Exhibit 10.23

 

ADMINISTRATIVE SERVICES AGREEMENT

“California”

 

This Administrative Services Agreement (“Agreement”) is entered into as of
August 1, 2003 (“Effective Date”) by and among CALIFORNIA RADIATION THERAPY
MANAGEMENT SERVICES, INC., a California corporation (“MANAGEMENT SERVICES”) and
21st CENTURY ONCOLOGY OF CALIFORNIA, A MEDICAL CORPORATION, a California medical
corporation (the “PC”).

 

RECITALS

 

A. The PC is a California medical corporation that engages in the business of
providing or arranging for the provision of health care services (the
“Practice”). The PC has entered into and throughout the term of this Agreement
may (if MANAGEMENT SERVICES does not do so itself as provided herein) continue
to enter into arrangements with insurers, HMOs and other third-party payers
(“Payers”) to provide or arrange for the provision of health care services to
persons covered by those Payers (“Enrollees”).

 

B. The PC has entered into written employment agreements with physicians and
other health care providers and health care professionals (“Employed Providers”)
licensed to practice in the State of California. The PC may also enter into
independent contractor agreements with various physicians and other health care
providers and health care professionals (“Contracting Providers”) to assist the
PC in providing or arranging for the provision of health care services to
Enrollees and other patients of the PC (collectively, “Patients”).

 

C. MANAGEMENT SERVICES engages in the business of providing certain
administrative and support services concerning the day-to-day affairs of
radiation therapy offices (the “Offices”), both in their startup and established
phases, and in providing space, equipment, furnishings, supplies, inventory,
personnel and working capital to Offices and facilities management in connection
therewith.

 

D. The PC desires to secure certain administrative services from MANAGEMENT
SERVICES in connection with its operation of the Practice in the Offices, and to
lease from MANAGEMENT SERVICES certain space, equipment, furnishings, supplies
and inventory in connection therewith.

 

E. The PC and MANAGEMENT SERVICES desire to enter into a written agreement for
the provision by MANAGEMENT SERVICES, on an exclusive basis, of administrative
services to the PC with respect to the Practice, and for the provision of space,
furnishings, supplies, inventory, non-medical personnel and management services
to the Practice, so as to permit the PC to devote its efforts on a concentrated
and continuous basis to the rendering of medical services to its Patients.

 

NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the parties agree as follows:

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I. RESPONSIBILITIES OF THE PC

 

1.1. Sole Responsibility for All Medical and Professional Matters. All medical
and professional matters relating to the provision of radiation therapy or
oncology services at the Offices shall be the sole responsibility of the PC. The
PC shall use and occupy the facilities provided by MANAGEMENT SERVICES hereunder
exclusively for the practice of medicine. The PC expressly acknowledges that the
medical practice or practices conducted at these facilities shall be conducted
solely by Employed Providers and Contracting Providers.

 

1.2. Employed Providers and Contracting Providers. The PC shall have complete
control of and responsibility for the hiring, engagement, compensation,
supervision, evaluation, and termination of all Employed Providers and
Contracting Providers, including nurses, physician assistants and other licensed
healthcare professionals. With respect to physicians, the PC shall only employ
and contract with licensed physicians meeting applicable credentialing
guidelines established by the PC. The PC shall be responsible for the payment of
salaries and wages, compensation, payroll taxes, employee benefits, and all
other taxes and charges now or hereafter applicable to Employed Providers and
Contracting Providers. Prior to making any changes with respect to any of the
Employed Providers or Contracting Providers, the PC shall consult with
MANAGEMENT SERVICES, although MANAGEMENT SERVICES shall provide input only and
shall not conclude whether an Employed Provider should be hired or terminated.
The PC shall also consult with MANAGEMENT SERVICES with regard to the terms of
contracts entered into between the PC and Employed Providers and Contracting
Providers and the terms and conditions of their employment or engagement as
independent contractors, as applicable.

 

1.3. Fees, Charges and Payer Agreements. The PC shall, after consultation with
MANAGEMENT SERVICES, determine the fees, charges, premiums, or other amounts due
in connection with its delivery of health care services to Patients. Such fees,
charges, premiums, or other amounts, regardless of whether determined on a
fee-for-service, capitated, prepaid, or other basis, shall be reasonable and
consistent with the fees, charges, premiums and other amounts due to health care
providers for similar services within the community under the type of
reimbursement program involved. MANAGEMENT SERVICES shall provide input relating
to the foregoing but shall not conclude the level of fees, charges, premiums, or
other amounts the PC should establish.

 

1.4. Compliance with Law. The PC shall require all of its Employed Providers and
Contracting Providers to comply with all laws, regulations, and ethical and
professional standards applicable to the practice of medicine. Employed
Providers and Contracting Providers who are physicians shall at all times be
licensed to practice medicine in the State of California and all other states in
which an Office at which such physician provides patients medical services is
located.

 

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1.5. Offices; Hours of Operation; Staffing. The PC shall conduct the Practice
from the current Office located in California at 78120 Wildcat Drive, Palm
Desert, California, 92211 as well as such hospitals and other facilities as may
be agreed upon by MANAGEMENT SERVICES and the PC from time to time. Any
additional or substitute Office shall be deemed to be part of the Practice for
the purposes of this Agreement. The hours of operation and the medical staffing
of the Offices shall be established by the agreement of the PC and MANAGEMENT
SERVICES from time to time hereafter.

 

1.6. Quality Assurance. The PC shall rigorously monitor utilization and quality
of services provided by Employed Providers and Contracting Providers, shall
develop, maintain and administer quality assurance programs and performance
standards and shall take all steps necessary to remedy any and all deficiencies
in the efficiency or the quality of medical care provided.

 

1.7. Patient Referrals. The parties agree that the benefits to the PC hereunder
do not require, are not payment for, and are not in any way contingent upon the
admission, referral or any other arrangements for the provision of any item or
service offered by MANAGEMENT SERVICES or any Affiliate, as defined in Section
8.21 of this Agreement, of MANAGEMENT SERVICES to any of the PC’s Patients in
any facility or laboratory controlled, managed or operated by MANAGEMENT
SERVICES or any Affiliate of MANAGEMENT SERVICES.

 

1.8. Professional Dues and Education Expenses. The PC and its Employed Providers
and Contracting Providers shall be solely responsible for the cost of membership
in professional associations, and continuing professional education. The PC
shall ensure that each of its Employed Providers and Contracting Providers
participates in such continuing medical education as is necessary for such
provider to remain current with professional licensure and community standards.

 

1.9. Professional Insurance Eligibility. The PC shall cooperate with MANAGEMENT
SERVICES in the obtaining and retaining of professional liability insurance by
assuring that either its Employed Providers and Contracting Providers are
insurable or instituting proceedings to terminate any Employed Provider of
Contracting Provider who is not insurable or loses his or her insurance
eligibility. Termination shall be effective no more than thirty (30) days from
such determination. The PC shall require all Employed Providers and Contracting
Providers to participate in an on-going risk management program.

 

1.10. Fees for Professional Services. MANAGEMENT SERVICES shall be solely
responsible for legal, accounting and other professional services incurred by
the PC in operating the Practice absent a violation by the PC of any provisions
of this Agreement.

 

 

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II. RESPONSIBILITIES OF MANAGEMENT SERVICES

 

2.1. General Responsibility. MANAGEMENT SERVICES shall have general
responsibility for providing fiscal services, administrative services, and other
strategic and tactical support services to the PC with respect to the Practice,
except as otherwise provided in this Agreement. MANAGEMENT SERVICES shall
perform all required functions in accordance with sound management techniques.
Notwithstanding MANAGEMENT SERVICES’s general and specific rights and
responsibilities set forth in this Agreement, the PC shall have full authority
and control with respect to all medical, professional and ethical determinations
over the PC’s Practice to the extent required by federal, state and local laws,
rules and regulations. MANAGEMENT SERVICES shall not engage in activities which
constitute the practice of medicine under applicable laws. MANAGEMENT SERVICES
shall neither exercise control over nor interfere with the physician-patient
relationship, which shall be maintained strictly between the physicians employed
by or contracting with the PC and the PC’s Patients.

 

2.2. Responsibilities with Regard to Selected Patient- Related Matters.

 

(a) Patient Relations, Sheduling, Etc. MANAGEMENT SERVICES shall assist the PC
in maintaining positive Patient relations by, among other things, in conjunction
with and at the direction of the PC: scheduling Patient appointments; responding
to Patient grievances and complaints in matters other than medical evaluation,
diagnosis, and treatment; and establishing and maintaining in the PC’s name and
on its behalf Patient transfer arrangements to expedite referrals where
medically necessary, as determined and requested by the attending physician.

 

(b) Recordkeeping. MANAGEMENT SERVICES shall assist the PC in maintaining
Patient medical records in accordance with applicable laws concerning their
confidentiality and retention, and promptly making such records available to the
PC’s Employed Providers, Contracting Providers and other appropriate recipients.
Notwithstanding the foregoing sentence, Patient medical records shall be and
shall remain the property of the PC, and the content thereof shall be solely the
responsibility of the PC.

 

(c) Quality Assurance.

 

(i) In General. MANAGEMENT SERVICES shall assist the PC, in accordance with
criteria established by the PC, in the development and implementation of
appropriate quality assurance programs, including development of performance and
utilization standards, sampling techniques for case review, and preparation of
appropriately documented studies. Notwithstanding the foregoing, MANAGEMENT
SERVICES shall not perform any duties that constitute the corporate practice of
medicine in California and all other states in which an Office at which the PC
provides patient medical services is located.

 

(ii) Periodic Independent Review. On behalf of the PC,

 

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MANAGEMENT SERVICES may periodically perform quality assurance and utilization
reviews through nurses employed by it; provided, however, that MANAGEMENT
SERVICES shall not engage in activities which constitute the practice of
medicine under applicable law. Alternatively, MANAGEMENT SERVICES may
periodically arrange for an independent quality assurance and utilization review
to be performed by persons who are unrelated to the PC or MANAGEMENT SERVICES,
or to any Affiliate of the PC or MANAGEMENT SERVICES, which has expertise in
such areas, and which has been approved in advance by the PC. Such review shall
include a random sampling of medical records (consistent with laws regarding the
confidentiality of medical records), an analysis of the PC’s quality assurance
utilization review procedures, and an analysis of the appropriateness of costs
associated with operating the PC’s medical practice at the Practice.

 

2.3. Responsibilities with Regard to Selected Financial Matters.

 

(a) Billing. MANAGEMENT SERVICES shall submit on a timely basis all bills and
necessary documentation required by Patients and Payers in order to obtain
payment in connection with the PC’s delivery of health care services at the
Practice or its arrangement for the delivery of such services. In seeking such
payment, MANAGEMENT SERVICES shall act as the PC’s exclusive agent in billing
and collecting professional fees, charges and other amounts owed to the PC. In
this connection, the PC hereby appoints MANAGEMENT SERVICES, during the term of
this Agreement, as the PC’s true and lawful attorney-in-fact, with power of
substitution, for the following purposes relating to the Practice:

 

(i) To bill the PC’s Patients on the PC’s behalf.

 

(ii) To collect accounts receivable generated by such billings on the PC’s
behalf, including, where deemed appropriate by MANAGEMENT SERVICES and approved
in advance by the PC, settling and compromising claims, assigning such accounts
receivable to a collection agency or the bringing of legal action against a
Patient or Payer on the PC’s behalf.

 

(iii) To receive payments on behalf of the PC from Patients and Payers, to cause
such payments to be deposited into appropriate depository accounts (each such
depository account, a “Collections Account”) and to write checks against or
otherwise withdraw such payments to pay the PC Expenses (as hereinafter
defined).

 

(b) Accounting. MANAGEMENT SERVICES shall direct and maintain the operation of
an appropriate accounting system with respect to the PC’s operation of the
Practice which shall perform all bookkeeping and accounting services required
for the operation of the Practice, including the maintenance, custody and
supervision of business records, ledgers and reports; the establishment,
administration and implementation of accounting procedures, controls and
systems. Such accounting system shall allow MANAGEMENT SERVICES to prepare the
reports specified in Section 2.3(c).

 

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(c) Reporting. MANAGEMENT SERVICES shall present to the PC reports on the
financial condition of the PC on the basis set forth below in clauses (i) and
(ii) and such other reports that the PC may reasonably request, including daily
activity reports, weekly analyses, alternative delivery system reports, backlog
reports and the like. MANAGEMENT SERVICES also shall provide such reports as may
be required by any regulatory agency having jurisdiction over the operations of
the PC.

 

The reports initially required to be delivered to the PC under this Section
2.3(c) with respect to the Practice are as follows:

 

(i) As soon as possible after the close of each month, a balance sheet and a
related statement of revenues and expenses showing the results of the PC’s
operations for the preceding month of the fiscal year and the year to date.

 

(ii) As soon as possible after the close of each fiscal year, a balance sheet
and related statement of revenues and expenses showing the results of the PC’s
operations during that fiscal year.

 

2.4. Responsibilities with Respect to Facilities Management.

 

(a) Office Management Services. MANAGEMENT SERVICES shall provide, supervise and
direct the development of appropriate and efficient office management services
with respect to the PC’s operation of the Practice.

 

(b) Offices. MANAGEMENT SERVICES shall provide, manage and maintain the real
property comprising the Offices and reasonable improvements during the term of
this Agreement. In consultation with the PC, MANAGEMENT SERVICES shall oversee
all management, maintenance and other decisions pertaining to the Offices
consistent with the terms of this Agreement. MANAGEMENT SERVICES shall maintain
the Offices in good condition and repair, reasonable wear and tear excepted.
MANAGEMENT SERVICES shall provide such additional and/or replacement facilities
as the PC and MANAGEMENT SERVICES agree, from time to time. MANAGEMENT SERVICES
shall provide the PC with all utilities (including water, gas and electricity),
heat, air conditioning, telephone, janitorial services and disposal services
(including the disposal of medical wastes) required in connection with the
operation of the Offices.

 

(c) Use of Assets.

 

(i) MANAGEMENT SERVICES shall lease or purchase and, when necessary, replace
equipment and furnishings needed for the delivery of health care services by the
PC at the Offices and for the delivery of services provided by MANAGEMENT
SERVICES pursuant to this Agreement. MANAGEMENT SERVICES shall consult with the
PC with respect to the suppliers, prices and specifications of such equipment
and furnishings. MANAGEMENT SERVICES shall use its best efforts to keep and
maintain the equipment and furnishings used by the PC at the Offices in good
working order and condition.

 

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(ii) All assets provided or purchased under this Agreement by MANAGEMENT
SERVICES, including any management information systems, shall remain the
property of MANAGEMENT SERVICES and the PC shall have the right to use such
assets only during the term of this Agreement.

 

(iii) Nothing in this Agreement shall be construed to affect or limit in any way
the professional discretion of the PC to select and use equipment, furnishings,
inventory and supplies purchased by MANAGEMENT SERVICES in accordance with the
terms of this Agreement insofar as such selection or use constitutes or might
constitute the practice of medicine.

 

(d) Supplies and Inventory. MANAGEMENT SERVICES shall provide and replenish, as
necessary and as may be permitted by applicable law, the inventory and supplies
needed for the delivery of medical services by the PC, and for the delivery of
services by MANAGEMENT SERVICES pursuant to this Agreement. MANAGEMENT SERVICES
shall consult with the PC with respect to the suppliers, prices and
specifications of such inventory and supplies.

 

(e) No Warranties. THE PC ACKNOWLEDGES THAT MANAGEMENT SERVICES MAKES NO
WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, AS TO THE SUITABILITY OR
ADEQUACY OF ANY FACILITIES, EQUIPMENT, FURNISHINGS, INVENTORY OR SUPPLIES
PROVIDED PURSUANT TO THIS AGREEMENT FOR THE CONDUCT OF A MEDICAL PRACTICE OR FOR
ANY OTHER PARTICULAR PURPOSE.

 

2.5. Other Responsibilities.

 

(a) Public Relations. MANAGEMENT SERVICES shall provide services reasonably
necessary for enhancing public relations for the PC’s health care services and
shall submit any public relations programs for prior review and revision, if
necessary, and approval by the PC. Such public relations shall comply with
applicable laws and regulations governing the use of promotional activities by
the medical profession and with applicable standards of medical ethics.

 

(b) Insurance.

 

(i) Property and Liability Insurance. MANAGEMENT SERVICES shall obtain and
maintain during the term of this Agreement, if available on commercially
reasonable terms, (a) property damage insurance protecting the Practice premises
and the personal property located therein against such hazards and in such
amounts as MANAGEMENT SERVICES determines are reasonably prudent; and (b)
general liability insurance in such amounts as MANAGEMENT SERVICES determines
are reasonably prudent.

 

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(ii) General Liability Insurance. The PC shall obtain and maintain during the
term of this Agreement general liability insurance in such amounts as the PC
determines are reasonably prudent. The PC shall name MANAGEMENT SERVICES as an
additional insured on such policies.

 

(iii) Malpractice Insurance. It is understood that the PC and its Employed
Providers shall, at the PC’s cost, at all times be covered by malpractice
insurance with coverage in usual and customary amounts for practitioners of the
same profession and specialties in California and, if applicable, other states.
The PC shall ensure that its written agreements with Contracting Providers who
are physicians require such Contracting Providers to at all times be covered by
malpractice insurance in amounts that are usual and customary for practitioners
of the same profession and specialty in California and, if applicable, other
states. Such malpractice policies shall name MANAGEMENT SERVICES as an
additional insured.

 

(iv) Copies of Insurance Policies. MANAGEMENT SERVICES or the PC shall, upon
request by the PC or MANAGEMENT SERVICES, as the case may be, promptly provide
the PC or MANAGEMENT SERVICES, as the case may be, with copies of all policies
of insurance that it procures under this Agreement. Each such policy shall
provide that it cannot be modified or terminated except after thirty (30) days
written notice to MANAGEMENT SERVICES.

 

(c) Personnel. MANAGEMENT SERVICES shall furnish the services of all personnel
other than physicians, nurses, physician assistants or other licensed healthcare
professionals required for the operation of the Practice. Except as specifically
provided in this Section 2.5(c), MANAGEMENT SERVICES has the power to recruit,
hire, train, promote, assign, set the compensation level for, and discharge all
personnel other than physicians, nurses, physician assistants or other licensed
healthcare professionals. Any personnel employed by MANAGEMENT SERVICES who
perform patient care services shall perform such services under the exclusive
direction, supervision and control of the PC, while all other services of
MANAGEMENT SERVICES personnel shall be performed under the exclusive direction,
supervision and control of MANAGEMENT SERVICES. If the PC is dissatisfied with
the services of any personnel employed by MANAGEMENT SERVICES, the PC shall
consult with MANAGEMENT SERVICES. MANAGEMENT SERVICES shall in good faith
determine whether the performance of that employee could be brought to
acceptable levels through counsel and assistance, or whether, if requested by
the PC (provided that such employee is not an officer or senior manager of
MANAGEMENT SERVICES), such employee should be removed from providing services
for the PC. Employee assignments shall be made with the intention of assuring
consistent and continued rendering of quality services and to ensure prompt
availability and accessibility of personnel to physicians in order to develop
constant, familiar and routine working relationships between the Employed
Providers, Contracting Providers and MANAGEMENT SERVICES personnel.

 

(d) Employed Providers. MANAGEMENT SERVICES shall assist the PC in the
administration of any employee benefit plans established by the PC in compliance
with the provisions of Section 1.10 hereof.

 

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(e) Managed Care Agreements. MANAGEMENT SERVICES shall negotiate and administer
all managed care agreements on behalf of the PC and shall consult with the PC on
all professional and clinical matters relating thereto.

 

III. FINANCIAL ARRANGEMENTS

 

3.1. Service Fee. For the services to be provided hereunder by MANAGEMENT
SERVICES, the PC shall pay to MANAGEMENT SERVICES a Service Fee of Ten Thousand
Dollars ($10,000.00) per month payable by the 15th day of the month following
the month for which the Service Fee is being paid. The parties agree that the
Service Fee represents the fair market value of the services provided by
MANAGEMENT SERVICES hereunder and that the parties shall meet annually to
reevaluate the value of services provided by MANAGEMENT SERVICES and shall
establish the fair market value thereof for purposes of this Section 3.1.

 

3.2. Security Agreement; the PC Expenses. To secure the PC’s payment obligations
hereunder, MANAGEMENT SERVICES may require the PC to enter into a security
agreement, in form acceptable to MANAGEMENT SERVICES, to grant to MANAGEMENT
SERVICES a security interest in the accounts receivable of the PC and all of the
PC’s rights to receive payments under managed care contracts. The PC shall
cooperate with MANAGEMENT SERVICES and execute all reasonably necessary
documents in connection with the granting of such security interest.

 

All payments on behalf of the PC from Patients and Payers shall be deposited
into one or more Collection Accounts. To the extent the PC receives any such
payments, the PC shall direct such payments to MANAGEMENT SERVICES for deposit
in one or more Collection Accounts.

 

3.3. Arbitration. Any controversy or claim arising out of or relating to this
Agreement or the transactions contemplated hereby, including any controversy or
claim arising out of or relating to the parties’ decision to enter into this
Agreement or the transactions contemplated hereby, shall be settled by binding
arbitration. Each party shall select an arbitrator who has at least three (3)
years experience in health care or medical practice management or in health care
or medical practice dispute resolution. The arbitration proceedings shall be
confidential and the arbitrators may issue appropriate protective orders to
safeguard each party’s confidential information. Such protective orders shall be
enforceable by any court of competent jurisdiction. Except as specifically
provided in this section, the arbitration shall be conducted in accordance with
the rules of conciliation and arbitration of the American Arbitration
Association. The two arbitrators shall agree upon any issue no later than thirty
(30) days after the date the second arbitrator has been engaged, and shall take
into account the principles and objectives set forth in paragraph (b) below. If
the two arbitrators cannot agree on a determination, then within five (5) days
thereafter the two arbitrators shall select a third arbitrator, who shall have
the same qualifications required for the first two arbitrators. No later than
thirty (30) days after the date

 

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the third arbitrator is engaged, he or she shall determine which of the two
positions best satisfies the provisions of the contract and the intent of the
parties, taking into account the principles and objectives set forth in
paragraph (b) below. The third arbitrator shall have no right to propose a
middle ground between the two or to make any modification of the proposals of
either party. The third arbitrator’s determination shall be final and binding on
all parties. The cost and expense of the third arbitrator shall be shared
equally between the parties. If either party fails to engage an arbitrator as
required hereunder, the arbitrator selected by the other party shall conduct the
arbitration and make the final decision in accordance with this Section 3.4.

 

IV. REPRESENTATIONS AND WARRANTIES; COVENANTS

 

4.1. Representations and Warranties and Covenants of the PC.

 

(a) The PC hereby represents and warrants to MANAGEMENT SERVICES as follows:

 

(i) The PC is and shall remain during the term of this Agreement a professional
corporation duly organized, validly existing and in good standing under the laws
of the State of California, actively engaged in the practice of medicine, and
possessing full corporate power and authority to own its properties and to
conduct the business in which it engages.

 

(ii) The PC has full corporate power and authority to execute and deliver this
Agreement and to engage in the transactions and obligations contemplated by this
Agreement. Upon its execution, this Agreement shall constitute a valid and
binding obligation of the PC, enforceable in accordance with its terms, except
as limited by applicable bankruptcy, insolvency, moratorium, or other similar
laws affecting generally the rights of creditors and by principles of equity.
The party executing this Agreement on behalf of the PC is duly authorized to do
so.

 

(iii) The consummation of the transactions contemplated by this Agreement will
not: result in a breach of the terms, provisions, or conditions of or constitute
a default under the Articles of Incorporation, By-Laws or other enabling or
governing instruments of the PC or any agreement to which the PC is a party or
by which it is bound; or, to the best knowledge of the PC, constitute a
violation of any applicable law or regulation.

 

(b) The PC hereby covenants to MANAGEMENT SERVICES that it shall not, without
the prior written consent of MANAGEMENT SERVICES, take any action to terminate
or nullify, or release any Employed Provider from, the terms of any
noncompetition covenant set forth in any employment agreement between the PC and
such Employed Provider.

 

4.2. Covenants and Warranties of MANAGEMENT SERVICES. MANAGEMENT SERVICES hereby
represents and warrants to the PC as follows:

 

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(a) MANAGEMENT SERVICES is and shall remain during the term of this Agreement a
corporation which is duly organized, validly existing and in good standing under
the laws of the State of California, possessing full corporate power and
authority to own its properties and to conduct the business in which it engages.

 

(b) MANAGEMENT SERVICES has full corporate power and authority to execute and
deliver this Agreement and to engage in the transactions and obligations
contemplated by this Agreement. Upon its execution, this Agreement shall
constitute a valid and binding obligation of MANAGEMENT SERVICES, enforceable in
accordance with its terms, except as limited by applicable bankruptcy,
insolvency, moratorium, or other similar laws affecting generally the rights of
creditors and by principles of equity. The party executing this Agreement on
behalf of MANAGEMENT SERVICES is duly authorized to do so.

 

(c) The consummation of the transactions contemplated by this Agreement will
not: result in any breach of the terms, provisions or conditions of or
constitute a default under the Certificate of Incorporation, Bylaws or other
enabling or governing instruments of MANAGEMENT SERVICES or any agreement to
which MANAGEMENT SERVICES is a party or by which it is bound; or, to the best
knowledge of MANAGEMENT SERVICES, constitute a violation of any applicable law
or regulation.

 

V. TERM AND TERMINATION

 

5.1 Initial and Renewal Term. The term of this Agreement will be for an initial
period of twenty-five (25) years after the Effective Date, and shall be
automatically renewed for successive five (5) year periods thereafter
(collectively, the “Term”), provided that neither MANAGEMENT SERVICES nor the PC
shall have given notice of termination of this Agreement at least one hundred
twenty (120) days before the end of the initial term or any renewal term, or
unless otherwise terminated as provided in Section 5.2 of this Agreement.

 

5.2 Termination.

 

(a) Termination by the PC. The PC may immediately terminate this Agreement at
its discretion, upon written notice as follows:

 

(i) If MANAGEMENT SERVICES becomes insolvent by reason of its inability to pay
its debts as they mature; is adjudicated bankrupt or insolvent; files a petition
in bankruptcy, reorganization or similar proceeding under the bankruptcy laws of
the United States or shall have such a petition filed against it which is not
discharged within thirty (30) days; has a receiver or other custodian, permanent
or temporary, appointed for its business, assets or property; makes a general
assignment for the benefit of creditors; has its bank accounts, property or
accounts attached; has execution levied against its business or property; or
voluntarily dissolved or liquidates or has a petition filed for corporate
dissolution and such petition is not dismissed with thirty (30) days;

 

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(ii) If the MANAGEMENT SERVICES fails to comply with any material provision of
this Agreement, or any other agreement with the PC, and does not correct such
failure within sixty (60) days after written notice of such failure to comply is
delivered by the PC specifying the nature of the breach in reasonable detail.

 

(b) Termination by MANAGEMENT SERVICES. MANAGEMENT SERVICES may immediately
terminate this Agreement at its discretion, upon written notice as follows:

 

(i) If the PC becomes insolvent by reason of its inability to pay its debts as
they mature; is adjudicated bankrupt or insolvent; files a petition in
bankruptcy, reorganization or similar proceeding under the bankruptcy laws of
the United States or shall have such a petition filed against it which is not
discharged within thirty (30) days; has a receiver or other custodian, permanent
or temporary, appointed for its business, assets or property; makes a general
assignment for the benefit of creditors; has its bank accounts, property or
accounts attached; has execution levied against its business or property; or
voluntarily dissolves or liquidates or has a petition filed for corporate
dissolution and such petition is not dismissed with thirty (30) days; or

 

(ii) If the PC fails to comply with any material provision of this Agreement
with MANAGEMENT SERVICES, and does not correct such failure within sixty (60)
days after written notice of such failure to comply is delivered by MANAGEMENT
SERVICES specifying the nature of the breach in reasonable detail.

 

(c) Termination by Agreement. In the event the PC and MANAGEMENT SERVICES shall
mutually agree in writing, this Agreement may be terminated on the date
specified in such written agreement.

 

(d) Legislative, Regulatory or Administrative Change. In the event there shall
be a change in the Medicare or Medicaid statutes, federal statutes, state
statutes, case laws, administrative interpretations, regulations or general
instructions, the adoption of new federal or state legislation, or a change in
any third-party reimbursement system, any of which are reasonably likely to
materially and adversely affect the manner in which either party may perform or
be compensated for its services under this Agreement or which shall make this
Agreement or any related agreements unlawful or unenforceable, or which would be
reasonably likely to subject either party to this Agreement, or any member,
shareholder, officer, director, employee, agent or affiliated organization to
any civil or criminal penalties or administrative sanctions, the parties shall
immediately use their best efforts to enter into a new service arrangement or
basis for compensation for the services furnished pursuant to this Agreement
that complies with the law, regulation, or policy, or which minimizes the
possibility of such penalties, sanctions or unenforceability, and that
approximates as closely as possible the economic position of the parties prior
to the change. If the parties are unable to reach a new agreement within a
reasonable time, then either party may submit the issue to arbitration pursuant
to Section 3.3 for the purpose of reaching an alternative arrangement that is
equitable under the circumstances.

 

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5.3 Effects of Termination. Upon termination of this Agreement, as provided in
this Article V, neither party shall have any further obligations hereunder
except for (i) obligations accruing prior to the date of termination, including,
without limitation, payment of the Service Fee relating to services provided
prior to the termination of this Agreement, (ii) obligations, promises, or
covenants set forth herein that are expressly made to extend beyond the Term,
including, without limitation, insurance, indemnities and non-competition
provisions, which provisions shall survive the expiration or termination of this
Agreement. In effectuating the provisions of this Section 5.3, the PC
specifically acknowledges and agrees that if this Agreement terminates pursuant
to Sections 5.2(b) or (d), MANAGEMENT SERVICES shall continue for a period not
to exceed ninety (90) days to collect and receive on behalf of the PC on an
exclusive basis all cash collections from accounts receivable in existence at
the time this Agreement is terminated, it being understood that (a) such cash
collections may be used to compensate MANAGEMENT SERVICES for services rendered
prior to the termination of this Agreement, (b) MANAGEMENT SERVICES shall not be
entitled to collect accounts receivable after the termination date of this
Agreement is terminated pursuant to Section 5.2(a), and (c) the MANAGEMENT
SERVICES shall deduct for such cash collections any other amounts owed to
MANAGEMENT SERVICES under this Agreement, including, without limitation, any
reasonable costs incurred by MANAGEMENT SERVICES in carrying out the
post-termination procedures and transactions contemplated herein. MANAGEMENT
SERVICES shall remit remaining amounts from such collection activities, if any,
to the PC. Upon the expiration or termination of this Agreement for any reason
or cause whatsoever, MANAGEMENT SERVICES shall surrender to the PC all books and
records pertaining to the PC’s Patient medical records and PC Records (as
defined in Section 7.2).

 

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VI. RESTRICTIVE COVENANTS

 

6.1. Covenant Regarding Proprietary Information. In the course of the
relationship created pursuant to this Agreement, the PC will have access to
certain methods, trade secrets, processes, ideas, systems, procedures,
inventions, discoveries, concepts, software in various stages of development,
designs, drawings, specifications, models, data, documents, diagrams, flow
charts, research, economic and financial analysis, developments, procedures,
know-how, policy manuals, financial data, form contracts, marketing ad other
techniques, plans, materials, forms, copyrightable materials and trade
information regarding the operations of MANAGEMENT SERVICES and/or of its
Affiliates (collectively, the “Protected Parties”). The foregoing, together with
the existence and terms of this Agreement, are referred to in this Agreement as
“Proprietary Information”. The PC shall maintain all such Proprietary
Information in strict secrecy and shall not divulge such information to any
third parties, except as may be necessary for the discharge of its obligations
under this Agreement. The PC shall take all necessary and proper precautions
against disclosure of any Proprietary Information to unauthorized persons by any
of its officers, directors, employees or agents. All officers, directors,
employees and agents of the PC who will have access to all or any part of the
Proprietary Information may be required to execute an agreement, at the
reasonable request of MANAGEMENT SERVICES, valid under the law of the
jurisdiction in which such agreement is executed, and in a form acceptable to
MANAGEMENT SERVICES and its counsel, committing themselves to maintain the
Proprietary Information in strict confidence and not to disclose it to any
unauthorized person or entity. The Protected Parties not party to this Agreement
are hereby specifically made third party beneficiaries of this Section 6.1, with
the power to enforce the provisions hereof. Upon termination of this Agreement
for any reason, the PC and each of its Employed Providers and Contracting
Providers shall cease all use of any of the Proprietary Information and, at the
request of MANAGEMENT SERVICES, shall execute such documents as may be necessary
to evidence the PC’s abandonment of any claim thereto. The parties recognize
that a breach of this Section 6.1 cannot be adequately compensated in money
damages and therefore agree that injunctive relief shall be available to the
Protected Parties as their respective interests may appear.

 

The obligations of the PC under this Section 6.1 shall not apply to information:
(i) which is a matter of public knowledge on or becomes a matter of public
knowledge after the Effective Date of this Agreement, other than as a breach of
the confidentiality terms of this Agreement or as a breach of the
confidentiality terms of any other agreement between the PC and MANAGEMENT
SERVICES or its Affiliates; or (ii) was lawfully obtained by the PC on a
nonconfidential basis other than in the course of performance under this
Agreement and from some entity other than MANAGEMENT SERVICES or its Affiliates
or from some person other than one employed or engaged by MANAGEMENT SERVICES or
its Affiliates, which entity or person has no obligation of confidentiality to
MANAGEMENT SERVICES or its Affiliates.

 

6.2. Covenants Not to Compete During the Term. The parties recognize that the
services to be provided by MANAGEMENT SERVICES shall be feasible only if the PC
operates an active medical practice to which the PC and Employed Providers
devote full time and

 

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attention. To that end:

 

(a) Restrictive Covenants by the PC. During the term of this Agreement, the PC
shall not establish, operate or provide physician or other health care services
at any medical office, clinic or other health care facility providing services
substantially similar to those provided by the PC pursuant to this Agreement
anywhere other than at the Offices and as may be approved in writing by
MANAGEMENT SERVICES. The PC shall also not enter into any management or
administrative services agreement or arrangement with any person or entity other
than MANAGEMENT SERVICES without MANAGEMENT SERVICES’s prior written approval.

 

(b) Restrictive Covenants by Employed Providers. All employment contracts
between the PC and its Employed Providers shall name MANAGEMENT SERVICES as a
third-party beneficiary to the contract and shall not be revised without the
prior written consent of MANAGEMENT SERVICES. The contracts shall include
noncompetition agreements with its Employed Providers who are physicians, the
substance and form of which is set forth as Exhibit A hereto, and which the PC
will enforce.

 

6.3. Covenant Not to Compete Following Termination. For three (3) years
following the termination of this Agreement by MANAGEMENT SERVICES pursuant to
Section 5.2, the PC shall not enter into any management or administrative
services agreement or any similar arrangement with any person or entity for the
provision of the same or similar services as MANAGEMENT SERVICES provides to the
PC under this Agreement.

 

6.4. Covenant Not to Solicit. During the term of this Agreement and for three
(3) years following the termination of this Agreement, the PC shall not:

 

(a) Directly or indirectly solicit, recruit or hire, or induce any party to
solicit, recruit or hire any person who is an employee of, or who has entered
into an independent contractor arrangement with, MANAGEMENT SERVICES or any
Affiliate of MANAGEMENT SERVICES (excluding any person who performs patient
services);

 

(b) Directly or indirectly, whether for itself or for any other person or
entity, call upon, solicit, divert or take away, or attempt to solicit, call
upon, divert or take away any of MANAGEMENT SERVICES’s customers, business, or
clients; or

 

(c) Disrupt, damage, impair or interfere with the business of MANAGEMENT
SERVICES.

 

6.5. Enforcement. MANAGEMENT SERVICES and the PC acknowledge and agree that
since a remedy at law for any breach or attempted breach of the provisions of
this Article VI or of Article VII shall be inadequate, either party shall be
entitled to specific performance and injunctive or other equitable relief in
case of any such breach or attempted breach, in addition to whatever other
remedies may exist by law. All parties hereto also waive

 

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any requirement for the securing or posting of any bond in connection with the
obtaining of any such injunctive or other equitable relief. If any provision of
Article VI or Article VII relating to the restrictive period, scope of activity
restricted and/or other provisions described therein shall be declared by a
court of competent jurisdiction to exceed the maximum time period, scope of
activity restricted or geographical area such court deems reasonable and
enforceable under applicable law, the time period, scope of activity restricted
and/or area of restriction held reasonable and enforceable by the court shall
thereafter be the restrictive period, scope of activity restricted and/or the
territory applicable to the restrictive covenant provisions in this Article VI
or Article VII. The invalidity or non-enforceability of this Article VI or
Article VII in any respect shall not affect the validity or enforceability of
the remainder of this Article VI or Article VII or of any other provisions of
this Agreement.

 

VII. INFORMATION AND RECORDS

 

7.1. Ownership of Records. At all times during and after the term of this
Agreement, including any extensions or renewals hereof, all business records,
including but not limited to, business agreements, books of account, general
administrative records and all information generated under or contained in the
management information system pertaining to MANAGEMENT SERVICES’s obligations
hereunder, and other business information of any kind or nature, except for
Patient medical records and the PC’s Records (as defined in Section 7.2), shall
be and remain the sole property of MANAGEMENT SERVICES; provided that after
termination of this Agreement the PC shall be entitled to reasonable access to
such records and information, including the right to obtain copies thereof, for
any purpose related to patient care or the defense of any claim relating to
patient care or the business of MANAGEMENT SERVICES or the PC.

 

7.2. The PC’s Business and Financial Records. At all times during and after the
term of this Agreement, the financial, corporate and personnel records and
information relating exclusively to the business and activities of the PC, as
distinguished from the business and activity of MANAGEMENT SERVICES, hereinafter
referred to as “the PC’s Records,” shall be and remain the sole property of the
PC.

 

7.3. Access to Records. Each party shall be entitled, upon request and with
reasonable advance notice, to obtain access to all records of the other party
directly related to the performance of such party’s obligations pursuant to this
Agreement; provided, however, that such right shall not allow for access to
records that must necessarily be kept confidential. Either party, at its
expense, shall have the right to make copies of any records to which it has
access pursuant to this Section.

 

7.4. Confidentiality of Records. MANAGEMENT SERVICES and the PC shall adopt
procedures for maintaining the confidentiality of the records relating to the
operations of MANAGEMENT SERVICES and the PC which do not constitute Proprietary
Information, which information is not otherwise available to third parties
publicly or by law, and shall comply with all applicable federal and state
statutes and regulations relating to such records. Patient

 

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medical records and other privileged Patient information shall not be disclosed
or utilized by the PC or MANAGEMENT SERVICES or their agents or employees except
as required or permitted by applicable laws and regulations.

 

VIII. MISCELLANEOUS

 

8.1. Independent Contractor Status of Parties. In the performance of the work,
duties and obligations under this Agreement, it is mutually understood and
agreed that each party is at all times acting and performing as an independent
contractor with respect to the other and that no relationship of partnership
joint venture or employment is created by this Agreement. Neither party, nor any
other person performing services on behalf of such party pursuant to this
Agreement, shall have any right or claim against the other party for Social
Security benefits, workers’ compensation benefits, disability benefits,
unemployment insurance benefits, health benefits, vacation pay, sick leave or
any other employee benefits of any kind.

 

8.2. No Waiver. The waiver by any party to this Agreement of any breach of any
term or condition of this Agreement shall not constitute a waiver of subsequent
breaches. No waiver by any party of any provision of this Agreement shall be
deemed to constitute a waiver of any other provision.

 

8.3. Notices. If, at any time after the execution of this Agreement, it shall
become necessary or convenient for one of the parties to serve any notice,
demand or communication upon the other party, such notice, demand, or
communication shall be in writing and shall be served personally, by nationally
recognized overnight courier which provides confirmation of delivery, or by
depositing the same in the United States mail, registered or certified, return
receipt requested, postage prepaid and to such address as either party may have
furnished to the other party in writing as the place for the service of notice.
Any notice so mailed shall be deemed to have been given three (3) days after the
same has been deposited in the United States mall; when delivered if the same
has been given personally; or the next business day if the same has been
delivered to a nationally recognized overnight courier service.

 

8.4. Assignment. Neither party may sell, transfer, assign, or otherwise convey
its rights or obligations under this Agreement without the prior written consent
of the other, which consent shall not be unreasonably withheld. Notwithstanding
the foregoing, MANAGEMENT SERVICES shall have the right to (a) assign its rights
and/or delegate all or any of its obligations to any of its Affiliates; and/or
(b) subcontract some portion of its obligations hereunder to a third party which
is not an Affiliate of MANAGEMENT SERVICES, in each case without the consent of
the PC.

 

8.5. Successors and Assigns. Subject to the provisions of this Agreement
respecting assignment, the terms, covenants and conditions contained herein
shall be binding upon and inure to the benefit of the successors and permitted
assigns of the parties hereto.

 

8.6. Severability. Nothing contained in this Agreement shall be construed to
require

 

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the commission of an act contrary to law, and whenever there is any conflict
between any provision of this Agreement and any statute, law, ordinance or
regulation, the latter shall prevail. In such event, and in any case in which
any provision of this Agreement is determined to be in violation of a statute,
law, ordinance or regulation, the affected provision(s) shall be limited only to
the extent necessary to bring it within the requirements of the law and, insofar
as possible under the circumstances, to carry out the purposes of this
Agreement. The other provisions of this Agreement shall remain in full force and
effect, and the invalidity or unenforceability of any provision hereof shall not
affect the validity and enforceability of the other provisions of this
Agreement, nor the availability of all remedies in law or equity to the parties
with respect to such other provisions.

 

8.7. Third Parties. Except as provided in Article VII, nothing in this Agreement
shall be construed to create any duty to, any standard of care with reference to
or any liability to anyone not a party to this Agreement.

 

8.8. Headings. The headings used in this Agreement are for convenience of
reference only and shall have no force or effect in the construction or
interpretation of the provisions of this Agreement.

 

8.9. Time of the Essence. Time is of the very essence of each and all of the
agreements, covenants and conditions of this Agreement.

 

8.10. Governing Law. This Agreement shall be deemed made, executed and entered
into and shall be governed by and construed in accordance with the internal laws
of the State of California.

 

8.11. Language Construction. The language in all parts of this Agreement shall
be construed, in all cases, according to its fair meaning, and not for or
against either party hereto. The parties acknowledge that each party and its
counsel have reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement.

 

8.12. Indemnification. The PC shall indemnify, hold harmless and defend
MANAGEMENT SERVICES, its officers, directors, shareholders, employees, agents
and independent contractors (the “MANAGEMENT SERVICES Group”) from and against
any and all liabilities, losses, damages, claims, causes of action, and expenses
(including reasonable attorneys’ fees and disbursements (a “MANAGEMENT SERVICES
Loss”)), caused or asserted to have been caused, directly or indirectly, by or
as a result of the performance of medical services or any other acts or
omissions by MANAGEMENT SERVICES and/or its partners, agents, employees and/or
subcontractors (other than MANAGEMENT SERVICES) during the term hereof except
with respect to any MANAGEMENT SERVICES Loss which is the result of any gross
negligence or willful misconduct by a member of the MANAGEMENT SERVICES Group.
MANAGEMENT SERVICES shall indemnify, hold harmless and defend the PC, its
officers, directors, partners employees, agents and independent contractors (the
“the PC Group”)

 

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from and against any and all liabilities, losses, damages, claims, causes of
action, and expenses (including reasonable judgment attorneys’ fees and
disbursements) (a “the PC Loss”), caused or asserted to have been caused,
directly or indirectly, by or as a result of the performance of any acts of
omissions by MANAGEMENT SERVICES and/or its shareholders, agents, employees
and/or subcontractors during the term hereof except with respect to any the PC
Loss which is the result of any gross negligence or willful misconduct by a
member of the PC Group.

 

8.13. Entire Agreement. This Agreement constitutes the entire agreement between
the parties with respect to the subject matter hereof and supersedes all prior
and contemporaneous agreements, understandings, negotiations and discussions,
whether written or oral, between or among parties regarding the subject matter
of this Agreement.

 

8.14. Incorporation by Reference. All exhibits and other attachments to this
Agreement are incorporated by reference into this Agreement by such reference.

 

8.15. Amendments Only in Writing. This Agreement may not be amended or modified
in any respect whatsoever, except by an instrument in writing signed by the
parties hereto.

 

8.16. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be considered an original and all of which shall constitute
one and the same agreement. This Agreement shall not become effective until it
has been executed by all of the parties hereto.

 

8.17. Commercial Impracticability. No party to this Agreement shall be liable
for any failure to perform its obligations hereunder where such failure results
from any cause beyond that party’s reasonable control, including, for example,
an act of God, labor disturbance such as a strike or walkout, war, riot, fire,
storm, accident, government regulation or interference, or mechanical,
electronic or communications failure.

 

8.18. Election of Remedies. The respective rights of the parties to this
Agreement shall be cumulative. Each party shall have all other rights and
remedies consistent with this Agreement as law and equity may provide. No
exercise by any party of one right or remedy shall be deemed to be an exclusive
election of rights or remedies.

 

8.19. Survival. The provisions of Articles III, IV, V, VI, VII and VIII shall
survive any termination of this Agreement.

 

8.20. Third Party Beneficiaries. Except with respect to Affiliates of MANAGEMENT
SERVICES, nothing in this Agreement shall be construed to create any duty to,
any standard of care with reference to, or any liability to any Person not a
party to this Agreement. The Affiliates of MANAGEMENT SERVICES are intended
third party beneficiaries of this Agreement.

 

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8.21 Affiliate. An “Affiliate” of an entity means (i) any person or entity
directly or indirectly controlled by such entity; (ii) any person or entity
directly or indirectly controlling such entity; (iii) any subsidiary of such
entity if the entity has a fifty percent (50%) or greater ownership interest in
the subsidiary; or (iv) such entity’s parent entity if the parent has a fifty
percent (50%) or greater ownership interest in the entity. For purposes of this
Agreement, the PC is not an Affiliate of MANAGEMENT SERVICES.

 

IN WITNESS WHEREOF, MANAGEMENT SERVICES and the PC have caused this Agreement to
be executed by their duly authorized respective officers as of the Effective
Date.

 

CALIFORNIA RADIATION THERAPY

MANAGEMENT SERVICES, INC.

By:  

/s/ Daniel E. Dosoretz

--------------------------------------------------------------------------------

   

Daniel E. Dosoretz, M.D.

President

21st CENTURY ONCOLOGY OF CALIFORNIA,

A MEDICAL CORPORATION

By:  

/s/ Michael J. Katin

--------------------------------------------------------------------------------

   

Michael J. Katin

President

 

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EXHIBIT A

 

NONCOMPETITION AGREEMENT

 

NON-COMPETITIVE AND RESTRICTIVE AGREEMENTS.

 

A. During the term of this Agreement and any renewal period, Physician shall not
undertake any professional service except as directed and authorized by
[Employer] and shall not engage in any profession other than the rendition of
the professional services as directed by [Employer].

 

B. In the event of the termination of this Agreement for any reason, Physician
agrees not to directly or indirectly engage in the practice of radiation therapy
or oncology, or otherwise compete with [Employer], or any of its physician
providers, by practicing as a radiation therapist or oncologist (i) at any
hospital in which physician providers of [Employer] regularly admit patients, or
(ii) within any county in which [Employer] or any of its Affiliates operate an
Office for a period of two (2) years after the date of such actual termination
of this Agreement. The purpose of this covenant is to protect [Employer] from
the irreparable harm it will suffer if Physician competes with [Employer] after
having been introduced to [Employer]’s personnel and patients and after learning
special medical procedures used by [Employer]’s physician providers,
[Employer]’s business procedures, office and practice policies, and the special
and confidential professional procedures developed by [Employer].

 

C. The parties agree that in the event of any breach or attempted breach of any
of the covenants set out in section B (the “Covenant Not to Compete”),
[Employer] will be entitled to equitable relief by way of injunction or
otherwise, in addition to any remedy at law which may be available. The parties
agree that any violation or threatened violation by Physician of the Covenant
Not to Compete will cause [Employer] to suffer irreparable harm. The parties
agree that [Employer]’s remedy of an injunction is not the exclusive remedy for
breach of the Covenant Not to Compete and that a court may grant such additional
relief as is reasonable.

 

D. In the event Physician breaches the Covenant Not to Compete, in addition to
the injunctive relief to which [Employer] shall be entitled under the law,
Physician shall immediately repay to [Employer] any amounts paid by [Employer]
pursuant to section 3.B hereof after the termination of this Agreement, and all
severance or termination pay, if any, paid pursuant to this Agreement.
[Employer] may offset against any amounts owed Physician pursuant to this
Agreement any amounts Physician owes [Employer] pursuant to paragraph E below
for breach of the Covenant Not to Compete.

 

E. In addition to the injunctive relief to which [Employer] is entitled under
the law and in addition to the payments provided for in paragraph D above and in
order to compensate [Employer] for the damages it will incur in recruiting and
compensating a replacement radiation oncologist and for the lost business it
will suffer, in the event of a breach

 

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by Physician of the Covenant Not to Compete, Physician shall also pay to
[Employer], as liquidated damages, a sum equal to a percentage of the gross
billings of [Employer] for the twelve month period immediately preceding the
termination of this Agreement. The percentage shall be that formed by dividing
the number one by the number equal to the total number of physician providers of
[Employer], including Physician, on the date of termination of this Agreement.
The parties agree that, in the event of the breach by Physician of the Covenant
Not to Compete, the actual amount of damages which would be incurred by
[Employer] would be difficult to ascertain and prove, and that therefore the
liquidated damages sum set forth herein would be reasonable and appropriate.

 

F. In the event the Covenant Not to Compete shall be determined by a court of
competent jurisdiction to be unenforceable by reason of its geographic or
temporal restrictions being too great, or by reason that the range of activities
covered is too great, or for any other reason, section B shall be interpreted to
extend over the maximum geographic area, period of time, range of activities or
other restrictions as to which it may be enforceable.

 

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HIPAA BUSINESS ASSOCIATE ADDENDUM

 

This Addendum, dated as of August 1, 2003 (“Addendum”), supplements and is made
a part of the Administrative Services Agreement (as defined below) by and
between 21st Century Oncology of California, A Medical Corporation (“Covered
Entity”) and California Radiation Therapy Management Services, Inc. (“Business
Associate”).

 

WHEREAS, Covered Entity and Business Associate are parties to the Administrative
Service Agreement pursuant to which Business Associate provides certain services
to Covered Entity. In connection with Business Associate’s services, Business
Associate creates or receives Protected Health Information from or on behalf of
Covered Entity, which information is subject to protection under the Federal
Health Insurance Portability and Accountability Act of 1996, Pub. L. No. 104-191
(“HIPAA”) and related regulations promulgated by the Secretary (“HIPAA
Regulations”).

 

WHEREAS, in light of the foregoing and the requirements of the HIPAA
Regulations, Business Associate and Covered Entity agree to be bound by the
following terms and conditions:

 

1. Definitions.

 

(a) General. Terms used, but not otherwise defined, in this Addendum shall have
the same meaning as those terms in the Privacy Rule.

 

(b) Specific.

 

(i) Individual. “Individual” shall have the same meaning as the term
“individual” in 45 CFR 164.501 and shall include a person who qualifies as a
personal representative in accordance with 45 CFR 164.502(g).

 

(ii) Privacy Rule. “Privacy Rule” shall mean the Standards for Privacy of
Individually Identifiable Health Information at 45 CFR part 160 and part 164,
subparts A and E.

 

(iii) Protected Health Information. “Protected Health Information” shall have
the same meaning as the term “protected health information” in 45 CFR 164.501,
limited to the information created or received by Business Associate from or on
behalf of Covered Entity.

 

(iv) Required By Law. “Required by Law” shall have the same meaning as the term
“required by law” in 45 CFR 164.501.

 

(v) Secretary. “Secretary” shall mean the Secretary of the Department of Health
and Human Services or his designee.

 

(vi) Services Agreement. “Services Agreement” shall mean any present or future
written agreements between Covered Entity and Business Associate under which
Business Associate provides services to Covered Entity which involve the use or
disclosure of Protected Health Information.

--------------------------------------------------------------------------------

2. Obligations and Activities of Business Associate.

 

(a) Use and Disclosure. Business Associate agrees to not use or disclose
Protected Health Information other than as permitted or required by the Services
Agreement or as Required By Law.

 

(b) Appropriate Safeguards. Business Associate agrees to use appropriate
safeguards to prevent use or disclosure of the Protected Health Information
other than as provided for by the Services Agreement. Without limiting the
generality of the foregoing, Business Associate agrees to protect the integrity
and confidentiality of any Protected Health Information it electronically
exchanges with Covered Entity.

 

(c) Reporting. Business Associate agrees to report to Covered Entity any use or
disclosure of the Protected Health Information not provided for by the Services
Agreement of which it becomes aware.

 

(d) Agents. Business Associate agrees to ensure that any agent, including a
subcontractor, to whom it provides Protected Health Information received from,
or created or received by Business Associate on behalf of Covered Entity agrees
to the same restrictions and conditions that apply through this Addendum to
Business Associate with respect to such information.

 

(e) Access to Designated Record Sets. To the extent that Business Associate
possesses or maintains Protected Health Information in a Designated Record Set,
Business Associate agrees to provide access, at the request of Covered Entity,
and in the time and manner reasonably requested by the Covered Entity, to
Protected Health Information in a Designated Record Set, to Covered Entity or,
as directed by Covered Entity, to an Individual in order to meet the
requirements under 45 CFR 164.524.

 

(f) Amendments to Designated Record Sets. To the extent that Business Associate
possesses or maintains Protected Health Information in a Designated Record Set,
Business Associate agrees to make any amendment(s) to Protected Health
Information in a Designated Record Set that the Covered Entity directs or agrees
to pursuant to 45 CFR 164.526 at the request of Covered Entity or an Individual,
and in the time and manner reasonably requested by the Covered Entity.

 

(g) Access to Books and Records. Business Associate agrees to make internal
practices, books, and records, including policies and procedures and Protected
Health Information, relating to the use and disclosure of Protected Health
Information received from, or created or received by Business Associate on
behalf of, Covered Entity available to the Secretary, in a time and manner
designated by the Secretary, for purposes of the Secretary determining Covered
Entity’s compliance with the Privacy Rule.

--------------------------------------------------------------------------------

(h) Accountings. Business Associate agrees to document such disclosures of
Protected Health Information and information related to such disclosures as
would be required for Covered Entity to respond to a request by an Individual
for an accounting of disclosures of Protected Health Information in accordance
with 45 CFR 164.528.

 

(i) Requests for Accountings. Business Associate agrees to provide to Covered
Entity or an Individual, in the time and manner reasonably requested by the
Covered Entity, information collected in accordance with Section 2.h. of this
Addendum, to permit Covered Entity to respond to a request by an Individual for
an accounting of disclosures of Protected Health Information in accordance with
45 CFR 164.528.

 

3. Permitted Uses and Disclosures by Business Associate.

 

(a) Services Agreement. Except as otherwise limited in this Addendum, Business
Associate may use or disclose Protected Health Information to perform functions,
activities, or services for, or on behalf of, Covered Entity as specified in the
Services Agreement, provided that such use or disclosure would not violate the
Privacy Rule if done by Covered Entity or the minimum necessary policies and
procedures of the Covered Entity.

 

(b) Use for Administration of Business Associate. Except as otherwise limited in
this Addendum, Business Associate may use Protected Health Information for the
proper management and administration of the Business Associate or to carry out
the legal responsibilities of the Business Associate.

 

(c) Disclosure for Administration of Business Associate. Except as otherwise
limited in this Addendum, Business Associate may disclose Protected Health
Information for the proper management and administration of the Business
Associate, provided that disclosures are Required by Law, or Business Associate
obtains reasonable assurances from the person to whom the information is
disclosed that it will remain confidential and used or further disclosed only as
Required by Law or for the purpose for which it was disclosed to the person, and
the person notifies the Business Associate of any instances of which it is aware
in which the confidentiality of the information has been breached.

 

4. Obligations of Covered Entity.

 

(a) Privacy Notice. Covered Entity shall notify Business Associate of any
limitation(s) in its notice of privacy practices of Covered Entity in accordance
with 45 CFR 164.520, to the extent that such limitation may affect Business
Associate’s use or disclosure of Protected Health Information.

 

(b) Changes of Permission of Individual. Covered Entity shall notify Business
Associate of any changes in, or revocation of, permission by an Individual to
use or disclose Protected Health Information, to the extent that such changes
may affect Business Associate’s use or disclosure of Protected Health
Information.

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(c) Restrictions on Use or Disclosure. Covered Entity shall notify Business
Associate of any restriction to the use or disclosure of Protected Health
Information that Covered Entity has agreed to in accordance with 45 CFR 164.522,
to the extent that such restriction may affect Business Associate’s use or
disclosure of Protected Health Information.

 

5. Permissible Requests by Covered Entity. Except as set forth in Section 3 of
this Addendum, Covered Entity shall not request Business Associate to use or
disclose Protected Health Information in any manner that would not be
permissible under the Privacy Rule if done by Covered Entity.

 

6. Term and Termination.

 

(a) Term. This Addendum shall be effective as of the date of this Addendum, and
shall terminate when all of the Protected Health Information provided by Covered
Entity to Business Associate, or created or received by Business Associate on
behalf of Covered Entity, is destroyed or returned to Covered Entity, or, if it
is infeasible to return or destroy Protected Health Information, protections are
extended to such information, in accordance with the termination provisions in
this Section.

 

(b) Termination for Cause. Upon Covered Entity’s knowledge of a material breach
by Business Associate, Covered Entity shall either:

 

i. Provide an opportunity for Business Associate to cure the breach or end the
violation. If Business Associate does not cure the breach or end the violation
within the time specified by Covered Entity, Covered Entity shall terminate: (A)
this Addendum; and (B) all of the provisions of the Services Agreement that
involve the use or disclosure of Protected Health Information;

 

ii. Immediately terminate: (A) this Addendum; and (B) all of the provisions of
the Services Agreement that involve the use or disclosure of Protected Health
Information if Business Associate has breached a material term of this Addendum
and cure is not possible; or

 

iii. If neither termination nor cure are feasible, Covered Entity shall report
the violation to the Secretary.

 

(c) Effect of Termination.

 

i. Except as provided in paragraph ii. of this Section 6.c., upon termination of
this Addendum, for any reason, Business Associate shall return or destroy all
Protected Health Information received from Covered Entity, or created or
received by Business Associate on behalf of Covered Entity. This provision shall
apply to Protected Health Information that is in the possession of
subcontractors or agents of Business Associate. Business Associate shall retain
no copies of the Protected Health Information.

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ii. In the event that Business Associate determines that returning or destroying
the Protected Health Information is infeasible, Business Associate shall provide
to Covered Entity notification of the conditions that make return or destruction
infeasible. Upon mutual agreement of the parties that return or destruction of
Protected Health Information is infeasible, Business Associate shall extend the
protections of this Addendum to such Protected Health Information and limit
further uses and disclosures of such Protected Health Information to those
purposes that make the return or destruction infeasible, for so long as Business
Associate maintains such Protected Health Information.

 

7. Electronic Transaction Standards.

 

(a) Compliance with HIPAA Standards. When providing its services and/or
products, Business Associate shall comply with all applicable HIPAA standards
and requirements (including, without limitation, those specified in 45 CFR Part
162) with respect to the transmission of health information in electronic form
in connection with any transaction for which the Secretary has adopted a
standard under HIPAA (“Covered Transactions”).

 

(b) Agents and Subcontractors. Business Associate shall require all of its
agents and subcontractors (if any) who assist Business Associate in providing
its services and/or products to comply with all applicable requirements of
HIPAA, including without limitation, compliance with 45 CFR Part 162.

 

8. Miscellaneous.

 

(a) Regulatory References. A reference in this Addendum to a section in the
Privacy Rule means the section as in effect or as amended.

 

(b) Amendment. The Parties agree to take such action as is necessary to amend
the Services Agreement from time to time as is necessary for Covered Entity to
comply with the requirements of the Privacy Rule and HIPAA.

 

(c) Survival. The respective rights and obligations of Business Associate under
Section 6.c. of this Addendum shall survive the termination of the Services
Agreement.

 

(d) Interpretation. Any ambiguity in this Addendum shall be resolved to permit
Covered Entity to comply with the Privacy Rule.

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(e) Miscellaneous. The terms of this Addendum are hereby incorporated into the
Services Agreement. Except as otherwise set forth in Section 8.d. of this
Addendum, in the event of a conflict between the terms of this Addendum and the
terms of the Services Agreement, the terms of this Addendum shall prevail. The
terms of the Agreement which are not modified by this Addendum shall remain in
full force and effect in accordance with the terms thereof. The Services
Agreement together with this Addendum constitutes the entire agreement between
the parties with respect to the subject matter contained herein. This Addendum
may be executed in counterparts, each of which when taken together shall
constitute one original.

 

IN WITNESS WHEREOF, the parties have executed this Addendum as of the date set
forth above.

 

CALIFORNIA RADIATION THERAPY MANAGEMENT SERVICES, INC.

 

By:  

/s/ Daniel E. Dosoretz

--------------------------------------------------------------------------------

Name:   Daniel E. Dosoretz, M.D. Title:   President

 

21ST CENTURY ONCOLOGY OF CALIFORNIA, A MEDICAL CORPORATION

By:  

/s/ Michael J. Katin

--------------------------------------------------------------------------------

Name:   Michael J. Katin, M.D. Title:   President

--------------------------------------------------------------------------------

ADDENDUM TO ADMINISTRATIVE SERVICES AGREEMENT

 

This Addendum (the “Addendum”) is entered into as of January 1, 2004, by and
between CALIFORNIA RADIATION THERAPY MANAGEMENT SERVICES, INC., a California
corporation (“MANAGEMENT SERVICES”) and 21st CENTURY ONCOLOGY OF CALIFORNIA, A
MEDICAL CORPORATION, a California medical corporation (the “PC”). This Addendum
amends Section 3.1 of the Administrative Services Agreement dated August 1, 2003
between the parties (the “Agreement”). From and after the date hereof, Section
3.1 shall read as follows:

 

3.1. Service Fee. For the services to be provided hereunder by MANAGEMENT
SERVICES, the PC shall pay to MANAGEMENT SERVICES a monthly Service Fee of
$21,667.00. The parties agree that the Service Fee represents the fair market
value of the services provided by MANAGEMENT SERVICES hereunder and that the
parties shall meet annually to reevaluate the value of services provided by
MANAGEMENT SERVICES and shall establish the fair market value thereof for
purposes of this Section 3.1.

 

Accepted:

 

CALIFORNIA RADIATION THERAPY

MANAGEMENT SERVICES, INC.

    By:  

/s/ David Koeninger

--------------------------------------------------------------------------------

        David Koeninger         Vice President and CFO

Accepted:

 

21st CENTURY ONCOLOGY OF

CALIFORNIA, A MEDICAL

CORPORATION

   

By:

 

/s/ Daniel E. Dosoretz

--------------------------------------------------------------------------------

        Daniel E. Dosoretz, M.D.         Vice President

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ADDENDUM TO ADMINISTRATIVE SERVICES AGREEMENT

 

This Addendum (the “Addendum”) is entered into as of January 1, 2005, by and
between CALIFORNIA RADIATION THERAPY MANAGEMENT SERVICES, INC., a California
corporation (“MANAGEMENT SERVICES”) and 21st CENTURY ONCOLOGY OF CALIFORNIA, A
MEDICAL CORPORATION, a California medical corporation (the “PC”). This Addendum
amends Section 3.1 of the Administrative Services Agreement dated August 1, 2003
between the parties (the “Agreement”) to adjust the monthly Service Fee of
$21,666.67 paid in 2004 to a monthly Service Fee of $39,583.33 and replaces the
Addendum of that same Section dated January 1, 2004.

 

From and after the date hereof, Section 3.1 shall read as follows:

 

3.1. Service Fee. For the services to be provided hereunder by MANAGEMENT
SERVICES, the PC shall pay to MANAGEMENT SERVICES a monthly Service Fee of
$39,583.33. The parties agree that the Service Fee represents the fair market
value of the services provided by MANAGEMENT SERVICES hereunder and that the
parties shall meet annually to reevaluate the value of services provided by
MANAGEMENT SERVICES and shall establish the fair market value thereof for
purposes of this Section 3.1.

 

Accepted:

  CALIFORNIA RADIATION THERAPY
MANAGEMENT SERVICES, INC.    

By:

 

/s/ David Koeninger

--------------------------------------------------------------------------------

        David Koeninger         Vice President and CFO

Accepted:

  21st CENTURY ONCOLOGY OF CALIFORNIA,
A MEDICAL CORPORATION    

By:

 

/s/ Daniel E. Dosoretz

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        Daniel E. Dosoretz, M.D.         Vice President