Exhibit 10.55


 


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

  
	
   

  	
   

  	
   

  	
  Daniel E. Dosoretz, M.D.

  Vice President

  



 


1

















 


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

  



 


2














 


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:


 


3

















 


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.


 


4

















 


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 ate 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.


 


5

















 


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,
Scheduling, 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,


 


6

















 


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).


 


7

















 


(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.


 


8

















 


(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.


 


9

















 


(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.


 


10














 


(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


 


11

















 


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:


 


12

















 


(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 patty
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;


 


13

















 


(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.


 


14

















 


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 ail 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 inclined 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).


 


15

















 


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


 


16

















 


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


 


17

















 


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


 


18

















 


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 patty 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


 


19

















 


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”)


 


20

















 


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 patties 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.


 


21














 


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

  



 


22

















 


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 [Employee’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 hi 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


 


23

















 


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.


 


24

















 


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.


 


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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 pennttted 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 amendments) 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.


 


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(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) Request 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 necessaiy
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 Coveted 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

  	
   

  
	
   

  	
   

  	
   

  
	
  2IST CENTURY ONCOLOGY OF CALIFORNIA, A MEDICAL
  CORPORATION

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ Michael J. Katin

  	
   

  
	
  Name:

  	
  Michael J. Katin, M.D. 

  	
   

  
	
  Title:

  	
  President

  	
   

  



 


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