EMPLOYMENT AGREEMENT
--------------------
AGREEMENT dated December 29, 2000 by and between DIALYSIS CORPORATION OF
AMERICA, a Florida corporation (the "Company"), and XXXXXXX X. XXXXXXX (the
"Executive").
W I T N E S S E T H:
WHEREAS, the Executive has been employed by the Company since November,
1998, and has been actively involved in its management, operations, and
performance of services, and the Company desires to continue the employ of the
Executive upon the terms and conditions hereinafter set forth; and
WHEREAS, the Company and the Executive desire to set forth in writing the
terms and conditions of their agreements and understandings with respect to the
Executive's employment by the Company.
NOW, THEREFORE, in consideration of the premises and the mutual and
dependant promises contained herein, and the parties intending to be legally
bound, the Company and the Executive hereby agree to the following terms and
conditions:
1. EMPLOYMENT
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The Company hereby employs the Executive, and the Executive hereby accepts
employment by the Company, upon all the terms and conditions of this Agreement.
2. TERM
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Subject to earlier termination as provided in Section 9, this Agreement
shall be for five (5) years commencing on January 1, 2001 and ending December
31, 2005 (the "Employment Term").
3. EXECUTIVE'S REPRESENTATIONS AND WARRANTIES
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The Executive represents and warrants to the Company that he is free to
accept employment with the Company as contemplated herein and has no other
written or oral obligations or commitments of any kind or nature which would
in any way interfere with his acceptance of employment pursuant to the terms
hereof or the full performance of his obligations under this Agreement or the
exercise of his best efforts in his employment.
4. DUTIES AND EXTENT OF SERVICES
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The Executive shall be employed as the Company's President, and shall
report directly to the Chief Executive Officer of the Company. The Executive
shall be involved with, responsible for and oversee all of the Company's
operations, and perform such other duties and responsibilities as may be
offered to the Executive from time to time commensurate with his title and
position as described in this Section 4, by the Company's board of directors
or Chief Executive Officer. The Executive agrees to devote in good faith his
full time, skill, attention and energy exclusively to the Company, and shall
use his best efforts to be loyal and faithful at all times, and to exercise
his talents and capabilities toward the interests and operations of the
Company, and agrees to travel to the extent necessary to perform such duties
and responsibilities. It shall not be considered a violation of the foregoing
for the Executive to provide assistance and services to charitable, industry
or community organizations, boards and committees, and manage Executive's
personal investments, so long as such activities do not conflict or
interfere with Executive's performance of his duties under this Agreement.
The Executive's office shall be located at 00 Xxxxxx Xxxxxx, Xxxxxxx, XX 00000,
or other location as may be mutually agreed upon. The Executive agrees not to
enter into any other employment agreement during the Employment Term.
5. COMPENSATION
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During the first year of the Employment Term, the Company will compensate
the Executive for the services to be rendered pursuant to this Agreement with
a salary at the rate of $120,000 ("Base Rate"), payable in accordance with the
Company's normal payroll procedures. For each of the second and third years
of the Term, the Executive's compensation shall be the Base Rate increased by
a minimum of $10,000 per year; and for the two years remaining in the Term,
the Executive's compensation shall be the Base Rate as adjusted in the prior
years, increased by either three (3%) percent of the pre-tax profits (as
determined by the Company's accountants using generally accepted accounting
principles) for that year of the Term, or $10,000, whichever is less. Salary
for a portion of any period will be pro rated. All sums payable hereunder
shall be reduced by all federal, state, local and other withholding and similar
taxes and payments required to be withheld by the Company by applicable law.
6. FRINGE BENEFITS AND EXPENSES
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A. The Executive Plans. The Executive shall be eligible (subject to the
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terms and conditions of particular plans and programs) to participate in such
medical, hospitalization, group health, accident, disability and life insurance
programs and plans, such 401(k) plans, profit sharing, stock option, incentive
compensation and stock purchase plans and such other employee benefit programs
to the same extent such plans and programs are made generally available by the
Company to all of its other similarly-situated executive employees.
B. Other Expenses. The Company shall reimburse the Executive for his
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reasonable out-of-pocket costs and expenses incurred in connection with the
performance of his duties and responsibilities hereunder to the earlier of
the expiration of the Employment Term or termination of employment under
Section 9, subject to the submission by the Executive of appropriate invoices,
receipts and other supporting documentation.
7. VACATIONS
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The Executive shall be entitled to normal vacation taken by other members
of senior management during each year of the Employment Term, during which
vacation periods the Executive's compensation shall be paid in full. The
Executive shall not be entitled to be compensated for any unused vacation
during any year of the Employment Term or upon termination of this Employment
Agreement. The periods during which the Executive will be absent from work
shall be determined by the Executive taking into account the needs of the
Company's business.
8. DISABILITY
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In the event of the Executive's physical or mental disability he shall
receive benefits as are available from the Company's currently existing
standard disability plan. The Executive's physical or mental disability shall
not be considered a default under the terms of this Agreement, provided,
however, the Company, after 13 consecutive weeks of disability may determine
the extent of the disability and its continuance and upon its determination
that it must replace the Executive based upon the disability, upon such
replacement this Agreement shall terminate. See Section 9C, below.
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9. TERMINATION OF EMPLOYMENT
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Notwithstanding any provisions of this Agreement to the contrary, the
Executive's employment may be terminated upon the occurrence of any of the
following events:
A. Executive's death;
B. By the Company, "for cause," which for purposes of this Employment
Agreement include: (i) conviction for fraud or criminal conduct (other than
conviction of, or a plea of guilty to, a minor misdemeanor or traffic
violation); (ii) habitual drunkenness or drug addiction; (iii) embezzlement;
(iv) sanctions against the Executive in his capacity as an employee of the
Company by regulatory agencies or against the Company because of wrongful
acts or conduct of the Executive; (v) material breach or default by the
Executive of any of the terms or conditions of this Agreement, including the
Executive's failure to perform the duties and services required under this
Agreement, particularly as required in Section 4, and the continuation of such
breach, default, or failure to perform by the Executive for a period of seven
(7) days following the date of receipt of written notice from the Company
specifying the breach, default of, or failure to perform by the Executive;
(vi) dishonesty of the Executive; or (vii) the resignation or quitting of the
Executive, other than as provided in subparagraph D below, prior to the
expiration of the Employment Term (in this last event, the Executive's
employment shall be deemed terminated "for cause" on the date that he resigns
or quits);
C. By the Company, upon Executive's incapacity or inability to further
perform his services as contemplated in this Agreement for a period of no less
than 13 consecutive weeks because the Executive's physical or mental health
shall have become impaired so as to make it impossible or impractical for the
Executive to fully perform the duties and responsibilities contemplated for the
Executive under this Agreement;
D. By the Executive, 30 days following a material breach by the Company of
its obligations under this Agreement that is not cured within thirty (30) days
following receipt of written notice from the Executive specifying such breach.
Upon termination of employment under subparagraphs A or C, the Company
shall be required to pay the Executive or his estate, as the case may be, all
compensation as per Section 5 to the date of such termination and severance pay
equal to three (3) months of his then salary. If termination is based upon
subparagraph D, the above payments, except the severance payment, shall be an
amount equal to the greater of (i) six (6) months of Executive's then
compensation as per Section 5, or (ii) the Executive's compensation as per
Section 5 during any remaining portion of the original Employment Term. If
termination is based upon subparagraph B, the only payments to Executive shall
be compensation as per Section 5 to the date of termination, and expenses as
provided below. Executive's rights under the Company's benefit plans shall be
determined under the provisions of those plans; and in all occurrences of
termination, all expenses as provided for in Section 6B hereunder shall be paid
to the Executive.
10. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
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A. Confidential Information. The Executive acknowledges that he has been
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informed that it is the policy of the Company to maintain as secret and
confidential all non-public information relating to (i) the financial
condition, businesses and interests of the Company and its affiliates; (ii)
the systems, know-how (means all factual knowledge and information which gives
to the one acquiring it an ability to produce and market something which one
otherwise would not have known how to produce and market with the same accuracy
or precision necessary for commercial success), products, services, costs,
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inventions, patents, patent applications, formulae, research and development
procedures, notes and results, computer software programs, planning and
development of business and services, and/or programs, methods, methodologies,
manuals, lists, manner and method of operations, and other trade secrets
heretofore or hereafter acquired, sold, developed and/or used by the Company
and its affiliates; (iii) data, plans and projections regarding the locations,
development and expansion of existing and proposed facilities, market surveys,
studies and analyses; (iv) information concerning the identities, locations
and qualifications of professionals and other Third Parties (defined below)
presently or prospectively to be retained or employed by the Company; (v)
information concerning the identities, locations, prices, costs, and other
terms of dealings with referral and reimbursement sources, suppliers,
providers, and supplier and provider organizations and entities, administra-
tive and accounting procedures and policies, and information about contractual
and other arrangements and affiliations with any of the foregoing; (vi)
medical, patient and personal records, existing and prospective patient lists,
names and addresses; (vii) statistical, financial cost and accounting data;
(viii) administrative operations and procedures; and (ix) all such similar
sensitive Company information, including those items referred to in subpara-
graph B (all such information being hereinafter collectively referred to as
"Confidential Information"); and the Executive further acknowledges that such
Confidential Information is of great value to the Company and its affiliates
and, in and by reason and as a result of the Executive's employment by the
Company, the Executive will be making use of, acquiring and/or adding to such
Confidential Information. Therefore, the Executive understands that it is
reasonably necessary to protect the Company's and its affiliates' trade
secrets, good will and business interests that the Executive agrees and
accordingly, the Executive does hereby agree, that the Executive will not,
directly or indirectly (except where authorized by the board of directors of
the Company for the benefit of the Company and/or its affiliate(s) and/or as
required in the course of his employment), during the Employment Term and for
a period of two (2) years thereafter divulge or disclose for any purpose
whatsoever to any person, firm, corporation or other entity, other than the
Company or its affiliates, (hereinafter referred to collectively as "Third
Parties"), or use or cause or authorize any Third Parties to use, any such
Confidential Information, except as otherwise required by law.
B. The Company's Materials. In accordance with the foregoing, the
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Executive agrees that (i) the Executive will at no time retain or remove from
the premises of the Company or its affiliates any such Confidential Information
as well as but not limited to any research and development materials, drawings,
notebooks, notes, reports, formulae, samples, prototypes, software programs or
discs or other containers of software, manuals, data, books, records, materials
or documents of any kind or description, whether in writing, audio, video or any
other format for any purpose unconnected with the strict performance of the
Executive's duties with the Company and (ii) upon the cessation or termination
of the Executive's employment with the Company for any reason, the Executive
shall forthwith deliver or cause to be delivered up to the Company any and all
research and development materials, drawings, notebooks, notes, reports,
formulae, software programs or discs or other containers of software, manuals,
data, books, records, materials and other documents and materials of any kind
or description, whether in writing, audio, video or any other format, in the
Executive's possession or under the Executive's control relating to any
Confidential Information or any property or information which is otherwise the
property of the Company or its affiliates.
11. COVENANT NOT TO COMPETE
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In view of the Confidential Information to be obtained by or disclosed to
the Executive, because of the know-how acquired and to be acquired by the
Executive, and as a material inducement to the Company to enter into this
Agreement, the Executive covenants and agrees that, so long as the Executive
is employed by the Company and for a period of one (1) year after the Executive
ceases for any reason to be employed by the Company, whether "for cause,"
expiration of the Employment Term, voluntarily or otherwise ("Restricted
Period"), provided in the event of any violation of this Section 11 the
Restricted
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Period shall be extended by a period of time equal to that period beginning
when the violation commenced and ending when the violation terminated, the
Executive will not engage in Restricted Activity as defined below; provided
further, that this covenant not to compete will not be applicable if the
Executive is unilaterally terminated by the Company without cause or due to
an uncured material breach of this Agreement by the Company.
"Restricted Activity" shall mean participation or involvement, direct or
indirect, whether by the Executive himself or with or through any Third
Parties, either as an officer, director principal, agent, joint venturor,
proprietor, shareholder (other than ownership of less than five (5%) percent
of the issued and outstanding stock of a public company), employee creditor,
independent contractor, subcontractor, administrator, consultant, advisor,
lender or investor, or otherwise, in or for any entity, trade or business
(other than for the Company, which term for purposes of this Section 11 means
and includes any and all of the Company's subsidiaries or affiliates) which
is engaged or to be engaged in operations or business or providing services,
in whole or in part, which is or is to be competitive with the operations
and/or business of, or with the services provided by, the Company in the
United States during the Restricted Period. In addition, Restricted Activity
shall include the prohibition of the Executive, directly or indirectly, whether
himself or with or through any other Third Parties, from (i) diverting business
from, or (ii) soliciting or enticing or endeavoring to entice away from or
causing to terminate a relationship with the Company any director, officer,
employee, contractor, reimbursement source, provider, supplier, insuror, or
other third-party payor of the Company.
12. PATENTS AND PROPRIETARY RIGHTS
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The parties agree that the Company shall have and be the owner of all
patents, patent applications and other proprietary rights in and to any
discovery, concept, idea or invention of any kind or nature, whether
patentable or not, including but not limited to processes, methods, formulas
and techniques, as well as improvements thereon, or know-how related thereto,
concerning anything in the present or prospective activities of the Company
made, developed or conceived by the Executive during the Employment Term,
whether or not during the hours of his employment or with the use of the
Company's name (hereinafter referred to as "Inventions"), and all records,
documents, notes and information, oral, in writing, or any other form,
including but not limited to disc, audio, tape or video, relating to such
Inventions shall be owned and be the property of the Company. The Company
and the Executive shall promptly and diligently prosecute patents, patent
applications, proprietary and other similar rights protecting any products
or processes developed pursuant to or during the Employment Term and do all
acts necessary for obtaining, sustaining, reissuing, defending or extending
any such patent, proprietary or similar right.
To the extent necessary, the Executive hereby assigns and agrees to assign
to the Company all of his rights to such Inventions and to applications for
United States and/or foreign Letters Patent granted upon such Inventions and
the Executive shall acknowledge and deliver to the Company, without charge to
the Company, any such written instruments and do such other acts as may be
necessary to vest the entire rights and title thereto to the Company.
To the extent a patent or similar right is obtainable only in the
Executive's name, the Executive agrees to assign exclusive world wide licenses
and rights to license the patent to the Company for no additional compensation.
The Executive shall inform the Company promptly and fully of such Inventions by
a written report, setting forth in detail the procedures employed and the
results achieved.
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13. THE COMPANY'S REMEDIES FOR BREACH OF SECTION 10, 11 AND 12
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The Executive covenants and agrees that if he shall violate or breach any
of his covenants or agreements provided for in Sections 10, 11 or 12 hereof,
the Company and/or its affiliates shall be entitled to an accounting and
repayment of all profits, compensation, commissions, remuneration or benefits
which the Executive, directly or indirectly, has realized or realizes as a
result of, growing out of or in connection with any such violation or breach.
In addition, in the event of a breach or violation or threatened or imminent
breach or violation of any provision of Sections 10, 11 or 12 hereof, the
Company and/or its affiliates shall be entitled to a temporary and permanent
injunction or any other appropriate decree of specific performance or equitable
relief, without posting of bond, from a court of competent jurisdiction in
order to prevent, prohibit or restrain any such breach or violation or
threatened or imminent breach or violation by the Executive, by his partners,
agents, representatives, servants, employers or employees, affiliates and/or
by any Third Parties. The Company shall be entitled to such injunctive or
other equitable relief in addition to any damages which are suffered. Resort
by the Company and/or its affiliates to such injunctive or other equitable
relief shall not be deemed to waive or to limit in any respect any other rights
or remedies which the Company or its affiliates may have with respect to such
breach or violation.
14. REASONABLENESS OF RESTRICTIONS
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A. Reasonableness. The Executive acknowledges that any breach or
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violation of Sections 10 through 13 hereof will cause irreparable injury and
damage and incalculable harm to the Company and its affiliates and that it
would be very difficult or impossible to measure the damages resulting from
any such breach or violation. The Executive further acknowledges that he has
carefully read and considered the provisions of Sections 10 through 13 hereof
and, having done so, agrees that the restrictions and remedies set forth in
such Sections (including, but not limited to, the time period, geographical
and types of restrictions imposed) are fair and reasonable and are reasonably
required for the protection of the business, trade secrets, interests and good
will of the Company and its affiliates.
B. Severability. The Executive understands and intends that each
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provision and restriction agreed to by him in Sections 10 through 13 hereof
shall be construed as separate and divisible from every other provision and
restriction and that, in the event that any one of the provisions of, or
restrictions in Sections 10 through 13 hereof shall be held to be invalid or
unenforceable, the remaining provisions thereof and restrictions therein shall
nevertheless continue to be valid and enforceable as though the invalid or
unenforceable provisions or restrictions had not been included therein, and
any one or more of such valid provisions and restrictions may be enforced in
whole or in part as the circumstances warrant. In the event that any such
provision relating to time period and/or geographical and/or type of restric-
tion shall be declared by a court of competent jurisdiction to exceed the
maximum or permissible time period, geographical area or type of restriction
such court deems reasonable and enforceable, said time period to become and
shall thereafter be the maximum time period and/or geographical restriction
and/or type of restriction which such court deems reasonable and enforceable.
C. Survivability. The restrictions, acknowledgements, covenants and
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agreements of the Executive set forth in Sections 10 through 14 of this
Agreement shall survive any termination of this Agreement (for any reason,
including expiration of the Employment Term) for the specific periods provided
in those Sections and in the absence of any specific periods, for a period of
one (1) year from termination of this Agreement.
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15. INDEPENDENT COUNSEL
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The Company and the Executive agree that each of them have been, or were
advised and fully understand that they are entitled to be represented by
independent legal counsel with respect to all matters contemplated herein,
from the commencement of negotiations at all times through the execution of
this Agreement.
16. LAW APPLICABLE
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This Agreement shall be governed by and construed pursuant to the laws of
the Commonwealth of Pennsylvania.
17. NOTICES
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All notices required or permitted to be given by either party hereunder
shall be in writing and mailed, return receipt requested, to the other party
addressed as follows:
A. If to the Executive:
Xxxxxxx X. Xxxxxxx
0000 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
With a copy to:
B. If the Company:
Dialysis Corporation of America
c/o Medicore, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx, CEO
With a copy to:
Jaffe Xxxxxxxx & Xxxx, LLC
000 Xxxxxxx Xxxxxx
Xxxxxxxxx Xxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxx, Esq.
Any notice mailed as provided above shall be deemed completed on the date
of the receipt.
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18. SUCCESSION
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This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective legal representatives, heirs, assignees
and/or successors in interest of any kind whatsoever; provided, however, by
reason of the special and unique nature of the services hereunder, the
Executive acknowledges and agrees that he cannot assign or delegate any of
his rights, duties, responsibilities or obligations hereunder to any other
person or entity.
19. ENTIRE AGREEMENT
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This Agreement constitutes the entire final agreement between the parties
with respect to, and supersedes any and all prior agreements between the
parties hereto, oral or written, concerning the subject matter hereof and may
not be amended, modified or terminated except in writing signed by the parties
hereto.
20. SEVERABILITY
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If any provision of this Agreement shall be held to be invalid or
unenforceable, and is not reformed by an arbitrator or a court of competent
jurisdiction, such invalidity or unenforceability shall attach only to such
provision and shall not in any way affect or render invalid or unenforceable
any other provision of this Agreement, and this Agreement shall be carried out
as if such invalid or unenforceable provision were not contained herein.
21. NO WAIVER
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A waiver of any breach or violation of any term, provision or covenant
contained herein shall not be deemed a continuing waiver or a waiver of any
future or past breach or violation. No oral waiver shall be binding.
22. ARBITRATION
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The Executive and the Company will submit to mandatory binding arbitration
any controversy or claim arising out of, or relating to, this Agreement or any
breach hereof, including without limitation any employment discrimination
dispute and the arbitrability of this Agreement; provided, however, that each
party will retain its right to, and shall not be prohibited, limited or in any
other way restricted from, seeking or obtaining equitable relief (such as
injunctive relief) from a court having jurisdiction over the parties. Any such
arbitration shall be conducted in Hackensack, New Jersey before a single
arbitrator in accordance with the employment dispute arbitration rules of the
American Arbitration Association then in effect, and judgment upon the
determination or award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. The arbitrator will have the authority to award
costs and expenses to the prevailing party.
23. COUNTERPARTS
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This Agreement may be executed in counterparts, each of which shall be an
original, but both of which together shall constitute one and the same
instrument.
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24. INDEMNITY OF THE EXECUTIVE
--------------------------
The Company shall indemnify and hold harmless the Executive from and
against any and all claims, judgments, fines, penalties, liabilities, losses,
costs and expenses (including reasonable attorneys' fees and costs) asserted
against or incurred by the Executive as a result of acts or omissions of the
Executive taken or made in the course of performing his duties and services
for the Company or by reason of the Executive acting or having acted as an
officer of the Company in situations provided in Article XXV of the Company's
By-Laws, even if later amended, and under Article IX(d) of the Company's
Articles of Incorporation, even if later amended, and, to the maximum extent
permitted by law, including Section 607.0850 of the Florida Business Corpora-
tion Act (including the advancement of expense provisions thereof); provided,
however that such indemnity shall not apply to acts or omissions of the
Executive which constitute willful misconduct, gross negligence, or which were
intended by the Executive to improperly personally benefit the Executive, or
were a violation of the criminal law, unless the Executive had reasonable cause
to believe his conduct was lawful or had no reasonable cause to believe his
conduct was unlawful.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands on the
day and year first above written.
DIALYSIS CORPORATION OF AMERICA
/s/ Xxxxxx X. Xxxxxxxx
By:-------------------------------------
XXXXXX X. XXXXXXXX, CEO
XXXXXXX X. XXXXXXX
/s/ Xxxxxxx X. Xxxxxxx
By:-------------------------------------
XXXXXXX X. XXXXXXX, President
