-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CxgMq6PSawJil9tA7kZeo70wi+5eo7J6rUFswMieVyeSh2glxrledTonJzbTvXsq 4vCe72X7mN9p8BWWGZoYgA== /in/edgar/work/20000821/0001028212-00-000041/0001028212-00-000041.txt : 20000922 0001028212-00-000041.hdr.sgml : 20000922 ACCESSION NUMBER: 0001028212-00-000041 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20000721 ITEM INFORMATION: FILED AS OF DATE: 20000821 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIALYSIS CORP OF AMERICA CENTRAL INDEX KEY: 0000201653 STANDARD INDUSTRIAL CLASSIFICATION: [8060 ] IRS NUMBER: 591757642 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-08527 FILM NUMBER: 706918 BUSINESS ADDRESS: STREET 1: 27 MILLER AVENUE CITY: LEMOYNE STATE: PA ZIP: 17043 BUSINESS PHONE: 7177306164 MAIL ADDRESS: STREET 1: 27 MILLER AVENUE CITY: LEMOYNE STATE: PA ZIP: 17043 8-K 1 0001.txt DCA FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) July 21, 2000 DIALYSIS CORPORATION OF AMERICA ------------------------------------------------------ (Exact name of registrant as specified in its charter) Florida 0-8527 59-1757642 - ---------------------------- ----------- ------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 27 Miller Avenue, Lemoyne, Pennsylvania 17043 ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (717) 730-6164 -------------- Item 5. Other Events On July 21, 2000, the Company entered into a Loan and Security Agreement with South Georgia Nephrology, P.C. ("SGN"), wholly owned by Dr. Andrew Queler, the medical director of our planned new dialysis facility in Georgia, to loan SGN up to $300,000 in periodic advances over an 18-month period to January 20, 2002, at an annual interest rate of 1% over prime. The loan is to provide SGN with working capital to establish and operate a medical practice and to purchase or lease real property and equipment necessary to operate a medical practice. The loan is evidenced by a promissory note requiring payments from the practice proceeds of SGN, defined as all the proceeds of the practice less base salaries and overhead. SGN many not re- borrow any amounts paid under the promissory note. The loan is secured by SGN's accounts receivable, fixtures, intangibles, furniture and equipment, as well as all of Dr. Queler's equity ownership of SGN. The parties simultane- ously entered into a Stock Transfer Restriction Agreement, restricting Dr. Queler from all transfer of his equity ownership of SGN, and automatically upon any transfer event, which term includes but is not limited to Dr. Queler becoming incompetent or permanently disabled to be unable to provide medical services to SGN, is disqualified from practicing medicine, or other- wise terminates his relationship with SGN, his SGN ownership is transferred to the next designated medical director for the Company's Georgia dialysis facility. The Company is holding Dr. Queler's equity interest in escrow under the Loan and Stock Transfer Restriction Agreements. No advance has been made under the Loan Agreement to date. The Company's Georgia facility is in its initial stages of construction. On August 9, 2000, the Company loaned to its parent, Medicore, Inc., $200,000 for 30 days at an annual interest rate of 10%. The parent had previously borrowed $2,000,000 at the same interest rate, which is due January 26, 2001. These funds were loaned by the parent to Linux Global Partners, Inc., a private holding company investing in Linux software companies, under the same terms as its borrowings from the Company. The parent has a pro rata security interest in the Linux software companies in which Linux is investing, and also holds an 8% equity interest in Linux Global Partners. Thomas K. Langbein, Chairman of the Board and CEO of the Company and Medicore, of which parent he is also the President, is one of the directors of Linux Global Partners. The proposed merger with MainStreet IPO.com Inc. ("MainStreet") has been terminated and will not proceed. In October, 1999, the Company entered into an Agreement and Plan of Merger ("Merger Agreement") with MainStreet, pursuant to which it was proposed to effect a merger, among other proposed transactions, resulting in the Company's operations being owned 100% by its parent, Medicore, Inc. (presently, Medicore owns 59% of the equity of the Company), the Company becoming a wholly-owned subsidiary of MainStreet, and the Company's shareholders receiving MainStreet common stock. These proposed transactions were subject to the approval of the Company's public minority shareholders. That approval could only be obtained through a proxy solicitation for a special meeting of shareholders. MainStreet filed a registration statement with the Securities and Exchange Commission ("SEC") on February 9, 2000, which included the Company's proxy statement. No solicitation could be effected until such time that Main- Street's registration statement would be declared effective by the SEC. The staff of the SEC provided extensive comments to MainStreet's registra- tion statement, including concerns as to regulatory issues relating to MainStreet's proposed operations. The Merger Agreement provided, among other factors, that the closing, which anticipated an effective registration and subsequent Company shareholder approval and satisfaction of all conditions of the Merger Agreement, would occur no later than May 31, 2000. Although the Company has been patient, too much time has elapsed without MainStreet's resolving its issues with the SEC, and without pursuing the initial amendment to its registration statement relating to the comments of the staff of the SEC, as well as the failure of certain of the conditions of the Merger Agreement, including, but not limited to, no material change in MainStreet's business, receipt of all consents and approvals of governmental authorities, and MainStreet's satisfying Nasdaq listing requirements. Accordingly, under the terms and conditions of the Merger Agreement, that Agreement and the proposed merger between the Company and MainStreet, and the ancillary proposed sale of the Company's assets to its parent, are terminated. It is anticipated that MainStreet will be filing a withdrawal of its registration statement relating to these now-terminated proposed transactions. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (a) Financial Statements of Businesses Acquired Not Applicable (b) Pro Forma Financial Information Not Applicable (c) Exhibits (10) Material Contracts 10.1 Loan and Security Agreement between South Georgia Nephrology, P.C. and the Company dated July 21, 2000. 10.2 Stock Transfer Restriction Agreement by and among South Georgia Nephrology, P.C., Dr. Andrew Queler, and the Company dated July 21, 2000. (99) Additional Exhibits (i) Promissory Note from Medicore, Inc. to the Company dated August 9, 2000. (ii) Press Release re: termination of the proposed merger between the Company and MainStreet IPO.com Inc. dated August 21, 2000. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. DIALYSIS CORPORATION OF AMERICA /s/ Stephen W. Everett By-------------------------------- STEPHEN W. EVERETT, President Dated: August 21, 2000 EXHIBIT INDEX (10) Material Contracts 10.1 Loan and Security Agreement between South Georgia Nephrology, P.C. and the company dated July 21, 2000. 10.2 Stock Transfer Restriction Agreement by and among South Georgia Nephrology, P.C., Dr. Andrew Queler, and the Company dated July 21, 2000. (99) Additional Exhibits (i) Promissory Note from Medicore, Inc. to the Company dated August 9, 2000. (ii) Press Release re: termination of proposed merger between the Company and MainStreet IPO.com Inc. dated August 21, 2000. EX-10.1 2 0002.txt LOAN AND SECURITY AGREEMENT 10.1 Loan and Security Agreement between South Georgia Nephrology, P.A. and the Company dated July 21, 2000. LOAN AND SECURITY AGREEMENT BETWEEN SOUTH GEORGIA NEPHROLOGY, P.C., A GEORGIA CORPORATION AND DIALYSIS CORPORATION OF AMERICA, INC., A FLORIDA CORPORATION DATED: July 21, 2000 LOAN AND SECURITY AGREEMENT This Loan and Security Agreement (the "Agreement") is entered into effective as of July 21, 2000 (the "Effective Date") by and between SOUTH GEORGIA NEPHROLOGY, P.C., a Georgia corporation ("Borrower") and DIALYSIS CORPORATION OF AMERICA, INC., a Florida corporation ("Lender"). R E C I T A L S --------------- A. Borrower is a Georgia professional corporation all of whose physician members are duly licensed and authorized to practice medicine in the State of Georgia. B. Lender is a Florida business corporation that is experienced in the provision of financing services for medical groups such as Borrower. C. Lender desires to provide financial assistance to Borrower in connection with the establishment and operation of a medical practice concentrating in Nephrology and the provision of working capital necessary to employ such physicians, and Borrower desires to receive such assistance, in the manner and on the terms and conditions set forth in this Agreement. A G R E E M E N T ----------------- NOW, THEREFORE, in consideration of the above recitals, the mutual covenants, conditions and other terms contained herein, and intending to be legally bound hereby, the parties hereto agree as follows: ARTICLE I AMOUNTS AND TERMS OF THE ADVANCES 1.1 The Advances. During the eighteen (18) month period (the "Advance ------------ Period") commencing on the Effective Date, Lender shall, upon the terms and conditions hereinafter set forth, make certain advances (the "Advances") to Borrower upon the request of Borrower, subject to the limitations set forth in Sections 1.2 and 1.3 below. 1.2 Aggregate Limitation on Advances. Lender shall not be obligated to -------------------------------- make any Advance under this Agreement if such Advance would cause the aggregate outstanding Advances extended to Borrower during the Advance period to exceed Three Hundred Thousand Dollars ($ 300, 000). 1.3 Reasonable Business Purposes. Advances shall be permitted pursuant ---------------------------- to this Agreement only for the following purposes: (a) to establish and operate a medical practice concentrating in Nephrology; (b) to provide the working capital necessary to employ such physicians from time to time; and (c) to purchase or lease such real property, equipment and supplies necessary to the operation of a medical practice. 1.4 Making the Advances. Each Advance shall be made upon at least ------------------- seventy-two (72) hours prior written notice from Borrower to Lender, specifying the date on which such Advance is requested to be made and the amount of such Advance. Within seventy-two (72) hours of the written notice, or on the date when the Advance is to be made, and upon fulfillment and the continued satisfaction of the applicable conditions set forth in Article II below, Lender shall tender the Advance to Borrower, in same day funds, at the address for Borrower referred to in Section 7.2 below. Each Advance made by Lender shall serve to reduce the total amount which Lender is obligated to advance under Section 1.2 above. 1.5 Interest. Interest shall accrue on a monthly basis on each Advance -------- made by Lender, at a rate equal to the lesser of the "Prime Rate" as published by the Wall Street Journal, plus one percent (1%) per annum or the maximum amount permitted by Georgia law, with interest calculated as of the date on which each Advance is made to Borrower. 1.6 Payments of Principal and Interest. Subject to the provisions set ---------------------------------- forth in Section 1.7 below, (a) interest shall accrue but not be paid during the Advance Period, and (b) principal and the accrued but unpaid interest shall be payable from Practice Proceeds. The term "Practice Proceeds" shall mean the amount calculated by subtracting physicians' base salaries, professional malpractice insurance costs and practice overhead costs from practice collections. In the event of a termination for any reason of the Employment Agreement executed this date between South Georgia Nephrology, P.C. and Andrew Queler or a Transfer Event triggering the transfer of Andrew Queler's shares of stock in South Georgia Nephrology, P.C. under the Stock Transfer Restriction Agreement also executed this date, Andrew Queler, personally and individually, his heirs and administrators, shall be relieved of all obligations under this Loan and Security Agreement including the obligation of repayment. Lender agrees to indemnify and hold harmless Andrew Queler, in his individual capacity, his heirs and administrators, from any demands to collect repayments pursuant to this Loan and Security Agreement. Indemnification shall include the defense of any claim for repayment as well as payment of any debt, obligation, compromise, judgment or renovation of said debt. 1.7 Prepayments. Any voluntary prepayments shall be treated as first ----------- reducing the amount of accrued but unpaid interest on previously extended Advances and thereafter, as a prepayment with respect to the then outstanding principal balance of such Advances. All such prepayments may be made in whole or in part without premium or penalty of any kind. Borrower may not re-borrow any amounts prepaid in accordance with the terms of this Agreement. 1.8 Promissory Note. Payment of principal and interest shall be in --------------- accordance with the terms and conditions of the Promissory Note (the "Note"), a copy of which is attached 2 hereto as Exhibit A and incorporated herein by this reference. The Note shall be executed by Borrower, shall evidence the indebtedness resulting from the Advances made by Lender to Borrower, and shall be delivered to Lender pursuant to Article II below. The last installment of principal and interest to be paid by Borrower hereunder shall be in an amount necessary to repay in full all Advances together with accrued interest on any and all principal amounts remaining unpaid under the Note. ARTICLE II CONDITIONS PRECEDENT TO MAKING THE ADVANCES The obligation of Lender to make the Advances pursuant to Article I above shall be subject to the following conditions precedent: (a) Lender shall have received this Agreement and the Note, each duly executed by Borrower, as appropriate, as of the Effective Date. (b) The representations, warranties and covenants contained in Article IV and Article V below are true and correct. (c) No event has occurred and is continuing which would constitute an event of default (as defined in Section 6.1 below) or would constitute an event of default but for the requirement that notice be given or time elapse or both. (d) Lender shall have received a UCC-1 financing statement, executed by Borrower as "Debtor" and naming Lender as the "Lender" with respect to the Security Interest, as hereinafter defined, granted by Borrower under the provisions of this Agreement. ARTICLE III SECURITY INTEREST 3.1 Security Interest. Borrower hereby creates and grants to Lender a ----------------- security interest (the "Security Interest") in the collateral described and referred to in Section 3.2 below to secure the performance of Borrower's obligations to Lender as set forth in this Agreement and the Note. 3.2 Collateral. The collateral in which the Security Interest is ---------- created shall include: (a) all present and future accounts receivable of Borrower from the Nephrology practice in Valdosta, the start-up of which is being financed under this Agreement, and the proceeds therefrom, and other rights of Borrower relating to the payment of money for services rendered by or on behalf of Borrower no matter how evidenced, all chattel paper, accounts, instruments and other writings evidencing any such right, and all goods repossessed or returned in connection therewith, including all proceeds from the sale or disposition of the foregoing; (b) all of Borrower's fixtures and appurtenances thereto; (c) such other goods, 3 general intangibles, contract rights, chattels, fixtures, medical equipment and other equipment (of every nature and description), furniture and personal property that is now owned or may hereafter be acquired by Borrower in connection with and for use in said Nephrology practice in Valdosta; and (d) the entire equity interest in Borrower's professional corporation and documents evidencing such interest, including all stock certificates (collectively, the "Collateral"). It is understood that no tangible or intangible personal or real property owned by Andrew Queler and/or his wife, Marta Queler, or their heirs (with the exception of Andrew Queler's equity interest in Borrower's professional corporation) shall serve as collateral in which the security interest is created hereunder. 3.3 Obligations Secured. The Security Interest created hereby secures ------------------- the following: (a) Payment of the indebtedness evidenced by the Note, and performance and discharge of each and every obligation, covenant and condition on Borrower's part to be performed under the Note, including any and all modifications, extensions, renewals or accords and satisfactions thereof. (b) Performance and discharge of each and every obligation, covenant and condition on Borrower's part to be performed under this Agreement. 3.4 Release of Security Interest. Upon satisfaction of all of Borrower's ---------------------------- obligations set forth in the Note and in this Agreement, Lender shall release the Security Interest in the Collateral. 3.5 Indemnification. Lender hereby agrees to execute any and all --------------- documents necessary to indemnify Andrew Queler, his wife Marta Queler, and their heirs and administrators from any and all actions brought by any individual, natural or corporate, against him or them personally for contribution of any portion of the loan repayments herein based on any theory of liability or obligation. This indemnification includes the payment of any claims, judgments, settlements or attorneys' fees incurred in connection with said demands for repayment. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BORROWER Borrower hereby represents and warrants as of the Effective Date, which representations and warranties shall be correct at all times during the term of this Agreement, as follows: (a) Borrower is a Georgia professional corporation, duly formed, validly existing and in good standing under the laws of the State of Georgia. 4 (b) The execution, delivery and performance by Borrower of this Agreement and the Note have been duly authorized by all necessary corporate action, and do not contravene any law or any contractual restrictions binding on or affecting Borrower. (c) This Agreement is, and the Note when delivered hereunder shall be, a legal, valid and binding obligation of Borrower enforceable against Borrower in accordance with their respective terms. (d) Borrower has full right and power to grant the Security interest contemplated hereunder, there are no presently existing security interests in the Collateral or any part thereof (except for other security interests that may exist in the name of Lender), and hereafter Borrower shall not grant additional security interests in the Collateral during the term of this Agreement without Lender's prior written consent. ARTICLE V AFFIRMATIVE COVENANTS OF BORROWER So long as the Note shall remain unpaid or Lender shall have any remaining outstanding unpaid balance hereunder, Borrower shall, unless Lender shall otherwise consent in writing: (a) Comply in all material respects with all applicable laws, rules and regulations; (b) Perform all of its obligations under this Agreement and under the Note when due and before any such obligations constitute an "Event of Default" as hereinafter defined; and (c) Use the proceeds from the Advances only in connection with the reasonable business purposes of Borrower as set forth in Section 1.3 above. ARTICLE VI EVENTS OF DEFAULT 6.1 Events of Default. As used in this Agreement, the term "Event of ----------------- Default" shall be any or all of the following: (a) The failure of Borrower to pay any principal or accrued interest then due and payable under the Note and any such failure shall remain unremedied for ten (10) days after written notice thereof shall have been given to Borrower by Lender; 5 (b) The failure of Borrower to perform or discharge any obligation, covenant or condition contained in this Agreement or in the Note on its part to be performed or discharged, and any such failure shall remain un- remedied for ten (10) days after written notice thereof shall have been given to Borrower, as appropriate, by Lender; (c) The representations and warranties of Borrower contained in Article IV above or the affirmative covenants of Borrower contained in Article V above fail to be correct at all times during the term of this Agreement; (d) Lender's Security interest in the Collateral shall become materially impaired or otherwise unenforceable; (e) The dissolution of Borrower; or (f) The termination without renewal or replacement of that certain Medical Director Agreement dated ____________, 2000 between Borrower and DCA of South Georgia, LLC for any reason whatsoever. 6.2 Effect of Default. Upon the occurrence of an Event of Default, ----------------- Lender may exercise any or all of its rights and remedies provided by the Uniform Commercial Code and/or other Georgia law related to commercial transactions or by this Section 6.2, or otherwise available to Lender at law or in equity. All rights and remedies of Lender shall be cumulative and may be exercised successively or concurrently and, without impairment of the Security Interest of Lender in the Collateral. Upon the occurrence and during the continuance of an Event of Default, Lender may also, upon written notice to Borrower: (a) Declare its obligations hereunder to make Advances to be terminated, whereupon the same shall forthwith terminate; (b) Declare all principal and any accrued interest remaining unpaid under the Note and all other amounts payable under this Agreement to be due and payable, whereupon the same shall become and be immediately due and payable, without demand, protest, presentment or further notice of any kind; and (c) Require Borrower to assign, transfer, distribute, grant, gift or otherwise turn over to an affiliate or other designee of Lender, all of the intangible assets owned by Borrower (including without limitation accounts receivable, equity interests, contract rights, going concern and related goodwill) in satisfaction of all of the amounts owed by Borrower to Lender pursuant to this Agreement. 6 ARTICLE VII MISCELLANEOUS 7.1 Amendments. No amendment or waiver of any provision of this ---------- Agreement or the Note, nor consent to any departure by Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by lender, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. 7.2 Notices. All notices which either party is required or may desire ------- to give to the other under or in conjunction with this agreement or the Note shall be in writing, and shall be deemed to have been duly given on the date of delivery if delivered in person to the party named below, or as of the date indicated on a return receipt or other evidence of delivery if delivered by certified or registered mail, postage prepaid, return receipt requested or by reputable overnight delivery service such as Federal Express, addressed as follows: If to Lender: Dialysis Corporation of America, Inc. 27 Miller Avenue, Suites 2 & 3 Lemoyne, PA 17043 Attention: Stephen W. Everett, President With a copy to: Lawrence E. Jaffe, Esq. 777 Terrace Avenue Hasbrouck Heights, NJ 07604 If to Borrower: South Georgia Nephrology, P.C. Attention: or to such other addresses or persons as may be designated by Lender or Borrower from time to time in accordance with the provisions of this Section 7.2. 7.3 No Waiver of Rights or Remedies. No failure or delay on the part ------------------------------- of Lender in exercising any right hereunder or under the note shall operate as a waiver hereof or thereof; nor shall any single or partial exercise of any right hereunder or under the Note preclude any other or further exercise of any other right. 7.4 Severability. In the event any provision or part of any provision ------------ of this Agreement or the Note are rendered invalid or unenforceable by the enactment of any applicable statute, regulation or ordinance, or are made or declared unenforceable by any court 7 of competent jurisdiction, the remaining parts or provisions of this Agreement or the Note shall continue in full force and effect. 7.5 Captions. Any captions to or headings of the articles, sections, -------- subsections, paragraphs or subparagraphs of this Agreement are solely for the convenience of the parties, are not a part of this Agreement, and shall not be used for the interpretation or determination of the validity of this agreement or any provision hereof. 7.6 Costs and Expenses. Borrower shall pay on demand all costs and ------------------ expenses, if any (including reasonable attorneys' fees and expenses), in connection with the enforcement of this Agreement and the Note. Lender shall pay on demand all costs and expenses, if any (including reasonable attorneys' fees and expenses), in connection with the enforcement of the payment of any Advance to Borrower by Lender under this Agreement, if such payment is wrongfully withheld. 7.7 Assignment. Borrower shall not assign any rights or delegate any ---------- duties under this Agreement without the prior written consent of Lender. Any unauthorized attempted assignment by Borrower shall be null and void and of no force and effect and shall constitute a material breach of this Agreement. Lender may assign this Agreement and the Note to any affiliate or other designee of Lender. All covenants, conditions and provisions of this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns. 7.8 Governing Law. This Agreement and the Note shall be construed in ------------- accordance with and governed by the laws of the State of Georgia. 7.9 Entire Agreement. Except as otherwise provided herein, this ---------------- Agreement and the Note supersede any and all other agreements, whether oral or written, between the parties with respect to the subject matter hereof, and there are no representations, covenants or undertakings other than those expressly set forth in this Agreement or the Note. IN WITNESS WHEREOF, the parties have executed this agreement effective as of the date first written above. SOUTH GEORGIA NEPHROLOGY, P.C. a Georgia corporation ("Borrower") /s/ Andrew Queler By: ------------------------------------ Its: 8 DIALYSIS CORPORATION OF AMERICA, INC. a Florida corporation ("Lender") /s/ Stephen W. Everett By: ------------------------------------ Its: President 9 EXHIBIT A TO LOAN AND SECURITY AGREEMENT PROMISSORY NOTE --------------- ($300,000) Maximum ----------------------- Principal Amount -----------------, 2000 FOR VALUE RECEIVED, the undersigned South Georgia Nephrology, P.C., a Georgia professional corporation ("Borrower"), hereby promises to pay to Dialysis Corporation of America, Inc., a Florida business corporation ("Lender"), the maximum principal amount of Three Hundred Thousand Dollars ($300,000) in accordance with this Promissory Note and that certain Loan and Security Agreement dated as of ______________, 2000, by and between Borrower and Lender (the "Loan and Security Agreement"), together with accrued interest on the unpaid balance of such amount. 1. Payment Terms ------------- (a) The maximum principal amount of Three Hundred Thousand Dollars ($300,000) to the extent Advanced (as that term is defined in the Loan and Security Agreement) by Lender to Borrower, together with accrued interest on such outstanding principal amount, shall be due and payable (subject to Section 1(b) below) as follows: (i) interest shall accrue but not be paid during the Advance Period, and (ii) principal and the accrued but unpaid interest shall be payable from Practice Proceeds. The term "Practice Proceeds" shall mean the amount calculated by subtracting physicians' base salaries and practice overhead costs from practice collections. (b) Interest shall accrue on a monthly basis on each Advance made by Lender to Borrower at a rate equal to the lesser of the "Prime Rate" as published by the Wall Street Journal, plus one percent (1%) per annum or the maximum amount permitted by Georgia law, with interest calculated as of the date on which each Advance is made to Borrower. Interest during any partial month shall accrue on a pro rata basis. (c) Both principal and interest shall be payable in lawful money of the United States of America in same day funds. 1 2. Advances and Payments. --------------------- (a) Each Advance made by Lender to Borrower pursuant to the Loan and Security Agreement and all payments made on account of principal and interest hereof shall be recorded and endorsed by Lender on the "Schedule of Advances and Payments" attached hereto as part of this Promissory Note. The failure by Lender to make any such record or endorsement shall in no way detract from or add to Borrower's obligations hereunder. (b) Any voluntary prepayments made by Borrower shall be credited first on any accrued but unpaid interest then due, and the remainder, if any, shall be credited on principal. (c) Borrower may not re-borrow any amounts prepaid in accordance with this Promissory Note. (d) Advances shall be permitted pursuant to the Loan and Security Agreement only for the following purposes: (a) to establish and operate a medical practice concentrating in Nephrology; (b) to provide the working capital necessary to employ such physicians from time to time; and (c) to purchase or lease such real property, equipment and supplies necessary to the operation of a medical practice. 3. Other Terms and Conditions. -------------------------- (a) Upon any default under the Loan and Security Agreement, the entire principal amount outstanding on this Promissory Note and accrued interest thereon shall at once become due and payable at the option of Lender. Lender may exercise this option to accelerate at any time that Borrower is in default hereunder, regardless of any prior forbearance. (b) Borrower shall pay all costs and expenses, including without limitation reasonable attorneys' fees, incurred by Lender in enforcing payment hereof. (c) This Promissory Note incorporates herein by reference the terms and conditions of the Loan and Security Agreement described above. The Loan and Security Agreement, among other things: (i) contains provisions for acceleration of the maturity of this Promissory Note upon the happening of certain stated events, and (ii) requires Borrower to assign, transfer, distribute, grant, gift or otherwise turn over to an affiliate or other designee of Lender, all of the intangible assets owned by Borrower (including without limitation accounts receivable, equity interests, contract rights, going concern and related 2 goodwill) in satisfaction of all of the amounts owed by Borrower to Lender pursuant to the Loan and Security Agreement and this Promissory Note. (d) Any default under this promissory Note shall constitute a default under the Loan and Security Agreement, and any default under the Loan and Security Agreement shall constitute a default under this promissory Note. (e) Payment of this Promissory Note is secured by and entitled to the benefit of the collateral described in the Loan and Security Agree- ment. (f) This Promissory Note may not be assigned by Borrower without the prior written consent of Lender. Lender may assign this Promissory Note and the Loan and Security Agreement to any affiliate or other designee of Lender. (g) This Promissory Note shall be governed by, and construed in accordance with, the laws of the State of Georgia. SOUTH GEORGIA NEPHROLOGY, P.C. a Georgia corporation ("Borrower") By: --------------------------------- Its:--------------------------------- 3 SCHEDULE OF ADVANCES AND PAYMENTS - -------------------------------------------------------------------------- Amount of Amount of Unpaid Amount of Principal Interest Principal Endorsed by Date Advance Prepaid Paid Balance Lender - -------------------------------------------------------------------------- 4 EX-10.2 3 0003.txt STOCK TRANSFER RESTRICTION AGREEMENT 10.2 Stock Transfer Restriction Agreement by and among South Georgia Nephrology, P.C., Dr. Andrew Queler, and the Company dated July 21, 2000. STOCK TRANSFER RESTRICTION AGREEMENT BY AND AMONG SOUTH GEORGIA NEPHROLOGY, P.C., A GEORGIA CORPORATION, DIALYSIS CORPORATION OF AMERICA, INC., A FLORIDA CORPORATION, AND ANDREW QUELER, M.D. DATED: July 21, 2000 STOCK TRANSFER RESTRICTION AGREEMENT This Stock Transfer Restriction Agreement (the "Agreement") is made and entered into as of July 21, 2000 (the "Effective Date"), by and among SOUTH GEORGIA NEPHROLOGY, P.C., a Georgia corporation ("Medical Group"), DIALYSIS CORPORATION OF AMERICA, INC., a Florida corporation ("DCA") and ANDREW QUELER, M.D. (the "Stockholder"). R E C I T A L S --------------- WHEREAS, the Stockholder is the sole holder of all of the issued and outstanding Medical Group common stock (the "Stock"); and WHEREAS, Medical Group and the Stockholder believe that is in the best interest of Medical Group to restrict the transferability of the Stock. A G R E E M E N T ----------------- NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, and intending to be legally bound hereby, the parties covenant and agree as follows: 1. Restrictions On Shares. Except as otherwise provided in this ---------------------- Agreement, the Stockholder shall not sell, assign, transfer, gift or pledge, whether voluntarily, involuntarily, by operation of law or otherwise, any interest in any of the shares of Stock that the Stockholder now owns or may hereafter acquire. In addition, the Stockholder shall not permit Medical Group to (a) authorize, approve or declare any dividend or other distribution with respect to the Stock or (b) issue additional Stock or other equity interests or options or rights thereto unless the recipient thereof duly executes a copy of this Agreement. 2. Automatic Transfer of Shares in Certain Events. ---------------------------------------------- (a) Transfer Events. By executing this Agreement, the Stockholder --------------- hereby agrees that all of the shares of Stock owned by the Stockholder (or held by any heir, personal representative, estate, successor or assignee of the Stockholder) shall be transferred, or deemed transferred, to the Designated Transferee (as defined below) immediately and without further action by the Stockholder upon the date of any of the following events (each a "Transfer Event"): (i) the Stockholder's date of death; (ii) the date the Stockholder is determined by a court of competent jurisdiction to be incompetent; (iii) the date the Stockholder becomes permanently disabled so as to be unable to render any professional services on behalf of Medical Group for a period of at least sixty (60) consecutive days; (iv) the date the Stockholder becomes disqualified, under applicable law, whether by loss of his or her license to practice medicine, or otherwise, to be a shareholder of Medical Group; (v) the date the Stockholder is convicted of any felony or any crime of moral turpitude, whether or not a felony; (vi) the date of termination or notice of intent to terminate, whichever first occurs, of the Medical Director Agreement ("MDA") of even date herewith between DCA of South Georgia, LLC and Medical Group; (vii) the date upon which any of the shares of Stock held by the Stockholder are transferred or attempted to be transferred voluntarily, involuntarily by operation of law or otherwise to any person who is not the Stockholder's immediate successor as the Medical Group's designated Medical Director under the MDA; (viii) the date upon which the Stockholder ceases to be Medical Group's designated Medical Director under the MDA; (ix) the date of termination, change, or material breach of the Employment Agreement of even date herewith between Medical Group and the Stockholder; or (x) the date of filing any petition for or other document that causes, or is intended to cause, a judicial, administrative, voluntary or involuntary dissolution of Medical Group. (b) Transfer of Stock. Immediately, upon the occurrence of a ----------------- Transfer Event, the Designated Transferee shall pay to the Stockholder a purchase price for the Stock transferred pursuant to this Section 2, in an amount equal to the stated par value of the Stock. Payment of the purchase price for the Stock shall be made to the Stockholder in cash or by certified or cashiers check. The time for payment of the purchase price for any Stock transferred hereunder shall be at 10:00 am on the first business day following receipt by the Designated Transferee of notice of such Transfer Event (provided, however, that in the absence of any such notice, the Designated Transferee shall, upon becoming aware of any such Transfer Event, promptly notify the Stockholder, Medical Group and DCA of such Transfer Event and tender to the Stockholder the purchase price for the Stock). Unless otherwise agreed upon by the 2 parties, the Designated Transferee shall tender the purchase price at the principal office of Medical Group. (c) Definition. For the purposes of this Agreement, the term ---------- "Designated Transferee" shall mean the individual then holding the position of designated Medical Director for Medical Group under the MDA, whether in an acting, interim or permanent capacity (provided that such Designated Transferee is permitted to hold the Stock pursuant to applicable Georgia law). (d) Deposit and Custody of Stock. DCA hereby acknowledges ---------------------------- receipt of stock certificate no. (the "Certificate") of Medical --------- Group, evidencing shares of the Stock of Medical Group, which stock -------- certificate has been delivered by the Stockholder upon execution hereof and has been duly endorsed by the Stockholder in blank. DCA agrees to hold such Certificate in trust for the benefit of the Designated Transferee. Upon the occurrence of a Transfer Event, DCA shall endorse the Certificate in the name of the Designated Transferee and shall release the Certificate to the Medical Group's secretary for cancellation by the secretary, for registration of the shares represented thereby in the name of the Designated Transferee on the books of Medical Group, and for issuance of a new certificate in the name of the Designated Transferee. (e) Deliveries by Designated Transferee. Notwithstanding anything ----------------------------------- to the contrary herein, release of the certificate by DCA to the secretary of Medical Group shall be contingent on DCA's prior or concurrent receipt of: (i) a stock transfer power executed by the Designated Transferee covering the Stock transferred to the Designated Transferee; (ii) issuance by Medical Group of a new stock certificate evidencing the Designated Transferee's ownership of the Stock in Medical Group; and (iii) a copy of this Agreement duly executed by the Designated Transferee substituting the Designated Transferee for the Stock- holder hereunder. 3. Other Matters. ------------- (a) Upon the occurrence of a Transfer Event, the Stockholder shall be disqualified as a stockholder of Medical Group, and shall immediately resign, or be deemed to have resigned, as a Director, as President and as any other officer of Medical Group. 3 (b) Upon the occurrence of a Transfer Event, the parties hereto or their personal representatives and assigns shall do all things and execute and deliver all papers as may be necessary to consummate the stock transfer, free and clear of all liens, security interests, claims and encumbrances with the exception of any security interest remaining under the Loan and Security Agreement of even date herewith between Medical Group and DCA. (c) After occurrence of a Transfer Event, the Stockholder, and any person other than the Designated Transferee who acquires the Stock, shall neither have nor exercise any right or privilege as a stockholder of Medical Group, including any right to receive any unallocated or undistributed dividend. 4. Legend on Certificates. Medical Group shall cause the following ---------------------- legend to be included on all certificates representing the Shares; THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF A STOCK TRANSFER RESTRICTION AGREEMENT BY AND AMONG THE STOCKHOLDER NAMED HEREIN, SOUTH GEORGIA NEPHROLOGY, P.C. AND DIALYSIS CORPORATION OF AMERICA, INC., DATED AS OF , 2000 (A COPY OF WHICH IS AVAILABLE UPON REQUEST, ----------- FREE OF CHARGE, FROM THE SECRETARY OF THE CORPORATION). NO TRANSFER OF THE SHARES REPRESENTED HEREBY OR SHARES ISSUED IN EXCHANGE THEREFORE SHALL BE VALID OR EFFECTIVE UNLESS AND UNTIL THE TERMS AND CONDITIONS OF SUCH STOCK TRANSFER RE- STRICTION AGREEMENT HAVE BEEN FULFILLED. All Stock that is subject to this Agreement and is issued to or held by the Stockholder after the date of this Agreement shall bear the same notice. 5. Notices. Any notices to be given hereunder by either party to the ------- other shall be deemed to be received by the intended recipient (a) when delivered personally, (b) the day following delivery to a nationally recognized overnight courier service with proof of delivery, or (c) three (3) days after mailing by certified mail, postage prepaid with return receipt requested, in each case addressed to the parties as set forth below: If to Medical Group: SOUTH GEORGIA NEPHROLOGY, P.C. Attention: 4 If to the Stockholder: ANDREW QUELER, M.D. If to DCA: DIALYSIS CORPORATION OF AMERICA, INC. 27 Miller Avenue, Suites 2 & 3 Lemoyne, PA 17043 Attn: Stephen W. Everett, President With a copy to: Lawrence E. Jaffe, Esq. 777 Terrace Avenue Hasbrouck Heights, NJ 07604 Any party may change the address for notice by notifying the other party, in writing, of the new address. 6. Successors. This Agreement shall be binding upon and shall inure to ---------- the benefit of the parties hereto, and their authorized successors or assigns. The rights of any party hereunder may not be assigned without the consent of the remaining parties hereto. 7. Additional Stockholders. Each holder of any of the capital stock of ----------------------- Medical Group or of any rights to acquire capital stock of Medical Group, including any holder of any warrant, option or other security convertible into or exchangeable for capital stock of Medical Group, shall execute a counterpart of this Agreement acknowledging that the restrictions contained herein shall apply to such stock or to such rights to acquire stock in Medical Group. 8. Third Party Beneficiary. The parties hereto acknowledge that the ----------------------- Designated Transferee, if and when he or she becomes a Designated Transferee, shall have standing to enforce the provisions of this Agreement. 9. Governing Law. This Agreement, the rights and obligations hereunder, ------------- and any claims or disputes relating thereto, shall be governed by and construed in accordance with the laws of the State of Georgia. 10. Entire Agreement and Amendments. All understandings and agreements ------------------------------- heretofore had between the parties hereto with respect to the transactions contemplated hereby are merged into this Agreement, and this Agreement reflects all the understandings of the parties with respect to such transactions. This Agreement cannot be modified, extended or amended except by written agreement signed by all of the parties hereto. 11. Arbitration. Any disputes arising under this Agreement or any ----------- breach of this Agreement, shall be determined by arbitration in the State of Georgia in accordance with the rules of the American Arbitration Association ("Association") then in effect, by a single 5 arbitrator selected by mutual agreement of the parties or, if the parties are unable to agree on an arbitrator, by the Association; provided that this paragraph shall not restrict the right of either party to institute a legal proceeding to enable such party to obtain temporary injunctive relief during the pendency of any such arbitration. A determination of the dispute by the arbitrator shall be final and binding on the parties to the extent permitted by law. The cost of the arbitration, other than attorneys' or other consultancy fees, shall be borne equally by the parties. 12. Corporate Authority. Medical Group and DCA are authorized to enter ------------------- into this Agreement by resolutions duly adopted by the Directors of the respective corporations. 13. Counterparts. This Agreement may be executed in one or more ------------ counterparts, each of which shall constitute an original Agreement, but all of which together shall constitute one and the same instrument. 14. Term of Agreement. This Agreement shall terminate on the later of ----------------- twelve (12) months from the effective date hereof or upon payment in full of the loan and termination of the Loan and Security Agreement of even date herewith between Medical Group and DCA. Provided that, in the event a Transfer Event as defined in Section 2(a) occurs after twelve months from the effective date hereof, the Stockholder shall be given a grace period of four (4) days to pay in full the principle and accumulated interest remaining on the loan between Medical Group and DCA. If the Stockholder fulfills the payment obligation within the grace period and has caused no material adverse financial consequences to DCA during the grace period, this Agreement will be deemed to have terminated on the date of the Transfer Event. IN WITNESS WHEREOF, the parties have executed this agreement as of the date first above written. SOUTH GEORGIA NEPHROLOGY, P.C. a Georgia corporation ("Medical Group") /s/ Andrew Queler By: --------------------------------------- Its: STOCKHOLDER: /s/ Andrew Queler --------------------------------------- Andrew Queler, M.D. DIALYSIS CORPORATION OF AMERICA, INC. a Florida corporation ("DCA") /s/ Stephen W. Everett By: -------------------------------------- Its: President EX-99.1 4 0004.txt PROMISSORY NOTE 99(i) Promissory Note from Medicore, Inc. to the Company dated August 9, 2000. PROMISSORY NOTE $200,000.00 August 9, 2000 FOR VALUE RECEIVED, the undersigned, Medicore, Inc., a Florida corporation (the "Borrower"), hereby promises to pay to the order of Dialysis Corporation of America, a Florida corporation and a 60%-owned subsidiary of the Borrower, or its successors and assigns (hereinafter, with any subsequent holder, the "Holder"), at its principal offices located at 27 Miller Street, Lemoyne, PA 17043, or at such other place or to such other party as the holder of this Promissory Note (the "Note") may from time to time designate in writing, the principal sum of Two Hundred Thousand Dollars ($200,000.00) together with interest on the principal balance outstanding from time to time at the fixed rate of ten percent (10%) per annum, computed daily. All payments hereunder shall be made in lawful currency of the United States and in immediately available funds. Interest shall be calculated on the basis of the actual number of days elapsed over a 360-day year. Unless sooner paid in full, the entire unpaid principal of this Note, together with all accrued, but unpaid, interest and all other fees, costs, and charges, if any, shall be due and payable in full on September 8, 2000 (the "Maturity Date"). No payments of principal or interest are required hereunder until the Maturity Date except as otherwise provided herein. If any amounts due under this Note are due on a day which is not a business day, then such amounts shall be due on the next following day which is a regular business day. Except as otherwise defined herein, all capitalized terms shall have the meanings ascribed to them in the Promissory Note between the Borrower and the Holder dated January 27, 2000 (the "Original Note"). This Note is subject to all the terms and conditions of the Original Note other than Section 1, "Terms of the Note and Payment," the Maturity Date of this Note being in lieu of any maturity date of the Original Note. Otherwise all the terms and provisions of the Original Note shall continue in full force and effect. IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, has duly executed this Note as of the day and year first above written. MEDICORE, INC. /s/ Thomas K. Langbein By:----------------------------------- THOMAS K. LANGBEIN, Chairman of the Board, CEO and President ACKNOWLEDGEMENT STATE OF NEW JERSEY ) : ss.: COUNTY OF BERGEN ) Before me personally appeared THOMAS K. LANGBEIN, as Chairman of the Board, CEO and President of MEDICORE, INC., a Florida corporation, to me well known and known to me to be the person described in and who executed the foregoing instrument, and acknowledged to and before me that he executed said instrument of the purposes therein expressed, on behalf of the corporation. WITNESS my had and official seal, this 9th day of August, 2000. /s/ Nancy A. Cox ------------------------------------- Notary Public, State of New Jersey My commission expires: march 6, 2005 [NOTARIAL SEAL] EX-99.2 5 0005.txt PRESS RELEASE 99(ii) Press Release re: termination of proposed merger between the Company and MainStreet IPO.com Inc. dated August 21, 2000. Press Release PROPOSED MERGER WITH MAINSTREET IPO.COM INC. IS CANCELLED Lemoyne, Pennsylvania, August 21, 2000 - Dialysis Corporation of America ("DCA") (Nasdaq SmallCap Market - DCAI) announces that its proposed merger with MainStreet IPO.com Inc. is terminated. The parties signed a Merger Agreement in October, 1999, and MainStreet filed a registration statement in February, 2000, which included DCA's proxy statement intended for the solicitation of its minority public shareholders relating to the proposed merger and ancillary proposed sale by DCA of substantially all of its assets to its parent, Medicore, Inc. The SEC provided extensive comments to MainStreet's registration statement, including certain regulatory issues. The Merger Agreement contemplated an effective MainStreet registration statement, the solicitation of DCA's minority public shareholders and their approval of the proposed merger with MainStreet and related sale of DCA assets to Medicore, all of which was to occur on or before May 31, 2000. The Agreement also contemplated satisfaction of a variety of conditions, which included, among others, no material change in MainStreet's proposed operations, receipt of consents and approvals of governmental authorities, and MainStreet satisfying Nasdaq listing requirements. Although the Company has exhibited patience as to the merger conditions, deadlines, and MainStreet's attempts at resolving the concerns of the SEC, the failure of these conditions and MainStreet's efforts has resulted in the termination of the proposed merger. DCA owns and operates free-standing kidney hemodialysis centers in Pennsyl- vania and New Jersey, with planned expansion into other states. Currently, two new dialysis facilities are under construction in Georgia and Ohio, with two additional dialysis centers in the planning stage to provide patients with their choice of a full range of quality in-center, acute, or at-home hemodialysis services. DCA has entered into two additional in-patient hospital dialysis services agreements, has expanded its patient base, and continues its negotiations with other physicians and hospitals for further development. This release contains forward-looking statements that are subject to risks and uncertainties, including but not limited to, certain delays beyond the Company's control with respect to future business events, regulation of dialysis operations, government rate determination for Medicare reimburse- ment, the highly competitive environment in the operation and acquisition of dialysis centers, the ability to develop additional dialysis facilities, whether patient bases of our facilities can expand to provide profitability and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. CONTACT: For more information, contact Thomas K. Langbein, CEO, Dialysis Corporation of America, 777 Terrace Avenue, Hasbrouck Heights, New Jersey 07604. Telephone No. (210) 288-8222. -----END PRIVACY-ENHANCED MESSAGE-----