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Exhibit 10.31
LEASE AGREEMENT FOR A GAMMA KNIFE UNIT
THIS AGREEMENT FOR A GAMMA KNIFE UNIT on June 3, 1999, (hereinafter,
referred to as the "Agreement") is entered into between GK Financing, LLC, a
California Limited Liability Company, (hereinafter referred to as "GKF"), and
Sunrise Hospital and Medical Center, LLC, d/b/a as Sunrise Hospital and Medical
Center, a Nevada corporation, (hereinafter referred to as "Medical Center").
R E C I T A L S
WHEREAS, Medical Center wants to lease a Leksell Stereotactic Gamma Unit
Manufactured by Elekta Instruments, Inc., (hereinafter referred to as the
"Equipment"); and
WHEREAS, GKF is willing to lease the Equipment which GKF has acquired
from Elekta Instruments, Inc., a Georgia corporation (hereinafter referred to as
"Elekta"), to Medical Center, pursuant to the terms and conditions of this
Agreement.
NOW, therefore, in consideration of the foregoing premises and the
promises contained herein, the parties hereto hereby agree as follows:
1. Execution of LGK Agreement by and between Medical Center and Elekta.
Medical Center agrees that simultaneously with the execution of this Agreement
it shall execute that certain LGK Agreement with Elekta, (hereinafter referred
to as the "LGK Agreement"), a copy of which is attached hereto as Exhibit A and
incorporated herein by this reference. Medical Center agrees to fulfill all of
its obligations under the LGK Agreement and acknowledges that GKF is a third
party beneficiary of the LGK Agreement. Medical Center shall fully indemnify and
hold harmless GKF in the event that GKF suffers any loss, damage, claim or
expense (including attorneys' fees) solely as a result of Medical Center's
breach or alleged breach of the LGK Agreement.
2. Delivery of the Equipment and Site preparation. GKF shall arrange to
have the Equipment delivered to Medical Center, at _____________(the "Site") in
coordination with Elekta. GKF shall exert its best faith efforts to expedite the
delivery of the Equipment in accordance with the terms and conditions of the
Purchase Agreement for the Equipment by and between GKF and Elekta.
Notwithstanding the preceding sentence, it is understood and agreed that GKF has
made no representations and warranties to Medical Center concerning actual
delivery dates or schedules for the Equipment at the Site.
Medical Center shall provide a safe, convenient and properly prepared
Site, at its own expense, in accordance with all of the Equipment manufacturer's
(Elekta's) guidelines, specifications, technical instruments and Site Planning
Criteria (which Site Planning Criteria are attached hereto as
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Exhibit B and incorporated herein by this reference), which criteria shall
include Elekta's estimated delivery schedule when and as received by GKF, on
Medical Center controlled property (The "Site") for the proper performance of
Gamma Knife procedures. Site location shall be acceptable to GKF. Medical Center
shall prepare at its sole cost and expense the requisite site plans and
specifications and shall submit them to Elekta and GKF for approval. Medical
Center shall obtain, in a timely manner, a User License from the Nuclear
Regulatory Commission and/or appropriate state agency authorizing it to take
possession of the Cobalt Supply and shall obtain such other licenses, permits,
approvals, consents and authorizations, which may be required by local
governmental or other regulatory agencies for the Site, its preparation, the
charging of the Equipment with its Cobalt Supply, the conduct of Acceptance
tests, and the use of the Equipment all as more fully set forth in Article 2.1
of the LGK Agreement.
3. Commencement of Term. The Term (hereinafter defined) of this
Agreement shall commence upon the performance of the first clinical Gamma Knife
procedure at the Site (the "Commencement Date"). Medical Center shall become
liable to GKF for the payments referred to in Paragraph 6 herein below upon the
Commencement Date.
4. Costs of Site Preparation; Costs of Installation. Medical Center's
obligations shall include preparation of plans and specifications for the
construction and preparation of the Site in such form as will result in the
Site, when constructed in accordance with such plans and specifications, being
in full compliance with Elekta's Site Planning Criteria. Medical Center shall at
its own expense and risk, prepare, construct and make ready the Site as
necessary, for the installation of the Equipment, including, but not limited to,
providing any temporary and/or permanent shielding for the charging of the
equipment and its use, selecting and preparing a proper foundation for the
Equipment and for such shielding and walls, as well as proper alignment of the
Site and wiring. Medical Center shall be financially responsible for the
positioning of the Equipment on its foundation at the Site.
Medical Center shall also at its own expense select, purchase and
install all radiation monitoring equipment and devices, safety circuits and
radiation warning signs needed for the Equipment at the Site, according to all
applicable federal, state and local laws, regulations, recommendations or
custom.
Upon completion of the Site, Medical Center shall warrant that the Site
will be safe and suitable for its use of the Equipment. Medical Center shall
fully indemnify and hold harmless GKF from any and all loss, liability, damage,
expense or claim (including attorneys' fees) which GKF may suffer and incur and
which relate to the Site and the Equipment's positioning thereon.
Medical Center shall be liable to GKF for any damage to the Equipment
caused by (a) defects in construction of the Site or defects in the positioning
of the Equipment at the Site; (b) defects arising out of materials or parts
provided, modified or designed by Medical Center with respect to the Site; or
(c) negligent or intentional acts of omission or commission by Medical Center or
any of its officers, agents, physicians, and employees in connection with the
Site preparation or operation of the Equipment at the Site.
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Medical Center warrants that it shall utilize its best efforts to
fulfill on an expeditious basis its obligations under this Paragraph 4. Medical
Center further warrants that it shall on a regular basis keep GKF informed of
Medical Center's progress in fulfilling its obligations pursuant to this
Paragraph 4. Should Medical Center not have all site preparations completed by
the delivery date specified by a separate agreement plus a sixty (60) day grace
period such that the site is acceptable for positioning and installation of the
equipment, Medical Center shall reimburse GKF at an interest rate of Bank of
America's prime rate plus 2% on GKF's equipment cost until the site is prepared
to allow positioning and installation of the equipment.
5. Term of the Equipment. GKF agrees to provide to Medical Center the
Equipment pursuant to the terms of this Agreement, for a term of ten (10) years
from the Commencement Date as described in Paragraph 3 herein above (the
"Term"), unless terminated earlier as provided herein.
6. Per Procedure Payments. Medical Center shall pay to GKF a per
procedure payment as specified in Exhibit B for the use of the Equipment. A
procedure shall be defined as a single patient treatment session that may
include one or more isocenters during that session. Medical Center shall be
billed on the fifteenth (15th) and the last day of each month for the actual
number of procedures performed during the first and second half of the month,
respectively. Medical Center shall pay the procedures invoiced within thirty
(30) days after being invoiced. Interest shall begin to accrue at the rate of
1-1/2% per month on all invoices remaining unpaid after 45 days.
(a) If the "Reimbursement Rate" in effect on any "Reset Date" is *
greater or less than the "Base Rate," Medical Center shall inform GKF in writing
within thirty (30) days after the applicable Reset Date and shall provide GKF
with the information used in calculating such Reimbursement Rate. Within thirty
(30) days after GKF's receipt of such notice, the parties shall meet to
renegotiate in good faith the per procedure payments payable by Medical Center
under this Agreement.
(b) In determining the renegotiated per procedure payment any reduction
or increase thereto may or may not be in proportion to the reduction or increase
to the Reimbursement Rate. Furthermore, any reduction to the per procedure
payment will be calculated to provide Medical Center with Operating Income
estimated at a break even level as a result of such reduction; provided that no
per procedure payment shall be imposed if it would result in negative Operating
Income to GKF in accordance with subsection (c) below. Medical Center shall
permit GKF to inspect Medical Center's books and records pertaining to the
Equipment in order to verify such Operating Income.
(c) If the per procedure payment proposed by Medical Center would result
in negative "Operating Income" (as defined below) to GKF, then, GKF shall have
no recourse to arbitration as provided in this Section 6. In such event, this
Agreement shall remain unchanged and in full force and effect. GKF shall permit
Medical Center to inspect GKF's books and records pertaining to the Equipment in
order to verify such Operating Income.
(d) If the per procedure payment proposed by Medical Center would not
result in GKF incurring negative Operating Income, but the parties are unable to
agree in good faith on a renegotiated per procedure payment, then, GKF and
Medical Center shall jointly appoint an arbitrator who shall have not less than
ten (10) years experience in medical equipment financing, in
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good standing with the American Arbitration Association or other comparable
organization, and who shall have no prior relationship, attorney/client or
otherwise, with any of the parties. Such arbitrator shall review the information
presented by both parties and shall render a decision within thirty (30) days of
his of her appointment. In rendering a decision, the arbitrator shall be bound
by the guidelines set forth in this Section, including, without limitation, the
parameters for renegotiated per procedure payments as set forth in subsection
(a), (b), (c), above and this subsection (d). The arbitrator's decision shall be
binding upon the parties and non-appealable. The fees and expenses of the
arbitrator shall be shared equally between the parties. The foregoing
arbitration procedure shall apply only to disagreements arising from this
subsection (d) and not to any other disputes or disagreements arising from this
Agreement.
(e) If the parties mutually agree on a renegotiated per procedure
payment or if a renegotiated per procedure payment is determined by the
arbitrator as set forth above, then such renegotiated per procedure payment
shall become effective on the date that is six (6) months following the
applicable Reset Date, and Exhibit B hereto shall be deemed automatically
amended as of such date.
(f) DEFINITION OF TERMS: As used herein, (i) the "Reimbursement Rate"
shall mean the average technical component reimbursement received by Medical
Center from all payor sources in effect as of any Reset Date; (ii) the "Base
Rate" shall mean the average technical component reimbursement received by
Medical Center from all payor sources in effect on the date which is one year
after the Commencement Date; (iii) the "Reset Date" shall mean the date which is
two (2) years after the Commencement Date and each anniversary date thereafter;
and (iv) "Operating Income" with respect to either party shall mean the revenues
generated by such party from the Equipment less such party's corresponding
direct operating expenses related to the Equipment, including, without
limitation, applicable interest and depreciation expenses on the Equipment and
Site improvements, but excluding physician professional fees and direct or
indirect administrative overhead expenses.
As a means to permit Medical Center to perform charity care for persons
who require Gamma Knife procedures, who are not covered by Medicare, Medicaid or
private insurance programs (whether indemnity, preferred provider, health
maintenance organization, etc.) and who do not have the means to pay for such
procedures based upon state adopted standards of indigency, GKF shall waive the
per procedure payment described in this paragraph 6 for * Gamma Knife procedure
for each * Gamma Knife procedures performed under this Agreement by Medical
Center for which a per procedure payment is made to GKF in the manner describe
herein. Medical Center shall be solely responsible (and GKF shall not in any
manner be or become responsible) to determine (a) whether any person described
herein requires a Gamma Knife procedure, (b) who shall receive a Gamma Knife
procedure hereunder if more than one (1) person described herein requires a
Gamma Knife procedure, and (c) whether any person meets the standards of
indigency. Medical Center shall provide reasonable written documentation
evidencing satisfaction of the conditions set forth herein to GKF at or prior to
the time of payment in order for GKF to waive the per procedure payment set
forth in this paragraph 6 for each Gamma Knife procedure regardless of the
ability of the patient to pay for such services or the amount of reimbursement
or payment received by Medical Center.
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Prior to entering into or renewing any third party payor contracts for
the provisions of Gamma Knife procedures, Medical Center shall consult with GKF
regarding the terms and provisions thereof.
7. Use of the Equipment. The Equipment may be used by Medical Center
only at the location stated above and shall not be removed therefrom. Medical
Center shall not assign or sublease the Equipment or its rights hereunder
without the prior written consent of GKF; which consent shall not be
unreasonably withheld. No permitted assignment or sublease shall relieve Medical
Center of any of its obligations hereunder. Medical Center shall not use nor
permit the Equipment to be used in any manner nor for any purpose for which, in
the opinion of Elekta or GKF, the Equipment is not designed or reasonably
suitable. Medical Center shall not permit any liens, whether voluntary or
involuntary, to attach to the Equipment, without the prior written consent of
GKF. Medical Center shall have no interest in the Equipment other than the
rights acquired as a lessee hereunder and the Equipment shall remain the
property of GKF regardless of the manner in which it may be installed or
attached at the Site. Medical Center shall, at GKF's request, affix to the
Equipment tags, decals, or plates furnished by GKF, indicating GKF's ownership
of the Equipment.
8. Additional Covenants of Medical Center. In addition to the other
covenants made by Medical Center, Medical Center shall at its own cost and
expense:
(a) Provide properly trained professional, technical and support
personnel and supplies required for the proper performance of medical procedures
utilizing the Equipment.
(b) Assume all medical and financial responsibility for the overseers'
monitoring of all patients' medical condition and treatment.
(c) Fully comply with all of its obligations under the LGK Agreement.
(d) Indemnify GKF as herein provided: (i) Medical Center hereby agrees
to fully indemnify and/or reimburse (including attorneys' fees) GKF on a prompt
basis for any and all damage to the Equipment (including any violations by
Medical Center, its agents, officers, physicians, employees, successors and
assigns of the Service Agreement described in Paragraph 15 hereof) to the extent
such damages are caused by the negligent or wrongful acts or omissions of
Medical Center, its agents, officers, physicians and employees. In the event the
Equipment is destroyed or rendered unusable, this indemnification shall extend
up to (but not exceed) the full replacement value of the Equipment at the time
of its destruction less salvage value, if any. (ii) Medical Center hereby
further agrees to indemnify and hold GKF, its agents, officers, employees,
successors and assigns, harmless from and against any and all claims,
liabilities, obligations, losses, damages, injuries, penalties, actions, costs
and expenses (including attorneys' fees) for all events and/or occurrences
described in Article 7.3 of the LGK Agreement to the same extent that Medical
Center agrees to indemnify Elekta thereunder. Medical Center further agrees to
fully indemnify and hold harmless GKF for any loss, damage, claim, or expense
(including attorneys' fees) GKF may suffer or incur as a result of Medical
Center's breach or breach alleged in litigation with regard to the LGK
Agreement.
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(e) Provide reasonable and customary marketing materials (i.e.
brochures, announcements, etc.) and marketing support from an administrative and
physician (i.e. seminars by neurosurgeons and radiation therapists to referring
physicians, etc.) commitment for this clinical service.
9. Additional Covenants, Representations and Warranties of GKF. In
addition to the other covenants, representations and warranties, made by GKF in
this Agreement:
(a) GKF represents and warrants that GKF has full power and authority to
enter into this Agreement, and that this Agreement does not and will not violate
any agreement, contract or instrument binding upon GKF.
(b) GKF represents and warrants to Medical Center that, upon delivery of
the Equipment to Medical Center, GKF shall use its best faith efforts to require
that Elekta meets its contractual obligations to GKF and in putting the
Equipment, as soon as possible, into good, safe and serviceable condition and
fit for its intended use in accordance with the manufacturer's specifications,
guidelines and field modification instructions.
(c) GKF represents and warrants that throughout the term of this
Agreement, Medical Center shall enjoy the use of the Equipment, free of the
rights of any other persons except for those rights reserved by GKF or granted
to Elekta under the LGK Agreement or under Elekta's Purchase Agreement with GKF.
(d) During the entire term of this agreement and subsequent extension
thereof, GKF shall maintain in full force and effect: (i) the Service Agreement
referenced in Paragraph 15 hereof; and (ii) any other service or other
agreements required to fulfill GKF's obligations to Medical Center pursuant to
this Paragraph 9(d). GKF represents and warrants that during the entire term of
this agreement and any subsequent extensions thereof, that it will fully pursue
any and all remedies it may have against Elekta under the Service Agreement to
insure that the Equipment will be in conformity with Elekta's warranties so that
it is free from defects in design, materials, and workmanship which result in
noncompliance with the specifications and/or Elekta's warranties to GKF. In no
event, however, shall the warranty obligations of GKF to Medical Center with
respect to the Equipment be greater or more extensive than Elekta's warranty
obligations to GKF with respect to the Equipment.
10. Ownership/Title. It is expressly understood that Medical Center
shall acquire no right, title or interest in or to the Equipment, other than the
right to the possession and use of the same in accordance with the terms of this
Agreement.
GKF may at its sole discretion finance the Equipment. Financing may be
in the form of an installment loan or a capitalized lease or other commercially
available debt instrument. Should GKF finance the Equipment through an
installment loan, GKF shall be required to provide the Equipment as collateral
against the loan. Should GKF finance the Equipment through a capitalized lease
title shall vest with the lessor until GKF exercises its buy-out option. In
addition, should GKF finance the Equipment, said agreement may be used as
collateral against the loan.
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11. Cost of Use of the Equipment. Except as is otherwise provided
herein, Medical Center shall bear the entire cost of using the Equipment during
the Term of this Agreement. This shall include, but not be limited to, providing
trained professionals, technical and support personnel and supplies to properly
operate the Equipment. Medical Center shall be fully responsible and liable for
all acts and/or omissions of such professional, technical and support personnel.
12. Taxes. GKF shall pay any personal property taxes levied against the
Equipment and any other taxes or governmental fees or assessments, however
denoted, whether of the federal government, any state government or any local
government, levied or based on this Agreement or the use of the Equipment except
for those taxes, if any, pertaining to the gross income or gross receipts of
Medical Center.
13. Maintenance and Inspections. GKF agrees to exercise due and proper
care in the maintenance of the Equipment and to keep the Equipment in a good
state of repair, reasonable wear and tear excepted. Medical Center shall be
liable to GKF for all damage to the Equipment caused by the misuse, negligence,
improper use or other intentional or negligent acts or omissions of Medical
Center's employees, officers, agents, and physicians.
GKF (and Elekta) shall have the right of access to the Equipment for the
purpose of inspecting same at all reasonable times and upon reasonable notice
and with a minimum of interference to Medical Center's operations. In the event
the Equipment is improperly used by Medical Center or its employees, agents,
officers, and physicians, GKF may service or repair the same as needed and such
expense shall be paid by Medical Center, unless the repair is covered by the
Service Agreement described in Paragraph 15 hereof.
Any work so performed by or in the service or maintenance of the
Equipment as a result of Medical Center's failure or neglect to do so shall not
deprive GKF of any of its rights, remedies or actions against Medical Center for
damages caused by such failure or neglect.
14. Equipment Modifications/Additions/Upgrades. The parties agree that
the necessity and financial responsibility for modifications/additions/upgrades
to the Equipment, including the reloading of the Cobalt-60 source, shall be
discussed and mutually decided by GKF and Medical Center.
15. Service Agreement. GKF warrants that it shall simultaneously with
the execution of this Agreement enter into a Service Agreement with Elekta.
16. Termination. If after the initial forty-eight (48) month period of
service and during each subsequent twelve (12) month period of service, Medical
Center does not provide GKF with a reasonable economic justification to continue
providing Gamma Knife services hereunder, then and in that event, on the date
which is forty-eight (48) months after the Commencement Date and on each
anniversary date thereafter during the term of this Agreement, GKF shall have
the option of terminating this Agreement upon the giving of not less than nine
(9) months prior written notice to
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Medical Center. Should GKF elect to terminate this Agreement, GKF shall bear the
costs to remove the Equipment from the Medical Center, including the Cobalt-60
sources.
If after the initial sixty (60) month period of service and during each
subsequent twelve (12) month period of service, the Gamma Knife program does not
provide Medical Center with a reasonable economic justification to continue
providing Gamma Knife services, hereunder, then and in that event, on the date
which is sixty (60) months after the Commencement Date and on each anniversary
date thereafter during the term of this Agreement, Medical Center shall have the
option of terminating this Agreement upon the giving of not less than nine (9)
months' prior written notice to GKF. Should Medical Center elect to terminate
this Agreement as described in this Section 16, Medical Center shall directly
pay vendor(s) and other third parties selected by GKF for all costs up to but
not to exceed * to remove the Equipment from the Medical Center, including the
unloading of the Cobalt-60 sources, the costs to transport the Equipment to the
new site selected by GKF and the costs to reload the Cobalt-60 sources onto the
Equipment at the new site.
Reasonable economic justification shall not be deemed to exist if,
during any preceding twelve (12) month period, either party's revenues generated
from the Equipment are lower than the corresponding direct operating expenses
related to the Equipment, exclusive of physician professional fees. Each party
agrees that direct and/or indirect administrative overhead expenses will not be
deemed operating expenses for purposes of determining the existence of
reasonable economic justification. Both parties agree they will utilize their
best efforts to maximize revenues from the Gamma Knife program.
All of the terms and provisions of this Section 16 (including, without
limitation, the restrictive covenants set forth below) shall survive the
termination of this Agreement.
(a) Restrictive Covenant Applicable to GKF. During the term of this
Agreement and for a period of two (2) years following the date of any
termination by GKF pursuant to this Section 16 (the "GKF Covenant Period"), GKF
covenants that it shall not either directly as, or indirectly by or through an
entity in which it may be a sole proprietor, partner, member, shareholder,
director, officer, employee, manager, independent contractor, joint venturer or
in any other manner, lease any Equipment to any party other than Medical Center
within Xxxxx County, Nevada; provided that in the event such termination becomes
effective on or after the date which is eight (8) years after the Commencement
Date, the GKF Covenant Period shall be for the number of months remaining from
the date of such termination to the date which is ten (10) years after the
Commencement Date; provided further, that in no event shall the GKF Covenant
Period exceed two (2) years in the aggregate.
(b) Restrictive Covenant Applicable to Medical Center. During the term
of this Agreement and for a period of two (2) years following the date of any
termination by Medical Center pursuant to this Section 16 (the "Medical Center
Covenant Period"), Medical Center covenants that it shall not either directly
as, or indirectly by or through an entity in which it may be a sole proprietor,
partner, member, shareholder, director, officer, employee, manager, independent
contractor, joint venturer or in any other manner own, purchase, lease, operate
or otherwise acquire any Stereotactic Radiosurgery unit or other similar
equipment performing similar functions as that of
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the Equipment for use or operation within Xxxxx County, Nevada; provided that in
the event such termination becomes effective on or after the date which is eight
(8) years after the Commencement Date, the Medical Center Covenant Period shall
be for the number of months remaining from the date of such termination to the
date which is ten (10) years after the Commencement Date; provided further, that
in no event shall the Medical Center Covenant Period exceed two (2) years in the
aggregate.
(c) Coverage of Covenants. If the duration or territorial limitations
contained in this Section 16 is deemed overly broad or unenforceable by a court
of competent jurisdiction, the covenants shall nevertheless remain in full force
and effect subject to such reduced duration or territorial limitation as such
court shall deem reasonable under the circumstances.
(d) Injunctive Relief. GKF and Sunrise acknowledge that the covenants
and restrictions set forth in this Section 16, (i) are necessary, fundamental
and required for the protection of GKF and Medical Center, and (ii) related to
matters which are of a unique value to GKF and Medical Center. A breach of any
such covenants and restrictions would result in irreparable harm and damage to
GKF and Medical Center which would not be adequately compensated by monetary
damages. Accordingly, in addition to all other remedies that may be available at
law or in equity, GKF and Medical Center shall be entitled to the immediate
remedy of a temporary restraining order or preliminary injunction and such other
form of temporary or permanent injunctive or equitable relief as may be issued
by a court of competent jurisdiction to restrain or enjoin a breach of all or
any portion of these covenants and restrictions or to specifically enforce the
provisions hereof.
17. Options to Extend Agreement.
(a) Medical Center shall have the option at the end of the ten (10) year
initial Term to:
(i) Renew this agreement for an additional five (5) year Term.
(ii) Terminate this Agreement. If Medical Center terminates this
Agreement at the end of the initial term, GKF shall remove the Gamma Knife
within an agreed upon period of time after the expiration of the ten (10) year
initial Term.
Medical Center shall exercise one (1) of the two (2) options referred to
above, by mailing an irrevocable written notice thereof to GKF at Xxxx
Xxxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, Xxxxxxxxxx, 00000, by registered
mail, postmarked on or before the end of the ninth (9th) year of the ten (10)
year initial Term of this Agreement. Any such notice shall be sufficient if it
states in substance that Medical Center elects to exercise its option and states
which of the two (2) options referred to above Medical Center is exercising.
18. No Warranties by GKF. Medical Center warrants that as of the
Commencement Date, it shall have (a) thoroughly inspected the Equipment; (b)
determined for itself that all items of the Equipment are of a size, design,
capacity and manufacture selected by it; and (c) satisfied itself that to the
best of its knowledge the Equipment is suitable for Medical Center's stated
purposes. GKF SUPPLIES THE EQUIPMENT "AS IS" AND NOT BEING THE MANUFACTURER OF
THE
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EQUIPMENT OR THE MANUFACTURER'S AGENT, MAKES NO WARRANTY OR REPRESENTATION,
EITHER EXPRESSED OR IMPLIED, AS TO THE EQUIPMENT'S MERCHANTABILITY, FITNESS FOR
A PARTICULAR PURPOSE, DESIGN, CONDITION, DURABILITY, CAPACITY, MATERIAL OR
WORKMANSHIP OR AS TO PATENT INFRINGEMENT OR THE LIKE, it being agreed that all
such risks as between GKF and Medical Center, shall be borne by Medical Center.
Medical Center agrees to look solely to the manufacturer (Elekta) or to
suppliers of the Equipment (and its software) for any and all warranty claims.
Any and all warranties made by Elekta will be in its good faith best efforts
enforced by GKF on behalf of Medical Center during the ten (10) year initial
Term hereof. Medical Center agrees that GKF shall not be responsible for the
delivery, installation, or operation of the Equipment or for any delay or
inadequacy of any or all of the foregoing. GKF shall not be responsible for any
direct or indirect consequential loss or damage resulting from the installation,
operation or use of the Equipment or otherwise. Medical Center expressly waives
any right to hold GKF liable hereunder for any claims, demands and liabilities
arising out of or in connection with the design, manufacture, possession or
operation of the Equipment.
19. Events of Default and Remedies. The occurrence of any one of the
following shall constitute an Event of Default hereunder:
(a) Medical Center fails to pay any installment of semi-monthly
procedure payments when due when such default continues for a period of thirty
(30) days after notice thereof from GKF or its assignee is given to Medical
Center.
(b) Medical Center attempts to remove, sell, transfer, encumber, sublet
or part with possession of the Equipment or any items thereof, except as
expressly permitted herein;
(c) Medical Center shall fail to observe or perform any of the other
obligations required to be observed or performed by Medical Center hereunder and
such failure shall continue uncured for twenty (20) days after written notice
thereof to Medical Center by GKF;
(d) Medical Center ceases doing business as a going concern, makes an
assignment for the benefit of creditors, admits in writing its inability to pay
its debts as they become due, files a voluntary petition in bankruptcy, is
adjudicated a bankrupt or an insolvent, files a petition seeking for itself any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar arrangement under any present or future statute, law or regulation or
files an answer admitting the material allegations of a petition filed against
it in any such proceeding, consents to or acquiesces in the appointment of a
trustee, receiver, or liquidator of it or of all or any substantial part of its
assets or properties, or it or its shareholders shall take any action looking to
its dissolution or liquidation
(e) Within sixty (60) days after the commencement of any proceedings
against Medical Center seeking reorganization, arrangement, readjustment,
liquidation, dissolution or similar relief under any present or future statute,
law or regulation, such proceedings shall not have been dismissed, or if within
thirty (30) days after the appointment without Medical Center's consent or
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acquiescence of any trustee, receiver or liquidator of it or of all or any
substantial part of its assets and properties, such appointment shall not be
vacated.
Upon the occurrence of an Event of Default, GKF may at its option do any
or all of the following: (i) by notice to Medical Center, terminate this
Agreement as to the Equipment in default, wherever situated, and for such
purposes, enter upon the Site without liability for so doing or GKF may cause
Medical Center and Medical Center hereby agrees to return the Equipment to GKF
at Medical Center's sole cost and expense; (ii) recover from, as liquidated
damages for the loss of the bargain and not as a penalty, an amount equal to the
present value of the unpaid estimated future lease payments by Medical Center to
GKF through the end of the Agreement term discounted at the rate of nine percent
(9%), which payment shall become immediately due and payable. Unpaid estimated
future lease payments shall be based on the prior 12 months lease payments with
an annual five (5%) percent increase; (iii) sell, dispose of, hold, use or lease
the Equipment in default, as GKF in its sole discretion may determine (and GKF
shall not be obligated to give preference to the sale, lease or other
disposition of the Equipment over the sale, lease or other disposition of
similar Equipment owned or leased by GKF). In any event, Medical Center shall,
without further demand, pay to GKF an amount equal to all sums due and payable
for all periods up to and including the date on which GKF had declared this
Agreement to be in default.
In the event, that Medical Center shall have paid to GKF the liquidated
damages referred to in (iii) above, GKF hereby agrees to pay to Medical Center
promptly after receipt thereof, all rentals or proceeds received from the
reletting or sale of the Equipment during the balance of the ten (10) year
initial Term (after deduction of all expenses incurred by GKF; said amount never
to exceed the amount of the liquidated damages paid by Medical Center). Medical
Center agrees that GKF shall have no obligation to sell the Equipment. Medical
Center shall in any event remain fully liable for reasonable damages as provided
by law for all costs and expenses incurred by GKF on account of such default,
including but not limited to, all court costs and reasonable attorneys' fees.
Medical Center hereby agrees that, in any event, it shall be liable for any
deficiency after any sale, lease or other disposition of the Equipment by GKF.
The rights afforded GKF hereunder shall not be deemed to be exclusive, but shall
be in addition to any other rights or remedies provided by law.
20. Insurance.
(a) During the ten (10) year initial Term of this Agreement (and any
successive terms) GKF shall, at its own cost and expense, keep in effect an all
risk and hazard insurance policy covering the Equipment. The all risk and hazard
insurance policy shall be for an amount not less than the replacement cost of
the Equipment. During the ten (10) year initial Term of this Agreement, Medical
Center shall, at its own cost and expense keep in effect public liability and
professional liability insurance policies concerning the operation of the
Equipment by Medical Center. Said policies shall be in the amounts of not less
than $1,000,000 per occurrence and $5,000,000 in aggregate per year. Medical
Center and GKF, their successors and assigns, shall be named as additional
insureds and/or loss payees on the insurance policies maintained hereunder by
the other party. Evidence of such insurance coverages shall be furnished by both
parties to the other party upon written request, by no later than the
Commencement Date.
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(b) If the Equipment is rendered unusable as a result of any physical
damage to, or destruction of, the Equipment, Medical Center shall give to GKF
immediate notice. GKF shall determine, within thirty (30) days after the date of
occurrence of such damage or destruction, whether the Equipment can be repaired.
In the event GKF determines that the Equipment cannot be repaired, GKF at its
sole cost and expense shall promptly replace the Equipment. This Agreement shall
continue in full force and effect as though such damage or destruction had not
occurred. In the event GKF determines that the Equipment can be repaired, GKF
shall cause the Equipment to be promptly repaired.
21. Notices. Any notices required under this Agreement shall be sent in
writing and shall be deemed to have been duly given if delivered by hand or
mailed by certified or registered mail to the following addresses:
To GKF: Xxxxx X. Xxxxxx, C.E.O.
Four Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
To Medical Center: Xxxxxx X. Xxxxxxxx, President/CEO
0000 Xxxxx Xxxxxxxx Xxxxxxx
Xxx Xxxxx, XX 00000
Or to such other addresses as either party may specify for the reception of
notice from time to time in writing to the other party. Any such notice shall be
effective only when actually received by the party to whom addressed.
22. Integration/Supersedure. This Agreement contains the full and entire
Agreement between the parties hereto, and no oral or written understanding is of
any force or effect whatsoever unless expressly contained in writing executed
subsequent to the date of this Agreement.
23. Waivers. To the extent that GKF fails or chooses not to pursue any
of its remedies under this Agreement or pursuant to applicable law, such shall
not prejudice GKF's rights to pursue any of those remedies at any future time
and shall not constitute a waiver of GKF's rights.
24. Assignments. This Agreement is binding upon and shall inure to the
benefit of the permitted successors or assigns of the respective parties hereto,
except that neither party may assign its rights or obligations under this
Agreement without the express written consent of the other (which consent shall
not be unreasonably withheld).
25. Amendments. This Agreement shall not be amended or altered in any
manner unless such amendment or alteration is in a writing signed by both
parties.
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13
26. Record-Keeping Requirements. To the extent required by the
regulations promulgated by the Health Care Financing Administration pursuant to
Section 952 of the Omnibus Reconciliation Act of 1980, GKF shall:
(a) Until the expiration of four (4) years following the furnishing of
services pursuant to this Agreement, GKF agrees to make available upon written
request of the Secretary of Health and Human Services or the U.S. Comptroller
General or any of their duly authorized representatives, this Agreement, any
books, documents and records necessary to verify the nature and extent of costs
incurred by Medical Center by reason of the activities of GKF under this
Agreement; and
(b) If GKF elects to delegate any of its duties under this Agreement
(which have a cost or value of Ten Thousand Dollars ($10,000.00) or more over a
twelve (12) month period) to a related organization, GKF may do so only through
a subcontractor which is consented to by Medical Center, it being understood
that, inasmuch as Medical Center is entering into this Agreement in reliance on
GKF's reputation and expertise, that Medical Center shall be the sole judge of
the reputation and expertise of the proposed delegee, and only through a
subcontractor which provides that, until the expiration of four (4) years
following the furnishing of services under such subcontract, the related
organization shall make available, on request of the Secretary of Health and
Human Services or the U.S. Comptroller General or any of their authorized
representatives, the subcontract, and books, documents and records of the nature
and extent of costs incurred by Medical Center by reason of activities of such
related organization under such subcontract. No delegation by GKF of its duties
hereunder shall relieve GKF from liability hereunder.
27. Miscellaneous Provisions.
(a) The invalidity or unenforceability of any portion or provision of
this Agreement shall not effect the validity or enforceability of any other
portion, nor shall either party's implied or express consent to the breach or
waiver of any provision of this Agreement constitute a waiver of such provision
as to any subsequent breach.
(b) In the event of any claim or controversy arising hereunder, the
prevailing party in such claim or controversy shall be entitled to a reasonable
attorneys' fee in addition to whatever other relief said party would be
otherwise entitled.
(c) Force Majeure. Failure to perform by either party will be excused in
the event of any delay or inability to perform its duties under this Agreement
directly or indirectly caused by conditions beyond its reasonable control
including without limitation, fires, floods, earthquakes, snow, ice, disasters,
Acts of God, accidents, riots, wars, operation of law, strikes, governmental
action or regulations, shortages of labor, fuel, power, materials, manufacturer
delays or transportation problems.
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IN WITNESS WHEREOF, the parties have signed this Agreement on the day
and year first above written.
Medical Center GK Financing, LLC
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxx X. Xxxxxx
-------------------------------------- ---------------------------------
Xxxxxx X. Xxxxxxxx Xxxxx X. Xxxxxx
President/Chief Executive Officer Chief Executive Officer
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Exhibit B
GKF
COLUMBIA SUNRISE HOSPITAL AND MEDICAL CENTER
PER PROCEDURE SCHEDULE
TERM PER PROCEDURE PAYMENT
---- ---------------------
Years 1 through 5 *
Years 6 through 10 *
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