EXHIBIT 10.43
EQUIPMENT LEASE AGREEMENT
THIS EQUIPMENT LEASE AGREEMENT ("Agreement") is made and entered into on
July 11, 2002, by and between GK FINANCING, LLC, a California limited liability
company ("GKF"), and SOUTHERN BAPTIST HOSPITAL OF FLORIDA, INC. A FLORIDA NOT
FOR PROFIT CORPORATION D/B/A BAPTIST MEDICAL CENTER ("Hospital"), with reference
to the following facts:
R E C I T A L S
A. GKF owns a Leksell Stereotactic Gamma Knife Unit (the "Equipment")
which it acquired from by Elekta Instruments, Inc., a Georgia corporation
("Elekta"), pursuant to that certain Agreement dated ____________, together with
the Exhibits attached thereto between GKF and Elekta (collectively, the
"Purchase Agreement").
B. Hospital wishes to lease the Equipment from GKF, and GKF is willing
to lease the Equipment to Hospital, upon the terms, covenants, conditions and
agreements set forth in this Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual covenants, conditions and
agreements set forth herein, and for such other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Lease. Subject to and in accordance with the covenants and
conditions set forth in this Agreement, GKF hereby leases to Hospital, and
Hospital hereby leases from GKF, the Equipment. The Equipment to be leased to
Hospital pursuant to this Agreement shall include the latest approved Gamma
Knife technology available as of the date of this Agreement, including all
hardware and software related thereto.
2. LGK Agreement. Simultaneously with the execution of this Agreement,
Hospital and Elekta shall enter into that certain LGK Agreement (the "LGK
Agreement"), a copy of which is attached hereto as Exhibit 1. Hospital shall
perform, satisfy and fulfill all of its obligations arising under the LGK
Agreement when and as required thereunder. Hospital acknowledges that GKF is a
third party beneficiary of the LGK Agreement and, in that capacity, GKF shall be
entitled to enforce Hospital's performance, satisfaction and fulfillment of its
obligations thereunder.
3. Term of the Agreement. The initial term of this Agreement (the
"Term") shall commence as of the date hereof and, unless earlier terminated or
extended in accordance with the provisions of this Agreement, shall continue for
a period of eight (8) years following the date of the performance of the first
clinical Gamma Knife procedure (the "First Procedure Date") at the
1
Site. Hospital's obligation to make the payments to GKF for the Equipment
described in Section 8 below shall commence as of the First Procedure Date.
Hospital shall have the option of renewing this Agreement for an additional
period of two (2) years following the initial term of this Agreement by
providing GKF with at least two hundred seventy (270) days advance written
notice of its intention to extend this Agreement.
4. User License.
4.1 Hospital shall apply for and obtain in a timely manner a User
License from the Nuclear Regulatory Commission and, if necessary, from the
applicable state agency authorizing it to take possession of and maintain the
Cobalt supply required in connection with the use of the Equipment during the
term of this Agreement. Hospital also shall apply for and obtain in a timely
manner all other licenses, permits, approvals, consents and authorizations which
may be required by state or local governmental or other regulatory agencies for
the development, construction and preparation of the Site, the charging of the
Equipment with its Cobalt supply, the conduct of acceptance tests with respect
to the Equipment, and the use of the Equipment during the Term, as more fully
set forth in Article 2.2 of the LGK Agreement.
5. Delivery of Equipment; Site.
5.1 GKF shall coordinate with Elekta and Hospital to have the
Equipment delivered to ____________ (the "Site") on or prior to the delivery
date agreed upon by Hospital and Elekta in the LGK Agreement. GKF makes no
representations or warranties concerning delivery of the Equipment to the Site
or the actual date thereof.
5.2 Subject to Section 6 below, Hospital, at its cost and expense,
shall provide a safe, convenient Site for the Equipment. The location of the
Site shall be subject to the prior approval of GKF.
6. Site Preparation and Installation of Equipment.
6.1 GKF, at its cost and expense, shall prepare all plans,
specifications and site planning criteria (which site planning criteria are
attached as Exhibit B to the LGK Agreement) (collectively the "Site Planning
Criteria") required to prepare, construct and improve the Site for the
installation, use and operation of the Equipment during the Term. The plans and
specifications (i) shall be approved by Hospital, which approval shall not be
unreasonably withheld or delayed; (ii) shall comply in all respects with the
Site Planning Criteria; and (iii) to the extent required by applicable law,
shall be submitted to all state and federal agencies for their review and
approval. GKF, at its cost and expense, shall obtain all permits,
certifications, approvals or authorizations required by applicable federal,
state or local laws, rules or regulations necessary to prepare, construct and
improve the Site as provided above.
6.2 GKF, at its cost and expense, shall prepare, construct and
improve the Site as necessary for the installation, use and operation of the
Equipment during the Term, including,
2
without limitation, providing all temporary or permanent shielding required for
the charging of the Equipment with the Cobalt supply and for its subsequent use,
selecting and constructing a proper foundation for the Equipment and the
temporary or permanent shielding, aligning the Site for the Equipment, and
installing all electrical systems and other wiring required for the Equipment.
In connection with the construction of the Site, GKF, at its cost and expense,
shall select, purchase and install all radiation monitoring equipment, devices,
safety circuits and radiation warning signs required at the Site in connection
with the use and operation of the Equipment. GKF shall be responsible for the
shipment, storage, placement and removal of all Cobalt and depleted Cobalt. Any
depleted Cobalt supply shall be properly disposed of by GKF at such time as GKF
shall deem necessary, in GKF's sole and absolute judgment.
6.3 In addition to construction and improvement of the Site, GKF,
at its cost and expense, shall be responsible for the installation of the
Equipment at the Site, including the positioning of the Equipment on its
foundation at the Site in compliance with the Site Planning Criteria.
6.4 During the Term, GKF, at its cost and expense, shall maintain
the Site in a good working order, condition and repair, reasonable wear and tear
excepted.
7. Marketing Support. GKF shall coordinate its Gamma Knife marketing
plan with Hospital, which marketing plan shall be subject to the approval of
Hospital. Hospital shall participate in meetings with GKF to jointly develop a
marketing plan annually. The Hospital, with the support of GKF, shall implement
the Gamma Knife marketing plan based on the approved budget and timeline.
Notwithstanding the foregoing, Hospital will not be obligated to pay for the
marketing of or reimbursement of GKF for any marketing related expenses for the
Gamma Knife, but is not prohibited from doing so as long as Hospital's efforts
are coordinated with GKF.
8. Lease Payments.
8.1 In consideration and as compensation to GKF for (i) the lease
of the Equipment by GKF to Hospital pursuant to this Agreement; (ii) the
preparation by GKF of all plans and specifications required to prepare,
construct and improve the Site for the installation, use and operation of the
Equipment; (iii) the preparation, construction and improvement of the Site as
necessary for the installation, use and operation of the Equipment; (iv) the
installation by GKF of the Equipment at the Site; and (v) the maintenance by GKF
of the Site in a good working order, condition and repair, Hospital shall pay to
GKF on a monthly basis an amount (the "Lease Payments") equal to * during each
such month. As used herein:
*
3
As used herein, a "Gamma Knife procedure" shall mean any treatment that involves
stereotactic, external, single fraction, conformal radiation, commonly called
radiosurgery, that may include one or more isocenters during the patient
treatment session, delivered to any site(s) superior to the foramen magnum.
If no Gamma Knife procedures are performed by Hospital or any other person
utilizing the Equipment, no Lease Payments shall be owing by Hospital to GKF.
8.2 Payment by Hospital to GKF of the Lease Payments shall be made
monthly within ten (20) days following each month end by Hospital of the
reimbursement for the technical component of such Gamma Knife procedure from
payor sources received in the immediately preceding month. To facilitate
Hospital's billing and collection for Gamma Knife procedures performed, within
two (2) business days after any Gamma Knife procedure is performed, GKF shall
cause the administrative support individual referenced in Section 11.3 below to
provide Hospital with written confirmation of the names of the patients treated.
Hospital shall submit claims for reimbursement to the appropriate payors for
each Gamma Knife procedure within ten (10) days after the patient receiving the
treatment is discharged. All or any portion of any Lease Payment which is not
paid in full within sixty (60) days after its due date shall bear interest at
the annual rate of five percent (5%) in excess of the Federal Reserve Discount
Rate then in effect as published in the Wall Street Journal or similar
publication (or the maximum monthly interest rate permitted to be charged by law
between an unrelated, commercial borrower and lender, if less) until the unpaid
Lease Payment, together with all accrued interest thereon is paid in full. If
GKF shall at any time accept a Lease Payment from Hospital after it shall become
due, such acceptance shall not constitute or be construed as a waiver of any or
all of GKF's rights under this Agreement, including the rights of GKF set forth
in Section 20 hereof. Notwithstanding the foregoing, in the event that * in any
given month, GKF shall reimburse Hospital for said shortfall. * is payable by
GKF even if no Gamma Knife procedures are performed in a given month. If no
procedures are performed in a given month, there should be no other costs
involved. The "Space Rental" is the payment from GKF to Hospital for space
utilized for the Gamma Knife equipment, referenced in Exhibit 8.1.
8.3 Within thirty (30) days after the close of each month,
Hospital shall provide GKF with a written report indicating the status of
▇▇▇▇▇▇▇▇ and collections for each Gamma Knife procedure performed during that
month, including, without limitation, the amount of the claim submitted and the
amount received for each such procedure. Upon request by GKF, Hospital shall
furnish to GKF information regarding reimbursement rates from any or all payor
sources for Gamma Knife procedures (applicable to procedures performed either on
an inpatient or outpatient basis). If such reimbursement rates should change at
any time or from time to time after the date hereof, in each instance, Hospital
shall provide written notice thereof to GKF within thirty (30) days of Hospital
receiving notice thereof. All information provided to GKF by Hospital with
regard Gamma Knife procedure charges, billing and reimbursement rates shall
remain confidential by GKF.
4
GKF acknowledges that, as a result of its performance of its duties herein, it,
its employees or agents may directly or indirectly receive medical information
("Patient Medical Information") regarding Hospital's patients. GKF further
acknowledges that Patient Medical Information is confidential pursuant to
applicable State and federal law ("Applicable Privacy Law"), including but not
limited to, privacy standards imposed pursuant to the federal Health Insurance
Portability and Accountability Act of 1996 ("HIPAA"). GKF agrees, therefore,
that:
a. Any Patient Medical Information it, its employees or agents receive
regarding Hospital's patients shall be treated as confidential so as
to comply with Applicable Privacy Law. GKF agrees to indemnify and
hold harmless Hospital, its officers, directors, employees and
agents from any breech of such confidentiality by GKF, its employees
or agents. This provision shall survive termination of this
Agreement.
b. In the event that the Department of Health and Human Services, the
Office of Civil Rights Enforcement, the Centers for Medicaid
Services, the Agency for Health Care Administration or legal counsel
advice Hospital that this Agreement does not, or must be amended to,
comply with Applicable Privacy Law, Hospital may, at its sole
option, (i) modify this Agreement to the extent reasonably necessary
and reasonably acceptable to GKF to bring it into compliance, or
(ii) require GKF to enter into a separate HIPAA- compliant Business
Associate agreement with Hospital.
8.4 The parties acknowledge that the rental payments to GKF and
the reimbursement of costs and Space Rental to Hospital reflects fair market
value compensation to GKF for the Gamma Knife and Hospital for space used for
the Gamma Knife are not determined in a manner that takes into account the
volume or the value of any referral or other business generated between the
parties.
9. Use of the Equipment.
9.1 The Equipment shall be used by Hospital only at the Site and
shall not be removed therefrom. Hospital shall use the Equipment only in the
regular and ordinary course of Hospital's business operations and only within
the capacity of the Equipment as determined by Elekta's specifications. Hospital
shall not use nor permit the Equipment to be used in any manner nor for any
purpose which, Hospital has been informed by Elekta or GKF, the Equipment is not
designed or reasonably suitable.
9.2 This is an agreement of lease only. Nothing herein shall be
construed as conveying to Hospital any right, title or interest in or to the
Equipment, except for the express
5
leasehold interest granted to Hospital for the Term. All Equipment shall remain
personal property (even though said Equipment may hereafter become attached or
affixed to real property) and the title thereto shall at all times remain
exclusively in GKF.
9.3 During the Term, upon the request of GKF, Hospital shall
promptly affix to the Equipment in a prominent place, or as otherwise directed
by GKF, labels, plates, insignia, lettering or other markings supplied by GKF
indicating GKF's ownership of the Equipment, and shall keep the same affixed for
the entire Term. Hospital hereby authorizes GKF to cause this Lease or any
statement or other instrument showing the interest of GKF in the Equipment to be
filed or recorded, or refiled or re-recorded, with all governmental agencies
considered appropriate by GKF, at GKF's cost and expense. Hospital also shall
promptly execute and deliver, or cause to be executed and delivered, to GKF any
statement or instrument requested by GKF for the purpose of evidencing GKF's
interest in the Equipment, including financing statements and waivers with
respect to rights in the Equipment from any owners or mortgagees of any real
estate where the Equipment may be located.
9.4 At Hospital's cost and expense, Hospital shall (a) protect and
defend GKF's ownership of and title to the Equipment from and against all
persons claiming against or through Hospital, (b) at all times keep the
Equipment free from any and all liens, encumbrances, attachments, levies,
executions, burdens, charges or legal processes imposed against Hospital, and
(c) give GKF immediate written notice of any matter described in clause (b).
10. Additional Covenants of Hospital. In addition to the other covenants
of Hospital contained in this Agreement, Hospital shall, at its cost and
expense:
10.1 Provide properly trained, technical and support personnel and
supplies required for the proper performance of Gamma Knife procedures utilizing
the Equipment. In this regard, Hospital shall use its best efforts to maintain
on staff a minimum of two (2) Gamma Knife trained teams comprised of
neurosurgeons, radiation oncologists and physicists.
10.2 Direct, supervise and administer the provision of all hospital
services relating to Gamma Knife Procedures in accordance with all applicable
laws, rules and regulations.
10.3 Use best efforts to keep and maintain the Equipment and the
Site fully protected, secure and free from unauthorized access or use by any
person.
11. Additional Covenants of GKF. In addition to the other covenants of
GKF contained in this Agreement, GKF, at its cost and expense, shall:
11.1 Use its best efforts to require Elekta to meets its
contractual obligations to GKF and Hospital upon delivery of the Equipment and
put the Equipment, as soon as reasonably 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.
6
11.2 Ensure Hospital's quiet enjoyment and 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 the Purchase Agreement.
11.3 GKF shall provide an individual located at the Site to provide
Gamma Knife administrative and marketing support services. The individual's
duties shall include but not be limited to scheduling Gamma Knife patients and
coordinating professional and technical personnel and support services to
perform said Gamma Knife treatment. This individual shall also verify patient
insurance. The individual shall also assist with marketing activities on an as
needed basis. If the individual is provided by the Hospital, GKF shall reimburse
Hospital for the cost of the individual. GKF and Hospital shall mutually agree
on individual.
12. Maintenance of Equipment; Damage or Destruction of Equipment.
12.1 During the Term and except as otherwise provided in this
Agreement, GKF, at its cost and expense, shall (a) maintain the Equipment in
good operating condition and repair, reasonable wear and tear excepted, (b)
subject to Hospital's compliance with its obligations under the LGK Agreement
and under Sections 4, 5, 9, 10, 12, and 16 hereunder, cause the equipment to be
in compliance with all applicable state and federal regulations, and (c)
maintain in full force and effect a Service Agreement with Elekta and any other
service or other agreements required to fulfill GKF's obligation to repair and
maintain the Equipment under this Section 12. Hospital shall promptly notify GKF
in the event of any damage or destruction to the Equipment or of any required
maintenance or repairs to the Equipment, GKF shall, or shall cause its agent to,
respond to any such maintenance request within 24 hours and either repair or
replace the equipment with in 24 hours or as soon as possible and practical, in
addition, GKF shall pursue all remedies available to it under the Service
Agreement and under any warranties made by Elekta with respect to the Equipment
so that the Equipment will be free from defects in design, materials and
workmanship and will conform to Elekta's technical specifications concerning the
Equipment.
12.2 GKF and Elekta shall have the right to access the Equipment
for the purpose of inspection and the performance of repairs at all reasonable
times, upon reasonable advance notice and with a minimum of interference or
disruptions to Hospital's regular business operations.
12.3 Hospital shall be liable for any damage to or destruction of
the Equipment caused by the misuse, improper use, or other intentional and
wrongful or negligent acts or omissions of Hospital's officers, employees,
agents, and contractors. In the event the Equipment is damaged as a result of
the misuse, improper use, or other intentional and wrongful or negligent acts or
omissions of Hospital's officers, employees, agents and contractors, other than
GKF and Elekta to the extent such damage is not covered by the Service Agreement
or any warranties or insurance, GKF may service or repair the Equipment as
needed and the cost thereof shall be paid by Hospital to GKF immediately upon
written request; provided that, if GKF's charges and costs
7
for such service or repair are not paid in full by Hospital within sixty (60)
days after GKF's request therefore, in addition to such charges and costs,
Hospital shall pay interest thereon to GKF until paid in full at the annual rate
of five percent (5%) in excess of the Federal Reserve Discount Rate then in
effect, as published in the Wall Street Journal or similar publication (or the
maximum monthly interest rate permitted to be charged by law between an
unrelated, commercial borrower and lender, if less) and costs incurred by GKF in
collecting such amount from Hospital (other than attorneys' fees). Any work so
performed by GKF shall not deprive GKF of any of its rights, remedies or actions
against Hospital for such damages.
12.4 If the Equipment is rendered unusable as a result of any
failure of, physical damage to or destruction of the Equipment, Hospital shall
give GKF written notice thereof. GKF shall determine, within thirty (30) days
after it is given written notice of such damage or destruction, whether the
Equipment can be repaired. Subject to Section 12.3 above, in the event GKF
determines that the Equipment cannot be repaired, at the election of GKF in
GKF's sole and absolute discretion, (a) GKF, at its cost and expense, may
replace the Equipment as soon as reasonably possible taking into account the
availability of replacement equipment from Elekta, Elekta's other then existing
orders for equipment, and the then existing limitations on Elekta's
manufacturing capabilities, and (b) in such event, this Agreement shall continue
in full force and effect as though such damage or destruction had not occurred.
If GKF elects not to replace the Equipment, GKF shall provide written notice of
such election to Hospital, and this Agreement shall terminate on the date that
is ninety (90) days following the date of such notice. In the event GKF
determines that the Equipment can be repaired, GKF shall cause the Equipment to
be repaired as soon as reasonably possible thereafter. Hospital shall fully
cooperate with GKF to effect the replacement of the Equipment or the repair of
the Equipment (including, without limitation, providing full access to the Site)
following the damage or destruction thereof.
13. [Intentionally omitted.]
14. Financing of Equipment by GKF. GKF, in its sole discretion, may
finance the Equipment. Financing may be in the form of an installment loan, a
capitalized lease or other commercially available debt or financing instrument.
If GKF finances the Equipment through an installment loan, GKF shall be required
to provide the Equipment as collateral for the loan. If GKF finances the
Equipment through a capitalized lease, title shall vest with the lessor until
such time as GKF exercises its buy-out option under the lease, if any. If
required by the lender, lessor or other financing entity (the "Lender"), GKF may
assign its interest under this Agreement as security for the financing.
Hospital's interest under this Agreement shall be subject to the interests of
the Lender and Hospital shall execute such documentation as the Lender shall
reasonably require in furtherance of this Section 14; provided, however, such
assignment shall not relieve GKF of its obligation to Hospital under this
Agreement.
15. Equipment Operational Costs. GKF shall be responsible for all costs
and expenses for the operation and use of the Equipment. Significant costs and
expenses are
8
enumerated in Exhibit 8.1. Between Hospital and GKF, Hospital shall be fully
liable for all negligent, intentional or wrongful acts or omissions of Hospital,
its officers, directors, employees and agents.
16. Taxes. GKF shall pay all sales or use taxes imposed or assessed in
connection with the purchase of the Equipment and all personal property taxes
imposed, levied or assessed on the ownership and possession of the Equipment
during the Term. All other taxes, assessments, licenses or other charges
imposed, levied or assessed on the Equipment during the Term shall be paid by
Hospital before the same shall become delinquent, whether such taxes are
assessed or would ordinarily be assessed against GKF or Hospital; provided,
however, Hospital shall not be required to pay any federal, state or local
income, franchise, corporation or excise taxes imposed upon GKF's net income
realized from the lease of the Equipment. In case of a failure by Hospital to
pay any taxes, assessments, licenses or other charges when and as required under
this Section, GKF may (in GKF's sole and absolute discretion) pay all or any
part of such taxes, in which event the amount paid by GKF shall be immediately
payable by Hospital to GKF upon written request; provided that, if GKF is not
repaid in full by Hospital within sixty (60) days after GKF's request therefor,
in addition to the repayment of the amounts paid by GKF, Hospital shall pay
interest thereon to GKF until paid in full at the annual rate of five percent
(5%) in excess of the Federal Reserve Discount Rate then in effect, as published
in the Wall Street Journal or similar publication (or the maximum monthly
interest rate permitted to be charged by law between an unrelated, commercial
borrower and lender, if less) and costs incurred by GKF in collecting such
amount from Hospital (other than attorneys' fees).
17. No Warranties by GKF. Hospital warrants that as of the First
Procedure Date, it shall have (a) thoroughly inspected the Equipment, (b)
determined that the Equipment is consistent with the size, design, capacity and
manufacture selected by it, and (c) satisfied itself that to the best of its
knowledge the Equipment is suitable for Hospital's intended purposes and is good
working order, condition and repair at the time of acceptance. GKF SUPPLIES THE
EQUIPMENT UNDER THIS AGREEMENT IN ITS "AS IS" CONDITION. GKF, NOT BEING THE
MANUFACTURER OF THE 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 OR USE, DESIGN, CONDITION,
DURABILITY, CAPACITY, MATERIAL OR WORKMANSHIP OR AS TO PATENT INFRINGEMENT OR
THE LIKE. As between GKF and Hospital, Hospital shall bear all risks with
respect to the foregoing warranties. GKF shall not be liable for any direct,
indirect and consequential losses or damages suffered by Hospital or by any
other person for, and Hospital expressly waives any right to hold GKF liable
hereunder for, any claims, demands and liabilities arising out of or in
connection with the design or manufacture, possession or operation of the
Equipment, including injury to persons or property resulting from the failure
of, defective or faulty design, operation, condition, suitability or use of the
Equipment. All warranty or other similar claims with respect to the Equipment
shall be made by Hospital solely and exclusively against persons other than GKF,
including Elekta or any other manufacturers or suppliers. In this regard and
with prior written
9
approval of GKF, Hospital may, in GKF's name, but at Hospital's sole cost and
expense, enforce all warranties, agreements or representations, if any, which
may have been made by Elekta or manufacturers, suppliers or other third parties
regarding the Equipment to GKF or Hospital. GKF shall not be responsible for the
operation of the Equipment, however it shall be GKF's responsibility that the
equipment be properly maintained. GKF and Hospital shall mutually agree to an
acceptable delivery date for the equipment.
18. Termination for Economic Justification.
18.1 If, following the initial twenty-four (24) months after the
First Procedure Date and following each subsequent 12 month period thereafter
during the Term, based upon the utilization of the Equipment and other factors
considered relevant by GKF in the exercise of its discretion, within a
reasonable period of time after GKF's written request, Hospital does not provide
GKF with a reasonable economic justification to continue this Agreement and the
provision of Gamma Knife services at the Hospital, then and in that event, GKF
shall have the option to terminate this Agreement by giving a written notice
thereof to Hospital not less than ninety (90) days prior to the effective date
of the termination designated in GKF's written notice.
18.2 Notwithstanding the provisions of Section 18.1, if at any time
during the term of this Agreement, Hospital is suspended or terminated from
participation in the Medicare program, GKF shall have the option to terminate
this Agreement immediately by giving written notice thereof to Hospital.
18.3 As a result of any termination of this Agreement pursuant to
this Section 18, GKF may enter upon the Site under hospital supervision and
remove the Equipment and any improvements made by GKF to the Site without
liability of any kind or nature for appropriate removal or GKF may demand that
Hospital remove and return the Equipment and such improvements to GKF, all at
GKF's sole cost and expense. GKF shall restore the Site to a similar
pre-deinstallation appearance and condition.
19. Options to Extend Agreement. As of the end of the Term, Hospital
shall have the option either to:
19.1 Extend the Term of this Agreement as set forth in Section 3.
under the same terms and conditions.
19.2 Terminate this Agreement as of the expiration of the Term.
Hospital shall exercise one (1) of the two (2) options referred to above by
giving an irrevocable written notice thereof to GKF at least Two hundred seventy
(270) days prior to the expiration of the initial Term. Any such notice shall be
sufficient if it states in substance that Hospital elects to exercise its option
and states which of the two (2) options referred to above Hospital is
exercising. If Hospital fails to exercise the option granted herein at least Two
hundred seventy
10
(270) days prior to the expiration of the initial Term, the option shall lapse
and this Agreement shall expire as of the end of the initial Term.
20. Events of Default by Hospital and Remedies.
20.1 The occurrence of any one of the following shall constitute an
event of default under this Agreement (an "Event of Default"):
20.1.1 Hospital fails to pay any Lease Payment when due
pursuant to Paragraph 8 above and such failure continues for a period of thirty
(30) days after written notice thereof is given by GKF or its assignee to
Hospital; however, if Hospital cures the payment default within the applicable
thirty (30) day period, such default shall not constitute an Event of Default.
20.1.2 Hospital attempts to remove, sell, transfer, encumber,
assign, sublet or part with possession of the Equipment or any items thereof,
except as expressly permitted herein.
20.1.3 Hospital fails to observe or perform any of its
covenants, duties or obligations arising under this Agreement or the LGK
Agreement and such failure continues for a period of thirty (30) days after
written notice thereof by GKF to Hospital; however, if Hospital cures the
default within the applicable thirty (30) day period or if the default
reasonably requires more than thirty (30) days to cure, Hospital commences to
cure the default during the initial thirty (30) day period and Hospital
diligently completes the cure as soon as reasonably possible following the end
of the thirty (30) day period, such default shall not constitute an Event of
Default.
20.1.4 Hospital 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
20.1.5 Within sixty (60) days after the commencement of any
proceedings against Hospital 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 Hospital's consent or
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.
11
20.2 Upon the occurrence of an Event of Default with respect to
Hospital, GKF may at its option do any or all of the following:
20.2.1 By written notice to Hospital, immediately terminate
this Agreement as to the Equipment, wherever situated. As a result of the
termination, GKF may enter upon the Site and remove the Equipment and any
improvements made by GKF to the Site without liability of any kind or nature for
so doing or GKF may demand that Hospital remove and return the Equipment and
such improvements to GKF, all at Hospital's sole cost and expense.
20.2.2 Recover damages from Hospital as may be awarded by a
court of competent jurisdiction for the loss of the bargain represented by this
Agreement. For purposes of determining such damages, the parties agree that the
following methodology shall be used: (a) the amount of such damages shall be
equal to the present value of the unpaid estimated future Lease Payments to be
made by Hospital to GKF through the end of the Term discounted at the rate of
nine percent (9%); and (b) the unpaid estimated future Lease Payments shall be
based on the historical trend of payments made by Hospital to GKF hereunder
taking into account known factors which could impact the historical trend
through the end of the Term. Hospital and GKF acknowledge that the methodology
set forth in this Section 20.2.2 constitutes a reasonable method to calculate
GKF's damages resulting from an Event of Default under the circumstances
existing as of the date of this Agreement. GKF shall use reasonable commercial
efforts to mitigate its damages by attempting to sell or lease the Equipment;
provided that (i) GKF shall not be obligated to give preference to the sale or
lease of the Equipment over the sale, lease or other disposition of similar
equipment or improvements owned or leased by GKF, (ii) GKF shall have no
obligation to sell or lease any improvements made by GKF to the Site, and (iii)
GKF's inability in good faith to mitigate damages shall not limit or otherwise
affect the foregoing methodology for determining damages as set forth in this
Section.
20.2.3 Sell, dispose of, hold, use or lease the Equipment or
any improvements made by GKF to the Site, as GKF in its sole and absolute
discretion may determine (and GKF shall not be obligated to give preference to
the sale, lease or other disposition of the Equipment or improvements over the
sale, lease or other disposition of similar Equipment or improvements owned or
leased by GKF).
20.2.4 Exercise any other right or remedy which may be
available to GKF under the Uniform Commercial Code or any other applicable law
or proceed by appropriate court action, without affecting GKF's title or right
to possession of the Equipment or improvements, to enforce the terms hereof or
to recover damages for the breach hereof or to cancel this Agreement as to the
Equipment.
In addition to the foregoing remedies, Hospital shall be liable to GKF for all
reasonable costs and expenses incurred by GKF as a result of the Event of
Default or the exercise of GKF's remedies.
12
20.3 Upon termination of this Agreement or the exercise of any
other rights or remedies under this Agreement or available under applicable law
following an Event of Default, Hospital shall, without further request or
demand, pay to GKF all Lease Payments and other sums then owing under this
Agreement. Hospital shall in any event remain fully liable for all damages as
may be provided by law and for all costs and expenses incurred by GKF on account
of such default, including but not limited to, all court costs. The rights and
remedies afforded GKF under this Agreement shall be deemed cumulative and not
exclusive, and shall be in addition to any other rights or remedies to GKF
provided by law or in equity.
21. Events of Default by GKF and Remedies.
21.1 The occurrence of any one of the following shall constitute an
Event of Default hereunder:
21.1.1 GKF shall fail to observe or perform any of its
covenants, duties or obligations arising under this Agreement and such failure
shall continue for a period of thirty (30) days after written notice thereof is
given by Hospital to GKF; however, if GKF cures the default within the
applicable thirty (30) day period or if the default reasonably requires more
than thirty (30) days to cure, GKF commences to cure the default during the
initial thirty (30) day period and GKF diligently completes the cure as soon as
reasonably possible following the end of the thirty (30) day period, such
default shall not constitute an Event of Default.
21.1.2 GKF 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.
21.1.3 Within sixty (60) days after the commencement of any
proceedings against GKF 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 GKF's consent or 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.
21.2 Upon the occurrence of an Event of Default involving GKF,
Hospital may at its option do any or all of the following:
21.2.1 By written notice to GKF, immediately terminate this
Agreement as to the Equipment and, in such event, GKF shall remove the
Equipment, the Cobalt and any
13
improvements made by GKF to the Site, at GKF's sole cost and expense or, in the
absence of removal by GKF within a reasonable period of time after a written
request therefor, Hospital may remove the Equipment, the Cobalt and such
improvements with all due care and store the same at GKF's sole cost and
expense.
21.2.2 Seek to recover from GKF such loss as may be realized
by Hospital in the ordinary course of events as a result of the Event of
Default.
21.3 GKF shall in any event remain fully liable for reasonable
damages as provided by law and for all costs and expenses incurred by GKF on
account of such default, including but not limited to, all court costs (other
than attorneys' fees). However, GKF shall not in any manner be or become liable
to Hospital for any consequential or incidental damages that may be suffered by
Hospital which arise out of or result from the Event of Default, except as
otherwise stated in Section 24.1. The rights and remedies afforded Hospital
under this Agreement shall be deemed cumulative to include the purchase option
contained in section 18.3 and not exclusive and shall be in addition to any
other rights or remedies to Hospital provided by law or in equity.
21.4 Notwithstanding the occurrence of an Event of Default with
respect to GKF (including any claim which would otherwise be in the nature of a
set-off), Hospital shall fully perform and pay its obligations hereunder
(including payment of all Lease Payments) without set-off or defense of any
kind. Upon termination of this Agreement or the exercise of any other rights or
remedies under this Agreement or applicable law following an Event of Default,
Hospital shall, without further request or demand, pay to GKF all Lease Payments
and other sums and owing under this Agreement when and as due.
22. Removal of Equipment. Upon expiration of the Term, GKF, at its cost
and expense, shall remove the Equipment from the Site not more than ninety (90)
days following the last day of the Term; provided that all of GKF's right, title
and interest in and to the improvements made by GKF to the Site pursuant to
Section 6 above shall thereupon transfer to Hospital.
23. Insurance.
23.1 During the Term, GKF shall, at its cost and expense, purchase
and maintain in effect an all risk property and casualty insurance policy
covering the Equipment. The all risk property and casualty insurance policy
shall be for an amount not less than the replacement cost of the Equipment. The
all risk property and casualty insurance policy maintained by GKF shall be
evidenced by a certificate of insurance or other reasonable documentation which
shall be delivered by GKF to Hospital upon request following the commencement of
this Agreement and as of each annual renewal of such policy during the Term.
23.2 During the Term, Hospital shall, at its cost and expense,
purchase and maintain in effect professional liability insurance covering the
use or operation of the Equipment
14
by Hospital's employees and agents. The professional liability insurance
policies shall provide coverage in amounts not less than Five Hundred Thousand
Dollars ($500,000.00) per occurrence and One and One half Million Dollars
($1,500,000.00) annual aggregate. The policies to be maintained by Hospital
hereunder shall be evidenced by a certificate of insurance or other reasonable
documentation which shall be delivered by Hospital to GKF no later than the
First Procedure Date and as of each annual renewal of such policies during the
Term. Hospital shall require any physicians using the equipment to show evidence
of professional liability insurance consistent with Hospital's Medical Staff
Bylaws.
23.3 During the construction of the Site and prior to the First
Procedure Date, GKF, at its cost and expense, shall purchase and maintain a
general liability insurance policy which conforms with the coverage amounts and
other requirements described in Section 23.2 above and which names Hospital as
an additional insured party. The policy to be maintained by GKF hereunder shall
be evidenced by a certificate of insurance or other reasonable documentation
which shall be delivered by GKF to Hospital prior to the commencement of any
construction at the Site.
23.4 During the Term, Hospital shall purchase and maintain all
workers compensation insurance to the maximum extent required by applicable law.
24. Indemnification.
24.1 Hospital and GKF each hereby covenants and agrees that it will
defend, indemnify and hold the other party and the other party's officers,
directors, members, employees and agents at all times harmless from and against
any loss, damage and expense (including reasonable attorneys' fees and other
costs of defense) caused by or arising out of: (i) any liability or obligation
related to the business of the indemnifying party prior to the date hereof; (ii)
any obligation or liability arising from services provided under this Agreement
by the indemnifying party to the extent any such liability or obligation
directly results from the negligence or intentional misconduct of the
indemnifying party, it's employees or agents ; or (iii) any obligation or
liability resulting from a breach of any provision of this Agreement by the
indemnifying party, it's employees or agents. The obligations of the parties
under this Section shall survive the expiration or earlier termination of this
Agreement.
24.2 Any party that intends to enforce an indemnity obligation
shall give the indemnifying party notice of any claim as soon as possible, but
the failure to give such notice shall not constitute a waiver or release of the
indemnifying party and shall not affect the rights of the indemnified party to
recover under this indemnity, except to the extent the indemnified party is
materially prejudiced thereby. In connection with any claim giving rise to
indemnity under this Section resulting from or arising out of any claim or legal
proceeding by a person who is not a party to this Agreement, the indemnifying
party, at its sole cost and expense, may, upon written notice to the indemnified
party, assume control of the defense of such claim or legal proceeding, to the
extent that the indemnifying party admits in writing its indemnification
liability to the indemnified party with respect to all material elements
thereof. If the indemnifying party assumes the defense of any such claim or
legal proceeding, the obligations of the indemnifying
15
party hereunder as to such claim or legal proceeding shall be to take all steps
necessary in the defense or settlement thereof and to hold the indemnified party
harmless from and against any losses, damages, expenses or liability caused by
or arising out of any settlement approved by the indemnifying party and the
indemnified party or any judgment in connection with such claim or legal
proceeding. Each indemnified party shall cooperate with the indemnifying party
in the defense of any such action, the defense of which is assumed by the
indemnifying party. Except with the consent of the indemnified party, which
consent may be withheld at the indemnified party's sole discretion, the
indemnifying party shall not consent to any settlement or the entry of any
judgment arising from any such claim or legal proceeding which, in each case,
does not include as an unconditional term thereof the delivery by the claimant
or the plaintiff to the indemnified party of a release from all liability in
respect thereof. If the indemnifying party does not assume the defense of any
claim or litigation, any indemnified party may defend against such claim or
litigation in such manner as it may deem appropriate, including but not limited
to settling such claim or litigation, after giving notice of the same to the
indemnifying party, on such terms as the indemnified party may deem appropriate.
The indemnifying party will, promptly after any of the same is incurred,
reimburse the indemnified party in accordance with the provisions hereof for all
damages, losses, liabilities, costs and expenses incurred by the indemnified
party.
25. Miscellaneous.
25.1 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns. Except as provided under Section 14, neither party shall assign this
Agreement nor any of its respective rights hereunder and Hospital shall not
sublease the Equipment without the prior written consent of the other party,
which consent shall not be unreasonably withheld. An assignment or sublease
shall not relieve the assigning party or sublessor of any liability for
performance of this Agreement during the remainder of the Term. Any purported
assignment or sublease made without the other party's prior written consent
shall be null, void and of no force or effect.
25.2 Agreement to Perform Necessary Acts. Each party agrees to
perform any further acts and execute and deliver any further documents which may
be reasonably necessary or otherwise reasonably required to carry out the
provisions of this Agreement.
25.3 Validity. If for any reason any clause or provision of this
Agreement, or the application of any such clause or provision in a particular
context or to a particular situation, circumstance or person, should be held
unenforceable, invalid or in violation of law by any court or other tribunal of
competent jurisdiction, then the application of such clause or provision in
contexts or to situations, circumstances or persons other than that in or to
which it is held unenforceable, invalid or in violation of law shall not be
affected thereby, and the remaining clauses and provisions hereof shall
nevertheless remain in full force and effect.
16
25.4 Attorney's Fees and Costs. In the event of any action,
arbitration or other proceedings between or among the parties hereto with
respect to this Agreement, each party shall pay for their own attorneys' fees
and related costs and expenses, irrespective of which party is deemed to be the
prevailing party.
25.5 Entire Agreement; Amendment. This Agreement together with the
Exhibits attached hereto constitutes the full and complete agreement and
understanding between the parties hereto concerning the subject matter hereof
and shall supersede any and all prior written and oral agreements with regard to
such subject matter. This Agreement may be modified or amended only by a written
instrument executed by all of the parties hereto.
25.6 Number and Gender. Words in the singular shall include the
plural, and words in a particular gender shall include either or both additional
genders, when the context in which such words are used indicates that such is
the intent.
25.7 Effect of Headings. The titles or headings of the various
paragraphs hereof are intended solely for convenience or reference and are not
intended and shall not be deemed to modify, explain or place any construction
upon any of the provisions of this Agreement.
25.8 Counterparts. This Agreement may be executed in one or more
counterparts by the parties hereto. All counterparts shall be construed together
and shall constitute one agreement.
25.9 Governing Law. This Agreement shall be interpreted and
enforced in accordance with the internal laws, and not the law of conflicts, of
the State of Florida applicable to agreements made and to be performed in that
State.
25.10 Exhibits. All exhibits attached hereto and referred to in this
Agreement are hereby incorporated by reference herein as though fully set forth
at length.
25.11 Ambiguities. The general rule that ambiguities are to be
construed against the drafter shall not apply to this Agreement. In the event
that any provision of this Agreement is found to be ambiguous, each party shall
have an opportunity to present evidence as to the actual intent of the parties
with respect to such ambiguous provision.
25.12 Representations. Each of the parties hereto represents (a)
that no representation or promise not expressly contained in this Agreement has
been made by any other party hereto or by any of its agents, employees,
representatives or attorneys; (b) that this Agreement is not being entered into
on the basis of, or in reliance on, any promise or representation by such party
or individual, expressed or implied, other than such as are set forth expressly
in this Agreement; (c) that it has been represented by counsel of its own choice
in this matter or has affirmatively elected not to be represented by counsel;
(d) it is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization, (e) it
17
has full power and authority to execute, deliver and perform this Agreement, and
(f) the execution, delivery and performance of this Agreement has been duly
authorized by all necessary corporate or other similar action.
25.13 Non-Waiver. No failure or delay by a party to insist upon the
strict performance of any term, condition, covenant or agreement of this
Agreement, or to exercise any right, power or remedy hereunder or under law or
consequent upon a breach hereof or thereof shall constitute a waiver of any such
term, condition, covenant, agreement, right, power or remedy or of any such
breach or preclude such party from exercising any such right, power or remedy at
any later time or times.
25.14 Notices. All notices, requests, demands or other
communications required or permitted to be given under this Agreement shall be
in writing and shall be delivered to the party to whom notice is to be given
either (a) by personal delivery (in which case such notice shall be deemed to
have been duly given on the date of delivery), (b) by next business day air
courier service (e.g., Federal Express or other similar service) (in which case
such notice shall be deemed given on the business day following deposit with the
air courier service), or (c) by United States mail, first class, postage
prepaid, registered or certified, return receipt requested (in which case such
notice shall be deemed given on the third (3rd) day following the date of
mailing), and properly addressed as follows:
To GKF: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
GK Financing, LLC
Four ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
To Hospital: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
SVP & Administrator
Baptist Medical Center
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
WITH A COPY TO :
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, SVP & GENERAL COUNSEL
BAPTIST HEALTH
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
18
A party to this Agreement may change his, her or its address for purposes of
this Section by giving written notice to the other parties in the manner
specified herein.
25.15 Special Provisions Respecting Medicare and Medicaid Patients
25.15.1 Hospital and GKF shall generate such records and make
such disclosures as may be required, from time to time, by the Medicare,
Medicaid and other third party payment programs with respect to this Agreement
in order to meet all requirements for participation and payment associated with
such programs, including but not limited to the matters covered by Section
1861(v)(1)(I) of the Social Security Act.
25.15.2 For the purpose of compliance with Section
1861(v)(1)(I) of the Social Security Act, as amended, and any regulations
promulgated pursuant thereto, both parties agree to comply with the following
statutory requirements (a) Until the expiration of four (4) years after the
termination of this Agreement, both parties shall make available, upon written
request to the Secretary of Health and Human Services or, upon request, to the
Comptroller General of the United States, or any of their duly authorized
representatives, the contract, and books, documents and records of such party
that are necessary to certify the nature and extent of such costs, and (b) if
either party carries out any of the duties of the contract through a subcontract
with a value or cost of $10,000 or more over a twelve month period, with a
related organization, such subcontract shall contain a clause to the effect that
until the expiration of four (4) years after the furnishing of such services
pursuant to such subcontract, the related organization shall make available,
upon written request to the Secretary, or upon request to the Comptroller
General, or any of their duly authorized representatives the subcontract, and
books, documents and records of such organization that are necessary to verify
the nature and extent of such costs.
25.16 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. Notwithstanding the foregoing,
all parties shall make good faith efforts to perform under this Agreement in the
event of any such circumstance. Further, once such an event is resolved, the
parties shall again perform their respective obligations under this Agreement.
25.17 Independent Contractor Status. With respect to the
performance of the duties and obligations arising under this Agreement, nothing
in this Agreement is intended nor shall be construed to create a partnership, an
employer/employee relationship, a joint venture relationship, or a lease or
landlord/tenant relationship between GKF and Hospital. GKF
19
acknowledges that physicians practicing at Hospital are not employees or agents
of Hospital, but independent community practitioners.
[Signatures continued on next page]
20
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
"GKF" GK FINANCING, LLC,
a California limited liability company
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------
▇▇▇▇▇ ▇▇▇▇▇▇,
Chief Executive Officer
"HOSPITAL" SOUTHERN BAPTIST HOSPITAL OF
FLORIDA, INC. D/B/A BAPTIST MEDICAL
CENTER
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: As its SVP & Administrator
21
EXHIBIT 8.1
HOSPITAL'S COST COMPONENT
Rental Space *
Registered nurse *
Physicist *
Recovery room *
Hospital per diem charge *
MRI procedure with contrast *
MRI procedure without contrast *
CT procedure with contrast *
CT procedure without contrast *
Angiography procedure *
Angiograph Cerebral procedure *
Billing and collection fee *
On each anniversary of the first procedure date, Hospital may adjust these * up
or down, which increases or decreases shall directly correlate to increases or
decreases in Hospitals * supported by documentation reasonably satisfactory to
GKF.
All services associated with the Gamma Knife procedure must be performed at a
Baptist Health facility (location) unless that service is not readily available.
Any other billable hospital services not expressly set forth in this exhibit
will be reimbursed to Hospital at Hospital's costs.
22
