FIRST AMENDMENT TO PURCHASED SERVICES AGREEMENT
Exhibit 10.57a
FIRST AMENDMENT TO PURCHASED SERVICES AGREEMENT
This FIRST AMENDMENT TO PURCHASED SERVICES AGREEMENT (this “First Amendment”) is effective as
of the 1st day of April, 2009, and is entered into by and between GK FINANCING, LLC, a California
limited liability company (“GKF”), or its wholly owned subsidiary whose obligations hereunder shall
be guaranteed by GKF, and UNIVERSITY OF SOUTHERN CALIFORNIA, a California nonprofit public benefit
corporation (“Hospital”).
Recitals:
A. On Xxxxx 0, 0000, XXX and USC University Hospital, Inc. (“USC University Hospital”),
entered into a certain Purchased Services Agreement.
B. Pursuant to a certain letter dated effective as of March 31, 2009, GKF agreed to the
transfer and assignment to Hospital of all of USC University Hospital’s right, title and interest
in, under and to the Purchased Services Agreement. The Purchased Services Agreement, as assigned
to and assumed by Hospital, is referred to herein as the “Agreement.”
C. GKF and Hospital desire to amend the Agreement as set forth herein.
NOW THEREFORE, for valuable consideration, the receipt and sufficiency of which are
acknowledged, the parties hereby amend the Agreement as follows:
Agreement:
1. Defined Terms. Unless otherwise defined herein, the capitalized terms used herein
shall have the same meanings set forth in the Agreement.
2. Amendment to Section 7. Section 7 of the Agreement (Marketing Support) is hereby
deleted in its entirety and replaced with the following:
“7. Marketing. Hospital shall determine whether and how to market
the services provided using the Equipment. The parties shall discuss and
mutually agree on marketing activities that promote the Equipment and the
Hospital services related to the Equipment to the mutual benefit of both
parties. If such joint marketing is undertaken, the parties will determine
an appropriate allocation of the costs of the marketing based on the
relative benefit each receives.”
3. Amendment to Section 8(b). Section 8(b) of the Agreement is hereby deleted in its
entirety and replaced with the following:
“(b) In consideration for and as compensation to GKF for deinstallation and
removal of the Model C, the preparation, construction and improvement of the
Site, installation of the Equipment and the other additional services to be
provided by GKF under this Agreement, Hospital shall pay to GKF, on a
monthly basis, the applicable per Procedure payments set forth in Exhibit 8
of this Agreement (the “Purchased
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Services Payments”) for each “Procedure” that is performed using the
Equipment at the Site, whether on an inpatient or outpatient basis, and
irrespective of the actual amounts billed or collected, if any, pertaining
to such procedures. As used herein, a “Procedure” means 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.”
4. New Section 9.5. The following is hereby added as a new Section 9.5 to the
Agreement:
“(a) At all times during the term of the Agreement subsequent to the
effective date of this First Amendment, Hospital represents and warrants
that any and all Procedures performed or to be performed within the
“Southern California Region” (as defined below) by Hospital, its
representatives and/or affiliates (including, without limitation, USC/Xxxxxx
Comprehensive Cancer Center), whether on an inpatient or outpatient basis,
shall be performed using the Equipment at the Site, except that the
foregoing representation and warranty shall not apply (i) to the performance
of any Procedures using the existing Cyberknife equipment, as presently
configured, upgraded or replaced (the “Cyberknife”), so long as the
Procedures using such Cyberknife are performed at the USC/Xxxxxx
Comprehensive Cancer Center; (ii) to the performance of any Procedures
outside the Southern California Region; (iii) to the activities of
Hospital-affiliated physicians at facilities not owned or operated by
Hospital or its affiliates; or (iv) if the Equipment ceases to represent the
prevailing standard of care for Procedures, as determined in accordance with
Section 9.5(c) below (the “Equipment Use Representation”). As used herein,
the “Southern California Region” shall mean the California counties of
Imperial, Los Angeles, Orange, Riverside, San Bernardino, Santa Xxxxxxx and
Ventura.
“(b) Notwithstanding anything to the contrary contained in this Agreement,
in the event of a breach of the Equipment Use Representation at any time or
from time-to-time, for any reason or for no reason, then, within thirty (30)
days following the occurrence thereof, Hospital shall pay to GKF as
liquidated damages for the loss of the benefit from the Equipment Use
Representation and not as a penalty, an amount equal to * that is performed
using any other equipment or devices (other than the Equipment), including,
without limitation, any other Leksell Gamma Knife unit(s) of any model type
or configuration (provided that no such liquidated damages shall be
payable for any Procedures performed using the Cyberknife). Such liquidated
damages (i) shall be payable for all Procedures performed anywhere within
the Southern California Region using such other equipment or devices by
Hospital or its representatives or affiliates, whether on an inpatient or
outpatient basis, and irrespective of
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the actual amounts billed or collected, if any, pertaining to such
Procedures; (ii) shall be in addition to any Purchased Services Payments
that are payable to GKF for Procedures performed using the Equipment as set
forth herein; and (iii) shall be the sole and exclusive remedy for any
breach of the Exclusive Use Representation and shall not apply to any other
breach of this Agreement. Hospital and GKF acknowledge that the liquidated
damages formula set forth in this Section constitutes a reasonable method to
calculate GKF’s damages resulting from a breach of the Equipment Use
Representation under the circumstances existing as of the date of this First
Amendment.
“(c) A determination as to whether the Equipment ceases to represent the
prevailing standard of care for Procedures may be requested in writing by
either party at any time on or after the fifth (5th) anniversary
of the First Procedure Date and not more than once during any twelve month
period commencing from the fifth (5th) anniversary of the First
Procedure Date. The Equipment shall be deemed not to represent the
prevailing standard of care for the performance of Procedures if it is
determined in accordance with the procedures set forth in this Section
9.5(c) that it is not medically appropriate to use the Equipment to perform
any and all Procedures (other than due to a temporary unavailability of the
Equipment to perform Procedures, e.g., for servicing or Cobalt
reloading of the Equipment, if any). The prevailing standard of care for
the performance of Procedures shall not mean the best or a better standard
of care, but rather is an accepted standard of care within the radiosurgery
community. Within ten (10) days following a party’s receipt of a request
from the other party, each party shall designate a practicing neurosurgeon
who shall have not less than ten (10) years experience in the performance of
radiosurgical procedures using various radiosurgical devices, including the
Gamma Knife. Within ten (10) days of such designation, each such designee
shall mutually agree upon and designate a third neurosurgeon having the same
qualifications as described above and who shall have no relationship or
medical staff privileges with either Hospital or GKF. The three (3)
designated physicians shall have thirty (30) days within which to determine
whether the Equipment does not represent the prevailing standard of care for
Procedures based on the standard set forth in this Section 9.5(c). Any
determination that the Equipment does not represent the prevailing standard
of care for Procedures based on the standard set forth in this Section
9.5(c) must be in writing and signed by not less than two (2) of the three
(3) physician designees. If the requisite number of physician designees
fails to make such determination as provided above, then, the Equipment
shall be deemed to continue to represent the prevailing standard of care for
Procedures based on the standard set forth in this Section 9.5(c), and the
party requesting the determination shall be required to promptly reimburse
the other party for any reasonable costs or expenses incurred by the other
party in connection with such determination. If the requisite number of
physician designees makes the
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determination that the Equipment does not represent the prevailing standard
of care for Procedures as provided above, then, (i) from and after the date
of such determination, Hospital, its representatives and affiliates, may
perform Procedures without using the Equipment without being in breach of
the Equipment Use Representation; and (ii) the party not requesting the
determination shall be required to promptly reimburse the other party for
any reasonable costs or expenses incurred by the other party in connection
with such determination.”
5. Amendment to Exhibit 8. Based in part on GKF’s lowered marketing expense
commitment pursuant to this First Amendment, Exhibit 8 to the Agreement is hereby deleted in its
entirety and replaced with Exhibit 8 attached to this First Amendment.
6. Other. In connection with the assignment of the Agreement from USC University
Hospital to USC, if required by the third party financing company which holds a security interest
in the Equipment, Hospital shall promptly execute and deliver a consent to sublease for the purpose
of evidencing the Lender’s interest in the Equipment and/or this Agreement.
7. Full Force and Effect. Except as amended by this First Amendment, all of the terms
and provisions of the Agreement shall remain in full force and effect. Notwithstanding the
foregoing, to the extent of any conflict or inconsistency between the terms and provisions of this
First Amendment and that of the Agreement, the terms and provisions of this First Amendment shall
prevail and control.
IN WITNESS WHEREOF, the parties have executed this First Amendment effective as of the date
first written above.
| GKF: | Hospital: | |||||||||
| GK FINANCING, LLC | UNIVERSITY OF SOUTHERN CALIFORNIA | |||||||||
By:
|
/s/ Xxxxx X. Xxxxxx | By: | /s/ Xxxxx X Xxxxxxxx | |||||||
| Xxxxx X. Xxxxxx Chief Executive Officer |
Name: Xxxxx Xxxxxx- Xxxxxxxx Title: Assistant VP, Business Services |
|||||||||
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Exhibit 8
PER PROCEDURE PAYMENTS
| Year | Annual Procedures Performed | Fee Per Procedure | ||
*
|
* | * | ||
| * | * | |||
| * | * | |||
| * | * | |||
Notwithstanding anything to the contrary set forth herein, (a) for purposes of determining the per
procedure payment, the number of annual procedures performed shall be reset to zero (0) at the
commencement of each anniversary of the First Procedure Date; and (b) there shall be no retroactive
adjustment of the per procedure payment irrespective of whether the number of procedures performed
reaches a lower per procedure payment level. *.
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