EXHIBIT 10.18
LEASE AGREEMENT
This LEASE AGREEMENT (this "Agreement") is made and entered into
effective as of, January 19,1997 (the "Effective Date") by and between Doctors
Hospital 1997, LP a Texas limited partnership doing business as Doctors Hospital
Xxxxxxx (the "Hospital" or "Owners"), and, American Medical Providers, Inc. or
its nominee ("Lessee").
RECITALS:
A. Owner owns a general acute care hospital located at 000 Xxxx Xxxxxxx,
Xxxxxxx, Xxxxx 00000, (the Facility.) containing operating rooms, surgery
suites, a preop area, and a recovery room (collectively, the "Surgery Areas").
B. Lessee is a corporation organized under the laws of the State of
Texas, and will be authorized to do business in Texas at the Commencement Date
(as defined herein) of this Agreement and Lessee has entered into certain
Business Purchase Agreements pursuant to which Lessee is purchasing certain
practice assets from Physicians (the "Affiliated Physicians")who are thereafter
entering into employment agreements with a regional group practice limited
liability corporation ("RGP") which will enter into a management agreement with
Lessee or its wholly owned subsidiary corporation.
C. Lessee desires to use the Surgery Area for the purpose of providing
ambulatory surgical services to patients of the RGP's Affiliated Physicians (as
defined hereinabove), on the terms and conditions set forth in this Agreement,
and Owner desires to allow such use.
AGREEMENTS:
NOW, THEREFORE, in consideration of the premises and the terms and
conditions contained in this Agreement, the mutuality and adequacy of which are
forever acknowledged, the parties do agree as follows, intending to be legally
bound:
1. LEASE OF PREMISES. Owner hereby leases and lets to Lessee, for use by
RGP, Affiliated Physicians and Lessee, and Lessee hereby leases and takes from
Owner, the Surgery Area, or so much thereof as is needed by Lessee (the
"Premises"), located in Owner's Facility located in Houston, Texas which
Facility is situated on that certain tract or parcel of real property (the
"Land"), situated in the state of Texas and being more fully described on
Exhibit A attached hereto and made a part hereof for all purposes, during the
following times:
(a) Forty Eight (48) hours per quarter (the "Base Hours"), which shall
be (be at such times and such increments as is mutually agreed to by the
parties) on weekdays other than holidays,( unless mutually agreed
otherwise, and which shall be scheduled by Lessee in advance in
accordance with Owner's scheduling procedure but in not less than 4 hour
blocks unless otherwise agreed to by Lessee.
(b) Additional time, which shall be scheduled by Lessee in advance in
accordance with Owner's scheduling procedure, and hold-over time
(collectively, "Additional Time") as needed by Lessee.
A floor plan depicting the design of the Premises is attached hereto as Exhibit
B and made a part hereof for all purposes. Owner hereby grants Lessee, RGP,
Affiliated Physicians, and their respective assignees, subtenants, agents,
employees, invitees, and other visitors, a nonexclusive license for the term of
this Lease to use the Surgery Area and the common areas of the Facility and the
Land.
2. TERM AND TERMINATION.
(a) TERM. This Agreement shall be in force for an initial term of
one year commencing on the Commencement Date and, upon notice by Lessee
or Owner at least thirty (30) days before the end of the initial term or
any renewal term, may be renewed for successive renewal terms of one
year each, unless sooner terminated in accordance with the terms and
conditions of this Agreement.
(b) TERMINATION. Agreement may be sooner terminated only on the
occurrence of one of the following:
(i) TERMINATION BY AGREEMENT. If Owner and Lessee mutually
agree in writing, this Agreement may be terminated on the terms
and date stipulated.
(ii) TERMINATION FOR DEFAULT. If either party shall give
written notice to the other that the other party has
substantially defaulted in the performance of any obligation
under this Agreement, and such default shall not have been cured
within fifteen (15) days following the giving of such notice, the
party giving the notice shall have the right to immediately
terminate this Agreement by written notice.
(iii) LEGISLATIVE, REGULATORY OR ADMINISTRATIVE CHANGE. In
the event of a change in the Medicare or Medicaid laws,
regulations or general instructions or interpretations, the
adoption of new state or federal legislation, or a change in any
third party reimbursement system, any of which materially affects
the manner in which either party may perform or be compensated
for its services under this Agreement, the parties may either
immediately terminate this Agreement or propose a new service
arrangement or basis for compensation for the services furnished
pursuant to this Agreement. If such notice of new service
arrangement or basis for compensation is given and if the parties
are unable within ninety (90) days thereafter to agree upon a new
service arrangement or basis for compensation, either party may
terminate this Agreement by ninety (90) days notice to the other
on any future date specified in such notice.
(c) For purposes of this Agreement "Commencement Date" shall mean
the date which is the latter of the following events to have occurred: (a) the
Initial Public Offering date for American Medical Providers, Inc in its sale of
stock to the public as contemplated in its registration statement filed with the
Securities Exchange Commission; (b) the date this Agreement is approved by
Lessee's board of directors, or the date the board of managers for the RGP has
approved this Agreement.
3. USE. The Surgery Area shall be used by Lessee, RGP, or Affiliated
Physicians for the sole purpose of providing ambulatory surgical services and
related services for the benefit of RGP's or Affiliated Physicians' patients.
4. RENT. Lessee agrees to pay Owner (a) an annual base rental beginning
on the Commencement Date of One Hundred Five Thousand Six Hundred Dollars
($105,600.) payable in equal monthly installments of Eight Thousand Eight
Hundred Dollars ($8,800), which amounts are subject to adjustment as provided in
this Section, with the first installment to be paid on the Commencement Date and
subsequent installments each succeeding month, and (b) an additional rental
charge of One Hundred Thirty Seven Dollars ($137.00) for each quarter hour (or
part thereof) of Additional Time, payable monthly, with the first payment to be
paid forty-five (45) days after the month containing the Commencement Date and
subsequent installments after each succeeding month. The Base Rental shall be
adjusted for the following:
(a) If an Affiliated Physician (as of the Effective Date) of
Lessee dies, becomes permanently disabled, or moves away from the
Houston metropolitan area, the Lessee shall have the option, upon 10
days notice to Owner, to reduce the number of Base Hours, (and
correspondingly the Base Rental) in proportion to the collections of
such Affiliated Physician to the collections of the RGP over the prior
two months relating to services rendered to their respective patients.
For purposes of this Agreement, a disability is a documented illness or
incapacity that keeps or is expected to keep an individual from resuming
his full-time professional practice for at least ninety (90) days;
provided, however, that such ninety (90) day period shall not be deemed
to be broken if the individual returns to work for no more than three
consecutive working days during any given attempt to resume his or her
regular work schedule.
(b) If an Affiliated Physician discharges his obligations to RGP
or Lessee through bankruptcy, the Lessee shall have the option, upon 10
days notice to Owner, to reduce the number of Base Hours, (and
correspondingly the Base Rental) in proportion to the collections of
such Affiliated Physician to the collections of the RGP over the prior
two months relating to services rendered to their respective patients.
(c) If the Premises are not available for Lessee at scheduled
times, the base rental shall be reduced by $140.00 for each quarter hour
(or part thereof). During any block of time scheduled by Lessee if the
turn around time (defined to be the time between surgeries required by
Owner to clean and make the Surgery space available for the next
surgery) is in excess of twenty minutes, then Lessee shall be given
credit against the Base Rental for such period by $140.00 for each
quarter hour (or part thereof) in excess of 20 minutes, and such
turn-around time shall not reduce the numbers of Base Hours available to
Lessee.
(d) If Lessee attempts to schedule at least the number of hours
set forth in Section l (a) in accordance with Owner's scheduling
procedure and the Premises are not available for that number of hours,
the base rental shall be reduced by $140. for each quarter hour (or part
thereof) of the shortfall.
All rent shall be payable by Lessee to Owner at the Facility. All rent shall be
prorated for the number of days Lessee is actually in possession of the Surgery
Area during the first and last months of the term of this Agreement.
5. OPERATION OF SURGERY AREA. Owner shall provide the facilities
reasonably necessary and appropriate for the provision of ambulatory surgical
services at the Surgery Area, including but not limited to all personnel
staffing, supplies and disposable supplies and equipment, including surgery
trays, operating room equipment, as well as pre-operating and recovery
equipment, personnel and space. Owner (or the landlord from which Owner leases
the Facility) shall be responsible for all costs of repairs, maintenance and
improvements, utility expenses, normal janitorial services, refuse disposal, and
all other costs and expenses reasonably incurred in conducting business at the
Facility during the term of this Agreement, including but not limited to related
real or personal property lease cost payments and expenses, taxes, utilities and
insurance.
6. EQUIPMENT. Owner shall at Owner's expense provide all equipment
reasonably necessary and appropriate for the provision of ambulatory surgical
services at the Surgery Area. Owner shall not be required to purchase any
additional equipment which is not already present in the Facility. Lessee, RGP
and Affiliated Physicians shall have access to and use of any medical equipment
located in the Surgery Area throughout the term; provided, however, that title
to the Facility and all equipment other than items placed in the location by
them shall at all times be and remain in Owner or, if applicable, the entity
from which Owner leases the Facility and/or equipment. Should Lessee from time
to time during the term of this Agreement desire Owner to provide additional
patient care other equipment for use at the Surgery Area or to replace used or
obsolete equipment, Lessee shall make such requests or recommendations to Owner,
which shall implement reasonably necessary or appropriate requests. Owner shall
maintain all tangible assets and properties of the Facility in as good a state
of operating condition and repair as they are on the Commencement Date, except
for ordinary depreciation, wear, and tear.
7. PERSONNEL Owner shall at Owner's expense provide all personnel
traditionally provided and reasonably necessary and appropriate for the
provision of ambulatory surgical services at the Surgery Area.
8. SUPPLIES. Owner shall obtain and provide all supplies traditionally
provided in surgeries, including but not limited to those described in section 5
above, and shall ensure that the Surgery Area is at all times adequately stocked
with supplies. Lessee, RGP or Affiliated Physicians shall have the right to
purchase any unique items of supplies, including but not limited to screws,
prosthesis, and implants from Owner at its cost, or alternatively may purchase
all such items independent of Owner and make them available for their respective
patients. Lessee, RGP and Affiliated Physicians shall have access to and use of
any supplies reasonably necessary and appropriate for the provision of
ambulatory surgery services at the Surgery Area.
9. LICENSES. Owner has and shall maintain possession of all licenses
necessary for the provision of ambulatory surgery services at the Facility, and
all such licenses are and shall remain in full force and effect. To Owner's
knowledge, no material violations are or have been recorded in respect of such
licenses, and no proceeding is pending or, to the knowledge of Owner,
threatened, seeking the revocation or limitation of any of such licenses.
10. MEDICARE/MEDICAID PROGRAMS. Owner is and shall remain a Provider
under existing provider agreements with the applicable Medicare and Medicaid
authorities. Owner shall file timely all reports required to be filed in
connection with an state and federal Medicare and Medicaid programs. Owner shall
have the sole right to xxxx for facility fees for all Medicare and Medicaid
patients, and no portion of such fee shall be paid to Lessee, RGP, or its
Affiliated Physicians.
11. MANAGED CARE NETWORK. Owner will use its commercially reasonable
best efforts to ensure the continued participation of the Facility in all its
existing managed care programs.
12. PROFESSIONAL SERVICES. Lessee. RGP or Affiliated Physicians shall
provide professional services to patients in compliance at all times with
ethical standards, laws and regulations applying to the medical profession.
Lessee shall ensure that each physician associated with Lessee to provide
services at the Surgery Area is licensed in the State of Texas. Lessee shall
have complete control of and responsibility for the selection and compensation
of its physician members and other health care professional employees and shall
further be responsible for the payment of all payroll taxes, employee benefits,
and ad other taxes or charges now or hereafter applicable to them. Any
Professionals associated with Lessee, RGP, or Affiliated Physicians, including
but not limited to Podiatrists, that perform surgery in the Facility, must be
credentialed in accordance with Owner's medical staff bylaws, rules and
regulations.Owner is hereby granted the first right to supply professional
anesthesia services to the RGP Affiliated Physicians at the Surgery Area
provided it is able to meet the price for such services which Lessee has secured
a proposal from an independent third party for the provision of such services.
Owner will be given ten days to agree to the compensation for such professional
anesthesia services as proposed by Lessee, and failing such agreement by Owner,
Lessee shall be able thereafter to contract for anesthesia professional services
independent of Owner..
13. BILLING AND COLLECTION FOR PROFESSIONAL SERVICES. Lessee on behalf
of RGP and Affiliated Physicians shall be entitled to xxxx patients and third
party payers for a professional services furnished by the RGP and its Affiliated
Physicians at the Surgery Area and to collect payments for those xxxxxxxx.
14. BILLING AND COLLECTION FOR FACILITY SERVICES. Lessee recognizes the
expertise and experience of Owner in billing and collecting for all the Facility
Services that shall be provided to patients by Lessee at the Surgery Area. To
that end, Lessee, RGP or Affiliated Physicians shall have the option of
collecting such Facility fees itself or have the Owner xxxx patients (other than
Medicare and Medicaid patients referred to in section 10 above, which shall be
billed by Owner under all such circumstances) for all Facility Services provided
by RGP or its Affiliated Physicians at the Surgery Area and to collect payments
for those xxxxxxxx. Lessee shall provide Owner with at least 30 days prior
notice should it desire to have Owner xxxx and collect for such Facility
Services and any compensation to be paid therefore to Owner shall be mutually
acceptable to both parties. If there is a failure to mutually agree on such
compensation the Lessee will be required to xxxx for all such Facility Services.
In the event Lessee elects to have Owner xxxx and collect for such Facility
Services.
Owner shall establish and maintain credit, billing, tracking, rebilling,
follow-up, and collection policies and procedures and shall use commercially
reasonable best efforts to xxxx and collect timely all facility fees for all
billable Facility Services provided under this Agreement; shall be at least as
diligent and timely in billing and collecting facility fees under this Agreement
as Lessee is in billing and collecting facility fees for billable Facility
Services provided by Owner outside this Agreement; and shall not write off any
facility fees for billable Facility Services provided under this Agreement
without the consent of Lessee, which consent shall not be unreasonably withheld.
In the event Lessee elects to have Owner xxxx and collect for such
Facility Services, Lessee will furnish Owner with all information necessary to
enable Owner to perform the services set forth in this Section and Lessee shall
cooperate, and shall cause its employees to cooperate, with Owner in every
reasonable respect to allow Owner to perform its duties under this Section.
Should Lessee Elect to have Owner xxxx and collect for such Facility
Services, within fifteen (15) days after each calendar month Owner shall pay
Lessee (i) the full amount of all facility fees collected during the month for
all billable Facility Services provided under this Agreement, less (ii) the
amount, if any, of rent remaining unpaid for that month and, if applicable, for
prior months. Owner shall submit regular reports to Lessee as agreed upon by the
parties that set forth the total revenues for Facility Services billed and
collected by Owner on behalf of Lessee during the reporting period. Owner shall
make available to Lessee and its authorized agents and accountants for
inspection at reasonable times and under reasonable circumstances the following
items with respect to Owner's business and financial records, tax returns,
working papers, files, and memoranda of its public accountants and outside legal
counsel for the purpose of making an accounting review; and the results of any
legal or financial audit. This Section shall survive the termination of this
Agreement until all facility fees for billable Facility Services provided under
this Agreement have been either collected and paid to Lessee or, with the
consent of Lessee, written off.
15. TAXES. Owner shall be liable for all taxes levied against the
Surgery Area (including personal property and trade fixtures in the Surgery
Area) during the term of this Agreement, including any special assessments
imposed on or against the property for the construction or improvements thereof.
16. REPAIRS. Owner shall be responsible for the maintenance of the
Surgery Area and shall keep the Surgery Area in good repair. Lessee shall
promptly give Owner notice of any conditions that might require repair or
maintenance by Owner and may confer with Owner regarding how and by whom such
repairs and maintenance will be performed. Owner and Lessee shall keep the
Surgery Area clean and orderly.
17. INSURANCE. Lessee shall at all times during the term of this
Agreement maintain and keep in force professional liability insurance of the
type and in the amount customarily carried by similar professional parties to
RGP and Affiliated Physicians with respect to their performance of similar
services with Owner being named as an insured as its interests may appear, and
Owner shall at all times during the term of this Agreement maintain and keep in
force general comprehensive liability and all other insurance of the types and
in the amounts customarily carried by similar parties with respect to their
operations. Policies shall be placed with insurance companies authorized and
licensed to issue such policies in the State of Texas and reasonably acceptable
to the parties. Each party shall provide the other with a copy of the insurance
policies upon request.
18. CASUALTY DAMAGE. . If the Facility shall be destroyed or
substantially damaged so as to impair the operating integrity of the Surgery
Area, the rent shall be abated from the date of the destruction or substantial
damage until the damage is completely repaired and the operating integrity of
the Surgery Area is restored. If the damage can not be repaired within a period
of ninety (90) days, Lessee shall have the option to terminate this Agreement.
Notice of Lessee's election must be given within thirty (30) days of the date of
the substantial damage.
19. CONDEMNATION. If the whole Facility shall be taken in any
condemnation or eminent domain proceeding or shall be voluntarily conveyed in
Lieu thereof, this Agreement shall terminate on the date Lessee ceases to
provide services at the Surgery Area. If a part of the Facility shall be taken
by condemnation or eminent domain proceedings or shall be voluntarily conveyed
in lieu thereof so as to materially affect the efficient operation of the
Surgery Center, Lessee shall have the option to terminate this Agreement as of
the date of such taking by giving written notice of termination to Owner.
20. SUPERIOR LEASES OR LIENS. Lessee accepts this Agreement subject and
subordinate to any lease or lien upon Owner or the Facility.
21. INDEMNIFICATION. To the extent not covered by insurance, each party
agrees to defend, indemnify, and hold the other party harmless from and against
any loss, claim, suit, expense or obligation arising out of or resulting from
the indemnifying party's negligence, errors, omissions, or malfeasance in the
performance of its responsibilities under this Agreement.
22. COMPLIANCE WITH LAWS AND STANDARDS. Lessee agrees that the Surgery
Area shall be used in compliance with all applicable governmental statutes and
regulations and all valid rules and regulations of any federal, state, or local
governmental subdivision or agency and all applicable standards of the
Facility's appropriate accreditation organization.
23. PATIENTS. The parties agree that the benefits to either party
hereunder do not require, are not payment for, and are not in any way contingent
upon the admission, referral, or any other arrangement for the provision of any
item or service offered by either party to any of the other party's patients in
any facility owned or operated by either party.
24. WAIVER. No waiver by Owner or Lessee of any default or breach of any
term, covenant, condition, agreement, provision or stipulation herein contained
shall be treated as a waiver of any subsequent default or breach of the same or
any other term, condition, covenant, agreement, provision or stipulation hereof.
The rights and remedies of the parties shall be cumulative and in addition to
any other right afforded by law. The exercise of any right or remedy shall not
impair Owner's or Lessee's right to any other remedy.
25. NOTICES. Any notices or other communications to Owner or Lessee
required or permitted to be given under this Agreement must be in writing and
shall be effectively given if delivered to the addressees for Owner and Lessee
set forth below, or if sent by United States certified mail, return receipt
requested, to such addresses:
To Owner Doctor's Hospital 1997 L.P.
d.b.a. Doctor's Hospital Tidwell
Houston, Texas
To Lessee: American Medical Providers, Inc.
or Nominee
C/O American Medical Providers
0000 Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxx. 77027
Any notice mailed shall be deemed to have been given on the second business day
following the date of deposit of such item, postage paid, in a depository of the
United States Postal Service in the continental United States. Notice effected
other than by mail shall be deemed to have been given at the time of actual
delivery. Either party shall have the right to change its address to which
notices shall thereafter be sent to any other address in the continental United
States by giving the other written notice thereof.
26. ASSIGNMENT. Neither party may assign any of its rights and
obligations under this Agreement without the prior written consent of
the other party, except that Lessee may assign all such of its rights to
a wholly owned subsidiary.
27. MISCELLANEOUS.
(a) The parties intend to act and perform as independent
contractors, and nothing in this Agreement is intended and nothing shall
be construed to create an employer/employee, partnership, joint venture
or other type of relationship, or to allow either to exercise control or
direction over the manner or method by which the other performs the
services that are the subject matter of this Agreement.
(b) The terms, provisions, covenants, and conditions contained in
this Agreement shall apply to, inure to the benefit of, and be binding
upon, the parties, their respective heirs, representatives, successors,
and permitted assigns.
(c) All exhibits, attachments, instruments, and addenda referred to
in this Agreement shall be considered a part of this Agreement for all
purposes with the same force and effect as if copied at full length in
this Agreement. The captions or headings of paragraphs in this Agreement
are inserted for convenience only and shall not be considered in
construing the provisions of this Agreement if any questions of intent
should arise.
(d) If any clause or provision of this Agreement is illegal, invalid,
or unenforceable under present or future laws effective during the term
of this Agreement, then it is the intention of the parties that the
remainder of this Agreement shall not be affected thereby, and it is
also the intention of both parties that in lieu of each clause or
provision that is illegal, invalid, or unenforceable, there shall be
added as part of this Agreement a clause or provision with similar terms
to such illegal, invalid, or unenforceable clause or provision as may be
possible, legal, and enforceable.
(e) This Agreement shall be governed by the laws of the State of
Texas, and any and all actions as may be brought under this Agreement,
or in connection with this Agreement, shall be brought in Xxxxxx County,
Texas.
(f) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but which together shall
constitute one and the same instrument.
(g) This Agreement may not be altered, changed or amended except by
an instrument in writing signed by both of the parties hereof, and any
amendment only become effective when such amendment is signed in writing
by both parties.
(h) This Agreement constitutes the entire agreement of the parties
with respect to the subject matter hereof and supersedes all prior
agreements, whether written or oral.
EXECUTED effective as of the 19th day of January 1998..
Mid-America Equities, L.P, a
Texas limited partnership
By: /s/XXXX XXXXXXXX
Name: Xxxx Xxxxxxxx
Title: VP of Normandy Community
Hospital Management, It
General Partner
American Medical Providers, Inc.
By: /s/XXXX XxXXXX
Name: Xxxx XxXxxx
Title:______________________________
