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EXHIBIT 10.19
Confidential material appearing in this document has been omitted and filed
separately with the Securities and Exchange Commission in accordance with Rule
24b-2, promulgated under the Securities and Exchange Act of 1934, as amended.
Omitted information has been replaced with asterisks.
LEASE AGREEMENT FOR A GAMMA KNIFE UNIT
THIS AGREEMENT FOR A GAMMA KNIFE UNIT on April 10, 1997 (hereinafter
referred to as the "Agreement") is entered into between GK FINANCING, LLC, a
California Limited Liability Company (hereinafter referred to as "GKF") and
YALE-NEW HAVEN AMBULATORY SERVICES CORPORATION, a Connecticut Corporation
(hereinafter referred to as "Yale").
RECITALS
WHEREAS, Yale wants to lease a Leksell Stereotactic Gamma Unit, also known
as the Leksell Gamma Knife Model 23004 (B-type) which is technically specified
in "Exhibit A" to the LGK Agreement (hereinafter defined) which is "Exhibit A"
to this Lease Agreement, all of which technical specifications are incorporated
herein and referred to collectively as the "Equipment" from GKF and further
desires from GKF certain marketing support related to promotion and utilization
of said Equipment; and
WHEREAS, GKF is willing to purchase the Equipment distributed by Elekta,
Inc., a Georgia corporation (hereinafter referred to as "Elekta") and lease the
Equipment to Yale pursuant to the terms and conditions of this Agreement and is
further willing to provide to Yale marketing support.
NOW THEREFORE, in consideration of the promises contained herein, the
parties hereto hereby agree as follows:
1. Execution of LGK Agreement by and between Yale and Elekta. Yale
agrees that simultaneously with the execution of this Agreement it shall enter
into that certain LGK Agreement with Elekta and GKF (hereinafter referred to as
the "LGK Agreement"), a copy of which is attached hereto as "Exhibit A" and
incorporated herein by reference. Yale agrees to fulfill all of its obligations
under the LGK Agreement and acknowledges that GKF is a third party beneficiary
of the LGK Agreement.
2. Certificate of Need. The parties hereto acknowledge that the
installation and use of the Equipment by Yale is conditional upon the issuance
of a Certificate of Need (hereinafter "CON") by the Connecticut Commission on
Hospitals and Health Services. Yale will use all reasonable efforts to obtain a
CON, however, in the event a CON is denied or its issuance is conditioned upon
circumstances or events beyond Yale's reasonable control, then in such event
this Agreement shall be rendered null and void and all parties shall thereafter
be excused from performing any obligation or duty hereunder.
3. Delivery of the equipment and Site Preparation. GKF shall arrange to
have the Equipment delivered to Yale and installed at Temple Medical Center, New
Haven, Connecticut
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(the "Site") in coordination with Elekta. Elekta shall be responsible for
transporting the Equipment for F.O.B. loading dock to the Site and the
subsequent positioning of the Equipment, as well as, construction of the
temporary hot cell to facilitate charging of the Equipment with its cobalt
supply. Elekta has provided Yale with a written estimate for the costs
associated with transporting, installing and positioning the Equipment on Site,
as well as, construction of the temporary hot cell to facilitate charging of the
Equipment with its cobalt supply. Actual costs of transporting, installing and
positioning the Equipment shall be reimbursed by Yale. GKF shall use its best
faith efforts to expedite the delivery of the Equipment in accordance with the
terms and conditions of the Purchase Agreement for the Equipment in accordance
with the terms and conditions of the Purchase Agreement for the Equipment by and
between GKF and Elekta. Notwithstanding the preceding sentence, it is understood
and agreed that GKF has made no representations or warranties to Yale concerning
actual delivery dates or schedules for the Equipment at the Site. GKF shall
coordinate with Yale the estimated delivery date of Equipment.
Yale shall prepare and provide the Site, at its own expense, in
accordance with Elekta's Site Planning Criteria (which Site Planning Criteria
are attached to the LGK Agreement as "Exhibit B" thereto and incorporated herein
by reference) pursuant to site plans and specifications to be prepared by Yale
and submitted to Elekta and GKF for prior written approval.
Yale shall obtain, in a timely manner, a User License from the Nuclear
Regulatory Commission and/or appropriate state agency authorizing it to take
possession of the Cobalt Supply and obtain such other licenses, permits,
approvals, consents and authorizations, which may be required by local
governmental or other regulatory agencies for the Site, its preparation, the
charging of the Equipment with its Cobalt Supply, the conduct of Acceptance
tests, and the use of the Equipment all as more fully set forth in Article 2.1
of the LGK Agreement.
4. Term. The term of this Agreement (the "Term") shall commence as of
the date hereof and unless earlier terminated in accordance with the provisions
of this Agreement, shall continue for the period of ten (10) years following the
date of performance of the first billed Gamma Knife procedure at the Site (the
"First Procedure Date"). Yale shall become liable to GKF for the GKF monthly
reimbursement as hereinafter defined in paragraph 7 upon the First Procedure
Date.
5. Costs of Site Preparation; Costs of Installation. Yale shall, at
its own expense, prepare, construct and make ready the Site in accordance with
the Site plans previously approved by Elekta and GKF pursuant to paragraph 3
hereof, for the installation of the Equipment.
Yale shall, at its own expense, select, purchase, install and
maintain all radiation monitoring equipment and devices, safety circuits and
radiation warning signs required at the Site in connection with the use and
operation of the Equipment, all in accordance with the Site Planning Criteria
and the applicable federal, state and local laws and regulations.
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Yale warrants that upon completion of the Site, it will comply
with the Site Planning Criteria and the site plans and specifications referred
to in paragraph 3 above.
Yale shall be liable for any damages to the Equipment caused by:
(a) Its failure to construct the Site in accordance with the
plans and specifications referred to in paragraph 3 above
and the Site Planning Criteria; or
(b) Negligent or intentional acts of omission or commission by
Yale or any of its officers, agents, physicians or
employees in connection with the construction of the Site.
Yale shall utilize its best efforts to fulfill on an
expeditious basis its obligations under this paragraph 5, and keep GKF informed
to Yale's progress in fulfilling its obligations pursuant to this paragraph 5.
Should Yale not have all Site preparations complete by the mutually agreed upon
delivery date specified by a separate agreement between the parties, plus a
sixty (60) day grace period such that the Site is acceptable for positioning
and installation of the Equipment. Yale shall reimburse GKF at an interest rate
of Bank of America's prime rate plus two percent (2%) on GKF's equipment cost
from such agreed delivery date until the Site is prepared to allow positioning
and installation of the Equipment. Should GKF not deliver the Equipment to Yale
on the later of the above scheduled delivery date plus a sixty (60) day grace
period or when Site is ready to accept the Equipment. GKF shall reimburse Yale
at an annual interest rate of Bank of America's prime rate plus two percent
(2%) on its actual cost expended to prepare the Site until the Equipment is
installed at the Site.
6. Marketing Support. GKF will provide marketing support for the Gamma
Knife service in coordination with Yale.
7. Reimbursement to GKF. As its sole consideration for the Lease of the
Equipment and GKF's provision of certain marketing and administrative support
service. Yale shall pay GKF as follows:
*
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*
The amount due to GKF hereunder shall be determined and paid on a
monthly basis throughout the initial Term and any successive Terms, and
thereafter to the extent any technical component revenues associated with Gamma
Knife treatments during the Term or any successive Term of the Lease are
received subsequent to termination of the Lease. Within ten days after the last
day of each calendar month of the initial Term and any successive terms (and
upon the termination or expiration of the initial Term or any subsequent term
with respect to a period shorter than a calendar month) each party shall submit
to the other a statement setting forth such party's portion of the Direct
Operating Expenses, and the parties shall calculate the Direct Operating
Expenses with respect to such month (or portion thereof). The parties shall
also calculate the net technical component of revenues (determined on a cash
basis) with respect to cash receipts for Gamma Knife treatments paid in such
month; and within ten days after the conclusion of such month or portion
thereof Yale shall provide to GKF all revenue data necessary to perform such
calculation. The GKF shares of such revenues for such month (or portion
thereof) is referred to herein as the GKF Monthly Reimbursement."
*
On or before the First Procedure Date, the parties shall execute a preliminary
amendment to this paragraph 7 setting forth GKF's equipment cost. Yale's cost
to install the Equipment and Yale's cost to obtain the CON for the Gamma Knife
and Yale's pre-opening marketing costs. Each party shall first provide to the
other documentary proofs of expenditure to justify the amounts claimed for such
costs. A final cost accounting of these aforementioned costs shall be completed
and documented in a final amendment to this paragraph 7 no later than six
months after the First Procedure Date.
The technical fees to be billed for Gamma Knife procedures performed
from time to time during the term of this Agreement shall be an amount which is
economically justifiable based upon each party's Direct Operating Expenses (as
described hereinabove), the total project costs (as described hereinabove)
together with a return thereon, utilization of the Equipment and payments made
by third party payers to Yale from time to time for Gamma Knife procedures.
Yale shall consult with GKF from time to time regarding the amount of the
technical fees to be
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billed by Yale for Gamma Knife procedures and any revisions thereto; however,
subject to compliance with the standard described in the preceding sentence.
Yale shall not be required to obtain the consent of GKF to set or revise the
amount of the technical fees.
With respect to any period for which net technical component revenues
associated with Gamma Knife treatment are equal to or less than Direct Operating
Expenses associated with providing Gamma Knife treatment, GKF shall be entitled
to no reimbursement other than for Direct Operating Expenses incurred by GKF, to
the extent available. Further, the excess of Direct Operating Expenses over net
technical component revenues for any such period shall be paid when incurred by
Yale to the extent of the Yale Percentage, as hereinafter defined in paragraph
11 and by GKF to the extent of the GKF Percentage as hereinafter defined in
paragraph 11.
Throughout the initial Term and any successive terms, and thereafter until
final settlement of all amounts owed to or claimed by either party under this
Agreement, each party shall have the right to inspect, audit and copy the other
party's books and records which relate to the accounting for and calculation of
revenues from the provision of Gamma Knife procedures, Direct Operating
Expenses, project cost. Yale's cost to install the Equipment and Yale's cost to
obtain the CON for the Gamma Knife and GKF's equipment acquisition cost.
8. Use of the Equipment. The Equipment may be used by Yale only at the
Site and shall not be removed therefrom. Yale shall not assign or sublease the
Equipment or its rights hereunder without the prior written consent of GKF,
which consent shall not be unreasonably withheld. No permitted assignment or
sublease shall relieve Yale of any of its obligations hereunder. Yale shall not
use nor permit the Equipment to be used in any manner nor for any purpose for
which the Equipment is not designed or reasonably suitable. Yale shall not
permit any liens whether voluntary or involuntary, to attach to the Equipment,
without the prior written consent of GKF. Yale shall have no interest in the
Equipment other than the rights acquired as a lessee hereunder and the Equipment
shall remain the property of GKF regardless of the manner in which it may be
installed or attached at the Site. Yale shall at GKF's request, affix to the
Equipment tags, decals, or plates furnished by GKF, indicating GKF's ownership
of the Equipment.
9. Additional Covenants of Yale. In addition to the other covenants
made by Yale. Yale shall, at its own cost and expense:
(a) Provide properly trained professional, technical and support
personnel and supplies required for the proper performance of
medical procedures utilizing the Equipment.
(b) Monitor all patients' condition and treatment.
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(c) Fully comply with all of its obligations under the LGK
Agreement.
(d) To the extent any loss realized by GKF is not fully covered by
insurance, indemnify GKF as herein provided:
(i) Yale shall indemnify, hold harmless and/or reimburse GKF
on a prompt basis for any and all damage to the
Equipment, reasonable wear and tear excepted (including
any damage relating to or arising out of violations by
Yale, its agents, officers, physicians, employees,
successors and assigns of the Services Agreement
described in paragraph 16 hereof), together with
reasonable attorney fees incurred by GKF to establish or
enforce its right to indemnity hereunder, to the extent
the damage (or a portion thereof) is caused by the
negligent or wrongful acts or omissions of Yale, its
agents, officers, directors, physicians, employees,
successors or assigns. Yale shall not be obligated to
indemnify GKF hereunder to the extent the damage (or a
portion thereof) is caused by the negligent or wrongful
acts or omissions of GKF or its agents, officers,
directors, employees, successors or assigns. In the
event the Equipment is destroyed or rendered unusable,
this indemnification shall extend up to the full
replacement value of the Equipment at the time of its
destruction less salvage value, if any.
(ii) Yale shall indemnify, hold harmless and/or reimburse GKF
for any loss, claim, liability or damage (collectively
"damages") which GKF may suffer or incur, and for
reasonable attorneys fees incurred by GKF to defend
itself against such damages or to establish or enforce
its rights to indemnity hereunder with respect to the
events or occurrences described in Section 7.3 of the
LGK Agreement to the same extent that Yale agrees to
indemnify Elekta thereunder, Notwithstanding the
foregoing in no event shall liability of Yale hereunder
cause or result in a recovery in favor of GKF which is
duplicative of any damages paid directly to Elekta.
(iii) Yale shall indemnify, hold harmless and/or reimburse GKF
for any damages (as defined in sub-part (ii) above) and
for reasonable attorneys fees incurred by GKF to defend
itself against such damages or to establish or enforce
its right to indemnity hereunder which GKF may suffer or
incur as a result of Yale's breach of the LGK Agreement.
Notwithstanding the foregoing in no event shall
liability of Yale hereunder cause or result in a
recovery in favor of GKF which is duplicative of any
damages paid directly to Elekta.
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(e) Provide reasonable and customary marketing materials (i.e.
brochures, announcements, etc.) and marketing support.
10. Additional Covenants, Representations and Warranties of GKF. In
addition to the other covenants, representations and warranties, made by GKF in
this Agreement:
(a) GKF represents and warrants that GKF has full power and authority
to enter into this Agreement, and that this Agreement does not
and will not violate any agreement, contractor or instrument
binding upon GKF.
(b) GKF represents and warrants to Yale that, upon delivery of the
Equipment to Yale, GKF shall use its best faith efforts to
require that Elekta places the Equipment in service, as soon as
possible, consistent with all reasonable safety precautions. In
accordance with the manufacturer's specifications, guidelines
and field modification instructions.
(c) GKF represents and warrants that throughout the term of this
Agreement, Yale shall peaceably enjoy the use of the Equipment,
free of the rights of any other persons except for those rights
reserved by GKF in this Agreement or granted to Elekta under the
LGK Agreement or under Elekta's Purchase Agreement, with GKF, a
full and complete copy of which has been provided to Yale and
incorporated as an exhibit to the LGK Agreement.
(d) During the entire term of this Agreement and subsequent
extensions thereof, GKF shall maintain at its sole cost the
Equipment to Elekta's specifications and shall maintain in full
force and effect: (1) the Service Agreement referenced in
paragraph 16 hereof; and (2) any other service or other
agreements required to fulfill GKF's obligations to Yale
pursuant to this paragraph 10(d). Unless Yale elects in its sole
discretion to pursue any warranty claim directly against Elekta.
GKF represents and warrants that during the entire term of this
agreement and any subsequent extensions hereof, that it will
fully pursue any and all remedies it may have against Elekta
under the Service Agreement to insure that the Equipment will be
in conformity with Elekta's warranties so that it is free from
defects in design, materials, and workmanship which result in
noncompliance with the Equipment's specifications and/or
Elekta's warrants to GKF. In no event, however, shall the
warranty obligations
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of GKF to Yale with respect to the Equipment be greater or more
extensive than Elekta's warranty obligations to GKF with respect
to the Equipment.
11. Ownership/Title. Except as hereinafter provided, it is expressly
understood that Yale shall acquire no right, title or interest in or to the
Equipment, other than the right to quietly and peacefully possess and use the
same in accordance with the terms of the Agreement. Upon termination of this
Agreement (whether by expiration or early termination) Yale shall be granted a
percentage ownership interest in the Equipment equal to the percentage that
Yale's cost to install the Equipment at the Site. Yale's cost to obtain the CON
for the Gamma Knife and Yale's pre-opening marketing costs is to the total
project cost (the "Yale Percentage"). Upon termination of this Agreement, GKF
shall be granted an ownership interest in those leasehold improvements at the
Site which can be removed on termination of this Agreement without any damage to
the Site equal to the percentage that GKF's equipment cost is to the total
project cost (the "GKF Percentage"). The total project cost for the purposes of
this of this paragraph shall be equal to GKF's equipment cost (equipment
acquisition cost, sales tax and customs and duty) plus Yale's cost to install
the Equipment at the Site, its cost to obtain the CON for the Gamma Knife and
Yale's pre-opening marketing costs. The grant of an ownership interest to Yale
under this paragraph shall be subject to the condition that, at the termination
of the Agreement. Yale must pay a percentage of the total cost to relocate the
Equipment equal to the Yale percentage. Yale's ownership interest in the
Equipment shall be subject to a security interest in the Equipment of any and
all entities that provide financing to GKF with respect to the Equipment.
The Equipment may be subject to a security interest in favor of Elekta
to secure the purchase price for the Equipment due to Elekta. Upon payment of
the full purchase price to Elekta and release of its security interest. GKF may
in its sole discretion finance the Equipment. Financing may be in the form of an
installment loan or a capitalized lease or other commercially available debt
instrument. Should GKF finance the Equipment through an installment loan, GKF
shall be required to provide the Equipment as collateral against the loan.
Should GKF finance the Equipment through a capitalized lease title shall vest
with the lessor until GKF exercises its buy-out option. Yale's interest shall be
subject to the interests of Elekta and thereafter any financing entity. GKF, as
a condition of this Agreement, shall provide to Yale complete copies of all
financing documents prior to execution and shall cause Elekta and any subsequent
financing entity to notify Yale within ten (10) business days of any payment
defaults on the loan/lease agreement for the Equipment installed at the Yale
Site (Payment Default). In the event of a Payment Default by GKF, GKF's Monthly
Reimbursement shall not be paid to GKF until the Payment Default is cured.
Unless Yale exercises its right of assumption of the GKF financing as
hereinafter provided, Yale shall pay all withheld Monthly Reimbursement payments
to GKF forthwith upon receiving written notice from the secured party that
Payment Default has been cured by GKF. In the event a Payment Default remains
uncured by GKF for a period of thirty (30) days after written notice thereof is
received by Yale, Yale in its sole discretion, may cure the Payment Default by
paying the amount owing to the holder of any security interest in the Equipment
("Secured Party"), and assuming and agreeing to be bound by all terms and
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covenants of the financing: provided that (i) in the event GKF's financing
covers Leksell Gamma Knife units other than the Equipment that is the subject
of this Agreement, the financing assumed by Yale shall be limited to the
portion thereof that relates to the Equipment; (ii) the amount of the financing
assumed by Yale shall not exceed the amount of the original purchase price of
the Equipment as set forth in Elekta's Purchase Agreement with GKF (exclusive
of any interest, late fees or other costs or charges that may have been imposed
by the Secured Party and added to the outstanding principal balance
thereunder); (iii) such financing assumed by Yale shall not be cross-defaulted
with any other collateral security other than the Equipment, this Agreement or
any property or other interests related thereto; and (iv) Yale shall give
written notice to GKF and the Secured Party upon the exercise of its election
to satisfy the Payment Default and assume the financing. The Secured Party must
enter into an estoppel and subordination agreement with Yale at or prior to the
time GKF enters into any financing of the Equipment (other than with respect to
Elekta which shall enter into such estoppel and subordination agreement with
Yale within sixty (60) days following the execution of this Agreement by the
parties) wherein the Secured Party's rights in the Equipment shall be fully
subordinate and subject to the rights of Yale to cure any such default and
assume GKF's obligations under the financing as set forth above (subject to the
reasonable approval by the Secured Party of Yale's financial status); provided
that, in the event Yale does not elect to cure such default and assume and
agree to be bound by all terms and covenants of such financing within thirty
(30) days after notice of a Payment Default is received by Yale as set forth
above, the Secured Party shall thereupon be entitled to exercise all of its
rights as a secured party pursuant to the terms and provisions of its financing
documents. In the event Yale exercises its right of assumption upon default by
GKF, all rights of redemption in and to the Equipment shall thereafter vest
solely in Yale, and GKF shall have no further right to any payments under
paragraph 7 hereof. Further, in the event of default by GKF and the exercise
by Yale of its right of assumption of the GKF financing as hereinabove
provided. GKF shall have waived all right, title and interest in and to the GKF
Percentage and to any and all equity it may have previously had in and to the
Equipment, and Yale shall have no obligation to resell the Equipment or take
any action to preserve or protect such equity in the Equipment as GKF may have.
The exercise by Yale of any rights or remedies it may have hereunder shall be
deemed to be commercially reasonable.
11.1. Right of First Refusal. If at any time or from time to time during
the terms of this Agreement, Yale desires to purchase, lease or otherwise
acquire one or more additional Leksell Gamma Knife units for use or operation
within the State of Connecticut. Yale shall provide to GKF no less than sixty
(60) days prior written notice of its intended purchase, lease or acquisition
(the "Option Notice"). In the event Yale's desire is to lease any such Leksell
Gamma Knife, for sixty (60) days following GKF's receipt of the Option Notice,
GKF shall have the exclusive option and right to purchase, lease or acquire
such Leksell Gamma Knife and to lease such Leksell Gamma Knife to Yale on the
same terms and conditions as are set forth in this Agreement. In the event
Yale's desire is to acquire any such Leksell Gamma Knife other than by lease,
for sixty (60) days following GKF's receipt of the Option Notice, GKF shall
have the exclusive option and right to so acquire such Leksell Gamma Knife
jointly with Yale. Exercise of the foregoing option by GKF shall be
accomplished by giving written notice of exercise (the
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"Exercise Notice") to Yale dated on or before the expiration of sixty (60) days
following receipt of the Option Notice by GKF. Within ninety (90) days following
receipt of the Exercise Notice by Yale, (i) with respect to the lease of such
Leksell Gamma Knife by Yale; GKF and Yale shall enter into a lease agreement on
the same terms and conditions as are set forth in this Agreement, or (ii) with
respect to the acquisition of such Leksell Gamma Knife other than by lease, GKF
and Yale shall enter into such other agreement pertaining to such acquisition on
terms and conditions as shall be mutually agreed upon between GKF and Yale,
provided that in the event the parties are unable to agree upon the terms and
conditions of such other agreement within such 90-day period, the parties shall
submit the matter to arbitration as set forth in Section 29(e) below. In the
event GKF fails to exercise its option within such sixty (60) day period, Yale
may purchase, lease or acquire such Leksell Gamma Knife independent of GKF,
provided that such purchase, lease or acquisition shall be limited only to the
Leksell Gamma Knife unit referenced in the Option Notice. The parties agree that
a violation of the terms of this Section 11.1 may be enforced by way of an
action for preliminary and permanent injunctive relief since monetary damages
may be difficult to ascertain.
12. Cost of Use of the Equipment. Except as is otherwise provided
herein and subject to Yale's right to charge Direct Operating Expenses against
technical component revenues under paragraph 7 above, Yale shall bear the
entire cost of the operation of the Equipment during the Term of this
Agreement. This shall include, but not be limited to, providing trained
professionals, technical and support personnel and supplies to properly
operate the Equipment. Yale shall be fully responsible and liable for all acts
and/or omissions of such professional, technical and support personnel.
13. Taxes. GKF shall pay any personal property taxes levied against the
Equipment and any other taxes or governmental fees or assessments, however
denoted, including sales and use tax, whether of the federal government, any
state government or any local government, levied or based on this Agreement or
the use of the Equipment except for those taxes, if any, pertaining to the
gross income or gross receipts of Yale.
14. Maintenance and Inspections. GKF agrees to exercise due and proper
care in the maintenance of the Equipment and to keep the Equipment in good
state of repair consistent with Elekta's specifications and the intended use of
the Equipment, reasonable wear and tear excepted. Yale shall be liable to GKF
for all damage to the Equipment caused by the misuse, negligence, improper use
or other intentional or negligent acts or omissions of Yale's employees,
officers, agents and physicians (not employed by GKF or Elekta).
GKF (and Elekta) shall have the right of access to the Equipment for the
purpose of inspecting same at all reasonable times and upon reasonable notice
and with a minimum of interference to Yale's operations. In the event the
Equipment is improperly used by Yale or its employees, agents, officers and
physicians, GKF may service or repair the same as needed and such expense shall
be paid by Yale, unless the repair is covered by the Service Agreement
described in paragraph 16 hereof.
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15. EQUIPMENT MODIFICATIONS/ADDITIONS/UPGRADES. The parties agree
that the necessity and financial responsibility for modifications/additions/
upgrades to the Equipment, including the reloading for the Cobalt-60 source,
shall be discussed and mutually decided by GKF and Yale. If GKF and Yale agree
to reload the Cobalt-60 source (in approximately Year 8 of the initial Term)
GKF and Yale shall share in the expenses of this Cobalt-60 reload in the same
proportions as they share in revenues and expenses as calculated under
paragraph 7. If a reloading of the Equipment occurs, the original term shall be
extended by eight (8) years less the number of years remaining in the original
term.
16. SERVICE AGREEMENT. GKF warrants that it shall simultaneously with
the execution of this Agreement enter into and be solely responsible for the
costs of a Service Agreement with Elekta (the "Service Agreement"), a copy of
which is annexed to Elekta's Purchase Agreement with GKF as "Exhibit F". GKF
shall obtain from Elekta the right to assign GKF's rights under the Service
Agreement to Yale, which assignment shall be made upon Yale's written request
for the same. In no event shall such assignment relieve GKF from its obligation
to pay all costs associated with the Service Agreement.
17. TERMINATION. The Agreement may be terminated after the initial
eighteen (18) month period of service, and after each subsequent twelve (12)
month period of service, upon mutual agreement by the parties.
18. OPTIONS TO EXTEND AGREEMENT.
(a) Yale shall have the option at the end of the ten (10) year
initial Term to:
(1) Extend the term of the lease under this Agreement for an
additional term of five (5) years under the same terms and
conditions as are set forth herein.
(2) Terminate this Agreement. If Yale terminates this Agreement
at the end of the initial Term, GKF shall remove the Gamma
Knife within an agreed upon period of time after the
expiration of the (10) year initial Term.
Yale shall exercise one (1) of the two (2) options referred to
above, by mailing an irrevocable written notice thereof to GKF at Xxxx
Xxxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, by certified
mail, postmarked on or before the end of the ninth (9th) year of the initial
Term of this Agreement. Any such notice shall be sufficient if it states in
substance that Yale elects to exercise its option and states which of the two
(2) options referred to above Yale is exercising.
19. NO WARRANTIES BY GKF. As of the First Procedure Date, Yale shall
have thoroughly inspected the Equipment. Provided that all manufacturer's
warranties are assigned to
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Yale with the written consent of Elekta and without waiving any rights, Yale
has under this Agreement to require GKF to provide a Service Agreement to
service and maintain the Equipment. Yale agrees to look solely to the
manufacturer (Elekta) or to suppliers of the Equipment (and its software) for
any and all warranty claims. Any and all warranties made by Elekta will be
enforced by GKF in its good faith best efforts on behalf of Yale during the ten
(10) year initial Term hereof.
GKF SUPPLIES THE EQUIPMENT "AS IS" AND NOT BEING THE MANUFACTURER
OF THE EQUIPMENT OR THE MANUFACTURER'S AGENT, MAKES NO WARRANTY OR
REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE EQUIPMENT'S
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, DESIGN, CONDITION,
DURABILITY, CAPACITY, MATERIAL OR WORKMANSHIP OR THE LIKE.
GKF shall not be liable for any direct, indirect or consequential
losses or damages resulting from operation or use of the Equipment by Yale.
20. EVENTS OF DEFAULT BY YALE AND REMEDIES. The occurrence of any
one of the following shall constitute an Event of Default hereunder:
(a) Yale fails to make payment required pursuant to Paragraph 7
when due and such default conditions for a period of thirty
(30) days after written notice thereof from GKF or its
assignee is given to Yale.
(b) Yale attempts to remove, sell, transfer, encumber, sublet or
part with possession of the Equipment or any items thereof;
except as expressly permitted herein.
(c) Yale shall fail to observe or perform any of the other
obligations required to be observed or performed by Yale
hereunder and such failure shall continue uncured for twenty
(20) days after the expiration of a reasonable time
necessary to cure such default has lapsed and written notice
thereof has been received by Yale;
(d) Yale ceases doing business, 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
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admitting the material allegations of a petition filed
against it in any such proceeding, consents to or
acquiesces in the appointment of a trustee, receiver, or
liquidator of it or of all or any substantial part of
its assets or properties, or it or its shareholders
shall take any action looking to its dissolution or
liquidation.
(e) Within sixty (60) days after the commencement of any
proceedings against Yale 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 Yale'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.
Upon the occurrence of an Event of Default, GKF may, at its option, do any
or all of the following; (i) by notice to Yale, terminate this Agreement as to
the Equipment in default, wherever situated, and for such purposes, enter upon
the Site without liability for so doing or GKF may cause Yale and Yale hereby
agrees to return the Equipment to GKF at Yale's sole cost and expense; (ii)
recover from Yale, as liquidated damages for the loss of the bargain and not as
a penalty, an amount equal to the present value of the unpaid estimated future
lease payments by Yale to GKF through the end of the then current Agreement term
less the reasonable salvage value of the Equipment discounted at the rate of
nine percent (9%), which payment shall become immediately due and payable.
Unpaid estimated future lease payments shall be based on the prior twelve (12)
months' lease payments with an annual five percent (5%) increase; (iii) sell,
dispose of, hold, use or lease the Equipment in default, as GKF in its sole
discretion may determine (and GKF shall not be obligated to give preference to
the sale, lease or other disposition of the Equipment over the sale, lease or
other disposition of similar Equipment owned or leased by GKF). In any event,
Yale shall, without further demand, pay to GKF an amount equal to all sums due
and payable for all periods up to and including the date on which GKF had
declared this Agreement to be in default.
In the event that Yale shall have paid to GKF the liquidated damages
referred to in (ii) above, GKF hereby agrees to pay to Yale promptly after
receipt thereof, all rentals or proceeds received from the reletting or sale of
the Equipment during the balance of the initial Term (after deduction of all
expenses incurred by GKF; said amount never to exceed the amount of the
liquidated damages paid by Yale). Yale agrees that GKF shall have no obligation
to sell the Equipment. Yale shall, in any event, remain fully liable for
reasonable damages as provided by law for all costs and expenses incurred by GKF
on account of such default, including but not limited to all court costs and
reasonable attorney's fees.
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21. Events of Default by GKF and Remedies. The occurrence of any one of
the following shall constitute an Event of Default hereunder:
(a) GKF fails to enter into and maintain in force the Service
Agreement as required under paragraph 16 hereof.
(b) Elekta or any successor Secured Party declares GKF in default
of any financing agreements entered into by GKF to finance the
acquisition of the Equipment.
(c) GKF fails to observe or perform any other obligation required
to be observed or performed by GKF hereunder and such failure
shall continue uncured for twenty days after the expiration of
a reasonable time necessary to cure such default has lapsed
and written notice thereof has been received by GKF.
(d) GKF ceases doing business, makes an assignment for the benefit
of creditors, admits in writing its inability to pay its debts
as they become due, files a voluntary petition in bankruptcy,
is adjudicated a bankrupt or an insolvent, files a petition
seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar
arrangement under any present or future statute, law or
regulation or files an answer admitting the material
allegations of a petition filed against it in any such
proceeding, consents to or acquiesces in the appointment of a
trustee, receiver, or liquidator of it or of all or any
substantial part of its assets or properties, or it or its
shareholders shall take any action looking to its dissolution
or liquidation.
(e) Within sixty (60) days after the commencement of any
proceedings against 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.
Upon the occurrence of an Event of Default described in sub-paragraph (b)
above, Yale's exclusive remedy shall be that described in paragraph 11 above.
Upon the occurrence of any other Event of Default, Yale may, at its option, do
any or all of the following: (i) by notice to GKF terminate this Agreement as to
the Equipment and, in such event, GKF shall remove the
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Equipment at GKF's sole cost and expense or, in the absence of removal by GKF
within a reasonable period of time after written request therefor, Yale may
remove the Equipment with all due care and store the Equipment at GKF's sole
cost and expense; and (ii) recover from GKF such reasonable damages as may be
realized by Yale as a result of such breach or default. GKF shall also be liable
for all costs and expenses incurred by Yale on account of any such default,
including but not limited to all court costs and reasonable attorney's fees.
Except as provided in the first sentence of this paragraph, the rights afforded
Yale hereunder shall not be deemed to be exclusive, but shall be in addition to
any other rights or remedies provided by law.
22. Insurance.
(a) During the initial Term (and any successive terms) GKF shall,
at its own cost and expense, keep in effect an all risk and hazard insurance
policy covering the Equipment. The all risk and hazard insurance policy shall be
for an amount not less than the replacement cost of the Equipment. During the
initial Term of this Agreement (and any successive terms), Yale shall, at its
own cost and expense, keep in effect public liability and professional liability
insurance policies concerning the operation of the Equipment by Yale. Said
policies shall be in the amounts of not less than $1,000,000.00 per occurrence
and $5,000,000.00 in aggregate per year. Yale and GKF, their successors and
assigns, shall be named as additional insureds and/or loss payees on the
insurance policies maintained hereunder by the other party. All policies shall
provide for a waiver of the right of subrogation as to each additional insured.
Evidence of such insurance coverages shall be furnished by both parties to the
other party upon written request, by no later than the First Procedure Date.
(b) If the Equipment is rendered unusable as a result of any
physical damage to, or destruction of, the Equipment. Yale shall give to GKF
immediate notice. GKF shall determine, within thirty (30) days after the date of
occurrence of such damage or destruction, whether the Equipment can be repaired.
In the event GKF determines that the Equipment cannot be repaired. GKF, at its
sole cost and expense (subject to Yale's obligations elsewhere in this
Agreement) shall promptly replace the Equipment. This Agreement shall continue
in full force and effect as though such damage or destruction had not occurred.
In the event GKF determines that the Equipment can be repaired, GKF shall cause
the Equipment to be promptly repaired.
23. Notices. Any notices required under this Agreement shall be sent in
writing and shall be deemed to have been given if delivered by hand or mailed by
certified or registered mail to the following addresses:
To GKF: Xxxxx X. Xxxxxx, C.E.O.
Xxxx Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
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To Yale: Xxxxx Xxxxxxxxx, M.D. Administrator
Yale New Haven Ambulatory Services Corporation
000 Xxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
or to such other addresses as either party may specify for the reception of
notice from time to time in writing to the other party. Any such notice shall
be effective only when actually received by the party to whom addressed.
24. Integrated/Supersedure. This Agreement contains the full and entire
Agreement between the parties hereto, and no oral or written understanding is
of any force or effect whatsoever unless expressly contained in a writing
executed subsequent to the date of this Agreement.
25. Waivers. To the extent that GKF fails to chooses not to pursue any of
its remedies under this Agreement or pursuant to applicable law, such shall not
prejudice GKF's right to pursue any of those remedies at any future time and
shall not constitute a waive of GKF's rights.
26. Assignments. This Agreement is binding upon and shall inure to the
benefit of the permitted successors or assigns of the respective parties
hereto, except that neither party may assign its rights or obligations under
this agreement without the express written consent of the other (which consent
shall not be unreasonably withheld).
27. Amendments. This Agreement shall not be amended or altered in any
manner unless such amendments or alteration is in writing signed by both
parties.
28. Record Keeping Requirements. To the extent required by the regulations
promulgated by the Health Care Financing Administration pursuant to Section 952
of the Omnibus Reconciliation Act of 1980, GKF shall:
(a) Until the expiration of four (4) years following the furnishing
of services pursuant to this Agreement, GKF agrees to make
available upon written request of the Secretary of Health and
Human Services or the U.S. Comptroller General or any of their
duly authorized representatives, this Agreement, any books,
documents and records necessary to verify the nature and extent
of costs incurred by Yale by reason of the activities of GKF
under this Agreement; and
(b) If GKF elects to delegate any of its duties under this Agreement
(which have a cost or value of Ten Thousand
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only 00/100 [$10,000.00] Dollars or more over a twelve (12) month
period) to a related organization. GKF may do so only through a
subcontractor which is consented to by Yale, it being understood that,
inasmuch as Yale is entering into this Agreement in reliance on GKF's
reputation and expertise, that Yale shall be the sole judge of the
reputation and expertise of the proposed delegatee, and only through a
subcontractor which provides that, until the expiration of four (4)
years following the furnishing of services under such subcontract, the
related organization shall make available, on request of the Secretary
of Health and Human Services or the U.S. Comptroller General or any of
their authorized representatives, the subcontract, and books,
documents and records of the nature and extent of costs incurred by
Yale by reason of activities of such related organization under such
subcontract. No delegation by GKF of its duties hereunder shall relief
GKF from liability hereunder.
29. Miscellaneous Provisions.
(a) The invalidity or unenforceability of any portion or provision of this
Agreement shall not effect the validity or enforceability or any other
portion, nor shall either party's implied or express consent to the
breach or waiver of any provision of this Agreement constitute a
waiver of such provision as to any subsequent breach.
(b) In the event of any claim or controversy arising hereunder, the
prevailing party in such claim or controversy shall be entitled to a
reasonable attorneys' fee in addition to whatever other relief said
party would be otherwise entitled.
(c) Force Majeure. Failure to perform by either party will be excused in
the event of any delay or inability to perform its duties under this
Agreement directly or indirectly caused by conditions beyond its
reasonable control including without limitation, fires, floods,
earthquakes, snow, ice, disasters. Acts of God, accidents, riots,
wars, operation of law, strikes, governmental action or regulations,
shortages of labor, fuel, power, materials, manufacturer delays or
transportation problems.
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(d) Choice of Law. This Agreement shall be governed by, and construed,
enforced and interpreted in accordance with the laws of the State of
Connecticut and the laws of the United States of America applicable to
transactions within the State of Connecticut.
(e) Any controversy or claim arising out of or relating to this contract,
or the breach thereof, shall be settled by arbitration to be conducted
in Atlanta, Georgia in accordance with the Commercial Arbitration
Rules of the American Arbitration Association, and Judgment upon the
award rendered by the arbitrators may be entered in any Court having
jurisdiction thereof.
IN WITNESS WHEREOF, the parties have signed this Agreement on the day and
year first above written.
YALE-NEW HAVEN AMBULATORY GK FINANCING, LLC
SERVICES CORPORATION
BY: /s/ XXXX XXXXX /s/ XXXXX X. XXXXXX
-------------------------------- ----------------------------
XXXXX X. XXXXXX
-------------------------------- Chief Executive Officer
Its: President
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