EXHIBIT 10.19
LEASE AGREEMENT
This LEASE AGREENMENT (this "Agreement") is made and entered into effective as
of, January 19,1997 (the "Effective Date") by and between MidAmerica Equities,
L.P., a Texas limited partnership doing business as Normandy Community Hospital,
(the "Hospital" or "Owners"), and, American Medical Providers, Inc. or its
nominee ("Lessee").
RECITALS:
A. Owner owns a general acute care hospital located 0000 Xxxxxxx Xxxxxx Xxxx,
Xx. Xxxxx, Xxxxxxxx 00000 (the Facility.) containing operating rooms, surgery
suites, a pre op 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 Missouri 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 St. Louis Missouri, which
Facility is situated on that certain tract or parcel of real property (the
"Land"), situated in the state of Missouri 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 between the hours of 7:30:00 a.m. and 2:00 p.m. 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 Ownerat 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 on the same day of each succeeding month, and (b) an
additional rental charge of One Hundred Thirty Seven Dollars ($137..00) for each
quarter hour 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 45 days after the end of each successive 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 St.
Louis 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 a 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 supplies, including but not limited to, any screws,
implants, or prostheses 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 Missouri. 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
Podiatrist associated with Lessee, RGP, or Affiliated Physicians that perform
professional services, including surgery, in the Facility must be credentialed
in accordance with the 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 providing such services. Owner will be given 10 days to
agree to the compensation for such professional anesthesia services as proposed
by Lessee, and failing such agreement by Owner, Lessee will 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 to Owner shall be mutually acceptable
to both parties. If there is a failure to mutually agree on such compensation,
the Lessee is required to xxxx for such 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 interest 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 Missouri 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 proceding 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 Mid-American Equities, L.P.
d.b.a. Normandy Community Hospital
0000 Xxxxxxx Xxxxxx Xxxx
Xx. Xxxxx, Xx. 00000
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 this Agreement 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..
Doctors Hospital 1997, L.P., a
Texas limited partnership
By: /s/XXXXXX X. XXXX
Name: Xxxxxx X. Xxxx
Title: Senior Vice President
American Medical Providers, Inc.
By: XXXX XxXXXX
Name: Xxxx XxXxxx
Title:___________________________________
