PURCHASED SERVICES
AGREEMENT
THIS PURCHASED
SERVICES AGREEMENT (“Agreement”) is made and
entered into as of November 19 2008, by and between GK
FINANCING, LLC, a California limited liability company
(“GKF”), or its wholly owned subsidiary whose
obligation under this agreement shall be guaranteed by GKF, and
KETTERING MEDICAL CENTER, an Ohio non-profit corporation,
(“Medical Center”), with reference to the following
facts:
WHEREAS, Medical
Center wants to obtain the right to use a Leksell Gamma Knife
Perfexion (the “Equipment”), manufactured by Elekta
Instruments, Inc., a Georgia corporation (“Elekta”),
which will replace the existing Leksell Stereotactic Gamma Unit,
model B (the “Model B”), currently being used by
Medical Center; and
WHEREAS, GKF is
willing to provide Medical Center with the right to use the
Equipment which GKF has acquired from Elekta, pursuant to the terms
and conditions of this Agreement.
NOW,
THEREFORE, in consideration of the mutual covenants, conditions
and agreements set forth herein, and for such other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as
follows:
1. Right to
Use the Equipment. Subject to and in accordance with the covenants
and conditions set forth in this Agreement, GKF hereby grants the
right to use the Equipment to Medical Center, and Medical Center
hereby accepts the right to use the Equipment from GKF. The
Equipment to be placed at the Medical Center pursuant to this
Agreement shall include the Gamma Knife technology as specified in
Exhibit 1, including all hardware and software related
thereto.
2. LGK
Agreement. Simultaneously with the execution of this Agreement,
Medical Center and Elekta shall enter into that certain Leksell
Gamma Knife End User Agreement pertaining to the Equipment (the
“LGK Agreement”), a copy of which is attached hereto as
Exhibit 2. Medical Center shall perform, satisfy and fulfill
all of its obligations arising under the LGK Agreement when and as
required thereunder. Medical Center acknowledges that GKF is a
third party beneficiary of the LGK Agreement and, in that capacity,
GKF shall be entitled to enforce Medical Center’s
performance, satisfaction and fulfillment of its obligations
thereunder.
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3. Term of
the Agreement. The initial term of this Agreement (the
“Term”) shall commence as of the date hereof and,
unless earlier terminated or extended in accordance with the
provisions of this Agreement, shall continue for a period of seven
(7) years following the date of the performance of the first
clinical Procedure (as defined in Section 8) performed on the
Equipment (the “First Procedure Date”) at the Site (as
defined in Section 5.1). The parties agree to amend this
Agreement to memorialize the First Procedure Date upon the
performance of the first clinical Procedure performed on the
Equipment. Medical Center’s obligation to make the
“Purchased Services Payments” to GKF for the Equipment
described in Section 8 below shall commence as of the First
Procedure Date.
4. User
License. Medical Center shall apply for and use its reasonable
efforts to obtain in a timely manner a User License from the
Nuclear Regulatory Commission and, if necessary, from the
applicable state agency authorizing it to take possession of and
maintain the Cobalt supply required in connection with the use of
the Equipment during the term of this Agreement. Medical Center
also shall apply for and use its reasonable efforts to obtain in a
timely manner all other licenses, permits, approvals, consents and
authorizations which may be required by state or local governmental
or other regulatory agencies for the development, construction and
preparation of the Site, the charging of the Equipment with its
Cobalt supply, the conduct of acceptance tests with respect to the
Equipment, and the use of the Equipment during the Term, as more
fully set forth in Article 2.1 of the LGK Agreement. GKF shall
provide assistance to the Medical Center in applying for and for
obtaining all such licenses, permits, approvals, consents or
authorizations. If the applicable regulatory authorities
affirmatively decline to issue a required license, permit,
approval, consent or authorization notwithstanding Medical
Center’s best efforts to obtain the same, all parties shall
be released from further performance or any obligations or duties
arising under this Agreement.
5. Delivery
of Equipment; Site.
5.1
GKF shall coordinate with Elekta and Medical Center to have the
Equipment delivered to Medical Center at the site at which the
Model B is currently located, as described in Exhibit 5.1 of
this Agreement (the “Site”), which delivery is
anticipated to be on or before July 2009, subject to all
approvals and User Licenses having been obtained, and provided
that, if such delivery date is in advance of the expiration of the
current term of the existing Lease Agreement For A Gamma Knife Unit
dated June 1, 1998, between GKF and Medical Center (as
amended, the “Prior Agreement”), which results in an
early termination of the Prior Agreement, then, the parties will
negotiate an extension to the Term of this Agreement to offset the
effect of such early termination of the Prior Agreement. GKF makes
no representations or warranties, and assumes no responsibility or
liability, concerning delivery of the Equipment to the Site or the
actual date thereof. Medical Center shall bear no risk of loss
prior to actual delivery of Equipment to the Site.
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5.2
Medical Center shall provide access to the Site for the Equipment.
GKF at its cost and expense shall prepare the Site for the
Equipment in accordance with Elekta’s guidelines,
specifications, technical instructions and site planning criteria
(which site planning criteria are attached as Exhibit 5.2 of
this Agreement) (collectively the “Site Planning
Criteria”). The location of the Site has been agreed upon by
Medical Center and GKF as described in Exhibit 5.1 of this
Agreement.
6. Site
Preparation, Deinstallation of Model B and Installation of
Equipment.
6.1
GKF, at its cost, expense and risk, shall prepare all plans and
specifications required to construct and improve the Site for the
installation, use and operation of the Equipment during the Term.
The plans and specifications shall comply in all respects with the
Site Planning Criteria and with all applicable federal, state and
local laws, rules and regulations. All plans and specifications
prepared by or on behalf of GKF (and all material changes thereto
following approval by Medical Center and Elekta) shall be subject
to the written approval of Medical Center and Elekta prior to
commencement of construction at the Site. GKF shall provide Medical
Center and Elekta with a reasonable period of time for the review
and consideration of all plans and specifications following the
submission thereof for approval (and Medical Center shall not
unreasonably withhold or delay its approval). Following approval of
the plans and specifications by Medical Center and Elekta, GKF, at
its cost and expense, shall assist Medical Center in obtaining all
permits, certifications, approvals or authorizations required by
applicable federal, state or local laws, rules or regulations
necessary to construct and improve the Site for the installation,
use and operation of the Equipment.
6.2
Based upon the plans and specifications approved by Medical Center
and Elekta, GKF, at its cost, expense and risk, shall prepare,
construct and improve the Site as necessary for the installation,
use and operation of the Equipment during the Term, including,
without limitation, providing all temporary or permanent shielding
required for the charging of the Equipment with the Cobalt supply
and for its subsequent use, selecting and constructing a proper
foundation for the Equipment and the temporary or permanent
shielding, aligning the Site for the Equipment, and installing all
electrical systems and other wiring required for the Equipment. In
connection with the construction of the Site, GKF, at its cost and
expense, shall select, purchase and install all radiation
monitoring equipment, devices, safety circuits and radiation
warning signs required, if any, at the Site in connection with the
use and operation of the Equipment, all in accordance with
applicable federal, state and local laws, rules, regulations or
custom.
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6.3
GKF, at its cost, expense and risk, shall be responsible for the
installation of the Equipment at the Site, including the
positioning of the Equipment on its foundation at the Site in
compliance with the Site Planning Criteria.
6.4
GKF warrants and ensures that, to its best knowledge, upon
completion of the preparation, construction and improvement of the
Site, including the positioning of the Equipment on its foundation
at the Site and installation of the Equipment, the Site shall
comply in all material respects with the Site Planning Criteria and
all applicable federal, state and local laws, rules and
regulations, and be safe and suitable for the ongoing use and
operation of the Equipment during the Term. GKF agrees to
indemnify, defend and hold Medical Center harmless from any loss,
or claim, suit or proceeding brought against the Medical Center in
connection with or arising from GKF’s noncompliance with
GKF’s warranties and assurances provided under this
Section 6.4. It is acknowledged that the existing site and
location that are currently being used for the Model B pursuant to
the Prior Agreement (the “Existing Site”) will continue
to be used for the Equipment following the deinstallation and
removal of the Model B and GKF’s modifications to the Site to
accommodate the Equipment. Notwithstanding anything to the contrary
contained in this Agreement, (a) nothing set forth in this
Agreement shall eliminate, modify or limit any or all of Medical
Center’s representations, warranties and/or obligations set
forth in the Prior Agreement with respect to the Existing Site, all
of which shall remain unchanged and in full force and effect, and
shall survive the termination or expiration of the Prior Agreement;
and (b) GKF makes no representation or warranty and assumes no
liabilities with respect to the work performed by or on behalf of
Medical Center pursuant to the Prior Agreement in connection with
the Existing Site.
6.5
GKF at its cost, expense and risk, shall coordinate with Elekta the
deinstallation and removal of the Model B including unloading and
disposing of the cobalt. GKF agrees to provide Medical Center the
option to retain its existing headframes and fiducial boxes; and in
the event that Medical Center exercises this option, GKF also
agrees that it shall, at its sole cost and expense, refurbish the
existing headframes.
6.6
GKF shall use its reasonable efforts to satisfy its obligations
under this Section 6 in a timely manner. GKF shall keep
Medical Center informed on a regular basis of its progress in the
design of the Site, the preparation of plans and specifications,
the construction and improvement of the Site, and the satisfaction
of its other obligations under this Section 6. In all events,
GKF shall complete all construction and improvement of the Site
required for the installation, positioning and testing of the
Equipment on or prior to the delivery date described in
Section 5.1 above. During the Term, Medical Center, at its
cost and expense, shall maintain the Site in a good working order,
condition and repair, reasonable wear and tear excepted.
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6.7
Notwithstanding anything to the contrary contained in this
Agreement, GKF’s responsibility for all costs and expenses
incurred in connection with Section 6.1, 6.2, and 6.3 shall
not exceed * in the aggregate. All costs and expenses in excess of
* shall be the responsibility of Medical Center.
7. Marketing
Support. GKF, in coordination with Medical Center, shall provide
Medical Center with marketing support for the service to be
provided by Medical Center using the Equipment. Not less than
ninety (90) days prior to the First Procedure Date and the
commencement of each succeeding twelve (12) month period
during the Term, GKF and Medical Center shall develop a mutually
agreed upon marketing budget and plan (“Plan”) for the
clinical service to be supported by the Equipment for the
succeeding twelve (12) month period of the Term. Once
approved, the Plan shall be implemented by Medical Center in
accordance with its terms. If Medical Center has not approved or
disapproved of the Plan within sixty (60) days following its
receipt, Medical Center shall be deemed to have approved the same.
All advertisements, brochures and other marketing materials
pertaining to the Plan shall be subject to review and written
approval by Medical Center and GKF prior to their use. Medical
Center and GKF shall discuss the Plan on a regular basis not less
than once per quarter. Medical Center’s and any Medical
Center subsidiary’s or related corporation’s name,
trademarks, service marks, or other identifying names, marks,
images or designations shall be and remain the sole and exclusive
property of Medical Center, but which may be used in any written
pre-approved marketing materials without payment of any license or
royalty fee. As funds are expended by Medical Center in accordance
with the Plan, Medical Center shall submit invoices (together with
documentary evidence supporting the invoices) for its expenditures
paid to third parties and, promptly following the receipt of such
invoices, GKF shall reimburse Medical Center for * of approved
expenditures, provided that such portion to be reimbursed by GKF
shall not exceed an average of * annually during the term of the
Agreement. It is acknowledged by the parties that such expenses to
be reimbursed by GKF as provided in Section 7 have been
included in GKF’s calculation of Medical Center’s
Purchased Services Payments so as to allow GKF to recover such GKF
expenses during the Term of this Agreement.
8. Purchased
Services Payments.
(a) The
parties have negotiated this Agreement at arm’s length based
upon reasonable and jointly derived assumptions regarding the
capacity for clinical services available from the Equipment,
Medical Center’s capabilities in providing high quality
radiation oncology services, market dynamics, GKF’s risk in
providing the Equipment, and the provision to GKF of a reasonable
rate of return on its investment in support of the Equipment. Based
thereon, the Parties believe that the “Purchased Services
Payments” as defined below represent fair market value for
the use of the Equipment, the deinstallation and removal of the
Model B, the preparation, construction and improvement of the Site,
and the marketing support and other services to be
provided
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by GKF to
Medical Center hereunder. Medical Center undertakes no obligation
to perform any minimum number of Procedures on the Equipment, and
the use of the Equipment for the performance of Procedures is
wholly based upon the independent judgment of physicians who order
such Procedures to meet the medical needs of their
patients.
(b) In
consideration for and as compensation to GKF for deinstallation and
removal of the Model B, the preparation, construction and
improvement of the Site, installation and use of the Equipment, the
Equipment modification allowance referenced in Section 13.1
below, and marketing support and the other additional services to
be provided by GKF under this Agreement, Medical Center shall pay
to GKF, on a monthly basis, the applicable “Purchased
Services Payments” (as defined below) for each
“Procedure” that is performed by Medical Center or its
representatives or affiliates, whether on an inpatient or
outpatient basis, and irrespective of whether the Procedure is
performed on the Equipment or using any other equipment or devices,
including but not limited to any “Additional GK Leksell
Unit” (defined below). Notwithstanding the foregoing, and for
the avoidance of doubt, if at any time in addition to the
Equipment, Medical Center purchases, leases or otherwise acquires
from any third party the use of a Leksell Gamma Knife unit(s) of
any model type or configuration (an “Additional GK Leksell
Unit”), then, in addition to the Purchased Services Payments
that are payable to GKF for Procedures performed using the
Equipment as set forth above, Medical Center shall pay to GKF the
Purchased Services Payments on a monthly basis for any and all
Procedures performed using the Additional GK Leksell Unit, and/or
any other equipment or devices, whether on an inpatient or
outpatient basis. The parties acknowledge that the Purchased
Services Payments represent fair market value for the use of the
Equipment as described in this Agreement. As used
herein:
(i) “Procedure”
means any treatment that involves stereotactic, external, single
fraction, conformal radiation, commonly called radiosurgery, that
may include one or more isocenters during the patient treatment
session, delivered to any site(s) superior to the foramen magnum.
“Procedure” shall expressly exclude (1) any
procedures which the Equipment is unable to perform or which, in
the opinion of Elekta, the Equipment is not designed or reasonably
suitable to perform; and/or (2) any fractionated procedures
for a single tumor involving more than a single fraction (commonly
called fractionated stereotactic radiotherapy) where such
fractionated treatment is medically indicated.
(ii) “Purchased
Services Payments” shall be equal to the applicable
percentage of the “Technical Component Collections”
relating to each Procedure as set forth in Exhibit 8 attached
hereto performed using the Equipment, any Additional GK Leksell
Unit and/or any other equipment or devices during the Term of this
Agreement.
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(iii) “Technical
Component Collections” means the total amount actually
collected by Medical Center or its representatives or affiliates
during each month from any and all payor sources, including,
without limitation, patients, insurance companies, state or federal
government programs or any other third party payors, including,
without limitation, all copayments and deductibles, as
reimbursement for the technical component of all services
(including, but not limited to, treatment planning and delivery,
imaging, medical supplies, pharmacy, laboratory, and recovery room)
pertaining to each Procedure performed on the Equipment, any
Additional GK Leksell Unit and/or any other equipment or devices
during the term of this Agreement. The technical fees to be billed
for each Procedure (on an individual basis and not collectively)
that is performed utilizing the Equipment, any Additional GK
Leksell Unit and/or any other equipment or devices during the Term
of this Agreement shall be an amount which is economically
justifiable based upon GKF’s direct operating expenses and
its total project costs, together with a return thereon. For all
Procedures that are performed utilizing the Equipment, any
Additional GK Leksell Unit and/or any other equipment or devices,
Medical Center shall consult in advance with GKF from time to time
regarding the amount of such technical fees to be billed by Medical
Center. Subject to compliance with the standard described in the
preceding sentence, Medical Center and GKF shall mutually agree on
the setting or revision of the amount of, or portion comprising,
such technical fees on no more than an annual basis to ensure that
such fees remain consistent with fair market value, and the
acceptance of the technical fee component amounts with third party
payors prior to their implementation.
(c) On
or before the fifteenth (15) day and the last day of each
month (or portion thereof) during the term of this Agreement,
Medical Center shall inform GKF in writing as to (i) the
number of Procedures performed during that month utilizing the
Equipment (and, if applicable, any Additional GK Leksell Unit
and/or any other equipment or devices); and (ii) the Technical
Component Collections during that month. Medical Center shall
submit claims for reimbursement to the appropriate payors for each
Procedure within thirty (30) days after the patient receiving
the treatment is discharged. If no Technical Component Collections
are received during any month, then, no Purchased Services Payments
shall be owing by Medical Center to GKF for that month. During the
Term of this Agreement, Medical Center shall, by the thirtieth
(30th) day of each month, remit GKF’s aggregate Purchased
Services Payment for the immediately preceding month, and, for a
period of twenty-five (25) months following the termination or
expiration of this Agreement (the “Collections Run-Out
Period”), Medical Center shall, by the thirtieth (30th) day
of each such month, continue to remit GKF’s aggregate
Purchased Services Payment pertaining to Technical Component
Collections received during the Collections Run-Out Period as
applicable to Procedures performed during the Term. All or any
portion of a Purchased Services Payment which is not paid in full
within sixty (60) days after its due date shall bear interest
at the rate of one percent (1%) per month (or the maximum monthly
interest rate permitted to be charged by law
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between an
unrelated, commercial borrower and lender, if less) until the
unpaid Purchased Services Payment together with all accrued
interest thereon is paid in full. If GKF shall at any time accept a
Purchased Services Payment from Medical Center after it shall
become due, such acceptance shall not constitute or be construed as
a waiver of any or all of GKF’s rights under this Agreement,
including the rights of GKF set forth in Section 20
hereof.
(d) Within
thirty (30) days after the close of each month, Medical Center
shall provide GKF with a patient de-identified written report
indicating the status of billings and collections for each
Procedure performed during that month using the Equipment, any
Additional GK Leksell Unit and/or any other equipment or devices,
including, without limitation, the amount of the claim submitted
and the amount received for each such Procedure. Upon request by
GKF, Medical Center shall furnish to GKF information regarding
reimbursement rates from any or all payor sources for Procedures
(applicable to procedures performed either on an inpatient or
outpatient basis). If such reimbursement rates should change at any
time or from time to time after the date hereof, in each instance,
Medical Center shall provide written notice thereof to GKF within
five (5) days of Medical Center receiving notice
thereof.
(e) Within
ten (10) days after Medical Center’s receipt of written
request by GKF, GKF shall have the right to audit all applicable
books and records during normal business hours to verify the number
of Procedures performed and Technical Component Collections
received by Medical Center or its agents, representatives or
affiliates, utilizing the Equipment, any Additional GK Leksell Unit
and/or any other equipment or devices, and Medical Center shall
provide GKF (or cause GKF to be provided) with access to such books
and records; provided that any patient names or identifiers or
other confidential and Protected Health Information (as defined and
required by state and federal law) shall not be
disclosed.
(f) The
provisions of this Section 8 shall survive the termination or
expiration of this Agreement.
9.1
The Equipment shall be used by Medical Center only at the Site and
shall not be removed therefrom. Medical Center shall use the
Equipment only in the regular and ordinary course of Medical
Center’s business operations and only within the capacity of
the Equipment as determined by Elekta’s specifications.
Medical Center shall not use nor permit the Equipment to be used in
any manner nor for any purpose which, in the opinion of Elekta or
GKF, the Equipment is not designed or reasonably
suitable.
9.2
Notwithstanding anything to the contrary contained in this
Agreement, this is an agreement of purchasing a service only.
Nothing herein shall be construed as conveying to Medical Center
any right, title or interest in or to the
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Equipment,
except for the express right to use the Equipment granted herein to
Medical Center during the Term. All Equipment shall remain personal
property (even though said Equipment may hereafter become attached
or affixed to real property) and the title thereto shall at all
times remain exclusively in GKF.
9.3
During the Term, upon the request of GKF, Medical Center shall
promptly affix to the Equipment an identifying label supplied by
GKF indicating GKF’s ownership of the Equipment, and shall
keep the same affixed for the entire Term. Medical Center hereby
authorizes GKF to cause this Agreement or any statement or other
instrument showing the interest of GKF in the Equipment to be filed
or recorded, or refiled or re-recorded, with all governmental
agencies considered appropriate by GKF. Medical Center also shall
promptly execute and deliver, or cause to be executed and
delivered, to GKF any statement or instrument reasonably requested
by GKF for the purpose of evidencing GKF’s interest in the
Equipment, including UCC financing statements and other relevant
statements and waivers with respect to rights in the Equipment from
any owners or mortgagees of any real estate where the Equipment may
be located.
9.4
At Medical Center’s cost and expense, Medical Center shall
(a) protect and defend GKF’s ownership of and title to
the Equipment from and against all persons claiming against or
through Medical Center, (b) at all times keep the Equipment
free from any and all liens, encumbrances, attachments, levies,
executions, burdens, charges or legal processes imposed against
Medical Center, (c) give GKF immediate written notice of any
matter described in clause (b), and (d) in the manner
described in Section 22 below indemnify GKF harmless from and
against any loss, cost or expense (including reasonable
attorneys’ fees) with respect to any of the
foregoing.
10. Additional
Covenants of Medical Center. In addition to the other covenants of
Medical Center contained in this Agreement, Medical Center shall,
at its cost and expense:
10.1
Provide properly trained professional, technical and support
personnel and supplies required for the proper performance of Gamma
Knife procedures utilizing the Equipment. In this regard, Medical
Center shall make reasonable efforts to maintain on staff a minimum
of two (2) Gamma Knife trained teams comprised of neurosurgeons,
radiation oncologists and physicists. The Gamma Knife shall be
available for use by all credentialed neurosurgeons, radiation
oncologists and physicists.
10.2
Direct, supervise and administer the provision of all services
relating to the performance of Procedures utilizing the Equipment
in accordance with all applicable laws, rules and
regulations.
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10.3
Provide reasonable and customary marketing materials (i.e.
brochures, announcements, etc.) together with administrative and
physician support (e.g., seminars for physicians by neurosurgeons
and radiation therapists, in accordance with Medical Center’s
policies and procedures, etc.) for the Equipment to be operated by
the Medical Center. The obligation to provide marketing materials
and administration and physician support shall be included in, and
not in addition to, the annual marketing budget referenced in
Section 7 above.
10.4
Keep and maintain the Equipment and the Site fully protected,
secure and free from unauthorized access or use by any person to
the extent that Medical Center provides security for its other
radiation oncology services.
10.5
Operate a fully functional radiation therapy department at the Site
or Affiliate site which shall include the Equipment.
11. Additional
Covenants of GKF. In addition to the other covenants of GKF
contained in this Agreement, GKF, at its cost and expense,
shall:
11.1
Use its best efforts to require Elekta to meets its contractual
obligations to GKF and Medical Center upon delivery of the
Equipment and put the Equipment, as soon as reasonably possible,
into good, safe and serviceable condition and fit for its intended
use in accordance with the manufacturer’s specifications,
guidelines and field modification instructions.
11.2
Cause Medical Center to enjoy the use of the Equipment, free of the
rights of any other persons except for those rights reserved by GKF
or granted to Elekta under the LGK Agreement.
11.3
Cover the tuition costs for up to ten (10) Perfexion training
slots for physicians and physicists who will be using the
Equipment. Travel and entertainment associated with training shall
not be the responsibility of GKF.
12. Maintenance
of Equipment; Damage or Destruction of Equipment.
12.1
During the Term and except as otherwise provided in this Agreement,
GKF, at its cost and expense, shall (a) maintain the Equipment
in good operating condition and repair, reasonable wear and tear
excepted, and (b) maintain in full force and effect an
Advanced Service Agreement with Elekta (“Service
Agreement”) and any other service or other agreements
required to fulfill GKF’s obligation to repair and maintain
the Equipment under this Section 12. Medical Center shall
promptly notify GKF in the event of any damage or destruction to
the Equipment or of any required maintenance or repairs to the
Equipment, regardless of whether such repairs or maintenance are
covered or not covered by the Service Agreement. GKF shall pursue
all remedies available to it under the Service Agreement and under
any warranties made by Elekta with respect to the Equipment so that
the Equipment will at all times during the
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Term of this
Agreement be free from defects in design, materials and workmanship
and will conform to Elekta’s technical specifications
concerning the Equipment.
12.2
GKF and Elekta shall have the right to access the Equipment for the
purpose of inspection and the performance of repairs at all
reasonable times, upon reasonable advance notice and with a minimum
of interference or disruptions to Medical Center’s regular
business operations.
12.3
Medical Center shall be liable for, and in the manner described in
Section 22 below shall indemnify GKF from and against, any
damage to or destruction of the Equipment caused by the misuse,
improper use, or other intentional and wrongful or negligent acts
or omissions of Medical Center’s officers, employees, agents,
contractors and physicians. In the event the Equipment is damaged
as a result of the misuse, improper use, or other intentional and
wrongful or negligent acts or omissions of Medical Center’s
officers, employees, agents, contractors and/or physicians, to the
extent such damage is not covered by the Service Agreement or any
warranties or insurance, GKF may service or repair the Equipment as
needed and the cost thereof shall be paid by Medical Center to GKF
immediately upon written request together with interest thereon at
the rate of one percent (1%) per month (or the maximum monthly
interest rate permitted to be charged by law between an unrelated,
commercial borrower and lender, if less) and reasonable
attorneys’ fees and costs incurred by GKF in collecting such
amount from Medical Center. Any work so performed by GKF shall not
deprive GKF of any of its rights, remedies or actions against
Medical Center for such damages.
12.4
If the Equipment is rendered unusable as a result of any physical
damage to or destruction of the Equipment, Medical Center shall
give GKF written notice thereof. GKF shall determine, within thirty
(30) days after it is given written notice of such damage or
destruction, whether the Equipment can be repaired. In the event
GKF determines that the Equipment cannot be repaired
(a) subject to Section 12.3 above, GKF, at its cost and
expense, shall replace the Equipment as soon as reasonably possible
taking into account the availability of replacement equipment from
Elekta, Elekta’s other then existing orders for equipment,
and the then existing limitations on Elekta’s manufacturing
capabilities, (b) the Term of this Agreement shall be extended
for the period of time the Equipment is unusable, and (c) 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 repaired as soon as reasonably possible thereafter. Medical
Center shall fully cooperate with GKF to effect the replacement of
the Equipment or the repair of the Equipment (including, without
limitation, providing full access to the Site) following the damage
or destruction thereof.
13. Alterations
and Upgrades to Equipment.
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13.1
Medical Center shall not make any modifications, alterations or
additions to the Equipment (other than normal operating accessories
or controls) without the prior written consent of GKF. Medical
Center shall not, and shall not permit any person other than
representatives of Elekta or any other person authorized by GKF to,
effect any inspection, adjustment, preventative or remedial
maintenance, or repair to the Equipment without the prior written
consent of GKF. All modifications, alterations, additions,
accessories or operating controls incorporated in or affixed to the
Equipment (herein collectively called “additions” and
included in the definition of “Equipment”) shall become
the property of the GKF upon termination of this Agreement.
Included in this Agreement is an Equipment modification allowance
of * for modifications that are mutually agreed upon by the parties
hereto. Equipment modification costs in excess of * shall be the
responsibility of Medical Center.
13.2
The necessity and financial responsibility for modifications,
additions or upgrades to the Equipment, including the reloading of
the Cobalt-60 source, shall be mutually agreed upon by GKF and
Medical Center. If (a) GKF and Medical Center agree to reload
the Cobalt-60 source (i.e., on or around the end of the fifth
(5 th
) year of the Term), and
(b) GKF pays the reload costs associated therewith up to *
then, notwithstanding any provisions to the contrary herein, the
initial Term shall be automatically extended for an additional
three (3) years. Cobalt-60 reload costs in excess of * shall
be the responsibility of Medical Center. Alternatively, Medical
Center may elect to pay the entire costs of the Cobalt-60 reload in
which case the Term of the Agreement shall remain
unchanged.
13.3
All software upgrades provided at no charge to GKF under the terms
of its maintenance agreement with Elekta shall be provided at no
charge to Medical Center. All other software upgrades shall be the
responsibility of Medical Center, and shall not be included as part
of the Equipment modification allowance.
14. Financing
of Equipment by GKF. GKF, in its sole discretion, may finance the
Equipment. Financing may be in the form of an installment loan, a
capitalized lease or other commercially available debt or financing
instrument. If GKF finances the Equipment through an installment
loan, GKF shall be required to provide the Equipment as collateral
for the loan. If GKF finances the Equipment through a capitalized
lease, title shall vest with the lessor until such time as GKF
exercises its buy-out option under the lease, if any. If required
by the lender, lessor or other financing entity (the
“Lender”), GKF may assign its interest under this
Agreement as security for the financing. Medical Center’s
interest under this Agreement shall be subordinate to the interests
of the Lender.
15. Equipment
Operational Costs. Except as otherwise expressly provided in this
Agreement, Medical Center shall be responsible and liable for all
costs and expenses incurred, directly or indirectly, in connection
with the operation and use of the Equipment during the Term,
including, without limitation, but subject to Section 11.3
above, the
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costs and
expenses required to provide trained physicians, professionals, and
technical and support personnel, supplies and other items required
to properly operate the Equipment and perform
Procedures.
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