EQUIPMENT LEASE
AGREEMENT
This
EQUIPMENT LEASE AGREEMENT (“Agreement”) is made and
entered into on August 7, 2003, by and between GK FINANCING,
LLC, a California limited liability company (“GKF”) and
BAPTIST HOSPITAL OF EAST TENNESSEE, a Tennesse not for profit
corporation (“Hospital”), with reference to the
following facts:
A.
GKF owns a Leksell Stereotactic Gamma Knife Unit (the
“Equipment”) which it acquired from Elekta Instruments,
Inc., a Georgia corporation (“Elekta”).
B.
Hospital wishes to lease the Equipment from GKF, and GKF is willing
to lease the Equipment to Hospital, upon the terms, covenants,
conditions and agreements set forth in 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.
Lease . Subject to and in accordance with the covenants and
conditions set forth in this Agreement, GKF hereby leases to
Hospital, and Hospital hereby leases from GKF, the Equipment. The
Equipment to be leased to Hospital pursuant to this Agreement shall
include the latest approved Gamma Knife technology available as of
the date of this Agreement (i.e., Model C with Automatic
Positioning System), including all standard hardware and software
related thereto.
2. LGK
Agreement . Simultaneously with the execution of this
Agreement, Hospital and Elekta shall enter into that certain LGK
Agreement (the “LGK Agreement”) a copy of which is
attached hereto as Exhibit A. Hospital shall perform, satisfy
and fulfill all of its obligations arising under the LGK Agreement
when and as required thereunder. Hospital acknowledges that GKF is
a third party beneficiary of the LGK Agreement and, in that
capacity, GKF shall be entitled to enforce Hospital’s
performance, satisfaction and fulfillment of its obligations
thereunder.
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 ten
(10) years following the earlier of July 1, 2005 or the
date of the performance of the first clinical Gamma Knife procedure
(the “First Procedure Date”) at the Site.
Hospital’s obligation to make the payments to GKF for the
Equipment described in Section 8 below shall commence as of
the First Procedure Date.
4.
Certificate of Need; User License; GKF Policy Committee
.
4.1
GKF acknowledges that Hospital will require a certificate of need
(“CON”) issued by the Tennessee Health Services and
Development Agency in order to install
and operate the
Equipment at the Site. As soon as reasonably possible following the
date of this Agreement, Hospital shall apply for and use its best
efforts to obtain in a timely manner a CON for the installation and
use of the Equipment at the Site, and shall be reimbursed by GKF
upon presentation of invoices not to exceed an agreed upon budget
for all costs and expenses relating thereto, including all legal
fees and expenses. GKF and Hospital shall agree in writing on a CON
cost budget prior to the preparation of the CON application. The
application for the CON shall be prepared in coordination with GKF,
and shall require the prior written approval of both GKF and
Hospital prior to its submission to the applicable authorities,
which approval shall not be unreasonably withheld. If either party
has not approved or disapproved such CON application in writing
within thirty (30) days following its submission to such party
for approval, such party shall be deemed to have approved the same.
The CON shall be filed and owned by Hospital. In the event
Hospital’s application for a CON is denied, this Agreement
shall automatically terminate and all parties shall be released
from the further performance of any obligations or duties arising
under this Agreement. If the CON application is denied, GKF and
Hospital agree to evenly share the costs of the CON
application.
4.2
Hospital shall, at its sole cost and expense, apply for and 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. Hospital also shall, at its sole cost and
expense, apply for and 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 reimburse Hospital
for its direct costs to obtain a User License and any other
licenses, permits, approvals, consents and authorizations required
by this Section 4.2 upon presentation of invoices.
4.3
This Agreement is subject to approval by the Policy Committee of
GKF. In the event GKF’s Policy Committee does not approve
this Agreement, this Agreement shall automatically terminate and
all parties shall be released from the further performance of any
obligations or duties arising under this Agreement.
5.
Delivery of Equipment; Site .
5.1
GKF shall coordinate with Elekta and Hospital to have the Equipment
delivered to Hospital at 137 Blount Avenue, Knoxville, Tennessee
(the “Site”) on or prior to the delivery date agreed
upon by Hospital and Elekta in the LGK Agreement. GKF makes no
representations or warranties concerning delivery of the Equipment
to the Site or the actual date thereof.
5.2
Subject to Section 6 below, Hospital, at its cost and expense,
shall provide a safe, convenient Site for the Equipment. The
location of the Site shall be subject to the prior approval of
GKF.
6. Site
Preparation and Installation of Equipment .
6.1
GKF, at its cost and expense, shall prepare all plans and
specifications required to prepare, construct and improve the Site
for the installation, use and operation of the Equipment during the
Term. GKF’s Site improvement responsibilities may include
creation of several walls to assist in the relocation of the
department currently located in the Site. It is not anticipated
that GKF’s costs to assist in relocation of the department
currently located in the Site will be material. The plans and
specifications (i) shall be approved by Hospital, which
approval shall not be unreasonably withheld or delayed;
(ii) shall comply in all respects with the site planning
criteria attached as Exhibit E to the LGK Agreement
(collectively the “Site Planning Criteria”); and
(iii) to the extent required by applicable law, shall be
submitted to all state and federal agencies for their review and
approval. GKF, at its cost and expense, shall obtain and maintain
all permits, certifications, approvals or authorizations required
by applicable federal, state or local laws, rules or regulations
necessary to prepare, construct and improve the Site as provided
above during the term of this agreement.
6.2
GKF, at its cost and expense, 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 at
the Site in connection with the use and operation of the Equipment.
GKF shall be responsible for the shipment, storage, placement and
removal of all Cobalt and depleted Cobalt. Any depleted Cobalt
supply shall be properly disposed of by GKF at such time as GKF
shall deem necessary, in GKF’s sole and absolute
judgment.
6.3
In addition to construction and improvement of the Site, GKF, at
its cost and expense, 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
During the Term, GKF, at its cost and expense, shall maintain the
Site in a good working order, condition and repair, reasonable wear
and tear excepted.
7.1
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 Hospital shall jointly develop an
annual marketing plan, budget and timeline, which shall be
implemented by Hospital with the support of GKF, based on the
approved budget and timeline. Hospital’s approval of such
plan, budget and timeline shall not be unreasonably withheld or
delayed. If Hospital has not approved or disapproved the same
within thirty (30) days following its receipt, Hospital shall
be deemed to have approved the same. GKF shall be * responsible for
any out-of-pocket marketing expenses paid to unrelated third
parties that are included in the marketing plan budget. Any
marketing efforts conducted independently by Hospital shall be at
Hospital’s expense, and subject to coordination with
GKF.
7.2
The Gamma Knife program at the Hospital shall be given a name
mutually agreed to by GKF and Hospital (the “Program”).
All communications to the public regarding the Program may identify
the Program as being associated with GKF and Hospital, provided
that all such communications are in accordance with the
communications and marketing plan adopted or approved by Hospital
and GKF. Hospital shall use its best efforts to promote the Program
and to encourage the use thereof by the Public and medical
community.
8.1
In consideration for, and as compensation to, GKF for (i) the
lease of the Equipment by GKF to Hospital pursuant to this
Agreement; (ii) payment of “Startup Costs”,
(iii) the preparation by GKF of all plans and specifications
required to prepare, construct and improve the Site for the
installation, use and operation of the Equipment; (iv) the
preparation, construction and improvement of the Site as necessary
for the installation, use and operation of the Equipment; (v) the
installation by GKF of the Equipment at the Site; (vi) the
marketing of the services to be provided using the Equipment; and
(vii) the maintenance by GKF of the Site and the Equipment in
a good working order, condition and repair, on a monthly basis,
Hospital shall pay the “Lease Payment” to GKF for each
“Procedure” that is performed by Hospital or its
representatives or affiliates, that are directly or indirectly
owned and/or controlled, in whole or in part, by Hospital
irrespective of whether the Procedure is performed on the Equipment
or using any other equipment or devices. As used herein:
(1) For each
Procedure that is performed using the Equipment, “Lease
Payment” shall be equal to *. For each Procedure using any
other equipment or devices, Lease Payment shall be equal to the
Technical Component Collections for any other equipment or devices
during each such month.
(2)
“Technical Component Collections” means the total
amount actually collected by Hospital 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, as
reimbursement for the technical component of each Procedure,
irrespective of whether the Procedure is performed on the Equipment
or using any other equipment or devices. The technical fees to be
billed for Procedures performed utilizing the Equipment 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. Hospital
shall consult and mutually agree with GKF from time to time
regarding the amount of the technical fees to be billed by Hospital
for Procedures that are performed utilizing the Equipment and any
revisions thereto. Subject to compliance with the standard
described in the preceding sentence, Hospital and GKF shall
mutually agree on the setting or revision of the amount of the
technical fees and the acceptance of technical fee component
amounts with third party payors prior to their
implementation.
(3) “Cost
Component” means the costs incurred by Hospital during the
corresponding month for services and personnel associated with
the
performance of
Procedures, excluding (i) Lease Payments, (ii) physician
and other professional fees, and (iii) direct or indirect
administrative overhead expenses. Hospital’s Cost Component
shall be limited to those costs set forth in the schedule attached
hereto, as Exhibit 8.1, irrespective of whether the Procedures
are performed on an inpatient or outpatient basis.
(4)
“Procedure” shall mean 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.
If no
Procedures are performed utilizing the Equipment or any other
equipment or devices during any month, no Lease Payments shall be
owing by Hospital to GKF for such month. If Technical Component
Collections relating to the Equipment are less than
Hospital’s Cost Component relating to the Equipment in any
given month, GKF shall reimburse Hospital for said shortfall,
provided that Hospital has complied with its obligations regarding
the timely submission of claims as set forth in Section 8.2
below, and provided, further, that GKF shall have no obligation to
reimburse Hospital for any shortfalls relating to any other
equipment or devices. No costs comprising Hospital’s Cost
Component shall be permitted to cumulate. All or any portion of any
Cost Component which is not paid in full by GKF to Hospital within
thirty (30) days after GKF’s receipt of Hospital’s
invoice shall bear interest at the annual rate of five percent (5%)
in excess of the Federal Reserve discount rate then in effect as
published in the Wall Street Journal or similar publication (or the
maximum monthly interest rate permitted to be charged by law
between an unrelated, commercial borrower and lender, if less)
until the unpaid Cost Component payment, together with all accrued
interest thereon is paid in full. If no Procedures are performed in
a given month, the only Hospital Cost Component incurred will be
for physical facility space, standard staffing costs and
miscellaneous operating costs as set forth in
Exhibit 8.1.
8.2
Within ten (10) business days following the end of each month
(or portion thereof) during the term of this Agreement, Hospital
shall pay the Lease Payments to GKF and shall concurrently inform
GKF in writing as to the number of Procedures performed during that
month utilizing the Equipment and any other equipment or devices.
To facilitate Hospital’s billing and collection for
Procedures performed, within three (3) business days after any
Procedure using the Equipment is performed, the administrative
support individual referenced in Section 11.3 below shall
provide Hospital with written confirmation of the names of the
patients treated. Hospital shall submit claims for reimbursement to
the appropriate payors for each Procedure within ten (10) days
after the patient receiving the treatment is discharged. Such
claims shall be submitted under Hospital’s provider numbers
and license. Hospital shall also diligently follow up any unpaid or
denied claims and re-bill and/or contest the same where appropriate
so as to maximize Technical Component Collections. All or any
portion of any Lease Payment which is not paid in full within
thirty (30) days after its due date (date of Hospital’s cash
receipt from payors) shall bear interest at the annual rate of five
percent (5%) in excess of the Federal Reserve Discount Rate then in
effect as published in the Wall Street Journal or similar
publication (or the maximum monthly interest rate permitted to be
charged by law between an unrelated, commercial borrower and
lender, if less) until the unpaid Lease Payment, together with all
accrued interest thereon is paid in full. If GKF shall at any
time
accept a Lease
Payment from Hospital 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.
8.3
Within thirty (30) days after the close of each month,
Hospital shall provide GKF with a written report indicating the
status of billings and collections for each Procedure performed
during that month, including, without limitation, the amount of the
claim submitted, the amount received or denied for each such
procedure, and copies of the corresponding explanation of benefits
(EOB). Upon request by GKF, Hospital 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, Hospital shall provide written notice
thereof to GKF within thirty (30) days of Hospital receiving
notice thereof. Prior to entering into or renewing any third party
payor contracts for the provision of Procedures utilizing the
Equipment, Hospital shall consult with GKF regarding the terms and
provisions thereof, including the technical component reimbursement
rates. GKF shall maintain the confidentiality of all information
provided to GKF by Hospital with regard to Procedure charges,
billing and reimbursement rates.
8.4
The parties acknowledge that the Lease Payments to GKF and
Hospital’s Cost Component reflect their respective fair
market value, and are not determined in a manner that takes into
account the volume or the value of any referral or other business
generated between the parties.
8.5
Within ten (10) days after Hospital’s receipt of written
request from GKF, GKF shall have the right to audit
Hospital’s books and records (including, without limitation,
the books and records pertaining to any other Radiosurgery
equipment and devices) during normal business hours to verify the
Technical Component Collections and Hospital’s Costs
Component, and Hospital shall provide GKF with access to such books
and records on Hospital’s premises.
8.6
Risk Sharing Option. Hospital shall have the option in its sole
discretion to restructure the Lease Payments by amending this
Agreement as set forth in Exhibit 8.6 attached hereto
(“the Option”). Hospital may exercise the Option only
if (a) no “Event of Default” (as defined in
Section 20 below) (and no act or omission which, with the
giving of notice and/or the passage of time, would constitute an
Event of Default) shall then have occurred; and (b) Hospital
has complied with all of the requirements set forth in this
Section. The Option may be exercised not more than once by Hospital
(i) at any time prior to the First Procedure Date,
(ii) on the First Procedure Date, or (iii) on any
anniversary of the First Procedure Date (the “Option Exercise
Date”). If Hospital elects to exercise the Option, Hospital
shall give written notice thereof to GKF not less than thirty
(30) days prior to the Option Exercise Date, and shall specify
the “Hospital Percentage” (as defined below). In
addition, Hospital shall concurrently execute and deliver to GKF an
Amendment to Equipment Lease Agreement in the form attached hereto
as Exhibit 8.6 (the “Amendment”).
(a) Exercise
of the Option Prior to the First Procedure Date. If Hospital
exercises the Option prior to the First Procedure Date, Hospital
shall pay to GKF an
amount equal to
*. Such payment shall be made by Hospital to GKF in immediately
available funds within five (5) days of presentment of an
invoice by GKF.
(b) Exercise
of the Option On or After the First Procedure Date. If Hospital
exercises the Option on the First Procedure Date or on any
anniversary of such date, Hospital shall pay to GKF an amount equal
to *. Such payment shall be made by hospital to GKF in immediately
available funds within five (5) days of presentment of an
invoice by GKF.
(c) Appraisal
to Determine the Fair Market Valuation. If Hospital exercises the
Option on or after the First Procedure Date, within five
(5) days following Hospital’s exercise of the Option,
GKF and Hospital shall each select an appraiser to determine the
Fair Market Valuation, which appraisers shall each have not less
than ten (10) years’ experience in appraising the value
of healthcare businesses. In such event, the Fair Market Valuation
shall be the average of the valuations of the two appraisers so
long as the two valuations are within fifteen percent (15%) of each
other. Should the two valuations not be within fifteen percent
(15%) of each other, then the two appraisers shall mutually select
a third appraiser who shall have the same qualifications set forth
above. Following the valuation by the third appraiser, the two
valuations that are closest to each other will be averaged to
determine the Fair Market Valuation. GKF and Hospital shall retain
their own appraisers and shall jointly retain the third appraiser;
provided that, within five (5) days following the issuance of
the Fiar Market Valuation, Hospital shall reimburse GKF for all
costs and expenses incurred by GKF in connection with such
appraisers (including the third appraiser).
(d) Definitions.
As used herein:
(1) “Fair
Market Valuation” means the fair market value as of the
applicable Option Exercise Date of the projects * (as defined in
and calculated pursuant to the Amendment) over the remaining Term
of the Agreement, without taking into account the costs of the
Equipment.
(2) “GKF
Amount” shall mean the sum of GKF’s actual costs and/or
losses incurred in connection with (a) the “Startup
Costs”, (b) the construction and improvement of the site
for the installation of the Equipment and the purchase of the
Equipment (which costs shall not include associated with progress
payments of the purchase of the Equipment); (c) the shipment
of the Equipment to the Site, including, without limitation,
freight, insurance, customs, import taxes and duties, interest
costs, permit fees, Equipment storage costs (both prior and
subsequent to shipment), and all other costs and expenses
pertaining thereto; (d) the installation of the Equipment,
including, without limitation, rigging costs; (e) any
upgrading of the Equipment as deemed necessary by GKF; (f) any
reloading of the Cobalt in the Equipment; and (g) any and all
operating losses incurred by GKF through the effective date of the
Option’s exercise in connection with the lease of the
Equipment to Hospital hereunder (excluding any administrative or
overhead costs or expenses); plus interest accrued on all of the
foregoing from the date incurred by GKF at the floating rate of
three percent (3%)
above the prime
rate as established by Bank of American from time-to-time, which
floating rate shall change as and when changed by Bank of
America,
(3)
“Hospital Percentage” means a fixed percentage selected
by Hospital in its sole discretion which shall not *.
(4) “Startup
Costs” means the actual costs incurred by Hospital and
reimbursed by GKF to Hospital (which costs shall not include any
administrative or overhead costs or expenses) to obtain the CON and
other regulatory approvals needed for the installation and use of
the Equipment. All such Startup Costs shall be at their actual cost
without administrative overhead or markup. Within ten
(10) days following Hospital’s written notice to GKF of
Hospital’s election to exercise the Option, GKF shall submit
to Hospital a detailed statement of the GKF Amount, and Hospital
shall submit to GKF a detailed statement of Hospital’s
Startup Costs. Such detailed statements shall include documentary
proof of expenditures to justify the amounts claimed for such
costs. A final cost accounting of these aforementioned costs shall
be completed no later than six (6) months following the Option
Exercise Date which shall be used for purposes of calculating the
GKF Percentage.
9. Use of
the Equipment .
9.1
The Equipment shall be used by Hospital only at the Site and shall
not be removed therefrom. Hospital shall use the Equipment only in
the regular and ordinary course of Hospital’s business
operations and only within the capacity of the Equipment as
determined by Elekta’s specifications. Hospital shall not use
nor permit the Equipment to be used in any manner nor for any
purpose which the Equipment is not designed or reasonably suitable
as indicated to Hospital by Elekta or GKF.
9.2
This is an agreement of lease only. Nothing herein shall be
construed as conveying to Hospital any right, title or interest in
or to the Equipment, except for the express leasehold interest
granted to Hospital for 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, Hospital shall promptly
affix to the Equipment in a prominent place, or as otherwise
directed by GKF, labels, plates, insignia, lettering or other
markings supplied by GKF indicating GKF’s ownership of the
Equipment, and shall keep the same affixed for the entire Term.
Hospital hereby authorizes GKF to cause this Lease 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, at GKF’s
cost and expense. Hospital also shall promptly execute and deliver,
or cause to be executed and delivered, to GKF any statement or
instrument requested by GKF for the purpose of evidencing
GKF’s interest in the Equipment, including
financing
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 Hospital’s cost and expense, Hospital shall
(a) protect and defend GKF’s ownership of and title to
the Equipment from and against all persons claiming against or
through Hospital, (b) at all times keep the Equipment free from any
and all liens, encumbrances, attachments, levies, executions,
burdens, charges or legal processes imposed against Hospital, and
(c) give GKF immediate written notice of any matter described
in clause (b).
10.
Additional Covenants of Hospital . In addition to the other
covenants of Hospital contained in this Agreement, Hospital shall,
at its cost and expense.
10.1
Provide properly trained, technical and support personnel and
supplies required for the proper performance of Gamma Knife
procedures utilizing the Equipment. The cost of technical and
support personnel and supplies required for the proper performance
of Gamma Knife procedures utilizing the Equipment shall be
reimbursed to Hospital by GKF. In this regard, Hospital shall use
its best efforts to maintain on staff a minimum of two
(2) Gamma Knife trained teams comprised of neurosurgeons,
radiation oncologists and physicists.
10.2
Direct, supervise and administer the provision of all hospital
services relating to Gamma Knife Procedures in accordance with all
applicable laws, rules and regulations.
10.3
Use best efforts to keep and maintain the Equipment and the Site
fully protected, secure and free from unauthorized access or use by
any person.
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 Hospital 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
Ensure Hospital’s quiet enjoyment and 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 or the
Purchase Agreement.
11.3
GKF and Hospital shall mutually select an individual to be located
at the Site to provide Gamma Knife administrative and marketing
support services. The individual’s duties shall include but
not be limited to scheduling Gamma Knife patients and coordinating
professional and technical personnel and support services to
perform said Gamma Knife treatment. This individual shall also
verify patient insurance. The individual shall also assist with
marketing activities on an as needed basis. This individual is
provided by the Hospital and GKF shall reimburse Hospital for the
cost of the individual. GKF and Hospital shall mutually agree on
individual.
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, (b) subject to Hospital’s compliance with its
obligations under the LGK Agreement and under Sections 4, 5,
9, 10, 12, 13 and 16 hereunder, cause the equipment to be in
compliance with all applicable state and federal regulations, and
(c) maintain in full force and effect a Service Agreement with
Elekta and any other service or other agreements required to
fulfill GKF’s obligation to repair and maintain the Equipment
under this Section 12. Hospital 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, and GKF shall, or
shall cause its agent to, respond to any such maintenance request
within 24 hours and either repair or replace the equipment within
24 hours or as soon as possible and practical. In addition, 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 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 Hospital’s regular business
operations.
12.3
Hospital shall be liable for 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 Hospital’s
officers, employees, agents, and contractors. In the event the
Equipment is damaged as
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