Exhibit 10.7

 

LEASE AGREEMENT FOR A GAMMA KNIFE UNIT

 

THIS AGREEMENT FOR A GAMMA KNIFE UNIT on May 28, 1999, (hereinafter, referred to
as the “Agreement”) is entered into between GK Financing, LLC, a California
Limited Liability Company, (hereinafter referred to as “GKF”), and Froedtert
Memorial Lutheran Hospital, a non-profit Wisconsin corporation, (hereinafter
referred to as “Medical Center”).

 

RECITALS

 

WHEREAS, Medical Center wants to lease a Leksell Stereotactic Gamma Unit
Manufactured by Elekta Instruments, Inc., (hereinafter referred to as the
“Equipment”); and

 

WHEREAS, GKF is willing to lease the Equipment which GKF has acquired from
Elekta Instruments, Inc., a Georgia corporation (hereinafter referred to as
“Elekta”), to Medical Center, pursuant to the terms and conditions of this
Agreement.

 

NOW, therefore, in consideration of the foregoing premises and the promises
contained herein, the parties hereto hereby agree as follows:

 

1.          Execution of LGK Agreement by and between Medical Center and Elekta.
Medical Center agrees that simultaneously with the execution of this Agreement
it shall execute that certain LGK Agreement with Elekta, (hereinafter referred
to as the “LGK Agreement”), a copy of which is attached hereto as Exhibit A and
incorporated herein by this reference. Medical Center agrees to fulfill all of
its obligations under the LGK Agreement and acknowledges that GKF is a third
party beneficiary of the LGK Agreement. Medical Center shall indemnify and hold
harmless GKF in the event that GKF suffers any loss, damage, claim or expense
(including reasonable attorneys' fees) solely as a result of Medical Center's
breach or alleged breach of the LGK Agreement.

 

2.          Delivery of the Equipment and Site preparation. GKF shall arrange to
have the Equipment delivered to Medical Center, at Froedtert Memorial Lutheran
Hospital, 9200 W. Wisconsin Avenue, Milwaukee, Wisconsin, 53226 (the “Site”) in
coordination with Elekta.

 

Medical Center shall provide a Site, at its own expense, in accordance with all
of the Equipment manufacturer's (Elekta's) guidelines, specifications, technical
instruments and Site Planning Criteria (which Site Planning Criteria are
attached hereto as Exhibit B and incorporated herein by this reference), which
criteria shall include Elekta's estimated delivery schedule when and as received
by GKF, on Medical Center controlled property (The “Site”) for the proper
performance of Gamma Knife procedures. Site location shall be reasonably
acceptable to GKF. Medical Center shall prepare at its sole cost and expense the
requisite site plans and specifications and shall submit them to Elekta and GKF
for approval. Medical Center shall obtain, in a timely manner, a User License
from the Nuclear Regulatory Commission and/or appropriate state agency
authorizing it to take possession of the Cobalt Supply and shall obtain such
other licenses, permits, approvals, consents and authorizations, which may be
required by local governmental or other regulatory agencies for the Site, its
preparation, the charging of the Equipment with its Cobalt Supply, the conduct
of Acceptance Tests, and the use of the Equipment all as more fully set forth in
the LGK Agreement.

 

3.          Commencement of Term. The Term (hereinafter defined) of this
Agreement shall commence upon successful completion of the Acceptance Tests and
the performance of the first clinical Gamma Knife procedure at the Site (the
“Commencement Date”). Medical Center shall become liable to GKF for the payments
referred to in Paragraph 6 herein below upon the Commencement Date.

 

 
 

  

4.          Costs of Site Preparation; Costs of Installation. Medical Center's
obligations shall include preparation of plans and specifications for the
construction and preparation of the Site in such form as will result in the
Site, when constructed in accordance with such plans and specifications, being
in full compliance with Elekta's Site Planning Criteria. Medical Center shall at
its own expense and risk, prepare, construct and make ready the Site as
necessary, for the installation of the Equipment, including, but not limited to,
providing any temporary and/or permanent shielding for the charging of the
equipment and its use, selecting and preparing a proper foundation for the
Equipment and for such shielding and walls, as well as proper alignment of the
Site and wiring. Medical Center shall be financially responsible for the
positioning of the Equipment on its foundation at the Site.

 

Medical Center shall also at its own expense select, purchase and install all
radiation monitoring equipment and devices, safety circuits and radiation
warning signs needed for the Equipment at the Site, required by all applicable
federal, state and local laws and regulations.

 

Upon completion of the Site, Medical Center shall warrant that the Site will be
safe and suitable for its use of the Equipment. Medical Center shall fully
indemnify and hold harmless GKF from any and all loss, liability, damage,
expense or claim (including attorneys' fees) which GKF may suffer and incur and
which relate to the Site and the Equipment's positioning thereon.

 

Medical Center shall be responsible for any damage to the Equipment caused by
(a) defects in construction of the Site or defects in the positioning of the
Equipment at the Site by Medical Center; (b) defects arising out of materials or
parts provided, modified or designed by Medical Center with respect to the Site;
or (c) negligent or intentional acts of omission or commission by Medical Center
or any of its officers, agents, physicians, and employees in connection with the
Site preparation or operation of the Equipment at the Site.

 

Medical Center warrants that it shall utilize its best efforts to fulfill on an
expeditious basis its obligations under this Paragraph 4. Medical Center further
warrants that it shall on a regular basis keep GKF informed of Medical Center's
progress in fulfilling its obligations pursuant to this Paragraph 4. GKF shall
deliver the Equipment to the Medical Center's designated loading dock on July 1,
1999. Should GKF fail to deliver the Equipment no later than thirty (30) days
after July 1, 1999 GKF shall pay Medical Center $100,000. Should Medical Center
not have all site preparations completed by the delivery date specified by a
separate agreement plus a sixty (60) day grace period such that the site is
acceptable for positioning and installation of the equipment, Medical Center
shall reimburse GKF at an interest rate of Bank of America's prime rate plus 2%
on GKF's equipment cost until the Site is prepared to allow positioning and
installation of the equipment.

 

5.          Term of the Equipment. GKF agrees to provide to Medical Center the
Equipment pursuant to the terms of this Agreement, for a term of ten (10) years
from the Commencement Date as described in Paragraph 3 hereinabove (the “Term”),
unless terminated earlier as provided herein.

 

6.          Per Procedure Payments. Medical Center shall pay to GKF a per
procedure payment of for the use of the Equipment pursuant to Exhibit I. A
procedure shall be defined as a single patient treatment session that may
include one or more isocenters during that session. Medical Center shall be
billed on the fifteenth (15th) and the last day of each month for the actual
number of procedures performed during the first and second half of the month,
respectively. Medical Center shall pay the procedures invoiced within thirty
(30) days after receipt of the invoice. Interest shall begin to accrue at the
rate of 1-1/2% per month on all invoices remaining unpaid after 45 days. After
twenty four (24) months of service, and every twelve (12) months thereafter, the
parties agree to review and renegotiate the payment provisions of this
paragraph, including consideration of payment as a percentage of the Medical
Center's reimbursement (although GKF shall be under no obligation to change such
payment provisions).

 

 
 

  

7.          Use of the Equipment. The Equipment may be used by Medical Center
only at the location stated above and shall not be removed therefrom. Medical
Center shall not assign or sublease the Equipment or its rights hereunder
without the prior written consent of GKF which consent shall not be unreasonably
withheld. Medical Center may, however, permit the equipment to be used by
trained personnel that are not employees of Medical Center. No permitted
assignment or sublease shall relieve Medical Center of any of its obligations
hereunder. Medical Center shall not use nor permit the Equipment to be used in
any manner nor for any purpose for which, in the opinion of Elekta, the
Equipment is not designed or reasonably suitable. Medical Center shall not
permit any liens, whether voluntary or involuntary, to attach to the Equipment,
without the prior written consent of GKF. Medical Center shall have no interest
in the Equipment other than the rights acquired as a lessee hereunder and the
Equipment shall remain the property of GKF regardless of the manner in which it
may be installed or attached at the Site. Medical Center shall, at GKF's
reasonable request, affix to the Equipment tags, decals, or plates furnished by
GKF, indicating GKF's ownership of the Equipment.

 

8.          Additional Covenants of Medical Center. In addition to the other
covenants made by Medical Center, Medical Center shall at its own cost and
expense:

 

(a)          Provide properly trained professional, technical and support
personnel and supplies required for the proper performance of medical procedures
utilizing the Equipment (subject to Elekta's obligation to provide training of
Medical Center personnel, as provided in the LGK Agreement).

 

(b)          Assume all medical and financial responsibility for the overseers'
monitoring of all patients' medical condition and treatment.

 

(c)          Fully comply with all of its obligations under the LGK Agreement.

 

(d)          Indemnify GKF as herein provided: (i) Medical Center hereby agrees
to fully indemnify and/or reimburse (including reasonable attorneys' fees) GKF
on a prompt basis for any and all damage to the Equipment (including any
violations by Medical Center, its agents, officers, physicians, employees,
successors and assigns of the Service Agreement described in Paragraph 15
hereof) to the extent such damages are caused by the negligent or wrongful acts
or omissions of Medical Center, its agents, officers, physicians and employees
and are in excess of insurance proceeds recovered by GKF. In the event the
Equipment is destroyed or rendered unusable, this indemnification shall extend
up to (but not exceed) the full replacement value of the Equipment at the time
of its destruction less salvage value, if any. (ii) Medical Center hereby
further agrees to indemnify and hold GKF, its agents, officers, employees,
successors and assigns, harmless from and against any and all claims,
liabilities, obligations, losses, damages, injuries, penalties, actions, costs
and expenses (including reasonable attorneys' fees) for all events and/or
occurrences described in Article 7.3 of the LGK Agreement to the same extent
that Medical Center agrees to indemnify Elekta thereunder. Medical Center
further agrees to fully indemnify and hold harmless GKF for any loss, damage,
claim, or expense (including reasonable attorneys' fees) GKF may suffer or incur
as a result of Medical Center's breach or breach alleged in litigation with
regard to the LGK Agreement. GKF shall give prompt notice to Medical Center of
any claim and Medical Center at its option and expense may assume the primary
defense of the claim. Any compromise or settlement shall require the prior
written consent of GKF which consent shall not be unreasonable withheld.

 

 
 

  

(e)          Provide reasonable and customary marketing materials (i.e.
brochures, announcements, etc.), marketing support, and an administrative and
physician (i.e. seminars by neurosurgeons and radiation oncologists to referring
physicians, etc.) commitment to this clinical service. Medical Center and GKF
personnel shall jointly develop and agree upon a marketing plan and budget. Not
less than ninety (90) days prior to the First Procedure Date and the
commencement of each succeeding twelve (12) month period of the Term. As funds
are expended by Medical Center shall submit invoices (together with documentary
evidence supporting the invoices) for its expenditures and, promptly following
the receipt of such invoices, GKF shall reimburse Medical Center for fifty
percent (50%) of the expenditures up to the limit of Fifty Thousand Dollars
($50,000.00), unless said limit is waived by GKF.

 

9.          Additional Covenants, Representations and Warranties of GKF. In
addition to the other covenants, representations and warranties, made by GKF in
this Agreement:

 

(a)          GKF represents and warrants that GKF has full power and authority
to enter into this Agreement, and that this Agreement does not and will not
violate any agreement, contract or instrument binding upon GKF.

 

(b)          GKF represents and warrants to Medical Center that, upon delivery
of the Equipment to Medical Center, GKF shall use its best faith efforts to
require that Elekta meets its contractual obligations to GKF and in putting the
Equipment, as soon as 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.

 

(c)          GKF represents and warrants that throughout the term of this
Agreement, subject to the second paragraph of section 10 below it has good
marketable title to the equipment, and Medical Center shall 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.

 

(d)          During the entire term of this agreement and subsequent extension
thereof, GKF shall maintain in full force and effect: (i) the Service Agreement
referenced in Paragraph 15 hereof; and (ii) any other service or other
agreements required to fulfill GKF's obligations to Medical Center under this
Agreement. GKF represents and warrants that during the entire term of this
agreement and any subsequent extensions thereof, that it will fully pursue any
and all remedies it may have against Elekta under the Service Agreement to
insure that Elekta fully performs its obligations under the Service Agreement
and that the Equipment will be in conformity with Elekta's warranties so that it
is free from defects in design, materials, and workmanship which result in
noncompliance with the specifications and/or Elekta's warranties to GKF. In no
event, however, shall the warranty obligations of GKF to Medical Center with
respect to the Equipment be greater or more extensive than Elekta's warranty
obligations to GKF with respect to the Equipment.

 

10.         Ownership/Title. It is expressly understood that Medical Center
shall acquire no right, title or interest in or to the Equipment, other than the
right to the possession and use of the same in accordance with the terms of this
Agreement.

 

GKF may at its sole discretion finance the Equipment. Financing may be in the
form of an installment loan or a capitalized lease or other commercially
available debt instrument. Should GKF finance the Equipment through an
installment loan, GKF shall be required to provide the Equipment as collateral
against the loan. Should GKF finance the Equipment through a capitalized lease
title shall vest with the lessor until GKF exercises its buy-out option. In
addition, should GKF finance the Equipment, said agreement may be used as
collateral against the loan. In all of the foregoing situations, GKF shall use
its best efforts to cause the entity financing the equipment to agree not to
disturb the rights of the Medical Center under this Agreement so long as the
Medical Center does not default on its obligations hereunder. In the event the
financial entity forecloses on GKF's interest in the equipment of this Agreement
and said foreclosure is not cured within 45 days and the financing entity elects
not to assume GKF's obligations, Medical Center may elect to purchase the
equipment for its fair market value or principal balance, whichever is higher.

 

 
 

  

11.         Cost of Use of the Equipment. Except as is otherwise provided
herein, Medical Center shall bear the entire cost of using the Equipment during
the Term of this Agreement. This shall include, but not be limited to, providing
trained professionals, technical and support personnel and supplies to properly
operate the Equipment. Medical Center shall be fully responsible and liable for
all acts and/or omissions of such professional, technical and support personnel.

 

12.         Taxes. GKF shall pay any personal property taxes levied against the
Equipment and any other taxes or governmental fees or assessments, however
denoted, whether of the federal government, any state government or any local
government, levied or based on this Agreement or the use of the Equipment except
for those taxes, if any, pertaining to the gross income or gross receipts of
Medical Center.

 

13.         Maintenance and Inspections. GKF agrees to exercise due and proper
care in the maintenance of the Equipment and to keep the Equipment in a good
state of repair, reasonable wear and tear excepted. Medical Center shall be
responsible for all damage to the Equipment caused by the misuse, negligence,
improper use or other intentional or negligent acts or omissions of Medical
Center's employees, officers, agents, and physicians.

 

GKF (and Elekta) shall have the right of access to the Equipment for the purpose
of inspecting and repairing the same at all reasonable times and upon reasonable
prior written notice and shall use all reasonable efforts not to interfere with
Medical Center's use of the Equipment. In the event the Equipment is improperly
used by Medical Center or its employees, agents, officers, and physicians, GKF
may service or repair the same as needed and such expense shall be paid by
Medical Center, unless the repair is covered by the Service Agreement described
in Paragraph 15 hereof.

 

Any work so performed by or in the service or maintenance of the Equipment as a
result of Medical Center's failure or neglect to do so shall not deprive GKF of
any of its rights, remedies or actions against Medical Center for damages caused
by such failure or neglect. If, thirty (30) days after giving of written notice
by Medical Center, GKF fails to make the repairs it is required to make under
this Agreement, Medical Center may make the repairs. GKF shall reimburse Medical
Center for the cost of the repairs within thirty (30) days, following receipt of
Medical Center's invoice.

 

14.         Equipment Modifications/Additions/Upgrades. The parties agree that
the necessity and financial responsibility for modifications/additions/upgrades
to the Equipment, including the reloading of the Cobalt-60 source, shall be
discussed and mutually decided by GKF and Medical Center. If GKF and Medical
Center agree to reload the Cobalt-60 source (in approximately year 8 of the
initial term), GKF shall be responsible for the expenses relate to the Cobalt-60
reloading and Medical Center shall be responsible for any site costs associated
with the Cobalt-60 reload. If the reloading of the Equipment occurs, the
original term shall be extended for 8 years less the number of years remaining
in the original term. GKF shall reimburse Medical Center for the cost of the
repairs within thirty (30) days, following receipt of Medical Center's invoice.

 

15.         Service Agreement. GKF warrants that it shall simultaneously with
the execution of this Agreement enter into a Service Agreement with Elekta in
the form of Exhibit C attached to this Agreement.

 

 
 

  

16.         Termination If, after the initial twenty-four (24) month period of
service, and subsequent 12 month periods of service, Medical Center does not
provide GKF with a reasonable economic justification to continue providing Gamma
Knife services hereunder, then and in that event, GKF shall have the option of
terminating this Agreement upon the giving of written notice to Medical Center
of said termination not less than ninety (90) days prior to GKF's designated
termination date.

 

17.         Options to Extend Agreement.

 

(a)          Medical Center shall have the option at the end of the ten (10)
year initial Term to:

 

(i)          Renegotiate this Agreement for a five (5) year renewal term.

 

(ii)         Terminate this Agreement. If Medical Center terminates this
Agreement at the end of the initial term, GKF shall remove the Gamma Knife
within an agreed upon period of time after the expiration of the ten (10) year
initial Term not in excess of 90 days.

 

Medical Center shall exercise one (1) of the two (2) options referred to above,
by mailing an irrevocable written notice thereof to GKF at Four Embarcadero
Center, Suite 3620, San Francisco, California, 94111, by registered mail,
postmarked on or before the end of the ninth (9th) year of the ten (10) year
initial Term of this Agreement. Any such notice shall be sufficient if it states
in substance that Medical Center elects to exercise its option and states which
of the two (2) options referred to above Medical Center is exercising.

 

18.         No Warranties by GKF. Medical Center warrants that as of the
Commencement Date, it shall have (a) thoroughly inspected the Equipment; (b)
determined for itself that all items of the Equipment are of a size, design,
capacity and manufacture selected by it; and (c) satisfied itself that to the
best of its knowledge the Equipment is suitable for Medical Center's stated
purposes. GKF SUPPLIES THE EQUIPMENT “AS IS” AND NOT BEING THE MANUFACTURER OF
THE EQUIPMENT OR THE MANUFACTURER'S AGENT, MAKES NO WARRANTY OR REPRESENTATION,
EITHER EXPRESSED OR IMPLIED, AS TO THE EQUIPMENT'S MERCHANTABILITY, FITNESS FOR
A PARTICULAR PURPOSE, DESIGN, CONDITION, DURABILITY, CAPACITY, MATERIAL OR
WORKMANSHIP OR AS TO PATENT INFRINGEMENT OR THE LIKE, it being agreed that all
such risks as between GKF and Medical Center, shall be borne by Medical Center.
Medical Center agrees to look solely to the manufacturer (Elekta) or to
suppliers of the Equipment (and its software) for any and all warranty claims.
Any and all warranties made by Elekta will be in its good faith best efforts
enforced by GKF on behalf of Medical Center during the ten (10) year initial
Term hereof. Medical Center agrees that GKF shall not be responsible for the
delivery, installation, or operation of the Equipment or for any delay or
inadequacy of any or all of the foregoing. GKF shall not be responsible for any
direct or indirect consequential loss or damage resulting from the installation,
operation or use of the Equipment or otherwise. Medical Center expressly waives
any right to hold GKF liable hereunder for any claims, demands and liabilities
arising out of or in connection with the design, manufacture, possession or
operation of the Equipment.

 

19.         Events of Default and Remedies. The occurrence of any one of the
following shall constitute an Event of Default hereunder:

 

(a)          Medical Center fails to pay any installment of semi-monthly
procedure payments when due when such default continues for a period of thirty
(30) days after notice thereof from GKF or its assignee is given to Medical
Center.

 

 
 

  

(b)          Medical Center attempts to remove, sell, transfer, encumber, sublet
or part with possession of the Equipment or any items thereof, except as
expressly permitted herein;

 

(c)          Medical Center shall fail to observe or perform any of the other
obligations required to be observed or performed by Medical Center hereunder and
such failure shall continue uncured for thirty (30) days after written notice
thereof to Medical Center by GKF provided, however, that if the nature of the
default is such that it cannot reasonably be cured within the thirty (30) day
period, the Medical Center shall not be deemed to be in default if it shall
commence to cure the default within the thirty (30) day period and diligently
effect the cure within a period not exceeding an additional thirty (30) days;

 

(d)          Medical Center ceases doing business as a going concern, makes an
assignment for the benefit of creditors, admits in writing its inability to pay
its debts as they become due, files a voluntary petition in bankruptcy, is
adjudicated a bankrupt or an insolvent, files a petition seeking for itself any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar arrangement under any present or future statute, law or regulation or
files an answer admitting the material allegations of a petition filed against
it in any such proceeding, consents to or acquiesces in the appointment of a
trustee, receiver, or liquidator of it or of all or any substantial part of its
assets or properties, or it or its shareholders shall take any action looking to
its dissolution or liquidation.

 

(e)          Within sixty (60) days after the commencement of any proceedings
against Medical Center seeking reorganization, arrangement, readjustment,
liquidation, dissolution or similar relief under any present or future statute,
law or regulation, such proceedings shall not have been dismissed, or if within
thirty (30) days after the appointment without Medical Center's consent or
acquiescence of any trustee, receiver or liquidator of it or of all or any
substantial part of its assets and properties, such appointment shall not be
vacated.

 

Upon the occurrence of an Event of Default, GKF may at its option do any or all
of the following: (i) by notice to Medical Center, terminate this Agreement as
to the Equipment in default, wherever situated, and for such purposes, enter
upon the Site without liability for so doing or GKF may cause Medical Center and
Medical Center hereby agrees to return the Equipment to GKF at Medical Center's
sole cost and expense; (ii) recover from, as liquidated damages for the loss of
the bargain and not as a penalty, an amount equal to the present value of the
unpaid estimated future lease payments by Medical Center to GKF through the end
of the Agreement term discounted at the rate of nine percent (9%), which payment
shall become immediately due and payable. Unpaid estimated future lease payments
shall be based on the prior 12 months lease payments with a five percent (5%)
increase; (iii) sell, dispose of, hold, use or lease the Equipment in default,
as GKF in its sole discretion may determine (and GKF shall not be obligated to
give preference to the sale, lease or other disposition of the Equipment over
the sale, lease or other disposition of similar Equipment owned or leased by
GKF). In any event, Medical Center shall, without further demand, pay to GKF an
amount equal to all sums due and payable for all periods up to and including the
date on which GKF had declared this Agreement to be in default.

 

In the event, that Medical Center shall have paid to GKF the liquidated damages
referred to in (iii) above, GKF hereby agrees to pay to Medical Center promptly
after receipt thereof, all rentals or proceeds received from the reletting or
sale of the Equipment during the balance of the ten (10) year initial Term
(after deduction of all expenses incurred by GKF; said amount never to exceed
the amount of the liquidated damages paid by Medical Center). Medical Center
agrees that GKF shall have no obligation to sell the Equipment. Medical Center
shall in any event remain fully liable for reasonable damages as provided by law
for all costs and expenses incurred by GKF on account of such default, including
but not limited to, all court costs and reasonable attorneys' fees.

 

 
 

  

Medical Center hereby agrees that, in any event, it shall be liable for any
deficiency after any sale, lease or other disposition of the Equipment by GKF.
The rights afforded GKF hereunder shall not be deemed to be exclusive, but shall
be in addition to any other rights or remedies provided by law.

 

20.         Insurance.

 

(a)          During the ten (10) year initial Term of this Agreement (and any
successive terms) GKF shall, at its own cost and expense, keep in effect an all
risk and hazard insurance policy covering the Equipment. The all risk and hazard
insurance policy shall be for an amount not less than the replacement cost of
the Equipment. During the ten (10) year initial Term of this Agreement, Medical
Center shall, at its own cost and expense keep in effect public liability and
professional liability insurance policies concerning the operation of the
Equipment by Medical Center. Said policies shall be in the amounts of not less
than $1,000,000 per occurrence and $5,000,000 in aggregate per year. Medical
Center and GKF, their successors and assigns, shall be named as additional
insureds and/or loss payees on the insurance policies maintained hereunder by
the other party. Evidence of such insurance coverages shall be furnished by both
parties to the other party upon written request, by no later than the
Commencement Date.

 

(b)          If the Equipment is rendered unusable as a result of any physical
damage to, or destruction of, the Equipment, Medical Center shall give to GKF
prompt notice. GKF shall determine, within thirty (30) days after the date of
occurrence of such damage or destruction, whether the Equipment can be repaired.
In the event GKF determines that the Equipment cannot be repaired, subject to
section 8(d), GKF at its sole cost and expense shall promptly replace the
Equipment. This Agreement shall continue in full force and effect as though such
damage or destruction had not occurred except that the term of the Agreement
shall be extended by the time the Equipment was rendered unusable. In the event
GKF determines that the Equipment can be repaired, GKF shall cause the Equipment
to be promptly repaired, subject to section 8(d).

 

21.         Notices. Any notices required under this Agreement shall be sent in
writing and shall be deemed to have been duly given if delivered by hand or
mailed by certified or registered mail to the following addresses:

 

To GKF: Chief Executive Officer   Four Embarcadero Center, Suite 3620   San
Francisco, CA 94111     To Medical Center: Chief Executive Officer   Froedtert
Memorial Lutheran Hospital   9200 W. Wisconsin Avenue   Milwaukee, WI 53226

 

Or to such other addresses as either party may specify for the reception of
notice from time to time in writing to the other party. Any such notice shall be
effective only when actually received by the party to whom addressed.

 

22.         Integration/Supersedure. This Agreement contains the full and entire
Agreement between the parties hereto, and no oral or written understanding is of
any force or effect whatsoever unless expressly contained in a writing executed
subsequent to the date of this Agreement.

 

23.         Waivers. To the extent that either party fails or chooses not to
pursue any of its remedies under this Agreement or pursuant to applicable law,
such shall not prejudice that party's rights to pursue any of those remedies at
any future time and shall not constitute a waiver of rights.

 

 
 

  

24.         Assignments. This Agreement is binding upon and shall inure to the
benefit of the permitted successors or assigns of the respective parties hereto,
except that neither party may assign its rights or obligations under this
Agreement without the express written consent of the other (which consent shall
not be unreasonably withheld).

 

25.         Amendments. This Agreement shall not be amended or altered in any
manner unless such amendment or alteration is in a writing signed by both
parties.

 

26.         Record-Keeping Requirements. To the extent required by the
regulations promulgated by the Health Care Financing Administration pursuant to
Section 952 of the Omnibus Reconciliation Act of 1980, GKF shall:

 

(a)          Until the expiration of four (4) years following the furnishing of
services pursuant to this Agreement, GKF agrees to make available upon written
request of the Secretary of Health and Human Services or the U.S. Comptroller
General or any of their duly authorized representatives, this Agreement, any
books, documents and records necessary to verify the nature and extent of costs
incurred by Medical Center by reason of the activities of GKF under this
Agreement; and

 

(b)          If GKF elects to delegate any of its duties under this Agreement
(which have a cost or value of Ten Thousand Dollars ($10,000.00) or more over a
twelve (12) month period) to a related organization, GKF may do so only through
a subcontractor which is consented to by Medical Center, it being understood
that, inasmuch as Medical Center is entering into this Agreement in reliance on
GKF's reputation and expertise, that Medical Center shall be the sole judge of
the reputation and expertise of the proposed delegee, and only through a
subcontractor which provides that, until the expiration of four (4) years
following the furnishing of services under such subcontract, the related
organization shall make available, on request of the Secretary of Health and
Human Services or the U.S. Comptroller General or any of their authorized
representatives, the subcontract, and books, documents and records of the nature
and extent of costs incurred by Medical Center by reason of activities of such
related organization under such subcontract. No delegation by GKF of its duties
hereunder shall relieve GKF from liability hereunder.

 

27.         Miscellaneous Provisions.

 

(a)          The invalidity or unenforceability of any portion or provision of
this Agreement shall not effect the validity or enforceability of any other
portion, nor shall either party's implied or express consent to the breach or
waiver of any provision of this Agreement constitute a waiver of such provision
as to any subsequent breach.

 

(b)          In the event of any claim or controversy arising hereunder, the
prevailing party in such claim or controversy shall be entitled to a reasonable
attorneys' fee in addition to whatever other relief said party would be
otherwise entitled.

 

(c)          Force Majeure. Failure to perform by either party will be excused
in the event of any delay or inability to perform its duties under this
Agreement directly or indirectly caused by conditions beyond its reasonable
control including without limitation, fires, floods, earthquakes, snow, ice,
disasters, Acts of God, accidents, riots, wars, operation of law, strikes,
governmental action or regulations, shortages of labor, fuel, power, materials,
manufacturer delays or transportation problems.

 

 
 

  

IN WITNESS WHEREOF, the parties have signed this Agreement on the day and year
first above written.

 

Medical Center GK Financing, LLC By: /s/ William B. Petasnick By: /s/ Craig K.
Tagawa President & CEO Chief Executive Officer Froedtert Memorial Lutheran
Hospital      

 
 

 

Exhibit 1

 

PER PROCEDURE PAYMENTS

 

Annual Procedures Performed  Fee Per Procedure         1-75  $8,250  76-125 
$8,000  126-150  $7,750  151+  $7,000 

 

Note: Procedure counts will revert to zero on each anniversary of the
Commencement Date.