Exhibit 10.67

 

Confidential material appearing in this document has been omitted and filed
separately with the Securities and Exchange Commission in accordance with Rule
24b-2, promulgated under the Securities and Exchange Act of 1934, as amended.
Omitted information has been replaced with asterisks.

 

LEKSELL GAMMA KNIFE PERFEXION

PURCHASED SERVICES AGREEMENT

 

THIS PURCHASED SERVICES AGREEMENT (“Agreement”) is made and entered into as of
the date of the last party to sign below, by and between GK FINANCING, LLC, a
California limited liability company (“GKF”) and PEACEHEALTH, a Washington
non-profit corporation (“PeaceHealth”), doing business through its operating
division PEACEHEALTH SACRED HEART MEDICAL CENTER AT RIVERBEND (“Medical
Center”), with reference to the following facts:

 

R E C I T A L S

 

WHEREAS, PeaceHealth currently operates a Gamma Knife at another of its Oregon
facilities; and

 

WHEREAS, PeaceHealth administrators do not consider the current Gamma Knife
center financially viable; and

 

WHEREAS, the current Gamma Knife equipment requires expensive upkeep to remain
functional, and is outmoded in comparison to more recently developed technology;
and

 

WHEREAS, PeaceHealth administrators and GKF have determined through financial
and community need analysis that a newer, more clinically flexible Gamma Knife,
located at Medical Center, could reasonably be expected to serve a broader
cohort of patients, enhancing quality of care and financial viability; and

 

WHEREAS, without access to additional resources, PeaceHealth would not be able
to purchase or otherwise obtain access to newer, more flexible equipment, so
that the quality of care available to the community could be adversely affected;
and

 

WHEREAS, GKF is willing provide additional resources to PeaceHealth according to
the terms and conditions of this Agreement, and thereby join with Medical Center
to ensure that the community has access to updated, more flexible Gamma Knife
services by providing Medical Center with the right to use a Leksell Gamma
Knife® Perfexion (the “Equipment”), manufactured by Elekta Instruments, Inc., a
Georgia corporation ("Elekta"); and

 

 

 

 

WHEREAS, Medical Center is willing to transfer ownership of its current Leksell
Gamma Knife® Model 4C unit, serial number 4366 (the “Model 4C”) to GKF for *
free and clear of any and all liens, encumbrances or debt obligations, and to
join with GKF according to the terms and conditions of this Agreement to furnish
Gamma Knife services to the people of the community.

 

A G R E E M E N T

 

NOW, THEREFORE, in consideration of the above recitals, which are hereby made a
part of this Agreement, and of the mutual covenants, conditions and agreements
set forth herein, and for 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”). 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.

 

3. Term of the Agreement. The initial term (“Initial Term”) of this Agreement
shall commence as of the date hereof and, unless earlier terminated or extended
(“Renewal Term”; Initial Term and Renewal Term may be referred to collectively
as the “Term”) in accordance with the provisions of this Agreement, shall
continue for a period of ten (10) years following the date of the performance of
the first clinical Procedure (as defined in Section 8 below) 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 any 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 as reasonably requested 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, as described in Exhibit 5.1 of this
Agreement (the “Site”), which delivery is anticipated to be on or before
September 30, 2014, subject to all approvals and User Licenses having been
obtained by Medical Center. 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.

 

5.2 Medical Center shall provide access to the Site for the Equipment. Medical
Center 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 (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 and Installation of Equipment.

 

6.1 Medical Center, 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 Medical Center (and all material
changes thereto following approval by GKF and Elekta) shall be subject to the
written approval of GKF and Elekta prior to commencement of construction at the
Site. Medical Center shall provide GKF 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 GKF and Elekta shall not unreasonably
withhold or delay its approval). Following approval of the plans and
specifications by GKF and Elekta, Medical Center, at its cost and expense, shall
obtain 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 GKF and Elekta, Medical
Center, 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, Medical Center, 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.

 

6.3 Medical Center, 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 Medical Center warrants that upon completion of preparation, construction,
and improvement of the Site including the positioning of the Equipment on its
foundation at the Site and installation of the Equipment, (a) 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 (b) with
respect to those portions of the Site that are not addressed by the Site
Planning Criteria, the Site shall be safe and suitable for the ongoing use and
operation of the Equipment during the Term.

 

6.5 In accordance with the schedule determined by GKF and/or Elekta, Medical
Center, at its cost, expense and risk, shall be responsible for the appropriate
de-installation of the Model 4C, including the rigging in and out of (i) the
Model 4C, and (ii) cobalt loading machine, and the loading of the Model 4C onto
the truck furnished by Elekta at the Site. Notwithstanding the above, GKF, at
GKF’s expense, shall be responsible for providing a cobalt loading machine that
will unload and dispose the Model 4C’s cobalt (loading machine to be rigged in
and out by the Medical Center). Effective upon the loading of the Model 4C onto
the truck furnished by Elekta at the Site, and for a purchase price of *,
Medical Center shall sell, assign, transfer and convey to GKF (or to Elekta, if
designated by GKF), and GKF (or Elekta, if designated by GKF) shall purchase and
acquire the Model 4C from Medical Center, free and clear of all liens,
encumbrances and adverse claims. In furtherance of the foregoing, concurrently
with the execution of this Agreement, Medical Center shall deliver to GKF a duly
executed bill of sale in substantially the form set forth on Exhibit A attached
hereto. Medical Center shall be responsible for any sales and use taxes levied
by any state or political subdivision thereof which may become due and owing by
reason of the sale of the Model 4C. It is acknowledged by the parties that GKF
intends to trade in the Model 4C to Elekta for credit towards GKF's purchase of
the Equipment, and that the trade in credit pertaining to the Model 4C has been
factored by GKF into the calculation of the Purchased Services Payment set forth
herein. Neither GKF nor Elekta shall bear any risk of loss prior to the loading
of the Model 4C onto the truck furnished by Elekta at the Site.

 

 

 

 

6.6 Medical Center shall use its reasonable efforts to satisfy its obligations
under this Section 6 in a timely manner. Medical Center shall keep GKF 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,
Medical Center 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.

 

7. Marketing Support.

 

7.1 Within ninety (90) days of acceptance of the Equipment and the commencement
of each succeeding twelve (12) month period during the Term, GKF and Medical
Center shall jointly develop an annual marketing plan, budget and timeline for
the clinical service to be supported by the Equipment for the succeeding twelve
(12) month period of the Term (the "Plan"), which Plan shall be implemented by
Medical Center based on the approved budget and timeline. The Plan shall require
the approval of both GKF and Medical Center; however, neither party’s approval
of such Plan shall be unreasonably withheld or delayed. As funds are expended by
Medical Center in accordance with the Plan, Medical Center shall submit to GKF
invoices for its marketing expenses paid to unrelated third parties that are
included in the Plan and promptly following the receipt of such invoices, GKF
shall reimburse Medical Center for * of approved expenditures. Medical Center
shall make available upon request invoices (together with documentary evidence
supporting the invoices) for marketing expenditures paid to unrelated third
parties that are included in the Plan. The annual average marketing budget will
not exceed * in the aggregate during the Term of this Agreement.

 

7.2 The Gamma Knife program at Medical Center (the “Program”) shall be named the
PeaceHealth Sacred Heart Medical Center at RiverBend Gamma Knife Center of the
Oregon Neuroscience Institute. All signage at the Gamma Knife center and all
communications to the public regarding the Program shall identify the Program as
being a Medical Center service, as required by applicable federal billing and
reimbursement guidelines. The cost of the signage shall be treated as a shared
marketing expense under Section 7.1 above. Without limiting Section 7.1 above,
Medical Center shall use commercially reasonable and industry standard efforts
to promote the Program and to encourage the use thereof by the public and
medical community.

 

 

 

 

8 Purchased Services Payments.

 

8.1 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, service, maintenance, insurance and
personal property tax and marketing expenses related to the Equipment, cobalt
unloading assistance, as well as other services to be provided 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.

 

8.2 In consideration for and as compensation to GKF for use of the Equipment and
other services rendered pursuant to this Agreement, Medical Center shall pay
GKF, on a monthly basis, the applicable “Purchased Services Payments” (as
defined below) for each “Procedure” that is performed by Medical Center, 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. As used
in this Agreement:

 

(a) “Purchased Services Payments” shall be equal to the applicable percentage
(%) (Set forth in Schedule 1 of this Agreement) of the “Gross Technical
Component Collections” for the applicable period relating to each Procedure
performed using the Equipment and/or any other equipment or devices at the Site
during the Term of this Agreement.

 

(b) "Gross Technical Component Collections" means *. Subject to all applicable
legal requirements, Medical Center agrees that it will utilize best efforts to
maximize third party reimbursement for the Program and revenues from the
Program; provided, however, that GKF acknowledges and agrees that Medical Center
shall perform Procedures as medically indicated on patients who qualify under
Medical Center’s guidelines for free or reduced cost care, regardless of such
patients’ ability to pay.

 

(c) "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) as medically indicated and consistent with appropriate utilization
parameters of the Equipment.

 

 

 

 

8.3 Within thirty (30) days after the last day of each month (or portion
thereof) during the Term of this Agreement, (a) 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 other equipment or devices);
and (ii) the Gross Technical Component Collections during that month. Medical
Center certifies that all claims submitted for reimbursement to the appropriate
payors shall be in accordance with its standard billing and collection policies
and procedures which provide that claims shall be submitted within thirty (30)
days of (i) each outpatient Procedure and (ii) discharge for each inpatient
Procedure. If no Gross Technical Component Collections are received during any
month, then, no Purchased Services Payments shall be owing by Medical Center to
GKF for that month.

 

8.4 During the Term of this Agreement, Medical Center shall, by the twenty-fifth
(25th) day of each month, remit GKF’s aggregate Purchased Services Payment, for
the immediately preceding month, and, for a period of eighteen (18) months
following the termination or expiration of this Agreement (the "Collections
Run-Out Period"), Medical Center shall, by the twenty-fifth (25th) day of each
such month, continue to remit GKF’s aggregate Purchased Services Payment
pertaining to Gross Technical Component Collections received during the
Collections Run-Out Period. All or any portion of any Purchased Services Payment
which are not paid in full within forty-five (45) days after its due date shall
bear interest at the rate of one and one-half percent (1.50%) per month (or the
maximum monthly interest rate permitted to be charged by law between an
unrelated, commercial borrower and lender, if less) until the unpaid Purchased
Services Payment, together with all accrued interest thereon are paid in full.
GKF will accept payment from Medical Center in the following forms: check and
electronic funds transfer. If GKF shall at any time accept any 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 19
hereof.

 

8.5 Within thirty (30) days after the close of each month, Medical Center shall
provide GKF with a written report, in a format mutually agreed upon by the
parties, indicating the status of billings and collections for each Procedure
performed during that month using the Equipment and/or any other equipment or
devices, including, without limitation, the amount of the claim submitted and
the amount received for each such Procedure provided, however, Medical Center
shall not identify the patient or payor.

 

8.6 Inspection of Records and Record Retention. Throughout the Term, and
thereafter until final settlement of all amounts owed to or claimed by either
party under this Agreement, each party, at its own expense, shall have the right
upon request and from time-to-time, not more than once annually, to inspect,
audit and copy the other party's books and records which relate to the
accounting for and calculation of Gross Technical Component Collections;
provided that any patient names or identifiers shall not be disclosed. GKF
acknowledges that Medical Center's managed care contracts may contain
confidentiality provisions that prohibit Medical Center from disclosing payment
rates to GKF. Accordingly, Medical Center agrees to provide payment rates to
GKF’s designated auditing firm for purposes of auditing and monitoring the
Purchase Services Payments and other obligations contemplated by the parties
under this Agreement. GKF’s designated auditing firm shall agree to (i) only use
the payment rate information in connection with this Agreement, and (ii)
disclose to GKF the minimum amount information regarding payment rates as
necessary for GKF to audit and monitor the Purchased Services Payments and other
obligations contemplated by the parties under this Agreement; provided, however,
GKF's auditing firm shall in no case share Medical Center's payment rates with
GKF.

 

 

 

 

8.7 Reimbursement Rate for Gamma Knife Procedures. Medical Center shall use
commercially reasonable efforts to renegotiate Medical Center's existing managed
care contracts to include coverage for stereotactic radiosurgery services
utilizing the Equipment to be provided through the Program, and to include in
new managed care contracts provisions covering such services

 

8.8 Survival. The provisions of this Section 8 shall survive the termination or
expiration of this Agreement.

 

9. Use of the Equipment.

 

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
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 or its Lender (as defined in Section 14),
as the case may be, 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.
Without limiting the generality foregoing, Medical Center hereby authorizes GKF
or its Lender to execute and file any statement or instrument, including a UCC-1
financing statement(s), for the purpose of evidencing GKF’s and/or such
Lender’s, as the case may be, interest in the Equipment. Medical Center also
shall promptly execute and deliver, or cause to be executed and delivered other
relevant statements, agreements, waivers and other documents with respect to
GKF’s and its Lender’s rights in the Equipment for the Term of the Agreement.

 

 

 

 

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 21 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 maintain on staff at least
two (2) neurosurgeons, two (2) radiation oncologists and (1) physicist to
operate the Equipment. 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.

 

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 Pay 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.

 

11.4 To the extent GKF personnel may, during the performance of their
obligations under this Agreement, be exposed to or otherwise access Protected
Health Information, as that term is defined in the Health Insurance Portability
and Accountability Act of 1996 and regulations promulgated thereunder, codified
at 45 C.F.R §§ 160 – 164, GKF agrees to ensure that GKF personnel who furnish
services at Medical Center are trained as appropriate and comply with all
privacy and security provisions of HIPAA and similar state and federal laws. GKF
agrees to indemnify and hold harmless Medical Center for any breach of this
Section 11.4, which shall survive the termination of this Agreement. Medical
Center shall not disclose any Protected Health Information (and shall
de-identify any Protected Health Information prior to its disclosure) to GKF or
any of its personnel.

 

11.5 Provide suggested marketing materials for the Gamma Knife, including
content for web pages, that GKF has found to be effective in other areas.

 

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. 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.

 

 

 

 

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
21 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
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.

 

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.

 

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 75th month
of the Term), then, notwithstanding any provisions to the contrary herein, the
Initial Term shall be automatically extended for an additional three (3) years.
The necessity for modifications, additions or upgrades to the Equipment,
including the reloading of the Cobalt-60 source, shall be as mutually agreed
upon by GKF and Medical Center, and the financial responsibility for such
modifications, additions and upgrades (excluding repairs, which pursuant to
Section 12.1 and subject to Section 12.3, are GKF’s and Medical Center’s
responsibility, respectively) shall be paid equally by GKF and Medical Center.

 

14. Financing of Equipment by GKF. GKF, in its sole discretion, may finance the
Equipment. If GKF finances the Equipment, GKF may be required to grant the
lender, lessor or other financing entity (the “Lender”) a security interest in
the Equipment as collateral for the loan, and Lender may file a UCC-1 financing
statement(s) to perfect its security interest in the Equipment. In addition, if
GKF finances the Equipment, title to the Equipment may remain with Lender until
the financing term ends or GKF exercises its buy-out option, if any, under the
financing. If required by the Lender, GKF may also be required to assign its
interest under this Agreement as security for the financing described above.
Medical Center's interest under this Agreement shall be subordinate to the
interests of the Lender, which Medical Center shall promptly confirm in writing
on Lender's form, if requested by GKF.

 

15. Taxes. GKF shall pay all sales or use taxes imposed or assessed in
connection with the use or purchase of the Equipment and all personal property
taxes imposed, levied or assessed on the ownership and possession of the
Equipment during the Term. Unless Medical Center provides GKF with a tax
exemption certificate, all other taxes, assessments, licenses or other charges
imposed, levied or assessed on the Equipment during the Term for which Medical
Center is not expressly exempt, shall be paid by Medical Center before the same
shall become delinquent, whether such taxes are assessed or would ordinarily be
assessed against GKF or Medical Center; provided, however, Medical Center shall
not be required to pay any federal, state or local income, franchise,
corporation or excise taxes imposed upon GKF's net income realized from the
Purchased Services Payments of the Equipment. In case of a failure by either
party to pay any taxes, assessments, licenses or other charges when and as
required under this Section, the other party may pay all or any part of such
taxes, in which event the amount paid by such paying party shall be immediately
payable to the paying party upon written request together with interest thereon
at the rate of 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).

 

 

 

 

16. No Warranties by GKF. Medical Center warrants that as of the First Procedure
Date, it shall have (a) thoroughly inspected the Equipment to the best of their
knowledge, (b) determined that to the best of its knowledge the Equipment is
consistent with the 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 intended purposes and is good working order, condition and
repair. GKF will work with Medical Center in good faith to remedy any problems
identified in writing by Medical Center during Medical Center's inspection. GKF
SUPPLIES THE EQUIPMENT UNDER THIS AGREEMENT IN ITS “AS IS” CONDITION. GKF, 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 OR USE, DESIGN, CONDITION,
DURABILITY, CAPACITY, MATERIAL OR WORKMANSHIP OR AS TO PATENT INFRINGEMENT OR
THE LIKE. As between GKF and Medical Center, Medical Center shall bear all risks
with respect to the foregoing warranties. Notwithstanding the foregoing, GKF
shall use its commercially reasonable efforts as set forth below in this Section
to ensure that all benefits under the manufacturer’s warranty shall run to the
Medical Center. GKF shall not be liable for any direct, indirect and
consequential losses or damages suffered by Medical Center or by any other
person, and 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, including, without limitation, injury to persons or property
resulting from the failure of, defective or faulty design, operation, condition,
suitability or use of the Equipment. All warranty or other similar claims with
respect to the Equipment shall be made by Medical Center solely and exclusively
against Elekta and any other manufacturers or suppliers, but shall in no event
be asserted against GKF. In this regard and with prior written approval of GKF,
Medical Center may, in GKF’s name, but at Medical Center’s sole cost and
expense, enforce all warranties, agreements or representations, if any, which
may have been made by Elekta or manufacturers, suppliers or other third parties
regarding the Equipment to GKF or Medical Center. GKF shall not be responsible
for the delivery or operation of the Equipment or for any delay or inadequacy of
either or both of the foregoing.

 

 

 

 

17. Termination for Economic Justification. If, following the initial twenty
four (24) months after the First Procedure Date and following each subsequent
twelve (12) month period thereafter during the Term, based upon the utilization
of the Equipment and other factors considered relevant by GKF in the exercise of
its reasonable discretion, within a reasonable period of time after GKF’s
written request, Medical Center does not provide GKF with a reasonable economic
justification to continue this Agreement and the utilization of the Equipment at
the Medical Center, then and in that event, GKF shall have the option to
terminate this Agreement by giving a written notice thereof to Medical Center
not less than one hundred eighty (180) days prior to the effective date of the
termination designated in GKF’s written notice. Without limiting the generality
of the foregoing, for purposes of this Section, “reasonable economic
justification to continue this Agreement” shall not be deemed to exist (and GKF
shall have the option to terminate this Agreement) if, during the twelve (12)
month period immediately preceding the issuance of GKF’s written notice of
termination, the “Net Cash Flow” is negative. As used herein, “Net Cash Flow”
shall mean, for the applicable period, (a) the aggregate Purchased Services
Payments actually received by GKF during such period, minus (b) the sum of the
aggregate (i) debt service on the Equipment, (ii) maintenance expenses, (iii)
marketing support, and (iv) Equipment-related personal property taxes and
insurance during such period.

 

18. Options to Extend Agreement. As of the end of the Initial Term, Medical
Center shall have the option either to:

 

18.1 Extend the Term of this Agreement for a specified period of time and upon
such other terms and conditions as may be agreed upon by GKF and Medical Center;

 

18.2 Terminate this Agreement as of the expiration of the Initial Term. Upon the
expiration of the Initial Term and within a reasonable time thereafter, GKF, at
its cost and expense, may enter upon the Site under Medical Center supervision
and remove the Equipment.

 

18.3 Medical Center shall exercise one (1) of the two (2) options referred to
above by giving an irrevocable written notice thereof to GKF at least one (1)
year prior to the expiration of the Initial Term. 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. If Medical Center fails to exercise the option granted herein at
least one (1) year prior to the expiration of the Initial Term, the option shall
lapse and this Agreement shall expire as of the end of the Initial Term.
Further, if Medical Center exercises the option specified in Section 18.1 above
and the parties are unable to mutually agree upon the length of the extension of
the Initial Term or any other terms or conditions applicable to such extension
prior to the expiration of the Initial Term, this Agreement shall expire as of
the end of the Initial Term.

 

 

 

 

19. Events of Default and Remedies.

 

19.1 Medical Center Event of Default. The occurrence of any one of the following
shall constitute a Medical Center event of default under this Agreement (a
“Medical Center Event of Default”):

 

19.1.1 Medical Center fails to pay any Purchased Services Payment when due
pursuant to Paragraph 8 above and such failure continues for a period of thirty
(30) days after written notice thereof is given by GKF or its assignee to
Medical Center; however, if Medical Center cures the Purchased Services Payment
default within the applicable thirty (30) day period, such default shall not
constitute an Event of Default.

 

19.1.2 Medical Center attempts to remove, sell, transfer, encumber, assign,
sublet or part with possession of the Equipment or any items thereof, except as
expressly permitted herein.

 

19.1.3 Medical Center fails to observe or perform any of its covenants, duties
or obligations arising under this Agreement or the LGK Agreement and such
failure continues for a period of thirty (30) days after written notice thereof
by GKF to Medical Center; however, if Medical Center cures the default within
the applicable thirty (30) day period or if the default reasonably requires more
than thirty (30) days to cure, Medical Center commences to cure the default
during the initial thirty (30) day period and Medical Center diligently
completes the cure within sixty (60) days following the end of the thirty (30)
day period, such default shall not constitute a Medical Center Event of Default;
provided that the foregoing cure periods shall not apply to a Medical Center
Event of Default under Subsections 19.1.1 or 19.1.2.

 

19.1.4 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.

 

19.1.5 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 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.

 

 

 

 

19.1.6 Medical Center is suspended or terminated from participation in the
Medicare program.

 

19.2 GKF Event of Default. The occurrence of any one of the following shall
constitute a GKF event of default under this Agreement (a “GKF Event of
Default”):

 

19.2.1 GKF causes Medical Center’s quiet enjoyment and use of the Equipment
pursuant to this Agreement to be materially interfered with (other than by
reason of a Medical Center Event of Default or in connection with servicing,
maintenance or repairs as contemplated in this Agreement), and GKF fails to cure
such default within thirty (30) days after written notice thereof is given by
Medical Center or its assignee to GKF; however, if GKF cures such default within
the applicable thirty (30) day period, such default shall not constitute an GKF
Event of Default.

 

19.2.2 GKF fails to pay or reimburse Medical Center for any monies payable by
GKF to Medical Center pursuant to this Agreement and such failure continues for
a period of thirty (30) days after written notice thereof is given by Medical
Center or its assignee to GKF; however, if GKF cures the default within the
applicable thirty (30) day period, such default shall not constitute a GKF Event
of Default.

 

19.2.3 GKF fails to observe or perform any of its covenants, duties or
obligations arising under this Agreement and such failure continues for a period
of thirty (30) days after written notice thereof by Medical Center to GKF;
however, if GKF cures the default within the applicable thirty (30) day period
or if the default reasonably requires more than thirty (30) days to cure, GKF
commences to cure the default during the initial thirty (30) day period and GKF
diligently completes the cure within sixty (60) days following the end of the
thirty (30) day period, such default shall not constitute a GKF Event of
Default; provided that the foregoing cure periods shall not apply to a GKF Event
of Default under Subsections 19.2.1 or 19.2.2.

 

19.2.4 GKF 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.

 

 

 

 

19.2.5 Within sixty (60) days after the commencement of any proceedings against
GKF seeking reorganization, arrangement, readjustment, liquidation, dissolution
or similar relief under any present or future statute, law or regulation, such
proceedings shall not have been dismissed, or if within thirty (30) days after
the appointment without GKF 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.

 

19.3 Upon the occurrence of a Medical Center Event of Default or a GKF Event of
Default, the non-breaching party may at its option do any or all of the
following:

 

19.3.1 By written notice to GKF, Medical Center may at its option immediately
terminate this Agreement as to the Equipment, wherever situated, but only upon
the occurrence of a GKF Event of Default under Subsections 19.2.1 or 19.2.2. As
a result of such termination, Medical Center may, at its option and upon written
notice to GKF, demand that GKF immediately enter upon the Site and remove the
Equipment at GKF’s sole cost and expense. For the avoidance of doubt, Medical
Center shall not have the right to terminate this Agreement by reason of a GKF
Event of Default, other than due to the occurrence of a GKF Event of Default
under Subsections 19.2.1 and/or 19.2.2.

 

19.3.2 By written notice to Medical Center, GKF may at its option immediately
terminate this Agreement as to the Equipment, wherever situated, but only upon
the occurrence of any of the Medical Center Events of Default as set forth in
Subsections 19.1.1, 19.1.2, 19.1.6 and/or noncompliance with Sections 10.1
and/or 10.5 above (which noncompliance has not been cured within the periods set
forth in Section 19.1.3 above) (collectively, the “Termination Defaults”). For
the avoidance of doubt, but without limiting GKF’s rights under Section 17 above
(Termination for Economic Justification), GKF shall not have the right to
terminate this Agreement by reason of a Medical Center Event of Default, other
than due to the occurrence of any Termination Default. As a result of such
termination pursuant to any Termination Default, GKF may (a) provide reasonable
notice to Medical Center of its intention to remove the Equipment, and upon such
date as provided by notice, GKF may then enter upon the Site and remove the
Equipment in a manner and at a time that causes least amount of disruption to
patient care, or, at Medical Center’s election, Medical Center shall remove and
return the Equipment to GKF, but in either event at Medical Center’s sole cost
and expense; and (b) recover from Medical Center as liquidated damages for the
loss of the bargain represented by this Agreement and not as a penalty an amount
equal to the present value of the unpaid estimated future Purchased Services
Payments to be made by Medical Center to GKF through the end of the Term
discounted at the rate of nine percent (9%), which liquidated damages shall
become immediately due and payable. The unpaid estimated future Purchased
Services Payments shall be based on the prior twelve (12) months Purchased
Services Payments made by Medical Center to GKF hereunder with an annual four
(4%) percent increase thereof through the end of the Term. Medical Center and
GKF acknowledge that the liquidated damages formula set forth in this Section
constitutes a reasonable method to calculate GKF’s damages resulting from any
Termination Default and under the circumstances existing as of the date of this
Agreement.

 

 

 

 

19.3.3 With respect to all other Medical Center Events of Default, GKF may:

 

A. Sell, dispose of, hold, use or lease the Equipment, as GKF in its sole and
absolute 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).

 

B. Exercise any other right or remedy which may be available to GKF under the
Uniform Commercial Code or any other applicable law or proceed by appropriate
court action, without affecting GKF’s title or right to possession of the
Equipment, to enforce the terms hereof or to recover damages for the breach
hereof or to cancel this Agreement as to the Equipment.

 

19.3.4 Upon termination of this Agreement or the exercise of any other rights or
remedies under this Agreement or available under applicable law following a
Medical Center Event of Default, Medical Center shall, without further request
or demand, pay to GKF all Purchased Services Payments and other sums owing under
this Agreement as of the date of termination. In the event that Medical Center
shall pay the liquidated damages referred to in Section 19.3.2 above to GKF, GKF
shall 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 Initial Term (after deduction of all costs and expenses, including
reasonable attorneys’ fees and costs, incurred by GKF as a result of the Event
of Default), said amount never to exceed the amount of the liquidated damages
paid by Medical Center. However, Medical Center acknowledges that GKF shall have
no obligation to sell the Equipment. Medical Center shall in any event remain
fully liable for all damages as may be provided by law and 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.

 

19.3.5 Subject to Section 16 above, each party shall in any event remain fully
liable to the other non-defaulting party for all damages as may be provided by
law and for all costs and expenses incurred by the non-defaulting party on
account of such default, including but not limited to, all court costs and
reasonable attorneys’ fees.

 

 

 

 

19.3.6 Subject to Sections 19.3.1 and 19.3.2 above (regarding limitations on the
right to terminate this Agreement), the rights and remedies afforded a
non-defaulting party under this Agreement shall be deemed cumulative and not
exclusive, and shall be in addition to any other rights or remedies available to
the non-defaulting party provided by law or in equity.

 

20. Insurance.

 

20.1 During the Term, GKF shall, at its cost and expense, purchase and maintain
in effect an all-risk property and casualty insurance policy covering the
Equipment. The all-risk property and casualty insurance policy shall be for an
amount not less than the replacement cost of the Equipment. Medical Center shall
be named as an additional insured party on the all-risk property and casualty
insurance policy to the extent of its interest in the Equipment arising under
this Agreement. The all-risk property and casualty insurance policy maintained
by GKF shall be evidenced by a certificate of insurance or other reasonable
documentation which shall be delivered by GKF to Medical Center upon request
following the commencement of this Agreement and as of each annual renewal of
such policy during the Term.

 

20.2 During the Term, Medical Center shall, at its cost and expense, purchase,
and maintain in effect general liability and professional liability insurance
coverage/policies covering the Site (together with all premises where the Site
is located) and the use or operation of the Equipment by Medical Center or its
officers, directors, agents, employees, contractors or physicians. Medical
Center has a self-insured retention coverage which provides general liability
and professional liability insurance policies shall provide coverage in amounts
not less than One Million Dollars ($1,000,000.00) per occurrence and Five
Million Dollars ($5,000,000.00) annual aggregate. The program is operated by
PeaceHealth and is funded in accordance with recognized actuarial projections.
GKF shall be named as additional insured party on the general liability and
professional liability insurance coverage/policies to be maintained hereunder by
Medical Center. The coverage/policies to be maintained by Medical Center
hereunder shall be evidenced by a certificate of insurance or other reasonable
documentation which shall be delivered by Medical Center upon request to GKF no
later than the First Procedure Date and as of each annual renewal of such
policies during the Term. Medical Center shall require any physicians using the
Equipment to show evidence of professional liability insurance consistent with
Medical Center’s Medical Staff Bylaws. PeaceHealth will not cancel or terminate
this program of self-insurance without at least thirty (30) days prior written
notice to GKF, together with a description of the insurance program to be
substituted; provided that GKF shall be named as an additional insured party on
any such substitute insurance programs or policies, as evidenced by a
certificate of insurance or other reasonable documentation which shall be
delivered by Medical Center upon request to GKF.

 

 

 

 

20.3 During the construction of the Site and prior to the First Procedure Date,
Medical Center, at its cost and expense, shall purchase, and maintain a general
liability insurance policy which conforms with the coverage amounts and other
requirements described in Section 20.2 above and which names GKF as an
additional insured party. The policy to be maintained by Medical Center
hereunder shall be evidenced by a certificate of insurance or other reasonable
documentation which shall be delivered by Medical Center to GKF prior to the
commencement of any construction at the Site.

 

20.4 During the Term, Medical Center and GKF shall purchase and maintain all
workers compensation insurance to the maximum extent required by applicable law.

 

21. Indemnification.

 

21.1 Medical Center shall be liable for and shall indemnify, defend, protect and
hold GKF and its members, managers, officers, employees, agents and contractors
(collectively “GKF”) harmless from and against all losses, claims, damages,
liabilities, assessments, deficiencies, actions, proceedings, orders, judgments,
liens, costs and other expenses (including reasonable attorneys’ fees) of any
nature or kind whatsoever asserted against or incurred by GKF (collectively
“Damages”) which in any manner arise out of or relate to (a) the failure by
Medical Center to fully perform, observe or satisfy its covenants, duties or
obligations contained in this Agreement or in the LGK Agreement; (b) negligent,
intentional or wrongful acts or omissions by Medical Center or any of its
officers, directors, agents, contractors (or their subcontractors), or employees
in connection with the use and operation of the Equipment during the Term; (c)
defects arising out of materials or parts provided, modified or designed by
Medical Center for or with respect to the Site; (d) the maintenance of the Site
during the Term by Medical Center; (e) Damages to the Equipment caused by the
negligent or wrongful acts or omissions of Medical Center, its agents, officers,
employees or contractors (if the Equipment is destroyed or rendered unusable,
subject to Section 21.7 below, this indemnity 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); (f) the events or occurrences described
in Article 7.3 of the LGK Agreement to the same extent that Medical Center
agrees to indemnify Elekta thereunder (other than with respect to the failure of
the Site to comply with the Site Planning Criteria or defective maintenance of
the Equipment under the Service Agreement); and (g) any other matters for which
Medical Center has specifically agreed to indemnify GKF pursuant to this
Agreement.

 

 

 

 

21.2 GKF shall be liable for and shall indemnify, defend, protect and hold
Medical Center and its directors, members, managers, officers, employees, agents
and contractors (collectively “Medical Center”) harmless from and against all
losses, claims, damages, liabilities, assessments, deficiencies, actions,
proceedings, orders, judgments, liens, costs and other expenses (including
reasonable attorneys’ fees) of any nature or kind whatsoever asserted against or
incurred by Medical Center (collectively “Damages”) which in any manner arise
out of or relate to (a) the failure by GKF to fully perform, observe or satisfy
its covenants, duties or obligations contained in this Agreement; (b) negligent,
intentional or wrongful acts or omissions by GKF or any of its officers,
directors, agents, contractors (or their subcontractors), or employees in
connection with the installation or removal of the Equipment, (c) the failure by
GKF to maintain the Equipment as provided in this Agreement; and (d) any other
matters for which GKF has specifically agreed to indemnify Medical Center
pursuant to this Agreement.

 

21.3 Upon the occurrence of an event for which GKF or Medical Center is entitled
to indemnification under this Agreement (“Indemnitee”), such party shall give
written notice thereof to the other party setting forth the type and amount of
Damages. If the indemnity relates to a Third Party Claim (as defined in Section
21.4 below), the matter shall be subject to Section 21.4 below. If the indemnity
relates to any Damages other than a Third Party Claim, not more than thirty (30)
days after written notice is given, the indemnifying party shall acknowledge its
obligation in writing to the Indemnitee to indemnify hereunder and pay the
Damages in full to the Indemnitee.

 

21.4 GKF or Medical Center, as Indemnitee, shall give written notice to the
other party as Indemnitor as soon as reasonably possible after the Indemnitee
has knowledge of any third party claim or legal proceedings (“Third Party
Claim”) for which the Indemnitee is entitled to indemnification under this
Section 21. Indemnitor shall (a) immediately assume, at its sole cost and
expense, the defense of the Third Party Claim with legal counsel approved by the
Indemnitee (which approval will not be unreasonably withheld, delayed or
conditioned), and (b) as soon as reasonably possible after Indemnitee’s written
notice is given to the Indemnitor, acknowledge in writing to Indemnitee its
obligation to indemnify Indemnitee in accordance with the terms of this
Agreement. If either party as the Indemnitor fails to assume the defense of a
Third Party Claim or fails to timely acknowledge in writing its obligation to
indemnify the Indemnitee, then, the Indemnitee may assume the defense of the
Third Party Claim in the manner described in Section 21.5 below. Each party
shall cooperate with the other in the defense of any Third Party Claim. Any
settlement or compromise of a Third Party Claim to which either party is a party
shall be subject to the express written approval of the other party, which
approval shall not be unreasonably withheld, delayed or conditioned as long as
an unconditional term of the settlement or compromise is the full and absolute
release of the Indemnitee from all Damages arising out of the Third Party Claim.
Either party as Indemnitee, at its own cost and expense, may participate on its
own behalf with legal counsel of its own selection in the defense of any Third
Party Claim which may have a material impact on it.

 

 

 

 

21.5 If either party having the obligation as Indemnitor fails to promptly
assume the defense of any Third Party Claim, the Indemnitee may assume the
defense of the Third Party Claim with legal counsel selected by the Indemnitee,
all at the Indemnitor’s cost and expense. The defense of an action by an
Indemnitee under this Section 21.5 shall not impair, limit or otherwise restrict
Indemnitor’s indemnification obligations arising under this Section 21 or
Indemnitee’s right to enforce such obligations.

 

21.6 The indemnity obligations under this Section 21 shall expire on the
expiration of the applicable statute of limitations relating to the underlying
claim that is the subject of the indemnification claim. Any indemnification
obligation shall be in proportion to the amount of responsibility found
attributable to the Indemnitor.

 

21.7 The indemnification obligations set forth in this Agreement are intended to
supplement, and not supersede, supplant or replace, any coverage for Damages
which may be available under any insurance policies that may be maintained by
GKF or Medical Center. In the event any Damages may be covered by insurance
policies, the parties shall exercise good faith and use their best efforts to
obtain the benefits of and apply the available insurance coverage to the Damages
subject to indemnification under this Agreement. In the event that an insurer
provides coverage under an insurance policy on the basis of a “reservation of
rights”, the indemnification obligations under this Agreement shall apply to all
Damages which are finally determined as not being covered under the insurance
policy.

 

22. Miscellaneous.

 

22.1 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
Medical Center shall not assign this Agreement or any of its rights hereunder or
sublease the Equipment without the prior written consent of GKF, which consent
shall not be unreasonably withheld; provided, however that the Medical Center
may assign this Agreement without prior written consent of GKF to an entity
controlled by, controlling, or under common control with the Medical Center and
which entity is the holder of the general acute care hospital license for the
facility at which the Equipment is located, and provided further, that such
entity shall have credit rating and financial position equivalent to or higher
than that of Medical Center as reasonably determined by GKF. Unless otherwise
agreed to in writing by GKF, an assignment or sublease shall not relieve Medical
Center of any liability for performance of this Agreement during the remainder
of the Term. Any purported assignment or sublease made without GKF’s prior
written consent shall be null, void and of no force or effect.

 

 

 

 

22.2 Agreement to Perform Necessary Acts. Each party agrees to perform any
further acts and execute and deliver any further documents which may be
reasonably necessary or otherwise reasonably required to carry out the
provisions of this Agreement.

 

22.3 Validity. If for any reason any clause or provision of this Agreement, or
the application of any such clause or provision in a particular context or to a
particular situation, circumstance or person, should be held unenforceable,
invalid or in violation of law by any court or other tribunal of competent
jurisdiction, then the application of such clause or provision in contexts or to
situations, circumstances or persons other than that in or to which it is held
unenforceable, invalid or in violation of law shall not be affected thereby, and
the remaining clauses and provisions hereof shall nevertheless remain in full
force and effect.

 

22.4 Attorneys’ Fees and Costs. In the event of any action, arbitration or other
proceedings between or among the parties hereto with respect to this Agreement,
the non-prevailing party or parties to such action, arbitration or proceedings
shall pay to the prevailing party or parties all costs and expenses, including
reasonable attorneys’ fees, incurred in the defense or prosecution thereof by
the prevailing party or parties. The party which is a “prevailing party” shall
be determined by the arbitrator(s) or judge(s) hearing the matter and shall be
the party who is entitled to recover his, her or its costs of suit, whether or
not the matter proceeds to a final judgment, decree or determination. A party
not entitled to recover his, her or its costs of suit shall not recover
attorneys’ fees. If a prevailing party or parties shall recover a decision,
decree or judgment in any action, arbitration or proceeding, the costs and
expenses awarded to such party may be included in and as part of such decision,
decree or judgment.

 

22.5 Entire Agreement; Amendment. This Agreement together with the Exhibits and
Schedules attached hereto constitutes the full and complete agreement and
understanding between the parties hereto concerning the subject matter hereof
and shall supersede any and all prior written and oral agreements with regard to
such subject matter. This Agreement may be modified or amended only by a written
instrument executed by all of the parties hereto.

 

22.6 Number and Gender. Words in the singular shall include the plural, and
words in a particular gender shall include either or both additional genders,
when the context in which such words are used indicates that such is the intent.

 

22.7 Effect of Headings. The titles or headings of the various paragraphs hereof
are intended solely for convenience or reference and are not intended and shall
not be deemed to modify, explain or place any construction upon any of the
provisions of this Agreement.

 

 

 

 

22.8 Counterparts. This Agreement may be executed in one or more counterparts by
the parties hereto. All counterparts shall be construed together and shall
constitute one agreement.

 

22.9 Governing Law. This Agreement shall be interpreted and enforced in
accordance with the internal laws, and not the law of conflicts, of the State of
Oregon.

 

22.10 Exhibits and Schedules. All exhibits and schedules attached hereto and
referred to in this Agreement are hereby incorporated by reference herein as
though fully set forth at length.

 

22.11 Ambiguities. The general rule that ambiguities are to be construed against
the drafter shall not apply to this Agreement. In the event that any provision
of this Agreement is found to be ambiguous, each party shall have an opportunity
to present evidence as to the actual intent of the parties with respect to such
ambiguous provision.

 

22.12 Representations. Each of the parties hereto represents (a) that no
representation or promise not expressly contained in this Agreement has been
made by any other party hereto or by any of its agents, employees,
representatives or attorneys; (b) that this Agreement is not being entered into
on the basis of, or in reliance on, any promise or representation, expressed or
implied, other than such as are set forth expressly in this Agreement; (c) that
it has been represented by counsel of its own choice in this matter or has
affirmatively elected not to be represented by counsel; (d) it is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (e) it has full power and authority to
execute, deliver and perform this Agreement, and (f) the execution, delivery and
performance of this Agreement has been duly authorized by all necessary
corporate or other similar action.

 

22.13 Non-Waiver. No failure or delay by a party to insist upon the strict
performance of any term, condition, covenant or agreement of this Agreement, or
to exercise any right, power or remedy hereunder or under law or consequent upon
a breach hereof or thereof shall constitute a waiver of any such term,
condition, covenant, agreement, right, power or remedy or of any such breach or
preclude such party from exercising any such right, power or remedy at any later
time or times.

 

22.14 Notices. All notices, requests, demands or other communications required
or permitted to be given under this Agreement shall be in writing and shall be
delivered to the party to whom notice is to be given either (a) by personal
delivery (in which case such notice shall be deemed to have been duly given on
the date of delivery), (b) by next business day air courier service (e.g.,
Federal Express or other similar service) (in which case such notice shall be
deemed given on the business day following deposit with the air courier
service), or (c) by United States mail, first class, postage prepaid, registered
or certified, return receipt requested (in which case such notice shall be
deemed given on the third (3rd) day following the date of mailing), and properly
addressed as follows:

 

 

 

 

  To GKF: GK Financing, LLC     4 Embarcadero Center, Suite 3700     San
Francisco, CA 94111     Attn: Craig K. Tagawa, CEO         To Medical Center:
PeaceHealth Sacred Heart Medical Center at RiverBend     3333 RiverBend Drive  
  Springfield, OR  97477     Attn: Hospital Administrator

 

A party to this Agreement may change his, her or its address for purposes of
this Section by giving written notice to the other parties in the manner
specified herein.

 

22.15 Special Provisions Respecting Medicare and Medicaid Patients

 

22.15.1 Medical Center and GKF shall generate such records and make such
disclosures as may be required, from time to time, by the Medicare, Medicaid,
TriCare, HCAP and other third party payment programs with respect to this
Agreement in order to meet all requirements for participation and payment
associated with such programs, including but not limited to the matters covered
by Section 1861(v)(1)(I) of the Social Security Act.

 

22.15.2 For the purpose of compliance with Section 1861(v)(1)(I) of the Social
Security Act, as amended, and any regulations promulgated pursuant thereto, both
parties agree to comply with the following statutory requirements (a) Until the
expiration of four (4) years after the termination of this Agreement, both
parties shall make available, upon written request to the Secretary of Health
and Human Services or, upon request, to the Comptroller General of the United
States, or any of their duly authorized representatives, the contract, and
books, documents and records of such party that are necessary to certify the
nature and extent of such costs, and (b) if either party carries out any of the
duties of the contract through a subcontract with a value or cost of $10,000 or
more over a twelve month period, with a related organization, such subcontract
shall contain a clause to the effect that until the expiration of four (4) years
after the furnishing of such services pursuant to such subcontract, the related
organization shall make available, upon written request to the Secretary, or
upon request to the Comptroller General, or any of their duly authorized
representatives the subcontract, and books, documents and records of such
organization that are necessary to verify the nature and extent of such costs.

 

 

 

 

22.15.3 It is the intent of the parties to comply fully with all applicable
requirements of federal law, including but not limited to the Federal
Anti-Kickback Statute, codified at 42 U.S.C. § 1320a-7b, and regulations
promulgated thereunder, codified at 42 C.F.R. § 1001.952. All payments under
this Agreement have been negotiated at arm’s length and are, to the best
knowledge of the parties, consistent with fair market value for items and
services rendered. Nothing in this Agreement is intended to encourage or induce
referral for any item or service payable under federal health care programs.

 

22.16 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. Notwithstanding the foregoing, all parties
shall make good faith efforts to perform under this Agreement in the event of
any such circumstance. Further, once such an event is resolved, the parties
shall again perform their respective obligations under this Agreement.
Notwithstanding the foregoing, and for the avoidance of doubt, (i) no reductions
or other changes to reimbursement amounts and/or payment methodology(ies)
pertaining to any third party payors or governmental programs, including,
without limitation, Medicare, Medicaid, any other federal or state programs,
and/or any commercial payors, and (ii) no suspension or exclusion of Medical
Center from participation in the Medicare program shall be deemed to constitute
a force majeure event under this Section, and shall not excuse or delay Medical
Center’s obligations under this Agreement or provide Medical Center with the
right to terminate this Agreement.

 

22.17 Independent Contractor. It is mutually understood and agreed that nothing
in this Agreement is intended nor shall be construed to create between GKF and
Medical Center, with respect to their relationship hereunder, an
employer/employee relationship, a partnership or joint venture relationship, or
a landlord/tenant relationship.

 

22.18 Supplier and Owner of Equipment. The parties hereto agree that,
notwithstanding anything to the contrary set forth in this Agreement, this
Agreement is and shall be treated and interpreted as a "finance lease," as such
term is defined in Article 2A of the Uniform Commercial Code, that GKF shall be
treated as a finance lessor who is entitled to the benefits and releases from
liability accorded to a finance lessor under Article 2A of the Uniform
Commercial Code. In furtherance of the foregoing, Medical Center acknowledges
that, before signing this Agreement, GKF has informed Medical Center in writing
(a) that Elekta is the entity supplying the Equipment to GKF, (b) that Medical
Center is entitled (under Section 2A of the Uniform Commercial Code) to the
promises and warranties, including those of any third party, provided to GKF by
Elekta which is the entity supplying the goods in connection with or as part of
the contract by which GKF acquired the Equipment or the right to possession and
use of the Equipment, and (c) that Medical Center may communicate with Elekta
and receive an accurate and complete statement of those promises and warranties,
including any disclaimers and limitations of them or of remedies. Medical Center
also acknowledges that Medical Center has selected Elekta to supply the
Equipment and has directed GKF to acquire the Equipment or the right to
possession and use of the Equipment from Elekta.

 

 

 

 

22.19 Legal Status.

 

22.19.1 Notwithstanding anything to the contrary herein, if two (2) independent
legal counsel specializing in healthcare law (collectively, the “Independent
Legal Counsel”), one of whom shall be chosen by and at the expense of Medical
Center, and one of whom shall be chosen by and at the expense of GKF, issue
separate written legal opinions addressed to both of the parties stating that
performance by either of the parties hereto of any term of this Agreement shall
jeopardize the licensure of Medical Center, or the full accreditation of Medical
Center by Medical Center’s accrediting body, or the tax-exempt status of
PeaceHealth, or the ability of PeaceHealth to issue tax-exempt bonds or should
be in violation of applicable laws or regulations (each, a "Disqualifying
Event"), then, the parties mutually agree to use their best efforts to
renegotiate such term. In the event (a) the parties are unable to renegotiate
said term within sixty (60) days following receipt of such written opinions from
the Independent Legal Counsel; and (b) the Independent Legal Counsel each
determine in writing that any modification to the Agreement would be impossible,
illegal or would disqualify a party from providing services to Medicare or
Medicaid patients, then, (i) either party may terminate this Agreement upon
thirty (30) days prior written notice to the other party, except for any
obligations under the Agreement accruing to the date of termination and those
obligations surviving the date of termination as provided hereunder; and (ii) if
any part or all of the representations and warranties made by Medical Center set
forth in Section 22.19.3 were untrue as of the date made, then, Medical Center
shall, upon such termination, pay to GKF as liquidated damages for the loss of
the bargain represented by this Agreement and not as a penalty an amount equal
to that specified in Section 19.3.2(b).

 

22.19.2 Each party shall select one of the two Independent Legal Counsel to
render the aforementioned opinions. All costs and expenses of the Independent
Legal Counsel will be borne by the party initiating the request unless the
determination is made by the Independent Legal Counsel as described above that
the performance by either of the parties hereto of any term of this Agreement
shall result in the occurrence of a Disqualifying Event, in which event, such
costs and expenses shall be shared equally between the parties. In the event
that the two Independent Legal Counsel render conflicting opinions, either the
parties hereto shall decide upon a third attorney who meets the above
qualifications or shall instruct the Independent Legal Counsel to select a third
attorney specializing in healthcare law to review and render an opinion, which
opinion by such third attorney shall be binding on both parties. Under the
circumstance of having to select a third attorney, the costs of the Independent
Legal Counsel shall be borne by the party selecting such counsel and the costs
of the third attorney shall be borne equally by the parties.

 

 

 

 

22.19.3 Medical Center represents and warrants to GKF that, as of the date of
the parties' respective execution and delivery of this Agreement, (a) no
Disqualifying Event has occurred or will occur as of such date; and (b) the
percentage of tax-exempt bond proceeds and/or tax-exempt bond financed property
(pertaining to any specific tax-exempt bond issue or in the aggregate) that are
used directly or indirectly for any private business use (after taking into
account the effect of this Agreement) does not exceed nine hundredths percent
(.09%). For purposes of determining at any time or from time-to-time the
percentage of tax-exempt bond proceeds and/or tax-exempt bond financed property
(pertaining to any specific tax-exempt bond issue or in the aggregate) that are
used directly or indirectly for any private business use, Medical Center shall
(and any Independent Legal Counsel shall be instructed to) disregard any private
business use unrelated to this Agreement arising or that has been placed into
service after the commencement date of the Initial Term of this Agreement.

 

[Signatures on next page]

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first set forth above.

 

  "GKF" GK FINANCING, LLC             By:       Title:       Date:  
                                 “MEDICAL CENTER” PEACEHEALTH SACRED HEART
MEDICAL CENTER AT RIVERBEND             By:       Title:       Date:  

 

 

 

 

Exhibit A

 

BILL OF SALE

 

This BILL OF SALE is executed and delivered effective as of the date of the last
party to sign below, but is made effective at the “Effective Time" (as defined
below) by PEACEHEALTH, a Washington non-profit corporation (“PeaceHealth”),
doing business through its operating division PEACEHEALTH SACRED HEART MEDICAL
CENTER AT RIVERBEND (“Medical Center”), and GK FINANCING, LLC, a California
limited liability company ("GKF").

 

1.In consideration for the sum of * and other good and valuable consideration,
effective as of the Effective Time, Medical Center hereby sells, bargains,
grants, assigns, conveys, transfers and delivers to GKF, and GKF hereby accepts,
all of Medical Center’s right, title and interest to the equipment listed on
Schedule A attached hereto (collectively, the "Equipment"). As used herein, the
“Effective Time" shall mean the date on which the Equipment is loaded by Medical
Center onto the truck furnished by Elekta Instruments, Inc. ("Elekta") at the
"Site" (as defined in the below-referenced Agreement).

 

2.Medical Center hereby covenants and agrees with GKF that Medical Center shall
duly execute and deliver all such deeds, bills of sale, endorsements,
assignments, drafts, checks, and other instruments of transfer as may be
necessary or helpful more fully to sell, transfer, assign and convey to and to
invest in GKF, the Equipment hereby sold, transferred, assigned and conveyed by
this Bill of Sale.

 

3.Medical Center represents and warrants that it has full, complete and absolute
right to transfer the Equipment to GKF. Medical Center further represents and
warrants that the Equipment is free and clear of all liens, claims, debts,
liabilities, liens and encumbrances of any kind. All of the terms and provisions
of this Bill of Sale shall be binding upon Medical Center and its respective
successors and assigns, and shall inure to the benefit of GKF and its successors
and assigns. Medical Center agrees to indemnify, defend and hold GKF and its
successors and assigns harmless from and against all expenses including
reasonable attorneys’ fees, costs, losses, liabilities, judgment and damages
including amounts paid in settlement incurred by GKF and its successors and
assigns in connection with any claim, assertion or lawsuit made or brought by
any party claiming title to or any interest whatsoever in the Equipment, other
than a party claiming to have derived its interest as a grantee of GKF.

 

4.This Bill of Sale is being executed and delivered in connection with that
certain Purchased Services Agreement dated ______, 2014, between Medical Center
and GKF (the "Agreement"). This Bill of Sale is in all respects subject to the
provisions of the Agreement and is not intended in any way to supersede, limit
or qualify any provision of the Agreement. This Bill of Sale may be assigned at
any time by GKF to Elekta without Medical Center's consent.

 

5.This Bill of Sale shall be governed by and construed in accordance with the
laws of the State of Oregon without regard to the principles of conflicts of
laws.

 

 

 

 

IN WITNESS WHEREOF, Medical Center has caused this Bill of Sale to be executed
by its duly authorized officers effective as of the Effective Date.

 

  PEACEHEALTH SACRED HEART   MEDICAL CENTER AT RIVERBEND         By:
                        Title:       Date:  

 

 

AGREED AND ACCEPTED:       GK FINANCING, LLC       By:                 Title:  
    Date:    

 

 

 

 

Schedule 1

 

The Purchased Services Payment percentage is as follows:

 

Purchased Services Payment Percentage:            *