Exhibit 10.45

EQUIPMENT LEASE AGREEMENT

     THIS EQUIPMENT LEASE AGREEMENT (“Agreement”) is made and entered into on
May 28, 2003, by and between GK FINANCING, LLC, a California limited liability
company (“GKF”), and Lehigh Valley Hospital (“Hospital”), a not for profit
Pennsylvania corporation, with reference to the following facts:

R E C I T A L S

     WHEREAS, Hospital wants to lease a Leksell Stereotactic Gamma Unit, model C
with Automatic Positioning System, manufactured by Elekta Instruments, Inc., as
specified in Exhibit A of the LGK Agreement (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 Hospital, pursuant to the terms and conditions of this Agreement.

A G R E E M E N T

     NOW, THEREFORE, in consideration of the mutual covenants, conditions and
agreements set forth herein, and for such other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

     1.  Lease.  Subject to and in accordance with the covenants and conditions
set forth in this Agreement, GKF hereby leases to Hospital, and Hospital hereby
leases from GKF, the Equipment. The Equipment to be leased to Hospital pursuant
to this Agreement shall include the 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,
Hospital and Elekta shall enter into that certain LGK Agreement (the “LGK
Agreement”), a copy of which is attached hereto as Exhibit 1. Hospital shall
perform, satisfy and fulfill all of its obligations arising under the LGK
Agreement when and as required thereunder. Hospital acknowledges that GKF is a
third party beneficiary of the LGK Agreement and, in that capacity, GKF shall be
entitled to enforce Hospital’s performance, satisfaction and fulfillment of its
obligations thereunder.

     3.  Term of the Agreement.  The initial term of this Agreement (the “Term”)
shall commence as of the date hereof and, unless earlier terminated or extended
in accordance with the provisions of this Agreement, shall continue for a period
of ten (10) years following the date of the performance of the first clinical
Gamma Knife procedure (the “First Procedure Date”) at the

 

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Site. Hospital’s obligation to make the rental payments to GKF for the Equipment
described in Section 8 below shall commence as of the First Procedure Date.

     4.  User License.

          4.1  Hospital shall apply for and obtain in a timely manner a User
License from the Nuclear Regulatory Commission and, if necessary, from the
applicable state agency authorizing it to take possession of and maintain the
Cobalt supply required in connection with the use of the Equipment during the
term of this Agreement. Hospital also shall apply for and obtain in a timely
manner all other licenses, permits, approvals, consents and authorizations which
may be required by state or local governmental or other regulatory agencies for
the development, construction and preparation of the Site, the charging of the
Equipment with its Cobalt supply, the conduct of acceptance tests with respect
to the Equipment, and the use of the Equipment during the Term, as more fully
set forth in Article 2.2 of the LGK Agreement.

     5.  Delivery of Equipment; Site.

          5.1  GKF shall coordinate with Elekta and Hospital to have the
Equipment delivered to Hospital at Lehigh Valley Hospital-Muhlenberg (the
“Site”) on or prior to the delivery date agreed upon by Hospital, GKF and Elekta
in writing. GKF makes no representations or warranties concerning delivery of
the Equipment to the Site or the actual date thereof.

          If the Equipment is not delivered by the scheduled delivery date
specified in a separate written agreement plus a sixty (60) day grace period
(other than by reasons of force majeure as provided in Paragraph 23.16 below)
(the “Late Delivery Date”), GKF shall reimburse Hospital upon written request
for Hospital’s actual financing costs (which financing costs shall not exceed
interest at the prime interest rate of Bank of America plus 2%) based upon
Hospital’s cost to install the Equipment (cost is estimated at approximately
$500,000) for the period between the Late Delivery Date and the date that the
Equipment is delivered to the Site.

          5.2  Hospital, at its cost and expense, shall provide a safe,
convenient and properly prepared Site for the Equipment in accordance with
Elekta’s guidelines, specifications, technical instructions and site planning
criteria (which site planning criteria are attached as Exhibit B to the LGK
Agreement) (collectively the “Site Planning Criteria”). The location of the Site
shall be subject to the prior approval of GKF.

     6.  Site Preparation and Installation of Equipment.

          6.1  Hospital, 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

 

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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 Hospital (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. Hospital 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. Following
approval of the plans and specifications by GKF and Elekta, Hospital, 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, Hospital, 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, Hospital, at its cost and expense, shall select, purchase and install
all radiation monitoring equipment, devices, safety circuits and radiation
warning signs required at the Site in connection with the use and operation of
the Equipment, all in accordance with applicable federal, state and local laws,
rules, regulations or custom.

          6.3  In addition to construction and improvement of the Site,
Hospital, 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  Upon completion of construction, the Site shall (a) comply in all
respects with the Site Planning Criteria and all applicable federal, state and
local laws, rules and regulations, and (b) be safe and suitable for the ongoing
use and operation of the Equipment during the Term.

          6.5  Hospital shall use its reasonable efforts to satisfy its
obligations under this Section 6 in a timely manner. Hospital shall keep GKF
informed in a timely manner 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, Hospital 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. If the Site is not
complete as of the delivery date described in Section 5.1 above plus a sixty
(60) day grace period (other than by reasons of force majeure as provided in
Section 23 below) (the “late completion date”), Hospital shall reimburse GKF for
its out-of-pocket financing costs incurred with respect the Equipment at the
Bank of America prime

 

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interest rate (which rate is sometimes referred to by the Bank as its “reference
rate”) plus 2% based upon GKF’s cost of the Equipment for the period between the
late completion date and the date that the Site is completed to the extent
necessary to allow for the installation, positioning and testing of the
Equipment.

          If the Equipment is not delivered by the scheduled delivery date
specified in a separate written agreement plus a sixty (60) day grace period
(other than by reasons of force majeure as provided in Paragraph 23.16 below)
(the “Late Delivery Date”), GKF shall reimburse Hospital upon written request
for Hospital’s actual financing costs (which financing costs shall not exceed
interest at the prime interest rate of Bank of America plus 2%) based upon
Hospital’s direct costs incurred to prepare and construct the Site for the
Equipment for the period between the Late Delivery Date and the date the
Equipment is actually delivered to the Site.

          6.6  During the Term, Hospital, at its cost and expense, shall
maintain the Site in a good working order, condition and repair, reasonable wear
and tear excepted.

          6.7  Hospital shall be liable for, and shall indemnify GKF in the
manner described in Section 22 below from and against, all damage to the
Equipment caused by (a) defects in construction of the Site or in installation
or positioning the Equipment at the Site; (b) defects arising out of materials
or parts provided, modified or designed by Hospital for or with respect to the
Site; (c) negligent, intentional or wrongful acts or omissions by Hospital or
any of its officers, directors, agents, contractors (or their subcontractors),
or employees in connection with the construction and preparation of the Site;
and (d) negligent or intentional and wrongful operation of the Equipment at the
Site. Further, neither the review and approval of Site plans, specifications
and/or positioning plans by GKF and/or Elekta, nor the construction of any other
Site preparation, shall relieve Hospital for liability for damages to the
Equipment caused by the failure to comply with applicable federal, state or
local laws or regulations, including building codes, or those portions of the
Site Planning Criteria relating to the load bearing capacity of the floor of the
treatment room and to radiation protection.

     7.  Marketing Support.  GKF, in coordination with Hospital, shall provide
marketing support for the Gamma Knife service to be provided by Hospital. Not
less than ninety (90) days prior to the First Procedure Date and the
commencement of each succeeding twelve (12) month period during the Term, GKF
and Hospital shall develop a mutually agreed upon marketing budget and plan for
the clinical service to be supported by the Equipment for the succeeding twelve
(12) month period of the Term. Once approved, the marketing budget and plan
shall be implemented by Hospital in accordance with its terms. As funds are
expended by Hospital in accordance with the marketing budget and plan, Hospital
shall submit invoices (together with documentary evidence supporting the
invoices) for its expenditures and, promptly following the receipt of such
invoices, GKF shall reimburse Hospital for * of the expenditures up to an annual
maximum of *. It is acknowledged by the parties that such expenses to be
reimbursed by GKF as provided in this Section 7 have been included in GKF’s
calculation of Hospital’s Lease Payments so as to allow GKF to recover such GKF
reimbursed expenses during the Term of this Agreement.

 

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     8.  Per Procedure Payments.  As rent for the lease of the Equipment to
Hospital pursuant to this Agreement, Hospital shall pay to GKF the sum of * for
each Procedure. Hospital shall pay GKF this amount (the “Lease Payment”) for
each “Procedure” that is performed by Hospital or its representatives or its
employees or affiliated health care entities, irrespective of whether the
Procedure is performed on the Equipment or using any other equipment or devices.
It is acknowledged that a physician that is not employed by Hospital shall not
be deemed to be a representative or affiliated health care entity of Hospital.
As used herein, a “Procedure” means any treatment that involves stereotactic,
external, single fraction, conformal radiation, commonly called radiosurgery,
that may include one or more isocenters during the patient treatment session,
delivered to any site(s) superior to the foramen magnum.

     Within ten (10) days following the end of each month (or portion thereof)
during the term of this Agreement, Hospital shall inform GKF in writing as to
the number of Procedures performed during that month utilizing the Equipment and
any other devices. If no Procedures are performed by Hospital or any other
person utilizing the Equipment or any other equipment or devices, no Lease
Payments shall be owing by Hospital to GKF. GKF shall submit a rent invoice to
Hospital on the last day of each calendar month (or portion thereof) for the
actual number of Procedures performed during the calendar month. Hospital shall
pay the rent invoice within forty five (45) days after submission by GKF to
Hospital. All or any portion of a rent invoice which is not paid in full within
sixty (60) days after submission 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 rent invoice together with all accrued
interest thereon is paid in full. If GKF shall at any time accept a rent payment
from Hospital after it shall become due, such acceptance shall not constitute or
be construed as a waiver of any or all of GKF’s rights under this Agreement,
including the rights of GKF set forth in Section 20 hereof.

     In the event the Equipment cannot perform Gamma Knife procedures for
fourteen (14) consecutive days due to Equipment malfunction, the Hospital will
not be required to pay Lease Payments for Procedures performed on alternative
Equipment during the period subsequent to the 14th day until the Equipment
malfunction is repaired by GKF.

     Within ten (10) days after Hospital’s receipt of written request by GKF,
GKF shall have the right to audit Hospital’s books and records (including,
without limitation, the books and records pertaining to any other radiosurgery
equipment or devices) to verify the number of Procedures that have been
performed by Hospital, and Hospital shall provide GKF with access to such books
and records; provided that any patient names or identifiers shall not be
disclosed.

     9.  Use of the Equipment.

          9.1  The Equipment shall be used by Hospital only at the Site and
shall not be removed therefrom. Hospital shall use the Equipment only in the
regular and ordinary course of Hospital’s business operations and only within
the capacity of the Equipment as determined by Elekta’s specifications. Hospital
shall not use nor permit the Equipment to be used in any

 

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manner nor for any purpose which, in the opinion of Elekta or GKF, the Equipment
is not designed or reasonably suitable.

          9.2  This is an agreement of lease only. Nothing herein shall be
construed as conveying to Hospital any right, title or interest in or to the
Equipment, except for the express leasehold interest granted to Hospital for the
Term. All Equipment shall remain personal property (even though said Equipment
may hereafter become attached or affixed to real property) and the title thereto
shall at all times remain exclusively in GKF.

          9.3  During the Term, upon the request of GKF, Hospital shall promptly
affix to the Equipment in a prominent place, or as otherwise directed by GKF,
labels, plates, insignia, lettering or other markings supplied by GKF indicating
GKF’s ownership of the Equipment, and shall keep the same affixed for the entire
Term. Hospital hereby authorizes GKF to cause this Lease or any statement or
other instrument showing the interest of GKF in the Equipment to be filed or
recorded, or refiled or re-recorded, with all governmental agencies considered
appropriate by GKF, at GKF’s cost and expense. Hospital also shall promptly
execute and deliver, or cause to be executed and delivered, to GKF any statement
or instrument requested by GKF for the purpose of evidencing GKF’s interest in
the Equipment, including financing statements and waivers with respect to rights
in the Equipment from any owners or mortgagees of any real estate where the
Equipment may be located.

          9.4  At Hospital’s cost and expense, Hospital shall (a) protect and
defend GKF’s ownership of and title to the Equipment from and against all
persons claiming against or through Hospital, (b) at all times keep the
Equipment free from any and all liens, encumbrances, attachments, levies,
executions, burdens, charges or legal processes imposed against Hospital,
(c) give GKF immediate written notice of any matter described in clause (b), and
(d) in the manner described in Section 22 below indemnify GKF harmless from and
against any loss, cost or expense (including reasonable attorneys’ fees) with
respect to any of the foregoing.

     10.  Additional Covenants of Hospital. In addition to the other covenants
of Hospital contained in this Agreement, Hospital shall, at its cost and
expense:

          10.1  Provide properly trained professional, technical and support
personnel and supplies required for the proper performance of Gamma Knife
procedures utilizing the Equipment. In this regard, Hospital shall maintain on
staff a minimum of one (1) Gamma Knife trained team comprised of a neurosurgeon,
radiation oncologist and physicist. Hospital will use its best efforts to have
two (2) Gamma Knife trained teams during the term of the Agreement. The Gamma
Knife shall be available for use by all credentialed neurosurgeons and radiation
oncologists.

          10.2  Direct, supervise and administer the diagnosis, treatment and
care of all patients who receive Gamma Knife procedures.

 

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          10.3  Provide reasonable and customary marketing materials (i.e.
brochures, announcements, etc.) together with administrative and physician
support (e.g., seminars for physicians by neurosurgeons and radiation
therapists, etc.) for the Gamma Knife service to be operated by the Hospital.

          10.4  Keep and maintain the Equipment and the Site fully protected,
secure and free from unauthorized access or use by any person.

     11.  Additional Covenants of GKF. In addition to the other covenants of GKF
contained in this Agreement, GKF, at its cost and expense, shall:

          11.1  Use its best efforts to require Elekta to meets its contractual
obligations to GKF and Hospital upon delivery of the Equipment and put the
Equipment, as soon as reasonably possible, into good, safe and serviceable
condition and fit for its intended use in accordance with the manufacturer’s
specifications, guidelines and field modification instructions.

          11.2  Cause Hospital 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 or the Purchase Agreement.

     12.  Maintenance of Equipment; Damage or Destruction of Equipment.

          12.1  During the Term and except as otherwise provided in this
Agreement, GKF, at its cost and expense, shall (a) maintain the Equipment in
good operating condition and repair, reasonable wear and tear excepted, and (b)
maintain in full force and effect a Service Agreement with Elekta and any other
service or other agreements required to fulfill GKF’s obligation to repair and
maintain the Equipment under this Section 12. Hospital shall promptly notify GKF
in the event of any damage or destruction to the Equipment or of any required
maintenance or repairs to the Equipment, regardless of whether such repairs or
maintenance are covered or not covered by the Service Agreement. GKF shall
pursue all remedies available to it under the Service Agreement and under any
warranties made by Elekta with respect to the Equipment so that the Equipment
will be free from defects in design, materials and workmanship and will conform
to Elekta’s technical specifications concerning the Equipment.

          12.2  GKF and Elekta shall have the right to access the Equipment for
the purpose of inspection and the performance of repairs at all reasonable
times, upon reasonable advance notice and with a minimum of interference or
disruptions to Hospital’s regular business operations.

          12.3  Hospital shall be liable for, and in the manner described in
Section 22 below shall indemnify GKF from and against, any damage to or
destruction of the Equipment caused by the misuse, improper use, or other
intentional and wrongful or negligent acts or omissions of Hospital’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

 

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or negligent acts or omissions of Hospital officers, employees, agents,
contractors and physicians, to the extent such damage is not covered by the
Service Agreement or any warranties or insurance, GKF may service or repair the
Equipment as needed and the cost thereof shall be paid by Hospital to GKF
immediately upon written request together with interest thereon 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) and reasonable attorneys’ fees and costs incurred by GKF in
collecting such amount from Hospital. Any work so performed by GKF shall not
deprive GKF of any of its rights, remedies or actions against Hospital for such
damages.

          12.4  If the Equipment is rendered unusable as a result of any
physical damage to or destruction of the Equipment, Hospital 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) 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, and (b)
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. Hospital 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  Hospital 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. Hospital 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 Hospital. In the event GKF and
Hospital agree to reload the Cobalt-60 source (i.e., in approximately the
seventh (7th) year of the Term), and GKF pays certain costs associated
therewith, notwithstanding any provisions to the contrary herein, the initial
Term shall be automatically extended for a period of two (2) years. It is the
intent of the parties that GKF shall be responsible for Equipment related costs
and expenses and that Hospital shall be responsible for Site related costs and
expenses for modifications, additions or upgrades to the

 

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Equipment, including the reloading of the Cobalt-60 source that are mutually
agreed upon by GKF and Hospital.

     14.  Financing of Equipment by GKF. GKF, in its sole discretion, may
finance the Equipment. Financing may be in the form of an installment loan, a
capitalized lease or other commercially available debt or financing instrument.
If GKF finances the Equipment through an installment loan, GKF shall be required
to provide the Equipment as collateral for the loan. If GKF finances the
Equipment through a capitalized lease, title shall vest with the lessor until
such time as GKF exercises its buy-out option under the lease, if any. If
required by the lender, lessor or other financing entity (the “Lender”), GKF may
assign its interest under this Agreement as security for the financing. Hospital
interest under this Agreement shall be subject to the interests of the Lender.

     15.  Equipment Operational Costs. Except as otherwise expressly provided in
this Agreement, Hospital shall be responsible and liable for all costs and
expenses incurred, directly or indirectly, in connection with the operation and
use of the Equipment during the Term, including, without limitation, the costs
and expenses required to provide trained physicians, professionals, and
technical and support personnel, supplies and other items required to properly
operate the Equipment and perform Gamma Knife procedures. Between Hospital and
GKF, Hospital shall be fully liable for, and in the manner described in Section
22 below shall indemnify and hold GKF harmless from and against, all negligent,
intentional or wrongful acts or omissions of such physicians, professional,
technical and support personnel.

     16.  Taxes. GKF shall pay all sales or use taxes imposed or assessed in
connection with the purchase of the Equipment and all personal property taxes
imposed, levied or assessed on the ownership and possession of the Equipment
during the Term. All other taxes, assessments, licenses or other charges
imposed, levied or assessed on the Equipment during the Term shall be paid by
Hospital before the same shall become delinquent, whether such taxes are
assessed or would ordinarily be assessed against GKF or Hospital; provided,
however, Hospital 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 lease of the Equipment. In case of a failure by Hospital to
pay any taxes, assessments, licenses or other charges when and as required under
this Section, GKF may pay all or any part of such taxes, in which event the
amount paid by GKF shall be immediately payable by Hospital to GKF upon written
request together with interest thereon at the rate of 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) and reasonable attorneys’ fees and costs incurred by GKF in
collecting such amount from Hospital.

     17.  No Warranties by GKF. Hospital warrants that as of the First Procedure
Date, it shall have (a) thoroughly inspected the Equipment, (b) determined that
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 Hospital intended purposes and is

 

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good working order, condition and repair. 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
Hospital, Hospital shall bear all risks with respect to the foregoing
warranties. GKF shall not be liable for any direct, indirect and consequential
losses or damages suffered by Hospital or by any other person, and Hospital
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 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 Hospital solely and
exclusively against persons other than GKF, including Elekta or any other
manufacturers or suppliers. In this regard and with prior written approval of
GKF, Hospital may, in GKF’s name, but at Hospital 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 Hospital. 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.

     18.  Termination for Economic Justification. If, following the initial
twenty four (24) months after the First Procedure Date and following each
subsequent 12 month period thereafter during the Term, based upon the
utilization of the Equipment, within a reasonable period of time after GKF’s
written request, Hospital does not provide GKF with a reasonable economic
justification to continue this Agreement and the provision of Gamma Knife
services at the Hospital, then and in that event, GKF shall have the option to
terminate this Agreement by giving a written notice thereof to Hospital not less
than ninety (90) days prior to the effective date of the termination designated
in GKF’s written notice. Such termination shall take place without penalty to
Hospital.

     19.  Options to Extend Agreement. As of the end of the Term, Hospital shall
have the option either to:

          19.1  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
Hospital;

          19.2  Terminate this Agreement as of the expiration of the Term.

Hospital shall exercise one (1) of the two (2) options referred to above by
giving an irrevocable written notice thereof to GKF at least nine (9) months
prior to the expiration of the initial Term. Any such notice shall be sufficient
if it states in substance that Hospital elects to exercise its option and states
which of the three (2) options referred to above Hospital is exercising. If

 

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Hospital fails to exercise the option granted herein at least nine (9) months
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 Hospital
exercises the option specified in Section 19.1 above and the parties are unable
to mutually agree upon the length of the extension of the Term or any other
terms or conditions applicable to such extension prior to the expiration of the
Term, this Agreement shall expire as of the end of the initial Term.

     20.  Events of Default by Hospital and Remedies.

          20.1  The occurrence of any one of the following shall constitute an
event of default under this Agreement (an “Event of Default”):

               20.1.1  Hospital fails to pay any rent payment when due pursuant
to Paragraph 8 above and such failure continues for a period of fifteen
(15) days after written notice thereof is given by GKF or its assignee to
Hospital; however, if Hospital cures the rent payment default within the
applicable fifteen (15) day period, such default shall not constitute an Event
of Default.

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

               20.1.3  Hospital 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 Hospital; however, if Hospital cures the
default within the applicable thirty (30) day period or if the default
reasonably requires more than thirty (30) days to cure, Hospital commences to
cure the default during the initial thirty (30) day period and Hospital
diligently completes the cure as soon as reasonably possible following the end
of the thirty (30) day period, such default shall not constitute an Event of
Default.

               20.1.4  Hospital 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.

               20.1.5  Within sixty (60) days after the commencement of any
proceedings against Hospital seeking reorganization, arrangement, readjustment,
liquidation, dissolution or similar relief under any present or future statute,
law or regulation, such proceedings shall not

 

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have been dismissed, or if within thirty (30) days after the appointment without
Hospital 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.

               20.1.6  Hospital is suspended or terminated from participation in
the Medicare program.

          20.2  Upon the occurrence of an Event of Default with respect to
Hospital as defined in Sections 20.1.1, 20.1.2 and 20.1.3, GKF may at its option
do any or all of the actions described in Section 20.2.1, 20.2.2, 20.2.3, 20.2.4
and 20.2.5. Upon the occurrence of an Event of Default with respect to the
Hospital as defined in Sections 20.1.4, 20.1.5 and 20.1.6, GKF may at its option
exercise any or all of the actions described in Sections 20.2.1, 20.2.3, 20.2.4
and 20.2.5.

               20.2.1  By written notice to Hospital, immediately terminate this
Agreement as to the Equipment, wherever situated. As a result of the
termination, at Hospital’s sole cost and expense, GKF may enter upon the Site
and remove the Equipment or GKF may demand that Hospital remove and return the
Equipment to GKF. Other than for GKF’s negligence or willful misconduct, GKF
shall have no liability of any kind or nature in connection with any such
removal or restoration.

               20.2.2  Recover from Hospital 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 rent payments to be
made by Hospital 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 lease payments shall be based on the prior
twelve (12) months rent payments made by Hospital to GKF hereunder with an
annual five (5%) percent increase thereof through the end of the Term. Hospital
and GKF acknowledge that the liquidated damages formula set forth in this
Section 20.2.2 constitutes a reasonable method to calculate GKF’s damages
resulting from an Event of Default arising under Section 20.1.1, 20.1.2 and
20.1.3 under the circumstances existing as of the date of this Agreement.

               20.2.3  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).

               20.2.4  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.

 

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               20.2.5  In addition to the foregoing remedies, Hospital shall be
liable to GKF for all reasonable attorneys fees, costs and expenses incurred by
GKF as a result of the Event of Default or the exercise of GKF’s remedies.

          20.3  Upon termination of this Agreement or the exercise of any other
rights or remedies under this Agreement or available under applicable law
following an Event of Default, Hospital shall, without further request or
demand, pay to GKF all rent payments and other sums owing under this Agreement.
In the event that Hospital shall pay the liquidated damages referred to in
Section 20.2.2 above to GKF, GKF shall pay to Hospital within thirty (30) days
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 Hospital. However, Hospital
acknowledges that GKF shall have no obligation to sell the Equipment. Hospital
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.
The rights and remedies afforded GKF under this Agreement shall be deemed
cumulative and not exclusive, and shall be in addition to any other rights or
remedies to GKF provided by law or in equity.

     21.  Insurance.

          21.1  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.
Hospital 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 Hospital upon
request following the commencement of this Agreement and as of each annual
renewal of such policy during the Term.

          21.2  During the Term, Hospital shall, at its cost and expense,
purchase and maintain in effect general liability and professional liability
insurance policies covering the Site (together with all premises where the Site
is located) and the use or operation of the Equipment by Hospital or its
officers, directors, agents, employees, contractors or physicians. The general
liability insurance policy 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. GKF shall be a certificate holder for general
liability insurance. Professional liability insurance shall be as required by
Pennsylvania Law Act 111 as amended by Act 135. Currently the limits are
$500,000 per occurrence and $2,500,000 in the aggregate for institutional
liability which covers those employees such as nurses, physicists, etc. and the
physician individual limits are $500,000 per occurrence and $1,500,000 in the
aggregate. In addition, coverage is provided by

 

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the MCARE Fund with limits for each of these provides in the amount of $500,000
per occurrence and $2,100,000 in the aggregate. Evidence of current insurance is
required by the Medical Staff Bylaws. The policies to be maintained by Hospital
hereunder shall be evidenced by a certificate of insurance or other reasonable
documentation which shall be delivered by Hospital to GKF no later than the
First Procedure Date and as of each annual renewal of such policies during the
Term.

          21.3  During the construction of the Site and prior to the First
Procedure Date, Hospital, 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 21.2 above and which names GKF as an
additional insured party. The policy to be maintained by Hospital hereunder
shall be evidenced by a certificate of insurance or other reasonable
documentation which shall be delivered by Hospital to GKF prior to the
commencement of any construction at the Site.

          21.4  During the Term, Hospital shall purchase and maintain all
workers compensation insurance to the maximum extent required by applicable law.

     22.  Indemnification.

          22.1  Hospital 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 attorney’s 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 Hospital to fully
perform, observe or satisfy its covenants, duties or obligations contained in
this Agreement or in the LGK Agreement; (b) the use and operation of the
Equipment resulting from the negligence or willful misconduct of Hospital and
its employees, contractors, agents, or representatives and or affiliates during
the Term; (c) the design, construction and preparation of the Site by Hospital
or the maintenance of the Site during the Term by Hospital; (d) Damages to the
Equipment from the defective, faulty or improper design, construction or
preparation of the Site or the installation and positioning of the Equipment;
(e) Damages to the Equipment (including any Damages arising out of or related to
violations by Hospital, its agents, officers, physicians, employees or
contractors of the Service Agreement) caused by the negligent or wrongful acts
or omissions of Hospital, its agents, officers, physicians, employees or
contractors (in the event the Equipment is destroyed or rendered unusable,
subject to Section 22.6 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 Hospital agrees to
indemnify Elekta thereunder; and (g) any other matters for which Hospital has
specifically agreed to indemnify GKF pursuant to this Agreement.

 

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          22.2  Upon the occurrence of an event for which GKF is entitled to
indemnification under this Agreement, GKF shall give written notice thereof to
Hospital setting forth the type and amount of Damages. If the indemnity relates
to a Third Party Claim (as defined in Section 22.3 below), the matter shall be
subject to Section 22.3 below. If the indemnity relates to any Damages other
than a Third Party Claim, not more than thirty (30) days after GKF’s written
notice is given, Hospital either shall acknowledge in writing to GKF its
obligation to indemnify hereunder and pay the Damages in full to GKF or dispute
its obligation to indemnify in a written notice delivered to GKF. If Hospital
disputes the obligation to indemnify, the parties shall meet and negotiate in
good faith to mutually resolve the disagreement regarding indemnification.

          22.3  GKF shall give written notice to Hospital as soon as reasonably
possible after it has knowledge of any third party claim or legal proceedings
(“Third Party Claim”) for which GKF is entitled to indemnification under this
Section 22. Hospital shall (a) immediately assume, at its sole cost and expense,
the defense of the Third Party Claim with legal counsel approved by GKF (which
approval will not be unreasonably withheld, delayed or conditioned), and (b) as
soon as reasonably possible after GKF’s written notice is given to Hospital,
acknowledge in writing to GKF its obligation to indemnify GKF in accordance with
the terms of this Agreement. If Hospital fails to assume the defense of a Third
Party Claim or fails to timely acknowledge in writing its obligation to
indemnify GKF, GKF may assume the defense of the Third Party Claim in the manner
described in Section 22.4 below. GKF shall cooperate with Hospital in the
defense of any Third Party Claim. Any settlement or compromise of a Third Party
Claim to which GKF is a party shall be subject to the express written approval
of GKF, 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 GKF from all Damages arising out of the Third
Party Claim. GKF, 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 GKF.

          22.4  If Hospital fails to promptly assume the defense of any Third
Party Claim, GKF may assume the defense of the Third Party Claim with legal
counsel selected by GKF, all at Hospital cost and expense. The defense of an
action by GKF under this Section 22.4 shall not impair, limit or otherwise
restrict Hospital indemnification obligations arising under this Section 22 or
GKF’s right to enforce such obligations.

          22.5  The indemnity obligations under this Section 22 shall survive
the termination of this Lease with respect to events occurring during or
relating to the Term.

          22.6  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 Hospital. 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

 

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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.

     23.  Miscellaneous.

          23.1  Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns. Hospital 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. An assignment or sublease shall not
relieve Hospital 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.

          23.2  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.

          23.3  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.

          23.4  Attorney’s 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.

          23.5  Entire Agreement; Amendment. This Agreement together with the
Exhibits 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.

 

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          23.6  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.

          23.7  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.

          23.8  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.

          23.9  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 Pennsylvania applicable to agreements made and to be performed in that State.

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

          23.11  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.

          23.12  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.

          23.13 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.

 

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          23.14  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:
  Craig K. Tagawa

  Chief Executive Officer

  GK Financing, LLC

  Four Embarcadero Center, Suite 3700

  San Francisco, CA 94111

   
To Hospital:
  Teri Guidi

  Lehigh Valley Hospital

  Vice President Cancer Services

  1200 South Cedar Crest Blvd.

  Allentown, PA 18103

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.

          23.15  Special Provisions Respecting Medicare and Medicaid Patients

               23.15.1  Hospital and GKF shall generate such records and make
such disclosures as may be required, from time to time, by the Medicare,
Medicaid 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.

               23.15.2  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

 

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(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.

          23.16  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.

 

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     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,

  a California limited liability company

                  By:   /s/ Craig K. Tagawa         Craig K. Tagawa,       
Chief Executive Officer     

     
“Hospital”
  Lehigh Valley Hospital,

  a not for profit Pennsylvania corporation

                  By:   /s/ Teri U. Guidi         Teri U. Guidi,        Vice
President, Cancer Services              By:   /s/ Louis L. Liebhaber        
Louis L. Liebhaber,        Chief Operating Officer