exv10w18a



 






Exhibit 10.18a




AMENDMENT TO

LEASE AGREEMENT FOR A GAMMA KNIFE UNIT




     This AMENDMENT TO LEASE AGREEMENT FOR A GAMMA KNIFE UNIT (this “Amendment”) is made effective
December 13, 2003 (the “Effective Date”), by and between Methodist Healthcare System of San
Antonio, Ltd., d/b/a Southwest Texas Methodist Hospital, a Texas Corporation (“Hospital”), and GK
Financing, LLC, a California limited liability company (“GKF”).



RECITALS




     WHEREAS, on October 29, 1996, GKF and Hospital executed a Lease Agreement for a Gamma Knife
Unit, and an Addendum dated October 31, 1996 (collectively, the “Original Lease”);



     WHEREAS, the parties desire to amend the terms and provisions of the Original Lease as set
forth herein.



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



AGREEMENT




     1.     Defined Terms. Unless otherwise defined herein, the capitalized terms used herein
shall have the same meaning set forth in the Original Lease.



     2.     Lease Extension. The original ten (10) year Gamma Knife Service Term set forth in
Paragraph 3 of the Original Lease shall be extended for an additional two (2) years plus
the number of days the Equipment is not available for clinical use during Cobalt reloading (the
“Cobalt Reloading Period”). The Commencement Date of the Gamma Knife Service Term was March 17,
1998, and the Cobalt Reloading Period consisted of twenty-two (22) days.. Accordingly, the date on
which the Gamma Knife Service Term expires shall be extended from March 16, 2008 to April 7, 2010,
(which includes the Cobalt Reloading Period).



     3.     Cobalt Reload. The existing Cobalt-60 was removed from, and new Cobalt-60 reloaded
into, the Equipment during the Cobalt Reloading Period commencing on or about December 13, 2003.
The costs to remove and reload Cobalt-60 on the Equipment shall be the sole responsibility of GKF.



     4.     Paragraph 5 of the Original Lease shall be deleted in its entirety.



     5.     Marketing Support. Paragraph 6 of the Original Lease shall be deleted in its
entirety and replaced with the following:



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	 	   	Per Procedure Payments. As its sole consideration for the lease
of the Equipment and the provision of administrative support, Hospital
shall pay GKF the per procedure payment of * for each procedure that is
performed using the Equipment during the first five (5) years of this
Agreement starting from the Commencement Date (i.e., from March
17, 1998 through March 16, 2003).
	 
	 	   	“The per procedure payments during the sixth (6th) year of this
Agreement as extended by the Cobalt Reloading Period (i.e., from
March 17, 2003 through April 7, 2004) shall be determined as follows:





	 	 	 
	“Annual Procedures

	 	Per Procedure Payment
	*

	 	*
	*

	 	*
	*

	 	*
	*

	 	*







	 	   	“The per procedure payments during the seventh (7th) year of
this Agreement and during each subsequent year thereafter through the
expiration of this Agreement (i.e., from April 8, 2004 through
April 7, 2010) shall be determined as follows:





	 	 	 
	“Annual Procedures

	 	Per Procedure Payment
	*

	 	*
	*

	 	*
	*

	 	*
	*

	 	*







	 	   	“Notwithstanding anything to the contrary set forth herein, (a) for
purposes of determining the per procedure payment, the number of annual
procedures performed shall be reset to zero (0) on March 17, 2003, on
April 8, 2004, and on each April 8th thereafter through the
expiration of this Agreement; and (b) there shall be no retroactive
adjustment of the per procedure payment irrespective of whether the number
of procedures performed reaches a lower per procedure payment level. For
example, if * procedures are performed during the eighth year, Hospital
would pay * for each of the first * procedures, and * for each of the next
*.
	 
	 	   	“If no procedures are performed utilizing the Equipment, no charges shall
be incurred by Hospital.
	 
	 	   	“A procedure shall be defined as a single patient treatment session that
may include one or more isocenters during that session. Hospital shall be
billed on the fifteenth (15th) and the last day of each month for the
actual number of procedures performed during the first and second half of
the month, respectively. Hospital shall




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	 	   	pay the procedures invoiced within thirty (30) days after being invoiced.
Interest shall accrue at the rate of 1-1/2% per month on all invoices
remaining unpaid after 45 days.”






	 	6.  	Paragraph 8(e) of the Original Lease shall be deleted in its entirety and
replaced with the following:






	 	(e)  	Use best efforts to develop and implement an ongoing
marketing program that is specific to the Equipment (the “Marketing
Program”), which shall include, without limitation (i) providing
reasonable and customary marketing materials (i.e., brochures,
announcements, seminars for physicians by neurosurgeons and radiation
therapists, etc.) for the Gamma Knife service to be operated by the
Hospital; and (ii) employing an individual, who shall be employed
only after consultation with GKF, whose primary responsibility shall
be to provide marketing services for the Gamma Knife service to be
operated by the Hospital (the “Marketing Employee”). All of the
costs and expenses of the Marketing Program, including, without
limitation, all compensation paid to the Marketing Employee, shall be
borne solely by Hospital.






	 	   	The Marketing Program including, without limitation, all
advertisements, brochures and other marketing materials, shall be
subject to review by GKF prior to their use. Hospital and GKF
shall discuss the Marketing Program on a regular basis, which
shall be not less than once per month. In the event Hospital
materially fails to provide marketing efforts under the Marketing
Program generally consistent with the level and scope of such
efforts, as made by Hospital during its 2003 fiscal year, and
such material failure continues for at least thirty (30) calendar
days, GKF at is option may either (i) terminate this Agreement
upon providing Hospital with thirty (30) calendar days written
notice; or (ii) upon providing fifteen (15) calendar days written
notice to Hospital, increase the per procedure payments owed by
Hospital from * per procedure to * per procedure for each of the
* procedures during the seventh (7th) year of this
Agreement and during each subsequent year thereafter through the
expiration of this Agreement (i.e., from April 8, 2004 through
April 7, 2010) subject to the procedures set forth in Section 6
of this Agreement.





          6.     Paragraph 17 of the Original Lease shall be deleted in its entirety and replaced
with the following:




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	 	   	“17. Options.






     ”(a) Hospital shall have the option, exercisable as set forth below
to:




     ”(i) Renegotiate this Agreement on terms mutually agreeable to GKF
for a specified renewal term taking into account the first twelve (12)
years of activity of the Equipment at the Site. Pursuant to Paragraph
17(a)(ii), if terms and conditions of an extension are not executed by
both parties by the end of the eleventh (11th) year of the Gamma Knife
Service Term (as extended by the Cobalt Reloading Period (i.e., April 7,
2009), this Agreement shall terminate. Both parties shall negotiate in
good faith on the terms and conditions of an extension of this Agreement.




     ”(ii) Terminate this Agreement. If Hospital fails to renew this
Agreement as provided in Paragraph 17(a)(i) above, GKF shall, at its sole
expense remove the Gamma Knife within a reasonable period of time after
the expiration of the Gamma Knife Service Term. Hospital shall cooperate
in good faith in such removal.




     ”(iii) Purchase the Equipment from GKF at the end of the Gamma Knife
Service Term, at a price equal to * if at least * paid procedures have
been performed during the Gamma Knife Service Term.




     ”(iv) Purchase the Equipment from GKF at the end of the Gamma Knife
Service Term at a price equal to * of its Fair Market Value. Should
Hospital pay for the cost to reload the Cobalt on the Equipment during the
original Gamma Knife Service Term, any increase in Equipment value
attributed to Cobalt reloading will be excluded from determining the
Equipment’s Fair Market Value.




     “Hospital shall exercise one (1) of the four (4) options referred to
above, by mailing an irrevocable written notice thereof to GKF at Four
Embarcadero Center, Suite 3700, San Francisco, California, 94111, by
certified mail, return receipt requested, postmarked on or before the end
of the eleventh (11th) year of the Gamma Knife Service Term (as extended
by the Cobalt Reloading Period (i.e., April 7, 2009). Any such notice
shall be sufficient if it states in substance that Hospital elects to
exercise its option and states
which of the four (4) options referred to above Hospital is exercising.



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          7.     Full Force and Effect. Except as otherwise amended hereby or provided herein, all
of the terms and provisions of the Original Lease shall remain in full force and effect.
Notwithstanding the foregoing, to the extent of any conflict or inconsistency between the terms and
provisions of this Amendment and that of the Original Lease, the terms and provisions of this
Amendment shall prevail and control.




          IN WITNESS WHEREOF, the parties have executed this Amendment effective as of the Effective
Date.




	 	 	 
	“HOSPITAL”	 	“GKF”
	Methodist Healthcare System of San

Antonio, Ltd, d/b/a Southwest Texas

Methodist Hospital


	 	GK Financing, LLC
	 
	 	 
	By: /s/ James C. Scoggin, Jr.

	 	By: /s/ Craig K. Tagawa
	 

	 	 
	Name: James C. Scoggin, Jr.

	 	Craig K. Tagawa
	Title: Executive Vice President

	 	Chief Executive Officer
	 
	 	 
	Approved as to Form:
	 	 
	 
	 	 
	By: /s/ Elizabeth Henry

	 	 
	 
	 	 
	Elizabeth Henry
	 	 
	General Counsel
	 	 







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