exv10w22a



 






Exhibit 10.22a




ADDENDUM




TO LEASE AGREEMENT FOR A GAMMA KNIFE UNIT




     This ADDENDUM TO LEASE AGREEMENT FOR A GAMMA KNIFE UNIT (the “Addendum”) is effective April 1,
2005, and is entered into between NEW ENGLAND MEDICAL CENTER HOSPITALS, INC., a Massachusetts
corporation (“Medical Center”), and GK FINANCING, LLC, a California limited liability company
(“GKF”).



RECITALS




     WHEREAS, on October 5, 1998, GKF and Medical Center executed a Lease Agreement for a Gamma
Knife Unit (the “Lease”); and



     WHEREAS, the parties desire to amend the terms and provisions of the 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 meanings set forth in the Lease.



     2. Extension of Lease Term. The Term of the Lease as set forth in Section 6 of the Lease is
hereby extended for an additional six (6) years, plus the period of time that the Equipment
is unavailable to perform procedures due to the Equipment upgrade and cobalt reload process
described herein (collectively, the “Extension”). The Extension shall commence on the expiration of
the initial Term of the Lease. Notwithstanding the foregoing, if the Term (as extended by the
Extension) expires on a date that is prior to September 30 of any calendar year, then, the Term (as
extended by the Extension) shall not expire until, and shall be further extended to, September 30
of such calendar year. All references in the Lease to the “Term” shall be deemed to refer to the
Term as extended hereby.



     3. Upgrade and Cobalt Reload of the Equipment. Section 15 (including Sections 15.1, 15.2 and
15.3) of the Lease are hereby deleted in their entirety and replaced with the following:




     15.1 Subject to the terms and conditions set forth below, GKF, at GKF’s cost and
expense, shall upgrade the Equipment to a Leksell Gamma Knife Model 4C (the “Model 4C”) and
reload the Equipment (as upgraded) with new cobalt-60 (the “Upgrade and Reload”), which
Upgrade and Reload shall be performed at the Site and shall include any required
installation and rigging. In connection with the Upgrade and



1









 






Reload, Medical Center, at Medical Center’s cost and expense, shall provide GKF with
Medical Center personnel (including Medical Center physicists) and services upon request
and as required by GKF, among other things, to oversee, supervise and assist with
construction and compliance with local, state and federal regulatory requirements and with
nuclear regulatory compliance issues and the calibration of the Model 4C. Subject to
Medical Center’s compliance with Section 15.2 below, it is anticipated but not guaranteed
that the Upgrade and Reload will be performed in or around fourth quarter 2005 or first
quarter 2006.




     15.2 Notwithstanding the foregoing, the Upgrade and Reload shall be performed by GKF
only after all licenses, permits, approvals, consents and authorizations necessary and
appropriate for the Upgrade and Reload, including, without limitation, the proper handling
of the cobalt-60 (collectively, the “Permits”), have been obtained by Medical Center at
Medical Center’s sole cost and expense (other than any filing or registration fees which
shall be paid for by GKF). The timing and procedure for such Upgrade and Reload shall be as
mutually agreed upon between the parties. All references in the Lease to (i) “Installation”
shall be deemed to refer to the Upgrade and Reload, and (ii) “Equipment” shall be deemed,
immediately following its upgrade, to mean the Model 4C. Notwithstanding the foregoing, GKF
makes no representation or warranty to Medical Center concerning the Upgrade and Reload, and
GKF shall have no obligation to pay any damages to Medical Center resulting therefrom.




     15.3 Unless Medical Center notifies GKF at least ninety (90) days prior to the
expiration of the Term (as extended) that Medical Center wishes to purchase the Model 4C in
cash at its fair market value (based upon the “in use” value of the Model 4C) as determined
by an appraiser mutually agreed upon between the parties, GKF shall remove the Model 4C, at
its sole expense, within ninety (90) days after the expiration of the Term (as extended).



     4. Per Procedure Payment. In consideration for and as compensation to GKF for the Upgrade and
Reload and the additional services to be provided by GKF hereunder, effective as of the date of
this Addendum, Exhibit 2 of the Lease shall be deleted and replaced with Exhibit 2 attached hereto.



     5. Services Performed by GKF. In addition to GKF’s responsibilities under the Lease, GKF shall
provide marketing support and research funding assistance as follows. Within ninety (90) days after
the date of this Addendum and each succeeding anniversary date hereof during the extended Term, GKF
and Medical Center shall jointly develop an annual marketing plan, budget and timeline, which shall
be implemented by Medical Center with the support of GKF based on the approved budget and timeline.
Medical Center’s approval of such plan, budget and timeline shall not be unreasonably withheld or
delayed. If Medical Center has not approved or disapproved the same within thirty (30)



2









 




days following its receipt, Medical Center shall be deemed to have approved the same. GKF shall be
responsible for any actual out-of-pocket marketing expenses paid to unrelated third parties that
are included in the marketing plan budget in an approximate amount of *. This section shall not
reduce or alter Medical Center’s obligations pursuant to Section 9.5 of the Lease.




     6. No Responsibility for Additional Upgrades or Reloading. It is understood by the parties
that GKF is not responsible for any additional upgrades, hardware, cobalt reloading, software
changes and/or other modifications to the Model 4C except as expressly set forth herein or
otherwise agreed upon in writing by Medical Center and GKF.



     7. Captions. The captions and paragraph headings used herein are for convenience only and
shall not be used in construing or interpreting this Addendum.



     8. Full Force and Effect. Except as amended by this Addendum, all of the terms and provisions
of the Lease shall remain in full force and effect.



     IN WITNESS WHEREOF, the parties have executed this Addendum effective as of the date first
written above.



	 	 	 	 	 	 	 	 	 	 	 
	GK FINANCING, LLC	 	 	 	NEW ENGLAND MEDICAL CENTER HOSPITALS, INC.
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Craig K. Tagawa
	 	 	 	By:
	 	/s/ Michael T. Burke	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	Name:

	 	Craig K. Tagawa
	 	 	 	Name:
	 	Michael T. Burke	 	 
	Title:	 	Chief Executive Officer	 	 	 	Title:	 	Senior Vice President and CFO






3









 






Exhibit 2




PER PROCEDURE PAYMENTS




	 	 	 	 	 	 	 	 	 	 	 	 	 
	Year	 	Annual Procedures Performed	 	 	 	 	 	 	Fee Per Procedure	 
	1-4
	 	 	 	 	 	 	*	 	 	 	*	 
	 
	 	 	 	 	 	 	*	 	 	 	*	 
	 
	 	 	 	 	 	 	*	 	 	 	*	 
	 
	 	 	 	 	 	 	*	 	 	 	*	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	5-10
	 	 	 	 	 	 	*	 	 	 	*	 
	 
	 	 	 	 	 	 	*	 	 	 	*	 
	 
	 	 	 	 	 	 	*	 	 	 	*	 
	 
	 	 	 	 	 	 	*	 	 	 	*	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	11-16
	 	 	 	 	 	 	*	 	 	 	*	 
	 
	 	 	 	 	 	 	*	 	 	 	*	 
	 
	 	 	 	 	 	 	*	 	 	 	*	 
	 
	 	 	 	 	 	 	*	 	 	 	*	 





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) at the
commencement of each fiscal year of Medical Center (i.e., on October 1 of each year); (b)
the per procedure payment shall not be affected or adjusted due to any upgrading and/or cobalt
reloading of the Equipment; and (c) there shall be no retroactive adjustment of the per procedure
payment irrespective of whether the number of procedures performed during any fiscal year reaches a
lower per procedure payment level. For example, if * procedures are performed during the * year,
Medical Center would pay * for each of the first * procedures, and * for each of the next *
procedures (i.e., for procedures *). The parties acknowledge that, for purposes of determining the
per procedure payment, October 1, 2005 shall mark the commencement of year seven (7) of the Lease.




Compliance with Safe Harbor.



GKF and Medical Center intend that the reductions to the fee per procedure set forth above shall
satisfy the requirements of the anti-kickback safe harbor applicable to discounts contained in 42
C.F.R. § 1001.952(h). In furtherance of the foregoing:




4









 









	1.	 	The discount shall be earned and computed based on total number of procedures performed
within a single fiscal year of Medical Center ending September 30 of each year.
	 
	2.	 	Medical Center must claim the benefit of the discount in the fiscal year in which the
discount is earned.
	 
	3.	 	Medical Center must fully and accurately report the discount in its applicable cost report or
in its separate claims for payment with the Department of Health and Human Services or a State
agency.
	 
	4.	 	Medical Center must provide, upon request by the Secretary of the Department of Health and
Human Services or a State agency, the information provided by GKF as specified below.
	 
	5.	 	GKF shall fully and accurately report the existence of the discount on the invoices or
statements submitted to Medical Center. GKF hereby informs Medical Center of its obligation to
report such discount as stipulated in subparagraphs 3 and 4 above. When the value of the
discount becomes known for each fiscal year, GKF shall provide Medical Center with
documentation of the calculation of the discount identifying the number of procedures to which
the discount will be applied.






5