Document:

Exhibit 10.35

 

MASTER LEASE #3

 

This Master Lease #3 (this “Master Lease”) is entered into as of May 3, 2010 (the “Effective Date”) between Theriac Enterprises of Pembroke Pines, LLC, a Florida limited liability company and its undersigned wholly-owned subsidiaries (collectively, “Landlord”), and each of the undersigned entities identified as “Tenant”, for the improvements thereon (collectively, the “Facilities”) set forth on Schedule 1 (the “Premises”), each used as a radiation or oncology related medical office building (individually as so utilized, as such utilization may be changed pursuant to Section 7.1(a), collectively, the “Business”). Pursuant to its concurrent Guaranty, Radiation Therapy Services, Inc., a Florida corporation (“Guarantor”) has guaranteed Tenant’s obligations hereunder. In consideration of the mutual covenants, conditions and agreements set forth herein, Landlord hereby leases the Premises to Tenant for the Term upon the terms and conditions provided below. Certain capitalized terms used in this Master Lease are defined on Exhibit E.

 

RECOGNITION OF MASTER LEASE;

IRREVOCABLE WAIVER OF CERTAIN RIGHTS

 

Tenant and Landlord each acknowledge and agree that the terms and conditions of this Master Lease constitute a single, indivisible lease of the entire Premises and shall be uniformly applied to the Facilities and the Premises. The Minimum Rent, Additional Rent, other amounts payable hereunder and all other provisions contained herein have been negotiated and agreed upon based on the intent to lease the entirety of the Premises as a single and inseparable transaction pursuant to this Master Lease, and such Minimum Rent, Additional Rent, other amounts and other provisions would have been materially different had the parties intended to enter into separate leases for each of the Facilities or Premises.

 

Tenant and Guarantor each acknowledge and agree that Landlord is entering into this Master Lease as an accommodation to Tenant and Guarantor. Each of the entities comprising Tenant and Guarantor, in order to induce Landlord to enter into this Master Lease, to the extent permitted by law:

 

A.            Agrees, acknowledges and is forever estopped from asserting to the contrary that the statements set forth in the first sentence of this Section are true, correct and complete;

 

B.            Agrees, acknowledges and is forever estopped from asserting to the contrary that this Master Lease is a new and de novo lease, which supersedes and replaces in its entirety any existing or prior occupancy lease for the Premises and/or the Facilities between the Tenant and the Landlord or between any of the entities comprising Tenant and any of the entities comprising Landlord that may have existed prior to the date hereof;

 

C.            Agrees, acknowledges and is forever estopped from asserting to the contrary that this Master Lease is a single lease pursuant to which the collective Premises are demised to the Tenant pursuant to the terms and conditions of this Master Lease;

 

D.            Agrees, acknowledges and is forever estopped from asserting to the contrary that if, notwithstanding the provisions of this Section, this Master Lease were to be determined or found to be in any proceeding, action or arbitration under state or federal bankruptcy, insolvency, debtor-relief or other applicable laws to constitute multiple leases demising multiple properties, such multiple leases could not, by the debtor, trustee, or any other party, be selectively or individually assumed, rejected or assigned; and

 

 

E.            Forever knowingly waives and relinquishes any and all rights under or benefits of the provisions of the Federal Bankruptcy Code Section 365 (11 U.S.C. § 365), or any successor or replacement thereof or any analogous state law, to selectively or individually assume, reject or assign the multiple leases comprising this Master Lease following a determination or finding in the nature of that described in the foregoing Section D.

 

Landlord, i.e., Theriac Enterprises of Pembroke Pines, LLC, and its undersigned wholly-owned subsidiaries, acknowledges that each separate parcel of real property and improvements comprising the Facilities and Premises is owned by one of the undersigned wholly-owned subsidiaries. With respect to this Master Lease and exercise of the rights of Landlord and discharge of the duties and obligations of Landlord with respect to the Facilities and Premises owned by Landlord, each of the undersigned wholly-owned subsidiaries of Theriac Enterprises of Pembroke Pines, LLC hereby appoints Theriac Enterprises of Pembroke Pines, LLC as its agent with power of attorney, coupled with an interest, to collect rents, to exercise all of the other rights of Landlord and to perform and discharge any and all duties and obligations of Landlord under this Master Lease with respect to the Facilities and Premises owned by such undersigned wholly-owned subsidiary of Theriac Enterprises of Pembroke Pines, LLC. Each said agency and power of attorney is irrevocable for the term of this Master Lease. Any act of Theriac Enterprises of Pembroke Pines, LLC as agent or attorney-in-fact for any one or more of the undersigned wholly-owned subsidiaries of Theriac Enterprises of Pembroke Pines, LLC may be relied upon by Tenant as the act of such undersigned wholly-owned subsidiary or subsidiaries.

 

With respect to this Master Lease and exercise of the rights of Tenant and discharge of the duties and obligations of Tenant with respect to the Facilities and Premises occupied by Tenant, certain of the undersigned entities identified as “Tenant” have heretofore or do hereby appoint Guarantor as their agent with power of attorney, coupled with an interest, to pay rent and to exercise all of the other rights of Tenant and to perform and discharge any and all duties and obligations of Tenant under this Master Lease with respect to the Facilities and Premises occupied by such undersigned entity. Any act of Guarantor as agent or attorney-in-fact for any one or more of the undersigned Tenant entities may be relied upon by Landlord as the act of such entity. The Tenant entities which have appointed or which do hereby appoint Guarantor as their attorney-in-fact/agent are indentified in Section 21 below.

 

1.             Term. The “Term” of this Master Lease is the Initial Term plus all Renewal Terms, and a “Lease Year” is the twelve month period commencing on May 1 of each year of the Term; provided, however, the first Lease Year shall commence on May 3, 2010 and end on April 30, 2011. The “Initial Term” commences on May 3, 2010 and ends on January 31, 2020, and may be extended for two (2) separate “Renewal Terms” of five (5) years each if: (a) at least twelve (12), but not more than fifteen (15) months prior to the end of the then current Term, Tenant delivers to Landlord a “Renewal Notice” that it desires to exercise its right to extend this Master Lease for one (1) Renewal Term; and (b) there is no Event of Default on the date Landlord receives the Renewal Notice (the “Exercise Date”) or on the last day of the then current Term.

 

2.             Rent. During the Term, Tenant shall pay Landlord “Rent” consisting of “Minimum Rent” plus “Additional Rent” determined as provided in this Section 2; provided, the Rent for any Lease Year shall not be less than one hundred percent (100%) of the Rent for the previous Lease Year. The Rent for any month that begins or ends on other than the first or last day of a calendar month shall be prorated based on actual days elapsed.

 

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2.1          Initial Term Rent. During the Initial Term, “Minimum Rent” is $295,266.36 annually, payable in advance in twelve (12) equal monthly installments. Commencing with the second (2nd) Lease Year and continuing thereafter during the Term (excluding the first Lease Year of any Renewal Term), Tenant agrees to pay “Additional Rent” to Landlord monthly in advance together with the payment of Minimum Rent. Such Additional Rent (which shall be expressed as an annual amount but shall be payable in equal monthly installments) shall be equal to the sum of (A) the Additional Rent (if any) due for the immediately preceding Lease Year and (B) the product of (i) the Minimum Rent and Additional Rent due for the immediately preceding Lease Year and (ii) the percentage increase, if any, in the CPI (as herein defined) from the first day of the immediately preceding Lease Year to the last day of the immediately preceding Lease Year. Tenant shall pay the Additional Rent to Landlord for the period of time elapsing between the anniversary date and notice of such increase upon request by Landlord. Thereafter the increase shall be payable equally with the regular Minimum Rent payments. In no event shall a decrease in the CPI result in a decrease in the Minimum Rent and Additional Rent payable under the terms of this Master Lease.

 

2.2             Renewal Term Rent. To establish a fair market Minimum Rent for the Premises during the Renewal Terms, the Minimum Rent for the Renewal Terms shall be reset and expressed as an annual amount equal to the greater of: (i) one hundred three percent (103%) of the Minimum Rent due for the immediately preceding Lease Year, or (ii) the Fair Market Rent of the Premises on the Exercise Date as established pursuant to Exhibit C, provided, however, in no event shall the Minimum Rent for the Premises during the first Lease Year of such Renewal Term(s) be greater than one hundred ten percent (110%) of the Minimum Rent and Additional Rent for the immediately preceding Lease Year. The Minimum Rent for the Premises during the fourth Renewal Term, if any, shall be reset and expressed as an annual amount equal to the Fair Market Rent of the Premises on the Exercise Date. Commencing with the second (2nd) Lease Year of a Renewal Term and continuing each Lease Year of such Renewal Term thereafter, Additional Rent shall be calculated as provided in Section 2.1 and as so calculated shall be payable in monthly installments throughout the remainder of such Renewal Term.

 

2.3             Payment Terms. All Rent and other payments to Landlord shall be paid by wire transfer or ACH (Automated Clearing House) only. Minimum Rent and Additional Rent shall be paid in advance in equal monthly installments on or before the first (1st) Business Day of each calendar month.

 

2.4             Absolute Net Lease. All Rent payments shall be absolutely net to Landlord, free of any and all Taxes, Other Charges, and operating or other expenses of any kind whatsoever, all of which shall be paid by Tenant. Tenant shall continue to perform its obligations under this Master Lease even if Tenant claims that it has been damaged by Landlord. Thus, Tenant shall at all times remain obligated under this Master Lease without any right of setoff, counterclaim, abatement, deduction, reduction or defense of any kind. Tenant’s sole right to recover damages against Landlord under this Master Lease shall be to prove such damages in a separate action.

 

3.             Late Charges. The late payment of Rent or other amounts due will cause Landlord to lose the use of such money and incur administrative and other expenses not contemplated under this Master Lease. While the exact amount of the foregoing is extremely difficult to ascertain, the parties agree that as a reasonable estimate of fair compensation to Landlord, if any Rent or other amount is not paid within (i) five (5) days after the due date for such payment, then Tenant shall thereafter pay to Landlord on demand a late charge equal to three percent (3%) of such delinquent amounts, and (ii) ten (10) days after the due date for such payment, such unpaid amount shall accrue interest from such date at

 

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the “Agreed Rate” of five percent (5%) plus the prime rate of interest as published in the Wall Street Journal on the eleventh (11th) day after the due date for such payment.

 

4.             Intentionally Omitted.

 

5.             Taxes and Other Charges. At the end of the Term, all Taxes and Other Charges shall be prorated. If Tenant has prepaid any Taxes or Other Charges for periods extending beyond the end of the Term, Landlord shall, within forty-five (45) days of the expiration of the Term, reimburse Tenant for such Taxes and Other Charges, which obligation shall survive the expiration or earlier termination of this Lease. Landlord shall promptly forward to Tenant copies of all bills and payment receipts for Taxes or Other Charges received by it. At the end of the Term, subject to Section 5.1 and Landlord’s obligations to make payments from the Tax Impound as defined therein, Tenant shall pay and discharge (including the filing of all required returns), prior to delinquency or imposition of any fine, penalty, interest or other cost (“Penalty”) the following: (i) “Taxes”, consisting of any property (real and personal) and other taxes and assessments levied or assessed with respect to this Master Lease or any portion of the Premises, including, without limitation, any state or county occupation tax, transaction privilege, franchise taxes, business privilege, rental tax or other excise taxes, and other assessments levied or assessed against the Premises, Tenant’s interest therein or Landlord (with respect to this Master Lease and/or the Premises, but excluding any local, state or federal income tax based upon the net income or excess profits of Landlord, any capital gains tax imposed on Landlord in connection with the sale of all or any portion of the Premises to any Person and any transfer tax or stamps for Landlord’s transfer of any interest in any portion of the Premises to any Person other than Tenant or any of its Affiliates), which shall be borne by Landlord, and (ii) “Other Charges”, consisting of any utilities, common area maintenance, and other costs and expenses of the Business and operation, possession or use of any portion of the Premises and all other charges, obligations or deposits assessed against any portion of the Premises during the Term. Tenant may pay all of any portion of the Taxes or the Other Charges in permitted installments (whether or not interest accrues on the unpaid balance) when due and before any Penalty. Tenant will furnish to Landlord, promptly after demand therefore, proof of payment of Taxes and Other Charges which are paid by Tenant.

 

5.1             Protests. Each party has the right, but not the obligation, in good faith to protest or contest (a “Protest”) in whole or in part (i) the amount or payment of any Taxes or Other Charges and (ii) the existence, amount or validity of any Lien (as defined in Section 8.1) by appropriate proceedings sufficient to prevent its collection or other realization and the sale, forfeiture or loss of any portion of the Premises or Rent to satisfy it (so long as, in the case of any Protest or contest by Tenant, Tenant provides Landlord with reasonable security to assure the foregoing, which security may take the form of a title indemnity (in a form reasonably acceptable to Landlord and from a national title insurance company reasonably acceptable to Landlord) or payment of the amount due the lien claimant), provided that if as a result of any Protest initiated by Landlord, such Taxes, Other Charges or the amount of any Lien increases above the protested amount, such increase shall be borne exclusively by Landlord. Each party shall diligently prosecute any such Protest initiated by it at its sole cost and expense. In connection with any Protest that Tenant is diligently pursuing regarding Taxes, subject to Landlord’s obligation to make payments from the Tax Impound pursuant to Section 5.2, Tenant shall pay the Taxes that are the subject of such Protest before the imposition of any Penalty. In connection with any Protest that Tenant is diligently pursuing regarding any Other Charges or Liens, Tenant shall pay such Other Charges or pay such Liens (or otherwise cause them to be removed) before any part of the Premises or any Rent therefrom or interest therein is in any danger of being sold, forfeited, attached or lost. At Tenant’s sole

 

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cost and expense, Landlord will cooperate fully in any Protest that involves an amount assessed against it and, at Tenant’s request, in the case of any Protest in which Tenant is prohibited from solely prosecuting such proceedings by applicable law.

 

6.             Insurance. All insurance provided for in this Master Lease shall (i) be maintained under valid and enforceable policies issued by insurers licensed and approved to do business in the state(s) where the applicable Facility or portion of the Premises is located and having general policyholders and financial ratings of not less than “A-” and “X”, respectively, in the then current Best’s Insurance Report, (ii) except for insurance referenced in Section 6(c), 6(d) and Section 6(e), name Landlord (and, if required, pursuant to the terms of any mortgage encumbering the Premises, or any part hereof, Landlord’s mortgagee) as an additional insured and, for the casualty policy referenced in Section 6(a), as the owner and loss payable beneficiary, (iii) be on an “occurrence” basis, (iv) cover all of Tenant’s operations at the applicable Facility or portion of the Premises, (v) provide that the policy may not be canceled except upon not less than thirty (30) days prior written notice to Landlord and (vi) be primary and provide that any insurance with respect to any portion of the Premises maintained by Landlord is excess and noncontributing with Tenant’s insurance. The parties hereby waive as to each other all rights of subrogation (other than with respect to Worker’s Compensation Coverage described below) which any insurance carrier, or either of them, may have by reason of any provision in any policy issued to them, provided such waiver does not thereby invalidate such policy. Original policies or satisfactory insurer certificates evidencing the existence of the insurance required by this Master Lease and showing the interest of Landlord shall be provided to it prior to the commencement of the Term or, for a renewal policy, not less than five (5) days prior to the expiration date of the policy being renewed. If Landlord is provided with a certificate, it may demand that Tenant provide a complete copy of the related policy within fifteen (15) days. Tenant may satisfy the insurance requirements hereunder through coverage under a so-called blanket policy or policies of insurance carried and maintained by Tenant; provided, however, that the coverage afforded Landlord will not be reduced or diminished or otherwise be different from that which would exist under a separate policy meeting all other requirements of this Master Lease by reason of the use of such blanket policy of insurance. During the Term, Tenant shall maintain the following insurance and any claims thereunder shall be adjudicated by and at the expense of it or its insurance carrier:

 

(a)              Fire and Extended Coverage with respect to each Facility against loss or damage from all causes under standard “all risk” property insurance coverage with an agreed amount endorsement (such that the insurance carrier has accepted the amount of coverage and has agreed that there will be no co-insurance penalty), without exclusion for fire, lightning, windstorm, explosion, smoke damage, vehicle damage, sprinkler leakage, flood, vandalism, earthquake, malicious mischief or any other risks normally covered under an extended coverage endorsement, in amounts that are not less than the actual replacement value of such Facility and all Tenant Personal Property associated therewith (including the cost of compliance with changes in zoning and building codes and other laws and regulations, demolition and debris removal and increased cost of construction). Additionally, if any Facility contains steam boilers, steam pipes, steam engines, steam turbines or other high pressure vessels, insurance with an agreed amount endorsement (such that the insurance carrier has accepted the amount of coverage and has agreed that there will be no co-insurance penalty), covering the major components of the central heating, air conditioning and ventilating systems, boilers, other pressure vessels, high pressure piping and machinery, elevators and escalators, if any, and other similar equipment installed in the Facility, in an

 

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amount equal to one hundred percent (100%) of the full replacement cost of the Facility, which policies shall insure against physical damage to and loss of occupancy and use of the Facility arising out of an accident or breakdown covered thereunder. Notwithstanding any provision to the contrary herein, insurance coverage for earthquake shall be limited to One Million Dollars ($1,000,000) in the aggregate for the entire Premises.

 

(b)              Commercial General Public Liability Coverage with respect to each Facility (including products liability and broad form coverage) against claims for bodily injury, death or property damage occurring on, in or about such Facility, affording the parties protection of not less than One Million Dollars ($1,000,000) per occurrence and Three Million Dollars ($3,000,000) in the aggregate, which maximum aggregate limit may be satisfied with the combination of commercial general public liability coverage and excess and/or umbrella coverage;

 

(c)              Professional Liability Coverage with respect to each Facility for damages for injury, death, loss of service or otherwise on account of professional services rendered or which should have been rendered, in a minimum amount of One Million Dollars ($1,000,000) per occurrence and Three Million Dollars ($3,000,000) in the aggregate;

 

(d)              Worker’s Compensation Coverage with respect to each Facility for injuries sustained by Tenant’s employees in the course of their employment and otherwise consistent with all applicable legal requirements;

 

(e)              Business Interruption and Extra Expense Coverage with respect to each Facility for loss of rental value for a period not less than one (1) year, covering perils consistent with the requirements of Section 6(a) and providing that any covered loss thereunder shall be payable to the Landlord as its interests may appear, and (A) including either an agreed amount endorsement or a waiver of any co-insurance provisions, so as to prevent Tenant, Landlord and any other insured thereunder from being a co-insurer, or (B) if such insurance contains a coinsurance provision, with a limit greater than or equal to ten (10) times the amount of annual Minimum Rent and Additional Rent then payable under this Master Lease; and

 

(f)              Deductibles/Self-Insured Retentions for the above policies shall not be greater than One Hundred Twenty Five Thousand Dollars ($125,000.00). At such times and only so long as policies of insurance with deductibles or self-insured retentions not greater than One Hundred Twenty Five Thousand Dollars ($125,000.00) are generally not available to operators of businesses similar to that then being conducted at the Premises at commercially reasonable rates, as determined by Landlord in its reasonable judgment, the deductibles or self-insured retentions on the policies of insurance required hereunder may be in such greater amount, as determined by Landlord in its reasonable judgment, that would result in the applicable policies being available at commercially reasonable rates, not to exceed Two Hundred Fifty Thousand Dollars ($250,000.00). Notwithstanding the foregoing, with respect to windstorm/hail coverage, the deductibles/self-insured retentions for a Facility shall be equal to the greater of (i) such amounts permitted under the preceding two sentences, (ii) with respect to only those Facilities located in the State of Florida, $250,000.00, and (iii) five percent (5%) of the total insurable value of the applicable Facility.

 

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7.             Use, Regulatory Compliance and Preservation of Business.

 

7.1          Permitted Use.

 

(a)           Tenant shall use, operate and occupy each Facility as a radiation or oncology related medical office building and treatment center, and for ancillary services relating thereto, but for no other purpose; provided, however, that Tenant may, with the written approval of Landlord (subject to the succeeding sentence, to be granted or withheld in the exercise of its sole and absolute discretion) change the use of a Facility to a different use so long as Tenant shall continue to use, operate and occupy such Facility for a use in the medical services industry. Landlord, upon the written request of Tenant, shall approve a change in the use of a Facility if the following conditions are met: (i) the proposed change in use is for a use in the medical services industry, (ii) Tenant has obtained and provided to Landlord appraisals (prepared by an appraiser reasonably acceptable to Landlord) that take into account the proposed change in use and that demonstrate to Landlord’s reasonable satisfaction that the fair market value of such Facility after the change in use will not result in a material reduction of the fair market value of the Facility, and (iii) Tenant has obtained or agrees to obtain prior to such change in use all licenses, certificates, permits and all other approvals required by law in connection with operating the Facility for the proposed new use. Tenant shall operate each Facility and the Business conducted thereon in a manner consistent with all applicable laws.

 

(b)           Tenant shall continuously and uninterruptedly use, operate and occupy each Facility throughout the Term; provided, however, that (i) Tenant may close down the operations of a Facility in connection with Tenant’s refurbishing, upgrading, or changing the permitted use of such Facility for a commercially reasonable amount of time required to complete such refurbishment, upgrades, or change in use; but in no event shall such period of time exceed two hundred seventy (270) days, and (ii) subject to the Tenant’s restoration obligations contained in this Master Lease, Sections 17 and 18, a Facility may be temporarily closed down to the extent and for the period of time such Facility is untenantable by reason of fire or other casualty or condemnation.

 

7.2          Regulatory Compliance. Tenant, each Facility and the other portions of the Premises shall be subject to all CC&R’s promulgated by, or for the benefit of, condominium or other such associations or entities, as the same may be amended from time to time and Tenant, each Facility and the other portions of the Premises shall comply in all material respects with all of such CC&R’s, as well as all licensing and other laws and other use or maintenance requirements applicable to the Business conducted thereon and, to the extent applicable, all Medicare, Medicaid and other third-party payor certification requirements, including timely filing properly completed cost and other required reports, timely paying all expenses shown thereon, and ensuring that each Facility, to the extent required in connection with the then permitted use pursuant to Section 7.1(a), continues to be fully certified for participation in Medicare and Medicaid throughout the Term. Further, Tenant shall not commit any act or omission that would in any way violate any certificate of occupancy affecting any Facility. All inspection fees, costs and charges associated with a change of such licensure or certification shall be borne solely by Tenant. In addition, Tenant shall operate each Facility in full compliance with the applicable provisions of the Medicare Anti-Kickback Law, 42 U.S.C. 1320a-7(b), and the Stark Self-Referral Prohibition Act, 42 U.S.C. 1395nn, et. seq., as the same may be modified, supplemented or replaced from time to time, and all regulations promulgated thereunder from time to time.

 

7.3          Quiet Enjoyment. So long as no Event of Default has occurred and is continuing, Landlord covenants that Tenant may peaceably and quietly have, hold and enjoy the Premises for the Term, free of any claim or other action not caused or created by Tenant, subject to Section 17 or Section 18.

 

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8.             Acceptance, Maintenance, Upgrade, Alteration and Environmental.

 

8.1          Acceptance “AS IS”; No Liens. Tenant acknowledges that, in deciding to enter into this Master Lease, it has not relied on any representations or warranties, express or implied, of any kind from Landlord with respect to the Premises. Tenant has examined the condition of title to and thoroughly investigated the Premises, has selected the Premises to its own specifications, has concluded that, as of the date hereof, no improvements or modifications are required to be made by Landlord in order to conduct the Business thereon, and accepts them on an “AS IS” basis and assumes all responsibility and cost for the correction of any observed or unobserved deficiencies or violations. It is expressly understood and agreed that any inspection by or on behalf of the Landlord of the business conducted at the Premises or of the Premises is for Landlord’s sole and exclusive benefit and is not directly or indirectly for the benefit of, nor should be relied in any manner upon by, Tenant, its subtenants or any other third party. Subject to its right to Protest set forth in Section 5.1, Tenant shall not cause or permit any lien, levy or attachment to be placed or assessed against any portion of the Premises or the operation thereof (a “Lien”) other than “Permitted Exceptions” as described on Exhibit D and any mortgage, lien, encumbrance, or other charge created by or resulting solely from any act or omission of Landlord.

 

8.2          Tenant’s Maintenance Obligations. Tenant shall (i) keep and maintain the Premises in good appearance, repair and condition and maintain proper janitorial services, (ii) promptly make all repairs (interior and exterior, structural and nonstructural, ordinary and extraordinary, foreseen and unforeseen) necessary to keep each Facility in good and lawful order and condition and in substantial compliance with all applicable requirements and laws relating to the business conducted thereon, including, if applicable certification for participation in Medicare and Medicaid, and (iii) keep and maintain all Landlord and Tenant Personal Property in good condition, ordinary wear and tear, casualty and condemnation excepted, and repair and replace such property consistent with prudent industry practice.

 

8.3          Intentionally Omitted

 

8.4          Alterations by Tenant. Tenant may alter, improve, exchange, replace, modify or expand (collectively, “Alterations”) the Premises from time to time as it may determine is desirable for the continuing and proper use and maintenance of the Premises; provided, that any Alterations in excess of Two Hundred Fifty Thousand Dollars ($250,000.00) with respect to any individual Facility in any rolling twelve (12) month period shall require Landlord’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed; provided further, that any Alterations to the Premises must satisfy the requirements set forth in Sections 4.04 (2) and (3) of Revenue Procedure 2001-28, 2001-19 I.R.B. 1156. All Alterations shall immediately become a part of the Premises and the property of Landlord subject to this Master Lease, and the cost of all Alterations or other purchases, whether undertaken as an on-going licensing, Medicare, Medicaid or other regulatory requirement, or otherwise shall be borne solely by Tenant. All Alterations shall be done in a good and workmanlike manner in compliance in all material respects with all applicable laws and the insurance required under this Master Lease. If an Alteration changes the rentable square footage of a Facility, Tenant shall promptly provide Landlord notice of the same and upon delivery of such notice, Schedule 1 shall be deemed amended to reflect such revised rentable square footage for the applicable Facility.

 

8.5          Hazardous Materials. Tenant’s use of the Premises shall comply in all material respects with all Hazardous Materials Laws. If any Environmental Activities occur or are suspected to

 

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have occurred in material violation of any Hazardous Materials Laws or if Tenant has received written notice of any Hazardous Materials Claim against any portion of the Premises, Tenant shall promptly remedy any such violation or claim to the reasonable satisfaction of Landlord and in accordance in all material respects with all applicable governmental authorities, as required by Hazardous Materials Laws. Tenant and Landlord shall promptly advise one another in writing upon receiving written notice of (a) any Environmental Activities in material violation of any Hazardous Materials Laws; (b) any Hazardous Materials Claims against Tenant or Landlord in connection with the Premises (or any portion of the Premises); (c) any remedial action taken by Tenant or Landlord in response to any Hazardous Materials Claims or any Hazardous Materials on, under or about any portion of the Premises in material violation of any Hazardous Materials Laws; (d) any occurrence or condition on or in the vicinity of any portion of the Premises of which Tenant or Landlord, as applicable, has actual knowledge and that materially increases the risk that any portion of the Premises will be exposed to Hazardous Materials; and (e) all material communications to or from Tenant, any governmental authority or any other Person relating to Hazardous Materials Laws or Hazardous Materials Claims with respect to any portion of the Premises, including copies thereof. Notwithstanding any other provision of this Master Lease, if any Hazardous Materials are discovered on or under any portion of a Facility in violation of any Hazardous Materials Law, the Term shall be automatically extended with respect to such Facility only and this Master Lease shall remain in full force and effect with respect to such Facility only until the earlier to occur of (i) the completion of all remedial action or monitoring, as reasonably approved by Landlord, in accordance with all Hazardous Materials Laws, or (ii) the date specified in a written notice from Landlord to Tenant terminating this Master Lease (which date may be subsequent to the date upon which the Term was to have expired). Notwithstanding the foregoing, unless the Initial Term of this Master Lease is renewed pursuant to Section 1, above, in no event shall the provisions of this Section 8.5 extend the Term for a Facility beyond December 31, 2025 as to such Facility; provided, however, that Tenant’s obligations to complete all remedial action or monitoring pursuant to this Section 8.5 shall survive any such termination of the Term. Landlord shall have the right, at Tenant’s sole cost and expense (including, without limitation, Landlord’s reasonable attorneys’ fees and costs) and with counsel chosen by Landlord, to join and participate in, as a party if it so elects, any legal proceedings or actions initiated in connection with any Hazardous Materials Claims.

 

8.6          Medical Waste. Tenant shall be responsible for all Medical Waste disposal for each Facility, which disposal shall be provided by a licensed medical waste hauler and shall comply in all material respects with all applicable laws, rules, regulations and orders. If Tenant elects to provide Medical Waste disposal services to the subtenants in a Facility, such services shall be provided in compliance in all material respects with all applicable laws, rules, regulations and orders.

 

9.             Tenant Property.

 

9.1          Tenant Property. Tenant may obtain and install all items of furniture, fixtures, trade fixtures, supplies and equipment as Tenant determines are reasonably necessary or reasonably appropriate to operate the Premises (“Tenant Personal Property”). As used herein, “Tenant Intangible Property” means all the following at any time owned by Tenant in connection with its use of any portion of the Premises: Medicare, Medicaid and other accounts and proceeds thereof; rents, profits, income or revenue derived from such operation or use; all documents, chattel paper, instruments, contract rights (including all leases with subtenants and contracts with employees and third parties), deposit accounts, general intangibles and choses in action; refunds of any Taxes or Other Charges; if applicable, licenses and permits necessary’ or desirable for Tenant’s use of any portion of the Premises, any applicable

 

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certificate of need, occupancy or other similar certificate, and the exclusive right to transfer, move or apply for the foregoing and manage the business conducted at any portion of the Premises; and the right to use the names set forth on Schedule 1 and any other trade or other name now or hereafter associated with its operation of the Premises.

 

9.2          Intentionally Omitted

 

9.3          Waiver of Landlord’s Lien. Landlord hereby waives any statutory or common law lien that may be granted or deemed to be granted to Landlord in Tenant Personal Property or Tenant Intangible Property. Landlord agrees that, upon the request of any Person that shall be providing senior secured financing to Tenant, or a purchase money equipment financier or equipment lessor of Tenant, Landlord shall, at Tenant’s sole cost and expense, negotiate in good faith for the purpose of executing and delivering a commercially reasonable waiver or subordination of Landlord’s statutory lien rights, if any, and a consent and agreement with respect to the respective rights of Landlord and such Person regarding the security interests in, and the timing and removal of, any Tenant Personal Property or Tenant Intangible Property which such Person has a secured interest (the “Collateral”), in form and substance reasonably acceptable to Landlord and such Person, so long as such waiver and agreement (i) provides for the indemnification of Landlord against any claims by Tenant or any Person claiming through Tenant, and against any physical damage caused to the Premises, in connection with the removal of any of the Collateral by such Person, (ii) provides for a reasonable, but limited, time frame for the removal of such Collateral by such Person after the expiration of which same shall be deemed abandoned, and (iii) provides for the per diem payment of Rent due hereunder by such Person for each day following the date of the expiration or termination of this Master Lease that Landlord permits such Person’s Collateral to remain in the Premises.

 

10.          Financial, Management and Regulatory Reports. Tenant shall provide Landlord with the reports listed in Exhibit F at the time described therein, and such other information about it or the operations of the Premises and the Business as Landlord may reasonably request from time to time, including such information reasonably requested in connection with a financing of the Premises sought by Landlord. All financial information provided shall be prepared in accordance with generally accepted accounting principles consistently applied and shall be submitted electronically in the form of unrestricted, unlocked “.xls” spreadsheets (or, if restricted or locked, Landlord has been provided with all necessary passwords and access keys required to fully access or extract the subject data therefrom) created using Microsoft Excel (2003 or newer editions). In the event Tenant fails to provide Landlord with the reports listed in Exhibit F within the time periods specified therein, Tenant shall have a grace period of five (5) Business Days after receipt of written notice of such failure from Landlord to provide such reports, after which Tenant will be assessed with a S500.00 administrative fee, which administrative fee shall be immediately due and payable to Landlord.

 

11.          Representations and Warranties. Each party represents and warrants to the other that: (i) this Master Lease and all other documents executed or to be executed by it in connection herewith have been duly authorized and shall be binding upon it; (ii) it is duly organized, validly existing and in good standing under the laws of the state of its formation and is duly authorized and qualified to perform this Master Lease within the state(s) where any portion of the Premises is located; and (iii) neither this Master Lease nor any other document executed or to be executed in connection herewith violates the terms of any other agreement of such party.

 

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12.                               Events of Default. The occurrence of any of the following events will constitute an “Event of Default” on the part of Tenant, and there shall be no cure period therefor except as otherwise expressly provided:

 

(a)                                 Tenant’s failure to pay any Rent when due within two (2) Business Days after receipt of written notice from Landlord of such failure;

 

(b)                                 Tenant’s failure to pay when due Taxes, any Other Charges or other payments required to be made by Tenant under this Master Lease, which failure continues for ten (10) days after receipt of written notice from Landlord of such failure;

 

(c)                                  (i) The suspension or material limitation of any license, or, if applicable, the certification of any portion of the Premises for provider status under Medicare or Medicaid which would have a material adverse affect on the operation of any Facility for the then permitted use pursuant to Section 7.1(a); provided, however, if any such suspension or material limitation is curable by Tenant it shall not constitute an Event of Default if Tenant promptly commences to cure such breach and thereafter diligently pursues such cure to the completion thereof within the lesser of (x) the time period in which the applicable governmental agency has given Tenant to undertake corrective action or (y) one hundred eighty (180) days after the occurrence of any such suspension or material limitation; (ii) the revocation of any license or, if applicable, the certification of any portion of the Premises for provider status under Medicare or Medicaid which would have a material adverse affect on the operation of any Facility for the then permitted use pursuant to Section 7.1(a); (iii) the discontinuance of operations at any Facility, except as may be permitted pursuant to Sections 7.1 or 24.5; (iv) the failure to maintain any certificate of need or other similar certificate or license required to operate any Facility for the then permitted use in accordance with the provisions of Section 7.1, which failure would have a material adverse affect on the operation of any Facility; or (v) the use of any material portion of the Premises other than as permitted pursuant to Section 7.1;

 

(d)                                 A default beyond any applicable cure period by Tenant (i) with respect to any obligation in excess of One Million dollars ($1,000,000.00) under any other lease, agreement or obligation between Tenant and Landlord or any of Landlord’s Affiliates, or (ii) in any payment of principal or interest on any obligations of borrowed money to third parties having an aggregate principal balance of One Hundred Million dollars ($100,000,000.00) or more in the aggregate, or in the performance of any other provision contained in any instrument under which any such obligation is created or secured (including the breach of any covenant thereunder), (x) if such payment is a payment at maturity or a final payment, or (y) if an effect of such default is to cause, or permit any Person to cause, such obligation to become due prior to its stated maturity;

 

(e)                                  A default beyond any applicable cure period by any Guarantor under the Guaranty;

 

(f)                                   Any material misrepresentation by Tenant under this Master Lease or in any written report, notice or communication made pursuant hereto from Tenant to Landlord with respect to Tenant, any Guarantor, or the Premises;

 

(g)                                 The failure to perform or comply with the provisions of Sections 6 or 16;

 

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(h)                                 (i) Tenant shall generally not pay its debts as they become due, or shall admit in writing its inability to pay its debts generally, or shall make an assignment of all or substantially all of its property for the benefit of creditors; or (ii) a receiver, trustee or liquidator shall be appointed for Tenant or any Facility if such appointment is not discharged within sixty (60) days after the date of such appointment; (iii) the filing by Tenant of a voluntary petition under any federal bankruptcy or state law to be adjudicated as bankrupt or for any arrangement or other debtor’s relief; or (iv) the involuntary filing of such a petition against Tenant by any other party unless such petition is dismissed within ninety (90) days after filing; or

 

(i)                                    The failure to perform or comply with any other provision of this Master Lease not requiring the payment of money unless Tenant cures it either (i) within thirty (30) days after receipt of written notice from Landlord of such failure or (ii) if such default cannot with due diligence be so cured because of the nature of the default or delays beyond the control of Tenant and cure after such period will not have a materially adverse effect upon any Facility, then such default shall not constitute an Event of Default if Tenant uses its best efforts to cure such default by promptly commencing and diligently pursuing such cure to the completion thereof and cures it within one hundred eighty (180) days after such notice from Landlord.

 

13.                               Remedies. Upon the occurrence and during the continuance of an Event of Default, Landlord may exercise all rights and remedies under this Master Lease and the laws of the state(s) where the Premises are located that are available to a lessor of real and personal property in the event of a default by its lessee. Landlord shall have no duty to mitigate damages unless required by applicable law and shall not be responsible or liable for any failure to relet any of the Premises or to collect any rent due upon any such reletting. Tenant shall pay Landlord, immediately upon demand, all expenses incurred by it in obtaining possession and reletting any of the Premises, including reasonable fees, commissions and costs of attorneys, architects, agents and brokers.

 

13.1                        General. Without limiting the foregoing, Landlord shall have the right (but not the obligation) to do any of the following upon and during the continuance of an Event of Default: (a) sue for the specific performance of any covenant of Tenant as to which it is in breach; (b) enter upon any portion of the Premises, terminate this Master Lease, dispossess Tenant from the Premises, by any available legal process, and/or collect money damages by reason of Tenant’s breach, including the acceleration of (i) all Minimum Rent and Additional Rent which would have accrued after such termination, discounted at an annual rate equal to the then-current U.S. Treasury Note rate for the closest comparable term and taking into account any obligation on behalf of Landlord to mitigate its damages to the extent required by law, and (ii) all obligations and liabilities of Tenant under this Master Lease which survive the termination of the Term; (c) elect to leave this Master Lease in place and sue for Rent and other money damages as the same come due; and (d) (before or after repossession of the Premises pursuant to clause (b) above and whether or not this Master Lease has been terminated) relet any portion of the Premises to such tenant(s), for such term(s) (which may be greater or less than the remaining balance of the Term), rent, conditions (which may include concessions or free rent) and uses as it may determine in its sole discretion and collect and receive any rents payable by reason of such reletting.

 

13.2                        Remedies Cumulative; No Waiver. No right or remedy herein conferred upon or reserved to Landlord is intended to be exclusive of any other right or remedy, and each and every right and remedy shall be cumulative and in addition to any other right or remedy given hereunder or now or hereafter existing at law or in equity. Any notice or cure period provided herein shall run concurrently with any provided by applicable law. No failure of Landlord to insist at any time upon the strict

 

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performance of any provision of this Master Lease or to exercise any option, right, power or remedy contained herein shall be construed as a waiver, modification or relinquishment thereof as to any similar or different breach (future or otherwise) by Tenant. Landlord’s receipt of any rent or other sum due hereunder (including any late charge) with knowledge of any breach shall not be deemed a waiver of such breach, and no waiver by Landlord of any provision of this Master Lease shall be effective unless expressed in a writing signed by it.

 

13.3                        Performance of Tenant’s Obligations. If Tenant at any time shall fail to make any payment or perform any act on its part required to be made or performed under this Master Lease, then Landlord may, without waiving or releasing Tenant from any obligations or default hereunder, make such payment or perform such act for the account and at the expense of Tenant, and enter upon any portion of the Premises for the purpose of taking all such action as may be reasonably necessary. No such entry shall be deemed an eviction of Tenant. All sums so paid by Landlord and all necessary and incidental costs and expenses (including reasonable attorneys’ fees and expenses) incurred in connection with the performance of any such act by it, together with interest at the Agreed Rate from the date of the making of such payment or the incurring of such costs and expenses, shall be payable by Tenant to Landlord upon Landlord’s written demand therefor.

 

13.4                        Limited Remedy Event of Defaults. Notwithstanding anything to the contrary herein contained, or any other provisions of this Master Lease or any other concurrent transaction document, if Landlord is exercising remedies due solely to the Events of Default described in clauses (c), (d), (e), (f) or (i) of Section 12 (“Limited Remedy Events of Default”), the aggregate amount Tenant shall be required to pay to Landlord from and after the date of the occurrence of such Limited Remedy Event of Default (the “Occurrence Date”) shall be limited to the sum of (i) (A) 89.9% of the fair market value of the Premises as of the commencement date less (B) the sum of the present value as of the Effective Date (using an annual discount rate equal to Fifteen and 65/100 percent (15.65%)) of all Minimum Rent and Additional Rent received as of the Occurrence Date, (ii) any amounts of Taxes and Other Charges which are due and payable or have accrued under this Master Lease through the Occurrence Date, and (iii) any amounts of Taxes and Other Charges which are due and payable or have accrued under this Master Lease after the Occurrence Date while or so long as the Tenant remains in possession of the Premises after any Limited Remedy Event of Default that relates to insurance, utilities, repairs, maintenance, environmental maintenance, remediation and compliance and other customary costs and expenses of operating and maintaining the Premises in substantial compliance with the terms of this Master Lease.

 

14.                               Provisions on Termination.

 

14.1                        Surrender of Possession. On the expiration of the Term or earlier termination or cancellation of this Master Lease (the “Termination Date”), Tenant shall deliver to Landlord or its designee possession of (a) the Premises (or portion thereof if the expiration, termination, or cancellation of this Master Lease is not with respect to the entire Premises) in broom clean condition and in as good a condition as existed at the date of their possession and occupancy pursuant to this Master Lease, except as repaired, replaced, rebuilt, restored, altered or added to as permitted or required by the provisions of this Master Lease, ordinary wear and tear, casualty and condemnation excepted, (b) all subtenant leases and security deposits, all documentation related to the subtenants (including financials and past correspondence) and copies of all Tenant’s books and records relating solely to the Premises, and (c) plans, specifications, drawings or similar materials in connection with the applicable Facility or Facilities.

 

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14.2                        Removal of Tenant Personal Property. Tenant may remove from the Premises in a workmanlike manner all Tenant Personal Property, leaving the Premises in good and presentable condition and appearance, including repair of any damage caused by such removal. Title to any Tenant Personal Property which is not removed by Tenant as permitted above upon the expiration of the Term shall, at Landlord’s election, vest in Landlord; provided, however, that Landlord may remove and store or dispose at Tenant’s expense any or all of such Tenant Personal Property which is not so removed by Tenant without obligation or accounting to Tenant.

 

14.3                        Holding Over. If Tenant shall for any reason remain in possession of any portion of the Premises after the Termination Date, such possession shall be a month-to-month tenancy during which time Tenant shall pay as rental on the first (1st) Business Day of each month one and one-half (1-1/2) times the total of the monthly Minimum Rent payable with respect to the last Lease Year plus Additional Rent allocable to the month, all additional charges accruing during the month and all other sums, if any, payable by Tenant pursuant to this Master Lease. Nothing contained herein shall constitute the consent, express or implied, of Landlord to the holding over of Tenant after the Termination Date, nor shall anything contained herein be deemed to limit Landlord’s remedies.

 

14.4                        Survival. All covenants, indemnities and other obligations of Tenant under this Master Lease which arise on or prior to the Termination Date or which specifically survive the expiration or termination by their own terms shall survive the Termination Date.

 

15.                               Certain Landlord Rights.

 

15.1                        Entry and Examination of Records. Landlord and its representatives may enter any portion of the Premises at any reasonable time upon not less than twenty-four (24) hours written notice to Tenant (which notice may be transmitted in the form of electronic mail or other similar electronic means) to inspect the Premises for compliance with this Master Lease, to exhibit the Premises for sale, lease or mortgaging, or for any other reasonable purpose; provided that no such notice shall be required in the event of an emergency, upon and during the continuance of an Event of Default or to post notices of non-responsibility under any mechanic’s or materialmen’s lien law. No such entry shall unreasonably interfere with Tenant or any subtenants in a Facility or the business operated thereon. During normal business hours (and upon reasonable notice), Tenant will permit Landlord and its representatives (coordinated through Landlord) to examine and make abstracts from any of Tenant’s books and records (other than materials protected by the attorney-client privilege and materials which such person may not disclose without violation of a confidentiality obligation binding upon it); provided that, so long as no Event of Default has occurred and is continuing, Landlord shall not be entitled to exercise the foregoing rights more than once, in the aggregate, in any calendar year.

 

15.2                        Grant Liens. Any Lien or other encumbrance now existing and securing any borrowing or other means of financing or refinancing or otherwise shall provide for the recognition of this Master Lease and all Tenant’s rights hereunder. Subject to the foregoing sentence and Section 7.3, without the consent of Tenant, Landlord may from time to time, directly or indirectly, create or otherwise cause to exist any Lien, title retention agreement or other encumbrance upon the Premises, or any portion thereof or interest therein (including this Master Lease), whether to secure any borrowing or other means of financing or refinancing or otherwise. Upon the request of Landlord, Tenant shall subordinate this Master Lease to the Lien of any such encumbrance so long as (a) such encumbrance provides that it is subject to the rights of Tenant under this Master Lease and that so long as no Event of Default shall exist

 

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beyond any applicable cure period, Tenant’s occupancy shall not be disturbed if any Person takes possession of the applicable portion of the Premises through foreclosure proceedings or otherwise and (b) is otherwise in form and substance reasonably acceptable to Tenant.

 

15.3                        Estoppel Certificates. At any time upon not less than ten (10) days prior written request by either Landlord or Tenant (the “Requesting Party”) to the other party (the “Responding Party”), the Responding Party shall have an authorized representative execute, acknowledge and deliver to the Requesting Party or its designee a written statement certifying (a) that this Master Lease, together with any specified modifications, is in full force and effect, (b) the dates to which Rent and additional charges have been paid, (c) that no default currently exists on the part of the Responding Party, and to the Responding Party’s actual knowledge, on the part of the Requesting Party or specifying any such default, and (d) as to such other matters as the Requesting Party may reasonably request.

 

15.4                        Conveyance Release. If Landlord or any successor owner shall transfer any portion of the Premises in accordance with this Master Lease, they shall thereupon be released from all future liabilities and obligations hereunder arising or accruing from and after the date of such conveyance or other transfer, which instead shall thereupon be binding upon the new owner.

 

16.                               Assignment and Subletting.

 

16.1                        No Assignment or Subletting. Without the prior written consent of Landlord, which may be withheld or conditioned at its sole discretion, this Master Lease shall not, nor shall any interest of Tenant herein, be assigned or encumbered by operation of law, nor shall Tenant voluntarily or involuntarily assign, mortgage, encumber or hypothecate any interest in this Master Lease or sublet any portion of the Premises. Any foregoing acts without such consent shall be void and shall, at Landlord’s sole option, constitute an Event of Default giving rise to Landlord’s right, among other things, to terminate this Master Lease. An assignment of this Master Lease by Tenant shall be deemed to include: (a) entering into a management or similar agreement relating to the operation or control of any portion of the Premises with a Person that is not an Affiliate of Tenant; or (b) any change (voluntary or involuntary, by operation of law or otherwise, including the transfer, assignment, sale, hypothecation or other disposition of any equity interest in Tenant) in the Person that ultimately exert effective Control over the management of the affairs of Tenant or Guarantor as of the date hereof; provided that an initial public offering of Tenant or Guarantor shall not be deemed to be an assignment of the Master Lease so long as thereafter less than twenty five percent (25%) of the voting stock of Tenant or Guarantor, as applicable, is held by any Person or related group that did not have such ownership before the initial public offering.

 

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16.2                        Permitted Assignments and Sublets.

 

(a)                                 Notwithstanding Section 16.1 above, Tenant may, without Landlord’s prior written consent, assign this Master Lease or sublet the Premises or any portion thereof to an Affiliate of Tenant or any Guarantor if all of the following are first satisfied: (i) such Affiliate fully assumes Tenant’s obligations hereunder; (ii) Tenant remains fully liable hereunder and any Guarantor remains fully liable under its guaranty; (iii) the use of the applicable portion of the Premises shall comply with Section 7.1, above; (iv) Landlord shall be provided the proposed form and content of all documents for such assignment or sublease on or before the date that is twenty (20) days prior to such assignment or sublease, and (v) Landlord shall be provided executed copies of all such documents within fifteen (15) Business Days after such assignment or sublease.

 

(b)                                 Notwithstanding Section 16.1 above, Landlord’s consent shall not be required for any assignment of this Master Lease or change of Control of Tenant or Guarantor if the consolidated net worth of the successor Tenant (in the case of an assignment) or Tenant (in the case of a change of Control of Tenant), as applicable (such entity “Resulting Tenant”) or, successor Guarantor (in the case of an assignment) or Guarantor (in the case of a change of Control of Guarantor), as applicable (such entity, “Resulting Guarantor”) immediately after the effectiveness of the assignment or change of Control is equal to or greater than Three Hundred Million Dollars ($300,000,000.00) (such assignment or change of Control, a “Strong Tenant/Guarantor Transfer”), and each of the following conditions is met: (i) Resulting Tenant and/or Resulting Guarantor, or the officers, directors or managers thereof or of the Person that controls Resulting Tenant or Resulting Guarantor, as applicable, has sufficient operating experience and history with respect to the Business of the Facilities as had Tenant or Guarantor, as applicable (or the officers, directors or managers thereof or of the Person that controls Tenant or Guarantor) immediately prior to the Strong Tenant/Guarantor Transfer, or has retained a management company with such expertise to manage the Facilities; (ii) after a Strong Tenant/Guarantor Transfer, the Resulting Tenant and/or Resulting Guarantor, if different than the Tenant or Guarantor immediately prior to such Strong Tenant/Guarantor Transfer, shall assume all of the obligations of Tenant under the Lease and Guarantor under the Guaranty accruing subsequent to the effective date of such Strong Tenant/Guarantor Transfer by a written instrument in form and substance reasonably satisfactory to Landlord (the “Lease/Guaranty Assumption”); and (iii) no Event of Default shall have occurred and be continuing hereunder. A Person shall be deemed to have “sufficient operating experience and history” if, immediately prior to the Strong Tenant/Guarantor Transfer, such Person (together with its Affiliates and/or officers, directors and managers) (x) operated or managed (whether directly or through its operating subsidiary(ies)) at least twelve (12) facilities engaged in the Business of the Facilities (or the number of such facilities operated and/or managed by Guarantor, whichever is less) and (y) has been in the business of operating or managing such facilities for at least three (3) years (or for such period as Guarantor has been in such business, whichever is less). Upon delivery of the Lease/Guaranty Assumption, Landlord shall release Tenant from any liability under the Lease and Guarantor from any liability under the Guaranty first accruing from and after the effective date of such Strong Tenant/Guarantor Transfer.

 

(c)                                  Notwithstanding Section 16.1 above, Tenant may, (i) without Landlord’s prior written consent, sublet portions of a Facility in the ordinary course of Tenant’s business to subtenants of such Facility for customary uses ancillary to Tenant’s permitted use including, pharmacy, physical therapy, and sundry providers, and (ii) subject to Landlord’s prior written consent, which consent shall

 

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not be unreasonably withheld, conditioned or delayed, sublet all or any portion of the Premises, in each case using a form of sublease reasonably approved by Landlord.

 

(d)                                 Notwithstanding Section 16.1 above and subject to Tenant’s obligations pursuant to Section 9.2, Tenant shall have the right from time to time during the Term hereof and without Landlord’s further approval, written or otherwise, to grant and assign a security interest in Tenant’s interest in all Tenant Personal Property or other property of Tenant that is not a part of the Premises to Tenant’s lenders. In addition, Tenant may grant and assign a mortgage or other security interest in Tenant’s interest in this Master Lease to Tenant’s lenders in connection with Tenant’s financing of Tenant’s interest in this Master Lease provided that: (i) Tenant pays all reasonable costs, expenses and charges of Landlord incident to the granting of any such mortgage or other security interest, including Landlord’s reasonable attorneys’ fees and expenses and (ii) Landlord has approved, in its reasonable discretion, the form of leasehold mortgage pursuant to which Tenant is granting a leasehold mortgage or other security interest in this Master Lease.

 

(e)                                  Tenant hereby acknowledges that an assignment, subleasing or other transfer of the Premises or a portion thereof under this Section 16 will cause Landlord to incur administrative and other expenses not contemplated under this Master Lease. Accordingly, prior to or concurrently with an assignment, sublease or other transfer of the Premises or a portion thereof pursuant to Section 16.1 or Sections 16.2, Tenant shall reimburse Landlord for any and all reasonable costs and expenses (including, without limitation, reasonable attorneys’ fees) incurred by Landlord in connection with such assignment, sublease, or other similar transfer.

 

(f)                                   In no event shall Tenant sublet any portion of the Premises on any basis such that the rental to be paid by the sublessee would be based, in whole or in part, on either the income or profits derived by the business activities of the sublessee, or any other formula, such that any portion of the sublease rental received by Landlord would fail to qualify as “rents from real property” within the meaning of Section 856(d) of the U.S. Internal Revenue Code, or any similar or successor provision thereto.

 

17.                               Damage by Fire or Other Casualty. Tenant shall promptly notify Landlord of any material damage or destruction of any portion of the Premises and diligently repair or reconstruct such portion of the Premises in a good and workman like manner to a like or better condition than existed prior to such damage or destruction in accordance with Section 8.4. So long as no Event of Default exists, any award of insurance proceeds up to and including One Hundred Thousand Dollars ($100,000.00) shall be paid directly to Tenant. In the event that any award of net insurance proceeds payable with respect to the casualty are in excess of One Hundred Thousand Dollars ($100,000.00), such insurance proceeds (i) shall be paid directly to Landlord, and (ii) if no Event of Default exists, shall be made available to Tenant for the repair or reconstruction of the applicable portion of the Premises subject to the following disbursement requirements:

 

(a)                                 prior to commencement of restoration, the architects, contracts, contractors, plans and specifications, payment and performance bond from the general contractor for the work and a budget for the restoration shall have been approved by Landlord, which approval shall not be unreasonably withheld, delayed, or conditioned;

 

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(b)                                 Tenant shall possess such additional funds which Landlord reasonably determines are needed to pay all costs of the repair or restoration and such Tenant funds shall be made available by Tenant as required to pay for the costs of the restoration;

 

(c)                                  at the time of any disbursement, except as permitted pursuant to Section 5.1, no mechanics’ or materialmen’s liens shall have been filed against any of the Premises and remain undischarged;

 

(d)                                 disbursements shall be made from time to time (within reasonable time frames to perform and complete the restoration, but not more frequently than monthly) in an amount not exceeding the cost of the restoration completed since the last disbursement, upon receipt of (i) satisfactory evidence, including architects’ certificates, of the stage of completion, the estimated total cost of completion and performance of the restoration to date in a good and workmanlike manner in accordance with all material respects with the contracts, plans and specifications, (ii) waivers of liens, and (iii) contractors’ and subcontractors’ sworn statements as to completed work and the cost thereof for which payment is requested; and

 

(e)                                  each request for disbursement shall be accompanied by a certificate of Tenant, signed by an officer of Tenant, describing the restoration for which payment is requested, stating the cost incurred in connection therewith, stating that Tenant has not previously received payment for such restoration and, upon completion of the restoration, also stating that the restoration has been fully completed and complies with the applicable requirements of this Master Lease.

 

If such proceeds are insufficient, Tenant shall provide the required additional funds; if such proceeds are more than sufficient, the surplus shall belong and be paid to Tenant upon completion of the restoration in accordance with the requirements of this Master Lease. Tenant shall not have any right under this Master Lease, and hereby waives all rights under applicable law, to abate, reduce or offset rent by reason of any damage or destruction of any portion of the Premises of any amount by reason of an insured or uninsured casualty.

 

If at any time during the last two (2) years of the Term, fire or other casualty shall render the whole or any portion of a Facility untenantable and such Facility (or any portion thereof) cannot reasonably be expected to be repaired within two hundred seventy (270) days from the date of such event, then Tenant, by notice in writing to Landlord within ninety (90) days from the date of such damage or destruction, may terminate this Master Lease with respect to such Facility effective upon a date within thirty (30) days from the date of such notice in which event (i) the insurance proceeds payable with respect to the casualty to such Facility (except to the extent related to Tenant Personal Property) shall be paid to Landlord, and (ii) this Master Lease shall be deemed terminated as to such Facility and Minimum Rent and Additional Rent clue hereunder shall be reduced by the product of (x) the amount of the then current Minimum Rent and Additional Rent, and (y) a fraction, the numerator of which is the portion of Landlord’s Investment allocated to such Facility and the denominator of which is Landlord’s Investment.

 

18.                               Condemnation. Except as provided to the contrary in this Section 18, this Master Lease shall not terminate and shall remain in full force and effect in the event of a taking or condemnation of the Premises, or any portion thereof, and Tenant hereby waives all rights under applicable law to abate, reduce or offset Rent by reason of such taking. If during the Term all or substantially all (a “Complete Taking”) or a smaller portion (a “Partial Taking”) of any Facility is taken or condemned by any competent public or quasi-public authority, then (a) in the case of a Complete Taking, Tenant may at its

 

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election made within thirty (30) days of the effective date of such Taking, terminate this Master Lease with respect to such Facility and the current Rent shall be equitably abated as of the effective date of such termination, or (b) in the case of a Partial Taking, the Rent shall be abated to the same extent as the resulting diminution in Fair Market Value of the applicable portion of the Premises. The resulting diminution in Fair Market Value on the effective date of a Partial Taking shall be as established pursuant to Exhibit C. In the event this Master Lease is terminated as to any Facility under this Section 18, then the Minimum Rent and Additional Rent due hereunder shall be reduced by the product of (i) the amount of the then current Minimum Rent and Additional Rent, and (ii) a fraction, the numerator of which is the portion of Landlord’s Investment allocated to such Facility and the denominator of which is Landlord’s Investment. Landlord alone shall be entitled to receive and retain any award for a taking or condemnation other than a temporary taking; provided, however. Tenant shall be entitled to submit its own claim in the event of any such taking or condemnation with respect to the value of (u) Tenant’s leasehold interest in any portion of the Premises, (v) the relocation costs incurred by Tenant as a result thereof, (w) Tenant Personal Property, (x) other tangible property, (y) moving expenses, and/or (z) loss of business, if available. In the event of a temporary taking of less than all or substantially all of the Premises, Tenant shall be entitled to receive and retain any and all awards for the temporary taking and the Minimum Rent and Additional Rent due under this Master Lease shall be not be abated during the period of such temporary taking.

 

19.                               Indemnification. Tenant agrees to protect, indemnify, defend and save harmless Landlord, its directors, officers, shareholders, agents and employees (each an “Indemnitee”) from and against any and all foreseeable or unforeseeable liability, expense, loss, cost, deficiency, fine, penalty or damage (including punitive but excluding consequential damages) of any kind or nature, including reasonable attorneys’ fees, from any suits, claims or demands, on account of any matter or thing, action or failure to act arising out of or in connection with (unless caused by an Indemnitee) this Master Lease, the Premises or the operations of Tenant on any portion of the Premises, including (a) the breach by Tenant of any of its representations, warranties, covenants or other obligations hereunder, (b) any Protest, and (c) all known and unknown Environmental Activities on any portion of the Premises, Hazardous Materials Claims or violations by Tenant of a Hazardous Materials Law with respect to any portion of the Premises, except to the extent such Environmental Activities, Hazardous Materials Claims or violations arise out of any negligent or willful act or omission of Landlord or its affiliates, employees or agents. Upon receiving knowledge of any suit, claim or demand asserted by a third party that Landlord believes is covered by this indemnity, it shall promptly give Tenant written notice of such matter. If Landlord does not elect to defend the matter with its own counsel at Tenant’s expense, Tenant shall then defend Landlord at Tenant’s expense (including Landlord’s reasonable attorneys’ fees and costs) with legal counsel reasonably satisfactory to Landlord and Tenant’s insurer. The obligations of Tenant under this Section 19 shall survive any termination, expiration, or rejection in bankruptcy of this Master Lease, but only with respect to matters that arose, occurred, or existed prior to such termination, expiration, or rejection.

 

20.                               Disputes. If any party brings any action to interpret or enforce this Master Lease, or for damages for any alleged breach, the prevailing party shall be entitled to reasonable attorneys’ fees and costs as awarded by the court in addition to all other recovery, damages and costs. EACH PARTY HEREBY WAIVES ANY RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY AGAINST THE OTHER IN CONNECTION WITH ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS MASTER LEASE, INCLUDING RELATIONSHIP OF THE PARTIES, TENANT’S USE AND OCCUPANCY OF ANY PORTION OF THE PREMISES, OR

 

19

 

ANY CLAIM OF INJURY OR DAMAGE RELATING TO THE FOREGOING OR THE ENFORCEMENT OF ANY REMEDY.

 

21.                               Notices. All notices and demands, certificates, requests, consents, approvals and other similar instruments under this Master Lease shall be in writing and sent by personal delivery, U.S. certified or registered mail (return receipt requested, postage prepaid) or FedEx or similar generally recognized overnight carrier regularly providing proof of delivery, addressed as follows:

 

	
*If   to any Tenant, each of which have If to Landlord:
    
	
appointed Radiation   Therapy Services, Inc.
    	
 
    
	
as   agent/attorney-in-fact:
    	
 
    
	
 
    	
 
    
	
Radiation Therapy   Services, Inc. LLC
    	
Theriac Enterprises of   Pembroke Pines,
    
	
2234 Colonial Blvd.
    	
5292 Summerlin Commons   Way
    
	
Ft. Myers, Florida   33907
    	
Suite 1103
    
	
Attn:                    
    	
Ft. Myers, Florida   33907
    

 

	
*Name   of Tenant
    	
Attn: Jay Bunnell
    
	
 
    	
Facsimile: (239)   936-5485
    
	
 
    	
 
    
	
 
    	
 
    
	
With a copy to:
    	
With a copy to:
    
	
 
    	
 
    
	
Kirkland &   Ellis, LLP
    	
Henderson, Franklin,   Starnes & Holt, P.A.
    
	
300 North LaSalle
    	
1715 Monroe St.
    
	
Chicago, Illinois   60654
    	
Ft. Myers, FL 33901
    
	
Attn: John G. Caruso
    	
Attn: Bruce E.   Sands, Esq.
    
	
Facsimile: (312)   862-2200
    	
Facsimile:   (239)344-1546
    
	
 
    	
 
    

 

A party may designate a different address by notice as provided above. Any notice or other instrument so delivered (whether accepted or refused) shall be deemed to have been given and received on the date of delivery established by U.S. Post Office return receipt or the carrier’s proof of delivery or, if not so delivered, upon its receipt. Delivery to any officer, general partner or principal of a party shall be deemed delivery to such party. Notice to any one co-Tenant shall be deemed notice to all co-Tenants.

 

22.                               Miscellaneous. Since each party has been represented by counsel and this Master Lease has been freely and fairly negotiated, all provisions shall be interpreted according to their fair meaning and shall not be strictly construed against any party. While nothing contained in this Master Lease should be deemed or construed to constitute an extension of credit by Landlord to Tenant, if a portion of any payment made to Landlord is deemed to violate any applicable laws regarding usury, such portion shall be held by Landlord to pay the future obligations of Tenant as such obligations arise and if Tenant discharges and performs all obligations hereunder, such funds will be reimbursed (without interest) to Tenant on the Termination Date. If any part of this Master Lease shall be determined to be invalid or unenforceable, the remainder shall nevertheless continue in full force and effect. Time is of the essence, and whenever action must be taken (including the giving of notice or the delivery of documents) hereunder during a certain period of time or by a particular date that ends or occurs on a Saturday. Sunday

 

20

 

or federal holiday, then such period or date shall be extended until the immediately following Business Day. Whenever the words “including”, “include” or “includes” are used in this Master Lease, they shall be interpreted in a non-exclusive manner as though the words “without limitation” immediately followed. Whenever the words day or days are used in this Master Lease, they shall mean “calendar day” or “calendar days” unless expressly provided to the contrary. The titles and headings in this Master Lease are for convenience of reference only and shall not in any way affect the meaning or construction of any provision. Unless otherwise expressly provided, references to any “Section” mean a section of this Master Lease (including all subsections), to any “Exhibit” or “Schedule” mean an exhibit or schedule attached hereto or to “Medicare” or “Medicaid” mean such programs and shall include any successor program. If more than one Person is Tenant hereunder, their liability and obligations hereunder shall be joint and several. Promptly upon the request of either party and at its expense, the parties shall prepare, enter into and record a suitable short form memorandum of this Master Lease. This Master Lease (a) contains the entire agreement of the parties as to the subject matter hereof and supersedes all prior or contemporaneous verbal or written agreements or understandings, (b) may be executed in one or more facsimile or electronic counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same document, (c) may only be amended by a writing executed by the parties, (d) shall inure to the benefit of and be binding upon the successors and permitted assigns of the parties, (e) shall be governed by and construed and enforced in accordance with the internal laws of the State of Florida, without regard to the conflict of laws rules thereof, provided that the law of the State in which each Facility is located (each a “Situs State”) shall govern procedures for enforcing, in the respective Situs State, provisional and other remedies directly related to such Facility and related personal property as may be required pursuant to the law of such Situs State, including without limitation the appointment of a receiver; and, further provided that the law of the Situs State also applies to the extent, but only to the extent, necessary to create, perfect and foreclose the security interests and liens created under this Master Lease, and (f) incorporates by this reference any Exhibits and Schedules attached hereto.

 

23.                               Right of First Refusal.

 

(a)                                 During the Term and subject to the terms and conditions and except as otherwise expressly provided in this Section 23. Tenant shall have a right of first refusal to purchase all of the Subject Facilities (as defined below) that are the subject of a Third Party Offer (as defined below). Within five (5) Business Days of Landlord’s decision to accept a Third Party Offer (or its acceptance of such offer subject to the right of first refusal granted herein) Landlord shall deliver to Tenant a written notice (the “Offer Notice”) (i) stating that Landlord is prepared to accept (or has already accepted subject to the right of first refusal granted herein) the applicable Third Party Offer, (ii) identifying the Subject Facilities, and (iii) describing the material terms and conditions (including purchase price and earnest money deposit) under which the third party proposes to purchase the Subject Facilities.

 

(b)                                 As used herein, the following terms shall have the following meanings:

 

(1)                                 “Third Party Offer” shall mean a written offer, proposal, letter of intent or similar instrument setting forth the material terms and conditions under which a third party which is not an Affiliate of Landlord proposes to enter into a purchase of all or a portion of the Premises.

 

(2)                                 “Subject Facilities” shall mean that portion of the Premises (or those Facilities) that are the subject of the purchase proposal contained in the Third Party Offer.

 

21

 

(c)                                  Tenant shall have fifteen (15) Business Days from its receipt of an Offer Notice to elect to purchase the Subject Facilities by delivery of written notice of such election to Landlord (the “Purchase Notice”). For the avoidance of doubt, Tenant may only elect to purchase all of the Subject Facilities and may not elect to purchase some but not all of the Subject Facilities.

 

(d)                                 Landlord and Tenant shall have a period of thirty (30) days from Landlord’s receipt of the Purchase Notice (the “Purchase Agreement Period”) to negotiate in good faith a purchase and sale agreement and related documentation necessary to complete the disposition of the Subject Facilities (the “Purchase Documentation”). The Purchase Documentation shall contain the purchase price, earnest money deposit, and other material terms and conditions contained in the Third Party Offer. In the event Landlord and Tenant enter into the Purchase Documentation within the Purchase Agreement Period, then the transaction that is the subject of such Purchase Documentation shall be consummated within thirty (30) days of the execution thereof (the “Closing Date”).

 

(e)                                  In the event that (i) Tenant does not timely provide the Purchase Notice, (ii) Landlord and Tenant are unable to agree upon the Purchase Documentation within the Purchase Agreement Period, or (iii) following execution of the Purchase Documentation, the transaction that is the subject thereof is not consummated on or before the Closing Date as a result of a default by Tenant in its obligations under the Purchase Documentation, then Landlord shall be free to sell the Subject Facilities to the third party who submitted the Third Party Offer on terms not materially more favorable to the acquiring party than are set forth in the applicable Third Party Offer. If such sale is not consummated within thirty (30) days following the Purchase Agreement Period, or if at any time Landlord agrees with such third party to modify the terms of the proposed transaction in a manner materially more favorable to the third party, Tenant’s right of first refusal as granted herein shall be reinstituted and Landlord shall give Tenant prompt written notice of the same.

 

(f)                                   Notwithstanding anything in this Section 23 which may be construed or interpreted to the contrary, the terms of this Section 23 (including the right of first refusal granted herein) shall not apply to any of the following: (i) any sale, transfer, or other disposition of the Premises or any portion thereof to any Affiliate, parent, or subsidiary of Landlord or to a joint venture entity, relationship, partnership or similar business arrangement in which Landlord or any of Landlord’s Affiliates is the managing member or general partner and holds at least a twenty five percent (25%) equity ownership interest, (ii) to any merger, business combination, or similar transaction involving all or substantially all of the assets of Landlord and its Affiliates; or (iii) any judicial or non-judicial foreclosure sale or deed in lieu of foreclosure pursuant to any mortgage or deed of trust now or hereafter encumbering the Premises or any portion thereof in favor of an unaffiliated third party.

 

(g)                                 In the event Tenant purchases the Subject Facilities pursuant to this Section 23, this Master Lease shall terminate as to the Subject Facilities and the Minimum Rent and Additional Rent due hereunder shall be reduced by the product of (i) the amount of the then current Minimum Rent and Additional Rent, and (ii) a fraction, the numerator of which is the portion of Landlord’s Investment allocable to the Subject Facilities and the denominator of which is Landlord’s Investment.

 

24.                               Economic Substitution.

 

24.1                        Provided that no Event of Default exists on the Option Exercise Date or the Closing Date, Tenant may offer to purchase an Option Premises (as defined herein) by giving Landlord

 

22

 

written notice thereof (the “Exercise Notice”) at least sixty (60) days, but not more than one hundred eighty (180) days, prior to the desired closing date (the date on which such notice is delivered being the “Option Exercise Date”) provided that (a) Tenant provides Landlord with substitute Replacement Premises in accordance with the requirements set forth below and (b) the substitution of the Replacement Premises for the Option Premises does not result in a decrease in the Rent Coverage Ratio from the Rent Coverage Ratio existing as of the Exercise Date. Landlord may accept or reject such offer to purchase an Option Premises at Landlord’s sole and absolute discretion. As used herein, “Option Premises” shall mean the Facility or Facilities identified as the portion of the Premises that Tenant elects to be designated as the Option Premises in the Exercise Notice; provided, however, in no event shall Tenant be entitled to (i) include any Facility in the Option Premises unless Landlord has owned such Facility for a period of the greater of (x) two (2) years or (y) the currently recognized “safe-harbor” holding period for Real Estate Investment Trusts under the rules and regulations relating to “prohibited transactions” or “dealer sales” under the Internal Revenue Code of 1986, as amended, and (ii) designate more than five (5) Facilities as Option Premises during the Term. As used herein, “Replacement Premises” shall mean a healthcare facility or facilities, of comparable or superior type, use, and quality to the Option Premises, and, subject to customary due diligence and property investigations by Landlord, reasonably acceptable to Landlord to be added to the Premises demised under this Master Lease in place of the Option Premises, as of the date of closing. As used herein, “Rent Coverage Ratio” means, as of the date of determination, the ratio of (A) the Portfolio EBITDARM for the immediately preceding 6 calendar months, minus (I) an assumed management fee equal to five percent (5%) of the gross revenues generated during such six month period, and (II) one-twelfth (1/12) of the CapEx Amount multiplied by the aggregate rentable square footage of the Facilities on the calculation date and further multiplied by the number of months in the period of determination, to (B) the total amount of the Minimum Rent and Additional Rent due for such six month period pursuant to the terms of this Master Lease. As used herein, “Portfolio EBITDARM” means, for any period of determination, the aggregate net income (or loss) of Tenant for such period to the extent derived from the collective operation of the Premises, adjusted to add thereto, to the extent allocable to the Premises, without duplication, any amounts deducted in determining such net income (or loss) for (a) interest expense, (b) income tax expense, (c) depreciation and amortization expense, (d) rental expense, and (e) management fee expense, in each case determined in conformity with generally accepted accounting principles, consistently applied. With respect to any Replacement Premises that has been operating for less than twelve (12) months as of the Option Exercise Date, Portfolio EBITDARM shall be calculated using a commercially reasonable estimate of the net income (or loss) of Tenant for such Replacement Premises during the first year of operations. Such commercially reasonable estimate of net income (or loss) shall be based on documentation that is reasonably satisfactory to Landlord and shall be calculated utilizing accounting and forecasting principles consistently applied and reasonably satisfactory to Landlord. Notwithstanding anything herein which may be interpreted to the contrary, Tenant shall be responsible for all costs and expenses incurred by Landlord or Tenant in connection with the transfer of the Option Premises to Tenant and the transfer of the Replacement Premises to Landlord, including, without limitation, all reasonable costs and expenses incurred by Landlord in connection with its due diligence investigation of the Replacement Premises (including reasonable attorneys’ fees), documentary transfer taxes, any title insurance premiums pursuant to Section 24.2(d) below and any and all recording and escrow fees.

 

24.2                        In connection with the transfer and conveyance of the Replacement Premises from Tenant to Landlord, the following provisions shall apply. Any capitalized terms used in this Section 24.2 and not otherwise defined herein shall have the meanings given such terms in that certain Purchase

 

23

 

and Sale Agreement between NHP and certain Affiliates of Tenant dated as of September 30, 2008 (the “Purchase Agreement”).

 

(a)                                 The closing of the transfer of the Replacement Premises from Tenant to Landlord shall be consummated through an escrow established with a national title company reasonably acceptable to Landlord (the “Title Company”).

 

(b)                                 Landlord’s obligation to accept the Replacement Premises pursuant to this Section 24 shall be conditioned upon (i) the satisfaction of those conditions precedent contained in Sections 5.1(a) and (b) of the Purchase Agreement, together with any additional commercially reasonable conditions precedent reasonably requested by Landlord, (ii) Tenant providing to Landlord, on or before the Substitution Closing Date, a certificate (in a form reasonably acceptable to Landlord) representing and warranting to Landlord that the representations and warranties contained in Sections 7.1(a) through (g) of the Purchase Agreement, together with any other commercially reasonable representations and warranties reasonably requested by Landlord, are accurate with respect to the Replacement Premises as of the Substitution Closing Date, and (iii) Landlord and Tenant delivering to Title Company any additional documents, information, or instruments reasonably necessary to accomplish the transfer of the Replacement Premises to Landlord and the transfer of the Option Premises to Tenant.

 

(c)                                  On a date mutually acceptable to Landlord and Tenant following the satisfaction of the conditions contained in Section 24.1 above (the “Substitution Closing Date”), Tenant shall convey, at no cost to Landlord, good and marketable title to the Replacement Premises pursuant to a deed in a form reasonably acceptable to Landlord. Tenant shall deliver said deed to the Title Company on the Business Day prior to the Substitution Closing Date.

 

(d)                                 Concurrently with the transfer and conveyance of the Replacement Premises to Landlord by Tenant, at Tenant’s sole cost and expense the Title Company shall be committed to issue an ALTA Extended Coverage Policy of Title Insurance in favor of Landlord with respect to the Replacement Premises showing only those exceptions approved in writing by Landlord, which approval shall not be unreasonably withheld, conditioned or delayed, and which exceptions shall include the lien of any then non-delinquent taxes and assessments.

 

(e)                                  There shall be no proration of income or expenses related to the Replacement Premises.

 

24.3                        In connection with the conveyance of the Option Premises from Landlord to Tenant, the following provisions shall apply:

 

(a)                                 The closing of the transfer of the Option Premises from Landlord to Tenant shall be consummated through an escrow established with the Title Company and shall occur concurrently with the transfer to Landlord of the Replacement Premises.

 

(b)                                 Landlord shall convey title to the Option Premises pursuant to the form of deed mutually acceptable to Landlord and Tenant and in an “as is” condition without representation or warranty, but free and clear of all liens except Permitted Exceptions. Landlord shall deliver said deed to the Title Company on the Business Day prior to the Substitution Closing Date.

 

(c)                                  There shall be no proration of income or expenses related to the Option Premises.

 

24

 

24.4                        Landlord and Tenant hereby acknowledge that either party may consummate the transfer of the Replacement Premises to Landlord and the Option Premises to Tenant as part of a so-called like kind exchange pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended, and each party agrees to cooperate with the other party to accomplish such an exchange, even if such an exchange may result in the Substitution Closing Date being delayed for up to thirty (30) days as a result of such an exchange. Notwithstanding the foregoing, the party desiring such an exchange shall pay any additional costs that would not otherwise have been incurred by Landlord or Tenant had such party not consummated the transfer through such an exchange. Neither party shall by this agreement or acquiescence to such an exchange desired by the other party (i) have its rights under this Section 24 affected or diminished in any manner except as otherwise agreed to herein or (ii) be responsible for compliance with or be deemed to have warranted to the other party that such party’s exchange in fact complies with section 1031 of the Internal Revenue Code of 1986, as amended.

 

24.5                        During the Term and subject to the limitations set forth herein, if one or more of the Facilities becomes uneconomical or unsuitable for continued use in Tenant’s business, Tenant may, with respect to not more than two (2) uneconomical Facilities, seek to terminate the Master Lease with respect to such uneconomical Facility or Facilities (such facility being herein called the “EAP”) in accordance with the conditions and limitations of this Section 24.5.

 

(a)                                 From time to time during the Term and provided no Event of Default has occurred and is continuing, if Tenant shall determine in good faith and deliver to Landlord a certificate signed by the president or chief financial officer of Tenant certifying that (i) continued use and occupancy by Tenant in Tenant’s business at such EAP is no longer consistent with either the business operation or business strategy of Tenant, and (ii) Tenant has determined to abandon the use at such EAP, then Tenant may give Landlord not less than ninety (90) calendar days prior written notice (the “EAP Notice”) that Tenant intends to arrange a sale of the EAP (“EAP Sale”) in accordance with the provisions of this Section 24.5.

 

(b)                                 In the case of an EAP Sale, Tenant must arrange the sale of the EAP on behalf of Landlord on terms and conditions reasonably acceptable to Landlord, which terms and conditions shall include, without limitation, the following: (i) a purchase price not less than the Replacement Value for such EAP, which purchase price shall be payable in immediately available funds at the closing of the EAP Sale, and (ii) the EAP Sale shall be on an “as is”, “where is”, “with all faults” basis without any representation or warranty whatsoever on the part of Landlord. As used herein, “Replacement Value” shall be an amount equal to the greater of: (1) the then Fair Market Value, as determined pursuant to Exhibit C, of the EAP, or (2) Landlord’s Investment in the EAP (minus any net award paid to Landlord for a taking pursuant to Section 18). Prior to the closing of the EAP Sale, Tenant shall deliver to Landlord a covenant and undertaking (“EAP Undertaking”) in a form reasonably acceptable to Landlord pursuant to which Tenant (w) represents and warrants that Tenant is permanently abandoning such EAP, (x) covenants to vacate such EAP prior to the closing of the EAP Sale, (y) covenants not to operate another radiation treatment center (or whatever the then permitted use of the EAP is at the time of the EAP Notice) within five (5) miles of such EAP for two (2) years from the date of the EAP Sale, and (z) acknowledges and agrees that a breach or violation of such EAP Undertaking shall be an immediate Event of Default under this Master Lease. Upon the sale of the EAP, this Master Lease shall be deemed terminated as to such EAP and Minimum Rent and Additional Rent due hereunder shall be reduced by the product of (1) the amount of the then current Minimum Rent and Additional Rent, and (2) a fraction, the numerator of which is the portion of Landlord’s Investment allocable to such EAP and the denominator of

 

25

 

which is Landlord’s Investment. If Landlord elects not to accept an EAP Sale and provided that Tenant has otherwise complied with all the provisions of this Section 24.5, the Master Lease with respect to such EAP shall be deemed terminated and Minimum Rent and Additional Rent due hereunder shall be reduced by the product of (A) the amount of the then current Minimum Rent and Additional Rent and (B) a fraction, the numerator of which is the portion of Landlord’s Investment allocable to such EAP and the denominator of which is Landlord’s Investment.

 

(c)                                          Notwithstanding anything else in this Master Lease to the contrary, during the Term, Tenant shall only be permitted to cause an EAP Sale or cause the termination of the Master Lease for up to two (2) Facilities.

 

(d)                                         Tenant shall pay all charges incident to any transaction pursuant to this Section 24.5, including Landlord’s attorneys’ fees and expenses together with all prepayment fees and expenses solely with respect to the applicable Facility, including attorneys’ fees and expenses due a mortgagee, arising out of such transaction.

 

25.                               Tax Treatment; Reporting. Landlord and Tenant each acknowledge that each shall treat this transaction as a true lease for state law purposes and shall report this transaction as a lease for Federal income tax purposes. For Federal income tax purposes each shall report this Master Lease as a true lease with Landlord as the owner of the Premises and Tenant as the lessee of such Premises including: (1) treating Landlord as the owner of the property eligible to claim depreciation deductions under Section 167 or 168 of the Internal Revenue Code of 1986 (the “Code”) with respect to the Premises, (2) Tenant reporting its Rent payments as rent expense under Section 162 of the Code, and (3) Landlord reporting the Rent payments as rental income. For the avoidance of doubt, nothing in this Master Lease shall be deemed to constitute a guaranty, warranty or representation by either Landlord or Tenant as to the actual treatment of this transaction for state law purposes and for federal income tax purposes.

 

[SIGNATURE PAGES FOLLOW]

 

26

 

IN WITNESS WHEREOF, this Master Lease has been executed by Landlord and Tenant as of the date first written above.

 

	
Signed, sealed and   delivered:
    	
 
    	
TENANT:
    
	
in the presence of:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
21st Century Oncology, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ [ILLEGIBLE]
    
	
Print Name:
    	
 
    	
Print Name:
    	
 
    
	
 
    	
 
    	
As Its:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Print Name:
    	
 
    	
 
    

 

27

 

	
Signed, sealed   and delivered:
    	
 
    	
LANDLORD:
    
	
in the presence   of:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Theriac   Enterprises of Pembroke Pines, LLC
    
	
 
    	
 
    	
 
    	
 
    	
a Florida   limited liability company
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
TEM, LLC
    
	
 
    	
 
    	
 
    	
 
    	
a Florida   limited liability company, its Manager
    
	
 
    	
 
    	
 
    	
 
    	
(FL Document #   L06000088324)
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
/s/ Daniel E. Dosoretz
    
	
Print Name:
    	
 
    	
 
    	
 
    	
Daniel E.   Dosoretz, Managing Member
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Print Name:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Theriac   Enterprises of —Pembroke Pines , LLC, a Florida limited liability company
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
TEM, LLC,
    
	
 
    	
 
    	
 
    	
 
    	
a Florida   limited liability
    
	
 
    	
 
    	
 
    	
 
    	
company, its Manager
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
/s/ Daniel E.   Dosoretz
    
	
Print Name:
    	
 
    	
 
    	
 
    	
Daniel E.   Dosoretz, Managing Member
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Print Name:
    	
 
    	
 
    	
 
    	
 
    

 

28

 

THE GUARANTOR IS MADE A PARTY HERETO SOLELY AS TO ITS ACKNOWLEDGMENTS AND OBLIGATIONS UNDER THE INTRODUCTORY PARAGRAPHS TO THIS MASTER LEASE:

 

	
Signed, sealed   and delivered:
    	
 
    	
GUARANTOR:   Radiation Therapy Services,
    
	
in the presence   of:
    	
 
    	
Inc.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ [ILLEGIBLE]
    
	
Print Name:
    	
 
    	
Print Name:
    	
 
    
	
 
    	
 
    	
As Its:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Print Name:
    	
 
    	
 
    	
 
    

 

29

 

EXHIBIT “A”

 

INTENTIONALLY OMITTED

 

30

 

EXHIBIT “B”

 

INTENTIONALLY OMITTED

 

31

 

EXHIBIT “C”

 

FAIR MARKET VALUE

 

“Fair Market Value” or “Fair Market Rent” means the fair market value (or fair market rent, as applicable) of the Premises or applicable portion thereof on a specified date as agreed to by the parties, or failing such agreement within ten (10) days of such date, as established pursuant the following appraisal process. Each party shall within ten (10) days after written demand by the other select one MAI Appraiser to participate in the determination of Fair Market Value or Fair Market Rent, as applicable. For all purposes under this Master Lease, the Fair Market Value shall be the fair market value of the Premises or applicable portion thereof unencumbered by this Master Lease. Within ten (10) days of such selection, the MAI Appraisers so selected by the parties shall select a third (3rd) MAI Appraiser. The three (3) selected MAI Appraisers shall each determine the Fair Market Value (or, as applicable, Fair Market Rent) of the Premises or applicable portion thereof within thirty (30) days of the selection of the third appraiser. To the extent consistent with sound appraisal practices as then existing at the time of any such appraisal, and if requested by Landlord, such appraisal shall be made on a basis consistent with the basis on which the Premises or applicable portion thereof were appraised at the time of their acquisition by Landlord. Tenant shall pay the fees and expenses of any MAI Appraiser retained pursuant to this Exhibit.

 

If either party fails to select a MAI Appraiser within the time period set forth in the foregoing paragraph, the MAI Appraiser selected by the other party shall alone determine the fair market value (or, as applicable, fair market rent) of the Premises or applicable portion thereof in accordance with the provisions of this Exhibit and the Fair Market Value (or Fair Market Rent) so determined shall be binding upon the parties. If the MAI Appraisers selected by the parties are unable to agree upon a third (3rd) MAI Appraiser within the time period set forth in the foregoing paragraph, either party shall have the right to apply at Tenant’s expense to the presiding judge of the court of original trial jurisdiction in the county in which the Premises or applicable portion thereof are located to name the third (3rd) MAI Appraiser.

 

Within five(5) days after completion of the third (3rd) MAI Appraiser’s appraisal, all three (3) MAI Appraisers shall meet and a majority of the MAI Appraisers shall attempt to determine the fair market value (or, as applicable, fair market rent) of the Premises or applicable portion thereof. If a majority are unable to determine the fair market value (or fair market rent) at such meeting, the three (3) appraisals shall be added together and their total divided by three (3). The resulting quotient shall be the Fair Market Value (or, as applicable, Fair Market Rent). If, however, either or both of the low appraisal or the high appraisal are more than ten percent (10%) lower or higher than the middle appraisal, any such lower or higher appraisal shall be disregarded. If only one (1) appraisal is disregarded, the remaining two (2) appraisals shall be added together and their total divided by two (2), and the resulting quotient shall be such Fair Market Value (or, as applicable, Fair Market Rent). If both the lower appraisal and higher appraisal are disregarded as provided herein, the middle appraisal shall be such Fair Market Value (or Fair Market Rent). In any event, the result of the foregoing appraisal process shall be final and binding.

 

“MAI Appraiser” shall mean an appraiser licensed or otherwise qualified to do business in the state(s) where the Premises or applicable portion thereof are located and who has substantial experience in performing appraisals of facilities similar to the Premises or applicable portion thereof and is certified as a member of the American Institute of Real Estate Appraisers or certified as a SRPA by the Society of Real Estate Appraisers, or, if such organizations no longer exist or certify appraisers, such successor organization or such other organization as is approved by Landlord.

 

32

 

EXHIBIT “D”

 

PERMITTED EXCEPTIONS

 

1.                                      The standard printed exceptions, conditions and exclusions from coverage contained in the standard coverage owner’s title policy then prevailing in use at the title company that consummates the sale transaction.

 

2.                                      Any matters which an accurate survey of the Premises may show.

 

3.                                      Real property taxes and assessments.

 

4.                                      Any matters shown as title exceptions in the ALTA Owner’s Policy of Title Insurance obtained by Landlord in connection with its acquisition of the Premises.

 

5.                                      Such other matters burdening the Premises which were created with the consent or knowledge of Tenant or arising out of Tenant’s acts or omissions.

 

33

 

EXHIBIT “E”

 

CERTAIN DEFINITIONS

 

For purposes of this Master Lease, the following terms and words shall have the specified meanings:

 

ENVIRONMENTAL DEFINITIONS

 

“Environmental Activities” shall mean the use, generation, transportation, handling, discharge, production, treatment, storage, release or disposal of any Hazardous Materials at any time to or from any portion of the Premises or located on or present on or under any portion of the Premises.

 

“Hazardous Materials” shall mean (a) any petroleum products and/or by-products (including any fraction thereof), flammable substances, explosives, radioactive materials, hazardous or toxic wastes, substances or materials, known carcinogens or any other materials, contaminants or pollutants as to which liability or standards of conduct are imposed under Hazardous Materials Laws, which pose a hazard to any portion of the Premises or to Persons on or about any portion of the Premises or cause any portion of the Premises to be in violation of any Hazardous Materials Laws; (b) asbestos in any form which is friable; (c) urea formaldehyde in foam insulation or any other form; (d) transformers or other equipment which contain dielectric fluid containing levels of polychlorinated biphenyls in excess of fifty (50) parts per million or any other more restrictive standard then prevailing; (e) medical wastes and biohazards; (f) radon gas; and (g) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any governmental authority because of its dangerous or deleterious properties or characteristics or would pose a hazard to the health and safety of the occupants of any portion of the Premises or the owners and/or occupants of property adjacent to or surrounding any portion of the Premises, including, without limitation, any materials or substances that are listed in the United States Department of Transportation Hazardous Materials Table (49 CFR 172.101) as amended from time to time.

 

“Hazardous Materials Claims” shall mean any and all enforcement, clean-up, removal or other governmental or regulatory actions, claims or orders threatened, completed or instituted pursuant to any Hazardous Material Laws, together with all claims made or threatened by any third party against any portion of the Premises, Landlord or Tenant relating to damage, contribution, cost recovery compensation, loss or injury resulting from any Hazardous Materials.

 

“Hazardous Materials Laws” shall mean any laws, ordinances, regulations, rules having the force and effect of law, or orders relating to the environment, health and safety, Environmental Activities, Hazardous Materials, air and water quality, waste disposal and other environmental matters.

 

OTHER DEFINITIONS

 

“Affiliate” shall mean with respect to any Person, any other Person which Controls, is Controlled by or is under common Control with the first Person.

 

“Business Day” shall mean each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which national banks in the City of New York, New York, or in the municipality wherein the Facility is located are closed.

 

“CC&R’s” shall mean covenants, conditions and restrictions or similar use, maintenance or ownership obligations encumbering or binding upon the real property comprising any Facility.

 

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“Control” shall mean, as applied to any Person, the possession, directly or indirectly, of the power to direct the management and policies of that Person, whether through ownership, voting control, by contract or otherwise.

 

“Consumer Price Index” or “CPI” shall mean the Consumer Price Index as now published by the U.S. Bureau of Labor Statistics under the caption: “United States City Average for Urban Wage Earners and Clerical Workers All Items,” or any revision or equivalent thereof hereafter published by that Bureau, or if there ceases to be any such publication, any substantially equivalent Price Index generally recognized as authoritative, designated by Landlord.

 

“Debt to Equity Ratio” shall mean the ratio of Total Liabilities to Net Worth.

 

“Medical Waste” shall mean all medical waste as defined by California Health and Safety Code §117690, as amended or supplemented. If a Situs State has a comparable statute that defines “medical waste”, Medical Waste for purposes of all Facilities in such Situs State shall have the meaning set forth in such statute.

 

“Landlord’s Investment” shall mean, as to any particular Facility, the amount shown for such Facility on Exhibit “G” hereof.

 

“Net Worth” means with respect to any Person, the amount by which such Person’s Total Assets exceeds Total Liabilities.

 

“Person” shall mean any individual, partnership, association, corporation, limited liability company or other entity.

 

“Total Assets” means all assets of a Person determined on a consolidated basis in accordance with generally accepted accounting principles.

 

“Total Liabilities” means all liabilities of a Person (excluding deferred tax liability) determined on a consolidated basis in accordance with generally accepted accounting principles.

 

35

 

EXHIBIT “F”

 

FINANCIAL, MANAGEMENT AND REGULATORY REPORTS

 

Tenant shall keep adequate records and books of account with respect to the finances and business of Tenant generally and with respect to the Premises, in accordance with generally accepted accounting principles (“GAAP”) consistently applied.

 

During the Term, Tenant shall deliver to Landlord, prior to one hundred twenty (120) days after the close of each fiscal year of Tenant, Guarantor or any Resulting Guarantor annual audited financial statements of Tenant, Guarantor or any Resulting Guarantor, commencing with the fiscal year including the date of commencement of the Term, certified by a nationally recognized firm of independent certified public accountants. In addition, Tenant shall also furnish to Landlord prior to sixty (60) days after the end of each of the three remaining quarters, unaudited financial statements and all other quarterly reports of Tenant, Guarantor or any Resulting Guarantor, certified by their respective chief financial officers, and all filings, if any, of Form 10-K, Form 10-Q and other required filings with the Securities and Exchange Commission pursuant to the provisions of the Securities Exchange Act of 1934, as amended, or any other law.

 

If, for whatever reason, the financial results of Tenant do not appear, or are not included, in the consolidated financial statements required to be provided to Landlord pursuant to the foregoing paragraph, then Tenant shall also deliver to Landlord Tenant’s financial statements meeting the same requirements and within the same timeframes as required for Holdings pursuant to the foregoing paragraph.

 

All financial statements shall be prepared in accordance with GAAP consistently applied. All annual financial statements shall be accompanied (i) by an opinion of the accounting firm preparing such statements stating that (A) there are no qualifications as to the scope of the audit and (B) the audit was performed in accordance with GAAP and (ii) by the affidavit of the president or a vice president (or officer, director or manager of a similar position) of Tenant, dated within five (5) days of the delivery of such statement, stating that (C) the affiant knows of no Event of Default, or event which, upon notice or the passage of time or both, would become an Event of Default which has occurred and is continuing hereunder or, if any such event has occurred and is continuing, specifying the nature and period of existence thereof and what action Tenant has taken or proposes to lake with respect thereto and (D) except as otherwise specified in such affidavit, that to affiant’s knowledge Tenant has fulfilled all of its obligations under this Master Lease which are required to be fulfilled on or prior to the date of such affidavit. All financial statements shall be sent via email to Landlord at jay@theriacenterprises.com or to such other email address which Landlord shall, in writing, direct.

 

On or before the date that is forty-five (45) days after the end of each calendar quarter, Tenant shall deliver to Landlord quarterly profit and loss reports concerning the Business at each Facility and the combined Facilities in this Master Lease. Such reports shall be in substantially the same form as delivered by Tenant to Landlord in connection with Landlord’s acquisition of the Premises and shall contain a level of detail reasonably satisfactory to Landlord. Such reports shall be sent via email to Landlord at jay@theriacenterprises.com or to such other email address which Landlord shall, in writing, direct.

 

Tenant shall furnish to Landlord within ten (10) days of receipt written notice of any of the following: (i) any material violation of any federal, state, or local licensing or reimbursement certification statute or regulation, including Medicare or Medicaid, (ii) any suspension, termination or restriction placed on Tenant or any portion of the Premises or the operation of any portion of the Business

 

36

 

which would have a material adverse effect on the operation of the Business at a Facility, and (iii) any material violation of any permit, approval or certification in connection with any portion of the Premises or any portion of the Business, by any federal, state, or local authority, including Medicare or Medicaid, if applicable.

 

Tenant shall, on or before the date that is sixty (60) days prior to the beginning of each fiscal year of Holdings, provide Landlord with an annual operating budget covering the operations of Holdings for the forthcoming fiscal year. If, for whatever reason, the operating budget of Holdings would not include and cover the operations of Tenant for the forthcoming fiscal year, then Tenant shall deliver to Landlord, within sixty (60) days after the beginning of Tenant’s fiscal year, an annual operating budget covering the operations of Tenant for such fiscal year.

 

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EXHIBIT “G”

 

LANDLORD’S INVESTMENT

 

	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Landlord’s
    	
 
    
	
#
    	
 
    	
Location
    	
 
    	
Street Address
    	
 
    	
State
    	
 
    	
Investment
    	
 
    
	
1
    	
 
    	
Pembroke Pines, FL (Pembroke)
    	
 
    	
12105 Pembroke Road, Unit 601; Pembroke Pines
    	
 
    	
FL
    	
 
    	
$
    	
2,460.553
    	
 
    
	
 
    	
 
    	
Total
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
											

 

38

 

EXHIBIT H

 

INTENTIONALLY OMITTED

 

39

 

SCHEDULE 1

 

Schedule of Rentable Square Footage

 

Radiation Therapy / Theriac Enterprises of Pembroke Pines, LLC

 

	
Site
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
No.
    	
 
    	
Location
    	
 
    	
Address
    	
 
    	
Owner/Landlord
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
1
    	
 
    	
Pembroke Pines, FL (Pembroke)
    	
 
    	
12105 Pembroke Road, Unit 601; Pembroke Pines
    	
 
    	
Theriac Enterprises of Pembroke Pines, LLC
    

 

40Exhibit 10.49

 

EXECUTED COPY

 

FACILITY AND MANAGEMENT SERVICES AGREEMENT

 

THIS FACILITY AND MANAGEMENT SERVICES AGREEMENT (the “Agreement”), dated as of January 2, 2015, is by and between Northwest Cancer Care Management Company, LLC a Washington limited liability company (“Manager”), and Northwest Cancer Care Associates, P.C. a Washington professional corporation (“Medical Group”). Manager and Medical Group are each individually referred to in this Agreement as a “Party” and, collectively, as the “Parties.”

 

RECITALS

 

A.                                    Medical Group is a provider of radiation oncology (the “Medical Specialty”) in Benton County, Washington.

 

B.                                    Manager operates and manages facilities used by licensed physicians to practice various professional medical services, including but not limited to the Medical Specialty.

 

C.                                    Medical Group wishes to engage Manager to provide it with certain office facilities, equipment, nonclinical and administrative personnel, supplies and administrative services at the office located at 7379 W. Deschutes Ave., Suite 100, Kennewick, Washington 99336 (the “Office”).

 

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises and covenants of the Parties hereinafter set forth, and for their mutual reliance, the Parties, intending to be legally bound, hereby agree as follows:

 

1.                                      Facilities, Equipment and Services to be Provided by Manager.

 

(a)                                 Office. Manager hereby grants an exclusive license to Medical Group to utilize the Office (the “Licensed Premises”) and Medical Group agrees to license such Office from Manager from Monday through Friday during the hours of 8:00 a.m. through 6:00 p.m. and such other hours as mutually agreed upon between the Parties during the Term of this Agreement. Manager shall make all arrangements for and pay all costs associated with the utilities necessary for the operation of the Licensed Premises, including, without limitation, electricity, water, gas, telephone, waste (office and medical, including radioactive medical waste) collection and removal, and janitorial services. In no event shall Manager permit any other parties to utilize the Licensed Premises and all common area portions of the Office that will be shared by the Medical Group and the Manager, such as all the lavatory facilities, the waiting rooms and reception area and the general office area for faxes and copies during the term of this Agreement. Manager and its employees and representatives shall have the right to enter the Licensed Premises at all reasonable times for the purposes of inspection, making repairs and for any other reasonable purpose.

 

(b)                                 Equipment. Manager hereby grants Medical Group an exclusive right to utilize such furniture, fixtures and equipment located in the Licensed Premises as are described on Exhibit A hereof (the “Equipment”) and Medical Group agrees to license the use of such Equipment from Manager. The Equipment provided hereunder shall, at all times, be and remain the property of Manager. Medical Group shall not remove the Equipment from the Licensed

 

 

Premises without the prior written consent of Manager. Manager shall maintain all Equipment in good repair, condition and working order, and shall furnish all parts and services for the Equipment reasonably required therefore including, without limitation, preventive and routine maintenance as necessary and appropriate, as determined by Manager, to maintain the Equipment in an acceptable state of repair and serviceability. The Parties agree and acknowledge that Medical Group shall be free to exercise its professional judgment with respect to the use of the Equipment.

 

(c)                                  General Management. Manager shall have authority and responsibility to manage, conduct and administer the day-to-day administrative and non-professional operations of the Medical Group’s Practice and shall perform those functions pursuant to the terms of this Agreement and consistent with applicable laws, rules and regulations and applicable standards of care for like entities. Nothing in this Agreement shall be construed as permitting the Manager to engage in the practice of medicine, and Medical Group shall have sole and exclusive authority over the professional operations of the Licensed Premises. The duties of Manager shall include, but not be limited to:

 

(i)                                               Supplies. Manager shall provide Medical Group with such office and medical supplies as are necessary for patient care and treatment and the operation of the Licensed Premises by Medical Group as reasonably determined by Medical Group in consultation with Manager.

 

(ii)                                            Billing and Collections. Manager shall provide billing and collection services on behalf of Medical Group.

 

(iii)                                         Scheduling. Manager shall maintain patient appointment scheduling services on behalf of Medical Group, which services shall include obtaining all appropriate pre-certification, demographic, insurance and related materials with respect to patients.

 

(iv)                                        Required Licenses and Regulatory Fees. Manager shall procure and maintain all necessary licenses and permits for the installation, use and operation of the Equipment (if necessary) and the Licensed Premises (other than the professional medical licenses of Medical Group and its Physicians (as such term is defined in section 3)), and shall pay all related licensing, inspection and regulatory fees.

 

(v)                                           Personnel.

 

(A)                               Manager shall provide, on behalf of Medical Group, all necessary non-professional support personnel (such support personnel are hereinafter referred to as “Leased Personnel”), receptionists, secretaries, clerks, management personnel and/or other personnel as necessary, as reasonably determined by the Manager upon consultation with Medical Group. Manager shall be responsible for recruiting, training, managing, supervising, compensating and terminating such personnel; provided, however, that Medical Group shall at all times have the ultimate authority and responsibility to supervise all such personnel to the extent they are engaged in the delivery of patient care services and shall participate in decisions of Manager with respect to the recruiting, training and terminating of all such personnel.

 

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Manager shall be responsible for all salaries, fringe benefits, taxes and insurance necessary with respect to all such personnel.

 

(B)                               Leased Personnel shall remain employees of Manager, and not employees of Medical Group. At such times as the Leased Personnel are providing services on Medical Group’s behalf, Medical Group shall have authority and responsibility for (i) the supervision and control of the Leased Personnel (while providing services on Medical Group’s behalf); (ii) determining the means and methods by which Leased Personnel provide services hereunder; and (iii) determining charges for the services of Leased Personnel.

 

(vi)                                              Contract Negotiations. Manager shall advise Medical Group with respect to and negotiate, on Medical Group’s behalf, all contractual arrangements with third parties as are reasonably necessary and appropriate; provided, however, that all such contractual arrangements shall be subject to final approval by Medical Group.

 

(vii)                                           Financial Reports. Manager shall prepare and submit to Medical Group periodic financial reports reflecting the financial status and operations of the Medical Group.

 

(d)                                 Prohibited Activities. Notwithstanding any other provision of this Agreement, Manager and Medical Group expressly acknowledge and agree that Manager is not being engaged by Medical Group to, nor at any time shall Manager:

 

(i)                                               engage in the practice of medicine (including but not limited to determining what diagnostic tests are appropriate for a particular condition, determining the need for referrals to or consultations with another physician/specialist (or the identity of the physician for such referral or consultation) determining patient treatment options, or determining what is included in a particular patient’s medical records);

 

(ii)                                            provide marketing services, directly or indirectly, to or on behalf of Medical Group;

 

(iii)                                         select, hire and/or fire (as it relates to clinical competency or proficiency) Physicians, allied health staff and medical assistants;

 

(iv)                                        set the parameters under which Medical Group will enter into contractual relationships with third-party payers;

 

(v)                                           make decisions regarding coding and billing procedures for patient care services;

 

(vi)                                        make decisions regarding the compensation of Medical Group’s Physicians; or

 

(vii)                                     determine how many patients a Physician must see during any given period of time or how many hours a Physician must work.

 

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Both Manager and Medical Group acknowledge and agree that by entering into this Agreement, Medical Group does not delegate to Manager any powers, duties or responsibilities which it is prohibited by law from delegating. Medical Group retains all authority not expressly delegated to Manager under this Agreement. Manager shall provide all services hereunder directly or, at Manager’s option, through one or more third parties engaged by Manager, provided, however, that any such delegation shall be on commercially reasonable terms and conditions. Medical Group acknowledges that certain of Manager’s services may be so delegated and may also be provided offsite.

 

2.                                      Term. The term of this Agreement shall commence as of the effective date of termination of that certain Interim Facility and Management Services Agreement between Manager and Northwest Cancer Clinic, LLC, dated January 2, 2015 (the “Effective Date”), and shall, unless terminated sooner as provided herein, continue for an initial term often (10) years after the Effective Date (the “Initial Term”). Thereafter, this Agreement shall automatically renew for up to two successive five-year renewal terms (each a “Renewal Term”, and together with the Initial Term, the “Term”), unless either party gives the other party a written notice of non-renewal at least ninety (90) days before the beginning of any renewal term.

 

3.                                      Responsibilities of Medical Group.

 

(a)                                 Provision of Professional Services. Medical Group, as an independent medical practice, shall be and remain fully responsible for all professional medical services provided at the Licensed Premises. In connection therewith, Medical Group shall provide all related physician support through its physician-employees and/or other physicians otherwise engaged by Medical Group (including physician-owned professional corporations) (“Physicians”).

 

(b)                                 Licensed Providers. Each Physician engaged by Medical Group to provide services at the Licensed Premises shall be duly licensed, without restriction, to practice medicine in the State of Washington, shall be board certified or board eligible in the Medical Specialty; shall maintain professional liability insurance in minimum amounts of $l,000,000.00/$3,000,000.00 annual aggregate; and shall have never been convicted of a criminal offense related to healthcare, or been listed by any federal or state healthcare program as excluded or otherwise ineligible to participate in such federal or state program.

 

(c)                                  Licenses and Permits. Medical Group and each Physician providing services on behalf of Medical Group shall have all necessary licenses, certificates, permits, approvals, franchises, notices and authorizations issued by governmental entities or other regulatory authorities, federal, state or local, required for the ownership and operation of Medical Group and the operation of its medical practice at the Licensed Premises.

 

(d)                                 Payor Requirements. Medical Group shall cause all services in the Medical Specialty performed at the Licensed Premises to be performed in accordance with all requirements of applicable third party payors, including Medicare, as necessary to obtain all available payments therefore, including providing necessary Physician supervision of all such services provided.

 

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(e)                                  Quality of Care. Medical Group shall regularly review the Medical Group’s quality assurance policies and procedures to verify that the Medical Group is continually providing services that are medical necessary and of appropriate quality. Medical Group shall promptly inform Manager of any deficiency in the Licensed Premise’s facilities, Equipment, supplies or provision of services by Manager’s personnel which, directly or indirectly, could adversely affect the rendition of services of high quality on a consistent basis.

 

(f)                                   Medical Records. During the term of this Agreement, all medical records with respect to Medical Group’s patients shall remain in the custody and control of Medical Group. Such records shall be stored at such location or locations as Medical Group shall direct. Upon any termination of this Agreement, Medical Group, at its own expense, shall remove such records from such location or locations, if such removal is required to enable Medical Group to satisfy its obligations as set forth in this Section 3(f). Notwithstanding the foregoing, at all times during the term of this Agreement and thereafter, Manager shall be provided with access to such records, as requested, for billing and all other reasonable purposes, subject to applicable law regarding confidentiality. Manager’s rights set forth in this Section 3(f) shall expressly survive any termination of this Agreement

 

4.                                      Manager Compensation.

 

(a)                                 Manager shall be paid, and Manager shall accept as payment for all facilities, Equipment, supplies, personnel and services provided to Medical Group hereunder, an amount equal to (i) $650,000.00 (the “Management Fee”). For purposes of this Agreement, “Net Collected Dollars” shall mean the gross collections attributable to radiation therapy services provided by Medical Group at the Licensed Premises during the term of this Agreement, net of refunds, adjustments and overpayments.

 

(b)                                 Following the expiration or other termination of this Agreement for any reason, Manager shall continue to be entitled to receive the Management Fee based on Net Collected Dollars attributable to radiation therapy services provided by the Medical Group at the Licensed Premises prior to the expiration or other termination of this Agreement but for which collections are actually received following such expiration or other termination of this Agreement.

 

(c)                                  The parties hereto have reviewed and evaluated the compensation to be paid by Medical Group to Manager for the facilities, Equipment, supplies, personnel and services hereunder and have determined it to be commercially reasonable, to be commensurate with fair market value and to not in any way be based upon the volume or value of patient referrals or any other business generated between the parties hereto or any of their affiliates.

 

5.                                      Billing and Collections.

 

(a)                                 Manager shall engage Financial Services of Southwest Florida, a Florida limited liability company (“FSS”) to provide billing and collection services on behalf of Medical Group pursuant to that certain Billing Services Agreement between Manager and FSS (the “Billing Services Agreement”).

 

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(b)                                 All Net Collected Dollars of Medical Group shall be deposited in a lockbox bank account in the name of Medical Group (the “Account”) with a bank (“Bank”) mutually agreed upon by the parties until termination or expiration of this Agreement. Manager shall remain a required signatory on the Account and shall be authorized to make payments from such account on behalf of the Medical Group, including without limitation, the Management Fee. Medical Group shall cause FSS to instruct all third party payors to deposit their payments directly into the Account. Medical Group shall provide the Bank standing instructions that at the end of each day all of the funds in the Account shall be swept into another account maintained by Manager at the Bank or by wire transfer to appropriate account(s) of Manager. Such letter of instruction shall not be altered, modified, changed or supplemented by the Medical Group absent Manager’s prior written agreement. Any such alteration, modification or change may be deemed by Manager as an event of default by the Medical Group under the terms of this Agreement. To the extent that any Net Collected Dollars are not sent directly to the Account as required by this Agreement, or are received by Medical Group, such collection shall be immediately remitted, in the form received, to the Account immediately upon receipt by Medical Group. This Section 5(b) shall expressly survive any termination or expiration of this Agreement.

 

(c)                                  The parties acknowledge that all collections of Medical Group shall be applied first to the expenses and obligations of Medical Group (excluding any amounts due and owing to Manager or FSS) as stated in Medical Group’s annual budget (which budget shall be subject to the approval of Manager), and then applied to any amounts due and owing to Manager hereunder or due FSS pursuant to the Billing Services Agreement, until such amounts are paid in full. On or before the 15th day after each month, Manager shall remit the remaining balance in the Account to Medical Group.

 

(d)                                 So long as any Management Fee or Billing Services Fee or any other liabilities or obligations of the Medical Group under this Agreement remain unpaid, Manager shall, to the extent authorized by law, have a continuing first priority security interest in all of the accounts receivable of the Medical Group, whether now existing or hereinafter arising, and all replacements of, and substitutions to, proceeds and products of any of the foregoing The Medical Group shall promptly execute and deliver any and all further instruments and documents, and take all further action that Manager may request, in order to perfect any security interest granted or purported to be granted by the Medical Group hereunder. Without limiting the generality of the foregoing, the Medical Group shall execute and file such financing or continuation statements, or amendments thereto, and such other similar instruments or notices as may reasonably be deemed necessary or desirable by Manager, or as Manager may otherwise reasonably request, in order to perfect and preserve the security interests granted to Manager hereunder. The Medical Group shall promptly provide Manager with evidence of such filings upon receipt. In addition, Manager shall have the right, in its sole and absolute discretion, to assign, pledge or subordinate the security interests granted to Manager hereunder. The parties acknowledge and agree that this Section 5(d) does not constitute an assignment by the Medical Group of its Medicare/Medicaid receivables in violation of the Social Security Act, and the Medical Group is not required to have its Medicare/Medicaid funds be paid directly to Manager.

 

6.                                      Disclaimer. MEDICAL GROUP ACKNOWLEDGES THAT MANAGER IS NOT THE MANUFACTURER OF THE EQUIPMENT, THE MANUFACTURER’S AGENT, OR THE DEVELOPER, ARCHITECT, OR OWNER OF THE PREMISES UPON WHICH

 

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THE OFFICE IS LOCATED. ACCORDINGLY, MEDICAL GROUP HEREBY AGREES TO TAKE THE EQUIPMENT IN AN “AS IS” CONDITION. MANAGER HEREBY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER RELATING TO THE OFFICE OR THE EQUIPMENT, INCLUDING WITHOUT LIMITATION, THE DESIGN OR CONDITION OF THE OFFICE, THE EQUIPMENT’S MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, DESIGN, CONDITION, QUALITY, CAPACITY, MATERIAL OR WORKMANSHIP, OR AS TO PATENT INFRINGEMENT OR THE LIKE.

 

7.                                      Representations of Medical Group. Medical Group hereby makes the following representations, warranties and covenants to Manager, each of which shall be true as of the date hereof and shall continue to be true during the term of this Agreement:

 

(a)                                 Duly Authorized. This Agreement has been duly authorized, executed and delivered by Medical Group and is binding upon Medical Group.

 

(b)                                 Duly Organized. Medical Group is duly organized under the laws of the State of Washington and is authorized and qualified to do all things required of it under this Agreement.

 

(c)                                  Capacity to Contract. Medical Group has the capacity and authority to fulfill the obligations required of it hereunder and nothing prohibits or restricts the right or ability of Medical Group to carry out the terms hereof.

 

(d)                                 Violations of Law. Neither Medical Group nor any agreement, document or instrument executed or to be executed by it in connection with this Agreement, or anything provided in or contemplated by this Agreement, does or will violate any applicable law, rule or regulation or breach, invalidate, cancel, make inoperative or interfere with, or result in acceleration of maturity of, any contract or agreement to which Medical Group is bound which would affect Manager’s rights hereunder.

 

8.                                      Manager’s Representations. Manager hereby makes the following representations, warranties, and covenants to Medical Group, each of which shall be true as of the date hereof and shall continue to be true during the term of this Agreement:

 

(a)                                 Duly Authorized. This Agreement has been duly authorized, executed and delivered by Manager and is binding upon Manager.

 

(b)                                 Duly Organized. Manager is duly organized under the laws of the State of Washington and is duly authorized and qualified to do all things required of it under this Agreement.

 

(c)                                  Capacity to Contract. Manager has the capacity and authority to fulfill the obligations required of it hereunder and, to the best of Manager’s knowledge and belief, nothing prohibits or restricts the right or ability of Manager to carry out the terms hereof.

 

(d)                                 Violations of Law. Neither Manager nor any agreement, document or instrument executed or to be executed in connection with this Agreement, or anything provided

 

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in or contemplated by this Agreement, does or will, to the best of Manager’s knowledge and belief, violate any applicable law, rule or regulation or breach, invalidate, cancel, make inoperative or interfere with, or result in acceleration of maturity of, any contract or agreement to which Manager is bound which would affect the rights of Medical Group hereunder.

 

(e)                                  Title to Office and Premises. Manager is the lessee of the Office and has the right to authorize the use of the Licensed Premises and the Office by Medical Group during the term of this Agreement pursuant to the written consent of the lessor which consent has been obtained by the Manager.

 

9.                                      Independent Contractor.

 

(a)                                 This Agreement is by and between Manager and Medical Group and is not intended, and shall not be construed, to create an employment relationship, partnership or other such association as between the Parties. Manager is independent and separate from the Medical Group.

 

(b)                                 Neither Manager nor its employees or agents shall look to Medical Group for vacation pay, sick leave, retirement benefits, Social Security, worker’s compensation, disability or unemployment insurance benefits, or other employee benefits; nor shall Medical Group or its employees look to Manager for the same.

 

(c)                                  In performing the services required hereunder, Medical Group and its Physician employees and contractors shall exercise independent professional judgment. Manager shall not exercise any control over matters of Medical Group involving the exercise of professional medical judgment.

 

(d)                                 In the event the Internal Revenue Service or any other governmental agency shall, at any time, question or challenge the independence of either Party, the Party who received notice of same shall promptly notify the other Party and afford the other Party the opportunity to participate in any discussion or negotiation with the Internal Revenue Service or other governmental agency, irrespective of by whom such discussions or negotiations are initiated. The other Party shall participate in any such discussions or negotiations to the extent permitted by the Internal Revenue Service or other governmental agency.

 

10.                               Default by Medical Group.

 

(a)                                 The occurrence of any one of the following shall constitute a default by Medical Group hereunder:

 

(i)                                     if Medical Group fails to pay the Management Fees when due;

 

(ii)                                  if Medical Group fails to observe or perform any of its other material obligations hereunder in any material respect and such failure continues uncured for a period of thirty (30) days after written notice thereof to Medical Group from Manager or, if such failure cannot be cured within such thirty (30) day period, Medical Group has failed to commence to cure such failure within such thirty (30) day period and diligently proceed to effect such cure;

 

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(iii)                               if Medical Group (A) ceases to provide or arrange to be provided services in the Medical Specialty at the Licensed Premises; (B) makes an assignment for the benefit of creditors; (C) admits in writing its inability to pay its debts as they become due; (D) files a petition seeking reorganization, an arrangement, readjustment, or similar arrangement under any present or future statute, law or regulation; (E) files an answer admitting the material allegations of a petition filed against it in any such proceeding; or (F) consents to or acquiesces in the appointment of a trustee, receiver or liquidator of all or any substantial part of its assets or properties;

 

(iv)                              if, within sixty (60) days after the commencement of any proceedings against Medical Group seeking reorganization or similar relief under any present or future statute, law or regulation, such proceedings shall have not been dismissed, or if within sixty (60) days after the appointment (without Medical Group’s consent or acquiescence) of any trustee, receiver or liquidator of all or any substantial part of its assets or properties, such appointment shall not have been vacated;

 

(v)                                 if Medical Group or any of its physician employees is finally determined, by an appropriate governing body or court, to have violated any applicable law, rule, regulation or ethical standard arising out of the conduct of the practice of medicine;

 

(vi)                              if Medical Group or any of its physician employees is suspended, excluded, debarred or otherwise ineligible to participate in any federal or state health program, including, but not limited to, the Medicare or Medicaid programs; or

 

(vii)                           if Medical Group or any of its physician employees is arrested for a felony or a misdemeanor involving moral turpitude, or has violated any rule, law, or administrative regulation (other than traffic violations or similar minor misdemeanors) that in Manager’s reasonable opinion impacts the Medical Group’s ability to provide services to patients or otherwise perform its obligations hereunder.

 

(b)                                 Upon a default by Medical Group which has not been cured within an applicable cure period, Manager shall have the right to immediately terminate this Agreement.

 

11.                               Default by Manager.

 

(a)                                 The occurrence of any one of the following shall constitute a default by Manager hereunder.

 

(i)                                     if Manager fails to observe or perform any of its material obligations hereunder in any material respect and such failure continues uncured for a period of thirty (30) days after written notice thereof to Manager from Medical Group or, if such failure cannot be cured within such thirty (30) day period, Manager has failed to commence to cure such failure within such thirty (30) day period and diligently proceed to effect such cure;

 

(ii)                                  if Manager: (A) makes an assignment for the benefit of creditors; (B) admits in writing its inability to pay its debt as they become due; (C) files a petition seeking reorganization and arrangement, readjustment or similar arrangement under the present or future statute, law or regulation, if any present or future; (D) files an answer admitting the material

 

9

 

allegations of a petition filed against it and any such proceeding; or (E) consents to or acquiesces in the appointment of a trustee, receiver, or liquidator of all or any part of its assets or properties; or

 

(iii)                               if, within sixty (60) days after the commencement of any proceedings against Manager seeking reorganization or similar relief under any present or future statute, law or regulation, such proceedings shall have not been dismissed, or if within sixty (60) days after the appointment (without Manager’s consent or acquiescence) of any trustee, receiver or liquidator of all or any substantial part of its assets or properties, such appointment shall not have been vacated.

 

(b)                                 Upon a default by Manager which has not been cured within an applicable cure period, Medical Group shall have the right to immediately terminate this Agreement.

 

12.                               Termination.

 

(a)                                 This Agreement shall terminate upon the following events:

 

(i)                                     the mutual written agreement of the Parties;

 

(ii)                                  as provided in Section 2; or

 

(iii)                               as provided in Sections 10 and/or 11.

 

(b)                                 If this Agreement is terminated prior to the first anniversary of the Effective Date, then the parties will not enter into a successor agreement addressing the same or substantially the same subject matter until after the first anniversary of the Effective Date.

 

13.                               Default In Other Instances. In addition to and not in limitation of any of the other provision of this Agreement, any failure on the part of Manager or Medical Group to undertake any of their respective material obligations under this Agreement or any agreement made or entered into in connection with this Agreement shall constitute an event of default under this Agreement. Upon the occurrence of an event of default, the non-defaulting Party shall have all remedies available at law and equity.

 

14.                               Regulatory Matters.

 

(a)                                 In the performance of their respective obligations hereunder, Medical Group and Manager shall comply with all applicable regulations and laws (including, without limitation, applicable zoning regulations and rules and regulations governing the practice of medicine) and do everything in their power to see to it that the Office and the business conducted therein are in compliance with the rules and regulations of all regulatory bodies, agencies or authorities having jurisdiction over the Office and such business.

 

(b)                                 The Parties acknowledge and agree that the amounts due to Manager from Medical Group pursuant to this Agreement have been determined by the Parties through good faith and arm’s length bargaining to be commercially reasonable, to reflect fair market value and to not in any way be based upon the volume or value of patient referrals or any other business

 

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generated between the Parties. Manager and Medical Group enter into this Agreement with the intent of conducting their relationship and implementing the agreements contained in this Agreement in full compliance with applicable federal, state and local law, including without limitation, the Medicare/Medicaid Anti-Kickback statute (the “Anti-Kickback Law”) and Section 1877 of the Social Security Act (the “Stark Law”), as amended. Notwithstanding any unanticipated effect of any of the provisions of this Agreement, neither Party will intentionally conduct itself under the terms of this Agreement in a manner that would constitute a violation of the Anti-Kickback Law or the Stark Law or any similar Washington law, rule or regulation. Without limiting the generality of the foregoing, Manager and Medical Group expressly agree that nothing contained in this Agreement shall require either Party to refer any patients to the other, or to any affiliate or subsidiary of the other.

 

(c)                                  In the event that any law, rule, or regulation applicable to this Agreement or any rule or policy of any third-party payor, or any policy, or any interpretation thereof at any time during the term of this Agreement is modified, implemented, threatened to be implemented, or determined to prohibit, restrict or in any way materially change the terms of this Agreement, or by virtue of the existence of this Agreement has or will have a material adverse effect on either Party or their respective affiliates or on the ability of either Party to engage in any commercial activity on terms at least as favorable to that Party as those reasonably attributable as of the date hereof (each of the foregoing being referred to herein as a ‘‘Change”), then the Parties to this Agreement shall negotiate in good faith to amend this Agreement to the minimum degree necessary in a manner consistent with such change and the intent of the Parties. If the Parties are unable to reach agreement as to any such amendment reasonably necessary to remove the jeopardy contemplated herein, within sixty (60) days, this Agreement shall thereafter automatically terminate.

 

(d)                                 Medical Group agrees to comply with the requirements of the Federal Health Insurance Portability and Accountability Act of 1996, Pub. L. No. 104-191, the Health Information Technology for Economic and Clinical Health Act, Title XIII of the American Recovery and Reinvestment Act of 2009 (collectively, “HIPAA”), including but not limited to the implementation of appropriate administrative, technical and physical safeguards as required by to limit incidental disclosures of PHI (as such term is defined below), and Manager agrees to meet all requirements and obligations contained in the Business Associate Agreement attached hereto as Exhibit B and incorporated herein by reference. For purposes of this Section 14, “protected health information”, or PHI, has the meaning defined by the Standards for Privacy of Individually Identifiable Health Information, 45 C.F.R. Part 160 and Subparts A and E of Part 164 (the “Privacy Standards”), as promulgated by the Department of Health and Human Services pursuant to the Administrative Simplification provisions of the HIPAA.

 

(e)                                  Upon written request, the Parties shall make available for a period of four (4) years after the furnishing of services under this Agreement to the Secretary of the U.S. Department of Health and Human Services, or any of its duly authorized representatives, this Agreement and any of the Parties’ books, documents, and records that are necessary to certify the nature and extent of costs incurred pursuant to this Agreement and which are required to be made available under the Omnibus Reconciliation Act of 1980, Public Law 96-499, Section 952, or any regulation promulgated thereunder. Further, if Manager carries out any of its duties under this Agreement through a subcontract or assignment with a value or cost of $10,000.00 or more

 

11

 

over a twelve (12) month period, such contract shall contain a clause to the effect that the contracting organization shall furnish its books, documents, and records upon request as described to verify the nature and extent of costs.

 

15.                               Miscellaneous.

 

(a)                                 Notices. Any notice or other communication required or which may be given hereunder shall be in writing and shall be delivered personally, sent by certified mail, postage prepaid, return receipt requested or by a nationally recognized overnight courier, and shall be deemed given when so delivered personally or by facsimile, or if mailed, five (5) days after the date of mailing as follows:

 

	
Manager:
    	
 
    	
Northwest Cancer Care Management Company, LLC
    
	
 
    	
 
    	
2270 Colonial Boulevard
    
	
 
    	
 
    	
Ft. Myers, FL 33907
    
	
 
    	
 
    	
Attention: Vice President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
With copy to:
    	
 
    	
21st Century   Oncology, Inc.
    
	
 
    	
 
    	
2270 Colonial Boulevard
    
	
 
    	
 
    	
Ft. Myers, FL 33907
    
	
 
    	
 
    	
Attention: Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Medical Group:
    	
 
    	
Northwest Cancer Care Associates, P.C.
    
	
 
    	
 
    	
2270 Colonial Boulevard
    
	
 
    	
 
    	
Ft. Myers, FL 33907
    
	
 
    	
 
    	
Attention: Vice President
    

 

or to such other address and to the attention of such other person(s) or officer(s) as either Party may designate by written notice.

 

(b)                                 Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Washington without regard to its conflicts of law principles.

 

(c)                                  Further Instruments. At any time and from time to time, each Party shall, without further consideration and at its own expense, take such further actions and execute and deliver such further instruments as may be reasonably necessary to effectuate the purposes of this Agreement.

 

(d)                                 Entire Agreement. This Agreement contains the entire understanding between the Parties with respect to the transactions contemplated hereby and supersedes all prior agreements between them, written or oral.

 

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(e)                                  Severability. In the event that any term or provision of this Agreement is held to be illegal, invalid or unenforceable under any applicable law, rule or regulation, such term or provision shall be deemed severed from this Agreement and the remaining terms and provisions shall remain unaffected thereby provided the invalid term does not materially alter the basic purpose or intent of this Agreement.

 

(f)                                   Assignment. Nothing in this Agreement shall permit assignment by Medical Group without the express prior written consent of Manager. Manager shall have the right, without the consent of Medical Group, to assign to its affiliates or subsidiaries all or any portion of its rights, duties and obligations under this Agreement.

 

(g)                                  Waiver of Breach. No waiver of a breach of any provision of this Agreement shall be construed to be a waiver of any breach of any other provision of this Agreement or of any succeeding breach.

 

(h)                                 Amendments. This Agreement shall not be changed or modified except by an instrument in writing executed by both Parties. Without limiting any other provision herein, in the event that rules, policies, directives and/or orders of the United States Department of Health and Human Services or any other applicable federal, state, or local agency or third-party payor necessitate modifications or amendments to this Agreement, the Parties agree to so modify or amend this Agreement to conform with such rules, policies, directive and/or orders, provided they do not materially affect the duties and obligations of the Parties hereunder.

 

(i)                                     Counterparts. This Agreement may be executed in counterparts, each of which shall be considered an original and all of which together shall constitute one and the same instrument.

 

[Remainder of Page Intentionally Left Bank]

 

13

 

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.

 

	
 
    	
NORTHWEST   CANCER CARE
    
	
 
    	
MANAGEMENT   COMPANY, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Sheila   Rege
    
	
 
    	
 
    	
Name: Sheila   Rege MD
    
	
 
    	
 
    	
Title: Member
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
NORTHWEST   CANCER CARE
    
	
 
    	
ASSOCIATES,   P.C.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ [ILLEGIBLE]
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

[SIGNATURE PAGE TO FACILITY AND MANAGEMENT SERVICES AGREEMENT- NWCCA]

 

14

 

EXHIBIT “A”

 

	
Medical Equipment
    
	
Varian TrueBeam   Linac (2012), Serial No. 1189
    
	
Varian HDR   VariSource iX Afterloader (2012), Serial No. CA-1080-D-103-S
    
	
Varian   Aria/Eclipse Software
    
	
GE Optima CT580   RT8 CT Scanner, Serial No. 0001773065
    
	
Daily QA -   BeamCheck Plus
    
	
CT Scanner LAP   Lasers
    
	
Optical Scope -   Olympus
    
	
Dual Diode   Dosimeter
    
	
Ion Chamber
    
	
Physics   Equipment - Sun Nuclear
    
	
Carbon fiber   overlay, breastboard
    
	
Waterbath
    
	
Type S Extension   - Varian
    
	
Aquapan
    
	
CNMC Area   Monitor
    
	
Physics   Equipment - CNMC
    
	
MAP Phantom MC2
    
	
Plastic Water   set for Physics Testing
    
	
Buildup SCN   Radonc Imaging QA Kit
    
	
CT View Window
    
	
 
    
	
Furniture & Fixtures
    
	
Sharp   Televisions
    
	
Waiting   Room/Office Furniture
    
	
Doctor Desk
    
	
Guest   Chairs/Filing Cabinets/Etc.
    
	
Lockers
    
	
Conference Table   and accessories
    
	
Exam room tables
    
	
20 Office Chairs
    
	
Table Lamps
    
	
Furniture for   Clinic
    
	
Wireless   Microphone
    
	
Amplifier
    
	
Stacking Chairs
    
	
Vanity in   bathroom
    
	
Mobile lectern   cherry
    
	
Desk, chairs for   Dr. Hong’s Office
    
	
Dishwasher &   Fridge
    
	
Sharp TV for   Display Niche
    
	
2 office desks   and conference table (2014)
    
	
4 monitors front   office area (2014)
    
	
 
    
	
IT Software/Hardware
    
	
Hard Drives for   NAS Synology
    
	
Synology NAS
    
	
Dell Backup   Server
    
	
Barracuda   Spam & Virus Firewall
    
	
Firewall/Router
    
	
3 monitors for   office
    
	
Fender Passport   150 Portable PA System
    
	
Computer   Monitors
    
	
Tripplite   Battery Backup System
    
	
Rockwalla   Computer Equipment
    

 

 

	
Lenova   Workstations
    
	
Telephone   Equipment
    
	
Fujitsu Scanners
    
	
Copier/Printer
    
	
EMC Equipment
    
	
Servers &   Rack
    
	
Switches,   servers, rack, EMC
    
	
Toshiba phone   system
    
	
Medical   Transcription Software
    
	
Switch,   Exchange, Server Software
    
	
New scanner for   reception area
    
	
Dell sonicwall   router
    
	
Lenovo   workstation at front desk
    

 

 

EXHIBIT “B”

 

BUSINESS ASSOCIATE AGREEMENT

 

See Attached.

 

 

EXECUTED COPY

 

HIPAA BUSINESS ASSOCIATE AGREEMENT

 

This Business Associate Agreement, dated as of January 2, 2015 (“BA Agreement”), supplements and is made a part of the Services Agreement (as defined below) by and between Northwest Cancer Care Management Company, LLC a Washington limited liability company (“Business Associate”), and Northwest Cancer Care Associates, P.C., a Washington professional corporation (“Covered Entity”).

 

WHEREAS, Covered Entity and Business Associate are parties to the Services Agreement pursuant to which Business Associate provides certain services to Covered Entity. In connection with Business Associate’s services, Business Associate creates, receives, maintains or transmits Protected Health Information from or on behalf of Covered Entity, which information is subject to protection under the federal Health Insurance Portability and Accountability Act of 1996, Pub. L. No. 104-191 (“HIPAA”), the Health Information Technology for Economic and Clinical Health Act, Title XIII of the American Recovery and Reinvestment Act of 2009 (the “HITECH Act”), and related regulations promulgated by the Secretary (“HIPAA Regulations”).

 

WHEREAS, in light of the foregoing and the requirements of HIPAA, the HITECH Act, and HIPAA Regulations, Business Associate and Covered Entity agree to be bound by the following terms and conditions.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

 

1.                                      Definitions.

 

a.                                      General. Terms used, but not otherwise defined, in this BA Agreement shall have the same meaning given to those terms by HIPAA, the HITECH Act and HIPAA Regulations as in effect or as amended from time to time.

 

b.                                      Specific.

 

i.                                          Breach. “Breach” shall have the same meaning as the term “breach” in the HITECH Act, Section 13400(1), and the HIPAA Regulations.

 

ii.                                       Electronic Protected Health Information. “Electronic Protected Health Information” shall have the same meaning as the term “electronic protected health information” in 45 CFR § 160.103, limited to the information that Business Associate creates, receives, maintains, or transmits from or on behalf of Covered Entity.

 

iii.                                    Individual. “Individual” shall have the same meaning as the term “individual” in 45 CFR § 160.103 and shall include a person who qualifies as a personal representative in accordance with 45 CFR § 164.502(g).

 

iv.                                   Privacy Rule. “Privacy Rule” shall mean the Standards for Privacy of Individually Identifiable Health Information at 45 CFR Part 160 and Part 164.

 

 

v.                                      Protected Health Information. “Protected Health Information” shall have the same meaning as the term “protected health information” in 45 CFR § 160.103, limited to the information created, received, maintained or transmitted by Business Associate from or on behalf of Covered Entity.

 

vi.                                   Required By Law. “Required by Law” shall have the same meaning as the term “required by law” in 45 CFR § 164.103.

 

vii.                                Secretary. “Secretary” shall mean the Secretary of the Department of Health and Human Services or his designee.

 

viii.                             Security Incident. “Security Incident” shall have the same meaning as the term “security incident” in 45 CFR § 164.304, and includes attempted or successful unauthorized access to, or interference with, system operations in an information system.

 

ix.                                   Security Rule. “Security Rule” shall mean the Security Standards at 45 Part 160 and Part 164.

 

x.                                      Services Agreement. “Services Agreement” shall mean any present or future agreements, either written or oral, between Covered Entity and Business Associate under which Business Associate provides services to Covered Entity which involve the use or disclosure of Protected Health Information. The Services Agreement is amended by and incorporates the terms of this BA Agreement.

 

xi.                                   Unsecured Protected Health Information. “Unsecured Protected Health Information” shall have the same meaning as the term “unsecured protected health information” in the HITECH Act, Section 13402(h)(l), and the HIPAA Regulations.

 

2.                                      Obligations and Activities of Business Associate.

 

a.                                      Use and Disclosure. Business Associate agrees not to use or disclose Protected Health Information other than as permitted or required by the Services Agreement, this BA Agreement or as Required By Law. Business Associate shall comply with the provisions of this BA Agreement relating to privacy and security of Protected Health Information and all present and future provisions of HIPAA, the HITECH Act and HIPAA Regulations that relate to the privacy and security of Protected Health Information and that are applicable to Covered Entity and/or Business Associate. To the extent Business Associate is to carry out any of Covered Entity’s obligations under the Privacy Rule, Business Associate shall comply with the requirements of the Privacy Rule that apply to Covered Entity in the performance of such obligation.

 

b.                                      Appropriate Safeguards. Business Associate agrees to use appropriate safeguards, and comply with the Security Rule with respect to Electronic Protected Health Information, to prevent the use or disclosure of the Protected Health Information other than as provided for by this BA Agreement. Without limiting the generality of the foregoing sentence, Business Associate will:

 

2

 

i.                                          Implement administrative, physical, and technical safeguards that appropriately protect the confidentiality, integrity and availability of Electronic Protected Health Information as required by the Security Rule;

 

ii.                                       Ensure that any agent or subcontractor to whom Business Associate provides Electronic Protected Health Information agrees to implement appropriate safeguards to protect Electronic Protected Health Information; and

 

iii.                                    Promptly report to Covered Entity any Security Incident of which Business Associate becomes aware. Specifically, Business Associate shall notify Covered Entity within thirty (30) calendar days of any successful Security Incident or pattern of attempted Security Incidents, with periodic aggregated reporting of other attempted Security Incidents. In addition, Business Associate agrees to notify Covered Entity without unreasonable delay, but in no event more than thirty (30) calendar days, following the discovery of a Breach of Unsecured Protected Health Information. A Breach is considered “discovered” as of the first day on which the Breach is known, or by exercising reasonable diligence would have been known, to Business Associate or any employee, officer or agent of Business Associate, other than the individual committing the Breach. Any notice to Covered Entity of a successful Security Incident or Breach of Unsecured Protected Health Information shall include the identification of each Individual whose Protected Health Information has been, or is reasonably believed by Business Associate to have been, accessed, acquired, used, or disclosed as a result of such Security Incident or Breach as well as any other relevant information regarding the Security Incident or Breach, including the applicable elements listed at 45 CFR § 164.404(c).

 

c.                                       Reporting. Business Associate agrees to report to Covered Entity within three (3) business days of any use or disclosure of Protected Health Information not permitted by this BA Agreement of which Business Associate becomes aware.

 

d.                                      Mitigation. Business Associate agrees to mitigate, to the extent practicable, any harmful effect that is known to Business Associate of a use or disclosure of Protected Health Information by Business Associate or its employees, officers, agents or subcontractors in violation of the requirements of this BA Agreement (including, without limitation, any Security Incident or Breach of Unsecured Protected Health Information). Business Associate agrees to reasonably cooperate and coordinate with Covered Entity in the investigation of any violation of the requirements of this BA Agreement and/or any Security Incident or Breach. Business Associate shall also reasonably cooperate and coordinate with Covered Entity in the preparation of any reports or notices to Individuals, regulatory bodies or any third parties as required under HIPAA, HIPAA Regulations, the HITECH Act, or any other Federal or State laws, rules or regulations, provided that any such reports or notices shall be subject to the prior written approval of Covered Entity.

 

e.                                       Agents and Subcontractors. Business Associate shall ensure that any agents and subcontractors that create, receive, maintain or transmit Protected Health Information on behalf of Business Associate agree to comply with the same restrictions, conditions and requirements that apply through this BA Agreement or otherwise to Business Associate with respect to such information. Business Associate shall enter into written agreements with any subcontractors, and the terms of such agreements shall incorporate the applicable requirements of, and otherwise

 

3

 

comply with, HIPAA, the HITECH Act, the HIPAA Regulations, and this BA Agreement, including but not limited to Section 2(b)(ii).

 

f.                                        Access to Designated Record Sets. To the extent that Business Associate possesses or maintains Protected Health Information in a Designated Record Set, Business Associate agrees to provide access, at the request of Covered Entity, and in the time and manner designated by the Covered Entity, to Protected Health Information in a Designated Record Set, to Covered Entity or, as directed by Covered Entity, to an Individual in order to meet the requirements under HIPAA Regulations. If an Individual makes a request for access to Protected Health Information directly to Business Associate, Business Associate shall notify Covered Entity of the request within three (3) business days of such request and will cooperate with Covered Entity and allow Covered Entity to respond to the Individual.

 

g.                                       Amendments to Designated Record Sets. To the extent that Business Associate possesses or maintains Protected Health Information in a Designated Record Set, Business Associate agrees to make any amendment(s) to Protected Health Information in a Designated Record Set as directed or agreed to by Covered Entity, or take other measures as necessary to satisfy Covered Entity’s obligations pursuant to HIPAA Regulations at the request of Covered Entity, and in the time and manner designated by the Covered Entity. If an Individual makes a request for an amendment to Protected Health Information directly to Business Associate, Business Associate shall notify Covered Entity of the request within three (3) business days of such request and will cooperate with Covered Entity and allow Covered Entity to respond to the Individual.

 

h.                                      Access to Books and Records. Business Associate agrees to make its internal practices, books, and records relating to the use and disclosure of Protected Health Information received from, or created or received by Business Associate on behalf of, Covered Entity available to the Covered Entity, or to the Secretary, in a time and manner designated by the Covered Entity or designated by the Secretary, for purposes of the Secretary determining compliance with the HIPAA Regulations.

 

i.                                          Accountings. Business Associate agrees to document such disclosures of Protected Health Information and maintain information related to such disclosures as would be required for Covered Entity to respond to a request by an Individual for an accounting of disclosures of Protected Health Information in accordance with HIPAA, HIPAA Regulations and the HITECH Act.

 

j.                                         Requests for Accountings. Business Associate agrees to provide to Covered Entity, or to an Individual at the direction of Covered Entity, in the time and manner designated by the Covered Entity, information collected in accordance with Section 2(i) of this BA Agreement, to permit Covered Entity to respond to a request by an Individual for an accounting of disclosures of Protected Health Information in accordance with HIPAA, HIPAA Regulations and the HITECH Act. If an Individual makes a request for an accounting directly to Business Associate, Business Associate shall notify Covered Entity of the request within three (3) business days of such request and will cooperate with Covered Entity and allow Covered Entity to respond to the Individual.

 

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3.                                      Permitted Uses and Disclosures by Business Associate.

 

a.                                      Services Agreement. Except as otherwise set forth in this BA Agreement, Business Associate may use or disclose Protected Health Information to perform functions, activities, or services for, or on behalf of, Covered Entity as specified in the Services Agreement, provided that such use or disclosure would not violate HIPAA, HIPAA Regulations or the HITECH Act if done by Covered Entity or the minimum necessary policies and procedures of the Covered Entity.

 

b.                                      Use for Administration of Business Associate. Except as otherwise limited in this BA Agreement, Business Associate may use Protected Health Information for the proper management and administration of the Business Associate or to carry out the legal responsibilities of the Business Associate.

 

c.                                       Disclosure for Administration of Business Associate. Except as otherwise limited in this BA Agreement, Business Associate may disclose Protected Health Information for the proper management and administration of the Business Associate, provided that (i) the disclosure is Required by Law, or (ii) Business Associate obtains reasonable assurances from the person to whom the information is disclosed that it will remain confidential and be used or further disclosed only as Required by Law or for the purpose for which it was disclosed to the person, and the person notifies the Business Associate of any instances of which it is aware in which the confidentiality of the information has been breached.

 

d.                                      Data Aggregation. At the request and direction of Covered Entity, Business Associate may provide data aggregation services relating to the health care operations of Covered Entity.

 

e.                                       De-Identification. At the request and direction of Covered Entity, Business Associate may use the Protected Health Information to de-identify the information in accordance with the HIPAA Regulations for use by Covered Entity.

 

4.                                      Permissible Requests by Covered Entity. Except as set forth in Section 3 of this BA Agreement, Covered Entity shall not request Business Associate to use or disclose Protected Health Information in any manner that would not be permissible under the Privacy Rule if done by Covered Entity. If Covered Entity notifies Business Associate of (i) any limitations in Covered Entity’s notice of privacy practices, (ii) any changes in or revocation of an Individual’s permission to use or disclose his/her Protected Health Information, and/or (iii) any restriction on the use or disclosure of Protected Health Information to which Covered Entity has agreed or is required to agree, Business Associate will comply with any such limitations or restrictions as applicable in carrying out its duties under the Service Agreement or this BA Agreement.

 

5.                                      Term and Termination.

 

a.                                      Term. This BA Agreement shall be effective as of the date first set forth above and shall terminate when all of the Protected Health Information provided by Covered Entity to Business Associate, or created, received, maintained or transmitted by Business Associate on behalf of Covered Entity, is destroyed or returned to Covered Entity, or, if it is infeasible to

 

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return or destroy Protected Health Information, protections are extended to such information, in accordance with the provisions in this Section 5.

 

b.                                      Termination for Cause. Upon Covered Entity’s knowledge of a material breach by Business Associate of the terms of this BA Agreement, Covered Entity shall either:

 

i.                                          Provide an opportunity for Business Associate to cure the breach or end the violation. If Business Associate does not cure the breach or end the violation within the time specified by Covered Entity, Covered Entity shall terminate: (A) this BA Agreement; (B) all of the provisions of the Services Agreement that involve the use or disclosure of Protected Health Information; and (C) such other provisions, if any, of the Services Agreement as Covered Entity designates in its sole discretion; or

 

ii.                                       Immediately terminate: (A) this BA Agreement; (B) all of the provisions of the Services Agreement that involve the use or disclosure of Protected Health Information; and (C) such other provisions, if any, of the Services Agreement as Covered Entity designates in its sole discretion.

 

c.                                       Effect of Termination.

 

i.                                          Except as provided in Section 5(c)(ii), upon termination of this BA Agreement, for any reason, Business Associate shall return or destroy all Protected Health Information received from Covered Entity, or created or received by Business Associate on behalf of Covered Entity. This Section shall apply to Protected Health Information in any form that is in the possession of Business Associate and subcontractors or agents of Business Associate. Business Associate shall retain no copies of the Protected Health Information.

 

ii.                                       In the event that Business Associate determines that returning or destroying the Protected Health Information is infeasible, Business Associate shall provide to Covered Entity notification of the conditions that make return or destruction infeasible. Upon mutual agreement of the Parties that return or destruction of Protected Health Information is infeasible, Business Associate shall extend the protections of this BA Agreement to such Protected Health Information and limit further uses and disclosures of such Protected Health Information to those purposes that make the return or destruction infeasible, for so long as Business Associate maintains such Protected Health Information. If it is necessary for Business Associate to maintain records for purposes permitted under Sections 3(b) or 3(c), Business Associate will return or destroy any such Protected Health Information when it is no longer needed by Business Associate for its proper management and administration or to carry out its legal responsibilities, and will otherwise maintain such Protected Health Information in conformity with this Agreement until the Protected Health Information can be returned or destroyed.

 

6.                                      Indemnity. Business Associate agrees to indemnify, defend and hold harmless Covered Entity and its employees, directors, trustees, members, professional staff, representatives and agents (collectively, the “Indemnitees”) from and against any and all claims (whether in law or in equity), obligations, actions, causes of action, suits, debts, judgments, losses, fines, penalties, damages, expenses (including attorney’s fees), liabilities, lawsuits or costs incurred by the

 

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Indemnitees which arise or result from a breach of the terms and conditions of this BA Agreement or a violation of HIPAA, the HITECH Act or HIPAA Regulations by Business Associate or its employees or agents. Business Associate’s indemnification obligations hereunder shall not be subject to any limitations of liability or remedies in the Service Agreement.

 

7.                                      Compliance with HIPAA Transaction Standards. When providing its services and/or products, Business Associate shall comply with all applicable HIPAA standards and requirements (including, without limitation, those specified in 45 CFR Part 162) with respect to the transmission of health information in electronic form in connection with any transaction for which the Secretary has adopted a standard under HIPAA (“Covered Transactions”). Business Associate will make its services and/or products compliant with HIPAA’s standards and requirements no less than thirty (30) days prior to the applicable compliance dates under HIPAA. Business Associate represents and warrants that it is aware of all current HIPAA standards and requirements regarding Covered Transactions, and Business Associate shall comply with any modifications to HIPAA standards and requirements which became effective from time to time. Business Associate agrees that such compliance shall be at its sole cost and expense, which expense shall not be passed on to Covered Entity in any form, including, but not limited to, increased fees. Business Associate shall require all of its agents and subcontractors (if any) who assist Business Associate in providing its services and/or products to comply with the terms of this Section 7.

 

8.                                      Miscellaneous.

 

a.                                      Regulatory References. A reference in this BA Agreement to a section in HIPAA, HIPAA Regulations, or the HITECH Act means the section in effect or as amended or modified from time to time, including any corresponding provisions of subsequent superseding laws or regulations.

 

b.                                      Amendment. The Parties agree to take action to amend the Services Agreement and this BA Agreement from time to time as is necessary for Covered Entity to comply with the requirements of HIPAA, the HIPAA Regulations and the HITECH Act.

 

c.                                       Survival. The respective rights and obligations of Business Associate under Sections 5(c) and 6 of this BA Agreement shall survive the termination of the Services Agreement or this BA Agreement.

 

d.                                      Interpretation. Any ambiguity in this Agreement shall be resolved to permit Covered Entity to comply with HIPAA, HIPAA Regulations and the HITECH Act.

 

e.                                       Miscellaneous. The terms of this BA Agreement are hereby incorporated into the Services Agreement. Except as otherwise set forth in Section 8(d) of this BA Agreement, in the event of a conflict between the terms of this BA Agreement and the terms of the Services Agreement, the terms of this BA Agreement shall prevail. The terms of the Services Agreement which are not modified by this BA Agreement shall remain in full force and effect in accordance with the terms thereof. This BA Agreement shall be governed by, and construed in accordance with, the laws of the State of Washington, exclusive of conflict of law rules. Each party to this

 

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BA Agreement hereby agrees and consents that any legal action or proceeding with respect to this BA Agreement shall only be brought in the courts of the state where the Covered Entity is located in the county where the Covered Entity is located. The Services Agreement together with this BA Agreement constitutes the entire agreement between the parties with respect to the subject matter contained herein, and this BA Agreement supersedes and replaces any former business associate agreement or addendum entered into by the parties. This BA Agreement may be executed in counterparts, each of which when taken together shall constitute one original. Any PDF or facsimile signatures to this BA Agreement shall be deemed original signatures to this BA Agreement. No amendments or modifications to the BA Agreement shall be effected unless executed by both parties in writing.

 

IN WITNESS WHEREOF, the parties have executed this BA Agreement as of the date set forth above.

 

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Business   Associate:
    	
Covered   Entity:
    
	
 
    	
 
    	
 
    
	
NORTHWEST   CANCER CARE
    	
NORTHWEST   CANCER CARE
    
	
MANAGEMENT   COMPANY, LLC
    	
ASSOCIATES,   P.C.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Sheila   Rege MD
    	
 
    	
By:
    	
/s/ [ILLEGIBLE]
    
	
Name:
    	
Sheila Rege MD
    	
 
    	
Name:
    	
 
    
	
Title:
    	
Member
    	
 
    	
Title:
    	
 
    
						

 

[SIGNATURE PAGE TO BUSINESS ASSOCIATE AGREEMENT — FACILITY AND MANAGEMENT SERVICES AGREEMENT]

 

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