Document:

exv10w4

 

Exhibit 10.4

Stockholders’ Agreement

Natural Gas Services Group, Inc.

2911 South County Road 1260

Midland, Texas 79706

Gentlemen:

     Natural Gas Services Group, Inc. (“NGSG “), a Colorado corporation, is issuing an
aggregate of 609,756 shares of its common stock, par value $.01 per share (the “Restricted
Securities”), to Paul Hensley, Jim Hazlett and Tony Vohjesus (collectively, the
“Sellers” and each individually, a “Seller”) as partial consideration for NGSG’s purchase
(the “Purchase”) of all of the issued and outstanding shares of capital stock of Screw
Compression Systems, Inc., a Texas corporation, from Sellers pursuant to the Stock Purchase
Agreement, dated as of October 18, 2004, 2004, as amended by Amendment No. 1 to Stock Purchase
Agreement, dated as of December 6, 2004 (the “Purchase Agreement”). The undersigned
understands that the issuance is being made pursuant to exemptions from the registration
requirements of the Securities Act of 1933, as amended (the “Securities Act”), and pursuant
to exemptions from the registration and other requirements of applicable state securities laws. In
order to induce NGSG to consummate the Purchase, Sellers have executed and delivered this
Stockholders’ Agreement (this “Agreement”) to NGSG.

1. Representations, Warranties and Covenants of Each Seller. Each Seller, severally and not
jointly, hereby represents, warrants and covenants to NGSG as follows:

     a. Such Seller is acquiring the Restricted Securities for his own account for investment
purposes only, and not with a view to, or for resale in connection with, any distribution other
than in compliance with the registration requirements under the Securities Act or the securities
laws of any state or pursuant to an exemption therefrom.

     b. Such Seller understands that (A) the Restricted Securities (1) have not been registered
under the Securities Act or any state securities laws, (2) will be issued in reliance upon an
exemption from the registration and prospectus delivery requirements of the Securities Act and
state securities laws for an offer and sale of securities not involving a public offering which
relate to private purchases and (3) may not be sold, transferred or otherwise disposed of without
satisfaction of certain conditions, including registration under, or the availability of an
exemption from registration under, the Securities Act and applicable state securities laws, and (B)
such Seller must therefore bear the economic risk of such investment indefinitely unless a
subsequent disposition thereof is registered under the Securities Act and applicable state
securities laws or is exempt therefrom. Such Seller further understands that such exemptions depend
upon, among other things, the nature of the investment intent of the undersigned expressed herein.

 

 

     c. Such Seller has been furnished by NGSG all information (or provided access to all
information) regarding the business and financial condition of NGSG, the attributes of the
Restricted Securities and the merits and risks of an investment in the Restricted Securities which
such Seller has requested to evaluate an investment in the Restricted Securities. Specifically, the
undersigned acknowledges that such Seller has had an opportunity to review NGSG ‘s Annual Report on
Form 10-KSB for the year ended December 31, 2003 and Quarterly Reports on Form 10-QSB for the
fiscal quarters ended March 31, 2004, June 30, 2004 and September 30, 2004 and the other SEC
Documents (as defined in the Purchase Agreement).

     d. Such Seller is an “accredited investor” as defined in Rule 501 of Regulation D promulgated
under the Securities Act, and he, or those persons retained by him, has knowledge, skill and
experience in financial, business and investment matters relating to an investment of the same
nature as the Restricted Securities and is capable of evaluating the merits and risks of such
investment and protecting himself in connection with the Purchase and an investment in the
Restricted Securities. Such Seller has, to the extent deemed necessary by him retained, at his own
expense, and relied upon, appropriate professional advice regarding the investment, tax and legal
merits and consequences of an investment in the Restricted Securities. Such Seller has examined the
SEC Documents, or caused the same to be examined, by his representatives to the extent he deems
necessary or appropriate. Such Seller has not received any legal, business, tax or other advice
from NGSG, its counsel or other representatives.

     e. Such Seller acknowledges that (i) it has been called to his attention that his investment
in the Restricted Securities involves risk and (ii) he understands that the Restricted Securities
to be issued in the Purchase will be an illiquid investment, subject to any future registration
pursuant to this Agreement.

     f. No person or entity, other than NGSG, has been authorized to give any information or to
make any representations on behalf of NGSG in connection with the Purchase, and, if given or made,
such information or representations have not been relied upon by such Seller as having been made or
authorized by NGSG. The only representations, warranties and information made by NGSG in connection
with the Purchase are those contained in the Purchase Agreement and the SEC Documents.

     g. NGSG has provided such Seller the opportunity to ask questions of, and receive answers
from, NGSG concerning the Purchase and the Restricted Securities and to obtain any appropriate
additional information necessary to the investment decision being made by him in connection with
the Purchase and the Restricted Securities.

     h. Such Seller acknowledges that he has been advised that:

     IN MAKING AN INVESTMENT DECISION REGARDING THE RESTRICTED SECURITIES, HE MUST RELY ON HIS OWN
EXAMINATION OF NGSG AND THE TERMS OF THE PURCHASE, INCLUDING THE MERITS AND RISKS INVOLVED.

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THE RESTRICTED SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION
OR REGULATORY AUTHORITY.

     THE RESTRICTED SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE, AND MAY
NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE SECURITIES
ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFERABILITY SET FORTH IN THIS AGREEMENT.

     The foregoing representations and warranties and undertakings are made by and on behalf of
each Seller with the intent that they be relied upon by NGSG in determining each Seller’s
suitability as an investor. Each Seller hereby agrees that such representations and warranties
shall survive his purchase of the Restricted Securities.

2. Standstill. Unless waived in writing by NGSG from time to time, during the period
commencing on the Closing Date and ending on the third anniversary thereof, neither Sellers nor any
of their respective affiliates (as defined in Rule 12b-2 under the Securities Exchange Act of 1934,
as amended) will:

     (a) acquire or agree, offer, seek or propose to acquire (or request permission to do so),
ownership (including, but not limited to, beneficial ownership as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) of any assets or businesses or any additional
securities issued by NGSG, or any rights or options to acquire such ownership (including from a
third party), or

     (b) contest any election of directors by the stockholders of NGSG, or

     (c) otherwise act, alone or in concert with others, to induce or attempt to induce any other
person to initiate any stockholder proposal or a tender offer for any voting secutrites of NGSG, or

     (d) enter into any discussions, negotiations, arrangements or understandings with any third
party with respect to any of the foregoing.

3. Restrictions on Transferability; Registration Rights.

     The Restricted Securities shall not be transferable except upon the conditions specified in
this Section 3; provided that, notwithstanding any other provision of this Section 3, each Seller
shall have the right to transfer any Restricted Securities upon the prior written consent of NGSG.
Each transferee shall be subject to the same transfer restrictions imposed on Sellers by this
Agreement. All rights and obligations of Sellers set forth in this Section 3 will inure to the
benefit of and be binding upon any transferee of the Restricted Securities.

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     3.1 Restrictive Legend. Unless and until otherwise permitted by this Section 3, each
certificate for Restricted Securities issued under the Purchase Agreement, and each certificate for
any Restricted Securities issued to any subsequent permitted transferee of any such certificate,
shall be stamped or otherwise imprinted with a legend in substantially the following form:

	 	 	 
	 	 	“The shares evidenced by this certificate have not been registered

under the Securities Act of 1933, as amended, and may be reoffered

and sold only if registered pursuant to the provisions of said

Securities Act or if an exemption from registration is available.”

     3.2 Notice of Proposed Transfers. Prior to any transfer or attempted transfer of any
Restricted Securities (other than pursuant to Rule 144 under the Securities Act or registration of
the Restricted Securities under the Securities Act), the Seller of such Restricted Securities shall
give written notice to NGSG of such Seller’s intention to effect such transfer. Each such notice
(i) shall describe the manner and circumstances of the proposed transfer in sufficient detail, and
shall contain an undertaking by the Seller giving such notice to furnish such other information as
may be required, to enable counsel to render the opinions referred to below, and (ii) shall
designate the counsel for the Seller giving such notice. Such Seller shall obtain the services of
counsel described below at his own expense. The Seller giving such notice shall submit a copy
thereof to the counsel designated in such notice. If in the opinion of such counsel, which is
reasonably satisfactory to NGSG, the proposed transfer of such Restricted Securities may be
effected without registration of such Restricted Securities under the Securities Act, NGSG shall,
within ten business days after delivery of such opinion to NGSG, so notify the Seller of such
Restricted Securities and such Seller shall thereupon be entitled to transfer such Restricted
Securities in accordance with the terms of the notice delivered by such Seller to NGSG. Each
certificate evidencing the Restricted Securities thus to be transferred (and each certificate
evidencing any untransferred balance of the Restricted Securities) shall bear the restrictive
legend set forth in Section 3.1.

     3.3 Piggy-Back Registration Rights.

     (a) Registration Initiated by NGSG. If NGSG shall determine to register any shares of
common stock of NGSG (other than a registration relating to stock options or employee benefit
plans, any dividend reinvestment plan, or the acquisition or purchase by or combination by merger
or otherwise of NGSG of or with another company or business entity or partnership), whether or not
for sale for its own account, NGSG will:

     (i) promptly give to Sellers written notice thereof (which shall include (to the extent
known) a list of the jurisdictions in which NGSG intends to attempt to qualify such
securities under the applicable blue sky or other state securities laws); and

     (ii) include in such registration (and any related qualification under blue sky laws or
other compliance), and in any underwriting involved therein, all the Restricted Securities
specified in a written request or requests, made within 20 days after receipt of such
written notice from NGSG, by Sellers, except as set forth in Section 3.3(b) below.

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     (b) Underwriting. If the registration of which NGSG gives notice to Sellers is for a
registered public offering involving an underwriting, NGSG shall so advise Sellers as a part of the
written notice given pursuant to Section 3.3(a)(i). In such event, the right of each Seller to
registration pursuant to this Section 3.3 shall be conditioned upon each such Seller’s
participation in such underwriting and the inclusion of each such Seller’s Restricted Securities in
the underwriting to the extent provided herein. A Seller proposing to distribute shares of his
Restricted Securities through such underwriting (together with NGSG and the other holders (if any)
distributing their securities through such underwriting) shall enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for such underwriting by NGSG.
Notwithstanding any other provision of this Section 3.3, if the lead managing underwriter
determines, in good faith, that marketing factors require a limitation of the number of shares to
be underwritten, the underwriter may limit the number of shares of Restricted Securities to be
included in the registration and underwriting to the extent such underwriter deems necessary. NGSG
shall so advise Sellers, and the number of shares of Restricted Securities that may be included in
the registration and underwriting shall be reduced to the number which the underwriter is willing
to include in the registration. If a Seller disapproves of the terms of any such underwriting, such
Seller may elect to withdraw therefrom by written notice to NGSG and the underwriter.

     (c) Expenses of Registration by the Company. NGSG shall bear all expenses incurred in
connection with each registration, qualification or compliance pursuant to this Section 3.3,
including, without limitation, all registration, filing and qualification fees, printing expenses,
audit fees, fees and disbursements of counsel for NGSG and counsel for the underwriters, if any
(unless any such underwriter pays such counsel fees) and reasonable fees and disbursements of one
special counsel for Sellers (but excluding underwriter’s commissions, fees and expenses allocable
to the Restricted Securities of Sellers and fees of independent accountants, if any, for Sellers,
which commissions, fees and expenses and fees of accountants shall be borne pro rata (by share) by
Sellers and any other offeror employing such accountants in such requested registration).

     (d) Limitations on Registration. NGSG’s obligation to effect a registration under
Section 3.3(a) shall expire two years from the date of consummation of the Purchase.
Notwithstanding any provision to the contrary in this Section 3.3, NGSG shall not be obligated to
take any action to effect any such registration, qualification or compliance pursuant to Section
3.3 on more than two occasions; provided, however, only registrations which actually include all of
the Restricted Securities of Sellers requested to be included shall be counted for this purpose.

     (e) Assignability and Assumption. The registration rights granted to Sellers in this
Section 3.3 may be assigned in whole or in part by the holder thereof in connection with any
transfer of Restricted Securities provided that (i) the assignor provides NGSG with written notice
of such assignment, and (ii) the assignee of such rights agrees in writing to be bound by the terms
and conditions of this Section 3. In the event of a partial assignment, the holders of Restricted
Securities shall possess the rights granted in this Section 3.3 pro rata in accordance with the
number of shares of Restricted Securities beneficially owned by each of them and each such holder
shall be entitled to receive a copy of all notices provided for in this Agreement and to exercise
such part of the rights so granted.

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     3.4 Registration Procedures. In the case of each registration, qualification or
compliance effected by NGSG pursuant to this Agreement pursuant to which Restricted Securities of
Sellers are included therein, NGSG will keep Sellers advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion thereof. At its expense,
NGSG will:

     (a) keep such registration, qualification or compliance effective for a period of at least 120
days or until Sellers have completed the distribution described in the registration statement
relating thereto, whichever first occurs;

     (b) furnish such number of prospectuses and other documents incident thereto as Sellers from
time to time may reasonably request;

     (c) list such Restricted Securities on each securities exchange (if any) on which the common
stock of NGSG is listed; and

     (d) provide to Sellers and their special counsel a reasonable opportunity to review in advance
the registration statement and all amendments thereto.

     3.5 Indemnification.

     (a) NGSG shall, if Restricted Securities held by Sellers or any other holder of Restricted
Securities are included in the securities as to which such registration, qualification or
compliance is being effected, indemnify Sellers and each other holder of Restricted Securities,
each of their officers and directors, and each person controlling any of Sellers or other holder of
Restricted Securities, with respect to each registration, qualification or compliance which has
been effected pursuant to Section 3.3, and each underwriter, if any, and each person who controls
any underwriter, against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus, offering circular or other document (including any
related registration statement, notification or the like) incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements not misleading, and
will reimburse Sellers and each other holder of Restricted Securities, each of their officers and
directors, and each person controlling any of Sellers or other holder of Restricted Securities,
each such underwriter and each person who controls any such underwriter, for any legal and any
other expenses reasonably incurred in connection with investigating or defending any such claim,
loss, damage, liability or action; provided that NGSG will not be liable in any such case to the
extent that any such claim, loss, damage, liability or expense arises out of or is based on any
untrue statement or omission based upon written information furnished to NGSG by Sellers or other
holder of Restricted Securities or underwriter specifically for use therein. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on behalf of such party
and shall survive the subsequent transfer of shares of common stock of NGSG by the seller thereof
and the transfer of any shares of common stock of NGSG which were the subject of such registration,
qualification or listing.

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     (b) Each of the Sellers and each other holder of Restricted Securities, severally and not
jointly, will, if Restricted Securities held by such Seller or other holder of Restricted
Securities are included in the securities as to which such registration, qualification or
compliance is being effected, indemnify NGSG, each of its directors and officers, each legal
counsel and independent accountants of NGSG, each underwriter, if any, of NGSG’s securities covered
by such registration statement, each person who controls NGSG or such underwriter within the
meaning of the Securities Act, and each other holder of common stock of NGSG registering securities
of NGSG in such registration, each of its officers and directors and each person controlling such
holder, against all claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a material fact contained
in any such registration statement, prospectus, offering circular or other document, or any
omission (or alleged omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse NGSG, such holders,
such directors, officers, persons, underwriters or control persons for any legal or any other
expenses reasonably incurred in connection with investigating or defending any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to NGSG by such Seller or other holder of Restricted
Securities specifically for use therein; provided; however, that (i) the obligations of each Seller
and each other holder of Restricted Securities hereunder shall be limited to an amount equal to the
proceeds to such Seller or each other holder of Restricted Securities sold as contemplated herein
and (ii) the indemnity for untrue statements or omissions described above shall not apply if
Sellers or other holder of Restricted Securities providing such written information provide NGSG
with such additional written information prior to the effectiveness of the registration as is
required to make the previously supplied written information true and complete, together with a
description in reasonable detail of the information previously supplied which was untrue or
incomplete.

     (c) Each person entitled to indemnification under this Section 3.5 (the “Indemnified
Person”) shall give notice to the party required to provide indemnification (the
“Indemnifying Party”) promptly after such Indemnified Person has actual knowledge of any
claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by
the Indemnified Person (whose approval shall not unreasonably be withheld), and the Indemnified
Person may participate in such defense at such person’s expense, and provided further that the
failure of any Indemnified Person to give notice as provided herein shall not relieve the
Indemnifying Party of any obligations it may have otherwise than on account of this Section 3.5.
After notice from the Indemnifying Party to the Indemnified Person of its election to assume the
defense of such claim or litigation, the Indemnifying Party will not be liable to such Indemnified
Person for any legal or other expenses subsequently incurred by such Indemnified Person in
connection with the defense thereof other than reasonable costs of investigation, unless the
Indemnifying Party abandons the defense of such claim or litigation. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of each Indemnified Person,
consent to entry of any judgment or enter into any settlement which does not include as

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an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Person of
a release from all liability in respect to such claim or litigation.

     (d) The indemnification required by this Section 3.5 shall be made by periodic payments of the
amount thereof during the course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.

     3.6 Information by Sellers and Other Holders. Sellers or other holders of Restricted
Securities included in any registration shall furnish to NGSG such information regarding Sellers or
other holders and the distribution proposed by Sellers or other holders as NGSG may reasonably
request in writing, and as shall be required in connection with any registration, qualification or
compliance referred to in this Agreement.

4. Appointment and Nomination for Director. Paul D. Hensley shall be appointed to fill the
vacancy existing on the Board of Directors at the date hereof, to hold office until the next annual
stockholders’ meeting at which directors are elected, and in connection with the next annual
meeting of stockholders, NGSG will nominate Paul D. Hensley for election as a director to serve for
a term the same as the class of directors then standing for election.

5. Miscellaneous.

     (a) This Agreement shall be governed by and construed in accordance with the laws of the State
of Texas, notwithstanding principles of conflicts of laws.

     (b) This Agreement constitutes the entire agreement among the parties hereto with respect to
the subject matter hereof, and may be amended only by a writing executed by all parties hereto.

     (c) This Agreement and the representations and warranties contained herein shall be binding
upon the heirs, executors, legal representatives, administrators, successors and permitted assigns
of the undersigned.

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     IN WITNESS WHEREOF, Sellers have executed this Stockholders’ Agreement this
3rd day of January, 2005.

	 	 	 	 	 
	 

	 	               /s/ Paul D. Hensley
 

	 	 

	 	 	 	 	 
	 
	 	 	 	 
	 

	 	                    Paul D. Hensley
 

          
     Printed Name of Seller
	 	 

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Address of Seller:
	 
	 	 	 	 	 	 
	 	 	 	 	Paul D. Hensley
	 	 	 	 	3005 N. 15th Street
	 	 	 	 	Broken Arrow, Oklahoma 74012

	 	 	 	 	 
	 
	 	 	 	 
	 

	 	               /s/ Tony Vohjesus
 

	 	 

	 	 	 	 	 
	 
	 	 	 	 
	 

	 	                    Tony Vohjesus
 

          
     Printed Name of Seller
	 	 

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Address of Seller:
	 
	 	 	 	 	 	 
	 	 	 	 	Tony Vohjesus
	 	 	 	 	5863 E. Hunter Lane
	 	 	 	 	Claremore, Oklahoma 74019

	 	 	 	 	 
	 
	 	 	 	 
	 

	 	               /s/ Jim Hazlett
 

	 	 

	 	 	 	 	 
	 

	 	 	 	 
	 

	 	                    Jim Hazlett	 	 
	 

	 	 	 	 
	 

	 	               Printed Name of Seller	 	 

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Address of Seller:
	 
	 	 	 	 	 	 
	 	 	 	 	Jim Hazlett
	 	 	 	 	10601 ECR 104
	 	 	 	 	Midland, Texas 79706

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     Accepted and Agreed to this 3rd day of January, 2005:

	 	 	 	 	 	 	 
	 	 	NATURAL GAS SERVICES GROUP, INC.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	       /s/ Wallace C. Sparkman
 

     Wallace C. Sparkman, President
	 	 

10exv10w22a

 

Exhibit 10.22a

ADDENDUM

TO LEASE AGREEMENT FOR A GAMMA KNIFE UNIT

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

RECITALS

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

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

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

AGREEMENT

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

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

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

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

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

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

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

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

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

2

 

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

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

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

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

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

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

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

	 	 
	 	 	 	 	 	 	 	 
	Name:

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

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Exhibit 2

PER PROCEDURE PAYMENTS

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

Notwithstanding anything to the contrary set forth herein, (a) for purposes of determining the per
procedure payment, the number of annual procedures performed shall be reset to zero (0) at the
commencement of each fiscal year of Medical Center (i.e., on October 1 of each year); (b)
the per procedure payment shall not be affected or adjusted due to any upgrading and/or cobalt
reloading of the Equipment; and (c) there shall be no retroactive adjustment of the per procedure
payment irrespective of whether the number of procedures performed during any fiscal year reaches a
lower per procedure payment level. For example, if * procedures are performed during the * year,
Medical Center would pay * for each of the first * procedures, and * for each of the next *
procedures (i.e., for procedures *). The parties acknowledge that, for purposes of determining the
per procedure payment, October 1, 2005 shall mark the commencement of year seven (7) of the Lease.

Compliance with Safe Harbor.

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

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

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