EQUIPMENT PURCHASE AGREEMENT By and between VIRTUALSCOPICS, LLC And UNIVERSITY OF ROCHESTER MEDICAL CENTER
EXHIBIT
10.9
By
and between
VIRTUALSCOPICS,
LLC
And
UNIVERSITY
OF ROCHESTER MEDICAL CENTER
This
EQUIPMENT PURCHASE AGREEMENT (“Agreement”) is made as of the 17th day of
December, 2003, by and between VIRTUALSCOPICS, LLC (“VS”) with an office at ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ and the UNIVERSITY OF ROCHESTER MEDICAL
CENTER, an unincorporated division of the University of Rochester, an education
corporation formed under the laws of the State of New York (“URMC”) with an
office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (each individually
referred to herein as “Party” and collectively as “Parties”).
RECITALS:
WHEREAS,
prior to the execution of this Agreement, VS purchased from General Electric
Medical Systems, Inc. (“GEMS”) a certain General Electric Medical Systems Signa
Twin Speed MRI 1.5T with Excite Platform as specifically identified on Exhibit
A
attached hereto (the “Equipment”), used to generate three dimensional magnetic
resonance images; and
WHEREAS,
VS holds sole title to the Equipment and is the sole beneficial owner of
the
Equipment; and
WHEREAS,
VS desires to sell the Equipment to URMC but retain rights to use the Equipment
after the consummation of the sale to URMC; and
WHEREAS,
URMC desires to purchase the Equipment from VS and own, maintain and operate
the
Equipment at Strong Memorial Hospital (“SMH”) an unincorporated division of the
University of Rochester and an affiliate of URMC; and
THEREFORE,
VS agrees to sell the Equipment to URMC and URMC agrees to purchase the
Equipment on the terms and conditions set forth below:
PROVISIONS:
1. Payment.
URMC
agrees that the purchase price for the Equipment shall be Two Million Three
Hundred Thousand Dollars ($2,300,000.00), of which URMC agrees to pay to
VS a
cash payment of One Million Two Hundred Fifty Thousand Dollars ($1,250,000.00)
(the “Payment”) in three separate installments. The first installment shall be
in the amount of Two Hundred Fifty Thousand Dollars ($250,000.00) and shall
be
due within ten (10) business days of the date that this Agreement is executed
by
the Parties. The second installment shall be in the amount of Seven Hundred
Fifty Thousand Dollars ($750,000.00) and shall be due (i) within ten (10)
business days of the date that the Equipment is delivered to URMC or (ii)
on
December 31, 2003, whichever is earlier, provided that URMC shall not be
required to make such payment before the Equipment has been delivered. The
third
installment shall be in the amount of Two Hundred Fifty Thousand Dollars
($250,000.00) and shall be due within ten (10) business days of the date
that
URMC accepts the Equipment under Section 3 hereof. Installments shall be
paid in
certified funds or by wire transfer. The balance of the purchase price shall
be
paid by URMC performing the covenants and agreements set forth herein including,
without limitation, providing VS with its use rights set forth
herein.
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2. Delivery,
Improvements and Installation. URMC
agrees that it shall, at its sole expense, improve an area(s) at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ (“Business Premises”) that is suitable in all
respects for the delivery, installation and use of the Equipment, including
without limitation, electrical power and outlets, by December 31, 2003. URMC
shall provide written notice to VS of the date that improvements are complete.
Within ten (10) business days thereafter, VS shall cause the equipment to
be
delivered to URMC. GEMS’ written assurances that it will provide all
transportation, delivery and installation of the Equipment to the Business
Premises at no additional charge to VS or URMC. Such written assurance is
attached hereto as Exhibit B. URMC shall take delivery of the Equipment at
the
Business Premises. VS shall transfer its right, if any, to require GEMS to
pay
transportation installation or training cost as part of VS initial purchase
of
the Equipment. All supplies, including utilities, consumed or required for
operation, maintenance and repair of the Equipment shall be furnished and
paid
for by URMC, other than those supplies required by VS relating to use and
operation of the Equipment. VS acknowledges that URMC will incur considerable
expense to make the improvements necessary to take delivery of the
Equipment.
3. Acceptance. The
Equipment shall be subject to inspection and testing by URMC upon delivery
and
installation notwithstanding prior payment of installments by URMC. URMC
reserves the right to reject the Equipment if it is established through
inspection and testing that the Equipment does not perform according to the
manufacturer’s published performance specifications, which are attached hereto
as Exhibit C. URMC shall provide VS written notice of rejection within ten
(10)
business days of the date the installation of the Equipment is complete.
If the
Equipment is rejected due to nonconformity with the requirements of Exhibit
C,
VS shall have the right to attempt to cure the nonconformity, at its cost,
by
arranging for GEMS to repair or replace the Equipment so that it does perform
according to the manufacturer’s published performance specifications. If VS is
unable to cure the nonconformity within a commercially reasonable time, not
to
exceed sixty (60) days from the date of notice of rejection, it shall, agree
to
take back the Equipment and refund URMC the portion of the purchase price
paid.
Title to the Equipment shall pass from VS to URMC upon URMC’s acceptance of the
Equipment and payment of the third installment of the Payment.
4. Use
of
Equipment.
(a) URMC
agrees that VS, for a period of seven years following the date that the
Equipment is fully installed, operational and accessible to VS (the “Term”),
shall be allowed to use and operate the Equipment as set forth
below:
(i) during
the first three (3) years of the Term, VS shall have the exclusive right
to
access and use the Equipment for eighteen (18) hours each week from 6:00
a.m. to
12:00 a.m. on Tuesday or such other day of the week as may be mutually agreed
upon in writing by the parties, and
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(ii) during
the next four (4) years immediately succeeding the initial three (3) years
of
the Term, VS shall have the exclusive right to access and use the Equipment
for
twelve (12) hours each week from 6:00 a.m. to 6:00 p.m. on
Saturdays.
(b) URMC
agrees to allow VS’s employees and permitted contractors access to and exclusive
use of the Equipment and premises where the Equipment is located during the
time
periods set forth in subsection (a) of this provision, subject to the right
of
URMC and its contractors to access the Equipment to make repairs or perform
maintenance where such activities are not normal and customary repairs and
maintenance but are urgent and time sensitive or time is otherwise of the
essence to make repairs. URMC shall make every commercially reasonable effort
to
make repairs and perform maintenance on days other than days VS has exclusive
rights to access and use the Equipment.
(c) URMC
shall provide VS’s employees and permitted contractors the necessary
documentation and security clearance to access the Equipment during the time
periods set forth in subsection (a) of this provision.
(d) Notwithstanding
anything herein to the contrary, URMC shall not be liable to VS for damages
of
any kind should the Equipment become unavailable during the time periods
set
forth in subsection (a) due to any reason beyond URMC’s control, including but
not limited to (i) Equipment failure which is not the result of an act or
omission of URMC and provided URMC is taking all commercially reasonable
steps
to repair the Equipment or (ii) federal, state or municipal action, statute,
ordinance or regulation, strike or other labor trouble, fire or other act
of
God.
(e) Upon
execution of this Agreement and until the beginning of the Term, VS shall
have
the exclusive right to access and use the “Alternative Equipment” not less than
7 hours per week during the hours of 7:00 a.m. through 12:00 a.m. Monday
through
Saturday, preferably Monday through Friday and as mutually agreed by URMC
and
VS. Alternative Equipment means a Magnetic Resonance Imaging unit sufficient
for
VS to perform its services located within a 20 mile radius of the URMC Rochester
campus.
(f) VS
shall
ensure that all VS patients and research subjects who enter the premises
where
the Equipment (or Alternative Equipment, as applicable) is located, and receive
services or participate in research using the Equipment (or Alternative
Equipment), understand that VS is solely providing the services/conducting
the
research in question, and that URMC, Strong Memorial Hospital and their
affiliates are not involved in such services or research in any
way.
(g) During
the Term of this Agreement, VS shall maintain commercial general liability
insurance with minimum coverage of $1 million per claim/$2 million annual
aggregate and an excess liability policy with a minimum of $3 million combined
single limit. URMC shall be named as an additional insured on VS’s liability
insurance policies, and certificates of insurance and other evidence of
liability insurance coverage shall provide for thirty (30) days prior written
notification to URMC of the cancellation or termination of said insurance.
VS
shall also maintain Workers’ Compensation insurance coverage as required by law.
Written evidence of all insurance coverage will be provided to URMC upon
execution of this Agreement and within five (5) business days of any subsequent
request by URMC.
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5. Assignment
of Warranty; Maintenance and Repairs.
VS shall
assign any and all manufacturer’s warranties associated with the Equipment to
URMC upon acceptance, as herein defined. GEMS’s consent to the same is attached
hereto as Exhibit B. Consent to the Assignment must be documented in writing
by
a suitable representative of GEMS. URMC, at its sole expense, shall cause
the
Equipment to be maintained and kept in good repair according to the
manufacturer’s specifications for the entire Term, annexed hereto as Exhibit
C.
6. Disclaimer
of Warranties. URMC
ACKNOWLEDGES THAT VS DOES NOT MANUFACTURE THE EQUIPMENT NOR DOES VS REPRESENT
THE MANUFACTURER OF THE EQUIPMENT. URMC IS SATISFIED THAT THE EQUIPMENT IS
SUITABLE AND FIT FOR URMC’S PURPOSES. VS MAKES NO WARRANTY EITHER EXPRESS OR
IMPLIED, AS TO, WITHOUT LIMITATION, QUALITY, CONDITION, MERCHANTABILITY,
DESIGN,
CAPACITY, WORKMANSHIP OR PERFORMANCE OF THE EQUIPMENT, OR ITS FITNESS FOR
ANY
PARTICULAR PURPOSE. URMC ACKNOWLEDGES THAT IT IS NOT RELYING ON VS’S SKILL OR
JUDGMENT TO SELECT OR FURNISH GOODS SUITABLE FOR ANY PARTICULAR PURPOSE AND
THAT
THERE ARE NO WARRANTIES FROM VS CONTAINED IN THIS AGREEMENT. VS SHALL NOT
BE
LIABLE FOR DAMAGES ARISING OUT OF OR IN CONNECTION WITH THE PERFORMANCE OF
THE
EQUIPMENT WHEN USED BY URMC OR ITS USE BY URMC, UNLESS SUCH DAMAGES ARISE
FROM
THE NEGLIGENCE OR MISCONDUCT OF VS OR ITS EMPLOYEES OR AGENTS.
7. Risk
of
Loss. URMC assumes the entire risk of loss to the Equipment upon transfer
of
title and upon taking possession of the Equipment, provided that VS shall
be
solely responsible for any loss that results from the negligence or misconduct
of its employees, agents, or other individuals acting at VS’s direction. URMC
shall be solely responsible for any loss that results from the negligence
or
misconduct of its employees, agents or other individuals acting at the direction
of URMC before transfer of title. Each party shall advise the other, in writing,
promptly of the circumstances and extent of any damage of which it becomes
aware. If the Equipment is irreparably damaged, lost or stolen, URMC shall
replace it with like equipment approved by VS, which approval shall not be
unreasonably withheld. If the Equipment can be repaired after a loss, URMC
shall
promptly effect such repairs as necessary to meet the specifications required
of
the Equipment in this Agreement. Such repairs will be made at URMC’s sole
expense unless the loss is the responsibility of VS as set forth in this
Section
7.
8. Maintenance
and Repairs. URMC, at its sole expense, shall cause the Equipment to be
maintained and kept in good repair according to the manufacturer’s
specifications for the entire Term. URMC agrees that during the first year
of
the Term it shall, at its sole expense, pay for a Maintenance Agreement pursuant
to which GEMS shall maintain the Equipment, a copy of the Maintenance Agreement
is annexed hereto as Exhibit D. For the balance of the Term, URMC, at its
sole
expense, shall maintain the Equipment according to the strict manufacturer's
specifications and guidelines as annexed hereto as Exhibit C.
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9. Representations
and Warranties of URMC. URMC
represents and warrants that it has full power and authority to execute,
deliver
and perform its obligations in accordance with this Agreement; and the execution
and delivery of this Agreement will not violate any agreement governing URMC
or
to which URMC is a party.
10. Taxes
and
Costs. VS
shall
pay sales tax on its purchase of the Equipment, if any, and all taxes due
on its
use of the Equipment, if any. URMC represents and warrants that it qualifies
as
tax-exempt under Section 501(c)(3) of the Internal Revenue Service Code and
is
exempt from New York State taxes, and that it is not required to pay any
taxes
as a direct result of its purchase of the Equipment hereunder.
11. Intellectual
Property. VS’s use of the Equipment as described in Section 4 above is a right
accorded to it as partial payment by URMC for the Equipment. Accordingly,
URMC
acknowledges and agrees that such use shall not be deemed the use of URMC
resources or otherwise give URMC ownership rights in any Intellectual Property
(as defined below) of VS. "Intellectual
Property"
means
any and all ideas, inventions, formulas, processes, methods, apparatuses,
machines, patents, trademarks, trade names, service marks, copyrightable
works,
programs, improvements, discoveries, inventions, creations, trade secrets,
techniques, routines, ideas for formula, original works of authorship, computer
software programs, databases, business concepts, plans, projections and other
similar items that VS has conceived, designed, devised, developed, perfected
or
made through VS's use of the Equipment and all know-how related
thereto.
12. General
Indemnity.
(a) URMC
shall defend and indemnify VS against, and shall hold VS harmless from, any
claims made by any person or entity as a result of injuries, damages, expenses
and losses incurred by such a person or entity, including without limitation
such person's or entity's and VS's reasonable legal costs and attorneys’ fees
(hereinafter, "Liabilities"), arising out of or relating to URMC’s acts,
omissions, negligence or intentional misconduct in the performance or failure
to
perform pursuant to this Agreement. This provision shall survive the termination
or expiration of this Agreement.
(b) VS
shall
defend and indemnify the URMC against, and shall hold URMC harmless from,
any
claims made by any person or entity as a result of injuries, damages, expenses
and losses incurred by such a person or entity, including without limitation
such person's or entity's and URMC's reasonable legal costs and attorney's
fees
(hereinafter, "Liabilities"), arising out of or relating to VS's acts,
omissions, negligence or intentional misconduct in the performance or failure
to
perform pursuant to this Agreement. This provision shall survive the termination
or expiration of this Agreement.
13. Waiver.
Either party's failure to insist on performance of any of the terms or
conditions in this Agreement shall not thereafter waive any other terms,
conditions, or privileges, whether of the same or similar type.
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14. Assignment. None
of
VS's rights or obligations under this Agreement may be delegated or assigned
to
another person or party without the written consent of URMC, provided, however,
if VS sells all or substantially all of its assets or ownership interest,
the
purchaser thereof shall be entitled to assignment of all of VS’s rights
hereunder without URMC’s consent.
15. Debarment. VS
certifies that neither it nor any of its Principals (officers, directors,
owners, partners, key employees, principal investigators, researchers or
management or supervisory personnel) is presently debarred, suspended, proposed
for debarment, declared ineligible or excluded from participation in this
transaction or in any federal grant, benefit, contract or program (including
but
not limited to Medicare and Medicaid and Federal Health Care Programs) by
any
Federal department or agency. (See Executive Orders 12549 and 12689, 45 CFR
part
76, 48 CFR part 9; 42 USC sect. 1320a-7). To the extent necessary to the
assure
accuracy of its certification, VS agrees to conduct searches of the List
of
Parties Excluded from Federal Procurement and Nonprocurement Programs maintained
by the General Services Administration (▇▇▇▇://▇▇▇▇.▇▇▇▇▇.▇▇▇/) and the List
of
Excluded Individuals and Entities maintained by the Department of Health
and
Human Services (▇▇▇▇://▇▇▇.▇▇▇.▇▇▇) prior to making its certification. VS
acknowledges that the certification is a material representation of fact
upon
which URMC is relying in entering into this transaction. VS agrees to provide
immediate written notice to URMC if it learns at any time that its certification
was erroneous when submitted or if, during the term of this Agreement, it,
or
any of its Principals, is debarred, suspended, proposed for debarment, declared
ineligible or excluded from participation in this transaction or in any federal
grant, benefit, contract or program. If subcontracting is permitted by this
Agreement, VS agrees that it will include this clause, without modification,
in
all subcontracts and subprojects, and in all solicitations for subcontract
and
subproject proposals. VS agrees that debarment, suspension, proposed debarment
or suspension, ineligibility or exclusion of VS, or any of its Principals
or
subcontractors shall constitute cause for immediate termination of the use
of
the Equipment by such debarred person.
16. Applicable
law. This Agreement shall be governed by the laws of the State of New York,
and
the Parties commit to the jurisdiction and venue of the courts located in
Monroe
County, New York, to adjudicate any dispute arising under or relating to
this
Agreement.
17. Privacy.
In connection with the exercise of their rights under this Agreement, the
Parties acknowledge that Protected Health Information of their respective
patients, as defined in the Health Insurance Portability and Accountability
Act
of 1996 and the regulations promulgated thereunder (“HIPAA”), may be disclosed
to the other Party by virtue of their shared use of the Equipment. Each Party
agrees that it will not, and that it will ensure that its directors, officers
and workforce will not, use or disclose such Protected Health Information
for
any purpose other than the proper use, maintenance and repair of the Equipment.
The Parties shall use appropriate safeguards to prevent use or disclosure
of
Protected Health Information other than as permitted or required in this
Agreement.
The
Parties agree to fully cooperate with each other should further action be
necessary to assure compliance with HIPAA. Each representative or member
of the
workforce of VS who will access the Equipment during the Term shall execute
a
Confidentiality Agreement in the form attached hereto as Exhibit E prior
to such
access.
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18. Integration. This
agreement, together with its Exhibits, constitutes the entire contract of
sale
and purchase of the Equipment identified herein. No modification hereof shall
be
of any force or effect unless in writing and signed by the Party claimed
to be
bound thereby, and no modification shall be effected by the acknowledgment
or
acceptance of purchase order forms stipulating different
conditions.
19. No
Liens. URMC
shall not create or permit any lien or other encumbrance of any kind on the
Equipment.
20. Enforceability.
This
Agreement shall be binding on URMC’s successors and assigns and shall be
enforceable by VS’s successors and assigns.
21. Notices. All
notices hereunder shall be in writing and shall be deemed to have been delivered
on the day of mailing if sent by registered or certified mail, postage prepaid
and return receipt requested to the addresses set forth at the beginning
of this
Agreement.
22. Cumulative
Nature and Non-Exclusive Exercise of Rights and Remedies. All rights and
remedies of the Parties pursuant to this Agreement shall be cumulative, and
no
such right or remedy shall be exclusive of any other such right or remedy.
No
single or partial exercise by a Party of any right or remedy pursuant to
this
Agreement or otherwise shall preclude any other or further exercise thereof,
or
any exercise of any other such right or remedy, by such Party.
23. Court
Costs; Attorneys' Fees. In the event of litigation to enforce the terms and
conditions of this Agreement, the losing Party agrees to pay the prevailing
Party's costs and expenses incurred including, without limitation, reasonable
attorneys' fees.
|
UNIVERSITY OF ROCHESTER
MEDICAL CENTER
|
VIRTUALSCOPICS, LLC | |||
| By: | /s/ C ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, MD | By: | /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | |
|
|
|
|||
| Title: | Sr. VP & Vice ▇▇▇▇▇▇▇ for Health Affairs And CEO Strong Health Center | Title: | Chief Operating Officer | |
LIST
OF
EXHIBITS
Exhibit
A
- Description
of Equipment
Exhibit
B -
GEMS’
Agreement to Provide Delivery and Installation, and Consent to Transfer of
Warranty
Exhibit
C - Manufacturer's
Specifications
Exhibit
D - Maintenance
Agreement
Exhibit
E - Form
of
Confidentiality Agreement
7
EXHIBIT
A
Description
of Equipment
8
EXHIBIT
B
Manufacturer’s
Specifications
9
EXHIBIT
C
GEMS’
Consent to Assignment of Warranty
10
EXHIBIT
D
Maintenance
Agreement
11
EXHIBIT
E
Form
of Confidentiality Agreement
12