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EXHIBIT 10.10
CONTRIBUTION AGREEMENT
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Contribution Agreement dated as of November 22, 1996 (the "AGREEMENT") by
and among HLR Holdings Inc., a Delaware corporation ("HLR"), Roche Image
Analysis Systems, Inc., a Delaware corporation and wholly owned subsidiary of
HLR ("RIAS"), and AutoCyte, Inc., a Delaware corporation ("AUTOCYTE").
RECITALS
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X. XXXX is presently engaged in the business of designing, testing,
manufacturing, marketing and distributing cellular preparation, image processing
and image analysis systems for use in clinical laboratory testing, especially as
related to cancer diagnostics and prognostics (the "TRANSFERRED BUSINESS").
B. In order to increase operational flexibility, maximize its ability to
raise capital and otherwise better position itself to carry out its business
objectives, RIAS proposes to restructure its operations by forming and initially
capitalizing AutoCyte. RIAS and HLR wish to implement the proposed
restructuring, which will become effective upon the Closing Date (as defined in
Section 5), in part by entering into this Agreement with AutoCyte.
C. In connection with the proposed restructuring, the parties hereto desire
to exchange the Transferred Business and Contributed Assets (as defined in
Section 1.1) for 7,500,000 shares of AutoCyte Common Stock, par value $.01 per
share (the "COMMON STOCK").
D. It is intended by the parties that the exchange qualify for tax-free
treatment under [section]351 of the Internal Revenue Code of 1986, as amended.
AGREEMENT
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In consideration of the mutual representations, warranties and covenants
herein contained, the parties hereto agree as follows:
1. Contribution of Assets.
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1.1 CONTRIBUTED ASSETS. RIAS hereby contributes, conveys, transfers,
assigns and delivers to AutoCyte, and AutoCyte accepts from RIAS, on the terms
and subject to the conditions set forth in this Agreement, all of the
properties, business and assets of the Transferred Business of every kind and
description, real, personal or mixed, tangible and intangible, wherever located,
whether or not appearing in the Balance Sheet (as defined in Section 6.6),
including but not limited to the assets set forth or described on SCHEDULE 1.1
attached hereto, but excluding those assets of RIAS relating to the Transferred
Business which are specifically identified on SCHEDULE 1.2 hereto (collectively,
the "CONTRIBUTED
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ASSETS"). Without limiting the generality of the foregoing, the Contributed
Assets shall include the following:
(a) All of RIAS's interest in and rights under all leases of real
property and all improvements to and buildings thereon used in connection with
the Transferred Business;
(b) All machinery, equipment, tools, supplies, leasehold improvements,
construction in progress, furniture and fixtures, and other fixed assets used in
connection with the Transferred Business;
(c) All inventories of the Transferred Business, including without
limitation, finished goods, work-in-progress and raw materials of the
Transferred Business;
(d) All receivables of the Transferred Business, including without
limitation all trade accounts receivable arising from sales on inventory in the
ordinary course of business, notes receivable and insurance proceeds receivable;
(e) All of RIAS's interest in and rights under all service agreements,
supply contracts, purchase orders, purchase commitments and leases of personal
property made by RIAS in the ordinary course of business of the Transferred
Business, all agreements to which RIAS is a party or by which it is bound
relating to the Transferred Business and all other choses in action, causes of
action and other rights of every kind of RIAS relating to the Transferred
Business;
(f) All operating data and records of RIAS relating to the Transferred
Business, including without limitation financial, accounting and credit records,
correspondence, budgets and other similar documents and records;
(g) All of the proprietary rights of RIAS relating to the Transferred
Business and the Contributed Assets, including without limitation all
trademarks, trade names, patents, licenses thereof, patents applications, trade
secrets, technology, know-how, formulae, designs and drawings, computer
software, slogans, copyrights, processes operating rights, other licenses and
permits, and other similar intangible property and rights;
(h) All prepaid and deferred items of RIAS relating to the Transferred
Business, including without limitation prepaid rentals, taxes and unbilled
charges and deposits relating to the operations of the Transferred Business; and
(i) All of the intangibles of RIAS relating to the Transferred
Business.
1.2 EXCLUDED ASSETS. Anything to the contrary in Section 1.1
notwithstanding, the Contributed Assets shall be exclusive of the assets (the
"EXCLUDED ASSETS") of RIAS described on SCHEDULE 1.2 attached hereto.
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2. Assumption of Liabilities.
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2.1 ASSUMED LIABILITIES. AutoCyte hereby assumes and agrees to pay,
discharge and perform when lawfully due, only those liabilities, contracts,
commitments and other obligations of the Transferred Business (i) reflected on
the AutoCyte Opening Balance Sheet, as defined in Section 6.6 hereof (provided,
however, that AutoCyte shall not assume any net increase in liabilities between
those reflected under the column entitled "AUTOCYTE INC." on the Balance Sheet
and those reflected on the AutoCyte Opening Balance Sheet in an aggregate amount
in excess of $250,000, excluding for this purpose liabilities set forth on
SCHEDULE 2.1), or (ii) set forth in SCHEDULE 2.1, in each case as the same shall
exist on the date hereof (collectively, the "ASSUMED LIABILITIES").
2.2 NO EXPANSION OF THIRD PARTY RIGHTS. The (i) assumption by AutoCyte of
the Assumed Liabilities as provided herein, and (ii) transfer thereof by RIAS
shall in no way expand the rights or remedies of any third party against
AutoCyte, RIAS or HLR as compared to the rights and remedies which such third
party would have had against RIAS or HLR had AutoCyte not assumed such
liabilities. Without limiting the generality of the preceding sentence, the
assumption by AutoCyte of the Assumed Liabilities shall not create any third
party beneficiary rights.
3. Delivery of AutoCyte Shares.
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3.1 AUTHORIZATION OF THE AUTOCYTE SHARES. AutoCyte has authorized the sale
and issuance of Seven Million Five Hundred Thousand (7,500,000) shares of
AutoCyte's Common Stock (the "SHARES") to RIAS.
3.2 EXCHANGE PRICE. As consideration for the Contributed Assets, AutoCyte
hereby delivers to RIAS the AutoCyte Shares, on the terms and subject to the
conditions set forth in this Agreement.
4. DELIVERY OF RECORDS AND CONTRACTS. At the Closing, RIAS shall deliver or
cause to be delivered to AutoCyte good and sufficient instruments of transfer
transferring to AutoCyte title to all the Contributed Assets together with
copies of all written leases, contracts, commitments and rights evidencing
Contributed Assets and Assumed Liabilities, with those consents to assignment in
accordance with Section 6.10 and SCHEDULE 6.10 hereof. The instruments of
transfer referred to herein (a) shall be in the form and will contain the
warranties, covenants and other provisions (not inconsistent with the provisions
hereof) which are usual and customary for transferring the type of property
involved under the laws of the jurisdictions applicable to such transfers, (b)
shall be in form and substance satisfactory to AutoCyte and its counsel and RIAS
and its counsel, and (c) shall effectively vest in AutoCyte good title to all of
the Contributed Assets free and clear of all liens, restrictions and
encumbrances, except as provided in Section 6.18(ii). RIAS shall also deliver to
AutoCyte at the Closing all of RIAS's business records, books and other data
relating to the Contributed Assets and the Transferred Business (except
corporate records and
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other property of RIAS excluded under Section 1.2) and RIAS shall take all
requisite steps to put AutoCyte in actual possession and operating control of
the Contributed Assets and the Transferred Business.
5. CLOSING. The closing of the transactions contemplated hereby (the "CLOSING"),
shall take place at the offices of Xxxxxx & Dodge LLP at 10:00 a.m., local time,
on November 22, 1996 or at such other place or such other time or date as the
parties shall agree (the date of such Closing shall hereinafter be referred to
as the "CLOSING DATE").
6. Representations and Warranties of RIAS and HLR.
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Except as disclosed in the DISCLOSURE SCHEDULE attached hereto, the section
numbers of which correspond to the section numbers of this Agreement to which
they refer, RIAS and HLR, jointly and severally, represent and warrant to
AutoCyte as follows:
6.1 ORGANIZATION AND QUALIFICATION. Each of RIAS and HLR is a corporation
duly organized, validly existing and in good standing under the laws of Delaware
and has full corporate power and lawful authority to own, lease and operate its
assets, properties and business and to carry on its business as now being and as
heretofore conducted. RIAS has qualified or is otherwise authorized to transact
business as a foreign corporation in all jurisdictions (in the United States and
outside of the United States) in which such qualification or authorization is
required by law and in which the failure to so qualify or be authorized could
have a material adverse effect on RIAS or its assets, properties, business,
operations or condition (financial or otherwise). RIAS does not file and is not
required to file any franchise, income or other tax returns in any other
jurisdiction (in the United States or outside of the United States), other than
its jurisdiction of incorporation and North Carolina, based upon the ownership
or use of property therein or the derivation of income therefrom. RIAS does not
own or lease real property in any jurisdiction (in the United States or outside
the United States) other than in Europe and North Carolina.
6.2 OUTSTANDING CAPITAL STOCK. RIAS is authorized to issue 1,000 shares of
capital stock, $1.00 par value per share, of which 100 shares are issued and
outstanding, none is held in its treasury and all are owned beneficially and of
record by the HLR. No other class of capital stock of RIAS is authorized or
outstanding. All of the issued and outstanding shares of RIAS's capital stock
are duly authorized and are validly issued, fully paid, nonassessable and free
of pre-emptive rights. None of the issued and outstanding shares have been
issued in violation of any federal or state law.
6.3 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. Each of RIAS and HLR has
the full legal right and power and all authority and approvals required to enter
into, execute and deliver this Agreement and the agreements contemplated hereby
and to perform fully its respective obligations hereunder and thereunder, and
this Agreement and the agreements contemplated hereby have been duly executed
and delivered and constitute the valid and binding obligations of each of RIAS
and HLR enforceable against them in accordance with
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their respective terms. RIAS has obtained the necessary approval of the holders
of the outstanding capital stock of RIAS to the transactions contemplated
hereby.
6.4 SUBSIDIARIES AND OTHER AFFILIATES. RIAS does not have any subsidiary or
directly or indirectly own or have any investment in any of the capital stock
of, or any other proprietary interest in, or is a party to a partnership or
joint venture with, any other person.
6.5 CHARTER AND BY-LAWS. RIAS has heretofore delivered to AutoCyte true and
complete copies of its Certificate of Incorporation (certified by the Secretary
of State of Delaware) and By-laws as in effect on the date hereof.
6.6 FINANCIAL STATEMENTS. The unaudited balance sheet of RIAS as at October
25, 1996, and the related statement of operations for the month then ended,
previously delivered to AutoCyte, fairly present in all material respects the
financial condition of RIAS and the Transferred Business as at the most recent
month and for the month then ended, in accordance with GAAP (except for the
absence of footnotes thereto) consistently applied throughout the period covered
thereby except to the extent otherwise disclosed in said financial statements
and subject to normal year-end adjustments, none of which year-end adjustments
will be material to the Transferred Business or the Contributed Assets except as
described on SCHEDULE 6.6(a). The foregoing financial statements of RIAS as at
October 25, 1996, and for the month then ended, are sometimes herein called the
"FINANCIALS," the balance sheet included in the Financials is sometimes herein
called the "BALANCE SHEET" and October 25, 1996 is sometimes herein called the
"BALANCE SHEET DATE." The Balance Sheet also reflects certain adjustments and
pro forma financial information in a form agreed upon by RIAS and AutoCyte.
These adjustments include, but are not limited to, adjustments for certain
assets and liabilities which are to be retained by RIAS, as more fully described
in the "Accounting Adjustment Principles Summary" set forth on SCHEDULE 6.6(b).
AutoCyte intends to cause information included in the Balance Sheet under the
column entitled "AUTOCYTE INC." to be audited as of the Closing Date (the
"AUTOCYTE OPENING BALANCE SHEET") by an accounting firm of AutoCyte's choice and
RIAS and HLR agree to provide AutoCyte with such reasonable assistance as may be
requested by AutoCyte in this regard. In the event that a comparison between the
audited AutoCyte Opening Balance Sheet and the information included under the
column "AUTOCYTE INC." of the Balance Sheet shows an increase in AutoCyte's net
liabilities in excess of $250,000, excluding for this purpose those liabilities
set forth on SCHEDULE 2.1 hereof, then RIAS shall reimburse AutoCyte in cash for
such amount. In the event that there is a dispute among the parties and their
respective accounting firms with respect to this balance sheet reconciliation
and the parties are unable to resolve such dispute after good faith
negotiations, then the parties agree that they shall cause their respective
accounting firms to select a third independent accounting firm of national
standing to review the AutoCyte Opening Balance Sheet and the matters in dispute
and to report its conclusion with respect to such disputed matter. Such report
shall be final and binding upon the parties hereto. The cost of such review and
report shall be borne equally by RIAS and AutoCyte.
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6.7 NO MATERIAL ADVERSE CHANGE. Since the Balance Sheet Date (and with
specific reference to information included in the Balance Sheet under the column
"AUTOCYTE INC."),
(a) there have been no changes in the assets, properties, business,
operations or condition (financial or otherwise) of RIAS which either
individually or in the aggregate materially and adversely affect the Contributed
Assets or the Transferred Business, nor does RIAS or HLR know of any such change
that is threatened, nor has there been any damage, destruction or loss
materially and adversely affecting the Contributed Assets or the Transferred
Business, whether or not covered by insurance; and
(b) RIAS has not, insofar as it relates to the Contributed Assets or
the Transferred Business:
(i) incurred any indebtedness for borrowed money, other than in
the ordinary course of business in an amount not in excess of $25,000;
(ii) declared or paid any dividend or declared or made any other
distribution of any kind to its shareholders, or made any direct or
indirect redemption, retirement, purchase or other acquisition of any
shares of its capital stock;
(iii) made any loan or advance to any of its shareholders,
officers, directors, employees, consultants, agents or other
representatives (other than travel advances made in the ordinary
course of business), or made any other loan or advance otherwise than
in the ordinary course of business;
(iv) made any payment or commitment to pay any severance or
termination pay to any of its officers, directors, employees,
consultants, agents or other representatives, other than payments to,
or commitments to pay, persons made in the ordinary course of
business, other than Xxxxxx Xxxxxx, Xxxxx Xxxxxxxx and Xxxx Xxxx;
(v) except in the ordinary course of business: entered into any
lease (as lessor or lessee); sold, abandoned or made any other
disposition of any of its assets or properties, granted or suffered
any lien or other encumbrance on any of the Contributed Assets;
entered into or amended any contract or other agreement to which it is
a party, or by or to which it or the Contributed Assets or Transferred
Business are bound or subject, or pursuant to which it agrees to
indemnify any party or to refrain from competing with any party;
(vi) except for inventory or equipment acquired in the ordinary
course of business, made any acquisition of all or any part of the
assets, properties, capital stock or business of any other person;
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(vii) incurred any contingent liability as a guarantor or
otherwise with respect to the obligations of others or cancelled any
material debt or claim owing to, or waived any material right of, the
Transferred Business;
(viii) incurred any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the
Contributed Assets or Transferred Business; or
(ix) made any change in accounting methods or practices, credit
practices or collection policies used by the Transferred Business; and
(c) RIAS has conducted the Transferred Business only in the ordinary
course and consistently with its prior practices.
6.8 Tax Matters. Except as described on Schedule 6.8:
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(a) RIAS has paid or caused to be paid all federal, state, county,
local, foreign and other taxes, including, without limitation, income taxes,
estimated taxes, alternative minimum taxes, excise taxes, sales taxes, use
taxes, import duties, value-added taxes, gross receipts taxes, franchise taxes,
capital stock taxes, employment and payroll-related taxes, withholding taxes,
stamp taxes, transfer taxes, windfall profit taxes, environmental taxes and
property taxes, whether or not measured in whole or in part by net income and
all deficiencies, or other additions to such taxes and interest, fines and
penalties thereon (hereinafter, "TAXES" or, individually, a "TAX") required to
be paid by RIAS through the date hereof whether disputed or not. The provisions
for Taxes reflected in the Financials are adequate to cover any and all Tax
liabilities of RIAS in respect of its assets, properties, business and
operations during the periods covered by said Financials and all prior periods.
Neither RIAS nor HLR knows of any Tax deficiency or claim for additional Taxes
or interest thereon or penalties in connection therewith, asserted or threatened
to be asserted against RIAS by any taxing authority.
(b) RIAS has in accordance with applicable law timely filed all Tax
reports or returns required to be filed by it through the date hereof. Each of
the Tax reports and returns filed by RIAS correctly and accurately reflects the
amount of its Tax liability for such period and other required information.
There has not been any audit of any Tax return filed by RIAS and no audit of any
Tax return of RIAS is in progress and RIAS has not been notified by any Tax
authority that any such audit is contemplated or pending. No extension of time
with respect to any date on which a Tax return was or is to be filed by RIAS is
in force, and no waiver or agreement by RIAS is in force for the extension of
time for the assessment or payment of any Tax. No claim has ever been made by an
authority in a jurisdiction where RIAS does not file reports or returns that
RIAS is or may be subject to taxation by that jurisdiction. There are no
security interests on any of the assets of RIAS that arose in connection with
any failure (or alleged failure) to pay any Taxes. RIAS has never entered into a
closing agreement pursuant to Section 7121 of the Code.
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(c) RIAS has not agreed to, nor is RIAS required to, make any
adjustments under Section 481(a) of the Code by reason of a change in accounting
method or otherwise. RIAS is not required to make any adjustments to its taxable
income under Section 805(d) of the Tax Reform Act of 1986, Section 806(e) of the
Tax Reform Act of 1986 or other similar provision of any tax act, including the
Tax Reform Act of 1986, except for any changes required as a result of Section
803(d) of the Tax Reform Act of 1986 dealing with changes required as a result
of the enactment of Section 263A of the Code.
(d) RIAS is not and has not been a member of an affiliated group of
corporations (as defined in Section 1504(a) of the Code) filing a consolidated
federal income tax return other than a group the common parent of which is Roche
Holdings, Inc. (the "ROCHE GROUP"). RIAS has no liability for the taxes of any
other member of the Roche Group by contract, including any tax sharing
agreement, or as a result of joint and several liability arising out of
consolidated tax filings. RIAS does not own, and has never owned, a direct or
indirect interest in any trust, partnership, corporation or other entity and
therefore AutoCyte is not acquiring from RIAS an interest in any entity.
(e) For purposes of this Agreement, all references to Sections of the
Code shall include any predecessor provisions to such Sections and any similar
provisions of federal, state, local or foreign law.
6.9 Compliance with Laws.
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(a) Subject in each instance to exceptions which would not, either
singly or in the aggregate, interfere in any material respect with the
Contributed Assets or the Transferred Business: (i) RIAS is not in violation of
any order, judgment, injunction, award or decree binding upon it or, to the best
knowledge of RIAS and HLR, RIAS is not in violation of any federal, state, local
or foreign law, ordinance or regulation or any other requirement of any
governmental or regulatory body, court or arbitrator applicable to its business
or assets, including, without limitation, regulations and requirements of the
Occupational Safety and Health Administration ("OSHA"), and laws, ordinances,
regulations and other requirements respecting labor, employment and employment
practices, terms and conditions of employment and wages and hours, or relating
to the uses of its assets, zoning, pollution or protection of the environment,
including, without limitation, laws relating to emissions, discharges, releases
or threatened releases of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes into the environment (including, without
limitation, ambient air, surface water, ground water or land), or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes and (ii) RIAS has never
received notice of, and there has never been, any citation, fine or penalty
imposed or asserted against RIAS for, any such violation or alleged violation.
(b) Set forth on SCHEDULE 6.9 are all of the licenses, permits,
franchises, orders or approvals of any federal, state, local or foreign
governmental or regulatory body,
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including, but not limited to, licenses issued by OSHA or otherwise relating to
employment and environmental matters (collectively, "PERMITS") that are material
to the conduct of RIAS's business and the uses of its assets. RIAS holds all
Permits necessary to operate its business as presently conducted. Such Permits
are in full force and effect and, except as set forth on SCHEDULE 6.9, such
Permits will be transferred to AutoCyte (with any expenses related to such
transfer being borne by AutoCyte) as part of the Contributed Assets. No
violations are or have been recorded with any governmental or regulatory body in
respect of any Permit; and no proceeding is pending or, to the best knowledge of
RIAS and HLR, threatened to revoke or limit any Permit.
6.10 Consents; No Breach. All consents, permits, authorizations and
approvals from any person pursuant to applicable law or contracts or other
agreements with RIAS, that are required in connection with the performance of
RIAS's and HLR's obligations under this Agreement, or the assignment of the
Contributed Assets or the assumption of the Assumed Liabilities are set forth on
SCHEDULE 6.10 hereto. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby and thereby will
not (i) violate any provision of the Certificate of Incorporation or By-laws of
RIAS; (ii) except as set forth on SCHEDULE 6.10, violate, conflict with or
result in the breach of any of the terms or conditions of, result in
modification of the effect of, or otherwise give any other contracting party the
right to terminate, or constitute (or with notice or lapse of time or both
constitute) a default under, any instrument, contract or other agreement to
which RIAS or HLR is a party or to which either of them or any of their assets
or properties may be bound and which are identified on SCHEDULE 6.12; (iii)
violate any order, judgment, injunction, award or decree of any court,
arbitrator or governmental or regulatory body against, or binding upon, either
RIAS or HLR or upon the securities, properties, assets or business of RIAS; (iv)
violate any statute, law or regulation of any jurisdiction as such statute, law
or regulation relates to either RIAS or HLR or to the securities, properties,
assets or business of RIAS which either singly or in the aggregate could have a
material adverse effect on the business, prospects, condition (financial or
otherwise) of the Contributed Assets or the Transferred Business; (v) except as
set forth on SCHEDULE 6.10, violate any Permit; (vi) except as set forth in
SCHEDULE 6.10, require the approval or consent of any foreign, federal, state,
local or other governmental or regulatory body or the approval or consent of any
other person; or (vii) result in the creation of any lien or other encumbrance
on the assets or properties of RIAS.
6.11 Actions And Proceedings. Subject in each instance to exceptions which
would not, either singly or in the aggregate, interfere in any material respect
with the Contributed Assets or the Transferred Business, there are no
outstanding orders, judgments, injunctions, awards or decrees of any court,
governmental or regulatory body or arbitration tribunal against or involving
RIAS relating to or affecting the Transferred Business or the Contributed
Assets. There are no actions, suits or claims or legal, administrative or
arbitral proceedings or, to the best knowledge of RIAS and HLR, investigations
(whether or not the defense thereof or liabilities in respect thereof are
covered by insurance) pending or, to the best knowledge of RIAS and HLR,
threatened against or involving RIAS relating to or affecting
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the Transferred Business or the Contributed Assets. To the best knowledge of
RIAS and HLR, there is no fact, event or circumstance that may give rise to any
suit, action, claim, investigation or proceeding that individually or in the
aggregate could have a material adverse effect upon the Transferred Business or
the Contributed Assets.
6.12 CONTRACTS AND OTHER AGREEMENTS. SCHEDULE 6.12 sets forth all of the
following contracts and other agreements to which RIAS is a party and which
relate to the Transferred Business or the Contributed Assets may be bound or
subject:
(i) contracts and other agreements with any current or former
officer, director, shareholder, employee, consultant, agent or other
representative of RIAS and contracts and other agreements for the
payment of fees or other consideration to any entity in which any
officer or director of RIAS has an interest (all such agreements
signed by employees are substantially the same and, therefore, only
one form of each type of agreement is listed and the names of all
individuals who have not signed such agreements are set forth in the
schedule);
(ii) contracts and other agreements with any labor union or
association representing any employee of RIAS or otherwise providing
for any form of collective bargaining;
(iii) contracts and other agreements for the purchase or sale of
materials, supplies, equipment, merchandise or services other than in
the ordinary course of business;
(iv) contracts and other agreements for the sale of any of the
Contributed Assets other than in the ordinary course of business or
for the grant to any person of any options, rights of first refusal,
or preferential or similar rights to purchase any of such assets;
(v) partnership or joint venture agreements;
(vi) contracts or other agreements under which RIAS agrees to
indemnify any party, other than indemnities and warranties made for
its products or services in the ordinary course of business, or of any
party;
(vii) contracts, options and other agreements for the purchase of
any asset other than for materials, supplies or other similar
merchandise, tangible or intangible, calling for an aggregate purchase
price or payments in any one year of more than $10,000.00 in any one
case;
(viii) contracts and other agreements, other than those made in
the ordinary course of business, that cannot by their terms be
canceled by RIAS and any
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successor or assignee of RIAS without liability, premium or penalty on
no less than thirty days notice;
(ix) contracts and other agreements with customers or suppliers
for the sharing of fees, payment of royalties, the rebating of charges
or other similar arrangements;
(x) contracts and other agreements containing obligations or
liabilities of any kind to holders of the securities of RIAS as such
(including, without limitation, an obligation to register any of such
securities under any federal or state securities laws);
(xi) contracts and other agreements containing covenants of RIAS
not to compete in any line of business or with any person or covenants
of any other person not to compete with RIAS in any line of business;
(xii) contracts and other agreements relating to the acquisition
by RIAS of any operating business or the capital stock of any other
person;
(xiii) contracts and other agreements requiring the payment to
any person of a commission or fee, including contracts or other
agreements with consultants which provide for aggregate payments in
excess of $10,000.00;
(xiv) contracts, indentures, mortgages, promissory notes, loan
agreements, guaranties, security agreements, pledge agreements, and
other agreements relating to the borrowing of money or securing any
such liability;
(xv) distributorship or licensing agreements;
(xvi) contracts under which RIAS will acquire or has acquired
ownership of, or license to, intangible property, including software
(other than software licensed by RIAS as an end user for less than
$10,000.00 and not distributed by it);
(xvii) leases, subleases or other agreements under which RIAS is
lessor or lessee of any real property; or
(xviii) any other material contract or other agreement whether or
not made in the ordinary course of business that has or may have a
material adverse effect on the Contributed Assets or the Transferred
Business.
There have been delivered or made available to AutoCyte true and complete
copies of all of the contracts and other agreements (and all amendments, waivers
or other modifications thereto) set forth on SCHEDULE 6.12. All of such
contracts and other
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agreements are valid, subsisting, in full force and effect, binding upon RIAS,
and to the best knowledge of RIAS and HLR, binding upon the other parties
thereto in accordance with their terms, and RIAS has paid in full or accrued all
amounts now due thereunder and has satisfied in full or provided for all of its
liabilities and obligations thereunder which are presently required to be
satisfied or provided for, and is not in material default under any of them,
nor, to the best knowledge of RIAS and HLR, is any other party to any such
contract or other agreement in material default thereunder, nor does any
condition exist that with notice or lapse of time or both would constitute a
material default thereunder.
6.13 REAL ESTATE. RIAS does not own any real property or any buildings or
other structures and does not have any options or any contractual obligations to
purchase or acquire any interest in real property. The leasehold interests of
RIAS set forth in SCHEDULE 6.12 are subject to no lien or other encumbrance.
6.14 ACCOUNTS AND NOTES RECEIVABLE. All accounts and notes receivable
constituting part of the Contributed Assets arising subsequent to the Balance
Sheet Date have arisen in the ordinary course of business of RIAS, and all such
accounts and notes receivable as well as accounts and notes receivable reflected
on the Balance Sheet, represent valid and enforceable obligations due to RIAS,
have been and are subject to no agreed upon set-off or counter-claim, and have
been collected or are fully collectible in the ordinary course of business of
RIAS in the aggregate recorded amounts thereof in accordance with their terms.
RIAS has no accounts or notes receivable from any person, firm or corporation
which is affiliated with RIAS or from any director, officer or employee of RIAS
which constitute part of the Contributed Assets.
6.15 INVENTORY. The inventory of RIAS included within the Contributed
Assets (including that reflected on the Balance Sheet and any inventory
thereafter acquired by RIAS) is and will be in good and merchantable condition
and suitable and saleable or usable in the manufacture of saleable finished
goods in the ordinary course of business. The value of the inventory stated in
the Balance Sheet reflect the normal inventory valuation policies of RIAS and
were determined in accordance with generally accepted accounting principles,
consistently applied. Purchase commitments for raw materials and parts are not
in excess of normal requirements and none are at prices materially in excess of
then-current market prices. Since the Balance Sheet Date, no such inventory
items have been sold or disposed of except through sales in the ordinary course
of business at profit margins consistent with RIAS's experience in prior years,
and all sales commitments made for RIAS's products are at prices not less than
inventory values plus selling expenses and said profit margins.
6.16 TANGIBLE PROPERTY. The plant, machinery, equipment, furniture,
leasehold improvements, fixtures, vehicles, structures, any related capitalized
items and other tangible property material to the Transferred Business or
included in the Contributed Assets ("TANGIBLE PROPERTY") are in good operating
condition and repair, ordinary wear and tear excepted, and RIAS has not received
notice that any of its Tangible Property is in violation
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of any existing law or any building, zoning, health, safety or other ordinance,
code or regulation.
6.17 Intangible Property.
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(a) RIAS owns the patents, trademarks and service marks set forth in
SCHEDULE 6.17. All of the patents, trademarks and service marks set forth in
SCHEDULE 6.17 have been properly maintained and/or renewed in accordance with
all applicable provisions of law and administrative regulations. These patents,
trademarks and service marks, together with trade secrets, customer lists,
manufacturing and other processes, designs, computer software, data
compilations, research results and other confidential information (collectively,
"PROPRIETARY RIGHTS") which are material to the Transferred Business, whether
owned or licensed by RIAS, are to be contributed by RIAS to AutoCyte. To the
best knowledge of RIAS, the RIAS Proprietary Rights are free and clear of
legally sustainable claims of third parties.
(b) Neither RIAS nor HLR has received any notices of infringement by
RIAS of any Proprietary Rights of others.
(c) RIAS has established policies and procedures to protect its
Proprietary Rights. In particular, RIAS (i) limits dissemination of confidential
information and trade secrets relating to the Transferred Business or the
Contributed Assets to employees who require such disclosure for the business
purposes of RIAS and consultants who have executed written confidentiality
agreements governing their use of such confidential information and trade
secrets and (ii) requires all professional and technical employees of RIAS to
execute agreements in which such employees are required to convey to RIAS rights
to all inventions made by them during the course of their employment.
(d) To the best knowledge of RIAS, no activity of any RIAS employee on
behalf of RIAS violates any agreement or arrangement currently in effect which
such employee has with a former employer.
6.18 TITLE TO ASSETS; LIENS. RIAS owns outright and has good title to all
of its assets and properties included within the Contributed Assets, including,
without limitation, all of the assets and properties reflected on the Balance
Sheet, free and clear of any claim, lien or other encumbrance, except for (i)
assets and properties disposed of, or subject to purchase or sales orders, in
the ordinary course of business since the Balance Sheet Date; or (ii) liens or
other encumbrances securing the claims of materialmen, carriers, landlords and
like persons, all of which are not yet due and payable. Upon delivery of and
payment for the Contributed Assets as herein provided, AutoCyte will acquire all
of RIAS's right, title and interest thereto, free and clear of any claim, lien
or other encumbrance, except as stated in this Section 6.18. The Contributed
Assets, which are being transferred by RIAS to AutoCyte pursuant to this
Agreement, constitute all of the assets which are necessary or currently used by
RIAS in the conduct of the Transferred Business as presently conducted by RIAS.
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6.19 ABSENCE OF UNDISCLOSED LIABILITIES. As at the Balance Sheet Date, RIAS
had no liabilities of any nature, whether accrued, absolute, contingent or
otherwise (including, without limitation, liabilities as guarantor or otherwise
with respect to obligations of others or liabilities for Taxes due or then
accrued or to become due), required to be shown on the Balance Sheet that were
not fully and adequately reflected or reserved against on the Balance Sheet.
RIAS has no such liabilities, other than liabilities (i) fully and adequately
reflected or reserved against on the Balance Sheet, (ii) incurred since the
Balance Sheet Date in the ordinary course of business, or (iii) described in
Section 2.1 of this Agreement. Other than as described in Section 2.1, AutoCyte
is not assuming and shall not be responsible for any liabilities of RIAS,
including, but not limited to, any liabilities relating to or arising out of the
Contributed Assets or the conduct of the Transferred Business, and RIAS shall
have sole responsibility for any and all liabilities which do not constitute
Assumed Liabilities.
6.20 CUSTOMERS AND DISTRIBUTORS. The relationships of RIAS with its
customers and distributors are generally good commercial working relationships.
6.21 EMPLOYER RELATIONS. RIAS has an aggregate of approximately 65
employees who are employed in connection with the Transferred Business,
excluding Xxxxxx Xxxxxx, Xxxxx Xxxxxxxx and Xxxx Xxxx, and, to the best of its
knowledge, generally enjoys a good employer-employee relationship. RIAS is not
delinquent in any material respect in payments to any of its employees or
consultants for any wages, salaries, commissions, bonuses or other direct
compensation for any services performed by them to the date hereof or amounts
required to be reimbursed to such employees. Upon termination of the employment
of any said employees, AutoCyte will not by reason of any act or omission of
RIAS prior to the Closing be liable to any of said employees or consultants for
any payments, other than such as may be included in the Assumed Liabilities.
SCHEDULE 6.21 contains a list of all employees and consultants of RIAS who,
individually, have received or are scheduled to receive compensation from RIAS
for the current fiscal year in excess of $35,000. In each case such SCHEDULE
includes the aggregate annual compensation of each such individual. RIAS does
not employ 100 or more employees (excluding employees who work less than 20
hours per week or who have worked for RIAS less than six of the last twelve
months) and will not have employed 100 or more employees at any point during the
90 days prior to and including the Closing Date.
6.22 HAZARDOUS MATERIALS. To the extent that RIAS has treated, stored and
disposed of all Hazardous Materials (as defined below) at any site owned or
leased by RIAS, it has done so in compliance with all applicable laws, and has
shipped any Hazardous Materials for treatment, storage or disposal at any other
site or facility in compliance with all applicable laws. No other person has
ever generated, used, handled, stored or disposed of any Hazardous Materials at
any site owned or premises leased by RIAS during the period of RIAS's ownership
or lease, nor has there been or is there threatened any release of any Hazardous
Materials on or at any such site or premises during such period. RIAS does not
presently own, operate, lease or use, nor has it previously owned, operated,
leased, or used any site on which underground storage tanks are or were located.
No lien has ever been
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imposed by any governmental agency on any property, facility, machinery, or
equipment owned, operated, leased or used by RIAS in connection with the
presence of any Hazardous Materials. For purposes of this Section 6.22,
"HAZARDOUS MATERIALS" shall mean and include any "hazardous waste" as defined in
either the United States Resource Conservation and Recovery Act or regulations
adopted pursuant to said Act, and also any "hazardous substances" or "hazardous
materials" as defined in the United States Comprehensive Environmental Response,
Compensation and Liability Act. RIAS has provided or made available to AutoCyte
copies of all documents, records and information available to RIAS concerning
any environmental or health and safety matter relevant to RIAS, whether
generated by RIAS or others, including, without limitation, environmental
audits, environmental risk assessments, site assessments, documentation
regarding off-site disposal of Hazardous Materials, spill control plans, and
reports (if any), permits, licenses, approvals, consents and other
authorizations related to environmental or health and safety matters issued by
any governmental agency.
6.23 FULL DISCLOSURE. No representation or warranty of RIAS or HLR
contained in this Agreement, and, to the best knowledge of RIAS and HLR, no
document or other paper furnished by or on behalf of RIAS or HLR to AutoCyte (or
any of its agents) pursuant to this Agreement or in connection with the
transactions contemplated hereby, taken as a whole, contains an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements made, in the context in which made,
not false or misleading. No representation or warranty is being made or shall be
deemed to be made herein by HLR or RIAS as to (i) the merchantability or fitness
for a particular purpose of any of the Contributed Assets, or (ii) the future
profitability of the Contributed Assets or the Transferred Business.
7. Representations and Warranties of RIAS.
--------------------------------------
RIAS hereby represents and warrants to AutoCyte as follows:
7.1 EXPERIENCE. RIAS is capable of evaluating the merits and risks of its
investment in AutoCyte and has the capacity to protects its own interests.
7.2 INVESTMENT. RIAS is acquiring the AutoCyte Shares for investment for
its own account, not as a nominee or agent, and not with the view to, or for
resale in connection with, any distribution thereof. RIAS understands that the
AutoCyte Shares to be purchased have not been and will not be, registered under
the Securities Act of 1933, as amended (the "SECURITIES ACT"), by reason of a
specific exemption from the registration provisions of the Securities Act, the
availability of which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of RIAS's representations as expressed
herein.
7.3 RULE 144. RIAS acknowledges that the AutoCyte Shares must be held until
subsequently registered under the Securities Act or unless an exemption from
such
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registration is available. RIAS is aware of the provisions of Rule 144
promulgated under the Securities Act that permit limited resale of shares
purchased in a private placement subject to the satisfaction of certain
conditions, including, among other things, the existence of a public market for
the shares, the availability of certain current public information about
AutoCyte, the resale occurring not less than two years after a party has
purchased and paid for the security to be sold, the sale being effected through
a "broker's transaction" or in transactions directly with a "market maker" and
the number of shares being sold during any three-month period not exceeding
specified limitations.
7.4 NO PUBLIC MARKET. RIAS understands that no public market now exists for
any of the securities issued by AutoCyte and that AutoCyte has made no
assurances that a public market will ever exist for AutoCyte's securities.
8. Representations and Warranties of AutoCyte
------------------------------------------
AutoCyte represents and warrants to HLR and RIAS as follows:
8.1 ORGANIZATION. AutoCyte is duly organized, validly existing and in good
standing under the laws of Delaware, and has the corporate power and lawful
authority to own, lease and operate its assets, properties and business and to
carry on its business as now being and as heretofore conducted.
8.2 CAPITALIZATION. The authorized capital stock of AutoCyte (immediately
prior to the Closing) consists of 20,500,000 shares of Common Stock, none of
which shares are issued and outstanding, and 9,925,000 shares of preferred
stock, $.01 par value per share, all of which have been designated Series A
Convertible Preferred Stock and none of which are issued and outstanding.
8.3 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. AutoCyte has the corporate
power and all authority and approvals required to enter into, execute and
deliver this Agreement and to perform fully its obligations hereunder, and this
Agreement has been duly executed and delivered and is the valid and binding
obligation of AutoCyte enforceable in accordance with its terms. The issuance,
sale and delivery of the AutoCyte Shares in accordance with this Agreement has
been duly authorized by all necessary corporate action on the part of AutoCyte.
The AutoCyte Shares, when so issued, sold and delivered in accordance with the
provisions of this Agreement will be duly and validly issued, fully paid and
non-assessable.
8.4 BROKERAGE. No broker, finder, agent or similar intermediary has acted
on behalf of AutoCyte in connection with this Agreement or the transactions
contemplated hereby, and there are no brokerage commissions, finders' fees or
similar fees or commissions payable in connection therewith based on any
agreement, arrangement or understanding with AutoCyte or any action taken by
AutoCyte.
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8.5 ACTIONS AND PROCEEDINGS. There are no actions, suits or claims, legal,
administrative or arbitral proceedings pending or, to the best knowledge of
AutoCyte, threatened against or involving AutoCyte that individually or in the
aggregate could have a material adverse effect upon the transactions
contemplated hereby. To the best knowledge of AutoCyte, there is no fact, event
or circumstance that may give rise to any suit, action, claim, investigation or
proceeding that individually or in the aggregate could have a material adverse
effect upon the transactions contemplated hereby.
8.6 NO BREACH. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not (i)
violate any provision of the Certificate of Incorporation or By-laws of
AutoCyte; (ii) violate, conflict with or result in the breach of any of the
terms or conditions of, result in modification of the effect of, or otherwise
give any other contracting party the right to terminate, or constitute (or with
notice or lapse of time or both constitute) a default under, any material
instrument, contract or other agreement to which AutoCyte is a party or to which
it or any of its assets or properties may be bound or subject; (iii) violate any
order, judgment, injunction, award or decree of any court, arbitrator or
governmental or regulatory body against, or binding upon, AutoCyte or upon the
securities, properties, assets or business of AutoCyte; (iv) violate any
statute, law or regulation of any jurisdiction as such statute, law or
regulation relates to AutoCyte or to the securities, properties, assets or
business of AutoCyte; (v) require the approval or consent of any foreign,
federal, state, local or other governmental or regulatory body; or (vi) result
in the creation of any lien or other encumbrance on the assets or properties of
AutoCyte.
8.7 FDA APPROVALS. AutoCyte acknowledges that certain products being
transferred under this Agreement, including without limitation, a cervical
cytology slide preparation system (referred to as "CytoRich" or "Autocyte Prep")
and a computer automated cervical cytology screening system (referred to as
"Autocyte" or "AutoCyte Screen"), are still in the research and development
stage and will require regulatory approval from the U.S. Food and Drug
Administration and other similar foreign regulatory authorities, if deemed
appropriate by such authorities, before such products can be legally marketed in
such jurisdictions.
9. Conditions Precedent to the Obligation of AutoCyte to Close.
-----------------------------------------------------------
The obligation of AutoCyte to enter into and complete the Closing is
subject, at the option of AutoCyte, to the fulfillment of the following
conditions, any one or more of which may be waived by it:
9.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations and
warranties of RIAS and HLR contained in this Agreement shall be true in all
material respects on and as of the Closing Date. Each of RIAS and HLR shall have
performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied with by such
parties on or prior to the Closing
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Date. Each of RIAS and HLR shall have delivered to AutoCyte a certificate, dated
the Closing Date and signed by an officer of RIAS and HLR, as the case may be,
to the foregoing effect and stating that all conditions to AutoCyte's
obligations hereunder have been satisfied.
9.2 THIRD PARTY CONSENTS. AutoCyte shall have received evidence of the
receipt of all authorizations, consents and permits of others required to permit
the consummation by AutoCyte, RIAS and HLR of the transactions contemplated by
this Agreement, including but not limited to, all consents set forth on SCHEDULE
6.10, except to the extent waived by AutoCyte in writing.
9.3 OPINION OF COUNSEL TO RIAS AND HLR. AutoCyte shall have received the
opinion of Crummy, Del Deo, Dolan, Griffinger & Xxxxxxxxx, counsel to RIAS and
HLR, dated the Closing Date, addressed to AutoCyte, and substantially in the
form of EXHIBIT A hereto.
9.4 LITIGATION. No action, suit or proceeding shall have been instituted
before any court or governmental or regulatory body, or instituted or threatened
by any governmental or regulatory body, to restrain, modify or prevent the
carrying out of the transactions contemplated hereby, or to seek damages or a
discovery order in connection with such transactions, or that has or may have,
in the reasonable opinion of AutoCyte, a materially adverse effect on the
assets, properties, business, operations or condition (financial or otherwise)
of RIAS.
9.5 DELIVERY OF INSTRUMENTS OF TRANSFER. RIAS shall have delivered or
caused to be delivered to AutoCyte instruments of transfer in conformity with
Section 4 above.
9.6 ASSIGNMENT OF PROPRIETARY RIGHTS BY AFFILIATES. All affiliates of RIAS
who have been assigned Proprietary Rights relating to the Contributed Assets by
employees of RIAS or otherwise shall have assigned such rights to AutoCyte.
9.7 SUPPORT AGREEMENT. The parties shall have entered into a Support
Agreement, in the form attached hereto as EXHIBIT B, providing for, among other
things, the removal of the Excluded Assets from the facilities of AutoCyte.
10. Conditions Precedent to the Obligation of RIAS and HLR to Close.
---------------------------------------------------------------
The obligation of RIAS and HLR to enter into and complete the Closing is
subject, at the option of RIAS, to the fulfillment of the following conditions,
any one or more of which may be waived:
10.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations and
warranties of AutoCyte contained in this Agreement shall be true in all material
respects on and as of the Closing Date. AutoCyte shall have performed and
complied in all material
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respects with all covenants and agreements required by this Agreement to be
performed or complied with by it on or prior to the Closing Date. AutoCyte shall
have delivered to RIAS and HLR a certificate, dated the Closing Date and signed
by an officer of AutoCyte, to the foregoing effect and stating that all
conditions to the obligations of RIAS and HLR hereunder have been satisfied.
10.2 DELIVERY OF ASSUMPTION AGREEMENT. AutoCyte shall have delivered or
caused to be delivered to RIAS an agreement for assumption of the Assumed
Liabilities by AutoCyte, in the form attached hereto as EXHIBIT C.
10.3 OPINION OF COUNSEL TO AUTOCYTE. RIAS and HLR shall have received the
opinion of Xxxxxx & Dodge LLP, counsel to AutoCyte, dated the Closing Date and
substantially in the form of EXHIBIT D hereto.
10.4 LITIGATION. No action, suit or proceeding shall have been instituted
before any court or governmental or regulatory body, or instituted or threatened
by any governmental or regulatory body, to restrain, modify or prevent the
carrying out of the transactions contemplated hereby, and such action, suit or
proceeding shall not have been stayed.
10.5 FINANCING TRANSACTIONS. The transactions contemplated by that certain
Series A Convertible Preferred Stock Purchase Agreement of even date herewith by
and among AutoCyte and the Purchasers named therein shall be completed
immediately following the transactions contemplated hereby.
11. Indemnification.
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11.1 SURVIVAL. Notwithstanding any right of any party to fully investigate
the affairs of the other party and notwithstanding any knowledge of facts
determined or determinable by such party pursuant to such investigation or right
of investigation, each party has the right to rely fully upon the
representations, warranties, covenants and agreements of each other party in
this Agreement or in any Schedule, certificate or financial statement delivered
by any party pursuant hereto. All such representations, warranties, covenants
and agreements shall survive the execution and delivery hereof and the Closing
hereunder and be subject to indemnification in accordance with this Section 11,
and, except as otherwise specifically provided in this Agreement, shall
thereafter:
(a) survive for 10 years following the Closing with respect to any
Environmental Claim (as defined below);
(b) survive for five years following the Closing with respect to any
claim based upon, arising out of or otherwise in respect of any inaccuracy in,
or breach of, any representation or warranty of RIAS or HLR contained in
Sections 6.3, 6.6, 6.17 and 6.18 (a "Clause (b) Claim");
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(c) survive until the expiration of the applicable statute of
limitations with respect to any Tax Claim (as defined below); and
(d) terminate and expire on the second anniversary of the Closing Date
with respect to any General Claim or RIAS Claim (as such terms are hereinafter
defined);
provided, however, that once a Claims Notice of any of the foregoing claims has
been given hereunder, additional claims based upon, arising out of or otherwise
in respect of any fact, circumstance, action or proceeding upon which the
original claim arose may be made at any time prior to the final resolution of
such claim (by means of a final, non-appealable judgment of a court of competent
jurisdiction, a binding arbitration decision or a settlement approved by the
parties involved) even if such resolution occurs after the applicable
termination date for such claim, such date being deemed to have been extended to
the date of such final resolution.
As used in this Section 11, the following terms have the following meanings:
(i) "GENERAL CLAIM" means any claim (other than an Environmental
Claim, a Clause (b) Claim or a Tax Claim) based upon, arising out of
or otherwise in respect of any inaccuracy in or any breach of any
representation, warranty, covenant or agreement of RIAS or HLR
contained in this Agreement.
(ii) "ENVIRONMENTAL CLAIM" means any claim based upon, arising
out of or otherwise in respect of any inaccuracy in or any breach of
any representation, warranty, covenant or agreement of RIAS or HLR
contained in this Agreement relating to environmental matters;
(iii) "TAX CLAIM" means any claim based upon, arising out of or
otherwise in respect of (A) issues raised on audit by Tax authorities
with respect to RIAS's business on or before the Closing Date, (B) any
inaccuracy in or any breach of any representation, warranty, covenant
or agreement of RIAS or HLR contained in this Agreement related to
Taxes or (C) any other Tax liabilities of RIAS other than Taxes which
are Assumed Liabilities.
(iv) "RIAS CLAIM" means any claim based upon, arising out of or
otherwise in respect of any inaccuracy in or any breach of any
representation, warranty, covenant or agreement of AutoCyte contained
in this Agreement.
(v) "AUTOCYTE CLAIM" means any Environmental Claim, Clause (b)
Claim, Tax Claim or General Claim.
11.2 OBLIGATION OF RIAS AND HLR TO INDEMNIFY. Subject to the limitations
set forth below and in Section 11.5 hereof and to the termination provisions set
forth in Section 11.1, RIAS and HLR, jointly and severally, agree to indemnify,
defend and hold harmless
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AutoCyte (and its directors, officers, employees, affiliates and assigns) from
and against all losses, liabilities, damages, deficiencies, costs or expenses
(including interest and penalties imposed or assessed by any judicial or
administrative body and reasonable attorneys fees) ("LOSSES") based upon,
arising out of or otherwise in respect of any AutoCyte Claim.
11.3 OBLIGATION OF AUTOCYTE TO INDEMNIFY. Subject to the limitations set
forth below and in Section 11.5 hereof and to the termination provisions set
forth in Section 11.1, AutoCyte agrees to indemnify, defend and hold harmless
RIAS and HLR from and against any Losses based upon, arising out of or otherwise
in respect of any RIAS Claim.
11.4 Notice and Opportunity to Defend.
--------------------------------
(a) NOTICE OF ASSERTED LIABILITY. Promptly after receipt by any party
hereto (the "INDEMNITEE") of notice of any demand, claim or circumstances which,
with the lapse of time, would give rise to a claim or the commencement (or
threatened commencement) of any action, proceeding or investigation (an
"ASSERTED LIABILITY") that may result in a Loss, the Indemnitee shall give
notice thereof (the "CLAIMS NOTICE") to all other party or parties obligated to
provide indemnification pursuant to Sections 11.2 or 11.3 hereof (the
"INDEMNIFYING PARTY"). The Claims Notice shall describe the Asserted Liability
in reasonable detail, and shall indicate the amount (estimated, if necessary) of
the Loss that has been or may be suffered by the Indemnitee.
(b) OPPORTUNITY TO DEFEND. The Indemnifying Party may elect to
compromise or defend, and control the defense of, at its own expense and by
counsel reasonably satisfactory to the Indemnitee, any Asserted Liability,
provided that the Indemnitee shall have no liability under any compromise or
settlement agreed to by the Indemnifying Party which it has not approved in
writing. If the Indemnifying Party elects to compromise or defend such Asserted
Liability, it shall within 30 days (or sooner, if the nature of the Asserted
Liability so requires) notify the Indemnitee of its intent to do so, and the
Indemnitee shall cooperate upon the request and at the expense of the
Indemnifying Party, in the compromise of, or defense against, such Asserted
Liability. If the Indemnifying Party elects not to compromise or defend the
Asserted Liability, or fails to notify the Indemnitee of its election as herein
provided, the Indemnitee may pay, compromise or defend such Asserted Liability
and receive full indemnification for its Losses as provided in Sections 11.2 and
11.3 hereof, subject to the limitations included in Section 11.5 below. In any
event, the Indemnitee and the Indemnifying Party may participate, at their own
expense, in the defense of such Asserted Liability by the Indemnifying Party or
the Indemnitee, respectively. If the Indemnifying Party chooses to defend any
claim, the Indemnitee shall make available to the Indemnifying Party any books,
records or other documents within its control that are reasonably requested for
such defense and shall otherwise cooperate with the Indemnifying Party, in which
event the Indemnitee shall be reimbursed for its out-of-pocket expense.
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11.5 LIMITATIONS ON INDEMNIFICATION. The indemnification provided for in
Sections 11.2 and 11.3 hereof shall be subject to the following limitations:
(a) DEDUCTIBLE ON CLAIMS. AutoCyte shall not be entitled to receive
any indemnification payments based upon, arising out of or otherwise in respect
of any AutoCyte Claim until the aggregate indemnification payments equal
$150,000, whereupon AutoCyte shall receive indemnification payments only for
sums in excess of such amount. RIAS and HLR shall not be entitled to receive any
indemnification payments based upon, arising out of or otherwise in respect of
any RIAS Claim until the aggregate indemnification payments equal $150,000
whereupon RIAS and HLR shall receive indemnification payments only for sums in
excess of such amount.
(b) CEILING ON CLAIMS. Anything in this Agreement to the contrary
notwithstanding, (I) the liability of RIAS and HLR to AutoCyte under this
Section 11 shall in no event (i) exceed, in the aggregate, $8,000,000.00 with
respect to Tax Claims, Environmental Claims and General Claims based on Section
6.9, (ii) exceed, in the aggregate, $4,000,000 with respect to all AutoCyte
Claims other than those set forth in the preceding clause (i), and (iii) exceed,
in the aggregate, $8,000,000 with respect to all AutoCyte Claims, and (II) the
liability of AutoCyte to RIAS and HLR under this Section 11 shall in no event
exceed $1,000,000.00.
(c) OTHER BENEFITS. In determining the amount of any Loss, there shall
be taken into account any tax benefit, insurance proceeds or other similar
recovery or offset realized, directly or indirectly, by the Indemnitee.
12. Further Assurances.
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12.1 Each of HLR, RIAS and AutoCyte will execute and deliver such further
instruments of conveyance, transfer and assignment and will take such other
actions as each of them may reasonably request of the other in order to
effectuate the purposes of this Agreement and to carry out the terms hereof. At
the request of AutoCyte and without further consideration, HLR and/or RIAS will
execute and deliver to AutoCyte such other instruments of transfer, conveyance,
assignment and confirmation and take such action as AutoCyte may reasonably deem
necessary or desirable in order to more effectively transfer, convey and assign
to AutoCyte and to confirm AutoCyte's title or rights to all of the Contributed
Assets, to put AutoCyte in actual possession and operating control thereof and
to permit AutoCyte to exercise all rights with respect thereto (including,
without limitation, rights under contracts and other arrangements as to which
the consent of any third party to the transfer thereof shall not have previously
been obtained). At the request of RIAS and without further consideration,
AutoCyte will execute and deliver to RIAS all instruments, undertakings or other
documents and take such action as RIAS may reasonably deem necessary or
desirable in order to have AutoCyte fully assume and discharge the Assumed
Liabilities and relieve RIAS of any liability or obligations with respect
thereto and evidence the same to third parties. Notwithstanding the provisions
of this Section 12.1, HLR, RIAS
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and AutoCyte shall not be obligated, in connection with the foregoing, to expend
monies other than reasonable out-of-pocket expenses and attorneys' fees.
12.2 If any consent, approval or amendment required to be obtained by RIAS
or HLR in order to effect the transactions contemplated hereby is not obtained
on or prior to the Closing Date, then HLR, RIAS and AutoCyte will use their best
efforts following the Closing to obtain any such consent, approval or amendment
required to novate and/or assign all agreements, licenses and other rights of
any nature whatsoever to the Contributed Assets and the Transferred Business to
AutoCyte. In the event and to the extent that HLR and/or RIAS are unable to
obtain any such required consent, approval or amendment (i) HLR and/or RIAS
shall continue to be bound thereby and (ii) unless not permitted by law or the
terms thereof, AutoCyte shall pay, perform and discharge fully all the
obligations of HLR or RIAS thereunder from and after the Closing Date. HLR and
RIAS shall, without further consideration therefor, pay and remit to AutoCyte
promptly all monies, rights and other considerations received in respect of such
performance. HLR and RIAS shall exercise or exploit their rights and options
under all such agreements, licenses and other rights and commitments referred to
in this Section 12.2 only as reasonably directed by AutoCyte and at AutoCyte's
expense. If and when any such consent shall be obtained or such agreement, lease
or other right shall otherwise become assignable or able to be novated, HLR or
RIAS, as the case may be, shall promptly assign and novate all their rights and
obligations thereunder to AutoCyte without payment of further consideration and
AutoCyte shall, without the payment of any further consideration therefor,
assume such rights and obligations. To the extent that the assignment of any
contract or agreement (or their proceeds) pursuant to this Section 12.2 is
prohibited by law, the assignment provisions of this Section shall operate to
create a subcontract with AutoCyte to perform each relevant unassignable HLR or
RIAS contract or agreement at a subcontract price equal to the monies, rights
and other considerations received by HLR or RIAS with respect to the performance
by HLR or RIAS under such contract.
12.3 HLR, RIAS and AutoCyte agree to cooperate to determine the amount of
sales, transfer or other similar taxes or fees (including, without limitation,
all real estate, copyright and trademark transfer taxes and recording fees)
payable in connection with the transactions contemplated by this Agreement (the
"Transaction Taxes"). HLR, RIAS and/or AutoCyte, as the case may be, agree to
file promptly and timely the returns for such Transaction Taxes with the
appropriate taxing authorities and remit payment of the Transaction Taxes in
compliance with all applicable federal, state and local laws.
12.4 All real property, personal property and similar taxes and
installments of general and special assessments, if any, with respect to the
Contributed Assets shall be prorated on the basis of actual days elapsed between
the commencement of the relevant fiscal tax year and the Closing Date, based on
a 365-day year and the most recent tax statements or bills applicable thereto,
without later adjustment. RIAS shall be responsible for all such taxes, payments
and charges allocable to all times prior to and including the Closing Date and
AutoCyte shall be responsible for all such taxes, payments and charges allocable
to all
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times after the Closing Date. Following the Closing Date, each party shall, upon
request of the other party, immediately reimburse the other party for any such
taxes, payments and charges or other expenses for which said party is
responsible but have been paid by or are owed by the other party and for
collections made by one party on behalf of the other party.
12.5 AutoCyte acknowledges that, from and after the Closing Date, it will
be solely responsible for establishing its own employee benefit plans and that
no benefit plan of RIAS will be transferred from RIAS to AutoCyte as part of the
transactions contemplated hereby. AutoCyte also agrees to make offers of
employment to all employees of RIAS formerly associated with the Transferred
Business, with the exception of, Xxxxxx Xxxxxx, Xxxxx Xxxxxxxx and Xxxx Xxxx.
13. Provision of Corporate Records; Access to Information.
-----------------------------------------------------
13.1 As soon as practicable after the Closing Date, RIAS shall deliver to
AutoCyte all corporate books and records relating exclusively to the Transferred
Business and the Transferred Employees not then in possession of the Transferred
Business (the "Books and Records"). Such Books and Records shall be property of
AutoCyte, but shall be retained and made available readily to RIAS for review
and duplication until the earlier of (i) notice from RIAS that such records are
no longer needed by RIAS or (ii) the fourth anniversary of the Closing Date.
13.2 From and after the Closing Date, RIAS and AutoCyte shall afford to
each other and to each other's authorized accountants, counsel and other
designated representatives reasonable access and duplicating rights (with
copying costs to be borne by the requesting party) during normal business hours
to all Books and Records and documents, communications, items and matters
(collectively, "Information") within each other's knowledge, possession or
control existing on the Closing Date and relating to the Contributed Assets and
the Transferred Business, insofar as such access is reasonably requested by RIAS
or AutoCyte, as the case may be and shall use reasonable efforts to cause
persons or firms possessing relevant Information to give similar access).
Information may be requested under this Section 13.2 for, without limitation,
audit, accounting, claims, actions, litigation and tax purposes, as well as for
purposes of fulfilling disclosure and reporting obligations, but not for
competitive purposes.
13.3 RIAS and AutoCyte shall hold, and shall cause its officers, employees,
agents, consultants and advisors to hold, in strict confidence, unless compelled
to disclose by judicial or administrative process or, in the opinion of its
independent legal counsel, by other requirements of law (in which case the
non-disclosing party shall receive reasonable prior notice from the disclosing
party and shall be given the opportunity to seek a protective order eliminating
or restricting any such disclosure obligation), all confidential Information
concerning the other party furnished it by such other party or its
representatives pursuant to this Agreement (except after the Closing Date to the
extent that such Information can be shown to have been (i) available to such
party on a non-confidential basis prior to its
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disclosure by the other party, (ii) in public domain through no fault of such
party or (iii) later lawfully acquired from other sources by the party to which
it was furnished), and each party shall not release or disclose such Information
to any other person, except its auditors, attorneys, financial advisors, bankers
and other consultants and advisors who shall be bound by the provisions of this
Section 13.3. Each party shall be deemed to have satisfied its obligation to
hold confidential Information concerning or supplied by the other party if it
exercises the same care as it takes to preserve confidentiality for its own
similar Information.
14. TAX TREATMENT. The parties intend that, and this agreement should be
interpreted and implemented in such a way that, the transactions described above
shall be tax free to the entities involved and to their shareholders, and, more
specifically, that the transfer described in Section 1 intended to qualify as a
tax-free transaction within the meaning of Section 351 of the Internal Revenue
Code of 1986, as amended (the "Code") or alternatively, as nontaxable capital
contributions.
15. NON-COMPETITION. For the period of time extending for five (5) years after
the Closing Date, HLR and RIAS shall not compete, directly or indirectly, with
AutoCyte in the fields of (i) computer-assisted, cytological image analysis and
(ii) preparation of cellular monolayers for cytological image analysis, as these
fields relate to the Transferred Business. Nothing in this Section 15 shall
limit in any way HLR, RIAS, and their respective affiliates from engaging (i) in
the laboratory screening activities presently being conducted by Laboratory
Corporation of America or (ii) other forms of diagnosis and clinical analysis
which do not utilize computer-assisted, cytological image analysis, such as via
polymerase chain reaction, or PCR, or other chemical analyses.
16. Miscellaneous.
-------------
16.1 STOCK CERTIFICATE LEGENDS. Each certificate representing the AutoCyte
Shares shall bear a legend substantially in the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL SUCH
SHARES ARE REGISTERED UNDER THE ACT AND SUCH LAWS OR (1)
REGISTRATION UNDER APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED AND (2) AN OPINION OF COUNSEL TO THE COMPANY IS
FURNISHED TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER
THE ACT IS NOT REQUIRED."
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The foregoing legend shall be removed from the certificates representing
the AutoCyte Shares at the request of the holder thereof at such time as they
become registered under the Securities Act or eligible for resale pursuant to
Rule 144(k) under the Securities Act.
16.2 ENTIRE AGREEMENT. This Agreement, including the schedules, annexes and
exhibits hereto and the agreements and other documents referred to herein or
contemplated hereby, shall constitute the entire agreement between HLR, RIAS and
AutoCyte with respect to the subject matter hereof and shall supersede all
previous negotiations, commitments and writings with respect to such subject
matter.
16.3 AMENDMENT. This Agreement may be amended, modified or supplemented
only by written agreement of the parties.
16.4 SUCCESSORS AND ASSIGNS. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any party
without the prior written consent of the other party.
16.5 NO THIRD PARTY BENEFICIARIES. This Agreement is solely for the benefit
of the parties and is not intended to confer upon any other person except the
parties any rights or remedies hereunder. There are no third party beneficiaries
to this Agreement.
16.6 GOVERNING LAW. This Agreement shall be governed by and construed under
the laws of the State of Delaware.
16.7 NOTICES. Any notice or other communication by either party to the
other parties shall be in writing and shall be deemed effectively given upon the
date of receipt if personally delivered, telecopied or telexed to the party to
whom the same is directed, or upon the third day after mailing if mailed to such
party, by registered or certified mail, postage prepaid, addressed to the
following addresses:
(a) if to AutoCyte:
AutoCyte, Inc.
000 Xxxxxx Xxxxx
Xxxx Xxxxxxx, Xxxxx Xxxxxxxx 00000
with a copy to:
Xxxxxxx X. Xxxxxx, Esq.
Xxxxxx & Dodge LLP
Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
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(b) if to RIAS or HLR:
Xxxxxx Xxx Xxxxx
President
Roche Diagnostics
0000 Xxxxxxx 000
Xxxxxxxxxx, XX 00000-0000
with a copy to:
General Counsel
c/o Xxxxxxxx-Xx Xxxxx Inc.
000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
or to such other address and to the attention of such other person or officer,
as such party may designate in writing.
16.8 BROKERS. HLR and RIAS hereby agree to indemnify AutoCyte, and hold it
harmless from and against any claims for finders' fees or brokerage commission
in relation to or in connection with the consummation of the transactions
contemplated hereby as a result of any agreement or understanding between HLR or
RIAS and any third party. The obligation of HLR and RIAS hereunder shall be
subject to the procedural terms of Section 11 hereof, and any claim by AutoCyte
hereunder shall be considered a Clause (b) Claim for purposes thereof; provided,
however, that the limitations of liability set forth in Section 11.5 shall not
apply to claims for indemnification asserted by AutoCyte under this Section
16.8.
16.9 PUBLIC ANNOUNCEMENTS. Unless required by law, no party to this
Agreement shall issue any press release unless the other parties have approved
such press release in advance.
16.10 EXPENSES. None of the parties hereto shall have any obligation to pay
any of the fees and expenses of any other party incident to the negotiation,
preparation and execution of this Agreement, including the fees and expenses of
counsel, accountants, investment bankers and other experts.
16.11 PARTIAL INVALIDITY. In the event that any term or provision of this
Agreement shall to any extent be held by a court of proper jurisdiction to be
invalid or unenforceable for any reason, the remainder of this Agreement shall
not be affected thereby, and the remaining terms and provisions hereof shall
remain in full force and effect. The invalid or unenforceable provisions shall,
to the extent permitted by law, be deemed amended and given such interpretation
as will achieve the intent of this Agreement.
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16.12 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
22nd day of November, 1996.
AUTOCYTE, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
ROCHE IMAGE ANALYSIS SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxx Xxxxx
------------------------------------
Name: Xxxxxx X. Xxx Xxxxx
Title: Vice President
HLR HOLDINGS INC.
By: /s/ Xxxxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxxxx X. Xxxxx
Title: Secretary
28
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EXHIBIT A
[LETTERHEAD OF CRUMMY, DEL DEO, DOLAN, GRIFFINGER & XXXXXXXXX]
November 22, 1996
AutoCyte, Inc.
000 Xxxxxx Xxxxx
Xxxx Xxxxxxx, Xxxxx Xxxxxxxx 00000
Re: Roche Image Analysis Systems, Inc.
HLR Holdings, Inc.
----------------------------------
Ladies and Gentlemen:
We have acted as counsel to Roche Image Analysis Systems, Inc., a
Delaware corporation ("Seller") and its sole stockholder HLR Holdings, Inc., a
Delaware corporation (the "Stockholder") in connection with the contribution
of substantially all of the assets of the Seller to AutoCyte, Inc., a Delaware
corporation (the "Buyer"), pursuant to the terms and conditions of the
Contribution Agreement dated as of November 22, 1996, among the Seller, the
Stockholder and Buyer (the "Contribution Agreement"). This opinion is
delivered to you pursuant to Section 9.3 of the Contribution Agreement. All
capitalized terms used herein shall have the respective defined meanings set
forth in the Contribution Agreement.
For purposes of this opinion, we have reviewed the provisions of the
Contribution Agreement, the Certificate of Incorporation and the By-laws of
Seller and Stockholder, and the corporate proceedings of Seller and
Stockholder, with respect to the Contribution Agreement. We have not reviewed
other documents or participated in negotiations or documentation of the
Contribution Agreement or related transactions and are not otherwise familiar
with the affairs of Seller or Stockholder. We have examined or relied upon
originals or copies, certified or otherwise identified to our satisfaction, of
such corporate records, documents, certificates and other instruments,
including certificates of corporate secretaries (which we have relied upon in
rendering the opinions expressed below with respect to the valid existence and
good standing of Seller and the Stockholder), as we have deemed necessary or
appropriate for the purposes of
30
CRUMMY, DEL DEO, DOLAN, GRIFFINGER & XXXXXXXXX
AutoCyte, Inc.
November 22, 1996
Page 2
rendering this opinion. As to questions of fact material to the opinion
rendered therein, we have, when relevant facts were not independently
established by us, relied upon statements by Seller and Stockholder in the
Contribution Agreement and certificates of the Stockholder and Seller or their
respective officers, or other evidence satisfactory to us.
In our examination, we have assumed the genuineness of all signatures
other than those of Seller and the Stockholder, the capacity, power and
authority of all parties other than the Seller and the Stockholder to execute
and deliver all applicable documents, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies, and the
authenticity of the originals of such latter documents. We have also assumed
that the Contribution Agreement is your legal, valid and binding obligation
enforceable against you in accordance with its terms, and that any
representations, covenants and warranties made by you therein were and are
true and correct, that you have complied with all conditions precedent
required to be performed or complied with by you thereunder and that all
applicable antitrust and securities laws have been complied with by all
parties.
To the extent that any opinion expressed herein is based upon "our
knowledge", or words of similar import, these words imply that in the course
of our said representation, no information has come to the attention of any
attorney currently associated with this firm who has generally been involved
in said representation that would give us actual knowledge or actual notice of
the existence or absence of facts which would change the opinions stated
herein.
This opinion is limited to the laws of the State of New Jersey, the
corporate law of the State of Delaware and the Federal laws of the United
States.
Based upon and subject to the foregoing, it is our opinion that:
1. Seller and the Stockholder are corporations duly organized, validly
existing and in good standing with the Secretary of State of Delaware under
the laws of the State of Delaware with full corporate power and authority to
own or lease their properties and to conduct their business, and to enter into
and complete the transactions contemplated by the Contribution Agreement.
2. Each of the Seller and the Stockholder has full power and authority
to execute and deliver the Contribution Agreement, and the Contribution
Agreement has been duly and validly executed and delivered by the Seller and
the Stockholder and constitutes the legal, valid and binding obligation of the
Seller and the Stockholder, enforceable in accordance with its terms,
31
CRUMMY, DEL DEO, DOLAN, GRIFFINGER & XXXXXXXXX
AutoCyte, Inc.
November 22, 1996
Page 3
except as such enforceability may be limited by bankruptcy, reorganization,
insolvency, moratorium or other similar laws from time to time in effect
affecting creditors' rights generally and by principles governing the
availability of equitable remedies.
3. Neither the execution, delivery or performance by Seller or the
Stockholder of the Contribution Agreement will (i) contravene any provisions
of the Certificate of Incorporation or By-laws of Seller or the Stockholder or
(ii) violate any judgment, decree, order, statute, rule or regulation to our
knowledge applicable to Seller or the Stockholder.
4. The instruments of transfer delivered by the Seller pursuant to
Section 4 of the Contribution Agreement have been duly authorized by all
necessary corporate action by the Seller and the Stockholder and each of said
instruments has been duly executed and delivered by the Seller.
The opinions hereinabove set forth are qualified as follows:
A. We express no opinion herein as to whether a court would (1) enforce
payment of the Contribution Agreement upon acceleration thereof if such
acceleration was declared as a consequence of the failure by you to perform or
observe or cause another person to perform or observe a provision or
provisions thereof which was not material, or (2) limit enforcement of any of
your rights or remedies thereunder, if the enforcement thereof under the
circumstances would violate an implied covenant of good faith and fair
dealing.
B. We express no opinion as to (1) the (a) enforceability of
non-judicial foreclosures or sales or other self-help remedies provided for
therein; (b) enforceability of provisions which purport to restrict access to
legal or equitable remedies or waive any rights or which purport to establish
evidentiary standards, (c) enforceability of provisions relating to
subrogation rights, suretyship, delay or omission of enforcement of rights or
remedies, waivers of rights, agreements to agree on future acts, prohibitions
against the transfer, alienation, or hypothecation of property, severance,
consent judgments or marshaling of assets; and (d) venue selection provisions;
(2) your rights and remedies thereunder which are limited by any requirements
of law that a secured party act in good faith and in a commercially reasonable
manner, or (3) title to, or ownership of any real or personal property covered
by the Contribution Agreement or such instruments of transfer.
C. Regardless of whether or not you exercise remedies under the
Contribution Agreement, you may be required to file a notice of business
activities report with the Director of the Division of Taxation of the State
of New Jersey pursuant to N.J.S.A. 14A:13-14, et, seq. if
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CRUMMY, DEL DEO, DOLAN, GRIFFINGER & XXXXXXXXX
AutoCyte, Inc.
November 22, 1996
Page 4
you receive payments form businesses or persons in the State of New Jersey
aggregating in excess of $25,000 in any year or otherwise derive income from
sources within New Jersey.
D. As to any related agreement, document or instrument not governed by
New Jersey or Delaware corporate law, we have assumed that the governing law
is the same as that of New Jersey. We undertake no obligation to correct or
supplement this opinion if any such law should change or if we become aware of
facts that might change this opinion. No opinions should be implied beyond
these expressed herein.
E. As to any agreement which is the subject of this opinion and which
has a choice of law provision designating the law of a particular state, our
opinion as to the enforceability of such choice of law provision is subject to
the condition that it does not contravene a fundamental policy of that state;
and further provided that the choice of law designated bears a reasonable
relationship to the transaction contemplated by such agreement.
This opinion is being furnished only to you and is solely for your
benefit. This opinion may not be used, circulated, quoted or relied upon or
otherwise referred to for any purpose without our prior written consent.
We undertake no obligation to cause any filing, refiling, recording,
registration or registration by virtue of relating to any of the matters set
forth in this opinion letter. We further undertake no obligation to inform you
of any matters which may subsequently occur which affect in any way the
opinions given herein.
Very truly yours,
/s/ Crummy, Del Deo, Dolan,
Griffinger & Xxxxxxxxx, P.C.
CRUMMY, DEL DEO, DOLAN,
GRIFFINGER & XXXXXXXXX
A Professional Corporation
33
EXHIBIT B
SUPPORT AGREEMENT
-----------------
AGREEMENT ("Agreement") made this 22nd day of November, 1996 by and between
AutoCyte, Inc., ("AutoCyte") and Xxxxxxxx-Xx Xxxxx Inc. and Roche Image Analysis
Systems, Inc. (collectively "Roche").
WITNESSETH
WHEREAS, subject to the terms and conditions contained herein, AutoCyte desires
to have certain support services provided by Roche and the parties hereto wish
to enter into this Agreement pursuant to which Roche shall provide certain
support services to AutoCyte (the "Support Services"); and
WHEREAS, subject to the terms and conditions contained herein, AutoCyte may
provide certain services for Roche Image Analysis Systems, Inc. ("RIAS").
NOW THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereby agree as follows:
1. GENERAL OBLIGATIONS
A. AutoCyte agrees that Roche is not in the business of providing
any of the services to be provided hereunder to third parties
and that Roche's only obligation hereunder shall be to use
reasonable efforts to meet AutoCyte's needs consistent with
the manner in which Roche has previously used to provide the
services. In no event shall Roche be obligated to provide any
Support Services after December 31, 1996 unless the parties
shall mutually agree to a further extension. Notwithstanding
anything contained herein to the contrary, AutoCyte agrees
that in the event that any person who is employed or is under
contract to provide consulting services to Roche shall quit,
be discharged or terminated for any reason, or in the event
that Roche shall determine that it shall be unable to supply
such services for any reason, the services which would be
provided by such individual or Roche shall immediately cease
and Roche shall have no further obligation to provide such
services to AutoCyte.
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B. AutoCyte agrees to pay Roche any and all amounts, in addition
to the specific amounts set forth below, which Roche shall
reasonably incur in connection with providing the various
Support Services provided under this Agreement. These amounts
shall include any reasonable compensation, including benefits,
which may be paid to any individual. AutoCyte agrees that is
shall be solely responsible for its operations and that by
Roche providing support assistance, Roche shall not assume any
responsibility to AutoCyte or any third party for any claims
or damages arising, or alleged to arise, in connection with
such operations or Roche's performance hereunder except if
such claims or damages are caused by Roche's intentional or
willful failure to fulfill its obligations hereunder; provided
however, that in no event shall Roche be responsible for
consequential or special damages. Roche's total liability to
AutoCyte in connection with this Agreement shall be limited to
the amounts paid under this Agreement to Roche by AutoCyte.
2. INTERIM PAYROLL SERVICES
X. Xxxxx agrees to provide interim payroll accounting services to
AutoCyte until December 31, 1996 unless previously terminated
by Roche upon reasonable notice or extended by mutual
agreement between the parties hereto. These services shall
include, but not be limited to (i) recording the payrolls to
the AutoCyte general ledger, (ii) performing any account
reconciliation that may be required, (iii) maintaining and
updating employee records to reflect any changes, and (iv)
other such services currently being provided. AutoCyte shall
wire funds to Roche at least one day prior to any pay date
which are sufficient to pay any and all compensation and/or
withholdings pertaining to any payroll period for all
employees of AutoCyte. AutoCyte agrees that existing payroll
stock must be used to pay its employees and agrees to defend,
indemnify and hold harmless Roche from any claims from any
employee of AutoCyte which may arise.
B. The charges for the services set forth in this Section shall
be any and all reasonable costs incurred by Roche, but in no
event less than twenty-five Dollars ($25.00) per hour, per
person, for time incurred.
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3. AUTOCYTE SERVICES
A. AutoCyte may, at the request of RIAS and with RIAS's prior
consent, provide certain services to RIAS. The charges for any
such services shall be twenty-five ($25.00) per hour, per
person, for time incurred.
B. AutoCyte agrees that there are certain inventory, furniture,
fixtures and equipment pertaining to the HLA business of RIAS
located on AutoCyte's premises which are owned by RIAS ("HLA
assets"). AutoCyte agrees that the HLA assets may remain on
AutoCyte's premises until February 1, 1997 at no cost or
expense to RIAS. AutoCyte agrees that AutoCyte will not do any
act which would damage the HLA assets and will properly
monitor and maintain the HLA assets in order that the HLA
assets are properly stored. In the event that the HLA assets
are not removed on or before February 1, 1997, RIAS agrees to
pay AutoCyte a one time payment of Five Thousand ($5,000.00)
and allow AutoCyte the right to remove the HLA assets. If RIAS
does not remove the HLA assets by February 1, 1997, RIAS
agrees to reimburse AutoCyte for its reasonable disposal costs
net of any proceeds that might be realized from liquidating
these assets.
4. ADDITIONAL SUPPORT SERVICES
In addition to those Support Services set forth above, Roche agrees to
provide such additional support, financial and consultation services to
AutoCyte as the parties shall mutually agree.
The charges for the services set forth in this Section shall be any and
all reasonable costs incurred by Roche, but in no event less than
twenty-five Dollars ($25.00) per hour, per person, for time incurred.
5. GENERAL CONDITIONS
A. Additional Costs/Fees/Payment. It is the intent of the parties
that additional third party costs incurred in connection with
providing the Support Services provided hereunder by Roche
shall be borne by AutoCyte. In the event a cost or fee of any
third party is required to support AutoCyte's needs, it shall
be AutoCyte's obligation to pay such costs or fees after
notice from Roche and an opportunity to approve such costs or
fees, unless Roche has expressly agreed in writing herein to
bear such costs. AutoCyte agrees to wire to Roche any and all
amounts incurred for any
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services provided under this Agreement by the ten (10th) day
of the following month.
B. WARRANTY/LIMITATION OF LIABILITY. THE PARTIES UNDERSTAND AND
AGREE THAT ALL SUPPORT SERVICES PROVIDED HEREUNDER ARE "AS IS"
AND ROCHE MAKES NO WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT
TO SUCH SERVICES, THE RESULTS OF SUCH SERVICES, OR THAT ANY
ERRORS OR PROGRAM PROBLEMS WILL BE CORRECTED. ROCHE IS NOT IN
THE BUSINESS OF PROVIDING THE SUPPORT SERVICES TO BE PROVIDED
HEREUNDER OR ON A COMMERCIAL BASIS AND THE FEES CHARGED ARE
INTENDED TO REIMBURSE ROCHE FOR ITS ACTUAL COST AND DO NOT
INCORPORATE A CHARGE TO COVER WARRANTIES, GUARANTEES OR CLAIMS
OF AUTOCYTE OR THIRD PARTY CLAIMS. IN THE EVENT OF A THIRD
PARTY ACTION RELATING TO WORK PERFORMED, IF ROCHE IS ADDED AS
A THIRD PARTY, PROVIDED SUCH ACTION IS NOT CAUSED BY OR
RELATED OR INCIDENT TO, OR THE RESULT OF ROCHE'S INTENTIONAL
OR WILLFUL FAILURE TO MEET ITS OBLIGATIONS HEREUNDER, AUTOCYTE
AGREES TO INDEMNIFY AND HOLD ROCHE AND ITS AGENTS AND
EMPLOYEES HARMLESS FROM AND AGAINST ALL SUCH LIABILITY,
INCLUDING THE COST OF DEFENSE.
C. Travel and Living Expenses. AutoCyte agrees to pay all
reasonable travel, lodging, meals, automobile, living and
other expenses incurred in accordance with Roche's current
policy in connection with providing the Support Services.
D. Protection of Proprietary and Confidential Information. While
this Agreement is in effect and thereafter, each party shall
keep in confidence all confidential or proprietary information
disclosed to it by the other party ("Information") and shall
protect the same from: (1) any use except as authorized; or
(2) disclosure to third parties except as required by law,
judicial or governmental authority. Each party shall inform
any affected employees of the confidential nature of the
Information and of the obligations of such party and such
employees under this Agreement. Upon the discontinuance,
termination or cancellation of this Agreement, the Information
shall be returned to the disclosing party at such party's
prior written request or shall be destroyed and such party
shall certify as to such destruction.
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E. Indemnification. In addition to the indemnification provisions
contained herein, AutoCyte agrees to defend, indemnify and
hold Roche, its parent, subsidiaries, affiliated and related
companies, directors, officers, employees, and agents wholly
harmless from and against all third party claims, losses,
lawsuits, settlements, demands, causes, judgments, expenses
and costs (including reasonable attorneys fees) arising under
or in connection with this Agreement to the extent that such
costs and liabilities are caused by AutoCyte.
Subject to the limitations set forth within this Support
Agreement, Roche agrees to defend, indemnify and hold
AutoCyte, its parent, subsidiaries, affiliated and related
companies, directors, officers, employees, and agents wholly
harmless from and against all third party claims, losses,
lawsuits, settlements, demands, causes, judgments, expenses,
and costs (including reasonable attorney fees) arising under
or in connection with this Agreement to the extent that such
costs and liabilities are caused by the intentional or willful
misconduct of Roche.
IN NO EVENT SHALL EITHER PARTY BE HELD RESPONSIBLE FOR
PUNITIVE DAMAGES, OR CONSEQUENTIAL, INCIDENTAL, OR SPECIAL
DAMAGES (INCLUDING LOST PROFITS OR REVENUE).
F. Force Majeure. Roche's performance hereunder shall be excused
to the extent it is hindered or prevented due to Acts of God,
including earthquakes, fire or flood; acts of any governmental
authority; acts of war, rebellion, sabotage, riot, civil
disorders or explosions; strikes or labor disputes; and causes
beyond its control.
G. Choice of law. This Agreement shall be construed in accordance
with the laws of the State of New Jersey applicable to
contracts made and to be performed wholly within such State.
H. Assignment. Neither party may assign, delegate, or transfer
its rights or obligations hereunder without the written
consent of the other party, except Roche may assign its
obligations to any of its affiliates.
5
38
I. Merger. The terms and conditions herein constitute the entire
agreement between the parties with respect to the matters
herein and supersede all previous communications, whether
written or oral, between the parties with respect to the
subject matter hereof. No waiver, modification or addition to
this Agreement shall be valid unless in writing and signed by
an authorized representative of the party to be charged.
J. Change in Law or Regulation. The terms of this Agreement are
intended to be in compliance with all federal, state and local
statutes, regulations or ordinances applicable on the date the
Agreement takes effect. Should counsel for either party
reasonably conclude that any portion of this Agreement is or
may be in violation of such requirements, or subsequent
enactment by federal, state or local authorities, or if any
such interpretation, change or proposed change materially
alters the amount or method of compensating Roche for
performing the Support Services for AutoCyte or materially
increases the cost of Roche's performance hereunder, this
Agreement shall terminate upon thirty (30) day's notice
thereof to the other party, unless within said thirty (30) day
period the parties agree to such modifications of the
Agreement as may be necessary to establish compliance with
such authorities or to reflect such change in compensation or
cost, if possible. The parties shall in good faith attempt to
reach an agreement to modify this Agreement to establish
compliance with such authorities or to reflect such change in
compensation or cost.
K. Notices. Any notice required to be given pursuant to the terms
and provisions hereof shall be in writing and shall be sent by
certified or registered mail or overnight delivery to Roche
at:
Xxxxxxxx-Xx Xxxxx Inc. or Roche Image Analysis Systems, Inc.
c/o Roche Diagnostic Systems, Inc.
0000 X.X. Xxxxxxx 000
Xxxxxxxxxx, XX 00000-0000
Attn: Xxxxx Xxxxx
with a copy to:
Xxxxxxxx-Xx Xxxxx Inc. or Roche Image Analysis Systems, Inc.
000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: General Counsel
6
39
and to AutoCyte at
AutoCyte, Inc.
000 Xxxxxx Xxxxx
Xxxx Xxxxxxx, XX 00000
Attn: President
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in
their names as their official acts by their respective executive officers, each
of whom is duly authorized to execute the same, all as of the date first written
above.
XXXXXXXX-XX XXXXX INC.
By: /s/ Xxxxxxxxx X. Xxxxx
--------------------------------
Vice President
ROCHE IMAGE ANALYSIS
SYSTEMS, INC.
By: /s/ Xxxxxx Xxx Xxxxx
--------------------------------
Vice President
AUTOCYTE, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
President
7
40
EXHIBIT C
INSTRUMENT OF ASSUMPTION OF LIABILITIES
This Instrument of Assumption of Liabilities dated November 22, 1996, is
made by AutoCyte, Inc., a Delaware corporation ("AutoCyte"), in favor of Roche
Image Analysis Systems, Inc., a Delaware corporation ("RIAS"). All capitalized
words and terms used in this Instrument of Assumption of Liabilities and not
defined herein shall have the respective meanings ascribed to them in the
Contribution Agreement dated as of November 22, 1996 between AutoCyte, RIAS and
HLR Holdings Inc. (the "Contribution Agreement").
WHEREAS, pursuant to the Contribution Agreement, RIAS has agreed to convey,
transfer, assign and deliver to AutoCyte and AutoCyte has agreed to accept the
Contributed Assets;
WHEREAS, in partial consideration therefor, AutoCyte has agreed to assume
certain of the liabilities of RIAS;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, AutoCyte hereby agrees as follows:
1. AutoCyte hereby assumes and agrees to perform, pay and discharge the
liabilities, obligations and commitments of RIAS which are described in Section
2.1 of the Contribution Agreement.
2. Notwithstanding the foregoing, AutoCyte does not hereby assume or agree
to perform, pay or discharge, and RIAS shall remain unconditionally liable for,
from and after the date hereof, all other liabilities, obligations and
commitments, fixed or contingent, of RIAS.
3. Nothing contained herein shall require AutoCyte to perform, pay or
discharge any liability, obligation or commitment expressly assumed by AutoCyte
herein so long as AutoCyte in good faith contests or causes to be contested the
amount or validity thereof.
4. It is expressly understood and agreed that all liabilities, obligations
and commitments not assumed hereunder by AutoCyte pursuant to Section 1 above
shall remain, as between AutoCyte and RIAS, the sole obligation of RIAS and its
respective successors and assigns.
5. AutoCyte, by its execution of this Instrument of Assumption of
Liabilities, and RIAS, by its acceptance of this Instrument of Assumption of
Liabilities, each hereby acknowledges and agrees that neither the
representations and warranties nor the rights and remedies of either party under
the Contribution Agreement shall be deemed to be enlarged, modified or altered
in any way by such execution and acceptance of this instrument.
41
IN WITNESS WHEREOF, AutoCyte and RIAS have caused this instrument to be
duly executed as of and on the date first above written.
AUTOCYTE, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
ROCHE IMAGE ANALYSIS SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxx Xxxxx
------------------------------------
Name: Xxxxxx X. Xxx Xxxxx
Title: Vice President
- 2 -
42
EXHIBIT D
PALMER AND DODGE LLP
XXX XXXXXX XXXXXX, XXXXXX, XX 00000-0000
Telephone: (000) 000-0000 Facsimile: (000) 000-0000
November 22, 1996
Roche Image Analysis Systems, Inc. and
HLR Holdings Inc.
Gentlemen:
This opinion is furnished to you pursuant to Section 10.2 of the
Contribution Agreement dated as of the date hereof (the "Contribution
Agreement") among AutoCyte, Inc., a Delaware corporation (the "Company"), Roche
Image Analysis Systems, Inc. ("RIAS") and HLR Holdings Inc. ("HLR"). Terms used
but not otherwise defined in this opinion shall have the meanings ascribed to
them in the Contribution Agreement.
We have acted as counsel for the Company in connection with the
preparation, execution and delivery of the Contribution Agreement. For purposes
of the opinions expressed below, we have examined the originals or copies of
such records, agreements and instruments of the Company, certificates of public
officials and of officers of the Company and such other documents and records,
and such matters of law, as we have deemed appropriate as a basis for the
opinions hereinafter expressed. In making such examination, we have assumed the
genuineness of all signatures, the legal capacity of natural persons, the
authenticity of all documents submitted to us as originals and the conformity to
the originals of all documents submitted to us as copies, and the accuracy and
completeness of all corporate records made available to us for review. As to
various facts material to the opinions set forth herein, we have relied without
independent verification upon factual representations made by the Company in the
Contribution Agreement, upon certificates of public officials and upon facts
certified to us by officers of the Company. Our opinion in paragraph 1 below,
insofar as it relates to the legal existence and good standing of the Company,
is based solely upon a certificate of legal existence issued by the Secretary of
State of Delaware on November 19, 1996.
Statements herein qualified by the phrase "to our knowledge" or similar
phrase refer to the actual knowledge of the individual lawyers in our firm who
participated in the negotiation and drafting of the Contribution Agreement,
without independent investigation.
For purposes of the opinions expressed herein, we have assumed that at all
relevant times RIAS and HLR had all requisite power and authority and had taken
all necessary action to enter into and perform all of their obligations under
the Contribution Agreement or such other
43
November 22, 1996
Page 2
documents, agreements and instruments to which they are a party, and that the
Contribution Agreement and each such other document, agreement and instrument
was and will continue to be the valid, binding and enforceable obligation of
each party thereto, other than the Company.
This opinion is limited to the laws of the Commonwealth of Massachusetts,
the federal laws of the United States of America, and the General Corporation
Law statute of the State of Delaware and we express no opinions with respect to
the law of any other jurisdiction.
Based upon and subject to the foregoing, we hereby advise you that, in our
opinion, as of the date hereof:
1. The Company is a corporation duly organized, validly existing and in
good corporate standing under the laws of the State of Delaware. The Company has
requisite corporate power and authority to own and operate its properties and
assets, and to carry on its business as presently conducted.
2. The Company has all requisite corporate power and authority to enter
into the Contribution Agreement and to carry out and perform its obligations
under the terms of the Contribution Agreement.
3. Based solely upon our examination of the Company's Certificate of
Amendment of the Company's Certificate of Incorporation as filed with the
Secretary of State of Delaware on November 22, 1996 (the "Amended Charter") and
stock records, and except for changes contemplated by the Contribution
Agreement, the Company is duly authorized to issue 20,500,000 shares of Common
Stock, none of which are issued and outstanding, and 9,925,000 shares of
Preferred Stock, all of which have been designated as Series A Convertible
Preferred Stock, none of which are issued and outstanding. To our knowledge,
there are no outstanding rights, options, warrants, conversion rights or
agreements for the purchase or acquisition from the Company of any shares of its
capital stock other than rights created by the Contribution Agreement, the
Series A Preferred Stock Purchase Agreement, the Rights Agreement, the
Stockholders' Agreement, the Amended Charter, and other than as set forth on the
Disclosure Schedule attached to the Contribution Agreement. To our knowledge,
the Company has no obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any of its equity securities or any interest therein or to pay
any dividend or make any other distribution in respect thereof, other than as
provided for in the Amended Charter.
4. The execution and delivery of the Contribution Agreement by the Company
and the performance by the Company of its obligations thereunder have been duly
authorized by all necessary corporate action on the part of the Company.
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November 22, 1996
Page 3
5. The Contribution Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
6. The issuance, sale and delivery of the Shares by the Company in
accordance with the Contribution Agreement have been duly authorized by all
necessary corporate action on the part of the Company.
7. The execution, delivery and performance of the Contribution Agreement by
the Company, and the issuance of the Shares will not result in any violation of,
or be in conflict with, or constitute a default under, any term of the Company's
Amended Charter or By-laws, as the same exist on the date hereof.
8. To our knowledge, the Company is not in default with respect to any
order, writ, injunction or decree specifically naming the Company and known to
us of any court or any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign.
Our opinions set forth above are subject to the following general
qualifications:
(a) The validity and enforceability of any obligation and the exercise
of rights and remedies may be limited by (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
affecting the enforcement generally of the rights and remedies of creditors
and secured parties or the obligations of debtors, and (ii) general
principles of equity (regardless of whether such enforcement is considered
in a proceeding at law or in equity), including, without limitation, the
discretion of any court of competent jurisdiction in granting specific
performance, injunctive or other equitable relief.
(b) The enforcement of any rights or remedies is or may be subject to
an implied duty on the part of the party seeking to enforce such rights to
take action and make determinations on a reasonable basis and in good
faith.
(c) We express no opinion as to prospective waivers of rights to
notice or a hearing, or other rights granted by constitution or statute,
powers of attorney, provisions purporting to relieve parties of the
consequences of their own negligence or misconduct, or provisions
purporting to establish evidentiary standards.
(d) The enforceability of the Contribution Agreement may be limited by
general principles of contract law which include (i) the unenforceability
of provisions to
45
November 22, 1996
Page 4
the effect that provisions therein may only be amended or waived in writing
to the extent that an oral agreement modifying such provisions has been
entered into, and (ii) the general rule that, where less than all of an
agreement is enforceable, the balance is enforceable only when the
unenforceable portion is not an essential part of the agreed exchange.
(e) The validity or enforceability of the indemnification or
contribution provisions of the Contribution Agreement may be limited by
federal or state securities laws or public policy relating thereto. We
express no opinion as to the enforceability of the specific performance
provisions included in the Contribution Agreement.
This opinion is furnished to you solely for your benefit in connection with
the Contribution Agreement and may not be relied upon by any other person or
entity or for any other purpose without our express, prior written consent.
Very truly yours,
/s/ Xxxxxx & Dodge LLP
XXXXXX & DODGE LLP
