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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
July 16, 1999
-----------------------
Date of Report (Date of earliest event reported)
Applied Imaging Corp
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(Exact name of Registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
0-21371 77-0120490
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(Commission File No.) (IRS Employer Identification Number)
2380 Walsh Avenue, Bldg. B
Santa Clara, California 95051
(408) 562-0250
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(Address of Principal Executive Offices)
Not Applicable
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
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On July 16, 1999 (the "Closing Date"), Applied Imaging Corp, a Delaware
corporation (the "Company"), completed an acquisition of assets from Vysis, Inc.
("Vysis") related to Vysis' cytogenetic imaging instrumentation business.
The acquisition was accounted for as a purchase. The consideration paid by
the Company to Vysis was $2.35 million consisting of (i) $1.75 million in cash,
and (ii) 497,368 shares of the Company's Common Stock. In conjunction with the
issuance of the Common Stock, the Company granted certain registration rights to
Vysis. The Company will also purchase approximately $500,000 in existing
inventory of Vysis for use in the cytogenetic imaging instrumentation business.
The Company financed the acquisition by using existing cash resources.
Item 7. Financial Statements and Exhibits
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(a) The purchase of assets from Vysis does not meet the thresholds of
significance of Item 2 of Form 8-K, and therefore the Company will not
present audited financial statements or pro forma financial
information related to the acquisition of assets described.
(b) Not applicable.
(c) Exhibit
2.1* Asset Purchase, License, and Distribution Agreement between the
Company and Vysis, Inc. dated July 16, 1999.
Certain schedules to the Agreement listed on page (iv) thereto
and the agreement related to the issuance of the Company's Common
Stock in this transaction have not been filed herewith. The
Registrant will furnish them supplementally to the Securities and
Exchange Commission upon request.
* Confidential treatment requested for portions of this exhibit.
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Applied Imaging Corp
By: /s/ Jack Goldstein
_______________________________
Jack Goldstein, President and
CEO
Dated: July 30, 1999
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INDEX TO EXHIBITS
Exhibit
Number Description
- --------- ---------------
2.1 * Asset Purchase, License and Distribution
Agreement between the Company and Vysis,
Inc. dated July 16, 1999
* Confidential treatment requested for portions of this exhibit.
<PAGE>
Exhibit 2.1
ASSET PURCHASE, LICENSE, AND DISTRIBUTION AGREEMENT
BY AND BETWEEN
VYSIS, INC.
and
APPLIED IMAGING CORP
JULY 16, 1999
[*] - CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
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TABLE OF CONTENTS
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Page
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ARTICLE I. DEFINITIONS............................................................................................. 1
ARTICLE II. PURCHASE AND SALE....................................................................................... 3
2.1 Sale and Purchase of Assets............................................................................. 3
2.2 Assumption of Liabilities............................................................................... 4
ARTICLE III. PURCHASE PRICE; CLOSING................................................................................. 4
3.1 Purchase Price.......................................................................................... 4
3.2 Inventory Purchase...................................................................................... 4
3.3 Closing................................................................................................. 5
3.4 Transaction Taxes....................................................................................... 5
3.5 Form of Delivery........................................................................................ 6
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF VYSIS................................................................. 6
4.1 Organization, Standing and Power........................................................................ 6
4.2 Authority............................................................................................... 7
4.3 Consents and Approvals.................................................................................. 7
4.4 Litigation, Claims, Violations.......................................................................... 7
4.5 Intellectual Property................................................................................... 7
4.6 Assigned Properties..................................................................................... 7
4.7 [*]..................................................................................................... 8
4.8 Digital Scientific...................................................................................... 8
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF AI.................................................................... 8
5.1 Organization, Standing and Power........................................................................ 8
5.2 Authority............................................................................................... 8
5.3 Consents and Approvals.................................................................................. 8
ARTICLE VI. DISTRIBUTION COVENANTS.................................................................................. 9
6.1 Excluded Agreements..................................................................................... 9
6.2 Continuation of Distributor Agreements.................................................................. 9
6.3 [*]..................................................................................................... 9
6.4 European Sales Agency................................................................................... 9
6.5 Selected Product Financial Information.................................................................. 9
6.6 Excluded in Transfer.................................................................................... 9
6.7 Supply of Filters and Filter Holders.................................................................... 10
6.8 Orders/Technical Service Support........................................................................ 10
6.9 Sales Transition........................................................................................ 11
6.10 Override Fee............................................................................................ 11
</TABLE>
[*] - CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
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ARTICLE VII. LICENSE COVENANTS...................................................................................... 11
7.1 Grant of Exclusive License............................................................................. 11
7.2 Limitations............................................................................................ 13
7.3 Covenant Not to Sue.................................................................................... 13
ARTICLE VIII. COVENANTS WITH RESPECT TO MANUFACTURING................................................................ 13
8.1 Training............................................................................................... 13
8.2 Manufacturing.......................................................................................... 14
8.3 [*].................................................................................................... 14
8.4 Access to Research Records and Technical Information................................................... 15
8.5 Contracts, Licenses and Service Agreements............................................................. 15
8.6 Assumption of Contract Obligations..................................................................... 15
8.7 Employment............................................................................................. 15
ARTICLE IX. GENERAL COVENANTS...................................................................................... 16
9.1 Access and Rights of Inspection........................................................................ 16
9.2 Further Assurances..................................................................................... 16
9.3 Claims Handling........................................................................................ 16
9.4 [*].................................................................................................... 16
9.5 Confidentiality Regarding Information of Business...................................................... 17
9.6 Covenant Not to Compete................................................................................ 17
9.7 Compatibility of Reagents.............................................................................. 17
ARTICLE X. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; ARBITRATION................................................................................ 17
10.1 Indemnification by Vysis............................................................................... 17
10.2 Indemnification by AI.................................................................................. 18
10.3 Procedure.............................................................................................. 18
10.4 Indemnity Limit........................................................................................ 18
10.5 Disclaimer............................................................................................. 19
10.6 Survival of Warranties................................................................................. 19
10.7 Limitation of Liability................................................................................ 19
ARTICLE XI. MISCELLANEOUS.......................................................................................... 19
11.1 Successors; Assignability.............................................................................. 19
11.2 Costs and Expenses..................................................................................... 19
11.3 Other Agreements Superseded; Waiver and Modification, Etc.............................................. 19
11.4 Overdue Payments....................................................................................... 19
11.5 Notices................................................................................................ 19
11.6 Parties in Interest.................................................................................... 20
11.7 Governing Law; Jurisdiction............................................................................ 20
11.8 Fair Construction/Difference in Facts.................................................................. 20
11.9 Captions, References, Date............................................................................. 20
11.10 Severability........................................................................................... 20
11.11 Counterparts........................................................................................... 20
11.12 Recovery of Litigation Costs........................................................................... 20
</TABLE>
[*] - CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
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11.13 Relationship of the Parties............................................................................ 21
11.14 Brokerage.............................................................................................. 21
11.15 Publicity.............................................................................................. 21
11.16 Arbitration............................................................................................ 21
11.17 Sole Remedy............................................................................................ 21
</TABLE>
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Schedules and Exhibits
Schedules
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1 Product List
2 Assigned Contracts
3 Tangible Assets (including Inventory)
4 License Agreements
5 Service Agreements
6 Trademarks and Copyrights
7 Purchase Price Allocation
8 Exceptions to Representation and Warranties
9 Assumed Warranties and Service Contracts
10 Filters and Filter Holders
11 Employees
12 Sales Analysis Data
Exhibits
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A Stock Issuance Agreement
B Bill of Sale and General Assignment of Assets
C European Sales Agency Agreement
D Override Fee Calculation
E Quality Criteria for SpectraVysion and PathVysion, and Other Vysis
Trademarked Products
F [*]
G Press Announcement
H Sales Lead Form
I Electronic Transfer Guidelines
[*] - CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
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ASSET PURCHASE, LICENSE, AND DISTRIBUTION AGREEMENT
This Asset Purchase, License and Distribution Agreement (this "Agreement"),
effective as of July 16, 1999, is made by and between Vysis, Inc. ("Vysis"), a
Delaware corporation with its principal place of business at 3100 Woodcreek
Drive, Downers Grove, Illinois, and Applied Imaging Corp. ("AI"), a Delaware
corporation with its principal place of business at 2380 Walsh Avenue, Building
B, Santa Clara, California. Vysis and AI are sometimes referred to herein as
the "Parties."
RECITALS
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WHEREAS, Vysis desires to sell certain assets of its cytological digital
imaging business to AI on the terms and conditions herein, and AI desires to
purchase such assets; and
WHEREAS, the Parties desire to enter into license and distribution
arrangements in connection with the sale of the assets;
NOW, THEREFORE, in consideration of the above and the mutual promises and
covenants set forth below, Vysis and AI agree as follows:
ARTICLE 1 DEFINITIONS
For the purposes of this Agreement the following definitions shall apply:
"Affiliate" of a party means, with respect to any party, any other person
or entity that, directly or indirectly, controls, is controlled by or is under
common control with, that party; provided, however, that in each case any such
other person or entity shall be considered to be an Affiliate only during the
time such control exists. For purposes of this definition, "control"
(including, with correlative meaning, the terms "controlled by" and "under
common control with") means the possession, directly or indirectly, of the power
to direct and/or cause the direction of the management and policies of such
party, whether through the ownership of voting securities, by contract or
otherwise.
"Books and Records" means copies of specific books and records related to
any assets sold by Vysis hereunder, including, without limitation, product lists
with list prices, selling prices, and cost of goods sold on a country-by-country
basis, all financial records, books, ledgers, supplier lists, customer and
marketing lists or databases, marketing plans, management plans, distribution
and reseller materials, advertising materials, and manuals, insofar as such
items relate to the Business. Books and Records which relate solely to the
Business shall be the subject of title transfer from Vysis to AI. Books and
Records which do not solely relate to the Business transferred hereunder shall
be the subject of an unlimited right granted by Vysis to AI for AI to use such
Books and Records in furtherance of the Business, provided that Vysis shall have
the right to first redact any information, including information related to
Vysis' reagent business, not relevant to AI's conduct of the Business contained
in such nonexclusive Books and Records.
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"Business" means Vysis' FISH and brightfield cytological digital imaging
system and software business (including those products comprising the QUIPS
genetic imaging products marketed and under development by Vysis shown in
Schedule 1 in the Cytogenetic and Pathology Field, as defined below).
"Closing" is defined in Section 3.2.
"Contract" means any written contract, agreement, commitment, note, bond,
lease, mortgage, guaranty, license or any other written contractual obligation
or commitment that is listed on Schedule 2, attached hereto and made a part of
this Agreement by this reference.
"Cytogenetic and Pathology Field" means the field of clinical and research
applications for both human and non-human species involving testing of tissue,
blood and cellular samples.
"Excluded Assets" means any and all assets, both tangible and intangible,
of Vysis that (i) are not listed on Schedules 1, 2, 3, 4, 5 or 6, including,
without limitation thereto any receivable or, any tangible asset used in the
manufacture of a reagent product, or (ii) are not expressly granted to AI under
Article 7, such as for example and without limitation thereto any patent right
covering fluorescence in situ hybridization assays.
"Intellectual Property Rights" means, collectively, all Patents, Trade
Secrets, Copyrights, moral rights, trade names, Trademarks, rights in trade
dress, rights in biological materials and all other intellectual property rights
and proprietary rights, whether arising under the laws of the United States or
any other state, country or jurisdiction, including without limitation all
rights or causes of action for infringement or misappropriation of any of the
foregoing. "Patents" mean all patents rights and all right, title and interest
in all letters patent or equivalent rights and applications for letters patent
or rights, industrial and utility models, industrial designs, patents of
importation, patents of addition, certificates of invention and any indicia of
invention ownership issued or granted by any Governmental Entity, including
without limitation any reissue, extension, division, continuation or
continuation-in-part applications throughout the world. "Trade Secrets" mean
all right, title and interest in all trade secrets and trade secret rights
arising under the applicable common law, state law, federal law or laws of
foreign countries. "Copyrights" mean all copyright rights and all other
literary property and author rights, and all right, title and interest in all
copyrights, copyright registrations, certificates of copyright and copyrighted
interests throughout the world. "Trademarks" mean all trademark and service
mark rights arising under the applicable common law, state law, federal law and
laws of foreign countries, all right, title and interest in all trademarks,
service marks, trademark and service mark applications and registrations and
trademark and service mark interests throughout the world.
"Inventory" means all items listed on Schedule 3, attached hereto and made
a part of this Agreement by this reference, under the headings "Inventory
Items", "Demonstration Equipment" or "Service Equipment" subject to review and
acceptance by AI.
"License Agreements" means the license agreements listed on Schedule 4
attached hereto and made a part of this Agreement by this reference.
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"Lien" means liens, pledges, claims, charges, security interests and other
restrictions or encumbrances of any nature whatsoever, except for (i) liens for
current taxes not yet delinquent or which are being contested in good faith by
appropriate proceedings, (ii) statutory liens imposed by law which are incurred
in the ordinary course of business for obligations not yet due including to
carriers, warehousemen, laborers and materialmen, and (iii) deposits in
connection with workers' compensation, unemployment insurance, bids, trade
contracts, bonds or leases created in the ordinary course of business.
"Other Assets" means manufacturer's or vendor's warranties or guarantees
relating to any asset acquired hereunder, claims (excluding any Vysis receivable
based claim or patent infringement claim) against third parties relating to any
asset acquired by AI hereunder, and any other tangible assets used exclusively
in the Business or any tangible assets reasonably necessary for AI to operate
the Business, which are owned by Vysis as of the Closing Date.
"Stock Issuance Agreement" means the agreement between Vysis and AI as of
the date hereof regarding the AI common stock issuance to Vysis as partial
consideration for Vysis' performance of this Agreement, included herein as
Exhibit A attached hereto and made a part of this Agreement by this reference.
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"Service Contracts" means the contracts listed on Schedule 5 attached
hereto and made a part of this Agreement by this reference.
"Tangible Assets" means all of the property listed on Schedule 3 attached
hereto and made a part of this Agreement by this reference.
"Transferred Copyrights" means all of the unregistered copyrights listed on
Schedule 6 attached hereto and made a part of this Agreement by this reference.
"Transferred Trademarks" means all of the Trademark registrations listed on
Schedule 6 attached hereto and made a part of this Agreement by this reference.
ARTICLE 2 PURCHASE AND SALE
2.1 Sale and Purchase of Assets. Subject to the terms and conditions
contained in this Agreement, Vysis hereby sells, assigns, transfers, and
delivers to AI all of Vysis' right, title, and interest in and to all assets
listed on Schedules 1 through 6 hereof along with any Other Assets and the Books
and Records of the Business (collectively, the "Acquired Assets") to AI on the
Closing Date on the terms and conditions as set out herein.
(a) Inventory. AI shall initially purchase, at net book value, the
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Inventory identified by AI on Schedule 3 consistent with the terms of Section
3.2 below. All Inventory desired by AI on Schedule 3 will be shipped to AI's
facility within 45 days of the Closing in accordance with AI's instructions.
Vysis shall, within 10 days of the Closing Date, update Schedule 3 which shall
include demonstration units, and then AI shall have 10 days thereafter to choose
which of those units will be purchased by AI.
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(b) Rights Under Contracts. All of Vysis' rights under any contract,
----------------------
agreement, license, plan or arrangement relating primarily or exclusively to the
Business identified in Schedule 1 shall be transferred to AI. It is the intent
of the parties hereto that any new customer orders received by Vysis arising out
of the operation of the Business following the Closing Date be transferred to
AI. Included on Schedule 1 is (i) a list as of June 30, 1999 of all outstanding
written customer orders, purchase orders, and other customer commitments from
Vysis' customers of the Business, and (ii) the names of all customers of the
Business, which list will be updated as of the Closing and provided to AI.
(c) Books and Records. Copies of all Books and Records shall be
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delivered in hard copy and/or electronic form, as assembled by Vysis subject to
prior review by AI personnel.
2.2 Assumption of Liabilities. AI is not assuming any liabilities of
Vysis, except those listed on Schedule 9. AI shall not be responsible for, is
not assuming, and shall have no liability whatsoever for any other liability or
obligation.
ARTICLE 3 PURCHASE PRICE; CLOSING
3.1 Purchase Price. The purchase price payable by AI to Vysis as full
consideration for the sale, assignment, transfer, and delivery by Vysis to AI of
the Acquired Assets, and the assumption by AI of the Assumed Liabilities, AI, on
the terms and conditions set forth herein, shall be $2,350,000 (the "Purchase
Price") paid as follows:
(a) Cash Payments. AI shall pay to Vysis One Million Seven Hundred
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Fifty Thousand Dollars ($1,750,000) in three installments: One Million Dollars
($1,000,000) by wire transfer at Closing (the "Initial Payment"); subject to
Section 8.3, Five Hundred Thousand Dollars ($500,000) on the one year
anniversary of the Closing; and subject to Section 8.3, Two Hundred-Fifty
Thousand Dollars ($250,000) on the eighteenth month anniversary of the Closing.
The two installments to be paid on the one year and eighteen month anniversary
of the Closing Date, respectively, shall each bear interest at the annual rate
of seven percent (7%), due and payable at the time the installment is due,
subject to Section 8.3.
(b) Stock Issuance. AI shall issue to Vysis Six Hundred Thousand
--------------
Dollars ($600,000) of AI Common Stock, par value $0.001, with the number of
shares of AI Common Stock determined by using the average closing price for AI
Common Stock on the NASDAQ National Market for the twenty (20) trading days
before and including the Closing Date. A certificate representing such shares
of AI Common Stock shall be issued to Vysis within 10 days of the Closing
pursuant to the Stock Issuance Agreement.
(c) Contingency for Failure of Consideration. If AI does not make any
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of the payments called for in Section 3.1 when due, Vysis may request that AI
make such payment. If AI does not make such payment within thirty (30) days of
Vysis' written request, Vysis shall be entitled to revoke the licenses granted
to AI under Section 7.1 and/or exercise its rights under this Agreement to
collect the payments owed, including termination of the noncompete covenants
contained herein.
3.2 Inventory Purchase. AI shall pay to Vysis in U.S. Dollars the net book
value of the Inventory identified by AI in Schedule 3 up to Five Hundred
Thousand Dollars ($500,000) within
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forty-five (45) days of the Closing by wire transfer. In regards to any
additional Inventory identified by AI on Schedule 3 in excess of the $500,000
net book value limit (including demonstration units), AI shall make payment to
Vysis within one hundred-eighty (180) days of the Closing by wire transfer.
3.3 Closing.
(a) Delivery. The closing of the purchase and sale of the Acquired
--------
Assets and the consummation of the other transactions contemplated hereby shall
be held at the offices of Vysis' Downers Grove, Illinois facility, at 1:00 p.m.
(local time), on July 16, 1999 (the "Closing") or at such other date, time and
place not to be later than July 30, 1999, unless AI and Vysis shall have agreed
in writing (the date of the Closing is hereinafter referred to herein as the
"Closing Date").
(b) Closing Deliveries. At the Closing, AI shall deliver the Initial
------------------
Payment against delivery by Vysis of such transfer documents relating to the
sale and transfer of the Acquired Assets as AI shall reasonably request,
including, without limitation, the Bill of Sale and General Assignment of Assets
in the form attached hereto as Exhibit B. At the Closing, Vysis shall put AI
---------
into full possession and enjoyment of all the Acquired Assets, and AI shall be
fully and solely responsible for and perform when due or discharge all of the
Assumed Liabilities. With respect to Books and Records, generally, it is
understood that (i) Books and Records related to Schedules 1 to 9 shall be
delivered by Vysis to AI upon Closing, (ii) other Books and Records that relate
solely to the Business shall be delivered by Vysis to AI within thirty (30) days
of the Closing Date, and (iii) the Books and Records which do not solely relate
to the Business transferred hereunder shall be delivered by Vysis to AI within
ninety (90) days of the Closing Date. With respect to the SpectraVysion source
code to be transferred electronically under this Agreement, as detailed in
Exhibit I hereto, it is understood between the Parties that such source code has
- ---------
been integrated with Vysis' GenoSensor source code, which AI agrees shall not be
used by AI for array imaging. At any time and from time to time after the
Closing, at the request of AI and without further consideration, Vysis shall
execute and deliver such further instruments of sale, transfer, conveyance,
assignment, and confirmation and take such actions as is reasonably necessary to
transfer, convey, and assign to AI (or such wholly owned subsidiary as AI may
designate), and to confirm AI's title to or interest in, the Acquired Assets, to
put AI in actual possession and operating control thereof, and to assist AI in
exercising all rights with respect thereto. With respect to the PathVysion
source code to be electronically transferred under this Agreement, a working
copy of the PathVysion software shall be delivered on the Closing Date and the
PathVysion source code shall be transferred as soon as practicable after such
source code has been given to Vysis. Upon request by AI after December 31,
1999, Vysis shall use its reasonable efforts to obtain such code from Digital
Scientific, Ltd.
3.4 Transaction Taxes.
(a) Sales Tax. AI shall be responsible for any and all sales taxes
---------
required to be paid in connection with the sale of the Acquired Assets.
(b) Allocation of Consideration. AI and Vysis will allocate the
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Purchase Price among the Acquired Assets (the "Allocation") in accordance with
Schedule 7 to be attached to this Agreement at or prior to the Closing in a form
mutually agreeable to the parties. No party will take a
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position on any federal or state tax return, before any governmental agency
charged with the collection of any income tax, or in any judicial proceeding
that is in any way inconsistent with the Allocation.
3.5 Form of Delivery.
(a) Master Copy/Source Code. Vysis shall electronically deliver on
-----------------------
the Closing Date to AI's facility in Santa Clara, California, subject to the
limitations contained in Section 3.3(b) above, (i) the Master Copy and (ii) a
copy of the Source Code of all of the Vysis Systems and Software Products listed
on Schedule 1, except for the PathVysion source code.
(b) Trademark Assignment. Vysis shall deliver to AI promptly after
--------------------
the Closing Date executed assignments of the Trademark registrations and
applications listed on Schedule 6, all in a form reasonably acceptable to AI.
(c) Manufacturing Records. Vysis shall deliver to AI promptly after
---------------------
the Closing Date a copy of the manufacturing and quality assurance
specifications and procedures used by Vysis in the manufacture of the Systems
and Software Products listed on Schedule 1. Upon AI's request, Vysis will
provide AI's representatives access upon reasonable advance notice and during
normal business hours to all of the original product manufacturing records for
the installed base of the Business.
(d) Advertising and Promotional Materials. Upon the Closing Date,
-------------------------------------
Vysis, shall have available, and within one week of the Closing Date, Vysis
shall send to AI, all master copies, proofs and electronic source images of the
advertising and promotional materials developed for support of the QUIPS
products along with all copies of currently approved promotional materials which
shall include the delivery of those parts of any website maintained by Vysis
which is relevant to the transferred Business, and the right to use relevant
portions of the 1999-2000 Product Catalog. The Parties agree that with respect
to the foregoing, Vysis shall be allowed to retain sufficient copies of the
relevant advertising and promotional materials in order to continue to service
its European customers as contemplated by this Agreement, or any ancillary
agreement, as well as a sufficient number of copies of materials necessary for
Vysis' reagent business.
(e) Delivery Costs. All costs and liability for the shipment and
--------------
physical delivery of any Acquired Assets and any intangible assets shall
initially be Vysis' responsibility as follows: Items to be delivered to AI's
designated facility will be shipped F.O.B. AI's facility, with costs of
transportation and insurance to be repaid to Vysis by AI. Risk of loss to all
items will belong to Vysis until delivery to AI's facility. AI shall have the
right to physically inspect all tangible assets at Vysis' facility, at the time
of inventory evaluation and again immediately prior to shipment to AI.
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF VYSIS
Vysis represents and warrants to AI the following:
4.1 Organization, Standing and Power. Vysis is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Vysis has the corporate power to own its properties and to carry on
its business as now being conducted.
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4.2 Authority. Vysis has all requisite corporate power and authority to
enter into this Agreement, the Stock Issuance Agreement and the European Sales
Representative Agreement (the "Agreements") and to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of the Agreements and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Vysis, including any necessary action
by shareholders. The Agreements have been duly executed and delivered by Vysis,
and, assuming the valid execution and delivery of the Agreements by AI, the
Agreements constitute valid and binding obligations of Vysis, enforceable in
accordance with their terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws relating
to or affecting the enforcement of creditors' rights generally and by principles
of equity regarding the availability of remedies.
4.3 Consents and Approvals. The execution, delivery and performance of
this Agreement and the Stock Issuance Agreement by Vysis will not (a) violate
any provision of the Certificate of Incorporation or the Bylaws of Vysis; (b)
require any filing with, or permission, consent or approval of, or the giving of
any notice to, any U.S. governmental entity by Vysis, other than the FDA (and
any such required FDA filing will be made promptly by Vysis), or (c) violate any
statute, ordinance, rule, regulation, order or decree of any governmental entity
applicable to Vysis or by which any of its properties or assets may be bound; or
(d) result in a violation or breach of, constitute (with or without the giving
of notice or lapse of time or both) a default, give rise to any right of
termination under, or result in the creation of any Lien on the assets
transferred hereunder to AI.
4.4 Litigation, Claims, Violations. That, as of the Closing Date, there is
no action, suit, proceeding or investigation relating to the Business pending in
any court or before any arbitrator or U.S. or foreign governmental entity or, to
the knowledge of Vysis, threatened against Vysis or the operation of the
Business. That as of the Closing Date, Vysis has not received any written notice
from the U.S. FDA concerning any violation of FDA regulations in its operation
of the Business.
4.5 Intellectual Property. That as of the Closing Date Vysis does not own
or control any U.S. or foreign patent application with claims relating solely to
cytological digital imaging technology, except as set forth on Schedule 8,
attached hereto. That as of the Closing Date Vysis does not own any copyright
registration, pending or issued in any jurisdiction, relating to the Business.
That, except as set out in Schedule 8, as of the Closing Date, it has the
unencumbered right to grant the licenses granted in Section 7.1. That, except as
set forth on Schedule 8, as of the Closing Date, Vysis has not received notice
from any entity or person of any conflict or potential conflict by the Systems
and Software Products listed on Schedule 1 or the Trademarks listed on Schedule
6 with the Intellectual Property of any third party. That, except as set forth
on Schedule 8, as of the Closing Date, Schedule 4 lists all material licenses by
which Vysis licenses from third parties any rights related to the Systems and
Software Products listed on Schedule 1. That, except as set forth on Schedule 8,
as of the Closing Date, all Trademarks owned or controlled by Vysis and used in
the Business are listed on Schedule 6.
4.6 Assigned Properties. Vysis has good and marketable title to the
Tangible Assets, free and clear of all Liens.
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4.7 [*]. Except for third party codes embedded in [*] under license, no
third party has any claim or right of ownership over the [*] system being
developed by Vysis and governed by Section 8.3 of this Agreement, and the [*]
system when completed will be free and clear of any third party right to title
over the [*] system. Vysis warrants that the [*] source code when delivered to
AI will not contain any third party source code, unless a license for such code
can be passed through to AI or does not prohibit AI's commercialization and
distribution of [*] in digital imaging systems. Vysis agrees to deliver to AI
with the completed [*] system a list of all third party code included in the [*]
system. Vysis further agrees not to include in the [*] system any royalty
bearing code without AI's prior written consent.
4.8 Digital Scientific. Vysis represents and warrants that its agreement
with Digital Scientific, Ltd. ("DSL"), which agreement is addressed herein in
Section 7.2, does not grant to DSL any claim or rights to SpectraVysion system
or software or the [*] system or software.
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF AI
AI represents and warrants to Vysis the following:
5.1 Organization, Standing and Power. AI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
AI has the corporate power to own its properties and to carry on its business as
now being conducted.
5.2 Authority. AI has all requisite corporate power and authority to enter
into this Agreement, the Stock Issuance Agreement and the European Sales
Representative Agreement (the "Agreements") and to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of the Agreements and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of AI. The Agreements have been duly
executed and delivered by AI, and, assuming the valid execution and delivery of
this Agreement by Vysis, the Agreements constitute valid and binding obligations
of AI, enforceable in accordance with their terms except as such enforcement may
be limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or affecting the enforcement of creditors' rights generally and
by principles of equity regarding the availability of remedies.
5.3 Consents and Approvals. The execution, delivery and performance of
this Agreement and the Stock Issuance Agreement by AI will not (a) violate any
provision of the Articles of Incorporation or the Bylaws of AI; (b) require any
filing with, or permission, consent or approval of, or the giving of any notice
to, any U.S. governmental entity by AI; (c) violate any statute, ordinance,
rule, regulation, order or decree of any governmental entity applicable to AI or
by which any of its properties or assets may be bound; or (d) result in a
violation or breach of, constitute (with or without the giving of notice or
lapse of time or both) a default, give rise to any right of termination under,
or result in the creation of any Lien upon AI or any of its property that would
materially interfere with AI's performance of its obligations hereunder.
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ARTICLE 6 DISTRIBUTION COVENANTS
6.1 Excluded Agreements. AI acknowledges that none of Vysis' distributor
agreements outside of the United States are being transferred, by assignment or
otherwise, to AI hereunder.
6.2 Continuation of Distributor Agreements. Within sixty (60) days after
the Closing Date, AI shall specify in writing which of Vysis' non-U.S.
distributor agreements (except for Japan and for those in Europe which are
governed by Sections 6.3 and 6.4 hereof), that AI wishes to continue to
distribute the Systems and Software Products transferred hereunder. For those
distributor agreements which AI will not continue, it shall notify Vysis, and
Vysis will notify the particular distributor that the Systems and Software
Products are being withdrawn from the distributor agreement. For a period of not
more than thirty (30) days, or such greater time as may be required by any local
laws which might govern the distributor agreement in question, following the
date of Vysis' notification of the product withdrawal, AI shall continue to
fulfill any orders for the Systems and Software Products placed by the
discontinued distributors provided payment is made in accordance with AI's
practices. For those distributor agreements that AI wishes to continue, AI
agrees to fulfill all product orders placed under such distributor agreements
and to use commercially reasonable efforts to negotiate a distribution
arrangement directly with the particular distributor. Vysis will cooperate with
AI in these negotiations. AI shall not have any liability to terminated
distributors under the existing agreement they have with Vysis.
6.3 [*]. AI agrees to continue to fulfill all product orders placed
pursuant to Vysis' distribution agreement with [*] in [*] for the current
transferred Systems and Software Product line for as long as AI continues
manufacture and distribution of such product line. Except for any Assumed
Liabilities and products shipped after the Closing Date, AI shall not have any
liability to [*] under Vysis' current agreement with [*]. If [*] elects to
discontinue the transferred Systems and Software Product line, then AI shall use
reasonable commercial efforts to have its [*] representatives offer revenue
earning service to [*]'s former customers with respect to Systems and Software
Product line.
6.4 European Sales Agency. Vysis and AI will enter into the European Sales
Representative Agreement, attached hereto as Exhibit C, under which Vysis will
---------
act as AI's exclusive sales agent (allowing in certain countries for AI to also
cooperatively promote and sell to customers through AI employees) for all of
AI's CytoVysion products, including those transferred to AI hereunder, for the
territory specified in the European Sales Representative Agreement.
6.5 Selected Product Financial Information. Vysis shall provide to AI in
Schedule 12, at Closing, selected financial information on instrumentation sales
by certain customers and countries reflecting net sales value, cost of goods
sold and gross margin and supporting component composition for selected sales in
Europe. A copy of supporting component composition of each U.S. instrument sale
for the first six months of 1999 will be provided to AI five (5) days after
closing.
6.6 Excluded in Transfer. AI acknowledges that Vysis' assets, including
some portion of the inventory and the vendor supply agreement, relating to
imaging filters and filter holders, listed on Schedule 10, attached hereto, that
are obtained from a third party vendor and are specified for use
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with the Systems and Software Products listed in Schedule 1, are not included in
the assets transferred to AI hereunder, and that Vysis will continue to sell
imaging filters and filter holders as part of its reagent business and maintain
certain filter and filter holder inventory not transferred to AI. It is the
intent of the parties that AI will be the primary vendor of filters and filter
holders, and that Vysis as a service to its customers will continue to sell
filters and filter holders solely related to its reagent sales.
6.7 Supply of Filters and Filter Holders. Vysis agrees to give AI the
right to buy direct from Vysis' current third party supplier AI's requirements
for Vysis filters listed on Schedule 10 for its continuation of the Business
acquired from Vysis. With respect to any new Vysis proprietary filters not
listed on Schedule 10 which might come into use in conjunction with new product
development by Vysis, Vysis agrees (i) to provide to AI, sixty (60) to ninety
(90) days prior to marketing any such product, the technical information about
the new required filter, and (ii) to give to AI the right to obtain such filters
at Vysis' cost in a timely manner such that AI will be in a position to market
such filters at the time which coincides with the launch of the new product. For
non-proprietary filters, Vysis will assist AI in obtaining a supply of such
filters[*] For proprietary filters, Vysis will use reasonable commercial efforts
to ensure that AI receives an uninterrupted supply of such filters from Vysis'
same third party source at Vysis' cost. [*] AI shall have the right,
unrestricted in any way be Vysis, to sell the filters obtained under this
Section 6.7.
6.8 Orders/Technical Service Support.
(a) After the Closing Date, Vysis shall use best efforts to ensure
that all communication from third parties related exclusively or primarily to
the Business will be forwarded immediately to AI, and will transfer immediately
to AI all orders for the Systems and Software Products listed on Schedule 1 that
are received after the Closing Date.
(b) For a period of sixty (60) days after the Closing Date, Vysis, at
its expense, will dedicate two full-time U.S. technical service employees,
chosen at Vysis' discretion, to supporting AI's performance of the Business.
Such employee shall have previously worked in technical service support for the
Business.
(c) In addition to the personnel allocated in subsection (b) above,
for a period of sixty (60) days after the Closing Date, Vysis will, at AI's
expense, make its U.S. based personnel with knowledge of the Business available
to AI as reasonably requested by AI on at least 48 hours' notice, to assist AI
in the transition of the Business. AI shall pay all out-of-pocket travel costs
and expenses of Vysis' personnel who travel pursuant to such requests. Vysis
will provide, at AI's expense, telephone technical support to back up AI's
customer support and service personnel for sixty (60) days after the Closing
Date.
(d) Europe. For sixty (60) days past the Closing Date, Vysis agrees
------
to continue to perform all technical service support for the Systems and
Software Products listed in Schedule 1 in Europe. AI shall be responsible for
all technical service in Europe thereafter.
(e) Expanded AI Field Service Support. Vysis and AI agree to review
---------------------------------
and negotiate a technical service agreement under which AI would supply all of
Vysis' requirements for
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field service support for VP-2000 and GenoSensor product lines. Neither party
shall be obligated by this Agreement to enter into an expanded technical service
agreement.
6.9 Sales Transition.
(a) Upon the Closing Date, Vysis shall deliver to AI copies of its
customer lists, customer contacts, price lists and sales leads of the Business.
Vysis will provide AI with reasonable access during normal business hours to any
of its sales records relating to the Business; provided that Vysis shall have
the right to redact any information from such records which relates to other
parts of Vysis' business.
(b) For a period of sixty (60) days after the Closing Date, Vysis
shall make available, at Vysis' sole cost and expense, the East-Coast and Mid-
West U.S. Instrument Sales Representatives up to half-time and the West-Coast
U.S. Instrument Sales Representative on a full-time basis to assist in the
transition to AI of the sales activities of the Business. AI will make an offer
of employment to the West-Coast Sales Representative as soon as practicable
after the Closing Date. Such employees shall have previously worked in sales
for the Business in the capacities indicated.
(c) Promptly after the Closing Date, Vysis and AI shall each post a
notice acceptable to the other party of the transfer of the Business to AI in
its Web Site product catalog and shall provide a hypertext link to the other's
website.
(d) Vysis and AI will cooperate in AI's marketing and sales of digital
imaging products in the Cytogenetics and the Pathology Fields, with Vysis
notifying AI of any U.S. and Canadian sales leads its sales representatives may
develop on the form attached hereto as Exhibit H. For any sales made by AI as a
---------
result of such leads, AI agrees to pay Vysis a "finders fee" of one-half percent
(0.5%) of the net selling price, which Vysis will pass through in its entirety
to the Vysis salesperson who generated the lead.
(e) Upon the Closing Date, Vysis agrees to transfer to AI a complete
listing of all Vysis imaging instrumentation customers worldwide. Such list
will include all Vysis account/customer numbers, account and primary contact
names, mailing and street addresses, phone, fax and e-mail contact information
formatted as a Microsoft Excel spreadsheet.
6.10 Override Fee. AI will pay Vysis a [*] commission on sales (excluding
micrometastasis applications) that exceed AI's specific sales goals within the
U.S. territory as specified on Exhibit D hereto, which fee shall be paid until
---------
the first commercial sales by Vysis of any automated scanning and imaging system
or integrated imaging system as defined in Section 7.1 (e)(ii) and Section
7.1(e)(i), respectively, from any source sold into a Pathology lab.
ARTICLE 7 LICENSE COVENANTS
7.1 Grant of Exclusive License.
(a) Subject to the terms and conditions in this Agreement, Vysis
hereby grants to AI, and AI hereby accepts, a worldwide, paid-up, transferable
license, with right to sublicense, to
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make, have made, use, export, import, offer to sell, sell, distribute and have
distributed, copy, modify, assemble, disassemble, translate, compile, decompile
and make derivatives of the software, any derivative thereof or any portion
thereof embodied in the Systems and Software Products listed on Schedule 1 and
of any Vysis technical information related thereto. Such license shall be
exclusive in the Cytogenetic and the Pathology Field, exclusive for karyotyping
in all fields, non-exclusive in all other fields, but shall not include the
field of array imaging. Such license shall be revocable until, but shall become
irrevocable upon, the receipt by Vysis of all of the consideration, including
any interest due, to be paid to Vysis by AI under Section 3.1, subject to
Section 8.3.
(b) Subject to the terms and conditions in this Agreement, Vysis
hereby grants to AI, and AI hereby accepts, a worldwide, paid-up, transferable,
exclusive license to make, have made, use, export, import, offer to sell, sell,
distribute and have distributed, copy and make derivatives of any of the
advertising materials and brochures, customer lists and addresses, sales and
technical service records used in the Business. Such license shall be revocable
until, but shall become irrevocable upon, the receipt by Vysis of all of the
consideration, including any interest due, to be paid to Vysis by AI under
Section 3.1, subject to Section 8.3.
(c) Subject to the terms and conditions in this Agreement, Vysis
hereby grants to AI, and AI hereby accepts, a worldwide, paid-up, transferable,
exclusive license for use of the SpectraVysion, PathVysion, all Spectrum-branded
trademarks in the Cytogenetic and Pathology Field on digital imaging software
and instrumentation, provided that (i) Vysis shall have the worldwide right to
use and sublicense such trademarks in Vysis' reagent business, (ii) Vysis shall
have the worldwide right to use and sublicense the Spectrum-branded trademarks
in instrumentation. AI shall have the right to assign any of the trademark
rights discussed herein. Vysis hereby grants to AI and AI accepts, permission
to use the phrase "Vysis-compatible" (or words expressing such concept) in
conjunction with the promotion of the systems and products transferred
hereunder. AI agrees that any software and instrumentation marked with such
trademarks that it sells or distributes for consideration shall meet the quality
assurance standards established by Vysis for Vysis' SpectraVysion and
PathVysion, which standards are attached hereto as Exhibit E. Vysis warrants
---------
that its current revisions of SpectraVysion and PathVysion software currently
and consistently meet such standards as of the Closing Date. Such license shall
be revocable until, but shall become irrevocable upon, the receipt by Vysis of
all of the consideration, including any interest due, to be paid to Vysis by AI
under Section 3.1, subject to Section 8.3.
(d) Subject to the terms and conditions in this Agreement, Vysis
hereby grants to AI, and AI hereby accepts, a limited term, worldwide, paid-up,
non-transferable, non-exclusive license for use of any Vysis trademark listed in
Schedule 6 in the Cytogenetic and Pathology Fields in conjunction with its
marketing and sales of the Systems and Software Products listed on Schedule 1
and its use of the advertising materials of the Business acquired hereunder.
This license is limited to a period of one year past the Closing Date. AI
agrees that during the term of this license the Systems and Software Products
listed on Schedule 1 and sold by AI shall meet the quality assurance standards
established by Vysis (set forth on Exhibit E) for the particular Vysis' Systems
---------
and Software Product, including the performance specifications for use with
Vysis' DNA probes. Vysis warrants that its current revisions of QUIPS software
currently and consistently meet such standards as of the Closing Date.
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(e) The grant of the license in Section 7.1(a) is subject to Vysis'
retained worldwide, royalty-free, transferable right to make, have made, use,
export, import, offer to sell, sell, distribute and have distributed, copy,
modify, assemble, disassemble, translate, compile, decompile and make
derivatives of the software, any derivative thereof or any portion thereof
embodied in the Systems and Software Products listed on Schedule 1 and of any
Vysis technical information related thereto: [*]
(f) The grant of the license in Section 7.1(b) is subject to Vysis'
retained worldwide, royalty-free, transferable right to make, have made, use,
export, import, offer to sell, sell, distribute and have distributed, copy and
make derivatives of any Books and Records and any of such advertising materials
and brochures, customer lists and addresses, sales and technical service records
in its retained businesses.
(g) The grant of the license in Section 7.1(c) is subject to Vysis'
retained worldwide, royalty-free, transferable right to use the SpectraVysion
trademark on (i) any reagent product sold or distributed for consideration in
any field of use, and (ii) any software or instrumentation product using any of
Vysis' retained rights in Section 7.1(d).
(h) Vysis shall be entitled to sublicense any of its retained rights
under Sections 7.1(e), (f) and (g), unless otherwise indicated to the contrary
herein.
7.2 Limitations.
(a) The licenses granted from Vysis to AI in Section 7.1 are limited
to the rights expressly granted therein and do not include: (i) any technical
information relating to any reagent product or to any digital imaging and
analysis software not listed on Schedule 1 or (ii) a license to any other Vysis
Intellectual Property Rights not being sold or expressly licensed to AI
hereunder.
(b) This Agreement shall not be construed as creating any restriction
upon Vysis' research, development, clinical trials, marketing, sale and
collaborative efforts for any reagent product.
(c) AI acknowledges that certain software licensed to AI in Section
7.1 is co-owned by Vysis and Digital Scientific, Ltd. and that beginning January
1, 2000, Digital Scientific will have the right to exploit commercially its
rights in such software, including the grant of licenses.
7.3 Covenant Not to Sue. Subject to the terms and conditions in this
Agreement, Vysis hereby agrees not to assert any claim or bring any suit, now or
in the future, against AI on the basis that its sale of the Systems and Software
Products listed in Schedule 1 or AI's instrumentation products as presently
configured infringes, contributorily infringes, or induces the infringement of
any patent owned or controlled by Vysis, provided that this covenant shall not
extend to any patent right licensed to AI under its CGH license agreement with
Vysis effective January 1, 1998.
ARTICLE 8 COVENANTS WITH RESPECT TO MANUFACTURING
8.1 Training. Within thirty (30) days of the Closing Date, Vysis shall
provide, at its sole cost and expense, for up to three (3) employees of AI
designated by AI, on-site manufacturing
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training at Vysis' Downers Grove site. AI shall bear all expenses of its
employees in connection with such on-site training.
8.2 Manufacturing. For the period from the Closing Date through September
30, 1999, Vysis agrees that, if requested to do so by AI, it will manufacture in
a timely manner, and sell to AI at Vysis' standard cost, which AI will pay
within thirty (30) days of receipt of an invoice therefor, any of the Systems
and Software Products listed on Schedule 1.
8.3 [*]
(a) Vysis agrees to complete the development of its [*] product in
accordance with its existing procedures for completion and release of a product
for sale. This development will be of the product as specified in Vysis'
existing marketing essential characteristics ("MEC") without change in the MEC.
The [*] detailed MEC product specifications and project schedule for completion
are attached as Exhibit F. Vysis, will use its best efforts and resources for
---------
completion of the product according to the schedule shown in Exhibit F. In the
---------
event the [*] product is not completed according to schedule, (i) Vysis shall
continue to devote no less than the level of resources, on a best efforts basis,
as had previously been devoted to completion of the product pursuant to the
schedule in Exhibit F, and (ii) AI shall have the right, on the scheduled twelve
---------
(12) month payment date pursuant to Section 3.1(a) of this Agreement, without
regard to adjustments as provided for below, to request copies of all source
code, all systems specifications and documentation complete as of the date of
request, which request shall be fulfilled within ten (10) days of such request,
and AI shall have the unrestricted right to commercially or otherwise utilize
such source code, specifications and documentation, provided however, that any
modification of such code by AI shall have no affect on the finished [*] product
to be delivered by Vysis to AI. In the event the [*] product is not delivered
by December 31, 1999, then AI's one year anniversary and eighteen month
anniversary payments under Section 3.1(a) shall be delayed one day for each day
the final [*] product completion and delivery are delayed past December 31,
1999. Any delay in payments under Section 3.1(a) due to this provision shall be
on an interest-free basis and shall in no way affect the validity of any license
or be the basis for termination of any license granted to AI under this
Agreement. Completion of the [*] product shall be that the MECs have been
fulfilled as measured by the criteria attached hereto as Exhibit F which will
---------
include at least one customer beta site test. All expenses of the [*] product
development will be the responsibility of Vysis. To facilitate and complete the
transfer of the [*] product pursuant to this Agreement, Vysis shall make
available during the thirty (30) day period following delivery of the [*]
product, the research and development staff associated with the development of
the Vysis [*] project for the training of AI staff for up to ten (10) days'
intensive training, the cost of which shall be borne by AI.
(b) AI shall have the right to review the MEC and to request changes
in the MEC, but AI will be responsible for any additional development expense
resulting from such changes, as determined by Vysis provided that Vysis shall
not be penalized for any delay in the [*] delivery schedule incident to any such
requested change by AI.
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8.4 Access to Research Records and Technical Information.
(a) Vysis will make its U.S. based personnel with knowledge of its
research efforts in the Business available at Vysis' Downers Grove facility to
AI as reasonably requested by AI on at least 48 hours' notice, to assist AI in
the transition of the Business. This access shall not unduly interfere with
Vysis' ongoing research and development in its retained businesses and the [*]
development.
(b) For sixty (60) days after the Closing Date, Vysis will provide
reasonable access during normal business hours at Vysis' Downers Grove facility
to AI to review and copy at AI's expense any of the research records, including
computer records, of Vysis' software development group that relate to the
Systems and Software Products listed on Schedule 1. This access shall not
unduly interfere with Vysis' ongoing research and development in its retained
businesses and the [*] development.
8.5 Contracts, Licenses and Service Agreements. Vysis hereby assigns to AI
all its right and interest in and to all Contracts, Licenses and Service
Agreements listed on Schedules 2, 4 and 5, respectively. AI and Vysis shall
cooperate in notifying the other party to such Contracts, Licenses and Service
Agreements and to secure any consents necessary to effectuate the assignment.
8.6 Assumption of Contract Obligations.
(a) AI hereby assumes all Vysis' obligations under the Contracts,
Licenses and Service Agreements, copies of which have been provided to AI.
(b) AI hereby assumes all Vysis warranty obligations for the Systems
and Software Product installations listed on Schedule 9, attached and
incorporated herein, that are to be performed subsequent to the Closing Date.
(c) A list of all warranty and service contracts and obligations being
assumed hereunder is attached on Schedule 11.
(d) Vysis shall be responsible for System and Software Product returns
for sales made by Vysis before the Closing Date for a period of ninety (90)
days' post closing with AI responsible thereafter, and AI shall be responsible
for System and Software Product returns for sales made by AI after the Closing
Date.
8.7 Employment. In order to facilitate a smooth transfer of the Business
and to further the purposes of this Section 8.7 and this Agreement, Vysis shall
use its best efforts to encourage and promote the acceptance of any offers made
by AI to Vysis employees pursuant to this Agreement. For a period of 24 months
after the Closing, Vysis agrees that it shall not directly or indirectly
solicit, induce, recruit, or encourage any of its former employees (whether AI
employees or otherwise) to leave their employment either for employment at Vysis
or at another person or entity, except for those persons involved in the
research and development of the Business.
(a) In connection with the transfer of the Business, AI shall have the
right to solicit the research (2 U.S.), technical service (2 U.S. and 4 Europe),
and sales (1 U.S.) employees of
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Vysis who are identified on Schedule 11 attached hereto. AI agrees to consider
such employees for employment and to make any offers of employment within sixty
(60) days of the Closing Date. Vysis agrees that the employees listed on
Schedule 11 may be employed by and provide services to AI; provided, that Vysis
will continue to enforce the proprietary, confidentiality and similar provisions
in any agreements with such employees to the extent such enforcement relates to
information not used in the Business as of the Closing Date. The human resources
departments of the parties will cooperate in the hiring of any such employee by
AI. In regards to the employment offers which AI will make to the four members
of Vysis' Europe based technical service employees, in the event that one or
more such offers are not accepted, Vysis, at AI's request, shall continue the
employment of such employee(s) for the benefit of AI and at AI's expense, for a
period of up to six months beyond the sixty day anniversary of the Closing. In
regards to the employment offers which AI will make to the two U.S. based
research employees, in the event that one or more such offers are not accepted,
Vysis, at AI's request, shall continue the employment of such employee(s) for
the benefit of AI and at AI's expense, for a period of up to four months beyond
the delivery of the [*] product.
(b) The hiring of employees of Vysis shall be at the sole discretion
of AI, and AI shall have no obligation to make offers of employment to any
person. As between the parties, all rights to accrued vacation, to any
severance payments and to all other rights of employees of Vysis created upon
the termination of their employment with Vysis shall remain the sole
responsibility of Vysis. AI agrees that it shall treat the years of service
with Vysis of any Vysis employee hired by AI as years of service with AI for
purposes of calculating vacation and other employee benefits of AI.
ARTICLE 9 GENERAL COVENANTS
9.1 Access and Rights of Inspection. For thirty (30) days after the
Closing Date, Vysis will allow AI and its counsel, accountants, consultants and
other representatives reasonable access, during normal business hours and so as
not to unreasonably interfere with the business operations of Vysis, to all
properties, Contracts, books and records, including technical service records
used in or relating to Vysis' operation of the Business.
9.2 Further Assurances. Both before and after the Closing, each party
hereto agrees to execute, acknowledge and deliver such further instruments and
to do all such other acts as may be necessary or appropriate in order to carry
out the purposes and intents of this Agreement. Without limiting the foregoing,
AI agrees that it will, both prior to and after the Closing, without demanding
or receiving any further consideration, at the request of Vysis, perform any and
all legal acts, including the execution and acknowledgment of instruments, that
may be or become necessary or convenient for effectuating the assignment of any
property assigned hereunder.
9.3 Claims Handling. Vysis and AI agree to cooperate concerning the
handling of any claims, tax, government reporting, government investigation or
litigation matters arising after the Closing Date and relating to the Business.
9.4 [*] Vysis and AI will review AI's [*] product line for possible
distribution by Vysis of the [*] products as part of Vysis' reagent business.
Any such possible distribution will be pursuant to a
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written product distribution agreement to be negotiated between the Parties and
entered into separately from this Agreement.
9.5 Confidentiality Regarding Information of Business.
(a) Vysis agrees that, after the Closing, it shall not disclose to any
person or entity not employed by, or not engaged to render services to, Vysis,
any trade secrets, financial data, operational methods, customer lists,
marketing and sales information or other proprietary information relating to the
Business, except in conjunction with the operation of its retained businesses or
its retained rights under Section 7.1 and under the conditions used by Vysis to
protect its own business information and except for purposes of SEC filings.
(b) AI agrees that, after the Closing, it shall not disclose to any
person or entity not employed by, or not engaged to render services to, AI, any
trade secrets, financial data, operational methods, customer lists, marketing
and sales information or other proprietary information relating to the Business,
except in conjunction with the operation of Business or exercise of its rights
under Section 7.1 and under the conditions used by AI to protect its own
business information and except for purposes of SEC filings.
9.6 Covenant Not to Compete.
(a) In connection with the transfer of the Business to AI, for the
period from the Closing Date until the fifth anniversary of the Closing Date,
Vysis will not compete with AI anywhere in the world in the marketing and sale
of stand-alone cytological digital imaging systems in the Cytogenetics and the
Pathology Fields; provided that Vysis': [*]
(b) AI acknowledges that this non-compete covenant shall not be
construed as violated by any research and development activities of Vysis either
internal or with third party collaborators. AI further acknowledges that this
non-compete covenant shall not be construed as violated by Vysis' performance of
its agreement with Digital Scientific, including any contractually required
transfer of source code to Digital. Section 9.1 shall not preclude Vysis from
holding, as a passive investment, not more than five percent (5%) of any class
of securities, which class is publicly traded on a U.S. securities exchange or
the Nasdaq National Market, of any corporation, partnership, business or other
entity with operations directly competitive with AI.
9.7 Compatibility of Reagents. AI agrees to use reasonable commercial
efforts, within 60 to 90 days before product launch if possible, to provide
Vysis with information related to modifications of the products listed in
Schedule 1 for Vysis' internal use to ensure compatibility of its reagents with
such products, including three copies of any software developed by AI for Vysis'
use in its reagent research.
ARTICLE 10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION;
ARBITRATION
10.1 Indemnification by Vysis. Vysis shall indemnify and hold harmless AI
and its Affiliates against any and all claims (including product liability and
personal injury claims), demands, actions, proceedings, liabilities, losses,
damages, costs and expenses, including, without
[*]-CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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limitation, reasonable expert witness and attorneys' fees and costs which may be
asserted against or incurred by AI or its Affiliates, arising out of or related
to (a) any claim or suit by a third party which is based upon a breach of any of
the representations or warranties made by Vysis in Article 4, (b) any claim or
suit which is based upon the conduct of the Business before the Closing Date
(except for liabilities expressly assumed by AI hereunder and set forth as
Assumed Liabilities in Schedule 9 hereto), and (c) any breach by Vysis of its
obligations or covenants hereunder.
10.2 Indemnification by AI. AI shall indemnify and hold harmless Vysis and
its Affiliates against any and all claims (including product liability and
personal injury claims), demands, actions, proceedings, liabilities, losses,
damages, costs and expenses, including, without limitation, reasonable expert
witness and attorneys' fees and costs which may be asserted against or incurred
by Vysis or its Affiliates, arising out of or related to (a) any claim or suit
by a third party which is based upon a breach of any of the representations or
warranties made by AI in Article 5, (b) any claim or suit by a third party which
is based upon the conduct of the Business after the Closing Date, and (c) any
breach by AI of its obligations or covenants hereunder.
10.3 Procedure. The indemnified party will: (a) promptly notify the
indemnifying party of any claim, suit or proceeding for which defense or
indemnity is claimed; (b) cooperate reasonably with the indemnifying party at
the latter's expense; and (c) allow the indemnifying party to control the
defense or settlement thereof, provided, however, that the indemnifying party
may not consent to entry of any judgment or enter into any settlement without
the prior written consent of the indemnified party (which consent shall not be
unreasonably withheld or delayed), unless such judgment or settlement provides
solely for money damages or other money payments which the indemnifying party
actually pays on behalf of the indemnified party and includes as an
unconditional term thereof a release of the indemnified party from all liability
in respect of the claim, suit or proceeding giving rise to the claim for
indemnification. The indemnified party will have the right to participate in any
defense of a claim and/or to be represented by counsel of its own choosing at
its own expense.
10.4 Indemnity Limit. Vysis' obligation to indemnify AI, and AI's
obligation to indemnify Vysis hereunder, shall each not exceed a total
expenditure, for any and all claims, demands, actions, proceedings, liabilities,
losses, damages, costs and expenses, of [*], except for claims, demands,
actions, proceedings, liabilities, losses, damages, costs and expenditures which
are the result of fraud or intentional non-disclosure on the part of Vysis are
not subject to any dollar limitation on Vysis' obligation to indemnify AI
hereunder. For any and all claims, demands, actions, proceedings, liabilities,
losses, damages, costs and expenses incurred by AI in matters related to the
establishment, preservation, or defense of title to the Assets transferred or
licensed under this Agreement, Vysis' obligation to indemnify AI shall be
limited to [*].
10.5 Disclaimer. Except as expressly set out in this Agreement and except
for any warranties implied by law, Vysis makes no additional warranties or
guarantees. Vysis makes no warranty or guarantee to AI concerning the accuracy
of any business or research records provided to AI pursuant to the terms of this
Agreement.
[*]-CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.
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10.6 Survival of Warranties. Any claim for indemnification hereunder,
except for claims based on fraud or intentional non-disclosure by Vysis, must be
made on or prior to December 31, 2000. Any claim not noticed by December 31,
2000, shall be irrevocably waived and released.
10.7 Limitation of Liability. IN NO EVENT SHALL ANY PARTY BE LIABLE TO THE
OTHERS FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES, HOWEVER
CAUSED AND ON ANY THEORY OF LIABILITY, ARISING OUT OF THIS AGREEMENT, WHETHER OR
NOT SUCH PARTY IS ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, EXCEPT FOR
INSTANCES INVOLVING FRAUD AND INTENTIONAL NON-DISCLOSURE, AND EXCEPT WHERE SUCH
IS ALLEGED BY A THIRD PARTY CLAIMANT FOR WHICH ONE OF THE PARTIES HERETO IS
ENTITLED TO INDEMNIFICATION HEREUNDER.
ARTICLE 11 MISCELLANEOUS
11.1 Successors; Assignability. Either party may assign its rights
hereunder without the consent of the other party. This Agreement shall inure to
the benefit of and be binding upon the executors, administrators, successors and
permitted assigns of the parties hereto.
11.2 Costs and Expenses. Whether or not the transactions contemplated by
this Agreement are consummated, Vysis will pay its own expenses, and AI will pay
its own expenses, in connection with the negotiation, execution, delivery and
performance of this Agreement, including without limitation the expenses of
their respective counsel, accountants and other experts.
11.3 Other Agreements Superseded; Waiver and Modification, Etc. This
Agreement supersedes all prior agreements or understandings, written or oral,
between the parties relating to the subject matter hereof, and incorporates the
entire understanding of the parties with respect to such subject matter. This
Agreement may be amended, supplemented or waived only by a written instrument
signed by an authorized representative of both parties. The parties expressly
acknowledge and agree that, except for the licenses expressly granted AI in
Section 7.1 and the assignment of Intellectual Property Rights pursuant to
Section 3.4, no other rights of any kind to the Intellectual Property Rights
owned by Vysis or its third-party licensors (including, without limitation,
implied licenses) are granted to AI under this Agreement, except those rights
that accompany the Acquired Assets. AI hereby expressly disclaims any implied
licenses under any patents held by Vysis and/or its licensor, The Regents of the
University of California.
11.4 Overdue Payments. Any amount payable under this Agreement which is not
paid when due shall bear interest at the lower of (a) an annual rate of 18% and
(b) the highest rate allowed by law.
11.5 Notices. Any notice under or relating to this Agreement shall be given
in writing and shall be deemed sufficiently given and served for all purposes
(a) when personally delivered or transmitted by facsimile, or (b) two (2)
business days after a writing is deposited in the United States mail, first
class postage or other charges prepaid and registered, addressed as follows:
(a) If to Vysis:
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3100 Woodcreek Drive
Downers Grove, Illinois 60515
Attention: President & CEO
Facsimile: (630) 271-7078
(b) If to AI:
2380 Walsh Avenue, Building B
Santa Clara, California
Attention: President & CEO
Facsimile: (408) 562-0264
11.6 Parties in Interest. Nothing in this Agreement, express or implied,
is intended to confer any rights or remedies under or by reason of this
Agreement on any Person other than the parties to it and their respective
permitted successors and assigns, nor is anything in this Agreement intended to
relieve or discharge any obligation of any third Person to any party hereto or
give any third Person any right of subrogation or action over against any party
hereto.
11.7 Governing Law; Jurisdiction. This Agreement shall be construed in
accordance with and governed by the laws of the State of California, without
giving effect to the principles of conflict of laws thereof.
11.8 Fair Construction/Difference in Facts. This Agreement has been
negotiated and prepared jointly by both parties and shall not be construed for
or against any party but shall be given a fair and reasonable construction in
accordance with the intention of the parties.
11.9 Captions, References, Date. The Article and Section headings in this
Agreement are provided for convenient reference only and are not to be
considered in the interpretation of this Agreement. All references herein to
Article, Section, Schedule, etc. refer to the designated Article, Section,
Schedule, etc. of this Agreement.
11.10 Severability. In the event that any of the provisions contained in
this Agreement shall, for any reason, be declared or held to be unreasonable,
unlawful, unenforceable or otherwise invalid in any respect, such term or
provision shall be deemed modified to the extent necessary to make it
enforceable, and in no event shall such declaration or holding affect the
validity of any other provision of this Agreement, all of which provisions shall
continue in effect in accordance with their terms.
11.11 Counterparts. This Agreement may be executed in any number of
counterparts or using separate signature pages. Each such executed counterpart
and each counterpart to which such signature pages are attached will be deemed
to be an original instrument, and all such counterparts together will constitute
one and the same instrument.
11.12 Recovery of Litigation Costs. If any legal action or any arbitration
or other proceeding is brought for the enforcement of this Agreement, or because
of an alleged dispute, breach, default or misrepresentation in connection with
any provision of this Agreement, the
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successful or prevailing party shall be entitled to recover reasonable
attorneys' fees and other costs incurred in that action or proceeding, in
addition to any other relief to which it may be entitled.
11.13 Relationship of the Parties. Both parties are independent
contractors under this Agreement. Nothing contained in this Agreement is
intended nor is to be construed so as to constitute Vysis and AI as partners or
joint ventures with respect to the subject matter of this Agreement. Neither
party hereto shall have any express or implied right or authority to assume or
create any obligations on behalf of or in the name of the other party or to bind
the other party to any other contract, agreement or undertaking with any third
party.
11.14 Brokerage. Each party represents and warrants to the other that it
has dealt with no broker or finder in connection with any of the transactions
contemplated by this Agreement and, insofar as each party knows, no broker,
finder or other Person is entitled to any brokerage commission or finder's fee
in connection with any of such transactions. Each party agrees to indemnify and
hold harmless the other from and against any loss or damage incurred by reason
of any other brokerage commission or finder's fee alleged to be payable because
of any act, omission or statement of the indemnifying party.
11.15 Publicity.
(a) Upon the Closing, Vysis and AI each shall issue the press
announcement attached as Exhibit G hereto.
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(b) Vysis and AI may each be required to attach this Agreement as an
exhibit to documents required to be filed with the Securities Exchange
Commission pursuant to the Securities Act of 1933 and the Securities Exchange
Act of 1934, each as amended. Vysis and AI shall cooperate in determining
whether confidential treatment should be sought for all or any part of such
filings, and, if it is agreed that confidential treatment should be sought, each
party shall use reasonable best efforts to secure such confidential treatment.
(c) The Parties will cooperate on any other announcement where the
name of the other Party is used in a way not expressly authorized under this
Agreement.
11.16 Arbitration. Any claim arising out of or related to this Agreement
shall be finally settled by arbitration in the County of Denver, Colorado in
accordance with the then current Commercial Arbitration Rules of the American
Arbitration Association; and judgment upon the award rendered by the arbitrator
may be entered in any court having jurisdiction thereof. Such arbitration shall
be conducted by an arbitrator chosen by mutual agreement of AI and Vysis.
Failing such agreement, the arbitration shall be conducted by three independent
arbitrators, none of whom shall have any competitive interests with AI or Vysis.
AI shall choose one such arbitrator, Vysis shall choose one such arbitrator, and
such two arbitrators shall mutually select a third arbitrator. Any decision of
two such arbitrators shall be binding on AI and Vysis. Each party shall pay its
own costs and expenses (including counsel fees) of any such arbitration except
that the arbitrator must compel the non-prevailing party to pay all of the
prevailing party's costs and expenses.
11.17 Sole Remedy. Except for the rights of the Parties to injunctive
relief for violations of Sections 9.5 and 9.6 the indemnification provided in
Section 10 hereof (subject to the limitations
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contained therein) shall be the sole and exclusive remedy for any and all
matters arising out of, or related to, this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Asset Transfer
Agreement to be effective as of the date first written above:
VYSIS, INC.
By:
/s/ R. Williams
Name: Richard Williams
Title: Co-Chairman
APPLIED IMAGING CORP.
By:
/s/ J. Goldstein
Name: Jack Goldstein
Title: President & CEO
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