SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): August 18, 1997
----------------
Advanced NMR Systems, Inc.
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(Exact name or registrant as specified in its charter)
Delaware 0-11914 22-2457487
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(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
46 Jonspin Road, Wilmington, Massachusetts 01887
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (508) 657-8876
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N/A
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(Former name or former address, if changed since last report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
------------------------------------
On August 18, 1997, Advanced NMR Systems, Inc. ("ANMR")
entered into agreements with the General Electric Company
("GE") whereby (i) GE purchased all of ANMR's inventory,
equipment and other assets and assumed related liabilities
relating to the 3T, 4T and InstaScan business for $2,432,580 in
cash, (ii) GE purchased 27,000 shares of newly issued Series B
Convertible Redeemable Preferred Stock (the "Series B Preferred
Stock") for $2,700,000, (iii) ANMR and GE entered into a
license agreement pursuant to which ANMR granted certain
license rights to GE; and (iv) ANMR and GE entered into
releases of any claims either may have had against the other.
ANMR and GE had previously collaborated in the development
of the purchased MRI systems. Also, as part of the purchase,
GE acquired the servicing of these systems along with the
servicing of the previously installed InstaScan systems.
The Series B Preferred Stock consists of 27,000 shares,
ranks senior to any other shares of Advanced ANMR preferred
stock which may be created and the Advanced ANMR Common Stock,
has a liquidation value of $100.00 per share, plus accrued and
unpaid dividends, is non-voting except if ANMR proposes an
amendment to its Certificate of Incorporation which would
adversely affect the rights of the holders of the Series B
Preferred Stock, and is initially convertible into 11,597,930
shares of ANMR Common Stock, subject to customary anti-dilution
provisions, commencing on August 18, 1998, or earlier upon a
change of control of ANMR. A change of control is defined as:
(i) the ownership of 45% or more of the outstanding shares of
ANMR Common Stock; (ii) the sale of substantially all of the
assets of ANMR; or (iii) the election of an ANMR board of
directors, the majority of whose members had not been nominated
by a majority of the members of the previous board of
directors. In the event that at the time GE seeks to convert
its Series B Preferred Stock there are not enough authorized
but unissued shares of ANMR Common Stock available to issue to
GE upon such conversion, GE has the right to redeem its Series
B Preferred Stock for $100 per share. No fixed dividends are
payable on the Series B Preferred Stock, except that if a
dividend is paid on the ANMR Common Stock, dividends are paid
on the shares of Series B Preferred Stock as if they were
converted into shares of ANMR Common Stock.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------
(b) Pro Forma Condensed Financial Information
The following unaudited pro forma condensed financial
statements set forth the financial position as of June 30,
-2-
<PAGE>
1997, as if the GE transaction had occurred on that date, and
the results of operations for the twelve months ended September
30, 1996 and the nine months ended June 30, 1997, as if the
merger of Medical Diagnostics Inc., a former subsidiary of ANMR
("MDI") with a subsidiary of US Diagnostic Inc. had occurred as
of October 1, 1995. The pro forma condensed financial
statements do not purport to represent what ANMR's financial
position or results of operations would actually have been if
the acquisition had occurred on October 1, 1995, or to project
ANMR's financial position or results of operations for any
future date or period. The financial statements filed under
part (a) of this item should be read in conjunction with these
pro forma condensed financial statements.
(c) Exhibits
3. Certificate of Designations, Powers, Preferences
and Rights of Series B Convertible Redeemable
Preferred Stock of ANMR filed with the Secretary
of State of the State of Delaware on August 18,
1997
10.1 Purchase Agreement dated August 18, 1997 between
ANMR and GE
10.2 Registration Rights Agreement dated August 18,
1997 between ANMR and GE
10.3 Stockholders' Agreement dated August 18, 1997
between ANMR and GE
10.4 Settlement and Release dated August 18, 1997
between ANMR and GE
10.5 License Agreement dated August 18, 1997 between
ANMR and GE
99 Press Release of ANMR dated August 19, 1997
-3-
<PAGE>
ADVANCED NMR SYSTEMS, INC.
PRO FORMA CONDENSED BALANCE SHEET
(In Thousands)
(Unaudited)
As of June 30, 1997
-----------------------
Historical Pro Forma
---------- ----------
Advanced
NMR GE
Systems Transaction
Inc. Adjustments Pro Forma
-------- ----------- ---------
ASSETS
Current assets:
Cash and cash equivalents 5,913 5,132 11,045
Cash, restricted 1,722 1,722
Accounts receivable 2,780 2,967
Inventories 482 (482) 0
Other current assets 217 217
------ ------- -------
11,114 4,650 20,488
------- ------- -------
Equipment, building,
furniture & leasehold
improvements 956 (147) 808
Goodwill, net 2,418 2,418
Investments in and advances
to unconsolidated
subsidiary 1,332 1,332
Other 165 165
------- -------- -------
TOTAL ASSETS 15,985 4,503 20,488
======= ======== =======
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable 664 664
Accrued Expenses 1,271 1,271
Other current liabilities 41 41
Current portion of long-
term debt and capital 676 (121) 555
lease obligations ------- -------- -------
Total current 2,652 (121) 2,531
liabilities ------- -------- -------
Long-term debt and capital
lease obligations, less
current portion 513 (72) 441
Stockholders' equity:
Preferred stock 2,700 2,700
Common stock 437 437
Additional paid-in
capital 55,776 55,776
Accumulated deficit (43,391) 1,996 (41,395)
--------- -------- -------
12,822 4,696 17,516
Less: Treasury Stock, (2) (2)
at cost --------- --------- -------
Total stockholder's 12,820 4,696 17,516
equity --------- --------- -------
Total liabilities and 15,985 4,503 20,488
stockholders' equity ======== ========= =======
The accompanying notes are an integral part of these condensed
financial statements.
<PAGE>
ADVANCED NMR SYSTEMS, INC.
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
(In Thousands)
(Unaudited)
Nine months Ended
June 30, 1997
------------------------------------
Historical Pro Forma
---------- ----------------------
Advanced NMR MDI Sale Pro
Systems Inc. Adjustments Forma
----------- ----------- --------
Revenues:
Net patient service
revenue 11,608 (8,424) 3,184
Management fees and other 287 (287) 0
------- -------- -------
Total revenue 11,895 (8,711) 3,184
------- -------- -------
Operating expenses:
Cost of service
operations 8,269 (5,788) 2,481
Selling, general and
administrative 3,045 (1,254) 1,791
Provision for bad debt
and collection costs 850 (657) 193
------- --------- ------
Total operating costs 12,164 (7,699) 4,465
------- --------- ------
Operating Income (269) (1,012) (1,281)
Other income 240 223
Loss on sale of Imaging
Business (9,377) 9,377 0
Interest income 149 289 438
Interest expense (950) 807 (143)
-------- --------- -------
Loss from continuing
operations before
minority interest, equity
in loss of subsidiary and
provision for taxes (10,207) 9,461 (746)
Minority interest in net
income of consolidated
entities (202) 208 6
Equity in net loss of
subsidiary (1,190) (1,190)
-------- ---------- ------
Loss from continuing
operations before income
taxes (11,599) 9,669 (1,930)
Provision for income taxes (63) 63
-------- ---------- ------
Loss from continuing
operations (11,536) 9,669 (1,867)
========= ========== ======
The accompanying notes are an integral part of these condensed
financial statements.
<PAGE>
ADVANCED NMR SYSTEMS, INC.
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
(In Thousands)
(Unaudited)
Twelve months Ended
September 30, 1996
--------------------
Historical
------------
Advanced NMR
Systems Inc.
------------
Revenues:
Net patient service revenue 25,481
Management fees and other 653
--------
Total revenue 26,134
--------
Operating expenses:
Cost of service operations 16,206
Selling, general and administrative 4,255
Provision for bad debt and collection
costs 2,126
--------
Total operating costs 22,587
Operating income from continuing 3,547
operations
Other income 126
Interest income 213
Interest expense (1,848)
--------
Income from continuing operations before
minority interest, equity in loss of
subsidiary and provision for taxes 2,038
Minority interest in net income of
consolidated entities (1,006)
Equity in net loss of subsidiary (2,374)
--------
Loss from continuing opertions before
income taxes (1,342)
Provision for income taxes (42)
--------
Loss from continuing operations (1,384)
========
Twelve months Ended
September 30, 1996
--------------------------
Pro Forma
--------------------------
MDI Sale
Adjustments Pro Forma
----------- ---------
Revenues:
Net patient service revenue (20,770) 4,711
Management fees and other (653) 0
-------- -------
Total revenue (21,423) 4,711
-------- -------
Operating expenses:
Cost of service operations (13,237) 2,969
Selling, general and administrative (3,419) 836
Provision for bad debt and collection
costs (1,738) 388
-------- -------
Total operating costs (18,394) 4,193
-------- -------
Operating income from continuing (3,029) 518
operations
Other income (126) 0
Interest income 356 569
Interest expense 1,848 0
-------- -------
Income from continuing operations before
minority interest, equity in loss of
subsidiary and provision for taxes (951) 1,087
Minority interest in net income of
consolidated entities 846 (160)
Equity in net loss of subsidiary (2,374)
-------- --------
Loss from continuing opertions before
income taxes (105) (1,447)
Provision for income taxes (42)
-------- --------
Loss from continuing operations (105) (1,489)
======== ========
The accompanying notes are an integral part of these condensed
financial statements.
<PAGE>
ADVANCED NMR SYSTEMS, INC.
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 Basis of Presentation
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries, including MDI's
wholly-owned subsidiaries and various majority-owned or
controlled partnerships and joint ventures. All significant
intercompany transactions have been eliminated in consolidation.
The pro forma adjustments to the Pro Forma Condensed Balance
Sheet reflect the GE Transaction as if it had occurred on June
30, 1997. The pro forma adjustments to the Pro Forma Condensed
Statement of Operations reflect the MDI merger with USD in
February 1997 as if it had occurred on October 1, 1995.
Note 2 Pro Forma Adjustments to Pro Forma Condensed Balance
Sheet
As of June 30, 1996
-------------------
(In Thousands,
except in text)
Debit (Credit)
Cash 5,132
Inventory (482)
Equipment (147)
Current portion of long-term and
capital lease obligations 121
Long-term debt and capital obligations,
less current portion 72
Preferred stock (2,700)
Accumulated deficit (1,996)
To reflect GE transaction as of June 30, 1997 based
on following schedules.
Sale:
Selling price 2,625
Book value of assets sold:
Inventory (482)
Equipment (147)
-----
Gain on sale 1,976
=====
Investment:
Preferred shares issued 27,000
Price per share $ 100
------
Purchase price 2,700
------
Cash received:
Selling price, above 2,625
Lease obligations assumed:
Short-term lease (121)
Long-term (72)
Investment, above 2,700
------
Total cash received 5,132
======
<PAGE>
ADVANCED NMR SYSTEMS, INC.
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note 3 Pro Forma Adjustments to Pro Forma Condensed Statement of Loss
Nine months ended Twelve months ended
June 30, 1996 September 30, 1996
---------------- ------------------
In Thousands, In Thousands, except
except in text in text
Debit (Credit) Debit (Credit)
Remove income for MDI Imaging
Services Business
Net patient service revenue 8,424 20,770
Management fees and other 287 653
Cost of service operation (5,788) (13,237)
Selling, general and
administrative (1,254) (3,419)
Provision for bad debt and
collection costs (657) (1,738)
Other income 126
Interest income 1 31
Interest expense (807) (1,848)
Minority interest in net
income of consolidated
subsidiaries (208) (846)
Reverse loss on sale of MDI
imaging business
Loss on sale of imaging
business (9,232)
Increase in interest income
from net proceeds
Interest income (290) (387)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
ADVANCED NMR SYSTEMS, INC.
Dated: August 28, 1997 By: /s/ Jack Nelson
---------------------------
Name: Jack Nelson
Title: Chairman
<PAGE>
EXHIBIT INDEX
Exhibit Description
------- -----------
3. Certificate of Designations, Powers,
Preferences and Rights of Series B
Convertible Redeemable Preferred Stock
of ANMR filed with the Secretary of
State of the State of Delaware on
August 18, 1997
10.1 Purchase Agreement dated August 18,
1997 between ANMR and GE
10.2 Registration Rights Agreement dated
August 18, 1997 between ANMR and GE
10.3 Stockholders' Agreement dated August
18, 1997 between ANMR and GE
10.4 Settlement and Release dated August
18, 1997 between ANMR and GE
10.5 License Agreement dated August 18,
1997 between ANMR and GE
99 Press Release of ANMR dated August 19,
1997
CERTIFICATE OF DESIGNATIONS
POWERS, PREFERENCES, AND RIGHTS, AND QUALIFICATIONS,
LIMITATIONS, AND RESTRICTIONS THEREOF,
OF "SERIES B CONVERTIBLE REDEEMABLE PREFERRED STOCK" OF
ADVANCED NMR SYSTEMS, INC.
PURSUANT TO SECTION 151(G) OF
THE DELAWARE GENERAL CORPORATION LAW
The undersigned, being the President and the Secretary of
Advanced NMR Systems, Inc., a Delaware corporation (the
"Corporation"), do hereby certify and set forth:
1. The name of the Corporation is Advanced NMR Systems,
Inc..
2. The Certificate of Incorporation of the Corporation was
filed with the Secretary of State of the State of Delaware on
June 3, 1983 and has been renewed, revived, and restored pursuant
to a certificate of renewal and revival filed with the Secretary
of State of the State of Delaware on October 30, 1986, and has
been amended pursuant to certificates of amendment filed with the
Secretary of State of Delaware on November 5, 1993, August 31,
1995 and September 21, 1995, respectively, and has been
supplemented by a certificate of designations filed with the
Secretary of State of the State of Delaware on May 30, 1996, and
has been corrected by a certificate of correction filed with the
Secretary of State of Delaware on May 31, 1996. Terms not
otherwise defined in this Certificate of Designations have the
meanings stated in the Certificate of Incorporation of the
Corporation, as so amended, renewed and supplemented.
3. The following resolution was approved by the majority
vote of the Board of Directors of the Corporation at a meeting of
the Board of Directors of the Corporation, duly called, at which
a quorum was present and in attendance throughout, on the 14th
day of August, 1997 in accordance with Section 151(g) of the
Delaware General Corporation Law and Article Fourth of the
Certificate of Incorporation of the Corporation, which resolution
has not been amended, modified or rescinded and is in full force
and effect as of the date hereof:
SERIES B CONVERTIBLE REDEEMABLE PREFERRED STOCK
RESOLVED, that:
The Corporation shall have authority to issue 27,000
shares of Preferred Stock to be designated as the "Series B
Convertible Redeemable Preferred Stock", which series shall have
the following designations, relative rights, preferences and
powers, and limitations, qualifications, and restrictions thereof
in addition to those set forth in Article Fourth of the
Certificate of Incorporation of the Corporation (the shares of
the Series B Convertible Redeemable Preferred Stock being
hereinafter called the "Series B"):
(1) Dividends. As and when dividends or other
---------
distributions (other than distributions referred to in Section 2
below) are declared or paid on the Common Stock, whether in cash,
property or securities of the Corporation (other than Common
Stock or a right or warrant referred to in Section 5(b) or (c)
below), the holders of the Series B will be entitled to share in
such dividends in an amount equal to the Conversion Rate (as
defined in Section (5) below) multiplied by the amount of the
dividend or other distribution declared or paid on a share of
Common Stock for each share of the Series B.
(2) Liquidation, Dissolution or Winding Up. Upon any
--------------------------------------
liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, (a "Liquidation") the holders
of shares of the Series B shall be entitled, before any payment
or distribution is made to any Common Stock or shares of any
other series of Preferred Stock that does not by its terms rank
on a parity with or senior to the Series B with respect to
distributions upon Liquidation, to be paid in cash out of the
assets of the Corporation legally available for distribution to
stockholders, whether such assets are capital, surplus or
earnings, the sum of $100.00 per share plus an amount equal to
any declared but unpaid dividends. The Series B shall rank at
least pari passu with any other Preferred Stock of the
Corporation with respect to distribution of assets upon any
Liquidation. Upon a Liquidation, after payment to holders of any
other series of Preferred Stock that by its terms ranks senior to
the Series B with respect to distributions upon Liquidation of
the amount to which they are respectively entitled, in case the
net assets of the Corporation are insufficient to pay the holders
of all outstanding shares of the Series B and any outstanding
shares of any other series of Preferred Stock that by its terms
ranks on parity with the Series B with respect to distributions
upon Liquidation the amount to which they are respectively
entitled, then the entire remaining net assets of the Corporation
shall be distributed ratably among the holders of all outstanding
shares of the Series B and any outstanding shares of parity stock
in proportion to the respective amounts that would be payable per
share if such assets were sufficient to permit payment of the
amount to which they were entitled in full. Following the
completion of the distribution of the stated liquidation
preference to be paid to the holders of the Series B and any
outstanding shares of any other series of Preferred Stock that by
its terms ranks senior to the Common Stock with respect to
distributions upon Liquidation, and after there shall have been
paid an amount equal to $100.00 divided by the Conversion Rate
(as defined in Section (5) below) (the "Common Share Equalizer
Amount") to the holders of Common Stock in respect of each share
of Common Stock, the holders of the Series B shall rank on a
parity with the holders of the Common Stock with respect to
distributions on Liquidation and shall be entitled to receive,
with respect to each share of the Series B, the Conversion Rate
(as defined in Section 5 below) times the amount received by each
share of Common Stock of any and all assets remaining to be paid
or distributed.
Neither the merger or consolidation of the Corporation
into or with another corporation nor the merger of any other
corporation into the Corporation shall be deemed to be a
Liquidation within the meaning of this provision, but the sale,
lease or conveyance of all or substantially all of the
Corporation's assets will be deemed a Liquidation within the
meaning of this provision.
(3) Voting Rights. Except as otherwise set forth in
-------------
Section (4) hereof or as required by law, the holders of the
Series B shall not be entitled to vote on any matter.
(4) Amendment of Certificate of Incorporation. So
-----------------------------------------
long as any shares of the Series B are outstanding, the
Corporation shall not amend, alter or repeal any of the
provisions of the Certificate of Incorporation (which term
includes each and all amendments for the purpose of creating
other series of Preferred Stock) so as to affect adversely the
rights, powers or preferences of the shares of the Series B or of
the holders thereof, or issue additional shares of the Series B,
without the consent of the holders of at least a majority of the
total number of outstanding shares of the Series B, given in
person, by proxy or by vote at a meeting called for that purpose.
An amendment which increases the number of authorized shares of
Preferred Stock, or which creates another series of Preferred
Stock ranking pari passu with the Series B as to dividends and
the distribution of assets, or the issuance of such shares shall
not require the approval of the holders of the Series B.
However, in the application of these provisions, any amendment
which would authorize or create any shares of stock ranking prior
to the Series B as to dividends or as to distribution of assets
upon liquidation, dissolution or winding up of the Corporation
shall be considered as affecting adversely the rights of all
outstanding shares of the Series B.
(5) Conversion. The shares of the Series B shall be
----------
convertible, in whole or in part, (x) at the option of the
holders thereof (an "Optional Conversion"), at any time and from
time to time (i) after a bona fide offer that, as shall be
determined by the Corporation's Board of Directors in good faith,
is reasonably likely to be concluded (an "Offer") is made by, on
behalf of and for the benefit of any person other than a holder
of shares of the Series B or any affiliate thereof, or by the
Corporation as the case may be with respect to a plan or
transaction that could result in a Change of Control (as defined
below), or (ii) after the first anniversary of the date of the
first issuance of the Series B (the "First Anniversary") and
before the tenth anniversary of the date of the first issuance of
the Series B (the "Tenth Anniversary") at the offices of the duly
appointed transfer agent for the shares of the Series B, and (y)
automatically, without further action by the holder of the shares
of the Series B as otherwise required by the fourth paragraph of
this Section 5, on the Tenth Anniversary or, if on such Tenth
Anniversary, the Corporation shall be a debtor under the
Bankruptcy Code or the liabilities of the Corporation as stated
on the last regularly prepared balance sheet prepared by the
Corporation as of the fiscal quarter that precedes the Tenth
Anniversary by not less than fifteen (15) days exceeds the fair
market value of the Corporation's property (as shall be
determined by the Corporation's Board of Directors in good
faith), then on the next date (the "Solvency Date") on which the
liabilities of the Corporation as stated on any regularly
prepared balance sheet prepared by the Corporation do not exceed
the fair market value of the Corporation's property (as shall be
determined by the Corporation's Board of Directors in good
faith), (the "Mandatory Conversion"), in each case into a number
of fully paid and nonassessable shares (calculated to the nearest
one-thousandth of a share) of Common Stock of the Corporation, at
the rate of 429.553 shares of Common Stock for each share of the
Series B. The rate at which shares of Common Stock shall be
deliverable in exchange for shares of the Series B upon
conversion thereof is hereinafter referred to as the "Conversion
Rate" for shares of the Series B. The Conversion Rate shall be
subject to further adjustment from time to time in certain
instances as hereinafter provided. In no event, however, shall
the Conversion Rate be adjusted such that Common Stock would be
issued at a Conversion Rate such that the sum of the liquidation
preference, plus declared but unpaid dividends, of a converted
share of the Series B, divided by the number of shares that would
be issuable upon conversion would be less than $.01 per share of
Common Stock (which is the par value thereof). Upon conversion,
the Corporation shall make no payment or adjustment on account of
dividends accrued but unpaid on the shares of the Series B
surrendered for conversion; however, a holder of shares of the
Series B who converts such shares after the record date for a
dividend and on or before the dividend payment date shall receive
the dividend payable on such shares of the Series B on such
dividend payment date. As used herein, the term "business day"
shall mean any Monday, Tuesday, Wednesday, Thursday or Friday on
which banks in The City of New York are not authorized to close.
For purposes of this Section 5, a "Change of Control"
shall mean any of the following events: (i) the direct or
indirect beneficial ownership (within the meaning of Section
13(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and Regulation 13D-G thereunder) of securities
of the Corporation representing 45% or more of the combined
voting power of the Corporation's then outstanding securities is
acquired or becomes held by any person (as such term is used in
Section 13(d) and 14(d)(2) of the Exchange Act) (for purposes of
this Section 5, a "Person") or group of Persons (within the
meaning of Section 13(d)(3) of the Exchange Act) (a "Group"),
(ii) the sale, lease or other disposition to any Person or Group
in one or more transactions of all or substantially all of the
assets of the Corporation, provided that any mortgage, pledge,
lien or other security interest to secure bona fide indebtedness
shall not constitute a Change of Control in any event, or (iii)
the election of a board of directors, the majority of whose
members had not been nominated by a majority of the members of
the previous board of directors.
Whenever the Corporation shall receive such an Offer,
or agree to a plan or transaction that would result in a Change
of Control, the Corporation will forthwith cause a notice thereof
to be sent in writing to the respective holders of record of the
Series B and shall in no event consummate or close such a plan or
transaction that will result in a Change of Control earlier than
fifteen (15) days following receipt of such notice by such
holders.
Before any holder of shares of the Series B shall be
entitled to convert the same into Common Stock in connection with
an Optional Conversion, such holder shall surrender the
certificate or certificates for such shares of the Series B at
the office of the transfer agent, which certificate or
certificates, if the Corporation shall so request, shall be duly
endorsed to the Corporation or in blank, and shall give written
notice to the Corporation at said office that such holder elects
so to convert said shares of the Series B and shall state in
writing therein the name or names and respective amounts in which
such holder wishes the certificate or certificates for Common
Stock to be issued.
The rights of conversion exercisable by the holders of
shares of the Series B shall be exercisable either in full or in
part at the election of the holders thereof. If the holder of
Series B shares exercises its right of conversion in respect of
less than all of its Series B shares, a new certificate
evidencing the remaining Series B shares shall be issued to the
holder by the Corporation.
As of and after the Tenth Anniversary or the Solvency
Date, as the case may be, the shares of the Series B issued and
outstanding immediately prior to the Tenth Anniversary or the
Solvency Date, as the case may be, shall be deemed to have been
converted into shares of Common Stock as provided herein on the
transfer books of the Common Stock of the Corporation.
The Corporation shall, as soon as practicable after (x)
the surrender of certificates for shares of the Series B in
connection with an Optional Conversion, accompanied by the
written notice and the statement above prescribed, and (y) the
surrender of certificates for shares of the Series B after the
Tenth Anniversary or the Solvency Date, issue and deliver at the
office of the transfer agent, to the person for whose account
such shares were so surrendered, or to his nominee or nominees,
certificates for the number of full shares of Common Stock to
which he shall be entitled as aforesaid, together with a cash
adjustment for any fraction of a share as hereinafter stated, if
not evenly convertible. Subject to the following provisions of
this paragraph with respect to an Optional Conversion, such
conversion shall be deemed to have been made as of the date of
such surrender of the shares of the Series B to be converted; and
the person or persons entitled to receive the Common Stock
issuable upon an Optional Conversion of such shares of the Series
B shall be treated for all purposes as the record holder or
holders of such Common Stock on such date. The Corporation shall
not be required to convert, and no surrender of shares of the
Series B shall be effective for that purpose with respect to an
Optional Conversion, while the stock transfer books of the
Corporation are closed for any purpose; but the surrender of
shares of the Series B for conversion with respect to an Optional
Conversion, during any period while such books are closed shall
become effective for conversion immediately upon the reopening of
such books, as if the conversion had been made on the date such
shares were surrendered, and at the Conversion Rate in effect at
the date of such surrender.
With respect to a Mandatory Conversion, each
certificate that immediately prior to the Tenth Anniversary or
the Solvency Date (as the case may be) represented one (1) or
more shares of Series B shall, upon and after the Tenth
Anniversary or the Solvency Date (as the case may be), until such
certificate is surrendered in accordance herewith, represent that
number of whole shares of Common Stock (and the right to receive
the cash amount payable in lieu of the issuance of fractional
shares of Common Stock) into which the share(s) of Series B
theretofore represented by such certificate shall have been
converted.
The Conversion Rate for shares of the Series B and the
Common Share Equalizer Amount shall be subject to further
adjustment from time to time as follows:
(a) If the Corporation shall at any time pay
a dividend on its Common Stock (including, if
applicable, shares of such stock held by the
Corporation in treasury) in shares of its Common Stock,
subdivide its outstanding shares of Common Stock into a
larger number of shares or combine its outstanding
shares of Common Stock into a smaller number of shares,
the Conversion Rate in effect immediately prior thereto
shall be adjusted so that each share of the Series B
shall thereafter be convertible into the number of
shares of Common Stock which the holder of a share of
the Series B would have been entitled to receive after
the happening of any of the events described above had
such share been converted immediately prior to the
happening of such event. An adjustment made pursuant
to this paragraph (a) shall become effective
retroactively to the record date in the case of a
dividend and shall become effective on the effective
date in the case of a subdivision or combination.
(b) If the Corporation shall issue rights or
warrants to all holders of shares of Common Stock for
the purpose of entitling them (for a period not
exceeding 45 days from the date of issuance) to
subscribe for or purchase shares of Common Stock at a
price per share (taking into account any consideration
received by the Corporation for such rights or
warrants, the value of such consideration, if other
than cash, to be determined in good faith by the Board
of Directors of the Corporation) less than the average
market price per share (determined as provided below)
of the Common Stock on the record date for such
issuance, then in each such case the Conversion Rate
shall be determined by multiplying the Conversion Rate
on the date immediately preceding such record date by a
fraction the numerator of which shall be the sum of the
number of shares of Common Stock outstanding on such
record date and the number of additional shares of
Common Stock so offered for subscription or purchase in
connection with such rights or warrants, and the
denominator of which shall be the sum of the number of
shares of Common Stock outstanding on such record date
and the number of shares of Common Stock which the
aggregate offering price of the total number of shares
so offered would purchase at such average market price;
provided, however, if all the shares of Common Stock
-------- -------
offered for subscription or purchase are not delivered
upon the exercise of such rights or warrants, upon the
exercise of such rights or warrants the Conversion Rate
shall be readjusted to the number of shares which would
have been in effect had the numerator and the
denominator of the foregoing fraction and the resulting
adjustment been made based upon the number of shares of
Common Stock actually delivered upon the exercise of
such rights or warrants rather than upon the number of
shares of Common Stock offered for subscription or
purchase. Such adjustment shall be made whenever any
such rights or warrants are issued, and shall become
effective on the date of issuance retroactive to the
record date for determination of stockholders entitled
to receive such rights or warrants. For the purposes
of this paragraph (b), the number of shares of Common
Stock at any time outstanding shall not include shares
held in the treasury of the Corporation.
(c) If the Corporation shall distribute to
all the holders of Common Stock (i) any rights or
warrants to subscribe for or purchase any security of
the Corporation (other than those referred to in
paragraph (b) above) or any evidence of indebtedness or
other securities of the Corporation (other than Common
Stock), or (ii) assets (other than cash) having a fair
market value (as determined in a resolution adopted in
good faith by the Board of Directors of the
Corporation, which shall be conclusive evidence of such
fair market value) in an amount during any 12-month
period equal to more than 10% of the market
capitalization (as defined below) of the Corporation,
then in each such case the Conversion Rate shall be
determined by multiplying the Conversion Rate on the
day immediately preceding the date of declaration or
authorization by the Board of Directors of the
Corporation of such distribution by a fraction, the
numerator of which shall be the average market price
per share (determined as provided in paragraph (e)
below) of the Common Stock on such declaration or
authorization date and the denominator of which shall
be such average market price per share less the then
fair market value (as determined by the Board of
Directors of the Corporation as provided above with
respect to assets other than cash or securities) of the
portion of the assets, rights, warrants, evidences of
indebtedness or other securities so distributed
applicable to one (1) share of Common Stock. Such
adjustment shall be made whenever any such rights or
warrants are issued or such assets are distributed and
shall become effective on the date of issuance or
distribution retroactive to the record date for
determination of the stockholders entitled to receive
such distribution. The term "market capitalization"
shall mean an amount determined by multiplying the
number of shares of Common Stock outstanding on such
declaration or authorization date by the average market
price per share (determined as provided in paragraph
(e) below) of the Common Stock on such declaration
date.
(d) In case of any capital reorganization or
any reclassification (other than a change in par value)
of the capital stock of the Corporation or of any
conversion of the Common Stock into securities of
another corporation or in case of the consolidation or
merger of the Corporation with or into any other person
(other than a merger which does not result in any
reclassification, conversion, exchange or cancellation
of outstanding shares of Common Stock) or in case of
any sale or conveyance of all or substantially all of
the assets of the Corporation, the person formed by
such consolidation or resulting from such capital
reorganization, reclassification or merger or which
acquires such assets, as the case may be, shall make
provision in the articles or certificate of
incorporation of such person such that each share of
the Series B then outstanding shall thereafter be
convertible into the kind and amount of shares of
stock, other securities, cash and other property
receivable upon such capital reorganization,
reclassification of capital stock, consolidation,
merger, sale or conveyance, as the case may be, by a
holder of the number of shares of Common Stock into
which such share of the Series B was convertible
immediately prior to the effective date of such capital
reorganization, reclassification of capital stock,
consolidation, merger, sale or conveyance, assuming (i)
such holder of Common Stock of the Corporation is not a
person with which the Corporation consolidated or into
which the Corporation merged or which merged into the
Corporation or to which such sale or transfer was made
as the case may be (a "constituent entity"), or an
affiliate of a constituent entity, and (ii) such person
failed to exercise his rights of election, if any, as
to the kind or amount of securities, cash and other
property receivable upon such capital reorganization,
reclassification of capital stock, consolidation,
merger, sale or conveyance and, in any case appropriate
adjustment (as determined by the Board of Directors of
the Corporation) shall be made in the application of
the provisions herein set forth with respect to rights
and interests thereafter of the holder of the shares of
the Series B, to the end that the provisions set forth
herein (including the specified changes in and other
adjustments of the Conversion Rate) shall thereafter be
applicable, as near as reasonably may be, in relation
to any shares of stock or other securities or other
property thereafter deliverable upon the conversion of
the shares of the Series B. The Corporation shall not
be party to any transaction unless the terms of such
transaction are consistent with the provisions of this
paragraph (d), and it shall not consent or agree to the
occurrence of any transaction until the Corporation has
entered into an agreement with the successor or
purchasing entity, as the case may be, for the benefit
of the holders of the Series B that will contain
provisions enabling the holders of the Series B that
remain outstanding after such transaction to convert
into the consideration received by holders of Common
Stock at the Conversion Rate in effect immediately
prior to such transaction. The provisions of this
paragraph (d) shall similarly apply to successive
transactions.
(e) For the purpose of any computation under
this Section 5, the average market price per share of
Common Stock on any date shall be the average of the
daily closing prices for the 20 consecutive trading
days commencing 25 trading days before the date of
determination or declaration or authorization by the
Board of Directors of the Corporation of such issuance
or distribution. The closing price for each such
trading day shall be the last reported sales price
regular way or, in case no such sale takes place on
such day, the average of the closing bid and asked
prices regular way, in either case on the principal
national securities exchange on which the Common Stock
is listed or admitted to trading, or, if not listed or
admitted to trading on any national securities
exchange, on NASDAQ National Market System or, if the
Common Stock is not listed or admitted to trading on
any national securities exchange or quoted on NASDAQ
National Market System, or NASDAQ SmallCap Market or,
if the Common Stock is not quoted on NASDAQ SmallCap
Market, the average of the closing bid and asked prices
as furnished by any New York Stock Exchange member firm
selected from time to time by the Board of Directors of
the Corporation for such purpose or if no such prices
are available, the fair market value of the Common
Stock as determined by good faith action of the Board
of Directors of the Corporation.
(f) All calculations under this Section 5
shall be made to the nearest one-thousandth of a share
of Common Stock.
(g) For the purpose of this Section 5, the
term "shares of Common Stock" shall mean (i) the class
of stock designated as the Common Stock of the
Corporation at the date of this Certificate of
Designation or (ii) any other class of stock resulting
from successive changes or reclassification of such
shares consisting solely of changes in par value, or
from par value to no par value, or from no par value
to par value. In the event that at any time, as a
result of an adjustment made pursuant to paragraph (a)
through (d) above, the holder of the shares of the
Series B shall become entitled to receive any shares of
the Corporation other than shares of Common Stock,
thereafter the number of such other shares so
receivable upon conversion of any share of Series B and
the Common Share Equalizer Amount shall be subject to
adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions
with respect to shares of Common Stock contained in
paragraphs (a) through (g), inclusive, above, with
respect to the shares of Common Stock.
(h) Upon the expiration of any rights,
options, warrants or conversion or exchange privileges,
if any thereof shall not have been exercised, the
Conversion Rate and the Common Share Equalizer Amount
shall, upon such expiration, be readjusted and shall
thereafter be such as it would have been had it been
originally adjusted (or had the original adjustment not
been required, as the case may be) as if (1) the only
shares of Common Stock so issued were the shares of
Common Stock, if any, actually issued or sold upon the
exercise of such rights, options, warrants, exchange
privileges or conversion rights and (2) such shares of
Common Stock, if any, were issued or sold for the
consideration actually received by the Corporation upon
such exercise plus the consideration, if any, actually
received by the Corporation for the issuance, sale or
grant of all of such rights, options, warrants or
conversion rights whether or not exercised; provided
--------
that no such readjustment shall have the effect of
decreasing the number of shares of Common Stock
issuable upon the conversion of shares of the Series B
or the Common Share Equalizer Amount by an amount in
excess of the amount of the adjustment initially made
in respect to the issuance, sale or grant of such
rights, options, warrants or conversion rights.
Whenever the Conversion Rate is adjusted as provided in
this Section 5, the Corporation shall forthwith file with the
transfer agent for the shares of the Series B a certificate
signed by the President or one of the Vice Presidents of the
Corporation and by its Treasurer or an Assistant Treasurer,
stating the adjusted Conversion Rate and the adjusted Common
Share Equalizer Amount determined as provided in this Section 5.
Such certificate shall show in detail the facts requiring such
adjustment. Whenever the Conversion Rate or the Common Share
Equalizer Amount is adjusted, the Corporation will forthwith
cause a notice stating the adjustment and the Conversion Rate to
be mailed to the respective holders of record of the shares of
the Series B. The transfer agent shall be under no duty to make
any inquiry or investigation as to the statements contained in
any such certificate or as to the manner in which any computation
was made, but may accept such certificate as conclusive evidence
of the statements therein contained, and each transfer agent
shall be fully protected with respect to any and all acts done or
action taken or suffered by it in reliance thereon. The transfer
agent in its capacity as transfer agent shall not be deemed to
have any knowledge with respect to any change of capital
structure of the Corporation unless and until it receives a
notice thereof pursuant to the provisions of this paragraph and
in the absence of any such notice each transfer agent may
conclusively assume that there has been no such change.
The Corporation shall at all times reserve and keep
available, out of its authorized and unissued Common Stock,
solely for the purpose of effecting the conversion of the shares
of the Series B, such number of shares as shall from time to time
be sufficient to effect the conversion of all shares of the
Series B from time to time outstanding. The Corporation shall
from time to time, in accordance with the Delaware General
Corporation Law, increase the authorized amount of its Common
Stock if at any time the number of shares of Common Stock
remaining unissued shall not be sufficient to permit the
conversion of all the then outstanding shares of the Series B.
No fractions of shares of Common Stock are to be issued
upon conversion, but in lieu thereof the Corporation shall pay
therefor an amount in cash equal to the product obtained by
multiplying such fraction by the closing price (determined as
provided in the last sentence of paragraph (e) above) of the
Common Stock on the business day immediately preceding the day of
conversion. If more than one certificate representing shares of
the Series B shall be surrendered for conversion at one time by
the same holder, the number of full shares issuable upon
conversion thereof shall be computed on the basis of the
aggregate number of shares of the Series B so surrendered.
The Corporation shall pay any and all issue and other
taxes that may be payable in respect of any issue or delivery of
shares of Common Stock on conversion of shares of the Series B
pursuant hereto. The Corporation shall not, however, be required
to pay any tax which may be payable in respect of any transfer
involved in the issue and delivery of Common Stock in a name
other than in which the shares of the Series B so converted was
registered, and no such issue or delivery shall be made unless
and until the person requesting such issue has paid to the
Corporation the amount of any such tax, or has established, to
the satisfaction of the Corporation, that such tax has been paid.
In the event (i) that the Corporation shall pay any
dividend or make any distribution to the holders of shares of
Common Stock otherwise than in cash; or (ii) that the Corporation
shall offer for subscription or purchase, pro rata, to the
holders of shares of Common Stock any additional shares of stock
of any class or any securities convertible into or exchangeable
for stock of any class; or (iii) of any reclassification or
change of outstanding shares of the class of Common Stock
issuable upon the conversion of the shares of the Series B (other
than a change in par value, or from par value to no par value, or
from no par value to par value, or as a result of a subdivision
or combination), or of any merger or consolidation of the
Corporation with, or merger of the Corporation into, another
corporation (other than a merger or consolidation in which the
Corporation is the continuing corporation and which does not
result in any Change of Control or any reclassification or change
of outstanding shares of Common Stock issuable upon conversion of
the shares of the Series B) or of any sale or conveyance to
another corporation of the property of the Corporation as an
entirety or substantially as an entirety, or (iv) of any
dissolution, liquidation or winding up of the Corporation, then
in any such event the Corporation shall cause to be filed with
the transfer agent for the Series B, and shall cause to be mailed
to the holders of record of the Series B, at their respective
last addresses as they shall appear upon the stock transfer books
of the Corporation, at least 15 days prior to any applicable
record date hereinafter specified, a notice stating (x) the date
on which a record is to be taken for the purpose of any of the
events specified in clauses (i) and (ii) of this paragraph, or
(y) the effective dates of any of the events specified in clauses
(iii) and (iv) of this paragraph. No failure to give such notice
or any defect therein or in the mailing thereof shall affect the
validity of the corporate action required to be specified in such
notice.
Upon conversion of the Series B the capital in respect
of the shares of the Common Stock issued upon such conversion
shall be the aggregate par value thereof, and the stated capital
and capital surplus (capital in excess of par value) of the
Corporation shall be correspondingly increased or reduced as
permitted by the Delaware General Corporation Law to reflect the
difference between the capital in respect of the shares of the
Series B so converted and the capital in respect of the shares of
the Common Stock issued upon conversion.
The Corporation covenants that any shares of Common
Stock issued upon conversion of the shares of Series B shall be
validly issued, fully paid and non-assessable.
(6) Redemption. The shares of the Series B shall be
----------
redeemable, in whole or in part, on at least 30 days' prior
written notice to the Corporation, at the option of the holders
thereof (an "Optional Redemption"), at any time and from time to
time after the first anniversary of the date of the first
issuance of the Series B (the "First Anniversary") and before the
Tenth Anniversary (or at any time after the date of the first
issuance of the Series B in the event of a Change in Control) at
the offices of the duly appointed transfer agent for the shares
of the Series B, at the redemption price of $100.00 plus any
declared but unpaid dividend for each share of the Series B if,
and to the extent that, on the date of redemption specified in
such notice, the number of shares of Common Stock issuable upon
conversion of such shares of the Series B shall then not be
authorized and available for issuance or the Corporation shall
have failed to obtain the corporate or shareholder approvals
required to issue the Series B, increase the number of
outstanding shares as to allow the Series B to be convertible or
allow the Preferred Conversion Shares to be listed on the NASDAQ
SmallCap Market.
Before any holder of shares of the Series B shall be
entitled to redeem the same in connection with an Optional
Redemption, such holder shall surrender the certificate or
certificates for such shares of the Series B at the office of the
transfer agent, which certificate or certificates, if the
Corporation shall so request, shall be duly endorsed to the
1Corporation or in blank, and shall give written notice to the
Corporation at said office that such holder elects so to redeem
said shares of the Series B and shall state in writing therein
the name or names of the persons to which such holder wishes the
redemption price to be paid and the amount of each such payment.
The Corporation shall not be required to redeem, and no
surrender of shares of the Series B shall be effective for that
purpose with respect to an Optional Redemption, while the stock
transfer books of the Corporation are closed for any purpose; but
the surrender of shares of the Series B for redemption with
respect to an Optional Redemption, during any period while such
books are closed shall become effective for redemption,
immediately upon the reopening of such books, as if the
redemption had been made on the date such shares were
surrendered.
The shares of the Series B shall be redeemable from
time to time, in whole or in part, on at least 30 days prior
written notice to the holders thereof at their respective last
addresses as they appear on the stock transfer books of the
Corporation at the option of the Board of Directors of the
Corporation (each, a "Mandatory Redemption"), at any time and
from time to time on or after the Second Anniversary and on or
before the Tenth Anniversary, at the offices of the duly
appointed transfer agent for the shares of the Series B, at the
following redemption prices for each share of the Series B if
redeemed during the twelve-month period beginning on the
anniversary of the first issuance of the Series B in each of
following years:
Year Price
---- -----
1999 $110.00
2000 $104.00
2001 $103.00
2002 $102.00
2003 $101.00
2004 $100.00
and at $100.00 per share thereafter, in each case, plus declared
but unpaid dividends. If the shares of the Series B shall be
redeemed in part, the Corporation shall select shares so to be
redeemed as nearly as practicable pro rata or by lot, in such
manner as the Board of Directors of the Corporation may
determine.
If all funds necessary for any Optional Redemption or
Mandatory Redemption, as the case may be, shall have been set
apart by the Corporation so as to be available therefor and only
therefor, then on and after the close of business on the later of
the date on which all such funds shall have been so set apart and
the date specified in written notice delivered by the holders of
the shares of the Series B to be so redeemed or by the
Corporation, as the case may be, pursuant to this Section 6, the
shares of the Series B then subject to redemption,
notwithstanding that any certificate therefor shall not have been
surrendered for cancellation, shall no longer be deemed
outstanding and all rights with respect to such shares shall
forthwith cease and terminate except the right of the holders
thereof to receive upon surrender of their certificates the
amount payable upon redemption thereof, but without interest.
<PAGE>
IN WITNESS WHEREOF, this certificate has been executed
on behalf of the Corporation by its President on this 18th day of
August, 1997 and the undersigned hereby affirm the truth of the
statements contained herein under the penalties of perjury.
/s/ Enrique Levy
--------------------------------
Name: Enrique Levy
Title: President
EXECUTION
PURCHASE AGREEMENT
dated as of
August 18, 1997
between
ADVANCED NMR SYSTEMS, INC.
and
GENERAL ELECTRIC COMPANY
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
TRANSACTIONS . . . . . . . . . . . 1
Section 1.1 Purchase and Sale of Assets; Grant of
License . . . . . . . . . . . . . . . . . 1
Section 1.2 Issuance and Sale of Preferred Shares . . . 2
Section 1.3 Settlement and Release Agreement. . . . . . 3
ARTICLE II
CLOSING; DELIVERIES . . . . . . . . . 3
Section 2.1 Closing . . . . . . . . . . . . . . . . . . 3
Section 2.2 Delivery of Purchased Assets; Proprietary
Rights . . . . . . . . . . . . . . . . . 4
ARTICLE III
CONDITIONS OF CLOSING . . . . . . . . . 4
Section 3.1 Conditions Precedent to Obligations of the
Company. . . . . . . . . . . . . . . . . 4
Section 3.2 Conditions Precedent to Obligations of the
Purchaser. . . . . . . . . . . . . . . . 4
Section 3.3 Additional Conditions Precedent. . . . . . 5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . 7
Section 4.1 Corporate Existence and Power . . . . . . . 8
Section 4.2 Authorization; Contravention . . . . . . . 8
Section 4.3 Approvals . . . . . . . . . . . . . . . . . 8
Section 4.4 Binding Effect . . . . . . . . . . . . . . 8
Section 4.5 Financial Information . . . . . . . . . . . 9
Section 4.6 Litigation . . . . . . . . . . . . . . . . 9
Section 4.7 Compliance with Laws . . . . . . . . . . . 9
Section 4.8 Capitalization . . . . . . . . . . . . . . 9
Section 4.9 Purchased Assets; Proprietary Rights . . . 10
Section 4.10 SEC Documents . . . . . . . . . . . . . . 11
Section 4.11 Continuing Representations and
Warranties . . . . . . . . . . . . . . . 12
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER . . . . . . . . . . 12
Section 5.1 Corporate Existence and Power . . . . . . . 12
Section 5.2 Authorization; Contravention . . . . . . . 12
Section 5.3 Approvals . . . . . . . . . . . . . . . . . 13
Section 5.4 Binding Effect. . . . . . . . . . . . . . . 13
Section 5.5 Litigation. . . . . . . . . . . . . . . . . 13
Section 5.6 Compliance with Laws. . . . . . . . . . . . 13
Section 5.7 Investment Intent. . . . . . . . . . . . . 13
Section 5.8 Limited Warranties. . . . . . . . . . . . 14
Section 5.9 Continuing Representations and Warranties . 14
ARTICLE VI
COVENANTS . . . . . . . . . . . . 14
Section 6.1 Affirmative Covenants of the Company . . . 14
Section 6.2 Negative Covenants of the Company . . . . . 15
Section 6.3 Additional Covenants of the Parties . . . . 16
Section 6.4 Covenant Not to Compete. . . . . . . . . . 18
ARTICLE VII
INDEMNIFICATION . . . . . . . . . . 18
Section 7.1 Indemnification by the Company . . . . . . 18
Section 7.2 No Limitation on Other Rights of Recovery . 21
ARTICLE VIII
MISCELLANEOUS . . . . . . . . . . . 21
Section 8.1 Expenses. . . . . . . . . . . . . . . . . . 21
Section 8.2 Notices. . . . . . . . . . . . . . . . . . 22
Section 8.3 No Waivers; Remedies; Specific
Performance. . . . . . . . . . . . . . . 22
Section 8.4 Amendments, Etc . . . . . . . . . . . . . . 22
Section 8.5 Successors and Assigns; Third Party
Beneficiaries . . . . . . . . . . . . . . 22
Section 8.6 Governing Law . . . . . . . . . . . . . . . 23
Section 8.7 Counterparts; Effectiveness . . . . . . . . 23
Section 8.8 Severability of Provisions . . . . . . . . 23
Section 8.9 Headings and References . . . . . . . . . . 23
Section 8.10 Entire Agreement . . . . . . . . . . . . . 23
Section 8.11 Survival . . . . . . . . . . . . . . . . . 23
Section 8.12 Dispute Resolution . . . . . . . . . . . . 24
Section 8.13 Affiliate. . . . . . . . . . . . . . . . . 26
Section 8.14 Non-Recourse. . . . . . . . . . . . . . . 26
<PAGE>
ANNEX
Annex A - Definitions
EXHIBITS
Exhibit A - Form of Certificate of Designations
Exhibit B - Form of Registration Rights Agreement
Exhibit C - From of Stockholders Agreement
Exhibit D - Form of Settlement and Release Agreement
Exhibit E - Form of Assignment and Assumption Agreement
Exhibit F - Form of Bill of Sale
Exhibit G - Form of License Agreement
Exhibit 3.1(j)(1) - Certificate of Secretary of the Company
or the Purchaser
Exhibit 3.1(j)(2) - Certificate of Officer of the Company or
the Purchaser
Exhibit 3.1(j)(4) - Opinion of Counsel for the Company
Exhibit 3.1(j)(5) - Opinion of Counsel for the Purchaser
SCHEDULES
Schedule 1.1(a)(1) - Inventory
Schedule 1.1(a)(2) - Equipment
Schedule 1.1(a)(3) - Assigned Agreements
Schedule 1.1(b) - Proprietary Rights
Schedule 1.1(c)(2) - Assumed Warranty Obligations
Schedule 4.9(h) - Suppliers
<PAGE>
PURCHASE AGREEMENT
PURCHASE AGREEMENT dated as of August 18, 1997 between
ADVANCED NMR SYSTEMS, INC., a Delaware corporation (the
"Company"), and GENERAL ELECTRIC COMPANY, a New York corporation
(the "Purchaser").
Terms not otherwise defined in this Agreement have the
meanings stated in Annex A.
The parties agree as follows:
ARTICLE I
TRANSACTIONS
SECTION 1.1 PURCHASE AND SALE OF ASSETS; GRANT OF
-------------------------------------
LICENSE. Subject to the terms and conditions set forth in this
-------
Agreement, at the Closing,
(a) the Company shall sell, transfer, assign,
convey and deliver to the Purchaser, and the Purchaser shall
purchase, accept and acquire from the Company, in each case as
the same shall exist on the Closing Date, the following assets
(collectively, the "Purchased Assets"):
(1) the inventory listed on Schedule 1.1(a)(1);
(2) the equipment listed on Schedule 1.1(a)(2);
(3) the "Assigned Agreements" listed on Schedule
1.1(a)(3); and
(4) any equipment and inventory subsequently delivered
pursuant to Section 6.1(f) hereof;
(b) the Company shall grant to the Purchaser a
limited, non-transferable (except as set forth therein), paid up,
worldwide and perpetual license (the "License") under each of the
proprietary rights listed in Schedule 1.1(b) and all rights of
the Company, if any, in patents or applications of the Company
which may claim priority to any of the patents or applications
listed in Schedule 1.1(b), and all rights of the Company, if any,
with respect to service marks, trade names, copyrights, trade
secrets, know-how or inventions primarily used in the
manufacturing, sale or service of the Purchased Assets
(collectively, the "Proprietary Rights") to make, have made,
import, offer to sell, sell or otherwise dispose of any product
or service, including, without limitation, magnetic resonance
scanners, and to use, copy, modify and develop derivative works
of any product or service, which License shall include rights to
access, incorporate or use in any way the associated know-how for
the manufacturing and servicing of any product; and
(c) in consideration of such sale of the
Purchased Assets by the Company to the Purchaser and the grant of
the License and the sale of the Preferred Shares referred to
below by the Company to the Purchaser, (i) the Purchaser shall
pay to the Company, and the Company shall accept from the
Purchaser, the amount of $5,132,580.00, which shall be paid by
wire transfer at the time of such sale, and (ii) the Purchaser
shall assume, and become liable for the timely payment or other
performance in full of, the following obligations and liabilities
of the Company (collectively, but excluding all obligations and
liabilities of the Company not expressly referred below, the
"Assumed Liabilities"):
(1) the obligations and liabilities of the Company
under each of the Assigned Agreements, in each case arising
on and after the Closing Date; and
(2) the obligations and liabilities of the Company
with respect to warranties of the Company, express or
implied, through contract or by operation of law, with
respect to the equipment listed in Schedule 1.1(c)(2)
(excluding, for this purpose, obligations and liabilities
arising from claims of a type typically excluded under a
written warranty, such as negligence or misrepresentation
and any penal, incidental or consequential damages such as
lost profit or revenue); provided that the Purchaser shall
--------
not assume or otherwise become liable for the payment or
other performance of the obligations and liabilities of
the Company with respect to product liability, with respect
to such equipment;
which purchase price shall be allocated among the Purchased
Assets, the Licenses and the Preferred Shares in a manner
proposed by the Purchaser and approved by the Company, but which
purchase price shall in no event be less than the full amount of
the purchase price specified above. Notwithstanding anything to
the contrary, the Purchaser shall not become liable for any
obligations of the Company other than the Assumed Liabilities.
SECTION 1.2 ISSUANCE AND SALE OF PREFERRED SHARES.
-------------------------------------
Subject to the terms and conditions set forth in this Agreement,
at the Closing,
(a) the Company shall issue, sell and deliver to
the Purchaser, and the Purchaser shall purchase, accept and
acquire from the Company, 27,000 shares of Series B Convertible
Redeemable Preferred Stock, par value $.01 per share (the
"Preferred Shares"), at a price of $100.00 per Preferred Share
(the "Preferred Share Price"), payable in cash,
(1) which Preferred Shares shall be issued pursuant to
a Certificate of Designations with respect to the
Certificate of Incorporation of the Company (the
"Certificate") in the form of Exhibit A attached hereto, and
---------
(2) upon the conversion of each of which Preferred
Share the Company shall issue and deliver to Purchaser a
number of shares of Common Stock, par value $.01 per share
(the "Common Stock"), of the Company as determined by the
Certificate (as such number of shares may be adjusted
pursuant to the Certificate, the "Preferred Conversion
Shares"), which conversion may be made from time to time
upon a change of control or after the date that is the first
anniversary of the Closing Date (the "First Anniversary")
but which in any event shall be made on the date that is the
tenth anniversary of the Closing Date (the "Tenth
Anniversary");
(b) the Company and the Purchaser shall execute
and deliver the Registration Rights Agreement substantially in
the form of Exhibit B attached hereto (the "Registration Rights
---------
Agreement"), pursuant to which the Company will grant to the
Purchaser and certain other persons certain rights with
respect to the registration under the Securities Act of the
disposition of the Preferred Conversion Shares; and
(c) the Company and the Purchaser shall execute
and deliver the Stockholders Agreement substantially in the form
of Exhibit C attached hereto (the "Stockholders Agreement"),
----------
pursuant to which the Company and the Purchaser will provide for
certain restrictions on the ownership, voting and disposition
of the Preferred Shares and the Preferred Conversion Shares
by the Purchaser and certain other persons and certain other
matters.
SECTION 1.3 SETTLEMENT AND RELEASE AGREEMENT. Subject
--------------------------------
to the terms and conditions set forth in this Agreement, at the
Closing, the Company and the Purchaser shall enter into the
Settlement and Release Agreement, substantially in the form of
Exhibit D attached hereto (the "Settlement and Release
----------
Agreement").
ARTICLE II
CLOSING; DELIVERIES
SECTION 2.1 CLOSING.
-------
(a) The closing of the Transactions shall take
place (the "Closing") on Monday, August 18, 1997 or, at the
election of the Company, on the second Business Day after the
conditions precedent to the obligations of the parties under this
Agreement with respect thereto shall have been satisfied or
waived, as the case may be, or on such other date as the parties
may agree in writing (the "Closing Date").
(b) The Closing shall take place at the offices
of O'Melveny & Myers LLP, 153 East 53rd Street, New York, New
York 10022 or at such other location as the parties may agree in
writing.
SECTION 2.2 DELIVERY OF PURCHASED ASSETS; PROPRIETARY
-----------------------------------------
RIGHTS.
------
(a) At or promptly after the Closing, but in no
event later than 90 days after the Closing, and with reasonable
prior written notice to the Company, during normal business
hours, at its expense and without any cost or liability of the
Company, the Purchaser shall remove the Purchased Assets
specified in clauses (1) and (2) of Section 1.1(a) from the
premises of the Company at 46 Jonspin Road, Wilmington,
Massachusetts. From and after the Closing, the Purchaser shall
have all risk of loss and damage with respect to such Purchased
Assets, and the Company shall have no obligation to maintain or
insure such Purchased Assets for the benefit of the Purchaser or
any other person, except to use reasonable care pending removal
by the Purchaser.
(b) Promptly after the Closing, with reasonable prior
written notice to the Company, during normal business hours, at
its expense and without any cost or liability to the Company, the
Purchaser shall (1) copy the documents relating to the
Proprietary Rights at the premises of the Company at 46 Jonspin
Road, Wilmington, Massachusetts, and shall remove the copies from
such premises or (2) cause such documents to be copied under the
supervision of the Company by a vender of duplicating services
approved by the Company.
ARTICLE III
CONDITIONS OF CLOSING
SECTION 3.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
------------------------------------------
COMPANY. The obligations of the Company under this Agreement with
-------
respect to the Transactions are subject to the satisfaction of
each of the following conditions, unless waived by the Company,
at or before the Closing:
(a) the Purchaser shall have delivered to the
Company an amount in immediately available funds equal to the
aggregate purchase price for the Purchased Assets and the
Preferred Shares; and
(b) the Purchaser shall have executed and
delivered to the Company such agreements and other instruments,
substantially in the form of the bill of sale attached hereto as
Exhibit E, with such changes therein as shall be approved by the
---------
Company and the Purchaser, as may be required to assume the
Assumed Liabilities.
SECTION 3.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
------------------------------------------
PURCHASER. The obligations of the Purchaser under this Agreement
---------
with respect to the Transactions are subject to the satisfaction
of each of the following conditions, unless waived by the
Purchaser, at or before the Closing:
(a) the Company shall have executed and delivered
to the Purchaser such bills of sales, assignments and other
instruments of transfer, substantially in the form of the bill of
sale attached hereto as Exhibit F, with such changes therein as
---------
shall be approved by the Company and the Purchaser, as may be
required to sell, transfer, assign, convey and deliver to the
Purchaser the Purchased Assets, without representation or
warranty other than as expressly stated herein;
(b) the Company shall have executed and delivered
to Purchaser such licenses and other instruments, substantially
in the form of the license agreement attached hereto as Exhibit G,
---------
with such changes therein as shall be approved by the Company and
the Purchaser as may be required to grant to the Purchaser a
License under each of the Proprietary Rights, without
representation or warranty other than as expressly stated herein,
to make, have made, sell or otherwise dispose of any product or
service, including, without limitation, magnetic resonance
scanners; and
(c) the Company shall have executed and delivered
to the Purchaser one or more certificates representing the
Preferred Shares, which certificates shall bear the legends
stated in Section 4(b) of the Registration Rights Agreement and
Section 1.6 of the Stockholders Agreement, respectively.
SECTION 3.3 ADDITIONAL CONDITIONS PRECEDENT. The
-------------------------------
respective obligations of each party under this Agreement with
respect to the Transactions are also subject to the satisfaction
of each of the following conditions, unless waived by the party,
at or before the Closing:
(a) neither party (1) shall be in violation of or
default with respect to any Regulation of any Governmental Body
or any decision, ruling, order or award of any arbitrator
applicable to it or its business, properties or operations, (2)
would be in violation of or default with respect to the same in
connection with or as a result of the conclusion of the
Transactions, or (3) has received notice that, in connection with
or as a result of the conclusion of the Transactions, it is or
would be in violation of or default with respect to the same,
which violation or default, individually or in the aggregate,
would materially and adversely affect the ability of the party to
perform its material obligations under any Transaction Document
to which it is a party;
(b) no Action shall be pending or, to the
knowledge of either party, threatened against any party or, to
its knowledge, any other person that, individually or in the
aggregate, if determined adversely to the party or the other
person, would materially and adversely affect the ability of the
party to perform its material obligations under any Transaction
Document to which it is or may become a party;
(c) each party shall have obtained from each
Governmental Body or other person each Approval or taken all
actions required to be taken in connection with each Approval, in
each case with respect to an Approval that is required or
advisable on the part of that person for (1) the due execution
and delivery by that person of each Transaction Document to which
it is or may become a party, (2) the conclusion of the
Transactions, (3) the performance by that person of its
obligations under each Transaction Document to which it is or may
become a party, and (4) the exercise by that person of its rights
and remedies under each Transaction Document to which it is or
may become a party, which violation or default, individually or
in the aggregate, would materially and adversely affect the
ability of the party to perform its material obligations under
any Transaction Document to which it is or may become a party;
(d) the Certificate shall have been duly filed
with and accepted by the Secretary of State of the State of
Delaware and evidence thereof shall have been delivered to the
Company and the Purchaser;
(e) the other party shall have executed and
delivered the Registration Rights Agreement, dated as of the
Closing Date;
(f) the other party shall have executed and
delivered the Stockholders Agreement, dated as of the Closing
Date;
(g) the other party shall have executed and
delivered the Settlement and Release Agreement, dated as of the
Closing Date;
(h) the representations and warranties of the
other party contained in each Transaction Document to which it is
a party shall be true and correct in all material respects on and
as of the Closing Date with the same force and effect as though
made on and as of the Closing Date;
(i) the other party shall have performed, in all
material respects, all of its covenants and other obligations
required by each Transaction Document to be performed at or
before the Closing; and
(j) the party shall have received from the other
party the following, each dated the Closing Date, in form and
substance reasonably satisfactory to the party:
(1) a certificate of the Secretary or an Assistant
Secretary of such other party, substantially in the form of
Exhibit 3.1(j)(1), with respect to (i) the resolutions ofthe
-----------------
Board of Directors of such other party, approving each
Transaction Document to which such other party is a party
and the other documents to be delivered by it under the
Transaction Documents, and (ii) the names and true
signatures of the officers of such other party authorized to
sign each Transaction Document to which such other party is
a party and the other documents to be delivered by such
other party under the Transaction Documents;
(2) a certificate of the Chairman of the Board, the
President or a Vice President of such other party,
substantially in the form of Exhibit 3.1(j)(2) to the effect
-----------------
that (i) the representations and warranties of such other
party contained in the Transaction Documents to which it is
a party are true and correct in all material respects as of
the Closing Date and (ii) such other party has performed, in
all material respects, all covenants and other obligations
required by the Transaction Documents to which it is a party
to be performed by it at or before the Closing;
(3) with respect to the Company, a certificate of the
Secretary of State of the State of Delaware, dated as of a
recent date, as to the good standing of the Company and as
to the charter documents of the Company on file in the
office of the Secretary of State of the State of Delaware;
(4) with respect to the Company, a favorable opinion
of one or more counsel for the Company, which together are
substantially in the form of Exhibit 3.1(j)(4); and
-----------------
(5) with respect to the Purchaser, a favorable opinion
of one or more counsel for the Purchaser, which together are
substantially in the form of Exhibit 3.1(j)(5).
-----------------
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants as follows, except
as otherwise described in Schedule IV:
SECTION 4.1 CORPORATE EXISTENCE AND POWER. The Company
-----------------------------
(1) is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware and (2) has
all necessary corporate power and authority to execute, deliver
each Transaction Document to which it is or may become a party
and to perform its obligations thereunder.
SECTION 4.2 AUTHORIZATION; CONTRAVENTION. Subject to
----------------------------
the effectiveness of the Certificate, the execution and delivery
by the Company of each Transaction Document to which it is or may
become a party and the performance by it of its obligations under
each of those Transaction Documents have been duly authorized by
all necessary corporate action and do not and will not
(1) contravene, violate, result in a breach of or constitute a
default under, (A) its certificate of incorporation or bylaws,
(B) any Regulation of any Governmental Body or any decision,
ruling, order or award of any arbitrator by which the Company or
any Consolidated Subsidiary or any of their properties may be
bound or affected, or (C) any agreement, indenture or other
instrument to which the Company or any Consolidated Subsidiary is
a party or by which the Company or any Consolidated Subsidiary or
their properties may be bound or affected, or (2) except as
contemplated by the Transaction Documents, result in or require
the creation or imposition of any Lien on any of the properties
now owned or hereafter acquired by the Company or any
Consolidated Subsidiary, which contravention, violation, breach,
default or Lien, individually or in the aggregate, would have a
Material Adverse Effect.
SECTION 4.3 APPROVALS. Except with respect to the
---------
Approvals required to effect the Recapitalization and the
Certificate and the Approvals referred to in the Registration
Rights Agreement, no Approval of any Governmental Body or other
person is required or advisable on the part of the Company for
(1) the due execution and delivery by the Company of any
Transaction Document to which it is or may become a party, (2)
the conclusion of the Transactions, (3) the performance by the
Company of its obligations under each Transaction Document to
which it is or may become a party and (4) the exercise by the
Purchaser of its rights and remedies under each Transaction
Document, except for Approvals the failure to obtain which,
individually or in the aggregate, would not have a Material
Adverse Effect.
SECTION 4.4 BINDING EFFECT. Each Transaction Document
--------------
to which the Company is or may become a party is, or when
executed and delivered in accordance with this Agreement will be,
the legally valid and binding obligation of the Company,
enforceable against it in accordance with its terms, except as
may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws relating
to or affecting creditors' rights generally and general
principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing and the
possible unavailability of specific performance or injunctive
relief, regardless of whether considered in a proceeding in
equity or at law.
SECTION 4.5 FINANCIAL INFORMATION. The consolidated
---------------------
balance sheet of the Company and its Consolidated Subsidiaries as
of September 30, 1996 and the related consolidated statements of
operations, stockholders' equity and cash flows for the 12 months
then ended, reported on by Richard A. Eisner & Company, LLP and
filed with the Securities and Exchange Commission in the
Company's Annual Report on Form 10-K for the year ended September
30, 1996, a true and complete copy of which has been delivered to
the Purchaser, fairly present the consolidated financial position
of the Company and its Consolidated Subsidiaries as of that date
and their consolidated results of operations and cash flows for
the year then ended, in accordance with GAAP applied on a
consistent basis except as described in the footnotes to the
financial statements included in such Form 10-K.
SECTION 4.6 LITIGATION. There is no Action pending or,
----------
to the knowledge of each of the Company and its Consolidated
Subsidiaries, threatened against the Company or a Consolidated
Subsidiary that involves any of the Transactions, the Purchased
Assets, the Proprietary Rights or the Preferred Shares and that,
individually or in the aggregate, if determined adversely to any
of them, would have a Material Adverse Effect.
SECTION 4.7 COMPLIANCE WITH LAWS. None of the Company
--------------------
and its Consolidated Subsidiaries is in, and none of them has
received notice of, a violation of or default with respect to,
any Regulation of any Governmental Body or any decision, ruling,
order or award of any arbitrator applicable to it or its
business, properties or operations, including individual products
or services sold or provided by it and the Purchase Assets, the
Assigned Agreements and the Proprietary Rights, except for
violations or defaults that, individually or in the aggregate,
will not have a Material Adverse Effect.
SECTION 4.8 CAPITALIZATION.
--------------
(a) The authorized capital stock of the Company
consists of (1) 50,000,000 shares of Common Stock and (2)
1,000,000 shares of Preferred Stock, par value $.01 per share.
(b) As of August 1, 1997, there were (1)
43,747,628 shares of Common Stock issued and outstanding, (2)
225,000 shares of Common Stock held in the treasury of the
Company, (3) 3,423,102 shares of Common Stock reserved for
issuance upon exercise of the warrants (collectively, the
"Warrants") issued and outstanding pursuant to the Warrant
Agreement dated August 31, 1995 between the Company and American
Stock Transfer & Trust Company, as Warrant Agent and (4)
2,456,006 shares of Common Stock reserved for issuance upon
exercise of outstanding stock options issued by the Company to
current and former employees of the Company and its Consolidated
Subsidiaries (the "Employee Options"); and since August 1, 1997,
there has been no material change in any of the foregoing.
(c) Except with respect to the Employee Options,
the Warrants, the Merger Agreement and the Transaction Documents,
there are no outstanding securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of
any kind to which the Company is a party obligating the Company
to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock or other Equity
Securities of the Company or obligating the Company to issue,
grant, extend or enter into any such security, option, warrant,
call, right, commitment, agreement, arrangement or undertaking.
(d) All outstanding shares of capital stock of
the Company are, and all shares of Common Stock that may be
issued pursuant to the exercise of the Warrants or the Employee
Options or the conversion of the Preferred Shares (if the same
shall be issued and sold pursuant to this Agreement), as the case
may be, will be, when issued, and all Preferred Shares (if the
same shall be issued and sold pursuant to this Agreement) will
be, when issued, duly authorized, validly issued, fully paid and
nonassessable.
(e) Under the circumstances contemplated by this
Agreement and assuming the accuracy of the representations of
Purchaser in Article 5, the offer, issuance, sale and delivery of
the Preferred Shares will not, under current laws and
regulations, require compliance with the prospectus delivery or
registration requirements of the Securities Act.
SECTION 4.9 PURCHASED ASSETS; PROPRIETARY RIGHTS.
------------------------------------
(a) The Company has good title to each of the
Purchased Assets and the interests created by the Proprietary
Rights, free and clear of all Liens.
(b) The Company has good right, full power and
lawful authority to sell, transfer, assign, convey and deliver to
Purchaser each of the Purchased Assets and the interests created
by the Proprietary Rights, free and clear of all Liens. The
Company has caused to be delivered to the Purchaser true and
complete copies of the Assigned Agreements.
(c) The right, title and interest of the Company
in and to each of the Purchased Assets and the interests created
by the Proprietary Rights are free and clear of all Liens, except
as may be provided to the contrary in the terms and conditions of
the respective Assigned Agreements and the Proprietary Rights.
Immediately after the sale, transfer, assignment, conveyance and
delivery of the Purchased Assets at the Closing, the Purchaser,
its successors and assigns will have good title to each of the
Purchased Assets free and clear of all Liens.
(d) Each of the Assigned Agreements has, to the
knowledge of the Company with respect to parties other than the
Company, been duly authorized, executed and delivered by all
parties to each Assigned Agreement, is in full force and effect
and constitutes the legal, valid and binding obligations of the
parties to each Assigned Agreement or their respective successors
or assigns, enforceable against them in accordance with the terms
of each Assigned Agreement, except as may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws relating to or affecting
creditors' rights generally and general principles of equity,
including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible
unavailability of specific performance or injunctive relief,
regardless of whether considered in a proceeding in equity or at
law. As of the date of this Agreement, (1) there is no material
liability or obligation of the Company with respect to any
Assigned Agreement that, under the terms of such Assigned
Agreement, is required to be paid or otherwise performed, but
that has not been paid or otherwise performed in full and (2)
there is no material default under any Assigned Agreement by any
party.
(e) As of the date of this Agreement, (1) the
Company has not received notice that the validity of any
Proprietary Right or its title to or use of any Proprietary Right
is being questioned in any Action and (2) there is no material
obligation or liability of the Company with respect to any
Proprietary Right that is required to be paid or otherwise
performed or is required to have been paid or otherwise
performed, in each case as of the date of this Agreement, but
that has not been paid or otherwise performed.
(f) The Purchased Assets specified in clauses (1)
and (2) of Section 1.1(a) are located at the premises of the
Company specified in Schedules 1.1(a)(1) and 1.1(a)(2),
respectively, with respect thereto. The documents relating to
the Proprietary Rights are located at the premises of the Company
specified in Schedule 1.1(b) with respect thereto True and
complete copies of all of the Assigned Agreements are attached
hereto as a part of Schedule 1.1(a)(3). The prepaid revenues
under the Assigned Agreements do not exceed $33,000 in the
aggregate.
(g) None of the Assigned Agreements contains a
prohibition on assignment to the Purchaser. The conclusion of
the Transactions will not (and will not give any person a right
to) terminate or modify any rights of, or accelerate or increase
any obligation of, the Company or the Purchaser under any of the
Assigned Agreements and the Proprietary Rights.
(h) Schedule 4.9(h) lists all suppliers to the
Company of parts for performing the Assigned Agreements. No
notice of termination has been given to the Company by any
supplier listed on Schedule 4.9(h).
(i) To the Company's knowledge, Schedule
1.1(a)(1) lists all inventory in the Company's possession that is
primarily used in the manufacturing or service of InstaScan or 3T
or 4T whole-body magnetic resonance scanners. To the Company's
knowledge, Schedule 1.1(a)(2) lists all equipment in the
Company's possession that is primarily used in the manufacturing
or service of InstaScan or 3T or 4T whole-body magnetic resonance
scanners.
Section 4.10 SEC Documents. The Company has timely
-------------
filed with the Securities and Exchange Commission all reports,
schedules, forms, statements and other documents required by the
Exchange Act to be filed by the Company since January 1, 1995
(collectively, and in each case including all exhibits and
schedules thereto and documents incorporated by reference
therein, the "SEC Documents"). The Company has delivered or made
available to the Purchaser true and complete copies of all SEC
Documents. As of their respective dates, except to the extent
revised or superseded by a subsequent filing with the Securities
and Exchange Commission, the SEC Documents complied in all
material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and none of the SEC
Documents (including any and all financial statements included
therein) as of such dates contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements of
the Company and the Consolidated Subsidiaries included in all SEC
Documents, including any amendments thereto (collectively, the
"SEC Financial Statements"), comply as to form in all material
respects with applicable accounting requirements and the
published rules and regulations of the Securities and Exchange
Commission with respect thereto.
SECTION 4.11 CONTINUING REPRESENTATIONS AND WARRANTIES.
-----------------------------------------
Each of the representations and warranties made with respect to
the Company or a Consolidated Subsidiary in this Agreement or in
any other Transaction Document as of any date other than the
Closing Date shall be true and correct in all material respects
on and as of the Closing Date except as otherwise contemplated by
such Transaction Document, and except that the Company will
prepare and deliver to the Purchaser such updates or other
revisions of the written disclosures referred to in this Article
IV as have been delivered by the Company to the Purchaser as
shall be necessary in order to make each of such written
disclosures correct and complete in all material respects on and
as of the Closing Date. The requirement to prepare and deliver
updates or other revisions of the written disclosures, and the
receipt by the Purchaser of information pursuant to Section
6.3(b) or otherwise on or before the Closing Date, shall not
limit the right of the Purchaser under Article III to require as
a condition precedent to the performance of its obligations under
this Agreement on the Closing Date the accuracy in all material
respects of the representations and warranties and the
performance in all material respects of the covenants of the
Company made in the Transaction Documents (without regard to such
updates or other revisions) and to receive an unqualified
certificate with respect to the same.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER
The Purchaser represents and warrants as follows:
SECTION 5.1 CORPORATE EXISTENCE AND POWER. The
-----------------------------
Purchaser (1) is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of New
York and (2) has all necessary corporate power and authority to
execute and deliver each Transaction Document to which it is or
may become a party.
SECTION 5.2 AUTHORIZATION; CONTRAVENTION. The execution
----------------------------
and delivery by the Purchaser of each Transaction Document to
which it is or may become a party and the performance by it of
its obligations under each of those Transaction Documents have
been duly authorized by all necessary corporate action and do not
and will not contravene, violate, result in a breach of or
constitute a default under (1) its certificate of incorporation
or bylaws, (2) any Regulation or any decision, ruling, order or
award of any arbitrator by which the Purchaser or any of its
properties may be bound or affected or (3) any agreement,
indenture or other instrument to which it is a party or by which
it or its properties may be bound or affected, which
contravention, breach or default, individually or in the
aggregate, would materially and adversely affect the ability of
the Purchaser to perform its obligations under any Transaction
Document to which it is or may become a party.
SECTION 5.3 APPROVALS. Except with respect to such
---------
filings by the Purchaser as may be required pursuant to Sections
13(d) and 16(a) of the Exchange Act, no Approval of any
Governmental Body or other person is required or advisable on the
part of the Purchaser for (1) the due execution and delivery by
the Purchaser of any Transaction Document, (2) the conclusion of
the Transactions and (3) the performance by the Purchaser of its
material obligations under each Transaction Document to which it
is or may become a party.
SECTION 5.4 BINDING EFFECT. Each Transaction Document
--------------
to which the Purchaser is or may become a party is, or when
executed and delivered in accordance with this Agreement will be,
the legally valid and binding obligation of the Purchaser,
enforceable against it in accordance with its terms, except as
may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws relating
to or affecting creditors' rights generally and general
principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing and the
possible unavailability of specific performance or injunctive
relief, regardless of whether considered in a proceeding in
equity or at law.
SECTION 5.5 LITIGATION. There is no Action pending or,
----------
to the Purchaser's knowledge, threatened against the Purchaser
or, to its knowledge, any other person or that involves any of
the Transactions or any property owned, leased, licensed or used
by the Purchaser that, individually or in the aggregate, if
determined adversely to the party or the other person, would
materially and adversely affect the ability of the Purchaser to
perform its material obligations under any Transaction Document
to which it is or may become a party.
SECTION 5.6 COMPLIANCE WITH LAWS. The Purchaser is
--------------------
neither in, nor has received notice of a, violation of or default
with respect to any Regulation of any Governmental Body or any
decision, ruling, order or award of any arbitrator applicable to
it or its business, properties or operations, which violation or
default, individually or in the aggregate, would materially and
adversely affect the ability of the Purchaser to perform its
material obligations under any Transaction Document to which it
is or may become a party.
SECTION 5.7 INVESTMENT INTENT. The Purchaser
-----------------
acknowledges that the Company is issuing and selling the
Preferred Shares (and, upon conversion thereof, the Preferred
Conversion Shares) pursuant to the terms of the Transaction
Documents in reliance upon the exemption afforded by Section 4(2)
of the Securities Act for transactions by an issuer not involving
any public offering. The Purchaser represents that (1) it is
acquiring such securities for investment and without any view
toward distribution of any of the securities to any other person,
(2) it will not sell or otherwise dispose of the securities
except in compliance with the registration requirements or
exemption provisions under the Securities Act and (3) before any
sale or other disposition of any of such securities other than in
a sale registered under the Securities Act, or pursuant to Rule
144 under the Securities Act unless the Company shall have been
advised by counsel that the sale does not meet the requirements
of Rule 144 for the sale, it will deliver to the Company an
opinion of counsel reasonably satisfactory to the Company to the
effect that such registration is unnecessary.
SECTION 5.8 LIMITED WARRANTIES. The Purchaser
------------------
acknowledges that (1) the Purchaser is acquiring the Purchased
Assets, the Licenses and the Preferred Shares (and, upon the
conversion thereof, the Preferred Conversion Shares) pursuant to
this Agreement after having performed such due diligence and
investigations with respect to the Company, its Subsidiaries, the
Purchased Assets, the Licenses, the Proprietary Rights, the
Preferred Shares and the Preferred Conversion Shares that the
Purchaser, in its judgment, has determined to be appropriate,
(2) it is the intention of the parties that (A) the Purchaser
acquire the Purchased Assets and the Licenses without
representation or warranty by the Company, express or implied, on
an "as is, where is" basis, except as specifically set forth
herein, and (B) the Purchaser acquire the Purchased Assets, the
Licenses and the Preferred Shares (and, upon the conversion
thereof, the Preferred Conversion Shares) subject to the
provisions of Section 8.11, and (3) except as specified herein,
the Company is making no warranty of merchantability or
suitability for any purpose with respect to any of the Purchased
Assets, the Licenses and the Proprietary Rights.
SECTION 5.9 CONTINUING REPRESENTATIONS AND WARRANTIES.
------------------------------------------------------
Each of the representations and warranties made by the Purchaser
in this Agreement or in any other Transaction Document as of a
date other than the Closing Date shall be true on and as of the
Closing Date except as otherwise contemplated by the Transaction
Documents.
ARTICLE VI
COVENANTS
SECTION 6.1 AFFIRMATIVE COVENANTS OF THE COMPANY. The
------------------------------------
Company agrees that the Company shall do the following:
(a) Maintenance of Existence. At all times on or
------------------------
before the Closing Date, preserve and maintain its corporate
existence and good standing in the jurisdiction of its
incorporation and qualify and remain qualified as a foreign
corporation in each jurisdiction in which both (1) qualification
is required either (A) to own, lease, license or use its
properties now owned, leased, licensed or used and proposed to be
owned, leased, licensed or used or (B) to carry on its business
as now conducted or proposed to be conducted and (2) the failure
to be so qualified would have a Material Adverse Effect.
(b) Conduct of Business. At all times on or before
-------------------
the Closing Date, except as otherwise contemplated by the
Transaction Documents, continue to operate a business of the same
general type as conducted by it on the date of this Agreement in
the ordinary course, consistent with past practices; provided that
--------
the Company may cause or permit Advanced Mammography Systems,
Inc., a Delaware corporation ("AMS"), and a Wholly-Owned
Subsidiary of the Company to merge (the "Merger") pursuant to an
Agreement and Plan of Merger dated as of June 23, 1997 by and
among the Company, such Wholly-Owned Subsidiary and AMS, a true
and complete copy of which has been delivered to the Purchaser,
as the same may be amended or modified (the "Merger Agreement"),
or otherwise.
(c) Compliance with Laws. At all times on or
--------------------
before the Closing Date, comply in all respects with each
Regulation of all Governmental Bodies and each decision, ruling,
order or award of all arbitrators applicable to it or its
business, properties or operations, if a failure to comply with
any of the foregoing, individually or in the aggregate, would
have a Material Adverse Effect.
(d) NASDAQ SmallCap Market. Take all action
----------------------
required, if any, to cause the issuance of the Preferred Shares
to comply with the Corporate Governance Rules of the NASDAQ
SmallCap Market and the Preferred Conversion Shares to be
qualified for inclusion in the NASDAQ SmallCap Market and shall
give such notice as required, if any, to the National Association
of Securities Dealers, Inc. with respect to the Transaction
Documents and the Transactions.
(e) Access. Afford to the Purchaser, upon
------
reasonable prior written notice and during normal business hours,
reasonable access to (1) the Purchased Assets and to documents
relating to the Assigned Agreements, the Assumed Liabilities and
the Proprietary Rights, (2) personnel of the Company familiar
with any of the foregoing, with whom the Purchaser shall be
permitted to discuss the possibility of employment by the
Purchaser or its Affiliates after the Closing Date and (3) for a
180 day period following the Closing Date, provide such training
with respect to the Purchased Assets as the Purchaser may
reasonably request and provide such training and other assistance
as the Purchaser may reasonably request in connection with the
Purchaser's performance of the Assigned Agreements.
(f) Equipment and Inventory. If the Company
-----------------------
becomes aware within six months of closing that it is in
possession of additional equipment or inventory primarily related
to the manufacturing or servicing of InstaScan or 3T or 4T whole-
body magnetic resonance scanners, the Company will promptly
inform the Purchaser of the existence of such equipment or
inventory and Purchaser may take possession of such equipment or
inventory on the same basis as the other Purchased Assets
hereunder, provided that if Purchaser does not notify the Company
of its intention to take possession of such equipment or
inventory within one month of receiving notice by the Company,
the Company shall be entitled to declare such equipment or
inventory obsolete and dispose of it without further obligation
to Purchaser. For purposes of this paragraph, the terms
"equipment" and "inventory" shall include all hardware components
and copies of all software components thereof.
SECTION 6.2 NEGATIVE COVENANTS OF THE COMPANY. The
----------------------------------
Company agrees that, before the Closing Date and except as
contemplated by the Transaction Documents or with the prior
approval of the Purchaser, the Company shall not do any of the
following or enter into any agreement or other arrangement (other
than the Transaction Documents) with respect to any of the
following:
(a) Charter documents. Amend its articles of
-----------------
incorporation or certificate of incorporation, as the case may
be, or its bylaws, except in each case pursuant to the
Recapitalization or a transaction permitted by Section 6.2(b).
(b) Mergers, Etc. Merge or consolidate with any
------------
person, sell, lease, license or otherwise dispose of all or
substantially all of its assets (whether now owned or hereafter
acquired) to any person or acquire all or substantially all of
the assets or the business of any person, in each case whether in
one transaction or in a series of transactions, except that AMS
or a Consolidated Subsidiary may merge into or transfer assets to
the Company or a Wholly-Owned Consolidated Subsidiary, whether
pursuant to or in connection with the Merger or otherwise.
SECTION 6.3 ADDITIONAL COVENANTS OF THE PARTIES. Each
-----------------------------------
party shall do the following until the Closing and, with respect
to Section 6.3(f), indefinitely after the Closing:
(a) Best Efforts. Upon the terms and subject to
------------
the conditions provided in the Transaction Documents, use its
best efforts to take, or cause to be taken, all action, and to
do, or cause to be done, and to assist and cooperate with the
other party in doing all things necessary, proper or advisable to
ensure that the conditions set forth in Article III and to the
conclusion of the Transactions are satisfied and to conclude and
make effective, in the most expeditious manner practicable, the
Transactions, including, without limitation, (1) using its best
efforts to obtain all necessary Approvals and (2) in cooperation
with the other party, giving written notice of the Transactions
to persons in possession of the Purchased Assets and the parties
to the Assigned Agreements.
(b) Notification. Give prompt notice to the other
------------
party of (1) the occurrence, or failure to occur, of any event
that would be likely to cause any representation or warranty of
the party contained in the Transaction Document to be untrue or
inaccurate in any material respect at any time from the date of
this Agreement to the Closing Date and (2) any failure of the
party to perform or otherwise comply with, in any material
respect, any covenant, condition or agreement to be performed or
complied with by it under the Transaction Documents; which
covenant of notification shall not limit the right of the other
party under Article III to require as a condition precedent to
the performance of its obligations under this Agreement the
continuing accuracy and performance of the representations and
warranties and covenants of the notifying party made in the
Transaction Documents and to receive an unqualified certificate
with respect to the same.
(c) Publicity and Reports. The initial press
---------------------
release with respect to the Transactions shall be mutually
satisfactory to the parties hereto and thereafter, except as may
be required by applicable laws, court process or by obligations
pursuant to any listing agreement with a national securities
exchange or the NASDAQ/SmallCap Market, neither the Company nor
the Purchaser shall issue any press release or make any public
filings with respect to the Transactions, without affording the
other party the opportunity to review and comment upon such
release or filing.
(d) Confidentiality. Information disclosed by any
---------------
party or its representatives to any other party or its
representatives, whether before or after the date of this
Agreement, in connection with the Transactions or the discussions
and negotiations preceding the execution of the Transaction
Documents, shall be kept confidential by the other party and its
representatives and shall not be used by those persons other than
as contemplated by the Transaction Documents, except in each case
to the extent that (1) the information was known by the recipient
when received or the information is or hereafter becomes lawfully
obtainable from other sources, (2) disclosure to a Governmental
Body having jurisdiction over the parties is necessary or
appropriate, (3) disclosure may otherwise be required by
applicable Regulations or (4) the duty as to confidentiality is
waived in writing by the other party. If this Agreement is
terminated, each party shall use reasonable efforts to return
upon written request from the other party all documents (and
reproductions of those documents) received by it or its
representatives from the other party (and, in the case of
reproductions, all reproductions made by the receiving party)
that include information not within the exceptions contained in
the preceding sentence, unless the recipients provide assurances
reasonably satisfactory to the requesting party that the
documents have been destroyed.
(e) ANMR/GE Agreements. Neither party shall take
------------------
any action to enforce any of its rights under the ANMR/GE
Agreements (as defined in the form of Settlement and Release
Agreement attached hereto as Exhibit D) or otherwise with respect
to any matter subject thereto or arising therefrom, except as
specifically provided in the Settlement and Release Agreement.
(f) Further Assurances. Promptly upon request by
------------------
any other party, correct any defect or error that may be
discovered in any Transaction Document or in the execution or
acknowledgement of any Transaction Document and execute,
acknowledge, deliver, file, re-file, register and re-register,
any and all such further acts, certificates, assurances and other
instruments as the requesting party may require from time to time
in order (1) to carry out more effectively the purposes of each
Transaction Document, (2) to enable the requesting party to
exercise and enforce its rights and remedies and collect any
payments and proceeds under each Transaction Document and (3) to
better transfer, preserve, protect and confirm to the requesting
party the rights granted or now or hereafter intended to be
granted to the requesting party under each Transaction Document
or under each other instrument executed in connection with any
Transaction Document.
SECTION 6.4 COVENANT NOT TO COMPETE. (a) Before the
-----------------------
fifth anniversary of the Closing Date, the Company and its
Subsidiaries shall not manufacture, license, service or sell
magnetic resonance scanners that are designed for whole-body
imaging and have a magnetic field of 3T or greater ("Whole-Body
3T MR Scanners").
(b) Before the fourth anniversary of the Closing
Date, neither the Company nor any of its Subsidiaries shall enter
into service contracts with respect to magnetic resonance
scanners designed for whole body imaging and have a magnetic
field of less than 3T unless it first offers Purchaser the
opportunity to enter instead into such service contracts on
identical terms.
(c) Notwithstanding anything herein to the
contrary, Subsidiaries of the Company that are acquired by the
Company after the Closing Date ("Acquired Companies") may
manufacture, license, sell, or otherwise deal in Whole-Body 3T MR
Scanners and may enter into service contracts with respect to
magnetic resonance scanners designed for whole body imaging;
provided, however, that, (i) before the fifth anniversary of the
Closing Date, the Company shall not expand the business of any
Acquired Company so as to cause such Acquired Company to compete
with the Purchaser's Whole-Body 3T MR Scanner business or service
business in a manner or to an extent that such Acquired Company
did not compete with the Purchaser prior to such acquisition or
as was contemplated by the Acquired Company's business plan at
the time of acquisition; and (ii) before the fourth anniversary
of the Closing Date, Acquired Companies shall not solicit service
contracts with respect to magnetic resonance scanners designed
for whole body imaging from parties to the Assigned Agreements.
ARTICLE VII
INDEMNIFICATION
SECTION 7.1 INDEMNIFICATION BY THE COMPANY AND
----------------------------------
PURCHASER.
---------
(a) Subject to, and without limiting the effect
of, any term or provision of any Transaction Document that limits
the Purchaser's recourse against the Company in the event of a
failure by the Company to perform a certain covenant or agreement
specified therein, and whether or not the Closing or both shall
occur, and subject to Section 8.11, the Company shall indemnify
the Purchaser and its "controlling persons" (within the meaning
of Section 20 of the Exchange Act) and Subsidiaries and their
respective stockholders, directors, officers, employees, agents
and Affiliates against, and hold each of those persons harmless
from, any and all Losses in any way relating to or allegedly
arising out of any of the following:
(1) any breach of the representations, warranties,
covenants or agreements of the Company contained in any
Transaction Document, whether or not the Transactions are
concluded or the obligations of the parties under the
Transaction Documents are terminated;
(2) any other matter as to which the Company in other
provisions of this Agreement or any other Transaction
Document has agreed to indemnify any of those persons; or
(3) the failure of the Company to pay or otherwise
perform, timely and in full, any of its obligations and
liabilities with respect to the Purchased Assets arising
before the Closing other than the Assumed Liabilities.
(b) Subject to, and without limiting the effect
of, any term or provision of any Transaction Document that limits
the Company's recourse against the Purchaser in the event of a
failure by the Purchaser to perform a certain covenant or
agreement specified therein, and whether or not the Closing shall
occur, and subject to Section 8.11, the Purchaser shall indemnify
the Company and its "controlling persons" (within the meaning of
Section 20 of the Exchange Act) and Subsidiaries and their
respective stockholders, directors, officers, employees, agents
and Affiliates against, and hold each of those persons harmless
from, any and all Losses in any way relating to or allegedly
arising out of any of the following:
(1) any breach of the representations, warranties,
covenants or agreements of the Purchaser contained in any
Transaction Document, whether or not the Transactions are
concluded or the obligations of the parties under the
Transaction Documents are terminated;
(2) any other matter as to which the Purchaser in
other provisions of this Agreement or any other Transaction
Document has agreed to indemnify any of those persons; or
(3) the failure of the Purchaser to pay or otherwise
perform the Assumed Liabilities timely and in full.
(c) If any Action indemnifiable under this
Section shall be brought, asserted or threatened against any
person indemnified under this Section by any person other than
the indemnifying person, the indemnified person shall promptly
notify the indemnifying person. A failure to notify the
indemnifying person timely or at all shall reduce the liabilities
and obligations of the indemnifying person under this Section
only to the extent the indemnifying person actually shall be
prejudiced by such failure. The indemnifying person shall assume
the defense of the Action, including the employment of counsel
satisfactory to the indemnified person and the payment of all
related fees and expenses, but the indemnified person may employ
separate counsel in the Action and participate in the defense of
the Action at its own expense. However, the indemnified person
may by written notice to the indemnifying person assume the
defense of the Action, including the employment of counsel, at
the expense of the indemnifying person if:
(1) the indemnifying party shall have agreed to pay
those fees and expenses; or
(2) the indemnifying party shall have failed to assume
the defense of the Action or shall have failed to employ
counsel reasonably satisfactory to the indemnified person in
the Action; or
(3) the named parties to the Action (including any
impleaded parties) include both the indemnified person and
the indemnifying party, and the indemnified person shall
have been advised by counsel that there may be one or more
legal defenses available to the indemnified person that are
different from or additional to those available to the
indemnifying party (in which case, if the indemnified person
notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to
assume the defense of such Action on behalf of the
indemnified person; it being understood, however, that the
indemnifying party shall not, in connection with any one
Action or separate but substantially similar or related
Actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm
of attorneys at any time for all indemnified persons, which
firm shall be designated in writing by the principal
indemnified person).
The indemnifying party shall not be liable for any settlement of
any Action effected without its written consent, but if settled
with its written consent, or if there be a final judgment for the
plaintiff in any such Action, the indemnifying party shall
indemnify and hold harmless the indemnified person from and
against any loss or liability by reason of the settlement or
judgment.
(d) Notwithstanding anything in this Section to
the contrary, if, in connection with an Action indemnifiable
under this Section, a Governmental Body or other person having
authority or jurisdiction over a matter or matters related to the
Action shall have rendered, entered or granted a binding
judgment, decision, ruling, order or award with respect to the
matter or matters providing for the payment of money damages or
the claimant and the indemnifying party shall have agreed to
settle the Action for an amount of money damages without
reservation of any rights or defenses against the indemnified
person, and if the indemnified person elects to appeal the
judgment, decision, ruling, order or award or declines to agree
to the proposed settlement, as the case may be, then the
indemnified person may continue to defend the Action, free of any
participation by the indemnifying person, but the amount of any
ultimate liability of the indemnifying party under this Section
with respect to Losses related to or allegedly arising in
connection with the matter or matters that shall have been
comprehended by the judgment, decision, ruling, order or award or
by the proposed settlement, as the case may be, shall then be
limited to the amount of the judgment, decision, ruling, order or
award or the amount of the proposed settlement, as the case may
be, plus the other indemnified Losses of the indemnified person
relating to the matter or matters through the date of its
election to appeal or its rejection of the proposed settlement,
as the case may be.
(e) If the indemnification provided for in this
Section is unavailable to an indemnified person (other than by
reason of exceptions provided in this Section), or is
insufficient to hold harmless an indemnified person in respect of
any Loss then the indemnifying person, in lieu of indemnifying
the indemnified person, shall contribute to the amount paid or
payable by the indemnified person as a result of the Loss in the
proportion that is appropriate to reflect the relative fault of
the indemnifying person on the one part and of the indemnified
person on the other part in connection with the events or
circumstances which resulted in the Loss as well as any other
relevant equitable considerations. The relative fault of the
indemnifying person on the one part and of the indemnified person
on the other part shall be determined by reference to, among
other things, those persons' relative intent, knowledge, access
to information and opportunity to correct or prevent the events
or circumstances resulting in the Loss. The amount of any Loss
suffered, incurred or paid any person shall be deemed to include
all expenses incurred or paid by the person in connection with
investigating or defending any Action, including, but not limited
to, the fees and expenses of counsel.
SECTION 7.2 NO LIMITATION ON OTHER RIGHTS OF RECOVERY.
-----------------------------------------
The indemnification set forth in this Article shall be in
addition to any other obligations or liabilities of an
indemnifying person to an indemnified person at common law or
otherwise. The provisions of this Article shall not eliminate or
otherwise limit the right of any indemnified person or any other
person to seek to recover contribution, damages or otherwise
enforce its rights against the indemnifying person or any other
person without regard to the provisions of this Article. If at
any time all or any part of any indemnification payment hereunder
is or must be rescinded or returned to the person making such
indemnity payment for any reason whatsoever (including, without
limitation, the insolvency, bankruptcy or reorganization of any
person) the indemnification obligations of the person making such
payment shall be reinstated with respect to such payment so
rescinded or returned as though such payment had never been made
or received.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 EXPENSES. Whether or not the Transactions
--------
are concluded, all costs and expenses incurred in connection with
the Transaction Documents and the Transactions shall be paid by
the party incurring such expenses.
SECTION 8.2 NOTICES. All notices, requests and other
-------
communications to any party or under any Transaction Document
shall be in writing. Communications may be made by telecopy or
similar writing. Each communication shall be given to the party
at its address stated on the signature pages of this Agreement or
at any other address as the party may specify for this purpose by
notice to the other party. Each communication shall be effective
(1) if given by telecopy, when the telecopy is transmitted to the
proper address and the receipt of the transmission is confirmed,
(2) if given by mail, 72 hours after the communication is
deposited in the mails properly addressed with first class
postage prepaid or (3) if given by any other means, when
delivered to the proper address and a written acknowledgement of
delivery is received.
SECTION 8.3 NO WAIVERS; REMEDIES; SPECIFIC PERFORMANCE.
------------------------------------------
(a) No failure or delay by any party in
exercising any right, power or privilege under any Transaction
Document shall operate as a waiver of the right, power or
privilege. A single or partial exercise of any right, power or
privilege shall not preclude any other or further exercise of the
right, power or privilege or the exercise of any other right,
power or privilege. The rights and remedies provided in the
Transaction Documents shall, subject to Section 8.12 hereof, be
cumulative and not exclusive of any rights or remedies provided
by law.
(b) In view of the uniqueness of the Transactions
and the business, properties, operations, prospects and condition
(financial and otherwise) of the Company and its Consolidated
Subsidiaries, neither of the parties would have an adequate
remedy at law for money damages in the event that any of the
Transaction Documents is not performed in accordance with its
terms, and therefore each of the parties agrees that the other
party shall, subject to Section 8.12 hereof, be entitled to
specific enforcement of the terms of each Transaction Document in
addition to any other remedy to which it may be entitled, at law
or in equity.
SECTION 8.4 AMENDMENTS, ETC. No amendment,
---------------
modification, termination, or waiver of any provision of any
Transaction Document, and no consent to any departure by a party
to a Transaction Document from any provision of the Transaction
Document, shall be effective unless it shall be in writing and
signed and delivered by the other parties to the Transaction
Document, and then it shall be effective only in the specific
instance and for the specific purpose for which it is given.
SECTION 8.5 SUCCESSORS AND ASSIGNS; THIRD PARTY
-----------------------------------
BENEFICIARIES.
-------------
(a) The Purchaser may assign to a Wholly-Owned
Subsidiary thereof its rights and delegate its obligations under
this Agreement before the Closing; such assignee shall accept
those rights and assume those obligations for the benefit of the
Company in writing in form reasonably satisfactory to the
Company. Thereafter, without any further action by any person,
all references in this Agreement to the "Purchaser", and all
comparable references, shall be deemed to be references to the
transferee, but the Purchaser shall not be released from any
obligation or liability under this Agreement.
(b) Except as provided in Section 8.5(a), no
party to this Agreement may assign its rights under the
Transaction Document. Any delegation in contravention of this
Section shall be void ab initio and shall not relieve the
-- ------
delegating party of any obligation under this Agreement.
(c) The provisions of each Transaction Document
shall be binding upon and inure to the benefit of the parties to
the Transaction Document and their respective successors and
permitted assigns, and no other person.
SECTION 8.6 GOVERNING LAW. Each Transaction Document
-------------
shall be governed by and construed in accordance with the
internal laws of the State of New York.
SECTION 8.7 COUNTERPARTS; EFFECTIVENESS. Each
---------------------------
Transaction Document may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if
all signatures were on the same instrument.
SECTION 8.8 SEVERABILITY OF PROVISIONS. Any provision
--------------------------
of any Transaction Document that is prohibited or unenforceable
in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of the prohibition or unenforceability
without invalidating the remaining provisions of the Transaction
Document or affecting the validity or enforceability of the
provision in any other jurisdiction.
SECTION 8.9 HEADINGS AND REFERENCES. Article and
-----------------------
section headings in any Transaction Document are included in the
Transaction Document for the convenience of reference only and do
not constitute a part of the Transaction Document for any other
purpose. References to parties and articles and sections in any
Transaction Document are references to the parties to or the
articles and sections of the Transaction Document, as the case
may be, unless the context shall require otherwise.
SECTION 8.10 ENTIRE AGREEMENT. The Transaction
----------------
Documents embody the entire agreement and understanding of the
respective parties and supersede all prior agreements or
understandings with respect to the subject matters of those
documents, except that paragraph 4 of the Letter Agreement dated
June 11, 1997 between the Company and the Purchaser remains in
full force and effect.
SECTION 8.11 SURVIVAL. Except as otherwise specifically
--------
provided in any Transaction Document, and notwithstanding any
investigation or notice to the contrary or any waiver by any
other party of a related condition precedent to the performance
by the other party of an obligation under the Transaction
Document, (1) each representation and warranty of each party to
the Transaction Document contained in or made pursuant to the
Transaction Document shall survive the Closing and remain in full
force and effect until the date that is the first anniversary of
the Closing Date and (2) the other party may assert or commence
an Action against the party with respect to the breach of any
such representation or warranty of the party on or before such
date and may maintain any such Action thereafter; provided that
--------
(x) no representation or warranty of the Company set forth in
Sections 4.5, 4.6, 4.7, 4.9 (other than paragraphs (a), (b), (c)
and (f) thereof) and 4.10 shall survive the Closing, and the
Purchaser may not assert or commence an Action against the Company
with respect to a breach thereof after the Closing Date and (y) no
representation or warranty of the Purchaser set forth in Sections
5.5 and 5.6 shall survive the Closing, and the Company may not
commence an Action against the Purchaser with respect thereto
after the Closing Date. Each covenant or agreement of a party
to a Transaction Document required to be performed on or after
a Closing shall remain in full force and effect thereafter in
accordance with its terms.
SECTION 8.12 DISPUTE RESOLUTION. (a) General Provisions.
------------------
(i) Any dispute, controversy or claim arising out of or relating
to this Agreement or any related agreement or the validity,
interpretation, breach or termination thereof (a "Dispute"),
including claims seeking redress or asserting rights under
applicable law, shall be resolved in accordance with the
procedures set forth herein. Until completion of such
procedures, no party may take any action not contemplated herein
to force a resolution of the Dispute by any judicial, arbitral or
similar process, except to the limited extent necessary to (A)
avoid expiration of a claim that might eventually be permitted
hereby or (B) obtain interim relief, including injunctive relief,
to preserve the status quo or prevent irreparable harm.
(ii) All communications between the parties or their
representatives in connection with the attempted resolution
of any Dispute shall be deemed to have been delivered in
furtherance of a Dispute settlement and shall be exempt from
discovery and production, and shall not be admissible in
evidence (whether as an admission or otherwise), in any
arbitral or other proceeding for the resolution of the
Dispute.
(iii) In connection with any Dispute, the parties
expressly waive and forego any right to trial by jury.
(b) Consideration by Senior Executives. If a Dispute
----------------------------------
cannot be resolved at an operational level, either party may, by
notice to the other, request referral to the President and CEO of
the General Electric Medical Services Division and the Chairman
of the Company (or comparable officers of any permitted successor
or assignee) for their consideration. Such request shall be
accompanied by a written statement of the Dispute and of each
party's position. Within 30 days after the request, the other
party will either concur in such statement or prepare its own,
and such statement(s) will be delivered to the officers named
above. Such officers will meet in person or by telephone within
30 days thereafter to seek a resolution. If no resolution is
reached by the expiration of 60 days from the referral request,
then either party may submit the Dispute to resolution as further
provided herein by notice to the other party.
(c) Mediation. After completion of any prior procedures
---------
required hereby, either party may submit the Dispute for
resolution by mediation pursuant to the Center for Public
Resources Model Procedure for Mediation of Business Disputes as
then in effect. Mediation will continue for at least 60 days
unless the mediator chooses to withdraw sooner. At the request
of either party at commencement of the mediation, the mediator
will be asked to provide an evaluation of the Dispute and the
parties' relative positions.
(d) Arbitration. (i) After completion of any prior
-----------
procedures required hereby, either party may submit the Dispute
for resolution by arbitration pursuant to the Rules of the Center
for Public Resources ("CPR") for Non-Administered Arbitration of
Business Disputes as in effect at the time of the arbitration.
The parties consent to a single, consolidated arbitration for all
Disputes for which arbitration is permitted.
(ii) The neutral organization for purposes of the
CPR rules will be the CPR. The arbitral tribunal shall be
composed of one arbitrator selected by agreement of the
parties or, in the absence of such agreement within 60 days
after either party first proposes an arbitrator, by the CPR.
The arbitration shall be conducted in New York. Each party
shall be permitted to present its case, witnesses and
evidence, if any, in the presence of the other party. A
written transcript of the proceedings shall be made and
furnished to the parties. The arbitrators shall determine
the Dispute in accordance with the law of the State of New
York, without giving effect to any conflict of law rules or
other rules that might render such law inapplicable or
unavailable, and shall apply this Agreement according to its
terms.
(iii) The parties agree to be bound by any award or
order resulting from any arbitration conducted hereunder and
further agree that:
(1) any monetary award shall include pre-award interest,
to the extent appropriate, and shall be made and
payable in U.S. dollars through a bank selected by
the recipient of such award, free of any withholding
tax or other deduction, together with interest
thereon at the prime rate in effect at such bank on
the date of the award, from the date the award is
granted to the date it is paid in full.
(2) in the context of an attempt by either party to
enforce an arbitral award or order, any defenses
relating to the parties' capacity or the validity of
this Agreement or
the Transaction Documents under any law are hereby waived; and
(3) judgement on any award or order resulting from an
arbitration conducted under this Section may be
entered and enforced in any court, in any country,
having jurisdiction thereof or having jurisdiction
over any of the parties or any of their assets.
(iv) Except as expressly permitted by this
Agreement, no party will commence or voluntarily participate
in any court action or proceeding concerning a Dispute,
except (A) for enforcement as contemplated by paragraph
(iii)(3) above, (B) to restrict or vacate an arbitral
decision based on the grounds specified under applicable law
and not waived in paragraph (iii)(2) above, or (C) for
interim relief as provided in paragraph (v) below. For
purposes of the foregoing or enforcement of any undisputed
obligation, the parties hereto submit to the non-exclusive
jurisdiction of the courts of the State of New York.
(v) In addition to the authority otherwise conferred
on the arbitral tribunal, the tribunal shall have the
authority to make such orders for interim relief, including
injunctive relief, as it may deem just and equitable. If
the tribunal shall not have been appointed, either party may
seek interim relief from a court having jurisdiction if the
award to which the applicant may be entitled may be rendered
ineffectual without such interim relief. Upon appointment
of the tribunal following any grant of interim relief by a
court, the tribunal may affirm or disaffirm such relief, and
the parties will seek modification or rescission of the
court action as necessary to accord with the tribunal's
decision.
(vi) The prevailing party in any arbitration
conducted under this Section shall be entitled to recover
from the other party (as part of the arbitral award or
order) its reasonable attorneys' fees and other costs of
arbitration.
Section 8.13 Affiliate. Nothing contained in the
---------
Transaction Documents shall constitute the Purchaser an
"affiliate" of any of the Company and its Subsidiaries within the
meaning of the Securities Act or the Exchange Act.
Section 8.14 Non-Recourse. No recourse under any of
------------
the Transaction Documents shall be had against any "controlling
person" (within the meaning of Section 20 of the Exchange Act) of
any party or the stockholders, directors, officers, employees,
agents and Affiliates of the party or such controlling persons,
whether by the enforcement of any assessment or by any legal or
equitable proceeding, or by virtue of any Regulation, it being
expressly agreed and acknowledged that no personal liability
whatsoever shall attach to, be imposed on or otherwise be
incurred by such controlling person, stockholder, director,
officer, employee, agent or Affiliate, as such, for any
obligations of the party under this Agreement or any other
Transaction Document or for any claim based on, in respect of or
by reason of such obligations or their creation.
-----------------------
[Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, the parties have executed and
delivered this Purchase Agreement as of the date first written
above in New York, New York.
ADVANCED NMR SYSTEMS, INC.
By: /s/ Jack Nelson
-------------------------
Name: Jack Nelson
Title: Chairman and CEO
Address: Advanced NMR Systems, Inc.
46 Jonspin Road
Wilmington, Massachusetts
01887
Telecopy: (508) 658-3581
GENERAL ELECTRIC COMPANY
By: /s/ Jeffrey R. Immelt
-------------------------
Name: Jeffrey R. Immelt
Title: President of GE Medical
Systems
Address: General Electric Company
Medical Services Division
3000 North Grandview Blvd.
(P.O. Box 414)
Waukesha, Wisconsin 53188
Telecopy: (414) 544-3573
<PAGE>
DEFINITION ANNEX
"ACTION" against a person means an action, suit,
investigation, complaint or other proceeding pending against or
affecting the person or its property, whether civil or criminal,
in law or equity or before any arbitrator or Governmental Body.
"AFFILIATE" of a person means any other person (1) that
directly or indirectly controls, is controlled by or is under
common control with, the person or any of its Subsidiaries, (2)
that directly or indirectly beneficially owns or holds 5% or more
of any class of voting stock of the person or any of its
Subsidiaries or (3) 5% or more of the voting stock of which is
directly or indirectly beneficially owned or held by the person
or any of its Subsidiaries. The term "control" means the posses-
sion, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether
through the ownership of voting securities, by contract or
otherwise.
"APPROVAL" means an authorization, consent, approval or
waiver of, clearance by, notice to or registration or filing
with, or any other similar action by or with respect to a
Governmental Body or any other person and the expiration or
termination of all prescribed waiting, review or appeal periods
with respect to any of the foregoing.
"AMS" means Advanced Mammography Systems, Inc., a
Delaware corporation, and its successors.
"BENEFICIAL OWNERSHIP" has the meaning assigned to that
term in Section 13(d) of the Exchange Act.
"BEST EFFORTS" means the use of all reasonable efforts,
including, without limitation, the expenditure of amounts
reasonably related to the objective sought to be achieved, with
respect to matters and actions over which the person has or could
reasonably be expected to exert any control or influence.
"BUSINESS DAY" means any day excluding Saturday, Sunday
and any day which is a legal holiday under the laws of the State
of New York or is a day on which banking institutions located in
such state are authorized or required by law or other
governmental action to close.
"CERTIFICATE" means the Certificate of Designations
with respect to the Preferred Shares, substantially in the form
of Exhibit A attached hereto, with such changes therein as shall
---------
be approved by the Company and the Purchaser.
"CLOSING" has the meaning stated in Section 2.1 of this
Agreement.
"CLOSING DATE" has the meaning stated in Section 2.1 of
this Agreement.
"COMMON STOCK" has the meaning stated in Section 1.2(a)
of this Agreement.
"COMPANY" means Advanced NMR Systems, Inc., a Delaware
corporation, and its successors.
"CONSOLIDATED" means, as applied to any financial or
accounting term, the term determined on a consolidated basis for
a person and its Consolidated Subsidiaries, excluding
intercompany items and minority interests.
"CONSOLIDATED SUBSIDIARY" of a person at any date means
any Subsidiary of the person or other entity the accounts of
which would be consolidated with those of the person in its
consolidated financial statements as of that date.
"EQUITY SECURITIES" of a person means the capital stock
of the person and all other securities convertible into or
exchangeable or exercisable for any shares of its capital stock,
all rights to subscribe for or to purchase, all options for the
purchase of, and all calls, commitments or claims of any
character relating to, any shares of its capital stock and any
securities convertible into or exchangeable or exercisable for
any of the foregoing.
"EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended, and the related rules and regulations
thereunder.
"FIRST ANNIVERSARY" has the meaning stated in Section
1.2(a)(2) of this Agreement.
"GOVERNMENTAL BODY" means any agency, bureau,
commission, court, department, official, political subdivision,
tribunal or other instrumentality of any government, whether
federal, state, county or local, domestic or foreign.
"KNOWLEDGE OF THE COMPANY" with respect to a
representation or warranty of the Company contained in any
Transaction Document means, after due inquiry by the Company of
each of the following persons, the actual knowledge of any of the
officers or other employees of the Company having managerial
responsibility for the portion of the operations, assets or
liabilities of the Company and its Consolidated Subsidiaries with
respect to which such knowledge of the Company is being
represented.
"LICENSE" has the meaning stated in Section 1.1(b) of
this Agreement.
"LIEN" means any mortgage, deed of trust, lien
(statutory or otherwise), pledge, hypothecation, charge, deposit
arrangement, preference, priority, security interest or
encumbrance of any kind.
"LOSS" means any cost, damage, disbursement, expense,
liability, judgment, loss, deficiency, obligation, penalty or
settlement of any kind or nature, whether foreseeable or
unforeseeable, including, but not limited to, interest or other
carrying costs, penalties, legal, accounting, expert witness,
consultant and other professional fees and expenses incurred in
the investigation, collection, prosecution and defense of claims
and amounts paid in settlement, that may be imposed on or
otherwise incurred or suffered by the specified person.
"MARKET PRICE" means, as of any date of determination,
the average of the daily closing prices per share of the Common
Stock for 20 consecutive trading days commencing 25 trading days
before such date of determination. The closing price for each
such trading day shall be the last reported sales price regular
way or, in case no such sale takes place on such day, the average
of the closing bid and asked prices regular way, in either case
on the principal national securities exchange on which the Common
Stock is listed or admitted to trading, or, if not listed or
admitted to trading on any national securities exchange, on
NASDAQ National Market System or, if the Common Stock is not
listed or admitted to trading on any national securities exchange
or quoted on NASDAQ National Market System, on NASDAQ SmallCap
Market or, if the Common Stock is not quoted on NASDAQ SmallCap
Market, the average of the closing bid and asked prices as
furnished by any New York Stock Exchange member firm selected
from time to time by the Board of Directors of the Company for
such purpose or if no such prices are available, the fair market
value of the Common Stock as determined by good faith action of
the Board of Directors of the Company.
"MATERIAL ADVERSE EFFECT" means a material adverse
effect on (1) the business, properties, operations, prospects,
condition (financial or otherwise) or capitalization of the
Company and its Consolidated Subsidiaries, taken as a whole,
other than a circumstance or event affecting the healthcare
industry generally, or (2) the ability of the Company to perform
its material obligations under any Transaction Document to which
it is or may become a party.
"MERGER" has the meaning stated in Section 6.1(b) of
this Agreement.
"MERGER AGREEMENT" has the meaning stated in Section
6.1(b) of this Agreement.
"PERSON" means an individual, a corporation, a
partnership, an association, a trust or any other entity or
organization, including a Governmental Body.
"PREFERRED CONVERSION SHARES" has the meaning stated in
Section 1.2(a) of this Agreement.
"PREFERRED SHARE PRICE" has the meaning stated in
Section 1.2(a) of this Agreement.
"PREFERRED SHARES" has the meaning stated in Section
1.2(a) of this Agreement.
"PURCHASED ASSETS" has the meaning stated in Section
1.1 of this Agreement.
"PURCHASER" means General Electric Company, a New York
corporation, and its successors.
"REGISTRATION RIGHTS AGREEMENT" means the Registration
Rights Agreement to be entered into by the Company and the
Purchaser, substantially in the form of Exhibit B attached hereto,
---------
with such changes therein as shall be approved by the Company and
the Purchaser.
"REGULATION" means (1) any applicable law, rule,
regulation, judgment, decree, ruling, order, award, injunction,
recommendation or other official action of any Governmental Body
and (2) any official change in the interpretation or
administration of any of the foregoing by the Governmental Body
or by any other Governmental Body or other person responsible for
the interpretation or administration of any of the foregoing.
"SEC DOCUMENTS" has the meaning stated in Section 4.11
of this Agreement.
"SECOND ANNIVERSARY" has the meaning stated in Section
1.2(a)(3) of this Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as
amended, and the related rules and regulations thereunder.
"SETTLEMENT AND RELEASE AGREEMENT" means the Settlement
and Release Agreement to be entered into by the Company and the
Purchaser, substantially in the form of Exhibit D attached hereto,
---------
with such changes therein as shall be approved by the Company and
the Purchaser.
"STOCKHOLDERS AGREEMENT" means the Stockholders
Agreement to be entered into by the Company and the Purchaser,
substantially in the form of Exhibit C attached hereto, with such
---------
changes therein as shall be approved by the Company and the
Purchaser.
"SUBSIDIARY" of a person means (1) any corporation or
other entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at
the time directly or indirectly owned by the person or (2) a
partnership in which the person or a Subsidiary of the person is,
at the date of determination, a general or limited partner of
such partnership, but only if the person or its Subsidiary is
entitled to receive more than fifty percent of the assets of such
partnership upon its dissolution. Unless the context otherwise
requires, references to one or more Subsidiaries shall be
references to Subsidiaries of the Company.
"TENTH ANNIVERSARY" has the meaning stated in Section
1.2(a)(2) of this Agreement.
"TRANSACTION DOCUMENTS" means this Agreement, the
Registration Rights Agreement, the Stockholders Agreement, the
Settlement and Release Agreement and all other instruments and
documents executed and delivered by any person in connection with
the conclusion of one or more of the transactions contemplated
hereby and thereby.
"TRANSACTIONS" means, collectively, the transactions
undertaken pursuant to, or otherwise contemplated by, the
Transaction Documents.
"TRANSFER" means a sale, an assignment, a lease, a
license, a grant, a transfer or other disposition of an asset or
any interest of any nature in an asset. The term "transfer" used
as a verb has a correlative meaning.
"WARRANTS" has the meaning stated in Section 4.8(b) of
this Agreement.
"WHOLE-BODY 3T MR SCANNER" has the meaning stated in
Section 6.4 of this Agreement.
"WHOLLY-OWNED SUBSIDIARY" means any Subsidiary, all of
the shares of capital stock or other ownership interests of
which, except directors qualifying shares, are at the time
directly or indirectly owned by the person.
"WHOLLY-OWNED CONSOLIDATED SUBSIDIARY" of a person
means any Consolidated Subsidiary all of the shares of capital
stock or other ownership interests of which, except directors'
qualifying shares, are at the time directly or indirectly owned
by the person.
- 38 -
EXECUTION
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of August 18,
1997 between ADVANCED NMR SYSTEMS, INC., a Delaware corporation
(the "Company"), and GENERAL ELECTRIC COMPANY, a New York
corporation (the "Stockholder").
Terms not otherwise defined herein have the meanings
stated in the Purchase Agreement (as defined below).
RECITALS
A. The Company and the Stockholder have executed and
delivered the Purchase Agreement dated as of August 18, 1997 (the
"Purchase Agreement"), pursuant to which, among other things, on
the date hereof the Stockholder is purchasing the Preferred
Shares from the Company and hereafter may, upon the conversion of
the Preferred Shares, acquire the Preferred Conversion Shares.
B. The Company and the Stockholder desire to enter
into this Agreement to provide for the registration under the
Securities Act of the disposition of the Preferred Conversion
Shares and certain other matters. The Preferred Conversion
Shares are referred to as the "Registerable Shares".
C. Pursuant to the Purchase Agreement, on the date
hereof the Company and the Purchaser are entering into a
Stockholders Agreement to provide for certain restrictions on the
ownership, voting and disposition of the Preferred Shares and the
Preferred Conversion Shares by the Stockholder and certain other
matters.
<PAGE>
AGREEMENT
The parties agree as follows:
SECTION 1. REGISTRATION RIGHTS.
-------------------
(a) From and after the first date on which shares
of Common Stock may be acquired by the Purchaser upon the
conversion of any Preferred Share (the "Commencement Date") and
to and including the date that is the tenth anniversary of the
date hereof, subject to extension pursuant to Section 1(f), on
one or more occasions when the Company shall have received the
written request of the Stockholder, any pledgee of Preferred
Conversion Shares from the Stockholder or holders of at least
100,000 Preferred Conversion Shares in the aggregate (as such
number of shares may be adjusted in the event of any change in
the Registerable Shares by reason of stock dividends, split-ups,
reverse split-ups, mergers, recapitalizations, subdivisions,
conversions, exchanges of shares or the like) that shall have
been acquired directly or indirectly from the Stockholder and to
which rights under this Section 1(a) shall have been assigned
pursuant to Section 11(a), in each case in a transaction or
series of transactions not constituting a Rule 144 Transaction
(as defined in Section 1(h)) (each such person, when requesting
registration under this Section 1(a) and thereafter in connection
with any such registration, being hereinafter referred to as a
"Registering Stockholder"), as expeditiously as practicable the
Company shall include the Preferred Conversion Shares specified
by the Registering Stockholder in a Registration Statement (as
defined in Section 1(h)). If the requested registration pursuant
to this Section 1(a) shall involve an underwritten offering, the
Registering Stockholder initiating a request for registration of
Preferred Conversion Shares pursuant to this Section 1(a) shall
select (with the consent of the Company, not to be unreasonably
withheld) the managing underwriter in connection with the
offering and any additional investment bankers and managers to be
used in connection with the offering. Notwithstanding anything
to the contrary in the foregoing:
(1) the Company shall not be required to prepare and
file pursuant to this Section 1(a) more than one
Registration Statement; provided that a Registration
--------
Statement shall be deemed not to have been prepared and
filed if the same does not become effective;
(2) the Company shall not be required to prepare and
file a Registration Statement pursuant to this Section 1(a)
if the Registering Stockholder does not specify at least
300,000 (or, if less, all outstanding) Preferred Conversion
Shares to be included in such Registration Statement; and
(3) if a requested registration pursuant to this
Section 1(a) shall involve an underwritten offering, and if
the managing underwriter shall advise in writing the Company
and the Registering Stockholders that, in its opinion, the
number of Preferred Conversion Shares of any class proposed
to be included in the registration (including securities of
the Company which are proposed to be offered by persons
other than Registering Stockholders) exceeds the number
which would have an adverse effect on the offering,
including the price at which the Preferred Conversion Shares
can be sold, the Company will include in the registration
the maximum number of securities which it is so advised can
be sold without the adverse effect, allocated as follows:
(A) first, all Preferred Conversion Shares owned
-----
by Registering Stockholders and requested to be included in such
registration (if necessary, allocated pro rata among all
Registering Stockholders on the basis of the relative number of
Preferred Conversion Shares each such Registering Stockholder has
requested to be included in the registration); and
(B) second, any other securities proposed to be
------
included in the registration.
(b) From and after the Commencement Date, if the
Company shall determine to register or qualify by a registration
statement filed under the Securities Act and under any applicable
state securities laws, any offering of any Equity Securities of
the Company, whether pursuant to Section 1(a) or otherwise, the
Company shall give notice of such determination to each potential
Registering Stockholder and each other person having rights with
respect to the registration under the Securities Act of the
disposition of securities of the Company (each such potential
Registering Stockholder and each such other person, being
hereinafter referred to as a "Transaction Registering
Stockholder") about which the Company has knowledge; it being
understood that without prior notice to the Company, the Company
shall not be deemed to have knowledge of the existence of any
pledgee of Preferred Conversion Shares. The Company shall, as
expeditiously as possible and in good faith, include in the
registration statement such Preferred Conversion Shares (the
"Transaction Preferred Conversion Shares"), as those persons
shall specify by notice received by the Company not later than 30
days after the giving of the notice by the Company (each person
so notifying the Company being hereinafter referred to as a
"Piggy-Back Stockholder"). Notwithstanding anything in the
foregoing to the contrary,
(1) the Company shall not be required to include any
shares owned by Piggy-Back Stockholders in a registration
statement on Form S-4 or S-8 (or any successor form) or a
registration statement filed in connection with an exchange
offer or other offering of securities solely to the then
existing shareholders of the Company; and
(2) if a registration pursuant to this Section 1(b)
involves an underwritten offering, the Company shall select
the managing underwriter for the offering and any additional
investment bankers and managers to be used in connection
with the offering, and if the managing underwriter advises
the Company in writing that, in its opinion, the number of
securities requested to be included in the registration is
so great as would adversely affect the offering, including
the price at which the Preferred Conversion Shares can be
sold, the Company will include in the registration the
maximum number of securities which it is so advised can be
sold without the adverse effect, allocated as follows:
(A) first, all securities proposed to be
-----
registered by the Company for its own account;
(B) second, all securities proposed to be
------
registered by the Company pursuant to the exercise by any person
other than a Registering Stockholder of a right to request the
registration of securities of Common Stock in accordance with an
agreement substantially similar to the provisions of Section 1(a)
and effective prior to the date of this Agreement;
(C) third, all Transaction Preferred Conversion
-----
Shares requested to be included in the registration under Section
1(b) of this Agreement (if necessary, allocated pro rata among
all requesting Transaction Registering Stockholders, on the basis
of the relative number of Transaction Preferred Conversion
Shares, each Transaction Registering Stockholder has requested to
be included in the registration); and
(D) fourth, any other securities proposed to be
------
registered by the Company other than for its own account,
including, without limitation, securities proposed to be
registered by the Company pursuant to the exercise by any person
other than a Registering Stockholder of any right in accordance
with an agreement substantially similar to this Section 1(b);
provided, however, that in no event will the number of Preferred
-------- -------
Conversion Shares included in the Registration pursuant to this
Section 1(b)(2) be reduced to less than 10% of the aggregate
number of securities included in the registration and provided,
--------
further that the reductions specified under this Section
-------
1(b)(2)(A)-(D) shall not apply in the case of a registration
requested under Section 1(a).
(c) The Company shall make available for
inspection by each Registering Stockholder, each underwriter
participating in any disposition pursuant to such registration
and their respective representatives all financial and other
records, pertinent corporate documents and properties of the
Company as shall be reasonably necessary to enable them to
exercise their due diligence responsibility in connection with
each registration of Registered Shares of the Registering
Stockholder pursuant to this Section 1, and shall cause the
Company's officers, directors and employees to supply all
information reasonably requested by any such person in connection
with such registration; provided that records and documents which
--------
the Company determines, in good faith, after consultation with
counsel for the Company and counsel for the Registering
Stockholder or underwriter, as the case may be, to be confidential
and which it notifies such persons are confidential shall not be
disclosed to them unless (1) the disclosure of such records or
documents is necessary to avoid or correct a misstatement
or omission in the Registration Statement or (2) the release of
such records or documents is ordered pursuant to a subpoena
or other order from a court of competent jurisdiction. Each
Registering Stockholder shall, upon learning that disclosure
of any such records is sought in a court of competent
jurisdiction, give notice to the Company, and allow the Company,
at the Company's expense, to undertake appropriate action and to
prevent disclosure of any such records or documents deemed
confidential.
(d) At the request of one or more of the
Registering Stockholders or the Company in connection with any
registration pursuant to this Section 1, the Company and the
requesting Registering Stockholders shall enter into an
appropriate underwriting agreement with respect to the Preferred
Conversion Shares of the Registering Stockholders containing
terms and provisions customary in agreements of that nature,
including provisions with respect to expenses substantially the
same as those set forth in Section 2 and provisions with respect
to indemnification and contribution substantially the same as
those set forth in Section 3.
(e) Notwithstanding anything herein to the
contrary, the Company shall not be required to include in any
registration pursuant to this Section 1 any Preferred Conversion
Shares owned by a Registering Stockholder (1) if the Company
shall deliver to the Registering Stockholder an opinion,
satisfactory in form, scope and substance to the Registering
Stockholder and addressed to the Registering Stockholder by legal
counsel satisfactory to the Registering Stockholder, to the
effect that the distribution of Preferred Conversion Shares
proposed by the Registering Stockholder is exempt from
registration under the Securities Act and all applicable state
securities laws (including, if the proposed method of
distribution consists of brokers transactions or sales to market
makers within the meaning of Rule 144 under the Securities Act of
1933, pursuant to all applicable provisions of Rule 144) or (2)
if such Registering Stockholder or any underwriter of Preferred
Conversion Shares shall fail to furnish to the Company the
information in respect of the distribution of the shares that may
be required under this Agreement to be furnished by the
Registering Stockholder or the underwriter to the Company.
(f) Upon written notice ("Black-out Notice") to
each Registering Stockholder, the Company may postpone effecting
a registration pursuant to this Section 1 on one occasion during
any period of nine consecutive months, may require other holders
of shares registered pursuant to this Section 1 to refrain from
disposing of the shares under the registration or may require
Transaction Registering Stockholders to refrain from otherwise
disposing of any shares of Equity Securities of the Company owned
by them (whether pursuant to Rule 144 under the Securities Act or
otherwise), in each case for a reasonable time specified in the
notice but not exceeding 90 days in the aggregate in any six
month period (or, if the Effective Period (as defined in Section
1(g)(3)) is nine months, 90 days in the aggregate in any nine
month period) (which period may be renewed on no more than two
(2) occasions), if (1) an investment banking firm of recognized
national standing shall advise the Company and the Registering
Stockholders in writing that effecting the registration or
disposition would materially and adversely affect an offering of
Equity Securities of the Company the preparation of which had
then been commenced or (2) the Company is in possession of
material non-public information the disclosure of which during
the period specified in such notice the Company believes would
not be in the best interests of the Company. The period during
which the rights granted under Section 1(a) may be exercised by a
Registering Stockholder shall be extended by one day beyond the
tenth anniversary of the date hereof for each day that pursuant
to this Section 1(f), the Company postpones effecting a
registration, requires the Registering Stockholder to refrain
from disposing of Preferred Conversion Shares under a
registration or otherwise requires the Registering Stockholder to
refrain from disposing of shares of Equity Securities of the
Company pursuant to this Section 1(f).
(g) In the event the registration of Preferred
Conversion Shares shall be required by this Section 1:
(1) Each Registering Stockholder shall furnish, and
shall cause each underwriter of the Preferred Conversion
Shares of the Registering Stockholder to be distributed
pursuant to the registration to furnish, to the Company in
writing promptly upon the request of the Company the
additional information regarding the Registering Stockholder
or the underwriter, the contemplated distribution of the
Preferred Conversion Shares and the other information
regarding the proposed distribution by the Registering
Stockholder and the underwriter that shall be required in
connection with the proposed distribution by the applicable
securities laws of the United States of America and the
states thereof in which the Preferred Conversion Shares are
contemplated to be distributed. The information furnished
by any Registering Stockholder or any underwriter shall be
certified by the Registering Stockholder or the underwriter,
as the case may be, and shall be stated to be specifically
for use in connection with the registration.
(2) The Company shall prepare and file with the
Securities and Exchange Commission the Registration
Statement, including the Prospectus (as defined in
Section 1(h)), under the Securities Act and as required
under any applicable state securities laws, on the form that
is then required or available for use by the Company to
permit each Registering Stockholder, upon the effective date
of the Registration Statement, to use the Prospectus in
connection with the contemplated distribution by the
Registering Stockholder of the Preferred Conversion Shares
so registered. A registration pursuant to Section 1 shall
be effected pursuant to Rule 415 (or any similar provision
then in force) under the Securities Act if the manner of
distribution contemplated by the Registering Stockholder
shall include an offering on a delayed or continuous basis.
If any Registration Statement refers to any Registering
Stockholder by name or otherwise as the holder of any
securities of the Company, then the Registering Stockholder
shall have the right to require, in the event that such
reference to the Registering Stockholder by name or
otherwise is not required by the Securities Act or any
similar federal statute then in force, the deletion of the
reference to the Registering Stockholder. The Company shall
deliver to each Registering Stockholder, without charge, one
executed copy of the Registration Statement and each
amendment or post-effective amendment thereof and one copy
of each document incorporated therein by reference. If the
registration shall have been initiated solely by the Company
or shall not have been initiated by the Registering
Stockholder, the Company shall not be obligated to prosecute
the registration, and may withdraw the Registration
Statement at any time prior to the effectiveness thereof, if
the Company shall determine in good faith not to proceed
with the offering of securities included in the Registration
Statement. In all other cases, the Company shall use its
best efforts to cause the Registration Statement to become
effective and, as soon as practicable after the
effectiveness thereof, shall deliver to each Registering
Stockholder evidence of the effectiveness and a reasonable
supply of copies of the Prospectus. In addition, if
necessary for resale by the Registering Stockholders, the
Company shall qualify or register in such states as may be
reasonably requested by each Registering Stockholder the
Preferred Conversion Shares of the Registering Stockholder
that shall have been included in the Registration Statement;
provided that the Company shall not be obligated to file any
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general consent to service of process or to qualify as a
foreign corporation in any state in which it is not subject
to process or qualified as of the date of the request.
(3) The Company shall use its best efforts to cause
the Registration Statement and the Prospectus to remain
effective or current, as the case may be, including the
filing of necessary amendments, post-effective amendments
and supplements, and shall furnish copies of such
amendments, post-effective amendments and supplements to the
Registering Stockholders, so as to permit distributions by
the Registering Stockholders during the respective
contemplated periods of distribution (the "Effective
Period"), but in no event longer than six consecutive months
from the effective date of the Registration Statement;
provided that the period shall be increased by the number of
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days that any Registering Stockholder shall have been
required by Section 1(f) to refrain from disposing of the
Preferred Conversion Shares owned by the Registering
Stockholder in the distribution; and provided further that
the period shall be increased by ninety
(90) days in the event more than one Black-out Notice is given to
the Registering Stockholders. During such respective
contemplated periods of distribution, the Company shall comply
with the provisions of the Securities Act applicable to it with
respect to the disposition of all Preferred Conversion Shares
that shall have been included in the Registration Statement in
accordance with the intended methods of disposition by the
Registering Stockholders set forth in the Registration Statement,
the Prospectus or the supplement, as the case may be. The
Company shall not be deemed to have used its best efforts to
cause the Registration Statement to remain effective during the
applicable period if it voluntarily takes any action (other than
an action required under applicable law) that would result in the
Registering Stockholders not being able to dispose of the
Preferred Conversion Shares during that period in accordance with
the intended methods of disposition. The Company shall notify
each Registering Stockholder, at any time when a prospectus with
respect to the Preferred Conversion Shares is required to be
delivered under the Securities Act, when the Company becomes
aware of the happening of any event as a result of which the
Prospectus (as then in effect) contains any untrue statement of a
material fact or omits to state a material fact necessary to make
the statements therein (in the case of the Prospectus or any
preliminary prospectus, in light of the circumstances under which
they were made) not misleading and, as promptly as practicable
thereafter, prepare and file with the Securities and Exchange
Commission an amendment or supplement to the Registration
Statement or the Prospectus so that, as thereafter delivered to
the purchasers of such Preferred Conversion Shares, such
Prospectus will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading. The Company shall make every
reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement at the
earliest possible moment. Notwithstanding anything in the
foregoing to the contrary, the Company may at any time upon
notice to each Registering Stockholder terminate the
effectiveness of the Registration Statement or upon notice to any
Registering Stockholder withdraw from the Registration Statement
the Preferred Conversion Shares of the Registering Stockholder
if, in the opinion of counsel for the Company, there shall have
arisen any legal impediment to the offer of the Preferred
Conversion Shares made by the Prospectus or if any legal action
or administrative proceeding shall have been instituted or
threatened or any other claim shall have been made relating to
the offer made by the Prospectus or against any of the parties
involved in the offer; provided that, promptly after
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those matters shall be resolved to the satisfaction of
counsel for the Company, pursuant to this Section 1 the
Company shall cause the registration of Preferred Conversion
Shares formerly covered by the Registration Statement that
were removed from registration by the action of the Company.
(4) If requested by any Registering Stockholder or an
underwriter, the Company shall as promptly as practicable
prepare and file with the Securities and Exchange Commission
an amendment or supplement to the Registration Statement or
the Prospectus containing such information as the
Registering Stockholder or the underwriter requests to be
included therein, including, without limitation, information
with respect to the Preferred Conversion Shares being sold
by the Registering Stockholder to the underwriter, the
purchase price being paid therefor by such underwriter and
other terms of the underwritten offering of the Preferred
Conversion Shares to be sold in such offering.
(5) Each Registering Stockholder shall report to the
Company distributions made by the Registering Stockholder of
Preferred Conversion Shares pursuant to the Prospectus and,
upon written notice by the Company that an event has
occurred as a result of which an amendment or supplement to
the Registration Statement or the Prospectus is required,
the Registering Stockholder shall cease further
distributions pursuant to the Prospectus until notified by
the Company of the effectiveness of the amendment or
supplement. Each Registering Stockholder shall distribute
Preferred Conversion Shares only in accordance with the
manner of distribution contemplated by the Prospectus with
respect to the Preferred Conversion Shares. Each
Registering Stockholder, by participating in a registration
pursuant to this Section 1, acknowledges that the remedies
of the Company at law for failure by the Registering
Stockholder to comply with the undertaking contained in this
Section 1(g) would be inadequate and that the failure would
not be adequately compensable in damages and would cause
irreparable harm to the Company, and therefore agrees that
undertakings made by the Registering Stockholder in this
Section 1(g) may be specifically enforced.
(6) The Company shall deliver to the Registering
Stockholders, their counsel and the underwriters, if any, of
Preferred Conversion Shares owned by Registering
Stockholders to be distributed pursuant to such
registration, the certificates, opinions of counsel and
comfort letters that are customarily delivered in connection
with underwritten public offerings.
(7) The Company shall cooperate with each Registering
Stockholder and each underwriter to facilitate the timely
preparation and delivery of certificates (not bearing any
restrictive legends) representing Preferred Conversion
Shares to be sold under the Registration Statement, and
enable such Preferred Conversion Shares to be in such
denominations and registered in such names as the
Registering Stockholder or the underwriter may request.
(8) The Company shall use its best efforts to comply
with all applicable rules and regulations of the Securities
and Exchange Commission, and make available to its
securityholders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve
months, but not more than eighteen months, beginning with
the first calendar month after the effective date of the
Registration Statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities
Act.
(9) The Company shall take all action required to
cause the Preferred Conversion Shares to be listed on each
national securities exchange on which the Common Stock shall
then be listed, if any, and to be qualified for inclusion in
the National/National Market System or the NASDAQ/SmallCap
Market, as the case may be, if the Common Stock is then so
qualified.
(h) For the purposes of this Section 1, the
following terms shall have the following meanings:
(1) "Registration Statement" means a registration
statement filed by the Company in accordance with Section
1(g)(2), including exhibits and financial statements
thereto, in the form in which it shall become effective and,
in the event of any amendment thereto after the effective
date of the registration statement, also means (from and
after the effectiveness of the amendment) the registration
statement as so amended;
(2) "Rule 144 Transaction" means a transaction
involving the sale of Preferred Conversion Shares to a
person other than an affiliate of the Company under
circumstances in which all of the applicable conditions of
Rule 144 or Rule 144A (or any similar provisions then in
force) under the Securities Act are satisfied; and
(3) "Prospectus" means the prospectus relating to the
Preferred Conversion Shares owned by the Registering
Stockholders included in a Registration Statement and, in
the event of any amendment or supplement to the prospectus
after the effective date of the Registration Statement, also
means (from and after the effectiveness of the amendment or
the filing with the Securities and Exchange Commission of
the supplement) the prospectus as so amended or supplemented
and, if a prospectus relating to the Preferred Conversion
Shares shall be filed with the Securities and Exchange
Commission pursuant to Rule 424 under the Securities Act,
such prospectus.
SECTION 2. EXPENSES.
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(a) The Company shall bear all expenses of the
following in connection with the registration of Preferred
Conversion Shares pursuant to Section 1, whether or not any
related Registration Statement shall become effective:
(1) preparing, printing and filing each Registration
Statement, Preliminary Prospectus, and Supplement thereto
Prospectus and each qualification or notice required to be
filed under federal and state securities laws or the rules
and regulations of the National Association of Securities
Dealers, Inc. (the "NASD") in connection with a registration
pursuant to Section 1;
(2) all fees and expenses of complying with federal
and state securities laws and the rules and regulations of
the NASD;
(3) furnishing to each Registering Stockholder one
executed copy of the related Registration Statement and the
number of copies of the related Prospectus that may be
required by Sections 1(g)(2) and 1(g)(3) to be so furnished,
together with a like number of copies of each amendment,
post-effective amendment or supplement;
(4) performing its obligations under Section 1(g)(6);
(5) printing and issuing share certificates, including
the transfer agent's fees, in connection with each
distribution so registered; and
(6) preparing audited financial statements required by
the Securities Act and the rules and regulations thereunder
to be included in the Registration Statement and preparing
audited financial statements for use in connection with the
registration other than audited financial statements
required by the Securities Act and the rules and regulations
thereunder;
(7) internal expenses of the Company (including,
without limitation, all salaries and expenses of its
officers and employees performing legal or accounting
duties);
(8) premiums or other expenses relating to liability
insurance required by the Company or underwriters of the
Registering Stockholders;
(9) fees and disbursements of underwriters of the
Registering Stockholders customarily paid by issuers or
sellers of securities;
(10) listing of the Preferred Conversion Shares on
national securities exchanges and inclusion of the Preferred
Conversion Shares on the NASDAQ/National Market System or
the NASDAQ/SmallCap Market, as the case may be; and
(11) fees and expenses of any special experts retained
by the Company in connection with the registration.
(b) The Registering Stockholders shall bear all
other expenses incident to the distribution by the respective
Registering Stockholders of their Preferred Conversion Shares in
connection with a registration pursuant to Section 1, including
without limitation the selling expenses of the Registering
Stockholders, commissions, underwriting discounts, insurance,
fees of counsel for the Registering Stockholders and their
underwriters.
SECTION 3. INDEMNIFICATION
---------------
(a) The Company shall indemnify and hold harmless
each Registering Stockholder participating in a registration
pursuant to Section 1, each underwriter of any of the Preferred
Conversion Shares owned by the Registering Stockholder to be
distributed pursuant to the registration, each partner in each
Registering Stockholder, the officers and directors of the
Registering Stockholder and the underwriter and each person, if
any, who controls the Registering Stockholder, each partner in
each Registering Stockholder or the underwriter within the
meaning of Section 15 (or any successor provision) of the
Securities Act, and their respective successors, against all
claims, losses, damages and liabilities to third parties (or
actions in respect thereof) arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact
contained in the Registration Statement or the Prospectus or
other document incident thereto or any omission (or alleged
omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, and shall reimburse each such Registering Stockholder
and each other person indemnified pursuant to this Section 3(a)
for any legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss,
damage, liability or action; provided that the Company shall not
--------
be liable in any case to the extent that any such claim,
claim, loss, damage or liability arises out of or is based on any
untrue statement or omission based upon written information
furnished to the Company by any Registering Stockholder or
underwriter for a Registered Stockholder specifically for use in
the Registration Statement or the Prospectus.
(b) Each Registering Stockholder, by
participating in a registration pursuant to Section 1, thereby
agrees to indemnify and to hold harmless the Company and its
officers and directors and each person, if any, who controls any
of them within the meaning of Section 15 (or any successor
provision) of the Securities Act, and their respective
successors, against all claims, losses, damages and liabilities
to third parties (or actions in respect thereof) arising out of
or based upon any untrue statement (or alleged untrue statement)
of a material fact contained in the Registration Statement or the
Prospectus or other document incident thereto or any omission (or
alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and shall reimburse the Company and each other person
indemnified pursuant to this Section 3(b) for any legal and any
other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage,
liability or action; provided that this Section 3(b) shall apply
--------
only if (and only to the extent that) the statement or omission
was made in reliance upon and in conformity with information
furnished to the Company in writing by the Registering Stockholder
specifically for use in the Registration Statement or the Prospectus.
(c) If any action or proceeding (including any
governmental investigation or inquiry) shall be brought, asserted
or threatened against any person indemnified under this Section
3, the indemnified person shall promptly notify the indemnifying
party in writing, and the indemnifying party shall assume the
defense of the action or proceeding, including the employment of
counsel satisfactory to the indemnified person and the payment of
all expenses. The indemnified person shall have the right to
employ separate counsel in any action or proceeding and to
participate in the defense of the action or proceeding, but the
fees and expenses of that counsel shall be at the expense of the
indemnified person unless
(1) the indemnifying party shall have agreed to pay
those fees and expenses; or
(2) the indemnifying party shall have failed to assume
the defense of the action or proceeding or shall have failed
to employ counsel reasonably satisfactory to the indemnified
person in the action or proceeding; or
(3) the named parties to the action or proceeding
(including any impleaded parties) include both the
indemnified person and the indemnifying party, and the
indemnified person shall have been advised by counsel that
there may be one or more legal defenses available to the
indemnified person that are different from or additional to
those available to the indemnifying party (in which case, if
the indemnified person notifies the indemnifying party in
writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party
shall not have the right to assume the defense of such
action or proceeding on behalf of the indemnified person; it
being understood, however, that the indemnifying party shall
not, in connection with any one action or proceeding or
separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm
of attorneys at any time for the indemnified person, which
firm shall be designated in writing by the indemnified
person).
The indemnifying party shall not be liable for any settlement of
any action or proceeding effected without its written consent,
but if settled with its written consent, or if there be a final
judgment for the plaintiff in any such action or proceeding, the
indemnifying party shall indemnify and hold harmless the
indemnified person from and against any loss or liability by
reason of the settlement or judgment.
(d) If the indemnification provided for in this
Section 3 is unavailable to an indemnified person (other than by
reason of exceptions provided in this Section 3) in respect of
losses, claims, damages, liabilities or expenses referred to in
this Section 3, then each applicable indemnifying party, in lieu
of indemnifying the indemnified person, shall contribute to the
amount paid or payable by the indemnified person as a result of
the losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified person
on the other in connection with the statements or omissions which
resulted in the losses, claims, damages, liabilities or expenses
as well as any other relevant equitable considerations. The
relative fault of the indemnifying party on the one hand and of
the indemnified person on the other shall be determined by
reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied
by the indemnifying party or by the indemnified person and by
these persons' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The parties agree that it would not be just and equitable if
contribution pursuant to this Section 3(d) were determined by pro
rata allocation or by any other method of allocation that does
not take into account the equitable considerations referred to in
the immediately preceding sentence. The amount paid or payable
by a person as a result of the losses, claims, damages,
liabilities and expenses shall be deemed to include any legal or
other fees or expenses reasonably incurred by the person in
connection with investigating or defending any action or claim.
Notwithstanding in the foregoing to the contrary, no Registering
Stockholder or underwriter shall be required to contribute any
amount in excess of the amount by which (1) in the case of any
Registering Stockholder, the net proceeds received by the
Registering Stockholder the sale of Registerable Shares or (2) in
the case of an underwriter, the total price at which the
Registerable Shares purchased by it and distributed to the public
were offered to the public exceeds, in any such case, the amount
of any damages that the Registering Stockholder or underwriter,
as the case may be, has otherwise been required to pay by reason
of any untrue or alleged untrue statement or omission. No person
guilty of fraudulent representation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation.
(e) Each Registering Stockholder participating in
a registration pursuant to Section 1 shall cause each underwriter
of any of the Preferred Conversion Shares owned by the
Registering Stockholder to be distributed pursuant to the
registration to agree in writing on terms reasonably satisfactory
to the Company to indemnify and to hold harmless the Company and
its officers and directors and each person, if any, who controls
any of them within the meaning of Section 15 (or any successors
provision) of the Securities Act, and their respective
successors, against all claims, losses, damages and liabilities
to third parties (or actions in respect thereof) arising out of
or based upon any untrue statement (or alleged untrue statement)
of a material fact contained in the Registration Statement or the
Prospectus or other document incident thereto or any omission (or
alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and to reimburse the Company and each other person
indemnified pursuant to the agreement for any legal or any other
expense reasonably incurred in connection with investigating or
defending any claim, loss, damage, liability or action; provided
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that the agreement shall apply only if (and only to the extent
that) the statement or omission was made in reliance upon and
in conformity with information furnished to the Company in
writing by the underwriter specifically for use in the Registration
Statement or the Prospectus.
SECTION 4. TRANSFER RESTRICTIONS.
---------------------
(a) The Stockholder acknowledges that the Company
issued and sold the Preferred Shares and will issue and sell the
Preferred Conversion Shares in reliance upon the exemption
afforded by Section 4(2) of the Securities Act for transactions
by an issuer not involving any public offering. The Stockholder
represents that (1) it has acquired the Preferred Shares and will
acquire the Preferred Conversion Shares for investment and
without any view toward distribution of any of the shares to any
other person, (2) it will not sell or otherwise dispose of the
Preferred Shares or Preferred Conversion Shares except in
compliance with the registration requirements or exemption
provisions under the Securities Act and (3) before any sale or
other disposition of any of the Preferred Shares or Preferred
Conversion Shares other than in a sale registered under the
Securities Act, or pursuant to Rule 144 under the Securities Act
unless the Company shall have been advised by counsel that the
sale does not meet the requirements of Rule 144 for the sale, it
will deliver to the Company an opinion of counsel, which counsel
shall be reasonably satisfactory to the Company, to the effect
that such registration is unnecessary.
(b) Except as provided to the contrary in this
Section 4, each certificate for Preferred Shares or Preferred
Conversion Shares, and any certificate issued in exchange
therefor or upon conversion, exchange or transfer thereof, shall
bear legends to the effect stated in clauses (1) and (2) below:
(1) "The shares represented by this certificate have
not been registered under the Securities Act of 1933 and may
not be offered, sold, transferred or otherwise disposed of
except in compliance with said Act."
(2) "The shares represented by this certificate are
subject to the restrictions contained in the Registration
Rights Agreement dated as of August 18, 1997, a copy of
which is on file at the office of the Secretary of the
Company."
(c) The legend stated in Section 4(b)(1) shall be
removed by delivery of one or more substitute certificates
without such legend if either (1) the related certificates are
issued in connection with a sale registered under the Securities
Act or pursuant to Rule 144 under the Securities Act or (2) the
holder thereof shall have delivered to the Company a copy of a
letter from the staff of the Securities and Exchange Commission
or an opinion of counsel, in form and substance reasonably
satisfactory to the Company, to the effect that the legend is not
required for purposes of the Securities Act.
(d) The legend stated in Section 4(b)(2) shall be
removed by delivery of one or more substitute certificates
without such legend at such time as the related securities are no
longer subject to this Agreement.
SECTION 5. FILINGS. The Company shall make all
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filings with the Securities and Exchange Commission required in
order to make available to the holders of Preferred Conversion
Shares the exemption from the registration requirements provided
by Rule 144 (or any successor regulation) under the Securities
Act.
SECTION 6. MERGER, CONSOLIDATION, EXCHANGE, ETC. In
------------------------------------
the event, directly or indirectly, (1) the Company shall merge
with and into, or consolidate with, or consummate a share
exchange pursuant to Subchapter IX of the Delaware General
Corporation Law (or successor provisions or statutes) with, any
other person, or (2) any person shall merge with and into, or
consolidate, the Company and the Company shall be the surviving
corporation of such merger or consolidation and, in connection
with such merger or consolidation, all or part of the Preferred
Conversion Shares shall be changed into or exchanged for stock or
other securities of any other person, then, in each such case,
proper provision shall be made so that such other person shall be
bound by the provisions of this Agreement and the term "Company"
shall thereafter be deemed to refer to such other person.
SECTION 7. NOTICES. All notices, requests and other
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communications to any party under this Agreement shall be in
writing. Communications may be made by telecopy or similar
writing. Each communication shall be given to the party at its
address stated on the signature pages of this Agreement or at any
other address as the party may specify for this purpose by notice
to the other party. Each communication shall be effective (1) if
given by telecopy, when the telecopy is transmitted to the proper
address and the receipt of the transmission is confirmed, (2) if
given by mail, 72 hours after the communication is deposited in
the mails properly addressed with first class postage prepaid or
(3) if given by any other means, when delivered to the proper
address and a written acknowledgement of delivery is received.
SECTION 8. NO WAIVERS; REMEDIES. No failure or delay
--------------------
by any party in exercising any right, power or privilege under
this Agreement shall operate as a waiver of the right, power or
privilege. A single or partial exercise of any right, power or
privilege shall not preclude any other or further exercise of the
right, power or privilege or the exercise of any other right,
power or privilege. The rights and remedies provided in this
Agreement shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 9. AMENDMENTS, ETC. No amendment,
---------------
modification, termination or waiver of any provision of this
Agreement, and no consent to any departure by a party to this
Agreement from any provision of this Agreement, shall be
effective unless it shall be in writing and signed and delivered
by the other party to this Agreement, and then it shall be
effective only in the specific instance and for the specific
purpose for which it is given.
SECTION 10. SUCCESSORS AND ASSIGNS.
----------------------
(a) The Stockholder may assign to any transferee
of Preferred Shares, or Preferred Conversion Shares its rights
and delegate its obligations under this Agreement; provided that
such transferee assignee shall accept those rights and assume
those obligations for the benefit of the Company in writing in
form reasonably satisfactory to the Company. Thereafter, without
any further action by any person, all references in this
Agreement to the "Stockholder", and all comparable references,
shall be deemed to be references to the transferee, and the
Stockholder shall be released from any obligation or liability
under this Agreement with respect to the Preferred Shares, or
Preferred Conversion Shares so transferred.
(b) The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties to this
Agreement and their respective successors and permitted assigns
pursuant to Section 10(a).
SECTION 11. GOVERNING LAW. This Agreement shall be
-------------
governed by and construed in accordance with the internal laws of
the State of New York.
SECTION 12. COUNTERPARTS; EFFECTIVENESS. This
---------------------------
Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if all
signatures were on the same instrument.
SECTION 13. SEVERABILITY OF PROVISIONS. Any provision
--------------------------
of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to
the extent of the prohibition or unenforceability without
invalidating the remaining provisions of this Agreement or
affecting the validity or enforceability of the provision in any
other jurisdiction.
Section 14. Headings and References. Section headings
-----------------------
in this Agreement are included for the convenience of reference
only and do not constitute a part of this Agreement for any other
purpose. References to parties and sections in this Agreement
are references to the parties to or the sections of this
Agreement, as the case may be, unless the context shall require
otherwise.
SECTION 15. ENTIRE AGREEMENT. Except as otherwise
----------------
specifically provided in the Purchase Agreement, the Transaction
Documents embody the entire agreement and understanding of the
respective parties and supersede all prior agreements or
understandings with respect to the subject matters of those
documents.
SECTION 16. SURVIVAL. Except as otherwise
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specifically provided in this Agreement, each representation,
warranty or covenant of each party to this Agreement contained in
or made pursuant to this Agreement shall survive the Closing and
remain in full force and effect, notwithstanding any
investigation or notice to the contrary or any waiver by any
other party of a related condition precedent to the performance
by the other party of an obligation under this Agreement.
SECTION 17. DISPUTE RESOLUTION (a) General
------------------ -------
Provisions. (i) Any dispute, controversy or claim arising out of
----------
or relating to this Agreement or any related agreement or the
validity, interpretation, breach or termination thereof (a
"Dispute"), including claims seeking redress or asserting rights
under applicable law, shall be resolved in accordance with the
procedures set forth herein. Until completion of such
procedures, no party may take any action not contemplated herein
to force a resolution of the Dispute by any judicial, arbitral or
similar process, except to the limited extent necessary to (A)
avoid expiration of a claim that might eventually be permitted
hereby or (B) obtain interim relief, including injunctive relief,
to preserve the status quo or prevent irreparable harm.
(ii) All communications between the parties or their
representatives in connection with the attempted resolution
of any Dispute shall be deemed to have been delivered in
furtherance of a Dispute settlement and shall be exempt from
discovery and production, and shall not be admissible in
evidence (whether as an admission or otherwise), in any
arbitral or other proceeding for the resolution of the
Dispute.
(iii) In connection with any Dispute, the parties
expressly waive and forego any right to trial by jury.
(b) Consideration by Senior Executives. If a Dispute
----------------------------------
cannot be resolved at an operational level, either party may, by
notice to the other, request referral to the President and CEO of
the General Electric Medical Services Division and the
[President] of the Company (or comparable officers of any
permitted successor or assignee) for their consideration. Such
request shall be accompanied by a written statement of the
Dispute and of each party's position. Within 30 days after the
request, the other party will either concur in such statement or
prepare its own, and such statement(s) will be delivered to the
officers named above. Such officers will meet in person or by
telephone within 30 days thereafter to seek a resolution. If no
resolution is reached by the expiration of 60 days from the
referral request, then either party may submit the Dispute to
resolution as further provided herein by notice to the other
party.
(c) Mediation. After completion of any prior
---------
procedures required hereby, either party may submit the Dispute
for resolution by mediation pursuant to the Center for Public
Resources Model Procedure for Mediation of Business Disputes as
then in effect. Mediation will continue for at least 60 days
unless the mediator chooses to withdraw sooner. At the request
of either party at commencement of the mediation, the mediator
will be asked to provide an evaluation of the Dispute and the
parties' relative positions.
(d) Arbitration. (i) After completion of any prior
-----------
procedures required hereby, either party may submit the Dispute
for resolution by arbitration pursuant to the Rules of the Center
for Public Resources ("CPR") for Non-Administered Arbitration of
Business Disputes as in effect at the time of the arbitration.
The parties consent to a single, consolidated arbitration for all
Disputes for which arbitration is permitted.
(ii) The neutral organization for purposes of the CPR
rules will be the CPR. The arbitral tribunal shall be
composed of one arbitrator selected by agreement of the
parties or, in the absence of such agreement within 60 days
after either party first proposes an arbitrator, by the CPR.
The arbitration shall be conducted in New York. Each party
shall be permitted to present its case, witnesses and
evidence, if any, in the presence of the other party. A
written transcript of the proceedings shall be made and
furnished to the parties. The arbitrators shall determine
the Dispute in accordance with the law of the State of New
York, without giving effect to any conflict of law rules or
other rules that might render such law inapplicable or
unavailable, and shall apply this Agreement according to its
terms.
(iii) The parties agree to be bound by any award or
order resulting from any arbitration conducted hereunder and
further agree that:
(1) any monetary award shall include pre-award interest,
to the extent appropriate, and shall be made and
payable in U.S. dollars through a bank selected by
the recipient of such award, free of any withholding
tax or other deduction, together with interest
thereon at the prime rate in effect at such bank on
the date of the award, from the date the award is
granted to the date it is paid in full.
(2) in the context of an attempt by either party to
enforce an arbitral award or order, any defenses
relating to the parties' capacity or the validity of
this Agreement or any related agreement under any law
are hereby waived; and
(3) judgement on any award or order resulting from an
arbitration conducted under this Section may be
entered and enforced in any court, in any country,
having jurisdiction thereof or having jurisdiction
over any of the parties or any of their assets.
(iv) Except as expressly permitted by this
Agreement, no party will commence or voluntarily participate
in any court action or proceeding concerning a Dispute,
except (A) for enforcement as contemplated by paragraph
(iii)(3) above, (B) to restrict or vacate an arbitral
decision based on the grounds specified under applicable law
and not waived in paragraph (iii)(2) above, or (C) for
interim relief as provided in paragraph (e) below. For
purposes of the foregoing or enforcement of any undisputed
obligation, the parties hereto submit to the non-exclusive
jurisdiction of the courts of the State of New York.
(v) In addition to the authority otherwise conferred
on the arbitral tribunal, the tribunal shall have the
authority to make such orders for interim relief, including
injunctive relief, as it may deem just and equitable. If
the tribunal shall not have been appointed, either party may
seek interim relief from a court having jurisdiction if the
award to which the applicant may be entitled may be rendered
ineffectual without such interim relief. Upon appointment
of the tribunal following any grant of interim relief by a
court, the tribunal may affirm or disaffirm such relief, and
the parties will seek modification or rescission of the
court action as necessary to accord with the tribunal's
decision.
(vi) The prevailing party in any arbitration
conducted under this Section shall be entitled to recover
from the other party (as part of the arbitral award or
order) its reasonable attorneys' fees and other costs of
arbitration.
SECTION 18. AFFILIATE. Nothing contained in this
---------
Agreement shall constitute the Stockholder an "affiliate" of any
of the Company and its Subsidiaries within the meaning of the
Securities Act or the Exchange Act.
____________________________
[Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, the parties have executed and
delivered this Registration Rights Agreement as of the date
first written above in New York, New York.
ADVANCED NMR SYSTEMS, INC.
By: /s/ Jack Nelson
--------------------------
Name: Jack Nelson
Title: Chairman and CEO
Address: Advanced NMR Systems, Inc.
46 Jonspin Road
Wilmington, Massachusetts 01887
Telecopy: (508) 658-3581
GENERAL ELECTRIC COMPANY
By: /s/ Jeffrey R. Immelt
-----------------------
Name: Jeffrey R. Immelt
Title: President of GE Medical
Systems
Address: General Electric Company
Medical Services Division
3000 North Grandview Blvd.
(P.O. Box 414)
Waukesha, Wisconsin 53188
Telecopy: (414) 544-3573
EXECUTION
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT dated as of August 18, 1997
between ADVANCED NMR SYSTEMS, INC., a Delaware corporation (the
"Company"), and GENERAL ELECTRIC COMPANY, a New York corporation
(the "Purchaser").
Terms not otherwise defined herein have the meanings
stated in the Purchase Agreement (as defined below).
RECITALS
A. The parties have entered into the Purchase
Agreement dated as of August 18, 1997 (the "Purchase Agreement"),
pursuant to which, among other things, on the date hereof the
Purchaser is purchasing the Preferred Shares and may, upon the
conversion of the Preferred Shares, hereafter acquire the
Preferred Conversion Shares. The Preferred Shares and the
Preferred Conversion Shares are collectively referred to as the
"Purchaser Shares".
B. The Company and the Purchaser desire to enter into
this Agreement to provide for certain restrictions on the
ownership, voting and disposition of the Purchaser Shares by the
Purchaser and certain other matters.
C. Pursuant to the Purchase Agreement, on the date
hereof the Company and the Purchaser are entering into a
Registration Rights Agreements pursuant to which the Company is
granting to the Purchaser and certain other persons certain
rights with respect to the registration under the Securities Act
of the disposition of the Preferred Conversion Shares.
AGREEMENT
The parties agree as follows:
ARTICLE I
RESTRICTIONS
SECTION 1.1 VOTING RESTRICTIONS.
-------------------
(a) In connection with each matter on or in
respect of which the holders of shares of the Common Stock and/or
the Preferred Stock, par value $.01 per share, of the Company, or
any series thereof, are required or permitted to vote or consent
or dissent in writing the Purchaser and its Affiliates shall
vote, or consent or dissent in writing with respect to, and cause
each of its Affiliates, to vote or consent or dissent in writing
with respect to, all Purchaser Shares in respect of the matters
subject to such vote or consent or dissent in writing, at the
election of the Board of Directors of the Company, either (1) as
directed by the affirmative vote or written consent of not less
than a majority of a quorum of the Board of Directors of the
Company (the "Board"), or of a duly designated constituted, and
empowered committee of the Board, which majority, in any case,
must include a majority of the Independent Directors, or (2) in
the same proportion that all other Equity Securities of the
Company entitled to vote thereon (other than Equity Securities of
the Company owned by the Purchaser or any of its Affiliates) are
voted or in the same proportion as written consent is provided by
the holders thereof with respect to such Equity Securities with
respect to such matter; it being understood that the Purchaser
and its Affiliates shall have no obligation under this Section
1.1(a) with respect to matters subject to vote or consent of
holders of Series B Convertible Redeemable Preferred Stock, par
value $.01 per share, of the Company prior to any conversion
thereof.
(b) Notwithstanding anything contained in this
Agreement, the Purchaser and its Affiliates shall not be
restricted in any manner whatsoever from voting, or consenting
with respect to, Equity Securities of the Company owned by any of
them that are not Purchaser Shares with respect to the matter
subject to such vote or consent.
SECTION 1.2 TRANSFER RESTRICTIONS.
---------------------
(a) Except in connection with an Offer (as defined in
Section 5 of the Company's Certificate of Designations set forth
as Exhibit A to the Purchase Agreement ("Certificate")) with
respect to a Change of Control (as defined in the Certificate)
made by or to the Company, or a Change of Control shall have
occurred or been agreed to by the Company, the Purchaser shall
not, and shall not cause or permit its Affiliates to, transfer
the record or beneficial ownership of any or all of the Purchaser
Shares to any person for a period of one year following the date
of this Agreement except in one or more of the following
transactions:
(i) each transfer pursuant to a public offering
of shares of Common Stock pursuant to a registration statement
effective under the Securities Act; and
(ii) each transfer to any person or Group that
represents in writing to the Purchaser that, after giving effect
to such transfer and to each Related Transaction, it will
beneficially own less than 5% of the sum of the total number of
shares of Common Stock that are then issued and outstanding plus
the total number of shares of Common Stock that are then subject
to acquisition upon the conversion, exercise or exchange of
Equity Securities of the Company (whether or not the conversion,
exercise or exchange thereof is subject to any condition or
restriction); and
(iii) each transfer to any person or Group
that (1) represents in writing to the Purchaser that, after
giving effect to such transfer and to each Related Transaction,
it will beneficially own more than 5% and less than 10% of the
sum of the total number of shares of Common Stock that are then
issued and outstanding plus the total number of shares of Common
Stock that are then subject to acquisition upon the conversion,
exercise or exchange of Equity Securities of the Company (whether
or not the conversion, exercise or exchange thereof is subject to
any condition or restriction) and (2) assumes by written
instrument satisfactory to each of the Company and the Purchaser
the obligations and restrictions contained in this Section 1.2 to
which such Purchaser Shares were subject immediately prior to
such transfer; and
(iv) each transfer approved by the Board of
Directors of the Company, which approval shall not be
unreasonably withheld, to any person or Group that represents in
writing to Purchaser that, after giving effect to such transfer
and to each Related Transaction, it will beneficially own more
than 9.9% and less than 15% of the sum of the total number of
shares of Common Stock that are then issued and outstanding plus
the total number of shares of Common Stock that are then subject
to acquisition upon the conversion, exercise or exchange of
Equity Securities of the Company (whether or not the conversion,
exercise or exchange thereof is subject to any condition or
restriction); and
(v) each transfer approved by the Board of
Directors of the Company; and
(vi) each transfer in a Business Combination
Transaction approved by the Board of Directors of the Company or
by the majority of Common Stock voted with respect to the
transaction (in which the Purchaser Shares are voted in
accordance with the restrictions contained in Section 1.1, if
applicable); and
(vii) each transfer pursuant to a tender or
exchange offer for outstanding shares of Common Stock by any
person other than Purchaser, any of its Affiliates or any Group
including the Purchaser or any of its Affiliates (1) which the
Board of Directors of the Company does not oppose, or (2) which
the Board of Directors of the Company opposes if after completion
of such tender or exchange offer securities not tendered or
exchanged may be treated less favorably than securities tendered,
provided that no tender, indication or arrangement to tender
--------
shares of Common Stock may be made in the case of the preceding
clause (2) until forty-eight hours prior to the expiration of any
time after which securities tendered may be treated less favorably
than securities tendered prior thereto; and
(viii) each bona fide pledge of or the granting
of a security interest or any other lien in the Purchaser Shares
to secure a bona fide loan, guarantee or other financial support,
each foreclosure of such pledge or security interest or any other
lien that may be placed involuntarily upon any Purchaser Shares,
and each subsequent sale or other disposition of such Purchaser
Shares by the lender (or other secured party or lien creditor) or
its agent, provided that, with respect to each such bona fide loan,
--------
guarantee or other financial support, (x) such lender is not a
member of a Group with respect to Common Stock which Group
includes the Purchaser or Affiliates of the Purchaser and (y) the
Purchaser shall retain the right to vote, or consent with respect
to, the Purchaser Shares in accordance with Section 1.1(a) so
long as no default shall have occurred and be continuing under
such bona fide loan, guarantee or other financial support; and
(ix) each transfer of Purchaser Shares to any
Affiliate of the Purchaser, including GE Capital Corporation, GE
Investment Management, Employers Reinsurance Corporation or any
other financial services affiliate of the Purchaser or a bona
fide pledge of or the granting of a security interest or any
other Lien in such Purchaser Shares to an Affiliate of the
Purchaser, provided in each case that such Affiliate or GE Capital
--------
Corporation, GE Investment Management or Employers Reinsurance
Corporation or GEIC or other financial services affiliate shall
expressly assume by written instrument satisfactory to the
Company and the Purchaser all of the obligations and restrictions
contained in this Stockholder Agreement to which such Purchaser
Shares were subject immediately before such transfer; and
(x) each transfer of Purchaser Shares to a
charitable organization (as defined in the Investment Company Act
of 1940), provided in each case that such charitable organization
--------
shall expressly assume by written instrument reasonably
satisfactory to Company and Purchaser all of the obligations and
restrictions contained in this Stockholder Agreement to which
such Purchaser Shares were subject immediately before such
transfer; and
(xi) a transfer upon the liquidation or
dissolution of the Company or a transfer that is effected by
operation of law; and
(xii) a transfer pursuant to and in
compliance with Rule 144 of the Securities Act.
(b) Following the first anniversary of the date of
this Agreement, except in connection with an Offer with respect
to a Change of Control made to or by the Company, the Purchaser
shall not, and shall not cause or permit its Affiliates to
transfer the beneficial or record ownership of any or all of the
Purchaser Shares to any person except in a transaction described
in Section 1.2 (a) or upon complying with the following;
(i) The Purchaser or its Affiliate shall deliver to
the Company written notice (the "Offer Notice") of its desire to
sell or transfer the beneficial or record ownership of some or
all of the Purchaser Shares. The Offer Notice shall specify the
number of Purchaser Shares the Purchaser desires to sell or
transfer (the "Offered Shares");
(ii) The Company shall have the right (the "Right of
First Offer") to offer, or to designate a party of its choice to
offer, in writing to purchase not less than all of the Offered
Shares for a consideration per share in cash determined by the
Company (a "Transaction Offer"), which written Transaction Offer
shall be delivered to Purchaser or its Affiliate within ninety
(90) days of receipt of the Offer Notice ("Right of First Offer
Period"), shall include the consideration per Purchaser Share to
be paid for the Offered Shares, and all other material terms and
conditions of the Transaction Offer;
(iii) In the event the Purchaser accepts the
Transaction Offer, the closing of any such purchase of Offered
Shares by the Company or its designee shall take place no later
than ten (10) days after the expiration of the Right of First
Offer Period or twenty (20) days after acceptance (whichever is
earlier), at the place and on the date specified by the
Purchaser; and
(iv) The Purchaser shall have the right to reject the
Transaction Offer and sell or transfer, within ninety (90) days
of expiration of the Right of First Offer Period, the Offered
Shares to a third party or parties (a "Third Party Purchaser") at
a price no less than and on other terms no more beneficial in all
material respects to such Third Party Purchaser than those
contained in the Transaction Offer. If such a sale or transfer
to a Third Party Purchaser is not so consummated within ninety
(90) days of the expiration of the Right of First Offer Period,
any sale or transfer of Purchaser Shares shall be deemed to be in
violation of the provisions of this Agreement unless the Company
is once again afforded the Right of First Offer provided for
herein or such Purchaser Shares are sold or transferred in a
transaction described in Section 1.2(a).
SECTION 1.3 PURCHASE RESTRICTIONS.
---------------------
(a) The Purchaser shall not, and shall not cause
or permit its Affiliates or any Group including the Purchaser or
any of its Affiliates to, acquire shares of Common Stock other
than the Preferred Conversion Shares, which when combined with
shares of Common Stock then owned beneficially or of record by
the Purchaser and its Affiliates or any such Group, after giving
effect to the acquisition and each Related Transaction, would
result in the Purchaser, its Affiliates, or any such Group
beneficially owning 15% or more of the shares of Common Stock
then issued and outstanding, except that such restriction shall
not be applicable to each of the following acquisitions:
(1) each acquisition following a Business Combination
Transaction that (A) shall have been approved by the Board
of Directors of the Company, including a majority of
Independent Directors, or by two-thirds of the shares of
Common Stock voted with respect to the transaction (in which
the Purchaser Shares are voted in accordance with the
restrictions contained in Section 1.1, if applicable) and
(B) would, if completed on the terms so approved, result in
the beneficial ownership by any person or Group (other than
and not including the Purchaser or an Affiliate of, or any
person acting in concert with the Purchaser) of 30% or more
of the shares of Common Stock then issued and outstanding
or, if all or any part of the shares of Common Stock shall
be changed into or exchanged for shares of any class of
capital stock or ownership interests of any other person
(which class has the right to vote generally for the
election of directors), 30% or more of the shares of such
class of capital stock or such ownership interests; and
(2) each acquisition following the commencement of a
tender or exchange offer made by any person or Group (other
than and not including the Purchaser or an Affiliate of, or
any person acting in concert with, the Purchaser) to acquire
beneficial ownership of 50% or more of the shares of Common
Stock then issued and outstanding; and
(3) each acquisition after any person or Group (other
than and not including the Purchaser or an Affiliate of the
Purchaser) shall beneficially own 30% or more of the shares
of Common Stock then issued and outstanding;
(4) each acquisition approved by the Board of
Directors of the Company;
(5) any acquisition pursuant to the Certificate of
Designations pertaining to the Preferred Shares, or any
exercise of rights or receipt of a distribution as a holder
of Purchaser Shares, and
(6) any acquisition by any financial services
affiliate of the Purchaser in the ordinary course of its
business, including GE Capital Corporation, GE Investment
Management, Employers Reinsurance Corporation and their
subsidiaries.
(b) The Purchaser and its Affiliates shall have
no obligation under this Agreement or otherwise to transfer
shares of Common Stock, which, when such shares were acquired,
after giving effect to such transaction and any Related
Transaction, did not, when combined with other shares of Common
Stock then owned by the Purchaser and its Affiliates and any
Group including the Purchaser or any of its Affiliates,
constitute 15% or more of the shares of Common Stock then issued
and outstanding. Without limiting the generality of the
foregoing, the Purchaser and its Affiliates shall not be required
to transfer any shares of Common Stock if the aggregate
percentage ownership of the Purchaser and its Affiliates is
increased as a result of any action taken by the Company or its
Affiliates including, without limitation, by reverse stock split,
reclassification, recapitalization, reorganization, combination,
redemption, repurchase or cancellation of shares or Business
Combination Transaction.
SECTION 1.4 OTHER RESTRICTIONS. The Purchaser shall
------------------
not, and shall not cause or permit its Affiliates to, enter into
any transaction (including, without limitation, the purchase,
sale or exchange of property or the rendering of any service)
with the Company or any of its Subsidiaries that shall not have
been approved by the Board of Directors of the Company, except in
the ordinary course of business.
SECTION 1.5 TERMINATION. The provisions of this
-----------
Article I shall terminate on the date that is the earlier of
(a) the date that is the tenth anniversary of the date hereof and
(b) such time that the Purchaser, any Affiliate of the Purchaser
or any Group in which it is a member beneficially owns, and
continues to beneficially own, less than 5% of the shares of
Common Stock then issued and outstanding plus the sum of the
shares of Common Stock that are then subject to acquisition upon
conversion, exercise or exchange of Equity Securities of the
Company, it being understood that if the Purchaser at any time
thereafter, and before such tenth anniversary, beneficially owns
5% or more of the shares of Common Stock then issued and
outstanding plus the sum of the shares of Common Stock that are
subject to acquisition upon conversion, exercise or exchange of
Equity Securities of the Company, the provisions of Article I
shall be effective and in full force again as if no termination
had occurred.
SECTION 1.6 LEGENDS.
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(a) Except as provided to the contrary in this
Section 1.6, each certificate for Purchaser Shares, and any
certificate issued in exchange therefor or upon conversion,
exchange or transfer thereof, shall bear a legend to the
following effect:
"The shares represented by this
certificate are subject to the restrictions
contained in the Stockholders Agreement dated
as of August 18, 1997, a copy of which is on
file at the office of the Secretary of the
Company."
(b) At the written request and expense of the
Purchaser, the legend stated in Section 1.6(a) shall be removed
from certificates for Purchaser Shares by delivery of one or more
substitute certificates without such legend upon the earlier of
(1) the transfer of the related securities in one or more of the
transactions specified in clauses (a)(i), (a)(ii), (a)(iv),
(a)(v), (a)(vi), (a)(vii), (a)(xi) or (a)(xii) of Section 1.2,
and (2) the termination of the provisions of Article I pursuant
to Section 1.5(a);
SECTION 1.7 DEFINITIONS. The following terms have
-----------
the following meanings:
"AFFILIATE" of a person means any other persons that
directly or indirectly controls, is controlled by or is under
common control with, the person or any of its Subsidiaries. The
term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting
securities, by contract or otherwise.
"BENEFICIAL OWNERSHIP" has the meaning assigned to the
term "beneficial ownership" in Section 13(d) of the Exchange Act.
The term "beneficially own" used as verb has a correlative
meaning. For the purpose of determining the beneficial ownership
by any person of shares of capital stock of an issuer, such
person shall be deemed to beneficially own that number of shares
subject to acquisition upon the conversion, exercise or exchange
by such person and its Affiliates of Equity Securities of such
issuer, whether or not the conversion, exercise or exchange
thereof is then subject to any condition (including, without
limitation, the passage of time or the occurrence of any event)
or restriction.
"BUSINESS COMBINATION TRANSACTION" means a merger,
consolidation or similar transaction.
"EQUITY SECURITIES" of a person means the capital stock
of the person and all other securities convertible into or
exchangeable or exercisable for any shares of its capital stock,
all rights to subscribe for or to purchase, all options for the
purchase of, and all calls, commitments or claims of any
character relating to, any shares of its capital stock and any
securities convertible into or exchangeable or exercisable for
any of the foregoing.
"EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended, and the related rules and regulations
thereunder.
"GROUP" has the meaning given such term in Section
13(d)(3) of the Exchange Act.
"INDEPENDENT DIRECTORS" means, as of any date of
determination, directors of the Company who are not then and have
not been at any time during the preceding three years a director,
officer or employee of a beneficial owner of 5% or more of the
shares of Common Stock then issued and outstanding or any
Affiliate of such beneficial owner.
"RELATED TRANSACTION" means, with respect to any
acquisition or disposition, or deemed acquisition or disposition,
of any securities, a transaction that (1) has been disclosed in a
document filed with the Securities and Exchange Commission with
respect to the Company (that is then available for inspection at
the offices of the Securities and Exchange Commission) or has
been otherwise publicly announced and (2) by its terms is
effective upon, or immediately before or after giving effect to,
the occurrence of such acquisition or disposition or deemed
acquisition or disposition.
"SECURITIES ACT" means the Securities Act of 1933, as
amended, and the related rules and regulations thereunder.
"SUBSIDIARY" of a person means (1) any person of which
securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other
persons performing similar functions are at the time directly or
indirectly owned by the person or (2) a partnership in which the
person or a Subsidiary of the person is, at the date of
determination, a general or limited partner, but only if the
person or its Subsidiary is entitled to receive more than fifty
percent of the assets of such partnership upon its dissolution.
"TRANSFER" means a sale, an assignment, a lease, a
license, a grant, a transfer or other disposition of an asset or
any interest of any nature in an asset. The term "transfer" used
as a verb has a correlative meaning.
ARTICLE II
MISCELLANEOUS
SECTION 2.1 NOTICES. All notices, requests and
-------
other communications to any party or under this Agreement shall
be in writing. Communications may be made by telecopy or similar
writing. Each communication shall be given to such party at its
address stated on the signature pages of this Agreement or at any
other address as such party may from time to time specify in
writing to all other parties. Each communication shall be
effective (1) if given by telecopy, when the telecopy is
transmitted to the proper address and the receipt of the
transmission is confirmed, (2) if given by mail, 72 hours after
the communication is deposited in the mails properly addressed
with first class postage prepaid or (3) if given by any other
means, when delivered to the proper address and a written
acknowledgement of delivery is received.
SECTION 2.2 NO WAIVERS; REMEDIES; SPECIFIC
------------------------------
PERFORMANCE.
-----------
(a) No failure or delay by any party in
exercising any right, power or privilege under this Agreement
shall operate as a waiver of such right, power or privilege. A
single or partial exercise of any right, power or privilege shall
not preclude any other or further exercise of such right, power
or privilege or the exercise of any other right, power or
privilege. The rights and remedies provided in this Agreement
shall be cumulative and not exclusive of any rights or remedies
available at law or in equity.
(b) In view of the uniqueness of the agreements
contained in this Agreement and the transactions contemplated
hereby and the fact that each party would not have an adequate
remedy at law for money damages in the event that any obligations
under this Agreement is not performed in accordance with its
terms, each party therefore agrees that the other parties to this
Agreement shall be entitled to specific enforcement of the terms
of this Agreement in addition to any other remedy to which any of
them may be entitled, at law or in equity.
SECTION 2.3 AMENDMENTS, ETC. No amendment,
---------------
modification, termination, or waiver of any provision of this
Agreement, and no consent to any departure by a party from any
provision of this Agreement, shall be effective unless it shall
be in writing and signed and delivered by the other parties to
this Agreement, and then it shall be effective only in the
specific instance and for the specific purpose for which it is
given.
SECTION 2.4 SUCCESSORS AND ASSIGNS.
----------------------
(a) Except as expressly contemplated by this
Agreement, no party may assign its rights or delegate its
obligations under this Agreement without the prior written
consent of the other parties; provided, that the Purchaser may
--------
assign its rights and delegate its responsibilities under this
Agreement pursuant to Sections 1.2(a)(iii), 1.2(a)(ix) or
1.2(a)(x), as the case may be, without the consent of the
Company. Any assignment or delegation in contravention of this
Section 2.4 shall be void ab initio and shall not relieve the
-- ------
delegating party of any of its obligations under this Agreement.
(b) The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties to this
Agreement and their respective permitted successors and assigns.
(c) Notwithstanding anything herein to the
contrary, each transferee of Purchaser Shares transferred in one
or more of the transactions specified in clauses (a)(i), (a)(ii),
(a)(iv) through (a)(viii) and (a)(xi) through (a)(xii),
inclusive, of Section 1.2 shall acquire such Purchaser Shares
free and clear of any restrictions or obligations contained in
this Agreement.
SECTION 2.5 GOVERNING LAW. This Agreement shall be
-------------
governed by and construed in accordance with the internal laws of
the State of Delaware.
SECTION 2.6 COUNTERPARTS; EFFECTIVENESS. This
---------------------------
Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if all
signatures were on the same instrument.
SECTION 2.7 SEVERABILITY OF PROVISIONS. Any
--------------------------
provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of the prohibition or unenforceability
without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of the provision in
any other jurisdiction.
SECTION 2.8 HEADINGS AND REFERENCES. Article and
-----------------------
section headings in this Agreement are included for the
convenience of reference only and do not constitute a part of
this Agreement for any other purpose. References to parties and
articles and sections in this Agreement are references to the
parties to or the articles and sections of this Agreement, as the
case may be, unless the context shall require otherwise.
SECTION 2.9 ENTIRE AGREEMENT. Except as otherwise
----------------
specifically provided in the Purchase Agreement, this Agreement
embodies the entire agreement and understanding of the parties
and supersedes all prior agreements or understandings and all
contemporaneous agreements or understandings, with respect to the
subject matters of this Agreement.
SECTION 2.10 SURVIVAL. Except as otherwise
--------
specifically provided in this Agreement, each representation,
warranty or covenant of each party contained in this Agreement
shall remain in full force and effect, notwithstanding any
investigation or notice to the contrary or any waiver by any
other party of a related condition precedent to the performance
by such other party of an obligation under this Agreement.
SECTION 2.11 DISPUTE RESOLUTION. (a) General
------------------
Provisions. (i) Any dispute, controversy or claim arising out of
or relating to this Agreement or any related agreement or the
validity, interpretation, breach or termination thereof (a
"Dispute"), including claims seeking redress or asserting rights
under applicable law, shall be resolved in accordance with the
procedures set forth herein. Until completion of such
procedures, no party may take any action not contemplated herein
to force a resolution of the Dispute by any judicial, arbitral or
similar process, except to the limited extent necessary to (1)
avoid expiration of a claim that might eventually be permitted
hereby or (2) obtain interim relief, including injunctive relief,
to preserve the status quo or prevent irreparable harm.
(ii) All communications between the parties or their
representatives in connection with the attempted resolution
of any Dispute shall be deemed to have been delivered in
furtherance of a Dispute settlement and shall be exempt from
discovery and production, and shall not be admissible in
evidence (whether as an admission or otherwise), in any
arbitral or other proceeding for the resolution of the
Dispute.
(iii) In connection with any Dispute, the parties
expressly waive and forego any right to trial by jury.
(b) Consideration by Senior Executives. If a Dispute
----------------------------------
cannot be resolved at an operational level, either party may, by
notice to the other, request referral to the President and CEO of
the General Electric Medical Services Division and the Chairman
of the Company (or comparable officers of any permitted successor
or assignee) for their consideration. Such request shall be
accompanied by a written statement of the Dispute and of each
party's position. Within 30 days after the request, the other
party will either concur in such statement or prepare its own,
and such statement(s) will be delivered to the officers named
above. Such officers will meet in person or by telephone within
30 days thereafter to seek a resolution. If no resolution is
reached by the expiration of 60 days from the referral request,
then either party may submit the Dispute to resolution as further
provided herein by notice to the other party.
(c) Mediation. After completion of any prior procedures
---------
required hereby, either party may submit the Dispute for
resolution by mediation pursuant to the Center for Public
Resources Model Procedure for Mediation of Business Disputes as
then in effect. Mediation will continue for at least 60 days
unless the mediator chooses to withdraw sooner. At the request
of either party at commencement of the mediation, the mediator
will be asked to provide an evaluation of the Dispute and the
parties' relative positions.
(d) Arbitration. (i) After completion of any prior
-----------
procedures required hereby, either party may submit the Dispute
for resolution by arbitration pursuant to the Rules of the Center
for Public Resources ("CPR") for Non-Administered Arbitration of
Business Disputes as in effect at the time of the arbitration.
The parties consent to a single, consolidated arbitration for all
Disputes for which arbitration is permitted.
(ii) The neutral organization for purposes of the
CPR rules will be the CPR. The arbitral tribunal shall be
composed of one arbitrator selected by agreement of the
parties or, in the absence of such agreement within 60 days
after either party first proposes an arbitrator, by the CPR.
The arbitration shall be conducted in the City of New York.
Each party shall be permitted to present its case, witnesses
and evidence, if any, in the presence of the other party. A
written transcript of the proceedings shall be made and
furnished to the parties. The arbitrators shall determine
the Dispute in accordance with the law of the State of
Delaware, without giving effect to any conflict of law rules
or other rules that might render such law inapplicable or
unavailable, and shall apply this Agreement according to its
terms.
(iii) The parties agree to be bound by any award
or order resulting from any arbitration conducted hereunder
and further agree that:
(1) any monetary award shall include pre-award interest,
to the extent appropriate, and shall be made and
payable in U.S. dollars through a bank selected by
the recipient of such award, free of any withholding
tax or other deduction, together with interest
thereon at the prime rate in effect at such bank on
the date of the award, from the date the award is
granted to the date it is paid in full.
(2) in the context of an attempt by either party to
enforce an arbitral award or order, any defenses
relating to the parties' capacity or the validity of
this Agreement or the Transaction Documents under any
law are hereby waived; and
(3) judgement on any award or order resulting from an
arbitration conducted under this Section may be
entered and enforced in any court, in any country,
having jurisdiction thereof or having jurisdiction
over any of the parties or any of their assets.
(iv) Except as expressly permitted by this
Agreement, no party will commence or voluntarily participate
in any court action or proceeding concerning a Dispute,
except (A) for enforcement as contemplated by paragraph
(iii)(3) above, (B) to restrict or vacate an arbitral
decision based on the grounds specified under applicable law
and not waived in paragraph (iii)(2) above, or (C) for
interim relief as provided in paragraph (v) below. For
purposes of the foregoing or enforcement of any undisputed
obligation, the parties hereto submit to the non-exclusive
jurisdiction of the courts of the State of New York.
(v) In addition to the authority otherwise
conferred on the arbitral tribunal, the tribunal shall have
the authority to make such orders for interim relief,
including injunctive relief, as it may deem just and
equitable. If the tribunal shall not have been appointed,
either party may seek interim relief from a court having
jurisdiction if the award to which the applicant may be
entitled may be rendered ineffectual without such interim
relief. Upon appointment of the tribunal following any
grant of interim relief by a court, the tribunal may affirm
or disaffirm such relief, and the parties will seek
modification or rescission of the court action as necessary
to accord with the tribunal's decision.
(vi) The prevailing party in any arbitration
conducted under this Section shall be entitled to recover
from the other party (as part of the arbitral award or
order) its reasonable attorneys' fees and other costs of
arbitration.
SECTION 2.12 AFFILIATE. Nothing contained in this
---------
Agreement shall cause the Purchaser or any other party to be or
be deemed an "affiliate" of any of the Company and its
Subsidiaries within the Securities Act or the Exchange Act.
____________________________
[Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed
and delivered this Agreement as of the date first written above.
ADVANCED NMR SYSTEMS, INC.
By: /s/ Jack Nelson
---------------------------
Name: Jack Nelson
Title: Chairman and CEO
Address: Advanced NMR Systems, Inc.
46 Jonspin Road
Wilmington, Massachusetts 01887
Telecopy: (508) 658-3581
GENERAL ELECTRIC COMPANY
By: /s/ Jeffrey R. Immelt
--------------------------
Name: Jeffrey R. Immelt
Title: President of GE Medical
Systems
Address: General Electric Company
Medical Services Division
3000 North Grandview Blvd.
(P.O. Box 414)
Waukesha, Wisconsin 53188
Telecopy: (414) 544-3573
EXECUTION
SETTLEMENT AND RELEASE AGREEMENT
SETTLEMENT AND RELEASE AGREEMENT dated as of August 18,
1997 between ADVANCED NMR, INC., a Delaware corporation (the
"Company"), and GENERAL ELECTRIC COMPANY, a New York corporation
(the "Purchaser").
Terms not otherwise defined in this Agreement have the
meanings stated in the Purchase Agreement (as defined below).
RECITALS
A. The Purchaser has filed a Demand for Arbitration
dated May 15, 1997 (the "Demand for Arbitration") with the American
Arbitration Association at its office in New York, New York with
respect to disagreements concerning certain matters (collectively,
the "Disputed Matters") subject to or arising out of a development
agreement dated December 3, 1987, as amended and restated as of
November 30, 1989 (the "1989 Agreement"), Purchase Agreement (No.
800206) dated as of March 5, 1993, Purchase Agreement (No. 800247)
dated as of July 29, 1994, as amended as of December 5, 1995, a
letter agreement dated July 13, 1994, and a letter agreement dated
June 13, 1996, and a Master Leaseline Agreement, number 2002,
contract number 8506792-001, dated as of July 27, 1993, in each
case between the Company and the Purchaser, and amendments,
waivers, modifications, purchase orders, purchase order releases,
documents transmitted by computer access, agreements and other
documents related to the foregoing or otherwise entered into or
delivered by one or both parties in the course of the dealings
between the parties (collectively, the "ANMR/GE Agreements").
B. The Purchaser has commenced a litigation styled
General Electric Co. vs. Advanced NMR Systems, Inc., in the United
States District Court in and for the Southern District of New York,
Civ. No. 97-CIV-3560 (JSR) (the "Litigation"), to compel
arbitration with respect to the Disputed Matters.
C. The Company and the Purchaser have entered into the
Purchase Agreement dated as of August 18, 1997 (the "Purchase
Agreement") and are entering into this Agreement, the Registration
Rights Agreement and the Stockholders Agreement, each dated as of
the date hereof, and each of the Company and the Purchaser is
executing and delivering certain other instruments and documents in
connection with the conclusion of one or more of the transactions
contemplated hereby and thereby (collectively, the "Transaction
Documents").
D. The Company and the Purchaser desire to enter into
this Agreement to provide for a mutual and general release (except
with respect to the Transaction Documents), the withdrawal of the
Demand for Arbitration, the termination of the Litigation and the
termination of the ANMR/GE Agreements.
AGREEMENT
The parties agree as follows:
SECTION 1. RELEASE BY COMPANY PARTIES. Effective on
--------------------------
and as of the date hereof, the Company, for itself and its
Subsidiaries (collectively, the "Company Parties"), hereby releases
and forever discharges the Purchaser and its Subsidiaries, and each
past, present or future principal, partner, stockholder, officer,
director, nominee, beneficiary, attorney-in-fact, agent, employee
or other representative of the foregoing (collectively, the
"Purchaser Released Parties") from any and all demands, damages,
debts, costs, expenses, liabilities, contracts, agreements,
obligations, accounts, defenses, suits, losses, claims (including,
without limitation, warranty claims and claims for
indemnification), actions, causes of action or claims for relief of
any kind or character whatsoever, whether now known or unknown,
suspected or unsuspected, in contract or in tort, joint or several,
at law or in equity, whether heretofore or hereafter accruing
(collectively, "Claims"), which any of the Company Parties or their
respective heirs, executors, legal representatives, administrators,
successors and assigns, ever had or now have or may in the future
have against the Purchaser Released Parties, jointly or severally,
at any time prior to and including the date hereof, for or by
reason of any matter, cause, or thing done, admitted to, or
suffered to be done by the Purchaser Released Parties, jointly or
severally, at any time prior to the date hereof, including, without
limitation, Claims with respect to any of the Disputed Matters and
the ANMR/GE Agreements (collectively, the "Purchaser Released
Claims"); provided that the Purchaser Released Claims shall not
--------
include Claims with respect to any of the rights of the Company
Parties and the duties and obligations of the Purchaser Released
Parties owed to the Company Parties pursuant to the Transaction
Documents. The foregoing release shall include, without limitation,
to the extent allowed by applicable law, such claims or defenses
as fraud, mistake (mutual or unilateral), duress, overreaching,
failure to disclose, interference with business management or
relationship, tortious interference with corporate or partnership
governance or prospective business advantage or contract, breach of
contract, injury to any person or entity of whatever nature, libel
or slander (without admitting or implying that any such claim exists
or has validity).
SECTION 2. RELEASE BY PURCHASER PARTIES. Effective on
----------------------------
and as of the date hereof, the Purchaser, for itself and its
Subsidiaries (collectively, the "Purchaser Parties"), hereby
releases and forever discharges each of the Company Parties and
each past, present or future principal, partner, stockholder,
officer, director, nominee, beneficiary, attorney-in-fact, agent,
employee or other representative of the Company Parties
(collectively, the "Company Released Parties") from any and all
Claims which any of Purchaser Parties or their respective
affiliates, heirs, executors, legal representatives,
administrators, successors and assigns, ever had or now have or may
in the future have against the Company Released Parties, jointly or
severally, at any time prior to and including the date hereof, for
or by reason of any matter, cause, or thing done, admitted to, or
suffered to be done by the Company Parties, jointly or severally,
at any time prior to the date hereof, including, without
limitation, Claims with respect to any of the Disputed Matters and
the ANMR/GE Agreements (collectively, the "Company Released
Claims"); provided that the Released Claims shall not include Claims
--------
with respect to any of the rights of the Purchaser Parties and the
duties and obligations of the Company Released Parties owed to
the Purchaser Parties pursuant to the Transaction Documents. The
foregoing release shall include, without limitation, to the
extent allowed by applicable law, such claims or defenses as fraud,
mistake (mutual or unilateral), duress, overreaching, failure to
disclose, interference with business management or relationship,
tortious interference with corporate or partnership governance or
prospective business advantage or contract, breach of contract,
injury to any person or entity of whatever nature, libel or slander
(without admitting or implying that any such claim exists or has
validity).
SECTION 3. DISPUTED MATTERS; ANMR/GE AGREEMENTS.
------------------------------------
(a) The Purchaser is delivering to the Company a
Withdrawal of Demand for Arbitration with respect to the Demand for
Arbitration and, promptly after the execution and delivery hereof,
shall cause an original copy of the same to be duly filed with the
American Arbitration Association at its office in New York, New
York.
(b) The Purchaser is delivering to the Company a
Stipulation of Dismissal with Prejudice with respect to the
Litigation and, promptly after the execution and delivery hereof,
shall cause an original copy of the same to be duly filed with the
United States District Court in and for the Southern District of
New York.
(c) Each of the ANMR/GE Agreements is hereby cancelled
and is without further force or effect. Notwithstanding the
foregoing, the Parties agree that their respective ownership rights
in the Deliverable Technology and Product as provided in Section
1.3, 1.8, 4.1 and 4.2 of the 1989 Agreement and the inventions and
improvements described in Section 8 of Purchase Agreement (No.
800247), shall survive. Each party hereby waives the benefit of
any period or passage of time that may be provided in any ANMR/GE
Agreement or otherwise as (1) a condition to the effectiveness of
such termination or (2) a warranty period.
SECTION 4. FURTHER ASSURANCES. Promptly upon request
------------------
by the other party or by any other express beneficiary of this
Agreement, each party shall execute, acknowledge, deliver, file,
re-file, register and re-register, any and all such further acts,
certificates, assurances and other instruments as the requesting
party may require from time to time in order to carry out more
effectively the purposes of this Agreement or to better transfer,
preserve, protect and confirm to the requesting party the benefits
intended to be granted to the requesting party under this
Agreement.
For a period from the date hereof for four years, neither
party hereto nor any of its respective affiliates or associates
shall, directly or indirectly, make or issue or cause to be made or
issued any disclosure, announcement or statement concerning the
other party hereto or its subsidiaries or affiliates, or any of its
respective stockholders, directors, officers or employees which
portrays such other party or its subsidiaries or affiliates or its
respective stockholders, directors, officers or employees in an
unfavorable light with respect to the Disputed Matters.
Neither party hereto nor any of its respective
subsidiaries or affiliates shall, without the written consent of
the other party hereto or a person duly authorized thereby,
disclose to any person any information heretofore obtained by them
with respect to the other party hereto, disclosure of which it
knows or, in the exercise of reasonable case, should know may be
damaging to the other party hereto; provided, however, that such
information shall not include any information known generally to
the public (other than as a result of unauthorized disclosure by a
party hereto or any of its respective subsidiaries or affiliates);
and provided, further, that the duties of the parties hereto and
their respective subsidiaries and affiliates under this paragraph
shall not extend to any disclosure that may be required by law in
connection with any judicial or administrative proceeding or
inquiry.
SECTION 5. NOTICES. All notices, requests and other
-------
communications to any party or under this Agreement shall be in
writing. Communications may be made by telecopy or similar
writing. Each communication shall be given to the party at its
address stated on the signature pages of this Agreement or at any
other address as the party may specify for this purpose by notice
to the other party. Each communication shall be effective (1) if
given by telecopy, when the telecopy is transmitted to the proper
address and the receipt of the transmission is confirmed, (2) if
given by mail, 72 hours after the communication is deposited in the
mails properly addressed with first class postage prepaid or (3) if
given by any other means, when delivered to the proper address and
a written acknowledgement of delivery is received.
SECTION 6. AMENDMENTS, ETC. No amendment,
---------------
modification, termination, or waiver of any provision of this
Agreement, and no consent to any departure by a party from any
provision of this Agreement, shall be effective unless it shall be
in writing and signed and delivered by the other party, and then it
shall be effective only in the specific instance and for the
specific purpose for which it is given.
SECTION 7. SUCCESSORS AND ASSIGNS; THIRD PARTY
-----------------------------------
Beneficiaries. No party may assign its rights under this
Agreement. The provisions of this Agreement shall be binding upon
and inure to the benefit of the parties to this Agreement, the
express beneficiaries hereof (to the extent provided herein) and
their respective heirs, executors, legal representatives,
successors and permitted assigns, and no other person.
SECTION 8. GOVERNING LAW. This Agreement shall be
-------------
governed by and construed in accordance with the internal laws of
the State of New York.
SECTION 9. COUNTERPARTS; EFFECTIVENESS. This Agreement
---------------------------
may be signed in any number of counterparts, each of which shall be
an original, with the same effect as if all signatures were on the
same instrument.
SECTION 10. SEVERABILITY OF PROVISIONS. Any provision
--------------------------
of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the
extent of the prohibition or unenforceability without invalidating
the remaining provisions of this Agreement or affecting the
validity or enforceability of the provision in any other
jurisdiction.
SECTION 11. HEADINGS AND REFERENCES. Section headings
-----------------------
in this Agreement are included in this Agreement for the
convenience of reference only and do not constitute a part of this
Agreement for any other purpose. References to parties, express
beneficiaries and sections in this Agreement are references to the
parties to or the express beneficiaries and sections of this
Agreement, as the case may be, unless the context shall require
otherwise.
SECTION 12. ENTIRE AGREEMENT. Except as otherwise
----------------
specifically provided in the Purchase Agreement, this Agreement
embodies the entire agreement and understanding of the parties and
supersedes all prior agreements or understandings with respect to
the subject matters of this Agreement.
SECTION 13. DISPUTE RESOLUTION (a) General Provisions.
------------------ ------------------
(i) Any dispute, controversy or claim arising out of or relating to
this Agreement or any related agreement or the validity,
interpretation, breach or termination thereof (a "Dispute"),
including claims seeking redress or asserting rights under
applicable law, shall be resolved in accordance with the procedures
set forth herein. Until completion of such procedures, no party
may take any action not contemplated herein to force a resolution
of the Dispute by any judicial, arbitral or similar process, except
to the limited extent necessary to (1) avoid expiration of a claim
that might eventually be permitted hereby or (2) obtain interim
relief, including injunctive relief, to preserve the status quo or
prevent irreparable harm.
(ii) All communications between the parties or their
representatives in connection with the attempted resolution of
any Dispute shall be deemed to have been delivered in
furtherance of a Dispute settlement and shall be exempt from
discovery and production, and shall not be admissible in
evidence (whether as an admission or otherwise), in any
arbitral or other proceeding for the resolution of the
Dispute.
(iii) In connection with any Dispute, the
parties expressly waive and forego any right to trial by jury.
(b) Consideration by Senior Executives. If a Dispute cannot be
----------------------------------
resolved at an operational level, either party may, by notice to
the other, request referral to the President and CEO of the General
Electric Medical Services Division and the Chairman of the Company
(or comparable officers of any permitted successor or assignee) for
their consideration. Such request shall be accompanied by a
written statement of the Dispute and of each party's position.
Within 30 days after the request, the other party will either
concur in such statement or prepare its own, and such statement(s)
will be delivered to the officers named above. Such officers will
meet in person or by telephone within 30 days thereafter to seek a
resolution. If no resolution is reached by the expiration of 60
days from the referral request, then either party may submit the
Dispute to resolution as further provided herein by notice to the
other party.
(c) Mediation. After completion of any prior procedures
---------
required hereby, either party may submit the Dispute for resolution
by mediation pursuant to the Center for Public Resources Model
Procedure for Mediation of Business Disputes as then in effect.
Mediation will continue for at least 60 days unless the mediator
chooses to withdraw sooner. At the request of either party at
commencement of the mediation, the mediator will be asked to
provide an evaluation of the Dispute and the parties' relative
positions.
(d) Arbitration. (i) After completion of any prior procedures
-----------
required hereby, either party may submit the Dispute for resolution
by arbitration pursuant to the Rules of the Center for Public
Resources ("CPR") for Non-Administered Arbitration of Business
Disputes as in effect at the time of the arbitration. The parties
consent to a single, consolidated arbitration for all Disputes for
which arbitration is permitted.
(ii) The neutral organization for purposes of the
CPR rules will be the CPR. The arbitral tribunal shall be
composed of one arbitrator selected by agreement of the
parties or, in the absence of such agreement within 60 days
after either party first proposes an arbitrator, by the CPR.
The arbitration shall be conducted in New York. Each party
shall be permitted to present its case, witnesses and
evidence, if any, in the presence of the other party. A
written transcript of the proceedings shall be made and
furnished to the parties. The arbitrators shall determine the
Dispute in accordance with the law of the State of New York,
without giving effect to any conflict of law rules or other
rules that might render such law inapplicable or unavailable,
and shall apply this Agreement according to its terms.
(iii) The parties agree to be bound by any award or
order resulting from any arbitration conducted hereunder and
further agree that:
(1) any monetary award shall include pre-award interest, to
the extent appropriate, and shall be made and payable
in U.S. dollars through a bank selected by the
recipient of such award, free of any withholding tax or
other deduction, together with interest thereon at the
prime rate in effect at such bank on the date of the
award, from the date the award is granted to the date
it is paid in full.
(2) in the context of an attempt by either party to enforce
an arbitral award or order, any defenses relating to
the parties' capacity or the validity of this Agreement
or any related agreement under any law are hereby
waived; and
(3) judgement on any award or order resulting from an
arbitration conducted under this Section may be entered
and enforced in any court, in any country, having
jurisdiction thereof or having jurisdiction over any of
the parties or any of their assets.
(iv) Except as expressly permitted by this
Agreement, no party will commence or voluntarily participate
in any court action or proceeding concerning a Dispute, except
(A) for enforcement as contemplated by paragraph (iii)(3)
above, (B) to restrict or vacate an arbitral decision based on
the grounds specified under applicable law and not waived in
paragraph (iii)(2) above, or (C) for interim relief as
provided in paragraph (v) below. For purposes of the
foregoing or enforcement of any undisputed obligation, the
parties hereto submit to the non-exclusive jurisdiction of the
courts of the State of New York.
(v) In addition to the authority otherwise
conferred on the arbitral tribunal, the tribunal shall have
the authority to make such orders for interim relief,
including injunctive relief, as it may deem just and
equitable. If the tribunal shall not have been appointed,
either party may seek interim relief from a court having
jurisdiction if the award to which the applicant may be
entitled may be rendered ineffectual without such interim
relief. Upon appointment of the tribunal following any grant
of interim relief by a court, the tribunal may affirm or
disaffirm such relief, and the parties will seek modification
or rescission of the court action as necessary to accord with
the tribunal's decision.
(vi) The prevailing party in any arbitration
conducted under this Section shall be entitled to recover from
the other party (as part of the arbitral award or order) its
reasonable attorneys' fees and other costs of arbitration.
____________________________
[Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, the parties have executed and
delivered this Agreement as of the date first written above in New
York, New York.
ADVANCED NMR SYSTEMS, INC.
By: /s/ Jack Nelson
------------------------
Name: Jack Nelson
Title: Chairman and CEO
Address: Advanced NMR Systems, Inc.
46 Jonspin Road
Wilmington, Massachusetts 01889
Telecopy: (508) 658-3581
GENERAL ELECTRIC COMPANY
By: /s/ Jeffrey R. Immelt
-------------------------
Name: Jeffrey R. Immelt
Title: President of GE Medical
Systems
Address: General Electric Company
Medical Services Division
3000 North Grandview Blvd.
(P.O. Box 414)
Waukesha, Wisconsin 53188
Telecopy: (414) 544-3573
EXECUTION
LICENSE AGREEMENT
LICENSE AGREEMENT dated as of August 18, 1997 between
ADVANCED NMR SYSTEMS, INC., a Delaware corporation (the
"Licensor"), and GENERAL ELECTRIC COMPANY, a New York corporation
(the "Licensee").
Terms not otherwise defined herein have the meanings
stated in the Purchase Agreement (as defined below).
RECITALS
A. The Licensor and the Licensee have entered into a
Purchase Agreement dated as of August 18, 1997 (the "Purchase
Agreement") for the purchase and sale of certain assets
referenced therein (the "Purchased Assets").
B. The Licensor desires to grant to the Licensee and to
any present or future Affiliate of Licensee a limited, non-
transferable (except as set forth in Section 9 hereof), paid up,
worldwide and perpetual license under each of the patents listed
on Schedule 1 and all rights of the Company, if any, in patent or
applications of the Company which may claim priority to any of
the patents or applications listed on Schedule 1, and all rights
of the Company, if any, with respect to service marks,
trademarks, copyrights, trade secrets, know-how or inventions
primarily used in the manufacturing, sale or service of the
Purchased Assets (collectively, the "Proprietary Rights") which
shall be exclusive (except as to Licensor and Advanced
Mammography Systems, Inc. ("AMS") and as to customers of ANMR's
with respect to limited software use licenses) for a period of
four years following the date of this Agreement and shall be non-
exclusive thereafter, to make, have made, sell or otherwise
dispose of any product or service, including, without limitation,
magnetic resonance scanners and to use, copy, modify and develop
derivative works of any product or service, and to distribute the
same and shall include the right to access, incorporate and use
in any way associated know-how for the manufacturing and
servicing of any product (the "License") and the Licensee desires
to accept the License under each of the Proprietary Rights.
C. This Agreement is being entered into pursuant to
Section 3.2(b) of the Purchase Agreement.
AGREEMENT
The parties agree as follows:
SECTION 1. LICENSE. The Licensor hereby grants to the
-------
Licensee and to any Affiliate of Licensee, and the Licensee
hereby accepts, a limited, non-transferable (except as set forth
in Section 9 hereof), paid up, worldwide and perpetual License
under each of the Proprietary Rights to make, have made, sell or
otherwise dispose of any product or service, including, without
limitation, magnetic resonance scanners, and to use, copy, modify
and develop derivative works of any product or service, and to
distribute the same and which shall include the associated know-
how for the manufacturing and servicing of any product. The
License shall be exclusive (except as to Licensor and AMS and to
customers of ANMR with respect to limited software use licenses)
for a period of four years following the date of this Agreement
and shall be non-exclusive thereafter.
SECTION 2. OWNERSHIP. The Licensee shall not acquire any
---------
ownership interest in any of the Proprietary Rights by reason of,
or pursuant to, the License or this Agreement.
SECTION 3. REPRESENTATIONS AND WARRANTIES. The Licensor
------------------------------
represents that (a) the License extends to all patents
technology, copyrights (if any) and related trade secrets and
know-how for the manufacturing and servicing of the Purchased
Assets, and (b) no subsidiary of Licensor has any technology,
patents, copyrights (if any), related trade secrets or know-how
useful or necessary for the manufacturing or servicing of
InstaScan or 3T or 4T whole-body magnetic resonance Scanners that
are not included within the License. Aside from these
representations, and the representations in the Purchase
Agreement, THE LICENSOR MAKES NO REPRESENTATIONS OR WARRANTIES,
EXPRESS OR IMPLIED, AS TO ANY MATTER CONCERNING THE VALIDITY OR
OWNERSHIP OF THE PROPRIETARY RIGHTS, THE USE BY ANY OTHER PERSON
OF ANY OF THE PROPRIETARY RIGHTS OR ASSERTIONS BY ANY OTHER
PERSON OF OWNERSHIP OR RIGHTS AS A LICENSEE WITH RESPECT TO ANY
OF THE PROPRIETARY RIGHTS, THE MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE OR ANY OTHER MATTER IN RESPECT OF THE LICENSE
AND THE PROPRIETARY RIGHTS. THE TOTAL LIABILITY OF THE LICENSOR
UNDER OR WITH RESPECT TO THE LICENSE OR THIS AGREEMENT SHALL NOT
EXCEED ONE HUNDRED DOLLARS.
SECTION 4. LIMITATIONS ON LIABILITY. Except as set forth
------------------------
in the Purchase Agreement, the Licensee agrees that the Licensor
has no liability to the Licensee or its successors or assigns for
(1) claims of ownership, infringement or improper use asserted by
any person with respect to any of the Proprietary Rights, (2)
product liability with respect to the Proprietary Rights or the
License, (3) negligence or misrepresentation, in contract or in
tort, at law or in equity, whether heretofore or hereafter
accruing, with respect to the Proprietary Rights or the License
or (4) any penal, incidental or consequential damages such as
lost profit or revenue training, support or other assistance with
respect to the Proprietary Rights or the License.
SECTION 5. TERMINATION. The License will be perpetual.
-----------
SECTION 6. NOTICES. All notices, requests and other
-------
communications to any party or under this Agreement shall be in
writing. Communications may be made by telecopy or similar
writing. Each communication shall be given to such party at its
address stated on the signature pages of this Agreement or at any
other address as such party may from time to time specify in
writing to the other party. Each communication shall be
effective (1) if given by telecopy, when the telecopy is
transmitted to the proper address and the receipt of the
transmission is confirmed, (2) if given by mail, 72 hours after
the communication is deposited in the mails properly addressed
with first class postage prepaid or (3) if given by any other
means, when delivered to the proper address and a written
acknowledgement of delivery is received.
SECTION 7. NO WAIVERS; REMEDIES. No failure or delay by
--------------------
any party in exercising any right, power or privilege under this
Agreement shall operate as a waiver of such right, power or
privilege. A single or partial exercise of any right, power or
privilege shall not preclude any other or further exercise of
such right, power or privilege or the exercise of any other
right, power or privilege. The rights and remedies provided in
this Agreement shall be cumulative and not exclusive of any
rights or remedies available at law or in equity.
SECTION 8. AMENDMENTS, ETC. No amendment, modification,
---------------
termination, or waiver of any provision of this Agreement, and no
consent to any departure by a party from any provision of this
Agreement, shall be effective unless it shall be in writing and
signed and delivered by the other parties to this Agreement, and
then it shall be effective only in the specific instance and for
the specific purpose for which it is given.
SECTION 9. SUCCESSORS AND ASSIGNS. No party may assign
----------------------
its rights or delegate its obligations under this Agreement
without the prior written consent of the other party; provided,
however, the Licensee may assign it rights and transfer the
License to any purchaser or transferee of all or substantially
all of the Purchased Assets; provided that in no event shall the
--------
Licensee sell, assign or sublicense its rights or transfer the
License to Siemens Medical Systems. Any assignment or delegation
in contravention of this Section 9 shall be void ab initio and
-- ------
shall not relieve the delegating party of any of its obligations
under this Agreement. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties to this
Agreement and their respective permitted successors and assigns.
SECTION 10. GOVERNING LAW. This Agreement shall be
-------------
governed by and construed in accordance with the internal laws of
the State of New York.
SECTION 11. COUNTERPARTS; EFFECTIVENESS. This Agreement
---------------------------
may be signed in any number of counterparts, each of which shall
be an original, with the same effect as if all signatures were on
the same instrument.
SECTION 12. SEVERABILITY OF PROVISIONS. Any provision of
--------------------------
this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to
the extent of the prohibition or unenforceability without
invalidating the remaining provisions of this Agreement or
affecting the validity or enforceability of the provision in any
other jurisdiction.
SECTION 13. HEADINGS AND REFERENCES. Section headings in
-----------------------
this Agreement are included for the convenience of reference only
and do not constitute a part of this Agreement for any other
purpose. References to parties and sections in this Agreement
are references to the parties to or the sections of this
Agreement, as the case may be, unless the context shall require
otherwise.
SECTION 14. ENTIRE AGREEMENT. Except as otherwise
----------------
specifically provided in the Purchase Agreement, this Agreement
embodies the entire agreement and understanding of the parties
and supersedes all prior agreements or understandings with
respect to the subject matters of this Agreement.
SECTION 15. DISPUTE RESOLUTION (a) General Provisions.
------------------ ------------------
(i) Any dispute, controversy or claim arising out of or relating
to this Agreement or any related agreement or the validity,
interpretation, breach or termination thereof (a "Dispute"),
including claims seeking redress or asserting rights under
applicable law, shall be resolved in accordance with the
procedures set forth herein. Until completion of such
procedures, no party may take any action not contemplated herein
to force a resolution of the Dispute by any judicial, arbitral or
similar process, except to the limited extent necessary to (1)
avoid expiration of a claim that might eventually be permitted
hereby or (2) obtain interim relief, including injunctive relief,
to preserve the status quo or prevent irreparable harm.
(ii) All communications between the parties or their
representatives in connection with the attempted resolution of
any Dispute shall be deemed to have been delivered in
furtherance of a Dispute settlement and shall be exempt from
discovery and production, and shall not be admissible in
evidence (whether as an admission or otherwise), in any
arbitral or other proceeding for the resolution of the
Dispute.
(iii) In connection with any Dispute, the
parties expressly waive and forego any right to trial by jury.
(b) Consideration by Senior Executives. If a Dispute cannot be
----------------------------------
resolved at an operational level, either party may, by notice to
the other, request referral to the President and CEO of the
General Electric Medical Services Division and the [President] of
the Company (or comparable officers of any permitted successor or
assignee) for their consideration. Such request shall be
accompanied by a written statement of the Dispute and of each
party's position. Within 30 days after the request, the other
party will either concur in such statement or prepare its own,
and such statement(s) will be delivered to the officers named
above. Such officers will meet in person or by telephone within
30 days thereafter to seek a resolution. If no resolution is
reached by the expiration of 60 days from the referral request,
then either party may submit the Dispute to resolution as further
provided herein by notice to the other party.
(c) Mediation. After completion of any prior procedures
---------
required hereby, either party may submit the Dispute for
resolution by mediation pursuant to the Center for Public
Resources Model Procedure for Mediation of Business Disputes as
then in effect. Mediation will continue for at least 60 days
unless the mediator chooses to withdraw sooner. At the request
of either party at commencement of the mediation, the mediator
will be asked to provide an evaluation of the Dispute and the
parties' relative positions.
(d) Arbitration. (i) After completion of any prior procedures
-----------
required hereby, either party may submit the Dispute for
resolution by arbitration pursuant to the Rules of the Center for
Public Resources ("CPR") for Non-Administered Arbitration of
Business Disputes as in effect at the time of the arbitration.
The parties consent to a single, consolidated arbitration for all
Disputes for which arbitration is permitted.
(ii) The neutral organization for purposes of the
CPR rules will be the CPR. The arbitral tribunal shall be
composed of one arbitrator selected by agreement of the
parties or, in the absence of such agreement within 60 days
after either party first proposes an arbitrator, by the CPR.
The arbitration shall be conducted in New York. Each party
shall be permitted to present its case, witnesses and
evidence, if any, in the presence of the other party. A
written transcript of the proceedings shall be made and
furnished to the parties. The arbitrators shall determine the
Dispute in accordance with the law of the State of New York,
without giving effect to any conflict of law rules or other
rules that might render such law inapplicable or unavailable,
and shall apply this Agreement according to its terms.
(iii) The parties agree to be bound by any award or
order resulting from any arbitration conducted hereunder and
further agree that:
(1) any monetary award shall include pre-award interest,
to the extent appropriate, and shall be made and
payable in U.S. dollars through a bank selected by
the recipient of such award, free of any withholding
tax or other deduction, together with interest
thereon at the prime rate in effect at such bank on
the date of the award, from the date the award is
granted to the date it is paid in full.
(2) in the context of an attempt by either party to
enforce an arbitral award or order, any defenses
relating to the parties' capacity or the validity of
this Agreement or the Transaction Documents under any
law are hereby waived; and
(3) judgement on any award or order resulting from an
arbitration conducted under this Section may be
entered and enforced in any court, in any country,
having jurisdiction thereof or having jurisdiction
over any of the parties or any of their assets.
(iv) Except as expressly permitted by this
Agreement, no party will commence or voluntarily participate
in any court action or proceeding concerning a Dispute,
except (A) for enforcement as contemplated by paragraph
(iii)(3) above, (B) to restrict or vacate an arbitral
decision based on the grounds specified under applicable law
and not waived in paragraph (iii)(2) above, or (C) for
interim relief as provided in paragraph (v) below. For
purposes of the foregoing or enforcement of any undisputed
obligation, the parties hereto submit to the non-exclusive
jurisdiction of the courts of the State of New York.
(v) In addition to the authority otherwise
conferred on the arbitral tribunal, the tribunal shall have
the authority to make such orders for interim relief,
including injunctive relief, as it may deem just and
equitable. If the tribunal shall not have been appointed,
either party may seek interim relief from a court having
jurisdiction if the award to which the applicant may be
entitled may be rendered ineffectual without such interim
relief. Upon appointment of the tribunal following any
grant of interim relief by a court, the tribunal may affirm
or disaffirm such relief, and the parties will seek
modification or rescission of the court action as necessary
to accord with the tribunal's decision.
(vi) The prevailing party in any arbitration
conducted under this Section shall be entitled to recover
from the other party (as part of the arbitral award or
order) its reasonable attorneys' fees and other costs of
arbitration.
SECTION 16. CONFIDENTIALITY. Information disclosed by
---------------
any party or its representatives to any other party or its
representatives, whether before or after the date of this
Agreement, in connection with the License, all matters covered by
the License, or the discussions and negotiations preceding the
execution of this Agreement, shall be kept confidential by the
other party and its representatives and shall not be used by
those persons other than as contemplated by the this Agreement,
except in each case to the extent that (1) the information was
known by the recipient when received or the information is or
hereafter becomes lawfully obtainable from other sources, (2)
disclosure to a Governmental Body having jurisdiction over the
parties is necessary or appropriate, (3) disclosure may otherwise
be required by applicable Regulations or (4) the duty as to
confidentiality is waived in writing by the other party.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed
and delivered this Agreement as of the date first written above
in New York, New York.
ADVANCED NMR SYSTEMS, INC.
By: /s/ Jack Nelson
-------------------------
Name: Jack Nelson
Title: Chairman and CEO
Address: Advanced NMR Systems, Inc.
46 Jonspin Road
Wilmington, Massachusetts 01887
Telecopy: (508) 658-3581
GENERAL ELECTRIC COMPANY
By: /s/ Jeffrey R. Immelt
------------------------
Name: Jeffrey R. Immelt
Title: President of GE Medical
Systems
Address: General Electric Company
Medical Services Division
3000 North Grandview Blvd.
(P.O. Box 414)
Waukesha, Wisconsin 53188
Telecopy: (414) 544-3573
ADVANCED NMR
------------
SYSTEMS, INC.
NEWS RELEASE
------------
FOR IMMEDIATE RELEASE
=====================
GE MEDICAL SYSTEMS INVESTS $5.1 MILLION FOR ACQUISITION OF
SECURITIES OF ADVANCED NMR SYSTEMS, INC. AND
ADVANCED NMR SYSTEMS, INC.'S 3T AND 4T
WHOLE BODY IMAGING BUSINESS
WILMINGTON, MA - AUGUST 19, 1997 - ADVANCED NMR SYSTEMS, INC.
(NASDAQ: ANMR) AND GE MEDICAL SYSTEMS jointly announced today
that GE has invested $5.1 million for the acquisition of $2.7
million of ANMR preferred stock, convertible at $0.233 per share,
and for the acquisition of ANMR's 3-tesla and 4-tesla whole body
magnetic resonance imaging business. The companies had
previously collaborated in the development of these systems. GE
Medical Systems will continue to develop, manufacture, sell, and
service the 3T and 4T whole body imaging systems, and will also
acquire ANMR's business of servicing 1.5T systems.
In announcing the transaction, Jeffrey R. Immelt, President and
Chief Executive Officer of GE Medical Systems, said, "GE Medical
Systems is excited about assuming sole responsibility for this 3T
and 4T whole body imaging business, and we are committed to
providing products and service to the developing market in 3T and
4T whole body imaging systems. We are also pleased with the
opportunity to build upon our strategic relationship by becoming
an ANMR shareholder."
Jack Nelson, Chairman and Chief Executive Officer of Advanced NMR
Systems, Inc., said "This transaction further strengthens our
balance sheet and positions us to concentrate on our future
growth following our proposed merger with Advanced Mammography
Systems. We are delighted to have GE as a significant investor
in the company."
Advanced NMR Systems, Inc. and Advanced Mammography Systems, Inc.
(NASDAQ:MAMO) have executed a definitive agreement to merge.
Advanced NMR Systems, Inc. is awaiting SEC clearance of proxy
material and a related registration statement for subsequent
approval of shareholders for the merger.
###
FOR FURTHER INFORMATION, PLEASE CONTACT:
Beverly Tkaczenko Charles Young
ADVANCED NMR SYSTEMS, INC. GE MEDICAL SYSTEMS
(800) 476-0569 (414) 544-3530
