<PAGE> 1
As filed with the Securities and Exchange Commission on February 23, 1998.
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Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ADAC LABORATORIES
----------------------------------------------------
(Exact name of registrant as specified in its charter)
California
--------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)
94-1725806
-----------------------------------
(I.R.S. Employer Identification No.)
540 Alder Drive
Milpitas, California 95035
(408) 321-9100
--------------------------------------------------
(Address, including zip code and telephone number,
including area code, of Registrant's
principal executive offices)
KAREN L. MASTERSON
VICE PRESIDENT AND GENERAL COUNSEL
ADAC LABORATORIES
540 ALDER DRIVE
MILPITAS, CALIFORNIA 95035
(408) 321-9100
---------------------------------------------------------
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Approximate date of commencement of proposed sale to the public:
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From time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Each Proposed Proposed Amount of
Class of Maximum Maximum Registration
Securities to Amount to be Offering Price Aggregate Fee
be Registered Registered Per Share (1) Offering Price(1)
- -------------- ------------ ---------------- ----------------- ----------
<S> <C> <C> <C> <C>
Common Stock 139,131 $22.69 $3,156,882.39 $931.28
</TABLE>
1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) of the Securities Act of 1933, as amended, based on
the average of the high and low prices of the Common Stock on the Nasdaq
National Market on February 19, 1998.
139,131 SHARES
[ADAC LOGO]
ADAC LABORATORIES
COMMON STOCK
---------------
This Prospectus relates to the public offering, which is not
being underwritten, of up to 139,131 shares of Common Stock, no par
value per share (the "Shares"), of ADAC Laboratories ("ADAC" or
the "Company"), which may be offered from time to time by certain
shareholders of the Company or by pledgees, donees, transferees or
other successors in interest that receive such Shares as a gift,
partnership distribution or other non-sale related transfer (the
"Selling Shareholders"). The Company will not receive any of the
proceeds from the sale of the Shares offered hereby.
All of the Shares offered hereby were originally issued by the
Company in connection with the Company's acquisition of substantially
all of the assets of Southern Cats, Inc., Specialized Medical X-Ray,
Inc., and J&J Medical Imaging Systems, Inc. (the "Companies") In
the acquisitions, the Shares were issued pursuant to the exemption
from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), provided by Section 4(2) of the
Securities Act. The Shares are being registered by the Company
pursuant to the Agreement and Plan of Reorganization dated as of
October 16, 1997 by and among ADAC, the Companies and the
shareholders thereof.
The Shares may be offered by the Selling Shareholders from
time to time in transactions in the over-the-counter market at prices
prevailing therein, in negotiated transactions at such prices as may
be agreed upon, or in a combination of such methods of sale. See
"Plan of Distribution." The price at which any of the Shares may
be sold, and the commissions, if any, paid in connection with any
such sale are unknown and may vary from transaction to transaction.
The Company's Common Stock is traded on the Nasdaq National
Market under the symbol "ADAC". On February 19, 1998, the closing
price for the Common Stock was $22 15/16.
---------------
See "Risk Factors" for a discussion of certain information
that should be considered in connection with an investment in the
Common Stock offered hereby.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------
The Company has agreed to pay certain expenses in connection
with the offering of the Shares, estimated at approximately $6,000.
The Selling Shareholders and any broker-dealers or agents that
participate with the Selling Shareholders in the distribution of the
Shares may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act, and any commissions received by
them and any profit on the resale of the Shares purchased by them may
be deemed to be underwriting commissions or discounts under the
Securities Act.
No person is authorized in connection with the offering made
hereby to give any information or to make any representation other
than as contained in this Prospectus and, if given or made, such
information or representation must not be relied upon as having been
authorized by the Company, any Selling Shareholder or by any other
person. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, any security other than the Shares,
nor does it constitute an offer to or solicitation of any person in
any jurisdiction in which such offer or solicitation cannot lawfully
be made. Neither the delivery of this Prospectus nor any sale made
hereunder shall under any circumstances create any implication that
the information contained herein is correct as of any time subsequent
to the date hereof.
---------------
The date of this Prospectus is March , 1998.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and, in accordance therewith, files reports, proxy statements,
information statements, and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy and
information statements and other information concerning the Company
can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549; as well as the Regional
Offices of the Commission at Seven World Trade Center, Suite 1300,
New York, New York, 10048 and Northwest Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois, 60661. Copies of any
such material can be obtained from the Public Reference Section of
the Commission, Washington, D.C., 20549, at prescribed rates. The
Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants
that file electronically with the Commission. The address of the
site is http:\\www.sec.gov. The Common Stock of the Company is
listed on the Nasdaq National Market and such reports, proxy and
information statements and other information concerning the Company
may be inspected at the offices of Nasdaq Operations, 1735 K Street,
N.W., Washington, D.C. 20006.
This Prospectus constitutes a part of a Registration Statement
on Form S-3 (herein, together with all amendments and exhibits,
referred to as the "Registration Statement") filed by the Company
with the Commission under the Securities Act. This Prospectus does
not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the
rules and regulations of the Commission. For further information
with respect to the Company and the Shares of Common Stock offered
hereby, reference is hereby made to the Registration Statement. The
Registration Statement may be inspected at the public reference
facilities maintained by the Commission at the addresses set forth in
the preceding paragraph. Statements contained herein concerning any
document filed as an exhibit are not necessarily complete and, in
each instance, reference is made to the copy of such document filed
as an exhibit to the Registration Statement. Each such statement is
qualified in its entirety by such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed with the Commission by the
Company are incorporated in the Prospectus by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal
year ended September 28, 1997.
(b) The Company's Quarterly Report on From 10-Q for the
quarter ended December 28, 1997.
(c) The Company's Proxy Statement for its Annual Meeting of
Shareholders to be held on March 5, 1998.
(d) The description of the Company's Common Stock contained
in its Registration Statement on Form 8-A, filed with the Commission
under the Exchange Act, including any amendments or reports filed for
the purpose of updating such description.
Furthermore, all documents filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of this Prospectus and prior to the termination of the
offering of the Common Stock shall be deemed to be incorporated into
this Prospectus to the extent required, and to be a part of this
Prospectus from the date of filing of such reports and documents.
Any statement contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statements. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom
this Prospectus is delivered, upon the request of any such person, a
copy of any or all of the documents described above, other than
exhibits to such documents which are not specifically incorporated by
reference herein. Requests should be directed to Investor Relations
at the principal executive offices of the Company, 540 Alder Drive,
Milpitas, California, 95035, telephone (408) 321-9100.
THE COMPANY
ADAC Laboratories ("ADAC" or "the Company") designs,
develops, manufactures, sells and services medical imaging and health
care information systems used in hospitals and clinics worldwide.
The Company conducts its business through two primary business units,
Medical Systems and Healthcare Information Systems ("HCIS"). The
Company's Medical Systems products include nuclear medicine systems
used primarily in cardiology and oncology and radiation therapy
planning systems for oncology, as well as refurbished ADAC and third-
party nuclear medicine systems. The Company's HCIS products include
laboratory, radiology, and cardiology information systems. In
October 1996, the United States Department of Commerce awarded ADAC a
Malcolm Baldrige National Quality Award in the large manufacturing
category in recognition of its performance management system and its
achievements in quality and business performance. ADAC is the first
healthcare manufacturer ever to receive this award. ADAC was
incorporated in California on October 14, 1970. Its principal
offices are located at 540 Alder Drive, Milpitas, California, 95035.
Its telephone number at that location is (408) 321-9100.
RISK FACTORS
The Shares offered hereby involve certain risks. The business
considerations and other information contained in the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended December
28, 1997 are incorporated by reference herein. See "Incorporation
of Certain Documents by Reference." Such business considerations
and other information should be carefully considered before
purchasing the Shares.
USE OF PROCEEDS
All proceeds will be for the account of Selling Shareholders.
See "Selling Shareholders" and "Plan of Distribution." The
Company will not receive any of the proceeds from the sale of the
Shares.
SELLING SHAREHOLDERS
The following table sets forth as of February 20, 1998 with respect to
each Selling Shareholder (1) the number of Shares of Common Stock
beneficially owned by each Selling Shareholder and (ii) the number of Shares of
Common Stock to be owned after the offering (assuming all Shares are sold in
this offering). Except as indicated, none of the Selling Shareholders has
held any position or had a material relationship with the Company or any of its
affiliates within the past three years other than as a result of ownership of
the Commpany's Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF NUMBER OF SHARES
NAME OF SELLING OWNED PRIOR TO SHARES TO BE OWNED AFTER
SHAREHOLDER OFFERING OFFERED HEREBY OFFERING
- -------------------- ----------------- --------------- -------------------
<S> <C> <C> <C>
Southern Cats, Inc. 113,366 113,366
Specialized Medical --
X-Ray, Inc. 5,153 5,153 --
J&J Medical Imaging, --
Inc. 20,612 20,612 --
----------------- --------------- -------------------
Total 139,131 139,131 --
================= =============== ===================
</TABLE>
PLAN OF DISTRIBUTION
The Shares covered by this Prospectus may be offered and sold
from time to time by the Selling Shareholders. The Selling
Shareholders will act independently of the Company in making
decisions with respect to the timing, manner and size of each sale.
The Selling Shareholders may sell the Shares being offered hereby on
the Nasdaq National Market, or otherwise, at prices and under terms
then prevailing or at prices related to the then current market
price or at negotiated prices. The Shares may be sold through one or
more of the following means of distribution: (a) a block trade in
which the broker-dealer so engaged will attempt to sell Shares as
agent, but may position and resell a portion of the block as
principal to facilitate the transaction; (b) purchases by a broker-
dealer as principal and resale by such broker-dealer for its own
account pursuant to this Prospectus; (c) an over-the-counter
distribution in accordance with the rules of the Nasdaq National
Market; (d) ordinary brokerage transactions and transactions in which
the broker solicits purchasers; and (e) in privately negotiated
transactions. To the extent required, this Prospectus may be amended
and supplemented from time to time to describe a specific plan of
distribution. In connection with distributions of the Shares or
otherwise, the Selling Shareholders may enter into hedging
transactions with broker-dealers or other financial institutions. In
connection with such transactions, broker-dealers or other financial
institutions may engage in short sales of the Company's Common Stock
in the course of hedging the positions they assume with Selling
Shareholders. The Selling Shareholders may also sell the Company's
Common Stock short and redeliver the shares to close out such short
positions. The Selling Shareholders may also enter into option or
other transactions with broker-dealers or other financial
institutions which require the delivery to such broker-dealer or
other financial institution of Shares offered hereby, which Shares
such broker-dealer or other financial institution may resell pursuant
to this Prospectus (as supplemented or amended to reflect such
transaction). The Selling Shareholders may also pledge Shares to a
broker-dealer or other financial institution, and, upon a default,
such broker-dealer or other financial institution may effect sales of
the pledged Shares pursuant to this Prospectus (as supplemented or
amended to reflect such transaction). In addition, any Shares that
qualify for sale pursuant to Rule 144 may be sold under Rule 144
rather than pursuant to this Prospectus.
In effecting sales, brokers, dealers or agents engaged by the
Selling Shareholders may arrange for other brokers or dealers to
participate. Brokers, dealers or agents may receive commissions,
discounts or concessions from the Selling Shareholders in amounts to
be negotiated prior to the sale. Such brokers or dealers and any
other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act in
connection with such sales, and any such commissions, discounts or
concessions may be deemed to be underwriting discounts or commissions
under the Securities Act. The Company will pay certain expenses
incident to the offering and sale of the Shares to the public, except
for any commissions and discounts of underwriters, dealers or agents
and any transfer taxes.
In order to comply with the securities laws of certain states,
if applicable, the Shares must be sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in
certain states the Shares may not be sold unless they have been
registered or qualified for sale in the applicable state or an
exemption from the registration or qualification requirement is
available and is complied with.
The Company has advised the Selling Shareholders that the anti-
manipulation rules of Regulation M under the Exchange Act may apply
to sales of Shares in the market and to the activities of the Selling
Shareholders and their affiliates. In addition, the Company will
make copies of this Prospectus available to the Selling Shareholders
and has informed them of the need for delivery of copies of this
Prospectus to purchasers at or prior to the time of any sale of the
Shares offered hereby. The Selling Shareholders may indemnify any
broker-dealer that participates in transactions involving the sale of
the Shares against certain liabilities, including liabilities arising
under the Securities Act.
At the time a particular offer of Shares is made, if required,
a Prospectus Supplement will be distributed that will set forth the
number of Shares being offered and the terms of the offering,
including the name of any underwriter, dealer or agent, the purchase
price paid by any underwriter, any discount, commission and other
item constituting compensation, any discount, commission or
concession allowed or reallowed or paid to any dealer, and the
proposed selling price to the public.
The Company has agreed with certain of the Selling Shareholders
to keep the Registration Statement of which this Prospectus
constitutes a part effective for up to one year following October 29,
1997, the closing date of the acquisition of the Companies (which
period may be shortened or extended under certain circumstances).
The Company intends to de-register any of the Shares not sold by the
Selling Shareholders at the end of such one year period; however, it
is anticipated that at such time certain of the unsold Shares may be
freely tradable subject to compliance with Rule 144 of the Securities
Act.
LEGAL MATTERS
Certain legal matters in respect of the Shares offered hereby
will be passed upon for the Company by Karen L. Masterson, Vice
President and General Counsel of ADAC, 540 Alder Drive, Milpitas, CA
95035.
EXPERTS
The consolidated financial statements and related financial
statement schedules of ADAC Laboratories and Subsidiaries, included
in the Report on Form 10-K of the Company for the fiscal year ended
September 28, 1997 referred to above, have been audited by Coopers &
Lybrand L.L.P., independent accountants, as set forth in their report
dated November 4, 1997, and are incorporated herein by reference in
reliance upon the report of such firm, given upon their authority as
experts in accounting and auditing.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table shows all expenses of the issuance and distribution
of the securities offered hereby, other than underwriting discounts and
commissions:
SEC REGISTRATION FEE ............................. $931.00
NASDAQ NATIONAL MARKET LISTING FEE ................ 2,783.00
ACCOUNTING FEES AND EXPENSES ...................... 2,000.00
MISCELLANEOUS EXPENSES ............................ 286.00
-----------
TOTAL .................................... $6,000.00
===========
All amounts listed above, except for the registration and listing fees,
are estimates.
15. Indemnification of Directors and Officers
Section 317 of the California General Corporation Law permits
indemnification of directors, officers and controlling persons of a
corporation under certain conditions and subject to certain
limitations. Article VII of the Registrant's Articles of Incorpo-
ration authorizes the Registrant to indemnify its officers and
directors in accordance with the General Corporation Law. Pursuant
to Article VI of the Company's Bylaws and the terms of
indemnification agreements between the Company and each of its
directors and executive officers, the Company has agreed to indemnify
and advance expenses to its agents and to such directors and
executive officers, respectively, to the fullest extent permitted by
law. Indemnification also may be granted pursuant to bylaw
provisions that may be adopted in the future, or pursuant to a vote
of shareholders or directors.
16. Exhibits
(a) Exhibits:
2.1 Agreement and Plan of Reorganization
dated as of October 16, 1997 by and among
ADAC, the Companies and the shareholders thereof
5.1 Opinion of General Counsel of ADAC
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of General Counsel of ADAC
(included in Exhibit 5.1 hereto)
24.1 Power of Attorney (included on page II-3 of
this Registration Statement)
<PAGE>
17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually or
in the aggregate, represents a fundamental change in the information
set forth in the registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the registration statement is on Form S-3 or Form S-8 and
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(4) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(5) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing pro-
visions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and
has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Milpitas,
California on the date set forth below.
Date: February 20, 1998 ADAC LABORATORIES
(Registrant)
BY:/s/ R. Andrew Eckert
R. Andrew Eckert,
Chief Executive Officer
(Principal Executive Officer)
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints R. Andrew Eckert and
P. Andre Simone and each of them acting individually, as such person's
true and lawful attorneys-in-fact and agents, each with full power of
substitution, for such person, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this
Registration Statement, and to file same, with all exhibits thereto and
other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as such person might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his or her
substitutes, may do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Exchange Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Capacities Date
- -------------------------- ------------------------------- -----------------
<S> <C> <C>
/s/ David L. Lowe Chairman of the Board February 20, 1998
- ------------------------- of Directors
David L. Lowe
/s/ R. Andrew Eckert Chief Executive Officer February 20, 1998
- ------------------------- and Director
R. Andrew Eckert (Principal Executive Officer)
/s/ P. Andre Simone Chief Financial Officer February 20, 1998
- ------------------------- (Principal Financial and
P. Andre Simone Accounting Officer)
/s/ Stanley D. Czerwinski Director February 20, 1998
- -------------------------
Stanley D. Czerwinski
/s/ Graham O. King Director February 20, 1998
- -------------------------
Graham O. King
/s/ F. David Rollo Director February 20, 1998
- -------------------------
F. David Rollo
/s/ Edmund H. Shea, Jr. Director February 20, 1998
- -------------------------
Edmund H. Shea, Jr.
</TABLE>
<PAGE>
EXHIBIT INDEX
EXHIBIT NAME PAGE NO.
2.1 Agreement and Plan of Reorganization dated as of
October 16, 1997 by and among ADAC, the Companies
and the shareholders thereof
5.1 Opinion of General Counsel of ADAC
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of General Counsel of ADAC (included
in Exhibit 5.1 hereto)
24.1 Power of Attorney (included on page II-3 of this
Registration Statement)
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made
and entered into as of October 16, 1997, by and among ADAC LABORATORIES, a
California corporation ("ADAC"), Specialized Medical X-Ray, Inc., a
California corporation ("SMX"), J&J Medical Imaging Systems, Inc., a
California corporation ("J&J"), Southern Cats, Inc., a California
corporation ("SCI"), Richard Stockton, Edward Manubay, James Karlen
and Joseph Marino (collectively the "Shareholders"). SMX, J&J and SCI
are referred to herein individually as a "Company" and collectively
as the "Companies".
RECITALS
A. ADAC, the Companies and the Shareholders intend to effect
tax-free reorganizations in which ADAC will acquire substantially all
of the assets of the Companies solely in exchange for shares of the
common stock, no par value, of ADAC ( the "ADAC Common Stock") in
accordance with the terms of this Agreement (the "Acquisition").
B. It is intended that the Acquisition qualify as a tax-free
reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code").
C. This Agreement has been adopted and approved by the Boards
of Directors and the Shareholders of the Companies.
NOW, THEREFORE, in consideration of the mutual agreements and
premises contained herein, ADAC, Sub, the Company and the
Shareholders agree as follows:
1
SALE OF ASSETS AND RELATED TRANSACTIONS
1.1 Assets. On the terms and subject to the conditions of
this Agreement, and except as provided in Section 1.2, the Companies
shall transfer, convey and assign (or cause to be transferred, conveyed
and assigned) to ADAC, at the Closing, and ADAC shall purchase and
acquire from the Companies, all of the Companies' right, title and
interest in all rights, assets and properties, of every kind and
description, tangible and intangible, wherever located, that are in
each case, directly or indirectly, owned or used by the Companies in
their businesses, together with all accrued benefits and rights
attaching thereto, including those rights, properties and assets listed
on Exhibit A. The rights, properties and assets that are to be
transferred, conveyed and assigned to ADAC are hereinafter referred to
as the "Assets".
1.2 Excluded Assets. Notwithstanding anything contained in
Section 1.1 or elsewhere in this Agreement to the contrary, there are
expressly excluded from the rights, properties and assets being
acquired, the shares of capital stock of J&J and SMX owned by SCI and
the notes receivable and accrued interest thereon executed by Messrs.
Bear, Stockton, Manubay, and Sterba in the aggregate principal amount
of $60,000 (such assets, the "Excluded Assets").
1.3 Liabilities Being Assumed. Simultaneously with the
transfer, conveyance and assignment to ADAC of the Assets, ADAC shall
assume the Liabilities of the Companies that are listed on Exhibit B
(the `Assumed Liabilities").
1.4 Excluded Liabilities. Notwithstanding anything to the
contrary in Section 1.3 or elsewhere in this Agreement, ADAC shall not
assume any of the following Liabilities (the "Excluded Liabilities"):
(a) any Liabilities arising out of any claims brought by
either of Rudy Ryskey or Dan Bear against the Companies or any of the
Shareholders;
(b) any Liabilities arising out of any Taxes arising out
of the conduct of the businesses of the Companies; and
(c) any Liabilities arising out of compensation paid or
payable to any employees, agents, contractors or consultants to the
Companies for services rendered prior to the Closing to the extent not
reflected in the September 30, 1997 Financial Statements;
(d) any Liability under any motor vehicle leases for
non-commercial vehicles leased by the Companies;
(e) any Liability for accrued rent or any other
obligations of the Companies under the existing lease for the premises
occupied by the Companies; and
(f) any Liability of the Companies or any Shareholder to
the Small Business Adminstration or the Money Store Corporation in
relation to the leased premises referred to in Section 4.8 below or
otherwise.
2
PURCHASE PRICE
2.1 Purchase Price.
(a) The aggregate purchase price (the "Purchase Price")
to be paid to the Companies for the Assets and the Non-Compete
Agreements described in Article 11 hereof shall be $2,700,000, subject
to adjustment as provided in paragraph (b) and Article 10 below. The
Purchase Price shall be paid in shares of ADAC Common Stock. The
aggregate number of shares of ADAC Common Stock to be issued in the
Acquisition shall equal (x) $2,700,000, divided by (y) the closing
sales price of a share of ADAC Common Stock as reported on the Nasdaq
Stock Market on October 16, 1997 (the "Designated ADAC Stock Price").
(b) The purchase price to be paid to the Companies at
the Closing in ADAC Common Stock (the "Initial Purchase Price") shall
be $2,430,000, and the remainder of the Purchase Price shall be held
back, adjusted and distributed subject to and in accordance with
Article 10 below.
(c) The shares of ADAC Common Stock representing the
Initial Purchase Price shall be issued to the Companies as of the
Closing Date, and shall be allocated among the Companies in the manner
agreed by the Companies, and the Purchase Price shall be allocated
between the Assets and the Non-Compete Covenant, which allocations are
set forth in Exhibit C.
(d) No certificates or scrip for fractional shares of
ADAC Common Stock shall be issued, but in lieu thereof each Company
that would otherwise be entitled to receive a certificate or scrip for
a fraction of a share of ADAC Common Stock shall receive from ADAC a
cash amount (without interest) equal to the Designated ADAC Stock Price
multiplied by the fraction of a share of ADAC Common Stock to which
such holder would otherwise be entitled.
(e) The shares of ADAC Common Stock to be issued in the
Acquisition shall be characterized as "restricted securities" for
purposes of Rule 144 under the Securities Act of 1933, as amended, and
each certificate representing any of such shares shall bear a legend
identical or similar in effect to the following legend (together with
any other legend or legends required by applicable state securities
laws or otherwise):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED UNLESS REGISTERED UNDER THE ACT OR
UNLESS AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT IS AVAILABLE."
2.2 Tax Consequences. For federal income tax purposes, the
Acquisition is intended to constitute a tax-free reorganization within
the meaning of Section 368 of the Code. The parties to this Agreement
hereby adopt this Agreement as a "plan of reorganization" within the
meaning of the applicable United States Treasury Regulations. None of
the Companies, any Shareholder or ADAC shall take a position
inconsistent with this Section 2.3 on any tax return. The Companies
and the Shareholders agree to liquidate the Companies within period of
time required by the Code in order for the transactions contemplated
hereby to constitute tax-free reorganizations.
3
CLOSING
3.1 Closing. Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned
pursuant to Article 9 hereof, a closing (the "Closing") shall be held
at 1:00 p.m., local time, on Friday, October 24, 1997, or such later
date that is not more than five (5) business days after all of the
conditions to Closing have been satisfied.
3.2 Effectiveness. The date of the Closing is referred to
herein as the "Closing Date". The transactions contemplated by this
Agreement to be taken at the Closing shall be effective as of the close
of business on the Closing Date and all references herein to the
Closing Date shall be as of the close of business on the Closing Date.
3.3 Obligations of the Companies. At the Closing, each of the
Companies shall deliver to ADAC:
(a) all customer and supplier lists, books of account,
contracts and all records of such Company relating to the Assets,
together with all drawings, designs, specifications, plans,
instructions, manufacturing data, advertising material and all other
technical and sales material of such Company relating to the business
of such Company, whether contained in electronic media or otherwise
(collectively, the "Books and Records");
(b) possession of the Assets;
(c) all documents of title relating to the Assets;
(d) a bill of sale in the form attached hereto as
Exhibit D (the "Bill of Sale");
(e) an assignment and assumption agreement in the form
attached hereto as Exhibit E (the "Assignment and Assumption
Agreement") with respect to the Assumed Contracts; and
(f) each of the other agreements and documents
contemplated to be delivered by or entered into by such Company as
referenced in Article 7 hereof.
3.4 Obligations of ADAC. On the Closing Date, ADAC shall
deliver to the Companies:
(a) the Initial Purchase Price pursuant to Section
2.1(c); and
(b) each of the other agreements and documents
contemplated to be delivered or entered into by ADAC as set forth in
Article 8 hereof.
3.5 Passage of Title; Risk of Loss. Legal and equitable title
and risk of loss with respect to the Assets shall pass to ADAC on the
Closing Date.
4
REPRESENTATIONS AND WARRANTIES OF THE COMPANIES AND THE SHAREHOLDERS
Except as set forth in the disclosure schedule delivered to ADAC
with this Agreement and signed by the Presidents of the Companies (the
"Disclosure Schedule"), the Companies and the Shareholders jointly and
severally represent and warrant to ADAC as follows:
4.1 Organization and Qualification.
(a) Each Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
California. Each Company has all necessary power and authority under
applicable corporate law and its organizational documents to own or
lease its Assets, to carry on its business as presently conducted and
to perform its obligations under all Assumed Contracts. None of the
Companies owns or holds, directly or indirectly, any debt or equity
securities of, or has any other interest in, any corporation,
partnership, joint venture or other entity, and Company has not entered
into any agreement to acquire any such interest, except that SCI owns
52% of the issued and outstanding capital stock of J&J.
(b) Each Company is qualified to do business as a
foreign corporation and is in good standing, under the laws of all
jurisdictions where the nature of its business requires such
qualification and where the failure to so qualify would have a Material
Adverse Effect, a list of which jurisdictions is set forth in the
Disclosure Schedule.
4.2 Articles of Incorporation and Bylaws; Records. Each
Company has delivered to ADAC accurate and complete copies of: (1) the
Company's articles of incorporation and bylaws, including all
amendments thereto; (2) the stock records of the Company; and (3) the
minutes and other records of the meetings and other proceedings
(including any actions taken by written consent or otherwise without a
meeting) of the shareholders of the Company and the board of directors
of the Company. The books of account, stock records, minute books and
other records of the Company are accurate, up-to-date and complete, and
have been maintained in accordance with prudent business practices and
all applicable Legal Requirements.
4.3 Capitalization. The Disclosure Schedule sets forth the
authorized and issued and outstanding capital stock of the Companies.
The Disclosure Schedule sets forth the names of each Company's
shareholders and the number of shares of stock owned of record by each.
None of the Companies has granted any options, warrants or rights to
acquire any capital stock or other securities of the Companies.
4.4 Financial Statements; Absence of Liabilities.
(a) Each of the Companies has previously delivered to
ADAC unaudited financial statements of such Company for the fiscal year
ended December 31, 1996, and for the nine--month period ended September
30, 1997, including a balance sheet and related statements of income
and cash flows including the notes thereto (collectively, the
"Financial Statements"). The Financial Statements were prepared in
accordance with the books and records of the Companies and fairly
present the financial position of the Companies as of the dates thereof
and the results of its operations and cash flows for the periods
indicated.
(b) Except as set forth in the Disclosure Schedule, the
Companies have no Liabilities, except for (i) Liabilities that are
fully reflected and reserved against in the Financial Statements, and
(ii) Liabilities incurred by the Companies in the ordinary course of
business and consistent with past practice since the date of the
Financial Statements. All Assumed Liabilities were incurred by the
Companies in the ordinary course of business.
4.5 Absence of Certain Changes or Events. Except as set forth
in the Disclosure Schedule, since September 30, 1997,
(a) each Company has conducted its business and
operations in the ordinary course and there has not been any material
adverse change in such Company's business, condition, assets,
liabilities, operations, or prospects, and no event has occurred that
will, or could reasonably be expected to, have a Material Adverse
Effect;
(b) there has not been any loss, damage or destruction
to, or any interruption in the use of, any of the Assets (whether or
not covered by insurance);
(c) there has been no amendment to any Company's
articles of incorporation or bylaws, and no Company has effected or
been a party to any acquisition transaction, recapitalization,
reclassification of shares, stock split, reverse stock split or similar
transaction;
(d) the Companies have not formed any subsidiary or
acquired any equity or other interest in any other entity;
(e) the Companies have not made any capital expenditure
which, when added to all other capital expenditures made by the
Companies since that date, exceeds $10,000 in the aggregate;
(f) the Companies have not (i) entered into or permitted
any of the Assets to become bound by any Material Contract (as defined
in Section 4.10(a)), except that the Companies has renewed various
Material Contracts in the ordinary course of business, or (ii) amended
or prematurely terminated, or waived any material right or remedy
under, any Assumed Contract;
(g) the Companies have not (i) acquired, leased or
licensed any right or other asset from any other person or entity
(other than immaterial rights or other immaterial assets acquired,
leased or licensed from other persons or entities in the ordinary
course of business and consistent with the Companies' past practices),
(ii) sold or otherwise disposed of, or leased or licensed, any right or
other asset to any other person or entity (other than immaterial rights
or other immaterial assets disposed of or leased or licensed to other
persons or entities in the ordinary course of business and consistent
with the Companies' past practices), or (iii) waived or relinquished
any right (other than immaterial rights waived or relinquished in the
ordinary course of business and consistent with the Companies' past
practices);
(h) the Companies have not written off as uncollectible,
or established any extraordinary reserve with respect to, any account
receivable or other indebtedness;
(i) the Companies have not made any pledge of any of the
Assets or otherwise permitted any of the Assets to become subject to
any lien, pledge, charge or other encumbrance;
(j) the Companies have not (i) lent money to any person
or entity, or (ii) incurred or guaranteed any indebtedness for borrowed
money;
(k) the Companies have not changed any methods of
accounting or accounting practices in any respect;
(l) the Companies have not made any tax election;
(m) the Companies have not commenced or settled any
Legal Proceeding;
(n) the Companies have not entered into any material
transaction or taken any other material action outside the ordinary
course of business or inconsistent with past practices; and
(o) the Companies have not agreed or committed to take
any of the actions referred to in clauses "(c)" through "(n)" above.
4.6 Title to Assets. Except as set forth in the Disclosure
Schedule, the Companies own, and have good, valid and marketable title
to, all of the Assets purported to be owned by them, including: (i)
all assets reflected on the September 30, 1997 Financial Statements
(ii) all assets referred to in Sections 4.7, 4.8 and 4.9 hereof, and
(iii) all of the Companies' rights under the Assumed Contracts. All of
the Companies' inventory (spare parts and otherwise) consists of a
quality and quantity usable and salable in the ordinary course of
business, and the present quantities of such inventory are reasonable
in the present circumstances of the Companies' businesses. Upon
consummation of the Acquisition, ADAC will acquire good and marketable
title to all of the Assets, free and clear of all liens, claims, and
other encumbrances, except for any lien for current taxes not yet due
and payable. Except for the Excluded Assets, the Assets constitute all
of the assets held for use or used primarily in the Companies
businesses, are in good condition and repair (ordinary wear and tear
excepted) and are adequate to carry on the businesses of the Companies.
4.7 Accounts Receivable; Customers; Payables.
(a) Except as set forth in the Disclosure Schedule, all
existing accounts and notes receivable of the Companies (i) represent
valid and enforceable obligations arising from bona fide transactions
entered into in the ordinary course of business, (ii) are current and
will be collected in full, without any counterclaim or set off, when
due, net of an allowance for doubtful accounts in the amount of
$111,063;and (iii) are not, and as of the Closing Date, will not be
delinquent more than ninety (90) days in its payment. To the extent
ADAC is unable to collect any such receivables, ADAC will assign those
receivables to the Companies for collection and, unless the Companies
are able to collect such receivables and pay the amount of such
recievables to ADAC in full within ninety (90) days of such assignment,
ADAC shall have the right to make a claim against the Holdback in such
amount to the extent such amount plus the amount of all other
uncollected receivables exceeds the above allowance.
(b) Since September 30, 1997, the Companies have not
received any notice or other communication indicating that any customer
intends or expects to cease dealing with the Companies or to effect a
material reduction in the volume of business transacted by such Person
with the Companies below historical levels.
(c) Except as set forth in the Disclosure Schedule, all
accounts payable and notes payable by any of the Companies to third
parties arose and will have arisen in the ordinary course of business,
and, except as set forth in the Disclosure Schedule, as of the date
hereof, there is, and as of the Closing Date there will be, no such
account or note payable delinquent more than ninety (90) days in its
payment.
4.8 Leased Property. The Disclosure Schedule contains (a) an
accurate and complete list of all real property leased by any of the
Companies, as well as all buildings, structures and material
improvements located on such real property and (b) a complete list of
all leases pursuant to which the Companies lease personal property.
All such leases are valid, binding and enforceable in accordance with
their terms, and are in full force and effect, and there are no
defaults, or events that with the giving of notice or the passage of
time or both would constitute an event of default thereunder. The
Companies have made available to ADAC true and correct copies of all
leases referred to in the Disclosure Schedule. Except as set forth in
the Disclosure Schedule, all improvements on any real estate conform to
all Legal Requirements, including zoning and building ordinances, and
the properties are zoned for the purposes for which they are being
used; none of any buildings or structures located on such real
property, nor any appurtenances thereto or equipment therein, nor the
operation or maintenance thereof, violates in any manner any
restrictive covenants or encroaches on any property owned by others nor
does any building or structure of third parties encroach upon the real
property leased by the Companies. The Company does not own any real
property or any interest in real property, except for the leasehold
created under the real property lease for the premises located at 1137
East Philadelphia Street, Ontario, CA 91761. This lease will be
terminated as of the Closing Date without liability to the Companies,
and ADAC and the landlords will enter into a new lease for such
premises as contemplated in Section 6.10 hereof.
4.9 Proprietary Assets.
(a) The Disclosure Schedule sets forth, with respect to
each Company Proprietary Asset that has been registered, recorded or
filed with any Governmental Body or with respect to which an
application has been filed with any Governmental Body, (i) a brief
description of such Company Proprietary Asset, and (ii) the names of
the jurisdictions covered by the applicable registration, recordation,
filing or application. The Disclosure Schedule identifies and provides
a brief description of all other Company Proprietary Assets owned by
the Company. The Disclosure Schedule identifies and provides a brief
description of each Company Proprietary Asset that is owned by any
other person or entity and that is licensed to or used by the Company
(except for any Company Proprietary Asset that is licensed to the
Company under any third party software license that (1) is generally
available to the public at a cost of less than $1,000, and (2) imposes
no future monetary obligation on the Company) and identifies the
license agreement or other agreement under which such Company
Proprietary Asset is being licensed to or used by the Company. Except
as set forth in the Disclosure Schedule, the Companies have good, valid
and marketable title to all of the Company Proprietary Assets owned by
the Companies, free and clear of all liens, claims and other
encumbrances, and has a valid right to use all other Company
Proprietary Assets licensed to or used by the Companies in their
businesses. Except as set forth in the Disclosure Schedule, the
Companies are not obligated to make any payment to any Person for the
use of any Company Proprietary Asset. Except as set forth in the
Disclosure Schedule, the Company is free to use, modify, copy,
distribute, sell, license or otherwise exploit each of the Company
Proprietary Assets on an exclusive basis (other than Company
Proprietary Assets consisting of software licensed to the Company under
third party licenses generally available to the public, with respect to
which the Company's rights are not exclusive).
(b) The Companies have taken all reasonable measures and
precautions necessary to protect and maintain the confidentiality and
secrecy of all Company Proprietary Assets (except Company Proprietary
Assets whose value would be unimpaired by public disclosure) and
otherwise to maintain and protect the value of all Company Proprietary
Assets. Except as set forth in the Disclosure Schedule, the Companies
have not disclosed or delivered or permitted to be disclosed or
delivered to any person or entity, and no person or entity (other than
the Company) has access to or has any rights with respect to, the
source code, or any portion or aspect of the source code, to any
Company Proprietary Asset.
(c) None of the Company Proprietary Assets infringes or
conflicts with any Proprietary Asset owned or used by any other person
or entity. Except as set forth in the Disclosure Schedule, the Company
is not infringing, misappropriating or making any unlawful use of, and
the Companies have not at any time infringed, misappropriated or made
any unlawful use of, or received any notice or other communication of
any actual, alleged, possible or potential infringement,
misappropriation or unlawful use of, any Proprietary Asset owned or
used by any other Person. To the best of the knowledge of the Companies
and the Shareholders, except as set forth in the Disclosure Schedule,
no other person or entity is infringing, misappropriating or making any
unlawful use of, and no Proprietary Asset owned or used by any other
person or entity infringes or conflicts with, any Company Proprietary
Asset.
(d) Except as set forth in the Disclosure Schedule: (i)
each Company Proprietary Asset conforms with any specification,
documentation, performance standard, representation or statement made
or provided with respect thereto by or on behalf of the Companies; and
(ii) there has not been any claim by any customer or other Person
alleging that any Company Proprietary Asset does not conform with any
specification, documentation, performance standard, representation or
statement made or provided by or on behalf of the Companies, and, to
the best of the knowledge of the Companies and the Shareholders, there
is no basis for any such claim. The Companies are not required under
generally accepted accounting principles to establish reserves on their
financial statements to cover any costs associated with any obligations
that the Companies may have with respect to the correction or repair of
programming errors or other defects in the Company Proprietary Assets.
(e) The Company Proprietary Assets constitute all the
Proprietary Assets necessary to enable the Companies to conduct their
businesses in the manner in which such businesses have been conducted.
Except as set forth in the Disclosure Schedule, (i) the Companies have
not licensed any of the Company Proprietary Assets to any Person on an
exclusive basis, and (ii) the Companies have not entered into any
covenant not to compete or contract limiting their ability to exploit
fully any of its Proprietary Assets or to transact business in any
market or geographical area or with any Person.
(f) All current and former employees of the Companies,
and all current and former consultants and independent contractors to
the Companies, have executed and delivered to the Company written
agreements (containing no exceptions to or exclusions from the scope of
their coverage) that convey to the Companies all right, title and
interest in any inventions developed by such parties that form a part
of the Company Proprietary Assets.
(g) The execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated
hereby, will not breach, violate or conflict with any instrument or
agreement governing any Company Proprietary Assets, and will not cause
the forfeiture or termination or give rise to a right of forfeiture or
termination of any Company Proprietary Asset.
4.10 Contracts.
(a) Except as set forth in the Disclosure Schedule, the
Companies are not a party to (each such Company Contract, a "Material
Contract"):
(i) any material Contract relating to the
employment or engagement of, or the performance of services by, any
employee, consultant or independent contractor;
(ii) any Contract relating to the acquisition,
transfer, use, development, sharing or license of any technology or any
Proprietary Asset;
(iii) any Contract imposing any restriction on any
Company's right or ability (A) to compete with any other person or
entity, (B) to acquire any product or other asset or any services from
any other person or entity, to sell any product or other asset to or
perform any services for any other person or entity or to transact
business or deal in any other manner with any other person or entity,
or (C) to develop or distribute any technology;
(iv) any Contract creating or involving any agency
relationship, distribution arrangement or franchise relationship;
(v) any Contract relating to the acquisition,
issuance or transfer of any securities;
(vi) any Contract creating or relating to the
creation of any lien, charge, pledge or other encumbrance with respect
to any Asset;
(vii) any Contract involving or incorporating any
guaranty, any pledge, any performance or completion bond, any
indemnity, any right of contribution or any surety arrangement;
(viii) any Contract creating or relating to any
partnership or joint venture or any sharing of revenues, profits,
losses, costs or liabilities;
(ix) any Contract relating to the purchase or sale
of any product or other asset by or to, or the performance of any
services by or for, any Related Party (as defined in Section 4.19);
(x) any Contract to which any Governmental Body is
a party or under which any Governmental Body has any rights or
obligations, or involving or directly or indirectly benefiting any
Governmental Body (including any subcontract or other Contract between
any Company and any contractor or subcontractor to any Governmental
Body);
(xi) any Contract entered into outside the ordinary
course of business or inconsistent with any Company's past practices;
(xii) any Contract that has a term of more than 60
days and that may not be terminated by the applicable Company (without
penalty) within 60 days after the delivery of a termination notice by
such Company; and
(xiii) any Contract (not otherwise identified in
clauses "(i)" through "(xii)" of this sentence) that contemplates or
involves (A) the payment or delivery of cash or other consideration in
an amount or having a value in excess of $10,000 in the aggregate, or
(B) the performance of services having a value in excess of $10,000 in
the aggregate.
(b) The Companies have delivered to ADAC accurate and
complete copies of all Material Contracts, including all amendments
thereto. Each Material Contract is valid and in full force and effect,
and is enforceable by the Company in accordance with its terms, subject
to (i) laws of general application relating to bankruptcy, insolvency
and the relief of debtors, and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies. The
Companies are not in default under any Company Contract, no default has
occurred that with notice, the passage of time or both would constitute
an event of default thereunder, and to the best knowledge of the
Companies and the Shareholders, the other parties thereto are not in
default thereunder.
4.11 Compliance with Legal Requirements. The Companies are,
and at all times since December 31, 1994 have been, in compliance with
all applicable Legal Requirements. Since December 31, 1994, the
Companies have not received any notice or other communication from any
Governmental Body regarding any actual or possible violation of, or
failure to comply with, any Legal Requirement.
4.12 Governmental Authorizations. The Disclosure Schedule
identifies each material Governmental Authorization held by the
Companies, and the Companies have delivered to ADAC accurate and
complete copies of all such Governmental Authorizations. Such
Governmental Authorizations are valid and in full force and effect, and
collectively constitute all Governmental Authorizations necessary to
enable the Companies to conduct their businesses in the manner in which
they are currently being conducted. The Companies are, and at all
times since December 31, 1994 have been, in compliance with the terms
and requirements of such Governmental Authorizations. Since December
31, 1994, the Companies have not received any notice or other
communication from any Governmental Body regarding (a) any actual or
possible violation of or failure to comply with any term or requirement
of any Governmental Authorization, or (b) any actual or possible
revocation, withdrawal, suspension, cancellation, termination or
modification of any Governmental Authorization.
4.13 Tax Matters. All Tax Returns required to be filed by or
on behalf of the Companies with any Governmental Body (the "Company
Returns") (i) have been or will be filed when due, and (ii) have been,
or will be when filed, prepared accurately and completely in compliance
with all applicable Legal Requirements. All amounts shown on the
Company Returns to be due have been paid, and the Companies have
withheld all amounts required to be withheld by or on their behalf.
The Companies have delivered to ADAC accurate and complete copies of
all Company Returns filed since December 31, 1991. There is no
agreement, plan, arrangement or other Contract covering any employee or
independent contractor or former employee or independent contractor of
the Company that, considered individually or considered collectively
with any other such Contracts, will, or could reasonably be expected
to, give rise directly or indirectly to the payment of any amount that
would not be deductible pursuant to Section 280G or Section 162 of the
Code. The Company is not, and has never been, a party to or bound by
any tax indemnity agreement, tax sharing agreement, tax allocation
agreement or similar Contract. Except as set forth in the Disclosure
Schedule, since December 31, 1991, (i) no Governmental Body has
asserted any claim or otherwise made any allegation that the Companies
have failed or may have failed to pay any sales tax, use tax or similar
Tax, and (ii) the Companies have not engaged in any discussions or
negotiations with any Governmental Body, and has not sent any written
communication to or received any written communication from any
Governmental Body, in connection with any possible failure on the part
of the Company to pay any sales tax, use tax or similar Tax.
4.14 Employee and Labor Matters; Benefit Plans.
(a) The Disclosure Schedule contains a list of all
salaried employees of the Companies as of the date of this Agreement,
and correctly reflects their salaries, any other compensation payable
to them (including compensation payable pursuant to bonus, deferred
compensation or commission arrangements), their dates of employment and
their positions. The Companies are not a party to any collective
bargaining contract or other Contract with a labor union involving any
of its employees.
(b) There is no employee of the Companies who is not
fully available to perform work because of disability or other leave.
(c) The Disclosure Schedule identifies each salary,
bonus, deferred compensation, incentive compensation, stock purchase,
stock option, severance pay, termination pay, hospitalization, medical,
insurance, supplemental unemployment benefits, profit-sharing, pension
or retirement plan, program or agreement (individually referred to as a
"Plan" and collectively referred to as the "Plans") sponsored,
maintained, contributed to or required to be contributed to by the
Company for the benefit of any current or former employee of the
Company.
(d) Except as set forth in the Disclosure Schedule, the
Companies do not maintain, sponsor or contribute to, and the Companies
have not at any time in the past maintained, sponsored or contributed
to, any employee pension benefit plan (as defined in Section 3(2) of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), whether or not excluded from coverage under specific Titles
or Merger Subtitles of ERISA) for the benefit of employees or former
employees of the Company (a "Pension Plan").
(e) The Companies do not maintain, sponsor or contribute
to any employee welfare benefit plan (as defined in Section 3(1) of
ERISA, whether or not excluded from coverage under specific Titles or
Merger Subtitles of ERISA) for the benefit of employees or former
employees of the Company (a "Welfare Plan") except for those Welfare
Plans described in Disclosure Schedule, none of which is a
multiemployer plan (within the meaning of Section 3(37) of ERISA).
(f) The Companies are in compliance with all applicable
Legal Requirements and Contracts relating to employment, employment
practices, employee compensation, wages, bonuses and terms and
conditions of employment. The Companies have paid all sums due and
owing all employees and independent contractors of the Companies for
all periods ending on or prior to the Closing Date or has made an
appropriate reserve therefor in the September 30, 1997 Financial
Statements, and have properly withheld all Taxes therefrom. Each
employee, agent and contractor to the Companies is authorized under the
Immigration Reform and Control Act of 1986 to lawfully work in the
United States.
4.15 Litigation and Claims. Except for the Rysky, Bear and
Madison Radiology suits (the "Suits"), there is no examination,
review, investigation, arbitration, suit, litigation or other
proceeding (a "Legal Proceeding") pending or threatened by or before
any court or Governmental Body in which any Company is a party or
otherwise involved or to which any of the business or assets of any
Company is subject, nor has any third party made any claim against any
Company which could result in any such Legal Proceeding nor, to the
best of the Companies' and the Shareholders' knowledge, is there any
basis for any such claim or Legal Proceeding. The Companies are not a
party to any decree, order or arbitration award (or agreement entered
into in any Legal Proceeding) with respect to its properties, assets,
personnel or business activities. Except for the Suits, there are no
Legal Proceedings pending or, to the knowledge of the Companies,
threatened (or any basis therefor known to the Companies) involving the
prior employment of any of the Companies' employees, their use in
connection with the Companies' business of any information or
techniques allegedly proprietary to any of their former employers, or
their obligations under any agreements with prior employers.
4.16 Environmental Matters. The Companies are and at all times
have been in compliance with all applicable Environmental Laws. The
Companies possess all permits and other Governmental Authorizations
required under applicable Environmental Laws, and the Companies are and
at all times have been in compliance with the terms and requirements of
all such Governmental Authorizations. The Companies have not received
any notice or other communication (whether from a Governmental Body,
citizens group, employee or otherwise) that alleges that any Company is
not in compliance with any Environmental Law. To the best of the
knowledge of the Companies and the Shareholders, no current or prior
owner of any property leased or controlled by the Companies has
received any notice or other communication (whether from a Governmental
Body, citizens group, employee or otherwise) that alleges that such
current or prior owner or any Company is not or was not in compliance
with any Environmental Law. All Governmental Authorizations currently
held by the Companies pursuant to Environmental Laws are identified in
the Disclosure Schedule.
4.17 Insurance. The Disclosure Schedule contains an accurate
and complete list of each insurance policy maintained by, at the
expense of or for the benefit of the Companies and with respect to any
claims made thereunder. Each such insurance policy is in full force
and effect. Since December 31, 1994, the Companies have not received
any notice or other communication regarding any actual or possible (a)
cancellation or invalidation of any insurance policy, (b) refusal of
any coverage or rejection of any claim under any insurance policy, or
(c) material adjustment in the amount of the premiums payable with
respect to any insurance policy.
4.18 Full Disclosure. This Agreement, the Disclosure Schedule
and all other documents delivered by the Companies and the Shareholders
to ADAC or its attorneys or agents in connection herewith or in
connection with the transactions contemplated hereby, do not contain
any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements contained herein or
therein not misleading.
4.19 Related Party Transactions. Except as set forth in the
Disclosure Schedule: (a) no Related Party has, and no Related Party
has at any time since December 31, 1994 had, any direct or indirect
interest in any Asset; (b) no Related Party is, or has at any time
since December 31, 1994 been, indebted to any Company; (c) since
December 31, 1994, no Related Party has entered into, or has had any
direct or indirect financial interest in, any Assumed Contract; (d) no
Related Party is competing, or has at any time since December 31, 1994
competed, directly or indirectly, with the Companies; and (e) no
Related Party has any claim or right against the Companies (other than
rights to receive compensation for services performed as an employee of
any Company). (For purposes of this Section 2.19, each of the
following shall be deemed to be a "Related Party": (i) each of the
Shareholders; (ii) each individual who is, or who has at any time since
December 31, 1994 been, an officer or director of any Company;
(iii) each individual who is, or who has at any time since December 31,
1994 been, a member of the immediate family of any of the individuals
referred to in clauses "(i)" and "(ii)" above; and (iv) any trust or
other Entity (other than a Company) in which any one of the individuals
referred to in clauses "(i)", "(ii)" and "(iii)" above holds (or in
which more than one of such individuals collectively hold),
beneficially or otherwise, a voting, proprietary or equity interest.)
4.20 Financial Advisor. The Companies and the Shareholders
represent and warrant that, no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in
connection with the Acquisition or any of the other transactions
contemplated hereby based upon arrangements made by or on behalf of the
Companies or any Shareholder.
4.21 Enforceability. The Companies have the corporate power
and authority to execute, deliver and perform each of the Transactional
Agreements (as defined below) to which it is or will become a party.
The execution and delivery of said Transactional Agreements have been
duly and validly authorized by the unanimous vote of the Board of
Directors of each Company and by the Shareholders of each Company. No
other corporate proceedings on the part of the Company is necessary to
authorize the Company's execution, delivery and performance by the
Companies of their obligations under the Transactional Agreements.
Said Transactional Agreements (a) have been (or will be) duly executed
and delivered by duly authorized officers of the Companies and (b)
constitute (or, when executed by the Companies, will constitute) legal,
valid and binding obligations of the Companies enforceable against them
in accordance with their terms. For purposes of this Agreement,
(i) "Transactional Agreements" means this Agreement and each of the
other agreements and documents referred to in Articles 3 and 7 hereof;
and (ii) "Transactions" means (A) the execution, delivery and
performance of the respective Transactional Agreements and (B) each of
the transactions contemplated by or otherwise referred to in any of the
Transactional Agreements.
4.22 Governmental Consents; No Conflicts. Except as set forth
in the Disclosure Schedule, there is no requirement applicable to any
Company to make any filing with, or to obtain any permit,
authorization, consent or approval of, any Governmental Body as a
condition to the lawful consummation of any of the Transactions. The
Company does not know of any reason why any required permit,
authorization, consent or approval will not be obtained. Neither the
execution and delivery of this Agreement by the Company nor the
consummation by the Company of any of the Transactions will
(a) conflict with, violate or result in any breach of any provision of
the Articles of Incorporation or Bylaws (or comparable charter
documents) of the Companies, (b) result in a default (or with notice or
lapse of time or both would result in a default) under, or impair the
rights of the Company or alter the rights or obligations of any third
party under, or require the Company to make any material payment or
become subject to any liability to any third party under, or give rise
to any right of termination, amendment, cancellation, acceleration,
repurchase, put or call under, any of the terms, conditions or
provisions of any Contract, (c) result in the creation of any liens,
charges or encumbrances on any of the assets of the Company or (d)
conflict with or violate any law, statute, rule, regulation, judgment,
order, writ, injunction, decree or arbitration award applicable to the
Companies or any of their assets.
5
REPRESENTATIONS AND WARRANTIES OF ADAC
ADAC represents and warrants to the Companies and the
Shareholders as follows:
5.1 SEC Filings; Financial Statements.
(a) ADAC has delivered to the Companies accurate and
complete copies (excluding copies of exhibits) of each report,
registration statement (on a form other than Form S-8) and definitive
proxy statement filed by ADAC with the SEC between September 30, 1996
and the date of this Agreement (the "ADAC SEC Documents"). As of the
time it was filed with the SEC (or, if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such
filing): (i) each of the ADAC SEC Documents complied in all material
respects with the applicable requirements of the Securities Act or the
Exchange Act (as the case may be); and (ii) none of the ADAC SEC
Documents 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 the light of the circumstances
under which they were made, not misleading.
(b) The consolidated financial statements contained in
the ADAC SEC Documents: (i) complied as to form in all material
respects with the published rules and regulations of the SEC applicable
thereto; (ii) were prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the
periods covered, except as may be indicated in the notes to such
financial statements and (in the case of unaudited statements) as
permitted by Form 10-Q of the SEC, and except that unaudited financial
statements may not contain footnotes and are subject to year-end audit
adjustments; and (iii) fairly present the consolidated financial
position of ADAC and its subsidiaries as of the respective dates
thereof and the consolidated results of operations of ADAC and its
subsidiaries for the periods covered thereby.
5.2 Authority; Binding Nature of Agreement. Subject to the
requisite approval by the ADAC Board of Directors, ADAC has the
corporate power and authority to perform its obligations under this
Agreement. No vote of ADAC's stockholders is needed to approve the
Merger. Subject to the foregoing, this Agreement constitutes the
legal, valid and binding obligation of ADAC, enforceable against it in
accordance with its terms.
5.3 Valid Issuance. The ADAC Common Stock to be issued in the
Merger will, when issued in accordance with the provisions of this
Agreement, be validly issued, fully paid and nonassessable.
5.4 Financial Advisor. ADAC represents and warrants that no
broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the Merger or
any of the other Transactions based upon arrangements made by or on
behalf of ADAC.
6
CONDUCT AND TRANSACTIONS PRIOR TO EFFECTIVE TIME;
ADDITIONAL AGREEMENTS
6.1 Information and Access.
(a) During the period from the date of this Agreement
through the Closing Date (the "Pre-Closing Period"):
(i) the Companies shall afford, and shall cause
the independent auditors, counsel and other advisors and
representatives (collectively, "Representatives") of the Companies to
afford, to ADAC and to ADAC's Representatives, reasonable access to the
properties, books, records (including filed Tax Returns, Tax Returns in
preparation and the audit work papers and other records of the
independent auditors of the Companies) and personnel of the Companies
in order that ADAC and ADAC's Representatives may have a full
opportunity to make such investigation as ADAC reasonably desires to
make of the Company;
(ii) the Companies shall permit ADAC and ADAC's
Representatives to make such reasonable inspections of the Companies
and their operations as ADAC may reasonably require from time to time;
and
(iii) the Companies shall furnish ADAC and ADAC's
Representatives with, and shall cause the Companies' Representatives to
furnish ADAC with, such financial and operating data and other
information with respect to the business and properties of the
Companies as ADAC or its counsel may reasonably request from time to
time.
(b) Without limiting the generality of Section 6.1(a),
during the period from the date of this Agreement through the Closing
Date, the Companies shall promptly provide ADAC with copies of:
(i) all material operating and financial reports
prepared by the Companies for its senior management, including copies
of the unaudited monthly balance sheets of the Companies and the
related unaudited monthly statements of operations, changes in
financial position and changes in shareholders' equity (with copies of
such monthly financial statements to be delivered to ADAC no later than
the 20th day after the last day of the month to which they relate);
(ii) any written materials or written
communications sent by the Company to its shareholders generally in
connection with their status as such; and
(iii) any notice, report or other document filed
with or sent to any Governmental Authority in connection with any of
the Transactions.
(c) No investigation by ADAC or any of its
Representatives pursuant to this Section 6.1 shall limit or otherwise
affect any representations or warranties of the Companies or any
condition to any obligation of ADAC.
6.2 Conduct of Business of the Companies.
(a) Except as provided in Section 6.2(b), during the
Pre-Closing Period, (i) the Companies shall conduct their business in
the ordinary and usual course consistent with past practice and (ii)
the Companies shall use their best efforts to maintain and preserve
intact their business organizations, to keep available the services of
their officers and employees and to maintain satisfactory relations
with lessors, suppliers, contractors, distributors, customers and
others having business relationships with the Companies.
(b) During the Pre-Closing Period,
(i) the Companies shall keep in full force all
insurance policies identified in the Disclosure Schedule;
(ii) the Companies shall (to the extent requested
by ADAC) cause its officers to report regularly (but in no event less
frequently than weekly) to ADAC concerning the status of the Companies'
businesses;
(iii) the Companies shall not declare, accrue, set
aside or pay any dividend or make any other distribution in respect of
any shares of capital stock, and shall not repurchase, redeem or
otherwise reacquire any shares of capital stock or other securities;
(iv) the Companies shall not sell, issue or
authorize the issuance of (A) any capital stock or other security, (B)
any option, call, warrant or right to acquire, or relating to, any
capital stock or other security, or (C) any instrument convertible into
or exchangeable for any capital stock or other security;
(v) none of the Companies nor any of the
Shareholders shall amend or permit the adoption of any amendment to the
Companies' articles of incorporation or bylaws, or effect or permit the
Companies to become a party to any Acquisition Transaction,
recapitalization, reclassification of shares, stock split, reverse
stock split or similar transaction;
(vi) the Companies shall not form any subsidiary or
acquire any equity interest or other interest in any other entity;
(vii) the Companies shall not make any capital
expenditure, except for capital expenditures that, when added to all
other capital expenditures made on behalf of the Companies during the
Pre-Closing Period, do not exceed $5,000 in the aggregate (for purposes
hereof, purchases of equipment held for sale shall not be deemed
capital expenditures);
(viii) the Companies shall not (i) enter into or
become bound by, or permit any of the Assets to become bound by, any
Material Contract or (ii) amend or prematurely terminate, or waive any
material right or remedy under, any Material Contract;
(ix) the Companies shall not (A) acquire, lease or
license any right or other asset from any other Person, (B) sell or
otherwise dispose of, or lease or license, any right or other asset to
any other Person, or (C) waive or relinquish any right, except for
immaterial assets acquired, leased, licensed or disposed of by the
Companies pursuant to Contracts that are not Material Contracts;
(x) the Companies shall not (A) lend money to any
person or entity, or (B) incur or guarantee any indebtedness;
(xi) the Companies shall not (A) establish, adopt
or amend any Employee Benefit Plan, (B) pay any bonus or make any
profit-sharing or similar payment to, or increase the amount of the
wages, salary, commissions, fringe benefits or other compensation or
remuneration payable to, any of its directors, officers or employees,
or (C) hire more any new employees.
(xii) the Companies shall not change any of their
methods of accounting or accounting practices in any respect;
(xiii) the Companies shall not make any Tax election;
(xiv) the Companies shall not commence or settle any
Legal Proceeding, which could have an adverse effect on the businesses
being acquired or on ADAC, or its business, properties or assets;
(xv) the Companies shall not enter into any
material transaction or take any other material action outside the
ordinary course of business or inconsistent with its past practices;
and
(xvi) the Companies shall not agree or commit to
take any of the actions described in clauses "(iii)" through "(xv)" of
this Section 6.2.
6.3 Notification; Updates to Disclosure Schedule.
(a) During the Pre-Closing Period, the Companies shall
promptly notify ADAC in writing of:
(i) the discovery by any Company of any event,
condition, fact or circumstance that occurred or existed on or prior to
the date of this Agreement and that caused or constitutes an inaccuracy
in or breach of any representation or warranty made by any Company or
any of the Shareholders in this Agreement;
(ii) any event, condition, fact or circumstance
that occurs, arises or exists after the date of this Agreement and that
would cause or constitute an inaccuracy in or breach of any
representation or warranty made by the Companies or any of the
Shareholders in this Agreement if (A) such representation or warranty
had been made as of the time of the occurrence, existence or discovery
of such event, condition, fact or circumstance, or (B) such event,
condition, fact or circumstance had occurred, arisen or existed on or
prior to the date of this Agreement;
(iii) any breach of any covenant or obligation of
the Companies or any of the Shareholders; and
(iv) any event, condition, fact or circumstance
that would make the timely satisfaction of any of the conditions set
forth in Articles 7 or 8 impossible or unlikely.
(b) If any event, condition, fact or circumstance that
is required to be disclosed pursuant to Section 6.3(a) requires any
change in the Disclosure Schedule, or if any such event, condition,
fact or circumstance would require such a change assuming the
Disclosure Schedule were dated as of the date of the occurrence,
existence or discovery of such event, condition, fact or circumstance,
then the Companies shall promptly deliver to ADAC an update to the
Disclosure Schedule specifying such change. No such update shall be
deemed to supplement or amend the Disclosure Schedule for the purpose
of (i) determining the accuracy of any of the representations and
warranties made by the Companies or any of the Shareholders in this
Agreement, or (ii) determining whether any of the conditions set forth
in Article 8 have been satisfied.
6.4 Negotiation With Others.
(a) During the Pre-Closing Period, the Companies shall
not, and shall not authorize or permit any of their respective
officers, directors or employees, directly or indirectly, to (i)
solicit, initiate or knowingly encourage or induce the making of any
Acquisition Transaction, (ii) furnish information regarding the
Companies in connection with an Acquisition Proposal or potential
Acquisition Transaction, (iii) negotiate or engage in discussions with
any third party with respect to any Acquisition Transaction, (iv)
approve, endorse or recommend any Acquisition Transaction or (v) enter
into any letter of intent, contract or other instrument related
directly or indirectly to any Acquisition Transaction or contracts with
advisors or consultants.
(b) During the Pre-Closing Period, none of Shareholders
shall, directly or indirectly, (i) solicit, initiate or knowingly
encourage or induce the making of any Acquisition Transaction, (ii)
furnish information regarding the Companies in connection with an
Acquisition Transaction or potential Acquisition Transaction, (iii)
negotiate or engage in discussions with any third party with respect to
any Acquisition Transaction, (iv) approve, endorse or recommend any
Acquisition Transaction or (v) enter into any letter of intent,
contract or other instrument related directly or indirectly to any
Acquisition Transaction or contracts with advisors or consultants.
Each Shareholder represents and warrants to ADAC that it has adopted
and approved the reorganization contemplated hereby and has voted all
shares of capital stock of the Companies owned by it in favor of the
Acquisition.
(c) The Companies shall immediately cease and cause to
be terminated any discussions or negotiations with any parties existing
as of the date of this Agreement and that relate to any Acquisition
Transaction.
6.5 Additional Agreements. The Companies and each Shareholder
agree to use their best efforts to take, or cause to be taken, all
actions necessary to consummate the Acquisition and make effective the
other Transactions. Without limiting the generality of the foregoing,
the Companies shall use all commercially reasonable efforts to obtain
the consent and approval of each Governmental Body, lessor or other
person whose consent or approval is required (by virtue of any
contractual provision or Legal Requirement or otherwise) in order to
permit the consummation of the Acquisition or any of the other
Transactions or in order to enable ADAC to conduct the businesses of
the Companies in the manner in which such businesses are currently
being conducted.
6.6 Public Announcements. During the Pre-Closing Period, none
of the Companies nor any of the Shareholders shall (and the Companies
shall not permit any of their representatives to) issue any press
release or make any public statement regarding this Agreement or the
Acquisition, or regarding any of the other transactions contemplated by
this Agreement, without ADAC's prior written consent. During the Pre-
Closing Period, ADAC will consult with the Companies prior to issuing
any press release or making any public statement regarding the
Acquisition (unless ADAC reasonably determines that ADAC is required,
by virtue of any applicable Legal Requirement, to issue any such press
release or make any such public statement under circumstances that make
it infeasible or impractical to consult with the Companies).
6.7 Employment Agreements. Each of Messrs. Stockton and
Manubay, on the one hand, and Messrs. Karlen and Marino, on the other
hand, shall execute and deliver to ADAC, on or prior to the Closing
Date, Employment Agreements substantially in the forms attached hereto
as Exhibits F-1 and F-2.
6.8 Continuity of Interest Certificates. Each Shareholder
shall execute and deliver to ADAC, as promptly as possible after the
execution of this Agreement, a Continuity of Interest Certificate in
the form attached hereto as Exhibit G.
6.9 Tax Certificates. The Companies shall deliver to ADAC's
counsel a tax certificate substantially in the form attached hereto as
Exhibit H (the "Company Tax Certificate"). ADAC shall deliver to the
Companies' counsel a tax certificate substantially in the form attached
hereto as Exhibit I (the "ADAC Tax Certificate").
6.10 Lease. ADAC and the landlord of the premises currently
occupied by the Companies shall execute a lease in the form of Exhibit
J attached hereto (the "Lease").
6.11 Registration Statement. As soon as practicable but no
later than 120 days following the Closing Date, ADAC shall prepare and
cause to be filed with the SEC a Registration Statement on Form S-3 to
register all of the shares of ADAC Common Stock to be issued to the
Companies in the Acquisition. ADAC shall use its best efforts to cause
such registration statement to become effective as soon as practicable
after the filing thereof.
7
CONDITIONS PRECEDENT TO OBLIGATIONS OF ADAC
The obligations of ADAC to effect the Acquisition and to
otherwise consummate the transactions contemplated hereby are subject
to the fulfillment at or prior to the Closing of each of the following
conditions:
7.1 Representations and Warranties Accurate. The
representations and warranties of the Companies and the Shareholders
contained in this Agreement and in each of the other instruments and
documents delivered to ADAC in connection with the transactions
contemplated hereby shall have been accurate in all respects as of the
date of this Agreement. The representations and warranties of the
Companies and the Shareholders contained in this Agreement and in each
of the other instruments and documents delivered to ADAC in connection
with the transactions contemplated hereby shall be accurate in all
respects as of the Closing Date as if made on and as of the Closing
Date.
7.2 Compliance With Covenants. The Companies and the
Shareholders shall have complied with and performed in all material
respects each covenant contained in this Agreement that is required to
be performed by them on or prior to the Closing Date.
7.3 Consents. All consents required to be obtained in
connection with the Acquisition and the other transactions contemplated
by this shall have been obtained and shall be in full force and effect.
7.4 Agreements and Documents. ADAC and the Companies shall
have received the following agreements and documents, each of which
shall be in full force and effect:
(a) Companies' Investment Certificate in the form of
Exhibit K, dated as of the date hereof, executed by each of the
Companies and the Shareholders;
(b) Employment Agreements in the form of Exhibit F-1 and
F-2, executed by Messrs. Stockton and Manubay, and Messrs. Karlen and
Marino, respectively;
(c) Continuity of Interest Certificates in the form of
Exhibit G, executed by each Company and Shareholder;
(d) a legal opinion of counsel to the Companies, dated
as of the Closing Date, in the form to be agreed by counsel for the
Companies and ADAC;
(e) a certificate executed by each Company and the
Shareholders and containing the representation and warranty of each
that each of the representations and warranties set forth in Section 4
is accurate in all respects as of the Closing Date as if made on the
Closing Date and that the conditions set forth in Sections 7.1, 7.2,
7.3, 7.6 and 7.9 have been duly satisfied (the " Closing Certificate");
7.5 Employees. At least 95% of the employees of the Companies
shall have accepted employment with ADAC contingent upon the closing of
the Acquisition.
7.6 No Material Adverse Change. There shall have been no
material adverse change in the business, condition, assets,
liabilities, operations, financial performance or prospects of any of
the Companies since the date of this Agreement.
7.7 Exempt Transaction. The issuance of the ADAC stock to the
Shareholders in the Acquisition shall be exempt from the registration
requirements of the Securities Act of 1933, as amended.
7.8 No Restraints. No temporary restraining order,
preliminary or permanent injunction or other order preventing the
consummation of the Acquisition shall have been issued by any court of
competent jurisdiction and remain in effect, and there shall not be any
Legal Requirement enacted or deemed applicable to the Acquisition that
makes consummation of the Acquisition illegal.
7.9 No Legal Proceedings. No person shall have commenced or
threatened to commence any Legal Proceeding challenging or seeking the
recovery of a material amount of damages in connection with the
Acquisition or that may have the effect of preventing, delaying, making
illegal or otherwise interfering with the Acquisition or any of the
other transactions contemplated by this Agreement.
7.10 Confidentiality and Nondisclosure Agreements. Each
employee of the Companies who will become an employee of ADAC following
the Acquisition shall have executed and delivered to ADAC ADAC's
standard form of Nondisclosure and Inventions Agreement.
7.11 Lease. ADAC and the appropriate landlord shall have
executed the Lease, and the previous leases and subleases for the
underlying property shall have been terminated.
7.12 Bulk Sales. ADAC shall have determined that all filings,
publications and notification requirements set forth in the Bulk
Transfers division of the California Uniform Commercial Code have been
complied with or that such requirements are not applicable to the
transactions described by this Agreement or the parties shall have
waived such actions.
8
CONDITIONS PRECEDENT TO THE COMPANIES' AND THE SHAREHOLDERS' OBLIGATIONS
The obligations of the Companies and the Shareholders to effect
the Acquisition and otherwise consummate the transactions contemplated
by this Agreement are subject to the fulfillment, at or prior to the
Closing, of the following conditions:
8.1 Representations and Warranties Accurate. The
representations and warranties of ADAC contained in this Agreement and
in each of the other instruments and documents delivered to the
Companies and the Shareholders in connection with the transactions
contemplated hereby shall have been accurate in all material respects
as of the date of this Agreement. The representations and warranties
of ADAC contained in this Agreement and in each of the other
instruments and documents delivered to the Companies and the
Shareholders in connection with the transactions contemplated hereby
shall be accurate in all respects as of the Closing Date as if made on
and as of the Closing Date.
8.2 Compliance With Covenants. ADAC shall have complied with
and performed in all material respects each covenant contained in this
Agreement that is required to be performed by ADAC on or prior to the
Closing Date.
8.3 Certificate. ADAC shall have delivered to the Companies
and the Shareholders a certificate of an executive officer of ADAC
evidencing compliance with the conditions set forth in Sections 8.1 and
8.2.
8.4 Legal Opinion. The Companies shall have received an
opinion of counsel to ADAC, dated the Closing Date, in a form to be
agreed by counsel for the Companies and ADAC.
8.5 Absence of Restraint. No order to restrain, enjoin or
otherwise prevent the consummation of the Acquisition or any of the
other Transactions shall have been entered by any court or Governmental
Body.
9
TERMINATION OF AGREEMENT
9.1 Termination.
(a) This Agreement may be terminated prior to the
Effective Time:
(i) by mutual written consent of the respective
Boards of Directors of ADAC and the Companies;
(ii) by either ADAC or SCI if the Acquisition shall
not have been consummated by November 30, 1997 (unless the failure to
consummate the Acquisition is attributable to a failure on the part of
the party seeking to terminate this Agreement to perform any material
obligation required to be performed by such party at or prior to the
Effective Time);
(iii) by either ADAC or SCI if a court of competent
jurisdiction or Governmental Authority shall have issued a final and
nonappealable order, decree or ruling, or shall have taken any other
action, having the effect of permanently restraining, enjoining or
otherwise prohibiting the Acquisition;
(b) This Agreement may be terminated prior to the
Closing Date:
(i) by ADAC if any of the Companies' or the
Shareholders' representations and warranties contained in this
Agreement shall be or shall have become materially inaccurate as of the
date of this Agreement, or if any of the Companies' or the Shareholder'
covenants contained in this Agreement shall have been breached in any
material respect; provided, however, that if an inaccuracy in the
Companies' or the Shareholders' representations and warranties or a
breach of a covenant by the Companies or the Shareholders' is curable,
the Companies and/or the Shareholders shall have ten days to cure such
breach; or
(ii) by SCI if any of ADAC's representations and
warranties contained in this Agreement shall be or shall have become
materially inaccurate as of the date of this Agreement, or if any of
ADAC's covenants contained in this Agreement shall have been breached
in any material respect; provided, however, that if an inaccuracy in
ADAC's representations and warranties or a breach of a covenant by ADAC
is curable by ADAC, ADAC shall have ten days to cure such breach.
9.2 Effect of Termination. In the event of the termination of
this Agreement as provided in Section 9.1, this Agreement shall be of
no further force or effect; provided, however, that (i) this
Section 9.2, Section 9.3 and Section 11.9 shall survive the termination
of this Agreement and shall remain in full force and effect and
(ii) the termination of this Agreement shall not relieve any party from
any liability for any breach of this Agreement.
9.3 Fees and Expenses. Each of ADAC, the Companies and the
Shareholders shall bear its own expenses in connection with the
preparation, negotiation, execution and performance of this Agreement,
the Acquisition and the Transactions.
10
INDEMNITY AND HOLDBACK
10.1 Agreement to Indemnify. The Companies and the
Shareholders hereby jointly and severally agree to indemnify and hold
ADAC and its affiliates, and each of their respective officers,
directors, employees and agents, harmless from and against all claims,
losses, liabilities, damages, deficiencies, costs and expenses,
including reasonable attorneys' fees and expenses of investigation
("Losses"), incurred by any of them as a result of (i) any inaccuracy
or breach of a representation or warranty of the Companies or the
Shareholders, (ii) any failure of the Companies or the Shareholders to
perform or comply with any covenant contained herein to be complied
with by them, or (iii) any Liability of the Companies, except to the
extent such Liability constitutes an Assumed Liability.
10.2 Holdback Amount. On the Closing Date, ADAC shall withhold
an aggregate of ten percent (10%) of the ADAC Common Stock (the
"Holdback Common Stock") being delivered pursuant to Article 2 hereof,
and the Companies shall deliver to ADAC endorsed stock powers (the
"Stock Powers") in blank for the Holdback Common Stock. ADAC shall
hold the Holdback Common Stock until the date specified in Section 10.8
(the "Holdback Period").
10.3 Voting of Shares. During the Holdback Period, the record
owners of the shares of Holdback Common Stock shall be entitled to
exercise all voting rights with respect to such shares of Holdback
Common Stock. Any cash, securities or other property distributable
(whether by way of dividend, stock split or otherwise) in respect of or
in exchange for any shares of Holdback Common Stock held by ADAC shall
not be distributed to the record owner of such shares, but rather shall
be held by ADAC. At the time any shares of Holdback Common Stock are
released by ADAC, any cash, securities or other property previously
distributed in respect of or in exchange for such shares shall be
released by ADAC to such person.
10.4 Transferability; Fractional Shares. The interests of the
record owners in the Holdback Common Stock shall not be assignable or
transferable, other than by operation of law. No transfer of any of
such interests by operation of law shall be recognized or given effect
until ADAC shall have received written notice of such transfer. No
fractional shares of Holdback Common Stock shall be retained in or
released pursuant to this Article 10. In connection with any release
of shares of the Holdback Common Stock, ADAC shall be permitted to
"round down" or to follow such other rounding procedures as ADAC
reasonably determines to be appropriate in order to avoid retaining any
fractional share and in order to avoid releasing any fractional share.
10.5 Claim Notice. If ADAC determines in good faith that (i)
there has been a possible breach by the Companies or any Shareholder of
any representation, warranty, covenant or other provision set forth in
this Agreement or any agreement or instrument delivered pursuant
hereto; (ii) any breach of any covenant or obligation of the Companies
or any of the Shareholders; or (iii) there is a reasonable likelihood
of ADAC incurring any other Losses covered by Section 10.1, and if ADAC
wishes to make a claim against the Holdback Common Stock with respect
to any matter set forth in clause "(i)," "(ii)," or "(iii)" above, then
ADAC may deliver to Mr. Rick Stockton, as agent (the "Agent") for the
persons or entities entitled to the Holdback Common Stock a certificate
signed by one or more of its officers (a "Claim Notice") setting forth
the claim and the amount of the claim (the "Claim Amount"), with a copy
to the Company's counsel. No Claim Notice may be issued following the
Expiration Date.
10.6 Response Notice. Within thirty (30) days after the
delivery of a Claim Notice to the Agent, the Agent shall deliver to
ADAC a written notice (the "Response Notice") containing:
(a) instructions to the effect that shares of Holdback
Common Stock having a Stipulated Value (as defined below) equal to the
entire Claim Amount set forth in such Claim Notice are to be released
to ADAC; or
(b) instructions to the effect that shares of Holdback
Common Stock having a Stipulated Value equal to a specified portion
(but not the entire amount) of the Claim Amount set forth in such Claim
Notice are to be released to ADAC, together with a statement that the
remaining portion of such Claim Amount is being disputed;
(c) a statement that the entire Claim Amount set forth
in such Claim Notice is being disputed; or
(d) if the Claim Notice relates to a third party claim
and the Agent, on behalf of the persons or entities entitled to the
Holdback Common Stock, desires to defend, indemnify and hold harmless
ADAC against the underlying claim, has executed an agreement to that
effect with ADAC and posted any security deemed reasonably necessary by
ADAC and has actually assumed the defense of such claim by such date,
instructions to the effect that the shares of Holdback Common Stock
that would otherwise by released to ADAC with respect to such claim
shall continue to be retained by ADAC in accordance with the other
provisions hereof as if the Claim Notice with respect to such third
party claim had not been made. Agent shall reimburse ADAC for
reasonable costs of providing assistance in such litigation as
requested by Agent. ADAC shall have the right to participate, at its
own expense, in the defense of any such third party claim, and, to the
extent any settlement of such claim could reasonably be expected to
have an adverse effect on ADAC or its business, properties or assets,
or requires any action on the part of ADAC, shall have the right to
consent to any settlement thereof.
If no Response Notice is received by ADAC from the Agent within thirty
(30) days after the delivery of a Claim Notice to the Agent, then the
Companies shall be deemed to have given instructions that shares of
Holdback Common Stock having a Stipulated Value equal to the entire
Claim Amount set forth in such Claim Notice are to be released to ADAC.
10.7 Release of Shares to ADAC.
(a) If the Agent gives (or is deemed to have given)
instructions that shares of Holdback Common Stock having a Stipulated
Value equal to the entire Claim Amount set forth in a Claim Notice are
to be released to ADAC, then ADAC shall be authorized to use the Stock
Powers to transfer to ADAC shares of Holdback Common Stock having a
Stipulated Value equal to such Claim Amount.
(b) If a Response Notice delivered by the Agent in
response to a Claim Notice contains instructions to the effect that
shares of Holdback Common Stock having a Stipulated Value equal to a
specified portion (but not the entire amount) of the Claim Amount set
forth in such Claim Notice are to be released to ADAC, then (i) ADAC
shall be authorized to use the Stock Powers to transfer to ADAC shares
of Holdback Common Stock having a Stipulated Value equal to such
specified portion of such Claim Amount, and (ii) the procedures set
forth in Section 10.7(c) shall be followed with respect to the
remaining portion of such Claim Amount.
(c) If a Response Notice delivered by the Agent in
response to a Claim Notice contains a statement that all or a portion
of the Claim Amount set forth in such Claim Notice is being disputed
(such Claim Amount or the disputed portion thereof being referred to as
the "Disputed Amount"), then, notwithstanding anything contained in
Section 10.8, ADAC shall continue to hold (in addition to any other
shares of Holdback Common Stock permitted to be retained, whether in
connection with any other dispute, or otherwise) shares of Holdback
Common Stock having a Stipulated Value equal to One Hundred Twenty-Five
percent (125%) of the Disputed Amount. Such shares of Holdback Common
Stock shall continue to be held until such time as (i) ADAC or the
Agent execute a settlement agreement containing instructions regarding
the release of such shares, or (ii) ADAC receives a copy of a court
order containing instructions to ADAC regarding the release of such
shares. ADAC shall thereupon release such shares of Holdback Common
Stock in accordance with the instructions set forth in such settlement
agreement or court order. (The parties acknowledge that it is
appropriate to retain more than One Hundred percent (100%) of the Claim
Amount in recognition of the fact that ADAC may have underestimated the
aggregate amount of the actual and potential Losses arising from a
particular breach.) For purposes of this Article 10, the "Stipulated
Value" of each of the shares of Holdback Common Stock held shall be
deemed to be equal to the Designated ADAC Stock Price.
(d) Shares of Holdback Common Stock shall be transferred
to ADAC as permitted under this Article 10 on a pro-rata basis from
each Company, based on the number of shares of Holdback Common Stock in
the name of each Company. Any release of Holdback Common Stock to ADAC
shall be an adjustment in and reduction of the consideration due the
Companies as set forth in Article 2.
10.8 Release of Shares to Agent. On the first anniversary of
the Closing Date (the "Expiration Date"), ADAC shall release to the
Companies or their successors in interest the remaining shares of
Holdback Common Stock then held by ADAC, except to the extent any such
shares are to be retained by ADAC pursuant to Section 10.7(c).
10.9 Basket. Notwithstanding anything to the contrary
contained herein, ADAC shall have no right to make a claim under this
Section 10 until the aggregate amount of all claims being made by ADAC
exceed $25,000, at which point ADAC may assert any and all claims it
has under this Section.
11
MISCELLANEOUS
11.1 Non-Compete. Each Company and each Shareholder hereby
agrees that during the period commencing upon the Closing Date and
ending two years after the Closing Date, without the prior written
consent of ADAC, it shall not, within any state in the United States,
either as an individual or as an employee, agent, consultant, advisor,
independent contractor, general partner, officer, director, shareholder
or investor of any person: (i) participate or engage in the design,
development, manufacture, production, marketing, sale or servicing of
any product, or the provision of any service, that directly or
indirectly competes with any product or service designed, developed,
manufactured, produced, marketed, sold or provided by ADAC; (ii)
solicit or attempt to solicit any person who at the time of such
inducement is an employee of ADAC to perform work or services for any
other person; or (iii) permit the name of such Company or Shareholder
to be used in connection with any business that competes with ADAC.
The foregoing obligations shall terminate in the event ADAC commits a
material breach of this Agreement.
11.2 Amendment. This Agreement may be amended with the
approval of the respective Boards of Directors of the Companies and
ADAC at any time; provided, however, that no amendment shall be made
which would have a material adverse effect on the Shareholders without
the further approval of such Shareholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of
the parties hereto.
11.3 Waiver. No failure on the part of any party to exercise
any power, right, privilege or remedy under this Agreement, and no
delay on the part of any party in exercising any power, right,
privilege or remedy under this Agreement, shall operate as a waiver of
such power, right, privilege or remedy; and no single or partial
exercise of any such power, right, privilege or remedy shall preclude
any other or further exercise thereof or of any other power, right,
privilege or remedy. No party shall be deemed to have waived any claim
arising out of this Agreement, or any power, right, privilege or remedy
under this Agreement, unless the waiver of such claim, power, right,
privilege or remedy is expressly set forth in a written instrument duly
executed and delivered on behalf of such party; and any such waiver
shall not be applicable or have any effect except in the specific
instance in which it is given.
11.4 Severability. In the event that any provision of this
Agreement or the application thereof, becomes or is declared by a court
of competent jurisdiction to be illegal, void, or unenforceable, the
remainder of this Agreement will continue in full force and effect and
the application of such provision to other persons or circumstances
will be interpreted so as reasonably to effect the intent of the
parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the extent possible, the economic,
business an other purposes of such void or unenforceable provision.
11.5 Entire Agreement; Counterparts; Applicable Law. This
Agreement and the other agreements referred to herein constitute the
entire agreement and supersede all prior agreements and understandings,
both written and oral, among or between any of the parties with respect
to the subject matter hereof, including the letter agreement between
the parties dated August 7, 1997. This Agreement may be executed in
several counterparts, each of which shall be deemed an original and all
of which shall constitute one and the same instrument, and shall be
governed in all respects by the laws of the State of California as
applied to contracts entered into and to be performed entirely within
California.
11.6 Assignability. This Agreement shall be binding upon: the
Companies and their respective successors and assigns (if any); the
Shareholders and their respective personal representatives, executors,
administrators, estates, heirs, successors and assigns (if any); and
ADAC and its successors and assigns (if any). This Agreement shall
inure to the benefit of: the Companies; the Shareholders; ADAC; and
the respective successors and assigns (if any) of the foregoing. This
Agreement may not be assigned by any party without the prior written
consent of all the other parties hereto.
11.7 Notices. All notices and other communications pursuant to
this Agreement shall be in writing and shall be deemed given if
delivered personally, faxed, sent by nationally-recognized, overnight
courier or mailed by registered or certified mail (return receipt
requested), postage prepaid, to the parties at the following addresses
(or at such other address for a party as shall be specified by like
notice):
If to ADAC,
to: ADAC Laboratories
540 Alder Drive
Milpitas, California 95035
Attention: Steve Giardina,
with a copy to: Karen L.Masterson
If to the Companies
or the Shareholders,
to: SCI
1137 East Philadelphia Street
Ontario, CA 91761
with a copy to: Goldenring & Prosser
6050 Seahawk Street
Ventura, CA 93003
Attn: Peter Goldenring
All such notices and other communications shall be deemed to have been
received (a) in the case of personal delivery, on the date of such
delivery, (b) in the case of a fax, when the party receiving such fax
shall have actually received the communication, (c) in the case of
delivery by nationally-recognized, overnight courier, on the Business
Day following dispatch and (d) in the case of mailing, on the fifth
Business Day following such mailing.
11.8 Cooperation. Each of the Companies, the Shareholders and
ADAC agrees to cooperate fully with the other and to execute and
deliver such further documents, certificates, agreements and
instruments and to take such other actions as may be reasonably
requested by the other to evidence or reflect the Transactions and to
carry out the intent and purposes of this Agreement.
11.9 Confidentiality. The parties hereby agree that all
information about the other that is or was obtained pursuant to this
Agreement or the letter agreement dated August 7, 1997, shall be deemed
confidential and shall not be disclosed to any other party except as
contemplated hereby and such information will not be used for any
purpose except evaluating the desirability of the Acquisition. The
foregoing shall not apply however to information (i) known to a party
prior to such disclosure to such party, (ii) information that become
generally available to the public or to a party without confidentiality
restrictions after the date hereof, and (iii) required to be disclosed
by law or court order. Without limiting the generality of the
foregoing, on and at all times after the Closing Date, each Shareholder
shall keep confidential, and shall not use or disclose to any other
Person, any non-public document or other non-public information in such
Shareholder's possession that relates to the businesses of the
Companies or ADAC.
11.10 Survival of Representations and Warranties and Indemnity.
The representations and warranties made by and the indemnity given by
the Companies and the Shareholders in this Agreement and the other
agreements and instruments delivered pursuant hereto shall survive the
Closing and shall expire on the Expiration Date, provided that any of
the foregoing relating to Taxes shall survive for the applicable
statute of limitations period, and provided further that if at any time
prior to the Expiration Date, ADAC delivers to the Agent a Claim Notice
then the claim asserted in such notice shall survive the Expiration
Date until such time as such claim is fully and finally resolved. The
representations and warranties of ADAC shall expire on the Closing
Date.
11.11 Certain Terms. As used in this Agreement:
(a) "Acquisition Transaction " shall mean any proposal
(other than any proposal by ADAC) regarding (i) any merger,
consolidation, share exchange, business combination or other similar
transaction or series of related transactions involving the Companies;
(ii) any sale, lease, exchange, transfer or other disposition of the
assets of the Companies constituting more than 10% of the consolidated
assets of the Companies or accounting for more than 10% of the
consolidated revenues of the Companies in any one transaction or in a
series of related transactions; and (iii) any offer to purchase, tender
offer, exchange offer or any similar transaction or series of related
transactions made by any person involving more than 10% of the
outstanding shares of the capital stock of the Companies.
(b) "Assumed Contracts" shall mean Company Contracts
listed in Exhibit A.
(c) "Company Contract" shall mean any Contract: (a) to
which any Company is a party; (b) by which any Company or any of its
assets is or may become bound or under which the Companies have, or may
become subject to, any obligation; or (c) under which any of the
Companies have or may acquire any right or interest.
(d) "Company Proprietary Asset" shall mean any
Proprietary Asset owned by or licensed to the Companies or otherwise
used by the Companies.
(e) "Contract" shall mean any written, oral or other
agreement, contract, subcontract, lease, understanding, instrument,
note, warranty, insurance policy, benefit plan, or legally binding
commitment or undertaking of any nature.
(f) "Employee Benefit Plan" shall have the meaning
specified in Section 3(3) of ERISA.
(g) "Environmental Law" shall mean any federal, state,
local or foreign Legal Requirement relating to pollution or protection
of human health or the environment (including ambient air, surface
water, ground water, land surface or subsurface strata), including any
law or regulation relating to emissions, discharges, releases or
threatened releases of Materials of Environmental Concern, or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environmental
Concern.
(h) "Governmental Authorization" shall mean any: (a)
permit, license, certificate, franchise, permission, clearance,
registration, qualification or authorization issued, granted, given or
otherwise made available by or under the authority of any Governmental
Body or pursuant to any Legal Requirement; or (b) right under any
Contract with any Governmental Body.
(i) "Governmental Body" means any (i) nation, state,
commonwealth, province, territory, county, municipality, district or
other jurisdiction of any nature; (ii) federal, state, local,
municipal, foreign or other government; or (iii) governmental or
quasi-governmental authority of any nature (including any governmental
division, department, agency, commission, instrumentality, official,
organization, unit, body or entity and any court or other tribunal.
(j) The words "include" and "including," and variations
thereof, shall not be deemed to be terms of limitation, but rather
shall be deemed to be followed by the words "without limitation."
(k) "Legal Requirements" means any federal, state,
local, municipal, foreign or other law, statute, constitution,
principle of common law, resolution, ordinance, code, edict, decree,
rule, regulation, ruling or requirement issued, enacted, adopted,
promulgated, implemented or otherwise put into effect by or under the
authority of any Governmental Body.
(l) "Liabilities" shall mean obligations and claims of
any nature, whether known or unknown, absolute, contingent or
otherwise, and whether due or to become due.
(m) "Material Adverse Effect" shall mean a material
adverse effect on the business, operations, results, financial
condition, assets or prospects of the Companies other than as a result
(i) general economic or industry conditions, or (ii) the performance by
the Companies of their obligations, or the exercise by ADAC of its
rights under this Agreement (a "Material Adverse Effect").
(n) "Materials of Environmental Concern" shall include
chemicals, pollutants, contaminants, wastes, toxic substances,
petroleum and petroleum products and any other substance that is now or
in the future regulated by any Environmental Law or that is otherwise a
danger to health, reproduction or the environment.
(o) "Person" refers to any (i) individual,
(ii) corporation, partnership, company or other entity, or
(iii) Governmental Body.
(p) "Proprietary Asset" shall mean any: (a) patent,
patent application, trademark (whether registered or unregistered),
trademark application, trade name, fictitious business name, service
mark (whether registered or unregistered), service mark application,
copyright (whether registered or unregistered), copyright application,
maskwork, maskwork application, trade secret, know-how, customer list,
franchise, system, computer software, source code, computer program,
invention, design, blueprint, engineering drawing, proprietary product,
technology, proprietary right or other intellectual property right or
intangible asset; or (b) right to use or exploit any of the foregoing.
(q) "Tax" shall mean any tax (including any income tax,
franchise tax, capital gains tax, gross receipts tax, value-added tax,
surtax, excise tax, ad valorem tax, transfer tax, stamp tax, sales tax,
use tax, property tax, business tax, withholding tax or payroll tax),
levy, assessment, tariff, duty (including any customs duty), deficiency
or fee, and any related charge or amount (including any fine, penalty
or interest), imposed, assessed or collected by or under the authority
of any Governmental Body.
(r) "Tax Return" shall mean any return (including any
information return), report, statement, declaration, estimate,
schedule, notice, notification, form, election, certificate or other
document or information filed with or submitted to, or required to be
filed with or submitted to, any Governmental Body in connection with
the determination, assessment, collection or payment of any Tax or in
connection with the administration, implementation or enforcement of or
compliance with any Legal Requirement relating to any Tax.
11.12 Titles. The titles and captions of the Articles and
Sections of this Agreement are included for convenience of reference
only and shall have no effect on the construction or meaning of this
Agreement.
11.13 Articles, Sections and Exhibits. Except as otherwise
indicated, all references in this Agreement to "Articles," "Sections"
and "Exhibits" are intended to refer to Articles and Sections of this
Agreement and Exhibits to this Agreement.
IN WITNESS WHEREOF, the parties hereby have executed this Agreement
and Plan of Reorganization as of the date first above written.
"ADAC"
ADAC LABORATORIES,
a California corporation
By:
---------------------------
---------------------------
[Print name and title]
the "Companies"
SOUTHERN CATS, INC., a California
corporation
By:
---------------------------
---------------------------
[Print name and title]
SPECIALIZED MEDICAL X-RAY, INC., a
California corporation
By:
---------------------------
---------------------------
[Print name and title]
J&J MEDICAL IMAGING SYSTEMS, INC.,
a California corporation
By:
---------------------------
---------------------------
[Print name and title]
the "Shareholders"
---------------------------
Rick Stockton
---------------------------
Ed Manubay
---------------------------
James Karlen
---------------------------
Joseph Marino
<PAGE>
EXHIBIT 5.1
February 20, 1998
ADAC Laboratories
540 Alder Drive
Milpitas, California 95035
Gentlemen:
I am the Vice President, General Counsel and Secretary of
the Company and have acted as Company counsel in connection with the
offering and proposed sale of up to 139,131 shares of the Company's
Common Stock (the "Common Stock") to be offered by third parties
pursuant to a Registration Statement on Form S-3 to be filed under
the Securities Act of 1933, (the "Registration Statement"). In this
connection I have examined: (a) the Company's Registration Statement;
(b) the Company's Articles of Incorporation and Bylaws, as amended to
date; (c) minutes of meetings of the Company's Board of Directors;
and (d) such other proceedings, documents and records as we have
deemed necessary to enable me to render this opinion.
Based upon the foregoing, I am of the opinion that, when
sold as contemplated by the Registration Statement, the shares of
Common Stock covered by the Registration Statement will be validly
issued, fully paid and nonassessable.
I hereby consent to the use of this opinion as an exhibit
to the Registration Statement and to the reference to me under the
caption "Legal Matters" in the Prospectus included therein.
Karen L. Masterson
Vice President, General
Counsel and Secretary
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration
statement of ADAC Laboratories on Form S-3 of our report dated
November 4, 1997 on our audits of the consolidated financial
statements and financial statement schedules of ADAC Laboratories as
of September 28, 1997 and September 29, 1996, and for each of the
three fiscal years in the period ended September 28, 1997 which
report is included in the Company's Annual Report on Form 10-K for
the fiscal year ended September 28, 1997. We also consent to the
reference to our firm under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
San Jose, California
February 20, 1998
