SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act 1934
Date of Report: July 31, 1997
US DIAGNOSTIC INC.
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(Exact name of registrant as specified in charter)
DELAWARE
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(State or other jurisdiction of incorporation)
1-13392 11-3146389
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(Commission File Number) (IRS Employer Identification No.)
777 SOUTH FLAGLER DRIVE, SUITE 1201 EAST, WEST PALM BEACH, FLORIDA 33401
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(Address of principal executive offices) Zip Code)
Registrant's telephone number including area code: (561) 832-0006
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Item 5. OTHER EVENTS
The attached press release was issued on July 31, 1997. The press release
announced that U.S. Diagnostic Inc. has reached a settlement in principle,
subject to certain terms and conditions including court approval and notice to
the class members, of all of the shareholder class actions brought against the
Company in January 1997. The settlement amount is $5,875,000.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
( c ) EXHIBITS
10.44 Memorandum of Understanding
99.6 Press Release of the Company dated July 31, 1997
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
US DIAGNOSTIC INC.
/S/ JOSEPH A. PAUL
-----------------------
Joseph A. Paul
Chief Executive Officer,
Chief Operating Officer and President
Dated: August 4, 1997
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
10.44 Memorandum of Understanding
99.6 Press Release of the Company dated July 31, 1997
EXHIBIT 10.44
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
NORTHERN DIVISION
LYNNE M. GOLDEN, TRUSTEE, UAD CASE NO. 97-8010-CIV-ZLOCH
1/6/96 LYNNE M. GOLDEN TRUST,
individually and on behalf
of a class of all persons
similarly situated,
Plaintiff,
v.
U.S. DIAGNOSTIC INC., JEFFREY A.
GOFFMAN, KEITH G. GREENBERG,
JOSEPH A. PAUL, ROBERT D. BURKE,
AMOS F. ALMAND III, and COYOTE
CONSULTING & FINANCIAL SERVICES LLC,
Defendants.
- -------------------------------------/
SANDRA NEUMAN, individually
and on behalf of a class of
all persons similarly
situated,
Plaintiff, CASE NO. 97-8017-CIV-
ZLOCH
v.
U.S. DIAGNOSTIC INC.; JEFFREY A.
GOFFMAN; KEITH G. GREENBERG;
ROBERT D. BURKE; JOSEPH A. PAUL;
AMOS F. ALMAND III and COYOTE
CONSULTING,
Defendants.
- ------------------------------------/
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MEMORANDUM OF UNDERSTANDING
The parties to this litigation (the "Parties") by their undersigned
attorneys ("Class Counsel" on behalf of plaintiffs, and "Defendants' Counsel" on
behalf of all defendants with the exception of Keith Greenberg), have reached an
agreement in principle for the settlement of this litigation on the terms set
forth below and subject to court approval. This Memorandum outlines the terms of
the proposed settlement and is intended to be used as a basis for drafting a
Stipulation of Settlement and accompanying papers which shall embody the terms
set forth herein and such other and consistent terms as are agreed upon by
counsel for the Parties, including limitations upon the number and dollar amount
of requests for exclusion from the Class. In the event that the parties are
unable to agree on a Stipulation of Settlement after reasonable efforts, the
initial payment described in paragraph 3(1) shall be refunded, less any notice
and administration expenses, to U.S. Diagnostic, Inc.
1. For purposes of this settlement, the Class shall be defined
as those persons and entities who purchased the common stock of U.S. Diagnostic,
Inc., on a national securities exchange between March 15, 1996 and March 31,
1997 (the "Class Period"). The Class shall be certified for purposes of this
settlement only. Excluded from the Class are the defendants, the officers and
directors of U.S. Diagnostic during the Class Period, members
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of their immediate families and their legal representatives, heirs, successors
and assigns, any entity in which any excluded person has or had a controlling
interest, any person or persons, entity or entities, who acquired U.S.
Diagnostic common stock through a private transaction, or in connection with the
sale of any business.
2. Within ten business days of the filing of this Memorandum
of Understanding, Plaintiffs' Counsel shall file Amended Class Action
Complaints, in each of the above-captioned Actions asserting additional claims
alleging that the statements of operations, results thereon, and general
financial condition of U.S. Diagnostic, Inc., were materially misstated in the
year end 1995 annual report on Form 10-K and the quarterly reports on Form 10-Q
for the first three quarters of 1996 fiscal year. Such claims are specifically
included within and intended to be settled pursuant to this Memorandum of
Understanding. Prior to the filing of the Stipulation of Settlement, Plaintiffs'
Counsel shall move to consolidate the two above-styled Actions. It is the
parties' intention that this settlement shall be pursued, without duplication,
on a single track, in the consolidated Actions. Upon the filing of the
Stipulation of Settlement, all other pending related actions, (including Civil
Action Nos. 97-8011-CIV-RYSKAMP and 97-8054-CIV-RYSKAMP), shall be dismissed
without prejudice.
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3. Defendants shall pay or cause to be paid to the Class, in
settlement of the claims against them, the sum of $5,875,000 payable as follows:
(1) $587,500 within ten (10) days of execution of this Memorandum; (2)
$1,468,750 within ten (10) days of the Court's approval of the proposed Notice
advising the Class of the settlement; (3) $3,818,750 no later than twenty-five
(25) days prior to the Final Hearing on approval of the settlement, which
hearing shall occur not less than one hundred and forty-five (145) days from the
date of this Memorandum. The payments, when made, shall be deposited into an
interest-bearing account to be held in escrow by Plaintiffs' Counsel in the
above-styled Actions. Accrued interest shall become part of the account funds.
Class Counsel in the above-styled Actions shall administer the account. All
reasonable costs and expenses of class notice and administration of the
settlement shall be paid from the account when incurred. The account funds, less
any amounts incurred for notice, administration, and/or taxes shall revert to
the person(s) making the deposits if the settlement does not become effective.
4. As part of the Final Judgment approving this settlement,
plaintiffs shall dismiss the above-styled Actions with prejudice upon the
effective date of the settlement. The settlement shall further release each of
the defendants (with the exception of Keith Greenberg), Genesis Insurance
Company, and any agents or representatives for whom U.S. Diagnostic, Inc.
specifi-
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cally requests releases, of all claims that were or could have been asserted in
the Actions arising out of any open market purchases of U.S. Diagnostic common
stock during the Class Period. The settlement is not intended to release, and
shall not impair the rights of contribution or indemnification among the
defendants or the right of U.S. Diagnostic to seek contribution or indemnity
from any non-party. At the request, and in the sole discretion of U.S.
Diagnostic, Inc., the Final Judgment shall also include a release of Keith
Greenberg.
5. In the event of a default on any of the payments required
under paragraph 3 hereof, and the failure to cure said default within five (5)
days, Plaintiffs' Counsel, on behalf of the Class, shall be entitled only to
either: (1) retain all funds deposited in the account, less notice and
administration expenses, and present an affidavit of default to the Court, upon
the filing of which the Class shall be entitled to a judgment against U.S.
Diagnostic, Inc. on the amount of the default plus interest from the date of
default at the rate of 12% per annum; or (2) withdraw from the settlement,
return all funds in the account, less notice and administration expenses (paid
and accrued), and continue to prosecute these Actions.
6. Immediately upon execution of this Memorandum, the Parties
shall advise the Court in the above-styled cases of this agreement and shall
seek a stay of all pending proceedings in these Actions, and all related actions
pending effectuation of
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the settlement.
7. Following execution of this Memorandum, the Parties and
their counsel shall use their best efforts to finalize and execute an
appropriate Stipulation of Settlement and such other documentation as may be
required or appropriate in order to obtain approval by the Court of the
settlement of these Actions upon the terms set forth in this Memorandum.
Promptly upon execution of the Stipulation, the Parties shall apply to the Court
for preliminary approval of the settlement and for the scheduling of a hearing
for consideration of final approval of the settlement and Class Counsel's
application for an award of attorneys' fees and expenses. The Parties shall use
their best efforts to obtain final Court approval of the settlement. The
Stipulation of Settlement shall provide (among other terms): (a) that the Court
shall order preliminary approval of the Stipulation and settlement and direct
that notice of pendency and of the settlement be provided to the Class; (b) that
the consideration described in paragraphs 3 through 4 above shall be provided;
(c) that defendants have denied and continue to deny that they have committed
any violations of law, and state that they are entering into this settlement to
eliminate the burden and expense of further litigation; (d) that plaintiffs,
defendants, and their counsel and Insurer shall not assert that any claims or
defenses in these Actions were raised in bad faith or without reasonable basis;
(e) that the allocation of the
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settlement fund among the Class Members shall be subject to a Plan of Allocation
to be proposed by Class Counsel and approved by the Court; defendants will take
no position with respect to such proposed plan of allocation or such plan as may
be approved by the Court; such plan of allocation is a matter separate and apart
from the proposed settlement between the Parties and any decision by the Court
concerning the plan of allocation shall not affect the validity or finality of
the proposed settlement; and (f) that Class Counsel may apply for and receive an
award of attorneys' fees and reimbursement of expenses from the settlement fund
in such amounts as may be approved by the Court; and that any amount included in
such award shall be paid to Class Counsel immediately upon final district court
approval of the settlement and award, subject to each counsel's obligation to
pay back any such amount if, or to the extent that, the award order is amended
or does not become final. The award of attorneys' fees is a matter separate and
apart from the proposed settlement between the parties, and any decision by the
Court concerning such award of fees shall not affect the validity, or finality
of the proposed settlement.
8. Class Counsel may designate the settlement claims
administrator, subject to Court approval. U.S. Diagnostic shall provide or cause
to be provided its shareholder lists as appropriate for providing notice to the
Class, in a format reasonably designated by Class Counsel for mailings, without
cost
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to any other Party.
9. This Memorandum may be executed in counterparts, including
by signature transmitted by facsimile. Each counterpart when so executed shall
be deemed to be an original, and all such counterparts together shall constitute
the same instrument. The undersigned signatories represent that they have
authority from their clients to execute this Memorandum. The terms of this
Memorandum and settlement shall inure to and be binding upon the Parties and
their successors in interest.
IT IS HEREBY AGREED by the undersigned as of July ___, 1997.
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<TABLE>
<S> <C>
BURT & PUCILLO U.S. DIAGNOSTIC, INC.
By: ____________________ By:
Michael J. Pucillo --------------------------
Fla. Bar No. 261033 Laura R. Craft
Wendy H. Zoberman
Fla. Bar No. 434670
222 Lakeview Avenue
Suite 300 East
West Palm Beach, FL 33401
561/835-9400
Acting General Counsel STEEL, HECTOR & DAVIS, LLP
MILBERG WEISS BERSHAD
HYNES & LERACH LLP
By:
By: -------------------------
-------------------------- Lewis F. Murphy, P.A.
Sharon Levine Mirsky 200 S. Biscayne Blvd.
Salvatore Graziano Suite 4000
One Pennsylvania Plaza Miami, FL 33131-2398
New York, NY 10119 305/577-7000
212/594-5300
(U.S. Diagnostic, Inc.)
WEISS & YOURMAN KENNY NACHWALTER SEYMOUR
ARNOLD CRITCHLOW &
SPECTOR, P.A.
By:
--------------------------- By:
Joseph H. Weiss --------------------------
551 Fifth Avenue Harry R. Schafer
Suite 1600 201 S. Biscayne Blvd.
New York, NY 10176 1100 Miami Center
Miami, FL 33131-4327
305/371-1000
(Amos F. Almand III)
STULL, STULL & BRODY ARAGON, BURLINGTON, WEIL
& CROCKETT, P.A.
By:
---------------------------- By:
Jules Brody --------------------------
6 East 45th Street Jeffrey Crockett
2699 S. Bayshore Drive
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New York, NY 10017 Miami, FL 33133
305/858-2900
(Jeffrey Goffman)
WOLF POPPER LLP STEARNS WEAVER MILLER WEISSLER
ALHADEFF & SITTERSON, P.A.
By: By:
---------------------------- ---------------------------
Lester L. Levy Robert C. Owens
845 Third Avenue 150 West Flagler Street
New York, NY 10022 Museum Tower - Ste. 2200
212/759-4600 Miami, FL 33130
305/789-3200
ATTORNEYS FOR PLAINTIFFS
(Joseph A. Paul) WINSTON & STRAWN
By:
----------------------------
Timothy J. Rooney
Joseph A. Walsh
35 West Wacker Drive
Chicago, IL 60601
312/558-5972
(Robert D. Burke)
ATTORNEYS FOR DEFENDANTS
</TABLE>
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EXHIBIT 99.6
[LOGO]
U.S. DIAGNOSTIC INC.
INVESTOR CONTACT:
Joseph Seime
Director Investor Relations
(561) 833-1495 ext. 220
website: www.usdl.com
FOR IMMEDIATE RELEASE
US DIAGNOSTIC INC. ANNOUNCES SETTLEMENT
IN PRINCIPLE OF SHAREHOLDER CLASS ACTIONS
COMPANY ALSO ANNOUNCES APPOINTMENT OF NEW CHIEF FINANCIAL OFFICER
WEST PALM BEACH, FL, July 31, 1997 - US Diagnostic Inc. (NASDAQ:NMS:USDL)
announced today that it has reached a settlement in principle of all of the
shareholder class actions brought against the Company in January 1997. The total
settlement figure is $5,875,000.
The parties have executed a memorandum of understanding which is subject to
certain terms and conditions including court approval and notice to the class
members. The Company aniticipates that the court approval process may take up to
145 days.
Joseph A. Paul, President and Chief Executive Officer stated, "We are very
pleased with this resolution. The settlement frees the Company up to obtain new
financing to restart its program of strategic acquisitons."
In other news, the Company announced the appointment of Wayne Moore as its
new Chief Financial Officer. Mr. Moor has held various financial executive
positions over the last 22 years and formerly with Arthur Anderson LLP.
US Diagnostic Inc. is the leading provider of outpatient radiology services
in the United States. The Company has locations in 18 states, owns or operates
120 fixed site diagnostic imaging facilities, provides mobile imaging services
to 40 hospitals, and manages 19 additional facilities.
STATEMENTS CONTAINED IN THIS PRESS RELEASE, WHICH ARE NOT HISTORICAL FACTS,
ARE FORWARD LOOKING STATEMENTS AS THAT TERM IS DEFINED IN THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. THESE FORWARD-LOOKING STATEMENTS ARE BASED
LARGELY ON THE COMPANY'S EXPECTATIONS AND ARE SUBJECT TO A NUMBER OF RISKS AND
UNCERTAINITIES, INCLUDING BUT NOT LIMITED TO LEGAL, ECONOMIC, COMPETITIVE AND
OTHER FACTORS AFFECTING THE COMPANY'S OPERATIONS, MARKETS, EXPANSION STRATEGIES,
AVAILABLE FINANCING, GOVERNMENT REGULATIONS INVOLVING THE COMPANY, AND OTHER
FACTORS DISCUSSED IN THE COMPANY'S FILINGS WITH THE SECURITIES AND
<PAGE>
EXCHANGE COMMISSION. SPECIFIC OPERATING RISKS MAY INCLUDE, IN ADDITION TO
OTHERS, THOSE ASSOCIATED WITH THE ACQUISITION OF EXISTING IMAGING CENTERS,
MANAGEMENT OF GROWTH, LIMITATIONS AND DELAYS IN REIMBURSEMENT AND GOVERNMENT
REGULATION EFFECTS. MANY OF THESE FACTORS ARE BEYOND THE COMPANY'S CONTROL.
ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THE FORWARD-LOOKING STATEMENTS. IN
LIGHT OF THESE RISKS AND UNCERTAINTIES, THERE CAN BE NO ASSURANCE THAT THE
FORWARD-LOOKING STATEMENTS IN THIS PRESS RELEASE WILL, IN FACT, OCCUR.
# # #
