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EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made and
entered into as of February 3, 1997, by and among: ADAC LABORATORIES, a
California corporation ("ADAC"); X.X. TECHNICAL SERVICES, INC., a Delaware
corporation ("Sub"); PHOTON DIAGNOSTIC TECHNOLOGIES, INC., a Florida corporation
(the "Company"); and XXXXXX X. XXXXXXX ("Shareholder").
RECITALS
A. ADAC, Sub and the Company intend to effect a merger of the Company
into Sub in accordance with this Agreement and the laws of the States of
Delaware and Florida (the "Merger"). Upon consummation of the Merger, the
Company will cease to exist.
B. It is intended that the Merger qualify as a tax-free reorganization
within the meaning of [Section 368(a)]of the Internal Revenue Code of 1986, as
amended (the "Code"). For accounting purposes, it is intended that the Merger be
treated as a "pooling of interests."
AGREEMENT
ADAC, Sub, the Company and the Shareholder agree as follows:
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DESCRIPTION OF TRANSACTION
1.1 MERGER OF THE COMPANY INTO SUB. Upon the terms and subject to the
conditions set forth in this Agreement, at the Effective Time (as defined in
Section 1.3), the Company shall be merged into Sub and the separate existence of
the Company shall cease. Sub will be the surviving corporation in the Merger
(the "Surviving Corporation").
1.2 EFFECT OF THE MERGER. The Merger shall have the effects set forth in
this Agreement, in the applicable provisions of the Delaware General Corporation
Law (the "DGCL") and in the applicable provisions of the Florida Business
Corporation Act (the "FBCA").
1.3 CLOSING; EFFECTIVE TIME. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of ADAC on the date as of which each of the conditions set forth in Articles 5
and 6 has been fulfilled or waived or on such other date as may be jointly
designated by ADAC and the Company (the "Closing Date"). As soon as practicable
after the Closing, a properly executed certificate of merger conforming to the
requirements of the DGCL shall be filed with the Delaware Secretary of State and
a plan and articles of merger conforming to the requirements of the FBCA shall
be filed with the Florida Secretary of State. The Merger shall become effective
at the time said certificate of merger is filed
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with the Delaware Secretary of State and said plan and articles of merger are
filed with the Florida Secretary of State (the "Effective Time"). The Company,
Sub and ADAC shall use their best efforts to properly file such documents no
later than the end of the business day following the Closing Date.
1.4 CERTIFICATE OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS.
Upon the filing of the Certificate of Merger with the Delaware Secretary of
State, the name of the Surviving Corporation shall be changed to ADAC Medical
Technologies, Inc. The Bylaws of Sub, as in effect immediately prior to the
Effective Time, shall become the Bylaws of the Surviving Corporation at the
Effective Time. The directors and officers of the Surviving Corporation
immediately prior to the Effective Time shall be the directors and officers of
Sub immediately after the Effective Time.
1.5 CONVERSION OF SHARES.
(a) At the Effective Time, by virtue of the Merger (and without
any action on the part of any shareholder of the Company):
(i) any shares of the capital stock, $.01 par value, of the
Company ("Company Stock") then held by the Company or any subsidiary of the
Company (or held in the Company's treasury) shall be canceled; and
(ii) except as provided in clause (i) above and subject to
Section 1.5(b), all shares of Company Stock then outstanding shall be converted
into the right to receive in the aggregate that number of shares of the common
stock of ADAC ("ADAC Common Stock") equal to (x) $1,500,000, divided by (y) the
average of the closing sales price of a share of ADAC Common Stock as reported
on the Nasdaq Stock Market for each of the five trading days immediately
preceding the Closing Date (the "Closing Price").
(b) The shares of ADAC Common Stock into which each outstanding
share of Company Stock is to be converted pursuant to Section 1.5(a)(ii) (as
such fraction may be adjusted in accordance with this Section 1.5(b)) is
referred to as the "Exchange Ratio." If, between the date of this Agreement and
the Effective Time, the outstanding shares of Company Stock or ADAC Common Stock
are changed into a different number or class of shares by reason of any stock
dividend, subdivision, reclassification, recapitalization, split-up, combination
or similar transaction, the Exchange Ratio shall be appropriately adjusted.
1.6 CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the Effective Time,
holders of certificates representing shares of Company Stock shall cease to have
any rights as shareholders of the Company, and the stock transfer books of the
Company shall be closed with respect to all shares of Company Stock outstanding
immediately prior to the Effective Time. No further transfer of any such shares
of Company Stock shall thereafter be made on such stock transfer books. If,
after the Effective Time, a valid certificate previously representing any of
such shares of Company Stock (a "Company Stock Certificate") is presented to
ADAC, such Company Stock Certificate shall be canceled and exchanged as provided
in Section 1.7.
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1.7 EXCHANGE OF CERTIFICATES.
(a) As soon as practicable after the Effective Time, ADAC will
mail to the holders of Company Stock Certificates (i) a letter of transmittal in
customary form and containing such provisions as ADAC may reasonably require and
(ii) instructions for use in effecting the surrender of Company Stock
Certificates in exchange for certificates representing ADAC Common Stock. Upon
surrender of a Company Stock Certificate to ADAC for exchange, together with a
duly executed letter of transmittal and such other documents as may be
reasonably required by ADAC, the holder of such Company Stock Certificate shall
be entitled to receive in exchange therefor a certificate representing the
number of whole shares of ADAC Common Stock that such holder has the right to
receive pursuant to the provisions of this Article 1 (after withholding the
Holdback Common Stock (as defined in Section 8.1)), and the Company Stock
Certificate so surrendered shall be canceled. Until surrendered as contemplated
by this Section 1.7, each Company Stock Certificate shall be deemed, from and
after the Effective Time, to represent only the right to receive upon such
surrender a certificate representing shares of ADAC Common Stock (and cash in
lieu of any fractional share of ADAC Common Stock) as contemplated by this
Article 1.
(b) No dividends or other distributions declared or made with
respect to ADAC Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Company Stock Certificate with
respect to the shares of ADAC Common Stock represented thereby, and no cash
payment in lieu of any fractional share shall be paid to any such holder, until
such holder surrenders such Company Stock Certificate in accordance with this
Section 1.7 (at which time such holder shall be entitled to receive all such
dividends and distributions and such cash payment, all without interest
thereon).
(c) No certificates or scrip for fractional shares of ADAC Common
Stock shall be issued, but in lieu thereof each holder of shares of Company
Stock who 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
equal to the market value of one share of ADAC Common Stock (based on the
Closing Price) multiplied by the fraction of a share of ADAC Common Stock to
which such holder would otherwise be entitled.
(d) ADAC shall not be liable to any holder or former holder of
shares of Company Stock with respect to any shares (or dividends or
distributions with respect thereto) or cash amounts issuable pursuant to this
Article 1 which is delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
1.8 TAX CONSEQUENCES. For federal income tax purposes, the Merger 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. Neither the Company nor ADAC shall take a position
inconsistent with this Section 1.8 on any tax return.
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1.9 ACCOUNTING CONSEQUENCES. For accounting purposes, the Merger is
intended to be treated as a "pooling of interests." Neither the Company nor ADAC
shall take any action prior to the Effective Time that could reasonably be
expected to prevent the Merger from being accounted for as a "pooling of
interests."
1.10 FURTHER ACTION. If at any time after the Effective Time any further
action is determined by ADAC to be necessary or desirable to carry out the
purposes of this Agreement or to vest ADAC as the Surviving Corporation with the
full right, title and possession of and to all assets, property, rights,
privileges, immunities, powers and franchises of the Company, the officers and
directors of ADAC shall be fully authorized (in the name of the Company and
otherwise) to take such action.
1.11 TRANSFER OF PHOTON MOBILE BUSINESS ASSETS. At or prior to the
Closing Date, the Company shall transfer all of products, assets and liabilities
relating to the Photon Mobile business, as set forth in the Disclosure Schedule
(collectively, the "Mobile Business"), to an affiliate of Shareholder,
TransPhoton Corporation ("TPC"). Such transfer shall be without representation
or warranty, expressed or implied, by the Company and shall be received on an
"AS IS" basis. At the time of such transfer, Shareholder represents and warrants
that (i) the assets constituting the Mobile Business shall constitute less than
10% of the gross assets and net assets of the Company prior to such transfer,
both in terms of historical cost and fair market value, (ii) the sales generated
or associated with the Mobile Business during the prior twelve (12) months shall
constitute less than 10% of the gross sales of all of the products and services
sold by the Company during such period, and (iii) the sales generated or
associated with the Mobile Business during the prior twelve (12) months shall
have generated less than 10% of the gross operating profits of the Company
derived from the sale of all of its products and services during such period.
Shareholder represents and warrants that the transfer of the assets constituting
the Mobile Business are non-operating assets which are not an integral part of
the business of the Company to be acquired by the Surviving Corporation pursuant
to the Merger.
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REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule delivered to ADAC on the
date of this Agreement and signed by the President of the Company (the
"Disclosure Schedule"), the Company and Shareholder represent and warrant to
ADAC as follows:
2.1 ORGANIZATION; SUBSIDIARIES; CAPITALIZATION.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Florida. The Company has all
necessary power and authority under applicable corporate law and its
organizational documents to own or lease its properties and to carry on its
business as presently conducted. As of the date of this Agreement, the
Disclosure Schedule sets forth a list of all of the Company's "affiliates" or
their "associates" (as
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such terms are defined in the rules and regulations of the Securities and
Exchange Commission (the "SEC")). As of the date of this Agreement, the Company
does not own or hold, directly or indirectly, any debt or equity securities of,
or has any other interest in, any corporation, partnership, joint venture or
other entity, and the Company has not entered into any agreement to acquire any
such interest.
(b) Each of the Company and its affiliates is qualified to do
business as a foreign corporation, partnership or limited liability company, as
the case may be, 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. For purposes of this
Agreement, material adverse effect, as it applies to the Company, means a
material adverse effect on the business, operations, results, financial
condition or assets of the Company other than as a result of (i) general
economic or industry conditions, or (ii) the performance by the Company of its
obligations, or the exercise by ADAC of its rights under this Agreement.
(c) As of the date of this Agreement, the authorized capital
stock of the Company consists of: one thousand two hundred fifty shares of
Company Stock, 250 shares of which constitute Class A Stock and the remainder of
which constitutes Class B Stock, of which, as of the date hereof, 100 shares
were issued and outstanding. All the issued and outstanding shares of Company
Stock are validly issued, fully paid and nonassessable and free of preemptive
rights and were issued in compliance with state and federal securities laws.
Except as set forth above, as of the date of this Agreement, (i) there are no
shares of capital stock of the Company authorized, issued or outstanding, (ii)
there are no outstanding subscriptions, options, warrants, stock appreciation
right plans, calls, rights, convertible securities, stockholder rights plans (or
similar plans commonly referred to as "poison pills") or other agreements or
commitments of any character relating to issued or unissued capital stock or
other securities of the Company or any of its subsidiaries, or obligating the
Company or any other party to issue, transfer or sell any shares of the capital
stock or other securities of the Company or any of its subsidiaries, and (iii)
there are no other outstanding securities convertible into, exchangeable for or
evidencing the right to subscribe for any shares of the capital stock or other
securities of the Company or any of its subsidiaries or any successor
corporation or controlling person of such successor corporation. All outstanding
securities of the Company are held by Shareholder as set forth in the Disclosure
Schedule.
(d) Neither the Company nor any of its affiliates owns any ADAC
Common Stock.
(e) A certified copy of the Articles of Incorporation, as amended
to date, of the Company, a complete and accurate copy of the Bylaws of the
Company, as amended to date, and a good standing certificate from the State of
Florida of a recent date have been delivered to ADAC.
2.2 FINANCIAL STATEMENTS; ABSENCE OF LIABILITIES.
(a) The Company's unaudited interim financial statements as of
January 17, 1997 and for the period then ended (the "Unaudited Financial
Statements") were prepared in
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accordance with the books and records of the Company using accounting principles
applied on a consistent basis throughout the period involved and fairly present
the financial position of the Company as of the date thereof and the results of
its operations and cash flows for the period indicated.
(b) The Company has no Liabilities, except for (i) Liabilities
that are disclosed in the Unaudited Financial Statements, or (ii) Liabilities
that were incurred after January 17, 1997 in the ordinary course of business and
which do not exceed $5,000 in the aggregate. As used herein, "Liabilities" shall
mean any liability or obligation of any kind or nature, secured or unsecured
(whether absolute, accrued, contingent or otherwise, and whether due or to
become due). The Company has no Liabilities to any officer, director,
shareholder, affiliate or associate.
(c) The Disclosure Schedule sets forth as of January 17, 1997 and
will set forth as of the Closing Date a true and correct list of the Company's
inventory and accounts receivable. All such inventory is in good and saleable
condition, and all such accounts receivable are current and collectible.
2.3 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since January 17, 1997, there
has not been (a) any change, or any development or combination of changes or
developments that has had or would reasonably be expected to have a material
adverse effect on the Company, (b) any damage, destruction or loss, whether or
not covered by insurance, that has had or would reasonably be expected to have a
material adverse effect on the Company or (c) any transaction, commitment,
dispute or other event or condition (financial or otherwise) of any character
(whether or not in the ordinary course of business) which would be prohibited by
Section 4.2(b) if it were to occur or be effected between the date of this
Agreement and the Effective Time.
2.4 TAX MATTERS
(a) The Company is now, and at all times since its incorporation
has been, a valid S Corporation under the Code. The Company has filed, within
the time (including any extensions of applicable due dates) and in the manner
prescribed by law, all returns, declaration, reports, estimates, information
returns, statements and reports ("Returns"), required to be filed under federal,
state, local or any foreign laws by the Company.
(b) The Company has, within the time (including any extensions of
applicable due dates) and in the manner prescribed by law, reported, withheld
and paid all Taxes (as defined below) required to be reported, withheld and/or
paid by the Company.
(c) The Company has accrued on its books an amount sufficient to
cover all Taxes that will become due and payable by the Company for the period
ending on the Closing Date.
(d) The Company has not filed (and will not file prior to the
Closing Date) any consent agreement under Section 341(f) of the Code or agreed
to have Section 341(f)(2) of the
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Code apply to any disposition of any subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by Company.
(e) To the Company's knowledge, the Transactions (as defined in
Section 2.14) will not result in the payment of any "excess parachute payment"
within the meaning of Section 280G of the Code, and there is no agreement, plan
or arrangement covering any employee or independent contractor of the Company
that would give rise to any payment that would not be deductible pursuant to
Section 280G of the Code.
(f) No outstanding debt obligation of Company is "corporate
acquisition indebtedness" within the meaning of Section 279(b) of the Code.
(g) For purposes of this Agreement, "Taxes" shall mean all taxes,
charges, fees, levies, or other assessments of whatever kind or nature,
including, without limitation, all net income, gross income, gross receipts,
sales, use, value-added, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, excise, estimated, severance, stamp, net
worth, environmental, occupancy or property taxes, customs duties, fees,
assessments or charges of any kind whatsoever (together with any interest and
any penalties, additions to tax or additional amounts) imposed by any taxing
authority (domestic or foreign) upon or payable by the Company or any of its
subsidiaries.
2.5 CONTRACTS.
(a) As of the date of this Agreement, except as set forth in the
Disclosure Schedule, the Company is not a party to, or bound by, any
undischarged written or oral:
(i) contract for the employment for any period of time
whatsoever, or restricting the employment, of any employee;
(ii) consulting agreement, except for those that both (A) do
not call for payment in an annual amount in excess of $5,000 in the aggregate
and (B) were entered into in the ordinary course of business;
(iii) contract or agreement restricting in any manner the
Company's right to compete with any other person or restricting the Company's or
any of its affiliates' listed on Schedule 2.1(a) right to sell to or purchase
from any other person;
(iv) contract or other instrument that (A) provides for the
receipt or expenditure of cash or other consideration in excess of $5,000,
except sales and purchase orders accepted in the ordinary course of business,
(B) was entered into outside the ordinary course of business, (C) is material
and has an original term of more than one year and cannot be terminated by the
Company without penalty with 30 days notice or less, (D) relates to the license
of any patent, copyright, trade secret or other proprietary right to or from the
Company, (E) includes provisions restricting or, in any material respect,
affecting the development, manufacture or distribution of the
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Company's intellectual property, products or services, (F) provides for
indemnification by the Company with respect to infringement of proprietary
rights, or (G) is otherwise material; or
(v) debt instrument or evidence of indebtedness or any
guarantee, loan agreement or transaction, including with any affiliate of the
Company.
All material contracts, leases, subleases and other instruments, whether or not
of the types referred to in this Section 2.5(a), to which the Company or any of
its affiliates is a party or by which the Company or any of its affiliates is
bound (collectively "Company Contracts") are in full force and effect and are
binding upon the Company and, to the Company's knowledge, are binding on the
other parties thereto, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws, both
state and federal, affecting the enforcement of creditors' rights or remedies in
general from time to time in effect and the exercise by courts of equity powers.
No material default by the Company has occurred under any of the Company
Contracts and, to the Company's knowledge, (A) no material default by any of the
other contracting parties has occurred under any of the Company Contracts and
(B) no event has occurred which with the giving of notice or the lapse of time,
or both, would constitute a material default by the Company or any of its
subsidiaries or any of the other contracting parties.
(b) The Company possesses all material licenses, permits, and
governmental approvals and authorizations which are required in order to operate
its business as presently conducted and the Company is in compliance in all
material respects with all such licenses, permits, approvals and authorizations.
(c) The Disclosure Schedule sets forth a list of all claims made
or, to the Company's knowledge, threatened against the Company under each
Company Contract presently or heretofore in effect (including claims for back
charges, rebates, price reductions, breaches of product or service warranties or
for product or service liability for products manufactured or sold).
2.6 INTELLECTUAL PROPERTY. The Company owns or possesses sufficient
legal rights to all patents, trademarks, service marks, trade names, copyrights,
trade secrets, information and other proprietary rights and processes necessary
for its business as now conducted and as proposed to be conducted, without any
infringement of the rights of others. The Disclosure Schedule sets forth all
domestic and foreign patents and patent applications, registered trademarks,
material common law trademarks, service marks, trade names, symbols and logos
used, controlled or owned by the Company, and the rights of the Company with
respect to each. There are no outstanding options, licenses or agreements of any
kind relating to the foregoing, nor is the Company bound by or a party to any
options, licenses or agreements of any kind with respect to the patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information and other proprietary rights and processes of any other person or
entity other than such licenses or agreements arising from the purchase of "off
the shelf" or standard products. The Company is not violating or infringing, and
has not at any time during the last five years, violated or infringed or
received any communications alleging that the Company has violated or infringed
or, by conducting its business as proposed, would violate or infringe any of the
patents, trademarks, service marks, trade names, copyrights or trade secrets or
other proprietary rights of any other person or entity. The Company
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is not aware that any of its employees is obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would interfere with their duties to the Company or that would
conflict with the Company's business as proposed to be conducted in any material
respect. Neither the execution nor delivery of this Agreement, nor the carrying
on of the Company's business by the employees of the Company, nor the conduct of
the Company's business as proposed to be conducted, will, to the Company's
knowledge, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any employee is now obligated. The Company does not
believe it is or will be necessary to utilize any inventions, trade secrets or
proprietary information of any of its employees made prior to their employment
by the Company, except for inventions, trade secrets or proprietary information
that have been validly assigned to the Company.
2.7 EMPLOYEES.
(a) The Disclosure Schedule sets forth a complete and accurate
list of each bonus, deferred compensation, incentive compensation, stock
purchase, stock option, severance or termination pay, hospitalization or other
medical, life or other insurance, supplemental unemployment benefits,
profit-sharing, flexible benefit, dependent care, educational assistance,
pre-Tax premium, pension, or retirement plan, program, agreement or arrangement
(collectively, the "Company Employee Plans"), sponsored, maintained or
contributed to or required to be contributed to by the Company or any of its
affiliates for the benefit of any employee of the Company or any of its
affiliates ("Employee").
(b) The Company has no plan or commitment, whether legally
binding or not, to create any additional Company Employee Plan, or any plan or
commitment to modify or change any existing Company Employee Plan, other than
changes to comply with applicable law, that would affect any Employee.
(c) No Company Employee Plan provides death, medical or health
benefits (whether or not insured) with respect to current or former Employees
after any such Employee's retirement or other termination of service (other than
(i) benefit coverage mandated by applicable law, including, without limitation,
coverage provided pursuant to Section 4980B of the Code and (ii) deferred
compensation benefits accrued as liabilities on the books of Company).
(d) With respect to each of the Company Employee Plans
constituting a group health plan within the meaning of Section 5000(b)(1) of the
Code, the provisions of Section 4980B of the Code have been complied with in all
material respects.
(e) There are no Company Employee Plans intended to be qualified
under Section 401(a) of the Code.
(f) There is no pending or, to the knowledge of the Company,
threatened Proceeding (as defined in Section 2.9) against the Company or any of
its affiliates or any current or former director, major stockholder, officer or
supervisory employee of the Company or any of its
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affiliates, alleging wrongful termination, racial, religious, sexual or age
discrimination, improper post-termination conduct, or breach of contract or
covenant of employment, nor has any third party made any claim against the
Company with respect to the foregoing, nor, to the Company's knowledge, is there
any basis for such a claim or Proceeding.
(g) All individuals who are performing or have performed services
for the Company and are or were classified as "independent contractors" for tax
purposes qualify for such classification.
(h) Neither the Company nor Shareholder has received any
communication indicating that any Employee or independent contractor of the
Company intends to terminate his employment or independent contracting
relationship either now or following the Effective Time. To the Company's
knowledge, no Employee, nor any consultant with whom the Company has contracted,
is in violation of any term of any employment contract, proprietary information
agreement or any other agreement relating to the right of any such individual to
be employed by, or to contract with, the Company or any of its affiliates
because of the nature of the business conducted by them; and to the Company's
knowledge the continued employment of such Employees, and the performance of the
Company's and its affiliates' contracts with their respective independent
contractors, will not result in any such violation. The Company has not received
any notice alleging that any such violation has occurred. No Employee has been
granted the right to continued employment by his or her employer or to any
compensation following termination of employment.
(i) The Disclosure Schedule sets forth a complete list of
all Employees and all persons performing services as independent contractors for
the Company or any of its affiliates as of the date hereof. The Company has paid
all sums due and owing such persons for all periods ending on or prior to the
Closing Date or has made an appropriate reserve therefor in the Unaudited
Financial Statements.
2.8 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. Each former and
current employee, officer and independent contractor of the Company has executed
a Proprietary Information and Inventions Agreement substantially in the form
included in the Disclosure Schedule.
2.9 LITIGATION AND CLAIMS; COMPLIANCE WITH LAW.
(a) There is no examination, review, investigation, arbitration,
suit, litigation or other proceeding (a "Proceeding") pending or threatened by
or before any court or Governmental Authority (as defined in Section 2.15) in
which the Company is a party or otherwise involved or to which any of the
business or assets of the Company is subject, nor has any third party made any
claim against the Company which could result in any such Proceeding nor, to the
Company's knowledge, is there any basis for any such claim or Proceeding.
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(b) The Company is not a party to any decree, order or
arbitration award (or agreement entered into in any Proceeding) with respect to
its properties, assets, personnel or business activities.
(c) The Company is not and has not at any time since January 1,
1994 been in violation of, or delinquent in respect to, any decree, order or
arbitration award or law, statute or regulation of, or agreement with, or any
material license or material permit from, any Governmental Authority to which
any of its properties, assets, personnel or business activities are subject or
to which any of them is subject, including laws, rules and regulations relating
to the environment, occupational health and safety, employee benefits, wages,
workplace safety, equal employment opportunity and race, religious, sex and age
discrimination.
(d) There are no actions pending or, to the knowledge of the
Company, threatened (or any basis therefor known to the Company) involving the
prior employment of any of the Company's employees, their use in connection with
the Company's business of any information or techniques allegedly proprietary to
any of their former employers, or their obligations under any agreements with
prior employers.
2.10 PROPERTIES.
(a) Schedule 2.10 sets forth a complete list of all property,
tangible or intangible, leased by the Company (the "Leases"). The Company has
previously delivered to ADAC complete and accurate copies of all such Leases.
Each of the Leases is valid, binding and enforceable in accordance with its
terms, and is in full force and effect. The Company is not in default under any
Lease, nor to the Company's knowledge is any other party thereto in default
thereunder, and no event has occurred which (whether with or without notice,
lapse of time or both) would constitute a default by the Company.
(b) Schedule 2.10 sets forth a complete list of all property,
tangible and intangible, owned by the Company (the "Company Properties"). The
Company Properties are owned by the Company outright, in each case free and
clear of any lien, pledge, hypothecation, mortgage, security interest, claim,
lease, charge, option, right of first refusal, easement, servitude, trust,
transfer restriction or any other restriction or limitation whatsoever (the
"Liens"), except for Liens disclosed in the Financial Statements and notes
thereto. Each of the Company Properties are in good operating condition, subject
to continued repair and replacement in accordance with past practice. The
Company Properties include all of the assets used in or required for the
operation of the Company's business.
(c) The Company has fire and casualty insurance policies, with
extended coverage (subject to reasonable deductibles), sufficient to allow them
to replace any of their properties that might be damaged or destroyed, and have
liability insurance reasonably adequate to protect them and their financial
condition against the risks involved in the business conducted by them. The
Disclosure Schedule sets forth all such policies. The Company has not taken any
action, or failed to take any action, which might invalidate any of such
policies in whole or in part.
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(d) The Company owns no real property.
2.11 FULL DISCLOSURE. This Agreement, the Disclosure Schedule and all
other documents delivered by the Company 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 nor, to the Company's
knowledge, omit to state a material fact necessary in order to make the
statements contained herein or therein not misleading.
2.12 TRANSACTIONS WITH AFFILIATES. Except for compensation of employees,
every transaction between Company and any of its "affiliates" or their
"associates" (as such terms are defined in the rules and regulations of the SEC)
which is currently in effect or was consummated since January 1, 1992, and which
involves more than $5,000 is set forth in the Disclosure Schedule.
2.13 FINANCIAL ADVISOR. The Company 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 the Company or any
of the Shareholders.
2.14 ENFORCEABILITY. The Company has 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 the Company and approved by the unanimous vote
or written consent of the shareholders of the Company, and no other corporate
proceedings on the part of the Company are necessary for the Company to
authorize any of the Transactional Agreements, and no such proceedings are
necessary to enable the Company to perform or consummate any of the
Transactions. Said Transactional Agreements (a) have been (or will be) duly
executed and delivered by duly authorized officers of the Company and (b)
constitute (or, when executed by the Company, will constitute) legal, valid and
binding obligations of the Company enforceable against it 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 Sections 5.10, 5.11, 5.12, 5.15 and 5.16; 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 (including the Merger).
2.15 GOVERNMENTAL CONSENTS; NO CONFLICTS. Except as set forth in the
Disclosure Schedule, there is no requirement applicable to the Company to make
any filing with, or to obtain any permit, authorization, consent or approval of,
any federal, state, local or foreign governmental or regulatory agency,
department, commission or other authority (a "Governmental Authority") 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 Certificate of Incorporation or Bylaws (or comparable charter
documents) of the Company, (b) result in a default (or with notice or lapse of
time or both would result in a default)
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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 note, bond,
mortgage, indenture, license agreement, lease or other contract, instrument or
obligation to which the Company is a party or by which the Company or any of its
affiliates or any of their assets may be bound, (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 Company or any
of its assets.
3
REPRESENTATIONS AND WARRANTIES OF ADAC AND SUB
ADAC and Sub represent and warrant to the Company and Shareholder as
follows:
3.1 SEC FILINGS; FINANCIAL STATEMENTS.
(a) ADAC has delivered to the Company 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 January 1, 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.
3.2 AUTHORITY; BINDING NATURE OF AGREEMENT. Subject to the requisite
approval by the ADAC Board of Directors, each of ADAC and Sub 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. This Agreement constitutes
the legal, valid and binding obligation of each of ADAC and Sub, enforceable
against it in accordance with its terms.
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3.3 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.
3.4 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.
4
CONDUCT AND TRANSACTIONS PRIOR TO EFFECTIVE TIME;
ADDITIONAL AGREEMENTS
4.1 INFORMATION AND ACCESS.
(a) During the period from the date of this Agreement through the
Effective Time:
(i) the Company shall afford, and shall cause the
independent auditors, counsel and other advisors and representatives
(collectively, "Representatives") of the Company 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 Company) and
personnel of the Company 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 Company shall permit ADAC and ADAC's
Representatives to make such reasonable inspections of the Company and its
operations as ADAC may reasonably require from time to time; and
(iii) the Company shall furnish ADAC and ADAC's
Representatives with, and shall cause the Company's Representatives to furnish
ADAC with, such financial and operating data and other information with respect
to the business and properties of the Company as ADAC or its counsel may
reasonably request from time to time.
(b) Without limiting the generality of Section 4.1(a), during the
period from the date of this Agreement through the Closing Date, the Company
shall promptly provide ADAC with copies of:
(i) all material operating and financial reports prepared by
the Company for its senior management, including copies of the unaudited monthly
balance sheets of the Company and the related unaudited monthly statements of
operations, changes in financial position
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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 4.1 shall limit or otherwise affect any representations
or warranties of the Company or any condition to any obligation of ADAC.
4.2 CONDUCT OF BUSINESS OF THE COMPANY.
(a) Except as provided in Section 4.2(b), during the period from
the date of this Agreement through the Effective Time, (i) the Company shall
conduct its business in the ordinary and usual course consistent with past
practice and (ii) the Company shall use its best efforts to maintain and
preserve intact its business organization, to keep available the services of its
officers and employees and to maintain satisfactory relations with lessors,
suppliers, contractors, distributors, customers and others having business
relationships with the Company.
(b) During the period from the date of this Agreement through the
Effective Time, the Company shall not do, and shall not permit any of its
subsidiaries to do, any of the following, without ADAC's prior written consent:
(i) declare, set aside or pay any dividend or make any other
distribution in respect of any capital stock;
(ii) repurchase, redeem or otherwise acquire any capital
stock of the Company;
(iii) issue, deliver, pledge, encumber, sell or transfer, or
authorize or propose the issuance, delivery, pledge, encumbrance, sale or
transfer of, any shares of capital stock of the Company or any securities
convertible into, or rights, warrants or options to acquire, any such shares of
capital stock or other convertible securities, or make any change in its equity
capitalization or to the terms of any option, warrant or other equity security
of the Company that is currently outstanding;
(iv) amend the Certificate of Incorporation, Bylaws or other
organizational or charter documents of the Company or adopt any stock purchase
rights plan (or "poison pill");
(v) acquire any asset, except in the ordinary course of
business consistent with past practice;
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(vi) sell, lease, pledge or otherwise dispose of or encumber
any of its assets, except in the ordinary course of business consistent with
past practice;
(vii) incur any indebtedness for borrowed money, or issue or
sell any debt securities or guarantee, endorse or otherwise become responsible
for any obligation of any other person;
(viii) adopt or amend any Company Employee Plan, employment
agreement, severance agreement, special pay arrangement with respect to
termination of employment or other similar arrangement or agreement with any
director, officer or employee of the Company, or enter into or amend any
severance or termination arrangement;
(ix) change any compensation payable or to become payable to
any of its officers or employees; or
(x) authorize or propose any of the foregoing, or enter into
any contract, agreement, commitment or arrangement contemplating any of the
foregoing.
4.3 NEGOTIATION WITH OTHERS.
(a) Until the Closing Date, the Company shall not, and it shall
not authorize or permit any of its officers, directors or employees, directly or
indirectly, to (i) solicit, initiate or knowingly encourage or induce the making
of any Acquisition Proposal, (ii) furnish information regarding the Company or
any of its subsidiaries in connection with an Acquisition Proposal or potential
Acquisition Proposal, (iii) negotiate or engage in discussions with any third
party with respect to any Acquisition Proposal, (iv) approve, endorse or
recommend any Acquisition Proposal or (v) enter into any letter of intent,
contract or other instrument related directly or indirectly to any Acquisition
Proposal or contracts with advisors or consultants. "Acquisition Proposal" 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 Company; (ii) any sale, lease,
exchange, transfer or other disposition of the assets of the Company or any
subsidiary of the Company constituting more than 10% of the consolidated assets
of the Company or accounting for more than 10% of the consolidated revenues of
the Company 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 Company.
(b) Until the Closing Date, each Shareholder shall not, directly
or indirectly, (i) solicit, initiate or knowingly encourage or induce the making
of any Acquisition Proposal, (ii) furnish information regarding the Company or
any of its subsidiaries in connection with an Acquisition Proposal or potential
Acquisition Proposal, (iii) negotiate or engage in discussions with any third
party with respect to any Acquisition Proposal, (iv) approve, endorse or
recommend any
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Acquisition Proposal or (v) enter into any letter of intent, contract or other
instrument related directly or indirectly to any Acquisition Proposal or
contracts with advisors or consultants.
(c) The Company or, as applicable, Shareholder, shall promptly
advise ADAC orally and in writing of the receipt of any Acquisition Proposal or
any inquiry relating to an Acquisition Proposal prior to the Effective Time.
(d) The Company 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 Proposal, and the
Company shall immediately demand the return of all financial and other
information furnished to such parties.
4.4 REGISTRATION STATEMENTS. No later than March 31, 1997, ADAC shall
prepare and cause to be filed with the SEC a Registration Statement on Form S-3
to register 50% of the ADAC Common Stock to be issued in connection with the
Merger, and no later than December 13, 1997, ADAC shall prepare and cause to be
filed with the SEC a Registration Statement on Form S-3 to register the
remaining 50% of the ADAC Common Stock to be issued in connection with the
Merger. ADAC shall use its best efforts to cause such registration statements to
become effective as soon as practicable after the filing thereof.
Notwithstanding the foregoing, if at any time after March 31, 1997 (i) the fair
market value of ADAC Common Stock, determined by reference to the closing price
of such stock on the Nasdaq Stock Market, drops below $15.00, or (ii) Sub give
Shareholder notice of the termination of Shareholder's consulting agreement with
Sub pursuant to Section 7(d) thereof, Shareholder shall have the right to demand
that ADAC register, as soon as practicable, on Form S-3 the remaining
unregistered shares of ADAC Common Stock held by Shareholder. Shareholder may
exercise such demand right by giving written notice to ADAC no later than ten
business days following the date of the occurrence of such event.
4.5 REGULATORY APPROVALS.
(a) The Company and ADAC shall use all reasonable efforts to file
as soon as practicable after the date of this Agreement all notices, reports and
other documents required by law to be filed with any Governmental Authority with
respect to the Merger and the other Transactions and to submit promptly any
additional information requested by any such Governmental Authority.
(b) The Company and ADAC shall (i) give each other prompt notice
of the commencement of any Proceeding by or before any court or Governmental
Authority with respect to the Merger or any of the other Transactions, (ii) keep
each other informed as to the status of any such Proceeding and (iii) except as
may be prohibited by any Governmental Authority or by any law or court order or
decree, permit the other party to be present at each meeting or conference
relating to any such Proceeding and to have access to and be consulted in
connection with any document filed or provided to any Governmental Authority in
connection with any such Proceeding.
4.6 ADDITIONAL AGREEMENTS. The Company and Shareholder agree to use
their best efforts to take, or cause to be taken, all actions necessary to
consummate the Merger and make
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effective the other Transactions. Without limiting the generality of the
foregoing, the Company shall use all commercially reasonable efforts to (i)
obtain the consent and approval of each Governmental Authority, 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 Merger or any of the other Transactions or in order to enable ADAC as the
Surviving Corporation to conduct its business in the manner in which such
business is currently being conducted or is proposed to be conducted, (ii)
effect all registrations and filings necessary to consummate the Merger and
(iii) lift any restraint, injunction or other legal bar to the Merger.
4.7 DISCLOSURE. Except as otherwise required by law, no announcement
shall be made regarding this Agreement or the Merger (a) by either the Company
or Shareholder without the prior written consent of ADAC or (b) by ADAC without
the prior written consent of the Company, which consents shall not be
unreasonably withheld.
4.8 CONSULTING AGREEMENT. Shareholder shall execute and deliver to ADAC,
on or prior to the Closing Date, a Consulting Agreement in the form attached
hereto as Exhibit A.
4.9 AFFILIATE AND INVESTMENT REPRESENTATION AGREEMENT. Shareholder shall
execute and deliver to ADAC, on or prior to the Closing Date, an Affiliate and
Investment Representation Agreement in the form attached hereto as Exhibit B.
4.10 CONTINUITY OF INTEREST CERTIFICATE. Shareholder shall execute and
deliver to ADAC a Continuity of Interest Certificate in the form attached hereto
as Exhibit C.
4.11 TAX CERTIFICATES. The Company shall deliver to ADAC's counsel a tax
certificate substantially in the form attached hereto as Exhibit D (the "Company
Tax Certificate"). ADAC shall deliver to the Company's counsel a tax certificate
substantially in the form attached hereto as Exhibit E (the "ADAC Tax
Certificate").
4.12 TAX RETURNS. The Company shall timely file all federal and state
income tax returns for taxable periods ending on or prior to the Effective Time
and has paid or will pay all Taxes attributable to such periods. Such returns
will be prepared and filed in accordance with applicable law and in a manner
consistent with past practices and shall be subject to review and approval by
ADAC. After the Effective Time, ADAC and Shareholder will make available to the
other, as reasonably requested, all information, records or documents relating
to liability for Taxes for all periods prior to or including the Effective Time
and will preserve such information, records or documents until the expiration of
any applicable statutes of limitations.
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5
CONDITIONS PRECEDENT TO OBLIGATIONS OF ADAC
The obligations of ADAC to effect the Merger 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:
5.1 REPRESENTATIONS AND WARRANTIES ACCURATE.
(a) The representations and warranties of the Company contained
in this Agreement shall have been accurate in all respects as of the date of
this Agreement.
(b) The representations and warranties of the Company contained
in this Agreement shall be accurate in all respects as of the Closing Date as if
made on and as of the Closing Date.
5.2 COMPLIANCE WITH COVENANTS. The Company and the Shareholder shall
have complied with and performed in all material respects each covenant
contained in this Agreement that is required to be performed by the Company and
the Shareholder, respectively, on or prior to the Closing Date.
5.3 NO MATERIAL ADVERSE EFFECT. Since the date of this Agreement, there
shall not have been any material adverse effect on the Company and there shall
not have occurred any change or development, or any combination of changes or
developments, that would reasonably be expected to have a material adverse
effect on the Company.
5.4 CERTIFICATE. The Company shall have delivered to ADAC a certificate
of the Chief Executive Officer of the Company evidencing compliance with the
conditions set forth in Sections 5.1, 5.2 and 5.3.
5.5 PRE-ACQUISITION REVIEW. ADAC shall have completed its
pre-acquisition review of the Company and its business and shall be satisfied,
in its sole discretion, with the results of such review.
5.6 GOVERNMENTAL CONSENTS AND APPROVALS. ADAC and the Company shall have
received all approvals, licenses, consents, assignments and authorizations of
Governmental Authorities as may be required to permit the performance by ADAC
and the Company of their respective obligations under this Agreement and the
consummation of the Merger and the other Transactions.
5.7 CONSENT OF LENDERS. ADAC and the Company shall have received any
applicable consents of lenders.
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5.8 BOARD OF DIRECTORS APPROVAL. The Board of Directors of ADAC shall
have approved this Agreement, the Merger and the Related Transactions.
5.9 EXEMPT TRANSACTION. The issuance of the ADAC Common Stock in
connection with the Merger shall be exempt from the registration requirements of
the Securities Act of 1933, as amended.
5.10 CONSULTING AGREEMENT. Shareholder shall have executed and delivered
to ADAC a Consulting Agreement in the form of Exhibit A.
5.11 AFFILIATE AND INVESTMENT REPRESENTATION AGREEMENT. Shareholder
shall have executed and delivered to ADAC an Affiliate and Investment
Representation Agreement in the form of Exhibit B.
5.12 NONDISCLOSURE AND INVENTIONS AGREEMENT. Each Employee and
independent contractor of the Company requested by ADAC shall have executed and
delivered to ADAC a Nondisclosure and Inventions Agreement in the form of
Exhibit F.
5.13 ABSENCE OF RESTRAINT. No order to restrain, enjoin or otherwise
prevent the consummation of the Merger or any of the other Transactions shall
have been entered by any court or Governmental Authority.
5.14 NO LITIGATION. There shall not be pending or threatened any
Proceeding which, in the reasonable opinion of ADAC, could have a material
adverse effect on the Company, ADAC or the Surviving Corporation.
5.15 CONTINUITY OF INTEREST CERTIFICATE. Shareholder shall have executed
and delivered to ADAC a Continuity of Interest Certificate in the form of
Exhibit C.
5.16 LEGAL OPINION. ADAC shall have received an opinion of counsel to
the Company, dated the Closing Date, in substantially the form set forth on
Exhibit G.
5.17 LEASE. ADAC and Shareholder shall have executed and delivered a
sublease on terms and conditions satisfactory to the parties for the leasehold
at 00000-00-00 XX 000 Xxxxxx, Xxxxx, Xxxxxxx 00000, the prime lease shall have
been renewed for one year, amended to the satisfaction of ADAC and assigned by
PDT to Shareholder, and the Company shall have been released from the guarantee
provided to secure payments made under the lease.
5.18 MOBILE UNIT GUARANTEE. The Company shall have been released from
all guarantees to repurchase any mobile units.
5.19 TRANSITION AGREEMENT. Sub and TPC shall have entered into an
agreement in the form of Exhibit H hereto regarding the purchase of cameras by
TPC from Sub and certain other matters.
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6
CONDITIONS PRECEDENT TO THE COMPANY'S AND SHAREHOLDER'S OBLIGATIONS
The obligations of the Company and the Shareholder to effect the Merger
and otherwise consummate the transactions contemplated by this Agreement are
subject to the fulfillment, at or prior to the Closing, of the following
conditions:
6.1 REPRESENTATIONS AND WARRANTIES ACCURATE.
(a) The representations and warranties of ADAC contained in this
Agreement shall have been accurate in all material respects as of the date of
this Agreement.
(b) The representations and warranties of ADAC contained in this
Agreement shall be accurate in all respects as of the Closing Date as if made on
and as of the Closing Date.
6.2 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.
6.3 CERTIFICATE. ADAC shall have delivered to the Company a certificate
of an executive officer of ADAC evidencing compliance with the conditions set
forth in Sections 6.1 and 6.2.
6.4 LEGAL OPINION. The Company shall have received an opinion of counsel
to ADAC, dated the Closing Date, substantially to the effect of Exhibit H.
6.5 ABSENCE OF RESTRAINT. No order to restrain, enjoin or otherwise
prevent the consummation of the Merger or any of the other Transactions shall
have been entered by any court or Governmental Authority.
6.6 CONSULTING AGREEMENT. ADAC shall have executed and delivered to
Shareholder a Consulting Agreement in the form of Exhibit A.
6.7 SBA LOAN. Sub or ADAC shall have assumed the SBA loan held by the
Company, and the SBA shall have released the lien it holds on Shareholder's home
with respect thereto.
6.8 TRANSITION AGREEMENT. Sub and TPC shall have entered into an
agreement in the form of Exhibit I regarding the purchase of cameras by TPC from
Sub and certain other matters.
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7
TERMINATION OF AGREEMENT
7.1 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 Company;
(ii) by either ADAC or the Company if the Merger shall not
have been consummated by March 31, 1997 (unless the failure to consummate the
Merger 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 the Company 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 Merger;
(b) This Agreement may be terminated prior to the Closing Date:
(i) by ADAC if any of the Company'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 the Company's
covenants contained in this Agreement shall have been breached in any material
respect; provided, however, that if an inaccuracy in the Company's
representations and warranties or a breach of a covenant by the Company is
curable by the Company, the Company shall have ten days to cure such breach; or
(ii) by the Company 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.
7.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement as provided in Section 7.1, this Agreement shall be of no further
force or effect; provided, however, that (i) Section 4.3, this Section 7.2,
Section 7.3 and Section 10.10 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.
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7.3 FEES AND EXPENSES. Each of ADAC and the Company shall bear its own
expenses in connection with the preparation, negotiation, execution and
performance of this Agreement, the Merger and the Transactions.
8
HOLDBACK
8.1 HOLDBACK AMOUNT. On the Closing Date, ADAC shall withhold ten
percent (10%) of the ADAC Common Stock being delivered pursuant to Section
1.5(a)(ii) (the "Holdback Common Stock") and Shareholder 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 8.7 (the "Holdback Period").
8.2 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.
8.3 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 8. 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.
8.4 CLAIM NOTICE. If ADAC determines in good faith that (i) there has
been a possible breach by the Company of any representation, warranty, covenant
or other provision set forth in this Agreement or the certificate issued
pursuant to Section 5.3, (ii) there is a reasonable likelihood that any of the
matters disclosed in Section ____ of the Disclosure Schedule may result in any
liability, loss, cost or expense to ADAC, (iii) Sub has become liable for any
Taxes attributable to the period ending on or prior to the Closing Date, (iv)
Shareholder has failed to repay by April 30, 1997 any Liabilities outstanding as
of the Closing Date of Shareholder or any Shareholder affiliate or associate to
the Company, including the approximately $70,000 owed the Company by the Mobile
Business, or (v) there is any Proceeding relating to any inaccuracy, breach,
failure, liability or alleged liability, or damages of the type referred to in
the preceding clauses, and if ADAC wishes to make a claim against the Holdback
Common Stock with respect to such possible breach, then
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ADAC may deliver to Shareholder 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").
8.5 RESPONSE NOTICE. Within thirty (30) days after the delivery of a
Claim Notice to Shareholder, Shareholder 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; or
(c) a statement that the entire Claim Amount set forth in such
Claim Notice is being disputed.
If no Response Notice is received by ADAC from Shareholder within thirty (30)
days after the delivery of a Claim Notice to Shareholder, then Shareholder 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.
8.6 RELEASE OF SHARES TO ADAC.
(a) If Shareholder 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 Shareholder 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 8.6(c) shall be followed with respect to the remaining portion
of such Claim Amount.
(c) If a Response Notice delivered by Shareholder 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 8.7, ADAC shall continue to hold
(in addition to any other shares of Holdback Common Stock permitted to be
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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 Shareholder 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 damages arising from a particular breach.)
For purposes of this Article 8, the "Stipulated Value" of each of the shares of
Holdback Common Stock held shall be deemed to be equal to the Closing Price.
(d) Any release of Holdback Common Stock to ADAC shall be an
adjustment in and reduction of the consideration due the Shareholder as set
forth in Section 1.5(a)(ii).
8.7 RELEASE OF SHARES TO SHAREHOLDER. On the date which is Three Hundred
Sixty-Five (365) days after the Closing Date, ADAC shall release to Shareholder
all shares of Holdback Common Stock then held by ADAC, except for any shares of
Holdback Common Stock that are to be retained by ADAC pursuant to Section
8.6(c).
8.8 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Company and Shareholder in this Agreement and the other
agreements and instruments delivered by them pursuant hereto shall survive the
Closing and shall expire on the earlier of the date that is the date of the
auditor's report for the first audit of ADAC as of a date after the Closing Date
or the date that is one year following the Closing Date (the "Expiration Date");
provided however that if at any time prior to the Expiration Date, ADAC deliver
to Shareholder 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. All representations and warranties of ADAC and Sub shall terminate and
expire as of the Effective Time, and any liability of ADAC and Sub with respect
to such representations and warranties shall thereupon cease.
9
MISCELLANEOUS
9.1 NON-COMPETE. 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, such Shareholder 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 the Company prior to the Effective Time
or
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by ADAC prior to or after the Effective Time; (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
Shareholder to be used in connection with any competitive business.
9.2 AMENDMENT. This Agreement may be amended with the approval of the
respective Boards of Directors of the Company and ADAC at any time; provided,
however, that no amendment shall be made which would have a material adverse
effect on the Shareholder without the further approval of such Shareholder. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
9.3 WAIVER.
(a) 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.
(b) 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.
9.4 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.
9.5 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. 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.
9.6 ASSIGNABILITY. This Agreement shall be binding upon, and shall be
enforceable by and inure solely to the benefit of, the parties hereto and their
respective successors; provided, however, that this Agreement may not be
assigned by any party without the prior written consent of
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the other parties, and any attempted assignment without such consent shall be
void and of no effect. Nothing in this Agreement, express or implied, is
intended to or shall confer upon any third person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement.
9.7 NOTICES. All notices and other communications pursuant to this
Agreement shall be in writing and shall be deemed given if delivered personally,
telecopied, 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
000 Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxx Xxxxx with a copy to
Xxxxx X. Xxxxxxxxx
If to the Company,
to: Photon Diagnostic Technologies, Inc.
000000 X.X. 000xx Xxxxxx
Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
with a copy to: Xxxxx Xxxxxxxxx & Associates
c/o Techniport
0000 XX 00xx Xxxxxx, Xxxxx 000
Xxxxx, XX 00000
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 telecopy, when the party receiving such telecopy shall have confirmed
receipt of 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.
9.8 COOPERATION. Each of the Company 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.
9.9 CONFIDENTIALITY. The parties hereby agree that all information about
the other's business obtained by them pursuant to this Agreement or the letter
agreement dated October 28, 1996, 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
Merger. 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
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public or to a party without confidentiality restrictions after the date hereof,
and (iii) required to be disclosed by law or court order.
9.10 CERTAIN TERMS. As used in this Agreement:
(a) the word "person" refers to any (i) individual, (ii)
corporation, partnership, company or other entity, or (iii) Governmental
Authority; and
(b) 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."
9.11 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.
9.12 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 "SUB"
X.X. TECHNICAL SERVICES, INC.
a Delaware corporation
By:
----------------------------------
----------------------------------
[Print name and title]
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THE "COMPANY"
PHOTON DIAGNOSTIC TECHNOLOGIES, INC.,
a Florida corporation
By:
----------------------------------
----------------------------------
[Print name and title]
THE "SHAREHOLDER"
----------------------------------
Xxxxxx X. Xxxxxxx
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