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Exhibit 99(d)(1)(B)
EXECUTION COPY
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of November 12, 2000 (this
"Agreement"), among Adac Laboratories, a California corporation (the "Company"),
Philips Holding USA Inc., a Delaware corporation ("Parent"), and Academy
Acquisition Company, a Delaware corporation and an indirect wholly owned
subsidiary of Parent that is to be renamed Philips Medical Acquisition
Corporation("Merger Sub").
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this
Agreement, the parties hereto are entering into an Agreement and Plan of Merger
(as such agreement may hereafter be amended from time to time, the "Merger
Agreement") which provides, upon the terms and subject to the conditions set
forth therein, for (i) the commencement by Merger Sub of a tender offer (the
"Offer") to purchase any and all of the outstanding shares of the common stock,
no par value (the "Shares"), of the Company at a price of $18.50 per Share in
cash, net to the seller (such price, or such greater amount which may be paid
pursuant to the Offer, the "Offer Price") and (ii) the subsequent merger of
Merger Sub with and into the Company (the "Merger"), whereby each Share issued
and outstanding (other than Shares owned by Parent, Merger Sub or any other
subsidiary of Parent and other than Shares which are held by shareholders
exercising dissenters' rights pursuant to Chapter 13 of the California General
Corporation Law) shall be converted into the right to receive the Offer Price;
WHEREAS, as a condition to the willingness of Parent and
Merger Sub to enter into the Merger Agreement, Parent and Merger Sub have
required that the Company agree, and in order to induce Parent and Merger Sub to
enter into the Merger Agreement, the Company has agreed, to grant to Merger Sub
an option to purchase Shares upon the terms and subject to the conditions of
this Agreement; and
WHEREAS, capitalized terms used but not defined in this
Agreement shall have the meanings ascribed to them in the Merger Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
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ARTICLE I
The Top-Up Option
Section 1.01. Grant of Top-Up Stock Option. Subject to the
terms and conditions set forth herein, the Company hereby grants to Merger Sub
an irrevocable option (the "Top-Up Stock Option") to purchase that number of
Shares (the "Top-Up Option Shares") equal to the number of Shares that, when
added to the number of Shares owned by [NAME OF PARENT'S PARENT], a company
incorporated under the laws of the Netherlands ("Grandparent"), Merger Sub,
Parent and any other subsidiary of Grandparent immediately following
consummation of the Offer, shall constitute 90% of the Shares outstanding on a
fully diluted basis (but excluding, solely for the purpose of calculating the
total number of Shares outstanding on a fully diluted basis, Shares issuable
upon exercise of any stock option as to which a duly executed Option
Cancellation (as defined in the Merger Agreement) has been received by the
Company and Parent on or prior to 9:00 a.m., Pacific time, on the business day
prior to the expiration of the Offer) and shall permit Merger Sub to effect the
Merger pursuant to Section 1110 of the California General Corporation Law
(assuming the issuance of the Top-Up Option Shares) at a purchase price per
Top-Up Option Share equal to the Offer Price; provided, however, that the Top-Up
Stock Option shall not be exercisable if the number of Shares subject thereto
exceeds the number of authorized Shares available for issuance. The Company
agrees to provide Parent and Merger Sub with information regarding the number of
Shares available for issuance on an ongoing basis.
Section 1.02. Exercise of Top-Up Stock Option. (a) Merger Sub
may, at its election, exercise the Top-Up Stock Option in whole, but not in
part, at any one time after the occurrence of a Top-Up Exercise Event (as
defined below) and prior to the Top-Up Termination Date (as defined below).
(b) A "Top-Up Exercise Event" shall occur for purposes of this
Agreement upon Merger Sub's acceptance for payment pursuant to the Offer of
Shares constituting, together with Shares owned directly or indirectly by
Grandparent, Merger Sub, Parent and any other subsidiary of Grandparent, more
than 50% of the Shares then outstanding
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but less than 90% of the Shares then outstanding on a fully diluted basis (but
excluding, solely for the purpose of calculating the total number of Shares
outstanding on a fully diluted basis, Shares issuable upon exercise of any stock
option as to which a duly executed Option Cancellation has been received by the
Company and Parent on or prior to 9:00 a.m., Pacific time, on the business day
prior to the expiration of the Offer).
(c) Except as provided in the last sentence of this Section
1.02(c), the "Top-Up Termination Date" shall occur for purposes of this
Agreement upon the earliest to occur of: (i) the Effective Time; (ii) the date
which is 20 business days after the occurrence of a Top-Up Exercise Event; (iii)
the termination of the Merger Agreement; and (iv) the date on which Merger Sub
reduces the Minimum Condition to the Revised Minimum Number and accepts for
payment a number of Shares equal to the Revised Minimum Number.
Notwithstanding the occurrence of the Top-Up Termination Date,
Merger Sub shall be entitled to purchase the Top-Up Option Shares if it has
exercised the Top-Up Stock Option in accordance with the terms hereof prior to
such occurrence, and the occurrence of the Top-Up Termination Date shall not
affect any rights hereunder which by their terms do not terminate or expire
prior to or as of the Top-Up Notice Date (as herein defined).
(d) In the event Merger Sub wishes to exercise the Top-Up
Stock Option, Merger Sub shall send to the Company a written notice (a "Top-Up
Exercise Notice," the date of dispatch of which notice is referred to herein as
the "Top-Up Notice Date") specifying the denominations of the certificate or
certificates evidencing the Top-Up Option Shares which Merger Sub wishes to
receive, the place for the closing of the purchase and sale pursuant to the
Top-Up Stock Option (the "Top-Up Closing") and a date not earlier than one day
nor later than ten business days after the Top-Up Notice Date for the Top-Up
Closing; provided, however, that (i) the Top-Up Closing shall occur concurrently
with the consummation of the Offer, (ii) if the Top-Up Closing cannot be
consummated by reason of any applicable laws or orders, the period of time that
otherwise would run pursuant to this sentence shall run instead from the date on
which such restriction on consummation has expired or been
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terminated and (iii) without limiting the foregoing, if prior notification to or
approval of any governmental entity is required in connection with such
purchase, Merger Sub and the Company shall promptly file the required notice or
application for approval and shall cooperate in the expeditious filing of such
notice or application, and the period of time that otherwise would run pursuant
to this sentence shall run instead from the date on which, as the case may be,
(A) any required notification period has expired or been terminated or (B) any
required approval has been obtained, and in either event, any requisite waiting
period has expired or been terminated. The Company shall, promptly after receipt
of the Top-Up Exercise Notice, deliver a written notice to Merger Sub confirming
the number of Top-Up Option Shares and the aggregate purchase price therefor.
ARTICLE II
Closing
Section 2.01. Conditions to Closing. The obligation of the
Company to deliver Top-Up Option Shares upon the exercise of the Top-Up Stock
Option is subject to the following conditions:
(a) any applicable waiting period under the HSR Act and any
applicable non-United States laws regulating competition, antitrust, investment
or exchange controls relating to the issuance of the Top-Up Option Shares
hereunder shall have expired or been terminated;
(b) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the exercise of the Top-Up
Stock Option or the delivery of the Top-Up Option Shares in respect of any such
exercise; and
(c) delivery of the Top-Up Option Shares would not violate, or
otherwise cause a violation of the rule of the Nasdaq Stock Market set forth in
Section 4350(i)1(D) of the NASD Manual.
Section 2.02. Closing. (a) At the Top-Up Closing (i) the
Company shall deliver to Merger Sub a
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certificate or certificates evidencing the applicable number of Top-Up Option
Shares (in the denominations designated by Merger Sub in the Top-Up Exercise
Notice) and (ii) Merger Sub shall purchase each Top-Up Option Share from the
Company at the Offer Price. Payment by Merger Sub of the purchase price for the
Top-Up Option Shares may be made, at the option of Merger Sub, by delivery of
(i) immediately available funds by wire transfer to an account designated by the
Company or (ii) a promissory note, in form and substance reasonably satisfactory
to the Company and in a principal face amount equal to the aggregate amount of
the purchase price, which promissory note shall be secured with property (other
than the Top-Up Option Shares) reasonably acceptable to the parties, shall bear
interest at a rate equal to 5% per annum and shall be payable in full with
accrued interest immediately prior to the Effective Time.
(b) The Company shall pay all expenses, and any and all
federal, state and local taxes and other charges, that may be payable in
connection with the preparation, issuance and delivery of stock certificates
under this Section 2.02.
(c) Certificates evidencing Top-Up Option Shares delivered
hereunder may include legends legally required including the legend in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD ONLY IF SO
REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
It is understood and agreed that the foregoing legend shall be
removed by delivery of substitute certificate(s) without such legend upon the
sale of the Top-Up Option Shares pursuant to a registered public offering or
Rule 144 under the Securities Act, or any other sale as a result of which such
legend is no longer required.
ARTICLE III
Additional Agreements
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Section 3.01. Reasonable Best Efforts. Subject to the terms
and conditions of this Agreement, Parent, Merger Sub and the Company will use
their reasonable best efforts to take, or cause to be taken, all actions and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate the transactions contemplated by
this Agreement.
Section 3.02. Further Assurances. Each party shall perform
such further acts and execute such further documents and instruments as may
reasonably be required to vest in Merger Sub and Parent the power to carry out
the provisions of this Agreement. If Merger Sub shall exercise the Top-Up Stock
Option granted hereunder in accordance with the terms of this Agreement, each
party shall, without additional consideration, execute and deliver all such
further documents and instruments and take all such further action as any other
party may reasonably request to carry out the transactions contemplated by this
Agreement.
ARTICLE IV
Miscellaneous
Section 4.01. Notices. Any notice, request and other
communication to any party hereunder shall be in writing (including facsimile
transmission) and shall be given as specified in Section 10.7 of the Merger
Agreement.
Section 4.02. Waiver of Conditions. The conditions to each of
the parties' obligations to consummate this Agreement are for the sole benefit
of such party and may be waived by such party in whole or in part to the extent
permitted by applicable law.
Section 4.03. Payment of Expenses. Whether or not the
transactions contemplated by this Agreement shall be consummated, each party
hereto shall pay its own expenses incident to preparing for, entering into and
carrying out this Agreement.
Section 4.04. Entire Agreement, etc. This Agreement, the
Merger Agreement and the Confidentiality Agreement, dated March 20, 2000,
between Bear ▇▇▇▇▇▇▇ & Co., Inc., for itself and on behalf of the Company, and
Parent,
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taken together, (a) constitute the entire agreement, and supersede all other
prior agreements, understandings, representations and warranties both written
and oral, among the parties, with respect to the subject matter hereof, and (b)
shall not be assignable by operation of law or otherwise and is not intended to
create any obligations to, or (except with respect to the provisions of Section
7.9 of the Merger Agreement) rights in respect of, any person other than the
parties hereto; provided, however, that Parent may designate, by written notice
to the Company, another wholly-owned direct or indirect subsidiary to purchase
the Top-Up Option Shares in lieu of Merger Sub, in which event all references
herein to Merger Sub shall be deemed references to such other subsidiary.
Section 4.05. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York, except as
otherwise required by the California General Corporation Law.
Section 4.06. Counterparts. For the convenience of the parties
hereto, this Agreement may be executed in any number of counterparts, each such
counterpart being deemed to be an original instrument, and all such counterparts
shall together constitute the same agreement.
Section 4.07. Captions. The Article, Section and paragraph
captions herein are for convenience of reference only, do not constitute part of
this Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof.
Section 4.08. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the fullest
extent possible.
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Section 4.09. Specific Performance. The parties hereto agree
that irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof,
in addition to any other remedy to which they are entitled at law or in equity.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto on the date
first hereinabove written.
ADAC LABORATORIES
By: /s/ R. ▇▇▇▇▇▇ ▇▇▇▇▇▇
________________________________
Name:
Title: Chairman and Chief
Executive Officer
PHILIPS HOLDING USA INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
________________________________
Name:
Title: Chairman, President
and Director
ACADEMY ACQUISITION COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
________________________________
Name:
Title: President and Director
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