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Exhibit 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
by and among
BRACCO DIAGNOSTICS, INC.,
EAGLE ACQUISITION SUB, INC.,
E-Z-EM, INC.
and
BRACCO IMAGING S.P.A.
(for the limited purposes specified
herein)
Dated as of October 30, 2007
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October
30, 2007 (this “ Agreement ”), by and among
BRACCO DIAGNOSTICS, INC., a Delaware corporation (“
Parent ”), EAGLE
ACQUISITION SUB, INC., a Delaware corporation and a wholly owned
Subsidiary of Parent (“ Merger
Sub ”), E-Z-EM, INC., a Delaware
corporation (the “ Company ”), and, for the
limited purposes specified herein, Bracco Imaging S.p.A., a
corporation organized under the laws of the Republic of Italy
(“ Bracco Imaging
”).
RECITALS
WHEREAS, the respective Boards of Directors of
Parent and the Company have each approved and declared advisable
the merger of Merger Sub with and into the Company (the
“ Merger ”), upon the terms and subject to the conditions set
forth in this Agreement, pursuant to which each outstanding share
of common stock, par value $0.10 per share, of the Company
(“ Company Common Stock
”) issued and outstanding immediately prior to
the Effective Time, other than shares to be cancelled pursuant to
Section 1.08(b) and, except as provided in
Section 1.08(e), Appraisal Shares, will be converted into the
right to receive $21.00 per share in cash, without interest (the
“ Merger Consideration
”);
WHEREAS, concurrently with the execution and
delivery of this Agreement, certain stockholders of the Company,
who collectively ownapproximately 33.8% of the Company Common Stock
outstanding on the date hereof(collectively, the “
Stockholders ”),
have entered into an agreement with Parent and the Company pursuant
to which each Stockholder has agreed to vote and give a proxy with
respect to the shares of Company Common Stock beneficially owned by
such Stockholder in favor of this Agreement and the transactions
contemplated hereby (including the Merger) and against any
transaction or other action that would interfere with this
Agreement or any of the transactions contemplated hereby (including
the Merger) (the “ Voting
Agreement ”); and
WHEREAS, Parent, Merger Sub and the Company desire
to make certain representations, warranties, covenants and
agreements in connection with the transactions contemplated hereby
and also to prescribe various conditions to the transactions
contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing
and the respective representations, warranties, covenants and
agreements set forth herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE 1
THE MERGER
SECTION
1.01
The Merger . Upon the
terms and subject to the conditions hereof, and in accordance with
the Delaware General Corporation Law (the “
DGCL ”), at the
Effective Time, Merger Sub shall be merged with and into the
Company and the separate existence of Merger Sub shall thereupon
cease by virtue of the Merger, and the Company, as the surviving
corporation in the Merger (the “ Surviving Corporation ”), shall
by virtue of the Merger continue its existence under the Laws of
the State of Delaware.
SECTION
1.02
Closing . Unless this
Agreement shall have been terminated pursuant to the provisions of
Section 9.01, the closing of the Merger (the “
Closing ”) will
take place on the third Business Day after the satisfaction or
waiver (subject to applicable Law) of the conditions (excluding
conditions that, by their terms, cannot be satisfied until the
Closing Date, but subject to the satisfaction or, where permitted,
waiver of those conditions as of the Closing) set forth in Article
8, unless another time or date is agreed to in writing by the
parties hereto (the date of the Closing, the “
Closing Date ”).
The Closing shall be held at the offices of Greenberg Traurig, LLP,
The Met Life Building, 200 Park Avenue, New York, New York, unless
another place is agreed to in writing by the parties
hereto.
SECTION
1.03
Effective Time . Upon
the Closing, the parties shall file with the Secretary of State of
the State of Delaware a certificate of merger (the “
Certificate of Merger ”). The Merger shall become effective at such time as the
Certificate of Merger is duly filed with and accepted by the
Secretary of State of the State of Delaware or at such subsequent
date and time as Parent and the Company shall agree and as shall be
specified in the Certificate of Merger (the date and time the
Merger becomes effective being the “ Effective Time ”).
SECTION
1.04
Effect of the Merger .
From and after the Effective Time, the effect of the Merger shall
be as provided in the applicable provisions of the DGCL. Without
limiting the generality of the foregoing, and subject thereto, at
the Effective Time, all of the properties, rights, privileges,
powers and franchises of the Company and Merger Sub shall vest
entirely in the Surviving Corporation, and all debts, liabilities,
obligations, restrictions, disabilities and duties of each of the
Company and Merger Sub shall become the debts, liabilities,
obligations, restrictions, disabilities and duties of the Surviving
Corporation.
SECTION
1.05
Certificate of Incorporation
. At the Effective Time, the certificate of
incorporation of the Company shall be amended to read in its
entirety as the certificate of incorporation of Merger Sub as in
effect immediately prior to the Effective Time, and, as so amended,
shall be the certificate of incorporation of the Surviving
Corporation after the Effective Time, and thereafter may be amended
as provided therein or by applicable Law.
SECTION
1.06
Bylaws . The bylaws of
Merger Sub as in effect at the Effective Time shall be the bylaws
of the Surviving Corporation, and thereafter may be amended as
provided therein or by applicable Law.
SECTION
1.07
Directors; Officers .
The directors of Merger Sub immediately prior to the Effective Time
shall be the directors of the Surviving Corporation and, unless
otherwise directed by Parent in writing prior to the Effective
Time, the officers of the Company immediately prior to the
Effective Time shall be the officers of the Surviving Corporation,
in each case until their respective successors are duly elected and
qualified or until their death, resignation or removal in
accordance with the DGCL and the certificate of incorporation and
bylaws of the Surviving Corporation.
SECTION
1.08
Effect on Capital Stock . At the Effective Time, by virtue of the Merger and without
any action on the part of Parent, Merger Sub, the Company or the
holders of any of the following securities:
(a)
Each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than
shares to be cancelled pursuant to Section 1.08(b) and, except
as provided in Section 1.08(e), Appraisal Shares) shall be
converted into the right to receive the Merger Consideration,
without interest and subject to any required Tax withholding. At
the Effective Time, all such shares of Company Common Stock shall
cease to be outstanding and shall be canceled and retired and shall
cease to exist, and each holder of a certificate which immediately
prior to the Effective Time represented any such shares of Company
Common Stock (a “ Certificate ”) shall thereafter
cease to have any rights with respect to such shares of Company
Common Stock, except the right to receive the Merger Consideration,
without interest and subject to any required Tax
withholding.
(b)
Each share of Company Common Stock held in the
treasury of the Company and each share of Company Common Stock
owned by Merger Sub, Parent or any direct or indirect wholly-owned
Subsidiary of Parent, Merger Sub or the Company, in each case
immediately prior to the Effective Time, shall be canceled without
any conversion thereof and no payment or distribution shall be made
with respect thereto.
(c)
Each share of common stock, par value $0.01 per
share, of Merger Sub issued and outstanding immediately prior to
the Effective Time shall be converted into one share of common
stock, par value $0.01 per share, of the Surviving
Corporation.
(d)
If prior to the Effective Time, the Company should
split, combine or otherwise reclassify the Company Common Stock, or
pay a stock dividend or other stock distribution in Company Common
Stock, or otherwise change the Company Common Stock into any other
securities, or make any other such stock dividend or distribution
in capital stock of the Company in respect of the Company Common
Stock, then the Merger Consideration will be appropriately adjusted
to reflect such split, combination, dividend or other distribution
or change.
(e)
Notwithstanding anything in this Agreement to the
contrary, shares (the “ Appraisal
Shares ”) of Company Common Stock
issued and outstanding immediately prior to the Effective Time that
are held by any holder who has not voted in favor of the adoption
of this Agreement or consented thereto and who has properly
exercised appraisal pursuant to and in accordance with, and who has
otherwise complied with, the provisions of Section 262 of the DGCL
(“ Section 262
”), shall not be converted into the right to
receive the Merger Consideration as provided in Section 1.08(a),
but instead such holder shall be entitled only to payment of the
appraised value of such Appraisal Shares in accordance with the
provisions of Section 262 unless and until any such holder fails to
perfect or effectively withdraws or loses his, her or its rights to
appraisal and payment under the DGCL. At the Effective Time, the
Appraisal Shares shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and each holder
of a certificate that immediately prior to the Effective Time
represented Appraisal Shares shall cease to have any rights with
respect thereto, except the right to receive the appraised value of
such shares in accordance with the provisions of Section 262.
Notwithstanding the foregoing, if any such holder shall fail to
perfect or otherwise shall waive, withdraw or lose the right to
appraisal under Section 262 or a court of competent jurisdiction
shall determine that such holder is not entitled to the relief
provided by Section 262, then the right of such holder to be paid
the appraised value of such holder’s Appraisal Shares under
Section 262 shall cease and such Appraisal Shares shall be deemed
to have been converted at the Effective Time into, and
shall
have become, the right to receive the Merger
Consideration as provided in Section 1.08(a). The Company shall
serve prompt written notice to Parent of any demands for appraisal
of any shares of Company Common Stock, withdrawals of any such
demands and any other related instruments served pursuant to the
DGCL received by the Company, and Parent shall have the right to
participate in and direct all negotiations and proceedings with
respect to such demands. Unless required by a final and
non-appealable order, decree, ruling or injunction of a court of
competent jurisdiction, the Company shall not, without the prior
written consent of Parent (which shall not be unreasonably withheld
or delayed), make any payment with respect to, or settle or offer
to settle, any such demands, or agree to do or commit to do any of
the foregoing.
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Section 1.09
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Treatment of Options .
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(a)
Each option to purchase shares of Company Common
Stock (individually a “ Company
Option ” and collectively, the
“ Company Options
”) outstanding immediately prior to the
Effective Time pursuant to any Company Option Plan or otherwise
will at the Effective Time be cancelled and the holder of such
Company Option will, in full settlement of such Company Option,
receive from the Company an amount (without interest and subject to
any required Tax withholding), if any, in cash equal to the product
of (i) the excess, if any, of the Merger Consideration over the
exercise price per share of Company Common Stock underlying such
Company Option multiplied by (ii) the number of shares of Company
Common Stock subject to such Company Option, whether or not vested
or exercisable; provided
that the aggregate amount of such payment shall be
rounded down to the nearest whole cent. If the applicable exercise
price of any Company Option equals or exceeds the Merger
Consideration, such Company Option shall be cancelled without
payment of additional consideration, and all rights with respect to
such Company Option shall terminate as of the Effective Time.
Parent shall pay, or shall cause the Surviving Corporation to pay,
the amount of cash payable in respect of each Company Option as
soon as practicable following the Effective Time (but in no event
later than ten (10) Business Days after the Effective Time). The
holders of Company Options shall have no further rights in respect
of any Company Options from and after the Effective
Time.
(b)
Prior to the Effective Time, the Company shall adopt
such resolutions and take such other actions as are necessary in
order to (i) effectuate the actions contemplated by this Section
1.09 or to otherwise cancel the Company Options prior to the
Effective Time and (ii) terminate each Company Plan, including
providing notice to, or obtaining the consent of, each holder of a
Company Option necessary or desirable to effect the provisions of
this Section 1.09, in each case without paying any consideration or
incurring any debts or obligations on behalf of the Company, Parent
or the Surviving Corporation other than as contemplated by Section
1.09(a); provided that such resolutions and actions shall expressly be
conditioned upon the consummation of the Merger and the other
transactions contemplated hereby and shall be of no effect if this
Agreement is terminated.
ARTICLE 2
EXCHANGE OF CERTIFICATES
SECTION
2.01
Exchange Fund . At or
prior to the Effective Time, Parent shall deposit with a bank or
trust company designated by Parent and reasonably satisfactory to
the Company (the “ Exchange
Agent ”), in trust for the benefit
of holders of shares of Company Common Stock,
for exchange in accordance with Section 1.08, the
cash to be paid pursuant to this Agreement in exchange for
outstanding Company Common Stock. Any cash deposited with the
Exchange Agent, and any interest or other distributions thereon,
shall hereinafter be referred to as the “
Exchange Fund .”
The Exchange Fund shall be invested by the Exchange Agent, as
directed by Parent or the Surviving Corporation, only in
obligations of or guaranteed by the United States of America or
obligations of an agency of the United States of America which are
backed by the full faith and credit of the United States of
America, or in deposit accounts, certificates of deposit or
banker’s acceptances of, repurchase or reverse repurchase
agreements with, or Eurodollar time deposits purchased from,
commercial banks, each of which has capital, surplus and undivided
profits aggregating more than $500 million (based on the most
recent financial statements of the banks which are then publicly
available at the Securities and Exchange Commission (the
“ SEC ”) or otherwise); provided that no such investment or
losses thereon shall affect the Merger Consideration payable to
former stockholders of the Company, and Parent shall promptly
provide, or cause the Surviving Corporation to promptly provide,
additional funds to the Exchange Agent for the benefit of the
former holders of Company Common Stock in the amount of any such
losses.
SECTION
2.02
Exchange Procedures .
As promptly as practicable after the Effective Time, Parent shall
cause the Exchange Agent to send to each record holder of a
Certificate, (a) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to
the Exchange Agent and shall be in customary form and have such
other provisions as Parent may reasonably specify) and (b)
instructions for use in effecting the surrender of the Certificates
in exchange for the payment of the Merger Consideration. As soon as
reasonably practicable after the Effective Time, each holder of a
Certificate, upon surrender of a Certificate to the Exchange Agent
together with such letter of transmittal, duly executed, and such
other documents as may reasonably be required by the Exchange
Agent, shall be entitled to receive in exchange therefor a check in
the amount equal to the per share cash amount of the Merger
Consideration (after giving effect to any required Tax
withholdings), which such holder has the right to receive pursuant
to Section 1.08. The Exchange Agent shall accept such Certificates
upon compliance with such reasonable terms and conditions as the
Exchange Agent may impose to effect an orderly exchange thereof in
accordance with normal exchange practices. No interest will be paid
or will accrue on any cash payable upon due surrender of the
Certificates. In the event of a transfer of ownership of Company
Common Stock that is not registered in the transfer records of the
Company, the Merger Consideration with respect to such Company
Common Stock shall be paid to such a transferee only if the
Certificate representing such shares of Company Common Stock is
presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and to evidence that
any applicable stock transfer Taxes have been paid.
SECTION
2.03
No Further Ownership Rights in Company Common
Stock . The Merger Consideration paid
upon conversion of shares of Company Common Stock in accordance
with the terms of Article 1 and this Article 2 shall be deemed to
have been paid in full satisfaction of all rights pertaining to the
shares of Company Common Stock.
SECTION
2.04
Termination of Exchange Fund
. Any portion of the Exchange Fund that remains
undistributed to the holders of Certificates for six (6) months
after the Effective Time shall be delivered to the Surviving
Corporation or otherwise on the instruction of the
Surviving Corporation, and any holders of
Certificates who have not theretofore complied with this Article 2
shall thereafter look only to the Surviving Corporation and Parent
(subject to abandoned property, escheat or other similar laws) for
the Merger Consideration with respect to the shares of Company
Common Stock formerly represented thereby to which such holders are
entitled pursuant to Section 1.08.
SECTION
2.05
No Liability . None of
Parent, Merger Sub, the Company, the Surviving Corporation or the
Exchange Agent shall be liable to any Person in respect of any
Merger Consideration from the Exchange Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or
similar Law.
SECTION
2.06
Lost Certificates . If
any Certificate shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such Person of a bond in such
reasonable amount as the Surviving Corporation may direct as
indemnity against any claim that may be made against it with
respect to such Certificate or other documentation (including an
indemnity in customary form) reasonably requested by Parent, the
Exchange Agent will deliver in exchange for such lost, stolen or
destroyed Certificate the applicable Merger Consideration with
respect to the shares of Company Common Stock formerly represented
thereby.
SECTION
2.07
Withholding Rights .
Each of the Exchange Agent, the Surviving Corporation and Parent
shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock and any holder of Company Options
such amounts as it is required to deduct and withhold with respect
to the making of such payment under the Internal Revenue Code of
1986, as amended (the “ Code ”), and the rules and
regulations promulgated thereunder (“ Treasury Regulations ”), or any
provision of state, local or foreign Tax Law. To the extent that
amounts are so withheld by the Surviving Corporation or Parent, as
the case may be, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the
shares of Company Common Stock in respect of which such deduction
and withholding was made by the Surviving Corporation or Parent, as
the case may be.
SECTION
2.08
Further Assurances . At
and after the Effective Time, the officers and directors of the
Surviving Corporation will be authorized to execute and deliver, in
the name and on behalf of the Company or Merger Sub, any deeds,
bills of sale, assignments or assurances and to take and do, in the
name and on behalf of the Company or Merger Sub, any other actions
and things to vest, perfect or confirm of record or otherwise in
the Surviving Corporation any and all right, title and interest in,
to and under any of the rights, properties or assets acquired or to
be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger.
SECTION
2.09
Stock Transfer Books .
At the close of business, New York time, on the day the Effective
Time occurs, the stock transfer books of the Company shall be
closed and there shall be no further registration of transfers of
shares of Company Common Stock thereafter on the records of the
Company. From and after the Effective Time, the holders of
Certificates shall cease to have any rights with respect to such
shares of Company Common Stock formerly represented thereby, except
as otherwise provided herein or by applicable Law. On or after
the
Effective Time, any Certificates presented to the
Exchange Agent or Parent for any reason shall be converted into the
Merger Consideration with respect to the shares of Company Common
Stock formerly represented thereby.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY
Except as disclosed in (a) the Company Disclosure
Schedule delivered by the Company to Parent prior to the execution
of this Agreement (the “ Company
Disclosure Schedule ”) (provided
that (i) information disclosed in any section or subsection of the
Company Disclosure Schedule shall be deemed to qualify all other
sections and subsections of this Agreement to which such
information relates, but only to the extent (x) such relationship
is reasonably apparent or (y) such disclosure is cross-referenced
in such other section or subsection of the Company Disclosure
Schedule (or a reference to any attachments to such
cross-referenced section or subsection) and (ii) all information
disclosed in any subsection of Section 3.20 of the Company
Disclosure Schedule shall be deemed to qualify for all purposes all
other subsections of Section 3.20 of the Company Disclosure
Schedule) or (b) any Company SEC Report filed with the SEC on or
after August 17, 2006 and prior to the date of this Agreement (to
the extent such disclosure does not constitute a “risk
factor” or forward-looking statement and such disclosure is
reasonably apparent on its face to pertain to such section or
subsection of Article 3 below, and provided that any statement in
any such Company SEC Report shall not be deemed disclosed for
purposes of this Article 3 to the extent such statement has been
modified or superseded or is otherwise inconsistent with the
disclosure contained in any such subsequently filed Company SEC
Report, in which case such statement, as so modified or superseded,
shall be deemed to be disclosed for the purposes of this Article
III), the Company hereby represents and warrants to Parent and
Merger Sub as follows:
SECTION
3.01
Corporate Organization . Each of the Company and its Subsidiaries is duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite corporate
power to own its properties and assets and to conduct its business
as now conducted. Copies of the Company’s Restated
Certificate of Incorporation and Amended and Restated By-laws,
together with all amendments thereto to the date hereof (the
“ Company Organizational
Documents ”) and the organizational
documents of each Subsidiary of the Company as currently in effect,
with all amendments thereto to the date hereof, have been made
available to Parent, and such copies are accurate and complete as
of the date hereof.
SECTION
3.02
Qualification to Do Business
. Each of the Company and its Subsidiaries is duly
qualified to do business as a foreign corporation and is in good
standing in every jurisdiction in which the character of the
properties owned or leased by it or the nature of the business
conducted by it makes such qualification necessary, except where
the failure to be so qualified or in good standing individually or
in the aggregate has not had and would not reasonably be expected
to have a Company Material Adverse Effect.
SECTION
3.03
No Conflict or Violation . The execution, delivery and performance by the Company of
this Agreement does not and will not (a) violate or conflict with
any provision of any Company Organizational Documents or any of the
organizational documents of the Subsidiaries of the Company as
currently in effect, (b) assuming compliance with the
matters
referenced in Section 3.04 and receipt of the
Company Stockholder Approval, violate any provision of applicable
Law, or (c) other than as set forth in Section 3.03 of the
Company Disclosure Schedule, violate or result in a breach of or
constitute (with due notice or lapse of time or both) a default
under any note, bond, mortgage, indenture, lease, license, contract
or other agreement, instrument or obligation to which the Company
or any of its Subsidiaries is a party or to which any of their
respective properties or assets is subject or result in the
creation or imposition of any Lien (other than any Permitted Lien)
upon any of the assets, properties or rights of either the Company
or any of its Subsidiaries or result in or give to others any
rights of cancellation, modification, amendment, acceleration,
revocation or suspension of any of such note, bond, mortgage,
indenture, lease, license, contract, agreement, instrument or
obligation thereunder, or of any Licenses and Permits, except with
respect to clauses (b) and (c), for any violations, breaches,
defaults, conflicts or other occurrences that individually or in
the aggregate have not had and would not reasonably be expected to
have a Company Material Adverse Effect.
SECTION
3.04
Consents and Approvals . No consent, waiver, authorization or approval of any
Governmental Entity, and no declaration or notice to or filing or
registration with any Governmental Entity, is required in
connection with the execution and delivery of this Agreement by the
Company or the performance by the Company or its Subsidiaries of
their obligations hereunder, except for: (a) any antitrust,
competition or other regulatory approvals and/or notifications
required by or of any Governmental Entity in connection with the
transactions contemplated by this Agreement, including under (i)
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the “ HSR Act
”), (ii) the German Act Against Restraints of
Competition, (iii) notice to the Committee on Foreign Investment in
the United States (“ CFIUS ”) pursuant to the
provisions of Section 721 of Title VII of the Defense
Production Act of 1950, as amended, and the regulations promulgated
thereunder (the “ Exon-Florio
Provision ”), (iv) notices to the
Directorate of Defense Trade Controls, U.S. Department of State
(“ DDTC ”) pursuant to Section 122.4 of the International Traffic
in Arms Regulations (22 C.F.R. Parts 120-130) (“
ITAR ”) and (v)
the amendment of Establishment Registrations and Product Listings
under the United States Food and Drug Administration’s
(“ FDA ”) Establishment Registration and Product Listing
regulations, as set forth in 21 C.F.R. Part 207 and Part 807 (all
approvals under this Section 3.04(a) being the “
Required Approvals ”); (b) applicable requirements of the Securities Act of
1933, as amended, and the rules and regulations promulgated
thereunder (the “ Securities
Act ”) and of the Securities
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the “ Exchange Act ”) and the rules
and regulations of NASDAQ; (c) state securities, takeover and
“blue sky” laws; (d) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware; and
(e) such other consents, waivers, authorizations, declarations,
notices, filings and registrations the failure of which to be
obtained or made individually or in the aggregate (i) has not had
and would not reasonably be expected to have a Company Material
Adverse Effect or (ii) would not reasonably be expected to prevent
or materially delay the consummation of the transactions
contemplated by this Agreement.
SECTION
3.05
Authorization and Validity of
Agreement . The Company has the necessary
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement
by the Company and the performance by the Company of its
obligations hereunder and the consummation of the transactions
contemplated hereby have been
duly authorized by the Board of Directors of the
Company (the “ Company
Board ”) and all other necessary
corporate action on the part of the Company, other than the Company
Stockholder Approval and the actions contemplated by Section
1.09(b), and, other than the Company Stockholder Approval and the
actions contemplated by Section 1.09(b), no other corporate
proceedings on the part of the Company are necessary to authorize
this Agreement and the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the
Company and, assuming due execution and delivery by Parent and
Merger Sub, shall constitute a legal, valid and binding obligation
of the Company, enforceable against it in accordance with its
terms, subject to (a) the effect of bankruptcy, fraudulent
conveyance, reorganization, moratorium and other similar Laws
relating to or affecting the enforcement of creditors’ rights
generally, (b) general equitable principles (whether considered in
a proceeding in equity or at Law) and (c) an implied covenant of
good faith and fair dealing.
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SECTION 3.06
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Capitalization and Related Matters
.
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(a)
The authorized capital stock of the Company consists
of 16,000,000 shares of Company Common Stock and 1,000,000 shares
of preferred stock, par value $.10 per share, of the Company (the
“ Preferred Stock
”). At the close of business on
October 26, 2007:
(i)
10,976,549 shares of Company Common Stock are issued
and outstanding, including no restricted shares of Company Common
Stock,
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(ii)
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no shares of Preferred Stock are issued and
outstanding,
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(iii)
89,205 shares of Company Common Stock are held by
the Company as treasury shares,
(iv)
an aggregate of 1,974,994 shares of Company Common
Stock are reserved and available for issuance pursuant to the
Company’s 2004 Stock and Incentive Award Plan, 1983 Stock
Option Plan and 1984 Stock Option Plan (the “
Company Option Plans ”), and of such shares, 1,278,819 shares of Company
Common Stock are subject to issuance pursuant to outstanding
Company Options and
(v)
an aggregate of 104,395 shares of Company Common
Stock are reserved and available for issuance pursuant to the
Company’s 1985 Employee Stock Purchase Plan (together with
the Company Option Plans, the “ Company Plans ”).
Other than the Company Plans and as set forth in
Section 3.06(a) of the Company Disclosure Schedule, there is no
plan or other Contract providing for the grant of options,
securities or other rights exercisable or exchangeable for or into
shares of Company Common Stock by the Company or any of its
Subsidiaries. No shares of Company Common Stock are owned by any
Subsidiary of the Company. Section 3.06(a) of the Company
Disclosure Schedule sets forth a true and complete list as of the
date hereof, of all outstanding Company Options, the number of
shares of Company Common Stock (or other capital stock) subject
thereto, the grant dates, expiration dates, exercise prices and
vesting schedules thereof, the names of the holders thereof and
whether or not each holder is a current employee of the Company or
any of its Subsidiaries and whether or not such Company Option is
intended to qualify as an “incentive stock option”
under Section 422 of the Code.
(b)
On the date hereof, except for the Company Options
and as set forth in Section 3.06(a) of the Company Disclosure
Schedule, no shares of capital stock of, or other equity or voting
interests in, the Company, or any securities convertible into, or
exchangeable for, any such stock, interests or securities, or any
options, warrants, shares of deferred stock, restricted stock
awards, restricted stock units, stock appreciation or depreciation
rights, performance stock awards and performance stock units,
dividend equivalent rights, “phantom” stock awards or
other agreements (to which the Company or any of its Subsidiaries
is a party) or calls or rights to acquire or receive any such
stock, interests or securities, or other rights that are linked in
any way to the value of the Company Common Stock or the value of
the Company or any part thereof, were issued, reserved for issuance
or outstanding.
(c)
All outstanding shares of capital stock of the
Company are, and all shares which are issuable pursuant to the
Company Plans shall be, when issued in accordance with the terms
thereof, duly authorized, validly issued, fully paid and
non-assessable and not subject to or issued in violation of any
purchase option, call or put option, right of first offer or
refusal, preemptive right, subscription right or any similar right
under any provision of the DGCL, the Company Organizational
Documents or any Contract to which the Company is a party or
otherwise bound. Except as set forth in Section 3.06(a), there are
no (i) bonds, debentures, notes or other evidences of indebtedness
of the Company or any of its Subsidiaries and (ii) securities or
other instruments or obligations of the Company or any of its
Subsidiaries, in each case, the value of which is based upon or
derived from any capital stock of, or other equity or voting
interest in, the Company or which has or which by its terms may
have at any time (whether actual or contingent) the right to vote
(or which is convertible into, or exchangeable or exercisable for,
securities having the right to vote) on any matters on which
holders of Company Common Stock may vote whether generally in the
election of Company directors or in respect of any other matter for
which holders of Company Common Stock are entitled to vote as a
matter of Law or pursuant to the Company Organizational Documents.
With respect to the Company Options, (A) each Company Option
intended to qualify as an “incentive stock option”
under Section 422 of the Code so qualifies, (B) each grant of a
Company Option was duly authorized no later than the date on which
the grant of such Company Option was by its terms to be effective
by all necessary corporate action, including, as applicable,
approval by the Company Board (or a duly constituted and authorized
committee thereof) and any required stockholder approval by the
necessary number of votes or written consents, and the award
agreement governing such grant (if any) was duly executed and
delivered by each party thereto, (C) each such grant was made in
accordance with the terms of the Company Plans, the Exchange Act
and all other applicable Laws and regulatory rules or requirements,
including the rules of NASDAQ, (D) the per share exercise price of
each Company Option was not less than the fair market value of a
share of Company Common Stock on the applicable date of grant of
such Company Option and (E) each such grant was properly accounted
for in accordance with U.S. GAAP in the financial statements
(including the related notes) of the Company and disclosed in the
Company SEC Reports in accordance with the Exchange Act and all
other applicable Laws. The provisions of the Company Option Plans
and the grant agreements governing the Company Options permit the
Company Options to be treated in accordance with Section
1.09.
SECTION
3.07
Subsidiaries . Except
as set forth in Section 3.07 of the Company Disclosure Schedule,
each Subsidiary of the Company is listed on Exhibit 21 of the
Company’s
Annual Report on Form 10-K for the fiscal year ended
June 2, 2007. Other than those Subsidiaries, neither the Company
nor any of its Subsidiaries, directly or indirectly, owns, or holds
any rights to acquire, any capital stock or any other securities,
interests or investments in any other Person.
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SECTION 3.08
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Company SEC Reports .
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(a)
Since June 3, 2004, the Company has filed or
otherwise transmitted each registration statement, prospectus,
definitive proxy statement or information statement, form, report,
schedule and other document (together with all amendments thereof
and supplements thereto) required to be filed by the Company
pursuant to the Exchange Act or the Securities Act, each as in
effect as of the date of the respective filing (as such documents
have since the time of their filing been amended or supplemented,
the “ Company SEC Reports
”). As of their respective dates, after giving
effect to any amendments or supplements thereto filed prior to the
date hereof, the Company SEC Reports (i) complied in all material
respects with the applicable requirements of the Exchange Act, the
Securities Act and the Sarbanes-Oxley Act of 2002 and any rules and
regulations promulgated thereunder (the “
Sarbanes-Oxley Act ”), each as in effect as of the date of the respective
filing, and (ii) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading (other
than to the extent such statement or fact was provided to the
Company by, or on behalf of, Parent specifically for inclusion in
the Proxy Statement). Each of the Company SEC Reports, if not yet
filed, when so filed will comply in all material respects with the
applicable requirements of the Exchange Act, the Securities Act and
the Sarbanes-Oxley Act, each as in effect as of the date of the
respective filing. As of the date of this Agreement, (i) there are
no outstanding or unresolved comments in comment letters received
from the SEC staff with respect to the Company SEC Reports and (ii)
to the Knowledge of the Company, none of the Company SEC Reports is
the subject of ongoing review, comment or investigation by the SEC.
None of the Subsidiaries of the Company are, or have been, subject
to the reporting requirements of Section 13(a) or 15(d) of the
Exchange Act.
(b)
The audited consolidated financial statements and
unaudited interim consolidated financial statements (including, in
each case, the notes, if any, thereto) included in the Company SEC
Reports complied as to form in all material respects with the
published rules and regulations of the SEC with respect thereto,
were prepared in accordance with U.S. GAAP applied on a consistent
basis during the periods involved (except as may be indicated
therein or in the notes thereto and except with respect to
unaudited statements as permitted by Form 10-Q of the SEC) and
fairly present (subject, in the case of the unaudited interim
financial statements included therein, to normal year-end
adjustments and the absence of complete footnotes) the consolidated
financial position of the Company and its consolidated Subsidiaries
as of the respective dates thereof and the consolidated results of
their operations and cash flows for the respective periods then
ended.
SECTION
3.09
Absence of Certain Changes or Events
. Except as disclosed in Section 3.09 of the Company
Disclosure Schedule, since June 3, 2007, (a) the Company and its
Subsidiaries have conducted their respective businesses in all
material respects in the ordinary course of business consistent
with past practice, (b) there has not been any Company
Material
Adverse Effect and (c) none of the Company or any of
its Subsidiaries has taken any action that if taken after the date
of this Agreement, would have required the consent of Parent under
Section 5.01.
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SECTION 3.10
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Tax Matters .
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(a) (i)
The Company and each of its Subsidiaries has filed when due with
the appropriate governmental entities all Tax Returns it was
required by applicable Law to file; (ii) all such Tax Returns are
true, correct and complete in all material respects; (iii) the
Company and each of its Subsidiaries has timely paid all material
Taxes (except for Taxes which are being contested in good faith by
appropriate proceedings) due with respect to the taxable periods
covered by such Tax Returns and all other material Taxes due and
owing by the Company and its Subsidiaries (whether or not shown on
any tax return); and (iv) any liability of the Company or any of
its Subsidiaries for Taxes not yet due and payable, or which are
being contested in good faith, has been provided for on the
financial statements of the Company in accordance with U.S.
GAAP.
(b)
The Company has delivered or made available to
Parent correct and complete copies of all federal, state, local and
foreign Income Tax Returns filed by the Company or any of its
Subsidiaries since May 31, 2002.
(c)
There is no material action, suit, proceeding,
investigation, audit or claim now pending with respect to the
Company or any of its Subsidiaries in respect of any Tax, nor has
any material claim for additional Tax been asserted in writing by
any taxing authority since May 31, 2002. Since May 31, 2002, no
claim has been made in writing by any taxing authority in a
jurisdiction where the Company or any of its Subsidiaries has not
filed a Tax Return that it is or may be subject to Tax by such
jurisdiction.
(d)
(i) There is no outstanding request for any
extension of time for the Company or any of its Subsidiaries to pay
any Taxes or file any Tax Returns; (ii) there has been no waiver or
extension of any applicable statute of limitations for the
assessment or collection of any Taxes of the Company or any of its
Subsidiaries that is currently in force; and (iii) neither the
Company nor any of its Subsidiaries is a party to or bound by any
Tax-sharing, Tax indemnity, Tax allocation, pre-filing, or advance
pricing agreement or similar arrangements, whether written or
unwritten, providing for the payment of Taxes, payment for Tax
losses, entitlements to refunds or similar Tax matters.
(e)
The Company and each of its Subsidiaries has
withheld and paid all material Taxes required to be withheld in
connection with any amounts paid or owing to any employee,
creditor, independent contractor or other third party.
(f)
The Company has not been a United States real
property holding corporation within the meaning of Section
897(c)(2) of the Code during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code.
(g)
Neither the Company nor any of its Subsidiaries has
elected at any time to be treated as an S corporation within the
meaning of Sections 1361 or 1362 of the Code or under any
comparable state or local Tax provision.
(h)
Except as set forth in Section 3.10 of the Company
Disclosure Schedule, none of the Company nor any of its
Subsidiaries shall be required to include in a taxable period
ending after the Closing taxable income attributable to income that
accrued in a prior taxable period as a result of the installment
method of accounting, the completed contract method of accounting,
the long-term contract method of accounting, the cash method of
accounting or Section 481 of the Code or comparable provisions of
state or local Tax law, or for any other reason.
(i)
Other than with respect to the Company’s
spin-off of AngioDynamics in 2004, neither the Company nor any of
its Subsidiaries has distributed stock of another Person, or has
had its stock distributed by another Person, in a transaction that
was purported or intended to be governed in whole or in part by
Section 355 or Section 361 of the Code.
(j)
There is no material Lien, other than a Permitted
Lien, affecting any of the assets, properties or rights of the
Company and its Subsidiaries that arose in connection with any
failure or alleged failure to pay any Tax.
(k)
Neither the Company nor any of its Subsidiaries (i)
has been a member of an affiliated group (within the meaning of
Code § 1504(a)) filing a consolidated federal income Tax
Return (other than a group the common parent of which is the
Company) or (ii) except as set forth in Section 3.10 of the Company
Disclosure Schedule, has any liability for the Taxes of any Person
(other than any of the Company and its Subsidiaries) under Treasury
Regulations § 1.1502-6 (or any similar provision of state,
local, or foreign law), as a transferee or successor, by contract,
or otherwise.
(l)
Neither the Company nor any of its Subsidiaries is
or ever has been a partner for Tax purposes with respect to any
joint venture, partnership, or other arrangement or contract which
is treated as a partnership for Tax purposes.
(m)
Neither the Company nor any of its Subsidiaries has
entered into any transaction identified as a “reportable
transaction” or “listed transaction” for purposes
of Code Section 6707A(c) or Treasury Regulations Sections
1.6011-4(b)(2) or 301.6111-2(b)(2).
SECTION
3.11
Absence of Undisclosed Liabilities
. Neither the Company nor any of its Subsidiaries
has any liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise), except for liabilities and
obligations that (i) are accrued or reserved against in the most
recent financial statements included in the Company SEC Reports
filed prior to the date hereof or are reflected in the notes
thereto, (ii) were incurred in the ordinary course of business
consistent with past practice since the date of such financial
statements, (iii) are incurred as expressly provided in this
Agreement, (iv) have been discharged or paid in full prior to the
date of this Agreement in the ordinary course of business
consistent with past practice or (v) individually or in the
aggregate (A) have not had and would not reasonably be expected to
have a Company Material Adverse Effect, or (B) would not reasonably
be expected to prevent or materially delay the consummation of any
of the transactions contemplated by this Agreement.
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SECTION 3.12
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Company Property .
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(a)
Section 3.12(a) of the Company Disclosure Schedule
contains a true and complete list of all real property owned by the
Company and its Subsidiaries (the “ Owned Real Property ”) as of
the date hereof. Except for matters that individually or in the
aggregate have not had or would not reasonably be expected to have
a Company Material Adverse Effect, the Company and its Subsidiaries
have good, marketable and valid fee title to all of the Owned Real
Property free and clear of Liens other than Permitted
Liens.
(b)
Except for matters that individually or in the
aggregate have not had and would not reasonably be expected to have
a Company Material Adverse Effect, the Company or a Subsidiary
enjoys peaceful and undisturbed possession of the Leased Real
Property pursuant to the Leases.
(c)
Except for matters that individually or in the
aggregate have not had and would not reasonably be expected to have
a Company Material Adverse Effect, none of the Company Property is
subject to any option, lease, sublease, license or other agreement
granting to any Person any right to the use, occupancy or enjoyment
of such property or any portion thereof or to obtain title to all
or any portion of such property.
(d)
Except for matters that individually or in the
aggregate have not had and would not reasonably be expected to have
a Company Material Adverse Effect, all equipment and machinery
located in the Company’s manufacturing facility in Quebec,
Canada are in good operating condition and repair and generally
suitable in all respects for the present and continued use,
operation and maintenance thereof as now used, operated or
maintained.
SECTION
3.13
Assets of the Company and its
Subsidiaries . (a) The Company or a
Subsidiary of the Company has good title, free and clear of any
Liens (other than Permitted Liens), to, or a valid leasehold
interest under enforceable leases in, all material furniture,
fixtures, equipment, operating supplies and other personal property
necessary to conduct the business of the Company as conducted
immediately prior to the date of this Agreement and (b) there are
no material assets, properties, rights or interests of any kind or
nature that the Company or any of its Subsidiaries has been using,
holding or operating in their business prior to the Closing that
will not be held or owned by each of the Company or its
Subsidiaries immediately following the Closing.
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SECTION 3.14
|
Intellectual Property .
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(a)
Section 3.14(a) of the Company Disclosure Schedule
sets forth a complete and current list of all issued patents and
patent applications, registered trademarks and service marks,
trademark and service mark applications, domain names, and
copyright registrations and applications that, in each case, are
owned by or licensed to the Company or any of its Subsidiaries
(“ Registered Intellectual
Property ”). The Company and its
Subsidiaries also own or license from third parties certain works
of authorship in various media, trade names, confidential or
proprietary information, trade secrets or know how rights,
intellectual property rights in computer programs or software
(including without limitation source code and object code),
confidential information, database rights, or other types of
intellectual property or proprietary
rights that are material to the conduct of the
business of the Company or its Subsidiaries as currently conducted
(“ Material Unregistered
Intellectual Property ”). The
Registered Intellectual Property and the Material Unregistered
Intellectual Property are collectively referred to herein as
“ Intellectual Property
”. The Intellectual Property constitutes all
intellectual property necessary to conduct of the business of the
Company and its Subsidiaries as currently conducted. To the
Knowledge of the Company and its Subsidiaries and except as would
not be reasonably expected to have a Company Material Adverse
Effect, the Intellectual Property is valid, subsisting, and
enforceable. To the Knowledge of the Company and its Subsidiaries
as of the Closing Date, except as set forth on Section 3.14 of the
Company Disclosure Schedule, no governmental or administrative
agency fees, office action responses, maintenance filings, or other
required actions with respect to the Registered Intellectual
Property fall due within 30 days of the Closing Date.
(b)
Except as set forth in Section 3.14(b) of the
Company Disclosure Schedule or in Section 3.14(f) of the Company
Disclosure Schedule, the Company or one of its applicable
Subsidiaries is the sole owner of all right, title, and interest in
and holds good title to the Intellectual Property, free and clear
of all Liens other than Permitted Liens, or holds a valid and
enforceable license to use the Intellectual Property. Except as set
forth in Section 3.14(b) of the Company Disclosure Schedule or in
Section 3.14(f) of the Company Disclosure Schedule or Section 3.20
of the Company Disclosure Schedule, the Company and its
Subsidiaries are not restricted from assigning their rights in any
Intellectual Property.
(c)
Except as set forth in Section 3.14(c) of the
Company Disclosure Schedule, to the Knowledge of the Company and
except as would not be reasonably expected to have a Company
Material Adverse Effect, no third party (including any current or
former employee or consultant of the Company or any of its
Subsidiaries) is infringing or has misappropriated any Intellectual
Property. Neither the Company nor any of its Subsidiaries has made
any claim of any infringement or misappropriation by any third
party of rights to any Intellectual Property, which claim is
pending as of the Closing Date.
(d)
Except as set forth in Section 3.14(d) of the
Company Disclosure Schedule, to the Knowledge of the Company: (i)
the conduct of the business of the Company and its Subsidiaries as
conducted on the Closing Date does not infringe or misappropriate
any intellectual property or proprietary right of any third party;
and (ii) there are no claims pending or, to the Knowledge of the
Company, threatened against the Company or any of its Subsidiaries
with regard to the rights of the Company or any of its Subsidiaries
in any Intellectual Property. To the Knowledge of the Company, the
Company and its Subsidiaries are in material compliance with all
relevant agreements governing the use or exploitation of any
Intellectual Property.
(e)
Except as set forth in Schedule 3.14(e) the
consummation by the Company of the transactions contemplated by
this Agreement will not (i) alter, impair or result in the
termination of any Intellectual Property or (ii) result in the
creation of any Lien (other than a Permitted Lien) with respect to
any of the Intellectual Property.
(f)
Section 3.14(f) of the Company Disclosure Schedule
sets forth, as of the date hereof, a list of the written agreements
under which the Company or any of its Subsidiaries is obligated to
make payments to third parties for use of any Intellectual Property
with respect to the commercialization of any products that are, as
of the date hereof, being sold, manufactured
by or under development by the Company or any of its
Subsidiaries and for which such payments are in excess of $100,000
per year for any single product.
(g)
Except as set forth on Section 3.14(g) of the
Company Disclosure Schedule or as, individually or in the
aggregate, has not had and would not reasonably be expected to have
a Company Material Adverse Effect, all current officers, senior
directors, engineers, and research and development (R & D)
employees of the Company or its Subsidiaries, and all former
officers, senior directors, engineers, and research and development
(R & D) employees who left the employment of the Company or its
Subsidiaries within the ten-year period prior to the Closing Date,
and all contractors and consultants engaged by the Company or its
Subsidiaries within the ten-year period prior to the Closing Date
and involved in the creation of Intellectual Property have executed
written agreements (i) requiring them to maintain the
confidentiality of such Intellectual Property to the extent that it
consists of confidential information and/or trade secrets and (ii)
assigning to the Company or its Subsidiaries, as applicable, all
right, title and interest in and to any inventions and any other
Intellectual Property created by such officers, senior directors,
engineers, research and development (R & D) employees,
contractors, or consultants in conjunction with their work for or
on behalf of the Company within the ten-year period prior to the
Closing Date.
(h)
The Company and its Subsidiaries do not own, use, or
distribute any software that incorporates or uses any “free
software” or “open source software” in a manner
that would require that the Company or any of its Subsidiaries :
(i) disclose any source code to third parties; or (ii) license to
third parties any source code for the purpose of making derivative
works thereof; or (iii) make available any source code for
redistribution by any third party.
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SECTION 3.15
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Licenses and Permits .
|
(a)
Except as provided in Section 3.16 or for matters
that individually or in the aggregate (x) have not had and would
not reasonably be expected to have a Company Material Adverse
Effect or (y) would not reasonably be expected to prevent or
materially delay the consummation of any of the transactions
contemplated by this Agreement, (i) the Company and its
Subsidiaries have, and are in compliance with, all licenses,
permits, franchises, registrations, authorizations and approvals
issued or granted by any Governmental Entity for the conduct of
their respective businesses (the “ Licenses and Permits ”) and
have taken all necessary action to maintain such Licenses and
Permits and (ii) the Licenses and Permits are sufficient and
adequate to permit the continued lawful conduct of the business of
the Company and its Subsidiaries, and none of the operations of the
Company or its Subsidiaries are being conducted in a manner that
violates any of the terms or conditions under which any License and
Permit was granted.
(b)
Except for matters that individually or in the
aggregate have not had and would not reasonably be expected to have
a Company Material Adverse Effect, each License and Permit is valid
and in full force and effect, and no petition, action,
investigation, notice of violation or apparent liability, notice of
forfeiture, order to show cause, complaint, or administrative or
judicial proceeding seeking to revoke, reconsider the grant of,
cancel, suspend, declare invalid or modify any of the Licenses and
Permits is pending or, to the Knowledge of the Company, threatened
before any Governmental Entity. As of the date hereof, no notices
have
been received by, and, to the Knowledge of the
Company, no claims have been filed against, the Company or its
Subsidiaries alleging a failure to hold any Licenses or
Permits.
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SECTION 3.16
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Regulatory Matters .
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(a)
The Company and its Subsidiaries manufacture,
market, test and distribute and, since June 3, 2004, have
manufactured, marketed, tested and distributed their own products
in compliance with the Federal Food, Drug, and Cosmetic Act (the
“ FDCA ”) and all applicable rules and regulations of the FDA or
similar applicable Laws in any state or foreign jurisdiction,
including, but not limited to, current “Good Manufacturing
Practices,” “Quality System Regulation,”
“Adverse Event Reporting,” “Medical Device
Reporting” and those Laws related to investigational use of
drugs and medical devices, marketing medical devices and drugs, and
marketing unapproved “grandfathered drugs,” regulations
regarding labeling, advertising and record-keeping, in compliance
with the Company’s and its Subsidiaries’ quality
control procedures in effect at the time of manufacture, where the
failure to be in such compliance has, individually, or in the
aggregate, had or would reasonably be expected to have a Company
Material Adverse Effect. All of the products currently sold by the
Company and its Subsidiaries have been approved or cleared for
marketing by the FDA, unless approval or clearance is not required,
as the case may be, and all other applicable Governmental Entities
performing functions similar to those performed by the FDA. Neither
the Company nor any of its Subsidiaries promotes or, to the
Knowledge of the Company, has promoted any “off-label”
use for such products in violation of existing Law or current
regulatory interpretations, or received any notice in writing from
the FDA or any Governmental Entity performing functions similar to
those performed by the FDA alleging such illegal promotion. Neither
the Company nor any Subsidiary has received any written notice or
other communication from the FDA, or any other Governmental Entity,
that has not been fully and satisfactorily responded to and
resolved, questioning its manufacturing, distribution or reporting
practices or threatening to revoke or curtail any product clearance
or approval or otherwise alleging any violation of the FDCA, its
regulations or Law applicable to any products of the Company or its
Subsidiaries. Except as set forth in Section 3.16(a) of the Company
Disclosure Schedule, none of the products of the Company or its
Subsidiaries has been recalled, withdrawn, suspended or
discontinued by the Company or its Subsidiaries in the United
States or outside the United States, whether voluntary or
involuntary. As of the date hereof, to the Knowledge of the
Company, there exists no basis for any action by it, the FDA or any
other applicable Governmental Entity performing functions similar
to those performed by the FDA to revoke, recall, suspend, cancel or
withdraw any product, or product approval, clearance, registration,
license or other authorization or permit with respect to any
product of the Company or its Subsidiaries. All United States and
international regulatory approvals or pre-market notifications
therefor are owned either by and registered in the name of the
Company or one of its Subsidiaries, or in the name of a licensed
distributor, and are in full force and effect.
(b)
Neither the Company nor any of its Subsidiaries has
failed to file with the FDA or any applicable Governmental Entity
performing functions similar to those performed by the FDA any
material required filing, declaration, listing, registration,
report or submission; all such filings, declarations, listings,
registrations, reports or submissions were to the Knowledge of the
Company in compliance with applicable Laws when filed, and no
unresolved deficiencies have been asserted by any applicable
regulatory authority with respect to any such filings,
declarations, listing, registrations, reports or
submissions which, individually or in the aggregate, have had or
could be reasonably expected to have a Company Material Adverse
Effect.
(c)
Any clinical, pre-clinical and other studies and
tests conducted by or on behalf of or sponsored by the Company or
its Subsidiaries were and, if still pending, are to the Knowledge
of the Company being conducted in accordance in all material
respects with “Good Clinical Practices” and all United
States and foreign Laws, as applicable, including the Laws of those
States that address clinical trials. As of the date hereof, the
Company has no Knowledge of other studies or tests the results of
which contain any significant or material inconsistencies with the
Company’s or its Subsidiaries’ studies or tests or
otherwise call into question the safety or efficacy of the
Company’s or its Subsidiaries’ products. Neither the
Company nor any of its Subsidiaries has received any written
notices or other correspondence from an institutional review board
or study site, the FDA or any other applicable Governmental Entity
performing functions similar to those performed by the FDA with
respect to any of these ongoing clinical or pre-clinical studies or
tests requiring the termination, suspension or material
modification of such studies or tests.
(d)
To the Knowledge of the Company, neither the
Company, nor any of its Subsidiaries, nor any employee of the
Company, nor any of its Subsidiaries or any Person retained by the
Company or any of its Subsidiaries, has made on behalf of the
Company or any of its Subsidiaries any false statement or material
omissions in any application or other submission relating to
products governed by the Department of Health and Human Services or
other Governmental Entity.
(e)
To the Knowledge of the Company, all of the
manufacturing facilities and operations of the Company and its
Subsidiaries of finished products sold in the United States are in
material compliance with applicable FDA regulations, including
current Good Manufacturing Practices, when applicable, and meet
quality standards set by the FDCA, except where the failure to be
in such compliance or to meet such standards has not, individually
or in the aggregate, had and would not reasonably be expected to
have a Company Material Adverse Effect.
(f)
The products sold by the Company and its
Subsidiaries in the United States are generally classified either
as over-the-counter drugs under 21 U.S.C. § 353(b)(i),
“grandfathered drugs” under 21 U.S.C. § 321(p)(1),
or as Class I and Class II Medical Devices (as defined in 21 U.S.C.
§ 360c(a)(1)(A) and (B) and the applicable rules thereunder).
The Company and its Subsidiaries, and the products sold by the
Company and its Subsidiaries, are in compliance in all material
respects with all current and otherwise applicable Laws
administered or issued by the FDA and any other applicable
Governmental Entity performing functions similar to those performed
by the FDA, except where the failure to be in such compliance has
not, individually or in the aggregate, had and would not reasonably
be expected to have a Company Material Adverse Effect.
(g)
The Company has made available to Parent all
material complaints maintained by the Company and its Subsidiaries
(as required by 21 C.F.R. Parts 211 and 820) and all Product
Adverse Event Reports or Medical Device Reports received or
compiled by the Company and its Subsidiaries since June 3, 2004. To
the Knowledge of the Company, all such
complaints that it was required to report to the FDA
or comparable Governmental Entity it reported as required by
Law.
(h)
Except as noted in Schedule 3.16(h), to the
Knowledge of the Company neither the Company nor any of its
Subsidiaries has committed any act, made any statement or failed to
make any statement that would violate the FDA’s policy with
respect to “Fraud, Untrue Statements of Material Facts,
Bribery, and Illegal Gratuities” set forth in 56 Fed. Reg.
46191 (September 10, 1991) or any similar laws, rules or
regulations, whether under the jurisdiction of the FDA or any
Governmental Entity, and any amendments thereto. Neither the
Company nor any of its Subsidiaries, nor to the Knowledge of the
Company, any officer, employee, or third party vendors of any of
the Company or its Subsidiaries, has been convicted of any crime or
engaged in any conduct that would reasonably be expected to result
in (i) debarment under 21 U.S.C. § 335a or any similar
state or foreign law or regulation or (ii) exclusion under 42
U.S.C. § 1320a-7 or any similar state or foreign law or
regulation.
(i)
To the Knowledge of the Company, neither the Company
nor any of its Subsidiaries is being investigated by the Office of
Inspector General of the Department of Health and Human Services
with respect to any matter arising under titles XI, XVIII, or XIX
of the Social Security Act, or the implementing regulations.
Neither the Company nor any of its Subsidiaries (i) has been
excluded from participating in any federal health care program,
(ii) has paid a civil money penalty under Title XI of the Social
Security Act, or (iii) employs any individual who has been excluded
from participating in any federal health care program.
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SECTION 3.17
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Certifications; Product Safety
.
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(a)
All operations of the Company and its Subsidiaries
have achieved and substantially maintained all required ISO
(International Organization for Standardization) and quality
certifications and are compliant, in all material respects, with
the applicable FDA Good Manufacturing Practice and Quality System
Regulations. There are no Actions pending or, to the Knowledge of
the Company, threatened in writing, to audit, repeal, fail to renew
or challenge any such certification. Each product distributed,
sold, or leased, or service rendered, by the Company and its
Subsidiaries complies in all respects with all product safety
standards of each applicable product safety Governmental Entity
having jurisdiction over the Company, except where the failure to
so comply has not, individually or in the aggregate, had and would
not reasonably be expected to have a Company Material Adverse
Effect. The Company and its Subsidiaries, or an agent of the
Company or its Subsidiaries, manufactures each product of the
Company and its Subsidiaries in compliance with each device master
record (as such terms are defined in the FDA Good Manufacturing
Practice and Quality System Regulations) maintained by the Company
and its Subsidiaries, or an agent of the Company or its
Subsidiaries, for each product of the Company and its Subsidiaries,
except when the failure to be in such compliance has not,
individually or in the aggregate, had and would not reasonably be
expected to have a Company Material Adverse Effect.
(b)
As of the date hereof, no unresolved product
liability claims remain pending related to the Company or its
Subsidiaries or any of the Company’s or its
Subsidiaries’ products.
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SECTION 3.18
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Compliance with Law; Sarbanes-Oxley
Act .
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(a)
Each of the Company and its Subsidiaries is in
compliance with all applicable Laws, including compliance with the
listing and governance rules and regulations of NASDAQ, except
where such noncompliance individually or in the aggregate (x) has
not had and would not reasonably be expected to have a Company
Material Adverse Effect or (y) would not reasonably be expected to
prevent or materially delay the consummation of any of the
transactions contemplated by this Agreement or the Voting
Agreement. This Section 3.18 shall not apply to the Laws that are
expressly the subject of Sections 3.08, 3.10, 3.16, 3.17, 3.21,
3.25, 3.26 and 3.33.
(b)
Except as permitted by the Exchange Act, including
Sections 13(k)(2) and (3) or rules of the SEC, since the enactment
of the Sarbanes-Oxley Act, neither the Company nor any of its
Affiliates has made, arranged or modified (in any material way) any
extension of credit in the form of a personal loan to any executive
officer or director of the Company.
(c)
The Company maintains (i) disclosure controls and
procedures (as defined in Rule 13a-15 or 15d-15, as applicable,
under the Exchange Act) designed to ensure that information
required to be disclosed by the Company is recorded and reported on
a timely basis to the individuals responsible for the preparation
of the Company’s filings with the SEC and other public
disclosure documents and (ii) a system of internal control over
financial reporting (as defined in Rule 13a-15 or 15d-15, as
applicable, under the Exchange Act) designed to provide reasonable
assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with U.S. GAAP which includes policies and procedures
that (i) pertain to the maintenance of records that in reasonable
detail accurately and fairly reflect the transactions and
dispositions of the asset of the Company, (ii) provide reasonable
assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with U.S. GAAP,
and that receipts and expenditures of the Company are being made
only in accordance with authorizations of management or the
directors of the Company, and (iii) provide reasonable assurance
regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Company’s assets that
could have a material effect on its financial statements. The
Company has disclosed, based on the most recent evaluation of its
chief executive officer and its chief financial officer prior to
the date hereof, to the Company’s auditors and the audit
committee of the Company Board (x) any significant deficiencies in
the design or operation of its internal controls over financial
reporting that are reasonably likely to adversely affect the
Company’s ability to record, process, summarize and report
financial information (and has identified for the Company’s
auditors and audit committee of the Company Board any material
weaknesses in internal control over financial reporting) and (y)
any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company’s
internal control over financial reporting.
SECTION
3.19
Litigation . Other than
the action entitled Tyco Healthcare Group
LP, Mallinckrodt Inc. and Liebel-Flarsheim Company vs. E-Z-EM,
Inc. Case no. 2-07CV-262, as amended
through the date hereof, (the “ Tyco
Litigation ”) or as set forth in
Section 3.19 of the Company Disclosure Schedule, there is no
material litigation, claim, action, suit, arbitration, mediation,
subpoena, investigation or other proceeding administrative,
regulatory, judicial or other by or before a Governmental Entity or
Person acting in a dispute resolution capacity (each,
an “ Action ”) that is pending or,
to the Knowledge of the Company, threatened, against, or brought
by, any of the Company or its Subsidiaries or any of their officers
or directors involving or relating to the Company or its
Subsidiaries, the assets, properties or rights of any of the
Company and its Subsidiaries or the transactions contemplated by
this Agreement or the Voting Agreement. There is no Order of any
Governmental Entity or before any arbitrator of any nature
outstanding, or to the Knowledge of the Company, threatened,
against either the Company or its Subsidiaries that individually or
in the aggregate have had or would reasonably be expected to have a
Company Material Adverse Effect.
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SECTION 3.20
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Material Contracts .
|
(a)
Section 3.20 of the Company Disclosure Schedule sets
forth a complete and correct list of all Contracts as of the date
hereof.
(b)
Except for matters that individually or in the
aggregate (x) have not had and would not reasonably be expected to
have a Company Material Adverse Effect or (y) would not reasonably
be expected to prevent or materially delay the consummation of any
of the transactions contemplated by this Agreement or the Voting
Agreement, each Contract is in full force and effect, valid,
binding and enforceable against the Company or its Subsidiaries
and, to the Knowledge of the Company, against the other parties
thereto in accordance with its terms, subject to (i) the effect of
bankruptcy, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting the enforcement of
creditors’ rights generally, (ii) general equitable
principles (whether considered in a proceeding in equity or at law)
and (iii) an implied covenant of good faith and fair dealing. Each
of the Company and its Subsidiaries has performed all obligations
required to be performed by it to date under, and is not in default
or delinquent in performance, status or any other respect (claimed
or actual) in connection with, any Contract, and, to the Knowledge
of the Company, no event has occurred which, with due notice or
lapse of time or both, would constitute such a default, except for
matters that individually or in the aggregate (r) have not had and
would not reasonably be expected to have a Company Material Adverse
Effect or (s) would not reasonably be expected to prevent or
materially delay the consummation of any of the transactions
contemplated by this Agreement or the Voting Agreement. Except for
matters that individually or in the aggregate (I) have not had and
would not reasonably be expected to have a Company Material Adverse
Effect or (II) would not reasonably be expected to prevent or
materially delay the consummation of any of the transactions
contemplated by this Agreement or the Voting Agreement, the Company
has sent no notices of default under any Contract, which default
remains uncured, and to the Knowledge of the Company, no other
party to any Contract is in material default in respect thereof,
and, to the Knowledge of the Company, no event has occurred which,
with due notice or lapse of time or both, would constitute such a
default. The Company has made available to Parent or its
representatives true and complete originals or copies of all the
Contracts.
(c)
A “ Contract ” means any binding
agreement, contract or commitment to which either the Company or
any of its Subsidiaries is a party or by which it or any of its
assets are bound constituting:
(i)
an agreement that would be required to be filed by
the Company as a “material agreement” pursuant to Item
601(b)(10) of Regulation S-K under the Securities
Act or disclosed by the Company on a Current Report
on Form 8-K or that if terminated or subject to a default by any
party thereto individually or in the aggregate would reasonably be
expected to have a Company Material Adverse Effect;
(ii)
an agreement (A) with a customer of the Company or
any of its Subsidiaries pursuant to which the Company or any of its
Subsidiaries has sold or will sell goods and/or services and has
derived, or expects to derive, revenue of at least $500,000 in any
twelve (12) month period, or (B) with any customer that contains
“most-favored nation,” pursuant to which the Company or
any of its Subsidiaries has sold or will sell goods and/or services
and derived, or expects to derive, revenue of at least $500,000 in
any twelve (12) month period;
(iii)
an agreement with a licensor, supplier or other
vendor of the Company or any of its Subsidiaries pursuant to which
the Company and its Subsidiaries has paid or is expected to pay at
least $500,000 to such licensor, supplier or other vendor in any
twelve (12) month period;
(iv)
a mortgage, indenture, security agreement, guaranty,
pledge and other agreement or instrument relating to the borrowing
of money or extension of credit (other than accounts receivable or
accounts payable in the ordinary course of business and consistent
with past practice), in each case having an aggregate principal
amount of at least $500,000;
(v)
a written employment, change of control, retention
or severance agreement or any consulting agreement pursuant to
which the Company has paid or is expected to pay at least $100,000
in any twelve (12) month period, or a collective bargaining
agreement or other material agreement with any association
representing employees (other than customary employment agreements
entered into in the ordinary course of business with employees
located in Europe);
(vi)
any agreement with a group purchasing organization
(“ GPO ”), distributors and independent hospital networks
pursuant to which the Company or any of its Subsidiaries has sold
or will sell goods and/or services and has derived, or expects to
derive, revenue of at least $500,000 in any twelve (12) month
period;
(vii)
any joint venture, partnership or limited liability
company agreement with third parties that is material to the
business of the Company and its Subsidiaries, taken as a
whole;
(viii)
any non-competition agreement or any other agreement
or obligation which purports to materially limit (A) the manner in
which, or the localities in which, the business of the Company or
its Subsidiaries may be conducted or (B) the ability of either the
Company or its Subsidiaries to provide any type of service
presently conducted by the Company or its Subsidiaries;
(ix)
(A) any leases, licenses (for real property),
subleases and occupancy agreements, together with all amendments
thereto, in which either the Company or its Subsidiaries has a
leasehold interest or similar occupancy rights, whether as lessor
or
lessee, and which involve payments by the Company or
its Subsidiaries in excess of $250,000 per year (each, a
“ Lease ” and collectively, the “ Leases ”; the property covered
by Leases under which either the Company or its Subsidiaries is a
lessee is referred to herein as the “ Leased Real Property ”; the
Leased Real Property, together with the Owned Real Property,
collectively being the “ Company
Property ”) and (B) any lease or
sublease of personal property to which the Company or any of its
Subsidiaries is party as either lessor or lessee, that, in the case
of (B), is material to the business of the Company and its
Subsidiaries, taken as a whole;
(x)
an agreement limiting or restricting the ability of
either the Company or its Subsidiaries to make distributions or
declare or pay dividends in respect of its capital stock or
membership interests, as the case may be;
(xi)
a distribution, dealership, representative, broker,
sales agency, consulting or advertising contract that is material
to the business of the Company and its Subsidiaries, taken as a
whole;
(xii)
an agreement requiring capital expenditures in
excess of $200,000 in any twelve (12) month period;
(xiii)
an agreement or offer to acquire all or a
substantial portion of the capital stock, business, property or
assets of any other Person or sell, transfer or otherwise dispose
of a substantial portion of the assets or capital stock of the
Company or its Subsidiaries;
(xiv)
any agreement between the Company or any of its
Subsidiaries and any Governmental Entity that is material to the
business of the Company and its Subsidiaries, taken as a
whole;
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(xv)
|
any agreement relating to the supply of barium
sulfate; or
|
(xvi)
any other material agreement not in the ordinary
course of the business of the Company and its Subsidiaries that is
material to the business of the Company and its Subsidiaries, taken
as a whole.
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SECTION 3.21
|
Employee Plans .
|
(a)
Section 3.21(a) of the Company Disclosure Schedule
sets forth a list: (i) all “employee benefit plans”, as
defined in Section 3(3) of ERISA, and all other employee benefit
agreements, plans, programs, policies or arrangements, including,
without limitation, any such agreements, plans, programs, policies
or arrangements providing severance pay, sick leave, employment,
severance, retention, change in control, consulting, vacation pay,
salary continuation for disability, retirement benefits, deferred
compensation, bonus pay, incentive pay, stock options or stock
awards, hospitalization insurance, medical insurance, life
insurance, cafeteria benefits, dependent care reimbursements,
prepaid legal benefits, scholarships or tuition reimbursements,
maintained or sponsored by the Company or any of its Subsidiaries
or to which the Company or any of its Subsidiaries is obligated to
contribute thereunder for current or former employees, officers,
directors, agents, consultants and independent contractors of the
Company
and its Subsidiaries (the “
Employee Benefit Plans ”), and (ii) all “employee pension benefit
plans,” as defined in Section 3(2) of ERISA, maintained or
sponsored by the Company or any trade or business (whether or not
incorporated) which is under control or treated as a single
employer with the Com
