Exhibit 10.3
FORM OF
MASTER SEPARATION AND DISTRIBUTION AGREEMENT
BETWEEN
E-Z-EM, INC.
AND
ANGIODYNAMICS INC.
MASTER SEPARATION AND DISTRIBUTION AGREEMENT
THIS MASTER SEPARATION AND DISTRIBUTION AGREEMENT (this "Agreement") is
entered into as of May_____, 2004, between E-Z-EM, Inc., a Delaware corporation
("E-Z-EM"), and AngioDynamics, Inc., a Delaware corporation ("AngioDynamics").
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to such terms in Section 10 hereof.
RECITALS
WHEREAS, the Board of Directors of E-Z-EM (the "E-Z-EM Board") has
determined that it is appropriate and desirable for E-Z-EM to separate
AngioDynamics from the E-Z-EM Group in a manner that would permit E-Z-EM to
divest its entire ownership interest in AngioDynamics through a pro-rata
distribution of all of the outstanding shares of common stock, par value $0.01
per share, of AngioDynamics (the "AngioDynamics Common Stock") to the holders of
common stock, par value $0.10 per share, of E-Z-EM (the "E-Z-EM Common Stock"),
pursuant to the terms and subject to the conditions of this Agreement (the
"Distribution");
WHEREAS, the Distribution is intended to qualify as a tax-free transaction
to E-Z-EM and its shareholders pursuant to Sections 355 and 368(a)(1)(D) of the
Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, AngioDynamics has filed a registration statement on Form S-1
(Registration No. 333-113329) (the "IPO Registration Statement") with the
Securities and Exchange Commission (the "Commission"), pursuant to which
AngioDynamics has registered AngioDynamics Common Stock for AngioDynamics'
initial public offering (the "Offering");
WHEREAS, the parties intend in this Agreement, including the Exhibits
hereto, to set forth the principal arrangements between them regarding the
Distribution;
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:
1. CERTAIN ACTIONS AT OR PRIOR TO THE DISTRIBUTION DATE
1.1 Treatment of Intercompany Accounts. Prior to or contemporaneously
with the Commission declaring effective the IPO Registration Statement, E-Z-EM
shall cause all of the intercompany long term debt of $16,148,000 owed by
AngioDynamics to E-Z-EM, less three million dollars ($3,000,000), to be
"capitalized" by making an in-kind contribution to AngioDynamics of its rights
in such obligations or otherwise treating such obligations in the manner
reasonably requested by AngioDynamics in order to minimize or eliminate any
adverse income tax effects upon AngioDynamics. Upon the receipt by AngioDynamics
of proceeds of the Offering, AngioDynamics shall promptly (but in no event after
two (2) Business Days after receipt of same) deliver to E-Z-EM in same day funds
the sum of three million dollars ($3,000,000) as payment in full and
satisfaction of the remaining intercompany indebtedness owing to E-Z-EM by
AngioDynamics.
1.2 Documents to Be Delivered By E-Z-EM and AngioDynamics. On or prior to
the date on which the Commission declares effective the IPO Registration
Statement, E-Z-EM will execute and deliver (and where applicable cause other
members of the E-Z-EM Group to execute and deliver) to AngioDynamics, and
AngioDynamics will execute and deliver to E-Z-EM (and/or to the appropriate
member of the E-Z-EM Group), each of the following agreements (collectively,
together with all agreements and documents contemplated by this Agreement, the
"Ancillary Agreements"):
1.2.1 a Tax Allocation and Indemnification Agreement substantially
in the form attached hereto as Exhibit A (the "Tax
Agreement");
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1.2.2 a Corporate Agreement substantially in the form attached
hereto as Exhibit B (the "Corporate Agreement") and
1.2.3 such other agreements, documents or instruments as the parties
may agree are necessary or desirable in order to achieve the
purposes hereof.
2 THE DISTRIBUTION
2.1 The Distribution.
2.1.1 Cooperation. AngioDynamics shall cooperate with E-Z-EM to
accomplish the Distribution and shall, at E-Z-EM's direction,
promptly take any and all actions necessary or desirable to
effect the Distribution. E-Z-EM may select any investment bank
or manager in connection with the Distribution, as well as any
financial printer, solicitation and/or exchange agent and
financial, legal, accounting and other advisors for E-Z-EM;
provided that nothing herein shall prohibit AngioDynamics from
engaging (at its own expense) its own financial, legal,
accounting and other advisors in connection with the
Distribution. AngioDynamics and E-Z-EM, as the case may be,
will provide to the distribution or exchange agent to be
appointed by E-Z-EM (the "Distribution Agent") all share
certificates and any stockholder and other information
required in order to complete the Distribution.
2.1.2 Distribution Mechanics. Unless E-Z-EM and AngioDynamics shall
mutually agree on another method of effecting the
Distribution:
2.1.2.1 Subject to Sections 2.3, 2.4 and 2.6, on or prior to
the Payment Date, E-Z-EM will deliver to the Distribution
Agent for the benefit of holders of E-Z-EM Common Stock on the
Record Date, a single stock certificate, endorsed by E-Z-EM in
blank, representing all of the outstanding shares of
AngioDynamics Common Stock then owned by E-Z-EM, and shall
cause the transfer agent for the E-Z-EM Common Stock to
instruct the Distribution Agent to distribute on the Payment
Date the appropriate number of such shares of AngioDynamics
Common Stock to each such holder or designated transferee or
transferees of such holder of E-Z-EM Common Stock. The
Distribution shall be deemed binding on E-Z-EM at 11:59 pm New
York Time on the Distribution Date.
2.1.2.2 Subject to Sections 2.3, 2.4 and 2.6, each holder of
E-Z-EM Common Stock on the Record Date (or such holder's
designated transferee or transferees) will be entitled to
receive in the pro-rata distribution a number of shares of
AngioDynamics Common Stock equal to the number of shares of
E-Z-EM Common Stock held by such holder on the Record Date
multiplied by the distribution ratio determined by the E-Z-EM
Board on the Distribution Date.
2.2 Actions In Connection with the Distribution.
2.2.1 Registration under the Exchange Act. In connection with the
Offering, AngioDynamics shall have filed a registration on
Form 8-A under the Exchange Act (the "Exchange Act
Registration Statement"), together with such amendments and
supplements thereto as may have been necessary to cause the
same to become effective and as may otherwise be required by
the Commission or federal, state or foreign securities Laws.
AngioDynamics and E-Z-EM shall coordinate the mailing to the
holders of E-Z-EM Common Stock, at such time on or prior to
the Distribution Date as E-Z-EM shall determine, such
information concerning the Distribution and related matters as
may be required under applicable federal securities laws, as
well as any other information concerning AngioDynamics, its
business, operations and
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management, the Distribution and such other matters as E-Z-EM
shall reasonably determine are necessary (collectively, the
"Information Package").
2.2.2 Other Documentation. E-Z-EM and AngioDynamics shall also
cooperate in preparing, filing with the Commission and causing
to become effective registration statements or amendments
thereto (including registration statements on Form S-8) that
are required to reflect the establishment of, or amendments
to, any employee benefit, stock option and other plans
necessary or appropriate in connection with the Distribution
or other transactions contemplated by this Agreement and the
Ancillary Agreements.
2.2.3 Blue Sky. Upon receiving a reasonable request from E-Z-EM to
do so, AngioDynamics shall take all such actions (if any) as
may be necessary or appropriate under the securities (or "blue
sky") laws of the United States (and any comparable Laws under
any foreign jurisdiction) in connection with the Distribution.
2.2.4 Nasdaq Listing. Promptly after receiving a request to do so
from E-Z-EM, AngioDynamics shall prepare and file, and shall
use its reasonable commercial efforts to have approved and
made effective (to the extent not included in the initial
application by AngioDynamics in connection with the Offering),
an application for the listing on Nasdaq of the AngioDynamics
Common Stock to be distributed in the Distribution, subject to
official notice of distribution.
2.2.5 Conditions. AngioDynamics shall take all reasonable steps
necessary and appropriate to cause the conditions set forth in
Section 2.4 to be satisfied and to effect the Distribution, or
any portion thereof, on the terms, in the manner and on the
Distribution Date.
2.3 Sole Discretion of E-Z-EM. E-Z-EM shall, in its sole and absolute
discretion, determine the date of the consummation of the
Distribution and all terms of the Distribution, including, without
limitation, the distribution ratio and the form, structure and terms
of any transaction(s) to effect the Distribution and the timing of
and conditions to the consummation thereof. In addition, E-Z-EM may
at any time and from time to time until the completion of the
Distribution decide to abandon the Distribution or modify or change
the terms of the Distribution, including, without limitation, by
accelerating or delaying the timing of the completion of all or part
of the Distribution.
2.4 Conditions To Distribution. Subject to Section 2.3, the following are
conditions to the consummation of any part of the Distribution. The
conditions are for the sole benefit of E-Z-EM and shall not give rise
to or create any duty on the part of E-Z-EM or the E-Z-EM Board to
waive or not waive any such condition.
2.4.1 Effective Exchange Act Registration Statement; Periodic
Filings. The Exchange Act Registration Statement shall have
remained effective under the Exchange Act and AngioDynamics
shall be current with its periodic filings under the Exchange
Act. There shall be no stop order with respect to any
prospectus or registration statement filed by AngioDynamics,
nor any stop trading order in effect relating to the
AngioDynamics Common Stock.
2.4.2 Blue Sky Laws. The actions and filings, if any, with regard to
state securities and blue sky laws of the United States (and
any comparable Laws under any foreign jurisdictions) described
in Section 2.2.3 shall have been taken and, where applicable,
have become effective or been accepted.
2.4.3 Nasdaq Listing. The AngioDynamics Common Stock to be delivered
in the Distribution shall have been approved for listing on
Nasdaq, subject to official notice of issuance.
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2.4.4 IRS Ruling/Tax Opinion. If the Distribution has not taken
place on or prior to February 5, 2005, then E-Z-EM shall have
received an opinion from its tax counsel to the effect that
the Distribution qualifies as a tax-free spin-off both to
E-Z-EM and the holders of E-Z-EM Common Stock who receive
AngioDynamics Common Stock in the Distribution (resulting in
no recognition of gain or loss or other realization of
income).
2.4.5 Charter and Bylaws. AngioDynamics' Amended and Restated
Certificate of Incorporation and Amended and Restated Bylaws
in substantially the forms in effect on the closing of the
Offering shall remain in effect.
2.4.6 Ancillary Agreements. Each of the Ancillary Agreements shall
have been duly executed and delivered by the parties thereto
and shall be in full force and effect.
2.4.7 Payment of Intercompany Indebtedness to E-Z-EM. E-Z-EM shall
have received the three million dollar ($3,000,000) payment
required under (and at the time set forth in) Section 1.1
hereof.
2.4.8 Governmental Approvals. Any material Governmental Approvals
necessary to consummate the Distribution or any portion
thereof shall have been obtained and be in full force and
effect.
2.4.9 No Legal Restraints. No order, injunction or decree issued by
any court or agency of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of all or
any portion of the Distribution shall be in effect, and no
other event outside the control of E-Z-EM shall have occurred
or failed to occur that prevents the consummation of all or
any portion of the Distribution.
2.4.10 No Inadvisable Event. In addition to, and not in lieu of the
provisions of Section 2.3, the E-Z-EM Board shall have
approved the Distribution and shall have not determined that
any events or developments shall have occurred that make it
inadvisable to effect the Distribution.
2.5 E-Z-EM agrees that if, after the Offering, the E-Z-EM Board decides
not to complete the Distribution or waives a material condition to
the Distribution set forth in Section 2.4, E-Z-EM will issue a press
release to disclose the change in intent or waiver, as applicable, or
file a report on Form 8-K with the Commission.
2.6 Fractional Shares. No certificates representing fractional shares of
AngioDynamics Common Stock will be distributed in the Distribution.
Instead, on the Payment Date, E-Z-EM shall direct the Distribution
Agent (i) to determine, based on the Distribution ratio, the amount
of the fractional share of AngioDynamics Common Stock allocable to
each holder of record or beneficial owner of E-Z-EM Common Stock and
to aggregate all such fractional shares into whole shares; (ii) to
sell the resulting number of whole shares, at the direction of
E-Z-EM, in open market transactions or otherwise, at the then
prevailing trading prices, and (iii) to cause to be distributed to
each such holder or for the benefit of each such beneficial owner to
which a fractional share shall be allocable such holder or owner's
ratable share of the proceeds of such sale, after making appropriate
deductions for any amount required to be withheld for United States
federal income tax purposes and to repay expenses reasonably incurred
by the Distribution Agent, including all brokerage charges,
commissions and transfer taxes, in connection with such sale. E-Z-EM
and the Distribution Agent shall use their reasonable commercial
efforts to aggregate the shares of E-Z-EM Common Stock that may be
held by any beneficial owner thereof through more than one account in
determining the fractional share allocable to such beneficial owner.
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3 COVENANTS AND OTHER MATTERS
3.1 Release of E-Z-EM from Credit Support Arrangements. Each party
acknowledges that, to the best of its knowledge, E-Z-EM has not
provided or issued, for the benefit of AngioDynamics, any guarantee,
letter of credit, keepwell or support agreement or other credit
support document, instrument or other similar arrangement (the
"Credit Support Arrangements"), other than Credit Support
Arrangements that have been released or waived, or terminate in
accordance with their respective terms upon the completion of the
Offering. In the event that the parties become aware of pre-Offering
Credit Support Arrangements in the future, AngioDynamics (i) shall
use all commercially reasonable efforts to cause the obligations of
members of the E-Z-EM Group to be unconditionally released as of the
Payment Date or as promptly as practicable thereafter, (ii) shall
execute and deliver any and all such instruments of substitution and
such other instruments or agreements as shall be necessary in
connection with the discharge by AngioDynamics of its obligations
under this sentence, and (iii) shall not modify or renew, or amend
the terms of any agreement, instrument or obligation underlying any
of the Credit Support Arrangements in any manner that could increase,
extend or give rise to liability of a member of the E-Z-EM Group
under any such Credit Support Arrangements.
3.2 Further Assurances and Agreements. In addition to the actions
specifically provided for elsewhere in this Agreement and the
Ancillary Agreements, each of E-Z-EM and AngioDynamics shall use its
reasonable efforts, prior to, on and after the Distribution Date, to
take, or cause to be taken, all actions, and do, or cause to be done,
all things, and agree to execute, or cause to be executed, by the
appropriate parties and deliver, as appropriate, such other
agreements, instruments and other documents, as such action, thing,
agreement, instrument or other document may be necessary or desirable
in order to consummate and make effective the transactions
contemplated by this Agreement and the Ancillary Agreements.
3.3 Further Filings by E-Z-EM at the U.S. Patent and Trademark Office.
Each of E-Z-EM (on behalf of the applicable members of the E-Z-EM
Group), as transferor, and AngioDynamics, without further
consideration, agrees (i) to execute and deliver (and E-Z-EM will
cause any applicable E-Z-EM Group member to execute and deliver) such
instruments of transfer, conveyance, assignment, substitution and
confirmation, and to cause same to be filed and/or recorded with the
U.S. Patent and Trademark Office prior to the date that is six (6)
months after the completion of the Offering so as to fully effect the
contributions and transfers to AngioDynamics by E-Z-EM pursuant to
that certain Contribution Agreement dated as of June 1, 1996 (the
"Contribution Agreement") and (ii) to take such action as
AngioDynamics may reasonably deem necessary or desirable in order
more effectively to transfer, convey and assign to AngioDynamics and
confirm AngioDynamics' title to all of the assets, rights and other
things of value contemplated to be transferred or allocated to it
pursuant to the Contribution Agreement.
3.4 Manufacturing Arrangements. AngioDynamics agrees that it will
continue to manufacture the products currently being manufactured for
E-Z-EM at the respective prices currently charged for such products.
E-Z-EM agrees to use all commercially reasonable efforts to engage a
new manufacturer for such products (or comparable products) on or
prior to December 31, 2004, and AngioDynamics agrees to assist and
cooperate (at E-Z-EM's expense) with E-Z-EM's change in manufacturer
for the aforementioned products. If the change in manufacturer for
the products has not occurred by December 31, 2004, then E-Z-EM and
AngioDynamics hereby agree that the prices for such products shall be
increased so as to result in AngioDynamics achieving a gross margin
of 50% on each such product. Ordering quantities shall be at the sole
discretion of E-Z-EM; however, unless E-Z-EM orders lesser amounts of
such products, AngioDynamics shall manufacture for E-Z-EM an amount
of such products sufficient to sell to E-Z-EM an amount of such
products consistent with (but subject to normal yearly variances) the
amount sold to E-Z-EM in calendar 2003. The obligations of
AngioDynamics hereunder shall terminate upon the earlier of either
(i) 60 days after E-Z-EM gives notice to AngioDynamics that E-Z-EM no
longer requires such manufacturing services or (ii) in the absence of
a mutual agreement to the contrary, December 31, 2005.
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3.4.1 Upon any termination of the above described manufacturing
arrangements by E-Z-EM, E-Z-EM agrees to purchase any finished
materials at the agreed upon prices therefor and to acquire
from AngioDynamics, at AngioDynamics' cost, such raw materials
and components of final products as AngioDynamics was
reasonably required to maintain in inventory or as supplies to
meet the reasonably anticipated demand by E-Z-EM for
AngioDynamics' completed products. For purposes of the
preceding sentence, inventory and supplies shall be deemed to
be "reasonable" if they do not exceed that required by E-Z-EM
over a typical three-month period. AngioDynamics will continue
to fulfill E-Z-EM's orders until the effective date of the
termination.
3.4.2 E-Z-EM's unperformed payment obligations and AngioDynamics
unperformed manufacturing obligations under the arrangements
in this Section 3.4 shall survive the termination of the
above-described manufacturing arrangements.
3.4.3 AngioDynamics shall be liable to E-Z-EM, and shall indemnify
and hold E-Z-EM harmless from and against any Claims to the
extent caused by the negligence, gross negligence or willful
misconduct of AngioDynamics (or those performing the
manufacturing services on behalf of AngioDynamics) in
performing its obligations under this Section 3.4. E-Z-EM
shall be liable to AngioDynamics, and shall indemnify and hold
AngioDynamics harmless from and against any Claims to the
extent caused by E-Z-EM's modifications, if any, to the
products manufactured by AngioDynamics, or product defects
that resulted from product specifications provided by E-Z-EM
to AngioDynamics.
3.4.4 Nothing set forth herein shall require E-Z-EM to engage
AngioDynamics' to manufacture for any products. E-Z-EM agrees
that its obligation to acquire inventory and supplies as set
forth in Section 3.4.1 includes inventory and supplies
existing on the date hereof to be used by AngioDynamics on the
production of products for E-Z-EM.
3.5 Distribution Arrangements. The parties agree that, if negotiations
are not completed before the Offering, they will continue to
negotiate (or, in the case of E-Z-EM, will cause its United Kingdom
and Canadian subsidiaries to negotiate) in good faith the terms of
distribution agreements relating to AngioDynamics' products in the
United Kingdom and Canada. Although subject to the terms of
definitive agreements, the parties agree that (in the absence of an
agreement to the contrary) each such agreement will be for three
years on an exclusive basis, and shall such other terms and
conditions as AngioDynamics has typically agreed to in contracts with
unrelated parties. Furthermore, effective May 31, 2004, the parties
acknowledge that no E-Z-EM subsidiary is continuing as a distributor
of AngioDynamics' products in Belgium, The Netherlands and
Luxembourg.
3.6 Confidentiality and Agreement for the Exchange of Information.
3.6.1 Confidentiality.
3.6.1.1 Except as set forth below and in any Ancillary
Agreement with respect to the matters specified therein, upon
the completion of the Offering, each of AngioDynamics and
E-Z-EM agree that it shall not, except with the prior written
consent of the other, at any time within six years of the
closing of the Offering, directly or indirectly, disclose,
divulge, reveal, report, publish, transfer or use, for any
purpose whatsoever, any Confidential Information.
Notwithstanding the foregoing, each Party may disclose
Confidential Information to its directors, officers,
shareholders and employees, but only on a bona fide "need to
know" basis, and only if the relevant other person(s) or
entity(ies) agree to be bound by this Agreement. Each party
shall be responsible for the breach by any such other person
of his or her confidentiality obligations to the same extent
as if such breach was made by such party. Without limiting the
foregoing
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obligations, each party agrees to use all reasonable
precautions (including taking legal action if necessary or
appropriate) to prevent the unauthorized disclosure of the
Confidential Information, which precautions shall in no event
be less than such party's treatment of its own Confidential
Information of a similar nature.
3.6.1.2 Disclosure of Confidential Information shall not be
prohibited if such disclosure is directly pursuant to the
disclosure obligations under the NASD Rules, the rules and
regulations of the American Stock Exchange, the Securities Act
and/or the Exchange Act, or a valid and existing order of a
court or other governmental body or agency of competent
jurisdiction; provided in each case, however, that, if
practicable in light of filing or other notification
requirements under the applicable regulatory scheme, (i) each
party shall first have given prompt notice to the other of any
such possible or prospective order (or proceeding pursuant to
which any such order may result), (ii) the other Party shall
have been afforded a reasonable opportunity to review such
disclosure and to prevent or limit any such disclosure and
(iii) each party shall use its best efforts to prevent or
limit any such disclosure by means of a protective order or a
request for confidential treatment.
3.6.2 Provision of Information. Each of E-Z-EM (on behalf of the
E-Z-EM Group) and AngioDynamics agrees to provide, or cause to
be provided, to the other, as soon as reasonably practicable
after written request therefor, any Information in the
possession or under the control of the other that the
requesting party requests (i) to comply with reporting,
disclosure, filing or other requirements imposed on the
requesting party (including under applicable securities or tax
Laws) by a Governmental Authority having jurisdiction over the
requesting party, (ii) for use in connection with any other
judicial, regulatory, administrative, tax or other proceeding
or in order to satisfy audit, accounting, claims, regulatory,
litigation, tax or other similar requirements, in each case
other than claims or allegations that one party to this
Agreement has against the other, (iii) subject to the
foregoing clause (ii) above, to comply with its obligations
under this Agreement or any Ancillary Agreement, or (iv) in
connection with the ongoing businesses of E-Z-EM or
AngioDynamics as it relates to the conduct of such businesses
prior to the Payment Date, as the case may be; provided,
however, that in the event that any party determines that any
such provision of Information could be commercially
detrimental, violate any Law or agreement, or waive any
attorney-client privilege, the parties shall take all
reasonable measures to permit the compliance with such
obligations in a manner that avoids any such harm or
consequence.
3.6.3 Internal Accounting Controls. In addition to the accounting
and audit-related provisions in the Corporate Agreement, after
the Distribution Date, each of E-Z-EM (on behalf of the E-Z-EM
Group) and AngioDynamics shall maintain in effect, at its own
cost and expense, adequate systems and controls for its
business, to the extent necessary to enable the other to
satisfy their respective reporting, accounting, audit and
other obligations.
3.6.4 Ownership of Information. Any Information owned by E-Z-EM (or
any member of the E-Z-EM Group) or AngioDynamics that is
provided to AngioDynamics or E-Z-EM, as applicable, pursuant
to this Section 3.6 shall be deemed to remain the property of
the party providing such Information. Unless specifically set
forth herein, nothing contained in this Agreement shall be
construed as granting or conferring rights of license or
otherwise in any such Information.
3.6.5 Record Retention. To facilitate the possible exchange of
Information pursuant to this Section 3.6 and other provisions
of this Agreement after the Distribution Date, each party
agrees to use its reasonable commercial efforts to retain all
Information in its respective possession or control on the
Distribution Date substantially in accordance with its
policies as in effect on the Distribution Date. AngioDynamics
shall not amend its record retention policies (or establish
such policies for a Subsidiary that is different from that of
AngioDynamics on the
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date hereof) prior to the Distribution Date without the
consent of E-Z-EM. AngioDynamics shall retain, in a manner
allowing for reasonable access, Information constituting audit
work papers and work papers from internal audits, in each case
relating to periods prior to the Distribution Date for at
least six years thereafter. Except as set forth in any
Ancillary Agreement, at any time after the Distribution Date,
each party may amend its respective record retention policies
at such party's discretion, but in the case of AngioDynamics,
subject to the immediately preceding sentence; provided,
however, that if a party desires to effect the amendment
within three (3) years after the Distribution Date, the
amending party must give thirty (30) days prior written notice
of such change in the policy to the other party to this
Agreement. No party will destroy, or permit any of its present
or future Subsidiaries to destroy, any Information that exists
on the Distribution Date (other than Information that is
permitted to be destroyed under the current record retention
policy of such party) without first using its reasonable
commercial efforts to notify the other party of the proposed
destruction and giving the other party the opportunity to take
possession of such Information prior to such destruction.
3.6.6 Limitation of Liability. No party shall have any liability to
any other party in the event that any Information exchanged or
provided pursuant to this Section 3.6 is found to be
inaccurate, in the absence of willful misconduct by the party
providing such Information. No party shall have any liability
to any other party if any Information is destroyed or lost
after reasonable commercial efforts by such party to comply
with the provisions of Section 3.6.5.
3.6.7 Other Agreements Providing For Exchange of Information. With
respect to the specific issues covered by the Ancillary
Agreements, the rights and obligations granted under this
Section 3.6 are subject to the more specific limitations,
qualifications or additional provisions, if any, on the
sharing, exchange or confidential treatment of Information set
forth in the applicable Ancillary Agreement.
3.6.8 Production of Witnesses; Records; Cooperation. After the
Distribution Date, each of E-Z-EM (on behalf of the E-Z-EM
Group) and AngioDynamics agrees to use reasonable commercial
efforts to make available to the other, upon written request,
their former, current and future officers, employees, other
personnel and agents as witnesses and any books, records or
other documents within its control or which it otherwise has
the ability to make available, to the extent that any such
person (giving consideration to business demands of such
officers, employees, other personnel and agents) or books,
records or other documents may reasonably be required in
connection with any legal, regulatory, administrative or other
proceeding in which the requesting party may from time to time
be involved, regardless of whether such legal, regulatory,
administrative or other proceeding is a matter with respect to
which indemnification may be sought hereunder. The requesting
party shall bear all reasonable costs and expenses of the
other party in connection with the latter party's compliance
with the foregoing requests.
3.7 Expenses. Except as otherwise provided in this Agreement and/or the
Ancillary Agreements, all out-of-pocket costs and expenses of the
parties in connection with the Distribution shall be the
responsibility of E-Z-EM.
3.8 Governmental Approvals. The parties acknowledge that certain of the
transactions contemplated by this Agreement and the Ancillary
Agreements may be subject to certain conditions established by
applicable regulations, orders, and approvals of Governmental
Authorities ("Existing Authority"). The parties intend to implement
this Agreement, the Ancillary Agreements and the transactions
contemplated hereby and thereby consistent with and to the extent
permitted by applicable Existing Authority and to cooperate toward
obtaining and maintaining in effect such Governmental Approvals as
may be required in order to implement this Agreement and each of the
Ancillary Agreements as fully as possible in accordance with their
respective terms. To the extent that any of the transactions
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contemplated by this Agreement or any Ancillary Agreement require any
Governmental Approvals, the parties will use their reasonable
commercial efforts to obtain any such Governmental Approvals.
3.9 Non-Competition.
3.9.1 Except as permitted under Sections 3.9.2 and 3.9.3, for a
period of two years from the completion of the Offering, (i)
AngioDynamics shall not engage in any activities or lines of
business included within the E-Z-EM Business and (ii) E-Z-EM
shall not engage in any activities or lines of business
included within the AngioDynamics Business. (For purposes of
this Section 3.9, the business of the other party is
hereinafter referred to as "Prohibited Activities" of a
party.) Solely as between AngioDynamics and E-Z-EM, to the
maximum extent permitted under Section 122(17) of the Delaware
General Corporation Law, each of AngioDynamics and E-Z-EM
hereby renounces an interest or expectancy in being offered an
opportunity to participate in business opportunities that are
Prohibited Activities during the above-referenced two-year
period.
3.9.2 Notwithstanding anything in this Agreement to the contrary,
E-Z-EM and, subject to Articles 1 and 6 of the Corporate
Agreement, AngioDynamics shall be permitted to make
acquisitions of and investments in any entity engaged in
Prohibited Activities; provided, that, the aggregate of all
Prohibited Activities will have represented in such entity's
most recently completed fiscal year not more than 20% of the
consolidated revenues or net income of such entity being
acquired or in which the investment is being made.
3.9.3 Notwithstanding anything in this Agreement to the contrary,
this Section 3.9 shall not apply to (i) any Person (an
"Acquiror") who becomes an Affiliate of AngioDynamics or
E-Z-EM, as applicable, after the completion of the Offering as
a result of an acquisition of Equity Securities, or (ii) any
Person who was an Affiliate of such Acquiror prior to such
acquisition. Nothing herein shall be deemed as limiting the
restrictions on issuances of Equity Securities under the
Corporate Agreement or any other Ancillary Agreement.
3.10 Use of Other Party's Name and Marks. AngioDynamics acknowledges that
E-Z-EM shall own all rights in the "E-Z-EM" name and logo and related
tradenames and marks, and E-Z-EM acknowledges that AngioDynamics
shall own all rights in the name "AngioDynamics" and AngioDynamics's
logo and related tradenames and marks. Subject to the final sentence
of this Section 3.10, within thirty (30) days following the
Distribution Date, each party shall (x) cease, and shall cause each
of its Subsidiaries, if any, to cease, to all use of the other
parties name or any variation thereof as part of its corporate or
organizational name, including by causing all licenses,
certifications and authorizations issued to its respective personnel,
the name of which includes or included the name of the other party or
any variation thereof, to be reissued or amended, to the extent
necessary, to remove from such licenses, certifications and
authorizations any references to the other party's name or any
variation thereof in the names of the holders thereof that may be
reflected on such licenses, certifications and authorizations (or any
related documentation). Subject to the final sentence of this Section
3.10, within sixty (60) days following the Distribution Date, each
party shall cease, and shall cause all of its personnel and
Subsidiaries, if any, to cease all other use of the other party's
name and any variation thereof (including in the URL of any website,
unless the other party consents thereto in writing), and the other
party's logo and related tradenames and marks. A party may use such
names, logos and marks of the other during such 60-day period only to
the extent (if any) that it is not practical to change or replace any
existing signs, letterheads, business cards, invoices or other
business forms, telephone directory listings or promotional material,
provided that each party shall maintain, and shall cause its
respective personnel and Subsidiaries, if any, to maintain the same
standards of quality with respect to such names, logos and marks as
previously exercised. Notwithstanding anything in this Section 3.10
to the contrary, each party may continue, up to and including the
later of (i) December 31, 2004 or (ii) six months after the Payment
Date, to distribute in the ordinary course of business promotional
materials that contain references to the other's name and related
tradenames, marks and
9
logos. Furthermore, prior to the Payment Date, each party may use the
other party's name in press releases to the extent beneficial in
making such press releases not misleading at the time released.
4 OPTION PLANS
4.1 E-Z-EM Option Plans. Prior to the Payment Date, E-Z-EM will take all
action necessary and appropriate to effect amendments to the E-Z-EM
Option Plans such that (i) the Distribution will not be deemed a
"termination" of the employment of any AngioDynamics Employee for the
purposes of such Plans, and (ii) following the Distribution,
termination of employment of any AngioDynamics Employee for the
purposes of such Plans will be determined by reference to employment
by AngioDynamics or any of its Subsidiaries. Following the
Distribution, E-Z-EM shall continue the E-Z-EM Option Plans, as so
amended, and shall continue to reserve those shares of E-Z-EM Common
Stock already reserved for issuance thereunder.
4.2 Existing AngioDynamics Option Plans. Prior to the completion of the
Offering, AngioDynamics shall take all action necessary and
appropriate to present to E-Z-EM all, if any, of AngioDynamics' stock
option plans that have not yet been approved by E-Z-EM, in its
capacity as the sole stockholder of AngioDynamics, and E-Z-EM hereby
agrees to approve same. The provisions of clauses (i) and (ii) of
Section 4.1 shall apply to AngioDynamics mutatis mutandis.
AngioDynamics hereby agrees to continue to reserve at least those
shares of AngioDynamics Common Stock already reserved for issuance
thereunder.
4.3 AngioDynamics Adjustment Plans. Prior to the completion of the
Offering, AngioDynamics shall take, or cause to be taken, all action
necessary and appropriate (i) to ratify the adoption of all necessary
AngioDynamics Adjustment Plans, and (ii) to present the AngioDynamics
Adjustment Plans to E-Z-EM, as the sole stockholder of AngioDynamics,
for approval. To the extent authorized by E-Z-EM prior to the
completion of the Offering, AngioDynamics shall reserve for issuance
under each AngioDynamics Adjustment Plan such number of shares of
AngioDynamics Common Stock necessary to grant Options pursuant to
Section 4.4.2 hereof. Any shares reserved for issuance under an
AngioDynamics Adjustment Plan that are not used to grant
AngioDynamics Options under Section 4.4.2 will not be available for
future awards thereunder.
4.4 Treatment of Existing E-Z-EM Options. After the Distribution Date and
prior to the Payment Date, each Existing E-Z-EM Option will be
converted into an Adjusted E-Z-EM Option and will entitle the grantee
to receive a grant of a AngioDynamics Option, as follows:
4.4.1 Following the Payment Date, each Existing E-Z-EM Option will
survive as an Adjusted E-Z-EM Option in accordance with the
terms of the Existing Option and the terms of (i) the relevant
non-plan grant, or (ii) E-Z-EM Option Plan, as amended
pursuant to Section 4.1 hereof, as the case may be, except
that the exercise price of, and number of shares of E-Z-EM
Common Stock subject to the Adjusted E-Z-EM Option will be
determined as provided in Section 4.6 hereof. E-Z-EM shall use
all commercially reasonable efforts to enter into new option
agreements with each grantee of an Adjusted E-Z-EM Option,
reflecting the modifications required by this Section 4.
4.4.2 After the Distribution Date and prior to the Payment Date,
AngioDynamics shall grant, to each grantee of an Existing
E-Z-EM Option, an AngioDynamics Option, under the appropriate
AngioDynamics Adjustment Plan, Existing AngioDynamics Option
Plan or pursuant to a non-plan grant, as the case may be,
which option will be subject to the same terms and conditions
of the Existing E-Z-EM Option, except that (i) the option will
be exercisable to purchase shares of AngioDynamics Common
Stock and the exercise price of, and number of shares of
AngioDynamics Common Stock subject to, the AngioDynamics
Options shall be determined as provided in Section 4.5 below,
and (ii) the vesting and lapsing thereof shall be adjusted as
set forth in Section 4.6 below. AngioDynamics shall use all
10
commercially reasonable efforts to enter into new option
agreements with each grantee of an option to acquire
AngioDynamics Common Stock under this Section 4.4.2, which
agreements will reflect the modifications required by this
Section 4.
4.5 Adjustment and Setting of Number of Shares and Exercise Prices.
4.5.1 The number of shares of E-Z-EM Common Stock subject to each
Adjusted E-Z-EM Option will equal the number of shares of
E-Z-EM Common Stock subject to the Existing E-Z-EM Option that
survives as the applicable Adjusted E-Z-EM Option. Subject to
Section 4.5.2, AngioDynamics and E-Z-EM agree to establish (y)
the ratio of the exercise price of the AngioDynamics Options
to the market price of the AngioDynamics Common Stock equal to
(z) the ratio of the exercise price of the Adjusted E-Z-EM
Options to the market price of the E-Z-EM Common Stock. In no
event will options to purchase any fractional shares of E-Z-EM
Common Stock or AngioDynamics Common Stock be issued, nor will
any cash be paid in lieu thereof. Options will be issued for
whole shares only, determined by rounding down.
4.5.2 The number of shares of E-Z-EM Common Stock and AngioDynamics
Common Stock subject to options and the adjusted exercise
price of each Adjusted E-Z-EM Option and of the related
AngioDynamics Option shall be determined in such a manner so
that the aggregate "intrinsic value" of the Adjusted E-Z-EM
Option and the AngioDynamics Option together will equal the
intrinsic value of the Existing E-Z-EM Stock Option to which
such options relate. For the purposes of this Section 4.5.2,
"intrinsic value" means:
4.5.2.1 with respect to each Existing E-Z-EM Stock Option, the
difference between the exercise price and the last reported
sale price of E-Z-EM Common Stock on the last date on which
E-Z-EM Common Stock trades as though E-Z-EM still owns
AngioDynamics (i.e., the last date on which E-Z-EM trades on
an "on dividend" basis), as reported by the American Stock
Exchange, multiplied by the number of shares of E-Z-EM Common
Stock covered by such option;
4.5.2.2 with respect to each Adjusted E-Z-EM Option, the
difference between the exercise price and the average of the
last reported sales prices of E-Z-EM Common Stock on the date
immediately after the Payment Date, as reported by the
American Stock Exchange, multiplied by the number of shares of
E-Z-EM Common Stock covered by such option; and
4.5.2.3 with respect to each AngioDynamics Option granted
pursuant to Section 4.4.2, the difference between the exercise
price and the average of the last reported sales prices of
AngioDynamics Common Stock on date immediately after the
Payment Date, as reported by the Nasdaq National Market,
multiplied by the number of shares of AngioDynamics Common
Stock covered by such option.
4.6 Vesting and Lapsing of AngioDynamics Options. The AngioDynamics
Options granted under Section 4.4.2 will vest and become exercisable
in accordance with the terms of the Existing E-Z-EM Options to which
they relate, but will expire on the earlier of (i) the date on which
the Existing E-Z-EM Option would have expired (subject to Section
4.1) or (ii) the date calculated as follows:
4.6.1 For officers and directors of AngioDynamics,
4.6.1.1 One-half of the AngioDynamics Options will expire upon
the later of (i) 12 months after one-half of the options
become exercisable in full and (ii) 12 months after expiration
of the 180-day lock-up period described in the "Underwriting"
section of the IPO Registration Statement.
11
4.6.1.2 The remaining one-half of the options will expire upon
the later of (i) 24 months after the remaining one-half of the
options become exercisable in full and (ii) 24 months after
expiration of the 180-day lock-up period described in Section
4.6.1.1.
4.6.2 For all other options recipients,
4.6.2.1 One-half of their options will expire upon the later
of (i) 12 months after one-half of the options become
exercisable in full and (ii) 12 months from the Payment Date.
4.6.2.2 The remaining one-half of their options will expire
upon the later of (i) 24 months after the remaining one-half
of the options become exercisable in full and (ii) 24 months
from the Payment Date.
4.7 Employment Taxes. Upon the exercise of AngioDynamics Options granted
under any AngioDynamics Adjustment Plan, AngioDynamics, as agent for
E-Z-EM, shall collect and timely remit to E-Z-EM the employee's share
of all required employment taxes (including federal and state income
taxes required to be withheld and the employee's share of FICA taxes)
relating to such exercises, and shall otherwise cooperate in such
fashion, provide such information and take such action as E-Z-EM may
request to assure that proper and timely employment tax remittance
and reporting is made by E-Z-EM with respect to such exercises and to
establish E-Z-EM's entitlement to deduct on its income tax returns
the compensation expense arising from such exercises, pursuant to
Treas. Reg. Section 1.83-6. Provided that AngioDynamics fulfills its
obligations under this Section 4.7, AngioDynamics shall be entitled
to receive and retain the aggregate exercise price payable to
AngioDynamics upon such exercises.
4.8 Communication Regarding Termination Of Employment and Effect on
Outstanding Options. E-Z-EM shall promptly notify AngioDynamics of
the termination of employment of any E-Z-EM Employee holding
AngioDynamics Options. AngioDynamics shall promptly notify E-Z-EM of
the termination of employment of any AngioDynamics Employee holding
an E-Z-EM Option. Such notices with respect to termination shall
specify the date of termination, the reason for termination (e.g. for
cause, without cause, upon a change of control, etc.), whether the
termination is with or without written consent and the effect that
such termination has on any outstanding grant or award of options.
4.9 Determination of Consent to Termination of Employment Plans. Each
party agrees that the giving or withholding of consent to the
termination of employment of any E-Z-EM Employee or AngioDynamics
Employee, as the case may be, shall be as determined by the party
employing such person and stated in the notice of termination as
required by Section 4.8 hereof.
5 BENEFIT PLANS
5.1 Benefit Matters Generally.
5.1.1 Subject to the other terms and conditions of this Section 5
(including without limitation the termination provisions of
Section 5.10), after the Offering, E-Z-EM shall maintain and
administer the existing E-Z-EM Plans through the earlier of
(i) the Payment Date and (ii) the next anniversary date of the
applicable E-Z-EM Plan.
5.1.2 E-Z-EM and AngioDynamics acknowledge and agree that
AngioDynamics has previously established its own medical,
dental and short-term disability Plans separate and apart from
any Employee Welfare Plans of E-Z-EM, and that AngioDynamics
is solely responsible for the funding, administration and all
other matters related thereto (which shall be unaffected by
this Agreement). Additionally, each party is responsible for
the funding of E-Z-EM Plans for its own Employees prior to the
termination of E-Z-EM's obligations to maintain such
12
E-Z-EM Plans under this Section 5. AngioDynamics hereby agrees
to use all reasonable commercial efforts to establish, prior
to the Payment Date, AngioDynamics' Employee Welfare Plans and
business insurance policies separate and apart from any
applicable E-Z-EM "master policy" and other E-Z-EM Plans;
provided, however, that AngioDynamics shall obtain its own
directors and officers insurance prior to the completion of
the Offering and E-Z-EM's obligations with respect thereto
shall terminate upon the completion of the Offering.
Furthermore, and regardless of when the Payment Date occurs
(if at all), after the termination of E-Z-EM's obligations to
maintain a particular E-Z-EM Plan, each party shall fund and
maintain its own separate corresponding Plan. Accordingly, any
Claims or Proceedings by or on behalf of Employees or any
federal, state or local government agency for alleged
underfunding of, or failure to make payments to, health and
welfare funds based on acts or omissions will be the sole
responsibility of each party as to its own Employees and the
responsible party will indemnify, defend, and hold harmless
the other from any such Claims.
5.1.3 Effective immediately prior to the termination of E-Z-EM's
obligations under this Section 5 with respect to a particular
Plan, AngioDynamics hereby assumes (i) the complete
responsibility for providing coverage under Employee Welfare
Plans to the AngioDynamics Employees and administering such
Employee Welfare Plans, and (ii) the associated liabilities
and accrued obligations of and relating to all AngioDynamics
Employees (and their eligible dependents and beneficiaries
under the terms of the aforementioned Plans) who participate
in the AngioDynamics Employee Welfare Plans. Nothing contained
in the preceding sentence limits the obligations of
AngioDynamics to make the contributions and other payments to
E-Z-EM required under the balance of this Section 5.
5.1.4 Refunds. In the event that subsequent to the date on which
AngioDynamics is covered under its own Employee Welfare Plans
(the "AngioDynamics Plan Commencement Date"), refunds are
received from, or additional premium adjustments become
payable to, carriers providing health or medical insurance
where such amounts are the result of actual experience
differing from that used to compute premiums for any periods
prior to the AngioDynamics Plan Commencement Date, such
refunds or obligations will be shared between E-Z-EM and
AngioDynamics based on the relative percentages of
AngioDynamics employees and E-Z-EM employees to the total of
all such employees based on the average number of employees
during the period to which the refund or obligation relates.
5.1.5 Service Credits. If Service Credits for all or any
AngioDynamics Employees are reflected in, or determined by
reference to, the E-Z-EM payroll system records, then for
purposes of determining Service Credits under any Plans,
AngioDynamics shall credit each AngioDynamics Employee with
such Employee's Service Credits and original hire date as may
be reflected in the E-Z-EM payroll system records as of the
Payment Date. Such Service Credits and hire date shall
continue to be maintained as described herein for as long as
the Employee is not terminated. Subject to the provisions of
ERISA, AngioDynamics may, in its sole discretion, make such
decisions as it deems appropriate with respect to determining
Service Credits for AngioDynamics Employees whose employment
with AngioDynamics is terminated following the Payment Date
but who are subsequently re-employed by AngioDynamics.
5.1.6 Preservation Of Right To Amend Or Terminate Plans. Except as
otherwise expressly provided herein, no provision of this
Agreement, including, without limitation, the agreement of
E-Z-EM or AngioDynamics to make a contribution or payment to
or under any Plan for any period, shall be construed as a
limitation on the right of E-Z-EM or AngioDynamics to amend
such Plan or terminate its participation therein. No provision
of this Agreement shall be construed to create any additional
rights in any Employee, or dependent or beneficiary of such
Employee, under a Plan. AngioDynamics may request changes in
the applicable terms
13
of the E-Z-EM Plans; however, the approval of changes in the
terms of any of the E-Z-EM Plans shall be in the sole
discretion of E-Z-EM, and may be withheld for any or no
reason.
5.2 Benefit Services.
5.2.1 For so long as E-Z-EM is required to maintain the E-Z-EM Plans
under Section 5.1.1, E-Z-EM agrees to provide the same
Benefits Services (as defined in Section 5.2.2) to and in
respect of the officers, directors and employees and agents of
AngioDynamics under the Welfare Benefit Plans that were
provided prior to the date hereof.
5.2.2 The parties acknowledge that the costs, if any, payable by
AngioDynamics for Intercompany Services relating to
administering the life insurance policy, travel life insurance
policy, long-term disability policy and workers compensation
policy under E-Z-EM's "master policy" (such subset of
Intercompany Services are collectively referred to as the
"Benefits Services") are covered in Section 8.1 and Exhibit C
as accounting administration services. The parties agree that
all fees payable to insurers for such policies shall continue
to be invoiced directly from the relevant insurer(s) to
AngioDynamics as is the practice on the date hereof, and that
any deductions from payroll to pay for such policies shall be
administered by AngioDynamics.
5.2.3 E-Z-EM and AngioDynamics agree to cooperate fully with each
other in the administration and coordination of regulatory and
administrative requirements associated with the E-Z-EM Plans
and any successor Plans adopted by AngioDynamics. Such
coordination, upon request, will include (but is not limited
to) the following: sharing payroll data for determination of
highly compensated associates, providing census information
(including accrued benefits) for purposes of running
discrimination tests, providing actuarial reports for purposes
of determining the funded status of any plan, review and
coordination of insurance and other independent third party
contracts, and providing for review of all summary plan
descriptions, requests for determination letters, insurance
contracts, Forms 5500, financial statement disclosure and plan
documents.
5.3 Invoicing and Settlement of Funding and Related Costs.
5.3.1 After the date the Offering is completed, E-Z-EM will invoice
or notify AngioDynamics on a monthly basis of the out of
pocket costs, fees, funding contributions and policy premiums
incurred in connection with maintaining and funding, as
applicable, the E-Z-EM Plans (other than those paid directly
by AngioDynamics, as set forth in the first sentence of
Section 5.2.2). Such notice shall be consistent with the
notices used in connection with costs incurred on behalf of
AngioDynamics or other E-Z-EM Subsidiaries on the date hereof
(except as otherwise agreed), which reflect the
"cross-charges" among E-Z-EM and its Subsidiaries. In
connection with the invoicing and notices described in this
Section 5.3.1, E-Z-EM will provide to AngioDynamics a
reasonable level of billing data and detail. Within 30 days of
receipt of any such invoice from E-Z-EM (each, a "Plan Payment
Date"), AngioDynamics shall pay E-Z-EM the respective amount
set forth therein.
5.3.2 Except as otherwise agreed by the parties, AngioDynamics shall
take such action as is necessary to fund all medical,
retirement and other benefit claims payable to or on behalf of
AngioDynamics personnel and their dependents to the extent not
covered by third party insurance. Benefit claims processing
activities performed by E-Z-EM or its subcontractors shall be
coordinated to facilitate payments. Following prior written
notice of not less than 15 business days, E-Z-EM shall be
relieved of any obligation to deliver Benefit Services under
this Section 5 at any time when AngioDynamics fails to fund
the payment of a properly presented claim, unless
AngioDynamics should deliver the required funds within such 15
day period.
14
5.4 401(k) Retirement Plan. On or prior to the Payment Date,
AngioDynamics shall cause all (if any) references to E-Z-EM to be
removed from AngioDynamics' 401(k) Plan and shall cause the 401(k)
Plans to be completely independent. Without limiting the foregoing
sentence, AngioDynamics shall take such actions as are reasonably
necessary to exclude E-Z-EM (because of a deemed "control group" or
otherwise) from the testing or analysis of AngioDynamics' 401(k)
Plan.
5.5 Delegation. AngioDynamics hereby delegates to E-Z-EM final, binding
and exclusive authority, responsibility, and discretion to interpret
and construe the provisions of any E-Z-EM-administered Employee
Welfare Plan in which AngioDynamics is participating under this
Agreement (being those set forth in the first sentence of Section
5.2.2). E-Z-EM may further delegate such authority to plan
administrators to:
5.5.1 provide administrative and other services;
5.5.2 reach factually supported conclusions consistent with the
terms of the Employee Welfare Plans;
5.5.3 make a full and fair review of each claim denial and decision
related to the provision of benefits provided or arranged for
under the Employee Welfare Plans, pursuant to the requirements
of ERISA, if within sixty days after the receipt of the notice
of denial, a claimant requests in writing a review for
reconsideration of such decisions. Any such administrator
shall notify the claimant in writing of its decision on
review, and such notice shall satisfy all ERISA requirements
relating thereto; and
5.5.4 notify the claimant in writing of its decision to review.
5.6 Limitation of Liability. AngioDynamics agrees that none of E-Z-EM or
any E-Z-EM Indemnified Person shall have any liability, whether
direct or indirect, in contract or tort or otherwise, to
AngioDynamics for or in connection with the payment of the
out-of-pocket costs, fees, funding contributions and policy premiums
required hereunder, except for damages which have resulted from the
gross negligence or willful misconduct of E-Z-EM or such Indemnified
Person in connection with any such actions or inactions.
5.7 Reports. E-Z-EM shall provide or shall cause to be provided to
AngioDynamics data or reports requested by AngioDynamics relating to
(i) benefits paid to or on behalf of AngioDynamics personnel under
the E-Z-EM Plans, including but not limited to financial statements,
claims history, and census information, and (ii) other information
relating to the E-Z-EM Plans that is required to satisfy any
reporting or disclosure requirements of ERISA or the Code. E-Z-EM
will provide such information within a reasonable period of time
after it is requested. The costs for reports which are prepared by
E-Z-EM or on behalf of E-Z-EM generally for its business shall be
billed as part of the amounts payable under this Section 5.
5.8 Notice. Unless otherwise agreed in writing by the parties,
AngioDynamics agrees to provide E-Z-EM with at least one month prior
written notice of any material change in the eligible AngioDynamics
personnel covered by the E-Z-EM Plans. Notwithstanding the preceding
sentence, if AngioDynamics provides E-Z-EM with less than one month
notice of any such change and E-Z-EM is nonetheless able, with
reasonable efforts, to effectuate such change with such shorter
notice, then E-Z-EM shall implement the requested change.
5.9 Self Insured Retention; Increased Insurance Rates. AngioDynamics
acknowledges that E-Z-EM's business insurance is subject to a
"self-insured retention" of $500,000 per claim. In connection with a
third party claim against E-Z-EM based upon the business activities
and operations of AngioDynamics, AngioDynamics will indemnify and
hold E-Z-EM harmless with respect to any out-of-pocket payments made
up to the limit of E-Z-EM's self-insured retention (i.e., repayment
in full for all amounts paid by E-Z-EM before payments are received
from a provider under an E-Z-EM Plan). Additionally, if the insurance
premium charged by the applicable provider to E-Z-EM increases as a
15
result of the payments by such provider relating to the business and
operations of AngioDynamics, then (i) the parties shall negotiate in
good faith the allocation of the increase in the insurance premium
resulting from the claim based on AngioDynamics' business and
operations, and shall all commercially reasonable efforts obtain from
the provider of coverage under such E-Z-EM Plan the hypothetical
insurance premium had there been no such claim based on
AngioDynamics' business and operations, and (ii) AngioDynamics shall
pay E-Z-EM an amount equal to five (5) times the increase in the
insurance premiums resulting from the claim based upon AngioDynamics'
business and operations described in clause (i). The parties
acknowledge that the amount paid in clause (ii) is a reasonable
estimate of the effect of the increase in aggregate premiums over
time, and is not a penalty. This provision shall survive this
Agreement. E-Z-EM shall use commercially reasonable efforts to
mitigate any damages, including without limitation out-of-pocket
expenses, to be indemnified by AngioDynamics pursuant to this Section
5.9. Such efforts include seeking comparable insurance from other
providers at rates and on other terms more favorable than the
proposed rates and terms of the then-current insurance provider (as
modified after the AngioDynamics-related claim).
5.10 Term and Termination.
5.10.1 The obligations of the parties under this Section 5 may be
terminated by AngioDynamics upon giving E-Z-EM at least 60
days prior written notice. E-Z-EM shall deliver to
AngioDynamics upon receipt of same (or as soon thereafter as
practicable) any refunds or rebates received allocable to the
AngioDynamics Employees for periods in which AngioDynamics
participated in a Plan, in connection with the reduction in
coverage under the E-Z-EM Plans.
5.10.2 Subject to Section 5.3.2, E-Z-EM may terminate AngioDynamics
participation in an E-Z-EM Plan at any time if (i)
AngioDynamics shall have failed to perform any of its material
obligations under this Agreement relating to such E-Z-EM Plan,
(ii) E-Z-EM has notified AngioDynamics in writing of such
failure, and (iii) such failure shall have continued for a
period of 30 days after receipt of AngioDynamics of notice of
such failure. E-Z-EM agrees that after a failure by
AngioDynamics to perform its obligations under this Section 5
and prior to exercising its termination rights under this
Section 5, E-Z-EM will consult for a reasonable period with
AngioDynamics in advance of such termination as to its
implementation.
5.10.3 Effect of Termination. Other than as required by law, upon
termination of the agreements under this Section 5 in
accordance with its terms or the unilateral termination
thereof by a party hereto, E-Z-EM will have no further
obligation to include AngioDynamics or any of its personnel
under the E-Z-EM Plans and AngioDynamics will have no
obligation to pay any fees relating the E-Z-EM Plans or make
any other payments hereunder; provided that notwithstanding
such termination, but subject to the second sentence of
Section 5.10.1, AngioDynamics shall remain liable to E-Z-EM
for (i) out of pocket costs, fees, funding contributions and
policy premiums incurred prior to the effective date of the
termination, and (ii) administrative and program costs
relating to benefits paid after but incurred prior to the
termination of the obligations under this Section 5.
16
6 INDEMNIFICATION
6.1 Indemnification by AngioDynamics. AngioDynamics shall indemnify and
hold harmless E-Z-EM and its officers, directors, stockholders,
employees or other representatives (for each party, each such Person
is sometimes referred to as an "Indemnified Person") from and against
any losses, claims, damages or liabilities, joint and/or several (or
actions in respect thereof) (collectively, "Claims"), to which E-Z-EM
or such Indemnified Person may become subject arising out of or due
to any of the following:
6.1.1 the failure of AngioDynamics to pay, perform or discharge in
due course the liabilities, if any, assumed by AngioDynamics
in connection with the Distribution or the separation from
E-Z-EM;
6.1.2 the failure of AngioDynamics to comply with the terms of this
Agreement or any of the Ancillary Agreements,
6.1.3 without limiting Section 6.1.2 above, the tax ramifications
set forth in (i) through (iv) below (collectively, the
"Adverse Tax Results"), if suffered by E-Z-EM and its
stockholders, resulting primarily from action or inaction by
AngioDynamics, its transfer agent(s) or any other agent or
representative of AngioDynamics, to the extent E-Z-EM or its
stockholders are adversely affected: (i) a gain being
recognized (or an amount being included in the income of) the
stockholders of E-Z-EM upon the receipt of AngioDynamics
Common Stock in the Distribution; (ii) a gain or loss being
recognized to E-Z-EM upon the completion of the Distribution;
(iii) the failure of the basis of the AngioDynamics Common
Stock and the E-Z-EM Common Stock in the hands of the
stockholders of E-Z-EM after the Distribution to be, in each
instance, the same as the aggregate basis of the E-Z-EM
stockholders in the E-Z-EM Common Stock immediately before the
Distribution (allocated in proportion to the fair market value
of each), and/or (iv) the failure of the holding period of the
AngioDynamics Common Stock received by the stockholders of
E-Z-EM as a result of the Distribution to include the holding
period of the E-Z-EM Common Stock with respect to which the
AngioDynamics Common Stock was received, provided that such
E-Z-EM Common Stock is held as a capital asset on the date of
the Distribution. Bases for AngioDynamics becoming obligated
to indemnify and hold harmless the applicable Indemnified
Persons include, without limitation, if (within the prescribed
period under the Code) (y) a sufficient number of shares of
AngioDynamics Common Stock is held by new stockholders such
that there is a change in ownership of 50% or greater in
either the voting power or value of AngioDynamics Common Stock
(which may include changes in ownership occurring as a result
of the Offering) under the Code, or (y) E-Z-EM's share
ownership in AngioDynamics decreases below 80.0% and such
decrease results in one of the Adverse Tax Results. E-Z-EM
acknowledges that changes in the ownership of E-Z-EM Common
Stock that cause such Adverse Tax Results shall not be events
for which AngioDynamics shall be required to indemnify E-Z-EM
or any Person deriving rights through E-Z-EM;
6.1.4 any investigating, preparing, pursuing or defending any
Proceeding (as defined in Section 6.4) or investigation
arising out of or in connection with the funding and other
payment obligations of AngioDynamics under Section 5; provided
that AngioDynamics will not be responsible for any damages of
E-Z-EM or any E-Z-EM Indemnified Person that have resulted
from his or its gross negligence or willful misconduct in
connection therewith;
6.1.5 any pre-Offering Credit Support Arrangements;
6.1.6 the business operations of AngioDynamics prior to the
Distribution in which E-Z-EM is a defendant solely because
E-Z-EM was the sole stockholder of AngioDynamics;
17
6.1.7 without duplication of Section 6.1.4, any Claims for which
AngioDynamics is responsible under Section 7.3;
6.1.8 Claims with respect to Intercompany Services provided under
Section 8.1, to the extent that such Claims result from or are
attributable to the gross negligence or willful misconduct of
AngioDynamics;
6.1.9 Claims under Sections 3.4 and 5.9, in each case to the extent
set forth therein;
6.1.10 Claims based on any untrue statement of a material fact or
material omission (i) in the IPO Registration Statement or any
similar document relating to the Offering, other than
information provided by (or not provided, as applicable) and
relating to E-Z-EM, or (ii) in any document related to the
Distribution, to the extent such information is provided (or
not provided, as applicable) by AngioDynamics with respect to
its own business and operations; and
6.1.11 any taxes, interest, fines, or penalties assessed by any
Governmental Authority against E-Z-EM, plus any fees and
expenses incurred by E-Z-EM in connection with any such
assessment, as a result of AngioDynamic's failure to discharge
its obligations under Section 4.7.
6.2 Indemnification by E-Z-EM. E-Z-EM shall indemnify and hold harmless
AngioDynamics and its "Indemnified Persons" from and against any and
all Claims suffered by AngioDynamics or such Indemnified Person
arising out of or due to any of the following:
6.2.1 E-Z-EM's failure to pay, perform or discharge in due course
E-Z-EM's liabilities that are not assumed by AngioDynamics in
connection with the Distribution or the separation from
AngioDynamics;
6.2.2 any investigating, preparing, pursuing or defending any Claim
or Proceeding arising out the gross negligence or willful
misconduct of E-Z-EM or any E-Z-EM Indemnified Person with
respect to its obligations under Section 5;
6.2.3 the occurrence of any Adverse Tax Results (as defined in
Section 6.1.3 above) with respect to AngioDynamics or
AngioDynamics' stockholders as a result of the action or
inaction of E-Z-EM, including by way of example (i) transfers
of E-Z-EM Common Stock and (ii) plans or agreements to which
E-Z-EM is a party (other than the Distribution and plans and
agreements to which AngioDynamics is a party) for the
transfers of E-Z-EM Common Stock or AngioDynamics Common
Stock;
6.2.4 any Claims for which E-Z-EM is responsible under Section 7.3;
6.2.5 Claims with respect to Intercompany Services provided under
Section 8.1, to the extent that such Claims result from or are
attributable to the gross negligence or willful misconduct of
E-Z-EM;
6.2.6 Claims based on any untrue statement of a material fact or
material omission (i) in the IPO Registration Statement or any
similar document relating to the Offering provided by (or not
provided, as applicable) and relating to E-Z-EM, or (ii) in
any document related to the Distribution, unless provided (or
not provided, as applicable) by AngioDynamics with respect to
its own business and operations; and
6.2.7 E-Z-EM's failure to comply with the terms of this Agreement or
any of the other Ancillary Agreements; and
18
6.2.8 any taxes, interest, fines, or penalties assessed by any
Governmental Authority against AngioDynamics, plus any fees
and expenses incurred by AngioDynamics in connection with any
such assessment, as a result of the discharge by AngioDynamics
of its obligations under Section 4.7.
6.3 Limitations upon Indemnification Provisions in this Agreement.
6.3.1 The indemnification obligations in Sections 6.1 and 6.2 are
subject to the more specific indemnification obligations set
forth in the Ancillary Agreements, including by way of example
only Article 4 of the Corporate Agreement. To the extent that
any indemnification obligation set forth herein is covered by
or inconsistent with more specific provisions of one of the
Ancillary Agreements, the indemnification obligations set
forth in such Ancillary Agreement shall govern and this
Agreement shall be interpreted so as to be consistent with the
applicable Ancillary Agreement.
6.3.2 All indemnification amounts will be reduced by any insurance
proceeds and other offsetting amounts actually recovered by
the party entitled to indemnification.
6.4 Procedure for Indemnification. Promptly after receipt by any
Indemnified Person under Section 6.1 or Section 6.2 hereof of notice
of the commencement of any action, claim or proceeding (each, a
"Proceeding"), such Indemnified Person shall, if a Claim in respect
thereof is sought against an AngioDynamics or E-Z-EM, respectively
(for purposes of this Section 6.4, an "Indemnitor"), notify such
Indemnitor in writing of the commencement thereof, but any omission
or delay in notifying the Indemnitor shall not relieve it from any
liability which it may have to any Indemnified Person except to the
extent of any actual prejudice. In case any such action shall be
brought against any Indemnified Person, it shall notify an Indemnitor
of the commencement thereof, such Indemnitor shall be entitled to
participate therein and, to the extent that it shall wish, jointly
with any other Indemnitor similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such Indemnified
Person, and, after notice from the Indemnitor to such Indemnified
Person of its election so to assume the defense thereof, such
Indemnitor shall not be liable to such Indemnified Person under this
Section 6 for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by such Indemnified
Person, in connection with the defense thereof. No Indemnitor shall,
without the prior written consent of the applicable Indemnified
Person, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened
Proceeding in respect of which indemnification may be sought
hereunder (whether or not the Indemnified Person is an actual or
potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the
Indemnified Person from all Claims arising out of such Proceeding and
(ii) does not include a statement as to, or an admission of, fault,
culpability or a failure to act, by or on behalf of any Indemnified
Person. Notwithstanding the foregoing, an Indemnified Person shall
have the right to employ separate counsel reasonably acceptable to
the Indemnitor in any such proceeding and to participate in (but not
control, other than with respect to (3) below) the defense thereof,
but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless (1) the Indemnitor has agreed to pay
such fees and expenses; (2) the Indemnitor shall have failed after
notice to assume the defense of such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Person and the Indemnitor, and a
conflict of interest may reasonably be expected to exist if such
counsel represents such Indemnified Person and the Indemnitor. In the
case of clause (3), the Indemnified Person shall have the right to
control the Indemnified Person's defense and, for each of clauses
(1)-(3), if such Indemnified Person notifies the Indemnitor in
writing that it elects to employ separate counsel, the reasonable
fees and expenses of such counsel shall be at the expense of the
Indemnitor; provided, however, that the Indemnitor shall not, in
connection with any one such Proceeding or separate but substantially
similar or related Proceedings in the same jurisdiction, arising out
of the same general allegations or circumstances, be liable for the
reasonable fees and
19
expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all such Indemnified
Persons. An Indemnitor shall not be liable for any settlement of an
action effected without its written consent.
7 EMPLOYMENT MATTERS
Notwithstanding any other provision of this Agreement or any Ancillary Agreement
to the contrary, E-Z-EM and AngioDynamics acknowledge and agree that:
7.1 Separate Employers. After the Payment Date, E-Z-EM and AngioDynamics
will be separate and independent employers for all purposes. Except
as otherwise provided in this Agreement or in any Ancillary Agreement
and without in any way limiting Sections 4.1 and 4.2, the preceding
sentence shall not, of itself, constitute a severance or a
termination of employment under any Plan (including severance
agreements) maintained by E-Z-EM or AngioDynamics, and to the maximum
extent permitted by applicable law, no severance, separation or
termination shall be deemed to occur by reason of the Distribution.
7.2 Employment Policies And Practices. Further to Section 5.1.6, E-Z-EM
and AngioDynamics may adopt, continue, modify or terminate such
employment policies, compensation practices, Employee Welfare Plans,
and other plans or policies of any kind or description, as each may
determine, in its sole discretion, are necessary and appropriate.
7.3 Claims.
7.3.1 This Section 7.3 is intended to allocate all liabilities for
employment-related claims involving E-Z-EM or AngioDynamics
including, but not limited to, claims against either or both
E-Z-EM and AngioDynamics and their respective officers,
directors, agents and employees, or against or by their
respective employee benefit plans and plan administrators and
fiduciaries, except to the extent covered under Section 5 of
this Agreement.
7.3.2 An employment-related claim shall include any actual or
threatened lawsuit, arbitration, ERISA claim, or federal,
state or local judicial or administrative proceeding of
whatever kind involving a demand by or on behalf of or
relating to E-Z-EM Employees or AngioDynamics Employees, or by
or relating to any federal, state or local government agency
alleging liability against E-Z-EM or AngioDynamics, or (except
to the extent covered by Section 5 of this Agreement) against
any employee health, welfare, deferred compensation or other
benefit plan and/or their respective officers, directors,
agents, employees, administrators, trustees and fiduciaries.
7.3.3 The duty of a party to indemnify, defend and hold harmless the
other party under this Section 7.3 shall include such duties,
and be subject to such procedures, as set forth in Section 6
of this Agreement, as modified in this Section 7.3.
7.3.4 With respect to pre-Distribution claims:
7.3.4.1 E-Z-EM shall indemnify, defend and hold harmless
AngioDynamics from any employment-related claims of an E-Z-EM
Employee arising from acts occurring before the Payment Date.
7.3.4.2 AngioDynamics shall indemnify, defend and hold
harmless E-Z-EM from any employment-related claims of a
AngioDynamics Employee arising from acts before the Payment
Date.
20
7.3.5 Where employment-related claims alleging or involving joint
and several liability asserted against E-Z-EM and
AngioDynamics are not separately traceable to liabilities
relating to E-Z-EM Employees or AngioDynamics Employees, any
liability shall be appointed between E-Z-EM and AngioDynamics
in accordance with the percentage that each party's Employees
represents of the combined total number of Employees of both
parties, as described below. The percentage of the liability
assumed by E-Z-EM shall equal the ratio of (i) the total
number of E-Z-EM Employees on the Distribution Date to (ii)
the combined total number of E-Z-EM Employees and
AngioDynamics Employees on such date. The percentage of the
liability assumed by AngioDynamics shall equal the ratio of
(i) the total number of AngioDynamics Employees on the
Distribution Date, to (ii) the combined total number of E-Z-EM
Employees and AngioDynamics Employees on such date. Each party
will indemnify, defend and hold harmless the other to the
extent of the indemnifying party's apportioned percentage
determined in accordance herewith.
7.3.6 Employment related claims arising from acts occurring on and
after the Payment Date and not relating to, arising from, or
in connection with the Distribution will be the sole
responsibility of E-Z-EM as to E-Z-EM Employees and of
AngioDynamics as to AngioDynamics Employees and each will
indemnify, defend, and hold harmless the other from
employment-related claims of the other company.
8 SERVICES AGREEMENT
8.1 Intercompany Services and Intercompany Charges. Legal, professional,
administrative, clerical, consulting and/or support services (the
"Intercompany Services") provided to one party by personnel of the
other party, upon the request of the first party or when such
services are otherwise required by this Agreement, shall be charged
to the party receiving such services on terms that reflect arm's
length negotiation (the "Intercompany Charges").
8.1.1 The parties acknowledge and agree that the Intercompany
Services and the Intercompany Charges are expected to be those
set forth on Exhibit C, but that Exhibit C is neither binding
(except where the Intercompany Charges are set forth as a
fixed percentage) nor reflective of additional services (or
their cost) that may be provided as mutually agreed by the
persons named or described therein.
8.1.2 With respect to the amounts on Exhibit C relating to payments
to ▇▇▇▇▇▇ ▇▇▇▇▇, AngioDynamics hereby assumes E-Z-EM's payment
obligations under E-Z-EM's agreement with ▇▇▇▇▇▇ ▇▇▇▇▇ dated
as of January 1, 2002, to the extent set forth on Exhibit C,
and only from the date hereof through December 2004, as
indicated in the right-most column of Exhibit C.
8.2 Payment. E-Z-EM and AngioDynamics agree to pay the amount invoiced by
the other (absent manifest error) for the Intercompany Services
within ten (10) days of the end of the month in which the respective
Intercompany Services are provided. With respect to those
Intercompany Costs that are ascertainable in advance or remain
relatively constant, such as contributions for the respective
salaries and benefits set forth on Exhibit C, the parties agree to
negotiate in good faith a more frequent payment schedule if requested
by the party who employs or has engaged the personnel providing such
Intercompany Services.
8.3 Termination. The obligation to perform the Intercompany Services
shall terminate on December 31, 2004; provided that (i) in the case
of a payment default, the party providing the applicable Intercompany
Services may terminate providing same upon 15 days prior written
notice (unless such payment default is cured within such 15-day
period) and (ii) nothing set forth in this Section 8 shall require
either party use or pay for Intercompany Services from the other. The
payment obligations
21
under Section 8.2 and the applicable indemnification obligations
under Section 6 shall survive any termination of the obligations
under this Section 8.
8.4 Return of Property. Upon the termination of the parties' obligations
under this Section 8, each party shall return to the other any and
all items of the other's property, if any, utilized in performing the
services contemplated above.
8.5 Limitation on Applicability. This Section 8 shall not apply to (i)
manufacturing or production services provided by AngioDynamics to
E-Z-EM, which shall be governed by Section 3.4 of this Agreement,
(ii) Benefit Services (which shall be governed by Section 5), (iii)
tax allocations and any related services covered in the Tax
Agreement, and (iv) any other services specifically covered in
another provision of this Agreement or an Ancillary Agreement.
9 MISCELLANEOUS
9.1 Entire Agreement. This Agreement, the Ancillary Agreements and the
Exhibits and Schedules referenced or attached hereto and thereto,
constitute the entire agreement between the parties with respect to
the subject matter hereof and thereof and shall supersede all prior
written and oral and all contemporaneous oral agreements and
understandings, negotiations, discussions, writings, commitments and
conversations with respect to the subject matter hereof and thereof,
and there are no agreements or understandings between the parties
other than those set forth or referred to herein or therein.
9.2 Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of
New York (without giving effect to any conflict of laws principles).
The parties hereto unconditionally and irrevocably agree and consent
to the exclusive jurisdiction of the United States District Court and
the courts of the State of New York located in the County of New
York, State of New York, and waive any objection with respect
thereto, for the purpose of any action, suit or proceeding arising
out of or relating to this Agreement or the transactions contemplated
hereby and further agree not to commence any such action, suit or
proceeding except in any such court. Each party irrevocably waives
any objections or immunities to jurisdiction to which it may
otherwise be entitled or become entitled (including sovereign
immunity, immunity to pre-judgment attachment, post-judgment
attachment and execution) in any legal suit, action or proceeding
against it arising out of or relating to this Agreement or the
transactions contemplated hereby which is instituted in any such
court.
9.3 Termination. Notwithstanding the specific termination provisions in
any Section hereof, this Agreement and all Ancillary Agreements may
be terminated at any time prior to the sale of shares of
AngioDynamics Common Stock to the underwriters in the Offering by and
in the sole discretion of E-Z-EM without the approval of either
AngioDynamics or the stockholders of E-Z-EM. Thereafter, this
Agreement may only be terminated in a written agreement executed by
AngioDynamics and E-Z-EM, although portions of this Agreement may be
terminated unilaterally as specifically provided in such sections. In
the event of termination pursuant to this Section 9.3, no party shall
have any liability of any kind to the other party or any other
Person, except to the extent agreed herein, in the Ancillary
Agreements or otherwise by the parties.
9.4 Notices. All notices and other communications required or permitted
to be given by either party pursuant to the terms of this Agreement
shall be in writing to and shall be deemed to have been duly given
when delivered in person, by express or overnight mail delivery by a
nationally recognized courier (delivery charges prepaid), or by
registered or certified mail (postage prepaid, return receipt
requested), as follows:
22
if to E-Z-EM:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇-▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
if to AngioDynamics:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
or to such other address as the party to whom notice is given may
have previously furnished to the other in writing in the manner set
forth above. All notices and other communication shall be deemed to
have been given and received on the date of actual delivery.
9.5 Counterparts. This Agreement and each Ancillary Agreement, may be
executed in counterparts, each of which shall be deemed to be an
original but all of which shall constitute one and the same
agreement, and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other
party.
9.6 Binding Effect; Assignment; Third-Party Beneficiaries. AngioDynamics
may not, directly or indirectly, in whole or in part, whether by
operation of Law or otherwise, assign or transfer this Agreement or
its rights hereunder, without E-Z-EM's prior written consent and,
except as otherwise permitted hereby, any attempted assignment,
transfer or delegation without such prior written consent shall be
voidable at the sole option of E-Z-EM. Nothing in this Agreement
shall restrict any transfer of this Agreement by E-Z-EM, whether by
operation of Law or otherwise, in connection with a transfer of
AngioDynamics Common Stock in a non-public transaction; otherwise,
the prior written consent of AngioDynamics shall be required. Without
limiting the foregoing, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their permitted
successors and assigns. Except for Indemnified Persons (who are
intended third party beneficiaries of this Agreement, but solely to
the extent set forth in Section 6) and as otherwise expressly
provided herein, this Agreement shall be binding upon and inure
solely to the benefit of each party hereto and its legal
representatives and successors and assigns and nothing in this
Agreement, express or implied, is intended to confer upon any other
Person any rights or remedies of any nature whatsoever under or by
reason of this Agreement.
9.7 Severability. If any term or other provision of this Agreement is
determined by a court or administrative agency of competent
jurisdiction or arbitrator in any binding arbitration, to be invalid,
illegal or incapable of being enforced by any rule of Law or public
policy, all other conditions and provisions of this Agreement will
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 materially adverse to any party hereto. 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 hereto as closely as possible in an
acceptable manner to the end that transactions contemplated hereby
are fulfilled to the fullest extent possible.
9.8 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or
delay on the part of either party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of,
or acquiescence in, any breach of any representation, warranty or
agreement herein, nor shall any single or partial exercise of any
such right preclude other or further exercise thereof or of any other
right. All rights and remedies existing under this Agreement or the
Exhibits attached hereto
23
(and under the Ancillary Agreements and the Schedules and Exhibits
thereto) are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
9.9 Amendment. This Agreement may not be amended by any custom of trade,
course of dealing or otherwise, except by an instrument in writing
signed on behalf of each of the parties to such agreement.
9.10 Authority. Each of the parties hereto represents to the other that
(a) it has the requisite corporate power and authority to execute,
deliver and perform this Agreement and each Ancillary Agreement, (b)
the execution, delivery and performance by it of this Agreement and
each Ancillary Agreement have been duly authorized by all necessary
corporate or other actions, (c) it has duly and validly executed and
delivered this Agreement and each Ancillary Agreement, and (d) this
Agreement and each Ancillary Agreement is a legal, valid and binding
obligation, enforceable against it in accordance with its terms
subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar Laws affecting creditors' rights
generally and general equity principles.
9.11 Conflicting Agreements. In the event of conflict between this
Agreement and any Ancillary Agreement or other agreement executed in
connection herewith, the provisions of this Agreement shall prevail.
However, to the extent that any Ancillary Agreement addresses an
issue more specifically than such issue is addressed herein, the
terms of such Ancillary Agreement shall prevail to the extent they
are not in conflict with this Agreement.
9.12 Specific Performance and Other Equitable Rights. Each of the parties
hereto recognizes and acknowledges that a breach by a party or by any
assignee thereof of any covenants or other commitments contained in
this Agreement will cause the other party to sustain injury for which
it would not have an adequate remedy at law for money damages.
Therefore, each of the parties hereto agrees that in the event of any
such breach, the aggrieved party shall be entitled to the remedy of
injunctive and other equitable relief in addition to any other remedy
to which it may be entitled, at law or in equity, and the parties
hereto further agree to waive any requirement for the securing or
posting of any bond in connection with the obtaining of any such
injunctive or other equitable relief.
9.13 Attorney-Client Privilege. The provisions herein requiring either
party to this Agreement to cooperate shall not be deemed to be a
waiver of the attorney/client privilege for either party or shall it
require either party to waive its attorney/client privilege.
9.14 Independent Status. The relationship of AngioDynamics and E-Z-EM
hereunder with respect to manufacturing (Section 3.4), distribution
(Section 3.5) and other services hereunder (including without
limitation Section 8) shall be that of independent contractors.
Nothing in this Agreement with respect to services is intended to, or
shall be construed to constitute E-Z-EM or any of E-Z-EM's employees,
salepersons or agents, an agent, employee or partner of AngioDynamics
(and vice-versa), except to the extent an agent for purposes of sales
and marketing purposes.
10 DEFINITIONS
10.1 Interpretation. The headings contained in this Agreement, in any
Exhibit or Schedule hereto and in the table of contents to this
Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. Any capitalized
term used in any Schedule or Exhibit but not otherwise defined
therein shall have the meaning assigned to such term in this
Agreement. When a reference is made in this Agreement to a Section,
Exhibit or Schedule, such reference shall be to a Section of, or an
Exhibit or Schedule to, this Agreement unless otherwise indicated.
Any reference in this Agreement to another agreement or instrument
shall be deemed to include such agreement or instrument as it may be
amended, modified, restated and/or supplemented from time to time.
References in this Agreement to any legislation (including for
purposes of (i) below rules and regulations) shall be deemed to
include, unless the context indicates to the contrary,
24
(i) any amendments or supplemental or substitute legislation from
time to time, and (ii) any "rules or regulations" promulgated under
such legislation. References to the plural shall also be deemed to be
a reference to the singular, and vice-versa, as the context may
dictate.
10.2 As used herein, the following terms have the respective definitions
set forth below:
"401(k) Retirement Plan" means a defined contribution plan maintained
pursuant to Section 401(k) or 401(a) of the Code for Employees and
their beneficiaries.
"Acquiror" has the meaning set forth in Section 3.9.3.
"Adjusted E-Z-EM Option" means an Existing E-Z-EM Option adjusted in
the manner set forth in Section 4.
"Affiliate" or "Affiliates" as applied to any Person, means any other
Person directly or indirectly controlling, controlled by, or under
common control with that Person. For the purposes of this definition,
"control" (including with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as
applied to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting
securities, by contract or otherwise.
"Ancillary Agreements" has the meaning set forth in Section 1.2
hereof.
"AngioDynamics Adjustment Plans" means, collectively, any (i)
non-plan grants and/or (ii) stock option plans (which shall be deemed
to include "mirror plans" and AngioDynamics 2004 Stock and Incentive
Award Plan) to be adopted by AngioDynamics in furtherance of Section
4.3 hereof, to enable AngioDynamics to grant options to purchase
AngioDynamics Common Stock to the holders of Existing E-Z-EM Options
granted under the E-Z-EM Option Plans. For greater certainty, each
AngioDynamics Adjustment Plan will "mirror" the material provisions
of the corresponding E-Z-EM Option Plan or related Existing E-Z-EM
Option, except that each AngioDynamics Adjustment Plan will provide
that: (i) the Distribution will not be deemed a "termination" of the
employment of any E-Z-EM Employee for the purposes of the Plan, (ii)
following the Distribution, termination of employment of any E-Z-EM
Employee for the purposes of the Plan will be determined by reference
to employment by E-Z-EM or any of its subsidiaries, and (iii) the
expiration date of such option shall be modified as set forth in
Section 4.6 hereof.
"AngioDynamics Business" means the business of AngioDynamics as
conducted consistent with practices in place prior to the
Distribution Date and as expected to be conducted in the future (as
described in the IPO Registration Statement).
"AngioDynamics Option" means an option to acquire AngioDynamics
Common Stock granted under any currently existing Plans of
AngioDynamics, the AngioDynamics Adjustment Plans or any non-plan
grant.
"AngioDynamics Plan Commencement Date" has the meaning set forth in
Section 5.1.4.
"Benefits Services" has the meaning ascribed thereto in Section
5.2.2.
"Business Day" means a day other than a Saturday, a Sunday or a day
on which banking institutions located in the State of New York are
authorized or obligated by Law or executive order to close.
"Code" has the meaning set forth in the Recitals hereof.
"Commission" has the meaning set forth in the Recitals hereof.
25
"Confidential Information" shall mean:
(a) all information concerning a party and its business constituting
a trade secret, except for such information as is described below,
whether or not reduced to writing, marked as confidential, patentable
or protectible by copyright, patent or trademark, that the other
Party receives or receives access to, directly or indirectly,
including, without limitation:
(i) financial information relating to a Party;
(ii) application, operating system, data base, communication and
other computer software, whether now or hereafter existing, all
modifications, enhancements and versions and all options available
with respect thereto, and all future products developed or derived
therefrom;
(iii) source and object codes, flowcharts, algorithms, coding
sheets, routines, sub-routines, compilers, assemblers, design
concepts and related documentation and manuals;
(iv) processes, marketing techniques and arrangements, mailing
lists, purchasing information, pricing policies, quoting procedures,
customer and prospect names and requirements, employee, customer,
supplier and distributor data and other materials or information
relating to the party's business and activities and the manner in
which the party does business;
(v) discoveries, concepts, and ideas including, without
limitation, the nature and results of research and development
activities, processes, formulas, formulations, protocols, inventions,
computer-related equipment or technology, techniques, data,
"know-how", designs, drawings, prototypes, diagrams, schematics,
descriptions, trade secrets, records, proposals, reports and methods
and specifications;
(vi) any other materials or information related to the business
or activities of the party that are not generally known to others
engaged in similar businesses or activities; and
(vii) all ideas that are derived from or relate to the other
party's access to or knowledge of any of the above enumerated
materials and information.
(b) For purposes of this Agreement, the term "Confidential
Information" shall not include information that is disclosed pursuant
to the order of a court or Governmental Authority having competent
jurisdiction, or that becomes publicly available without breach of
either (i) this Agreement or (ii) any other agreement or instrument
to which the applicable party is a party or a beneficiary; provided,
however, that each party hereby acknowledges and agrees that if it
shall seek to disclose, divulge, reveal, report, publish, transfer or
use, for any purpose whatsoever, any Confidential Information, it
shall bear the burden of proving that any such information has become
publicly available without any such breach.
"Credit Support Arrangements" has the meaning set forth in Section
3.1 hereof.
"Distribution" has the meaning set forth in the Recitals hereof.
"Distribution Agent" has the meaning set forth in Section 2.1.1
hereof.
"Distribution Date" means the date as so determined by E-Z-EM in its
sole and absolute discretion in accordance with Section 2 hereof on
which the Distribution is declared (which date shall not necessarily
be the same as the Payment Date).
"E-Z-EM Board" has the meaning set forth in the Recitals hereof.
"E-Z-EM Business" means the development, manufacture, and marketing
of medical products used by radiologists, gastroenterologists and
speech language pathologists for diagnostic imaging of diseases and
disorders of the GI tract, as well as manufacturing barium sulfate
suspensions, defense decontaminants, mining of barium sulfate, and
acting as distributors for E-Z-EM's gastrointestinal products, but in
no case may the E-Z-EM Business include any such activities if
related to the AngioDynamics Business.
26
"E-Z-EM Common Stock" has the meaning set forth in the Recitals
hereof.
"E-Z-EM Group" means E-Z-EM and each Subsidiary and Affiliate of
E-Z-EM immediately after the Distribution Date and each Person that
becomes a Subsidiary or an Affiliate of E-Z-EM (other than
AngioDynamics and its Subsidiaries, if any) after the Distribution
Date.
"E-Z-EM Option Plans" means the stock option plans currently in
effect for E-Z-EM.
"E-Z-EM Plans" means (i) with the exceptions of the AngioDynamics
Plans referred to in the first sentence of Section 5.1.2, every plan,
policy, arrangement, contract or agreement providing compensation or
benefits for any group of Employees or for any individual Employee or
the dependents or beneficiaries of any such Employee, including
without limitation Employee Welfare Plans, whether formal or informal
or written or unwritten, and including, without limitation, any
means, whether or not legally required, pursuant to which any benefit
is provided by an employer to any Employee or the beneficiaries of
any such Employee, and (ii) to the extent the context does not
indicate to the contrary, other insurance policies currently in
effect insuring E-Z-EM and AngioDynamics and their employees,
directors and officers, including without limitation (A) directors
and officers insurance and any other "fiduciary"-based insurance
policies, (B) product liability insurance, (C) property (real or
personal) insurance, and (D) business, casualty, general and/or
umbrella liability insurance policies. The term "Plan" as used in
this Agreement does not include any contract, agreement or
understanding entered into by E-Z-EM or AngioDynamics relating to
settlement of actual or potential employee-related litigation claims.
"Employee" means an individual who, on the Payment Date, is
identified as being in any of the following categories.
E-Z-EM Categories of Employees (which shall for all purposes exclude
AngioDynamics Employees):
(i) E-Z-EM Terminee. Any individual formerly employed in the
E-Z-EM Business whose employment was terminated prior to the
Payment Date.
(ii) E-Z-EM Employee. Any individual who is an Employee of
E-Z-EM on the Payment Date.
AngioDynamics Categories of Employees:
(i) AngioDynamics Terminee. Any individual formerly employed in
the AngioDynamics Business whose employment was terminated prior
to the Payment Date.
(ii) AngioDynamics Employee. Any individual who is an Employee
of AngioDynamics on the Payment Date.
"Employee Welfare Plans" means any Plan that provides medical,
health, disability, accident, life insurance, death, dental or any
other welfare benefit, including, without limitation, any
post-employment benefit.
"Equity Securities" means all classes of equity securities of
AngioDynamics, and any options, instruments or other securities of
AngioDynamics or any other issuer exercisable for, convertible into
or exchangeable for AngioDynamics' equity securities.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"Exchange Act" means the Securities and Exchange Act of 1934.
27
"Exchange Act Registration Statement" shall have the meaning set
forth in Section 2.2.1.
"Existing Authority" has the meaning set forth in Section 3.8 hereof.
"Existing E-Z-EM Stock Option" means each unexercised option to
purchase E-Z-EM Common Stock outstanding as of the Record Date,
issued pursuant to any of the E-Z-EM Option Plans or non-plan grant.
"Governmental Approvals" means any notices, reports or other filings
to be made, or any consents, registrations, approvals, permits or
authorizations to be obtained from, any Governmental Authority.
"Governmental Authority" shall mean any federal, state, local,
foreign or international court, government, department, commission,
board, bureau, agency, official or other regulatory, administrative
or governmental authority.
"Indemnified Person" has the meaning set forth in Section 6.1.
"Information" means information, whether or not patentable or
copyrightable, in written, oral, electronic or other tangible or
intangible forms, stored in any medium, including studies, reports,
records, books, audit work papers, work papers from internal audits,
contracts, instruments, surveys, discoveries, ideas, concepts,
know-how, techniques, designs, specifications, drawings, blueprints,
diagrams, models, prototypes, samples, flow charts, data, computer
data, disks, diskettes, tapes, computer programs or other software,
marketing plans, customer names, communications by or to attorneys
(including attorney-client privileged communications), memos and
other materials prepared by attorneys or under their direction
(including attorney work product), and other technical, financial,
employee or business information or data.
"Information Package" has the meaning set forth in Section 2.2.1
hereof.
"Intercompany Services" and "Intercompany Charges" shall have the
meaning set forth in Section 8.1.
"Law" means any applicable federal, state, local or foreign law,
statute, ordinance, directive, rule, regulation, judgment, order,
injunction, decree, arbitration award, agency requirement, license or
permit of any Governmental Authority.
"IPO Registration Statement" has the meaning set forth in the
Recitals hereof.
"Nasdaq" means the Nasdaq National Market of the Nasdaq Stock Market,
Inc.
"Payment Date" means the date of the delivery date of the
AngioDynamics Common Stock distributed in the Distribution.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental
entity or any department, agency or political subdivision thereof.
"Plan Payment Date" has the meaning ascribed thereto in Section
5.3.1.
"Prohibited Activities" has the meaning set forth in Section 3.9.1
hereof.
"Record Date" means the close of business on the date to be
determined by the E-Z-EM Board as the record date for determining the
shareholders of E-Z-EM entitled to receive shares of AngioDynamics
28
Common Stock pursuant to a pro-rata distribution of shares of
AngioDynamics Common Stock as part of the Distribution.
"Service Credit" means the period taken into account under any Plan
for purposes of determining length of service or plan participation
to satisfy eligibility, vesting, benefit accrual and similar
requirements under such Plan.
"Subsidiary" means with respect to any specified Person, corporation,
limited liability company, partnership or other legal entity of which
such Person or its Subsidiaries owns, directly or indirectly, more
than 50% of the stock or other equity interest entitled to vote on
the election of the members of the board of directors or similar
governing body.
"Tax Agreement" has the meaning set forth in Section 1.2.1 hereof.
[The remainder of this page intentionally left blank]
29
IN WITNESS WHEREOF, the parties hereto have signed this Distribution
Agreement effective as of the date first set forth above.
E-Z-EM, INC ANGIODYNAMICS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------- ------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇▇▇▇▇
President and Chief Executive President and Chief Executive
Officer Officer
30
EXHIBIT C
Intercompany Services and Intercompany Charges
MONTHLY (EST.) Termination
-------------- ------------------------------
E-Z-EM CHARGES TO ANGIODYNAMICS % $
---------------------------------
Financial Consulting Services 20% 4,600 December 31, 2004
Accounting - Salary plus benefits 1,300 December 31, 2004
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ - Consulting 35% 7,300 December 31, ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ - Expenses 35% 2,300 December 31, 2004
Foreign Sales Management 45% 6,300 December 31, 2004
In-house Legal 40% 8,400 December 31, 2004
--------------
$ 30,200
Commissions (Foreign Sales of
AngioDynamics Products) 100% December 31, 2004
Miscellaneous Invoices (de minimis)
ANGIODYNAMICS (NON-MANUFACTURING)
CHARGES TO E-Z-EM
---------------------------------
Miscellaneous Invoices (de minimis)
31