PROXY STATEMENT
FOR
SPECIAL MEETING OF
STOCKHOLDERS
February 21, 2008
SUMMARY TERM SHEET
The
following is a summary of information contained elsewhere in this proxy statement and the
attached Annexes. This summary does not purport to contain a complete statement of all
material information relating to the merger agreement, the merger, and the other matters
discussed in this proxy statement and is subject to, and is qualified in its entirety by,
the more detailed information contained in or attached to this proxy statement. Where
appropriate, items in this summary contain a cross reference directing you to a more
complete description included elsewhere in this proxy statement. Bradley stockholders
should carefully read this proxy statement in its entirety, as well as all annexes
attached to this proxy statement.
The Parties to the
Merger (page 1)
Bradley
Pharmaceuticals, Inc.
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Bradley
Pharmaceuticals, Inc.
383 Route 46 West
Fairfield, New Jersey 07004
(973) 882-1505
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Bradley
Pharmaceuticals, Inc. was founded in 1985 as a specialty pharmaceutical company and
markets to niche physician specialties in the United States and international markets.
Nycomed US Inc. and
Phase Merger Sub Inc.
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Nycomed
US Inc.
60 Baylis Road
P.O. Box 2006
Melville, New York 11747
(631) 454-6389
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Phase
Merger Sub Inc. (Merger Sub) is a newly formed Delaware corporation. Nycomed US Inc.
(Nycomed US) owns 100% of Phase Merger Sub Inc. Nycomed US is an indirect, wholly owned
subsidiary of Nycomed S.C.A., SICAR (Nycomed).
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Nycomed
S.C.A., SICAR
8-10 rue Mathias Hardt
L 1717 Luxembourg
Grand Duchy of
Luxembourg
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Nycomed
is a pharmaceutical company that provides medicines for hospitals, specialists and
general practitioners, as well as over-the-counter medicines in selected markets.
Privately owned, the combined group had annual sales of approximately 3.4 billion
in 2006.
The Special Meeting
(page 14)
Date,
Time and Place of the Special Meeting.
The Special Meeting will be held on February 21,
2008, at 9:30 a.m., Eastern Time, at the offices of Morrison & Foerster LLP, 1290
Avenue of the Americas, New York, NY 10104. See The Special Meeting beginning on page
14.
Purposes
of the Special Meeting.
At the Special Meeting, our stockholders will consider and vote
on a proposal to approve and adopt the merger agreement, dated October 29, 2007, among
Nycomed US, Phase Merger Sub Inc. and Bradley. Under the merger agreement, Merger Sub, a
wholly owned subsidiary of Nycomed US, will be merged with and into Bradley, and Bradley
will survive the merger as a wholly owned subsidiary of Nycomed US. Each outstanding
share of our common stock and of our Class B common stock will be converted automatically
into the right to receive $20.00 in cash, without interest. See
The Special Meeting
General
beginning on page 14
and
The Merger Agreement The Merger
beginning on page
42.
At
the Special Meeting you may also be asked to consider and vote upon a proposal to adjourn
the Special Meeting, if necessary, to permit further solicitation of proxies in the event
there are not sufficient votes at the time of the Special Meeting to approve and adopt
the merger agreement.
Record
Date.
Our board of directors has fixed the close of business on January 10, 2008 as the
record date (the Record Date) for determining stockholders entitled to notice of, and
to vote at, the Special Meeting and any adjournments of the Special Meeting. On the
Record Date there were 16,529,498 shares of our common stock and 429,752 shares of our Class
B common stock outstanding. See
The Special Meeting Record Date
beginning on page 14.
Required
Vote.
Adoption of the merger agreement and the transactions contemplated thereby,
including the merger, and any proposal to adjourn the Special Meeting, requires the
affirmative vote of a majority of the voting power of our common stock and Class B common
stock, voting together as one class, held by stockholders entitled to vote on the Record
Date for the Special Meeting. The holders of common stock and Class B common stock are
generally entitled to one vote and five votes, respectively, for each share held on the
Record Date. Shares of Class B common stock represent approximately 11.5% of our total
voting power. Mr. Daniel Glassman and his affiliates, who together own all the shares of
Class B common stock as well as shares of common stock, hold shares representing
approximately 20.2% of our total voting power as of the Record Date. Mr. Glassman has
indicated that he and his affiliates intend to vote in favor of approval and adoption of
the merger agreement and the merger. See
The Special Meeting Vote Required for
Approval and Adoption of the Merger Agreement or Adjournment
beginning on page 15. See
also
Security Ownership of Certain Beneficial Owners and Management
beginning on page
51.
How
to vote.
You may:
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Vote
by completing, signing, dating and mailing the enclosed proxy card in the accompanying
postage-paid envelope;
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Vote
by telephone or Internet; or
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Vote
in person by attending the Special Meeting. We will distribute written
ballots to any stockholder of record who wishes to vote in person at the
Special Meeting.
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If
your Bradley shares of common stock are held in street name by a broker or other
nominee, the broker or other nominee will vote your Bradley shares only if you instruct
your broker or other nominee how to vote. You should follow the directions provided by
your broker or other nominee regarding how to instruct your broker or other nominee to
vote your shares. If you do not provide your broker or other nominee with instructions on
how to vote by returning your proxy as directed or following, if provided, the directions
on how to vote by Internet or telephone, your broker or other nominee will not be
permitted to vote your shares.
The Merger (page 17)
General.
Under the terms of the merger agreement, Merger Sub will merge with and into Bradley, and
Bradley will survive the merger as a wholly owned subsidiary of Nycomed US. At the
effective time of the
merger each share of our common
stock (other than treasury shares owned by us) and of our Class B common stock will be
converted into the right to receive $20.00 in cash, without interest. Based on the number
of shares of our common stock and Class B common stock outstanding on the Record Date and
assuming the exercise of all options outstanding on the Record Date with an
exercise price of less than $20.00, the aggregate consideration to be paid by Nycomed US
to our stockholders will be approximately $346 million. We expect to close the merger as
soon as practicable after the approval and adoption of the merger agreement by our
stockholders and after all other conditions to the merger have been satisfied or waived.
Background
of the Merger.
In May 2007, in response to preliminary indications that Mr. Daniel
Glassman, Bradleys founder, director, President and Chief Executive Officer and the
holder of nearly all of our Class B common stock, was considering a proposal to acquire
Bradley, our board of directors formed a special committee to consider our strategic
initiatives with a view to enhancing stockholder value, including a number of potential
value-enhancing strategic transactions, such as an acquisition or merger, being acquired
or participating in a going private transaction led by management. After an extensive
auction process led by the special committee, on October 29, 2007, Bradley executed the
merger agreement with Nycomed. For a more detailed description of the events leading to
the approval of the merger by our board of directors, see
The Merger Background of
the Merger
beginning on page 17.
Opinion
of the Special Committees Financial Advisor.
In contemplation of a merger bid by
Nycomed, the special committee received an opinion from Deutsche Bank Securities Inc.
(Deutsche Bank) to the effect that, as of the date of its opinion, based upon and
subject to the assumptions made, matters considered and limits of review set forth
therein, the merger consideration of $20.00 in cash per share to be received by the
holders of the outstanding shares of Bradley common stock, other than Mr. Daniel Glassman
and his affiliates, was fair from a financial point of view. A copy of Deutsche Banks
opinion is attached as Annex C to this proxy statement. We encourage you to read
carefully the opinion in its entirety and
The Merger Opinion of the Special
Committees Financial Advisor
beginning on page 26 for a description of the procedures
followed, assumptions made, matters considered and limitations on the review undertaken
by Deutsche Bank. The opinion of Deutsche Bank was provided to Bradleys special
committee in connection with its evaluation of the merger with Nycomed, does not address
any other aspect of the merger and does not constitute a recommendation as to how any
stockholder should vote on any matter at the Special Meeting.
Recommendation
of the Special Committee.
The special committee, consisting solely of disinterested
independent directors elected by the holders of our common stock, and acting with the
assistance of the special committees legal and financial advisors in evaluating the
merger, determined by unanimous vote, that the merger is in the best interest of Bradley
and its stockholders, declared it advisable to enter into the merger agreement and
recommended that the board of directors approve and adopt the merger and the merger
agreement. In reaching its determination, the special committee considered a number of
factors and potential benefits as further described under
The Merger Reasons for the
Merger; Recommendations of Our Special Committee and Board of Directors
beginning on
page 23.
Recommendation
of Our Board of Directors.
On October 29, 2007, our board of directors, after reviewing
and considering the terms and conditions of the merger agreement, receiving the
recommendation of the special committee, reviewing and considering the financial
presentation and advice of the special committees financial advisor, including the
financial advisors opinion and other information provided by the advisors to the special
committee and the advice of the boards legal advisor, (i) determined in good faith that
the merger agreement and the transactions contemplated thereby, including the merger, are
advisable and in the best interests of our stockholders, (ii) approved and adopted the
merger agreement and the transactions contemplated thereby, including the merger, and
(iii) recommended approval and adoption of the merger agreement and the merger and the
principal terms thereof by our stockholders. Mr. Daniel Glassman did not participate in
our boards deliberations or voting with respect to the merger. See
The Merger
Reasons for the Merger; Recommendations of Our Special Committee and Board of Directors
beginning on page 23.
Our
board of directors recommends that our stockholders vote FOR approval and adoption of
the merger agreement.
Interests of Our
Directors and Executive Officers in the Merger (page 32)
In
considering the recommendation of our board of directors to vote for the proposal to
approve and adopt the merger agreement, you should be aware that our directors and
executive officers have personal interests in the merger that are, or may be, different
from, or in addition to, your interests. These interests include:
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Our
executive officers are entitled to benefits under employment agreements that
contain change of control provisions pursuant to which they will receive
severance benefits if their employment is terminated following the completion
of the merger under specified circumstances.
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All
stock options held by our directors and employees, including executive
officers, will become fully vested in connection with the merger.
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The
continued indemnification of our current and former directors and officers
pursuant to our charter documents as in effect on the date of the merger
agreement and the purchase and continuation of directors and officers
liability insurance after the merger.
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Our
board of directors was aware of these interests and considered them, among other matters,
when approving the merger agreement and determining to recommend that our stockholders
vote in favor of approving and adopting the merger agreement. Our directors and officers
as a group, including Mr. Daniel Glassman, beneficially own approximately 23.5% of our
common stock. See
Security Ownership of Certain Beneficial Owners and Management
beginning on page 51.
Appraisal Rights (page
38)
Stockholders
who do not wish to accept the cash consideration payable pursuant to the merger may seek,
under Section 262 of the General Corporation Law of the State of Delaware, judicial
appraisal of the fair value of their shares by the Delaware Court of Chancery. This value
could be more or less than or the same as the merger consideration for the common stock.
This right to appraisal is subject to a number of restrictions and technical
requirements. Generally, to properly demand appraisal, among other things:
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you
must not vote in favor of the proposal to approve and adopt the merger agreement;
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you
must make a written demand for appraisal in compliance with the General
Corporation Law of the State of Delaware before the vote on the proposal to
approve and adopt the merger agreement at the Special Meeting; and
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you
must hold your shares of record continuously from the time of making a
written demand for appraisal through the effective time of the merger.
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Merely
voting against the merger agreement will not preserve your right to appraisal under
Delaware law. Also, because a submitted proxy not marked against or abstain will be
voted for the proposal to approve and adopt the merger agreement, the submission of a
proxy not marked against or abstain will result in the waiver of appraisal rights. If
you hold shares in the name of a broker or other nominee, you must instruct your broker
or other nominee to take the steps necessary to enable you to demand appraisal for your
shares. If you or your broker or other nominee fails to follow all of the steps required
by Section 262 of the General Corporation Law of the State of Delaware, you will lose
your rights of appraisal. Also, there are no rights of appraisal if the merger is not
completed.
If
you validly demand appraisal of your shares in accordance with Delaware law and do not
withdraw your demand or otherwise forfeit your appraisal rights, you will not receive the
merger consideration. Instead, after completion of the proposed merger, a court will
determine the fair value of your shares exclusive of any value arising from the proposed
merger. This appraisal amount could be more than, the same as or less than the amount a
stockholder would be entitled to receive under the terms of the merger agreement.
Annex
D to this proxy statement contains the full text of Section 262 of the General
Corporation Law of the State of Delaware, which relates to your rights of appraisal. We
encourage you to read these provisions carefully and completely.
Conditions to
Completion of the Merger (page 48)
The
obligations of Bradley, Nycomed US and Merger Sub to complete the merger depend on the
satisfaction or waiver of a number of conditions, including:
Conditions
to the obligations of both Bradley and Nycomed US and Merger Sub to complete the merger:
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obtaining
Bradley stockholders approval;
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expiration
or termination of any waiting period under applicable U.S., German and Italian antitrust
laws;
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if
required, obtaining clearance by the New Jersey Department of Environment
Protection (NJ DEP) under the New Jersey Industrial Site Recovery Act; and
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no
injunction or other governmental order making the merger illegal or preventing it.
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Conditions
to the obligations of Nycomed US and Merger Sub to complete the merger:
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our
representations and warranties being true and correct;
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our
performance and compliance with all of our agreements and covenants in the merger
agreement; and
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our
delivery of an officers certificate as to satisfaction of the above two conditions.
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Conditions
to the obligation of Bradley to complete the merger:
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representations
and warranties of Nycomed US and Merger Sub being true and correct;
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performance
and compliance by Nycomed US and Merger Sub with all of their agreements and covenants in
the merger agreement; and
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Nycomed
USs delivery of an officers certificate as to satisfaction of the above two conditions.
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Other Acquisition
Proposals (page 46)
The
merger agreement contains restrictions on our ability to solicit or engage in discussions
or negotiations with a third party with respect to a proposal to acquire a significant
interest in Bradley. Notwithstanding these restrictions, the merger agreement provides
that under specified circumstances, if we receive an acquisition proposal from a third
party before the adoption of the merger agreement by our stockholders that our board of
directors determines is a Superior Proposal (as defined in the merger agreement) or is
reasonably likely to lead to a Superior Proposal, we may, if our board of directors by a
vote of a majority of the disinterested directors determines that the failure to do so
would result in a breach of its fiduciary duties to our stockholders, furnish nonpublic
information to that third party and engage in negotiations regarding an acquisition
proposal with that third party. These determinations must be made in good faith, after
consultation with our legal and financial advisors.
Termination of the
Merger Agreement (page 49)
The
merger agreement may be terminated and the merger abandoned at any time prior to its
effective time as follows:
Termination
by either Nycomed US or Bradley:
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by
mutual written consent of Nycomed US and Bradley;
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by
either Nycomed US or Bradley if the merger has not occurred on or before
March 31, 2008 (subject to extension to April 30, 2008 if (i) the Securities
and Exchange Commission (the SEC) has not cleared the proxy statement for
the merger by the date that is five business days prior to February 29, 2008
or (ii) the waiting periods under applicable U.S., German and Italian
antitrust laws have not expired or terminated by March 31, 2008);
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by
either Nycomed US or Bradley in the event of a final, non-appealable
injunction or other governmental order making the merger illegal or otherwise
preventing its consummation; or
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by
either Nycomed US or Bradley if Bradley stockholder approval is not obtained
at a stockholders meeting at which a vote on the merger agreement is taken.
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Termination
by Nycomed US:
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in
the event of our breach of representations or covenants, subject to a 60-day
cure period (which can be shortened to 45 days if, at the end of such 45
days, it is not reasonably likely that the breach can be cured); or
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if
our board of directors has (i) effected a change in board recommendation,
(ii) taken any actions prohibited by the non-solicitation provisions of the
merger agreement (see
The Merger Agreement No Solicitation/Fiduciary Out
Right to Terminate
beginning on page 46), or (iii) taken any action
contemplated by Rule 14e-2a under the Securities Exchange Act of 1934, as
amended (the Exchange Act), with respect to a tender or exchange offer
made by a third party, other than recommending rejection of such
offer within 10 business days.
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Termination
by Bradley:
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in
the event of breach of representations or covenants by Nycomed US or Merger
Sub, subject to a 60-day cure period (which can be shortened to 45 days if,
at the end of such 45 days, it is not reasonably likely that the breach can
be cured); or
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pursuant
to our fiduciary out right to terminate. See
The Merger Agreement No
Solicitation/Fiduciary Out Right to Terminate
beginning on page 46.
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Termination Fee (page
50)
Bradley
is required to pay Nycomed US a termination fee in the amount of 3.0% of the aggregate
Merger Consideration (as defined in the merger agreement) under certain events that
terminate the merger agreement, as discussed under
The Merger Agreement Termination
Fee Payable to Nycomed US
beginning on page 50. In general, this has the effect of
making it more expensive for any other potential acquiror to acquire Bradley.
Treatment of Stock
Options (page 42)
At
the effective time of the merger, all outstanding options to acquire Bradley common stock
under Bradleys stock option plans, whether vested or unvested, will be cancelled and
converted into the right to receive, within five days after the effective time of the
merger, a cash payment equal to the number of shares of Bradley common stock underlying
the options multiplied by the amount (if any) by which $20.00 exceeds the exercise price,
without interest and less any applicable withholding taxes. For a more complete
description, see
The Merger Agreement Stock Options and Warrants
on page 42.
Material U.S. Federal
Income Tax Consequences (page 36)
The
receipt of $20.00 in cash in exchange for each share of our common stock and Class B
common stock pursuant to the merger will be a taxable transaction for U.S. federal income
tax purposes. In general, as a result of the merger, you will recognize, for each share
of common stock you own, gain or loss measured by the difference, if any, between $20.00
and your adjusted tax basis in that share.
You
should read
The Merger Material U.S. Federal Income Tax Consequences
beginning
on page 36 for a more complete discussion of the U.S. federal income tax consequences of
the merger. Tax matters can be complicated, and the tax consequences of the merger to you
will depend on your particular tax situation. We urge you to consult your tax advisor on
the tax consequences of the merger to you.
Regulatory Approvals
(page 40)
The
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the HSR Act) prohibits us from
completing the merger until we have furnished certain information and materials to the
Antitrust Division of the U.S. Department of Justice and the U.S. Federal Trade
Commission (the FTC), and the required waiting period has expired or been terminated.
The merger agreement also requires that the waiting period (and any extension thereof)
applicable to the merger under the Hart-Scott-Rodino Act, will have been terminated or
will have expired and that all material filings and authorizations legally required to be
made or obtained with or from a governmental authority to consummate the merger shall
have expired, been terminated, made or obtained. Nycomed US and Bradley filed
notification forms under the HSR Act and requested early termination of the waiting
period, which was granted. The waiting period terminated on December 5, 2007. The
proposed transaction is also subject to German, Italian and Argentine antitrust laws. The German antitrust authority cleared the merger on December 12, 2007 and the Italian antitrust authority cleared the merger on December 27, 2007. The completion of the merger
is not subject to expiration or termination of any waiting or review period under Argentine antitrust laws. The
merger agreement also requires that we file and record all required merger documents as
required under Delaware law and obtain clearance by the NJ DEP under the New Jersey
Industrial Site Recovery Act, if required. Bradley has been advised by NJ DEP that no such clearance is required. For a more complete description of the
required regulatory approvals, see the section entitled
The Merger Approvals
on
page 40.
As
of the date of this proxy statement, we are not aware of any other regulatory approvals
that we would be required to obtain from other state and foreign authorities. While we
expect to obtain all required regulatory approvals, we cannot assure you that these
regulatory approvals will be obtained. Moreover, regulatory approval may be subject to
the satisfaction of conditions to the completion of the merger or require changes to the
terms of the merger that would have a materially adverse effect on the combined company.
These conditions or changes could result in an inability to satisfy the conditions to
Nycomed USs obligation to complete the merger.
The Paying Agent
Nycomed
US has designated American Stock Transfer & Trust Company to act as the paying agent
in connection with the merger.
QUESTIONS & ANSWERS
ABOUT THE SPECIAL MEETING AND THE MERGER
When and where will
the Special Meeting be held?
The
Special Meeting of Stockholders of Bradley Pharmaceuticals, Inc. will be held at 9:30
a.m., Eastern Time, on February 21, 2008, at Morrison & Foerster LLP, 1290 Avenue of
the Americas, New York, NY 10104 and at any adjournment thereof (the Special Meeting).
Do I need a ticket
to attend the Special Meeting?
No.
The Special Meeting is open to all stockholders or their authorized representatives. If
you hold shares of common stock or Class B common stock in your own name, please indicate
your intention to attend the Special Meeting by checking the appropriate box on your
proxy card. If you hold your shares through a broker, bank or other holder of record and
plan to attend, please bring proof of ownership of the shares (such as a copy of your
brokerage or bank account statement) to the Special Meeting. You should also be prepared
to present photo identification for admittance at the Special Meeting.
What are the
purposes of the Special Meeting?
You
will be asked to consider and vote upon:
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1.
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A
proposal to approve and adopt the agreement and plan of merger that Bradley
entered into on October 29, 2007 with Nycomed US Inc. (Nycomed US) pursuant
to which Phase Merger Sub Inc., a wholly owned subsidiary of Nycomed US Inc.
(Merger Sub), will merge with and into Bradley. If we complete the merger,
you will have the right to receive $20.00 in cash, without interest, in
exchange for each share of Bradley common stock or Class B common stock you
own. The approval and adoption of the merger agreement will also constitute
approval of the merger and the other transactions contemplated by
the merger agreement;
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2.
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To
adjourn the Special Meeting, if necessary, to permit further solicitation of
proxies in the event there are not sufficient votes at the time; and
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3.
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To
transact any other business that may properly come before the Special Meeting
or any adjournment of the Special Meeting.
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The
board of directors is not aware of any other matters to be presented for action at the
Special Meeting. However, if other matters are presented for a vote and you grant a
proxy, the persons named as proxy holders, Seth W. Hamot and Alan S. Goldstein, will have
the discretion to vote your shares on any additional matters properly presented for a
vote at the Special Meeting.
Who is entitled to
vote?
Only
stockholders of record at the close of business on January 10, 2008, the record date for
the Special Meeting (the Record Date), are entitled to receive notice of and to
participate in the Special Meeting. If you were a stockholder of record on that date, you
will be entitled to vote all of the shares that you owned on that date.
How many votes can
be cast by the holders of our common stock and Class B common stock?
On
January 10, 2008, the Record Date, there were 16,529,498 shares of Bradley common stock and
429,752 shares of Class B common stock outstanding. The holders of our common stock and
Class B common stock are generally entitled to one vote and five votes, respectively, for
each share held on the Record Date. Shares of Class B common stock represent
approximately 11.5% of our total voting power as of the Record Date.
How many votes must
be present to hold the Special Meeting?
A
quorum for the matters to be presented at the Special Meeting is a majority (more than
half) of the outstanding shares present at the meeting or represented by proxy, with the
common stock and Class B common stock counted as one class.
How many votes are
required for stockholder approval of the merger?
The
affirmative vote of a majority of the total voting power of the our common stock and
Class B common stock, voting together as one class, outstanding as of the Record Date is
required to approve and adopt the agreement and plan of merger and approve the merger.
Mr. Daniel Glassman and his affiliates, who together own all the shares of Class B common
stock as well as shares of common stock, hold shares representing approximately 20.2% of
our total voting power as of the Record Date. Mr. Glassman has indicated that he and his
affiliates intend to vote in favor of approval and adoption of the merger agreement and
the merger. See also
Security Ownership of Certain Beneficial Owners and Management
beginning on page 51.
How does Bradleys
board of directors recommend that you vote?
Bradleys
board of directors recommends that you vote:
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FOR
the proposal to approve and adopt the merger agreement and approve the merger; and
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FOR
the adjournment proposal.
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What function did
the special committee serve and who are its members?
The
principal function of the special committee was to consider, evaluate, assess, negotiate
and reject or recommend to our full board of directors potential strategic transactions
for Bradley, including ultimately the merger proposal submitted by Nycomed. The special
committee is composed of three independent and disinterested directors elected by holders
of our common stock: Seth W. Hamot, Douglas E. Linton and William J. Murphy. For
additional information regarding the role of the special committee, see
The Merger Background
of the Merger
beginning on page 17, and
Reasons for the Merger; Recommendations
of Our Special Committee and Board of Directors
beginning on page 23.
When do you expect
the merger to be completed?
We
are working toward completing the merger as quickly as possible. Depending on the receipt
of regulatory approvals, and assuming approval and adoption of the merger agreement by
our stockholders and satisfaction or waiver of other conditions, we hope to complete the
merger shortly after the Special Meeting. For more details on the approvals required, see
The Merger Approvals
beginning on page 40. For a description of the conditions to
the closing of the merger contained in the merger agreement, see
The Merger Agreement
Conditions to the Merger
beginning on page 48.
What will happen to
Bradley as a result of the merger?
Bradley
will become a wholly owned subsidiary of Nycomed US.
What will I receive
in the merger and when will I receive it?
If
we complete the merger, you will have the right to receive $20.00 in cash, without
interest, for each share of Bradley common stock and Class B common stock you own, unless
you seek and perfect appraisal rights, as discussed more fully elsewhere in this proxy
statement. If you have certificated shares of Bradley common stock or Class B common
stock, meaning you hold a physical stock certificate, the merger consideration will be
paid to you once you submit the letter of transmittal, together with properly endorsed
stock certificates and other required documentation, to American Stock Transfer & Trust
Company, the paying agent. See
The Merger Agreement Conversion of Securities and
Merger Consideration
beginning on page 42.
How will the merger
affect outstanding options to purchase Bradley common stock of Bradley?
All
stock options held by our directors, employees and consultants will become fully vested
in connection with the merger. In order to have all stock options available for
cancellation, as is required under the merger agreement, we have commenced a tender
offer, to purchase all outstanding options (that do not expire by
their terms at or prior to the completion of the merger) issued under our 1990 Employee
Stock Option Plan and our 1999 Stock Option Plan. We are offering for each option, the greater of (1) an
amount equal to the spread value per option for each option with an exercise price of
less than $20.00, with the spread value being equal to the excess of $20.00 over the
exercise price of such option, or (2) $0.35, without interest and less in both cases, applicable withholding tax. The
completion of the tender offer will be conditioned upon and will occur simultaneously
with the closing of the merger. At the Record Date, there were options to purchase 1,204,245
shares outstanding and issued pursuant to these plans, of which options to acquire
180,600 shares have exercise prices greater than $20.00 per share. The merger agreement provides for payment of the spread value for options with exercise prices less than $20.00. The
aggregate purchase price for options with exercise prices greater than $20.00 is approximately $63,000. See
The Merger Agreement Stock
Options and Warrants
beginning on page 42.
What happens if I
sell my shares of Bradley common stock or Class B common stock before the Special Meeting?
The
Record Date for the Special Meeting, January 10, 2008, is earlier than the expected date
of the merger. If you transfer your shares of Bradley common stock or Class B common
stock after the Record Date but before the Special Meeting, you will retain your right to
vote at the Special Meeting but will transfer the right to receive $20.00 in cash per
share to the person to whom you transfer your shares.
Should I send in my
stock certificates now?
No.
After the merger is completed, you will receive written instructions for exchanging your
stock certificates for cash.
Please do not send in your stock certificates with your
proxy card.
What do I need to
do now?
After
carefully reading and considering the information contained in this proxy statement,
including the annexes, please vote by telephone or by Internet or complete, date and sign
your proxy card and return it in the enclosed return envelope as soon as possible so that
your shares may be represented at the Special Meeting. If you sign and send in your proxy
and do not indicate how you want to vote, we will count your proxy
FOR
approval and
adoption of the merger agreement and adjourning the Special Meeting in the event that
there are not sufficient votes at the time of the Special Meeting to adopt the merger
agreement.
What happens if I
abstain, fail to vote or submit a proxy or do not instruct my broker or other nominee how
to vote?
If
you abstain from voting, do not vote or do not instruct your broker or nominee on how to
vote, it will have the effect of a vote against approval and adoption of the merger
agreement. Therefore, we urge you to vote. However, abstention from voting or failure to
execute a proxy with respect to adoption of the merger agreement, without taking other
specified procedures, will not be sufficient to assert appraisal rights. For a
description of your appraisal rights and related procedures, see the section entitled
The Merger Appraisal Rights
beginning on page 38 and Annex D for a reproduction
of Section 262 of the Delaware General Corporation Law, which relates to the appraisal
rights of dissenting stockholders.
How many votes are
required for adjournment of the meeting or for other matters that may properly come
before the Special Meeting?
The
affirmative vote of a majority of the voting power of our common stock and Class B common
stock, voting together as one class, present or represented and entitled to vote and
voting is required for approval of the adjournment of the Special Meeting and for all
other business that may properly come before the Special Meeting or any adjournments.
How do I vote?
You may:
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Vote
by completing, signing, dating and mailing the enclosed proxy card in the accompanying
postage-paid return envelope;
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Vote
by telephone or Internet; or
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Vote
in person by attending the Special Meeting. We will distribute written
ballots to any stockholder of record who wishes to vote in person at the
Special Meeting.
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If my Bradley
shares are held in street name by my broker or other nominee, will my broker or other
nominee vote my shares for me?
Your
broker or other nominee will vote your Bradley shares only if you instruct your broker or
other nominee how to vote. You should follow the directions provided by your broker or
other nominee regarding how to instruct your broker or other nominee to vote your shares.
If you do not provide your broker or other nominee with instructions on how to vote by
returning your proxy as directed or following, if provided, the directions on how to vote
by Internet or telephone, your broker or other nominee will not be permitted to vote your
shares.
How are shares
voted that are held in a Bradley 401(k) plan?
The
Bradley Pharmaceuticals 401(k) trust includes an Employee Stock Ownership Plan feature.
At the Record Date, 96,834 shares (including 217 shares subject to forfeiture)
were held in the trust for participants. Each participant who held shares through
Bradleys 401(k) plan at the Record Date will receive a voting instruction form. Frontier
Trust, as trustee, will vote the shares in accordance with instructions received from
participants. Frontier Trust will vote shares for which no instructions were received in
the same proportion, for and against, as the shares for which instructions were received.
To
allow sufficient time for voting by the trustee, your voting instructions for 401(k) plan
shares must be received by 11:59 p.m., Eastern Time, on February 19, 2008.
Can I change my
vote?
Yes.
Send in a new proxy card with a later date, cast a new vote by telephone or by Internet,
or send a written notice of revocation to Bradleys Secretary at the address on the cover
page of this proxy statement. If you attend the Special Meeting and want to vote in
person, you can request that your previously submitted proxy not be used. If your shares
are held through a broker, bank or other institution in street name, you will need to
obtain a proxy form from the institution that holds your shares.
What does it mean
if I receive more than one proxy card?
If
you hold your shares in multiple registrations, or in both registered and street name,
you will receive a proxy card for each account. Please complete, sign, date and mail
all cards you receive. Only your latest dated proxy for each account will be voted.
Who will act as
inspector of election and what is the role of the inspector?
A
representative of American Stock Transfer & Trust Company, our transfer agent, will
act as inspector of election at the Special Meeting. Votes cast by proxy or in person at
the Special Meeting will be tabulated by the inspector of election. The inspector will
also determine whether a quorum is present at the Special Meeting. Shares represented by
the proxy cards received, properly completed, dated, signed, and not revoked, or by
shares voted on the Internet, will be voted at the Special Meeting. If the proxy card
specifies a choice with respect to any matter to be acted on, the shares will be voted in
accordance with that specified choice. Any proxy card that is returned signed but not
marked will be voted
FOR
the merger agreement and for adjournment and as the proxy
holder deems desirable for any other matters that may properly come before the Special
Meeting. Broker non-votes will not be considered as voting with respect to any matter for
which the broker does not have voting authority.
Who is soliciting
my vote?
Your
vote is being solicited by and on behalf of Bradleys board of directors.
How will my vote be
solicited?
Proxies
will be solicited by the use of the mails and may also be solicited personally, or by
telephone, telecopy or e-mail, by our directors, officers and employees. None of our
directors, officers or employees will receive additional compensation for soliciting
proxies.
Bradley
will (i) request banking institutions, brokerage firms, custodians, trustees, nominees
and fiduciaries as record holders to forward the solicitation materials to the beneficial
owners of our common stock, (ii) furnish the number of copies necessary for these record
holders to supply the materials to the beneficial holders and (iii) reimburse the
reasonable forwarding expenses incurred by these record holders.
Who pays for the
solicitation of my vote?
We
pay the costs of soliciting your vote, including the costs of preparing, printing and
mailing the proxy materials. None of our directors, officers or employees will receive
any extra compensation for soliciting you.
When will this
proxy statement be sent to stockholders?
This
proxy statement is first being sent to stockholders on or about January 17, 2008.
Can I access
Bradleys proxy materials electronically?
This
proxy statement, any additional proxy materials and our SEC filings are available on our
Internet web site at www.bradpharm.com. See also
Where You Can Find More Information
beginning on page 57.
Who can help answer
my questions?
If
you need assistance in completing your proxy card or have questions regarding the Special
Meeting, please contact us at Bradley Pharmaceuticals, Inc., 383 Route 46 West,
Fairfield, NJ 07004, (973) 882-1505, Attention: Alan S. Goldstein, Secretary, ext. 547.
THE PARTIES TO THE
MERGER
Bradley
Pharmaceuticals, Inc.
The
headquarters of Bradley Pharmaceuticals, Inc. are located at 383 Route 46 West,
Fairfield, NJ 07004. Bradleys general telephone number at the headquarters is (973)
882-1505.
Bradley
Pharmaceuticals, Inc. was founded in 1985 as a specialty pharmaceutical company and
markets to niche physician specialties in the United States and international markets.
Bradleys success is based upon its core strengths in marketing and sales which enables
the company to
Commercialize
brands that fill unmet patient and physician needs;
Develop
new products through life cycle management; and
In-License
phase II and phase III drugs
with long-term intellectual property protection that upon approval leverage Bradleys
marketing and sales expertise to increase shareholder value. Bradley is comprised of Doak
Dermatologics, specializing in therapies for dermatology and podiatry; Kenwood
Therapeutics, providing gastroenterology, OBGYN, respiratory and other internal medicine
brands; and A. Aarons, which markets authorized generic versions of Doak and Kenwood
therapies.
Nycomed
The
headquarters of Nycomed US Inc. are located at 60 Baylis Road, P.O. Box 2006, Melville,
NY 11747. Nycomed USs general telephone number at the headquarters is (631) 454-6389.
Nycomed US is an indirect, wholly owned subsidiary of Nycomed S.C.A., SICAR.
Nycomed
is a pharmaceutical company that provides medicines for hospitals, specialists and
general practitioners, as well as over-the-counter medicines in selected markets. Nycomed
is active within a range of therapeutic areas, including cardiology, gastroenterology,
osteoporosis, respiratory, pain and tissue management. New products are sourced both from
its own research and from external partners. Operating throughout Europe and in
fast-growing markets such as Latin America, Russia/CIS and the Asia-Pacific region,
Nycomed has a presence in about 50 markets worldwide. Privately owned, the combined group
had annual sales of approximately 3.4 billion in 2006. More information about
Nycomed is available at www.nycomed.com.
Nycomed
US (formerly Altana Inc.) is a subsidiary of Nycomed, which operates three divisions in
the United States focused on specialty pharmaceuticals in dermatology. Founded in 1849,
Fougera is the largest of the three divisions and is a leading manufacturer and
distributor of a wide range of multi-source topical steroids, antibiotics and antifungal
products. The PharmaDerm division of Nycomed US is dedicated to bringing innovative
products to dermatologists so they can best care for their patients. Nycomed US also
markets and sells Savage Laboratories products, which focus on emergency care. More
information about Nycomed US is available at www.fougera.com, www.pharmaderm.com or
www.savagelabs.com.
Phase Merger Sub Inc.
Phase
Merger Sub Inc. is a newly formed corporation organized and existing under the laws of
Delaware. Nycomed US owns 100% of Merger Sub. Merger Sub was organized solely for the
purpose of entering into the merger agreement with Bradley and has not conducted any
business operations.
THE SPECIAL MEETING
General
This
proxy statement is being delivered to you in connection with a Special Meeting of
Stockholders to be held on February 21, 2008, at 9:30 a.m., Eastern Time, at Morrison & Foerster
LLP, 1290 Avenue of the Americas, New York, NY 10104. The purpose of the Special Meeting
is for our stockholders to consider and vote upon a proposal to approve and adopt the
agreement and plan of merger, dated October 29, 2007, among Bradley, Nycomed US and
Merger Sub. At the Special Meeting you may also be asked to consider and vote upon a
proposal to adjourn the Special Meeting, if necessary, to permit further solicitation of
proxies in the event there are not sufficient votes at the time of the Special Meeting to
approve and adopt the merger agreement.
On
October 29, 2007, our board of directors, after reviewing and considering the terms and
conditions of the merger agreement, receiving the recommendation of the special
committee, reviewing and considering the financial presentation and advice of the special
committees financial advisor, including the financial advisors opinion, and other
information provided by the advisors to the special committee and the advice of the
boards legal advisor, (i) determined in good faith that the merger agreement and the
transactions contemplated thereby, including the merger, are advisable and in the best
interests of our stockholders, (ii) approved and adopted the merger agreement and the
transactions contemplated thereby, including the merger, and (iii) recommended approval
and adoption of the merger agreement and the merger and the principal terms thereof by
our stockholders. Accordingly, our board of directors recommends that stockholders vote
FOR
approval and adoption of the merger agreement. Mr. Daniel Glassman did not
participate in our boards deliberations or voting with respect to the merger.
Record Date
Our
board of directors has fixed the close of business on January 10, 2008 as the Record Date
for determining stockholders entitled to notice of and to vote at the Special Meeting and
any adjournment of the Special Meeting. At the Record Date, there were 16,529,498 shares of
the our common stock held of record by 154 holders, and 429,752 shares of Class B common
stock outstanding held of record by 7 holders. The holders of our common stock and
Class B common stock are generally entitled to one vote and five votes, respectively, for
each share held on the Record Date.
Vote Needed for a
Quorum; Effect of Abstentions and Broker Non-Votes
A
quorum is required for stockholders of Bradley to conduct business at the Special
Meeting. A quorum for the matters to be presented at the Special Meeting is a majority
(more than half) of the outstanding shares present at the meeting or represented by
proxy, with the common stock and Class B common stock counted as one class.
Under
the Delaware General Corporation Law as it relates to determining the presence of a
quorum at the Special Meeting, abstaining votes and broker non-votes are counted as
present and are, therefore, included for purposes of determining whether a quorum of
shares is present. An abstention is counted as a share present and entitled to be voted
at the Special Meeting and will have the same effect as a no vote on the merger
proposal. A broker non-vote occurs when a broker or nominee holding shares for a
beneficial owner does not vote on a particular matter because the broker or nominee does
not have the discretionary voting power with respect to that matter and has not received
instructions from the beneficial owner. With respect to the merger proposal, a broker or
nominee who holds shares for a beneficial owner is prohibited from giving a proxy to vote
the beneficial owners shares without instructions from the beneficial owner. As a
result, a broker non-vote will have the same effect as a no vote on the merger
proposal.
Vote Required for
Approval and Adoption of the Merger Agreement or Adjournment
Approval
and adoption of the merger agreement and the transactions contemplated thereby, including
the merger, as well as any vote to adopt a proposal to adjourn the Special Meeting
requires the affirmative vote of a majority of the voting power of our common stock and
Class B common stock, voting together as a class, held by stockholders entitled to vote
on the Record Date. The holders of common stock and Class B common stock are generally
entitled to one vote and five votes, respectively, for each share held on the Record
Date. Shares of Class B common stock represent 11.5% of our total voting power. Mr.
Daniel Glassman and his affiliates, who together own all the shares of Class B common
stock as well as shares of common stock, hold shares representing approximately 20.2% of
our total voting power as of the Record Date. Mr. Glassman has indicated that he and his
affiliates intend to vote in favor of approval of the merger agreement and the merger.
See also
Security Ownership of Certain Beneficial Owners and Management.
Method of Voting
Bradley
stockholders are being asked to vote the shares held directly in their name as
stockholders of record and any shares they hold in street name as beneficial owners.
Shares held in street name are shares held by a broker, dealer, bank or other financial
institution that serves as a stockholders nominee.
The
method of voting differs for the shares held by a record holder and the shares held in
street name. Record holders will receive proxy cards. Holders of shares in street name
will receive voting instruction cards in order to instruct their nominees on how to vote.
Bradley
stockholders may also vote by proxy by using the mail, telephone or the Internet. For
specific instructions on how to use the mail, telephone or the Internet to vote by proxy
for the Special Meeting, please refer to the instructions on your proxy card or voting
instruction card.
If
you are a stockholder of record, you may also vote in person at the Special Meeting. If
you hold shares in street name, you may not vote in person at the Special Meeting unless
you obtain a signed proxy from the record holder giving you the right to vote the shares.
You will also need to present photo identification and comply with the other procedures
described in
Special Meeting Admission Procedures
below.
Stockholders
may receive multiple copies of this proxy statement and multiple proxy cards or voting
instruction cards. For example, stockholders who hold shares in more than one brokerage
account will receive a separate voting instruction card for each brokerage account in
which shares are held. Bradley stockholders of record whose shares are registered in more
than one name will receive more than one proxy card.
Stockholders
should not forward any stock certificates with their proxy cards. In the event the merger
is completed, stock certificates should be delivered in accordance with instructions set
forth in a letter of transmittal, which will be sent to stockholders by the paying agent
promptly after the effective time of the merger.
Read
the voting instruction card(s) and proxy card(s) carefully. A stockholder should execute
all the proxy card(s) and voting instruction card(s) received in order to make sure all
of your shares are voted.
Grant of Proxies
All
shares of Bradley common stock and Class B common stock represented by properly executed
proxies or voting instruction cards received before or at the Special Meeting will,
unless the proxies or voting instructions are revoked, be voted in accordance with the
instructions indicated on those proxy cards or voting instruction cards. If no
instructions are indicated on a properly executed proxy card or voting instruction card,
the shares will be voted
FOR
(i) the approval and adoption of the merger agreement and
the transactions contemplated by the merger agreement and (ii) the adjournment of the
Special Meeting in the event that there are not sufficient votes at the time of the
Special Meeting to adopt the merger agreement. You are urged to mark the boxes on the
proxy card or the voting instruction card, as the case may be, to indicate how to vote
your shares.
We
are not aware of any matter that will be brought before the Special Meeting other than
(i) the proposal to approve and adopt the merger agreement and (ii) the proposal in favor
of adjourning the Special Meeting in
the event that there are not
sufficient votes at the time of the Special Meeting to adopt the merger agreement. If,
however, other matters are properly presented, the persons named as proxies will vote in
accordance with their judgment with respect to those matters, unless authority to do so
is specifically withheld on the proxy card or the voting instructions card, as the case
may be.
Revocation of Proxies
A
stockholder may revoke his or her proxy at any time before it is voted by:
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if
you are a record holder of Bradley common stock:
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notifying
in writing the Secretary of Bradley Pharmaceuticals at 383 Route 46 West, Fairfield, NJ
07004 that you wish to revoke your proxy;
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following
the instructions given for revoking or changing your vote using the
telephone or Internet voting procedures;
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completing,
signing, dating and mailing a subsequently dated proxy to our corporate Secretary; or
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appearing
in person and voting at the Special Meeting.
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if
you hold shares of Bradley common stock in street name, that is, with a
broker, dealer, bank or other financial institution, follow the instructions
from such nominee on how to revoke or modify your voting instructions.
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Attendance
at the Special Meeting will not in and of itself constitute revocation of a proxy.
Solicitation of Proxies
Bradley
will pay the expenses incurred in connection with the printing and mailing of this proxy
statement. Bradley will also request banks, brokers and other intermediaries holding
shares of Bradley common stock beneficially owned by others to send this proxy statement
to, and obtain proxies from, the beneficial owners and will reimburse the holders for
their reasonable expenses in so doing. Solicitation of proxies by mail may be
supplemented by telephone, telecopy, e-mail and other electronic means, advertisements
and personal solicitation by the directors, officers or employees of Bradley. No
additional compensation will be paid to our directors, officers or employees for such
solicitation.
Adjournment of Meeting
Although
it is not expected, the Special Meeting may be adjourned if a quorum is not present.
Bradleys bylaws permit adjournment without notice other than an announcement of the new
date, time and/or place of the adjourned Special Meeting by a majority vote of the shares
entitled to vote at the Special Meeting that are present in person or represented by
proxy and vote for the adjournment. In the event of an adjourned meeting at which a
quorum is present or represented by proxy, any business may be transacted that might have
been transacted at the original Special Meeting. If the adjournment is for more than 30
days, or if after the adjournment a new record date is fixed for the adjourned meeting, a
notice will be given to each stockholder of record entitled to vote at the Special
Meeting.
Special Meeting
Admission Procedures
You
should be prepared to present photo identification for admittance at the Special Meeting.
In addition, if you are a record holder of Bradley common stock or Class B common stock,
your name is subject to verification against the list of record holders of Bradley common
stock and Class B common stock on the Record Date prior to being admitted to the Special
Meeting. If you are not a record holder but hold shares in street name, that is, with a
broker, dealer, bank or other financial institution that serves as your nominee, you
should be prepared to provide proof of beneficial ownership on the Record Date, such as
your most recent account statement prior to the Record Date, or similar evidence of
ownership. If you do not provide photo identification or comply with the other procedures
outlined above upon request, you will not be admitted to the Special Meeting.
THE MERGER
Background of the
Merger
Since
becoming a publicly traded company in 1991, our senior management and the board of
directors have periodically reviewed and evaluated our business strategy and strategic
options including potential significant acquisitions in an effort to enhance stockholder value. As a part of those efforts, over the
past several years we have pursued various strategic opportunities, including the
purchase of rights to SOLARAZE
®
, ADOXA
®
and certain other assets of Bioglan
Pharmaceutical in 2004 for a purchase price of approximately $188 million, and the 2006 acquisition of rights to VEREGEN
and
ELESTRIN
from MediGene AG and BioSante Pharmaceutical, respectively, with aggregate payments through December 31, 2007 of approximately $33 million.
In August 2006, we also announced a number of initiatives to enhance long-term stockholder value.
At
a regular meeting of our board on March 8, 2007, Mr. Daniel Glassman, our founder,
director, President and Chief Executive Officer and holder of nearly all of our Class B
common stock, informed the board of directors that he had met with a number of investment
banks about potential merger and acquisition opportunities for Bradley, one of which
suggested a possible going private transaction led by Mr. Glassman. He said that he
would continue to explore such opportunities. At a regular meeting of our board on May 8,
2007, Mr. Glassman announced to the board that he was having conversations with private
equity firms, some of which were affiliates of investment banks, regarding a potential buy-out of Bradley. The board of directors agreed to
allow Mr. Glassman to proceed with formulating a bid.
Following
Mr. Glassmans announcement to the board of directors of his consideration of a going
private transaction, on May 21, 2007, the board, following a number of informal conference calls, approved by unanimous written consent
the formation of a special committee, comprised of independent and disinterested
directors elected by the holders of our common stock. The committee members are Seth W.
Hamot, Chairman, Douglas E. Linton and William J. Murphy. The board of directors also
approved a special committee charter that, among other things, delegated to the special
committee the responsibility to consider strategic alternatives for Bradley, including
the possibility of entering into a going private transaction with Mr. Glassman. The
special committee was granted the authority to assess, consider and review the terms of
potential transactions and, if determined to be appropriate by the special committee, to
make a recommendation regarding a specific transaction to the full board of directors. The special committee was also authorized under its charter to conduct negotiations with respect to any potential
transaction and to conduct and carry out such investigations and due diligence in relation to potential transactions as it
deemed necessary or advisable. In carrying out its obligations, pursuant to its charter, the special committee had the
authority to retain external advisors, including investment banks/financial advisors, legal counsel and accountants, as
the members of the committee considered necessary or advisable, and to authorize and direct management of Bradley with
respect to all aspects of the matters relating to a potential transaction. Following its formation,
the special committee promptly requested seven investment banks to submit written proposals
for retention as the special committees financial advisor.
On
May 29, 2007, Mr. Glassman delivered a letter to the board of directors containing a
proposal to acquire all of Bradleys outstanding shares of common stock and Class B
common stock for $21.50 per share in cash. According to the proposal letter, Mr. Glassman
intended to reinvest a substantial portion of his equity ownership of Bradley through
that transaction. The proposal letter also stated that Mr. Glassman had received
indications of willingness from One Equity Partners LLC (OEP) to provide the new cash
equity and from Credit Suisse Securities (USA) LLC (Credit Suisse) to underwrite the
debt financing. Mr. Glassmans wife, Iris Glassman, and his son Bradley Glassman, an
officer of Bradley, formed part of Mr. Glassmans group. We issued a press release on May
29, 2007 announcing receipt of Mr. Glassmans proposal. The closing price of our common
stock on May 25, 2007, which was the last trading day prior to our announcement of Mr.
Glassmans proposal, was $18.44. The closing price of our common stock on May 29, 2007
following our announcement of Mr. Glassmans proposal was $22.25.
On
May 31, 2007, the special committee conducted its first meeting at which it interviewed
and considered four internationally recognized investment banks for retention as the
special committees financial advisor. This meeting was the first of 30 special
committee meetings convened at least weekly, via teleconference or in
person, over the
next five months until the execution of the merger agreement with Nycomed US. At the May
31st meeting, the special committee discussed, among other things, the four investment
banks relevant industry experience, expertise in mergers and acquisition transactions
and in advising special committees as well as their independence. Following this
discussion, the special committee determined to retain Deutsche Bank Securities Inc.
(Deutsche Bank) as its financial advisor. The special committee also considered two law
firms and, after review of the qualifications and independence of both firms, determined
to retain Sills Cummis & Gross P.C. (Sills Cummis) as its legal counsel. Neither Deutsche Bank nor Sills Cummis had ever been retained by Bradley for any purpose other than as advisors to the
special committee.
On
June 4, 2007, the special committee next met to discuss a response to Mr. Glassmans
proposal and the process to be used to evaluate such proposal as well as other strategic
alternatives for Bradley. During the meeting, the representatives of Sills Cummis advised
the special committee of its fiduciary duties to our stockholders under Delaware law in
connection with a sale of Bradley.
At
the direction of the special committee, Sills Cummis requested that Mr. Glassman produce
to the special committee copies of all Bradley materials previously provided by him to
OEP and Credit Suisse in the course of the formulation of his bid and that, going
forward, he only provide confidential information to OEP and Credit Suisse upon specific
written directives from the special committee. On June 8, 2007, Proskauer Rose LLP
(Proskauer Rose), Mr. Glassmans counsel, delivered copies of the confidentiality
agreements executed by OEP and DLJ Merchant Banking, Inc., an affiliate of Credit Suisse,
with Mr. Glassman on behalf of the Company on March 22, 2007 and February 8, 2007,
respectively, to Sills Cummis. The requested Bradley materials were provided to Sills
Cummis by Proskauer Rose on June 11 and 12, 2007.
At
the June 4, 2007 special committee meeting, the special committee also made a
determination to run an auction for the sale of Bradley. During the remainder of June, at
the instruction of the special committee, Deutsche Bank contacted 81 potential buyers,
including 47 strategic buyers and 34 financial sponsors. These potential buyers were
identified by Deutsche Bank, which has worldwide experience and relationships in the pharmaceutical industry generally and the dermatological
products market specifically, with input from the special committee, based on, among other
things, the potential buyers experience in the pharmaceutical markets in which Bradley
operates and their perceived ability to complete a potential acquisition. Of these
potential buyers, 40 strategic buyers and 31 financial sponsors expressed an interest in
Bradley and were provided with a form of non-disclosure agreements. In addition, a number of potential bidders contacted Deutsche Bank because of the public announcement of Mr. Glassmans
proposal and the public announcement that the special committee had retained Deutsche Bank as its advisor to evaluate
strategic alternatives. In order to ensure an orderly, fair and efficient auction process, the form of non-disclosure agreement
included (1) a standstill provision, which, among other things, would prohibit the
potential bidder from acquiring Bradley shares except through the auction process for two years, and (2) a
non-exclusive financing provision, which would restrict a bidder from entering into
exclusive financing arrangements in connection with a bid for Bradley, because the special committee believed that exclusive arrangements could make it more difficult for other bidders to
obtain acquisition financing.
During
the later part of June and the early part of July, Deutsche Bank, based on information
provided by our management, prepared a Confidential Information Memorandum to be sent to
potential buyers. At its weekly meetings on July 2, 10 and 16, 2007 the special committee
discussed in detail the confidential information and documents provided by Mr. Glassman
to OEP and Credit Suisse, which included financial projections prepared in February 2007.
The February 2007 financial projections exceeded those prepared in July 2007 by
management for inclusion in the Confidential Information Memorandum. The special
committee determined to include within the Confidential Information Memorandum both the
July 2007 financial projections prepared by Bradley management as well as the February
2007 financial projections that were provided to OEP and Credit Suisse by Mr. Glassman. In addition, the Confidential Information Memorandum included information about Bradleys acquisition history, Bradleys
products, manufacturers, suppliers and customers, its intellectual property and employees, a discussion of Elestrins
launch and of Veregen manufacturing processes and timing, a management overview and an historical financial overview.
During the last two weeks in July, the Confidential Information Memorandum was sent to
the 17 strategic buyers and 14 financial sponsors that executed non-disclosure agreements
that contained at least a one-year standstill and a non-exclusive financing
provision. In order to identify serious bidders,
a preliminary bid instruction letter accompanied each Confidential Information Memorandum
and advised prospective purchasers to submit preliminary written bids for Bradley to
Deutsche Bank no later than 5:00 p.m., Eastern Time, on August 8, 2007.
During
this time, Sills Cummis had several discussions with Proskauer Rose and requested, among
other things, that Mr. Glassman, OEP and Credit Suisse enter into non-disclosure
agreements, containing standstill and non-exclusive financing provisions comparable to
those agreed to by other potential buyers. Neither Mr. Glassman nor OEP or Credit Suisse
signed such an agreement, and they did not participate further in the special committees
auction process.
At
its meeting on July 30, 2007, the special committee requested that Deutsche Bank discuss
the deteriorating conditions in the credit markets in the United States and globally and
their potential impact on the auction and potential bids for Bradley. Deutsche Bank
provided a detailed analysis, and concluded that it believed that while financial
sponsors may be less likely to bid for Bradley because their ability to finance an acquisition could be adversely affected, strategic buyers, especially those with
substantial liquidity, would be less likely to alter their interest in Bradley merely
because of the changes in the credit markets.
On
August 8, 2007, Deutsche Bank received seven preliminary non-binding first round bids
from strategic buyers, including Nycomed, which included six bids for 100% of our
outstanding stock with prices ranging from $20.00 to $25.00 per share and one bid to
acquire only our Kenwood Therapeutics business. The closing price of our common stock on
August 8, 2007 was $15.21.
On
August 9, 2007, the special committee met to review the preliminary bids. After extensive
review of the bids, the special committee decided to invite five parties who bid for the
entire company to participate in management presentations and to terminate discussions
with the sixth bidder for the entire company as the special committee felt at that time that the bid of $20.00
was too low. After being advised that its bid was too low, the sixth bidder raised its
bid and was invited to participate in the management presentations as well. The special
committee also determined that, although selling assets was a more complex, risky and
time-consuming process, Deutsche Bank should hold separate discussions with the buyer
interested solely in Kenwood Therapeutics. On August 9, 2007, the special committee
issued a press release announcing that it had received preliminary bids for a possible
sale of Bradley and was continuing to pursue a possible sale. The closing price of our
common stock on August 9, 2007 was $15.29. On August 17, 2007, a bid for only the Doak
Dermatologics business was received. After review, the special committee concluded that
the Doak Dermatologics-only bid was too low and it was rejected. The closing price of our
common stock on August 16, 2007 was $17.84.
On
August 9, 2007, Bradley released its results of operations for the quarter ended June 30,
2007. Bradley reported a net loss of $1.67 million primarily due to a decline in ADOXA
®
product
sales. During the second quarter, the ADOXA
®
150 mg tablets, which
accounted for approximately 15% of 2006 gross sales, faced generic competition for the
first time. In addition, in April 2007, Bradley implemented a returns and inventory
optimization plan designed to reduce future returns by decreasing customer inventory in
the channel and to ship products with increased shelf-life to wholesalers by improving
product production planning. Bradley believes the implementation of the plan contributed
to lower revenues in the second quarter of 2007 compared to prior quarters. In the second
quarter of 2007, Bradley also experienced significantly increased selling, general and
administrative expenses related to higher salary and salary related expenses, primarily
in the sales area, an increased provision for bad debt and higher advertising and
promotion expenses, primarily related to the ELESTRIN
launch as well as
increases in professional fees primarily related to the auction process. The operating
results were lower than consensus analysts estimates of net income and revenue.
Following the release of such information, all analysts lowered earnings per share
estimates for Bradley, citing loss of profitability and uncertain future as the reasons
for the downgrade.
During
the weeks of August 13 and 20, 2007, the six bidders and their representatives attended separate but identical management presentations (except that the bidder for Kenwood Therapeutics only received information as to the Kenwood division)
in which management reviewed the information provided in the Confidential Information Memorandum in greater detail, and Deutsche Bank and our management were available to address
follow-up due diligence questions. In addition, beginning the week of August 20th, the
six bidders were provided with identical access (except that the bidder for Kenwood Therapeutics only had access to information concerning the Kenwood division)
to a virtual data room that contained confidential
information regarding our business, operations, plans, financial condition and other
related matters. Due to the competitive nature of the pharmaceutical industry and in
order to protect both Bradley and the value to be received by the final bidder, the
special committee decided, after extensive discussion, to limit access to the most
sensitive information about Bradley, such as product pipelines, royalty payments,
milestones and distribution agreement terms, during the initial rounds of due diligence.
Between
August 29, 2007 and September 12, 2007, three bidders dropped out of the bidding process
including the bidder who was interested in only Kenwood Therapeutics.
On
September 11, 2007, the special committee sent out a final bid instruction letter to the four
remaining bidders, including Nycomed, together with a form of merger agreement. The
letter requested that each bidder submit a final revised bid together with comments to
the merger agreement in the form of a revised agreement that it would be willing to
execute. On September 25, 2007, Deutsche Bank received second round bids from Nycomed and
another bidder for the acquisition of the entire company for $24.00 per share in cash,
together with their mark-ups of the merger agreement. Another of the four final bidders
from the first round submitted a letter reaffirming its interest in Bradley but declined
to submit a binding bid due to difficulty obtaining financing. The remaining bidder from
the first round decided not to submit a second round bid, concluding that it would only
be willing to submit a bid in the range of or at a small premium above the then current
per share market price. The closing price of our common stock on September 24, 2007 was
$17.05.
The
other second round bidder indicated that it would be able to finance its bid through
existing cash and debt financing while Nycomed indicated that it would finance its bid
using existing cash and committed equity
from its existing equity partners.
Both bidders asked for additional due diligence materials. Specifically, both bidders
requested the sensitive information that had been withheld from bidders in the second
round including pipeline information and royalty rates.
On
September 27, 2007, the special committee met to discuss the remaining two bids, one of
which was from Nycomed. The price per share of both of the remaining bids was identical.
At that meeting, the special committee decided to send both bidders nearly identical
revised merger agreements and discussed the procedures and timing of providing various
levels of requested sensitive information.
In
early October 2007, Bradley provided the two bidders with preliminary third quarter
financial results in the form of an income statement and limited additional supporting
documentation. These preliminary results reflected managements understanding that third
quarter results would miss the Bradley budget, as prepared in July 2007.
At
a special committee meeting on October 4, 2007, Deutsche Bank reported that after several
conversations, the other bidder had agreed to provide comments to the proposed merger
agreement or set up a conference call to negotiate the merger agreement only after
receiving access to Bradleys sensitive documents. At its meeting on October 4, 2007, the
special committee continued to discuss various ways in which the bidders might be
provided additional information without prematurely allowing them access to the sensitive
information. Sills Cummis reported that negotiations with Nycomed were progressing and
that revised drafts of the merger agreement had been exchanged with Nycomeds counsel,
Dorsey & Whitney LLP (Dorsey & Whitney), and reported on the material issues
raised by the revised merger agreements. Over the next several weeks, representatives
from Sills Cummis negotiated with Nycomeds legal counsel to finalize the terms of the
merger agreement. These negotiations focused on, among other things, certainty of
closing, provisions relating to deal protection, conduct of business prior to closing and
the actions that Nycomed must take to obtain antitrust approval of the transaction. In addition, because the special committee had engaged in an extensive and public auction process and because it believed
that a bidder would not be willing to execute a merger agreement without such a provision, the special committee agreed to
include a covenant in the merger agreement prohibiting Bradley from actively soliciting alternative proposals after the
merger agreement was signed, which covenant explicitly reserved to Bradley the right both to furnish information to and
conduct negotiations with third parties that make unsolicited acquisition proposals and to accept superior proposals
(each as defined in
The Merger Agreement No Solicitation/
Fiduciary Out Right to Terminate
).
On
October 9, 2007, the other bidder withdrew its bid and withdrew from the process
explaining that after further due diligence it could no longer support its prior
valuation of Bradley and its previous bid of $24.00 price per share. As a follow up,
Deutsche Bank held conversations with the financial advisor to this bidder. During these
conversations, the financial advisor indicated that, while its client could not justify
the $24.00 per share price contained in its previously submitted bid, they should be
contacted again in the future should the special committee be willing to discuss a value
for Bradley in the range of $20.00 to $22.00 per share. Further, the other bidder
explained that there were significant contract issues that it did not think could be
overcome and that it was unwilling to follow the special committees auction process and
negotiate the merger agreement before being permitted access to Bradleys sensitive
information. After lengthy deliberations, the special committee decided that the
outstanding contract issues, particularly this bidders insistence, as a condition of a
transaction, on a voting agreement with Daniel Glassman and his family, without the
ability to change their vote, if necessary, to comply with any fiduciary obligations and the conditions upon which the bidder had the right to terminate the merger agreement,
made it inappropriate at that stage of the negotiations to provide this bidder with
access to Bradleys most sensitive information.
At
a special committee meeting held on October 10, 2007, Deutsche Bank reported that Nycomed
had expressed concern over the preliminary third quarter financial results (subject to
review by external accountants) and requested that it receive the final third quarter
results before being asked to submit a final bid. At that meeting, the special committee
decided that, given the near final status of the merger agreement negotiations, it would
begin to provide limited access to certain of our sensitive information to Nycomed.
On
October 11, 2007, representatives of Nycomed and Dorsey & Whitney were provided
limited access to Bradleys sensitive information at Sills Cummis offices in Newark, New
Jersey.
At
a special committee meeting held on October 12, 2007, the special committee agreed to
provide Nycomed with copies of our preliminary third quarter financial reports in the
form that would be submitted to our auditors, when available. On October 20, 2007,
preliminary third quarter financial reports were provided to Nycomed as well as
supporting detail.
On
October 23, 2007, the special committee received a final binding bid from Nycomed to
purchase all of our common stock and Class B common stock for $20.00 per share in cash.
The final bid included a revised
merger agreement and executed copies
of the equity commitment letters in the form previously agreed. Representatives from
Nycomed indicated to representatives of Deutsche Bank on several calls that the offer was
its best and final offer and would not be increased. The closing price of our common
stock on October 23, 2007 was $16.47.
On
October 24, 2007, Nycomed proposed that Nycomed US Inc. be the purchasing entity and the
party to the merger agreement. Nycomed US Inc. is an indirect subsidiary of Nycomed
S.C.A., SICAR, the ultimate parent of the Nycomed group. Sills Cummis, on behalf of the
special committee, requested non-consolidated financial information for Nycomed US Inc.
and other information necessary to assess its financial ability to complete the
transaction and fulfill all of Nycomeds obligations under the merger agreement.
Thereafter, Sills Cummis held further negotiations with Dorsey & Whitney, resulting
in the parties reaching agreement on October 25, 2007 that Nycomed S.C.A., SICAR would
provide Bradley with a guaranty of Nycomed US Inc.s performance and payment obligations
under the merger agreement.
On
the morning of October 24, 2007, the special committee held a meeting at the offices of
Sills Cummis in Newark, New Jersey to review the final bid received from Nycomed.
Representatives of Sills Cummis advised the special committee of its fiduciary duties to
our stockholders under Delaware law in connection with a sale of Bradley. At that
meeting, Deutsche Bank summarized the financial implications of Nycomeds bid and Sills
Cummis reviewed the proposed merger agreement and any remaining issues raised by
Nycomeds revised merger agreement. The special committee engaged in extensive
discussions regarding the Nycomed proposal and alternatives thereto. In particular, the
special committee focused on Bradleys net losses and other financial results during the
last two quarters including that the results had not met the projections prepared in July 2007, the disappointing results of the launch of
Elestrin and the risks surrounding a successful launch of Veregen, and the risks associated with our business plan, the fact that the
Nycomed proposal represented a 25% premium over the current stock price and the favorable
terms and perceived likelihood of consummation associated with
the Nycomed proposal. The
committee also discussed, and sought Deutsche Banks views regarding, whether other
bidders who had previously withdrawn from the process might reemerge and provide a
superior bid. The committee instructed Deutsche Bank to contact the other bidder that had
withdrawn from the final round and inquire as to whether it would be interested in
submitting a bid in the $20.00 to $22.00 per share range, and also instructed Deutsche
Bank to contact Mr. Glassman and determine if he planned to submit a bid.
On
October 24, 2007 and October 25, 2007, Deutsche Bank had several conversations with the
other bidder that had withdrawn from the final round regarding its possible interest in
re-entering the process at the lower price and submitting a final bid. During those
discussions, Deutsche Bank indicated the special committees willingness to discuss
providing this bidder with access to Bradleys sensitive information (as previously provided to Nycomed), on an expedited
basis, contemporaneously with merger agreement negotiations. On the afternoon of October
25, 2007, that other bidder called Deutsche Bank and informed them that it would not be
submitting a bid and was no longer interested in pursuing a transaction with Bradley. Mr.
Glassman also informed the special committee that he did not intend to submit a bid in
the auction at that time and that the Committee should proceed with the remaining bidder.
On
October 25, 2007, the special committee held a telephonic meeting to review again the
Nycomed proposal and discuss strategic alternatives. Deutsche Bank reviewed in detail
certain financial analyses relating to the Nycomed proposal. The special committee also
discussed various alternatives to the Nycomed proposal and the likely negative impact on
our stock price of certain factors, including, among others, the public release of the
lower than expected third quarter financial results and the possible termination of the
auction process without a sale. Deutsche Bank also provided the special committee with a
detailed analysis of current conditions in the credit markets in the United States. Deutsche Bank noted that, while lending volumes showed that credit markets had been robust in May and June during the
period when Mr. Glassman made his initial proposal, there had been a large drop in volume in July and August with the
markets recovering slightly in September and October but still remaining far below the levels of May and June. Deutsche
Bank further stated that the current credit market was challenging for any bidder who needed credit to finance a
transaction based on Bradleys balance sheet.
The special committee then concluded that it was highly unlikely that either Mr. Glassman or
the bidder who had submitted a letter on September 11, 2007 reaffirming its interest in
Bradley (but had declined to submit a binding bid due to difficulty obtaining financing
at that time) would be able to reenter the process at the present time and fund either of
their bids due to current conditions in the credit markets.
Between
October 25, 2007 and October 27, 2007, Sills Cummis, Morgan Stanley, Nycomeds financial
advisor, Deutsche Bank, Dorsey & Whitney and Nycomed participated in several
conference calls to negotiate and finalize the merger agreement and related disclosure
schedules.
On
the afternoon of October 28, 2007, the special committee convened a telephonic meeting to
consider its recommendation with respect to the approval of the Nycomed proposal, the
merger and the merger agreement.
Representatives of Sills Cummis
advised the special committee of its fiduciary duties to our stockholders under Delaware
law in connection with a sale of Bradley. At the meeting representatives of Deutsche Bank
reviewed the history of negotiations and the auction process in general, certain
financial analyses of the Nycomed proposal and delivered its opinion to the effect that,
as of the date of such opinion, based upon and subject to the assumptions made, matters
considered and limits of review set forth therein, the merger consideration of $20.00 in
cash per share to be received by the holders of the outstanding shares of Bradley common
stock, other than Mr. Daniel Glassman and his affiliates, was fair from a financial point
of view. See
Opinion of The Special Committees Financial Advisor.
Sills Cummis
reviewed with the committee the final changes to the merger agreement and the guaranty,
and reported that the merger agreement and disclosure schedules were in substantially
final form. Following careful consideration of the proposed merger agreement, the
financial analysis and opinion delivered by Deutsche Bank and the various factors
described under
Reasons for the Merger; Recommendations of Our Special Committee
and Board of Directors,
the special committee by unanimous vote determined that the
merger agreement and the merger were advisable and in the best interests of Bradleys
stockholders, approved the merger and the merger agreement, and recommended that the
board of directors approve and adopt the merger agreement and the merger.
On
October 29, 2007, Bradleys board of directors, other than Mr. Glassman, who did not
participate, convened to consider the proposed merger with Nycomed. Following discussion
and consideration, including of the various factors described under
Reasons for
the Merger; Recommendation of the Special Committee and Our Board of Directors,
the
board, other than Mr. Glassman who did not participate, unanimously approved and
authorized the execution of the merger agreement and resolved to recommend approval and
adoption of the merger agreement and the merger to our stockholders on the terms
discussed at the board meeting. Following the board meeting, the parties finalized the
merger agreement and disclosure schedules and executed the merger agreement.
On
the morning of October 30, 2007, Bradley and Nycomed issued separate press releases
announcing the execution of the merger agreement.
On
November 26, 2007, Mr. Glassman advised Bradley that he and the other persons
constituting the members of his group had withdrawn their proposal to acquire Bradley and
expressed their intention to support the merger with Nycomed.
Reasons for the
Merger; Recommendations of Our Special Committee and Board of Directors
The
special committee, consisting solely of disinterested independent directors elected by
holders of our common stock, and acting with the assistance of the special committees
legal and financial advisors in evaluating the merger, has determined that the merger is
in the best interest of Bradley and its stockholders, declared it advisable to enter into
the merger agreement and recommended, by unanimous vote, that the board of directors
approve and adopt the merger and the merger agreement.
In
reaching its determination, the special committee considered the following factors and
potential benefits of the merger, each of which the special committee believed supported
its decisions:
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the
belief that the merger and the merger consideration of $20.00 per share was
more favorable to stockholders than the alternative of remaining a
stand-alone independent company, because of the uncertain returns to
stockholders if we remained independent (taking into account, in particular,
managements projections of our future financial performance and the risks
involved in achieving projected financial results);
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the
potential stockholder value that could be expected to be generated from the
other strategic alternatives available to us;
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the
belief that the cash consideration of $20.00 per share was likely the most
favorable financial terms that could be obtained from Nycomed, and that
further negotiation could have caused Nycomed to abandon the transaction;
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the
belief that the termination of the auction process without a sale of Bradley
would have a negative impact on our stock price;
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certain
financial analyses of Deutsche Bank, as well as the opinion of Deutsche Bank
to the effect that, as of October 28, 2007, and based upon and subject to the
respective factors, assumptions and limitations set forth in the opinion, the
$20.00 per share in cash consideration to be received by the holders of our
common stock (other than Mr. Daniel Glassman and his affiliates) was fair,
from a financial point of view to such holders (see
Opinion of the
Special Committees Financial Advisor
);
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the
merger consideration consists solely of cash, which provides immediate
liquidity and certainty of value to our stockholders compared to a
transaction in which stockholders would receive stock;
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the
fact that the special committee, with the assistance of Deutsche Bank,
conducted an extensive and thorough publicly-disclosed strategic alternatives
review and auction process over five months, which included Deutsche Bank
contacting 81 parties that might have been interested in acquiring Bradley to
solicit their interest in making an acquisition proposal, and that, of the 81
parties, only Nycomed submitted a final binding proposal;
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the
current and historical market prices of our common stock and the fact that
the price of $20.00 per share represented a premium of 25% over the market
closing price of $16.00 on October 29, 2007, the last trading day prior to
the announcement of the proposed transaction with Nycomed, and a premium of
approximately 31% percent over the market closing price of $15.29 on August
9, 2007, the last trading day prior to our public announcement of the receipt
of non-binding preliminary bids in connection with the possible sale of
Bradley;
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the
fact that following the release of our second quarter of 2007 financial
results, all analysts lowered earnings per share estimates for Bradley,
citing loss of profitability and uncertain future as reasons for the
downgrade, and that during the second quarter of 2007 ADOXA
®
150 mg
tablets, which accounted for approximately 15% of 2006 gross sales, faced
generic competition for the first time, all of which the special committee
believed might be reflected in the price of our common stock in the future;
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the
fact that there were significant risks associated with our ability to launch VEREGEN
by
the end of 2007 and to maintain or increase sales of ELESTRIN
;
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the
fact that third quarter of 2007 financial results were expected to fall below
analysts then estimates and the special committees assessment of the
potential impact on the price of our common stock of the announcement of such
results;
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the
belief that while improvements in our operating performance could yield
improved operating results, the achievement of such improvements is uncertain
and subject to significant execution risk, including, without limitation,
competition from generic or therapeutically equivalent products, the
development of new competitive pharmaceutical and technological advances to
treat the conditions addressed by the core branded products, marketing or
pricing actions by one or more of our competitors, the effectiveness
of our sales and marketing efforts and manufacturing or supply
interruptions;
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the
fact that the strength and liquidity of the private equity and debt financing
markets have recently deteriorated, which has made the acquisition of Bradley
more difficult for a buyer seeking financing, and the fact that if current
market conditions persist or deteriorate further, such conditions could be
even less conducive to an acquisition of Bradley in the future;
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the
financial and other terms and conditions of the merger agreement, as reviewed
by Sills Cummis, which were the product of extensive negotiations between the
special committee and Nycomed and their respective advisors, including that:
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the
merger is not subject to any financing condition;
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Nycomed
USs ultimate parent, Nycomed S.C.A., SICAR, has entered into a
guaranty of all of Nycomed USs payment and performance obligations
under the merger agreement;
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Bradley
is permitted to furnish information to and conduct negotiations with
third parties that make an unsolicited acquisition proposal (as
defined in
The Merger Agreement No Solicitation/
Fiduciary Out
Right to Terminate
) in certain circumstances;
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subject
to compliance with the terms and conditions of the merger agreement, if a third party has
proposed an alternative transaction that is a Superior Proposal, the
board of directors is permitted, by a majority vote of the
disinterested members of the board of directors (after consultation with its
outside legal counsel and financial advisors), prior to the adoption of
the merger agreement by the stockholders, to change its recommendation,
approve or recommend the superior proposal or, upon the payment to
Nycomed of a reasonable break-up fee, terminate the merger agreement in order to enter
into a definitive agreement with respect to the superior proposal, as
more fully described below under
The Merger Agreement Board
Recommendation of Withdrawal and Termination in Connection with a Superior
Proposal;
and
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the
merger agreement is subject to a limited number of conditions, and the
special committee believes, after review with its legal advisors, that
the conditions to the merger have a high likelihood of being satisfied
(see
The Merger Agreement Conditions to the Merger
);
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the
special committees belief, after consultation with its legal and financial
advisors, that the termination fee of 3% of the aggregate merger
consideration (or approximately $10 million) that may become payable (and the
circumstances when such fee is payable) and the requirement to reimburse
Nycomed for certain reasonable out-of-pocket expenses in the event that the
merger agreement is terminated under certain other circumstances are
reasonable in light of the facts and circumstances surrounding the merger,
the benefits of the merger, commercial practice and transactions of this size
and nature;
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the
likelihood that the merger will be completed, including the special
committees belief that there will not be any significant antitrust risk in
connection with the transaction;
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the
likelihood that the merger will be completed, in light of the financial capabilities of
Nycomed; and
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the
fact that holders of the common stock and Class B common stock will have an
opportunity to vote on the merger and have the right to dissent and seek a
judicial appraisal of their shares if such holders comply with the
requirements of Delaware law concerning dissenters rights.
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The
special committee also considered the following potentially negative factors concerning
the merger agreement and the merger, including the following:
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that
Bradley will no longer exist as an independent public company and our
stockholders will forgo any future increase in the value that might result
from future earnings or possible growth as an independent company or the
benefits of synergies resulting from the merger;
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that
the receipt of cash by the stockholders in exchange for shares of our common
stock pursuant to the merger would generally be a taxable transaction for
U.S. federal income tax purposes;
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certain
of our directors and executive officers may have conflicts of interest in
connection with the merger, as they may receive benefits that are different
from, and in addition to, those of the other stockholders, as described below
under
Interests of Bradley Directors and Executive Officers;
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the
restrictions on the conduct of business prior to the consummation of the merger;
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the
risks and costs to Bradley if the merger does not close, including the
diversion of management and employee attention, employee attrition and the
effect on existing business relationships;
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the
merger agreement precludes us from actively soliciting alternative proposals;
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the
possibility that the termination fee of 3% of the aggregate merger
consideration (or approximately $10 million) payable under specified
circumstances may discourage a competing proposal to acquire Bradley;
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that
the price being paid for each share of the common stock and Class B common
stock in the merger is approximately 20% below the 52 week high sales price
of our common stock of $25.00 on December 20, 2006; and
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the
risk that entering into the merger agreement may result in the loss of
interest by other parties to make a definitive proposal for our acquisition
at a price that may be higher than the $20.00 per share to be received by the
stockholders.
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The
special committee considered all of the factors listed above as a whole and decided that
in their totality such factors supported the decision to recommend that the board of
directors approve and adopt the merger agreement and the merger. The discussion of the
information and factors considered by the special committee is not intended to be
exhaustive and may not include all of the factors considered by the special committee. In
view of the wide variety of factors considered by the special committee, and the
complexity of these matters, the special committee did not find it practicable and did
not quantify, rank or otherwise assign relative or specific values to any of the above
factors or the other factors considered by it. In addition, the special committee did not
reach any specific conclusion on each factor considered, but conducted an overall
analysis of these factors. Individual members of the special committee may have given
different weight to different factors.
Our
board of directors, based largely on the factors described below, on October 29, 2007,
(i) determined in good faith that the merger agreement and the transactions contemplated
thereby, including the merger, are advisable and in the best interests of our
stockholders, (ii) approved and adopted the merger agreement and the transactions
contemplated thereby, including the merger, and (iii) recommended approval and adoption
of the merger agreement and the merger and the principal terms thereof by our
stockholders. In reaching these determinations, our board considered and relied upon,
among other factors, (a) the financial presentation of Deutsche Bank that was prepared
for the special committee and that was delivered to the board of directors at the request
of the special committee, as well as the fact that the special committee received an
opinion delivered by Deutsche Bank as to the fairness, from a financial point of view, to
our common stockholders (other than Mr. Daniel Glassman and his affiliates) of the merger
consideration to be received by such holders in the merger; (b) the unanimous
recommendation and analysis of the special committee, as described above; (c) the board
of directors review of the terms and conditions of the merger agreement; (d) information
provided by Sills Cummis and Deutsche Bank regarding the procedures followed by the
special committee during the auction process; and (e) the advice of Morrison & Foerster
LLP, Bradleys legal advisor. Mr. Glassman did not participate in our boards
deliberations or voting with respect to the merger.
The
foregoing discussion summarizes the material factors considered by our board of directors
in its consideration of the merger. In view of the wide variety of factors considered by
our board of directors and the complexity of these matters, our board of directors did
not find it practicable to quantify or otherwise assign relative weights to the foregoing
factors. In addition, individual members of our board of directors may have assigned
different weights to various factors. The board of directors approved and recommends the
merger agreement and the merger based upon the totality of the information presented to
and considered by it.
Our board of directors
recommends that you vote FOR approval and adoption of the merger agreement.
In
considering the recommendations of our special committee and our board of directors with
respect to the merger, you should be aware that certain of our directors and executive
officers have interests in the merger that are different from, or are in addition to, the
interests of our stockholders generally. Please see
Interests of Bradley
Directors and Executive Officers
below.
Opinion of the Special
Committees Financial Advisor
Deutsche
Bank has acted as financial advisor to the special committee in connection with the
merger. The special committee retained Deutsche Bank to render to it an opinion, as
investment bankers, as to the fairness, from a financial point of view, of the
Consideration to be received by the stockholders of Bradley, other than Mr. Daniel
Glassman and his affiliates (the Excluded Persons). As used in this section, the term
Consideration refers to the $20.00 in cash per share merger consideration contemplated
in the merger agreement.
On
October 28, 2007, Deutsche Bank delivered to the special committee its oral opinion,
which opinion was subsequently confirmed in writing, that, as of that date and based upon
and subject to the assumptions
made, matters considered and limits
of review set forth in its written opinion, the Consideration to be received by the
holders of outstanding shares of Bradley common stock, other than the Excluded Persons,
was fair, from a financial point of view.
The
full text of Deutsche Banks written opinion dated October 28, 2007, which discusses,
among other things, the assumptions made, matters considered and limits on the review
undertaken by Deutsche Bank in connection with the opinion, is attached as Annex C to
this proxy statement and is incorporated herein by reference. Deutsche Banks opinion was
addressed to the special committee and was limited to the fairness, from a financial
point of view, of the Consideration to be received by the holders of the outstanding
shares of Bradley common stock, other than the Excluded Persons, and Deutsche Bank
expressed no opinion as to the merits of the underlying decision by Bradley to engage in
the merger, the relative merits of the merger as compared to any alternative that might
be available to Bradley, the underlying business decision by Bradley to engage in the
merger or the terms of the merger agreement or as to how any holder of shares of Bradley
common stock should vote with respect to the merger. In addition, Deutsche Bank did not
express any view or opinion as to the fairness, financial or
otherwise, of the amount or
nature of any compensation payable to or to be received by Bradleys officers, directors
or employees, or any class of such persons, in connection with the merger relative to the
Consideration. Deutsche Banks opinion was authorized for issuance by the Fairness
Opinion and Valuation Review Committee of Deutsche Bank. Bradleys stockholders are urged
to read the opinion in its entirety. The following summary of the Deutsche Bank opinion
is qualified in its entirety by reference to the full text of the opinion.
In
connection with Deutsche Banks role as financial advisor to the special committee, and
in arriving at its opinion, Deutsche Bank:
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reviewed
certain publicly available financial and other information concerning Bradley;
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reviewed
certain internal analyses and other non-public information provided to it by Bradley;
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|
prepared, with the guidance of the special committee, a sensitivity analysis of Bradleys financial projections for 2008
based on projections for 2008-2011 prepared by the Companys management (the Management Case) and adjusted those
projections to reflect the variance between managements projections and actual results in the second and third quarter of
2007 (the Sensitivity Case). According to the Management Case, EBITDA for 2008 was projected to be $55 million, and
under the Sensitivity Case EBITDA for 2008 was projected to be $39 million. There is no difference in the growth rates
for 2009-2011 between the Management Case and the Sensitivity Case. EBITDA represents operating income before
depreciation and amortization. EBITDA is not a recognized term under U.S. generally accepted accounting principles;
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held
discussions with members of senior management of Bradley regarding its business and
prospects;
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reviewed
the reported prices and trading activity for Bradleys common stock;
|
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|
compared
certain financial and stock market information for Bradley with similar
information for certain other companies whose securities are publicly traded;
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reviewed
the financial terms of certain recent business combinations that it deemed
comparable, in whole or in part, to the merger;
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|
reviewed
the terms of a draft of the merger agreement dated October 28, 2007, which
was the last draft available prior to Deutsche Bank delivering its opinion to
the special committee, and certain related documents; and
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performed
such other studies and analyses and considered such other factors as it deemed
appropriate.
|
Financial forecasts and projections are subjective in many respects and reflect numerous assumptions, including with
respect to general business, economic, market and financial conditions and other matters. None of Bradley, Deutsche
Bank, or any of their respective affiliates or representatives makes any representation to any person regarding the
financial forecasts and projections. Stockholders are cautioned not to place undue reliance on the financial forecasts
and projections because they are subject to a variety of risks, uncertainties, and other factors that could cause actual
results to differ materially. There can be no assurance that the financial forecasts and projections will be
achieved.
Deutsche
Bank did not assume responsibility for independent verification of, and did not
independently verify, any information, whether publicly available or furnished to it,
concerning Bradley, including, without limitation, any financial information, forecasts
or projections considered in connection with the rendering of its opinion. Accordingly,
for purposes of its opinion, Deutsche Bank assumed and relied upon the accuracy and
completeness of all such information and Deutsche Bank did not conduct a physical
inspection of any of the properties or assets, and did not prepare or obtain any
independent evaluation or appraisal of any of the assets or liabilities, of Bradley. With
respect to the financial forecasts and projections made available to Deutsche Bank and
used in its analyses, Deutsche Bank assumed that they were reasonably prepared on bases
reflecting the best currently available estimates and judgments of the management of
Bradley as to the matters covered thereby. In rendering its opinion, Deutsche Bank
expressed no view as to the reasonableness of such forecasts and
projections or the assumptions on
which they are based. Deutsche Banks opinion was necessarily based upon economic, market
and other conditions as in effect on, and the information made available to it as of, the
date of its opinion. Deutsche Bank has not agreed or undertaken to update, reaffirm or
revise its opinion or otherwise comment upon any events occurring after the date of its
opinion and does not have any obligation to update, reaffirm or revise its opinion.
For
purposes of rendering its opinion, Deutsche Bank assumed that, in all respects to its
analysis:
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the
final terms of the merger agreement did not differ materially from the terms
set forth in the draft of the merger agreement dated October 28, 2007;
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|
the
representations and warranties of Bradley, Nycomed US and Merger Sub contained in the
merger agreement are true and correct;
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Bradley,
Nycomed US and Merger Sub will each perform all of the covenants and
agreements to be performed by it under the merger agreement;
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all
conditions to the obligations of each of Bradley, Nycomed US and Merger Sub to consummate
the merger will be satisfied without any waiver thereof;
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all
material governmental, regulatory or other approvals and consents required in connection
with the consummation of the merger will be obtained; and
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in
accordance with Bradleys certificate of incorporation, each share of Bradley
common stock and Class B common stock is entitled to receive the same
consideration in the merger and (despite the differing voting rights) have
identical values.
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Deutsche Banks
Financial Analysis
The
following is a summary of the material financial analyses underlying Deutsche Banks
opinion, dated October 28, 2007, delivered to the special committee in connection with
the merger at a meeting of the special committee on October 28, 2007. The order of the
analyses described below does not represent relative importance or weight given to those
analyses by Deutsche Bank or the special committee. The financial analyses summarized
below include information presented in tabular format. In order to fully understand
Deutsche Banks financial analyses, the tables must be read together with the text of
each summary. The tables alone do not constitute a complete description of the financial
analyses. Considering the data below without considering the full narrative description
of the financial analyses, including the methodologies and assumptions underlying the
analyses, could create a misleading or incomplete view of Deutsche Banks financial
analyses.
Historical
Stock Performance and Premium Paid
. Deutsche Bank reviewed and analyzed recent and
historical market prices and trading volume of Bradleys common stock and compared such
market prices to the Consideration to be received in connection with the merger. Deutsche
Bank evaluated the Consideration in comparison to the market price for the common stock
on October 26, 2007, the last trading day prior to the delivery of its opinion; August 9,
2007, the last trading day prior to the special committees announcement that it had
received non-binding bids and was continuing the sale process; May 25, 2007, the last
trading day prior to Mr. Daniel Glassman making his initial offer for all outstanding
shares of Bradley common stock; the 10-day and 30-day trading day averages for the period
ended October 26, 2007; and the 52-week high and low closing price of the common stock
for the period ended October 26, 2007. The results of Deutsche Banks analysis are set
forth below:
Premium to
|
Price
|
Premium
(Discount)
|
|
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Closing price as of 10/26/07
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|
$15.71
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27.3
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%
|
Closing price as of 08/09/07
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|
$15.21
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31.5
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%
|
Closing price as of 05/25/2007
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$18.44
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8.5
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%
|
10-day average
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$16.27
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22.9
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%
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30-day average
|
|
$17.08
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17.1
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%
|
52-week high
|
|
$25.00
|
|
(20.0
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%)
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52-week low
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|
$14.06
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42.2
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%
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In
addition, Deutsche Bank reviewed the premiums received by shareholders of a select group
of target companies in 34 prior transactions in the healthcare and pharmaceutical
industries since February 24, 2000 and compared those to the premium represented by the
Consideration. The group of target companies were selected from transactions that were announced from 2000 to 2007, were
100% cash transactions between $200 million and $700 million and in which the target was a U.S. based healthcare company. The premiums were calculated based on the value of the consideration offered
as compared to the closing price of the target companys common stock on the trading day
prior to the announcement of the transaction. Deutsche Bank observed that for these
transactions, the highest one day premium paid was 71.6%, the lowest was 1.7%, the median
was 34.3% and the average was 34.2%.
Deutsche
Bank noted that the reasons for, and circumstances surrounding, each of the transactions
reviewed were diverse and that the premiums fluctuated based on perceived growth,
synergies, strategic value, trading history and other factors. None of the targets in the
reviewed transactions is identical to Bradley and, accordingly, Deutsche Banks analysis
of these transactions necessarily involved complex considerations and judgments
concerning the differences in financial and operating characteristics and other factors
that would necessarily affect the comparison of the percentage purchase price premium
implied by the merger versus the percentage purchase price premiums of these transactions.
Analysis
of Selected Publicly Traded Companies
. Deutsche Bank reviewed certain publicly available
financial information and compared commonly used valuation measurements for Bradley to
corresponding information and measurements for publicly traded companies in the same
industry. The companies used in Deutsche Banks Selected Publicly Traded Companies analysis were selected because of their
therapeutic market focus, products, growth potential, size, regulatory risk, and competitive risk, among other relevant
factors. The publicly traded companies selected in the industry to which Bradley was
compared (the Selected Companies) consisted of:
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Barrier
Therapeutics, Inc.;
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CollaGenex
Pharmaceuticals, Inc.;
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Endo
Pharmaceutical Holdings, Inc.;
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King
Pharmaceuticals, Inc.;
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Salix
Pharmaceuticals, Ltd.;
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Sciele
Pharma, Inc.; and
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Valeant
Pharmaceuticals International.
|
Deutsche
Bank reviewed certain historical and projected operating performance characteristics and
public market valuation metrics of Bradley and compared them to those same metrics
derived from publicly available information for each of the Selected Companies. The
trading multiples for Bradley are based on the Consideration of $20.00 in cash per share.
Such information included:
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|
the
ratio of total enterprise value (TEV) to earnings before interest, taxes,
depreciation and amortization for the last twelve months (LTM EBITDA)
(referred to as the TEV/LTM EBITDA Multiple); and
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the
ratio of share price to earnings per share as estimated by management for 2007 and 2008
(referred to as the 2007 E P/E Multiple and the 2008E P/E Multiple,
respectively).
|
This
analysis indicated the low, mean, median and high multiples for the Selected Companies,
as compared to the corresponding transaction multiples implied by the Consideration as
set forth below:
|
|
|
Price/Earnings
|
|
|
|
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|
TEV/LTM
EBITDA
|
2007E
|
2008E
|
|
|
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|
High
|
13.6x
|
|
22.8x
|
|
16.1x
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|
Mean
|
7.9x
|
|
14.6x
|
|
12.9x
|
|
Median
|
8.9x
|
|
16.2x
|
|
13.6x
|
|
Low
|
2.6x
|
|
5.6x
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|
7.3x
|
|
|
|
|
|
|
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|
Bradley (Management Estimate)*
|
11.1x
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|
41.7x
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15.3x
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|
Bradley (Sensitivity Case)
|
11.1x
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|
52.6x
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|
21.3x
|
|
Bradley (Wall Street Average Estimates)
|
11.1x
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|
76.9x
|
|
26.0x
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|
*
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|
2007
Management Estimate reflects actual results from the first and second quarters of 2007,
preliminary third quarter results as provided by Bradleys management and fourth
quarter projections as provided by Bradleys management.
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None
of the companies used in the publicly traded company analysis is identical to Bradley.
Accordingly, Deutsche Bank believes the analysis is not simply mathematical. Rather, it
involves complex considerations and qualitative judgments, reflected in Deutsche Banks
opinion, concerning differences in financial and operating characteristics of the
Selected Companies and other factors that could affect the public trading value of the
Selected Companies.
Analysis
of Selected Precedent Transactions
. Deutsche Bank reviewed the financial terms, to the
extent publicly available, of eight merger and acquisition transactions announced since
June 9, 2004 in the pharmaceutical and healthcare industries. The transactions were
divided into two tiers (Tier I and Tier II, respectively) based on each target
companys internal growth prospects, research and design capabilities, product
concentration and patent risk, with the attributes of the Tier I companies more closely
resembling Bradley. The transactions reviewed (the Selected Transactions) were:
Date Announced
|
Acquiror
|
Target
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|
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|
Tier I
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|
|
06/09/04
|
Bradley Pharmaceuticals, Inc.
|
Bioglan Pharmaceuticals
|
07/26/04
|
Mylan Laboratories, Inc.
|
King Pharmaceuticals, Inc.
|
03/24/05
|
Solvay S.A.
|
Fournier Pharma, Inc.
|
09/21/06
|
Nycomed Group
|
Altana Pharma
|
Tier II
|
10/29/04
|
Investor Group
|
Warner Chilcott, Ltd.
|
01/25/05
|
PDL BioPharma, Inc.
|
ESP Pharma, Inc.
|
02/02/05
|
Valeant Pharmaceuticals
International
|
Xcel Pharmaceuticals, Inc.
|
10/23/06
|
Stiefel Laboratories, Inc.
|
Connetics Corporation
|
Deutsche
Bank observed that the ratio of total enterprise value to LTM EBITDA for the Selected
Transactions ranged from 5.4x to 9.9x for the Tier I companies and a range of 5.4x to
19.2x for the Tier I and Tier II companies combined, and a median ratio of 7.6x for the
Tier I companies and 11.2x for the Tier I and Tier II companies combined. These precedent
transaction range and median of multiples were compared to the 11.1x multiple ratio for
Bradley at the consideration of $20.00 in cash per share.
The
analysis for the Selected Transactions was based on public information available at the
time of announcement of such transactions, without taking into account differing market
and other conditions during the period between June 9, 2004 and October 23, 2006, during
which the Selected Transactions were announced.
Because
the reasons for, and circumstances surrounding, each of the Selected Transactions
analyzed were so diverse, and due to the inherent differences between the operations and
financial conditions of Bradley and the companies involved in the selected transactions,
Deutsche Bank believes that a comparable transaction
analysis is not simply mathematical.
Rather, it involves complex considerations and qualitative judgments, reflected in
Deutsche Banks opinion, concerning differences between the characteristics of these
transactions and the merger that could affect the value of the subject companies and
businesses and Bradley.
Discounted
Cash Flow Analysis
. Deutsche Bank performed discounted cash flow analyses for Bradley.
Deutsche Bank calculated the discounted cash flow values for Bradley as the sum of the
net present values of:
|
|
the
estimated unlevered future free cash flows Bradley would generate for the
period from the first quarter of 2008 through 2011; and
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|
|
the
terminal value of Bradley at the end of such period.
|
For
the purposes of this analysis Deutsche Bank analyzed two different cases. Under the first
case, the estimated unlevered future free cash flows were based on the financial
projections for Bradley for the years 2008 through 2011 prepared by Bradleys management
(the Management Case). Under the second case, Deutsche Bank performed the analysis
using financial projections derived from the Sensitivity Case. Deutsche Bank calculated
terminal values for Bradley by applying a perpetuity growth rate of 0% to 4.0% and
discount rates ranging from 12.0% to 16.0% in both cases. The discount rates applicable
to Bradley were selected by performing weighted average cost of capital analyses on
Bradley and the Selected Companies.
The
analyses indicated a range of values of approximately $16.91 to $29.89 per share for the
Management Case and $12.52 to $21.67 per share for the Sensitivity Case.
General.
The foregoing summary describes all analyses and factors that Deutsche Bank deemed
material in its presentation to the special committee, but is not a comprehensive
description of all analyses performed and factors considered by Deutsche Bank in
connection with preparing its opinion. The preparation of a fairness opinion is a complex
process involving the application of subjective business judgment in determining the most
appropriate and relevant methods of financial analysis and the application of those
methods to the particular circumstances and, therefore, is not readily susceptible to
summary description. Deutsche Bank believes that its analyses must be considered as a
whole and that considering any portion of such analyses and of the factors considered
without considering all analyses and factors could create a misleading view of the
process underlying the opinion. In arriving at its fairness determination, Deutsche Bank
did not assign specific weights to any particular analyses.
In
conducting its analyses and arriving at its opinion, Deutsche Bank utilized a variety of
generally accepted valuation methods. The analyses were prepared solely for the purpose
of enabling Deutsche Bank to provide its opinion to the special committee as to the
fairness of the Consideration, from a financial point of view, to the stockholders of
Bradley other than the Excluded Persons, and do not purport to be appraisals or
necessarily reflect the prices at which businesses or securities actually may be sold,
which are inherently subject to uncertainty. In connection with its analyses, Deutsche
Bank made, and was provided by Bradleys management with, numerous assumptions with
respect to industry performance, general business and economic conditions and other
matters, many of which are beyond Bradleys control. Analyses based on estimates or
forecasts of future results are not necessarily indicative of actual past or future
values or results, which may be significantly more or less favorable than suggested by
such analyses. Because such analyses are inherently subject to uncertainty, being based
upon numerous factors or events beyond the control of Bradley or its advisors, neither
Bradley nor Deutsche Bank nor any other person assumes responsibility if future results
or actual values are materially different from these forecasts or assumptions.
The
terms of the merger agreement were determined through arms length negotiations between
Nycomed and the special committee and were approved by our board of directors (other than
Mr. Daniel Glassman). Although Deutsche Bank provided advice to the special committee
during the course of these negotiations, the decision to enter into the merger agreement
was solely that of the special committee and board of directors. As described above, the
opinion and presentation of Deutsche Bank to the special committee was collectively only
one of a number of factors taken into consideration by the special committee in making
its determination with respect to the merger agreement.
Deutsche
Banks opinion was limited to the fairness, from a financial point of view, of the
Consideration to be received by the holders of the outstanding shares of Bradley common
stock, other than the Excluded Persons, and Deutsche Bank expressed no opinion as to the
merits of the underlying decision by Bradley to engage in the merger, the relative merits
of the merger as compared to any alternative that might be available to Bradley, the
underlying business decision by Bradley to engage in the merger or the terms of the
Merger Agreement or as to how any holder of shares of Bradley common stock should vote
with respect to the merger.
The
special committee selected Deutsche Bank as financial advisor in connection with the
merger based on Deutsche Banks qualifications, expertise, reputation and experience in
mergers and acquisitions. The special committee has retained Deutsche Bank pursuant to a
letter agreement dated June 1, 2007. Deutsche Bank will be paid a reasonable and
customary fee for its services, a substantial portion of which is contingent upon
completion of the merger. Deutsche Banks fee in connection with the merger includes
$1,000,000 upon delivery of its opinion to the special committee and an amount equal to
approximately $3,500,000 if the merger is consummated (against which the opinion fee will
be credited). In addition, Bradley has agreed to reimburse Deutsche Bank for its
reasonable expenses, including fees and disbursements of counsel, and to indemnify
Deutsche Bank and related parties against liabilities, including liabilities under
federal securities laws, relating to, or arising out of, its engagement.
Deutsche
Bank is an affiliate of Deutsche Bank AG, which is referred to, together with its
affiliates, as the DB Group. In the ordinary course of business, members of the DB Group
may actively trade in the securities and other instruments and obligations of Bradley for
their own accounts and for the accounts of their customers. Accordingly, the DB Group may
at any time hold a long or short position in such securities, instruments and obligations. Except for its retention by the special committee, Deutsche Bank has never been retained or otherwise engaged by Bradley
nor is it currently engaged by Nycomed or any of its affiliates, including Nycomed US.
Interests of Bradley
Directors and Executive Officers
When
you consider the recommendations of our board of directors, you should be aware that our
directors and executive officers may have interests in the merger that are different
from, or in addition to, the interests of other Bradley stockholders. Our board of
directors was aware of these interests and considered them when it approved the merger
agreement and other transactions contemplated by the merger. These interests are
summarized below. Our directors and officers as a group, including Mr. Daniel Glassman,
beneficially own approximately 23.2% of our common stock. See
Security Ownership of
Certain Beneficial Owners and Management
.
In
December 2005, we entered into employment agreements with Messrs. Daniel Glassman,
Bradley Glassman, Lenczycki and Goldstein and a change of control agreement with Dr.
Landau that provide for payments upon a change of control. The change of control
provisions in these agreements were designed to offer protection to these employees to
recognize their many years of commitment to Bradley and its continuing growth. On October
30, 2007, following approval of the employment agreement by our board of directors on
October 29, 2007, we entered into an employment agreement with Dr. Landau that was
substantially identical to those already existing with the other executive officers and
his change of control agreement terminated.
Daniel
Glassman.
Daniel Glassmans employment agreement was entered into on December 6, 2005.
Mr. Glassmans employment agreement has a three year term and is automatically renewed
for additional one year periods, unless terminated by either party, at least 90 days
prior to the end of the term. Mr. Glassmans current annual base salary is approximately
$738,700, which is subject to increase according to the policies and practices we may
adopt from time to time and at the discretion of our board of directors, and an annual
non-accountable expense allowance of $25,000. In addition to providing for an annual base
salary, Mr. Glassman is eligible to participate in our bonus and benefit plans. The
employment agreement also provided for a grant of options to purchase shares of our
common stock or other similar securities on terms and conditions established by the board
of directors and compensation committee.
R.
Brent Lenczycki.
R. Brent Lenczyckis employment agreement was entered into on December
6, 2005. Mr. Lenczyckis employment agreement has a three year term and is automatically
renewed for additional one year periods, unless terminated by either party, at least 90
days prior to the end of the term. Mr. Lenczyckis current annual base salary is
approximately $330,000, which is subject to increase according to the policies and
practices we may adopt from time to
time and at the discretion of our board of directors. In addition to providing for an
annual base salary, Mr. Lenczycki is eligible to participate in our bonus and benefit
plans. The employment agreement also provided for a grant of options to purchase shares
of our common stock or other similar securities on terms and conditions established by
the board of directors and compensation committee.
Bradley
Glassman.
Bradley Glassmans employment agreement was entered into on December 6, 2005.
Mr. Glassmans employment agreement has a three year term and is automatically renewed
for additional one year periods, unless terminated by either party, at least 90 days
prior to the end of the term. Mr. Glassmans current annual base salary is approximately
$290,000, which is subject to increase according to the policies and practices we may
adopt from time to time and at the discretion of our board of directors. In addition to
providing for an annual base salary, Mr. Glassman is eligible to participate in our bonus
and benefit plans. The employment agreement also provided for a grant of options to
purchase shares of our common stock or other similar securities on terms and conditions
established by the board of directors and compensation committee.
Alan
Goldstein.
Alan Goldsteins employment agreement was entered into on December 6, 2005.
Mr. Goldsteins employment agreement has a three year term and is automatically renewed
for additional one year periods, unless terminated by either party, at least 90 days
prior to the end of the term. Mr. Goldsteins current annual base salary is approximately
$302,500, which is subject to increase according to the policies and practices we may
adopt from time to time and at the discretion of our board of directors. In addition to
providing for an annual base salary, Mr. Goldstein is eligible to participate in our
bonus and benefit plans. The employment agreement also provided for a grant of options to
purchase shares of our common stock or other similar securities on terms and conditions
established by the board of directors and compensation committee.
Ralph
Landau.
Dr. Landau entered into an employment agreement with us on October 30, 2007. The
employment agreement has a term that ends on December 6, 2008, the same date that the
employment agreements for the other executive officers terminate, and is automatically
renewed for additional one year periods, unless terminated by either party, at least 90
days prior to the end of the term. Dr. Landaus current annual base salary is $285,500,
which is subject to increase according to the policies and practices we may adopt from
time to time and at the discretion of our board of directors. In addition to an annual
base salary, Dr. Landau is eligible to participate in our bonus and benefit plans. The
employment agreement also provided for a grant of options to purchase shares of our
common stock or other similar securities on terms and conditions established by the board
of directors and compensation committee.
Under
the employment agreements, upon termination of employment without cause or for good
reason (as such terms are defined in the employment agreements), each of the executive
officers will be entitled to: (i) a lump sum cash payment equal to the sum of (a) any
accrued but unpaid salary as of the date of such termination, (b) any accrued but unpaid
annual cash bonus payable under our EVA Bonus Plan for any annual period ended prior to
the date of such termination, and (c) all expenses incurred for which documentation has
been or will be provided in accordance with our policies but not yet reimbursed; (ii) a
lump sum cash payment equal to the amount payable under our EVA Bonus Plan for the annual
period in which such termination occurs, prorated through the date of such termination;
(iii) continuation of all perquisites and other Bradley-related benefits to which he was
entitled as of the date of his termination through the end of the second calendar year
following the year in which his employment terminates; (iv) immediate vesting of all of
his stock options or any other equity awards based on our securities; (v) continued
participation in, and continuation by us of the payment of the relevant premiums
applicable to, the life insurance and health, welfare and medical insurance plans through
the end of the second calendar year following the year in which his employment
terminates; and (vi) continued participation by him and his dependents in all other
Bradley-sponsored health, welfare and benefit plans through the end of the second
calendar year following the year in which his employment terminates. In addition to the
foregoing payments and benefits continuation, upon termination without cause or for
good reason, each of the executive officers will be entitled to a lump sum cash payment
equal to two times the sum of his then current annual salary and the average amount paid
to him under our EVA Bonus Plan with respect to the most recent three calendar years. The
foregoing payments and benefits are subject to compliance with the applicable provisions
of Section 409A of the U.S. Internal Revenue Code, as amended (the Code).
If
a change of control (as defined below) of Bradley occurs during the term of his
employment agreement, and if, during such term and within 12 months after the date on
which the change of control occurs, his employment is terminated by us without cause
or by him for any reason, then each of the executive officers, as applicable, will be
entitled to the payments and benefits described in the preceding paragraph for a
termination without cause or for good reason.
In
the event that any payment under his employment agreement is subject to the excise tax
for golden parachute payments, we will provide the applicable executive officer with a
gross-up payment to put him in the same after-tax position as if the payments had not
been subject to the excise tax.
Each
of our executive officers has agreed that he will not compete with us for a period of
twelve months immediately following the term of his employment agreement; provided,
however, that such restriction will not apply if his employment is terminated without
cause or he terminates his employment for good reason, regardless of whether a
change of control has occurred.
Change
of Control is defined in each of the employment agreements as:
|
(a)
|
|
The
acquisition by an individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
Exchange Act)) (a Person) of beneficial ownership of any capital stock of
the Company if, after such acquisition, such Person beneficially owns (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) 50% or more of
either (x) the then-outstanding shares of common stock of the Company (the
Outstanding Company Common Stock) or (y) subject to Section d, the
combined voting power of the then-outstanding securities of the
Company entitled to vote generally in the election of directors (the
Outstanding Company Voting Securities); provided, however, that for
purposes of this subsection (a), the following acquisitions shall not
constitute a Change of Control Event: (A) any acquisition directly
from the Company (excluding an acquisition pursuant to the exercise,
conversion or exchange of any security exercisable for, convertible
into or exchangeable for common stock or voting securities of the
Company, unless the Person exercising, converting or exchanging such
security acquired such security directly from the Company or an
underwriter or agent of the Company), (B) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by
the Company or any corporation controlled by the Company, or (C) any
acquisition by any corporation pursuant to a Business Combination (as
defined below) which complies with clauses (x) and (y) of subsection
(c) of this definition; or
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(b)
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Subject
to Section (d), such time as the Continuing Directors do not constitute a
majority of the board of directors of the Company, where the term Continuing
Director means at any date a member of the Board (x) who was a member of the
Board on the date hereof or (y) who was nominated or elected subsequent to
such date by at least a majority of the directors who were Continuing
Directors at the time of such nomination or election or whose election to the
Board was recommended or endorsed by at least a majority of the directors who
were Continuing Directors at the time of such nomination or election;
provided, however, that there shall be excluded from this clause (y)
any individual whose initial assumption of office occurred as a
result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened
solicitation of proxies or consents, by or on behalf of a person
other than the Board; or
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(c)
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The
consummation of a merger, consolidation, reorganization, recapitalization or
share exchange involving the Company or a sale or other disposition of all or
substantially all of the assets of the Company (a Business Combination),
unless, immediately following such Business Combination, each of the following
two conditions is satisfied: (x) all or substantially all of the individuals
and entities who were the beneficial owners of the Outstanding Company
Common Stock and Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of the then-outstanding shares of common
stock and the combined voting power of the then-outstanding
securities entitled to vote generally in the election of directors,
respectively, of the resulting or acquiring corporation in such
Business Combination (which shall include, without limitation, a
corporation which as a result of such transaction owns the Company or
substantially all of the Companys assets either directly or through
one or more subsidiaries) (such
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resulting
or acquiring corporation is referred to herein as the Acquiring Corporation)
in substantially the same proportions as their ownership of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, respectively,
immediately prior to such Business Combination and (y) no Person
(excluding the Acquiring Corporation or any employee benefit plan (or
related trust) maintained or sponsored by the Company or by the
Acquiring Corporation) beneficially owns, directly or indirectly, 50%
or more of the then-outstanding shares of common stock of the
Acquiring Corporation, or of the combined voting power of the
then-outstanding securities of such corporation entitled to vote
generally in the election of directors (except to the extent that
such ownership existed prior to the Business Combination).
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(d)
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During
the period in which Mr. Daniel Glassman and his affiliates own or control a
majority of the Companys Class B common stock entitled to elect the majority
of the Companys board of directors, a Change of Control shall not be deemed
to have occurred if Mr. Glassman and his affiliates caused, either by their
action or inaction, the circumstances contemplated in either Sections (a) or
(b) to occur.
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The
merger will constitute a Change of Control under each of the employment agreements
described above. If any of the executive officers employment were terminated in
accordance with their respective employment agreements, the following table sets forth
the payments, on the terms described above, that each of them would generally be entitled
to receive. For purposes of this table, (1) salary is based upon the executive officers
salary as of December 31, 2007, and (2) it is assumed that such employment terminates as
of March 31, 2008. Further, all outstanding options will be cancelled in connection with
the merger and the amounts attributable to Vesting of Options below will have been paid
in connection with the closing of the merger and not as part of any Change of Control
payments.
Name
|
Cash
Severance
|
Vesting of
Options (1)
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Health and
Welfare
Payments(2)
|
Continuation
of
Perquisites(3)
|
Tax
Gross-Up
Payments(4)
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Total
|
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|
|
|
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Daniel Glassman
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$1,773,204
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$350,002
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|
$55,973
|
|
$227,621
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|
$ 0
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|
$2,998,100
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President and
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Chief Executive Office
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|
|
|
|
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|
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|
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|
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R. Brent Lenczycki
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|
725,302
|
|
175,736
|
|
46,572
|
|
162,697
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|
414,536
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|
1,532,952
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Chief Financial Officer
|
|
|
|
|
|
|
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|
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Bradley Glassman
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|
650,721
|
|
219,671
|
|
46,088
|
|
110,284
|
|
0
|
|
1,313,254
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|
Senior Vice President,
|
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|
|
|
|
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Marketing and
|
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|
|
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|
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Corporate Planning
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
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|
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Alan Goldstein
|
|
659,701
|
|
65,900
|
|
48,920
|
|
90,180
|
|
311,750
|
|
1,098,966
|
|
Vice President,
|
|
|
|
|
|
|
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|
|
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Corporate Development
|
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|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
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Ralph Landau
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|
612,822
|
|
65,900
|
|
48,585
|
|
65,383
|
|
279,500
|
|
962,540
|
|
Vice President,
|
|
|
|
|
|
|
|
|
|
|
|
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|
Chief Scientific Officer
|
|
|
|
|
|
|
|
|
|
|
|
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|
(1)
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Represents
the aggregate value of the acceleration of vesting of the executives unvested
stock options based on the spread between the merger consideration of $20.00 and
the exercise price of the stock options. Does not include any payments that may be
made for options with exercise prices in excess of the merger consideration of
$20.00 per share pursuant to the expected offer for all outstanding options. See
The Merger Agreement Stock Options and Warrants.
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(2)
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Represents
continued group health benefits (medical, dental and vision, etc.) for the
executive officer and his dependents (to the extent provided at the termination
date) through the end of the second calendar year following the year in which
employment terminates.
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(3)
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Represents
the value of continued perquisites other than those attributable to Health and
Welfare Benefits through the end of the second calendar year following the year in
which employment
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(footnotes continued
on next page)
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terminates, including accrued matching contributions in respect to participation in Bradleys 401(k) plan, and reimbursement of certain other
personal benefits including continuing education expenses, commuter expenses, and technology expenses.
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(4)
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Represents
an estimate of the payment of an amount sufficient to offset the impact of any
excess parachute payment excise tax payable by the executive pursuant to the
provisions of the Code or any comparable provision of state law. An executive is
treated as having received excess parachute payments if he receives compensatory
payments or benefits that are contingent on a change in control, and the aggregate
amount of such payments and benefits equal or exceeds three times the executives
base amount. This estimate does not include any additional amounts that could
become due under the employment agreements as a result of the imposition of
any penalties or interest associated with the excise tax.
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In
addition, upon consummation of the merger, the unvested stock options granted to the
directors will vest upon execution of the merger. The directors named below (which
excludes Mr. Daniel Glassman, who is included in the above table) will be entitled to the
following payments with respect to their options, which excludes payments related to any
common stock held by such directors:
Name
|
Vested
Options
|
Unvested
Options
|
Total
|
|
|
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|
Andre Fedida(1)
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|
$141,063
|
|
$16,137
|
|
$157,200
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|
Michael Fedida(1)
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|
$ 27,063
|
|
$16,137
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|
$ 43,200
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|
Seth W. Hamot(2)
|
|
|
|
|
|
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Steven Kriegsman(1)
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|
$ 77,913
|
|
$16,137
|
|
$ 94,050
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|
Douglas E. Linton
|
|
$ 5,200
|
|
$10,400
|
|
$ 15,600
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|
William J. Murphy
|
|
$ 43,833
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|
$87,667
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|
$131,500
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(1)
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Dr.
Fedida, Mr. Fedida and Mr. Kriegsman also have options to acquire shares with
exercise prices greater than $20.00 per share. Does not include any payments that
may be made for such options pursuant to the expected offer for all outstanding
options. See
The Merger Agreement Stock Options and Warrants.
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(2)
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Mr.
Hamot does not have any options.
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Effects of the Merger
As
a result of the merger, our stockholders will not have an opportunity to continue their
equity interest in Bradley as an ongoing corporation and, therefore, will not share in
the future earnings and potential growth of Bradley. Upon consummation of the merger, our
shares of common stock will no longer be traded on The New York Stock Exchange.
Furthermore, following the merger and the termination of the registration of our shares
of common stock under the Exchange Act, we will no longer be a reporting company under
the Exchange Act.
Material U.S. Federal
Income Tax Consequences
General
T
he following is a discussion of the material U.S. federal income tax
consequences of the merger to a holder of Bradley common stock. This summary is
based on the provisions of the Code, applicable current and proposed U.S.
Treasury Regulations, judicial authority, and administrative rulings and
practice, all of which are subject to change, possibly on a retroactive basis.
This
discussion assumes that you hold your shares of Bradley common stock as a capital asset
within the meaning of Section 1221 of the Code. This discussion does not address all
aspects of U.S. federal income taxation that may be relevant to you in light of your
particular circumstances, or that may apply to you if you are subject to special
treatment under the U.S. federal income tax laws (including, for example, insurance
companies, dealers in securities or foreign currencies, tax-exempt organizations,
financial institutions, mutual funds, stockholders subject to the alternative minimum
tax, persons (other than non-U.S. holders (as defined below)) that have a functional
currency other than the U.S. dollar, partnerships or other pass through entities for U.S.
federal income tax purposes, U.S. expatriates and former long-term residents of the
United States, stockholders who hold shares of Bradley common stock as part of a hedge,
straddle, constructive sale or
conversion transaction, or
stockholders who acquired their shares of Bradley common stock through the exercise of
employee stock options or other compensation arrangements). This discussion does not
address the tax treatment of holders who exercise appraisal rights in the merger, nor
does it address any tax considerations under state, local or foreign laws or U.S. federal
laws that may apply to you other than those pertaining to the U.S. federal income tax.
We
urge you to consult your tax adviser to determine the particular tax consequences to you,
including the application and effect of any state, local or foreign and other tax laws,
of the receipt of cash in exchange for Bradley common stock pursuant to the merger.
For
purposes of this discussion, we use the term U.S. holder to mean a beneficial owner of
a share of Bradley common stock that is, for U.S. federal income tax purposes:
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a
citizen or resident alien individual of the United States;
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a
corporation (or an entity treated as a corporation for federal income tax
purposes) created or organized under the law of the United States, any State
thereof or the District of Columbia;
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a
trust if (1) a court within the United States is able to exercise primary
supervision over the administration of the trust, and one or more United
States persons have the authority to control all substantial decisions of the
trust, or (2) the trust was in existence on August 20, 1996 and properly
elected to continue to be treated as a United States person; or
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an
estate the income of which is subject to U.S. federal income tax without regard to its
source.
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For
purposes of this discussion, a non-U.S. holder is a beneficial owner of a share of
Bradley common stock that is:
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a
nonresident alien individual;
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|
a
corporation (or an entity treated as a corporation for federal income tax purposes) that
is not a U.S. holder; or
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|
an
estate or trust that is not a U.S. holder.
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If
a partnership (including for this purpose any entity treated as a partnership for U.S.
federal income tax purposes) holds Bradley common stock, the tax treatment of a partner
generally will depend on the status of the partners and the activities of the
partnership. If you are a partner of a partnership holding Bradley common stock, you
should consult your tax advisors.
U.S.
holders.
The receipt by a U.S. holder of cash for Bradley common stock pursuant to the
merger will be a taxable transaction for U.S. federal income tax purposes. A U.S. holder
generally will recognize gain or loss in an amount equal to the difference between the
cash received by the stockholder pursuant to the merger and the stockholders adjusted
tax basis in Bradley common stock tendered pursuant to the merger. That gain or loss will
be a capital gain or loss and will be long-term capital gain or loss if you have held
your Bradley common stock for more than one year at the time of the merger. Long-term
capital gains of non-corporate holders, including individuals, are eligible for reduced
rates of taxation. The deductibility of a capital loss is subject to limitations under
the Code. If you acquired different blocks of Bradley common stock at different times or
different prices, you must determine your adjusted tax basis and holding period
separately with respect to each block of Bradley common stock that you own. Stockholders
are urged to consult their own tax advisers as to the federal income tax treatment of a
capital gain or loss.
Non-U.S.
holders.
A non-U.S. holder generally will not be subject to U.S. federal income tax on
any gain realized on a disposition of Bradley common stock pursuant to the merger unless:
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the
gain is effectively connected with a trade or business conducted by the
non-U.S. holder in the United States, and the gain is attributable to a
permanent establishment or fixed base of the non-U.S. holder maintained in
the United States if that is required by an applicable income tax treaty as a
condition to subjecting that non-U.S. holder to U.S. federal income tax on a
net income basis;
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the
non-U.S. holder is an individual and is present in the United States for 183 or more days
during the taxable year of the sale, and certain other requirements are met;
or
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|
|
the
non-U.S. holder is subject to tax under the provisions of the Code regarding the taxation
of United States expatriates or former long-term residents of the United
States.
|
If
the gain is effectively connected with a trade or business conducted by the non-U.S.
holder in the United States, and the gain is attributable to a permanent establishment or
fixed base of the non-U.S. holder maintained in the United States if that is required by
an applicable income tax treaty as a condition to subjecting that non-U.S. holder to U.S.
federal income tax on a net income basis, the non-U.S. holder generally will be taxed at
the graduated U.S. federal income tax rates applicable to U.S. persons and, if the
non-U.S. holder is a foreign corporation, the additional 30% branch profits tax (or such
lower rate as may be specified by an applicable income tax treaty) may apply.
Information Reporting
and Backup Withholding
Proceeds
from the exchange of shares for cash pursuant to the merger that are paid to a U.S.
holder (other than certain exempt recipients, such as corporations) generally are subject
to information reporting and, if the U.S. holder fails to provide a valid taxpayer
identification number and comply with certain certification procedures or otherwise
establish an exemption, to backup withholding at the applicable rate (currently 28%). A
non-U.S. holder may also be subject to information reporting and backup withholding at
the applicable rate with respect to proceeds from the exchange of shares for cash
pursuant to the merger.
Backup
withholding is not an additional tax. Any amounts withheld under the backup withholding
rules will be refunded or credited against the holders U.S. federal income tax liability
if certain required information is furnished to the U.S. Internal Revenue Service in a
timely manner. Holders are urged to consult their own tax advisers regarding the
application of backup withholding in their particular circumstances and the availability
of and procedure for obtaining an exemption from backup withholding under current
treasury regulations.
Because
individual circumstances may differ, each holder of Bradley common stock is urged to
consult such holders tax adviser as to the particular tax consequences to such holder of
the merger, including the application and effect of state, local, foreign and other tax
laws.
Appraisal Rights
Holders
of shares of Bradley common stock who do not vote in favor of adoption of the merger
agreement and who properly demand appraisal of their shares in accordance with the
procedures under Section 262 of the General Corporation Law of the State of Delaware
(DGCL Section 262) will be entitled to have their shares appraised by the Delaware
Court of Chancery and to receive payment in cash of the fair value of the shares,
exclusive of any element of value arising from the accomplishment or expectation of the
merger. A copy of DGCL Section 262 is attached to this proxy statement as Annex D.
Holders of stock options for Bradley common stock are not entitled to appraisal rights
with respect to such options.
Below
is a summary of the steps you must take if you are a Bradley stockholder and you wish to
exercise your appraisal rights. You are strongly urged to read DGCL Section 262 carefully
and in its entirety if you are considering the exercise of your appraisal rights. Failure
to comply with the procedures set forth in Section 262 may terminate your appraisal
rights.
You must make a
written demand for appraisal.
You
must deliver a written demand for appraisal to Bradley Pharmaceuticals, Inc. at 383 Route
46 West, Fairfield, NJ 07004, Attention: Alan S. Goldstein, Secretary, before the vote on
the merger is taken at the Special Meeting. A vote against the merger alone will not
constitute a valid demand for appraisal, and you therefore must provide written notice
separate from your proxy. A demand for appraisal should be signed by or on behalf of the
stockholder exactly as the stockholders name appears on the stockholders stock
certificates. If the shares are
owned of record in a fiduciary
capacity, such as by a trustee, guardian or custodian, the demand should be executed in
that capacity, and if the shares are owned of record by more than one person, as in a
joint tenancy or tenancy in common, the demand should be executed by or on behalf of all
joint owners. An authorized agent, including one or more joint owners, may execute a
demand for appraisal on behalf of a record holder; however, in the demand, the agent must
identify the record owner or owners and expressly disclose that the agent is executing
the demand as an agent for the record owner or owners. If the shares are held in street
name by a broker, bank or nominee, the broker, bank or nominee may exercise appraisal
rights with respect to the shares held for one or more beneficial owners while not
exercising the rights with respect to the shares held for other beneficial owners; in
such case, however, the written demand should set forth the number of shares as to which
appraisal is sought and where no number of shares is expressly mentioned the demand will
be presumed to cover all shares of Bradley common stock held in the name of the record
owner. Stockholders who hold their shares in brokerage accounts or other nominee forms
and who wish to exercise appraisal rights are urged to consult with their brokers to
determine the appropriate procedures for the making of a demand for appraisal by such a
nominee.
You must refrain
from voting for approval of the merger.
You
must not vote your shares of Bradley common stock for approval of the merger. You can
terminate your right to appraisal, even if you have previously filed a written demand for
appraisal, if you return a signed proxy and:
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|
fail
to vote against approval and adoption of the merger agreement and the approval of the
merger; or
|
|
|
fail
to note that you are abstaining from voting.
|
Because
a signed proxy that does not contain voting instructions will, unless revoked, be voted
in favor of adoption of the merger agreement, if you wish to exercise the right to
dissent from the merger and demand appraisal rights under DGCL Section 262, you must vote
against the adoption of merger agreement or abstain from voting on the merger agreement
proposal.
You must
continuously hold your shares of Bradley common stock.
You
must continuously hold your shares of Bradley common stock from the date you make the
demand for appraisal through the completion of the merger.
You must petition
the Delaware Court of Chancery.
If
you and Bradley cannot agree on the fair cash value of your dissenting shares, then
within 120 days after the effective date of the merger, either the surviving corporation
in the merger or any stockholder who has complied with the conditions of DGCL Section 262
may file a petition in the Delaware Court of Chancery. The petition should request that
the court determine the value of the shares of stock held by all of the stockholders who
are entitled to appraisal rights. Bradley has no intention at this time, or any
obligation, to file such a petition. If you and Bradley cannot agree on such a fair cash
value and you do not file a petition within 120 days after the effective date of the
merger, you will lose your appraisal rights.
Appraisal of shares.
If
a petition for appraisal is timely filed, the Delaware Court of Chancery will determine
the stockholders who are entitled to appraisal rights. The Delaware Court of Chancery
will then determine the fair value of the applicable shares held by the dissenting
stockholders, exclusive of any value arising from the accomplishment or expectation of
the merger, but together with a fair rate of interest, if any, to be paid on the amount
determined to be the fair value. In determining fair value, the court will consider all
relevant factors, and there is extensive case law regarding the methodology and factors
that the court can consider. The Delaware Court of Chancery may determine the fair value
to be more than, the same as, or less than the merger consideration. The costs and
expenses of the appraisal proceeding may be assessed against Bradley and the dissenting
stockholders, as the court deems equitable under the circumstances. However, you may
request that the Delaware Court of Chancery allocate the expenses of the appraisal action
incurred by any stockholder against the value of all of the shares entitled to appraisal.
Withdrawal of
demand.
You
may withdraw your demand for appraisal and accept the merger consideration by delivering
to Bradley a written withdrawal of your demand, except that (1) any attempt to withdraw
your demand for appraisal made more than 60 days after the completion of the merger will
require the written approval of Bradley, and (2) an appraisal proceeding in the Delaware
Court of Chancery cannot be dismissed unless the court approves such dismissal.
Failure
to follow the steps required by DGCL Section 262 for exercising appraisal rights may
result in the loss of such rights (in which event a Bradley stockholder will be entitled
to receive the applicable merger consideration with respect to such dissenting shares in
accordance with the merger agreement). In view of the complexity of the provisions of
DGCL Section 262, Bradley stockholders who are considering objecting to the merger are
urged to consult their own legal advisors.
Certain Stockholder
Lawsuits
Five complaints were filed in connection with Daniel Glassmans May 29, 2007 public announcement disclosing his intent to propose an acquisition of our outstanding shares. Four of those complaints are styled as class actions and were filed in the Law or Chancery divisions in New Jersey state court. The complaints were consolidated in the Law Division and have been adjourned pending a conference to be scheduled by the Court. The state complaints allege that the genesis and consideration of Mr. Glassmans proposal were breaches of fiduciary duties by our board of directors and that the proposed acquisition by Mr. Glassman did not meet the entire fairness standard. The complaints seek, among other relief, to enjoin defendants from further breaching their fiduciary duties and from consummating Mr. Glassmans proposal.
A fifth complaint, filed in the United States District Court of New Jersey, made substantially the same allegations
as the four state complaints. On December 14, 2007, the plaintiff filed an amended class action complaint, which alleges that the Company, its directors, and one of its officers breached their fiduciary duties by agreeing to the merger agreement
and by allegedly omitting certain information in the December 11, 2007 Preliminary Proxy Statement filed by Bradley with the SEC.
On January 11, 2008, Bradley and the other defendants entered into a memorandum of understanding with the
plaintiffs to settle the four state complaints and the federal complaint mentioned above (the Litigation). As part of
the settlement, Bradley and the other defendants deny all allegations of wrongdoing and maintain that they are willing to
settle the Litigation solely because the settlement would eliminate the burden and expense of further litigation. The
settlement is subject to customary conditions, including court approval following notice to members of the proposed
settlement class and consummation of the merger. If finally approved by the court, the settlement will resolve all claims
that were or could have been brought on behalf of the proposed settlement class in the Litigation being settled, including
all claims relating to the merger, the merger agreement and any disclosure made by Bradley in connection with the merger.
In addition, as part of the proposed settlement, Bradley has agreed to pay up to $425,000 to counsel for the plaintiffs for
their fees and expenses, subject to approval by the court. The memorandum of understanding does not change any of the
terms or conditions of the merger. There can be no assurance that a settlement will be completed or approved.
Approvals
On
November 20, 2007, Nycomed US and Bradley filed the required notification and report
forms with the Antitrust Division of the U.S. Department of Justice and the FTC under the
HSR Act and requested early termination of the waiting period, which was granted. On
November 27, 2007, the FTC requested additional information regarding the merger. Bradley
and Nycomed US each submitted supplementary materials on November 30, 2007. On December
5, 2007, the FTC Premerger Notification Office granted early termination of the waiting
period.
The
proposed merger is also subject to the German Act Against Restraints of Competition,
which requires certain transactions to be notified to the Federal Cartel Office of the
Federal Republic of Germany (the Federal Cartel Office). Nycomed US and Bradley filed the required information for
notifying the Federal Cartel Office of the merger on December 5, 2007; the Federal Cartel Office cleared
the merger on December 12, 2007.
The
proposed merger is also subject to the Italian Competition Act, which requires certain
transactions to be notified to the Italian Antitrust Authority (IAA). Under the Italian
pre-merger control rules, the transaction does not need to be suspended during the review
period. However, if the IAA does not approve a transaction within 30 days after a filing,
it may open a second phase investigation and suspend the effects of a transaction pending
further investigation during an additional 45 day period. Both periods may be extended if
the IAA requests further information. Nycomed US made the required filing on December 5,
2007; the IAA cleared the merger on December 27, 2007.
Nycomed US and
Bradley have also made appropriate filings under applicable Argentine antitrust
laws. The completion of the merger is not subject to expiration or termination of any waiting or review period or approval of the merger
under applicable Argentine antitrust laws.
The
merger agreement also requires that Bradley and Nycomed US file and record all required
merger documents as required under the DGCL and that Bradley obtain clearance by the NJ
DEP under the New Jersey Industrial Site Recovery Act, if required. Bradley has been advised by the NJ DEP that no such clearance is required.
We
are not aware of any other significant government or regulatory approvals that need to be
obtained, or waiting periods with which we need to comply, to complete the merger. If we
discover that other approvals or waiting periods are required, we will seek to obtain or
comply with them. If any approval or action is needed, however, we may not be able to
obtain it. Even if we could obtain the approval, conditions may be placed on it that
could cause us or Nycomed US to abandon the merger even if we receive stockholder
approval.
Source of Funds;
Guaranty
Nycomed
US has represented and warranted that it has obtained sufficient equity financing
commitments for the merger transaction, and has provided copies of the equity commitments
to Bradley. Bradley will not have responsibility for any financing that Nycomed US or
Merger Sub may raise in connection with the merger, and Nycomed US and Merger Sub will
use their best efforts to take all actions to maintain any financing and the financing
commitments in effect, to enter into definitive financing agreements, and to consummate
the financing at or prior to the effective time. Nycomed US and Merger Sub will not amend
or grant any waiver under the financing commitments or the final financing documentation
in a manner that would reduce the aggregate amount of available financing or delay or
prevent the closing of the merger or that is otherwise adverse to Bradley in any material
respect. Bradley will reasonably cooperate in connection with the financing, at Nycomed
USs and Merger Subs expense. In addition, the payment and performance obligations of
Nycomed US are guaranteed by Nycomed. A copy of the Guaranty is attached as Annex B to
this proxy statement. For a more detailed description, see
The Merger Agreement Nycomed
US Financing.
THE MERGER AGREEMENT
The
summary of the material terms of the merger agreement below is qualified in its entirety
by reference to the merger agreement, a copy of which is attached as Annex A to this
proxy statement, and which we incorporate by reference into this proxy statement. This
summary does not purport to be complete and may not contain all of the information about
the merger agreement that is important to you. We encourage you to carefully read the
merger agreement in its entirety.
The Merger
Merger
Sub will be merged with and into Bradley, and Bradley, as the surviving corporation, will
continue to exist following the merger as a wholly owned subsidiary of Nycomed US. Upon
consummation of the merger, the directors of Merger Sub will be the initial directors of
the surviving corporation. The merger will be effective at the time the certificate of
merger is filed with the Secretary of State of the State of Delaware.
Conversion of
Securities and Merger Consideration
Each
share of Bradley common stock and Class B common stock issued and outstanding immediately
prior to the effective time of the merger will be converted into the right to receive
$20.00 in cash, without interest and less certain applicable withholding taxes, other
than the following shares:
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shares
held in the treasury of Bradley or owned by any direct or indirect subsidiary of Bradley;
and
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shares
held by stockholders, if any, who have properly demanded and perfected
statutory appraisal rights under Delaware law.
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At
the effective time of the merger, Nycomed US will deposit the aggregate merger
consideration with a paying agent that will pay the merger consideration to our
stockholders upon surrender of their stock certificates.
Stock Options and
Warrants
Under
the merger agreement, unless otherwise agreed by Bradley and Nycomed US, immediately
prior to the effective time of the merger, all outstanding options to acquire Bradley
common stock under Bradleys stock option plans, whether vested or unvested, will be
cancelled, and converted into the right to receive, within five days after the effective
time of the merger, a cash payment equal to the number of shares of our common stock
underlying options multiplied by the amount (if any) by which $20.00 exceeds the exercise
price per share, without interest and less any applicable withholding taxes. In addition,
Bradley shall use its reasonable best efforts to cause to be exercised all outstanding
warrants to purchase shares of our common stock.
In
order to have all stock options available for cancellation, as is required under the
merger agreement, we have commenced a tender offer to purchase
all outstanding options (that do not expire by their terms at or prior to the completion
of the merger) issued under our 1990 Employee Stock Option Plan and our 1999 Stock Option
Plan. We are offering for each option, the greater of (1) an amount equal to the spread value per option for
each option with an exercise price of less than $20.00, with the spread value being equal
to the excess of $20.00 over the exercise price of such option or (2) $0.35 without interest and, less in both cases,
applicable withholding tax. The completion of the tender offer will be conditioned upon
and will occur simultaneously with the closing of the merger. At the Record Date, there
were options to purchase 1,204,245 shares outstanding and issued pursuant to these plans,
of which options to acquire 180,600 shares have exercise prices greater than $20.00 per
share. The merger agreement provides for payment of the spread value for options with exercise prices less than $20.00. The
aggregate purchase price for options with exercise prices greater than $20.00 is approximately $63,000.
Representations and
Warranties of Bradley
In
the merger agreement, we make representations and warranties (with the exceptions set
forth in Bradleys disclosure schedules) relating to, among other things:
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organization,
existence, qualification to do business, and corporate minutes;
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certificates
of incorporation and bylaws;
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corporate
power and authority to enter into the merger transaction and enforceability of the merger
agreement against Bradley;
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that
the merger agreement does not conflict with or violate any law or agreement
that Bradley is party to and that no consents (other than certain specified
ones) are needed under such agreements, and that no governmental filings or
consents (other than those specified, including under the HSR Act and other
competition or merger control law filings) are required, to enter into the
merger agreement;
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licenses
and permits necessary to conduct business, Sarbanes-Oxley Act of 2002 compliance and
internal accounting controls;
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SEC
filings and financial statements;
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absence
of liabilities;
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absence
of joint venture or off balance sheet partnerships or similar arrangements;
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the
absence of litigation that would not have a Company Material Adverse Effect (as defined
below);
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employee
benefit plans (including change of control payments, severance and cash bonus plans);
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the
absence of collective bargaining or similar agreements or arrangements;
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intellectual
property rights;
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enforceability
of, compliance by Bradley and its subsidiaries with, and no default under,
specified contracts (those contracts that were filed as an exhibit to our
Annual Report on Form 10-K for the year ended December 31, 2006, as amended,
or disclosed in a Quarterly Report on Form 10-Q or Current Report on 8-K
filed by us with the SEC thereafter);
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approval
of the merger and the merger agreement by the special committee of Bradleys
board of directors and by Bradleys full board, and the requirement for
stockholder approval of the merger agreement and the merger;
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Some
of our representations and warranties are qualified by a material adverse effect
standard. For purposes of the merger agreement, Company Material Adverse Effect means
any event, development, state of facts, occurrence or change that is or would reasonably
be expected to be, individually or in the aggregate, materially adverse to the business,
assets, condition (financial or otherwise) or results of operation of Bradley and its
subsidiaries, taken as a whole, other than the following or to the extent resulting from
the following:
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changes
in the U.S. or international financial markets;
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changes
in general economic conditions that affect Bradleys industries so long as there is no
disproportionate impact on Bradley;
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change
in Bradleys industries so long as there is no disproportionate impact on Bradley;
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acts
of terrorism or war;
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announcement
of the merger agreement;
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actions
or failures to act consented to or requested by Nycomed US;
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changes
in the generally accepted accounting principles;
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changes
in Bradleys stock price or stock trading volume in and of itself; or
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failure
by Bradley to meet published analyst estimates or internal projections in and of itself.
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Bradleys
representations and warranties terminate at the effective time of the merger. Bradley
does not make any representations or warranties as to any matter except as expressly set
forth in the merger agreement.
Representations and
Warranties of Nycomed US and Merger Sub
Nycomed
US and Merger Sub each make representations and warranties relating to, among other
things:
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organization
and existence;
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certificates
of incorporation and bylaws;
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corporate
power and authority to enter into the merger transaction and the enforceability of the
merger agreement against Nycomed US and Merger Sub;
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that
the merger agreement does not conflict with or violate any law or agreement
that Nycomed US or Merger Sub is party to and that no consents are needed
under such agreements, and that no governmental filings or consents (other
than those specified, including under the HSR Act and other competition or
merger control law filings) are required, to enter into the merger agreement;
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formation
of Merger Sub for sole purpose of merger transaction and absence of other activities and
operations;
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financing
commitments in effect for the merger transaction and sufficiency of funds available to
consummate the merger;
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solvency
of the surviving corporation;
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delivery
of and obligations under guaranty.
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Nycomed
USs and Merger Subs representations and warranties terminate at the effective time of
the merger. Neither Nycomed US nor Merger Sub makes any representations or warranties as
to any matter except as expressly set forth in the merger agreement.
Guaranty
At
the execution of the merger agreement, Nycomed S.C.A., SICAR executed a guaranty dated
the date of the merger agreement, with respect to the performance by Nycomed US and
Merger Sub of their obligations in favor of Bradley under the merger agreement. The
guarantor guarantees to Bradley the performance of all obligations of Nycomed US and
Merger Sub to Bradley arising under the merger agreement. The guaranty is an
unconditional and continuing guarantee of the full and timely payment and performance of
those obligations and not a guarantee of collection of any payment. A copy of the
Guaranty is attached as Annex B to this proxy statement.
Conduct of Business
Pending the Merger
The
merger agreement provides that prior to consummation of the merger, Bradleys business
must be conducted in all material respects in the ordinary course of business and in a
manner consistent with past practice. In addition, Bradley and its subsidiaries may not
(with the exceptions set forth in its disclosure schedules):
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amend
their certificates of incorporation or bylaws;
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issue,
transfer or encumber shares of their capital stock or any warrants or options
with respect thereto, other than issuance of company stock options consistent
with past practice or shares of Bradley common stock issuable pursuant to
company stock options or warrants;
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declare
or pay dividends or distributions;
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reclassify,
split, redeem, purchase or otherwise acquire any of their capital stock;
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adopt
or enter into a plan of liquidation, dissolution, recapitalization or reorganization
(other than the merger);
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make
any change to their accounting methods;
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directly
or indirectly acquire (i) any person, business or equity interest or (ii) any
assets with a purchase price, individually, in excess of $500,000 or, in the
aggregate, in excess of $1,000,000, except for (i) permitted capital
expenditures or (ii) inventory, components, raw materials, supplies or other
assets in the ordinary course of business;
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(i)
sell, lease, encumber or otherwise dispose of any assets other than inventory
and used equipment in the ordinary course of business consistent with past
practice or (ii) enter into or amend any lease of real property except for
renewals or replacements of existing leases in the ordinary course of
business;
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incur
any indebtedness for borrowed money (except for drawings up to $2,000,000 under the
existing credit facility) or guarantee any debt of others;
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make
any new capital expenditures aggregating more than $100,000 (other than specified capital
expenditures);
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waive,
release, assign, settle, pay, discharge, satisfy or compromise any claims,
liabilities, obligations, litigation or arbitration other than in the
ordinary course consistent with past practice or in accordance with their
terms, of liabilities disclosed, reflected or reserved against in Bradleys
most recent financial statements filed with the SEC (for amounts not in
excess of such reserves) or incurred since the date of such financial
statements in the ordinary course of business consistent with past
practice;
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(i)(a)
enter into, modify or amend any contract that is material to Bradley or any
of its subsidiaries (including licensing agreements, co-promotion agreements
or agreements with affiliates of Bradley) or (b) enter into, modify or amend
any other contract in any manner materially adverse to Bradley or any of its
subsidiaries (except for renewals or replacements on substantially the same
terms) or (ii)(a) terminate or waive, release or assign any rights under any
such material contract or (b) terminate or waive, release or assign any
material rights under any other contract which, in the case of
clause (i)(b) or (ii)(b) could reasonably be expected to adversely
affect in any material respect Bradley;
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increase
compensation or benefits of its directors or executive officers, or increase
the compensation or benefits of any other officers except in the ordinary
course of business consistent with past practice, or grant any severance or
termination pay not currently provided to or make loans or advances to
employees (except for travel expenses); or
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sell,
transfer or license, or amend or modify in any material respect any rights to
the intellectual property of Bradley and its subsidiaries.
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Covenants of the
Parties
The
merger agreement contains the following covenants of the parties:
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Bradley
will prepare and file with the SEC and, when cleared by the SEC, mail to its
stockholders a proxy statement with respect to the merger.
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Bradley
will use reasonable best efforts to call and hold a meeting of its
stockholders, which will be held within 30 business days after the proxy
statement is mailed to stockholders. Subject to a change in board
recommendation made in accordance with the merger agreement, Bradley will
recommend that its stockholders adopt the merger agreement and the merger.
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Bradley
will provide Nycomed US and its representatives reasonable access to its
officers, employees, accountants, legal counsel, investment bankers,
financing sources and other representatives and will use reasonable best
efforts to provide Nycomed US and its representatives reasonable access to
the books and records of Bradley and its subsidiaries. Nycomed US is required
to keep all information provided to it confidential.
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Bradley
and Nycomed US will be obligated to keep each other reasonably apprised of
the status of matters relating to completion of the merger transaction. Each
of them will give prompt notice to the other of any event which is likely to
result in the failure of a condition to closing.
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The
parties agree to use reasonable best efforts to take all actions to comply
with all legal requirements with respect to the merger and to provide notices
and obtain any consents or approvals required to be obtained in connection
with the merger, including obtaining any consents identified by Nycomed US or
Bradley under any contracts of Bradley.
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The
initial press releases announcing the merger must be in mutually acceptable
form and the parties must consult with each other prior to issuing other
press releases or making public announcements.
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If
Nycomed US receives a solvency opinion in connection with its financing for
the merger, Nycomed US will cause an appraisal firm to deliver to Bradley a
letter confirming that Bradleys Board may rely on such opinion.
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Nycomed
US will use reasonable best efforts to cause Merger Sub and the surviving
corporation to comply with their obligations under the merger agreement.
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To
the extent not violative of our fiduciary duties and to the extent not a
waiver of our attorney client and other privileges, we will promptly advise
Nycomed US and keep Nycomed US informed as to any stockholder litigation
relating to the merger agreement and/or the merger and will not settle any
such litigation without Nycomed USs consent, not to be unreasonably withheld.
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We
will furnish Nycomed US resignations (effective as of the effective time of
the merger) from such officers and directors as Nycomed US requests not less
than 10 days prior to the closing date.
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We
will take commercially reasonable steps to cause the transactions
contemplated by the merger agreement and any dispositions of
securities by our directors or executive officers in connection
therewith to be exempt under Exchange Act Rule 16b-3.
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No
Solicitation/Fiduciary Out Right to Terminate
We
agree not to solicit, negotiate, have any discussions or enter into any transaction with
respect to any Acquisition Proposal. As defined in the merger agreement, Acquisition
Proposal means any proposal or offer from any person (other than Nycomed US or its
affiliates) relating to (i) any acquisition or purchase of (A) 20% or more of the assets
of Bradley and its subsidiaries, taken as a whole, (B) 20% or more of our common stock
then outstanding, (C) more than 50% of our Class B common stock then outstanding or (D)
25% or more of the equity securities of any Bradley subsidiary then outstanding, (ii) any
tender or exchange offer that if consummated would result in any person beneficially
owning (A) 20% or more of our common stock then outstanding, (B) more than 50% of our
Class B common stock then outstanding or (C) 25% or more of the equity securities of any
Bradley subsidiary then outstanding or (iii) any merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction involving
Bradley (other than the transactions contemplated by the merger agreement).
Notwithstanding
the foregoing restrictions, at any time prior to the approval of the merger agreement by
our stockholders, we are permitted to furnish information with respect to Bradley to any
person making an
Acquisition Proposal that did not
result, directly or indirectly, from a breach of our obligations under the solicitation
provisions of the merger agreement; and participate in discussions or negotiations with
the person making such Acquisition Proposal regarding such Acquisition Proposal (provided
that we enter into a confidentiality agreement with such person and promptly provide to
Nycomed US any non-public information provided to such person that was not previously
provided to Nycomed US), and so long as:
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our
board of directors determines in good faith, by a majority vote of the disinterested
members, after consultation with its financial advisors and outside legal
counsel, that such Acquisition Proposal constitutes or would reasonably be
expected to lead to a Superior Proposal (a Superior Proposal means an Acquisition
Proposal (a) that is a bona fide written Acquisition Proposal that relates to
an acquisition by any person or group acting in concert of either (i) more
that 50% of the equity interests of Bradley pursuant to a tender offer,
merger or otherwise or (ii) more than 50% of the assets used in the conduct of the
business of Bradley and its subsidiaries, taken as a whole, and (b) that our
board of directors determines in good faith, by a majority vote of
disinterested members, would, if consummated, result in a transaction that is more
favorable to our stockholders from a financial point of view than the merger
and that is reasonably capable of being consummated); and
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our
board of directors determines in good faith, by a majority vote of the
disinterested members, after consultation with its outside counsel, that the
failure to take such action would be inconsistent with its fiduciary duties
under applicable law.
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Board Recommendation
of Withdrawal and Termination in Connection with a Superior Proposal
The
merger agreement provides that our board (or a committee of the board) may not:
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withdraw
or modify in a manner adverse to Nycomed US the boards approval of the
merger or the merger agreement, or propose publicly to do so;
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approve
or recommend any Acquisition Proposal or propose publicly to do so; or
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approve
or recommend any letter of intent or acquisition or similar agreement relating to any
Acquisition Proposal or requiring the abandonment or termination of the
merger;
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take
any action contemplated by Exchange Act Rule 14e-2a with respect to a tender
or exchange offer made by a third party, other than recommending rejection of
such offer.
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Notwithstanding
the foregoing, Bradleys board may:
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prior
to obtaining stockholder approval, terminate the merger agreement to enter
into a new agreement with respect to a Superior Proposal received after the
date of the merger agreement; and
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prior
to obtaining stockholder approval the board may make a change in board
recommendation, if the board determines in good faith by a majority vote of
its disinterested directors that it is reasonably likely to be required to do
so to comply with its fiduciary duties to stockholders; provided further that
three business days prior notice has been given to Nycomed US of such a
change in board recommendation and that Bradleys board has taken into
account any changes in the terms of the merger agreement proposed by Nycomed
US in response to such notice.
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Director and Officer
Liability
For
six years after the effective time of the merger, the certificate of incorporation and
bylaws of the surviving corporation will contain provisions no less favorable with
respect to the indemnification and exculpation of directors and officers than are
contained in Bradleys certificate of incorporation and bylaws on the date of the merger
agreement. After the effective time, Nycomed US will cause the surviving corporation to
indemnify each present and former director, officer and employee of Bradley against
costs, claims and liabilities in connection with any litigation or claim arising out of
any act or omission occurring before or at the effective time.
Prior
to the effective time, Nycomed US will, after consultation with Bradley, either (a)
purchase a fully prepaid six-year tail insurance policy with respect to directors and
officers liability insurance in amount and
scope at least as favorable as our
existing policy or (b) maintain our existing directors and officers liability insurance
for at least six years after the effective time; provided that Nycomed US is not required
to pay more than 300% of Bradleys current annual premium in order to do so.
Employee Benefit
Matters
For
one year after the effective time of the merger, Nycomed US must maintain for our
employees, salaries, employee benefits and incentive opportunities (other than
equity-based compensation) that are substantially comparable in the aggregate to those
provided to such employees immediately prior to the effective time. Employees of Bradley
will receive credit for accrued service for all purposes in determining employee benefits
to the same extent recognized by Bradley prior to the effective time. Nycomed US will
waive or use reasonable best efforts to have waived all limitations as to preexisting and
at-work conditions under welfare benefit programs.
Regulatory Filings
Nycomed
US and Bradley must use best efforts to make the filings required under the HSR Act, and
must use reasonable best efforts to resolve any objections to the merger transaction
asserted by any governmental authority under the HSR Act or under any other U.S. or
foreign law, including applicable German, Italian and Argentine antitrust laws. Nycomed
US must commit to all divestures, licenses or hold separate arrangements with respect to
its assets or conduct of business arrangements which are a condition to cause the
expiration of the waiting period under the HSR Act or to obtain any other required
governmental consents or approvals; provided such would not result in a substantial
detriment. The term substantial detriment means an impairment of the expected benefit
of the merger to Nycomed US or any event or occurrence which would reasonably be expected
to have a material adverse impact on Bradley, Nycomed US or their respective
subsidiaries. Any requirement to divest, license or hold separate assets or conduct of
business arrangements of Nycomed US in an amount which if a comparable amount of
Bradleys assets or conduct of business arrangements were required to be divested,
licensed or held separate would likely be deemed to have a material adverse effect on
Bradley at or after the effective time shall be deemed a substantial detriment. Bradley
is also obligated to divest assets if requested by Nycomed US in furtherance of such
purposes, but only if the merger is consummated.
The
proposed merger is also subject to certain German, Italian and Argentine antitrust laws,
and Nycomed US and Bradley have filed the required information for notifying the
applicable regulatory authorities in these countries. See
The Merger Approvals
.
Nycomed US Financing
Nycomed
US also represents and warrants that it has obtained sufficient equity financing
commitments for the merger transaction. Nycomed USs obligations under the merger
agreement are not subject to any financing contingency. We will have no responsibility
for any financing that Nycomed US or Merger Sub may raise in connection with the merger.
Nycomed US and Merger Sub will use their best efforts to take all actions to maintain any
financing and the financing commitments in effect, to enter into definitive financing
agreements, and to consummate the financing at or prior to the effective time of the
merger. Nycomed US and Merger Sub will not amend or grant any waiver under the financing
commitments or the final financing documentation in a manner that would reduce the
aggregate amount of available financing or delay or prevent the closing of the merger or
which is otherwise adverse to Bradley in any material respect. Bradley will reasonably
cooperate in connection with the financing, at Nycomed USs and Merger Subs expense.
If
the financing or financing commitments expire or are terminated prior to the closing of
the merger, Nycomed US and Merger Sub must notify us and promptly arrange for alternative
financing (in sufficient amount and with no more onerous or additional conditions than
are in the financing).
Conditions to the
Merger
The
obligations of Bradley, Nycomed US and Merger Sub to consummate the merger are subject to
satisfaction or waiver of the following conditions:
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obtaining
stockholder approval;
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expiration
or termination of any waiting period under the HSR Act and under applicable German and
Italian antitrust laws; and
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no
injunction or other governmental order making the merger illegal or preventing it.
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The
obligations of Nycomed US and Merger Sub to consummate the merger are
subject to satisfaction or waiver of the following conditions:
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our
representations and warranties being true and correct;
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our
performance and compliance with all of our agreements and covenants in the merger
agreement; and
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delivery
of an officers certificate as to satisfaction of the above two conditions.
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Our
obligations to consummate the merger are subject to satisfaction or waiver of the
following conditions:
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representations
and warranties of Nycomed US and Merger Sub being true and correct;
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performance
and compliance by Nycomed US and Merger Sub with all of their agreements and covenants in
the merger agreement;
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delivery
of an officers certificate as to satisfaction of the above two conditions; and
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if
required, obtaining clearance by the NJ DEP under the New Jersey Industrial Site Recovery
Act.
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Termination by Nycomed
US
The
merger agreement may be terminated by Nycomed US and the merger abandoned at any time
prior to the effective time as follows:
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by
Nycomed US in the event of our breach of representations or covenants,
subject to a 60-day cure period (which can be shortened to 45 days if, at the
end of such 45 days, it is not reasonably likely that the breach can be
cured); or
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by
Nycomed US if Bradleys board has (i) effected a change in board
recommendation, (ii) taken any actions prohibited by the
non-solicitation provisions of the merger agreement (see
No
Solicitation/Fiduciary Out Right to Terminate
description above),
or (iii) taken any action contemplated by Exchange Act Rule 14e-2a
with respect to a tender or exchange offer made by a third party,
other than recommending rejection of such offer within 10 business
days.
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Termination by Bradley
The
merger agreement may be terminated by Bradley and the merger abandoned at any time prior
to the effective time as follows:
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in
the event of breach of representations or covenants by Nycomed US or Merger
Sub, subject to a 60-day cure period (which can be shortened to 45 days if,
at the end of such 45 days, it is not reasonably likely that the breach can
be cured); or
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pursuant
to Bradleys fiduciary out right to terminate.
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Termination by Either
or Both Parties
The
merger agreement may be terminated by either or both parties and the merger abandoned at
any time prior to the effective time as follows:
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by
mutual written consent of both Nycomed US and Bradley;
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by
either Nycomed US or Bradley if the effective time has not occurred on or
before March 31, 2008 (subject to extension to April 30, 2008 if (i) the SEC
has not cleared the proxy statement by the date that is 5 business days prior
to February 29, 2008 or (ii) the waiting periods under the HSR Act and
applicable German and Italian antitrust laws have not expired or terminated
by March 31, 2008);
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by
either Nycomed US or Bradley in the event of a final, non-appealable
injunction or other governmental order making the merger illegal or otherwise
preventing its consummation; or
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by
either Nycomed US or Bradley if stockholder approval is not obtained at a
stockholders meeting at which a vote on the merger agreement is taken.
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Termination Fee
Payable to Nycomed US
We
are required to pay Nycomed US a termination fee in the amount of 3.0% of the aggregate
merger consideration in the event that the merger agreement is terminated:
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by
Nycomed US if Bradleys stockholders have not approved the merger and within
12 months after the termination date Bradley enters into an agreement with
respect to another Acquisition Proposal; for purposes of this termination
fee, the references to 20% or 25% in the definition of Acquisition
Proposal are changed to 45%.
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by
Nycomed US or Bradley if Bradleys board (i) has effected a change in board
recommendation or (ii) taken any action contemplated by Exchange Act Rule
14e-2a with respect to a tender or exchange offer made by a third party,
other than recommending rejection of such offer within 10 business days; or
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if
Bradley has exercised its fiduciary out right to terminate.
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Amendments and Waivers
The
merger agreement may be amended by the parties by or on behalf of each partys respective
board of directors at any time prior to the effective time of the merger, as long as
after Bradleys stockholders adoption of the agreement, no amendment may be made except
as allowed under applicable law. To be valid, any amendment must be in writing and signed
by all parties to the merger agreement.
Any
party to the merger agreement may (i) extend the time for the performance of any
obligation or other act of any of the other parties to the agreement, (ii) waive any
inaccuracy in the representations and warranties of any other party named in the merger
agreement or in any document delivered under the terms of the merger agreement and (iii)
waive compliance with any agreement of any other party or any condition to its own
obligations contained in the merger agreement. To be valid, any waiver must be in writing
and signed by the party or parties to be bound by the waiver.
Governing Law
The
merger agreement is governed by Delaware law.
Expenses, Sole and
Exclusive Remedy and Specific Performance
If
either Bradley or Nycomed US terminates the merger agreement as a result of a breach by
the other party, the breaching party must reimburse the terminating party for its
reasonable and documented out-of-pocket expenses in connection with the merger agreement
and the merger. Our maximum aggregate liability to Nycomed US and Merger Sub for any
losses or damages (including such expenses) in connection with the merger agreement (and
the sole and exclusive remedy of Nycomed US and Merger Sub) is limited to either (i) 3.0%
of the aggregate merger consideration or (ii) payment of the termination fee (i.e., 3.0%
of aggregate merger consideration), if applicable. Either party is entitled to seek
specific performance of the terms of the merger agreement.
There
is no limitation on Nycomed USs liability in connection with the merger agreement.
Procedure for
Stockholder Proposals and Nomination of Directors
If
we complete the merger, we will no longer have public stockholders or any public
participation in our stockholder meetings. If we do not complete the merger, we intend to
hold our next annual stockholder meeting in 2008. In that case, if you are still a
stockholder as of the record date of such meeting, you would continue to be entitled to
attend and participate in our 2008 Annual Meeting of Stockholders.
The
board of directors currently proposes to hold its 2008 Annual Meeting of Stockholders in
June 2008. Stockholder proposals to be included in the proxy statement for the 2008
Annual Meeting of Stockholders must be received by us at our principal executive offices
at Bradley Pharmaceuticals, Inc., 383 Route 46 West, Fairfield, NJ 07004 by no later than
February 9, 2008. However, if our 2008 Annual Meeting is not held between June 18, 2008
and August 17, 2008, stockholder proposals must be received a reasonable time before we
begin to print and mail our proxy materials. The proposal should be submitted in writing
and sent to the attention of Bradleys Secretary.
Nominations
for director or other business proposals to be introduced at the 2008 Annual Meeting of
Stockholders must be submitted in writing to Bradleys secretary at our principal
executive offices. We must receive the notice of your intention to introduce a nomination
or to propose an item of business at our 2008 Annual Meeting no later than February 9,
2008.
These
advance notice provisions are in addition to, and separate from, the requirements imposed
by the SEC regarding stockholder proposals.
The
Nominating and Corporate Governance Committee considers candidates for director
recommended by our security holders. A nomination for director should contain the
following information about the nominee:
|
|
business
and residence addresses;
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|
the
number of shares of common stock or Class B common stock beneficially owned by the
nominee;
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|
|
the
information that would be required under the rules of the SEC in a proxy statement
soliciting proxies for the election of such nominee as a director; and
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signed
consent of the nominee to serve as a director of Bradley, if elected.
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Notice
of a proposed item of business should include:
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a
description of the substance of, and the reasons for conducting, such business at the
Special meeting;
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the
stockholders name and address;
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|
the
number of shares of common stock and Class B common stock beneficially owned
by the stockholder (with supporting documentation where appropriate); and
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any
material interest of the stockholder in such business.
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WHERE YOU CAN FIND
MORE INFORMATION
We
file reports, proxy statements and other information with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended. You may read and copy
this information at the Securities and Exchange Commission, Public Reference Room, 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549. Please call the Securities and
Exchange Commission at 1-800-SEC-0330 for further information.
The
Securities and Exchange Commission also maintains an Internet world wide web site that
contains reports, proxy statements and other information about issuers, including
Bradley, who file electronically with the Securities and Exchange Commission. The address
of that site is http://www.sec.gov. You can also inspect reports, proxy statements and
other information about us at the offices of The New York Stock Exchange, 11 Wall Street,
New York, NY 10005.
You
also can obtain reports, proxy statements and other information we file with the
Securities and Exchange Commission by requesting them in writing to:
Investor Relations
Bradley Pharmaceutical, Inc.
383 Route 46 West
Fairfield,
New Jersey 07004
(973) 882-1505
If
you would like to request documents, please do so by February 11, 2008 in order to
receive them before the Special Meeting.
You
should rely only on the information contained in this proxy statement. We have not
authorized anyone to provide you with information that is different from what is
contained in this proxy statement. This proxy statement is dated as of January 17,
2008. You should not assume that the information contained in this proxy statement is
accurate as of any date other than that date. Neither the mailing of this proxy statement
to stockholders nor the issuance of cash in the merger creates any implication to the
contrary.
|
By order of the board of directors
/s/ Seth W. Hamot
Seth W. Hamot
Non-Executive Chairman of the Board
|
Annex A
AGREEMENT AND PLAN OF
MERGER
BY AND AMONG
NYCOMED US INC.
PHASE MERGER SUB INC.
and
BRADLEY
PHARMACEUTICALS, INC.
Dated as of October 29,
2007
TABLE OF CONTENTS
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Page
|
|
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ARTICLE I
THE MERGER
|
A-1
|
Section 1.01
|
The Merger
|
A-1
|
Section 1.02
|
Closing
|
A-1
|
Section 1.03
|
Effective Time
|
A-1
|
Section 1.04
|
Effect of the Merger
|
A-1
|
Section 1.05
|
Certificate of Incorporation; Bylaws
|
A-2
|
Section 1.06
|
Directors and Officers
|
A-2
|
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
|
A-2
|
Section 2.01
|
Conversion of Securities
|
A-2
|
Section 2.02
|
Surrender of Certificates
|
A-2
|
Section 2.03
|
Options and Warrants
|
A-4
|
Section 2.04
|
Dissenting Shares
|
A-4
|
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
|
A-5
|
Section 3.01
|
Organization and Qualification
|
A-5
|
Section 3.02
|
Certificate of Incorporation and Bylaws
|
A-6
|
Section 3.03
|
Capitalization
|
A-6
|
Section 3.04
|
Authority Relative to This Agreement
|
A-7
|
Section 3.05
|
No Conflict; Required Filings and Consents
|
A-7
|
Section 3.06
|
Permits; Compliance with Laws
|
A-8
|
Section 3.07
|
SEC Filings; Financial Statements; Undisclosed Liabilities
|
A-9
|
Section 3.08
|
Title to Properties
|
A-9
|
Section 3.09
|
Absence of Litigation
|
A-10
|
Section 3.10
|
Employee Benefit Plans
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A-10
|
Section 3.11
|
Labor and Employment Matters
|
A-11
|
Section 3.12
|
Intellectual Property
|
A-11
|
Section 3.13
|
Taxes
|
A-12
|
Section 3.14
|
Specified Contracts
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A-12
|
Section 3.15
|
Board Approval; Vote Required
|
A-13
|
Section 3.16
|
Environmental Matters
|
A-13
|
Section 3.17
|
Insurance
|
A-13
|
Section 3.18
|
Brokers
|
A-13
|
Section 3.19
|
No Other Information
|
A-13
|
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
|
A-14
|
Section 4.01
|
Corporate Organization
|
A-14
|
Section 4.02
|
Certificate of Incorporation and Bylaws
|
A-14
|
Section 4.03
|
Authority Relative to this Agreement
|
A-14
|
Section 4.04
|
No Conflict; Required Filings and Consents
|
A-14
|
Section 4.05
|
Absence of Litigation
|
A-15
|
Section 4.06
|
Operations of Merger Sub; Ownership of Company Common Stock and Company Class B Common Stock
|
A-15
|
|
and Company Class B Common Stock
|
|
Section 4.07
|
Financing
|
A-15
|
Section 4.08
|
Solvency
|
A-15
|
Section 4.09
|
Brokers
|
A-16
|
Section 4.10
|
No Other Information
|
A-16
|
Section 4.11
|
Guaranty
|
A-16
|
TABLE OF CONTENTS
(continued)
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Page
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ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
|
A-16
|
Section 5.01
|
Conduct of Business by the Company Pending the Merger
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A-16
|
ARTICLE VI
COVENANTS OF THE PARTIES
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A-18
|
Section 6.01
|
Proxy Statement
|
A-18
|
Section 6.02
|
Company Stockholders Meeting
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A-19
|
Section 6.03
|
Access to Information; Confidentiality
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A-19
|
Section 6.04
|
No Solicitation
|
A-19
|
Section 6.05
|
Directors and Officers Indemnification and Insurance
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A-21
|
Section 6.06
|
Employee Benefits Matters
|
A-22
|
Section 6.07
|
HSR Act Filing
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A-23
|
Section 6.08
|
Notification of Certain Matters
|
A-24
|
Section 6.09
|
Further Action; Reasonable Best Efforts
|
A-24
|
Section 6.10
|
Public Announcements
|
A-25
|
Section 6.11
|
Solvency Opinion
|
A-25
|
Section 6.12
|
Obligations of Merger Sub.
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A-25
|
Section 6.13
|
Rule 16b-3
|
A-25
|
Section 6.14
|
Financing
|
A-25
|
Section 6.15
|
Shareholder Litigation
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A-26
|
Section 6.16
|
Resignations
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A-26
|
ARTICLE VII
CONDITIONS TO THE MERGER
|
A-26
|
Section 7.01
|
Conditions to the Obligations of Each Party
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A-26
|
Section 7.02
|
Conditions to the Obligations of Parent and Merger Sub.
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A-27
|
Section 7.03
|
Conditions to the Obligations of the Company
|
A-27
|
ARTICLE VIII
TERMINATION
|
A-27
|
Section 8.01
|
Termination
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A-27
|
Section 8.02
|
Effect of Termination
|
A-29
|
Section 8.03
|
Fees and Expenses; Termination Fees
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A-29
|
ARTICLE IX
GENERAL PROVISIONS
|
A-30
|
Section 9.01
|
Non-Survival of Representations, Warranties and Agreements
|
A-30
|
Section 9.02
|
Notices
|
A-30
|
Section 9.03
|
Amendment
|
A-31
|
Section 9.04
|
Waiver
|
A-31
|
Section 9.05
|
Certain Definitions
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A-31
|
Section 9.06
|
Severability
|
A-33
|
Section 9.07
|
Entire Agreement; Assignment
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A-33
|
Section 9.08
|
No Third Party Beneficiaries
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A-33
|
Section 9.09
|
Governing Law
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A-33
|
Section 9.10
|
Sole and Exclusive Remedy; Specific Performance;
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Submission to Jurisdiction; No Recourse
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A-33
|
Section 9.11
|
Waiver of Jury Trial
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A-34
|
Section 9.12
|
Headings
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A-34
|
Section 9.13
|
Counterparts
|
A-34
|
Exhibit A - Form of Guaranty
|
|
Exhibit B - Certificate of Incorporation of Merger Sub
|
|
LIST OF DISCLOSURE
SCHEDULE SECTIONS
Section 3.01
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|
Subsidiaries
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|
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Section 3.03(a)
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|
Stock Options
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|
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Section 3.05(a)
|
|
Required Consents
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|
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|
Section 3.07(c)
|
|
Liabilities
|
|
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|
Section 3.08
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|
Leases
|
|
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|
Section 3.09
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|
Litigation
|
|
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|
Section 3.10(a)
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|
Employee Benefit Plans
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|
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|
Section 3.10(c)
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|
Excess Parachute Payments; Excise Taxes
|
|
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Section 3.10(e)
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|
Post-Termination Benefits
|
|
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Section 3.12(a)
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|
Intellectual Property Exceptions
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Section 3.12(b)
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|
Scheduled Intellectual Property
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|
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Section 3.13(c)
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Taxes/Audits; Proceedings
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Section 3.17
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|
Insurance Policies
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|
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|
Section 5.01
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|
Conduct of Business
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|
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Section 9.05(a)
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Persons with Knowledge
|
INDEX OF DEFINED
TERMS
Acceptable Confidentiality Agreements
|
|
Section 6.04(g)
|
Acquisition Proposal
|
|
Section 6.04(g)
|
Action
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|
Section 3.09
|
Affiliate
|
|
Section 9.05(a)
|
Agreement
|
|
Recitals
|
Antitrust Laws
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|
Section 6.07(b)
|
Balance Sheet
|
|
Section 3.07(c)
|
Beneficial owner
|
|
Section 9.05(a)
|
Business Day
|
|
Section 9.05(a)
|
Capitalization Date
|
|
Section 3.03(a)
|
Certificate of Merger
|
|
Section 1.03
|
Certificates
|
|
Section 2.01(a)
|
Change in Board Recommendation
|
|
Section 6.04(c)
|
Closing
|
|
Section 1.02
|
Closing Date
|
|
Section 1.02
|
Code
|
|
Section 3.10(c)
|
Company Board
|
|
Recitals
|
Company Class B Common Stock
|
|
Section 2.01(a)
|
Company Common Stock
|
|
Section 2.01(a)
|
Company Material Adverse Effect
|
|
Section 9.05(a)
|
Company Permits
|
|
Section 3.06(a)
|
Company Preferred Stock
|
|
Section 3.03(a)
|
Company Stock Option Plans
|
|
Section 2.03(a)
|
Company Stock Options
|
|
Section 2.03(a)
|
Company Stockholders Meeting
|
|
Section 6.02
|
Company Subsidiary
|
|
Section 2.01(b)
|
Company Termination Fee
|
|
Section 8.03(d)
|
Company Warrants
|
|
Section 2.03(a)
|
Confidentiality Agreement
|
|
Section 6.03(c)
|
Contract
|
|
Section 3.05(a)
|
Control
|
|
Section 9.05(a)
|
Copyright Office
|
|
Section 3.12(b)
|
Credit Agreement
|
|
Section 9.05(a)
|
DGCL
|
|
Section 1.01
|
Disclosure Schedule
|
|
Article III
|
Dissenting Shares
|
|
Section 2.04(a)
|
Effective Time
|
|
Section 1.03
|
Environmental Law
|
|
Section 9.05(a)
|
Equity Financing
|
|
Section 4.07
|
Equity Financing Commitments
|
|
Section 4.07
|
ERISA
|
|
Section 3.10(a)
|
ERISA Affiliate
|
|
Section 3.10(b)
|
Exchange Act
|
|
Section 3.05(b)
|
Exchange Fund
|
|
Section 2.02(b)
|
Expenses
|
|
Section 8.03(a)
|
Expiration Date
|
|
Section 8.01(b)
|
FDA
|
|
Section 3.05(b)
|
Financing
|
|
Section 4.07
|
Financing Commitments
|
|
Section 4.07
|
Form 10-K
|
|
Section 3.14(b)
|
GAAP
|
|
Section 3.07(b)
|
Governmental Authority
|
|
Section 3.05(b)
|
Grant Date
|
|
Section 3.03(b)
|
Guarantor
|
|
Recitals
|
Guaranty
|
|
Recitals
|
Hazardous Substance
|
|
Section 9.05(a)
|
HSR Act
|
|
Section 3.05(b)
|
Indemnified Parties
|
|
Section 6.05(a)
|
Intellectual Property
|
|
Section 3.12(a)
|
IRS
|
|
Section 3.10(a)
|
ISRA
|
|
Section 3.05(b)
|
Knowledge of the Company
|
|
Section 9.05(a)
|
Law
|
|
Section 3.05(a)
|
Leases
|
|
Section 3.08
|
Liabilities
|
|
Section 3.07(c)
|
Liens
|
|
Section 9.05(a)
|
Merger
|
|
Recitals
|
Merger Consideration
|
|
Section 2.01(a)
|
Merger Sub.
|
|
Recitals
|
Multiemployer Plan
|
|
Section 3.10(b)
|
NJDEP
|
|
Section 7.03(d)
|
Notice of Change in Board Recommendation
|
|
Section 6.04(e)
|
Offering Materials
|
|
Section 6.14(a)
|
Option Consideration
|
|
Section 2.03(a)
|
Parent
|
|
Recitals
|
Paying Agent
|
|
Section 2.02(a)
|
Person
|
|
Section 9.05(a)
|
Plans
|
|
Section 3.10(a)
|
Proxy Statement
|
|
Section 3.05(b)
|
PTO
|
|
Section 3.12(b)
|
Purchaser Welfare Benefit Plans
|
|
Section 6.06(c)
|
Regulatory Authority
|
|
Section 9.05(a)
|
Representatives
|
|
Section 6.03(a)
|
Sarbanes-Oxley Act
|
|
Section 3.06(c)
|
Scheduled Intellectual Property
|
|
Section 3.12(b)
|
SEC
|
|
Article III
|
SEC Reports
|
|
Section 3.07(a)
|
Section 262
|
|
Section 2.04(a)
|
Securities Act
|
|
Section 3.07(a)
|
Shares
|
|
Section 2.01(a)
|
Special Committee
|
|
Recitals
|
Specified Contract
|
|
Section 3.14(b)
|
Stockholder Approval
|
|
Section 3.15(b)
|
subsidiaries
|
|
Section 9.05(a)
|
subsidiary
|
|
Section 9.05(a)
|
Substantial Detriment
|
|
Section 6.07(c)
|
Superior Proposal
|
|
Section 6.04(g)
|
Surviving Corporation
|
|
Section 1.01
|
Tax
|
|
Section 9.05(a)
|
Tax Returns
|
|
Section 9.05(a)
|
Taxes
|
|
Section 9.05(a)
|
Termination Date
|
|
Section 8.01
|
AGREEMENT AND PLAN
OF MERGER
This
AGREEMENT AND PLAN OF MERGER, is made as of October 29, 2007 (the
Agreement
), by and
among NYCOMED US INC., a company organized under the laws of New York (
Parent
), PHASE
MERGER SUB INC., a Delaware corporation and a wholly-owned subsidiary of Parent (
Merger
Sub
), and BRADLEY PHARMACEUTICALS, INC., a Delaware corporation (the
Company
).
WHEREAS,
the board of directors of the Company (the
Company Board
) acting upon the
recommendation of the Special Committee of the Company Board formed for the purpose of
evaluating strategic alternatives for the Company and making a recommendation to the
Company Board regarding this Agreement and the Merger (the
Special Committee
) has (i)
determined that the merger of Merger Sub with and into the Company, upon the terms and
provisions of, and subject to the conditions set forth in, this Agreement (the
Merger
)
is advisable and in the best interests of the Companys stockholders, (ii) approved this
Agreement and the Merger and the other transactions contemplated hereby and (iii)
recommended approval and adoption of this Agreement and the Merger by the Companys
stockholders;
WHEREAS,
the respective boards of directors of each of Parent and Merger Sub deem it in the best
interests of their respective stockholders to consummate the Merger, and such boards of
directors have approved this Agreement and the Merger and declared the advisability of
this Agreement and the Merger; and
WHEREAS,
concurrently with the execution of this Agreement, and as a condition and inducement to
the Companys willingness to enter into this Agreement, Nycomed S.C.A., SICAR (the
Guarantor
) has provided a guaranty (the
Guaranty
) in favor of the Company, in the
form attached hereto as Exhibit A.
NOW,
THEREFORE, in consideration of the foregoing and the representations, warranties,
covenants and agreements herein contained, and intending to be legally bound hereby,
Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I
THE MERGER
Section
1.01
The Merger
. Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the General Corporation Law of the State of Delaware
(the
DGCL
), at the Effective Time, (a) Merger Sub shall be merged with and into the
Company and (b) the separate corporate existence of Merger Sub shall cease and the
Company shall continue as the surviving corporation of the Merger (the
Surviving
Corporation
).
Section
1.02
Closing.
Unless this Agreement shall have been terminated in accordance with Section
8.01, and subject to the satisfaction or waiver of the conditions set forth in ARTICLE
VII, the closing of the Merger (the
Closing
) will take place at 10:00 a.m. (local time)
at the offices of Morrison & Foerster LLP, 1290 Avenue of the Americas, New York, NY
10104 on the third business day following the date on which the conditions set forth in
Sections 7.01(a) and (b) are satisfied or waived in accordance with this Agreement or at
such other time, date or place as Parent and the Company may agree (the date on which the
Closing occurs, the
Closing Date
).
Section
1.03
Effective Time
. Upon the terms and subject to the conditions set forth in this
Agreement, on the Closing Date, the parties hereto shall file a certificate of merger
(the
Certificate of Merger
) in such form as is required by, and executed and
acknowledged in accordance with, the relevant provisions of the DGCL. The Merger shall
become effective at such date and time as the Certificate of Merger is duly filed with
the Secretary of State of the State of Delaware or at such subsequent date and time as
Merger Sub and the Company shall agree and specify in the Certificate of Merger. The time
at which the Merger becomes effective is referred to in this Agreement as the
Effective
Time
.
Section
1.04
Effect of the Merger
. At and after the Effective Time, the effects of the Merger
shall be as provided in the DGCL, including Section 259 thereof.
Section
1.05
Certificate of Incorporation; Bylaws
.
(a)
At the Effective Time, the certificate of incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be amended as of the Effective Time to
read in its entirety as set forth in Exhibit B attached hereto and, as so amended, shall
be the certificate of incorporation of the Surviving Corporation until thereafter amended
in accordance with the provisions thereof and as provided by Law.
(b)
At the Effective Time, the bylaws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be the bylaws of the Surviving Corporation until thereafter amended
as provided by Law, the certificate of incorporation of the Surviving Corporation and
such bylaws.
Section
1.06
Directors and Officers
. The directors of Merger Sub immediately prior to the
Effective Time shall be the initial directors of the Surviving Corporation, each to hold
office in accordance with the certificate of incorporation and bylaws of the Surviving
Corporation, and the officers of the Company immediately prior to the Effective Time
shall be the initial officers of the Surviving Corporation, each to hold office in
accordance with the certificate of incorporation and bylaws of the Surviving Corporation,
in each case until their respective successors are duly elected or appointed and
qualified or until the earlier of their death, resignation or removal.
ARTICLE II
CONVERSION OF
SECURITIES; EXCHANGE OF CERTIFICATES
Section
2.01
Conversion of Securities
. At the Effective Time, by virtue of the Merger and without
any action on the part of Parent, Merger Sub, the Company or the holders of any of the
following securities:
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(a)
Conversion of Company Common Stock and Company Class B Common Stock
. Each share of
common stock, par value $0.01 per share, of the Company (the
Company Common
Stock
), and each share of Class B Common Stock, par value $0.01 per share, of the
Company (the
Company Class B Common Stock
; all issued and outstanding shares of
Company Common Stock and Company Class B Common Stock being hereinafter
collectively referred to as the
Shares
) issued and outstanding immediately prior
to the Effective Time (other than any Shares to be cancelled pursuant to Section
2.01(b) and any Dissenting Shares) shall be cancelled and shall be converted
automatically into the right to receive $20.00 in cash, without interest (the
Merger Consideration
), payable upon surrender, in the manner provided in Section
2.02, of the certificate (collectively, the
Certificates
) that formerly evidenced
such Shares.
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(b)
Cancellation of Treasury Stock
. Each share of Company Common Stock or Company Class
B Common Stock held by the Company as treasury stock, and each share of Company
Common Stock or Company Class B Common Stock held by any direct or indirect
subsidiary of the Company (a
Company Subsidiary
) immediately prior to the
Effective Time shall automatically be cancelled and cease to exist without any
conversion thereof and no consideration shall be paid with respect thereto.
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(c)
Capital Stock of Merger Sub
. Each share of common stock, par value $0.01 per share,
of Merger Sub issued and outstanding immediately prior to the Effective Time shall
be converted into and become one (1) validly issued, fully paid and nonassessable
share of common stock, par value $0.01 per share, of the Surviving Corporation.
Following the Effective Time, each certificate evidencing ownership of shares of
Merger Sub common stock shall evidence ownership of such shares of the
Surviving Corporation.
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(d)
Adjustments.
If, between the date of this Agreement and the Effective Time, the
number of Shares is changed into a different number of shares or a different class,
by reason of any reclassification, recapitalization, stock split, stock dividend,
subdivision, combination, exchange of shares, rights issuance or similar event,
other than pursuant to the Merger and in accordance with this Agreement, the Merger
Consideration shall be correspondingly adjusted, without duplication, to
reflect such change.
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Section
2.02
Surrender of Certificates
.
(a)
Paying Agent
. Prior to the Effective Time, Parent shall (i) select a bank or trust
company, satisfactory to the Company in its reasonable discretion, to act as the paying
agent in the Merger (the
Paying Agent
) and (ii) enter into a paying agent agreement
with the Paying Agent, the terms and conditions of which are satisfactory to the Company
in its reasonable discretion.
(b)
Exchange Fund
. At the Effective Time, on the Closing Date, Parent shall deposit (or cause
to be deposited) funds with the Paying Agent in amounts sufficient for the payment of the
aggregate Merger Consideration payable under Section 2.01(a). Such funds deposited with
the Paying Agent are referred to as the
Exchange Fund
.
(c)
Payment Procedures
.
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(i)
Letter of Transmittal
. As promptly as practicable after the Effective Time, Parent
shall cause the Paying Agent to mail to each holder of record of a Share as of
immediately prior to the Effective Time (A) a letter of transmittal in customary
form, specifying that delivery shall be effected, and risk of loss and title to
such holders Shares shall pass, only upon proper delivery of the Certificates
representing such Shares to the Paying Agent and (B) instructions for surrendering
such Certificates.
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(ii)
Surrender of Certificates
. Upon surrender of a Certificate for cancellation to the
Paying Agent, together with a duly executed letter of transmittal and any other
documents reasonably required by the Paying Agent, the holder of that Certificate
shall be entitled to receive, and the Paying Agent shall pay in exchange therefor,
the Merger Consideration payable in respect of the number of Shares evidenced by
that Certificate. Any Certificates so surrendered shall be cancelled
immediately. No interest shall accrue or be paid on any amount payable upon
surrender of Certificates.
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(iii)
Unregistered Transferees
. If any Merger Consideration is to be paid to a Person
other than the Person in whose name the surrendered Certificate is registered, then
the Merger Consideration may be paid to such a transferee so long as (A) the
surrendered Certificate is accompanied by all documents required to evidence and
effect that transfer and (B) the Paying Agent shall be entitled to deduct any
applicable transfer Taxes from the Merger Consideration in accordance with the
provisions of Section 2.02(e), unless the Person requesting such payment
establishes to the satisfaction of the Paying Agent that any such Taxes have
already been paid or are not applicable.
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(iv)
No Other Rights
. Until surrendered in accordance with this Section 2.02(c), each
Certificate shall be deemed, from and after the Effective Time, to represent only
the right to receive the applicable Merger Consideration. Any Merger Consideration
paid upon the surrender of any Certificate shall be deemed to have been paid in
full satisfaction of all rights pertaining to that Certificate and the shares of
Company Common Stock or Company Class B Common Stock formerly represented by it.
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(d)
No Further Transfers
. At the Effective Time, the stock transfer books of the Company
shall be closed and there shall be no further registration of transfers of the shares of
Company Common Stock or Company Class B Common Stock that were outstanding immediately
prior to the Effective Time.
(e)
Withholding Rights
. Each of the Paying Agent, the Surviving Corporation, the Company,
Parent and Merger Sub shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of Shares or Company Stock
Options such amounts for Taxes as it is required to deduct and withhold with respect to
such payment under all applicable Tax Laws and pay such withholding amount over to the
appropriate Governmental Authority. To the extent that amounts are so withheld by the
Paying Agent, the Surviving Corporation, the Company, Parent or Merger Sub, as the case
may be, such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the Shares or Company Stock Options, as the case may
be, in respect of which such deduction and withholding was made by the Paying Agent, the
Surviving Corporation, the Company, Parent or Merger Sub, as the case may be.
(f)
No Liability
. None of Parent, the Surviving Corporation or the Paying Agent shall be
liable to any holder of Certificates for any amount properly paid to a public official
under any applicable abandoned property, escheat or similar Laws.
(g)
Investment of Exchange Fund
. As directed by Parent, the Exchange Fund shall be invested
by the Paying Agent in (i) direct obligations of the United States of America or (ii)
obligations for which the full faith and credit of the United States of America is
pledged to provide for payment of all principal and interest. Any interest and other
income resulting from such investment shall become a part of the Exchange Fund and shall
inure to Parent for Tax purposes, and any amounts in excess of the amounts payable under
Section 2.01(a) shall be paid to Parent upon termination of the Exchange Fund pursuant to
Section 2.02(h);
provided, however
, that (i)
no such investment or losses thereon
shall affect the Merger Consideration payable to the holders of Shares and (ii) promptly
following any losses that cause the Exchange Fund to then hold less than the aggregate
Merger Consideration payable in respect of Shares for which payment shall not theretofore
have been made, Parent shall promptly provide additional funds to the Paying Agent for
the benefit of the stockholders of the Company to the extent that such losses have so
caused the Exchange Fund to hold less than the aggregate Merger Consideration payable in
respect of such Shares for which payment has not theretofore been made. The Exchange Fund
shall not be used for any purpose other than to fund payments due pursuant to Section
2.01.
(h)
Termination of Exchange Fund
. Without limiting Parents right to receive interest and
other income in respect of the Exchange Fund as described in Section 2.02(g), any portion
of the Exchange Fund that remains unclaimed by the holders of Certificates twelve months
after the Effective Time shall be delivered by the Paying Agent to Parent upon demand.
Thereafter, any holder of Certificates who has not complied with this ARTICLE II shall
look only to Parent for payment of the applicable Merger Consideration.
(i)
Lost, Stolen or Destroyed Certificates
. If any Certificate is lost, stolen or destroyed,
upon the making of an affidavit of that fact by the Person claiming such Certificate to
be lost, stolen or destroyed and the posting by such Person of a bond in the form and
amount reasonably required by Parent as indemnity against any claim that may be made
against Parent on account of the alleged loss, theft or destruction of such Certificate,
the holder thereof shall be entitled to receive, and the Paying Agent shall pay in
exchange therefor, the applicable Merger Consideration to such Person in exchange for
such lost, stolen or destroyed Certificate.
Section
2.03
Options and Warrants
.
(a)
Except as otherwise agreed prior to the Effective Time by Parent and the Company,
immediately prior to the Effective Time, (i) all options to purchase shares of Company
Common Stock (the
Company Stock Options
) granted under any plan, arrangement or
agreement (the
Company Stock Option Plans
) shall be cancelled by the Company and shall
no longer be outstanding thereafter. In consideration for such cancellation (whether or
not the Company Stock Option was then vested and exercisable), the holder thereof shall
thereupon be entitled to receive, within 5 days after the Effective Time, a cash payment
without interest from the Surviving Corporation in respect of such cancellation in an
amount (if any) equal to the product of (x) the number of shares of Company Common Stock
subject to such Company Stock Option, whether or not then vested and exercisable, and (y)
the excess, if any, of the Merger Consideration over the exercise price per share of
Company Common Stock subject to such Company Stock Option (the
Option Consideration
),
reduced by any Tax required to be withheld with respect to such payment in accordance
with the provisions of Section 2.02(e); and (ii) the Company shall take all actions
reasonably requested by Parent and shall use its reasonable best efforts to cause to be
exercised all outstanding warrants to purchase shares of Company Common Stock (the
Company Warrants
) that are not exercised prior to the Effective Time.
(b)
Prior to the Effective Time, the Company shall provide notice to each holder of Company
Stock Options describing the treatment of such Company Stock Options under this Section
2.03.
(c)
Prior to the Effective Time, the Company, in consultation with Parent, shall use its
reasonable best efforts to obtain any necessary consents to give effect to the treatment
of Company Stock Options as contemplated by Section 2.03(a), to the extent that such
treatment is not expressly provided for by the terms of the applicable Company Stock
Option Plan, which consents may be deemed obtained upon acceptance of the cash payments
contemplated by Section 2.03(a) by the holders of such Company Stock Options if such
deemed consent is described in the notice required under this Section 2.03 to such
holders that acceptance of such payments shall be treated as consent.
Section
2.04
Dissenting Shares
.
(a)
Notwithstanding any provision of this Agreement to the contrary, any shares of Company
Common Stock or Company Class B Common Stock outstanding immediately prior to the
Effective Time for which the holder thereof (i) has not voted in favor of the Merger or
consented to it in writing and (ii) has demanded the appraisal of such shares in
accordance with, and has complied in all respects with, Section 262 of the DGCL
(collectively, the
Dissenting Shares
) shall not be converted into the right to receive
the Merger Consideration
in accordance with Section 2.01(a).
At the Effective Time, (x) all Dissenting Shares shall be cancelled and cease to exist
and (y) the holder or holders of Dissenting Shares shall be entitled only to such rights
as may be granted to them under Section 262 of the DGCL (
Section 262
).
(b)
Notwithstanding the provisions of this Section 2.04, if any holder of Dissenting Shares
effectively withdraws or loses such appraisal rights (through failure to perfect such
appraisal rights or otherwise), then that holders shares (i) shall no longer be deemed
to be Dissenting Shares and (ii) shall be treated as if they had been converted
automatically at the Effective Time into the right to receive the Merger Consideration,
without interest thereon, upon surrender of the Certificate formerly representing such
shares in accordance with Section 2.02. In such event, if the Exchange Fund shall then
remain in place, Parent shall promptly deposit or cause the Surviving Corporation to
deposit in the Exchange Fund the aggregate amount of Merger Consideration in respect of
such Dissenting Shares.
(c)
The Company shall give Parent (i) prompt notice of any demands for appraisal of any
shares of Company Common Stock or Company Class B Common Stock, the withdrawals of such
demands, and any other instrument served on the Company under the provisions of Section
262 and (ii) the right to participate in all negotiations and proceedings with respect to
demands for appraisal under the DGCL. The Company shall not offer or agree to make or
make any payment with respect to any demands for appraisal or offer to settle or settle
any such demands without the prior written consent of Parent.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
The
Disclosure Schedule attached hereto (the
Disclosure Schedule
) sets forth, among other
things, items the disclosure of which is necessary either in response to an express
disclosure requirement contained in a provision hereof or as an exception to one or more
of the Companys representations or warranties contained in this ARTICLE III, or to one
or more of the Companys covenants contained in Section 5.01;
provided, however
, that,
notwithstanding anything in this Agreement to the contrary, the mere inclusion of an item
in the Disclosure Schedule as an exception to a representation or warranty or covenant
shall not be deemed an admission by the Company that such item represents a material
exception or material fact, event or circumstance or that such item would or would
reasonably be expected to, individually or in the aggregate, have a Company Material
Adverse Effect. Notwithstanding that each disclosure set forth in the Disclosure Schedule
is identified by reference to, or has been grouped under a heading referring to, a
specific individual section of this Agreement, such disclosure shall be deemed a
qualification or exception to such section and also to any other sections to which its
relevance is reasonably apparent on its face.
Except
as set forth in the Disclosure Schedule and except as disclosed in any forms, reports,
statements, schedules, certifications and other documents (including exhibits and any
amendments) filed by the Company with, or furnished by the Company to, the Securities and
Exchange Commission (
SEC
) since January 1, 2007, the Company represents and warrants to
Parent and Merger Sub as set forth in 3.01 through Section 3.19 that:
Section
3.01
Organization and Qualification
. Each of the Company and the Company Subsidiaries is
a corporation duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as it is now being
conducted, except where the failure to be in good standing would not, individually or in
the aggregate, have a Company Material Adverse Effect. The Company and each of the
Company Subsidiaries is duly qualified or licensed as a foreign corporation to do
business and is in good standing in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its business makes such
qualification or licensing necessary, except where the failure to be so qualified or
licensed and in good standing would not, individually or in the aggregate, have a Company
Material Adverse Effect. A true and complete list of all of the Company Subsidiaries,
together with the jurisdiction of incorporation of each such Subsidiary, is set forth in
Section 3.01 of the Disclosure Schedule. Except as set forth in Section 3.01 of the
Disclosure Schedule, the Company has made available to Parent complete and accurate
copies of the minutes of all
meetings of the shareholders of the Company and each of the Company and the Company
Subsidiaries and the committees of each of such Boards of Directors (other than the
Special Committee), in each case held since January 1, 2004 and prior to the date hereof.
Section
3.02
Certificate of Incorporation and Bylaws
. The Company has made available to Parent a
complete and correct copy of the certificate of incorporation and the bylaws, as in
effect as of the date of this Agreement, of the Company and each Company Subsidiary. Such
certificates of incorporation and bylaws are in full force and effect.
Section
3.03
Capitalization.
(a)
The authorized capital stock of the Company consists of (i) 26,400,000 shares of Company
Common Stock, (ii) 900,000 shares of Company Class B Common Stock, and (iii) 2,000,000 of
Preferred Stock, par value $0.01 per share (
Company Preferred Stock
). As of June 30,
2007 (the
Capitalization Date
), (A) 17,392,974 shares of Company Common Stock were
issued and outstanding, all of which are duly authorized, validly issued, fully paid and
nonassessable and were issued free of preemptive (or similar) rights, (B) 429,752 shares
of Company Class B Common Stock were issued and outstanding, (C) 6,000 shares of Company
Common Stock were reserved for issuance under outstanding warrants, (D) no shares of
Company Class B Common Stock were held by the Company as treasury stock, (E) no shares of
Company Common Stock or Company Class B Common Stock were held by the Company
Subsidiaries, (F) 877,058 shares of Company Common Stock were held by the Company as
treasury stock, (G) no shares of Company Preferred Stock were issued and outstanding, and
(H) 1,995,258 shares of Company Common Stock were reserved for future issuance in
connection with the Company Stock Option Plans (including 1,190,402 shares reserved
pursuant to outstanding Company Stock Options). Section 3.03(a) of the Disclosure
Schedule sets forth, as of the Capitalization Date, a summary of Company Stock Options
and other rights to purchase or receive shares of capital stock of the Company. Since the
Capitalization Date through the date of this Agreement, other than in connection with the
issuance of Shares pursuant to the exercise of Company Stock Options outstanding as of
the Capitalization Date and set forth in Section 3.03(a) of the Disclosure Schedule,
there has been no change in the number of shares of outstanding or reserved capital stock
of the Company or the number of outstanding Company Stock Options.
(b)
The Company has made available to Parent a true and complete copy of each Company Stock
Option Plan. Except as set forth in Section 3.03(a) of the Disclosure Schedule, there are
no (i) subscriptions, calls, contracts, options, warrants or other rights, agreements,
arrangements, understandings, restrictions or commitments of any character to which the
Company or any Company Subsidiary is a party or by which the Company or any Company
Subsidiary is bound relating to the issued or unissued capital stock of the Company or
any Company Subsidiary or obligating the Company or any Company Subsidiary to issue or
sell any shares of capital stock of the Company or any Company Subsidiary, (ii)
securities of the Company or securities convertible, exchangeable or exercisable for
shares of capital stock of the Company or any Company Subsidiary, or (iii) equity
equivalents, stock appreciation rights or phantom stock, ownership interests in the
Company or any Company Subsidiary or similar rights. All shares of Company Common Stock
subject to issuance as set forth in Section 3.03(a) are duly authorized and, upon
issuance on the terms and conditions specified in the instruments pursuant to which they
are issuable, will be validly issued, fully paid and nonassessable and free of preemptive
(or similar) rights. With respect to Company Stock Options, (i) each grant of a Company
Stock Option was duly authorized no later than the date on which the grant of such
Company Stock Option was by its terms to be effective (the
Grant Date
) by all necessary
corporate action, including, as applicable, approval by the Board of Directors of the
Company (or a duly constituted and authorized committee thereof) and any required
shareholder approval by the necessary number of votes or written consents, and the award
agreement governing such grant (if any) was duly executed and delivered by each party
thereto, (B) each such grant was made in accordance with the terms of the applicable
Company Stock Option Plan, the Exchange Act and all other applicable Laws, including the
rules and regulations of the New York Stock Exchange, (C) the per share exercise price of
each Company Stock Option was equal to or greater than the fair market value of a share
of Company Common Stock on the applicable Grant Date and (D) each such grant was properly
accounted for in accordance with GAAP in the Companys audited financial statements
included in the SEC Reports and disclosed in the SEC Reports in accordance with the
Exchange Act and all other applicable Laws.
(c)
Each outstanding share of capital stock of each Company Subsidiary is duly authorized,
validly issued, fully paid and nonassessable and was issued free of preemptive (or
similar) rights, and each such share is owned by the Company and/or by one (1) or more
wholly-owned Company Subsidiaries, free and clear of all Liens and free of any
restriction on the right to vote, sell or otherwise dispose of such capital stock or
other equity interests. Except for the capital stock of each of the Company Subsidiaries,
the Company does not own, directly or indirectly, any capital stock of, or other voting
securities or equity interests in, any corporation, partnership, joint venture,
association or other entity.
Section
3.04
Authority Relative to This Agreement
. The Company has all necessary corporate power
and authority to execute and deliver this Agreement, to perform its obligations hereunder
and to consummate the Merger. The execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the Merger have been duly and
validly authorized by all necessary corporate action by the Company Board and the Special
Committee, and no other corporate actions on the part of the Company are necessary to
authorize this Agreement or to consummate the Merger (other than the adoption of this
Agreement by the affirmative vote of the holders of a majority of the voting power of the
then outstanding shares of Company Common Stock and Company Class B Common Stock, voting
together as a class, entitled to vote thereon and the filing of the Certificate of
Merger). This Agreement has been duly and validly executed and delivered by the Company
and, assuming the due authorization, execution and delivery by Parent and Merger Sub,
constitutes a legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to the effect of any general principles of
equity, whether applied in a court of law or a court of equity, and by bankruptcy,
insolvency and similar Laws affecting creditors rights and remedies generally, including
all Laws relating to fraudulent transfers.
Section
3.05
No Conflict; Required Filings and Consents
.
(a)
The execution and delivery of this Agreement by the Company do not, and the performance
of this Agreement by the Company and the consummation by the Company of the Merger will
not (i) contravene, conflict with, violate or result in a breach of the certificate of
incorporation or bylaws of the Company, (ii) assuming that all consents, approvals and
other authorizations described in Section 3.05(b) have been obtained and that all filings
and other actions described in Section 3.05(b) have been made or taken, contravene,
conflict with or violate any U.S. federal, state or local or foreign statute, law,
ordinance, regulation, rule, code, executive order, judgment, decree or other order
(
Law
) applicable to the Company or any Company Subsidiary, except for such
contraventions, conflicts or violations that would not, individually or in the aggregate,
have a Company Material Adverse Effect, or (iii) assuming receipt of the consents from
the non-Company parties to the Contracts (as hereinafter defined) described in Section
3.05(a) of the Disclosure Schedule, result in any material breach or violation of or
constitute a default under (with or without notice or lapse of time or both), or result
in a loss of a material benefit under, give rise to a material obligation under, give to
others any right of termination, amendment, acceleration or cancellation of, or result in
the creation of a Lien on any property or asset of the Company or any Company Subsidiary
pursuant to any note, bond, mortgage, indenture, contract, lease, license, permit,
franchise or other binding commitment, instrument or obligation (each, a
Contract
) or
under any Law or Permit, in each case, to which the Company or any Company Subsidiary is
a party or by which the Company or a Company Subsidiary is bound or affected, except for
any such conflicts, violations, breaches, defaults or other occurrences that would not,
individually or in the aggregate, have a Company Material Adverse Effect.
(b)
The execution and delivery of this Agreement by the Company do not, and the performance
of this Agreement by the Company and the consummation by the Company of the Merger do not
and will not, require any consent, approval, authorization or permit of, or filing with
or notification to, any supranational, national, provincial, federal, state or local
government, regulatory or administrative authority, or any court, agency, commission,
tribunal, or judicial or arbitral body or self-regulated entity, whether domestic or
foreign, (a
Governmental Authority
), except for (i) applicable disclosure requirements
of the Securities Exchange Act of 1934, as amended (the
Exchange Act
), (ii) the
pre-merger notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the
HSR Act
), and the competition or merger control Laws of any
other applicable jurisdiction, (iii) the filing with, and clearance by, the SEC of a
proxy statement relating to the adoption of this Agreement by the Companys stockholders
(as amended or supplemented from time to time, the
Proxy
Statement
), (iv) any filings
required by, any approvals required under and any other applicable requirements of, the
rules and regulations of the New York Stock Exchange, (v) the filing and recordation of
appropriate merger documents as required by the DGCL and appropriate documents with the
relevant authorities of other states in which the Company is qualified to do business,
(vi) the filing of any required applications and notices with the U.S. Food and Drug
Administration (
FDA
) or any other federal, state, local or foreign Governmental
Authority that is concerned with the marketing, sale, use, handling and control, safety,
efficacy, reliability or manufacturing of drug or biological products or medical devices,
(vii) applicable requirements, if any, of the Industrial Site Recovery Act of the State
of New Jersey, N.J.S.A. 13:1k 6
et seq.
, as amended (
ISRA
), and (viii) such consents,
approvals, authorizations, permits, actions, notifications or filings, the failure of
which to be made or obtained would not, individually or in the aggregate, have a Company
Material Adverse Effect.
Section
3.06
Permits; Compliance with Laws
.
(a)
Except as would not, individually or in the aggregate, have a Company Material Adverse
Effect, (i) each of the Company and each Company Subsidiary is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances, exceptions,
consents, certificates, approvals and orders of any Governmental Authority necessary for
each such entity to own, lease and operate its properties or to carry on its business as
it is now being conducted (the
Company Permits
), (ii) all such Company Permits are in
full force and effect, (iii) no default or violation has occurred under any such Company
Permit and no notice of a default or violation has been received from any Governmental
Authority and (iv) neither the Company nor any Company Subsidiary has received any
written notification from any Governmental Authority threatening to revoke, suspend or
cancel any such Company Permit.
(b)
Each of the Company and each Company Subsidiary is, and at all times since January 1,
2007, has been, in compliance with all Company Permits and all Laws applicable to such
entity or by which any property or asset of such entity is bound or affected, and has not
received any written notice of any violation of any such Law, except as would not,
individually or in the aggregate, have a Company Material Adverse Effect.
(c)
The Company has made all certifications and statements required by the Sarbanes-Oxley Act
of 2002 and the related rules and regulations promulgated thereunder (the
Sarbanes-Oxley
Act
) with respect to the Companys filings pursuant to the Exchange Act. The Company has
established and maintains disclosure controls and procedures (as defined in Rule 13a-15
under the Exchange Act) as required by Rule 13a-15 of the Exchange Act.
(d)
The Company has designed a system of internal accounting control sufficient to comply, in
all material respects, with all legal and accounting requirements applicable to the
Company. The Company and the Company Subsidiaries have disclosed, based on their most
recent evaluation of internal controls, to the Companys and Company Subsidiaries
outside auditors and the audit committee of the board of directors of the Company and
Company Subsidiaries, (A) all significant deficiencies and material weaknesses in the
design or operation of its internal controls over financial reporting (as defined in Rule
13a-15(f) of the Exchange Act) that are reasonably likely to adversely affect in any
material respect the Companys and Company Subsidiaries ability to record, process,
summarize and report financial information and (B) any fraud, whether or not material,
that involves management or other employees who have a significant role in the Companys
or the Company Subsidiaries internal controls over financial reporting.
(e)
Since January 1, 2007, except as would not, individually or in the aggregate, have a
Company Material Adverse Effect, (i) the Company and the Company Subsidiaries have not
received any warning letters, notice of adverse findings, or similar documents that
assert a lack of substantial compliance with any applicable Laws, orders, or regulatory
requirements that have not been fully resolved to the satisfaction of the FDA or any
other Regulatory Authorities, as applicable, and none of the Company and the Company
Subsidiaries has knowledge (or has been notified in writing by a third party) of any
pending regulatory action, investigation or inquiry of any sort (other than non-material
routine or periodic inspections or reviews) against any of the Company or the Company
Subsidiaries; and (ii) there have been no product recalls, warnings, notifications or
safety alerts conducted or issued by the Company or the Company Subsidiaries, the FDA or
any other Regulatory Authorities or otherwise with respect to the Companys and the
Company Subsidiaries products, and none of the foregoing has been requested or demanded
by the FDA or any other Regulatory Authorities.
Section
3.07
SEC Filings; Financial Statements; Undisclosed Liabilities
.
(a)
The Company has filed with the SEC all forms, reports, statements, schedules,
certifications and other documents (including exhibits) required to be filed by it with
the SEC since January 1, 2007 (the
SEC Reports
). The SEC Reports (including any
documents or information incorporated by reference therein and including any financial
statements or schedules included therein) (i) at the time they were filed, complied in
all material respects with, and were prepared in accordance with, all applicable
requirements of the Securities Act of 1933, as amended (the
Securities Act
), the
Exchange Act, the Sarbanes-Oxley Act and, in each case, the rules and regulations of the
SEC promulgated thereunder, and (ii) did not, at the time they were filed, or if amended,
as of the date of such amendment, contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were made,
not misleading.
(b)
Each of the consolidated financial statements (including, in each case, any notes and
schedules thereto) included or incorporated by reference in the SEC Reports complied in
all material respects with the applicable accounting requirements and rules and
regulations of the SEC, and each fairly presents, in all material respects, the
consolidated financial position, results of operations and cash flows of the Company and
the Company Subsidiaries as at the respective dates thereof and for the respective
periods indicated therein in conformity with United States generally accepted accounting
principles (
GAAP
) consistently applied (except as described therein and subject, in the
case of unaudited statements, to normal and recurring year-end adjustments). All of the
Company Subsidiaries are consolidated for accounting purposes.
(c)
Except as and to the extent set forth on the consolidated balance sheet (including notes
thereof) of the Company and the Company Subsidiaries as at June 30, 2007 included in the
Form 10-Q for the quarter ended June 30, 2007 (the
Balance Sheet
) neither the Company
nor any Company Subsidiary has any liability or obligation of any nature (whether
accrued, absolute, contingent or otherwise) (collectively,
Liabilities
), except for
Liabilities (i) incurred in the ordinary course of business and in a manner consistent
with past practice since June 30, 2007, (ii) set forth in Section 3.07(c) of the
Disclosure Schedule, (iii) arising under this Agreement, or (iv) that would not,
individually or in the aggregate, have a Company Material Adverse Effect.
(d)
Neither the Company nor any of the Company Subsidiaries is a party to, or has any
commitment to become a party to, any joint venture, off balance sheet partnership or any
similar Contract (including any Contract or arrangement relating to any transaction or
relationship between or among the Company and any of the Company Subsidiaries, on the one
hand, and any unconsolidated Affiliate, including any structured finance, special purpose
or limited purpose entity or person, on the other hand, or any off balance sheet
arrangements (as defined in Item 303(a) of Regulation S-K under the Exchange Act)),
where the result, purpose or intended effect of such Contract is to avoid disclosure of
any material transaction involving, or material liabilities of, the Company or any of the
Company Subsidiaries in the Companys or such Company Subsidiarys published financial
statements or other SEC Reports.
Section
3.08
Title to Properties
. (a) Each of the Company and Company Subsidiaries has valid
leasehold or easement interests in all of its material properties and assets (
Leases
).
Set forth on Section 3.08 of the Disclosure Schedule is a list setting forth such real
property Leases. All such interests of the Company or any Company Subsidiary in such
properties and assets are free and clear of all Liens other than (i) Liens for Taxes not
yet due and payable, (ii) Liens in respect of property or assets of the Company or any of
the Company Subsidiaries imposed by law which were incurred in the ordinary course of
business, such as carriers, warehousemens and mechanics Liens, statutory landlords
Liens, and other similar Liens arising in the ordinary course of business, and (x) that
do not in the aggregate materially detract from the value of such property or assets or
materially impair the use thereof in the operation of the business of the Company or any
Company Subsidiary or (y) that are not yet due or are being contested in good faith by
appropriate proceedings, which proceedings have the effect of preventing the forfeiture
or sale of the property or asset subject to such Lien, and (iii) easements,
encroachments, covenants, rights-of-way, restrictions, minor defects or irregularities in
title and other similar charges or encumbrances not interfering in any material respect
with the ordinary conduct of the business of the Company or any of the Company
Subsidiaries and municipal and zoning ordinances.
Section
3.09
Absence of Litigation
. Except as set forth in Section 3.09 to the Disclosure
Schedule, (i) there is no litigation, suit, claim, action, proceeding, hearing, petition,
grievance, complaint or investigation (an Action) pending or, to the knowledge of the
Company, threatened, against, or affecting, the Company or any Company Subsidiary, by or
before any Governmental Authority or arbitrator which, if adversely determined, would,
individually or in the aggregate, have a Company Material Adverse Effect; and (ii)
neither the Company nor any Company Subsidiary is subject to any order, writ, judgment,
injunction, decree, determination or award of, or, to the knowledge of the Company, any
continuing investigation by, any Governmental Authority, except as would not,
individually or in the aggregate, have a Company Material Adverse Effect.
Section
3.10
Employee Benefit Plans
.
(a)
Section 3.10(a) of the Disclosure Schedule sets forth a true and complete list of (i) all
material employee benefit plans (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended (
ERISA
)) and all material bonus, stock option,
stock purchase, restricted stock, incentive, deferred compensation, retiree medical or
life insurance, supplemental retirement, severance or other benefit plans, programs or
arrangements; and (ii) all material employment, termination, severance or other
contracts, agreements or commitments to which the Company or any Company Subsidiary is a
party, with respect to which the Company or any Company Subsidiary has or may reasonably
be expected to have any obligation or which are maintained, contributed to or sponsored
by the Company or any Company Subsidiary for the benefit of any current or former
employee, consultant, officer or director of the Company or any Company Subsidiary
(collectively, the
Plans
). The Company has made available to Parent a true and complete
copy (where applicable) of (A) each Plan (or, where a Plan has not been reduced to
writing, a summary of all material Plan terms of such Plan), (B) each trust or funding
arrangement prepared in connection with each such Plan, (C) the most recently filed
annual report on Internal Revenue Service (
IRS
) Form 5500 or any other annual report
required by applicable Law, (D) the most recently received IRS determination or opinion
letter for each applicable Plan, (E) the most recently prepared actuarial report and
financial statement in connection with each such Plan, and (F) the most recent summary
plan description, any summaries of material modification, any employee handbooks, and any
material written communications by the Company or the Company Subsidiaries to any current
or former employees, consultants, or directors of the Company or any Company Subsidiary
concerning the extent of the benefits provided under a Plan.
(b)
None of the Company or any Company Subsidiary or any other Person or entity that,
together with the Company or any Company Subsidiary, is or was treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code (each, together with the
Company and any Company Subsidiary, an
ERISA Affiliate
), has now or at any time within
the past six years (and in the case of any such other Person or entity, only during the
period within the past six years that such other Person or entity was an ERISA Affiliate)
contributed to, sponsored, or maintained (i) a pension plan (within the meaning of
Section 3(2) of ERISA) subject to Section 412 of the Code or Title IV of ERISA; or (ii) a
multiemployer plan (within the meaning of Section 3(37) or 4001(a)(3) of ERISA or the
comparable provisions of any other applicable Law) (a
Multiemployer Plan
).
(c)
No Plan exists that would reasonably be expected to result in the payment to any present
or former employee, director or consultant of the Company or any Company Subsidiary of
any money or other property or accelerate or provide any other rights or benefits to any
current or former employee, director or consultant of the Company or any Company
Subsidiary as a result of the consummation of the Merger (whether alone or in connection
with any other event) except as may otherwise be required by applicable Law. Except as
set forth in Section 3.10(c) of the Disclosure Schedule, neither the execution and
delivery of this Agreement nor the consummation of the Merger will (either alone or in
combination with another event) result in any payment or other benefit that has been or
may be made to any current or former employee or independent contractor of the Company or
any Company Subsidiary under any employment, severance or termination agreement, other
compensation arrangement or employee benefit plan or arrangement with the Company or any
Company Subsidiary to be characterized as an excess parachute payment, as such term is
defined in Section 280G of the United States Internal Revenue Code of 1986, as amended
(the
Code
). Except as set forth in Section 3.10(c) of the Disclosure Schedule, none of
the Company or any Company Subsidiary is a party to any material agreement, contract,
arrangement or plan pursuant to which it is bound to compensate any Person for any excise
or other additional Taxes paid pursuant to Section 4999 of the Code or any similar
provision of state, local or foreign Law.
(d)
Each Plan that is intended to be qualified under Section 401(a) of the Code, and each
trust established in connection with any Plan that is intended to be exempt from federal
income taxation under Section 501(a) of the Code has received a favorable determination
or opinion letter from the IRS, and to the knowledge of the Company, nothing has
occurred that would reasonably be expected to adversely affect such determination or
opinion.
(e)
(i) Each Plan has been established and administered in accordance with its terms, and in
compliance with the applicable provisions of ERISA, the Code and other applicable Laws,
except to the extent such noncompliance would not, individually or in the aggregate, have
a Company Material Adverse Effect, and (ii) except as set forth in Section 3.10(e) of the
Disclosure Schedule, no Plan provides post-termination benefits, and neither the Company
nor any Company Subsidiary has any obligation to provide any post-termination benefits
other than for health care continuation as required by Section 4980B of the Code or any
similar statute.
(f)
With respect to any Plan, (i) no Actions (other than routine claims for benefits in the
ordinary course) are pending or, to the knowledge of the Company, threatened, except for
those that would not, or would not reasonably be expected to, individually or in the
aggregate, have a Company Material Adverse Effect, (ii) to the knowledge of the Company,
no facts or circumstances exist that would reasonably be expected to give rise to any
Actions that would, individually or in the aggregate, have a Company Material Adverse
Effect, and (iii) to the knowledge of the Company, no administrative investigation, audit
or other administrative proceeding by the Department of Labor, the IRS or other
Governmental Authority is pending, in progress or threatened, except for those that would
not, individually or in the aggregate, have a Company Material Adverse Effect.
Section
3.11
Labor and Employment Matters
. Neither the Company nor any Company Subsidiary is or
has been within the last six years a party to any collective bargaining agreement or
other agreements or arrangements with any labor union or works council applicable to
Persons employed by the Company or any Company Subsidiary, nor is any such agreement or
arrangement being negotiated, nor, to the knowledge of the Company, are there any such
employees represented by a works council or a labor organization or activities or
proceedings of any labor union to organize any such employees.
Section
3.12
Intellectual Property
.
(a)
To the knowledge of the Company, the Company and/or the Company Subsidiaries own or
possess rights in all patents, trademarks, trade names, copyrights and other intellectual
property rights (collectively,
Intellectual Property
) reasonably necessary for the
conduct of the businesses of the Company and the Company Subsidiaries as now operated,
except where the failure to own or possess rights in any such Intellectual Property would
not individually or in the aggregate, have a Company Material Adverse Effect or except as
disclosed in Section 3.12(a) of the Disclosure Schedule. Except as set forth in Section
3.12(a) of the Disclosure Schedule and except as would not, individually or in the
aggregate, have a Company Material Adverse Effect, no claim with respect to the
Intellectual Property of the Company or any Company Subsidiary is being asserted in
writing by any Person against the use by the Company or any of the Company Subsidiaries
of any Intellectual Property of the Company or any Company Subsidiary, or challenging the
ownership, validity, enforceability or effectiveness of any of the Intellectual Property
of the Company or any Company Subsidiary.
(b)
Section 3.12(b) of the Disclosure Schedule sets forth: a true and complete list of all
material registered trademarks and registered service marks, trademark and service mark
applications, copyright and mask work registrations and applications, and patents and
patent applications currently owned by the Company and the Company Subsidiaries
(collectively,
Scheduled Intellectual Property
). Each item of the Scheduled
Intellectual Property has been duly registered or application filed with the U.S. Patent
and Trademark Office (the
PTO
), U.S. Copyright Office (the
Copyright Office
), or
other appropriate or equivalent Governmental Authority in other jurisdictions, in each
case as and to the extent so indicated on Section 3.12(b) of the Disclosure Schedule.
Except as would not, individually or in the aggregate, have a Company Material Adverse
Effect, to the Companys knowledge, all patent, copyright and trademark applications,
renewals and other similar fees have been properly paid and are current, and all patent,
copyright and trademark registrations and filings remain in full force and effect.
Section
3.13
Taxes
.
(a)
The Company and the Company Subsidiaries have (i) filed or caused to be filed (taking
into account any extension of time to file validly granted or obtained) all material Tax
Returns required to have been filed by them, and such Tax Returns are true, correct and
complete in all material respects, and (ii) paid all material Taxes required to have been
paid (whether or not shown due on any Tax Return) except to the extent that such Taxes
are being contested in good faith or a reserve for such Taxes has been established on the
Companys Balance Sheet. There are no material Liens for Taxes upon any property or asset
of the Company or any of the Company Subsidiaries, except for Liens for Taxes not yet
due. All material Taxes required to have been withheld by the Company and the Company
Subsidiaries have been withheld and, if so required, have been paid over to the
appropriate Governmental Authority.
(b)
No deficiency for any material amount of Tax has been asserted or assessed by any
Governmental Authority in writing against the Company or any Company Subsidiary (or, to
the knowledge of the Company, has been threatened or proposed in writing), except for
deficiencies that have been satisfied by payment, settled or withdrawn or that are being
contested in good faith and a reserve for which has been established on the Companys
Balance Sheet.
(c)
Except as set forth in Section 3.13(c) of the Disclosure Schedule, there are no pending
or, to the knowledge of the Company, threatened audits, examinations, investigations or
other proceedings regarding Taxes or Tax Returns of the Company or any Company Subsidiary
with respect to which the Company or a Company Subsidiary has been notified in writing
and neither the Company nor any Company Subsidiary has waived any statute of limitations
regarding Taxes or Tax Returns or agreed to any extension of time with respect to an
assessment or deficiency for Taxes (other than waivers and extensions which are no longer
in effect).
(d)
Neither the Company nor any Company Subsidiary has constituted a distributing
corporation or a controlled corporation (within the meaning of Section 355(a)(1)(A) of
the Code) in a distribution of stock intended to qualify for tax-free treatment under
Section 355 of the Code (i) in the two years prior to the date of this Agreement (or will
constitute such a corporation in the two years prior to the Closing Date) or (ii) in a
distribution that otherwise constitutes part of a plan or series of related
transactions (within the meaning of Section 355(e) of the Code) in conjunction with the
Merger.
(e)
Neither the Company nor any Company Subsidiary (i) has been a member of an affiliated
group filing a consolidated federal income Tax Return (other than a group the common
parent of which was the Company) since January 1, 2006, (ii) has any Liability for the
Taxes of any Person (other than the Company or any Company Subsidiary) under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or foreign Law),
whether as a transferee, successor, by contract, assumption, operation of Law or
otherwise and (iii) is a party to any indemnification, allocation or sharing agreement or
other arrangement with respect to Taxes the principal purpose of which is or was the
allocation of Tax liabilities computed on a consolidated, combined, unitary or similar
basis among entities that have been or will be required to compute their Tax Liability on
such a basis.
Section
3.14
Specified Contracts
.
(a)
Except as would not, individually or in the aggregate, have a Company Material Adverse
Effect, (i) each Specified Contract is a legal, valid and binding obligation of the
Company or a Company Subsidiary, as applicable, and, to the Companys knowledge, each
counterparty thereto, and is in full force and effect and (ii) the Company and the
Company Subsidiaries have performed and complied with all obligations required to be
performed or complied with by them under each Specified Contract. There is no breach,
violation or default under any Specified Contract by the Company or any of the Company
Subsidiaries or, to the Companys knowledge, by any counterparty, and no event has
occurred that with the lapse of time or the giving of notice or both would constitute a
breach, violation or default thereunder by the Company or any of the Company
Subsidiaries, or, to the Companys knowledge, by any counterparty, except for any which
would not, individually or in the aggregate, have a Company Material Adverse Effect.
(b)
For purposes of this Agreement, the term
Specified Contract
means any of the Contracts
filed as an exhibit to the Companys Form 10-K for the fiscal period ended December 31,
2006, as amended by Form 10-K/A filed on April 30, 2007 (the
Form 10-K
), pursuant to
Item 601(b)(10) of Regulation S-K under the Securities Act or disclosed by the Company in
a Quarterly Report on Form 10-Q or in a Current Report on Form 8-K filed since the date
of filing of the Form 10-K, other than Plans disclosed in Section 3.10(a) of the
Disclosure Schedule.
Section
3.15
Board Approval; Vote Required
.
(a)
Each of the Company Board and the Special Committee by resolutions duly adopted at a
meeting duly called and held, which resolutions, subject to Section 6.04, have not been
subsequently rescinded, modified or withdrawn in any way, has (i) determined that the
Merger is advisable and in the best interests of the Companys stockholders, (ii)
approved this Agreement and the Merger and (iii) recommended approval and adoption of
this Agreement and the Merger.
(b)
The only vote of the holders of any class or series of capital stock or other securities
of the Company necessary to adopt this Agreement or consummate the Merger under the DGCL,
under the Companys certificate of incorporation or bylaws is the affirmative vote of the
holders of a majority of the voting power of the outstanding shares of Company Common
Stock and Company Class B Common Stock, voting together as a class (with each share of
Company Common Stock entitled to one vote per share and each share of Company Class B
Common Stock entitled to five votes per share), entitled to vote in favor of the adoption
of this Agreement (the
Stockholder Approval
).
Section
3.16
Environmental Matters
. Except for such matters that, individually or in the
aggregate, would not reasonably be expected to have a Company Material Adverse Effect:
(i) the Company and the Company Subsidiaries are in compliance with all applicable
Environmental Laws; (ii) the Company and the Company Subsidiaries possess all permits,
licenses, registrations, identification numbers, authorizations and approvals required
under applicable Environmental Law for the operation of their respective businesses as
presently conducted; (iii) neither the Company nor any of the Company Subsidiaries has
received any written claim, notice of violation or citation concerning any violation or
alleged violation of any applicable Environmental Law during the past two years; and (iv)
there are no writs, injunctions, decrees, orders or judgments outstanding, or any
actions, suits or proceedings pending or, to the knowledge of the Company, threatened,
concerning compliance by the Company or any of the Company Subsidiaries with any
Environmental Law.
Section
3.17
Insurance
. Section 3.17 of the Disclosure Schedule sets forth a complete and correct
list of all insurance policies owned or held by the Company and each Company Subsidiary
and all such policies have been made available to Parent. With respect to each such
insurance policy, except as would not, individually or in the aggregate, have a Company
Material Adverse Effect: (i) except for policies that have expired under their terms in
the ordinary course and have been replaced by policies with substantially similar
coverage, the policy is in full force and effect; (ii) neither the Company nor any
Company Subsidiary is in material breach or default (including any such breach or default
with respect to the payment of premiums or the giving of notice) under the policy; (iii)
to the knowledge of the Company, no insurer on the policy has been declared insolvent or
placed in receivership, conservatorship or liquidation; and (iv) to the knowledge of the
Company, no notice of cancellation or termination has been received other than in
connection with ordinary renewals.
Section
3.18
Brokers
. Except for Deutsche Bank Securities Inc., no broker, finder or investment
banker is entitled to any brokerage, finders or other fee or commission in connection
with the transactions contemplated hereby based upon arrangements made by or on behalf of
the Company.
Section
3.19
No Other Information
. Except as set forth in this Agreement, the Company
acknowledges that neither Parent nor Merger Sub make any representations or warranties as
to any matter whatsoever except as expressly set forth in this Agreement.
ARTICLE IV
REPRESENTATIONS AND
WARRANTIES OF PARENT AND MERGER SUB
Each
of Parent and Merger Sub, jointly and severally, hereby represents and warrants to the
Company that:
Section
4.01
Corporate Organization
. Each of Parent and Merger Sub is a corporation duly
organized, validly existing and in good standing under the laws of the jurisdiction of
its organization and has the requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have such power
authority and governmental approvals would not, individually or in the aggregate, prevent
or materially delay consummation of the Merger or otherwise prevent or materially delay
either Parent or Merger Sub from performing its obligations under the Agreement.
Section
4.02
Certificate of Incorporation and Bylaws
. Each of Parent and Merger Sub has
heretofore furnished to the Company a complete and correct copy of its certificate of
incorporation and bylaws, as in effect as of the date of this Agreement. Such
certificates of incorporation and bylaws are in full force and effect.
Section
4.03
Authority Relative to this Agreement
. Each of Parent and Merger Sub has all
necessary corporate or other power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the Merger. The execution,
delivery and performance of this Agreement by each of Parent and Merger Sub and the
consummation by each of Parent and Merger Sub of the Merger have been duly and validly
authorized by all necessary corporate or other action, and no other corporate or other
actions on the part of Parent or Merger Sub are necessary to authorize this Agreement or
to consummate the Merger. This Agreement has been duly and validly executed and delivered
by each of Parent and Merger Sub and, assuming due authorization, execution and delivery
by the Company, constitutes a legal, valid and binding obligation of each of Parent and
Merger Sub, enforceable against each of Parent and Merger Sub in accordance with its
terms, subject to the effect of any general principles of equity, whether applied in a
court of law or a court of equity, and by bankruptcy, insolvency and similar Laws
affecting creditors rights and remedies generally, including all Laws relating to
fraudulent transfers.
Section
4.04
No Conflict; Required Filings and Consents
.
(a)
The execution and delivery of this Agreement by each of Parent and Merger Sub do not, and
the performance of this Agreement by each of Parent and Merger Sub and the consummation
by each of Parent and Merger Sub of the Merger will not, (i) contravene, conflict with,
violate or result in a breach of the respective certificates of incorporation or bylaws
of Parent or Merger Sub, (ii) assuming that all consents, approvals, authorizations and
other actions described in Section 3.05(b) and Section 4.04(b) have been obtained and all
filings and obligations described in Section 4.04(b) have been made, conflict with or
violate any Law applicable to either Parent or Merger Sub, or (iii) result in any breach
or violation of, or constitute a default (or an event which, with notice or lapse of time
or both, would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a Lien on any
property or asset of either Parent or Merger Sub pursuant to any Contract to which either
Parent or Merger Sub is a party or by which either Parent or Merger Sub is bound or
affected, except, with respect to clauses (ii) and (iii), for any such conflicts,
violations, breaches, defaults or other occurrences which would not, individually or in
the aggregate, prevent or materially delay consummation of the Merger or otherwise
prevent or materially delay either Parent or Merger Sub from performing their obligations
under this Agreement.
(b)
The execution and delivery of this Agreement by each of Parent and Merger Sub do not, and
the performance of this Agreement by each of Parent and Merger Sub and the consummation
by each of Parent and Merger Sub of the Merger will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Authority, except for (i) applicable requirements, if any, of the Exchange Act, (ii) the
pre-merger notification requirements of the HSR Act and the competition or merger control
Laws of any other applicable jurisdiction, (iii) the filing and recordation of
appropriate merger documents as required by the DGCL and appropriate documents with the
relevant authorities of other states in which the Company or any of the Company
Subsidiaries is qualified to do business, (iv) the filing of required applications and
notices with the FDA and (v) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such
filings or notifications, would not,
individually or in the aggregate prevent or materially delay consummation of the Merger
or otherwise prevent or materially delay either Parent or Merger Sub from performing
their obligations under this Agreement.
Section
4.05
Absence of Litigation
. There is no Action pending or, to the knowledge of Parent or
Merger Sub, threatened, against either Parent or Merger Sub before any Governmental
Authority that would or seeks to materially delay or prevent the consummation of the
Merger. Neither Parent nor Merger Sub is subject to any continuing order of, consent
decree, settlement agreement or other similar written agreement with, or, to the
knowledge of Parent and Merger Sub, continuing investigation by, any Governmental
Authority, or any order, writ, judgment, injunction, decree, determination or award of
any Governmental Authority that would or seeks to materially delay or prevent the
consummation of the Merger.
Section
4.06
Operations of Merger Sub; Ownership of Company Common Stock and Company Class B
Common Stock
. Merger Sub was formed solely for the purpose of engaging in the
transactions contemplated hereby, has engaged in no other business activities, and has
conducted its operations only as contemplated by this Agreement. Merger Sub has no
subsidiaries. No shares of Company Common Stock or Company Class B Common Stock are held
by Parent, Merger Sub, Guarantor or any direct or indirect wholly owned subsidiary of
Parent, Merger Sub or Guarantor.
Section
4.07
Financing
. Parent and Merger Sub will have available to them, at the Effective Time,
immediately available funds necessary to consummate the Merger in accordance with this
Agreement. Parent has delivered to the Company true, complete and correct copies of
executed equity commitment letters (the
Equity Financing Commitments
or the
Financing
Commitments
), pursuant to which Avista Capital Partners GP, LLC, Avista Capital
Partners, LP, Avista Capital Partners (Offshore), LP, DLJ Merchant Banking III, Inc., DLJ
Merchant Banking IV (Cayman), L.P., Nordic Capital VI Limited, NC VI Limited and Nordic
Industries Limited have committed, subject to the terms and conditions thereof, to invest
and/or provide loans in the amount set forth therein (the
Equity Financing
or the
Financing
). Each of the Equity Financing Commitments is in full force and effect and is
a legal, valid and binding obligation of Parent and of the other parties thereto. None of
the Financing Commitments has been or will be amended or modified, except as permitted by
Section 6.14, and the respective commitments contained in the Financing Commitments have
not been withdrawn or rescinded in any respect as of the date hereof. No event has
occurred which, with or without notice, lapse of time or both, would constitute a
material default or material breach on the part of Parent or Merger Sub under any
Financing Commitment and neither Parent nor Merger Sub has any reason to believe that it
will be unable to satisfy on a timely basis any material term or condition of closing to
be satisfied by it in any of the Financing Commitments on or prior to the Effective Time,
any subsequent offering period and the Closing Date. There are no precedent conditions
related to the funding or investing, as applicable, of the full amount of the Financing
other than as expressly set forth in or contemplated by the Financing Commitments. There
are no side letters or other agreements, contracts or arrangements (except for customary
fee letters and engagement letters) related to the funding or investing, as applicable,
of the full amount of the Financing other than as expressly set forth in or contemplated
by the Financing Commitments. The aggregate proceeds contemplated by the Financing
Commitments plus Parents cash on hand (excluding the Companys cash on hand) will be
sufficient for Parent and/or Merger Sub to pay the aggregate Merger Consideration and any
other repayment or refinancing of debt contemplated by the Financing Commitments and to
pay all related fees and expenses. Parent has fully paid any and all commitment fees that
have been incurred and are due and payable in connection with the Financing Commitments,
and Parent will pay when due all other commitment fees arising under the Financing
Commitments as and when they become payable.
Section
4.08
Solvency.
Immediately after giving effect to all of the transactions contemplated by
this Agreement, including the payment of the aggregate Merger Consideration, and payment
of all related fees and expenses, the Surviving Corporation on a consolidated basis will
be Solvent at the Effective Time. For the purposes of this Agreement, the term Solvent,
when used with respect to any Person, means that, as of any date of determination, (a)
the amount of the fair saleable value of the assets of such Person will, as of such
date, exceed (x) the value of all liabilities of such Person, including contingent and
other liabilities, as of such date, as such quoted terms are generally determined in
accordance with applicable federal laws governing determinations of the insolvency of
debtors, and (y) the amount that will be required to pay the probable
liabilities of such Person on its
existing debts (including contingent liabilities) as such debts become absolute and
matured, (b) such Person will not have, as of such date, an unreasonably small amount of
capital for the operation of the businesses in which it is engaged or proposed to be
engaged following such date, and (c) such Person will be able to pay its liabilities,
including contingent and other liabilities, as they mature.
Section
4.09
Brokers.
Unless the Closing occurs and except as contemplated by Section 8.03, the
Company shall not be responsible for any brokerage, finders or other fee or commission
to any broker, finder or investment banker in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of either Parent or
Merger Sub.
Section
4.10
No Other Information.
Except as set forth in this Agreement, Parent and Merger Sub
acknowledge that the Company makes no representations or warranties as to any matter
whatsoever except as expressly set forth in this Agreement, including with respect to any
projections, estimates or budgets discussed with, delivered to or made available to
Parent and Merger Sub or to any of their respective Affiliates or any representatives of
future revenues, future results of operations (or any component thereof), future cash
flows or future financial condition (or any component thereof) of the Company and the
Company Subsidiaries or of the future business and operations of the Company and the
Company Subsidiaries.
Section
4.11
Guaranty.
Concurrently with the execution of this Agreement, Parent has delivered to
the Company the Guaranty, dated the date hereof and executed by the Guarantor, in favor
of the Company with respect to the performance by Parent and Merger Sub, respectively, of
their obligations under this Agreement.
ARTICLE V
CONDUCT OF BUSINESS
PENDING THE MERGER
Section
5.01
Conduct of Business by the Company Pending the Merger
. The Company agrees that,
between the date of this Agreement and the Effective Time, except as expressly
contemplated by this Agreement or as set forth in Section 5.01 of the Disclosure
Schedule, without the prior written consent of Parent and Merger Sub (which consent shall
not be unreasonably withheld, conditioned or delayed), the businesses of the Company and
the Company Subsidiaries shall be conducted in all material respects in the ordinary
course of business and in a manner consistent with past practice. Without limiting the
generality of the foregoing, except as contemplated by any other provision of this
Agreement or as set forth in Section 5.01 of the Disclosure Schedule, the Company agrees
that neither it nor any Company Subsidiary shall, between the date of this Agreement and
the Effective Time, directly or indirectly, do any of the following, except with the
prior written consent of Parent and Merger Sub (which consent shall not be unreasonably
withheld, conditioned or delayed):
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(a)
amend or otherwise change the certificate of incorporation or bylaws of the
Company, or the Company Subsidiaries;
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(b)
issue, deliver, sell, transfer, dispose of, pledge or encumber any shares of its
capital stock or equity interests, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such shares of
capital stock or equity interests, voting securities or convertible securities,
other than the issuance of Company Stock Options consistent with past practices or
shares of Company Common Stock issuable pursuant to Company Stock Options or
warrants;
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(c)
declare, set aside, make or pay any dividend or other distribution, payable in
cash, stock, property or otherwise, with respect to any of its capital stock or
equity interests, except for dividends by any wholly-owned Company Subsidiary to
the Company or any other wholly-owned Company Subsidiary;
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(d)
reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire,
directly or indirectly, any capital stock or equity interests of the Company or any
Company Subsidiary;
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(e)
adopt or enter into a plan of complete or partial liquidation, dissolution,
restructuring, recapitalization or other reorganization of the Company or any
Company Subsidiary (other than the Merger);
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(f)
make any change to its methods of accounting in effect as of June 30, 2007, except
as required by changes in GAAP;
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(g)
directly or indirectly acquire (x) by merging or consolidating with, or by
purchasing assets of, or by any other manner, any person or division, business or
equity interest of any person or (y) any asset or assets that, individually, has a
purchase price in excess of $500,000 or, in the aggregate, have a purchase price in
excess of $1,000,000, except for new capital expenditures, which shall be subject
to the limitations of clause (j) below, and except for purchases of inventory,
components, raw materials, supplies or other assets in the ordinary course of
business;
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(h)
(x) sell, lease, license, mortgage, sell and leaseback or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or other assets
or any interests therein (including securitizations), except for sales of inventory
and used equipment in the ordinary course of business consistent with past practice
or (y) enter into, modify or amend any lease of real property, except for any
renewals of existing leases in the ordinary course of business;
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(i)
incur any indebtedness for borrowed money (except for drawings under the Credit
Agreement in an aggregate amount not to exceed $2,000,000 at any time outstanding)
or guarantee any such indebtedness of another person, issue or sell any debt
securities or calls, options, warrants or other rights to acquire any debt
securities of the Company or any Company Subsidiary, guarantee any debt securities
of another person or enter into any keep well or other Contract to maintain any
financial statement condition of another person;
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(j)
make any new capital expenditure or capital expenditures which in the aggregate are
in excess of $100,000, other than capital expenditures made pursuant to contractual
obligations set forth on Section 5.01(j) of the Disclosure Schedule;
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(k)
waive, release, assign, settle, pay, discharge, satisfy or compromise any claims,
liabilities, obligations or any litigation or arbitration (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the waiver, release,
assignment, settlement, payment, discharge, satisfaction or compromise in the
ordinary course of business consistent with past practice or in accordance with
their terms, of liabilities disclosed, reflected or reserved against in the most
recent financial statements (or, if applicable, the notes thereto) of the Company
included in the SEC Reports (for amounts not in excess of such reserves) or
incurred since the date of such financial statements in the ordinary course of
business consistent with past practice;
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(l)
(i) (x) enter into, modify or amend any Contract that is material to the Company or
any Company Subsidiary, including but not limited to, licensing agreements,
co-promotion agreements or agreements with any Affiliates of the Company (Material
Contracts) or (y) enter into, modify or amend in any manner materially adverse to
the Company or any Company Subsidiary any other Contract, except in the case of
clause (y), for renewals on substantially similar terms of existing Contracts or
replacements of existing Contracts with new counterparties on substantially
similar terms to the existing Contract being replaced, or (ii) (x) terminate or
waive, release or assign any rights under any Material Contract, or (y) terminate
or waive, release or assign any material rights under any other Contract, which in
the case of either clause (i)(y) or (ii)(y) if so entered into, modified, amended,
terminated, waived, released or assigned could reasonably be expected to
adversely affect in any material respect the Company;
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(m)
except as set forth in Section 3.10 of the Disclosure Schedule, (i) increase in any
manner the compensation or benefits of any of its directors or executive officers,
(ii) increase in any manner the compensation or benefits of any of its employees
who are not executive officers other than in the ordinary course of business
consistent with past practice, (iii) grant any severance or termination pay not
provided for under any Plan or agreement in effect prior to the date hereof, (iv)
make any loans or advances to any of its employees other than in respect of
travel expenses in the ordinary course of business, or (v) establish or become
obligated under any collective bargaining agreement;
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(n)
sell, transfer or license to any Person or otherwise amend or modify, in any
material respect, any rights to the Intellectual Property of the Company or any
Company Subsidiary (other than implied licenses in connection with sales of Company
or Company Subsidiary products or in connection with non-disclosure agreements
entered into in the ordinary course of business); or
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(o)
announce an intention, enter into any formal or informal agreement or otherwise
make a commitment or offer, to do any of the foregoing.
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Nothing
set forth in this Section 5.01 shall give Parent or Merger Sub, directly or indirectly,
the right to control or direct the business or operations of the Company or any of the
Company Subsidiaries prior to the Effective Time. Prior to the Effective Time, the
Company shall exercise, consistent with the terms and conditions of this Agreement,
complete control and supervision over the business and operations of the Company and the
Company Subsidiaries.
ARTICLE VI
COVENANTS OF THE
PARTIES
Section
6.01
Proxy Statement
.
(a)
The Company shall prepare and file with the SEC as promptly as practicable, the
preliminary Proxy Statement. Each of the Company, Parent and Merger Sub shall promptly
obtain and furnish all information concerning itself and its Affiliates that is required
to be included in the Proxy Statement or that is customarily included in proxy statements
prepared in connection with transactions of the type contemplated by this Agreement. Each
of the Company, Parent and Merger Sub shall use its reasonable best efforts to respond as
promptly as practicable to any comments of the SEC with respect to the Proxy Statement
and the Company shall use its reasonable best efforts to cause the definitive Proxy
Statement to be mailed to the Companys stockholders as promptly as reasonably
practicable after the SEC clears the Proxy Statement. Each party shall promptly notify
the other parties upon the receipt of any comments from the SEC or its staff or any
request from the SEC or its staff for amendments or supplements to the Proxy Statement
and shall provide the other parties with copies of all correspondence between it and its
representatives, on the one hand, and the SEC and its staff, on the other hand, relating
to the Proxy Statement. If, at any time prior to the Effective Time, any information
relating to the Company, Parent, Merger Sub or any of their respective Affiliates,
officers or directors, should be discovered by the Company, Parent or Merger Sub which
should be set forth in an amendment or supplement to the Proxy Statement, so that the
Proxy Statement shall not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading, the party that discovers such information shall promptly notify the other
parties, and an appropriate amendment or supplement describing such information shall be
filed with the SEC and, to the extent required by applicable Law, disseminated to the
stockholders of the Company. Notwithstanding anything to the contrary stated above, prior
to filing or mailing the Proxy Statement (or any amendment or supplement thereto) or
responding to any comments of the SEC with respect thereto, the Company shall provide
Parent and Merger Sub an opportunity to review and comment on the Proxy Statement and
shall include in the Proxy Statement comments reasonably proposed by Parent and Merger
Sub.
(b)
The Proxy Statement that is filed by the Company will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder. The Company hereby covenants and agrees that none of the
information included or incorporated by reference in the Proxy Statement to be made by
the Company will, at the date it is first mailed to the Companys stockholders or at the
time of the Company Stockholders Meeting or at the time of any amendment or supplement
thereof, contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they are made, not misleading, except that no
covenant is made by the Company with respect to statements made or incorporated by
reference therein based on information supplied by Parent or Merger Sub or any Affiliate
of Parent or Merger Sub in connection with the preparation of the Proxy Statement for
inclusion or incorporation by reference therein. Parent and Merger Sub hereby covenant
and agree that none of the information supplied by Parent or Merger Sub or any Affiliate
of Parent or Merger Sub for inclusion or incorporation by reference in the Proxy
Statement will at the date it is first mailed to the Companys stockholders or at the
time of the Company Stockholders Meeting or at the time of any amendment or supplement
thereof, contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they are made, not misleading. No covenant is
made by either Parent or Merger Sub with respect to statements made or incorporated by
reference therein based on information supplied by the Company in connection with the
preparation of the Proxy Statement for inclusion or incorporation by reference therein.
Section
6.02
Company Stockholders Meeting
. The Company shall use reasonable best efforts to duly
call, give notice of, convene and hold a meeting of its stockholders (including any
adjournments thereof, the
Company Stockholders Meeting
), as promptly as practicable
after the SEC indicates that it has no further comments on the Proxy Statement, and in
any event shall hold the Company Stockholders Meeting within 30 Business Days after the
Proxy Statement is mailed to its stockholders, for the purpose of voting upon the
adoption of this Agreement. Subject to a Change in Board Recommendation effected in
accordance with Section 6.04(e), (i) the Company shall include in the Proxy Statement the
Company Boards recommendation described in Section 3.15(a) that holders of Shares adopt
this Agreement and the Merger and (ii) the Company will use reasonable best efforts to
solicit from its stockholders proxies in favor of the adoption of this Agreement and the
Merger and will take all other action reasonably necessary or advisable to secure the
Stockholder Approval. For the avoidance of doubt, the Company shall not be required to
hold the Company Stockholders Meeting if this Agreement is validly terminated in
accordance with Section 8.01.
Section
6.03
Access to Information; Confidentiality
.
(a)
Except as otherwise prohibited by applicable Law or as would result in a waiver of any
attorney-client privilege (it being understood that the parties shall make appropriate
substitute disclosure arrangements to cause such information to be provided, if
reasonably practicable, in a manner that is not reasonably likely to result in such
waiver), from the date of this Agreement until the Effective Time, the Company shall (and
shall cause the Company Subsidiaries to): provide to Parent and to the officers,
directors, employees, accountants, legal counsel, investment bankers, financing sources
and other representatives (collectively,
Representatives
) of Parent reasonable access,
during normal business hours and, upon reasonable prior notice by Parent, to the
officers, employees, properties, offices and other facilities of the Company and the
Company Subsidiaries and use reasonable best efforts to provide to Parent and its
Representatives reasonable access, during normal business hours and, upon reasonable
prior notice by Parent, to the books and records thereof.
(b)
Nothing in this Section 6.03 shall require the Company to permit any inspection, or to
disclose any information, that in the reasonable judgment of the Company would violate
any of its respective obligations with respect to confidentiality;
provided,
that the
Company shall use its commercially reasonable efforts to obtain the consent of such third
party to such inspection or disclosure.
(c)
All information obtained by Parent or its Representatives pursuant to this Section 6.03
shall be kept confidential in accordance with the Non-Disclosure Agreement, dated July
16, 2007 between Parent and the Company (the
Confidentiality Agreement
).
Section
6.04
No Solicitation
.
(a)
Except as expressly permitted by Section 6.04(b), from the date hereof until the
Effective Time or the termination of this Agreement, the Company shall not, nor shall the
Company permit any of the Company Subsidiaries or their respective Representatives to,
(A) solicit, initiate, facilitate or knowingly encourage (including by way of furnishing
non-public information or providing access to its properties, books, records or
personnel) any inquiries regarding, or the making of any proposal or offer that
constitutes, or could reasonably be expected to lead to, an Acquisition Proposal, or (B)
have any discussions (other than to state that the Company is not permitted to have
discussions) or participate in any negotiations regarding an Acquisition Proposal, or
execute or enter into any agreement, understanding or arrangement with respect to an
Acquisition Proposal, or approve or recommend or propose to approve or recommend an
Acquisition Proposal or any agreement, understanding or arrangement relating to an
Acquisition Proposal. Upon execution of this Agreement, the Company shall immediately
cease and cause to be terminated any solicitation, encouragement, discussion or
negotiation with any Person conducted theretofore by the Company, the Company
Subsidiaries or any of its Representatives with respect to any Acquisition Proposal.
(b)
Notwithstanding Section 6.04(a), if, at any time after execution of this Agreement and
prior to obtaining the Stockholder Approval and following the receipt by the Company of a
bona fide written Acquisition Proposal from any Person, which Acquisition Proposal was
made after the date hereof and did not result, directly or indirectly, from a breach of
this Section 6.04, the Company Board determines in good faith by a majority vote of the
disinterested members thereof, after consultation with financial advisors of nationally
recognized reputation,
and, with respect to the matters
covered by clause (iii) of the definition of
Superior Proposal
set forth in Section
6.04(g), its outside legal counsel, that such Acquisition Proposal constitutes or would
reasonably be expected to lead to a Superior Proposal, the Company may, if its Board of
Directors determines in good faith by a majority vote of the disinterested members
thereof (after consultation with its outside legal counsel) that it is reasonably likely
to be required to do so in order to comply with its fiduciary duties to the shareholders
of the Company under applicable Law, in response to such Acquisition Proposal, subject to
compliance with this Section 6.04, and after giving notice to Parent (x) furnish
information with respect to the Company to the Person who has made such Acquisition
Proposal pursuant to an Acceptable Confidentiality Agreement, a copy of which shall be
provided to Parent, (provided that all such information has previously been provided to
Parent or is provided to Parent substantially concurrently with the time it is provided
to such Person) and (y) participate in discussions and negotiations regarding such
Acquisition Proposal. From and after the date hereof, the Company shall advise Parent
orally and in writing of the receipt of any Acquisition Proposal or any inquiry with
respect to, or that could reasonably be expected to lead to, any Acquisition Proposal (in
each case within three business days of receipt thereof) specifying the material terms
and conditions thereof and the identity of the person or persons making such Acquisition
Proposal or inquiry. The Company agrees that it and the Company Subsidiaries will not
enter into any confidentiality agreement with any Person subsequent to the date hereof
which prohibits the Company from providing such information to Parent. From and after the
date hereof, the Company shall (i) keep Parent reasonably informed, on a reasonably
prompt basis, of the status and material terms of any Acquisition Proposal or inquiry
(including any material modifications to the financial or other material terms of any
Acquisition Proposal or inquiry) and (ii) provide to Parent as soon as practicable after
receipt or delivery thereof with copies of all material correspondence and other written
material sent or provided to the Company or any Company Subsidiary from any person that
describes any of the terms or conditions of any Acquisition Proposal.
(c)
Except as set forth in Section 6.04(d) and Section 6.04(e), neither the Company Board nor
any committee thereof shall, directly or indirectly, (i) withdraw or modify, or propose
publicly to withdraw or modify, or resolve to withdraw or modify, in a manner adverse to
Parent, the approval or recommendation by the Company Board of the Merger and this
Agreement; (ii) approve or recommend, or propose publicly to approve or recommend, or
resolve to approve or recommend, any Acquisition Proposal (any of the actions referred to
in the foregoing clauses (i) and (ii), whether taken by the Company Board or any
committee thereof, a
Change in Board Recommendation
); (iii) approve or recommend or
allow the Company or any of the Company Subsidiaries to enter into any letter of intent,
acquisition agreement or any similar agreement or understanding (A) constituting or
related to, or that is intended to or could reasonably be expected to lead to, any
Acquisition Proposal or (B) requiring it to abandon, terminate or fail to consummate the
Merger; or (iv) effect any transaction contemplated by any Acquisition Proposal.
(d)
Notwithstanding Section 6.04(c), the Company Board may, prior to obtaining the
Stockholder Approval, in response to a Superior Proposal received by the Company Board
after the date of this Agreement, terminate this Agreement to enter into an agreement
with respect to such Superior Proposal.
(e)
Notwithstanding Section 6.04(c), at any time prior to obtaining the Stockholder Approval,
if the Company Board determines in good faith by a majority vote of the disinterested
members of the Board of Directors (after consultation with its outside legal counsel and
financial advisors of nationally recognized reputation) that it is reasonably likely to
be required to do so in order to comply with its fiduciary duties to the shareholders of
the Company under applicable Law, then the Company Board may make a Change in Board
Recommendation,
provided, however
, no Change in Board Recommendation may be made until
after the third business day following Parents receipt of written notice (a
Notice of
Change in Board Recommendation
) from the Company advising Parent that the Board of
Directors of the Company intends to take such action and, if applicable, specifying all
material terms and conditions of any Superior Proposal that is the basis of the proposed
action by the Board of Directors (it being understood and agreed that any amendment to
the financial terms or any other material term of such Superior Proposal shall require a
new Notice of Change in Board Recommendation and a new three business day period). In
determining whether to make a Change in Board Recommendation, the Board of Directors of
the Company shall take into account any changes to the terms of this Agreement proposed
by Parent in response to a Notice of Change in Board Recommendation or otherwise.
(f)
Nothing contained in this Section 6.04 shall prohibit the Company from complying with
Rules 14a-9, 14d-9 or 14e-2 promulgated under the Exchange Act, or making any required
disclosure to the Companys stockholders if, in the good faith judgment of the Company
Board, after consultation with its outside legal counsel, the failure to do so would be
inconsistent with its fiduciary duties under applicable Law or is otherwise required
under applicable Law;
provided, however
, that, in any event, the Company Board shall not
be permitted to (i) make a Change in Board Recommendation or (ii) take any position under
Rule 14e-2(a) other than recommending rejection of such tender or exchange offer, in each
case, unless it has complied with all of its obligations under this Section 6.04.
(g)
For purposes of this Agreement:
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(i)
Acceptable Confidentiality Agreement
means any confidentiality agreement on terms
no less favorable in the aggregate to the Company than those contained in the
Confidentiality Agreement and with a standstill of duration no shorter than and
with exceptions to such standstill not materially broader than those contained in
the Confidentiality Agreement between Parent and the Company;
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(ii)
Acquisition Proposal
means any proposal or offer (whether or not binding) from
any Person or group (other than Parent and its Affiliates) relating to (i) any
direct or indirect acquisition or purchase of (A) 20% or more of the assets of the
Company and the Company Subsidiaries, taken as a whole, (B) 20% or more of the
Company Common Stock then outstanding, (C) more than 50% of the Company Class B
Common Stock then outstanding or (D) 25% or more of the equity securities of any
Company Subsidiary then outstanding, (ii) any tender offer or exchange offer
that if consummated would result in any Person beneficially owning (A) 20% or more
of the Company Common Stock then outstanding, (B) more than 50% of the Company
Class B Common Stock then outstanding or (C) 25% or more of the equity securities
of any Company Subsidiary then outstanding, or (iii) any merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company, other than the transactions contemplated by this
Agreement; and
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(iii)
Superior Proposal
means any bona fide written Acquisition Proposal not solicited
or initiated in violation of this Section 6.04 that (i) relates to an acquisition
by a Person or group acting in concert of either (A) more than 50% of the equity
interests of the Company pursuant to a tender offer, merger or otherwise or (B)
more than 50% of the assets used in the conduct of the business of the Company and
the Company Subsidiaries, taken as a whole, (ii) the Company Board by a vote of a
majority of disinterested directors determines in its good faith judgment
(after consultation with outside counsel and financial advisors of nationally
recognized reputation) would, if consummated, result in a transaction that is more
favorable to the Companys stockholders (in their capacities as stockholders) from
a financial point of view than the transactions contemplated by this Agreement, and
(iii) the Company Board determines in good faith (after consultation with its
financial advisors of nationally recognized reputation and its outside legal
counsel) is reasonably capable of being consummated.
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Section
6.05
Directors and Officers Indemnification and Insurance
.
(a)
For a period of six years after the Effective Time, unless otherwise required by
applicable Law, the certificate of incorporation and bylaws of the Surviving Corporation
and the Company Subsidiaries shall contain provisions no less favorable with respect to
the indemnification and exculpation of directors and officers than are set forth in the
certificate of incorporation or bylaws of the Company (or the relevant Company
Subsidiary) as in effect on the date hereof. From and after the Effective Time, Parent
shall cause the Surviving Corporation, to the fullest extent permitted under applicable
Law (including to the greatest extent authorized or permitted by any amendments to or
replacements of the DGCL adopted after the date of this Agreement that increase the
extent to which a corporation may indemnify its officers and directors), to indemnify and
hold harmless (and advance funds in respect of each of the foregoing) each present and
former director, officer or employee of the Company and each Company Subsidiary
(collectively, the
Indemnified Parties
), in and to the extent of their capacities as
such and not as stockholders of the Company or any Company Subsidiary, against any costs
or expenses (including advancing attorneys fees and expenses in advance of the final
disposition of any claim, suit, proceeding or investigation to each Indemnified Party to
the fullest extent permitted by Law), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement (with the consent of Parent, which consent
shall not be unreasonably withheld)
in connection with any actual or threatened Action, arising out of, relating to or in
connection with any action or omission occurring or alleged to have occurred before or at
the Effective Time (including acts or omissions in connection with such persons serving
as an officer, director or other fiduciary in any entity if such service was at the
request or for the benefit of the Company). In the event of any such Action, the
Surviving Corporation shall cooperate with the Indemnified Party in the defense of such
Action.
(b)
Prior to the Effective Time, Parent shall (i) after consultation with the Company, either
(A) cause to be obtained from an insurance carrier with the same or better rating as the
Companys current insurance carriers prior to the Effective Time a fully prepaid tail
insurance policy with a claims period of at least six years from the Effective Time with
respect to directors and officers liability insurance in amount and scope at least as
favorable as the Companys existing policies for claims arising from facts or events that
occurred prior to the Effective Time or (B) maintain the existing directors and
officers liability insurance policies maintained by the Company for a period of six
years after the Effective Time and (ii) deliver to the Company, at or prior to the
Closing, written evidence satisfactory to the Company of compliance by Parent with the
provisions of the foregoing clause (i) of this Section 6.05(b);
provided however
, that
Parent shall not be obligated to pay for such tail insurance policy (or, if the
foregoing clause (B) is applicable, shall not be obligated to pay in any one year) more
than 300% of the annual premium currently paid by the Company for such insurance
coverage; and
provided,
further, that if the premiums for such tail insurance policy
(or, if applicable, annual premiums for the insurance coverage described in the foregoing
clause (B)) exceed 300% of such annual premium currently paid by the Company, Parent
shall obtain a policy with the greatest coverage available for a cost not exceeding such
amount.
(c)
This Section 6.05 shall survive the consummation of the Merger and continue in full force
and effect and is intended to benefit, and shall be enforceable as third party
beneficiaries by each Indemnified Person (notwithstanding that such Persons are not
parties to this Agreement) and their respective heirs and legal representatives. The
indemnification provided for herein shall not be deemed exclusive of any other rights to
which an Indemnified Person is entitled, whether pursuant to Law, contract or otherwise.
(d)
If Parent or the Surviving Corporation or any of its successors or assigns (i) shall
consolidate with or merge into any other corporation or entity and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or shall
cease to continue to exist for any reason or (ii) shall transfer all or substantially all
of its properties and assets to any individual, corporation or other entity, then, and in
each such case, proper provisions shall be made so that the successors and assigns of
Parent or the Surviving Corporation and the transferee or transferees of such properties
and assets, as applicable, shall assume all of the obligations set forth in this Section
6.05.
(e)
Nothing in this Agreement is intended to, shall be construed to or shall release, waive
or impair any rights to directors and officers insurance claims under any policy that
is or has been in existence with respect to the Company or any of the Company
Subsidiaries or their respective officers, directors and employees, it being understood
and agreed that the indemnification provided for in this Section 6.05 is not prior to or
in substitution for any such claims under any such policies.
Section
6.06
Employee Benefits Matters
.
(a)
Parent hereby agrees that, for a period of one year after the Effective Time, it shall,
or it shall cause the Surviving Corporation and its subsidiaries to, provide, in the
aggregate, employees of the Company and the Company Subsidiaries as of the Effective
Time, with salaries, employee benefits and incentive compensation opportunities (other
than equity-based compensation) that are substantially comparable in the aggregate to
those provided to such employees immediately prior to the Effective Time. From and after
the Effective Time, Parent shall cause the Surviving Corporation and its subsidiaries to
comply with the terms of (including terms which provide for amendment or termination) all
contracts, agreements, arrangements, policies, plans and commitments of the Company and
the Company Subsidiaries, including the Companys Retention Plan, as in effect
immediately prior to the Effective Time that are applicable to any current or former
employees or directors of the Company or any Company Subsidiary.
(b)
Employees of the Company and the Company Subsidiaries shall receive credit for service
accrued or deemed accrued on or prior to the Effective Time with the Company or any
Company Subsidiary for all
purposes (including for purposes of
eligibility to participate, vesting, benefit accrual and eligibility to receive benefits,
but excluding benefit accruals under any defined benefit pension plan) under any employee
benefit plan, program or arrangement established or maintained by Parent, the Surviving
Corporation or any of their respective subsidiaries under which each such employee may be
eligible to participate on or after the Effective Time to the same extent recognized by
the Company or any of the Company Subsidiaries under comparable Plans immediately prior
to the Effective Time;
provided, however
, that such crediting of service shall not
operate to duplicate any benefit or the funding of any such benefit.
(c)
With respect to the welfare benefit plans, programs and arrangements maintained,
sponsored or contributed to by Parent or the Surviving Corporation (
Purchaser Welfare
Benefit Plans
) in which an active employee of the Company and the Company Subsidiaries
may become eligible to participate in following the Effective Time, Parent shall (i)
waive, or use reasonable best efforts to cause its insurance carrier to waive, all
limitations as to preexisting and at-work conditions, if any, with respect to
participation and coverage requirements applicable to each such active employee under any
Purchaser Welfare Benefit Plan to the same extent waived under a comparable Plan, (ii)
use reasonable best efforts to cause any eligible expenses incurred by any employee of
the Company or the Company Subsidiaries and his or her covered dependents under
comparable Plans during the plan year in which such individuals move to a comparable
Purchaser Welfare Benefit Plan to be taken into account under the Purchaser Welfare
Benefit Plans for purposes of satisfying all deductible, coinsurance and maximum
out-of-pocket requirements applicable to such employee and his or her dependents as if
such amounts had been paid in accordance with the Purchaser Welfare Benefit Plans, and
(iii) waive, or use reasonable best efforts to cause its insurance carrier to waive, any
waiting period limitation or evidence of insurability requirement that would otherwise be
applicable to an employee of the Company or the Company Subsidiaries and his or her
eligible dependents on or after the Effective Time during the plan year in which such
individuals move to a comparable Purchaser Welfare Benefit Plan.
(d)
Without limiting the generality of the foregoing, no provision of this Agreement shall
create any third party beneficiary rights in any employee or former employee of the
Company or any Company Subsidiaries (including any beneficiary or dependent thereof) in
respect of continued employment by the Company or any Company Subsidiaries or otherwise.
Nothing herein shall (i) guarantee employment for any period of time or preclude the
ability of Parent or the Surviving Corporation or its subsidiaries to terminate any
employee of the Company for any reason, (ii) require Parent or the Surviving Corporation
or any of their respective subsidiaries to continue any Plans, employee benefit plans or
arrangements or prevent the amendment, modification or termination thereof after the
Closing Date or (iii) amend any Plans, employee benefit plans or arrangements.
Section
6.07
HSR Act Filing
.
(a)
Each of Parent and the Company shall (i) use best efforts to make or cause to be made the
filings required of such party to this Agreement or any of its subsidiaries or Affiliates
under the HSR Act with respect to the transactions contemplated by this Agreement as
promptly as practicable after the date of this Agreement, (ii) comply at the earliest
practicable date with any request under the HSR Act for additional information,
documents, or other materials received by such party or any of its subsidiaries from the
United States Federal Trade Commission or the United States Department of Justice or any
other Governmental Authority in respect of such filings or such transactions, and (iii)
cooperate in good faith with the other party to this Agreement in connection with any
such filing and in connection with resolving any investigation or other inquiry of any
such agency or other Governmental Authority under any Antitrust Laws with respect to any
such filing or any such transaction. The parties to this Agreement shall consult in good
faith with each other to determine whether any other filing, application or notice must
be made or approval must be obtained pursuant to any applicable Law, and shall use best
efforts to furnish to each other all information required for, any such filing,
application or notice to be made or approval to be obtained pursuant to any applicable
Law, in connection with the Merger. Each party to this Agreement shall promptly notify
the other parties to this Agreement of any communication with, and any proposed
understanding, undertaking, or agreement with, any Governmental Authority regarding any
such filings or any such transaction.
(b)
Each of Parent and the Company shall use reasonable best efforts to resolve such
objections, if any, as may be asserted by any Governmental Authority with respect to the
transactions contemplated by this Agreement
under the HSR Act, the Sherman Act,
as amended, the Clayton Act, as amended, the Federal Trade Commission Act, as amended,
and any other United States federal or state or foreign statues, rules, regulations,
orders, decrees, administrative or judicial doctrines or other Laws that are designed to
prohibit, restrict or regulate actions having the purpose or effect of monopolization or
restraint of trade (collectively,
Antitrust Laws
). Each of Parent and the Company shall
use reasonable best efforts to take such action as may be required to cause the
expiration of the notice periods under the HSR Act or other Antitrust Laws with respect
to such transactions as promptly as possible after the execution of this Agreement.
(c)
For the avoidance of doubt, Parent and its subsidiaries shall commit to any and all
divestitures, licenses or hold separate or similar arrangements with respect to its
assets or conduct of business arrangements as a condition to obtaining any and all
approvals from any Governmental Authority for any reason in order to cause the expiration
of the waiting periods under the HSR Act or other Antitrust Laws and obtain any other
required consents or approvals of any Governmental Authority, as promptly as practicable,
but in no event later than the Expiration Date, including taking any and all actions
necessary in order to ensure that (x) no requirement for non-action, a waiver, consent or
approval of the United States Federal Trade Commission, the Antitrust Division of the
United States Department of Justice, any State Attorney General or other Governmental
Authority, (y) no decree, judgment, injunction, temporary restraining order or any other
order in any suit or proceeding, and (z) no other matter relating to any antitrust or
competition Law or regulation, would preclude satisfaction of the conditions to the
Merger set forth in ARTICLE VII by the Expiration Date;
provided, however
, and
notwithstanding anything to the contrary contained in this Agreement, the provisions of
this Section 6.07 or Section 6.09 shall not be construed to require Parent to undertake
or commit to undertake any efforts or to take any action or commit to take any action if
such efforts or action would, or would reasonably be expected to result in a Substantial
Detriment.
Substantial Detriment
(i) a substantial impairment of the benefits to Parent
reasonably expected, as of the date hereof, to be realized from consummation of the
Merger or (ii) any event, development, state of facts, occurrence or change that is or
would reasonably be expected to be, individually or in the aggregate, materially adverse
to the business, assets, condition (financial or otherwise) or results of operations of
Parent, the Company and their respective subsidiaries, taken as a whole; provided that
any requirement to divest, license or hold separate or similar arrangements with respect
to the assets or conduct of business arrangements of Parent shall be deemed to result in
a Substantial Detriment if such action with respect to a comparable amount of assets or
businesses of the Company and its Subsidiaries would be reasonably likely, in the
aggregate, to have a Company Material Adverse Effect, at or after the Effective Time. The
Company shall agree if, but solely if, requested by Parent, to divest, hold separate or
otherwise take or commit to take any action with respect to the businesses, services, or
assets of the Company or any of its subsidiaries in furtherance of this Section 6.07;
provided, however
, that any such action may be conditioned upon consummation of the
Merger.
Section
6.08
Notification of Certain Matters
. Subject to applicable Laws and the instructions of
any Governmental Authority, each of the Company and Parent shall keep the other
reasonably apprised of the status of matters relating to completion of the transactions
contemplated hereby, including promptly furnishing the other with copies of notices or
other communications received by Parent or the Company, as the case may be, or any of the
Company Subsidiaries, from any third Person and/or any Governmental Authority with
respect to the Merger. Between the date hereof and the Effective Time, the Company shall
give prompt notice to Parent, and Parent shall give prompt notice to the Company, if the
occurrence or non-occurrence of any event, which is likely to result in the failure of a
condition set forth in ARTICLE VII;
provided, however
, that the delivery of any notice
pursuant to this Section 6.08 shall not limit or otherwise affect the remedies or
conditions available hereunder to any of the parties receiving such notice.
Section
6.09
Further Action; Reasonable Best Efforts
. Upon the terms and subject to the
conditions of this Agreement, each of the Company, Parent and Merger Sub agrees to use
its reasonable best efforts to effect the consummation of the Merger as soon as
reasonably practicable after the date hereof. Without limiting the foregoing, (a) each of
the Company, Parent and Merger Sub shall use its reasonable best efforts to take, or
cause to be taken, all actions necessary to comply promptly with all legal requirements
(and to cause any injunction or order issued by a Governmental Authority to be removed)
that may be imposed on itself with respect to the Merger and shall promptly cooperate
with and furnish information to each other in connection with any such
requirements imposed upon any of
them or any of their subsidiaries in connection with the Merger, and (b) the Company
shall, and shall cause the Company Subsidiaries to, use its or their reasonable best
efforts to provide notice or obtain any consent, authorization, order or approval of, or
any exemption by, any Governmental Authority or other public or private third Person
required to be obtained or made by the Company or any of the Company Subsidiaries in
connection with the Merger or the taking of any action contemplated thereby or by this
Agreement (including obtaining consents identified by Parent or the Company prior to the
Closing under any Contracts of the Company or any Company Subsidiary).
Section
6.10
Public Announcements
. The initial press releases issued by each party announcing the
Merger shall be in a form that is mutually acceptable to Parent and the Company.
Thereafter, Parent and the Company shall consult with each another before issuing any
press releases or otherwise making any public announcements with respect to the
transactions contemplated by this Agreement, and except as may be required by applicable
Laws or by the rules and regulations of the New York Stock Exchange shall not issue any
such press release or make any such announcement prior to such consultation (it being
understood that the final form and content of any such release or announcement, as well
as the timing of any such release or announcement, shall be at the final discretion of
the disclosing party).
Section
6.11
Solvency Opinion
. In the event that Parent receives a solvency opinion in connection
with its procurement of financing for the Merger, Parent agrees to cause to be delivered
to the Company a letter confirming that the Company Board may rely on any such opinion
from an appraisal firm that addresses whether, following consummation of the transactions
contemplated hereby, the Company and the Company Subsidiaries would be solvent and that
such transactions would not otherwise impair the capital of the corporation within the
meaning of Section 160(a) of the DGCL.
Section
6.12
Obligations of Merger Sub
. Parent shall use reasonable best efforts to cause Merger
Sub and the Surviving Corporation to perform their respective obligations under this
Agreement and to consummate the transactions contemplated hereby and thereby upon the
terms and subject to the conditions set forth in this Agreement.
Section
6.13
Rule 16b-3
. The Company shall take commercially reasonably steps to cause the
transactions contemplated by this Agreement and any other dispositions of equity
securities of the Company in connection with the transactions contemplated by this
Agreement by each individual who is a director or executive officer of the Company to be
exempt under Rule 16b-3 promulgated under the Exchange Act.
Section
6.14
Financing.
(a)
Parent and Merger Sub acknowledge and agree that the Company and its Affiliates have no
responsibility for any financing that Parent or Merger Sub may raise in connection with
the Merger. Any offering materials and other related documents prepared by or on behalf
of or utilized by Parent or its Affiliates and financing sources, in connection with
Parent and Merger Subs financing activities in connection with the Merger, that include
any information provided by the Company or any of its Affiliates, including any offering
memorandum, bankers book or similar document used, or any other written offering
materials used (collectively,
Offering Material
s), in connection with any debt or
securities offering or other such Parent and Merger Sub financing shall include a
conspicuous disclaimer to the effect that neither the Company nor any of its Affiliates
has any responsibility for the content of such document and disclaims all responsibility
therefor and shall further include a disclaimer with respect to the Company and its
Affiliates in any oral disclosure with respect to such financing.
(b)
Parent and Merger Sub shall use their respective best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper or
advisable to (i) maintain in effect the Financing and the Financing Commitments, (ii)
enter into definitive financing agreements with respect to the Financing and Financing
Commitments, so that such agreements are in effect as promptly as practicable but in any
event no later than the Effective Time and (iii) consummate the Financing at or prior to
the Effective Time. Parent and Merger Sub shall provide to the Company copies of all
final documents relating to the Financing and shall keep the Company fully informed of
material developments in respect of the financing process relating thereto. Prior to the
Closing, Parent and Merger Sub shall not agree to, or permit, any amendment or
modification of, or
waiver under, the Financing
Commitments or other final documentation relating to the Financing (i) in a manner that
would (A) reduce the aggregate amount of available Financing or (B) delay or prevent the
Closing or (ii) which is otherwise adverse to the Company in any material respect,
without the prior written consent of the Company (such consent not to be unreasonably
withheld). In the period between the date hereof and the Closing Date, upon request of
Parent and Merger Sub, the Company shall, and shall use reasonable best efforts to cause
the Company Subsidiaries, and its and their Affiliates and Representatives to, reasonably
cooperate with Parent and Merger Sub in connection with the Financing, including without
limitation, subject to Section 6.14(a), (i) preparation of any required financial
statements relating to the Company and the Company Subsidiaries and any required pro
forma financial information; (ii) reasonable participation in meetings and road shows, if
any; (iii) the provision of information relating to the Financing reasonably requested by
Parent and Merger Sub; and (iv) reasonable assistance in the preparation of offering
memoranda, private placement memoranda, prospectuses and similar documents of Parent.
Parent and Merger Sub shall promptly, upon request by the Company, reimburse the Company
for all reasonable and documented out-of-pocket expenses incurred by the Company or its
Affiliates or Representatives in connection with such cooperation. Notwithstanding
anything to the contrary in this Agreement, the Company shall not be required to execute
and deliver any commitment letters, underwriting or placement agreements, pledge and
security documents, or other definitive financing documents in connection with the
Financing prior to the Closing.
(c)
If, notwithstanding the use of best efforts by Parent and Merger Sub to satisfy its
obligations under Section 6.14(b), any of the Financing or the Financing Commitments (or
any definitive financing agreement relating thereto) expire or are terminated prior to
the Closing, in whole or in part, for any reason, Parent and Merger Sub shall (i)
promptly notify the Company of such expiration or termination and the reasons therefor
and (ii) promptly arrange for alternative financing (which shall be in an amount
sufficient to pay for the consummation of the Merger from other sources and which do not
include any conditions of such alternative financing that are more onerous than or in
addition to the conditions set forth in the Financing) to replace the financing
contemplated by such expired or terminated commitments or agreements.
Section
6.15
Shareholder Litigation
. To the extent not violative of any fiduciary duties owed by
the Company to its shareholders, and to the extent that such action shall not operate as
a waiver of the Companys work product or attorney client or other privileges, (a) the
Company shall promptly advise Parent orally or in writing of any stockholder litigation
against the Company and/or its directors relating to this Agreement, the Merger and/or
the transactions contemplated by this Agreement and shall keep Parent informed regarding
any such stockholder litigation, (b) the Company shall give Parent the opportunity to
participate in the defense or settlement of any such litigation and (c) the Company shall
not settle any such litigation without Parents prior written consent, which consent
shall not be unreasonably withheld.
Section
6.16
Resignations.
The Company shall furnish to Parent resignations in writing (effective
as of the Closing Date) from such of the officers and directors of the Company as Parent
may have requested not less than 10 days prior to the Closing Date.
ARTICLE VII
CONDITIONS TO THE
MERGER
Section
7.01
Conditions to the Obligations of Each Party
. The obligations of the Company, Parent
and Merger Sub to consummate the Merger are subject to the satisfaction or waiver as of
the Closing of the following conditions:
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(a)
Company Stockholder Approval
. The Stockholder Approval shall have been obtained.
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(b)
Antitrust Approvals and Waiting Period
s. Any waiting period (and any extension
thereof) applicable to the consummation of the Merger under applicable United
States, German and Italian antitrust Laws, including the HSR Act, shall have
expired or been terminated, and any approvals required thereunder shall have been
obtained.
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(c)
No Order
. No Governmental Authority shall have enacted, issued, promulgated,
enforced or entered any injunction, order, decree or ruling (whether temporary or
preliminary) which is then in effect and has the effect of making consummation of
the Merger illegal or otherwise preventing or prohibiting consummation of the
Merger.
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Section
7.02
Conditions to the Obligations of Parent and Merger Sub
. The obligations of Parent
and Merger Sub to consummate the Merger are subject to the satisfaction or waiver in
writing (where permissible) as of the Closing of the following additional conditions:
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(a)
Representations and Warranties
. The representations and warranties of the Company
set forth in this Agreement shall be true and correct in all respects, without
regard to any materiality or Company Material Adverse Effect qualifications
contained in them, as of the Effective Time, as though made on and as of such date
and time (except for representations and warranties expressly made as of a
specified date, the accuracy of which shall be determined as of that specified
date), unless the failure or failures of any such representations and warranties to
be so true and correct in all respects would not, individually or in the
aggregate, have a Company Material Adverse Effect.
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(b)
Agreements and Covenant
s. The Company shall have performed or complied in all
material respects with all agreements and covenants required by this Agreement to
be performed or complied with by it on or prior to the Effective Time.
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(c)
Officers Certificate
. The Company shall have delivered to each of Parent and
Merger Sub a certificate, dated the Closing Date, signed by an officer on behalf of
the Company and certifying as to the satisfaction of the conditions specified in
Section 7.02(a) and Section 7.02(b).
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Section
7.03
Conditions to the Obligations of the Company
. The obligations of the Company to
consummate the Merger are subject to the satisfaction or waiver in writing (where
permissible) as of the Closing of the following additional conditions:
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(a)
Representations and Warranties
. The representations and warranties of each of
Parent and Merger Sub set forth in this Agreement shall be true and correct in all
respects, without regard to any materiality or similar qualifications contained in
them, as of the Effective Time, as though made on and as of such date and time
(except for representations and warranties expressly made as of a specified date,
the accuracy of which shall be determined as of that specified date), unless
the failure or failures of any such representations and warranties to be so
true and correct in all respects would not, individually or in the aggregate,
prevent the consummation of the Merger or prevent Parent or Merger Sub from
performing its obligations under this Agreement.
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(b)
Agreements and Covenant
s. Each of Parent and Merger Sub shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the Effective
Time.
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(c)
Officers Certificate
. Parent and Merger Sub shall have delivered to the Company a
certificate, dated the Closing Date, signed by an officer on behalf of Parent and
Merger Sub, certifying as to the satisfaction of the conditions specified in
Section 7.03(a) and Section 7.03(b).
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(d)
ISRA.
Clearance by the New Jersey Department of Environmental Protection (NJDEP)
pursuant to ISRA shall have been obtained.
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ARTICLE VIII
TERMINATION
Section
8.01
Termination.
This Agreement may be terminated and the Merger may be abandoned at any
time prior to the Effective Time by action taken or authorized by the board of directors
of the terminating party or parties, notwithstanding any requisite adoption of this
Agreement by the stockholders of the Company, and whether before or after the
stockholders of the Company have approved this Agreement at the Company Stockholders
Meeting (other than termination by the Company pursuant to Section 8.01(h), which such
termination may only be effected
prior to obtaining the Stockholder Approval, or a termination by the Company or Parent
pursuant to Section 8.01(f), which such termination may, for the avoidance of doubt, only
be effected after the Company Stockholders Meeting), as follows (the date of any such
termination, the
Termination Date
):
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(a)
by mutual written consent of Parent and the Company;
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(b)
by either Parent or the Company if the Effective Time shall not have occurred on or
before March 31, 2008 (the
Expiration Date
);
provided, however
, that the
Expiration Date shall be automatically extended until April 30, 2008 in the event
the Proxy Statement has not been cleared by the SEC on or prior to the date that is
five business days prior to February 29, 2008;
further provided
, that the
Expiration Date shall be automatically extended until April 30, 2008 in the event
that, as of March 31, 2008, each of the conditions set forth in ARTICLE VII have
been satisfied or waived as of such date, other than the conditions set forth
in Section 7.01(b) and those that by their nature are only satisfied as of the
Closing; and
further provided
, that the right to terminate this Agreement under
this Section 8.01(b) shall not be available to the party whose failure to fulfill
any obligation under this Agreement has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before such date;
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(c)
by either Parent or the Company if any Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any injunction, order, decree or ruling or
taken any other action (including the failure to have taken an action) which, in
either such case, has become final and non-appealable and has the effect of making
consummation of the Merger illegal or otherwise preventing or prohibiting
consummation of the Merger;
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(d)
by Parent if (i) any of the representations and warranties of the Company herein
are or become untrue or inaccurate such that Section 7.02(a) would not be
satisfied, or (ii) there has been a breach on the part of the Company of any of its
covenants or agreements herein such that Section 7.02(b) would not be satisfied,
and, in either such case, such breach has not been, or cannot be, cured within 60
days after receipt of written notice by the Company from Parent;
provided, however
,
in the event that on or after the date which is 45 days after receipt of such
written notice by the Company, it is not reasonably likely that such breach can be
cured within such 60-day period, such 60-day period may be reduced to 45 days
(or such number of days greater than 45 days but less than 60 days as shall be
specified by Parent) by further written notice by Parent to the Company;
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(e)
by the Company if (i) any of the representations and warranties of either Parent or
Merger Sub herein are or become untrue or inaccurate such that Section 7.03(a)
would not be satisfied, or (ii) there has been a breach on the part of either
Parent or Merger Sub of any of its covenants or agreements herein such that Section
7.03(b) would not be satisfied, and, in either such case, such breach has not been,
or cannot be, cured within 60 days after receipt of written notice by Parent and
Merger Sub, as applicable, from the Company;
provided, however
, in the event that
on or after the date which is 45 days after receipt of such written notice by
Parent and Merger Sub, as applicable, it is not reasonably likely that such
breach can be cured within such 60-day period, such 60-day period may be reduced to
45 days (or such number of days greater than 45 days but less than 60 days as shall
be specified by the Company) by further written notice by the Company to Parent and
Merger Sub, as applicable;
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(f)
by either Parent or the Company if the Stockholder Approval shall not have been
obtained at the Company Stockholders Meeting or any adjournment or postponement
thereof at which adoption of this Agreement is voted upon;
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(g)
by Parent if the Company Board shall have (i) effected a Change in Board
Recommendation, (ii) taken any of the actions prohibited by Section 6.04(c), or
(iii) taken a position or published, sent or given to stockholders a statement
contemplated by Rule 14e-2(a) of the Exchange Act with respect to any tender or
exchange offer by a third party other than recommending rejection of such tender or
exchange offer within 10 Business Days after such tender or exchange offer is made;
or
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(h)
by the Company pursuant to and in accordance with the terms and conditions of
Section 6.04(d).
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Section
8.02
Effect of Termination
. In the event of the termination of this Agreement pursuant to
Section 8.01, this Agreement shall forthwith become void, and there shall be no liability
under this Agreement on the part of any party hereto (except that the provisions of
Section 6.03(c), this Section 8.02, Section 8.03 and ARTICLE IX shall survive any such
termination);
provided, however
, that nothing herein shall relieve any party from
liability for any intentional breach of any of its representations, warranties, covenants
or agreements set forth in this Agreement prior to such termination.
Section
8.03
Fees and Expenses; Termination Fees
.
(a)
All Expenses incurred in connection with this Agreement shall be paid by the party
incurring such expenses, whether or not the Merger is consummated.
Expenses
, as used in
this Agreement, shall include all reasonable out-of-pocket documented expenses (including
all fees and expenses of counsel, accountants, investment bankers, financing sources,
hedging counterparties, experts and consultants to a party hereto and its Affiliates)
incurred by a party or on its behalf in connection with or related to the transactions
contemplated hereby, including the authorization, preparation, negotiation, execution and
performance of this Agreement, the preparation, printing, filing and mailing of the Proxy
Statement, the solicitation of stockholder approval and all other matters related to the
closing of the Merger.
(b)
The Company agrees that if this Agreement shall be terminated:
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(i)
by Parent pursuant to Section 8.01(f), and at or prior to the Termination Date, a
Person or group shall have made an Acquisition Proposal to the Company or the
stockholders of the Company or an Acquisition Proposal shall have otherwise become
publicly announced and, no later than 12 months after the applicable Termination
Date, the Company enters into an agreement with respect to an Acquisition Proposal,
or the Acquisition Proposal (which, in each case, need not be the same
Acquisition Proposal as the Acquisition Proposal described above) is
consummated, then the Company will pay to Parent, on the earlier of (x) the
date that a definitive agreement in respect of such Acquisition Proposal is
executed and (y) the date of the consummation of the transaction in respect of such
Acquisition Proposal, the Company Termination Fee in immediately available funds,
as directed by Parent in writing;
provided,
that for the purpose of this Section
8.03(b)(i), all references to 20% or 25% in the definition of Acquisition
Proposal shall be changed to 45%;
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(ii)
by Parent or the Company pursuant to Section 8.01(g)(i) or 8.01(g)(iii), then the
Company shall pay to Parent, on the Termination Date, the Company Termination Fee
in immediately available funds; or
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(iii)
by the Company pursuant to Section 8.01(h), then the Company shall pay to Parent,
on the Termination Date, the Company Termination Fee, in immediately available
funds, as directed by Parent in writing.
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(c)
For purposes of this Agreement,
Company Termination Fee
means an amount in
cash equal to 3% of the aggregate Merger Consideration. The Company and Parent
acknowledge that the agreements contained in this Section 8.03 are an integral part of
the transactions contemplated by this Agreement. In the event that the Company shall fail
to pay the Company Termination Fee when due, the Company shall reimburse Parent for all
reasonable costs and expenses actually incurred or accrued (including reasonable fees and
expenses of counsel) in connection with the collection under and the enforcement of this
Section 8.03, together with interest from the Termination Date on all amounts so owed at
the prime rate announced by JPMorgan Chase Bank as its prime rate in effect from time to
time during such period. The parties hereto agree and understand that in no event shall
the Company be required to pay the Company Termination Fee on more than one occasion.
(d)
The Company shall reimburse Parent and Merger Sub for all their reasonable and documented
out-of-pocket expenses actually incurred in connection with this Agreement, the Merger
and the other transactions contemplated by this Agreement if this Agreement is terminated
pursuant to Section 8.01(d). Parent shall reimburse the Company for all its reasonable
and documented out-of-pocket expenses actually incurred in connection with this
Agreement, the Merger and the other transactions contemplated by this Agreement if this
Agreement is terminated pursuant to Section 8.01(e). Any such reimbursement shall be paid
upon such termination, except that no payment shall be due Parent and Merger Sub for
reimbursement of such expenses if the Company has previously paid the Company Termination
Fee. Subject to Section 9.10(a), the provisions of this Section 8.03(d) shall be in
addition to and shall not limit any other liability for losses or damages which the
parties may otherwise have.
ARTICLE IX
GENERAL PROVISIONS
Section
9.01
Non-Survival of Representations, Warranties and Agreements
. The representations and
warranties in this Agreement and in any certificate delivered pursuant hereto shall
terminate at the Effective Time. This Section 9.01 shall not limit any covenant or
agreement of the parties which by its terms contemplates performance after the Effective
Time.
Section
9.02
Notices.
All notices, requests, claims, demands and other communications hereunder
shall be in writing and shall be given (a) on the date of delivery if delivered
personally, (b) on the first business day following the date of dispatch if delivered by
a nationally recognized next-day courier service, (c) on the fifth business day following
the date of mailing if delivered by registered or certified mail (postage prepaid, return
receipt requested) or (d) if sent by facsimile or electronic transmission, when
transmitted and receipt is confirmed. All notices under Section 6.04 or ARTICLE VIII
shall be delivered by courier and facsimile or electronic transmission to the respective
parties at the addresses provided in accordance with this Section 9.02. All notices
hereunder shall be delivered to the respective parties at the following addresses (or at
such other address for a party as shall be specified in a notice given in accordance with
this Section 9.02):
(a)
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if
to the Company, to it at:
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Bradley
Pharmaceuticals, Inc.
383 Route 46 West
Fairfield, NJ 07084-2402
Attention: R. Brent Lenczycki
Telecopy: (973) 575-5366
Telephone: (973)
882-1505 (x. 510)
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with
a copy (which shall not constitute notice) to:
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Morrison
& Foerster LLP
1290 Avenue of the Americas
New York, NY 10104
Attention: James R. Tanenbaum
Telecopy: (212) 468-7900
Telephone: (212)
468-8000
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Sills
Cummis & Gross P.C.
One Riverfront Plaza
Newark, NJ 07102
Attention: Robert Crane
Arlene Elgart Mirsky
Telecopy: (973) 643-6500
Telephone: (973) 643-5055
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(b)
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if
to either Parent or Merger Sub, to it at:
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Nycomed
US Inc.
60 Baylis Road
P.O. Box 2006
Attn: Paul McGarty, Chief
Executive Officer
Melville, NY 11747
Telecopy: (631) 454-7677
Telephone: (631) 454-6389
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Nycomed
S.C.A., SICAR,
c/o Nycomed Germany Holding GmbH
Byk-Gulden-Str. 2, 78467
Konstanz, Germany
Attention: General Counsel NYCOMED GROUP
Facsimile:
+49 (0) 7531 84-91496
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in
each case, with a copy (which shall not constitute notice) to:
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Dorsey
& Whitney LLP
250 Park Avenue
New York, NY 10177
Attention: Steven
Khadavi
Telecopy: (212) 953-7201
Telephone: (212) 415-9200
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Section
9.03
Amendment.
This Agreement may be amended by the parties hereto by action taken by or
on behalf of their respective boards of directors at any time prior to the Effective
Time;
provided, however
, that, after the adoption of this Agreement by the stockholders
of the Company, no amendment shall be made except as allowed under applicable Law. This
Agreement may not be amended except by an instrument in writing signed by each of the
parties hereto.
Section
9.04
Waiver.
Any party hereto may (a) extend the time for the performance of any
obligation or other act of any other party hereto, (b) waive any inaccuracy in the
representations and warranties of any other party contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any agreement of any other party
or any condition to its own obligations contained herein. Any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by the party or
parties to be bound thereby. The failure of any party to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of those rights. Any waiver
pursuant to this Section 9.04 shall not be construed as a waiver of any continuing or
succeeding breach of such provision or a waiver or modification of any other provision.
Section
9.05
Certain Definition
s.
(a)
For purposes of this Agreement:
Affiliate
of a specified Person means a Person who, directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with, such
specified Person.
Beneficial
owner
, with respect to any Shares, has the meaning ascribed to such term under Rule
13d-3(a) of the Exchange Act.
Business
Day
means any day on which the principal offices of the SEC in Washington, D.C. are open
to accept filings, or, in the case of determining a date when any payment is due, any day
on which banks are not required or authorized to close in the City of New York.
Company
Material Adverse Effect
means any event, development, state of facts, occurrence or
change that is or would reasonably be expected to be, individually or in the aggregate,
materially adverse to the business, assets, condition (financial or otherwise) or results
of operations of the Company and the Company Subsidiaries, taken as a whole;
provided
that none of the following shall in and of itself constitute, and no event, circumstance,
development, occurrence, change or effect to the extent resulting from any of the
following shall constitute, a Company Material Adverse Effect: (i) changes in the
national or world financial markets as a whole, (ii) changes in general economic
conditions taken as a whole that affect the industries in which the Company and the
Company Subsidiaries conduct their business so long as such changes do not
disproportionately impact the Company relative to other companies in such industries,
(iii) general changes in the principal industries in which the Company and the Company
Subsidiaries operate so long as such changes do not disproportionately impact the Company
relative to other companies in such industries, (iv) acts of terrorism or war, including
the engagement by the United States of America or any other country in hostilities, and
whether or not pursuant to the
declaration of a national emergency or war, (v) the announcement of this Agreement and
the transactions contemplated hereby, (vi) any actions taken, or failure to take action,
in each case, to which Parent has expressly consented or requested in writing, (vii)
changes in GAAP (or the interpretation thereof), (viii) changes in the Companys stock
price or the trading volume of the Companys stock, in and of itself, or (ix) any failure
by the Company to meet any published analyst estimates or expectations of the Companys
revenue, earnings or other financial performance or results of operations for any period,
in and of itself, or any failure by the Company to meet its internal budgets, plans or
forecasts of its revenues, earnings or other financial performance or results of
operations, in and of itself.
Control
(including the terms controlled by and under common control with) means the
possession, directly or indirectly, or as trustee or executor, of the power to direct or
cause the direction of the management and policies of a Person, whether through the
ownership of voting securities, as trustee or executor, by contract or credit arrangement
or otherwise.
Credit
Agreement
means the Second Amended and Restated Agreement as currently in effect among
the Company and certain of its Company Subsidiaries, the lenders parties thereto,
Wachovia Bank, National Association, as Administrative Agent, JPMorgan Chase Bank, as
Syndication Agent and Sovereign Bank, as Documentation Agent, dated as of August 3, 2007.
Environmental
Law
means any applicable law, regulation, code, license, permit, order, judgment, decree
or injunction from any Governmental Authority (i) concerning the protection of the
environment (including air, water, soil and natural resources) or (ii) the use, storage,
handling, release or disposal of any Hazardous Substances, in each case as presently in
effect.
Hazardous
Substance
means any substance presently listed, defined, designated or classified as
hazardous, toxic or radioactive under any applicable Environmental Law including
petroleum and any derivative or by-products thereof.
Knowledge
of the Company
or
Companys knowledge
means the actual knowledge after due inquiry of
the Persons set forth in Section 9.05(a) of the Disclosure Schedule.
Liens
means any pledges, claims, liens, mortgages, easements, covenants, rights of way, title
defects, encroachments and any other title defects, charges, encumbrances, options to
purchase or lease or otherwise acquire any interest, conditional sales agreement,
restriction (whether on voting, sale, transfer, disposition or otherwise) and security
interests of any kind or nature whatsoever.
Person
means an individual, corporation, partnership, limited partnership, limited liability
partnership, limited liability company, syndicate, natural person (including a person
as defined in Section 13(d)(3) of the Exchange Act), trust, association or other entity
or government, political subdivision, agency or instrumentality of a government.
Regulatory
Authority
means the FDA or any other federal, state, local or foreign Governmental
Authority that is concerned with the marketing, sale, use, handling and control, safety,
efficacy, reliability or manufacturing of drug or biological products or medical devices.
subsidiary
or
subsidiaries
means, when used with respect to the Company, the Surviving
Corporation, Parent or Merger Sub, any other Person that the Company, the Surviving
Corporation, Parent or Merger Sub, as applicable, directly or indirectly owns or has the
power to vote or control 50% or more of any class or series of capital stock or equity
interests of such Person.
Tax
or
Taxes
means any and all federal, state, local or foreign taxes, charges, fees,
levies, imposts, duties and governmental fees or other like assessments or charges of any
kind whatsoever, together with any interest or penalty, addition to tax or additional
amount imposed with respect thereto, including, but not limited to, income, alternative
or add-on minimum, gross income, gross receipts, sales, use, value-added, ad valorem,
franchise, capital, paid-up capital, profits, lease, service, transfer, license,
withholding, estimated, payroll, employment, real and personal property, stamp, workers
compensation, severance, and windfall profits tax.
Tax
Returns
means returns, forms, declarations, claims for refund, or information returns or
statements, reports and forms relating to Taxes filed or required to be filed with any
Governmental Authority (including any schedule or attachment thereto and any amendment
thereof).
(b)
When a reference is made in this Agreement to Sections, Schedules or Exhibits, such
reference shall be to a Section, Schedule or Exhibit of this Agreement, respectively,
unless otherwise indicated. Whenever the words include, includes or including are
used in this Agreement, they shall be deemed to be followed by the words without
limitation. The words hereof, herein and hereunder and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not any
particular provision of this Agreement. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms. References to a
Person are also to its permitted successors and assigns. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and neuter forms.
Section
9.06
Severability
. If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of Law, or public policy, all other conditions
and provisions of this Agreement shall nevertheless remain in full force and effect so
long as the economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby be consummated as originally contemplated
to the fullest extent possible.
Section
9.07
Entire Agreement; Assignment
. This Agreement, the Guaranty, the Disclosure Schedule,
and the Confidentiality Agreement constitute the entire agreement among the parties
hereto with respect to the subject matter hereof and thereof and supersede all prior
agreements and undertakings, both written and oral, among the parties hereto, or any of
them, with respect to the subject matter hereof and thereof. This Agreement shall not be
assigned (whether pursuant to a merger, by operation of law or otherwise), except that
Parent or Merger Sub may assign all or any of their rights and obligations hereunder to
any direct or indirect Subsidiary so long as assignment does not delay or impede the
consummation of the transactions contemplated hereby or, after the Closing, in connection
with a merger, consolidation or sale of all or substantially all of the assets of Parent
or the Surviving Corporation and its subsidiaries;
provided, however
, that no such
assignment shall relieve the assigning party of its obligations hereunder if such
assignee does not perform such obligations.
Section
9.08
No Third Party Beneficiaries
. This Agreement shall be binding upon and inure solely
to the benefit of each party hereto, and nothing in this Agreement, express or implied,
is intended to or shall confer upon any other Person any right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement, other than, subject to the
limitations set forth in Section 9.10, Section 6.05 (which is intended to be for the
benefit of the Persons covered thereby and may be enforced by such Persons).
Section
9.09
Governing Law
. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware (without giving effect to the choice of law
principles therein).
Section
9.10
Sole and Exclusive Remedy; Specific Performance; Submission to Jurisdiction; No
Recourse.
(a)
Each of Parent and Merger Sub agree that to the extent either or both of them has
incurred any losses or damages in connection with this Agreement, the maximum aggregate
liability of the Company (and the sole and exclusive remedy of Parent and Merger Sub) for
all of such losses or damages of Parent and Merger Sub shall be limited in the aggregate
and without duplication to either (but not both) (i) 3% of the aggregate Merger
Consideration or (ii) the payment of the Company Termination Fee pursuant to Section
8.03(b), if applicable.
(b)
The parties to this Agreement agree that irreparable damage would occur in the event that
any of the provisions of this Agreement are not performed by the parties in accordance
with their specific terms or are otherwise breached. It is accordingly agreed that the
parties hereto shall be entitled to seek an injunction or injunctions to prevent breaches
of this Agreement and to specifically enforce the terms hereof, this being in addition to
any other remedy to which they are entitled at Law or in equity. Except as provided in
Section
9.10(a) or as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred hereby, or by Law or
equity upon such party, and the exercise by a party of any one remedy will not preclude
the exercise of any other remedy.
(c)
Each of the parties hereto (i) consents to submit itself to the personal jurisdiction of
the Court of Chancery or other courts of the State of Delaware in the event any dispute
arises out of this Agreement or any of the transactions contemplated by this Agreement,
(ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from such court, (iii) agrees that it will not bring
any action relating to this Agreement or any of the transactions contemplated by this
Agreement in any court other than the Court of Chancery or other courts of the State of
Delaware and (iv) to the fullest extent permitted by Law, consents to service being made
through the notice procedures set forth in Section 9.02. Each party hereto hereby agrees
that, to the fullest extent permitted by Law, service of any process, summons, notice or
document by U.S. registered mail to the respective addresses set forth in Section 9.02
shall be effective service of process for any suit or proceeding in connection with this
Agreement or the transactions contemplated hereby.
(d)
This Agreement may only be enforced against, and any claims or causes of action that may
be based upon, arise out of or relate to this Agreement, or the negotiation, execution or
performance of this Agreement may only be made against the entities that are expressly
identified as parties hereto and no past, present or future Affiliate, director, officer,
employee, incorporator, member, manager, partner, stockholder, agent, attorney or
representative of any party hereto shall have any liability for any obligations or
liabilities of the parties to this Agreement or for any claim based on, in respect of, or
by reason of, the transactions contemplated hereby.
Section
9.11
Waiver of Jury Trial
. EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR THE MERGER. EACH OF THE PARTIES HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THAT FOREGOING WAIVER
AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO
THIS AGREEMENT AND THE MERGER, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 9.11.
Section
9.12
Headings
. The descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section
9.13
Counterparts
. This Agreement may be executed and delivered (including by facsimile
or other electronic transmission) in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when executed shall be deemed to
be an original but all of which taken together shall constitute one and the same
agreement.
IN
WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this Agreement to be
executed as of the date first written above by their respective officers thereunto duly
authorized.
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NYCOMED US INC.
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By:
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/s/ Paul B. McGarty
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Name: Paul
B. McGarty
Title: CEO
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PHASE MERGER SUB INC.
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By:
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/s/ Paul B. McGarty
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Name: Paul
B. McGarty
Title: CEO
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BRADLEY PHARMACEUTICALS, INC.
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By:
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/s/ Seth W. Hamot
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Name: Seth
W. Hamot
Title:
Non Executive Chairman of the Board
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(EXHIBITS OMITTED)
Annex B
GUARANTY
This
Guaranty (this
Guaranty
) is made as of October 29, 2007 by Nycomed S.C.A., SICAR, 8-10
rue Mathias Hardt, L 1717 Luxembourg, Grand Duchy of Luxembourg (the Guarantor), in
favor of Bradley Pharmaceuticals, Inc., a Delaware corporation (the Company). Unless
otherwise defined herein, all capitalized terms used herein shall have the meaning
ascribed to them in the Agreement (as defined below).
WHEREAS,
as an inducement to the Companys willingness to enter into the Agreement and Plan of
Merger (as amended or otherwise supplemented from time to time, the Agreement), dated
as of October 29, 2007, by and among Nycomed US Inc., a New York corporation (Parent),
Phase Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of Parent
(Merger Sub), and the Company, the Guarantor has agreed to guarantee the payment and
performance by Parent and Merger Sub, respectively, of their Obligations (as defined
below) under the Agreement.
NOW,
THEREFORE, the Guarantor hereby agrees with the Company as follows:
Section
1.
Guaranty of Obligations
. The Guarantor hereby irrevocably, absolutely and
unconditionally guarantees to the Company the payment when due, and the performance, of
all liabilities, agreements and other obligations of Parent and Merger Sub to the
Company, whether direct or indirect, absolute or contingent, due or to become due,
secured or unsecured, now existing or hereafter arising under the Agreement (the
Obligations
). This Guaranty is an absolute, unconditional and continuing guarantee of
the full and punctual payment and performance of the Obligations, and not a guarantee of
collection.
Section
2.
Representations and Warranties
. The Guarantor represents and warrants that:
(a)
Organization and Good Standing
. The Guarantor is a partnership limited by shares (société en
commandite par actions) duly organized and validly existing in good standing under the
laws of the Grand Duchy of Luxembourg and has full power and authority to own its
properties and to conduct its business as such properties are presently owned and such
business is presently conducted.
(b)
Power and Authority; Due Authorization
. The Guarantor has all necessary corporate power
and authority to execute and deliver this Guaranty and to perform all its obligations
hereunder. The execution, delivery and performance of this Guaranty has been duly
authorized by all necessary corporate action.
(c)
Binding Obligations
. This Guaranty constitutes the legal, valid and binding obligation of
the Guarantor, enforceable against the Guarantor in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors rights generally and by general
principles of equity, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
Section
3.
Guarantors Acknowledgment
. The Guarantor hereby acknowledges that the Company entered
into the transactions contemplated by the Agreement in reliance upon the execution of
this Guaranty.
Section
4.
Termination of Guaranty
. The Guarantors obligations hereunder shall continue in full
force and effect until the closing of the transactions contemplated by the Agreement or
the termination thereof as provided therein (except that Sections 1, 3 and 5 through 12
hereof shall survive such termination).
Section
5.
Successors and Assigns
. This Guaranty shall be binding upon the Guarantor and its
successors and assigns, and shall inure to the benefit of and be enforceable by the
Company and its respective successors, transferees and assigns. The Guarantor may not
assign or transfer any of its obligations hereunder without the prior written consent of
the Company.
Section
6.
Amendments and Waivers
. No amendment or waiver of any provision of this Guaranty nor
consent to any departure by the Guarantor therefrom shall be effective unless the same
shall be in writing and signed by the Company. No failure on the part of the Company to
exercise, and no delay in exercising, any right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right hereunder preclude any
other or further exercise thereof or the exercise of any other right.
Section
7.
Notices.
All notices and other communications called for hereunder shall be made in
writing and, unless otherwise specifically provided herein, shall be deemed to have been
duly made or given when delivered by hand or mailed first class, postage prepaid, or, in
the case of telecopied or telexed notice, when transmitted, answer back received,
addressed as follows: (i) if to the Guarantor, to it at Nycomed S.C.A., SICAR, c/o
Nycomed Germany Holding GmbH, Byk-Gulden-Str. 2, 78467 Konstanz, Germany, Attention:
General Counsel NYCOMED GROUP, Facsimile: +49 (0) 7531 84-91496 and (ii) if to the
Company, at its address for notices set forth in the Agreement.
Section
8.
Governing Law
. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York (without giving effect to choice of law principles
thereof that would result in the application of the laws of another jurisdiction).
Section
9.
Submission to Jurisdiction
. The Guarantor hereby (a) consents to submit itself to the
personal jurisdiction of any New York state or federal court located in the City of New
York in the event any dispute arises out of this Agreement or any transaction
contemplated by this Guaranty, (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court, and (c)
agrees that it will not bring any action relating to this Guaranty or any transaction
contemplated by this Guaranty in any court other than any such court. The Guarantor
hereby irrevocably and unconditionally waives any objection to the laying of venue of any
action, suit or proceeding arising out of this Guaranty or the transactions contemplated
hereby in New York state or federal courts located in the City of New York, and hereby
further irrevocably and unconditionally waives and agree not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum.
Section
10.
WAIVER OF JURY TRIAL
. THE GUARANTOR HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR RELATING TO THIS GUARANTY,
OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE
BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), ACTIONS OF EITHER THE
GUARANTOR OR THE COMPANY OR ANY OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THIS
GUARANTY, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.
Section
11.
Counterparts.
This Guaranty may be executed in counterparts, each of which shall be
deemed to be an original, but all of which, taken together, shall constitute one and the
same agreement.
Section
12.
Miscellaneous.
This Guaranty constitutes the entire agreement of the Guarantor with
respect to the matters set forth herein. No failure on the part of the Company to
exercise, and no delay in exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right hereunder preclude any
other or further exercise thereof or the exercise of any other right. The rights and
remedies herein provided are cumulative and not exclusive of any remedies provided by law
or any other agreement. The provisions of this Guaranty are severable, and in any action
or proceeding involving any state corporate law, or any state, federal or foreign
bankruptcy, insolvency, reorganization or other law affecting the rights of creditors
generally, if the obligations of the Guarantor hereunder would otherwise be held or
determined to be avoidable, invalid or unenforceable on account of the amount of the
guaranty, the amount of such liability shall, without any further action by the Guarantor
be automatically limited and reduced to the highest amount that is valid and enforceable
as determined in such action or proceeding. The invalidity or unenforceability of any one
or more sections of this Guaranty shall not affect the validity or enforceability of its
remaining provisions. Captions are for ease of reference only and shall not affect the
meaning of the relevant provisions.
[Remainder of page
intentionally left blank.]
IN
WITNESS WHEREOF, the Guarantor has caused this Guaranty to be executed and delivered as
of the date first above written.
Signed on behalf of NYCOMED S.C.A.,
SICAR
By: Nycomed LuxCo S.A., acting in its capacity as general partner of Nycomed S.C.A., SICAR
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By:
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/s/ Håkan Björklund
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Name: Håkan
Björklund
Title: Member
of the Board of Directors
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By:
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/s/ Kristoffer Melinder
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Name:
Kristoffer Melinder
Title: Member
of the Board of Directors
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[Signature Page to
Guaranty]
Annex C
October 28, 2007
The Special Committee of the Board
of Directors
Bradley Pharmaceuticals, Inc.
383 Route 46 West
Fairfield, New Jersey 07004
Gentlemen:
Deutsche
Bank Securities Inc. (Deutsche Bank) has acted as financial advisor to the Special
Committee of the Board of Directors of Bradley Pharmaceuticals, Inc. (the Company) in
connection with the proposed merger of the Company and Nycomed US Inc. (Acquiror)
pursuant to the proposed draft Agreement and Plan of Merger, dated October 28, 2007, among
the Company, Acquiror and Phase Merger Sub Inc., a wholly owned subsidiary of Acquiror
(Merger Sub) (the Merger Agreement), which provides, among other things, for the
merger of Merger Sub with and into the Company (the Transaction), as a result of which
the Company will become a wholly owned subsidiary of Acquiror. As set forth more fully in
the Merger Agreement, as a result of the Transaction, each share of the Common Stock, par
value $0.01 per share, of the Company (Company Common Stock) not owned directly or
indirectly by the Company or Acquiror, other than dissenting shares, will be converted
into the right to receive $20.00 in cash, without interest (the Merger Consideration).
The terms and conditions of the Transaction are more fully set forth in the Merger
Agreement.
You
have requested Deutsche Banks opinion, as investment bankers, as to the fairness, from a
financial point of view, of the Merger Consideration to be received by the holders of
outstanding shares of Company Common Stock, other than Mr. Daniel Glassman and his
affiliates (together, the Excluded Persons).
In
connection with Deutsche Banks role as financial advisor to the Special Committee of the
Board of Directors of the Company, and in arriving at its opinion, Deutsche Bank has
reviewed certain publicly available financial and other information concerning the
Company and certain internal analyses and other information furnished to it by the
Company. Deutsche Bank has also held discussions with members of the senior managements
of the Company regarding its business and prospects. In addition, Deutsche Bank has (i)
reviewed the reported prices and trading activity for Company Common Stock, (ii) compared
certain financial and stock market information for the Company with similar information
for certain other companies whose securities are publicly traded, (iii) reviewed the
financial terms of certain recent business combinations which it deemed comparable, in
whole or in part, to the Transaction, (iv) reviewed the terms of a draft of the Merger
Agreement, dated October 28, 2007, and certain related documents, and (v) performed such
other studies and analyses and considered such other factors as it deemed appropriate.
Deutsche
Bank has not assumed responsibility for independent verification of, and has not
independently verified, any information, whether publicly available or furnished to it,
concerning the Company, including, without limitation, any financial information,
forecasts or projections considered in connection with the rendering of its opinion.
Accordingly, for purposes of its opinion, Deutsche Bank has assumed and relied upon the
accuracy and completeness of all such information and Deutsche Bank has not conducted a
physical inspection of any of the properties or assets, and has not prepared or obtained
any independent evaluation or appraisal of any of the assets or liabilities, of the
Company. With respect to the financial forecasts and projections, made available to
Deutsche Bank and used in its analyses, Deutsche Bank has assumed that they have been
reasonably prepared on bases reflecting the best currently available estimates and
judgments of the management of the Company as to the matters covered thereby. In
rendering its opinion, Deutsche Bank expresses no view as to the reasonableness of such
forecasts and projections or the assumptions on which they are based.
Deutsche
Banks opinion is necessarily based upon economic, market and other conditions as in
effect on, and the information made available to it as of, the date hereof; events
occurring after the date hereof could materially affect the assumptions used in preparing
this opinion. Deutsche Bank has not agreed or undertaken to update, reaffirm or revise
this opinion or otherwise comment upon any events occurring after the date hereof and
does not have any obligation to update, reaffirm or revise this opinion.
The Special Committee of the Board
of Directors
Bradley Pharmaceuticals, Inc.
Page 2
For
purposes of rendering its opinion, Deutsche Bank has assumed that the final terms of the
Merger Agreement will not differ materially from the terms set forth in the draft it has
reviewed. Deutsche Bank has also assumed that, in all respects material to its analysis,
the representations and warranties of the Company, Acquiror and Merger Sub contained in
the Merger Agreement are true and correct, the Company, Acquiror and Merger Sub will each
perform all of the covenants and agreements to be performed by it under the Merger
Agreement and all conditions to the obligations of each of the Company, Acquiror and
Merger Sub to consummate the Transaction will be satisfied without any waiver thereof.
Deutsche Bank has also assumed that all material governmental, regulatory or other
approvals and consents required in connection with the consummation of the Transaction
will be obtained and that in connection with obtaining any necessary governmental,
regulatory or other approvals and consents, or any amendments, modifications or waivers
to any agreements, instruments or orders to which either the Company or Acquiror is a
party or is subject or by which it is bound, no limitations, restrictions or conditions
will be imposed or amendments, modifications or waivers made that would have a material
adverse effect on the Company or Acquiror or materially reduce the contemplated benefits
of the Transaction. Deutsche Bank understands that, in accordance with the Companys
Certificate of Incorporation, as filed with the Secretary of State of the State of
Delaware on May 15, 1998, and last amended on July 23, 1999, each share of Company Common
Stock and Class B Common Stock, will receive the same consideration in the Transaction
and, consequently, for purposes of Deutsche Banks opinion and related analysis, Deutsche
Bank has treated all such shares of common stock as entitled to receive the same
consideration in the Transaction and as having identical values.
This
opinion is addressed to, and for the sole use and benefit of, the Special Committee of
the Board of Directors of the Company in connection with its consideration of the
Transaction. This letter is not to be used for any other purpose, or be reproduced,
disseminated, quoted from or referred to at any time, in whole or in part, without our
prior written consent. This opinion is not a recommendation to the Special Committee of
the Board of Directors of the Company in connection with the Transaction and is not a
recommendation to the stockholders of the Company to approve the Transaction. This
opinion is limited to the fairness, from a financial point of view, of the Merger
Consideration to be received by the holders of the outstanding shares of Company Common
Stock, other than the Excluded Persons, and Deutsche Bank expresses no opinion as to the
merits of the underlying decision by the Company to engage in the Transaction, the
relative merits of the Transaction as compared to any alternative that might be available
to the Company, the underlying business decision by the Company to engage in the
Transaction or the terms of Merger Agreement or as to how any holder of shares of Company
Common Stock should vote with respect to the Transaction. In addition, we do not express
any view or opinion as to the fairness, financial or otherwise, of the amount or nature
of any compensation payable to or to be received by the Companys officers, directors or
employees, or any class of such persons, in connection with the Transaction relative to
the Merger Consideration. Our opinion has been authorized for issuance by the Fairness
Opinion and Valuation Review Committee of Deutsche Bank.
Deutsche
Bank will be paid a fee for its services as financial advisor to the Special Committee of
the Board of Directors of the Company in connection with the Transaction, a substantial
portion of which is contingent upon consummation of the Transaction. The Company has also
agreed to reimburse Deutsche Bank for its expenses, and to indemnify Deutsche Bank
against certain liabilities, in connection with its engagement. We are an affiliate of
Deutsche Bank AG (together with its affiliates, the DB Group). Members of the DB Group
may, in the future, provide investment and commercial banking services to the Company or
Acquiror, for which we would expect the DB Group to receive compensation. In the ordinary
course of business, members of the DB Group may actively trade in the securities and
other instruments and obligations of the Company or Acquiror for their own accounts and
for the accounts of their customers. Accordingly, the DB Group may at any time hold a
long or short position in such securities, instruments and obligations.
The Special Committee of the Board
of Directors
Bradley Pharmaceuticals, Inc.
Page 3
Based
upon and subject to the foregoing, it is Deutsche Banks opinion as investment bankers
that the Merger Consideration to be received by the holders of the outstanding shares of
Company Common Stock, other than the Excluded Persons, is fair, from a financial point of
view.
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Very truly yours,
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/s/ DEUTSCHE BANK SECURITIES INC.
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Annex D
SECTION 262 OF THE
DELAWARE GENERAL CORPORATION LAW
§ 262. Appraisal
rights.
(a)
Any stockholder of a corporation of this State who holds shares of stock on the date of
the making of a demand pursuant to subsection (d) of this section with respect to such
shares, who continuously holds such shares through the effective date of the merger or
consolidation, who has otherwise complied with subsection (d) of this section and who has
neither voted in favor of the merger or consolidation nor consented thereto in writing
pursuant to § 228 of this title shall be entitled to an appraisal by the Court of
Chancery of the fair value of the stockholders shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section, the word
stockholder means a holder of record of stock in a stock corporation and also a member
of record of a nonstock corporation; the words stock and share mean and include what
is ordinarily meant by those words and also membership or membership interest of a member
of a nonstock corporation; and the words depository receipt mean a receipt or other
instrument issued by a depository representing an interest in one or more shares, or
fractions thereof, solely of stock of a corporation, which stock is deposited with the
depository.
(b)
Appraisal rights shall be available for the shares of any class or series of stock of a
constituent corporation in a merger or consolidation to be effected pursuant to § 251
(other than a merger effected pursuant to §251(g) of this title), § 252, § 254,
§ 257, § 258, §263 or § 264 of this title:
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(1)
Provided, however, that no appraisal rights under this section shall be available
for the shares of any class or series of stock, which stock, or depository receipts
in respect thereof, at the record date fixed to determine the stockholders entitled
to receive notice of and to vote at the meeting of stockholders to act upon the
agreement of merger or consolidation, were either (i) listed on a national
securities exchange or (ii) held of record by more than 2,000 holders; and further
provided that no appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require for
its approval the vote of the stockholders of the surviving corporation as provided
in subsection (f) of § 251 of this title.
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(2)
Notwithstanding paragraph (1) of this subsection, appraisal rights under this
section shall be available for the shares of any class or series of stock of a
constituent corporation if the holders thereof are required by the terms of an
agreement of merger or consolidation pursuant to §§ 251, 252, 254, 257,
258, 263 and 264 of this title to accept for such stock anything except:
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a.
Shares of stock of the corporation surviving or resulting from such merger
or consolidation, or depository receipts in respect thereof;
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b.
Shares of stock of any other corporation, or depository receipts in respect
thereof, which shares of stock (or depository receipts in respect thereof)
or depository receipts at the effective date of the merger or consolidation
will be either listed on a national securities exchange or held of record by
more than 2,000 holders;
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c.
Cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a. and b. of this paragraph; or
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d.
Any combination of the shares of stock, depository receipts and cash in lieu
of fractional shares or fractional depository receipts described in the
foregoing subparagraphs a., b. and c. of this paragraph.
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(3)
In the event all of the stock of a subsidiary Delaware corporation party to a
merger effected under § 253 of this title is not owned by the parent
corporation immediately prior to the merger, appraisal rights shall be available
for the shares of the subsidiary Delaware corporation.
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(c)
Any corporation may provide in its certificate of incorporation that appraisal rights
under this section shall be available for the shares of any class or series of its stock
as a result of an amendment to its certificate of
incorporation, any merger or
consolidation in which the corporation is a constituent corporation or the sale of all or
substantially all of the assets of the corporation. If the certificate of incorporation
contains such a provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is practicable.
(d)
Appraisal rights shall be perfected as follows:
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(1)
If a proposed merger or consolidation for which appraisal rights are provided under
this section is to be submitted for approval at a meeting of stockholders, the
corporation, not less than 20 days prior to the meeting, shall notify each of its
stockholders who was such on the record date for such meeting with respect to
shares for which appraisal rights are available pursuant to subsection (b) or (c)
hereof that appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of such
stockholders shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for appraisal of such
stockholders shares. Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the stockholder intends
thereby to demand the appraisal of such stockholders shares. A proxy or vote
against the merger or consolidation shall not constitute such a demand. A
stockholder electing to take such action must do so by a separate written demand as
herein provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each stockholder
of each constituent corporation who has complied with this subsection and has not
voted in favor of or consented to the merger or consolidation of the date
that the merger or consolidation has become effective; or
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(2)
If the merger or consolidation was approved pursuant to § 228 or § 253 of
this title, then either a constituent corporation before the effective date of the
merger or consolidation or the surviving or resulting corporation within 10 days
thereafter shall notify each of the holders of any class or series of stock of such
constituent corporation who are entitled to appraisal rights of the approval of the
merger or consolidation and that appraisal rights are available for any or
all shares of such class or series of stock of such constituent corporation,
and shall include in such notice a copy of this section. Such notice may, and, if
given on or after the effective date of the merger or consolidation, shall, also
notify such stockholders of the effective date of the merger or consolidation. Any
stockholder entitled to appraisal rights may, within 20 days after the date of
mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holders shares. Such demand will be sufficient
if it reasonably informs the corporation of the identity of the stockholder and
that the stockholder intends thereby to demand the appraisal of such holders
shares. If such notice did not notify stockholders of the effective date of the
merger or consolidation, either (i) each such constituent corporation shall send a
second notice before the effective date of the merger or consolidation notifying
each of the holders of any class or series of stock of such constituent corporation
that are entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send such a
second notice to all such holders on or within 10 days after such effective date;
provided, however, that if such second notice is sent more than 20 days
following the sending of the first notice, such second notice need only be
sent to each stockholder who is entitled to appraisal rights and who has
demanded appraisal of such holders shares in accordance with this
subsection. An affidavit of the secretary or assistant secretary or of the
transfer agent of the corporation that is required to give either notice that
such notice has been given shall, in the absence of fraud, be
prima facie
evidence
of the facts stated therein. For purposes of determining the stockholders entitled
to receive either notice, each constituent corporation may fix, in advance, a
record date that shall be not more than 10 days prior to the date the notice is
given, provided, that if the notice is given on or after the effective date of the
merger or consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the record
date shall be the close of business on the day next preceding the day on which the
notice is given.
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(e)
Within 120 days after the effective date of the merger or consolidation, the surviving or
resulting corporation or any stockholder who has complied with subsections (a) and (d) of
this section hereof and who is otherwise entitled to appraisal rights, may commence an
appraisal proceeding by filing a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60
days after the effective date of the merger or consolidation, any stockholder who has not
commenced an appraisal proceeding or joined that proceeding as a named party shall have
the right to withdraw such stockholders demand for appraisal and to accept the terms
offered upon the merger or consolidation. Within 120 days after the effective date of the
merger or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) of this section hereof, upon written request, shall be entitled
to receive from the corporation surviving the merger or resulting from the consolidation
a statement setting forth the aggregate number of shares not voted in favor of the merger
or consolidation and with respect to which demands for appraisal have been received and
the aggregate number of holders of such shares. Such written statement shall be mailed to
the stockholder within 10 days after such stockholders written request for such a
statement is received by the surviving or resulting corporation or within 10 days after
expiration of the period for delivery of demands for appraisal under subsection (d) of
this section hereof, whichever is later. Notwithstanding subsection (a) of this section,
a person who is the beneficial owner of shares of such stock held either in a voting
trust or by a nominee on behalf of such person may, in such persons own name, file a
petition or request from the corporation the statement described in this subsection.
(f)
Upon the filing of any such petition by a stockholder, service of a copy thereof shall be
made upon the surviving or resulting corporation, which shall within 20 days after such
service file in the office of the Register in Chancery in which the petition was filed a
duly verified list containing the names and addresses of all stockholders who have
demanded payment for their shares and with whom agreements as to the value of their
shares have not been reached by the surviving or resulting corporation. If the petition
shall be filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so ordered by the
Court, shall give notice of the time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting corporation and to the
stockholders shown on the list at the addresses therein stated. Such notice shall also be
given by 1 or more publications at least 1 week before the day of the hearing, in a
newspaper of general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and by
publication shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g)
At the hearing on such petition, the Court shall determine the stockholders who have
complied with this section and who have become entitled to appraisal rights. The Court
may require the stockholders who have demanded an appraisal for their shares and who hold
stock represented by certificates to submit their certificates of stock to the Register
in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any
stockholder fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.
(h)
After the Court determines the stockholders entitled to an appraisal, the appraisal
proceeding shall be conducted in accordance with the rules of the Court of Chancery,
including any rules specifically governing appraisal proceedings. Through such proceeding
the Court shall determine the fair value of the shares exclusive of any element of value
arising from the accomplishment or expectation of the merger or consolidation, together
with interest, if any, to be paid upon the amount determined to be the fair value. In
determining such fair value, the Court shall take into account all relevant factors.
Unless the Court in its discretion determines otherwise for good cause shown, interest
from the effective date of the merger through the date of payment of the judgment shall
be compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate
(including any surcharge) as established from time to time during the period between the
effective date of the merger and the date of payment of the judgment. Upon application by
the surviving or resulting corporation or by any stockholder entitled to participate in
the appraisal proceeding, the Court may, in its discretion, proceed to trial upon the
appraisal prior to the final determination of the stockholders entitled to an appraisal.
Any stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted such
stockholders certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that such stockholder
is not entitled to appraisal rights under this section.
(i)
The Court shall direct the payment of the fair value of the shares, together with
interest, if any, by the surviving or resulting corporation to the stockholders entitled
thereto. Payment shall be so made to each such stockholder, in the case of holders of
uncertificated stock forthwith, and the case of holders of shares represented
by certificates upon the surrender
to the corporation of the certificates representing such stock. The Courts decree may be
enforced as other decrees in the Court of Chancery may be enforced, whether such
surviving or resulting corporation be a corporation of this State or of any state.
(j)
The costs of the proceeding may be determined by the Court and taxed upon the parties as
the Court deems equitable in the circumstances. Upon application of a stockholder, the
Court may order all or a portion of the expenses incurred by any stockholder in
connection with the appraisal proceeding, including, without limitation, reasonable
attorneys fees and the fees and expenses of experts, to be charged pro rata against the
value of all the shares entitled to an appraisal.
(k)
From and after the effective date of the merger or consolidation, no stockholder who has
demanded appraisal rights as provided in subsection (d) of this section shall be entitled
to vote such stock for any purpose or to receive payment of dividends or other
distributions on the stock (except dividends or other distributions payable to
stockholders of record at a date which is prior to the effective date of the merger or
consolidation); provided, however, that if no petition for an appraisal shall be filed
within the time provided in subsection (e) of this section, or if such stockholder shall
deliver to the surviving or resulting corporation a written withdrawal of such
stockholders demand for an appraisal and an acceptance of the merger or consolidation,
either within 60 days after the effective date of the merger or consolidation as provided
in subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery shall be
dismissed as to any stockholder without the approval of the Court, and such approval may
be conditioned upon such terms as the Court deems just; provided, however that this
provision shall not affect the right of any stockholder who has not commenced an
appraisal proceeding or joined that proceeding as a named party to withdraw such
stockholders demand for appraisal and to accept the terms offered upon the merger or
consolidation within 60 days after the effective date of the merger or consolidation, as
set forth in subsection (e) of this section.
(l)
The shares of the surviving or resulting corporation to which the shares of such
objecting stockholders would have been converted had they assented to the merger or
consolidation shall have the status of authorized and unissued shares of the surviving or
resulting corporation.
SPECIAL
MEETING OF STOCKHOLDERS OF
BRADLEY
PHARMACEUTICALS, INC.
February 21
, 2008
PROXY
VOTING INSTRUCTIONS
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MAIL
-
Sign, date and mail your proxy card in the envelope provided
as soon as possible.
- or -
TELEPHONE
-
Call toll-free
1-800-PROXIES
(1-800-776-9437) from any touch-tone telephone and follow the instructions.
Have your proxy card available when you call
- or -
INTERNET
-
Access
www.voteproxy.com
and follow
the on-screen instructions. Have your proxy card available when you
access the web page.
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COMPANY
NUMBER
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ACCOUNT
NUMBER
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You
may enter your voting instructions at 1-800-PROXIES or www.voteproxy.com
up until 11:59 PM Eastern Time the day before the applicable cut-off
or meeting date.
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Please
detach along perforated line and mail in the envelope provided
IF
you are not voting via telephone or the Internet.
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n
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR
THE ELECTION OF DIRECTORS
AND
FOR
THE PROPOSAL TO ADJOURN THE MEETING, IF NECESSARY.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
x
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1.
Approval of the Merger:
Proposal
to approve and adopt the agreement and plan of merger that Bradley Pharmaceuticals
entered into on October 29, 2007 with Nycomed US Inc. and Phase Merger
Sub, Inc., pursuant to which Bradley Pharmaceuticals would become a
wholly owned subsidiary of Nycomed US after the merger.
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FOR
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AGAINST
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ABSTAIN
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2.
Adjournment:
Proposal
to adjourn the Special Meeting, if necessary, to permit further solicitation
of proxies in the event there are not sufficient votes at the time of
the Special meeting to adopt the merger agreement proposal.
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FOR
|
AGAINST
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ABSTAIN
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q
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q
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q
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q
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q
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q
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To
change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted
via this method.
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q
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Yes
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No
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Do you plan to attend the Special Meeting?
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q
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q
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Signature
of Stockholder
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Date
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Signature
of Stockholder
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Date
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n
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Note:
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Please
sign exactly as your name or names appear on this Proxy. When shares
are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title
as such. If the signer is a corporation, please sign full corporate
name by duly authorized officer, giving full title as such. If signer
is a partnership, please sign in partnership name by authorized person.
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BRADLEY
PHARMACEUTICALS, INC.
383
Route 46 West
Fairfield, NJ 07004
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby
appoints Seth W. Hamot and Alan S. Goldstein as proxies, each with full power
of substitution, to represent and vote as designated on the reverse side,
all the shares of Common Stock of Bradley Pharmaceuticals, Inc. held of record
by the undersigned on January 10, 2008, at the Special
Meeting of Stockholders to be held at Morrison & Foerster LLP, located
at 1290 Avenue of the Americas, New York, NY 10104 at 9:30 a.m. on February 21, 2008, or any adjournment or postponement thereof.
(Continued
and to be signed on the reverse side)
SPECIAL
MEETING OF STOCKHOLDERS OF
BRADLEY
PHARMACEUTICALS, INC.
February 21
, 2008
Please
date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
|
Please
detach along perforated line and mail in the envelope provided.
|
|
n
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR
THE ELECTION OF DIRECTORS
AND
FOR
THE PROPOSAL TO ADJOURN THE MEETING, IF NECESSARY.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
x
|
1.
Approval of the Merger:
Proposal
to approve and adopt the agreement and plan of merger that Bradley Pharmaceuticals
entered into on October 29, 2007 with Nycomed US Inc. and Phase Merger
Sub, Inc., pursuant to which Bradley Pharmaceuticals would become a
wholly owned subsidiary of Nycomed US after the merger.
|
FOR
|
AGAINST
|
ABSTAIN
|
2.
Adjournment:
Proposal
to adjourn the Special Meeting, if necessary, to permit further solicitation
of proxies in the event there are not sufficient votes at the time of
the Special meeting to adopt the merger agreement proposal.
|
FOR
|
AGAINST
|
ABSTAIN
|
q
|
q
|
q
|
q
|
q
|
q
|
|
|
|
To
change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted
via this method.
|
q
|
|
|
|
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|
Signature
of Stockholder
|
|
Date
|
|
Signature
of Stockholder
|
|
Date
|
|
n
|
Note:
|
Please
sign exactly as your name or names appear on this Proxy. When shares
are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title
as such. If the signer is a corporation, please sign full corporate
name by duly authorized officer, giving full title as such. If signer
is a partnership, please sign in partnership name by authorized person.
|
n
|
SPECIAL
MEETING OF STOCKHOLDERS OF
BRADLEY
PHARMACEUTICALS, INC.
February 21
, 2008
PROXY
VOTING INSTRUCTIONS
|
MAIL
-
Sign, date and mail your proxy card in the envelope provided
as soon as possible.
- or -
TELEPHONE
-
Call toll-free
1-800-PROXIES
(1-800-776-9437) from any touch-tone telephone and follow the instructions.
Have your proxy card available when you call
- or -
INTERNET
-
Access
www.voteproxy.com
and follow
the on-screen instructions. Have your proxy card available when you
access the web page.
|
|
COMPANY
NUMBER
|
|
|
ACCOUNT
NUMBER
|
|
|
|
|
|
|
You
may enter your voting instructions at 1-800-PROXIES or www.voteproxy.com
up until 11:59 PM Eastern Time the day before the applicable cut-off
or meeting date.
|
|
Please
detach along perforated line and mail in the envelope provided
IF
you are not voting via telephone or the Internet.
|
|
n
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR
THE ELECTION OF DIRECTORS
AND
FOR
THE PROPOSAL TO ADJOURN THE MEETING, IF NECESSARY.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
x
|
1.
Approval of the Merger:
Proposal
to approve and adopt the agreement and plan of merger that Bradley Pharmaceuticals
entered into on October 29, 2007 with Nycomed US Inc. and Phase Merger
Sub, Inc., pursuant to which Bradley Pharmaceuticals would become a
wholly owned subsidiary of Nycomed US after the merger.
|
FOR
|
AGAINST
|
ABSTAIN
|
2.
Adjournment:
Proposal
to adjourn the Special Meeting, if necessary, to permit further solicitation
of proxies in the event there are not sufficient votes at the time of
the Special meeting to adopt the merger agreement proposal.
|
FOR
|
AGAINST
|
ABSTAIN
|
q
|
q
|
q
|
q
|
q
|
q
|
|
|
|
To
change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted
via this method.
|
q
|
|
|
|
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Yes
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No
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Do you plan to attend the Special Meeting?
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q
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q
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Signature
of Stockholder
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Date
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Signature
of Stockholder
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Date
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n
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Note:
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Please
sign exactly as your name or names appear on this Proxy. When shares
are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title
as such. If the signer is a corporation, please sign full corporate
name by duly authorized officer, giving full title as such. If signer
is a partnership, please sign in partnership name by authorized person.
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n
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BRADLEY
PHARMACEUTICALS, INC.
383
Route 46 West
Fairfield, NJ 07004
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby
appoints Daniel Glassman as proxy, with full power of substitution, to represent
and vote as designated on the reverse side, all the shares of Class B Common
Stock of Bradley Pharmaceuticals, Inc. held of record by the undersigned on
January 10, 2008, at the Special Meeting of Stockholders
to be held at Morrison & Foerster LLP, located at 1290 Avenue of the Americas,
New York, NY 10104 at 9:30 a.m. on February 21, 2008,
or any adjournment or postponement thereof.
(Continued
and to be signed on the reverse side)
SPECIAL
MEETING OF STOCKHOLDERS OF
BRADLEY
PHARMACEUTICALS, INC.
February 21, 2008
Please
date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
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Please
detach along perforated line and mail in the envelope provided.
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n
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR
THE ELECTION OF DIRECTORS
AND
FOR
THE PROPOSAL TO ADJOURN THE MEETING, IF NECESSARY.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
x
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1.
Approval of the Merger:
Proposal
to approve and adopt the agreement and plan of merger that Bradley Pharmaceuticals
entered into on October 29, 2007 with Nycomed US Inc. and Phase Merger
Sub, Inc., pursuant to which Bradley Pharmaceuticals would become a
wholly owned subsidiary of Nycomed US after the merger.
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FOR
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AGAINST
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ABSTAIN
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2.
Adjournment:
Proposal
to adjourn the Special Meeting, if necessary, to permit further solicitation
of proxies in the event there are not sufficient votes at the time of
the Special meeting to adopt the merger agreement proposal.
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FOR
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AGAINST
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ABSTAIN
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q
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q
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q
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q
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q
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q
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To
change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted
via this method.
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q
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Signature
of Stockholder
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Date
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Signature
of Stockholder
|
|
Date
|
|
n
|
Note:
|
Please
sign exactly as your name or names appear on this Proxy. When shares
are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title
as such. If the signer is a corporation, please sign full corporate
name by duly authorized officer, giving full title as such. If signer
is a partnership, please sign in partnership name by authorized person.
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n
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Bradley (NYSE:BDY)
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Bradley (NYSE:BDY)
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