SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934 (Amendment No. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/X/ Preliminary proxy statement
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14(a)-12
E-Z-EM, INC.
(Name of Registrant as Specified in Charter)
DENNIS J. CURTIN
(Name of Person(s) filing Proxy Statement)
Payment of filing fee (check the appropriate box):
/x/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1. (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed: <PAGE>
_E-Z-EM,_INC._
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 17, 1996
_____________
To the Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of E-Z-EM, INC., a Delaware Corporation (the "Company"),
will be held at the Long Island Marriott in Uniondale, New York, on
Tuesday, December 17, 1996 at 9:00 a.m., Local Time, for the
following purposes:
1. To elect two Class III directors, each to serve for a term of
three years;
2. To ratify the Company's making of a Plan of Reorganization
whereby the Company separates the business now conducted by its
AngioDynamics Division through, sequentially, a transfer of its
business to AngioDynamics, Inc., a Delaware corporation wholly-
owned by the Company; a public offering of up to 19.9% of the
shares of AngioDynamics, Inc.; and the payment of a dividend to the
Company's shareholders of the Company's shares of AngioDynamics,
Inc. in the form of what is expected to be a tax-free spin-off.
3. To ratify the appointment of Grant Thornton LLP as the
Company's independent auditors for the fiscal year ending May 31,
1997; and
4. To transact such other business as may properly come before the
Meeting.
The Board of Directors has fixed the close of business on November
12, 1996 as the record date (the "Record Date") for the Meeting.
Only stockholders of record of the Company's Class A Common Stock,
$0.10 par value, on the Company's stock transfer books on the close
of business on that date are entitled to vote at the Meeting.
By Order of the Board of Directors
W. PHILIP VAN KIRK
Secretary
Westbury, New York
Dated: November ___, 1996
<PAGE>
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, YOU ARE
URGED TO FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE
ENVELOPE THAT IS PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN
THE UNITED STATES.
If you wish to attend, please check the appropriate box on the
enclosed proxy and return it in the enclosed envelope.
E-Z-EM, INC.
717 MAIN STREET
WESTBURY, NEW YORK 11590-5021
PROXY STATEMENT
FOR
MEETING OF STOCKHOLDERS
DECEMBER 17, 1996
INTRODUCTION
This Proxy Statement is being furnished to stockholders by the
Board of Directors of E-Z-EM, Inc., a Delaware corporation (the
"Company"), in connection with the solicitation of the accompanying
proxy (each a "Proxy" and collectively, the "Proxies") for use at
the 1996 Annual Meeting of Stockholders of the Company (the
"Meeting") to be held at the Long Island Marriott in Uniondale, New
York, on Tuesday, December 17, 1996, at 9:00 a.m., or at any
adjournment thereof.
The principal executive offices of the Company are located at
717 Main Street, Westbury, New York 11590-5021. The approximate
date on which this Proxy Statement and the accompanying Proxy will
first be sent or given to stockholders is November 17, 1996.
RECORD DATE AND VOTING SECURITIES
As of the close of business on November 12, 1996, the record
date (the "Record Date"), there were [4,035,346] outstanding shares
of the Company's Class A Common Stock, $0.10 par value (the "Class
A Common Stock"). Holders of the Class A Common Stock have one
vote per share on each matter to be acted upon. Only stockholders
of Class A Common Stock of record at the close of business on the
Record Date for the Meeting (the "Stockholders"), will be entitled
to vote at the Meeting and at any adjournment thereof. A majority
of the outstanding shares of Class A Common Stock present in person
or by proxy is required to constitute a quorum at the Meeting.
Additionally, the Company had [5,209,655] shares of Class B
Common Stock, $0.10 par value (the "Class B Common Stock" and
collectively with the Class A Common Stock, the "Common Stock")
outstanding as of the Record Date. Shares of Class B Common Stock
are non-voting shares.
VOTING OF PROXIES
Shares of Class A Common Stock represented by Proxies that are
properly executed, duly returned and not revoked, will be voted in
accordance with the instructions contained therein. If no
specification is indicated on the Proxy, the shares of Class A
Common Stock represented thereby will be voted: (i) for the
election as Directors of the persons who have been nominated by the
Board of Directors; (ii) for the ratification of a proposed plan of
reorganization of the Company whereby the Company separates the
business presently conducted by its AngioDynamics division and
(iii) for the ratification of the appointment of Grant Thornton LLP
as the Company's independent auditors for the fiscal year ending
May 31, 1997 (the "1997 Fiscal Year"); and (iv) with respect to any
other matter that may properly be brought before the Meeting in
accordance with the judgment of the person or persons voting the
Proxies.
The execution of a Proxy will in no way affect a Stockholder's
right to attend the Meeting and vote in person. Any Proxy executed
and returned by a Stockholder may be revoked at any time thereafter
if written notice of revocation is given to the Secretary of the
Company prior to the vote to be taken at the Meeting, or by
execution of a subsequent proxy which is presented before the
Meeting, or if the Stockholder attends the Meeting and votes by
ballot, except as to any matter or matters upon which a vote shall
have been cast pursuant to the authority conferred by such Proxy
prior to such revocation. For purposes of determining the presence
of a quorum for transacting business at the Meeting, abstentions
and broker "non-votes" (i.e., proxies from brokers or nominees
indicating that such persons have not received instructions from
the beneficial owner or other persons entitled to vote shares on a
particular matter with respect to which the brokers or nominees do
not have discretionary power) will be treated as shares that are
present but which have not been voted.
The cost of solicitation of the Proxies being solicited on
behalf of the Board of Directors will be borne by the Company. In
addition to the use of the mail, proxy solicitation may be made by
telephone, telegraph and personal interview by officers, directors
and employees of the Company. The Company will, upon request,
reimburse brokerage houses and persons holding Class A Common Stock
in the names of their nominees for their reasonable expenses in
sending soliciting material to their principals.
<PAGE>
SECURITY OWNERSHIP
The following table sets forth information, as of November 12,
1996, as to the beneficial ownership of the Company's voting Class
A Common Stock by each person known by the Company to own
beneficially more than 5% of the Company's voting Class A Common
Stock.
Name and Address of Shares Percent of
Beneficial Owner Beneficially Owned Class
Howard S. Stern,................ 956,412 23.7
Chairman of the Board,
Director
717 Main Street
Westbury, NY 11590
Betty S. Meyers................. 820,806 20.3
401 Emerald Street
New Orleans, LA 70124
David Meyers (1)............... 311,284 7.7
2484-30 Briarcliff Road
Atlanta, GA 30329
Stuart J. Meyers (1)........... 311,284 7.7
434 Bellair Drive
New Orleans, LA 70124
Jonas Meyers (1)............... 311,284 7.7
904 Oakland Avenue
Ann Arbor, MI 48104
Wellington Management Company... 219,258 5.4
75 State Street
Boston, MA 02109
- - ---------------
(1) Beneficial ownership of 154,534 of such shares is disclaimed.
The following table sets forth information, as of November 12,
1996, as to the beneficial ownership of the Company's voting Class
A and nonvoting Class B Common Stock, by (i) each of the Company's
directors, (ii) those persons who were, at the end of the 1996
Fiscal Year, Chief Executive Officer ("CEO") (Daniel R. Martin)
and each of the four most highly compensated executive officers of
the Company other than the CEO (collectively, the "Named Executive
Officers"), and (iii) all directors and executive officers of the
Company as a group:
<PAGE>
_______Class_A_______ _______Class_B_______
Shares Percent Shares Percent
Name of Beneficially of Beneficially of
Beneficial_Owner __Owned_(1)_ _Class_ __Owned_(2)_ _Class_
Howard S. Stern,........... 956,412 23.7 1,228,213 23.2
Chairman of the Board,
Director
Daniel R. Martin,.......... 23,882 * 175,119 3.3
President, Chief Executive
Officer, Director
Arthur L. Zimmet,.......... 28,750 * 83,925 1.6
Senior Vice President
Robert M. Topol,........... 26,313 * 59,321 1.1
Director
Paul S. Echenberg,......... 3,313 * 69,348 1.3
Chairman of the Board of
E-Z-EM Canada, Director
Irwin H. Nadel,............ 27,313 * 36,647 *
Director
James L. Katz,............. 3,338 * 49,806 *
Director
George P. Carden,.......... 6,725 * 45,596 *
Senior Vice President and
General Manager
Donald A. Meyer,........... 20,492 * 29,420 *
Director
Eamonn P. Hobbs,........... 50 * 37,380 *
Vice President
Michael A. Davis, M.D.,.... None * 35,632 *
Medical Director, Director
All directors and executive
officers as a group (21
persons)................. 2,028,178 (3) 27.0 3,246,487 (4) 34.7
_______________
* Does not exceed 1%.
(1) Includes Class A Common Stock shares issuable upon exercise of
options currently exercisable or exercisable within 60 days
from November 12, 1996 as follows: Daniel R. Martin (16,882),
Robert M. Topol (2,813), Paul S. Echenberg (2,813), Irwin H.
Nadel (2,813), James L. Katz (2,813) and Donald A. Meyer
(2,813).
(2) Includes Class B Common Stock shares issuable upon exercise of
options currently exercisable or exercisable within 60 days
from November 12, 1996 as follows: Howard S. Stern (74,263),
Daniel R. Martin (166,364), Arthur L. Zimmet (47,963), Robert
M. Topol (36,898), Paul S. Echenberg (68,725), Irwin H. Nadel
(5,998), James L. Katz (48,125), George P. Carden (37,322),
Donald A. Meyer (5,998), Eamonn P. Hobbs (37,322) and Michael
A. Davis, M.D. (34,632).
(3) Includes Class A Common Stock shares issuable upon exercise of
options currently exercisable or exercisable within 60 days
from November 12, 1996 totalling 30,947 shares.
(4) Includes Class B Common Stock shares issuable upon exercise of
options currently exercisable or exercisable within 60 days
from November 12, 1996 totalling 789,074 shares.
PROPOSAL I--ELECTION OF DIRECTORS
Nominees
As of December 17, 1996, the effective date of the retirement
of Irwin H. Nadel, the Company's Board of Directors will consist of
eight Directors. The Board is classified into three classes, each
of which has a staggered three year term. At the Meeting, the
Stockholders will elect two Class III directors each of whom will
hold office until the Annual Meeting of Stockholders to be held in
1999 and until their successors are duly elected and qualified.
The Class I directors and Class II directors will continue in
office during the terms indicated below. Unless otherwise
specified, all Proxies received will be voted in favor of the
election of the persons named below (the "Nominees") as directors
of the Company. Directors shall be elected by a plurality of the
votes cast, in person or by proxy, at the Meeting. Abstentions
from voting and broker non-votes on the election of directors will
have no effect since they will not represent votes cast at the
Meeting for the purpose of electing directors. Howard Stern is
currently a director of the Company; David Meyers, who is the son
of the late Dr. Phillip H. Meyers, former officer, director and
holder of over 23% of the Company's securities, is not currently a
director of the Company.
The term of the current non-retiring Class III director
expires at the Meeting when his successor is duly elected and
qualified. Management has no reason to believe that any of the
Nominees will be unable or unwilling to serve as a director, if
elected. Should any of the Nominees not remain a candidate for
election at the date of the Meeting, the Proxies will be voted in
favor of the Nominees who remain candidates and may be voted for
substitute nominees selected by the Board of Directors. The names
of the nominees and certain information concerning them are set
forth below:
Nominees to Class III of the Board of Directors
First
Year
Became
Name Principal Occupation Age Director
Howard S. Stern Chairman of the Board of 65 1962
the Company
David Meyers President and Chief 32 N/A
Executive Officer,
MedTest Express, Inc.
HOWARD S. STERN, age 65, is a co-founder of the Company and
has served as Chairman of the Board and Director of the Company
since its formation in 1962. Prior to 1994, Mr. Stern also served
as Chief Executive Officer, and from the formation of the Company
until 1990, he served as President of the Company.
DAVID MEYERS, age 32, is the founder of MedTest Express, Inc.,
an Atlanta, Georgia provider of contracted laboratory services for
home health agencies, and has served as its President and Chief
Executive Officer since November 1994. For the five years prior to
that, Mr. Meyers was the Vice President of Operations at Radiation
Care, Inc., an Atlanta, Georgia operator of radiation therapy and
diagnostic imaging centers. Mr. Meyers is the son of Dr. Phillip
H. Meyers, a former director, officer and holder of over 23% of the
outstanding securities of the Company, who died during the past
year.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH
OF THE NOMINEES.
The following Class I and II Directors will continue on the Board
of Directors for the terms indicated:
Class I Directors
(Term Expiring in 1997):
JAMES L. KATZ, CPA, JD, age 60, has been a director of the
Company since 1983. He is a founder and has been a principal of
Chapman Partners LLC (investment banking) since its organization in
1995. Previously, he had been the co-owner and President of Ever
Ready Thermometer Co., Inc. from its acquisition in 1985 until its
sale in November 1994. From 1971 until 1980 and from 1983 until
1985, he held various executive positions with Baxter International
and subsidiaries of Baxter International, including that of Chief
Financial Officer of Baxter. He is also a director of Intec, Inc.
and Binax.
DANIEL R. MARTIN, age 59, has served as President, Chief
Executive Officer and Director since 1994, and previously served as
President, Chief Operating Officer and Director from 1990 to 1993.
MICHAEL A. DAVIS, M.D., age 55, has served as Medical Director
and Director of the Company since July 1995, and previously served
as Medical Director from 1994 to July 1995 and as Associate Medical
Director from 1988 to 1993. He has been Professor of Radiology and
Nuclear Medicine and Director of the division of Radiologic
Research, University of Massachusetts Medical Center since 1980.
Class II Directors
(Term Expiring in 1998):
PAUL S. ECHENBERG, age 53, has been a director of the Company
since 1987 and has served as Chairman of the Board of E-Z-EM Canada
since 1994. He is a founder and has been a general partner and
director of Eckvest Equity Inc. (personal investment and consulting
services) since 1989. He was also a founder and had been a senior
partner of BDE Capital Partners (investment banking partnership)
from 1992 to 1994. He is also a director of Lallemand Inc., ISG
Technologies, Inc., LDI Research Co., Inc., LDI Marketing Co.,
Inc., Benvest Capital Inc. and Colliers MacAuley Nicholl. The
Company has an investment in ISG Technologies, Inc.
DONALD A. MEYER, age 62, has been a director of the Company
since 1968. He had been the Executive Director of the Western
States Arts Federation, Santa Fe, New Mexico, which provides and
develops regional arts programs, from 1990 to October 1995.
ROBERT M. TOPOL, age 71, has been a director of the Company
since 1982. Prior to his retirement in 1994, he served as an
Executive Vice President of Smith Barney, Inc. (financial services)
for more than five years. He is also a director of First American
Health Concepts, Fund for the Aging, City Meals on Wheels, American
Health Foundation, State University of New York - Purchase and
Group One Ltd.
MEETINGS
The Board of Directors held four regular meetings and two
special meetings by conference call during the fiscal year ended
June 1, 1996 (the "1996 Fiscal Year"). From time to time, the
members of the Board of Directors act by unanimous written consent
pursuant to the laws of the State of Delaware. All directors
attended all regular Board meetings during the 1996 Fiscal Year,
except that Messrs. Nadel and Topol each missed one meeting.
The Company has a standing Executive Committee, Audit
Committee, Nominating Committee, Compensation Committee and Finance
Committee.
The Executive Committee has the power and authority to act on
behalf of the Board during intervals between regularly scheduled
Board meetings. The members of the Executive Committee are Messrs.
Stern, Martin, Echenberg, Katz and Topol. The Executive Committee
met six times during the 1996 Fiscal Year.
The Audit Committee recommends to the Board the selection of
independent accountants and reviews the scope and results of the
annual audit. The members of the Audit Committee are Messrs. Katz
and Topol. The Audit Committee met twice during the 1996 Fiscal
Year.
The Nominating Committee recommends to the Board nominees for
election to the Board. The members of the Nominating Committee are
Messrs. Meyer and Topol. The Nominating Committee met once during
the 1996 Fiscal Year.
The Compensation Committee determines the compensation for the
President and the Chief Executive Officer. In addition, the
Compensation Committee also sets the policies and parameters of the
Company's executive compensation programs and awards thereunder,
and makes determinations as to stock option grants under the 1983
Plan and the 1984 Plan. The members of the Compensation Committee
are Messrs. Stern and Meyer. The Compensation Committee met three
times during the 1996 Fiscal Year.
The Board of Directors created a Finance Committee in January,
1995. Its members are Messrs. Topol and Katz. The Finance
Committee did not meet during the 1996 Fiscal Year.
Phillip H. Meyers, M.D., a director of the Company who died
during the past year, served on the Company's Executive and
Nominating Committees.
Irwin H. Nadel, a director of the Company who is retiring as
of December 17, 1996, served on the Audit Committee and the Finance
Committee.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the
compensation for services, in all capacities for the 1996, 1995 and
1994 fiscal years, of the Named Executive Officers:
_Annual_Compensation_ Long_Term_Compensation
_Awards__ Payouts
Other All
Annual Restricted LTIP Other
Name and Compensa- Stock Pay- Compen-
Principal Fiscal Salary Bonus sation Awards Options outs sation
Position_ _Year_ _($)__ _($)_ (1)_($) _($)__ #(2)_ _($)_ _(3)($)
Howard S. Stern 1996 $250,000 None None None None None $7,245
Chairman of 1995 250,000 None None None 74,263 None 11,712
the Board 1994 250,000 None None None None None 9,627
Daniel R. Martin 1996 $220,000 None None None None None $9,261
President and 1995 200,000 None None None 116,699 None 8,453
Chief Executive 1994 200,000 None None None None None 9,150
Officer
George P. Carden 1996 $186,300 None None None None None $7,257
Sr. Vice President1995 186,300 $25,000None None 30,766 None 7,330
1994 172,125 None None None None None 7,853
Arthur L. Zimmet 1996 $153,000 None None None None None $7,760
Sr. Vice President1995 153,000 $10,000None None 40,314 None 7,466
1994 153,000 None None None None None 8,094
Eamonn P. Hobbs 1996 $170,648 None None None None None $8,021
Vice President 1995 120,000 $15,000None None 30,766 None 5,856
1994 120,000 None None None None None 6,020
_______________
(1) The Company has concluded that the aggregate amount of perquisites and
other personal benefits paid to each of the Named Executive Officers
for the 1996, 1995 and 1994 fiscal years did not exceed the lesser of
10% of such officer's total annual salary and bonus for the 1996, 1995
or 1994 fiscal years or $50,000; such amounts are, therefore, not
reflected in the table.
(2) Retroactively adjusted for the 3% stock dividends distributed on shares
of nonvoting Class B Common Stock on March 11, 1994, March 16, 1995 and
March 15, 1996.
(3) For the 1996, 1995 and 1994 fiscal years, represents for each of
the Named Executive Officers the amounts contributed by the Company
under the Profit-Sharing Plan and, as matching contributions, under
the companion 401(k) Plan.
Option Grants Table
The Company did not grant any stock options or stock appreciation
rights to the Named Executive Officers during the 1996 Fiscal Year.
Aggregated Option Exercises and Fiscal Year-End Option Value Table
The following table sets forth certain information concerning all
exercises of stock options during the 1996 Fiscal Year by the Named
Executive Officers and the fiscal year-end value of unexercised stock
options on an aggregated basis:
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
June 1, 1996 June 1, 1996
_____(#)_____ ___($)_(1)___
Shares Value Exercisable/ Exercisable/
Acquired on Realized Unexercisable Unexercisable
Name Exercise_(#) ___($)__ _____(2)_____ _____(2)_____
Howard S. Stern... None None 74,263/ $651,485/
None None
Daniel R. Martin.. None None 183,246/ $1,462,783/
None None
George P. Carden.. None None 37,322/ $319,273/
None None
Arthur L. Zimmet.. None None 47,963/ $411,263/
None None
Eamonn P. Hobbs... None None 37,322/ $319,273/
None None
_______________
(1) Options are "in-the-money" if on June 1, 1996, the market
price of the stock exceeded the exercise price of such
options. At June 1, 1996, the closing price of the Company's
Class A and Class B Common Stock was $14.13 and $13.25,
respectively. The value of such options is calculated by
determining the difference between the aggregate market price
of the stock covered by the options on June 1, 1996 and the
aggregate exercise price of such options.
(2) Options granted prior to the Company's recapitalization on
October 26, 1992 are exercisable one-half in Class A Common
Stock and one-half in Class B Common Stock. Options granted
after the recapitalization are exercisable in Class B Common
Stock.
Employment Contract
During 1994, the Company entered into an employment contract
with Howard S. Stern. This employment contract is for a term of
eight years at an annual compensation of $250,000.
COMPENSATION AND STOCK OPTION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
General
The Compensation Committee determines the cash and other
incentive compensation, if any, to be paid to the Company's
executive officers and key employees. Howard S. Stern and Donald
A. Meyer are the members of the Compensation Committee and are
"disinterested directors" (within the meaning of Rule 16b-3 under
the Securities Exchange Act of 1934, as amended.
Compensation Philosophy
The Compensation Committee's executive compensation philosophy
is to base management's pay, in part, on the achievement of the
Company's annual and long-term performance goals by (a) setting
levels of compensation designed to attract and hold superior
executives in a highly competitive business environment, (b)
providing incentive compensation that varies directly with the
Company's financial performance and individual initiative and
achievement contributions to such performance, (c) linking
compensation to elements which effect the Company's annual and
long-term performance, (d) evaluating the competitiveness of
executive compensation programs based upon information drawn from
a variety of sources, and (e) establishing salary levels and
bonuses intended to be consistent with competitive practice and
level of responsibility, with salary increases and bonuses
reflecting competitive trends, the overall financial performance of
the Company, the performance of the individual executive and the
contractual arrangements that may be in effect with the individual
executive. Executive compensation consists of base salary, annual
performance bonuses, and stock options.
Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), prohibits a publicly held corporation, such
as the Company, from claiming a deduction on its federal income tax
return for compensation in excess of $1 million paid for a given
fiscal year to the chief executive officer (or person acting in
that capacity) or to the four most highly compensated officers of
the corporation, other than the chief executive officer, at the end
of the corporation's fiscal year. The $1 million compensation
deduction limitation does not apply to "performance-based
compensation." The Company believes that any compensation received
by executive officers in connection with the exercise of options
granted under the 1983 Plan will qualify as "performance-based
compensation." The Company has not established a policy with
respect to Section 162(m) of the Code because the Company has not
and does not currently anticipate paying compensation in excess of
$1 million per annum to any employee.
Base Salaries
Base salaries for the Company's executive officers are
determined initially by evaluating the responsibilities of the
position held and the experience of the individual, and by
reference to the competitive marketplace for management talent,
including a comparison of base salaries for comparable positions at
comparable companies. Annual salary adjustments are determined
consistent with the Company's compensation policy by evaluating the
competitive marketplace, the performance of the Company, the
performance of the executive particularly with respect to the
ability to manage growth of the Company, and any increased
responsibilities assumed by the executive.
Annual Performance Bonuses
The Company administers an Executive Incentive Bonus Plan (the
"Bonus Plan"), under which cash bonuses may be made to the CEO and
President, other corporate officers, and certain divisional
personnel. The bonus pool is determined at the beginning of each
fiscal year based on budgeted earnings for the year. The bonus
pool is limited to an aggregate of 10% of the annual pretax profit
of the Company and its subsidiaries taken as a whole. In general,
individual bonus awards under the Bonus Plan are determined as
follows:
- - - 50% of such individual award is based on the attainment by the
Company of certain pretax profit level goals which are approved in
advance by the Board of Directors ("Profit Objectives");
- - - 50% of such individual award is based on the attainment of
individual objectives (an "MBO") which have been proposed,
evaluated, and approved at the beginning of each fiscal year by the
Compensation Committee in the case of the CEO and President, and by
Mr. Martin, the President and CEO, in the case of all other
participants.
A bonus may be awarded if either the Profit Objective or the
individual MBO has been met, as determined by the Compensation
Committee in the case of the CEO and President, and by Mr. Martin,
in the case of all other participants. The Company awarded bonuses
to corporate officers under the Bonus Plan for the 1996 Fiscal Year
in the aggregate amount of $25,000.
Stock Option Agreements
Long-term compensation awards are granted pursuant to the
stockholder approved stock option plans. The use of stock options
ensures that the interest of the Company's executive officers are
tied to the interest of the Company's stockholders by making a
portion of the executive's long-term compensation dependent upon
the value created for stockholders. Options are granted at an
exercise price equal to the fair market value of the Company's
Class B stock on the date of the grant. The Committee considers
the amount of stock options previously granted to each officer, as
well as the officer's current performance and contribution to the
Company when determining the size of an option grant.
Compensation of Chief Executive Officer
During the 1996 Fiscal Year, no options were granted to Mr.
Martin. No options previously granted were exercised by Mr.
Martin. During the 1996 Fiscal Year, the base salary for Mr.
Martin was adjusted to $230,000 from its 1995 level of $200,000.
Based upon the reported 1996 Fiscal Year profits of the Company,
Mr. Martin did not receive a cash bonus.
Compensation of Directors
Directors, who are not employees of the Company, are entitled
to directors fees of $15,000 annually. Directors, who serve on
committees of the Company and who are not employees or consultants
of the Company, are entitled to a fee of $500 for each committee
meeting attended, except that the chairman of a committee is
entitled to a fee of $1,000 for each committee meeting attended.
Common Stock Performance
On October 27, 1992 (the "Recapitalization Date"), the Company
effected a recapitalization which was accomplished by a one-for-two
reverse stock split of the then existing common stock of the
Company (the "Old Common Stock"), and the reclassification of the
Old Common Stock as voting Class A Common Stock. In addition, a
dividend of one share of new non-voting Class B Common Stock was
paid on each share of Class A Common Stock.
The following graph provides a comparison of the cumulative
total return of (i) the Company's Old Common Stock and its Class A
Common Stock after its creation on the Recapitalization Date and
(ii) the Class B Common Stock after its creation on the
Recapitalization Date, with returns on the Nasdaq Stock Market
(U.S.) Index ("NASDAQ Index") and the Standard and Poor's Medical
Products and Supplies Index ("S&P Medical Index"), for the five
year period ended May 31, 1996. The total return of the Class A
Common Stock presented in the following graph treats all stock
dividends payable in Class B Common Stock as cash dividends and
assumes the reinvestment of such dividends in Class A Common Stock.
As prescribed by the SEC, the measurements are indexed to a value
of $100 at May 31, 1991, and assume all dividends were reinvested.
(GRAPH OMITTED)
TOTAL RETURN - DATA SUMMARY
Cumulative_Total_Return
5/91 5/92 5/93 5/94 5/95 5/96
E-Z-EM, INC.-CLASS A (EZM.A) 100 107 82 67 64 199
E-Z-EM, INC.-CLASS B (EZM.B) 100(1) 100 74 72 231
NASDAQ INDEX (2)(INAS) 100 117 141 149 177 257
AMEX MARKET VALUE(2) (IAMX) 100 106 118 118 132 164
S & P INDEX (IMDP) 100 112 91 86 126 172
Graph Produced by Research Data Group
____________________
(1) The Class B Common Stock was authorized and issued in October 1992.
(2) As of July 24, 1995 the Company's Common Stock commenced trading on
the American Stock Exchange ("AMEX") and ceased being quoted on NASDAQ.
CERTAIN TRANSACTIONS
A facility of the Company located in Westbury, New York is owned 27%
by Howard S. Stern, 25% by Betty S. Meyers, a principal shareholder, 4% by
other employees of the Company and 44% by unrelated parties, which includes
a 25% owner who manages the property. Aggregate rentals, including real
estate tax payments, were $142,537 during 1996. The lease term expired in
June 1996 and is currently being extended on a month-to-month basis.
The Company has engaged Eckvest Equity Inc. ("Eckvest"), of which Paul
S. Echenberg, a director of the Company, is a principal, as a consultant.
Fees paid to Eckvest and fees paid to Mr. Echenberg for attendance at
directors' meetings, aggregated approximately $319,000 during the 1996
Fiscal Year. In connection with the sale of Surgical Dynamics Inc., a 51%
owned subsidiary of the Company ("SDI") in November 1995, Mr. Echenberg
resigned as a director of SDI and Eckvest received an investment banker's
fee of $905,000, and Mr. Echenberg received a bonus of $191,000 arising
from the sale of SDI and a payment of $268,000 in connection with the
surrender of outstanding stock options in SDI. Additionally, the Company
has an investment in an entity in which Mr. Echenberg serves as a director.
In connection with the sale of SDI, Arthur L. Zimmet resigned as a
director of SDI and received a bonus of $191,000 arising from the sale of
SDI and a payment of $268,000 in connection with the surrender of
outstanding stock options in SDI.
The Company has engaged James L. Katz, a director of the Company, for
consulting services. Fees for such services, including fees relating to
attendance at directors' meetings, were approximately $99,000 during the
1996 Fiscal Year .
The Company has engaged Michael A. Davis, M.D., a director of the
Company, for consulting services. Fees for such services were
approximately $97,000 during the 1996 Fiscal Year.
PROPOSAL II--RATIFICATION OF PROPOSED PLAN OF REORGANIZATION,
SEPARATING OUT THE BUSINESS PRESENTLY CONDUCTED BY THE COMPANY'S
ANGIODYNAMICS DIVISION
INTRODUCTION
The Board of Directors of the Company has determined, for the reasons
set forth below, among others, that it is in the best interests of the
Company and its shareholders to separate the business (the "AngioDynamics
Business") previously conducted by its AngioDynamics division (the
"Division") from the Company. The separation will be accomplished in three
steps (collectively, the "Reorganization"). The first step, the transfer,
as a capital contribution, of all of the assets of the Company used
principally in connection with the AngioDynamics Business and the
liabilities associated therewith to AngioDynamics Inc., a Delaware
corporation ("AngioDynamics") wholly-owned by the Company (the "Transfer"),
took place effective June 1, 1996. The second step is the sale by
AngioDynamics of up to 19.9% of its shares in a public offering, with the
Company retaining ownership of the balance of the shares (other than shares
that may be issued pursuant to a stock option plan to be established for
the employees, officers and directors of AngioDynamics) (the "Public
Offering"). The third step is a dividend of the Company's shares of
AngioDynamics by the Company to its shareholders in what it expected to be
a tax-free spin-off (the "Spin-Off").
Although neither the approval nor the ratification of the Company's
shareholders is required under Delaware law to implement any part of the
Reorganization, because of the significance of the Reorganization to the
Company and its shareholders, the Board of Directors has determined that
the Company should not effect the second and third steps of the
Reorganization without shareholder ratification.
OVERVIEW OF ANGIODYNAMICS BUSINESS
The AngioDynamics Business is the design, development, manufacture and
marketing of a variety of differentiated products and systems for the
worldwide interventional medicine marketplace, which is the practice of
medicine using what were traditionally diagnostic procedures for
therapeutic purposes. The Company believes that the interventional
medicine market is growing dramatically, due in large part to the less
invasive aspects of interventional procedures as compared to open surgical
procedures, which result in a reduction in the overall cost of medical care
while providing important patient benefits. Interventional procedures are
often performed on an out-patient basis, thereby requiring fewer hospital
support services. These procedures, even when performed on an in-patient
basis, generally require a shorter hospital stay than do surgical
procedures. Interventional procedures also typically have reduced risk and
trauma, are less complex, have fewer and less serious complications, can
often be performed earlier in the stage of a disease and frequently result
in less costly and more definitive therapy than do surgical procedures.
The Company expects the number of interventional procedures performed to
increase as the procedures gain wider acceptance, as more physicians become
trained in less invasive medical specialties, and as these procedures
become more widely performed in community hospitals as well as in major
medical centers. Improvements in technology should further expand the
application of interventional procedures.
The AngioDynamics Business has focused its efforts in three distinct
interventional markets: stent products, angiographic and fluid management
products, and thrombolytic products.
AngioDynamics's stent product is called the ANGIOSTENT. Stents are
used to hold open passageways in the body that may have closed or become
obstructed as a result of aging, disease or trauma. Stents are
increasingly being used as alternatives to or adjunct to surgical and
minimally invasive procedures and drug therapies because they reduce
procedure time, patient trauma, hospitalization and recovery time. To
date, the Company's focus has been on coronary, biliary, peripheral,
carotid and urethral stents, which AngioDynamics believes are the primary
markets for stent technology. AngioDynamics believes that the ANGIOSTENT,
introduced in January 1996 in certain international markets, provides a
competitive advantage over competing stent products and alternative
therapies. The ANGIOSTENT has not yet been cleared by the FDA for sale in
the United States and AngioDynamics does not anticipate receiving FDA
clearance to sell the coronary or peripheral ANGIOSTENT prior to June 2000,
if at all.
The AngioDynamics Business's primary angiographic products are
diagnostic catheters used to inject contrast agents, such as iodine or
carbon dioxide ("CO2"), into the various arteries and veins and the
interior of the heart in order to permit x-ray studies to be made. These
studies are called "angiograms", "venograms" and "cardiac
catheterizations". AngioDynamics believes its catheters are differentiated
from competitive products with respect to the types of materials used and
the numerous configurations in which they are available. All of these
diagnostic catheters are cleared for sale in the United States and
internationally.
Additionally, the AngioDynamics Business has developed a CO2
Angiography System ("CO2JECT") that uses CO2 as a contrast agent.
AngioDynamics believes CO2 offers many advantages over traditional ionated
contrast agents in terms of safety and cost. Although the CO2JECT is
available for sale in certain foreign countries, the CO2JECT has not yet
been cleared by the FDA for sale in the United States and AngioDynamics
does not anticipate receiving FDA clearance for the CO2JECT prior to
January 1999, at the earliest, and there can be no assurance that such
clearance will be obtained at all.
The AngioDynamics Business's fluid management products include blood
containment "closed systems", bloodless arterial needles and high pressure
connecting lines. Fluid management is the control, administration and
containment of fluids that include blood, saline solutions and contrast
agents. The Division's products reduce such contact by preventing fluids
from entering the clinical environment, thereby reducing the potential
exposure of the health care worker to disease. The Company believes the
technology related to these products is proprietary.
The AngioDynamics Business's thrombolytic products are used to
dissolve blood clots in the arteries and veins. AngioDynamics believes
that its products offer advantages over competitive products by delivering
the lytic agent (the drug that actually dissolves the clots) more
efficiently. The more efficient delivery reduces the amounts of lytic
agents required, thereby reducing the time of the procedure and the
complications associated with the use of lytic agents. These products have
been cleared for sale in the United States and internationally. An
injector designed to automate the delivery of the lytic agents is cleared
for sale in certain countries outside the United States. In the United
States the injector is not yet cleared for sale and a 510(k) submission is
pending before the FDA. AngioDynamics believes it will not receive
clearance for sale of the injector prior to March 1997, and there can be
no assurance that such clearance will be obtained at all.
AngioDynamics also acts as a exclusive U.S. sales agent for Navarre
Biomedical, Ltd. Navarre Biomedical manufactures percutaneous abscess
drainage catheters. Percutaneous abscess drainage involves resolution of
pus pockets, pleural effusions and other fluids by inserting the catheter
directly into the fluid pocket under fluoroscopic, CT or ultrasound
guidance. The percutaneous approach to resolve an abscess avoids the
mortality and morbidity associated with a surgical resolution. All Navarre
Biomedical drainage products are cleared for sale in the United States.
REASONS FOR THE REORGANIZATION
The Company's Board of Directors continually reviews the businesses
operated by the Company with a view to assessing the operating and
financial characteristics and the growth potential of the businesses in
light of current economic conditions and other circumstances affecting the
Company. After considerable review, the Company's Board of Directors has
determined that the AngioDynamics Business is substantially different from
the Company's other businesses and that retention of the AngioDynamics
Business is not consistent with either the long-range goals of the
AngioDynamics Business or the Company's other businesses.
The Company's Board of Directors believes that companies in the
medical device business, which is the business in which AngioDynamics is
engaged, tend to be valued differently from the Company's other businesses
and that the value of the AngioDynamics Business to the Company's
shareholders is not presently being reflected in the Company's stock price.
The Company's Board of Directors further believes that the value and
potential of the AngioDynamics Business can be better realized as a
separate public company and that the AngioDynamics Business should have
adequate financing available to it in the future through the sale of equity
as well as debt. Additionally, as a public company, AngioDynamics will be
able to offer direct equity ownership to its employees, and the Company's
Board of Directors believes that providing such incentives to employees
will tend to benefit all shareholders.
The Company's Board of Directors has determined that the
Reorganization is the most appropriate means of separating the
AngioDynamics Business from the Company at this time. The Company's Board
of Directors believes that, by effecting the Reorganization, there will be
a greater potential for increasing the long-term value of the Company's
shareholders' investment. Additionally, the Reorganization will enable
current shareholders and potential investors to direct their investment to
their specific area of interest.
MANNER OF EFFECTING THE REORGANIZATION
The first step of the Reorganization, the transfer of the
AngioDynamics Business to AngioDynamics, took place effective June 1, 1996,
by the Company assigning to AngioDynamics all of the assets and liabilities
attributable principally to the AngioDynamics Business. These assets
included cash, intangible assets, such as intellectual property and
contracts, as well as tangible property, such as inventory, equipment and
real property. Also effective June 1, 1996, AngioDynamics assumed the
liabilities of the Company attributable to the AngioDynamics Business
(including contingent and undisclosed liabilities). Additionally between
June 2, 1996 and September 28, 1996, the Company advanced approximately
$[*] to or on behalf of AngioDynamics and it is anticipated that between
September 29, 1996 and the closing of the Public Offering (assuming a
Public Offering closing of January 31, 1997), the Company will further
advance approximately $[*] [NOTE TO SEC: this amount may be as high as $7-
10 million if a potential acquisition is consummated] to or on behalf of
AngioDynamics. The total amount being advanced to or on behalf of
AngioDynamics is not materially greater than the Company would have
advanced to or on behalf of the AngioDynamics Division had the Transfer not
occurred. AngioDynamics has agreed to repay the advances made by the
Company out of the proceeds of the Public Offering, if it occurs, and
otherwise such advances will be repaid to the Company pursuant to a
repayment schedule to be agreed upon by the Company and AngioDynamics. The
value of the assets transferred by the Company to AngioDynamics is
$12,945,000 and the value of the liabilities assumed by AngioDynamics is
$991,000.
The second step of the Reorganization, the Public Offering, will be
accomplished by AngioDynamics engaging one or more underwriters to offer
AngioDynamics's shares to the public in an offering registered with the
Securities and Exchange Commission. The Public Offering will be made only
by means of a prospectus. Although it has not yet been definitively
determined how many classes of stock of AngioDynamics will be offered to
the public or the number of shares that will be offered to the public, the
Company must retain at least 80% of the AngioDynamics shares in order to
effect the Spin-Off on a tax-free basis. The price for the shares in the
Public Offering will depend on the valuation of AngioDynamics at the time
of the Public Offering. It is expected that the AngioDynamics shares will
be listed on a national securities exchange or quoted on NASDAQ.
The third step of the Reorganization, the Spin-Off of the shares of
AngioDynamics retained by the Company to the shareholders of the Company,
will be accomplished by dividending such AngioDynamics shares to the
Company's shareholders. This step is contingent on the Company receiving
either a private letter ruling or an opinion of counsel that the Spin-Off
will be tax-free. No holder of the Company's shares will be required to
pay any cash or other consideration for the shares of AngioDynamics to be
received in the Spin-Off or to surrender or exchange shares of the Company
in order to receive the shares of AngioDynamics. No certificates or scrip
representing fractional shares of AngioDynamics stock will be issued to the
Company's shareholders as part of the Spin-Off. Fractional shares will be
aggregated into whole shares and sold in the open market at then prevailing
prices on behalf of the Company's shareholders who would otherwise receive
fractional share interests, and such persons will receive instead a cash
payment in the amount of their pro-rata share of the total sales proceeds
received with respect to the aggregate fractional shares.
Shares of AngioDynamics distributed in the Spin-Off will be freely
tradable, except for shares received by persons who may be deemed to be
affiliates of AngioDynamics under the Securities Act of 1933, as amended
(the "Securities Act"). Persons who may be deemed to be affiliates of
AngioDynamics after the Spin-Off generally include individuals or entities
that control, are controlled by or are under common control with,
AngioDynamics, and may include the directors of AngioDynamics, as well as
principal shareholders of AngioDynamics. Persons who are affiliates of
AngioDynamics will be permitted to sell their AngioDynamics shares only
pursuant to an effective registration statement under the Securities Act
or an exemption from the registration requirements of the Securities Act,
such as the exemptions offered by Section 4(2) of the Securities Act and
Rule 144 promulgated thereunder.
NO APPRAISAL RIGHTS
Shareholders who are opposed to the Reorganization and vote against
the Reorganization Proposal will have no appraisal or similar rights if the
Reorganization is ratified and consummated, in whole or in part.
ABANDONMENT OF THE REORGANIZATION
It is the current intent of the Company's Board of Directors that the
entire Reorganization take place, but the Board of Directors reserves the
right, in its sole discretion, not to proceed with either the second or
third steps of the Reorganization, even if it is ratified by the Company's
shareholders. Among other reasons, a decision not to proceed with the
Public Offering might be made if market conditions at the time of the
proposed Public Offering are not favorable, and a decision not to proceed
with the Spin-Off will be made if it cannot be effected in a tax-free
manner. If only the Public Offering occurs, AngioDynamics would continue
as a publicly traded majority-owned subsidiary of the Company with minority
public ownership; if only the Spin-Off occurs, the ownership of
AngioDynamics would be transferred to the Company's shareholders without
an infusion of additional equity capital and AngioDynamics would continue
as a publicly traded company; and if neither the Public Offering nor the
Spin-Off occur, AngioDynamics would continue as a wholly-owned subsidiary
of the Company.
FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION
The Reorganization will be consummated by the Company only if it
obtains a ruling from the Internal Revenue Service or an opinion of
counsel, in either case satisfactory to the Board of Directors, to the
effect that the Reorganization qualifies as a reorganization pursuant to
Section 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the
"Code"). The Company anticipates preparing a ruling request to be
submitted to the IRS concerning the following federal income tax
consequences of the Reorganization.
1. No gain or loss will be recognized by the Company or its
shareholders on the Transfer, pursuant to Sections 361(a) and 357(a) of the
Code.
2. No gain or loss will be recognized by AngioDynamics upon its
receipt of the assets of the AngioDynamics Business in exchange for stock,
pursuant to Section 1032 of the Code.
3. AngioDynamics's basis in the assets it received in the
Transfer will equal the basis of such assets in the hands of the Company
immediately prior to the Transfer, pursuant to Section 362(b) of the Code.
4. AngioDynamics's holding period for the assets it received in
the Transfer includes the period during which the Company held such assets,
pursuant to Section 1223(2) of the Code.
5. No gain or loss will be recognized by the Company upon
the distribution to its shareholders of the stock of AngioDynamics, pursuant
to Section 361(c) of the Code.
6. No gain or loss will be recognized by the shareholders of the
Company upon their receipt of AngioDynamics stock in the Spin-Off, pursuant
to Section 355(a)(1) of the Code.
7. Each shareholder's tax basis in the Company's stock held
before the Spin-Off will be allocated between the Company stock and the
AngioDynamics stock held by the shareholder after the transaction in
proportion to their relative fair market values, as provided by Section 1.358-2
of the Income Tax Regulations.
8. The holding period of the AngioDynamics stock received by
shareholders of the Company will include the period during which the
shareholders of the Company held Company stock with respect to which the
distribution was made, provided that the Company stock is a capital asset
in the hands of the respective shareholders of the Company on the date of
the distribution, pursuant to Section 1223(1) of the Code.
9. A proper allocation of the earnings and profits between the
Company and AngioDynamics will be made, pursuant to Section 312(h) of the Code.
Future Management of AngioDynamics
AngioDynamics continues to be operated substantially in the manner in
which the Division was operated by the Company in the past and with
substantially the same operating management. The Board of Directors of
AngioDynamics is composed of Howard Stern, the Chairman of the Board and
a Director of the Company, Donald Meyer and Paul Echenberg, each a Director
of the Company, and Eamonn Hobbs, a Vice-President of the Company and the
President of AngioDynamics.
RELATIONSHIP BETWEEN THE COMPANY AND ANGIODYNAMICS
Financial
During the time that the Company operated the AngioDynamics Business
through the Division, the AngioDynamics Business had the benefit of access
to the Company's credit through the extension of intracompany loans. Since
the Transfer, the Company has advanced funds to or on behalf of
AngioDynamics and will continue to do so until the closing of the Public
Offering. Such advances will be repaid to the Company out of the proceeds
of the Public Offering, if it occurs, and otherwise will be repaid to the
Company pursuant to a repayment schedule to be agreed upon by the Company
and AngioDynamics. Following the Public Offering, the Company will not
extend any additional credit to AngioDynamics and AngioDynamics will repay
the Company for funds advanced by the Company to or on behalf of
AngioDynamics after the Transfer.
Stock Ownership
Until the Public Offering, AngioDynamics will continue to be a wholly-
owned subsidiary of the Company. Following the Public Offering, but prior
to the Spin-Off, the Company will remain the majority owner of
AngioDynamics, owning in excess of 80% of the issued and outstanding shares
of AngioDynamics. Following the Spin-Off, the Company will have no
ownership interest in AngioDynamics.
Tax Matters
The Company and AngioDynamics will enter into a tax-sharing agreement
with respect to the period after the Transfer and prior to the Spin-Off.
The tax-sharing agreement will become effective with respect to such period
only upon the earlier of the Public Offering or the Spin-Off. Pursuant to
the tax-sharing agreement, the Company and AngioDynamics will make payments
between them such that, with respect to any period, the amount of taxes to
be paid by AngioDynamics, subject to certain adjustments, will be
determined as though AngioDynamics were to file separate federal, state and
local tax returns (including, except as provided below, any amounts
determined to be due as a result of a redetermination of the tax liability
of the Company arising from an audit or otherwise). AngioDynamics will be
reimbursed, however, for tax attributes that it generates, such as net
operating losses, if and when they are used on a consolidated basis.
In determining the amount of tax-sharing payments under the tax-
sharing agreement, the Company will prepare for AngioDynamics pro forma
returns with respect to federal and applicable state and local income taxes
that reflect the same positions and elections used by the Company in
preparing the returns for the Company's consolidated group. The Company
will continue to have all the rights of a parent of a consolidated group
(and similar rights provided for by applicable state and local law with
respect to a parent of a combined, consolidated or unitary group), will be
the sole and exclusive agent for AngioDynamics in any and all matters
relating to the income, franchise and similar tax liabilities of
AngioDynamics, will have sole and exclusive responsibility for the
preparation and filing of consolidated federal and consolidated or combined
state income tax returns (or amended returns), and will have the power, in
its sole discretion, to contest or compromise any asserted tax adjustments
or deficiency and to file, litigate or compromise any claim for refund on
behalf of AngioDynamics. In addition, the Company has agreed to undertake
to provide the aforementioned services with respect to AngioDynamics's
separate state and local returns and its foreign returns. Under the tax-
sharing agreement, AngioDynamics will pay the Company a fee intended to
reimburse the Company for all direct and indirect costs and expenses
incurred with respect to AngioDynamics's share of the overall costs and
expenses incurred by the Company with respect to tax related services.
Each member of a consolidated group for federal income tax proposes
is jointly and severally liable for the federal income tax liability of
each other member of the consolidated group. For benefit plan purposes,
AngioDynamics will be part of the Company's controlled group, which
includes the Company and its other subsidiaries. Under the Employment
Retirement Income Security Act of 1974, as amended and federal income tax
law, each member of the controlled group is jointly and severally liable
for funding and termination liabilities of tax qualified defined benefit
retirement plans as well as certain plan taxes. Accordingly, during the
period in which the Company is included in the Company's consolidated or
controlled group, AngioDynamics could be liable under such provisions in
the event any such liability or tax is incurred, and not discharged, by any
other member of the Company's consolidated or controlled group.
Insurance Matters
AngioDynamics's liability insurance is included in the Company's
liability policy. This will continue until the Company determines not to
continue such coverage for AngioDynamics, or until such time as
AngioDynamics is no longer able to be covered under the Company's policy,
or until AngioDynamics obtains its own insurance coverage. Because the
design, development, manufacture and marketing of implantable medical
devices entails an inherent risk of product liability claims and product
recalls, the cost of liability insurance for the Company may be greater
than if AngioDynamics were not included in the same liability policy.
Employee Matters
Most employees of the Division have become employees of AngioDynamics
(the "Transferred Employees") and as of the effective date of the Transfer,
AngioDynamics assumed all liabilities of the Company with respect to the
Transferred Employees other than liabilities with respect to the Company's
stock option plan. There may be a limited number of employees who perform
services for both AngioDynamics and the Company's other businesses who will
be shared by the Company and AngioDynamics.
It is currently intended that the Transferred Employees (as well as
the Directors of AngioDynamics) will remain participants in the Company's
existing 1983 Stock Option Plan with respect to stock options granted
before the date of the Transfer, and will be able to participate in a stock
option plan intended to be established by AngioDynamics prior to the Public
Offering.
Shared Services
Although the AngioDynamics Business has been operated to a large
degree independently of the Company's other businesses, the Company and
AngioDynamics may enter into a series of agreements pursuant to which the
Company would provide certain services to AngioDynamics. These services
could include, among others, legal, financial, intellectual property and
engineering services. It is currently contemplated that the services will
be charged to AngioDynamics based upon an allocation of costs incurred by
the Company, to the extent that such services are classified as general
administrative expenses, and that research and development and product
transfers will be charged to AngioDynamics at a fair and reasonable arms-
length price, comparable to what a third party would charge AngioDynamics
for such services. The services and charges will be periodically reviewed
by the Company and AngioDynamics. The services will be provided for an
indefinite period of time and will be phased out as and when no longer
needed by AngioDynamics. In addition, the Company may discontinue
providing a service if to continue to provide the service would unduly
interfere with the Company's business and operations.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE
RATIFICATION OF THE PLAN OF REORGANIZATION SEPARATING OUT THE BUSINESS
PRESENTLY CONDUCTED BY THE ANGIODYNAMICS DIVISION.
PROPOSAL III--RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
The Board of Directors appointed Grant Thornton LLP, certified public
accountants, who were the Company's independent auditors for the 1996
Fiscal Year, as the Company's independent auditors for the 1997 Fiscal
Year. Although the selection of auditors does not require ratification,
the Board of Directors has directed that the appointment of Grant Thornton
LLP be submitted to the Stockholders for ratification due to the
significance of their appointment to the Company. If the Stockholders do
not ratify the appointment of Grant Thornton LLP, the Board of Directors
will consider the appointment of other certified public accountants.
The approval of the proposal to ratify the appointment of Grant
Thornton LLP requires the affirmative vote of a majority of the votes cast
by all Stockholders represented and entitled to vote thereon. Therefore,
an abstention, withholding of authority to vote or broker non-vote will not
have the same legal effect as an "against" vote and will not be counted in
determining whether the proposal has received the required shareholder
vote.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE 1997 FISCAL YEAR.
ANNUAL REPORT
All stockholders of record as of the Record Date, have been sent, or
are concurrently herewith being sent, a copy of the Company's 1996 Annual
Report for the 1996 Fiscal Year.
ANY STOCKHOLDER OF THE COMPANY MAY OBTAIN WITHOUT CHARGE A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE 1996 FISCAL YEAR (WITHOUT
EXHIBITS), AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, BY WRITING
TO STOCKHOLDER INFORMATION, E-Z-EM, INC., 717 MAIN STREET, WESTBURY, NEW
YORK 11590-5021.
STOCKHOLDER PROPOSALS
In order to be considered for inclusion in the proxy materials to be
distributed in connection with the next Annual Meeting of Stockholders of
the Company, stockholder proposals for such meeting must be submitted to
the Company no later than May 1, 1997.
OTHER MATTERS
As of the date of this Proxy Statement, management knows of no matters
other than those set forth herein which will be presented for consideration
at the Meeting. If any other matter or matters are properly brought before
the Meeting or any adjournment thereof, the persons named in the
accompanying Proxy will have discretionary authority to vote, or otherwise
act, with respect to such matters in accordance with their judgment.
W. PHILIP VAN KIRK
Secretary
Noveber ____, 1996<PAGE>
E-Z-EM,INC. Proxy--1996 Annual Meeting of Stockholders
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1 THROUGH 3.
1. ELECTION OF DIRECTORS
For Howard S. Stern and David Meyers as Class III directors:
TO WITHHOLD AUTHORITY
WITHHOLD TO VOTE FOR ANY NOMINEE(S),
FOR VOTE PRINT NAME(S) BELOW
2. TO RATIFY THE PLAN OF REORGANIZATION SEPARATING OUT THE BUSINESS
PRESENTLY CONDUCTED BY THE COMPANY'S ANGIODYNAMICS DIVISION
FOR AGAINST ABSTAIN
3. RATIFICATION OF APPOINTMENT OF AUDITORS
FOR AGAINST ABSTAIN
4. DISCRETIONARY AUTHORITY
FOR AGAINST ABSTAIN
Please mark, date and sign exactly as your name appears on this proxy card.
When shares are held jointly, both holders should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give your
full title. If the holder is a corporation or partnership, the full
corporate or partnership name should be signed by a duly authorized
officer.
Signature
Signature, if shares held jointly
Dated 1996
I will will not attend the Meeting.
