Case 2:22-cv-01593 Document 1 Filed 03/21/22 Page 1 of 18 PageID: 1
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`STEPHEN BUSHANSKY,
`
`Plaintiff,
`
`
`
`UNITED STATES DISTRICT COURT
`DISTRICT OF NEW JERSEY
`)
`Case No.
`)
`
`
`)
`
`)
`COMPLAINT FOR VIOLATIONS
`)
`OF THE FEDERAL SECURITIES
`)
`LAWS
`)
`
`)
`)
`JURY TRIAL DEMANDED
`
`)
`)
`)
`)
`)
`)
`)
`)
`
`
`
`vs.
`
`
`ORTHO CLINICAL DIAGNOSTICS
`HOLDINGS PLC, CHRISTOPHER M. SMITH,
`KAREN H. BECHTEL, EVELYN DILSAVER,
`ALLAN HOLT, CARL HULL, RON LABRUM,
`THOMAS MAC MAHON, DAVID PEREZ,
`ROBERT R. SCHMIDT, STEPHEN H. WISE,
`and ROBERT YATES,
`
`
`Defendants.
`
`
`Plaintiff Stephen Bushansky (“Plaintiff”), upon information and belief, including an
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`
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`examination and inquiry conducted by and through his counsel, except as to those allegations
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`pertaining to Plaintiff, which are alleged upon personal belief, alleges the following for his
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`Complaint:
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`NATURE AND SUMMARY OF THE ACTION
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`1.
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`This is an action brought by Plaintiff against Ortho Clinical Diagnostics Holdings
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`plc (“Ortho” or the “Company”) and the members of Ortho’s Board of Directors (the “Board” or
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`the “Individual Defendants”) for their violations of Sections 14(a) and 20(a) of the Securities
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`Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. §§ 78n(a), 78t(a), and U.S. Securities and
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`Exchange Commission (“SEC”) Rule 14a-9, 17 C.F.R. § 240.14a-9, and to enjoin the vote on a
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`proposed transaction between Ortho, Quidel Corporation (“Quidel”), Coronado Topco, Inc.
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`(“Topco”), Orca Holdco, Inc. (“U.S. Holdco Sub”), Laguna Merger Sub, Inc. (“U.S. Merger Sub”),
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`and Orca Holdco 2, Inc. (“U.S. Holdco Sub 2”), pursuant to which Ortho will be acquired by
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`Case 2:22-cv-01593 Document 1 Filed 03/21/22 Page 2 of 18 PageID: 2
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`Quidel and the combined company will continue to operate through Topco (the “Proposed
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`Transaction”).
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`2.
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`On December 23, 2021, Ortho and Quidel issued a joint press release announcing
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`that they had entered into a Business Combination Agreement dated December 22, 2021 (the
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`“BCA”) to sell Ortho to Quidel. Under the terms of the BCA, Ortho shareholders will receive
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`both of: (i) $7.14 in cash, and (ii) 0.1055 shares of Topco common stock for each share of Ortho
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`common stock they own (the “Merger Consideration”). Upon completion of the merger, current
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`Ortho shareholders are expected to own approximately 38% and current Quidel shareholders are
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`expected to own approximately 62% of the combined company. The Proposed Transaction is
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`valued at approximately $6.0 billion.
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`3.
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`On January 31, 2022, Topco filed a Form S-4 Registration Statement (the
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`“Registration Statement”) with the SEC. The Registration Statement, which recommends that
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`Ortho stockholders vote in favor of the Proposed Transaction, omits or misrepresents material
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`information concerning, among other things: (i) the Company’s and Quidel’s financial projections;
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`and (ii) the data and inputs underlying the financial valuation analyses that support the fairness
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`opinion provided by the Company’s financial advisor, J.P. Morgan Securities LLC (“JPM”).
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`Defendants authorized the issuance of the false and misleading Registration Statement in violation
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`of Sections 14(a) and 20(a) of the Exchange Act.
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`4.
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`In short, unless remedied, Ortho’s public stockholders will be irreparably harmed
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`because the Registration Statement’s material misrepresentations and omissions prevent them
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`from making a sufficiently informed voting decision on the Proposed Transaction. Plaintiff seeks
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`to enjoin the stockholder vote on the Proposed Transaction unless and until such Exchange Act
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`violations are cured.
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`JURISDICTION AND VENUE
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`5.
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`This Court has jurisdiction over the claims asserted herein for violations of Sections
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`14(a) and 20(a) of the Exchange Act and SEC Rule 14a-9 promulgated thereunder pursuant to
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`Section 27 of the Exchange Act, 15 U.S.C. § 78aa, and 28 U.S.C. § 1331 (federal question
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`jurisdiction).
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`6.
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`This Court has jurisdiction over the defendants because each defendant is either a
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`corporation that conducts business in and maintains operations within this District, or is an
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`individual with sufficient minimum contacts with this District to make the exercise of jurisdiction
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`by this Court permissible under traditional notions of fair play and substantial justice.
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`7.
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`Venue is proper in this District under Section 27 of the Exchange Act, 15 U.S.C. §
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`78aa, as well as under 28 U.S.C. § 1391 because: (i) the Company is headquartered in this District;
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`(ii) one or more of the defendants either resides in or maintains executive offices in this District;
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`and (iii) defendants have received substantial compensation in this District by doing business here
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`and engaging in numerous activities that had an effect in this District.
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`8.
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`Plaintiff is, and has been at all times relevant hereto, a continuous stockholder of
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`THE PARTIES
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`Ortho.
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`9.
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`Defendant Ortho is organized under the laws of England and Wales, with its
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`principal executive offices located at 1001 Route 202, Raritan, New Jersey 08869. Ortho is one
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`of the world’s largest pure-play in vitro diagnostics (“IVD”) companies. Ortho’s common stock
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`trades on the Nasdaq Global Select Market under the ticker symbol “OCDX.”
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`10.
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`Defendant Christopher M. Smith (“Smith”) is Chairman of the Board and Chief
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`Executive Officer (“CEO”) of the Company, and has been a director at all relevant times.
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`11.
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`Defendant Karen H. Bechtel (“Bechtel”) has been a director of the Company at all
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`relevant times.
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`12.
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`Defendant Evelyn Dilsaver (“Dilsaver”) has been a director of the Company at all
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`relevant times.
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`13.
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`Defendant Allan Holt (“Holt”) has been a director of the Company at all relevant
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`times.
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`14.
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`Defendant Carl Hull (“Hull”) has been a director of the Company at all relevant
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`times.
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`15.
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`Defendant Ron Labrum (“Labrum”) has been a director of the Company at all
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`relevant times.
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`16.
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`Defendant Thomas Mac Mahon (“Mac Mahon”) has been a director of the
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`Company at all relevant times.
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`17.
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`Defendant David Perez (“Perez”) has been a director of the Company at all relevant
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`times.
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`18.
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`Defendant Robert R. Schmidt (“Schmidt”) has been a director of the Company at
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`all relevant times.
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`19.
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`Defendant Stephen H. Wise (“Wise”) has been a director of the Company at all
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`relevant times.
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`20.
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`Defendant Robert Yates (“Yates”) has been a director of the Company at all
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`relevant times.
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`21.
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`Defendants identified in paragraphs 10-20 are referred to herein as the “Board” or
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`the “Individual Defendants.”
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`OTHER RELEVANT ENTITIES
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`22.
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`Quidel has a leadership position in the development, manufacturing and marketing
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`of rapid diagnostic testing solutions. These diagnostic testing solutions are separated into four
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`product categories: rapid immunoassay, cardiometabolic immunoassay, molecular diagnostic
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`solutions and specialized diagnostic solutions. Quidel sells products directly to end users and
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`distributors, in each case, for professional use in physician offices, hospitals, clinical laboratories,
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`reference laboratories, urgent care clinics, leading universities, retail clinics, pharmacies and
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`wellness screening centers, as well as for individual, non-professional, over-the-counter (“OTC”)
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`use. Quidel markets its products through a network of distributors and a direct sales force. Quidel
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`operates in one business segment that develops, manufactures and markets its products globally.
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`23.
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`24.
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`Topco.
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`25.
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`26.
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`Topco is a Delaware corporation and a wholly owned subsidiary of Ortho.
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`U.S. Holdco Sub is a Delaware corporation and a wholly owned subsidiary of
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`U.S. Merger Sub is a Delaware corporation and wholly owned subsidiary of Topco.
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`U.S. Holdco Sub 2 is a Delaware corporation and a wholly owned subsidiary of
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`U.S. Holdco Sub.
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`SUBSTANTIVE ALLEGATIONS
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`Background of the Company
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`27.
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`Ortho is a leading global provider of IVD solutions to the clinical laboratory and
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`transfusion medicine communities. Ortho maintains a direct or indirect commercial presence in
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`more than 130 countries and territories, with a direct presence in 36 countries. Ortho’s instruments,
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`assays, reagents and other consumables are used in hospitals, laboratories, clinics, blood banks and
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`donor centers worldwide. Ortho is globally operated with manufacturing facilities in the United
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`States and the United Kingdom and with sales centers, administrative offices and warehouses
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`located throughout the world. The Company’s products deliver consistently fast, accurate and
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`reliable results that allow clinicians to make better-informed treatment decisions.
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`28.
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`Ortho’s business model generates significant recurring revenues and strong cash
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`flow streams, primarily from the ongoing sales of high margin consumables. In fiscal 2021, these
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`recurring revenues contributed approximately 93% of both total and core revenue. Ortho
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`maintains close connectivity with customers through its global presence, with more than 4,800
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`employees, including approximately 2,300 commercial sales, service and marketing teammates.
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`29.
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`Ortho operates two lines of business, Clinical Laboratories and Transfusion
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`Medicine, which together generate core revenue. The Clinical Laboratories line is focused on (i)
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`clinical chemistry, which is the measurement of target chemicals in bodily fluids for the evaluation
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`of health and the clinical management of patients, (ii) immunoassay instruments, which test the
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`measurement of proteins as they act as antigens in the spread of disease, antibodies in the immune
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`response spurred by disease, or markers of proper organ function and health, and (iii) testing to
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`detect and monitor disease progression across a broad spectrum of therapeutic areas, and includes
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`grant revenue related to development of our COVID-19 antibody and antigen tests. The
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`Transfusion Medicine line is focused on (i) immunohematology instruments and tests used for
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`blood typing to ensure patient-donor compatibility in blood transfusions; and (ii) donor screening
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`instruments and tests used for blood and plasma screening for infectious diseases for customers
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`primarily in the United States.
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`30.
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`On February 16, 2022, Ortho announced its fourth quarter and fiscal year 2021
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`financial results. Fourth quarter Core revenue grew 3.5% to $518.9 million versus the prior year
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`quarter, while fiscal year Core revenue grew 16.1% versus the prior year to $2.01 billion. Adjusted
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`free cash flow for the fiscal year was $260.3 million, compared with $40.8 million in the prior year
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`period. Fiscal year Adjusted EBITDA was $548.1 million, an increase of 20.2% as compared to
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`$456.0 million in the prior year period. Reflecting on the Company’s results and looking towards
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`the future, defendant Smith stated:
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`“Ortho concluded a consistently strong 2021 reaching such significant milestones
`as exceeding $2 billion in revenue and 15% constant currency annual growth. In
`the fourth quarter, we saw this strong growth continue with 8% constant currency
`core revenue growth, excluding CoV-2 assay sales. This momentum is a direct
`result of our commercial execution within the Clinical Laboratories and
`Transfusion Medicine businesses as well as across all major geographic regions,
`demonstrating the strength and stability of our recurring revenue business model.
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`As previously announced, we are excited about the definitive agreement with
`Quidel Corporation. We believe shareholder value will be enhanced by the
`combination of Quidel and Ortho to establish a diagnostics company with an
`expanded global presence and robust product offering serving a wide range of
`customers. We believe the companies’ highly complementary, world-class product
`and service offerings will provide opportunities to capture significant growth
`globally through Ortho’s commercial footprint of approximately 2,300 teammates,
`while enhancing cross-selling opportunities across a diversified customer and
`channel mix.”
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`The Proposed Transaction
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`31.
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`On December 23, 2021, Ortho and Quidel issued a joint press release announcing
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`the Proposed Transaction. The press release states, in relevant part:
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`SAN DIEGO & RARITAN, N.J.--Quidel Corporation (NASDAQ: QDEL)
`(“Quidel”) and Ortho Clinical Diagnostics Holdings plc (NASDAQ: OCDX)
`(“Ortho”) today announced that they have entered into a definitive agreement in
`which Quidel will acquire Ortho, one of the world’s largest in vitro diagnostics
`companies, for $24.68 per share of common stock using a combination of cash and
`newly issued shares in the combined company, representing a 25% premium over
`Ortho’s closing price on December 22, 2021 and an equity value of approximately
`$6.0 billion. The transaction is expected to close during the first half of fiscal year
`2022, subject to customary closing conditions.
`
`“The combination with Ortho will help solidify Quidel as a leader in the diagnostics
`industry, bringing together innovative, complementary products, solutions, and
`services that enhance the health and well-being of patients across the globe,” said
`Douglas Bryant, President and Chief Executive Officer of Quidel, who will serve
`as Chairman and Chief Executive Officer of the combined company. “Establishing
`a stronger leadership position, we expect the combined company will emerge as a
`global player with top-tier R&D capabilities, a more diverse product pipeline, and
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`broader geographic footprint. Importantly, our complementary cultures are
`underpinned by a commitment to our customers, patients, and the communities we
`serve, reinforcing our confidence in the long-term value creation of this transaction.
`We are impressed by what Ortho has accomplished for patients. We look forward
`to joining together to continue the strong patient focus that is core to our mission,
`creating an organization with a shared goal of discovering, developing, and
`delivering innovative solutions to our customers.”
`
`“Quidel shares our commitment to customers and passion for the patients we serve.
`By bringing together Quidel’s point-of-care diagnostics with Ortho’s vast global
`reach, there is a substantial opportunity to capitalize on the cross-selling
`opportunities, move into attractive adjacent markets, and accelerate innovative
`product expansion and the development of molecular technologies,” said Chris
`Smith, Chairman and Chief Executive Officer of Ortho. “Together, we will
`continue to advance life-changing diagnostic solutions to improve patient outcomes
`and deliver economic benefits to the healthcare system.”
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`The combined organization will unite world-class technologies and platforms to
`benefit customers with expanded access to clinical chemistry, immunoassay,
`molecular diagnostics, immunohematology, donor screening, and point-of-care
`diagnostics offerings. Further, the combined company will be poised to meet
`patient testing needs at all points of the care continuum – reference labs, hospitals,
`physicians’ offices, urgent care centers and at-home / retail locations. With
`complementary areas of focus, the combined company will also operate with global
`reach and scale, maintaining the speed and agility that is fundamental to enhance
`Quidel’s current strategic approach.
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`Transaction Benefits
`
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`• Balanced and diversified product portfolio across diagnostic
`instruments and assays. The companies’ highly complementary, world-
`class product and service offerings provide opportunities to capture
`significant growth globally while enhancing cross-selling opportunities
`across a diversified customer and channel mix. The transaction provides
`Quidel with ample whitespace opportunity to capture demand in emerging
`markets through telehealth technology and digital health capabilities,
`utilizing Ortho’s strong customer relationships and providing greater patient
`access to point-of-care diagnostic products.
`
`
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`• Highly synergistic opportunities create significant shareholder value
`creation. The transaction is expected to generate substantial synergies on
`both the top- and bottom-line. Quidel anticipates that the combined
`company will realize approximately $90 million of run-rate cost-related
`synergies, excluding one-time costs, by the end of year three, driven
`primarily from operational efficiencies, supply chain optimization, and
`shared administrative functions, including public company costs. In
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`addition, given Ortho’s enhanced global commercial reach and expansive
`product portfolio, Quidel expects to drive strong cross-selling revenue
`synergies in excess of $100 million by 2025 and meaningful adjusted
`EBITDA benefits.
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`• Complementary cultures with a commitment to providing world-class
`products and services. Both Quidel and Ortho have talented and
`experienced employees who share a commitment to customers, patients,
`and the communities the companies serve. This combination is expected to
`benefit patients, customers, and suppliers, and provide greater opportunities
`for the approximately 6,000 employees of both companies.
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`• Robust, more diverse product pipeline and enhanced R&D capabilities.
`The transaction is expected to accelerate an innovative pipeline and
`milestone execution through complementary capabilities and product
`development synergies. The combined product portfolio, supported by an
`established global commercial infrastructure and distribution footprint,
`positions Quidel to capitalize on strong secular growth drivers.
`
`
`
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`
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`• Strong balance sheet with significant cash generation. After accounting
`for financing of the transaction, the combined company has a pro forma net
`debt-to-adjusted EBITDA of less than two-times as of TTM third quarter
`2021. Expected strong operating cash flow and margin enhancement
`opportunities will enable Quidel to pursue organic and inorganic growth.
`
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`Transaction Details
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`Under the terms of the agreement, which was unanimously approved by the Board
`of Directors of each company, Quidel will acquire Ortho for $24.68 per share of
`common stock, for a total consideration of approximately $6.0 billion, including
`$1.75 billion of cash, funded through cash on the balance sheet and incremental
`borrowings. The combined company will also acquire Ortho’s existing net debt of
`$2.0 billion.
`
`Ortho shareholders will receive $7.14 in cash per common share and 0.1055 shares
`of common stock in the combined company for each Ortho common share, with
`Ortho shareholders expected to own approximately 38% of the combined company.
`This represents an implied premium of 25% when compared to Ortho’s unaffected
`closing stock price on December 22, 2021.
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`Following the close of the transaction, the combined company’s Board of Directors
`will consist of 12 members, eight (8) designated by Quidel and four (4) designated
`by Ortho. Quidel’s current President and Chief Executive Officer, Douglas Bryant,
`will serve as Chairman and Chief Executive Officer of the combined company.
`Joseph M. Busky will be the Chief Financial Officer, Robert Bujarski will be
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`President and Chief Operating Officer, and Michael Iskra will be Chief Commercial
`Officer.
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`The transaction, which is subject to approval by both companies’ shareholders as
`well as customary closing conditions and regulatory approvals, is expected to close
`in the first half of 2022.
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`Advisors
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`Quidel’s financial advisors in connection with this acquisition are Perella Weinberg
`Partners LP and Citi, and its legal advisor is Gibson, Dunn & Crutcher LLP.
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`Ortho’s exclusive financial advisor is J.P. Morgan Securities LLC, and its legal
`advisor is Latham & Watkins LLP.
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`Insiders’ Interests in the Proposed Transaction
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`32.
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`Ortho insiders are the primary beneficiaries of the Proposed Transaction, not the
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`Company’s public stockholders. The Board and the Company’s executive officers are conflicted
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`because they will have secured unique benefits for themselves from the Proposed Transaction not
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`available to Plaintiff and the public stockholders of Ortho.
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`33.
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`Notably, certain Company insiders have secured positions for themselves with the
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`combined company. For example, Ortho executive officers Joseph Busky (“Busky”) and Michael
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`Iskra (“Iskra”) will serve as the Chief Financial Officer (“CFO”) and Chief Commercial Officer
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`of Topco, respectively, after closing of the merger, and four members of the post-closing board of
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`directors of Topco will be appointed by Ortho.
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`34.
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`Company insiders also stand to reap substantial financial benefits for securing the
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`deal with Quidel. Under the terms of the Merger Agreement, upon a qualifying termination in
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`connection with the Proposed Transaction, all Company options, restricted stock units, and
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`restricted stock held by Company insiders will vest and convert into the right to receive the Merger
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`Consideration. The following tables set forth the value of equity awards held by Company
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`executive officers and directors:
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`35. Moreover, in connection with the merger, Ortho approved the grant of retention
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`bonuses to certain employees and executive officers (the “Retention Bonuses”). Retention
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`Bonuses in the following amounts for the executive officers are: Busky: $384,375; Iskra:
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`$375,000; Dr. Chockalingam Palianiappan: $461,250; and Mr. Michael Schlesinger: $421,563.
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`36.
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`Further, in connection with the merger, Ortho approved the grant of transaction
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`bonuses to certain employees and executive officers (the “Transaction Bonuses”). Transaction
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`Bonuses in the following amounts for the executive officers are: defendant Smith: $937,500;
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`Busky: $384,375; Iskra: $375,000; and Mr. Schlesinger: $421,563.
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`37.
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`Additionally, if they are terminated in connection with the Proposed Transaction,
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`Ortho’s named executive officers stand to receive substantial severance payments in the form of
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`golden parachute compensation, as set forth in the following table:
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`
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`The Registration Statement Contains Material Misstatements or Omissions
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`38.
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`Defendants filed a materially incomplete and misleading Registration Statement
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`with the SEC and disseminated it to Ortho’s stockholders. The Registration Statement
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`misrepresents or omits material information that is necessary for the Company’s stockholders to
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`make an informed decision whether to vote in favor of the Proposed Transaction.
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`39.
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`Specifically, as set forth below, the Registration Statement fails to provide
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`Company stockholders with material information or provides them with materially misleading
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`information concerning: (i) the Company’s and Quidel’s financial projections; and (ii) the data and
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`inputs underlying the financial valuation analyses that support the fairness opinion provided by
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`the Company’s financial advisor JPM.
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`Material Omissions Concerning Ortho’s and Quidel’s Financial Projections
`
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`40.
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`The Registration Statement omits material information regarding the Company’s
`
`and Quidel’s financial projections.
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`41.
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`For example, with respect to the “Ortho Management Projections for Ortho” the
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`registration Statement fails to disclose: (i) Ortho’s net operating losses; (ii) Ortho Synergies
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`Estimates; and (iii) the line items underlying (a) Adjusted EBITDA and (b) Unlevered Free Cash
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`Flow.
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`42. With respect to the “Ortho Management Projections for Quidel” the Registration
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`Statement fails to disclose the line items underlying (a) Adjusted EBITDA and (b) Unlevered Free
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`Cash Flow.
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`43.
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`The omission of this information renders the statements in the “Ortho Unaudited
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`Forward-Looking Financial Information” section of the Registration Statement false and/or
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`materially misleading in contravention of the Exchange Act
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`Material Omissions Concerning JPM’s Financial Analyses
`
`
`44.
`
`The Registration Statement describes JPM’s fairness opinion and the various
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`valuation analyses performed in support of its opinion. However, the description of JPM’s fairness
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`opinion and analyses fails to include key inputs and assumptions underlying these analyses.
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`Without this information, as described below, Ortho’s public stockholders are unable to fully
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`understand these analyses and, thus, are unable to determine what weight, if any, to place on JPM’s
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`fairness opinion in determining whether to vote in favor of the Proposed Transaction.
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`45.
`
` With respect to JPM’s Public Trading Multiples analysis, the Registration
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`Statement fails to disclose the reason that the FV/2022E Adj. EBITDA multiples for 10X
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`Genomics, Inc. and NanoString Technologies Inc. were deemed to be not meaningful.
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`46. With respect to JPM’s Discounted Cash Flow Analysis, the Registration Statement
`
`fails to disclose: (i) quantification of the inputs and assumptions underlying the discount rates
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`ranging from 6.5% to 7.5% for Ortho and 7.5% to 8.5% for Quidel; (ii) quantification of the
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`estimated terminal values for Ortho and Quidel; (iii) quantification of Ortho and Quidel’s net debt
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`as of December 31, 2021; and (iv) quantification of the value of Ortho’s net operating losses.
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`47. Without such undisclosed information, Ortho stockholders cannot evaluate for
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`themselves whether the financial analyses performed by JPM were based on reliable inputs and
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`assumptions or whether they were prepared with an eye toward ensuring that a positive fairness
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`opinion could be rendered in connection with the Proposed Transaction. In other words, full
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`disclosure of the omissions identified above is required to ensure that stockholders can fully
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`evaluate the extent to which JPM’s opinion and analyses should factor into their decision whether
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`to vote in favor of or against the Proposed Transaction.
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`48.
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`The omission of this information renders the statements in the “Opinion of J.P.
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`Morgan Securities LLC as Financial Advisor to Ortho” section of the Registration Statement false
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`and/or materially misleading in contravention of the Exchange Act.
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`49.
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`The Individual Defendants were aware of their duty to disclose this information
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`and acted negligently (if not deliberately) in failing to include this information in the Registration
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`Statement. Absent disclosure of the foregoing material information prior to the stockholder vote
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`on the Proposed Transaction, Plaintiff and Ortho’s public stockholders will be unable to make a
`
`sufficiently informed decision whether to vote in favor of the Proposed Transaction and are thus
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`threatened with irreparable harm warranting the injunctive relief sought herein.
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`CLAIMS FOR RELIEF
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`COUNT I
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`Claims Against All Defendants for Violations of Section 14(a) of the
`Exchange Act and Rule 14a-9 Promulgated Thereunder
`
`Plaintiff repeats all previous allegations as if set forth in full.
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`During the relevant period, defendants disseminated the false and misleading
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`50.
`
`51.
`
`Registration Statement specified above, which failed to disclose material facts necessary to make
`
`the statements, in light of the circumstances under which they were made, not misleading in
`
`violation of Section 14(a) of the Exchange Act and SEC Rule 14a-9 promulgated thereunder.
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`52.
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`By virtue of their positions within the Company, the defendants were aware of this
`
`information and of their duty to disclose this information in the Registration Statement. The
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`Registration Statement was prepared, reviewed, and/or disseminated by the defendants. It
`
`misrepresented and/or omitted material facts, including material information about the
`
`Company’s, Quidel’s and Topco’s financial projections and the financial analyses performed by
`
`the Company’s financial advisor JPM. The defendants were at least negligent in filing the
`
`Registration Statement with these materially false and misleading statements.
`
`53.
`
`The omissions and false and misleading statements in the Registration Statement
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`are material in that a reasonable stockholder would consider them important in deciding how to
`
`vote on the Proposed Transaction.
`
`54.
`
`By reason of the foregoing, the defendants have violated Section 14(a) of the
`
`Exchange Act and SEC Rule 14a-9(a) promulgated thereunder.
`
`55.
`
`Because of the false and misleading statements in the Registration Statement,
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`Plaintiff is threatened with irreparable harm, rendering money damages inadequate. Therefore,
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`injunctive relief is appropriate to ensure defendants’ misconduct is corrected.
`
`COUNT II
`
`Claims Against the Individual Defendants for Violations of
`Section 20(a) of the Exchange Act
`
`Plaintiff repeats all previous allegations as if set forth in full.
`
`The Individual Defendants acted as controlling persons of Ortho within the
`
`56.
`
`57.
`
`meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their positions as
`
`officers and/or directors of Ortho, and participation in and/or awareness of the Company’s
`
`operations and/or intimate knowledge of the false statements contained in the Registration
`
`Statement filed with the SEC, they had the power to influence and control and did influence and
`
`control, directly or indirectly, the decision-making of the Company, including the content and
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`dissemination of the various statements which Plaintiff contends are false and misleading.
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`58.
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`Each of the Individual Defendants was provided with or had unlimited access to
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`copies of the Registration Statement and other statements alleged by Plaintiff to be misleading
`
`prior to and/or shortly after these statements were issued and had the ability to prevent the issuance
`
`of the statements or cause the statements to be corrected.
`
`59.
`
`Each of the Individual Defendants had direct and supervisory involvement in the
`
`day-to-day operations of the Company, and, therefore, is presumed to have had the power to
`
`control or influence the transactions giving rise to the securities violations as alleged herein, and
`
`exercised the same. The Registration Statement at issue contains the unanimous recommendation
`
`of each of the Individual Defendants to approve the Proposed Transaction. They were, thus,
`
`directly involved in the making of the Registration Statement.
`
`60.
`
`In addition, as the Registration Statement sets forth at length, and as described
`
`herein, the Individual Defendants were each involved in negotiating, reviewing, and approving the
`
`Proposed Transaction. The Registration Statement purports to describe the various issues and
`
`information that they reviewed and considered—descriptions the Company directors had input
`
`into.
`
`61.
`
`By virtue of the foregoing, the Individual Defendants have violated Section 20(a)
`
`of the Exchange Act.
`
`62.
`
`As set forth above, the Individual Defendants had the ability to exercise control
`
`over and did control a person or persons who have each violated Section 14(a) and SEC Rule 14a-
`
`9, promulgated thereunder, by their acts and omissions as alleged herein. By virtue of their
`
`positions as controlling persons, these defendants are liable pursuant to Section 20(a) of the
`
`Exchange Act. As a direct and proximate result of defendants’ conduct, Ortho’s stockholders will
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`be irreparably harmed.
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`PRAYER FOR RELIEF
`
`WHEREFORE, Plaintiff demands judgment and preliminary and permanent relie