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Eckert & Ziegler: Court Supports Further Modernization in Braunschweig

Eckert & Ziegler Strahlen- und Medizintechnik AG (ISIN DE0005659700), a specialist for isotope applications in medicine, science and industry, has received important help from a US district court ruling in Virginia in its attempt to further modernize the production facilities in Braunschweig. The Court found Best Medical International and Best Vascular (jointly, Best) to be in default of a Settlement Agreement which required Best to decommission and remove an unused production line located at the premises of Eckert & Ziegler Nuclitec GmbH. Nuclitec now plans to permanently dispose of the defunct and through its use contaminated production line itself in accordance with German regulations, and is presently awaiting approval of its plan for such disposal from German regulators.

Background: In 2005, Best entered into an Amended and Restated Purchase Agreement (APA) with Novoste Corporation, an Atlanta, Georgia-based medical device manufacturer that had used Nuclitec’s facility in Braunschweig for the production of radioactive components. Pursuant to the APA, Best agreed to decommission and remove a production line used to manufacture Sr-90 sources, in return for a payment by Novoste of an undisclosed sum of money to Best. Best failed to honor its contractual obligation to decommission and remove the equipment, and Nuclitec, at this time named QSA GmbH, sued Best in the US District Court in Virginia to enforce this obligation. The QSA GmbH vs. Best litigation was resolved by a Settlement Agreement under which Best again was required to decontaminate and decommission the production line by April 2009.

However, Best failed to meet its obligations under the Settlement Agreement, and Nuclitec notified Best that it would perform the decommissioning activities as authorized by the Settlement Agreement. Best sued Nuclitec to prevent it from removing the equipment from its facility, claiming that Best had, in essence, unlimited time within which to remove the production line. The Court ruled against Best on all of its claims, and found that Best was in default under the Settlement Agreement by failing to decommission and remove the production line within the time limits set forth in the Settlement Agreement.

Eckert & Ziegler Nuclitec’s Managing Director, Frank Yeager, commented, “We are very pleased with the Court’s decision. We hope that this now useless equipment can be removed from our facility, so that our modernization efforts can continue, and the space can be used productively for the first time in more than 6 years. The Court’s decision obligates Best to pay Nuclitec’s costs once the clean-up is completed, and we hope that Best will do so without engaging in yet another round of costly litigation.”