Exhibit 10.46


 


Execution Version


 


SETTLEMENT AGREEMENT AND LIMITED
RELEASE


 


THIS
SETTLEMENT AGREEMENT AND LIMITED RELEASE (“Agreement”) is made
and entered into as of this 31st day of March, 2005 by and among LRC
North America, Inc., a Delaware corporation (“Parent”), SSL Holdings, Inc., a Delaware
corporation (“Seller”),
Silipos, Inc., a Delaware corporation (“Company”), and Langer, Inc., a Delaware
corporation (“Buyer”
and with Parent, Seller and Company, each, a “Party” and collectively, the “Parties”).


 


BACKGROUND


 


A.            Parent,
Seller, Company and Buyer are parties to that certain Stock Purchase Agreement
(the “SPA”)
dated September 22, 2004 whereby Buyer purchased all of the issued and
outstanding capital stock of the Company from the Seller.  Capitalized terms not defined herein shall
have the meaning set forth in the SPA.


 


B.            Pursuant
to Section 2.4 of the SPA the parties agreed that the Purchase Price will be
decreased dollar for dollar to the extent that the Tangible Net Worth of the
Company, as set forth on the Statement of Tangible Net Worth, is less than the
Minimum Tangible Net Worth on the Closing Date.


 


C.            As
a final and irrevocable resolution of all rights of any party to reduce the
Purchase Price pursuant to Section 2.4 of the SPA, the Parties have agreed that
the Purchase Price shall be decreased (the “Reduction”) by an amount equal to Two
Hundred Thirty Two Thousand Dollars ($232,000) (the “Reduction Amount”).


 


D.            Pursuant
to Section 2.4(d) of the SPA, the Reduction is to be satisfied by decreasing
the Principal Sum of the Note by an amount equal to the Reduction Amount, in
accordance with the terms of the Note.


 


E.             In
consideration for the Reduction and other covenants set forth in this
Agreement, the Company and the Buyer are providing herein certain mutual
irrevocable releases (the “Releases”)
of the Parent, the Seller and their affiliates, on the one hand, and the Buyer,
the Company and their affiliates, on the other hand, with respect to accounting
and financial practices and are delivering an amended and restated Note, in the
form attached hereto as Exhibit A (the “Amended Note”), and an amended and
restated Additional Note, in the form attached hereto as Exhibit B (the “Amended Additional Note”).  In addition, the Buyer has elected to make the
Protection Payment (as such term is defined in the Note) pursuant to Section 6
of the Note by increasing the Principal Amount (as such term is defined in the
Note) of the Note by an amount equal to $1,000,000.  Such increase is reflected in the Amended
Note.


 


F.             In
consideration for the Releases, certain other agreements set forth in this
Agreement, and the delivery of executed original copies of an Amended Note and
the Amended Additional Note, Seller agrees to promptly surrender to the Buyer
the original Note and the Additional Note for cancellation.


 





















 


AGREEMENT


 


For and in
consideration of the covenants set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
intending to be legally bound, the Parties hereby agrees as follows:


 


1.             Post-Closing
Settlement of Tangible Net Worth.  As
a final and irrevocable resolution of all rights and claims of any party to
reduce the Purchase Price pursuant to Section 2.4 of the SPA, the Parties
hereby agree to the Reduction of the Purchase Price by the Reduction Amount.
Pursuant to Section 2.4(d) of the SPA, the Reduction is to be satisfied by
decreasing the Principal Sum of the Note by an amount equal to the Reduction
Amount, in accordance with the terms of the Note.  Such decrease shall be reflected in the
Amended Note to be delivered pursuant to Section 3 hereof.


 


2.             Release.


 


a.     Subject to the
Seller’s delivery to the Buyer of the original Note and Additional Note for
cancellation and exchange for the Amended Note and the Amended Additional Note
pursuant to Section 3 hereof, each of the Buyer and the Company, for itself and
each of their respective successors and assigns (collectively, the “Company Releasors”), hereby waives,
releases, acquits, and forever discharges SSL International plc, SSL Americas,
Inc., Parent, Seller, their respective subsidiaries, and each of their
respective present and former shareholders or other equity holders, affiliates,
the respective predecessors, successors and assigns of any of the foregoing,
and the respective past and present shareholders or other equity holders,
partners, members, employees, agents, representatives, attorneys, advisors,
including, without limitation, KPMG LLP, officers, directors, shareholders and
insurers of any of the foregoing (collectively, the “Company Releasees”),
of and from any and all claims, actions, causes of actions, suits, debts,
demands, damages, liabilities of any kind whatsoever, whether direct or
indirect, known or unknown, matured or unmatured, whether in law or equity
(collectively, “Claims”),
that any of the Company Releasors have had, may have now, or may have in the
future, by reason of any matter or cause, (a) of which any Company Releasor is
currently aware, with respect to, or as a result of, accounting policies,
practices, positions, and advice of any Company Releasee, or their accounting
or financial advisors, including, without limitation, KPMG LLP arising out of
that certain put option pursuant to Section 10(b) of that certain Supply
Agreement dated as of August 20, 1999 by and between the Company and Poly Gel,
L.L.C., a New Jersey limited liability company, and the rights and obligations
set forth therein (the “Put
Option”), and (b) with respect to, or as a result of, Section
2.4 of the SPA, the Statement of Tangible Net Worth and all rights of any party
to reduce the Purchase Price pursuant to Section 2.4 of the SPA, existing or
occurring from the beginning of the World until the date of this Agreement
against the Company Releasees (each of the foregoing being a “Company  Released Claim” and
all of the foregoing being the “Company Released Claims”).  No Company Releasor shall ever sue or
otherwise institute a Claim of any kind, against any Company Releasee in any
way related to any Company Released Claim.


 


b.     Subject to the
Seller’s delivery to the Buyer of the original Note and Additional Note for
cancellation and exchange for the Amended Note and the Amended Additional Note
pursuant to Section 3 hereof, each of the Parent and the Seller, for itself and


 


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each of their respective and
their respective successors and assigns (collectively, the “Seller Releasors”), hereby waives,
releases, acquits, and forever discharges the Company and the Buyer, their
respective subsidiaries, and each of their respective present and former
shareholders or other equity holders, affiliates, the respective predecessors,
successors and assigns of any of the foregoing, and the respective past and present
shareholders or other equity holders, partners, members, employees, agents,
representatives, attorneys, advisors, officers, directors, shareholders and
insurers of any of the foregoing (collectively, the “Seller Releasees”),
of and from any and all Claims, that any of the Seller Releasors have had, may
have now, or may have in the future, by reason of any matter or cause, of which
any Seller Releasor is currently aware, with respect to, or as a result of,
accounting policies, practices, positions, and advice of any Seller Releasee,
or their accounting or financial advisors arising out of the Put Option (of the
foregoing being a “Seller Released Claim” and all of the
foregoing being the “Seller Released Claims”).  No Seller Releasor shall ever sue or otherwise
institute a Claim of any kind, against any Seller Releasee in any way related
to any Seller Released Claim.


 


c.     The releases set
forth in Sections 2(a) and 2(b) hereof constitute a release solely as, and are
limited, to the matters expressly set forth therein and no other Claim of any
kind is being released, waived, compromised, or discharged hereunder.


 


3.             Exchange
of Notes.  Upon the execution of (i)
this Agreement by the Parties, (ii) the Amended Note and (iii) the Amended
Additional Note, and the delivery of each such original document to the
appropriate Parties, the Seller shall deliver to the Buyer the original Note
and Additional Note for cancellation. 
This Agreement shall constitute the required prior written consent of
the Seller to the amendment of the Note and the Additional Note as required by
Section 11 of the Note and Section 8 of the Additional Note.  In addition, the Buyer shall pay to the
Seller on the last day of August 2005 an amount in cash equal to the accrued
and unpaid interest on the Note and the Additional Note with respect to the
month of March 2005.


 


4.             Knowledge
of Accounting or Financial Irregularities. 
Except with respect to the Deferred Tax Asset, as hereinafter defined,
neither the Buyer nor the Company has any Knowledge (as defined below) of any
accounting policies, practices, positions, or methodologies used in the
application and interpretation of GAAP of any Company Releasee, that would
render the representations based upon the subject matter set forth in Section 3.11
of the SPA untrue.  For purposes of this
Section 4, “Knowledge” means the actual current knowledge of Ven Govindarajan,
Joseph P. Ciavarella, W. Gray Hudkins, those employees of Deloitte & Touche
USA LLP, Buyer’s and Company’s sole outside accounting advisors, who have
advised the Buyer.  The Company and Buyer
are aware of issues relating to the validity of $1,657,977 of the deferred tax
asset (the “Deferred Tax Asset”) reflected on the balance sheet of the Company
dated March 31, 2004 and September 30, 2004, which arose from interest paid by
the Company to its foreign affiliate.  


 


5.             Additional
Representations of the Company Releasors. 
Each of the Company and the Buyer represents and warrants that a. it has
the authority to execute this Agreement on behalf of itself and the other
Company Releasors; and b. none of the Company Releasors has sold, assigned,
transferred, conveyed or otherwise disposed of any Company Released Claim.


 


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6.             Additional
Representations of the Seller Releasors. 
Each of the Parent and the Seller represents and warrants that a. it has
the authority to execute this Agreement on behalf of itself and the other
Seller Releasors; and b. none of the Seller Releasors has sold, assigned, transferred,
conveyed or otherwise disposed of any Seller Released Claim.


 


7.             Breach
of Agreement.  Any breach by any
Party of any of the representations, warranties, covenants or agreements
contained in this Agreement shall entitle any other Party to bring an action
for failure to comply with the terms of this Agreement and, further, the
non-breaching Party shall be entitled to attorney’s fees and costs as part of
such action.  In addition, each Company
Releasor and each Seller Releasor agrees that no adequate remedy exists at law
for breach of this Agreement and that the Company Releasees and Seller
Releasees shall be entitled to injunctive relief.


 


8.             Amendment.  This Agreement cannot be amended, modified,
or supplemented in any respect except by the written agreement of the Parties
hereto.  Any such amendment, modification
or supplement shall be binding upon all Company Releasors, Company Releasees
Seller Releasors, Seller Releasees and the other Parties hereto.


 


9.             Enforceability.  If, in any judicial proceeding, a court finds
any portion of this Agreement unenforceable, the remainder of this Agreement
shall be enforced to the maximum extent permitted by law.


 


10.           Binding
Agreement; Successors and Assigns. 
This Agreement shall be binding upon and inure to the benefit of the
Company Releasors, the Company Releasees, Seller Releasors, Seller Releasees
and the other Parties hereto and their respective heirs, personal
representatives, successors and assigns.


 


11.           Governing
Law.  Each Party agrees that the laws
of the State of New York shall govern the validity and interpretation of this
Agreement, without regard to the principles of conflict of laws of the State of
New York or any other jurisdiction.


 


12.           Review
of Agreement.  Each of the Company,
the Buyer, the Seller and the Parent agrees that it is fully aware of its
rights, that it has carefully read and fully understands all of the provisions
set forth in this Agreement, that it has had the opportunity to consult with
its own attorney, and that it has voluntarily and knowingly entering into this
Agreement.  Each of the Company, the
Buyer, the Seller and the Parent further acknowledges that it has not relied on
any representations, promises, or agreements of any kind made to it in
connection with the Company Releasees’ and Seller Releasees’ respective
decision to accept this Agreement except for the terms set forth above.


 


[Remainder
of Page Intentionally Left Blank; Signature Page Follows]


 


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IN WITNESS
WHEREOF, each of the undersigned has executed this
Settlement Agreement and Limited Release as of the date written above.


 


WITNESS:


 


 


	
   

  	
   

  	
  LRC NORTH
  AMERICA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SSL
  HOLDINGS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LANGER, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SILIPOS,
  INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  



 





















 


EXHIBIT A


 


AMENDED NOTE


 





















 


EXHIBIT B


 


AMENDED ADDITIONAL NOTE