Document:

Exhibit 10.1

 

 

 

SHARE
PURCHASE AGREEMENT

 

BY AND
AMONG

 

DJ
ORTHOPEDICS, LLC

 

AND

 

THE
STOCKHOLDERS OF NEWMED

 

 

 

December
15, 2005

 

 

 

 

SHARE
PURCHASE AGREEMENT

 

 

This Share
Purchase Agreement (“Agreement”), dated as of the 15th day of
December 2005 is entered into by and among dj Orthopedics, LLC, a Delaware,
USA, limited liability company (“Purchaser”), MBO Partenaires, a French société
par actions simplifiée, having its registered offices at 75 bis, avenue
Marceau, 75116 Paris, registered with the Registry of Commerce and Companies
under number 443 024 237 RCS Paris, acting in its capacity as the
management company of MBO Capital, a Fonds Commun de Placements
à Risque, Alain Cassam-Chenaï, an individual residing at 98, rue de
l’Abbé Groult, 75015 Paris (MBO Capital and Mr. Cassam-Chenaï sometimes
hereinafter referred to collectively as the “MBO Stockholders”), Alain Avril,
an individual residing at Chemin de Jacquemin, 64100 Bayonne, Charles Dubourg,
an individual residing at 32, place du pavé, 18200 Meillant, Sophie Dubourg, an
individual residing at 32, place du pavé, 18200 Meillant, and Edmond Flacks, an
individual residing at 5, square des Sables, 78940 La-Queue-Lez-Yvelines
(Messrs. Avril, Dubourg and Flacks and Mrs. Dubourg sometimes hereinafter referred
to collectively as the “Management Stockholders”).  The MBO Stockholders and the Management
Stockholders are sometimes hereinafter referred to collectively as the
“Stockholders”.

 

RECITALS

 

1.             The Stockholders own all of the
outstanding shares of capital stock of Newmed, a French société par
actions simplifiée, having its registered offices at Paris (75008) —
37, rue des Mathurins and registered with the Registry of Commerce and
Companies under number 448 205 906 RCS Paris (the “Company”).

 

2.             On the terms and subject to the
conditions set forth in this Agreement, Purchaser desires to purchase from the
Stockholders, and the Stockholders desire to sell to Purchaser, all of the
outstanding capital stock of the Company (the “Shares”) and to enter into certain
other agreements ancillary to such purchase and sale of Shares as provided for
herein.

 

AGREEMENT

 

                                Now,
therefore, the parties to this Agreement agree as follows:

 

Section 1

 

Purchase
and Sale of Capital Stock and Debt

 

1.1           Purchase and Sale of Shares.  Subject to the terms and conditions hereof,
on the Closing Date (as hereinafter defined) Purchaser shall purchase from each
of the Stockholders, and each Stockholder shall sell and transfer to Purchaser,
all such Stockholder’s right, title and interest, free and clear of any liens,
encumbrances or charges, in and to the Shares owned by such Stockholder as
shown opposite each such Stockholder’s name on Schedule 1.1 to this
Agreement, such Shares constituting in the aggregate all of the issued and
outstanding shares of 

 

2

 

capital stock of the
Company.  Purchaser reserves the right to
assign its right to receive title to the Shares to its subsidiary, dj
Orthopedics France a French société par actions simplifiée, having its
registered offices at rue Albert Deville, 08090 Tournes and registered with the
Registry of Commerce and Companies under number 450 064 654 RCS
Charleville Mezieres, and agrees to advise the Stockholders on or before the
Closing (as hereinafter defined) if it will make such assignment.  Should Purchaser assign its rights under the
Agreement to dj Orthopedics France SAS, the latter shall be bound by the terms
of the Agreement, and Purchaser shall remain jointly and severally liable (solidairement responsable) with dj Orthopedics France SAS in
respect of any and all obligations of dj Orthopedics France SAS hereunder.

 

1.2           Purchase and Sale of Debt.  Subject to the terms and conditions hereof,
on the Closing Date Purchaser shall purchase from the Stockholders, and the
Stockholders shall sell and transfer to Purchaser, all such Stockholder’s
right, title and interest, free and clear of any liens, encumbrances or
charges, in and to all of the debt due by the Company to the Stockholders at
the date hereof (the “Debt”) as shown opposite each such Stockholder’s name on Schedule
1.2.  Purchaser reserves the right to
assign its right to receive title to the Debt to its subsidiary, dj Orthopedics
France SAS, and agrees to advise the Stockholders on or before the Closing (as
hereinafter defined) if it will make such assignment.  Should Purchaser assign its rights under the
Agreement to dj Orthopedics France SAS, the latter shall be bound by the terms
of the Agreement, and Purchaser shall remain jointly and severally liable (solidairement responsable) with dj Orthopedics France SAS in
respect of any and all obligations of dj Orthopedics France SAS hereunder.

 

1.3           Purchase Price.  Subject to possible adjustment under Section
1.6 below, the aggregate purchase price for the Shares and the Debt shall
consist of a payment at Closing of €11,140,000 (the “Base Price”) and an
additional payment of up to €1 million if certain revenue thresholds are
reached by the Company during the one-year period following the Closing, as
described below in Section 1.5 (the “Earn Out Amount”).  The Base Price shall be paid in readily
available funds at the Closing and allocated between the Shares and the Debt as
follows:

 

(i)            an amount equal to €8,686,412 for
the Shares;

 

(ii)           an amount equal to €450,000 for Alain
Avril’s balance of sale credit;

 

(iii)          an amount equal to €50,000 for Edmond
Flacks’ balance of sale credit;

 

(iv)          an amount equal to €147,500 for the
current indebtedness of the Company to the Stockholders; and

 

(v)           an amount equal to €1,806,088 for the
then outstanding convertible bonds of the Company.

 

Schedule 1.3 shows the allocation of the above
amounts comprising the Base Price between the various Stockholders.

 

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1.4           Repayment of the Third Party Debt.  Purchaser shall cause the Company to repay to
the lenders under the senior credit facility agreement (Convention
de Crédit) entered into between Société Nanceienne Varin-Bernier,
Crédit Industriel d’Alsace et Lorraine and Newmed on May 7, 2005, as amended by
an Amendment N°1 of even date, the full amount outstanding thereunder
(excluding breakage or other costs) in an amount of €1,860,000, it being
provided that breakage or other costs, which are in a maximum amount of €1,000,
shall be borne by the Company.

 

1.5           Earn Out Amount.  During the one-year measurement period of the
Earn-Out, as described below, the Management Stockholders shall be in active
day-to-day control of the Company’s operations, subject to the oversight and
supervision of Purchaser and Purchaser Vice President, Europe.  The parties agree that the commercial
policies of the Company during said measurement period will be generally
consistent with those pursued by the Company prior to the Closing Date.  Purchaser and the Management Stockholders agree
to consult with each other before implementing material changes to those
commercial policies, particularly changes to prices or products offered to the
market.  The Management Stockholders
shall be entitled to receive all or a portion of the Earn Out Amount if the
Revenue achieved by the Company and the Subsidiaries (as this word is defined
in Section 2.2) plus the Revenue of Purchaser’s currently existing subsidiary
in France (hereinafter referred to collectively as the “Net Consolidated Axmed
Revenue”) during 2006 reflect growth of 10% or more over 2005.  Revenue means gross revenue deriving from bona
fide sales of products to third parties (excluding any sales between any of
the Company or the Subsidiaries) (chiffre d’affaires),
less any discounts, other rebates, or recalls (rabais,
remises, ristournes, escomptes de réglement, et retours éventuels),
and excluding, for the Subsidiaries, sales made outside France (including
French overseas territories — DOM/TOM-), Belgium, Luxembourg, Andorra, and
Monaco.  Specifically, if the growth rate
of the Net Consolidated Axmed Revenue during 2006 is less than 10%, the
Management Stockholders shall receive none of the Earn Out Amount.  If the growth rate of the Net Consolidated
Axmed Revenue during 2006 is 10%, the Management Stockholders shall receive 50%
of the Earn Out Amount.  If such growth
rate is 15% or more, the Management Stockholders shall receive the entire Earn
Out Amount.  If such growth rate is
between 10% and 15%, the Management Stockholders shall receive a prorata
portion of the amount between 50% and 100% of the Earn Out Amount.  The Net Consolidated Axmed Revenue and the
portion of the Earn Out Amount actually earned by the Management Stockholders
shall be determined by Purchaser from the books and records of the Company, the
Subsidiaries and Purchaser’s currently existing subsidiary in France and, to
the extent earned, shall be paid to the Management Stockholders no later than
30 days after the first anniversary of this Agreement; provided, however, that
the Management Stockholders shall be entitled to be paid 25% of the Earn Out
Amount if the Net Consolidated Axmed Revenue during the first two complete
calendar quarters following the Closing reflects a growth rate of 15% or more
over the two comparable calendar quarters in the preceding year.  Payments of the Earn Out Amount to the
Management Stockholders shall be made according to the instructions as appended
in Schedule 1.5.  As soon as
practicable and no later than thirty (30) days after the Closing Date,
Purchaser shall deliver to the Management Stockholders a notice setting forth
the Net Consolidated Axmed Revenue for 2005. 
The Net Consolidated Axmed Revenue for 2005 shall become final thirty
(30) days after delivery of such notice to the Management Stockholders (or
earlier if the Management 

 

4

 

Stockholders agree with
such amount) unless the Management Stockholders notify Purchaser that they
disagree with such amount.  As soon as
practicable and no later than thirty (30) days after the first anniversary of
the Closing Date, Purchaser shall deliver to the Management Stockholders a
notice setting forth the Net Consolidated Axmed Revenue for 2006 and the Earn
Out Amount.  The Net Consolidated Axmed Revenue
for 2006 and the Earn Out Amount shall become final thirty (30) days after
delivery of such notice to the Management Stockholders (or earlier if the
Management Stockholders agree with such amount) unless the Management
Stockholders notify Purchaser that they disagree with such amount.  Any dispute arising from this Section 1.5 in
relation to the determination of the amount of the Net Consolidated Axmed
Revenue for 2005, the Net Consolidated Axmed Revenue for 2006 or the Earn Out
amount shall be settled pursuant to the provisions of Section 1.6, in fine, which shall apply mutatis
mutandis.

 

1.6           Minimum Net Asset Requirement.  The Stockholders agree that the “Net Assets”
of the Company and each of the Subsidiaries, as measured on December 31, 2005,
must equal or exceed, in the aggregate, the total “Net Assets” of the Company
and each of the Subsidiaries as measured on December 31, 2004.  For this purpose, “Net Assets” means (i) for
the Company and Axmed, the amount referred to in the “DL” line of tax form 2051
as attached to tax return form 2065, (ii) for Axmed Iberica Productos
Ortopedicos, S.L. Unipersonal, the amount referred to in line 220 of Modelo 200 “Fondos Proprios”, and (iii) for Fabrique
Tunisienne Orthopédique (FTO), the “Total des capitaux propres avant
affectation” line of its financial statements, all determined by application of
generally accepted French accounting standards in effect on the date of this
Agreement.  For purposes of calculating
the “Net Assets” of the Company and each Subsidiary as at December 31, 2005,
the valuation of the participation in the Subsidiaries as recorded on the
Company’s balance sheet as at December 31, 2005 shall be deemed to be equal to
the valuation of such participation as recorded in the Company’s balance sheet
as at December 31, 2004.  If the sum of
the Net Assets of the Company and the Subsidiaries on December 31, 2005 is less
than the sum of the Net Assets of each such entity on December 31, 2004, the
Stockholders shall pay to Purchaser, in readily available funds within ten (10)
days of final agreement on the amount of said Net Assets on December 31, 2005,
the difference between such Net Assets on December 31, 2004 and such amount on
December 31, 2005.

 

As soon as
practicable and no later than sixty (60) days after the Closing Date, Purchaser
shall prepare and deliver to the Stockholders a balance sheet for the Company
and each of the Subsidiaries as of December 31, 2005 (the “2005 Balance
Sheets”) which shall reflect the Net Assets of those entities on that date.  The 2005 Balance Sheets shall be prepared
using generally accepted French accounting standards in effect on the date of
this Agreement.  The 2005 Balance Sheets
shall become final thirty (30) days after delivery to the Stockholders (or
earlier if the Stockholders agree with such balance sheets) unless the
Stockholders give notice to Purchaser that they disagree with any such balance
sheet.  Any such notice shall specify the
nature and amount of the disagreement. 
The parties will work in good faith to resolve any such disagreement, but
if they cannot resolve the disagreement within thirty (30) days of delivery of
the notice of disagreement, the parties will submit the disagreement for
resolution to KPMG (Paris).  If KPMG
(Paris) is unable or unwilling to act and the Stockholders and Purchaser cannot
agree, within 10 days from the date upon which KPMG (Paris) has stated that it
is 

 

5

 

unwilling or unable to
act, on another independent internationally recognized accounting firm not
associated with any party hereto, either party hereto shall be entitled to
request, via a référé proceeding the designation
of such a firm by the President of the commercial Court of Paris (Tribunal de Commerce de Paris), each party
having the opportunity to be heard.  The
accounting firm shall act as an expert within the meaning of Article 1592 of
the French civil code (and not as an arbitrator) in making any such
determination, which shall be final and binding on the parties and shall not be
subject to any recourse before a court or arbitration tribunal, except as
necessary to enforce such determination. 
One half of the fees of KPMG (Paris) (or the alternate accounting firm
as the case may be) shall be borne by Purchaser, the remaining half being borne
by the Stockholders, based on their respective shareholding in the Company
immediately before the Closing Date.

 

Section 2

 

Representations and Warranties of the Stockholders

 

2.0           Qualifications to the
Representations.  The Schedules
attached to this Agreement identify specific items which are disclosed against
the specifically identified representations and warranties contained in this
Agreement.  There shall be no breach or
deemed breach of any of the representations or warranties contained in this
Agreement in respect of any of the matters disclosed in the Schedule against
the particular representation and warranty. Notwithstanding the foregoing,
information set forth in one specific section of a Schedule which is disclosed
against a particular representation and warranty shall also be deemed to apply
to each other applicable representation and warranty to which its relevance is
apparent on its face.  Generally, the
liability of the Stockholders pursuant to Section 7.2 shall be excluded only
with respect to the information contained in the Schedules, provided that such
information is fairly disclosed.  If any
event(s) that occurred between the date of this Agreement and the Closing Date,
makes one or more of the representations and warranties made or given in this
Section 2 inaccurate in any material respect, the Stockholders will promptly
(and in any event 1 business day before the Closing Date) inform Purchaser in
writing of said event.  Where such event
is likely to have a financial adverse impact on the Company or the Subsidiaries
which is less than €15,000 (per event) or occurred in the ordinary course of
business, Stockholders shall have the right to include in the relevant Schedule
a description of such event, which shall accordingly be deemed to be disclosed pursuant
to the provisions of this Section 2.0.

 

As of the date hereof, the Management Stockholders,
jointly and severally (solidairement),
and the other Stockholders, jointly but not severally (non
solidairement), hereby represent and warrant to Purchaser as
follows, it being provided that, subject to the provisions of the above
paragraph in fine, the following representations
and warranties shall also be deemed to be true as of the Closing Date as if
made or given on such date :

 

2.1           Organization,
No bankruptcy, and Qualification. 
The Company is a corporation duly organized and validly existing under
the laws of France.

 

6

 

The Company has
all requisite power and authority and all licenses and other governmental
authorizations necessary to own, operate and lease its properties and carry on
its business as now conducted and as proposed to be conducted.  The Company is duly qualified or duly
licensed to transact business and, where applicable, is in good standing in
each jurisdiction, within or outside France, that the nature of the business
conducted by it or its ownership or leasing of any property makes such
qualification necessary.  True and
complete copies of the documents by which the Company was organized and
pursuant to which it is governed (“Organizational Documents”) have been
delivered to Purchaser.

 

The Company is not
currently, nor has it been in the past, the subject of any proceedings with a
view to the prevention or resolution of business difficulties (or any similar
actions), or of a judgment of dissolution, and there does not exist any fact
justifying such a procedure or judgment involving the Company. The Company is
not undergoing a period of difficulties (période suspecte)
or any procedure related thereto (including a procédure
d’alerte), as those terms are used in French bankruptcy law or in a
situation likely to result in similar consequences under any applicable laws
and there do not exist any facts justifying such a procedure or judgment against
the Company.

 

2.2           Subsidiaries.  Schedule 2.2 hereto sets forth each
direct or indirect subsidiary of the Company (hereinafter, “Subsidiary”, it
being provided that for the purpose of this Agreement, Orbamed Dr. Gützlaf GmbH
shall not be considered as a Subsidiary), the jurisdiction of its organization
or incorporation, the number of shares and percentage of outstanding capital
stock of such Subsidiary owned by the Company or any other Subsidiary and the
identity of any other owner of any shares of capital stock of, or any other
equity interest or security in, any such Subsidiary.  Other than the Subsidiaries and, until
Closing Date, Orbamed Dr. Gützlaf GmbH, the Company and the Subsidiaries do not
own, and never owned, directly or indirectly, any ownership interest or other
security or investment in any corporation, partnership, limited liability
company, joint venture, organization or other entity.  Each Subsidiary is a company duly organized
and validly existing in its jurisdiction of organization and has all requisite
power and authority and all licenses and governmental authorizations necessary
to own, operate and lease its property and carry on its business as now
conducted and as proposed to be conducted. 
None of the Subsidiaries is currently, nor has any of them been in the
past, the subject of any proceedings with a view to the prevention or
resolution of business difficulties (or any similar actions), or of a judgment
of dissolution, and there does not exist any fact justifying such a procedure or
judgment involving any of the Subsidiaries. None of the Subsidiaries is
undergoing a period of difficulties (période suspecte)
or any procedure related thereto (including a procédure
d’alerte), as those terms are used in French bankruptcy law or in a
situation likely to result in similar consequences under any applicable laws
and there do not exist any facts justifying such a procedure or judgment
against any of the Subsidiaries.  True
and complete copies of the Organizational Documents of each Subsidiary have
been delivered to Purchaser.  No
resolution has been adopted by a Subsidiary’s competent corporate body, which
has not yet been registered in the commercial register of such Subsidiary,
where such registration is required under applicable law.  On the Closing Date and thereafter, subject
to the provisions of Section 8.4, none of the Company and the Subsidiaries
shall have any liability, whether known or 

 

7

 

unknown, as a result or
in connection with the shareholding previously held in Orbamed Dr. Gützlaf
GmbH.

 

2.3           Authorization
and Enforceability.  Each Stockholder
has all requisite power and authority to enter into this Agreement and to
perform its obligations hereunder.  All
action on the part of each Stockholder and, if applicable, each Stockholder’s
officers, directors and equity holders, necessary for the authorization,
execution and delivery of this Agreement and any agreements required or
contemplated hereunder and the performance of all obligations of the
Stockholder hereunder and thereunder, including the transfer and sale of the
Shares and, where relevant, the Debt, has or will have been taken before the
Closing Date.  This Agreement has been
duly executed and delivered by each Stockholder and constitutes the valid and
legally binding obligation of such Stockholder, enforceable against the
Stockholder in accordance with its terms, except as may be limited by
bankruptcy, reorganization, insolvency, moratorium or other laws relating to or
affecting the enforcement of creditors’ rights and remedies generally.  MBO Partenaires hereby further represents
that it has, and will maintain, appropriate reserves so that it will be, at all
times, in a position to pay any amounts payable to Purchaser under Section 1.6
and the Stockholders’ indemnification of Purchaser provided in Section 7.2 of
this Agreement.

 

2.4           Capitalization.  The share capital of the Company amounts to €1,000,000,
consisting of 100,000 shares with a par value of €10 each, of which 100,000
shares constitute the “Shares” for purposes of this Agreement.  The Shares constitute all of the equity
interests of the Company.  The Shares are
owned by the Stockholders in the respective amounts shown on Schedule 1.1
attached to this Agreement.  Except as
shown on Schedule 1.1 and Schedule 2.2 hereto and as provided for
in the Shareholders’ Agreement existing to date between the Stockholders and
which will automatically and fully terminate on Closing Date, there are as of
the Closing Date no shares of capital stock of the Company or any Subsidiary,
or other equity interests or securities of any nature in the Company or any
Subsidiary, issued, outstanding or reserved for issuance nor are there any
preemptive rights, rights of first refusal, rights of first offer or any
outstanding subscriptions, options, warrants, rights, convertible securities,
or other agreements, arrangements or commitments relating to the issued or unissued
capital stock or other equity interests or securities of the Company or any
Subsidiary.  Except as shown on Schedule
2.4(i), none of the Shares nor any outstanding share of capital stock of
any Subsidiary is subject to any voting trust agreement or other contract,
agreement, arrangement, commitment or understanding, including any such
agreement, arrangement, commitment or understanding restricting or otherwise
relating to the voting or disposition of any of such shares.  Except as set forth in Schedule 2.4(ii),
there are no outstanding bonds, debentures, notes or other indebtedness of the
Company or any Subsidiary convertible into, or exchangeable for securities
having the right to vote on any matters on which stockholders of the Company or
any Subsidiary may vote.

 

There are no
outstanding contractual obligations of the Company or any Subsidiary to
repurchase, redeem or otherwise acquire any capital stock or equity interests
or securities of the Company, any Subsidiary or any other entity or person.

 

8

 

2.5           Valid
Issuance; Share Ownership.  All the
Shares and all shares of capital stock of the Subsidiaries have been validly
issued, are fully paid, have neither been directly or indirectly repaid or
redeemed, and have been issued in compliance with applicable laws.  The Stockholders have good and marketable
title to the Shares owned by them, free and clear of any lien, charge,
encumbrance or claim by any other person or entity.  Each of the Company and any Subsidiary that
owns shares of capital stock of an indirect Subsidiary of the Company has good
and marketable title to the shares of capital stock owned in the Subsidiaries,
free and clear of any lien, charge, encumbrance or claim by any other person or
entity, with the exception of the pledge described in Schedule 2.5 and
which will be released on the Closing Date.

 

No Stockholder is
subject to any bankruptcy, reorganization or similar proceeding.  Upon delivery of the Shares to Purchaser
pursuant to this Agreement against payment of the consideration therefor,
Purchaser shall acquire good and valid title to such Shares.

 

2.6           Consents
and Approvals.  No consent or
approval by, or filings with, any governmental or administrative body or agency
or other third party is required in connection with the execution, delivery or
performance by the Stockholders of this Agreement or any agreement required or
contemplated by the provisions hereof or for the consummation by the
Stockholders of the transactions contemplated hereby or thereby.

 

2.7           No
Conflicts.  Neither the execution and
delivery of this Agreement or any agreements provided for hereunder, nor the
consummation of the transactions contemplated hereby or thereby, will
(a) violate any provision of the Organizational Documents of the Company,
any Stockholder or any Subsidiary; (b) violate, breach, conflict with, or
constitute a default (or constitute an event which, with the giving of notice
or lapse of time or both, would constitute a default) under, or give rise to
any right of termination, cancellation or acceleration under, any contract,
agreement, lease, license or document to which the Company, any Stockholder or
any Subsidiary is a party or by which any of their respective assets or
properties is bound; (c) violate any order, writ, injunction, decree, law,
statute, rule or regulation of any governmental authority applicable to any
Stockholder, the Company or any Subsidiary or their respective businesses or
properties; or (d) give rise to the declaration or imposition of any lien
or other encumbrance upon any of the Shares, any share of a Subsidiary or any
property of, or used by, the Company or any Subsidiary.

 

2.8           Reference
Accounts.  The Stockholders have
delivered to Purchaser the audited corporate income statements, balance sheets,
and notes thereto, of the Company and the Subsidiaries for the two fiscal years
ended December 31, 2003 (or as the case may be June 30, 2004) and December 31,
2004.  The corporate income statements,
balance sheets, and notes thereto, of the Company and the Subsidiaries for the
year ended December 31, 2004 are attached to this Agreement as Schedule 2.8
and are hereinafter referred to as the “Reference Accounts.

 

The Reference
Accounts (i) have been prepared in conformity with generally accepted
French accounting standards (the “Accounting Standards”) consistently applied
for prior periods, and (ii) fairly present the financial condition and results
of operations of the Company and the Subsidiaries as of the dates and for the
periods indicated therein, except concerning the notes to 

 

9

 

the accounts which do not
show the amount of the retirement commitments (indemnités
de départ à la retraite).  The
books of account, financial data, and other records, including corporate
records, of the Company and the Subsidiaries, required to be held pursuant to
applicable laws, are held by the Company and the Subsidiaries, have been
maintained in the ordinary course of business of the Company and the
Subsidiaries, and there are no material misstatements, mistakes or omissions
therein, and there have been no transactions involving the Company or the
Subsidiaries that properly should have been reflected in the Reference Accounts
in accordance with the Accounting Standards that have not been reflected
therein.  Except concerning the amount of
the retirement commitments, the Reference Accounts accurately reflects all
liabilities, obligations and commitments of any nature (whether absolute,
accrued, contingent or otherwise and whether matured or unmatured) of the
Company or any Subsidiary, except (a) liabilities, obligations or commitments
incurred since December 31, 2004 in the ordinary course of business and
consistent with past practice and (b) other liabilities or obligations not
required to be shown on a balance sheet prepared in accordance the Accounting
Standards.

 

                2.9           Accounts
Receivable.  Any accounts receivable
arising between December 31, 2004 and the Closing Date (collectively, the
“Accounts Receivable”) represent bona fide sales made or services
performed on or prior to such date in the ordinary course of business of the
Company and the Subsidiaries and consistent with past practices.  There is no contest, claim or right of
set-off contained in any oral or written agreement with any account debtor
relating to the amount or validity of any Account Receivable, and the Accounts
Receivable, net of reserves, are and will be collectible in the ordinary course
of business of the Company and the Subsidiaries.  The reserves for uncollectible Accounts
Receivable reflected in the Reference Accounts and updated to the Closing Date
have been established in the ordinary course of business, in accordance with
the Accounting Standards and consistent with past practices.

 

                2.10         Inventory.  All inventory of the Company and the
Subsidiaries existing on December 31, 2004 is valued in accordance with the
Accounting Standards and consistent with past practices.  All inventory of the Company and the
Subsidiaries existing on the date hereof, net of reserves for obsolescence, is
useable and salable in the ordinary course of business of the Company and the
Subsidiaries. The reserve for obsolescence has been established in the ordinary
course of business, in accordance with the Accounting Standards and consistent
with past practices.

 

                2.11         Fixed
Assets.  All fixtures, furniture,
machinery, equipment and other fixed assets owned or leased by the Company or
any Subsidiary (the “Fixed Assets”) are in good operating condition and repair,
normal wear and tear excepted, and are adequate for the uses to which they are
being put.  None of the Fixed Assets is
in need of maintenance or repairs, except for ordinary, routine maintenance and
repairs.  The Fixed Assets are validly
owned or leased and constitute all of the fixed assets used by the Company and
the Subsidiaries in the operation of its and their businesses.

 

2.12         Absence of Certain Changes or Events.  Since the date of the Reference Accounts and
except as set forth on Schedule 2.12 hereto, the Company and the
Subsidiaries have 

 

10

 

conducted their
respective businesses in the ordinary course consistent with past practices and
none of the following has occurred:

 

(a)           event, fact or circumstances that,
individually or in the aggregate, could reasonably be expected to result in a
material adverse effect on the operations, conditions or prospects of the
Company and its Subsidiaries, taken as a whole;

 

(b)           acquisition of or agreement to
acquire by merging with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, limited liability company, association or other
business entity, in a transaction or series of related transactions;

 

(c)           issuance by the Company or any
Subsidiary of, or commitment by it to issue, any common stock or other equity
securities or obligations or any securities convertible into or exchangeable or
exercisable for equity securities;

 

(d)           indebtedness for borrowed money
incurred, assumed or guaranteed by the Company or any Subsidiary or any
commitment to incur any such indebtedness entered into by the Company or any
Subsidiary, or any loans made or agreed to be made by the Company or any
Subsidiary other than ordinary course of business indebtedness incurred to (i)
lease or acquire ordinary course of business fixed assets consistent with past
practice, or (ii) finance the working capital needs of the Subsidiaries in the
ordinary course of business;

 

(e)           increase in the compensation of
officers or employees (including any such increase pursuant to the grant of or
increase to any bonus, pension, profit sharing or other plan or commitment) or
any increase in the compensation payable or to become payable to any officer or
employee or any severance or termination pay, except for increases to non
officer employees in the ordinary course of business, consistent with past
practice or as required by any existing agreement;

 

(f)            incurrence or imposition of a lien,
security interest or encumbrance on any of the assets or other properties of
the Company or any Subsidiary;

 

(g)           damage, destruction or loss (whether
or not covered by insurance) in an aggregate amount exceeding €10,000;

 

(h)           delay or failure to pay or perform
any obligation (including accounts payable) of the Company or any Subsidiary
when due;

 

(i)            settlement or other resolution of
any litigation, or termination, amendment, modification or waiver of, or any
breach, violation or default by any party under, any contract or agreement of
the Company or any Subsidiary, or entrance into a material contract, commitment
or agreement;

 

11

 

(j)            forgiveness,
waiver or agreement to extend repayment of any indebtedness or other material
obligation owed by or to the Company or any Subsidiary;

 

(k)           disposition
or lapse of any rights to use any of the intellectual property or intangible
assets of the Company or any Subsidiary;

 

(l)            contract,
agreement or transaction with any affiliate of the Company or any Subsidiary,
any officer, director, stockholder or employee of the Company or any Subsidiary
or any family member of any such person other than in the ordinary course of
business or as disclosed in this Agreement;

 

(m)          declaration
or payment of any dividend or other distribution or payment (whether in cash,
property or equity interests) to the Stockholders or otherwise with respect to
the capital stock of the Company, or any redemption, purchase or acquisition of
any of the securities of the Company or any Subsidiary, with the exception of
the payment of interest pursuant to the terms and conditions of the convertible
bonds issued on May 7, 2003 in a total amount, as of January 2, 2006, of €255,123,
it being provided that this amount was provided under the responsibility of the
Stockholders, and not verified by Purchaser, and that the Stockholders hereby
undertake to provide Purchaser with any appropriate explanation or evidencing
document confirming this amount as soon as possible and no later than December
31, 2005;

 

(n)           payment on any indebtedness to any
Stockholder or any person or entity affiliated with any Stockholder, with the
exception of the interest owed relating to the stockholders’ debts in a total
amount, as of January 2, 2006, of € 75,733 and the reimbursement, by way of
set-off, of Alain Avril and Edmond Flacks stockholders debts, in a total
amount, as of January 2, 2006, of €114,500, it being provided that these
amounts were provided under the responsibility of the Stockholders, and not
verified by Purchaser, and that the Stockholders hereby undertake to provide
Purchaser with any appropriate explanation or evidencing document confirming
these amounts as soon as possible and no later than December 31, 2005;

 

(o)           material change in the tax liability
of the Company and its Subsidiaries;

 

(p)           capital expenditures or commitments
for additions to any property of the Company or its Subsidiaries constituting
capital assets in an aggregate amount exceeding 
€10,000 and not previously contained in a capital budget provided to
Purchaser;

 

(q)           change in the accounting methods or
practices followed by or with respect to the Company and its Subsidiaries or
any material write-down or write-up of the value of any inventory of the
Company or any Subsidiary or write-off of all or a material portion of any
account receivable or note receivable of the Company or any Subsidiary;

 

(r)            changes made or pending in the
amount or nature of the reimbursements available to customers for the products
of the Company or its Subsidiaries; or

 

12

 

(s)           negotiation, discussion or contract
or agreement to take or agree to take any of the actions described in
subsections (a) through (r) above.

 

2.13         Insurance.  Schedule 2.13 contains a true and
complete list of all policies of liability, theft, life, fire, product liability,
worker’s compensation, health and other forms of insurance for the Company, the
Subsidiaries and their respective operations, specifying the insurer, amount of
coverage, type of insurance, policy number, deductible or retention amount,
premium, policy term and any pending claims thereunder.  The policies listed on such schedule are in
full force and effect and the insurance available thereunder has not been
exhausted.  Said insurance is sufficient
in amount as of the date of the Closing, subject to reasonable deductibles, to
allow the Company to replace any of the material properties of the Company or
the Subsidiaries that may be damaged or destroyed.  This insurance insures the Company and the
Subsidiaries and their assets and other properties against such casualties and
contingencies and is carried in such amounts as is customary for companies
similarly situated, which insurance is deemed by the Company to be
sufficient.  Except as described on Schedule
2.13, and since December 31, 2004, neither the Company nor any Subsidiary
has given any notice or filed any claim with any of the insurers under any of
these insurance policies.

 

2.14         Occupational Safety and Health
Matters - Environmental Matters. 
Each of the Company and the Subsidiaries have complied and continue to
comply with all material legislation and regulation in force in the country
where  they each operate concerning
environment, health, safety or public health protection (the “Environmental
Requirements”).  Each of the Company and
the Subsidiaries has, in particular, filed all notifications or declarations
and obtained all required permits and authorizations necessary to conduct its
business as currently carried on and operations under applicable Environmental
Requirements, and complied with all material regulations (including the fire or
other reports for Axmed Iberica Productos Ortopedicos attached in Schedule 2.14)
relating to such notifications, declarations, permits and authorizations. None
of the Company or the Subsidiaries operates any waste storage facility, quarry
or installation regulated under applicable Environmental Requirements.  There are no facts, conditions, situations or
set of circumstances that could reasonably be expected to result in, or be the
basis for, any liabilities on any of the Company or the Subsidiaries, arising
under or relating to the Environmental Requirements.

 

No petroleum,
petroleum hydrocarbon products, hazardous substances or wastes of any kind have
been disposed of or otherwise released on, to or from any properties now or in
the past owned or leased by any of the Company or the Subsidiaries (or any
predecessor in interest).  Such
properties do not contain asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls (PCB’s), leaking and/or non complying underground
storage tanks or any other chemical material or substance prohibited by any
governmental authority.  The
representation in this paragraph is made subject to the best knowledge of the
Stockholders in relation to properties that were acquired or leased by the
Company or a particular Subsidiary before the Stockholders had control
(directly or indirectly) over the Company or the Subsidiary concerned.

 

The Company and
the Subsidiaries have at all times in the past sold, transferred, transported
or arranged for the transportation, treated for elimination or arranged for the

 

13

 

treatment of elimination
of hazardous substances or wastes in compliance with the Environmental
Requirements.

 

For clarification
purposes, Purchaser acknowledges that there shall be no responsibility of the
Stockholders for any remediation works that may be implemented by the Company
or the Subsidiaries after the Closing Date and that were required pursuant only
to the Purchaser’s internal policies and practice, as opposed to, and over and
beyond, any applicable Environmental Requirements.

 

2.15         Litigation; No Orders.  Except as set forth in Schedule 2.15,
there are no actions, claims, suits, proceedings, arbitrations, complaints, or
investigations pending or, to the best knowledge of the Stockholders,
threatened (a) against the Company, any Subsidiary or their respective
businesses or any properties before any court, administrative, governmental or
regulatory body or arbitrator or mediator, or (b) that challenge the
validity or propriety of any of the transactions contemplated by this
Agreement.  There are no (i) facts
or circumstances known to the Stockholders that could give rise to, or provide
the basis for, any action which would be required to be disclosed pursuant to
this Section 2.15 or (ii) outstanding judgments, orders, decrees,
awards or citations of any governmental authority against the Company, any
Subsidiary or their respective businesses (including any assets, property,
right, obligation or liability of such businesses).

 

2.16         Material Contracts and Other
Agreements.  Neither the Company nor
any Subsidiary is a party to, nor is the Company or any Subsidiary or any of
their assets or other properties used in their respective businesses bound or
affected by, any contract, agreement, order, understanding, instrument, lease
or other commitment, written or oral, absolute or contingent, including any
credit facility agreement other than (i) material contracts, which are
listed on Schedule 2.16 attached to this Agreement, accurate and
complete copy (or description, where the contract is an oral contract) of which
have been delivered or made available to Purchaser and (ii) contracts
which are not material and which were entered into in the ordinary course of
business at arms’ length conditions.  All
of the contracts entered into by the Company or the Subsidiaries are valid,
binding and legally enforceable in accordance with their respective terms, and
neither the Company, any Subsidiary nor, to the best knowledge of the
Stockholders, any other party is in material default under any such
contract.  The Stockholders, the Company
and the Subsidiaries have received no notice from any party to any such
contract of its intention to cancel, fail to renew or reduce the scope of any
such contract.  Neither the Company nor
any Subsidiary is a party to any contract that restricts it from carrying on
its business or any part thereof anywhere in the world or restricts it from
competing in any line of business with any person or entity.

 

2.17         Client and Supplier Relationships.  Neither the Stockholders, the Company nor any
Subsidiary has received any notice and none of them is in possession of any
actual knowledge that might reasonably indicate that any of the Company’s or
the Subsidiaries’ current clients, customers, subcontractors, vendors or
suppliers intends to cease retaining, purchasing from, selling to or dealing
with the Company or any Subsidiary in the manner in which such transactions
have previously occurred or that any such current client, customer,
subcontractor, 

 

14

 

vendor or supplier
intends to alter in any respect the amount of such retention, purchases or
sales or the extent of dealings with the Company or any Subsidiary or would
alter in any respect any such retention, purchases, sales or dealings in the
event of the consummation of the transactions contemplated in this Agreement.

 

2.18         Compliance with Laws and Charter.  The Company and each Subsidiary has at all
times been, and all of its assets and properties have at all times been, in
compliance in all material respects with any and all applicable rules,
statutes, laws, ordinances and regulations of governmental authorities,
including, without limitation, any applicable building, zoning, health,
environmental, safety, employment, labor relations, export, customs or other
rule, statute, law, ordinance or regulation, it being provided that the
Stockholders are granted a specific right to remedy pursuant to Section
7.8.  Neither the Stockholders, the
Company, any Subsidiary nor any officer, employee, agent or any other person
acting on behalf of any of them has, directly or indirectly, given or agreed to
give any money, gift or similar benefit (other than legal price concessions to
customers in the ordinary course of business) to any customer, supplier,
employee or agent of a customer or supplier, or official or employee of any
government or governmental agency or any other person who was, is, or may be,
in a position to help or hinder the business of the Company or any Subsidiary
and that (i) might subject the Company or Subsidiary to any damage or penalty
in any governmental proceeding, (ii) if not given, might have or lead to a
material adverse effect on the Company and the Subsidiaries, taken as a whole
or (iii) has a value in excess of €2,500 individually or in the aggregate in
any one-year period.  The Company and the
Subsidiaries are in compliance in all respects with their respective
Organizational Documents.

 

2.19         Licenses and Permits.  The Company and each Subsidiary has all
licenses, permits, authorizations, rights, privileges, exemptions, orders and
approvals issued or granted by any governmental authority necessary to conduct
its business as now being conducted, and each of the foregoing (the “Licenses”)
is listed on Schedule 2.19 and is in full force and effect.  The Déclarations CE de
conformité have been made by the Company and the Subsidiaries, and
the necessary certificates obtained, for the products sold by them.  Neither the Stockholders, the Company nor any
Subsidiary has received any notice to the effect that, or otherwise been
advised that, the Company or any Subsidiary is not in compliance with, or that
it is in violation of, any such License. 
The Company and each Subsidiary is in compliance in all material
respects with the terms of each such License, and there are no currently
existing circumstances that are likely to result in a failure of the Company or
any Subsidiary to comply with, or in a violation by the Company or any
Subsidiary of, any such License.

 

2.20         Title to Properties; Liens and
Encumbrances.  Except as set forth in
Schedule 2.20, the Company and the Subsidiaries have good and marketable
title to all of their respective properties and assets (including their fonds de commerce) (all of which are sufficient for them to
run their businesses as currently conducted) and, with respect to the property
and assets leased by the Company or any Subsidiary, hold valid leasehold
interests therein and are in compliance with such leases, in each case, whether
owned or leased, subject to no mortgage, pledge, lien, security interest,
conditional sale agreement, encumbrance or charge, except (i) liens which
arose by operation of law and which did not arise as a result of a default or
an omission of the Company 

 

15

 

or the Subsidiaries or
(ii) liens or encumbrances which do not individually or in the aggregate
materially impair the use thereof or materially detract from the value of the
particular properties and assets and which have arisen only in the ordinary
course of business.  Where the property
is leased by the Company or any Subsidiary, the lease is a valid lease giving the concerned company renewal rights to the
lease (propriété commerciale).  None of the Company and the Subsidiaries
owns, or did own, any real property assets.

 

2.21         Brokers; Certain Expenses.  The Stockholders, the Company and the
Subsidiaries have not paid or become obligated to pay any fee or commission to
any broker, finder, investment banker or other intermediary in connection with
this Agreement.

 

2.22         Taxes, Social Security, Customs.  Except as set forth in Schedule 2.22,
each of the Company and the Subsidiaries has filed by their deadlines true and
correct Tax returns as required by applicable laws.  Each of the Company and the Subsidiaries has
paid, or established adequate reserves for, all Taxes with respect to any
periods prior to the Closing Date, inclusive. 
For purposes of this Agreement, “Tax” shall mean all direct or indirect
taxes, charges, fees, duties, compulsory loans, levies or other assessments or
governmental charges of any kind, and any charge in the nature of taxation,
whether payable directly or by withholding (wherever imposed), including,
without limitation, all net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits,
license, withholding, payroll, employment, social security (including any
health, unemployment, housing, family allowances, pension or retirement
contributions or similar payroll-related charges, taxes or assessments),
excise, estimated, severance, property, local (including taxe professionnelle) or other taxes,
duties, fees, assessments or charges of any kind whatsoever, including any
interest thereon, and penalties, fines or additional amounts in relation, or
attributable, thereto, and any payment made in or in relation thereto, imposed
by any governmental authority.

 

None of the Company or the Subsidiaries is the
subject of any inspection or inquiry, nor has received any request for
information or notice from the Tax authorities or any similar bodies. To the
best knowledge of the Stockholders, the Company and the Subsidiaries, no such
inspections or inquiries are anticipated.

 

None of the Company or the Subsidiaries is
bound by any obligation nor shall incur any additional Tax burden as a result
of obtaining any fiscal advantages, carry forward or postponement of taxation,
or any favorable Tax regime. Each of the Company and the Subsidiaries, where
applicable, has fulfilled its obligations under Article 54 septies
I and II of the French General tax Code and has carried out all related
formalities in due course.

 

None of the Company or the Subsidiaries shall
incur any Tax burden as a result of the termination, due to the sale of the
Shares, of any tax consolidation regime applicable to it, with the exception of
a tax liability on the Company in a maximum amount of €20,000, relating to réintégration de la quote part des frais et charges.

 

The Company and
the Subsidiaries are the
beneficiaries of the tax loss carry-forwards (including deferred depreciation)
and carry-back receivables set forth in Schedule 2.22(i).

 

16

 

None of the Company or the Subsidiaries does
incur or has incurred any Tax liability with respect to any of the intra-group
agreement to which it is a party to, as said agreements are listed in Schedule 2.22(ii).  The Company and the Subsidiaries have kept
all necessary documents to justify any amounts paid pursuant to said
agreements.

 

The Company is not
a real estate company within the meaning of Article 726 of the French General
Tax Code.

 

2.23         Related-Party Relationships.  Except as set forth on Schedule 2.23,
no Stockholder, officer, director or affiliate of the Company or any Subsidiary
has any (i) interest, directly or indirectly, in any lease, lien,
contract, license, loan or other agreement, transaction or arrangement to which
the Company or any Subsidiary is a party or that relates in any way to any
property or any aspect of the Company’s or any Subsidiary’s business,
(ii) interest in any properties, assets, liabilities or other obligations
of the Company or any Subsidiary or (iii) employment relationship or other
relationship as a director, manager or similar such position with, or any
interest, direct or indirect, in any competitor, supplier, vendor or customer
of, or other person or entity having any business dealings or a business
relationship with, the Company or any Subsidiary.  Except as set forth in Schedule 2.23,
no Stockholder nor any officer, director or affiliate of the Company or any
Subsidiary will own, hold, possess or have any other right or obligation with
respect to any property or other asset on or after the Closing that is
currently used in the business of the Company or any Subsidiary.

 

2.24         Labor Matters; Employees.  All individuals employed by the Company and
the Subsidiaries are listed in Schedule 2.24(i), along with classification, salary,
seniority and compensation details, including accrued paid holidays and working
time related benefits (R.T.T.,...),
where applicable.  Neither the
Company nor the Subsidiaries has undertaken to increase the rates of
remuneration or grant a bonus or advantage of any kind to any of its employees
or corporate officers at any future date, either as a result of the completion
of the transactions provided for herein or otherwise, except pursuant to
existing employment contracts, the collective agreements or undertakings listed
in Schedule 2.24(ii), or the law. 
None of the senior executives or management staff of any of the Company
or the Subsidiaries who are in office as of the date of this Agreement has
resigned, or made known his/her intention to resign.

 

Schedule 2.24.(ii) sets forth, for each of the Company and the
Subsidiaries, where applicable:

 

(a)                                 the applicable collective bargaining and
company agreements;

 

(b)                                any exceptional agreements concluded with
staff representatives;

 

(c)                                 remuneration systems, including premiums,
bonuses, commissions, and advantages in kind, awarded to all of the staff or
certain categories thereof;

 

17

 

(d)                                a list of each plan, program, scheme or
undertaking of the Company or any Subsidiary involving employee compensation or
benefits, including but not limited to pension programs, incentive bonus,
profit sharing plans, medical, dental, life and disability insurance policies
or programs, stock option or other equity incentives and other compensatory or
fringe benefit plans or programs (the “Employee Plans”); and

 

(e)                                 any regional, local, company or business
branch practices that provide for advantages exceeding those resulting from
legislation or the applicable collective bargaining agreements.

 

The Company and
the Subsidiaries have fully performed their obligations under any of the
above.  In particular, the Company and
the Subsidiaries are current in all of their respective obligations (financial
and otherwise) under all of the Employee Plans, have complied in all material
respects with all applicable laws relating thereto.  Neither the Company nor any Subsidiary has
any liability or obligation for the provision of, or funding for, benefits or
compensation under any Employee Plan beyond the annual or monthly payments
required thereunder in the amounts of such payments reflected in the Reference
Accounts.

 

Model employment
contracts as concluded by the Company and the Subsidiaries are attached hereto
as Schedule 2.24(iii).  Schedule
2.24(iii) also includes a copy of those contracts (as modified, if
applicable) under which certain employees or management staff enjoy advantages
in excess of those arising from the collective status referred to above or the
model agreements attached hereto as Schedule 2.24(iii)
(including, but not limited to, increased severance pay, extended notice
periods, advantages in kind, pensions). 
The terms and conditions of the employment agreements between each of
the Company and the Subsidiaries and its employees are in compliance with the
applicable laws and the collective bargaining agreements and company agreements
applying to the Company and the Subsidiaries, in particular in terms of salary,
compensation in kind, medical insurance, life insurance, increase of
remuneration, bonus, retirement benefits, pension schemes or any severance
benefits whatsoever.  Each of the Company
and the Subsidiaries is now, and has been, in compliance with the individual
employment contracts entered into with its employees.

 

All the agreements
entered into between any of the Company and the Subsidiaries and any third
party with respect to the direct or indirect provision of workforce to any of
the Company or the Subsidiaries comply with applicable laws.  No such agreements will give rise to an
obligation to provide employee benefits to any person whose services are or
have been provided thereunder.

 

Schedule 2.24(iv) set forth the list of all corporate
officers (mandataire sociaux), including for the
avoidance of a doubt, all administrateurs,
of any of the Company and the Subsidiaries, together with a description of any
remuneration paid to them, including any advantages in kind, pensions, or any
other advantage whatsoever.  No corporate
officer of any of the Company or the Subsidiaries benefits from an employment
agreement that is currently suspended and that could be resumed after the
dismissal or resignation of such corporate officer.

 

18

 

The Stockholders
have duly informed and consulted the works council of the Company and, when
required, of any Subsidiaries, in connection with the entering into of this
Agreement and the transactions provided for therein and said council(s) have
accordingly issued an opinion in compliance with applicable laws.

 

None of the
Company or the Subsidiaries has any undertakings within the context of any
redundancy plan (“plan de sauvegarde de
l’emploi”) that have not been performed in full, nor is any of the
Company and the Subsidiaries liable to make any payment to any of its employees
or corporate officers or former employees or corporate officers by way of
damages or compensation for loss of office or employment or for redundancy or
dismissal.

 

No event has
occurred that would result in the increase of one of the rates of social
contributions applicable to any of the Company and the Subsidiaries in effect
as of the date hereof.  In particular,
there has been no work-related accident insurance increase (taux majoré de cotisation d’accident du travail) applied to
any of the Company and the Subsidiaries as of the date hereof.

 

There is no
pending or, to the Stockholders’ best knowledge, threatened labor strike, work
stoppage or other organized disturbance or disruption of the labor force of any
of the Company and the Subsidiaries. 
Generally, the Company and the Subsidiaries enjoy good and harmonious
labor and employee relations with their employees, and the Stockholders have no
reason to believe that the consummation of the transactions contemplated hereby
will adversely affect such relations.

 

2.25         Trademarks, Patents and Other Rights.  Schedule 2.25(i) contains a true and
complete list of all patents, patent applications, trademarks, trademark
applications, service marks, trade names and copyrights (collectively,
“Intellectual Property”) used by the Company or any Subsidiary in the conduct
of its business.  Schedule 2.25(i)
also lists or briefly describes the material computer programs and related
technical data necessary for the business of the Company and its Subsidiaries
as now conducted (“Software”).  The
Stockholders have delivered to Purchaser true and complete copies of all license
agreements under which the Company or any Subsidiary licenses the right to use
any such Intellectual Property from a third party or grants to a third party a
license to use any such Intellectual Property or Software.  Where applicable, the Company and the
Subsidiaries have properly filed and maintained all registrations for the
Intellectual Property and have paid on a timely basis all fees and other
charges required to be paid to the relevant governmental authorities in
connection with the filing and maintenance of such registrations.  The Company and its Subsidiaries own or have
rights to use all such Intellectual Property and Software and such use, to the
best knowledge of the Stockholders, does not conflict with or infringe upon the
valid rights of others.  To the best
knowledge of the Stockholders, no person or entity is infringing on the rights
of the Company or any Subsidiary in such Intellectual Property or
Software.  The Company and the
Subsidiaries have a valuable body of trade secrets, including know-how,
concepts, designs, manufacturing processes and other technical data (the
“Proprietary Information”) for the development, manufacture and sale of their
products.  To the best knowledge of the
Stockholders after reasonable inquiry, the Company and 

 

19

 

the Subsidiaries have the
right to use the Proprietary Information, free and clear of any rights
(including license rights), liens, encumbrances or claims of others.  Reasonable security measures have been, and
continue being taken by the Company and the Subsidiaries to protect the
secrecy, confidentiality and value of the Proprietary Information and the
Intellectual Property.  The Company and
the Subsidiaries have duly obtained the certifications listed in Schedule 2.25(ii). 
The Company and the Subsidiaries have not infringed any rule which might
cause any of those certifications to be cancelled or terminated or otherwise
negatively affected.

 

2.26         Bank Accounts; Powers of Attorney.  Schedule 2.26 hereto sets forth a true
and complete list of (i) all bank accounts (specifying type) and safe deposit
boxes of the Company and the Subsidiaries and all persons who are signatories
thereunder or who have access thereto and (ii) the names of all persons holding
general or special powers of attorney from the Company or any Subsidiary and a
summary of the terms thereof.

 

2.27         Product Liability.  None of the Company or the Subsidiaries’
products have any hidden or apparent faults or defects and such products
conform to all laws, contractual commitments, standards and norms, including
safety, applicable to such products.  No
warranty has been made with respect to such products under whose terms the
Company or the Subsidiaries would be liable beyond the limits and periods
provided for by the general conditions of sale of the Company or the
Subsidiaries attached hereto as Schedule 2.27.

 

Section 3

 

Representations and Warranties of

Purchaser

 

Purchaser hereby represents and warrants to the
Stockholders as follows:

 

3.1           Organization
and Corporate Authority.  Purchaser
is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite
corporate power and authority to own, lease and operate its properties, and to
carry on its business, as such is now being conducted.  Purchaser has all requisite power and
authority to execute and deliver this Agreement and the agreements and
documents contemplated hereby to which it will be a party, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby.

 

3.2           Authorization and Enforceability
of Agreements.  The execution,
delivery and performance by Purchaser of this Agreement and any ancillary
documents and agreements to which Purchaser will be a party and the performance
and consummation of the transactions contemplated thereunder have been duly and
validly authorized by all necessary action on the part of Purchaser.  This Agreement has been duly executed and
delivered by Purchaser and constitute the legal, valid and binding obligation
of Purchaser, enforceable in accordance with its terms, except as may be
limited by bankruptcy, reorganization, insolvency, moratorium or other laws
relating to or affecting the enforcement of creditors’ rights and remedies
generally and except as enforcement may be limited by general principles of
equity.  No further approvals or 

 

20

 

consents by, or filings
with, any federal, state, municipal, foreign or other court or governmental or
administrative body, agency or other third party is required in connection with
the execution and delivery by Purchaser of this Agreement, or the consummation
by Purchaser of the transactions contemplated hereby, except for those which,
if not obtained, would not have a material adverse impact on the ability of
Purchaser to perform its business as currently conducted or the ability of
Purchaser to execute and deliver such agreement, or to consummate the
transactions contemplated hereby.

 

3.3           No Conflicts.  Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
(a) violate any provisions of the operating agreement or other
organizational documents of Purchaser, (b) violate, or be in conflict
with, or constitute a default (or other event which, with the giving of notice
or lapse of time or both, would constitute a default) under, or give rise to
any right of termination, cancellation or acceleration under any of the terms,
conditions or provisions of any material lease, license, promissory note,
contract, agreement, mortgage, deed of trust or other instrument or document to
which Purchaser is a party or by which Purchaser or any of its properties or
assets may be bound, (c) violate any order, writ, injunction, decree, law,
statute, rule or regulation of any court or governmental authority applicable
to Purchaser or its properties or assets or (d) give rise to a declaration
or imposition of any claim, lien, charge, security interest or encumbrance of
any nature whatsoever upon any of the assets of Purchaser.

 

3.4           Brokers and Finders.  Purchaser has not engaged or authorized any
broker, finder, investment banker or other third party to act on behalf of
Purchaser, directly or indirectly, as a broker, finder, investment banker or in
any other like capacity in connection with this Agreement or the transactions
contemplated hereby, or has consented to or acquiesced in anyone so acting, and
Purchaser knows of no claim for compensation from any such broker, finder,
investment banker or other third party for so acting on behalf of Purchaser or
of any basis for such a claim.

 

Section 4

 

Conditions to Closing by Purchaser

 

The obligation of Purchaser to consummate the
transactions contemplated by this Agreement on the Closing Date are subject to
the satisfaction in all material respects, on or before the Closing Date, of
the following conditions (unless waived in writing by Purchaser):

 

4.1           Accuracy
of Representations and Warranties; Performance of Covenants.  The representations and warranties of the
Stockholders set forth herein shall be accurate in all material respects on and
as of the date hereof and on and as of the Closing Date (as though made on and
as of the Closing Date), and the Company, each Subsidiary and the Stockholders
each shall have, in all material respects, performed all obligations and
complied with all covenants required to be performed or to be complied with by
them under this Agreement prior to the Closing Date.

 

21

 

4.2           Transfer of Shares.  The Stockholders shall have executed and
delivered to Purchaser stock transfer forms to the effect that the Shares are
validly transferred to Purchaser and such transfer shall have been duly
registered in the stock ledger (registre des mouvements de
titres et comptes individuels d’actionnaires) of the Company and as
required by law.

 

4.3           Transfer of the Debt.  The Stockholders shall have executed and
delivered to Purchaser transfer instruments to the effect that the Debt is
fully and validly transferred to Purchaser.

 

4.4           Repayment of the Senior
Indebtedness.  The lenders under the
Third Party Debt shall have confirmed in writing that, upon, payment to them by
the Company of €1,860,000, they shall have no claim whatsoever outstanding
against the Company or the Subsidiaries and all corresponding securities shall
be released.

 

4.5           Sale of Orbamed Dr. Gützlaf GmbH.  The shares of Orbamed Dr. Gützlaf GmbH shall
be transferred by the Company for a consideration equal to their nominal value
to any of the Stockholders or third party, with no liability for any of the
Company or the Subsidiaries.

 

4.6           No Litigation or Legislation.  No legal action or other proceedings brought
by third parties to restrain or prohibit the consummation of the transactions
contemplated by this Agreement or to obtain other relief in connection with
this Agreement or the transactions contemplated hereby shall be pending or
threatened.  No law, statute, rule or
regulation of a governmental body shall have been enacted which prohibits,
restricts or delays the consummation of the transactions contemplated hereby.

 

4.7           No Adverse Changes.  There shall not have been instituted or
threatened any litigation which materially affects the Company or any
Subsidiary, and there shall not have occurred any loss or destruction of any
material part of the assets of the Company or any Subsidiary or any material
adverse change in the financial condition, business, prospects or operations of
the Company and the Subsidiaries, taken as a whole.

 

4.8           Bank Guarantees.  Each of the Stockholders but MBO Capital
shall have delivered to Purchaser an effective and outstanding bank guarantee
issued by Fortis, Paris and, for Alain Cassam-Chenaï, Fortis, Paris or HSBC,
Paris, and in such form as in Schedule 4.8, that guarantees for a two
year period following the Closing Date, the payment by such Stockholder but MBO
Capital of such Stockholder’s proportionate share, based on relative ownership
of the Shares immediately prior to the Closing, of any amounts payable by the
Stockholders but MBO Capital to Purchaser under Section 1.6 and the
Stockholders’ indemnification of Purchaser provided in Section 7.2 of this
Agreement.  The aggregate amount
guaranteed by such bank guarantees shall be €821,990, allocated among the bank
guarantees provided by such Stockholders in proportion to their relative
ownership of Shares. Purchaser shall provide a copy to such Stockholders of any
claim or notice made to Fortis, Paris or HSBC, Paris, as the case may be, such
copy being submitted to the Stockholders at the same time as the original is
submitted to the bank concerned.  To the
extent any payment is made under such bank 

 

22

 

guarantees, then that
payment will reduce the amount that may be owed by such Stockholders to
Purchaser in relation to any Recoverable Losses or pursuant to Section 1.6, as
the case may be.

 

4.9           Resignations.  The members of the Strategic Committee (comité stratégique) of the Company (and any other corporate
officer of the Company or the Subsidiaries as may be identified by Purchaser
before the Closing Date) shall have executed and delivered to Purchaser
resignation letters confirming that they have no claim whatsoever outstanding
against the Company in relation to their former Strategic Committee or other
position.

 

 

4.10         Other Matters.  All corporate and other proceedings and
actions taken in connection with the transactions contemplated hereby and all agreements,
instruments and documents referred to in this Section 4 or incident to any such
transactions shall be reasonably satisfactory in form and substance to
Purchaser.

 

Section 5

 

Conditions to Closing by the
Stockholders

 

Notwithstanding any provisions in Section 6.2, the
obligations of the Stockholders to consummate the transactions contemplated by
this Agreement on the Closing Date are subject to the satisfaction in all
material respects, on or before the Closing Date, of the following conditions (unless
waived in writing by the Stockholders):

 

5.1           Accuracy
of Representations and Warranties; Performance of Covenants by Purchaser.  The representations and warranties of
Purchaser set forth herein shall be accurate in all material respects on and as
of the date hereof and the Closing Date (as though made on and as of the
Closing Date), and Purchaser shall have, in all material respects, performed
all obligations and complied with all covenants required to be performed or to
be complied with by it under this Agreement on or prior to the Closing Date.

 

5.2           Purchase Price.  Purchaser shall have provided for the
delivery of the Base Price portion of the purchase price under this Agreement
to the bank account the details of which are in Schedule 5.2, it being
provided that the allocation of such Base Price between, and actual payment to,
the Stockholders shall be the responsibility of the Stockholders only, with no
obligation or liability whatsoever for Purchaser.

 

5.3           No Litigation or Legislation.  No legal action or other proceedings brought
by third parties to restrain or prohibit the consummation of the transactions
contemplated by this Agreement or to obtain other relief in connection with
this Agreement or the transactions contemplated hereby shall be pending or
threatened.  No law, statute, rule or
regulation of a governmental body shall have been enacted which prohibits,
restricts or delays the consummation of the transactions contemplated hereby.

 

5.4           Other Matters.  All corporate and other proceedings and
actions taken by Purchaser in connection with the transactions contemplated
hereby and all agreements, 

 

23

 

instruments and documents
referred to in this Section 5 or incident to any transactions shall be
reasonably satisfactory in form and substance to the Stockholders.

 

Section
6

 

Closing

 

6.1           The exchange and transfer of the
Shares, documents, instruments, funds and other matters described in Sections 4
and 5 above shall constitute the closing of the transaction contemplated
hereunder (the “Closing”) and shall take place and occur at the offices of
Latham & Watkins, 53 quai d’Orsay, 75007 Paris as soon as practicable
following the satisfaction of the conditions described in said Sections 4 and 5
on the date hereof or any date as mutually agreed upon by the parties hereto,
but in no event later than January 31, 2006 (the “Closing Date”), it being
provided that the parties shall make their best efforts so that Closing occurs
on January 2, 2006.  In case the Closing
does not occur at the latest on January 31, 2006, the party which is not
responsible for the Closing not to occur in due course shall have the right to
terminate this agreement, with no liability whatsoever.

 

6.2           In the circumstance where all conditions
provided in Section 4 and 5.3 are met on January 2, 2006 or thereafter and
Purchaser has failed to transfer, on the same day (the “Payment Date”), the
Base Price portion of the purchase price under this Agreement to the bank
account the details of which are in Schedule 5.2, Purchaser shall be
liable to pay to the Stockholders an amount of €25,000 per day, starting on the
day following the fifth business day after the Payment Date (unless payment is
made before the expiry of such five business day period), until such date as
the transfer is made, provided however that the liability of Purchaser under
this Section 6.2 shall in any event be limited to a maximum amount equal to
€250,000.  For purposes of this Section
6.2, the condition in Section 4.2 shall be deemed to be fulfilled as soon as
the Stockholders have made available to Purchaser the stock transfer forms
referred to therein.

 

Section 7

 

Survival of Representations and
Warranties; Indemnification

 

7.1           Survival.  The representations and warranties made by
the Stockholders, on the one hand, and by Purchaser, on the other hand, in this
Agreement or in any document, schedule or instrument delivered in connection
herewith shall survive the Closing and shall continue in effect for a period of
two years after the Closing Date; provided, however, that the representations
of the Stockholders under Sections 2.1 (first paragraph), 2.4 (first
paragraph), and 2.5 (first paragraph) shall survive indefinitely and the
representations of the Stockholders under Section 2.22 shall survive for the
applicable statute of limitations for the recovery of unpaid taxes or other
charges by a governmental authority.

 

7.2           Indemnity by Stockholders.  The Management Stockholders, acting jointly
and severally (solidairement), and the other
Stockholders, acting jointly but not severally (non 

 

24

 

solidairement), shall indemnify and hold harmless
Purchaser, the Company and the Subsidiaries from and against any loss,
liability, damage or expense, including reasonable attorneys’ fees incurred as
a result thereof, (the “Loss”) that Purchaser, the Company or such Subsidiary
shall incur or suffer (collectively, “Purchaser’s Recoverable Losses”), arising
out of or resulting from any breach or inaccuracy of any representation or
warranty of the Stockholders contained in Section 2 hereof or in any document,
schedule or instrument delivered by or on behalf of the Stockholders pursuant
hereto.  Payments to be made by the
Stockholders pursuant to this Section 7.2 shall be made to Purchaser.

 

7.3           Assessment of Purchaser’s
Recoverable Loss.  The
following rules shall apply to assess the Purchaser’s Recoverable Loss which
may be owed by the Stockholders:

 

(i)            The
Purchaser’s Recoverable Loss shall be reduced
by (A) any amounts actually repaid after the Closing Date to Axmed by Axmed’s
supplier Danem, up to a maximum amount of €60,000, and any amounts by which
Axmed’s payables outstanding vis-à-vis Danem as of the Closing Date will be
actually cancelled after the Closing Date, up to a maximum amount of €80,000,
and (B) amounts by which the reserve made in Axmed’s Reference Accounts in
relation to its pending dispute with Laboratoire Sober shall be cancelled after
the Closing Date.  For purposes of this paragraph,
amounts received by Axmed or reserves or payables of Axmed cancelled will only
be taken into consideration when received or cancelled pursuant to either a
final settlement agreement between Axmed and Danem or Laboratoire Sober, as the
case may be, or an
enforceable court decision (décision ayant force
exécutoire).  In the latter
case, should the enforceable court decision be ruled out by a subsequent and
final court decision to the effect that the amount received or cancelled be
less than what it was pursuant to the enforceable court decision, the
Purchaser’s Recoverable Loss shall be increased back in due proportion and
the Stockholders shall be liable in relation to such increase of the
Purchaser’s Recoverable Loss.

 

(ii)           Any Tax reassessment of any nature
whatsoever, that would result in a mere transfer of charge or income or
collection of Tax from one fiscal year to the next year or preceding year, or
in a corresponding tax credit or a deduction or allocation right, shall result
in Purchaser, the Company or the Subsidiaries being entitled to indemnification
only to the extent of the amount of penalties, interest, or financial expenses
to which the Company or the Subsidiaries are subject, save in the case
contemplated in Article 38-4 bis of the French Tax code. This method of
calculation of the increase in liabilities or the reduction in assets will
apply mutatis mutandis to any reassessments
and payment of arrears to any administration and notably to the tax and social
administrations.

 

(iii)          The Purchaser’s Recoverable Loss shall be reduced
by amounts which were actually reimbursed to the Company or any of the
Subsidiaries in relation to such Purchaser’s Recoverable Loss, by an
insurance company (which insurance was paid for by the Company or the
Subsidiaries prior to the date of the Closing), a third party or a party to the
Agreement (other than Purchaser).  In the
event the Company or any of the Subsidiaries are reimbursed by an insurance
company in relation to such Purchaser’s Recoverable Loss subsequent
to payment by the Stockholders on any Purchaser’s Recoverable Loss
hereunder, and such reimbursement occurs no later than three years following
the payment of such Purchaser’s

 

25

 

Recoverable Loss and is from insurance which
was paid for by the Company or the Subsidiaries prior to the Closing Date, then
the Purchaser, shall promptly remit to the Stockholders (in accordance with the
ratio on which they paid the original Purchaser’s Recoverable Loss) the
amount of such insurance reimbursement, but in any event such payment shall not
exceed the amount of the Purchaser’s Recoverable Loss the Stockholders
originally paid.

 

(iv)          In order to
assess the amount of the Purchaser’s Recoverable Loss, account will be
taken of the actual tax benefit (i.e. the actual reduction of any tax payable,
as opposed to a mere increase of a tax loss carry forward) that was derived by
the Company or the Subsidiaries in respect of the Tax year during which such Purchaser’s Recoverable Loss
was taken into account for the determination of the taxable result of the
Company or the Subsidiary concerned and that is directly linked to the Tax
saving generated by the increase in liabilities or the reduction in assets
resulting from the Stockholders’ misrepresentations, but also taking into
account any additional Tax liability incurred by the Company or the Subsidiary
concerned as a result of the payment by the Stockholders of the indemnification
amount.

 

(v)           For the avoidance of doubt, the amount to which Purchaser, the
Company or a Subsidiary might be entitled under the Stockholders’s indemnification
obligations hereunder shall be reduced where and to the extent that the
Purchaser’s Recoverable Loss is reserved for in the Reference
Accounts.

 

(vii)         For the avoidance of doubt, Purchaser
shall not make a Claim in relation to any event or fact constituting a breach
of a representation or warranty made or given under Section 2, where such fact
or event had occurred between the December 31, 2004 and the Closing Date, was
taken into account for purposes of establishing the Net Assets of the Company and each of the
Subsidiaries, as measured on the Closing Date pursuant to Section 1.6, and to
the extent it resulted in a reduction of the Base Price.

 

(vi)          For the
purposes of assessing the
amount to which Purchaser, the Company or a Subsidiary might be entitled under
the Stockholders’s indemnification obligations hereunder,
account will be taken of the rules pertaining to deductible amount and cap as
provided in Section 7.4 below.

 

7.4           Deductible amount and Cap.  The parties agree that the Stockholders’
indemnity obligations shall apply when Purchaser’s Recoverable Losses,
calculated in accordance with Section 7.3 hereabove, exceed, in the aggregate
€50,000, and then only to the extent of such excess, and such indemnity
obligations shall in no event exceed a total of €6.5 million.

 

7.5           Indemnity by Purchaser.  Purchaser shall indemnify and hold harmless
the Stockholders from and against, and shall reimburse the Stockholders for any
Loss incurred as a result thereof that the Stockholders shall incur or suffer
(collectively, “Stockholders’ Recoverable Losses”) arising out of or resulting
from (i) any material breach or inaccuracy of any representation or warranty of
Purchaser contained in Section 3 hereof or in any document, 

 

26

 

schedule or instrument
delivered by or on behalf of Purchaser pursuant hereto, or (ii) any
default or breach of an agreement or covenant made by Purchaser under or
pursuant to this Agreement.

 

7.6           Claims for Indemnification;
Disputes.

 

(a)           Claims
for Indemnification.  Any party
hereto shall give the Stockholders or Purchaser, as the case may be (the
“Indemnitor”), written notice (the “Claim Notice”) of any claim (including the
receipt of any demand) or the commencement of any action with respect to which
indemnity may be sought ( the “Claim” or the “Claims”), within 45 days
following Purchaser or any of the Stockholders becoming aware of the potential
claim (or, in respect of any proceedings, including in particular any
proceedings initiated by the tax or social administration, that require a
response within a shorter period of time, within a shorter period sufficient to
enable the Stockholders to answer in a timely fashion).  The Claim Notice shall state (i) the
aggregate amount of Purchaser’s Recoverable Losses (assessed to the extent
possible pursuant to Section 7.3 above) or Stockholders’ Recoverable Losses (in
either case, “Recoverable Losses”) as to which indemnification is being sought
(which amount may be estimated and updated from time to time), (ii) the
components of the amount of Recoverable Losses for which indemnification is
being sought (which components may be estimated and updated from time to time);
and (iii) the specific grounds upon which the Claim for indemnification is
being made.  The right to indemnification
for a Claim shall be deemed to be accepted by the Indemnitor unless, within 30
days after the Indemnitor’s receipt of the Claim Notice, the Indemnitor shall
notify the claimant in writing that it objects to the right to indemnification
with respect to the Claim.  Any delay in
sending a Claim Notice shall only result in damages for the party receiving the
late Claim Notice, insofar as the latter is able to prove that such delay
adversely affected its interest.

 

 

(b)           Resolution of Disputes.  Any dispute arising from the clause (a) above
shall be settled pursuant to Section 9.4 hereafter.

 

7.7            The Purchaser will allow the
Stockholders and their counsels to consult, within working hours, any register
and files of the Company and/or the Subsidiaries concerning any Claim, subject
to reasonable prior notice.  The
Stockholders and the counsel of their choice, for which they will assume the
fees, may attend any negotiations and proceedings pertaining to the object of
any third party claim for which the Purchaser have provided a Claim
Notice.  The Parties agree
to provide each other with any assistance that is reasonably required to keep
them fully informed and to enable them to defend themselves adequately against
any third party claims made in connection with the Company and/or the
Subsidiaries.  In addition, Purchaser
shall cause the Company’s representative, upon request from the Stockholders,
to meet, at the end of any given quarter following the Closing Date, with the
Stockholders’ representative as appointed pursuant to Section 9.5 to discuss
any progresses made in relation to the Danem and Sober litigation referred to
in Section 7.3(i).  In the case of a
request or a claim by a third party against the Company or a Subsidiary which
will likely result in a Purchaser Recoverable Loss, the Company or the
Subsidiary concerned will use, in its reasonable determination and if the
nature of such claim so requires, such defences and actions as are generally
appropriate to defend 

 

27

 

against or resolve such a
request or claim.  If a stay of payment
(including a sursis de paiement pursuant to
article L.277 of the Livre des Procédures
Fiscales) is available, the parties must mutually agree to elect for
such stay of payment and, if such election is made (i) the Stockholders shall
constitute all required guarantees, and (ii) the Stockholders shall bear the
reasonable out-of-pocket expenses and costs relating to, such guarantees and
stay of payment.

 

7.8           From
and after the delivery of a Claim Notice, in the event that any Loss
corresponding to a breach of Section 2.18 is susceptible to remedy, with no
negative effect on the Company or the Subsidiaries, Purchaser shall allow, and
shall cause the Company and the Subsidiaries to allow, the Stockholders an
opportunity to implement, at Stockholders costs, such remedy within a
reasonable period of time.

 

7.9           The
amounts claimed from the Indemnitor pursuant to the Agreement will be paid to
Purchaser, or the Stockholders, as the case may be, pursuant to the provisions
hereafter:

 

i)              The
Indemnitor will only be held to pay an indemnity pursuant to Section 7.2 in
relation to such Recoverable Loss once the amount corresponding to the Claim is
payable pursuant to either:

 

	
  •

  	
   

  	
  the failure of
  the Indemnitor to object to any Claim Notice within thirty (30) days; or

  
	
  •

  	
   

  	
  an express
  acceptance by the Indemnitor; or

  
	
  •

  	
   

  	
  where the
  Recoverable Loss results from a third party claim, to
  the extent none of the preceding clauses apply, an enforceable court decision
  (décision ayant force exécutoire)
  ordering the Company or a Subsidiary to pay an amount to the third party
  claimant, or

  
	
  •

  	
   

  	
  where the
  Recoverable Loss does not results from a third party claim, to
  the extent none of the two first preceding clauses apply, upon the issuance
  of a final and binding arbitration decision rendered in the last instance.

  
	
   

  	
   

  	
   

  
	
  ii)

  	
   

  	
  Payment shall be made in all cases on the earlier of
  the following dates:

  
	
   

  	
   

  	
   

  
	
  •

  	
   

  	
  thirty (30) days from the date of a Claim Notice, if
  the Indemnitor has not objected to such Claim Notice within such thirty (30)
  day period; or

  
	
  •

  	
   

  	
  on the date of acceptance of a Claim Notice by the
  Indemnitor; or

  
	
  •

  	
   

  	
  where the
  Recoverable Loss results from a third party claim, when an
  enforceable court decision (décision ayant force
  exécutoire) is rendered ordering the Company or a Subsidiary to
  pay an amount to the third party claimant

  
	
  •

  	
   

  	
  where the
  Recoverable Loss does not results from a third party claim,
  upon the issuance of a final and binding arbitration decision rendered in the
  last instance; or

  

 

28

 

	
  •

  	
   

  	
  with respect to the amounts owed by the Stockholders pursuant to the
  tax and social security representations and warranties, they will have to be
  paid at the latest by the end of any applicable stay of payment for such tax
  which Purchaser has requested, as the case may be, from the tax authorities.

  

 

 

Section
8

 

Stockholders
Covenants

 

8.1           Disclosure of Information.  From and after the Closing, no Stockholder
shall use or disclose to any person or entity, except as required by order or
decree of any governmental authority, any proprietary information, trade
secrets or other information that the Company and the Subsidiaries have prior
to the Closing viewed as confidential, for any reason or purpose whatsoever,
nor shall it make use of any such information for its own purposes or for the
benefit of any person or entity except Purchaser, the Company or any of the
Subsidiaries.

8.2           Further Assurances.  The Stockholders agree to prepare, execute, deliver and file any further
documents, instruments, or agreements, and to take any further action, as
reasonably requested by Purchaser to confirm the ownership of the Shares by
Purchaser and to otherwise carry out the purpose and intention of this
Agreement.

8.3           Non-Compete; Non-Solicitation.

(a)           MBO Stockholders.  During the one-year period following the Closing Date,
the MBO Stockholders shall not, directly or indirectly, own, manage, control,
participate in, consult with, render services for, or in any manner engage in
or represent any business within the country of France or any other country in
the European Union, that competes with the products and services included
within the orthopedic bracing and supports business of the Company or any of
its Subsidiaries or with any other commercial activity carried on by the
Company or any Subsidiary at the Closing Date (the “Business”) (for purposes of
this paragraph and for the avoidance of doubt, the Business shall not include
the holding and services activities carried out by the Company); provided,
however, that nothing in this Section 8.3(a) shall prohibit the MBO
Stockholders during such one-year period from (i) continuing to hold an
investment interest in any company or business that engages in the Business if
and to the extent such investment interest were held on October 24, 2005, or (ii)
becoming the owner, without participating in active management, of up to 10% of
the equity of a company or business that engages in the Business.

(b)           Management Stockholders.  During the five-year period following the
Closing Date, none of the Management Stockholders shall, directly or
indirectly, own, manage, control, participate in, consult with, render services
for, or in any manner engage in or represent any business within the country of
France or any other country in the European Union, that competes with the
products and services included within the orthopedic bracing and supports
business of 

 

29

 

the Company or any of its Subsidiaries or with any other business as
may be carried on by the Company or any Subsidiary as of the date that is the
first anniversary date of the Closing Date.

Purchaser has been made
aware that (i) Charles Dubourg currently holds 40% of the share capital, and is
a manager, of Orthofficine, a French société par actions
simplifiée, having its registered offices at 3, rue Roger Pearon,
18200 St Amand Montrond and registered with the Registry of Commerce and
Companies under number 383 895 984 RCS Bourges, and that (ii)
Orthofficine is engaged in a business similar to the Business.  Charles Dubourg hereby undertakes, for so
long as he is a shareholder or a manager of Orthofficine, to cause the latter
to limit its business activity to a subcontracting business activity of
manufacturing orthopedic bracing and support, and not to develop, use, or own
any trademark.  Charles Dubourg further
undertakes to sell its shares in Orthofficine as soon as possible and no later
than March 31, 2006.

In case any of the
Stockholders acquires any of the shares of Orbamed Dr. Gützlaf GmbH pursuant to
Section 4.5, the acquiring Stockholder undertakes not to be involved in the
management of such company and to seek to either cause the company to be
liquidated, or sell such shares to a third party, as soon as possible.

(c)           The MBO Stockholders shall not, during
the one-year period described in clause (a) above in this Section 8.3, and the
Management Stockholders shall not, during the five-year period described in
clause (b) above in this Section 8.3, directly or indirectly through another
person or entity (i) induce or attempt to induce any employee, salesperson or
representative of the Company or any Subsidiary of the Company to leave the
employ of the Company or any such Subsidiary, or in any way interfere with the
relationship between the Company or any such Subsidiary, on the one hand, and
any employee, salesperson or representative thereof, on the other hand, (ii)
hire any person who was an employee, salesperson or representative of the
Company or any such Subsidiary after such individual’s employment or contractual
relationship with the Company or any such Subsidiary has been terminated or
(iii) induce or attempt to induce any customer, supplier, licensee or other
business relation of the Company or any such Subsidiary to reduce or cease
doing business with the Company or any such Subsidiary, or in any way interfere
with the relationship between any such customer, supplier, licensee or business
relation, on the one hand, and the Company or any such Subsidiary, on the other
hand.

                (d)           If,
at the time of enforcement of this Section 8.3, a court holds that the
restrictions stated herein are unreasonable under the circumstances then
existing, the parties agree that the maximum period, scope or geographical area
reasonable under such circumstances shall be substituted for the stated period,
scope or area.  The parties hereto
acknowledge that money damages would be an inadequate remedy for any breach of
this Section 8.3.  Therefore, in the
event of a breach of threatened breach of this Section 8.3, Purchaser or its
successors or assigns shall, in addition to other rights and remedies existing
in their favor, be entitled to specific performance and/or injunctive relief in
order to enforce, or prevent any breach of, this Section 8.3.

 

30

 

                8.4           Orbamed Payables and Inventories.  The Management Stockholders shall make their
best efforts so that (i) any unpaid inventory held by Orbamed Dr. Gützlaf GmbH
be shipped back to the Company or the Subsidiary which delivered them, and so
that (ii) any outstanding payable that Orbamed Dr. Gützlaf GmbH may have
vis-à-vis any of the Company or the Subsidiaries be repaid to such company, all
such actions to occur as soon as possible and, in so far as possible, no later
than the Closing Date.

 

Section
9

 

General Provisions

 

9.1           Entire Agreement; Modifications;
Waiver.  This Agreement and the
agreements contemplated hereunder supersede any and all agreements heretofore
made, written or oral, relating to the subject matter hereof, and constitute
the entire agreement of the parties relating to the subject matter hereof.  This Agreement may be amended only by an
instrument in writing signed by Purchaser and the Stockholders.  Inspection of documents or the receipt of
information pursuant to this Agreement shall not constitute a waiver of any
representation, warranty, covenant or condition hereunder.  No waiver shall be binding unless executed in
writing by the party making such waiver.

 

9.2           Severability.  If any clause or provision of this Agreement
shall be held invalid or unenforceable by the final determination of a court of
competent jurisdiction, and all appeals therefrom shall have failed or the time
for such appeals shall have expired, such clause or provision shall be deemed
eliminated from this Agreement but the remaining provisions shall nevertheless
be given full force and effect.

 

9.3           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of each of the parties hereto, and their respective
successors.  Except as specifically
provided herein, the rights and obligations under this Agreement are not
assignable or transferable by either side without the prior written consent of
the other side.

 

9.4           Governing Law - Disputes.  This Agreement shall be construed and
interpreted in accordance with the internal substantive laws of France.  The parties shall undertake in good faith to
or to have their representatives promptly meet and attempt to resolve any
dispute arising out or in connection with this Agreement.  If the parties are unable to resolve such
disputes within 30 days, subject to the provision of Section 1.6, the
resolution of the disputes shall be referred to and settled by arbitration to be
held in Paris, France and conducted in accordance with the then current
Commercial Arbitration Rules of the International Chamber of Commerce.  The arbitration shall be conducted by one
arbitrator, in English, but the parties shall be entitled to submit written or
oral advice as well as their pleadings, whether written or oral, into the
French language.  Written evidence in a
language other than English or French shall be translated in the English
language.

 

31

 

The arbitration
decision shall be final and binding upon the parties and the parties agree that
any award granted pursuant to such decision may be enforced forthwith in any
court of competent jurisdiction. This arbitration clause and any award granted
pursuant to an arbitration decision thereunder shall be enforceable against the
parties in accordance with the 1958 Convention on the Recognition and
Enforcement of Foreign Arbitral Awards, as amended.

 

9.5           Stockholder Representatives.  For purposes of all communications under this
Agreement directed to the Stockholders or given by the Stockholders, Mr. Alain
Avril is hereby appointed the representative of the Stockholders.  Positions taken by said representative and
communicated to Purchaser shall be binding on the Stockholders represented by such
representatives as though taken by the Stockholders themselves.

 

9.6           Public Announcement.  The parties agree to consult with each other
before issuing any press release or making any public statement with respect to
this Agreement or the transactions contemplated hereby and, except as may be
required by applicable law or any listing agreement with any national
securities exchange, will not issue any such press release or make any such
statement prior to such consultation, it being provided that Purchaser intends
to make a press release immediately upon the execution of the Agreement the
wording of which was communicated to, and agreed by, the Stockholders.

 

9.7           Notices.  All notices required or desired to be given
hereunder shall be given in writing and signed by the party so giving notice,
and shall be effective when personally delivered or delivered by courier, one
business day after transmission if sent by facsimile and appropriate
confirmation is received, or ten (10) days after being sent by
registered mail, return receipt requested, first class postage and fees
prepaid, addressed as set forth below. 
Any party from time to time may change such party’s address for giving
notice by giving notice thereof in the manner outlined above:

 

If to Purchaser:

 

	
  dj Orthopedics, LLC.

  
	
  2985 Scott Street

  
	
  Vista, California 92081

  
	
  Attention: Donald M.
  Roberts

  
	
  Facsimile: (760)
  734-3566

  

 

 

If to the Stockholders:

 

	
  Alain Avril

  
	
  Chemin de Jacquemin

  
	
  64100 Bayonne

  
	
  Facsimile:

  
	
   

  

 

32

 

	
  With a copy to:

  
	
   

  
	
  MBO Partenaires

  
	
  75 bis, avenue Marceau

  
	
  75116 Paris

  
	
  Attention: Eric Dejoie

  
	
  Facsimile : +33 1 56 64
  17 19

  

 

9.8           Expenses.  Whether or not the transactions contemplated
under this Agreement are consummated, each of Purchaser and the Stockholders
(and not the Company) shall pay its own expenses (including outside legal and
accounting fees) incident to the negotiation, preparation of the definitive
written agreement, filings and preparation of documents in connection with the issuance
or transfer of shares, and any other documents prepared in connection with this
Agreement.  The Stockholders agree that
they shall not use any assets of the Company or any Subsidiary or otherwise
charge the Company or any Subsidiary for any expenses of the Stockholders
hereunder.

 

9.9           Registration Taxes.  Transfer taxes resulting from the transfer of
the Shares to Purchaser shall be borne by Purchaser.

 

9.10         Original copies.  This Agreement was executed in six original
copies, each of Charles Dubourg and Sophie Dubourg having acknowledged that
they have a common interest pursuant to Article 1325 of the French Civil Code
and allowing Charles Dubourg to hold the original copy they are entitled to.

 

IN WITNESS
WHEREOF, the parties hereto have executed this Agreement as of the date first
above written.

 

 

	
  dj Orthopedics, LLC

  	
   

  	
   

  	
  MBO Capital 

  
	
   

  	
   

  	
   

  	
  As represented by MBO
  Partenaires, its société de gestion

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By : Stephen Murphy 

  	
   

  	
   

  	
  By :

  	
   

  
	
  Title : duly empowered

  	
   

  	
   

  	
  Title :

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Alain Cassam-Chenai

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Alain Avril 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Charles Dubourg

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

33

 

	
   

  	
   

  	
   

  	
  Sophie Dubourg 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Edmond Flacks 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

34Exhibit 10.1

 
 
ALLIANT TECHSYSTEMS INC.
AMENDED AND RESTATED
NON-EMPLOYEE DIRECTOR RESTRICTED STOCK PLAN
 
Amended and Restated as of December 12, 2005
 
Section 1. Introduction
 
1.1 The Plan; Effective Date; Duration.  This Alliant Techsystems Inc. Amended and Restated Non-Employee Director Restricted Stock Plan (the “Plan”), shall be effective as of December 12, 2005.  No award shall be made under the Plan after the expiration of 10 years from August 6, 1996, the original effective date of the Plan.
 
1.2 Purpose.  The purpose of the Plan is to provide each non-employee member (“Director”) of the Board of Directors (the “Board”) of Alliant Techsystems Inc. (the “Corporation”) with awards of shares of common stock, par value $.01 per share (“Stock”), of the Corporation, subject to the restrictions and other provisions of the Plan.  It is intended that the Plan will (a) permit Directors to increase their stock ownership and proprietary interest in the Corporation and their identification with the interests of the Corporation’s stockholders (“Stockholders”), (b) provide a means of compensating Directors that will help attract qualified candidates to serve as Directors, and (c) induce incumbent Directors to continue to serve if the Board desires that they remain on the Board.
 
1.3 Shares of Stock Available Under the Plan.

 

(a) Subject to any adjustments made pursuant to Section 1.3(c), the aggregate number of shares of Stock that may be issued under the Plan shall be 168,750, taking into account the effect of the stock splits in the form of stock dividends that were paid on November 10, 2000, September 7, 2001, and June 10, 2002.
 
(b) Shares of Stock awarded under the Plan may be (i) authorized but unissued shares of Stock, (ii) previously issued shares of Stock reacquired by the Corporation, including shares purchased in the open market (collectively, “Treasury Shares”), or (iii) a combination thereof.
 
(c) Appropriate and equitable adjustment shall be made in the number of shares of Stock available under the Plan and covered by Plan awards in the event of any recapitalization, reorganization, merger, consolidation, spin-off, combination, repurchase, exchange of shares or other securities of the Corporation, stock split, reverse stock split, stock dividend, extraordinary dividend, liquidation, dissolution, or other similar corporate transaction or event affecting the Corporation.
 

 
Section 2. Restricted Stock Awards
 
2.1 Award Dates.
 
(a) As of the date of each annual meeting of Stockholders (“Annual Meeting”), commencing with the 1996 Annual Meeting and terminating December 31, 2001, each Director elected or reelected to the Board at such Annual Meeting shall be awarded 600 shares of restricted Stock (“Restricted Stock”).  Commencing January 1, 2002 and terminating March 31, 2003, as of the date of each Annual Meeting, each Director elected or reelected to the Board at such Annual Meeting shall be awarded 750 shares of Restricted Stock.  Commencing April 1, 2003, as of the date of each Annual Meeting, each Director elected or reelected to the Board at such Annual Meeting shall be awarded shares of Restricted Stock with a market value of $55,000.00 as determined by the closing market price of Stock on the date of such Annual Meeting.
 
(b) A Director who is elected to the Board on a date other than the date of an Annual Meeting shall be awarded shares of Restricted Stock as of such date of election with a market value of $55,000.00 as determined by the closing market price of the Stock on the date of such election.
 
(c) A Director may elect, in writing, on or prior to any date as of which the Director is entitled to receive a Restricted Stock award to waive the Director’s right to receive the award. Any such waiver shall apply to all future Restricted Stock awards the Director would otherwise be entitled to receive, and shall remain in effect until such time as the Director elects, in writing, to revoke such waiver. Any such revocation shall be effective with respect to Restricted Stock awards the Director is entitled to receive as of dates subsequent to the date of the revocation.
 
2.2 Issuance of Stock.  As promptly as practical after the date as of which an award is made, the Corporation shall issue a certificate (“Certificate”), registered in the name of each Director receiving an award, representing the number of shares of Restricted Stock covered by the Director’s award.
 
2.3 Rights of Holders of Restricted Stock.  Upon issuance of a Certificate, the Director in whose name the Certificate is registered shall, subject to the provisions of the Plan, have all of the rights of a Stockholder with respect to the shares of Restricted Stock represented by the Certificate, including the right to vote the shares and receive cash dividends and other cash distributions thereon.
 

2.4 Restricted Period.  Restricted Stock shall be subject to the
restrictions set forth in Sections 2.5 and 2.7 of the Plan and the other
provisions of the Plan for a period (the “Restricted Period”) commencing on the
date as of which the Restricted Stock is awarded (the “Award Date”) and ending
on the earlier of:

 

(a)                                  the third
anniversary of the Award Date with respect to an award of Restricted Stock to a
Director; or

 

2

 

(b)                                 the first
to occur of the following:

 

	
  (i)

  	
  the retirement of the Director from the Board in
  compliance with the Board’s retirement policy as then in effect;

  

 

	
  (ii)

  	
  the termination of the Director’s service on the Board as
  a result of the Director’s not being nominated for reelection by the Board,
  but not as a result of the Director’s declining to serve again;

  

 

	
  (iii)

  	
  the termination of the Director’s service on the Board
  because the Director, although nominated for reelection by the Board, is not
  reelected by the Stockholders;

  

 

	
  (iv)

  	
  the termination of the Director’s service on the Board
  because of (A) the Director’s resignation at the request of the Nominating
  Committee of the Board, (B) the Director’s removal by action of the
  Stockholders, or (C) the sale, merger or consolidation of, or a similar
  extraordinary transaction involving, the Corporation; or

  

 

	
  (v)

  	
  the termination of the 
  Director’s service on the Board because of disability or death.

  

 

2.5 Forfeiture of
Restricted Stock.  As of the
date (“Termination Date”) a Director ceases to be a member of the Board for any
reason, the Director shall forfeit to the Corporation all Restricted Stock
awarded to the Director for which the Restricted Period has not ended as of or
prior to the Termination Date.

 
2.6 Release of Restricted Stock.  Restricted Stock shall be released to the Director, free and clear of all restrictions and other provisions of the Plan, on the first business day immediately following the last day of the Restricted Period with respect to such Restricted Stock, unless the Director has made a deferral election pursuant to Appendix A to the Plan.
 
2.7 Restrictions.  Restricted Stock shall be subject to the following restrictions during the Restricted Period:
 
(a) The Restricted Stock shall be subject to forfeiture to the Corporation as provided in Section 2.5 of the Plan.
 
(b) The Restricted Stock may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of, and neither the right to receive Restricted Stock nor any interest under the Plan may be assigned by a Director, and any attempted assignment shall be void.
 
(c) Each Certificate representing shares of Restricted Stock shall be held by the Corporation and shall, at the option of the Corporation, bear an appropriate restrictive legend and be subject to appropriate “stop transfer” orders.  The Director shall deliver to the Corporation a stock power endorsed in blank to the Corporation.
 
3

 
(d) Any additional Stock or other securities or property (other than cash) that may be issued with respect to Restricted Stock as a result of any stock dividend, stock split, business combination or other event, shall be subject to the restrictions and other provisions of the Plan.
 
(e) The issuance of any Restricted Stock award shall be subject to and contingent upon (i) completion of any registration or qualification of the Stock under any federal or state law or governmental rule or regulation that the Corporation, in its sole discretion, determines to be necessary or advisable; (ii) the execution by the Director and delivery to the Corporation of (A) any agreement reasonably required by the Corporation, and (B) the stock power referred to in Section 2.7(c); and (iii) the payment by the Director to the Corporation of the par value of the Restricted Stock, except to the extent that Treasury Shares are issued in connection with the award.
 
Section 3. General Provisions
 
3.1 Administration.  The Plan shall be administered by a committee (the “Committee”) that shall be the Nominating and Governance Committee of the Board or such other committee of Directors as may be designated by the Board. The Committee shall have full power, discretion and authority to interpret and administer the Plan, except that the Committee shall have no power to (a) determine the eligibility for awards of Restricted Stock or the number of shares of Restricted Stock to be awarded or the timing or value of awards of Restricted Stock to be awarded to any Director, or (b) take any action specifically delegated to the Board under the Plan. The Committee’s interpretations and actions shall, except as otherwise determined by the Board, be final, conclusive and binding upon all persons for all purposes.
 
3.2 No Retention Rights.  Neither the establishment of the Plan nor the awarding of Restricted Stock to a Director shall be considered to give the Director the right to be retained on, or nominated for reelection to, the Board, or to any benefits or awards not specifically provided for by the Plan.
 
3.3 Interests Not Transferable.  Except as to withholding of any tax required under the laws of the United States or any state or locality, no benefit payable at any time under the Plan shall be subject in any manner to alienation, sale, transfer, assignment, pledge, attachment, or other legal process, or encumbrance of any kind.  Any attempt to alienate, sell, transfer, assign, pledge, attach or otherwise encumber any such benefits whether currently or thereafter payable, shall be void.  No benefit shall, in any manner, be liable for or subject to the debts or liabilities of any person entitled to such benefits.  If any person shall attempt to, or shall alienate, sell, transfer, assign, pledge or otherwise encumber such person’s benefits under the Plan, or if by reason of such person’s bankruptcy or any other event, such benefits would devolve upon any other person or would not be enjoyed by the person entitled thereto under the Plan, then the Committee, in its discretion, may terminate the interest in any such benefits of the person entitled thereto under the Plan and hold or apply them to or for the benefit of such person entitled thereto under the Plan or such person’s spouse, children or other dependents, or any of them, in such manner as the Committee may deem proper.
 
4

 
3.4 Amendment and Termination.  The Board may at any time amend or terminate the Plan; provided that:
 
(a) no amendment or termination shall, without the written consent of a Director, adversely affect the Director’s rights under outstanding awards of Restricted Stock; and
 
(b) Stockholder approval of any amendment shall be required if Stockholder approval is required under applicable law or the listing requirements of any national securities exchange on which are listed any of the Corporation’s equity securities.
 

3.5 Severability.  If all or any part of the Plan is declared by
any court or governmental authority to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate any portion of the
Plan not declared to be unlawful or invalid. 
Any Section or part thereof so declared to be unlawful or invalid shall,
if possible, be construed in a manner which will give effect to the terms of such
Section or part thereof to the fullest extent possible while remaining lawful
and valid.

 

3.6 Controlling Law.  The law of Delaware, except its law with respect to choice of law, shall be controlling in all matters relating to the Plan.
 
5

 
Exhibit 10.1
 

APPENDIX A

TO ALLIANT TECHSYSTEMS INC.

AMENDED AND RESTATED NON-EMPLOYEE DIRECTOR

RESTRICTED STOCK PLAN

 

RESTRICTED STOCK DEFERRALS

 

Section 1.                                            Purpose and Effect.

 

(a)                                  This
Appendix A to the Alliant Techsystems Inc. Amended and Restated Non-Employee
Director Restricted Stock Plan (the “Plan”) authorizes the deferral of income
that would otherwise be recognized upon the lapse of restrictions applicable to
Restricted Stock awards under the Plan.

 

(b)                                 In
accordance with the rules set forth in this Appendix A, Directors may elect to
forfeit shares of Restricted Stock that would otherwise vest pursuant to the
terms of the Plan and the relevant Restricted Stock award in exchange for the
Corporation’s agreement to pay deferred compensation in the form of
unrestricted shares of Stock (“Restricted Stock Deferral”).  The Restricted Stock awards that may be
subject to deferral elections authorized by this Appendix A are limited solely
to those made under the Plan.

 

(c)                                  No
Restricted Stock or other shares of Stock are authorized to be issued under
this Appendix A other than pursuant to Section 5(c) of this Appendix A.  Grants and vesting of Restricted Stock awards
are governed by the Plan, as it may be amended from time to time.

 

Section 2.                                            Definitions. 
For purposes of this Appendix A, the terms defined in the Plan shall
have the same meanings when used in this Appendix A.  In addition, the terms listed below shall
have the following meanings:

 

(a)                                  Deferred
Stock Unit Account shall mean the account
established for each Director in accordance with Section 5 of this Appendix A.

 

(b)                                 Stock Unit shall mean each one of the units credited to a Director’s Deferred Stock
Unit Account based on the number of shares of Restricted Stock forfeited
pursuant to Section 4 of this Appendix A or shares of Stock credited to the
Deferred Stock Unit Account pursuant to Section 5(c) of this Appendix A.

 

Section 3.                                            Eligibility. 
A person shall be eligible to make deferrals pursuant to this Appendix A
if he or she is a non-employee member of the Board of Directors of the
Corporation who participates in the Plan. 
A person who ceases to be a non-employee member of the Board of the
Corporation shall not be eligible to make deferrals pursuant to this Appendix
A.

 

Section 4.                                            Restricted Stock Deferral.

 

(a)                                  For
Restricted Stock with respect to which the Restricted Period would otherwise
end pursuant to Section 2.4 of the Plan (the “Vesting Date”) before January 1,
2005, at least 12

 

 

complete months prior to the Vesting Date a Director may elect,
in accordance with the procedures set forth in this Section 4 and elsewhere in
this Appendix A, to forfeit all of such shares of Restricted Stock and be
credited instead in the Director’s Deferred Stock Unit Account with a number of
Stock Units equal to the number of shares of Restricted Stock forfeited
pursuant to the deferral election. For Restricted Stock with respect to which
the Vesting Date would otherwise occur between January 1, 2005 and December 31,
2008, a Director may make such a deferral election on or before March 15, 2005.
For Restricted Stock with respect to which the Vesting Date would otherwise
occur in 2009, a Director may make such a deferral election on or before
December 31, 2005. If a Director is initially elected as a Director prior to
the 2006 annual meeting of stockholders, the Director may make a deferral
election within 30 days after the date of being elected to the Board with
respect to the number of shares of Restricted Stock that would otherwise be
granted as of the date of the 2006 annual meeting of stockholders.

 

(b)                                 A deferral
election made pursuant to this Section 4 shall be timely made in writing in
accordance with Section 7 of this Appendix A and shall specify the time of
payment in accordance with the rules for payment under Section 6 of this
Appendix A.  Any deferral election made
pursuant to this Section 4 shall be irrevocable and shall apply to 100%, but
not less than 100%, of the shares of Restricted Stock with respect to which the
Restricted Period would otherwise end on the Vesting Date.

 

(c)                                  For an
election to defer Restricted Stock to be valid the deferral election form must
(i) be received by the Corporation (to the attention of the Corporate
Secretary) by the time prescribed in subsection (a) and (ii) provide for the
forfeiture of the Restricted Stock which is the subject of the deferral
election and, if applicable, the transfer to and reacquisition by the
Corporation of such Restricted Stock as of the date of receipt by the
Corporation of the election to defer.

 

Section 5.                                            Deferred Stock Unit Account.  A Deferred Stock Unit Account shall be
established and maintained on behalf of each Director for Restricted Stock
deferred pursuant to this Appendix A, subject to the following rules:

 

(a)                                  For each
share of Restricted Stock deferred, a Stock Unit shall be credited to the
Director’s Deferred Stock Unit Account as of the Vesting Date of the Restricted
Stock subject to the deferral election.

 

(b)                                 On each
payment date for any cash dividends paid on the Corporation’s Stock, the
Corporation shall pay to each Director an amount equal to the cash dividends
that would be payable by the Corporation on a number of shares of Stock equal
to the number of Stock Units in the Director’s Deferred Stock Unit Account as
of such payment date.  Such amounts shall
be paid directly to each Director in cash and shall not be eligible for
deferral under this Plan.

 

(c)                                  The number
of units credited to the Director’s Deferred Stock Unit Account shall be
appropriately and equitably adjusted to reflect any change in the outstanding
Stock of the Corporation in the event of any recapitalization, reorganization,
merger, consolidation, spin-off, combination, repurchase, exchange of shares or
other securities of the Corporation, stock split, reverse stock split, stock
dividend, extraordinary dividend, liquidation, dissolution, or other similar
corporate transaction or event affecting the Corporation.

 

2

 

(d)                                 Directors
who elect to make a deferral of Restricted Stock in accordance with this
Appendix A will have no rights as Stockholders of the Corporation with respect
to Stock Units credited to their Deferred Stock Unit Accounts.

 

Section 6.                                            Payment of Deferred Amounts.

 

(a)                                  Payment of
the aggregate value of 100% of the Stock Units in the Director’s Deferred Stock
Unit Account shall be made in a lump sum at the time specified by the Director
in his or her deferral election (the “Payment Date”).  Notwithstanding the foregoing, in all events
payment of a Director’s entire Deferred Stock Unit Account shall be made in a
lump sum as soon as administratively feasible following the occurrence of the
earliest of the following events:

 

(i)                                     the retirement of the Director from the Board in compliance with the Board’s
retirement policy as then in effect;

 

(ii)                                  the termination of the Director’s service on the Board as a result of the
Director’s not being nominated for reelection by the Board, but not as a result
of the Director’s declining to serve again;

 

(iii)                               the termination of the Director’s service on the Board because the
Director, although nominated for reelection by the Board, is not reelected by
the Stockholders;

 

(iv)                              the termination of the Director’s service on the Board because of (A) the
Director’s resignation at the request of the Nominating Committee of the Board,
(B) the Director’s removal by action of the Stockholders, or (C) the sale,
merger or consolidation of, or a similar extraordinary transaction involving,
the Corporation; or

 

(v)                                 the termination of the  Director’s
service on the Board because of disability or death.

 

The date
of retirement or termination of service of a Director pursuant to any of the
events described in subsections (i) through (v) above shall constitute the
Payment Date for purposes of this Appendix A.

 

(b)                                 Payment of
the aggregate value of the Stock Units in a Director’s Deferred Stock Unit
Account shall be made solely in the form of shares of Stock.  On the Payment Date the Corporation shall pay
to the Director a number of shares of Stock equal to the number of Stock Units
in the Director’s Deferred Stock Unit Account on such Payment Date.

 

(c)                                  A Director
shall submit to the Corporation a written designation of the beneficiary or
beneficiaries to whom payment of the aggregate value of the Director’s Deferred
Stock Unit Account shall be made in the event of the Director’s death.  Beneficiary designations shall become
effective only when received by the Corporation.  If a Director has not designated a
beneficiary, or if no beneficiary is living on the Payment Date, the Director’s
vested account shall be distributed to the representative of the Director’s
estate.  Payment to the Director’s

 

3

 

designated
beneficiary shall be made in the form of Stock in accordance with the
provisions of Sections 6(a) and 6(b) of this Appendix.

 

Section 7.                                            Forms and Procedure.  Deferral elections and beneficiary
designations made pursuant to this Appendix A must be made in writing on forms
substantially similar to the forms set forth in Exhibit I to this Appendix A,
and shall be subject to such other procedural rules as the Committee may
establish.

 

Section 8.                                            Effect on Restricted Stock Awards.  Deferral elections made pursuant to this
Appendix A shall constitute amendments to the Restricted Stock awards to which
the deferral elections apply, but only to the extent such Restricted Stock
awards are expressly modified by this Appendix A.  Any shares of Stock paid to a Director
pursuant to this Appendix A with respect to a Director’s deferral election
shall be issued under the Plan with respect to the corresponding Restricted
Stock award.

 

Section 9.                                            Unfunded and Unsecured Plan.  The Director’s Deferred Stock Unit Account
shall be hypothetical in nature and shall be maintained for bookkeeping
purposes only.  The Deferred Stock Unit
Account shall be unfunded for tax purposes and no provision shall be made at
any time with respect to segregating assets of the Corporation for payment of
amounts in the Deferred Stock Unit Account. 
The obligation of the Corporation to make payments pursuant to this
Appendix A constitutes an unsecured but legally enforceable promise of the
Corporation to make such payments.

 

Section
10.  Effective Date.  This Appendix A shall be effective as of the
date adopted by the Board of Directors of the Corporation and the deferral
election provided herein shall be available only with respect to awards of
Restricted Stock made pursuant to the Plan on or after the effective date
hereof. This Appendix A is amended and restated effective as of January 1, 2005
to comply with section 409A of the Internal Revenue Code of 1986, as amended.

 

Section
11. Construction. Any deferral election that is inconsistent with Code
section 409A with respect to Restricted Stock for which the Vesting Date is
after December 31, 2004 shall not be effective.

 

4

 

EXHIBIT I TO APPENDIX A

NON-EMPLOYEE DIRECTOR RESTRICTED STOCK

DEFERRAL ELECTION FORM

AND DESIGNATION OF BENEFICIARY FORM

 

ALLIANT TECHSYSTEMS INC.

AMENDED AND RESTATED NON-EMPLOYEE
DIRECTOR

RESTRICTED STOCK PLAN

Amended and Restated as of December
12, 2005

 

ELECTION TO DEFER

 

 

	
  TO:

  	
  Alliant Techsystems Inc.

  
	
   

  	
  Attn: Assistant Secretary

  

 

 

Pursuant to the terms and conditions of the Alliant
Techsystems Inc. Amended and Restated Non-Employee Director Restricted Stock
Plan, Amended and Restated as of December 12, 2005 (the “Plan”), I hereby make
the following election to defer with respect to Restricted Stock to be awarded
to me pursuant to the Plan.

 

All capitalized terms not expressly defined in this election
to defer have the meanings set forth in the Plan.

 

1.                      Deferral of Restricted Shares: I hereby irrevocably:

(a) elect to
defer 100% of my Restricted Stock award described below that, in accordance
with the provisions of the Plan, will be awarded on the date set forth below;
and

 

(b) agree that
such Restricted Stock award shall be waived.

 

Please complete:

 

Number of
Shares                                  

 

Award Date of Shares:  August

 

Vesting
Date:  August

 

As set forth in Section 4(a) of Appendix A to the Plan,  “Vesting Date” means the date on which the
Restricted Period ends with respect to that Restricted Stock pursuant to
Section 2.4 of the Plan.

 

 

2.                       Time of Payment:                                                     I hereby irrevocably elect to have my Deferred Stock Unit Account paid out
at the following time:

 

 

                                                        

 

	
   

  	
  as soon as administratively practicable after I cease to be
  a Director of the Corporation; or

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  at such other time as here specified

  	
   

  	
   

  

(not later than the Plan provides).

 

I understand that all payments of my Deferred Stock Unit
Account will be made in the form of Stock of the Corporation in accordance with
the terms of the Plan.

 

This election to defer is made as of
the date of my signature below.  I
understand and acknowledge that to be effective this election to defer form
must be fully and properly completed and received by the Corporation in
accordance with the terms of the Plan.

 

I understand that the foregoing
elections are irrevocable and will apply to all of the Restricted Stock
described above.  This election to defer
constitutes an amendment to the Restricted Stock award to which this election
applies, but only to the extent that the award of Restricted Stock is expressly
modified by the election.

 

I certify that the foregoing
elections are not being made in reliance upon any financial or tax advice given
by the Corporation.  I understand that I
should consult my own tax advisor as to the tax consequences of my elections.

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature
  of Non-Employee Director)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  

 

 

 

Received by the
Corporation:

 

2

 

Alliant
Techsystems Inc.

 

	
  Date: 

  	
   

  	
   

  

 

	
  Acknowledged:

  	
   

  
	
   

  	
  Name and Title

  
	
   

  	
  Office of Corporate Secretary

  

 

3

 

AMENDED AND RESTATED NON-EMPLOYEE
DIRECTOR

RESTRICTED STOCK PLAN

Amended and Restated as of December
12, 2005

 

DESIGNATION OF BENEFICIARY

(Please type or print)

 

	
  Name of Director

  	
   

  	
  Marital Status: Single 

  	
   

  
	
  Social Security No.

  	
   

  	
  Married 

  	
   

  
					

 

I hereby revoke any previous designation(s) of beneficiary
made by me with respect to amounts payable by Alliant Techsystems Inc. (the “Corporation”)
under the Corporation’s Non-Employee Director Restricted Stock Plan in the
event of my death; and I hereby designate the following person(s) or entity to
receive, upon my death, any such amounts:

 

 

Primary Beneficiary or Beneficiaries:

 

	
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Contingent Beneficiary or Beneficiaries (if your Primary Beneficiary(ies) all predecease you):

 

	
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  Date:

  	
   

  	
   

  	
  Director’s
  Signature:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00095-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00095-of-00352.parquet"}]]