Document:

exv10w20

 

EXHIBIT 10.20

EXECUTION COPY

AGREEMENT FOR THE SALE AND PURCHASE

OF

THE SHARES OF

LABORATOIRES EUROSILICONE SA

by and between

MR FRANCOIS TOURNIAIRE

MR JACQUES TOURNIAIRE

MR MICHEL TOURNIAIRE

MR OLIVIER TOURNIAIRE

And Others

(SELLERS)

AND

MEDICOR LTD.

(PURCHASER)

17 MAY 2004

 

 

CONTENTS

	 	 	 	 	 	 	 
	ARTICLE	 	PAGE
	1.
	 	Definitions	 	 	2	 
	2.
	 	Sale and Purchase	 	 	6	 
	3.
	 	Purchase price	 	 	6	 
	4.
	 	Payment	 	 	7	 
	5.
	 	Conditions	 	 	8	 
	6.
	 	Notices	 	 	9	 
	7.
	 	Closing	 	 	9	 
	8.
	 	Representations and Warranties of the Sellers	 	 	11	 
	9.
	 	Representations and Warranties of the Purchaser	 	 	26	 
	10.
	 	Covenants	 	 	27	 
	11.
	 	Indemnification	 	 	28	 
	12.
	 	Non-competition	 	 	35	 
	13.
	 	Confidential Information	 	 	36	 
	14.
	 	Announcements	 	 	37	 
	15.
	 	Costs	 	 	37	 
	16.
	 	Sellers’ Representative	 	 	37	 
	17.
	 	Term and Termination	 	 	38	 
	18.
	 	General	 	 	38	 
	19.
	 	Notices	 	 	39	 
	20.
	 	Governing Law - Jurisdiction	 	 	40	 
	21.
	 	Dispute Resolution	 	 	40	 

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This Agreement is made on 17 May 2004

BETWEEN:

	(1)	 	MediCor Ltd., a company existing and organized under the laws of
Delaware, having its registered office at 4560 S. Decatur Blvd, Ste 300,
Las Vegas, Nevada, 89103-5253, duly represented for the purpose hereof by
Donald K. McGhan (hereinafter referred to as the “Purchaser”), with a
right to be substituted hereunder by any company under its control in
accordance with Clause 18.2 of this Agreement;

ON THE ONE HAND

AND

	(2)	 	François Tourniaire, born on * * * , residing at * * * , of French
nationality,
	 
	(3)	 	Michel Tourniaire, born on * * * , residing at * * * , of French
nationality,
	 
	(4)	 	Jacques Tourniaire, born on * * * , residing at * * * , of French
nationality,
	 
	(5)	 	Olivier Tourniaire, born on * * * , residing at * * * , of French
nationality,
	 
	(6)	 	Senaz Falquerho (née Namooya), born on * * * , residing at * * * , of
French nationality,
	 
	(7)	 	Françoise Tourniaire (née Pelissard) born on * * * , residing at * * * ,
of French nationality,
	 
	(8)	 	Nadège Tourniaire born on * * * , residing at * * * , of French
nationality,

(The parties in (2) to (8) being referred to as the “Sellers” and individually
as a “Seller”), acting severally (de manière non-solidaire) for the purposes of
this Agreement.

ON THE OTHER HAND

WHEREAS:

	(A)	 	The Sellers collectively own 100% of the Shares of the Company in the
proportions set out on Schedule A.
	 
	(B)	 	The Company is involved in the development, manufacture and distribution
of silicone based products and other products derived therefrom for the
purpose of professional cosmetic and reconstructive surgery and external
cosmetic implants.
	 
	(C)	 	The Purchaser has conducted due diligence investigation of the prospects,
business, assets, contracts, rights, liabilities and obligations of the
Company, including financial, marketing, employees, legal, regulatory and
environmental matters, was given access to

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	 	 	data rooms in respect of the Company (the “Data Rooms”), and has had the
opportunity to ask questions and receive answers during the due diligence
process. The documents provided in the Data Rooms and in the written
questions and answers from the due diligence process are listed in
Schedule C.

	(D)	 	* * *
	 
	(E)	 	The Sellers wish to sell, and the Purchaser wishes to purchase, all of
the Shares held on the terms and subject to the conditions contained in
this Agreement.

THE PARTIES AGREE as follows:

	1.	 	DEFINITIONS
	 
	1.1	 	In this Agreement:

	 	 	 	 	 
	“Accounting Principles”

	 	:
	 	means (i) the accounting principles applied by the
Company in the preparation of the 2003 Financial
Statements and (ii) French GAAP as at the date of
signature of this Agreement to the extent not covered
in (i).
	 
	 	 	 	 
	“Agreement”

	 	:
	 	means this agreement and the schedules hereto.
	 
	 	 	 	 
	“Authorizations”

	 	:
	 	means authorizations, licenses, permits, certificates
or other approvals or consents delivered by any
Governmental Authority established in one of the
countries where the Company carries out its
activities.
	 
	 	 	 	 
	“Business”

	 	:
	 	means the business of the development, manufacture and
distribution of a comprehensive line of silicone
implants for cosmetic surgery and for reconstructive
surgery conducted by the Company as of the date of
this Agreement.
	 
	 	 	 	 
	“Business Day”

	 	:
	 	means a day other than a Saturday, Sunday or public
holiday in France or in the United States of America.
	 
	 	 	 	 
	“Business Intellectual
Property”

	 	:
	 	has the meaning specified in Clause 8.12.1.
	 
	 	 	 	 
	“Closing”

	 	:
	 	means the completion of the sale and purchase of the
Shares in accordance with this Agreement.
	 
	 	 	 	 
	“Closing Date”

	 	:
	 	means the date on which Closing takes place in
accordance with Clause 7.1.
	 
	 	 	 	 
	“Closing Date Account”

	 	:
	 	means the following account of Mr. François Tourniaire
at Banque BNP Paribas, Apt:
	 
	

	 	 	 	* * *
	 
	 	 	 	 
	“Closing Date Amount”

	 	:
	 	has the meaning specified in Clause 4.1.1.

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	“Company”

	 	:
	 	means Laboratoires Eurosilicone SA, a société anonyme
existing and organized under the laws of France, with
a share capital of Euro 2,000,000, having its
registered office at Z.I. de la Peyrolière, 84400 Apt,
France, registered with the Companies and Commercial
Registry under number RCS 347 535 296 Avignon.
	 
	 	 	 	 
	“Confidential Information”

	 	:
	 	means all information which is used in or otherwise
relates to the Business and the Company’s customers or
financial or other affairs including, without
limitation, information relating to:
	 
	 	 	 	 

	 	(a)	 	technical and/or business know-how or business
information acquired or developed or which the Sellers
have been made aware of in connection with their
activities or position as shareholder, director,
officer or employee of the Company;
	 
	 	(b)	 	the marketing of goods or services including,
without limitation, customer names and lists and other
details of customers, sales targets, sales statistics,
market share statistics, prices, market research
reports and surveys, and advertising or other
promotional materials; or
	 
	 	(c)	 	future projects, business development or planning,
commercial relationships and negotiations;

	 	 	 	 	 
	 
	 	 
	 	but does not include information which is generally
available to or known by the public other than as a
result of improper disclosure under this Agreement.

	 
	“Damages”

	 	:
	 	has the meaning specified in Clause 11.2.1.
	 
	 	 	 	 
	“Data Rooms”

	 	:
	 	has the meaning specified in paragraph C of the
recitals to this Agreement.
	 
	 	 	 	 
	“Encumbrance”

	 	:
	 	has the meaning specified in Clause 8.2.2.
	 
	 	 	 	 
	“Environment”

	 	:
	 	means ecological systems including living organisms
(including the human being) and the following media
(alone or in combination): air (including air within
buildings and air within other natural manmade
structures above or below ground), water (including
territorial and coastal and inland waters, ground
water and water in drains and sewers) and land
(including surface land and sub-surface land and land
under any water).
	 
	 	 	 	 
	“Environmental
Legislation”

	 	:
	 	means all applicable laws and regulations governing
the existence of or providing a remedy for the release
of Hazardous Substances, the protection of persons,
natural resources or the Environment, including those
governing occupational and health
and safety matters.

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	“2003 Financial
Statements”

	 	:
	 	has the meaning specified in Clause 8.5.1.
	 
	 	 	 	 
	“Escrow Account”

	 	:
	 	means the account established by the Sellers and the
Purchaser pursuant to the Escrow Agreement.
	 
	 	 	 	 
	“Escrow Agent”

	 	:
	 	means BNP Paribas, or any other French subsidiary of a
first ranking bank.
	 
	 	 	 	 
	“Escrow Agreement”

	 	:
	 	means the agreement substantially in the form of
Schedule 7.2.4 hereto, with such reasonable
modifications as the Escrow Agent may request.
	 
	 	 	 	 
	“Escrow Amount”

	 	:
	 	has the meaning specified in Clause 11.2.2(a).
	 
	 	 	 	 
	“French GAAP”

	 	:
	 	means French generally accepted accounting principles.
	 
	 	 	 	 
	“Governmental Authority”

	 	:
	 	means (i) any European, national, regional, municipal,
local or foreign government or any political
subdivision of the foregoing, (ii) any governmental,
regulatory, taxing or administrative entity,
authority, agency, commission, ministry or other
similar body, including without limitation any public
utility control, professional entity or public service
commission or similar regulatory body, or (iii) any
court, tribunal or judicial or arbitral body.
	 
	 	 	 	 
	“Hazardous Substances”

	 	:
	 	means any waste, pollutant, contaminant or other
hazardous, toxic, radioactive, noxious, flammable,
corrosive or caustic matter which is capable of
causing significant harm to the Environment or to
human health; in each case, whether in the form of
solids, gases, ions or noise.
	 
	 	 	 	 
	“Initial Purchase Price”

	 	:
	 	has the meaning specified in Clause 3.1.
	 
	 	 	 	 
	“Intellectual Property
Rights”

	 	:
	 	means trademarks, patents, service marks, registered
designs and applications, trade, business and company
names, internet domain names and e-mail addresses,
unregistered trademarks and service marks, copyrights,
database rights, rights in software, know-how, rights in designs and inventions owned or used by the Company
in the carrying out of its activities.
	 
	 	 	 	 
	“Party”

	 	:
	 	means the Sellers or the Purchaser and “Parties” means
both of them.
	 
	 	 	 	 
	“Performance Figure”

	 	:
	 	has the meaning specified in Clause 3.1(b).

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	“Person”

	 	:
	 	shall mean a natural person, partnership, corporation,
limited liability company, business trust, joint stock
company, trust, unincorporated association, joint
venture, Governmental Authority or other entity or
organization.
	 
	 	 	 	 
	* * *

	 	:
	 	* * *
	 
	 	 	 	 
	“Pledge Agreement”

	 	:
	 	has the meaning specified in Clause 4.3.
	 
	 	 	 	 
	“Premises”

	 	:
	 	means the land and buildings over which the Company
has possession by virtue of leases.
	 
	 	 	 	 
	“Prorata Proportion”

	 	:
	 	has the meaning specified in Clause 4.1.2.
	 
	 	 	 	 
	“Purchase Price”

	 	:
	 	has the meaning specified in Clause 3.1.
	 
	 	 	 	 
	“Purchaser’s
Representations”

	 	:
	 	means the representations and warranties made by the
Purchaser under Clause 9.
	 
	 	 	 	 
	“Real Property”

	 	:
	 	means the land and buildings, structures and fixtures
owned by the Company.
	 
	 	 	 	 
	“Revenue”

	 	:
	 	means, for any fiscal year, the chiffres d’affaires
nets of the Company as set out in its annual statement
of income for such year.
	 
	 	 	 	 
	“Right to Set- Off”

	 	:
	 	has the meaning specified in Clause 11.2.3.
	 
	 	 	 	 
	“Sellers’ Account”

	 	:
	 	has the meaning specified in Clause 4.1.2.
	 
	 	 	 	 
	“Sellers’ Representations”

	 	:
	 	means the representations and warranties made by the
Sellers under Clause 8.
	 
	 	 	 	 
	“Sellers’ Representative”

	 	:
	 	means François Tourniaire, appointed by each Seller as
its representative in accordance with Clause 16;
	 
	 	 	 	 
	“Shares”

	 	:
	 	means 33,750 fully paid ordinary shares of the Company
comprising the whole of the allotted and issued share
capital of the Company.
	 
	 	 	 	 
	“Specific Indemnities”

	 	:
	 	has the meaning specified in Clause 11.2.1.
	 
	 	 	 	 
	“Statement of Revenue”

	 	:
	 	has the meaning set out in Schedule 3.2.1
	 
	 	 	 	 
	“Subsequent Payment”

	 	:
	 	has the meaning specified in Clause 3.1
	 
	 	 	 	 
	“Targets”

	 	:
	 	Are set forth in Schedule 3.1

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	“Taxes”

	 	:
	 	means direct or indirect taxes, levies, imposts,
duties or other charges including, without limitation,
taxes on income or profits, withholding taxes,
deductions (précompte), property taxes, value added
taxes, stamp duty, registration duties, customs and
excise duties, sales taxes and social contributions,
under any applicable laws or regulations and any
penalty, fine or interest payable in connection with
any failure to pay or any delay in paying any of the
same.
	 
	 	 	 	 
	“Tax Claim”

	 	:
	 	means a claim for indemnification or defense arising
out of Clause 11, including reasonable attorneys’ fees
and expenses and reasonable accountants’ fees and
expenses incurred in the investigation or defense of
any of the same or in asserting, preserving or
enforcing any of the rights of the Purchaser arising
under Clause 11.
	 
	 	 	 	 
	“Tax Regulations”

	 	:
	 	means any Tax or custom law as well as statute,
decree, ordinances, rule, order, memorandum or other
texts of application or interpretation of the said law
applicable in a given country as well as any
international treaty (including the derivative law -
directives, regulations or others — of this treaty).
	 
	 	 	 	 
	“Third Party”

	 	:
	 	means a Person other than the Sellers or the Purchaser.

	2.	 	SALE AND PURCHASE
	 
	2.1	 	Upon the terms and subject to the conditions set forth herein, the
Sellers agree to sell to the Purchaser, and the Purchaser agrees to
acquire from the Sellers in exchange for the Purchase Price (as defined
below), all the Shares and all rights attaching or accruing to the Shares
on or after the date of this Agreement, free from all Encumbrances (as
defined below).
	 
	2.2	 	The Shares shall be sold to the Purchaser with coupon attached thereto
entitling the Purchaser to any and all dividends, distribution of reserves
(other than legal reserves) and advance payments payable in respect of the
Shares after the date hereof.
	 
	2.3	 	Notwithstanding Clause 2.2 above, the Company may pay to the Sellers
prior to the Closing Date dividends in respect of the financial year 2003
in an amount equal to * * * .
	 
	3.	 	PURCHASE PRICE
	 
	3.1	 	Initial Purchase Price
	 
	 	 	The total consideration for the purchase of the Shares (the “Purchase
Price”) shall be a cash payment of up to * * * , consisting of:

	 	(a)	 	an initial amount of * * * (the “Initial Purchase Price”), plus
	 
	 	(b)	 	up to an amount of * * * in subsequent payments payable in
three annual installments of up to * * * each (the “Subsequent
Payments” and individually, a “Subsequent Payment”), calculated on
the basis of the Revenue for the fiscal

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	 	 	 	years ending December 31, 2004, December 31, 2005 and December 31,
2006, multiplied by * * * (the “Performance Figure”), as more
fully set forth in Clause 3.2 below, and the Subsequent Payment
being subject to any Right to Set-Off.

	3.2	 	Subsequent Payments

	 	3.2.1	 	The amount owing in respect of a particular Subsequent Payment
shall be determined in accordance with the procedure set out in
Schedule 3.2.1 and this Clause 3.2.
	 
	 	3.2.2	 	Any annual installment of the Subsequent Payment shall be
equal to * * * if the Performance Figure for the relevant fiscal year
equals or exceeds the Target for such fiscal year as set forth in
Schedule 3.1. In the event that the Performance Figure in any
relevant fiscal year is less than the respective Target set forth in
Schedule 3.1 in respect of such fiscal year, then the amount of the
corresponding annual installment Subsequent Payment shall be reduced
in direct proportion to the difference between the Performance Figure
for such year and the Target for such year as set forth in Schedule
3.1.
	 
	 	3.2.3	 	By way of example, and subject to article 1164 of the French
Civil Code, if the Performance Figure for the fiscal year ending
December 31, 2004 is * * *, then the Subsequent Payment payable with
respect to such year shall be reduced by * * * (* * * divided by * *
*) and shall therefore be equal to * * *.
	 
	 	3.2.4	 	Calculation of Revenue for the purpose of determining the
amount of Subsequent Payments shall be based on the consistent
application over the period of the Accounting Principles.

	4.	 	PAYMENT
	 
	4.1	 	Initial Purchase Price

	 	4.1.1	 	The Purchaser shall pay into the Closing Date Account an
amount of * * *, of which (i) * * * is to be paid to Mr. François
Tourniaire, in the Closing Date Account, on or prior to 21 May 2004
(the “First Closing Date Installment Amount”) as a non-refundable
indemnity to Mr. François Tourniaire, which indemnity shall be
deducted from the portion of the Initial Purchase Price owed to Mr.
François Tournaire if the Agreement does not terminate in accordance
with Clause 17.1, and (ii) * * * is to be paid to Mr. François
Tourniaire, in the Closing Date Account, on or prior to 28 May 2004
in the form of a loan to Mr. François Tourniaire (the “Second Closing
Date Installment Amount” and, together with the First Closing Date
Installment Amount, the “Closing Date Amount”). The Second Closing
Date Installment Amount shall be repaid in accordance with the terms
of the loan agreement entered into between the Purchaser and Mr.
François Tourniaire on the date hereof (the “Loan Agreement”).
	 
	 	4.1.2	 	On the Closing Date, the Purchaser shall (i) pay the Initial
Purchase Price (less the Closing Date Amount) in full by bank wire
transfer of funds for same day

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	 	 	 	value to such account as shall be notified by the Sellers’
Representative no later than four (4) Business Days before the
Closing Date (the “Sellers’ Account”) and (ii) pay that portion of
the Initial Purchase Price equal to the Second Closing Date
Installment Amount to Mr. François Tourniaire, which payment may
be made as a set-off against the amount owed by Mr. François
Tourniaire to the Purchaser pursuant to the Loan Agreement.
	 
	 	4.1.3	 	In accordance with Clause 16, subject to the occurrence of the
Closing, the Sellers’ Representative shall (following a deduction for
those costs referred to in Clause 16.4) be responsible for
distributing the Initial Purchase Price (less the Closing Date
Amount) between the Sellers so that each Seller receives that amount
of the Initial Purchase Price which is proportionate to the number of
Shares sold by that Seller to the Purchaser on the Closing Date out
of the total number of Shares sold by the Sellers to the Purchaser on
the Closing Date as set forth in Schedule A (such proportion being
referred to as the “Prorata Proportion”).

	4.2	 	 Subsequent Payments

	 	4.2.1	 	The Subsequent Payments (or part thereof as the case may be),
if applicable, shall be determined in accordance with the procedures
set forth in Schedule 3.2.1 and the provisions of Clause 3.2 and
shall be paid by the Purchaser to the Sellers’ Representative on the
later of (i) (a) 31 March 2005 in respect of the 2004 fiscal year,
(b) 31 March 2006 in respect of the 2005 fiscal year, and (c) 31
March 2007 in respect of the 2006 fiscal year or (ii) three (3)
Business Days after the final determination of the amount of the
relevant Subsequent Payment by the Parties or the Expert (in
accordance with Schedule 3.2.1).
	 
	 	4.2.2	 	In accordance with Clause 16, the Sellers’ Representative
shall be responsible for distributing the amount of the Subsequent
Payments, if any, between the Sellers so that each Seller receives
the Prorata Proportion less his/her Prorata Proportion of the costs
as set forth in Clause 16.4.

	4.3	 	Pledge Agreement
	 
	 	 	At Closing, in order to secure the obligation of the Purchaser to pay to
each Seller his/her Prorata Proportion of the Subsequent Payments, if any,
the Purchaser shall grant at Closing to each such Seller a pledge over one
third of the Shares sold by such Seller, pursuant to the draft Pledge
Agreement in the form set out in Schedule 4.3; the number of pledged
Shares decreasing by one-third annually, following either (i) payment and
receipt of each Subsequent Payment (including any payments into the Escrow
Account which shall be deemed received for purposes hereof) or (ii) the
determination that no Subsequent Payment is due for such year.
	 
	5.	 	CONDITIONS
	 
	 	 	The sale and Purchase of the Shares is subject to the conditions set forth
in Clauses 5.1 to 5.6 below being satisfied or waived in writing by the
Purchaser on or before 30 June

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	 	 	2004, it being agreed that each Party shall exercise its best efforts to
satisfy the conditions set forth below on or prior to 30 June 2004.
	 
	5.1	 	No material adverse change in the Business, condition (financial or
otherwise), operations or prospects of the Company, has occurred since 31
December 2003.
	 
	5.2	 	Approval of the sale and transfer of the Shares by the board of directors
of the Company.
	 
	5.3	 	The delivery of a certificate signed by the Chairman of the Company
stating that the Company has not made or committed to make any
distribution of profits or reserves by way of a dividend since 30 November
2003, other than in accordance with Clause 2.3.
	 
	5.4	 	The Sellers’ representations and warranties in respect of the
transactions contemplated by this Agreement contained in Clause 8 shall be
true and correct in all material (this materiality test being assessed in
respect of the Business, condition (financial or otherwise), operations or
prospects of the Company) respects as at the Closing Date as if made on
that date except for (i) those representations and warranties for which a
specific date (other than the Closing Date) has been set out in Clause 8
and (ii) acts carried out or events occurring in the ordinary course of
business.
	 
	5.5	 	The Purchaser having entered into a definitive financing agreement in
connection with the transactions contemplated herein, and having received
the proceeds of such financing in an amount sufficient to pay the Purchase
Price.
	 
	5.6	 	The Sellers shall procure that the Persons occupying the Premises and/or
the Real Property vacate such Premises and the Real Property and that such
Persons discontinue any direct or indirect employment, activities or
relationship with the Company.
	 
	6.	 	NOTICES
	 
	 	 	The Sellers’ Representative shall give prompt notice to the Purchaser of
satisfaction of the conditions set forth in Clauses 5.1 to 5.5 and 5.6,
and the Purchaser shall do the same with respect to Clause 5.6.
	 
	7.	 	CLOSING
	 
	7.1	 	Time and Place of Closing
	 
	 	 	The Closing shall take place at the offices of Clifford Chance, 112 avenue
Kléber, 75016 Paris within five (5) Business Days of the date of the last
condition to be satisfied under Clause 5 or at another venue and at
another time to be mutually agreed upon by the Purchaser and the Sellers’
Representative.
	 
	7.2	 	Deliveries and Actions at Closing

     7.2.1 At Closing, the Sellers shall deliver or cause to be delivered to the Purchaser:

	 	(a)	 	the stock transfer forms (ordres de mouvement)
recording the transfer of the Shares to the Purchaser, duly
signed by the Sellers;

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	 	(b)	 	the up-to-date share transfer register of the
Company (comprising the registre des mouvements de titres and
the comptes individuels d’actionnaires);
	 
	 	(c)	 	letters of resignation of the corporate
officers of the Company listed in Schedule 7.2.1(c) and the
form of which is set forth in Schedule 7.2.1 (c);
	 
	 	(d)	 	notices to the shareholders of the Company
convening shareholders’ meetings to take place on or before
the Closing Date: (i) replacing the directors and corporate
officers of the Company as specified by the Purchaser at
least fifteen (15) days prior to the Closing Date and (ii)
canceling the right of pre-emption contained in Article 12 of
the by-laws (statuts) of the Company;
	 
	 	(e)	 	a certified copy of the minutes of the meeting
of the Company’s board of directors (i) approving the sale of
the Shares by each of the Sellers to the Purchaser and the
execution of the agreements referred to in sub-clause 7.2.1
(g) and (ii) revoking and replacing all existing instructions
to the Company’s bankers, bank mandate forms and authorities,
of which there is a full list at Schedule 7.2.1 (e);
	 
	 	(f)	 	a certificate signed by the chief executive
officer and chief financial officer of the Company, dated the
Closing Date, stating that the representations and warranties
set out in Clause 8 are true and accurate in all material
(this materiality test being assessed in respect of the
Business, condition (financial or otherwise), operations or
prospects of the Company) respects as at the Closing Date as
if made on that date except for (ii) those representations
and warranties for which a specific date (other than the
Closing Date) has been set out in Clause 8 and (ii) acts
carried out or events occurring in the ordinary course of
business;
	 
	 	(g)	 	agreements entered into between the Company and
each of Jacques and Olivier Tourniaire amending their
existing employment agreements, substantially in the form set
out in Schedule 7.2.1(g)(i) and agreements entered into
between the Company and each of Michel Tourniaire and Senaz
Falquerho (née Namooya), substantially in the form set out in
Schedule 7.2.1(g)(ii);
	 
	 	(h)	 	an agreement between the Company and Mr
François Tourniaire in relation to consultancy services to be
rendered by Mr François Tourniaire to the Company
substantially in the form set out in Schedule 7.2.1(h);
	 
	 	(i)	 	receipt of a release, in the form set forth in
Schedule 7.2.1(i), by each director of the Company, to any
and all claims arising prior to the date of this Agreement
that such person may have against the Company or the
Purchaser and their respective Affiliates arising from such
person’s relationship with the Company or their status as a
director, officer or employee of the Company; and

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	 	(j)	 	approval of the Pledge Agreement by the board
of directors of the Company.

	 	7.2.2	 	At Closing, the Purchaser shall deliver or cause to be
delivered to the Sellers’ Representative (i) evidence of credit to
the Sellers’ Account of a sum equal to the Initial Purchase Price
(less the Closing Date Amount) and (ii) evidence of credit to the
Closing Date Account of a sum equal to the Closing Date Amount in
accordance with Clause 4.1.1.
	 
	 	7.2.3	 	At Closing, each Seller and the Purchaser shall procure the
execution and delivery of a Pledge Agreement to each of them.
	 
	 	7.2.4	 	At Closing, the Sellers’ Representative and the Purchaser
shall procure the execution and delivery of an Escrow Agreement duly
signed by the Escrow Agent, substantially in the form set out in
Schedule 7.2.4 to each of them.
	 
	 	7.2.5	 	All matters at the Closing will be considered to take place
simultaneously, and no delivery of any document will be deemed
complete until all transactions and all deliveries of documents
required by this Agreement are completed and title to the Shares
shall not be transferred and the Purchaser shall have no property
rights or interest in the Shares unless and until the Closing
actually takes place and the payment of the Initial Purchase Price
has been effectively received by the Sellers’ Representative.

	8.	 	REPRESENTATIONS AND WARRANTIES OF THE SELLERS
	 
	 	 	Each of the Sellers represents and warrants to the Purchaser that the
representations and warranties contained in this Clause 8 are true,
complete and accurate and are not misleading both at the date of this
Agreement and at the Closing Date (unless otherwise specified). No
specific representation and warranty in any way limits the scope of the
more general representations and warranties, unless expressly provided
otherwise.
	 
	 	 	The representations and warranties contained in this Clause 8 are made to
the Purchaser subject to the disclosures contained in the Schedule
relating to the corresponding representation and warranty.
	 
	 	 	Inclusion of, or reference to, any matter in any schedule does not
constitute an admission of the materiality of any such matter.
	 
	 	 	Any reference to “the Sellers’ best knowledge” hereinafter shall be deemed
a reference to the best actual knowledge and belief of such Seller.
	 
	 	 	Representations and warranties given by a Seller in Clauses 8.1 and 8.2
are limited to such Seller and to the Shares owned by such Seller.
	 
	8.1	 	Authority of the Sellers

	 	8.1.1	 	Each of the Sellers has full power and authority to execute
and perform this Agreement and its obligations hereunder and to
benefit from the rights provided for herein. Any Seller who is
subject to legal restrictions as a result of either his

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	 	 	 	or her marital status or being a party to a pacte civil de
solidarité, has obtained the necessary consent to sell his or her shares.
	 
	 	8.1.2	 	None of the Sellers is currently the subject of any
proceedings with a view to the prevention or resolution of business
difficulties (or any similar actions), and there do not exist any
serious reasons justifying a judgment of declaration of bankruptcy
concerning such Seller.
	 
	 	8.1.3	 	There is no action, suit or proceeding pending or threatened
against or affecting him or her in any court or before any
Governmental Authority which would materially affect the performance
of his or her obligations under this Agreement.
	 
	 	8.1.4	 	The performance by each of the Sellers of their respective
obligations under this Agreement and the consummation of the
transactions contemplated herein will not:

	 	(i)	 	violate, conflict with or result in the breach
of any contract to which such Seller is a party, or
	 
	 	(ii)	 	constitute a violation by such Seller of any
judgment, order, decree, law or regulation applicable to him
or her.

	 	8.1.5	 	Except as set forth in Clause 5, all prior formalities and
authorizations to be obtained by the Sellers for the transactions
contemplated herein have been completed or obtained. No authorization
is required to be obtained by any of the Sellers in connection with
the valid execution of this Agreement and the performance of the
transactions hereby contemplated.
	 
	 	8.1.6	 	This Agreement has been duly executed by each of the Sellers
and constitutes a legal, valid and binding obligation of each of the
Sellers enforceable against him or her in accordance with its terms.

	8.2	 	Shares

	 	8.2.1	 	Each of the Sellers is the sole owner of the number of Shares
set forth opposite its name in Schedule A.
	 
	 	8.2.2	 	Subject to the provisions of the by-laws (statuts) of the
Company that have been provided to the Purchaser, all the Shares held
by each Seller are free and clear of all encumbrances, liens,
security interests, charges, mortgages, pledges, guarantees,
usufruits, subscription rights, options, restrictions on transfer,
rights of first refusal or buy-out, rights of pre-emption, voting
agreements, other third-party right or interest, or another type of
preferential arrangement (including, without limitation, a title
transfer or retention arrangement) having similar effect
(“Encumbrances”) and there is no agreement, arrangement or obligation
to create or give an Encumbrance in relation to any of the Shares,
and no Person has claimed to be entitled to an Encumbrance in
relation to any of the Shares.

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	8.3	 	Organization

	 	8.3.1	 	The Company is duly organized and validly existing under the
laws of France. The copies of the by-laws (statuts) of the Company
that have been provided to the Purchaser reflect all amendments made
to date and are correct and complete.
	 
	 	8.3.2	 	The Company has the right, power and authority to carry on its
respective Business as currently conducted, and to own and operate
the properties and assets owned and operated by it.
	 
	 	8.3.3	 	The Company has properly kept in all material respects all
registers, minute books and other books (including account books and
ledgers) required by law and such registers, minute books and other
books contain a complete and accurate record of the matters required
to be recorded.
	 
	 	8.3.4	 	All resolutions and other documents required to be delivered,
filed or recorded at the Commercial Court or other Governmental
Authority in relation to the Company have been properly prepared and
timely delivered, filed or recorded.

	8.4	 	Share Capital

	 	8.4.1	 	The Shares comprise the whole of the Company’s share capital.
The Shares have been properly issued and allocated and fully paid.
None of the Shares have been listed or traded on a stock exchange.
	 
	 	8.4.2	 	The Company has, at the date hereof, the capital stock, the
number of Shares and the shareholding structure set forth in Schedule
A. The Company does not have any subsidiaries nor does the Company
own, directly or indirectly, any capital stock of or other equity
interests in any corporation, partnership, or other Person. The
Company is not a member of, or participant in, any partnership, joint
venture, Groupement d’Intérêt Economique or similar enterprise. All
of the voting rights of the Company are vested exclusively in the shares constituting their share capital.
	 
	 	8.4.3	 	The Company has not issued any equity or debt security of any
kind (other than the Shares) and there are no resolutions or other
corporate actions that would require or permit the Company to issue
such other securities including without limitation convertible bonds,
options, warrants, reserved or authorized shares.
	 
	 	8.4.4	 	There are no agreements or arrangements of any kind providing
for the purchase, issuance, sale, extension or restriction on the
transfer of any interest in the capital stock of the Company, except
for the provisions of the by-laws of the Company (statuts) that have
been provided to the Purchaser.
	 
	 	8.4.5	 	The Company does not have nor has had in the past, a branch,
agency, place of business or establishment outside of France.

	8.5	 	Accounts

	 	8.5.1	 	The Sellers have heretofore furnished the Purchaser with the
audited accounts of the Company at 31 December 2003, set out in
Schedule 8.5.1 (the “2003

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	 	 	 	Financial Statements”). The 2003 Financial Statements, including
the footnotes thereto, have been prepared and audited in
accordance with the Accounting Principles, applied on a consistent
basis, and show a true, fair and accurate view of the financial
condition, results of operations and cash flows of the Company at
the date thereof.

	 	8.5.2	 	Except as set forth in Schedule 8.5.2, the Company does not have
any outstanding financial indebtedness (i.e., debt to credit or
financial institutions) to any Person. Except as set forth in Schedule
8.5.2, no document evidencing, or agreement with respect to, financial
indebtedness of the Company, contains any restriction upon (i)
prepayment of any financial indebtedness, (ii) the incurrence of
additional financial indebtedness or (iii) the ability to grant any
Encumbrance on any properties or assets of the Company. Schedule 8.5.2
sets forth the amount of principal and unpaid interest outstanding
under each document evidencing financial indebtedness of the Company,
if any, that will accelerate or become due or result in a right on the
part of the holder of such financial indebtedness (with or without due
notice or lapse of time) to require prepayment, redemption or
repurchase as a result of the execution of this Agreement or the
completion of the transactions contemplated hereby.
	 
	 	8.5.3	 	The Company is not a party to, or obligated under, any option,
swap or other derivatives contract other than such a contract that
directly links to and hedges the performance of a specific
contractual obligation of the Company.
	 
	 	8.5.4	 	There are no liabilities, whether actual or contingent,
relating to the Company, except for (a) liabilities that are required
to be reflected in the 2003 Financial Statements and have been
sufficiently provided for therein and (b) liabilities that were
incurred after 31 December 2003 in the ordinary and usual course of
business, consistent with past practice.
	 
	 	8.5.5	 	The Company is not insolvent and has not suspended its
payments, (b) is not in judicial liquidation, receivership or
moratorium, (c) is subject to any proceedings relating to the
prevention or settlement of insolvency claims, (d) is not in judicial
reorganization (redressement judiciaire), (e) has not been the object
of any proceedings for the reorganization or collective discharge of
its liabilities, or (f) to the Sellers’ best knowledge, is not under
the threat of any such proceedings.
	 
	 	8.5.6	 	Since 31 December 2003 until the date hereof, no event has
occurred, that has had or could reasonably be expected to have a
material adverse effect on the Company or the Business. Without
limiting the generality of the foregoing, (A) the Business has been
conducted in the usual, regular and ordinary course, consistent with
past practice, and (B) the Company has not engaged in practices,
taken any action or participated in any transaction the purpose of
which would have been different from securing and facilitating the
business development of the Company as a going concern on a long term
basis.

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	8.6	 	Accounts Receivable and Payable

	 	8.6.1	 	Except as set forth in Schedule 8.6.1, since 31 December 2003,
the amounts of all work-in-process, accounts receivable and unbilled
invoices (including, without limitation, unbilled invoices for
services and out-of-pocket expenses) and other debts due or recorded
in the records and books of account of the Business were incurred in
the ordinary course of business, and will be current and collectible,
net of any reserves shown in the 2003 Financial Statements or any
reserves made in the ordinary course of business thereafter whose
amount is consistent with past practices (and in any case are payable
no later than sixty (60) days from the relevant due date).
	 
	 	8.6.2	 	Except for fluctuations in the ordinary course of business,
there has been no material change since 31 December 2003 in the
amount of the work-in-process, accounts receivable or other debts due
to the Company or the reserves with respect thereto, or the accounts
payable or other payables of the Company from that reflected in the
2003 Financial Statements.
	 
	 	8.6.3	 	There are no unpaid invoices, bills or other amounts due and
payable representing amounts in excess of Euro 15,000 in aggregate
alleged to be owed by the Company or other alleged obligations of the
Company which it has disputed or determined to dispute or refuse to
pay.

	8.7	 	Inventory
	 
	 	 	All inventory consists of a quality and a quantity usable and saleable in
the ordinary course of business. Any inventory that is written off is done
so in accordance with the ordinary course of business. There has been no
material change since 31 December 2003 in the amount of inventory and
reserves with respect thereto. The quantities of each type of inventory
(whether work-in-process or finished goods) are not excessive but are
reasonable in the present circumstances of the Company. Except as set
forth in Schedule 8.7, all inventory is free and clear of all
Encumbrances.
	 
	8.8	 	Personnel and Corporate Officers of the Company

	 	8.8.1	 	The list of salaried employees of the Company as at the date
of this Agreement appears as Schedule 8.8.1.
	 
	 	8.8.2	 	Schedule 8.8.2 sets out the collective agreements applicable
to the various categories of employee working for the Company.
	 
	 	8.8.3	 	Except as indicated in Schedule 8.8.3, there is no contract or
agreement with (i) those salaried employees with an annual
remuneration exceeding Euro 30,000 or (ii) directors, corporate
officers or managers of the Company which allows for a notice period
and/or a redundancy payment greater than those appearing in the
collective agreements mentioned in Clause 8.8.2 above.
	 
	 	8.8.4	 	No employee of the Company has been granted terms of
employment which are triggered as a consequence of the sale of the
Shares, nor have any employees been granted special protection such
as golden parachutes or similar benefits.

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	 	8.8.5	 	Save as set out in Schedule 8.8.5, no directors of the Company
benefit from any employment contract or service contract with the
Company and, except as set out in Schedule 8.9 no corporate officer
has received any remuneration from the Company.
	 
	 	8.8.6	 	Save as indicated in Schedule 8.8.6, the Company does not
participate in or contribute to any retirement plans, investment or
profit sharing schemes, premiums or commission or other optional
employee plans, other than those required by applicable legislation,
regulations and collective bargaining agreements.
	 
	 	8.8.7	 	Except as otherwise disclosed in Schedule 8.8.7, the Company
has not granted any loans to any person employed by the Company.
	 
	 	8.8.8	 	Except as otherwise disclosed in Schedule 8.8.8, for each of
its employees (and where appropriate its former employees), the
Company complies in all material respects and has no liability
(whether accrued or otherwise) for past non-compliance with
applicable laws and regulations as well as the provisions of the
collective bargaining agreements, collective agreements, common
practices, decisions of the court and employment contract Clauses
concerning employment conditions in its respective jurisdictions.
	 
	 	8.8.9	 	The collective agreements applied within the Company are
valid, and comply in all material respects with applicable laws and
regulations. Save as set out in Schedule 8.8.9, the Company is not in
breach of the legal and regulatory provisions applicable in its
respective jurisdictions of incorporation or operation relating to
the personnel representative bodies and the exercise of trade union
rights.
	 
	 	8.8.10	 	All legal obligations to inform and consult the personnel
representative bodies of the Company in respect of the sale and
purchase of the Shares in accordance with the terms of the Agreement
have been fulfilled and no specific undertaking has been given in
this respect, it being specified that the note d’information given to
the workers’ committee of the Company was provided beforehand to the
Purchaser.
	 
	 	8.8.11	 	All employment declarations, Taxes and any other material
formalities or documents imposed by employment legislation, have been
timely completed, paid, submitted, lodged or teletransmitted by the
Company in the required form and within the required deadlines
applicable in its respective jurisdictions of incorporation or
operation.
	 
	 	8.8.12	 	There is no collective redundancy or social plan in the Company and
there have been no collective redundancies during the previous twelve
(12) months.

	8.9	 	Directors’ Fees
	 
	 	 	Since 31 December 2003 and except as provided for in Schedule 8.9, the
Company has not distributed any directors’ attendance fees or other
similar distributions and have not

-16-

 

	 	 	taken any decision as regards such distribution. Except as set out in
Schedule 8.9, no remuneration has been paid or remains payable to any
directors of the Company.
	 
	8.10	 	Real Property

	 	8.10.1	 	The Company has full and complete ownership of the Real Property
listed in Schedule 8.10.1 free from Encumbrances.
	 
	 	8.10.2	 	The Company holds good and valid title of occupation for the
Premises described in Schedule 8.10.2. The Company has not concluded
any agreement that has not yet been performed with a view to buying
or selling the Real Property or the Premises or any other form of
real property or rights thereto except for options to buy granted
under the financial leases (“crédit baux”) referred to in Clause
8.10.3 below. Each lease in respect of the Premises is valid, legally
binding, in full force and effect and enforceable in accordance with
its terms by the Company, and not subject to any challenge, refusal
of renewal or other claim.
	 
	 	8.10.3	 	Schedule 8.10.3 sets out the entire list of contracts or agreements
with any Third Party with regard to the Premises and Real Property
described in Schedule 8.10.2. The Company has all easements and
rights of ingress and egress necessary for utilities and services for
all operations conducted on the Real Property or on the Premises.
	 
	 	8.10.4	 	The Company is up to date with the payment of the usual local Taxes
which have to be paid by the Company in the localities where the Real
Property and the Premises are situated, and with the rents, charges
and insurance premiums due, as the case may be, in respect of the
construction and the use of the Real Property and the Premises.
	 
	 	8.10.5	 	The Real Property and the Premises are adapted to the purposes for
which they are used and, except as mentioned in Schedule 8.10.5, are
not the subject of any material default under applicable laws and
regulations, including Environmental Legislation. Neither the Real
Property nor the Premises are subject to any expropriation or
requisition measures or any other administrative measure that may
adversely affect in a significant way their current use (or, in
respect of the Real Property, their book value).
	 
	 	8.10.6	 	The Company has filed and obtained all planning authorizations
which were required under the applicable town planning regulations
for the construction and/or the fitting out of the Real Property and
the Premises. These planning authorizations are now definitive and
not subject to any withdrawal, challenge or other claim. The Real
Property and the Premises were built in compliance with these
planning authorizations.

	8.11	 	Assets

	 	8.11.1	 	Except as mentioned in Schedule 8.11.1, the Company is the absolute
owner and is in actual possession of its fixed assets used or useful
for carrying out its Business, including those fixed assets listed in
the 2003 Financial Statements.

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	 	 	 	Except as mentioned in Schedule 8.11.1, no person has the right to
call for any payment in respect of any of these assets, or to
claim ownership of these fixed assets (including by virtue of an
agreement) and, except as mentioned in Schedule 8.11.1, the
Company has not created or agreed to create any Encumbrance over
any part of its undertaking or these fixed assets (other than
arising by the operation of law). As regards the fixed assets not
owned by the Company of a value exceeding Euro 15,000, the Company
is up to date with all payments due in relation to these fixed
assets and observes the provisions of the agreements under which
they hold and use these fixed assets.
	 
	 	8.11.2	 	The Company’s material fixed assets are in good working order and
repair and can be used normally for the activities for which they are
intended.

	8.12	 	Intellectual Property and Software Rights

	 	8.12.1	 	The list of the Intellectual Property Rights owned and/or used by
the Company in carrying out its activities (the “Business
Intellectual Property”) is set out in Schedule 8.12.1.
	 
	 	8.12.2	 	Except as otherwise disclosed in Schedule 8.12.2, all Intellectual
Property Rights owned by the Company, are valid and in full force and
effect.
	 
	 	8.12.3	 	Save as set out in Schedule 8.12.3, the Intellectual Property
Rights owned by the Company are held exclusively (free and clear of
any Encumbrance) by the Company.
	 
	 	8.12.4	 	Except as otherwise disclosed in Schedule 8.12.4, all employees,
agents, consultants or contractors who have contributed to, or
participated in, the creation or development of any copyrightable,
patentable or otherwise protectable material under intellectual
property laws, or manufacturing or trade secret material on behalf of
the Company either: (i) is a party to a valid written agreement under
which the Company is deemed to be the original owner/author of all
the property rights therein; or (ii) has executed, or is obliged
pursuant to en existing agreement to execute, a valid agreement
assigning to the Company all right title and interest in such
material.
	 
	 	8.12.5	 	Except as otherwise disclosed in Schedule 8.12.5, the Company is
not a party to any written or oral cooperative research and
development agreement or similar arrangement with a Third Party with
respect to the Intellectual Property Rights.
	 
	 	8.12.6	 	The consummation of the transactions contemplated by this Agreement
will not alter or impair the rights to own or use any of the Business
Intellectual Property.

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	 	8.12.7	 	Except as otherwise disclosed in Schedule 8.12.7, no claims have
been asserted against the Company relating to the use of the Business
Intellectual Property or challenging the ownership, validity or
enforceability thereof. The use of the Business Intellectual
Property by the Company does not infringe or misappropriate any
intellectual property rights of a Third Party and no Third Party is,
to the Sellers’ best knowledge, infringing or misappropriating any
Intellectual Property Rights. Notwithstanding the outcome of the
litigation proceedings brought by * * * against the Company (which
are disclosed in Schedule 8.12.7) the Company shall be able to fully
operate the Business as it is conducted at the date of this
Agreement.

	8.13	 	Contracts

	 	8.13.1	 	Schedule 8.13.1 contains the list of the distribution, commercial
agency and representation agreements entered into by the Company,
whether in writing or otherwise or by which it is bound which require
payments exceeding Euro 50,000 per annum.
	 
	 	8.13.2	 	Schedule 8.13.2 contains a list of the supply agreements entered
into by the Company, whether in writing or otherwise or by which it
is bound, which require payments exceeding Euro 50,000 per annum.
	 
	 	8.13.3	 	Schedule 8.13.3 comprises a list of current contracts entered into
by the Company (other than employment contracts, commercial leases
and contracts specifically referred to or listed in the other
Schedules) with a duration of more than twelve (12) months and/or
involving an annual sum, VAT excluded, which require payments
exceeding Euro 50,000 per annum.
	 
	 	8.13.4	 	All contracts binding on the Company are in full force and effect,
have been entered into and are performed in compliance with
applicable laws and regulations, in particular with regard to
hygiene, clinical and health and safety regulations applicable to the
Business except when failure to so comply would not individually or
in the aggregate have a material adverse effect on the Company or the
Business. Neither the Company nor any other party to a contract is in
default of its obligations arising under any contract listed in
Schedules 8.13.1 to 8.13.3 (or under any commercial lease or contract
specifically referred to or listed in other Schedules) in such a way
as to incur any liability or justify the termination of the contract
or undertaking or its non-performance by the other party. The Company
has not been and is not infringing any Third Party’s rights, in
particular any exclusivity rights granted by the Company.
	 
	 	8.13.5	 	Save as indicated in Schedule 8.13.5 (i), the Company has not
entered into any contract which includes a change of control Clause
or which contains a Clause expressly stating that it has been entered
into on an intuitu personae basis. Save as indicated in Schedule
8.13.5 (ii), the Company has not been informed by any Third Party of
the Third Party’s intention to end or reduce their business relations
with the Company.

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	 	8.13.6	 	Save as indicated in Schedule 8.13.6, the Company has not given any
covenants still in force, limiting or excluding its right to carry on
the Business or compete in any area or field (whether limited or
excluded by reference to a geographical area or type of business) to
any other person.

	8.14	 	Product Liability

	 	8.14.1	 	The products supplied by the Company up and until the Closing Date
do not contain any design or manufacturing defects (whether affecting
all products of a particular type or “one off” defects affecting
specific individual products or batches of products) that cause them
not to comply with their specification in a manner that could result
in damages, liability whether civil or criminal or a general recall
of the type of product concerned except for the recall of products in
the ordinary course of business and consistent with past practice (a
total of approximately * * * returns per year). Except as set forth
in Schedule 8.14.1, as of the date of signature of this Agreement,
the Company, in either the 2003 fiscal year or the period starting
from January 1, 2004, has not taken back products as defective.
Except as set forth in Schedule 8.14.1 and as of the date of the
signature of this Agreement, there are no statements, citations or
decisions by any governmental, administrative, judicial, arbitral or
regulatory body that any product of the Company is defective or fails
to meet standards promulgated by any such body. To the Sellers’ best
knowledge, except as set forth in Schedule 8.14.1, there is no defect
relating to any product of the Company that may impose upon the
Company a duty to recall any product of the Company.
	 
	 	8.14.2	 	Except as set forth in Schedule 8.14.2, claims (actual or
threatened) relating to defective or allegedly defective products
that have been received by the Company have been fully provided for
in the 2003 Financial Statements.
	 
	 	8.14.3	 	The Company has not provided services or sold, distributed or
brought into circulation products which do not comply with the laws,
regulations (in particular, but without limitation, hygiene, clinical
and health and safety regulations applicable to the Business) and
specific instructions from the relevant authorities to which they are
subject. The representation set out in the previous sentence also
applies to the packaging, labeling and storage of the products
manufactured, sold or distributed by the Company.
	 
	 	8.14.4	 	Schedule 8.14.4 sets out the list of certifications (including all
those certifications for its facilities and equipment) and CE
markings granted to the Company as at the date of this Agreement. The
Company has all the CE markings required by applicable law for its
Business.

	8.15	 	Insurance

	 	8.15.1	 	Schedule 8.15.1 contains a list of each of the material insurance
policies entered into by the Company. Except in the case of product
liability insurance which has not yet been subscribed by the Company,
the Company has taken out all insurance policies necessary for the
conduct of the Business and such insurance

-20-

 

	 	 	 	policies provide sufficient cover and protection in regard to
applicable laws and regulations.
	 
	 	8.15.2	 	The insurance policies listed in Schedule 8.15.1 are in force and
no outstanding notification of termination of any such policy has
been received by the Company from any insurer or served by the
Company. Save as set out in Schedule 8.15.2, the Company has not been
informed in writing by any of its insurers of the intention of such
insurers to refuse a claim submitted by the Company, increase
premiums or reduce the amount of cover under the policies listed in
Schedule 8.15.1.
	 
	 	8.15.3	 	The Company is in compliance with the terms of its insurance
policies listed in Schedule 8.15.1 and all corresponding premiums
have been paid on time. There is no claim outstanding under any such
policy and, so far as the Sellers are aware, there are no
circumstances likely to give rise to such a claim.

	8.16	 	Loans
	 
	 	 	Except as indicated in Schedule 8.16, the Company has not granted any
outstanding loans to any Person other than (i) credits granted to its
customers in the normal course of business or amounts due from customers
which the Company seeks to retrieve in accordance with past practice or
(ii) credits granted to its employees.
	 
	8.17	 	Authorizations

	 	8.17.1	 	All of the material Authorizations and application therefore
necessary for or used by the Company for the exercise of its
activities as they are currently conducted are set out in Schedule
8.17.1. The Company has always had and has such material
Authorizations necessary to operate its activities, it being
specified that the Company made a classified installation declaration
to the Préfet on February 17, 2004 as disclosed in Schedule 8.17.1.
	 
	 	8.17.2	 	The Authorizations listed in Schedule 8.17.1 are in full force and
are and have always been complied with in all material respect. To
the Sellers’ knowledge, there are no circumstances which indicate
that the Authorizations or applications therefore mentioned in
Schedule 8.17.1 are likely to be revoked, not renewed or not granted,
in whole or in part. None of the Authorizations mentioned in Schedule
8.17.1 will be affected by the sale of the Shares under this
Agreement.

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	8.18	 	Environment

	 	8.18.1	 	The Company has obtained all material Authorizations required under
applicable Environmental Legislation for the performance of its
activities as they are currently conducted and such Authorizations
are in good standing order. The Company has timely filed all material
notices, certificates or declarations required to be filed by it
under applicable Environmental Legislation in relation to its
Business, operations and assets.
	 
	 	8.18.2	 	The Company has not been and is not in material breach of any
applicable Environmental Legislation. The Company has timely taken
all remedial actions required to be taken by it by a relevant
authority under applicable Environmental Legislation and has no
liabilities for any remedial actions outstanding on the date hereof
which is not reserved for in its financial statements.
	 
	 	8.18.3	 	The activity conducted by the Company on the Premises and the Real
Property has not generated pollution or contamination to the
Environment that could result in liability under applicable
Environmental Legislation.
	 
	 	8.18.4	 	The Company has not received any written notice to the effect that
it is or may be liable to any person for a breach of applicable
Environmental Legislation or as a result of the release or threatened
release of a Hazardous Substance arising from the operations of the
Company, including sales of any products.
	 
	 	8.18.5	 	The Company has not released any Hazardous Substances into the
Environment in connection with * * *.

	8.19	 	Tax Regulations

	 	8.19.1	 	The Company has always complied with the Tax Regulations.
	 
	 	8.19.2	 	The Company has correctly made and lodged in time all necessary tax
declarations and other documents used as the basis for calculating
Taxes in accordance with applicable Tax Regulations. Those tax
declarations have always been true and complete.
	 
	 	8.19.3	 	The Company has paid at the due date, or made provision for the
payment of, all Taxes that have or may have become due in accordance
with applicable Tax Regulations. The basis and the amount of Tax that
the Company has owed or still owes have always been properly
determined in compliance with the Tax Regulations.
	 
	 	8.19.4	 	The Company has all the documents required to justify the
information set out in the declarations or documents in this
representation as well as the implemented tax, customs or social
security rules. More generally, the Company fulfills its obligations
in respect of the periods for conserving

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	 	 	 	documents as provided by applicable laws and regulations, whether
they be in paper or computer form.
	 
	 	8.19.5	 	The Company does not benefit from any particular Tax or social
security regime, which could terminate or be materially and adversely
affected by the sale of the Shares, or due to any act or omission
which occurred before the date of this Agreement.
	 
	 	8.19.6	 	The Company is and always has been resident for the purposes of Tax
in the jurisdiction in France and has never been resident in any
other jurisdiction or traded through a branch or permanent
establishment situated outside such jurisdiction.
	 
	 	8.19.7	 	The Company is not nor will be liable to pay any Tax or be deprived
of any relief available to it, or to make reimbursement or indemnity
in respect of any Tax, for which some other company or Person is or
was primarily liable.
	 
	 	8.19.8	 	The Company is not nor has ever been the tax representative for the
purposes of value added tax, for a business resident outside the
jurisdiction in which it is incorporated. The Company has not made
any unusual election under applicable Tax regulations.
	 
	 	8.19.9	 	Except as provided for in Schedule 8.19.9, the Company has not been
and is not the subject of any ongoing Tax audit in relation to Taxes
and the Company has not been notified in writing by an administrative
authority of the implementation in the near future of an audit or
enquiry likely to lead to the payment of Taxes or a reassessment of
the basis of collection of Taxes; to the Sellers’ knowledge, there
are no circumstances which make it likely that the Company will be
liable to such payment or reassessment.

	8.20	 	Compliance and Litigation

	 	8.20.1	 	To the Sellers’ best knowledge, the Company and its Business are
conducted in accordance with applicable laws and regulations (in
particular, but without limitation, hygiene, clinical and health and
safety regulations applicable to the Business) except when failure to
comply would not individually or in the aggregate have a material
adverse effect on the Company or its Business and there is no order,
decree or judgment of any court or any governmental agency of any
applicable jurisdiction outstanding against the Company.
	 
	 	8.20.2	 	Neither the Company nor any agreement, arrangement or practice to
which the Company is a party, is at the date of this Agreement the
subject of any material investigation or inquiry by any Governmental
Authority. No material contracts or agreements to which the Company
is a party contain any provision or omission that is liable to result
in a civil or criminal sentence, fine or penalty against the Company,
or any of its directors.
	 
	 	8.20.3	 	Except for those matters set out in Schedule 8.20.3, the Company
has not been notified of a claim and is not involved in any
litigation, judicial procedure,

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	 	 	 	enquiry or administrative proceedings or arbitration for a claim
in excess of Euro 5,000.

	8.21	 	Relations with Sellers

	 	8.21.1	 	The Company is not a party to any agreement or arrangement with or
in relation to any Seller other than the legal relationship of a
company with its shareholders, directors, or through an employment
contract.
	 
	 	8.21.2	 	Except as disclosed in Schedule 8.21.2, there is no outstanding
indebtedness from the Company to any of the Sellers.

	8.22	 	Actions since 31 December 2003
	 
	 	 	Since 31 December 2003 and through the date hereof, the activities of the
Company have been conducted in accordance with the ordinary and usual
course of business, consistent with past practice, and except as disclosed
in Schedule 8.22, the Company has not:

	 	(a)	 	created, incurred or assumed any long-term indebtedness; or
incurred, assumed, or permitted to exist any short-term indebtedness
other than in the ordinary and usual course of business, consistent
with past practice; or permitted any change in the credit practices
of the Business;
	 
	 	(b)	 	assumed, guaranteed, or otherwise become liable or responsible
(whether directly or otherwise) for the obligations of any Person,
other than in the ordinary and usual course of business, consistent
with past practice;
	 
	 	(c)	 	except as permitted pursuant to Clause 2.3 above, paid, loaned
or advanced any amount to, or transferred or leased any fixed assets
to, paid or made any dividend or other distribution to, or entered
into any transaction with, any of the Sellers, any affiliate of any
of the Sellers, any officers or directors of the Company, or any
affiliate of any of them;
	 
	 	(d)	 	made or committed to make any capital expenditures in an amount
greater than Euro 100,000 in aggregate for all items;
	 
	 	(e)	 	permitted any material insurance policy to be cancelled,
terminated or materially changed;
	 
	 	(f)	 	suffered any material damage or destruction, whether or not
covered by insurance, materially and adversely affecting the
Business;
	 
	 	(g)	 	incurred any material liability, whether actual or contingent,
except items incurred in the ordinary and usual course of business
and consistent with past practice;
	 
	 	(h)	 	changed the Accounting Principles or the methods of maintaining
its books, accounts or business records;
	 
	 	(i)	 	experienced any event as a result of which it has, or should
have, written down the value of any inventory (including write-downs
by reason of shrinkage or

-24-

 

	 	 	 	mark-down); written off as uncollectible any notes or accounts
receivable, except for write-downs and write-offs in the ordinary
and usual course of business, consistent with past practice; or
increased, or experienced any change in any assumptions underlying
or methods of calculating, any bad debt, contingency or other
reserves;
	 
	 	(j)	 	other than in the ordinary and usual course of business,
consistent with past practice, permitted or allowed any Encumbrance
on any fixed asset, satisfied or discharged any Encumbrance or paid,
discharged or satisfied any claim, obligation or liability;
	 
	 	(k)	 	disposed of or permitted to lapse any rights to the use of any
material Intellectual Property Right, or disposed of or disclosed to
any Person other than representatives of the Purchaser any trade
secret, formula, process, know-how or other intellectual property of
the Company not theretofore a matter of public knowledge, except in
the ordinary and usual courses of business, consistent with past
practices;
	 
	 	(l)	 	except in the usual and ordinary course of business and
consistent with past practice, knowingly waived any rights, settled
any disputes or amended or terminated any agreements of material
value, or entered into any non-compete or non-solicitation agreements
or agreements having a similar effect;
	 
	 	(m)	 	made any change in the compensation payable or to become
payable to any of the employees, agents or consultants of the Company
(other than normal recurring increases, in the ordinary course of
business and consistent with past practice, of wages payable to
employees who are not officers (cadres)); or amended any employee
benefit plan of the Company or any employment, severance or
termination agreement with any employee of the Company; or entered
into any employment agreement; or made any termination of employment
of any officers (cadres) of the Company, or received notice of any
expression or intention by any of them to terminate his or her
employment;
	 
	 	(n)	 	become involved or threatened in writing with any labor dispute
which has had or could have a material adverse effect on the
financial condition, results of operations or prospects of the
Company;
	 
	 	(o)	 	acquired any other business, entered into any licensing
arrangement or joint venture pertaining to the operation of the
Company or made any investments in any other Person (except for cash
managed purposes);
	 
	 	(p)	 	acquired any fixed asset or transferred or otherwise disposed
of any of its fixed assets, except in the ordinary and usual course
of business, consistent with past practice;
	 
	 	(q)	 	granted any discount for prompt payment or any incentive, or
entered into any factoring or similar arrangement, outside the
ordinary course of business, in order to materially reduce the level
of current assets of the Company;

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	 	(r)	 	agreed to any material change to any material agreement for any
supply or to any service contract outside the ordinary and usual
course of business, consistent with past practices;
	 
	 	(s)	 	entered into other agreements or commitments, except agreements
or commitments made in the ordinary and usual course of business,
consistent with past practice;
	 
	 	(t)	 	purchased, redeemed or issued any shares or other securities,
or entered into any commitments or arrangements for the purchase,
redemption or issuance of shares of capital stock or other
securities; made any change in the number of issued shares of capital
stock of the Company; granted any right or option or make any
commitment or agreement relating to such capital stock; acquired or
created any subsidiary;
	 
	 	(u)	 	commenced litigation, arbitration or other contentious
proceedings, settled any material litigation, or had any judgment or
arbitral award entered against it;
	 
	 	(v)	 	agreed, whether in writing or otherwise, to take any action
described in this Clause; or
	 
	 	(w)	 	suffered any material adverse change.

	8.23	 	No other Representation or Warranty
	 
	 	 	The Sellers make no representation or warranty to the Purchaser other
than as expressly and specifically set forth in this Agreement.

	9.	 	REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
	 
	 	 	The Purchaser represents and warrants to the Seller as of the date of this
Agreement that the statements contained in this Article 9 are true and
accurate, such representations and warranties shall survive the Closing.
	 
	9.1	 	Organization, Legal Power, Enforceability

	 	9.1.1	 	The Purchaser is duly organized and validly existing under the
laws of its jurisdiction of incorporation. The copy of the
Purchaser’s certificate of incorporation that has been provided to
the Sellers reflects all amendments made to date and are correct and
complete.
	 
	 	9.1.2	 	The Purchaser has taken all action necessary and has all
requisite corporate power and authority to enter into, and to
exercise its rights and perform its obligations under, this Agreement
and the other documents contemplated hereby to which the Purchaser is
a party.
	 
	 	9.1.3	 	This Agreement and the other documents contemplated hereby to
which the Purchaser is a party constitute valid and binding
obligations of the Purchaser, enforceable against the Purchaser in
accordance with their terms.

-26-

 

	 	9.1.4	 	The Purchaser has executed on or prior to the date of
signature of this Agreement all financing documents to secure all
financing necessary to ensure that on the Closing Date it will have
sufficient resources to pay the Purchase Price.

	10.	 	COVENANTS
	 
	10.1	 	Pre-Closing Covenants
	 
	10.2	 	Between the date of this Agreement and the Closing, the Sellers shall:

	 	10.2.1	 	procure that the Company does not make or commit to make any of the
actions or steps listed in paragraphs (a) to (v) of Clause 8.22;
	 
	 	10.2.2	 	procure that the activities of the Company will be conducted in
accordance with the ordinary and usual course of business, consistent
with past practice;
	 
	 	10.2.3	 	make any notifications to financial institutions or Governmental
Authorities which are necessary to be made prior to the Closing in
accordance with the terms of the relevant agreements;
	 
	 	10.2.4	 	procure the registration of the sale and transfer agreement
relating to the acquisition by the Company of the trademark * * * and
the payment by the Company of all stamp duties and any penalties
which may be levied thereon; and
	 
	 	10.2.5	 	provide the Purchaser and its professional advisers with reasonable
access, during normal business hours, to the Company, its key
employees, the Premises and the Real Property; it being specified
that the Purchaser shall keep confidential the information disclosed
to it and use such information only for the purpose of closing the
transactions contemplated hereby.

	10.3	 	Post-Closing Covenants

	 	10.3.1	 	The Purchaser will arrange for the Sellers to be fully and finally
released from all obligations or liabilities arising from any
security, guarantees, comfort letters, joint undertakings or other
similar undertakings given for the benefit of or on account of the
Company up to and as at the Closing Date which are listed in Schedule
10.3.1 as soon as possible after the Closing and not later than six
(6) months after the Closing Date.
	 
	 	10.3.2	 	If at any time after the Closing Date any further action is
necessary, proper or advisable to carry out the purposes of this
Agreement, as soon as reasonably practicable, each Party shall take,
or cause its proper officers and directors to take, all such
necessary, proper or advisable actions.
	 
	 	10.3.3	 	From the Closing Date until 31 December 2006, the Purchaser shall,
inter alia, retain and conduct the Business (as it may evolve after
the Closing Date) so as to maintain the generation of Revenue within
the Company and generally in a manner consistent with past practice
and the Company’s long-term corporate interest.

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	 	10.3.4	 	The Purchaser shall conduct the * * * after the date of this
Agreement and shall take all necessary steps so the * * * be
completed and the report related thereto be remitted to the Parties
on or prior to the thirtieth (30th) day following the Closing Date.
	 
	 	10.3.5	 	The Purchaser shall pay all reasonable attorney fees and costs of
the lawyer of Mr. François Tourniaire (plus one additional lawyer)
incurred after the Closing Date in connection with * * *.

	11.	 	INDEMNIFICATION
	 
	11.1	 	Survival
	 
	 	 	The representations and warranties of the Sellers contained in Clause 8
shall survive until 31 March 2007 except for those representations and
warranties relating to (i) Tax (Clause 8.19) and Employment (Clause 8)
which shall survive until two (2) months after the expiration of
applicable statute of limitations and (ii) existing litigation identified
in Schedule 8.20.3 which shall survive until the final outcome of such
litigation (either through an award or judgment which cannot be appealed
or challenged, or a final settlement). Notwithstanding the foregoing, any
representation or warranty which is falsely and intentionally made shall
survive for a period of ten (10) years after the Closing; the Specific
Indemnities arising in connection with the facts set forth in paragraphs
(a) and (b) of Schedule 11.2.1 shall survive for a period of five (5)
years after the Closing, and the Specific Indemnities arising in
connection with the facts set forth in paragraphs (c), (d) and (e) of
Schedule 11.2.1 shall survive for a period of ten (10) years after the
Closing. Furthermore, all covenants and agreements contained in this
Agreement shall survive in accordance with the specific terms of this
Agreement and any claim in relation thereto may be made until the end of
the term specified in the Agreement. No indemnification claim may be
asserted by the Purchaser after the expiration of the applicable
indemnification period as stated above; provided, however, that
indemnification in relation with Claim Notice sent by the Purchaser prior
to the expiration of the applicable indemnification periods shall not
thereafter be barred by the expiration of the applicable indemnification
periods.
	 
	11.2	 	Indemnification

	 	11.2.1	 	Subject to the provisions of Clause 11.3 below, the Sellers
(severally but not jointly, and each on the basis of their respective
Prorata Proportion) hereby agree to indemnify, defend and hold
harmless the Purchaser (or the Company and/or all officers,
affiliates or agents and representatives of the Purchaser and of the
Company, if so requested by the Purchaser (collectively “Indemnified
Persons”)) from and against and in respect of any and all
liabilities, damages, penalties (including without limitation,
criminal and administrative sanctions), judgments, settlements, costs
and expenses (including interest and penalties and reasonable
attorneys’ and accountants’ fees) incurred (“Loss” or “Losses”) that
arise directly out of:

	 	(a)	 	any breach by the Sellers of any of the
representations and warranties contained in or made by or
pursuant to this Agreement; or

-28-

 

	 	(b)	 	any breach by the Sellers of any of their
covenants or agreements in this Agreement; or
	 
	 	(c)	 	the matters identified in Schedule 11.2.1 (the
“Specific Indemnities”), notwithstanding any other provisions
of this Agreement (except for the provisions of this Clause
11, which shall apply) or disclosure in any Schedule hereto.
	 
	 	 	 	(hereafter the “Damages”)

	 	11.2.2	 	Payment in Escrow

	 	(a)	 	In the event that on or before the date falling
two (2) Business Days prior to the payment date of a
Subsequent Payment, the Purchaser has notified the Sellers of
one or more claims pursuant to Clause 11.5 of this Agreement
(each a “Claim”), the Purchaser shall be entitled to pay, on
or before the date of the payment date of a Subsequent
Payment, an amount (not to exceed the amount of the
Subsequent Payment) equal to the Sellers’ potential liability
under Clause 11 of this Agreement for such Claim to the
Escrow Agent for deposit in the Escrow Account (the “Escrow
Amount”). Such Escrow Amount shall be determined by the
Purchaser in good faith. Such Escrow Amount shall be deducted
from the amount of the Subsequent Payment to be paid to the
Sellers at the payment date of such Subsequent Payment.
	 
	 	(b)	 	On the payment date of the Subsequent Payment,
and for a period of thirty (30) days thereafter, the Sellers
shall be entitled to notify the Purchaser that they contest
the relevant Escrow Amount and wish to refer the
determination of the Escrow Amount to an independent auditor
(the “Auditor”); provided, however, that * * *, the Sellers
shall not be entitled to contest (and shall be deemed to
accept) any Escrow Amount of less than * * * in respect of a
Claim by the Purchaser relating to * * *. Upon receipt of
such notice from the Sellers, the Purchaser and the Sellers
shall refer the matter to the Auditor. The Auditor shall
determine such Escrow Amount by determining whether and to
what extent the amount paid by the Purchaser to the Escrow
Agent represents a good faith, prima facie estimate of the
amount to which the Purchaser may be entitled to
indemnification under this Agreement.
	 
	 	(c)	 	The Auditor shall be Mazard & Guerard or if
Mazard & Guerard shall not accept such appointment, any
internationally recognized independent accounting firm with
offices in Paris mutually acceptable to the Sellers and the
Purchaser. If the Auditor shall be either unwilling or
unable to accept such appointment and the Parties are unable
to agree upon the appointment of another Expert, the matter
shall be referred by either Party to the Rules for Expertise
of the International Chamber of Commerce (the “Expertise
Rules”) who shall be requested to make a further selection or
(as the case may be) a further appointment, pursuant to
Clause II or Clause III of the Expertise Rules, as
appropriate. The Auditor shall act

-29-

 

	 	 	 	under the rules of the International Center for Expertise of
the International Chamber of Commerce. The Auditor shall use
its best efforts to make its determination in accordance with
Clauses 11.2.2 (a) and (b) within thirty (30) days after its
appointment, such determination being made in writing and
delivered to the Purchaser, and the Sellers as promptly as
practicable within such time period.
	 
	 	(d)	 	In the event the Auditor determines that the
Escrow Amount for any particular Claim should be less than
the amount deposited by the Purchaser as Escrow Amount in
respect to such Claim (including a determination by the
Auditor that such Escrow Amount should be zero), the
Purchaser and the Sellers shall immediately jointly instruct
the Escrow Agent to release from the Escrow Account in favor
of the Sellers an amount equal to the difference between the
Escrow Amount deposited by the Purchaser, and the definitive
Escrow Amount determined by the Auditor.
	 
	 	(e)	 	The Auditor’s determination shall be used only
for the purpose of determining an Escrow Amount and shall
have no bearing whatsoever upon the merits of the dispute
between the parties as to the existence or the amount of the
Claim of the Purchaser or the Sellers’ liability therefore.
Fees and expenses of the Auditor shall be equally shared
between the Sellers on the basis of their Prorata Proportion,
on the one hand, and the Purchaser, on the other hand.
	 
	 	(f)	 	In the event that it is determined, either by
agreement of the Parties or by a final arbitration award,
that the Sellers are liable to the Purchaser for any Claim in
connection with which an Escrow Amount has been established,
then the Escrow Amount (or relevant part thereof) shall be
returned by the Escrow Agent to the Purchaser in accordance
with the terms of the Escrow Agreement for the amount due to
the Purchaser in respect of such Claim and shall constitute a
reduction of the Subsequent Payment.
	 
	 	(g)	 	In the event that it is determined, either by
agreement of the parties or by a final arbitration award,
that the Sellers are not liable to the Purchaser for any
Claim in connection with which an Escrow Amount has been
established or that such liability is less than such Escrow
Amount, the relevant part of the Escrow Amount related to
such claim shall be paid by the Escrow Agent to the Sellers.
	 
	 	(h)	 	The Sellers and the Purchaser agree to give
promptly to the Escrow Agent all instructions necessary for
the release of funds from the Escrow Account in accordance
with this Section 11.2.2 and the Escrow Agreement.

	 	11.2.3	 	Right to Set Off
	 
	 	 	 	It is expressly provided that the Purchaser shall be entitled to
set off from any Prorata Proportion of the Subsequent Payment due
and payable to a Seller any

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	 	 	 	amount of indemnification agreed upon under this Agreement or
decided by a final arbitration award and due to the Purchaser by
such Seller under Clause 11 (the “Right to Set-Off”) and each
Seller shall be entitled to set off from any amount of
indemnification agreed upon under this Agreement or decided by a
final arbitration award and due by such Seller to the Purchaser
the amount of the Prorata Proportion of the Subsequent Payment due
to such Seller and not otherwise paid to such Seller pursuant to
the provisions of the Agreement or of the Escrow Agreement.

	11.3	 	Limitations

	 	11.3.1	 	With respect to the determination of the amount which shall be
payable by the Sellers in case of a claim for Damages, it is agreed
that:

	 	(a)	 	no individual claim for Damages may be made, or
aggregated in accordance with Clause 11.3.1(b) below for the
calculation of the applicable threshold, unless the
individual amount thereof shall exceed three thousand euros
(Euro 3,000) or the counter-value thereof on the date of the
claim in the relevant currency (the “De Minimis Amount”);
provided that if the aggregate amount of individual claims
arising from the same set of related circumstances exceeds
the De Minimis Amount all such individual claims may be made
pursuant to this section and aggregated in accordance with
Clause 11.3.1(b) below;
	 
	 	(b)	 	the Sellers shall have no obligation to
indemnify the Indemnified Person until and unless the
aggregated amount of all Damages for which indemnification
may be sought under this Agreement exceeds four hundred
thousand euros (Euro 400,000) or the counter-value thereof on
the date of the claim in the relevant currency (the
“Threshold Amount”); provided, however, that the Threshold
Amount shall be reduced by any amounts (up to a maximum
aggregate amount of Euro 100,000) paid by the Company to
fully implement the measures set out in Schedule 11.3.1(b)
and to conduct the * * *. In the event such aggregate amount
exceeds the Threshold Amount, the Sellers shall indemnify the
Indemnified Person for the whole of the aggregated amount of
the Damages, subject to the limitations set forth in this
Clause 11.3;
	 
	 	(c)	 	notwithstanding any other provision of this
Agreement, the maximum aggregate amount of indemnification
which the Indemnified Person shall be entitled to recover in
respect of all Damages and for which Sellers may be liable to
pay under this Agreement shall be capped at all times to the
aggregate of the Subsequent Payments actually due (whether
paid or payable) (the “Cap”). However if at any time the
maximum aggregate amount of indemnification (whether paid or
not) exceeds the amount of the Subsequent Payment due at such
time (whether paid or payable at such time), the Indemnified
Person shall be entitled to recover the difference to the
extent of the amount of Subsequent Payments actually due and
payable after such time.

-31-

 

	 	(d)	 	the amount to which the Indemnified Person
might otherwise be entitled for a Damage shall be reduced by
the value of any benefit received or realised by the
Indemnified Persons including the Company on account of the
Damage giving rise to the Claim and resulting directly from
any reduction, savings or recovery of debts and duties, any
payment under any insurance policy or any recovery as a
result of any litigation brought by the Company or the
Purchaser on account of the Damages giving rise to the Claim;
	 
	 	(e)	 	the amount to which the Indemnified Person
might otherwise be entitled for a Damage shall be reduced by
any provisions made in the 2003 Financial Statements on
account of the Damage giving rise to the Claim, or the
release of such provisions as a result of the redundancy of
such provisions in respect of a specific Damage;
	 
	 	(f)	 	the amount to which the Indemnified Person
might otherwise be entitled for any Damage shall be reduced
where and to the extent that such Damage results solely from
any change in accounting or taxation policy or practice of
the Purchaser or the Company (including the method of
submission of taxation returns ) introduced after the Closing
Date.
	 
	 	(g)	 	any amount to which the Indemnified Person
might otherwise be entitled for any Damage shall be reduced
where and to the extent that such Damage would have been
covered by any Company’s insurance policy existing at the
Closing Date, but for a reduction by such Company after the
Closing Date of the scope or amount of coverage under such
insurance policy below that existing on the Closing Date.
	 
	 	(h)	 	any amount to which Indemnified Person might
otherwise be entitled for any Damage shall be reduced where
and to the extent that the Indemnified Person may effectively
benefit from a tax saving (including any Tax reduction,
credit, or Loss carry-back or carry-forward) computed at the
then current tax rate in relation to such Damage.
	 
	 	(i)	 	any amount to which the Indemnified Person
might otherwise be entitled for any Damage shall be reduced
where and to the extend that such Damage was increased (from
that which it otherwise would have been) as a result of the
passing of implementation, or any change in, after the
Closing Date, any directive, law, decree or regulations.
	 
	 	(j)	 	Neither the De Minimis Amount, nor the
Threshold Amount, nor the Cap shall be applicable with regard
to the Specific Indemnity arising in connection with the
facts set forth in paragraph (c) of Schedule 11.2.1.

	 	11.3.2	 	Exclusion

	 	(a)	 	The Purchaser shall not be entitled to make a
claim for indemnification for Damages against the Sellers in
respect of any Tax audit or claim which merely modified the
Tax period during which a deductible charge or

-32-

 

	 	 	 	amortization may be taken or in respect of any VAT assessment
(except if the amount of such VAT assessment cannot be
effectively recovered), except for any interest or penalties
resulting therefrom.
	 
	 	(b)	 	The Sellers shall not be liable to indemnify
the Purchaser or the Company for that part of any Damages
resulting from the Purchaser’s acts or omissions which has
contributed to or aggravated such Damages.
	 
	 	(c)	 	Any Claim shall (if it has not been previously
satisfied, settled or withdrawn) be deemed to have been
withdrawn when the legal proceeding against the Sellers in
respect of it have not been commenced within six (6) month of
notification to the Sellers of the Claim Notice.

	 	11.3.3	 	No Multiplier
	 
	 	 	 	For purposes of computing the amount of any Damages, only the
Damages actually sustained by the Purchaser or the Company shall
be taken into account, to the exclusion of any price / earnings or
other multiplier or valuation factor (whether or not implicit in
the Purchase Price).

	11.4	 	Payment

	 	11.4.1	 	The Sellers will pay to the Indemnified Persons the amount of any
Claim under this Clause 11 (or instruct the Escrow Agent to this
effect) in accordance with the written instructions of the Purchaser
within ten (10) Business Days of agreement between the Sellers and
the Purchaser or final determination of the amount due in accordance
with the provisions of Clause 21.
	 
	 	11.4.2	 	If the Sellers pay to the Indemnified Persons an amount in respect
of a Claim and the Indemnified Persons subsequently recovers from a
Third Party an amount which relates directly to the matter giving
rise to the Claim:

	 	(a)	 	if the amount paid by the Sellers in respect of
the Claim is more than the Sum Recovered (as defined in this
Clause 11.4.2), the Purchaser will promptly pay to the
Sellers the Sum Recovered; and
	 
	 	(b)	 	if the amount paid by the Sellers in respect of
the Claim is less than or equal to the Sum Recovered, the
Purchaser will promptly pay to the Sellers an amount equal to
the amount paid by the Sellers.
	 
	 	(c)	 	For the purposes of this Clause 11.4, “Sum
Recovered” means an amount equal to the total of the amount
recovered from the Third Party plus any interest in respect
of the amount recovered from the Third Party to the extent
such interest was effectively received from such Third Party,
but after deduction of any cost incurred by the Purchaser or
the Company in collecting such an amount.

	11.5	 	Notification procedure and conduct of Claims

	 	11.5.1	 	If an event occurs which might give rise to a Claim, the Purchaser
will notify the Sellers’ Representative of the matter in accordance
with Clause 19 (a

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	 	 	 	"Claim Notice”) stating in reasonable detail the nature of the
Claim and, if practicable, the amount claimed promptly, and in any
event no later than 30 days upon the Company on the Purchaser
becoming aware of the facts causing such Damage, provided however
that failure to give timely such notice will not effect the rights
of the Purchaser to indemnification hereunder except to the extent
that the rights of the Sellers are actually prejudiced. If it is
not practicable to state the amount claimed in the Claim Notice,
the Purchaser undertakes as soon as practicable after the date of
the Claim Notice to provide the Sellers with a reasonable estimate
of the amount claimed.
	 
	 	11.5.2	 	The Sellers will have a period of thirty (30) days from receiving
the Claim Notice to notify the Purchaser of any preliminary remarks
or points they wishes to contest (a “Dispute Notice”).
	 
	 	11.5.3	 	Within fifteen (15) Business Days of receipt by the Purchaser of
the Dispute Notice, the Purchaser and the Sellers will endeavour to
agree the existence and/or amount of the Claim, failing which, the
dispute will be settled in accordance with Clause 21.

	 	 	 	 	 	 	 	 	 
	 

	 	 	11.5.4	 	 	(a)
	 	In the event that the Purchaser sends a Claim Notice, the
Sellers shall have the right, both themselves and through their
agents and advisors, to investigate the matters set forth therein.
	 
	

	 	 	 	 	 	(b)
	 	In such connection, the Purchaser shall, and
shall cause the Company to give reasonable access to the
Sellers and their agents and advisors to their books,
records, documents and employees and the Sellers shall be
allowed to take copies of all such books records and
documents. The Sellers shall keep and books recorded
documents confidential and use them only for the purpose of
analysing the Claim and defending their rights under this
Agreement.

	 	11.5.5	 	In the event of any Third Party claim or legal or administrative
action against the Company or any proceedings with respect to a Tax
matter which could give rise to a Claim (the “Third-Party Claim”),
the Purchaser will give written notice in accordance with Clause
11.5.1 and the Purchaser will be entitled to elect to have the
conduct of the Third-Party Claim. In this event:

	 	(a)	 	the Sellers’ Representative will be entitled to
participate in any proceedings, together with the advisers of
its choice; and
	 
	 	(b)	 	any reasonable recommendation made by the
Sellers’ Representative in the course of the proceedings will
be duly considered and taken into account by the Purchaser.

	 	11.5.6	 	If the Purchaser does not wish to have exclusive conduct of the
Third-Party Claim, it shall be entitled to request that the Sellers’
Representative take charge of the Third-Party Claim. In this event:

	 	(a)	 	the Purchaser will be entitled to participate
in any proceedings, together with the advisers of its choice;

-34-

 

	 	(b)	 	any reasonable recommendation made by the
Purchaser in the course of the proceedings will be duly
considered and taken into account by the Sellers’
Representative;
	 
	 	(c)	 	if the Purchaser disputes the litigation
strategy adopted by the Sellers’ Representative, it will be
entitled to take back the conduct of the Third-Party Claim
(in accordance with Clause 11.5.4).

	 	11.5.7	 	Whether the Sellers’ Representative conducts or assists in the
conduct of a Third-Party Claim, the Sellers will be responsible for
the cost and expenses of their own advisors.

	11.6	 	Several Liability of Sellers / Prorata Proportion
	 
	 	 	Except as otherwise explicitly set out herein, each Seller shall be liable
vis-à-vis the Purchaser on a several but not joint basis and on the basis
of his/her Prorata Proportion.
	 
	11.7	 	The Purchaser shall and shall cause the Company to take all reasonable
measures to mitigate any Damages.
	 
	11.8	 	Exclusive Remedy
	 
	 	 	The indemnification provided for in this Clause 11 shall be the exclusive
remedy of the Purchaser against the Sellers in respect of any breach of
any representation or warranty or covenant set out in this Agreement.
	 
	12.	 	NON-COMPETITION
	 
	12.1	 	None of the Sellers will, until five (5) years after the Closing:

	 	(i)	 	have any ownership interest (of record or beneficial) in or
have any interest as a director, officer, employee, manager or
consultant in, or otherwise aid or assist in any manner, any
corporation, partnership or other business that engages in products
and services competes with the Business, including products and
services in development or products developed but not yet marketed by
the Company, unless the ownership interest is for investment purposes
only, and, if in a company whose shares are listed on a recognized
stock exchange, does not grant the Seller directly or indirectly
management functions or material influence in competing with the
Company and the Subsidiary;
	 
	 	(ii)	 	do or say anything which might be harmful to the Business, or
which may lead a person who has dealt with the Company or the
Business to cease to deal with the Company or the Business (or
materially reduce its relations) on substantially equivalent terms to
those previously offered or at all;
	 
	 	(iii)	 	on its own account or in conjunction with or on behalf of any
other person in respect of the products or services of the Business,
either seek to obtain orders or do business with a customer of the
Business, or encourage directly or indirectly another person to
obtain orders from or do business with, a person who has been a
customer of that Business, in all instances with regard to the
products or services of the Business in its territory of operation;

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	 	(iv)	 	directly or indirectly solicit or contact with a view to his
engagement or employment a director, officer, employee or manager
whose services are substantially devoted to the Business;
	 
	 	(v)	 	engage or employ a director, officer, employee or manager of
the Company whose services are substantially devoted to the Business
or a person who was a director, officer, employee or manager whose
services were substantially devoted to the Business; or
	 
	 	(vi)	 	seek to contract with or engage (in such a way as to affect
adversely the Business as carried on at the date of this Agreement) a
Person with whom the Company has contracted with or has engaged to
manufacture, assemble, supply or deliver goods or services to the
Business.

	12.2	 	The above non-competition undertakings granted by each of Sellers in
Clause 12.1 above shall be valid in the jurisdictions where the Business
is active which are set forth in Schedule 12.2.
	 
	13.	 	CONFIDENTIAL INFORMATION
	 
	13.1	 	Each Seller undertakes to the Purchaser and the Purchaser undertakes to
each of the Sellers, before and after the Closing, that it will:

	 	(a)	 	Not use or disclose to any Person, with the exception of
potential financial investors (subject to the obtention of
appropriate confidentiality agreements) in any way the Confidential
Information it has or acquires, and
	 
	 	(b)	 	Not make any know-how available that it may have to any
individual, company or business of any kind, whether or not existing
at the date hereof.

	 	 	The Sellers will make every effort to prevent the use or disclosure of
Confidential Information.

	13.2	 	Clause 13.1 does not apply to disclosure of Confidential Information:

	 	(a)	 	to a director, officer or employee of the Purchaser whose
function requires him to have access to the Confidential Information;
	 
	 	(b)	 	required to be disclosed by law, by a rule of a stock exchange
or by a Governmental Authority to which a Party is subject or
submits, whether or not the requirement has the force of law provided
that the disclosure will so far as is practicable be made after
consultation with the other Party and after taking into account the
other Parties’ reasonable requirements as to its timing, content and
manner of making or dispatch; or
	 
	 	(c)	 	to an adviser for the purpose of advising a Party in connection
with the transactions contemplated by this Agreement provided that
such disclosure is essential for these purposes and is on the basis
that this Clause 13 applies to the disclosure by the adviser.

-36-

 

	13.3	 	Nothing in this Clause 13 will be construed, interpreted or applied as
restricting the right of the Purchaser from benefiting from, using or
disposing of any rights and assets pertaining to the Business after
Closing.
	 
	13.4	 	Notwithstanding any provision herein to the contrary, Sellers or
Purchaser may use Confidential Information to exercise their rights under
this Agreement.
	 
	14.	 	ANNOUNCEMENTS
	 
	 	 	Neither Party shall issue or permit to be made any press releases or
public announcements concerning this Agreement or its subject matter or
any ancillary matter without the prior written consent of the other Party,
except as may be required by law, any stock exchange or other competent
regulatory body (provided that the Party required to make the announcement
will consult with the other as to the content of such announcement and
will ensure, if requested by the other Party, and if reasonably
practicable, that such announcement is made simultaneously with any
announcement by the other Party). In addition, any such press release or
announcement shall only contain the same content as any press release or
public announcement made by the other. Each Party will coordinate with
the other any such press release or public announcement that it makes.
	 
	15.	 	COSTS
	 
	15.1	 	A Party will be solely responsible for any brokerage commissions,
finders’ fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement
entered into by that Party. For the avoidance of doubt, no fees incurred
by the Sellers in connection with the transaction contemplated in this
Agreement shall be imputed on the Company.
	 
	15.2	 	Each Party will bear the costs of its own legal and financial advisers in
connection with the preparation of this Agreement. Any registration
duties in connection with the sale and purchase of the Shares will be
borne exclusively by the Purchaser.
	 
	16.	 	SELLERS’ REPRESENTATIVE
	 
	16.1	 	The Sellers hereby irrevocably appoint François Tourniaire as their agent
(the “Sellers’ Representative”) for all purposes of this Agreement. For
this purpose, the Sellers have an irrevocable power of attorney to Mr.
François Tourniaire empowering Mr. François Tourniaire to (a) negotiate
and enter into any amendments to or alterations of the Agreement, (b) take
any action required of the Sellers pursuant to this Agreement, (c) receive
the Initial Purchase Price and the Subsequent Payments, if any, and
distribute such amounts among the Sellers in the Prorata Proportion
subject to clause 16.4 below, (d) send and receive all notifications
contemplated to be given or received under the Agreement (including but
not limited to payment instructions), (e) give bank instructions to the
bank in respect of the allocation of the payments in respect of the
Initial Purchase Price and the Subsequent Payments (as the case may be) as
between the Sellers, (f) agree

-37-

 

	 	 	on the Statement of Revenue of the Company in respect of the relevant
financial year with the Purchaser for the purposes of determining whether
the Targets referred to in Schedule 3.1 have been attained, (g) to
negotiate, accept, defend against or settle any claim that the Purchaser
may have against any one Seller or against all Sellers, (h) represent each
of the Sellers in the conduct of any litigation or court proceedings in
connection with any claim referred to in (g) above, (i) receive or release
any amount placed in the Escrow Account, accept the appointment of the
Auditor and take any action required under the Escrow Agreement and (j)
exercise such rights and perform such obligations as have been
specifically entrusted to him under this Agreement.
	 
	16.2	 	The Parties acknowledge that the appointment and the granting of a power
of attorney pursuant to Clause 16.1 is in the common interest of all
Parties. Accordingly, none of the Sellers shall have the right to revoke
or limit the appointment or the power of attorney of Mr. François
Tourniaire until consummation of the Agreement in full and agreement or
settlement (by settlement agreement, judgment, arbitral award or
otherwise) of all claims arising hereunder.
	 
	16.3	 	Should François Tourniaire hereby appointed, be unable to perform his
duties or be unwilling to remain as the Sellers’ Representative, for any
reason whatsoever, he shall so notify the Purchaser and the Sellers and
the Sellers shall appoint one of themselves at the latest within ten (10)
Business Days following the date on which notice of the inability or the
refusal of François Tourniaire to perform his duties is sent to the
Purchaser and the Sellers. The name and details of such representative
shall be notified to the Purchaser in accordance with the provisions of
Clause 19.
	 
	16.4	 	The Sellers hereby expressly authorize the Sellers’ Representative to
withhold from that part of the Initial Purchase Price or subsequent
payments to be received by each of them their Prorata Proportion of the
fees and expenses incurred by the Sellers’ Representative in connection
with the preparation, execution and performance of this Agreement,
including the fees and expenses of legal and financial advisors to the
Sellers.
	 
	17.	 	TERM AND TERMINATION
	 
	17.1	 	This Agreement will automatically terminate in the event that (i) the
conditions referred to in Clause 5 are not satisfied or waived in writing
in accordance with Clause 5 at the date set out in Clause 5 or (ii) the
Closing Date Account is not fully funded in accordance with the provisions
of Clause 4.1.1.
	 
	17.2	 	In the event that this Agreement terminates under Clause 17.1, all rights
and obligations arising out of or in connection with this Agreement will
also automatically terminate without any indemnification in whole or in
part due to or by either Party provided that:

	 	17.2.1	 	such termination will not affect any claims between the Parties
based on any breach arising prior to the date at which this Agreement
is terminated; and
	 
	 	17.2.2	 	the provisions of Clauses 4.1.1, 13,14,15,16,19, 20 and 21 will
remain in full force and effect.

	18.	 	GENERAL

-38-

 

	18.1	 	This Agreement constitutes the entire and only agreement between the
Parties with respect to the sale of the Shares and supersedes and replaces
any prior commitments, understandings or written or verbal agreements
(including the Memorandum of Understanding and Summary of Proposed Terms
signed by the Parties on 5 January 2004), that the Parties may have had in
connection with the sale of the Shares.
	 
	18.2	 	This Agreement has been entered into between the Parties on the basis of
their identity and of their respective shareholders and activities. This
Agreement is therefore of a personal nature and neither Party will assign
or transfer or purport to assign or transfer any of its rights or
obligations under this Agreement, except as otherwise provided in this
Agreement or with the express consent of the other Party. Notwithstanding
the foregoing, the Purchaser shall be entitled to assign the right to
acquire the Shares to any of its wholly-owned subsidiaries; provided,
however, that the Purchaser shall provide written notice to the Seller of
any such assignment prior to any such assignment being made and shall
remain jointly liable (solidaire) for the performance by the assignee of
all obligations undertaken by the Purchaser under this Agreement.
	 
	18.3	 	No amendment modification, alteration or variation of the Agreement shall
be valid unless it is in writing and signed by or on behalf of each of the
Parties to it.
	 
	18.4	 	The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions. If any provisions of
this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (A) a suitable and equitable
provision shall be substituted therefore in order to carry out, so far as
may be valid and enforceable, the intent and purpose of such invalid or
unenforceable provision and (B) the remainder of this Agreement and the
application of such provision to other Persons, or circumstances shall not
be affected by such invalidity or unenforceability, nor shall such
invalidity or unenforceability affect the validity or enforceability of
such provision, or the application thereof, in any other jurisdiction.
	 
	18.5	 	Interpretation

	 	18.5.1	 	A reference to any Party to this Agreement or any agreement or
document shall include such Party’s successors and permitted assigns.
	 
	 	18.5.2	 	A reference to any legislation or to any provision of any
legislation shall include any amendment to, and any modification or
re-enactment thereof, any legislative provision substituted therefore
and all regulations and statutory instruments issued thereunder or
pursuant thereto, provided the above are in effect on the Closing
Date.
	 
	 	18.5.3	 	In this Agreement, the headings to Clauses are inserted for
convenience only and shall be given no substantive or interpretative
effect whatsoever.

	19.	 	NOTICES
	 
	 	 	Any notice or other communication required or permitted hereunder shall be
sufficiently given to a person if in writing and will become effective
when delivered by hand, by an overnight courier service which requires a
delivery receipt therefore (such as DHL), by

-39-

 

	 	 	registered or certified mail, return receipt requested, postage prepaid,
at such person’s address set forth below or such other address as such
person may designate by notice in accordance with the foregoing provision:

	 	 	 	 	 
	 

	 	To the Sellers:
	 	M. François Tourniaire
	

	 	 	 	* * *
	

	 	 	 	* * *
	 
	 	 	 	 
	

	 	To the Purchaser:
	 	MediCor Ltd.
	

	 	 	 	4560 Decatur Boulevard, Suite 300
	

	 	 	 	Las Vegas, Nevada 89103-5253
	

	 	 	 	USA
	

	 	 	 	 
	

	 	 	 	Attn. Mr. Donald K. McGhan

	20.	 	GOVERNING LAW — JURISDICTION
	 
	 	 	This Agreement is governed by, and will be construed in accordance with,
the laws of France.
	 
	21.	 	DISPUTE RESOLUTION
	 
	21.1	 	Any dispute, difference, controversy or claim arising out of or in
connection with this Agreement (a “Dispute”), shall be referred to and
determined by arbitration according to the provisions set out below. The
seat of arbitration shall be Paris (France).
	 
	21.2	 	The party, or parties, initiating recourse to arbitration (hereinafter
called the “claimant(s)”) shall give to the other party, or parties
(hereinafter called the “respondent(s)”) a Notice of Arbitration. The
arbitration shall be deemed to commence on the date on which the Notice of
Arbitration is received by the respondent(s).
	 
	21.3	 	The Notice of Arbitration shall contain a brief description of the nature
of the claim and an indication of the amount involved, if any, and the
relief or remedy sought.
	 
	21.4	 	The Arbitral Tribunal shall be composed of three (3) Arbitrators who
shall be appointed by the International Court of Arbitration of the
International Chamber of Commerce (the “ICC”), acting as the appointing
authority. The Arbitrators shall be fluent in both English and French.
	 
	21.5	 	As soon as practicable after the appointment of the Arbitrators, and in
any event no later than 15 days after the Arbitrators ‘ appointment, the
claimant(s) shall deliver to the respondent(s) (with a copy to the
Arbitrators) a statement of case, containing particulars of its/their
claims and written submissions in support thereof, together with any
documents relied on.
	 
	21.6	 	Within 15 days of the receipt of the claimant’s(s) statement of case, the
respondent(s) shall deliver to the claimant(s) (with a copy to the
Arbitrators) a statement of case in answer, together with any counterclaim
and any documents relied on.

-40-

 

	21.7	 	Within 15 days of the receipt by the claimant(s) of any statement of
counterclaim by the respondent(s), the claimant(s) may deliver to the
respondent(s) (with a copy to the Arbitrators) a reply to counterclaim
together with any additional documents relied upon.
	 
	21.8	 	As soon as practicable after delivery to the Respondent(s) of any
statement of counterclaim, or if no counterclaim is made, then as soon as
practicable after delivery to the Claimant(s) of the statement of case in
answer, the Arbitral Tribunal shall convene a meeting (the “First
Procedural Meeting”) with the parties or their representatives to
determine the procedure to be followed in the arbitration.
	 
	21.9	 	The procedure shall be as agreed by the parties or, in default of
agreement, as determined by the Arbitral Tribunal. However, the following
procedural matters shall in any event be taken as agreed:

	 	(a)	 	the language of the arbitration shall be French and English and
documentary exhibits may be admissible in French and English;
	 
	 	(b)	 	the Arbitral Tribunal shall issue its final award in English
within 30 days of the last hearing or written submission of the
substantive issues in dispute between the parties.

	21.10	 	In the event of default by either party in respect of any procedural
order made by the Arbitral Tribunal, the Arbitral Tribunal shall have
power to proceed with the arbitration and to make its award.
	 
	21.11	 	If a Dispute raises issues substantially the same as, or connected with,
issues raised in an existing Dispute the Arbitral Tribunal appointed or to
be appointed in respect of any such existing Dispute shall also be
appointed as the Arbitral Tribunal in respect of the Dispute (in which
case it shall be called a “Related Dispute”). For the purposes of this
Agreement an existing Dispute means any Dispute between the Parties or any
number of them in respect of which a Notice of Arbitration has already
been served.
	 
	21.12	 	In the event that an arbitrator dies or is or becomes unable to act, a
replacement arbitrator shall be appointed by the ICC.
	 
	21.13	 	Where, pursuant to Clause 21.11 above, the same Arbitrators have been
appointed in relation to two or more Disputes, the Arbitral Tribunal may
order that the whole or part of the matters at issue shall be heard
together upon such terms and conditions as the Arbitral Tribunal thinks
fit. The Arbitral Tribunal shall have power to make such directions as it
considers just and desirable for the proper conduct of any such
consolidated proceeding.
	 
	21.14	 	The Arbitral Tribunal, upon the request of a party to a Dispute or a
Party to this Agreement which itself wishes to be joined in proceedings in
relation to a Dispute, shall join any party to this Agreement to
proceedings in relation to that Dispute and may make a single, final award
determining all Disputes between them. Each of the Parties to this
Agreement hereby consents to be joined to proceedings in relation to any
Dispute at the request of a party to that Dispute. Any such request must
be received by the Arbitral Tribunal before the First Procedural Meeting
is convened.

-41-

 

	21.15	 	The parties hereby waive any rights of application or appeal to the
courts of France to the fullest extent permitted by law in connection with
any question of law arising in the course of the arbitration or with
respect to any award made, except for actions to enforce an arbitral award
and actions seeking interim, interlocutory or other provisional relief in
any court of competent jurisdiction.
	 
	21.16	 	The award shall be final and binding upon the parties from the day it is
made, and shall be the sole and exclusive remedy between the parties
regarding any claims, counterclaims, issues, or accounting presented to
the Arbitral Tribunal. Judgment upon any award may be entered in any
court having jurisdiction.
	 
	21.17	 	Any monetary award shall be made and promptly payable in Euro and the
Arbitral Tribunal shall be authorized in its discretion to grant pre-award
and post-award interest at commercial rates. Any costs, fees, or taxes
incident to enforcing the award shall, to the maximum extent permitted by
law, be charged against the Party resisting such enforcement.
	 
	21.18	 	Any Seller commencing an arbitration under this Agreement shall, in
writing, inform all other Sellers to the Agreement whether or not they are
a party to the Dispute.
	 
	21.19	 	All notices by one party to another party in connection with the
arbitration shall be in accordance with the provisions of Clause 19.
	 
	21.20	 	This agreement to arbitrate shall be binding upon the successors and
assigns of each party.

IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement, as of
the day and year first above written, in eight (8) original copies and two (2)
sets of Schedules, one set for the Purchaser and one set for the Sellers (each
of the Sellers accepting to refer to one common set of Schedules).

-42-

 

	 	 	 
	
 

	 	
 
	MediCor Ltd.

	 	François Tourniaire
	Represented by Donald K. McGhan
	 	 
	 
	 	 
	
 

	 	
 
	Michel Tourniaire

	 	Jacques Tourniaire
	 
	 	 
	
 

	 	
 
	Olivier Tourniaire

	 	Senaz Falquerho (née Namooya)
	 
	 	 
	
 

	 	
 
	Françoise Pelissard

	 	Nadège Tourniaire

-43-exv10w21

 

Exhibit 10.21

EXECUTION COPY

STOCK PURCHASE AGREEMENT

     This Stock Purchase Agreement (the “Agreement”) is entered into on
September 7, 2004 (the “Execution Date”), by and among, Mr. Carlos Francisco
Lazo de la Vega Jasso (“Mr. Carlos Lazo”), a Mexican individual with his
principal place of business located at Juárez No. 18 A, Tlacopac, 01040,
Mexico, Federal District; Mr. Héctor Jesús Chuliá de la Torre (“Mr. Héctor
Chuliá” and, together with Mr. Carlos Lazo, the “Sellers”), a Mexican
individual with his principal place of business located at Juárez No. 18 A,
Tlacopac, 01040, Mexico, Federal District, and MediCor Latin America, S.A. de
C.V. (“MediCor LA”), a company organized and existing under the laws of Mexico,
with its principal place of business located at Juárez No. 18 A, Tlacopac,
01040, Mexico, Federal District, and International Integrated Management, Inc.
(“IIM” and, together with MediCor LA, the “Buyers”), a limited corporation duly
incorporated and validly existing under the laws of Delaware, United States of
America, with its principal place of business located at 4560 South Decatur
Boulevard, Suite 300, Las Vegas, Nevada, 89103-5253, United States of America,
with the appearance of Dermatological Medical Products and Specialties, S.A. de
C.V. (“Dermedics”), a company organized and existing under the laws of Mexico,
with its principal place of business located at Juárez No. 18 A, Tlacopac,
01040, Mexico City, Federal District, pursuant to the following recitals,
representations, warranties and clauses.

RECITALS

     WHEREAS, on August 25, 2004, Sellers and MediCor, Ltd. (“MediCor”) entered
into a promise of sale agreement (the “Promise of Sale Agreement”) by means of
which Sellers promised to sell to MediCor, or to the entity or entities
designated in writing by MediCor, and MediCor promised to purchase from Sellers
300,000 common, fully paid in shares representing the corporate capital of
Dermedics, upon the occurrence of certain conditions to which such Promise of
Sale was subject; and,

     WHEREAS, all conditions to which the Promise and Sale Agreement was
subject have occurred and/or occurrence thereof has been duly waived by
MediCor.

REPRESENTATIONS

I. Buyers represent, through their legal representative, that:

     a) (i) MediCor LA is a Mexican sociedad anónima de capital variable
(variable capital stock corporation) duly incorporated and validly existing in
accordance with the laws of Mexico, as evidenced in public instrument number
531, dated August 31, 2004, granted before Mr. Guillermo Escamilla Narváez,
Notary Public No. 243 of the Federal District, which first true copy is pending
registration in the Public Registry of Commerce of Mexico, Federal District,
due to its recent incorporation, and (ii) IIM is a limited corporation duly
incorporated, validly existing and in good standing under the laws of Delaware,
United States of America.

 

 

     b) Each is duly authorized to enter into this Agreement and to assume the
obligations contained herein, and that no corporate approval or authorization
is required for the execution and delivery of this Agreement, other than those
approvals or authorizations which have been previously obtained.

     c) Their legal representative, Mr. Theodore R. Maloney, has sufficient
authority to enter into this Agreement on their behalf, which authority has not
been revoked, limited or modified in any manner whatsoever as of the date of
this Agreement.

     d) It is their will and desire to enter into this Agreement with Sellers,
in order to acquire from Sellers, in the proportions set out in Second Clause
of this Agreement, the Shares (as defined below), free and clear from any Lien
(as defined below).

II. Sellers represent that:

     a) They are Mexican individuals with full capacity to enter into this
Agreement and assume the obligations contained herein, and that they do not
need authorization from their spouses to enter into this Agreement, since they
are married under separate assets regime.

     b) The execution and delivery of this Agreement do not contravene the
provisions, and do not and will not constitute a breach of any agreements,
covenants or obligations to which any of them is a party or bound to comply.

     c) (i) Mr. Carlos Lazo is the owner of record of 150,000 (One Hundred
Fifty Thousand) common, fully paid in shares representing the corporate capital
of Dermedics (“Mr. Lazo’s Shares”), and (ii) Mr. Héctor Chuliá is the owner of
record of 150,000 (One Hundred Fifty Thousand) common, fully paid in shares
representing the corporate capital of Dermedics (“Mr. Chuliá’s Shares” and,
together with Mr. Lazo’s Shares, the “Shares”), which Shares are free and clear
from any Lien.

     d) Subject to the terms and conditions set forth in this Agreement, it is
their will and desire to enter into this Agreement with Buyers in order to
sell, in the proportions set out in Second Clause of this Agreement, the
Shares.

III. Sellers jointly represent and warrant that:

     a) Dermedics is a Mexican sociedad anónima de capital variable (variable
capital stock company) duly incorporated and validly existing under the laws of
Mexico, as evidenced in public instrument number 123,322 dated May 28, 2004,
granted before Mr. Ignacio R. Morales Lechuga, Notary Public number 116 of the
Federal District, which first true copy was duly registered on July 2nd, 2004
before the Public Registry of Property and Commerce of Mexico, Federal
District, under Mercantile Folio No. 321005.

     b) The execution and delivery of this Agreement and the performance of
Sellers’ obligations hereunder have been duly and validly authorized by all
necessary action, and no other proceedings are necessary to authorize such
execution, delivery and performance. Furthermore, Sellers’ obligations under
this Agreement constitute valid and

- 2 -

 

binding obligations of each Seller, enforceable against them in accordance with
their respective terms.

     c) As of the date of execution hereof, the corporate capital of Dermedics
equals the amount of Mx.Cy.$300,000.00 (Three Hundred Thousand Pesos 00/100,
Mexican Currency), which amount has been totally contributed and is duly
represented by the Shares.

     d) The Shares are free and clear of any Lien, and all Shares have been
duly authorized and issued by Dermedics and are fully subscribed and have been
paid in by Sellers. For purposes of this Agreement the term “Lien” means any
lien, mortgage, pledge, assignment, security interest, charge or encumbrance of
any kind (including any conditional sale or other title retention agreement,
any lease in the nature thereof, and any agreement to give any security
interest) and any option, trust or other preferential arrangement having the
practical effect of any of the foregoing.

     e) Dermedics does not own, directly or indirectly, any shares,
participation interests or securities of other companies, whether civil or
commercial, nor does it have any right or option to acquire any shares,
participation interests or securities issued by any such companies.

     f) Neither Sellers nor Dermedics have entered into any agreements by means
of which they granted to a third party a right or option to acquire any shares
issued by Dermedics or other securities convertible into shares of Dermedics,
and Dermedics has not registered in its accounting records any contributions
made by its shareholders which in the future may be subject of a capital
increase.

     g) Except for the Shares, there are no other shares issued by Dermedics
pending subscription and/or payment.

     h) Dermedics is not a trustee or beneficiary under any trust agreement.

     i) Dermedics is not subject of any dissolution, liquidation, bankruptcy,
payment suspension and/or reorganization proceeding or event, and Sellers are
not knowledgeable that a third party intends to commence a proceeding seeking
Dermedic’s dissolution, liquidation, bankruptcy, payment suspension and/or
reorganization according to the Mexican General Law of Business Organizations
or the Reorganizations Law.

     j) There are no claims, actions, suits, proceedings, labor disputes or
investigations pending resolution or, to the knowledge of Sellers, threatened
before any domestic (either federal or state, wherever applicable), local or
foreign court or governmental, administrative or regulatory authority or before
any arbitrator of any nature, brought by or against Dermedics, any Seller, or
any of their Affiliates, which involve, affect or relate to any assets,
properties or operations of Dermedics or the transactions contemplated herein.

     k) Since the date of its incorporation and as of the Execution Date,
Dermedics has not had, nor does it have any employees. Therefore:

- 3 -

 

     (i) Dermedics has not entered into any collective bargaining
agreements with any union;

     (ii) There are no suits, claims, demands, litigations and/or
arbitrations of a labor nature commenced by Dermedics against an employee
or by an employee against Dermedics, and Sellers are not knowledgeable of
any possible suit, claim, demand, litigation and/or arbitration of a
labor nature which could be commenced against Dermedics;

     (iii) There is no threatening or pending labor conflict, strike,
work stoppage or premises’ obstruction derived from employees’ claims or
commenced by third parties rendering services to Dermedics, and, to
Sellers’ knowledge, there are no events which could cause in any of the
foregoing to occur;

     (iv) Dermedics is not obliged to comply with any labor obligations,
including, without limitation, payment of contributions to the Mexican
Institute of Social Security, to the Retirement Savings System or to the
National Institute of the Housing Fund;

     (v) Dermedics has not established fringe benefits for any employee;
and,

     (vi) Dermedics is not obliged to pay any salaries, labor benefits,
additional compensations, incentives, Christmas bonuses, vacations and/or other
compensations derived from the Mexican labor legislation.

     l) Exhibit “A” of this Agreement contains a list of all First Level
Officers (as defined below) of Dermedics, its attorneys in fact, and any and
all compensations, additional compensations, incentives and/or benefits
received by such First Level Officers and attorneys in fact from Dermedics. For
purposes of this Agreement, the term “First Level Officers” means the sole
manager or the members of the Board of Directors of Dermedics, as the case may
be, the chief executive officer, the chief financial officer, the chief
operating officer, the managing directors of Dermedics, and any other persons
performing managerial activities in Dermedics.

     m) Dermedics has not entered into any written or oral agreement with any
First Level Officer by means of which Dermedics has agreed to pay to any such
First Level Officer any indemnities or severance payments in excess of the
amounts set forth in the Mexican Federal Labor Law, or connected to any other
circumstances such as change in control or target compliance or achievement in
the performance of their duties.

     n) In performing its commercial activities, Dermedics has timely and
properly complied with any and all health and/or environmental related
obligations, whether municipal, local or federal, and its business premises or
facilities, whether owned or leased, comply in all material respects with any
and all applicable legal requirements and, therefore, as of the Execution Date,
there are no contingencies derived from any investigations, audits,
inspections, fines or requirements commenced or imposed against

- 4 -

 

Dermedics by any federal, local and/or municipal environmental and/or
health Mexican authorities.

     o) Dermedics has not released or caused the release of any solid, liquid
or toxic hazardous substances to the environment or soil and, therefore, no
such hazardous substances exist in, on or about the business premises and
facilities owned or leased by Dermedics. Sellers further represent that
Dermedics has not entered into any settlement agreements derived from a breach
of any federal, local and/or municipal health and/or environmental legal
provision, and that the operations of Dermedics do not involve the
transportation, warehousing, treatment or destruction of hazardous substances,
materials or wastes.

     p) Exhibit “B” of this Agreement contains a detailed description of all
properties leased or used by Dermedics as of the Execution Date, and in which
Dermedics performs its business and commercial activities (the “Leased
Premises”). Sellers represent that Dermedics does not own, nor it is the
fiduciary beneficiary of any real estate, and that all rights and obligations
of Dermedics derived from any and all agreements, commitments and arrangements
related to the Leased Premises are in full force and effect as of the Execution
Date, and that no conditions or limitations to execute this Agreement and
comply with Sellers’ obligations contained herein exist in such agreements,
commitments and arrangements.

     q) As of the Execution Date, (i) all taxes, levies, governmental charges,
duties, interest on taxes, tax penalties or interest on any tax penalty
required to be paid on behalf of or which are related in any way to Dermedics
(“Taxes”) have been, or will be, timely paid; (ii) adequate accruals on the
Accounting Information (as defined below) have been made for any unpaid Taxes
attributable to any period prior to the Execution Date; (iii) all tax returns
required to be filed by, on behalf of or with respect to any Taxes have been,
or will be, timely filed (taking into account any extensions of the due date
for the filing of such tax returns) with the appropriate tax authorities; (iv)
all such tax returns reflect in all material respects the facts regarding the
income, business, assets, operations, activities and status of Dermedics and
all other information required to be shown therein; (v) no action or proceeding
by any governmental authority for the assessment or collection of Taxes is
pending or has been threatened in writing; (vi) no claim or deficiency for the
assessment or collection of any Taxes has been asserted or proposed, which
claim or deficiency has not been settled with all amounts determined to have
been due and payable having been timely paid; (vii) as far as Sellers are
aware, no audit of any tax return with respect to any Taxes is in progress;
(viii) there are no agreements, waivers or other arrangements in effect
providing for an extension of time with respect to the filing of any tax
returns with respect to any Taxes; (ix) Dermedics has timely withheld and
remitted to the applicable governmental authority all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any
independent contractor, creditor, shareholder or other third party in
compliance with all withholding and similar provisions of any and all
applicable tax laws; and (x) neither Dermedics nor Sellers are a party to any
agreement, arrangement or practice for the sharing of taxes, or are obligated
to indemnify any other person for Taxes pursuant to any agreement, arrangement
or practice, which agreement, arrangement or practice will remain in effect, or
will require the payment of any amount, after the Execution Date.

- 5 -

 

     r) Exhibit “C” of this Agreement contains a copy of the accounting balance
sheet and income statement of Dermedics covering the period commencing on the
date of its incorporation and concluding on August 31, 2004 (the “Accounting
Information”), which Accounting Information has been prepared in accordance
with generally accepted accounting principles in Mexico (consistently applied),
and which Accounting Information reflects the financial condition of Dermedics
and of the businesses developed by it as of and to the date of their
preparation.

     s) Sellers represent that Dermedics has no financial, civil or commercial
liabilities. Sellers further represent that Dermedics has not issued any
guarantees, promissory notes or otherwise created a Lien upon any of its
properties or assets in order to secure any such financial, civil or commercial
liabilities. In furtherance of the foregoing, Sellers represent that, Dermedics
has no liabilities (i) resulting from the restructuring of any indebtedness of
Dermedics with its creditors, (ii) providing for a long term, this is, which
maturity exceeds twelve months, (iii) which result from occurred events, or
(iv) which are outstanding.

     t) Dermedics has no absolute or contingent, direct or indirect obligations
or liabilities, different from those set forth in the Accounting Information.
Exhibit “D” hereto contains a list of all accounts receivable of Dermedics and
accounts payable of Dermedics in favor of a Related Party. For purposes of this
Agreement, (i) the term “Related Party” means the shareholders, sole manager or
members of the Board of Directors, First Level Officers or any Affiliates of
the aforementioned individuals or entities, (ii) the term “Affiliate” when used
with respect to any Person, means any other Person which, directly or
indirectly, Controls or is controlled by or is under common control with such
Person, (iii) the term “Control” (including the correlative meanings of the
terms “controlled by” and “under common control with”), with respect to any
Person, shall mean possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities or by contract or otherwise, and
(iv) the term “Person” or “Persons” shall mean any individual, corporation,
partnership, joint venture, association, trust, unincorporated association,
joint stock company, government, municipality, political subdivision or agency,
or other entity.

     u) Dermedics has not assigned or otherwise transferred any liabilities to
any third parties.

     v) As of the Execution Date hereof, Dermedics has not (i) resolved to pay
or pay any dividends, whether in cash, shares or otherwise, or reduced its
corporate capital or redeem its shares, or (ii) modified its accounting
methods, expect when such modifications result from modifications to the
generally accepted accounting principles in Mexico.

     w) As of the Execution Date hereof, Dermedics has (i) carried out its
commercial activities solely in the Ordinary Course of Business (as defined
below), (ii) except as requested by Buyer, performed all reasonable commercial
efforts to preserve its business, properties and commercial relationship with
clients and suppliers, (iii) continued with all maintenance and repair programs
of its assets, (iv) not created any Lien upon any

- 6 -

 

of its assets, (iv) refrained from contracting liabilities, (f) refrained
from modifying the commercial policies applied to its Ordinary Course of
Business, (g) refrained from entering into any kind of written or oral
agreements or transactions with any Related Party, (h) continued paying its
fiscal obligations in terms of applicable law, and (i) honored all agreements
entered into with any third parties. For purposes of the foregoing, the term
“Ordinary Course of Business” means, with respect to Dermedics, the performance
of all acts which are necessary or convenient for the proper and normal
development of its Commercial Activities (as defined below), as well as to
preserve its businesses, properties and commercial relationship with its
clients and suppliers, but excluding those which, pursuant to Dermedic’s past
practices, may be considered as extraordinary; and the term “Commercial
Activities” shall mean the production, purchase, sale, import, export,
distribution and, in general, commercialization of all kinds of saline,
silicone gel and/or alternative medical, plastic surgery implants, cosmetic
surgery and dermatology health related and medical products, articles,
materials, equipment and machinery in Mexico or abroad.

     x) Exhibit “E” contains a complete copy of the shareholders’ meetings
minutes book and the shareholders’ registry book of Dermedics, which books
contain true, accurate and updated information regarding all meetings held by
the shareholders of Dermedics and all transfers of shares verified since the
incorporation date of Dermedics to the Execution Date. Sellers represent that
the capital variations book and the board meetings minutes book of Dermedics
have not been opened, since any variations to the corporate capital of
Dermedics nor any board meeting have been verified.

     y) The execution of this Agreement and the compliance by Sellers of their
obligations contained herein, including, without limitation, the entering into
any other agreement or document necessary to achieve the purposes hereof, (i)
shall not constitute a violation or breach by Dermedics of any of its
obligations under any other agreements, (ii) does not grant to any third party
the right to accelerate compliance of any obligation in charge of Dermedics,
(iii) does not constitute a violation or breach of any legal provisions which
Dermedics is obliged to observe, nor to Dermedic’s bylaws, (iv) shall not
create a Lien in charge of Dermedics or its assets, and (v) does not grant to
any third party a right to exercise any stock option to purchase or subscribe
shares representing the corporate capital of Dermedics.

     z) Except as set forth in Exhibit “F” of this Agreement, there are no
agreements, commitments, arrangements or legal or commercial relationships of
any nature whatsoever, direct or indirect, between Dermedics and its Related
Parties, and that any such agreements, commitments, arrangements or legal or
commercial relationships described in Exhibit “F” hereto have been entered into
under arms-length conditions.

     aa) Dermedics does not own, or is the legal or fiduciary beneficiary of
any real estate..

     bb) The Leased Premises are adequate for the performance and development
of Dermedics’ Commercial Activities, and comply with any and all applicable
federal, local or

- 7 -

 

municipal zoning, construction, use of soil, security, hygiene and safety
laws and regulations.

     cc) Exhibit “G” of this Agreement contains a list of all the machinery and
equipment (including computing hardware) owned or used by Dermedics in carrying
out the Commercial Activities, indicating which of such machinery and
equipments are owned by Dermedics or leased from third parties by Dermedics.

     dd) Except as set forth in Exhibit “G” hereto, the machinery, tools and
equipment listed therein are in good physical condition and are suitable for
their use. Such machinery, tools and equipment are adequate to carry out the
Ordinary Course of Business, and are free and clear from any Lien.

     ee) As of the Execution Date, Dermedics has not guaranteed any third-party
obligations and, except for the Shares, it has not issued any promissory notes
or other credit instruments which could be enforceable against it by a third
party.

     ff) Except as otherwise described in Exhibit “F” of this Agreement,
Dermedics is not a party to any agreement, arrangement or commitment, which
agreement, arrangement or commitment is a valid, binding and enforceable
obligation of, and has not been breached by Dermedics.

     gg) Dermedics does not own any trademarks, trade names, patents or other
industrial and/or intellectual property rights, nor it is a licensee of any
trademarks, trade names, patents and other industrial and/or intellectual
property rights owned by third parties.

     hh) Exhibit “H” contains a list of all software used by Dermedics in the
Ordinary Course of Business. All such software has been duly licensed to
Dermedics by the legitimate owner of the rights thereof, and that all licenses
are in full force and effect as of the Execution Date.

     ii) Dermedics has complied in all material respects with its corporate
bylaws, with all legal provisions applicable to its Commercial Activities and
all contractual obligations to which it is subject.

     jj) Dermedics has not obtained any insurance policies for the proper
operation of its Commercial Activities, nor it has obtained any insurance
policy for the benefit of a third party, or to guaranteed any obligations
assumed by it with a bond or similar instrument.

     kk) Dermedics has obtained all necessary authorizations, licenses and
permits for the proper operation of its Commercial Activities, and Dermedics
has complied in all material respects with all obligations imposed by such
authorizations, licenses and permits, and has exercised all rights contemplated
therein. All such authorizations, licenses and permits are in effect as of the
Execution Date, and Sellers are not knowledgeable of any

- 8 -

 

legal, administrative and/or
judicial procedure commenced against Dermedics which seeks the nullity or invalidity of any such authorizations,
licenses and permits.

     ll) Exhibit “I” of this Agreement contains a detailed list of Dermedics’
clients and suppliers. None of the commercial relationship, between Dermedics
and the clients and suppliers listed in Exhibit “I” hereto are, as of the
Execution Date, jeopardized in manner whatsoever due to the execution of this
Agreement or the transactions contemplated hereunder.

     mm) Exhibit “J” of this Agreement contains a complete list of all
documents evidencing Sellers’ indebtedness related to Dermedics (including any
indebtedness incurred by a Seller all or part of the proceeds of which were
used to invest in or/and money to Dermedics); Sellers further represent that
all interests, fees and other amounts accrued and outstanding under such
indebtedness have been paid on time. Dermedics has not been and is not a party
to any loan or credit agreement, whether as borrower or as lender and,
therefore, no third party or Related Party may seek payment from Dermedics
under a loan or credit agreement.

     nn) None of the execution, delivery or performance by the Sellers of this
Agreement has, as of the Execution Date, or will (i) violate or conflict with
any provision of the organizational documents of Dermedics, (ii) violate any
provision of law, statute, judgment, order, writ, injunction, decree, award,
rule, or regulation of any court, arbitrator, or other governmental or
regulatory authority applicable to Dermedics or the Shares, (iii) violate,
result in a breach of, constitute (with due notice or lapse of time or both) a
default or cause any obligation, penalty or premium to arise or accrue under
any contract, lease, loan agreement, mortgage, security agreement, trust
indenture or other agreement or instrument to which any of the Sellers or
Dermedics is a party, or by which any of them is bound or to which any of their
respective properties or assets is subject, or otherwise relating to the
Shares, (iv) result in the creation or imposition of any encumbrance upon any
of the assets of Dermedics or the shares, or (v) result in the cancellation,
modification, revocation or suspension of any permits, authorizations or
licenses of Dermedics.

     NOW, THEREFORE, in consideration of the mutual covenants and
representations set forth above, Sellers and Buyers grant the following

CLAUSES

     FIRST. Defined Terms; Exhibits; Rules of Construction. All capitalized
terms shall have the meanings expressly set forth herein for such terms, and
variants and derivatives of such defined terms shall have correlative meanings.
To the extent that certain of the defined terms set forth herein suggest,
indicate or express agreements between or among parties to this Agreement, the
parties agree to the same by execution hereof.

     It is specifically acknowledged by the parties hereto that certain
agreements and documents listed in the Exhibits are not to be delivered on the
Execution Date, but have been previously delivered to Buyers and/or their
representatives, or shall be delivered or made available to Buyers or their
representatives promptly after the Execution Date, but no later

- 9 -

 

than 15 (fifteen) days thereafter. All such agreements and documents made
available or delivered to Buyers by Sellers and/or Dermedics shall be originals
or true and correct copies of the originals of all such agreements and
documents. Each Exhibit and the agreements and documents listed in each
Exhibit to this Agreement shall be deemed incorporated by mere reference. The
representations of Sellers set forth in this Agreement shall not be affected or
deemed waived or limited by the information provided in the Exhibits to this
Agreement, except to the extent that any qualification, exception or limitation
to any representation is expressly contained herein or therein.

     SECOND. Purchase and Sale of the Shares. Subject to the terms and
conditions of this Agreement, Sellers hereby sell to Buyers, and Buyers hereby
acquire from Sellers, in the proportions set forth below, the Shares, free and
clear from any Lien.

     a) Mr. Carlos Lazo hereby sells to MediCor LA 150,000 (One Hundred Fifty
Thousand) Shares representing the corporate capital of Dermedics;

     b) Mr. Hector Chuliá hereby sells to MediCor LA 149,999 (One Hundred Forty
Nine Thousand Nine Hundred Ninety Nine) Shares representing the corporate
capital of Dermedics; and,

     c) Mr. Hector Chuli hereby sells to IIM 1 (One) Share representing the
corporate capital of Dermedics.

     As a result of the purchase and sale of the Shares, the corporate capital
of Dermedics shall be, as of the Execution Date, distributed in the following
manner and among the following persons:

	 	 	 	 	 
	Shareholder	 	Shares
	MediCor Latin America, S.A. de C.V.
	 	 	299,999	 
	International Integrated Management Inc.
	 	 	1	 
	TOTAL:
	 	 	300,000	 

     THIRD. Purchase Price. In consideration of the Shares, Buyers agree to pay
to Sellers, in the corresponding proportion, the amount of *** (the
“Purchase Price”). The Purchase Price is paid in cash by Buyers to Sellers on
the date hereof. Therefore, the execution of this Agreement by Sellers shall be
considered for all legal purposes as the broadest receipt by Sellers of the
Purchase Price.

     FOURTH. Stock Certificates’ Endorsement; Recording. In terms and for
purposes of articles 33, 34 and other applicable provisions of the Mexican
General Law of Negotiable Instruments and Credit Transactions, Sellers hereby
deliver to Buyers the stock certificates issued by Dermedics in their favor
duly endorsed in property, and which are more specifically described in Exhibit
“K” of this Agreement.

- 10 -

 

     Dermedics hereby takes note of the purchase of the Shares, and agrees to
record each Buyer as a shareholder in the stock registry book of Dermedics
within 2 (two) days following the Execution Date, in terms of article 124 and
for the purposes of article 125, both, of the Mexican General Law of Business
Organizations.

     FIFTH. Taxes. All Taxes derived from the transactions contemplated
hereunder shall be withheld and paid by the party responsible of such
withholding and payment, in accordance with the applicable Mexican fiscal laws.

     SIXTH. Joint Obligations; Indemnity. Sellers hereby agree to jointly and
separately, irrevocably, absolutely and unconditionally guarantee Buyers and
their respective successors and assignees (i) the accuracy and truthfulness of
each representation made by Sellers in the Representations chapter of this
Agreement (“Sellers’ Representations”), and (ii) the payment of any damages,
losses, fines, suits and/or claims made by any authority and/or third parties
against Dermedics and/or Buyers and/or its successors and assignees, which
result from the inaccuracy and/or falseness of Sellers’ Representations, in
accordance with the following:

	1. 	 	 Immediate Compliance. Sellers agree that in the event any of
Sellers’ Representations result to be inaccurate or false, Sellers,
jointly and separately, shall pay Buyers all damages, losses, fines,
suits and/or claims made or imposed by any authority and/or third
parties against Dermedics and/or Buyers and/or its successors and
assignees resulting from such falseness or inaccuracy of Sellers’
Representations, without demand or notice different from those set
forth herein below. Any payments which need to be made pursuant to the
foregoing shall be made to the benefit of Buyers or their successors or
assignees in immediately available funds.
	 
	2.	 	Unconditional Obligations. The obligations of Sellers provided for
in this Clause Sixth are absolute and unconditional, joint and
separate, and regardless of whether such obligations are affected by
the value, truthfulness, validity, regularity or enforceability of this
Agreement or any other agreement or document executed in connection
with this Agreement, or any substitution, release or exchange of any
other joint obligation, personal guarantee or guarantee made with
respect of Sellers’ Representations, since the intent of these
indemnification provisions is for the relevant obligation to be
absolute, unconditional, joint and separate under any circumstances.
Therefore, no act or fact shall alter or modify Sellers’ responsibility
to indemnify Buyers, thus such responsibility shall be absolute and
unconditional in the terms set forth above.
	 
	3.	 	Waivers. Each Seller, in his capacity as joint obligor, hereby
waives the benefits of orden and excusión to which articles 2814, 2815,
2817, 2818, 2819, 2820, 2821 and 2827 of the Mexican Federal Civil Code
refer and, therefore, Buyers may demand from either of the Sellers the
payment of any and all damages, losses, fines, demands and/or claims
made or imposed by any authority or third party, which result from the
inaccuracy or falseness of any Sellers’ Representations in terms of

- 11 -

 

	 	 	this Agreement. Likewise, each Seller hereby expressly waives the
provisions of articles 2822, 2844, 2845, 2846, 2847 and 2848 of the
Federal Civil Code.

	4.	 	Continuous Guaranty; Term. The obligation of Sellers to indemnify
Buyers under this Clause Sixth constitutes a continuous and irrevocable
guaranty, and shall remain in effect for a period of 5 (five) years
following the Execution Date.
	 
	6.	 	Costs and Expenses. Without prejudice of Sellers’ obligation to
indemnify in the above terms, Sellers agree to jointly and separately
pay any and all costs and expenses incurred by Buyers and/or Dermedics
(including reasonable attorneys fees) in connection with the execution
and enforceability of the provisions contained in this Clause Sixth.

     SEVENTH. Non-Compete. During a period of 5 (five) years following the
Execution Date, Sellers shall not, jointly or separately:

	(i)	 	Incorporate, participate, invest in or in any
other manner get involved with any Person or business that
competes with Dermedics and/or Buyers and /or Buyers
Affiliates or carries out the Commercial Activities (the
“Competence”), in the understanding, however, that the
foregoing prohibition shall not include the acquisition by
Sellers of any participation or interests of the Competence
acquired through any stock exchange, provided such acquisition
does not exceed 1% (one percent) of the corporate capital of
the Competence, and that Sellers are not entitled to appoint
members of the board of directors, officers or any other
individuals who may at any point decide on the policies and
management of the Competence;
	 
	(ii)	 	Persuade any supplier of products or service
provider of Dermedics not to enter into any commercial
agreements or arrangement with Dermedics;
	 
	(iii)	 	Request from any employee of Dermedics to
terminate his/her labor relationship with Dermedics, or to be
employed by any Person or Affiliate of Sellers; or,
	 
	(iv)	 	Enter into any agreement or arrangement by means
of which either Seller agrees to assist, or in any other
manner facilitate, the participation of any other Person in
the Competence, or the development of the activities of the
Competence or the supplying of products or furnishing of
services to the Competence to or for the benefit of any other
person.

     In the event that either Seller has the opportunity to participate in or
commence a business with the Competence, such Seller shall notify such fact in
writing to Buyers, in

- 12 -

 

order for the Board of Directors of Dermedics to evaluate if it is
feasible for Dermedics to participate or commence business with the business
with the Competence.

     Sellers acknowledge and agree that their agreement not to compete is an
incentive for Buyers to purchase the Shares in terms of this Agreement, and
that the non-compete obligations imposed on each Seller are reasonable in scope
and time, thus such obligations do not impose restrictions which are not
necessary to preserve and protect the Commercial Activities of Dermedics or of
Buyers.

     Each Seller further acknowledges and agrees that neither Buyers nor
Dermedics would have adequate and sufficient legal relief if the non-compete
obligations in charge of Sellers are breached, and that non-compliance thereof
would result in a material damage for Dermedics and Buyers. Therefore, in order
to prevent any disputes with respect to the contents of this Clause Seventh and
the amount of damages caused by Sellers to Dermedics and/or Buyers if either of
them breaches his non-compete obligations, the parties hereby enter into a
“convenio de transacción” (settlement agreement) according to the provisions of
article 2944 of the Mexican Federal Civil Code, and agree that the amount of
any damages and losses which could be suffered by Dermedics and/or Buyers in
the event Sellers breach any of the obligations provided in this Clause Seventh
would not be less than the Purchase Price times six.

     Therefore, if either of the Sellers breaches his obligation not to compete
with Dermedics and/or Buyers in terms of this Clause Seventh, which obligation
is hereby recognized by Sellers as a main obligation in their charge, such
Seller shall pay to Dermedics and/or Buyers an amount equal to the Purchase
Price times six, every time he breaches such obligation.

     EIGHTH. Successors and Assigns; No Third-Party Beneficiaries. This
Agreement shall inure to the benefit of, and be binding upon the parties hereto
and their respective successors and assigns. Neither Sellers nor Buyers shall
assign or delegate any of their obligations hereunder without the prior written
consent of the other parties.

     NINTH. Fees and Expenses. Except as otherwise provided in this Agreement,
all legal, accounting and other fees, costs and expenses incurred in connection
with the preparation of this Agreement and the transactions contemplated hereby
shall be paid by the party incurring such fees, costs or expenses.

     TENTH. Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made if delivered personally or by an internationally recognized overnight
carrier, by facsimile, or sent by registered or certified mail (postage
prepaid, return receipt requested) to the parties at the addresses set forth in
the preamble of this Agreement, or to such other persons or at such other
addresses as shall be furnished by either party by like notice to the other
parties, and such notice or communication shall be deemed to have been given or
made as of the date so delivered or mailed. No change in any of such addresses
shall be effective insofar as notices under this Clause Tenth are concerned
unless notice of such change shall have been given to such other party hereto
as provided in this Clause Tenth.

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     ELEVENTH. Entire Agreement. This Agreement, together with its Exhibits,
represents the entire agreement and understanding of the parties with reference
to the transactions set forth herein, and no representations or warranties have
been made in connection with this Agreement other than those expressly set
forth herein. This Agreement supersedes all prior negotiations, discussions,
correspondence, communications, understandings and agreements between the
parties relating to the subject matter of this Agreement, including the Promise
of Sale Agreement.

     TWELFTH. Waivers and Amendments. The waiver by any party of a breach of
any provision or representation of this Agreement shall not operate or be
construed as a waiver of any subsequent breach, whether or not similar, unless
such waiver specifically states that it is to be construed as a continuing
waiver. This Agreement may be amended, modified or supplemented only by a
written instrument executed by the parties.

     THIRTEENTH. Severability. The invalidity or unenforceability of any term
or provision hereof shall not affect the validity or enforceability of this
Agreement or of any other term or provision hereof. Furthermore, in lieu of any
such invalid or unenforceable term or provision, the Parties intend that there
shall be added as a part of this Agreement a provision as similar in terms to
such invalid or unenforceable provision as may be possible and be valid and
enforceable.

     FOURTEENTH. Titles and Headings; Exhibits. The titles and headings
contained in this Agreement are solely for convenience of reference and shall
not affect the meaning or interpretation of this Agreement or of any term or
provision hereof. All references in this Agreement to “Exhibits” shall be a
reference to the applicable exhibit delivered by Sellers to Buyers on the
Execution Date.

     FIFTEENTH. Governing Law and Jurisdiction. This Agreement shall be
governed by, construed and enforced in accordance with the laws of Mexico. Any
disputes arising in connection with this Agreement shall be submitted to the
competent courts in Mexico Federal District, Mexico.

[SIGNATURE PAGE TO FOLLOW]

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IN WITNESS WHEREOF, this Agreement is executed in four counterparts on the date
specified above.

	 	 	 
	 

	 	MediCor Latin America, S.A. de C.V.
	 
	 	 
	

	 	

	

	 	By: Mr. Theodore R. Maloney
	

	 	Its: Legal Representative
	 
	 	 
	

	 	International Integrated Management Inc.
	 
	 	 
	

	 	

	

	 	By: Mr. Theodore R. Maloney
	

	 	Its: Legal Representative
	 
	 	 
	

	 	

	

	 	Mr. Carlos Francisco Lazo de la Vega Jasso
	 
	 	 
	

	 	

	

	 	Mr. Héctor Jesús Chuliá de la Torre
	 
	 	 
	

	 	Dermatological Medical Products and
	

	 	Specialties, S.A. de C.V.
	 
	 	 
	

	 	

	

	 	Mr. Carlos Lazo de la Vega Pérez Rivas
	

	 	Its: Legal Representative

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