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EXHIBIT 2.1
STOCK
SALE AND PURCHASE AGREEMENT
This
Stock Sale and Purchase Agreement (this
“Agreement”) is made as of September 21, 2006, by
LIL' DRUG STORE PRODUCTS, INC., an Iowa corporation
(“Seller”), WARTNER USA B.V., a private company
with limited liability organized under the laws of the
Netherlands (the “Company”), the Seller’s
shareholders set forth on the signature page attached hereto
(the “Shareholders”), and MEDTECH PRODUCTS INC., a
Delaware corporation (“Buyer”).
RECITALS
Seller
desires to sell, and Buyer desires to purchase, all of the
issued and outstanding shares (the “Shares”) of
capital stock of the Company, a wholly-owned subsidiary of
Seller, for the consideration and on the terms set forth in
this Agreement.
The
Shareholders, as the record and beneficial owners of 96.8% of
all of the outstanding capital stock of Seller, will
indirectly benefit from the sale of the Shares by Seller to
Buyer and therefore desire to execute this Agreement for the
limited purposes set forth below.
AGREEMENT
The
parties, intending to be legally bound, agree as
follows:
1.
DEFINITIONS
For
purposes of this Agreement, the following terms have the
meanings specified or referred to in this Section
1:
“Accounts
Receivable” - as defined in Section 3.7.
“Affiliate”
- with respect to any Person, any other Person that directly,
or indirectly through one or more intermediaries, controls or
is controlled by, or is under common control with, the Person
specified.
“Agreement”
- as defined in the first paragraph of this
Agreement.
“Allocation”
- as defined in Section 2.5.
“Annual
Balance Sheet” - the balance sheet of the Company as of
December 31, 2005 included in the Annual Financial
Statements.
“Annual
Financial Statements” - as defined in Section
3.4.
“Assignment
and Assumption” - as defined in Section
2.4(a)(vi).
“Business”
means the business carried on by the Company which involves
the design, marketing, sale and distribution of the Products
in the Territory.
“Business
Day” - means any day other than a Saturday, Sunday or
holiday on which commercial banks located in New York City are
obligated or authorized by law or executive order to
close.
“Business
Intellectual Property” - as defined in Section
3.15.
“Buyer”
- as defined in the first paragraph of this
Agreement.
“Buyer’s
Advisors” - as defined in Section 5.1.
“Check-the-box
Election” - as defined in Section 3.9(b).
“Closing”—as
defined in Section 2.3.
“Closing
Date”—the date and time as of which the Closing
actually takes place.
“Company”
- as defined in the first paragraph of this
Agreement.
“Company
Transaction Expenses” - all of the following to the
extent incurred or accrued by the Company on or before the
Closing Date: (i) all out-of-pocket costs and expenses
incurred in connection with the transactions contemplated
hereby, including, without limitation, investment advisory
fees and expenses, other consultant, legal, Tax, accounting,
travel, due diligence and related fees and expenses, and
escrow agent fees and expenses; (ii) all payments required to
be made by the Company to any Person due to the consummation
of the Contemplated Transactions; and (iii) all fees and
expenses incurred by the Company in connection with the
termination of any Company Indebtedness.
“Company
Indebtedness” - as defined in Section 2.2.
“Consent”—any
approval, consent, ratification, waiver, or other
authorization.
“Confidentiality
Agreement” - means the confidentiality agreement dated
April 24, 2006 between Seller and Buyer or any of its
Affiliates.
“Contemplated
Transactions”—all of the transactions contemplated
by this Agreement, including, without limitation:
(a)
the
sale of the Shares by Seller to Buyer; and
(b)
the
performance by Buyer and Seller of their respective covenants
and obligations under this Agreement.
“Contract”—any
agreement, commitment, contract, instrument, obligation,
promise, or undertaking (whether written or oral and whether
express or implied) that is legally binding, in whole or in
part, upon a party thereto.
“Damages”—as
defined in Section 9.2.
“Deed
of Transfer” - the notarial deed of transfer for the
Shares substantially in the form attached hereto as Exhibit
B.
“Disclosure
Schedule”—the Disclosure Schedule delivered by
Seller to Buyer concurrently with the execution and delivery
of this Agreement and attached hereto as Exhibit
A.
“Disregarded
Entity” - as defined in Section 3.9(b).
“Divestiture
Agreement” - all agreements or arrangements by which the
Company sold or divested itself, directly or through a
Subsidiary, of any material portion of its assets, including
the sale of all or substantially all of the capital stock or
other ownership interests of any of its
Subsidiaries.
“Encumbrance”—any
burden charge, claim, condition, covenant, deed of trust,
easement, encroachment, equitable interest, hypothecation,
lease, lien, mortgage, option, pledge, security interest,
sublease, title defect, title retention agreement, right of
first refusal, or restriction of any kind, including, without
limitation, any restriction on use, voting, transfer, receipt
of income, or exercise of any other attribute of ownership,
other than any applicable federal or state securities law
restrictions.
“Environment”—soil,
land surface or subsurface strata, surface waters,
groundwaters, air or any other environmental medium or natural
resource.
“Environmental
Law”—any Legal Requirement that requires or
relates to:
(a)
advising
appropriate authorities, employees, and the public of intended
or actual releases of pollutants or hazardous substances or
materials, violations of discharge limits, or other
prohibitions and of the commencements of activities, such as
resource extraction or construction, that could have
significant impact on the Environment;
(b)
preventing
or reducing to acceptable levels the release of pollutants or
hazardous substances or materials into the
Environment;
(c)
reducing
the quantities, preventing the release, or minimizing the
hazardous characteristics of wastes that are
generated;
(d)
assuring
that products are designed, formulated, packaged, and used so
that they do not present unreasonable risks to human health or
the Environment when used or disposed of;
(e)
protecting
resources, species, or ecological amenities;
(f)
reducing
to acceptable levels the risks inherent in the transportation
of hazardous substances, pollutants, oil, or other potentially
harmful substances;
(g)
cleaning
up pollutants that have been released, preventing the threat
of release, or paying the costs of such clean up or
prevention; or
(h)
making
responsible parties pay private parties, or groups of them,
for damages done to their health or the Environment, or
permitting self-appointed representatives of the public
interest to recover for injuries done to public
assets.
“ERISA”
- the Employee Retirement Income Security Act of 1974, as
amended, and any successor law, and regulations and rules
issued pursuant to that act or any successor law.
“Facilities”—any
leaseholds or other interests currently or formerly owned or
operated by the Company and any buildings, plants, structures,
or equipment currently or formerly owned or operated by the
Company.
“FDA
Act” - the United States Federal Food, Drug and Cosmetic
Act, as amended, and rules and regulations issued
thereunder.
“Financial
Statements” - as defined in Section 3.4.
“GAAP”
- means United States generally accepted accounting
principles, as in effect from time to time, applied on a
consistent basis.
“Governmental
Authority” - any (a) federal, state, regional, county,
city, municipal or local government, whether foreign or
domestic; (b) governmental or quasi-governmental authority of
any nature including any regulatory or administrative agency,
commission, department, board, bureau, court, tribunal,
arbitrator, arbitral body, agency, branch, official entity, or
other administrative or regulatory body obtaining authority
from any of the foregoing; or (c) other Person exercising, or
entitled to exercise, any administration, executive, judicial,
legislative, notice, regulatory or taxing authority or power
of any nature.
“Hazardous
Materials”—any waste or other substance that is
listed, defined, designated, or classified as, or otherwise
determined to be, hazardous, radioactive, or toxic or a
pollutant or a contaminant under or pursuant to any
Environmental Law.
“Indemnified
Persons”—as defined in Section 9.2.
“Interim
Balance Sheet” - the balance sheet of the Company as of
August 31, 2006 included in the Interim Financial
Statements.
“Interim
Financial Statements”—as defined in Section
3.4.
“Inventory”
- means the usable and merchantable finished goods,
components, raw materials and displays of the Product which
are not obsolete having expiration dating of not less than
twenty-four (24) months and representing not more than six (6)
months of forecasted requirements for sale of any SKU within
the Territory. For the avoidance of doubt, Inventory shall not
include Wartner Kids products or any components or raw
materials not usable by Pharmaspray and/or the Company as of
the Closing Date.
“IRC”—the
Internal Revenue Code of 1986, as amended, or any successor
law, and regulations issued by the IRS pursuant to the
Internal Revenue Code or any successor law.
“IRS”—the
United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States
Department of the Treasury.
“Knowledge”
- and all other words of similar meaning, whether or not
capitalized, when used with respect to (i) Seller shall mean
the actual knowledge or knowledge that may be obtained by the
officers of Seller after making Due Inquiry; and (ii) Buyer
shall mean the actual knowledge or knowledge that may be
obtained by the officers of Buyer after making Due Inquiry.
For the purposes of this definition, the term “Due
Inquiry” by an individual means inquiry, after review of
the specific provision(s) of this Agreement in question, of
such peers or subordinates whom such individual determines in
reasonable good faith to be the appropriate Persons to be
approached with respect to the particular fact or matter in
question, about such particular fact or matter in question and
who the Person making the inquiry reasonably believes has
personal knowledge of the particular fact or matter in
question.
“Legal
Requirement”—any federal, state, local, municipal,
foreign, international, multinational, or other administrative
order, constitution, law, ordinance, principle of common law,
regulation, statute, or treaty.
“Material
Adverse Effect” - means, with respect to any Person or
any of its Subsidiaries (together as one party for purposes of
this Section), an individual or cumulative adverse change in
or effect on (i) the business, properties, assets, condition
(financial or otherwise), liabilities or results of operations
of such party which is, or could reasonably be expected to be,
materially adverse
to
the business, properties, assets, condition (financial or
otherwise), liabilities or results of operations of such party
and its Subsidiaries taken as a whole, (ii) such Person or any
of its Subsidiaries as a result of the cancellation, amendment
or postponement for a period of three months or more of any
current or proposed Material Contract, or (iii)
the
ability of such Person to perform its material obligations
under this Agreement and the Related Agreements.
“Material
Contract” - as defined in Section 3.12.
“Non-Compete
Activities” - as defined in Section 5.3(a).
“Notary”
- means Daan ter Braak, civil law notary (
notaris ),
or his/her deputy (
plaatsvervanger ).
“Order”
- an order, award, decision, injunction, judgment, ruling,
subpoena, or verdict issued or rendered by any court,
administrative agency or other Governmental Authority (A) to
which the Company or any of its businesses, assets or
properties is subject, or (B) to which Seller is subject with
respect to Seller’s ownership of or ability to sell or
vote the Shares.
“Ordinary
Course of Business” - the ordinary course
of
Business consistent with past custom and practice (including
with respect to quantity and frequency).
“Organizational
Documents”— (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) any charter
or similar document adopted or filed in connection with the
creation, formation, or organization of a Person; and (c) any
amendment to any of the foregoing (including but not limited
to the current articles of association (
statuten )
of the Company).
“Permits”
- as defined in Section 3.24(ii).
“Person”—any
individual, corporation, general or limited partnership,
limited liability company, joint venture, estate, trust,
association, organization, labor union, or other entity or
governmental body.
“Pharmaspray”
- means Pharmaspray B.V., a company organized and existing
under the law of the Netherlands.
“Post-Closing
Tax Period” - as defined in Section
10.1(b).
“Pre-Closing
Tax Period” - as defined in Section
10.1(a).
“Proceeding”—any
action, arbitration, audit, hearing, investigation,
litigation, or suit commenced, brought, conducted, or heard by
or before, or otherwise involving, any Governmental
Authority.
“Product”
- the OTC cryogenic treatment for warts sold under the WARTNER
trademark and the cryogenic professional use treatment for
warts under the WARTNER PRO trademark, both of which utilize
the Business Intellectual Property.
“Purchase
Price” - as defined in Section 2.2.
“Related
Agreements” - means, with respect to a party hereto, the
Transition Agreement, the Assignment and Assumption, the
Wartner Assignment and any other agreement or instrument
executed by such party in connection with this
Agreement.
“Representative”—with
respect to a particular Person, any director, officer,
employee, affiliate, agent, consultant, advisor, or other
representative of such Person, including legal counsel,
accountants, and financial advisors.
“Restricted
Period” - as defined in Section 5.3(a).
“Returns”
- any claim for credit or refund for unsold Product or other
merchandise by any customer or account of Seller, the Company
or Buyer, whether or not accompanied by the Product or other
merchandise originally sold, and whether or not damaged, out
of date or otherwise impaired.
“Right
of Set-Off” - as defined in Section 9.10.
“Securities
Act”—the Securities Act of 1933, as amended, or
any successor law, and regulations and rules issued pursuant
to that Act or any successor law.
“Seller”
- as defined in the first paragraph of this
Agreement.
“Shareholders”
- as defined in the first paragraph of this
Agreement.
“Shares”—as
defined in the Recitals of this Agreement.
“Share
Sale Agreement”—the Share Sale Agreement dated
June 10, 2003 between Wartner Holding as the seller,
Seller as the purchaser, and the Company, for the sale by the
seller of the entire issued and outstanding share capital of
the Company to the purchaser.
“SKU”
- means one or more non-obsolete shelf keeping units of the
Product.
“Straddle
Period” - as defined in Section 10.1(c).
“Subsidiary”—with
respect to any Person (the “Owner”), any
corporation or other Person of which securities or other
interests having the power to elect a majority of that
corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person
(other than securities or other interests having such power
only upon the happening of a contingency that has not
occurred) are held by the Owner or one or more of its
Subsidiaries; when used without reference to a particular
Person, “Subsidiary” means a Subsidiary of the
Company.
“Tax”
or “Taxes” means any federal, state, local or
foreign net or gross income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium
(including taxes under Section 59A of the IRC), customs
duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real
property, personal property, sales, use, conveyance, transfer,
registration, value added, alternative or add-on minimum,
estimated, or other tax, governmental fee or like assessment,
together with any interest and penalties, additions to tax or
additional amounts imposed by any Governmental
Authority.
“Tax
Authority” means any Governmental Authority with
responsibility for Taxes.
“Tax
Return” means all returns, reports, elections, forms,
declarations, statements, estimated returns, claims for refund
and information returns supplied or required to be supplied to
a Tax Authority relating to Taxes.
“Territory”
- means the United States of America (including its
territories and possessions), Canada, Mexico, Bermuda and the
Dominican Republic.
“Trade
Adjustment” - means any unilateral financial adjustment
by a customer or account of Seller, the Company or Buyer
wherein such customer or account makes a reduction of an
amount to be paid or credited to Buyer, Seller or the Company
as a consequence of alleged or actual prior or subsequent
commercial dealings in the Product or in connection with prior
or subsequent commercial dealings in other products where
those commercial dealings are treated by the account as
offsets to obligations to Buyer, Seller or the Company
relating to the Product.
“Transfer
Taxes: - as defined in Section 10.3.
“Transition
Agreement” - as defined in Section
2.4(a)(v).
“U.S.
Patent” - as defined in Section 3.15.
“Wartner
Assignment” - as defined in Section
2.4(a)(iv).
“Wartner
B.V.” - means that certain private company with limited
liability organized under the laws of the Netherlands which
has among its affiliates Wartner Holding and Wartner Medical
Products A.G.
“Wartner
Europe B.V.” means that certain private company with
limited liability organized under the laws of the Netherlands
formerly affiliated with Wartner Holding but which as of the
date of this Agreement is a wholly owned subsidiary of Omega
Pharma N.V. Wartner Europe B.V. is not a party to this
Agreement.
“Wartner
Holding” - means Wartner Holding B.V., a private company
with limited liability organized under the laws of the
Netherlands which is an affiliate of Wartner B.V.
2.
SALE AND TRANSFER OF SHARES; CLOSING
2.1
SHARES
Subject
to the terms and conditions of this Agreement, at the Closing,
Seller will sell and transfer all of the Shares of capital
stock of the Company to Buyer, and Buyer will purchase all of
the Shares of capital stock of the Company from Seller, free
and clear of any Encumbrances except as set forth on Schedule
2.1.
Subject
to the terms and conditions of this Agreement, Seller shall
transfer title to the Shares to Buyer, and Buyer shall accept
the same from Seller, at Closing through the execution of the
Deed of Transfer before the Notary.
2.2
PURCHASE
PRICE
Subject
to the further provisions of this Section 2.2, the purchase
price (the “Purchase Price”) for all of the Shares
of capital stock of the Company shall be $31,500,000 payable
in cash at Closing to Seller. The Purchase Price assumes that,
as of the Closing, (i) the Company will have no outstanding
debt and no obligations not in the Ordinary Course of Business
(any such indebtedness and obligations, “Company
Indebtedness”); and (ii) the Company will have Inventory
in an aggregate amount equal to at least $950,000 which shall
be saleable in the Ordinary Course of Business; provided, that
Company Indebtedness shall not include trade debt and normal
operating liabilities not incurred in the Ordinary Course of
Business. The Purchase Price shall be (i) (x) increased by the
amount, if any, by which the Company’s Inventory (valued
at cost) as of the Closing (based on a physical inventory
taken by Buyer and Seller on the Closing Date) exceeds
$950,000; or (y) decreased by the amount, if any, by which the
Company’s Inventory (valued at cost) as of the Closing
(based on a physical inventory taken by Buyer and Seller on
the Closing Date) is less than $950,000; (ii) decreased by the
amount, if any, of Company Indebtedness as of the Closing; and
(iii) decreased by the amount of Company Transaction Expenses.
For purposes of
calculating
the amount to be wired at Closing, the amount of Inventory
shall be determined on the Closing Date based on
Seller’s perpetual inventory system. Each of Seller and
Buyer agree to cooperate with the other regarding any
post-closing adjustments that need to be made to the Purchase
Price to reflect the actual amount of Inventory as of the
Closing.
2.3
CLOSING
Subject
to the satisfaction of all of the closing conditions contained
in this Agreement, the purchase and sale (the
“Closing”) provided for in this Agreement will
take place at the offices of Seller’s counsel, Bradley
& Riley PC, Cedar Rapids, Iowa, at 10:00 a.m. (local time)
on or about September 21, 2006, or at such other time and
place as the parties may agree. The execution of the Deed of
Transfer will take place on the Closing Date at the offices of
Van Doorne N.V., Jachthavenweg
121, 1081 KM Amsterdam ,
The Netherlands.
2.4
CLOSING
OBLIGATIONS
At
the Closing, after the Notary has received sufficient
confirmation that the Purchase Price has been transferred by
Buyer and received by Seller in accordance with Sections 2.2
and 2.4(b)(i), Seller and Buyer shall execute the Deed of
Transfer before the Notary and shall procure that the Notary
shall execute the Deed of Transfer. Seller shall procure that
the Company will acknowledge the transfer of the Shares, by
signing the Deed of Transfer.
At
the Closing:
(a)
Seller
will deliver to Buyer:
(i)
certificates
representing the Shares, duly endorsed (or accompanied by duly
executed stock powers) and any other documents reasonably
necessary to transfer to Buyer the entire right, title and
interest in and to all of the Shares of capital stock of the
Company;
(ii)
a
certificate, dated as of the Closing Date and executed by the
Chief Executive Officer or Chief Financial Officer of Seller
certifying in such detail as Buyer may reasonably request that
the conditions specified in Sections 6.1 and 6.2 hereof have
been fulfilled with respect to Seller and the Company and
certifying that Seller and the Company have obtained all
consents and approvals required with respect to the
Contemplated Transactions;
(iii)
[Intentionally
Omitted];
(iv)
a
duly executed counterpart of an Assignment and Assumption
Agreement between Seller and Buyer under which Seller
transfers and assigns to Buyer, and Buyer expressly assumes,
certain rights and obligations under the Share Sale Agreement,
such agreement to be in substantially the form attached hereto
as Exhibit C (the “Wartner
Assignment”)
(v)
a
duly executed counterpart of a transition services agreement
between Buyer and Seller in substantially the form attached
hereto as Exhibit D (the “Transition
Agreement”);
(vi)
a
duly executed counterpart of an assignment and assumption
agreement between Seller and Buyer under which Seller
transfers and assigns to Buyer, and Buyer expressly assumes,
those trade and marketing programs listed in
Schedule 3.20, such assignment and assumption agreement
to be in substantially the form attached hereto as Exhibit E
(the “Assignment and Assumption”);
(vii)
a
disclaimer duly executed by Seller’s lenders terminating
any Encumbrances held by them with respect to the
Shares;
(viii)
a
bill of sale as of Closing in a form acceptable to Buyer
reflecting the transfer of all Inventory of Product in the
possession of Seller from Seller to Company;
(ix)
a
license agreement in favor of Buyer, the Company and
Pharmaspray duly executed by Wartner Europe in the form of
Exhibit F;
(x)
[Intentionally
Omitted];
(xi)
the
releases referenced in Section 6.14; and
(xii)
other
documents reasonably requested by Buyer.
(b)
Buyer
will deliver to Seller:
(i)
subject
to the Purchase Price adjustments in Section 2.2, $31,500,000
by wire transfer to the account specified by Seller on and as
of the Closing Date.
(ii)
a
certificate dated as of the Closing Date and executed by the
Chief Executive Officer or Chief Financial Officer of Buyer
certifying in such detail as Seller may reasonably request
that the conditions specified in Sections 7.1 and 7.2 hereof
have been fulfilled with respect to Buyer and certifying that
Buyer has obtained all consents and approvals required with
respect to the Contemplated Transactions;
(iii)
a
duly executed counterpart of the Transition
Agreement;
(iv)
a
duly executed counterpart of the Assignment and
Assumption;
(v)
[Intentionally
Omitted];
|
(vi) |
a duly executed counterpart of the Wartner Assignment;
|
(vi)
[Intentionally
Omitted]; and
(viii)
other
documents reasonably requested by Seller.
| 2.5
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PURCHASE
PRICE ALLOCATION
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Buyer
and Seller agree to allocate the Purchase Price (and all other
capitalizable costs) among the Company’s assets for
federal, state and local Tax purposes in accordance with IRC
Section 1060, as set forth on the allocation schedule attached
as Schedule 2.5. Buyer and Seller agree to use such Allocation
(the “Allocation”) for all relevant federal,
state, local or foreign Tax purposes, and to file timely one
or more IRS Forms 8594 and any similar forms required under
state or local law in accordance with the requirements of IRC
Section 1060 (or such state or local law) and the Allocation.
Neither Buyer nor Seller shall take any position, whether in a
Tax audit, on a Tax Return or otherwise, that is inconsistent
with the Allocation unless required to do so by applicable
Legal Requirements.
3.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller
hereby represents and warrants to Buyer as
follows:
3.1
ORGANIZATION AND GOOD STANDING
(a)
The
Company is a private company with limited liability duly
organized, validly existing and in good standing under the
laws of the Netherlands, with full corporate power and
authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it
purports to own or use, and to perform all its obligations
under the Contracts. The Company is duly qualified to do
business as a foreign corporation and is in good standing
under the laws of each state or other jurisdiction in which
either the ownership or use of the properties owned or used
by it, or the nature of the activities conducted by it,
requires such qualification (each of which such states or
jurisdictions is set forth in Schedule 3.1(a). The Company is
not in violation of its Organizational Documents and no
decision to amend the articles of association of the Company
has been made.
(b)
Seller
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Iowa, with full
corporate power and authority to conduct its business as it is
now being conducted and to own or use the properties and
assets that it purports to own or use. Seller is not in
violation of its Organizational Documents.
3.2
AUTHORITY;
NO CONFLICT
(a)
This
Agreement has been duly authorized, executed and delivered by
Seller and the Company and constitutes the legal, valid, and
binding obligation of Seller and the Company, enforceable
against Seller and the Company in accordance with its terms,
subject to (i) bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors’ rights
and remedies generally; and (ii) general principles of equity.
Each of Seller and the Company has the absolute and
unrestricted right, power, authority, and capacity to execute
and deliver this Agreement and the Related Agreements to which
it is a party and to perform its obligations under this
Agreement and the Related Agreements to which it is a
party.
(b) Except
as set forth in Schedule 3.2(b), neither the execution and
delivery of this Agreement nor the consummation or performance
of any of the Contemplated Transactions will, directly or
indirectly (with or without notice or lapse of
time):
(i)
contravene,
conflict with, or result in a violation of (A) any provision
of the Organizational Documents of the Company or Seller, or
(B) any resolution adopted by the board of directors or the
shareholder(s) of the Company or Seller;
(ii)
contravene,
conflict with, or result in a violation of, or give any
Governmental Authority or other Person the right to challenge
any of the Contemplated Transactions or to exercise any remedy
or obtain any relief under, any Legal Requirement or any Order
to which the Company or Seller, or any of the business,
properties and assets operated, owned or used by the Company
or Seller, may be subject;
(iii)
contravene,
conflict with, or result in a violation of any of the terms or
requirements of, or give any Governmental Authority the right
to revoke, withdraw, suspend, cancel, terminate, or modify,
any permit or governmental authorization that is held by the
Company or Seller or that otherwise relates to the business
of, or any of the assets owned or used by, the Company or
Seller;
(iv)
cause
Buyer or the Company to become subject to, or to become liable
for the payment of, any Tax;
(v)
contravene,
conflict with, or result in a violation or breach of any
provision of, or give any Person the right to declare a
default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or
modify, any Contract related to the Company or its Business;
or
(vi)
result
in the imposition or creation of any Encumbrance upon or with
respect to the Shares or any of the assets owned or used by
the Company.
Except
as set forth in Schedule 3.2(b), neither Seller nor the
Company is or will be required to give any notice to or obtain
any Consent from any Person in connection with the execution
and delivery of this Agreement or the consummation or
performance of any of the Contemplated Transactions. Schedule
3.2(b) contains a complete and accurate list of all consents
and notices needed in connection with this Agreement, the
Related Agreements and the transactions contemplated herein
and in the Related Agreements. The consents set forth in
Schedule 3.2(b) have been obtained on or prior to the date
hereof.
3.3
CAPITALIZATION;
TITLE TO SHARES AND POWER TO CONVEY
(a)
The
authorized equity securities of the Company consist of 180
normal shares of capital stock with a nominal value of Euro
100 per share, of which 180 shares are issued and outstanding
on the date hereof and are represented by the Shares. All of
the issued and outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are
fully paid-up in accordance with all requirements of
applicable law and nonassessable and, except as set forth on
Schedule 3.3(a), none of them are subject to or were issued
in violation of pre-emptive rights, rights
of
first offer or first refusal or similar rights, or in
violation of the Securities Act or any other applicable
securities law. On the date of this Agreement, there are no,
and as of the Closing Date there will be no, outstanding
subscriptions, options, warrants or other agreements or
commitments or other rights of any kind to acquire (including
securities exercisable or exchangeable for or convertible
into), or obligating the Company to issue, any shares of
capital stock of the Company, or giving any Person the right
to receive any benefits or rights similar to any rights
enjoyed by or accruing to the benefit of the holders of any
shares of capital stock of the Company. The Company is not
subject to any obligations (contingent or otherwise) to
repurchase, redeem, call or otherwise retire, or to register,
any shares of capital stock. On the date of this Agreement,
the Shares owned by Seller collectively constitute, and on the
Closing Date the Shares will constitute, all of the issued and
outstanding shares of capital stock of the Company. There are
no Contracts with respect to (i) voting of any shares of
capital stock of the Company; or (ii) transfer of, or transfer
restrictions on, any shares of capital stock of the Company.
The Company does not own or have any Contract to acquire, any
equity securities or other securities of any Person or any
direct or indirect equity or ownership interest in any other
entity or business.
(b)
Seller
is, and will be on the Closing Date, the sole record and
beneficial owner of the Shares and, except as set forth on
Schedule 3.3(b), has, and will have on the Closing Date, good
title to the Shares free and clear of all Encumbrances of any
nature whatsoever. All corporate formalities have been taken
to grant Seller the full right and capability to sell and
deliver the Shares as contemplated by this Agreement. Upon
execution of the Deed of Transfer at the Closing in accordance
with the first paragraph of Section 2.4, Buyer shall have
acquired from Seller good, legal and equitable title to the
Shares free and clear of all Encumbrances of any nature
whatsoever, except as otherwise noted in Schedule
3.3(b).
3.4
FINANCIAL
STATEMENTS
Seller
has delivered to Buyer: (a) audited balance sheets of the
Company as at December 31 in each of the years 2003, 2004
and 2005, and the related audited statements of income,
changes in shareholders' equity, and cash flow for each of the
fiscal years then ended (the “Annual Financial
Statements”); and (b) an unaudited balance sheet of the
Company as of August 31, 2006 and the related unaudited
statements of income, changes in shareholders' equity, and
cash flow for the eight months then ended (the “Interim
Financial Statements;” together with the Annual
Financial Statements, the “Financial Statements”).
The Financial Statements (i) have been prepared in accordance
with the books and records of the Company, (ii) have been
prepared in accordance with GAAP, and (iii) fairly present the
financial condition and the results of operations, changes in
shareholders' equity, and cash flow of the Company as at the
respective dates of and for the periods referred to in the
Financial Statements, subject, in the case of the Interim
Financial Statements, to normal recurring year-end adjustments
(the effect of which will not, individually or in the
aggregate, be material). Schedule 3.4 contains true, correct
and complete copies of the Financial Statements.
3.5
BOOKS
AND RECORDS
The
minute books, stock record books, financial books and records,
and other records of the Company and Seller with respect to
the Business, all of which have been made available to Buyer,
are complete and correct and have been maintained in
accordance with sound business practices. At the Closing, all
of those books and records will be in the possession of the
Company or its agent.
3.6
TITLE
TO PROPERTIES; ENCUMBRANCES
Schedule
3.6 contains a complete and accurate list of all fixed assets,
leaseholds or other interests therein owned by the Company.
The Company has good and valid right, title and interest in
and to or, in the case of leased properties or properties held
under license, good and valid leasehold or license interests,
respectively, in all of its assets and properties, including,
but not limited to, all of the machinery, equipment,
terminals, computers, vehicles, and all other assets and
properties (real, personal or mixed, tangible or intangible)
reflected in the Annual Balance Sheet and the Interim Balance
Sheet and all of the properties and assets purchased or
otherwise acquired by the Company since the date of the
Interim Balance Sheet (except for personal property sold since
the date of the Interim Balance Sheet in the Ordinary Course
of Business. All material properties and assets reflected in
the Annual Balance Sheet and the Interim Balance Sheet, or
acquired since the respective dates thereof, are free and
clear of all Encumbrances. The properties and assets owned or
leased by the Company are sufficient in all material respects
for the conduct of the business of the Company as it is now
conducted, and such properties and assets are in working order
(reasonable wear and tear excepted).
3.7
ACCOUNTS
RECEIVABLE
Except
as set forth on Schedule 3.7, the Company shall have no
accounts receivable on its books and records; provided, that,
if there are any receivables in existence on the Closing Date,
they shall be collected by the Company for the account of
Buyer. Notwithstanding the generality of the foregoing, all
accounts receivable of the Company reflected on the Annual
Balance Sheet or the Interim Balance Sheet or on the
accounting records of the Company as of the Closing Date
(collectively, the “Accounts Receivable”)
represent or will represent valid obligations arising from
sales actually made or services actually performed in the
Ordinary Course of Business and, to the Knowledge of Seller,
are not subject to any defenses, set-offs or counterclaims,
and subject only to reserves reflected on Schedule 3.7. Except
as set forth on Schedule 3.7, all items which are required by
GAAP to be reflected as Accounts Receivable on the Financial
Statements and on the books and records of the Company are so
reflected and have been recorded in accordance with GAAP.
Since June 2003, the Company has not changed the period for
determining when Accounts Receivable become uncollectible.
Schedule 3.7 is a true and complete aged list of all the
Accounts Receivable relating to the Company as of the day
immediately prior to the date hereof, and except as set forth
on Schedule 3.7, none of the Accounts Receivable included in
the Financial Statements are owed by the Company's
shareholders or relate to any employees or Affiliates of the
Company. Schedule 3.7 sets forth a list of any and all
Accounts Receivable from employees, shareholders and
Affiliates of the Company, including, without limitation, all
notes, loans, advances or other monies owed to the Company by
any past or present employee.
3.8
INVENTORY
Except
as set forth on Schedule 3.8, (i) Inventory shall be comprised
of inventory consistent with the books and records of the
Company and Seller (with respect to the Business); and (ii)
the Company shall not be liable for any components for the
Product provided by third-party suppliers. Notwithstanding the
generality of the foregoing, any raw materials, work in
process, spare parts, and other inventory of the Company and
Seller (with respect to the Business) as set forth on the
Financial Statements and Seller’s financial statements,
respectively, are in usable or salable condition in the
Ordinary Course of Business at the amounts carried on such
financial statements and on the books and records of the
Company and Seller (with respect to the Business). The raw
materials, work in process, spare parts, and other inventory
are (a) not obsolete or excessive and are of at least the
standard quality for such items; (b) suitable for the
manufacture and distribution of the Products; (c) not in
excess of the normal purchasing patterns of the Company and
Seller (with respect to the Business); and (d) adequate to
meet the Company’s and Seller’s expected shipping
requirements. Except as set forth on Schedule 3.8, the amounts
of the inventories reflected on the Financial Statements and
Seller’s financial statements and on the books and
records of the Company and Seller (with respect to the
Business) have been determined in accordance with
GAAP.
3.9
TAXES
Except
as set forth in Schedule 3.9:
(a)
All
Tax Returns required to be filed with any Governmental
Authority by the Company or Seller or with respect to the
Company’s assets or the Business have been timely filed
and were accurate and complete in all material respects. All
Taxes due and payable by the Company or Seller or with respect
to the Company’s assets or the Business (whether or not
shown on any Tax Return) have been timely paid in full.
Neither the Company nor Seller is currently the beneficiary of
or has applied for any extension of time within which to file
any Tax Return. There are no Encumbrances with respect to
Taxes on any of the Company’s or Seller’s assets,
other than Encumbrances for Taxes not yet due and payable. No
claim has ever been made by any Governmental Authority in a
jurisdiction in which the Company or Seller does not file Tax
Returns that the Company or Seller is or may be subject to Tax
in that jurisdiction and, to the Knowledge of Seller, there is
no basis on which a Governmental Authority could validly
assert such a claim.
(b)
Seller
purchased the Shares on June 10, 2003 and timely made a valid
election under IRC Section 338 with respect to such purchase.
For United States Tax purposes, Seller treated such election
as a liquidation of the Company into Seller pursuant to IRC
Section 332. Such election did not result in the Company
recognizing any income subject to federal, state or local Tax.
The Company made a valid election to be treated as an entity
disregarded from its owner (a “Disregarded
Entity”) for federal, state and local income and
franchise Tax purposes pursuant to Treasury Regulation Section
301.7701-3 by filing IRS Form 8023 (the “Check-the-box
Election”) on March 10, 2004. The Check-the-box Election
has been effective at all times since June 10, 2003 and will
remain effective at all times through the Closing Date. For
all federal, state and local income or franchise Tax purposes,
Seller is deemed to own the Company’s assets directly
and to be engaged directly in the Business.
(c)
The
Company and Seller have withheld and paid all Taxes required
to have been withheld and paid in connection with any amounts
paid or owing to any employee, independent contractor,
creditor, shareholder, partner, member or other third party,
and have timely and properly
completed
and filed any information returns or reports or other Tax Returns
required with respect thereto.
(d)
No
dispute concerning any Tax liability of the Company or Seller
(with respect to the Business) is pending or, to the Knowledge
of Seller, threatened. No Tax proceedings by a Governmental
Authority are pending or are being conducted with respect to
the Company or Seller (with respect to the Business). With
respect to Taxes for which the statute of limitations remains
open, neither the Company nor Seller (with respect to the
Business) has received from any foreign, federal, state or
local Governmental Authority (i) any notice indicating an
intent to open a Tax audit or other review, (ii) any request
for information related to Tax matters, or (iii) any notice of
deficiency or proposed adjustment for any amount of Tax
proposed, asserted or assessed against the Company or Seller
or with respect to the assets of the Company or the Business,
in each case other than with respect to an audit, review or
examination that has been completed and closed and with
respect to which the Company or Seller has paid all Taxes
asserted or assessed by the Governmental Authority. The
Company has not waived any statute of limitations in respect
of Taxes or agreed to any extension of time with respect to a
Tax assessment or deficiency of a Tax.
(e)
Schedule
3.9 of the Disclosure Schedule sets forth a complete and
accurate list of all jurisdictions in which the Company or the
Business is subject to Tax and of all Tax Returns filed by the
Company with respect to the Company or the Business since the
Company’s formation on December 13, 2002. Seller has
provided to Buyer correct and complete copies of all such Tax
Returns and of all examination reports and statements of
deficiencies assessed against or agreed to by the Company for
all Tax periods as to which the statute of limitations remains
open.
(f)
Neither
the Company nor Seller (with respect to the Company or its
assets or the Business) has ever obtained from a Governmental
Authority a ruling with respect to Taxes. There is no pending
request by the Company or Seller (with respect to the Company
or its assets or the Business) for a ruling by a Governmental
Authority with respect to Taxes.
(g)
The
Company will not be required to include any item of income in,
or exclude any item of deduction from, Taxable income for any
Taxable period (or portion thereof) ending after the Closing
Date as a result of any (i) change in method of accounting for
a taxable period ending on or prior to the Closing Date (under
IRC Section 481(c) or any corresponding or similar provision
of state, local or foreign income Tax law); (ii) closing
agreement with a Tax Authority; (iii) prior intercompany
transactions, the income or gain on which was deferred and
will become Taxable as a result of the purchase by Buyer of
the Shares; (iv) installment sale made prior to the Closing
Date; or (v) prepaid amount received on or prior to the
Closing Date.
(h)
The
Company is not liable for any unpaid Taxes for any Taxable
period beginning before the effective date of the
Check-the-box Election.
(i)
Neither
Seller nor the Company has been a United States real property
holding corporation within the meaning of IRC Section
897(c)(2) during the applicable period specified in IRC
Section 897(c)(1)(A)(ii).
(j)
Neither
the Company nor Seller (with respect to the Company, its
assets or the Business) has ever been required to make any
material adjustment by the IRS pursuant to IRC
Section
482 or any similar adjustment by another Governmental Authority
pursuant to any foreign Tax Law, and to the Knowledge of Seller,
there is no valid basis on which the IRS or another Governmental
Authority could make such an adjustment.
(k)
Neither
the Company nor Seller (with respect to the Company, its
assets or the Business) is party to any Tax sharing agreement.
Neither the Company nor Seller has any liability for Taxes of
any other Person as a transferee or successor, by contract or
otherwise.
3.10
EMPLOYEE
BENEFITS
Since
June 2003, the Company has had no employees other than the two
management level employees set forth on Schedule 3.10. The one
current employee of the Company, as of the Closing, will
become an employee of Seller or one of its Affiliates and
Seller will be responsible for all severance or other
benefits, if any, which may be or become payable to such
employee as a result of the termination of his employment with
the Company. The Company does not now, nor has it ever,
maintained any employee benefit plans subject to the
provisions of ERISA, nor does the Company have, nor will it
have, any obligation to make any contribution to an employee
benefit plan maintained by another which is subject to ERISA
with respect to periods prior to the Closing. The Company has
provided for and timely paid any and all required employee
benefits. The Company has at all times complied with all
applicable Legal Requirements relating to employment and labor
matters.
As
of Closing the Company has no employees and no former
employees to whom there is any residual debt, duty or
obligation of any kind whatsoever. At Closing Seller will have
delivered to Buyer releases in favor of the Company from all
former employees in a form acceptable to Buyer.
3.11
LEGAL
PROCEEDINGS; ORDERS
Except
as set forth in Schedule 3.11, there is no pending
Proceeding:
(a)
that
has been commenced by or against the Company or that otherwise
relates to or may affect the Shares or the business of, or any
of the assets owned or used by, the Company; or
(b)
that
challenges, or that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, the
consummation of the Contemplated Transactions.
To
the Knowledge of Seller, (1) no such Proceeding has been
threatened, and (2) no event has occurred or circumstance
exists that may give rise to or serve as a basis for the
commencement of any such Proceeding.
3.12
CONTRACTS;
NO DEFAULTS
Schedule
3.12 contains a complete and accurate list, and Seller has
made available or delivered to Buyer true and complete copies
of, all Material Contracts relating to the Company, or its
business, properties or assets including each licensing
agreement or other Contract with respect to patents,
trademarks, copyrights, or other intellectual property,
including, without limitation, agreements with current or
former employees, consultants, or contractors regarding the
appropriation or the non-disclosure of any of the Business
Intellectual Property.
For
purposes of this Section 3.12, the term “Material
Contract” will include, without limitation, (i) any
employment or consulting agreement, (ii) any Contract
restraining the Company from engaging or competing in any
manner in any business, (iii) any Contract that may require
expenditures by or generate receipts to the Company in excess
of $10,000, (iv) any Contract relating to indebtedness, any
guaranty, direct or indirect, of any obligation of another
Person, (v) any settlement or conciliation with respect to any
claim asserted by any Person, or (vi) any Contract between the
Company and Seller or any Affiliates of Seller. The Company is
not in breach of any Contract listed in Schedule 3.12. To the
Knowledge of Seller, no other party to any Contract listed in
Schedule 3.12 is in breach of or default under or in violation
of any such Contract. Each Contract listed in Schedule 3.12 is
in full force and effect and constitutes the valid and binding
obligation of the parties thereto, enforceable against each of
such parties in accordance with its terms. No event has
occurred that (with or without notice or lapse of time) may
result in a breach or default under or violation of any
Contract listed in Schedule 3.12 or give any party to any such
Contract the right to exercise a remedy, or accelerate the
maturity or performance of, or terminate or modify, any such
Contract.
Except
as set forth in Schedule 3.12, (i) no consent of any Person is
needed in order for a Material Contract to continue in full
force and effect in accordance with its terms without penalty,
acceleration, or rights of early termination by reason of the
consummation of the transactions contemplated by this
Agreement and the Related Agreements, and (ii) the Company has
not received notice that it is in violation of, breach of, or
default under any, or is in violation of, breach of, or
default under any, Material Contract, nor to Knowledge of
Seller is any other party to any such Material Contract in
violation of, material breach of, or default under any such
Material Contract.
With
respect to any Material Contract, there are no pending claims
(other than Accounts Receivable) by or against the Company,
or, to the Knowledge of Seller, threatened claims by or
against the Company arising out of or relating to any such
Material Contract.
3.13
INSURANCE
Schedule
3.13 sets forth a true and complete list of all policies of
insurance to which the Company is a party or under which the
Company, or any properties, assets, director or officer of the
Company, is or has been covered at any time within the three
years preceding the date of this Agreement. All premiums with
respect thereto are currently paid and, to the Knowledge of
the Seller, the Company is in compliance in all material
respects with the terms and conditions thereof. The Company
has given timely notice to the appropriate insurance carrier
with respect to any potential claims which may be covered by
such insurance policies. Except as set forth in Schedule 3.13,
(i) no dispute with any insurance carrier exists with respect
to the scope of any insurance coverage, (ii) the Company has
not received any refusal of coverage or any notice that a
defense will be afforded with
reservation
of rights, (iii) the Company has not received any notice of
cancellation, termination or reduction in coverage or any
other indication that any insurance policy is no longer in
full force or effect or will not be renewed, and (iv) none of
the insurance policies listed in Schedule 3.13 will terminate
or lapse (or be affected in any other adverse manner) by
reason of the consummation of the Contemplated
Transactions.
3.14
ENVIRONMENTAL
MATTERS
Except
as set forth in Schedule 3.14, the Company is, and at all
times has been, in full compliance with, and has not been and
is not in violation of or liable under, any Environmental Law.
Seller has no basis to expect any actual or threatened
Proceeding, Order, notice, or other communication from (i) any
Governmental Authority or private citizen acting in the public
interest, or (ii) the current or prior owner or operator of
any Facilities, of any actual or potential violation or
failure to comply with any Environmental Law, or of any actual
or threatened obligation to undertake or bear the cost of any
Environmental liabilities with respect to any of the
Facilities or any other properties or assets (whether real,
personal, or mixed) in which Seller or the Company has had an
interest, or with respect to any property or Facility at or to
which Hazardous Materials were generated, manufactured,
refined, transferred, imported, used, or processed by Seller,
the Company, or any other Person for whose conduct they are or
may be held responsible, or from which Hazardous Materials
have been transported, treated, stored, handled, transferred,
disposed, recycled, or received.
3.15
INTELLECTUAL
PROPERTY
Schedule
3.15 lists each patent, utility model, industrial design,
registered trademark, design mark, service mark and trade
name, registered copyright and domain name, and each published
application for any of the foregoing, domestic and foreign,
that is necessary for the operation of the Business as
presently conducted (collectively, the “Business
Intellectual Property”). Except as set forth in Schedule
3.15: (a) the Company has, directly or indirectly, the entire
right, title and interest in and to the Business Intellectual
Property, free and clear of all Encumbrances; (b) there is no
claim or notice of infringement of the intellectual property
rights of any other Person pending or, to the Knowledge of
Seller threatened against the Company; (c) the Business
Intellectual Property of the Company is valid, subsisting, in
full force and effect and has not been compromised, abandoned
or passed into the public domain in any respect, and all
necessary registration, maintenance and renewal documentation
and fees in connection with the Business Intellectual Property
have been timely filed with appropriate authorities and paid;
(d) to the Knowledge of Seller, no Person is infringing on or
misappropriating any Business Intellectual Property; (e) to
the Knowledge of Seller, the operation of the Business does
not infringe or misappropriate the intellectual property
rights of any other Person; (f) no present or former employee
of the Company or Seller has any proprietary, financial or
other interest, direct or indirect, in any Business
Intellectual Property; and (g) the Company has taken
commercially reasonable precautions to protect inventions,
trade secrets and know how constituting Business
Intell
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