agreement relating to the purchase of 100% ofthe shares of the company TAAGOn 24 February 2011

1.1

Sale

 

i.

The Sale Shares are validly issued by the Company;

 

ii.

It is rightfully owner of the Sale Shares entirely paid up and outstanding in full ;

 

iii.

The Sale Shares are not pledged at the Closing Date with no pledge, privilege, security, option, preemption right or right of approval or any rights in favor of a shareholder or a third party and are free of any right of any third party ; in particular the pledge over 996 shares of the Company in favor of BANQUE POPULAIRE LORRAINE CHAMPAGNE granted as security of reimbursement of a loan dated 17 October 2007, will be released on or before the Closing Date.

 

iv.

The Sale does not require the prior approval or authorization of any administrative, judicial or regulatory authority ;

 

v.

The Transferor, in its capacity of shareholder of the Company, will approve on or before the Closing Date the financial statements of the Company for the fiscal year ending 31 December 2010, and will designate the loss (estimated to an amount of 143.845 Euros) as a loss « carry forward », and will approve the Transferee as the new shareholder of the Company as a result of this Sale on the Closing Date ; and

 

vi.

No sum is due on the Closing Date by the Company to the Transferor and reciprocally, in any manner whatsoever and in particular, without prejudice, management fees agreements, mandates, collaboration or cooperation agreements, shareholders loan, or any similar agreements with similar effects, with the exception of the shareholders loan recorded in the accounts of the Company in the name of FIMMOTAAG for an amount of 197.640 € which shall be reimbursed to FIMMOTAAG in the amount of 50% within thirty (30) days from the Closing Date and the remaining 50% within one (1) year after the Closing Date.

1.2 

Sale Price

1.3

Payment Conditions’ of the Sale Price and undertakings of the Transferor

 

-

the pledge over 112.307 DERYCZ SCIENTIFIC shares’ in favor of BANQUE POPULAIRE LORRAINE CHAMPAGNE, in first rank, in substitution of the pledge over the 996 TAAG shares’ and in favor of the Transferee in second rank, as security for the representations made and warranties given in favor of the Beneficiary pursuant to the terms of this Agreement;

 

-

the pledge over 224.614 DERYCZ SCIENTIFIC shares’, to the benefit of the Transferee in first rank, as security for the representations made and warranties given in favor of the Beneficiary pursuant to the terms of this Agreement, and in favor of BANQUE POPULAIRE LORRAINE CHAMPAGNE in second rank, in substitution of the pledge over the 996 TAAG shares.

1.4

Guarantee linked to change risk

 

-

In case of variation of the exchange rate between the Euro and the US Dollar of more than 10% in favor of the EURO at the expiration of the Restriction Period, the Transferor will return a portion of the Derycz Scientific shares received in exchange for the Sale Shares representing the loss exceeding the 10% (i.e. the part above the 10%),

-

In case of variation of the exchange rate between the Euro and the US Dollarof more than 10% in favor of the USD at the expiration of the Restriction Period, the Transferee will pay  the Transferor a cash payment in Euro for the amount of the loss exceeding the 10% (i.e. the part above the 10%).

1.5

Earn Out

 

-

The Transferor shall have the right to an Earn Out, payable on April 15 2012, or within thirty (30) days after the delivery of the definitive accounts approved by both Parties, equal to :

 

o

Twenty per cent (20%) of the net income before taxes of TAAG for the year ending on 31 December 2011, for the part of the result between zero (0) and two hundred thousand (200.000) Euros ;

 

o

Thirty per cent (30%) of the net income before taxes of TAAG for the year ending on 31 December 2011, for the part of the result between two hundred thousand (200.000) and three hundred thousand (300.000) Euros ;

 

o

Forty per cent (40%) of the net income before taxes of TAAG for the year ending on 31 December 2011, for the part of the result exceeding four hundred thousand (400.000) Euros.

 

-

The Transferor shall have the right to an Earn Out, payable on April 15 2013, or within thirty (30) days after the delivery of the definitive accounts approved by both Parties, equal to :

 

o

Twenty per cent (20%) of the net income before taxes of TAAG for the year ending on 31 December 2012, for the part of the result between zero (0) and two hundred thousand (200.000) Euros ;

 

o

Thirty per cent (30%) of the net income before taxes of TAAG forthe year ending on 31 December 2012, for the part of the result between two hundred thousand (200.000) and three hundred thousand (300.000) Euros ;

 

o

Forty per cent (40%) of the net income before taxes of TAAG for the year ending on 31 December 2012, for the part of the result exceeding four hundred thousand (400.000) Euros.

 

-

The Transferor shall have the right to an Earn Out, payable on April 15 2014, or within thirty (30) days after the delivery of the definitive accounts approved by both Parties, equal to :

 

o

Twenty per cent (20%) of the net income before taxes of TAAG  for the year ending on 31 December 2013, for the part of the result between zero (0) and two hundred thousand (200.000) Euros ;

 

o

Thirty per cent (30%) of the net income before taxes of TAAG for the year ending on 31 December 2013, for the part of the result between two hundred thousand (200.000) and three hundred thousand (300.000) Euros ;

 

o

Forty per cent (40%) of the net income before taxes of TAAG for the year ending on 31 December 2013, for the part of the result exceeding four hundred thousand (400.000) Euros.

 

-

The Transferor shall have the right to an Earn Out, payable on April 15 2015, or within thirty (30) days after the delivery of the definitive accounts approved by both Parties, equal to :

 

o

Twenty per cent (20%) of the net income before taxes of TAAG f the year ending on 31 December 2014, for the part of the result between zero (0) and two hundred thousand (200.000) Euros ;

 

o

Thirty per cent (30%) of the net income before taxes of TAAG of the year ending  on 31 December 2014, for the part of the result between two hundred thousand (200.000) and three hundred thousand (300.000) Euros ;

 

o

Forty per cent (40%) of the net income before taxes of TAAG for the year endingclosed on 31 December 2014, for the part of the result exceeding four hundred thousand (400.000) Euros.

 

-

The Transferor shall have the right to an Earn Out, payable on April 15 2016, or within thirty (30) days after the delivery of the definitive accounts approved by both Parties, equal to :

 

o

Twenty per cent (20%) of the net income before taxes of TAAG for the year ending on 31 December 2015, for the part of the result between zero (0) and two hundred thousand (200.000) Euros ;

 

o

Thirty per cent (30%) of the net income before taxes of TAAG forthe year endingon 31 December 2015, for the part of the result between two hundred thousand (200.000) and three hundred thousand (300.000) Euros ;

 

o

Forty per cent (40%) of the net income before taxes of TAAG for the year ending on 31 December 2015, for the part of the result exceeding four hundred thousand (400.000) Euros.

1.6

Contractual set-off with the Representations and Warranties

1.6.1

In the case where the indemnity due by the Transferor as a price reduction in relation to a claim in application with the representations and warranties is definitively determined (the « Price Reduction ») and the Payment of the Earn Out is not yet due, a set off will automatically apply, in the same amount as the Price Reduction due, between this Price Reduction and part or all off the Earn Out due to the Transferor, and this even if the provisions of the legal compensation are not met.

1.6.2

In the event where the Price Reduction due by the Transferor is not yet definitively determined in accordance with the terms of the Warranty and:

 

(i)

whether the Earn Out is due, or

 

(ii)

the Earn Out is not yet due,

1.7

Documents delivered by the Transferor

 

o

the shares handover protocols duly filled out and signed by the Transferor in favor of the Transferee and pertaining to the Sale Shares, together with two originals signed by the Transferor of the corresponding Cerfa sheet n°2759 ;

 

o

the resignation letter with effect on Closing Date of M. Mario Vendemiati in his capacity of President of the Company, pursuant to which he declares being satisfied as per his rights and therefore waives any rights or demands of any kind whatsoever, against TAAG and/or the Transferee;

 

o

the resignation letter with effect on Closing Date of M. Patrice Chambin in his capacity of General Manager of the Company, pursuant to which he declares being satisfied as per his rights and therefore waives any rights or demands of any kind whatsoever, against TAAG and/or the Transferee;

 

o

a certified true copy from the President of the Company of the minutes of the decision of all of the shareholders of the Company, before the Closing Date :

 

o

approving the Nominated Accounts ;

 

o

the allocation of the loss amounting to 143.845 Euros as “carry forward” loss;

 

o

the approval of the Transferee in his capacity of new shareholder of the Company as per the Sale provided for at the Closing Date ;

 

o

stating the resignation of the President and the General Manager of the Company ;

 

o

appointing DERYCZ SCIENTIFIC, INC. or any other person being substituted as new president of TAAG replacing the resigning president ;

 

o

appointing M. Mario Vendemiati and Monsieur Patrice Chambin, as General Managers of the Company, not remunerated for their mandate.

 

o

a certified true copy from the President of the Company of the statutory auditor reports on the Nominated Accounts ;

 

o

an up-to-date copy of the charter documents, share ledger, shareholders accounts and corporate ledgers of the minutes and convening letters of the corresponding bodies of the Company ;

 

o

a certified true copy from the President of the Company of the minutes of the Work Committee of the Company stating the information and consultation of said Committee having approved (or similar effect) the authorization of the Sale in accordance with the in-force legislation and regulatory rules;

 

o

a copy of FIMMOTAAG minutes of the shareholders meeting authorizing the Sale of the Sale Shares to the Transferee, the signature of this Agreement and the representations and warranties attached thereto;

 

o

an original of the employment agreements entered into between MM. Mario Vendemiati and Patrice Chambin and the Company;

 

o

the release from the bank BANQUE POPULAIRE LORRAINE CHAMPAGNE of the pledge over the 996 shares of the Company;

 

o

the addendum to the commercial lease dated 30 December 2008 entered into with BUROBOUTIC.

1.8.1

On Closing Date, the Transferee will deliver to the Transferor a copy of the minutes or written consent of the board authorizing the Transferee to acquire the Sale Shares in accordance with the terms and conditions of this Agreement and the execution of any direct or indirect agreement in relation therewith and in particular the representations and warranties.

1.8.2

The Transferee shall commit irrevocably and unconditionally to transfer on the Closing Date to the Company’s shareholder current account the amount of five hundred thousand (500.000) Euros (the « Advance ») in order to satisfy possible cash needs of the Company.

1.8.3

The Transferee and the Company commit to transfer to the Transferor or to any other person, at the price of 1 Euro, the Kaplan patent, this transfer and the related formalities will be fulfilled in a reasonable amount of time after Closing Date.

1.9

Non competition, non canvassing and non solicitation

 

(i)

not to perform, in Europe, directly or indirectly and under any form whatsoever (this including through FIMMOTAAG), no activity in competition with the activity of the companies of the Group performed at a that time within the purposes of their respective businesses and/or any new activity that may be performed by the companies of the Group (the « Activity ») ;

 

(ii)

not to solicit directly or indirectly the clients and prospects of the Group, in any direct or indirect manner whatsoever (this including through FIMMOTAAG), with the purposes or the incentive to transfer part or all of said clients or said prospects, towards any establishment, branch or entity having an activity competing with the Activity ;

 

(iii)

not to accept any work, title, mandate or function of any sort whatsoever in a company, entity or consortium performing an activity competing with any Activity ;

 

(iv)

not to take any shares in companies, entities or consortium having an activity competing with the Activity, by means of acquisition or by way of subscription of shares of any kind whatsoever (this including through FIMMOTAAG) ;

 

(v)

not to hire or have hired, directly or indirectly, for himself or any other person whatsoever (this including through FIMMOTAAG) and for any goal whatsoever, any employees or representatives of the Group ;

 

(vi)

not to solicit in any manner whatsoever (this including through FIMMOTAAG) in order to offer any services or assistance, any clients, suppliers, agents, distributors, consultants or managers of the Group and more generally not to enter into any commercial businesses similar to those conducted by the Group with any of its clients ;

 

(vii)

not to solicit any services or hire any person working within the Group (this including through FIMMOTAAG).

« Event »

Means a fact, an event, an action or a situation:

 

-

which existence, the origin or the cause is before the Closing Date, and

 

-

which violates, infringes, provokes or constitutes a mistake or an omission in one or several representations made and warranties given to the Articles 2.1 and 3 of this Agreement.

 

« Loss »

Means (i) any increase of liabilities and/or insufficiency of assets, and more generally, any decrease in the Company’s equity with respect to the Nominated Accounts, (ii) any cost, loss, or prejudice by the Company or the Beneficiary resulting directly or indirectly for the Company or the Beneficiary of any Event, this including any Event occurring between the closing of the Nominated Accounts and the Closing Date, (iii) the amount of any tax, VAT, professional taxes and other taxes, charges, duties, fees, contribution and withholding taxes (in tax, regulatory, customs, social security or other matters), this including any penalties, or interests, which would be borne by the Company and any advantage in tax matters (in particular tax credits) which would be reassessed following any reassessment, towards the Company or any regulatory claim concerning a period elapsing before the Closing Date, (iv) to which will be added any reasonable advisers’ fees incurred by the Company and/or the Beneficiary in relation to the Event triggering the Warranty, the protection of the Company and/or the Beneficiary interests.

 

« Claim »

Means any claim for which the Beneficiary has provided notice to the Guarantor as per the terms of this Warranty.

 

« Price

 

Reduction »

Means the indemnity paid to the Beneficiary as a decrease in the Sale Price paid for the Sale Shares.

2.1 

Principles of the warranties

2.2

Scope of the warranties

2.2.1

The Beneficiary can trigger this Warranty as soon as an Event occurs or is revealed.

2.2.2

The Guarantor commits irrevocably to indemnify the Beneficiary in case of any Loss, as a Price Reduction.

2.2.3

The indemnity paid by the Guarantor to the Beneficiary of the Company on the ground of this Warranty constitutes a Price Reduction. However, this qualification does not have the effect of constituting a decrease in the Sale Price of the Sale Shares, this latter being definitively determined by the Parties as per the terms of this Agreement. As a result, in case where there is a dispute regarding the determination of the indemnity due as a Price Reduction, no Party shall claim that the price of the Sale Shares is uncertain.

2.3

Insufficiency and decreases of the Company’s equity

2.3.1

A Price Reduction can result from:

 

-

Any mistake, error or omission which appears in the Nominated Accounts, even if it was disclosed on the date of the closing of the Nominated Account, as well as

 

-

The consequences of any Events unknown on the Closing Date, which, if disclosed on that date, would have required modification of the Nominated Accounts.

 

-

From the non recoverability of any assets ;

 

-

An increase of liabilities of the Company to any third party, whatever the origin and whether it was envisioned on the Closing Date, and, in particular, without limitation, any tax reassessments by way of compensation, trial or proceedings;

 

-

The occurrence of any charge whose cause or origin occurred before the Closing Date, of any nature whatsoever and whithout regard to the cause, the amount or the time sny Party became aware of the occurrence;

 

-

The absence of provision or the insufficiency of provisions in the Nominated Accounts.

2.3.2

The amount of the Price Reduction due to a Loss relating to or in relation to the Company will be equal to 100 % of the insufficiencies or decreases inccurred, because of this Event, in the accounts of one or several financial years during which this Event has occurred or was disclosed.

2.3.3

For any recalculation or reassessments from the tax, social or customs administrations which would have reduced or postponed the tax deductibility of a charge during one or several financial years thereafter, only the interests, indemnities and penalties related thereto would be taken into account for the calculation of the indemnities due, as well as the difference in the applicable corporate tax rate between the financial year related to such reassessment and the financial year(s) during which such charge will be recorded for tax purposes.

2.3.4

In case where, in order to postpone the payments claimed by the tax, social or customs administrations, the Company should enter into any guarantees, the Guarantor commits to enter into such guarantees, with no delay, in lieu of the Company and to pay any costs for implementing such guarantees.

2.3.5

The amount of the Price Reduction will be calculated after deduction and impact of the following items, net of taxes, as the case may be:

 

·

The amount of any insurance indemnity received by the Company as a result of the concerned claim;

 

·

The amount of the provision recorded in the Nominated Accounts, as a result of the Event pursuant to which the Warranty is triggered, save the case where the Company must make a disbursement as a result of the Event concerned ;

 

·

The amount of the increase of assets or decrease of liabilities benefiting the Company as consideration of the Loss considered as per the Event concerned, to the extent that such increase of assets or decrease of liabilities results in an increase in cash or a saving which could be offset with the amount of cash paid out resulting or which could result from the Loss;

 

·

The amount of any tax saving effectively recorded which could, as the case may be, result from the occurrence of a cost, liability or a loss in relation with the Event as per which the Warranty is claimed. A tax saving will be regarded as effective if it decreases the amount of the corporate tax which would have been paid by the Company had the Event not occurred, excluding any creation or increase of tax carry-forward loss.

2.4

Other Losses incurred by the Beneficiary

2.5

Implementation of the Warranty

2.5.1

Notification of a claim under this Warranty should be provided to the Guarantor in accordance with the provisions Article 2.5.5 .

2.5.2

Any claim made by the Beneficiary will include all documentation available to the Beneficiary or the Company  at the date of the sending of such claim and the amount of the Price Reduction claimed, or if the amount of claim is not yet determined, an estimate of the Price Reduction. It is stipulated that the effectiveness or definitiveness of the Loss and/or the Claim suffered by the Company or the Beneficiary as per the claim concerned is not a condition for sending this Claim.

2.5.3

Payment

 

·

The Company is liable for paying a sum pursuant to an enforceable judicial decision, even in relation to an Event triggering the Warranty, or

 

·

The Company must make a payment pursuant to an Event, even if the consequences have been recorded as a provision in the Nominated Accounts, or

 

·

The Price Reduction has been accepted in writing by the Guarantor, or

 

·

The Price Reduction is payable, as the case may be, by application of the provisions of this Warranty and in particular Article 2.5.3, or

 

·

The corresponding Loss is due as a result of a regulatory, judicial, arbitration or settlement decision being finalized or by judicial decision, even temporary, notwithstanding any appeal or guarantee given in relation thereof.

2.5.4

Set-off

2.5.5

Follow up of the implementation of the Warranty

 

·

Inform, in a reasonable amount of time, the Guarantor of any Event which could likely trigger this Warranty and provide the Guarantor with a copy of any costs and documents justifying the implementation of this Warranty, as soon as practicable;

 

·

Allow the Guarantor together with its advisers reasonable access to any documents, information, data as well as the offices and employees of the Company and the Beneficiary and provide all necessary assistance in order to permit the protection of the Company’s interests at its sole costs;

 

·

Allow the Guarantor to formulate any observation as defendant and take into account its reasonable observations. In any event, the Guarantor will be able to follow the discussion and the hearing together with the representatives of the Company, to its sole expense.

2.6

Triggering threshold

2.6.1

The Guarantor will not indemnify the Beneficiary as per the terms if this Agreement for any Claims whosecumulative amount is less than or equal to fifty thousand (50.000) Euros, it being specified that in the case where the overall amount of claims exceeds this triggering threshold, the Guarantor will indemnify the Beneficiary starting from the first Euro as a Price Reduction.

2.7.2

However, in case of claims based on an infringement of the representations made in Articles 3.2, 3.3, 3.9 (i) and (ii) and 3.15, the threshold will not apply.

2.7

Ceiling

2.7.1

In any event, the full amount of liability of the Guarantor and the total amount of the Price Reduction paid by the Guarantor in favor of the Beneficiary as a result of this Warranty will not exceed five hundred thousand (500.000) Euros.

2.7.2

However, in case of claims based on an infringement of the representations made in Articles 3.2, 3.3, 3.9 (i) and (ii) and 3.15, the ceiling will not apply.

2.8

Duration

 

(i)

This Warranty can be claimed by the Beneficiary for the representations made in relation to the ownership of the Sale Shares, until five (5) years after the Closing Date ;

 

(ii)

For any of the tax, labor and customs warranties, until thirty (30) days following the term of the reassessment period of the applicable government body;

 

(iii)

For any warranties other than 2.8 (i) and 2.8 (ii) until eighteen (18) months after the Closing Date.

2.9

Guarantee of the Guarantor

 

-

A first-rank pledge in favor of the Transferor over 224.614 DERYCZ SCIENTIFIC shares remitted in payment of the Sale Price ;

 

-

A second-rank pledge in favor of the Transferor over 112.307 DERYCZ SCIENTIFIC shares remitted in payment of the Sale Price.

3.1

Subsidiaries – Participations

3.2

Charter documents of the Company

3.3

Corporate documents

 

Since the incorporation of the Company, all the decisions of its corporate bodies have been validly taken and recorded in the corporate ledgers, in accordance with the applicable regulatory legislation. Any decisions and all undertakings taken by the corporate bodies of the Company as well as any decisions which shall have been subject to an authorization or a ratification by such corporate bodies are set forth in the corporate ledgers and have been duly authorized and ratified by the shareholders or other competent corporate bodies.

 

Any decisions and undertakings which shall be subject to a public announcement, a formality or a filing of any nature whatsoever have been validly recorded, in accordance with the applicable regulatory legislation.

 

There are no specific agreements among the Company and its legal representatives other than the ones stipulated in the minutes of the shareholders meetings of the Company as well as the special report of the statutory auditors approved by the shareholders of the Company. No decision and undertakings made by the corporate bodies or by one or more representatives of the Company can be judged null and void nor have any such decisions or undertakings been subject to such a demand.

 

In a general manner, the Company has filed with the competent authorities and in a timely manner as per the law and mandatory rules, any declarations, reports, minutes and all and any documents required by the applicable legislation whatsoever.

3.4

Management of the interim period since the closing of the Nominated Accounts

3.4.1

Save for Annex 3.4.1, the Company (i) is not insolvent, has not concluded any settlement amicably or judicially or entered into any equivalent agreement with all or any of its creditors, is not in mandat ad hoc, conciliation, sauvegarde procedure, insolvency or bankruptcy or a similar procedure or (ii) no similar procedure is threatened in the weeks following the Closing Date.

3.4.2

No clients who have placed  individual orders for more than 10.000 Euros before taxes have issued any claims or actions or have refused to make payment in any manner whatsoever.

3.4.3

Save for Annex 3.4.3, between the 1st of January 2011 and the Closing Date:

 

-

No dividend or provisions for payment of dividends have been approved or paid and the Company has not purchased or amortized any shares or other bonds nor has it decreased its share capital,

 

-

The Company has not issued nor taken the decision to issue new shares or bonds which give access to share capital or voting rights,

 

-

No acquisition or transfer of assets whether material or immaterial has been realized related to individual amounts above 10.000 Euros before taxes or for an aggregate amount above 20.000 Euros before taxes during the current financial year,

 

-

The Company has not entered into any loans, nor subscribed to any debts or bank financings,

 

-

The Company has not sold, transferred or retired any asset, and has taken all reasonable measures in order to protect its assets,

 

-

The Company has not granted any guarantee or security to any third party,

 

-

The Company has not granted any pledge, lien, privilege or option or any other right over any of its assets whatsoever,

 

-

The Company has not modified any of its material agreements entered into with its clients, suppliers or other business relationships, nor has it modified in any material way the main terms of existing debts, save for the amendment to its lease agreement which must be entered into (substitution of the guarantee and postponement of the rents),

 

-

The Company has not paid any exceptional wage to its representatives, nor has it modified in material respect its employee relationships, individual or collective wage increases, advantages in kind, bonuses, premiums or other advantages granted to its employees,

 

-

The Company has not hired any employees, nor granted any increase of employee benefits, nor any wage increases or key manager wages, save for the hiring of a production assistant,

 

-

The Company has not instituted any lay offs nor imposed any sanction of any kind whatsoever, against its employees, save the laying off of a sales employee which occurred before the Closing Date,

 

-

The Company has not modified its accounting principles,

 

-

The Company has not suffered any material loss, destruction or reduction  to its assets or activities,

 

-

The Company is not aware of any events or facts which could result in the  nonpayment of any receivables due after 31st December 2010,

 

-

And more generally, the Company has been managed with care.

3.5

Contractual relationships

 

The Company has complied with the overall provisions of the agreements to which it is a party and there is no fact allowing a business partner to refuse to fulfill its contractual obligations as per the terms of such agreements.

 

The Company does not benefit nor has it granted any guarantee in relation to the acquisition or the sale of participations in any companies, entities or ventures. As of the Closing Date, the Company is not a party to any shareholders agreements or shareholders undertakings entailing rights or obligations of any nature whatsoever which shall be borne by the Company.

 

The shareholders of the Company do not hold, directly or indirectly, part or all of, a good or an asset whether material or immaterial used by the Company in the course of its activities.

 

The agreements entered into between the Company and/or the agreements entered into between (i) on the one part the Company and on the other part (ii) one of its shareholders, directly or indirectly, have been entered into on an arms length basis.

3.6

Sale Shares

3.7

Nominated Accounts

 

The Nominated Accounts have been prepared using the accounting principles of the Company and approved by the shareholders.

 

The Nominated Accounts have been prepared and recorded in accordance with French generally accepted accounting principles and as the case may be, using the principles and methods described in the accounting exhibits and in particular in accordance with the principles of care, continuity of the business and the exercise of independence (hereinafter the « Accounting Principles »). The presentation of the annual accounts as well as the accounting valuation methods of the assets and liabilities of the Company have not been modified during  the three past years.

3.8

Tax, regulatory, customs and labor situation

3.8.1

The Company has always established and disclosed to relevant tax and regulatory administrations, customs and labor authorities, all mandatory filings and the Company has always paid any and all sums legally due pursuant to taxes, charges, stamps duties and any other taxes so that the Company does not face any rectification, reassessment, penalty and interest or late interest and, more generally, pay any sums that may be due as of this day and as the case may be.

3.8.2

The Company has not benefited from any tax advantage or advantageous tax regime as a consideration of existing undertakings or existing obligations to which the Company is bound. The Company is not part of any tax integrated group, so that no benefit nor any capital gain is subject to a carry forward regime.

3.8.3

The Company has not received any reassessment, observation, notice, or any reassessment, control or verification from any tax authorities, customs, or labor, in France or aboard.

3.9

Disputes

 

(i)

To indemnify the Transferee for all sums which may be borne by the Company, those sums being excluded from the calculation of the ceiling of the Warranty;

 

(ii)

To indemnify the Transferee against any losses resulting from this dispute, the sums paid being excluded from the calculation of the ceiling of the Warranty ;

 

(iii)

To bear any and all legal fees and disbursements in relation to this dispute and to reimburse any amounts already paid by the Company therefor.

3.10

Human Resources

3.10.1

The collective bargaining agreement applicable to the Company is the collective bargaining agreement applicable to printers in France.

3.10.2

The employment agreements of all employees of the Company comply with the applicable legislation and the Company has correctly and in a timely manner carried out all and any required filings and formalities.

3.10.3

No employee of the Company has been subject to any work injury resulting in a suspension of its work for a duration of more than (1) month during the last three years, save for the dispute involving M. François Palos unless M. Palos files for an appeal.

3.10.4

The Annex 3.10.4 contains as the case may be:

 

-

The copy of any bargaining agreements, profit sharing schemes to which the Company is a party or in course of negotiating,

 

-

The complete list of employees and representatives of the Company at the Closing Date with the following inscription:

 

·

All and any advantages deviating from the law, the collective bargaining agreement or the profits schemes as the case may be,

 

·

Any loans granted to any employees or managers and representatives of the Company,

 

·

Bonus schemes and pre retirement schemes in force or in course of negotiations,

 

·

Any undertakings taken with respect to employees and/or managers and representatives of the Company not falling within the schemes set forth above or which could create new charges for the Company,

 

-

The hiring and start dates of all employees and representatives of the Company,

3.10.5

Since the closing of the Nominated Accounts, the Company has not taken increased the remuneration of any employees or representatives nor increased the compensation from which they are benefiting, in particular with respect to termination notice and dismissal indemnities, save for M. David Dufin who shall become an executive employee.

3.10.6

In a general manner, the Company has always operated in conformity with all legislative, regulatory and/or contractual obligations imposed on it in terms of labor law and social security regulations, so that no civil and/or criminal liability can be claimed for any reasons whatsoever and in particular with respect to:

 

-

Legislative and regulatory provisions related to the duration of work and the management of overtime hours;

 

-

Legislative and regulatory provisions related to temporary work, interim work and/or the loan of employees to any other employers;

 

-

Legislative and regulatory provisions related to social charges and duties, professional training and the application of any bargaining agreement;

 

-

Legislative and regulatory provisions related to workers committee or employees profit schemes.

3.10.7

The Company has not made any promise to hire any employee since December 31,  2010, save for the hiring of a production assistant.

3.10.8

The Company has complied with and is up-to-date with its obligations with respect to the workers committee’s election in accordance with applicable law.

3.11

Change of control

 

In a general manner, the Sale of the Sale Shares to the Beneficiary will have no effect  on the legal situation of the Company and its rights and obligations to third parties nor will it result in, without limitation, (i) the termination of any rights or advantage, (ii) the early termination or material modification of any agreements (iii) the early repayment of a loan or a financing granted to the Company (iv) the right for any party to terminate any guarantee, comfort letter or any other security with similar effect granted for the purposes of the Company’s business or (v) the record or implementation of any pledge or security over the assets of the Company.

3.12

Relations between the Guarantor and the Company

 

(i)

is the beneficiary of any right whatsoever, which is used by the Company or benefits the Company for the purposes of engaging in part or all of its activities;

 

(ii)

is creditor or debtor of the Company in any capacity whatsoever ;

 

(iii)

has granted as security any asset of the Company, nor benefits from any security granted by the Company as guarantee for its obligations ;

 

(iv)

is owner, partial or in full, or user of any asset whatsoever, owned or used by the Company for the purposes of its business activities ;

 

(v)

and more generally, has not concluded or has not committed to conclude any agreement with the Company.

3.13

Material undertakings

 

-

Constitute general sales or purchases or services conditions,

 

-

Contain a global undertaking, in one or more instances, above 10.000 Euros before taxes,

 

-

Have a duration of more than one (1) year or cannot be terminated without providing notice six (6) months or more before termination,

 

-

Contain an exclusivity, non competition, non canvassing or non solicitation  undertaking to the detriment of the Company, and/or

 

-

Have as partner, directly or indirectly, a shareholder of the Company or a competitor.

3.14

Good faith of the representations

3.15

Criminal liability of the Company

3.16

Rights and powers

 

-

Obtaining from the Transferror] the release of the pledge over 996 shares of the Company from BANQUE POPULAIRE LORRAINE CHAMPAGNE constituted as a guarantee of a loan dated October 17, 2007,

 

-

Substitution of the Transferor by the Transferee with respect to the undertakings as guarantor with respect to the payment of the rents as per the commercial lease dated 30 December 2008 and relating to the operating premises of the Company,

 

-

DERYCZ SCIENTIFIC Board approval in compliance with all applicable laws.

10.1 

Notices

10.2

Modification – Variation

10.3 

Constitution of Agreement – Interpretation

10.4

Successors and assigns