EXECUTION COPY
EXHIBIT 2
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May 9, 2001
LEGRIS INDUSTRIES SA
and
MANITOWOC FRANCE SAS
SHARE PURCHASE AGREEMENT
relating to the Sale and Purchase
of the Shares of Potain SA
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SHARE PURCHASE AGREEMENT
This Share Purchase Agreement (the "Agreement") is entered into on May
9, 2001 by and between:
1. Legris Industries SA, a societe anonyme a directoire et conseil de
surveillance with a share capital of Euro 26,313,792, whose registered
office is situated at 00 xxx xx Xxxxx, 00000 Xxxxxx, Xxxxxx,
registered with the Rennes registry under the number 786 450 197,
represented by Xx. Xxxxxxx Xxxxxxxx duly authorised pursuant to a
power of attorney dated as of 7 May 2001.
(the "Vendor")
2. Manitowoc France SAS, a societe par actions simplifiee with a share
capital of Euro 40,000, whose registered office is situated at 000 xxx
xx Xxxxxxxxx, 00000 Xxxxx, Xxxxxx, registered with the Paris
commercial registry under the temporary number 2001B07673, represented
by Xx. Xxxxx Xxxxxxxx acting as President.
(the "Purchaser")
WHEREAS:
The Vendor wishes to sell to the Purchaser, and the Purchaser wishes
to purchase from the Vendor, 100% of the shares of Potain SA, a
company incorporated under the laws of France, having its registered
office at 00 xxx xx Xxxxxxxxxxxxx, 00000 Xxxxxx, Xxxxxx and registered
at the commercial court of Lyon under the number 632 045 837 (the
"Company"), upon the terms hereinafter set out.
IT IS HEREBY AGREED AS FOLLOWS:
1. DEFINITIONS / INTERPRETATION
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1.1 Definitions
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In this Agreement, the following terms shall have the following
meanings unless the context otherwise requires:
"Accounts" means the unaudited subconsolidated annual accounts
closed as of 31 December 2000 of the Company and the
Subsidiaries;
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"Ancillary" has the meaning given to it in Clause 7.2.1;
"Ancillary Instruments" means the agreements, instruments and
documents contemplated by this Agreement;
"Assets" means all of the tangible and intangible assets owned by
the Company and its Subsidiaries or which the Company and its
Subsidiaries have a valid right to use, of whatever description,
used in connection with the ownership, use or operation of their
respective businesses but excluding assets disposed of between
the Balance Sheet Date and the date hereof in the ordinary course
of business;
"Balance Sheet Date" means 31 December 2000;
"Business Day" means any day (other than Saturday) upon which
banks are open for business in Paris and in New York;
"Company" has the meaning given to it in the recitals;
"Company Employees" has the meaning given to it in Clause 9.8.2;
"Completion or Completion Date" means the date of completion of
the transfer of ownership of the Shares which is the date hereof;
"Completion Financial Statements" means the consolidated balance
sheet of the Company and the Subsidiaries as of 30 April 2001 and
the consolidated income statement of the Company and its
Subsidiaries for the period from 1 January 2001 through 30 April
2001, as each is determined pursuant to Clause 2.2.4;
"Consolidated Net Worth" has the meaning given to it in Clause
10.5.1(e);
"Disclosure Schedule" has the meaning given to it in Clause
1.2.5;
"Employee Plans/Agreements" has the meaning given to it in Clause
9.8.2;
"Environmental Action" means any pollution or exposure to, or
manufacture, processing, distribution, use, treatment,
generation, existence, transport, handling, holding, removal,
abatement, remediation, recycling, reclamation, management,
disposal, emission, discharge, storage, escape, seepage, leakage
or release of any Waste;
"Environmental Claim Notice" has the meaning given to it in
Clause 13.1;
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"Environmental Laws" has the meaning given to it in Clause 9.5.3;
"Environmental Non-Compliance Condition" means (a) any
Environmental Action existing as of the date hereof at any
property owned, leased or previously owned or leased by the
Company or any Subsidiary or their respective predecessors in
interest or at any location where the Company or any Subsidiary
could be held responsible for investigation or cleanup activities
resulting from actual or alleged offsite disposal of Waste, (b)
non-compliance as of the date hereof with any Environmental Law,
Order or Permit or (c) any third party demands, claims, suits,
actions, proceedings or assessments, whether or not ultimately
determined to be valid, against the Company or any Subsidiary
with respect to items (a) or (b) above;
"Environmental Non-Compliance Costs" means an amount necessary to
indemnify the Purchaser, the Company, any Subsidiary and any of
the successors and assigns of the foregoing for (a) all debts,
liabilities and obligations and (b) all losses, damages,
judgements, awards, settlements, costs and expenses (including,
without limitation, interest (including prejudgement interest in
any litigated matter), penalties, court costs and reasonable
attorneys' and consultants' fees and expenses) associated with
any action that would need to be taken to evaluate, defend a
proceeding, investigate, remediate or otherwise respond to, or
liabilities resulting from, an Environmental Non-Compliance
Condition;
"Environmental Non-Compliance Schedule" has the meaning given to
it in Clause 6.2;
"Estimated Known Environmental Non-Compliance Costs" has the
meaning given to it in Clause 6.2;
"Expert Accountant" means Deloitte & Touche or, if that firm is
unable or unwilling to act in any matter referred to it under
this Agreement, a firm of "commissaires aux comptes" to be agreed
by the Parties within seven (7) days of a notice by one Party to
the other Party requiring such agreement or, failing such
agreement, to be nominated on the application of either Party by
the President of the Tribunal of Commerce of Paris acting in
summary proceedings (refere);
"Global Exemption" has the meaning given to it in Clause 10.3.2;
"Governmental Entities" means any court, arbitrator, department,
commission, board, bureau, agency, authority, instrumentality or
other body, whether federal, state, municipal, foreign or other;
"Individual Exemption" has the meaning given to it in Clause
10.3.1;
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"Intellectual Property" means, in respect of the Company and its
Subsidiaries, (i) all trademark rights, business identifiers,
trade dress, service marks, trade names and brand names, all
registrations thereof and applications therefor and all goodwill
associated with the foregoing; (ii) all copyrights, copyright
registrations and copyright applications, and all other rights
associated with the foregoing and the underlying works of
authorship; (iii) all patents and patent applications, and all
international proprietary rights associated therewith; (iv) all
contracts or agreements granting any right, title, license or
privilege to the Company or its Subsidiaries under the
intellectual property rights of any third party; and (v) all
inventions, know-how, models, discoveries, improvements, designs,
trade secrets, shop and royalty rights, employee covenants and
agreements respecting intellectual property and non-competition
and all other types of intellectual property;
"Interim Income" means the consolidated net income or loss
(resultat net) of the Company and its Subsidiaries for the period
from 1 January 2001 through the Completion Date (it being
understood that for the period from 1 May 2001 to the Completion
Date, the interim income shall be calculated as follows: 5/84 of
the interim income for the period from 1 January 2001 to 30 April
2001) as determined in accordance with French generally accepted
accounting principles applied on a consistent basis with past
practice, plus interest from the Completion Date through the date
of payment to the Vendor or the Purchaser, as the case may be,
pursuant to Clause 2.2.2(ii), computed based on the three (3)
month EURIBOR rate;
"Intra-Group Payables" means all outstanding loans or amounts
owed by the Company or the Subsidiaries to the Vendor or a member
of the Vendor's Group as of the close of business immediately
prior to the date hereof, but excluding, for the avoidance of
doubt, trade payables arising in the ordinary course of business;
"Intra-Group Receivables" means all outstanding loans or amounts
owed by the Vendor or a member of the Vendor's Group to the
Company and/or the Subsidiaries as of the close of business
immediately prior to the date hereof, but excluding, for the
avoidance of doubt, trade payables arising in the ordinary course
of business;
"IT and Telecommunications Systems and Equipment" means the
information technology system and all means of telecommunication
of the Company or its Subsidiaries, as the case may be, including
without any limitation any operating, software, data processing
software, hardware, routers modem farms, servers, telephones and
fax machines;
"Known Environmental Non-Compliance Conditions" has the meaning
given to it in Clause 6.2;
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"Known Environmental Non-Compliance Costs" has the meaning given
to it in Clause 6.2;
"Laws" means any enforceable statute, law, ordinance, rule or
regulation;
"Letter of Credit" has the meaning given to it in Clause 10.5.2;
"Lien" means any mortgage, lien (statutory or otherwise),
security interest, claim, pledge, license, conditional sales
contract, option, proxy, assessment, levy, easement, covenant,
reservation, restriction, right-of-way, exception, limitation,
charge, claim or encumbrance of any nature whatsoever, including,
without limitation, any nantissement, gage or any other right
restricting in any manner the ownership or the transfer of the
relevant asset;
"Loss" has the meaning given to it in Clause 10.1;
"Material Adverse Effect" means any facts or events which would
affect detrimentally in any material respect the financial
situation of the Company and its Subsidiaries taken as a whole;
"Material Contracts" means, as regards the Company and its
Subsidiaries, those contracts (i) involving a payment in excess
of Euro 500,000 per year or which cannot be terminated with a
notice period of less than one (1) year or (ii) contracts which
if terminated would result in a Material Adverse Effect;
"Net Loss" has the meaning given to it in Clause 10.2.5;
"Notified Claim" has the meaning given to it in Clause 11;
"Order" means any order, writ, injunction, decree or judgement of
any Governmental Entity;
"Party" or "Parties" means either or both of the parties to this
Agreement;
"Period 1" has the meaning given to it in Clause 10.5.1(a);
"Period 2" has the meaning given to it in Clause 10.5.1(b);
"Period 3" has the meaning given to it in Clause 10.5.1(c);
"Period 4" has the meaning given to it in Clause 10.5.1(d);
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"Permits" has the meaning given to it in Clause 9.3.2;
"Private Claim" has the meaning given to it in Clause 11.2.1;
"Proceedings Notice" has the meaning given to it in Clause
11.1.3;
"Products" means any and all products currently or at any time
previously designed, manufactured, distributed or sold by the
Company and/or its Subsidiaries, or by any predecessor of the
Company and/or its Subsidiaries, under any brand name or xxxx
under which products are or have been manufactured, distributed
or sold by the Company and/or its Subsidiaries or any
predecessors thereto;
"Purchaser" has the meaning given to it in the recitals;
"Purchaser's Environmental Consultant" means Dames & Xxxxx Group
or another mutually agreed nationally recognized environmental
consultant;
"Purchaser Indemnified Parties" has the meaning given to it in
Clause 13.2;
"Purchase Price" means the price payable by the Purchaser to the
Vendor pursuant to Clause 2;
"Real Property" means all real property owned, used or occupied
by the Company and/or its Subsidiaries;
"Related Parties" has the meaning given to it in Clause 9.7.4;
"Remedial Action" has the meaning given to it in Clause 13.3.5;
"Shares" means 100% percent of the share capital and voting
rights of the Company;
"Subsidiary" or "Subsidiaries" has the meaning given to it in
Clause 9.3.1;
"Taxation" or "Tax" means all income, profit, payroll, social
security, turnover, withholding, franchise, gross receipts,
sales, use, transfer, registration, recording, value added, ad
valorem, real or personal property, excise, occupation, customs,
import and export or other taxes and governmental fees imposed by
France or any other country, any state, municipality, subdivision
or agency of France or any other country or any other
governmental or other authority charged with levying taxes or
fees, and all interest, penalties, deficiencies and assessments
due on account thereof, whether disputed or undisputed,
including, without limitation,
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impot sur les societes, taxe sur la valeur ajoutee, droits
d'enregistrement, taxe professionnelle, taxe fonciere,
cotisations sociales and any other forms of taxation or
contributions and levies in France or any other country arising
pursuant to French Tax, "parafiscalite", social security or
customs laws, and all penalties and interest for late payment
relating thereto;
"Technical Update Procedures" means Mises a Jour Techniques
(M.J.T.) which is any preventive repair made on any Products in
accordance with the past practice and procedure of the Company
and the Subsidiaries and which cost is borne by the Company or
the Subsidiaries; the Mises a Jour Techniques is further detailed
in Schedule 9.6.5;
"Third Party Proceedings" has the meaning given to it in Clause
11.1.1;
"Vendor's Best Knowledge" means the particular knowledge of the
Vendor (which shall be deemed to be the particular knowledge of
Pierre-Xxxx Xxxxxx, Xxxxxxx Xxxxxxxx, Erwan Xxxxx, Xxxxxxxx Nunzi
and Xxxxxx Xxxxxx) and the particular knowledge of Xxxx-Xxxx
Xxxxxxxxx, Xxxx Frustie, Xxxxxx Xxxxxx Xxxxxxxxx Xxxxxx, M.F.
Pommaret, X.X. Xxxxxxx, X. Xxxxxxx, X. Xxxxxxxx, Xxxxxxx Xxxxxxx
and Xxxxxx-Xxxx LeDaeron, which knowledge any such person
actually has or should be deemed to have, based on prudent and
diligent behavior;
"Unknown Environmental Non-Compliance Costs" has the meaning
given to it in Clause 13.1;
"Vendor" has the meaning given to it in the recitals;
"Vendor's Completion Financial Statement Draft" has the meaning
given to it in Clause 2.2.4(a);
"Vendor's Group" means any person or entity which (i) is
controlled, directly or indirectly, by the Vendor, (ii) controls,
directly or indirectly, the Vendor or (iii) is under the control,
direct or indirect, of any entity which controls the Vendor;
provided, however, that the definition of the Vendor's Group
shall exclude the Company and the Subsidiaries; "control" shall
have the meaning ascribed to it under Article L. 233-3 of the
French Commercial Code; and
"Waste" means pollutants, contaminants, chemicals, compounds or
industrial, toxic, hazardous or petroleum or petroleum-based
substances or wastes, waste waters or byproducts, including
without limitation asbestos, polychlorinated biphenyls (PCBs) or
urea formaldehyde, and any substance subject to regulation under
any Environmental Law.
1.2 Interpretation
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In this Agreement unless otherwise specified:
1.2.1. References to clauses
References to clauses, sub-clauses, paragraphs, sub-paragraphs
and schedules are to clauses, sub-clauses, paragraphs, sub-
paragraphs of, and schedules to, this Agreement.
1.2.2. References to an "entity"
References to an "entity" shall be construed so as to include any
entity, wherever and however incorporated or established.
1.2.3. References to a "person"
References to a "person" shall be construed so as to include any
individual, entity, firm, company, government, state or agency of
a state or any undertaking, joint venture, association or
partnership (whether or not having separate legal personality).
1.2.4. Headings to clauses and schedules
Headings to clauses and schedules are for convenience only and do
not affect the interpretation of this Agreement.
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1.2.5. Disclosure Schedule
On the date hereof, the Vendor has delivered to the Purchaser a
disclosure schedule that includes the numbered schedules
specifically referred to in this Agreement (the "Disclosure
Schedule"). The Disclosure Schedule forms a part of this
Agreement and shall have the same force and effect as if
expressly set out in the body of this Agreement and any reference
to this Agreement shall include the Disclosure Schedule. The
information contained in the Disclosure Schedule is complete and
accurate in all respects, and all documents that are attached to
or that form a part of the Disclosure Schedule are true and
complete copies of the genuine original documents that such
documents purport to represent.
Information set forth in the Disclosure Schedule specifically
refers to the clause and section of this Agreement to which such
information is responsive and such information shall not be
deemed to have been disclosed with respect to any other clause or
section of this Agreement or for any other purpose except (i)
where otherwise indicated by an appropriate cross-reference or
(ii) where the information disclosed for a clause or section of
this Agreement obviously relates to another clause or section of
this Agreement (for instance, a product liability litigation
disclosed under Clause 9.6.5 would also relate to Clause 9.9.2).
The Disclosure Schedule shall not vary, change or alter the
language of representations and warranties contained in this
Agreement.
1.2.6. References to French legal terms
References to any French legal term for any action, remedy,
method or judicial proceeding, legal document, legal status,
court, official, or any legal concept or thing shall, in respect
of any jurisdiction other than France, be deemed to include the
term, concept, thing or procedure that most nearly approximates
in that jurisdiction the French term, concept, thing or
procedure.
1.2.7. Singular and plural words
Words importing the singular shall also include the plural and
vice versa.
2. SALE OF THE SHARES
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2.1 Sale and Purchase
-----------------
Subject to the terms and conditions of this Agreement, the Vendor
hereby sells all of the Shares to the Purchaser, who purchases
all of the Shares free from any Liens and together with all
rights (including the right to receive dividends relating to the
fiscal year ended on 31 December 2000) attached to the Shares as
of the date hereof.
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2.2 Consideration
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2.2.1. Purchase Price
The Purchase Price payable for the Shares shall be Two Billion
Two Hundred Fifty-Eight Million One Hundred Forty-One Thousand
French Francs (FRF 2,258,141,000), plus or minus, as the case may
be, the Interim Income as determined pursuant to Clause 2.2.4.
2.2.2. Payment of Purchase Price
The Purchase Price shall be paid by the Purchaser as follows:
(i) On the date hereof, the Purchaser shall pay to the
Vendor Two Billion Two Hundred Fifty-Eight Million One
Hundred Forty-One Thousand French Francs (FRF
2,258,141,000).
(ii) The Interim Income shall be paid by the Purchaser to
the Vendor (or, in the case of a net loss, paid by the
Vendor to the Purchaser) on or before the tenth
Business Day following the final determination thereof.
2.2.3. Method of Payment
All payments under this Clause 2 shall be made in the form of
wire transfer of immediately available funds to an account
designated by the recipient not less than 48 hours prior to the
time for payment specified herein.
2.2.4. Determination of Interim Income
The calculation of the Interim Income shall be finally
established as follows:
(a) Within ninety (90) days after the date hereof, the
Vendor shall deliver to the Purchaser a consolidated
balance sheet and income statement of the Company and
its Subsidiaries as of and for the interim period ended
on 30 April 2001, prepared by the Vendor (with the
Company's assistance) and audited by Ernst & Young
(accounting firm), in accordance with French generally
accepted accounting principles applied on a consistent
basis with past practice, from the books and records of
the Company and its Subsidiaries, and fairly presenting
the financial position and results of operations of the
Company and its Subsidiaries as of and for the interim
period ended on 30 April 2001 (the "Vendor's Completion
Financial Statement Draft"). The Vendor's Completion
Financial Statement Draft shall be accompanied by the
work papers used in the preparation and audit of such
financial statements and by a report (1) setting forth
the Vendor's calculation
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of the Interim Income and (2) stating that the calculation has
been prepared in accordance with French generally accepted
accounting principles (applied on a consistent basis with past
practice) from the books and records of the Company and its
Subsidiaries.
(b) Within forty-five (45) days following the delivery of the
Vendor's Completion Financial Statement Draft and other
calculations, the Purchaser may object to any of the information
contained in the Vendor's Completion Financial Statement Draft or
accompanying work papers delivered pursuant to Clause 2.2.4(a),
provided that such information relates to the determination of
the Interim Income. Any such objection shall be made in writing
and shall state the Purchaser's determination of the Completion
Financial Statements and the amount of the Interim Income.
(c) In the event of a dispute or disagreement relating to the
Vendor's determination of the Interim Income, which the Purchaser
and the Vendor are unable to resolve in good faith, such dispute
or disagreement shall be resolved by the Expert Accountant. In
the event of such disagreement or dispute, either Party shall
have the right to submit the matter to the Expert Accountant for
resolution.
(d) The Expert Accountant shall make a resolution of the Interim
Income, in accordance with French generally accepted accounting
principles applied on a consistent basis. The Expert Accountant
shall be instructed to use every reasonable effort to perform its
services within thirty (30) days of submission of the Vendor's
Completion Financial Statement Draft and other calculations and
the Purchaser's comments thereon and, in any case, as soon as
practicable after such submission. Notwithstanding the foregoing,
the Expert Accountant shall not consider any accruals for
environmental liabilities not specified by the Vendor.
(e) The Expert Accountant shall:
. give the Purchaser and the Vendor a reasonable opportunity
to make written and oral representations to it;
. require that the Parties supply each other with a copy of
any written representations at the same time as they are
made to the Expert Accountant; and
. permit each Party to be present while oral submissions are
being made by the other Party.
(f) The determination of the Expert Accountant shall (i) be made in
writing and sent to the Parties at such time as it is completed
and
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(ii) unless otherwise agreed by the Parties, include reasons for
each relevant determination.
(g) The Expert Accountant shall act as expert and not as arbitrator
and its determination of any matter falling within its
jurisdiction shall be final and binding on the Parties in
accordance with Article 1592 of the French Civil Code. The
calculation of the Interim Income as determined by the Expert
Accountant shall be final and binding on the Parties.
(h) The Parties shall cooperate with the Expert Accountant and comply
with its reasonable requests made in connection with the carrying
out of its duties under this Agreement.
(i) The Purchaser agrees to permit the Vendor and its respective
representatives, during normal business hours, to have reasonable
access to, and to examine, all books and records of the Company
and its Subsidiaries in order to prepare the Vendor's Completion
Financial Statement Draft and other calculations delivered by the
Vendor in accordance with Clause 2.2.4(a), which shall include,
without limitation, the books, records, schedules, work papers
and audit programs of the Purchaser. The Purchaser shall permit
the same access to the Expert Accountant for the performance of
its duties.
(j) In addition, the Purchaser shall use its best efforts, until the
determination and calculation of the Interim Income, to not
change the Company's internal accountants.
(k) Each Party shall instruct the Expert Accountant to keep all
information and documents provided to it confidential and to not
use the same for any purpose, except in connection with the
preparation of the calculation of the Interim Income.
(l) The fees of the Expert Accountant shall be shared equally by the
Purchaser and the Vendor.
3. REPAYMENT OF PAYABLES AND RECEIVABLES
-------------------------------------
Within two (2) Business Days after the date hereof, the Vendor shall pay or
cause to be paid the Intra-Group Receivables and the Purchaser shall pay or
cause to be paid the Intra-Group Payables.
4. TRANSFER OF OWNERSHIP OF THE SHARES
-----------------------------------
Ownership of the Shares is transferred to the Purchaser on the date hereof,
subject to the payment of the Purchase Price as per Clause 2.2.2.
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5. OBLIGATIONS OF THE VENDOR AND THE COMPANY ON THE DATE HEREOF
------------------------------------------------------------
On the date hereof, the Vendor and the Company, as relevant, have delivered
to the Purchaser the following documents, in each case duly executed or
otherwise in proper form:
5.1 a duly completed, executed and dated ordre de mouvement in respect of
the Shares in favour of the Purchaser;
5.2 the general releases referred to in Clause 7.1, duly executed by the
persons referred to in such Clause;
5.3 to the extent requested by the Purchaser, the written resignations
with effect from the date hereof of each of the directors of the
Company listed in Schedule 5.3 and, to the extent any such person is
an employee or affiliate of the Vendor, the directors of the
Subsidiaries, and the Vendor agrees to indemnify the Purchaser in case
of liabilities incurred towards these directors for dismissal from
their office as contemplated in Clause 10.3.4(v);
5.4 a certified copy of the minutes of the board of directors' meeting of
the Company authorising and approving:
5.4.1. the transfer of the Shares in favour of the Purchaser and the
subsequent transfer of the Shares in favour of the new
directors of the Company in accordance with Article 11 of the
articles of association of the Company; and
5.4.2. the appointment of such persons as the Purchaser has notified
to the Vendor as directors of the Company and any Subsidiary,
in substitution of the persons who have resigned according to
Clause 5.3 and a list, as of the date hereof, of the officers
and directors of the Company and its Subsidiaries;
5.5 a certified copy of the minutes of the Supervisory Board meeting of
the Vendor authorising and approving this Agreement and the Ancillary
Instruments and the transactions contemplated hereby and thereby;
5.6 the original statutory documents and corporate records (including the
share transfer registers) of the Company and its Subsidiaries,
certified as such by the legal representative of the Company or its
Subsidiaries;
5.7 documentation certified by the legal representative of the appropriate
Subsidiary evidencing that the Subsidiaries listed in Schedule 5.7 are
existing and duly organised under the laws of their respective
jurisdictions of organisation;
5.8 the names and locations of all banks, trust companies, savings and
loan associations and other financial institutions at which the
Company and its
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Subsidiaries maintain a safe deposit box, lock box or checking,
savings, custodial or other account of any nature, the type and number
of each such account and the signatories therefor, a description of
any compensating balance arrangements, and the names of all persons
authorised to draw thereon, make withdrawals therefrom or have access
thereto, all as listed in Schedule 5.8; and
5.9 such other documents, instruments and writings as mutually agreed
between the Parties acting in good faith.
6. OBLIGATIONS OF THE PURCHASER ON THE DATE HEREOF
-----------------------------------------------
On the date hereof, the Purchaser has delivered to the Vendor the following
documents, in each case duly executed or otherwise in proper form:
6.1 the wire transfer to the Vendor as required by Clause 2.2.2(i); and
6.2 a schedule (the "Environmental Non-Compliance Schedule") that sets
forth (a) the Environmental Non-Compliance Conditions identified by
the Purchaser and Purchaser's Environmental Consultant during their
due diligence investigations prior to the date hereof (the "Known
Environmental Non-Compliance Conditions"), and (b) the good faith
estimate (the "Estimated Known Environmental Non-Compliance Costs") of
the Purchaser's Environmental Consultant of the amount that could be
necessary to indemnify the Purchaser and/or the Company or any
Subsidiary for the Environmental Non-Compliance Costs arising from or
related to the Known Environmental Non-Compliance Conditions, it being
understood that the Estimated Known Environmental Non-Compliance Costs
(i) are estimates only and do not purport to represent the actual
Known Environmental Non-Compliance Costs, if any, incurred by the
Purchaser and/or the Company or any Subsidiary, (ii) have not been
approved by the Vendor and (iii) do not constitute per se an agreement
of the Vendor to indemnify the Purchaser, such an obligation to arise
only pursuant to Clause 13. "Known Environmental Non-Compliance Costs"
shall mean the actual Environmental Non-Compliance Costs arising from
or relating to the Known Environmental Non-Compliance Conditions as
defined in this Clause 6.2. Notwithstanding anything to the contrary
set forth above, Known Environmental Non-Compliance Costs shall not
include those budgeted capital expenditures set forth in Schedule 6.2
notwithstanding the fact that such capital expenditures may be set
forth on the Environmental Non-Compliance Schedule.
7. COVENANTS
---------
7.1 General releases
----------------
On the date hereof, the Vendor has delivered, and the Vendor has
caused Pierre-Xxxx Xxxxxx, Xxxxxxx Xxxxxxxx, Erwan Xxxxx, Xxxxxxxx
Nunzi, Xxxxxx Xxxxxx, Xxxx-Xxxx Xxxxxxxxx, Xxxx Frustie and Xxxxxx
Xxxxxx to deliver, general releases to the Purchaser, in the form
attached hereto as Schedule 7.1, releasing the
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Company and its Subsidiaries and the directors, officers, agents and
employees of any of them from all claims to the date hereof, except
(i) as may be described in written contracts disclosed in the
Disclosure Schedule and expressly described and excepted from such
releases, and (ii) in the case of persons who are employees of the
Company or any Subsidiary, compensation for current periods
expressly described and excepted from such releases. Notwithstanding
the foregoing, in no event shall any such general release limit the
liability to the Vendor of any person identified in the definition
of the term "To Vendor's Best Knowledge" for acts of gross
negligence or willful misconduct by such person in connection with
the delivery of a certification to the Vendor with respect to the
representations and warranties made by the Vendor pursuant to this
Agreement.
7.2 Non competition / Non solicitation / Confidentiality
----------------------------------------------------
7.2.1. Non competition
The Vendor shall not, for a period of five (5) years from the date
hereof, directly or indirectly, including through any controlled
entity of the Vendor's Group, (i) carry out an activity (other than
an ancillary activity) that competes with the current activities of
the Company or any of its Subsidiaries, including by acquiring a
participation, establishing a company or operating (including but
not limited to developing, manufacturing and/or selling) under
whatever form an entity or taking any interest in any company that
competes with the Company or any Subsidiary, (ii) advise or assist
in any way, whether or not for consideration, any corporation,
partnership, firm or other business organisation the primary (as
opposed to ancillary) activity of which now or in the future
competes with the Company or any Subsidiary, including, but not
limited to, advertising or otherwise endorsing the products of any
such competitor, or loaning money or rendering any other form of
financial assistance to, or engaging in any form of business
transaction other than at an arm's length basis with, any such
competitor, or (iii) engage in any practice the purpose of which is
to evade the provisions of this covenant not to compete or commit
any act which adversely affects the business of the Company and/or
its Subsidiaries.
"Ancillary" means for the purpose of this Clause an activity
representing less than 10% of the aggregate revenues of the
competing person.
The Purchaser however acknowledges and agrees that the foregoing
covenant shall not be deemed to be violated solely if the Vendor
retains or acquires a shareholding interest of up to 5% of a company
or other entity (provided that none of the relevant Vendor's
managers will manage the concerned company or entity nor act as a
member of the Board of Directors of that company or entity) which
competes with the Company or any Subsidiary as contemplated above.
7.2.2. Non solicitation
17
The Vendor shall not, directly or indirectly, for a period of
five (5) years from the date hereof, for itself, and, for the
same period, any successor, assign, agent, representative,
employee, director or officer of the Vendor or the Vendor's Group
and members of the Vendor's Group shall not, solicit (other than
through general forms of solicitation) for employment or hire any
officer, director or employee when employed by the Company or any
Subsidiary or do anything to influence or encourage any such
person to leave his or her employ with the Company or any
Subsidiary.
7.2.3. Confidentiality
The Vendor shall maintain all non-public information and
materials, written and oral, including, but not limited to, any
and all Intellectual Property applications, drawings,
specifications, know-how, processes and records, and all other
technical, business, commercial and financial information
regarding the Company and the Subsidiaries, in confidence, and
shall not disclose it to any third party nor use it, directly or
indirectly, for any use or purpose whatsoever. This covenant
shall survive the Completion of the transaction herein
contemplated without any limitation as to time.
7.2.4. Insurance
The Purchaser agrees, for a period of sixteen (16) months from
the date hereof, to maintain in force policies of insurance for
the Company and its Subsidiaries substantially similar (in terms
of scope, coverage and nature) as the policies in force for the
Company and its Subsidiaries on the date hereof.
18
8. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
-----------------------------------------------
The Purchaser hereby makes the following representations and warranties to
the Vendor, each of which is true and correct on the date hereof.
8.1 Existence-Incorporation
-----------------------
The Purchaser is a corporate body duly incorporated and validly
existing under the laws of France.
8.2 Authority and Capacity
----------------------
The Purchaser has full corporate power and capacity to enter into this
Agreement and the Ancillary Instruments and to carry out the
transactions contemplated hereby and thereby.
8.3 Authorisations
--------------
This Agreement and the Ancillary Instruments have been executed by a
duly authorised person of the Purchaser and the completion by the
Purchaser of the transactions contemplated hereby and thereby has been
duly authorised by all necessary corporate actions.
No further proceeding, action or consent on the part of the Purchaser,
its corporate bodies or shareholders or from any other entity or any
other person, administrative or regulatory body is necessary to
authorise this Agreement (except for any applicable antitrust
approvals, the obtaining of which will be the responsibility of the
Purchaser) or the Ancillary Instruments or to consummate the
transactions contemplated hereby and thereby.
This Agreement and the Ancillary Instruments have been duly executed
and delivered on behalf of the Purchaser and constitute valid and
binding obligations of the Purchaser, enforceable against it in
accordance with their respective terms.
8.4 Absence of violation
--------------------
The execution by the Purchaser of this Agreement and the Ancillary
Instruments and the consummation of the transactions contemplated
hereby and thereby by the Purchaser shall not constitute a violation
of, or a default under, or conflict with (i) any term or provision of
the statutes or the articles of association of the Purchaser, (ii) any
contract of the Purchaser, the effect of which would impair the
ability of the Purchaser to perform its obligations pursuant to this
Agreement or the Ancillary Instruments, or (iii) any Order, Law or any
other legal obligation to which the Purchaser is a party or by which
the Purchaser or any of its properties and assets are bound, the
effect of which would impair the ability of the Purchaser
19
to perform its obligations pursuant to this Agreement or the
Ancillary Instruments.
9. REPRESENTATIONS AND WARRANTIES OF THE VENDOR
--------------------------------------------
The Vendor hereby makes the following representations and warranties to the
Purchaser, each of which is true and correct on the date hereof, except
where another date is expressly provided hereafter.
9.1 Representations and warranties in relation to the Shares
--------------------------------------------------------
The Vendor is the full owner of the Shares. It has full power and
capacity to transfer the ownership of the Shares to the Purchaser,
with good and valid title thereto, free of any Liens on the date
hereof. Upon consummation of the transactions contemplated by this
Agreement, the Purchaser will acquire the Shares with good and
marketable title, free of any Liens.
9.2 Representations and warranties relating to the Vendor
-----------------------------------------------------
9.2.1. Existence - Incorporation
The Vendor is a corporate body duly incorporated and validly
existing under the laws of France.
9.2.2. Authority and Capacity
The Vendor has full power and capacity to enter into this Agreement
and the Ancillary Instruments and to carry out the transactions
contemplated hereby and thereby.
9.2.3. Authorisations
This Agreement and the Ancillary Instruments have been executed by
a duly authorised person of the Vendor and the completion by the
Vendor of its obligations contemplated hereby and thereby has been
duly authorised by all necessary corporate actions. This Agreement
and the Ancillary Instruments have been duly executed and delivered
on behalf of the Vendor and constitute valid and binding
obligations of the Vendor, enforceable against the Vendor in
accordance with their respective terms. No further proceeding,
action or consent on the part of the Vendor, its corporate body or
shareholders or from any other entity or any other person,
administrative or regulatory body (except for any applicable anti-
trust approvals in Germany, the obtaining of which will be the
responsibility of the Purchaser) is necessary to authorise the
execution and delivery of this Agreement or the Ancillary
Instruments or the consummation of the transactions contemplated
hereby and thereby and the transfer to the Purchaser of good and
valid title to the Shares.
20
9.2.4. Absence of violation
The execution and performance of this Agreement and/or the
Ancillary Instruments and the completion by the Vendor of its
obligations contemplated hereby and thereby by the Vendor shall not
(i) constitute a violation of, or a default under, or conflict with
or breach the terms, conditions or provisions of (a) any term or
provision of the statutes or the articles of association of the
Vendor, the Company and/or the Subsidiaries, (b) any Material
Contract or similar agreement to which the Vendor is a party, the
effect of which would impair the ability of the Vendor to perform
its obligations pursuant to this Agreement, or (c) any Law, Order
or any other legal obligation to which the Vendor, the Company or
any Subsidiary is a party or by which any of their respective
properties and assets are bound, the effect of which would impair
the ability of the Vendor to perform its obligations pursuant to
the Agreement, or (ii) result in the creation or execution of any
Liens upon the Shares or any of the Assets of the Company or any of
the Subsidiaries or constitute a violation of or a default under,
or conflict with or breach the terms, conditions or provisions of,
any Material Contract to which the Company and/or any Subsidiary is
a party.
9.3 General Representations and warranties in relation to the Company
-----------------------------------------------------------------
and its Subsidiaries
--------------------
9.3.1. Constitution, existence and conformity
The Company is a corporate body incorporated under the laws of
France duly organised and validly existing.
Schedule 9.3.1 sets forth the name, jurisdiction of incorporation,
capitalisation, ownership and officers and directors (which list of
officers and directors shall be as of March 2, 2001) of the Company
and all of the entities in which the Company has a direct or
indirect majority equity interest (individually, a "Subsidiary" and
collectively, the "Subsidiaries"). The Company, directly or
indirectly, has good and valid title to the equity it holds in the
Subsidiaries as set forth in Schedule 9.3.1, free of any Liens on
the date hereof. The equity held by the Company in the
Subsidiaries, whether held directly or indirectly, is validly
issued and fully paid. Each Subsidiary is a corporation duly
organised, validly existing and in good standing under the laws of
its country/state of incorporation and each of the Company and its
Subsidiaries is in good standing and is duly qualified or licensed
to do business in all jurisdictions where it is required to be so
qualified or licensed.
The Company and its Subsidiaries are not and have never been
insolvent or subject to liquidation (whether amicable or judicial),
bankruptcy or similar procedure and there is no threat of such
procedure save as disclosed in Schedule 9.3.1.
21
9.3.2. Permits
Each of the Company and its Subsidiaries has all licenses, permits,
approvals, authorisations and consents of all Government Entities
and all certification organisations required for the conduct of its
business (as presently conducted) and the operation of its
facilities (collectively, "Permits"). All such Permits are in full
force and effect and will not be affected or made subject to loss,
limitation or any obligation to reapply as a result of the
transactions contemplated hereby and by the Ancillary Instruments.
All Permits have been and are being complied with in all respects.
9.3.3. Share capital
The Shares represent the aggregate outstanding shares of the
capital stock of the Company. The Shares are validly issued and
fully paid. The rights attached to the Shares are identical
(subject to the specific rights attached to the Class A and Class B
Shares).
There are no (i) securities convertible into or exchangeable for
the capital stock or other securities of the Company and/or any
Subsidiary, (ii) options, warrants or other rights to purchase or
subscribe to capital stock or other securities of the Company or
any Subsidiary or securities which are convertible into or
exchangeable for capital stock or other securities of the Company
and/or any Subsidiary, or (iii) contracts, commitments, agreements,
understandings or arrangements of any kind relating to the
issuance, sale or transfer of any capital stock or other equity
securities of the Company or any Subsidiary, any such convertible
or exchangeable securities or any such options, warrants or other
rights. No person has the right to call for the allotment or
conversion of any share or other securities giving rise to a right
over the share capital of the Company or any Subsidiary except as
disclosed in Schedule 9.3.3.
The share capital of the Company and its Subsidiaries has not been
subject to any amortisation or redemption.
The Shares and the shares of the Subsidiaries have not been and are
not listed on any stock exchange or regulated market.
9.3.4. Statutory documents
All statutory books and corporate records of the Company and its
Subsidiaries required by applicable Laws and Orders, a true,
correct and complete copy of all of which have been delivered by
the Vendor to the Purchaser on the date hereof, accurately reflect,
taken as a whole, all material corporate action taken by the
Company and the Subsidiaries and contain information recorded in
accordance with applicable Laws, save for minor irregularities.
22
All deeds or other documents evidencing the ownership of the Assets
by the Company and its Subsidiaries and signed copies of all
Material Contracts are in the possession of the Company and its
Subsidiaries.
9.4 Representations and warranties relating to the Accounts
-------------------------------------------------------
9.4.1. Accounts
The Accounts, of which a true and complete copy is included as
Schedule 9.4.1, are true, complete and accurate and have been
prepared in accordance with French generally accepted accounting
principles, all applied on a consistent basis, in accordance with
the books and records of the Company and its Subsidiaries, on a
consolidated basis, and fairly present the assets, liabilities,
financial position, the results of operations and cash flows of the
Company and its Subsidiaries on a consolidated basis as of the date
and for the year indicated.
The Completion Financial Statements shall be prepared in accordance
with French generally accepted accounting principles applied on a
consistent basis, in accordance with the books and records of the
Company and its Subsidiaries, on a consolidated basis, and shall
fairly present the assets, liabilities, financial position and
results of operations of the Company and its Subsidiaries as of and
for the interim period ended on 30 April 2001.
9.4.2. Accounts receivable
Subject to Clause 14, all notes, drafts and accounts receivable of
the Company and its Subsidiaries reflected on the Accounts, and as
incurred in the normal course of business since the date thereof,
represent arm's length sales actually made in the ordinary course
of business, are collectible (net of the reserve for doubtful
receivables ultimately shown in the Completion Financial
Statements) in the ordinary course of business without the
necessity of commencing legal proceedings, are subject to no
counterclaim or setoff, and are not in dispute. Schedule 9.4.2
contains an aged schedule of accounts receivable of the Company and
its Subsidiaries included in the Accounts.
9.4.3. Changes since the Balance Sheet Date
Since the Balance Sheet Date:
(i) the Company and its Subsidiaries have been managed and
have conducted their operations in the ordinary course
of business;
(ii) except as set forth in Schedule 9.4.3(ii), neither the
Company nor any Subsidiary has increased, or committed
to increase, its share capital;
23
(iii) except as set forth in Schedule 9.4.3(iii), neither the
Company nor any Subsidiary has sold, leased or otherwise
transferred, or committed to sell, lease or otherwise
transfer, any Asset except in the ordinary course of
business;
(iv) neither the Company nor any Subsidiary has terminated, or
done or omitted to do anything which would result in the
termination of, a Material Contract;
(v) except as set forth in Schedule 9.4.3(v), neither the
Company nor any Subsidiary has made or agreed to make any
increase in the compensation, salaries or wages payable or
to become payable to any employee or agent (including,
without limitation, any increase or change pursuant to any
bonus, pension, profit sharing, retirement or other plan
or commitment) or any bonus or other employee benefit
granted, made or accrued, other than (x) those provided
for in employment agreements existing on the date hereof,
(y) for the applicable collective bargaining agreements
listed in Schedule 9.4.3(v) or (z) in the ordinary course
of business consistent with past practice;
(vi) neither the Company nor any Subsidiary has declared, set
aside or made payment of any dividend or other
distribution in respect of the capital stock of the
Company or any Subsidiary or made any other payment to any
shareholder of the Company or any Subsidiary as such a
shareholder, save for pro rata distributions of dividends
made by any Subsidiary to another Subsidiary or to the
Company;
(vii) neither the Company nor any Subsidiary has redeemed,
purchased or otherwise acquired or agreed to redeem,
purchase or otherwise acquire any of its share capital or
any security relating thereto;
(viii) except as otherwise contemplated by Clauses 9.4.3(ix),
9.8.1(v) and 9.12, the Company and the Subsidiaries, taken
together as a whole, have not experienced any event or
circumstance that has resulted or that is reasonably
likely to result in a Material Adverse Effect;
(ix) except as disclosed in Schedule 9.4.3(ix), neither the
Company nor any Subsidiary has experienced any labour
disputes or disturbances which would be material to its
business, financial condition and results of operations,
except for any such disputes or disturbances arising out
of the announcement of the transaction contemplated by
this Agreement;
24
(x) except as disclosed in Schedule 9.4.3(x), neither the
Company nor any Subsidiary has entered into any
commitments or transactions (including, without
limitation, any borrowing or capital expenditure) other
than in the ordinary course of business consistent with
past practice;
(xi) neither the Company nor any Subsidiary has incurred,
assumed or guaranteed any indebtedness for borrowed money,
except as disclosed in Schedule 9.4.3(xi) or as arising in
the ordinary course of business;
(xii) except as disclosed in Schedule 9.4.3(xii), neither the
Company nor any Subsidiary has made any mortgage, pledge,
Lien or encumbrance on any of its properties or Assets
except in connection with the acquisition of Assets in the
ordinary course of business;
(xiii) neither the Company nor any Subsidiary has entered into or
amended or terminated any contract, or waived any material
rights thereunder, other than in the ordinary course of
business;
(xiv) neither the Company nor any Subsidiary has made any loans
or advances to any person or entity, other than advances
to employees for travel and entertainment in the ordinary
course of business in accordance with past practices;
(xv) neither the Company nor any Subsidiary has granted any
credit to any customer or distributor on terms or in
amounts materially more favourable than those which have
been extended to such customer or distributor in the
preceding fiscal year, made any other change in the terms
of any credit heretofore extended or made any other change
in the Company's or any Subsidiary's policies or practices
with respect to the granting of credit, except in the
ordinary course of business; and
(xvi) neither the Company nor any Subsidiary has entered into
buy-back arrangements relating to the sale of Products
either outside of the ordinary course of business or at
levels in excess of those experienced in the fiscal year
ended 31 December 2000.
9.4.4. Axiome de Re
The restructuring of Axiome de Re as detailed in Schedule 9.4.4 was
implemented in compliance with applicable Laws and at arms' length
and such restructuring
25
shall not adversely affect the respective businesses of the Company
and the Subsidiaries nor create any liabilities or obligations
other than reflected in the Accounts. The only liabilities of
Axiome de Re are those specifically quantified and disclosed on the
balance sheet of Axiome de Re as of 31 December 2000, which balance
sheet is attached hereto in Schedule 9.4.4.
9.5 Representations and warranties in relation to the Assets of the
---------------------------------------------------------------
Company and its Subsidiaries
----------------------------
9.5.1. Assets
The Company and its Subsidiaries have good and marketable title to,
or a valid right to use, the Assets, free of any Liens, other than
Liens shown in the Accounts or as disclosed in Schedule 9.5.1. The
Company and its Subsidiaries have the continued right to the quiet
enjoyment (jouissance paisible) of the Assets that they own, rent
or use; the Assets are used in the normal course of the businesses
of the Company and its Subsidiaries as currently carried on and for
the purpose only of carrying out the usual activities of such
businesses; the Assets are in a reasonable state of maintenance,
repair and use given their respective life duration, and are
suitable for the purpose for which they are presently used.
The Assets are sufficient to carry on the respective businesses of
the Company and the Subsidiaries as conducted during the preceding
twelve (12) months. The level of the Assets has not changed over
the last twelve (12) months other than in the ordinary course of
business. Except as provided in Schedule 9.5.1, the buildings which
constitute part of the Assets are in good condition and repair,
reasonable wear and tear excepted. The Assets comply with the
currently applicable Laws or contractual requirements with regard
to the Company's and its Subsidiaries' use of them in their
respective country of use, except where such non compliance would
not materially affect the businesses thereof.
9.5.2. Properties
Schedule 9.5.2 contains a complete and accurate list of the Real
Property.
The Company and its Subsidiaries have full, good and marketable
title to all Real Property owned by them, and the Real Property
owned by the Company and its Subsidiaries is not subject to any
Lien other than referred to and disclosed in Schedule 9.5.2.
There are no leases, subleases, concessions or other agreements,
written or oral, granting to any party other than the Company and
its Subsidiaries the right of use or occupancy of any Real
Property.
26
The Real Property is free and clear of any rights-of-way and other
similar restrictions of any nature whatsoever, except zoning,
building and similar restrictions and, more generally, those
restrictions resulting from applicable Law or those restrictions
that would not materially affect the ongoing use of the Real
Property by the Company and/or its Subsidiaries.
The Company and its Subsidiaries have obtained all necessary
approvals or authorisations relating to any construction or
building they have undertaken on the Real Property.
The Real Property does not encroach on any third party's rights.
Schedule 9.5.2 also sets forth, with respect to each Real Property
which is leased, the material terms of such lease. There are now in
full force and effect duly issued certificates of occupancy
permitting the Real Property and improvements located thereon to be
legally used and occupied as the same are now constituted. The
Company and its Subsidiaries have full and good title as lessee to
all Real Property leased by them.
9.5.3. Environmental issues
Save as disclosed in Schedule 9.5.3, the Company and its
Subsidiaries are in compliance with, and the respective businesses
of the Company and its Subsidiaries have been carried out in
accordance with, all applicable limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in all environmental, zoning and
planning Laws in force from time to time in any country in which
any business or Assets of the Company or any Subsidiary is
conducted or located, including, without limitation, all
regulations, codes, plans, orders, decrees, judgements,
injunctions, notices or demand letters issued, entered, promulgated
or approved thereunder as of the date hereof (the "Environmental
Laws"), and the respective businesses of the Company and its
Subsidiaries may continue to be conducted on the premises occupied,
owned, leased or used by the Company and its Subsidiaries.
There are no litigation, investigations, actions or proceedings nor
any demand, claim, hearing or notice of violation notified in
writing pending or, to the Vendor's Best Knowledge, threatened
against the Company or any Subsidiary, or any person or entity
whose liability therefor may have been retained or assumed by or
could be imputed on or attributed to the Company or any Subsidiary,
pertaining in any way to the protection of the environment or to
the discharge of matter into the air, soil or water.
Save as disclosed in Schedule 9.5.3, there are no past or present
events, conditions, circumstances, activities, practices,
incidents, actions, omissions or plans which may interfere with or
prevent compliance or continued compliance
27
with the Environmental Laws or with any Order issued, entered,
promulgated or approved thereunder as of the date hereof, or which may
give rise to any liability or otherwise form the basis of any
litigation, hearing, notice of violation, study or investigation,
based on or related to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling, or the emission,
discharge, release or threatened release into the environment, of any
Waste. All environmental studies in the possession and control of the
Vendor, the Company or any Subsidiary or to which the Vendor, the
Company or any Subsidiary has access relating to any property with
respect to which the Company or any Subsidiary may have incurred
liability or for which liability may be asserted against the Company
or any Subsidiary have been delivered to the Purchaser and are
attached in Schedule 9.5.3. Without limitation, no portion of any of
the Real Property has been used as a landfill or for storage or
disposal of hazardous or toxic materials.
For the avoidance of doubt, the representations and warranties set
forth in this Clause 9.5.3 are the only representations and warranties
made by the Vendor in relation to environmental matters. No claim in
respect of such matters may be pursued by the Purchaser under any
other representations or warranties contained in this Agreement.
28
9.5.4 IT and communications
Except as disclosed in Schedule 9.5.4, IT and Telecommunications
Systems and Equipment are adapted and substantially satisfactory
having regard to the material requirements of the respective
businesses of the Company and its Subsidiaries, and those which are
material to the running of the business of the Company and its
Subsidiaries are subject to maintenance agreements where necessary
and, to the extent necessary, are compliant with Euro adoption plans
(except for configuration changes that can be accomplished with
existing software). The IT and Telecommunications Systems and
Equipment operate solely independent of the comparable systems and
equipment operated by the Vendor and/or the Vendor's Group.
9.5.5. Intellectual Property
The Company and its Subsidiaries have good title to or, with respect
to items not owned by the Company or any Subsidiary, sufficient
rights to use, all Intellectual Property that is material to the
operation of their respective businesses. The Intellectual Property
owned by the Company and its Subsidiaries is in full force and
effect. The consummation of the transactions contemplated herein
will not alter or impair any Intellectual Property used in
connection with the businesses of the Company and the Subsidiaries.
To the Vendor's Best Knowledge, there are no infringements by others
of Intellectual Property owned or used by the Company or any
Subsidiary nor the misappropriation of any trade secrets owned or
used by the Company or any Subsidiary. The conduct of the respective
businesses of the Company and its Subsidiaries does not infringe on
any Intellectual Property rights of others nor does it involve the
misappropriation of any trade secrets of others. Schedule 9.5.5 sets
forth (i) a complete and accurate list of all of the Intellectual
Property owned by the Company and its Subsidiaries and (ii) all of
the Intellectual Property currently used (but not owned by the
Company or any Subsidiary) in connection with the business of the
Company and the Subsidiaries, including licenses and other
agreements to which the Company and any Subsidiary is a party and
pursuant to which the Company or any Subsidiary is authorised to use
any Intellectual Property (excluding license agreements for
generally commercially available software).
No claims with respect to any Intellectual Property have been filed
or, to the Vendor's Best Knowledge, are threatened by any person or
entity, and no person or entity has any valid grounds for any claims
(i) to the effect that the manufacture, sale or use of any product,
process or service as now used or offered or proposed for use or
sale by the Company or any Subsidiary infringes on any Intellectual
Property right of any person or entity, (ii) against the use by the
Company or any Subsidiary of any Intellectual Property or (iii)
challenging the ownership, validity, enforceability or effectiveness
of any of the Intellectual Property owned or used by the Company or
any Subsidiary. The Company and its Subsidiaries have taken
reasonable steps to protect the Company's and its
29
Subsidiaries' rights in all inventions, processes, designs,
formulae, know-how, trade secrets and other confidential
information of the Company and its Subsidiaries and have taken
reasonable steps to enforce rights in Intellectual Property owned
or used by the Company and its Subsidiaries against known
infringement by third parties. The Company and its Subsidiaries
have taken reasonable steps, including all steps that the Company
and its Subsidiaries may be contractually obligated to undertake,
to protect confidential information or trade secrets provided by
another person or entity to the Company and/or its Subsidiaries.
9.5.6. Shareholdings
All of the shareholdings (titres de placement) and any other equity
interests owned by the Company and its Subsidiaries in any company
or entity (except for the Subsidiaries), whether French or foreign,
are set out in Schedule 9.5.6.
Save as disclosed in Schedule 9.5.6, the Company and its
Subsidiaries have never been and are not a member or manager of any
unlimited liability entity, including but not limited to a Societe
Civile, Societe en Nom Collectif, Societe en Commandite Simple,
Societe en Commandite par Actions (as commandite).
9.5.7. Business
The Company and its Subsidiaries are not party to any contract (i)
relating to the whole or part of its business (fonds de commerce),
such as a societe en participation (or location-gerance), or (ii)
which in any way restricts their freedom to carry on the whole or
any part of their respective businesses, except as disclosed in
Schedule 9.5.7.
9.5.8. Inventory
All inventory of the Company and its Subsidiaries reflected on the
Accounts is of merchantable quality and quantity and is capable of
being sold or used in the ordinary course of business and, save for
provisions reflected in the Accounts, has a commercial value at
least equal to the value shown on such Accounts and is valued in
accordance with generally accepted accounting principles at the
lower of cost or market. Since the date of the Accounts, all
inventory purchased is of merchantable quality and quantity and is
capable of being sold or used in the ordinary course of business
and the level has not changed other than in the ordinary course of
business. Save as disclosed in Schedule 9.5.8, all inventory of the
Company and its Subsidiaries is located on premises owned or leased
by the Company and its Subsidiaries as reflected in this Agreement.
Save as disclosed in Schedule 9.5.8, there is no inventory owned by
third parties that is located on premises owned or leased by the
Company and the Subsidiaries.
30
All work-in-process contained in inventory constitutes items in
process of production pursuant to contracts or open orders taken in
the ordinary course of business, from customers of the Company and
its Subsidiaries with no recent history of credit problems with
respect to the Company and its Subsidiaries; neither the Company or
any Subsidiary nor any customer is in breach of the terms of any
obligation to the other, and no valid grounds exist for any set-off
of amounts billable to such customers on the completion of orders
to which work-in-process relates. All work-in-process is of a
quality and quantity ordinarily produced in accordance with the
requirements of the orders to which such work-in-process is
identified.
9.5.9. Loans
No loans or advances have been granted by the Company or any
Subsidiary to third parties, other than standard advances or
deposit with suppliers and/or clients carried out in the ordinary
course of business.
9.6 Representations and warranties in relation to Liabilities
---------------------------------------------------------
9.6.1. Off-balance sheet and other liabilities
Schedule 9.6.1 sets forth the off-balance sheet liabilities of the
Company and its Subsidiaries as of 31 December 2000, except for
individual liabilities less than Ten Thousand French Francs (FRF
10,000) provided that the aggregate amount of such liabilities does
not exceed One Hundred Thousand French Francs (FRF 100,000).
Except as and to the extent described in the Accounts, the
Completion Financial Statements or Schedule 9.6.1, to Vendor's Best
Knowledge, there is no basis for the assertion against the Company
or any Subsidiary of any liability and there are no circumstances,
conditions, happenings, events or arrangements, contractual or
otherwise, which may give rise to liabilities, except commercial
liabilities and obligations incurred in the ordinary course of the
respective businesses of the Company and its Subsidiaries and
consistent with past practice.
9.6.2. Reserves
All reserves (reserves legales et statutaires) appearing in the
Accounts have been properly provided for.
9.6.3. Subsidies, support
Save as disclosed in Schedule 9.6.3, the Company and its
Subsidiaries do not have the benefit of any subsidy, support or
financial assistance. With respect to the subsidies disclosed in
Schedule 9.6.3, the Company and the Subsidiaries have
31
complied with all of their obligations in relation thereto as
imposed by the relevant authorities in connection with the granting
of such subsidies.
9.6.4. Debts of the Company and its Subsidiaries
All accounted debts have been properly paid on the relevant due
date and the Company and its Subsidiaries are not liable as a
result for any interest for late payment, penalty or indemnity of
any sort.
The Company and its Subsidiaries have duly made all necessary
declarations to the relevant administrative body and all debts have
been paid on the relevant due date.
9.6.5. Product warranty and product liability
Schedule 9.6.5 contains a complete and accurate copy of the
Company's and each Subsidiary's standard warranty or warranties for
sales of Products, and except as expressly identified therein,
there are no warranties, deviations from standard warranties,
commitments or obligations with respect to the return, repair or
replacement of Products except in the ordinary course of business
consistent with past practice.
Schedule 9.6.5 contains a complete and accurate description of all
product liability claims and similar litigation relating to
Products manufactured or sold, or services rendered, which are
presently pending, or which have been asserted or commenced against
the Company or any Subsidiary within the last three (3) years.
Schedule 9.6.5 also sets forth all Technical Update Procedures
undertaken within the last three (3) years. There are no defects in
design, construction or manufacture of Products which would
adversely affect performance or create an unusual risk of injury to
persons or property, except for Technical Update Procedures
relating to Products manufactured or sold by the Company or its
Subsidiaries prior to the date hereof which shall not entail future
costs to the Company and its Subsidiaries in excess of Six Million
Six Hundred Sixty-Six Thousand Six Hundred Sixty-Six French Francs
(FRF 6,666,666). The Products have been designed and manufactured
so as to meet and comply with all applicable Laws and Orders. Such
Products have received all approvals required by all applicable
Laws and Orders necessary to allow for their sale and use except as
set forth in Schedule 9.6.5. None of the Products have been the
subject of any general recall campaign during the last three (3)
years, and, to Vendor's Best Knowledge, no facts or conditions
exist which could reasonably be expected to result in such a
general recall campaign.
9.7 Representations and warranties in relation to Contracts
-------------------------------------------------------
9.7.1. Material Contracts
32
The Material Contracts entered into by the Company and its
Subsidiaries are:
(a) in full force and effect and are valid and binding and
have been concluded and have been and are performed in
accordance with their terms and conditions and under
usual and arm's length conditions; and
(b) enforceable in accordance with their respective terms.
To Vendor's Best Knowledge, there is no fact or event which could
provide a basis for preventing the performance of the Material
Contracts, leading to their amendment or termination or giving rise
to any material claim by or against the Company or any Subsidiary.
Except as disclosed in Schedule 9.7.1, the consummation of the
transactions contemplated herein will not enable the contracting
parties to terminate or modify any Material Contract or accelerate
or provide for any additional benefit thereunder. Except as
disclosed in Schedule 9.7.1, there are no contracts which
materially restrict the ability of the Company and its Subsidiaries
to carry on their respective businesses.
9.7.2. No default
Neither the Company nor any Subsidiary is in default under any
lease, contract or commitment whatsoever, nor has any event or
omission occurred which through the passage of time or the giving
of notice, or both, would constitute a default thereunder or cause
the acceleration of any of the Company's or any Subsidiary's
obligations or result in the creation of any Liens on any of the
Assets. To Vendor's Best Knowledge, no third party is in default
under any lease, contract or commitment to which the Company or any
Subsidiary is a party, nor has any event or omission occurred
which, through the passage of time or the giving of notice, or
both, would constitute a default thereunder or give rise to an
automatic termination, or the right of discretionary termination,
thereof.
33
9.7.3. Brokers or finders
None of the Company or its Subsidiaries have retained, employed or
used any broker or finder for the purpose of the sale of the Shares
as contemplated by this Agreement.
9.7.4. Related parties' relationships to the Company and its Subsidiaries
All leases, contracts, agreements or other arrangements between the
Company or any Subsidiary and Related Parties as well as all
respective obligations of the Company, any Subsidiary and any
Related Party are described on Schedule 9.7.4. No Related Party has
any direct or indirect interest in (i) any entity which does
business with the Company and/or its Subsidiaries or is competitive
with the respective businesses of the Company and/or its
Subsidiaries or (ii) any property, asset or right which is used by
the Company and/or its Subsidiaries in the conduct of their
respective businesses. "Related Parties" pursuant to this Clause
includes the Vendor and any entity of the Vendor's Group or any
person affiliated with the Vendor's Group.
9.8 Representations and warranties in relation to personnel
--------------------------------------------------------
9.8.1. Labour matters
The Company and its Subsidiaries have complied with all applicable
labour Laws and have satisfied all of their obligations vis-a-vis
their employees and the labour and social security authorities save
for minor irregularities.
Except to the extent set forth in Schedule 9.8.1:
(i) no sum is due to any present or former employee, agent
or representative of the Company or any Subsidiary in
connection with his or her employment and/or other
contracts or agreements with the Company or any
Subsidiary, other than disclosed in the Accounts;
(ii) there are no obligations of any kind made in writing or
owed by the Company or any Subsidiary to former or
existing employees except as disclosed in the Accounts.
In this respect, no employment agreement entered into
by the Company or its Subsidiaries with any employee
provides for the payment of a termination indemnity the
amount of which is greater than that resulting from a
strict application of the applicable labour Laws and
collective bargaining agreements;
34
(iii) neither the Company nor any Subsidiary is engaged or
involved in any litigation with its employees or any
trade union or other organisation formed for a similar
purpose;
(iv) at all times, the Company and its Subsidiaries have
complied with all of their statutory and other
obligations concerning the health and safety at work of
their employees. To Vendor's Best Knowledge, there are
no written claims by any employee or third party in
respect of any accident or injury which is not
adequately covered by insurance;
(v) there is no labour strike, dispute, request for
representation, slowdown or stoppage currently pending
against or affecting the Company or any Subsidiary,
except for any such strike, dispute or the like arising
out of the announcement of the transactions
contemplated by this Agreement;
(vi) to Vendor's Best Knowledge, no grievance which might
have a Material Adverse Effect, nor any arbitration
proceeding arising out of or under collective
bargaining agreements, is pending and no such claim
therefor exists;
(vii) to Vendor's Best Knowledge, there are no administrative
charges or court complaints against the Company or any
Subsidiary concerning alleged employment discrimination
or other employment related matters pending or
threatened before any Government Entity;
(viii) the Company and its Subsidiaries have duly
informed/consulted the labour councils or similar
bodies of the transactions contemplated herein, in
compliance with applicable Laws; and
(ix) within the last three (3) years, neither the Company
nor any Subsidiary has experienced any general labour
disputes, union organisation attempts or any general
work stoppage due to labour disagreements in connection
with its business exceeding five (5) days over any
rolling twelve (12) month period.
9.8.2. Employee benefit plans
Schedule 9.8.2 contains, in relation to the Company and its
Subsidiaries, a complete and accurate list of all material pension,
savings, profit sharing, retirement, retirement indemnity,
incentive bonus or other bonus, medical, dental, life, accident
insurance, benefit, employee welfare, disability, group insurance,
35
stock purchase, stock option, stock appreciation, stock bonus,
executive or deferred compensation, hospitalisation and other
similar fringe or employee benefit plans, programs and arrangement,
and any employment or consulting contracts, "golden parachutes,"
collective bargaining agreements, severance agreements or plans,
vacation and sick leave plans, programs, arrangements and policies,
including, without limitation, all "employee benefit plans" or
arrangements, all employee manuals, and all written statements of
policies, practices or understandings relating to employment, which
are provided to, for the benefit of, or relate to, any persons
("Company Employees") employed by Company or the Subsidiaries. The
items described in the foregoing sentence are hereinafter sometimes
referred to collectively as "Employee Plans/Agreements," and each
individually as an "Employee Plan/Agreement." True and correct
copies of all the Employee Plans/Agreements, including all
amendments thereto, have heretofore been provided to the Purchaser.
Except as disclosed in Schedule 9.8.2, all liabilities relating to
the Employee Plans/Agreements, other than those resulting from the
mandatory retirement Employee Plans/Agreements applicable by Law to
Company Employees and accrued through the date hereof, have been
adequately reserved in the Accounts as required by applicable Laws
for each jurisdiction.
9.8.3. Full funding
The funds available under each Employee Plan/Agreement which is
intended to be a funded plan equal or exceed the amounts required
to be paid, or which would be required to be paid if such Employee
Plan/Agreement were terminated, on account of rights vested or
accrued as of the Completion Date (using the actuarial methods and
assumptions then used by the Company's and/or its Subsidiaries'
actuaries in connection with the funding of such Employee
Plan/Agreement).
9.8.4. Payments and compliance
With respect to each Employee Plan/Agreement, (i) all payments due
from the Company and its Subsidiaries have been made and all
amounts properly accrued as liabilities of the Company and its
Subsidiaries which have not been paid have been properly recorded
on the books of the Company and its Subsidiaries (to the extent
such books are closed) and, to the extent in existence as of 31
December 2000, are reflected in the Accounts; (ii) the Company and
its Subsidiaries have complied with, and each such Employee
Plan/Agreement conforms in form and operation to, all applicable
Laws in all respects and all reports and information relating to
such Employee Plan/Agreement required to be disclosed or provided
to participants or their beneficiaries have been timely disclosed
or provided; and (iii) there are no actions, suits or claims
pending (other than routine claims for benefits) or threatened with
respect to such Employee Plan/Agreement or against the assets of
such Employee Plan/Agreement.
36
9.8.5. Post-retirement benefits
Except as set forth in Schedule 9.8.5, no Employee Plan/Agreement
provides benefits, including, without limitation, death or medical
benefits (whether or not insured) with respect to current or former
Company Employees beyond their retirement or other termination of
service other than (i) coverage mandated by applicable Law, (ii)
death or retirement benefits under any Employee Plan/Agreement that
is an employee pension benefit plan, (iii) deferred compensation
benefits accrued as liabilities on the books of the Company and its
Subsidiaries (including the Accounts), (iv) disability benefits
under any Employee Plan/Agreement that is an employee welfare
benefit plan and which have been fully provided for by insurance or
(v) benefits in the nature of severance pay.
9.8.6. No triggering of obligations
Except as set forth in Schedule 9.8.6, the consummation of the
transactions contemplated by this Agreement will not (i) entitle
any current or former employee of the Company or any Subsidiary to
severance pay, unemployment compensation or any other payment, (ii)
accelerate the time of payment or vesting, or increase the amount,
of compensation due to any such employee or former employee or
(iii) result in any prohibited transaction under applicable Laws.
9.8.7. Delivery of documents
Schedule 9.8.7 lists with respect to each Employee Plan/Agreement:
A copy of the funding agreement and the latest financial statements
thereof if the Employee Plan/Agreement is funded through a third
party funding vehicle (other than an insurance policy).
9.8.8. Future commitments
Neither the Company nor any Subsidiary has an announced plan or
legally binding commitment to create any additional Employee
Plans/Agreements or to amend or modify any existing Employee
Plan/Agreement.
37
9.8.9. Employees
Schedule 9.8.9 contains a complete and accurate list of those of
the employees to whom the Company and its Subsidiaries are paying
compensation, including bonuses and incentives, at an annual rate
in excess of Three Hundred Thousand French Francs (FRF 300,000) for
services rendered or otherwise; and in the case of salaried
employees such list identifies the current annual rate of
compensation for each employee and in the case of hourly or
commission employees identifies certain reasonable ranges of rates
and the number of employees falling within each such range. Neither
the Company nor any Subsidiary has made an undertaking verbally or
in writing which would entail future liabilities or obligations
whatsoever in favour of any of its employees, except as set forth
in Schedule 9.8.9.
9.9 Representations and warranties in relation to regulatory matters
----------------------------------------------------------------
and litigation
--------------
9.9.1. Compliance with Laws
Except as disclosed in Schedule 9.9.1, neither the Company nor any
Subsidiary has done or omitted to do anything which may have an
adverse effect on the operations of the businesses of the Company
and its Subsidiaries which is in contravention of any Law or Order.
9.9.2. Litigation
Save as disclosed in Schedule 9.9.2, the Company and its
Subsidiaries are not parties to any claim, legal action,
proceeding, suit, litigation, prosecution, investigation, enquiry,
arbitration (including investigations or public enquiries) or
settlement of any nature whatsoever and the Company and its
Subsidiaries have not received any notification of any of the
foregoing. To Vendor's Best Knowledge, no such claim is being
threatened against the Company or any Subsidiary.
The Company and its Subsidiaries are not, and no director or legal
representative of the Company and its Subsidiaries, is the subject
of any investigation, inquiry, control or other procedure by the
administration (particularly the Tax, customs, competition, fraud
or health and social security authorities) which would have
resulted in a notification in writing being delivered to the
Company or any Subsidiary regarding the operations and activities
of the Company and its Subsidiaries.
38
9.10 Representations and warranties in relation to insurance
-------------------------------------------------------
Schedule 9.10 sets forth a complete and accurate list of all
policies of fire, liability, product liability, workers
compensation, health and other forms of insurance presently in
effect with respect to the businesses and properties of the Company
and its Subsidiaries, true and correct copies of which have
heretofore been delivered to the Purchaser. Schedule 9.10 includes
the carrier, the type of coverage and any pending claims in excess
of Five Hundred Thousand French Francs (FRF 500,000). All such
policies are valid, outstanding and enforceable policies and
provide insurance coverage for the properties, assets and
operations of the Company and its Subsidiaries, of the kinds, in
the amounts and against the losses and risks customarily maintained
by companies carrying on similar activities, and having or using
equivalent goods or assets; all premiums relating to such insurance
have always been duly paid; and no such policy (or any previous
policy) provides for or is subject to any currently enforceable
retroactive rate or premium adjustment, loss sharing arrangement or
other actual or contingent liability arising wholly or partially
out of events arising prior to the date hereof. The Company and its
Subsidiaries and, where applicable, the person insured, have not
committed any act or omission capable of leading to the
termination, rescission or detrimental amendment of any or all of
the insurance policies. The Company and its Subsidiaries have not
received in writing notice of cancellation of any insurance, and To
Vendor's Best Knowledge, there are no facts or events that provide
a basis for cancellation. Except as disclosed in Schedule 9.10, the
Company and its Subsidiaries have not been refused any insurance
with respect to any aspect of the operations of their businesses
nor have their coverages been limited by any insurance carrier to
which they have applied for insurance or with which they have
carried insurance during the last three (3) years. Neither the
Company nor any Subsidiary has received any written notice from or
on behalf of any insurance carrier issuing any such policy that
insurance rates therefor will be substantially increased or that
there will be a cancellation or an increase in a deductible (or an
increase in premiums in order to maintain an existing deductible)
or a non renewal of any such policy.
9.11 Representations and warranties in relation to Taxation
9.11.1. Provision for Taxes
The provision made for Taxes on the Accounts is sufficient for the
payment of all Taxes at the date of the Accounts and for all years
and periods prior thereto. Since the date of the Accounts, neither
the Company nor any Subsidiary has incurred any Taxes other than
Taxes incurred in the ordinary course of business consistent with
past practice.
9.11.2. Tax returns filed / Tax payments
39
Save as disclosed in Schedule 9.11.2, all Tax returns required to
be filed by or on behalf of the Company and its Subsidiaries have
been timely filed and when filed were true and correct in all
respects, and the Taxes shown as due thereon were paid or
adequately accrued. True and complete copies of corporate income
Tax and social security returns filed by the Company and its
Subsidiaries for their most recent fiscal years have been delivered
to the Purchaser. Each of the Company and its Subsidiaries have
duly withheld and paid all Taxes which it is required to withhold
and pay.
9.11.3. Tax audits
The income Tax returns of the Company and its Subsidiaries for the
immediately preceding three (3) years have not been audited by the
appropriate Tax authorities except for the periods and to the
extent set forth in Schedule 9.11.3, and neither the Company nor
any Subsidiary has received from the Tax authorities of any
country, state, county, local or other jurisdiction any written
notice of underpayment of Taxes or other deficiency which has not
been paid or any objection to any return or report filed by the
Company or any Subsidiary. There are outstanding no agreements or
waivers extending the statutory period of limitations applicable to
any Tax return or report.
9.11.4. Consolidated group ("integration fiscale")
Neither the Company nor any Subsidiary is or was a member of an
affiliated group of corporations for Tax purposes that filed a
consolidated Tax return on which the statute of limitations does
not bar a Tax assessment.
9.11.5. Tax basis
Schedule 9.11.5 sets forth the following information with respect
to the Company and each Subsidiary as of the most recent
practicable date: (i) the original and adjusted Tax basis of its
assets; (ii) the amount of any net operating loss, net capital
loss, unused investment or other credit, unused foreign Tax or
excess charitable contribution allocable to the Company and each
Subsidiary; and (iii) the amount of any deferred gain or loss
allocable to the Company and each Subsidiary arising out of any
deferred intercompany transaction.
9.11.6. Other
The Vendor represents that neither the Company nor any Subsidiary
is a company for any Tax evasion purpose, whether in France or
elsewhere.
9.12 Representations and warranties relating to customers, suppliers,
---------------------------------------------------------------
dealers and distributors
------------------------
9.12.1. Customers and Suppliers
40
Except to the extent arising out of the announcement of the
transactions contemplated by this Agreement, neither the Company
nor any Subsidiary has been notified by any of the twenty-five
(25) largest customers by sales value or any of the twenty-five
(25) largest suppliers by purchase value that they will not
continue to be respectively customers or suppliers of the
respective businesses of the Company and its Subsidiaries at
substantially the same level of purchases or the same quantity
and quality of goods at competitive prices as heretofore.
9.12.2. Dealers and Distributors
Except to the extent arising out of the announcement of the
transactions contemplated by this Agreement, neither the Company
nor any Subsidiary has been notified by any of the twenty-five
(25) largest dealers, distributors and franchisees of the Company
and each Subsidiary by value that they will not continue to be
dealers, distributors and franchisees to the respective
businesses of the Company and its Subsidiaries and will not
continue to supply the respective businesses of the Company and
its Subsidiaries with substantially the same quantity and quality
of services at competitive prices.
9.13 Scope of the Representations
----------------------------
All statements and information contained in the Disclosure
Schedule delivered by or on behalf of the Vendor shall be deemed
to be representations and warranties by the Vendor.
10. INDEMNITY
---------
10.1 Principle of Indemnification
----------------------------
The Vendor shall indemnify and hold harmless the Purchaser and/or
the Company or any Subsidiary (if Purchaser so requests) and the
successors and assigns of any of the foregoing from and against
all Losses (as defined below) asserted against, resulting to,
imposed upon or incurred by the Purchaser, the Company and/or any
Subsidiary by reason of, arising out of or resulting from the
inaccuracy or breach of any representation or warranty or any
covenant of the Vendor contained in or made pursuant to this
Agreement. As used in this Clause 10, the term "Loss" as it
relates to breaches of representations and warranties or
covenants shall include (i) all debts, liabilities and
obligations; and (ii) all losses, damages, judgements, awards,
settlements, costs and expenses (including, without limitation,
interest (including prejudgment interest in any litigated
matter), penalties, court costs and reasonable attorneys' fees
and expenses). Notwithstanding the foregoing, any indemnification
for a breach of the representations and warranties set forth in
Clause 9.5.3 or for the matters specified in Clause 13 shall be
governed by Clause 13.
41
Without prejudice to the foregoing and for the avoidance of
doubt, the measure of damages of the Purchaser or the Company
and/or any Subsidiary as a result of a Loss shall not be
calculated by reference to any loss in the value of the Shares
purchased pursuant to this Agreement, or by application of any
multiple in respect thereof, but shall instead be calculated in
accordance with the Clauses below on a "franc for franc" basis.
The decision of the Purchaser to proceed to the Completion
despite the initiation by Xxxxxxxxx Potain of a summary procedure
on the ground of an allegedly existing or imminent rescission
claim regarding the sale of her Company Shares to U.E.I and
Unidev shall in no way be considered as a waiver to the statutory
and contractual rights of the Purchaser under this Agreement.
Accordingly, the provisions of this Agreement and in particular
Clauses 10.3.4(i) and 10.4 shall apply in order to indemnify the
Purchaser, the Company and/or any Subsidiary in respect of any
possible rescission action or other procedures which may be
started by Xxxxxxxxx Potain, including, without limitation, any
recourse exercised against the order rendered by the summary
judge on May 4, 2001 rejecting her claim for judicial escrow on
the Company Shares she previously owned.
10.2 Method of calculation
---------------------
10.2.1. Remedies
The Purchaser acknowledges and agrees that the only right and
remedy which shall be available to it in connection with or
arising out of or related to any breach of any representation and
warranty contained in this Agreement shall be damages under the
terms and conditions set out in this Agreement except in case of
dol (as such term is defined under French law).
10.2.2. Deductions from Loss
In order to identify and calculate the amount of the Loss, the
following shall be taken into account. To the extent not
previously applied, the amounts relating to the following items
shall be deducted from the amount of the corresponding Loss:
(i) the amount of any provision booked in the Accounts and
the Completion Financial Statements that relates to any
fact, event, matter or circumstance that was accounted
in the Accounts or the Completion Financial Statements
in the same account category (e.g., stock, trade debts,
---
fixed assets, provisions for risks, etc.) as the fact,
event, matter or circumstance giving rise to the Loss;
(ii) any recovery of a sum that had been previously written
off against a reserve established in the Accounts or
the Completion Financial Statements in the same account
category as the fact, event, matter or circumstance
giving rise to the Loss; and
42
(iii) the amount of any net reduction in any applicable Tax
liability actually realised by the Purchaser, the
Company or any Subsidiary indemnified in connection
with the satisfaction by the Vendor of the Loss with
respect to which indemnification is sought hereunder;
provided, however, that the amount of such offset shall
be adjusted by the amount of the actual Tax liability
incurred by the Purchaser, the Company or any
Subsidiary indemnified upon receipt of the payment of
the Loss (taking into account any net operating loss,
capital loss or credit carryover of such party).
10.2.3. Change to Tax position
Any Loss resulting from a Tax reassessment of the expenses or
revenue, which materializes in (i) a mere interval of the time or
a shift of a Tax from one financial year to another, or (ii) a
time-lag in a charge from one financial year to the next, or
which would result in (iii) a Tax credit relating to a right to a
deduction or imputation without any limitation in time, shall
only give rise to an indemnification up to the amount of
penalties, fines, increases or late interest due by the Company
and its Subsidiaries. In respect of VAT, the adjustments relating
to a Tax which can be deducted from or recovered from third
parties shall not be taken into consideration. However, the
amount of the penalties, fines, increases or late interest due by
the Company and its Subsidiaries shall be taken into account in
the Loss.
10.2.4. Indemnification by a third party
The amount of any Loss for which indemnification is provided
under this Clause 10 shall be net of any amounts actually
recovered from a third party by the Purchaser, the Company or any
Subsidiary seeking indemnification hereunder under insurance
policies or otherwise with respect to such Loss; provided,
however, that the amount of such Loss will not be reduced by the
amount of any net increase in insurance premiums through the
applicable duration as specified in Clause 10.4 which the
Purchaser, the Company or any Subsidiary can demonstrate has
occurred or is reasonably likely to occur as a result of such
claim (whether by prospective or retroactive premium adjustment);
and provided further that this Clause 10.2.4 will not be
applicable to the extent it constitutes an improper waiver of the
insurer's rights of subrogation against the Vendor.
Notwithstanding the foregoing, the Purchaser, the Company or any
Subsidiary seeking indemnification hereunder will not have any
obligation to seek insurance recovery in respect of Losses to the
extent such recovery would be precluded or would preclude other
(i) pending claims or (ii) claims reasonably likely, based upon
past claims experience, to be submitted as being within the
applicable policy coverage limit. Subject to the foregoing, the
Purchaser, the Company or any Subsidiary seeking indemnification
hereunder shall use commercially reasonable efforts to effect the
recovery from a third party as contemplated by this Clause
10.2.4.
43
10.2.5. Net Loss
The amount of any Loss calculated in accordance with the
provisions of this Clause 10.2 shall be referred to as "Net
Loss".
10.3 Limitations on liability-Exceptions
-----------------------------------
10.3.1. Individual Exemption
The Vendor shall not be liable, and therefore shall not be
required to indemnify or pay, in respect of a Loss related to a
breach of a representation and warranty pursuant to a Notified
Claim, in the event that such Loss results from a single event or
fact and the amount of such Loss does not exceed One Hundred
Fifty Thousand French Francs (FRF 150,000) before the calculation
process set out in Clause 10.2 has been applied. All Losses
having a similar initiating fact or cause shall be taken into
account as one cumulated amount (the "Individual Exemption").
10.3.2. Global Exemption
Except as provided below, the Vendor, with respect to a breach or
breaches of representations and warranties, shall not be liable
to pay all or part of a Loss hereunder, pursuant to a Notified
Claim, unless the amount of such Loss, together with the Losses
relating to previous Notified Claims, shall be more than or equal
to Thirty Million French Francs (FRF 30,000,000) (the "Global
Exemption").
In respect of any Losses, unless and to the extent that the
aggregate amount of all Losses for which the Vendor would
otherwise be liable under this Clause 10 exceeds the Global
Exemption, then the Vendor shall only be liable for those amounts
exceeding such Global Exemption, subject to Clause 10.3.1.
10.3.3. Ceiling
Except as provided below, the total cumulated amount of payments
which the Vendor may be obliged to make to the Purchaser, the
Company and/or any Subsidiary in accordance with this Clause 10
for breaches of representations and warranties shall not exceed
Four Hundred Thirty Million French Francs (FRF 430,000,000).
10.3.4. Exceptions / Specific Indemnification
Notwithstanding any provision herein contained, it is hereby
agreed that:
(i) the Vendor shall have liability for any breach of the
representations and warranties set forth in Clauses
9.1, 9.2.1 to 9.2.3, 9.3.1 (strictly
44
limited to the ownership of the shares of the
Subsidiaries), 9.3.3. and 9.7.3 without any
application of the above-mentioned exemptions and
ceiling set forth in Clauses 10.3.1 to 10.3.3;
(ii) the Vendor shall have liability for any Loss relating
to a dol (as such term is defined under French law)
for which the Vendor shall indemnify and hold harmless
the Purchaser, the Company and/or any Subsidiary
without any application of the above-mentioned
exemptions and ceiling set forth in Clauses 10.3.1 to
10.3.3;
(iii) the Vendor shall have liability for any Loss relating
to any participation of the Company or any Subsidiary
existing on or prior to the date hereof in unlimited
liability entities for which the Vendor shall
indemnify and hold harmless the Purchaser, the Company
and/or any Subsidiary without any application of the
above-mentioned exemptions and ceiling set forth in
Clauses 10.3.1 to 10.3.3;
(iv) the Vendor shall have liability for any Loss relating
to the pending litigation described in Schedule 9.9.2
(the Rentakran litigation) for which the Vendor shall
indemnify and hold harmless the Purchaser, the Company
and/or any Subsidiary without any application of the
above mentioned exemptions and ceiling set forth in
Clauses 10.3.1 to 10.3.3, provided that in the event
the Company exercises its option to repurchase any
cranes that are subject to the Rentakran litigation,
as provided in the underlying buy back agreements with
Rentakran, the Vendor shall be entitled to the net
profit from any subsequent sale of the crane(s) that
is consummated within a twenty-four (24) month period
from the date of the recovery of the crane(s); the
Purchaser and the Company will use commercially
reasonable efforts to recover and sell such cranes;
(v) the Vendor shall have liability for any Loss relating
to the dismissal of directors as contemplated by
Clause 5.3 and the Vendor shall indemnify and hold
harmless the Purchaser, the Company and/or any
Subsidiary with respect thereto without any
application of the above mentioned exemptions and
ceiling set forth in Clauses 10.3.1 to 10.3.3; and
(vi) the Vendor shall have liability for any breach of the
representation and warranty set forth in Clause 9.4.4
as well as any Tax liability that the Purchaser, the
Company or any Subsidiary may have for all periods
prior to the date hereof which relate to Axiome de Re
and/or the arrangements between Xxxxxx xx Xx xxx xxx
Xxxxxx,
00
the Vendor's Group, the Company or its Subsidiaries
existing on or before the date hereof, without
application of the above mentioned exemptions and
ceiling set forth in Clauses 10.3.1 to 10.3.3.
10.3.5. Non bis in idem
The Purchaser, the Company and/or any Subsidiary (taken as a
whole) shall not be entitled to recover from the Vendor under
this Clause 10 more than once in respect of the same Loss, and
accordingly the Vendor shall not be liable under this Clause 10
if and to the extent that the Loss is or has been recovered from
the Vendor following any claim whatsoever made by the Purchaser,
the Company and/or any Subsidiary under any ground other than
under this Clause 10.
10.3.6. Variation
The Vendor shall not be liable for, nor shall it be obliged to
pay, all or any part of any Loss arising under a Notified Claim
(as defined herein) in so far as the amount of such Loss results
solely from a causatory fact or event which is:
(i) the adoption of, or modification of, the legal
requirements occurring after the date hereof, including
those having a retroactive effect; or
(ii) any change in the accounting principles of the Company
or any Subsidiary made by the Purchaser.
Notwithstanding the foregoing, this Clause 10.3.6 shall be
inapplicable in the event that the changes contemplated by
subparagraphs (i) or (ii) were effected to remedy any breach
(which existed on the date hereof) in a representation or
warranty contained in this Agreement.
10.3.7. Mitigation of the Loss by the Purchaser and the Vendor
In the case where a Loss would give rise to a payment of
compensation by the Vendor, the Purchaser shall, and, after a
Notified Claim has been submitted, the Purchaser and the Vendor
shall cooperate to, take reasonable steps and provide all
reasonable assistance, so far practicable and at the sole cost of
the Vendor, to avoid or mitigate any Loss which in the absence of
mitigation might give rise to a liability in respect of any claim
under Clause 10.
If a breach of any of the representations occurs, without
prejudice to the right of the Purchaser to claim damages under
Clause 10, to the extent that a breach of any of the
representations is capable of being remedied, the Vendor shall be
afforded a reasonable opportunity to remedy the matter. The
remedy may include the
46
payment by the Vendor to the Purchaser of such compensation as
shall place the Purchaser in an equivalent position to that in
which it would have been had such breach of the representations
not occurred.
10.4 Duration of a request made by notified claim
--------------------------------------------
Except as provided in Clause 13, in order to be valid and
qualified for indemnification hereunder, a Notified Claim with
respect to any Loss must be delivered to the Vendor by the
Purchaser within sixteen (16) months following the date hereof,
except for claims relating to:
. taxation, including, without limitation, Tax matters
contemplated by Clause 10.3.4(vi), and social security
matters, for which the Notified Claim shall be
delivered no later than ten (10) days following the
expiration of the applicable statute of limitations;
. any matter referred to in Clauses 9.1, 9.3.1 (strictly
limited to the ownership of the shares of the
Subsidiaries), 9.3.3 and 10.3.4(ii), for which the
Notified Claim shall be delivered no later than ten
(10) days following the expiration of the applicable
statute of limitations; and
. any matter referred to in Clause 10.3.4(iv), for which
the Notified Claim shall be delivered no later than
three (3) years from the date hereof.
After the expiration of the applicable survival period, the
Vendor will be released from all non-Notified Claims related to
breaches of representations and warranties covered by this Clause
10. Once a Notified Claim has been made prior to the expiration
of the survival period, such claim shall be preserved despite the
subsequent termination of the survival period.
10.5 Indemnification Security
------------------------
10.5.1. Definitions
For purposes of this Clause 10.5, the following capitalized terms
shall have the following meanings:
(a) "Period 1" means the period commencing on the date
hereof and ending at 11:59 p.m. (Paris time) on the day
immediately preceding the date which is sixteen (16)
months from the date hereof.
(b) "Period 2" means the period commencing at 12:00 a.m.
(Paris time) on the day immediately following Period 1
and ending at
47
11:59 p.m. (Paris time) on the day immediately
preceding the date which is twenty-four (24) months
from the date hereof .
(c) "Period 3" means the period commencing at 12:00 a.m.
(Paris time) on the day immediately following Period 2
and ending at 11:59 p.m. (Paris time) on the day
immediately preceding the date which is thirty-six (36)
months from the date hereof.
(d) "Period 4" means the period commencing at 12:00 a.m.
(Paris time) on the day immediately following Period 3
and ending at 11:59 p.m. (Paris time) on the day
immediately preceding the date which is forty-eight
(48) months from the date hereof .
(e) "Consolidated Net Worth" means the sum of (i) the paid
up share capital, (ii) plus the capital surplus (primes
d'emission, de fusion, d'apport), (iii) plus the
consolidated reserves, (iv) plus the exchange rate
difference (ecarts de conversion), (v) plus the
consolidated profits not yet allocated, (vi) less the
accumulated consolidated losses of prior years and
(vii) plus the consolidated net profit (or less the
consolidated net loss) for the current period of the
Vendor and its subsidiaries, determined in accordance
with French generally accepted accounting principles
applied on a consistent basis with past practice. The
Vendor shall certify in writing to the Purchaser the
Vendor's Consolidated Net Worth as of the end of each
calendar year no later than 120 days after such year
end.
10.5.2. Indemnification Security During Period 1
At any such time during Period 1 that the Consolidated Net Worth
is less than Five Hundred Thirty-Seven Million Five Hundred
Thousand French Francs (FRF 537,500,000), the Vendor shall
immediately secure for the benefit of the Purchaser, the Company
and its Subsidiaries a letter of credit (from a commercial bank
with a combined capital and surplus of at least Ten Billion
French Francs (FRF 10,000,000,000)) (a "Letter of Credit") in an
amount equal to Four Hundred Thirty Million French Francs (FRF
430,000,000) less the amount of any Notified Claims which have
been paid by the Vendor prior to such time. Such Letter of Credit
shall remain in full force and effect during the unexpired term
of Period 1.
10.5.3. Indemnification Security During Period 2
At any such time during Period 2 that the Consolidated Net Worth
is less than Three Hundred Sixty-Two Million Five Hundred
Thousand French Francs (FRF 362,500,000), the Vendor shall
immediately secure for the benefit of the Purchaser, the Company
and its Subsidiaries a Letter of Credit (which shall replace and
be in lieu of any Letter of Credit obtained during Period 1) in
an
48
amount equal to Two Hundred Ninety Million French Francs (FRF
290,000,000) less the amount of any Notified Claims which have
been paid by the Vendor prior to such time. Such Letter of Credit
shall remain in full force and effect during the unexpired term
of Period 2.
10.5.4. Indemnification Security During Period 3
At any such time during Period 3 that the Consolidated Net Worth
is less than Three Hundred Sixty-Two Million Five Hundred
Thousand French Francs (FRF 362,500,000), the Vendor shall
immediately secure for the benefit of the Purchaser, the Company
and its Subsidiaries (to the extent the same does not already
exist) a Letter of Credit (which shall replace and be in lieu of
any Letter of Credit obtained during any prior period) in an
amount equal to One Hundred Fifty Million French Francs (FRF
150,000,000) less the amount of any Notified Claims which have
been paid by the Vendor prior to such time. Such Letter of Credit
shall remain in full force and effect during the unexpired term
of Period 3.
49
10.5.5. Indemnification Security During Period 4
At any such time during Period 4 that the Consolidated Net Worth
is less than Three Hundred Sixty-Two Million Five Hundred
Thousand French Francs (FRF 362,500,000), the Vendor shall
immediately secure for the benefit of the Purchaser, the Company
and its Subsidiaries (to the extent the same does not already
exist) a Letter of Credit (which shall replace and be in lieu of
any Letter of Credit obtained during any prior period) in an
amount equal to Seventy-Five Million French Francs (FRF
75,000,000) less the amount of any Notified Claims which have
been paid by the Vendor prior to such time. Such Letter of Credit
shall remain in full force and effect during the unexpired term
of Period 4.
11. PROCEDURE TO MAKE A CLAIM
-------------------------
Except for claims relating to breaches of the representations and
warranties set forth in Clause 9.5.3, which shall be governed by Clause 13
hereof, any demand or claim in respect of the indemnification of a Loss by
the Purchaser, the Company and/or any Subsidiary against the Vendor shall
be notified in writing to the Vendor and shall specify the basis, acts or
events on which it is based, indicating the amounts claimed in respect of
the Loss (if such amount is known), and shall be submitted together with
such documents available and appropriate to evidence the existence of the
Loss (hereafter referred to as "Notified Claim"). Except as otherwise
provided above, all Notified Claims submitted to the Vendor shall be
subject to the following procedures.
11.1 Notified Claims based on third party proceedings
------------------------------------------------
11.1.1. In the event that the grounds for a Notified Claim are (i) a
demand or claim in writing notified by a third party or (ii)
judicial or arbitral proceedings or any other proceedings
commenced or ongoing (for example in relation to a counterclaim)
by a third party, against the Purchaser, the Company or any
Subsidiary after the date hereof and giving rise to, or which may
give rise to, a Loss (hereafter referred to as "Third Party
Proceedings"):
. The Purchaser, the Company and/or any Subsidiary shall
submit the Notified Claim to the Vendor promptly but no
more than thirty (30) days after becoming aware of the
matter which might give rise to a Loss (and no later
than within eight (8) days for matters concerning
Taxes); provided, however, that the failure to provide
such notice shall not affect the Purchaser's rights
hereunder, except to the extent that the Vendor is
materially prejudiced thereby.
. The Vendor shall promptly, but not more than thirty
(30) days following receipt of the Notified Claim,
notify the Purchaser of its view as to whether it
wishes to object to the basis of the Notified Claim or
not. This period shall be reduced in the circumstances
where necessary to enable the Purchaser, the Company or
any Subsidiary to reply in due time (such as for Tax
matters where
50
such period shall be reduced to fifteen (15) days or
court proceedings where such period shall be reduced
appropriately). In the absence of notification by the
Vendor within the specified time frame, the Purchaser
shall then submit again to the Vendor a second Notified
Claim for the Vendor to submit its views. In the
absence of notification of its views by the Vendor
within eight (8) days following the sending of the
second Notified Claim, then the Vendor shall be deemed
not to have objected to the Notified Claim.
11.1.2. In the case where the Vendor has remained silent or has replied
to the Purchaser in the period stated in Clause 11.1.1 and has
stated that it does not object to the grounds for the Notified
Claim:
. The Vendor (at its own expense) shall have the right to
participate (together with its advisors) in the defense
of the interests of the Purchaser, the Company or any
Subsidiary in respect of the Third Party Proceedings.
The Purchaser and the concerned Company or Subsidiary
shall take reasonable steps to ensure that the Vendor
shall be included at each important step of the
proceedings and, in particular, the Purchaser, the
Company or Subsidiary shall seek the approval of the
Vendor in respect of any strategic choices relating to
the defense, which approval shall not be unreasonably
withheld, delayed or conditioned.
. Notwithstanding the foregoing, the Vendor (at its
expense) shall have the right at its request to
independently organize the defense of the Purchaser,
the Company or any Subsidiary with respect to any claim
relating to Tax matters. The Vendor shall take
reasonable steps to ensure that the Purchaser, the
Company or any Subsidiary, as the case may be, shall be
informed and consulted at each important step of the
proceedings.
11.1.3. In the case where the Vendor has replied to the Purchaser in the
period stated in Clause 11.1.1 and has stated that it objects to
the grounds for the Notified Claim:
. The Vendor shall be deemed to have contested the
Notified Claim, in which case the Purchaser, the
Company or any Subsidiary may initiate and notify the
commencement of proceedings concerning such Notified
Claim (the "Proceedings Notice"). Such proceedings
shall be commenced within six (6) months from the date
of the receipt of the Vendor's reply. In the event the
Purchaser, the Company or any Subsidiary does not
commence said proceedings within such six-month period,
the Purchaser shall be deemed to have irrevocably
waived its rights with respect to the Notified Claim in
question.
51
. Thereafter, reasonable steps shall be taken to inform
the Vendor of each important step of the proceedings in
respect of the Third Party Proceedings. The Purchaser,
the Company or any Subsidiary during the Third Party
Proceedings shall take charge of the defense of the
matter and the management of the judicial, arbitral or
other proceedings and shall conduct the litigation in
respect of the Third Party Proceedings. However, the
Purchaser, the Company or any Subsidiary shall not draw
up, agree, settle, defend or commence any appeal or
counterclaim and assert all the elements and means of
defense in respect of the Third Party Proceedings,
without the Vendor having been consulted; provided,
however, that the Purchaser shall be entitled to enter
into a settlement or to take such other action as it
shall determine in its sole discretion and
notwithstanding any position the Vendor may have taken
after being so consulted.
11.2 Notified Claims based upon a Private Claim
------------------------------------------
11.2.1. In the case where a Notified Claim gives rise or which may give
rise to a Claim in respect of the Purchaser, the Company or any
Subsidiary and which does not involve Third Party Proceedings
(hereafter referred to as a "Private Claim"):
. The Purchaser shall submit the Notified Claim to the
Vendor promptly but no more than thirty (30) days after
becoming aware of the matter which might give rise to a
Loss (and no later than within eight (8) days for
matters concerning Taxes); provided, however, that the
failure to provide such notice shall not affect the
Purchaser's rights hereunder, except to the extent that
the Vendor is materially prejudiced thereby.
. The Vendor shall promptly, but not more than thirty
(30) days following receipt of the Notified Claim,
notify the Purchaser of its view as to whether it
wishes to object to the basis of the Notified Claim or
not. This period shall be reduced in the circumstances
where necessary to enable the Purchaser, the Company or
any Subsidiary to reply in due time (such as for Tax
matters where such period shall be reduced to fifteen
(15) days or court proceedings, where such period shall
be reduced appropriately). In the absence of
notification by the Vendor within the specified time
frame, the Purchaser shall then submit again to the
Vendor a second Notified Claim for the Vendor to submit
its views. In the absence of notification of its views
by the Vendor within eight (8) days following the
sending of the second Notified Claim, then the Vendor
shall be deemed not to have objected to the Notified
Claim.
52
In the case where the Vendor either fails to respond in a timely
manner or states explicitly that it does not object to the
grounds for the Notified Claim, the amount of Loss shall be
payable by the Vendor under the terms of Clause 12 below.
11.2.2. In the case where the Vendor has replied to the Purchaser in the
period stated in Clause 11.2.1 stating that it objects to the
grounds for the Notified Claim or in the absence of any
settlement between the Purchaser, the Company or any Subsidiary
and the Vendor, the Purchaser may take legal action against the
Vendor in connection with the Notified Claim under Clause 15.12.
Such proceedings shall be commenced within six (6) months from
the date of the receipt of the Vendor's reply. In the event the
Purchaser, the Company or any Subsidiary does not commence said
proceedings within such six-month period, the Purchaser shall be
deemed to have irrevocably waived its rights with respect to the
Notified Claim in question.
11.3 Access to information
---------------------
On condition that the Vendor has agreed to provide
indemnification to the Purchaser, the Company or any Subsidiary
within the periods set out at Clauses 11.1.1 and 11.2.1 above,
the Purchaser and the Vendor shall cooperate with each other in
all reasonable respects from the date the Notified Claim relating
to Third Party Proceedings or relating to a Private Claim is
submitted. The Purchaser undertakes to (i) send to the Vendor,
without undue delay, all information and documents relating to
the Notified Claim within its possession and (ii) permit the
Vendor to consult freely all relevant information or documents
held by it, the Company or any Subsidiary, and conduct all
reasonable investigations in the Company and any Subsidiary, in
relation to the Third Party Proceedings or to a Private Claim, to
assist in reaching a full understanding of the conditions and
circumstances of the Notified Claim. The Vendor shall keep
strictly confidential all information and documents which it may
receive in the performance of this Agreement.
53
12. PAYMENT OF A CLAIM
------------------
12.1 Private Claim
-------------
12.1.1. In the event that the Vendor is required to pay an indemnity in
respect of a debt which has become unrecoverable, the Purchaser
shall allow the Vendor to take action for its own account to
recover such debt from the debtor. In the case of a Notified
Claim which has been accepted in accordance with the provisions
of Clause 11.2, the amounts corresponding to that Private Claim
shall be due and payable by the Vendor immediately.
12.1.2. In the event that a legal action has been commenced against the
Vendor by the Purchaser in accordance with Clause 11.2.2, the
Notified Claim shall become payable (i) where there is an
agreement between the Purchaser and the Vendor as a result of a
settlement in accordance with article 2044 of the French Code
Civil or (ii) if a judicial decision with the "execution
provisoire" has been rendered in the litigation proceedings
regarding such Notified Claim between the Vendor and the
Purchaser.
12.2 Claim in respect of Third Party Proceedings
-------------------------------------------
12.2.1. In the case where the Vendor has not responded to the Purchaser
during the period referred to under Clause 11.1.1, or in the case
where the Vendor has indicated to the Purchaser that it does not
object to the grounds for the Notified Claim in connection with a
Third Party Proceeding, a Notified Claim will be due and payable
(i) on the date of a judgement or administrative decision with
the "execution provisoire" against the Company or any Subsidiary
or a non retractable non appealable arbitral decision against the
Company or any Subsidiary or (ii) on the date on which a
settlement is completed (relating to legal proceedings by a third
party), but (iii) in any case not before the actual payment by
the Purchaser, the Company or any Subsidiary of the amount due
under the Third Party Proceedings; provided, however, that in any
such case the Purchaser shall be entitled to be reimbursed for
costs, fees, expenses and the like falling within the definition
of Loss incurred in connection with the Notified Claim as such
costs, fees and expenses are incurred.
12.2.2. In the event that the Purchaser has initiated and notified the
Vendor of a Notified Claim in respect of any Third Party
Proceedings to which the Vendor has objected, the Claim shall
become payable under this Agreement on the latest of:
. the date of delivery of a judgement with the "execution
provisoire" by a court against the Vendor, or
. the date when the Vendor has agreed to a settlement in
accordance with Article 2044 of the French Code Civil
with respect to its obligations relative to the
Notified Claim; but in either case above not before the
actual payment by the Purchaser, the Company or
54
any Subsidiary of the amount due under the Third Party
Proceeding.
12.3 Reimbursement
-------------
In accordance with Clause 10.2, in order to determine the final
amount of the Notified Claim, if one of the amounts to deduct
from a Loss is only known after the Notified Claim has been paid
by the Vendor to the Purchaser, the Company or Subsidiary, the
Purchaser, the Company or Subsidiary shall reimburse to the
Vendor an amount equal to the difference between (i) the amounts
paid by the Vendor in relation to such Notified Claim and (ii)
the amounts which would have been paid if the amount to be
deducted from the Loss in accordance with Clause 10.2 had been
known before the date of payment of such Net Loss.
When a Loss in respect of which payment was made by the Vendor to
the Purchaser, the Company or any Subsidiary for an amount
corresponding to the Net Loss is reduced or recovered, in whole
or in part, from a third party by the Purchaser, the Company or
its Subsidiaries no later than the two (2) year anniversary of
the date of payment of the Net Loss, the Purchaser shall pay to
the Vendor an amount corresponding to the net amount received
from third parties or an amount corresponding to the reduction of
the Loss in accordance with this Agreement.
13. ENVIRONMENTAL MATTERS
---------------------
13.1 Environmental Claim Notices
---------------------------
After the date hereof, the Purchaser shall have the right to
deliver one or more written claims (each, an "Environmental Claim
Notice") to the Vendor specifying any and all amounts necessary
to indemnify the Purchaser and/or the Company or any Subsidiary
for the Environmental Non-Compliance Costs arising from or
related to Environmental Non-Compliance Conditions that were not
set forth in the Environmental Non-Compliance Schedule (the
"Unknown Environmental Non-Compliance Costs"). Any Environmental
Claim Notice delivered to the Vendor pursuant to this Clause 13.1
shall set forth in reasonable detail the nature of the claim and
be accompanied by reports of Purchaser's Environmental Consultant
with respect to the Environmental Non-Compliance Conditions,
which reports shall provide reasonable backup for such claims.
13.2 Indemnification
---------------
The Vendor shall, for a period of three (3) years from the date
hereof, indemnify and hold harmless the Purchaser and/or the
Company or any Subsidiary (if the Purchaser so requests) and the
successors and assigns of any of the foregoing (the "Purchaser
Indemnified Parties") from and against any breach of the
representations and warranties set forth in Clause 9.5.3 and all
Environmental
55
Non-Compliance Costs (except those specifically disclosed as
budgeted capital expenditures on Schedule 6.2) asserted against,
resulting to, imposed upon or incurred by the Purchaser
Indemnified Parties, subject to the limitations described in
Clause 13.3. A notice of a claim hereunder shall be submitted in
and subject to payment substantially in accordance with the
provisions of Clauses 11 and 12 except as otherwise expressly
contemplated in this Clause 13. The Vendor's obligation to
provide indemnification pursuant to this Clause 13.2 shall
continue beyond the three-year period specified herein to the
extent the notice of claim is submitted prior to the end of such
three-year period. In calculating the Known Environmental Non-
Compliance Costs and the Unknown Environmental Non-Compliance
Costs, the provisions of Clauses 10.2.2(i) and (iii) shall apply.
13.3 Allocation of Liability
-----------------------
13.3.1. Known Environmental Non-Compliance Costs
Subject to Clause 13.3.3, the Purchaser and the Vendor agree that
Known Environmental Non-Compliance Costs shall be borne as
follows:
(a) The Vendor shall be responsible for one hundred percent
(100%) of the first Five Million French Francs (FRF
5,000,000) of Known Environmental Non-Compliance Costs;
(b) The Purchaser shall be responsible for twenty-five
percent (25%) and the Vendor shall be responsible for
seventy-five percent (75%) of Known Environmental Non-
Compliance Costs to the extent such costs exceed Five
Million French Francs (FRF 5,000,000) and are less than
or equal to Fifteen Million French Francs (FRF
15,000,000); and
(c) The Vendor shall be responsible for one hundred percent
(100%) of Known Environmental Non-Compliance Costs to
the extent that such costs exceed Fifteen Million
French Francs (FRF 15,000,000) (for the portion
exceeding Fifteen Million French Francs (FRF
15,000,000)).
13.3.2. Unknown Environmental Non-Compliance Costs
Subject to Clause 13.3.3, the Purchaser and the Vendor agree that
Unknown Environmental Non-Compliance Costs shall be borne as
follows:
(a) The Purchaser shall be responsible for one hundred
percent (100%) of the first One Million French Francs
(FRF 1,000,000) of Unknown Environmental Non-Compliance
Costs;
(b) The Vendor shall be responsible for one hundred percent
(100%) of Unknown Environmental Non-Compliance Costs to
the extent
56
such costs exceed One Million French Francs (FRF
1,000,000) and are less than or equal to Four Million
French Francs (FRF 4,000,000); and
(c) The Purchaser shall be responsible for twenty-five
percent (25%) and the Vendor shall be responsible for
seventy-five percent (75%) of Unknown Environmental
Non-Compliance Costs to the extent such costs exceed
Four Million French Francs (FRF 4,000,000).
13.3.3. Limitation on the Purchaser's Obligation for Environmental Costs
Notwithstanding anything to the contrary set forth in Clauses
13.3.1 and 13.3.2, in no event shall the Purchaser's obligation
with respect to Known Environmental Non-Compliance Costs and
Unknown Environmental Non-Compliance Costs exceed Ten Million
French Francs (FRF 10,000,000) in the aggregate. In the event
that the Purchaser's obligation reaches said Ten Million French
Francs (FRF 10,000,000) limit, the Vendor shall thereafter be
responsible for one hundred percent (100%) of all additional
Known Environmental Non-Compliance Costs and Unknown
Environmental Non-Compliance Costs.
13.3.4. Limitation of the Vendor's Obligation for Environmental Costs
The total amount for which the Vendor may be obligated to provide
indemnification under this Clause 13 shall not exceed One Hundred
Million French Francs (FRF 100,000,000). For the avoidance of
doubt, this amount shall be included in the ceiling provided
under Clause 10.3.3 so that the total amount due by the Vendor
under Clauses 10 and 13 shall not exceed the amount indicated in
Clause 10.3.3. Furthermore, once the ceiling provided under this
Clause 13.3.4 has been reached, the Purchaser may not claim any
other indemnification for environmental matters under this
Agreement even if the ceiling under Clause 10.3.3 has not been
reached.
13.3.5. Environmental Procedures
Any investigation, removal, remedial, cleanup, corrective or
compliance action relating to any Environmental Non-Compliance
Condition (any "Remedial Action") shall be mutually agreed upon
in good faith between the Purchaser and the Vendor. The Purchaser
shall keep the Vendor reasonably apprised of any material
developments relating to any Remedial Action, including providing
the Vendor with copies of material reports, agency notices,
correspondence to and from Governmental Entities and other
material documents related to such Remedial Action.
14. COVENANT - COLLECTION OF RECEIVABLES
------------------------------------
57
Purchaser shall, for at least sixteen (16) months from the date hereof,
take customary action - at least equal to the action generally used by the
Company and its Subsidiaries in connection with the collection of their
accounts receivables before the date hereof - in order to collect in a
timely manner the accounts receivables of the Company and the Subsidiaries
existing as of the date hereof as reflected in the Accounts and/or in the
Completion Financial Statements.
15. GENERAL
-------
15.1 Successors and Assigns
----------------------
The Vendor may not, without the prior written consent of the
Purchaser, assign any of its obligations under this Agreement,
nor any benefit arising under or out of this Agreement. The
Purchaser may assign its rights under this Agreement to any party
controlled or controlling the Purchaser with the meaning of
Article L. 233-3 of the French Commercial Code prior to the
Completion Date, provided that the Purchaser shall remain jointly
and severally liable for its obligations hereunder with such
party.
Thereafter, the Purchaser may assign its rights under this
Agreement to any third party subject to the Vendor's prior
consent, which consent shall not be unreasonably withheld, and to
any lender group providing financing for the Purchaser (or any
collateral agent for such lender group); in such a case the
representations and warranties shall remain in full force and
effect in favour of the assignee notwithstanding any subsequent
assignment of the Shares or any other portion of the business of
the Company or any Subsidiaries and the Purchaser shall remain a
party to this Agreement and the Ancillary instruments.
15.2 Variation
---------
No variation of this Agreement shall be effective unless in
writing and signed by or on behalf of each of the Parties to this
Agreement.
58
15.3 Prior Agreements
----------------
This Agreement (including the Ancillary Instruments) cancels and
replaces all prior agreements, arrangements and communications
whether oral or written with respect to the subject matter
hereof.
15.4 Entire Agreement
----------------
This Agreement including the Disclosure Schedule (as well as the
Ancillary Instruments) contains the whole agreement among the
Parties with respect to the subject matter hereof.
15.5 Restructuring
-------------
Subject to the provisions of Clause 15.1, the rights and
obligations of the Parties under this Agreement shall not be
affected by any merger or apport partiel d'actif or the transfer
of all or part of the assets and liabilities of any of the
Parties.
15.6 Further Assurance / Cooperation
-------------------------------
From time to time, at the Purchaser's request and without further
consideration, the Vendor shall execute and deliver to the
Purchaser such documents and take such other action as Purchaser
may reasonably request in order to consummate the transactions
contemplated hereby.
15.7 Disclosures and Announcements
-----------------------------
Announcements concerning the transactions provided for in this
Agreement by the Vendor or the Purchaser shall be subject to the
approval (which shall not be unreasonably withheld) of the other
Party, except that such approval shall not be required as to any
statements and other information which either Party may submit
due to mandatory disclosure Laws and under any stock exchange
rules. In this latter case, the disclosing Party shall, to the
extent reasonably practicable, nonetheless inform the other Party
of such disclosure before the actual disclosure takes place.
15.8 Waivers
-------
A waiver by any Party of any of its rights under this Agreement
must, in order to be valid, be made in writing.
59
15.9 Notices
-------
Any demand, notice or communication under this Agreement shall be
in writing and (i) delivered by hand with acknowledgement of
receipt, (ii) sent by registered post with acknowledgement of
receipt or telex or facsimile transmission or (iii) sent by
private expedited mail courier (such as Federal Express or DHL):
. in the case of the Purchaser, to:
Manitowoc France SAS
c/o The Manitowoc Company, Inc.
000 Xxxxx 00/xx/ Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Xxxxxx Xxxxxx of America
Attention: Secretary and General Counsel
Facsimile: (000) 000-0000
. in the case of the Vendor, to:
Legris Industries SA
00 xxx xx Xxxxx
00000 Xxxxxx
Xxxxxx
Attention: President
Facsimile: x00-0 00 00 00 00
If delivered by hand, such communication shall be deemed
delivered upon actual receipt; if delivered by telex or facsimile
transmission, such communication shall be deemed delivered the
next Business Day after transmission (and sender shall bear the
burden of proof of delivery); if sent by expedited courier
pursuant to this clause, such communication shall be deemed
delivered upon receipt; and if sent by registered post pursuant
to this clause such communication shall be deemed delivered as of
the date of delivery indicated on the receipt issued by the
relevant postal service, or, if the addressee fails or refuses to
accept delivery, as of the date of such failure or refusal. Any
Party may change its address for purposes of this Agreement by
giving notice thereof in accordance with this Clause 15.9.
15.10 Expenses and taxes
------------------
Each Party hereto shall bear its own fees and expenses (including
intermediaries' fees) in connection with this Agreement and the
transactions contemplated herein as well as any taxes required by
Law to be paid by such Party; provided, however, that the
Purchaser shall bear the transfer taxes associated with the sale
of the Shares as per Article 726 of the French Tax Code.
15.11 Governing Law
-------------
60
This Agreement is governed by French law.
15.12 Competent Court
---------------
All disputes, controversies or claims arising out of or in
connection with the existence, validity, interpretation or
performance of the present agreement shall be finally settled by
the Tribunal de Commerce de Paris.
15.13 Parties in Interest
-------------------
This Agreement shall be binding upon, inure to the benefit of,
and be enforceable by the Vendor, the Purchaser, the Company, the
Subsidiaries and their respective successors and permitted
assigns. Nothing contained herein shall be deemed to confer upon
any other person any right or remedy under or by reason of this
Agreement.
[signature page follows]
61
Signed in Paris, France and Milwaukee, Wisconsin, U.S.A.
On May 9, 2001
In three (3) originals
LEGRIS INDUSTRIES SA MANITOWOC FRANCE SAS
By: /s/ Xxxxxxx Xxxxxxxx By: /s/ Xxxxx Xxxxxxxx
-------------------- ------------------
Name: Xxxxxxx Xxxxxxxx Name: Xxxxx Xxxxxxxx
Title: Directeur de la strategie et du Title: President
developpement
The Manitowoc Company, Inc., a Wisconsin company having its executive offices at
000 Xxxxx 00/xx/ Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, Xxxxxx Xxxxxx of America,
represented by Xxxxxxx X. Xxxxx acting as Secretary and General Counsel, (a)
hereby guarantees the obligations of the Purchaser hereunder and shall be
jointly and severally liable therefor, and (b) in consideration thereof, shall
have all rights under this Agreement as though it were the Purchaser hereunder
and shall have the right to enforce the provisions of this Agreement as though
it were the Purchaser hereunder, including in each case, without limitation, the
right to indemnification pursuant to Clauses 10 and 13 hereof. The Manitowoc
Company, Inc. and Manitowoc France SAS shall jointly be deemed to be "the
Purchaser" for purposes of the application of Clause 10.3.5 of the Agreement.
THE MANITOWOC COMPANY, INC.
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Secretary and General Counsel
Acknowledged on this 9th day of May, 2001.
LEGRIS INDUSTRIES SA
By: /s/ Xxxxxxx Xxxxxxxx
--------------------
Name: Xxxxxxx Xxxxxxxx
Title: Directeur de la strategie et du developpment
62
LIST OF SCHEDULES
Schedule 5.3: Resignations of Directors of the Company
Schedule 5.7: Organization of the Subsidiaries
Schedule 5.8: Bank Accounts
Schedule 6.2: Budged Capital Expenditures
Schedule 7.1: Form of General Release
Schedule 9.3.1: Constitution, Existence and Conformity
Schedule 9.3.3: Share Capital
Schedule 9.4.1: Accounts
Schedule 9.4.2: Accounts Receivable
Schedule 9.4.3(ii): Increase in Share Capital
Schedule 9.4.3(iii): Transfer of Assets
Schedule 9.4.3(v): Increase in Compensation
Schedule 9.4.3(ix): Labour Disputes or Disturbances
Schedule 9.4.3(x): Commitments or Transactions
Schedule 9.4.3(xi): Indebtedness for Borrowed Money
Schedule 9.4.3(xii): Liens
Schedule 9.4.4: Axiome de Re
Schedule 9.5.1: Assets
Schedule 9.5.2: Properties
Schedule 9.5.3: Environmental Issues
Schedule 9.5.4: IT and Communications
Schedule 9.5.5: Intellectual Property
Schedule 9.5.6: Shareholdings
Schedule 9.5.7: Business
63
Schedule 9.5.8: Inventory
Schedule 9.6.1: Off-Balance Sheet and Other Liabilities
Schedule 9.6.3: Subsidies, Support
Schedule 9.6.5: Product Warranty and Product Liability
Schedule 9.7.1: Material Contracts
Schedule 9.7.4: Related Parties' Relationships to the Company and its
Subsidiaries
Schedule 9.8.1: Labour Matters
Schedule 9.8.2: Employee Benefit Plans
Schedule 9.8.6: No Triggering of Obligations
Schedule 9.8.7: Delivery of Documents
Schedule 9.8.9: Employees
Schedule 9.9.1: Compliance with Laws
Schedule 9.9.2: Litigation
Schedule 9.10: Insurance
Schedule 9.11.2: Tax Returns Filed/Tax Payments
Schedule 9.11.3: Tax Audits
Schedule 9.11.5: Tax Basis
