DATED 17 DECEMBER 2004
THE SELLERS
and
MEASUREMENT SPECIALITIES, INC
and
ENTRAN SA
SHARE PURCHASE AGREEMENT
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1
SHARE PURCHASE AGREEMENT
BETWEEN
XXXX-XXXXXXXX ALLIER, born on 31 January 1953 in Paris (75), domiciled 00,
xxxxxx Xxxxxx xx Xxxxxxxxx - 00000 Xxxxxxxxxx Saint Xxxx
XXXXXX ALLIER, born on 16 November 1927 in Provins (77), domiciled 00, xxx xx
Xxxxxx - 00000 Xxxx
XXXXXXXXX ALLIER, born on 15 November 1954 in Sainte-Collombe (69), domiciled
00, xxxxxx Xxxxxx xx Xxxxxxxxx - 00000 Xxxxxxxxxx Saint Xxxx
XXXXX ALLIER, born on 18 February 1924 in Provins (77), domiciled 00, xxxxx xx
xx Xxxxx Xxxxxxxxxx - 00000 Xxxxx
THIERRY ALLIER, born on 20 January 1951 in Paris (75), domiciled 0, xxx xx Xxx
Xxxxxxx - 00000 Xxxxxxxxxx
PIERRE ALLIER, born on 11 March 1958 in Suresnes (92), domiciled 00, xxx xx
x'Xxxxx Xxxx - 00000 Union
EMMANUEL ALLIER, born on 30 March 1970 in Saint-Collombe (69), domiciled 00,
xxxxxx Xxxxx-Xxxxxx - 00000 Xxxxx
XXXXXXXXX XXXXXXX-ALLIER, domiciled 00, xxxxx xx xx Xxxxx Xxxxxxxxxx - 00000
Xxxxx
XXXXXXX MASSELIN, xxxxxxxxx 0, xxxxx Xxxxxxxx - 00000 Xxxxxxxxxx
BRIGITTE MASSELIN, xxxxxxxxx 0, xxxxx Xxxxxxxx - 00000 Xxxxxxxxxx
XXXXX-XXXX XXXXXXXXX, domiciled 00, xxx Xxxxxxxxx - 00000 Xxxxx
LIONEL ALLIER, domiciled 00, xxxxxx Xxxxxx xx Xxxxxxxxx - 00000 Xxxxxxxxxx
Saint-Xxxx
XXXXXXXXX ALLIER, domiciled 0, xxx Xxxxxxxxx Xxxxxx - 00000 Xxxxxxxx
(referred to collectively as the "ALLIER SELLERS")
XXXX DESARNAUD, domiciled 0, xxx Xxxxx - 00000 Xxxxxx
ALAIN PACQUEMENT, domiciled 00, xxx xx Xxxxxxxx - 00000 Xxxxxxxxxx
BRUNO PATISSIER, domiciled 00, xxxxxx xx Xxxxxxx - 00000 Xxxxxxxxxx-Xxxxxxxx
XXXXXXX XXXXXXXX, domiciled 0, xxx xx Xxxx-Xxxxxxx - 00000 Xxxxxxxxxx
XXXXXX XXXXXXXX, domiciled 00, xxxx xx Xxxxxxxx - 00000 Xxxxx
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2
XXXXX XXXXX, domiciled 00, xxx xxx Xxxxxx - 00000 Xxxxxxxxx du Touch
XXXX MANIGOT, domiciled 0, xxxxxx Xxxxxx - 00000 Xxxxxx-xxx-Xxxxx
XXXXXX XXXXXXXX, domiciled 00, xxx Xxxxx-Xxxxxxxx - 00000 Xxxxxxxx
XXXXXXX XXXXXXXX, domiciled 00, xxx Xxxxx-Xxxxxxxx - 00000 Xxxxxxxx
LAURENT BERTHEZENE, domiciled 0, xxxxx xx x'Xxxxx xx Xxxxx - 00000 Frouzins
XXXX-XXXXXXXX XXXXXXX, xxxxxxxxx Xxxxx xx Xxxxxx - 00000 Grenade
XXXXXXX XXXXXXXXX, domiciled 0, xxx Xxxxxxx Xxxxxxxxxx - 00000 Xxxxxxxxxx
Tolosane
XXXXXXX XXXXX, domiciled 4, impasse Xxxxxx Xxxxxx - 31270 Cugnaux
XXXXX XXX XXXX, domiciled 00, xxxxx xx x'Xxxxxx - 00000 Xxxxxxxxx
XXXXXX XXXXXXX, domiciled 0, xxxxx xx 0 xxx 0000 - 00000 Xxxxxxx
(referred to collectively as the "INDIVIDUAL SELLERS")
with each Allier Seller and each Individual Seller acting jointly and severally
with the other Allier Sellers and the other Individual Sellers,
FCPR BANEXI VENTURES 2, Fonds Commun de Placement a Risques, duly represented by
its management company, BANEXI VENTURES PARTNERS, societe anonyme with a share
capital of 401,960 Euro, whose registered office is located at 00 xx Xxxxxxxxx -
Xxxxx 00000 registered at the Trade and Companies Registry of Paris under
company number B 424 367 035, represented by Mr Philippe Mere, duly authorised
member of the Directoire ("BANEXI"),
SUD OUEST CAPITAL RISQUE INNOVATION, societe par actions simplifiee with a share
capital of 9,000,000 Euro, whose registered office is located at 00, xxxxx
Xxxxx, 00000 Xxxxxxxx, registered at the Trade and Companies Registry of
Toulouse under company number B 430 122 218, duly represented by Philippe Mere,
pursuant to a power of attorney signed by Xx Xxxxxx du Lac, President of the
Directoire of SOCRI ("SOCRI"),
L'INSTITUT REGIONAL DE DEVELOPPEMENT INDUSTRIEL DE MIDI-PYRENEES, known as IRDI,
a societe anonyme with a share capital of 38,954,000 Euro with its registered
office located at 00, xxxxx Xxxxx, 00000 Xxxxxxxx, registered at the Trade and
Companies Registry of Toulouse under company number 312 969 297, duly
represented by Philippe Mere pursuant to a power of attorney signed by Xx Xxxxxx
du Lac, Directeur General delegue ("IRDI"),
(Banexi, SOCRI and IRDI being referred to collectively as the "INVESTORS"),
On the one hand,
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3
AND
MEASUREMENT SPECIALITIES, INC, a corporation registered under the laws of the
state of New Jersey, USA and whose registered office is located at 00 Xxxxxxxxxx
Xxx, Xxxxxxxxx, XX 00000-0000, XXX, duly represented by Xx Xxxxx Xxxxxxx, Chief
Executive Officer, ("MSI"), and
ENTRAN SA, a French societe anonyme registered in France under number 311 711
808 RCS Versailles, and whose registered office is located at 00, xxx xxx Xxxxx
00000 Xxx Xxxxxx xxxx Xxxx, Xxxxxx, duly represented by Xx Xxxxx Xxxxxxx,
empowered for the purpose hereof by a decision of the board of directors of 15
December 2004, ("ENTRAN"),
(MSI and Entran being referred to collectively as the "BUYERS"),
with MSI acting jointly and severally with Entran,
On the other hand,
Each of the Sellers and the Buyers are referred to individually
as a "PARTY" and collectively as the "PARTIES".
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4
TABLE OF CONTENTS
Clause page
Introduction 5
1 Definitions 6
2 Sale and Purchase of the Shares 14
3 Consideration 14
4 Warranties 18
5 Closing 41
6 Conditions Precedent 41
7 Payment 43
8 Indemnifications 43
9 Indemnification of litigation 52
10 Right of Termination 53
11 Confidentiality 53
12 Applicable Law/Arbitration 54
13 Miscellaneous 54
14 Notices 58
15 Number of Copies 60
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5
INTRODUCTION
(A) The Sellers own 10,870,000 Shares representing 100% of the issued share
capital of Humirel, a French societe anonyme incorporated under the
laws of France, having its registered office at 000, xxxxxx xx Xxxxxxx
Xxxxxxxxxx, Xxxxxxxx, with a share capital of 1,956,600 Euro divided into
10,870,000 shares of 0.18 Euro each, registered with the Registry of
Commerce of Toulouse under n 418 929 725 (the "COMPANY"). The allocation of
the Shares among the Sellers is detailed in Schedule (A).
(B) The Buyers have carried out a legal, limited financial, commercial and
technical due diligence on the Company based on documents made
available to them by the Sellers and the Company and have gone through a
questions and answers process with Mr. Xxxx-Xxxxxxxx Allier.
(C) The Sellers wish to sell and the Buyers wish to buy the Shares on the
Closing subject to and in accordance with the terms and conditions of
this Agreement.
NOW THEREFORE THE PARTIES HAVE AGREED AS FOLLOWS
1 DEFINITIONS
1.1 In addition to the terms elsewhere defined herein, the following
expressions shall have the following meanings in this
Agreement unless the context otherwise requires:
"ACCOUNTS" means the audited balance sheet, the profit and loss
account and annexes of the Company for the year ending on 31
December 2003 (a copy of which is attached to the Disclosure
Letter);
"AFFILIATE" means, with respect to any body corporate, any
other body corporate, directly or indirectly, controlling,
controlled by or under common control with, such body corporate,
with "control" for such purpose meaning control as defined under
Article L.233-3 of the French Code de Commerce or the control
resulting from the possession, directly or indirectly, of the
power to either (a) exercise a majority of the voting rights
exercisable at general meetings of a body corporate, or (b)
appoint or remove directors having a majority of the voting
rights exercisable at meetings of the board of directors of a
body corporate;
"AGENT" means Mr. Xxxx-Xxxxxxxx Allier;
"AGREEMENT" means this share purchase agreement;
"AGREED FORM" means, in relation to any document, the form
of that document which has been initialled for the purpose of
identification by the Sellers and the Buyers or their respective
legal advisors and which forms an exhibit to this Agreement;
"ALLIER AND INDIVIDUAL SELLERS' ACCOUNT" means the accounts
opened in the books of UBS Wealth Management in the name of Mr
[or] Mrs Xxxx-Xxxxxxxx Allier, bank code 30758, desk code 00010,
account
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6
number 51036240001, rib key 77, IBAN
XX0000000000000000000000000;
"ANCILLARY AGREEMENTS" means the settlement agreement signed
between Mr Desarnaud, SPSI, UPSI and the Company on 17 December
2004, the shareholders agreement (pacte d'associ s) attached in
exhibit to the settlement agreement and the contrat de cession de
brevets internationale et de concession de licence signed between
UPSI and the Company on 17 December 2004;
"ARTICLES " means the articles of association ("statuts") of
the Company dated 30 July 2004;
"ASSETS" means all of the tangible and intangible assets of
the Company, of whatever description, whether or not disclosed in
the Accounts, and all additions, accessions and substitutions
made for full consideration in the Ordinary Course of Business
prior to the Closing Date;
"BALANCE SHEET DATE" means 30 June 2004;
"BANEXI ACCOUNT" means the account opened in the books of
BNP Paribas Securities Services (XXXXXXXXXXX), bank code 41 329,
desk code 00001, account number 0000 744 533 B 41, account holder
Banexi Ventures 2;
"BANK" means UBS Wealth Management located at 00 xx
Xxxxxxxxx 00000 Xxxxx;
"BANK GUARANTEE" means the bank guarantee in the Agreed
Form;
"BSPCES" means all of the founder warrants ("bons de
souscription de parts de cr ateurs d'entreprise") issued or
purported to have been issued by the Company at any time on or
before the Closing Date;
"BUSINESS" means the activities of design, manufacture and
supply of electronic sensors and systems for the automotive,
white goods and other industries to the extent that they are
presently conducted or being developed by the Company on the date
of this Agreement;
"BUSINESS DAY" means any day (other than Saturday and
Sunday) upon which banks are open for business in Paris and New
York;
"BUYERS' GROUP" means the Buyers and any direct or indirect
Subsidiary of MSI;
"BUYERS' WARRANTIES" means the warranties and
representations contained in Clause 5;
"CLOSING" means the closing of the purchase of the Shares in
accordance with Clause 8.3;
"CLOSING DATE" means the date on which Closing shall take
place in accordance with Clause 8.3;
"CLOSING PAYMENT" means the amount of 17,242,922.30 Euro ;
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7
"COMMERCIAL LEASE" means a lease governed by the Decree of
30 September 1953 on commercial lease agreements (baux
commerciaux) and relating to the property that is used by the
Company as tenant;
"COMPANY" has the meaning set out in the Introduction;
"COMPANY'S BUDGET" means the Company's budget for year 2005
attached in Schedule 1;
"COMPANY'S GROUP" means the Company and any of its direct or
indirect Subsidiaries;
"CONSIDERATION SHARES" means the 20,000 shares of common
stock of MSI to be delivered by the Buyers to Messrs.
Xxxx-Xxxxxxxx Allier, Bruno Patissier and Xxxxx Xxxxx on the
Closing Date as part of the Closing Payment which for all
purposes of this Agreement shall be treated as having an
aggregate value of 357,595 Euro;
"COST OF GOODS SOLD" means the sum of direct material costs,
direct labour costs and manufacturing overheads (but excluding
depreciation of manufacturing equipment) for a given financial
period. Where any element of the Cost of Goods Sold is generated
in US dollars, it will be converted into euros for the purpose of
this Agreement on the basis of the following rate: 1 Euro =
USD1.23;
"DEBTS" means all debt of the Company existing at the
Closing Date including but not limited to all bank financing,
bonds (including but not limited to the Sofred Bonds), loans or
repayable grants received from government Entities, accrued
interest, prepayment penalties, Taxes and other similar
indebtedness and including Equipment Leases, which, for the
purpose of the Agreement, the Parties have agreed to definitively
settle at an amount of 500,000 Euro;
"DISCLOSURE LETTER" means the letter of the same date as
this Agreement from the Sellers to the Buyers containing
disclosures by the Sellers against the Sellers' Warranties;
"DUE DATE" means the date falling on the second anniversary
of the Closing Date;
"EARN-OUT PAYMENT" has the meaning given to that term in
Clause 3.3;
"ENTITY" means a corporate, partnership, limited liability
company, limited liability partnership, joint stock company or
any other form of legal association in any jurisdiction
whatsoever;
"EQUIPMENT LEASES" means a financial lease (location
financiere), a credit bail or any similar agreement under which
an item or items of equipment is/are leased to the Company with
an option to purchase at the end of the lease;
"FINALLY DETERMINED" has the meaning given to that term in
Clause 11.6;
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8
"FINANCING AGREEMENTS" has the meaning set forth in Clause
4.3.8(iv);
"FORFEITED REDUCTION" means the forfeit and definitive
amount of 800,000 Euro;
"GUARANTEE AMOUNT" means the following amount:
Guarantee Amount = XXXX x N2
---------
N
where
XXXX means the Guarantee and Retention Cumulated Amount;
N2 is the number of shares in the Company held by the
Sellers other than the Investors as at Closing Date;
N is the total number of Shares.
"GUARANTEE AND RETENTION CUMULATED AMOUNT" means 2.85M Euro;
"IMPORTANT AGREEMENTS" means all written agreements or
contracts, with a customer, a supplier or sub-contractor,
undertakings or arrangements which are in force at the date of
this Agreement (whether conditional or unconditional) into which
the Company has entered and which may fall within one of the
following categories:
(a) requiring payment in any yearly period by or to the
Company in excess of 100,000 Euro;
(b) entered into with a customer of the Company
representing more than 5 per cent of that Company's annual
turnover ("chiffre d'affaires annuel");
(c) relating to profit-sharing or the payment of
commissions, or which provide for a remuneration for year
2004 and year 2005 on the basis of profits or turnover
("chiffre d'affaires"), in either case in excess of 10,000
EURO;
(d) commercial agency agreements or other agreements
entered into with any person whose obligations under such
contracts are to bring business to the Company in
consideration of the payment by the Company of fees in
excess of 10,000 EURO or the granting of a counterpart in
another form to such person (or to any entity or individual
connected therewith);
(e) under whose terms the Company is bound to refrain from
carrying out or to restrict certain of its activities, to
refrain from soliciting any third party to carry out certain
activities or to refrain from competing or to refrain from
soliciting any customers, suppliers, employees, consultants
or agents of any third party;
(f) under which the Company has granted to any third party
any exclusive right to use Intellectual Property or to
receive the benefit of any research and development work or
any
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9
exclusive right to sell products of the Company or
purchase products for the Company in a specific region;
(g) relating to the holding and/or transfer by the Company
of capital shares or interest in any Entity or the control
or administration thereof by or on behalf of the Company;
(h) which have an indefinite term or a definite term of
more than two years with the exclusion of financial lease
agreements for individual tangible assets, insurance
agreements, employment agreements and agreements which the
Company may at any time terminate in full with a period of
notice of less than 3 (three) months and without any
compensation or penalty being owed by the Company to the
other party or any third party as a result of such
termination;
(i) which have not been concluded in the Company's Ordinary
Course of Business and with a total value of more than
10,000 Euro on an annual basis (all of which are listed in
the Disclosure Letter);
(j) research and development agreements which have not at
the date of this Agreement, directly or indirectly,
generated revenues of the Company in excess of the costs
incurred by the Company thereunder;
"INTELLECTUAL PROPERTY" means all patents (and applications
therefore), envelopes Xxxxxx, utility models (and applications
therefore), trade and service marks, rights in designs,
copyrights, moral rights, topography rights, rights in databases,
trade secrets and Know How and other confidential information and
all other similar proprietary rights which may subsist in any
part of the world (whether registered or not) including the
results of research and development programmes and Know How
arising there from;
"INTERIM ACCOUNTS" means the unaudited balance sheet and
profit and loss account of the Company for the four months ending
October, 31 2004;
"KNOW HOW" means confidential industrial and commercial
information and techniques in any form (including paper,
electronically stored data, magnetic media, film and microfilm),
including without limitation mechanical systems, mechanical
processes, drawings, formulae, test results, reports, project
reports and testing procedures, instruction and training manuals,
tables of operating conditions, market forecasts, lists and
particulars of customers and suppliers;
"LEGAL REQUIREMENT" means any applicable laws and
regulations in France and any law, ordinance, rule, award,
judgment, decision, whether foreign or domestic and whether
national, local or EC.
"LIABILITIES" means any damages, claims, losses, charges,
actions, suits, proceedings, deficiencies, Taxes, interest,
penalties, fines, settlements, judgements and costs and expenses
(including, without
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10
limitation, legal fees and expenses, removal costs,
remediation costs, closure and post-closure costs, fines and
expenses of investigation and ongoing monitoring), present or
future, known or unknown, fixed or contingent, and "LIABILITY"
means any one of them;
"LOSSES" has the meaning set forth in Clause 11.1;
"LOVELLS" shall mean Lovells, 0 xxxxxx Xxxxxx, 00000 Xxxxx,
acting as legal advisor to Lovells Clients in connection with the
transactions contemplated in this Agreement;
"LOVELLS CLIENTS" shall mean Banexi Ventures II and Mr.
Xxxx-Xxxxxxxx Allier;
"LOVELLS FEES" shall have the meaning set forth in Clause
16.11;
"MATERIAL ADVERSE CHANGE" means any event or state of facts
(including, without limitation, the occurrence of any natural
catastrophe) that is or would, with the passage of time, be
materially adverse to the Business, Assets, results of operations
or financial condition of the Company, considered in aggregate
and after taking into account any associated benefit ; provided
that a Material Adverse Change shall not include any event or
state of facts resulting from changes in the general economic
conditions of the French, United States, Asian or world economy
and not relating specifically to the Business or any change in
the euro/dollar exchange rate, as the case may be;
"ORDINARY COURSE OF BUSINESS" means any practice, policy,
act, agreement, measure or decision, which is consistent with the
normal conduct of the Business in accordance (where applicable)
with past practices;
"PERMITS" means permits, exemptions, approvals or
authorisations required by or issued pursuant to any applicable
rules under the laws of France or any other jurisdiction where
the Company conducts business;
"PURCHASE PRICE" means the aggregate amount of the Closing
Payment, the Guarantee and Retention Cumulated Amount, the
Earn-Out Payment and the Relevant Interest;
"PROPERTY"' has the meaning set forth in Clause 4.3.6.1;
"RELEVANT INTEREST" means interest at a rate of 3% on an
annual basis applied to the Earn-Out Payment (if any) as adjusted
in accordance with Sub-Clause 3.3.3 accruing in the period
starting on the date that the 2005 Accounts have been agreed
between the Parties and ending on the Due Date;
"RELEVANT DOMAIN NAME" means xxxxxxxxxx.xxx;
"RELEVANT TRADEMARKS" means "APITRONICS" and "Humirel";
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11
"SHAREHOLDERS' AGREEMENT" means the shareholders' agreement
entered into between each of the Sellers and Wu-Hin Foon relating
to the Company on 13 November 2001;
"SCHEDULES" means the schedules annexed to this Agreement;
"SCHEMES" has the meaning set forth in Clause 4.3.12;
"SECURITY" includes for the purpose of this Agreement any
"suret " "reelle" or "personnelle", "droit reel accessoire",
"droit de retention", "reserve de propriete", "delegation",
"subrogation", "fiducie", "cession fiduciaire" or "a titre de
garantie" or any "mesure conservatoire" or "voie d'execution", or
their equivalent in any jurisdiction other than France as well as
agreement, option, pre-emption right, undertaking, offer or other
real or personal right ("droit reel ou personnel") or other
obligation which has the purpose or effect of restricting in any
manner the ownership or the transferability of the relevant asset
or right; provided, however, that liens or encumbrances arising
in the Ordinary Course of Business in connection with
transportation or delivery of goods shall not be considered to be
"Security" for purposes of this Agreement;
"SELLERS" mean the Allier Sellers, the Individual Sellers,
the Investors as well as all Senior Employees having exercised
their BSPCEs on or prior to the Closing Date;
"SELLERS' WARRANTIES" means the warranties and
representations contained in Clause 4;
"SENIOR EMPLOYEES" means an employee of the Company holding
BSPCEs as at date of this Agreement;
"SHARES" means all the ordinary shares in the Company that
represent in the aggregate 100% of the entire issued and allotted
share capital of the Company as at Closing Date that are
transferred by the Sellers to the Buyers pursuant to this
Agreement;
"SOFRED BONDS" means the 200,000 new bonds of 1.75 Euro each
issued on 23 March 2004 by the Company in favour of SOFRED for a
total amount of 350,000 Euro;
"SPSI" means Societe d'Applications Electroniques pour la
Physique, la Science et l'Industrie, a French societe anonyme
having its registered office 951, rue Xxxxxx Xxxx, ZI des Grands
Godets, 94500 Xxxxxxxxx-sur-Marne identified under the number 785
219 825 RCS Cr teil;
"SUBSIDIARY" means, with respect to any body corporate, any
other body corporate, directly or indirectly, controlled by such
body corporate, with "control" for such purpose meaning control
as defined under Article L.233-3 of the French Code de Commerce
or the control resulting from the possession, directly or
indirectly, of the power to either (a) exercise a majority of the
voting rights exercisable at general meetings of a body
corporate, or (b) appoint or remove directors
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12
having a majority of the voting rights exercisable at
meetings of the board of directors of a body corporate;
"TAXATION", "TAX" or "TAXES" means all forms of taxation,
duties, impositions, levies, withholding taxes, contributions and
charges of whatsoever nature payable in conformity with the
legislation of all countries concerned including, without
limitation, income tax, "parafiscalite", corporation tax, capital
gains tax, value added tax, business licence tax, sales tax,
customs laws and other import and export duties, excise duties,
stamp duty, social security payments or other similar
contributions and generally all taxes, duties, withholdings
whatsoever on or in relation to income, profits, gains, sales, in
connection with any of the foregoing for the benefit of the State
or any other body or entity whether State-controlled or private,
or local authority or government agency and all penalties, costs
and interest relating thereto;
"TAX RETURN" means any return, declaration, report, claim
for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any
amendment thereof;
"TERRITORY" means the regions and countries where the
Business is conducted;
"UPSI" means Unite de Production de Systemes Industriels, a
French societe a responsabilite limitee having its registered
office 951, rue Xxxxxx Xxxx, ZI des Grands Godets, 94500
Xxxxxxxxx-sur-Marne, identified under the number 433 547 643 RCS
Cr teil;
"WARRANTY RETENTION PAYMENT" means the following
amount(subject to reduction in accordance with Clause 11.6 but
together with interest accruing thereon pursuant to Clause 3.6),
to be paid by the Buyers to the Investors on the Due Date:
Warranty Retention Payment = XXXX x N1
---------
N
where
XXXX means the Guarantee and Retention Cumulated Amount;
N1 is the number of shares in the Company held by the
Investors as at Closing Date;
N is the total number of Shares.
"2004 ACCOUNTS" means the balance sheet, the profit and loss
account and annexes of the Company for the six months ending on
30 June 2004 (a copy of which is attached to the Disclosure
Letter);
"2004 EBITDA" means the amount of the net income plus taxes,
plus depreciation and amortisation plus interest recorded in the
audited accounts of the Company for the year ending 31 December
2004;
"2005 ACCOUNTS" means the balance sheet, the profit and loss
account and annexes of the Company for the year ending on
December 31,
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13
2005 prepared in accordance with the provisions set out in
Schedule 3;
"2005 EBITDA" means the amount of the net income plus taxes,
plus depreciation and amortisation plus interest recorded in the
2005 Accounts;
"2005 GROSS MARGIN" means the 2005 Revenues less Cost of
Goods Sold;
"2005 REVENUES" means the total sales less total returns
recorded in euros in the 2005 Accounts. Where 2005 Revenues are
generated in US dollars, they will be converted into euros for
the purpose of this Agreement on the basis of the following rate:
1 Euro = USD1.23.
1.2 Any reference to the laws of France shall be deemed, when it
is to be interpreted in the context of a law or territory other
than French, to include a reference to its equivalent in the
relevant law or territory.
1.3 Any statement, representation or warranty which is qualified
by the expression "to the best of the knowledge of the Sellers"
or "so far as the Sellers are aware" or any similar expression
shall be deemed to refer to the knowledge of Xxxx-Xxxx ois
Allier, Bruno Patissier and Xxxxx Xxxxx after making due and
careful enquiry of the other Senior Employees.
1.4 The schedules hereto (the "SCHEDULES") form 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 Schedules.
2 SALE AND PURCHASE OF THE SHARES
2.1 Subject to the satisfaction of the conditions precedent contained
in Clause 8.1 of this Agreement, the Sellers shall sell and
the Buyers in reliance upon, inter alia, the Warranties shall
purchase the Shares, free from all Security and with the benefits
of all rights attaching to them as at the Closing Date. The
Shares shall be allocated between the Buyers as set forth in
Schedule 3 attached hereto.
The Buyers agree to purchase not only existing Shares on the
date of this Agreement but also any Shares which may result from
the exercise of BSPCEs on or prior to the Closing Date.
2.2 Title and risk to the Shares shall pass to the Buyers at the
Closing Date.
3 CONSIDERATION
3.1 In consideration for the sale of the Shares by the Sellers to the
Buyers and for the obligations of the Sellers contained
under this Agreement, the Buyers, jointly and severally, agree to
pay to the Sellers:
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14
3.1.1 the Closing Payment which shall be satisfied in cash
and, in respect of Messrs. Xxxx-Xxxxxxxx Allier,
Bruno Patissier and Xxxxx Xxxxx only also by allotment
of Consideration Shares on Closing in accordance with
Schedule 4. The payment in cash shall be paid on
Closing Date to Banexi by telegraphic transfer on
Banexi Account, to the Allier Sellers and Individual
Sellers by telegraphic transfer to the Allier and
Individual Sellers' Account (to be allocated to each
Allier Sellers and Individual Sellers by the Agent in
proportion to the respective number of Shares sold by
each of them at Closing) and to SOCRI and IRDI by two
banker's drafts (cheques de banque), prorata the number
of Shares sold by each of the related Sellers;
3.1.2 the Guarantee Amount which shall be satisfied in cash
on Closing, paid by telegraphic transfer to the
Allier and Individual Sellers' Account on Closing Date
and allocated by the Agent among the Allier Sellers and
Individual Sellers in proportion to the respective
number of Shares sold by each of them at Closing;
3.1.3 the Earn-Out Payment together with the Relevant
Interest which shall be satisfied in cash on the
Due Date, and allocated among the Sellers in proportion
to the respective number of Shares sold by each of them
at Closing. The payment in cash shall be paid on Due
Date to Banexi by telegraphic transfer on Banexi
Account (or any other account notified by Banexi to MSI
before the Due Date), to the Allier Sellers and
Individual Sellers by telegraphic transfer to the
Allier and Individual Sellers' Account (to be allocated
to each Allier Sellers and Individual Sellers by the
Agent in proportion to the respective number of Shares
sold by each of them at Closing) and to SOCRI and IRDI
by two banker's drafts (cheques de banque), prorata the
number of Shares sold by each of the related Sellers;
and
3.1.4 the Warranty Retention Payment to the extent that the
same is released to the Investors in accordance
with Clause 3.6;
3.1.5 if only (i) the conditions of payment of the Earn-Out
Payment defined in Clauses 3.3 first paragraph,
3.3.1 and 3.3.2 have been satisfied and (ii) the
Company has not acquired an aggregate holding of 100%
of the shares in UPSI under articles 2.1 and 2.2 of the
shareholders' agreement contained in the Ancillary
Agreements, the Forfeited Reduction (which amount shall
be reduced to the extent that the Earn-Out Payment
(after making the adjustment set out in Sub-clause
3.3.3) is less than the amount of 800,000 Euro) within
15 days as from the expiry of the time period of 60
months defined in articles 2.1 and 2.2 of this
shareholders' agreement. The Forfeited Reduction
(subject to any reduction referred to
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15
immediately above) shall be allocated among the Sellers
in proportion to the respective number of Shares
sold by each of them at Closing and paid to Banexi by
telegraphic transfer on Banexi Account (or any other
account notified by Banexi to MSI before the Due Date),
to the Allier Sellers and Individual Sellers by
telegraphic transfer to the Allier and Individual
Sellers' Account (to be allocated to each Allier
Sellers and Individual Sellers by the Agent in
proportion to the respective number of Shares sold by
each of them at Closing) and to SOCRI and IRDI by two
banker's drafts (cheques de banque), prorata the number
of Shares sold by each of the related Sellers.
3.2 The Parties agree that the Closing Payment shall be reduced by
the Lovells Fees
3.3 The Earn-Out Payment shall not exceed 6.0M Euro (and shall be
adjusted to take into account the amount of the Debts
pursuant to Sub-clause 3.3.3 and the Forfeited Reduction pursuant
to Sub-clause 3.3.4), shall only be made if 2005 EBITDA exceeds
2004 EBITDA (each as finally determined in accordance with
Schedule 3) and shall be calculated as follows:
3.3.1 up to 70% of the maximum Earn-Out Payment (i.e. 4.20M
Euro) shall be based on the level of 2005
Revenues. This part of the Earn-Out Payment shall start
to accrue if the 2005 Revenues exceed 8.75M Euro and
shall increase on a pro rata basis to 100% if 2005
Revenues reach 12.5 Euro. For the avoidance of doubt,
there shall be no Earn-out Payment based on 2005
Revenues if the 0000 Xxxxxxxx are equal to or less than
8.75M and the maximum Earn-Out Payment based on 2005
Revenues shall not exceed 4.20M Euro if 2005 Revenues
are greater than 12.5M Euro;
3.3.2 up to 30% of the maximum Earn-Out Payment (i.e. 1.80M
Euro) shall be based on the level of 2005 Gross
Margin. This part of the Earn-Out Payment shall start
to accrue if the 2005 Gross Margin reaches 4.21M Euro
and shall increase on a pro rata basis to 100% if 2005
Gross Margin reaches 6.02M Euro. For the avoidance of
doubt, there shall be no Earn-Out Payment based on 2005
Gross Margin if the 2005 Gross Margin is equal to or
less than 4.21M Euro and the maximum Earn-Out Payment
based on 2005 Gross Margin shall not exceed 1.80M Euro
if 2005 Gross Margin is greater than 6.02M Euro;
3.3.3 the amount of the Debt shall be deducted from the
Earn-Out Payment as calculated under Clauses 3.3.1
and 3.3.2 (but for the avoidance of doubt, no such
deduction shall oblige the Sellers to pay any amount to
the Buyer);
3.3.4 the amount of the Forfeited Reduction shall then be
deducted from the Earn-Out Payment as calculated
under Clauses
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16
3.3.1 and 3.3.2 (but for the avoidance of doubt,
no such deduction shall oblige the Sellers to pay any
amount to the Buyer).
3.4 The Purchase Price shall not exceed a maximum aggregate figure of
24.5M Euro.
3.5 Any cash payment to be made by telegraphic transfer to the
Individual Sellers' Account shall constitute a full and
valid discharge to the Buyers for such cash payment and the
Buyers shall not be concerned with the application of any such
payment between all or any of the Allier Sellers and Individual
Sellers.
3.6 At Closing, the Sellers other than the Investors shall remit to
the Buyers the Bank Guarantee covering an amount equal to
the Guarantee Amount, in order to secure the indemnification
obligations of the Sellers other than the Investors pursuant to
Clauses 11 and 12 of this Agreement. The Bank Guarantee shall
remain valid until the second anniversary of the Closing Date
provided that if by that date there have been any Notified Claims
which have not been Finally Determined, then the Bank Guarantee
shall remain valid to the extent of any undrawn balance thereof
in order to cover any such Notified Claims multiplied by the
percentage of shareholding in the Company of the Sellers other
than the Investors as at Closing Date and until such Notified
Claims have been Finally Determined.
The Warranty Retention Payment shall be retained by the Buyers at
Closing, shall be subject to deductions in accordance with
Clause 11.6 and shall bear interest at the rate of 3% per annum
(accruing daily on the basis of a 360 day year). Such interest
shall be payable by the Buyers to the Investors in proportion to
the number of Shares sold by each of them at Closing quarterly in
arrears with the first interest payment being made on March 31
2005 in respect of the period since the Closing Date and then on
each successive June 30, September 30, and December 31 and March
31 until such time as the Warranty Retention Payment has been
paid to the Investors in full or has been reduced to zero. On the
second anniversary of the Closing Date any balance of the
Warranty Retention Payment shall be paid to the Investors in
proportion to the number of Shares sold by each of them at
Closing provided that if by that date there have been any
Notified Claims which have not been Finally Determined, then the
Buyers shall retain a portion of the Warranty Retention Payment
to cover the full amount of any Notified Claims multiplied by the
percentage of shareholding in the Company of the Investors as at
the Closing Date and shall only release such amount as and when
such Notified Claims have been Finally Determined.
3.7 All of the Consideration Shares issued to Xxxx-Xxxxxxxx Allier,
Bruno Patissier and Xxxxx Xxxxx pursuant to this Agreement
will bear a restrictive legend in substantially the following
form:
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17
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"). THE SHARES MAY ONLY BE SOLD OR TRANSFERRED IN ACCORDANCE
WITH THE PROVISIONS OF REGULATION S (RULE 901 THROUGH 905 AND
PRELIMINARY NOTES) UNDER THE ACT, PURSUANT TO REGISTRATION UNDER
THE ACT, PURSUANT TO RULE 144 UNDER THE ACT OR ANY OTHER
AVAILABLE EXEMPTION FROM REGISTRATION. HEDGING TRANSACTIONS
INVOLVING THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT
BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.
3.8 MSI shall not register any transfer of the Consideration Shares
by any of the Sellers unless such transfer is made in
accordance with Regulation S ("REGULATION S") promulgated under
the Securities Act of 1933 as amended (the "SECURITIES ACT"),
pursuant to registration under the Securities Act, or pursuant to
an available exemption from registration.
4 WARRANTIES OF THE SELLERS
The Sellers represent and warrant to the Buyers that each of the
Sellers Warranties is true and accurate in all respects on the date of
this Agreement, except where another date is expressly provided and
shall be true and accurate on the Closing Date. If after the date of
this Agreement and before the Closing Date, any event shall occur or
matter shall arise which results or may result in any one or more of
the Seller's Warranties being untrue or inaccurate on the Closing
Date, the Sellers shall notify the Buyers in writing with sufficient
detail to provide fair disclosure to the Buyers of the disclosed
matter prior to the Closing Date, provided however that except as the
Buyers may otherwise agree, such notice by the Sellers shall not
relieve the Sellers of any liability under, or qualify, any of the
Sellers' Warranties.
4.1 INFORMATION
The Sellers are not aware of any material inaccuracy or
material omission in any information provided to or disclosed to
the Buyers during the course of the due diligence investigation
of the Company conducted by the Buyers and their advisers prior
to the date of this Agreement.
4.2 WARRANTIES IN RELATION TO THE SELLERS
4.2.1 The Sellers have the legal right and full power and
authority to enter into and perform this
Agreement; this Agreement will constitute a valid and
binding obligation of Sellers.
4.2.2 The execution and delivery of and the performance by
Sellers of their obligations under this Agreement
will not and is not likely to (i) result in a breach of
any provision of the constitutional documents of
Sellers, (ii) or result in the creation of any
encumbrances and restrictions under any agreement,
licence or other instruments to which any of the
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18
Sellers are a party or, (iii) result in a breach
of any order, judgement or decree of any court,
governmental agency or regulatory body to which one of
the Sellers is a party or by which one of the Sellers
is bound.
4.2.3 Each Seller who has been allocated Consideration Shares
(a) understands that the Consideration Shares have
not been, and will not be, registered under the
Securities Act or under any state securities laws, and
are being offered and sold in reliance upon Regulation
S, (b) until the date that is one year after that
issuance agrees to resell or transfer such shares only
in accordance with the provisions of Regulation S (Rule
901 through 905, and Preliminary Notes), pursuant to
registration under the Securities Act, pursuant to Rule
144 under the Securities Act or any other available
exemption from registration, (c) agrees not to engage
in hedging transactions with regard to such shares
unless in compliance with the Securities Act, and (d)
certifies that he, she or it is not a US person, as
defined in Rule 902(k) of the Securities Act, and is
not acquiring shares for the account or benefit of any
US person.
4.2.4 Each Seller who has been allocated Consideration Shares
understands that the Consideration Shares may not
be resold or transferred unless they are registered
under the Securities Act or pursuant to Regulation S or
an available exemption from the requirement to be so
registered.
4.3 WARRANTIES IN RELATION TO THE COMPANY
4.3.1 Constitution, existence, authorities, capacity and
conformity of the Company.
The copy of the Articles attached to the Disclosure
Letter is true, complete and accurate.
The Company is incorporated and registered in
accordance with the laws of France and is duly
organised and validly existing under such laws with the
full power and authority to enable it to own its assets
and properties and carry on its Business as currently
conducted. The Articles and other constitutional
documents of the Company are in conformity with the
laws and regulations in force.
The extract K-Bis and the declaration de
non-faillite of the Company contains true and accurate
information and is up-to-date.
The Company, (i) is able to meet its debts as they
fall due and is not in default under any debt financing
or declared to be in redressement judiciaire,
liquidation judiciaire or any equivalent proceedings in
any jurisdiction other than France, and no ad hoc
administrator has been appointed; (ii) has not
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19
been granted a suspension provisoire des
poursuites, nor is it the subject of reglement amiable
or any equivalent relief in any jurisdiction other than
France.
The accounting books, statutory registers, books
and other corporate records of the Company required by
applicable laws and regulations are (i) up-to-date,
(ii) have been kept by the Company, are in their
possession and have been properly maintained, (iii)
reflect all corporate action taken by the Company, and
(iv) contain information which is true and accurate and
which has been recorded in accordance with applicable
laws and regulations save in each of the above cases
for minor irregularities. All legally required
formalities, filings, registrations of documents
(including those with the Registry of Commerce and
Companies or equivalent) and legal publications are now
current.
4.3.2 WARRANTIES RELATING TO THE SHARES OF THE COMPANY
4.3.2.1 The Shares of the Company have been duly issued and
fully paid up and may be freely transferred and
are the only shares issued. The rights attached to each
of the Shares of the Company are identical and free of
any Security. The share capital of the Company is not
subject to any repayment.
4.3.2.2 Except as set forth in the Disclosure Letter, no
contract or undertaking is in force regarding the
issue or the allocation of Shares or granting to any
person the right to purchase or to pre-empt all or part
of the Shares of the Company. At the Closing Date, the
Company has not issued, nor is bound to issue,
securities giving rights, at any moment or on a given
date, whether by conversion, exchange, repayment,
presentation of coupon or by any other method, to the
allocation of Shares which are or which will be issued
for this purpose.
4.3.2.3 The Sellers are, at the Closing, the sole and full
holders of the Shares. No Security on the Shares
is in existence and no person has made any claims to
the Shares or with regard to any Security in relation
to the Shares. No Shares of the Company are legally or
beneficially owned by any person other than the
Sellers. The Sellers have full power and capacity to
transfer full title of their Shares free of any
Securities on the date of this Agreement.
4.3.2.4 The transfer of the Shares does not affect any of the
rights or obligations of the Company and does not
violate any law or regulation, judgment or other type
of decisions that are applicable to the Company or any
of the constitutive documents of the Company.
4.3.2.5 The Company is not nor has it agreed to become a
holder of any class of share or other capital of
any Entity and the
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20
Company is not and has not agreed to become a member of
any joint venture, partnership or consortium and
is not and has not agreed to be a party to any profit
sharing of any arrangement.
4.3.3 WARRANTY RELATING TO THE ACTIVITIES OF THE COMPANY
The Company has full power and capacity to carry on its
activities. All permits, licences, authorisations,
certificates and consents necessary for the Company to
carry on its Business and to sell its services have
been obtained, and have not been, and are not subject
to any suspension, revocation, amendment or non-renewal
(including as a result of the change of control of the
Company).
The Company has carried out and is carrying on its
Business materially in accordance with all applicable
statutory requirements and its constitutional
documents.
The Company has not made any illegal payment to
any person in order to obtain or secure the
continuation of the Business of the Company.
The Company is not under an obligation to any
third party to refrain from competing with a third
party or from engaging in any other activity.
4.3.4 WARRANTIES RELATING TO THE ACCOUNTS AND THE 2004
ACCOUNTS
4.3.4.1 The Accounts have been drawn up in accordance with the
rules of the French Plan Comptable General so that
they are sinceres et reguliers and give a true and fair
view (donnent une image fidele) of the assets and
liabilities, the financial situation and the results of
the Company. The Accounts have been drawn up using the
same principles and methods as those used during the
last three financial years. The Company kept and
maintained its books in accordance with the applicable
laws at all times relevant to the preparation of the
Accounts save for any minor irregularities.
The financial position and results shown by the
Accounts have not to any material extent been affected
by any non recurrent, extraordinary or exceptional
items or by inconsistencies of accounting practice or
by any other fact rendering such financial position and
results unusual or misleading in any material respect.
4.3.4.2 The 2004 Accounts have been drawn up in accordance
with the rules of the French Plan Comptable
General and fairly reflect the assets and liabilities,
the financial situation and the results of the Company
on the basis that they have been reviewed by the
Company's accountants in accordance with the procedures
described in the Disclosure Letter. The 2004
-----------------------------------------------------------------------------
21
Accounts have been drawn up using the same principles
and methods as those used during the preceding
three complete financial years. The Company has at all
times relevant to the preparation of the 2004 Accounts
kept and maintained its books in accordance with the
applicable laws save for any minor irregularities.
The financial position and results shown by the
2004 Accounts have not to any material extent been
affected by any non recurrent, extraordinary or
exceptional items or by inconsistencies of accounting
practice or by any other fact rendering such financial
position and results unusual or misleading in any
material respect.
4.3.5 INTERIM ACCOUNTS
The Interim Accounts (a true and complete copy of which
is annexed to the Disclosure Letter) have been
prepared on bases consistent with those adopted in the
preparation of the 2004 Accounts and, having regard to
the purpose for which they have been prepared (and
acknowledging in particular that they have not been
audited), represent in all material respects the assets
and liabilities and state of affairs of the Company as
at October 31, 2004 and do not materially overstate the
profits of the Company in respect of the period to
which they relate.
4.3.6 ASSETS OF THE COMPANY
The Assets included in the Accounts as well as any
Asset acquired since the Balance Sheet Date, save
for those disposed of since the Balance Sheet Date in
the Ordinary Course of Business, are legally and
beneficially owned by the Company and, other than
disclosed in the Disclosure Letter or in the Ordinary
Course of Business, free from any Security and not the
subject of any agreement for lease, hire purchase,
conditional purchase or sale on deferred terms save as
disclosed in the Accounts and are in the possession and
under the control of the Company. The Assets not owned
by the Company but rented or used by the Company are
effectively used pursuant to a valid title. The Assets
comprise all the assets necessary to enable the Company
to carry on the Business as presently conducted fully
and effectively in the ordinary course. The Assets
acquired or disposed of by the Company since the
Balance Sheet Date have been so acquired or disposed of
in the Ordinary Course of Business. Except as disclosed
in the Disclosure Letter and for disposals in the
Ordinary Course of Business or for financing purposes,
on the Closing Date, the Company will be the full owner
of the Assets disclosed in the Accounts. No Asset is
the subject of any Security.
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22
The Assets are in good working order and have been
regularly and properly maintained and are all
capable and will remain capable of doing the work for
which they were designed or acquired, fair wear and
tear excepted.
The receivables stated in the Accounts shall be
recoverable save as disclosed and provisioned for
in the Accounts.
4.3.6.1 PROPERTIES OF THE COMPANY
There is no real property owned and/or
used by the Company save for the leasehold
property which is identified in the
Disclosure Letter (the "PROPERTY"), and is
used in the Ordinary Course of Business of
the Company and for the purpose only of
carrying out its usual activities and (i) is
not subject to any proceedings, disputes,
obligations, claims, demands, notices,
process or other proceedings of any nature
which may affect their continued and quiet
use and/or any business carried thereon, (ii)
is in a good state of maintenance and repair
and are suitable for the purpose for which it
is currently used, fair wear and tear
excepted and (iii) comply with all applicable
laws and regulations and building or
technical standards in force and relevant to
the use made of them by the Company.
The Company is tenant of the Property
pursuant to a Commercial Lease which is
listed in the Disclosure Letter.
The Commercial Lease is valid, is fully
and legally enforceable and is not subject to
any conditions which have not been observed,
and the Company is entitled to require
performance until its expiry date.
The use of Property occupied by virtue
of the Commercial Lease conforms to the
relevant applicable regulations.
The Company has fulfilled all
obligations, covenants, conditions or
agreements arising from the Commercial Lease
with the exception of minor and one-off
breaches which would not result in a Material
Adverse Change.
The Company benefits from all the rights
of tenure under the Commercial Lease and in
particular, the right to renew the lease.
No rents or fees payable in respect of
the Property are in the process of being
reviewed other than in accordance with the
terms of the Commercial Lease and applicable
legislation.
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23
No notice to quit in respect of the
Commercial Lease has been served on or by the
Company and the sale of the Shares does not
constitute a termination event or an event of
default under the Commercial Lease.
The Company has not sub-let or granted
any other right of occupation over all or
part of the Property over which it has the
Commercial Lease without the landlord's
consent or without compliance of the
formalities provided for by the Commercial
Lease.
No alterations or other building works
have been made to the Property demised under
the Commercial Lease at the expense of the
Company without all necessary consents and
approvals having been requested and obtained
and no restoration of the Property demised
under the Commercial Lease will have to be
made in respect of alterations or works
carried out prior to the date of this
Agreement when the Commercial Lease expires,
even though the consents and approvals for
any such restoration would have been
obtained.
The Company has no duty to carry out any
alterations at its expense on the Property
demised under the Commercial Lease.
There are no outstanding legal
proceedings, disputes, claims, terminations
or refusals to renew affecting the Commercial
Lease or capable of affecting the Commercial
Lease because of or relating to an omission
or non performance of the Sellers or the
Company.
No fact exists which could lead to the
rescission of the Commercial Lease or to the
refusal to renew the Commercial Lease without
payment of compensation.
4.3.6.2 WARRANTIES IN RELATION TO ENVIRONMENT AND
PERMITS
The Company, so far as the Sellers are
aware, is in compliance with the applicable
environmental legislation and with the
applicable provisions of the French
environmental code. The Company operates no
establishments which are subject to the
legislation on classified installations; and
there exists no environmental inspection,
audit, study, review, test or analysis
relating to the Property.
The Company has never carried out any
act, action or activity which could lead or
have lead to environmental damage or damage
to persons. The Property is not subject to
any contamination
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24
whatsoever. The Sellers represent and
warrant that there is no asbestos in the
Property, and that it has always complied
with the provisions of the regulation
applicable regarding asbestos.
4.3.6.3 QUIET ENJOYMENT/MAINTENANCE/CONFORMITY
The Assets of the Company, so far as the
Sellers are aware, whether owned or rented,
are used in the Ordinary Course of Business
and are not subject to any procedure or
action which may affect their continued and
quiet use. The material movable Assets
(including materials, vehicles, plant,
equipment and stock) owned, rented or used by
the Company are in a normal state of use,
maintenance and repair and such Assets,
comply with any material statutory,
regulatory or contractual requirements or
standards with their use by the Company. All
authorisations and administrative permits
necessary for the use of the Assets owned,
rented or used by the Company have been
validly obtained.
4.3.6.4 IT AND COMMUNICATIONS
The IT and telecommunications systems
and equipment used by the Company are adapted
and satisfactory having regard to the
Business.
There are not and, in the last year
prior to the date of this Agreement, there
have been no failures in or breakdowns of any
computer hardware or software or any other IT
and telecommunication systems and equipment
which have caused any material disruption or
interruption in or to the Business. The
Company has a disaster recovery plan that is
usual to put in place for any French
businesses that operate a type of activity
that is similar in scope or risk to the
Business.
So far as the Sellers are aware, in the
event that the persons providing maintenance
or support services for IT and
telecommunications cease or are unable to do
so, the Company has all the necessary rights
and information to continue to maintain or
support the IT and telecommunication systems.
4.3.6.5 FONDS DE COMMERCE
The Company is not party to any
contract, such as a partnership or leasing
contract, relating to the transfer of the
whole or part of its fonds de commerce.
4.3.6.6 INTELLECTUAL PROPERTY
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25
Details (description and, if applicable,
numbers and dates of filing, registration and
renewal) relating to the patents and
trademarks included in the Intellectual
Property that are registered or for which
registration is pending, and owned by the
Company are shown in the Disclosure Letter.
(i) Ownership etc.
---------------
All Intellectual Property (whether
registered or not) and all pending
applications therefore which have been,
are, or are being used in the Business
are (a) fully owned (pleine propriete)
by the Company or lawfully used with the
consent of the owner under a licence;
(b) valid; (c) not being infringed or
challenged by any third party; and (d)
if owned by the Company, not subject to
any Security or any licence in favour of
another. Except as disclosed in the
Disclosure Letter, the Company (i) has
paid all renewal fees that are due in
respect of Intellectual Property that is
registered or the subject of
applications for registration; (ii)
operates policies relating to
maintenance and protection of such
Intellectual Property which is usual for
any French businesses that operate a
type of activity that is similar in
scope or risk to the Business; and (iii)
has not received notice of any claim in
relation to such Intellectual Property.
(ii) Processes etc.
---------------
So far as the Sellers are aware,
the processes and materials used by the
Company are not using, embodying or
infringing any rights or interests of
third parties in Intellectual Property
(other than those belonging to or
licensed to the Company and referred to
in the Disclosure Letter) and no claims
of infringement of any such rights or
interests have been made by any third
party.
(iii) Licenses
--------
Except as set forth in of the
Disclosure Letter, the licenses entered
into by the Company relating to
Intellectual Property (including all
amendments, novations, supplements or
replacements to those licenses and
agreements) are in full force and
effect, no notice having been given on
either side to
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26
terminate them; the obligations of
all parties to such licenses have been
complied with in accordance with their
terms; no disputes have arisen, nor has
the Company received a notification or
complaint from a third party in relation
to such licenses; and where it is usual
practice for a French business with
activities that are similar in scope or
risk to the Business to register such
licenses, they have been so registered.
(iv) Know-How
--------
So far as the Sellers are aware,
there has been and is no misuse of the
Company's Know-How or processes by the
Company and the Company has not made any
disclosure of the Company's Know How or
processes to any person other than to
the Buyer, the Sellers (except for Xxxx
Desarnaud other than to the extent
disclosed in the Disclosure Letter), the
Company's employees or other than in the
Ordinary Course of Business subject to
standard non-disclosure arrangements.
4.3.6.7 NO ASSERTION OF MORAL RIGHTS
No moral rights have been asserted which
would affect the use of any of the
Intellectual Property in the Business.
4.3.6.8 PATENTS
So far as the Sellers are aware, there
are no patentable inventions owned by
employees or shareholders or former
shareholders of the Company (whether
registered or not) used or intended to be
used in the Business.
4.3.6.9 SUFFICIENCY OF INTELLECTUAL PROPERTY
The Intellectual Property shown in the
Disclosure Letter, together with the
Company's Know-How, comprises all the rights
and interests used in the carrying on of the
Business.
4.3.7 SHAREHOLDINGS AND BRANCHES
Except as set forth in the Disclosure Letter, the
Company (i) does not hold shares in any other company,
partnership, GIE, GEIE or other entity or business,
French or foreign, nor is it member of such entities
(including de facto companies, or joint ventures) (ii)
does not have a branch office, representative office or
permanent establishment outside their
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27
jurisdiction of incorporation; and (iii) has not within
the last three years entered into any agreement
with a view to the acquisition of other shareholdings
in other companies or entities, or with a view to
setting up companies or new entities, or entered into
any such agreement or negotiation more than three years
prior to the Closing Date, as to which enforceable
rights remain against the Company.
4.3.8 WARRANTIES IN RELATION TO LIABILITIES
(i) TOTAL LIABILITIES
Except as disclosed in the Disclosure Letter,
there are no Liabilities (including contingent
Liabilities) of the Company outstanding on the
date of this Agreement other than those reflected
in the Interim Accounts or those incurred in the
Ordinary Course of Business since October 31,
2004.
(ii) RESERVES
All reserves appearing in the Accounts,
particularly the reserve legale (legal reserve)
and, where this is relevant, reserve statutaire
(statutory reserve), have been properly provided
for.
(iii) SUBSIDIES, SUPPORT
So far as the Sellers are aware, the sale of
the Shares will not require the Company to repay
any support, subsidy, grant or financial
assistance provided by any governmental
organization other than disclosed in the
Disclosure Letter.
(iv) DEBTS OF THE COMPANY
All debts of the Company to third parties, as
reflected in the Accounts, have been properly paid
on the relevant due date, and the Company is not
liable as a result for any interest for late
payment, penalty or indemnity. The same is true
for debts due by the Company since the Balance
Sheet Date.
The Disclosure Letter contains full details
of all Debt outstanding as at the Closing Date.
All financing agreements entered into by the
Company, and in force as at the Closing Date
(including loan agreements, leasing agreements,
overdrafts, and other banking facilities granted
to the Company, as well as any loan or advance
granted to the Company's employees, directors, or
indirect shareholders) (collectively, the
"FINANCING AGREEMENTS"), as well as any leasing or
hire purchase agreement, guarantee, warranty or
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28
indemnity, undertaking or other "off-balance
sheet" undertaking entered into on the date of
this Agreement, are set out in the Disclosure
Letter. The Company has never been in material
breach of the Financing Agreements such as would
lead to an event of default and termination right
of the other party. As at Closing Date, the
Company will have no Financing Agreements with the
Sellers.
(v) FORMER SHAREHOLDERS AND CONNECTED PERSONS
Save as described in the Disclosure Letter in
relation to employment agreements, the Sellers
will not have as at Closing Date any claim or
contractual right against the Company resulting
from its relations with the Company up to the
Closing Date.
4.3.9 WARRANTIES IN RELATION TO THE MANAGEMENT OF THE COMPANY
(i) RESOLUTIONS
Except as disclosed in the Disclosure Letter,
all resolutions taken at the shareholders'
meetings, by the boards of directors, by the
Chairmen and Managers of the Company during the
last three years, are valid, cannot be challenged,
cancelled or voided and, where required, are duly
reproduced in the legal books of the Company, as
the case may be, up to the date of this Agreement.
(ii) PROXIES, DELEGATION OF POWERS AND SIGNATURES
There are no proxies, powers of attorney,
delegations of power or signature granted by those
able to represent the Company, or sign in its
respective name, in force, as at the date hereof,
other than as set out in the Disclosure Letter.
4.3.10 CONTRACTS, AGREEMENTS AND ARRANGEMENTS OF THE COMPANY
All written contracts or agreements to which the
Company is a party have been entered into in the
Ordinary Course of Business.
There are no powers of attorney in force given by
the Company and no person, other than any of the legal
representatives, is entitled to authorise to bind or
commit the Company to any obligation not in the
Company's Ordinary Course of Business.
The Disclosure Letter lists all Important Agreements.
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29
All such Important Agreements are valid and
binding and have been performed in accordance with
their terms and conditions (save for minor and
unrepeated breaches); the sale of the Shares will not
prevent the performance of the Important Agreements,
lead to their amendment or termination or give rise to
any claim by or against the Company, require the
completion of one or more formalities or the obtaining
of an agreement or consent to allow the Important
Agreements to remain in force on the same basis; do not
contain any warranty obligations on the part of the
Company in excess of 12 months; have been entered into
on commercial arm's length terms (taking into account
the importance of the customer or supplier to the
Business); and none of the co-contractors to such
Important Agreements may be able to claim economic
dependence on the Company if that Important Agreement
were to be terminated for any reason.
The sales representative agreement entered into
between the Company and Lines On Sales Limited on 5
November 1999 has been inactive since its entry into
force and there has been no claim by the agent for any
indemnity or compensation thereunder.
So far as the Sellers are aware, none of the
Important Agreement violates any legal or regulatory
provisions, or any judicial or administrative
decisions, save for minor violations that do not
jeopardise the continuation of any of the Important
Agreements
(i) ARRANGEMENTS WITH CONNECTED PERSONS
Save for those provided in this Agreement, no
agreements, arrangements or commitments of any
kind will exist as at Closing Date between the
Company and any of the Sellers, its directors,
managers or shareholders or former shareholders
and any of their Affiliates including, but not
limited to, agreements, arrangements or
commitments under which the Company would be
required to pay royalties, service fees or any
other payments of any kind.
(ii) WARRANTIES RELATING TO INSURANCE
The Disclosure Letter lists all material
insurance policies that are taken out by the
Company or in connection with the Business. All
material assets owned, leased or used by the
Company are insured under valid insurance policies
and all premiums relating to such insurances have
been duly paid on their due date. The Company has
not received notice
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30
of cancellation of any such insurance policy
nor have knowledge that any cancellation by the
insurance company is likely to take place.
All such policies of insurance are in full
force and effect and no claim is outstanding by
the Company under any such policy of insurance.
The Disclosure Letter lists all claims in
excess of 5,000 Euro made by the Company under any
insurance policy during the fiscal years 2001,
2002 and 2003 and, so far as the Sellers are
aware, no circumstances exist which are likely to
give rise to a claim, involving a sum exceeding
5,000 Euro under such insurance policies. Such
Disclosure Letter also contains specifications in
respect of each such claim including the extent to
which it has been accepted by the insurance
company. In this respect, the Company has
implemented all necessary formalities to be timely
indemnified.
(iii) EFFECTS OF THE EXECUTION AND PERFORMANCE OF THIS
AGREEMENT
The execution and performance of this
Agreement by the Sellers shall, so far as the
Sellers are aware, not in itself result in the
following events:
(a) Any violation by the Sellers of any
Legal Requirement, agreements, obligations
(including contractual obligations) or legal
or other decisions of the Company;
(b) Any extraordinary termination of or
significant modification to any Important
Agreement of the Company;
(c) Any calls for early repayment of any
loans or financing granted to the Company
including the Financing Agreements;
(d) Any obligation to pay a bonus or
indemnity or other form of compensation,
whether monetary or otherwise, to any of the
employees or managers of the Company;
(e) Any extraordinary modification,
suspension or withdrawal of any Permits
granted to the Company, or of any favourable
tax or corporate regime in place as a result
of an agreement of otherwise;
(f) Payment of any Taxes or fees by the Company;
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31
(g) Any entitlement for any party to be
released from its obligations or to receive
an indemnity under the terms of any
guarantee, shareholder agreement, comfort
letter or other similar document issued as a
security or in support of any undertakings on
the part of the Company; and
(h) Any registration or constitution of a
Security on the Assets owned by the Company.
4.3.11 WARRANTIES RELATING TO EMPLOYEES OF THE COMPANY
The Disclosure Letter lists the name of all
persons employed by the Company as at the date of this
Agreement.
Except as set forth in the Disclosure Letter, no
amount is due to any current or previous employee of
the Company, under the terms of his or her employment
agreement, other than remuneration rights due but not
yet payable, reimbursement of business expenses, or
debts reflected in the Interim Accounts or due in the
Ordinary Course of Business.
The Disclosure Letter lists all collective
agreements that apply to the Company or its employees.
The Company has duly performed in all material
respects its obligations with relation to any employee,
collective agreement or other body representing
employees. As at the Closing Date, the Company has
never been required by law to constitute a works
council.
The Disclosure Letter lists the total number of
employees of the Company (as per the date of this
Agreement), the average age of such employees, the
seniority of the employees and the total amount of
wages and labour costs for all employees. The
Disclosure Letter lists also all Senior Employees
including the position, the age, the seniority, the
gross salary and the total labour costs. The employment
contracts of all those employees contain a standard
confidentiality clause, a standard IP protection
clause, and a restriction on employment with
competitors which complies with the collective
agreement applicable to the Business. There has been no
notice of termination given to any Senior Employee.
The Disclosure Letter also lists all bodies
representing employees, which by law or under any
collective agreement, have the right to be informed or
consulted on subjects which affect the Company or its
employees.
No employee has given written notification to the
Company of an intention to terminate his contract, nor
has given formal notice to leave or is under notice of
dismissal; no former
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32
employee of the Company has any priorite de
reembauche as against the Company.
None of the Company's subcontractors or
independent consultants, or employees of these
subcontractors or independent consultants, have any
right against the Company to claim that they must be
categorised as actual employees of the Company as a
result of their past relations with the Company.
The Company has satisfied all its obligations
relating to labour and social security laws including
those relating to (i) the use of temporary personnel,
(ii) employees' representation, (iii) the application
of collective bargaining agreements and (iv) those to
be carried out in view of the sale of the Shares.
The Company has entered into an agreement for the
reduction of the working time to 35 hours, which has
been provided to the Buyers and is set out in the
Disclosure Letter and implemented such reduction in
compliance with all applicable laws and regulations and
the terms of such agreement.
The Company is not involved in any dispute with a
salaried employee or in negotiation regarding the
dismissal, suspension, disciplining or variation of the
terms and conditions of employment of any present or
former salaried employee and, so far as the Sellers are
aware, there are no facts which might indicate that
there may be any such dispute.
The Company has not experienced any general
strikes, lockouts, union organisation attempts,
slowdowns or work stoppages within the last three (3)
years. Except as set forth in the Disclosure Letter,
save for the legal obligations of the Company, those
arising as a matter of law, those resulting from any
applicable collective bargaining agreement and from
usual salary increases:
(a) since the Balance Sheet Date, the Company has
not made any proposal nor undertaken any
obligation, to or in respect of its previous or
current legal representatives (mandataires
sociaux), Senior Employees or independent
commercial agents relating to their remuneration,
termination of services, retirement, sickness,
death, disability or insurance;
(b) since the Balance Sheet Date, the Company has
not incurred any liability arising from breach of
an employment, agency or service agreement
("mandat social");
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33
(c) the Company has not adopted and does not
intend to adopt a profit sharing scheme for its
respective legal representatives or directors.
Save as set out in the Disclosure Letter, the
Company has not entered into any agreement to
allow its employees to acquire any right
whatsoever in the Shares of the Company.
Neither the execution of the Agreement nor the
consummation of the transactions contemplated by
the Agreement will entitle any officer or Senior
Employee of the Company to severance pay, unemployment
compensation or any other payment or benefit (including
any incentive payment or bonus) from the Company.
4.3.12 PENSIONS
The Disclosure Letter contains a complete and
accurate list and summary of all material complementary
existing pension and death benefit schemes of the
Company (the "SCHEMES"). Except as set forth in the
Disclosure Letter, the Company has complied with the
Schemes and all the contributions due and payable by
the Company under the Schemes and various employment
benefits, and all future commitments undertaken by the
Company in this respect have been duly paid or provided
for in the Accounts.
With the exception of such Schemes, there are no
other retirement, death or disability benefit Schemes
for officers or employees of the Company nor is the
Company under any obligation to or in respect of any
former or present officers or employees of the Company
with regard to such benefit Schemes pursuant to which
the Company is or may become liable to make payments.
4.3.13 WARRANTIES IN RELATION TO LITIGATION
(i) Litigation
Save as disclosed in the Disclosure Letter,
the Company is not engaged in any litigation,
action or arbitration proceedings or any dispute
(including investigations or public enquiries) and
has not been served with any notice making it a
party to a litigation, action, arbitration or
other legal proceedings with the exception of debt
collection by the Company in the Ordinary Course
of Business and no litigation, arbitration or
other legal proceedings are threatened in writing
or, so far as the Sellers are aware, pending
either by or against the Company and there are no
facts known to the Sellers which might give rise
to any such proceedings. In respect of the
litigation described in the Disclosure Letter, the
Company has made sufficient accounting provisions
and/or benefits
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34
from insurance coverage as also described in the
Disclosure Letter.
(ii) Investigations
So far as the Sellers are aware, the Company
is not the subject of any investigation,
inspection, inquiry, control or other procedure by
any governmental authority (particularly the tax,
customs, competition, fraud or health, social
security and labour authorities) regarding its
operations and activities.
4.3.14 COMPLIANCE WITH LAWS
So far as the Sellers are aware, the Company is in
compliance in all material respects with applicable
laws, regulations and practices in France and abroad.
Neither the Company, nor any of its officers and
employees, have committed in the course of their
employment any act which may entail the criminal
liability of the Company.
4.3.15 TAXES AND CONTRIBUTIONS
Except as otherwise disclosed in the Disclosure Letter:
(a) The Company has filed all Tax Returns that it
was required to file and has paid all Taxes the
ultimate due date of which has expired on or
before the due date for payment;
(b) The Company Tax Returns are not the object of
any dispute with the French Tax authorities or
other Tax authorities and the Company is not
currently subject to an official Tax audit;
(c) The Company is not party to any contract,
plan or agreement which the relevant Tax
authorities generally consider to be an abuse of
law, abnormal act of management or fraud or other
artifice to avoid a Tax in any jurisdiction.
(d) The Company does not benefit from any
particular tax regime, tax deferral, benefit or
advantage that would be terminated, modified or
otherwise challenged in connection with the
transfer of the Shares.
4.3.16 MANAGEMENT OF THE COMPANY SINCE BALANCE SHEET DATE
From the Balance Sheet Date to the date hereof,
the Company has been managed in the Ordinary Course of
Business.
In particular, except as otherwise agreed between
the Parties and save as set out in the Disclosure
Letter, since the
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35
Balance Sheet Date to the date of this Agreement there
has been:
(e) no Material Adverse Change to the situation
of the Company ;
(f) no change of principle, method or
presentation in the accounts of the Company; all
operations of the Company have been duly accounted
for;
(g) the Company has neither terminated, nor done
or omitted to do anything which would result in
the termination of an Important Agreement;
furthermore, no contract has been entered into,
amended or terminated other than in the Ordinary
Course of Business;
(h) no change has been made in the rate of the
emoluments paid by the Company to any Senior
Employee or employees or officers (mandataires
sociaux) save as disclosed in the Disclosure
Letter;
(i) all additions or purchase and disposal made
by the Company to the tangible and intangible
Assets that the Company owns or which the Company
has a valid right to use in connection with the
operation of its Business have been and are made
in the Ordinary Course of Business;
(j) no alteration of the investment policy and no
repayment or discharge of any obligation or
liabilities to creditors or demand or collect
payment of trade receivables other than in the
Ordinary Course of Business;
(k) no Liability or debt to any third party other
than those incurred in the Ordinary Course of
Business;
(l) no decision from the Company or any of the
Sellers likely to negatively affect the financial
structure or the borrowing capacity of the
Company;
(m) no new employment agreement, services
agreement ("mandat social"), management agreement,
consulting agreement or sub-contracting agreement
other than in the Ordinary Course of Business;
(n) no transaction or settlement agreement with
the Company's officers or Senior Employees or
shareholders;
(o) no amendment of the articles of association
other than as required by this Agreement;
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36
(p) no issuing granting , or agreement to issue,
grant, any new shares, convertible bonds, options
or warrants or any security convertible into or
exchangeable for shares;
(q) no decision to distribute or to pay dividends
and no distribution relating to the capital of the
Company;
(r) no decision to invest or participate in
another business or entity.
4.3.17 CONCLUSIVE NATURE OF INFORMATION AND WARRANTIES
The Sellers acknowledge that the Buyers relied
upon the Warranties and indemnities given under this
Agreement when determining and accepting the price of
the Shares.
4.3.18 WARRANTIES IN RELATION TO THE CONSULTING FEES RELATING
TO THE CONCLUSION OF THIS AGREEMENT
The Sellers warrant that the consulting fees of
external advisors of the Sellers in connection with the
negotiation of this Agreement shall be exclusively
borne by the Sellers and not by the Company
4.3.19 HUMIREL INC
The warranties contained in Sub-Clauses 4.1,
4.3.3, 4.3.7, 4.3.9 (ii), 4.3.10 first and second
paragraphs, 4.3.10 (i), 4.3.12, 4.3.13 (i) & (ii),
4.3.14 and 4.3.16 shall apply also to Humirel, Inc as
if references in those warranties to the "Company" were
replaced by references to "Humirel, Inc" . The
information set out in the Disclosure Letter relating
to Hurmirel, Inc is true, complete and accurate.
Humirel, Inc has no employees or consultants other
than Xxxxx Xxxxxxxx, the remuneration and other
benefits of whom are set out in the Disclosure Letter.
Humirel, Inc is a corporation duly incorporated,
validly existing and in good standing under the laws of
the state of Arizona, with all necessary corporate
power, authority and capacity to own the assets owned
by it and to lease the assets leased by it, and to
carry on the business in which it is currently engaged.
Humirel, Inc is not insolvent or unable to pay its
debts as and when they fall due and not subject to
Chapter 11 proceedings or any other analogous
proceedings.
Save for an administrative services agreement
entered into between the Company and Humirel, Inc on 12
November 1998 and for Xx. Xxxxxxxx'x employment
contract, Humirel, inc is not a party to any other
agreements, arrangements or undertakings.
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37
5 WARRANTIES OF THE BUYERS
The Buyers, jointly and severally, represent and warrant to the
Sellers that each of the Buyers' Warranties is true and accurate in
all respects on the date of this Agreement, except where another date
is expressly provided.
5.1 The Buyers have the legal right and full power and authority
to enter into and perform this Agreement; this Agreement will
constitute a valid and binding obligation of the Buyer.
5.2 The execution and delivery of and the performance by the
Buyers of their obligations under this Agreement will not and is
not likely to (i) result in a breach of any provision of the
constitutional documents of the Buyer, (ii) or result in the
creation of any encumbrances and restrictions under any
agreement, licence or other instruments or, (iii) result in a
breach of any order, judgement or decree of any court,
governmental agency or regulatory body to which either of the
Buyers is a party or by which any of the Buyers is bound.
5.3 The Consideration Shares being acquired by the Sellers
hereunder, when issued, sold and delivered in accordance with the
terms of this Agreement for the consideration expressed herein,
will be duly and validly issued, fully paid, and nonassessable,
and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement and under
applicable state and federal securities laws.
5.4 No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing
with, any federal, state or local governmental authority
("Governmental Authority") on the part of the Buyers is required
in connection with the consummation of the transactions
contemplated by this Agreement.
5.5 The authorized capital of MSI consists of (i) 221,756 shares
of Serial Preferred Stock, none of which are issued and
outstanding; and (ii) 20,000,000 shares of common stock, no par
value share (the "Common Stock"), 13,426,549 shares of which were
issued and outstanding on October 29, 2004. All of the
outstanding shares of Common Stock have been duly authorized,
fully paid and are nonassessable and issued in compliance with
all applicable federal and state securities laws.
6 COVENANTS
Each of the Sellers undertakes to procure that between the
date of this Agreement and Closing the Company:
6.1.1 shall carry on the Business as a going concern in the
Ordinary Course of Business as carried on prior to
the date of this Agreement, save in so far as agreed in
writing by the Buyer; and
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38
6.1.2 shall maintain in force all existing insurance policies
in all material respects on the same terms and
similar level of cover prevailing at the date of this
Agreement for the benefit of the Company;
6.1.3 without prejudice to the generality of Clauses 6.1.1
and 6.1.2, shall not without the prior written
consent of MSI:
(i) acquire or agree to acquire any share, shares or
other interest in any company, partnership or
other venture;
(ii) create, allot or issue any share capital of the
Company;
(iii) repay, redeem or repurchase any share capital of
the Company;
(iv) declare, make or pay any dividend or other
distribution to shareholders;
(v) take steps to procure payment by any debtor
generally in advance of the date on which
book and other debts are usually payable in
accordance with the standard terms of business of
the Company or (if different) the period extended
to any particular debtor in which to make payment;
(vi) delay making payment to any trade creditors
generally beyond the date on which payment of
the relevant trade debt should be paid in
accordance with credit period authorised by the
relevant creditors (or (if different) the period
extended by creditors in which to make payment);
(vii) make any change to its accounting practices or
policies or amend its constitutional
documents;
(viii) enter into any Important Agreement;
(ix) increase the remuneration of or pay ex-gratia
bonuses to any of the employees of the
Company other than in the Ordinary Course of
Business.
7 BUYER'S UNDERTAKINGS
The Buyers agree with the Sellers that the 2005 Accounts shall be
prepared and agreed in accordance with Schedule 3 and that during
the period from Closing until December 31, 2005:
7.1 it will procure that the Company will not engage to any
material extent in any business other than the Business;
7.2 it will not cause any member of the Company's Group to enter
into any contract outside the ordinary course of business, it
being understood and agreed that guaranteeing the indebtedness of
the Buyers and
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39
providing collateral security for such guarantee to the
extent permitted by law shall not be deemed outside the ordinary
course of business ;
7.3 it will develop and promote the Business as a separate
operating entity and will support the same policies and practices
as have been followed by the Company prior to the date of this
Agreement insofar as the same are at the relevant time still
reasonable and practicable in the prudent management of the
affairs of the Company's Group; do not conflict with
Xxxxxxxx-Xxxxx legislation or other Legal Requirements nor with
the accounting policies used from time to time by the Buyer's
Group;
7.4 it will not cause or permit the Company to cease carrying on
its business or to sell all or any part of its business or to
reduce the scale of its operations or materially alter its
business or manner of operation save as required by law or the
prudent management of the affairs of the Company's Group;
7.5 it will procure that all trading or other transactions of
whatever nature between the Company and the Buyers or any member
of the Buyers' Group will be conducted on an arm's-length basis
at fair market value;
7.6 it will not cause or permit the diversion of any business
from the Company which competes directly with the Business and
which may be profitably undertaken by it;
7.7 it will not remove Xxxx-Xxxxxxxx Allier from the office of
president of the Company's board of directors other than in
circumstances which would constitute faute lourde or faute grave
if he were deemed to be an employee;
7.8 the Buyers acknowledge that the Company is successfully
growing the Business by a unique combination of anticipation,
technology innovation, aggressive investment policy and fast
decision-making processes. In this respect, it will not cause or
require any substantial change in the Company's Budget and in
particular will not reduce at any time the expenses, the capital
expenditures, the hiring plan and in general the necessary
resources that support its sales plan for 2005 for so long as the
Company is reasonably considered to be on course to meet its
sales' target for 2005;
7.9 it will not take any step or set up any process which may
negatively affect the rapidity of reaction of the Company vis-
-vis its clients, potential clients, suppliers or potential
suppliers other than to comply with Xxxxxxxx-Xxxxx legislation,
other Legal Requirements or consistently with the conduct of past
affairs of the Company;
7.10 it will not cause or require the Senior Employees to leave
the Company other than for cause reelle et serieuse de
licenciement;
7.11 it will not alter the marketing, sales, customer service and
technical support policies of the Company other than to comply
with Xxxxxxxx-Xxxxx legislation, other Legal Requirements or
consistently with the conduct of past affairs of the Company;
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40
7.12 it will not cause the Company to move from its offices
located at 000, xxxxxx xx Xxxxxxx Xxxxxxxxxx, Xxxxxxxx until the
expiry of a period of two years from the date of this Agreement;
7.13 with a view to making available the benefits of Rule 144 of
the Securities Act, until two years after the issuance of the
Consideration Shares, MSI agrees to use its best efforts to make
and keep adequate "current public information", as that term is
defined in Rule 144(c) of the Securities Act, available at all
times and to furnish to any holder of Consideration Shares
forthwith upon request a written statement as to its compliance
herewith.
8 CONDITIONS TO CLOSING
8.1 Closing of the sale and purchase of the Shares shall be
conditional upon the following conditions being satisfied or
waived by each of the parties hereto on or before 22 December
2004: (a) no Material Adverse Change having occurred between the
date of this Agreement and the Closing Date and (b) the Buyers
having unconditional financing to finance the transactions
contemplated by this Agreement.
8.2 The Buyers and the Sellers shall use their respective best
endeavours to achieve satisfaction of the conditions set out in
Clause 8.1.
8.3 The Closing shall take place on the third Business Day
following the date on which all of the conditions set out in
Clause 8.1 are first satisfied or waived.
9 CLOSING CONDITIONS
9.1 At the Closing, the Sellers shall deliver or cause to be
delivered the following to the Buyers and/or their nominees:
9.1.1 Evidence that all of the BSPCEs in existence at the
Closing Date have been either cancelled or
exercised in full and the Shares resulting from such
exercise sold in their entirety by the Sellers to the
Buyers pursuant to this Agreement.
9.1.2 Letters of resignation from all of the directors
(except for Xxxx-Xxxxxxxx Allier) in the Company
with effect from the Closing Date containing an
acknowledgement that their rights in their capacity as
director are fully satisfied and that each of them have
no claim or action in their capacity as director
against the Company of any nature whatsoever and that
each waives all rights and claims he or she may have
against the Company in their capacity as director;
9.1.3 Duly completed, executed and dated Cerfa declarations
and share transfers ("ordre de mouvement") in
respect of the Shares in favour of the Buyers;
9.1.4 The written resignation of the auditors of the Company
effective after they have finalised their audit of
the accounts for the year ending March 31, 2006
incorporating an
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41
acknowledgment that they have no claim against the
Company in respect of compensation for any account
whatsoever including fees for services rendered;
9.1.5 The share register of the Company as well as the
shareholders' accounts certifying that all the
Shares which are transferred pursuant to this Agreement
are fully owned by the Sellers;
9.1.6 One Bank Guarantee duly signed by the Bank covering
amounts equal to the Guarantee Amount;
9.1.7 Letters from each of the Sellers confirming the waiver
of their pre-emption rights contained under the
Shareholders Agreement or otherwise and containing an
acknowledgment that as at Closing Date, their rights
are fully satisfied and that each of them is not aware
of any claim or action that he could have against the
Company of any nature whatsoever and that each waives
any rights and claims he or she may have against the
Company (save in all cases for claims and actions that
the Sellers may have against the Company as a result of
this Agreement and any transaction provided in this
Agreement or pursuant to his or her contract of
employment with the Company);
9.1.8 Evidence that the Ancillary Agreements (except the
shareholders agreement) have been signed;
9.1.9 A statement detailing in full the flow of funds
necessary to pay the Closing Payment;
9.1.10 An unconditional transfer of the Relevant Trademarks
from Xxxx-Xxxxxxxx Allier to the Company (for a
price equal five thousand euros (5,000 Euro) for the
Humirel trademark and one euro (1 Euro) for the
Apitronics trademark);
9.1.11 An agreement whereby Xxxx-Xxxx ois Allier transfers his
shares in Humirel Inc. to the Company for three
hundred fifty euros (350 Euro);
9.1.12 An unconditional transfer for one euro (1 Euro) of the
Relevant Domain Name from Xxxx-Xxxxxxxx Allier to
the Company;
9.1.13 An agreement terminating the Shareholders' Agreement;
9.1.14 An estimated balance sheet for the Company as at 30
November 2004 together with a schedule of Debts
and cash or cash equivalent at the Closing Date (being
provided that this may not affect the agreed amount of
the Debts defined in Clause 1 of this Agreement).
9.2 At the Closing, the Buyers shall deliver to Messrs. Xxxx-Xxxx ois
Allier, Bruno Patissier and Xxxxx Xxxxx stock certificates
in respect of their Consideration Shares
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10 PAYMENT
10.1 Against compliance by the Sellers with the provisions of
Clause 9.1 above, the Buyers shall pay the Closing Payment to the
Sellers, the Guarantee Amount to the Sellers other than the
Investors.
10.2 If the provisions of Clause 9.1 are not fully complied with
by the Sellers, the Buyers shall be entitled to fix a new date
for Closing (not being more than 15 Business Days after the
Closing Date in which case the provisions of this Clause 10 shall
apply to Closing so deferred) or effect Closing notwithstanding
such non-compliance.
If the provisions of Clause 9.1 are still not fully complied
with by the Sellers at such new date fixed by the Buyer, the
Buyers shall be entitled to elect to terminate this Agreement (in
addition to and without prejudice to the right to claim for
damages or specific performance) or to effect Closing
notwithstanding such non-compliance.
10.3 If the provisions of Clause 9.2 are not fully complied with
by the Buyers, the Sellers shall be entitled to fix a new date
for Closing (not being more than 15 Business Days after the
Closing Date in which case the provisions of this Clause 10 shall
apply to Closing so deferred) or effect Closing notwithstanding
such non-compliance.
If the provisions of Clause 9.2 are still not fully complied
with by the Buyers at such new date fixed by the Sellers, the
Sellers shall be entitled to elect to terminate this Agreement
(in addition to and without prejudice to the right to claim for
damages or specific performance) or to effect Closing
notwithstanding such non-compliance.
11 INDEMNIFICATIONS
11.1 SELLERS' WARRANTIES; INDEMNIFICATION
11.1.1 Subject to the limitations contained in this Clause
11.1.1, the Sellers shall indemnify and hold
harmless the Buyers from and against any and all damage
and losses (but excluding any indirect and not
foreseeable damages and losses) (collectively,
"LOSSES") incurred by either the Buyers or the Company
that could result from:
(a) Any and all Taxes payable by the Company that
relate to any period or transaction prior to the
Closing Date by way of breach of the Sellers'
Warranties including all reasonable costs and
expenses incurred in relation to such Taxes
payable by the Company;
(b) Any breach of the Sellers' Warranties and any
and all actions, proceedings, demands, judgements,
costs and expenses including but not limited to
reasonable attorneys fees, incidental to such
breach or non-fulfilment;
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provided, however, and notwithstanding anything
else to the contrary contained in this Agreement
(except for the provisions of Clause 11.8) or
otherwise, that the Sellers shall not indemnify the
Buyers for any Losses, in whole or in part, if and to
the extent the fact, matter, event or circumstance
giving rise to a claim was fairly disclosed in this
Agreement or in the Disclosure Letter in a manner and
in sufficient detail to provide reasonable and fair
disclosure to the Buyers of the disclosed matter save
that this proviso shall not limit, except and/or
qualify the Sellers' liability under Sub-clause 11.1.2
or Clause 12.1.
For the avoidance of doubt, it is expressly
provided that each event or matter disclosed in the
Disclosure Letter, constitutes not only a disclosure
for the warranty against which it is disclosed, but
also a disclosure against each other Sellers' Warranty
to which it relates provided that the disclosure is
clearly linked to such other Sellers' Warranty.
11.1.2 Tax Indemnity
The Sellers undertake to indemnify the Buyers up
to the full amount of any Losses of the Company and/or
the Buyers resulting or arising from any Tax which
would be borne by the Company or any Group Company and
of any tax advantage (such as reduction, saving or
recall of taxes or duties, including any future tax
impact or deficits which may be carried forward,
depreciations which may be known to have been postponed
or other regulations allowing deferral or reprieve)
which could be questioned or postponed, following any
reassessment or other act carried out by the tax
authority relating to the period on or prior to the
Closing Date except to the extent that any such
liabilities have been specifically provided for in the
2004 Accounts or in the Interim Accounts or to the
extent that such liabilities relate to the activities
of the Company in the Ordinary Course of Business since
the Balance Sheet Date.
It being agreed that, in the case of an adjustment
relating to the timing of Tax, such Losses shall be
limited to the amount of interest and late payment
penalties (if any) effectively paid by the Company or
its Affiliates.
If tax losses carried forward available as at the
Closing Date to the Company are successfully challenged
by the Tax administration and hence no longer available
("LOST LOSSES"), the Sellers shall indemnify the Buyers
for Tax effectively paid or to be paid by the Company
which would otherwise have been offset by the Lost
Losses. The Buyers' right to indemnification will arise
only upon effective payment by the Company of Tax which
would otherwise have been offset by the Lost Losses.
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In calculating the Losses payable pursuant to this
Sub-Clause, the Losses shall be reduced to the extent
that any Tax reserves or Tax provision recorded in the
2004 Accounts or in the Interim Accounts have become
unjustified or have been released or written back on
the date the payment for the indemnification is due.
Sub-clause 11.3(a) shall not apply to this
Sub-clause 11.1.2.
11.2 BUYER'S WARRANTIES; INDEMNIFICATION
The Buyers, jointly and severally, shall indemnify and hold
harmless the Sellers from and against any and all Losses
reasonably incurred by the Sellers that could result from any
breach of the Buyers' Warranties or non-fulfilment of any
obligation on the part of Buyers under this Agreement and any and
all actions, proceedings, demands, judgements, costs and expenses
including but not limited to reasonable attorneys fees,
incidental to such breach or non-fulfilment.
11.3 Sellers' liability under the Sellers' Warranties shall be limited
as follows:
(a) DE MINIMIS; DEDUCTIBLE
(i) Subject to Sub-clause 11.1.2, the Buyers shall not
be entitled to make any claim pursuant to this Clause
11 unless the Loss (including Losses arising directly
or substantively out of the same fact or facts) is
greater than 10,000 Euro (ten thousand euros) per
individual Loss.
(ii) Subject to Sub-clause 11.1.2, the Sellers shall
not be liable to pay all or part of Losses, pursuant to
a Notified Claim, except to the extent that the amount
of such Losses, together with the Losses resulting from
previous Notified Claims shall be more than or equal to
100,000 Euro (one hundred thousand Euro) (the
"DEDUCTIBLE").
(iii) When the Deductible is reached or exceeded by Losses
in respect of a Notified Claim, taking into
account Losses arising by virtue of previous Notified
Claims, then the Sellers shall be obliged to pay only
the amount of such Losses together with all the Losses
arising by virtue of any previous Notified Claim which
exceeds the Deductible. From such date in respect of
all other Losses resulting from future Notified Claims,
the Sellers may no longer apply the procedure set out
in Clause 11.3 (a) (ii) nor benefit from the imposition
of the Deductible.
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(b) CEILING
The total cumulated amount of payments which the
Sellers may be obliged to make to the Buyers in accordance
with this Agreement shall not exceed an amount equal to the
sum of the Guarantee and Retention Cumulated Amount and the
Earn-Out Payment as finally determined in accordance with
Clause 3.3 (the "CEILING"). except for any Losses relating
to Tax and subject also to Clause 12
(c) CHANGE OF LEGAL REQUIREMENTS
The Sellers shall not be liable for nor shall be
obliged to pay all or part of any amounts under this
Agreement in so far as such amounts result from a causatory
fact or event which is:
- in relation to Taxes, the entry into effect of an
amendment to the applicable rate or withholding, or a
new Tax or law invoked after the date hereof even if
this entry into effect is given a retroactive effect;
- the adoption of, or modification of, the Legal
Requirements occurring after the date hereof even if
this adoption or modification is given a retroactive
effect;
- a change in the interpretation made by any
relevant authority of any law or rule which was applied
prior to the date hereof.
(d) COMPUTATION OF LOSSES
Losses for which the Buyers would be entitled to
indemnification hereunder shall be determined net of:
(i) any indemnity (net of Taxes and the reasonable
costs of recovering such amounts) which is effectively
paid by a third party (including amounts paid or
payable by insurers) in relation to such amounts
payable to the Buyer. The Buyers shall undertake, and
shall cause the Company to undertake, all commercially
reasonable actions to collect any amount payable under
an insurance policy. If any such amount related to a
Loss is subsequently recovered by the Company or the
Buyer, in whole or in part, from any third party after
indemnification by the Sellers, the net amounts so
recovered will be immediately reimbursed to the
Sellers;
(ii) any immediate Tax savings or future Tax savings
resulting from increases of Tax losses carried forward
and deferrals arising, directly or indirectly, from the
Losses for the Company or its Affiliates; it being
specified that, as stated in 11.1.2, in the case of an
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46
adjustment relating to the timing of Tax, such
Losses shall be limited to the amount of interest and
late payment penalties (if any) effectively paid by the
Company or its Affiliates.
(iii) any reserves or provision reflected in the Accounts,
the 2004 Accounts or the Interim Accounts but only
to the extent to which they specifically relate to the
relevant Losses.
(e) MITIGATION
Notwithstanding anything to the contrary, Losses shall
not include any damages to the extent they are proven to be
directly attributable to a failure to mitigate damages after
the Buyers became actually aware of the event or omissions
which caused such damages provided always that the Sellers
have complied promptly with their obligations under Clause
11.5.3. The Buyers undertake to the Sellers that it will at
all times procure that the Company makes its best efforts to
mitigate Losses on this basis.
(f) OTHER LIMITS ON INDEMNITY
(i) The Sellers shall not be liable to make any
payment in respect of any claim that arises in respect
of any breach of the Sellers' Warranties unless and
until any corresponding liability has been Finally
Determined.
(ii) Notwithstanding anything in this Agreement to the
contrary, the Sellers will not be obligated to
indemnify the Buyers for any tax audit or claim made or
brought by the Tax authorities which merely involves a
simple transfer of Taxes from one year to another,
except that any penalties or additions to Taxes paid as
a result of such a transfer of Taxes from one year to
another shall constitute a Loss.
(iii) The Buyers undertake to the Sellers that it will at
all times until the date of the second anniversary
of this Agreement procure that the Company maintains in
full force and effect insurance cover in amounts which
are not less than and in terms which are at least
comparable to those subsisting on Closing except in
respect of the level of the deductibles which shall be
consistent with the deductibles applied to the
insurance policies placed by the Buyer's Group.
(h) NO DUPLICATION
The Parties agree that any liability for any
indemnification for Losses pursuant to Clause 11 shall be
determined without duplication of recovery by reason of the
state of facts giving rise to such liability constituting a
breach of more than one
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47
representation, warranty covenant or agreement contained in
this Agreement.
11.4 DURATION
In order validly to request the performance of this
Agreement, the Buyers must provide a Notified Claim (as defined
hereunder) to the Sellers:
11.4.1 on or before the date that is 30 Business Days after
the date following the expiration of the
applicable statute of limitations, as far as questions
relating to Tax, customs or regulation of employment or
social security or environmental matters are concerned;
11.4.2 on or before the tenth anniversary of the Closing Date
for any Notified Claim relating to those
Warranties set out in Sub-Clauses 4.2.1, 4.2.2 and
4.3.2.3; and
11.4.3 on or before the second anniversary of the Closing Date
for any other event or matter subject to Clause
11.1.
11.5 INFORMATION AND CONDUCT OF CLAIMS - PARTIES
11.5.1 The Buyers and the Sellers undertake fully to cooperate
with each other relating to Notified Claims.
The Buyers shall provide written notice to the Sellers
of any event that gives rise to a claim under this
Agreement, which notice shall specify the grounds on
which the claim is based (a "NOTIFIED CLAIM"). Subject
to the Sellers complying promptly with their
obligations under Clause 11.5.3, the notification shall
be made in any event no more than (i) forty (40)
Business Days following MSI's actual knowledge of the
grounds of a Notified Claim or the actual receipt by
MSI of a third party claim or (ii) ten (10) Business
Days after the Company has received a notification of a
Tax reassessment from a governmental authority. If none
of the Buyers provide the written notice to the Sellers
within the time limits set out in this Sub-Clause, the
liability of the Sellers in respect of the claim shall
not be extinguished but shall be reduced to the extent,
if any, that it is increased as a result of the
relevant notice being provided after that time.
The Buyers undertake, and shall cause the Company
to undertake, to ensure that the Sellers are permitted
to consult freely all relevant information or documents
held by the Company in relation to a Notified Claim and
which is reasonably necessary to ensure an
understanding of the conditions and circumstances of
the Notified Claim, provided, however, that (i) such
investigations are conducted during the business hours
of the Company, as the case may be, (ii) are conducted
in such a way as shall not disturb the normal running
of the Business, or inhibit the normal activities of
the
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48
Company, and (iii) a first notice of three (3)
Business Days has been delivered by the Sellers to the
Company. The Sellers undertake to keep confidential all
information and documents which they may receive or
consult in connection thereto.
11.5.2 If the Sellers decide to contest the merits of a
Notified Claim, the Sellers will notify MSI in
writing of their reasons for doing so within 30
Business Days of receiving the Notified Claim. The
Sellers will be deemed to have accepted the Notified
Claim, if they do not respond to the Notified Claim
within this time limit and the provisions of Clause
11.6 will be applicable.
If the Sellers have notified MSI within the time
limit of their reasons for contesting the Notified
Claim, the Parties shall meet each other within 15
Business Days following the response of the Sellers in
accordance with the provisions contained in Clause
15.2. In the absence of an agreement with MSI within 30
Business Days following the date of this meeting, or in
the absence of this meeting, the Sellers shall be
deemed to have rejected the Notified Claim and either
Party shall be free to initiate the arbitration
proceedings set out in Clause 15.3.
11.5.3 Where the Sellers, due to their position in relation to
the Company, or for any other reason, are aware of
a disclosed fact or event giving rise to a Notified
Claim under this Agreement, before the Buyers
themselves are aware of such fact or event, they
undertake to inform MSI immediately.
11.5.4 In the event of a claim, audit notice, summons, or of
any litigation matter which has or which could
give rise to a Notified Claim under this Agreement (a
"THIRD PARTY CLAIM"), the Sellers may notify MSI within
the notice period provided in Clause 11.5.2 that they
will defend the Company against such Third Party Claim
but only if the Sellers accept full responsibility for
the corresponding claim by the Buyers under this
Agreement which arises out of the Third Party Claim
subject to the Commercial Safeguard Discount (as
defined below). In such circumstances, the Sellers
shall have the right to defend the Company by
appropriate proceedings and shall have the power to
direct and control such defence provided that the
conduct of such defence and any counter-claim is not in
any way detrimental to the commercial interests of MSI.
In such case, the Sellers may retain counsel of their
choice, reasonably acceptable to MSI, to represent the
Company and shall pay the fees and disbursements of
such counsel with regard thereto. The Sellers shall
ensure that MSI is provided with copies of all advice
and correspondence with respect to the Third Party
Claim sent and received between the Sellers and their
chosen counsel at the same time as the relevant
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49
advice or correspondence is received by the Sellers or
their chosen counsel. The Sellers shall not settle
a claim or demand without the consent of MSI which
consent shall not be unreasonably withheld. The conduct
of the Third Party Claim and any settlement of a claim
or demand by the Sellers shall take into account the
commercial interests of MSI and the Company provided
that the Sellers shall not be liable for Losses to the
extent that the compensation agreed to be paid by the
Sellers (subject to MSI's prior written consent) in
respect of the Third Party Claim has been increased
above the amount which would otherwise have been
awarded by an independent expert and this increase can
be reasonably attributed solely to the safeguarding of
the future commercial interests of MSI and the Company
(the "COMMERCIAL SAFEGUARD DISCOUNT"). The Parties
undertake to discuss and agree in good faith the amount
(if any) of the Commercial Safeguard Discount. If any
supra-national, governmental or local authority
requires the Company to pay a retainer or indemnity
during the conduct of any Third Party Claim, the Agent
shall ensure that the payment of the part of that
indemnity or retainer corresponding to the proportion
of Shares sold by the Allier Sellers and the Individual
Sellers on Closing Date to the total number of Shares
sold at that date is paid by the Bank pursuant to the
Bank Guarantee and the balance of such retainer or
indemnity shall be deducted from the Warranty Retention
Payment, to the extent that the Bank retain sufficient
funds for this purpose and the Warranty Retention
Payment is superior to or equals that balance. To the
extent that the funds so retained are insufficient,
each of the Sellers shall individually immediately make
good any shortfall of such indemnity or retainer,
prorata its shareholding in the share capital of the
Company at the Closing Date.
11.5.5 In the event that the Sellers elect not to defend the
Company against such Third Party Claim, then the
Buyers shall conduct the defence, and that portion
thereof as to which such defence is unsuccessful (and
the reasonable costs and expenses pertaining to such
defence) shall be the liability of the Sellers
hereunder, subject to the limitations set forth in
Clause 11 provided, however, that in any case (i) the
Buyers shall allow the Sellers to make their
observations on the conduct of the proceedings and the
Buyers will ensure that these observations are taken
into account by the Company in as far as such
observations are reasonable and made in its interest,
(ii) the Buyers shall not settle a Third Party Claim
without the consent of the Sellers, which consent shall
not be unreasonably withheld or delayed.
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11.6 PAYMENT OF CLAIMS
Any Notified Claim accepted or deemed to have been accepted by
the Sellers on a certain date under the terms of this
Agreement shall imply that the amount so claimed is certain, in
liquid form and due and payable from that date. Where this is not
the case, and without prejudice to any legal disposition, an
amount shall be deemed to be certain, in liquid form and due and
payable under the present Agreement following (a) an agreement
between the Parties on the Notified Claim, or (b) a settlement
agreement in accordance with article 2044 of the Civil Code being
concluded between the Parties, or (c) a final decision being
rendered by a court or administrative body (with no further
appeal available) in respect of the Notified Claim or (d) a final
decision having been rendered by arbitrator(s) as envisaged by
Clause 15.3 (such Notified Claim being referred to as being
"FINALLY DETERMINED"). The Parties shall, immediately on the due
date for payment of any Notified Claim accepted or deemed to have
been accepted by the Sellers, authorise the Bank to pay the
amount of such claim (which corresponds to the proportion of the
number of Shares sold by the Sellers other than the Investors to
the total number of Shares sold as at Closing Date) and the
balance of such Claim shall be deducted from the Warranty
Retention Payment, to the extent that such total amount cumulated
with all other amounts already paid by the Bank and deducted from
the Warranty Retention Payment do not exceed the Guarantee and
Retention Cumulated Amount. If such payment is insufficient to
meet such claim in full, the shortfall shall be paid according to
sub-paragraph (iii) below and to the extent that the Earn-Out
Payment is insufficient to meet the Finally Determined Notified
Claim or has already been paid out to the Sellers, then subject
always to Sub-Clause 11.3 (b), such shortfall shall immediately
be paid by the Sellers.
Any delay in payment (starting from the due date) by a Party
of sums due under the present Agreement will result in such
Party(ies) having to pay interest at the legal rate of interest
(taux de l'interet legal) at the stipulated date.
It is expressly provided that in the case when a legal
decision subject of appeal or other judicial recourse (voie de
recours) has been rendered against a Party or Parties for part of
all of a Notified Claim, and when such Party or Parties have
exercised their right of appeal or a judicial recourse and the
final and binding decision has confirmed part or all of that
Notified Claim, the sums to be paid under this Agreement so
determined shall bear interest at the interest rate provided for
in this Clause 11.6, from the date of the first judicial decision
until the date of payment of such sums by the such party to the
indemnified Party.
It is agreed that the Buyers shall be entitled to receive
payment of any indemnification due to them under this Clause 11
(other than indemnification in respect of matters which are
excluded from the
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51
Ceiling pursuant to Clause 11.3(b) and for which indemnification
becomes due after the Due Date) solely:
(i) by payments from the Bank made in accordance with the
Bank Guarantee in proportion to the number of Shares sold by
the Sellers other than the Investors as at Closing Date;
(ii) by deduction from the Warranty Retention Payment in
accordance with Clause 3.6 in proportion to the number of
Shares sold by the Investors as at Closing Date; and
(iii) by way of set off against the amount of the Earn-Out
Payment which would otherwise have been paid to the
Sellers pursuant to Clause 3.1.2.
Any payment under this Agreement shall be considered as a
reduction of the Purchase Price. The Buyers shall allocate
any such payment amongst themselves at the time of payment.
11.7 SUBSTITUTION/ASSIGNMENT
11.7.1 Successors and assignees of the Allier Sellers and the
Individual Sellers shall be held jointly and
severally liable for the performance of the obligations
of the Allier Sellers and the Individual Sellers under
this Agreement.
11.7.2 None of the Parties shall be entitled to assign its
rights or obligations under this Agreement without
the prior written consent of the other Party, except
that the Buyers shall be entitled to assign all or part
of its rights and obligations under this Agreement and
any outstanding claims and litigation to an Affiliate
or to any of the Buyers' lenders from time to time as
security for their obligations to such lenders without,
in each case, requiring prior written consent.
11.8 Nothing in this Agreement or in the Disclosure Letter or
otherwise shall qualify or limit the liability of the Sellers in
relation to (i) those Warranties set out in Sub-Clauses 4.2.1,
4.2.2 and 4.3.2.3 except for Sub-Clause 11.4.2 and/or (ii) any
claim under this Agreement attributable to the fraud or wilful
concealment (dol) on the part of any of the Sellers.
11.9 Sub-Clauses 11.3 and 11.4 shall apply mutatis mutandis to
the liabilities of the Buyers under this Agreement.
12 SPECIFIC INDEMNIFICATION
12.1 The Sellers agree to indemnify and hold the Buyers harmless
against all Losses arising out of or in connection with the
invalidity, nullity, unenforceability, challenge to or
requirement to remedy, ratify or rectify all or any of the
BSPCE's including the payment of any Tax by the Company resulting
from the foregoing or any payment or compensation by the Company
or the Buyers to any of the holders of
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52
the BSPCE's resulting from any of the foregoing (the "SPECIFIC
INDEMNITY").
12.2 The limitations in Clause 11.3 shall not apply to claims
under Clause 12 and those claims may be brought under Clause 11
for up to two (2) years following the Closing Date without
prejudice to Clause 11.4.1.
13 RIGHT OF TERMINATION
13.1 Each Party shall be entitled to terminate this Agreement
(except as regards Clause 14 which shall survive such
termination) without prior notice to the other Party if the
information, documents and evidence to be delivered by the other
Party in Clause 9 above are not delivered within ninety (90) days
after the date of this Agreement.
13.2 The provisions of this Clause are without prejudice to
Clause 10.
14 CONFIDENTIALITY
14.1 The Sellers and the Buyers shall treat as confidential and not
disclose the provisions of this Agreement and any agreement
entered into pursuant to this Agreement. Prior to the Closing
Date, the Buyers shall treat as confidential and not disclose or
use information received or obtained in respect of the Sellers.
From and after the Closing Date, the Buyers shall treat as
confidential and not disclose or use information received or
obtained in respect of the Sellers (other than the Company and
other than in respect of the subject matter of this Agreement).
From and after the Closing Date, the Sellers shall treat as
confidential and not disclose or use information received or
obtained in respect of the Buyers and the Company; provided,
however, that the Sellers shall be permitted to use financial
information regarding the Company to the extent required for
normal financial reporting purposes.
14.2 This Clause 14 shall not prohibit disclosure of any information
if and to the extent:
(i) the disclosure or use is required by law, any
regulatory body or the rules and regulations of any
recognised stock exchange;
(ii) the disclosure or use is required to vest the full
benefit of this Agreement in the Sellers or the Buyer, as
the case may be;
(iii) the disclosure or use is required for the purpose of any
judicial proceedings arising out of this Agreement or
any other agreement entered into under or pursuant to this
Agreement or the disclosure is reasonably necessary,
desirable or required to be made to a taxation authority in
connection with the taxation affairs of the disclosing
party;
(iv) the disclosure is made to employees or professional
advisers of the Sellers or the Buyer;
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(v) the information becomes publicly available (other than by
breach of this Agreement);
(vi) the other Party has given prior written approval to the
disclosure or use; or
(vii) the information is independently developed after Closing;
(viii) provided that prior to disclosure or use of any
information pursuant to (i), (ii) or (iii) (except in
the case of disclosure to a taxation authority), the Party
concerned shall promptly notify the other party of such
requirement with a view to providing the other party with
the opportunity to contest such disclosure or use or
otherwise to agree the timing and content of such disclosure
or use.
14.3 It is expressly agreed that if this Agreement should be voided or
terminated, Clause 16.5 shall remain in force for the
purposes of this Clause 14.
15 APPLICABLE LAW/ARBITRATION
15.1 This Agreement shall be construed and governed exclusively
in accordance with French law.
15.2 Any dispute which shall arise between the Parties from this
Agreement shall be first submitted to an internal system for
dispute resolution (ISDR). Such ISDR shall consist of Mr.
Xxxx-Xxxxxxxx Allier, one member of the Individual Sellers and
BANEXI and MSI who shall form the Dispute Committee. Should such
Dispute Committee not be able to reach agreement within a
reasonable period of time (such period not to exceed two months)
then either Party may refer any dispute to arbitration according
to Clause 15.3 below.
15.3 Any dispute arising between the parties from this Agreement
which cannot be settled by ISDR as stipulated in Clause 15.2
shall be finally settled either by a sole arbitrator or (if the
Parties cannot agree on such sole arbitrator within a period of 1
(one) month) by three arbitrators appointed by the Parties in
accordance with the rules of arbitration of the International
Chamber of Commerce.
The non-prevailing Party in the arbitration shall pay the
fees and expenses of the arbitrators and the costs of arbitration
and the enforcement of any award rendered therein including the
attorney's fees and expenses of the prevailing party.
Such arbitration shall take place in Paris; the language of
the arbitration shall be English.
16 MISCELLANEOUS
16.1 This Agreement can only be changed or modified in writing.
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16.2 A waiver by any Party of any of its rights under this
Agreement must, in order to be valid, be made in writing.
16.3 All Schedules to this Agreement form an integral part of the
same.
16.4 Should any provision of this Agreement is held to be
illegal, invalid, unenforceable or void, in whole or in part,
under enactment or rule of law, the Parties shall substitute such
invalid provision by a valid provision which achieves as much as
possible the purport, sense and economic purpose of the invalid
provision.
The remaining provisions of this Agreement shall not be
affected by the nullity/invalidity of individual provisions and
shall remain in full force and effect unless such invalid
provision is of such essential importance to this Agreement that
the Parties could not be reasonably expected to have concluded
the Agreement without the invalid provision.
16.5 Unless this Agreement provides otherwise, each Party shall
bear its own fees, expenses and costs in connection with this
Agreement and the transactions contemplated herein as well as any
taxes required by law to be paid by such Party.
16.6 Restructuring
The restructuring (contributions, apport partiel d'actifs,
mergers, splits and other transactions) which may involve
the Buyers and/or the Company shall not affect the rights and
undertakings of the Parties to this Agreement and, in particular,
the Sellers' Warranties and the indemnification procedure under
this Agreement shall remain applicable mutandis mutandis and
unchanged.
16.7 Non-competition
Mr. Xxxx-Xxxxxxxx Allier, Xx Xxxxx Patissier, Xxxxx Xxxxx
and each of the other Individual Sellers (except for those having
an employment contract with the Company as at the Closing Date)
individually undertakes to the Buyers and to any of their
assignees to which the Agreement has been assigned in accordance
with Clause 11.7.2 not to compete, directly or indirectly
(including through any Affiliate of any of the Sellers) with the
Business in the Territory for a period of two (2) years from the
Closing Date provided that in respect of (i) Xxxx-Xxxxxxxx
Allier, the period shall commence on the Closing Date and shall
end on the later of (a) the third anniversary of the Closing Date
or (b) two (2) years after he ceases to be actively engaged in
the activities of the Company (the "JF RESTRICTED PERIOD") and
(ii) Bruno Patissier and Xxxxx Xxxxx, the period shall commence
on the Closing Date and shall end one year later (the "BP/AS
RESTRICTED PERIOD"). To this end, each of these Sellers
individually undertake to the Buyers and to any of their
assignees to which the Agreement has been assigned in accordance
with Clause 11.7.2 for a period of two (2) years from the Closing
Date or in the case of Xxxx-Xxxxxxxx Allier on the one hand and
Bruno Patissier and Xxxxx Xxxxx on the other hand
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55
during respectively the JF Restricted Period and the BP
Restricted Period:
(ix) not to carry out or undertake, whether directly or
indirectly, for their own account or for the account of
third parties, any activity competing with the Business in
the Territory in any manner whatsoever;
(x) not to manage, advise or assist in any way, whether or not
for consideration, any Entity carrying out a business
competing with the Business in the Territory;
(xi) not to solicit any customers or clients of the Business who
are or were customers or clients of the Business as at
the Closing Date or in the twelve (12) months immediately
preceding the Closing Date or in the case of Xxxx-Xxxx ois
Allier only in the 12 months immediately his departure from
the Company;
(xii) not to acquire any interest in any Entity competing with
the Business, except where such interest only
constitutes a financial participation of less than 5% of the
share capital and voting rights of an Entity the stock of
which is traded on any recognised investment exchange; and
(xiii) not to engage in any practice the purpose of which is to
evade the provisions of this undertaking.
Provided that in the case of Xxxx Desarnaud only, he shall
be entitled to continue his activities as a shareholder and/or
director of UPSI and SPSI subject to and in accordance with the
terms and conditions of the Ancillary Agreements and provided
further that in respect of Mesrs Patissier and Seube if there is
any conflict between the provisions contained under this Clause
or Clause 16.8 and their respective contracts of employment, the
terms, conditions and provisions of this Clause and Clause 16.8
shall prevail.
16.8 Non solicitation
Each of the Sellers shall not, directly or indirectly, for a
period of three (3) years from the date of this Agreement
and each of the Investors shall procure that their Affiliates
shall not, for the same period, solicit for employment or hire
any officer, director or employee when employed by the Company or
do anything to influence or encourage any such person to leave
his or her employment with the Company, unless such person
resigned from the Company on or prior to the date of this
Agreement provided that in the case of Xxxx-Xxxx ois Allier, this
restriction shall apply during the JF Restricted Period.
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56
16.9 No joint liability
There shall be no joint liability between the Sellers for their
undertakings provided in this Agreement, save as otherwise
explicitly provided in the Agreement.
16.10 Registration
The Buyers shall be responsible for registration of this
Agreement with the Tax authorities and all registration
rights and stamp duties payable upon such registration.
16.11 Lovells' fees
The fees of Lovells in connection with the negotiation,
preparation and delivering of this Agreement and the
transactions contemplated hereby (the "LOVELLS FEES") shall be
paid as follows:
16.11.1 Lovells Fees shall be capped at 180,000, exclusive of
VAT, if any;
16.11.2 Upon Closing, upon request of Lovells Clients made
hereby under Article 1277 of the French Civil
Code, the Buyers shall pay Lovells Fees on behalf of
Lovells Clients in cash by wire transfer to an account
designated by Lovells, by deducting Lovells Fees pro
rata to the portion of the Closing Payment payable to
Lovells Clients, and proceed to payment of the Sellers'
contributions to Lovells Fees as set out in Clause 3.2
above;
16.11.3 Each of the Sellers other than the Lovells' Clients
hereby acknowledges to have benefited from
Lovells' services in relation to this transaction. As a
result, each of these Sellers agrees to reduce the
portion of the Closing Payment it is entitled to
receive by a portion of Lovells Fees to the extent that
the final amount of Lovells Fees borne by each Sellers
equals:
(xiv) For Banexi Ventures II, IRDI and SOCRI:
F = S x LF x 1.196
(xv) For each of the Allier Sellers and Individual
Sellers (except for Mr Xxxx-Xxxx ois Allier):
F = S x LF x 0.81
(xvi) For Mr Xxxx-Xxxxxxxx Allier: F = S x LF x
0.812107
where:
F is the amount of Lovells Fees (VAT included)
ultimately borne by each Seller,
S is the shareholding of each Seller in the
Company on the Closing Date,
LF is the amount of Lovells' Fees, VAT included.
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57
17 NOTICES
17.1 Any demand, notice or other communication under this Agreement,
whether required or permitted to be given hereunder, shall
be given in writing by mail, courier, telefax or email and to the
address stipulated in Clause 17.5 or such other address as the
parties shall nominate from time to time to all other Parties
hereto in accordance with the clause.
Any such notice or communication must be in the English language.
17.2 Every notice or communication given in accordance with this
Clause shall be deemed to have been received as follows:
MEANS OF DISPATCH DEEMED RECEIVED
Delivery by hand; the day of delivery;
Post: 48 hours after posting; and
Facsimile or other means of on the date the senders machine
visible electronic reproduction issues a transmission report in
respect of the notice or
communication provided that in
case of electronic messages a
notification of receipt by the
receiving party's machine is
requested and received
17.3 The Allier Sellers and the Individual Sellers acknowledge
that it may be necessary for the implementation of this Agreement
that they express one single opinion in respect of all notices
and communications under this Agreement. In the common interest
of all the Parties, the Allier Sellers and the Individual Sellers
irrevocably appoint the Agent and the Agent accepts such
appointment, as the Allier Sellers and the Individual Sellers'
sole representative in order to act on their behalf (mandataire)
for the purpose of implementing this Agreement. Any notice or
communication sent by the Agent shall be deemed to be made and
effected on behalf of all the Allier Sellers and all the
Individual Sellers and any notice or communication sent to the
Agent shall be deemed to be sent to all the Allier Sellers and
all the Individual Sellers simultaneously. No Allier Seller or
Individual Seller shall be entitled to rely on a removal of the
Agent or on cessation has been notified by registered letter with
acknowledgment of receipt to the Buyers in accordance with Clause
17.2.
17.4 The Sellers agree that Xxxx-Xxxx ois Allier, in his capacity
as agent of the Allier Sellers and Individual Sellers, BANEXI,
SOCRI and IRDI will comply with the principles set forth in
Schedule 8 in the event any action is required after the Closing
Date for the implementation of this Agreement.
17.5 The address for notice under this Agreement for each
party is as follows:
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58
Allier Sellers and Individual Sellers represented by
Xxxx-Xxxxxxxx Allier whose address for notice is mentioned
at the beginning of this Agreement.
Email: x.x.xxxxxx@xxxxxxx.xxx
With a copy to: Xxxxxxx
0, xxxxxx Xxxxxx - 00000 Xxxxx
BANEXI whose address for notice is mentioned at the beginning of
this Agreement, for the attention of Philippe Mere
Telefax: x00(0)00000000
With a copy to: Xxxxxxx
0, xxxxxx Xxxxxx - 00000 Xxxxx
SOCRI whose address for notice is mentioned at the beginning
of this Agreement, for the attention of Xxxxxxx Xxxxxxxx
Telefax: x00(0)00000000
With a copy to: Xxxxxxx
0, xxxxxx Xxxxxx - 00000 Xxxxx
IRDI whose address for notice is mentioned at the beginning
of this Agreement, for the attention of Xxxxxxx Xxxxxxxx
Telefax: x00(0)00000000
With a copy to: Xxxxxxx
0, xxxxxx Xxxxxx - 00000 Xxxxx
Buyers: MEASUREMENT SPECIALITIES, INC
-------
00 Xxxxxxxxxx Xxx, Xxxxxxxxx, XX
00000-0000, XXX,
FAO Xxxxx Xxxxxxx
Telefax: 00-0-000-000-0000
with copies to: Xxxxxxxx Xxxxxxxx
0 Xxxxxx Xxxxxxxxx
Xxxxx 00000
Xxxxxx
FAO Xxxx Xxxx
Telefax 00-00-000000000
XxXxxxxx & English, LLP
Four Gateway Center
000 Xxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxx, XX 00000-0000
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00
XXX/ Xxxxxxx X. Xxxxxxxx, Xxx.
Telefax: 00-0-000-000-0000
18 NUMBER OF COPIES
This Agreement is executed in SIX (6) copies, each of which will be
deemed to be an original.
SIGNED IN PARIS ON DECEMBER 2004
[Signature page to follow]
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60
[Signature page]
--------------------------------------------------------------------------------
XXXX-XXXXXXXX ALLIER DANIEL ALLIER
--------------------------------------------------------------------------------
XXXXXXXXX ALLIER SERGE ALLIER
--------------------------------------------------------------------------------
THIERRY ALLIER PIERRE ALLIER
--------------------------------------------------------------------------------
EMMANUEL ALLIER XXXXXXXXX XXXXXXX-ALLIER
--------------------------------------------------------------------------------
JACQUES MASSELIN BRIGITTE MASSELIN
--------------------------------------------------------------------------------
XXXXX-XXXX XXXXXXXXX XXXXXX ALLIER
--------------------------------------------------------------------------------
GUILLAUME ALLIER XXXX DESARNAUD
--------------------------------------------------------------------------------
ALAIN PACQUEMENT BRUNO PATISSIER
--------------------------------------------------------------------------------
XXXXXXX XXXXXXXX XXXXX XXXXX
--------------------------------------------------------------------------------
XXXXXX XXXXXXXX XXXX MANIGOT
--------------------------------------------------------------------------------
LAURENT BERTHEZENE XXXXXXX XXXXXXXX
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61
--------------------------------------------------------------------------------
XXXX-XXXXXXXX DELRIEU XXXXXXX XXXXXXXXX
--------------------------------------------------------------------------------
XXXXXXX XXXXX XXXXX XXX XXXX
--------------------------------------------------------------------------------
XXXXXX XXXXXXX XXXXXX XXXXXXXX
--------------------------------------------------------------------------------
Signed by on behalf of Signed by on behalf of
FCPR BANEXI VENTURES 2 SUD OUEST CAPITAL RISQUE INNOVATION
--------------------------------------------------------------------------------
Signed by on behalf of
L'INSTITUT REGIONAL DE DEVELOPPEMENT
INDUSTRIEL DE MIDI-PYRENEES
--------------------------------------------------------------------------------
Signed by Xxxxx Xxxxxxx on behalf of Signed by Xxxxx Xxxxxxx on behalf
MEASUREMENT SPECIALITIES, INC of ENTRAN SA
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62
SCHEDULE A
ALLOCATION OF THE SHARES AMONG THE SELLERS
----------------------------------------------
N SHAREHOLDER SHARES
----------------------------------------------
002 DESARNAUD XXXX 534 600
001 ALLIER X.XXXXXXXX 2 351 700
003 ALLIER DANIEL 165 500
011 PACQUEMENT ALAIN 59 400
004 ALLIER XXXXXXXXX 34 700
005 PATISSIER BRUNO 407 000
006 ALLIER SERGE 317 000
007 ALLIER THIERRY 299 000
008 XXXXXXXX XXXXXXX 34 700
009 XXXXXXXX XXXXXX 120 800
012 XXXXXXXX XXXXXXX 49 550
013 MASSELIN BRIGITTE 113 550
010 ALLIER PIERRE 223 550
016 BANEXI VENTURES C/RISQUE 3 375 180
018 XXXXX XXXXX 192 000
020 XXXXXXXX XXXXXX 26 500
021 XXXXXXXX XXXXXXX 23 500
022 DRILLON-ALLIER XXXXXXXXX 19 500
023 MANIGOT XXXX 10 000
024 ALLIER EMMANUEL 71 500
025 IRDI C/RISQUE 2 1 226 560
026 SOCRI C/RISQUE 2 735 940
028 XXXXXXXXX XXXXX XXXX 67 000
029 ALLIER LIONEL 156 250
030 ALLIER XXXXXXXXX 000 000
X XXXXXXXXXX LAURENT 26 000
S DELRIEU X.XXXXXXXX 13 000
S XXXXXXXXX XXXXXXX 15 000
X XXXXX XXXXXXX 00 000
X XXXXXXX KARIM 17 000
S MAITRET MICHEL 5 000
----------------------------------------------
TOTAL 10 870 000
----------------------------------------------
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63
SCHEDULE 1
COMPANY'S BUDGET
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64
SCHEDULE 2
2005 ACCOUNTS
1) Within 20 Business Days after December 31, 2005, the Buyers shall
prepare a draft of the 2005 Accounts specifying the 2004 EBITDA, the 2005
EBITDA, the 2005 Revenues and the 2005 Gross Margin and submit for approval
to the Sellers.
2) The 2005 Accounts shall be prepared:
(a) prepared on the same basis and in accordance with the same
accounting principles and policies and the same rates of
depreciation as have been applied in the Accounts;
(b)
here any element of the Cost of Goods Sold and the 2005
Revenues is generated in US dollars, it will be converted
into euros for the purpose of this Agreement on the basis of
the following rate: 1 Euro = USD1.23;
(c) subject to the preceding provisions of this paragraph 2 of this
Schedule, in accordance with French GAAP as December 31,
2005.
3) Within 20 Business Days of the receipt by the Sellers of the draft
2005 Accounts, the Sellers shall inform the Buyers in writing whether it
accepts the draft 2005 Accounts, and, if not, [the Sellers] shall specify
in writing the amount and nature of any item which it does not accept.
4) If the Sellers confirm in writing that they accepts the draft 2005
Accounts, or if it fails to inform the Buyers within 20 Business Days of
receipt that it does not accept the draft 2005 Accounts, such draft shall
be the 2005 Accounts for the purposes of this Schedule.
5) If the Sellers inform the Buyer, in accordance with paragraph 3, that
they do not accept the draft 2005 Accounts, the Sellers and the Buyers
shall hold discussions in good faith with a view to agreeing the 2005
Accounts. If such agreement is reached and is confirmed in writing by the
Parties, it shall be final and binding on the Parties.
6) Any dispute about the draft 2005 Accounts which remains unresolved 30
Business Days after receipt by the Sellers of the draft Closing Accounts
shall, at the request of either the Sellers on the one hand or the Buyers
on the other hand, be referred for final determination to an independent
firm of chartered accountants nominated jointly by the Sellers and the
Buyers or, failing such nomination within 10 Business Days after a request
by either the Buyers or the Seller, such firm shall be nominated at the
request of either the Sellers or the Buyers by the President for the time
being of Tribunal de Commerce de Paris. Such independent firm shall act as
experts and not as arbitrators and (in the absence of manifest error) its
decisions (both as to the manner in which its
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65
determination is to be made and as to the subject matter of its
determination) shall be final and binding on the Parties.
7) All costs incurred by the Buyers in reviewing and agreeing the 2005
Accounts shall be borne by the Buyers and all such costs incurred by the
Sellers shall be borne by the Sellers. The fees of such independent firm
appointed pursuant to paragraph 5 of this Schedule shall be payable by the
Buyers and the Sellers in such proportions as such independent firm
determines (or failing such determination equally by the Sellers on the one
hand and the Buyers on the other hand).
8) Each Party will co-operate fully with the other and, if applicable,
with the independent firm appointed under paragraph 5 of this Schedule
(including giving all reasonable access to records, information, and to
personnel) with a view to enabling the draft 2005 Accounts to be prepared
and subsequently discussed and, if applicable, with a view to enabling any
such independent firm to make any determination required by paragraph 5.
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66
SCHEDULE 3
ALLOCATION OF THE SHARES BETWEEN THE BUYERS
MSI shall acquire that number of Shares as is equal to the value of the
Consideration Shares and Entran SA shall receive the remainder of the Shares.
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67
SCHEDULE 4
ALLOCATION OF THE CONSIDERATION SHARES BETWEEN MESSRS. XXXX-XXXXXXXX ALLIER,
BRUNO PATISSIER AND XXXXX XXXXX
The Consideration Shares shall be allocated between Messrs. Xxxx-Xxxxxxxx
Allier, Bruno Patissier and Xxxxx Xxxxx as follows:
- Mr. Xxxx-Xxxxxxxx Allier: 87.5% of the Consideration Shares rounded to
the nearest round number,
- Xx. Xxxxx Patissier: 10% of the Consideration Shares rounded to the
nearest round number,
- Xx. Xxxxx Xxxxx: 2.5% of the Consideration Shares rounded to the
nearest round number.
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68
SCHEDULE 5
PRINCIPLE OF ACTIONS IN THE IMPLEMENTATION OF THE AGREEMENT BY THE SELLERS AFTER
THE CLOSING DATE
1 Each of the Allier Sellers and Individual Sellers other than Xxxx-Xxxxxxxx
Allier hereby irrevocably agrees:
1.1 that the Agent shall be entitled to defend, compromise or settle
any claim brought against the Allier Sellers or the Individual Sellers
or any of them hereunder as it sees fit in its absolute discretion,
but shall be under no obligation to take any specific action other
than those listed in paragraph (3) below;
1.2 to contribute (pro-rata to its entitlement to the Purchase Price)
on first written demand of the Agent to any and all out of pocket
expenses, costs or disbursements reasonably incurred by the Agent in
connection with its appointment (within the limits set out below);
1.3 to appoint and instruct legal advisers to advise and represent
the Agent in any legal and/or administrative proceedings brought
against the Sellers or any of them;
1.4 jointly and severally with each other Allier Seller and
Individual Seller to indemnify and hold harmless the Agent upon first
written demand from and against any Losses incurred or suffered by the
Agent in connection with its appointment (save for any such Losses
which arise from conduct qualified as faute lourde or dol on the part
of the Agent);
1.5 to inform immediately the Agent of any change in his
address.
2 The liability of the Agent under this mandate shall only be sought by
the Allier Sellers or the Individual Sellers or the Buyer in the event of
faute lourde or dol by the Agent. The Agent shall not be liable in any
other circumstances. In particular, the Agent shall not be liable for any
step taken on the instructions of all or part of the Sellers.
The Agent shall be entitled to rely on any document the Agent will
consider in good faith as authentic or signed by the authorised person and
on any communication the Agent would believe in good faith to be made by an
authorised person. The Agent will not be required to make any verification
in order to assess the authenticity or the accuracy of the documents
transmitted to the Agent under this mandate. The Agent will be entitled to
rely on the recommendations and opinions of its counsel.
3 Where any action from all the Sellers is required after the Closing Date in
the implementation of this Agreement, the Agent, Banexi, SOCRI and
IRDI hereby agrees to follow the instructions of the Sellers whose
aggregate shareholding in the Company as at Closing Date exceeds 50%.
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69
