Exhibit 2
SALE AND PURCHASE AGREEMENT
By and between
PINAULT PRINTEMPS REDOUTE
and
OFFICE DEPOT, INC.
dated as of
April 11, 2003
THIS AGREEMENT, DATED AS OF APRIL 11, 2003,
IS MADE BY AND BETWEEN
PINAULT PRINTEMPS REDOUTE, a SOCIETE ANONYME A DIRECTOIRE ET CONSEIL DE
SURVEILLANCE (corporation with management board and supervisory board) with an
outstanding share capital of 489,577,920 Euro organized under the laws of
France, having its head office at ▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇,
registered under number 552 075 020 RCS Paris, represented by ▇▇. ▇▇▇▇▇
▇▇▇▇▇▇▇▇, in his capacity as chief executive officer, duly authorized for the
purposes hereof,
hereinafter referred to as the "SELLER"
ON THE FIRST HAND,
AND
OFFICE DEPOT, INC., a corporation organized and existing under the laws of the
State of Delaware, USA, having its principal office at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, represented by Mr. ▇▇▇▇▇ ▇▇▇▇▇▇ in his capacity as
Chairman of the Board and Chief Executive Officer, duly authorized for the
purposes hereof,
hereinafter referred to as the "PURCHASER"
ON THE SECOND HAND,
The Seller and the Purchaser hereafter jointly referred to as the "PARTIES" and
individually as a "PARTY".
2
CONTENTS
WHEREAS ▇▇▇▇▇▇▇▇ ▇.▇., a SOCIETE ANONYME A DIRECTOIRE ET CONSEIL DE SURVEILLANCE
(corporation with management board and supervisory board) organized under the
laws of France with a capital of 13,909,654.09 Euros, having its head office at
▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, registered under number 697 180 297
RCS Senlis (the "COMPANY"), is a subsidiary of the Seller.
WHEREAS, the Purchaser has indicated to the Seller its desire to purchase the
Company.
WHEREAS, the Seller desires to sell to the Purchaser and the Purchaser desires
to purchase from the Seller all of the issued and outstanding shares of capital
stock of the Company owned by the Seller on the terms and subject to the
conditions set forth in this agreement (the "AGREEMENT").
NOW THEREFORE, in consideration of the foregoing premises and the respective
representations, warranties, covenants, agreements and undertakings referred to
in this Agreement, and subject to the satisfaction or waiver of the conditions
of this Agreement, the Parties to this Agreement agree as follows:
ARTICLE 1 - DEFINITIONS
Capitalized terms used in this Agreement shall have the meaning ascribed to them
in this Article 1 unless such terms are defined elsewhere in this Agreement.
ACCOUNTING PRINCIPLES shall mean GAAP, as applied according to
SCHEDULE 3.5.
ANTITRUST AUTHORITIES shall mean the EU Commission the French
Ministry of Economy (MINISTRE DE L'ECONOMIE,
DES FINANCES ET DE L'INDUSTRIE), the French
DGCCRF (DIRECTION GENERALE DE LA
CONCURRENCE, DE LA CONSOMMATION ET DE LA
REPRESSION DES FRAUDES) and any other
antitrust, competition, merger control and
investment authorities, as the case may be,
competent to scrutinize or approve the
Transaction.
ANTITRUST CLEARANCE shall mean the approval, consent, waiver,
license, order, registration, permits,
ruling, authorization or clearance of the
Transaction from all Antitrust Authorities
whose approval is necessary for the transfer
of ownership of the Shares to the Purchaser.
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BENEFITS SCHEDULE shall mean a schedule setting out full
written details of the benefits, as at the
Closing Date, of the Pre-Closing Members,
such benefits to be calculated as if all
active members of the UK Pension Plan as at
the Closing Date had left pensionable
service on the Closing Date based on
pensionable salaries and pensionable service
applicable at the Closing Date. Article
5.9(h) shall apply as regards any dispute
relating to the Benefits Schedule.
BUSINESS DAY shall mean any day other than (i) a
Saturday, Sunday or (ii) a day on which
first rank banks in Paris or New York are
authorized to close by a rule or regulation.
CASH EQUIVALENTS shall mean positive bank balances, other
cash accounts, cash deposit accounts and
readily marketable debt instruments.
CLOSING shall mean the sale and purchase of the
Shares from the Seller to the Purchaser and
the payment of the Initial Purchase Price
Payment by the Purchaser to the Seller.
CLOSING DATE shall mean the date on which the Closing
occurs, except as provided in Article 2.4.1.
CONTRACTS shall mean any contract, agreement,
undertaking, binding commitment, lease,
license, mortgage, bond, note or instrument,
whether written or oral, that is legally
binding, and relates to the Company or any
of its Subsidiaries.
FULL FUNDING TARGET DATE shall mean the earliest of:
(i) the fifth anniversary of the Closing
Date;
(ii) the Winding Up Payment Date; and
(iii) such earlier date as the Seller may
notify to the Purchaser (by giving written
notice no more than three (3) Business Days
prior to such proposed earlier date).
GAAP shall mean French generally accepted
accounting principles and practices.
GOVERNMENTAL AUTHORITY shall mean any European, national, regional,
municipal, local or foreign government or
any political subdivision of the foregoing,
governmental, regulatory, taxing or
administrative entity, authority, agency,
commission, ministry or other similar body
including any public utility control or
public service commission or similar
regulatory body, or any court, tribunal, or
judicial or arbitral body.
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GOVERNMENTAL ORDER shall mean any order entered by or with any
Governmental Authority specifically relating
to the Company or any of its Subsidiaries.
▇▇▇▇▇▇▇▇ NETHERLANDS shall mean ▇▇▇▇▇▇▇▇ Netherlands B.V.
▇▇▇▇▇▇▇▇ UK shall, subject to Article 5.9(s), mean
▇▇▇▇▇▇▇▇ Holdings UK Limited (UK registered
number 2898888), as the sponsoring employer
of the UK Pension Plan as at the date of
this Agreement.
INDEBTEDNESS shall mean (i) obligations for borrowed
money (including penalties, prepayment and
other fees and accrued interest thereon),
(ii) securitized receivables whether with or
without recourse, (iii) obligations under
financing leases and CREDIT BAUX and (iv)
indebtedness for the deferred purchase price
of property or services (other than (a)
trade liabilities incurred in the ordinary
course of business and payable in accordance
with customary practices (b) leases and (c)
arrangements for extended payment terms
which are less than six (6) months).
INTERCOMPANY INDEBTEDNESS shall mean the aggregate of all Indebtedness
owed by any of the Company or one of its
Subsidiaries to a member of the PPR Group
(other than the Company or its Subsidiaries)
net of all Indebtedness owed by a member of
the PPR Group (other than the Company or its
Subsidiaries) to the Company or its
Subsidiaries.
LIENS shall mean liens, pledges, mortgages,
charges, security interests, burdens,
encumbrances, options, pre-emption rights,
voting agreements, guarantees, usufructs or
other restrictions or limitations of any
nature whatsoever.
MATERIAL ADVERSE EFFECT shall mean a material adverse effect on the
business, financial condition or annual
results of operations of the Company and its
Subsidiaries, taken as a whole, it being
understood that this shall exclude any of
the following changes or developments after
the date hereof:
(i) changes or developments in
international, national, regional, state or
local wholesale or retail markets for office
supplies
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or related products including those due to
actions by competitors,
(ii) changes generally affecting the
industry in which the Company and the
Subsidiaries operate,
(iii) changes or developments in financial
or securities markets or the economy in
general,
(iv) effects of weather or meteorological
events, except to the extent causing damage
to the physical facilities of the Company
and its Subsidiaries,
(v) changes in applicable laws, rules or
regulations, or
(vi) changes attributable to the
announcement or execution of this Agreement,
including the loss of employees, customers,
orders, products or suppliers or the
occurrence of strikes or job actions.
MFR REGULATION shall mean a numbered regulation of the
Occupational Pension Schemes (Minimum
Funding Requirement and Actuarial Valuation)
Regulations 1996 (SI 1996/1536).
NET WORKING CAPITAL shall mean, as of a specified date, (A) net
inventories (after provisions for slow
moving and obsolete products) plus net trade
receivables (before securitization) plus net
operating receivables (gross receivables
from suppliers less provisions, if any, plus
cash paid in advance to suppliers) minus (B)
trade payables (suppliers payables and
client payables), all determined in
accordance with the Accounting Principles
and Article 3.18. For the avoidance of
doubt, Net Working Capital shall exclude any
and all cash and Cash Equivalents.
NET WORKING CAPITAL ADJUSTMENT shall mean the difference between the Net
Working Capital as of the Closing Date and
the amount specified in ANNEX A
corresponding to the same calendar month as
the one during which the Closing Date
occurs.
NETHERLANDS BENEFIT LIABILITIES shall mean, for the purposes of Article
5.14(a), the liabilities of all the
Netherlands Benefit Plans calculated in
accordance with the US GAAP Actuarial Basis
as specified in further detail in Schedule
5.14 to this Agreement.
NETHERLANDS BENEFIT PLANS shall mean the Netherlands pension
arrangements listed in Schedule 3.12(e)
(including for the avoidance of doubt the
unfunded pre-retirement plans listed in that
Schedule).
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NETHERLANDS BENEFITS DEFICIT shall mean, for the purposes of Article
5.14(a), the amount, if any, by which
Netherlands Benefit Liabilities exceed the
market value of the assets of the
Netherlands Benefit Plans as measured on the
US GAAP Actuarial Basis, each as at the
Closing Date. This shall include any deficit
which would arise as a result of the
proposed transfer from the Netherlands SFP
Pension Plan (calculated as if the transfer
had happened as at the Closing Date, if it
has not actually happened before then),
unless as at the Closing Date either:
(a) the Seller has produced to the
Purchaser a letter from the
administrators of the Netherlands
SFP Pension Plan confirming that
they agree the transfer will not
proceed and evidence that it has
informed the affected employees; or
(b) it would reasonably be expected
that the transfer from the
Netherlands SFP Pension Plan can be
prevented.
NETHERLANDS ▇▇▇▇▇▇▇▇ PENSION
PLAN shall mean the pension plans of the
StichtingPensioenfonds ▇▇▇▇▇▇▇▇ as
applicable on September 30, 2001.
NETHERLANDS PENSIONS ACTUARY shall mean the actuary appointed by the
Purchaser for the purposes of Article 5.14.
NETHERLANDS SFP DEFICIT shall mean, if the proposed transfer of
benefits from the Netherlands SFP Pension
Plan actually happens, the amount, if any,
by which the liabilities transferred exceed
the market value of the assets received
under that transfer (each as measured on the
US GAAP Actuarial Basis as further specified
in SCHEDULE 5.14) as at the Netherlands SFP
Transfer Date.
NETHERLANDS SFP PENSION PLAN shall mean the pension plan of the
'Stichting Federatief Pensioenfonds' with
options that were applicable for Kantic
employees (predecessor of ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇).
▇
▇▇▇▇▇▇▇▇▇▇▇ SFP TRANSFER DATE shall mean the earlier of the following two
dates, if either applies:
(a) if the proposed transfer of
benefits from the Netherlands SFP
Pension Plan actually happens
within five years from the Closing
Date, the date that transfer
happens; or
(b) the date five years after the
Closing Date, unless by that date
the Seller has produced to the
Purchaser a letter from the
administrators of the Netherlands
SFP Pension Plan confirming that
they agree the proposed transfer
from the Netherlands SFP Pension
Plan will not proceed.
OFF BALANCE SHEET LIABILITIES shall mean off balance sheet liabilities as
required to be disclosed in accordance with
GAAP, including financial derivatives
(including forward contracts).
100% MFR BASIS shall mean the actuarial method and
assumptions used in the UK Minimum Funding
Requirement test, as defined in section 56
of the Pensions Act 1995 and set out in
actuarial guidance note GN27 issued by the
Institute and Faculty of Actuaries. Subject
to Article 5.9(q), this definition will be
applied on a gilts-matching basis as defined
in MFR Regulation 7(9) if, in fact, a
gilts-matching policy is being followed by
the trustees of the UK Pension Plan at the
applicable time.
PERSON shall mean and include any natural person,
corporation, general or limited partnership,
limited liability company, proprietorship,
other business organization or entity,
trust, union, unincorporated association,
Governmental Authority or other
organization.
PPR GROUP shall mean Pinault Printemps Redoute and
entities controlled by Pinault Printemps
Redoute directly or indirectly through one
or more intermediaries where "control" and
correlatively "controlled by" have the
meaning set forth in Article L. 233-3 of the
French Commercial Code.
PRE-CLOSING MEMBERS shall mean members of the UK Pension Plan at
the Closing Date and other persons actually
or contingently entitled to benefits under
the UK Pension Plan in respect of such
members.
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PRE-CLOSING PENSION ASSETS shall mean the amount calculated as follows,
with the amount in each element of the
calculation being adjusted by the investment
return earned by the UK Pension Plan
(realised and unrealised) during the
relevant period, being the period between
the Closing Date and the date immediately
before the date used for the calculation in
Article 5.9:
(i) the market value of the assets of the UK
Pension Plan as at the Closing Date,
confirmed by an independent audit; plus
(ii) the contributions to the UK Pension
Plan which have been reimbursed by the
Seller in accordance with Article 5.9 and
accounting, when assessing the investment
adjustment, for contributions reimbursed
part way through the relevant period; less
(iii) the benefits paid (or the amounts used
to buy benefits out with insurers or the
amounts transferred to other pension
arrangements) in respect of Pre-Closing
Pension Liabilities and accounting, when
assessing the investment adjustment, for
payments made part way through the relevant
period; and less
(iv) the Appropriate Proportion of the
annual expenses of the UK Pension Plan
incurred from the Closing Date determined
year on year over the relevant period (where
the "PLAN YEAR END" is the scheme year end
date of the UK Pension Plan; and for each
scheme year of the UK Pension Plan the
"APPROPRIATE PROPORTION" is the proportion
which, as at the last Plan Year End, the
Pre-Closing Pension Assets bore to the total
assets of the UK Pension Plan). Account will
be made, when assessing the investment
adjustment, for expenses made part way
through the relevant period.
For the purposes of this definition all
payments into and out of the UK Pension Plan
are deemed to occur as at the quarterly
valuation date of the UK Pension Plan which
next follows (or is the actual date of) the
payment (unless the UK Pension Actuary
determines in his sole discretion that the
payment is of a significant amount, in which
case he shall substitute the actual date of
payment).
9
PRE-CLOSING PENSION DEFICIT shall mean the amount, if any, by which the
Pre-Closing Pension Liabilities (calculated
on the actuarial basis which is stated
within the relevant provision of Article 5.9
to apply for the calculation in question)
exceed the Pre-Closing Pension Assets.
PRE-CLOSING PENSION LIABILITIES shall mean the liabilities (assessed as at
the effective date of the relevant
calculation under Article 5.9) in the UK
Pension Plan in respect of benefits as at
the Closing Date of the Pre-Closing Members,
such benefits to be calculated as if all
active members at the Closing Date had left
pensionable service on the Closing Date and
to be based on pensionable salaries and
pensionable service applicable at the
Closing Date, and taking into account for
the purposes of and in the manner required
by the 100% MFR Basis or the basis of
calculation set down in Article 5.9(f), as
the case may be, (i) any revaluation which
the UK Pension Plan would have been legally
obliged to provide if the UK Pension Plan
had been frozen at the Closing Date and (ii)
any pension increases (on pensions in
payment) which the UK Pension Plan is
legally obliged to provide, and taking into
account for the purposes of and in the
manner required by the basis of calculation
set down in Article 5.9(f) discretionary
pension increases and other discretionary
practices which have not been granted in so
far as consistent with the basis of
calculation in Article 5.9(f). Pre-Closing
Pension Liabilities will be adjusted, where
necessary, in respect of Pre-Closing Members
who die, draw their benefits or transfer
their benefits to another pension
arrangement between the Closing Date and the
effective date of the relevant calculation
under Article 5.9. For the avoidance of
doubt, the Seller and the Purchaser agree
that, when performing calculations under
Article 5.9, the UK Pension Actuary shall
not incorporate the effect of any of the
following events:
(a) increases to members' pensionable
salaries for benefit purposes (as
set out in the applicable rules of
the UK Pension Plan) after the
Closing Date (save any that have
been agreed with or notified to
members prior to Closing Date);
(b) any continuation of pensionable
service beyond the Closing Date;
(c) discretionary increases and
augmentations (including
discretionary reduction terms on
early retirement) to members'
benefits which are both agreed and
granted after the Closing Date
10
(save any that are granted or
applied in a manner consistent with
practice prior to, and expectations
at, the Closing Date and consistent
with the funding of the UK Pension
Plan at the date of the grant and
with the Seller's consent, such
consent not to be unreasonably
withheld);
(d) changes in benefits introduced and
implemented after the Closing Date,
whether resulting from legislative
changes or otherwise;
(e) admission of new members to the UK
Pension Plan after the Closing Date
whether by way of the eligibility
and admission terms of the UK
Pension Plan, by way of merger,
transfer-in, provision of pension
credit benefit on divorce or
otherwise.
RELATED PERSON shall mean, with respect to a specified
Person (other than an individual):
(a) any Person that, directly or
indirectly, controls, is controlled
by, or is under common control
with, such specified Person (for
the purposes of this definition,
"control", including with
correlating meaning the terms
"controls", "controlled by" and
"under common control with", as
applied to any Person, shall have
the meaning set forth in Article L.
233-3 of the French Commercial
Code);
(b) any Person that serves as a
director or officer of such
specified Person; and
(c) any Person with respect to which
such specified Person serves as a
general partner.
SCHEDULE shall mean a schedule executed and delivered
by Seller to Purchaser concurrently with the
execution of this Agreement which sets forth
the exceptions to the representations and
warranties contained in this Agreement and
certain other information called for by this
Agreement.
SHARES shall mean all the shares of the Company
existing at the Closing Date. For the
avoidance of doubt, the term "Shares"
includes (i) the new shares of capital stock
of the Company resulting from conversion of
the 3.5% Convertible Bonds due January 1,
2004 to be completed on or before the
Closing Date in compliance with the terms of
such bonds and (ii) any existing shares of
capital stock of the Company acquired by the
Seller after the date hereof and prior to
the Closing Date.
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STAPLES shall mean Staples, Inc.
STAPLES AGREEMENT shall mean the Sale and Purchase Agreement,
dated as of August 21, 2002, by and among
the Company, Reliable UK Ltd., VPC Systems
S.r.l. and Staples.
SUBSIDIARIES shall mean all corporations, general or
limited partnerships, joint ventures,
limited liability companies,
proprietorships, other business
organizations, associations or other
entities controlled by the Company directly
or indirectly through one or more
intermediaries where "control" and
correlatively "controlled by" have the
meaning set forth in Article L. 233-3 of the
French Commercial Code.
TAX shall mean any tax (including income tax,
profit tax, withholding tax, precompte,
capital gains tax, value-added tax, sales
tax, property tax, gift tax, real estate
tax, excise tax, retirement, unemployment,
CSG, CRDS and social security contributions
in any applicable jurisdiction), tariff or
duty (including any stamp or customs duty)
and any fine, penalty, interest or addition
to tax imposed, assessed or collected by or
under the authority of any governmental
body.
TAX REGULATIONS shall mean any Tax or custom law, statute,
decree, ordinance, rule, order or other text
of application of the said law applicable in
a given country as well as any international
treaty (including the derivative law -
directive, regulations or others - of this
treaty).
TAX RETURN shall mean any return, report, information
return, statement, declaration or other
document (including any related or
supporting information) filed or required to
be filed with any Governmental Authority in
connection with any determination,
assessment or collection of any Tax or other
administration of any laws, regulations or
administrative requirements.
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TERMINATION DATE shall mean the Termination Date as that term
is used in rule M3 of the rules (as they
stand at the date of this Agreement) of the
UK Pension Plan as attached to the UK
Pension Plan's trust deed dated
September 27, 2002.
TRANSACTION shall mean the sale and purchase of the
Shares contemplated in this Agreement and
all the related transactions contemplated in
this Agreement.
THIRD PARTY INDEBTEDNESS shall mean the aggregate of all Indebtedness
owed to third parties, net of all cash or
Cash Equivalents of the Company or its
Subsidiaries remaining in the Company or its
Subsidiaries at the Closing, excluding (i)
Euro seven million (7,000,000) of cash that
shall remain in the Company as of the
Closing pursuant to Article 5.10 and (ii)
Intercompany Indebtedness. For the avoidance
of doubt, cash and Cash Equivalents removed
from the Company or its Subsidiaries by the
Seller or any of its Related Persons (other
than the Company and its Subsidiaries) prior
to or concurrently with the Closing shall
not be deducted in determining Third Party
Indebtedness.
UK MINIMUM FUNDING
REQUIREMENT shall mean the requirement referred to in
section 56(1) of the Pensions ▇▇▇ ▇▇▇▇ in
the UK.
UK PENSION PLAN shall mean the UK occupational pension
arrangement known as the ▇▇▇▇▇▇▇▇ UK
Retirement Benefits Plan including, where
appropriate, the trustees thereof.
UK PENSION ACTUARY shall mean the formally appointed Scheme
Actuary (for the purposes of section 47(1)
of the Pensions Act 1995) of the UK Pension
Plan at the date of the calculation who
shall be instructed jointly by the Seller
and by the Purchaser for the purposes of
Article 5.9 (and if for any reason he is
unable or unwilling to carry out any of the
calculations set out in Article 5.9, that
calculation will instead be carried out by
an independent actuary appointed jointly by
the Seller and by the Purchaser).
US GAAP ACTUARIAL BASIS shall mean the actuarial basis set out in
the Actuarial Methodology and Actuarial
Assumptions in SCHEDULE 5.14.
WINDING UP DEBT shall mean the debt (if any) calculated on
the 100% MFR Basis, as that basis applies on
winding-up, which ▇▇▇▇▇▇▇▇ UK is obliged to
pay to the trustees of the UK Pension Plan
under a total winding up of the UK Pension
Plan
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(except that if the winding up is
consequential (directly or indirectly) to
any act or omission of ▇▇▇▇▇▇▇▇ UK and the
Termination Date of the UK Pension Plan is
within three (3) years after the Closing
Date, any debt payable shall not be a
Winding Up Debt).
WINDING UP PAYMENT DATE shall mean the date on which the trustees of
the UK Pension Plan issue a GN19 certificate
to ▇▇▇▇▇▇▇▇ UK in respect of a Winding Up
Debt.
1.2 INTERPRETATION
The definitions in this Agreement are identified as capitalized terms and shall
apply equally to both the singular and plural forms of the terms defined in this
Agreement. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "hereby", "herein"
and "hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". In this Agreement, the headings to Articles are inserted for
convenience only and shall not affect the construction of this Agreement. In the
event an ambiguity or question of intent or interpretation arises regarding this
Agreement, this Agreement shall be construed as if drafted jointly by the
parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party to this Agreement by virtue of the authorship of any
provisions to this Agreement.
ARTICLE 2 - PURCHASE AND SALE OF THE SHARES
2.1 PURCHASE AND SALE OF THE SHARES
Upon the terms and subject to the conditions set forth in this Agreement, at the
Closing the Seller shall sell to the Purchaser, and the Purchaser shall purchase
from the Seller, the Shares free and clear of all Liens, as well as all rights
attaching to the Shares, for the consideration set forth in Article 2.2.
2.2 CONSIDERATION FOR THE SHARES
(a) The consideration to be paid for the Shares (hereafter referred to as the
"PURCHASE PRICE") shall be the aggregate of:
- Euro eight-hundred and fifteen million (815,000,000),
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- plus the Additional Consideration (as defined in Article 2.3(h)),
to the extent it becomes payable in accordance with the provisions
of Article 2.3(h),
- minus the amount, as of the Closing Date, of (i) the outstanding
Intercompany Indebtedness (the "CLOSING INTERCOMPANY
INDEBTEDNESS") and (ii) the outstanding Third Party Indebtedness
(the "CLOSING THIRD PARTY INDEBTEDNESS"), and
- minus the absolute value of the Net Working Capital Adjustment to
the extent the Net Working Capital Adjustment is negative; plus
the absolute value of the Net Working Capital Adjustment to the
extent the Net Working Capital Adjustment is positive,
all to be paid pursuant to the provisions of Article 2.3.
(b) Five (5) Business Days prior to the Closing Date, the Seller will notify
the Purchaser, in writing, of (i) the amount of the Intercompany
Indebtedness expected to be outstanding as of the Closing Date (the
"NOTIFIED CLOSING INTERCOMPANY INDEBTEDNESS"), (ii) the amount of the
Third Party Indebtedness expected to be outstanding as of the Closing
Date (the "NOTIFIED CLOSING THIRD PARTY INDEBTEDNESS"), (iii) the amount
of the Net Working Capital expected as of the Closing Date (the "NOTIFIED
CLOSING NET WORKING CAPITAL"), and (iv) the expected amount of the Net
Working Capital Adjustment (the "NOTIFIED CLOSING NET WORKING CAPITAL
ADJUSTMENT"). The notification of the Notified Closing Intercompany
Indebtedness, the Notified Closing Third Party Indebtedness, the Notified
Closing Net Working Capital and the Notified Closing Net Working Capital
Adjustment pursuant to this Article 2.2(b) shall use the definitions of
the terms used in this Agreement and shall be prepared in accordance with
the Accounting Principles. The notification of the Notified Closing Third
Party Indebtedness pursuant to this Article 2.2(b) shall in addition
provide reasonable details, on an item by item basis, specifying, to the
extent reasonably available, the interest rate, duration and indemnities
in case of early repayment of such Indebtedness and of the amounts owed
to each creditor, specifying the Company or Subsidiary owing such
Indebtedness. The notification of the Notified Closing Net Working
Capital Adjustment shall specify the amount of each separate component of
Notified Net Working Capital at the Closing Date and the calculation made
to derive the Notified Closing Net Working Capital Adjustment.
(c) Under this Agreement, the parties have appointed BDO Gendrot (the
"AUDITOR"), the mission of which will be, according to Article 1592 of
the French Civil Code, to determine the actual amounts of the Closing
Intercompany Indebtedness, the Closing Third Party Indebtedness and the
Net Working Capital as of the Closing Date. The Auditor shall deliver its
written determination on the Closing Intercompany Indebtedness (the
"DETERMINED CLOSING INTERCOMPANY INDEBTEDNESS"), on the Closing Third
Party Indebtedness (the "DETERMINED CLOSING THIRD PARTY INDEBTEDNESS")
and on the Net Working Capital as of the Closing Date (the "DETERMINED
CLOSING NET WORKING CAPITAL") to the Parties within forty-five (45) days
after the Closing Date, which
15
determinations shall be final and binding on the Parties, it being
understood that, except for the payments referred to in Articles 2.3(d),
(e) and (f), no amount shall be claimed by the Seller or any member of
the PPR Group, the Purchaser, the Company or the Subsidiaries with
respect to the Determined Closing Intercompany Indebtedness, the
Determined Closing Third Party Indebtedness or the Determined Closing Net
Working Capital once the Auditor has definitively determined them. The
Auditor shall determine the amount of the Closing Intercompany
Indebtedness, the Closing Third Party Indebtedness and the Net Working
Capital as of the Closing Date using the Accounting Principles and
consistent with SCHEDULE 3.7(B) and shall use the definitions set forth
in this Agreement for such terms in making such ----------------
determination. Should the Auditor be prevented for any reason whatsoever
from fulfilling its mission under this Article 2.2(c), the amount of the
Closing Intercompany Indebtedness, the Closing Third Party Indebtedness
and of the Net Working Capital as of the Closing Date shall be determined
by an expert appointed by the President of the Paris Commercial Court in
summary proceedings (EN LA FORME DES REFERES ET SANS RECOURS POSSIBLE).
Solely for the information of the parties, the decision of the Auditor
with respect to the Determined Closing Intercompany Indebtedness, the
Determined Closing Third Party Indebtedness and the Determined Closing
Net Working Capital pursuant to this Article 2.2(c) shall provide
reasonable details, on an item by item basis and, with respect to the
Determined Closing Intercompany Indebtedness and the Determined Closing
Third Party Indebtedness, of the amounts owed to each creditor. The
failure of the Auditor to include any such details shall not affect the
binding nature of its decision. The fees and expenses of the Auditor
shall be shared equally between the Seller on the one hand and the
Purchaser on the other hand. The Parties agree to make all information
reasonably requested by the Auditor available to the Auditor as promptly
as practicable.
(d) The Parties expressly agree that the definitive determination of the
Determined Closing Intercompany Indebtedness, the Determined Closing
Third Party Indebtedness and the Determined Closing Net Working Capital
by the Auditor or court-appointed expert shall be final and binding on
the Parties.
2.3 PAYMENT OF THE PURCHASE PRICE
(a) On the Closing Date, for same day value, by wire transfer of immediately
available funds to the bank account notified by the Seller to the
Purchaser no later than three (3) Business Days prior to the Closing
Date, the Purchaser shall pay to the Seller Euro five-hundred and fifty
million (550,000,000) reduced by (i) the Notified Closing Intercompany
Indebtedness, (ii) the Notified Closing Third Party Indebtedness and
(iii) the Notified Closing Net Working Capital Adjustment to the extent
the Notified Closing Net Working Capital is negative; and increased by
the Notified Closing Net Working Capital Adjustment to the extent the
Notified Closing Net Working Capital is positive (collectively, the
"INITIAL PURCHASE PRICE Payment"). The Seller shall use all reasonable
efforts to cause the sum of the Notified Closing Intercompany
Indebtedness plus the Notified Closing Third Party Indebtedness plus the
Notified Closing Net Working Capital Adjustment, to the extent the
Notified Closing Net Working Capital Adjustment is negative, not to
exceed Euro five hundred and fifty million (550,000,000). If the sum of
the Determined Closing
16
Intercompany Indebtedness plus the Determined Closing Third Party
Indebtedness plus the Net Working Capital Adjustment (as determined using
the Determined Closing Net Working Capital), to the extent such Net
Working Capital Adjustment is negative, exceeds Euro five hundred and
fifty million (550,000,000), then the Seller shall pay the difference to
the Purchaser within five (5) Business Days after the determination of
such amounts pursuant to Article 2.2(b).
(b) On the Closing Date, for same day value, by wire transfer of immediately
available funds to the bank accounts notified by the Seller to the
Purchaser no later than three (3) Business Days prior to the Closing
Date, the Purchaser shall pay (i) to the Seller, on behalf of the Company
and its Subsidiaries, the Notified Closing Intercompany Indebtedness and
(ii) to the relevant third parties, on behalf of the Company and its
Subsidiaries, the Notified Closing Third Party Indebtedness; PROVIDED,
HOWEVER, that to the extent the Purchaser notifies in writing no later
than three (3) Business Days prior to the Closing Date, the Purchaser may
elect not to pay any portion of the Closing Third Party Indebtedness,
such portion of the Closing Third Party Indebtedness being retained by
the relevant Company and Subsidiary (collectively the "ASSUMED
INDEBTEDNESS"), it being understood that the Purchaser commits itself to
take over any guarantees whatsoever granted by any member of the PPR
Group with respect to the Assumed Indebtedness, it being specified that
should such take over of any guarantees not be possible, the Purchaser
commits itself to hold the Seller harmless from any claims or losses
which may occur in relation to any such guarantees whatsoever granted by
any member of the PPR Group (other than the Company or its Subsidiaries)
with respect to the Assumed Indebtedness, the existing guarantees being
disclosed in SCHEDULE 3.7(A). In addition, to the extent the amount of
cash and Cash Equivalents of the Company or its Subsidiaries remaining in
the Company or its Subsidiaries at the Closing is greater than the
Indebtedness owed to third parties, such excess amount shall be paid by
the Purchaser to the Seller on the Closing Date (except for the sum of
Euro seven million (7,000,000) required to remain in the Company at the
Closing in accordance with Article 5.11).
(c) On the later to occur of (i) June 30, 2003 or (ii) the Closing Date, the
Purchaser shall pay to the Seller Euro two-hundred and sixty-five million
(265,000,000) (the "SECOND PURCHASE PRICE PAYMENT"), for same day value,
by wire transfer of immediately available funds to the bank account
notified by the Seller to the Purchaser no later than three (3) Business
Days prior to the later of June 30, 2003 or the Closing Date. The Parties
agree that the Purchaser shall have no right of set-off or deduction of
any kind with respect to the Second Purchase Price Payment for or on
account of any claim under this Agreement or against any other payment to
be made pursuant to this Agreement, including any claim for
indemnification or otherwise.
(d) (i) To the extent that the sum of the Notified Closing Intercompany
Indebtedness plus the Notified Closing Third Party Indebtedness is
greater than the sum of the Determined Closing Intercompany Indebtedness
plus the Determined Closing Third Party Indebtedness, then the Purchaser
shall pay the amount of such difference to the Seller. (ii) To the extent
that the sum of the Notified Closing Intercompany Indebtedness plus the
Notified Closing Third Party Indebtedness
17
is lower than the sum of the Determined Closing Intercompany Indebtedness
plus the Determined Closing Third Party Indebtedness, then the Seller
shall pay the amount of such difference to the Purchaser.
(e) (i) To the extent that the Notified Closing Intercompany Indebtedness is
greater than the Determined Closing Intercompany Indebtedness, then the
Seller shall pay the amount of such difference to the Purchaser, acting
on behalf of the Company and the Subsidiaries. (ii) To the extent that
the Notified Closing Intercompany Indebtedness is lower than the
Determined Closing Intercompany Indebtedness, then the Purchaser, acting
on behalf of the Company and the Subsidiaries, shall pay the amount of
such difference to the Seller.
(f) (i) To the extent that the Notified Closing Net Working Capital is lower
than the Determined Closing Net Working Capital, then the Purchaser shall
pay the amount of such difference to the Seller. (ii) To the extent that
the Notified Closing Net Working Capital is greater than the Determined
Closing Net Working Capital, then the Seller shall pay the amount of such
difference to the Purchaser.
(g) (i) Any amount to be paid to the Purchaser or to the Seller pursuant to
Articles 2.3(d), (e) or (f) shall be paid together with accrued interest
thereon at the rate of EURIBOR three (3) months + fifty (50) basis points
for the period starting on the Closing Date to and including the date on
which such payment is made. (ii) Any payments required under Articles
2.3(d), (e) or (f) shall be made within five (5) Business Days of the
determination of the Determined Closing Intercompany Indebtedness, the
Determined Closing Third Party Indebtedness and the Determined Closing
Net Working Capital in cash, by wire transfer of immediately available
funds to an account designated in writing by the receiving Party.
(h) If Purchaser's common stock as traded on the New York Stock Exchange or,
if not traded on the New York Stock Exchange, as traded on any national
securities exchange, closes at a price equal to or above $20 (twenty)
(the "TARGET PRICE") for any five (5) consecutive trading days (the
"TRIGGERING EVENT") during the eighteen (18) month period following the
Closing Date (the "ADDITIONAL CONSIDERATION PERIOD"), the Purchaser shall
pay to the Seller in cash, common stock of the Purchaser or a combination
thereof Euro forty million (40,000,000) (the "ADDITIONAL CONSIDERATION").
The Additional Consideration, (i) to the extent the Triggering Event
occurs during the first nine (9) months of the Additional Consideration
Period, shall be paid within ten (10) Business Days following the end of
such nine (9) month period, and (ii) to the extent the Triggering Event
occurs during the second nine (9) months of the Additional Consideration
Period, it shall be paid within ten (10) Business Days of the date of the
Triggering Event; PROVIDED, HOWEVER, that with respect to clause (i)
above, if such event occurs within ten (10) Business Days of the end of
such nine (9) month period, the Additional Consideration shall be paid
within ten (10) Business Days following the Triggering Event. The Target
Price shall be adjusted for any stock split, combination, dividends in
excess of regular quarterly dividends, stock dividend (including a
dividend of securities convertible into common stock of the Purchaser),
recapitalization, reclassification, reorganization or similar
transaction. Any common stock of Purchaser constituting all or part of
the Additional Consideration must be registered for resale pursuant to an
effective registration statement under the US Securities Act of 1933, as
amended and freely transferable and marketable at the time it is paid to
the Seller and
18
thereafter. Any common stock of Purchaser constituting all or part of the
Additional Consideration will be valued at the average of the closing
prices of the common stock of Purchaser on each of the ten (10) trading
days prior to the date of payment of the Additional Consideration as
reported on the New York Stock Exchange Composite Tape. To the extent
cash is paid by the Purchaser to the Seller pursuant to this Article
2.3(d), it shall be paid in same day value, by wire transfer of
immediately available funds to the bank account notified by the Seller to
the Purchaser no later than three (3) Business Days prior to the date of
payment. The Parties agree that the Purchaser shall have no right of
set-off or deduction of any kind with respect to the Additional
Consideration for or on account of any claim under this Agreement or
against any other payment to be made pursuant to this Agreement,
including any claim for indemnification or otherwise, unless such claim
or payment has been fully adjudicated or is not disputed by the Seller.
(i) Should the Closing occur after July 1, 2003, the Purchaser shall pay to
the Seller interest calculated on the amount of Euro five-hundred and
fifty million (550,000,000) at a rate of EURIBOR three (3) months + fifty
(50) basis points for the period starting on July 1, 2003 through and
including the date on which notice of the Antitrust Clearance is received
by the Purchaser. Payments shall be made by the Purchaser to the Seller
on the Closing Date.
(j) All payments made to the Seller pursuant to this Agreement shall be made
free and clear of, and without deduction for, any taxes, charges or other
withholdings, except as provided in the following sentence. To the extent
required by applicable law, if the Seller has not provided the applicable
documentation to avoid withholding, payments made pursuant to Article
2.3(i) may be reduced for withholdings. All payments made to the
Purchaser pursuant to this Agreement shall be made free and clear of, and
without deduction for, any taxes, charges or other withholdings.
2.4 CLOSING
2.4.1 DATE AND PLACE OF CLOSING.
If the condition precedent set forth in Article 7.1 (and subject to the
satisfaction at the Closing of the condition precedent set forth in
Article 7.2) is satisfied after the tenth (10th) day of any month, the
Closing shall occur on the last Business Day of such month. If the
condition precedent set forth in Article 7.1 (and subject to the
satisfaction at the Closing of the condition precedent set forth in
Article 7.2) is satisfied on or before the tenth (10th) day of any month,
the Closing shall occur on the Business Day immediately following such
day and the Closing Date, solely for purposes of the calculation of Net
Working Capital and the Net Working Capital Adjustment to be made
pursuant to Article 2, shall be deemed to be the last Business Day of the
month prior to the month in which such conditions precedent are
satisfied. The Closing shall take place at the offices of Darrois Villey
Maillot Brochier, Paris, France, at 10:00 a.m.
19
2.4.2 DELIVERIES AT THE CLOSING
(a) DELIVERIES BY THE PURCHASER
On the Closing Date, the Purchaser shall deliver or cause to be delivered to the
Seller the following:
(i) the Initial Purchase Price Payment as described in Article 2.3(a)
and the Notified Intercompany Indebtedness to the Seller and the
Notified Closing Third Party Indebtedness, as the case may be, to
the relevant third parties, as described in Article 2.3(b);
(ii) any other documents, instruments and writings reasonably required
by the Seller to be delivered by the Purchaser at or prior to the
Closing pursuant to the terms of this Agreement; and
(iii) the agreements referred to in Article 5.6, each executed by the
Purchaser and the Company.
(b) DELIVERIES BY THE SELLER
On the Closing Date, the Seller shall deliver or cause to be delivered to the
Purchaser the following:
(i) a duly completed and signed stock transfer form (ORDRE DE
MOUVEMENT) providing for transfer of ownership of all of the
Shares to the Purchaser;
(ii) the resignation letters of the members of the supervisory board of
the Company, and directors of the Subsidiaries, as set forth in
SCHEDULE 2.4.2(B)(III), effective upon the appointment of a new
supervisory board or board of directors, as the case may be;
(iii) the minute book, stock records and other corporate books and
records of the Company;
(iv) a certified copy of the minutes of the board of directors,
management board or supervisory board, as the case may be, of the
Company or the relevant Subsidiary having validly called a meeting
of its shareholders for the purpose of (a) acknowledging the
resignations of the foregoing members of the supervisory board of
the Company or each relevant Subsidiary, as the case may be; and
(b) electing new members of the supervisory board of the Company
or the relevant Subsidiary, as the case may be;
(v) any other documents, instruments and writings reasonably required
by the Purchaser to be delivered by the Seller at or prior to the
Closing pursuant to the terms of this Agreement, including
termination letters for any and all agreements between the Seller
and its Related Persons with the Company and its Subsidiaries to
be terminated on the Closing Date pursuant to Article 5.11 and
evidence of the termination of the program for the securitization
of receivables pursuant to Article 2.4.3; and
20
(vi) the agreements referred to in Article 5.6, each executed by the
Seller.
2.4.3 TERMINATION OF RECEIVABLES SECURITIZATION
The Seller shall cause the ▇▇▇▇▇▇▇▇ France S.A. and ▇▇▇▇▇▇▇▇ UK to terminate on
or prior to the Closing Date the program for the securitization of receivables
currently in place with Banque Federative du Credit Mutuel (the "BANK") under
the agreements entered into with it on November 27, 2000, resulting in (i) the
buying back of all receivables previously sold by the Company and its
Subsidiaries to the Bank under the securitization program, (ii) ownership by the
Company and its Subsidiaries of all receivables subject to such program and
(iii) discharge of any interest of the Bank in any receivables and/or bank
account subject to such program, confirmed in writing (with respect to (iii)
only).
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF THE SELLER
Except as set forth in the Schedules (it being understood that if a matter is
set forth in one Schedule it shall be deemed to be set forth in all other
relevant Schedules insofar as a reference is made thereto in the other
Schedules), the Seller hereby represents and warrants to the Purchaser that the
statements contained in this Article will be true and correct as of the Closing
Date as though made as of the Closing Date, except to the extent such
representations and warranties are by their express terms deemed to be made as
of a particular date (in which case, such representations and warranties shall
be true and correct as of such date):
3.1 ORGANIZATION - AUTHORITY - ENFORCEABILITY
3.1.1 ORGANIZATION, AUTHORITY AND QUALIFICATION TO THE SELLER. The Seller is a
corporation duly organized, and validly existing under the laws of France
and has all necessary corporate power and authority to enter into this
Agreement to carry out its obligations hereunder and to consummate the
Transaction. The execution and delivery of this Agreement by the Seller,
the performance by the Seller of its obligations hereunder and the
consummation by the Seller of the Transaction have been duly authorized
by all requisite action on the part of the Seller. This Agreement
constitutes a valid obligation of the Seller which is enforceable against
the Seller in accordance with its terms.
3.1.2 ORGANIZATION, AUTHORITY AND QUALIFICATION OF THE COMPANY. The Company (i)
is a corporation duly organized and validly existing under the laws of
France and (ii) has all necessary corporate power and authority to own,
operate or lease the properties and assets now owned, operated or leased
by it and to carry on its activities as currently conducted. The Company
is duly licensed or qualified to do business in each jurisdiction in
which the properties owned or leased by it or the operation of its
business makes such licensing or qualification necessary, except where
the failure to be so licensed or qualified is not and would not
reasonably be expected to be material to the operations or financial
condition of the Company. True and correct copies of the by-laws of the
Company, as currently in effect, have been delivered to the Purchaser.
21
The corporate bodies of the Company operate validly. As a general matter,
all corporate records, books and documents of the Company have been and
are being kept on a regular basis, reflect all material decisions of the
Company's management board, supervisory board and shareholders meetings
and generally reflect the Company's activities in all material respects.
The Company and, except as set forth in SCHEDULE 3.1.2, its Subsidiaries
are not, nor have they been, subject to any collective proceedings for
voluntary liquidation.
3.1.3 SUBSIDIARIES.
(a) SCHEDULE 3.1.3(a) sets forth a true and complete list of the Subsidiaries
and the percentage of the capital stock thereof owned by the Company or a
Subsidiary thereof.
(b) Other than the Subsidiaries, except as set forth in SCHEDULE 3.1.3(b) and
other than any "TITRE DE PLACEMENT" treated as such in accordance with
GAAP, there are no other corporations, partnerships, joint ventures,
associations or other entities in which the Company owns, of record or
beneficially, directly or indirectly, an equity or other interest or any
right (contingent or otherwise) to acquire the same.
(c) Neither the Company nor any Subsidiary holds, directly or indirectly, any
share or interest in an entity, whether or not incorporated, whether in
France or abroad, in which the liability of members is not limited to the
amount of their contributions.
(d) Each Subsidiary (i) is duly organized and validly existing under the laws
of its jurisdiction of incorporation or organization, (ii) has all
necessary corporate or other power and authority to own, operate or lease
the properties and assets owned, operated or leased by it and to carry on
its business as currently conducted and (iii) is duly licensed or
qualified to do business in each jurisdiction in which the properties
owned or leased by it or the operation of its business makes such
licensing or qualification necessary, except in the case of clause (iii)
where the failure to do so is not and would not reasonably be expected to
be material to the operations or financial condition of the Company and
such Subsidiary, taken as a whole. True and correct copies of the
organizational documents of each Subsidiary, as currently in effect, have
been made available to the Purchaser.
(e) Except for any matter that is not and would not reasonably be expected to
be material to the operations or financial condition of the Company and
its Subsidiaries, taken as a whole, or could be easily cured at a low
cost, the corporate bodies of each of the Subsidiaries operate validly.
As a general matter, all corporate records, books and
22
documents of each of the Subsidiaries have been and are being kept on a
regular basis and reflect the Subsidiaries' activities in all material
respects.
(f) All the outstanding shares of capital stock or other ownership interests
of each Subsidiary are (i) validly issued, fully paid, non-assessable
and, except with respect to wholly-owned Subsidiaries, free of preemptive
rights except as set forth in SCHEDULE 3.1.3(f) and (ii) except as set
forth in SCHEDULE 3.1.3(f), are owned by the Company or a Subsidiary
thereof, free and clear of all Liens.
(g) Except as set forth in SCHEDULE 3.1.3(g), there are no options, warrants,
convertible securities, or other rights, agreements, arrangements or
commitments of any character relating to the capital stock or other
ownership interests of any Subsidiary or obligating the Seller, the
Company, or any Subsidiary to issue, deliver or sell or cause to be
issued, delivered or sold, any authorized or outstanding shares of the
capital stock, or any securities convertible into or exchangeable for
shares of capital stock of, any Subsidiary or obligating any of such
persons to grant, extend or enter into any such agreement or commitment.
(h) Except as described in SCHEDULE 3.1.3(h), there are no voting trusts,
stockholder agreements, proxies or other agreements or understandings in
effect regarding the governance, the voting or transfer of any shares of
capital stock or any other interests in, or any rights or obligations of
any equity holders of any Subsidiary.
3.2 OWNERSHIP OF CAPITAL STOCK
3.2.1 The Shares will, as of the Closing, constitute all of the outstanding
shares of capital stock of the Company. All of the Shares will be validly
issued and fully paid and nonassessable. As of the Closing, the Seller
will own all of the Shares, free and clear of all Liens and the Company
will own all of the shares of the Subsidiaries free and clear of all
Liens, except for the shares of the Subsidiaries held by members of their
respective board of directors or supervisory board pursuant to loans
(PRETS DE CONSOMMATION) allowing the Company and the Subsidiaries to
acquire such shares at any time, which shares and related holders are
listed in SCHEDULE 3.2.1.
3.2.2 As of the Closing, except as set forth in SCHEDULE 3.2.2(b), there will
be no authorized or outstanding subscriptions, options, warrants,
convertible securities, or other rights, agreements, arrangements or
commitments of any character relating to the capital stock or other
ownership interests of the Company or obligating the Seller or the
Company to issue, deliver or sell, or cause to be issued, delivered or
sold, any authorized or outstanding shares of the capital stock, or any
securities convertible into or exchangeable for shares of capital stock
of the Company or obligating any of such persons to grant, extend or
enter into any such agreement or commitment.
23
3.2.3 As of the Closing, except as described in SCHEDULE 3.2.3, there will be
no voting trusts, stockholder agreements, proxies or other agreements or
understandings in effect regarding the governance, the voting or transfer
of any shares of capital stock or any other interests in, or any rights
or obligations of any equity holders of the Company.
3.3 NO CONFLICT
Except as set forth in SCHEDULE 3.3, neither the execution and delivery
of this Agreement nor the performance by the Seller of its obligations
hereunder or the consummation of the Transaction does or will:
3.3.1 conflict with or violate any provision of the Certificate of
Incorporation, by-laws or any other document of governance of the Company
and its Subsidiaries,
3.3.2 result in the breach, acceleration, postponement or termination of any
Contracts to which the Company or a Subsidiary is a party or by which any
of them or their respective securities, properties or businesses are
bound, except for any such matters that are not and would not reasonably
be expected to be material to the operations or financial condition of
the Company and its Subsidiaries, taken as a whole, or could easily be
cured at a reasonable cost,
3.3.3 result in the creation of any Liens upon any of their respective
securities, properties or businesses, or
3.3.4 result in the withdrawal or termination of any license, permit,
permission or approval benefiting the Company or a Subsidiary, except for
any such matters that are not and would not reasonably be expected to be
material to the operations or financial condition of the Company and its
Subsidiaries, taken as a whole, or could easily be cured at a reasonable
cost,
3.3.5 result in the enforcement by the beneficiary thereof of any put option,
call option, security interest or other undertaking involving any
disposal of any assets of the Company or the Subsidiaries, or
3.3.6 assuming that all Antitrust Clearances described in Article 5.2 have been
obtained and all filings and notifications necessary to obtain such
Antitrust Clearances have been made and any waiting or suspension periods
thereunder have terminated or expired, constitute a violation by the
Company or a Subsidiary of any laws, rules or regulations of any
Governmental Authority or of any Governmental Order, except for any such
matters that are not and would not reasonably be expected to be material
to the operations or financial condition of the Company and its
Subsidiaries, taken as a whole, or could be easily cured at a reasonable
cost.
3.3.7 Except as set forth in SCHEDULE 3.3, neither the execution nor the
delivery of this Agreement nor the performance by the Seller of its
obligations hereunder or the consummation of the Transaction will require
the payment of any bonus or indemnification payable to any employees or
corporate officers of the Company or any of the Subsidiaries.
24
3.4 COMPLIANCE WITH APPLICABLE LAWS, RULES AND REGULATIONS
Except for any matter that is the subject of another representation in this
Article 3 regarding compliance with applicable laws, rules and regulations or is
not and would not reasonably be expected to be material to the operations or
financial condition of the Company and its Subsidiaries, taken as a whole, or
could be easily cured at a reasonable cost, the respective activities of the
Company and the Subsidiaries comply with all applicable laws, rules, regulations
and permits. The Company and the Subsidiaries have complied in all material
respects with all Governmental Orders.
3.5 FINANCIAL INFORMATION
(a) A true and complete copy of the consolidated balance sheet of the
Company as of December 31, 2002, 2001 and 2000 and the related
consolidated statements of income, together with all related notes
and schedules thereto and the unqualified opinions of the
Company's independent auditor (collectively the "FINANCIAL
STATEMENTS") have been delivered to the Purchaser and are attached
hereto as SCHEDULE 3.5(a). The Financial Statements (i) were
prepared in accordance with the books of account and other
financial records of the Company and the Subsidiaries, (ii) are
true and correct (REGULIERS ET SINCERES) and present fairly
(DONNENT UNE IMAGE FIDELE) the consolidated financial condition
and results of operations of the Company and its Subsidiaries as
of the date thereof or for the period covered thereby, and (iii)
have been prepared in accordance with the Accounting Principles
applied consistently, except as otherwise specified in the
Financial Statements.
(b) (i) There are no Off Balance Sheet Liabilities at or since
December 31, 2002 through the date of this Agreement, except as
set forth in SCHEDULE 3.5(b)(I). (ii) Other than in the ordinary
course of business consistent with past practice, as of the date
of this Agreement, the Company and its Subsidiaries have not
granted any material performance incentives (including those not
yet earned) related to employees, customers or suppliers, except
as set forth in SCHEDULE 3.5(b)(II).
(c) Since December 31, 2002, none of the Company and the Subsidiaries:
(i) has suspended its payments; (ii) has made an amicable
settlement with its creditors (REGLEMENT AMIABLE); (iii) is in
judicial reorganization (REDRESSEMENT JUDICIAIRE) or judicial
liquidation; (iv) has been the object of any proceedings for the
reorganization or collective discharge of its liabilities; (v) has
filed, or is under any obligation to file, any motion, request or
petition of bankruptcy, reorganization, suspension of lawsuits or
claims by its creditors or the equivalent thereof; or (vi) has
received written notice indicating the threat of any such
proceedings. Neither the Company nor any of the Subsidiaries are
under voluntary liquidation.
25
3.6 ASSETS
The Company and the Subsidiaries have good and marketable title to the material
assets accounted for in the Financial Statements (excluding those assets which
have been disposed of since December 31, 2002), as well as any assets acquired
following the date of such Financial Statements (the "ASSETS"). None of the
Assets are subject to any Liens (other than Liens for current Taxes or
assessments not delinquent and builder, contractor, workmen, repairmen, title
retention clause (CLAUSE DE RESERVE DE PROPRIETE) or carrier Liens arising in
the ordinary course of business, with respect to obligations which are not
delinquent or in dispute in good faith). The FONDS DE COMMERCE of the Company
and its Subsidiaries are not pledged.
Except as set forth on SCHEDULE 3.6, subject to normal wear and tear, all of the
Assets (excluding inventories, Owned Premises, Leased Premises and Financial
Leased Premises (as defined in Article 3.10)), taken as a whole (and not
individually), are in good working condition with no known material defects.
3.7 INDEBTEDNESS AND LIABILITIES
Except (i) as and to the extent disclosed or reserved against on the Financial
Statements, (ii) as incurred after December 31, 2002 in the ordinary course of
business or (iii) as set forth in SCHEDULE 3.7(a), the Company and the
Subsidiaries do not have any liabilities or obligations of any nature, absolute,
accrued, contingent or otherwise and whether due or to become due, required by
GAAP to be recognized or disclosed on a balance sheet assuming it were to be
prepared as of the Closing Date. The Indebtedness of the Company and its
Subsidiaries as of December 31, 2002 is set forth on SCHEDULE 3.7(b). Guarantees
made by the Company or any Subsidiary to a third party as of December 31, 2002
for an amount greater than Euro one-hundred thousand (100,000) are set forth on
SCHEDULE 3.7(c).
3.8 TAXES
3.8.1 (a) Except as set forth on SCHEDULE 3.8.1(a), for periods open for Tax
audit or claims under the applicable statutes of limitation, the Company
and each of the Subsidiaries comply and have complied with the Tax
Regulations and, more particularly, and without limitation, have filed on
a timely basis all returns and reports in respect of Taxes for which it
may be liable. Such Tax Returns have been true and complete in all
material respects and do not contain any significant errors, inaccurate
statements or lapses;
(b) All Taxes required to be paid by the Company and the Subsidiaries that
were due and payable prior to the date hereof have been paid or are being
contested in good faith by appropriate proceedings. The Company and each
of the Subsidiaries have made sufficient provisions in the Financial
Statements for the payment of all Taxes which may become due in relation
to periods prior to December 31, 2002;
(c) For the fiscal years ended December 31, 2000, 2001 and 2002 and for the
current fiscal year to and including the date hereof, except as set forth
in SCHEDULE 3.8.1(c), no deficiencies for any Taxes have been assessed
against the Company or any of the Subsidiaries; and
26
(d) Except as set forth in SCHEDULE 3.8.1(d), neither the Company nor any of
the Subsidiaries benefits in any material respect from a specific Tax
regime subordinated to the respect of any undertaking whatsoever.
3.8.2
(a) The Company has entered into a tax agreement with the Seller which
shall remain in force after the Closing Date solely for events related to
fiscal years during which the Company was a member of the Seller's tax
group even if any such events occur after the Closing Date.
The Company shall not be entitled to any indemnification resulting from
its exit from the Seller's tax group with respect to (i) net operating
losses and capital losses carry overs which the Company might have
surrendered in the past to the Seller's tax group and (ii) the use of
distributable income not subject to the "PRECOMPTE" for distributions
made prior to Closing. Except as set forth in this Article 3.8.2, such
exit shall not result in any cost for the Company and its Subsidiaries,
including any Tax liability imposed on the Company or any of its
Subsidiaries as a former member of the Seller's tax group, including
under the last paragraph of Article 223 A of the French Tax Code.
(b) The Company and its French Subsidiaries formerly members of the tax
consolidated group with the Seller, as a result of their exit from the
Seller's tax group shall reimburse the Seller for the corporation tax
advance payment which, according to Article 223 N-2 of the French Tax
Code, shall be paid by the Seller on behalf of the Company and its
relevant French Subsidiaries during the twelve month period following the
opening of the fiscal year during which the Company and the relevant
French Subsidiaries shall be subject to French corporation tax on a
stand-alone basis (less the amount already paid prior to the Closing Date
by the Company and its relevant French Subsidiaries to the Seller
pursuant to the tax consolidation agreement and corresponding to
corporation tax advance payments). This reimbursement shall occur no
later than three (3) days before the due date of payment of each
corporation tax advance payment by the Seller. The Company and its
relevant French Subsidiaries shall be able in their sole discretion to
reduce the amount of the corporation tax advance payments to adjust them
to the estimated income of the current year, to the extent the Purchaser
shall retain sole responsibility for the payment of any penalty interest
and addition which may become due because of such reduction.
(c) The Seller shall pay to the Purchaser an amount equal to any UK Tax
arising as a result of or in consequence of the Company or any Subsidiary
ceasing to be grouped for any UK Tax purpose with any member of the PPR
Group in consequence of the entry into or consummation of this Agreement,
PROVIDED, HOWEVER that the Seller shall not pay any UK Tax resulting from
the Company and/or any Subsidiary ceasing to be grouped after the Closing
or from any restructuring or transactions decided after the Closing.
27
(d) The Seller shall not cause or permit any member of the PPR Group
(other than the Company or its UK Subsidiaries) to accept the surrender
by ▇▇▇▇▇▇▇▇ UK and its UK Subsidiaries of, or make any claim for Group
Relief using the losses for corporation tax purposes which are available
in ▇▇▇▇▇▇▇▇ UK and its UK Subsidiaries to be carried forward for offset
against future profits of such company and its UK Subsidiaries. For the
purposes of this Article 3.8, the term "GROUP RELIEF" means any of the
following (a) group relief capable of being surrendered or claimed
pursuant to Chapter IV Part X of the ICTA; (b) advance corporation tax
capable of being surrendered or claimed pursuant to regulation 15 of the
Corporation Tax (Treatment of Unrelieved Surplus Advance Corporation Tax)
Regulations 1999 of the UK; and (c) a tax refund capable of being
surrendered or claimed under section 102 of the Finance ▇▇▇ ▇▇▇▇ of the
UK.
(e) The Seller shall not cause nor permit the Company or any of the
Subsidiaries to be a party to any election made pursuant to section 171A
of the Taxation of Chargeable Gains Act, 1992 of the UK and any such
elections are disclosed in Schedule 3.8.2(e).
3.9 INTELLECTUAL PROPERTY RIGHTS
(a) Except as set forth in SCHEDULE 3.9(a), the Company and the Subsidiaries
have such ownership of, or such rights to use, by license or other
agreement, all patents and patent applications, trade secrets, trademarks
and service marks, trademark and service ▇▇▇▇ registrations and
applications, trade names, logos, copyrights, copyright registrations and
applications and computer software programs, in each case, as currently
is used by the Company and the Subsidiaries, and that is necessary to
operate the Company and the Subsidiaries' business and activities as
currently operated (collectively, the "INTELLECTUAL Property").
(b) Except as set forth in SCHEDULE 3.9(b), to the knowledge of the Seller,
the conduct of the business of the Company and the Subsidiaries as
currently conducted does not infringe upon the proprietary rights of any
third party, and there are no infringements of the Intellectual Property
by any third party, except, in either case, for such infringements that
are not material.
There are no pending actions by and no written notice of infringement has
been received from any Person against the use by the Company or any of
the Subsidiaries of any Intellectual Property that is owned by the
Company or any of the Subsidiaries, and, there are no pending actions
noticed by any Person against the use by the Company or any of the
Subsidiaries of any Intellectual Property that is licensed to the Company
or any of the Subsidiaries and, to the knowledge of the Seller, there is
no such claim, action or notice threatened.
(c) SCHEDULE 3.9(c) (the "IP SCHEDULE") lists all trade names, trademarks and
service marks and registrations and applications thereto, patents and
patent applications, copyright registrations and domain name
registrations of each of the Company and the Subsidiaries (collectively,
"IP RIGHTS") together with unregistered copyrights of the Company and
each of the Subsidiaries. All IP Rights are owned by the Company and/or
one of the Subsidiaries.
28
(d) SCHEDULE 3.9(d) lists contracts and undertakings that include licenses
pursuant to which the Company has the right to use the Intellectual
Property owned by third parties ("LICENSED RIGHTS").
(e) Except as set forth in SCHEDULE 3.9(e) or unless the lack, failure,
action or state of facts in question is not material, the Company and/or
one of the Subsidiaries (i) owns each of the IP Rights set forth in the
IP Schedule, (ii) has the right to use each of the Licensed Rights, (iii)
has not granted to any other Person any interest in any IP Rights or
Licensed Rights, as licensee or otherwise (other than non-exclusive
licenses), and (iv) there are no Liens, restrictions or reversionary
rights that restrict any such IP Rights, and neither the Company, the
Subsidiaries nor any predecessor in interests thereof has granted to any
other Person any Liens, restrictions or reversionary rights that restrict
any Licensed Rights other than those that exist in the instruments in
which the Licensed Rights were granted.
3.10 TITLE TO REAL PROPERTY
3.10.1 The Company and the Subsidiaries (a) have good and marketable title to
all real property shown in SCHEDULE 3.10.1(a) (the "OWNED PREMISES"); (b)
with respect to all leased real property or leased estates shown in
SCHEDULE 3.10.1(b) (the "LEASED PREMISES"), have a valid leasehold
interest; and (c) with respect to all real property subject to a
financial lease (CREDIT-BAIL) shown in SCHEDULE 3.10.1(c) (the "FINANCIAL
LEASED Premises"), have a valid leasehold title and a valid right to
purchase said property.
The Owned Premises constitute all the real properties owned by the
Company and its Subsidiaries. The Leased Premises constitute all the real
properties and buildings leased by the Company and its Subsidiaries and
the Financial Leased Premises constitute all real properties subject to
financial leases (CREDIT-BAUX) to which the Company and its Subsidiaries
are parties.
3.10.2 The Owned Premises are not subject to any Lien, lease or other right of
occupation or preemptive right, and neither the Company nor any of the
Subsidiaries has granted any easements, except where the existence of
such easements is not and would not reasonably be expected to be material
to the current use of the relevant Owned Premise.
3.10.3 None of the Owned Premises, the Leased Premises or the Financial Leased
Premises require any repairs, except where such repairs are not and would
not reasonably be expected to be material to the operations or financial
condition of the Company and its Subsidiaries, taken as a whole, or could
be easily cured at a low cost. The Seller has received no written
notification that the buildings, structures and fixtures used by the
Company and the Subsidiaries are not structurally sound, have any
material defects or are not adequate in all material respects for the
uses to which they are being put. With respect to each such building,
structure or fixture, none of the Seller, Company or Subsidiaries have
received written notification that they are in violation of any
applicable building, zoning, subdivision, health or other law, ordinance
or regulation (including, without limitation, Environmental Laws) and to
the Seller's knowledge, no such violation exists.
29
3.10.4 Except as set forth in SCHEDULE 3.10.4, the Company and each of the
Subsidiaries have complied in all material respects with all their
respective material obligations in respect of the Leased Premises and
Financial Leased Premises and, as of the date of this Agreement, none of
them has received any written notice to quit or notice of termination
(and there is no fact or circumstance which could entitle or require a
person to forfeit or enter on, or take possession of, or occupy, the
property), nor have they given written approval for assignment of the
lease or financial lease in respect of any Leased Premises or any
Financial Leased Premises, other than any assignments among the Company
and its Subsidiaries.
3.11 MATERIAL CONTRACTS
SCHEDULE 3.11 contains a list of the following Contracts:
(a) Contracts with the significant suppliers, as well as any Contracts with
suppliers that contain exclusivity provisions and/or price discounts;
(b) significant Contracts relating to distribution logistics;
(c) Contracts, including operating leases, entailing annual commitments in
excess of Euro five-hundred thousand (500,000);
(d) Contracts including non-competition or non-solicitation provisions;
(e) Contracts (other than customer contracts) which are material to the
Company and which cannot be terminated, either at all or without payment
of a material fee, by the Company or the Subsidiaries, as the case may
be, with less than six (6) months advance notice.
These Contracts are valid and enforceable. The Company and/or the Subsidiaries
and, to the knowledge of the Seller, the other Persons that are parties thereto
have complied with their obligations thereunder, except where the failure to
perform such obligations is not and would not reasonably be expected to be
material to the operations or financial condition of the Company and its
Subsidiaries, taken as a whole, or could be easily cured at a reasonable cost.
3.12 LABOR RELATIONS
(a) The Seller has made available to the Purchaser a list of the employees of
the Company and the Subsidiaries, along with details of their seniority,
which is accurate in all material respects as of the date hereof.
(b) The Seller has made available to the Purchaser the employment contracts
of the ten highest paid key executives of the Company and its
Subsidiaries, taken as a whole.
(c) The Company and the Subsidiaries have incurred no significant obligations
of any kind toward former employees, especially unfulfilled obligations
resulting from the breach by the Company or the Subsidiaries of any labor
or service contract or from indemnities for dismissal or indemnities for
unjustified dismissal or from not having complied with the obligation to
reinstate an employee.
(d) Except as stated in SCHEDULE 3.12(d), no employment or other contract has
been concluded with any current or former employee or director which
contains provisions of an exceptional nature, such dismissal indemnities
exceeding those provided by the applicable collective convention or
provisions granting the beneficiary exceptional specific advantages
including special employees benefits.
30
(e) All pension and employee plans (collectively, the "EMPLOYEE PLANS") in
which the Company and the Subsidiaries participate are listed in SCHEDULE
3.12(e). There are no unpaid amounts due in respect of any Employee Plans
in which the Company and the Subsidiaries participate. All liabilities
and contingent liabilities with regards to such Employee Plans as at
December 31, 2002 have been properly accounted for in the Financial
Statements.
(f) The Company and the Subsidiaries comply in all material respects with all
applicable labor law, rules and regulations and in particular with their
relevant collective status and collective bargaining agreements and with
all Governmental Orders relating to labor laws, rules and regulations
applicable to them. Neither the Company nor any of the Subsidiaries is
subject to any specific material proceedings by any applicable
Governmental Authority with respect to failures to comply with labor law,
rules and regulations.
(g) Except as set forth on SCHEDULE 3.12(g) and any material strike or work
stoppage involving employees of the Company or its Subsidiaries related
to the Transaction, as of the date hereof, (i) there has been no material
strike or work stoppage since January 1, 2000 involving employees of the
Company or its Subsidiaries and (ii) to the Seller's knowledge, no
material strike or work stoppage is currently threatened through an
official notice (PREAVIS OFFICIEL) involving employees of the Company or
its Subsidiaries.
3.13 ENVIRONMENT
(a) Except as set forth on SCHEDULE 3.13(a) and except for any matter that is
not and would not reasonably be expected to be material to the operations
or financial condition of the Company and its Subsidiaries, the Company
and the Subsidiaries (i) have complied with all applicable environmental
statutes and regulations ("ENVIRONMENTAL LAW"), (ii) are not subject to
any pending judicial or administrative proceeding alleging the violation
of any Environmental Law and/or health and safety law and (iii) have not
received any notice of violation of Environmental Law or health and
safety law; and
(b) Except for any matter that is not and would not reasonably be expected to
be material to the operations or financial condition of the Company and
its Subsidiaries, taken as a whole, or could easily be cured at a
reasonable cost, to the knowledge of the Seller, there has been no
occurrence of any industrial accident or incident resulting in damage to
the environment on any property owned or leased by the Company or its
Subsidiaries, in particular resulting from any act, activity or omission
of the Company or any of the Subsidiaries.
31
3.14 LITIGATION
Except as set forth on SCHEDULE 3.14, there are no pending or threatened (in
writing) actions, claims or other proceedings by or against the Company or any
of the Subsidiaries or any of their present directors or officers in their
capacity as such (a "LITIGATION") that, if adversely determined, could
reasonably be expected to be material to the operations or financial condition
of the Company and its Subsidiaries.
3.15 INSURANCE
The Company and the Subsidiaries, taken as a whole, are generally insured under
insurance policies that provide coverage for the risks customarily insured
against by entities carrying on the same type of business as the Company and the
Subsidiaries.
The Company and the Subsidiaries have paid all premiums due and have complied in
all material respects with their obligations under such policies.
3.16 BUSINESS IN THE ORDINARY COURSE
Since December 31, 2002 and through the date hereof: (a) there has not been any
Material Adverse Effect; (b) except as set forth in SCHEDULE 3.16, the business
of the Company and the Subsidiaries has been conducted in the ordinary course of
business; and (c) except as set forth in SCHEDULE 3.16, none of the Company or
any of its Subsidiaries has undertaken any action identified in Articles 5.1.1
through 5.1.5, Articles 5.1.7 and 5.1.8, and Articles 5.1.10 through 5.1.14.
3.17 NO BROKER
There is no broker, finder or financial advisor who is acting or has acted on
behalf of the Seller other than HSBC. There is no person, firm, or corporation
entitled to receive any brokerage, commission or finder's or financial advisory
fee from any of the Company or the Subsidiaries in connection with the
Transaction.
3.18 INVENTORY
As of December 31, 2002, (i) all inventory consists of a quality and quantity
usable and saleable in the ordinary course of business and consistent with
commercial policies in force at that time within twelve (12) months, except for
items of obsolete materials and materials of below-standard quality, all of
which items, including inventory for which a change in design or manufacture has
been requested by a customer, have been written off or written down on the
Financial Statements for December 31, 2002 to fair market value or for which
adequate reserves have been provided therein, (ii) all inventory not written off
has been priced at the lower of average cost or market, (iii) the quantities of
each type of inventory are not excessive, but are reasonable and warranted in
the present circumstances of the Company and each Subsidiary, (iv) all inventory
is free and clear of all Liens, (v) inventory, after provisions, does not
represent more than 6 weeks of purchases on average, (vi) gross inventory,
before provisions, does not
32
represent more than 7 weeks of purchases on average and (vii) no more than 10%
of the Company and the Subsidiaries' inventory, taken as a whole, has been
acquired or created within a period exceeding twelve (12) months.
ARTICLE 4- REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Seller that at the Closing Date:
4.1 ORGANIZATION - AUTHORITY AND ENFORCEABILITY
The Purchaser is a company duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation.
The Purchaser has all necessary corporate power and authority to enter into this
Agreement, to carry out its obligations hereunder and to consummate the
Transaction. The execution and delivery of this Agreement and the consummation
of the Transaction have been duly authorized by the board of directors of the
Purchaser and no other corporate proceeding on the part of the Purchaser is
necessary to authorize the execution or delivery of this Agreement or the
consummation of any of the Transaction.
This Agreement has been duly executed and delivered by the Purchaser and
constitutes a legal, valid and binding obligation of the Purchaser, enforceable
against it in accordance with its terms.
There are no actions, claims or other proceedings or investigations pending or
threatened against or involving the Purchaser or any of its present directors or
officers, properties or assets which, if adversely determined, would reasonably
be expected to have a material adverse effect on the Purchaser's ability to
consummate the Transaction or affect the validity or enforceability of the
Agreement.
4.2 NO CONFLICT
Neither the execution and delivery of this Agreement nor the performance by the
Purchaser of its obligations hereunder or the consummation of the Transaction
does or will (a) conflict with, violate or result in the breach of any provision
of the certificate of incorporation, by-laws or any other document of governance
of the Purchaser, (b) result in the creation of any Liens upon any of the
Purchaser's securities, properties or businesses, or (c) except for any such
matters that would not reasonably be expected to have a material adverse effect
on the Purchaser's ability to consummate the Transaction or affect the validity
or enforceability of the Agreement and assuming that all Antitrust Clearances
described in Article 5.2 have been obtained and all filings and notifications
necessary to obtain such Antitrust Clearances have been made and any waiting or
suspension periods thereunder have terminated or expired, conflict with or
violate any law, rules or regulations of any Governmental Authority or any order
entered by or with any Governmental Authority applicable to the Purchaser.
33
4.3 FINANCING
The Purchaser has access to sufficient funds to consummate the Transaction and
to operate the Company and its Subsidiaries after the Closing.
4.4 INDEPENDENT REVIEW
The Purchaser acknowledges hereby that it has conducted its own independent
review and analysis of the Company, its Subsidiaries and their respective
businesses and that it has been provided reasonable access to the properties,
records and management of the Company and its Subsidiaries for this purpose.
In entering into this Agreement, the Purchaser acknowledges that neither the
Seller, the Company, its Subsidiaries nor any of their respective directors,
officers, employees, agents, representatives or advisors make any representation
or warranty, either express or implied, as to the accuracy or completeness of
(and agrees that none of such persons shall have any liability or responsibility
to it in respect of) any of the information provided or made available to the
Purchaser or its agents or representatives, except as and only to the extent
expressly provided for in this Agreement and, consequently, the Purchaser has
relied on its own investigations and analysis and the representations and
warranties set forth in this Agreement.
The Purchaser represents and warrants that, based on its due diligence
investigation of the Company to the date hereof, as of the date hereof it does
not know of any indemnity claim with respect to a breach of any representation
or warranty contained in this Agreement that it could bring in the future and
not on the date hereof (assuming the Closing occurred on the date hereof) solely
due to the passage of time.
4.5 REPORTS AND FINANCIAL STATEMENTS
The representation in this Article 4.5 is subject to the condition subsequent
that Additional Consideration, if any, is in the form of common stock of the
Purchaser, the Purchaser having no responsibility, liability or obligation for
breach of this representation if no Additional Consideration is payable pursuant
to Article 2.3 or if the Purchaser elects to pay the Additional Consideration
entirely in cash pursuant to such Article, and this representation is deemed not
to be made by the Purchaser in the event the Additional Consideration does not
consist in whole or in part of common stock of the Purchaser.
The Purchaser has filed all required reports, schedules, forms, statements and
other documents required to be filed by it with the Securities and Exchange
Commission (the "SEC") since December 31, 2001 (collectively, including all
exhibits thereto and documents incorporated by reference therein, the "PURCHASER
SEC REPORTS"). None of the Purchaser SEC Reports, as of their respective dates
(and, if amended or superseded by a filing prior to the date of this Agreement,
then on the date of such filing), contained or will contain any untrue statement
of a material fact or omitted or will omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the financial
statements (including the related notes) included in
34
the Purchaser SEC Reports presents fairly, in all material respects, the
financial position and results of operations and cash flows of the Purchaser as
of the respective dates or for the respective periods set forth therein, all in
conformity with United States generally accepted accounting principles
consistently applied during the periods involved except as otherwise noted
therein. All of the Purchaser SEC Reports, as of their respective dates (and as
of the date of any amendment to the respective Purchaser SEC Report), complied
as to form in all material respects with the applicable requirements of the
Securities and Exchange Act and the rules and regulations promulgated
thereunder.
4.6 NO BROKER
There is no broker, finder or financial advisor who is acting or has acted on
behalf of the Purchaser other than ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. and Clinvest. There is no
person, firm, or corporation entitled to receive any brokerage, commission or
finder's or financial advisory fee from the Purchaser in connection with the
Transaction.
ARTICLE 5 - COVENANTS
5.1 COVENANTS OF THE SELLER
During the period from the date of this Agreement to the Closing Date, except as
specifically contemplated by this Agreement or as otherwise consented to in
writing by the Purchaser, (i) the Seller shall ensure that the Company and the
Subsidiaries are managed in an ordinary and appropriate manner (EN BON PERE DE
FAMILLE) and, in particular, the Seller shall use its best efforts to maintain
the activities and business relations of the Company and the Subsidiaries; and
(ii) the Company and the Subsidiaries shall maintain their inventory, accounts
receivable and accounts payable in the ordinary course of business consistent
with past practice.
As part of the Seller's commitment to ensure that the Company and the
Subsidiaries are managed in an ordinary and appropriate manner (EN BON PERE DE
FAMILLE) and except as permitted by Articles 2 and 5.6, the Seller, without the
consent of the Purchaser (which consent shall not be unreasonably withheld or
delayed and, if the Purchaser does not notify the Seller in writing of its
refusal to grant such consent within five (5) Business Days of the receipt of a
written request, in reasonable detail, for such consent by one or more of
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇ van Kaldekerken (which request shall also be
copied to Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP to the attention of ▇▇▇▇▇▇
▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ at the applicable address set forth in Article 12.3), such
consent shall be deemed to have been granted), will or will cause the Company to
not and each of the Subsidiaries to not:
5.1.1 amend their certificate of incorporation or by-laws or other
constituent or governing document, to the extent any such modification
is not required by law, or by the rules or regulations of any
Governmental Authority or Governmental Order;
5.1.2 be a party to any acquisition, merger, spin-off, consolidation,
purchase of stock or interest in any corporation, partnership,
association or other business organization or enter into or
35
form any material joint-venture (other than any such transactions among
the Company and any of its Subsidiaries or among any Subsidiaries) or
enter into any agreement leading to any of the foregoing;
5.1.3 alter the Company's outstanding capital stock or declare, set aside,
make or pay any dividend, or purchase or redeem any shares of the
Company's capital stock, except to the extent contemplated by this
Agreement;
5.1.4 issue or sell any of its capital stock or any options, warrants or
other rights to purchase any such shares or any securities convertible
into or exchangeable for such shares (other than any such issuances or
sales by Subsidiaries to the Company or other Subsidiaries);
5.1.5 except as set forth on SCHEDULE 5.1.5, acquire, sell or dispose in any
way any goodwill, real property or Intellectual Property involving an
amount greater than Euro five-hundred thousand (500,000), and with
respect to the sale of ▇▇▇▇▇▇▇▇ Industrie, the Seller shall keep the
Purchaser reasonably informed of the process, including providing
drafts of relevant agreements, which agreements shall be customary for
transactions of this type;
5.1.6 other than in the ordinary course, enter into, amend in any material
respect or terminate any Contract which is or, if entered into, would
be material to the Company and its Subsidiaries, taken as a whole;
5.1.7 except as otherwise disclosed, enter into a binding agreement for the
hiring or dismissal of any employee of the Company or any of its
Subsidiaries for an amount in excess of Euro one-hundred and fifty
thousand (150,000) (for each such binding agreement);
5.1.8 enter into any transaction involving a commitment in excess of Euro
four-hundred and fifty thousand (450,000) other than in the ordinary
course of business or as permitted by Article 5.1.7;
5.1.9 except as set forth on SCHEDULE 5.1.9, make any capital expenditures in
excess of Euro two-hundred thousand (200,000) for any individual
expenditure or Euro five-hundred thousand (500,000) in the aggregate;
5.1.10 waive any receivable involving an amount greater than Euro one-hundred
thousand (100,000) outside the ordinary course of business;
5.1.11 grant any Lien, mortgage or pledge or issue any security undertaking or
commitment whereby it would assume liability of a third party other
than in the ordinary course of business;
5.1.12 except as set forth in SCHEDULE 5.1.12, other than in the ordinary
course of business, settle any action, claim or dispute against or
affecting the Company or any Subsidiary involving an amount greater
than Euro four-hundred and fifty thousand (450,000);
36
5.1.13 amend its employees' collective status or to grant any additional
benefits, or make any material change in the compensation payable, or
to become payable, to any employee of the Company or any of its
Subsidiaries (other than normal recurring increases in the ordinary
course of business or pursuant to plans, programs or agreements
existing on the date hereof, and other than pursuant to statutory or
regulatory requirements); or
5.1.14 agree to take any of the actions set forth in the foregoing
subparagraphs 5.1.1 through 5.1.13.
The Company and its Subsidiaries shall not be prevented from curing a
breach of any representation or warranty contained in this Agreement;
PROVIDED, HOWEVER, that such cure does not breach the provisions of
Articles 5.1.1 through 5.1.14 or Article 5.10; PROVIDED, FURTHER, that,
subject to Article 5.10, the Company and its Subsidiaries shall not be
prevented from settling or disposing of any Litigation arising after
the date of this Agreement by expending cash prior to the Closing.
5.2 ADDITIONAL COVENANTS
5.2.1 Subject to the terms of this Agreement, the Purchaser will use all
reasonable efforts to take, or cause to be taken, all actions, and do,
or cause to be done, all things necessary, proper or advisable under
this Agreement and applicable laws and regulations to obtain as
promptly as practicable all consents, waivers, licenses, orders,
registrations, approvals, permits, rulings, authorizations and
clearances of all Governmental Authorities, including all Antitrust
Clearances necessary or advisable to be obtained in connection with the
Transaction (collectively, the "REQUIRED APPROVALS") as soon as
practicable after the date hereof and in any case prior to the Closing,
including (i) preparing and filing as promptly as practicable all
documentation to effect all necessary applications, notices, petitions,
filings, and other documents and to obtain as promptly as practicable
all Required Approvals and (ii) subject to Article 5.2.3, taking all
reasonable steps as may be necessary to obtain all such Required
Approvals. In furtherance and not in limitation of the foregoing, the
Purchaser agrees to make, as promptly as practicable, (A) appropriate
filings with the Antitrust Authorities in accordance with applicable
competition, merger control, antitrust, investment or similar laws, and
(B) all other necessary filings with other Governmental Authorities
relating to the Transaction, and, to supply as promptly as practicable
any additional information or documentation that may be requested by
such Governmental Authorities and to use all reasonable efforts to
cause the receipt of Required Approvals as soon as practicable. The
Purchaser shall defend through litigation on the merits any claim
asserted in any court or other forum by any party, including appeals.
5.2.2 The Purchaser shall be entitled to direct any proceedings or
negotiations with any Governmental Authority or Antitrust Authority
relating to any of the foregoing, provided that it shall keep the
Seller fully informed as to the status of such proceedings or
negotiations and allow the Seller's outside counsels to attend such
proceedings or negotiations. Each of the Purchaser and the Seller
shall, in connection with the efforts referenced in Article 5.2.1 above
to obtain all Required Approvals, use all reasonable efforts to the
extent practicable, and subject to the Purchaser's right not to
disclose to the Seller's any data, information or documents which the
Purchaser deems to be confidential and/or proprietary, to the extent
37
such data, information or document are disclosed to the Seller`s legal
advisors on a confidential basis, to (i) cooperate in all respects with
each other in connection with any filing or submission and in
connection with any investigation or other inquiry, including any
proceeding initiated by a private party, (ii) subject to applicable
law, permit the Seller to review in advance any proposed written
communication between the Purchaser and any Antitrust Authority or
other Governmental Authority, (iii) promptly inform the Seller of and
provide, on a confidential basis, the Seller's outside counsels a copy
of (and, at the Seller's reasonable request, supply to the Seller) any
communication (or other correspondence or memoranda) received by the
Purchaser from, or given by the Purchaser to, any Antitrust Authority
or other Governmental Authority and of any material communication
received or given in connection with any proceeding by a private party,
in each case regarding the Transaction and (iv) consult with the Seller
in advance to the extent practicable of any meeting or conference with
any Antitrust Authority or other Governmental Authority or, in
connection with any proceeding by a private party, with any other
Person, and to the extent permitted by the applicable Antitrust
Authority or other Governmental Authority or other Person, give the
Seller the opportunity to attend and participate in such meetings and
conferences.
5.2.3 In furtherance and not in limitation of the covenants of the Parties
contained in Articles 5.2.1 and 5.2.2 above, if any administrative or
judicial action or proceeding, including any proceeding by a private
party, is instituted (or threatened to be instituted) challenging any
transaction contemplated by this Agreement as violative of any
regulatory law, or if any statute, rule, regulation, executive order,
decree, injunction or administrative order is enacted, entered,
promulgated or enforced by an Antitrust Authority or other Governmental
Authority which would make the Transaction illegal or would otherwise
prevent, delay or otherwise adversely affect the consummation of the
Transaction, each of the Purchaser and the Seller shall cooperate in
all respects with each other and use, respectively, all reasonable
efforts to contest and resist any such action or proceeding and to have
vacated, lifted, reversed or overturned any decree, judgment,
injunction or other order, whether temporary, preliminary or permanent,
that is in effect and that would make illegal, rescind or otherwise
materially restrict the Transaction and to have such statute, rule,
regulation, executive order, decree, injunction or administrative order
repealed, rescinded or made inapplicable so as to not so affect the
Transaction; PROVIDED, HOWEVER, that in no event shall the Purchaser be
required to offer to the EU Antitrust Authority to take any action that
would reasonably be expected to substantially impair the benefits
expected to received by the Purchaser from the Transaction.
5.2.4 The Purchaser states that it is the Purchaser's intention, and hereby
agrees to use all reasonable efforts to ensure that the draft CO Form
to be prepared in connection with the Transaction is filed with the EU
Antitrust Authorities no later than ten (10) Business Days after the
date of this Agreement.
5.2.5 If Antitrust Clearance from any of the Antitrust Authorities shall have
not have been obtained by October 31, 2003, then the Seller shall have
the right to terminate this Agreement by sending a notice of
termination to the Purchaser on or prior to November 30, 2003.
38
5.3 ACCESS
Subject to the requirements of applicable laws and regulations, the Seller shall
cause the Company to permit the Purchaser's representatives to have appropriate
access at reasonable times to the records, books, registers, premises,
accounting documents and other sources of information relating to the Company
and the Subsidiaries in order to prepare for Closing. Information obtained by
the Purchaser under this Article 5.3 shall be subject to the confidentiality
agreement entered into between the Purchaser and the counsels to the Seller
dated April 25, 2002 which remains in full force and effect.
5.4 ASSISTANCE
To the extent that it does not affect their ability to conduct their business,
the Parties further each agree to provide the other with any assistance
reasonably requested of either of them by the other Party after the sale of the
Shares to the Purchaser, in particular in order to enable the Company and the
Subsidiaries to comply with any reporting obligations relating to tax or other
matters. Each Party shall reimburse the other Party for its reasonable out of
pocket costs for providing such assistance.
5.5 EMPLOYMENT AGREEMENTS
Purchaser shall honor and comply with all of the terms and obligations under the
employment agreements set forth on SCHEDULE 5.5.
5.6 OFFICE SUPPLIES PURCHASE AGREEMENT AND TRANSITION AGREEMENT
On the Closing Date, the Seller, on its behalf and on behalf of its Related
Persons, shall enter with the Company and its Related Persons into an office
supplies purchase agreement substantially in the form attached as EXHIBIT A to
this Agreement and the transition agreement substantially in the form attached
as EXHIBIT B to this Agreement.
5.7 NOTIFICATION OF BREACHES
The Seller shall promptly notify the Purchaser of any breach of any of the
Seller's or the Purchaser's representations and warranties in this Agreement of
which the Seller becomes aware between the date hereof and the Closing Date, and
the Purchaser shall promptly notify the Seller of any breach of any of the
Seller's or the Purchaser's representations and warranties in this Agreement of
which the Purchaser becomes aware between the date hereof and the Closing Date.
Any disclosures or notifications made pursuant to this Article 5.7 shall not
impact any indemnification obligation of the Seller or the Purchaser and shall
not be deemed to cure any breach of any representation or warranty made pursuant
to this Agreement.
39
5.8. TAX MATTERS
(i) The Seller shall prepare or cause to be prepared and file or cause to be
filed when due all Tax Returns (the "STRADDLE PERIOD RETURNS") that are
required to be filed by or with respect to the Company or any Subsidiary
or their respective businesses or assets for taxable years or periods
ending on or before the Closing Date and for taxable periods or years
commencing before and ending after the Closing Date (a "STRADDLE
PERIOD"), if the due date for such Straddle Period Returns is on or
before the Closing Date. The Purchaser shall prepare and timely file all
other Straddle Period Returns.
(ii) Each Party shall timely pay all Taxes with respect to the Tax Returns to
be filed by such Party pursuant to paragraph (i) above. With respect to
Straddle Period Returns filed by the Purchaser, the Seller will pay to
the Purchaser an amount equal to the Pre-Closing Taxes (as defined
below), other than VAT, due with respect to such Straddle Period Returns
and with respect to Straddle Period Returns to be filed by the Seller the
Purchaser shall pay to the Seller an amount equal to the Post-Closing
Taxes (as defined below), other than VAT, due with respect to such
Straddle Period Returns. Payments to be made under this paragraph (ii)
will be made no later than two (2) Business Days prior to the due date
for the applicable payment.
(iii) The Seller shall be responsible for and agrees to indemnify and hold the
Purchaser, the Company and the Subsidiaries harmless from and against all
Taxes with respect to the income, assets and operations of the Company
and the Subsidiaries for all taxable years and periods ending on or
before the Closing Date and for the portion of the taxable year through
and including the Closing Date ("PRE-CLOSING TAXES"). The Purchaser shall
be responsible for and agrees to indemnify and hold the Seller harmless
from and against all Taxes with respect to the income, assets and
operations of the Company and the Subsidiaries for the portion of the
taxable year after the Closing Date in case of a taxable year commencing
before and ending after the Closing Date (the "POST-CLOSING TAXES").
Taxes attributable to a taxable year or period which commences before and
ends after the Closing Date shall be allocated between the Seller and the
Purchaser as follows:
(a) The Purchaser shall calculate the portion of the Taxes relating to
the Straddle Period to be paid by the Seller in accordance with
Article 5.8(iii) as if the relevant taxable period ended on the
Closing Date applying normal tax rules as consistently applied by
the Company and any of its Subsidiaries; PROVIDED, HOWEVER, that
should the Closing Date be a date different from the last day of a
month, the income of that month shall be apportioned between the
Seller and the Purchaser pro rata based on sales, for the purposes
of the calculation of the Pre-Closing Taxes.
40
(b) The Purchaser shall prepare and deliver to the Seller the
calculation of the Pre-Closing Taxes within sixty (60) days
following the Closing Date, with full details of such calculation.
The Seller shall have thirty (30) days to review such calculation,
during which period it shall be granted full access to all
information, books and records supporting such calculation. If the
Seller disagrees with the calculation of Pre-Closing Taxes
delivered by the Purchaser it will so notify the Purchaser within
thirty (30) days following receipt of such calculation. Such
notice will describe the Seller's objections in detail. If, within
fifteen (15) days following the Purchaser's receipt of such
notice, the Seller and the Purchaser are not able to agree on the
calculation of the Pre-Closing Taxes, the objections not agreed
upon will be referred to an independent tax expert (the
"INDEPENDENT TAX EXPERT") to be agreed upon by the Seller and the
Purchaser. Should the Parties fail to agree on the name of the
Independent Tax Expert within ten (10) days, the Independent Tax
Expert will be appointed by the "PRESIDENT DU TRIBUNAL DE
COMMERCE" of Paris upon the application of either party. The
Independent Tax Expert shall render a decision within forty-five
(45) days following his appointment, and such decision will be
final and binding on the Parties in the absence of manifest error.
The Independent Tax Expert decision shall include an allocation
between the Parties of his expenses in connection with the
determination under this Article 5.8(iii)(b).
(iv) The Seller shall indemnify for and pay to the Purchaser an amount equal
to (I) any Tax liability which is primarily the liability of another
person, other than the Company or any of the Subsidiaries, (the "PRIMARY
PERSON") for which the Company or any Subsidiary is or becomes liable in
consequence of (a) the Primary Person failing to discharge such Tax
liability; and (b) the Company or any Subsidiary at any time before the
Closing Date being a member of the same group of companies for any Tax
purpose as the Primary Person or having control of, being controlled by,
or being otherwise connected with, the Primary Person or being controlled
by the same person as the Primary Person for any Tax purpose; (II) any
liability of the Company or any Subsidiary arising from an obligation to
repay the whole or any part of any payment received for Group Relief in
the UK (as this term is defined in Article 3.8.2(d)) or a similar relief
in any other jurisdiction, if applicable (other than from the Company or
any Subsidiary) pursuant to an arrangement entered into by the Company or
any Subsidiary on or before the Closing Date; and (III) any VAT group
liability of the Company or any Subsidiary arising as a result of
supplies actually made after the Closing Date by any person (other than
the Company and its Subsidiaries) which is or has been a member of the
same group for VAT purposes as the Company or any Subsidiary.
(v) In determining the Seller's liability for Taxes pursuant to this Article
5.8, the Seller shall be credited with the amount of estimated Tax (or
corporation tax advance payments) paid by or on behalf of the Company and
the Subsidiaries prior to the Closing, it being specified that this
provision shall apply on a Tax by Tax basis. To the extent that the
Seller's liability for Taxes for a taxable year or period is less than
the amount of estimated Taxes previously paid by or on behalf of the
Company and the Subsidiaries with respect to all or a portion of such
taxable year or period, the Purchaser shall pay the Seller the difference
within two (2) days of filing the Tax Return relating to such Taxes.
(vi) Any tax refund (including any interest in respect thereof) received by
Purchaser or the Company, and any amounts credited against Tax to which
Purchaser or the Company becomes entitled (including by way of any
amended Tax Returns or any carryback filing), that relate to any taxable
period, or portion thereof, ending on or before the Closing Date shall be
for the account of the Seller except to the extent there is a related
timing adjustment (i.e., shift of a Tax liability from one fiscal year to
another) which either (i) permits the Seller to increase deductions,
losses or Tax credits or decrease income or gains which would otherwise
(but for such adjustment) have been reported or taken into account by the
Seller or its Related Persons with respect to the Pre-Closing Taxes, or
41
(ii) causes the Company or the Subsidiaries to increase their taxable
base with respect to the Post-Closing Taxes. To the extent any refund or
credit relating to such timing adjustments are paid, or allowed, to the
Seller, the Seller shall remit them back to the Company or the relevant
Subsidiary within three (3) Business Days following receipt thereof. For
purposes of this paragraph (vi), where it is necessary to apportion a
refund or credit between the Purchaser and the Seller for a Straddle
Period, such refund or credit shall be apportioned between the Seller and
the Purchaser based on their relative contributions for the item(s)
creating the refund or credit, except that refunds or credits of Taxes
(E.G., real property Taxes) imposed on a period basis shall be allocated
on a daily basis.
(vii) The Purchaser shall not be entitled to amend, refile or otherwise modify
any Tax Return relating in whole or in part to the Company or any of the
Subsidiaries with respect to any taxable year or period ending on or
before the Closing Date (or with respect to any Straddle Period) without
the prior consent of the Seller, which consent may not be unreasonably
withheld or delayed. The Seller shall not and shall not permit any of its
Related Persons to amend, refile or otherwise modify any Tax Return
relating in whole or in part to the Company or any of the Subsidiaries
with respect to any taxable year or period ending on or before the
Closing Date (or with respect to any Straddle Period) without the prior
written consent of the Purchaser, which consent may not be unreasonably
withheld or delayed.
5.9 UK PENSION
The Seller and the Purchaser agree to deal with the funding of Pre-Closing
Pension Liabilities in the UK Pension Plan as follows:
(a) The Seller shall procure that at least five (5) Business Days before the
Closing Date, the UK Pension Actuary communicates in writing to ▇▇▇▇▇▇▇▇
UK, the Seller and the Purchaser an estimate of the minimum cash amount
required to be contributed to the UK Pension Plan to eliminate the
Pre-Closing Pension Deficit as at the Closing Date, where Pre-Closing
Pension Liabilities are calculated on the 100% MFR Basis.
(b) The Seller shall procure that on or before the Closing Date ▇▇▇▇▇▇▇▇ UK
makes a cash contribution to the UK Pension Plan of 70% of the amount
calculated by the UK Pension Plan's actuary under Article 5.9(a). Article
5.9(i) shall not apply to any payment anticipated by this Article 5.9(b).
(c) The Purchaser shall procure through ▇▇▇▇▇▇▇▇ UK that, as soon as
practicable after the Closing Date, and in any event within ninety (90)
days thereof the UK Pension Actuary will carry out a valuation of the UK
Pension Plan on the 100% MFR Basis as at the Closing Date, and will
calculate the Pre-Closing Pension Deficit as at the Closing Date (where
Pre-Closing Pension Liabilities are calculated on the 100% MFR Basis),
and will notify ▇▇▇▇▇▇▇▇ UK, the Seller and the Purchaser of the same in
writing. As part of carrying out this valuation, the Purchaser will
procure that ▇▇▇▇▇▇▇▇ UK instructs the UK Pension Actuary to produce the
Benefits Schedule, and that ▇▇▇▇▇▇▇▇ UK will send such schedule to the
Seller.
42
(d) The Seller shall pay to the Purchaser an amount in cash equal to the
amount determined under Article 5.9(c), being any remaining funding
shortfall on the 100% MFR Basis as at the Closing Date following the
payment under Article 5.9(b), on the day (being the due date for the
purposes of Article 5.9(i)) falling ten (10) Business Days after the
later of being notified by ▇▇▇▇▇▇▇▇ UK and being notified by the
independent actuary appointed under Article 5.9(h), as the case may be,
of the said amount (if any), and the Purchaser shall cause ▇▇▇▇▇▇▇▇ UK to
pay that amount into the UK Pension Plan within one month after receipt
of it by the Purchaser.
(e) This Article 5.9(e) applies during the period from the Closing Date to
the Full Funding Target Date. During this period the UK Pension Actuary
may carry out a valuation of the UK Pension Plan for the purposes of the
requirement in section 57 of the Pensions ▇▇▇ ▇▇▇▇ in the UK. If,
following such a valuation, the UK Pension Actuary determines that there
is a Pre-Closing Pension Deficit (on the basis that Pre-Closing Pension
Liabilities are calculated on the 100% MFR Basis), the Purchaser shall
procure (through ▇▇▇▇▇▇▇▇ UK) that the UK Pension Actuary produces a
schedule of contributions to be made by ▇▇▇▇▇▇▇▇ UK into the UK Pension
Plan such schedule to be prepared following the principles set down in
section 58 of the Pensions ▇▇▇ ▇▇▇▇ in the UK but for the sole purpose of
eliminating only this Pre-Closing Pension Deficit over the maximum time
period permitted under the UK Minimum Funding Requirement and
incorporating the minimum amount for each individual installment under
the schedule that is consistent with the UK Minimum Funding Requirement.
The Seller shall pay to the Purchaser an amount equal to each such
contribution set out in the schedule of contributions produced by the UK
Pension Actuary under this Article 5.9(e) on the day (being the due date
for the purposes of Article 5.9(i)) falling ten (10) Business Days after
the later of receiving confirmation that such amount has been paid as a
contribution to the UK Pension Plan and of receiving confirmation that
the amount notified pursuant to a decision of the independent actuary
appointed under Article 5.9(h) as regards the schedule of contributions
has been paid as a contribution to the UK Pension Plan. When calculating
Pre-Closing Pension Liabilities for the purposes of this Article 5.9(e),
the UK Pension Actuary will rely on the details set out in the Benefits
Schedule, updated as described in this Agreement.
(f) The Purchaser shall procure through ▇▇▇▇▇▇▇▇ UK that, as soon as
practicable after the Full Funding Target Date, the UK Pension Actuary
calculates (and notifies ▇▇▇▇▇▇▇▇ UK, the Seller and the Purchaser of the
same in writing) the extra cash amount (if any) that ▇▇▇▇▇▇▇▇ UK (or any
successor company, or other employer which has participated or is
participating in the UK Pension Plan) needs to contribute to the UK
Pension Plan to ensure that, as at the Full Funding Target Date, there is
no Pre-Closing Pension Deficit, where Pre-Closing Pension Liabilities are
calculated using an actuarial method and actuarial assumptions consistent
with those applied by the Purchaser to determine its accumulated benefit
obligation in relation to the UK Pension Plan for the purposes of its
disclosures in its financial statements in accordance with US SFAS 87 (or
such other comparable standard which may replace it) by reference to
actuarial assumptions determined by the Purchaser on a basis consistent
with that adopted by the Seller in its statutory accounts as at December
31, 2002, and as set out in those statutory accounts. In making this
calculation the UK Pension Actuary will rely on the details set out in
the Benefits Schedule, updated as described in this Agreement. The Seller
shall be notified of the proposed basis. Article 5.9(h) shall apply as
regards any dispute relating to whether the assumptions as proposed are
consistent with the required basis stated.
43
(g) The Seller shall pay to the Purchaser (or to a successor company, if
notified by the Purchaser) an amount equal to the amount(s) notified
under Article 5.9(f) by the UK Pension Actuary on the day (being the due
date for the purposes of Article 5.9(i)) ten (10) Business Days after the
later of being notified by ▇▇▇▇▇▇▇▇ UK and being notified by the
independent actuary appointed under Article 5.9(h), as the case may be,
of the said extra amount (if any), and the Purchaser shall cause ▇▇▇▇▇▇▇▇
UK to pay that amount into the UK Pension Plan within one month after
receipt of it by the Purchaser. For the avoidance of doubt, if the Full
Funding Target Date arises at any time before the expiry of five years
after the Closing Date, then the corresponding payment by the Seller
under this Article 5.9(g) shall end the Seller's obligations under this
Article 5.9 (including, for the avoidance of doubt, under Article
5.9(e)).
(h) The Seller and the Purchaser agree that they will each use their
reasonable endeavours to resolve any dispute or query as regards the
calculation of any amount and as regards any other matter contemplated by
this Article 5.9 in as timely and as cost effective a manner as possible.
All calculations contemplated by this Article 5.9 must be set out in
reasonable detail. If the Seller disputes any data or actuarial
assumptions used or any calculation prepared by the UK Pension Actuary in
calculating any amounts which affect any liability of the Seller under
this Article 5.9, it must notify the Purchaser of the nature of its
dispute (in reasonable detail) within fifteen (15) Business Days of
receipt of any notification under this Article 5.9. If the Seller does
not notify any such dispute within fifteen (15) Business Days, the
determinations made by the UK Pension Actuary shall be deemed to be final
and binding on the Seller and the Purchaser. In the event of a dispute by
the Seller, the Seller and the Purchaser shall aim to agree the amount(s)
payable in good faith. If they do not agree within five (5) Business Days
of the date the Seller notified the dispute to the Purchaser, either
party may refer the dispute to an independent actuary to be appointed by
the President for the time being of the Institute and Faculty of
Actuaries in the UK. The independent actuary's decision shall, in the
absence of manifest error, be final and binding on the Seller and
Purchaser and his expenses shall be borne equally between the Seller and
the Purchaser unless he shall otherwise direct.
(i) Any amount to be paid by the Seller to the Purchaser under this Article
5.9 shall be paid together with accrued interest on that amount at the
rate of EURIBOR three (3) months + fifty (50) basis points for the period
starting on the date by which such payment is due and ending on (and
including) the date the payment is made.
(j) (i) The Purchaser will pay, in accordance with this Article 5.9(j), to
the Seller an amount equal to any tax relief actually obtained by
▇▇▇▇▇▇▇▇ UK or any company to which ▇▇▇▇▇▇▇▇ UK surrendered Group
Relief as a direct consequence of making contributions to the UK
Pension Plan corresponding to the payments actually made by the
Seller to the Purchaser under Article 5.9(d) or (e).
(ii) For each accounting period after the Closing Date and so long as
the Seller has made a payment to the Purchaser under Article
5.9(d) or (e), the Purchaser (at its cost) shall issue a
certificate stating (on a reasonable and prudent basis) the amount
of tax relief actually obtained in that accounting period by
▇▇▇▇▇▇▇▇ UK or a company to which ▇▇▇▇▇▇▇▇ UK surrendered Group
Relief. The Purchaser shall pay an amount to the Seller equal to
the amount specified in the certificate on the date that is twelve
(12) months after the end of the accounting period in which the
tax relief is actually obtained. Such procedure to apply until
44
such time as all available tax relief has been obtained for the
full amount of the payments by ▇▇▇▇▇▇▇▇ UK to the UK Pension Plan
that correspond to payments actually made by the Seller to the
Purchaser under Article 5.9(d) or (e).
(iii) The Seller may instruct an Independent Accountant to review the
certificate. If the Independent Accountant determines that the
amount of tax relief obtained by ▇▇▇▇▇▇▇▇ UK or by any company to
which ▇▇▇▇▇▇▇▇ UK surrendered Group Relief exceeds the amount of
tax relief notified by the Purchaser to the Seller under Article
5.9(j)(ii), the Purchaser shall pay the Seller this amount plus
interest calculated at a rate equivalent to UK base rate plus 2%
from the date twelve (12) months after the end of the accounting
period to the day preceding the date of payment of this additional
amount. If the additional amount due to the Seller (excluding any
interest thereon) exceeds the amount of tax relief notified by the
Purchaser to the Seller under Article 5.9(j)(ii) by more than 7%,
the cost of the Independent Accountant shall be borne by the
Purchaser. In all other cases, the cost of the Independent
Accountant shall be borne by the Seller.
The Seller and the Purchaser agree that they will each use reasonable
endeavours to resolve any dispute arising under this sub-Article but, if they
are unable to do so, either party may refer the dispute to an Expert to be
appointed by the President for the time being of the Institute of Chartered
Accountants in England and Wales and such Expert shall act as an expert and not
as an arbitrator and his decision shall, in the absence of fraud or manifest
error be final and binding on the Seller and the Purchaser and his expenses
shall be borne between the Seller and the Purchaser in the proportions as such
Expert shall direct.
If, having issued the certificate, the amount of tax relief actually
obtained is later found to be incorrect or different from the amount so stated,
an adjustment shall be stated in the certificate for the following accounting
period, so as to increase the amount of the payment due by the Purchaser under
this Article 5.9 (j) for that subsequent period.
(iv) The term tax relief shall mean the amount of reduction in UK
corporation tax payable in respect of an accounting period by
▇▇▇▇▇▇▇▇ UK or any other company in the same group as ▇▇▇▇▇▇▇▇ UK
as a result of a deduction being available for the contributions
to the UK Pension Plan equal to the amounts paid by the Seller
pursuant to Article 5.9(d) or (e). Tax relief shall also be taken
to include any refund of corporation tax actually obtained as a
result of the payment of such contributions including relief
obtained as a result of a claim to carry back losses to an earlier
accounting period. For purposes of this Article 5.9, the term
"GROUP RELIEF" shall take the meaning given in section 402(2) of
the Taxes ▇▇▇ ▇▇▇▇ of the United Kingdom. The "INDEPENDENT
ACCOUNTANT" shall be the auditor named in Article 2.2(c), or
should such auditor be unable or unwilling to perform the duties
assigned under this Article 5.9, the auditor appointed by the
"PRESIDENT DU TRIBUNAL DE COMMERCE" of Paris upon the application
of either party.
(v) The Purchaser shall use its reasonable endeavours to procure that
▇▇▇▇▇▇▇▇ UK or any other company to which ▇▇▇▇▇▇▇▇ UK surrendered
any Group Relief provides any information (other than commercially
sensitive information) reasonably required by the Independent
Accountant to review any certificate. The Independent Accountant
shall keep such information in strict confidence and shall not
disclose it to the Seller (or any other person). It is accepted
that ▇▇▇▇▇▇▇▇ UK and any company to which ▇▇▇▇▇▇▇▇ UK surrenders
any Group Relief shall be entitled to arrange its tax affairs as
they see fit and any deduction available as a result of the
45
pension contributions shall be deemed to be taken after any other deduction,
relief or credit available to the companies concerned have been taken. The
Purchaser shall use its reasonable endeavours to obtain a any tax relief in
respect of such contributions. The Purchaser shall not be required to enter into
any appeal or dispute with any tax authority as a result of the preceding
sentence. Where any Group Relief consists of a consortium claim (as defined in
section 402(3) of the Taxes ▇▇▇ ▇▇▇▇ of the United Kingdom), the Purchaser shall
only be obliged to pay to the Seller an amount equal to the amount actually
received by ▇▇▇▇▇▇▇▇ UK in respect of such consortium claim.
(vi) The Purchaser shall not undertake any restructuring of its group
that is designed solely to affect the amount of tax relief payable
to the Seller pursuant to this Article 5.9(j). In addition, the
Purchaser shall give the Seller twenty (20) Business Days written
notice of the intent to undergo any restructuring of its Group
prior to implementing any such restructuring if it would be
reasonably expected to materially reduce the tax relief the Seller
has been receiving pursuant to this Article 5.9(j).
(k) The fees of the UK Pension Actuary in undertaking any actuarial
calculations required by this Article 5.9 will be borne by the Seller and
by the Purchaser in equal shares.
(l) If there is a Termination Date of the UK Pension Plan before the expiry
of three (3) years after the Closing Date and the occurrence of the
Termination Date is consequential (directly or indirectly) to any act or
omission of ▇▇▇▇▇▇▇▇ UK, then Articles 5.9(c), (d), (e), (f) and (g) and
any Articles under Article 5.9 that would apply consequentially shall be
of no effect, the intention being that the Seller's obligations under
this Article 5.9 shall end on the Termination Date. The Purchaser
undertakes to procure that the Seller is notified of a Termination Date
within two (2) days of the Termination Date occurring.
(m) For the purposes of applying the terms of this Article 5.9, the parties
acknowledge and agree that, if the minimum funding requirement basis as
set down in the Pensions ▇▇▇ ▇▇▇▇ in the UK, associated regulations and
formal actuarial guidance is, after the Closing Date:
(i) consolidated or re-enacted, then this Article 5.9 shall be read
and construed to the intent that the said consolidated or
re-enacted provisions had been specifically referred to in this
Article 5.9; or
(ii) modified, amended, revoked or substantially replaced, then this
Article 5.9 shall be read and construed to the intent that the
calculations anticipated by this Article 5.9 shall be prepared as
against the minimum funding requirement basis as set down in the
Pensions ▇▇▇ ▇▇▇▇ in the UK, associated regulations and formal
actuarial guidance last in force prior to the Closing Date.
(n) The Seller and the Purchaser shall co-operate to ensure that the UK
Pension Actuary is provided in a timely manner with all information that
he reasonably requests for the purposes of calculating any amount
contemplated by this Article 5.9.
(o) Any and all notifications anticipated by this Article 5.9.1 shall be
subject to the terms of Article 12.3.
46
(p) The Purchaser shall procure that the Seller is provided in a timely
fashion with the following documents, as and when reasonably requested by
the Seller:
(i) Written investment advice given to the trustees of the UK Pension
Plan;
(ii) Written materials relating to investments provided to the said
trustees in preparation for trustee meetings;
(iii) Relevant extracts of minutes of trustee meetings at which any
decisions relating to the investments of the UK Pension Plan were
taken;
(iv) All documents produced by the sponsoring employers as a response
to consultation requests from the trustees of the UK Pension Plan
on investments and any other written communication from the
sponsoring employers to the trustees regarding scheme investments,
to the intent that, for so long as the Seller has any obligation under
this Article 5.9, the Seller shall be provided with (upon a reasonable
specific request) trustee and company papers relating to investments of
the UK Pension Plan and that the Seller shall have reasonable opportunity
to speak to the sponsoring employers and the trustees (or directors of a
corporate trustee) for the purposes of ascertaining their policy and the
attitude of the sponsoring employers as regards investments
(q) Notwithstanding any other provision of this Article 5.9, the Seller shall
be under no liability under this Article 5.9 to the extent that such
liability is attributable to (A) an investment policy adopted by the
trustees of the UK Pension Plan where the Purchaser and/or ▇▇▇▇▇▇▇▇ UK in
bad faith, having undue regard to the Seller's obligations under this
Article 5.9, instigated, requested or otherwise encouraged such a policy
by the trustees, and/or (B) a gilts-matching investment policy where the
Purchaser and/or, after the Closing Date, ▇▇▇▇▇▇▇▇ UK instigated,
requested or otherwise encouraged the trustees of the UK Pension Plan to
adopt such a gilts-matching policy.
(r) The Purchaser agrees that the benefit of its undertakings in Article 5.9
paragraphs (d) and (g) is held by the Seller as trustee for the trustees
of the UK Pension Plan.
(s) For the purposes of this Article 5.9 ▇▇▇▇▇▇▇▇ UK shall, where the context
admits, include any successor as the Principal Employer of the UK Pension
Plan.
47
5.10 CASH IN THE SYSTEM
The Seller shall cause at least Euro seven million (7,000,000) of cash to remain
in the Company as of the Closing and such amount shall be in addition to any
cash netted against Third Party Indebtedness at the Closing.
5.11 RELATIONS WITH SELLER
After the Closing Date, except pursuant to the agreements contemplated in
Article 5.6, neither the Company nor any of the Subsidiaries will:
(a) be liable to any member of the PPR Group (other than the Company and the
Subsidiaries) for any salary, bonus, commission, attendance fee, benefit
in kind, pension, rent, royalty or fee;
(b) use any asset belonging to any member of the PPR Group (other than the
Company and the Subsidiaries); nor
(c) maintain with any member of the PPR Group (other than the Company and the
Subsidiaries) any special rights relating to the assets or liabilities of
the Company or the Subsidiaries.
Except pursuant to the agreements contemplated in Article 5.6, after the Closing
Date, the Seller shall cause the members of the PPR Group (other than the
Company and the Subsidiaries) to comply with Articles 5.11(a) and (c).
5.12 INSURANCE
The Seller shall assign to the Company rights available to the Seller after the
Closing under any contract of insurance currently or previously in force in
favor of the Company or its Subsidiaries with respect to a claim against the
Company or its Subsidiaries which arose prior to the Closing but which is
payable after the Closing; PROVIDED, HOWEVER, that such assignment shall not
result in any cost to the Seller or adversely affect the insurance coverage
available to the PPR Group.
5.13 LITIGATION EXPENSES
The Purchaser shall reimburse the Seller for any attorneys' fees, procedural
fees and costs (FRAIS DE PROCEDURE) and bailiffs' fees incurred by the Seller,
the Company or any of its Subsidiaries between the date of this Agreement and
the Closing in connection with a Litigation arising after the date of this
Agreement.
48
5.14 NETHERLANDS PENSION
The Seller and the Purchaser agree to deal with the funding of the Netherlands
Pension Plans as follows:
(a) The Purchaser shall procure through ▇▇▇▇▇▇▇▇ Netherlands that, as soon as
practicable after the Closing Date, and in any event within ninety (90)
days thereof, the Netherlands Pension Actuary will:
(i) calculate the total amount of the Netherlands Benefits Deficit, if
any, as at the Closing Date; and
(ii) notify ▇▇▇▇▇▇▇▇ Netherlands, the Seller and the Purchaser in
writing of the amount of the Netherlands Benefits Deficit, which
notification will be accompanied by all information necessary for
the Seller to verify these calculations.
(b) The Seller shall pay to the Purchaser an amount in cash equal to the
Netherlands Benefits Deficit, if any, on the day (being the due date for
the purposes of Article 5.14(f)) falling ten (10) Business Days after the
later of being notified by ▇▇▇▇▇▇▇▇ Netherlands and being notified by the
independent actuary appointed under Article 5.14(d), as the case may be.
The Seller's liability with respect to any present and former pension
and/or early retirement schemes applicable to current and former
employees of ▇▇▇▇▇▇▇▇ Netherlands, including any liability resulting from
Article 3.5 with respect to such pension or early retirement schemes, is
limited to the liability based on this Article 5.14 (including, for the
avoidance of doubt, any liability under Article 5.14(c)).
(c) (i) This Article 5.14(c)(i) applies only if the potential deficit
arising from the proposed transfer of benefits from the
Netherlands SFP Pension Plan is not included in the calculation of
the Netherlands Benefits Deficit for the purposes of Article
5.14(b). The Purchaser will procure that, as soon as practicable
after the Netherlands SFP Transfer Date and in any event within
ninety (90) days thereof, the Netherlands Pension Actuary
calculates the amount of the Netherlands SFP Deficit and notifies
▇▇▇▇▇▇▇▇ Netherlands, the Purchaser and the Seller of this amount
in writing, which notification will be accompanied by all
information necessary for the Seller to verify the calculation.
The Seller shall pay this amount to the Purchaser on the day
(being the due date for the purposes of Article 5.14(f)) ten (10)
Business Days after the later of being notified by the Netherlands
Pension Actuary and being notified by the independent actuary
appointed under Article 5.14(d), as the case may be.
(ii) This Article 5.14(c)(ii) applies only if the Seller has made a
payment to the Purchaser under Article 5.14(c)(i) that was
triggered by clause (b) of the definition of "Netherlands SFP
Transfer Date" and, shortly before the Netherlands SFP Transfer
Date, the Seller provides the Purchaser with reasonably
satisfactory evidence that either the administrators of the
Netherlands SFP Pension Plan or a court, arbitrator or similar
institution will in the reasonably foreseeable future give
confirmation that the proposed transfer from the Netherlands SFP
Pension Plan will not proceed. For the avoidance of doubt, this
Article 5.14(c)(ii) does not apply if the proposed transfer from
the Netherlands SFP Pension Plan has actually happened, either on
or after the Netherlands SFP Transfer Date. Should it be
established after the Netherlands SFP Transfer Date, either in a
letter from the administrator of the Netherlands SFP Pension Plan
or in a judgment or ruling of a
49
court, arbitrator or similar institution, that ▇▇▇▇▇▇▇▇
Netherlands is not legally obliged to accept a transfer of the
benefits from the Netherlands SFP Pension Plan, the Purchaser
shall on the day (being the due date for the purposes of Article
5.14(f)) falling ten (10) Business Days after the date of such a
letter, ruling or judgment repay to the Seller any amounts paid by
the Seller to the Purchaser pursuant to this Article 5.14 in
respect of the Netherlands SFP Pension Plan.
(iii) If the potential deficit arising from the proposed transfer of
benefits from the Netherlands SFP Pension Plan is included in the
calculation of the Netherlands Benefits Deficit for the purposes
of Article 5.14(b), but the Seller notifies the Purchaser that it
intends to engage in efforts to prevent such transfer and, the
Netherlands SFP Transfer Date has not elapsed, and such transfer
is prevented, then the Purchaser shall promptly repay to the
Seller any amounts paid by the Seller to the Purchaser pursuant to
this Article 5.14 in respect of the Netherlands SFP Pension Plan.
(d) If the Seller and the Purchaser have any dispute or query as regards the
calculation of any amount or any other matter contemplated by this
Article 5.14, the terms of Article 5.9(h) will apply. For this purpose
the reference in Article 5.9(h) to the UK Pension Actuary shall be read
as the Netherlands Pension Actuary and an actuary appointed by the
Institute and Faculty of Actuaries in the UK shall be read as an actuary
appointed by the Netherlands ACTUARIEEL GENOOTSCHAP.
(e) If there are any legal proceedings arising from a dispute over whether
▇▇▇▇▇▇▇▇ Netherlands is obliged under Netherlands law to accept the
proposed transfer from the Netherlands SFP Pension Plan, the Seller shall
have full control over, and bear all costs of, the defense, compromise or
settlement of the proceedings, to the effect that ▇▇▇▇▇▇▇▇ Netherlands
will not be obliged to take any steps towards preventing such transfer
except for reasonable legal steps to permit the Seller to control the
defense of the proceedings or other reasonable steps to cooperate with
the efforts by the Seller to prevent such transfer. The Seller shall
consult with the Purchaser in a timely manner on all important strategic
matters relating to any such proceedings. The Seller shall not settle any
proceedings without the prior written consent of the Purchaser (it being
understood that such consent will not be unreasonably withheld or
delayed).
(f) Any amount to be paid by the Seller to the Purchaser under this Article
5.14 shall be paid together with accrued interest on that amount at the
rate of EURIBOR three (3) months + fifty (50) basis points for the period
starting on the date by which such payment is due and ending on (and
including) the date the payment is made.
(g) The fees of the Netherlands Pension Actuary in undertaking any actuarial
calculations required by this Article 5.14 will be borne by the Seller
and by the Purchaser in equal shares.
(h) The Seller and the Purchaser shall co-operate to ensure that the
Netherlands Pension Actuary is provided in a timely manner with all
information that he reasonably requests for the purposes of calculating
any amount contemplated by this Article 5.14.
50
(i) Any and all notifications anticipated by this Article 5.14 shall be
subject to the terms of Article 12.3.
(j) The Purchaser shall, and shall cause the Company and its Subsidiaries to,
use reasonable best efforts to cooperate with legal and other efforts by
the Seller to seek, at its cost, recovery from ▇▇▇▇▇▇▇▇ of any funding
deficit under the Netherlands Burhmann Pension Plan that ▇▇▇▇▇▇▇▇ has
guaranteed in writing to cover (it being the Seller's responsibility to
provide the Purchaser with any such guarantee that may exist), including
any reasonable request by the Seller to the Purchaser to accept a letter
of credit securing its obligations to cover such deficit in lieu of
making payments to the Purchaser, the Company or the Subsidiaries that
would cause a loss of a claim under any such guarantee. The Purchaser
shall not otherwise be obliged to take steps to collect under any such
guarantee, but shall transfer to the Seller any amounts paid to the
Company or any of its Subsidiaries under any such guarantee if the Seller
has already paid to the Purchaser an amount in cash equal to any such
funding deficit under the Netherlands ▇▇▇▇▇▇▇▇ Pension Plan. If the
Purchaser, the Company or any of its Subsidiaries shall receive a payment
under any such guarantee and the Seller has not paid the deficit under
the Netherlands ▇▇▇▇▇▇▇▇ Pension Plan, such payment shall be credited
against the remaining obligations of the Seller.
(k) If the result of the Seller's efforts that the transfer of the
Netherlands SFP Pension Plan is prevented and liability results to the
Purchaser, the Company or any of its Subsidiaries as a result of such
prevention, the Seller shall indemnify and hold harmless the Purchaser,
the Company or any of its Subsidiaries, as applicable, for all such
liability.
(l) The Purchaser shall not, and, after the Closing Date, shall cause
▇▇▇▇▇▇▇▇ Netherlands not to, accept the transfer of the Netherlands SFP
Pension Plan without the Seller's consent (which shall not be
unreasonably withheld or delayed) unless ▇▇▇▇▇▇▇▇ Netherlands is legally
obligated to do so.
5.15 STAPLES AGREEMENT
The Purchaser shall cause the Company and its Subsidiaries to fully comply with
all of their obligations under the Staples Agreement from and after the Closing.
5.16 LETTER OF CREDIT
If, at anytime prior to the earlier of (i) the Termination Date of the UK
Pension Plan and (ii) the fifth anniversary of the Closing Date (the "DROP
DATE"), the corporate rating assigned to the Seller by either of (Standard &
Poor's Ltd) ("S&P"), ▇▇▇▇▇'▇ Investors Service, Inc. ("MOODY'S" and, together
with S&P, the "RATING AGENCIES", and each a "RATING AGENCY") is worse than BBB-
(with respect to S&P) or BAA3 (with respect to Moody's), than the Seller shall,
at its cost, no later than 60 days from the date such rating is publicly
disclosed, cause an Acceptable Bank to issue, for the benefit of the Purchaser,
a letter of credit in an amount equal to seventy million euros (euros
70,000,000) (the "LETTER OF CREDIT") and with a term ending no sooner than the
Drop Date, to serve as an unconditional guarantee of the Seller's obligations in
connection with the Transaction, including the Seller's indemnification
obligations under Article 8. The obligation to maintain the Letter of Credit
shall terminate upon the rating becoming at least BBB- or BAA3.
51
For the purposes of this Article, an "ACCEPTABLE BANK" means a financial
institution of international reputation, with a rating assigned to its
unsecured, unsubordinated and unguaranteed short term debt obligations which is
at least A1 from S&P or P1 from Moody's.
ARTICLE 6 - FURTHER ACTIONS
The Parties agree to use all reasonable efforts, subject to Article 5.2, to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under all applicable laws to facilitate
and cause the consummation of the Transaction.
At all times prior to the Closing Date, each party shall promptly notify the
other in writing of the occurrence of any event which will or may result in the
failure of any of the conditions contained in Article 7 to be satisfied.
ARTICLE 7 - CONDITIONS PRECEDENT TO CLOSING
7.1 The Closing is subject to the condition that the Antitrust Clearance
from all of the Antitrust Authorities shall have been obtained.
7.2 The obligation of the Purchaser to consummate the Closing is subject to
the condition that (a) after the date of this Agreement, no event,
change or development shall have occurred and be continuing in the
business, assets, liabilities, condition (financial or otherwise) or
results of operations of the Company and the Subsidiaries, taken as a
whole, which has resulted in or could reasonably be expected to result
in a Material Adverse Effect; and (b) the representation given in
Article 3.16(a) is true and correct.
ARTICLE 8 - INDEMNIFICATION
8.1 INDEMNIFICATION OF THE PURCHASER
8.1.1 Subject to the terms and conditions of this Article 8, after the Closing,
the Seller shall indemnify, defend and hold the Purchaser (or the Company
or the relevant Subsidiary, as the case may be) harmless from and against
any and all direct damages (including expenses incurred in connection
therewith, including reasonable attorneys' fees), liabilities and losses,
including those resulting from a Tax audit or reassessment (individually
a "LOSS" or collectively "LOSSES"), asserted against, resulting in,
imposed upon or incurred by the Purchaser, the Company or the
Subsidiaries relating to, arising out of or resulting from:
(a) any inaccuracy or breach of any representation or warranty of the
Seller contained in this Agreement;
52
(b) any breach or violation of any covenant or agreement of the Seller
contained in this Agreement (other than Article 2).
After the Closing, except with respect to (i) claims based upon fraud and
(ii) claims solely for injunctive relief under Articles 5.11, 5.16, 9 or
10, and subject to Article 7.2, the right to indemnification provided for
in this Article 8.1.1 shall be the Purchaser's exclusive remedy for any
such inaccuracy or breach of representations or warranty or breach of
covenant or agreement.
8.1.2 No indemnification pursuant to Article 8.1.1 above will be made:
(a) except for matters subject to specific indemnification hereunder
(Articles 5.8, 5.9, 5.14, 8.3 and 8.8), to the extent that the
facts giving rise to the relevant Losses were covered by relevant
provisions or by provisions covering items of the same nature in
the Financial Statements as of December 31, 2002;
(b) to the extent that the relevant Losses are due to the Purchaser's
or, with respect to any period following the Closing, the
Company's or any Subsidiary's willful misconduct, negligence or
bad faith;
(c) if and to the extent that (in the event that the relevant breach
can be cured) the Seller has, within thirty (30) days following
receipt by the Seller of the Purchaser's notice, cured such breach
by specific performance;
(d) if and to the extent that the Purchaser or the Company or its
Subsidiaries is entitled to receive or has received recovery for
the relevant Losses from any other Person (including under any
insurance policy) or if and to the extent that nonrecovery from
any other Person is due to the failure of the Purchaser and/or the
Company and/or any Subsidiary to use its or their reasonable
efforts to obtain such recovery;
(e) subject to Article 5.9(m), if and to the extent that the relevant
Losses arise or are increased as a result of the enactment or
amendment of any legal requirement including with regard to Taxes
after the date of this Agreement; or
(f) if the relevant Losses arise as a result of the application of any
generally accepted accounting principles, procedures, methods and
judgments other than the Accounting Principles.
8.1.3 Effective nature of the loss
(a) Any deficiency assessed by the Tax authorities whose sole effect
is to shift a Tax liability from one fiscal year to another shall
give rise to indemnification by the Seller only insofar as the
Company or the Subsidiaries is required to pay a penalty or
interest charge in relation thereto.
53
(b) Any deficiency assessed with regard to a Tax, such as a
value-added Tax, which is recoverable shall give rise to
indemnification by the Seller only insofar as the Company and the
Subsidiaries is required to pay a penalty or interest charge in
relation thereto.
(c) Any indemnification due by the Seller shall be calculated taking
into account (i) the effect of any Tax savings realized by the
Company and the Subsidiaries as a result of the Tax deductibility
of the relevant Loss; and (ii) the effect of the taxation of any
such indemnification so that the Company or the relevant
Subsidiary or the Purchaser shall be in the same position as it
would have been should the Loss have not occurred.
(d) A Loss shall be eligible for indemnification by the Seller to the
extent and only to the extent such Loss has effectively been
sustained by the Purchaser, the Company or the Subsidiaries, and
any indemnification due by the Seller shall be based on the amount
of the Loss actually sustained by the Company and the Subsidiaries
or the Purchaser, and shall be computed without regard to any
multiple, price-earnings or equivalent ratio implicit in
negotiating and/or settling the Purchase Price.
(e) Any indemnification due by the Seller shall in all cases be
limited to the amount of the Loss subject to the provisions of
paragraph (d) here above, notwithstanding the fact that the event
giving rise to the Seller's obligation may originate from an
inaccuracy of several of the representations and warranties made
under Article 3 hereof.
(f) If a claim is based upon a liability which is contingent only, no
indemnification shall be due unless and until such liability
becomes due and payable.
(g) In the event that the Company or any of the Subsidiaries is
required to make a payment in connection with a third-party claim,
the Seller shall not be required to make any indemnification
payment in connection thereto before such payment has actually
been made by such Company or Subsidiary to such third party.
(h) The Seller shall in no event be held liable for any punitive,
consequential or incidental damages asserted by the Company or any
of the Subsidiaries except to the extent the Company or its
Subsidiaries have been required to pay such damages, and have made
such payment, to a third party and the Seller is otherwise
required to provide indemnification pursuant to this Article 8.
8.1.4 Any payment made by the Seller under this Agreement shall be deemed to be
an indemnification to the Company or the relevant Subsidiary, except if
such Loss is suffered by the Purchaser in which case the Purchaser shall
be free to direct any payments under this Article 8 to itself. However,
the Purchaser shall be free to direct payments either to itself or to the
Company or any of the Subsidiaries as it deems appropriate, to the extent
that it does not create any additional cost on the Seller.
54
8.2 INDEMNIFICATION OF THE SELLER
The Purchaser shall indemnify and hold the Seller harmless against any Loss
arising out of or resulting from:
(a) any inaccuracy, breach of any representation or warranty by the
Purchaser contained herein or in any document delivered hereunder;
and
(b) any breach or violation of any covenant or agreement by the
Purchaser contained herein to be performed on or prior to the
Closing Date.
The indemnification of the Seller pursuant to this Article 8.2 shall be
subject to the limitations and qualifications which are reciprocal to
those applicable to the indemnification of the Purchaser provided for in
Article 8; PROVIDED, HOWEVER, that Losses arising out of or in connection
with a breach by the Purchaser of the covenants given in Articles 5.2,
5.8, 5.9, 5.13 or 5.15 shall not be subject to the limitations set forth
in Article 8.7.1.
8.3 STAPLES INDEMNIFICATION
(a) The Seller shall indemnify, defend and hold harmless the Purchaser
(or the Company or the relevant Subsidiary, as the case may be)
from and against any Loss asserted against, resulting in, imposed
upon or incurred by the Purchaser (or the Company or the relevant
Subsidiary, as the case may be) relating to, arising out of or
resulting from the Staples Agreement to the extent which the
Purchaser or the Company or any of the Subsidiaries is required to
make payments pursuant thereto; PROVIDED, HOWEVER, that the
Company and its Subsidiaries have materially complied with their
obligations under the Staples Agreement since the Closing;
PROVIDED, FURTHER, that the Seller has delivered a true and
complete copy of the Staples Agreement to the Purchaser.
(b) In the event that the Purchaser, the Company or its Subsidiaries
receive a claim from Staples or from any third party under
Articles 2.2.1(d), (e) or (f) or Article 8 of the Staples
Agreement (a "STAPLES AGREEMENT CLAIM"), the Purchaser shall
promptly notify the Seller thereof, providing it with all
documents relating to and all information necessary to understand
and evaluate such Staples Agreement Claim. Failure to give such
notice and information shall not affect the indemnification
obligations hereunder except to the extent the Seller is
prejudiced. The Seller shall have the right to control the
defense, compromise or settlement of the proceeding, and the
Purchaser shall not, and shall cause the Company and its
Subsidiaries not to, settle any proceeding without the prior
written consent of the Seller (it being understood that, with
respect to any settlement without such prior written consent or if
the Seller has not received prompt notification of the Staples
Agreement Claim and if and to the extent the Seller is prejudiced
by such failure, or was not given the right to control the defense
or compromise of the Staples Agreement Claim, none of the
55
Purchaser, the Company or its Subsidiaries shall be entitled to
indemnification therefor). With respect to any Staples Agreement
Claim that is reasonably likely to have an impact on any ongoing
material relationship between the Company or any of its
Subsidiaries and any significant third party, the Seller shall
keep the Purchaser informed about the defense, compromise or
settlement of such Staples Agreement Claim, including reasonable
advance notice of any major steps or actions to be taken by the
Seller in connection therewith, and the Seller shall in good faith
engage in prior consultation with the Purchaser.
(c) To the extent possible and applicable, the Seller will pay any
amounts required to be paid by the Seller pursuant to this Article
8.3 directly to Staples rather than to the Purchaser; PROVIDED,
HOWEVER, that the Purchaser has given the Seller sufficient
advance written notice of its request that the Seller pay such
amounts directly to Staples.
(d) In the event that the Purchaser, the Company or its Subsidiaries
receives any payment from a third party pursuant to the Staples
Agreement, the Purchaser shall, or shall cause the Company or its
Subsidiaries to, as applicable, promptly pay to the Seller, in
cash, an amount equal to such third party payment.
8.4 CONDITIONS OF INDEMNIFICATION
The obligations of the Seller and the Purchaser, as the case may be, under
Articles 8.1, 8.2 and 8.8 (herein referred to as the "INDEMNIFYING PARTY"), with
respect to claims shall be subject to the following terms and conditions:
(a) The person to whom such claim relates (the "INDEMNIFIED PARTY")
will give the Indemnifying Party prompt notice of such claim in
any event within thirty (30) days (i) from receipt by the
Indemnified Party of written notice of the commencement of any
action or proceeding (except for actions, claims or proceedings
which require an action, claim to be taken within thirty (30) days
or less for which such delay shall be reduced to five (5) Business
Days) or (ii) the knowledge by the Company of the facts or events
giving rise to the claim. Failure to give timely notice shall not
affect the indemnification obligations hereunder except to the
extent the Indemnifying Party is prejudiced. The Indemnified Party
shall have the right to control the defense, compromise or
settlement of the proceeding, provided that (i) the Indemnified
Party shall consult with the Indemnifying Party in a timely manner
on all important strategic matters relating to any such proceeding
and (ii) the Indemnified Party shall not settle any proceeding
without the prior written consent of the Indemnifying Party (it
being understood that, (i) with respect to any settlement without
such prior written consent, the Indemnified Party shall not be
entitled to indemnification therefor and (ii) that such consent
will not be unreasonably withheld or delayed).
(b) Upon the final determination of the liability under this Article
8, the Indemnifying Party shall pay to the Indemnified Party
within thirty (30) days after such determination, the amount of
any claim for indemnification made hereunder. Upon
56
the payment in full of any claim, the Indemnifying Party shall be
subrogated to the rights of the Indemnified Party, if any, against
any Person with respect to the subject matter of such claim.
(c) Notice by the Purchaser of any claim of indemnity by the Seller
must be given in writing to the Seller not later than March 11,
2005 (except for (i) claims relating to Taxes, for which such
notice must be given not later than one (1) month following the
date of expiration of the applicable statute of limitation, and
(ii) claims under Articles 5.9, 8.8, 9 or 10 solely to the extent
the applicable period under such Article(s) extends beyond March
11, 2005) (the "NOTICE DEADLINE"). The notice will set forth all
relevant facts and will indicate which section or sections of this
Agreement are alleged to have been violated. Any notice given by
Purchaser later than the applicable date referred to in this
paragraph (c) will be of no effect and, in particular, will not
give rise to any recovery under this Article 8. If notice
sufficient (with reasonable specificity) to make a claim is
received by the Seller prior to the Notice Deadline, the claim
which is the subject of such notice shall not thereafter be barred
by the expiration of the Notice Deadline.
8.5 COOPERATION OF THE PARTIES
Each Party shall give the other Party its full cooperation in defending all
claims subject to indemnification hereunder, including furnishing witnesses and
documentary evidence to the extent available.
8.6 DUTY TO MITIGATE
Each Party shall use its reasonable best efforts to mitigate any Loss to the
extent practicable under the circumstances and the failure to do so may cause
the Party's right to indemnification to be reduced, but only by the reasonable
amount by which such mitigation should have reduced such claim.
8.7 LIMITATIONS ON INDEMNITY PAYMENTS
8.7.1 No claim for indemnification under Article 8.1 may be made, and no
payment in respect thereof shall be required unless (i) the amount for
which the Purchaser seeks payment in relation with any individual Loss or
a series of Losses, to the extent that they are caused by the same set of
facts and have an identical nature, exceeds the threshold (SEUIL) of Euro
sixty thousand (60,000) and (ii) the aggregate amount of Losses against
which Purchaser is entitled to be indemnified exceeds the deductible
(FRANCHISE) of Euro eight million (8,000,000) (it being understood that
any Loss not exceeding the sixty thousand (60,000) Euro threshold (SEUIL)
set forth in clause (i) of this Article 8.7.1 shall not be counted
towards such Euro eight million (8,000,000) deductible (FRANCHISE)) and
then only for the amount that exceeds Euro eight million (8,000,000).
Except as set forth in Articles 8.7.2 and 8.7.3, in no event shall the
aggregate amount to be paid to the Purchaser hereunder exceed Euro ninety
million (90,000,000).
57
8.7.2 Losses arising out of or in connection with a breach by the Seller of the
representations given in Articles 3.1.3(f), (g), 3.2.1, 3.2.2 or 3.8 or
the covenants given in Articles 5.1, 5.8, 5.9, 5.10, 5.14, 5.16, 8.3, 9
or 10 shall not be subject to the limitations set forth in Article 8.7.1.
8.7.3 Any payments made by the Seller to the Purchaser pursuant to Article 8.8,
shall be counted in the maximum aggregate amount of Euro ninety million
(90,000,000) set forth in Article 8.7.1 for payments with respect to such
Article, but shall not be subject to the limitations set forth in Article
8.7.1.
8.7.4 Losses arising out of or in connection with a breach by the Seller of
covenants given in Article 5.7 shall be counted in the maximum aggregate
amount of Euro ninety million (90,000,000) set forth in Article 8.7.1
and, together with any other Losses, shall not exceed Euro ninety million
(90,000,000) and shall be subject to the minimum threshold set forth in
Article 8.7.1(i), but shall not be subject to the deductible set forth in
Article 8.7.1(ii).
8.8 INDEMNIFICATION FOR RESTRUCTURING COSTS
The Seller shall indemnify and hold the Purchaser harmless for cash payments
required to be made by the Company or its Subsidiaries with respect to the items
set forth on SCHEDULE 8.8 solely to the extent set forth in such Schedule if and
when such payments are made to third parties with respect to the items set forth
in such Schedule. The Purchaser shall use all reasonable efforts to cause the
Company and its Subsidiaries to minimize the amount of such payments. The
amounts set forth on SCHEDULE 8.8 shall be reduced to the extent that the
Company or any of its Subsidiaries have made any payments with respect to any
items listed on such Schedule to any third party before the Closing.
ARTICLE 9 - NON-COMPETITION; NON-SOLICITATION
(a) The Seller shall abstain and shall cause their Related Persons to
abstain: (i) for a period from the Closing Date to the third anniversary
thereof, from starting a new business directly competing with the
business of the Company and the Subsidiaries in any country in which the
Company and the Subsidiaries are doing business as of the date of this
Agreement; and (ii) for a period from the Closing Date to the first
anniversary thereof, from acquiring any business or entity whatsoever
which more than 25% of the prior year's revenues derived from a contract
stationers business in any of the countries in which the Company and the
Subsidiaries are doing business as of the date of this Agreement; it
being understood that this shall not restrict the operations of any of
the businesses owned or operated by the Seller or its Related Persons as
of the date of this Agreement.
(b) For a period of two years after the date of this Agreement, neither the
Seller nor any of its Related Persons shall, directly or indirectly,
solicit or induce any employee of the Company or of any of the
Subsidiaries, to leave such employment and become an employee of any
Person other than the Company and the Subsidiaries; PROVIDED HOWEVER,
that nothing in this Article 9 shall prohibit the Seller or its Related
Persons from employing (i) any Person who contacts them on his or her own
six (6) months after the date of this Agreement, provided such Person had
not been solicited by the Seller or any of their Related Persons after
the Closing, or (ii) the Persons listed in SCHEDULE 9(b).
58
ARTICLE 10 - CONFIDENTIALITY
For a period of three (3) years from the Closing Date, the Seller shall
maintain, and shall cause its Related Persons to maintain, in strict confidence,
all information relating to the business of the Company and the Subsidiaries
(including, but not limited to, intellectual property rights and all information
other than information which is or becomes readily obtainable from a public
source through no fault of the Seller). Without limiting the generality of the
foregoing, the Seller undertakes not to disclose, and shall cause its Related
Persons not to disclose, to a third party any information concerning the Company
or the Subsidiaries except (i) when requested or required to disclose such
information by law, by the regulations of any relevant stock exchange, by any
court or other judicial authority or pursuant to any enquiry or investigation by
any Governmental Authority which is lawfully entitled to require any such
disclosure; or (ii) as authorized by the Purchaser and to the extent necessary
in the ordinary course of business and will not itself use, and shall cause its
Related Persons not to use, such information.
ARTICLE 11 - TERMINATION
11.1 GROUNDS FOR TERMINATION
This Agreement may be terminated at any time prior to the Closing Date:
(a) by the written agreement of each of the Purchaser and the Seller;
(b) by either the Purchaser or the Seller in the case of a material
breach by the other Party of its covenants pursuant to this
Agreement which such breach is not cured within 30 days of written
notice thereof given by the non-breaching Party to the breaching
Party; or
(c) by the Seller pursuant to Article 5.2.5.
11.2 EFFECT OF TERMINATION
If this Agreement is terminated as permitted under this Article 11, such
termination shall be without liability to any Party to this Agreement or any
affiliate, shareholder, director, officer or representative of such Party,
except for liability arising from a willful breach of this Agreement.
59
11.3 LAPSE
In the event that the conditions precedent set forth in Article 7 have not been
satisfied by January 31, 2004, the Seller and the Purchaser shall each have the
right to terminate this Agreement; PROVIDED, HOWEVER, that to implement such
termination right, the Seller, or the Purchaser, as applicable, shall have
fulfilled its obligations under this Agreement.
ARTICLE 12 - MISCELLANEOUS
12.1 PUBLICITY
From the date hereof through and including the Closing Date, neither the
Purchaser nor the Seller shall issue, or cause or permit the publication by any
of its subsidiaries, affiliates or representatives, of any press release or
other announcement with respect to this Agreement except with the consent of the
other Party (which shall not be unreasonably withheld or delayed) or as required
by applicable law.
12.2 COSTS AND EXPENSES
Whether or not the Transaction is consummated, each of the Parties to this
Agreement shall bear its own expenses incurred in connection with the
negotiation, preparation, execution and Closing of this Agreement and the
Transaction.
The Purchaser shall declare the acquisition of the Shares pursuant to Article
726 of the French Tax Code and pay all and any stamp or registration duties due
in consequence of this Agreement.
12.3 NOTICES
All notices or other communications required or permitted by this Agreement
shall be effective upon receipt and shall be in writing and delivered personally
(against a receipt signed and dated by the addressee) or sent by facsimile
transmission (provided that a copy is mailed by registered mail, return receipt
requested) as follows:
If to the Purchaser, to: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
EVP & CFO
Office Depot, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
EVP & General Counsel
Office Depot, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
60
and Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇-▇) ▇▇ ▇▇ ▇▇ ▇▇
and Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Sellers, to: ▇▇▇▇▇▇▇▇
▇▇▇, ▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ Cedex
Attention: Chief Executive Officer
Facsimile:(▇▇-▇) ▇▇ ▇▇ ▇▇ ▇▇
PPR
▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ Cedex 08
Attention: Chief Legal Officer
Facsimile: (▇▇-▇) ▇▇ ▇▇ ▇▇ ▇▇
with a copy to: Darrois Villey Maillot Brochier
▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇-▇) ▇▇ ▇▇ ▇▇ ▇▇; and
and Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as hereafter shall be furnished as provided in this
Article 12.3 by any of the Parties hereto to the other Parties hereto.
Notices sent by facsimile transmission with copy by registered mail, return
receipt requested, shall be deemed received when the facsimile transmission is
received.
61
12.4 ENTIRE AGREEMENT
This Agreement (including the Schedules and Exhibits referred to herein) sets
forth the entire understanding and agreement between the Parties as to the
matters covered herein and supersedes and replaces any prior understanding,
agreement or statement of intent, in each case, written or oral, of any and
every nature with respect thereto.
12.5 NO THIRD PARTY RIGHTS; ASSIGNMENT
This Agreement is intended to be solely for the benefit of the Parties hereto
and is not intended to confer any benefits upon, or create any rights in favor
of, any person other than the Parties hereto and shall not be assignable without
the prior written consent of the other Party. Notwithstanding the above, the
Purchaser shall be entitled to assign the right to acquire the Shares to any of
its wholly-owned subsidiaries; PROVIDED, HOWEVER, that the Purchaser shall
provide written notice to the Seller of any such assignment prior to any such
assignment being made and an undertaking in such notice to remain jointly liable
for the performance by the assignee of all obligations undertaken by the
Purchaser under this Agreement.
12.6 CONFIDENTIALITY
Seller and Purchaser, acting on their own behalf and on behalf of their Related
Persons, agree that they will hold in strict confidence all information
disclosed in connection with this Agreement, its existence or the Transaction
and will not disclose the same to any Person without the prior written consent
of the other Party save:
(i) such information is already, or becomes, publicly available,
through no fault of such Party;
(i) when the use of such information is necessary or appropriate in
making any filing or obtaining any consent required for the
consummation or the transaction under applicable treaties, laws
and regulations; and
(iii) when requested or required to disclose such information by law, by
the regulations of any relevant stock exchange, by any court or
other judicial authority or pursuant to any enquiry or
investigation by any Governmental Authority which is lawfully
entitled to require any such disclosure, then the Party so
requested or required shall provide the other Party with prompt
notice of such request or requirement and to the full extent
possible before such disclosure. The Party receiving the above
mentioned notice may then either seek appropriate protective
relief from all or part of such request or requirement, including
confidential treatment of any such disclosure if required, or
waive the requested Party's compliance with the Agreement with
respect to all or part of such request or requirement. The
requested Party will cooperate with the relevant party's attempts
to obtain any protective relief which it chooses to seek. If,
after the relevant Party has had a reasonable opportunity to seek
such relief, it fails to obtain such relief, and, in the opinion
of counsel for the requested Party, the requested party is legally
compelled to disclose any confidential information to such
Governmental Authority, then the requested party may disclose that
portion of confidential information which counsel to the requested
Party advises that it must disclose.
62
If the Transaction is not consummated and/or this Agreement is
terminated, then each Party hereto will continue to maintain the
confidentiality of all such information and, according to the
instructions of the other Party hereto, either return or destroy all
such written and electronic information along with all copies thereof.
12.7 WAIVERS AND AMENDMENTS
No modification of or amendment to this Agreement shall be valid unless in a
writing signed by the Parties hereto referring specifically to this Agreement.
Any waiver of any term or condition of this Agreement must be in a writing
signed each Party hereto referring specifically to the term or condition to be
waived, and no such waiver shall be deemed to constitute the waiver of any other
breach of the same or of any other term or condition of this Agreement.
12.8 GOVERNING LAW
This Agreement shall be exclusively governed in all respects by French Law,
without regard to principles of conflicts of law.
12.9 DISPUTES; ARBITRATION
12.9.1 The Parties undertake to use their best efforts to try to settle amicably
any dispute, controversy or claim arising out or in connection with this
Agreement or the breach, termination or validity thereof (a "DISPUTE").
Therefore, before referring to arbitration any Party must notify by
registered mail to the other Party its wish to try to settle amicably the
Dispute. Such notice shall include the statement of the dispute and any
documents related thereto.
The Parties undertake to involve the higher level of their management to
try to settle amicably the Dispute.
12.9.2 Failing an amicable settlement within three (3) weeks of the receipt of
the above mentioned notification, the Dispute shall be finally settled by
arbitration under the Rules of Arbitration of the International Chamber
of Commerce ("ICC") then in effect (the "RULES"), except as modified
herein. The arbitration shall be held in Paris, France. The arbitration
proceedings shall be conducted in English and documentary exhibits may be
admissible in French or English without translation into French or
English, as the case may be, and the award
63
shall be rendered in the English language. The arbitrators shall render
their award within four (4) months from the date on which the last
arbitrator is selected.
(i) There shall be three arbitrators, all of whom shall be selected in
accordance with the rules of the ICC. Each arbitrator shall be
fluent in both English and French.
(ii) The Parties hereby waive any rights of application or appeal to
the courts of France to the fullest extent permitted by law in
connection with any question of law arising in the course of the
arbitration or with respect to any award made, except for actions
to enforce an arbitral award and actions seeking interim,
interlocutory or other provisional relief in any court of
competent jurisdiction.
(iii) The award shall be final and binding upon the Parties, and shall
be the sole and exclusive remedy between the parties regarding any
claims, counterclaims, issues, or accounting presented to the
arbitral tribunal. Judgment upon any award may be entered in any
court having jurisdiction.
(iv) The Parties shall each bear its own costs and expenses and an
equal share of the arbitrators' and administrative fees of the
arbitration.
(v) This Agreement and the rights and obligations of the parties shall
remain in full force and effect pending the award in any
arbitration proceeding hereunder.
(vi) All notices by one party to another party in connection with the
arbitration shall be in accordance with the provisions of Article
12.3 except that no notice may be transmitted by facsimile.
(vii) This agreement to arbitrate shall be binding upon the successors
and assigns of each party.
12.10 DEFINITION OF SELLER'S KNOWLEDGE
The phrases "to the knowledge of the Seller" or "to the Seller's knowledge"
shall mean, for purposes of this Agreement, the actual knowledge of ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Philippe Klocanas, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, Philippe Ferragu and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇.
64
IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the
date first written above.
Drawn up in Paris
On April 11, 2003
one original copy for each Party
The Purchaser The Seller
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------- --------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Chairman of the Board and Chief Executive Officer
Chief Executive Officer
65
ANNEX A
WORKING CAPITAL
The amount used to determine the Net Working Capital Deficit in accordance with
the Agreement shall be the amount set forth below corresponding to the month in
which the Closing occurs.
APRIL 2003 264
------------------------
May 2003 250
June 2003 251
July 2003 265
August 2003 248
September 2003 256
October 2003 270
November 2003 273
December 2003 230
66
SCHEDULE 8.8
DETAIL OF RESTRUCTURING PROVISIONS.
---------------------------------------------------------------------------------------------------------------------
PROVISIONS DESCRIPTION AMOUNT AS OF
12/31/2002
(THOUSANDS OF
EUROS)
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
OFFICE 1 Rent costs for locations previously used by Office 1 in Coventry, 1,251
Preston and Walsall, net of any sub let income.
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
EMPLOYEE LITIGATION (FRANCE) Risks associated to employee litigations in ▇▇▇▇▇▇▇▇ France, as 497
they are mentioned in Schedule 3.14.
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
LEASES AND PREMIUMS FRS12 Rent costs for locations previously used by ▇▇▇▇▇▇▇▇ UK or BCOP 630
UK in Bristol (the quadrant), St Helens, East ▇▇▇▇▇▇▇▇▇ and Gate
Lodge in Northampton
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
EMPLOYEE LITIGATION (UK) Provision for the payment of the fees of the lawyers involved in 23
the employee litigations.
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
EMPLOYEE LITIGATION (ITALY) Risk associated to litigation with 1 former employee of Titanedi. 20
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
EMPLOYEE LITIGATION (BELGIUM) Risk associated to litigations with 2 former employees of 95
▇▇▇▇▇▇▇▇ Belgium (M. Woitrin and ▇. ▇▇ ▇▇▇▇▇▇▇)
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
BCOP UK RESTRUCTURING Same object as for Provisions Office 1 1,017
PROVISIONS
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
COMMITTED CE MERGER Rent costs for locations previously used before completion of the 2,351
RESTRUCTURING COSTS integration process between ▇▇▇▇▇▇▇▇ ▇▇ and the Corporate Express
affiliate bought in 2001 in NL. Locations are in Enschede,
Amersfoort, Beverwijk, Groningen, Zwolle (Rollenweg), Zwolle
(former NIC building).
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
XEROX MACHINE Payment of the rent for the XEROX printing machine in Erith which 3,079
is no more used due to the non renewal of the contract with
Inland Revenue.
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
SUBTOTAL
8,963
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
N/A Severance payment for the termination of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇'▇ 1,200*
employment agreement.
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
TOTAL
10,163
---------------------------------------------------------------------------------------------------------------------
* Contractual amount for which no corresponding Financial Statement provision
exists
67