[▇▇▇▇▇▇▇▇ CHANCE GRAPHIC OMITTED]
SOCIETE D'EXERCICE LIBERAL D'AVOCATS A FORME ANONYME
INSIGNIA FINANCIAL GROUP, INC.
INSIGNIA FRANCE SARL /
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ AND OTHERS
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SHARE PURCHASE AGREEMENT
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CONTENTS
CLAUSE PAGE
1. DEFINITIONS AND INTERPRETATION..............................................................4
SECTION 1 - SALE AND PURCHASE..............................................................13
2. SALE AND PURCHASE OF THE SHARES............................................................13
3. PURCHASE PRICE.............................................................................14
4. COMPLETION.................................................................................24
SECTION 2 - REPRESENTATIONS AND WARRANTIES.................................................30
5. REPRESENTATIONS AND WARRANTIES OF THE SELLERS..............................................30
6. OTHER OBLIGATIONS OF THE SELLERS...........................................................49
7. REPRESENTATIONS AND WARRANTIES OF THE BUYER................................................53
SECTION 3 - INDEMNIFICATION................................................................69
8. INDEMNIFICATION............................................................................59
9. FLOOR, THRESHOLD AND CEILING...............................................................61
10. DURATION OF INDEMNIFICATION................................................................62
11. NOTIFICATION PROCEDURE AND PAYMENT OF THE INDEMNITY........................................63
12. GUARANTEE FOR THE OBLIGATIONS OF THE SELLERS...............................................64
13. EXEMPTIONS.................................................................................64
SECTION 4 - MISCELLANEOUS..................................................................65
14. MISCELLANEOUS..............................................................................65
SHARE PURCHASE AGREEMENT
BETWEEN:
Insignia France SARL, a "societe a responsabilite limitee" incorporated in
France, whose registered office is at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, registered
with the Commerce and Companies Registry of Paris under number 439 966 805,
represented by ▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, duly authorised for the purposes hereof by a
resolution of the shareholders dated 30 November 2001, a copy of which is set
forth in Schedule A,
(hereinafter the "BUYER")
Insignia Financial Group, Inc., incorporated in the State of Delaware, USA,
whose principal office is at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇,
represented by ▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, duly authorised for the purposes hereof by a
resolution of the board of directors dated 30 November 2001, a copy of which is
set forth in Schedule A,
(hereinafter "IFG")
OF THE FIRST PART
AND:
1. Monsieur ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, born on 7 June 1942, in Tours (37),
residing at ▇▇, ▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇-▇▇▇-▇▇▇▇▇, married with
Francoise Sclafer under community property marriage contract,
(hereinafter "JCB")
OF THE SECOND PART
2. Monsieur ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, born on 10 May 1969, in Paris, residing at
▇▇▇▇▇ ▇▇ ▇'▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇, married with ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
under community property marriage contract,
(hereinafter "MONSIEUR ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇")
OF THE THIRD PART
3. Monsieur OLIVIER BOURDAIS, born on 10 November 1971, in Paris,
residing at ▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ Seine, married with ▇▇▇▇
▇▇▇▇▇▇▇▇ under community property marriage contract,
(hereinafter "MONSIEUR OLIVIER BOURDAIS")
OF THE FOURTH PART
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4. Monsieur CHRISTIAN BOURDAIS, residing ▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇
Seine (Hauts-de-Seine), born in Paris on January 30, 1974, single.
(hereinafter "MONSIEUR CHRISTIAN BOURDAIS")
OF THE FIFTH PART
5. Monsieur ▇▇▇▇ ▇▇▇▇▇▇▇▇, residing ▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇
Seine (Hauts-de-Seine), born in Paris on May 12, 1978, single.
(hereinafter "MONSIEUR ▇▇▇▇ ▇▇▇▇▇▇▇▇")
OF THE SIXTH PART
6. Madame ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, born on 31 July 1943, in Tours, residing at ▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, married with ▇▇▇▇▇▇ ▇▇▇▇▇ under community
property marriage contract,
(hereinafter "Madame ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇")
OF THE SEVENTH PART
7. Monsieur ▇▇▇▇▇▇▇ ▇▇▇▇▇, residing ▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ (75008),
born in Paris on November 12, 1974, single.
(hereinafter "MONSIEUR ▇▇▇▇▇▇▇ ▇▇▇▇▇")
OF THE EIGHTH PART
8. Mademoiselle ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, residing in Venasque (Vaucluse), Centre
Culturel, born in Paris on May 10, 1976, single.
(hereinafter "MADEMOISELLE ▇▇▇▇▇▇▇▇ ▇▇▇▇▇")
OF THE NINTH PART
9. Monsieur ▇▇▇▇▇ ▇▇▇▇▇, residing ▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ (75008), born
in Paris on January 12, 1979, single.
(hereinafter "MONSIEUR ▇▇▇▇▇ ▇▇▇▇▇")
OF THE TENTH PART
10. Monsieur ▇▇▇▇▇▇ ▇▇▇▇▇, residing ▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ (75008), born
in Paris on September 10, 1981, single.
(hereinafter "MONSIEUR ▇▇▇▇▇▇ ▇▇▇▇▇")
OF THE ELEVENTH PART
11. Madame ▇▇▇▇▇ ▇▇▇▇▇▇ VIRENQUE, born on 16 August 1940, in Tours,
residing at ▇▇, ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, married with ▇▇▇▇ ▇▇▇▇▇▇
Virenque under community property marriage contract,
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(hereinafter "MADAME ▇▇▇▇▇ ▇▇▇▇▇▇ VIRENQUE")
OF THE TWELFTH PART
12. Madame ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, residing in Le Mans (Sarthe), ▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, born in Neuilly sur Seine on January 6, 1966, married
with Monsieur ▇▇▇▇ ▇▇▇▇.
(hereinafter "MADAME ▇▇▇▇▇▇▇▇▇ ▇▇▇▇")
OF THE THIRTEENTH PART
13. Mademoiselle Isabelle Virenque, born on 20 August 1970, in Neuilly Sur
Seine, residing at ▇▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇, Lille,
(hereinafter "MADEMOISELLE ISABELLE VIRENQUE")
OF THE FOURTEENTH PART
(JCB, Monsieur ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Monsieur Olivier Bourdais, Monsieur
Christian Bourdais, Monsieur ▇▇▇▇ ▇▇▇▇▇▇▇▇, Madame ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Monsieur ▇▇▇▇▇▇▇ ▇▇▇▇▇, Mademoiselle ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Monsieur ▇▇▇▇▇
▇▇▇▇▇, Monsieur ▇▇▇▇▇▇ ▇▇▇▇▇, Madame ▇▇▇▇▇ ▇▇▇▇▇▇ Virenque, Madame
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, Mademoiselle Isabelle Virenque are hereinafter
collectively referred to as the "SELLERS", represented by ▇▇▇▇-▇▇▇▇▇▇
Bourdais, duly authorised by powers of attorney a copy of which is set
forth in Schedule A).
(The Sellers, IFG and the Buyer are hereinafter collectively referred
to as the "PARTIES")
WHEREAS:
A The Sellers own 560,140 shares of FRF 10 each representing 100% of the
share capital of Societe Financiere Bourdais, a French societe anonyme
with a capital of FRF 5,601,400, having its registered office at ▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, registered with the Commerce and
Companies Registry of Paris under number 310 996 228 RCS Paris (the
"COMPANY"). The Company is, in particular, the owner of (i) 56,142
Class A shares and 273 Class B shares in Bourdais SA, a societe
anonyme with a capital of FRF 6,142,200 having its principal office at
▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, registered with the Commerce and
Companies Registry of Paris under number 311 702 450 RCS Paris
("BOURDAIS"), the balance of the shares of Bourdais being owned by the
Sellers and the Non Family Shareholders, and of (ii) 2,980 shares in
Bourdais Gerance, a societe anonyme with a capital of FRF 300,000
having its principal office at ▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
registered with the Commerce and Companies Registry of Paris under the
number 315 577 031 RCS Paris ("BOURDAIS GERANCE"), the balance of the
shares of Bourdais Gerance being owned by the Sellers and the Non
Family Shareholders.
B The Company is the ultimate holding company of a group of companies
which are more fully described in the diagram set forth in Schedule
E(1). The companies set out in Schedule E(2) represent the perimeter
of acquisition and such companies other than the Company, Immob
Aquitaine, FNAIM, SEM 92 and GIE Immostat are hereinafter called the
"SUBSIDIARIES".
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C The Companies have been managed by JCB for at least fifteen (15) years
and one of the motives which has induced the Buyer to enter into the
Agreement is the prospect of JCB continuing to manage the Companies
after Completion at least for the Earn-Out Period.
D The Buyer has agreed to acquire 100% of the Shares on condition that
prior to such acquisition a reorganisation shall take place as a
result of which, in particular, the Company shall own the percentage
of the share capital of Bourdais as set out in Clause 4.1.3 and 100%
of Bourdais Gerance and that Bourdais shall in turn own 100% of its
own subsidiaries with the exception of the holding in Bourdais
Expertises as set out in Clause 4.1.1, the 30% holding in the Bourdais
Pier France Joint Venture, the 20% holding in Webimm, the 9.61%
holding in Easyburo, the minority holdings in Immob Aquitaine, FNAIM,
SEM 92 and GIE Immostat. The Excluded Businesses will be sold for cash
and the Non-Family Shareholders shall have exchanged their shares in
the Subsidiaries for the equivalent of their existing economic rights
in the Brokering and Advisory Business.
E It has been agreed that the Purchase Price for the Shares shall be
partly payable on Completion and partly as soon as the Net Profit and
the Net Cash are determined. It has also been agreed that there will
be two conditional Top-Up payments and an Earn-Out depending on the
profitability of the Companies.
F The Sellers have agreed to transfer their shareholdings in the Company
in accordance with the conditions and the warranties and undertakings
set out below, which, for the Buyer, have an essential and determining
influence on its undertaking to purchase the Shares (the
"TRANSACTION").
IT IS HEREBY AGREED AS FOLLOWS:
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
1.1.1 In this agreement:
"ACCOUNTING METHODS AND PRINCIPLES" means the accounting
methods and principles generally adopted in France (known as
French generally accepted accounting principles) and
accounting practices as consistently applied by the Company
and Subsidiaries in preparation of the consolidated accounts
to date a copy of which is set out in Schedule 1.1.1.(a);
"AFFILIATE" means (a) in relation to an individual (i) his or
her ascendants or descendants and (ii) an entity in which any
such person is a partner, member, 25% or more shareholder or
manager; and (b) in relation to an incorporated person, an
entity (i) in which the person is a partner, member, 25% or
more shareholder or manager or (ii) which is a partner,
member, 25% or more shareholder or manager of the person or
(iii) any individual which is a member, 25% or more
shareholder or manager of the person or of any other entity
referred to in (ii);
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"AGREEMENT" means this document and the Schedules hereto;
"ASSETS" means the vehicles, movable assets, installations and
equipment used by the Companies in the carrying out of their
activities;
"AUTHORISATIONS" means all authorisations, licences, permits,
certificates, approvals, filings, registrations,
qualifications, consents or other documents delivered to the
Companies, by an administrative authority or any other
authority or by a professional entity, or any filing or
obligation to file with an administrative authority or any
other authority or professional entity in any of the countries
where the Companies carry on their activities or are owners of
assets at any given time;
"BLOCKED ACCOUNT" has the meaning given in Clause 3.4.2;
"BOURDAIS" has the meaning given in recital A;
"BROKERING AND ADVISORY BUSINESS" means the property
transaction, property valuation and consultation businesses
operated by Bourdais, Bourdais Rhone-Alpes SA, Bourdais
Mediterranee SARL, Bourdais Expertises SA, Bourdais Pier
France, Bourdais Consultants SARL and through the franchisees
of Bourdais;
"BUYER" means Insignia France SARL, incorporated in France,
whose registered office is at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇;
"CASH PRICE" has meaning given in Clause 3.2;
"CLAUSES" means the clauses of this Agreement unless otherwise
stated;
"CODE DE COMMERCE" means the French commercial code;
"COMPANIES" means the Company and the Subsidiaries or any one
of them according to the context;
"COMPANY" has the meaning given to it in the recitals above;
"COMPLETION" means completion of the sale and purchase of the
Shares in accordance with Clause 4;
"COMPLETION BALANCE SHEET" means the French Completion
Accounts adjusted in accordance with US GAAP, produced by the
Buyer and reviewed by the Sellers as set out in Schedule
3.4.3;
"CONDITIONS PRECEDENT" has the meaning set out in Clause 4.1;
"CONSOLIDATED ACCOUNTS" means the consolidated accounts of the
Companies prepared in accordance with the Accounting Methods
and Principles for the period 1 April 2001 to 31 December
2001;
"CREDIT-BAIL" means capital leases relating to certain
Premises ("credit-bail immobilier");
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"CURRENT ASSETS" means cash and cash equivalents, receivables
net of allowance, prepaid expenses, deferred taxes excluding
any deferred taxes arising from fixed assets and investments,
and restricted cash, as set out in the Completion Balance
Sheet;
"DATE OF THE AGREEMENT" means the date on which this Agreement
is signed;
"DAY" means a day other than a Saturday or Sunday or public
holiday in France or a day (or part of a day) during which
banks in France do not transfer monies;
"EARN-OUT" has the meaning given in Clause 3.8;
"EARN-OUT PERIOD" means the period from 1 January 2002 until
31 December 2004;
"ENCUMBRANCE" means, for an asset, such as a share or a
security, all sureties, claims, charges, encumbrances or
restrictions of any sort, put or call options, promises or
rights of first refusal or any other third party right or
obligation of whatever sort affecting its ownership, its
transfer or the exercise of any other right;
"ESCROW AGREEMENT" has the meaning given in Clause 4.3.1(i);
"ESTIMATED NET PROFIT" means FRF 19,954,305 as detailed in
Schedule 1.1.1 (p);
"EXECUTIVES" are those people set out in Schedule 1.1.1.(b);
"EXCHANGE RATE" means FRF 7.33 for USD 1;
"EXCLUDED BUSINESSES" means the companies listed in Schedule
4.3.1(m);
"FINAL NET CASH" means the positive difference between:
(a) the Current Assets which will be adjusted for the
following items which are excluded from the deal
perimeter to the extent such items have been included in
Current Assets:
(i) Marketable securities as detailed in Schedule
1.1.1(c) will be excluded;
(ii) Refurbishment costs of FRF 15,667,806 will be
excluded;
(iii) Loans receivable, net of any provisions, from
Excluded Businesses as detailed in Schedule 4.3.1
(m) will be excluded;
(iv) The pre-paid advertising to Immo-by-Tel of FRF
1,000,000 will be excluded;
(v) Any other assets relating to Excluded Businesses
will be excluded;
and:
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(b) the Total Liabilities and Provisions which will be
adjusted for the following items which are excluded from
the deal perimeter to the extent such items have been
included in Total Liabilities and Provisions:
(i) Capital lease liability as set out in Schedule 1.1.1
(o) in respect of the Credit-Bail, assuming the
conditions set out in Clause 4.1.19 are fulfilled,
will be excluded;
such difference to be reduced by:
(c) (i) an amount fixed at FRF 1,300,000 relating to the
Rebranding and IT Upgrade Costs and (ii) an amount fixed
at FRF 11,000,000;
the sum of (a) - (b) - (c) shall be reduced by:
(d) (i) any dividends paid or payable to persons other than
the Companies since 1 April 2001, and (ii) any deposit
payable by the Companies since 1 April 2001 to enter into
the head office operating leases;
the result of (a) - (b) - (c) - (d) shall be increased by the
net after Tax:
(e)
(i) the Net Realisable Value received by any of the
Companies from the sale of the Excluded Businesses;
(ii) the proceeds from the sale of any of the marketable
securities listed in Schedule 1.1.1(c) together with
any dividends or interest received between 1 April
2001 and the date of disposal of such securities;
(iii) the proceeds net of V.A.T received by any of the
Companies for any refurbishment costs referred to in
(a) (ii) above;
(iv) the net proceeds received by any of the Companies in
respect of the reimbursement of the deposit paid on
the premises identified in Schedule 4.6(e);
(v) the proceeds received by any of the Companies, if
received before 1 April 2002, in respect of the
premises to be vacated and identified in Schedule
5.8.7, net of any termination expenditure;
the result of (a) - (b) - (c) - (d) + (e) shall be increased
(if the following amount is positive) or reduced (if the
following amount is negative) by:
(f) Net Profit less FRF 19,954,305.
Final Net Cash has been determined subject to (d), (e) and (f)
above and is shown in Schedule 1.1.1 (d), and on the
assumption that the loans payable to Sellers in an amount of
FRF 1,112,958 in the Completion Balance Sheet have been repaid
at Completion.
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"FRENCH COMPLETION ACCOUNTS" means the consolidated accounts
of the Companies for the period 1 April 2000 to 31 March 2001
set out in Schedule 1.1.1 (f) prepared by the Company in
accordance with the Accounting Methods and Principles;
"FRF" means French Francs and after January 2002, the Euro,
the amounts expressed in French Francs in the Agreement being
deemed to be inserted for their counter-value in Euro;
"GOOD CAUSE" means:
- any act qualified as "faute lourde" by the French courts,
- misappropriation of company funds or any other serious
criminal activity (e.g. "abus de biens sociaux"),
- repeated or continued substantial breach of obligations
under his terms of appointment as President of the
Company or of Bourdais; repeated or continued substantial
failure to attend to the duties described therein, or any
act of dishonesty or serious misconduct,
- diversion of business normally carried out by any of the
Companies to any other individual or company,
- repeated negative comment ("denigrement systematique")
regarding any of the Companies, its officers or its
business by verbal or written communication amongst the
relevant Company's actual or potential clients, its staff
or the press,
- repeated substantial failure to observe a reasonable
group policy decision applying to all European Group
Companies and confirmed by both the Insignia Executive
Committee and the board of the Company, e.g. respecting
the international territorial rights and business sharing
rules,
- repeated and substantial breach of the applicable
provisions of Section 2 (Livre Deuxieme) of the Code de
Commerce or serious professional misconduct of his own
accord ("de son fait personnel");
"GROUP CHARGES" means 1% of actual revenue of the Companies,
prepared in accordance with US GAAP (but excluding SAB 101)
(chiffre d'affaires) net of fee sharing excluding VAT;
"IFG" or "INSIGNIA" means Insignia Financial Group, Inc.,
incorporated in the State of Delaware, USA, whose principal
office is at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇;
"IFG SHARE PRICE" means USD 9.934;
"IFG SHARES" means the ordinary shares issued by IFG given as
part of the Purchase Price;
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"IFG TOP UP SHARES" means the ordinary shares issued by IFG as
part of the Top-Up Payment 1 and the Top-Up Payment 2;
"IFG TOP UP 1 SHARES" is defined in clause 3.6.3;
"IFG TOP UP 2 SHARES" is defined in clause 3.7.3;
"INSIGNIA EUROPEAN DEVELOPMENT" shall mean any expenditure in
connection with the expansion of the Insignia business in
Europe outside of France;
"INTELLECTUAL PROPERTY RIGHTS" means trademarks, patents,
designs, models and author's rights and generally all the
rights giving their owner rights of use, (including all names
on the Internet and electronic e-mail addresses as well as all
data base information) and also all registrations, trading
names, registered names, know-how and processes used by the
Companies in the carrying out of their activities;
"INTEREST ON THE BLOCKED ACCOUNT" means any interest net of
tax earned by amounts credited at any time to the Blocked
Account;
"LAST ACCOUNTING DATE" means 31 March 2001;
"LOSS" means all losses, liabilities, costs, expenses,
penalties and any other damage of whatever nature, including
all reasonable professional and advisory fees;
"MATERIAL CONTRACTS" has the meaning given to it in Clause
5.18.2;
"NET CASH" is defined in Clause 3.4.5;
"NET PROFIT" means the profit after tax ("resultat apres
impot") for the Companies for the 9 month period 1 April 2001
to 31 December 2001 as will appear in the audited Consolidated
Accounts for such period, adjusted pursuant to the following
principles (which to the best knowledge of the Parties have
been applied for the calculation of the Estimated Net Profit
unless otherwise specified below):
(a) the following items will be added back:
- amortization of goodwill; (not calculated for the
purposes of the Estimated Net Profit)
- minority interest expense will be adjusted in direct
proportion to changes in minority ownership of the
Companies in connection with Completion; (not
calculated for the purposes of the Estimated Net
Profit)
- any increase in the provision for the litigation
disclosed in Schedules 5.16.1 and 5.16.2 over the
amount of the provision in the Completion Balance
Sheet; (not calculated for the purposes of the
Estimated Net Profit)
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(b) the following items will be deducted:
- any item of income which is included in the Final
Net Cash other than item (f), including but not
limited to:
- the reversal of the provision against the book
value of the Marketable Securities and the
profit on the disposal of the Marketable
Securities;
- dividends received by any of the Companies from
the Excluded Businesses;
- the Net Realisable Value from the disposal of
the Excluded Businesses;
- any change to the tax rates applied to the
calculation of the Net Realisable Value
deducted from the net profit compared to that
used in the calculation of the Final Net Cash;
(calculation of the Estimated Net Profit
assumed no difference in the tax rates)
- any dividends or interest received from the
Marketable Securities; (known not to have been
applied for the Estimated Net Profit)
- any exceptional profit unless, and to the extent that,
such gain is realised or becomes realised in cash;
- a minimum bonus, inclusive of employment taxes, of 15% of
income before income taxes, bonuses and exceptional items
in relation to the disposal of Excluded Businesses,
should be payable to all employees. Bonuses for this
purpose include (i) Statutory "participation des
salaries", (ii) Discretionary bonuses as set out in
employment contracts, (iii) Any other discretionary
bonuses agreed by the Bourdais board and (iv) Any bonus
payable to department heads or other senior executives
based on the profitability achieved by such departments.
If the above minimum bonus has not been deducted from
income before taxes, the difference between the actual
bonuses paid and the minimum bonus will be deducted. For
the avoidance of doubt any bonuses payable to JCB are
excluded from the above definition and would remain a
charge to income before income taxes;
- any increase in the provision for retirement annuity not
deducted from the net profit; (not calculated for the
purposes of the Estimated Net Profit)
- any reduction in the level of other provisions excluding
provisions for paid holiday;
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- the difference in the computation of the actual Tax
payable and the Tax payable on financial income
regardless of whether payment is due during the
calculation period or deferred to other periods; (not
calculated for the purposes of the Estimated Net Profit)
- normal accruals will be made such that the interim period
included a rateable proportion of all annual expenses;
- any items of expenditure capitalised except for budgeted
fixed assets and normal prepayments;
- a provision for any bad debts based on the normal bad
debt rate for the business;
- any fees subject to conditionality (e.g. the Cartier
deal);
- any profit share (participation des salaries) not
deducted from the Net Realisable Value of the Excluded
Businesses, or any other items, contained in the Final
Net Cash;
- any premium received in respect of Warrants issued to any
person would be deducted. (not calculated for the
purposes of the Estimated Net Profit)
"NET REALISABLE VALUE" means the gross proceeds received by
the Companies in respect of the Excluded Businesses for the
repayment of the loans from Companies and the shares in the
Excluded Businesses after the deduction of any Tax payable ,
less any loss on disposal of any Excluded Businesses (gross
proceeds less net book value), unless taken into account in
Net Profit;
"NON FAMILY SHAREHOLDERS" are those people set out in Schedule
1.1.1 (g) and who will be, at Completion, shareholders of the
Company. In this connection the Sellers shall use their best
efforts to procure that the Non Family Shareholders sell or
exchange their shares in Bourdais for shares of the Company
and those of the Sellers who hold shares directly in Bourdais
shall have sold or exchanged their shares in Bourdais for
shares of the Company;
"OTHER SHARES" means the shares in the Subsidiaries which are
not directly or indirectly held by the Company at the Date of
the Agreement as set out in Schedule 1.1.1 (h);
"PREMISES" means the premises over which the Companies have
possession by virtue of financial leases or real property
leases with an option to purchase;
"PROPERTY MANAGEMENT BUSINESS" means the property management
business operated by Bourdais Gerance;
"PROPERTY MANAGEMENT JOINT VENTURE" means the agreement dated
5 September 2000 entered into between the Company and Bourdais
on the one hand and SCIC and GFF on the other hand relating to
the property management business defined in Clause 4.5.1;
11
"PURCHASE PRICE" has the meaning given to it in Clause 3.1;
"REBRANDING AND IT UPGRADE COSTS" means an amount of FRF
1,300,000 representing all the costs born directly or
indirectly by the Companies in relation (i) to the change of
name of the Companies and (ii) to the IT hardware and software
upgrade of the Companies;
"RENTED PREMISES" means the premises over which the Companies
have possession by virtue of leases other than financial
leases or real property leases with an option to purchase;
"SCHEDULE" means each Schedule to this Agreement, and
"SCHEDULES" means each and every Schedule;
"SELLERS" means JCB, Monsieur ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Monsieur
Olivier Bourdais, Monsieur Christian Bourdais, Monsieur ▇▇▇▇
▇▇▇▇▇▇▇▇, Madame ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Monsieur ▇▇▇▇▇▇▇ ▇▇▇▇▇,
Mademoiselle ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Monsieur ▇▇▇▇▇ ▇▇▇▇▇, Monsieur
▇▇▇▇▇▇ ▇▇▇▇▇, Madame ▇▇▇▇▇ ▇▇▇▇▇▇ Virenque, Madame ▇▇▇▇▇▇▇▇▇
▇▇▇▇, Mademoiselle Isabelle Virenque;
"SHARES" means all the shares owned, at Completion by the
Sellers and the Non Family Shareholders comprising the whole
of the registered, issued share capital of the Company and
includes all the voting rights and voting interests (a Share
being one of the Shares) with sole exception of the shares in
the Company held by the Non Family Shareholders who may decide
not to sell their shares in accordance with Clause 4.1.2;
"SUBSIDIARIES" has the meaning given to it in recital B;
"SUBSIDIARIES SHARES" means the securities comprising all or
part of the share capital of the Subsidiaries and which are
held directly or indirectly by the Company;
"TAXES" or "TAXATION" means all direct or indirect taxes,
impositions, debits, contributions or charges including but
not limited to taxes on income or profits, withholding taxes,
deductions (precompte), property taxes, value added taxes,
stamp or registration duties, fiscal, customs and excise
duties, sales taxes, monopoly or competition taxes, licence
fees or direct debits or social contributions for which the
Companies are liable under all regulations applicable to them,
whatever the basis for recovering the fee or the entity
responsible for recovering such fee or whatever the status of
the entity in the name of which such fees are collected and
generally all taxes and deductions based on all or part of any
remuneration, including all interest, fines, penalties, and
other charges relating to them;
"TAX REGULATIONS" means all tax or customs legislation as well
as statutory instruments or any other applicable regulation or
interpretation of the above mentioned applicable rules in a
country where the Companies exercise their activities, as well
as any international treaty (including directives, regulations
or other applicable treaties in the relevant country);
12
"THRESHOLD EBITDA" has the meaning given to it in Clause
3.8.5;
"TOP-UP PAYMENT 1" has the meaning given to it in Clause
3.6.2;
"TOP-UP PAYMENT 2" has the meaning given to it in Clause
3.7.2;
"TOTAL LIABILITIES AND PROVISIONS" means the total liabilities
and provisions as set out in the Completion Balance Sheet;
"TRANSACTION" has the meaning given to it in the recitals of
the agreement;
"UNPAID TOP-UP 1" has the meaning given to it in Clause 3.6.8;
"UNPAID TOP-UP 2" has the meaning given to it in Clause 3.7.9;
"US GAAP" means the general accepted accounting principles
(including SAB 101) adopted in the United States of America as
they existed at 31 March 2001 and as applied by IFG as set out
in Schedule 1.1.1 (i);
"US GAAP ACCOUNTS" means the euro consolidated accounts of the
Companies prepared in accordance with US GAAP;
"VALUATION EBITDA": is defined in Schedule 1.1.1 (k) ;
"WARRANTS" means the maximum number of 87,080 warrants (bons
de souscription d'actions) whose beneficiaries are listed in
Schedule 1.1.1 (l), (premium of FRF 24.11) which will entitle
the beneficiaries to subscribe for 87,080 shares of the
Company at a price per share (including the premium) of FRF
241.13 and whose exercise is subject to the conditions set out
in Schedule 1.1.1 (m);
"WARRANT HOLDERS" means the holders of the Warrants at
Completion listed in Schedule 1.1.1 (l).
SECTION 1 - SALE AND PURCHASE
2. SALE AND PURCHASE OF THE SHARES
2.1 Subject to the provisions of Clause 4, the Sellers agree to sell to the
Buyer and to use their best efforts to procure the sale by the Non Family
Shareholders, and the Buyer agrees to purchase from the Sellers and the
Non Family Shareholders, the Shares at Completion.
2.2 At Completion the Buyer will have full title guarantee to the Shares,
free from any Encumbrance against payment of the Cash Price, delivery of
the IFG Shares and payment of the Estimated Net Profit.
2.3 Upon Completion, the Buyer will have the right as from Completion to all
dividends, interim dividends and other distributions paid in respect of
the Shares, and will benefit from subscription and allocation rights
attached to the Shares from Completion.
13
3. PURCHASE PRICE
3.1 The Purchase Price shall comprise (i) the Cash Price, (ii) the IFG
Shares, (iii) the Net Cash and (iv) the Net Profit. Additional
conditional purchase price is determined in Clauses 3.6, 3.7 and 3.8. All
calculations of the Purchase Price and the additional conditional
purchase price in this Agreement are made on the assumption that 100% of
the shares in the Company will be sold to the Buyer on Completion and
that the Company and/or Bourdais will own 100% of the Subsidiaries, 30%
of Bourdais Pier France, 20% of Webimm, and the minority shareholdings in
Easyburo, Immob Aquitaine, FNAIM, SEM 92 and GIE Immostat at Completion.
If less than 100% of the shares in the Company are sold to the Buyer at
Completion and/or if the Company holds less than 100% of the shares in
the Subsidiaries at Completion, the Purchase Price and additional
conditional purchase price will be adjusted accordingly on the basis of
the principles set out in Clause 3.12. If the Companies do not hold the
minority shareholdings in Easyburo, Immob Aquitaine, FNAIM, SEM 92 and
GIE Immostat at Completion, the Purchase Price will be adjusted
accordingly on the basis of each holding's net book value at 31 March
2001.
3.2 Cash Price
(a) Upon Completion, the Buyer shall, in exchange for the
transfer of the Shares, pay the Sellers and the Non Family
Shareholders a total amount of FRF 99,845,000, subject to
adjustment as set out in Clause 3.2 (c) below (the "CASH
PRICE"). The Cash Price payable to the Sellers and the Non
Family Shareholders will be paid to JCB who will acknowledge
payment thereof on his own behalf and on behalf of the other
Sellers and Non Family Shareholders and shall be solely
responsible for its allocation among the other Sellers and
the Non Family Shareholders.
(b) The Buyer shall pay the Cash Price by wire transfer of
immediately-available funds to the following bank account
opened in the name of JCB at the BRED: account number
00512187407, code banque 10107, code guichet 00118, cle 66.
(c) In the event that the Final Net Cash as determined in
accordance with Clause 3.4 is less than zero, the Cash Price
paid to the Sellers and the Non Family Shareholders shall be
reduced by such negative amount.
(d) Payment of any adjustment due by the Sellers and the Non
Family Shareholders under Clause 3.2(c) shall be in the
proportion set out in Schedule 3.2(a) and shall be made by
the Sellers and the Non Family Shareholders within 10 days
of the determination of the Final Net Cash.
3.3 IFG Shares
3.3.1 Upon Completion, the Buyer shall as part of Purchase Price deliver
to the Sellers and to the Non Family Shareholders, free of any
Encumbrances whatsoever (subject to the transfer restrictions set
out in Clause 3.3.3) 402,657.54 new common IFG Shares for an
aggregate value of FRF 29,320,000, in the proportion set out in
Schedule 3.2 (a). The number of
14
IFG shares to be delivered under this Clause has been determined
on the basis of the IFG Share Price and the Exchange Rate. The
number of IFG Shares to be delivered to the Sellers and Non Family
Shareholders does not correspond to a round number of IFG Shares.
The consideration exceeding this round number of IFG Shares shall
be paid in cash in the proportion set out in Schedule 3.2(a).
3.3.2 The Buyer warrants to the Sellers and the Non Family Shareholders
that the IFG Shares when issued, (i) will rank pari passu with the
existing common shares issued by IFG, (ii) shall carry rights to
receive in full all dividends declared, made or paid after
Completion with respect to the existing common shares issued by
IFG, and (iii) shall not carry any obligation in connection with
their issuance for the purpose of funding the Purchase Price.
3.3.3 All the IFG Shares will be non-transferable for a period of one
year and subject to US regulatory transfer restrictions for the
second year following their date of issue. The IFG Shares
delivered to the Sellers at Completion will be placed immediately
in escrow pursuant to the Escrow Agreement. After the initial
holding period of one year, the Sellers will be entitled to sell,
subject to regulatory restrictions, the IFG Shares placed in
escrow in 25% tranches every six months (the first 25% tranche
being available for sale after the initial holding period of one
year), the net proceeds of such sales being placed in escrow under
the Escrow Agreement for the Earn-Out Period.
3.3.4 Subject to US regulatory requirements, the Sellers and the Non
Family Shareholders shall not bear any restriction on their rights
in connection with the ownership or transferability of IFG Shares
which is not imposed upon Insignia's management holding IFG shares
in accordance with Insignia group policy.
3.4 Distribution of Net Cash
3.4.1 In addition to the Cash Price and the IFG Shares, the Buyer shall
pay as part of Purchase Price to the Sellers and to the Non Family
Shareholders the Net Cash as determined and in the manner set out
below.
3.4.2 The Buyer shall procure that the amount of the Final Net Cash
subject to any unagreed amounts of items (d), (e) and (f) of the
definition of Final Net Cash shall as from Completion be placed by
the Company in a blocked interest bearing bank account with BRED,
▇▇ ▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the "BLOCKED ACCOUNT").
3.4.3 Within 20 Days of Completion, the Buyer shall submit to the
Sellers and to the Non Family Shareholders a statement detailing
the calculation of elements (d) and (e) of the Final Net Cash. The
Sellers and the Non Family Shareholders shall have 20 Days from
receipt of the statement to agree or challenge such elements of
the Final Net Cash. Should any item of (d), (e) and (f) to be
taken into account for the calculation of the Final Net Cash not
be determined within 20 Days from Completion, the Final Net Cash
shall be adjusted as soon as possible to take into account the
relevant items.
15
3.4.4 As soon as any element of the Final Net Cash is agreed by the
Parties, the Buyer shall procure that the Blocked Account is
credited or debited by such amount.
3.4.5 As soon as possible and in any event within 10 Days of the
certification by the auditors of the statutory accounts of the
Company for the financial year ending 31 December 2001, the Buyer
shall procure, on instructions from the Sellers having received
full information from the Companies, that the Company shall
declare a dividend in the amount of the sums in the Blocked
Account with immediate payment. The Buyer will procure that within
20 Days of the final determination of the Final Net Cash, the
difference between the Final Net Cash and the amount of the sums
in the Blocked Account be declared by the Company as a dividend
with immediate payment. The Buyer shall procure on instructions of
the Sellers having received full information from the Company that
the Subsidiaries have convened and held general meetings of
shareholders in order to permit the distribution of the Final Net
Cash plus the interest on the Blocked Account by the Company.
Should the distributable profits of the Company be insufficient to
pay a dividend in the amount of the sums in the Blocked Account
and/or the balance to achieve the Final Net Cash plus the Interest
on the Blocked Account, the Buyer will procure on instructions of
the Sellers having received full information from the Company that
further distributions of dividends or interim dividends or other
means of achieving a payment by the Company to the Buyer are made
as soon as possible until the full Final Net Cash amount plus the
Interest on the Blocked Account is distributed. The amount
received by the Buyer in respect of such payment(s) less any Taxes
which may be due by the Buyer (being a French company subject to
corporation tax (impot sur les societes)) or by the Companies in
respect of such payment(s) will then constitute the NET CASH and
will be paid to a French account in the books of the BRED to the
Account mentioned in Clause 3.2 (b). The contemplated mechanics
and timing of extracting the amount of the Final Net Cash plus the
Interest on the Blocked Account are set out in Schedule 3.4.5.
3.4.6 The amount of the sums in the Blocked Account and Net Cash shall
be paid by the Buyer to the Sellers and to the Non Family
Shareholders on the same day as receipt by the Buyer in the
proportion set out in Schedule 3.2 (a). The Parties will cooperate
fully to ensure that the payments to be made to the Buyer and the
payments by the Buyer to the Sellers and the Non Family
Shareholders under this Clause 3.4 occur simultaneously. The
portion of the Net Cash payable to the Sellers will be paid by
wire transfer to JCB who will acknowledge payment thereof on his
own behalf and on behalf of the other Sellers and shall be solely
responsible for its allocation among the other Sellers. The
portion of the Net Cash payable to the Non Family Shareholders
will be paid by wire transfer to each Non Family Shareholder
individually.
3.5 Net Profit
16
3.5.1 As part of the Purchase Price the Buyer shall pay the Net Profit
in cash to the Sellers and to the Non Family Shareholders in the
proportion set out in Schedule 3.2 (a).
3.5.2 Upon Completion, the Buyer shall pay to the Sellers and to the Non
Family Shareholders the Estimated Net Profit.
3.5.3 The Estimated Net Profit will be paid in cash by wire transfer of
immediately-available funds to JCB who will acknowledge payment
thereof on his own behalf and on behalf of the other Sellers and
the Non Family Shareholders and shall be solely responsible for
its allocation among the other Sellers and the Non Family
Shareholders.
3.6 Top-Up Payment 1
3.6.1 If Valuation EBIDTA for the 12 months ending 31 March 2002 is
greater than FRF 29,523,428, as an additional Purchase Price the
Buyer shall pay to the Sellers and to the Non Family Shareholders
in the proportion set out in Schedule 3.2 (a), a Top-Up Payment 1
in cash and in IFG shares as set out in this Clause 3.6.
3.6.2 The Top-Up Payment 1 payable in cash will be calculated as: (a
payment of FRF 3.375 in incremental Purchase Price per FRF 1 of
Valuation EBITDA for the twelve months ending 31 March 2002 in
excess of FRF 29,523,428) capped at a maximum payment of FRF
24,738,750.
3.6.3 The Top-Up Payment 1 payable in IFG shares will be calculated as:
a number of IFG shares representing (FRF 1 in incremental Purchase
Price per FRF 1 of Valuation EBITDA for the twelve months ending
31 March 2002 in excess of FRF 29,523,428) capped at a maximum of
FRF 7,330,000. The number of IFG shares payable under this clause
(the "IFG TOP UP 1 SHARES") will be determined using the IFG Share
Price and the Exchange Rate.
3.6.4 Within eight weeks of 31 March 2002, the Buyer will produce the US
GAAP Accounts for the twelve months ending 31 March 2002 on the
basis of which will be calculated the Valuation EBITDA as set out
in Schedule 1.1.1 (k). Upon receipt of such US GAAP Accounts, the
Sellers and the Non Family Shareholders will have 30 days to agree
or challenge the US GAAP Accounts and/or the Valuation EBITDA, the
expiry of the 30-day period being the due date for payment
purposes.
3.6.5 The portion of the Top-Up Payment 1 payable in cash to the Sellers
will be paid in cash by wire transfer of immediately-available
funds to JCB who will acknowledge payment thereof on his own
behalf and on behalf of the other Sellers and will be solely
responsible for its allocation among the other Sellers. The share
certificates made out to each individual Seller representing the
IFG Top Up 1 Shares to be delivered to the Sellers will be
delivered to JCB who will acknowledge receipt thereof on his own
behalf and on behalf of the other Sellers and will be solely
responsible for delivery of such certificates to the
17
other Sellers. The portion of the Top-Up Payment 1 payable in cash
to the Non Family Shareholders shall be made to each of them
individually, and shares certificates made out to each individual
Non Family Shareholder representing the IFG Top Up 1 Shares to be
delivered to the Non Family Shareholders shall be delivered to
each of them individually. If the Top-Up Payment 1 to be made in
IFG shares does not correspond to a round number of IFG shares,
the consideration exceeding this round number of IFG shares shall
be paid in cash. In the event the Top-Up Payment 1 is not made on
due date, the unpaid due amounts will carry interest from the due
date of payment. The relevant interest rate shall be the EURIBOR
one month rate as published by Telerate Page 20041 at 11 a.m.
(Paris time) on due date, such interest rate to be calculated on a
monthly basis according to the EURIBOR one month as published the
first day of each month after such date.
3.6.6 The Buyer warrants to the Sellers and the Non Family Shareholders
that the IFG Top-Up 1 Shares when issued, (i) will rank pari passu
with the existing common shares issued by IFG, (ii) shall carry
rights to receive in full all dividends declared, made or paid
after Completion with respect to the existing common shares issued
by IFG, and (iii) shall not carry any obligation in connection
with their issuance for the purpose of funding the Purchase Price.
3.6.7 All the IFG Top-Up 1 Shares will be non-transferable for a period
of one year and subject to US regulatory transfer restrictions for
the second year following their date of issue.
3.6.8 Subject to US regulatory requirements, the Sellers and the Non
Family Shareholders shall not bear any restriction on their rights
in connection with the ownership or transferability of IFG Top-Up
1 Shares which is not imposed upon Insignia's management holding
IFG shares in accordance with Insignia group policy.
3.6.9 If the Top-Up Payment 1, in cash and IFG shares, is less than FRF
32,068,750, the difference between FRF 32,068,750 and the Top-Up
Payment 1 (such difference being the Unpaid Top-Up 1), will be
added to the maximum base amount of Earn-Out of FRF 111,866,250
referred to in Clause 3.8.1.
3.7 Top-Up Payment 2
3.7.1 If Valuation EBIDTA for the 12 months ending 31 March 2002 is
greater than FRF 36,853,428, as an additional Purchase Price the
Buyer shall pay to the Sellers and to the Non Family Shareholders
in the proportion set out in Schedule 3.2 (a), a Top-Up Payment 2
as set out in this Clause 3.7. The maximum Top-Up Payment 2 will
be FRF 58,540,000, less the amount of Net Profit.
3.7.2 The Top-Up Payment 2 will be calculated as: (a payment of FRF X in
incremental Purchase Price per FRF 1 of Valuation EBITDA for the
twelve months ending 31 March 2002 in excess of FRF 36,853,428),
where:
18
X = (FRF 58,540,000 less the Net Profit) / FRF 40,320,000.
3.7.3 The Top-Up Payment 2 will be paid 75% in cash and 25% in IFG
ordinary shares (the "IFG TOP-UP 2 SHARES"). The number of IFG
Top-Up 2 Shares will be determined using the IFG Share Price and
the Exchange Rate.
3.7.4 The portion of the Top-Up Payment 2 payable in cash to the Sellers
will be paid in cash by wire transfer of immediately-available
funds to JCB who will acknowledge payment thereof on his own
behalf and on behalf of the other Sellers and will be solely
responsible for its allocation among the other Sellers. The share
certificates made out to each individual Seller representing the
IFG Top-Up Shares 2 to be delivered to the Sellers will be
delivered to JCB who will acknowledge receipt thereof on his own
behalf and on behalf of the other Sellers and will be solely
responsible for delivery of such certificates to the other
Sellers. The portion of the Top-Up Payment 2 payable in cash to
the Non Family Shareholders shall be made to each of them
individually, and shares certificates made out to each individual
Non Family Shareholder representing the IFG Top-Up 2 Shares to be
delivered to the Non Family Shareholders shall be delivered to
each of them individually. If the Top-Up Payment 2 to be made in
IFG shares does not correspond to a round number of IFG shares,
the consideration exceeding this round number of IFG shares shall
be paid in cash. In the event the Top-Up Payment 2 is not made on
due date, the unpaid due amounts will carry interest from the due
date of payment. The relevant interest rate shall be the EURIBOR
one month rate as published by Telerate Page 20041 at 11 a.m.
(Paris time) on due date, such interest rate to be calculated on a
monthly basis according to the EURIBOR one month as published the
first day of each month after such date.
3.7.5 The Buyer warrants to the Sellers and the Non Family Shareholders
that the IFG Top-Up 2 Shares when issued, (i) will rank pari passu
with the existing common shares issued by IFG, (ii) shall carry
rights to receive in full all dividends declared, made or paid
after Completion with respect to the existing common shares issued
by IFG, and (iii) shall not carry any obligation in connection
with their issuance for the purpose of funding the Purchase Price.
3.7.6 All the IFG Top-Up 2 Shares will be non-transferable for a period
of one year and subject to US regulatory transfer restrictions for
the second year following their date of issue.
3.7.7 Subject to US regulatory requirements, the Sellers and the Non
Family Shareholders shall not bear any restriction on their rights
in connection with the ownership or transferability of IFG Top-Up
2 Shares which is not imposed upon Insignia's management holding
IFG shares in accordance with Insignia group policy.
3.7.8 The maximum amount of Top-Up Payment 2 will be achieved if the
Valuation EBITDA for the twelve months ending 31 March 2002
reaches FRF 77,173,428. If the Valuation EBITDA is less than FRF
77,173,428, the difference between (i) FRF 58,540,000 and (ii) the
aggregate of the Top-Up
19
Payment 2 and the Net Profit (such difference being the Unpaid
Top-Up 2), will be added to the maximum base amount of Earn-Out of
FRF 111,866,250 referred to in Clause 3.8.1.
3.8 Earn-Out
3.8.1 As an additional Purchase Price the Buyer shall pay to the Sellers
and to the Non Family Shareholders in the proportion set out in
Schedule 3.2 (a) an Earn-Out linked to the performance of the
Companies for the Earn Out Period in three tranches. The maximum
amount payable to the Sellers and the Non Family Shareholders in
respect of the Earn-Out is FRF 111,866,250 plus the Unpaid Top-Up
1 plus the Unpaid Top-Up 2. Clause 3.9 deals with the consequences
of JCB resigning as President of the Company and JCB being
terminated as President of the Company without Good Cause and
certain other events on the calculation of the Earn-Out.
3.8.2 The First Tranche of Earn-Out will be calculated as:
(Valuation EBITDA for year ending 31 December 2002 minus
Threshold EBITDA) x 87.286% x 1.41.
3.8.3 The Second Tranche of Earn-Out will be calculated as:
(Valuation EBITDA for year ending 31 December 2003 minus
Threshold EBITDA) x 87.286% x 1.41.
3.8.4 The Third Tranche of Earn-Out will be calculated as:
(Valuation EBITDA for year ending 31 December 2004 minus
Threshold EBITDA) x 87.286% x 1.41.
Examples of the calculation of the Earn Out are set out in
Schedule 3.8.4 for illustrative purposes.
3.8.5 Threshold EBITDA will be the greater of (i) FRF 29,523,428 and
(ii) Valuation EBITDA for the 12 months ending 31 March 2002.
3.8.6 The Valuation EBITDA on which will be based the calculation of the
Earn-Out will be calculated on the basis of the perimeter of the
Transaction. For the avoidance of doubt, EBITDA arising from any
future acquisitions will be excluded from the Earn-Out
calculation.
3.8.7 In the event of a disposal to a third party (not being a Buyer's
Affiliate) of any portion of the business of any of the Companies,
the average of the Valuation EBITDA of the disposed business for
each year since 1 January 2001 and the average of the portion of
the fixed Companies charges (including head offices costs) of the
disposed business for each year since 1 January 2001 will be added
to the Valuation EBITDA in the determination of the Earn-Out
payments in subsequent years.
20
From the resultant sum above will be deducted the amount
representing the difference between:
(i) The fixed Companies charges of the sold business and the
retained business before disposal, and
(ii) The fixed Companies charges of the retained business,
immediately after disposal.
3.8.8 In the event of a disposal to an Affiliate of the Buyer or IFG of
any portion of the business of any of the Companies, the Earn-Out
commitments will be maintained for the remainder of the Earn-Out
Period on the basis of the perimeter of the Companies at
Completion and the provisions of Clause 7.5.1 will apply.
3.8.9 In the event the Company and Bourdais enter into a new property
management joint venture agreement as set out in Clause 4.5.1, the
Valuation EBITDA on which will be based the calculation of the
Earn-Out will be calculated on the basis of the current perimeter
of the Property Management Business, i.e. in the case of
amalgamation by taking into account the percentage interest the
Company and Bourdais will hold in such property management joint
venture.
3.8.10 The Earn-Out payment shall be paid within three months of the end
of each calendar year. The Parties will act in good faith and will
take all reasonable steps to ensure that all necessary information
for calculation of the payments is provided as soon as possible in
order to meet payment deadlines.
3.8.11 Within eight weeks of the end of each calendar year, the Buyer
shall produce the US GAAP Accounts on the basis of which will be
calculated the Valuation EBITDA as set out in Schedule 1.1.1 (k).
Upon receipt of such US GAAP Accounts, the Sellers shall have 30
days to agree or challenge the US GAAP Accounts and/or the
Valuation EBITDA, the expiry of the 30 day-period being the due
date for payment purposes.
3.8.12 The portion of the Earn-Out payments payable to the Sellers will
be paid in cash by wire transfer to JCB who will acknowledge
payment thereof on his own behalf and on behalf of the other
Sellers and will be solely responsible for its allocation among
the other Sellers. The portion of the Earn-Out payments payable to
the Non Family Shareholders shall be made to each of them
individually in cash by wire transfer. In the event the Earn-Out
payments are not made on due date, the unpaid due amounts will
carry interest from the due date of payment. The relevant interest
rate shall be the EURIBOR one month rate as published by Telerate
Page 20041 at 11am (Paris time) on due date, such interest rate to
be calculated on a monthly basis according to the EURIBOR one
month as published the first day of each month after such date.
21
3.9 Termination Protection in respect of the Earn-Out.
3.9.1 Should JCB resign as President of the Company or Bourdais prior to
31 December 2004, the Earn-Out not already earned would be
determined by applying the Earn-Out formulae set out in Clause 3.8
to the Valuation EBITDA of the second calendar year following the
year of his departure. Thus:
(i) Should JCB resign as President of the Company or
Bourdais prior to 31 December 2002, the calculation
of the First Tranche will be based on the Valuation
EBITDA for the year end 31 December 2004; the
calculation of the Second Tranche will be based on
the Valuation EBITDA for the year ending 31 December
2005 and the calculation of the Third Tranche will be
based on the Valuation EBITDA for the year ending 31
December 2006.
(ii) Should JCB resign as President of the Company or
Bourdais between 1 January 2003 and 31 December 2003
the calculation of the Second Tranche will be based
on the Valuation EBITDA for the year ending 31
December 2005 and the calculation of the Third
Tranche will be based on the Valuation EBITDA for the
year ending 31 December 2006.
(iii) Should JCB resign as President of the Company or
Bourdais between 1 January 2004 and 31 December 2004
the calculation of the Third Tranche will be based on
the Valuation EBITDA for the year ending 31 December
2006.
3.9.2 Should JCB be terminated as President of the Company or Bourdais
other than with Good Cause prior to 31 December 2004, 60% of the
remaining Earn-Out will be calculated as follows:
(i) Should JCB be terminated as President of the Company
or Bourdais other than with Good Cause prior to 31
December 2002, calculation of 60% of each tranche of
the Earn-Out payments will be based on a Valuation
EBIDTA of FRF 77,000,000.
(ii) Should JCB be terminated as President of the Company
or Bourdais other than with Good Cause between 1
January 2003 and 31 December 2003, calculation of 60%
of the second and third tranches of the Earn-Out will
be based on the Valuation EBITDA for the 12 months
ending 31 December 2002.
(iii) Should JCB be terminated as President of the Company
or Bourdais other than with Good Cause between 1
January 2004 and 31 December 2004, calculation of 60%
of the third tranche of the Earn-Out will be based on
the average of the Valuation EBITDA for the 12 months
ending 31 December 2002 and the Valuation EBITDA for
the 12 months ending 31 December 2003.
22
The remaining 40% will be calculated based on the Valuation
EBITDA of the applicable Earn-Out year or years, as set out in
the formulae in Clause 3.8.
Examples of calculations are set out in Schedule 3.9.2 for
illustrative purposes.
3.9.3 Should JCB be terminated as President by the Company with Good
Cause, the Earn-Out shall only be due for the period up to the
date at which the Good Cause arose. It will be calculated on the
basis of the Valuation EBITDA for the period up to the date at
which the Good Cause arose and will be paid on the next date of
payment provided for herein.
3.9.4 The Earn-Out will not be altered in the event of JCB's death and
will therefore be calculated as set out in Clause 3.8.
3.9.5 The Earn-Out will not be altered in the event of illness or
disability of JCB and will therefore be calculated as set out in
Clause 3.8.
3.9.6 Should the events contemplated in Clauses 3.9.1, 3.9.2, 3.9.4 and
3.9.5 take place the timing of the Earn-Out payments will not be
altered except as provided for in Clause 3.9.1 and the overall
maximum defined in Clause 3.8.1 will apply. For the avoidance of
doubt, the Valuation EBIDTA of FRF 77,000,000 will apply in no
circumstance other than the termination of JCB as President of the
Company or of Bourdais other than with Good Cause prior to 31
December 2002 for calculation of 60% of each tranche of the
Earn-Out payments, as stated in Clause 3.9.2(i) above.
3.10 In case of disagreement between the Parties as to any item the
determination of which shall affect the determination of the Purchase
Price as determined in Clauses 3.1 to 3.4, or the Net Profit as
determined in Clause 3.5, or the Top-Up Payment 1 or the Top-Up Payment
2 as determined in Clauses 3.6 and 3.7, or the Earn-Out as determined in
Clauses 3.8 and 3.9, the Parties shall appoint, subject to the absence
of any conflict of interests with any of the parties on the date of
appointment, Pricewaterhouse Coopers as expert acting as a third party
expert within the meaning of Article 1592 of the French Civil Code (the
"EXPERT") to resolve the disputed items.
3.10.1 The terms of reference of the Expert will be to determine, within
30 days of its appointment, and after hearing each party and/or
its advisors, the disputed items, taking into account all the
conditions which reflect the intention of the parties as set out
in this Agreement.
3.10.2 The decision of the Expert will be binding on the parties without
any right of appeal, which is irrevocably and expressly agreed by
the parties. Notwithstanding, however, the designation of the
Expert, the parties will be entitled to continue to negotiate
between themselves in order to reach an agreement with regard to
the disputed items, and they may continue to do so until the date
on which the Expert renders its decision, in which case the
parties will inform the Expert of the termination of its
assignment.
3.10.3 The fees and charges of the Expert will be borne equally by the
Sellers and the Non Family Shareholders on the one hand, and the
Buyer on the other hand.
23
3.10.4 The Buyer, the Sellers and the Non Family Shareholders will
co-operate fully with each other and, if applicable, with the
Expert to whom any dispute is referred (including giving all
reasonable access to records, information and to personnel of the
Companies) with a view to enabling the disputed items to be agreed
between the Buyer, the Sellers and the Non Family Shareholders.
3.10.5 In the event that the Expert is unwilling to act or unable, for
any reason, to determine the disputed items within 30 days of its
appointment and if the parties do not agree on another expert
within five days of such event, the President of the commercial
court of Paris, by way of the emergency procedure ("refere"), will
appoint an expert who will have the mission as set out above and
his decision shall be binding on the parties.
3.10.6 Any undisputed amount due by the Buyer to the Sellers and the
Non-Family Shareholders shall be paid on due date. In the event of
dispute on any amount due by the Buyer and if the Expert finds in
the favour of the Sellers, interest at the rate defined in Clause
3.8.12 on such unpaid disputed amounts will be due as from the
initial date of payment.
3.11 The Sellers warrant that any expenditure incurred by any of the
Companies during the period 1 April 2001 to Completion in respect of any
part of the premises referred to in Schedule 4.6(c) and which would not
be borne by the Companies under the leases attached in Schedules 4.6(b),
4.6(f) and 4.6(g) (unless repaid under Clause 6.8) will be repaid in
full to the Companies at Completion at the latest.
3.12 In the event that less than 100% of the shares in the Company are sold
to the Buyer at Completion, and/or less than 100% of the shares in
Bourdais and/or Bourdais Expertises SA are held by the Company at
Completion, the Cash Price, the number of IFG Shares, the Net Profit,
the Top-Up Payment 1, the Top-Up Payment 2 and the Earn-Out will each be
reduced by the amount which the shareholder(s) remaining at Completion
in the Company and/or Bourdais and/or Bourdais Expertises SA would have
received as indicated in Schedule 3.2 (a).
4. COMPLETION
4.1 Conditions precedent
The completion of the sale of the Shares and of the other transactions
to be completed at Completion is subject to the fulfilment of the
following conditions precedent (the "CONDITIONS PRECEDENT"):
4.1.1 at least 95% of the shares in Bourdais Expertises are held by
Bourdais at Completion;
4.1.2 at least 95% of the shares of the Company are delivered to the
Buyer at Completion;
4.1.3 at least 95% of the shares of Bourdais are held by the Company at
Completion;
24
4.1.4 forty-seven (47) out of the fifty-six (56) Executives employed by
Bourdais and Bourdais Expertises SA listed in Schedule 4.1.4 have
not given notice, of which nine (9) must be current shareholders
of Bourdais, and the other thirty-eight (38) have subscribed to
the Warrants issued in their favour;
4.1.5 obtaining by the Company of consent pursuant to change of control
provisions contained in the contracts listed in Schedule 4.1.5.;
4.1.6 evidence of the holding of an extraordinary shareholders meeting
of the Company and the adoption of the resolutions on the
following agenda:
- conversion of the Company into a societe par actions
simplifiee; and the adoption of new bylaws in the form
attached as Schedule 4.1.6 (i);
- the appointment of the directors and appointment of JCB as
president of the Company on the terms set out in Schedule
4.1.6 (ii);
- the change of the registered name to Insignia Bourdais
Holding;
- the change of the Company's financial year to a calendar year
effective for the year ending on 31 December 2001.
4.1.7 evidence of the holding of extraordinary shareholders meetings of
the Subsidiaries held by the Company at least 50% and the adoption
of the resolutions on the following agenda:
- the conversion into a societe par actions simplifiee and the
adoption of new by laws in the form attached as Schedule
4.1.7 (i) (except for Bourdais Mediterranee and Bourdais
Consultants which will remain as SARLs);
- the change of registered name as set out in Schedule 4.1.7
(ii);
- the change of the Companies financial year to a calendar year
effective for the year ending on 31 December 2001.
4.1.8 the termination by the Company and/or its Subsidiaries of
its/their membership in Oncor with no obligation remaining for the
Company and/or its Subsidiaries in connection thereto;
4.1.9 the assignment by Bourdais to a Sellers' Affiliate of the
financial leases (contrats de credit-bail immobilier) identified
in Schedule 4.6 (a) and the signature of the commercial lease
attached as Schedules 4.6 (b), 4.6 (f) and 4.6 (g) by Bourdais and
the counterparty which will be amended to state as a termination
date a period of nine years as from the date of Completion as a
result of which the first break will occur six years after the
date of Completion;
4.1.10 there have not been and are not currently in progress any
proceedings against the Sellers, any one of the Companies, IFG or
the Buyer or a decision from a legal or administrative authority
preventing, prohibiting or modifying (or capable of preventing,
prohibiting or modifying) the completion of the transfer
25
of the Shares or imposing conditions on the Buyer in respect of
the transactions envisaged by this Agreement, in such a way as to
make such transactions substantially more onerous or restrictive
or capable of having a material adverse effect on the activities,
the prospects or the financial or economic situation of IFG, the
Buyer or any one of the Companies;
4.1.11 there has not occurred between the Date of this Agreement and
Completion any identifiable event (other than those set out in the
preceding paragraph) which affects in a materially adverse way the
financial situation, the operation or the ordinary course of
business of the Companies taken as a whole; Neither the financial
results of any of the Companies between 1 April 2001 and the date
of Completion nor the terrorist events of 11 September 2001 and
their consequences as known at the Date of the Agreement, shall be
considered an event which affects in a materially adverse way the
financial situation, the operation or the ordinary course of
business of any of the Companies;
4.1.12 there have not been and are not currently in progress any
proceedings or a decision from a legal or administrative authority
or any other event preventing, prohibiting or modifying in a
materially adverse way (or capable of preventing, prohibiting or
modifying in a materially adverse way) the activity of the
Companies including without limitation the termination or the
modification of the professional insurance, the withdrawal or the
non renewal of the professional capacity, the termination of the
financial guarantee granted in accordance with the law n(degree)
70-9 of 2 January 1970;
4.1.13 the Sellers have complied with their obligations under this
Agreement;
4.1.14 the representations and warranties of the Sellers contained in
this Agreement or the Schedules are correct and complete save for
non-material events having occurred in the ordinary course of
business;
4.1.15 the Buyer has complied with its obligations under this Agreement;
4.1.16 the representations and warranties of IFG and the Buyer contained
in this agreement are correct and complete save for non-material
events having occurred in the ordinary course of business;
4.1.17 evidence of a valid, binding and enforceable resolution of the
board of directors of the Buyer authorising the issuance of the
IFG Shares in accordance with this Agreement;
4.1.18 there has been no change of control (being the purchase or a
binding commitment to purchase directly or indirectly at least 50%
of the shares) of IFG, provided that the crossing of the 50%
threshold of shareholding by either the current shareholders of
the Company or such shareholders' affiliates shall not be regarded
as a change of control;
4.1.19 there has not occurred between the Date of this Agreement and
Completion any identifiable event which affects in a materially
adverse way the financial situation, the operation or the ordinary
course of business of IFG or the listing
26
of the IFG shares. For the avoidance of doubt, (i) changes
alone in the market price of IFG shares shall not be deemed
to constitute an event affecting in a material adverse way
the financial situation, the operation of the ordinary
course of business of IFG or the listing of the IFG shares,
and (ii) neither the financial results of IFG between 1
April 2001 and the date of Completion nor the terrorist
events of 11 September 2001 and their consequences as known
at the Date of the Agreement shall be considered an event
which affects in a materially adverse way the financial
situation, the operation or the ordinary course of business
of IFG.
The Conditions Precedent set out in Clauses 4.1.1 to 4.1.14 are for the
exclusive benefit of the Buyer and may be waived, in whole or in part,
at any time prior to Completion, in writing by the Buyer.
The Conditions Precedent set out in Clauses 4.1.15 to 4.1.19 are for the
exclusive benefit of the Sellers and may be waived in whole or in part,
at any time prior to completion, in writing by the Sellers.
The Conditions Precedent must be fulfilled by 31 December 2001. JCB
shall inform the Buyer at regular intervals of the progress of the
fulfilment of the Conditions Precedent set out in Clauses 4.1.1 to
4.1.14 and immediately upon their fulfilment. The Buyer shall inform JCB
at regular intervals of the progress of the fulfilment of the Conditions
Precedent set out in Clauses 4.1.17 and 4.1.18. If the Conditions
Precedent are not fulfilled by 31 December 2001 the Agreement will be
null and void and no compensation will be due to or by either Party. The
Parties may, by mutual agreement, extend the above date.
4.2 Date and location of Completion
4.2.1 Subject to the provisions of Clause 4.1, Completion will take
place after fulfilment of the last of the Conditions Precedent
4.1.1 to 4.1.9 and 4.1.17 and at latest by 31 December 2001,
unless the Parties agree otherwise in writing.
4.2.2 The Parties agree that Completion will take place on 19 December
2001 at 11:00 am at the office of ▇▇▇▇▇▇▇▇ Chance, ▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ or at any other date, time or location agreed
to in writing between the Parties.
4.3 Operations at Completion
4.3.1 At Completion, the Sellers shall deliver to the Buyer:
(a) the share transfer forms in respect of all the Shares duly
executed by the Sellers and the Non-Family Shareholders in
favour of the Buyer;
(b) a share transfer agreement in respect of the Shares drawn up
for the purpose of filing before the Tax Authorities duly
executed by the Parties;
(c) an agreement reproducing the relevant sections of this
Agreement signed by the Non Family Shareholders selling their
shares in the Company;
27
(d) the share transfer register and shareholders registers of the
Company showing the transfer of the Shares as well as the
share transfer registers and shareholders registers of the
Subsidiaries;
(e) the letters of resignation of all the corporate officers
(mandataires sociaux) of the Companies, the names of whom are
provided by Buyer to Sellers at least ten (10) Days prior to
Completion, confirming that the resigning officers have no
claims, financial or otherwise as corporate officers against
the Companies;
(f) signed minutes of the general meetings of shareholders (or
members) of the Companies to take place on Completion on the
agenda referred to in Clauses 4.1.6 and 4.1.7 above;
(g) a certified copy of the minutes of the board of directors of
the Company containing the approval of the transfer of the
Shares in favour of the Buyer and the Buyer's designees, the
identity of which will be given at least 10 days before
Completion;
(h) a certificate signed by the Sellers drawn up in the form
attached at Schedule 4.3.1 (h), stating that the
representations and warranties contained in this Agreement
are complete and correct at the date of Completion, that the
Sellers have complied with those obligations to which they
are subject in accordance with the provisions of this
Agreement and that none of the events or others set out in
Clauses 4.1.10, 4.1.11 and 4.1.12 have occurred;
(i) the Escrow Agreement in the form set out in Schedule 4.3.1
(i) signed by the Sellers and the escrow agent;
(j) a certified copy of the minutes of the works council of the
Companies evidencing the advice rendered on the Transaction;
(k) written evidence that the consents or approvals required from
third parties in relation to the material contracts listed in
Schedule 5.18.3 have been obtained;
(l) evidence of disposal of the Excluded Businesses (other than
Promoreal, SCI L'Avron, SCI du 48/54 ▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
du ▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ 14 rue ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and Belvar which
will be disposed after Completion and no later than 30 June
2002) for no less than the amount in aggregate set out in
Schedule 4.3.1 (m); it being specified that no warranty shall
be provided concerning the Excluded Businesses sold to the
Sellers' Affiliates and that warranties concerning the
Excluded Businesses sold to third parties not being a
Sellers' Affiliate will be allowed since the Sellers will
indemnify the Companies as set out in Clause 8.1.1 (c).
4.3.2 At the date of Completion, the Buyer shall deliver to the Sellers
28
(a) evidence of a transfer to JCB for value as at the date of
Completion of a sum equal to the Cash Price and the Estimated
Net Profit;
(b) documentation that the IFG Shares have been issued and
registered with the Sellers and the Non-Family Shareholders
as owners of the IFG Shares in the proportion stated in
Clause 3.3;
(c) the Escrow Agreement signed by the Buyer;
(d) a certificate signed by the Buyer drawn up in the form
attached at Schedule 4.3.2 (d), stating that the
representations and warranties contained in this Agreement
are complete and correct at the date of Completion, that the
Buyer has complied with those obligations to which it is
subject in accordance with the provisions of this Agreement
and that none of the events or others set out in Clauses
4.1.18 and 4.1.19 have occurred;
(e) the documents referred to in Clause 7.1;
(f) evidence of the appointment of JCB President and of the
directors of the Subsidiaries on the terms set out in
Schedule 4.1.7 (iii).
4.4 Operations after Completion
The Buyer and the Sellers will co-operate fully to ensure that the
following matters are completed as soon as possible after Completion:
(a) legal publicity formalities relating to the decisions of the
shareholders meetings of the Companies held at Completion;
(b) implementation of the rebranding plan for the Companies;
(c) registration by the Company of the following internet site
names: ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇; ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇.
4.5 Property Management Joint Venture
4.5.1 On 5 September 2000, the Company and Bourdais on the one hand and
SCIC and GFF (hereafter collectively referred to as "GFF") on the
other hand entered into the Property Management Joint Venture.
The Property Management Joint Venture provides for the termination
of the contract, should GFF and Bourdais not agree on the legal
and financial terms (provided for by clause 3.1 of the contract)
before 31 December 2000.
The parties to the Property Management Joint Venture did not reach
an agreement before 31 December 2000. No formal and written
amendment to the Property Management Joint Venture has been
executed to extend the time limit granted to reach a final
agreement on the terms still to be agreed.
As a result of the above and according to the latest discussions
between GFF and Bourdais, GFF and Bourdais have agreed on the sale
of SPGI and ▇▇▇▇▇▇ &
29
Bourdais to GFF. GFF and Bourdais intend to enter into new
discussions as soon as possible with the Buyer in view of agreeing
on the terms and conditions of a new property management joint
venture agreement.
4.5.2 The parties hereby undertake to fully co-operate to allow the
Company and Bourdais to come to an agreement with SCIC and GFF
providing, based upon Clause 4.5.1, for either (i) the setting up
of a new property management joint venture taking into account the
change of control of the Company and Bourdais and satisfactory for
the Sellers and the Buyer or (ii) the management of the
consequences of the failure to set up the initially contemplated
Property Management Joint Venture under satisfactory terms for
both the Company and GFF group as well as for both the Sellers and
the Buyer. The Sellers will and will procure that the Companies
allow the Buyer to be actively involved in the negotiations with
SCIC and GFF, and the Sellers, the Companies and the Buyer will
consult with each other prior to any decision being taken in
respect of the relationship between the Companies and GFF in
relation to property management.
4.6 Real property
The Companies occupy the premises of which a list is set out in Schedule
4.6.(a) by virtue of financial leases (credit-bail immobilier). The
Parties hereby agree that these financial leases will be assigned to a
Sellers' Affiliate which at Completion will enter into a commercial
sub-lease (a model of which is set out in Schedule 4.6.(b)) with
Bourdais.
In the event that within two years of the date of Completion all or any
part of the premises identified in Schedule 4.6.(c) are sold or
otherwise disposed of, directly or indirectly (e.g. by way of assignment
of financial lease(s), disposal of the shares of the Company(ies) owning
the premises...) by the Sellers' Affiliates which own them and/or to
which they are assigned under this clause, the capital gain made by the
Sellers' Affiliates on such sale shall be split equally between such
Sellers' Affiliates and Bourdais. A separate agreement detailing the
provisions of this sub-clause shall be entered into by the Sellers'
Affiliates and Bourdais at the latest at the Completion Date
substantially on the terms of the draft attached as Schedule 4.6(d). An
example of the calculation of the split is also set out in Schedule
4.6.(d).
A Sellers' Affiliate is to purchase the premises of which a list is set
out in Schedule 4.6.(e), and will enter into a commercial lease (a copy
of which is set out in Schedule 4.6.(f)) with Bourdais.
SCI 160 Haussmann and Bourdais will enter into a new commercial lease a
copy of which is attached as Schedule 4.6(g) at Completion at the
latest.
SECTION 2 - REPRESENTATIONS AND WARRANTIES
5. REPRESENTATIONS AND WARRANTIES OF THE SELLERS
30
The Parties expressly recognise that the representations and warranties
contained in this Clause 5 constitute a necessary and determining
condition of Buyer's undertaking to purchase the Shares under the terms
of this Agreement. Without prejudice to any legal warranties, the
Sellers represent and warrant the following at the Date of this
Agreement as well as, unless otherwise stated, at the date of Completion
pursuant, inter alia, to the certificate referred to in Clause 4.3.1
(h):
5.1 Capacity of the Sellers
5.1.1 The Sellers have full capacity to enter into this Agreement, to
perform their obligations under this Agreement and to benefit from
the rights contained herein.
5.1.2 With the exception of those which are a Condition Precedent, there
exists no consent, authorisation or judicial decision which is
necessary for the Sellers to execute and to perform their
obligations under this Agreement and which has not yet been
obtained. The Sellers represent, in this respect, that they have
satisfied in accordance with the conditions required by Article
L.432-1 of the Labour Code (Code du Travail) all of their
obligations which are set out therein.
5.1.3 This Agreement validly binds the Sellers in accordance with its
terms.
5.2 Incorporation of the Companies
5.2.1 The Companies have been duly incorporated, validly exist, are
fully entitled to own their assets and carry on their activity.
The Companies are validly registered and have validly registered
their registered offices as well as their branch offices. The
Companies are not subject to any proceedings, whether commenced or
not, with a view to preventing or settling difficulties in the
business (prevention et reglement amiable des difficultes des
entreprises) nor are the Companies subject to reorganisation or
liquidation proceedings and there are no grounds for making one of
the Companies subject to such proceedings. Likewise, they are not,
nor have they ever been the object of a petition seeking to
declare their dissolution or their nullity.
5.2.2 The corporate bodies of the Company and the Subsidiaries function
in accordance with applicable laws and regulations and all the
register, books and documents (especially relating to accounting
matters) of the Company and the Subsidiaries have been and are
regularly maintained.
5.3 Share capital
5.3.1 A up-to-date list of the shareholders of each of the Companies as
at the Date of the Agreement is set out in Schedule 5.3.1.
5.3.2 The Shares, the Subsidiaries Shares and the Other Shares make up
all of the share capital of the Companies.
5.3.3 The Shares, the Subsidiaries Shares, the Other Shares and the
Warrants are the only financial securities issued by the
Companies.
31
5.3.4 The Shares, the Subsidiaries Shares and the Other Shares are fully
paid-up. They have been validly issued and the Shares, the
Subsidiaries Shares and Other Shares are transferable in the
conditions set forth in the Companies' respective by-laws.
5.3.5 Except as set out in Schedule 5.3.5, the Shares are free from all
Encumbrances.
5.3.6 The Sellers and the Companies have full ownership of the Shares
and Subsidiaries Shares they own as described in Schedule 5.3.1.
The Sellers and the Non Family Shareholders who have agreed to
sell their shares in the Company to the Buyer as provided in this
Agreement will have at Completion full ownership of at least 95%
of the Shares and the Company will hold 100% of Bourdais Gerance
and at least 95% of the share capital and the voting rights of
Bourdais and Bourdais will hold at least 95% of the shares in
Bourdais Expertises SA and 100% of the share capital and voting
rights of the other Subsidiaries. The rights of ownership of the
Sellers and of the Companies at Completion over the Shares and the
Subsidiaries Shares will be regular and will not give grounds for
opposition by a third party.
5.3.7 Except as set out in Schedule 1.1.1(m), the Companies have not
given any undertaking whatsoever to increase their share capital
through options, conversions, exchanges or any other means. The
Companies have not put in place nor taken any measure to put in
place, any plan to subscribe for or to buy shares (plans d'options
ou de souscription d'actions).
5.3.8 Except as set out in Schedule 5.3.8, as at Completion there is no
agreement or contract in respect of the Shares and the
Subsidiaries Shares binding the shareholders or members of the
Companies between themselves or against any third party.
5.4 Interests- Profit sharing agreements
5.4.1 Except as set out in Schedule 5.4.1 (i), the Companies are not the
owners of any direct or indirect interest of whatever amount in a
company or in an entity where the partners liability is joint and
several and/or indefinite and except as set out in Schedule 5.4.1
(ii) have never been partners or shareholders of entities of this
nature in respect for which they may still be liable. No Company
holds a directorship in or is an officer of a company other than
the Companies, nor can it be held to be a de facto manager, it
being specified that JCB is a member of the board of the companies
listed in Schedule 6.6.6.
5.4.2 Except for the legal compulsory regime for interested salaried
employees, the Companies are not bound nor have they undertaken to
be bound by any contract or agreement seeking to share all or part
of the profits attributable to the Shares and the Subsidiaries
Shares with any third party other than in the ordinary course of
business.
5.4.3 The obligations and liabilities of the Companies in respect of the
minority shareholdings in SEM 92, Immob Aquitaine, FNAIM and GIE
Immostat are
32
limited to the amount of their contribution to the share capital
of each of those companies.
5.5 French Completion Accounts
The French Completion Accounts have been prepared in accordance with the
books and records of the Companies in conformity with the Accounting
Methods and Principles applied on a basis consistent with those applied
by the Companies in preparing previous accounts. The French Completion
Accounts are true and accurate (reguliers et sinceres) and give a fair
view (image fidele) of the financial situation and of the assets and
liabilities of the Companies as at 31 March 2001 as well as of the
operating result during the corresponding period.
5.6 Off balance sheet liabilities
5.6.1 All the liabilities, whether or not contingent, of the Companies
are reflected in the French Completion Accounts in accordance with
the Accounting Methods and Principles and sufficient provisions in
accordance with the Accounting Methods and Principles have been
booked in respect thereof.
5.6.2 The approval of the accounts in relation to the current financial
year by the Buyer in a shareholders meeting of the Company or by
the Company in a shareholders meeting of the Subsidiaries will not
be deemed to derogate from the representations and warranties
contained herein nor will it exempt the Sellers from any
liabilities.
5.6.3 Except as set out in Schedule 5.6.3 the Companies have not agreed
to any security, charge, guarantee, encumbrance or letter of
comfort for the performance of contractual undertakings either by
third parties or by the Companies or by the Sellers other than in
the ordinary course of business.
5.6.4 Except for as set out in Schedule 5.6.4, the Sellers and/or the
Sellers' Affiliates have not given any security, charge,
guarantee, pledge or letter of comfort for the performance of any
of the undertakings of the Companies.
5.6.5 There exist no off balance sheet liabilities other than those
mentioned in the French Completion Accounts and in Schedule 5.6.5.
5.7 Corporate officers and employees of the Companies
5.7.1 The list of salaried employees and corporate officers of the
Companies set out in Schedule 5.7.1 contains details of their
contracts, age, seniority, category and classification as the case
may be, as well as their remuneration (including all bonuses and
benefits in kind).
5.7.2 No person other than the employees listed in Schedule 5.7.2 can
claim to be in a position of subordination (lien de subordination)
with any of the Companies.
5.7.3 Copies of agreements and contracts entered into by the Companies
with the Executives are set out in Schedule 5.7.3 (i). At the Date
of the Agreement, except as set out in Schedule 5.7.3 (i), none of
the individuals referred to in the
33
said Schedule has given or been given notice or to the Sellers'
knowledge threatened to terminate his relationship with the
Companies or indicated that he is considering terminating his
position.
5.7.4 Schedule 5.7.4 defines for each of the Companies the applicable
collective agreements and details in respect of each Company and
for each distinct entity (etablissement distinct):
(a) the collective agreements (conventions collectives) and the
applicable internal agreements;
(b) the systems of remuneration including bonuses, commissions,
and benefits in kind in favour of all personnel or certain
categories of salaried employees;
(c) participation agreements, profit sharing, saving-plan
agreements and stock-option plans ;
(d) the system in respect of insurance and retirement benefits;
(e) the customs and practices applicable to all personnel or to
certain categories of salaried employees giving rise to
supplementary collective benefits and those arising out of
law or the collective agreements;
5.7.5 Set out in Schedule 5.7.5 for each of the Companies:
(a) standard work contracts of employees;
(b) standard work contracts of salaried executives not referred
to in Schedule 5.7.3;
(c) a copy of settlement agreements signed with the salaried
employees and corporate officers of the Companies entered
into within twelve (12) months preceding the Date of this
Agreement;
(d) all undertakings, other than those contained in the
settlement agreements referred to in (c) above, giving to the
salaried employees concerned additional benefits to those
referred in Schedules 5.7.1, 5.7.3 and 5.7.4;
(e) a note providing the essential terms of loan contracts
entered into between employees and the Companies and the sums
outstanding due on the Date of this Agreement.
5.7.6 The Companies comply and have always complied with all provisions
of labour law the violation of which carries a penalty such as but
not limited to, a fine or imprisonment and with all applicable
material social security provisions in particular in respect of
working hours, health and safety in the workplace. And there has
not been any material contravention of any agreement, contract or
undertaking referred to above.
34
5.7.7 The retirement plans, profit-sharing agreements, participation and
saving-plan agreements referred to in Schedule 5.7.4 are managed
in accordance with the applicable laws and regulations and the
sale and purchase of the Shares is not likely to modify the rights
of the employees or officers by virtue of the said plans. The
provisions registered in the French Completion Accounts cover all
obligations in that respect in accordance with the Accounting
Methods and Principles.
5.7.8 Except as set out in Schedule 5.7.8 and Schedule 5.7.5, except as
provided for in the French Completion Accounts and except for
those which may be the consequence of the disputes and/or
litigation set out in Schedule 5.7.15, the Companies do not have
any liabilities whatsoever towards former employees or managers
and in particular there are no obligations which have not yet been
satisfied in respect of a breach of any employment or service
contract or in respect of redundancy payments or payments for
unfair dismissal or for not having respected any obligation to
reinstate an employee.
5.7.9 Except as set out in Schedule 5.7.9, no written undertaking to
employ any additional person has been given by any of the
Companies which is still binding.
5.7.10 Except as set out in Schedule 5.7.10 (i) and Schedules 5.7.3 and
5.7.4, as the case may be, the corporate officers or managers of
the Companies do not benefit from any employment contract, service
contract with any one of the Companies or from any particular
benefit given by any of the Companies. Similarly, no corporate
officer has collected any remuneration from any of the Companies.
The list of the corporate officers or managers holding Other
Shares are set out in Schedule 5.7.10 (ii).
5.7.11 The Companies have not committed themselves in any way towards any
employee or officer of the Companies (or former employee or
officer of the companies) to pay a bonus or a remuneration of any
sort, the payment of which is conditional upon the completion of
part or all of the transactions contemplated by this Agreement.
The sale or exchange of shares in Bourdais to the Company by the
Non Family Shareholders and any other sale or exchange of shares
of the Subsidiaries will not be deemed to be such a payment.
5.7.12 Likewise Completion will not give rise to an obligation on the
part of the Companies to pay any sum, or to pay in advance or to
increase the amount due to any of the employees or officers
(whether still in employment or still officers or not). It is
agreed that this Section shall not apply where any Employee leaves
or is dismissed after Completion.
5.7.13 Except as set out in Schedule 5.7.13, there is no collective
redundancy or social plan for whatever reason in the Companies and
there have been no collective redundancies during the previous
twelve (12) months.
35
5.7.14 For the past twelve (12) months, there has not been any personnel
collective conflict (conflit collectif) in the Companies and there
exists no threat of such conflict.
5.7.15 Schedule 5.7.15 sets out (i) the current employment litigation
(including all disputes with the collection bodies of the social
security contributions and unemployment benefits or similar bodies
as well as dispute and/or litigation with the labour
administration) and details the parties who are subject to such
proceedings, the subject-matter of the litigation, the stage of
the proceedings, the sums claimed from the Company concerned, as
well as the amount of the provisions made for such proceedings in
the French Completion Accounts, and (ii) the disputes and/or
litigation which the Companies estimate they may be involved in
and the possible sums due in this respect.
5.7.16 Schedule 5.7.16 lists the material observations, investigation,
letters before action and minutes made by the Labour Inspectors
(Inspecteur du Travail) having jurisdiction over the Companies and
their branches (etablissements) over the course of the previous
two (2) years together with a description of the corrective action
taken, as the case may be. The works provided for in the leases
set out in Schedules 4.6 (b), (f) and (g) will be sufficient for
compliance with the remarks made in Schedule 5.7.16.
5.7.17 Schedule 5.7.17 lists the controls, verifications and
reassessments carried out by the collection bodies for
contributions to the social security and unemployment insurance
during the past two (2) years with respect to the Companies,
together with a description of payments made and corrective
measures taken as a consequence, as well as a list of potential
reassessments which may be carried out in the future on the
present operations of the Companies.
5.8 Real Property
5.8.1 None of the Companies owns any building, land or premises.
5.8.2 Subject to Clause 4.6, the Companies are tenants of the Rented
Premises listed in Schedule 5.8.2. Except for those items set out
in the same Schedule, the leases or sub-leases in respect of the
Rented Premises are all commercial leases as governed by articles
of the Commercial Code. Subject to the same Schedule, the
Companies benefit from the commercial ownership in respect of the
Rented Premises and all publications and necessary authorisations
in this respect have been obtained. The Companies have complied
with their material obligations pursuant to the leases or
sub-leases and none of the Companies are subject to an order or
decision of non-renewal. To the Sellers' knowledge, there is no
risk that the Rented Premises be declared dangerous or unfit for
use, nor do they make it necessary for the occupiers thereof to
perform works with a view to complying with the applicable
regulations, bearing in mind the activities currently performed
therein. The Companies are up to date in payment of all due rent,
and have not received any notice of pending rent reviews,
increased costs, dilapidations or other which would amend their
obligations under the leases or sub-leases listed in Schedule
5.8.2.
36
5.8.3 The Rented Premises are, together with their equipment, in a good
state of repair.
5.8.4 The financial leases or those leases containing a purchase option
in respect of the premises, the leases or the sub-leases in
respect of the Rented Premises are not subject to any contentious
opposition save for the disputes and litigation referred to in
Clause 5.16. To the Seller's knowledge, there does not exist any
event which may lead to the termination of the leases or
sub-leases or which may render the leases or sub-leases void.
5.8.5 Except as set out in Schedule 5.8.5, the Companies have not
granted any leases or sub-leases to a third party. All of the
Rented Premises are used for the needs of their activity to the
exclusion of all personal and employee accommodation needs.
5.8.6 No decision has been notified by an administrative authority which
may restrict or modify the use by the Companies of the Rented
Premises.
5.8.7 Except as set out in Schedule 5.8.7 (e.g. the Premises), the
Rented Premises constitute all the real property necessary for the
Companies to carry out their activities whatever such activities
may be and there is no other lease, financial lease or other title
of occupation in respect of the fixed assets other than the Rented
Premises.
5.8.8 Except as set out in Schedule 5.8.8, there exists no undertaking
or obligation to buy real property, to enter into a financial
lease or to enter into a lease given by the Companies.
5.8.9 As a result of the assignment of the financial leases referred to
in Clause 4.1.9 none of the Companies will have or incur any
obligation, expense or liability of any nature pursuant to such
financial leases.
5.9 Assets
5.9.1 The Companies have good title to all of the material Assets used
in their activity except those Assets which they use by virtue of
financial lease contracts or any other lease, each of which is set
out in Schedule 5.9.1. The material Assets are free from any
Encumbrance or third party rights. The material Assets exist, are
in the possession of the Companies and constitute all of the
material Assets which are necessary for the carrying out of the
activities of the Companies in their ordinary business.
5.9.2 All the material Assets are in a good condition and working order,
fit for their particular purpose and are well maintained and
repaired.
5.9.3 All the financial leases and lease contracts in respect of the
material Assets are in force, consist of contracts entered into
under normal conditions, and have not been and will not be
terminated before the date of Completion other than in the
ordinary course of business.
37
5.9.4 The Companies will be able to validly exercise on the appropriate
date the options that they hold in respect of the financial
leases.
5.10 Receivables- Provisions
5.10.1 In the Companies' reasonable judgement, the receivables, net of
provisions, shown in the French Completion Accounts which remain
outstanding at the Last Accounting Date are certain, liquid and
due at the Date of this Agreement or will be on the date on which
they are due and payable; they have been provided for in
accordance with the Accounting Methods and Principles. To the
Sellers' knowledge, none of the receivables are subject to a
counterclaim or indemnities and no receivable due and payable
before or at the Date of this Agreement has not been paid except
those receivables provided for in the French Completion Accounts.
The receivables, net of any provisions booked in the French
Completion Accounts, have been or will be paid within six months
of Completion except as stated in Schedule 5.10.1.
5.10.2 The receivables which have arisen and have been booked in
accordance with Accounting Methods and Principles or will arise
and will be booked between 1 April 2001 and the date of Completion
will be paid within six months of Completion for the amount net of
any provisions for which they have been booked in the accounting
records of the Companies in accordance with Accounting Methods and
Principles, except as stated in Schedule 5.10.2.
5.10.3 The Companies have made provisions in accordance with the
Accounting Methods and Principles for rebates, discounts and other
benefits and undertakings agreed to with their clientele whether
immediate or annual and more generally, all provisions necessary
in accordance with the Accounting Methods and Principles have been
made for all impositions direct or indirect and which are or could
be a burden on the Companies.
5.11 Business
The Companies are owners of their business without any restriction. The
businesses of the Companies have always been run (and are run) in a
normal and proper way with the object of maintaining their activities
and preserving their existence as businesses. They are not subject to
any Encumbrance and are not subject to any leasing arrangements
(location gerance).
5.12 Intellectual Property Rights and software rights
5.12.1 The Companies are without restriction legitimate owners of the
Intellectual Property Rights that they use in carrying out their
activities. A list of Intellectual Property Rights indicating
their lodging and/or registration in France, other countries and
internationally when such registration is required by the
applicable legislation, is set out in Schedule 5.12.1. These
registrations and/or lodging with the appropriate authority are
regular and enforceable and cannot be the subject of any
opposition whatsoever in particular through lack of payment or
insufficiency of use.
38
5.12.2 Except as set out in Schedule 5.12.2 and except for the use of the
"ONCOR" brand name, the Companies do not use any Intellectual
Property Right belonging to third parties and have never been
informed of any claim in this respect.
5.12.3 The Companies are not aware of, and have not drawn up any claim
nor undertaken any action concerning, the use by a third party of
the Intellectual Property Rights.
5.12.4 Schedule 5.12.4 details the computer software used by the
Companies and sets out for each of them, whether such computer
software belongs to the Companies or whether one or more of the
Companies has a licence in respect of it. The Companies have not
granted a licence to any third party in respect of the computer
software belonging to them and they have no knowledge of any use
of such computer software by any third party. None of the
Companies use without authorisation, computer software belonging
to third parties and have not been informed of any claim in this
respect.
5.12.5 The Intellectual Property Rights and computer software listed in
Schedules 5.12.1 and 5.12.4 constitute all of the intellectual
property rights and computer software necessary for the carrying
out of the activities of the Companies in the ordinary course of
business as carried out in the twelve (12) months preceding the
Date of the Agreement.
5.12.6 Except as set out in Schedule 5.12.6, no entity other than the
Companies is entitled to use, or to the Sellers' knowledge uses,
the Bourdais name.
5.13 Insurance
5.13.1 Schedule 5.13.1 lists all the insurance policies entered into by
the Companies.
5.13.2 These policies cover all the property and assets and extend to all
risks which have to be or are normally insured against with regard
to the activity carried out by the Companies pursuant to usual and
standard conditions, and in particular, they cover operating loss
and professional liability.
5.13.3 Schedule 5.13.3 sets out the incidents for the previous two (2)
accounting periods in respect of which the Companies have made
claims or notified potential claims under the policies set out in
Schedule 5.13.1 together with the amount of payments made by the
insurance companies under such policies which exceed FRF 100,000.
5.13.4 The Companies are up-to-date with the payment of their premiums in
respect of the policies mentioned in Schedule 5.13.1 and have
complied with all formalities and contractual clauses contained in
such policies; none of the Companies has been informed by the
insurance companies concerned of their intention to increase the
premiums, or to terminate the policies or not to renew them.
5.14 Loans
39
5.14.1 The Companies benefit from medium and long-term loans and other
financial aids whether or not repayable, as set out in Schedule
5.14.1 (which sets out notably the amount, the duration and the
guarantees in respect of the loans in question).
5.14.2 Set out in Schedule 5.14.2 and Schedule 4.3.1(m), are loans and
other financial aids given by the Companies to third parties or
between the Companies themselves.
5.14.3 All of the loans and financial aids have been regularly given and
contain normal and standard conditions.
5.14.4 The Companies comply in all respects with their contractual
obligations pursuant to the loans set out in Schedule 5.14.1. Such
loans are not subject to any contentious opposition, except for
those disputes and litigation referred to in Clause 5.16.
5.14.5 Except for those items set out in Schedule 5.14.5, the Companies
have not been granted any subsidy or State aid and have not
benefited from any forgiveness of debt.
5.14.6 The loans to the Excluded Businesses and the amounts of share
capital in the Excluded Businesses will not vary from the amounts
shown in Schedule 4.3.1(m) until the date of disposal of any
Excluded Business. For the avoidance of doubt, any breach of this
clause which is remedied by application of Clause 3.11 shall not
be a Loss and shall not be indemnifiable under this Agreement.
5.15 Environment
No employee or former employee of the Companies suffers or is likely to
suffer from illness or disability as a result of exposure in the context
of his/her activities in the Companies to any toxic substances and in
particular asbestos.
5.16 Litigation
5.16.1 Subject to the information contained in Schedule 5.16.1, none of
the Companies is subject to any claim from third parties,
contentious or non-contentious, for an individual sum in excess of
FRF 200,000 and the total amount of third party claims,
contentious or not, of an individual amount less than or equal to
FRF 200,000 does not exceed FRF 1,000,000.
5.16.2 Except for the litigation described in Schedule 5.16.2, the
Companies are not subject to any litigation, legal proceedings,
investigation or administrative proceedings or arbitration, for a
claim in excess of FRF 200,000 and to the Sellers' knowledge there
is no fact or event which suggests that such proceedings may
arise.
5.16.3 None of the sanctions set out in clauses 131-37 to 131-49 of the
new French Penal Code (Nouveau Code Penal) have been pronounced
against the
40
Companies. In the same manner, to the Sellers' knowledge no
judicial procedure is under way which might result in the
Companies being made subject to the aforementioned sanctions.
5.16.4 In the Companies' reasonable judgement, any litigation which the
Companies are or may be subjected to is sufficiently provided for
in the French Completion Accounts to guarantee all risks and
liabilities associated with such litigation.
5.16.5 The Companies have not been notified by any administrative body
whatsoever of a breach of a legal or regulatory provision, and the
Companies have not been subject to any judgement or order
affecting them or affecting their activities or their assets or
which could affect their financial situation.
5.17 Customers
5.17.1 Schedule 5.17.1 contains a list of the clients who generated more
than 1% of the turnover of any of the Companies over the twelve
(12) months to 31 March 2001, together with the current
contracts/mandates entered into with such clients, as well as
details of claims by such clients over the twelve (12) months to
31 March 2001.
5.17.2 Except as set out in Schedule 5.17.2, none of the Companies has
received any notice from any of the clients referred to in
Schedule 5.17.1 indicating that it intends to terminate its
relationship or significantly reduce its level of activity with
any or all of the Companies, immediately or in the future.
5.18 Contracts
5.18.1 Schedule 5.18.1 contains an exhaustive list of the contracts
entered into by any of the Companies:
(a) of a duration in excess of two (2) years and/or involving an
amount of FRF 500,000 or more per annum (other than any
employment contracts, commercial leases and other contracts
specifically referred to or listed in the other Schedules);
or
(b) which can only be terminated by the paying of an indemnity
greater than FRF 200,000 or requiring a period of notice of
more than three (3) months; or
(c) with sub-contractors; or
(d) with consultants; or
(e) limiting the ability of the Companies to carry out their
activities particularly by way of a non-compete clause in
respect of properties over 50,000 sq ft; or
(f) in respect of mergers, contributions, purchase of assets,
shares or parts including in particular representations and
warranties still in force; or
41
(g) organising with (a) third party(ies) the rules in respect of
the holding of share capital or the control of a company or
an undertaking; or
(h) setting forth the conditions to which one of the Companies
must comply in order to benefit from an aid or a grant from a
public authority; or
(i) in respect of mandates from banks or other financial
intermediaries; or
(j) in respect of research and development or the transfer of
know-how; or
(k) in respect of collaboration or franchise arrangements; or
(l) entered outside the normal course of business.
5.18.2 The Contracts referred to in Clause 5.18.1 (the "MATERIAL
CONTRACTS") are sufficiently legally documented to enable the
Companies to exercise their rights thereunder. The Material
Contracts have been validly entered into, are in full force and
effect and are not subject to any contentious or non-contentious
claim other than that described in Clause 5.16. The Companies have
complied with their material contractual obligations and to the
Sellers' knowledge and except as set out in Schedule 5.18.2 there
exists no event which may give rise to termination or amendment of
said contracts or render the contracts void or which may authorise
a third party to demand prompt payment or the payment of a penalty
clause or give rise to any liability on the part of any of the
Companies or their respective officers, directors or employees.
5.18.3 There exists no contract or undertaking containing a termination
clause or a prompt payment clause or a modification to the
provisions in the event of a change of control within the
Companies as defined in article L.233-16 of the Code de Commerce
or a change in the management team of the Companies except as
described in Schedule 5.18.3.
5.18.4 All payments provided for in the contract between Immo-by-tel and
Bourdais were made prior to 31 March 2001.
5.19 Relationships with the Sellers and the Executives
5.19.1 Except for relations and contracts referred to in Schedule 5.19.1,
the Companies have not and have never had relations with the
Sellers and the Executives other than as a company with its
shareholders and employees, and in particular none of the
Companies:
(a) is a creditor or a debtor of any of the Executives in respect
of any payment other than under contracts of employment
contained in Schedule 5.7.3 or is a creditor or a debtor of
any of the Sellers;
(b) uses, either gratuitously or for payment, any property
belonging to the Sellers or the Executives;
(c) has given to the Sellers or the Executives any particular
right over its assets; and
42
(d) has generally entered into with the Sellers or the Executives
any agreement or arrangement whether or not, written or
implied other than under contracts of employment contained in
Schedule 5.7.3
5.19.2 Sellers and Executives in Clause 5.19.1 shall include the Sellers'
Affiliates and the Executives' Affiliates.
5.20 Tax Regulations
5.20.1 The Companies have always been in accordance with the Tax
Regulations whether French or foreign.
5.20.2 The Companies are up to date in the payment of all Taxes. Adequate
provisions have been made in the French Completion Accounts in
accordance with the Accounting Methods and Principles for all
future Taxation.
5.20.3 The Companies have made and filed all declarations and have
complied with all formalities required by the Tax Regulations in
the form required and within the necessary time limit. These
declarations have always been and remain exact and complete and
contain no error, omission, inexactitude or material item which is
missing.
5.20.4 The basis and amount of Tax for which the Companies have been or
are liable has always been determined in a correct manner in
conformity with the Tax Regulations in force and are not to be
adjusted or reassessed.
5.20.5 The Companies are not the subject of any current tax examination
in relation to the Taxes and the Companies are not aware, directly
or indirectly, of any tax examination in respect of Taxes or any
enquiry instigated by an administrative authority leading, or
likely to lead to the payment of a Tax or a reassessment of any
Tax basis. The Companies have not received any notice of
reassessment nor have they otherwise been informed (in writing or
orally) by any administrative authority of its intention to carry
out any reassessment whatsoever.
5.20.6 The Companies have not entered into any agreement or transaction
which might be reassessed, rejected or re-qualified on the grounds
that the Companies have attempted to evade, circumvent or reduce
its Tax obligations or that of another person.
5.20.7 The Companies have not entered into any agreement or transaction
or obtained any concession, allowance or abatement in respect of a
Tax, with any administrative or political authority whatsoever,
that is not based on a strict application of the Tax Regulations.
5.20.8 The sale of the Shares will not lead to any Taxation on the
Company or one of the Companies or a loss or the placing into
question of any Tax advantage or of any particular tax regime.
5.20.9 The Companies benefit from the tax and social benefits as well as
the grants or other public subsidies listed in Schedule 5.20.9.
Except as set out in
43
Schedule 5.20.9, the Companies have not obtained any tax or
social benefit (such as an exemption or a modification of the
Taxation) which could be withdrawn, lost, or questioned. The
Companies comply with all provisions of all social and tax
benefits, all agreements or subsidies that they have received.
All tax-credits (including any tax concessions "avoirs fiscaux")
have been used in accordance with the Tax Regulations.
5.20.10 The Companies benefit from carried-forward tax losses (including
deferred depreciation) and "carry back" debts listed in Schedule
5.20.10. The debts referred to in this same Schedule are true,
accurate and fair in its sum and is capable of being repaid in
whole or used as payment for the Taxes that the company concerned
will be owed in the future.
5.20.11 The Companies are not members of a tax group set-up in accordance
with the provisions of article 223 A and seq. of the ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Tax Code (Code General des Impots).
5.20.12 The Companies incorporated under the laws of France are and have
always been exclusively registered in France for the purpose of
Taxes.
5.20.13 None of the Companies uses an entity or holds directly or
indirectly shares, parts, financial rights, or voting rights in a
company or a group falling within the conditions of article 209 B
of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Tax Code (Code General des Impots). None of
the Companies owes sums, or has made payments or transfers
falling within article 238 A of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Tax Code (Code
General des Impots). None of the Companies has transferred assets
outside France in circumstances defined in article 238 bis-0 I of
the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Tax Code (Code General des Impots). The
Companies are not and have never been a service supplier within
the meaning of article 155 A of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Tax Code (Code
General des Impots).
5.20.14 The Companies have never been party to a transfer, sale,
exchange, contribution or assignment of any kind, for which they
would not have paid registration duties, contribution or
transformation fees, stamp duty, real estate registration taxes
or any other charge which they would be legally or contractually
bound to pay.
5.20.15 With the exception of those items set out in Schedule 5.20.15,
none of the Companies benefit from a particular tax regime
conditional to an undertaking given on their part. For those
Companies benefiting from such a regime, the undertakings subject
to which the particular tax regime has been granted have always
been and remain fully respected.
5.20.16 Except as detailed in Schedule 5.20.16, none of the Companies
benefit or have benefited from a grace period, deferred or change
in levy, due to the occurrence of an event before the date of
Completion.
44
5.20.17 Except as indicated in Schedule 5.20.17, the value of the assets
and liabilities of the Companies appearing in the French
Completion Accounts corresponds to the tax value of the said
assets and liabilities.
5.20.18 The Companies, which have been party to any restructuring
operation (such as a merger, partial contribution of assets,
assets contributed to capital exchange or contribution of shares
or otherwise) have regularly entered into all undertakings giving
rise to the special tax regime which they have called upon and
which they have followed in the course and following such
restructuring operations. Such undertakings have always been and
are still complied with.
5.20.19 The Companies possess all the documents necessary to justify the
information contained in the documents or declarations referred
to in Clause 5.20.3 as well as their decisions in respect of the
application of the Tax Regulations. The Companies possess all the
documents necessary to prove the existence and amount of all
deferrable deficits, tax-credits, tax concessions (avoir fiscal)
or claims against a tax authority which they could have recourse
to or from which they could obtain reimbursement. More generally,
the Companies satisfy their legal and regulatory obligations
(such as commercial regulations) regarding the period during
which they must maintain certain documents.
5.21 Bank accounts, delegations of power, etc.
5.21.1 Schedule 5.21.1 lists the bank accounts and safety deposits in
the name of the Companies and sets out the authorised signatories
as well as the required conditions, in particular in relation to
joint signatories, for the operation of the accounts and access
to the safety deposits.
5.21.2 Schedule 5.21.2 contains a list of all nominated signatories,
delegations of power, proxies and authorisations of whatever
nature and form granted by the Companies to any person for other
purposes than the operation of bank accounts.
5.22 Impact of the introduction of the Single European Currency
No investment is necessary in order to deal adequately with the
introduction of the Single European Currency or has been insufficiently
provided for.
5.23 Authorisations and other permits
5.23.1 In the countries where the Companies exercise an activity, or in
those countries affected by the activities of the Companies:
(a) the Companies and/or the employees, as the case maybe, have
all the Authorisations necessary for the exercise of their
activity, such as it is currently exercised. These
Authorisations, a list of which appears as Schedule 5.23.1,
are in full force at the date of Completion and will remain
in force for the duration for which they were granted;
45
(b) the Companies and/or the employees, as the case maybe, are
members of all professional organisations which are directly
or indirectly necessary for the carrying out of their
activities;
(c) the Companies or the employees, as the case maybe, have not
received any notification from a competent authority
bringing into question the Authorisations or substantially
modifying their contents or casting doubt on their renewal,
except for those items set out in Schedule 5.23.1.
5.23.2 There exists no fact or event capable of leading to the
revocation, suspension or the placing into question of the
Authorisations applicable to the Companies and/or the employees,
as the case maybe, or which may lead to the liability of the
Companies or the liability of their managers, officers or
employees.
5.24 Laws and regulations
5.24.1 The Companies have always complied with the material provisions
of all laws and regulations (for the property transaction
business in accordance with usual practice and in the same manner
as their competitors) as well as all time-limits of all
authorities or other administrative bodies which are or have been
applicable to them.
5.24.2 No criminal sanction has been pronounced against the Sellers, the
managers in fact or in law of the Companies, or the holders of
the Authorisations. In the same manner, no proceedings are
currently under way which might lead to the prosecution of the
Sellers, the managers in fact or in law of the Companies or the
holders of the Authorisations.
5.24.3 The Companies will not be held criminally liable in relation to a
breach of any law or regulation further to the terms of article
121-2 of the new French Penal Code (Nouveau Code Penal).
5.24.4 Except for as set out in Schedule 5.24.4, the Sellers, the
managers in fact or in law of the Companies or the holders of
Authorisations cannot be held criminally liable by virtue of any
offence as provided for in legislation or applicable regulations.
5.24.5 No Company is a party to or implicated in an agreement, decision,
association or concerted practice nor has put into effect a
practice or decision:
(a) prohibited by articles 85 and 86 of the Treaty of Rome or by
national legislation relating to competition law;
(b) has been made the subject of a demand of declaration of
inapplicability or negative attestation or exemption by the
European Commission or national competition authorities or
an undertaking from the European Commission or national
competition authorities.
46
5.24.6 No authorisation, whether or not administrative, is necessary in
respect of the purchase of the Shares except the shareholders'
approval set out in Clause 4.3.1 (g) since neither IFG nor the
Buyer has any business in France.
5.25 Effect of the transfer of the Shares
To the Sellers' knowledge, the transfer of the Shares to the Buyer as
well as the completion by the Sellers of their obligations pursuant to
this Agreement will not affect in an adverse way the legal situation of
the Companies and except as set out in Schedule 5.25.1 will have no
effect on the rights and obligations of the Companies in respect of any
person. In particular but not exhaustively:
(a) They will not lead to the breach of any legal provision,
regulation or decision of any nature, judicial or otherwise;
(b) They will not give to any person the right to amend,
terminate or revoke any of the Authorisations or subsidies,
premiums, exemptions, tax credits, reduced-rate loans or
other public aid;
(c) They will not give any person the right to escape the terms
of a pledge, guarantee, comfort letter or any other document
of a similar nature based on security or the support of the
undertakings of the Companies.
5.26 Material adverse change
Since the Last Accounting Date and except as set out in Schedule 5.26 or
as provided for in this Agreement:
(a) There has occurred no identifiable event which affects or
could affect in a materially adverse way the assets and
liabilities, the financial situation or the operations of
the Companies taken as a whole; neither the financial
results of any of the Companies between 1 April 2001 and the
date of Completion nor the terrorist events of 11 September
2001 and their consequences as known at the Date of the
Agreement shall be considered an event which affects in a
materially adverse way the assets and liabilities, financial
situation, the operation or the ordinary course of business
of any of the Companies;
(b) There has been no declaration or payment of dividends or any
other distribution to shareholders, nor any depreciation,
increase or reduction in capital in the respect of the
Companies;
(c) The Companies have been managed in the ordinary course of
business (en bon pere de famille) and no undertaking or
obligation has been entered into which is outside the usual
management of the Companies or which is subject to unusual
terms and conditions;
(d) The activities of the Companies have been carried out in the
ordinary and normal course of business in such a way as to
ensure their continuity,
47
without significant alteration in their normal practice as
regards client advice and seeking new business, management
or operation;
(e) The Companies have not disposed or committed to dispose of
any material Assets other than in the ordinary course of
business;
(f) The Companies have in no way amended the Accounting Methods
and Principles nor have revalued any assets, or written-off
any debts or other assets which have been booked in the
accounts and exceed FRF 100,000.
5.27 Subject to the restrictions on transfer of the IFG Shares and the IFG
Top-Up Shares set forth in Clause 5.28, each of the Sellers and Non
Family Shareholders represents and warrants to, and acknowledges and
agrees with, IFG and the Buyer as follows:
5.27.1 none of the IFG Shares and IFG Top-Up Shares have been or will
be registered under the Securities Act, and such securities,
to the extent offered, are being offered to him/her outside
the United States in reliance on Regulation S;
5.27.2 he/she is not a U.S. person (as defined in Regulation S) and is
not acquiring the IFG Shares or the IFG Top-Up Shares for the
account or benefit of any such U.S. person;
5.27.3 for a period of one year following their respective date of
issue, he/she will resell the IFG Shares or the IFG Top-Up Shares
only: (i) pursuant to an effective registration statement
registering the IFG Shares and the IFG Top-Up Shares under the
Securities Act, (ii) in offshore transactions outside the United
States in accordance with Rule 903 or Rule 904 of Regulation S,
or (iii) pursuant to another available exemption from the
registration requirements of the Securities Act; and he/she will
not engage in hedging transactions with regard to the IFG Shares
or the IFG Top-Up Shares unless in compliance with the Securities
Act; and
5.27.4 he/she understands that IFG is required pursuant to Regulation S
to refuse to register the transfer of any IFG Shares or IFG
Top-Up Shares in violation of the restrictions stated in Clause
5.27.3 above, and any certificate representing the IFG Shares or
the IFG Top-UP Shares shall bear a legend containing the
acknowledgements and restrictions stated in Clauses 5.27.1 and
5.27.3 above.
5.28 To the extent that IFG Shares or IFG Top-Up Shares have become
transferable pursuant to Clause 5.27.3, each Seller and Non Family
Shareholder covenants to IFG and the Buyer that he/she will not without
the prior consent in writing of IFG dispose, except as provided under
Clause 5.29, of any of the IFG Shares or IFG Top-Up Shares to be issued
to him/her pursuant to this Agreement or any interest therein or any
securities of IFG received by him/her by way of dividends or
distributions in respect thereof or through subdivision, consolidation or
otherwise.
5.29 Each Seller's interest in the IFG Shares to be issued to him/her
pursuant to this Agreement shall become transferable as to 25% of such
IFG Shares every six months commencing on the anniversary date of
Completion. A certificate or certificates
48
representing the IFG Shares issued to each Seller shall be delivered to
such Seller bearing the legend referred to in this Clause.
5.30 Representations, Warranties and Schedules true and correct
The representations and warranties contained herein, as well as the
Schedules attached, are true, exact and complete as of the Date of this
Agreement, and the Sellers have disclosed in writing to the Buyer all
facts which in the Sellers' reasonable judgement, if they had been known
to the Buyer, would have changed its intention to purchase the Shares or
modified in a substantial way the conditions of its purchase.
5.31 Sellers' knowledge
Reference to Sellers' knowledge in this Agreement shall be construed as
the actual knowledge of any of the Sellers or knowledge which any of
them has or should have after reasonable inquiry.
6. OTHER OBLIGATIONS OF THE SELLERS
6.1 Shareholders' approval
The Sellers undertake to ensure that the Company gives consent to the
Buyer as well as to the transfer of the Shares in accordance with the
conditions of this Agreement.
6.2 Ownership of the shares
The Sellers undertake to allow the Buyer to review at a suitable time
before Completion the share transfer register, shareholders accounts,
share certificates and other documents evidencing the chain of ownership
of the Shares and the shares in the Subsidiaries.
6.3 Management of the Companies up to Completion
The Sellers warrant that from the Date of the Agreement until Completion
without the prior written approval of the Buyer given by ▇▇▇▇ ▇▇▇▇▇▇▇▇
and except as provided in this Agreement:
(a) no decision other than those referred to in this Agreement
will be taken by the Companies which affects or could affect
in a material and adverse way the assets and liabilities,
financial situation or the profitability of the Companies;
(b) no decision on the declaration or payment of dividends or
any other distribution to shareholders, nor any
depreciation, increase or reduction in capital will be taken
in respect of the Companies except regarding the steps to
distribute the Final Net Cash pursuant to Clause 3.4.;
(c) the Companies will be managed in the ordinary of business
(en bon pere de famille) and no undertaking or obligation
will be entered into which is outside the usual management
of the Companies or which is subject to unusual terms and
conditions;
49
(d) the activities of the Companies will be managed in the
ordinary and normal course of business and in such a way as
to ensure their continuity and without a significant
alteration in their normal practice as regards client advice
and seeking new business, management or operation;
(e) none of the Companies will dispose or commit to dispose of
any material Assets other than in ordinary course of
business;
(f) the Companies will not modify in any way the Accounting
Methods and Principles and will not revalue any assets, nor
write-off any debt or other assets which have been booked in
the accounts and exceed FRF 100,000;
(g) the Companies will enter into no new contracts for
individual commitments for any of the Companies exceeding
FRF 100,000;
(h) there will be no aggregate annual pay review, or individual
pay review for any employee at or above directeur level
within the Companies ;
(i) the Companies will not commit to any individual items of
capital expenditure above FRF 100,000;
(j) the Companies will make no commitment for expenditure by way
of a corporate acquisition;
(k) the Companies will not commit to any expenditure on signing
on bonuses, variations of senior executive service
contracts, or recruitment of personnel;
(l) the Companies will not create new branches, other than the
Marne-▇▇-▇▇▇▇▇▇ site which is included in the budget.
The approval of the Buyer must be requested in writing. If the
approval requested from the Buyer is not obtained within 5 (five)
days of receipt of such request by the Buyer, then the approval
of the Buyer is deemed to have been granted.
6.4 Situation at Completion
6.4.1 The Sellers warrant that all the representations and warranties
contained in Clause 5 above as updated in accordance with Clause
6.4.2 will be true and complete at the date of Completion as if
such representations and warranties had been given and granted as
that date.
6.4.2 The Sellers may only update the Schedules of this Agreement in
order to take into account changes linked to the normal and
ordinary course of business or which occurred after the Date of
the Agreement without having substantial and adverse effect on
the activities and operations of the Company. Other amendments to
the Schedules will be of no effect on the Sellers' obligation to
indemnify the Buyer in accordance with this Agreement.
50
6.4.3 The Sellers will produce and deliver to the Buyer at the date of
Completion a certificate drawn-up in accordance with the model
set out in Schedule 4.3.1 (h), certifying in particular the
completeness and accuracy of the representations and warranties
at the date of Completion.
6.5 Right of access
6.5.1 From the Date of this Agreement until Completion, the Sellers
undertake with reasonable notice from the Buyer to allow the
Buyer and its nominees and advisers reasonable access to the
premises of the Companies as well as to consult in the same way,
all accounting and corporate documents and more generally all
documents in respect of the activities of the Companies in view
of preparing for the integration of the Companies into the
Buyer's group. In the same view, the Sellers further undertake
that the salaried employees, corporate officers and advisers of
the Companies will collaborate fully with the Buyer.
6.5.2 The Sellers undertake to inform the Buyer without delay in
respect of all significant events occurring after the Date of the
Agreement likely to substantially and adversely affect the
activities and operations of the Companies (including all events
likely to adversely affect the financial results or evolutions
prospects of the Companies) together with each breach of a
substantial obligation.
6.6 Non-competition and confidentiality undertaking
6.6.1 Except as a representative of the Company or with the previous
written approval of the Board of the Company, JCB is prohibited
on his own behalf and on behalf of his Affiliates for whom he
shall be responsible, unless first authorised by the Buyer, for a
period of four years from the date of Completion:
(a) from undertaking directly or indirectly, within the area
nationally and in the countries of the European Union, any
activity which competes with or could have the effect of
competing with the activities of the Companies as they exist
at the Date of this Agreement, that is the Brokering and
Advisory Business and the Property Management Business; JCB
is prohibited in this respect in particular from being a
salaried employee, corporate officer, consultant, partner or
significant shareholder of any other business competing with
the Companies. For the purposes of this Clause, a
shareholding will be deemed significant if it represents
under whatever form more than 5% of the share capital or of
the voting rights of a competing entity; for the purpose of
clause 6.6.1 (a), the term Affiliate shall exclude the
descendants of the Sellers who may carry on competing
businesses but shall not trade in any manner under the name
Bourdais either on its own or in combination with another
name.
(b) from using or permitting the use of the name Bourdais in any
business which competes or could have the effect of
competing with the Brokering and Advisory Business and/or
the Property Management Business.
51
6.6.2 JCB is prohibited on his own behalf and on behalf of his
Affiliates for whom he shall be responsible, unless first
authorised by the Buyer, for a period of four years from the date
of Completion, from soliciting or encouraging the managers,
executives or salaried employees of the Companies to leave their
present or future functions within the Companies or from
recruiting directly or indirectly such managers, executives or
salaried employees.
6.6.3 JCB is prohibited on his own behalf and on behalf of his
Affiliates for whom he shall be responsible, unless first
authorised by the Buyer, for a period of four years from the date
of Completion, from soliciting or interfering with, or
endeavouring to entice away from any of the Companies any person,
firm, company or entity who was a client of any of the Companies
in the previous 12 months with whom JCB was concerned or had
personal contact in the previous 12 months.
6.6.4 JCB recognises that the consideration for the above obligations
is included in the Purchase Price; as a consequence, JCB is
prohibited from claiming against the Buyer and/or the Companies
in this respect.
6.6.5 Unless authorised by the Buyer in writing, the Sellers are
prohibited on their own behalf or on behalf of their Affiliates,
or of the managers, salaried employees or representatives of such
Affiliates for which they are responsible, for a period of five
(5) years from the date of Completion, to disclose to any person
or entity any confidential information in respect of the
Companies or their activities in particular in respect of
commercial strategy, research and development and clientele,
provided that such information:
(i) is not in the public domain unless as a result of a breach
of this Clause 6.6.4;
(ii) is not required to be disclosed by applicable laws or
regulations;
(iii) is not required to be disclosed for the defence of the
Sellers' interests;
(iv) for information concerning the Buyer, is not lawfully in
the possession of the Sellers prior to and independently
of communication by the Buyer.
6.6.6 For the purpose of Clause 6.6, the Buyer's and or the Company's
Board approval shall be deemed to be given in respect of (i) the
Excluded Businesses, (ii) any financial interest, office or
employment which JCB holds at the date hereof listed in Schedule
6.6.6, (iii) management of his personal and/or family assets
including shares of any company controlled by JCB and his family,
(iv) any item mentioned as an exception in JCB's terms of
appointment set out in Schedule 4.1.6 (ii) and Schedule 4.1.7
(iii).
6.7 Undertaking of exclusivity
52
The Sellers undertake neither to transfer the Shares to a third party,
nor to grant any third party any rights over the Shares or to take any
step nor to engage in any negotiation in relation to acquiring any
interest in the capital of the Companies for the duration of this
Agreement, in other words until 31 December 2001, which may be extended
pursuant to Clause 4.2.1.
6.8 The Sellers warrant that any expenditure incurred by any of the
Companies during the period from 1 April 2001 to Completion in respect
of any Excluded Businesses less any amount reimbursed in respect of such
expenditure to the Companies during the period from 1 April 2001 to
Completion shall be repaid to the Companies or form a reduction of Net
Realisable Value at Completion at the latest.
6.9 The Sellers undertake to repay, on first demand by the Buyer made by 31
December 2006 at the latest accompanied by evidence that the relevant
amount is due, any amount of taxes due in respect of the portion of
charges ("quote part de frais et charges") and any other taxes not
identified in Schedule 3.4.5 on the dividends distributed by the Company
to the Buyer - which will initially be neutralised for tax purposes by
virtue of the French tax group regime in respect of the Final Net Cash
received by the Buyer in application of the Clause 3.4.5.
6.10 The Sellers undertake to indemnify the Buyer and the Companies for any
Loss which they may suffer in respect of the sub-leases referred to in
Clause 5.8.5.
7. REPRESENTATIONS AND WARRANTIES OF THE BUYER
The following representations and warranties are made by IFG and the
Buyer at the Date of this Agreement and at Completion.
7.1 Capacity of IFG and the Buyer/IFG Shares
7.1.1 IFG and the Buyer represent and warrant to, and agree with, the
Sellers and the Non Family Shareholders as follows:
(a) Each of IFG and the Buyer is a corporation duly organised,
validly existing and in good standing under its laws of its
jurisdiction of organisation and has all requisite power and
authority to own, lease and operate its properties and to
carry on its businesses as now being conducted and is duly
qualified to do business and is in good standing in each
jurisdiction where the failure to be so qualified would have
a material adverse effect on IFG or the Buyer. IFG and the
Buyer have delivered to the Sellers and the Non Family
Shareholders complete and correct copies of their
certificates of incorporation and bylaws as amended;
(b) as of the date hereof the authorised capital stock of IFG
consists of 80,000,000 shares of common stock, par value
$0.01 per share ("Common Stock"), and 20,000,000 shares of
preferred stock, par value $0.01 per share ("Preferred
Stock"). At the close of business on 1st November 2001,
23,913,463 shares of Common Stock were issued; 22,410,863
shares of Common Stock were outstanding (1,502,600 of the
issued shares of
53
Common Stock are held in treasury); and 250,000 shares of
Preferred Stock designated Convertible Preferred Stock were
outstanding;
(c) each of IFG and the Buyer has all requisite corporate power
and authority to enter into this Agreement and to consummate
the transactions contemplated hereby. The execution and
delivery of this Agreement, and the consummation of the
transactions contemplated hereby (including the issuance of
the IFG Shares), have been duly authorised by all necessary
corporate action on the part of IFG and the Buyer. This
Agreement has been duly executed and delivered by IFG and
the Buyer and constitutes a valid and binding obligation of
IFG and the Buyer enforceable against IFG and the Buyer in
accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, or other similar laws
affecting the enforcement of creditors' rights generally and
except that the availability of equitable remedies,
including specific performance, is subject to the discretion
of the court before which any proceeding therefor may be
brought;
(d) IFG has filed all required forms, reports and documents with
the U.S. Securities and Exchange Commission (the "SEC")
since 1 January 2001, each of which has complied in all
material respects with all applicable requirements of the
U.S. Securities Act of 1933, as amended (the "Securities
Act"), and U.S. Securities Exchange Act of 1934, as amended
(the "Exchange Act"), each as in effect on the dates such
forms, reports and documents were filed;
(e) no filing, recording or registration with any court,
governmental authority or regulatory agency is required to
be obtained or made, and no authorisation, consent,
approval, license, order, registration, qualification or
decree is required from any court, governmental authority or
regulatory agency, in connection with (i) the execution and
delivery by IFG and the Buyer of this Agreement or the
performance of their obligations hereunder or (ii) the
offer, sale, and delivery of the IFG Shares in accordance
with the terms of this Agreement, except, in either case,
such as have been made or obtained and are in full force and
effect, and except for such as would not reasonably be
expected to have a material adverse effect on the ability of
IFG or the Buyer to perform their obligations hereunder or
to consummate the transaction contemplated hereby;
(f) neither the execution and delivery of this Agreement by IFG
and the Buyer nor the performance by IFG and the Buyer of
their obligations hereunder has resulted in or will result
in (i) any violation of any charter document of IFG or the
Buyer or conflict with or result in breach of any of the
terms or provisions of, or constitute a default or event of
default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets
of IFG or the Buyer under, any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or
instrument to which IFG or the Buyer is a party or by which
54
IFG or the Buyer may be bound or to which any of its
properties may be subject or (ii) any violation of any
existing applicable law, rule, regulation, judgement, order
or decree of any government, governmental instrumentality or
court, domestic or foreign, having jurisdiction over IFG or
the Buyer or any of its properties, except, in either case,
such as would not reasonably be expected to cause any
material adverse change in the condition, financial or
otherwise, or in the assets or operations of IFG or the
Buyer;
(g) the IFG Shares, when issued and delivered in accordance with
the terms of this Agreement, will be duly authorised,
legally and validly issued, fully paid and non-assessable
and title to the IFG Shares will be transferred free of any
liens or encumbrances other than those created or
contemplated by this Agreement (and the holders thereof will
not be subject to any personal liability in respect of the
debts and obligations of IFG or the Buyer solely by reason
only of being a holder thereof);
(h) assuming the accuracy of the representations made by the
Sellers in Clause 5.27, no registration under the Securities
Act is required for the offer, sale and delivery of the IFG
Shares by the Buyer to the Sellers and the Non Family
Shareholders in accordance with the terms of this Agreement;
(i) neither IFG nor the Buyer nor any of their "affiliates" (as
such term is defined in Rule 405 under the Securities Act)
or any person acting on behalf of any of them has engaged in
any "directed selling efforts" (as such term is defined in
Regulation S under the Securities Act ("Regulation S")) in
the United States with respect to the offer, sale and
delivery of the IFG Shares to the Sellers and the Non Family
Shareholders in accordance with the terms of the Agreement;
and
(j) IFG has delivered to the Sellers and the Non Family
Shareholders copies of its Form 10 (as amended), as filed
with the SEC on or about August 7, 1998, its Forms 10-Q for
the fiscal quarters ended 31 March 2001, 30 June 2001 and 30
September 2001, and its Form 10-K for the fiscal year ended
December 31, 2000 (such Form 10 (as amended), Forms 10-Q and
Form 10-K are referred to in this Clause as the "Disclosure
Documents"). Except insofar as the transactions contemplated
hereby are not reflected therein, (i) the Disclosure
Documents comply in all material respects with the
applicable requirements of the Exchange Act and the rules
and regulations thereunder, and (ii) the financial
statements of IFG contained in the Disclosure Documents (a)
were prepared in accordance with generally accepted
accounting principles in the United States, (b) fairly
present IFG's consolidated financial condition and
consolidated results of operations as of their respective
dates and for the periods then ended and (c) contain and
reflect all adjustments and accruals necessary for a fair
presentation of the IFG's consolidated financial condition
as of their respective dates, subject to, in the case of
unaudited financial
55
statements, normal year-end audit adjustments. The
Disclosure Documents, as of their respective dates, did not
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary in order to make the statements made therein in
the light of the circumstances under which they were made,
not misleading.
7.2 Incorporation of IFG and the Buyer
Each of IFG and the Buyer has been duly incorporated, validly exists, is
fully entitled to own its assets and carry on its activity. Each of IFG
and the Buyer is validly registered. Neither IFG nor the Buyer is
subject to any reorganisation or liquidation proceedings and there are
no grounds for making IFG or the Buyer subject to such proceedings.
Likewise neither IFG nor the Buyer is, nor have they ever been the
object of a petition seeking to declare their dissolution or their
nullity.
7.3 IFG Shares and IFG Top-Up Shares
7.3.1 The IFG Shares and IFG Top-Up Shares will be issued fully
paid-up. They will be validly issued.
7.3.2 The IFG Shares and IFG Top-Up Shares will be free from all
Encumbrances subject to the transfer restrictions set out in
Clauses 3.3.3, 3.6.7 and 3.7.6.
7.3.3 IFG is and at Completion will be a listed company with NYSE.
7.4 The number of IFG Shares and IFG Top Up Shares to be issued will be
subject to adjustment for stock splits, stock dividends,
recapitalisations and similar corporate events occurring between the
Date of the Agreement and the date of their issuance.
7.5 Reorganisation of the Companies
7.5.1 In the event that the Buyer were to decide to reorganise the
Companies prior to 31 December 2003, the Buyer undertakes as
follows:
(a) unless JCB resigns as President of the Company or is
terminated as President by the Company for Good Cause, JCB
will be allowed to continue to manage the Companies for the
remainder of the Earn-Out Period in a way not less
favourable to any material extent than his position as
president of the Companies as defined in the terms of
appointment set out in Schedule 4.1.6 (ii) and 4.1.7 (iii);
(b) JCB will be given access to the accounting documents
relating to the Companies for the purposes of verifying the
calculation of the Earn-Out payments due under this
Agreement;
(c) in the event of a planned merger (fusion) of the Company and
the Buyer during the Earn-Out Period, the Buyer shall
consult the Sellers and ensure that the Sellers' interests
in respect of the Earn-Out provisions of Clauses 3.8 and 3.9
are protected.
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7.5.2 In the event that the Buyer or IFG were to envisage the
sale prior to 31 December 2003 of the Companies or any
portion of the business of the Companies to an entity which
is not controlled by IFG, the Buyer undertakes to involve
JCB in the process of sale and allow him (i) to be aware of
negotiations in this regard at an early stage and (ii)
consult with JCB to ensure that his and the other Sellers'
interests derived from this Agreement in the context of the
contemplated transaction are protected.
7.5.3 Notwithstanding any reorganisation or sale of the
Companies, IFG and the Buyer shall remain liable for all
obligations towards the Sellers under this Agreement until
such obligations are extinguished.
7.5.4 The Buyer will procure that for the duration of the
Earn-Out Period the Company and Bourdais will remain
societes par actions simplifiee and that there be no
amendment of the clauses relating to the appointment,
dismissal or terms of reference of the President in the
articles of association or the relevant board decision of
either company on the terms set out in Schedule 4.1.6 (ii)
and 4.1.7 (iii).
7.6 Blocked Account
The Buyer undertakes not to dispose of the monies placed in the Blocked
Account for the duration of its obligations under Clause 3.8 or to give
any pledge on the monies in the Blocked Account.
7.7 Co-operation
During the Earn-Out Period, and in particular in the process of
approving the budget, the Buyer and JCB shall consult with each other in
good faith for purposes of maximising overall the interests of the
Companies and IFG with due regard for the Sellers' interest in the
Earn-Out. No Party to this Agreement shall pursue a course of conduct
whose sole purpose is to harm either the interests of the Companies, the
Buyer and IFG or the interests of the Sellers in the Earn-Out.
7.8 Accounting records
The Buyer shall ensure that the accounting records of the Companies for
periods following the date of Completion are kept in a manner allowing
calculation of the Earn-Out payments. The current auditor of the
Companies will be retained at least as co-auditor until the end of the
Earn-Out Period.
7.9 Non-compete
The Buyer undertakes for the duration of the Earn-Out Period not to
carry out directly or indirectly, in France, any activity which competes
with or could have the effect of competing with the Brokering and
Advisory Business and the Property Management Business as they are
operated at the Date of this Agreement, without prejudice to the
fee-sharing arrangement the current version of which is set out in
Schedule 7.9, any amendments to which will apply to Europe as a whole.
Part B of Schedule 7.9 is a further explanation of the rules, originally
written for the UK business. This does not form part
57
of the agreed fee-sharing arrangements for Insignia's European business,
but provides additional guidance on the way the rules are interpreted by
the Chief Executive.
7.10 Names of Companies
The Buyer undertakes for two years from Completion to retain Bourdais as
an element of the brand and corporate name of the Companies as
illustrated in Schedule 7.10 unless otherwise expressly agreed by JCB in
the form of a prior written approval. Beyond that two-year period and
for such time as any Earn-Out amounts are unpaid, the Buyer undertakes
that the Bourdais name will only be discontinued as an element of the
brand and corporate name of the Companies if the IFG Group adopts
another name globally.
7.11 Key-Man Insurance
The Buyer will subscribe to a key-man insurance policy on the life of
JCB in an amount of USD 20 million to cover the period of five years
from Completion. JCB undertakes to take any reasonable steps required to
permit the Buyer to subscribe such insurance policy and to comply with
the terms of the policy for its duration.
7.12 The Buyer undertakes to procure that the Companies will not terminate
the service agreement ("contrat d'assistance") entered into with
Engerand et ▇▇▇▇▇ and Cerip provided that such contract may be
terminated every year with 3 months' notice by either party with no
indemnity and that the services are provided at arms' length conditions.
The Buyer also undertakes to procure that the sub-leases entered into
with Excluded Businesses appearing in Schedule 5.8.5 be continued on
their terms.
7.13 Exoneration and indemnification in favour of the Sellers concerning
the Warrants
Any amount due or received by the Buyer and/or the Companies in respect
of the Warrants and the shares of the Company subscribed by the Warrant
Holders and the relevant loans entered into by Bourdais and the Warrant
Holders shall not be taken into account for the calculation of Valuation
EBITDA or Net Cash (the amounts due by the Companies shall be added
back) and no claim shall be made against the Sellers under this
Agreement in respect of the Warrants and the shares of the Company
subscribed by the Warrant Holders and the relevant loans entered into by
Bourdais and the Warrant Holders.
In particular, should the French Tax Authorities and/or URSSAF reassess
the sums received by the Warrant Holders in respect of the Warrants
and/or the shares of the Company subscribed by the Warrants Holders, in
whole or in part as a salary, any amount due by the Companies in respect
of such recharacterization shall not be taken into account for the
calculation of Valuation EBITDA (the amounts shall be added back), and
no claim shall be made against the Sellers under this Agreement and in
particular under Clause 8.
7.14 In the event that prior to 31 December 2004 any of the Companies
receives any amounts from a third party in respect of shareholdings in
FNAIM exceeding FRF 22,000, the amount exceeding FRF 22,000, capped at
FRF 172,000, shall be paid to the Sellers and the Non-Family
Shareholders in the proportion set out in Schedule 3.2(a).
58
7.15 In respect of any litigation which is resolved without recourse for an
amount less than the provision which has been booked in the French
Completion Accounts, the Buyer will pay to the Sellers and to the
Non-Family Shareholders in the proportion set out in Schedule 3.2(a),
the difference between such amount and the relevant provision.
SECTION 3 - INDEMNIFICATION
8. INDEMNIFICATION
8.1 Principle
8.1.1 The Sellers undertake to indemnify the Buyer, or any of the
Companies, against:
(a) any Loss that the Companies or the Buyer may suffer by
virtue of a reduction in the value of an item of assets or
an increase in the value of an item of liabilities resulting
from a liability not being accounted for or insufficient
provision being made for it in the French Completion
Accounts, as long as the cause or origin of this reduction
in assets or increase in liabilities arises prior to the
Last Accounting Date;
(b) any Loss that the Companies or the Buyer may suffer as a
result of any inaccuracy or omission in the representations
and warranties contained in Clause 5 as long as the cause or
origin of this inaccuracy or omission is prior to
Completion, or of the non-performance by the Sellers of any
of their obligations under this Agreement, provided that
such Loss has not been indemnified in full by the provisions
of Clause 8.1.1 (a) above;
(c) any Loss which the Companies or the Buyer may suffer in
respect of the Excluded Businesses or any other entities
other than the Companies, FNAIM, Immob Aquitaine, SEM 92 and
GIE Immostat, whether or not incorporated, in which any of
the Companies have or have had an interest, provided that
such Loss has not been indemnified in full by the provisions
of Clause 8.1.1(a) or (b) above. Any disclosure in the
Schedules will not limit this obligation and this obligation
will not be subject to Clause 9.3;
(d) any Loss which the Companies or the Buyer may suffer in
respect of any of the litigation disclosed in Schedules
5.16.1 and 5.16.2, for the amount in excess of the provision
made in respect of the relevant litigation in the French
Completion Accounts provided that such Loss has not been
indemnified in full by the provisions of Clause 8.1.1(a),
(b) or (c) above.
8.1.2 The obligation to indemnify also includes to all events which
occur between the Date of this Agreement and Completion and which
have the effect of rendering the representations, warranties and
undertakings contained in Section II incorrect or incomplete
(unless disclosed in accordance with Clause 6.4.2 or stated
expressly to be given at the Date of the Agreement) whether or
not the
59
Loss suffered could not be ascertained or was not ascertained
until after Completion.
8.2 Net Loss
8.2.1 The Sellers are only liable to indemnify the Net Loss. In this
respect, the total indemnity under this Clause 8 will be
calculated taking into account the following factors:
(a) If the event which forms the basis of a request for an
indemnity has given rise to the making of a provision in the
French Completion Accounts or the amount has been taken into
account in calculating the Final Net Cash or the Net Profit,
the amount of the indemnifiable Loss will be reduced by the
amount of the provision in the French Completion Accounts or
in the calculation of the Final Net Cash and the Net Profit
by the amount taken into account.
(b) If the event gives rise to an indemnity payment or insurance
indemnity by a third party to any of the Companies or to the
Buyer, the amount of indemnifiable Loss shall be reduced by
such payment. In the event that an indemnity payment in
respect of a Loss is made to any of the Companies or to the
Buyer after indemnification by the Sellers in respect of the
event giving rise to the Loss, the Buyer shall procure that
the amount of such indemnity be repaid to the Sellers in the
proportion and to the extent of the indemnification payment
made by them.
(c) Any tax adjustment which has the sole effect of transferring
an expense or an income from one financial year to another
within one of the Companies and which does not entail an
effective payment of Taxes will only be taken into account
in respect of interest and late payment penalties with
respect to the transfer of such expenditures or income.
(d) Any Tax due by the Buyer or, if the indemnity is paid to the
Companies, any Tax due by the relevant Company directly as a
result of payment of the indemnity provided that the Sellers
and the Buyer shall consult with a view to determining the
entity to receive payment of the indemnity which best
protects their respective interests.
(e) The amount of any Loss will be reduced by any remedy
proposed by JCB which has the effect of reducing the Loss,
to the extent the Loss is actually reduced by this remedy.
(f) Any material increase in non fixed assets or decrease in
liabilities over that recorded in the Completion Balance
Sheet, e.g. overprovision against an investment, which arose
prior to the claim arising, would be set-off against the
claim to the extent that the adjustment was recognised under
US GAAP, related to the same category of item as that
underlying the claim, and resulted in an identifiable
benefit to IFG.
60
(g) Any effective tax deduction directly resulting from a Loss,
such as the recovery of VAT would be deemed a reduction in
the amount of the claim. An increase in the tax losses of
the Companies or the tax group to which the Companies belong
shall be considered as an effective tax deduction only when
the relevant tax losses can be utilised.
(h) Any Loss may only be indemnified once under this Agreement.
(i) No indemnification shall be due by the Sellers in respect of
any Loss which would not have arisen but for some act,
omission, transaction or arrangement carried out after
Completion by the Buyer and/or the Companies (unless
required by law or in reasonable business management of the
Companies) and the Buyer was reasonably aware that such act,
omission, transaction or arrangement would give rise to a
Loss.
(j) The amount of any indemnifiable Loss shall be pro rata to
the percentage of shareholding of the Buyer, the Company or
Bourdais at Completion in the entity having suffered the
Loss.
(k) In the event that the Buyer or any of the Buyer's affiliates
are restricted in their rights to conduct business outside
of France by virtue of an undisclosed Material Contract, the
Buyer shall have the right to rescind this Agreement in
addition to any other remedy.
8.3 Information
8.3.1 In order to ensure the Buyer's full and complete information, the
Sellers have delivered to the Buyer and its advisors the
documents and information listed in Schedule 8.3.1, such
documents and information contain legal, financial, accounting
and commercial data.
8.3.2 It has been expressly agreed between the Parties that the
representations and warranties of the Buyer in this Agreement
will have no effect on the scope of the representations and
warranties of the Sellers contained in Clause 5 and on the
effectiveness of the indemnification procedures contained in this
Agreement. Only the information contained in this Agreement or in
its Schedules attached (as such Schedules exist of the Date of
this Agreement or are updated in accordance with Clause 6.4.2)
may release the Sellers from their liability pursuant to Clause
8, provided that any information contained in the Schedules may
only limit the Sellers' liability under this Agreement if the
matter disclosed in any Schedules is clearly and fully
identifiable.
9. FLOOR, THRESHOLD AND CEILING
9.1 Floor
The Sellers will only be liable to indemnify under Clause 8 if an
individual indemnifiable Loss in accordance with Clause 8.2 under this
Agreement exceeds the sum of FRF 50,000, provided that any Losses
resulting from a breach of Clauses 5.10.1 or 5.10.2 shall be considered
as an individual Loss.
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9.2 Threshold
9.2.1 The Sellers will only be liable to indemnify under Clause 8 if
the cumulative total of indemnifiable Loss calculated in
accordance with Clause 8.2 under this Agreement exceeds the sum
of FRF 1,000,000, with the exception of any Loss referred to
Clause 8.1.1(d) which will be indemnified in full.
9.2.2 Notwithstanding the above as regards any indemnifiable Loss as
calculated in accordance with Clause 8.2 arising from valuations
carried out by Bourdais Expertises SA there will be an annual
threshold of FRF 1,000,000.
9.3 Ceiling
Except in case of fraudulent conduct or intentional fault (fraude, dol
ou faute intentionnelle) the total indemnity for which the Sellers may
be liable under the Agreement shall not exceed 70% of the Purchase Price
actually paid to the Sellers (including the value of the IFG Shares)
pursuant to Clause 3 including the Top-Up Payment 1 and the Top-Up
Payment 2 and any Earn-Out payments which are due but excluding any
amounts paid in respect of the Net Cash and the Net Profit.
9.4 Calculations of floor, threshold and ceiling
9.4.1 The amount of a non-indemnifiable Loss in application of Clause
9.1 will not be taken into account for the calculation of the
threshold and the ceiling referred to above.
9.4.2 The amount of any indemnifiable Loss or series of Losses having a
cause and/or origin and/or factual basis which is the same or
similar will be considered as one and the same Loss indemnifiable
for the purpose of Clauses 9.1 and 9.2.
9.4.3 As soon as the relevant amount of a floor or a threshold is
reached, the obligation of the Sellers to indemnify shall apply
to the total amount of the indemnifiable Loss from the first
franc.
9.5 Exceptions
The floor, threshold and ceiling in this Clause 9 will not apply in the
case of fraudulent conduct or intentional fault (fraude, dol ou faute
intentionnelle) of the Sellers.
10. DURATION OF INDEMNIFICATION
10.1 Claims for indemnification pursuant to this Agreement in respect
of Taxes must be received before the expiry of a period equal to
the relevant statutory limitation period applicable to Taxes plus
three (3) months.
10.2 Any other claims for indemnification pursuant to this Agreement
must be received before 31 December 2003 except for a claim based
on Clause 9.5 which must be received by 31 December 2006.
10.3 The Buyer shall not lose its right to indemnification at the
expiry of the statutory limitation periods referred to above as
long as the requests pursuant to this Agreement
62
(or the events which may give rise to a claim for
indemnification) are notified before the expiry of such periods.
11. NOTIFICATION PROCEDURE AND PAYMENT OF THE INDEMNITY
11.1 Principle
11.1.1 Except as set forth in Clause 11.2.1, any event capable of giving
rise to an obligation to indemnify in accordance with this
Agreement must be notified in writing by the Buyer to the Sellers
within two months of the Buyer becoming aware of the event,
specifying and to the extent possible evidencing the reasons for
which the Buyer claims indemnification from the Sellers as well
as the sum of the indemnifiable Loss incurred, if determinable.
11.1.2 The Buyer will send notice to the Sellers of the amount due in
application of this Agreement (the "Payment Notice") once the
Loss is quantifiable or in the case of a Loss arising from a
third party claim, once the amount claimed is due by the relevant
Company.
11.1.3 Except in the event that written objection is sent by the Sellers
to the Buyer within 30 Days of the receipt by the Sellers of the
Payment Notice, the indemnification claimed shall be considered
due and shall give rise to interest accruing after the date of
receipt by the Sellers of the Payment Notice (the interest being
payable at the same time as the indemnity). The relevant interest
rate shall be the EURIBOR one month rate as published by Telerate
Page 20041 at 11am (Paris time) at the date of receipt of the
Payment Notice, such interest rate to be calculated on a monthly
basis according to the EURIBOR one month as published the first
day of each month after such date.
11.1.4 If on the contrary, the Sellers notify an objection to the Buyer
in the time-limits set out above, the dispute shall be settled
pursuant to Clause 14.11. It is understood that in the event the
Buyer finally receives an indemnity, it will carry interest as
from the date of receipt of the Payment Notice by the Sellers
(the interest being payable at the same time as the indemnity).
The relevant interest rate shall be the interest pursuant to
Clause 11.1.3 above.
11.2 Third party claims
11.2.1 In the event of any legal or administrative action filed by a
third party against the Companies as well as of a tax
reassessment conducted against the Companies, which would give
rise to a request by the Buyer to the Sellers, the Buyer shall
give written notice to the Sellers as soon as such action is
known by the Buyer in order to determine what action the Sellers
intend to take in respect of the conduct of the relevant legal
action. It is expressly understood that any delay by the Buyer in
informing the Sellers will only give rise to the payment of
damages to the Sellers in an amount equal to the loss suffered by
the latter.
11.2.2 In the event the Sellers do not inform the Buyer in writing of
their intentions in respect of the conduct of the legal action
referred to above within twenty (20) Days of receipt of the
notification referred to above, the Sellers shall be deemed
63
to have decided not to take part in the defence of the Companies
against the third party claim.
11.2.3 It is expressly agreed that the Buyer shall be authorised to
commence any urgent action with a view to defending the
Companies' interests without consulting the Sellers, if the
Sellers' advice cannot be reasonably obtained considering the
nature of the legal action to be conducted and/or the time-limits
for response set out by the third party.
11.2.4 In the event of a disagreement on the strategy to be implemented,
or if the Sellers choose not to take part in the defence of the
Companies, the Companies will keep the ultimate management of
their defence.
11.2.5 Any settlements (transactions) entered into in respect of an
indemnifiable Loss shall take into account the best interests of
the relevant Company and not the interests of the Parties hereto.
11.3 Payment of indemnity
The payment of any sums due (creance certaine, liquide et exigible) from
the Sellers to the Buyer pursuant to its obligation to indemnify
contained in this Agreement will be settled, at the Buyer's choice,
either by set-off together with all sums the Buyer owes (creance
certaine, liquide et exigible) to the Sellers or by an effective payment
by the Sellers to the Buyer or to the Companies.
11.4 Beneficiary of indemnification
11.4.1 The obligation to indemnify shall benefit the Buyer as well as
any legal entity which replaces it in accordance with Clause 14
in order to purchase the Shares and all assignee entities
benefiting from such rights (ayants-droit a titre particulier ou
universel), and in particular all companies which obtain such
rights in the context of a merger or in case of a transfer of all
or part of the Shares, in favour of all successive transferees,
individuals or legal entities.
11.4.2 The obligation to indemnify shall remain in force in the case of
any winding up, absorption, contribution or disposal of all or
any assets of the Companies.
12. GUARANTEE FOR THE OBLIGATIONS OF THE SELLERS
As a guarantee for the performance of the obligations and undertakings
of the Sellers pursuant to this Agreement, the Sellers shall on
Completion place the IFG Shares in escrow pursuant to the Escrow
Agreement.
13. EXEMPTIONS
13.1 With the exception of the representations expressly stated to be given
to the Sellers' Knowledge, the Sellers cannot be released from any of
their obligations pursuant to this Agreement by arguing their ignorance
of the relevant facts.
13.2 The investigations conducted by the Buyer or by its representatives or
advisors or by any company whatsoever within the group of the Buyer in
respect of the Companies and/or
64
their activities (whether performed by means of visits to the premises,
interviews or the examination of documents) during the preparation,
negotiation or pursuant to this Agreement shall not exempt the Sellers
from their obligations pursuant to this Agreement unless expressly stated
otherwise in this Agreement.
SECTION 4 - MISCELLANEOUS
14. MISCELLANEOUS
14.1 IFG guarantee - Transfer and Survival of Representations and Warranties
14.1.1 IFG is jointly and severally liable for the performance by the
Buyer of all obligations borne by the Buyer for the benefit of
the Sellers pursuant to this Agreement.
14.1.2 The Buyer may transfer the benefit of Sections II and III of this
Agreement to any transferee of all or part of the Shares provided
that such transferee is either (i) an entity controlled by IFG or
(ii) an institutional investor or a reputed player on the real
property market on the sole condition that the Buyer informs the
Sellers.
14.1.3 The provisions of Sections II and III will remain in force even
though the Company/Companies or the assets thereof are assigned
or transferred by a Company or the Buyer after Completion, in
particular if the Buyer or a Company as part of the transfer
gives to the transferee of shares in any of the Companies (or of
its assets) representations, warranties or undertakings.
14.2 Sellers' Attorney
(a) For the purposes of this Agreement, the Sellers hereby
appoint JCB as their representative (the "SELLERS'
ATTORNEY") who shall, in their name and on their behalf,
take any action, sign any documents required in respect of
the transactions set forth in this Agreement, receive any
notices and make any declarations required pursuant to this
Agreement, or as a consequence thereof.
(b) More particularly, the Sellers hereby appoint JCB as their
representative to act on their behalf (i) to negotiate and
agree any variation to any of the terms and conditions of
this Agreement in his entire discretion, including but not
limited to the Earn-Out, (ii) to amend and/or waive any of
the Conditions Precedent referred to in Clauses 4.1.15 to
4.1.19, (iii) to negotiate and settle in respect of any
dispute relating to the Earn-Out, the Top-Up Payment 1, the
Top-Up Payment 2, the Final Net Cash and the Net Profit and
(iv) to determine any dispute in relation to this Agreement
as he thinks fit including by way of amendment and/or waiver
of the terms and conditions of this Agreement. Consequently,
any notice received from JCB by the Buyer and/or any expert
appointed in connection with the transactions related in
this Agreement, and any agreement reached
65
between JCB and the Buyer and/or any expert appointed in
respect of any matters related to this Agreement, shall be
made as Sellers' Attorney and shall be final and binding on
all the Sellers without recourse. This power of attorney is
irrevocable, subject to the provisions of paragraph (c)
below even in the case of death or liquidation of any of the
Sellers.
(c) Should JCB hereby appointed, be unable to perform his duties
or be unwilling to remain as the Sellers' Attorney, for any
reason whatsoever, he shall so notify the Buyer and the
Sellers and the Sellers shall appoint one of themselves at
the latest within thirty (30) days following the date at
which notice of the inability or the refusal of JCB to
perform his duties is sent to the Sellers. Failing the
appointment of a new attorney within the 30-day period
mentioned above, such attorney shall be appointed by the
President of the Commercial Court of Paris ruling in summary
form, his order not being challengeable in appeal.
14.3 Entire Agreement
14.3.1 This Agreement represents the entire agreement between the
Parties as do the provisions of the recitals and the Schedules
attached.
14.3.2 This Agreement supersedes and replaces the share purchase
agreement signed by IFG and certain Sellers on 24 August 2001,
and all letters of intent, agreements or other arrangements
between the Parties entered into prior to the Date of this
Agreement, except for the confidentiality agreement signed in
March 2001 which will remain in force but shall lapse on
Completion if Completion occurs.
14.4 Amendments
The Parties agree that the Agreement shall be amended only in writing,
such amendment to be signed by the Parties or by their duly authorised
representatives. Neither Party will be deemed to have waived a right
unless expressly specified in this Agreement.
14.5 Confidentiality
This Agreement is confidential between the Parties. Consequently, the
Parties agree to keep this Agreement confidential and more generally not
to disclose any information directly or indirectly in relation to this
Agreement, unless the disclosure is required by law or by regulations or
in order to preserve its rights. In particular, any information obtained
by the Buyer under Clause 6.5 shall be treated as confidential by the
Buyer.
14.6 Announcements
14.6.1 No announcement or press release in respect of this Agreement or
as to the contents of this Agreement will be issued without prior
mutual written consent between the Buyer and the Sellers, which
consent is not to be unreasonably withheld.
66
14.6.2 If the announcement or the press release is required by law, the
consent from the other Party shall not be required, it being
understood that the existence of said requirement shall be
notified to the other Party within a reasonable time and the
content of such announcement or press release shall be discussed
by reference to this Clause 14.6.
14.6.3 The Sellers acknowledge that IFG as a matter of US law is
obligated to issue a press release pursuant to SEC regulation or
other regulatory obligations.
14.7 Notices
14.7.1 All notices required in respect to this Agreement or to the
related operations shall be either delivered by hand personally
with acknowledgement of receipt or sent by registered mail or
special mail; the notice may be faxed on the condition that a
confirmatory hard copy is sent by registered mail with
acknowledgement of receipt or by special mail (at the latest one
Day after the fax).
14.7.2 All notices shall be addressed to the parties at the following
addresses:
(a) To the Buyer : Insignia France SARL, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ with a copy to General Counsel (currently ▇▇▇▇ ▇.
▇▇▇▇▇▇▇, fax n(degree) ▇▇ ▇ ▇▇▇ ▇▇▇ ▇▇ ▇▇ ) and Chief
Executive Europe (currently ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ fax n(degree) 00
▇▇ (▇) ▇▇ ▇▇▇▇ ▇▇▇▇).
(b) To the Sellers : JCB, ▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇-▇▇▇-▇▇▇▇▇, with a copy to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇-▇▇▇▇▇.
Fax n(degree): ▇▇ ▇▇ ▇▇ ▇▇ ▇▇,
e-mail :▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇;
-----------------------
:▇▇▇▇▇▇▇.▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇.
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14.7.3 The Buyer and the Sellers will be authorised to amend at any time
their relevant address, addressee or fax number above subject to
informing the other Party in accordance with this Clause 14.7.
14.8 Costs and Expenses
14.8.1 Any registration and stamp duties payable on Completion shall be
borne by the Buyer.
14.8.2 Each Party shall bear the fees, costs and commissions of its own
legal advisers and agents.
14.9 Severability
14.9.1 If, for any reason whatsoever, any provisions of this Agreement
are declared null or void, the Parties agree to enter into talks
in order to amend such provisions in such a way that the
Agreement may continue without interruption.
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14.9.2 The introduction in France of the European Single Currency shall
not affect in any way the terms and conditions of this Agreement
except for the figures expressed in French Francs which shall be
automatically converted at the end of the transition period in
respect of the introduction of such currency. Consequently, such
introduction shall not confer on anyone either an exemption or
discharge of liability in respect of the performance of this
Agreement nor shall it confer the right to amend or terminate
unilaterally this Agreement. In case of conversion of the share
capital of the Company into Euro, such conversion will be carried
out through a capital decrease.
14.10 Execution and delivery of documents
14.10.1 The Parties agree to provide each other with any information as
well as execute and provide any documents required for the
performance of this Agreement.
14.11 APPLICABLE LAW AND SETTLEMENT OF DISPUTES
14.11.1 THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH
FRENCH LAW.
14.11.2 IT SHALL BE SUBJECT TO THE SOLE JURISDICTION OF THE COMMERCIAL
COURT OF PARIS TO WHOSE SOLE JURISDICTION THE PARTIES SHALL
SUBMIT THEIR CLAIMS IN RESPECT OF THIS AGREEMENT AND THE RELATED
OPERATIONS.
14.12 Recitals
The Recitals to the Agreement form an entire part of the Agreement.
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Executed on 16 December 2001
in 15 originals
/s/ Monsieur ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------- ------------------------------
The Sellers Insignia Financial Group, Inc.
By: Monsieur ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------------------
Insignia France SARL
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Gerant
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