1
Exhibit 2-1
DATED June 18, 1996
TALISMAN MANAGEMENT LTD
AND
DATASTREAM INTERNATIONAL (FRANCE) SA
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PURCHASE AGREEMENT
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TABLE OF CONTENTS
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Page
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SECTION I - DEFINITIONS ............................................. (2)
SECTION II - PURCHASE AND SALE OF SHARES ............................. (6)
2.1 Transfer of Shares ......................................... (6)
2.2 Purchase Price ............................................. (6)
2.3 Closing .................................................... (9)
2.4 Consolidated Financial Statements and Closing Statement .... (12)
2.5 Disputes Regarding Consolidated Financial Statements
and Closing Statement ..................................... (12)
2.6 Determination of any Post-Closing Adjustment Amount ........ (14)
2.7 Merger ..................................................... (14)
SECTION III - CONDITIONS OF THE PURCHASE BY THE BUYER OF THE SHARES ... (15)
3.1 Representations and Warranties ............................. (15)
3.2 Certificate of the Sellers ................................. (15)
3.3 Consents, Authorizations ................................... (15)
3.4 Corporate Action ........................................... (15)
3.5 No Action or Proceeding .................................... (15)
3.6 Performance of the Terms of this Agreement ................. (16)
3.7 Material Change ............................................ (16)
3.8 Guarantee .................................................. (16)
3.9 Loans ...................................................... (16)
3.10 Annual Meetings ............................................ (16)
SECTION IV - CONDITIONS OF THE SALE BY THE SELLER OF THE SHARES ...... (16)
4.1 Representations and Warranties ............................. (17)
4.2 Certificate of the Buyer ................................... (17)
4.3 Consents, Authorizations ................................... (17)
4.4 Corporate Action ........................................... (17)
4.5 No Action or Proceeding .................................... (17)
SECTION V - REPRESENTATIONS AND WARRANTIES OF THE SELLER ............ (18)
5.1 Incorporation and Corporate Capital of Talisman ............ (18)
5.2 Incorporation and Corporate Capital of Groupe DAFSA ........ (19)
5.3 Subsidiaries ............................................... (19)
5.4 Compliance with Laws and Obligations ....................... (20)
5.5 Corporate and Business Records ............................. (21)
5.6 Authorization; Valid and Binding Agreement ................. (21)
5.7 Government Authorizations .................................. (21)
5.8 Other Agreements - Laws .................................... (22)
5.9 No Finders ................................................. (22)
5.10 Financial Statements ....................................... (22)
5.11 Absence of Significant Changes ............................. (23)
(i)
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5.12 No Undisclosed Liabilities ................................. (24)
5.13 Taxes - Labor Contributions ................................ (25)
5.14 Litigation ................................................. (26)
5.15 Inventories ................................................ (27)
5.16 Assets ..................................................... (27)
5.17 Material Contracts ......................................... (28)
5.18 Leases ..................................................... (29)
5.19 Insurance .................................................. (30)
5.20 Labor matters .............................................. (31)
5.21 Benefit Plans .............................................. (32)
5.22 Proxies - Bank Accounts .................................... (33)
5.23 No Bankruptcy .............................................. (33)
5.24 Patents, Marks, Commercial Names and Copyrights ............ (33)
5.25 No Security Interests ...................................... (36)
5.26 Receivables ................................................ (36)
5.27 Customer Relations ......................................... (36)
5.28 Subsidy, Aid and Tax Benefits .............................. (36)
5.29 Environmental Matters ...................................... (37)
5.30 No Claim by the Seller ..................................... (37)
5.31 Contingent Liabilities ..................................... (37)
5.32 Loans ...................................................... (37)
5.33 Extel ...................................................... (38)
5.34 SAFE Litigations - restructuring costs ..................... (38)
5.35 No Material Misstatements .................................. (39)
SECTION VI - REPRESENTATIONS AND WARRANTIES OF THE BUYER ............. (39)
6.1 Incorporation and share capital of the Buyer ............... (39)
6.2 Authorization - Competence ................................. (40)
6.3 Government Authorizations .................................. (40)
6.4 Other Agreements ........................................... (40)
6.5 No Finders ................................................. (40)
SECTION VII - ACTIVITIES PRIOR TO THE CLOSING ......................... (41)
7.1 Access ..................................................... (41)
7.2 Government Filings ......................................... (41)
7.3 Conduct of the Business of Talisman and the Subsidiaries ... (41)
7.4 Other Actions .............................................. (43)
7.5 Intergroup Agreements ...................................... (43)
7.6 Waiver of Call Options ..................................... (44)
7.7 Loans ...................................................... (44)
7.8 Employment Agreement ....................................... (45)
7.9 Employees .................................................. (45)
7.10 Bank Mandate ............................................... (45)
7.11 Certificate of no C1aim .................................... (45)
7.12 Guarantee .................................................. (45)
SECTION VIII - INDEMNIFICATION ......................................... (46)
8.1 Survival of Representations and Covenants .................. (46)
8.2 Obligation to Indemnify .................................... (46)
SECTION IX - ADDITIONAL COVENANTS .................................... (51)
9.1 Non-Competition ............................................ (51)
9.2 Post-Closing Cooperation ................................... (51)
9.3 Bridge Loan ................................................ (52)
(ii)
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Republic National Bank of New York ................................. (52)
9.5 Talisman ................................................... (52)
SECTION X - TERMINATION ............................................. (53)
10.1 Termination ................................................ (53)
10.2 Effect of Termination ...................................... (53)
SECTION XI - MISCELLANEOUS PROVISIONS ................................ (53)
11.1 Notices .................................................... (53)
11.2 Further Acts ............................................... (54)
11.3 Entire Agreement ........................................... (54)
11.4 Waiver ..................................................... (55)
11.5 Counterparts ............................................... (55)
11 6 Third Party Rights ......................................... (55)
11.7 Governing Law .............................................. (55)
11.8 Parties Bound by Agreement - Successors and Assigns ........ (55)
11.9 Expenses ................................................... (55)
11.10 Headings .............................................. (56)
11.11 Invalidity of a Provision ............................. (56)
11.12 Transfer Taxes ........................................ (56)
11.13 Jurisdiction .......................................... (56)
11.14 Communications ........................................ (56)
(iii)
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STOCK PURCHASE AGREEMENT
Dated June 18, 1996
BETWEEN THE UNDERSIGNED:
Talisman Management Limited, a limited liability company, incorporated
in England and Wales, with an issued and paid in share capital of [pound
sterling]3,000, whose registered office is at 37 Ixworth Place, London SW3 3QH,
England, registered with the Companies Registrar under number 210 82 78,
represented by Mr. Francois Chaillou, its director,
(hereinafter the "SELLER"),
ON THE FIRST PART,
AND
Datastream International (France) S.A., a limited liability company,
incorporated in France with an issued and paid in share capital of FRF
2,250,000, whose registered office is at 25 avenue Marceau, 75116 Paris,
registered with the Registry of Commerce and Companies of Paris under number B
388 549 800, represented by Mr. Richard Anderson, its director,
(hereinafter the "BUYER"),
ON THE SECOND PART.
WITNESSETH:
WHEREAS, Talisman is a French "societe anonyme" with a capital of FRF
250,000, whose registered office is at 11 rue Robert de Flers, 75015 Paris,
registered with the Registry of Commerce and Companies of Paris under number B
352 936 876 (hereinafter referred to as "TALISMAN");
WHEREAS, Talisman is the parent company of Groupe DAFSA, a French
"societe anonyme" with a capital of FRF 2,810,000, whose registered office is at
11 rue Robert de Flers, 75015 Paris, registered with the Registry of Commerce
and Companies of Paris
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under the number B 388 299 893 (hereinafter referred to as "GROUPE DAFSA");
WHEREAS, on or prior to the Transfer Date (as such term is defined
hereunder), the Seller shall own all the shares of Talisman;
WHEREAS, the Buyer desires to purchase all of the issued shares of
capital stock of Talisman, and the Seller agrees to sell all such shares to the
Buyer upon the conditions hereinafter set forth;
WHEREAS, as soon as practicable after the Transfer Date (as defined
hereinafter) the Buyer will be merged with Talisman.
NOW, THEREFORE, IN CONSIDERATION OF THE REPRESENTATIONS AND WARRANTIES,
COVENANTS AND AGREEMENTS HEREINAFTER SET FORTH, IT IS HEREBY AGREED AS FOLLOWS:
SECTION I - DEFINITIONS
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As used in this Agreement, the following terms shall have the meaning
indicated below:
"ACCOUNTING PRINCIPLES" shall have the meaning defined in Section 2.4 of this
Agreement.
"AFFILIATE" shall mean, with respect to any Person (i) any other Person 10% or
more of the voting or equity interest of which is directly or indirectly, under
the control of such Person (ii) any other Person which is directly or
indirectly, under the control of such Person, and (iii) any other Person which,
directly or indirectly has the control over or is under common control with such
Person.
"AGREEMENT" shall mean this agreement and all annexes, exhibits, schedules and
documents attached hereto.
"APRIL 30 NET EQUITY" shall have the meaning set forth in Section 2.6 (a) of
this Agreement.
"BANQUE PARIBAS AGREEMENT" shall have the meaning defined in Section 5.34 of
this Agreement.
"BANQUE PARIBAS COMMITMENTS" shall mean (i) Banque Paribas' commitments set
forth in Section III.2 of the agreement entered into on September 4, 1995 among
Banque Paribas, Credit du Nord, Groupe DAFSA and Associes en Finance, as amended
on September 22,
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1995 and on April 16, 1996 to compensate Groupe DAFSA and any Affiliate thereof
in connection with any costs relating to a redundancy plan and a restructuring
of Societe d'Analyse Financiere Europeenne ("SAFE") and any litigation arising
in connection therewith, including any SAFE Litigations and (ii) Banque Paribas'
commitments set forth in a letter dated October 9, 1995 to Groupe DAFSA relating
to the termination of an agreement entered into between SAFE and Greer Global
Investor Services and a tax audit of SAFE.
"BENEFIT PLAN" shall have the meaning defined in Section 5.21 of this Agreement.
"BRIDGE LOAN" shall mean the loan extended by the Seller to Talisman on June 3,
1996, in a principal amount of FRF 1,000,000.
"BUSINESS DAY" shall mean any day except Saturday, Sunday and any day in France
which is a legal holiday or a day on which banking institutions are authorized
or required by law or other government action to close.
"BUYER" shall have the meaning defined at the beginning of this Agreement.
"CLOSING" shall mean the closing contemplated at Section 2.3 of this Agreement.
"CLOSING AMOUNT" shall mean the Purchase Price less (i) the Retention Amount,
(ii) the Retention Amount for Contingent Liabilities and less (iii) the Hold
Back Amount.
"CLOSING STATEMENT" shall have the meaning defined in Section 2.4 of this
Agreement.
"CONSOLIDATED FINANCIAL STATEMENTS" shall mean the balance sheet and income
statement for Talisman and the Subsidiaries (excluding Globe Online) on a
consolidated basis established in accordance with the Accounting Principles.
"CONTINGENT LIABILITIES" shall mean the liabilities for exceptional and
non-recurring costs of Talisman and of the Subsidiaries as set forth in ANNEX A.
"DAMAGE" shall have the meaning defined in Section 8.2(a) of this Agreement.
"ENCUMBRANCES" shall mean any mortgage, option, lien, charge, claim, assessment,
security interest and third party right and other encumbrance of any kind
whatsoever.
"EXCHANGE RATE" shall mean one U.S. Dollar (USD 1) equals 5.19 Francs (FRF
5.19).
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"FINAL CONSOLIDATED FINANCIAL STATEMENTS" shall have the meaning defined in
Section 2.5(b) of this Agreement.
"FINAL CLOSING STATEMENT" shall have the meaning defined in Section 2.5(b) of
this Agreement.
"FINANCIAL STATEMENTS" shall have the meaning defined in Section 5.10 of this
Agreement.
"FRANC or "FRF" shall mean the lawful currency of the Republic of France.
"GLOBE ONLINE S.A." shall mean Globe Online S.A., a limited liability company,
incorporated in France, with an issued and paid in share capital of FRF
1,165,000, whose registered office is at 46 rue Notre Dame des Victoires, 75002
Paris, registered with the Registry of Commerce of Paris under number B
400.541.066.
"GROUPE DAFSA" shall have the meaning defined in the second "Whereas" clause of
this Agreement.
"GROUPE DAFSA 1996 Turnover" shall have the meaning defined in Section 2.2 of
this Agreement.
"GUARANTEE" shall mean the agreement ("CAUTION SOLIDAIRE") in the form of ANNEX
B hereto to be executed by Mr. Francois Chaillou.
"HOLD BACK AMOUNT" shall mean an amount equal to seven hundred fifty thousand
U.S. Dollars (USD 750,000) times the Exchange Rate.
"INDEPENDENT ACCOUNTING FIRM" shall have the meaning defined in Section 2.5 of
this Agreement.
"INTELLECTUAL PROPERTY" shall have the meaning defined in Section 5.24 of this
Agreement.
"LOAN AMOUNT" shall mean FRF 29,681,705, which represent the aggregate principal
amount of financing to be granted on the Transfer Date by Buyer to Talisman and
Groupe DAFSA for the purpose of repaying the Loans, as more detailed in ANNEX C
hereto.
"LOANS" shall mean the loans granted to Groupe DAFSA and Talisman referred to in
ANNEX D hereto.
"MATERIAL CONTRACTS" shall have the meaning defined in Section 5.17 of this
Agreement.
"NET EQUITY" shall mean the net book value of Talisman and the Subsidiaries
(excluding Globe Online) on a consolidated basis, as defined in Article D 13.1
of Decree n[degree symbol] 83-1020 of November 29, 1983, as modified.
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"PERSON" shall mean an individual, a corporation, a partnership, an association,
a trust or any other entity or organization (whether or not incorporated),
including a government or political subdivision or an agency, department or
instrumentality thereof.
"POST-CLOSING ADJUSTMENT AMOUNT" shall have the meaning defined in Section
2.6(b) of this Agreement.
"PRIMARK LETTER" shall mean the letter in the form of ANNEX H.
"PURCHASE PRICE" shall be equal to (a) nine million U.S. dollars (USD 9,000,000)
times the Exchange Rate less (b) the Loan Amount, as such amount may be modified
pursuant to Section II of this Agreement.
"RETENTION AMOUNT" shall mean an amount equal to five hundred thousand US
Dollars (USD 500,000) times the Exchange Rate.
"RETENTION AMOUNT FOR CONTINGENT LIABILITIES" shall mean an amount equal to five
million eight hundred and sixty nine thousand Francs (FRF 5,869,000).
"SAFE LITIGATIONS" shall mean the litigations set forth in ANNEX
E hereto.
"SELLER" shall have the meaning defined at the beginning of this Agreement.
"SHARES" shall mean one hundred percent (100%) of the shares of Talisman.
"SUBSCRIPTION RIGHTS" shall mean 42,150 subscription rights ("Bons de
Souscription") to Groupe DAFSA shares the issuance of which in favor of Talisman
was decided pursuant to a decision of the ordinary and extraordinary
shareholders' meeting of Groupe DAFSA held on October 30, 1995;
"SUBSIDIARY" and collectively "SUBSIDIARIES" shall mean any company or entity in
which Talisman owns, directly or indirectly twenty percent or more of the shares
or voting rights and any "societe en participation" in which Talisman or any of
its Affiliates participates, directly or indirectly, it being specified that for
the purpose of the representations and warranties set forth in Section V, the
term, "Subsidiaries" shall include the "societe en participation" only with
respect to Sections 5.3, 5.4, 5.5, 5.8, 5.9, 5.11, 5.12, 5.13, 5.23, 5.27, 5.30,
5.31 and 5.35 of this Agreement.
"TALISMAN" shall have the meaning defined in the first "Whereas" clause of this
Agreement.
"TANGUY SETTLEMENT AGREEMENT" shall mean the settlement agreement entered into
between Talisman and Mr. Tanguy on June 13, 1996.
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"TMI" shall mean Talisman Management International, a company incorporated in
Bermuda, with an issued and paid in capital of USD 14,033, whose registered
office is at Conyers Dill & Pearman, Barristers & Attorneys, Clarendon House,
Third Floor, 1 church Street, Hamilton HMll, Bermuda, registered with the
Registrar of Companies under number 13325.
"TMI GUARANTEE" shall mean the agreement ("caution solidaire") in the form of
ANNEX I hereto.
"TAX RETURNS" shall have the meaning defined in Section 5.13 of this Agreement.
"THRESHOLD AMOUNT" shall have the meaning set forth in Section 8.2 (b).
"TRANSFER" shall mean the transfer of the Shares pursuant to Section 2.1 of this
Agreement.
"TRANSFER DATE" shall mean the date on which the Closing occurs.
"TRANSFER DATE NET EQUITY" shall have the meaning set forth in Section 2.6 (b)
of this Agreement.
SECTION II - PURCHASE AND SALE OF SHARES
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2.1 Transfer of Shares
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Subject to the terms and conditions of this Agreement, on the Transfer
Date, Seller shall sell and transfer to the Buyer, and the Buyer shall acquire
from Seller, the Shares free from all Encumbrances with all rights now or
hereafter attaching thereto.
2.2 Purchase Price
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The Purchase Price for the sale of the Shares shall be paid as follows:
- the Closing Amount shall be paid by the Buyer at the Closing as
follows:
- an amount of one million nine hundred seventy one thousand
seven hundred ninety five Francs (FRF 1,971,795) shall be
paid by the Buyer to the Seller by official bank check;
- the Seller hereby instructs the Buyer to pay for the
account and on behalf of the Seller the remaining portion
of the Closing Amount as follows:
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- an amount of one million eight hundred thousand
Francs (FRF 1,800,000) to Banque Paribas (RCS Paris
B 662 047 885);
- an amount of nine hundred thousand Francs (FRF
900,000) to Associes en Finance S.A. (RCS Paris B
394 630 867);
- the Retention Amount shall be paid by the Buyer to the Seller as
follows:
- on March 31, 1997, 150,000 U.S. Dollars times the Exchange
Rate,
- on March 31, 1998, 350,000 U.S. Dollars times the Exchange
Rate,
PROVIDED that the Buyer has not made, prior to either of such
dates, any claim for payment of a Post Closing Adjustment Amount
or under Section VIII of this Agreement. If the Buyer has made any
such claims prior to such dates, the Retention Amount, or the
portion thereof not paid to the Seller prior to the making of any
such claims, shall become due and payable only upon final
determination of all amounts due and payable to the Buyer under
all such claims. The Buyer shall have the right to set off, at any
time, against the Retention Amount any amount payable to the Buyer
by the Seller under this Agreement, including any Post Closing
Adjustment Amount, and any amount payable under Section VIII
hereunder; and
- Retention Amount for Contingent Liabilities:
Upon full and final payment and discharge by Talisman and/or any
Subsidiary of all Contingent Liabilities, the Buyer shall pay to
the Seller an amount equal to the difference (the "AMOUNT"), if
positive, between (i) the Retention Amount for Contingent
Liabilities and (ii) all amounts paid by Talisman and/or any
Subsidiary in connection with the payment and discharge of all
Contingent Liabilities.
The Buyer shall calculate and notify to the Seller such Amount
along with copies of all documents supporting such determination.
In the event the Seller disputes such determination and such
dispute is not resolved by mutual agreement of the Seller and the
Buyer within 15 days from the Buyer's notification to the Seller
of the Amount, then such dispute shall be submitted for resolution
to Arthur Andersen, Paris Office, or if Arthur Andersen, Paris
office shall not accept such appointment, to an independent
accounting firm appointed by the President of the Paris
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Commercial Court upon an ex-parte request of the most diligent
party. The resolution of such dispute by such accounting firm
(either appointed by the parties or by the President of the Paris
Commercial Court) shall be final, conclusive and binding upon
Seller and Buyer. Fees and expenses of such accounting firm shall
be shared equally between the Seller and the Buyer.
The Amount shall be due and payable upon final determination
thereof, either by mutual agreement of the Seller and the Buyer or
by the accounting firm.
- The Hold Back Amount shall be paid by the Buyer to the Seller as
follows :
- On March 31, 1997, if Groupe DAFSA's financial statements
for the year ending December 31, 1996 have been approved
without reserve as to Groupe DAFSA turnover by the
statutory auditor of Groupe DAFSA or within fifteen days
from the approval by the statutory auditor of Groupe DAFSA
of such 1996 financial statements without reserve as to
Groupe DAFSA turnover (whichever is earlier), PROVIDED THAT
the Buyer has not made, prior to such dates, any claim for
payment of a Post Closing Adjustment Amount or under
Section VIII of this Agreement. If the Buyer has made any
such claim prior to such payment dates, the Hold Back
Amount shall only become due and payable upon final
determination of all amounts due and payable to the Buyer
under all such claims. The Buyer shall have the right to
set off, at any time, against the Hold Back Amount any
amount payable to the Buyer by the Seller under this
Agreement, including any Post-Closing Adjustment Amount and
any amount payable under Section VIII hereunder;
- Notwithstanding the provisions of the preceding paragraph, the
amount payable by the Buyer to the Seller pursuant to the Hold
Back Amount will be adjusted on the basis of Groupe DAFSA's
turnover ("chiffre d'affaires") as reported in Groupe DAFSA
financial statements for the year ending December 31, 1996,
approved without reserve as to Groupe DAFSA turnover by the
statutory auditors of Groupe DAFSA (hereafter "GROUPE DAFSA 1996
TURNOVER"), as follows:
- If Groupe DAFSA 1996 Turnover equals or exceeds sixty-one
million one hundred and thirty thousand Francs (FRF
61,130,000), the Hold Back Amount will be payable by the
Buyer to the Seller.
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- If Groupe DAFSA 1996 Turnover is between fifty eight
million Francs (FRF 58,000,000) and sixty- one million one
hundred and thirty thousand Francs (FRF 61,130,000), the
amount payable by the Buyer to the Seller on account of the
Hold Back Amount will be equal to the product of the Hold
Back Amount times a fraction, the numerator of which is
Groupe DAFSA 1996 Turnover less fifty-eight million Francs
(FRF 58,000,000) and the denominator of which is three
million one hundred and thirty thousand Francs (FRF
3,130,000).
- If Groupe DAFSA 1996 Turnover is below fifty-eight million
Francs (FRF 58,000,000), the Hold Back Amount shall be
retained by the Buyer and no amount shall be due and
payable to the Seller on account of the Hold Back Amount.
2.3 Closing
-------
Subject to the terms and conditions hereof, the Closing of the
transaction contemplated by this Agreement will take place at the offices of
White & Case, 11 boulevard de la Madeleine, 75001 Paris, or at such other place
as shall be agreed upon by the parties hereto. The Closing shall be on a date
agreed upon by the parties, which date shall not be more than 10 days after the
satisfaction or waiver of the conditions set forth in Sections III and IV
hereof.
At the Closing, the Seller shall satisfy each of the following
obligations, each of which is material to the Buyer's agreement:
- deliver to the Buyer orders of transfer ("ordres de mouvements"),
in respect of all the Shares and share registers and shareholders'
accounts of Talisman and of the Subsidiaries;
- cause Talisman and the Subsidiaries to hold shareholders' meetings
or boards of directors' meetings, as the case may be, at which the
written resignation of all directors or statutory managers
("dirigeants sociaux"), except such directors or statutory
managers ("dirigeants sociaux") designated by the Buyer in
writing, shall be accepted and directors and statutory managers
("dirigeants sociaux") proposed by the Buyer shall be appointed;
- deliver to the Buyer the deed of transfer duly executed, whereby
Mr. Chaillou transfers to Talisman for consideration of one Franc
(FRF 1) his claim against Groupe DAFSA for a principal amount of
FRF
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600,000 resulting from a loan extended by Mr. Chaillou to Groupe
DAFSA;
- deliver to the Buyer the Guarantee, duly executed by Mr. Francois
Chaillou;
- deliver to the Buyer the TMI Guarantee, executed by a duly
authorized representative of Talisman Management International;
- deliver to the Buyer a written irrevocable waiver from TMI to be
repaid a portion of TMI's Loan to Talisman in an amount equal to
two million five hundred ninety five thousand (FRF 2,595,000),
reducing the remaining amount outstanding under such Loan to
eighteen million six hundred sixty six thousand one hundred and
fifty Francs (FRF 18,666,150);
- deliver to the Buyer written, irrevocable and unconditional
acknowledgement, executed by duly authorized representatives of
all creditors of Talisman and Groupe DAFSA under the Loans, except
La Compagnie Financiere Edmond de Rothschild Banque, whereby each
such creditor acknowledges that (subject to actual receipt of the
funds) all its claims under the relevant Loans, have been repaid
in full and that such creditor has no further right, claim or
action of any nature whatsoever, against Talisman and Groupe DAFSA
arising out or in connection with any such Loans;
- deliver to the Buyer a written, irrevocable waiver from Mr.
Olivier ROUX to be repaid a portion of the principal amount of his
Loan to Groupe DAFSA equal to one million two hundred ninety seven
thousand five hundred Francs (FRF 1,297,500), reducing the
remaining amount outstanding under such Loan to two hundred eighty
nine thousand five hundred and fifty Francs (FRF 289,550);
- deliver to the Buyer all originals of all promissory notes
executed in connection with the Loans;
- deliver to the Buyer a certificate from La Compagnie Financiere
Edmond de Rothschild Banque indicating the amount owed to it by
Groupe Dafsa as at June 17, 1996, such amount not to exceed the
amount indicated in ANNEX C as owing to La Compagnie Financiere
Edmond de Rothschild Banque ;
- deliver to the Buyer a legal opinion by Conyers, Dill & Pearman,
in form and substance satisfactory to the Buyer, confirming the
capacity, authority and power of (i) Mr. Malcom C. Furbert to
execute in the name and
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on behalf of TMI, the acknowledgement whereby TMI acknowledges
that all its claims under the relevant Loans have been repaid in
full and that it has no further rights, claim or action of any
nature whatsoever, against Talisman and Groupe DAFSA arising in
connection with any such Loans, and of (ii) Mr. Francois Chaillou
to execute in the name and on behalf of TMI the TMI Guarantee; and
confirming that the TMI Guarantee is valid and binding upon TMI.
- deliver to the Buyer any document or certificate of a notary
evidencing that Mr. Chaillou is married under the French legal
regime of "separation de biens";
- deliver to the Buyer the Tanguy Settlement Agreement; and
- sign and cause to be signed all such other documents, and take or
cause to be taken all such other action as the Buyer shall
reasonably require in order to transfer to the Buyer all right,
title and interest of the Seller in all the Shares.
At the Closing, the Buyer shall satisfy each of the following
obligations, each of which is material to the Seller's agreement:
- pay the Closing Amount by bank checks;
- extend to Talisman and to Groupe DAFSA financings of an aggregate
principal amount equal to the Loan Amount and cause Talisman and
Groupe DAFSA to repay at Closing the Loans in accordance with the
provisions of ANNEX D hereto including the footnotes thereto and
the Seller's instructions;
- extend to Talisman the necessary financing to repay at Closing an
amount equal to seventy five percent (75%) of the principal amount
of the Bridge Loan; and
- deliver to Groupe DAFSA the Primark Letter.
At the Closing, the Buyer and the Seller shall also deliver any
documents or instruments of assignment, conveyance and transfer, and any other
documents which are necessary to satisfy the obligations of the Buyer or the
Seller, as the case may be pursuant to this Agreement. At the Closing, the
Seller and the Buyer shall take any additional action which is necessary to
satisfy their respective obligations hereunder.
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2.4 Consolidated Financial Statements and Closing Statement
-------------------------------------------------------
As soon as practical and, in any event, not later than sixty (60) days
after the Transfer Date, the Buyer and/or its auditors shall prepare and deliver
to the Seller (i) the Consolidated Financial Statements as at April 30, 1996 and
as at the Transfer Date, respectively, and (ii) a statement ("CLOSING
STATEMENT") setting forth (A) the amount of the Net Equity as at April 30, 1996
and as at the Transfer Date, respectively, and (B) the resulting Post-Closing
Adjustment Amount, if any, determined in accordance with Section 2.6(b) hereof,
together with any appropriate supporting documentation and related work papers.
During such sixty-(60-) day period, the Buyer will give reasonable access or
will cause to be given reasonable access to the Seller's auditors, to the
accounting documents of Talisman and the Subsidiaries relating to the
preparation of the Consolidated Financial Statements. The Consolidated Financial
Statements and the Closing Statement shall be prepared on a basis consistent
with the accounting policies and practices in force in France, applied on a
consistent basis with those used for the years ended December 31, 1994 and
December 31, 1995 and the periods ending on April 30, 1996 and on the Transfer
Date; in addition, the consolidation principles will be in accordance with the
law of January 3, 1985 on consolidated financial statements and with the related
decrees of application (hereafter together the "ACCOUNTING PRINCIPLES"). For the
avoidance of doubt, it is expressly understood that (i) the Consolidated
Financial Statements and Closing Statement (A) will be prepared on the sole
basis of the Accounting Principles without any interpretation thereof by
reference to any other past accounting policies or practices of Talisman or the
Subsidiaries, and (B) shall neither reflect nor take into consideration any
action to occur on the Transfer Date, including any repayment of the Loans to
occur on the Transfer Date, as set forth in Section 2.3 above and any waiver of
any amount of principal or interest under any Loan or portion thereof or under
any financing granted by the Seller, TMI or any Affiliate thereof to Talisman or
the Subsidiaries occurring on or after April 30, 1996 and that (ii) provisions
or reserves to be made therein with respect to any matters shall remain
unaffected by the fact that any such matter is covered by any indemnification
(including specific indemnification) under Section 8.2 hereof.
2.5 Disputes Regarding Consolidated Financial Statements and Closing
----------------------------------------------------------------
Statement.
---------
(a) The Seller shall have thirty (30) days after the delivery to the
Seller of the Consolidated Financial Statements and the Closing Statement in
which to review such documents. Unless the Seller notifies the Buyer in writing
within such thirty (30) day period of any good faith objection to the
Consolidated Financial Statements and the Closing Statement, specifying in
reasonable detail the items and amounts subject to such objection, the
Consolidated Financial Statements and the
17
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Closing Statement (including the Post-Closing Adjustment Amount(s), if any,
shown thereon) shall be conclusive and binding on the Seller. If within such
thirty-day period the Seller notifies the Buyer in writing of any such
objection, then the Buyer and the Seller shall use reasonable efforts for
forty-five (45) days after the delivery to the Buyer of the notice of the Seller
setting forth such objections to resolve in good faith their differences and
agree upon any adjustments to the Consolidated Financial Statements and the
Closing Statement (including any Post-Closing Adjustment Amount shown thereon).
Any disputes which are not resolved by mutual agreement of the Buyer and the
Seller within such 45-day period shall be submitted for resolution to Arthur
Andersen, Paris Office, or, if Arthur Andersen, Paris Office shall not accept
such appointment, to another internationally recognized independent accounting
firm mutually acceptable to the Seller and the Buyer. In the event the Seller
and the Buyer shall not agree on such other internationally recognized
independent accounting firm within ten (10) days from Arthur Andersen, Paris
Office's refusal, then such independent accounting firm will be finally
appointed by the President of the Paris Commercial Court upon an ex-parte
request of the most diligent party (any such internationally recognized
independent accounting firm, whether appointed by the parties to this Agreement
or by the President of the Paris Commercial Court being hereinafter referred to
as the "INDEPENDENT ACCOUNTING FIRM").
The Seller and the Buyer shall instruct the Independent Accounting Firm
to limit its examination to the remaining items in dispute, to the exclusion of
all other matters, on the sole basis of the Accounting Principles and to use its
best efforts to make its determination thereon within thirty (30) days after its
appointment. The resolution of any such items by the Independent Accounting Firm
shall be made in writing and delivered by the Independent Accounting Firm to the
Buyer and the Seller as promptly as practicable and shall be final, conclusive
and binding upon the Seller and the Buyer. Fees and expenses of the Independent
Accounting Firm shall be shared equally between the Seller, on the one hand, and
the Buyer, on the other hand.
(b) The Consolidated Financial Statements and the Closing Statement
(i) to which the Seller does not object as provided in Section 2.5(a) hereof,
(ii) to which the Seller and the Buyer agree, or (iii) which is otherwise
conclusively determined pursuant to Section 2.5(a) hereof (such final form of
the Consolidated Financial Statements and the Closing Statement being referred
to herein as the "FINAL CONSOLIDATED FINANCIAL STATEMENTS" and the "FINAL
CLOSING STATEMENT", respectively) shall determine the Post-Closing Adjustment
Amount.
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2.6 Determination of any Post-Closing Adjustment Amount.
---------------------------------------------------
(a) The Net Equity, as at April 30, 1996, shall be determined from the
Final Consolidated Financial Statements as at April 30, 1996 and the Final
Closing Statement (hereafter the "APRIL 30 NET EQUITY");
(b) The Net Equity, as at the Transfer Date, shall be determined from
the Final Consolidated Financial Statements as at the Transfer Date and the
Final Closing Statement (hereafter the "TRANSFER DATE NET EQUITY");
(c) The Purchase Price shall be adjusted downwards or upwards, on a
Franc for Franc basis, by an amount equal to the difference between the April 30
Net Equity and the Transfer Date Net Equity (the "POST-CLOSING ADJUSTMENT
AMOUNT").
- If the Transfer Date Net Equity is below the April 30 Net Equity,
the Post Closing Adjustment Amount shall be paid in Francs by the
Seller to the Buyer, within five (5) days after agreement or
determination (pursuant to Section 2.5 of this Agreement) of the
Final Consolidated Financial Statements. Such payment shall be set
off first against the Retention Amount and second against the Hold
Back Amount. Any remaining amount due under the Post Closing
Adjustment Amount shall be paid directly by the Seller to the
Buyer by official bank check at the registered office of the
Buyer.
- If the Transfer Date Net Equity is above the April 30 Net Equity,
the Post Closing Adjustment Amount shall be paid in Francs by the
Buyer to the Seller within five (5) days after agreement (or
determined pursuant to Section 2.5 of this Agreement) of the Final
Consolidated Financial Statements.
Notwithstanding the foregoing, no payment shall be made by the
Seller to the Buyer or by the Buyer to the Seller under this Section 2.6 if the
Post Closing Adjustment Amount is less than twenty five thousand U.S. Dollars
(USD 25,000) times the Exchange Rate.
2.7 Merger
------
As soon as practicable following the Transfer Date, the Buyer will be
merged under its sole responsibility into Talisman with Talisman as the
surviving company. The Seller agrees to assist the Buyer, until the Transfer
Date, to do whatever is necessary to achieve the merger.
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SECTION III - CONDITIONS OF THE PURCHASE BY THE BUYER OF THE SHARES
- ----------- -----------------------------------------------------
The Parties agree that the Buyer's obligation to acquire the
Shares shall be subject to the satisfaction, or waiver by the Buyer, of the
following conditions on or before the Transfer Date, the satisfaction of such
conditions having no retroactive effect:
3.1 Representations and Warranties
------------------------------
The representations and warranties made herein by the Seller in
Section V hereof shall have been true and correct as of the date hereof, and
shall be true and correct as of the Transfer Date (except as to such
representations and warranties which by their terms apply to an earlier date).
There shall not be, as of the Transfer Date, any event or fact which might alter
or modify such representations and warranties.
3.2 Certificate of the Sellers
--------------------------
The Sellers shall have delivered to the Buyer a certificate, dated
the Transfer Date and signed by the Seller, certifying the fulfillment of the
conditions specified in Sections 3.1 and 3.3 to 3.10 hereof.
3.3 Consents, Authorizations
------------------------
All filings, orders, consents, permits, authorizations, approvals
and waivers of governmental and regulatory authorities required for the
consummation by the parties of the transactions contemplated hereby and by any
other agreement contemplated hereunder and all filings, registrations and
notifications to or with all Persons, required with respect to the consummation
by the parties hereto of such transactions, shall have been obtained or given.
It is agreed by both parties that the filing with the French Ministry of Finance
will be effected by the Buyer upon the signing of this Agreement by the Buyer
and does not constitute a condition precedent to the purchase by the Buyer of
the Shares.
3.4 Corporate Action
----------------
All corporate action, if any, necessary to authorize the execution
of this Agreement by the Seller and the performance of its obligations hereunder
(including the approval of the Buyer as shareholder of Talisman by the Board of
Directors of Talisman) shall have been duly and validly taken by the Seller,
Talisman and the Subsidiaries.
3.5 No Action or Proceeding
-----------------------
There shall be no action or proceeding commenced or, to the
knowledge of the parties, threatened before any legal or administrative tribunal
or by any administrative organization,
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and no judgement, order or injunction shall have been rendered by any such
tribunal or organization for the purpose of restraining or prohibiting the
transactions contemplated in this Agreement.
3.6 Performance of the Terms of this Agreement
------------------------------------------
The Seller shall have complied with all its covenants required to
be performed before or on the Transfer Date under this Agreement, including but
not limited to the Seller's covenant set forth in Section VII.
3.7 Material Change
---------------
As of the Transfer Date, no material adverse change shall have
occurred in the operating results, financial condition, business, properties,
assets or liabilities of any of the Companies or Subsidiaries since the date of
the Financial Statements.
3.8 Guarantee
---------
The Seller shall have caused Mr. Francois Chaillou to execute the
Guarantee, TMI to execute the TMI Guarantee and shall have delivered the
Guarantee and the TMI Guarantee to the Buyer.
3.9 Loans
-----
The Seller shall have delivered to the Buyer certificates delivered by
the statutory auditors of Talisman and Groupe DAFSA confirming that ANNEX D
listing all the Loans, as at the date hereof, constitutes an accurate and
complete listing of all the liabilities for borrowed money of Talisman, Groupe
DAFSA and the Subsidiaries except for (i) the Bridge Loan, (ii) any financing
granted by Societe Generale to Groupe Dafsa pursuant to a general Dailly law
assignment of receivables dated as of April 20, 1994 and (iii) any financing
granted by Societe Generale to Dafsa Edition pursuant to a factoring agreement
dated as of December 11, 1995.
3.10 Annual Meetings
---------------
The audited balance sheets, statements of income and annexes thereto of
Talisman and each of the Subsidiaries shall have been approved without
reservations or qualifications by their shareholders or partners at duly
convened ordinary shareholders or partners meetings.
SECTION IV - CONDITIONS OF THE SALE BY THE SELLER OF THE SHARES
- ---------- --------------------------------------------------
The Parties agree that the Seller's obligation to sell the Shares
to the Buyer shall be subject to the satisfaction, or
21
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waiver by the Seller, of the following conditions on or before the Transfer
Date, the satisfaction of such conditions having no retroactive effect:
4.1 Representations and Warranties
------------------------------
The representations and warranties made herein by the Buyer in
Section VI of this Agreement shall have been true and correct as of the date
hereof, and shall be true and correct as of the Transfer Date (except as to such
representations and warranties which by their terms apply to an earlier date).
There shall not be, as of the Transfer Date, any event or fact which might alter
or modify in any respect such representations and warranties.
4.2 Certificate of the Buyer
------------------------
The Buyer shall have delivered to the Seller a certificate, dated
as of the Transfer Date and signed by the Buyer, certifying the fulfillment of
the conditions specified in Section 4.1 hereof.
4.3 Consents, Authorizations
------------------------
All filings, orders, consents, permits, authorizations, approvals
and waivers of governmental and regulatory authorities required for the
consummation of the transactions contemplated hereby or any other agreements
contemplated hereunder and all filings, registrations and notifications to or
with all Persons required with respect to the consummation by the parties hereto
of the transactions contemplated hereby, shall have been obtained or given. It
is agreed by both parties that the filing with the French Ministry of Finance
will be effected by the Buyer upon the signing of this Agreement by the Buyer
and does not constitute a condition precedent to the sale by the Seller of the
Shares.
4.4 Corporate Action
----------------
All corporate action, if any, necessary to authorize the execution
and delivery by the Buyer of this Agreement and the performance by the Buyer of
its obligations hereunder shall have been duly and validly taken by the Buyer.
4.5 No Action or Proceeding
-----------------------
There shall be no action or proceeding commenced or, to the
knowledge of the parties, threatened before any legal or administrative tribunal
or by any administrative organization, and no judgement, order or injunction
shall have been rendered by any such tribunal or organization for the purpose of
restraining or prohibiting the transactions contemplated in this Agreement.
22
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SECTION V - REPRESENTATIONS AND WARRANTIES OF THE SELLER
- --------- --------------------------------------------
Subject to the exceptions and disclosures made in the Schedules
hereto, the Seller hereby represents and warrants to the Buyer on the date
hereof and, unless otherwise specifically provided for, on the Transfer Date, as
follows: Each such representation and warranty is subject to the disclosures set
forth in the Schedule or portion thereof, if any, specifically referenced in
such representation and warranty, such schedule being attached to this Agreement
and established as at the date of signature of this Agreement and shall not be
modified in any manner whatsoever after the date of signature of this Agreement.
Unless otherwise specifically indicated, the representations and warranties made
by the Seller hereunder are not subject to any knowledge qualification.
5.1 Incorporation and Corporate Capital of Talisman
-----------------------------------------------
(a) Talisman is a "societe anonyme" whose registered office is located
at 11 rue Robert de Flers, 75015 Paris, registered with the Registry of Commerce
and Companies of Paris, under number B 352 936 876. Talisman is duly
incorporated and validly existing under the laws of France and has the full
power and authority to own its assets and conduct its business as now being
conducted.
(b) Talisman has a capital of FRF 250,000 consisting of 2,500 shares
with a par value of FRF 100 each. The Shares are fully paid up, validly issued
and not subject to any calls, or assessments and may be transferred to the Buyer
free from any preemptive rights, or rights of first refusal or Encumbrances.
Talisman has not issued, and has not made any commitment providing for
the issuance of, any shares (with or without voting rights), any securities
convertible into, exchangeable for, or giving rights to shares of capital stock
or any other securities of Talisman. On the Transfer Date, the Seller will own
all the Shares free and clear from any Encumbrances. The Shares have all the
same rights and there are no voting agreement or any other agreements or
understandings of any kind relating to shareholders' rights to the Shares except
for the provisions of the by-laws of Talisman and the provisions of this
Agreement and its annexes. The right to receive dividends on any of the Shares
has not been transferred, assigned or sold and is not subject to any
Encumbrance.
(c) On the Transfer Date, Talisman will own one hundred percent of the
shares of Groupe DAFSA, all such shares being fully paid up, validly issued and
not subject to any calls, assessments, or any Encumbrance.
23
- 19 -
5.2 Incorporation and Corporate Capital of Groupe DAFSA
---------------------------------------------------
(a) Groupe DAFSA is a "societe anonyme" whose registered office is
located at 11 rue Robert de Flers, 75015 Paris, registered with the Registry of
Commerce and Companies of Paris, under the number B 388 299 893. Groupe DAFSA is
duly incorporated and validly existing under the laws of France and has the full
power and authority to own its assets and conduct its business as now being
conducted.
(b) Groupe DAFSA has a capital of FRF 2,810,000, consisting of 281,000
shares with a par value of FRF 10 each, all such shares being fully paid up,
validly issued and not subject to any calls or assessments or Encumbrances.
(c) Groupe DAFSA has voted the issuance of the Subscription Rights in
favor of Talisman. Talisman has never paid the purchase price for any such
Subscription Rights and on the Transfer Date, no Subscription Right has been
purchased and no person has any rights thereto, or any claim against Talisman
and/or its Subsidiaries in connection therewith. All such Subscription Rights
are on the Transfer Date null and void. Except for the Subscription Rights,
Groupe DAFSA has not issued, and has not made any commitments providing for the
issuance of, any shares (with or without voting rights), any securities
convertible into, exchangeable for, or giving rights to shares of capital stock
or any other securities of Groupe DAFSA or of Talisman. The shares of Groupe
DAFSA all have the same rights and there are no voting agreements or any other
agreements or understandings of any kind relating to shareholders' rights to
such shares except for the provisions of the By-laws of Groupe DAFSA and the
provisions of this Agreement and its annexes. The right to receive dividends non
any shares of Groupe DAFSA has not been transferred, assigned, mortgaged or sold
in any manner.
5.3 Subsidiaries
------------
(a) SCHEDULE 5.3(a) indicates the names, jurisdictions of
incorporation and corporate capital and managers of each of the Subsidiaries as
well as the identity and percentages held by all of its shareholders or
partners. All the shares and equity interests in each of the Subsidiaries are
held free and clear of any Encumbrances. Talisman is not involved in any manner
in the management, including on a DE FACTO basis, of any Person other than the
Subsidiaries, and does not have any liability, contingent or otherwise in
connection with any past or current interest in any Person other than the
Subsidiaries.
(b) All the shares or equity interests of each of the Subsidiaries are
fully paid up and validly issued and are not subject to any calls, assessments
or Encumbrances. Except as set forth in this Agreement, none of the Subsidiaries
has issued, or has made any commitment providing for the issuance of any new
shares (with or without voting rights), any securities
24
- 20 -
convertible into, exchangeable for, or giving rights to shares of capital stock
or any other securities. SCHEDULE 5.3(b) lists all commitments of Talisman or
the Subsidiaries to acquire shares or equity interests in the Subsidiaries.
(c) Each of the Subsidiaries:
(i) is duly organized and validly existing under the laws of its
jurisdiction of incorporation;
(ii) has the full power and authority to own its assets and
conduct its business as presently conducted;
(iii) except as set forth in SCHEDULE 5.3(c), does not own any
share of or equity interest in any other Person, and does not have
any liability, contingent or otherwise in connection with any past
or current interest in any Person; and
(iv) has neither taken part in the management of any other
Person, including, on a DE FACTO basis, nor, except as set forth
in SCHEDULE 5.12(b) granted any warranties, guarantees, comfort
letters or other commitments in favor of any third party.
(d) With respect to any Subsidiary having the form of a "societe en
participation", the Seller represents and warrants that (i) all commitments of
any such Subsidiary, whether actual or contingent, are listed in SCHEDULE
5.3(d), (ii) neither Talisman nor any of its Subsidiaries has disclosed to any
third parties its participation in any such "societes en participation", or has
acted as manager of any such "societes en participation" and (iii) the existence
of any such "societes en participation" has not been disclosed to any third
parties, except to the French tax administration.
5.4 Compliance with Laws and Obligations
------------------------------------
The business of Talisman and of each of the Subsidiaries is being
conducted in compliance with its by-laws and other governing documents and in
compliance with all applicable laws, orders, rules, and decrees and all
judgments, injunctions or other orders of any court, any arbitral tribunal or
government authority or subdivision thereof. Talisman and each of the
Subsidiaries has all licenses, permits or authorizations which are required to
conduct their business as it is presently conducted. Each such licenses, permits
and authorizations is in full force and effect and Talisman and each of the
Subsidiaries conducts its business in compliance with all such licenses, permits
and authorizations.
Talisman and each of the Subsidiaries has performed all of its
obligations under all of the contracts, agreements,
25
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permits, or undertakings by which it is bound without any material default.
5.5 Corporate and Business Records
------------------------------
The copies of the by-laws and other governing documents, minute
books and shareholders' records of Talisman and of each of the Subsidiaries
previously delivered to the Buyer and listed in SCHEDULE 5.5 constitute true and
complete copies of such by-laws, governing documents, minute books and
shareholder records and include all amendments to such by-laws and governing
documents and all minutes of all meetings of the shareholders and directors
and/or managers of Talisman and each of the Subsidiaries from the date of
incorporation of the relevant entity up to and including the date hereof. On the
Transfer Date, except as expressly provided in this Agreement, no change in such
by-laws or other governing document will have occurred. Talisman and the
Subsidiaries hold all statutory books required by applicable laws and
regulations. All statutory books including all accounting ledgers, financial
documents and tax returns are held in an organized fashion, and in accordance
with applicable laws and regulations, at the respective registered office of
Talisman and the Subsidiaries. All customer records or lists, market
information, marketing or business plans or any other similar business records,
documents or material are held in organized fashion at the respective registered
office of Talisman and the Subsidiaries.
5.6 Authorization; Valid and Binding Agreement
------------------------------------------
The execution and performance of this Agreement and all other
agreements, documents and instruments to be executed in accordance with this
Agreement has been duly authorized by all necessary and proper corporate actions
of the Seller. Subject to the provisions of Section 5.7 hereof, no further
proceeding, action or consent on the part of the Seller, Talisman or the
Subsidiaries or any other Person, is necessary to authorize this Agreement or
the other agreements, documents or instruments executed by the Seller pursuant
to this Agreement or in order to consummate the transactions contemplated hereby
or thereby. This Agreement and all other agreements, documents and instruments
to be executed in accordance with this Agreement constitute, or once executed
will constitute, legal, valid and binding obligations of the Seller enforceable
in accordance with their terms.
5.7 Government Authorizations
-------------------------
Except for the filing with the French Treasury Department of the
French Ministry of Economy and Finance, no consent, approval or authorization of
any governmental or regulatory authority, whether national or local, or any
filing with any such authority, is required in connection with the execution and
performance by the Seller of this Agreement or any other agreement contemplated
hereunder.
26
- 22 -
5.8 Other Agreements - Laws
-----------------------
Neither the execution of this Agreement nor the performance nor
the consummation of the transactions contemplated by this Agreement shall cause
any violation of, default under, (i) any provision of the by-laws or other
governing document of the Seller, Talisman or any of the Subsidiaries, (ii) any
decision, orders, judgment or arbitration award binding the Seller, Talisman or
any of the Subsidiaries, (iii) any contract, agreement or instrument to which
the Seller, Talisman or any of the Subsidiaries is a party, or (iv) any law,
statute, ordinance, rule or order.
5.9 No Finders
----------
The Seller has not used the services of, or entered into any
agreement with, a broker, agent or finder in connection with this Agreement or
the transactions contemplated hereby which could result in a payment obligation
on the part of Talisman, any of the Subsidiaries or the Buyer.
FINANCIAL REPRESENTATIONS AND WARRANTIES
5.10 Financial Statements
--------------------
The Seller has delivered to the Buyer (i) the audited balance
sheets, statements of income and annexes thereto of Talisman and each of the
Subsidiaries as of December 31, 1995, accompanied by the statutory auditors and
directors reports, and (ii) the unaudited balance sheets, statements of income
and annexes thereto of Talisman and each of the Subsidiaries for the first four
months of 1996 (all of the statements referred to in this paragraph to be
collectively referred to as the "FINANCIAL STATEMENTS"). The Financial
Statements, together with the notes thereto, and the description of the
accounting principles applied by Talisman and the Subsidiaries which are
attached hereto as SCHEDULE 5-10, are correct and complete and fairly represent
the financial position of Talisman and the Subsidiaries as of such dates and the
results of their operations for such periods then ended. The Financial
Statements have been prepared in accordance with the generally accepted
accounting principles in force in France applied on a consistent basis during
the periods covered by the Financial Statements, except as otherwise indicated
therein. Since the Financial Statements, no change or commitments to such
effect, in any method of accounting or accounting practice and no reevaluation
of any fixed asset or goodwill has occurred or been made.
27
- 23 -
5.11 Absence of Significant Changes
------------------------------
Except as set forth in SCHEDULE 5-11 or otherwise explicitly set
forth herein or in the Annexes or Schedules hereto, since December 31, 1995
until the date hereof:
(a) there has been no issuance of shares of stock of or equity
interest in Talisman or in any Subsidiary and no contribution to the capital of
Talisman or of any Subsidiary;
(b) there has not been (i) any declaration or payment of dividend or
other distribution of capital or income to shareholders in respect of shares of,
or equity interest in, Talisman or any Subsidiary or (ii) any commitment to
issue or sell any shares or equity interest in Talisman or any Subsidiary or
(iii) any commitment to grant any stock options or to redeem, purchase or
otherwise acquire any shares of, or equity interest in, Talisman or any
Subsidiary;
(c) neither Talisman nor any of the Subsidiaries has engaged in any
activity which has had or might reasonably be expected to have a material
adverse effect on its financial condition, results of operations, business,
property or assets;
(d) there has not been any sale or disposition of any property or
assets of Talisman or of any of the Subsidiaries; any cancellation of
receivables, debts or claims of Talisman or of any Subsidiary; any sale,
transfer or license of know-how, trade secrets, intellectual property rights or
any other intangible assets; any lease of property by Talisman or any
Subsidiary; in each case other than in the ordinary course of business, or any
mortgage, pledge or encumbrance of any property or assets of Talisman or any of
the Subsidiaries;
(e) there has not been any amendment of any Material Contract;
(f) neither Talisman nor any of the Subsidiaries has (i) issued any
guarantee relating to any indebtedness for borrowed money or (ii) incurred,
other than in the ordinary course of business, any other indebtedness;
(g) there has not been any damage, destruction or loss (whether or not
covered by insurance) adversely affecting the assets, properties or business of
Talisman or of any Subsidiary other than normal wear and tear;
(h) there has not been any labor dispute adversely affecting Talisman
or any of the Subsidiaries;
(i) neither Talisman nor any of the Subsidiaries has paid or committed
itself to pay to, or for the benefit of, any of its directors, managers,
officers or employees any salary, wages or
28
- 24 -
other compensation, other than at rates in effect on December 31, 1995;
(j) there has not been any payment or contribution or obligation
incurred by Talisman or any Subsidiary pursuant to any plan or contract
providing for bonuses, pensions, deferred compensation, retirement payment,
profit sharing or the like except for any payment or contribution incurred
pursuant to any such plan or contract specified in Section 5.21;
(k) neither Talisman nor any of the Subsidiaries has canceled or
waived any claims or rights of substantial value;
(1) neither Talisman nor any of the Subsidiaries has otherwise
conducted its business or entered into any transaction, except in the usual and
ordinary manner and in the ordinary course of business;
(m) there has been no material increase in the lease rates paid by
either Talisman or any of the Subsidiaries in respect of any real property
leased by Talisman or any such Subsidiary otherwise than in accordance with the
terms of the relevant lease;
(n) neither Talisman nor any of the Subsidiaries has been the subject
of any judicial or liquidation proceeding except with respect to the "societe en
participation" Dafsa-Quest which is being amicably liquidated by its partners;
and
(o) there has been no material adverse change in the assets or
liabilities, or in the business or condition, financial or otherwise, or in the
results of operations of Talisman or any of the Subsidiaries.
5.12 No Undisclosed Liabilities
--------------------------
(a) There is no material liability of Talisman or any Subsidiary with
the exception of the liabilities (i) shown in the Financial Statements as of
December 31, 1995, (ii) arising in the ordinary course of business since
December 31, 1995, or (iii) disclosed in this Agreement or in any Annex or
Schedule thereto.
(b) Except as set forth in SCHEDULE 5.12(b), there are no off-balance
sheet liabilities ("engagements hors bilan"), as such term is defined under
French generally accepted accounting principles and which pursuant thereto
should be reflected in the notes and annexes to the notes to the financial
statements of Talisman or of the Subsidiaries.
(c) Neither Talisman nor any of the Subsidiaries is a party to any
"fronting transaction" ("operation de portage"), swap agreement, option
agreement, any other financial forward agreement or has purchased or held any
derivative or future instrument.
29
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5.13 Taxes - Labor Contributions
---------------------------
(a) Talisman and each of the Subsidiaries has (i) timely filed or
caused to be filed (either independently or on a consolidated or groupe basis)
all tax returns, reports, schedules, declarations, and tax-related documents
(including any income tax returns of any group of which it is or was a member)
and any return, report, declaration or other document to be filed in connection
with social security, labor regulations, social regulations of any nature
whatsoever, and any return to be filed in connection with exchange control
regulations (collectively, "TAX RETURNS") required to be filed until the
Transfer Date with any jurisdiction to which it is or has been subject, and has
timely paid or caused to be paid in full or has established adequate reserves
for the payments of all taxes which are due and payable to any authorities for
such periods, (ii) fully paid or accrued on its respective books an amount
sufficient to pay all taxes in respect of the period from December 31, 1995 up
to and including the Transfer Date which are not yet due and payable, (iii) made
or caused to be made all withholdings of taxes required to be made, and such
withholdings have either been paid to the appropriate government agency or set
aside in accounts for such purpose, and (iv) otherwise satisfied, all legal
requirements applicable with respect to all aforementioned obligations to all
jurisdictions. All Tax Returns filed or caused to be filed by or in respect of
Talisman or any Subsidiary either individually or on a consolidated or group
basis correctly reflect in all material respects the income, expenses,
deductions, allowances, credits, loss carryovers, and taxes due in respect of
Talisman and each Subsidiary, and are otherwise accurate and complete in all
material respects. Neither Talisman nor any of the Subsidiaries has any
liability whether directly, as a transferee, or as a member of a group having
another company as its parent for taxes for any period up to and including the
Transfer Date in excess of the amounts paid, accrued or reserved on the books
and records of Talisman or of the relevant Subsidiary.
(b) Talisman is a party to a tax group, set up on December 22, 1993 as
set forth in SCHEDULE 5.13 (b).
(c) Except as set forth in SCHEDULE 5.13 (c), there is no actual or
proposed material additional tax assessment, reduction in tax loss carry forward
or disallowance of any exemption, deduction or recovery made with respect to
Talisman or any Subsidiary for any fiscal year for which there has not been an
accrual in the Financial Statements of Talisman or any such Subsidiary.
(d) Except as set forth in SCHEDULE 5.13(d), Talisman and the
Subsidiaries have not executed or filed with any domestic or foreign taxing or
social security or labor authority any agreement extending the period of
assessment or collection of any taxes.
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(e) Talisman or any of the Subsidiaries has not recovered taxes to
which it was not entitled.
(f) A tax group has been validly set up on December 22, 1992, among
Talisman and Groupe DAFSA; such tax group is in effect as at the Transfer Date.
SCHEDULE 5.13(f) sets forth all the tax losses of Talisman, as holding company
of the tax group, and the periods during which any such tax losses may be
carried forward under currently applicable laws and regulations.
(g) For purposes of this Section 5.13, "tax" and "taxes" shall include
all income, gross receipts, franchise, excise, transfer, severance, value added,
sales, use, wage, payroll, workmen's compensation, employment, occupation, and
real and personal property taxes and social security, unemployment and other
social contribution of any nature whatsoever; taxes measured by or imposed on
capital or turnover; levies, imposts, duties, custom duties, licenses, and
legislation fees; other taxes imposed by any state, municipal, local or other
governmental authority or agency, including assessments in the nature of taxes;
and including, without limitation, interest, penalties, fines, assessments and
deficiencies relating to any tax or taxes.
(h) It is expressly agreed by the parties to this Agreement that no
disclosure made by the Seller in this Agreement, including in SCHEDULES 5.13
(b), (c), (d) and (f) attached hereto, shall in any way release the Seller of
its obligations to indemnify the Buyer under Section VIII hereof in connection
with any fact, action, omission, any tax assessment, reduction in tax loss carry
forward (to the extent that, with respect to tax loss carry forward of Talisman,
the aggregate amount of the remaining tax loss carry forward is below USD
5,500,000 times the Exchange Rate), and any disallowance of any exemption
referred to in this Section 5.13.
5.14 Litigation
----------
SCHEDULE 5-14 sets forth a complete list of all suits,
arbitrations or proceedings (Court proceedings or other proceedings, including
administrative proceedings or governmental investigations) pending or, to the
best knowledge of the Seller, after having completed all due inquiry, threatened
against (i) the Seller with respect to the transactions contemplated hereunder
or (ii) Talisman or any Subsidiary. To the best knowledge of the Seller after
having completed all due inquiry, no event has occurred or exists which could
give rise to any such action, proceeding or investigation. It is expressly
agreed by the parties to this Agreement that no disclosure made by the Seller in
this Agreement, including in SCHEDULE 5.14 attached hereto, shall in any way
release the Seller from its obligation to indemnify the Buyer under Section VIII
hereunder in connection with any suit, arbitration or proceedings referred to in
this Section 5.14.
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5.15 Inventories
-----------
All inventories, raw materials, work in process, parts and
finished goods (hereinafter referred to as "INVENTORIES") of Talisman and the
Subsidiaries shown on their balance sheet at December 31, 1995 and on the books
of Talisman and the Subsidiaries at the date hereof and on the Transfer Date,
consist of usable items which, subject to the provisions of the following
sentence, as to quality and quantity, are saleable in the ordinary course of
business and represent all of the inventories of Talisman and the Subsidiaries
on such dates. The value of obsolete materials and materials below standard
quality has been written down to realizable market value or adequate reserves
have been provided therefore, in accordance [with the accounting principles
described in SCHEDULE 5.10]. Inventories are in a normal and adequate quantity
with regard to the business of Talisman and Subsidiaries and to past levels of
inventories of Talisman and Subsidiaries for a similar level of activity, as
such levels of inventories are set forth in the Financial Statements and
financial statements of such companies for fiscal years prior to 1995.
BUSINESS REPRESENTATIONS AND WARRANTIES
5.16 Assets
------
(a) Owned Land and Buildings
Talisman and each Subsidiary does not own any real property,
building or other structure or fixture permanently attached thereon or thereto,
except the computer network in so far as it can be characterized as such fixture
permanently attached thereon.
(b) Machinery and Equipment
Talisman and each Subsidiary has good and marketable title to or
leases all machinery, equipments, vehicles, furniture and tools and any related
capitalized items and all tangible property material to the business of Talisman
and each such Subsidiary (all of the foregoing being hereinafter sometimes
collectively referred to as "TANGIBLE PROPERTY") necessary for the conduct of
its business. All such Tangible Property has been maintained in good repair,
subject to normal wear and tear, and is in satisfactory operating condition
without present need for repair or replacement outside the ordinary course of
business and is operated in conformity with all material applicable laws and
regulations. There is no default under any lease relating to any such leased
equipment.
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5.17 Material Contracts
------------------
SCHEDULE 5-17 hereto includes a complete list as of the date
hereof of all Material Contracts pertaining to any of the Section 5.17 (a)
through (m), identifying:
(a) Any partnership, joint venture, shareholders' agreement or similar
agreement to which Talisman or any of the Subsidiaries is a party;
(b) Any contract or agreement under which Talisman or any of the
Subsidiaries makes or receives payments in excess of 100,000 Francs (or the
countervalue thereof in the relevant currency) during the current fiscal year;
(c) Any other contract or agreement entered into between Talisman or
any Subsidiary, on the one hand, and the Seller or any Affiliate of the Seller,
on the other hand;
(d) Any loan by or to Talisman or any of the Subsidiaries, credit or
overdraft facility, guarantee or other agreement with respect to indebtedness or
money borrowed for an amount in excess of ten thousand French Francs (FF 10,000)
or the countervalue thereof in the relevant currency or commitment relating to
the making of any loan, credit, overdraft facility or guarantee (other than
standard terms of payment of trade indebtedness incurred in the ordinary course
of business of Talisman or the Subsidiaries);
(e) Any written agreement to which Talisman or any of the Subsidiaries
is a party and which, as a direct result of the performance or consummation of
the transactions contemplated by this Agreement, may be terminated, accelerated
or subject to any other changes to the rights and obligations of Talisman or any
Subsidiary in accordance with its specific terms;
(f) Any contract or agreement containing a covenant by Talisman or any
of the Subsidiaries not to compete in any line of business or with any Person or
otherwise restricting the type of business which may be conducted by Talisman or
the Subsidiaries;
(g) Any secrecy, trade secrets, confidentiality or similar agreement
to which Talisman or any of the Subsidiaries is a party;
(h) Any collective bargaining or trade union agreement to which
Talisman or any of the Subsidiaries is a party or by which any of them is bound;
(i) Any material management service, consulting or any other similar
type contract to which Talisman or any Subsidiary is a party;
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(j) Any lease pursuant to which Talisman or any of the Subsidiaries
leases either real, personal property or intangible assets from or to third
parties and which involves annual rental payment in excess of FRF 100,000 or the
countervalue thereof in the relevant currency;
(k) Any financial lease, any sale/lease back transaction;
(1) Any agreement, contract or commitment not entered into in the
ordinary course of business to which Talisman or any Subsidiary is a party; and
(m) any contract or agreement with a customer or a supplier of
Talisman and/or the Subsidiaries.
(Such agreements, contracts, or understandings shall be
collectively referred to hereafter as the "MATERIAL CONTRACTS").
Except as otherwise provided for in SCHEDULE 5.17, each Material
Contract is in full force and effect and there is no default or event of default
or event, occurrence, condition or act (including the execution and consummation
of this Agreement) which, with the giving of notice, the lapse of time or the
happening of any other event or condition would become a default or event of
default thereunder or allow termination thereof. Neither Talisman nor any of the
Subsidiaries has violated any of the terms or conditions of any Material
Contract and to the best knowledge, information and belief of the Seller, after
having completed all due inquiry, all the covenants to be performed by any other
party thereto has been fully performed.
5.18 Leases
------
SCHEDULE 5-18 sets forth an accurate list (specifying the date,
duration and rental payments of the lease agreement, the nature of the assets or
premises leased and the name of the lessor and lessee) of:
(a) all leases under which Talisman or any of the Subsidiaries is a
lessee or a lessor of premises,
(b) all leases pursuant to which Talisman or any of the Subsidiaries
leases personal property, or intangible assets, from or to third parties and
which involve annual rental payments in excess of FRF 20,000 or the countervalue
thereof in the relevant currency.
All rents due pursuant to the leases mentioned in SCHEDULE 5-18
have been paid, except where being contested in good faith as set forth in
SCHEDULE 5-18. Neither Talisman nor any of the Subsidiaries (i) has violated any
of the material terms or conditions under any such lease, (ii) has taken any
action which could result, directly or indirectly, in an increase
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of the applicable rent, and all the material covenants to be performed by any
other party under any such lease have been fully performed. In each case, the
lessee has been in peaceable possession of the rented property since the
commencement of the original term of such lease and is not in default
thereunder. In each case the premises and the use thereof comply in all material
respects with all laws and regulations applicable to the type of activity
carried on therein, including but not limited to, zoning, environment and
security.
All of the leases mentioned in (a) and (b) above are valid,
binding and enforceable against the parties thereto in accordance with their
terms, and are in full force and effect.
Talisman and each of the Subsidiaries has complied with all its
obligations as lessor or lessee under any lease which is terminated as of the
date hereof and has no liability, contingent or otherwise, in connection
therewith.
Except as set forth in Schedule 5.18, any deposit made by Talisman and
the Subsidiaries, as lessee, under any lease which is terminated as of the date
hereof has been fully repaid to Talisman and the Subsidiaries, or shall be fully
repaid to Talisman and the Subsidiaries within the time period set forth in the
relevant agreement between the lessee and the lessor, and no third party has any
right to any such deposit.
5.19 Insurance
---------
SCHEDULE 5-19 contains the list of material insurance policies
maintained by Talisman and each of the Subsidiaries with respect to their
businesses, properties, assets and employees, indicating their renewal dates.
Such policies are valid and will be in effect without further payment of any
premium until a date not earlier than December 31, 1996.
There has been no lapse or cancellation of coverage as a result of
any default of payment of any premium or otherwise with respect to such policies
covering the period extending up to the date mentioned in SCHEDULE 5-19 and no
notice of cancellation or termination has been received with respect to any such
policy.
Such policies, with respect to their amount and types of coverage,
are adequate to insure fully against risks to which Talisman and the
Subsidiaries and their properties and assets are exposed in the operation of
their respective business.
Since December 31, 1995, there has not been any material adverse
change in Talisman or any of the Subsidiaries relationships with its insurers or
in the premiums payable pursuant to such policies. None of the transactions
contemplated in this Agreement would permit the insurers to deny or avoid
coverage under such policies. The Seller, after having completed
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due and careful inquiry, has no knowledge of any state of facts or of the
occurrence of any event that is reasonably likely to form the basis for any
material claim not fully covered by the policies referred to in SCHEDULE 5-19.
5.20 Labor matters
-------------
Except as set forth in SCHEDULE 5-20, there are no agreements or
arrangements with any present or former directors, managers (including any
"gerant", whether or not such gerant is an employee ("salarie")), employees,
salesmen, consultants or agents that are not in the ordinary course of business
of Talisman or any of the Subsidiaries. Except as set forth in Schedule 5-20,
there is no such director, manager, employee, salesman, consultant or agent:
(i) whose termination would require payment by Talisman or any
Subsidiary of an amount exceeding that provided by law or
by the applicable collective bargaining agreement;
(ii) who has an employment contract or other agreement entitling
him to an annual salary or other compensation in excess of
two hundred thousand French francs (FRF 200,000), or the
countervalue thereof in the relevant currency or whose
compensation or other benefits are based on the results of
Talisman or any Subsidiary;
(iii) who has the right to employment benefits or rights or
pension or other retirement benefits exceeding those
provided by law or the applicable collective bargaining
agreement; or
(iv) who owes Talisman or any Subsidiary any amount with regard
to outstanding loans or advances extended to such person.
Talisman and each of the Subsidiaries:
(w) is in compliance with all applicable laws, rules and
regulations relating to wages, hours, labor regulations
(including work conditions and safety regulations) and
collective bargaining agreements;
(x) has complied in all respects with its payment obligations
under any applicable program of workmen's compensation,
unemployment, redundancy, termination or social security or
indemnity insurance required by any law, the applicable
collective bargaining agreement, or any agreement set forth
in SCHEDULE 5-21;
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(Y) has complied with the payment of and has withheld all
amounts required by applicable law or agreement to be
withheld from the wages or salaries of its employees,
managers or directors and is not liable for any arrears of
wages or any penalties for failure to comply with any of
the foregoing; and
(z) except as set forth in Schedule 5.14, has made proper
provisions in its accounts against any and all obligations
in relation to the past or present services or benefits of
any present or former director, manager, employee,
salesman, consultant or agent, and the aggregate of all
such provisions are indicated in the Financial Statements.
SCHEDULE 5-20 sets forth a list of the directors, managers,
employees, salesman, consultant or agent, employed by Talisman and each
Subsidiary and the employment agreement together with any other agreement
providing for any additional compensation of the three principal managers of
Talisman and each Subsidiary. Except as set forth in SCHEDULE 5-20, Talisman and
each Subsidiary has not at any time since January 1, 1993 had, nor, to the
knowledge of the Seller, is there now threatened, a strike, work stoppage, work
slowdown, or other labor trouble that had or may have a material adverse effect
on the assets, properties, business, operations or condition (financial or
otherwise) of Talisman or any Subsidiary. SCHEDULE 5-20 lists all collective
bargaining agreements applicable to Talisman and each Subsidiary enforceable
between or adopted by, Talisman or any Subsidiary and any trade union or other
body representing its employees.
5.21 Benefit Plans
-------------
Except for the pension arrangements described in SCHEDULE 5-21,
for the compulsory provisions of the social security regime and for the
compulsory profit sharing, pensions or benefits resulting from applicable labor
laws or collective bargaining agreements, neither Talisman nor any of the
Subsidiaries has any bonus, retirement, supplementary insurance, profit sharing,
growth sharing, company savings plan, retirement bonus, stock purchase or stock
option, bonus share or employee funds (FONDS SALARIAUX) for the benefit of its
employees (hereinafter collectively the "BENEFIT PLANS"). Except as set forth in
SCHEDULE 5.21, all Benefit Plans are fully paid up or fully funded, or adequate
provisions for all liabilities or obligations of Talisman and of any of the
Subsidiaries thereunder in respect of or relating to any period or portion
thereof ending on or before December 31, 1995, have been made in the Financial
Statements.
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5.22 Proxies - Bank Accounts
-----------------------
SCHEDULE 5-22 contains an accurate and complete list of all
individuals who received from Talisman or any of the Subsidiaries a general or
specific proxy and of all individuals having bank signing powers for the
accounts of Talisman or any of the Subsidiaries along with, in the latter case,
the name of the bank or financial institution with which such proxy or mandate
was filed. A description of the bank accounts of Talisman and each of
Subsidiaries is set forth in SCHEDULE 5-22.
5.23 No Bankruptcy
-------------
Neither Talisman nor any of the Subsidiaries is in a state of not
meeting payments when they become due ("cessation de paiements") or the subject
of any judicial or amicable procedure of bankruptcy, insolvency, receiverships,
reorganization, winding up or liquidation proceedings, or is subject to any
judicial or administrative proceedings to such effect[, except as indicated in
Section 5.11 (n) hereof.]
5.24 Patents, Marks, Commercial Names and Copyrights
-----------------------------------------------
(a) SCHEDULE 5.24 (a) sets forth a complete and accurate list of (i)
all patents, including all reissues, reexaminations, continuations,
continuations-in-part and divisions thereof, all trademarks, service marks, and
designs, and all copyrights that, in the case of each of the foregoing items
described in this Clause (i), have been issued to or registered by Talisman or
any of the Subsidiaries; (ii) all pending patent applications and all pending
trademark, service mark and design applications and all pending applications for
the registration of copyrights in each case filed by or on behalf of the Company
or any Subsidiary; and (iii) all material unregistered trademarks, service
marks, trade names, service names, design rights, topography rights, logos and
assumed names which are owned by Talisman or any of the Subsidiaries. SCHEDULE
5.24 (a) also identifies each material license or similar material agreement
entered into by Talisman or any of the Subsidiaries, with respect to any
Intellectual Property (as hereinafter defined).
(b) Except as disclosed in SCHEDULE 5.24 (b), Talisman or any of the
Subsidiaries (i) is the sole and exclusive owner of the Intellectual Property
described in Sub-Clause 5.24 (a) and listed in SCHEDULE 5.24 (a); and (ii) is
listed in the records of the appropriate agency as the sole and exclusive owner
of record for each registration and grant listed in SCHEDULE 5.24 (a). All
registration and maintenance fees that have become due and payable to any
governmental agency in respect of any Intellectual Property owned by Talisman or
any of the Subsidiaries and for which a patent or registration has been issued,
have been paid, and no act has been done or omitted to be done by Talisman or
any of the Subsidiaries or, to the knowledge of Seller, any licensee,
distributor, sublicensee, or
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sub-distributor thereof, to impair or dedicate to the public or entitle any
governmental authority to cancel, forfeit, modify or hold abandoned any of such
Intellectual Property so owned by Talisman or any of the Subsidiaries and listed
in SCHEDULE 5.24 (a) and to the knowledge of Seller, all such Intellectual
Property so owned and listed is valid and enforceable.
(c) Except as set forth in SCHEDULE 5.24 (c): (i) there are no pending
or, to Seller's knowledge, threatened suits, claims, oppositions or other
challenges by any person against the ownership by Talisman or any of the
Subsidiaries or the use or prospective use by Talisman and the Subsidiaries of
any of the Intellectual Property owned or used by it; (ii) Talisman and the
Subsidiaries are in material compliance with the terms of all licenses, leases
or other agreements under which the right to use any of the Intellectual
Property listed in SCHEDULES 5.24 (a) AND 5.24 (e) arose or pursuant to which
Talisman or any of the Subsidiaries licenses or otherwise distributes such
Intellectual Property to any third party; and (iii) the use of any Intellectual
Property by Talisman or any of the Subsidiaries in connection with the conduct
of the business of Talisman or any of the Subsidiaries as currently conducted
does not infringe upon or otherwise violate any right of any third party.
(d) Talisman and each of the Subsidiaries owns or is licensed or
otherwise has the right to use, all Intellectual Property used by it in, or
necessary for it to conduct, its businesses as currently conducted, free and
clear of all Encumbrances, including without limitation (i) any computer
programs, and (ii) any user manuals, technical manuals, or other documentation,
or any advertisements or other materials, related to such Intellectual Property,
which are offered or made available to Talisman's or any of the Subsidiaries'
customers by Talisman or any of the Subsidiaries, and any such licenses or
rights will remain unaffected by the execution and performance of this
Agreement.
(e) SCHEDULE 5.24 (e): (i) lists all of the material computer programs
(except off-the-shelf software programs and computer programs, but not
databases, of Talisman or any of the Subsidiaries, and databases which are
owned, licensed, leased or otherwise used by Talisman or any of the
Subsidiaries, in connection with the operation of their businesses as currently
or planned to be conducted; (ii) identifies which is owned, licensed, leased or
otherwise used, as the case may be, and by which of Talisman or any of the
Subsidiaries; and (iii) identifies all material agreements relating to such
licensing or leasing, the parties thereto and the date thereof.
(f) Except as disclosed in SCHEDULE 5.24 (f), the computer programs
used in or necessary for the conduct of the business of Talisman and the
Subsidiaries as currently conducted (including without limitation the data,
articles and other content included therein) are (i) currently in the public
domain or otherwise
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available to Talisman and the Subsidiaries without the approval or consent of
any third party, or (iii) included in such database or computer program or
system pursuant to rights granted to Talisman or any of the Subsidiaries so
including the same pursuant to a written license or lease or other consent from
a third party.
(g) Except as disclosed in SCHEDULE 5.24 (g), Talisman and each
Subsidiary, with respect to all computer programs owned by it, has taken or
caused to be taken reasonable steps to obtain and retain valid and enforceable
Intellectual Property rights therein. Except as disclosed in SCHEDULE 5.24 (g),
Talisman and each of the Subsidiaries have taken all security measures necessary
to protect the secrecy and confidentiality of all trade secrets, know-how and
other confidential information material to the conduct of the business of
Talisman and the Subsidiaries.
(h) The material computer programs listed in SCHEDULE 5.24
(e) as owned by Talisman or a Subsidiary (i) function in all material respects
reasonably in accordance with the specifications therefor published by Talisman
or any Subsidiary; (ii) provide in all material respects all of the
functionality, features and content described in any user manuals, technical
manuals, and any other documentation related thereto published by Talisman or
any Subsidiary or in any advertisements or other materials therefor made
available to Talisman's or any Subsidiary's customers by Talisman or any
Subsidiary, subject, in the case of Clause (i) and (ii) of this Section 5.24
(h), to errors and bugs that arise and are corrected in the normal course of
Talisman's or any Subsidiary's business; and (iii) to Seller's knowledge, do not
contain any Subsidiary or employees thereof that are intended to cause harm,
disable or permit unauthorized access, to software, hardware, or date.
(i) To the best of Seller's knowledge, the material computer programs
listed in SCHEDULE 5.24 (e) which are not owned by Talisman or a Subsidiary but
which are used in the conduct of the business of Talisman or any Subsidiary as
currently conducted do not contain any software routines introduced by Talisman
or any Subsidiary or any employees thereof that are intended to cause harm,
disable, or permit unauthorized access, to software, hardware, or data, and
Talisman and the Subsidiaries have taken reasonable procedures to identify any
such software routines introduced before the initial use by Talisman or any
Subsidiary.
(j) No agreement referred to in SCHEDULES 5.24 (a) AND 5.24 (e)
pursuant to which Talisman or any of the Subsidiaries has granted any right to
use any Intellectual Property conveys to any party other than Talisman or any of
the Subsidiaries any property or ownership right in or over any of such right,
interest, title in Intellectual Property, and each such party thereunder (other
than Talisman or any of the Subsidiaries) has under any such agreement only the
right to use such right, interest, title in Intellectual Property under normal
commercial terms.
40
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(k) "Intellectual Property" means domestic and foreign patents, patent
applications, registered and unregistered trade marks and service marks,
registered and unregistered copyrights, computer programs, data bases, trade
secrets and proprietary information.
5.25 No Security Interests
---------------------
Except as set forth in SCHEDULE 5-25, neither Talisman nor any
Subsidiary has granted to any third parties any pledge, lien, mortgage,
assignment, other security interest or Encumbrance in any of its assets (whether
tangible or intangible) or businesses.
5.26 Receivables
-----------
(a) Except as set forth in SCHEDULE 5-26, all receivables reflected on
the Financial Statements are adequately reserved against for bad debts and have
been collected in full as of the date of signature of this Agreement, to the
extent their face value exceeds the accruals for doubtful account with respect
thereto in the Financial Statements.
(b) All receivables owing to Talisman and any of the Subsidiaries
since December 31, 1995 have arisen in the ordinary course of business of
Talisman and the Subsidiaries, are (to the best of Seller's knowledge) legal,
valid and binding obligations, collectible in full in the ordinary course of
business of Talisman and the Subsidiaries to the extent that the face value of
the aggregate of such receivables exceeds the reserves for doubtful accounts
with respect thereto provided for in the books and records of Talisman and the
Subsidiaries, which reserves do not exceed in the aggregate the reserves for
doubtful accounts shown in the Financial Statements as at December 31, 1995.
5.27 Customer Relations
------------------
No single supplier or customer is materially important to the
business of Talisman or any Subsidiary. As of the date thereof, the Seller has
no knowledge or reason to believe, after having completed all due inquiry, that
any current substantial customer, supplier, licensor or agent of Talisman or any
Subsidiary would substantially reduce trade or materially change its
relationship with Talisman or any Subsidiary.
5.28 Subsidy, Aid and Tax Benefits
-----------------------------
Talisman and each Subsidiary is in full compliance with, and has
not breached nor violated, any representation, condition or undertaking made by
it in regard to any subsidy, aid, tax benefit, grant program, loan at
preferential rate, special contract or lease and the like made available to
Talisman or each such Subsidiary by a governmental agency, administration or
local or regional development authority. Neither this
41
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Agreement nor any transaction contemplated herein will result in any
cancellation, limitation or reduction of any such benefit or advantage or
require any accelerated repayment of, any reapplication for or reissuance of, or
any posting of additional security for the maintenance of, any such benefit or
advantage for Talisman or any Subsidiary.
5.29 Environmental Matters
---------------------
Talisman and each of the Subsidiaries is conducting and has been
conducting its business in compliance with all applicable environmental laws and
regulations.
5.30 No Claim by the Seller
----------------------
On the Transfer Date, neither the Seller nor any Affiliate,
officer, director or shareholder of the Seller will have any claim, contingent
or otherwise, against Talisman or any Subsidiary or any officer or director
thereof, including in connection with the transactions contemplated in this
Agreement.
No executive employee or manager whether employed by Talisman or
by any of the Subsidiaries or seconded to it has any claim against Talisman or
the Subsidiaries.
5.31 Contingent Liabilities
----------------------
The list of Contingent Liabilities set forth in ANNEX A is
complete and accurate and each amount set forth in such list in respect of a
Contingent Liability is sufficient to fully cover such Contingent Liability.
5.32 Loans
-----
(a) The list of Loans set forth in ANNEX D is complete and
accurate and sets forth all the liabilities for borrowed
money of Talisman, Groupe DAFSA and the Subsidiaries, to
the exception of (i) the Bridge Loan, (ii) any financing
granted by Societe Generale to Groupe Dafsa pursuant to a
general Dailly law assignment of receivables dated as of
April 20, 1994, and (iii) any financing granted by societe
Generale to Dafsa Edition pursuant to a factoring agreement
dated as of December 11, 1995;
(b) To the exception of the Bridge Loan, Talisman, Groupe DAFSA
and the Subsidiaries have no liability towards the Seller
or any Affiliate of the Seller (other than Talisman, Groupe
DAFSA and the Subsidiary) which are not completely and
accurately set forth in ANNEX D;
(c) TMI has validly waived all its rights to be repaid a
portion of its Loan to Talisman in the principal amount of
two million five hundred ninety five
42
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thousand Francs (FRF 2,595,000), reducing the remaining
amount outstanding under such Loan to eighteen million six
hundred sixty six thousand one hundred and fifty Francs
(FRF 18,666,150);
(d) Mr. Olivier ROUX has validly waived all his rights to be
repaid a portion of his Loan to Groupe DAFSA in the
principal amount of one million two hundred ninety seven
thousand five hundred Francs (FRF 1,297,500), reducing the
remaining amount outstanding under such Loan to two hundred
eighty nine thousand five hundred and fifty Francs (FRF
289,550);
(e) The Bridge Loan has been used by Talisman and the
Subsidiaries for day to day cashflow requirements, and no
penalty applies to the early repayment thereof; and
(f) All promissory notes executed by Talisman and Groupe Dafsa
in connection with the Loans are held by the Seller and the
Affiliate thereof and have not been transmitted, in any
manner whatsoever to any third party, and will be delivered
by the Seller to the Buyer on the Transfer Date, and
Talisman and its Subsidiaries have not issued any
promissory note in favor of the Seller or any Affiliate
thereof which is not delivered by the Seller to the Buyer
on the Transfer Date.
5.33 Extel
-----
Talisman and the Subsidiaries have no liability to Extel Financial
Limited or any Affiliate thereof, whether existing, potential, contingent, or
otherwise resulting from the agreements entered into on July 1, 1993 and in 1993
between Dafsa Entreprise S.A.and Extel Financial Limited other than a fee
payment in the aggregate amount of up to FRF 935,000 (excluding VAT). Subject to
the payment to Extel Financial Limited by Groupe DAFSA of an amount not to
exceed FRF 935,000, (i) Talisman and the Subsidiaries are not bound to Extel
Financial Limited, or any Affiliate thereof, by any non-competition commitment
of whatever nature and duration, and (ii) there is no agreement in effect
between Talisman or any of the Subsidiaries on the one hand and Extel Financial
Limited or any Affiliate thereof on the other hand.
5.34 SAFE Litigations - restructuring costs
a) All liabilities of Talisman and the Subsidiaries,
contingent or otherwise arising out or in connection with
any of the SAFE Litigations or any restructuring costs
referred to in Section III.2 of the Agreement entered into
on September 4, 1995 among Banque Paribas, Credit du Nord,
Groupe Dafsa and Associes en
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Finance, (hereafter the "BANQUE PARIBAS AGREEMENT") are and will
continue after the Transfer Date to be finally fully supported by
Banque Paribas, and Talisman and the Subsidiaries will incur no
cost, expense, damage and prejudice in connection with any of the
SAFE Litigations and the restructuring costs referred to
hereinabove. Groupe Dafsa has complied with all its obligations
under the Banque Paribas Agreement, and in particular with all its
obligations, as set forth in Section III.2 thereof.
b) The special account referred to in article I.l.1 of the Banque
Paribas Agreement has been settled by agreement dated April 16,
1996 entered into between Banque Paribas and Groupe DAFSA and
there is no liability of Groupe Dafsa to Banque Paribas in
connection with such special account. All the proceeds of such
special account have been used in compliance with the provisions
of the Banque Paribas Agreement. The settlement of such special
account does not operate as a discharge of Banque Paribas to fully
support any costs and expenses related to the SAFE Litigations and
restructuring costs referred to in Paragraph 5.34 (a) above.
5.35 No Material Misstatements
-------------------------
No statement, representation or warranty by the Seller made in
this Agreement or in any Annex, Schedule or other agreements entered into in
connection herewith is misleading or omits to state any material fact necessary
to make such statement, representation or warranty not misleading. Except as
otherwise expressly stated in this Section 5 or in any representation or
warranty by reference to a Schedule hereto, no representation or warranty set
forth herein is or shall be deemed to be qualified or otherwise limited in any
respect by any document or other writing or by any information delivered or
otherwise furnished to the Buyer or to any person, whether by or on behalf of
the Seller or their accountants or otherwise, whether orally or in writing, or
of which the Buyer may, does or should have notice or knowledge.
SECTION VI - REPRESENTATIONS AND WARRANTIES OF THE BUYER
- ---------- -------------------------------------------
The Buyer represents and warrants to the Seller as follows:
6.1 Incorporation and share capital of the Buyer
--------------------------------------------
The Buyer is a Limited liability company incorporated in France,
whose registered office is located at 25 avenue Marceau, registered with the
Registry of Commerce and Companies of Paris under number B 388 549 800. The
Buyer is duly
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incorporated and validly existing under the laws of the State of France and has
the full power and authority to own its assets and conduct its business as now
being conducted. The Buyer has full power and authority to enter into this
Agreement and the other agreements, documents and instruments to be executed
pursuant to this Agreement and to carry out the transactions contemplated hereby
and thereby.
6.2 Authorization - Competence
--------------------------
The Board of Directors of the Buyer has duly authorized the
execution by the Buyer of this Agreement and of all agreements, documents and
instruments referred to in this Agreement, as well as the performance by the
Buyer of all transactions contemplated hereby or thereby. Subject to the
provisions of Section 6.3 hereof, no further proceeding, action or consent on
the part of the Buyer, or any other corporate body of the Buyer is necessary to
authorize this Agreement or the other agreements, documents or instruments
executed by the Buyer pursuant hereto or to consummate the transactions
contemplated hereby or thereby.
6.3 Government Authorizations
-------------------------
Except for the filing with the Treasury Department of the French
Ministry of Economy and Finance, the execution and performance by the Buyer of
this Agreement or any other agreement contemplated hereby shall not require any
consent, approval or authorization of a government or regulatory authority to be
obtained by the Buyer, nor any filing with any such authority to be made by the
Buyer, except for any filing with the tax authorities for the purposes of the
registration of such agreements.
6.4 Other Agreements
----------------
Neither the execution of this Agreement, nor the performance nor
the consummation of the transactions contemplated by this Agreement shall cause
any violation or default in the performance of any of the provisions of the
by-laws or Articles of Incorporation of the Buyer of any contract or agreement,
any decision, judgment or arbitration sentence binding the Buyer.
6.5 No Finders
----------
The Buyer has not used the services of, or entered into any
agreement with, any broker, agent or finder in connection with this Agreement or
the transactions contemplated hereby which could result in a payment obligation
on the part of the Seller.
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SECTION VII - ACTIVITIES PRIOR TO THE CLOSING
- ----------- -------------------------------
7.1 Access
------
Between the date hereof and the Closing, the Seller shall cause
Talisman and the Subsidiaries and executives of Talisman and the Subsidiaries to
give to the Buyer and their counsels, accountants and other representatives full
and free access, during normal business hours, to review and photocopy all of
the properties, books, files, contracts, tax returns, commitments and records
and documents of Talisman and of the Subsidiaries and to furnish the Buyer with
all such information concerning the affairs of Talisman and the Subsidiaries as
the Buyer may reasonably request.
7.2 Government Filings
------------------
(a) The Buyer shall file upon the signing of this Agreement
with to the Treasury Department of the French Ministry of Economy and Finance a
statement with respect to the transaction contemplated by this Agreement in
accordance with Law n[degree symbol] 66-1008 of December 28, 1966, as modified.
(b) The parties to this Agreement shall cooperate in connection with
all actions to be taken to make such filing.
7.3 Conduct of the Business of Talisman and the Subsidiaries
--------------------------------------------------------
Unless the Seller obtains the prior written consent of the Buyer,
or except as specifically provided otherwise herein, from the date hereof and
until the Transfer Date, the Seller shall cause Talisman and each of the
Subsidiaries:
(a) not to take or permit to be taken any action which would cause any
of the representations or warranties set forth herein to be untrue in any
material respect;
(b) to proceed with its management in the ordinary course of business
and not to take or permit to be taken any action which would be contrary to or
in breach of any of the terms of this Agreement, to preserve its present
business intact, keep available the services of its present executive personnel,
preserve its relationships with customers, merchants, suppliers and all other
persons having business dealings with Talisman or any of the Subsidiaries, and
to cooperate with and assist the Buyer in preparing for the transfer of
ownership of Talisman and the Subsidiaries to the Buyer;
(c) to refrain from granting any Encumbrance or servitude, on its
material assets;
(d) to refrain from making any increase in the remuneration of its
officers, directors, or salaried employees (except as
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required by law or by any applicable company agreement in effect as at the date
hereof or collective bargaining agreement) or any increase in any contribution
to any Benefit Plans, or creating new Benefit Plans, made available to them;
(e) to refrain from purchasing, selling or transferring any material
assets, tangible or intangible, or releasing any claim;
(f) to maintain its books, accounts and records in the usual and
ordinary manner, consistent with past practices;
(g) to comply in all material respects with all national, regional,
departmental, local and other governmental (domestic or foreign) laws, statutes,
ordinances, rules, regulations, orders, writs, injunctions, decrees, awards or
other requirements of any court or other governmental or other authority or body
applicable to Talisman or any of the Subsidiaries, their property and assets or
to the conduct of their business, and to perform their obligations under all
material contracts, agreements, franchises, licenses, permits, instruments or
undertakings or otherwise without any material default;
(h) not to amend its by-laws or other applicable documents and not to
merge or consolidate with, or sell or otherwise transfer, or grant any option to
purchase, any material assets to, any other Person or change the character of
its business.
(i) not to modify the number of shares of Talisman and the
Subsidiaries issued and outstanding (whether by purchase, redemption, issuance
of additional shares or otherwise), nor encumber, transfer to any party any
shares of Talisman or of any of the Subsidiaries, nor grant any option, warrant
or any other right to purchase or to convert any obligation into such shares,
nor make any loan or advance to any Person (other than in the ordinary course of
business) or pay dividend or other distribution or payment in respect of its
capital stock, or enter into any voting trust or other arrangement with respect
to the voting rights attached to the shares of Talisman or any of the
Subsidiaries;
(j) not to solicit offers from third parties with respect to the
acquisition, assignment, transfer, encumbrance or other disposition of any
shares of Talisman or any of the Subsidiaries;
(k) not to enter into any written employment agreement or agreement
with any salesman or sales agent or franchise agreement, distributorship
agreement or other contract or arrangement with respect to the performance of
services (i) the termination of which is prohibited or limited by any law, rule
or regulation or (ii) which cannot be terminated by its terms by Talisman or any
of the Subsidiaries at any time on not more than ninety (90) days' prior notice
and without monetary penalty;
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(1) not to incur or assume any debt, obligation or liability (except a
debt, obligation or liability arising in the ordinary course of business) and
not use or apply cash presently in banks or on hand or on deposit or otherwise
available for the repayment of outstanding loans, except as required by any
existing credit arrangement or by the ordinary course of dealing with such banks
or as provided herein;
(m) not to modify or change any existing right, franchise, concession,
license, patent, patent application, trademark, service marks, trademark
application, tradename, copyright, or copyright application, or any other
proprietary right except for modifications or changes in the ordinary course of
business or as otherwise provided herein;
(n) not to enter into any contract, commitment or understanding, the
existence of which would be required to be referred to in any Annex or Schedule
hereto if such contract, commitment or understanding were in existence on the
date hereof, or enter into any material modification to any contract, commitment
or understanding referred to in any Annex or Schedule hereto, or commit to any
investment program involving major expenditures;
(o) to maintain all of its material property in customary repair,
order and condition, reasonable wear and tear excepted; and
(p) to make no payment to, nor advance or lend any money to, nor
otherwise permit the creation of any indebtedness from, the Seller, any
Affiliate of the Seller, except for trade receivables incurred in the ordinary
course of business.
7.4 Other Actions
-------------
The Seller shall take all actions necessary to satisfy all the
conditions set forth in Section III hereunder.
The Buyer shall take all actions necessary to satisfy all the
conditions set forth in Section IV hereunder.
7.5 Intergroup Agreements
---------------------
The Seller shall cause all of the contracts and agreements
currently in force between the Seller or Affiliates thereof (other than Talisman
and the Subsidiaries) on the one hand and Talisman or any of the Subsidiaries,
on the other hand (other than contracts listed in ANNEX F), to be terminated
effective on the Transfer Date without any penalty or termination indemnity to
be paid by Talisman or any of the Subsidiaries. All amounts due pursuant to
these contracts and agreements (including any outstanding amount due under any
loan or cash facility) by Talisman or the Subsidiaries to the Seller or by the
Seller or Affiliate thereof to Talisman and the Subsidiaries shall, on the
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Transfer Date, become immediately due and payable and shall be paid. All such
amounts are listed on ANNEX F hereto.
7.6 Waiver of Call Options
----------------------
The Seller covenants that on or prior to the Transfer Date, the
Seller shall have caused Groupe DAFSA to obtain and deliver to the Buyer written
irrevocable waivers executed by a duly authorized representatives of Banque
Paribas (a company registered with the Registry of Commerce and Companies of
Paris under number B 662 047 885) and Associes en Finance (a company registered
with the Registry of Commerce and Companies of Paris under number B 394 630 867)
pursuant to which each such company irrevocably waives and cancels its rights to
purchase or be transferred any Subscription Right and more generally, any other
right, to be transferred by exchange, conversion, subscription, or otherwise any
shares, securities or other rights in the capital of Groupe DAFSA or of any
other Affiliate of Talisman.
7.7 Loans
-----
(a) The Seller covenants to cause the statutory auditors of Talisman
and Groupe DAFSA to establish on or prior the Transfer Date a certificate
confirming that ANNEX D, listing all the Loans, constitutes as at the date
hereof an accurate and complete listing of all the liabilities for borrowed
money of Talisman, Groupe DAFSA and the Subsidiaries other than (i) the Bridge
Loan, (ii) any financing granted by Societe Generale to Groupe Dafsa pursuant to
a general Dailly law assignment of receivables dated as of April 20, 1994, and
(iii) any financing granted by societe Generale pursuant to a factoring
agreement dated as of December 11, 1995. On the Transfer Date, the Seller will
deliver to the Buyer all the promissory notes executed by Talisman and the
Subsidiaries in connection with the Loans.
(b) The Seller shall have caused TMI to waive, on or prior to the
Transfer Date, all its rights to be repaid a portion of the principal amount of
TMI's Loan to Talisman in the principal amount of two million five hundred
ninety five thousand Francs (FRF 2,595,000), reducing the remaining amount
outstanding under such Loan to eighteen million six hundred sixty six thousand
one hundred and fifty Francs (FRF 18,666,150).
(c) The Seller shall have caused Mr. Olivier ROUX to waive, on or
prior to the Transfer Date, all his rights to be repaid a portion of the Loan
extended by Mr. Olivier ROUX to Groupe DAFSA in the principal amount of one
million two hundred ninety seven thousand five hundred Francs (FRF 1,297,500),
reducing the remaining amount outstanding under such Loan to two hundred eighty
nine thousand five hundred and fifty Francs (FRF 289,550).
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7.8 Employment Agreement
--------------------
The Seller shall remit to the Buyer on or prior to the Transfer
Date, employment agreements of Messrs. Francois Chaillou et Patrick Tanguy,
respectively, in the form of ANNEX G, duly executed by such individuals and
Groupe DAFSA, together with the Tanguy Settlement Agreement.
7.9 Employees
---------
The Seller shall comply and cause Talisman and the Subsidiary to
comply with applicable rules relating to the information of employees'
representative bodies in connection with the transactions contemplated in this
Agreement.
7.10 Bank Mandate
------------
On or prior to the Closing, the Seller shall effectuate all
changes of authorized signatures and bank mandates as instructed by the Buyer in
respect of all accounts operated by Talisman and the Subsidiaries.
7.11 Certificate of no Claim
-----------------------
On or prior to the Closing, the Seller shall procure that each of
the statutory managers ("mandataires sociaux", "gerants") and directors, as the
case may be, of Talisman and the Subsidiaries, whether or not such statutory
managers and directors are required to submit their resignations pursuant to
Section 2.3 hereabove, deliver to the Buyer a written acknowledgement that such
manager or director has no claim whatsoever against Talisman or any of the
Subsidiaries; if any such written acknowledgement is not obtained, and
notwithstanding any provision of this Agreement to the contrary, the Seller
shall jointly and severally indemnify and hold Talisman and the Subsidiaries
harmless from and against, and shall pay to Talisman and the Subsidiaries the
amount of, any loss, liability, damage or deficiency resulting from any claim
made against Talisman or any of the Subsidiaries by any such manager,
ex-manager, director or ex-director who shall not have delivered to the Buyer a
written acknowledgement pursuant to this Section 7.14.
7.12 Guarantee
---------
The Seller covenants to cause Mr. Francois Chaillou to execute the
Guarantee, TMI to execute the TMI Guarantee and shall deliver to the Buyer a
legal opinion from Conyers, Dill & Pearman confirming that Mr. Francois Chaillou
has the powers, capacity and authority to execute the TMI Guarantee, and that
the TMI Guarantee is valid and binding upon TMI.
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SECTION VIII - INDEMNIFICATION
- ------------ ---------------
8.1 Survival of Representations and Covenants
-----------------------------------------
The representations and warranties of the Seller contained in this
Agreement or in any Schedule, Annex or document attached thereto shall survive
the consummation of the transactions contemplated hereby; the time period during
which the Buyer may bring a claim in respect of such representations and
warranties being set forth in Section 8.2.
The covenants of the Seller contained in Sections VII and IX of
this Agreement, and the Seller's obligations thereunder shall survive the
Closing and the consummation of the transactions contemplated hereby.
8.2 Obligation to Indemnify
-----------------------
(a) Indemnification
---------------
The Seller agrees to indemnify and hold the Buyer harmless from
and against, and shall pay to the Buyer the amount of, any of the following
(each a "DAMAGE" and collectively the "DAMAGES"):
(i) any liability or deficiency in assets of Talisman and any
Subsidiary related to transactions or facts occurring prior
to or on December 31, 1995 or prior to or on April 30, 1996
and not reflected in the Financial Statements as of
December 31, 1995 or as of April 30, 1996, respectively, or
if so reflected, not the subject of a provision or, if
subject to a provision, to the extent such liability or
deficiency exceeds such provision;
(ii) any liability of Talisman and any Subsidiary (whether or
not reflected in the Financial Statements) resulting from
the performance of off-balance sheet obligations existing
on or prior to the Transfer Date, including guarantees or
comfort letters given by Talisman or any Subsidiary but
excluding any guarantee or comfort letter granted to secure
obligations of Talisman or any Subsidiary;
(iii) any loss, liability, damage or deficiency, cost or expense
suffered or incurred by the Buyer, Talisman or any
Subsidiary, resulting from or related to any breach of any
representation, warrantee or covenant of the Seller as set
forth in this Agreement;
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-47-
(iv) any loss, liability, damage or deficiency, cost or expense
suffered or incurred by the Buyer, Talisman or any
Subsidiary, resulting from or related to any breach by
Banque Paribas of any of Banque Paribas Commitments;
(v) any loss, liability, damage or deficiency, cost or expenses
suffered or incurred by the Buyer, Talisman or any
Subsidiary resulting from or related to:
(x) any suit, arbitration or proceedings initiated on or
prior to the Transfer Date to which either Talisman
or any of the Subsidiaries is, on or prior to the
Transfer Date, a party or to which Talisman or any
of the Subsidiary becomes a party after the Transfer
Date;
(y) any suit, arbitration or proceedings initiated after
the Transfer Date, based on events or circumstance
occurring or existing prior to the Transfer Date and
to which Talisman or any of the Subsidiaries becomes
a party;
(z) any tax assessment, reduction in tax loss carry
forward (to the extent that, with respect to tax
loss carry forward of Talisman, the aggregate amount
of the remaining tax loss carry forward is below USD
5,500,000 times the Exchange Rate) or disallowance
of any exemption, deduction or recovery made with
respect to Talisman or any Subsidiary to the extent
they relate to periods of time prior to the Transfer
Date or events having occurred prior to the Transfer
Date; for the purpose of this foregoing, "tax" shall
have the meaning defined in Sub-Section 5.13 (g);
(vi) any loss, liability, damage or deficiency, cost or expense
suffered or incurred by the Buyer, Talisman or any
Subsidiary resulting from or related to the Tanguy
Settlement, excluding the payment of the indemnity
thereunder.
(b) Seller's liability
------------------
With respect to the determination of the amount which shall be
payable by the Seller in case of a claim for indemnification under this Section,
it is agreed that:
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(I) the Seller shall have no obligation to indemnify the Buyer
pursuant to Section 8.2 (a) until and unless the aggregate
amount of Damages exceeds a threshold equal to U.S.$ 25,000
times the Exchange Rate (the "THRESHOLD AMOUNT") or the
countervalue thereof in the relevant currency. In the event
such aggregate amount exceeds such Threshold Amount, the
Seller shall indemnify the Buyer for the aggregate amount
of Damages, including the initial Threshold Amount;
(ii) notwithstanding any provision herein, the Seller's
aggregate liability shall not be subject to any cap in
connection with any claim for indemnification made by the
Buyer under Section 8.2 (a)(v) hereabove;
(iii) the Seller's global liability under this Section 8.2 for
indemnification (with the exception of any Seller's
liability pursuant to claims for indemnification made by
the Buyer under Section 8.2 (a)(v)) shall be limited to a
maximum amount equal to US $ 6,000,000 times the Exchange
Rate for any claim made by the Buyer to the Seller pursuant
to this Section VIII (except Section 8.2(a)(v)) on or
prior March 31, 1997 (the "FIRST PERIOD" and any such claim
made during the First Period being referred to as a "FIRST
PERIOD CLAIM");
(iv) for any claim for indemnification made by the Buyer to the
Seller pursuant to this Section VIII (except Section 8.2(a)
(v)) after the expiration of the First Period (the "SECOND
PERIOD" and any such claim made during the Second Period
being referred to as a "SECOND PERIOD CLAIM", it being
understood that the Second Period may have a different
duration depending on the nature of the claim as provided
in paragraph (d) of this Section 8.2) the Seller's global
liability under this Section 8.2 for indemnification (with
the exception of any Seller's liability pursuant to claims
for indemnification made by the Buyer under Section 8.2(a)
(v)) shall be limited to a maximum amount equal to US $
3,000,000 times the Exchange Rate, subject to the aggregate
limit on liability set forth in Section 8.2 (b)(v);
(v) the Seller's aggregate global liability under this Section
8.2 (except Section 8.2(a)(v)), for all First Period
Claims and all Second Period Claims shall be limited to a
maximum aggregate amount of US $ 6,000,000 times the
Exchange Rate.
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(C) Damages
-------
Any Damage shall include, with respect to any claim, all costs and
expenses including legal fees, reasonably incurred in connection therewith.
(d) Claims
------
No claim for Damages arising pursuant to this Section 8.2 or
otherwise by reason of the transactions contemplated in this Agreement shall be
entitled to indemnification pursuant to the terms hereof if the claim is
presented after March 31, 1998, except for Damages resulting from or related to
(A) a breach of any representation or warranty contained in Sections 5.13, 5.20
or 5.21 for which claims may be presented until sixty (60) days after the
expiration of the applicable statute of limitations, (B) a breach of any
representation or warranty contained in Section 5.29 of this Agreement for which
claims may be presented until December 31, 2006 , (c) a breach of any covenant
contained in Section 9.1, for which claims may be presented until sixty (60)
days after the expiration of the term of any such covenant and (D) a criminal
action (including a "constitution de partie civile", or an action as "civilement
responsable", for which claims may be presented until sixty (60) days after the
expiration of the applicable statute of limitation and (E) Section 8.2(a) (vi)
hereabove for which claims may be presented until the fourth anniversary of the
Transfer Date.
(e) Claims for Contingent Damage
----------------------------
Where any claim for indemnification made by the Buyer relates to a
Damage the existence or quantum of which is subject to a contingent event (a
"CONTINGENT DAMAGE"), the Seller shall have no obligation to indemnify the Buyer
until such Damage is actually suffered or incurred. The foregoing shall not
prevent the Buyer from making a claim for indemnification pursuant to this
Agreement for a Contingent Damage.
(f) Notification
------------
The Buyer shall promptly notify the Seller in writing of any
Damage which may give rise to a claim for indemnification pursuant to this
Agreement. Such notification shall be accompanied by any documents and
information which would assist in determining the amount and the basis for the
Damages and the request for indemnification resulting therefrom. Upon receipt of
such notice, the Seller shall have sixty (60) days within which to notify the
Buyer in writing of any good faith objections to such claim and/or the amount
thereof. To the extent that the Seller fails to raise a specific objection in
such manner and period to any claim so notified by the Buyer or the amount
thereof, the uncontested claim shall be deemed to be accepted and agreed upon by
the Seller, and the Seller shall immediately pay
54
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to the Buyer an indemnity in the amount of all such claims or parts of claims
not so contested.
To the extent that the Seller shall have notified the Buyer of any
good faith objection to any such claim or claims or the amount(s) thereof within
sixty (60) days of receipt of such notice, the parties shall promptly meet in an
attempt to quantify and agree upon the existence and the amount of the
indemnification obligation arising as a result of such claim.
To the extent that the Seller shall have in good faith contested
its liability for any such claim, payment of any amounts so contested shall be
due immediately upon agreement in writing among the parties as to the amount of
indemnification due with respect to such claim or upon issuance of a court
decision to that effect pursuant to Section 11.13 below.
(g) Third-party claims
------------------
With regard to claims brought by third parties against either
Talisman or any Subsidiary which may give rise to an obligation on the part of
the Seller to indemnify the Buyer under this Section VIII ("THIRD PARTY
CLAIMS"), the Seller shall have the right to direct the defense of any such
third-party claim, through counsel of Seller's choice and at Seller's own
expense, on behalf of Talisman or the relevant Subsidiary.
Promptly after Seller's receipt of notice from the Buyer relating
to any such Third-Party Claim and in any case within fifteen (15) days of such
notice (or such shorter period as may be reasonable in the circumstances), the
Seller shall inform the Buyer whether it will direct the defense of such claim.
If the Seller does not so inform the Buyer, the Buyer, Talisman and the relevant
Subsidiary shall have the right to direct the defense of and settle such
Third-Party Claim. In such case, the Seller hereby waives any right to contest
action or omission of Buyer, Talisman and the relevant Subsidiary in connection
with the defense or settlement of such Third-Party Claim.
If the Seller exercises its right to conduct the defense of any
such Third-Party Claim, then the Seller shall be deemed to acknowledge
irrevocably its liability pursuant to this Section VIII for any Damage related
to such Third-Party Claim. The Buyer shall cause Talisman or the relevant
Subsidiary to procure for the Seller (at the expense of the Seller) all
reasonable facilities and opportunities to investigate the matter (including
access to records relating to the third party claim), and the Seller shall keep
confidential the information so obtained, save as it may be disclosed for the
purposes of any court proceedings pursuant to Section 11.13 hereunder or with
the Buyer's prior written approval for the purpose of the litigation related to
the Third-Party Claim.
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In the event that the Seller shall choose to direct the defense of
a Third-Party Claim pursuant to the foregoing paragraph, the Seller may conduct
(but not conclude) settlement discussions with the relevant third party for the
purpose of settling such Third-Party Claim. Should the Buyer reject any
settlement proposed by the Seller, (x) the Seller's liability under this Section
VIII for any Damage related to the Third-Party Claim specifically covered by the
proposed settlement shall be limited to the amount that Seller would have paid
had the proposed settlement been approved and (y) the Buyer, Talisman and the
relevant Subsidiary shall have the right to appear, defend and settle such
Third-Party Claim.
SECTION IX - ADDITIONAL COVENANTS
- ---------- --------------------
9.1 Non-Competition
---------------
(a) The Seller shall not (and shall cause its Affiliates - other than
Talisman and the Subsidiaries - not to) engage, nor, directly or indirectly,
through any vehicle, own, be shareholder or partner in, manage, operate, control
or participate (as adviser or otherwise) in the ownership, management or
operation of any Person engaged in a business that is competitive with the
business of Talisman and/or any of the Subsidiaries in Europe. This undertaking
shall continue for a period of three years after the Closing. In addition, for a
period of three years after the Closing, the Seller shall maintain in strict
confidence, and shall use its best efforts to cause third parties (including,
but not limited to, all individuals that are directors or employees of any
Affiliate of the Seller (other than Talisman and the Subsidiaries)), to maintain
in strict confidence, all information relating to the businesses of Talisman and
the Subsidiaries (including, but not limited to, trade secrets) that is not
obtainable from a public source on the date of this Agreement.
(b) During a period of two years after the Closing, the Seller and its
Affiliates (other than Talisman and the Subsidiaries) shall not, without the
prior written consent of the Buyer directly or indirectly, and whether alone or
jointly with or through any other Person, solicit or endeavor to entice away,
offer employment to or contract for the services of any Person who is or will be
after the Transfer Date an employee of Talisman or any Subsidiary in a skilled
or managerial position.
9.2 Post-Closing Cooperation
------------------------
(a) For a period of one year after the Closing, without further
consideration, (i) the Seller shall use its best efforts to take, and cause to
be taken, all such further actions and execute, acknowledge and deliver, and
cause to be executed, acknowledged and delivered, all such further consents and
other documents as the Buyer may reasonably request to facilitate or effectuate
the transactions contemplated by this Agreement and
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(ii) the Buyer shall use its best efforts, and shall use its best efforts to
cause Talisman and the Subsidiaries to take, all such further actions and
execute, acknowledge and deliver all such further consents and other documents
as the Seller may reasonably request in order to facilitate or effectuate the
transactions contemplated by this Agreement.
(b) The Seller and the Buyer shall use their best efforts to cause
Talisman and the Subsidiaries to pay and discharge as soon as practicable all
the Contingent Liabilities, it being understood that Talisman's and the
Subsidiaries' interest shall be preserved when negotiating any payment or
discharge of any such Contingent Liabilities.
9.3 Bridge Loan
-----------
An amount equal to seventy five percent (75%) of the principal amount
of the Bridge Loan (FRF 750,000) will be repaid at the Transfer Date to the
Seller by Talisman. Subject to the condition that the Groupe DAFSA 1996 Turnover
is below fifty eight million Francs (FRF 58,000,000), the Seller hereby
irrevocably agrees to waive its claim against Talisman for the remaining
outstanding principal amount under the Bridge Loan (equal to FRF 250,000) and
any accrued interest.
Subject to the condition that the Groupe DAFSA 1996 Turnover is equal
or above fifty eight million Francs (FRF 58,000,000), the Buyer hereby
irrevocably agrees to take all necessary steps so that Talisman repays the
remaining outstanding principal amount under the Bridge Loan equal to FRF
250,000.
9.4 Republic National Bank of New York
----------------------------------
The Buyer agrees to take all necessary steps so that the Republic
National Bank of New York release within ninety days following the Transfer Date
the deposit of an amount of FRF 1,050,000 made by Talisman Management
International in its books in connection with Republic National Bank of New
York's Guarantee in favor of Sophia as security for payment of the rents under
the lease agreement entered into between Sophia and Groupe DAFSA dated January
23, 1996.
9.5 Talisman
--------
The Buyer undertakes, at the Seller's request and cost, to transfer to
the Seller within one hundred and twenty days from the Transfer Date, all rights
into the corporate name "Talisman".
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SECTION X - TERMINATION
- --------- -----------
10.1 Termination
-----------
This Agreement may be terminated at any time prior to the Transfer
Date:
(a) by the mutual consent of the Buyer and the Seller;
(b) by the Buyer or the Seller upon written notice to the other if (i)
any of the orders, consents, permits, authorizations, approvals and waivers of
governmental and regulatory authorities required to consummate the transactions
contemplated hereby shall have been denied, or (ii) any court of competent
jurisdiction shall have issued a final nonappealable order enjoining or
otherwise prohibiting the consummation of the transactions contemplated hereby;
(c) by the Buyer or the Seller if the Transfer shall not have been
consummated on or before August 31, 1996, unless the failure of the Transfer to
occur by such date shall be due to the failure of the party seeking to terminate
this Agreement to perform or observe the agreements set forth herein required to
be performed by such party prior to the Transfer Date; or
(d) by the Buyer, on the one hand, or the Seller, on the other hand,
if there shall have been a material breach of any of the covenants or agreements
set forth in this Agreement on the part of the other party(ies), which breach
shall not have been cured within thirty (30) days following receipt by the
breaching party(ies) of written notice of such breach from the other party(ies)
hereto.
10.2 Effect of Termination
---------------------
In the event of termination of this Agreement by the Buyer or the
Seller as provided in Section 10.1, this Agreement shall forthwith become void
and have no effect. No party shall be entitled to damages as a result of such
termination, except in the event such termination occurs pursuant to Section
10.1(d). For the avoidance of doubt, in the event that termination of this
Agreement occurs pursuant to Section 10.1(d), the non-breaching party shall be
entitled to damages, including, without limitation, its costs and attorneys'
fees incurred in the preparation and negotiation of this Agreement and defense
of its interest thereunder.
SECTION XI - MISCELLANEOUS PROVISIONS
- ---------- ------------------------
11.1 Notices
-------
All notices, requests, claims or other communications relating to
this Agreement shall be made in writing and addressed
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to the other party (and shall be deemed to have been duly given upon receipt by
the other party) by delivery in person, registered mail or express air courier
(DHL or similar) addressed as follows:
- Notices to the Seller:
Talisman Management Limited
37 Ixworth Place
London SW3 3QH England
Attention: Mr. Francois Chaillou
with a copy addressed on the same day to:
Mr. Francois Chaillou
14 rue Raynouard
75016 Paris
- Notices to the Buyer:
Richard Anderson
c/o Datastream International Limited
58-64 City Road
London EC1Y 2AL England
with a copy addressed on the same day to:
Michael Kargula
Primark Corporation
1000 Winter Street
Suite 4300 N
Waltham, M.A. 02154
USA
The Seller and the Buyer may from time to time change their
respective addresses (and the Seller may change their designated representative)
for the purpose of notification by giving a notice to the other Party indicating
a new address (or a new designated representative).
11.2 Further Acts
------------
Subject to the terms and conditions herein provided, each of the
parties agrees to use its best efforts to take or cause to be taken all
necessary action in accordance with applicable law to ensure that the conditions
set forth herein are satisfied and to perform in the most expeditious manner
possible the transactions contemplated in this Agreement.
11.3 Entire Agreement
----------------
This Agreement supersedes all prior exchanges of documents,
discussions and agreements between the parties with
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respect to the subject matter of this Agreement, and this Agreement, including
its Annexes and Schedules, and any document attached thereto, which are deemed
to be part of this Agreement, contains the entire agreement between the parties
hereto with respect to the subject matter hereof.
11.4 Waiver
------
Any term or condition of this Agreement may be waived at any time
by the party which is entitled to the benefit thereof; such waiver shall be in
writing and shall be executed by such party. A waiver on one occasion shall not
be deemed to be a waiver of the same or any other breach on a future occasion.
All remedies, provided either under this Agreement or by law, in the event of
breach by one or the other party in the performance of this Agreement, shall be
cumulative and not alternative.
11.5 Counterparts
------------
This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
11.6 Third Party Rights
------------------
The provisions of this Agreement are intended solely for the
benefit of the parties hereto and do not confer third-party beneficiary rights
upon any other Person.
11.7 Governing Law
-------------
This Agreement shall be governed by the laws of France.
11.8 Parties Bound by Agreement - Successors and Assigns
---------------------------------------------------
This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and assigns. Without the
prior written consent of the Buyer, the Seller may not assign its rights and/or
obligations hereunder or any part thereof to any other Person. The Buyer may,
before the Closing, designate one or more of its Affiliates to perform its
obligations and/or exercise its rights hereunder, in whole or in part, PROVIDED
that the Buyer shall be jointly and severally liable for the performance of such
obligations by such Affiliate(s).
11.9 Expenses
--------
Except as otherwise provided herein, the Seller and the Buyer
shall each pay all costs and expenses incurred by it or its behalf in connection
with this Agreement and the transactions contemplated hereby, including fees and
expenses of their or its own financial consultants, accountants and counsels.
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11.10 Headings
--------
The headings used in this Agreement have been inserted for the
convenience of the parties only and the parties represent that such headings are
not part of this Agreement and do not affect the meaning or interpretation
thereof.
11.11 Invalidity of a Provision
-------------------------
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect unless such
invalidity shall deprive a party to this Agreement of the material benefits to
which it is entitled or expected to receive hereunder. The parties shall amend
any invalid or unenforceable provision to the extent reasonably required to make
such provision valid or enforceable.
11.12 Transfer Taxes
--------------
The Buyer shall pay the transfer levy in an amount of FRF 20,000
(plus stamp taxes) in connection with the transfer of the Shares by the Seller
to the Buyer.
11.13 Jurisdiction
------------
All disputes arising in connection with this Agreement shall be
subject to the exclusive jurisdiction of the Paris Commercial Court.
11.14 Communications
--------------
The Buyer will agree with the Seller with respect to the contents
and timing of internal or external announcements or communications by the Buyer,
the Seller and their Affiliates relating to the operations contemplated in this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement in four originals as of the date first set forth above.
THE BUYER THE SELLER
By /S/ Richard Anderson By /S/ Francois Chaillou
------------------------------- ---------------------------------
Name: Mr. Richard Anderson Name: Mr. Francois Chaillou
Title: Director Title, Director