SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported) DECEMBER 28, 1995
THE CONTINUUM COMPANY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
1-10151 74-1609363
(Commission File Number) (IRS Employer Identification No.)
9500 ARBORETUM BOULEVARD, AUSTIN, TEXAS 78759-6399
(Address of principal executive offices) (zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE 512/345-5700
N/A
(Former name or former address, if changed since last report)
Exhibit Index appears on Page 5.
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Item 2. Acquisition or Disposition of Assets.
(a) On December 19, 1995, The Continuum Company, Inc. ("Continuum") acquired all
of the outstanding shares of SOCS Holding ("SOCS"). SOCS is a limited company
incorporated under the law of France. The consideration for the purchase was a
cash payment of FRF 175,000,000 made on the date of acquisition. In addition, as
prescribed in Section 3.4.2 of the Acquisition Agreement (as defined below)
Continuum shall pay to the SOCS shareholders a royalty on license sales of
certain software owned by SOCS for a specified period. The determination of the
amount of the consideration was based on a detailed analysis of current and
future business operations and was the subject of arm's length negotiations
between Continuum and the SOCS shareholders.
The acquisition of the shares of SOCS was accomplished pursuant to an
Acquisition Agreement of 100% of the Issued Shares of SOCS Holding dated
December 19, 1995 (the "Acquisition Agreement") and Warranty Agreement for the
Purchase of SOCS Holding dated December 19, 1995 (the "Warranty Agreement"),
copies of which are filed as exhibits to this report and which are incorporated
by reference herein. All of the shares of SOCS were acquired from three
individuals: Jean-Michel Renck, Jean-Charles Miginiac, and Marie-Claude
Rossignol as represented by Jean-Louis Rossignol.
For a description of the underlying assets involved, reference is made to
the information under the following captions in the Warranty Agreement:
"Subsidiaries - Shareholders" (Page 3 and Exhibit 1.3); "Activity - Officers"
(Page 4 and Exhibit 1.7); "Intellectual and Industrial Property" (Page 7 and
Exhibit 1.15.1); "Significant Commitments" (Page 8 and Exhibit 1.17); and "Bank
Accounts" (Page 9 and Exhibit 1.20).
The source of the cash funds used to purchase SOCS derived in part from
existing cash and in part from Continuum's revolving bank line of credit from
Texas Commerce Bank N.A.
Prior to the acquisition taking effect, there were no material
relationships between SOCS or its affiliates and Continuum or its affiliates,
any director or officer of Continuum, or any associate of any such director or
officer.
(b) SOCS provides insurance application software and related services to the
French insurance industry. Management of Continuum believes that the acquisition
of SOCS represents a logical extension of Continuum's existing business,
principally taking advantage of SOCS' management expertise and its product and
service offerings to the insurance industry. Continuum intends to enhance the
tools and methodologies developed by SOCS and to integrate them with Continuum's
current and planned development efforts.
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Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired
It is impracticable to provide the required financial statements at this time.
(b) Pro Forma Financial Information
It is impracticable to provide the required pro forma financial information at
this time.
(c) The exhibits listed below are filed as a part of this report.
2.1 Acquisition Agreement of 100% of the Issued Shares of SOCS Holding
dated December 19, 1995
2.2 Warranty Agreement for the Purchase of SOCS Holding dated December 19,
1995
The annexes and schedules to the agreement incorporated as Exhibit 2.1
listed below have been omitted from the exhibits filed as a part of this report.
Continuum shall furnish supplementally a copy of such omitted annexes and
schedules to the Securities and Exchange Commission upon request.
Exhibit 1: Chart of the SOCS Group
The annexes and schedules to the agreement incorporated as Exhibit 2.2
listed below have been omitted from the exhibits filed as a part of this report.
Continuum shall furnish supplementally a copy of such omitted annexes and
schedules to the Securities and Exchange Commission upon request.
Exhibit 1.3 List of shareholdings of the Companies
Exhibit 1.4 CBDIS draft agreements
Exhibit 1.5 By-laws and certificates of registration with the commercial
registry of the Companies
Exhibit 1.6.2 Distribution and representation of the share capital of the
Companies
Exhibit 1.7 Description of Companies activities, address of principal
place of business and other offices
Exhibit 1.9.1 Balance sheet, profit and loss account and notes to the
financial statements for the Companies as of September 30,
1994, Interim financial statements of SOCS, SATURNE and
OBJECTUM as of June 30, 1995 and consolidated interim
financial statements as of September 30, 1995
Exhibit 1.11 Off balance-sheet commitments
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Exhibit 1.13 Litigation
Exhibit 1.14 Exception to representations on assets
Exhibit 1.15.1 Industrial and intellectual property
Exhibit 1.15.2 Owned software and licenses on such software
Exhibit 1.16 Personnel of the Companies, with details of remuneration
and benefits if any, in excess of the applicable law or
CONVENTION COLLECTIVE
Exhibit 1.17 Significant commitments of the Companies
Exhibit 1.19 List of the insurance policies of the Companies
Exhibit 1.20 List of the bank accounts of the Companies and of the
signatories to such accounts
Exhibit 1.23 Distribution rights granted to third parties in the
computer software listed in Exhibit 1.15.1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE CONTINUUM COMPANY, INC.
January 12, 1996 By: JOHN L. WESTERMANN III
Vice President, Secretary and
Treasurer
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INDEX TO EXHIBITS
EXHIBIT PAGE NO.
2.1 Acquisition Agreement of 100% of the Issued Shares of
SOCS Holding dated December 19, 1995 6
2.2 Warranty Agreement for the Purchase of SOCS Holding dated
December 19, 1995 17
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EXHIBIT 2.1
VERSION 6
ACQUISITION AGREEMENT OF 100% OF
THE ISSUED SHARES OF SOCS HOLDING
In Paris,
On, December 19, 1995,
THE UNDERSIGNED:
1. Mr. Jean-Michel RENCK,
Residing at Residence Champagne, 2 allee des Vertus, 77220 - GRETZ
ARMAINVILLIERS, France,
2. Mrs. Marie-Claude ROSSIGNOL represented by Mr. Jean-Louis ROSSIGNOL,
Residing at RUEIL MALMAISON - 92500, 8, rue des Pyrenees,
3. Mr Jean-Charles MIGINIAC,
Residing at PONTAULT - COMBAULT - 77340, 25 rue Galilee,
The parties 1. to 3., acting severally and not jointly (conjointement et non
solidairement) for the purposes of this agreement, each for his future
prorata shareholding in SOCS HOLDING (respectively 80.86% for Jean-Michel
RENCK, 14.41% for Jean-Louis ROSSIGNOL and 4.73% for Jean-Charles MIGINIAC),
hereinafter collectively referred to as the "SELLERS",
4. THE CONTINUUM COMPANY INC.,
A limited company incorporated under the laws of DELAWARE (U.S.A.) whose
registered office is at 9500 Arboretum boulevard, Austin, TEXAS 78759
(U.S.A.), Represented by John L. Westermann III,
Who represents and warrants that he is fully authorized for the purpose
hereof,
Hereinafter referred to as the "PURCHASER",
HAVE AGREED THE FOLLOWING :
WHEREAS :
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1. The SELLERS own 200139 shares of the total 266476 issued shares with a par
value of FRF 100 each, issued by SOCS HOLDING, a limited company
incorporated under the law of France having its registered office at
CHARENTON LE PONT, 94220, Axe Liberte, 2, place de la Coupole, registered at
the Commercial Registry of Creteil under n(degree) 338 839 391 ("SOCS
HOLDING"). The sharecapital of SOCS HOLDING is represented by 266,476
shares and 3 warrants (hereinafter collectively referred to as the
SHARES"), all of which will be owned by the SELLERS immediately prior to
the consummation of the transactions contemplated hereby on the COMPLETION
DATE (as defined below).
2. SOCS HOLDING is the holding company of the companies appearing in Exhibit 1
hereto, including Societe d'Organisation de Conseils et de Services - SOCS,
a French societe anonyme, having its registered office located in CHARENTON
LE PONT (92420), 2, Place de la Coupole, Axe Liberte, registered at the
CRETEIL Commercial Registry under n(degree) B 323 127 332 ("SOCS") (All
companies to be held 100% at COMPLETION except for director shares and
except for HYPERION, CBDIS, NTI SARL, DATA SOCS and FINARGOS).
3. The SELLERS and the PURCHASER have agreed to enter into this agreement which
is intended to set out the conditions in which the acquisition of the SHARES
by the PURCHASER shall be completed.
THE FOLLOWING HAS BEEN AGREED:
1. DEFINITIONS
1.1 This agreement shall be construed by applying the following definitions but
only when the corresponding words are spelled in uppercase letters.
1.2 "COMPLETION DATE"
Two business days after the date when the CONDITION PRECEDENT hereafter
defined shall be met but in no event later than the TERM hereafter defined.
1.3 "TERM"
The earlier of (i) the date when the French Treasury determines not to
approve the acquisition provided for hereunder and (ii) March 31, 1996.
1.4 "CONDITION PRECEDENT"
The condition precedent stipulated under 2.
2. CONDITION PRECEDENT
This agreement is subject to the condition precedent of the authorization
from the French Treasury Department for the acquisition provided for
hereunder.
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This condition precedent must be met by the TERM at the latest. The
PURCHASER undertakes to use its best endeavours so that such authorization
be obtained within the shortest possible time limit. Without the prior
written consent of the SELLERS, the PURCHASER agrees not to amend its
application for such authorization or to otherwise take action the effect
of which will be to cause the Treasury Department to extend the time
during which it may consider the application for such authorization.
Should this condition precedent not be met by the TERM, this agreement
shall be null and void.
3. ACQUISITION OF THE SHARES
3.1 Subject to the CONDITION PRECEDENT, the SELLERS hereby agree to sell the
SHARES to the PURCHASER, who hereby agrees to purchase them for the price
stipulated hereafter.
The SELLERS represent that, as of the COMPLETION DATE, they will hold all
the SHARES. For the purpose hereof, on the COMPLETION DATE, substantially
simultaneously with the PURCHASER's purchase of the SHARES, the SELLERS
will purchase such shares and warrants in SOCS HOLDING as they do not
currently hold.
On the COMPLETION DATE, the SELLERS hereby represent and warrant to the
PURCHASER that the representations and warranties in the Warranty
Agreement for the Purchase of SOCS HOLDING of even date herewith will be
true and correct on the COMPLETION DATE as if made on and as of such date.
It is understood that, if such representations and warranties are not true
and correct on the COMPLETION DATE, the PURCHASER shall not have any right
to refuse to purchase the SHARES, but shall also not be deemed to have
waived any right to make an indemnity claim therefor under the Warranty
Agreement for the Purchase of SOCS HOLDING (subject to the limitations set
forth in the Warranty Agreement for the Purchase of SOCS HOLDING).
3.2 The SELLERS represent and warrant that, as of the COMPLETION DATE, the
SHARES will represent 100% of the sharecapital and voting rights issued by
SOCS HOLDING or authorized to be issued and that no securities (including
options, warrants and other rights to purchase securities) have been
issued or are authorized to be issued other than the SHARES.
The SELLERS further represent and warrant that, as of the COMPLETION DATE,
they hold the SHARES free of any pledge, lien or encumbrance.
3.3 The SHARES shall be transferred to the PURCHASER with all rights to
dividend to be paid after the date hereof. The SELLERS warrant that no
dividends have been authorized or distributed in 1995, except for the
preferential dividend distributed out of 1994 profits to ASTORG -
COMPAGNIE D'INVESTISSEMENTS with a total amount of FRF 340,010.
Transfer of title to the SHARES shall occur simultaneously with payment of
the fixed portion of the purchase price.
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3.4 The total price for the SHARES is comprised of a fixed portion and of a
variable portion.
3.4.1 The fixed portion amounts to FRF 175,000,000 paid in one installment on
the COMPLETION DATE by transfer to the bank accounts of the SELLERS
specified by notice in writing to the PURCHASER, or as directed by the
SELLERS, each SELLER receiving his prorata share:
- Jean-Michel RENCK: FRF 141,505,000, less the amount directed by such
SELLER pursuant to the immediately following sentence,
- Jean-Louis ROSSIGNOL: FRF 25,217,500, less the amount directed by such
SELLER pursuant to the immediately following sentence,
- Jean-Charles MIGINIAC: FRF 8,277,500, less the amount directed by such
SELLER pursuant to the immediately following sentence.
In connection therewith, the SELLERS will provide the PURCHASER with a
direction to pay, on the COMPLETION DATE, a portion of the purchase price
identified above to the current minority holders of shares and warrants
issued by SOCS HOLDING not owned by the SELLERS on the date of this
Agreement.
3.4.2 In addition to the Purchase Price stated in Section 3.4.1, the PURCHASER
shall pay to the SELLERS a royalty ("COMPLEMENT VARIABLE DE PRIX") equal
to a percentage of license fees (hereinafter referred to as the "PAYMENT
AMOUNT") collected by the PURCHASER and its consolidated subsidiaries
from licensing the OCEANIC software and software derived or developed
therefrom outside of the PURCHASER'S core business, all as more
particularly described below.
The PAYMENT AMOUNT shall be equal to the "APPLICABLE PERCENTAGE" (defined
below) of "ELIGIBLE LICENSE FEES" (defined below) received by the
PURCHASER and its consolidated subsidiaries during the period beginning
on the COMPLETION DATE and ending on December 31, 2007, subject to the
minimum payments described below.
"ELIGIBLE LICENSE FEES" shall mean fees received by the PURCHASER for
rights granted to use or exploit in any way the OCEANIC software
(including future versions of the OCEANIC software) or application
software developed on the OCEANIC software platform, excluding, however,
fees received by the PURCHASER for rights granted to customers in the
"PURCHASER'S CORE BUSINESS AREA" (defined below) and fees received by the
PURCHASER for rights granted in application software developed
specifically for the PURCHASER'S CORE BUSINESS AREA. The "PURCHASER'S
CORE BUSINESS AREA" shall mean the insurance industry (including life
insurance, property and casualty insurance, health insurance,
reinsurance, and all other forms of insurance), the financial services
industry and the health care industry. The ELIGIBLE LICENSE FEES shall
not include fees for services of any kind, such as maintenance services,
development services or consulting services. The PURCHASER shall
establish license fees in good faith and shall not attempt to minimize
the ELIGIBLE LICENSE FEES by unreasonably characterizing amounts received
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as service fees rather than license fees. Fees shall be considered
received by the PURCHASER when they are received by the PURCHASER or any
entity in which the PURCHASER has an equity interest of 50% or more.
The "APPLICABLE PERCENTAGE" shall depend upon the calendar year in which
ELIGIBLE LICENSE FEES are received as determined by the following table:
CALENDAR YEAR APPLICABLE PERCENTAGE
1995 and 1996 25%
1997 22
1998 19
1999 17
2000 15
2001 13
2002 09
2003 07
2004 05
2005 03
2006 02
2007 02
Installments on the PAYMENT AMOUNT shall be paid every year on February
15th at the latest for the ELIGIBLE LICENSE FEES received during the
previous calendar year. The first installment shall be paid on or before
February 15, 1997 for the ELIGIBLE LICENSE FEES received by the PURCHASER
during the period beginning on the COMPLETION DATE and ending on December
31, 1996. Installments of the PAYMENT AMOUNT shall be allocated among the
SELLERS in the following proportions:
- Jean-Michel RENCK: 55%
- Jean-Louis ROSSIGNOL: 30%
- Jean-Charles MIGINIAC: 15%.
MINIMUM PAYMENTS
If the total PAYMENT AMOUNT paid for the period beginning on the
COMPLETION DATE and ending on December 31, 1999 is less than FRF
15,000,000, the PURCHASER shall pay to the SELLERS on or before February
15, 2000 a MINIMUM PAYMENT equal to FRF 15,000,000 less the total PAYMENT
AMOUNT paid for the period through December 31, 1999.
If the total PAYMENT AMOUNT paid for the period beginning on the
COMPLETION DATE and ending on December 31, 2000, plus any MINIMUM PAYMENT
made pursuant to the preceding sentence, is less than FRF 30,000,000, the
PURCHASER shall pay to the SELLERS on or before February 15, 2001 a
MINIMUM PAYMENT equal to FRF 30,000,000 less the sum of the total PAYMENT
AMOUNT paid for the period through December 31, 2000 and any MINIMUM
PAYMENT made pursuant to the preceding sentence.
The MINIMUM PAYMENTS shall be paid to the SELLERS in the same proportions
as installments of the PAYMENT AMOUNT.
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The SELLERS shall be entitled to cause a firm of independent public
accountants which shall not be a competitor of the PURCHASER (or an
affiliate of such competitor), to inspect the books and records of the
companies of the PURCHASER's group relating to licenses or rights giving
rise to the payment of the PAYMENT AMOUNT. Such accountants shall be
required to treat as confidential all information reviewed in the course
of their inspection. Such inspection may occur once for a reasonable
number of consecutive business days in any 12 month period during normal
business hours. The PURCHASER agrees to furnish such accountants with
access during normal business hours to all books and records reasonably
relating to the applicable licenses and rights.
After such accountants deliver their report to the SELLERS, if the
SELLERS believe additional amounts are owed by the PURCHASER under the
PAYMENT AMOUNT provisions above, the SELLERS will give notice to the
PURCHASER setting forth the requested adjustment and make available to
the PURCHASER copies of the relevant portion(s) of such accountants'
report. If the PURCHASER disagrees, the PURCHASER and the SELLERS, and
their respective accountants, shall attempt to resolve to their mutual
satisfaction such disagreement.
If the parties are not able to agree upon any adjustment, the
disagreement will be referred to a third independent accounting firm that
is not a competitor of the PURCHASER (or an affiliate of such competitor)
(the "ARBITRATOR") who will make its own determination of the adjustment,
if any, according to Section 1592 of the French Civil code. The
ARBITRATOR shall be appointed by the Paris Trade Court in summary
proceedings (en refere) should the parties not agree to his name within
30 days of the date when the PURCHASER has received copies of the
relevant portion(s) of the accountants' report. If there shall be any
adjustment, PURCHASER will pay the additional amount owed to the SELLERS
within 10 days from receipt of the ARBITRATOR's award. This award shall
be final and binding upon the parties.
If such adjustment exceeds 10%, determined either by agreement of the
parties or by decision of the ARBITRATOR, PURCHASER will pay the
reasonable fees and expenses of the accountants which conducted the
inspection on behalf of the SELLERS and of the ARBITRATOR. Should there
be no adjustment or should the adjustment be less than 10% each party
shall bear the fees and expenses of its accountants and the fees and
expenses of the ARBITRATOR shall be allocated 50% to the SELLERS and 50%
to the PURCHASER.
3.5 On the COMPLETION DATE, the SELLERS shall hand over to the PURCHASER the
transfer forms (ordres de mouvement) and minority shareholders waiver of
their rights of first refusal for all the SHARES.
3.6 The PURCHASER shall bear the transfer taxes related to the sale of the
SHARES.
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4. SHAREHOLDERS LOANS
On the COMPLETION DATE, the PURCHASER shall cause (se porte fort):
- SOCS HOLDING to repay in full all of the outstanding principal,
accrued but unpaid interest on ASTORG - COMPAGNIE D'INVESTISSEMENTS'
loan with a principal amount of FRF 4,000,000, extended on September
29, 1995 and unpaid ASTORG - COMPAGNIE D'INVESTISSEMENTS' fees,
- SOCS to repay in full all of the outstanding principal, and accrued
but unpaid interest on ASTORG - COMPAGNIE D'INVESTISSEMENTS' loan with
a principal amount of FRF 10,000,000, extended on July 31, 1992.
As of September 30, 1995, aggregate accrued but unpaid interest and fees
on both loans were FRF 1,043,702,56 including VAT.
Since October 1, 1995, the daily interest for boths loans is: FRF
3,260,27.
This repayment is to be made by way of transfer to ASTORG - COMPAGNIE
D'INVESTISSEMENTS to a bank account specified by such party to the
PURCHASER.
The SELLERS represent and warrant that these loans are the only loans
extended by ASTORG - COMPAGNIE D'INVESTISSEMENTS to SOCS HOLDING and any
of the companies appearing in Exhibit 1.
Such loans bear interest at a rate of 8,5% per annum. Interest accrued on
the loans will be repaid by the relevant companies on the COMPLETION
DATE.
5. SET OFF
The SELLERS agree that the PURCHASER shall be entitled to set off against
amounts owing by the PURCHASER to the SELLERS under Section 3.4.2. any
unsatisfied claims for which it has been finally determined or agreed
that the PURCHASER is entitled to indemnification under Article 2 of the
"Warranty Agreement for the Purchase of SOCS HOLDING" signed as of this
date.
6. BOARD OF DIRECTORS - TRANSFORMATION OF SOCS
6.1 On the COMPLETION DATE, the SELLERS shall procure that as many directors
as may be designated by the PURCHASER are appointed to be members of SOCS
HOLDING board.
6.2 On or prior to the COMPLETION DATE, SOCS will be transformed into a
corporation with directorate and supervisory board (societe anonyme a
directoire et conseil de surveillance). Jean-Michel RENCK, Jean-Charles
MIGINIAC and Jean-Louis ROSSIGNOL are appointed as the first directors.
On the COMPLETION DATE, the SELLERS shall procure that the persons
designated by the PURCHASER are appointed to be members of SOCS
supervisory board.
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7. SPECIFIC UNDERTAKINGS OF THE SELLERS
7.1 The SELLERS and the PURCHASER have agreed that the SELLERS shall have the
following responsibilities set opposite their names below:
Jean-Michel RENCK: President du conseil d'administration de SOCS HOLDING,
President du Directoire de SOCS, Directeur commercial et marketing France
Jean-Louis ROSSIGNOL: Directeur general et Administrateur de SOCS
HOLDING, membre du Directoire de SOCS, Directeur commercial et marketing
Europe,
Jean-Charles MIGINIAC: Directeur general adjoint et Administrateur de
SOCS HOLDING, membre du Directoire de SOCS, Directeur Recherche -
Developpement et Services.
7.2 Non competition covenant
The SELLERS undertake for a period ending on the fifth anniversary of the
COMPLETION DATE not to conduct,
Directly or indirectly, either on their own behalf or on behalf of any
other person or entity, any activity which competes or may compete with
the Protected Products and Services of the CONTINUUM Group and/or the
SOCS Group.
For the purpose of this Agreement the following words have the following
meanings:
"CONTINUUM Group" shall mean The Continuum Company and any company more
than 50% owned directly or indirectly by The Continuum Company or any of
its subsidiaries.
"SOCS Group" shall mean SOCS HOLDING and any company more than 50% owned
directly or indirectly by SOCS HOLDING.
"CONTINUUM" shall mean The Continuum Company, Inc. and any company in its
Group.
The Valued Products shall mean software or services which provide for the
end-user any material function provided by a software or service offered
or under development by the SOCS Group or which the SOCS Group is
planning to develop in the areas of insurance, financial services and
health care.
The "CONTINUUM Products and Services" shall mean software or services
which provide for the end-user any material function provided by a
software or service offered or under development by CONTINUUM or which
CONTINUUM is planning to develop in the areas of insurance, financial
services and health care; provided that, except with respect to
insurance-related software or services, the CONTINUUM Products and
Services shall not include any software or services, whether offered or
under development, with which the SELLERS have no material involvement,
or access to confidential information in respect of, during the five year
period of validity of this non-competition covenant.
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The "Protected Products and Services" shall mean the Valued Products and
the CONTINUUM Products and Services.
The parties understand and acknowledge that the restraints set forth in
this sub-clause 7.2 are intended not to prohibit the SELLERS from finding
gainful or interesting employment, but to protect the goodwill of SOCS
Group and the CONTINUUM Group with whom the SELLERS have had or will have
access to confidential and commercially sensitive and valuable
information developed at great expense.
It is also understood between the parties that nothing is intended to
prohibit the SELLERS from being employed by an insurance company which
does not offer, or have under development, any products and services
which may compete with the Protected Products and Services of the
CONTINUUM Group and/or the SOCS Group.
7.3 Non enticement covenant
For the 5 years following the COMPLETION DATE, the SELLERS shall not,
directly or indirectly, either on their own behalf or on behalf of any
other person or entity either (a) solicit, entice, interfere or induce
any employee, either salaried or non-salaried, associated with the GROUP,
to become affiliated with him or any other person, partnership, joint
venture, corporation or other business organization, or (b) hire any
employee, either salaried of non-salaried, associated with the CONTINUUM
GROUP (unless such employee has not been associated with the CONTINUUM
GROUP for at least six months).
8. CBDIS
The PURCHASER acknowledges that, on the COMPLETION DATE, substantially
simultaneously with the purchase of the SHARES, SOCS will purchase the
shares issued by CBDIS, which it does not currently hold for a total
consideration of FRF 3,816,400. The PURCHASER agrees to invest or
contribute to SOCS the amount necessary to consummate such purchase.
The PURCHASER has reviewed the agreements concerning the said purchase,
appended in Exhibit 1.2 to the "Warranty Agreement for the Purchase of
SOCS HOLDING", and has no objection to the same.
9. COMMITMENT TO RUN THE SOCS GROUP IN THE ORDINARY COURSE OF BUSINESS
The SELLERS undertake that, between the date of execution hereof and the
COMPLETION DATE, they will run the companies appearing in Exhibit 1 in
the ordinary course of business and in accordance with past practice.
10. CONFIDENTIALITY
No announcement or circular in connection with this Agreement shall be
made by or on behalf of any of the parties hereto otherwise than with the
prior approval of the others (such approval not to be unreasonably
withheld or delayed), except (i) as required by law or stock exchange
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rules and (ii) for announcements to and conferences with securities
analysts and customers of the PURCHASER in respect of which PURCHASER
uses its best efforts to advise the SELLERS in advance of the general
content thereof.
11. SUCCESSORS AND ASSIGNS
This agreement is binding on the undersigned parties pursuant to the
conditions defined above as well as on their heirs successors assigns or
beneficiaries which they expressly accept.
12. COSTS
Each party shall bear the costs and expenses incurred in connection with
the transaction contemplated hereunder, except that the PURCHASER shall
pay the reasonable fees and expenses, not to exceed FRF 3,000,000 in the
aggregate, including the reasonable fees and expenses of the broker and
French and US counsel to the SELLERS.
13. APPLICABLE LAW - JURISDICTION
13.1 This agreement shall be governed by and construed in accordance with the
law of France.
13.2 Any dispute which may arise in connection with the validity, the
interpretation and/or the performance of this agreement shall be
submitted to the exclusive jurisdiction of the Paris Courts.
13.3 This agreement shall be signed in English and French. The French version
need not be signed on the date hereof but may be signed on or before the
COMPLETION DATE. In case of difference, the English version of this
agreement shall prevail, except that French words used in the English
version and referring to legal concepts shall prevail in all cases.
Executed in 4 original copies.
. JEAN-MICHEL RENCK . JEAN-LOUIS ROSSIGNOL
. .
. .
. .
. .
. .
. .
. JEAN-CHARLES MIGINIAC . CONTINUUM
. .
. .
. .
. .
. .
. .
JOHN L. WESTERMANN III
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E X H I B I T
EXHIBIT 1: CHART OF THE SOCS GROUP
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EXHIBIT 2.2
WARRANTY AGREEMENT FOR THE PURCHASE
OF SOCS HOLDING
This agreement is made in Paris
On December 19, 1995
BETWEEN THE UNDERSIGNED
1. Mr. Jean-Michel RENCK,
Residing at Residence Champagne, 2, allee des Vertus, 77220 CRETZ
ARMAINVILLIERS,
2. Mr. Jean-Louis ROSSIGNOL,
Residing at 8, rue des Pyrenees, 92500 RUEIL MALMAISON,
3. Mr. Jean-Charles MIGINIAC,
Residing at 25, rue Galilee, 77340 PONTAULT - COMBAULT,
The parties 1. to 3., acting severally and not jointly (conjointement
et non solidairement) for the purposes of this agreement, each for his
prorata shareholding in SOCS HOLDING (i.e., Jean-Michel Renck: 80.86%,
Jean-Louis Rossignol: 14.41% and Jean-Charles Miginiac: 4.73%),
hereinafter collectively referred to as the "GUARANTOR",
5. CONTINUUM,
A limited company incorporated under the laws of the State of Delaware
whose principal office is at 9500 Arboretum Boulevard, Austin, Texas,
U.S.A., Represented by Mr. John L. Westermann III, its Vice President
and Chief Financial Officer
Who represents and warrants that he is fully authorized for the purpose
hereof,
Hereinafter referred to as the "PURCHASER",
In order to allow the acquisition of shares of SOCS HOLDING, a company
incorporated under the laws of France, having its registered office
located at 2, place de la Coupole, Axe Liberte, 94220 Charenton le
Pont, with a share capital of FRF 26.647.000 registered at the Creteil
commercial registry under n(degree) 388 839 910 hereinafter referred to
as the "COMPANY",
And as a condition to this acquisition, the parties referred to as THE
GUARANTOR, acting severally and not jointly, HEREBY REPRESENT AND
WARRANT THE FOLLOWING:
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1. REPRESENTATIONS
The GUARANTOR makes the following representations as of the date hereof
and as of the COMPLETION DATE as defined in the acquisition agreement
of even date herewith:
1.1 CAPACITY
The parties referred to as the GUARANTOR have full power and authority
to enter into and perform this agreement. The parties referred to as
the GUARANTOR are entitled to transfer the ownership of all of the
COMPANY's shares to the PURCHASER on the terms of the agreement of even
date herewith without the consent of any third party (except for the
French Treasury department authorization).
1.2 SUBSIDIARIES - SHAREHOLDINGS
1.3 Exhibit 1.3 is the exhaustive list of the shares held by the COMPANY in
the sharecapital of other companies. The COMPANY and companies
appearing in Exhibit 1.3 are hereinafter collectively referred to as
the COMPANIES. However, prior to making any claim against the GUARANTOR
in respect of CBDIS, 66% of which is currently owned by third parties
and which SOCS is in the process of acquiring, it is understood that
the PURCHASER shall first exercise any recourse available (or cause
SOCS to exercise any such recourse) under the warranty granted by such
third parties to SOCS in order to obtain an appropriate indemnification
and that absent such appropriate indemnification, the PURCHASER shall
then exercise its rights against the GUARANTOR hereunder.
The COMPANIES do not have and have never had any interest in any
company, group, entity, partnership, association (either incorporated
or unincorporated) in which the partners thereof may incur any
unlimited liability.
The COMPANIES do not have any other subsidiaries as defined by French
company law.
1.4 Attached as Exhibit 1.4, appears a copy of the draft agreements between
SOCS and Messrs. F. ROUGE and G. GOSSET in connection with the purchase
by the former of 66% of the share capital of CBDIS.
1.5 MEMORANDUM - ARTICLES OF ASSOCIATION - CERTIFICATES OF REGISTRATION
The up to date memorandum and articles of association of the COMPANIES
as well as their certificates of registration with the commercial
registry are attached hereto in Exhibit 1.5.
There are no amendment(s) to these articles of association in progress,
nor amendments that have been authorized by any shareholders meeting
except for those contemplated by the acquisition agreement of even date
herewith.
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1.6 SHARE CAPITAL
1.6.1 Exhibit 1.3. comprises the following information:
- The amount of authorized, issued and paid up share capital of the
COMPANIES, the details of its representation, with the indication of
each existing category of shares and its distribution, and
- All securities issued or any of those which are intended to be
issued by the COMPANIES.
1.6.2 Except in the situations outlined in Exhibit 1.6.2:
- There has been no resolution of the shareholders in general meeting
to authorize the issue of new shares by the COMPANIES,
- The COMPANIES have not issued any securities, nor any other
instruments, convertible into, exchangeable for, or giving the right
to subscribe for, any equity interest of the COMPANIES and no
authorization therefor has been given, and
- The COMPANIES have never reduced or amortized their capital.
1.6.3 The shares of the COMPANY to be transferred to the PURCHASER on the
COMPLETION DATE consist of 100% of the issued shares of the COMPANY.
1.6.4 The shares of the COMPANY to be transferred to the PURCHASER by the
GUARANTOR are free of all liens, pledges, encumbrances or commitments
of any type whatsoever.
1.6.5 Once the shares of the COMPANY have been transferred to the PURCHASER,
same shall hold, directly or indirectly, 100% of the voting rights and
any other rights attached to the shares of the COMPANIES (except for
HYPERION, in which the PURCHASER shall hold a 66% interest).
1.7 ACTIVITY - OFFICES
Exhibit 1.7 comprises:
- A description of the COMPANIES activities, and
- The exact address of their principal place of business and any other
offices.
1.8 COMPLIANCE WITH THE LAWS
The COMPANIES are duly incorporated, organised and registered and
validly existing and in good standing.
The COMPANIES have in full force and effect all licences,
registrations, permits and other qualifications necessary for the
carrying on of all their business in France and each other jurisdiction
in which the COMPANIES carry on business.
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1.9 ACCOUNTS
1.9.1 Exhibit 1.9.1 hereattached contains:
- The balance sheet, the profit and loss account and the notes to the
financial statements for the COMPANIES as at September 30, 1994,
certified by their statutory auditors,
- The interim financial statements of SOCS (together with the interim
financial statements of the companies which were absorbed by SOCS -
SATURNE and OBJECTUM) as at June 30, 1995, certified by their
statutory auditors, and
- The consolidated interim financial statements of the COMPANY as at
September 30, 1995,
Hereinafter referred to as the "ACCOUNTS".
1.9.2 The ACCOUNTS fairly and truthfully reflect the COMPANIES' assets and
liabilities as at the dates thereof and they were prepared in
accordance with generally accepted accounting principles in France
applied on a consistent basis.
The ACCOUNTS fairly and truthfully reflect the operations and the
results of the COMPANIES.
1.9.3 As of the COMPLETION DATE, other than as reflected in the Sept. 30,
1995 balance sheet contained in Exhibit 1.9.1, the Companies have no
liabilities, contingent or otherwise, that would be required by French
generally accepted accounting principles to be reflected in the
Companies' balance sheet, other than (x) liabilities incurred after
September 30, 1995 in the ordinary course of business consistent with
past practice (excluding any liabilities for indebtedness and any
liabilities arising out of commitments or contracts with customers) and
(y) liabilities which, individually or in the aggregate, do not exceed
FRF 500,000 (excluding a provision of approximately FRF 500,000 for an
audit of the COMPANIES by the COMPANIES' independent accounting firm).
1.10 MANAGEMENT
From September 30, 1995 until the COMPLETION DATE, the COMPANIES have
conducted and will conduct their affairs in the ordinary and normal
course of business and there has been and will be no adverse material
change in the financial and trading position of the COMPANIES. Without
limiting the foregoing, from September 30, 1995 to the COMPLETION DATE,
the net worth of the COMPANIES has not decreased by more than FRF three
million (FRF 3,000,000) and the COMPANIES have not made any commitment
to make capital expenditures in excess of FRF five hundred thousand
(FRF 500,000) (excluding the commitment to make a capital expenditure
for an IBM RS6000, an IBM AS/400 and the build out for the 7th floor at
the premises of the COMPANY).
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The COMPANIES are not in "cessation des paiements", nor have they
entered into any assignment for the benefit of creditors and have not
entered into any bankruptcy and/or insolvency proceedings of any kind,
whether judicial or amiable.
1.11 OFF BALANCE SHEET COMMITMENTS
The COMPANIES have no commitments outside the balance sheet (engagement
hors bilan) other than those which are shown in Exhibit 1.11 and other
than those which, individually or in the aggregate, do not exceed FRF
five hundred thousand (FRF 500,000).
1.12 TAXES, DUTIES AND OTHER GOVERNMENT OR STATUTORY LEVIES
1.12.1 The COMPANIES have always duly filed all returns and reports relating
to taxes and social charges required to be filed and all such returns
are correct and complete in all material terms.
1.12.2 The COMPANIES have duly and timely paid all taxes, duties and other
governmental levies (including tax and custom authorities) as well as
all social security charges and any other payments due or arising from
the employment of any personnel.
1.12.3 There is no existing or pending investigation or enquiry by any
authority, commission, body or agency, nor any pending or threatened
judicial or administrative proceedings having as an object the
ascertainment or enforcement of the COMPANIES liability for taxes or
social security charges or other payments to be made due to the
employment of any personnel.
1.13 LITIGATION
The COMPANIES are not a party to nor, to the knowledge of the
GUARANTOR, are they threatened to become a party to:
- Any disputes, litigation or proceedings against them, before any
court, governmental agency or arbitration tribunal, and/or
- Any judicial decision, award, decree, order or resolution entered or
issued against them by any court, governmental agency, arbitration
tribunal,
except for those which appear in Exhibit 1.13 and except for those
arising between the date hereof and the COMPLETION DATE which, if
adversely determined, would not have a material adverse effect on the
financial position of the COMPANY.
1.14 OWNERSHIP OF THE ASSETS - LIENS - RIGHTS - PRIVILEGES
The COMPANIES have good title to all their properties and assets, and
to the knowledge of the GUARANTOR, nothing can affect the title to the
ownership of this property.
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These items on the balance sheet are:
- In a state of fair wear and tear taking into account their age and
the provisions for depreciation which appear in the ACCOUNTS, and
- Free from all liens, encumbrances or commitments of any nature
whatsoever except those which do not, individually or in the
aggregate, affect the use or value of the underlying property or
asset,
except as set forth in Exhibit 1.14.
The "fonds de commerce" of the COMPANIES are free from all liens,
encumbrances and privileges.
1.15 INTELLECTUAL AND INDUSTRIAL PROPERTY
1.15.1 Exhibit 1.15.1 comprises an exhaustive list of all items of industrial
property and intellectual property and, in particular, of all software,
trademarks, patents, tradenames and copyrights used by the COMPANIES.
Exhibit 1.15.1 lists the nature of the title and protections that the
COMPANIES have for each of these items.
1.15.2 The COMPANIES own, free and clear of all liens and privileges, the
intellectual property rights pertaining to the software appearing in
Exhibit 1.15.2 (hereinafter referred to as the "Intellectual Property"
and, except as set forth in Exhibit 1.15.2, the COMPANIES have treated
such software as trade secrets. No representation is made as to whether
such ownership would be recognized in any jurisdiction which does not
recognize ownership rights in intellectual property by companies
similarly situated to the COMPANIES.
Exhibit 1.15.2 comprises an exhaustive list of all licenses granted by
the COMPANIES on the said software.
The GUARANTOR does not have knowledge of (i) any notice or claim or
other that the rights of the COMPANIES in the Intellectual Property are
not valid or enforceable, or (ii) any infringement upon or conflict
with any intellectual property owned by any third party other than
infringements that would not, individually and in the aggregate, have a
material adverse effect.
The GUARANTOR does not have knowledge of any infringement by any person
of any Intellectual Property and to the knowledge of the GUARANTOR, the
COMPANIES have not taken or omitted to take any action which action or
omission would have the waiving of any of its rights with respect
thereto.
The development, use, licensing, marketing and distribution of the
computer software listed in Exhibit 1.15.2 are not infringing any
intellectual property rights of any third party, except that, with
respect only to patent rights of third parties in jurisdictions in
which the COMPANIES do not carry on business, this representation is
made to the knowledge of the GUARANTOR.
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1.16 EMPLOYEES
Exhibit 1.16 comprises an exhaustive list of the employees of the
COMPANIES, as of this date, indicating, in relation to each of them:
- The date of birth and number of years of employment,
- The duties, functions and status or title and remuneration, and
- All of the benefits and/or rights granted in excess of those
provided for by law or by the "conventions collectives" (Collective
employment agreements).
There exists no specific contract between any of the COMPANIES and its
employees (accord d'entreprise) or any other similar commitment of any
of the COMPANIES to its employees.
1.17 SIGNIFICANT COMMITMENTS
With the exception of the employment contracts between the COMPANIES
and the employees referred to in Section 1.16, Exhibit 1.17 comprises
an exhaustive list of each of the contracts and commitments involving
the COMPANIES that:
- involve a total commitment, in one or several agreements, of
an amount greater than FRF five hundred thousand (FRF
500,000), excluding VAT, or
- have a duration greater than one year or may not be
terminated without respecting a notice period of one year or
more.
1.18 RECEIVABLES
All receivables of the COMPANIES, unpaid at the date hereof and at the
COMPLETION DATE, are actually due, properly recorded for goods and
services which have been actually delivered/rendered and the GUARANTOR
has no knowledge of any dispute by payors of accounts receivables
concerning their obligation to pay. The GUARANTOR has no reason to
believe that the accounts receivables are not collectible.
1.19 INSURANCE
The COMPANIES subscribe to insurance policies with recognized insurance
companies for all risks against which companies of their size typically
obtain insurance, a list of all such insurance contracts being attached
as Exhibit 1.19 hereto.
The COMPANIES have duly paid all premiums due up to the present date
and generally fulfilled all the obligations under the aforesaid
policies so that they are entitled to all the benefits guaranteed
thereunder.
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The GUARANTOR is not aware of any reason why the amount of insurance
stated in such policies would not be available.
1.20 BANK ACCOUNTS
A list of the bank accounts of the COMPANIES and of the signatories to
these bank accounts is attached hereto as Exhibit 1.20. The COMPANIES
have unrestrained control of all the sums credited to the said bank
accounts.
1.21 CONTRACTS
There is no customer relationship (consisting of one or multiple
contracts) under which the cost to one of the COMPANIES of completing
its tasks for such customer pursuant to such contract(s) will exceed
the revenue remaining to be recognized to be received from such
customer and the effect of which would be materially adverse to the
COMPANIES taken as a whole.
1.22 RESTRICTIONS
There are no contracts prohibiting any of the COMPANIES from doing
business in any jurisdiction.
1.23 GRANTING OF RIGHTS
No distribution rights in the computer software listed as owned in
Exhibit 1.15.1 have been granted to any third parties except as set
forth in Exhibit 1.23.
1.24 NO DEFAULT
The COMPANIES are not in default under any contract, except for (i)
defaults which, individually or in the aggregate, would not have a
material adverse effect on the financial condition of the COMPANIES and
(ii) to GUARANTOR's knowledge, any other default.
2. INDEMNITY
2.1 SCOPE OF THE WARRANTIES
The parties referred to as the GUARANTOR, severally and not jointly,
warrant the accuracy and truthfulness of the representations made in
this document and in its Exhibits.
The GUARANTOR shall indemnify the PURCHASER from, against and with
respect to any loss or damage suffered by the COMPANIES, arising out of
any misrepresentation or breach of warranty. Disclosures made in any
Exhibit to this Agreement shall relieve the GUARANTOR from his
liability hereunder to the extent that the amount of the aforesaid loss
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or damage suffered by the COMPANIES has been set forth in such
disclosures and that the appropriate provisions, if they are required
by French generally accepted accounting principles, have been recorded
in the ACCOUNTS.
For the purpose hereof, an indemnifiable loss or damage shall be a loss
or damage computed on a net after-tax basis taking account of all
causes directly related to such loss or damage for mitigating the same
(e.g. insurance proceeds). Tax reassessments which only pertain to the
disallowance of the deductibility of a charge which is deductible from
future taxable profits will only be taken into consideration for the
amount of the corresponding penalties and/or interest.
2.2 DURATION
These warranties shall be in full force and valid until:
- March 31, 1998 as regards any matters other than the tax, social
contributions and customs matters, and
- the end of a one month period following the last day on which the
competent authorities may exercise recourse regarding all tax, social
contributions and customs matters.
2.3 DE MINIMUS - CAP
2.3.1 The GUARANTOR shall not be obligated to indemnify the PURCHASER
hereunder unless and until the aggregate amount of all claims against
the GUARANTOR exceeds the sum of FF 3,000,000 and then only for the
amount in excess thereof; provided that this provision shall not apply
to claims by the PURCHASER for intentional misrepresentation or for
misrepresentation or breach of warranty under Section 1.1, 1.6, the
first paragraph of Section 1.15.2, the fifth paragraph of Section
1.15.2, 1.22 or 1.23.
The PURCHASER shall use commercially reasonable efforts to mitigate any
loss for which indemnification is sought.
2.3.2 GUARANTOR's total liability hereunder shall not exceed:
(a) for intentional misrepresentation, no limit;
(b) for misrepresentations and breaches of warranty under
Sections 1.1, 1.6, the first paragraph of 1.15.2, the
fifth paragraph of 1.15.2 (relating to infringement of
copyrights and trade secrets of third parties), 1.22 and
1.23, FRF one hundred and seventy eight million (FRF
178,000,000);
(c) for misrepresentations and breaches of warranty under
Section 1.9.3, 1.11 and the fifth paragraph of 1.15.2
(relating to infringement of patents of third parties),
FRF one hundred million (FRF 100,000,000); and
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(d) for any misrepresentations and breaches of warranty not
falling within clauses (a), (b) or (c) above, FRF forty
million (FRF 40,000,000).
Any liability hereunder shall be several and not joint in the following
percentages :
- Jean-Michel Renck: 80.86%,
- Jean-Louis Rossignol: 14.41%
- Jean-Charles Miginiac: 4.73%
with each being only liable for his percentage of any particular loss
or damage.
2.4 INDEMNIFICATION PROCEDURES
For the purposes of this agreement, the PURCHASER, as promptly as
practicable, shall give notice of any indemnifiable loss or damage
hereunder to the GUARANTOR.
The failure of the PURCHASER to give such notice shall not relieve the
GUARANTOR of its indemnification obligations hereunder, except to the
extent such failure results in a lack of actual notice to the GUARANTOR
and the GUARANTOR is materially prejudiced as a result of failure to
receive such notice (e.g. cannot exercise a recourse or present his
arguments against a third party claim).
In the case of any claim asserted by a third party, the PURCHASER shall
permit the GUARANTOR, at its option and expense, to take over and
assume the defense of any such claim by counsel reasonably satisfactory
to the PURCHASER and to settle or otherwise dispose of the same;
provided that the PURCHASER may at its discretion at all times
participate, at its own expense, in such defense by counsel of its own
choice; and provided further that the GUARANTOR shall, to the extent
possible, consult with the PURCHASER with respect to any such defense
or settlement or disposition.
In the event the GUARANTOR does not accept the defense of any claim
within 30 days of delivery of notice thereof by the PURCHASER, the
PURCHASER shall have the right to defend against any such claim but
shall not be entitled to settle or agree to pay in full such claim or
demand until it is finally judicially determined that he should do so
or GUARANTOR consents thereto.
3. TRANSFER OF THE WARRANTIES
The PURCHASER will not be allowed to transfer the benefit of this
agreement to any third party without the prior writtent consent of the
GUARANTOR and such consent will not be unreasonably withheld. This
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clause 3 does not apply to a transfer to any legal entity in which the
PURCHASER is holding directly or indirectly more than fifty per cent of
the voting rights, but no such transfer will relieve PURCHASER of any
obligations hereunder.
4. APPLICABLE LAW - JURISDICTION
4.1 This agreement is governed by the laws of France.
4.2 Any dispute which may arise in connection with the validity, the
interpretation and/or the performance of this agreement shall be
submitted to the exclusive jurisdiction of the Paris Courts.
4.3 This agreement shall be signed in English and French. In case of
difference, the English version of this agreement shall prevail, except
that French words contained in the English version and referring to
legal concepts shall prevail in all cases.
Executed in 4 original copies,
. Jean-Michel Renck . Jean-Louis Rossignol
.
.
.
. Jean-Charles Miginiac . Continuum
. .
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LIST OF EXHIBITS
1.3 List of shareholdings of the COMPANIES
1.4 CBDIS draft agreements
1.5. By-laws and certificates of registration with the commercial registry
of the COMPANIES
1.6.2. Distribution and representation of the share capital of the COMPANIES
1.7. Description of COMPANIES activities, address of principal place of
business and other offices
1.9.1. Balance sheet, profit and loss account and notes to the financial
statements for the COMPANIES as of September 30, 1994, Interim
financial statements of SOCS, SATURNE and OBJECTUM as of June 30, 1995
and consolidated interim financial statements as of September 30, 1995
1.11. Off balance-sheet commitments
1.13. Litigation
1.14. Exception to representations on assets
1.15.1. Industrial and intellectual property
1.15.2. Owned software and licences on such software
1.16. Personnel of the COMPANIES, with details of remuneration and benefits
if any, in excess of the applicable law or convention collective
1.17. Significant commitments of the COMPANIES
1.19 List of the insurance policies of the COMPANIES
1.20 List of the bank accounts of the COMPANIES and of the signatories to
such accounts
1.23 Distribution rights granted to third parties in the computer software
listed in Exhibit 1.15.1
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