Minutes of expert meeting

Paris Court of Appeal Judgment of 9 December 1998 - RG 1998 / 14119 SEBOL v. MAC DONALD'S FRANCE Minutes of expert meeting no. 1 on 2 February 1999 at 3.00 pm These minutes contain neither conclusion nor opinion of the experts. Their sole purpose is to take stock of the statements exchanged and the documents examined. If the parties note any clerical errors in these minutes, they should point them out, as the report may reproduce them in whole or in part. 1. PERSONS PRESENT • Maître CLEMENT, Counsel for the Appellant • Mr COLLORAFI, Appellant • Ms DE BORDA, Legal Director representing the Respondent • Mr LE BOURDONNEC, Financial Consulting Manager representing the Respondent • Maître LELOUP, Counsel for the Respondent • Ms MAZIERES-VICECONTI, Legal Manager representing the Respondent • Mr DUMONT, Expert • Mr MARTIN, Expert • NI. FENARD, Experts' assistant 2. FRAMEWORK OF THE EXPERT MEETING The purpose of this first expert meeting was to present the context, to specify the assignment entrusted to the Experts and to take stock of the documents needed for their assignment. i The experts open the session by rereading the terms of the assignment entrusted by the Paris Court of Appeal on 9 December 1998 The questions put to the experts are notably summarised, namely: • Period prior to 1 July 1997 Question 1. Question 2. Question 3. state "whether, if Mr COLLORAFI had halved his salary in 1995 and 1996 and had left in the current account all or part of the dividends received in those years, in the company SEBOL and if, in the company B et O (the Court having no information on the salaries possibly received by Mr COLLORAFI and his wife from that company) he had made a contribution to the current account in 1997, this would not have enabled these two companies to reach the annual break-even point, which is the turnover that balances the operation, in 1996 and 1997," "state whether the amendment to the contract of the aforementioned company B et O was made at the right time or too late and was sufficient if Mr COLLORAFI reduced his salary in the company B et O, if he in fact received any from that company," state "whether the opening of the "Antibes-Nord" restaurant made it possible to partially transfer fixed costs from the company SEBOL to the company B et O as Mr GANDUR asserts in his annual report drawn up at the request of Mr COLLORAFI (see page 24);" Question 4. "That finally the said court-appointed experts will be invited to present a summary of the operation of the companies SEBOL and B et O considered as an economic unit owing to the common interest of the parties in seeing them operate as such for the period concerned;" Period after 1 July 1997 Question 5. state "whether the new "Antibes-Ouest" restaurant was viable in itself or whether, since the company Mc DONALD'S opened it at the same time as that of Vallauris, which is no coincidence but shows that it had envisaged a "synergy" between these two restaurants, its profitability had not been assessed a priori within a "Antibes-Ouest" "Vallauris" whole, the lease-management of which the company Me DONALD'S, contrary to what seems to have been its forecasts, entrusted to two different persons, - the "Antibes-Ouest" restaurant being merely the complement of the "locomotive" Vallauris;" Question 6. state "whether, given the financial situation of the "Carrefour" - "Antibes Nord" group and the fact that Mr COLLORAFI claimed he could not finance the "Straight licence" contract for Antibes-Ouest, the company Mc DONALD'S gave Mr COLLORAFI a "poisoned gift", as he seems to claim, or whether on the contrary it wished to give him an additional chance to pull through;" Question 7. Question 8. "Considering that the experts must give their opinion on the consistency of the overall financial management of Mr COLLORAFI in the three companies until 1 January 1998; "Considering that the experts will give their opinion on the accounts of the companies SEBOL, B et O and LES PINS, between 1 January 1998 and 10 June 1998, the date of their eviction;" Question 9. "Considering that, on the other hand, the experts must give their opinion on another assertion contained in the document: "Objective No. 3": make the Restaurants profitable With the spreading of administrative costs over several restaurants, we will reduce administrative costs" "...; that in other words, the experts must state whether the increase in the cumulative royalties of the three restaurants could be offset by the reduction in their administrative costs;" The parties then presented the context and the court proceedings to the experts and exchanged a number of points of view. EXPERT EXAMINATION DOCUMENTS Documents handed over at the meeting The experts are given copies of the GANDUR and DUMONTIER amicable reports. Maître CLEMENT, counsel for the Appellants, also gives each of the experts a copy of his pleading file (not complete). Documents requested A certain number of documents prove necessary for the analysis of the situation and the facts alleged by one or other of the parties. These documents are: For the Appellant: • the complete pleading file of Maître CLEMENT, counsel for the Appellant, • the annual accounts of the companies SEBOL (from 1993 to 1998), B&O (from 1996 to 1998) and LES PINS (from 1997 to 1998) as well as the related DAS returns, • the annual accounts of the GIE, from 1993 to 1998, as well as the related DAS returns. For the Respondent: • the pleading file of Maître LELOUP, counsel for the Respondent, • the income statements (monthly P&L), since inception, of the companies operating the "VALLAURIS" and "ANTIBES OUEST" restaurants, • the business plans of the "CARREFOUR", "ANTIBES NORD", "ANTIBES OUEST" and "VALLAURIS" restaurant businesses, • the annual accounts of the company M.A.R. (Mac Donald's Antibes Restaurant) for 1998 as well as the related DAS return. i 4. CONTINUATION AND PROCEDURE OF THE EXPERT OPERATIONS On the documents requested: The experts and the parties present jointly agree that the documents requested must reach each of the experts, at the latest by the end of February It is also agreed that Maître CLEMENT will send the experts and Maître LELOUP a submission, specifying the position of the appellant on each of the questions of the expert examination, before 15 March. Maître LELOUP will send the experts a submission in response, by the end of March. On a second expert meeting The experts and the parties present jointly agree to convene a second expert meeting at the premises of Mr MARTIN on: Wednesday 14 April 1999 at 3.00 pm, 101, rue de Prony 75017 - Paris Paris, 9 February 1999 For the experts, one of them, Jean-kúc DUMONT Financial Expert at the Paris Court of Appeal