Written submissions in appeal summary proceedings

••E= The companies SEBOL, B et O, LES PINS and Monsieur Bernard COLLORAFI have lodged an appeal against a judgment delivered by the Commercial Court of PARIS on 18 May 1998 which: *- dismisses Monsieur BERNARD COLLORAFI and the companies SEBOL, B et O, LES PINS of their claims, - notes that the lease-management and licence agreements concluded on 3 August 1987 (SEBOL), 9 October 1996 (B et O) and 18 June 1997 (LES PINS) between MC DONALD'S on the one hand and on the other hand the companies SEBOL and Monsieur Bernard COLLORAFI, B et O and Monsieur Bernard COLLORAFI on 9 October 1996, LES PINS and Monsieur Bernard COLLORAFI on 18 June 1997, have been terminated automatically on 2 January 1998 by the effect of the termination clause inserted in each of the agreements. - orders the eviction of the companies SEBOL, B et O, LES PINS and of Monsieur Bernard COLLORAFI, as well as of all occupants of their businesses, of fast-food restaurant businesses located respectively at: shopping gallery of the CARREFOUR store, chemin de Saint Claude, 06600 - ANTIBES • 1190, route de Grasse, 06600 - ANTIBES • 32, rue de Cannes, 06160 - ANTIBES - JUAN LES PINS - and enjoins each of these companies and Mr. Bernard COLLORAFI to hand over to the owner of the businesses, the SA MC DONALD'S: the keys of the restaurants the list of staff, the employment contracts as well as the files relating to each of them, allowing the normal continuation of the employment contracts accounts of the operation up to the day of abandonment of this operation - rules that the companies and Monsieur Bernard COLLORAFI must comply with in full with the above provisions on pain of a penalty payment jointly and severally between • Mr Bernard COLLORAFI and the company SEBOL for the ANTIBES restaurant : of 22,000 francs (thirty-two thousand francs) per day Bernard COLLORAFI and the company B et O for ANTIBES 2 of 37,000 F. (thirty-seven thousand francs) per day Bernard COLLORAFI and the company LES PINS of 26,350 F. (twenty- six thousand three hundred and fifty francs) per day after ten working days from the service of the present judgment with a limit of 90 days - appoints Maîtres NOVINO, Bailiffs, 186 avenue Eugène Cazane Le Cottage, 06800 - CAGNES SUR MER as official recorder in order to draw up an inventory at each restaurant, of consumables, operating items, furniture and equipment of the business and the state of the stocks ...L•• 2/8578..1?:20 Pg: - orders jointly and severally, starting from 15 days after service, the SA MC DONALD'S • the company SEBOL and Mr Bernard COLLORAFI to pay the sum of 1,867,247.84 francs (one million eight hundred and sixty-seven thousand two hundred and forty-seven francs eighty-four centimes) by way of unpaid fees with statutory interest from (registered letter of 22/07) on 1,266,300 francs (one million two hundred and sixty-six thousand three hundred francs) from 1 December 1997, (registered letter of 27/11) on 361,800 francs (three hundred and sixty-one thousand eight hundred francs) • from 1 January 1998 (art. 11.4) on 239,147.84 francs (two hundred and thirty-nine thousand one hundred and forty-seven francs eighty-four centimes) by way of occupation indemnity per day from January 1998 until the day of the report of the bailiff whose appointment is requested above, with statutory interest the company B et O and Mr Bernard COLLORAFI the sum of 1,535,548.87 francs (one million five hundred and thirty-five thousand five hundred and forty-eight francs eighty-seven centimes) by way of unpaid fees with default interest at the base bank rate increased by 3 points for each instalment from the date on which it should have been paid (art. XI 2 3 of the agreement) 9 [ 24 (twenty-four thousand of occupation indemnities per day, from 2 January 1998 until the day of the report of the bailiff whose appointment is requested above, with statutory interest • the company LES PINS and Mr Bernard COLLORAFI the sums of: 507,074.47 francs (five hundred and seven thousand seventy-four francs forty-seven centimes) by way of unpaid fees with interest at the base bank rate of 3 points for each instalment from the date on which it should have been paid (art. XI 2 3 of the agreement) francs) and occupation indemnity per day from 2 January 1998 until the day of the report of the bailiff whose appointment is requested above, with statutory interest - rules that the sums due to the SA MC DONALD'S shall themselves bear interest in accordance with article 1154 of the CIVIL CODE - takes note for the company MC DONALD'S that it reserves the right to claim conditions of return of the businesses occupied by Mr COLLORAFI and by the three companies and to claim all damages justified by the loss which would appear - Dismisses the company MC DONALD'S from its claim for damages and interest for abusive proceedings - Orders the provisional enforcement of the decision to be given subject to the SA MC DONALD'S providing a bank guarantee equal to the sentences pronounced in respect of the unpaid fees Orders jointly and severally the companies SEBOL, B et O and LES PINS and Monsieur Bernard COLLORAFI to pay to the company MC DONALD'S the sum of 50,000 francs (fifty thousand francs) under article 700 of the NCPC. Dismissing the remainder costs, to be recovered by the registry, liquidated at the sum of 320.59 francs Sum cause ARE 16.50 + MES 42.62 + Enci 284.50 / VAT 43.02 = 207.50 F.i + same cause : ACI 10.57 * aFf 21.00 + Era 5.19 = 37.49; = 27/95/98 17:26.29: the appellants ask the First President to order a stay of provisional enforcement of this judgment, this decision entailing manifestly excessive and irreversible consequences. THE CONSEQUENCES OF THE JUDGMENT if this judgment were enforced, The Company SEBOL would have to pay on the date of its service: - the sum of 1,867,247.84 (one million eight hundred and sixty-seven thousand two hundred and forty-seven francs eighty-four) of unpaid fees - the interest being about 100,000 francs (one hundred thousand francs) " The sum of 16,000 francs (sixteen thousand francs) per day for five months, from 2 January 1998 to 2 June 1998, i.e. 2,400,000 francs (two million four hundred thousand francs) after ten days unpaid - the interest of about 100,000 francs (one hundred thousand francs) - the occupation indemnity of 24,000 francs per day (twenty-four thousand francs) for thirty days, i.e. 3,600,000 francs (three million six hundred thousand) c'afinl ditt S 231 54LAI EIBDC9 ali ICTOI to count the penalty payment of 37,000 francs per day after ten days counted from the service of the judgment. THE COMPANY LES PINS WOULD HAVE TO PAY: - the sum of 507,474.40 francs (five hundred and seven thousand four hundred and seventy-four francs forty) by way of unpaid fees - the default interest estimated at 50,000 francs •the occupation indemnity of 16,000 francs per day (sixteen thousand francs per day): i.e. 2,400,000 francs (two million four hundred thousand francs). Fax received from: 81. 45_27 67_13 27.05.28.11:26 whereas he worked for twelve years in the MC DONALD'S network for a total profit before salary of 1,387,280 francs, i.e. about 120,000 francs per year (taking into account the losses of the last two years). Whereas the company MC DONALD'S • has received since 1987 the sum of 42,275,000 (forty-two million two hundred and seventy-five thousand francs) by way of fees. The Court could obviously not penalise Monsieur COLLORAFI and his companies. It should be added that the appellants have already suffered a considerable loss owing to the actions of the company MC DONALD'S. It is appropriate to compare this sum of 12,555,273.1 francs with that of 3,905,271.13 francs which represents, according to the company MC DONALD'S, the total of fees for the year 1997, The Court has therefore (without taking account of the penalty payments) multiplied by three the amount of the fees. Supposing the argumentation of the company MC DONALD'S, as adopted by the Court, to be well founded, which is formally contested by the appellants, the provisional enforcement would amount to ordering the appellants to pay more than twice the proportional fees, whereas precisely, owing to the very fact of the performance in bad faith of the agreement by the company MC DONALD'S, the appellants had been cut by nearly half to 1,200,000 francs (amount likely to bring the fees to 905 francs), and were obviously therefore in absolute incapacity to pay all the sums to which they have been ordered by the Court. the said appellants would therefore be irremediably condemned to file their balance sheet and to disappear. Moreover, the investments of Monsieur Bernard COLLORAFI to the amount of 11,000,000 francs, the fruit of the efforts of the latter through his companies, would be lost, to the great profit of the company MC DONALD'S which has received, we repeat, a sum of 42,275,000 francs by way of fees. Thus therefore, even if it were considered that the agreements should be terminated, the sanctions provided for by the Court are disproportionate and however, without going into the substance of the dispute, it is nonetheless appropriate to recall that it is Monsieur Bernard COLLORAFI and his companies who issued a summons on 26 June 1997 to the company MC DONALD'S to have the loss it had caused made good by deciding to establish within the catchment area of the first restaurant managed by the company SEBOL, a second restaurant which Monsieur Bernard COLLORAFI was compelled, against his will, to open himself, in order to prevent another franchisee or the company MC DONALD'S itself from taking over the clientele ... " immediately after this second opening. The company MC DONALD'S then decided on new restaurants, one of which was the responsibility of Monsieur Bernard COLLORAFI (economically compelled to do so) and managed by the company LES PINS, and the other by another franchisee, Monsieur Patrick GILARSKI. The result of these openings was to make the turnover of the company SEBOL fall from 27,000,000 francs in 1993 (24,000,000 francs in 1995) to 11,500,000 francs in 1997, the turnover having stabilised at about this level for the first four months of the year 1998. The statement issued by Monsieur COLLORAFI, the companies SEBOL, B et O, joined subsequently by the company LES PINS, sought to show the untimely nature of the proceedings by claiming that the company MC DONALD'S had performed the lease-management agreements in bad faith, and had abusively exploited the state of economic dependence in which the lessee-manager finds himself, who has no equivalent solution. The grounds raised before the Court and before the Court of Appeal the performance in bad faith of the MC DONALD'S agreements, the abusive exploitation of a state of economic dependence, nullity for violation of the law of 20 March 1956 on lease-management of businesses (fonds de commerce) are serious, pertinent and well founded, and rely on the case law concerning the performance in good faith of agreements (article 1134 paragraph 3 of the CIVIL CODE) as recalled by the decisions of the Plenary Assembly of the case law on the abusive exploitation of a state of economic dependence the judgment of the Court of Cassation of 14 December 1997 - PRODIM v. DEVAL) *: that concerning the lease-management of businesses (fonds de commerce). It suffices to recall that the unilateral decisions to open three restaurants in the primary catchment area of the company SEBOL, had as a consequence spectacular fall in turnover from 27,000,000 francs in 1993 (24,000,000 francs in 1995) to 11,500,000 francs in "la survenance d'un mortant tétei de pertes pour ion 3,200,000 franco Ipour quinze mois) de ligu d'un profit de Flue de 1,000 000 franco par ar "le palement, pas la biais de le redevaica minimum dostricateo de pros da of redevances antuelles en plut dinas profit of In attot, for a turnover consolidated ar 1997 2e 3: 100 00= Iranos, the company JE20f would have paid an annual fee of 11,200,002 x12 - 3,220: 000 E2700 excl. VAT 1) ors Juo 108 to the company Me DONALD'S $ 040 that is a difference of 2,220,000 francs: AT paž an isanl pau: the year 1997 where the difference is only: 440,000 ¿canco excl. VAT). ..............:.:.. Fax received from :01 75 ?? 6? 13 27/05428-11:26 .59: 8 marlfestenest 20,000,000 franco. § comparar since elia baso annuaito the fixed fee already raised to 9 !40 200 iranos nI and - rodevanco proso-tenso in q'aurale rogido la BOciteS SEROt ea elle had gercó of business, CEReESUIC ===testant, Boit 3,720,000 Iransy I" exágut ion tegument inexorably led the [z!a: filed: Iaur balance sheet. sociéter Moreover, the actual expulsion of the three companies doo 100aux restaurants of Ia Piua en Ved pul p0s1e BEr 00 1 1239 1031298 fainer do Bes PIOfIto • e risquniait de lui inire perre cout ou partie tie 301 Invest1egtnent3 ¡11,000,000 isanes) therefore more than 3,000,000 geanes pon: enucfe dis dux bacquo.. Mr Bernard COLLORAFI would have worked Iravolile Orzo Ar5 for MC DONEAD'Ș and having raci=a, Oueto 9a8 Balaipaa, only a total sum of 1,500,000 Irance. this expulsion would thus be the ultimate outcome of the strategy of tr DONAID'S which opens das restaurants with no other interest than, onro 90 I of gelul de soa parturdirts di. never any reproach about the management was made to Mr Bernard COLLORAti, indeed, he has always obtained for his restaurants ien notas raxialm aur Contiblea QUALITY SERVICE CLEANLINESS. It is obvious that even if the Court overturns, as it is requested to do elsewhere, the judgment of the Commercial Court, the expulsion would have created a situatiot 1IE0Y0I3ib18, hard to repair, néñe pri des dornejoo ot Interests. Bernard COLLORAFI, porsjudice inotamrart roral) Irportart, since in the eyes of ipus; 4t noTammeat de pn= franolltes MÇ DONALD'S 1l But2i: die shasgé du Iéseau, a10ts ps11 ogt propodo actarmers i ias conclusions priges par elsewhere, to suspend the enforcement of the termination clause, giving Mr COLLORAFI a period of two years to dibérer di nontart des arrears of fees and by set-off with the damages and interest which are owed to him for the harm which was caused to him and which continues currently. The immediate enforcement of the judgment deprives him of any possibility* of the operation of his companies. It obliges him to repay the loans taken out by them up to more than : 000,000 Icanco since he has given a personal guarantee and the risk of seeing his only real-estate asset seized, the Tatoan d'il hovito pout legaolle dl camopursa spaleñert in amprunt. 0-17:26,.69: 3 We are manifestly in the case of the 2nd paragraph of Article 524 of the NCPC, namely that the pursuit of provisional enforcement of the said judgment is liable to entail manifestly excessive consequences for the claimants. It is therefore requested of the President of the Paris Court of Appeal to suspend the provisional enforcement of the Judgment of 15 May 199€ until the outcome of the proceedings brought before the Paris Court of Appeal. 6. PROPOSED CONSIGNATION li o fié indiquel connecit ive at the openings! above+ the fall in turnover. *attautants deridéon unilaidinlement by the Company NO DONALD'S in the primary catchment area je SEBOL, was halted or thanks to the management efforts of Mr barnard COLLORAFI, in rentaostité jqui étalt négativa, has gradually improved. Mr barnard COTLORAFI and the companies BEBOL: DãC at IIS PIN$ had indicated in their submissions before the Commercial Court, a part of the fees due since 1 January 1995 had been placed in a special account. propost lenaalles minimum flat-rate amounts made between of the lessors and 30 April 1998. - POSE the company SEBOL a sum of 3 380102 E BiR - 405,079 Francs excl. VAT - pays the company 865 From 1 June 1908, It= three companies request that it be that they would pay the proportional fees at 12% for the company E2pom, 17 ¿% for the company Ein and i5 d% for the company LES PINS. = consequently, in the alternative, it is appropriate to take note of these propositiona dun rioit SEBOL, DEO and LES PINS, by suspending alas 1et: the provisional enforcement FrOViEDIIa. It would be inequitable to leave to the charge of Mr Bernard COLLONAFI, and of the companies 9E80b, t: DED FINS the "ibls Irrapécitled which the present proceedings cause them. There is accordingly cause to order the company MC DONAIDS to pay each: The sum of 10,000 francs #0 under Article 700 of the NCEC: FOR THESE REASONS ulcle 524 of the NCPC, suspend the provisional enforcement of the judgment delivered by the Commercial Court of Paris on 18 May 1998, until the Court sitting ¡ conteme s'exprison that the sentences eu palonien!. cracte to the three companies submitting that they offer to conogucr star toi te that the Presiding Judge may wish to designate nu or sequestrate between the s of the designated sequestrator. ocelo SEBOL the sum of 405,679 francs by way of the fees riotimelles due between 1 January and 30 April 1998 and then the ances proportional monthly. octété B & O, the sum of 731,718 francs by way of the fees rinnnelles due between 1 January and 30 April 1998 and then the ançes proportionnellos monthly. octété LES PINS the sum of 443,693 francs by way of the fees ruonnelles due between 1 January and 30 April 1998 and then the ances proportional monthly. riser the consignation of the said sums. uter the Company MAÇ DONALD'S of all its claims, purposes and submissions Ammer the company MAC DONALD'S ¿ to pay to each of the three companies and to Mr Bernard COLLORAFI the sum of 10,000 francs under Article 700 of the ondamwer to the costs of the present summary proceedings, recovery of which will be effected lement by Me PAMARI Avous under the conditions of Article 699 of the NCPC.