DATED: 18 May 1997
VISUAL ACTION HOLDINGS INC
- and -
VISUAL ACTION HOLDINGS PLC
- and -
PANAVISION INC
STOCK PURCHASE AGREEMENT
relating to the capital
stock of Xxxxxx Xxxxxx Inc.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of May 18, 1997, by and between Visual Action Holdings Inc., a Delaware
corporation with its registered office located at 00 Xxxxxxxxxx Xxxxxx, Xxxxx
X-000, Xxxxx, Xxxxxxxx ("Seller"); Visual Action Holdings plc, an English
corporation, with its registered office located at Xxxx 00, 00 Xxxxxxx Xxxx, The
Xxxxxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx XX0 0XX, Xxxxxxx ("Parent"); and
Panavision Inc., a Delaware corporation with its principal office located at
0000 Xx Xxxx Xxxxxx, Xxxxxxxx Xxxxx, Xxxxxxxxxx ("Buyer").
WITNESSETH
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WHEREAS, Parent, as Vendor, Buyer and Buyer's affiliate, as Purchaser
have entered into that certain Agreement as of the date hereof (the "Controlling
Agreement") relating to the sale and purchase of the entire film services
business (the "Business") of Parent and its subsidiaries (the "Principal
Transaction"), which is being structured as a sale and purchase of the capital
stock of certain of Parent's subsidiaries engaged in the Business including
Xxxxxx Xxxxxx, Inc., a Michigan corporation (the "Company"); and
WHEREAS, Parent is the sole shareholder of Seller, which owns all of
the issued and outstanding capital stock of the Company; and
WHEREAS, the Company has authorised capital stock consisting of
50,000 shares of Common Stock, $1.00 par value per share, of which 20,000 shares
(the "Shares") constituting 100% of the issued and outstanding capital stock of
the Company, are issued and outstanding and owned of record and beneficially by
Seller; and
WHEREAS, this Agreement is that certain US Share Sale Agreement
referred to in the Controlling Agreement, and certain capitalised terms used in
the Controlling Agreement are incorporated by reference herein and shall have
the same meaning herein as set forth in the Controlling Agreement; and
WHEREAS, in furtherance of and subject to all of the terms and
conditions of the Controlling Agreement and to the Completion of the Principal
Transaction in accordance with the Controlling Agreement, Seller desires to sell
and transfer to Buyer, and Buyer desires to purchase and acquire from Seller,
the Shares, on all of the terms and conditions of
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this Agreement;
AGREEMENT
NOW, THEREFORE, the parties hereby agree as follows:
1. Sale and Purchase of Shares. At the Closing, upon all of the terms and
conditions hereof, Seller shall sell, assign and transfer to Buyer the Shares,
and Buyer shall purchase and acquire the Shares, free and clear of any and all
liens, encumbrances or rights of third parties.
2. Consideration. The total purchase consideration (the "Purchase Price") for
the Shares shall be (pound) of the total consideration payable under clause 3.2
of the Controlling Agreement and adjusted as provided in that agreement.
3. Closing. (a) Subject to the terms and conditions set forth in this Agreement
and subject to the prior or simultaneous Completion of the Principal
Transaction, the consummation of the purchase and sale of Shares (the "Closing")
shall take place at the office of Xxxxxxx Xxxx & Xxxxxxxxx, 000 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx at 10.00a.m., on the date of Completion, or such
other date, time or place as the parties may agree upon in writing (the "Closing
Date").
(b) At the Closing, Seller shall deliver (or cause the delivery) to
Buyer of:
(i) transfers of the Shares to Buyer and/or its nominee duly
executed by the Seller in registrable form and the share certificates for the
Shares;
(ii) the resignations of the directors of the Company other than
Messrs. Xxxxxxx and Xxxxx dated as of the Closing Date;
(iii) instruments evidencing any necessary consents of third parties
to the execution and performance of this Agreement;
(iv) such other documents as Buyer may reasonably request for the
purpose of evidencing (x) the accuracy of the Seller's representations and
warranties; (y) the performance by Seller of, or compliance by Seller with, the
covenants of the Seller; and (z) the existence of the Company and the authority
of the Seller to enter into and perform under this Agreement; and
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(v) evidence of the release of any liens or other encumbrances on
the assets of the Company arising from obligations that are not included in the
Business Balance Sheet.
Section 4 Controlling Agreement. Except where inconsistent with the
specific provisions of this Agreement, all of the provisions of the Controlling
Agreement are incorporated into this Agreement.
Section 5 Additional Representations and Warranties of Seller
(a) Financial Statements
(i) Business Balance Sheet. The unaudited proforma balance sheets of
the Company as of December 31, 1996 and as of April 30, 1997 set forth on
Schedule A hereto (the "Business Balance Sheet") (i) is complete and correct in
all material respects having been properly extracted from the books and records
of the Company, and (ii) reflects accurately in all material respects all
accrued costs and expenses of the Company; provided that it is understood that a
good faith allocation of assets and liabilities has been made by the Company
between the Company and ABSI (the company referred to in Section 6(a)).
(ii) Income Statement. The unaudited statements of income of the
Company for the twelve months ended December 31, 1996 and for the four months
ended April 30, 1997 set forth on Schedule B hereof presents fairly the revenues
and expenses of the Company for such periods having been properly extracted from
the books and records of the Company; provided that it is understood that a good
faith allocation of revenues and expenses has been made by the Company between
the Company and ABSI.
(b) Employee Plans. Except as set forth on Schedule C hereto (the
"Plans"), the Company does not maintain or contribute to, is not a party to, nor
has incurred any liability or contingent liability with respect to, any employee
benefit plan within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), a multiemployer plan within
the meaning of Section 4001(a)(3) of ERISA (a "Multiemployer Plan") or any other
written, unwritten, formal or informal plan or agreement, involving direct or
indirect compensation other than practices involving the payment of salaries or
wages, workers' compensation, unemployment compensation and other government
progress, with respect to the employees of the Company. None of the Plans is a
Multiemployer Plan or is subject to Title IV of ERISA. With respect to the
Plans, the
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requirements of ERISA and the Internal Revenue Code of 1986, as amended, as
applicable, have been fulfilled in all material respects. Except as set forth on
Schedule C, the Company has no knowledge of any claims by any of its employees
relating to the terms and conditions of their employment which remain
outstanding other than claims respecting a routine payment or provisions of
compensation or benefits in the ordinary course of business of the Company in
accordance with its past practices. Except as set forth on Schedule C, the
Company has incurred no liability or contingent liability with respect to any
employee benefit plan within the meaning of Section 3(3) of ERISA that is
maintained or contributed to by any other member of a "controlled group" (within
the meaning of Section 4971(e)(2)(B) of the Code) that includes the Company.
Section 6 Conditions to Closing
(a) Transfer of Shares of Subsidiary. It is understood and agreed by
the parties that, prior to the Closing, the Company shall have transferred to
another person or entity all of its ownership interest in and to the capital
stock of Advanced Broadcast Systems, Inc., a Delaware corporation ("ABSI"), a
subsidiary of the Company engaged in a separate video business, and that neither
the shares nor any assets of ABSI shall constitute any part of the sale and
purchase transaction under this Agreement.
(b) Contract for Services. Buyer and Seller shall have agreed upon
the terms of a Contract for Services between Seller and ABSI, which shall be
executed by Seller and ABSI prior to or at the Closing.
Section 7 Covenants of Seller. In addition to any covenants contained
in the Controlling Agreement that apply to Seller and the Company, prior to the
Closing the Company shall use its best efforts to obtain all necessary consents
of any third parties required in connection with the execution and performance
by the Company of this Agreement.
Section 8 Section 338(h)(10) Election
(a) With respect to the sale of the Shares, Seller and Buyer shall
jointly make a Section 338(h)(10) Election (as hereinafter defined) in
accordance with applicable laws and under any comparable provision of state or
local law for which a separate election is permissible and as set forth herein.
Buyer shall take all necessary steps to properly make a
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Section 338(g) Election (as hereinafter defined) in connection with the Section
338(h)(10) Election in accordance with applicable laws and under any comparable
provision of state, local or foreign law for which a separate election is
permissible. Buyer and Seller agree to co-operate in good faith with each other
in the preparation and timely filing of any tax returns required to be filed in
connection with the making of such an election, including the exchange of
information and the joint preparation and filing of Form 8023 and related
schedules.
(b) Buyer shall be responsible for the preparation and filing of all
Section 388 Forms (as hereinafter defined) in accordance with applicable tax
laws and the terms of this Agreement and shall deliver such Section 338 Forms at
least 30 days prior to the date such Section 338 Forms are required to be filed.
Seller shall execute and deliver to Buyer such documents or forms (including
executed Section 338 Forms) as are requested by any laws in order to properly
complete the Section 338 Forms at least 20 days prior to date such Section 338
Forms are required to be filed. Seller shall provide Buyer with such information
as Buyer reasonably requests in order to prepare the Section 338 Forms by the
later of 30 days prior to the date on which Buyer is required to deliver such
forms to Seller. Buyer shall deliver to Seller a copy of all Section 338 Forms
that have been filed within 30 days of such filing.
(c) The Purchase Price, (and such amounts as required by Treasury
Regulations promulgated under Section 338(b)(5) of the Code) shall be allocated
in accordance with Section 338(b)(5) of the Code and the Treasury Regulations
thereunder.
(d) "Section 338 Forms" means all returns, documents, statements and
other forms that are required to be submitted in any federal, state, county or
other local taxing authority in connection with a Section 338(g) Election or a
Section 338(h)(10) Election. Section 338 Forms shall include, without
limitation, any "statement of section 338 election" and IRS Forms 8023 (together
with any schedules or attachments thereto) that are required pursuant to Treas.
Regs. Section 1.338-1 or Treas.Regs. Section 1.338(h)(10)-1 or any successor
provisions.
(e) "Section 338(g) Election" means an election described in Section
338(g) of the Code in connection with an election under Section 338(h)(10) of
the Code with respect to the acquisition of Shares pursuant to this Agreement.
Section 338(g) Election shall include any corresponding election under state or
local law for which a separate election is
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permissible with respect to Buyer's acquisition of Shares pursuant to this
Agreement.
(f) "Section 338(h)(10) Election" means an election described in
Section 338(h)(10) of the Code with respect to Buyer's acquisition of Shares
pursuant to this Agreement. Section 338(h)(10) Election shall include any
corresponding election under state or local law for which a separate election is
permissible with respect to Buyer's acquisition of Shares pursuant to this
Agreement.
Section 9 Certain Tax Provisions
(a) Tax Definitions. For purposes of this Agreement, "Code" shall
mean the Internal Revenue Code of 1986, as amended; "Taxes" shall mean any and
all federal, state, local, foreign and other taxes, levies, fees, imposts,
duties and charges of whatever kind (including any interest, penalties or
additions to the tax imposed in connection therewith or with respect thereto),
whether or not imposed on the Company or ABSI, including, without limitation,
taxes imposed on, or measured by, income, franchise, profits or gross receipts,
and also ad valorem, value added, sales, use, service, real or personal
property, capital stock, licence, payroll, withholding, employment, social
security, workers' compensation, unemployment compensation, utility, severance,
production, excise, stamp, occupation, premium, windfall profits, transfer and
gains taxes and customs duties; and "Tax Returns" shall mean returns, reports,
information statements and other documentation (including any additional or
supporting material) filed or maintained in connection with the calculation,
determination, assessment or collection of any Tax.
(b) Tax Covenants.
(i) Seller shall prepare and file all Tax Returns with the
appropriate governmental agencies relating to the Company for periods ending on
or prior to the Closing Date and shall pay all Taxes due with respect to such
Tax Returns except for Taxes accrued or reflected on the Business Balance Sheet.
Buyer shall prepare and file, or cause to be prepared and filed, all Tax Returns
required to be filed by the Company with respect to Taxes accrued or reflected
on the Business Balance Sheet or covering a Tax year commencing prior to the
Closing Date and ending after the Closing Date (a "Straddle Tax Return") and
shall cause the Company to pay the Taxes shown to be due thereon, provided,
however, that Parent and Seller shall promptly reimburse Buyer for the portion
of such Tax that relates to a Pre-Closing Tax Period except to the extent it is
accrued or reflected on the Business Balance
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Sheet. Seller will furnish to Buyer all information and records reasonably
requested by Buyer for use in preparation of any Straddle Tax Returns. The Buyer
shall allow Seller to review, comment upon and reasonably approve without undue
delay any Straddle Tax Return at any time during the forty-five (45) day period
immediately preceding the filing of such Tax Return. The Buyer and Seller agree
to cause the Company to file all Tax Returns for any Straddle Period on the
basis that the relevant taxable period ended as of the close of business on the
Closing Date, unless the relevant taxing authority will not accept a Tax Return
filed on that basis. For purposes of this Agreement "Pre-Closing Tax Period"
shall mean any taxable period ending on or before the Closing Date and the
portion ending on and including the Closing Date of any taxable period that
includes (but does not end on) the Closing Date ("Straddle Period").
(ii) In the case of any Straddle Period, (i) real, personal and
intangible property Taxes ("property Taxes") of the Company for the Pre-Closing
Tax Period shall be equal to the amount of such property Taxes for the entire
Straddle Period multiplied by a fraction, the numerator of which is the number
of days during the Straddle Period that are in Pre-Closing Tax Period and the
denominator of which is the number of days in the Straddle Period; and (ii) the
Taxes of the Company (other than property Taxes) for the portion of the Straddle
Period that constitutes a Pre-Closing Tax Period shall be computed as if such
taxable period ended as of the close of business on the Closing Date.
(iii) Seller and Vendor shall cause any tax sharing agreement or
similar arrangement with respect to Taxes involving the Company to be terminated
effective immediately before the Closing, to the extent any such agreement or
arrangement relates to the Company, and after the Closing Date the Company shall
have no obligation under any such agreement or arrangement for any past, present
or future period except to the extent accrued or reflected on the Business
Balance Sheet.
Section 10 General Provisions.
(a) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
(b) Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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(c) Headings. All paragraph headings in this Agreement are inserted
for convenience only and shall not modify or affect the construction or
interpretation of any provision of this Agreement.
(d) Entire Agreement. Subject to the provisions of the Controlling
Agreement, this Agreement and the instruments specifically provided for under
this Agreement represent the entire agreement of the parties with respect to the
subject matter hereof, and no provision or document of any kind shall be
included in, or form part of, this Agreement unless it is in writing and is
delivered to the other party by the party to be charged.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date set forth above.
PANAVISION INC. VISUAL ACTION HOLDINGS PLC
/s/ Xxxxxxx X. Xxxxxxxxx /s/ Xxxxxx X. Xxxxx
By:........................... By:........................
E.V.P. CEO
Its:................. Its:...............
VISUAL ACTION HOLDINGS, INC.
/s/ Xxxxxx X. Xxxxx
By:.........................
President
Its:..............
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