EXHIBIT 2.1
Dated August 4, 1999
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IMAX CORPORATION,
THE VENDORS (AS DEFINED HEREIN)
- and -
DIGITAL PROJECTION INTERNATIONAL PLC
AGREEMENT
for the sale and purchase of
all of the issued shares of
Digital Projection International PLC
THIS AGREEMENT is made on August 4, 1999
AMONG:-
(1) IMAX CORPORATION, a Canadian corporation (the "Purchaser");
(2) The persons specified as Vendors on Schedule I hereto (each a "Vendor" and
collectively, the "Vendors"); and
(3) DIGITAL PROJECTION INTERNATIONAL PLC, an English company (No. 03280170)
whose registered office is at Xxxxxxxxx Xxx, Xxxxxxxxx, Xxxxxxxxxx X00 0XX
(the "Company").
THE PARTIES AGREE AS FOLLOWS:-
1. INTERPRETATION
1.1 In this agreement the following words and expressions and abbreviations
have the following meanings, unless the context otherwise requires:-
"Accounts Date" means December 31, 1998.
"Bank Agreement" means the Revolving Credit and Guaranty Facility
Agreement, dated January 10, 1998, between the Company and the British
Linen Bank Limited.
"Business Day" means a day (excluding Saturdays) on which banks generally
are open in London and New York for the transaction of normal banking
business.
"Closing Balance Sheet" means the audited consolidated balance sheet
(including the related notes and schedules thereto) of the Company and the
Subsidiaries to be prepared pursuant to clause 5.7, and dated as of the
Completion Date.
"Company" has the meaning ascribed thereto in the Preamble to this
agreement.
"Completion" means the completion of the sale and purchase of the Shares in
accordance with clause 5.
"Completion Date" means the date on which Completion occurs.
"Conditions" means the conditions set out in clause 3.1.
"Confidential Information" means all information relating to any Group
Company's business, or financial or other affairs (including future plans
and targets of any Group Company) which is not publicly known.
"Disclosure Letter" means the Disclosure Letter from the Principal
Management Employees to the Purchaser (together with all the documents
attached to it), signed and first delivered to the Purchaser and the
Investors within 7 calendar days of the execution of the agreement, as
supplemented by the Principal Management Employees from time to time
prior to Completion.
"Encumbrance" means any mortgage, charge (fixed or floating), pledge, lien,
hypothecation, trust, right of set off or other third party right or
interest (legal or equitable) including any right of pre-emption,
assignment by way of security, reservation of title or any other security
interest of any kind however created or arising or any other agreement or
arrangement (including a sale and repurchase arrangement) having similar
effect.
"Escrow Agent" means the escrow agent under the Escrow Agreement.
"Escrow Agreement" has the meaning specified in clause 5.7(e).
"Escrow Fund" means the $1.5 million deposited with the Escrow Agent
pursuant to clause 5.5(a).
"Executive Officer" means any board-appointed Senior Vice-President,
Executive Vice-President, Chief Operating Officer, Chief Executive Officer,
or Chairman of the Purchaser.
"Group" means the Company and the Subsidiaries and "Group Company" means
any one of them.
"Intellectual Property" means (i) United Kingdom, United States,
international, and foreign patents, patent applications and statutory
invention registrations, (ii) trademarks, service marks, domain names,
trade dress, logos, and other source identifiers, including registrations
and applications for registration thereof, (iii) copyrights, including
registrations and applications for registration thereof, (iv) computer
software, data, databases, and related documentation, (v) confidential and
proprietary information, including trade secrets and know-how, (vi) mask
works, (vii) utility models and applications therefor, (viii) design
registrations and applications therefor, and (ix) all other intellectual
capital for which property rights exist anywhere in the world.
"Investment Agreement" means the Investment Agreement dated December 19,
1996 between the Company, the Principal Management Employees (other than
Xxxxxxx Xxxx and Xxxxxxx Xxxxxx), 3i plc, 3i Group plc, and Phildrew
Ventures Fourth Fund, Phildrew Ventures Fourth Fund B and Phildrew Ventures
Fourth Fund D, as amended by Supplemental Agreements dated June 25, 1997,
July 1, 1998 and June 29, 1999.
"Investors" means 3i Group plc and Phildrew Nominees Ltd for Phildrew
Ventures Fourth Fund, Phildrew Ventures Fourth Fund B, Phildrew Ventures
Fourth Fund C and Phildrew Venture Fourth Fund D.
"Investor's Shares" means, in the case of each Investor, those Shares set
forth on Schedule I opposite the name of such Investor which, in each case,
are designated thereon as being owned by such Investor.
"Key Employees" means the key employees in each department and division of
the Company, in the reasonable opinion of the Principal Management
Employees, including without limitation Xxxxxx Xxxx, Xxxx Xxxxx and Xxxxx
Xxxxxxxxx.
"Knowledge" means actual knowledge of the specified person, or knowledge of
the specified person that would have resulted from reasonable due inquiry
of all Principal Management Employees and of the Key Employees.
"Licensed Intellectual Property" shall mean (i) all licenses of
Intellectual Property and Software licensed to the Company by any third
party, and (ii) licenses of Intellectual Property and Software granted by
the Company to any third party, including the Supply Agreement.
"Licensed Rights" means Intellectual Property licensed to the Company under
the Licensed Intellectual Property.
"Material Adverse Effect" means any circumstances, change in, or effect on
the business, the Company or any Subsidiary that, individually or in the
aggregate with any other circumstances, changes in, or effects on, the
business, the Company or any Subsidiary: (i) is, or could be, materially
adverse to the business, operations, prospects, results of operations or
the condition (financial or otherwise) of the Group taken as a whole, or
(ii) could materially adversely affect the ability of the Purchaser or the
Group to operate or conduct the business in the manner in which it is
currently operated or conducted by the Group.
"Net Trading Balance" means net assets, including cash, as indicated on
the Reference Balance Sheet or Closing Balance Sheet, as the case may be.
The basis of the calculation of the Net Trading Balance on the Closing
Balance Sheet shall be consistent with the basis of calculation thereof on
the Reference Balance Sheet.
"Owned Intellectual Property" shall mean all Intellectual Property and
Software owned by each Group Company.
"Permit" means a permit, licence, consent, approval, certificate,
qualification, specification, registration and other authorisation and a
filing of a notification report or assessment necessary in any jurisdiction
for the proper and efficient operation of each Group Company's business,
its ownership, possession, occupation or use of an asset or the execution
and performance of this agreement.
"Principal Management Employees" means Xxxxx Xxxxxxxxx, Xxxxxxx Xxxxxxxxx,
Xxxxx Xxxxx, Xxxxxx Xxxxx, Xxxxxxx Xxxx and Xxxxxxx Xxxxxx.
"Properties" means the leasehold or freehold properties or any part or
parts thereof owned or occupied by the Group and "Property" shall mean any
one of them.
"Purchaser's Auditors" means PricewaterhouseCoopers.
"Purchaser's Solicitors" means Shearman & Sterling, 000 Xxxxxxxxxxx, Xxxxxx
XX0X 0XX.
"Reference Balance Sheet" means the forecast unaudited consolidated balance
sheet of the Company and the Subsidiaries, as of August 31, 1999,
previously delivered to the Purchaser and attached hereto as Exhibit 1.
The Reference Balance Sheet has been prepared in accordance with the
assumptions set forth therein, which assumptions, in the reasonable opinion
of the Principal Management Employees, are consistent with the law and
applicable
standards, principles and accounting practices generally accepted in the
United Kingdom ("U.K. GAAP") as consistently and historically applied by
the Company in the preparation of its financial statements.
"Shares" means all of the shares listed in Schedule 1.
"Software" shall mean all computer software (i) used by the Company which
is material to the operation of the business of the Company, or (ii)
manufactured, distributed, sold, licensed or marketed by each Group
Company.
"Subsidiary" means a subsidiary undertaking of the Company specified in
schedule 2 and "Subsidiaries" means all those subsidiary undertakings.
"Supply Agreement" means that certain Supply and Intellectual Property
Agreement, effective June 4, 1996, by and between Digital Projection
Limited and TI.
"TA" means the Income and Corporation Taxes Xxx 0000.
"TI" means Texas Instruments Incorporated.
"Transaction Documents" shall have the meaning set forth in clause 13.
"Vendor" and "Vendors" has the meaning ascribed thereto in the Preamble to
this agreement.
"Vendors' Auditors" means Deloitte & Touche.
"Vendors' Solicitors" means Garretts, Xxxx Xxxxx, 0 Xxxxxxxxx Xxxxxx,
Xxxxxxxxxx X0 0XX.
"Warranties" means the warranties set out in schedule 3.
1.2 In this agreement unless otherwise specified, reference to:-
(a) a "subsidiary undertaking" is to be construed in accordance with
section 258 of the Companies Xxx 0000 and a "subsidiary" or "holding
company" is to be construed in accordance with section 736 of that
Act;
(b) a document in the "agreed terms" is a reference to that document in
the form approved and for the purposes of identification signed by or
on behalf of each party;
(c) "FA" followed by a stated year means the Finance Act of that year;
(d) "includes" and "including" shall mean including without limitation;
(e) a "party" means a party to this agreement and includes its assignees
(if any) and/or the successors in title to substantially the whole of
its undertaking and, in the case of an individual, to his or her
estate and personal representatives;
(f) a "person" includes any person, individual, company, firm,
corporation, partnership,
government, state or agency of a state or any undertaking (whether or
not having separate legal personality and irrespective of the
jurisdiction in or under the law of which it was incorporated or
exists);
(g) a "statute" or "statutory instrument" or "accounting standard" or any
of their provisions is to be construed as a reference to that statute
or statutory instrument or accounting standard or such provision as
the same may have been amended or re-enacted before the date of this
agreement;
(h) "clauses", "paragraphs" or "schedules" are to clauses and paragraphs
of and schedules to this agreement;
(i) "writing" includes any methods of representing words in a legible form
other than writing on an electronic or visual display screen or in
other non-transitory form;
(j) words denoting the singular shall include the plural and vice versa
and words denoting any gender shall include all genders;
(l) "$" means United States dollars; and
(m) "pounds" means British pounds.
1.3 The schedules and exhibits form part of the operative provisions of this
agreement and references to this agreement shall, unless the context
otherwise requires, include references to the schedules.
1.4 The index to and the headings and the descriptive notes in brackets
relating to provisions of taxation statutes in this agreement are for
information only and are to be ignored in construing the same.
1.5 The agreements and obligations contained in this agreement on the part of
the Investors shall be several only, and none of the Investors shall have
any liability or be under any obligation in respect of any breach or non-
observance of any of the agreements and obligations contained in this
agreement (including but not limited to the warranties set forth in clause
6.3 hereto and the obligations set forth in clauses 4.6 and 4.7) other than
in respect of such Investor's own breaches or acts of non-observance.
2. SALE AND PURCHASE
2.1 Upon the terms and subject to the conditions of this agreement, the Vendors
as legal and beneficial owners and with full title guarantee shall sell the
Shares listed opposite their name on Schedule 1 hereto and the Purchaser
shall purchase the Shares with effect from Completion free from any
Encumbrance together with all accrued benefits and rights attached thereto,
including without limitation all accrued dividends and all rights to
dividends, if any, in respect of the Shares.
2.2 Each of the Vendors and the Company will waive upon Completion any rights
or restrictions conferred upon it which may exist in relation to the Shares
under the articles of association of the Company, the Investment Agreement
or otherwise.
2.3 The Purchaser shall not be obliged to complete the purchase of any of the
Shares unless the Vendors complete the sale of all of the Shares
simultaneously, but completion of the purchase of some Shares shall not
affect the Purchaser with respect to its rights to the other Shares.
2.4 The consideration for such sale and purchase shall be $26,945,750 (the
"Purchase Price") to be satisfied in cash on Completion in accordance with
clause 5.5.
3. CONDITIONS
3.1 Completion is conditional upon the fulfilment of each of the Conditions as
follows:-
(a) The Purchaser shall have received an opinion from Garretts, the
Company's solicitors, in relation to the issued share capital of the
Company substantially in the form attached hereto as Exhibit 6;
(b) The Purchaser shall have participated in discussions with TI and
shall, in the opinion of the Purchaser, be satisfied that each Group
Company and TI will have a satisfactory business relationship
following the Completion. Furthermore, TI shall confirm in terms which
are satisfactory to the Purchaser that the Company may provide the
Purchaser with full access from and after the fifteenth day following
the date hereof to all TI=s Intellectual Property in the possession
of, or under the control of, any Group Company;
(c) Each of the Principal Management Employees of the Company shall have
executed and delivered service agreements in each case, substantially
in the form of Exhibit 2 conformed in each case as per the employee
term sheet and notes attached as Exhibit 3;
(d) The Board of Directors of the Purchaser shall have adopted a
resolution approving the terms of this agreement and duly authorising
the Purchaser to perform its obligations under this agreement and to
take such further actions as are reasonably necessary to consummate
the transactions contemplated by this agreement;
(e) The Purchaser shall have completed all its business, legal, accounting
and other due diligence with respect to the Group and shall, in its
sole judgment, be satisfied with the results thereof;
(f) No event or events shall have occurred, or be reasonably likely to
occur, which, individually or in the aggregate, have, or could have, a
Material Adverse Effect;
(g) The Purchaser, the Vendors and each Group Company shall have received,
each in a form reasonably satisfactory to the Purchaser, all
authorisations, consents, orders and approvals of all governmental or
regulatory authorities and all third party consents which the
Purchaser deems necessary or desirable for the consummation of the
transactions contemplated by this agreement;
(h) Xxxxxx Blaxtan shall have delivered transfers in common form relating
to all of the Shares owned by her in favour of the Purchaser (or as it
may direct) and the share certificates relating to such Shares; and
(i) All warrants, options (other than options granted under the Digital
Projection Share Option Scheme), convertible securities or other
rights, agreements, arrangements or commitments of any character
relating to the share capital of any Group Company, or obligating any
Vendor or any Group Company to issue or sell any shares, or any other
interest in any Group Company (except, in each case, pursuant to this
agreement) shall have been terminated or otherwise cancelled and shall
be of no force or effect immediately prior to Completion.
3.2 The Purchaser may, in its sole discretion, by notice in writing to the
Vendors and the Company waive any of the Conditions in whole or in part.
3.3 Each of the Principal Management Employees and the Company undertakes to
use all reasonable endeavours to procure the fulfilment of the Conditions
set out in paragraphs (c), (g), (h) and (i) of clause 3.1 and to consummate
the transactions contemplated by this agreement, and the Principal
Management Employees shall use reasonable endeavours to assist and
facilitate the Purchaser in connection with clause 3.1(b).
3.4 If all of the Conditions (save for those compliance with which has been
waived in accordance with the terms of this agreement) have not been
fulfilled on or before September 3, 1999, this agreement shall terminate in
accordance with clause 3.5 with effect from that date.
3.5 If this agreement terminates in accordance with clause 3.4 then the
obligations of the parties shall automatically terminate save that the
rights and liabilities of the parties which have accrued prior to
termination under clauses 4.6 to 4.12 (inclusive), 9, 10 and 13 to 20
(inclusive) shall continue to subsist.
3.6 The Principal Management Employees and the Company shall keep the Purchaser
advised of any Material Adverse Effect of which they become aware and the
progress towards the satisfaction of their obligations under clause 3.3,
and the Purchaser shall keep the Vendors and the Company advised of the
progress towards the satisfaction of the conditions under clause 3.3.
3.7 The Purchaser shall deliver to the Principal Management Employees and
Investors within 7 days after the meeting with TI currently scheduled to be
held on August 2, 1999 a letter setting forth the Purchaser's view of the
likely business relationship between TI and the Company post-Completion and
whether the Purchaser knows if such view will have an impact on the
valuation of the Group.
3.8 The Vendors shall procure that the Company shall be re-registered as a
private limited company prior to Completion.
4. PERIOD TO COMPLETION
4.1 The Principal Management Employees and the Company undertake with the
Purchaser to procure that each Group Company shall operate its business and
activities in their usual course, and comply with each of the undertakings
set out in schedule 7.
4.2 Pending Completion, the Principal Management Employees will use all
reasonable endeavours to procure that (a) the Purchaser and any person
authorised by it shall be given
full access to the Properties and to all the books and records of each
Group Company (including without limitation, all books and records and
other documentation or information whatsoever regarding each Group
Company's Intellectual Property, subject to obtaining consents of third
parties where appropriate, as well as all books and records and other
documentation or information whatsoever regarding any other company's
Intellectual Property which is in the possession of, or under the control
of, any Group Company, subject to obtaining consents of third parties where
appropriate), provided that prior to Completion, the Principal Management
Employees shall not be obliged to disclose any board minutes or other
documents containing information relating to proposals received from third
parties in connection with a sale of the Shares or any substantial part of
the business or assets of the Group, and (b) the directors and employees
and auditors and other advisers of each Group Company shall be instructed
to give promptly all such information and explanations as the Purchaser or
any such person may reasonably request.
4.3 If, prior to Completion:-
(a) any of the Principal Management Employees is in breach of any of the
Warranties or any of the Investors is in breach of the warranties set
forth in clause 6.3 hereof; or
(b) there shall occur any act or event which upon Completion would or
might reasonably be expected to result in a breach of any of the
Warranties or any of the warranties set forth in clause 6.3 were they
repeated immediately prior to Completion; or
(c) there is any breach or non-fulfilment by any of the Vendors of their
undertakings or obligations hereunder which in any such case is, in
the opinion of the Purchaser, incapable of remedy or, if capable of
remedy, is not remedied by such Vendor by the Completion Date or (if
earlier) within seven days after notice thereof from the Purchaser
requiring the same to be remedied;
then in any such case the Purchaser shall be entitled to elect by notice in
writing to the Vendors not to complete the purchase of the Shares, in which
event this agreement shall automatically terminate save that the rights and
liabilities of the parties which have accrued prior to termination under
clauses 4.6 to 4.12 (inclusive), 9, 10 and 13 to 20 (inclusive) shall
continue to subsist. Without restricting the rights of the Purchaser or
the ability of the Purchaser to enforce any other legal rights or remedies
available to it, the Vendors expressly acknowledge that the Purchaser shall
be entitled to receive specific performance of the terms of this agreement
upon the fulfilment or waiver of the Conditions.
4.4 Each of the Principal Management Employees and the Company undertakes to
the Purchaser that it will disclose forthwith in writing to the Purchaser
any matter or thing which becomes known to it after the date hereof which
is, in the reasonable opinion of the Principal Management Employees,
inconsistent with any of the Warranties or which is material to the
business of any Group Company. Any such disclosures made prior to
Completion shall be deemed to be valid and proper disclosures against the
Warranties and shall have the effect of qualifying the Warranties.
4.5 Promptly following the date hereof, the Board of Directors of the Company
shall adopt a resolution approving the terms of this agreement and duly
authorising the Company to perform its obligations under this agreement and
to take such further actions as are reasonably necessary to consummate the
transactions contemplated by this agreement.
4.6 Each of the Investors undertakes and agrees on their own behalf only that
between the date of this agreement and the earlier of:-
(i) Completion;
(ii) the termination of this agreement; and
(iii) 3/rd/ September 1999
it will not:-
(a) solicit, initiate or accept any offer from any person relating to the
acquisition or purchase of all or any of the Shares owned by that
Investor;
(b) participate in any negotiations with any Person (other than the
Purchaser, its officers and employees and advisors) in connection with
a sale of the Shares held by that Investor; and
(c) take any affirmative action to require the directors of the Company to
bring about a sale by the Company of all or substantially all of its
assets and undertaking (such sale being referred to in this clause 4
as an "Asset Sale").
4.7 Each Investor shall immediately (a) cease any existing discussions,
conversations and negotiations to which they are a party with respect to
any proposed sale or disposal of any of the Shares or an Asset Sale; and
(b) each of the Investors shall instruct their own respective advisors to
terminate all such existing discussions, conversations and negotiations to
which they are a party with respect to any proposed sale or disposal of any
of the Shares or an Asset Sale.
4.8 If following a breach of any of the provisions of clauses 4.6 or 4.7 by any
Investor (in this clause a "Breaching Investor") (i) a sale of any of the
Shares owned by that Investor; or (ii) an Asset Sale, occurs, in either
case, prior to 3rd June 2000, then the Purchaser shall have the right to
either (i) require all of the Breaching Investors to pay the Purchaser in
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complete satisfaction of the Breaching Investor's liability under clause
4.6 or 4.7 an aggregate sum of $2.5 million, liability for such payment to
be divided equally between each Breaching Investor, or (ii) claim damages
--
against the Breaching Investor on any basis available at law to the
Purchaser for such Investor's breach of clause 4.6 or 4.7 including,
without limitation, a claim to receive a payment from the Breaching
Investor in an amount necessary to put the Purchaser into the position
which would have existed if clauses 4.6 or 4.7 had not been breached,
together with all costs and expenses incurred by the Purchaser as a result
of such breach together with all costs and expenses incurred by the
Purchaser.
4.9 Following the discharge by any Investor of its obligations under clause
4.8, the Investors' liability under this agreement and the Transaction
Documents shall cease and determine.
4.10 For the avoidance of doubt the provisions in clauses 4.6 through 4.8
(inclusive) shall not survive Completion.
4.11 If there is an affirmative statement to any Investor or Principal
Management Employee by an
Executive Officer of the Purchaser, or on behalf of any such an Executive
Officer, that the Purchaser will not proceed to Completion at a price of
$26,945,750 then notwithstanding any other provision of this agreement to
the contrary, the provisions of clauses 4.6 to 4.9 (inclusive) shall
immediately cease and determine and the Investors shall have no further
liability pursuant to those clauses.
4.12 (i) Each of the Vendors (other than the Investors and Digital Projection
Trustee Limited) severally undertake and agree that between the date
of this agreement and the earlier of (i) the Completion and (ii) the
termination of this agreement he will not (a) solicit or initiate any
other proposals or accept offers from any person relating to any
acquisition or purchase of all or any portion of the shares of the
Company (other than pursuant to the DPI Stock Option Plan) or the
shares of any Subsidiary or all or any material portion of the assets
of the Group (taken as a whole) or (b) actively, on his own behalf or
on behalf of any Group Company, participate in any discussions,
conversations or negotiations regarding, or furnish to any other
person any information with the intention of assisting such person to
seek to do, any of the foregoing. Each of the Vendors (other than the
Investors and Digital Projection Trustee Limited) shall immediately
cease and cause the Company's financial advisers to be instructed to
cease all existing discussions, conversations or negotiations
conducted heretofore with respect to any of the foregoing.
(ii) Unless prohibited by contract, law or other regulation, each of the
Vendors (other than the Investors and Digital Projection Trustee
Limited) shall notify the Purchaser promptly upon any such proposal
or offer with respect thereto being made to him and, unless so
prohibited shall set out in such notice in reasonable detail the
identity of such person and the terms and conditions of such proposal
or offer. Each of the Vendors (other than the Investors and Digital
Projection Trustee Limited) agrees not, without the prior written
consent of the Purchaser, to release any person from, or waive any
provision of, any standstill agreement to which he, the Company or
any Subsidiary is a party.
(iii) Following a breach by any of the Vendors (other than the Investors
and Digital Projection Trustee Limited) of any of the provisions of
clauses 4.12(i) or 4.12(ii), if:
a) a sale of any of the Shares of that Vendor; or
b) an Asset Sale,
occurs in either case prior to 3rd June 2000, then the Purchaser
shall have the right to either a) require the breaching Vendor to pay
the Purchaser in complete satisfaction of the breaching Vendor's
liability under clause 4.12(i) or 4.12(ii), the sum set opposite such
breaching Vendor's name below:
Xxxxx Xxxxxxxxx (Pounds) 50,000
Xxxxxxx Xxxxxx (Pounds) 25,000
Xxxx Xxxx (Pounds) 25,000
Xxxx Xxxxxxxxx (Pounds) 25,000
Xxxxxx Xxxxx (Pounds) 25,000
Xxxxx Xxxxx (Pounds) 25,000
Xxxxxxx Xxxxxxx (Pounds) 25,000
or,
b) claim damages against the breaching Vendor on any basis available
at law to the Purchaser for such Vendor's breach of clauses 4.12(i) or
4.12(ii) including, without limitation, a claim to receive a payment
from the breaching Vendor in an amount necessary to put the Purchaser
into the position which would have existed if clauses 4.12(i) or
4.12(ii) had not been breached, together with all costs and expenses
incurred by the Purchaser as a result of such breach; provided,
however, that none of the Vendors shall be liable for more than the
sum set opposite such breaching Vendor's name below:
Xxxxx Xxxxxxxxx (Pounds) 50,000
Xxxxxxx Xxxxxx (Pounds) 25,000
Xxxx Xxxx (Pounds) 25,000
Xxxx Xxxxxxxxx (Pounds) 25,000
Xxxxxx Xxxxx (Pounds) 25,000
Xxxxx Xxxxx (Pounds) 25,000
Xxxxxxx Xxxxxxx (Pounds) 25,000
Nothing contained in this clause shall prevent any of the Vendors from
discussing, communicating or negotiating such matters with the
Purchaser or the Purchaser's advisors.
4.13 Following the discharge by any Principal Management Employee of its
obligations under clause 4.12, such Principal Management Employee's
liability under this agreement and the Transaction Documents shall cease
and determine.
4.14 For the avoidance of doubt the provisions in clause 4.12 shall not survive
Completion.
5. COMPLETION
5.1 Completion shall take place at the offices of the Purchaser's Solicitors on
the earlier of (i) the second Business Day following the date when all of
the Conditions shall have been fulfilled or waived, and (ii) September 3,
1999.
5.2 On Completion the Principal Management Employees and/or each Group Company,
insofar as it is within their power to do, shall deliver to or, if the
Purchaser shall so agree, make available to the Purchaser:-
(a) transfers in common form relating to all the Shares duly executed in
favour of the Purchaser (or as it may direct) and share certificates
relating to the Shares;
(b) [deliberately left blank];
(c) waivers and releases, in each case duly executed in the agreed form to
discharge the Company's obligations under or pursuant to (i) the
Investment Agreement, (ii) the Bank Agreement, (iii) any option, right
or warrant or other instrument convertible into or exchangeable for
share capital of the Company, including without limitation
those held by the Principal Management Employees, and (iv) any other
waivers or consents by the Principal Management Employees or by any Group
Company or other persons which the Purchaser has specified prior to
Completion so as to enable the Purchaser or its nominees to be registered
as the holders of the Shares free of any Encumbrance;
(d) resignations in the form to be agreed duly executed as deeds of all the
directors and the secretary of any Group Company (other than Xxxxx
Xxxxxxxxx) from their offices as director or secretary of, and their
employment with, any Group Company;
(e) confirmations executed as deeds of all the Principal Management Employees
confirming that they do not have, and will not have, any claims (whether
statutory, contractual or otherwise) against any Group Company at or
following the Completion, including without limitation, confirmation
executed as deeds of all the directors and Principal Management Employees
and the secretary of each Group Company confirming that they have no claims
(whether statutory, contractual or otherwise) against any Group Company for
compensation for loss of office or termination of employment or for unpaid
remuneration or otherwise together with delivery to the Purchaser of all
property of any Group Company in their possession or under their control;
(f) service agreements duly executed as deeds, in each case, between the
Company and the Principal Management Employees in the agreed terms;
(g) the written resignations of the auditors of each Group Company containing
an acknowledgment that they have no claim against any Group Company for
compensation for loss of office, except for professional fees accrued up to
the date of Completion or otherwise and a statement under section 394(1) of
the Companies Xxx 0000; or written confirmation from the auditors of each
Group Company confirming that were they to resign at Completion they would
have no claim against any Group Company for compensation for loss of
office, professional fees (except for professional fees accrued up to the
date of Completion) or otherwise and a statement of any matters they
believe should be brought to the attention of the members or creditors of
any Group Company, or if they consider that there are no such matters a
statement that there are none;
(h) the common seals, certificates of incorporation and statutory books, share
certificate books and cheque books of each Group Company;
(i) to the extent not in the possession or under the control of any Group
Company, all books of account or references as to customers and/or
suppliers and other records and all insurance policies in any way relating
to or concerning the businesses of any Group Company;
(j) to the extent not in the possession or under the control of any Group
Company, all licences, consents, permits and authorisations obtained by or
issued to any Group Company or any other person in connection with the
business carried on by any of them and such contracts, deeds or other
documents (including assignments of any such licences) as shall have been
required by the Purchaser's Solicitors prior to the date hereof;
(k) share certificates relating to all of the issued shares in the capital
of each of the Subsidiaries;
(l) a release in the terms to be agreed duly executed as a deed, in a form
satisfactory to the Purchaser, releasing each Group Company and their
respective officers and employees from any liability whatsoever
(actual or contingent) which may be owing to any Vendor by any Group
Company except in the ordinary course of trade; and
(m) such other documents, consents or waivers as the Purchaser may
reasonably request.
5.2A On Completion, the Investors shall deliver to the Purchaser or make
available to the Purchaser:
(a) transfers in common form relating to their respective Investor Shares
duly executed in favour of the Purchaser (or as it may direct) and the
share certificates relating to those Shares;
(b) confirmations executed as deeds by the Investors confirming that they
do not have any claims (whether statutory, contractual or otherwise)
against any Group Company at Completion;
(c) a release in the terms to be agreed duly executed as a deed releasing
each Group Company and their respective officers and employees from
any liability whatsoever (whether actual or contingent) which may be
owing to any Investor by any Group Company except in the ordinary
course of trade other than for any claims against Principal Management
Employees which may arise pursuant to the terms of the Joint
Instruction Letter dated as of the date hereof to be issued from the
Vendors to the Vendor's Solicitors and the agreement (known as the
Escrow Fund Letter) among the Vendors dated as of the date hereof;
(d) waivers and releases from each Investor, in each case duly executed in
terms to be agreed to discharge the Company's obligations under or
pursuant to (i) any option, right or warrant or other instrument
convertible into or exchangeable for share capital of the Company in
favour of that Investor; and
(e) any other waivers or consents by the Investors which the Purchaser
reasonably requires of such Investor at Completion so as to enable the
Purchaser or its nominees to be registered as the holders of Shares
held by that Investor free of any Encumbrance.
5.2B Phildrew Ventures Fourth Fund shall on Completion deliver to the Purchaser
the resignation in terms to be agreed duly executed as a deed of Mr.
Xxxxxxxxxxx Xxxxxxx as a director of the Company.
5.3 At or prior to Completion the Principal Management Employees shall procure
the passing of board resolutions of the Company or each Group Company, as
applicable:-
(a) sanctioning for registration (subject where necessary to due stamping)
the transfers in respect of the Shares;
(b) appointing those individuals identified by the Purchaser no later than
two days prior to Completion to be the directors and secretary of each
Group Company; and
(c) resolving that the Company and the Principal Management Employees
enter into service agreements in the agreed terms.
5.4 The Principal Management Employees, the Investors and the Company shall, as
the case may be, procure that at Completion:-
(a) there is repaid all sums (if any) owing to any Group Company by any
such person or by the directors of any Group Company or any of their
connected persons and whether or not such sums are due for repayment;
and
(b) each Group Company is released from any guarantee, indemnity, bond,
letter of comfort or Encumbrance or other similar obligation given or
incurred by it which relates in whole or in part to debts or other
liabilities or obligations, whether actual or contingent, of any
person other than a Group Company.
5.5 Upon Completion the Purchaser shall (a) transfer to the Escrow Agent $1.5
million (such amount being the "Escrow Fund") of the Purchase Price
referred to in clause 2.4, and (b) transfer to an account designated in
writing by the Vendors the remainder of the Purchase Price referred to in
clause 2.4, which transfers, in each case, shall be by wire transfer in
immediately available funds to the account designated therefor in the
Escrow Agreement. The Purchase Price and the monies released to the Vendors
from the Escrow Fund shall be allocated amongst the Vendors in accordance
with the terms of the agreement (known as the Escrow Fund Letter) of even
date herewith between the Vendors.
5.6 If in any respect the obligations of the Vendors or the Company are not
complied with on Completion the Purchaser may:-
(a) defer Completion to a date not more than 28 days after September 3,
1999 (and so that the provisions of this clause 5, apart from this
clause 5.6(a), shall apply to Completion as so deferred);
(b) proceed to Completion so far as practicable (without prejudice to its
rights hereunder); or
(c) terminate this agreement without prejudice to the rights and
liabilities which accrued prior to termination under clauses 4.6 to
4.12 (inclusive), 9, 10 and 13 to 20 (inclusive), which shall continue
to subsist
by means of a notice to that effect in writing served on the Vendors and
the Company.
5.7 (a) Within 180 calendar days following the Completion Date, the Purchaser
shall procure that the Closing Balance Sheet is prepared on a basis
consistent with the preparation of the Reference Balance Sheet (it
being acknowledged that the Reference Balance Sheet was prepared as of
31 August 1999) and deliver to the Vendors the Closing Balance Sheet,
together with a report thereon of the Purchaser's Auditors stating
that the Closing Balance Sheet fairly presents the consolidated Net
Trading Balance of the Company and its Subsidiaries at the Completion
Date and was prepared on a basis consistent with the preparation of
the Reference Balance Sheet.
(b) (i) Subject to clause (ii) of this clause 5.7(b), the Closing
Balance Sheet delivered by the Purchaser to the Vendors shall be
deemed to be and shall be final, binding and conclusive on the
parties hereto.
(ii) The Vendors may dispute any amounts reflected on the Closing
Balance Sheet, but only on the basis that the amounts reflected
on the Closing Balance Sheet were not arrived at in accordance
with the preparation of the Reference Balance Sheet; provided,
--------
however, that the Vendors shall have notified the Purchaser and
-------
the Purchaser's Auditors in writing of each disputed item,
specifying the amount thereof in dispute and setting forth, in
reasonable detail, the basis for such dispute, within twenty
Business Days of the Purchaser's delivery of the Closing Balance
Sheet to the Vendors. In the event of such a dispute, the
Vendors' Auditors and the Purchaser's Auditors shall attempt to
reconcile their differences, and any resolution by them as to
any disputed amounts shall be final, binding and conclusive on
the parties hereto. If any such resolution by the Purchaser's
Auditors and the Vendors' Auditors leaves in dispute amounts the
net effect of which in the aggregate would not affect the Net
Trading Balance reflected on the Closing Balance Sheet by more
than, 5,000, all such amounts remaining in dispute shall then be
deemed to have been resolved in favor of the Closing Balance
Sheet delivered by the Purchaser to the Vendors.
(iii) If the Vendors' Auditors and the Purchaser's Auditors are unable
to reach a resolution with such effect within twenty Business
Days after receipt by the Purchaser and the Purchaser's Auditors
of the Vendors' written notice of dispute, the Vendors' Auditors
and the Purchaser's Auditors shall submit the items remaining in
dispute for resolution to KPMG (or, if such firm shall decline
to act or is not, at the time of such submission, independent of
the Vendors, the Company and the Purchaser, to another
independent accounting firm of international reputation mutually
acceptable to the Purchaser and the Vendors, or in the absence
of agreement appointed on the application of the Purchaser or
the Vendors, by the President for the time being of the
Institute of Chartered Accountants) (either KPMG or such other
accounting firm being referred to herein as the "Independent
Accounting Firm"), which shall, within thirty Business Days
after such submission, determine and report to the Purchaser and
the Vendors upon such remaining disputed items, and such report
shall be final, binding and conclusive on the Vendors and the
Purchaser. The fees and disbursements of the Independent
Accounting Firm shall be allocated between the Vendors and the
Purchaser in the same proportion that the aggregate amount of
such remaining disputed items so submitted to the Independent
Accounting Firm that is unsuccessfully disputed by each such
party (as finally determined by the Independent Accounting Firm)
bears to the total amount of such remaining disputed items so
submitted.
(iv) In acting under this agreement, the Purchaser's Auditors, the
Vendors'
Auditors and the Independent Accounting Firm shall be
entitled to the privileges and immunities of arbitrators.
(c) The Closing Balance Sheet shall be deemed final for the purposes of
this clause 5.7 upon the earliest of (i) the failure of the Vendors to
notify the Purchaser of a dispute within ten Business Days of the
Purchaser's delivery of the Closing Balance Sheet to the Vendors, (ii)
the resolution of all disputes, pursuant to clause 5.7(b)(ii), by the
Purchaser's Auditors and the Vendors' Auditors and (iii) the
resolution of all disputes, pursuant to clause 5.7(b)(iii), by the
Independent Accounting Firm. Within three Business Days of the
Closing Balance Sheet being deemed final, a payment adjustment shall
be made as follows:
(i) in the event that the Net Trading Balance reflected on the
Reference Balance Sheet exceeds the Net Trading Balance reflected
on the Closing Balance Sheet (the amount of such excess being the
"Net Trading Balance Shortfall"), then the Purchaser, the
Investors and the Principal Management Employees shall jointly
issue a notice to the Escrow Agent signed by (A) an authorized
signatory of the Purchaser, (B) Xxxxx Xxxxxxxxx, or failing him,
Xxxxxxx Xxxxxx, on behalf of the Principal Management Employees
and (C) any authorized signatory of 3i Group plc, on behalf of
the Investors, instructing the Escrow Agent to pay to the Vendors
from the Escrow Fund an amount equal to (A) $1.5 million, less
(B) an amount equal to the Net Trading Balance Shortfall, and
following such payment to the Vendors, to pay the remainder of
the Escrow Fund to the Purchaser, and the Escrow Agent shall,
within three Business Days of its receipt of such notice and in
accordance with the terms of the Escrow Agreement, duly pay such
amounts to the Vendors and the Purchaser, respectively, out of
the Escrow Fund by wire transfer in immediately available funds.
In the event that the Escrow Fund is insufficient to cover the
amount of such Net Trading Balance Shortfall, then the Escrow
Agent shall distribute the entire Escrow Fund to the Purchaser as
provided above and none of the Vendors shall have any further
liability to the Purchaser in respect thereof; and
(ii) in the event that the Net Trading Balance reflected on the
Closing Balance Sheet equals or exceeds the Net Trading Balance
reflected on the Reference Balance Sheet, then the Purchaser, the
Investors and the Principal Management Employees shall jointly
issue notice to the Escrow Agent signed by (A) an authorized
signatory of the Purchaser, (B) Xxxxx Xxxxxxxxx, or failing him,
Xxxxxxx Xxxxxx, on behalf of the Principal Management Employees
and (C) any authorized signatory of 3i Group plc, on behalf of
the Investors, instructing the Escrow Agent to pay the entire
Escrow Fund to the Vendors; and the Escrow Agent shall, within
three Business Days of its receipt of such notice and in
accordance with the terms of the Escrow Agreement, duly pay such
amount to the Vendors out of the Escrow Fund by wire transfer in
immediately available funds.
(d) Subsequent to receipt of the Closing Balance Sheet, the Purchaser
shall allow the Vendors and their respective advisors reasonable
access to the books, records, accounts and personnel of the Company
and each Group Company for the purposes of verifying the Closing
Balance Sheet and the basis on which it was prepared until
final resolution of any dispute regarding the Closing Balance Sheet.
(e) The Vendors and the Purchaser shall enter into an Escrow Agreement
with the Escrow Agent substantially in the form attached hereto as
Exhibit 4 (the "Escrow Agreement"). In accordance with the terms of
the Escrow Agreement, the Purchaser shall deposit the Escrow Fund into
an account to be managed and paid out by the Escrow Agent in
accordance with the terms of the Escrow Agreement.
6. WARRANTIES
6.1 (a) Upon execution of this agreement, each of the Principal Management
Employees severally warrants to the Purchaser in the terms of the
Warranties save as disclosed in the Disclosure Letter. The Warranties
shall be deemed to have been repeated immediately prior to Completion
by reference to the facts and circumstances then subsisting save as
disclosed in the Disclosure Letter. The Warranties and the warranties
in clause 6.3 shall survive Completion for a period of one year.
(b) Save in the case of fraud or fraudulent concealment by any of the
Principal Management Employees, no Principal Management Employee shall
be liable in respect of a claim under the Warranties unless written
notice of such claim setting out reasonable details of the relevant
claim is served upon the Principal Management Employee or Principal
Management Employees, as the case may be, by not later than 5.00 p.m.
on the first anniversary of the Completion Date, and the liability of
any of such Principal Management Employee shall cease and determine
(if such claim has not previously been satisfied, settled or
withdrawn) if legal proceedings in respect of such a claim have not
been commenced within 6 months of the service of such notice.
6.2 Each of the Warranties shall be construed as a separate warranty, and
(unless expressly provided to the contrary and as provided in clause 6.1
and schedule 5) shall not be limited by the terms of any of the other
Warranties or by any other term of this agreement.
6.3 Investors' Warranties.
(a) Each Investor hereby warrants in respect of its Shares only that:
(i) it is the only legal and beneficial owner of, and upon
Completion will transfer to the Purchaser full title to, their
respective Investor Shares, and their respective Investor Shares
are fully paid, and their respective Investor Shares will be
transferred to the Purchaser pursuant to this agreement without
any Encumbrance;
(ii) it has full power and legal capacity to enter into and perform
this agreement and has obtained all applicable corporate
authorisations and all other applicable governmental, statutory,
regulatory or other consents, licences, waivers or exemptions
required to empower, permit and enable it to enter into and to
perform its obligations under this agreement and each document
to be executed by it at or before Completion;
(iii) this agreement, when executed, will constitute a valid and
binding obligation
of each Investor, enforceable in accordance with its terms; and
(iv) as at the Completion Date, subject to any disclosure fairly given
with respect to any matter that comes to the attention of the
Investors after the date hereof, no person has claimed to be
entitled to an Encumbrance in relation to any of the Investor
Shares and, other than this agreement, no Investor is under any
obligation (whether actual or contingent) to sell, charge or
otherwise dispose of any of the Investor Shares or any interest
therein to any person.
(b) Save in the case of fraud or fraudulent concealment, the aggregate
liability of the Investors in respect of all substantiated claims
under the warranties in clause 6.3 shall not in any circumstances
exceed $26,945,750. For the purposes of this clause 6.3(b),
"substantiated" shall have the meaning ascribed thereto in clause
6.4(b). The Investors shall be severally liable and shall only be
liable for breach of the warranties in clause 6.3 after Completion
only. Save in the case of fraud or fraudulent concealment by any
Investor, no Investor shall be liable in respect of a claim under the
warranties contained in this clause 6.3 unless written notice of such
claim setting out reasonable details of the relevant claim is served
upon the Investor or Investors, as the case may be, by not later than
5:00 p.m. on the first anniversary of the Completion Date, and the
liability of any of such Investors shall cease and determine (if such
claim has not previously been satisfied, settled or withdrawn) if
legal proceedings in respect of such a claim have not been commenced
within 6 months of the service of such notice.
6.4 Principal Management Employees' Warranties
(a) Save in the case of fraud or fraudulent concealment, Principal
Management Employees shall not be liable in respect of a claim under
any Warranty other than a claim under clauses 1, 2, 3, 6.1, 6.2, 6.3,
8.3, 13 or 15 of the Warranties; provided however that, in determining
the liability of any Principal Management Employee in respect of a
claim under any of clauses 1, 2, 3, 6.1, 6.2, 6.3, 8.3, 13 or 15 of
the Warranties, each Principal Management Employee shall be deemed to
have given the Warranties under clauses 1, 2, 3, 6.1, 6.2, 6.3, 8.3,
13 and 15 to the best of his Knowledge.
(b) Save in the case of fraud or fraudulent concealment, the aggregate
liability of any individual Principal Management Employee in respect
of all substantiated claims under the Warranties shall not in any
circumstances exceed the sum of the advance incentive or reward
bonuses described in paragraphs 3 and 4 on Exhibit 5 attached hereto,
whether paid in cash or equity, paid to such individual Principal
Management Employee by the Purchaser and net of income taxes paid by
or refunded to such Principal Management Employee; provided, however,
-------- -------
any individual Principal Management Employee shall not be responsible
to pay such aggregate liability to the Purchaser in cash. In the
preceding sentence "substantiated" means a claim for which any such
Principal Management Employee is liable (whether on its own, as a
contributory or otherwise), and which is admitted, settled without
admission of liability, or proved or determined in a court of
competent jurisdiction.
(c) The liability of each Principal Management Employee under clauses 6.1
and 6.4,
respectively, shall be limited by the provisions set out in clause 6.1
and schedule 5. References in schedule 5 to the Warranties shall be
deemed to include reference to clauses 6.1 and 6.4, as applicable.
6.5 The Purchaser will, at Completion, confirm that it has no knowledge of any
matter which breaches or could, with the lapse of time, breach the
Warranties.
6.6 Pending Completion, the Principal Management Employees shall give to the
Purchaser all such information and documentation known to them relating to
the Group and which is material to the business of the Group in the
reasonable opinion of the Principal Management Employees.
7. CONFIDENTIAL INFORMATION
7.1 Each Vendor and the Company shall not, and shall procure that none of its
directors, officers or employees or advisers or agents shall use or
disclose to any person Confidential Information.
7.2 Clause 7.1 does not apply to:-
(a) disclosure of Confidential Information to or at the written request of
the Purchaser;
(b) use or disclosure of Confidential Information required to be disclosed
by law or the rules of any stock exchange or other regulatory body;
(c) disclosure of Confidential Information to professional advisers for
the purpose of advising the Vendors;
(d) Confidential Information which becomes generally known other than by
the Vendors' or the Company's breach of clause 7.1; or
(e) disclosure of Confidential Information in the ordinary and proper
conduct of the business of the Company.
8. [Deliberately left blank]
9. ANNOUNCEMENTS
9.1 No party shall disclose the making of this agreement nor its terms nor any
other agreement referred to in this agreement (except those matters set out
in a press release in the agreed terms) without the prior consent of the
other parties (which consent shall be deemed to have been given by the
Vendors and the Company if given by the Investors; provided however that
(i) 3i Group plc or the Purchaser may make such disclosures as are required
by law or the rules of the any stock exchange or other regulatory body, in
which case such disclosure shall then only be made after 3i Group plc or
the Purchaser, as the case may be, has taken reasonable steps in the
circumstances to agree to the contents of such announcement with each
other, and (ii), subject to first consulting with Xxxxx Xxxxxxxxx, the
Purchaser may make such disclosure to, and participate in meetings
concerning this agreement with, certain customers and suppliers of the
Company, including without limitation, TI. The restrictions contained in
this clause 9.1 shall apply for 12 months following the Completion Date.
10. COSTS
Unless expressly otherwise provided in this agreement the Vendors and the
Purchaser shall bear its own legal, accountancy and other costs, charges
and expenses connected with the sale and purchase of the Shares. The
Company shall not bear any costs in connection with the sale and purchase
of the Shares, except for such costs which are expressly approved in
writing by the Purchaser and the Investors.
11. EFFECT OF COMPLETION
11.1 The terms of this agreement (insofar as not performed at Completion and
subject as specifically otherwise provided in this agreement) shall
continue in force after and notwithstanding Completion.
12. FURTHER ASSURANCES
12.1 Following Completion the Vendors shall from time to time forthwith upon
request from the Purchaser at the Vendors' expense do or procure the doing
of all acts and/or execute or procure the execution of all such documents
which it can reasonably be expected to do in a form reasonably satisfactory
to the Purchaser for the purpose of vesting in the Purchaser the full legal
and beneficial title to the Shares.
13. ENTIRE AGREEMENT
13.1 (a) Each of the Vendors, the Company and the Purchaser acknowledges, and
agrees with the other, that this agreement together with any other
documents referred to in this agreement (together the "Transaction
Documents") constitutes the entire and only agreement between the
Vendors, the Company and the Purchaser relating to the subject matter
of the Transaction Documents;
(b) Each of the Purchaser, the Vendors and the Company acknowledges and
agrees that it has not been induced to enter into any Transaction
Document in reliance upon, nor has it been given, any warranty,
representation, statement, assurance, covenant, agreement,
undertaking, indemnity or commitment of any nature whatsoever other
than as are expressly set out in the Transaction Documents and, to the
extent that it has been, it unconditionally and irrevocably waives any
claims, rights or remedies which it might otherwise have had in
relation thereto.
14. VARIATIONS
This agreement may be varied only by a document signed by each of the
Vendors, the Company and the Purchaser.
15. WAIVER
15.1 A waiver of any term, provision or condition of, or consent granted under,
this agreement shall be effective only if given in writing and signed by
the waiving or consenting party and then only in the instance and for the
purpose for which it is given.
15.2 No failure or delay on the part of any party in exercising any right, power
or privilege under this agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or privilege
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
15.3 No breach of any provision of this agreement shall be waived or discharged
except with the express written consent of each of the Vendors, the Company
and the Purchaser.
15.4 The rights and remedies herein provided are cumulative with and not
exclusive of any rights or remedies provided by law.
16. INVALIDITY
16.1 If any provision of this agreement is or becomes invalid, illegal or
unenforceable in any respect under the law of any jurisdiction:-
(a) the validity, legality and enforceability under the law of that
jurisdiction of any other provision; and
(b) the validity, legality and enforceability under the law of any other
jurisdiction of that or any other provision,
shall not be affected or impaired in any way.
17. NOTICES
17.1 Any notice, demand or other communication given or made under or in
connection with the matters contemplated by this agreement shall be in
writing and shall be delivered personally or by courier or by email or sent
by fax or prepaid first class post (air mail if posted to or from a place
outside the United Kingdom):-
In the case of the Purchaser to:-
Imax Corporation
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxxx
Xxxxxxx
Xxxxxx
Fax: 000-000-0000
Attention: Legal Department
with a copy to:
Imax Corporation
000 Xxxx 00/xx/ Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX, 00000
Xxxxxx Xxxxxx
Attn: Senior Vice President,
Legal Affairs and General Counsel
Shearman & Sterling
000 Xxxxxxxxxxx
Xxxxxx XX0X 0XX
Fax: 0000-000-0000
Attention: Xxxxxxx Xxxxxx-Xxxxx
email: xxxxxxxxxxxx@xxxxxxxx.xxx
In the case of 3i Group plc:-
Xxxxxxx Xxxxx
00 Xxxxxx Xxxxxx
Xxxxxxxxxx
X0 0XX
Fax: 0000-000-0000
Attention: Xxxxxxxxx Xxxxxx
email: xxxxxxxxx_xxxxxx@0xxxxxx.xxx
with a copy to:
Xxxxxxxxx Xxxxx & Co
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx
X0 0XX
Fax: 0000-000-0000
Attention: Xxxxx Xxxxx
email: xxx@xxxxxxxxx-xxxxx.xx.xx
In the case of Phildrew Nominees
Ltd. and its associates:-
00 Xxxxxxxx Xxxxxx
Xxxxxx
XX0X 0XX
Fax: 0000-000-0000
Attention: Xxxxx Xxxxxxx
email: xxxxx.xxxxxxx@xxx.xxx
with a copy to:
Xxxxxxxxx Xxxxx & Co
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx
X0 0XX
Fax: 0000-000-0000
Attention: Xxxxx Xxxxx
email: xxx@xxxxxxxxx-xxxxx.xx.xx
In the case of the Principal
Management Employees:-
To each such Principal Employee at
the address set out in Schedule 1
In the case of the Company to:-
Digital Projection International PLC
Xxxxxxxxx Xxx
Xxxxxxxxx
Xxxxxxxxxx
X00 0XX
Fax: 0000-000-0000
Attention: Xxxxx Xxxxxxxxx
and shall be deemed to have been duly given or made as follows:-
(a) if personally delivered or delivered by courier or by email, upon
delivery at the address of the relevant party;
(b) if sent by first class post, seven Business Days after the date
of posting;
(c) if sent by air mail, five Business Days after the date of
posting; and
(d) if sent by fax, when despatched;
provided that if, in accordance with the above provisions, any such
notice, demand or other communication would otherwise be deemed to be
given or made outside 9.00 a.m. - 5.00 p.m. on a Business Day such
notice, demand or other communication shall be deemed to be given or
made at 9.00 a.m. on the next Business Day.
17.2 A party may notify the other party to this agreement of a change to
its name, relevant addressee, address or fax number for the purposes
of clause 17.1 provided that such notification shall only be effective
on:-
(a) the date specified in the notification as the date on which the
change is to take place; or
(2) if no date is specified or the date specified is less than five Business
Days after the date on which notice is given, the date falling five
Business Days after notice of any such change has been given.
18. COUNTERPARTS
This agreement may be executed in any number of counterparts which together
shall constitute one agreement. Any party may enter into this agreement by
executing a counterpart and this agreement shall not take effect until it
has been executed by all parties.
19. GOVERNING LAW AND JURISDICTION
19.1 This agreement (and any dispute, controversy, proceedings or claim of
whatever nature arising out of or in any way relating to this agreement or
its formation) shall be governed by and construed in accordance with
English law.
19.2 Without prejudice to any other permitted mode of service the parties agree
that service of any
writ, notice or other document ("Documents") for the purpose of any
Proceedings begun in England shall be duly served upon it if delivered
personally or sent by registered post, in the case of:-
(a) any Vendor to such Vendor at its address as set forth on Schedule I
(marked for the attention of the Vendor to whom the Documents are
being delivered); and
(b) the Purchaser to Imax Corporation, 0000 Xxxxxxxx Xxxxx, Xxxxxxxxxxx,
Xxxxxxx, Xxxxxx (marked for the attention the Legal Department); and
(c) the Company to Digital Projection International PLC, Xxxxxxxxx Xxx,
Xxxxxxxxx, Xxxxxxxxxx, X00 0XX (marked for the attention of the
Managing Director)
or such other person and address in England and/or Wales as any Vendor
shall notify the Purchaser in writing or vice versa from time to time.
20. ASSIGNMENT
This agreement may not be assigned by operation of law or otherwise without
the express written consent of the parties to this agreement; provided
however that the Purchaser may assign this agreement (i) to a direct or
indirect wholly owned subsidiary of the Purchaser without the consent of
any other party to this agreement, or (ii) pursuant to any acquisition,
merger or business combination of all or substantially all the assets or
shares of the Purchaser or any of its subsidiaries or holding companies.
21. TERMINATION OF INVESTMENT AGREEMENT
21.1 Upon Completion:
21.1.1 the Investment Agreement shall be deemed to terminate by mutual
consent on Completion when it shall cease to have any force or
effect;
21.1.2 each of the Vendors, 3i plc, Phildrew Nominees Limited and the
Company will be deemed to have released each of the other parties
to the Investment Agreement who are bound by its terms and
conditions from all and any claims and rights which he/it has or
may have against any of the other parties to the Investment
Agreement, arising out of or in connection with the Investment
Agreement or the termination thereof howsoever and whenever
arising.
IN WITNESS whereof this agreement has been executed on the date first above
written.
Signed by )
for and on behalf of )
IMAX CORPORATION
in the presence of :-
Signed by )
for and on behalf of )
DIGITAL PROJECTION TRUSTEE LIMITED )
in the presence of:-
Signed by )
for and on behalf of )
3i GROUP PLC )
in the presence of:-
Signed by )
for and on behalf of )
CANVEN (C.I.) LIMITED AS MANAGING )
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in the presence of:-
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CANVEN (C.I.) LIMITED AS MANAGING )
GENERAL PARTNER FOR PHILDREW VENTURES )
FOURTH FUND D )
in the presence of:-
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for and on behalf of )
PHILDREW NOMINEES LIMITED )
in the presence of:-
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in the presence of:-
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in the presence of:-
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in the presence of:-
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in the presence of:-
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in the presence of:-
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in the presence of:-
SCHEDULE 3
The Warranties
For the purpose of this schedule 3 "Company" means Digital Projection
International, PLC and includes the Subsidiaries, all of them and each of them
as the context admits.
In this Schedule 3 the following words have the following meanings, unless the
context otherwise requires:
"Accounts" means the audited financial statements of each Group Company,
comprising the balance sheet of the Company, the consolidated balance sheet,
profit and loss account and cash flow statement of the Group and the balance
sheet, profit and loss account and cash flow statements of each of the
Subsidiaries, together in each case with the notes thereon, directors' report
and auditors' certificate, as at and for the financial period ended on the
Accounts Date;
"ERA" means the Employment Rights Xxx 0000;
"L&T Covenants Act" means the Landlord and Tenant (Covenants) Xxx 0000;
"Leases" means the leases specified in the Disclosure Letter;
"Substantial Customer" means a customer accounting for more than five per cent.
the Group's sales in the financial year ended on the Accounts Date, as well any
person who is reasonably expected to become such a customer in the 12 months
following the date hereof;
"Substantial Supplier" means a supplier accounting for more than five per cent.
of the Group's purchases in the financial year ended on the Accounts Date, as
well as any person who is reasonably expected to become such a customer in the
12 months following the date hereof;
"Transfer Regulations" means the Transfer of Undertakings (Protection of
Employment) Regulations 1981;
"TULR(C)A" means the Trade Union and Labour Relations (Consolidation) Xxx 0000;
1. VENDORS' AND THE COMPANY'S CAPACITY
Each Principal Management Employee and the Company has full power and legal
capacity to enter into and perform this agreement. Each Principal
Management Employee and the Company has obtained all applicable corporate
authorisations and all other applicable governmental, statutory, regulatory
or other consents, licences, waivers or exemptions required to empower,
permit and enable it to enter into and to perform its obligations under
this agreement and each document to be executed by it at or before
Completion.
2. THE COMPANY, THE SHARES AND THE SUBSIDIARIES
2.1 Incorporation and Existence
Except for Digital Projection Inc., a Delaware corporation, the Company and
each of the Subsidiaries are limited companies incorporated under English
law and have been in continuous existence since incorporation. Digital
Projection Inc. is a wholly owned
subsidiary of the Company and is duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, and is duly licensed
or qualified to do business and is in good standing in each jurisdiction in
which the properties leased by it or the operation of its business makes
such licensing or qualification necessary.
2.2 The Shares
(a) The Shares are all the issued shares in the capital of the Company.
Each of the Principal Management Employees warrants he is the only
legal and beneficial owner of the Shares set out opposite his name in
Schedule 1 hereto.
(b) The Company has not allotted any shares other than the Shares and the
Shares are fully paid or credited as fully paid.
(c) Except as set forth on the Disclosure Letter, there is no Encumbrance
in relation to any of the Shares or unissued shares in the capital of
the Company. No person has claimed to be entitled to an Encumbrance in
relation to any of the Shares and, other than this agreement, no
Vendor is under any obligation (whether actual or contingent) to sell,
charge or otherwise dispose of any of the Shares or any interest
therein to any person.
(d) Except as set forth on Schedule 1 hereto, other than this agreement,
there is no agreement, arrangement or obligation requiring the
creation, allotment, issue, sale, transfer, redemption or repayment
of, or the grant to a person of the right (conditional or not) to
require the allotment, issue, sale, transfer, redemption or repayment
of, a share in the capital of the Company (including an option or
right of pre-emption or conversion).
2.3 The Subsidiaries
(a) The Company does not have any subsidiary undertakings other than the
Subsidiaries. Each of the Subsidiaries is a wholly owned subsidiary of
the Company and each of the shares of each such company has been
properly allotted and issued and is fully paid or credited as fully
paid.
(b) There is no Encumbrance in relation to any of the shares or unissued
shares in the capital of any of the Subsidiaries. No person has
claimed to be entitled to an Encumbrance in relation to any of the
shares of any of the Subsidiaries and no Group Company is under any
obligation (whether actual or contingent) to sell, charge or otherwise
dispose of any shares in any of the Subsidiaries or any interest
therein to any person.
(c) Other than this agreement, there is no agreement, arrangement or
obligation requiring the creation, allotment, issue, sale, transfer,
redemption or repayment of, or the grant to a person of the right
(conditional or not) to require the allotment, issue, sale, transfer,
redemption or repayment of, a share in the capital of any of the
Subsidiaries (including an option or right of pre-emption or
conversion).
(d) The Company does not own any shares or stock in the capital of nor
does it have any beneficial or other interest in any company or
business organisation other than the
Subsidiaries nor does the Company control or take part in the
management of any other company or business organisation.
3. ACCOUNTS
3.1 General
(a) The Accounts show a true and fair view of the:-
(i) assets, liabilities, financial position and state of affairs at
the Accounts Date; and
(ii) the profits and losses for the financial year ended on the
Accounts Date
of the Company and of the Group to the extent that they are
consolidated accounts.
(b) The Accounts have been prepared in accordance with the books of
account and other financial records of the Company, and have been
prepared and audited in accordance with the standards, principles and
practices specified on the face of the Accounts applied on a
consistent basis and subject thereto in accordance with the law and
applicable standards, principles and practices generally accepted in
the United Kingdom consistently applied.
(c) Since the Company's incorporation the Accounts have been prepared on a
basis consistent with the basis upon which all audited accounts of the
Company have been prepared.
3.2 Liabilities
The Accounts make proper provision or reserve for or disclose all
liabilities (including all contingent or deferred liability to Tax) of the
Company whether actual, contingent or otherwise.
3.3 Extraordinary and Exceptional Items
The results shown by the audited profit and loss account of the Company and
the consolidated audited profit and loss accounts of the Group for each of
the two financial years of the Company and the Group ended on the Accounts
Date have not (except as disclosed in those accounts) been affected by an
extraordinary, exceptional or non recurring item or by any other matter
making the profits or losses for a period covered by any of those accounts
unusually high or low.
3.4 Off Balance Sheet Financing
No member of the Group is engaged in any financing (including the incurring
of any borrowing or any indebtedness in the nature of acceptances or
acceptance credits) of a type which would not be required to be shown or
reflected in the Accounts.
3.5 Accounting and Other Records
(a) The books of account and all other records of the Company (including
any which it
may be obliged to produce under any contract now in force) are up-to-
date, in its possession and are true and complete in all material
respects in accordance with the law and applicable standards,
principles and practices generally accepted in the United Kingdom.
(b) All deeds and documents (properly stamped where stamping is necessary
for enforcement thereof) belonging to the Company are in the
possession of or under control of the Company.
3.6 Accounting Reference Date
The accounting reference date of the Company under section 224 of the
Companies Xxx 0000 is, and during the last two years has always been,
December 31.
3.7 Projections
Copies of (i) projections of the consolidated profit and loss statement,
balance sheet and statement of cash flows for each of the financial years
ended as of December 31, 1999, December 31, 2000 and December 31, 2001
prepared by senior management of the Company (the "Projections") and (ii)
the assumptions and supplemental data used in preparing the Projections
(collectively, the "Supplemental Data") have been delivered by the Company
to the Purchaser. The Projections were prepared on the basis of the
Supplemental Data which represent in the reasonable opinion of the
Principal Management Employees a reasonable basis for such preparation.
The Projections reflect the best currently available estimates in the
judgment of the Principal Management Employees as to the expected future
financial performance of the Company and the Subsidiaries.
3.8 Receivables and Payables
Except to the extent, if any, reserved for on the Reference Balance Sheet,
all receivables and payables reflected on the Reference Balance Sheet arose
from, and the receivables and payables existing on the Completion Date will
have arisen in the ordinary course of the business consistent with past
practice. The Principal Management Employees have no Knowledge of any
reason why all receivables reflected on the Reference Balance Sheet
(subject to the reserve for bad debts, if any, reflected on the Reference
Balance Sheet) are not capable of collection without resort to litigation
or extraordinary collection activity, within 90 days of the Completion
Date.
4. CHANGES SINCE THE ACCOUNTS DATE
4.1 General
Since the Accounts Date:-
(a) the Company has not, other than in the ordinary course of trading:-
(i) disposed of, or agreed to dispose of, an asset; or
(ii) assumed or incurred, or agreed to assume or incur, a liability,
obligation or
expense (actual or contingent) except in the ordinary course of
its business,
and in the case of a disposal or agreement to dispose of an asset for
an amount which is lower than book value or an open market arm=s
length value, whichever is the higher;
(b) the Principal Management Employees have no Knowledge of the occurrence
of an event which would have a Material Adverse Effect in the
financial or trading position of the Company; and
(c) there has been no material reduction in the value of those fixed
assets specified in the Accounts, to the extent still owned by the
Company.
4.2 Specific
Since the Accounts Date:-
(a) the Company has not, other than in the ordinary course of trading:-
(i) disposed of, or agreed to dispose of, an asset; or
(ii) assumed or incurred, or agreed to assume or incur, a liability,
obligation or expense (actual or contingent) other than in the
ordinary course of business;
and in the case of a disposal or agreement to dispose of an asset for
an amount which is lower than book value or an open market arm's
length value, whichever is the higher;
(b) the Company has not acquired or agreed to acquire an asset for an
amount which is higher than open market arm's length value;
(c) the Company has not made, or agreed to make, capital expenditure
except in the ordinary course of business;
(d) no Substantial Supplier or Substantial Customer has ceased or
substantially reduced its trade with the Company or has altered the
terms of trade to the Company's disadvantage;
(e) the Company has not declared, paid or made a dividend or other
distribution (including a distribution within the meaning of the TA)
except to the extent provided in the Accounts;
(f) no resolution of the shareholders of the Company has been passed
(except for those representing the ordinary business of an annual
general meeting);
(g) the Company has not repaid or redeemed share or loan capital, or made
(whether or not subject to conditions) an agreement or arrangement or
undertaken an obligation to do any of those things;
(h) the Company has not repaid any sum in the nature of borrowings in
advance of any
due date or made any loan or incurred any indebtedness
except in the ordinary course of business (including in each case
inter group); and
(i) the Company has not paid nor is under an obligation to pay any
service, management or similar charges or any interest or amount in
the nature of interest to any other person or incurred any liability
to make such a payment or made any such payment to any Vendor
whatsoever.
5. ASSETS
5.1 Title and Condition
(a) There is no Encumbrance, nor has the Company agreed to create any
Encumbrance, over any part of its undertaking or assets and each asset
used by the Company (tangible or intangible) is:-
(i) legally and beneficially owned by the Company; and
(ii) where capable of possession, in the possession of the Company.
(b) The Company owns, or has the right to use, each asset (tangible or
intangible) which in the opinion of the Principal Management Employees
is reasonably necessary for the operation of its business as currently
conducted and without limitation no rights (other than rights as
shareholders in the Company) relating to the business of the Company
are owned or otherwise enjoyed by or on behalf of any Vendor.
(c) All plant, machinery, vehicles and equipment owned or used by the
Company are in reasonable condition and working order and have been
regularly and properly maintained where appropriate.
6. INTELLECTUAL PROPERTY
6.1 General; Ownership
(a) To the Knowledge of the Principal Management Employees, the Disclosure
Letter sets forth a true and complete list of, and/or the Purchaser
has been provided access to, all (i) patents and patent applications,
registered trademarks and trademark applications, registered
copyrights and copyright applications, Software and other Intellectual
Property, in each case owned by the Company and material to the
business of the Company, (ii) Licensed Intellectual Property and (iii)
the Licensed Rights.
(b) To the Knowledge of the Principal Management Employees, the operation
of the business of the Company, including the manufacture of current
products of the Company and products under development by the Company
and the rendering of services currently rendered or under development
by the Company, and the use of the Owned Intellectual Property or
Licensed Rights in connection therewith, do not infringe any
Intellectual Property rights of any third party, and no allegation has
been made and no claim is pending or threatened asserting that the
operation of such business, or such use of the Owned Intellectual
Property or Licensed Rights does or
may infringe the Intellectual Property rights of any third party.
(c) To the Knowledge of the Principal Management Employees, the Company is
the exclusive owner of the entire and unencumbered right, title and
interest in and to the Owned Intellectual Property, and is entitled to
use the Owned Intellectual Property and Licensed Rights in the
ordinary course of the business of the Company as presently conducted,
including in the manufacture of current products of the Company and
products under development by the Company and the rendering of
services currently rendered or under development by the Company. To
the Knowledge of the Principal Management Employees, no impediment
exists to the Company's continued and future use of the Owned
Intellectual Property and Licensed Rights in the ordinary course of
its business.
(d) To the Knowledge of the Principal Management Employees, the Owned
Intellectual Property and the Licensed Rights include all of the
Intellectual Property used or intended to be used in, or in the
opinion of the Principal Management Employees necessary to, the
conduct of the business of the Company as carried on at the date of
this agreement. To the Knowledge of the Principal Management
Employees, the Owned Intellectual Property and the Licensed Rights are
subsisting and enforceable, and the Company has received no notice
that any of such rights have been adjudged invalid or unenforceable in
whole or part.
(e) To the Knowledge of the Principal Management Employees, no legal
proceedings have been asserted, are pending, or threatened against the
Company (i) based upon or challenging or seeking to deny or restrict
the use or unencumbered ownership by the Company of any of the Owned
Intellectual Property or Licensed Rights, or (ii) alleging that the
Licensed Intellectual Property or Licensed Rights is being used,
licensed or sublicensed in conflict with the terms of any license or
other agreement.
(f) To the Knowledge of the Principal Management Employees, no person is
engaging in any activity that infringes the Owned Intellectual
Property, Licensed Rights or Licensed Intellectual Property.
(g) To the Knowledge of the Principal Management Employees, no prohibition
or material restriction exists to the Company's exportation of the
Owned Intellectual Property, the Licensed Rights and Licensed
Intellectual Property and products made in accordance therewith
outside the United States and United Kingdom and importation of the
Owned Intellectual Property and Licensed Intellectual Property and
products made in accordance therewith into any country in which the
products are now sold or licensed for use or presently are
contemplated to be sold or licensed for use.
6.2 Texas Instruments Supply Agreement
(a) Except as set forth in the Disclosure Schedule, to the Knowledge of
the Principal Management Employees, the Company has not granted any
license or other right to any third party, including to TI under the
Supply Agreement, with respect to the Owned Intellectual Property,
Licensed Rights or Licensed Intellectual Property. To the Knowledge of
the Principal Management Employees, the consummation of the
transactions contemplated by this agreement will not result in the
termination or
impairment of any of the Licensed Rights or Owned Intellectual
Property.
(b) To the Knowledge of the Principal Management Employees, the
manufacture of current products of the Company and products under
development by the Company and the rendering of services currently
rendered or under development by the Company does not incorporate
proprietary information of TI.
(c) To the Knowledge of the Principal Management Employees, no Group
Company:
(i) has used any proprietary information of TI other than for the
allowable purposes contained in the Supply Agreement;
(ii) has included any proprietary information of TI in any
application for patent, utility model or design protection
filed by it or on its behalf;
(iii) has made any invention derived in whole or in part from
proprietary information of TI;
(iv) has or should have notified TI, under the terms of the Supply
Agreement, of any invention made by it but derived in whole or
in part from proprietary information of TI;
(v) has received or otherwise is aware of any claim of TI under the
Supply Agreement of the right to license any invention made by
any Group Company but purportedly derived in whole or in part
from proprietary information of TI;
(vi) is aware of any right of TI under the Supply Agreement to
license any invention made to date by any Group Company or to
enjoin manufacture, use, importation, offering for sale, or
sale of any product made in accordance with any such invention.
6.3 Licensed Intellectual Property
(a) To the Knowledge of the Principal Management Employees, the Company
has delivered to Purchaser correct and complete copies of all the
written licenses of the Licensed Intellectual Property and all written
amendments, consents, evidence of transfer, and all other material
correspondence and documentation pertaining to the Supply Agreement.
With respect to each such license:
(i) to the Knowledge of the Principal Management Employees, such
license is in full force and effect;
(ii) to the Knowledge of the Principal Management Employees, such
license will not cease to be valid and binding and in full force
and effect on terms identical to those currently in effect as a
result of the consummation of the transactions contemplated by
this agreement, nor will the consummation of the transactions
contemplated by this agreement constitute a breach or default
under such license or otherwise give the licensor a right to
terminate such license;
(iii) to the Knowledge of the Principal Management Employees, the
Company has not received any notice of termination or
cancellation under such license, received any notice of breach
or default under such license, which breach has not been cured,
or granted to any other third party any rights, adverse or
otherwise, under such license that would constitute a breach of
such license; and
(iv) to the Knowledge of the Principal Management Employees, neither
the Company nor any other party to such license is in breach or
default thereof in any material respect, and no event has
occurred that, with notice or lapse of time, would constitute
such a breach or default or permit termination, modification or
acceleration under such license.
6.4 Software and Trade Secrets
(a) To the Knowledge of the Principal Management Employees, the Software
is free of all material viruses, worms, trojan horses and other
material known contaminants, and does not contain any bugs, errors or
problems of a material nature that disrupts its operation or has an
adverse impact on the operation of other software programs or
operating systems. The Company has obtained all approvals necessary
for exporting the Software outside the United States and the United
Kingdom and importing the Software into any country in which the
Software is now sold or licensed for use, and all such export and
import approvals in the United States and the United Kingdom and
throughout the world are valid, current, outstanding and in full force
and effect. No rights in the Software have been transferred to any
third party except to the customers of the Company to whom the Company
has licensed such Software in the ordinary course of business.
(b) The Company has the right to use all software development tools,
library functions, compilers, and other third party software that is
material to the business of the Company, or that is required to
operate or modify the Software.
(c) The Company has taken reasonable steps in accordance with normal
industry practice to maintain the confidentiality of its trade secrets
and other confidential Intellectual Property. To the Knowledge of the
Principal Management Employees (i) there has been no misappropriation
by any person, and (ii) no employee, independent contractor or agent
of the Company has misappropriated any trade secrets of any other
person in the course of such performance as an employee, independent
contractor or agent; and (iii) no employee, independent contractor or
agent of the Company is in default or breach of any term of any
employment agreement, non-disclosure agreement, assignment of
invention agreement or similar agreement or contract relating in any
way to the protection, ownership, development, use or transfer of
Intellectual Property. The Company has disclosed to Purchaser all
Intellectual Property provided by TI to the Company under the Supply
Agreement.
6.5 Year 2000 Compliance.
The Company has undertaken an assessment of those Company Systems that
could be adversely affected by a failure to be Year 2000 Compliant,
developed a plan and time line for
rendering such systems Year 2000 Compliant, and to date, implemented such
plan in accordance with such timetable in all material respects. To the
Knowledge of the Principal Management Employees, there are no issues in
connection with Year 2000 Compliance which will result in a Material
Adverse Effect on the Company. For purposes hereof, "Company Systems" shall
mean all computer, hardware, software, Software, systems, and equipment
(including embedded microcontrollers in non-computer equipment) embedded
within or required to operate the current products of the Company, and/or
material to or necessary for the Company to carry on its business as
currently conducted. For purposes hereof, "Year 2000 Compliant" means that
the Company Systems will record, store, process and present calendar dates
falling on or after January 1, 2000, in the same manner and with the same
functionality as the Company Systems record, store, process, and present
calendar dates falling on or before December 31, 1999.
7. EFFECT OF SALE
7.1 To the Knowledge of the Principal Management Employees, neither the
execution nor performance of this agreement or any document to be executed
at or before Completion will:-
(a) result in the Company losing the benefit of a Permit or an asset,
licence, any Intellectual Property or proprietary information or
rights thereto, or any grant, subsidy, right or privilege which it
enjoys at the date of this agreement in any jurisdiction; or
(b) conflict with, or result in a breach of, or give rise to an event of
default under, or require the consent of a person under, or enable a
person to terminate, or relieve a person from an obligation under, an
agreement, arrangement or obligation to which the Company is a party
or a legal or administrative requirement in any jurisdiction; or
(c) result in any Substantial Customer being entitled to or, so far as the
Principal Management Employees or the Company are aware, cease dealing
with the Company or substantially to reduce its existing level of
business or to change the terms upon which it deals with the Company;
or
(d) result in any Substantial Supplier being entitled to or, so far as the
Principal Management Employees are aware, cease supplying to the
Company or substantially to reduce its supplies to or to change the
terms upon which it supplies the Company;
(e) result in any officer or senior employee leaving the Company; or
(f) make the Company liable to offer for sale, transfer or otherwise
dispose of or purchase or otherwise acquire any assets, including
shares held by it in other bodies corporate under their articles of
association or any agreement or arrangement.
8. CONSTITUTION
8.1 Intra Xxxxx
The Company has the power to carry on its business as now conducted and the
business of
the Company has at all times been carried on in all material respects in
accordance with the Memorandum and Articles of Association.
8.2 Memorandum and Articles
The memorandum and articles of association of the Company in the form
annexed to the Disclosure Letter are complete and have embodied therein or
annexed thereto copies of all resolutions and agreements as are referred to
in section 380 of the Companies Xxx 0000, and all amendments thereto (if
any) were duly and properly made.
8.3 Register of Members
The register of members of the Company has been properly kept and contains
true and complete records of the members from time to time of the Company
and the Company has not received any notice or allegation that any of them
is incorrect or incomplete or should be rectified.
8.4 Powers of Attorney
The Company has not executed any power of attorney or conferred on any
person other than its directors, officers and employees any authority to
enter into any transaction on behalf of or to bind the Company in any way
and which power of attorney remains in force or was granted or conferred
within the preceding three years.
8.5 Statutory Books and Filings
(a) The statutory books of the Company are up to date, in its possession
and are true and complete in accordance with the law.
(b) All resolutions, annual returns and other documents required to be
delivered to the Registrar of Companies (or other relevant company
registry or other corporate authority in any jurisdiction) have been
properly prepared and filed and the common seal of the Company is in
its possession.
9. INSURANCE
9.1 Policies
The Disclosure Letter contains a list of each current insurance and
indemnity policy in respect of which the Company has an interest (together
the "Policies"). Each of the Policies is in full force. To the Knowledge of
the Principal Management Employees, there are no circumstances which might
make any of the Policies void or voidable or lead any claim under the
Policies to be avoided by the insurers. No claim is outstanding under any
of the Policies and the Company has received no notice of any matter which
might give rise to a claim under any of the Policies.
10. CONTRACTUAL MATTERS
10.1 Validity of Agreements
(a) To the Knowledge of the Principal Management Employees, neither the
Company nor any of the Vendors have received any notice, whether
written or otherwise, alleging the invalidity of, or a ground for
termination, avoidance or repudiation of, an agreement, arrangement or
obligation to which the Company is a party and all such agreements,
arrangements or obligations, including without limitation, the Supply
Agreement, are in full force and effect. No party with whom the
Company has entered into an agreement, arrangement or obligation has
given notice of its intention to terminate, or has sought to repudiate
or disclaim, the agreement, arrangement or obligation.
(b) To the Knowledge of the Principal Management Employees, no party with
whom the Company has entered into an agreement or arrangement is in
material breach of the agreement or arrangement.
(c) The Company has not received any notice that it is in breach of any
agreement or arrangement.
10.2 Material Agreements
(a) To the Knowledge of the Principal Management Employees, the Company is
not a party to and is not liable under any contract, transaction,
arrangement or liability which involves, or is likely to involve
obligations or liabilities which, by reason of their nature or
magnitude, ought reasonably in the opinion of the Principal Management
Employees to be made known to the Purchaser.
(b) Except as set forth in the Disclosure Letter, the Company is not a
party to and is not liable under:
(i) an agreement, arrangement or obligation by which the Company is a
member of a joint venture, consortium, partnership or association
(other than a bona fide trade association), or
(ii) a distributorship, agency, marketing, licensing or management
agreement or arrangement.
11. LIABILITIES
11.1 Facilities
Details of all overdrafts, loans or other financial facilities outstanding
or available to the Company are set out in the Disclosure Letter, whether
or not of a type which would be required to be shown in or reflected in the
Accounts and copies of all documents relating to such matters are annexed
to the Disclosure Letter.
11.2 Bank Accounts
A statement of all the bank accounts of the Company and of the credit or
debit balances on such accounts as at a date not more than seven days
before the date of this agreement has been supplied to the Purchaser. The
Company does not have any other bank or deposit accounts (whether in credit
or overdrawn) not included in such statement. Since such
statement there have been no payments out of any such accounts except for
routine payments and the balances on current account are not now
substantially different from the balances shown on such statements. A
statement of such accounts as at the Completion Date shall be delivered to
the Purchaser at Completion.
11.3 Guarantees and Indemnities
(a) The Company is not a party to and is not liable (including
contingently) under a guarantee, indemnity or other agreement to
secure or incur a financial or other obligation with respect to
another person's obligation.
(b) No part of the loan capital, borrowing or indebtedness in the nature
of borrowing of the Company is dependent on the guarantee or indemnity
of, or security provided by, another person other than a Group
Company.
12. LITIGATION AND COMPLIANCE WITH LAW
12.1 Litigation
(a) Save for collection of debts in the ordinary course of business, to
the Knowledge of the Principal Management Employees, neither the
Company nor a person for whose acts or defaults the Company may be
vicariously liable is involved, or has during the 3 years ending on
the date of this agreement been involved, in a civil, criminal,
arbitration, administrative or other proceeding or investigation in
any jurisdiction. No civil, criminal, arbitration, administrative or
other proceeding or investigation in any jurisdiction is pending or
threatened by or against the Company or a person for whose acts or
defaults the Company may be vicariously liable.
(b) To the Knowledge of the Principal Management Employees, no matter
exists which might give rise to a civil, criminal, arbitration,
administrative or other proceeding or investigation in any
jurisdiction involving the Company or a person for whose acts or
defaults the Company may be vicariously liable.
(c) There is no outstanding judgment, order, decree, arbitral award or
decision of a court, tribunal, arbitrator or governmental agency in
any jurisdiction against the Company or a person for whose acts or
defaults the Company may be vicariously liable.
12.2 Compliance with Law
To the Knowledge of the Principal Management Employees, the Company has
conducted its business and dealt with its assets in all material respects
in accordance with all applicable legal and administrative requirements in
any jurisdiction.
13. BROKERAGE OR COMMISSIONS
No person is entitled to receive from the Company or its subsidiaries a
finder's fee, brokerage or commission in connection with this agreement or
anything in it and the Company is not liable to pay to any of the Vendors
or its directors, employees, agents and advisers any sum whatsoever in
connection with the sale of the Shares.
14. EMPLOYEES
14.1 Particulars of Officers
The particulars of all employees annexed to the Disclosure Letter show the
names, job title, date of commencement of employment, date of birth and
period of continuous employment (calculated in accordance with chapter 1 of
part XIV of the ERA) of every employee of the Company.
14.2 Remuneration and Benefits
The particulars of all employees annexed to the Disclosure Letter show all
remuneration and other benefits:-
(a) actually provided; and
(b) which the Company is bound to provide (whether now or in the future)
to each officer and employee of the Company and include particulars of and
details of participation in all profit sharing, incentive, bonus,
commission, share option, medical, permanent health insurance, directors'
and officers' insurance, travel, car, redundancy and other benefit schemes,
arrangements and understandings (the "Schemes") operated for all or any
employees or former employees of the Company or their dependants whether
legally binding on the Company or not.
14.3 Operation of the Schemes
(a) To the Knowledge of the Principal Management Employees, the Schemes
have at all times been operated in all material respects in accordance
with their governing rules or terms and all applicable laws and all
documents which are required to be filed with any regulatory authority
have been so filed and all tax clearances and approvals necessary to
obtain favourable tax treatment for the Company and/or the
participants in the Schemes have been obtained and not withdrawn and
the Company has received no notice that any act or omission has
occurred which has or could prejudice any such tax clearance and/or
approval.
(b) To the Knowledge of the Principal Management Employees, no past or
present director, officer, employee or any dependant thereof or any
other participant in any Scheme has made any claim against the Company
in respect of any Scheme and no event has occurred which could or
might give rise to any such claim.
14.4 Changes since the Accounts Date
Since the Accounts Date the Company has not made, announced or proposed any
changes to the emoluments or benefits of or any bonus to any of its
directors, officers or employees and the Company is under no obligation to
make any such changes with or without retrospective operation save as set
out in each such person=s terms of employment.
14.5 Loans
There are no amounts owing or agreed to be loaned or advanced by the
Company to any directors, officers or employees of the Company (other than
amounts representing remuneration accrued due for the current pay period,
accrued holiday pay for the current holiday year or for reimbursement of
expenses).
14.6 Payment up to Completion
All salaries and wages and other benefits of all employees of the Company
have, to the extent due, been paid or discharged in full.
14.7 Claims by Employees
To the Knowledge of the Principal Management Employees, no past or present
director, officer or employee of the Company or any predecessor in business
has given notice to the Company of any claim or right of action against the
Company including any claim:-
(a) in respect of any accident or injury which is not fully covered by
insurance; or
(b) for breach of any contract of services or for services;
(c) for loss of office or arising out of or connected with the termination
of his office or employment or arising out of his employment or his
holding of office; or
(d) made otherwise in connection with his employment by the Company;
and to the Knowledge of the Principal Management Employees, no event or
inaction has occurred which could or might give rise to any such claim.
14.8 Compliance with Laws
(a) To the Knowledge of the Principal Management Employees, the Company
has complied in all material respects with all relevant provisions of
the Treaty of Rome, EC Directives, statutes, regulations, codes of
conduct, collective agreements, terms and conditions of employment,
orders, declarations and awards relevant to the Company's directors,
officers and employees or the relations between the Company and any
trade union, staff association or any other body representing workers.
15. TAXATION
15.1 The Principal Management Employees have not knowingly withheld information
from Pricewaterhouse Coopers which the Principal Management Employees know
would be reasonably required to enable Pricewaterhouse Coopers to make a
complete and informed assessment of the taxation affairs of the Company.
15.2 To the knowledge of the Principal Management Employees, the report prepared
by PricewaterhouseCoopers in relation to the taxation affairs of the
Company (the "Tax Report") is as at Completion,
(a) accurate and complete in all material respects; and
(b) does not contain or omit to contain any information or conclusions
which may, in the reasonable opinion of the Principal Management
Employees, cause the Tax Report to be misleading in any material
respect.
16. INFORMATION
16.1 General
To the Knowledge of the Principal Management Employees, all written
information given by, or on behalf of, the Vendors or the Company to the
Purchaser, its advisers or agents before or during the negotiations leading
to this agreement is true, complete, accurate and not misleading.
16.2 The Agreement and the Disclosure Letter
To the Knowledge of the Principal Management Employees, the information set
out in schedules 1 and 2 of this agreement is true, complete, accurate and
not misleading.
17. PENSIONS
17.1 In this paragraph 17:-
Pension Scheme: each of the Digital Projection Pension Plan and the
Digital Projection Money Purchase Scheme.
Relevant Benefits as defined in section 612 of ICTA 1988 but with the
omission of the exception in that definition.
Relevant Person each past and present employee, officer and director of
a Group Company and their respective spouses and dependants.
17.2 Except under the Pension Scheme, no agreement, arrangement or understanding
(whether contractual, under trust or otherwise) exists for the provisions
of Relevant Benefits for any Relevant Person in connection with which any
Group Company is or may become legally liable to make any payment and no
Group Company is liable to make contributions to a personal pension scheme
in respect of any Relevant Person.
17.3 The Disclosure Letter contains or has annexed to it:-
17.3.1 true and complete copies of all the trust deeds, rules and other
documents containing the provisions which govern the Pension
Scheme;
17.3.2 a copy of the deed of participation for each Group Company which
employs or has employed any member of the Pension Scheme;
17.3.3 a copy of all insurance policies, investment management and
administration agreements, the statement of investment
principles, the IDR procedure, all professional advisers=
appointment letters and member nominated trustee compliance or
opt-out documents relating to the Pension Scheme;
17.3.4 details of any material changes which are to be made to the
documents mentioned in paragraph 17.3.1 but which have not yet
been formally executed, details of any augmentations awarded or
promised to a Relevant Person and details of any policy, custom
or practice affecting any Relevant Person which is not apparent
from the documents and which concerns discretionary pension
increases, early retirement pensions or any other Relevant
Benefits or the conditions of membership of the Pension Scheme;
17.3.5 true and complete copies of all booklets and announcements issued
to any Relevant Person;
17.3.6 true and complete copies of the latest trustees' report and
audited accounts and actuarial valuation report (and any
actuarial certificates since the latest valuation);
17.3.7 a list of the active members of the Pension Scheme who are
employed by a Group Company and those who would (apart from this
agreement and if service continued) become eligible for
membership, with details of age, sex, service, pensionable
service (showing both actual and credited), pensionable salaries
and dates on which salary increases are expected;
17.3.8 the latest schedule of contributions or payment schedule showing
employers' and members' contributions to the Pension Scheme and
any expenses which are paid in addition; and
17.3.9 a copy of the Inland Revenue letter of approval for the Pension
Scheme, and for the Group Companies' participation in it and any
contracting-out certificate for the Pension Scheme.
17.4 All of the provisions contained in the documents disclosed pursuant to
paragraph 17.3.1 are valid and effectual (subject only to overriding
legislation) and all information made available to the Purchaser or its
advisers in connection with the Pension Scheme and the Relevant Persons'
membership of it describes the Relevant Persons' rights in all material
respects.
17.5 No undertaking, assurance or announcement (whether or not legally binding)
has been given to any Relevant Person about the continuance, introduction,
increase or improvement of any Relevant Benefits or a change in any of the
conditions of membership of the Pension Scheme.
17.6 No indemnity, undertaking or guarantee has been given by a Group Company in
connection with any Relevant Benefits, any occupational pension scheme or
any personal pension scheme.
17.7 The Pension Scheme is an exempt approved scheme and is contracted-out
scheme in relation to the employees of each Group Company and to the
Knowledge of Principal Management Employees nothing has been done or
omitted which will or may result in the Pension Scheme ceasing to have
exempt approved status or in a contracting-out certificate which covers any
employee of a Group Company from being cancelled, surrendered or varied.
17.8 To the Knowledge of Principal Management Employees, the Pension Scheme has
at all times
been operated in accordance with the provisions governing it and in
accordance with all applicable laws and fiscal and regulatory
requirements.
17.9 There is not, and has never been, any unequal treatment which could
breach the provisions of Article 141 (formerly 119) of the Treaty of Rome
or sections 62-66 of the Pension Act of 1995 in relation to the terms on
which men and women may become members of the Pension Scheme and the
terms on which they are treated, and the benefits payable to them, as
members.
17.10 To the Knowledge of Principal Management Employees, the Pension Scheme
has been properly administered and true and complete records of all
matters relevant to its proper operation (including those relevant to the
calculation and payment of contributions and benefits and the proper
management of assets and investments) have been maintained.
17.11 All amounts due to the Pension Scheme by or in respect of Relevant
Persons have been paid (and, to the Knowledge of Principal Management
Employees, were properly calculated) in accordance with the schedule of
contributions or payment schedule for, and the rules of, the Pension
Scheme and the law.
17.12 There are no outstanding transfer payments to the Pension Scheme. The
transfer payment due from the Rank Organisation Pension Plan and referred
to in the report on the actuarial valuation of the Pension Scheme as at 4
April 1997 has been paid in full and was calculated on the basis set out
in the pensions schedule to the sale and purchase agreement dated
December 19, 1996 and the actuary's letter attached thereto.
17.13 There are no actions or claims pending or threatened to the Pension
Ombudsman or a court against a Group Company or the trustees of the
Pension Scheme in respect of the Pension Scheme and no report has been
made to, or investigation conducted by, the Occupational Pensions
Regulatory Authority about a Group Company or the Pension Scheme and
there are no circumstances which could give rise to such an action,
claim, investigation or report.
17.14 The liability for all lump sum death in service benefits and the value of
any dependent's death in service pension benefits which may become
payable under the Pension Scheme to any Relevant Person is fully insured
with an insurance company.
17.15 As at the date of this agreement, the Pension Scheme is fully funded on
an ongoing basis using the actuarial method and assumptions adopted in
the last valuation for the Pension Scheme and on the Government's minimum
funding requirements basis.
17.16 No payment from the assets of the Pension Scheme has been made to a Group
Company.
17.17 No Group Company has ceased to participate in the Pension Scheme. No
event has taken place (or will take place before Completion) which has
caused or could cause a debt to arise in relation to the Pension Scheme
under section 75 of the Pensions Xxx 0000. Contributions to the Pension
Scheme have not been (and will not be before Completion) suspended or
terminated and the winding-up of the Pension Scheme has not been (and
will not be before Completion) triggered. The trustees of the Pension
Scheme do not have the power to start a winding-up of the Pension Scheme
without the Company's consent.
18. REFERENCE BALANCE SHEET
The Reference Balance Sheet has been prepared in accordance with the
assumptions set forth therein, which assumptions, in the reasonable
opinion of the Principal Management Employees, are consistent with the
U.K. GAAP as consistently and historically applied by the Company in the
preparation of its financial statements.
