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