EXHIBIT II
AGREEMENT OF RECAPITALIZATION AND MERGER
BY AND AMONG
PX HOLDING CORPORATION,
PX MERGER CORPORATION AND PANAVISION INC.,
DATED AS OF DECEMBER 18, 1997
AGREEMENT OF RECAPITALIZATION AND MERGER
By and Among
PX HOLDING CORPORATION,
PX MERGER CORPORATION
and
PANAVISION INC.
Dated as of December 18, 1997
AGREEMENT OF RECAPITALIZATION AND MERGER
AGREEMENT OF RECAPITALIZATION AND MERGER
(collectively, this "Agreement"), dated as of December
18, 1997, by and among PX Holding Corporation, a Delaware
corporation ("Purchaser"), PX Merger Corporation, a
Delaware corporation, a wholly owned subsidiary of
Purchaser ("Merger Sub"), and Panavision Inc., a Delaware
corporation (the "Company").
WHEREAS, the Merger (as hereinafter defined)
and this Agreement require the vote of a majority of the
issued and outstanding Common Shares (as hereinafter
defined) for the approval thereof (the "Company
Stockholder Approval");
WHEREAS, the respective Boards of Directors of
Merger Sub and the Company have approved the merger of
Merger Sub with and into the Company, as set forth below
(the "Merger"), in accordance with the General
Corporation Law of the State of Delaware (the "DGCL") and
upon the terms and subject to the conditions set forth in
this Agreement, holders of shares of common stock, par
value $.01 per share, of the Company (the "Common
Shares") issued and outstanding immediately prior to the
Effective Time (as defined below) will be entitled,
subject to the terms hereof and other than as set forth
herein, to either (A) receive the Cash Consideration (as
hereinafter defined) or (B) retain the Retained Common
Shares(as hereinafter defined), in each case pursuant to
the Merger;
WHEREAS, the Board of Directors of the Company
(the "Company Board") has, in light of and subject to the
terms and conditions set forth herein, (i) determined
that the Merger is in the best interests of the Company
and its stockholders, and (ii) resolved to approve and
adopt this Agreement and the transactions contemplated
hereby and to recommend approval and adoption of this
Agreement by the stockholders of the Company;
WHEREAS, Purchaser desires to purchase and the
Company desires to issue and sell to Purchaser a certain
number of Common Shares pursuant to the terms and
conditions set forth in this Agreement (the "Stock
Purchase");
WHEREAS, Purchaser, Merger Sub and the Company
desire to make certain representations, warranties,
covenants and agreements in connection with the Merger
and the Stock Purchase, and also to set forth various
conditions to the Merger and the Stock Purchase; and
WHEREAS, it is intended that the Merger be
recorded as a recapitalization for financial reporting
purposes.
NOW, THEREFORE, in consideration of the
foregoing and the respective representations, warranties,
covenants and agreements set forth herein, Purchaser,
Merger Sub and the Company agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. Upon the terms and
subject to the satisfaction or waiver of the conditions
hereof, and in accordance with the applicable provisions
of this Agreement and the DGCL, at the Effective Time (as
hereinafter defined) Merger Sub shall be merged with and
into the Company. Following the Merger, the separate
corporate existence of Merger Sub shall cease and the
Company shall continue as the surviving corporation (the
"Surviving Corporation").
SECTION 1.2 Effective Time. As soon as
practicable after the satisfaction or waiver of the
conditions set forth in Article VI, the Company shall
execute, in the manner required by the DGCL, and deliver
to the Secretary of State of the State of Delaware
Certificate of Merger duly executed and verified by the
appropriate parties hereto, and the parties shall take
such other and further actions as may be required by law
to make the Merger effective. The time the Merger
becomes effective in accordance with applicable law is
referred to herein as the "Effective Time."
SECTION 1.3 Effects of the Merger. The Merger
shall have the effects set forth in the applicable
provisions of the DGCL and as set forth herein. Without
limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the properties,
rights, privileges, powers and franchises of the Company
and Merger Sub shall vest in the Surviving Corporation,
and all debts, liabilities and duties of the Company and
Merger Sub shall become the debts, liabilities and duties
of the Surviving Corporation.
SECTION 1.4 Certificate of Incorporation and
By-Laws of the Surviving Corporation.
(a) The Amended and Restated Certificate of
Incorporation of the Company dated as of July 12, 1996
(the "Amended and Restated Certificate of
Incorporation"), as in effect immediately prior to the
Effective Time, shall be the Certificate of Incorporation
of the Surviving Corporation until thereafter amended in
accordance with the provisions thereof and hereof and
applicable law, or as otherwise contemplated hereby; and,
provided that Section 13(b) shall be restated in its
entirety therein to read as follows, "(b) Expenses
incurred in defending a civil or criminal action, suit or
proceeding shall (in the case of any action, suit or
proceeding against a director or officer of the
Corporation) be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding as
authorized by the Board of Directors upon receipt of an
undertaking by or on behalf of the indemnified person to
repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the
Corporation as authorized in this Section 13."; and
further provided, that a new Section 16 shall be added
thereto to read as follows, "The Corporation expressly
elects not to be governed by Section 203 of the General
Corporation Law of the State of Delaware."
(b) The By-Laws of Merger Sub in effect at the
Effective Time shall be the By-Laws of the Surviving
Corporation until thereafter amended, in accordance with
the provisions thereof, hereof and applicable law.
SECTION 1.5 Directors and Officers. Subject
to applicable law, immediately prior to the Effective
Time, the directors of Merger Sub and the officers of the
Company shall be the initial directors and the initial
officers, respectively, of the Surviving Corporation and
shall hold office until their respective successors are
duly elected and qualified, or their earlier death,
resignation or removal.
SECTION 1.6 Closing. The closing of the
Merger (the "Closing") shall take place at 10:00 a.m. on
a date to be specified by the parties, which shall be no
later than the second business day after satisfaction or
waiver of all of the conditions set forth in Article VI
hereof (the "Closing Date"), at the offices of Skadden,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, unless another date or place
is agreed to in writing by the parties hereto.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS
SECTION 2.1 Effect on Capital Stock. As of
the Effective Time, by virtue of the Merger and without
any action on the part of the holder of any Common Shares
or any shares of capital stock of Merger Sub:
(a) Common Stock of Merger Sub. All of the
shares of common stock, par value $1.00 per share, of
Merger Sub (the "Merger Sub Common Stock"), issued and
outstanding immediately prior to the Effective Time shall
be converted into 10 (ten) Common Shares.
(b) Cancellation of Treasury Stock. Each
Common Share that is owned by the Company or by any
wholly owned subsidiary of the Company shall
automatically be canceled and retired and shall cease to
exist, and no cash or other consideration shall be
delivered or deliverable in exchange therefore.
(c) Retention or Exchange of Common Shares.
Except as otherwise provided herein and subject to
Sections 2.2 and 2.3, each Common Share issued and
outstanding immediately prior to the Effective Time
shall, by virtue of the Merger, be treated as follows:
(i) for each Common Share with respect to
which an election to receive an amount in cash equal
to $27.00 (the "Cash Consideration") has been made
and not revoked in accordance with Section 2.3 and
for each Common Share for which no election has been
made (the "Cash Election Shares"), the right to
receive the Cash Consideration. All Common Shares
so exchanged for the Cash Consideration shall no
longer be outstanding, shall automatically be
canceled and retired and shall cease to exist, and
each holder of a Certificate representing any such
Common Shares shall, to the extent such Certificate
represents such shares, cease to have any rights
with respect thereto, except the right to receive
the applicable Merger Consideration, upon surrender
of such Certificate in accordance with Section 2.5.
(ii) for each Common Share with respect to
which an election to retain Common Shares has been
made and not revoked in accordance with Section 2.3,
the right to retain such fully paid and non-
assessable Common Share (the "Retained Common
Shares" and, collectively with the Cash
Consideration, the "Merger Consideration").
SECTION 2.2 Proration.
(a) Notwithstanding anything in this Agreement
to the contrary, the number of Common Shares (the "Cash
Election Number") to be converted into the right to
receive the Cash Consideration shall be equal to not more
than 88% of the number of Common Shares issued and
outstanding immediately prior to the Stock Purchase and
held of record or beneficially by stockholders of the
Company other than Warburg, ▇▇▇▇▇▇ Capital Company, L.P.
("Stockholder").
(b) If the number of Cash Election Shares is
greater than the Cash Election Number, then each Cash
Election Share shall (i) receive the Cash Consideration
in accordance with the terms of Section 2.1(c)(i) or (ii)
be retained as a Retained Common Share in accordance with
the terms of Section 2.1(c)(ii) in the following manner:
(i) A proration factor (the "Proration
Factor") shall be determined by dividing the Cash
Election Number by the total number of Cash Election
Shares.
(ii) The number of Cash Election Shares
converted into cash in accordance with the terms of
Section 2.1(c)(i) shall be determined by multiplying
the Proration Factor by the total number of Cash
Election Shares covered by such election, rounded
down to the nearest whole number.
(iii) All Cash Election Shares, other than
those shares that shall receive cash in accordance
with Section 2.3(b)(ii), shall be deemed to be
Retained Common Shares (on a consistent basis among
stockholders who made the election referred to in
Section 2.3(a), pro rata to the number of shares as
to which they made such election).
SECTION 2.3 Election Procedures. (a) Each
person who, on or prior to the Election Date (as defined
in Section 2.3(b) below), is a record holder of Common
Shares will be entitled, subject to Section 2.2 hereof,
to make an unconditional election on or prior to such
Election Date specifying the number of Common Shares
which he desires (i) to have converted into the right to
receive the Cash Consideration or (ii) to retain as a
Retained Common Share.
(b) Subject to any required clearance by the
Securities and Exchange Commission (the "SEC"), the
Purchaser shall prepare a form of election (the "Form of
Election"), which form shall be subject to the reasonable
approval of the Company, to be mailed by the Company with
the Proxy Statement to the record holders of Common
Shares as of the record date for the Special Meeting (as
hereinafter defined), which Form of Election shall be
used by each record holder of Common Shares who elects to
specify the number of Common Shares which he desires to
have converted into the right to receive the Cash
Consideration in the Merger, subject to the provisions of
Section 2.2 hereof. The Company will use its reasonable
best efforts to make the Form of Election available to
all persons who become holders of Common Shares during
the period between such record date and the Election
Date, with a copy of the Proxy Statement. Any such
holder's election shall have been properly made only if
such bank or trust company as shall be mutually
acceptable to Purchaser and the Company, acting as
exchange agent (the "Exchange Agent") shall have received
at its designated office, by 5:00 p.m., New York City
time on the business day prior to the date of the Special
Meeting (the "Election Date"), a Form of Election
properly completed and signed and accompanied by
Certificates (as hereinafter defined) for the Common
Shares to which such Form of Election relates, duly
endorsed in blank or otherwise in a form acceptable for
transfer on the books of the Company (or by an
appropriate guarantee if delivery of such certificates as
set forth in such Form of Election from a firm which is a
member of a registered national securities exchange or of
the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office or
correspondent in the United States, provided such
certificates are in fact delivered to the Exchange Agent
within three New York Stock Exchange ("NYSE") trading
days after the date of execution of such guarantee of
delivery).
(c) Any Form of Election may be revoked by the
holder submitting it to the Exchange Agent only by
written notice received by the Exchange Agent (i) prior
to 5:00 p.m., New York City time on the Election Date or
(ii) after the Election Date, if the Company and
Purchaser determine, on or prior to the Election Date,
that the Closing is not likely to occur within three
business days following the Election Date, in which case
any Form of Election shall remain revocable until a
subsequent date which shall be a date prior to the
Closing determined by the Company and the Purchaser. In
addition, all Forms of Election shall automatically be
revoked if the Exchange Agent is notified in writing by
Merger Sub and the Company that the Merger has been
abandoned. If a Form of Election is revoked, the
Certificate or Certificates (or guarantees of delivery,
as appropriate) for the Common Shares to which such Form
of Election relates shall be promptly returned to the
stockholder submitting the same to the Exchange Agent.
(d) The determination of the Exchange Agent
shall be binding with respect to whether or not elections
have been properly made or revoked pursuant to this
Section 2.3 and when elections and revocations were
received by it. If the Exchange Agent determines that
any election was not properly made, such shares shall be
treated by the Exchange Agent as Retained Common Shares.
The Exchange Agent shall also make all computations as to
the allocation and the proration contemplated by Section
2.2, and any such computation shall be conclusive and
binding on the holders of Common Shares. The Exchange
Agent may, with the mutual agreement of Merger Sub and
the Company, make such rules as are consistent with this
Section 2.3 for the implementation of the elections
provided for herein as shall be necessary or desirable
fully to effect such elections.
SECTION 2.4 Options; Stock Plans. Each option
held by an employee, consultant or director of the
Company to acquire Common Shares ("Company Stock Option")
that is outstanding immediately prior to the Merger,
whether or not then vested or exercisable, shall,
simultaneously with the Merger, be cancelled in exchange
for a prompt payment of a single lump sum cash payment
equal to the product of (1) the number of Common Shares
subject to such Company Stock Option and (2) the excess,
if any, of the Cash Consideration over the exercise price
per share of such Company Stock Option.
SECTION 2.5 Exchange and Retention of Common
Shares.
(a) From time to time prior to the Effective
Time, Purchaser shall take all steps necessary to cause
to be deposited on a timely basis with the Exchange Agent
in an account (the "Exchange Fund") the Cash
Consideration to which holders of Common Shares shall be
entitled at the Effective Time pursuant to Section
2.1(c)(i).
(b) Promptly after the Effective Time,
Purchaser shall cause the Exchange Agent to mail to each
record holder of certificates (the "Certificates") that
immediately prior to the Effective Time represented
Common Shares a form of letter of transmittal which shall
specify that delivery shall be effected, and risk of loss
and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Exchange Agent
and instructions for use in surrendering such
Certificates and receiving the Merger Consideration in
respect thereof.
(c) In effecting the payment of the Cash
Consideration in respect of Common Shares represented by
Certificates entitled to payment of the Cash
Consideration pursuant to Section 2.1(c)(i) and Section
2.2(b) (the "Cashed Shares"), upon the surrender of each
such Certificate, the Exchange Agent at the time of such
surrender shall pay the holder of such Certificate the
Cash Consideration multiplied by the number of Cashed
Shares, in consideration therefor. Upon such payment,
such Certificate shall forthwith be cancelled.
(d) Until surrendered in accordance with
paragraph (c) above, each such Certificate (other than
Certificates representing Common Shares held by any
affiliate of Merger Sub, in the treasury of the Company
or by any wholly owned subsidiary of the Company) shall
represent solely the right to receive the aggregate Cash
Consideration relating thereto. No interest shall be
paid or accrued on the Cash Consideration. If the Cash
Consideration (or any portion thereof) is to be delivered
to any person other than the person in whose name the
Certificate formerly representing Common Shares
surrendered therefor is registered, it shall be a
condition to such right to receive such Cash
Consideration that the Certificate so surrendered shall
be properly endorsed or otherwise be in proper form for
transfer and that the person surrendering such Common
Shares shall pay to the Exchange Agent any transfer or
other taxes required by reason of the payment of the Cash
Consideration to a person other than the registered
holder of the Certificate surrendered, or shall establish
to the satisfaction of the Exchange Agent that such tax
has been paid or is not applicable.
(e) Promptly following the date which is six
months after the Effective Time, the Exchange Agent shall
deliver to the Surviving Corporation, all cash and other
documents in its possession relating to the transactions
described in this Agreement, and the Exchange Agent's
duties shall terminate. Thereafter, each holder of a
Certificate formerly representing a Common Share electing
the Cash Consideration may surrender such Certificate to
the Surviving Corporation and (subject to applicable
abandoned property, escheat and similar laws) receive in
consideration therefor the applicable aggregate Cash
Consideration relating thereto, without any interest
thereon.
(f) After the Effective Time, there shall be
no transfers on the stock transfer books of the Surviving
Corporation of any Common Shares which were outstanding
immediately prior to the Effective Time and which were
surrendered for exchange for the Cash Consideration. If,
after the Effective Time, Certificates formerly
representing Common Shares are presented to the Surviving
Corporation or the Exchange Agent for exchange for the
Cash Consideration, they shall be surrendered and
cancelled in return for the payment of the applicable
aggregate Cash Consideration relating thereto, as
provided in this Article II.
(g) No Liability. None of Merger Sub,
Purchaser, the Company or the Exchange Agent shall be
liable to any person in respect of any Cash Consideration
delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any
Certificates shall not have been surrendered prior to
seven years after the Effective Time (or immediately
prior to such earlier date on which the Cash
Consideration would otherwise escheat to or become the
property of any Governmental Entity) any such
distributions or cash in respect of such Certificate
shall, to the extent permitted by applicable law, become
the property of the Surviving Corporation, free and clear
of all claims or interest of any person previously
entitled thereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to
Purchaser and Merger Sub as follows:
SECTION 3.1 Organization and Qualification;
Subsidiaries. The Company and each of its Subsidiaries,
is an entity duly organized, validly existing and in good
standing under the laws of its state or jurisdiction of
organization and has all requisite power and authority to
own, lease and operate its properties and to carry on its
business as now being conducted and is in good standing
as a foreign entity in each jurisdiction where the
properties owned, leased or operated, or the business
conducted, by it require such qualification and where
failure to be in good standing or to so qualify would
have a Material Adverse Effect on the Company. The term
"Material Adverse Effect on the Company," as used in this
Agreement, means any change in or effect on the business,
financial condition, results of operations of the Company
or any of its Subsidiaries that would be materially
adverse to the Company and its Subsidiaries taken as a
whole. Neither (i) seasonal variations in operating
income, to the extent reasonably consistent with prior
periods, nor (ii) the existence of a labor strike, in and
of itself (that is, unless such labor strike has caused a
Material Adverse Effect on the Company), shall be deemed
a Material Adverse Effect on the Company. The Company
has heretofore made available to Purchaser a complete and
correct copy of its Amended and Restated Certificate of
Incorporation and By-Laws.
SECTION 3.2 Capitalization; Subsidiaries.
(a) The authorized capital stock of the Company
consists of 50,000,000 Common Shares and 2,000,000 shares
of preferred stock, par value $.01 per share ("Preferred
Stock"). As of the close of business on December 12,
1997, 18,155,000 Common Shares were issued and
outstanding, all of which are entitled to vote, and no
Common Shares were held in the Company's treasury. The
Company has no shares of Preferred Stock issued or
outstanding. The Company intends to authorize the
issuance, prior to the Effective Time, of up to 130,000
shares of Series A Redeemable Preferred Stock of the
Company, as contemplated by Section 5.10 of this
Agreement. As of December 12, 1997,(i) there were
865,950 Common Shares reserved for issuance pursuant to
outstanding Options and rights granted under the Stock
Plans, and (ii) options to acquire an aggregate of
2,134,050 Common Shares have been issued pursuant to
Company Stock Options. All the outstanding shares of the
Company's capital stock are duly authorized, validly
issued, fully paid and non-assessable. There are no
bonds, debentures, notes or other indebtedness having
voting rights (or convertible into securities having such
rights) ("Voting Debt") of the Company or any of its
Subsidiaries issued and outstanding.
(b) Except as set forth above, as set forth on
Section 3.2 of the Company Disclosure Schedule, and for
the transactions contemplated by this Agreement, (i)
there are no shares of capital stock of the Company
authorized, issued or outstanding and (ii) there are no
existing options, warrants, calls, pre-emptive rights,
subscriptions or other rights, convertible securities,
agreements, arrangements or commitments of any character,
relating to the issued or unissued capital stock of the
Company or any of its Subsidiaries, obligating the
Company or any of its Subsidiaries to issue, transfer or
sell or cause to be issued, transferred or sold any
shares of capital stock or Voting Debt of, or other
equity interest in, the Company or any of its
Subsidiaries or securities convertible into or
exchangeable for such shares or equity interests or
obligations of the Company or any of its Subsidiaries to
grant, extend or enter into any such option, warrant,
call, subscription or other right, convertible security,
agreement, arrangement or commitment.
(c) Except as set forth in Section 3.2 of the
Company Disclosure Schedule, there are no outstanding
contractual obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire
any Shares of the capital stock of the Company or any
Subsidiary or affiliate of the Company or to provide
funds to make any investment (in the form of a loan,
capital contribution or otherwise) in any Subsidiary or
any other entity. Except as set forth in Section 3.2 of
the Company Disclosure Schedule, and as permitted by this
Agreement, following the Merger, neither the Company nor
any of its Subsidiaries will have any obligation to
issue, transfer or sell any shares of its capital stock
other than pursuant to employee benefit plans.
SECTION 3.3 The Purchased Shares. Upon
delivery to Purchaser at the Closing of certificates
representing the Stock Purchase Common Shares, and upon
receipt of the Company of the payment in full therefor,
(i) good and valid title to the Stock Purchase Common
Shares shall pass to the Purchaser, free and clear of all
liens and restrictions of any kind, except those pursuant
to applicable securities laws, and (ii) the Stock
Purchase Common Shares shall be validly issued, fully
paid and nonassessable. Other than as provided for in
this Agreement, the Stock Purchase Common Shares are not,
and upon their issuance will not be, subject to any
voting trust agreement or other contract, agreement,
commitment or understanding restricting or otherwise
relating to the voting, dividend rights or other
disposition of the Stock Purchase Common Shares. The
Company has reserved 7,000,000 Common Shares for issuance
pursuant to the Stock Purchase.
SECTION 3.4 Authority Relative to this
Agreement.
(a) The Company has the requisite corporate
power and authority to execute and deliver this Agreement
and, except for the approval of this Agreement by the
stockholders of the Company, to consummate the
transactions contemplated hereby. The execution and
delivery of this Agreement by the Company and the
consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized
by the Company Board and no other corporate proceedings
on the part of the Company are necessary to authorize
this Agreement or to consummate the transactions so
contemplated (other than the approval of this Agreement
by the stockholders of the Company). This Agreement has
been duly and validly executed and delivered by the
Company, and, assuming this Agreement constitutes a valid
and binding obligation of the Purchaser and Merger Sub,
constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its
terms.
(b) The Company Board has taken any and all
necessary and appropriate action to render inapplicable
to the Merger and the transactions contemplated by this
Agreement, including the Voting and Stockholders
Agreement, dated as of December 18, 1997, by and between
Stockholder and Mafco Holdings Inc. (the "Stockholders
Agreement"), the provisions of Section 203 of the DGCL.
SECTION 3.5 No Violation; Required Filings and
Consents.
(a) Except as set forth in Section 3.5 of the
Company Disclosure Schedule, the execution and delivery
of this Agreement does not, and the consummation of the
transactions contemplated by this Agreement and
compliance with the provisions of this Agreement will
not, result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give
rise to a right of consent, termination, purchase,
cancellation or acceleration of any obligation or to loss
of any property, rights or benefits under, or result in
the imposition of any additional obligation under, or
result in the creation of any Lien (as hereinafter
defined) upon any of the properties or assets of the
Company or any of its Subsidiaries under, (i) the
organizational documents of the Company or any of its
Subsidiaries, (ii) any contract, instrument, permit,
concession, franchise, license, loan or credit agreement,
note, bond, mortgage, indenture, lease or other property
agreement, partnership or joint venture agreement or
other legally binding agreement, whether oral or written
(a "Contract"), applicable to the Company or any of its
Subsidiaries or their respective properties or assets or
(iii) subject to the governmental filings and other
matters referred to in the following paragraph, any
judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company or any of its
Subsidiaries or their respective properties or assets,
other than, in the case of clauses (ii) and (iii), any
such violations, defaults, rights or Liens that
individually or in the aggregate would not have a
Material Adverse Effect on the Company.
(b) Other than in connection with, or in
compliance with, the provisions of the DGCL with respect
to the transactions contemplated hereby, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"),
the Securities Act of 1933 (the "Securities Act"), the
securities laws of the various states and the ▇▇▇▇-▇▇▇▇▇-
▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), no authorization, consent or approval
of, or filing with, any Governmental Entity (as
hereinafter defined) is necessary for the consummation by
the Company of the transactions contemplated by this
Agreement other than authorizations, consents and
approvals the failure to obtain, or filings the failure
to make, which would not, in the aggregate, have a
Material Adverse Effect on the Company. As used in this
Agreement, the term "Governmental Entity" means any
government or subdivision thereof, domestic, foreign or
supranational or any administrative, governmental or
regulatory authority, agency, commission, tribunal or
body, domestic, foreign or supranational.
SECTION 3.6 SEC Reports and Financial
Statements.
(a) The Company has filed all forms, reports
and documents required to be filed by it with the SEC
since November 20, 1996 (collectively, the "Company SEC
Reports"). The Company SEC Reports (i) were prepared in
accordance with the requirements of the Securities Act or
the Exchange Act, as the case may be, and (ii) did not at
the time they were filed contain any untrue statement of
a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the
statements made therein, in the light of the
circumstances under which they were made, not misleading.
No Subsidiary is required to file any form, report or
other document with the SEC.
(b) Each of the consolidated financial
statements (including, in each case, any notes thereto)
contained in the Company SEC Reports (the "Company
Financial Statements") (i) was prepared from the books of
account and other financial records of the Company and
its Subsidiaries, (ii) was prepared in accordance with
United States generally accepted accounting principles
("U.S. GAAP") applied on a consistent basis throughout
the periods indicated (except as may be indicated in the
notes thereto) and (iii) presented fairly the
consolidated financial position of the Company and its
consolidated Subsidiaries as at the respective dates
thereof and the results of their operations and their
cash flows for the respective periods indicated therein
except as otherwise noted therein (subject, in the case
of unaudited statements, to the omission of footnotes and
normal and recurring year-end adjustments which were not
and are not expected, individually or in the aggregate,
to have a Material Adverse Effect on the Company).
(c) The Company Financial Statements were
prepared from the books of account and other financial
records of the Company and its Subsidiaries: (i) to
reflect all items of income and expense and all assets
and liabilities required to be reflected therein in
accordance with U.S. GAAP applied on a basis consistent
with the past practices of the Company, (ii) are in all
material respects complete and correct, and do not
contain or reflect any material inaccuracies or
discrepancies and (iii) have been maintained in
accordance with good business and accounting practices.
(d) Except for liabilities and obligations
reflected on the September 30, 1997 consolidated balance
sheet of the Company (including the notes thereto),
liabilities and obligations disclosed in Company SEC
Reports filed prior to the date of this Agreement and
other liabilities and obligations incurred in the
ordinary course of business consistent with past practice
since September 30, 1997, neither the Company nor any
Subsidiary has any liabilities or obligation of any
nature (whether accrued, absolute, contingent or
otherwise) which, individually or in the aggregate, are
or are reasonably likely to be material to the Company
and its Subsidiaries taken as a whole.
(e) The Company has heretofore furnished to
Purchaser complete and correct copies of (i) all
agreements, documents and other instruments not yet filed
by the Company with the SEC but that are currently in
effect and that the Company expects to file with the SEC
after the date of this Agreement and (ii) all amendments
and modifications that have not been filed by the Company
with SEC to all agreements, documents and other
instruments that previously had been filed by the Company
with the SEC and are currently in effect.
SECTION 3.7 No Undisclosed Liabilities.
Except (a) to the extent disclosed (1) in the Company SEC
Documents filed prior to the date of this Agreement or
(2) set forth on Section 3.7 of the Company Disclosure
Schedule and (b) for liabilities and obligations incurred
since September 30, 1997 in the ordinary course of
business consistent with past practice or pursuant to the
terms of this Agreement, neither the Company nor any of
its Subsidiaries has incurred any liabilities or
obligations of any nature, whether or not accrued,
contingent or otherwise, that have, or would be
reasonably likely to have, a Material Adverse Effect on
the Company. Section 3.7 of the Company Disclosure
Schedule sets forth each instrument evidencing
indebtedness of the Company and its Subsidiaries which
will accelerate or become due or payable, or result in a
right of redemption or repurchase on the part of the
holder of such indebtedness, or with respect to which any
other payment or amount will become due or payable, in
any such case with or without due notice or lapse of
time, as a result of this Agreement, the Merger or the
other transactions contemplated hereby.
SECTION 3.8 Litigation. Except as set forth
on Section 3.8 of the Company Disclosure Schedule, there
is no litigation, suit, claim, action, proceeding or
investigation pending or, to the knowledge of the
Company, threatened, against or affecting the Company or
any of its Subsidiaries, which individually or in the
aggregate, would have a Material Adverse Effect on the
Company or could prevent the consummation of the
transactions contemplated by this Agreement. Except as
disclosed in the SEC Reports filed prior to the date of
this Agreement, neither the Company nor any of its
Subsidiaries is subject to any outstanding order, writ,
injunction or decree which, individually or in the
aggregate, would have a Material Adverse Effect on the
Company or could prevent the consummation of the
transactions contemplated hereby.
SECTION 3.9 Properties and Assets; Real
Property and Leases.
(a) With respect to the real property owned by
the Company or its Subsidiaries (the "Owned Property")
the Company or its Subsidiaries have sufficient title to
all such property and assets to conduct their respective
businesses as currently conducted, with only such
exceptions as set forth in this Section 3.9 or which,
individually or in the aggregate, would not have a
Material Adverse Effect on the Company.
(b) Set forth on Company Disclosure Schedule
3.9(b) is a true, correct and complete list (including a
general description of the uses for such real property)
of all real property owned or leased by the Company and
each of its Subsidiaries.
(c) Except as would not have a Material
Adverse Effect on the Company, each parcel of real
property owned by the Company or any Subsidiary (i) is
owned free and clear of all mortgages, pledges, liens,
security interests, conditional and installment sale
agreements, encumbrances, charges or other claims of
third parties of any kind (collectively, "Liens"), other
than (A) those items set forth on the Company Disclosure
Schedule 3.9(c), (B) Liens for current taxes and
assessments not yet past due and payable, or if due and
payable, which are being contested in good faith, (C)
inchoate mechanics' and materialman's Liens of
construction in progress, (D) workmen's, repairmen's,
warehousemen's and carriers' Liens arising in the
ordinary course of business of the Company or such
Subsidiary, (E) all liens, easements and other matters of
record, Liens and other imperfections of title and
encumbrances which, individually or in the aggregate,
would not materially and adversely affect the use of the
property for its intended purpose (F) any condition that
may be shown by a current survey, title report or
physical inspection, and (G) zoning, building and other
similar restrictions (Liens described in clauses (A)
through (G) being referred to herein as "Permitted
Liens"), and (ii) except as set forth on the Company
Disclosure Schedule 3.9(c), with respect to any Owned
Property, the Company has not received written notice
that such Owned Property is subject to any governmental
decree or order to be sold or is being condemned or
otherwise taken by any public authority with or without
payment of compensation therefor, and, to the best
knowledge of the Company, no such condemnation or taking
has been proposed.
(d) All leases of real property leased for the
use or benefit of the Company or any Subsidiary to which
the Company or any Subsidiary is a party or by which the
Company or any Subsidiary is bound, and all amendments
and modifications thereto are in full force and effect
and, except as set forth on the Company Disclosure
Schedule 3.9(d) have not been modified or amended, and,
except as set forth on the Company Disclosure Schedule
3.9(d), the Company has not received notice of any
default under any such lease by the Company or any
Subsidiary, or to the knowledge of the Company, no other
party thereto is in default thereunder, nor to the
knowledge of the Company has any event which with notice
or lapse of time or both would constitute a default
thereunder by the Company or any Subsidiary or, to the
knowledge of the Company, any other party thereto,
occurred, except as, individually or in the aggregate,
would not have a Material Adverse Effect on the Company.
SECTION 3.10 Insurance. Set forth in Section
3.10 of the Company Disclosure Schedule is a complete and
accurate list of all primary, excess and umbrella
policies, bonds and other forms of insurance currently
owned or held by or on behalf of or providing insurance
coverage to the Company or any Subsidiary, their
respective businesses, properties and assets (or their
directors, officers, salespersons, agents or employees).
All policies set forth in Section 3.10 of the Company
Disclosure Schedule are in full force and effect and
shall remain in full force and effect through the Closing
Date, except to the extent replaced by substantially
similar insurance coverage, and with respect to all
policies, all premiums currently payable or previously
due have been paid, and, to the best knowledge of the
Company, no notice of cancellation or termination has
been received by the Company or any Subsidiary with
respect to any such policy, except for statutory notices.
All such policies are sufficient for compliance with all
requirements of law and of all Contracts and agreements
to which the Company or any Subsidiary is a party or
otherwise bound and are valid, outstanding, collectible
and enforceable policies and provide insurance coverage
which is adequate and customary for a business of the
size and type of the Company or any Subsidiary, as the
case may be.
SECTION 3.11 Information. None of the
information to be supplied by the Company in writing
specifically for inclusion or incorporation by reference
in (i) the definitive proxy statement to be used in
connection with a meeting (the "Special Meeting") of the
Company's stockholders at which this Agreement and the
matters contemplated hereby will be considered and voted
upon and the Form S-4 of which such proxy statement will
form a part (collectively, the "Proxy Statement") or (ii)
any other document to be filed with the SEC or any other
Governmental Entity in connection with the transactions
contemplated by this Agreement (the "Other Filings")
will, at the respective times filed with the SEC or other
Governmental Entity and, in addition, in the case of the
Proxy Statement, at the date it or any amendment or
supplement thereto is mailed to stockholders, at the time
of the Special Meeting and at the Effective Time, contain
any untrue statement of a material fact or omit to state
any material fact required to be stated therein or
necessary in order to make the statements made therein,
in light of the circumstances under which they were made,
not misleading. The Company further represents that the
Proxy Statement will comply in all material respects with
the provisions of applicable federal securities laws.
SECTION 3.12 Employee Benefit Plans.
(a) Schedule 3.12(a) of the Company Disclosure
Schedule contains a true and complete list of each
deferred compensation and each incentive compensation,
equity compensation plan, "welfare" plan, fund or program
(within the meaning of section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended
("ERISA")); "pension" plan, fund or program (within the
meaning of section 3(2) of ERISA); each employment,
termination or severance agreement; and each other
employee benefit plan, fund, program, agreement or
arrangement, in each case, that is sponsored, maintained
or contributed to or required to be contributed to by the
Company or by any trade or business, whether or not
incorporated (an "ERISA Affiliate"), that together with
the Company would be deemed a "single employer" within
the meaning of section 4001(b) of ERISA, or to which the
Company or an ERISA Affiliate is party for the benefit of
any employee or former employee of the Company or any
Subsidiary (the "Plans").
(b) With respect to each Plan, the Company has
made available to Purchaser true and complete copies of
the Plan and any amendments thereto (or if the Plan is
not a written Plan, a description thereof), any related
trust or other funding vehicle, any reports or summaries
required under ERISA or the Code and the most recent
determination letter received from the Internal Revenue
Service with respect to each Plan intended to qualify
under section 401 of the Internal Revenue Code of 1986,
as amended (the "Code").
(c) No liability under Title IV or section 302
of ERISA has been incurred by the Company or any ERISA
Affiliate that has not been satisfied in full, and no
condition exists that presents a material risk to the
Company or any ERISA Affiliate of incurring any such
liability, other than liability for premiums due the
Pension Benefit Guaranty Corporation (which premiums have
been paid when due).
(d) No Plan is subject to Title IV of ERISA.
Each Plan has been operated and administered in all
material respects in accordance with its terms and
applicable law, including but not limited to ERISA and
the Code, except whether failure to do so would not
reasonably be expected to have a Material Adverse Effect
on the Company.
(e) Each Plan intended to be "qualified"
within the meaning of section 401(a) of the Code is so
qualified and the trusts maintained thereunder are exempt
from taxation under section 501(a) of the Code.
(f) Except as set forth in the Company
Disclosure Schedule 3.12(a), no Plan provides medical,
surgical, hospitalization, death or similar benefits
(whether or not insured) for employees or former
employees of the Company or any Subsidiary for periods
extending beyond their retirement or other termination of
service, other than (i) coverage mandated by applicable
law, (ii) death benefits under any "pension plan," or
(iii) benefits the full cost of which is borne by the
current or former employee (or his beneficiary).
(g) There are no pending, threatened or
anticipated claims by or on behalf of any Plan, by any
employee or beneficiary covered under any such Plan, or
otherwise involving any such Plan (other than routine
claims for benefits), except to the extent that such
claims would not reasonably be expected to result in a
Material Adverse Effect on the Company.
SECTION 3.13 Taxes.
(a) Except as set forth in Schedule 3.13(a) of
the Company Disclosure Schedule, all Tax Returns (as
hereinafter defined) by or on behalf of the Company or
any Subsidiary or any affiliated, combined or unitary
group of which the Company or any Subsidiary is or was a
member, which if not filed would result in a Material
Adverse Effect, have been duly and timely filed with the
appropriate taxing authorities and were, in all material
respects, true, complete and correct.
(b) Except as set forth in Schedule 3.13(b) of
the Company Disclosure Schedule, the Company and each
Subsidiary has paid or will have had paid to the
appropriate taxing authority on its behalf, within the
time and in the manner prescribed by law, all Taxes (as
hereinafter defined) for which it is liable and which if
not paid would result in a Material Adverse Effect.
(c) The Company and each Subsidiary has
established on its books and records adequate reserves
for the payment of all Taxes for which it is liable which
are not yet due and payable, and with respect to any such
Taxes which have been proposed, assessed or asserted
against them and which, in each case, the failure to
establish adequate reserves for such Taxes would result
in a Material Adverse Effect.
(d) The Company and each Subsidiary has
complied in all respects with all applicable laws, rules
and regulations relating to the payment and withholding
of Taxes for which it is liable (including, without
limitation, withholding of such Taxes pursuant to
sections 1441 and 1442 of the Code or similar provisions
under any state, local or foreign laws, and has, within
the time and in the manner prescribed by law, withheld
and paid over to the appropriate taxing authorities all
amounts required to be so withheld and paid over under
all applicable domestic and foreign laws, in each case in
which the failure to so comply and so withhold would
result in a Material Adverse Effect.
(e) Except as set forth in Schedule 3.13(e) of
the Company Disclosure Schedule, neither the Company nor
any Subsidiary has requested any extension of time within
which to file any Tax Return in respect of any taxable
year, which Tax Return has not since been filed.
(f) Except as set forth in Schedule 3.13(f) of
the Company Disclosure Schedule, there are no outstanding
waivers or comparable consents that have been given by
the Company or any Subsidiary or with respect to any Tax
Return of the Company or any Subsidiary regarding the
application of any statute of limitations with respect to
any Taxes or Tax Returns of the Company or any such
Subsidiary.
(g) Except as set forth in Schedule 3.13(g) of
the Company Disclosure Schedule (which shall set forth
the nature of the proceeding, the type of return, the
deficiencies claimed, asserted, proposed or assessed and
the amount thereof, and the taxable year in question), no
United States federal, state, local or foreign audits or
other administrative proceedings or court proceedings are
presently pending against the Company or any Subsidiary
with regard to any Taxes or Tax Returns of the Company or
any Subsidiary the liability for which would result in a
Material Adverse Effect on the Company and no
notification has been received by the Company or any
Subsidiary that such an audit or other proceeding is
pending or threatened.
(h) Neither the Company nor any Subsidiary has
participated in or cooperated with an international
boycott within the meaning of section 999 of the Code.
(i) Neither the Company nor any Subsidiary has
filed a consent pursuant to section 341(f) of the Code
(or any predecessor provision) or agreed to have section
341(f)(2) of the Code apply to any disposition of a
subsection (f) asset (as such term is defined in section
341(f)(4) of the Code) owned by either the Company or any
Subsidiary.
(j) No property of the Company or any
Subsidiary is property that the Subsidiary or any party
to this transaction is or will be required to treat as
being owned by another person pursuant to the provisions
of section 168(f)(8) of the Internal Revenue Code of
1954, as amended, as in effect prior to the enactment of
the Tax Reform Act of 1986.
(k) Panavision Inc., Panavision Remote Systems
Inc., ▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc., Keepco I Inc. and Keepco II
Inc. are members of an affiliated group of corporations
within the meaning of section 1504(a) of the Code that
includes the Company; and such affiliated group filed a
consolidated return with respect to United States federal
income taxes.
(l) Except as set forth in Schedule 3.13(l) of
the Company Disclosure Schedule, there are no
encumbrances for taxes upon the assets or properties of
the Company or any Subsidiary except for statutory
encumbrances for Taxes not yet due and payable.
(m) Except as set forth in Schedule 3.13(m) of
the Company Disclosure Schedule, neither the Company nor
any Subsidiary has an obligation under any Tax sharing
agreement, Tax indemnification agreement or similar
contract or arrangement (including any agreement,
contract or arrangement providing for the sharing or
ceding of credits or losses) or has a potential liability
or obligation to any person as a result of or pursuant to
any such agreement, contract, arrangement or commitment.
(n) Except as set forth in Schedule 3.13(n) of
the Company Disclosure Schedule, no closing agreement
pursuant to section 7121 of the Code (or any predecessor
provision) or any similar provision of any state, local
or foreign law has been entered into by or on behalf of
the Company or any Subsidiary.
(o) Except as set forth in Schedule 3.13(o) of
the Company Disclosure Schedule, to the best knowledge of
the Company and its Subsidiaries no jurisdiction where
the Company or any Subsidiary has not filed a Tax Return
has made a claim that the Company or such Subsidiary is
required to file a Tax Return in such jurisdiction.
(p) All material elections with respect to
Taxes of the Company or any Subsidiary are set forth in
Schedule 3.13(p) of the Company Disclosure Schedule.
(q) The Company has previously delivered or
made available to Purchaser complete and accurate copies
of each of (i) all audit reports, letter rulings and
technical advice memoranda relating to United States
federal, state, local or foreign Taxes due with respect
to the income or business of the Company or Panavision
International, L.P., (ii) all income Tax Returns filed
with any taxing authority (or the relevant portions of
any combined, consolidated, or unitary Tax Return filed
in any jurisdiction of which the Company or Panavision
International, L.P. is a member, including, without
limitation, information relating to the computation of
taxable income) filed by or on behalf of the Company or
Panavision International, L.P. in the last three years,
(iii) any closing agreement, settlement agreement or
similar agreement or arrangement entered into by or on
behalf of the Company or Panavision International, L.P.
with any taxing authority, and (iv) any Tax sharing
agreement, Tax indemnification agreement or similar
contract or arrangement entered into by or on behalf of
the Company or Panavision International, L.P.
(r) The net operating losses, capital losses,
charitable contributions, foreign tax credits, general
business credits and minimum tax credits for United
States federal, state, foreign and all other purposes, as
applicable, of each of the Company and any Subsidiary and
the dates on which such net operating losses and such
other tax attributes will expire are set forth in
Schedule 3.13(r) of the Company Disclosure Schedule.
(s) Except as set forth in Schedule 3.13(s) of
the Company Disclosure Schedule, neither the Company nor
any Subsidiary has an overall foreign loss (as defined in
section 904 of the Code and allocated under Treasury
Regulation section 1.1502-9) as of the taxable year
ending December 31, 1996. For all periods subsequent to
the taxable year ending December 31, 1996, through the
Closing, the Company and its Affiliates (including any
Subsidiary) have not and will not take any action or
engage in any transaction including, without limitation,
causing the Company or any Subsidiary to incur additional
liabilities and/or additional expenses (other than (i)
any actions or transaction made in the ordinary course of
business, (ii) any transactions contemplated by this
Agreement or (iii) the acquisition by the Company of the
film services group of Visual Action Holdings Plc) that
would create an overall foreign loss allocable to the
Company or any Subsidiary under Treasury Regulation
section 1.1502-9.
(t) Except as set forth in Schedule 3.13(t) of
the Company Disclosure Schedule, no QEF elections (as
defined in section 1295 of the Code) have been filed by
or on behalf of the Company or any Subsidiary.
(u) For purposes of this Agreement, "Taxes"
shall mean all taxes, charges, fees, levies or other
assessments, including, without limitation, all net
income, gross income, gross receipts, sales, use, ad
valorem, goods and services, capital, transfer,
franchise, profits, license, withholding, payroll,
employment, employer health, excise, severance, stamp,
occupation, real and personal property, social security,
estimated, recording, gift, value assessed, windfall
profits or other taxes, customs duties, fees, assessments
or charges of any kind whatsoever, whether computed on a
separate, consolidated, unitary, combined or other basis,
together with any interest, fines, penalties, additions
to tax or other additional amounts imposed by any taxing
authority (domestic or foreign). For purposes of this
Agreement, "Tax Return" shall mean any return,
declaration, report, estimate, information or other
document (including any documents, statements or
schedules attached thereto) required to be filed with any
federal, state, local or foreign tax authority with
respect to Taxes.
SECTION 3.14 Environmental Matters.
(a) Except as set forth on Section 3.14 of the
Company Disclosure Schedule:
(i) the Company and its Subsidiaries have been
and are in compliance with all applicable
Environmental Laws as in effect on the date hereof,
except for such non-compliance violations and
defaults as would not, individually or in the
aggregate, have a Material Adverse Effect on the
Company;
(ii) the Company and its Subsidiaries possess
all Environmental Permits required for the operation
of the Business pursuant to Environmental Laws as in
effect on the date hereof, all such Environmental
Permits are in effect, there are no pending or, to
the best knowledge of the Company, threatened
proceedings to revoke such Environmental Permits and
the Company and its Subsidiaries are, to the best
knowledge of the Company, in compliance with all
terms and conditions thereof, except for such
failures to possess or comply with Environmental
Permits as would not, individually or in the
aggregate, have a Material Adverse Effect on the
Company;
(iii) except for matters which would not,
individually or in the aggregate, have a Material
Adverse Effect on the Company, neither the Company
nor any Subsidiary has received any written
notification that the Company or any Subsidiary, as
a result of any of the current or past operations of
the Business, or any property currently or formerly
owned or leased in connection with the Business, is
or may be the subject of any proceeding,
investigation, claim, lawsuit or order by any
Governmental Entity or other person as to whether
(x) any Remedial Action is or may be needed to
respond to a Release or threat of Release into the
environment of Hazardous Substances as defined under
Environmental Laws as in effect on or prior to the
date hereof; (y) any Environmental Liabilities and
Costs imposed by, under or pursuant to Environmental
Laws as in effect on or prior to the date hereof
shall be sought, or proceeding commenced, related to
or arising from the current or past operations of
the Business; or (z) the Company or any subsidiary
is or may be a "potentially responsible party" for a
Remedial Action, pursuant to any Environmental Law
as in effect on or prior to the date hereof, for the
costs of investigating or remediating Releases or
threatened Releases into the environment of
Hazardous Substances, whether or not such Release or
threatened Release has occurred or is occurring at
properties currently or formerly owned, leased or
operated by the Company and its Subsidiaries;
(iv) except for Environmental Permits, none of
the Company and its Subsidiaries has entered into
any written agreement with any Governmental Entity
by which the Company or any Subsidiary has assumed
responsibility, either directly or as a guarantor or
surety, for the remediation of any condition arising
from or relating to a Release of Hazardous
Substances as defined under Environmental Laws as in
effect on or prior to the date hereof into the
environment in connection with the Business,
including for cost recovery with respect to such
Releases or threatened Releases;
(v) there is not now and has not been at any
time in the past, a Release in connection with the
current or former conduct of the Business of
Hazardous Substances as regulated under
Environmental Laws as in effect on or prior to the
date hereof for which the Company or any Subsidiary
is required or is reasonably likely to be required
to perform a Remedial Action pursuant to
Environmental Laws as currently in effect, or will
incur Environmental Liabilities and Costs that
would, individually or in the aggregate, have a
Material Adverse Effect on the Company.
(b) For purposes of this Section:
(i) "Business" means the current and former
businesses of the Company and its Subsidiaries
including, but not limited to, businesses or
Subsidiaries that have been previously sold by the
Company, its Subsidiaries or any predecessors
thereto.
(ii) "Environmental Laws" means all Laws
relating to the protection of the environment, or to
any emission, discharge, generation, processing,
storage, holding, abatement, existence, Release,
threatened Release or transportation of any
Hazardous Substances, including, but not limited to,
(i) CERCLA, the Resource Conservation and Recovery
Act, the Clean Water Act, the Clean Air Act, the
Toxic Substances Control Act, as amended (the
"TSCA"), property transfer statutes or requirements
and (ii) all other requirements pertaining to
reporting, licensing, permitting, investigation or
remediation of emissions, discharges, Releases or
threatened Releases of Hazardous Substances into the
air, surface water, groundwater or land, or relating
to the manufacture, processing, distribution, use,
sale, treatment, receipt, storage, disposal,
transport or handling of Hazardous Substances.
(iii) "Environmental Liabilities and Costs"
means all damages, natural resource damages, claims,
losses, expenses, costs, obligations, and
liabilities (collectively, "Losses"), whether direct
or indirect, known or unknown, current or potential,
past, present or future, imposed by, under or
pursuant to Environmental Laws, including, but not
limited to, all Losses related to Remedial Actions,
and all fees, capital costs, disbursements,
penalties, fines and expenses of counsel, experts,
contractors, personnel and consultants based on,
arising out of or otherwise in respect of (i) the
Company, any Subsidiary (including predecessors and
former Subsidiaries) or property owned, used or
leased by the Company or any Subsidiary in respect
of the Business at any time; (ii) conditions
existing on, under, around, above or migrating from
any such property; and (iii) expenditures necessary
to cause any such property or the Company or any
Subsidiary to be in compliance with requirements of
Environmental Laws.
(iv) "Environmental Permits" means any
federal, state, foreign, provincial or local permit,
license, registration, consent, order,
administrative consent order, certificate, approval
or other authorization necessary for the conduct of
the Business as currently conducted under any
Environmental Law.
(v) "Hazardous Substances" means any substance
that (a) is defined, listed or identified or
otherwise regulated as a "hazardous waste,"
"hazardous material" or "hazardous substance" "toxic
substance," "hazardous air pollution," "polluted,"
or "contaminated" or words of similar meaning and
regulatory effect under CERCLA, TSCA or the Resource
Conservation and Recovery Act or any other
Environmental Law or analogous state or foreign law
(including, without limitation, radioactive
substances, asbestos, polycholorinated biphenyls,
petroleum and petroleum derivatives and products) or
(b) requires investigation, removal or remediation
under applicable Environmental Law.
(vi) "Laws" means all (A) constitutions,
treaties, statutes, laws (including, but not limited
to, the common law), rules, regulations, ordinances
or codes of any Governmental Entity, (B)
Environmental Permits, and (C) orders, decisions,
injunctions, judgments, awards and decrees of any
Governmental Entity.
(vii) "Release" means as defined in CERCLA or
the Resource Conservation and Recovery Act, without
limiting its application to violations or alleged
violations of those statutes, but not including any
discharge, spill or emission that is the subject of,
and in compliance with, an Environmental Permit.
(viii) "Remedial Action" means all actions
required by Governmental Entity pursuant to
Environmental Law or otherwise taken as necessary to
comply with Environmental Law to (i) clean up,
remove, treat or in any other way remediate any
Hazardous Substances; (ii) prevent the release of
Hazardous Substances so that they do not migrate or
endanger or threaten to endanger public health or
welfare or the environment; or (iii) perform
studies, investigations or monitoring in respect of
any such matter.
SECTION 3.15 Absence of Certain Changes.
Since September 30, 1997, except as contemplated by this
Agreement or as disclosed in Company SEC Reports filed
prior to the date of this Agreement, the Company and its
Subsidiaries have conducted their business only in the
ordinary course and in a manner consistent with past
practice and, since such date, there has not been (a) any
Material Adverse Effect on the Company, (b) any material
change by the Company in its accounting methods,
principles or practices, except as may be required by
GAAP, (c) any damage, destruction or loss (whether or not
covered by insurance) with respect to properties or
assets of the Company or any Subsidiary that,
individually or in the aggregate, is material to the
Company and its Subsidiaries taken as a whole, (d) any
declaration, setting aside or payment of any dividend or
distribution in respect of Common Shares or any
redemption, purchase or other acquisition of any of its
securities, (e) any revaluation by the Company and its
Subsidiaries of any asset (including, without limitation,
any writing down of the value of inventory or writing off
of notes or accounts receivable), other than in the
ordinary course of business consistent with past
practice, (f) any entry by the Company or any Subsidiary
into any commitment or transaction material to the
Company and its Subsidiaries taken as a whole, except in
the ordinary course of business consistent with past
practice, (g) any increase in or establishment of any
bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option
(including, without limitation, the granting of stock
options, stock appreciation rights, performance awards,
or restricted stock awards), stock purchase or other
employee benefit plan, or any other increase in the
compensation payable or to become payable to any officers
or key employees of the Company or any Subsidiary, except
in the ordinary course of business consistent with past
practice, (h) any acquisition or disposition by the
Company of any material asset, except in the ordinary
course of business except consistent with past practice,
(i) any incurrence, assumption or guarantee of any
indebtedness or obligation relating to any lending or
borrowing except current liabilities and commitments
incurred in the ordinary course of business consistent
with past practice, or (j) any amendment, modification or
termination of any existing, or entering into any new,
material contract, or any material plan, lease, license,
permit or franchise, except in the ordinary course of
business consistent with past practice.
SECTION 3.16 Broker. Except for the
engagement of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., none of the Company,
any of its Subsidiaries, or any of their respective
officers, directors or employees has employed any broker
or finder or incurred any liability for any brokerage
fees, commissions or finder's fees in connection with the
transactions contemplated by this Agreement.
SECTION 3.17 Opinion of Investment Banker.
The Company has received the opinion of ▇▇▇▇▇▇▇, Sachs &
Co. to the effect that, as of December 17, 1997, the
Merger Consideration is fair to the Company's
stockholders from a financial point of view.
SECTION 3.18 Board Recommendation. The
Company Board, at a meeting duly called and held, has (a)
determined that this Agreement and the transactions
contemplated hereby, taken together, are advisable and in
the best interests of the Company and its stockholders,
and (b) subject to the other provisions hereof, resolved
to recommend that the holders of the Common Shares
approve this Agreement and the transactions contemplated
hereby, including the Merger.
SECTION 3.19 Required Company Vote. The
Company Stockholder Approval, being the affirmative vote
of a majority of the Common Shares, is the only vote of
the holders of any class or series of the Company's
securities necessary to approve this Agreement, the
Merger and the other transactions contemplated hereby.
SECTION 3.20 Intellectual Property.
(a) Section 3.20 of the Company Disclosure
Schedule sets forth a list of all material domestic and
foreign Intellectual Property (as hereinafter defined).
Except as set forth on Section 3.20 of the Company
Disclosure Schedule:
(b) To the Company's knowledge, the Company or
a Subsidiary is the sole and exclusive owner of the
Intellectual Property set forth on Section 3.20 of the
Company Disclosure Schedule and has the sole and
exclusive right to use, sell, license, or bring actions
for the infringement of its rights thereto, free and
clear of all Liens which would have a Material Adverse
Effect on the Company;
(c) To the Company's knowledge, there are no
royalties, fees or other payments payable by the Company
or any of its Subsidiaries to any person by reason of
ownership, use, license or sale of any of the
Intellectual Property or the conduct of the Company or
its Subsidiaries' business which would have a Material
Adverse Effect on the Company;
(d) To the Company's knowledge, neither the
Company nor its Subsidiaries has entered into or is
otherwise bound by any consent, forebearance to ▇▇▇,
settlement agreement or other agreement which limits the
Company's or its Subsidiaries' rights to use, sell or
license any of the Intellectual Property except as would
not have a Material Adverse Effect on the Company;
(e) All patent, trademark, service ▇▇▇▇,
copyright and other registrations and applications set
forth on Section 3.20 of the Company Disclosure Schedule
(x) are standing in the name of the Company or a
Subsidiary, (y) are, with respect to domestic
registrations and applications, valid and subsisting, and
(z) to the Company's knowledge, are not subject to any
pending, actual or threatened interference, opposition,
cancellation or other proceeding before any court or
registration authority which individually or in the
aggregate would have a Material Adverse Effect on the
Company;
(f) To the Company's knowledge, neither the
Company nor its Subsidiaries is, in any material respect,
in breach, violation or default of the License Agreements
(and the Company is not aware of any event which has
occurred which with the giving of notice or the passage
of time or both would constitute such a breach, violation
or default or give rise to any right of termination,
amendment, renegotiation, cancellation or acceleration
under any such agreement), and to the Company's
knowledge, no other party to any such agreement is in
breach, violation or default thereof except as would not
have a Material Adverse Effect on the Company;
(g) To the Company's knowledge, neither the
manufacture, use, sale, offering for sale, marketing or
importation under, or the license of any of the
Intellectual Property set forth in Section 3.20 of the
Company Disclosure Schedule, nor the conduct of the
Company's or its Subsidiaries' businesses in the manner
currently conducted or proposed to be conducted,
violates, in any material respect, any License Agreement,
or conflicts with or infringes on the rights of any
person; no allegation of such an infringement has been
made within three (3) years preceding the date of this
Agreement, and the Company is not aware of any basis for
such a claim; and, to the Company's knowledge, there is
no pending or threatened claim or litigation challenging
or questioning the validity of, or the Company's or its
Subsidiaries' ownership or right to use, sell, license,
or bring actions for the infringement of its rights to
the Intellectual Property set forth in Schedule 3.20 of
the Company Disclosure Schedule which individually or in
the aggregate would have a Materially Adverse Effect on
the Company, and the Company is not aware of any basis
for such a claim;
(h) To the Company's knowledge, no person has
infringed, misappropriated, or misused any of the
Intellectual Property, except as would not have a
Material Adverse Effect on the Company, and neither the
Company nor any of its subsidiaries has asserted any
claim of infringement, misappropriation, or misuse
against any person within the past three (3) years;
(i) To the Company's knowledge, the Company
and its Subsidiaries have taken all reasonably necessary
steps to maintain and protect the Intellectual Property
set forth on Schedule 3.20 of the Company Disclosure
Schedule; and
(j) Except as would not have a Material
Adverse Effect on the Company, the Company is not aware
of any facts or circumstances that exist which could
render any of the Intellectual Property invalid or
unenforceable.
(k) As employed herein, the term "Intellectual
Property" shall mean: (i) any and all registered and
unregistered trademarks, service marks, slogans, trade
names, logos and trade dress, both domestic and foreign,
which are owned by the Company or a Subsidiary
(collectively, and together with the good will associated
with each, "Trademarks"); (ii) any and all domestic and
foreign patents, patent applications, invention
registrations and invention disclosures which are owned
by the Company or a Subsidiary (collectively, "Patents");
(iii) any and all registered and unregistered copyrights,
both domestic and foreign, which are owned by the Company
or a Subsidiary, including, but not limited to, programs
and databases which are owned by the Company or a
Subsidiary (together, "Software"); (iv) any and all
unpatented or unpatentable methods, devices, technology,
trade secrets, proprietary information and know-how which
are owned by the Company or a Subsidiary (collectively,
"Technology"); and (v) any and all licenses, contracts or
other agreements which involve the development,
acquisition, use, sale or license of intellectual
property rights and to which the Company or a Subsidiary
is a party (collectively, "License Agreements."
SECTION 3.21 Related Party Transactions.
Except as set forth in Section 3.21 of the Company
Disclosure Schedule hereto or as disclosed in SEC Reports
filed prior to the date of this Agreement, there are no
contracts, agreements, arrangements or understandings of
any kind between any affiliate (other than any
Subsidiary) of the Company, on the one hand, and the
Company or any Subsidiary, on the other hand.
SECTION 3.22 Labor Relations and Employment.
(a) Except as set forth on Section 3.22(a) of
the Company Disclosure Schedule and except to the extent
that such matters would not result in a Material Adverse
Effect on the Company, (i) there is no labor strike,
dispute, slowdown, stoppage or lockout actually pending,
or, to the best knowledge of the Company, threatened
against the Company or any of its Subsidiaries, and
during the past three years there has not been any such
action; (ii) to the best knowledge of the Company, there
are no union claims to represent the employees of the
Company or any of its Subsidiaries; (iii) neither the
Company nor any of its Subsidiaries is a party to or
bound by any collective bargaining or similar agreement
with any labor organization, or work rules or practices
agreed to with any labor organization or employee
association applicable to employees of the Company or
any of its Subsidiaries; (iv) none of the employees of
the Company or any of its Subsidiaries is represented by
any labor organization and the Company does not have any
knowledge of any current union organizing activities
among the employees of the Company or any of its
Subsidiaries, nor does any question concerning
representation exist concerning such employees; (v) the
Company and its Subsidiaries are, and have at all times
been, in compliance with all applicable laws respecting
employment and employment practices, terms and
conditions of employment, wages, hours of work and
occupational safety and health, and are not engaged in
any unfair labor practices as defined in the National
Labor Relations Act or other applicable law, ordinance
or regulation; (vi) there is no unfair labor practice
charge or complaint against the Company or any of its
Subsidiaries pending or, to the best knowledge of the
Company, threatened before the National Labor Relations
Board or any similar state or foreign agency; (vii)
there is no grievance arising out of any collective
bargaining agreement or other grievance procedure;
(viii) no charges with respect to or relating to the
Company or any of its Subsidiaries are pending before
the Equal Employment Opportunity Commission or any other
agency responsible for the prevention of unlawful
employment practices; (ix) neither the Company nor any
of its Subsidiaries has received notice of the intent of
any federal, state, local or foreign agency responsible
for the enforcement of labor or employment laws to
conduct an investigation with respect to or relating to
the Company or any of its Subsidiaries and no such
investigation is in progress; (x) there are no
complaints, lawsuits or other proceedings pending or, to
the best knowledge of the Company, threatened in any
forum by or on behalf of any present or former employee
of the Company or any of its Subsidiaries alleging
breach of any express or implied contract of employment,
any law or regulation governing employment or the
termination thereof or other discriminatory, wrongful or
tortious conduct in connection with the employment
relationship; and (xi) to the best knowledge of the
Company, since the enactment of the Worker Adjustment
and Retraining Notification ("WARN") Act, there has not
been (i) a "plant closing" (as defined in the WARN Act)
affecting any site of employment or one or more
facilities or operating units within any site of
employment or facility of the Company or any of its
Subsidiaries, or (ii) a "mass layoff" (as defined in the
WARN Act) affecting any site of employment or facility
of the Company or any of its Subsidiaries; nor has the
Company or any of its Subsidiaries been affected by any
transaction or engaged in layoffs or employment
terminations sufficient in number to trigger application
of any similar state or local law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PURCHASER AND MERGER SUB
Purchaser and Merger Sub represent and warrant
to the Company as follows:
SECTION 4.1 Organization and Qualification.
Each of Purchaser and Merger Sub is a corporation duly
organized, validly existing and in good standing under
the laws of Delaware and is not required to be qualified
as a foreign corporation under the laws of any
jurisdiction.
SECTION 4.2 Authority Relative to this
Agreement. Each of Purchaser and Merger Sub has full
corporate power and authority to execute and deliver
this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this
Agreement by each of Purchaser and Merger Sub and the
consummation by each of Purchaser and Merger Sub of the
transactions contemplated hereby have been duly and
validly authorized by their respective Board of
Directors and sole stockholder of each of Purchaser and
Merger Sub and no other corporate proceedings on the
part of either Purchaser or Merger Sub are necessary to
authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been
duly and validly executed and delivered by each of
Purchaser and Merger Sub and, assuming this Agreement
constitutes a valid and binding obligation of the
Company, constitutes a valid and binding agreement of
each of Purchaser and Merger Sub, enforceable against
each of Purchaser and Merger Sub in accordance with its
terms.
SECTION 4.3 Capitalization of Merger Sub;
Interests in the Company. The authorized capital stock
of Merger Sub consists of the Merger Sub Common Stock.
As of the close of business on December 17, 1997, 10
shares of Merger Sub Common Stock were issued and
outstanding, all of which are entitled to vote, and no
shares of Merger Sub Common Stock were held in the
Merger Sub's treasury. All the outstanding shares of
the Merger Sub's capital stock are duly authorized,
validly issued, fully paid and non-assessable. As of the
date hereof, the Purchaser and Merger Sub do not
beneficially hold any Common Shares.
SECTION 4.4 No Violation. (a) Neither the
execution nor delivery of this Agreement by either
Purchaser or Merger Sub nor the consummation by either
Purchaser or Merger Sub of the transactions contemplated
hereby shall (i) constitute a breach or violation of any
provision of the Certificate of Incorporation or By-Laws
of either Purchaser or Merger Sub or (ii) constitute a
breach, violation or default (or any event which, with
notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or
accelerate the performance required by, or result in the
creation of any lien or encumbrance upon any of the
properties or assets of either Purchaser or Merger Sub
under, any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other Contract to
which either Purchaser or Merger Sub is a party or by
which it or any of its properties or assets are bound or
(iii) subject to the governmental filings and other
matters referred to in the following paragraph, any
judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to either Purchaser or Merger
Sub or its properties or assets, other than, in the case
of clauses (ii) and (iii), any such conflicts,
violations, defaults, rights or Lien that individually
or in the aggregate would not have a Material Adverse
Effect on Purchaser or Merger Sub.
(b) Other than in connection with, or in
compliance with, the provisions of the DGCL with respect
to the transactions contemplated hereby, the Exchange
Act, the Securities Act, the securities laws of the
various states and the HSR Act, no authorization,
consent or approval of, or filing with, any Governmental
Entity is necessary for the consummation by the Company
of the transactions contemplated by this Agreement other
than authorizations, consents and approvals the failure
to obtain, or filings the failure to make, which would
not, in the aggregate, have a Material Adverse Effect on
Purchaser or Merger Sub. The term "Material Adverse
Effect on Purchaser or Merger Sub", as used in this
Agreement, means any change in or effect on the
business, financial condition, results of operations or
prospects of Purchaser or Merger Sub that would be
materially adverse to Purchaser or Merger Sub,
respectively.
SECTION 4.5 Information. None of the
information to be supplied by either Purchaser or Merger
Sub in writing specifically for inclusion or
incorporation by reference in (i) the Proxy Statement or
(ii) the Other Filings will, at the respective times
filed with the SEC or other Governmental Entity and, in
addition, in the case of the Proxy Statement, at the
date it or any amendment or supplement is mailed to
stockholders, at the time of the Special Meeting and at
the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact
required to be stated therein or necessary in order to
make the statements made therein, in light of the
circumstances under which they were made, not
misleading.
SECTION 4.6 No Prior Business. Neither
Purchaser nor Merger Sub has engaged in any business or
activity of any kind or entered into any agreement or
arrangement with any Person or incurred, directly or
indirectly, any material liabilities or obligations,
other than in connection with the transactions
contemplated by this Agreement.
SECTION 4.7 No Distribution. Purchaser shall
acquire any Common Shares purchased pursuant to this
Agreement for its own account and not with a view to or
for sale in connection with any distribution thereof,
and Purchaser shall not sell or otherwise dispose of any
Common Shares, except in each case in compliance with
the Securities Act and the rules and regulations
thereunder.
SECTION 4.8 Broker. Neither the Purchaser
nor Merger Sub, or any of their affiliates, has employed
any broker or finder or incurred any liability for any
brokerage fees, commissions or finder's fees in
connection with the transactions contemplated by this
Agreement.
ARTICLE V
COVENANTS
SECTION 5.1 Conduct of Business of the
Company. Except as contemplated by this Agreement or as
expressly agreed to in writing by Purchaser, during the
period from the date of this Agreement to the Effective
Time, the Company will, and will cause each of its
Subsidiaries to, conduct its operations according to its
ordinary and usual course of business and consistent
with past practice and use its and their respective
reasonable best efforts to preserve intact their current
business organizations, keep available the services of
their current officers and employees and preserve their
relationships with customers, suppliers, licensors,
licensees, advertisers, distributors and others having
business dealings with them and to preserve goodwill.
Without limiting the generality of the foregoing, and
except as (x) otherwise expressly provided in or
contemplated by this Agreement, (y) required by law, or
(z) set forth on Section 5.1 of the Company Disclosure
Schedule, prior to the Effective Time, the Company will
not, and will cause its Subsidiaries not to, without the
consent of Purchaser:
(a) except with respect to annual bonuses
made in the ordinary course of business consistent with
past practice, adopt or amend in any material respect
any bonus, profit sharing, compensation, severance,
termination, stock option, stock appreciation right,
pension, retirement, employment or other employee
benefit agreement, trust, plan or other arrangement for
the benefit or welfare of any director, officer or
employee of the Company or any of its Subsidiaries or
increase in any manner the compensation or fringe
benefits of any director, officer or employee of the
Company or any of its Subsidiaries or pay any benefit
not required by any existing agreement or place any
assets in any trust for the benefit of any director,
officer or employee of the Company or any of its
Subsidiaries (in each case, except with respect to
employees and directors in the ordinary course of
business consistent with past practice);
(b) incur any indebtedness for borrowed money
or issue any debt securities or assume, guarantee or
endorse, or otherwise as an accommodation become
responsible for, the obligations of any Person, or make
any loans or advances, except for (A) indebtedness
incurred in the ordinary course of business and
consistent with past practice, (B) indebtedness of the
Company to a direct or indirect wholly owned Subsidiary
to the Company or another direct or indirect wholly
owned Subsidiary and (C) other indebtedness with a
maturity of not more than one year incurred in the
ordinary course of business consistent with past
practice;
(c) enter into any contract or agreement
material to the business, results of operations, or
financial condition of the Company and its Subsidiaries
taken as a whole other than in the ordinary course of
business, consistent with past practice;
(d) sell, lease, license, mortgage or
otherwise encumber or subject to any lien or otherwise
dispose of any of its properties or assets other than
immaterial properties or assets (or immaterial portions
of properties or assets), (i) except in the ordinary
course of business consistent with past practice or (ii)
as otherwise reasonably necessary to comply with the
terms of any (a) mortgage liens encumbering such
Property, (b) insurance requirement or (c) laws, rules
or regulations or any governmental authority;
(e) (i) declare, set aside or pay any
dividends on, or make any other distributions in respect
of, any of its capital stock, (ii) split, combine or
reclassify any of its capital stock or issue or
authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of
its capital stock or (iii) purchase, redeem or otherwise
acquire any shares of capital stock of the Company or
any of its Subsidiaries or any other securities thereof
or any rights, warrants or options to acquire any such
shares or other securities;
(f) authorize for issuance, issue, deliver,
sell or agree or commit to issue, sell or deliver
(whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase
or otherwise), pledge or otherwise encumber any shares
of its capital stock or the capital stock of any of its
Subsidiaries, any other voting securities or any
securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities
or convertible securities or any other securities or
equity equivalents (including without limitation stock
appreciation rights) (other than issuances upon exercise
of options or pursuant to Company Stock Options);
(g) amend its Amended and Restated
Certificate of Incorporation, By-Laws or equivalent
organizational documents or alter through merger,
liquidation, reorganization, restructuring or in any
other fashion the corporate structure or ownership of
the Company or of any material Subsidiary of the
Company;
(h) acquire or dispose of (including, without
limitation, by merger, consolidation, or acquisition or
disposition or stock or assets) any interest in any
corporation, partnership, other business organization or
any division thereof or any assets, other than the
acquisition or disposition of assets in the ordinary
course of business consistent with past practice and any
other acquisitions or dispositions for consideration
which is not, individually, in excess of $2,500,000, and
in the aggregate, in excess of $5,000,000;
(i) settle or compromise any stockholder
derivative suits arising out of the transactions
contemplated hereby or any other litigation (whether or
not commenced prior to the date of this Agreement) or
settle, pay or compromise any claims not required to be
paid, individually in an amount in excess of $50,000, or
in the aggregate in excess of $250,000, other than in
consultation and cooperation with Purchaser, and, with
respect to any such settlement, with the prior written
consent of Purchaser;
(j) take any action, other than reasonable
and usual actions in the ordinary course of business and
consistent with past practice, with respect to
accounting policies or procedures (including, without
limitation, procedures with respect to the payment of
accounts payable and collection of accounts receivable);
(k) make any tax election or settle or
compromise any material federal, state, local or foreign
income tax liability;
(l) take any action that would result in (i)
any of the representations or warranties of the Company
set forth in this Agreement that are qualified as to
materiality becoming untrue, (ii) any of such
representations or warranties that are not so qualified
becoming untrue in any material respect or (iii) any of
the conditions to the Merger set forth in Article VI not
being satisfied; and
(m) authorize or enter into any agreement to
do anything prohibited by Sections 5.1(a) through (m).
SECTION 5.2 Access to Information;
Confidentiality. (a) To the fullest extent possible,
consistent with applicable Law, the Company shall afford
to Purchaser and its officers, employees, accountants,
counsel, financial advisors and other representatives
("Representatives") reasonable access during normal
business hours during the period prior to Effective Time
to all the officers, employees, agents, properties,
books, contracts, commitments and records of the Company
and its Subsidiaries, and shall cooperate in furnishing,
and cause its officers, employees and agents to furnish,
promptly to Purchaser and its representatives all
information concerning the business, properties and
personnel of the Company and its Subsidiaries as
Purchaser may reasonable request.
(b) Until the Effective Time, Purchaser,
Merger Sub and the Company shall be bound by, and will
hold any information received pursuant to this Agreement
in confidence in accordance with the terms of, the
confidentiality agreement by and between the Company and
Mafco Consolidated Group, Inc., dated October 8, 1997
(the "Confidentiality Agreement").
(c) No investigation by either the Company or
Merger Sub shall affect the representations and
warranties of the other.
SECTION 5.3 Financing. Purchaser shall use
its reasonable best efforts to conclude any financing
necessary to consummate the transactions contemplated by
this Agreement on or before the Closing Date. The
Company shall use, and shall cause ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
Chairman of the Board and Chief Executive Officer, ▇▇▇▇
▇. ▇▇▇▇▇▇▇, President and Chief Operating Officer and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Executive Vice President, Chief
Financial Officer and Treasurer to use, their respective
reasonable best efforts (consistent with the Company's
obligations pursuant to Section 5.1 of this Agreement)
to assist the Purchaser in obtaining any financing
pursuant to this Section 5.3.
SECTION 5.4 Stock Purchase. (a) Immediately
prior to the consummation of the Merger, the Company
shall sell, transfer, assign and deliver the Designated
Number of Common Shares (as hereinafter defined) to the
Purchaser, and the Purchaser shall purchase the
Designated Number of Common Shares from the Company for
the Designated Per Share Purchase Price (as hereinafter
defined), payable by wire transfer of same day funds;
provided, that all conditions to the Merger contained in
this Agreement have been either satisfied or waived.
(b) For purposes hereof:
(i) "Designated Per Share Purchase Price"
shall mean the number obtained by dividing (x) the sum
of (A) the number of Cashed Shares multiplied by $27.00,
(B) the number Company Stock Options to be cashed out
pursuant to Section 2.4 of this Agreement multiplied by
$27.00, and (C) 100 times the number of redeemable
preferred shares to be exchanged for cash pursuant to
Section 7.3 of the Stockholders Agreement, multiplied by
$26.50, by (y) the sum of (A) the number of Cashed
Shares, (B) the number Company Stock Options to be
cashed out pursuant to Section 2.4 of this Agreement,
and (C) 100 times the number of redeemable preferred
shares to be exchanged for cash pursuant to Section 7.3
of the Stockholders Agreement; and
(ii) "Designated Number of Common Shares"
shall mean such number of Common Shares which, when
added to the number of Retained Shares and the number of
Common Shares to be retained by the Stockholder pursuant
to Section 7.3 of the Stockholders Agreement, results in
a number of Common Shares which, when multiplied by the
Designated Per Share Purchase Price, shall equal $215,000,000.
SECTION 5.5 Efforts.
(a) Upon the terms and subject to the
conditions of this Agreement, each of the parties hereto
agrees to use its reasonable best efforts to take, or
cause to be taken, all actions, and to do, or cause to
be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make
effective the transactions contemplated by this
Agreement as promptly as practicable including, but not
limited to, (i) the preparation and filing of all forms,
registrations and notices required to be filed to
consummate the transactions contemplated by this
Agreement, including, (x) the prompt preparation and
filing with the SEC of the Proxy Statement, as well as
any other registration statement that may be required in
connection with the financing of the transactions
contemplated by this Agreement, and (y) such actions as
may be required to have the Proxy Statement, and such
other registration statements, if any, declared
effective under the Securities Act and the Proxy
Statement cleared by the SEC, in each case, as promptly
as practicable, including by consulting with each other
as to and responding promptly to, any SEC comments with
respect thereto, and the taking of such actions as are
necessary to obtain any requisite approvals, consents,
orders, exemptions or waivers by any third party or
Governmental Entity, and (ii) causing the satisfaction
of all conditions to the Closing.
(b) Each party shall promptly consult with
the other with respect to, provide any necessary
information that is not subject to legal privilege with
respect to, and provide the other (or its counsel)
copies of, all filings made by such party with any
Governmental Entity or any other information supplied by
such party to a Governmental Entity in connection with
this Agreement and the transactions contemplated by this
Agreement. Each party hereto shall promptly inform the
other of any communication from any Governmental Entity
regarding any of the transactions contemplated by this
Agreement. If either party receives a request for
additional information or documentary material from any
such Governmental Entity with respect to the
transactions contemplated by this Agreement, then such
party will endeavor in good faith to make, or cause to
be made, as soon as reasonably practicable and after
consultation with the other party, an appropriate
response in compliance with such request.
SECTION 5.6 Public Announcements. The
Company, on the one hand, and Purchaser and Merger Sub,
on the other hand, shall consult promptly with each
other prior to issuing any press release or otherwise
making any public statement with respect to the Merger,
the Stock Purchase and the other transactions
contemplated hereby, shall provide to the other party
for review a copy of any such press release or
statement, and shall not issue any such press release or
make any such public statement prior to such
consultation and review, unless required by applicable
law or any listing agreement with a securities exchange.
SECTION 5.7 Indemnification; Directors' and
Officers' Insurance.
(a) From and after the Effective Time,
Purchaser shall, and shall cause the Surviving
Corporation to, indemnify, defend and hold harmless the
present and former officers, directors, employees and
agents of the Company and its Subsidiaries (the
"Indemnified Parties") from and against all losses,
claims, damages, expenses or liabilities arising out of
or related to actions or omissions or alleged actions or
omissions occurring at or prior to the Effective Time to
the same extent and on the same terms and conditions
(including with respect to advancement of expenses)
provided for in the Company's Amended and Restated
Certificate of Incorporation and By-Laws and agreements
in effect at the date hereof (to the extent consistent
with applicable law), which provisions will survive the
Merger and continue in full force and effect for six
years after the Effective Time. It is further
understood and agreed that the Company shall, to the
fullest extent permitted under the DGCL and regardless
of whether the Merger becomes effective, indemnify,
defend and hold harmless, and after the Effective Time,
the Surviving Corporation shall, to the fullest extent
permitted under the DGCL, indemnify, defend and hold
harmless, each Indemnified Party against any costs or
expenses (including reasonable attorneys' fees),
judgements, fines, losses, claims, damages, liabilities
and amounts paid in settlement in connection with any
claim, action, suit, proceeding or investigation, and in
the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the
Effective Time), (i) the Company or the Surviving
Corporation shall pay the reasonable fees and expenses
of counsel selected by the Indemnified Parties, which
counsel shall be reasonably satisfactory to the Company
or the Surviving Corporation, promptly as statements
therefor are received, and (ii) the Company and the
Surviving Corporation shall cooperate in the defense of
any such matter; provided, however, that neither the
Company nor the Surviving Corporation shall be liable
for any settlement effected without its written consent
(which consent shall not be unreasonably withheld); and
further, provided, that neither the Company nor the
Surviving Corporation shall be obliged pursuant to this
Section 5.7 to pay the fees and disbursements of more
than one counsel for all Indemnified Parties in any
single action except to the extent that, in the opinion
of counsel for the Indemnified Parties, two or more of
such Parties have conflicting interests in the outcome
of such action. Without limiting the foregoing,
Purchaser shall, and shall cause the Surviving
Corporation to, advance expenses, including reasonable
attorney's fees and expenses, as incurred by an
Indemnified Party with respect to the foregoing to the
fullest extent permitted under the DGCL, provided that
the Indemnified Party to whom expenses are advanced
provides the undertaking to repay such advances
contemplated by Section 145(e) of the DGCL.
(b) The Surviving Corporation shall cause to
be maintained in effect for not less than four years
from the Effective Time the current policies of the
directors' and officers' liability insurance maintained
by the Company; provided that the Surviving Corporation
may substitute therefor other policies of at least the
same coverage amounts and which contain terms and
conditions not less advantageous to the beneficiaries of
the current policies and provided that such substitution
shall not result in any gaps or lapses in coverage with
respect to matters occurring prior to the Effective
Time; and provided, further, that the Surviving
Corporation shall not be required to pay an annual
premium in excess of 200% of the last premium paid by
the Company prior to the date hereof and if the
Surviving Corporation is unable to obtain the insurance
required by this Section 5.7(b) for such maximum amount
then it shall obtain as much comparable insurance as
possible for an annual premium equal to such maximum
amount.
(c) This Section 5.7 shall survive the
consummation of the Merger, is intended to benefit the
Company, the Surviving Corporation and the Indemnified
Parties, and shall be binding on all successors and
assigns of Purchaser, and the Surviving Corporation.
SECTION 5.8 Notification of Certain Matters.
Purchaser and the Company shall promptly notify each
other of (i) the occurrence or non-occurrence of any
fact or event which would be reasonably likely (A) to
cause any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material
respect at any time from the date hereof to the
Effective Time or (B) to cause any covenant, condition
or agreement under this Agreement not to be complied
with or satisfied and (ii) any failure of the Company,
Purchaser or Merger Sub, as the case may be, to comply
with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder; provided,
however, that no such notification shall affect the
representations or warranties of either party or the
conditions to the obligations of either party hereunder.
Each of the Company, Purchaser and Merger Sub shall give
prompt notice to the other of any notice or other
communication from any third party alleging that the
consent of such third party is or may be required in
connection with the transactions contemplated by this
Agreement.
SECTION 5.9 No Solicitation.
(a) The Company and its Subsidiaries shall,
and the Company shall direct and use its reasonable best
efforts to cause the officers, directors, employees,
representatives, agents and affiliates of the Company
and its Subsidiaries to, immediately cease any
discussions or negotiations with any parties that may be
ongoing with respect to any Transaction Proposal (as
hereinafter defined). The Company shall not, nor shall
it permit any of its Subsidiaries to, nor shall it
authorize or permit any of its officers, directors, or
employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by
it or any of its Subsidiaries to, directly or
indirectly,
(i) solicit, initiate or encourage (including
by way of furnishing information or assistance) any
inquiries or the making of any proposal which
constitutes, or may be reasonably expected to lead to,
any Transaction Proposal or
(ii) enter into or participate in any
discussions or negotiations regarding any Transaction
Proposal;
provided, however, that at any time prior to the receipt
of the vote of the Company's stockholders approving this
Agreement and the transactions contemplated hereby (the
"Required Vote") the Company may, in response to a
Transaction Proposal which the Board of Directors
reasonably believes may constitute, or result in the
making of, a Superior Proposal (as hereinafter defined)
which was not solicited subsequent to the date hereof
(x) furnish information with respect to the Company to
any Person pursuant to a confidentiality agreement on
terms no less favorable to the Company than the
Confidentiality Agreement; and (y) enter into or
participate in discussions, investigations or
negotiations regarding such Transaction Proposal. The
Company shall promptly give written notice to Purchaser
of the names of the person or persons with respect to
which it takes any action pursuant to subclauses (x) and
(y) of the preceding sentence and a general description
of the actions taken.
(b) Except as set forth in this Section 5.9,
the Board of Directors of the Company shall not (i)
withdraw or modify, or propose publicly to withdraw or
modify, in a manner adverse to the Purchaser, the
approval or recommendation by such Board of Directors of
the Merger or this Agreement, (ii) approve or recommend,
or propose publicly to approve or recommend, any
Transaction Proposal or (iii) cause the Company to enter
into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement related
to any Transaction Proposal. Notwithstanding the
foregoing, if the Board of Directors of the Company
determines in good faith that it has received a Superior
Proposal (as defined below), the Board of Directors of
the Company may, prior to the receipt of the Required
Vote, withdraw or modify its approval or recommendation
of the Merger and this Agreement, approve or recommend a
Superior Proposal or terminate this Agreement, but in
each case, only at a time that is at least four business
days after Purchaser's receipt of written notice
advising Purchaser that the Board of Directors of the
Company has received a Transaction Proposal that may
constitute a Superior Proposal, specifying the material
terms and conditions of such Superior Proposal and the
names of the person or persons making such Superior
Proposal.
(c) Nothing contained in this Section 5.9
shall prohibit the Company from taking and disclosing to
its shareholders a position contemplated by Rules 14d-9
and 14e-2 promulgated under the Exchange Act or from
making any disclosure to the Company's shareholders if,
in the good faith judgement of the Board of Directors of
the Company, after consultation with outside counsel,
such disclosure is necessary in order to comply with its
fiduciary duties to the Company's shareholders under
applicable law or is otherwise required under applicable
law.
(d) (i) For purposes of this Agreement,
"Transaction Proposal" means any bona fide inquiry,
proposal or offer from any person relating to any direct
or indirect acquisition or purchase of more than 50% of
the aggregate assets of the Company and its
subsidiaries, taken as a whole, or more than 50% of the
voting power of the shares of Common Stock then
outstanding or any merger, consolidation, business
combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company, other than
the transactions contemplated by this Agreement.
(ii) For purposes of this Agreement, a
"Superior Proposal" means any proposal determined by the
Board of Directors of the Company in good faith, after
consultation with outside counsel, to be a bona fide
proposal and made by a third party to acquire, directly
or indirectly, for consideration consisting of cash,
property and/or securities, more than 50% of the voting
power of the shares of Common Stock then outstanding or
all or substantially all the assets of the Company and
otherwise on terms which the Board of Directors of the
Company determines in its good faith judgment, after
consultation with outside counsel and with a financial
advisor of nationally recognized reputation, to be more
favorable to the Company's shareholders than the Merger
(taking into account all factors relating to such
proposal deemed relevant by the Company Board,
including, without limitation, the financing of such
proposal and all other conditions to closing).
SECTION 5.10 Redeemable Preferred Stock. The
Company shall from the date of this Agreement and until
the Closing reserve 130,000 shares of Series A
Redeemable Preferred Stock of the Company, free and
clear of any lien or encumbrance thereon, for issuance
pursuant to Section 7.3 of the Stockholders Agreement.
SECTION 5.11 Affiliate Letters. Prior to the
Closing Date, the Company shall deliver to Purchaser and
Merger Sub a letter identifying all persons who are, at
the time this Agreement is submitted for approval to the
stockholders of the Company, "affiliates" of the Company
for purposes of Rule 145 under the Securities Act. The
Company shall use its reasonable best efforts to cause
each such person who makes or is deemed to have Retained
Common Shares to deliver to Purchaser on or prior to the
Closing Date a written agreement in a form reasonably
satisfactory to Purchaser and the Company.
SECTION 5.12 Reports. The Company shall
provide Purchaser with monthly financial statements,
prepared in accordance with past practice, as soon as
reasonably practicable following delivery of such
reports to the Chief Executive Officer of the Company.
SECTION 5.13 Stockholders Meeting.
(a) The Company, acting through the Company
Board, shall, in accordance with applicable law:
(i) duly call, give notice of, convene and
hold the Special Meeting as soon as practicable
following the execution of this Agreement;
(ii) prepare and file with the SEC a
preliminary proxy statement relating to this
Agreement, and use its best efforts (A) to obtain
and furnish the information required to be included
by the SEC in the Proxy Statement and, after
consultation with Purchaser, to respond promptly to
any comments made by the SEC with respect to the
preliminary proxy statement and cause the Proxy
Statement to be mailed to its stockholders and (B)
to obtain the necessary approvals of the Merger and
this Agreement by its stockholders; and
(iii) subject to Section 5.9, include in the
Proxy Statement the recommendation of the Company
Board that stockholders of the Company vote in
favor of the approval of this Agreement.
(b) The Company and Purchaser, shall promptly
correct any information provided by it for use in the
Proxy Statement if and to the extent that it shall have
become false or misleading, and the Company shall
further take all steps necessary to cause the Proxy
Statement as so corrected to be filed with the SEC and
to be disseminated to the holders of Common Shares, in
each case, as and to the extent required by applicable
federal securities laws.
SECTION 5.14 Employee Benefits. As of the
Effective Time, the Surviving Corporation shall honor
and satisfy all obligations and liabilities with respect
to the Plans. Notwithstanding the foregoing, the
Surviving Corporation shall not be required to continue
any particular Plan after the Effective Time, and any
Plan may be amended or terminated subject to, and in
accordance with, its terms and applicable law. For a
period of at least 18 months following the Effective
Time, the Surviving Corporation shall provide employee
benefit plans, programs and arrangements, either
directly or through a plan of an affiliate ("Purchaser
Plans") that, in the aggregate, provide benefits not
materially less favorable than the Plans as currently in
effect, provided that (i) each employee of the Company
shall receive full credit for years of service with the
Company or any of its subsidiaries prior to the Merger
for all purposes for which such service was recognized
under applicable Plans, including, but not limited to,
recognition of service for eligibility, vesting
(including acceleration thereof pursuant to the terms of
the applicable Plans) and, to the extent not duplicative
of benefits received under such Plans, the amount of
benefits, (ii) each employee of the Company shall
participate in the Purchaser Plans on terms no less
favorable than those applicable to similarly situated
employees in such Purchaser Plans, and (iii) any and all
pre-existing condition limitations (to the extent such
limitations did not apply to a pre-existing condition
under the Plans) and eligibility waiting periods under
any group health plans shall be waived with respect to
such participants and their eligible dependents.
SECTION 5.15 Other Actions. With respect to
each employee (the "Individuals") of the Company who is
a "disqualified individual" (within the meaning of
section 280G of the Code) the Company shall (i) pay to
each such individual, prior to January 1, 1998, the
amount determined by the Company to have been earned by
such individual in respect of the current fiscal year
of the Company under the Company's Executive Incentive
Compensation Plan, (ii) take all such reasonable actions
(including, but not limited to, accelerating the
exercisability of Company Stock Options held by the
Individuals) as shall be necessary to permit each
Individual to exercise, prior to January 1, 1998, a
sufficient number of Company Stock Options so as to
permit the condition set forth in Section 6.2(f) hereto
to be satisfied and (iii) use its commercially
reasonable best efforts to loan to each Individual, on
commercially reasonable terms, the amount (the
"Withholding Amount") required to be withheld by the
Company under federal, state and local tax laws in
respect of any exercise of a Company Stock Option after
the date hereof to the extent such exercise is intended
by the Individual to satisfy the condition set forth in
Section 6.2(f) hereof. To the extent that the Company
is unable to lend all or part of the Withholding Amount
to one or more of the Individuals, Purchaser shall, or
shall cause one of its affiliates to, lend to each
Individual an amount equal to the excess, if any, of the
Withholding Amount with respect to such Individual over
the amount loaned to such Individual by the Company
pursuant to the preceding sentence; provided, however,
that the Purchaser's obligations under this sentence
shall be conditioned upon (1) the receipt by the
Purchaser or such affiliate of a first priority
perfected security interest in all of the shares of
Common Shares acquired upon the exercise of such Company
Stock Options and (2) the making of arrangements
satisfactory to the Purchaser for the continuation of
such first priority perfected security interest in all
proceeds of such Common Shares.
SECTION 5.16 Listing of Common Stock. The
Company shall use its reasonable best efforts to cause
the Common Shares to be issued pursuant to the Stock
Purchase to be authorized for listing on the NYSE,
subject to official notice of issuance.
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 6.1 Conditions to the Obligations of
Both Parties. The respective obligations of Purchaser,
Merger Sub and the Company to consummate the Merger are
subject to the satisfaction, at or before the Effective
Time, of each of the following conditions:
(a) Stockholder Approval. The stockholders
of the Company shall have duly approved the transactions
contemplated by this Agreement (the "Stockholder
Approval").
(b) Form S-4. The Form S-4 of which the
Proxy Statement constitutes a part shall have become
effective under the Securities Act and shall not be the
subject of any stop order or proceedings seeking a stop
order, and any material "blue sky" and other state
securities laws applicable to the registration and
qualification of Common Shares shall have been complied
with.
(c) Solvency Letters. The Company and
Purchaser shall each have received a solvency letter, in
form and substance and from an independent evaluation
firm reasonably satisfactory to both parties, as to the
solvency of the Company and its Subsidiaries on a
consolidated basis after giving effect to the
transactions contemplated by this Agreement.
(d) Orders and Injunctions. No Governmental
Entity or court of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any
Law, rule, regulation, executive order or Order which is
then in effect and has the effect of restraining or
making the Merger or the Stock Purchase illegal or
otherwise prohibiting consummation of the Merger or the
Stock Purchase.
(e) HSR Act. Any waiting period (and any
extension thereof) under the HSR Act applicable to the
Merger and the Stock Purchase shall have expired or been
terminated.
(f) The Stock Purchase. Purchaser shall have
purchased and the Company shall have issued and sold the
Stock Purchase Shares pursuant to Section 5.4 of this
Agreement.
SECTION 6.2 Conditions to the Obligations of
Purchaser and Merger Sub. The obligations of Purchaser
and Merger Sub to effect the Merger are further subject
to the following conditions:
(a) Accuracy of Representations and
Warranties. The representations and warranties of the
Company contained herein (without giving effect to the
materiality, Material Adverse Effect or knowledge
qualifications contained therein) shall be true and
correct when made and shall be true and correct as of
the Closing Date as though made on and as of the Closing
Date (except to the extent that any such representation
and warranty had by its terms been made as of a specific
date, in which case such representation and warranty
shall have been true and correct as of such specific
date), except, in all instances, where the failure to be
so true and correct shall not result, individually or in
the aggregate, in a Material Adverse Effect; and
Purchaser shall have received a certificate signed on
behalf of the Company by the chief executive office and
the chief financial officer of the Company to such
effect.
(b) Performance of Obligations of the
Company. The Company shall have performed the
obligations required to be performed by it under this
Agreement at or prior to the Closing Date, except for
such failures to perform as have not had or would not,
individually or in the aggregate, have a Material
Adverse Effect on the Company or materially adversely
affect the ability of the Company to consummate the
transactions contemplated hereby.
(c) Release of Lien. The lien referred to in
Schedule 3.20(b) of the Company Disclosure Schedule
shall have been released.
(d) Material Adverse Effect. There shall not
have been a Material Adverse Effect on the Company.
(e) Exchange of Common Shares. Stockholder
shall have exchanged not less than 88% of the Common
Shares it owns, either of record or beneficially, for
redeemable preferred common stock of the Company in
accordance with Section 7.3 of the Stockholders
Agreement.
(f) Option Exercises. Each of ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ shall
have exercised, prior to January 1, 1998, a number of
Company Stock Options reasonably determined by the
Company (based upon the most recently available
information and after taking into account the actions
contemplated by Section 5.15 hereof) as the amount
necessary such that, after giving effect to such
exercise, no amount paid in respect of such Company
Stock Options shall be subject to the excise tax imposed
under section 4999 of the Code; it being understood that
the foregoing shall not constitute a representation by
the Company or any of Messrs. Scott, Farrand, or
Marcketta that no such excise tax will in fact be
imposed in respect of such payments. With respect to
Individuals other than Messrs. Scott, Farrand, and
Marcketta, the Company shall use reasonable efforts to
cause such Individuals to exercise Company Stock Options
as and to the extent described in the preceding
sentence, it being understood that no such Individual
shall be obligated to so exercise such Company Stock
Options.
SECTION 6.3 Conditions to the Obligations of
the Company. The obligation of the Company to effect
the Merger is further subject to the following
conditions:
(a) Accuracy of Representations and
Warranties. The representations and warranties of
Purchaser and Merger Sub contained herein (without
giving effect to the materiality, Material Adverse
Effect or knowledge qualifications contained therein)
shall be true and correct when made and shall be true
and correct as of the Closing Date as though made on and
as of the Closing Date (except to the extent that any
such representation and warranty had by its terms been
made as of a specific date, in which case such
representation and warranty shall have been true and
correct as of such specific date), except, in all
instances, where the failure to be so true and correct
shall not result, individually or in the aggregate, in a
Material Adverse Effect on Purchaser and Merger Sub; and
the Company shall have received a certificate signed on
behalf of Purchaser by the chief executive officer and
the chief financial officer of Purchaser to such effect.
(b) Performance of Obligations of Purchaser
and Merger Sub. Purchaser and Merger Sub shall each
have performed their respective obligations required to
be performed by it under this Agreement at or prior to
the Closing Date, except for such failures to perform as
have not had or would not, individually or in the
aggregate, have a Material Adverse Effect on Purchaser
and Merger Sub or materially adversely affect the
ability of Purchaser and Merger Sub to consummate the
transactions contemplated hereby.
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
SECTION 7.1 Termination. This Agreement may
be terminated and the Merger and the Stock Purchase
contemplated hereby may be abandoned at any time prior
to the Effective Time, notwithstanding approval thereof
by the stockholders of the Company:
(a) by the mutual written consent of
Purchaser and the Company, by action of their respective
Boards of Directors;
(b) by Purchaser or the Company if the Merger
and the Stock Purchase shall not have been consummated
on or before the later (i) of April 30, 1998 and (ii) 45
days after the SEC has declared effective the Proxy
Statement (but in no event later than June 30, 1998);
provided, however, that the right to terminate this
Agreement pursuant to this Section 7.1(b) shall not be
available to any party whose failure to perform any of
its obligations under this Agreement results in the
failure of the Merger or the Stock Purchase to be
consummated by such time;
(c) by Purchaser or the Company if any court
of competent jurisdiction or other Governmental Entity
has issued an order, decree or ruling or taken any other
action restraining, enjoining or otherwise prohibiting
the Merger and such order, decree, ruling or other
action shall have become final and nonappealable;
(d) by the Company, prior to the receipt of
the Required Vote, in accordance with Section 5.9;
provided, that the Purchaser receives at least the four
business days' prior written notice specified in Section
5.9(b) and, during such four business day period, the
Company shall, and shall cause its financial and legal
advisors to, consider any adjustment in the terms and
conditions of this Agreement that the Purchaser may
propose;
(e) by Purchaser, if the Company Board shall
have (i) failed to recommend Stockholder Approval, (ii)
withdrawn or modified in a manner adverse to Purchaser
or Merger Sub its approval or recommendation of this
Agreement, the Merger or the Stock Purchase, (iii) shall
have approved or recommended a Transaction Proposal, or
(iv) shall have resolved to effect any of the foregoing; or
(f) by Purchaser or the Company, if
Stockholder Approval shall not have been obtained by
reason of the failure to obtain the required vote upon a
vote held at a duly held meeting of stockholders or at
any adjournment thereof.
SECTION 7.2 Effect of Termination. In the
event of the termination of this Agreement pursuant to
Section 7.1, this Agreement shall forthwith become void
and have no effect, without any liability on the part of
any party or its directors, officers or stockholders,
except for the provisions of this Section 7.2 and
Section 7.3, which shall survive any such termination.
Nothing contained in this Section 7.2 shall relieve any
party from liability for any breach of this Agreement.
SECTION 7.3 Fees and Expenses.
(a) The parties to this Agreement shall,
except as otherwise specifically provided herein, bear
their respective expenses incurred in connection with
the preparation, execution and performance of this
Agreement and the transactions contemplated hereby,
whether or not the Merger or the Stock Purchase is
consummated, including, without limitation, all fees and
expenses of their respective agents.
(b) The prevailing party in any legal action
undertaken to enforce this Agreement or any provision
hereof shall be entitled to recover from the other party
the costs and expenses (including attorneys' and expert
witness fees) incurred in connection with such action.
SECTION 7.4 Amendment. This Agreement may be
amended by the Company, Purchaser and Merger Sub at any
time before or after any approval of this Agreement by
the stockholders of the Company but, after any such
approval, no amendment shall be made which decreases the
Merger Consideration or which adversely affects the
rights of the Company's stockholders hereunder without
the approval of such stockholders. This Agreement may
not be amended except by an instrument in writing signed
on behalf of all the parties.
SECTION 7.5 Extension; Waiver. At any time
prior to the Effective Time, Merger Sub, Purchaser and
the Company may (i) extend the time for the performance
of any of the obligations or other acts of the other,
(ii) waive any inaccuracies in the representations and
warranties contained herein of the other or in any
document, certificate or writing delivered pursuant
hereto by the other or (iii) waive compliance by the
other with any of the agreements or conditions. Any
agreement on the part of either party to any such
extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Non-Survival of Representations
and Warranties. The representations and warranties made
in this Agreement shall not survive beyond the Effective
Time. Notwithstanding the foregoing, the agreements set
forth in Section 2.5, Section 5.6 and Section 5.7 shall
survive the Effective Time indefinitely (except to the
extent a shorter period of time is explicitly specified
therein).
SECTION 8.2 Entire Agreement; Assignment.
(a) This Agreement (including the documents
and the instruments referred to herein) and the
Confidentiality Agreement constitute the entire
agreement and supersede all prior agreements and
understandings, both written and oral, among the parties
with respect to the subject matter hereof and thereof.
(b) Neither this Agreement nor any of the
rights, interests or obligations hereunder may be
assigned by either of the parties hereto (whether by
operation of law or otherwise) without the prior written
consent of the other party (except that Purchaser and
Merger Sub may assign its rights, interest and
obligations to any of its affiliates without the consent
of the Company provided that no such assignment shall
relieve Purchaser or Merger Sub of any liability for any
breach by such assignee). Subject to the preceding
sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and
their respective successors and assigns.
SECTION 8.3 Validity. The invalidity or
unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any
other provision of this Agreement, each of which shall
remain in full force and effect.
SECTION 8.4 Notices. All notices, requests,
claims, demands and other communications hereunder shall
be in writing and shall be deemed to have been duly
given when delivered in person, by overnight courier or
telecopier to the respective parties as follows:
If to Purchaser or Merger Sub:
PX Holding Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇
Attention: General Counsel
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company:
Panavision Inc.
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
and
Panavision Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the person to whom notice is
given may have previously furnished to the other in
writing in the manner set forth above; provided, that
notice of any change of address shall be effective only
upon receipt thereof.
SECTION 8.5 Governing Law. This Agreement
shall be governed by and construed in accordance with
the laws of the State of Delaware, regardless of the
laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
SECTION 8.6 Descriptive Headings. The
descriptive headings herein are inserted for convenience
of reference only and are not intended to be part of or
to affect the meaning or interpretation of this
Agreement.
SECTION 8.7 Counterparts. This Agreement may
be executed in two or more counterparts, each of which
shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION 8.8 Parties in Interest. Except with
respect to Sections 2.4 and 5.7 (which are intended to
be for the benefit of the persons identified therein,
and may be enforced by such persons), this Agreement
shall be binding upon and inure solely to the benefit of
each party hereto, and nothing in this Agreement,
express or implied, is intended to confer upon any other
person any rights or remedies of any nature whatsoever
under or by reason of this Agreement.
SECTION 8.9 Certain Definitions. As used in
this Agreement:
(a) the term "affiliate", as applied to any
person, shall mean any other person directly or
indirectly controlling, controlled by, or under common
control with, that person. For the purposes of the
definition, "control" (including, with correlative
meanings, the terms "controlling," "controlled by" and
"under common control with"), as applied to any person,
means the possession, directly or indirectly, of the
power to direct or cause the direction of the management
and policies of that person, whether through the
ownership of voting securities, by contract or
otherwise;
(b) the term "Person" or "person" shall
include individuals, corporations, partnerships, trusts,
other entities and groups (which term shall include a
"group" as such term is defined in Section 13(d)(3) of
the Exchange Act); and
(c) the term "Subsidiary" or "Subsidiaries",
with respect to any person, means any corporation,
partnership, joint venture or other legal entity of
which such person (either alone or through or together
with any other subsidiary), owns, directly or
indirectly, stock or other equity interests the holders
of which are generally entitled to more than 50% of the
vote for the election of the board of directors or other
governing body of such corporation or other legal
entity.
SECTION 8.10 Specific Performance.
Irreparable damage would occur in the event that any of
the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise
breached; accordingly, the parties shall be entitled to
an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or
any state having jurisdiction, this being in addition to
any other remedy to which they are entitled at law or in
equity.
IN WITNESS WHEREOF, each of the parties has
caused this Agreement to be executed on its behalf by
its respective officer hereunto duly authorized, all as
of the day and year first above written.
PANAVISION INC.
By: /s/ ▇. ▇. ▇▇▇▇▇
----------------------------------
Name: ▇. ▇.▇▇▇▇▇
Title: Chairman and CEO
PX MERGER CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
___________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice Chairman
PX HOLDING CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
___________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice Chairman
GUARANTEE
Mafco Holdings Inc. hereby unconditionally and
irrevocably agrees to guarantee due and punctual performance
of all obligations of PX Merger Corporation and PX Holding
Corporation hereunder.
MAFCO HOLDINGS INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
___________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice Chairman
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
SECTION 1.1 The Merger . . . . . . . . . . . . . . . . 2
SECTION 1.2 Effective Time . . . . . . . . . . . . . . 2
SECTION 1.3 Effects of the Merger . . . . . . . . . . 2
SECTION 1.4 Certificate of Incorporation and
By-Laws of the Surviving Corporation . . . 3
SECTION 1.5 Directors and Officers . . . . . . . . . . 3
SECTION 1.6 Closing . . . . . . . . . . . . . . . . . 4
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCKOF THE
CONSTITUENT CORPORATIONS
SECTION 2.1 Effect on Capital Stock . . . . . . . . . 4
SECTION 2.2 Proration . . . . . . . . . . . . . . . . 5
SECTION 2.3 Election Procedures . . . . . . . . . . . 6
SECTION 2.4 Options; Stock Plans . . . . . . . . . . . 8
SECTION 2.5 Exchange and Retention of Common Shares . 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.1 Organization and Qualification;
Subsidiaries . . . . . . . . . . . . . . . 10
SECTION 3.2 Capitalization; Subsidiaries . . . . . . . 11
SECTION 3.3 The Purchased Shares . . . . . . . . . . . 12
SECTION 3.4 Authority Relative to this Agreement . . . 13
SECTION 3.5 No Violation; Required Filings and
Consents . . . . . . . . . . . . . . . . . 13
SECTION 3.6 SEC Reports and Financial Statements . . . 14
SECTION 3.7 No Undisclosed Liabilities . . . . . . . . 16
SECTION 3.8 Litigation . . . . . . . . . . . . . . . . 16
SECTION 3.9 Properties and Assets;
Real Property and Leases . . . . . . . . . 17
SECTION 3.10 Insurance . . . . . . . . . . . . . . . . 18
SECTION 3.11 Information . . . . . . . . . . . . . . . 19
SECTION 3.12 Employee Benefit Plans . . . . . . . . . . 19
SECTION 3.13 Taxes . . . . . . . . . . . . . . . . . . 21
SECTION 3.14 Environmental Matters . . . . . . . . . . 25
SECTION 3.15 Absence of Certain Changes . . . . . . . . 29
SECTION 3.16 Broker . . . . . . . . . . . . . . . . . . 30
SECTION 3.17 Opinion of Investment Banker . . . . . . . 30
SECTION 3.18 Board Recommendation . . . . . . . . . . . 31
SECTION 3.19 Required Company Vote . . . . . . . . . . 31
SECTION 3.20 Intellectual Property . . . . . . . . . . 31
SECTION 3.21 Related Party Transactions . . . . . . . . 34
SECTION 3.22 Labor Relations and Employment . . . . . . 34
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PURCHASER AND MERGER SUB
SECTION 4.1 Organization and Qualification . . . . . . 36
SECTION 4.2 Authority Relative to this Agreement . . . 36
SECTION 4.3 Capitalization of Merger Sub . . . . . . . 36
SECTION 4.4 No Violation . . . . . . . . . . . . . . . 37
SECTION 4.5 Information . . . . . . . . . . . . . . . 38
SECTION 4.6 No Prior Business . . . . . . . . . . . . 38
SECTION 4.7 No Distribution . . . . . . . . . . . . . 38
ARTICLE V
COVENANTS
SECTION 5.1 Conduct of Business of the Company . . . . 39
SECTION 5.2 Access to Information; Confidentiality . . 42
SECTION 5.3 Financing . . . . . . . . . . . . . . . . 42
SECTION 5.4 Stock Purchase . . . . . . . . . . . . . . 43
SECTION 5.5 Efforts . . . . . . . . . . . . . . . . . 44
SECTION 5.6 Public Announcements . . . . . . . . . . . 45
SECTION 5.7 Indemnification; Directors' and
Officers' Insurance . . . . . . . . . . . 45
SECTION 5.8 Notification of Certain Matters . . . . . 47
SECTION 5.9 No Solicitation . . . . . . . . . . . . . 47
SECTION 5.10 Redeemable Preferred Stock . . . . . . . . 50
SECTION 5.11 Affiliate Letters . . . . . . . . . . . . 50
SECTION 5.12 Reports . . . . . . . . . . . . . . . . . 50
SECTION 5.13 Stockholders Meeting . . . . . . . . . . . 50
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 6.1 Conditions to the Obligations of
Both Parties . . . . . . . . . . . . . . . 53
SECTION 6.2 Conditions to the Obligations of
Purchaser and Merger Sub . . . . . . . . . 54
SECTION 6.3 Conditions to the Obligations of the
Company . . . . . . . . . . . . . . . . . 55
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
SECTION 7.1 Termination . . . . . . . . . . . . . . . 56
SECTION 7.2 Effect of Termination . . . . . . . . . . 57
SECTION 7.3 Fees and Expenses . . . . . . . . . . . . 57
SECTION 7.4 Amendment . . . . . . . . . . . . . . . . 58
SECTION 7.5 Extension; Waiver . . . . . . . . . . . . 58
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Non-Survival of Representations and
Warranties . . . . . . . . . . . . . . . . 58
SECTION 8.2 Entire Agreement; Assignment . . . . . . . 59
SECTION 8.3 Validity . . . . . . . . . . . . . . . . . 59
SECTION 8.4 Notices . . . . . . . . . . . . . . . . . 59
SECTION 8.5 Governing Law . . . . . . . . . . . . . . 60
SECTION 8.6 Descriptive Headings . . . . . . . . . . . 60
SECTION 8.7 Counterparts . . . . . . . . . . . . . . . 61
SECTION 8.8 Parties in Interest . . . . . . . . . . . 61
SECTION 8.9 Certain Definitions . . . . . . . . . . . 61
SECTION 8.10 Specific Performance . . . . . . . . . . . 62
INDEX OF DEFINED TERMS
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . 61
Agreement . . . . . . . . . . . . . . . . . . . . . . . . 1
Amended and Restated Certificate of Incorporation . . . . 3
Business . . . . . . . . . . . . . . . . . . . . . . . . 27
Cash Consideration . . . . . . . . . . . . . . . . . . . 4
Cash Election Number . . . . . . . . . . . . . . . . . . 5
Cash Election Shares . . . . . . . . . . . . . . . . . . 5
Cashed Shares . . . . . . . . . . . . . . . . . . . . . . 8
Certificates . . . . . . . . . . . . . . . . . . . . . . 8
Closing . . . . . . . . . . . . . . . . . . . . . . . . . 4
Closing Date . . . . . . . . . . . . . . . . . . . . . . 4
Code . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Common Shares . . . . . . . . . . . . . . . . . . . . . . 1
Company . . . . . . . . . . . . . . . . . . . . . . . . . 1
Company Board . . . . . . . . . . . . . . . . . . . . . . 1
Company Financial Statements . . . . . . . . . . . . . . 15
Company SEC Reports . . . . . . . . . . . . . . . . . . . 14
Company Stock Option . . . . . . . . . . . . . . . . . . 8
Company Stockholder Approval . . . . . . . . . . . . . . 1
Confidentiality Agreement . . . . . . . . . . . . . . . . 42
Contract . . . . . . . . . . . . . . . . . . . . . . . . 14
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Effective Time . . . . . . . . . . . . . . . . . . . . . 2
Election Date . . . . . . . . . . . . . . . . . . . . . . 6
Environmental Laws . . . . . . . . . . . . . . . . . . . 27
Environmental Liabilities and Costs . . . . . . . . . . . 28
Environmental Permits . . . . . . . . . . . . . . . . . . 28
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . 20
Exchange Act . . . . . . . . . . . . . . . . . . . . . . 14
Exchange Agent . . . . . . . . . . . . . . . . . . . . . 6
Exchange Fund . . . . . . . . . . . . . . . . . . . . . . 8
Form of Election . . . . . . . . . . . . . . . . . . . . 6
Governmental Entity . . . . . . . . . . . . . . . . . . . 14
Hazardous Substances . . . . . . . . . . . . . . . . . . 28
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . 14
Indemnified Parties . . . . . . . . . . . . . . . . . . . 45
Intellectual Property . . . . . . . . . . . . . . . . . . 33
Laws . . . . . . . . . . . . . . . . . . . . . . . . . . 29
License Agreements . . . . . . . . . . . . . . . . . . . 34
Liens . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Losses . . . . . . . . . . . . . . . . . . . . . . . . . 28
Material Adverse Effect on Purchaser or Merger Sub . . . 37
Material Adverse Effect on the Company . . . . . . . . . 10
Merger . . . . . . . . . . . . . . . . . . . . . . . . . 1
Merger Consideration . . . . . . . . . . . . . . . . . . 5
Merger Sub . . . . . . . . . . . . . . . . . . . . . . . 1
Merger Sub Common Stock . . . . . . . . . . . . . . . . . 36
NYSE . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Other Filings . . . . . . . . . . . . . . . . . . . . . . 19
Patents . . . . . . . . . . . . . . . . . . . . . . . . . 33
Permitted Liens . . . . . . . . . . . . . . . . . . . . . 18
Person . . . . . . . . . . . . . . . . . . . . . . . . . 61
Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Preferred Stock . . . . . . . . . . . . . . . . . . . . . 11
Proration Factor . . . . . . . . . . . . . . . . . . . . 5
Proxy Statement . . . . . . . . . . . . . . . . . . . . . 19
Purchaser . . . . . . . . . . . . . . . . . . . . . . . . 1
Release . . . . . . . . . . . . . . . . . . . . . . . . . 29
Remedial Action . . . . . . . . . . . . . . . . . . . . . 29
Representatives . . . . . . . . . . . . . . . . . . . . . 42
Retained Common Shares . . . . . . . . . . . . . . . . . 5
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Securities Act . . . . . . . . . . . . . . . . . . . . . 14
Software . . . . . . . . . . . . . . . . . . . . . . . . 33
Special Meeting . . . . . . . . . . . . . . . . . . . . . 19
Stock Election Shares . . . . . . . . . . . . . . . . . . 5
Stock Purchase . . . . . . . . . . . . . . . . . . . . . 1
Stockholder . . . . . . . . . . . . . . . . . . . . . . . 5
Stockholder Approval . . . . . . . . . . . . . . . . . . 53
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 61
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . 61
Surviving Corporation . . . . . . . . . . . . . . . . . . 2
Tax Return . . . . . . . . . . . . . . . . . . . . . . . 25
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Technology . . . . . . . . . . . . . . . . . . . . . . . 33
Trademarks . . . . . . . . . . . . . . . . . . . . . . . 33
TSCA . . . . . . . . . . . . . . . . . . . . . . . . . . 28
U.S. GAAP . . . . . . . . . . . . . . . . . . . . . . . . 15
Voting and Stockholders Agreement . . . . . . . . . . . . 13
Voting Debt . . . . . . . . . . . . . . . . . . . . . . . 11
WARN . . . . . . . . . . . . . . . . . . . . . . . . . . 35
COMPANY DISCLOSURE SCHEDULES
TO THE
AGREEMENT OF RECAPITALIZATION
AND MERGER
BY AND AMONG
PX HOLDING CORPORATION,
PX MERGER CORPORATION AND
PANAVISION INC.
DATED AS OF DECEMBER 18, 1997
INDEX
SECTION 3.2(b) CAPITALIZATION AND SUBSIDIARIES
SECTION 3.5(a) REQUIRED FILINGS AND CONSENTS
SECTION 3.7 LIABILITIES
SECTION 3.8 LITIGATION
SECTION 3.9(b) REAL PROPERTY
SECTION 3.9(c) LIENS
SECTION 3.9(d) AMENDMENTS TO LEASES OR NOTICE OF DEFAULT ON
REAL PROPERTY
SECTION 3.10 INSURANCE POLICIES
SECTION 3.12(a) EMPLOYMENT BENEFIT PLANS
SECTION 3.13(a) TAXES
SECTION 3.13(b) TAXES
SECTION 3.13(e) TAXES: FILING EXTENSIONS
SECTION 3.13(f) TAXES: OUTSTANDING WAIVERS AND CONSENTS
SECTION 3.13(g) TAXES: AUDITS
SECTION 3.13(l) TAXES: ENCUMBRANCES FOR TAXES ON ASSETS OR
PROPERTIES
SECTION 3.13(m) TAXES
SECTION 3.13(n) TAXES
SECTION 3.13(o) TAXES
SECTION 3.13(p) TAXES: MATERIAL TAX ELECTIONS
SECTION 3.13(r) TAXES: FEDERAL AND STATE CARRYFORWARD
SCHEDULE FOR PANAVISION INC. AND SUBSIDIARIES
SECTION 3.13(s) TAXES: LOSSES
SECTION 3.13(t) TAXES
SECTION 3.14 ENVIRONMENTAL MATTERS
SECTION 3.15 ABSENCE OF CERTAIN CHANGES
SECTION 3.20 INTELLECTUAL PROPERTY
SECTION 3.21 RELATED PARTY TRANSACTIONS
SECTION 3.22(a) LABOR RELATIONS AND EMPLOYMENT
SECTION 5.1(a)
SECTION 5.1(b)
SECTION 5.1(c)
SECTION 5.1(d)
SECTION 5.1(h)
SECTION 3.2(B)
CAPITALIZATION AND SUBSIDIARIES
1. The management team of Panavision Canada Corporation holds options to
acquire 15% of the shares of Panavision Canada Holdings Inc., which in turn
owns 100% of Panavision Canada Corporation.
SECTION 3.5(A)
NO VIOLATION; REQUIRED FILINGS AND CONSENTS
1. Credit Agreement with Chase Manhattan Bank dated as of June 5, 1997.
2. Certain Performance Accelerated Options under the Company Stock Option
Plan.
3. ▇▇▇▇▇▇▇ ▇▇▇▇▇'▇ Employment Agreement.
SECTION 3.7
LIABILITIES
1. The agreement between ▇▇▇▇▇▇ EL Can and the Company dated December 10,
1997 to supply the Company with material for the manufacturing of lenses.
(See attached pages for details of purchase order.)
2. The Company intends to close its Atlanta office during the first quarter
of 1998. The Company estimates that probable shut down liability will not
exceed $1 million.
3. The Company intends to enter into an agreement with Chlorelle
Construction Limited for leasehold improvements for operations in the
United Kingdom.
4. For acceleration of debt, see #1 on Section 3.5.
SECTION 3.8
LITIGATION
1. DOMESTIC
A. Panavision International, L.P. v. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and Network
Solutions, Inc. ("NSI") May 7, 1996.
Action for unfair competition and related claims from
defendants' unauthorized misuse of PILP's trademark name on the Internet.
PILP's complaint alleged violation of the ▇▇▇▇▇▇ Act and relevant
California statutes. On November 1, 1996, the Federal Court in the Central
District of California granted Panavision's Motion for Summary Judgment on
the claims for Federal and State trademark dilution. In addition, the Court
granted Toeppen's Motion for Summary Judgment on the Company's claims for
intentional interference. Both parties are currently appealing.
2. FOREIGN
A. Grip House Limited
Grip House Limited was party to litigation involving an
alleged breach of contract or negligence in connection with the supply of
certain equipment. On January 31, 1997, judgment was entered in favor of
Grip House Limited. The Company is currently attempting to recover a
proportion of its costs which approximate (pound)160,000. The majority of
costs associated with this litigation were paid directly by Visual Action
Holding PLC, the holding company; Grip House contributed (pound)20,000
towards the approximate (pound)160,000 in costs. Any recovery of these
costs inure to the benefit of Visual Action Holdings PLC.
▇. ▇▇▇▇▇▇▇▇▇ Alga Cinema S.A.-- 4 Disputes
The first two disputes arise from (i) the dismissal of Mr.
Tinot, dated November 27, 1992 and (ii) the contractual termination of
employment of Mr. Cocq, dated December 31, 1994. These former employees
were both aged over 50 years old when their contracts were terminated. The
French Unemployment Fund filed a claim against ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Cinema S.A.
before the French civil court for the payment of a specific compensation
called "contribution Delalande."
The French civil court ordered the payment by ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Cinema S.A. to the French Unemployment Fund of an amount, in principal, of
113,079.60 French francs together with penalties. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Cinema
S.A. paid a portion of such amount to the French Unemployment Fund on
September 23, 1996 and requested the cancellation of payment of the
penalties. The French Unemployment Fund refused this request, and a
remaining amount of 122,201.22 French francs is still due and owing from
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Cinema S.A. to the French Unemployment Fund.
The Company's counsel has not received additional
information regarding this matter since January 20, 1997; the Company
continues to hold 117,849 French francs in reserve.
The third dispute arises from the dismissal by ▇▇▇▇▇▇▇▇▇
▇▇▇▇ Cinema S.A. of ▇▇. ▇▇▇▇▇ on December 26, 1996. ▇▇. ▇▇▇▇▇ had 27 years
seniority and ▇▇. ▇▇▇▇▇ claimed that his dismissal was abusive. No claim
has yet been filed before a French court, but should this occur, ▇▇▇▇▇▇▇▇▇
▇▇▇▇ Cinema S.A. could be ordered to pay ▇▇. ▇▇▇▇▇ damages in an amount
equal to a maximum of 12 months of his previous salary. The Company is
presently negotiating a proposed settlement with ▇▇. ▇▇▇▇▇ whereby the
Company would pay ▇▇. ▇▇▇▇▇ an amount equal to no less than three months of
his previous salary. Company counsel has not received additional
information regarding this matter since June 1997; the Company continues to
keep 91,494 French francs in reserve.
The fourth dispute relates to a claim filed by ▇▇▇. ▇▇▇▇▇
against ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Cinema S.A. before the French labor court on April
28, 1997. ▇▇▇. ▇▇▇▇▇ contests her dismissal and requests the payment by
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Cinema S.A. of a total amount of 71,054.60 French francs. A
second meeting is scheduled for January 1998, and 30,000 French francs are
currently held in reserve by the Company.
3. See Section 3.20(h) of the Company Disclosure Schedules which consists
of "Status Report on Foreign Trademark Enforcement and Policy for
Panavision."
SECTION 3.9(B)
REAL PROPERTY AND LEASES
SEE ATTACHED.
SCHEDULE OF LEASED AND OWNED REAL PROPERTY
EXPIRATION
PROPERTY ADDRESS LANDLORD DATE DESCRIPTION/USE
US LEASED-----------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ Crow Phoenix TCDFW Depository September 30, 1999 Camera rental
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇. offices, storage, and
Suite 100 maintenance
Irving, Texas
▇▇▇▇▇▇ ▇▇▇▇▇▇ M.K. Management Company, Inc. November 30, 1998 Camera rental
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ offices, storage, and
Atlanta, Georgia maintenance
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ Inc. April 30, 1999 Camera rental
▇▇▇▇▇▇▇ Place offices, storage, and
Chicago, Illinois maintenance
PANAVISION WOODLAND HILLS Trizec Properties Inc. May 30, 2012 Corporate offices,
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ storage, workshop and
cafeteria
PANAVISION HOLLYWOOD ▇▇▇▇▇▇▇▇ Place Partners December 31, 2006 Offices, storage,
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ maintenance, workshop
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PANAVISION FLORIDA/N.C. Universal City Florida January 31, 1998 Rental offices,
2000 Universal Studios Partners storage and
Plaza Suite 900 maintenance
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
PANAVISION FLORIDA/N.C. Carolco Studios Inc. Month to month Rental offices,
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ storage and
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ maintenance
PANAVISION WOODLAND HILLS VP Self Storage Month to month Storage Unit
VP Self Storage
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
CORPORATE NEW YORK ▇▇▇▇▇ Interest Limited June 30, 2002 CEO's ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ FILTERS U.S. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ & ▇▇▇ ▇. May 14, 1997 Office and warehouse
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇▇, Trustees under the
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇ ▇▇▇▇▇▇ Family
trust
▇▇▇ FILTERS U.S. Major Verde L.L.C. January 31, 1999 Office and warehouse
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SUBLEASED BY BORROWER: n/a January 31, 1998
DATAPRODUCTS, INC.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
CANADA LEASED-------------------------------------------------------------------------------------------------------
PANAVISION CANADA Kingsway Development Ltd. February 29, 2004 Rental offices,
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ maintenance, workshop
Canada
PANAVISION CANADA ▇▇▇▇▇▇ ▇▇▇▇▇▇ Business Park August 30, 2002 Rental offices,
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ Inc. warehouse,
▇▇▇ ▇▇▇▇▇, Ontario maintenance, workshop
Canada
UK OWNED------------------------------------------------------------------------------------------------------------
PANAVISION EUROPE n/a n/a Rental offices,
Binatone Plaza warehouse,
Wycombe Road, Wembley maintenance, workshop
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
PANAVISION EUROPE n/a n/a Rental offices,
Wycombe Road, Wembley warehouse,
Middlesex, HAO 10N maintenance, workshop
United Kingdom
▇▇▇ LIGHTING n/a n/a Rental office
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ LEASED-----------------------------------------------------------------------------------------------------------
CINE EUROPE Stargas Nominees Limited December 31, 2007 16 mm camera rental
▇ ▇▇▇▇▇▇ ▇▇▇▇ offices, maintenance,
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
GRIP HOUSE ▇▇▇▇▇▇ Estates Limited December 24, 2010 Grip House offices,
Units 30, 31, 32 storage, maintenance,
The Metropolitan Centre canteen, and warehouse
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
GRIP HOUSE ▇▇▇▇▇▇ Estates Limited December 24, 2010 Grip House studio
Units 28 and 29 stages
The ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ GROUP PLC Eastern Central Properties December 24, 2012 Sammy's offices,
▇▇▇▇ ▇▇ Limited maintenance, storage
The Metropolitan Centre and workshop
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ GROUP PLC Eastern Central Properties September 28, 2013 Offices and Grip
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ stage
The Metropolitan Centre
Greenford Industrial Estate
Greenford, Middlesex
United Kingdom
PANAVISION EUROPE LIMITED Calthorpe Hosiery Company March 24, 2009 Camera Bellows
Units 3, 4, 5 Limited offices, workshops
St. Pauls Road and storage
Balsall Heath
Birmingham
United Kingdom
PANAVISION EUROPE LIMITED Glaxo Wellcome UK Limited March 24, 2006 New PV UK
Units A/B headquarters (under
The Metropolitan Centre refurbishment)
Greenford, Middlesex Offices, storage,
United Kingdom maintenance, canteen
& workshop
PANAVISION EUROPE LIMITED Glaxo Wellcome UK Limited March 24, 2006 New PV UK
Unit C headquarters (under
The Metropolitan Centre refurbishment)
Greenford, Middlesex Offices, storage,
United Kingdom maintenance, canteen
& workshop
PANAVISION EUROPE LIMITED Glaxo Wellcome UK Limited March 24, 2006 New PV UK
Unit D headquarters (under
The Metropolitan Centre refurbishment)
Greenford, Middlesex Offices, storage,
United Kingdom maintenance, canteen&
workshop
▇▇▇ LIGHTING The City Council of Bristol February 25, 2004 Lighting rental
(Sub-underlease) offices, storage and
▇▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ maintenance
Avonmouth, Bristol
United Kingdom
▇▇▇ FILTERS The Southern Electricity Board June 1, 2018 Electricity substation
(Underlease of Electricity
substation)
Walworth Industrial Estate
Andover, Hants
▇▇▇ LIGHTING LIMITED Shepperton Studios Limited March 31, 1999 Lighting rental
Building 330a offices, storage and
Shepperton Studio Centre maintenance
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ LIGHTING LIMITED Sunset Developments Limited October 11, 2010 Lighting rental
Units 6 and 14 offices, storage, and
Sunset Business Centre maintenance
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
PANAVISION EUROPE Shepperton Studios LTD March 30, 1999 Offices, camera and
Part Building 37 & Room 910 in the maintenance
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
PANAVISION EUROPE Thames Water Utilities LTD August 30, 1999 Water pipe track
Pipetrack Land at ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
PANAVISION EUROPE Sunset Developments LTD January 31, 1998 Office grip storage
▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and maintenance
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
PANAVISION EUROPE Keyfield Property Company LTD March 17, 1997 Office
Cinema House
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
PANAVISION EUROPE Council of the Valley July 5, 2004 Warehouse
▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
PANAVISION EUROPE Test Valley Borough Council July 6, 2108 ▇▇▇ Filters HQ
▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ offices and
Andover, Hampshire manufacturing facility
United Kingdom
PANAVISION EUROPE Chattanooga Shipping June 5, 1998 Residential
Flat 14 & Thermafusent Corporation
▇▇ ▇▇. ▇▇▇▇▇' ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇
PANAVISION EUROPE LTD Sing ▇▇▇▇ ▇▇▇▇ & July 20, 1998 Residential
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇ LEASED------------------------------------------------------------------------------------------------------
PANAVISION EUROPE Admore Studios September 12, 1996 Offices, camera
IRELAND rental and maintenance
Ardmore Studios
▇▇▇▇▇▇▇ Road, Bray
Country Wicklow, Ireland
FRANCE LEASED-------------------------------------------------------------------------------------------------------
PANAVISION EUROPE ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ July 14, 2006 PV France offices,
▇▇-▇▇ ▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇ consumable sales and
Paris, France warehouse
PANAVISION ALGA La Societe DHZF December 31, 2003 PV Alga camera rental
35 rue Pleyel offices, maintenance,
Saint-Denis workshop
France
PANAVISION ALGA Soeximex March 31, 1998 Parking spaces
▇▇-▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇▇
▇▇▇▇▇▇
CINECAM Transpalux March 1, 2003 Camera rental,
▇▇▇▇ ▇▇▇ ▇▇ ▇'▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
AUSTRALIA OWNED-----------------------------------------------------------------------------------------------------
PANAVISION AUSTRALIA Factory
▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ LEASED----------------------------------------------------------------------------------------------------
PANAVISION ASIA PACIFIC Karovel Nominees Pty Ltd December 31, 1998 Warehouse, retail and
GROUP office
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇
MELBOURNE Decmar Pty Ltd February 28, 1999 Warehouse, retail and
▇▇▇-▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ office
South Millmourner, Victoria 3205
Australia
QUEENSLAND ▇▇▇▇▇ Banner Pty Ltd June 30, 1999 Warehouse, retail and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇
NEW ZEALAND LEASED-------------------------------------------------------------------------------------------------
WELLINGTON Kesbury Investments Ltd May 15, 2005 Rental office & warehouse
The Production Village
26 ▇▇▇▇▇▇ Street
Wellington, New Zealand
AUCKLAND Kesbury Investments Ltd May 15, 2005 Retail office & warehouse
The Production Village
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇
MALAYSIA LEASED-----------------------------------------------------------------------------------------------------
MALAYSIA Lim teck Hee and Lai ▇▇▇ ▇▇▇ November 14, 1998 Rental office & warehouse
37 Jin Gangsa SD 5/3D
Bandar ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Malaysia
INDONESIA LEASED-----------------------------------------------------------------------------------------------------
INDONESIA Mrs. Muskia Siregar April 14, 1998 Rental office & warehouse
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇/▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
SECTION 3.9(C)
LIENS
SEE ATTACHED PAGES..
SECTION 3.9(D)
AMENDMENTS TO LEASES OR NOTICES OF DEFAULT ON REAL PROPERTY
NONE.
SECTION 3.10
INSURANCE POLICIES
SEE ATTACHED PAGES.
SECTION 3.12(a)
EMPLOYEE BENEFIT PLANS
1. Employment Agreement between ▇▇▇▇▇▇▇ ▇▇▇▇▇ and the Company.
2. Employment Agreement between ▇▇▇▇ ▇▇▇▇▇▇▇ and the Company.
3. Employment Agreement between ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and the Company.
4. Employment Agreement between Don Balfor and ▇▇▇▇▇▇▇▇▇ Film Service
Australia Pty Ltd.
5. Service Agreement between ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ and Film Facilities
Limited.
6. Employment Agreement between ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ Film
Service Australia Pty Ltd.
7. Service Agreement between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ Film
Service Australia Pty Ltd.
8. Employment Agreement between ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ Film
Service Australia Pty Ltd.
9. Employment Agreement between ▇▇▇▇ ▇▇▇▇▇▇▇ and Panavision (Canada)
Corporation.
10. Employment Agreement between ▇▇▇▇ ▇▇▇▇▇ and Panavision (Canada)
Corporation.
11. Employment Agreement between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and Panavision Remote
Systems Inc. (formerly known as FLVP, Inc.)
12. Employment Agreement between ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and Panavision
Remote Systems Inc.
13. Employment Agreement between ▇. ▇▇▇▇▇▇ Berhault and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Cinema.
14. Employment Agreement between Will Paice and the Company.
15. Employment Agreement between ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
16. Conditions of Employment of ▇▇▇▇▇▇▇▇▇ Group Plc for ▇▇▇▇▇ ▇. ▇▇▇▇▇.
17. Conditions of Employment of ▇▇▇▇▇▇▇▇▇ Group Plc for ▇▇▇▇▇▇ ▇▇▇▇▇▇.
18. Conditions of Employment of ▇▇▇▇▇▇▇▇▇ Group Plc for ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
19. Conditions of Employment of ▇▇▇▇▇▇▇▇▇ Group Plc for ▇▇▇▇▇▇▇ ▇▇▇▇▇.
20. Conditions of Employment of ▇▇▇▇▇▇▇▇▇ Group Plc for ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇.
21. Conditions of Employment of ▇▇▇▇▇▇▇▇▇ Group Plc for ▇▇▇▇▇ Measure.
22. Conditions of Employment of ▇▇▇▇▇▇▇▇▇ Group Plc for ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
23. Statement of Main Terms and Conditions of Employment between ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ Film Services London Limited.
24. Statement of Main Terms and Conditions of Employment between ▇▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ Film Services London Limited.
25. Statement of Main Terms and Conditions of Employment between ▇▇▇▇
▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ Film Service London Limited.
26. Statement of Main Terms and Conditions of Employment between Guy
▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ Film Service London Limited.
27. Service Agreement undated and unsigned between Cine-Europe Limited
and ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
28. Service Agreement dated June 30, 1987 between ▇▇▇▇▇▇▇▇▇ Group Plc
and ▇ ▇ ▇▇▇▇▇▇.
29. Terms and Conditions of Employment between Grip House Limited and
▇▇▇▇ ▇▇▇▇▇▇▇ Furssedonn dated September 24, 1987.
30. Employment Contract between ▇▇▇▇▇▇▇▇▇ Film Service Pts. Ltd and
▇▇▇▇ ▇▇▇▇▇▇.
31. Employment Contract between ▇▇▇▇▇▇▇▇▇ Film Service Pts. Ltd and
▇▇▇▇▇ ▇▇▇▇▇▇.
32. Employment Contract between ▇▇▇▇▇▇▇▇▇ Film Service Pts. Ltd and
Ghazali Abu.
33. Service Agreement between Nigel ▇▇▇▇▇▇ ▇▇▇▇▇▇ and Panavision
Europe Limited.
34. Terms and Conditions of Employment between ▇▇▇▇ ▇▇▇▇▇▇▇ Furssedonn
and ▇▇▇▇▇▇▇▇▇ Group PLC.
35. Service Agreement between ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and Panavision
Europe Limited.
36. Service Agreement between ▇▇▇▇▇ ▇▇▇▇▇▇ and Panavision Europe
Limited.
37. Service Agreement between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and Panavision
Europe Limited.
38. Service Agreement between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇ Lighting
Limited.
39. Service Agreement between ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇ Lighting
Limited.
40. Employment Agreement between ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇ Lighting
Limited.
41. Employment Agreement between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇ Lighting
Limited.
42. Employment Agreement between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇ Lighting
Limited.
43. Employment Agreement between ▇▇▇▇ ▇▇▇▇▇ and Panavision UK.
44. Employment Agreement between ▇▇▇▇ ▇▇▇▇▇▇▇▇ and Panavision UK.
SECTION 3.13(A)
TAXES
NONE.
SECTION 3.13(B)
NONE.
SECTION 3.13(E)
TAXES: FILING EXTENSIONS
1. ▇▇▇▇▇▇▇▇▇ (Australia) requested an extension from August 1997 to
December 1997.
2. Panavision Europe has been granted an extension until January 1, 1998.
3. ▇▇▇ Lighting has been granted an extension until January 1, 1998.
SECTION 3.13(F)
TAXES: OUTSTANDING WAIVERS AND CONSENTS
NONE.
SECTION 3.13(G)
TAXES: AUDITS
1. There is currently pending against Panavision International, L.P. a
federal audit for the years ending December 31, 1994, December 31, 1995
and December 31, 1996.
2. There is currently pending against Panavision International, L.P. New
York City audits for the years ending December 31, 1994 and December
31, 1995.
3. Inland Revenue has an outstanding query pertaining to a 1995 interest
payment made on an intercompany loan between Panavision Europe and
PILP.
SECTION 3.13(L)
TAXES: ENCUMBRANCES FOR TAXES ON ASSETS OR PROPERTIES
NONE.
SECTION 3.13(M)
TAXES
1. ▇▇▇▇▇▇▇▇▇ Group UK Limited
2. ▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc. Acquisition
3. Panavision Remote Systems Inc.
SECTION 3.13(N)
1. Pending Closing Agreement for Panavision International L.P.
SECTION 3.13(O)
NONE.
SECTION 3.13(P)
TAXES: MATERIAL TAX ELECTIONS
The following elections have been made by the Company:
1. Keepco I Inc.--Consent to be included in Consolidated Tax
Return.
2. Keepco II Inc.--Consent to be included in Consolidated Tax Return.
3. Keepco I Inc.--Ratable Allocation Of Income.
4. Keepco II Inc.--Ratable Allocation of Income.
5. Panavision Inc. & Subsidiaries--Allocation of Tax Liability.
6. Cine Holdings Limited--Check-the-Box Election.
7. Cine-Europe Limited--Check-the-Box Election.
8. ▇▇▇▇▇▇▇▇▇ Film Service London Limited--Check-the-Box-
Election.
9. Grip House Limited--Check-the-Box-Election.
10. Cinevision Limited--Check-the-Box-Election.
11. Film Optics Limited--Check-the-Box-Election.
12. ▇▇▇▇▇▇▇▇▇ Group Pty Limited--Check-the-Box-Election.
13. ▇▇▇▇▇▇▇▇▇ Film Service (Australia) Pty
Limited--Check-the-Box-Election.
14. ▇▇▇▇ ▇▇▇▇▇ Group Pty Limited--Check-the-Box-Election.
15. ▇▇▇▇▇▇▇▇▇ Cases (Australia) Pty Limited--Check-the-Box-
Election.
16. Cinecam SARL--Check-the-Box-Election.
17. ▇▇▇▇▇▇▇▇▇ Film Service PTE Limited--Check-the-Box-Election.
18. ▇▇▇▇▇▇▇▇▇ Group Limited--Check-the-Box-Election (yet to be made.)
19. Film Facilities Ltd. --Check-the-Box-Election (yet to be
made.)
20. ▇▇▇▇▇▇▇▇▇ Film Service (Australia) Pty Limited--ss. 338 Election.
21. ▇▇▇▇ ▇▇▇▇▇ Group Pty Limited--ss. 338 Election.
22. ▇▇▇▇▇▇▇▇▇ Cases (Australia) Pty Limited--ss. 338 Election.
23. ▇▇▇▇▇▇▇▇▇ Film Service PTE Limited--ss. 338 Election.
24. ▇▇▇▇▇▇▇▇▇ Group Pty Limited--ss. 338 Election.
25. Cinecam SARL--ss. 338 Election.
26. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Cinema SA--ss. 338 Election.
27. Cinevision Limited--ss. 338 Election.
28. Film Optics Limited--ss. 338 Election.
29. Cine Holdings Limited--ss. 338 Election.
30. Cine-Europe Limited--ss. 338 Election.
31. ▇▇▇▇▇▇▇▇▇ Film Service London Limited--ss. 338 Election.
32. Grip House Limited--ss. 338 Election.
33. ▇▇▇▇▇▇▇▇▇ Group Limited--ss. 338 Election.
34. Film Facilities Ltd--ss. 338 Election (yet to be made.)
35. Panavision Europe--ss. 247 ICTA 1988 Group Income Election.
36. ▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc. --ss. 338 Election (yet to be made.)
SECTION 3.13(R)
TAXES: FEDERAL AND STATE CARRYFORWARD SCHEDULE
FOR PANAVISION INC. AND SUBSIDIARIES
FEDERAL CALIFORNIA EXPIRES
NOL at 12/31/96 (SRLY) $7,490,536 None 12/31/96-12/31/07
R&D Credit at 12/31/96 $281,083 $8,307 12/31/05- 12/31/20
Foreign Tax Credit at $1,402,052 None 12/31/97-12/31/01
12/31/96
Alternative Minimum $6,617,047 $1,212,384 Indefinite
Tax Credit at 12/31/96
Charitable None None N/A
Contributions at
12/31/96
PANAVISION CANADA Federal NOL at 12/31/96: CDN$7,578,742
Expiration: 1999-2001
▇▇▇▇▇▇▇▇▇ GROUP: Capital Loss Carryforward at 12/31/96:(pound)2,105,539
Expiration: Indefinite
CINE HOLDINGS ACT Carryforward at 12/31/96:(pound)14,807
Expiration: Indefinite.
SECTION 3.13(S)
TAXES: LOSSES
NONE.
SECTION 3.13(T)
NONE.
SECTION 3.14
ENVIRONMENTAL MATTERS
1. ▇▇▇ Filters
As required by the Environmental Protection Act (1990 United
Kingdom), ▇▇▇ Filters is required to reduce the emission of
Volatile Organic Compounds (VOCs) into the atmosphere to comply
with new stringent UK emission standards. These emission standards
apply to the film coating and coating manufacturing (mixing)
processes. The Company has selected the control technology and
expects to achieve compliance with all applicable emission
standards within the regulatory deadlines.
2. Trizec Release
Panavision is leasing its facility at ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ from Trizec Warner, Inc. Prior to the initiation
of the lease term, several environmental studies were conducted at
the property which indicated that elevated levels of VOCs and
chlorinated solvents were present in groundwater under the
property. The studies concluded that the contamination was likely
caused by off-site sources but that there was possibly an on-site
source. Panavision is fully indemnified in the lease for the cost
of any and all remediation of this contamination. The Landlord also
executed a separate Agreement of Guarantee which unconditionally
and irrevocably guarantees the environmental indemnity obligations.
SECTION 3.15
ABSENCE OF CERTAIN CHANGES
1. See Aaton Disposal referred to in Section 5.1(d) to the Company
Disclosure Schedules.
2. Disposal of United Kingdom Buildings.
3. Borrowing to effectuate the loans described in Section 5.1(a) to the
Company Disclosure Schedules.
SECTION 3.20
INTELLECTUAL PROPERTY
SEE ATTACHED PAGES.
SECTION 3.20(B)
INTELLECTUAL PROPERTY
The lien on Intellectual Property granted to Citicorp North
America in connection with the June 1, 1991 Credit Agreement between
Citicorp North America and Panavision International, L.P.
SECTION 3.20(C)
INTELLECTUAL PROPERTY
SECTION 3.20(D)
INTELLECTUAL PROPERTY
Listed are all presently known domestic trademark
proceedings which have occurred in the past three years and which all, save
one in Canada, are presently resolved:
1) Trademark Settlement Agreement dated March, 1977 between
Matsushita and Panavision. This Agreement was amended by the attached
Agreement, dated July 1, 1980.
Matsushita has filed a number of foreign applications for
service marks under the Panasonic name, including coverage for amusement
parks and motion picture production facilities. As they have come to our
attention, we have protested and filed oppositions where necessary.
2) Agreement settling a dispute between Panavision
International and a company called Paravion, regarding the name Paravion
for camera mounts. Panavision has now withdrawn the Opposition and Paravion
has withdrawn its application.
3) Consent Decree in the lawsuit Panavision International LP
v. Panavision Electronics in the Southern District of New York, secured in
1994. Also attached is a draft of a letter reflecting the settlement
agreement between the parties following Panavision's filing for a contempt
citation.
4) Brief on appeal in the matter between Panavision
International and Matsushita, over the registration of the word Panavideo
in Canada.
5) Panavision International v. Toeppon is reported at 945
F.Supp. 1296 (DC Cal. 1996) regarding PANAVISION and PANAFLEX marks.
SECTION 3.20(H)
INTELLECTUAL PROPERTY
See also Section 3.20(c).
SECTION 3.20(K)(I)
INTELLECTUAL PROPERTY
SECTION 3.20(K)(II)
INTELLECTUAL PROPERTY
SECTION 3.20(K)(III)
INTELLECTUAL PROPERTY
SECTION 3.20(K)(IV)
INTELLECTUAL PROPERTY
There exists no list of unpatented or unpatentable methods, devices,
technology, trade secrets, proprietary information and know-how.
SECTION 3.20(K)(V) RE LICENSE AGREEMENTS
INTELLECTUAL PROPERTY
1. Agreement dated November 1, 1994, as amended on June 16, 1995,
between Lockheed Missiles and Space Company Inc. ("LMSC") and
Panavision International, L.P.--concerning LMSC vs. U.S. Patents
4,958,919; 5,020,889 and 5,033,831, and corresponding foreign
patents, which relate to liquid lens technology. This License is
not transferable without the prior written consent of LMSC.
2. Agreement dated March 7, 1995, between Mantis Wildlife Films PTY
Limited; Panavision, a division of Panavision International, L.P.
and ▇▇▇ ▇▇▇▇▇▇▇ -- a joint development and revenue agreement under
certain U.S. and foreign patents of which ▇▇▇▇▇▇▇ is the named
inventor and property rights therein are owned by Mantis; which
subject matter relates to certain "Cine Lens" and "Still Lens"
systems. This Agreement is expressly nontransferable without the
consent of all three parties.
3. Agreement dated June 1, 1995, between Panavision International,
L.P. and Lightstorm Technologies, Inc. -- a joint development and
revenue sharing agreement on a patent owned by Lightstorm
concerning video viewfinder technology. This Agreement is freely
assignable in conjunction with the merger, acquisition,
reorganization or transfer of substantially all of the assets of
Panavision; otherwise, requires written consent of Lightstorm.
4. Trademark Consent Agreement dated September 1, 1974 between
Panavision, Incorporated and GAF Corporation.
SECTION 3.21
RELATED PARTY TRANSACTIONS
1. Indemnification Agreement between Panavision International, L.P. and
Colortran Directors Dated May, 1996.
2. Transactions between the Company and Warburg Pincus Capital Company.
There are no material contracts, agreements, arrangements or
understandings between the Company and Warburg Pincus Capital
Company.
3. Intercompany Transactions.
o Panavision International L.P. has a loan receivable due from
Pany Rental, Inc. (dba Panavision New York).
o The Company has a note due from an officer as well as
general loans to employees that are not considered to be
material to the Company.
o With the consummation of this transaction, there will be
loans between the Company and certain officers and
directors.
SECTION 3.22(A)
LABOR RELATIONS AND EMPLOYMENT
NONE.
SECTION 5.1(A)
1. Accelerated Vesting of Certain Options for officers and key employees.
2. Accelerated Payment of Bonuses for 1997 Executive Incentive Compensation
Plan (EICP).
3. Loans to employees to facilitate payment of withholding taxes due
relative to the exercise of options.
SECTION 5.1(B)
1. Borrowing under the Chase Credit Agreement dated June 5, 1997.
SECTION 5.1(C)
1. The agreement between ▇▇▇▇▇▇ EL Can and the Company dated December 10,
1997 to supply the Company with material for the manufacturing of lenses.
[Section 3.7]
2. The agreement with Chlorelle Construction Limited for leasehold
improvements for operations in the United Kingdom. [Section 3.7]
SECTION 5.1(D)
1. Panavision intends to accept a dividend distribution from Aaton, a
French Camera Manufacturer in which the Company has acquired an interest in
either December 1997 or January 1998. The dividend distribution will be
approximately $900,000. In addition, Panavision will sell its interest in
Aaton for approximately $375,000 in either December 1997 or January 1998.
SECTION 5.1(H)
1 See Aaton disposal referred to in Section 5.1(d) to the Company's
Disclosure Schedules.
2. See disposal of United Kingdom buildings referred to in Section 3.15 to
the Company's Disclosure Schedules.