DATED 18 May 1997
VISUAL ACTION HOLDINGS PLC
- and -
PANAVISION EUROPE LIMITED
- and -
PANAVISION INC
AGREEMENT
for the sale and purchase of the
share capital of ▇▇▇▇▇▇▇▇▇ Group Limited
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Telephone ▇▇▇▇ ▇▇▇ ▇▇▇▇ Fax ▇▇▇▇ ▇▇▇ ▇▇▇▇
DATED: 18 May 1997
PARTIES:
1. "Vendor": VISUAL ACTION HOLDINGS PLC (registered no. 3054629) whose
registered office is at ▇▇▇▇ ▇▇, ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, The ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇.
2. "Purchaser": PANAVISION EUROPE LIMITED (registered no. 2532311) whose
registered office is at ▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇.
3. "Panavision": PANAVISION, INC (a corporation incorporated under the
laws of the State of Delaware, United States of America) whose
principal office is at ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇.
OPERATIVE PROVISIONS
1 Definitions
1.1 In this agreement, including the Schedules, the following words and
expressions have the meanings stated, unless they are inconsistent
with the context:-
"Accounts Date"
31 December 1996 (being the date to which the Last Accounts were
prepared).
"Agreed Form"
a form agreed between the parties, a copy of which has been
initialled for the purpose of identification by their respective
solicitors.
"Business Day"
1
any day (excluding Saturdays and Sundays) on which clearing banks in
the City of London are open for business.
"CA"
Companies ▇▇▇ ▇▇▇▇.
"Certificates"
means the certificates of title in respect of the Certificated
Properties prepared by the Vendor's Solicitors and addressed to the
Vendor and the Purchaser.
"Certificated Properties"
the Properties identified by an asterisk in part 1 of Schedule 4 as
being those in respect of which Certificates will be provided by the
Vendor's Solicitors at Completion.
"CHL"
means Cine Holdings Limited.
"CHL VAT Group"
means the group of companies of which CHL is the representative
member for the purposes of VAT under VATA s43, such group being
registered under number 512632087.
"Companies"
all or, as the context requires, any of ▇▇▇▇▇▇▇▇▇ Group, VDI and
Visual Action (NZ) and "Company" shall be construed accordingly.
"Companies Acts"
CA, the former Companies Acts (within the meaning of CA s735(1)) and
the Companies ▇▇▇ ▇▇▇▇.
2
"Completion"
completion of the purchase of the Shares in accordance with
clause 4.
"Condition"
the condition set out in clause 5.
"Consideration"
the sum of (pound)37.5 million referred to in clause 3.1, as it may
be adjusted in accordance with this agreement.
"CVL"
means Cine Video Limited.
"Disclosure Letter"
the disclosure letter, of today's date, from the Vendor to the
Purchaser.
"Employee Letters"
the letters to certain key executives of the Group Companies in
Agreed Form to be delivered to those executives following Completion.
"Encumbrance"
means mortgage, charge, pledge, lien (other than any lien arising in
the ordinary course of business), or corresponding security interest
in the case of jurisdictions outside the United Kingdom, or option or
right of pre-emption or any other right or entitlement in favour of
any person other than a Group Company.
"Finally Determined"
3
bears the meaning in the Tax Deed.
"Financial Statements"
the combined balance sheet of ▇▇▇▇▇▇▇▇▇ Group and its Subsidiary
Undertakings and of VDI and Visual Action (NZ) prepared and adjusted
in accordance with clause 9.2.
"FRS"
a financial reporting standard issued or adopted by The Accounting
Standards Board Limited.
"Group"
the Companies and their respective Subsidiary Undertakings.
"Group Company"
each Company and each of its Subsidiary Undertakings as at
Completion, details of which are set out in Schedule 1.
"ICTA"
means Income and Corporation Taxes ▇▇▇ ▇▇▇▇.
"Intellectual Property Rights"
has the meaning set out in paragraph 13 of Schedule 2.
"Inter-Company Debt"
all indebtedness owed by any Group Company to the Vendor or any
member of the Remaining Group at Completion as identified (but not
finally quantified) in the Statement of Debt Transactions in the
Agreed Form.
"Last Accounts"
4
the audited balance sheet of each Company and its respective
Subsidiary Undertakings as at the Accounts Date, the audited profit
and loss account for the year ended on the Accounts Date of each
Company and its respective Subsidiary Undertakings and the audited
cash flow statement of each Company and its respective Subsidiary
Undertakings for the year ended on the Accounts Date, together with
the directors' report and the notes thereon.
"Net Assets"
an amount equal to the aggregate of the net assets of ▇▇▇▇▇▇▇▇▇ Group
and the equivalent amounts for VDI and Visual Action (NZ), as shown
in the Financial Statements.
"NZ Share Sale Agreement"
the agreement of today's date between the Vendor and Panavision
providing for the sale and purchase of the entire issued share
capital of Visual Action (NZ).
"Overseas Banks"
National Australia Bank, Bank of New Zealand, the Bank of California,
Societe Generale, Credit Commercial de France, Banque Transatlantique
and CCI/La Poste.
"Panavision Debt"
all indebtedness owing at Completion from Group Companies to the
Purchaser, Panavision or members of the Panavision group in respect
of cameras, grips or ancillary equipment whether arising under agency
agreements or otherwise and whether due for payment or not.
"Parent Undertaking"
a parent undertaking as defined in section 258 Companies ▇▇▇ ▇▇▇▇.
"prescribed accounting period"
5
means a prescribed accounting period for the purposes of VAT.
"Properties"
the freehold and leasehold property described in Schedule 4.
"Purchaser's Accountants"
Ernst & Young of Becket House, ▇▇.▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇
▇▇▇.
"Purchaser's Solicitors"
Rakisons, ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇.
"Remaining Group"
the Vendor and its Subsidiary Undertakings from time to time other
than the Group Companies.
"▇▇▇▇▇▇▇▇▇ Group"
▇▇▇▇▇▇▇▇▇ Group Limited, details of which is set out in Schedule 1
Part 1.
"▇▇▇▇▇▇▇▇▇ Ordinary Shares"
the 1000 issued ordinary shares of US $1 each in the capital of
▇▇▇▇▇▇▇▇▇ Group.
"▇▇▇▇▇▇▇▇▇ Deferred Shares"
the 22,350,694 issued deferred shares of 20p each in the capital of
▇▇▇▇▇▇▇▇▇ Group.
"SFS"
▇▇▇▇▇▇▇▇▇ Film Service Pte Limited, details of which are set out in
Schedule 1, Part 2.
"Shares"
the ▇▇▇▇▇▇▇▇▇ Ordinary Shares and the ▇▇▇▇▇▇▇▇▇ Deferred Shares.
6
"Stock Exchange"
London Stock Exchange Limited or, as the case may be, New York Stock
Exchange.
"Subsidiary Undertaking"
a subsidiary undertaking as defined in section 258 Companies
▇▇▇ ▇▇▇▇.
"Tax" and "Taxation"
have the meaning given in the Tax Deed.
"Tax Deed"
means the tax deed in the form set out in Schedule 5 between the
Vendor, the Purchaser and Panavision.
"Tax Warranties"
the warranties in paragraph 14.1.6 and paragraph 15 of Schedule 2.
"UK Group Company"
means a Group Company incorporated in the United Kingdom.
"Uncertificated Properties"
the Properties specified in parts 2 and 3 of Schedule 4.
"US Share Sale Agreement"
the agreement of today's date between Visual Action Holdings Inc.,
and Panavision providing for the sale and purchase of the entire
issued share capital of VDI.
"VATA"
means Value Added Tax ▇▇▇ ▇▇▇▇.
7
"VDI"
▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc, a company incorporated in the State of Michigan,
United States of America.
"Vendor's Accountants"
Coopers & ▇▇▇▇▇▇▇ of ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇.
"Visual Action (NZ)"
Visual Action Holdings (N.Z.) Limited and, where the context
requires, its Subsidiary Undertaking.
"Vendor's Group"
the Vendor and its Subsidiary Undertakings.
"Vendor's Solicitors"
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇.
"Vendor VAT Group"
means the group of companies of which the Vendor is the
representative member for the purposes of VAT under VATA s43, such
group being registered under number 227338169.
"Warranties"
the warranties of the Vendor set out in clause 7.3 and Schedule 2,
and also the representations and warranties of Visual Action Holdings
Inc., referred to in Section 4 of the US Share Sale Agreement and the
warranties of the Vendor referred to in clause 5 of the NZ Share Sale
Agreement.
8
1.2 Words denoting the singular include the plural and vice versa; words
denoting one gender include all genders; words denoting persons
include corporations and vice versa.
1.3 Unless otherwise stated, a reference to a clause, sub-clause or
Schedule is a reference to a clause or sub-clause of, or Schedule to,
this agreement.
1.4 Clause headings in this agreement and in the Schedules are for ease
of reference only and do not affect the construction of any
provision.
1.5 In this agreement "so far as the Vendor is aware" means the actual
awareness of the directors of the Vendor or the awareness they ought
reasonably to have having made due and careful enquiry of each Group
Company to which the relevant warranty relates.
2 Agreement
2.1 Subject to the satisfaction of the Condition and the other terms and
conditions of this agreement:
2.1.1 the Vendor shall sell with full title guarantee and the Purchaser
shall purchase the Shares, free from all Encumbrances and with all
rights attaching to them; and
2.1.2 the Vendor shall assign or procure the assignment of the
Inter-Company Debt with full title guarantee, free from Encumbrances
to Panavision and Panavision shall accept the assignment and assume
responsibility therefor.
3 Consideration
3.1 The aggregate consideration for the sale of the Shares and the
assignment of the Inter-Company Debt and the consideration payable
pursuant to the NZ Share Sale Agreement and the US Share Sale
Agreement shall be the sum of (pound)37.5 million adjusted as
referred to in clause 3.3.
9
3.2 The Consideration shall be paid in cash to the Vendor or as it shall
direct on Completion in accordance with clause 4 and shall be
apportioned as follows:
(pound)
Shares: 23,187,000
NZ Share Sale Agreement: 900,000
US Share Sale Agreement: 8,782,000
Inter-Company Debt: 4,631,000
3.3 The Consideration shall be adjusted as provided in clause 4.8, clause
9 and if applicable, clause 10.2.
3.4 The Vendor's current best estimates of the aggregate net bank
indebtedness which is likely to be owing by Group Companies at
Completion and which will fall to be reduced or cleared as provided
in clause 4.8 is (pound)3,300,000 and of the aggregate principal
amount likely to be outstanding on finance leases (which shall be
treated as indebtedness but not repaid) is (pound)425,000, in each
case as set out in the Statement of Debt Transactions in the Agreed
Form. Not later than three Business Days before Completion the Vendor
will review and, if necessary, revise these estimates and either
confirm them or deliver to the Purchaser a revised Statement of Debt
Transactions. The aggregate amount of the net bank indebtedness and
the principal outstanding under finance leases shown on the revised
or confirmed Statement of Debt Transactions shall be deducted from
the amount payable at Completion under clause 4.4.
4 Completion
4.1 Completion shall take place at the offices of the Vendor's Solicitors
at or about 2.00pm (London time) on the Business Day following
satisfaction of the Condition when all the transactions mentioned in
sub-clauses 4.2 to 4.9 shall take place.
4.2 The Vendor shall deliver to the Purchaser:
4.2.1 duly completed and signed transfers in favour of the Purchaser, or as
it may direct, of the Shares, together with the relative share
certificates;
10
4.2.2 the resignations in the Agreed Form of ▇ ▇ ▇▇▇▇▇▇, ▇ ▇ ▇▇▇▇▇, ▇ ▇
▇▇▇▇▇, ▇ ▇ ▇▇▇▇▇▇ and ▇ ▇ ▇▇▇▇▇, as directors of each Group Company
of which they are directors and of Miss S M L ▇▇▇▇▇▇ as secretary of
each Group Company of which she is secretary;
4.2.3 the resignation in the Agreed Form of the auditors of each Group
Company confirming that they have no outstanding claims and
containing a statement under CA s394(1) that there are no such
circumstances as are mentioned in that section;
4.2.4 a power of attorney executed by the Vendor in favour of the Purchaser
empowering the Purchaser to exercise the Vendor's rights as
shareholders of ▇▇▇▇▇▇▇▇▇ Group from Completion pending the stamping
and registration of the transfers, of the Shares referred to in
clause 4.2.1.
4.2.5 duly completed and signed transfers in favour of the Purchaser, or as
it may direct, of all shares of the Group Companies incorporated in
the United Kingdom not registered in the name of a Group Company,
duly executed by the registered holder;
4.2.6 documents transferring ownership to the Purchaser or Panavision, as
the case may be, together with appropriate share certificates and
other equivalent documents to those referred to in clauses 4.2.2 to
4.2.5 for each Group Company (other than Visual Action (NZ) and VDI)
incorporated outside the United Kingdom, as listed in Schedule 8; and
4.2.7 the Tax Deed duly executed by the Vendor.
4.3 There shall be delivered or made available to the Purchaser at the
offices of the Vendor's Solicitors or (where otherwise agreed in
writing between the Vendor's Solicitors and the Purchaser's
Solicitors) in respect of Group Companies incorporated outside the
United Kingdom at the offices of the Vendor's relevant local lawyers,
or in respect of books of account, documents of title, cheque books
and other items, where custody will be given to the Purchaser at the
premises of the Group Companies:
4.3.1 the statutory books, books of account and documents of record of each
Group Company complete and up to date and their certificates of
incorporation and common seals or the
11
equivalent in each case in respect of Group Companies incorporated
otherwise than in the United Kingdom;
4.3.2 the share certificates of all Group Companies;
4.3.3 the Certificates of Title;
4.3.4 the Statements of Indebtedness and Non-Default;
4.3.5 the title deeds relating to each of the Properties;
4.3.6 all documents of title relating to investments and assets owned by
each Group Company;
4.3.7 all the current cheque books and bank mandates of each Group Company,
together with current statements of all Group Company bank accounts
with a reconciliation to the close of business in each jurisdiction
on the day falling 2 Business Days before Completion and the
appropriate forms to amend, in such manner as the Purchaser may
require, the mandates given to the relevant bank.
4.4 The Purchaser shall transfer or procure the transfer by way of
electronic funds transfers to the account of the Vendor at National
Westminster Bank plc, 1st Floor, Argyll House, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇ ▇▇▇; sort code 56-00-27; account no. ▇▇▇▇▇▇▇▇ (or such
other account as the Vendor may direct prior to Completion) the sum
of (pound)37,500,000 less the amount shown on the confirmed or
revised Statement of Debt Transactions delivered pursuant to clause
3.4, being the amount payable at Completion in respect of the
Consideration.
4.5 Upon payment of the sums referred to in clause 4.4 the Purchaser
shall deliver to the Vendor a counter-part of the Tax Deed duly
executed by the Purchaser.
4.6 A board meeting of each of the Companies shall be held at which:-
4.6.1 such persons as the Purchaser nominates are appointed additional
directors;
12
4.6.2 the transfers referred to in clause 4.2.1 are approved (in the case
of the Shares, subject to stamping);
4.6.3 the resignations referred to in clauses 4.2.2 and 4.2.3 (insofar as
they relate to each Company) are submitted and accepted.
4.7 The Vendor shall ensure that all indebtedness owed at Completion to
any Group Company by any member of the Vendor's Group (excluding
Group Companies) is paid in full at Completion by the relevant debtor
to the relevant creditor.
4.8 The Vendor shall also ensure that at Completion any debit balances on
the respective bank accounts of the Group Companies are cleared or
reduced at Completion in the manner set out in the Statement of Bank
Transactions in the Agreed Form and that the Panavision Debt is
settled.
4.9 The parties shall procure that the US Share Sale Agreement is
completed in New York and the NZ Share Sale Agreement is completed in
Auckland in accordance with their respective terms.
4.10 The Purchaser shall not be obliged to complete the purchase of the
Shares unless the purchase of those all shares is completed in
accordance with this agreement and unless each of the US Share Sale
Agreement and the NZ Share Sale Agreement are also completed in
accordance with their respective terms.
4.11 The Purchaser may waive any requirement of the Vendor contained in
clauses 4.2, 4.3, 4.5, 4.6, 4.7, 4.8 or 4.9 or may waive any
requirement on condition that the Vendor gives, on Completion, a
written undertaking to the Purchaser in such form and substance as
the Vendor and the Purchaser may agree. The Vendor shall duly and
promptly comply with the undertaking.
5 Condition and rescission
5.1 If by 6 June 1997 (or by such later date not being after 13 June 1997
as the parties may agree) a resolution has not been passed at a duly
convened general meeting of the
13
Vendor approving the sale of the Shares this agreement shall cease to
have effect and neither party shall have any claim under it against
the other, except in respect of a prior breach.
5.2 The parties shall use all reasonable endeavours (insofar as it lies
within their power) to satisfy, or procure satisfaction of, the
condition specified in clause 5.1. The obligation of the Vendor in
relation to clause 5.1 shall be satisfied by its sending a circular
to its shareholders as soon as reasonably practicable containing a
recommendation by the Vendor's directors to vote in favour of the
appropriate resolution. The Purchaser acknowledges that the Vendor's
obligations in this clause 5.2 are subject to the fiduciary duties of
the Vendor's directors. The obligation of the Purchaser under clause
5.1 shall be satisfied by it providing promptly to the Vendor such
information about its business and affairs and those of Panavision as
may reasonably be required to be included in the circular to the
Vendor's shareholders to comply with the Rules of the London Stock
Exchange.
6 Conduct of business pending completion
6.1 Pending Completion the Vendor shall:
6.1.1 procure that the businesses of the Group Companies are carried on in
all material respects in the ordinary course of business as carried
on prior to today's date; and
6.1.2 encourage (so far as it is able to do so) the employees and customers
of the Group Companies to continue to be employed by and to deal with
the Group Companies on a similar basis to that on which they have
been employed by or been customers of the respective Group Companies
during the six months preceding this agreement;
6.1.3 procure that no Group Company (save with the prior written consent of
the Purchaser):
6.1.3.1 creates or issues, or agrees to create or issue, share or
loan capital or grants, or agrees to grant, an option in
respect of its share or loan capital or any of the share
or loan capital of another Group Company;
14
6.1.3.2 creates, extends, grants or issues, or agrees to create,
extend, grant or issue a mortgage, charge, debenture or
other security;
6.1.3.3 declares, makes or pays a dividend or other distribution;
6.1.3.4 enters or agrees to enter into a contract (whereby such
Group Company is contractually bound for a period
exceeding 12 months) or on unusual contract terms;
6.1.3.5 enters or agrees to enter into a contract involving
capital expenditure or a capital commitment in excess of
(pound)50,000.
6.1.3.6 makes a change in the nature of, or ceases carrying on,
its business;
6.1.3.7 passes a resolution of its members in general meeting or
makes an alteration to its memorandum or articles of
association;
6.1.3.8 pays or agrees to pay any of its directors, officers or
employees increased remuneration or other or additional
emoluments or benefits;
6.1.3.9 acquires or agrees to acquire assets on hire purchase or
deferred sale terms, otherwise than in the ordinary course
of business provided that such acquisition shall not
involve a capital commitment in aggregate in excess of
(pound)50,000 for each Group Company;
6.1.3.10 disposes of or agrees to dispose of any of its fixed
assets the proceeds of which exceeds(pound)5,000 for any
one item or(pound)75,000 in aggregate;
6.1.3.11 permits liens to arise on any of its assets, otherwise
than in the ordinary course of business;
6.1.3.12 writes off or releases any debts; or
6.1.3.13 permits any of its normal insurances to lapse or does or
omits to do anything to make a policy of insurances void
or voidable.
15
7 Warranties by the Vendor
7.1 The Vendor warrants to each of the Purchaser (and, in relation to VDI
and Visual Action (NZ), Panavision) that, save as fairly set out in
the Disclosure Letter, the Warranties are true and accurate and
except in respect of anything to which the Purchaser (or, in relation
to VDI or Visual Action (NZ), Panavision) gives its written consent
pursuant to clause 6 will continue to be so on the day of Completion
with reference to the facts and circumstances from time to time
applying.
7.2 Each of the Warranties is without prejudice to any other Warranty
and, except where expressly stated otherwise, no clause governs or
limits the extent or application of any other clause.
7.3 The Vendor warrants to the Purchaser (and, in relation to VDI, and
Visual Action (NZ), Panavision) that:
7.3.1 no change will be made prior to Completion to any of the rights
attached to the Shares;
7.3.2 the contents of the Disclosure Letter, and of all accompanying
documents, are accurate in all respects and fully and clearly
disclose every matter to which they relate.
7.4 None of the information supplied by a Group Company or its officers,
employees, agents or professional advisers to the Vendor, or its
agents, representatives or advisers, in connection with the
Warranties and the contents of the Disclosure Letter, or otherwise in
relation to the business or affairs of any Group Company, shall be
deemed a representation, warranty or guarantee of its accuracy by
such Group Company or its officers, employees or agents to the
Vendor, and the Vendor waives any claims against such Group Company
or its officers, employees or agents which it might otherwise have in
respect of it save in the case of fraud.
7.5 Except as provided in clauses 7.7 or 7.10 the rights and remedies of
the Purchaser (or, in relation to VDI or Visual Action (NZ),
Panavision) in respect of a breach of the Warranties shall not be
affected by Completion, by investigations made by or on behalf
16
of the Purchaser (or, as the case may be, Panavision) into the
affairs of any Group Company, by the Purchaser (or, as the case may
be, Panavision) rescinding, or failing to rescind, this agreement or
failing to exercise or delaying the exercise of any right or remedy,
or by any other event or matter, except a specific and duly
authorised written waiver or release, and no single or partial
exercise of any right or remedy shall preclude any further or other
exercise.
7.6 The provisions of Schedule 3 shall have effect to limit the liability
of the Vendor under this agreement, the NZ Share Sale Agreement and
the US Share Sale Agreement including without limitation any
liability arising under the Warranties or, where specified, the Tax
Deed.
7.7 The Purchaser may rescind this agreement by notice to the Vendor or
the Vendor's Solicitors (without liability on its part and without
any claim by the Vendor against the Purchaser) if, prior to
Completion, there is a material breach or non-fulfilment of the
Warranties (of which the Purchaser becomes aware as a result of
disclosure by the Vendor pursuant to clause 7.8 or otherwise) which
(being capable of remedy) is not remedied prior to Completion. In
such event the Purchaser shall have no other claim or claims against
the Vendor under this agreement or the Tax Deed.
7.8 The Vendor shall procure that except as may be necessary to give
affect to this agreement or with the prior written consent of the
Purchaser no Group Company does, procures or allows anything which
causes, constitutes or results in a breach of Warranty and shall
promptly disclose in writing to the Purchaser any event or
circumstance which arises, or becomes known to the Vendor, prior to
Completion and is inconsistent with any of the Warranties or the
contents of the Disclosure Letter (in each case as at the date
hereof) or which would result in the Warranties not being accurate at
Completion with reference to the facts or circumstances then
applying.
7.9 Upon receipt of a disclosure from the Vendor pursuant to the
provisions of clause 7.8 the Purchaser shall be entitled either:
17
7.9.1 to elect (by notice to the Vendor or the Vendor's Solicitors) to
complete the purchase of the Shares (subject nevertheless to the
provisions of clause 7.10); or
7.9.2 to rescind this agreement (in accordance with the provisions of
clause 7.7) if the disclosure from the Vendor pursuant to the
provisions of clause 7.8 constitutes a material breach or
non-fulfilment of the Warranties.
7.10 In the event of the Purchaser electing to complete the purchase of
the Shares pursuant to the provisions of clause 7.9.1, subject always
to the provisions of Schedule 3, the Purchaser shall be entitled to
claim that any fact or matter disclosed to the Purchaser pursuant to
the provisions of clause 7.8 constitutes a breach of any of the
Warranties or any provision of this agreement or gives rise to a
claim under the Tax Deed.
7.11 The Warranties shall additionally apply (with appropriate changes) to
Group Companies carrying on business outside England and Wales
including (but not limited to), where the context permits, VDI and
Visual Action (NZ). For the purpose of construction, the references
to a statutory provision enacted, or accounting principles applying,
in England and Wales shall be replaced by references to a
corresponding provision in the legislation and law and (where
relevant) to the generally accepted accounting principles in force in
the jurisdiction in which the relevant Group Company is incorporated.
References to a governmental or administrative authority or agency
shall be replaced by references to the equivalent local governmental
or administrative authority or agency.
7.12 Solely for the purpose of determining whether a breach or
non-fulfilment of a Warranty is sufficiently material to entitle the
Purchaser to elect to rescind under clause 7.7, a breach or
non-fulfilment shall be regarded as "material" if the amount the
Purchaser could properly claim as a result of the facts, matters or
circumstances giving rise to a claim for breach or non-fulfilment of
a Warranty exceeds (pound)250,000.
7.13 The Vendor warrants to the Purchaser that at Completion, Cine
Holdings Limited will have no liabilities or obligations relating to
the Vendor's video undertakings ("Video Business"). The Vendor
undertakes to indemnify the Purchaser and to keep it
18
indemnified against any diminution in the value of the assets of Cine
Holdings Limited arising from a breach of the warranty in this clause
7.13.
7.14 The Vendor also undertakes to indemnify the Purchaser and/or
▇▇▇▇▇▇▇▇▇ Group and keep them indemnified against any liability for
unpaid rent and any outstanding tenants' obligations (including any
liability in respect of delapidations and/or rates) arising in
respect of a lease dated 23 June 1987 of ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ in respect of which ▇▇▇▇▇▇▇▇▇ Group has or may be called upon
as original tenant.
7.15 The provisions of Schedule 3 shall not apply to the warranty and
indemnity in clause 7.13 and the indemnity in clause 7.14.
8 Warranties by the Purchaser
The Purchaser warrants to the Vendor that it shall have at Completion
the Consideration in immediately available funds or by means of an
agreed bank facility.
9 Post Completion adjustments
9.1 The Vendor warrants to each of the Purchaser and (in relation to VDI
and Visual Action (NZ)) Panavision that the Net Assets of the Group
Companies at Completion comprising only the assets identified in the
proforma statement of assets and liabilities in the Agreed Form
(after excluding all net bank balances (being cash at bank less all
monies owed to banks), liabilities in respect of finance leases and
the inter-company balances of the respective Group Companies) all as
derived from the Financial Statements to be prepared in accordance
with clause 9.2 will be not less than (pound)28,718,000.
HIDDEN TEXT
9.2.1 The Purchaser shall procure, as soon as practicable and in any event
within 60 days after Completion, the preparation of the Financial
Statements which shall be prepared, subject to clause 9.2.2, on the
basis of the same accounting standards and principles as the Last
Accounts.
9.2.2 The adjustments to be made in preparing the Financial Statements are
the following:
19
9.2.2.1 any exchange rates used to calculate the assets and
liabilities shall be those used at 31 December 1996 set
out in the statement of agreed rates in the Agreed Form;
9.2.2.2 the tax rates set out in the table of rates in the Agreed
Form shall be applied to the profit and loss before income
taxes of the Group Companies in determining the provision
for income taxes for the period since the Accounts Date;
9.2.2.3 net bank balances (being cash at bank less monies owed to
banks) of the Group Companies shall be excluded;
9.2.2.4 all inter-company balances shall be excluded;
9.2.2.5 the same amounts in respect of deferred tax credits and
debits of the Group Companies shall be included as the
amounts provided at the Accounts Date; and
9.2.2.6 any liabilities of the Group Companies in respect of
finance leases shall be excluded.
9.2.3 The Purchaser shall calculate the Net Assets from the Financial
Statements and shall deliver to the Vendor copies of the Financial
Statements and of their calculation.
9.3 If the Net Assets derived from the Financial Statements are less than
(pound)28,218,000 the Consideration shall be reduced by and the
Vendor shall pay to the Purchaser an amount equal to the shortfall or
if the Net Assets exceed (pound)29,218,000 the Consideration shall be
increased by and the Purchaser shall pay to the Vendor an amount
equal to the excess, in each case within 5 Business Days of the date
on which the net assets are agreed or determined in accordance with
clause 9.4. If payment is not made in full within 5 Business Days,
the outstanding balance shall bear interest, from the due date to the
date of actual payment, at the rate of 3 per cent. per annum above
the base rate of National Westminster Bank plc from time to time.
20
9.4 If the calculation of Net Assets is not agreed by the parties within
30 days of delivery to the Vendor the parties shall invite the
Vendor's Accountants and the Purchaser's Accountants to endeavour to
resolve any difference within a further 30 days. If the calculation
of Net Assets has not been agreed at the expiry of that further 30
days the dispute with respect to the calculation of Net Assets shall
be referred for final settlement to a firm of chartered accountants,
nominated jointly by the Vendor and the Purchaser, or, failing
nomination within 14 days after request by either party by the
President for the time being of the Institute of Chartered
Accountants in England and Wales. The firm shall act as experts and
not as arbitrators and their decision (in the absence of manifest
error) shall be final and binding on the parties. Their fees shall be
payable by the Vendor and the Purchaser in such proportions as the
firm determines.
9.5 For the purpose of determining the Net Assets if any payment is made
by the Vendor in respect of a missing Inventory Item as provided in
clause 10 an amount equal to the net book value of that Inventory
Item shall be included in the assets of the relevant Group Company as
if payment of that net book amount had been received before
Completion.
9.6 The provisions of Schedule 3 shall not apply for the purpose of the
warranty in clause 9.1 or otherwise affect the obligation of the
parties under this clause.
9.7 The Purchaser shall also prepare a bank reconciliation as at
Completion showing the aggregate indebtedness of the Group Companies
to banks and other lenders including in respect of finance leases.
The Purchaser shall also identify any cheques drawn on the bank
accounts of the Group Companies before the close of business on the
Business Day preceding Completion and which are cleared after
Completion, all of which shall be for the Vendor's account.
9.8 The Purchaser shall deliver the bank reconciliation and the statement
of uncleared cheques to the Vendor, as soon as in reasonably
practicable following Completion and in any event not later than the
date on which the Financial Statements prepared under clause 9.2 are
delivered.
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9.9 The Vendor shall pay to the Purchaser an amount equal to the
aggregate indebtedness and the uncleared cheques within 5 Business
Days of agreement or determination of the amounts, by way of
adjustment to the Consideration. The provisions of clauses 9.3 and
9.4 shall apply mutatis mutandis in respect of the determination and
settlement of indebtedness.
9.10 The Employee Letters shall be delivered to the respective executives
as soon as reasonably practicable following Completion. The Purchaser
shall procure that any payments that fall to be made on 20 December
1997 in accordance with the Employee Letters shall be made by the
relevant Group Company subject only to the Vendor placing the
Purchaser in sufficient funds so as to effect the payments and to
cover any costs incurred by the employer in making those payments.
9.11 The Purchaser shall disclose all information and provide the Vendor,
the Vendor's Accountants and/or the independent firm nominated
pursuant to clause 9.4 with access to the Group Companies, their
records, officers and employees and, at the Vendor's cost, copies of
all relevant documents for the purpose of verifying the amounts (if
any) payable under clauses 9.3, 9.9 and 9.10.
9.12 Any adjustment to the Consideration arising under this clause 9 or in
respect of the payments to be made under clause 4.8 or in respect of
missing Inventory Items under clause 10.2 shall be allocated to the
Consideration paid for the Shares, or as the case may be, the
Consideration paid for the shares in VDI or Visual Action (NZ) in the
same proportions in which the Vendor is required to make a payment in
respect of bank indebtedness owing by ▇▇▇▇▇▇▇▇▇ Group and its
Subsidiary Undertakings, VDI or Visual Action (NZ) and/or the
proportions in which indebtedness outstanding at Completion is
attributable to those Group Companies and/or the proportions in which
any payments for missing Inventory Items are attributable to those
Group Companies.
9.13 At Completion the actual amount of the Inter-Company Debt shall be
determined and the allocation of the Consideration in clause 3.2
adjusted accordingly.
22
10 Inventory
10.1 The Vendor has provided the Purchaser with an inventory of rental
assets of the Group Companies at 30 April 1997 in the Agreed Form and
will procure that the Purchaser is allowed access to the premises of
each of the Group Companies on the date of Completion and (if
required) during the three days immediately preceding the date of
Completion in order to carry out a physical stock take of the rental
assets and an assessment of those of the rental assets in the custody
of a customer of a Group Company under the terms of a contract for
hire in existence at Completion.
10.2 If any item included in the inventory in the Agreed Form, or any item
of rental equipment acquired since 30 April 1997 but excluding any
item of rental equipment sold since 30 April 1997 in the ordinary
course of business (in each case an "Inventory Item") is not in the
possession of the relevant Group Company or in the custody of a
customer of a Group Company under the terms of a contract for hire at
the date of Completion, the Vendor shall pay to the Purchaser an
amount equal to the market value of the missing Inventory Item agreed
or determined in accordance with this clause 10 provided that the
Vendor shall not be liable to account to the Purchaser either for
insurance proceeds or to make any other payment unless the aggregate
market value of Inventory Items missing exceeds (pound)175,000. An
amount equal to the aggregate of any payment or payments by the
Vendor under this clause 10.2 shall be treated as a deduction from
the Consideration.
10.3 The market value of any missing Inventory Item shall be agreed by the
Purchaser and the Vendor within 10 Business Days following delivery
to the Vendor of the Purchaser's written summary of missing Inventory
Items pursuant to clause 10.5 or, failing agreement, determined by
obtaining estimates of the value of the missing Inventory Items from
two reputable independent film camera and equipment dealers in the
United Kingdom and taking the mean valuation. For this purpose the
dealers shall take into account the actual age and likely useful life
of the missing Inventory Items.
10.4 The Vendor shall be entitled to nominate two representatives to be
present at the physical stock take but shall not be obliged to do so.
23
10.5 The Purchaser shall prepare a written summary of any missing
Inventory Items and its estimate of the market value of those items
and submit the summary to the Vendor within 60 days of Completion.
10.6 Payment shall be made by the Vendor within 5 Business Days of
agreement or determination of the market value of any missing
Inventory Items. If any Inventory Items identified by the Purchaser
as missing are subsequently located or returned to the relevant Group
Company, the Purchaser shall promptly notify the Vendor and repay to
the Vendor an amount equal to the market value of any such Inventory
Items located or returned within 5 Business Days of the date on which
any are located or returned.
10.7 If and to the extent that any insurance proceeds recovered by the
Vendor in respect of a missing Inventory Item exceeds the market
value of the item agreed or determined in accordance with this clause
10, the Vendor and the Purchaser shall be entitled to the surplus in
equal proportions. The Purchaser shall procure that the Group
Companies co-operate with the Vendor and afford the Vendor access to
any records and/or relevant employees of the Group Companies for the
purpose of submitting any insurance claim or claims in respect of any
Inventory Items.
11 Pensions
The provisions of Schedule 7 shall apply following Completion.
12 VAT and federal taxes
12.1 Upon Completion or as soon thereafter as is reasonably practicable
the Vendor shall (if it has not done so before Completion) give a
notice to HM Customs & Excise that, with effect from Completion, the
UK Group Companies which were a member of the Vendor VAT Group (being
▇▇▇▇▇▇▇▇▇ Group, ▇▇▇▇▇▇▇▇▇ Film Service London Limited and Grip House
Limited) have, or will have, ceased to be eligible to be treated as
members of the Vendor VAT Group and the Purchaser shall procure that
those UK Group Companies shall with effect from Completion register
separately as taxable persons for
24
the purposes of VAT or register as members of another group of
companies for the purposes of VAT under VATA s43.
12.2 The Purchaser covenants with the Vendor to indemnify the Vendor and
to keep the Vendor fully and effectively indemnified on demand
against any liability to VAT (including without limitation a
liability to repay VAT) arising from or in connection with any UK
Group Company which was a member of the Vendor VAT Group ceasing to
be a taxable person or failing to register or re-register for the
purposes of VAT by virtue of ceasing upon Completion (or otherwise by
virtue of the agreement) to be eligible to be treated as a member of
the Vendor VAT Group.
12.3 The Purchaser shall procure that each UK Group Company shall pay to
the Vendor in cleared funds:
12.3.1 not later than five business days before the 30th day from the end of
the prescribed accounting period ended most recently before the date
on which it ceases to be treated as a member of the Vendor VAT Group;
and
12.3.2 not later than five business days before the 30th day from the end of
the prescribed accounting period in which it ceases to be treated as
a member of the Vendor VAT Group,
the VAT which the Vendor is (or becomes) liable, in consequence of
that UK Group Company being (or having been) treated as a member of
the Vendor VAT Group to pay or account to HM Customs & Excise for
that period (or in the relevant return for that period) whether as
output tax or repayment of input tax previously recovered or
otherwise (net of allowable input tax to the extent to which credit
is available) insofar as attributable to supplies, acquisitions or
imports made by or to that UK Group Company (but treated as made by
or to the Vendor as representative member of the Vendor VAT Group).
12.4 The Vendor shall pay to the Purchaser (on behalf of the relevant UK
Group Company) in cleared funds:
25
12.4.1 in a case where the Vendor VAT Group is liable to pay VAT to HM
Customs & Excise in respect of the prescribed accounting period ended
most recently before the date on which a UK Group Company ceases to
be treated as a member of the Vendor VAT Group, not later than five
business days after the 30th day from the end of such period or, in a
case where the Vendor VAT Group is due to be repaid VAT by HM Customs
& Excise for such period, not later than five business days after the
date on which such repayment is received by the Vendor; and
12.4.2 in a case where the Vendor VAT Group is liable to pay VAT to HM
Customs & Excise in respect of the prescribed accounting period in
which a UK Group Company ceases to be treated as a member of the
Vendor VAT Group, not later than five business days after the 30th
day from the end of such period, or in a case where the Vendor VAT
Group is due to be repaid VAT by HM Customs & Excise for such period,
not later than five business days after the date on which such
repayment is received by the Vendor,
an amount equal to the amount of allowable input tax for which the
Vendor is entitled to credit, in consequence of that UK Group Company
being (or having been) treated as a member of the Vendor VAT Group
for that period (or in the relevant return for that period) insofar
as attributable to supplies, acquisitions or imports made by or to
that UK Group Company (but treated as made by or to the Vendor as the
representative member of the Vendor VAT Group for the time being).
12.5 If and to the extent any credit for input tax assumed in the
calculation made for the purposes of clauses 12.3 or 12.4 is
disallowed by HM Customs and Excise, the Purchaser shall procure that
the UK Group Company concerned pays an amount equal to the disallowed
credit to the Vendor forthwith on demand.
12.6 If and to the extent any amount of output tax assumed in the
calculation made for the purposes of clauses 12.3 or 12.4 is accepted
by HM Customs & Excise as being in excess of what it ought to have
been and such excess is recovered by the Vendor (either by a refund
or by such excess being set off against some other liability to VAT
unrelated
26
to the UK Group Companies) the Vendor shall repay to the UK Group
Company concerned an amount equal to the excessive output tax
forthwith on demand in writing.
12.7 The Purchaser shall procure that each UK Group Company which was a
member of the Vendor VAT Group shall promptly provide all such
information documents and other assistance as the Vendor reasonably
requires for the purposes of submitting to HM Customs & Excise the
return for the prescribed accounting period mentioned in clause 12.3
and otherwise generally complying with its obligations under or
pursuant to VATA (and all regulations made thereunder) insofar as
relevant to the UK Group Companies.
12.8 Upon Completion or as soon thereafter as is reasonably practicable
the Purchaser shall (if it has not been done before Completion) give
a notice to HM Customs & Excise that, with effect from Completion,
CVL has or will have ceased to be eligible to be treated as a member
of the CHL VAT Group.
12.9 The Vendor shall procure that CVL shall, with effect from Completion,
register separately as a taxable person for the purposes of VAT or
register as a member of another group of companies for the purposes
of VAT under VATA s43.
12.10 The Vendor shall procure that CVL shall pay to the Purchaser (on
behalf of CHL) in cleared funds:
12.10.1 not later than five business days before the 30th day from the end of
the prescribed accounting period ended most recently before the date
on which CVL ceases to be treated as a member of the CHL VAT Group;
and
12.10.2 not later than five business days before the 30th day from the end of
the prescribed accounting period in which CVL ceases to be treated as
a member of the CHL VAT Group,
12.10.3 the VAT which CHL is (or becomes) liable, in consequence of CVL being
(or having been) treated as a member of the CHL VAT Group to pay or
account to HM Customs & Excise for that period (or in the relevant
return for that period) whether as output tax or
27
repayment of input tax previously recovered or otherwise (net of
allowable input tax to the extent to which credit is available)
insofar as attributable to supplies, acquisitions or imports made by
or to CVL (but treated as made by or to CHL as representative member
of the CHL VAT Group).
12.11 The Purchaser shall pay to the Vendor (on behalf of CVL) in cleared
funds:
12.11.1 in a case where the CHL VAT Group is liable to pay VAT to HM Customs
& Excise in respect of the prescribed accounting period ended most
recently before the date on which CVL ceases to be treated as a
member of the CHL VAT Group, not later than five business days after
the 30th day from the end of such period or, in a case where the CHL
VAT Group is due to be repaid VAT by HM Customs & Excise for such
period, not later than five business days after the date on which
such repayment is received by CHL; and
12.11.2 in a case where the CHL VAT Group is liable to pay VAT to HM Customs
& Excise in respect of the prescribed accounting period in which CVL
ceases to be treated as a member of the CHL VAT Group, not later than
five business days after the 30th day from the end of such period, or
in a case where the CHL VAT Group is due to be repaid VAT by HM
Customs & Excise for such period, not later than five business days
after the date on which such repayment is received by CHL,
an amount equal to the amount of allowable input tax for which CHL is
entitled to credit, in consequence of CVL being (or having been)
treated as a member of the CHL VAT Group for that period (or in the
relevant return for that period) insofar as attributable to supplies,
acquisitions or imports made by or to CVL (but treated as made by or
to CHL as the representative member of the CHL VAT Group for the time
being).
12.12 If and to the extent any credit for input tax assumed in the
calculation made for the purposes of clauses 12.10 or 12.11 is
disallowed by HM Customs and Excise, the Vendor shall procure that
CVL pays an amount equal to the disallowed credit to the Purchaser
forthwith on demand.
28
12.13 If and to the extent any amount of output tax assumed in the
calculation made for the purposes of clauses 12.10 or 12.11 is
accepted by HM Customs & Excise as being in excess of what it ought
to have been and such excess is recovered by CHL (either by a refund
or by such excess being set off against some other liability to VAT
unrelated to CVL) the Purchaser shall repay to CVL an amount equal to
the excessive output tax forthwith on demand in writing.
12.14 The Vendor shall procure that CVL shall promptly provide all such
information, documents and other assistance as CHL reasonably
requires for the purposes of submitting to HM Customs & Excise the
return for the prescribed accounting period mentioned in clause 12.10
and otherwise generally complying with its obligations under or
pursuant to VATA (and all regulations made thereunder) insofar as
relevant to CVL.
12.15 The Vendor shall prepare an estimated calculation of the net adjusted
taxable income of VDI for federal income tax purposes which falls to
be included in the consolidated federal income tax return of Visual
Action Holdings Inc., in respect of VDI for the period from 1 January
1997 to Completion, save that such taxable income shall exclude the
taxable income realised as a result of the election under IRC Section
338(h)(10), taxable income attributable to Advanced Broadcast Systems
Inc., or any assets not owned by VDI immediately before Completion,
and taxable income or any other Tax liability attributable to the
transfer described in Section 6(a) of the US Share Sale Agreement
(the "VDI Net Taxable Income"). Panavision undertakes to procure that
VDI pays to Visual Action Holdings Inc., in respect of the US federal
income tax on the VDI Net Taxable Income for which Visual Action
Holdings Inc., is primarily liable as a result of VDI being included
in the US consolidated federal income tax return of Visual Action
Holdings Inc., and its subsidiaries for the accounting period ending
31 December 1997. Such payments shall not exceed 34% of the VDI net
taxable income (the "VDI Tax Liability"). Payment shall be made by
VDI as follows:
12.15.1 on 12 June 1997 as to 50% of the VDI Tax Liability, less any sums
already paid by VDI to Visual Action Holdings Inc.;
29
12.15.2 on 12 September 1997 as to 75% of the VDI Tax Liability, less any
amounts already paid by VDI to Visual Action Holdings Inc.; and
12.15.3 on 12 December 1997 as to 100% of the VDI Tax Liability, less any
payments already paid by VDI to Visual Action Holdings Inc.
12.16 On or before 15 March 1998 the Vendor will calculate the VDI Net
Taxable Income actually included in the consolidated federal income
tax return of Visual Action Holdings Inc., and its subsidiaries for
the accounting period ending 31 December 1997 and to the extent that
the VDI Tax Liability varies from the payments made by VDI as
provided in clause 12.15 including any estimated tax payments made by
VDI or on behalf of VDI for the period commencing 1 January 1997,
cash adjustment shall be made either by way of additional payment to
Visual Action Holdings Inc., or by way of repayment from Visual
Action Holdings Inc., to VDI.
13 Release of Guarantees
13.1 The Purchaser shall at or as soon as practicable following Completion
secure the replacement of the bank guarantees and letters of comfort
given by the Vendor on behalf of Group Companies listed in Part 1 of
Schedule 6 and shall secure the release in the Agreed Form from such
guarantees and of the Vendor and the Remaining Group from its
liability in respect of such guarantees and pending such releases the
Purchaser shall indemnify and secure the Vendor and each company in
the Remaining Group to their reasonable satisfaction against all and
any liability, costs, damage or expense which may be incurred in
respect of such guarantees arising after Completion. If any of the
guarantees referred to in this clause 13.1 have not been released
within 10 Business Days of Completion the Purchaser undertakes as a
separate covenant with the Vendor to repay any outstanding bank
indebtedness owing to the beneficiaries of the relevant guarantees.
13.2 The Vendor shall at or as soon as practicable following Completion
secure the replacement of the 3 guarantees issued by ▇▇▇▇▇▇▇▇▇ Group
on behalf of Group Companies listed in Part 2 of Schedule 6 and shall
secure the release in the Agreed Form
30
of the respective landlords from such guarantees and of ▇▇▇▇▇▇▇▇▇
Group in respect of such guarantees and shall procure the release of
the Group Companies from any cross-guarantees given to secure the
indebtedness of the Vendor or the Remaining Group to bankers and
others within 10 Business Days following Completion and pending such
releases the Vendor shall indemnify and secure the Purchaser and
▇▇▇▇▇▇▇▇▇ Group to their reasonable satisfaction against all and any
liability, costs, damage or expense which may be incurred in respect
of such guarantees.
13.3 The Purchaser acknowledges that at or before Completion the benefit
and burden of the leases currently vested in ▇▇▇▇▇▇▇▇▇ Group in
respect of premises at ▇▇▇▇▇ ▇▇/▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ will be assigned by ▇▇▇▇▇▇▇▇▇ Group to
the Vendor (or to a company within the Vendor's group) together with
any right or interest which ▇▇▇▇▇▇▇▇▇ Group might have in a rental
deposit of (pound)500,000 and all accrued interest thereon. If the
consent of the landlords to the assignment has not been obtained by
the date for Completion the Purchaser undertakes to procure that
▇▇▇▇▇▇▇▇▇ Group will execute assignments in the Agreed Form when
consent is obtained and pending completion of the assignment to
procure that ▇▇▇▇▇▇▇▇▇ Holdings delivers confirmation to the Vendor
that it holds any right, interest or benefit under the leases and the
rental deposit on trust for the Vendor absolutely and, pending
assignment, will account to the Vendor for any interest payments
which it might receive in respect of the deposit.
14 Restrictive agreement
14.1 To assure to the Purchaser the full benefit of the business and
goodwill of the Group Companies, the Vendor undertakes by way of
further consideration for the obligations of the Purchaser under this
agreement, as separate and independent agreements, that neither the
Vendor nor any company directly or indirectly under the control of
the Vendor including any subsidiary undertakings will not:
14.1.1 disclose to another person, or itself use for any purpose (save for
the purposes of the businesses of members of the Remaining Group)
information concerning the businesses,
31
accounts or finances of the Group Companies, or their clients' or
customers' transactions or affairs of which the Vendor has knowledge
save to the extent disclosure is required by the London Stock
Exchange or any other regulatory authority or by law;
14.1.2 for two years after Completion, either on the Vendor's own account or
for another person, directly or indirectly solicit, interfere with or
endeavour to entice away from a Group Company a person who, to the
Vendor's knowledge or that of any member of the Remaining Group, is,
or has during the 24 months prior to the date of this agreement been,
a client, customer or employee of, or in the habit of dealing with, a
Group Company save for any client or customer who has also been
during that period a client or customer of any member of the
Remaining Group for the limited purposes of providing services to
such customers or clients provided that such services are not in
competition with any business of any Group Company;
14.1.3 for five years after Completion, either alone or jointly with another
person, directly or indirectly carry on or be engaged, in any area in
which business has been carried on by any Group Company during the
period of 12 months prior to Completion, in any business in
competition with a Group Company provided that nothing in this
agreement shall prevent any member of the Remaining Group from
providing services to, and supplying any equipment for hire (other
than equipment supplied for hire by any Group Company during the 12
months immediately preceding the date of Completion) or sale to (i)
the television or presentation industries and (ii) any client or
customer of any member of the Remaining Group (whether or not such
client or customer operates in both or either of the film and
television industries).
14.2 The Vendor agrees that the covenants and undertakings contained in
clause 14.1 are reasonable and are entered into for the purpose of
protecting the goodwill of the business of the Group Companies.
Although the Vendor also acknowledges that the availability of the
covenants is a factor which the Purchaser has considered in agreeing
the Consideration the parties agree that the remedies of the
Purchaser for breach of the covenants shall be limited to injunctive
relief and/or damages but there shall not be an entitlement to an
abatement of the Consideration.
32
14.3 Each covenant and undertaking contained in clause 14.1 shall be
construed as a separate covenant or undertaking. If one or more of
the covenants and undertakings is held to be against the public
interest or unlawful or in any way an unreasonable restraint of
trade, the remaining covenants and undertakings shall continue to
bind the Vendor.
14.4 If any covenant or undertaking contained in clause 14.1 were void but
would be valid if the period of application were reduced or if some
part of the covenant or undertaking were deleted, the covenant or
undertaking in question shall apply with such modification as is
necessary to make it valid.
14.5 For the purposes of this clause 14 references to a "person" shall
include any natural person, company or firm.
15 Competition
If this agreement is registrable under the Restrictive Trade
Practices Act 1976 ("the Act") no provision contained or implied in
this agreement which constitutes a relevant restriction for the
purposes of the Act shall come into effect until the day after
particulars of this agreement have been furnished to the Director
General of Fair Trading in accordance with the Act. In this clause,
"this agreement" includes any deed, agreement or arrangement which
together with this document constitutes a single agreement for the
purposes of the Act.
16 Assignment and succession
16.1 This agreement binds each party's successors and assigns.
16.2 None of the rights of the Purchaser under this agreement, including
without limitation the Warranties and the Tax Deed, may be assigned
or transferred except:
16.2.1 in respect of an assignment of the Warranties and/or the benefit of
the Tax Deed (or a declaration of trust in relation thereto) by way
of security for any banking facilities to be granted to the Purchaser
or Panavision for the purpose of funding the Consideration or other
borrowings of the Group Companies from time to time; or
33
16.2.2 with the written consent of the Vendor (such consent not to be
unreasonably withheld having regard to the identity of any proposed
assignee).
17 Announcements
No announcement shall be made in respect of the subject matter of
this agreement, unless specifically agreed in writing between the
parties, except as disclosed in any circular to be despatched to the
Vendor's shareholders pursuant to clause 5 or to the extent that an
announcement is required by law or the rules of any Stock Exchange or
any other regulatory authority. An announcement by either party shall
in any event be issued only after prior consultation with the other
with a view to reaching agreement on the contents of the
announcement.
18 Costs
All expenses incurred by or on behalf of the parties, including all
fees of agents, representatives, solicitors, accountants and
actuaries employed by any of them in connection with the negotiation,
preparation or execution of this agreement, shall be borne solely by
the party who incurred the liability unless otherwise agreed by the
parties.
19 Communications
19.1 All communications between the parties with respect to this agreement
shall:
19.1.1 be delivered by hand, or sent by post, to the address of the
addressee as set out in this agreement or to such other address as
the addressee notifies for the purpose of this clause; or
19.1.2 be sent by facsimile transmission to the facsimile transmission
numbers stated below or as notified for the purpose of this clause.
19.2 Communications shall be deemed to have been received as follows:
34
19.2.1 if sent by post - 7 Business Days after posting;
19.2.2 if delivered by hand - on the day of delivery, if delivered at least
2 hours before the close of business hours on a Business Day, and
otherwise on the next Business Day;
19.2.3 if sent by facsimile transmission - at the time of transmission, if
received at least 2 hours before the close of business hours on a
Business Day, and otherwise on the next Business Day.
For this purpose, "business hours" mean between the hours of 09.00
and 18.00 inclusive, local time.
19.3 The facsimile transmission numbers referred to in clause 18.1 are:
for the Vendor - 0181 575 7088
for the Purchaser - 01932 567 449
for Panavision - 001 813 316 1110
20 Variation
A variation of this agreement is valid only if it is in writing and
signed by or on behalf of each party.
21 Failure to exercise rights
Subject to the provisions of Schedule 3:
21.1 the failure to exercise or delay in exercising a right or remedy
provided by this agreement or by law does not constitute a waiver of
the right or remedy; and
21.2 no single or partial exercise of a right or remedy provided by this
agreement or by law prevents further exercise of that right or remedy
or the exercise of another right or remedy.
35
22 Further assurance
The Vendor shall execute such documents and take such other
reasonable steps as are in the reasonable opinion of the Purchaser
necessary to vest in the Purchaser all its right title and interest
in and to the Shares or to any asset owned by a Group Company.
23 Invalidity
If a term in or provision of this agreement is held to be illegal or
unenforceable, in whole or in part, under an enactment or rule of
law, it shall to that extent be deemed not to form part of this
agreement and the enforceability of the remainder of this agreement
shall not be affected.
24 Counterparts
This agreement may be executed in any number of separate
counterparts, each of which when executed and delivered shall be an
original, but all the counterparts shall together constitute one and
the same instrument.
25 Access to information and co-operation
25.1 The Purchaser shall as soon as is reasonably practicable provide to
the Vendor and its auditors and advisers all information relating to
Group Companies (including reasonable access to the Group Companies,
their records and their employees and officers and, at the Vendor's
cost, copies of all relevant documents):
25.1.1 as the Vendor may reasonably request in writing to permit the Vendor
to prepare and complete the consolidated accounts of the Vendor for
the period from 1 January 1996 to 31 December 1997; and
25.1.2 as may be reasonably required in connection with the Tax computations
and returns of the Vendor and the Group Companies for periods ending
on or prior to 31 December 1997.
36
25.2 The Vendor shall procure that prior to Completion the Purchaser, its
agent, representatives, accountants and solicitors are given promptly
on request all such information regarding the business, assets,
liabilities, contracts and affairs of each Group Company, and of the
documents of title and other evidence of ownership of its assets, as
the Purchaser reasonably requires.
25.3 The Purchaser acknowledges that Grip House Limited has been party to
an action, ▇▇▇▇▇ ▇▇▇▇▇▇ Television Limited - v - (No1) Effects
Associates Limited (No2) Grip House Limited, involving a claim by
▇▇▇▇▇ ▇▇▇▇▇▇ Television Limited ("DW") in negligence and for breach
of contract for damages arising following an accident in which an
actor fell and broke his arm during the making of a film. The actor
sued DW in a separate action and obtained summary judgment and was
awarded damages. DW then sued Effects Associates Limited ("Effects")
and Grip House Limited ("Grip") for damages amounting to the damages
which it had paid the actor plus its costs of that action and
interest. Effects designed and built the trailer from which the actor
fell and Grip supplied the Mini-Moke and the driver which pulled the
trailer. Judgment was handed down on 31 January 1997 and Grip was
found to be not liable. Effects was found liable and ordered to pay
Grip's costs of the action. The Vendor's solicitors are instructed to
commence taxation proceedings against Effects to recover Grip's
costs. The Vendor's solicitors are also instructed, if appropriate,
to claim against Grip's insurers (who have denied liability under the
terms of the relevant policy) the difference between the amount of
costs actually incurred in relation to the action and the amount of
costs which Effects are ordered to pay to Grip following taxation.
The Purchaser agrees to procure that Grip assigns the benefit of the
right to recover costs from Effects and the benefit of Grip's right,
if any, to recover costs from its insurers and to procure that Grip
will allow the Vendor conduct of the taxation proceedings (if
necessary in the name of Grip) and shall co-operate with the Vendor
and, at the Vendor's expense, afford the Vendor access to any
information in Grip's possession that the Vendor may reasonably
require for the conduct of the proceedings and/or for the submission
of a claim against its insurers, with the benefit of any recovery to
accrue to the Vendor.
37
26 Panavision a party
Panavision is a party to this agreement for the purpose of receiving
the benefit of those of the Warranties that relate to VDI and Visual
Action (NZ) (and for this purpose, in its capacity as the purchaser
of VDI and Visual Action (NZ), references to the Purchaser shall
apply mutatis mutandis as if references to the Purchaser were to
Panavision), for the purpose of clauses 12.15, 12.16 and 14 and for
the purpose of receiving an assignment of the Inter-Company Debt.
27 Proper law
The construction, validity and performance of this agreement shall be
governed by the laws of England and the parties submit to the
exclusive jurisdiction of the English Courts.
Executed by the parties as an agreement under hand.
38
SCHEDULE 1
PART 1
DETAILS OF ▇▇▇▇▇▇▇▇▇ GROUP LIMITED
Company name: ▇▇▇▇▇▇▇▇▇ Group Limited
Company number: 598635
Date of incorporation: 10 February 1958
Share Capital: Authorised Issued
28,500,000 deferred 22,350,694 deferred
shares of 20p shares of 20p
each 1000 ordinary each 1000 ordinary
shares of US $1 shares of US$1 each
each
Registered office: ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Directors: ▇ ▇ ▇▇▇▇▇
▇ ▇ ▇▇▇▇▇▇
▇ ▇ ▇▇▇▇▇
▇ ▇ ▇▇▇▇▇
Secretary: S M L ▇▇▇▇▇▇
Shareholders: Visual Action Holdings plc :
22,350,694 deferred shares of
20p each and 1000 ordinary
shares of US $1 each.
Charges: None
39
SCHEDULE 1
PART 2
OTHER GROUP COMPANIES
A Companies registered in England and Wales
Cine Holdings Limited
Cine-Europe Limited
▇▇▇▇▇▇▇▇▇ Film Service London Limited
Grip House Limited
Cinevision Limited
Film Optics Limited
B Companies incorporated in Australia
▇▇▇▇▇▇▇▇▇ Group Pty Limited
▇▇▇▇▇▇▇▇▇ Film Service (Australia) Pty Limited
▇▇▇▇ ▇▇▇▇▇ Group Pty Limited
▇▇▇▇▇▇▇▇▇ Cases Australia Pty Limited
C Companies incorporated in France
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Cinema SA
Cinecam SARL
D Companies incorporated in New Zealand
Visual Action Holdings NZ Limited
Film Facilities Limited
E Companies incorporated in Singapore
▇▇▇▇▇▇▇▇▇ Film Service Pte Limited
F Companies incorporated in USA
▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
40
DETAILS OF THE SUBSIDIARIES
Company name: Cine Holdings Limited
Company number: 1715546
Date of incorporation: 15.4.83
Share Capital: Authorised Issued
3,500,000 ordinary 3,005,944 ordinary
shares of (pound) shares of(pound) 1
1 each each
Registered office: ▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇
Directors: ▇ ▇ ▇▇▇▇▇▇
▇ ▇ ▇▇▇▇▇
R ▇▇▇▇▇▇
▇ ▇ Paice
Secretary: S M L ▇▇▇▇▇▇
Shareholders: ▇▇▇▇▇▇▇▇▇ Group Limited : 3,005,944 ordinary shares of
(pound) 1 each
Charges: None
41
DETAILS OF THE SUBSIDIARIES
Company name: Cine-Europe Limited
Company number: 625636
Date of incorporation: 10.4.59
Share Capital: Authorised Issued
165,000,000 147,699,000
ordinary shares of ordinary shares
of 1p each 100,000 shares 1p each
deferred shares of 100,000 deferred
(pound)1 each of (pound)1 each
Registered office: ▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇
Directors: ▇ ▇ ▇▇▇▇▇▇
▇ ▇ ▇▇▇▇▇
▇ ▇ ▇▇▇▇▇▇
A M Piper
Secretary: S M L ▇▇▇▇▇▇
Shareholders: Cine Holdings Limited : 147,698,999 ordinary shares of
1p each and 99,998 deferred shares of (pound)1 each
▇▇▇▇▇▇▇▇▇ Group Limited : 1 ordinary share of 1p and 2
deferred shares of (pound)1 each
Charges: None
42
DETAILS OF THE SUBSIDIARIES
Company name: ▇▇▇▇▇▇▇▇▇ Film Service London Limited
Company number: 1672797
Date of incorporation: 20.10.82
Share Capital: Authorised Issued
100 ordinary shares of 100 ordinary shares of
(pound)1 each (pound)1 each
Registered office: ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Directors: ▇ ▇ ▇▇▇▇▇ J ▇▇▇▇▇▇▇
▇ ▇▇▇▇▇ B Measure
K ▇▇▇▇▇ ▇ ▇ ▇▇▇▇▇▇
Secretary: S M L ▇▇▇▇▇▇
Shareholders: ▇▇▇▇▇▇▇▇▇ Group Limited : 100 ordinary shares of (pound)
1 each
Charges: None
43
DETAILS OF THE SUBSIDIARIES
Company name: Grip House Limited
Company number: 1577530
Date of incorporation: 31.7.81
Share Capital: Authorised Issued
1,000 ordinary shares 600 ordinary shares
of(pound)1 each of(pound) 1 each
Registered office: ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Directors: ▇ ▇ ▇▇▇▇▇
D Fraser
Secretary: S M L ▇▇▇▇▇▇
Shareholders: ▇▇▇▇▇▇▇▇▇ Group Limited : 599 ordinary shares of(pound)
1 each
Eagle Trust plc: 1 ordinary share of (pound)1 as nominee
Charges: None
44
DETAILS OF SUBSIDIARIES
Company name: Cinevision Limited
Company number: 2895121
Date of incorporation: 7.2.94
Share capital: Authorised Issued
100,000 ordinary shares one ordinary share(pound)
of (pound)1 each 1
Registered office: ▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Directors: ▇ ▇ ▇▇▇▇▇▇
▇ ▇ ▇▇▇▇▇
Secretary: A D Maries
Shareholders: Cine Holdings Limited: one ordinary share of (pound)
1 each
Charges: None
45
DETAILS OF SUBSIDIARIES
Company name: Film Optics Limited
Company number: 2849220
Date of incorporation: 31.8.93
Share capital: Authorised Issued
100,000 ordinary shares 1 ordinary share
of (pound)1 each of (pound) 1
Registered office: ▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Directors: ▇ ▇ ▇▇▇▇▇
▇ ▇ ▇▇▇▇▇▇
Secretary: A D Maries
Shareholders: Cine Holdings Limited: one ordinary share of(pound) 1
Charges: None
46
DETAILS OF SUBSIDIARIES
Company name: ▇▇▇▇▇▇▇▇▇ Group Pty Limited
Company number: ACN 002952356
Date of incorporation: 13.6.85
Share capital: Authorised Issued
1,000,000 ordinary 151,214 ordinary
shares of A$1 each shares of A$1 each
Registered office: ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇
Directors: ▇ ▇ ▇▇▇▇▇
▇ ▇ ▇▇▇▇▇▇
M D ▇▇▇▇▇▇
▇ ▇ ▇▇▇▇▇▇
Secretary: M D ▇▇▇▇▇▇
Shareholders: ▇▇▇▇▇▇▇▇▇ Group Limited: 151,214 ordinary shares of A
$1 each
Charges: None
47
DETAILS OF SUBSIDIARIES
Company name: ▇▇▇▇▇▇▇▇▇ Film Service (Australia) Pty Limited
Company number: ACN 000941533
Date of incorporation: 8.9.71
Share capital: Authorised Issued
2,000 "A" ordinary 2,000 "A" shares
shares of A$1 each of A$1 each and
2,000 "B" ordinary ordinary shares of
448,856 A$1 each
unclassified
shares of A$1 each
2,000 "C" ordinary
shares of A$1 each
994,000
unclassified
ordinary shares of
A$1 each
Registered office: ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇
Directors: ▇ ▇ ▇▇▇▇▇▇
M D ▇▇▇▇▇▇
Secretary: M D ▇▇▇▇▇▇
Shareholders: ▇▇▇▇▇▇▇▇▇ Group Pty Limited: 2 Class "A" shares of A$1
each and 448,856 ordinary shares of A$1 each
Charges: None
48
DETAILS OF SUBSIDIARIES
Company name: ▇▇▇▇ ▇▇▇▇▇ Group Pty Limited
Company number: ACN 000599262
Date of incorporation: 14.11.67
Share capital: Authorised Issued
18,000 ordinary shares 212 ordinary shares of
of A$1 each 2,000 A$1 each 1,000
redeemable preference redeemable preference
shares of A$1 each shares of A$1 each
Registered office: ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇
Directors: ▇ ▇ ▇▇▇▇▇▇
M D ▇▇▇▇▇▇
B A G ▇▇▇▇▇▇▇▇▇▇▇
Secretary: M D ▇▇▇▇▇▇
Shareholders: ▇▇▇▇▇▇▇▇▇ Group Pty Limited: 212 ordinary shares of A$1
each and 1,000 redeemable preference shares of AU$1 each
Charges: None
49
DETAILS OF SUBSIDIARIES
Company name: ▇▇▇▇▇▇▇▇▇ Cases (Australia) Pty Limited
Company number: ACN 003111886
Date of incorporation: 30.5.86
Share capital: Authorised Issued
100,000 ordinary shares 2 ordinary
of A$1 each shares of A$1
each
Registered office: ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇
Directors: ▇ ▇ ▇▇▇▇▇▇
M D ▇▇▇▇▇▇
Secretary: M D ▇▇▇▇▇▇
Shareholders: ▇▇▇▇▇▇▇▇▇ Group Pty Limited: 2 ordinary shares of A$1
each
Charges: None
50
DETAILS OF THE SUBSIDIARIES
Company name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Cinema SA
Date of incorporation: 20.8.50
Share capital: Issued: 618,600 FF
Registered office: ▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
Directors: P Berhault
▇ ▇ ▇▇▇▇▇
▇ ▇ ▇▇▇▇▇
Secretary: No such position. General Manager: E Millet
Shareholders: ▇▇▇▇▇▇▇▇▇ Group Ltd : 6,160 shares
P Berhault 12 shares
▇ ▇ ▇▇▇▇▇ 10 shares
G Delorme 1 share
E Millet 1 share
H ▇▇▇▇▇ 1 share
R ▇▇▇▇▇ 1 share
Charges: None
51
DETAILS OF THE SUBSIDIARIES
Company: Cinecam SARL
Date of incorporation: 31.12.84
Share Capital: Issued: 500,000 FF
Registered Office: ▇-▇▇ ▇▇▇ ▇▇ ▇'▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
Directors: General manager: P Berhault
Secretary: No such position.
Shareholders: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Cinema SA: 4,999 shares
P Berhault: 1 share
Charges: None
52
DETAILS OF SUBSIDIARIES
Company name: Visual Action Holdings (N.Z.) Limited
Company number: AK802868
Date of incorporation: 26.3.96
Share capital: Authorised Issued
[No such concept for 100 ordinary shares of
companies incorporated NZ$1 each
under 1993 Act]
Registered office: ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
Directors: ▇ ▇ ▇▇▇▇▇
Secretary: [no such position under Companies Act 1993]
Shareholders: Visual Action Holdings plc: 100 ordinary shares
Charges: None
53
DETAILS OF SUBSIDIARIES
Company: Film Facilities Limited
Company number: AK 115253
Date of incorporation: 16.9.77
Share Capital: Authorised Issued
200,000 shares of NZ$1 200,000 shares of NZ$1
each each
Registered Office: ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
Directors: ▇ ▇ ▇▇▇▇
▇ ▇ ▇▇▇▇▇▇
M D ▇▇▇▇▇▇
Secretary: ▇ ▇ ▇▇▇▇
Shareholders: Visual Action Holdings (N.Z.) Limited: 140,000
shares; ▇▇▇▇ ▇▇▇▇▇ Group Pty Limited: 60,000
shares
Charges: Debenture dated 26 June 1996 in favour of the Bank of
New Zealand
54
DETAILS OF THE SUBSIDIARIES
Company name: ▇▇▇▇▇▇▇▇▇ Film Service Pte Limited
Company number: 199104255Z
Date of incorporation: 24 August 1991
Share capital: Authorised Issued
1,000,000 shares of 200,000 shares of
Singapore $1 each Singapore $1 each
Registered office: ▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇-▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Directors: ▇ ▇ ▇▇▇▇▇▇▇
▇ ▇ ▇▇▇▇▇▇
Secretary: Kwa Tze Hong
Shareholders: ▇▇▇▇▇▇▇▇▇ Group Pty Limited : 200,000 shares of
Singapore $1 each
Charges: None
55
DETAILS OF SUBSIDIARIES
Company name: ▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc
Company number: 129952
Date of incorporation: 19.10.65
Share capital: Authorised Issued
50,000 shares of common 20,000 shares of
stock of US$1 each common stock of
US$1 each
Registered office: ▇▇▇▇ ▇▇▇▇▇ ▇'▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇
Directors: F ▇▇▇▇▇▇▇
▇ ▇ Davies
M ▇▇▇▇▇
Secretary: M ▇▇▇▇▇
Shareholders: Visual Action Holdings Inc: 20,000 shares of common
stock of US$1 each
Charges: [Charges exist in favour of the Bank of California NA]
56
PART 3
OTHER BODY CORPORATES IN WHICH ANY GROUP COMPANIES HAVE A SHAREHOLDING
Companies incorporated in England and Wales
2.35 Research Plc 25,000 ordinary shares of(pound)1 each held by
▇▇▇▇▇▇▇▇▇ Group Film Service (London) Limited
(representing 50% of the issued share capital of
that company)
Company incorporated in Malaysia
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Film Service
Sdn Bhd 30 ordinary shares of 1 Malaysian Ringgit
each held by ▇▇▇▇▇▇▇▇▇ Group Film Service Pte
Limited (representing 30% of the issued share
capital of that company)
Company incorporated in France
Grue Telecopique Demontable SA 875 shares of Singapore $100 each (representing
2.5% of the issued share capital of that
company)
57
SCHEDULE 2
WARRANTIES
1 Corporate Authorisation, Existence And Power
1.1 Each Group Company is a company or corporation, duly incorporated and
validly existing under the laws of its jurisdiction and has the power
and the full authority and right to own its properties, assets and
revenues and to carry on its business as it is now being conducted.
1.2 The Vendor has full power and authority to enter into and perform
this agreement, the NZ Share Sale Agreement and the Tax Deed and
Visual Action Holdings Inc., has full power and authority to enter
into and perform the US Share Sale Agreement, all of which constitute
or when executed will constitute, binding obligations in accordance
with their terms.
1.3 The entry into and performance of this agreement by the Vendor does
not conflict with or exceed:
(a) any applicable law or regulation or any official or judicial
order in the United Kingdom or in the state or province of any
other country in which a Group Company is incorporated;
(b) its memorandum and articles of association;
(c) any agreement or document to which it is a party or which is
binding upon it, nor will it result in the creation or imposition
of any security interest on any of its property, assets or
revenues.
1.4 All authorisations, approvals, consents, licences, exemptions,
filings, registrations, or notarisations required in the United
Kingdom or in the state or province of any other country in which a
Group Company is incorporated in connection with the Vendor's entry
into and performance of, and the validity and enforceability of, this
agreement, have been obtained or effected and are in full force and
effect.
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2 Corporate Matters
2.1 The information contained in Parts 1, 2 and 3 of Schedule 1 relating
to the Group Companies is true and accurate in all material respects.
2.2 There are no Subsidiary Undertakings of the Companies other than
those listed in Part 2 of Schedule 1, and Part 3 of Schedule 1
identifies all bodies corporate (other than the Group Companies) in
which any of the Group Companies has a shareholding. No Group Company
has agreed to acquire a shareholding in any body corporate.
2.3 The only directors of the Group Companies are the persons whose names
are listed in Parts 1, 2 and 3 of Schedule 1.
2.4 No person is a shadow director (within the meaning of CA s741) of a
Group Company but is not treated as one of its directors for all the
purposes of the Companies Acts.
2.5 There are no agreements or arrangements in force which provide for
the issue, allotment or transfer of, or grant to any person the right
(whether conditional or otherwise) to call for the issue, allotment
or transfer of, any share or loan capital of any Group Company
(including an option or right of pre-emption or conversion).
2.6 The Vendor is the only legal and beneficial owner of the Shares.
2.7 The authorised and issued shares of the Companies referred to in
Parts 1 and 2 of Schedule 1 comprise, in each case, the whole of that
Company's allotted and issued share capital, have been properly
allotted and issued and are fully paid or credited as fully paid.
2.8 Each allotted and issued share in the capital of each Group Company
is legally and beneficially owned by the Group Company shown as a
shareholder of it in Schedule 1 and any other person shown as
shareholder of it in Schedule 1 is holding the share as nominee for
that Group Company, and each such share has been properly allotted
and issued, and is fully paid or credited as fully paid.
59
2.9 There is no Encumbrance, and there is no agreement, arrangement or
obligation to create or give an Encumbrance, in relation to a share
or unissued share in the capital of a Group Company. No person has
claimed to be entitled to an Encumbrance in relation to any of those
shares.
2.10 All returns particulars resolutions and documents required by law to
be filed, in the case of Group Companies incorporated in England and
Wales, with the Registrar of Companies and in the case of other Group
Companies, any similar authorities, have been duly filed and were
correct in all material respects when filed.
2.11 The UK Group Companies have complied with the Companies Acts, and
other legal requirements, in connection with their formation, the
allotment or issue of shares, debentures and other securities, the
payment of dividends and the conduct of their business; the non-UK
Group Companies have complied with equivalent companies legislation
in relation to such matters in the respective jurisdictions in which
they are incorporated.
2.12 All accounts books ledgers financial and other records of each Group
Company, including the register of members and statutory books of
each Group Company:
(a) are in its possession or under its control;
(b) have been properly kept; and
(c) contain an accurate and complete record in all material respects
of the matters with which they should deal.
2.13 The title deeds relating to the assets of each Group Company and an
executed copy of all agreements to which a Group Company is a party
and the original copies of all other documents which are owned by or
which ought to be in the possession of, a Group Company are in its
possession.
3 Effect of Sale of Shares
3.1 Compliance with the terms of this agreement does not and will not:
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(a) result in the breach of, or constitute a default under, or
relieve a person from an obligation under, any material agreement
or arrangement to which any Group Company is a party;
(b) result in the creation, imposition, crystallisation or
enforcement of an encumbrance on assets of any Group Company;
(c) contravene or constitute a default under the memorandum or
articles of association, governing documents or by-laws of any
Group Company.
(d) result in present indebtedness of a Group Company becoming due
and payable, or capable of being declared due and payable, prior
to its stated maturity.
3.2 The Vendor and its Subsidiary Undertakings from time to time other
than the Group Companies have no actual knowledge that after
Completion (whether by reason of an existing agreement or arrangement
or otherwise) or as a result of the proposed acquisition of the
Companies by the Purchaser:
(a) a supplier of the Group Company will cease, or be entitled to
cease or intends to cease, supplying or it may substantially
reduce its supplies to it;
(b) a customer of a Group Company will cease, or be entitled to cease
or intends to cease, to deal with it or may substantially reduce
its existing level of business with it;
(c) a Group Company will lose the benefit of a right or privilege
which it enjoys;
(d) an officer or senior employee of a Group Company is likely to
leave.
4 Litigation
4.1 No Group Company, and no person for whose acts or defaults any Group
Company may be vicariously liable, is a party to any civil, criminal
or arbitration proceedings where the
61
amount claimed exceeds (pound)10,000 (exclusive of costs or interest)
(other than debt collection in the ordinary course of business) and
so far as the Vendor is aware no such proceedings are pending or
threatened by or against any Group Company.
4.2 There is no dispute with a revenue or other official department in
the United Kingdom or elsewhere in relation to the affairs of any
Group Company, and so far as the Vendor is aware, there are no
circumstances which may give rise to a dispute.
4.3 There are no claims outstanding against a Group Company by an
employee or third party in respect of an accident or injury which are
not fully covered by insurance and so far as the Vendor is aware
there are no circumstances which might give rise to a claim liability
for which would be uninsured.
4.4 No order has been made, or petition presented, or resolution passed
for the winding-up of a Group Company; no distress, execution or
other process has been levied in respect of a Group Company which
remains undischarged; and there is no unfulfilled or unsatisfied
judgment or court order outstanding against a Group Company.
4.5 No Group Company has stopped payment.
5 Insurance
The schedule of the insurance policies of Group Companies referred to
in the Disclosure Letter is true and accurate, the premiums in
respect thereof have been duly paid, no claims have been made
thereunder in excess of (pound)100,000 in aggregate since the
Accounts Date and neither the Vendor or any Group Company has
received notification from the insurers thereunder that any such
policy is void or voidable nor so far as the Vendor is aware is there
any reason why such policies should be void or voidable.
6 Compliance with laws
6.1 No Group Company and none of its officers, agents or employees
(during the course of their duties in relation to it) is in violation
of any law, statute, ordinance or regulation except for violations
which do not have and are not expected to have a material adverse
effect on that Group Company.
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6.2 So far as the Vendor is aware no Group Company and no person for
whose acts or defaults the Group Company may be vicariously liable
has:
6.2.1 induced a person to enter into an agreement or arrangement with that
Group Company by means of an unlawful or immoral payment,
contribution, gift, or other inducement; or
6.2.2 offered or made an unlawful or immoral payment, contribution, gift or
other inducement to a government official or employee.
7 Licences and consents
Each Group Company has obtained all licences and authorisations
necessary for the carrying on of its business. So far as the Vendor
is aware all the licences and consents are valid and subsisting; no
Group Company is in breach of any of the licences or consents; and
there is nothing that might prejudice their continuation or renewal.
8 Material contracts
8.1 No Group Company is party or subject to a contract which is material
to that Group Company.
8.2 No Group Company is a party to an agreement arrangement or obligation
entered into other than in the ordinary course of its business.
8.3 No Group Company is a party to or liable under an agreement which is
prohibited by a competition law in any jurisdiction except where any
liability arising in respect of such agreement would not have or
would not be expected to have a material adverse effect on that Group
Company.
9 Suppliers and customers
No customer or supplier has in the year ending on the date of this
agreement notified a Group Company of a material dispute with that
Group Company concerning the supply of goods or services by that
Group Company where such dispute remains outstanding.
63
10 Defaults under agreements by Group Companies
10.1 No Group Company nor, so far as the Vendor is aware, any other person
is in default under the terms of any material agreement to which any
Group Company is a party.
10.2 Membership of an association is not necessary for the conduct of the
business of any Group Company.
10.3 No Group Company is or will with lapse of time, become liable in
respect of a representation or warranty (whether express or implied),
or a matter giving rise to a duty of care on its part.
10.4 No threat or claim or default under an agreement, obligation or
arrangement has been made, and is outstanding, against a Group
Company.
11 Related party contracts
11.1 No agreement or arrangement (legally enforceable or not) is
outstanding to which any Group Company is a party and to which the
Vendor or any Subsidiary Undertaking of the Vendor (other than a
Group Company) or any of their respective directors (save for any
service agreement) is also a party.
11.2 Save for the Inter-Group Debt no amounts are owing from any Group
Company to the Vendor or any Subsidiary Undertaking of the Vendor
(other than amounts owing to other Group Companies).
12 Employees
12.1 Complete and accurate particulars of the identities, dates of
commencement of employment, or appointment to office, and terms of
employment of all employees of each Group Company who earn a basic
annual salary in excess of (pound)35,000 per annum including profit
sharing, commission or discretionary bonus arrangements, are
contained in the Disclosure Letter.
64
12.2 No Group Company is a party to a consultancy contract under which the
amount payable per annum is in excess of(pound)35,000.
12.3 No Group Company has received notice of resignation from any employee
earning in excess of(pound)35,000 basic salary per annum.
12.4 No Group Company has an agreement with or recognises a trade union,
works council, staff association or other body representing any of
its employees.
12.5 No contract of service exists between a Group Company and a director
or employee in relation to which the requirements of CA section 319
have not been fulfilled.
12.6 There are no schemes in operation entitling an employee of a Group
Company to a commission or remuneration calculated by reference to
the whole or part of the turnover, profits or sales of a Group
Company.
12.7 No Group Company has registered a profit-related pay scheme under the
provisions of ICTA Part V Chapter III.
12.8 During the period to which the Last Accounts relate and since the
Accounts Date or (where employment or holding of office commenced
after the beginning of the period) since the commencing date of the
employment or holding of office:
(a) no change has been made in the rate of remuneration, emoluments
or pension benefits, of an officer, ex-officer or senior
executive of a Group Company (a senior executive being a person
in receipt of remuneration in excess of (pound)35,000 per annum);
(b) no change has been made in any other terms of employment of an
officer or senior executive.
12.9 No Group Company is obliged or accustomed to pay anything other than
in respect of remuneration or pension benefits, to or for the benefit
of an officer or employee of a Group Company.
65
12.10 No negotiations for an increase in the remuneration or benefits of an
officer or employee of a Group Company are current or likely to take
place within six months after Completion.
12.11 All contracts of service to which a Group Company is a party are
determinable at any time on three months' notice or less without
compensation (other than compensation in accordance with the
Employment Rights Act 1996).
12.12 The claims by ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ against Film Facilities
Limited have been settled on the terms disclosed and no Group Company
has any other liability or obligation to either of the claimants.
13 Intellectual Property
13.1 The Disclosure Letter lists all trade and service marks which have
been registered or for which an application for registration has been
filed which are owned by any Group Company in the territory of its
incorporation and which are material to its business ("Trademark M
specifying as to each, as applicable (a) the class in which
application for registration has been made of such Trademark Right;
(b) the owner of the Trademark Right and (c) the jurisdiction in
which such Trademark Right has been issued or registered or in which
an application for such issuance or registration has been filed and
no Group Company uses trade or service marks which are owned by
another Group Company.
13.2 Each of the Intellectual Property Rights purportedly owned by a Group
Company is:
(a) legally and beneficially owned by that Group Company alone, free
from any licence, Encumbrance or restriction on use; and
(b) not the subject of a claim or opposition from a person of which
that Group Company has been notified in writing (including,
without limitation, from an employee of that Group Company) as to
title, validity or enforceability.
13.3 No Group Company has granted nor has it received written notification
that it is obliged to grant, a licence, assignment or other right in
respect of any of its Intellectual Property
66
Rights nor has any Group Company entered into a written agreement to
grant any such licences assignments or other rights other than in the
ordinary course of its business.
13.4 So far as the Vendor is aware there is, and has been in the
preceding two years, no infringement of any of the Intellectual
Property Rights of a Group Company.
13.5 No claim has been received by a Group Company that the carrying on of
the business of that Group Company infringes the Intellectual
Property Rights of a third party.
In this paragraph 13 "Intellectual Property Rights" means patents,
trade marks, service marks, registered designs, unregistered trade
and service marks and copyrights.
14 Accounts
14.1 The Last Accounts:
14.1.1 have been properly prepared and audited in accordance with the
Companies ▇▇▇ ▇▇▇▇ and accounting standards principles and practices
generally accepted in the United Kingdom (or the relevant
corresponding accounting standards in the case of jurisdictions
outside the United Kingdom) as at 31 December 1996; and
14.1.2 show a true and fair view of the assets, liabilities and state of
affairs of each Company and its Subsidiary Undertakings as at the
Accounts Date and of the profits and losses of each Company and its
Subsidiary Undertakings for the financial year ended on the Accounts
Date;
14.1.3 are not affected by extraordinary, exceptional or non-recurring
items;
14.1.4 properly reflect the financial position of each Group Company as at
their date;
14.1.5 disclose, to the full extent required by normal accounting standards,
all the assets of each Group Company as at their date;
14.1.6 provide or reserve, in accordance with principles set out in the
notes included in the Last Accounts for all Taxation liable to be
assessed on each Group Company, or for which it may be accountable,
in respect of the period ended on the Accounts Date.
67
14.1.7 In relation to a Group Company incorporated in the United Kingdom
comply with the FRS's applicable to a United Kingdom company as at
the last accounting date.
14.2 Since the Accounts Date:
(i) the businesses of the Group Companies have been carried on in
the ordinary course and no Group Company has incurred or
agreed to incur any material liability other than in the
ordinary course of business;
(ii) there has been no material adverse change in the financial or
trading position of any Group Company; and
(iii) no Group Company has paid, made or declared any dividend or
other distribution nor has it made a cash payment to the
Vendor or any Subsidiary Undertaking of the Vendor other than
dividends, distributions or cash payments made to other Group
Companies;
(iv) no part of the business of a Group Company has been affected
by abnormal factors not affecting similar businesses to a like
extent;
(v) each group Company has paid its creditors in accordance with
their respective credit terms.
For the purpose of Warranty 14.2(ii) "material" means material in the
context of the separate business of each Group Company.
14.3 The management accounts of each Company and its Subsidiary
Undertakings for January, February, March and April 1997 are annexed
to the Disclosure Letter have been prepared on a basis consistent
with the basis of preparation of the management accounts of those
companies for the corresponding period in 1996 and properly reflect
in all material respects the profits and losses, assets and
liabilities of each Group Company as at the end of the month to which
each set of management accounts relates.
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15 Taxation
In this clause 15, each Warranty applies to each Group Company,
except where the Warranty is expressed to apply to UK Group Companies
or where it is expressly provided otherwise.
15.1 Administration
15.1.1 So far as the Vendor is aware, all returns, notifications,
computations and payments which should have been made or given by the
Group Companies for Taxation purposes in the period of six years
preceding the date of this agreement have been made or given and were
when given up-to-date, materially correct and on a proper basis; and
none of them (or any return, notification, computation or payment
made or given prior to such period) is, or so far as the Vendor is
aware, is likely to be, the subject of a dispute involving a material
amount with the Inland Revenue or other Taxation Authority.
15.1.2 No Group Company has paid or, so far as the Vendor is aware, been
assessed to or charged since 1 January 1996 a penalty under a
Taxation statute.
15.1.3 All particulars furnished to the Inland Revenue or other Taxation
authorities, in connection with the application for a consent,
clearance or Taxation ruling on behalf of a Group Company, or
affecting a Group Company, fully and accurately disclosed all
material facts and circumstances; the consent, clearance or Taxation
ruling is valid and effective; and the transaction, for which
consent, clearance or Taxation ruling was obtained, has been carried
into effect (if at all) only in accordance with the terms of the
relative application and consent, clearance or Taxation ruling.
15.1.4 No Group Company has taken any action which has had, or might have,
the result of altering or prejudicing, for a period commencing after
the Last Accounts Date, an arrangements or agreement which it has
with a Taxation authority.
15.1.5 So far as the Vendor is aware, each Group Company has, in the period
of three years preceding the date of this agreement, properly
operated the PAYE system (or similar system in any relevant
jurisdiction), by duly deducting Taxation from all payments made,
69
or treated as made, to its employees, former employees or
contractors, and accounting to the Inland Revenue or appropriate
Taxation Authority (to the extent required prior to the date of this
agreement) for all Taxation deducted and for all Taxation chargeable
on benefits provided for its employees or former employees.
15.1.6 Each UK Group Company is resident in the United Kingdom for the
purposes of corporation tax and each non-UK Group Company is
centrally managed and controlled in the jurisdiction in which it is
incorporated.
15.1.7 Each Group Company has sufficient records relating to past events to
determine either its liability to Taxation or relief from Taxation
which would arise on the realisation or disposal of any assets owned
by it at or acquired by it since the Accounts Date.
15.1.8 So far as the Vendor is aware, each Group Company has made and (to
the extent required prior to the date of this agreement) accounted
for all deductions in the period of six years preceding Completion in
respect of Taxation required by law to be made from any payment.
15.1.9 The Disclosure Letter contains full and accurate particulars of all
elections in force in relation to the UK Group Companies under ICTA
s247 (Dividends etc paid by one member of a group to another) and no
assessment may be made under that section on a UK Group Company in
respect of advance corporation tax which ought to have been paid or
income tax which ought to have been deducted.
15.2 Distributions
15.2.1 No UK Group Company has since 6 April 1965 repaid, or agreed to
repay, repurchased or agreed to repurchase, or redeemed or agreed to
redeem, its own shares, or capitalised or agreed to capitalise
profits or reserves in the form of redeemable shares or debentures.
15.2.2 No outstanding security (within the meaning of ICTA s254(1) (Company
distributions, tax credits etc.: interpretation)), of a UK Group
Company was issued in such circumstances that the interest payable on
it, or any other payment in respect of it, falls to be treated as a
distribution under ICTA s209 (Meaning of "distribution").
70
15.3 Close companies
No UK Group Company is, or was at any time during the six years ended
on the Accounts Date, a close company as defined in ICTA s414 (Close
companies).
15.4 Group relief and group surrenders
15.4.1 No UK Group Company has in relation to any accounting period ending
the period of six years preceding Completion, made or agreed to make,
otherwise than to or from another Group Company:
(a) a surrender of or claim for group relief under ICTA Part X Ch IV
(Group relief);
(b) a surrender of an amount of surplus advance corporation tax under
ICTA s240 (Set-off of company's surplus ACT against subsidiary's
liability to corporation tax).
15.4.2 No UK Group Company is liable to make or entitled to receive a
payment for group relief or for the surrender of advance corporation
tax, otherwise than to or from another UK Group Company.
15.4.3 No UK Group Company has made or received a payment for group relief
or for the surrender of advance corporation tax (otherwise than to or
from another UK Group Company) which may be liable to be refunded in
whole or in part.
15.4.4 No UK Group Company has since 1st April 1987 been a dual resident
investing company within the meaning of ICTA s404 (Limitation of
group relief in relation to certain dual resident companies).
15.4.5 No UK Group Company has agreed to surrender, otherwise than to
another Group Company, a right to receive a tax refund under FA1989
s102 (Surrender of company tax refund etc. within group).
15.5 Transactions not at arm's length
71
15.5.1 No Group Company has acquired a fixed asset owned by it at the
Accounts Date in circumstances such that the cost of the acquisition
would be treated for Taxation purposes as being less than the amount
at which the asset is recorded in the Last Accounts (before any
depreciation, revaluation, provision or write-off).
15.5.2 So far as the Vendor is aware, in the period of six years preceding
the date of this agreement, all transactions entered into by each
Group Company with another Group Company resident for Taxation
purposes in a different jurisdiction have been entered into on an
arm's length basis and the consideration (if any) charged or received
or paid by the Group Company on such transactions has been equal to
the consideration which might have been expected to be charged
received or paid between independent persons dealing at arm's length.
15.6 Tax avoidance
15.6.1 No UK Group Company has, since the Accounts Date, been a party to a
transaction to which any of the following provisions has been or
could be applied other than transactions in respect of which all
necessary consents or clearances have been obtained:
(a) ICTA ss703 to 709 (Cancellation of tax advantages from certain
transactions in securities);
(b) ICTA s765 (Migration etc. of companies);
(c) ICTA s776 (Transactions in land: taxation of capital gains);
(d) TCGA ss135 to 138 (Company reconstructions and amalgamations);
(e) TCGA s139 (Reconstruction or amalgamation involving transfer of
business).
15.7 Demergers
No UK Group Company has so far as the Vendor is aware, been engaged
in, or been a party to, any of the transactions set out in ICTA 213
to 218 (Demergers) or has made or
72
received a chargeable payment as defined in s214 (Chargeable payments
connected with exempt distributions).
15.8 Stock dividends and other securities
15.8.1 No UK Group Company has issued in the period of six years preceding
Completion or owns share capital to which ICTA s249 (Stock dividends
treated as income) or CGTA s89(1) (Stock dividends: consideration for
new holding) applies.
15.8.2 No UK Group Company has issued any security which is an asset to
which section 92 Finance ▇▇▇ ▇▇▇▇ (Convertible securities etc.)
applies or any relevant discounted security within the meaning of
Schedule 13 Finance ▇▇▇ ▇▇▇▇ or any security which is a loan
relationship to which section 93 Finance ▇▇▇ ▇▇▇▇ (Relationships
linked to the value of chargeable assets) applies where the security
is outstanding or was outstanding at any time since the Accounts
Date.
15.9 Foreign income and gains
15.9.1 No UK Group Company has either received or become entitled to income
which is "unremittable income", within the meaning of ICTA s584
(Relief for unremittable overseas income), or a gain to which TCGA
s279 (Foreign assets: delayed remittances) could apply.
15.9.2 No UK Group Company has made an election under ICTA s246A (Election
by company paying dividend) or has received a dividend treated as a
foreign income dividend for the purposes of ICTA Part VI Chapter VA
(Foreign income dividends) or is party to arrangements such as are
mentioned in ICTA s246A(3) or has given or agreed to give a consent
such as is mentioned in ICTA s246K(6) (Matching: subsidiaries).
15.9.3 No UK Group Company owns shares in another company which has made an
election under ICTA s246A.
15.10 Foreign companies and emigration
73
15.10.1 No notice of the making of a direction under ICTA s747 (Imputation of
chargeable profits and creditable tax of controlled foreign
companies) has been received by a UK Group Company and, so far as the
Vendor is aware, no circumstances exist which would entitle the
Inland Revenue to make a direction and to apportion profits of a
controlled foreign company to a UK Group Company under ICTA s752
(Apportionment of chargeable profits and creditable tax).
15.10.2 No claim has been or could be made against a UK Group Company under
FA1989 s134 (Non-payment of tax by non-resident companies) to pay
corporation tax in respect of a chargeable gain of a company which is
not a Group Company.
15.11 No gain has accrued on any disposal occurring in the six years
preceding the date of this agreement in respect of which a UK Group
Company is liable to corporation tax on chargeable gains by virtue of
TCGA s13 (Attribution of gains to members of non-resident companies).
15.12 Degrouping
The execution or completion of this agreement will not result in a
profit or gain being deemed to accrue for Taxation purposes whether
under TCGA s179 (Company ceasing to be member of group:
post-appointed day cases) for a UK Group Company or otherwise for a
non-UK Group Company.
15.13 Replacement of business assets
No UK Group Company has made a claim under TCGA ss23 (Receipt of
compensation and insurance money not treated as a disposal), 152
(Replacement of business assets: Roll-over relief), 153 (Assets only
partly replaced), 154 (New assets which are depreciating assets), 175
(Replacement of business assets by members of a group) or 247
(Rollover relief on compulsory acquisition) which would affect the
amount of the chargeable gain or allowable loss which would, but for
the claim, arise on a disposal of any of assets owned by it at the
date of this agreement or disposed of by it since the Accounts Date.
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15.14 Gifts involving Group Companies
15.14.1 No UK Group Company has held in the period of six years preceding the
date of this agreement or holds shares in a company (not being
another Group Company) which has made a transfer to which TCGA s125
(Shares in close company transferring assets at an undervalue)
applies.
15.14.2 No UK Group Company has received an asset in the period of six years
preceding the date of this agreement by way of gift as mentioned in
TCGA s282 (Recovery of tax from donee).
15.15 Value added tax and similar taxes
15.15.1 Each Group Company has in the period of six years preceding the date
of this agreement:
(a) complied in all material respects with all statutory
requirements, orders, provisions, directions or conditions
relating to any value added tax, sales tax, purchase tax or
turnover tax applicable to any jurisdiction in which that Group
Company is incorporated or carries on business through a branch
or agency (the `relevant VAT legislation');
(b) maintained full, accurate and up to date records for the purposes
of the relevant VAT legislation;
(c) paid and made all payments and full and accurate returns to the
relevant Taxation Authority as required under the relevant VAT
legislation.
15.15.2 No Group Company:
(a) has been required by the relevant Taxation Authority to give
security for its obligations under the relevant VAT legislation;
and
(b) has (in the case of the UK Group Companies only) been treated at
any time since 30 April 1991 as a member of a group which
includes a company other than the Group Companies.
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15.16 Inheritance tax
15.16.1 No UK Group Company has made a transfer of value (as defined in ITA
s3 (Transfers of value)).
15.16.2 No Inland Revenue charge for unpaid inheritance tax (as provided by
ITA ss237 and 238 (Inland Revenue charge for unpaid tax)) is
outstanding over an asset of a UK Group Company or in relation to
shares in the capital of a UK Group Company.
15.16.3 No circumstances exist so far as the Vendor is aware, whereby a power
mentioned in ITA s212 (Powers to raise tax) could be exercised in
relation to shares, securities or other assets of a UK Group Company
or could be exercised but for ITA s264(6) (Limitation of liability).
15.17 Stamp duty
15.17.1 No UK Group Company is a party to a document held so far as the
Vendor is aware, outside the United Kingdom which confers on the UK
Group Company material rights or imposes material obligations and
which, if brought into the United Kingdom, would be liable to stamp
duty under Stamp ▇▇▇ ▇▇▇▇ s14(4) (Terms upon which instruments not
duly stamped may be received in evidence) where the cost of such duty
or any penalty would fall on a of the UK Group Companies.
15.18 No Group Company is owed a debt (not being a debt on a security),
upon the disposal or satisfaction of which a liability to corporation
tax on chargeable gains will arise by reason of TCGA s251 (Debts:
General Provisions).
15.19 Interest rate and currency contracts
No Group Company is a party to an interest rate contract or option,
or a currency contract or option, which is a qualifying contract or a
quasi-qualifying contract within the meaning of FA1994 s147
(Qualifying contracts) or s148 (Contracts which may become qualifying
contracts).
15.20 Singapore
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15.20.1 Warranties 14.1.6, 15.1.2, 15.1.3 and 15.5.1 do not apply to SFS.
15.20.2 Full provision or reserve has been made in the Last Accounts for all
Taxation liable to be assessed on SFS or for which it is or may
become accountable in respect of:
(a) profits, gains or income (as computed for Taxation purposes)
arising or accruing to SFS or deemed to arise or accrue to SFS on
or before the Accounts Date;
(b) any transaction, act, event or omission or whatever nature
effected or deemed (for Taxation purposes) to be effected on or
before the Accounts Date; and
(c) distributions made or deemed (for Taxation purposes) to be made
on or before the Accounts Date or provided for in the Accounts.
15.20.3 Proper provision or reserve for deferred Taxation which may be
assessed on SFS has been made in the Last Accounts in accordance with
accounting principles and standards generally accepted at the date of
the Agreement in Singapore.
15.20.4 Except as disclosed by the Last Accounts and save in so far as full
provision is made in them in a deferred Taxation account for Taxation
in respect of any balancing charges which would arise or accrue in
respect of any such machinery and plant on disposal thereof at the
value at which the machinery and plant is included in the Last
Accounts, the machinery and plant is not included in the Last
Accounts at such value that if it were obtained on the disposal or
deemed disposal of the machinery and plant as a whole a balancing
charge would arise.
15.20.5 All particulars furnished to the Inland Revenue or other Taxation
Authority, in connection with the application for any consent or
clearance made by SFS disclosed all facts and circumstances material
for the decision of the Inland Revenue or such other authority and,
so far as the Vendor is aware, there are no circumstances that have
arisen since any application for any such consent or clearance was
made which might reasonably be expected to cause such consent or
clearance to be or become invalid or to be withdrawn by the Inland
Revenue or the Taxation Authority concerned.
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15.20.6 No director or officer of SFS has since the Accounts Date paid or
become liable to pay any fine, penalty or interest charged by virtue
of any other statutory provision relating to Taxation.
15.20.7 SFS neither is nor may become liable to pay or make reimbursement or
indemnity in respect of Taxation (or amounts corresponding thereto)
in consequence of the failure by any other person (other than another
Group Company) to discharge that Taxation within any specified period
or otherwise, where such Taxation relates to a profit, income or
gain, transaction, event, omission or circumstance arising occurring
or deemed to arise or occur (whether wholly or partly) prior to the
date of the agreement.
15.20.8 No relief (whether by way of deduction, reduction, set-off,
exemption, postponement, roll-over, repayment or allowance, or
otherwise) from, against or in respect of any Taxation has been
claimed and/or given to SFS which could or might be effectively
withdrawn, postponed, restricted, clawed back or otherwise lost as a
result of any act, omission, event or circumstance arising or
occurring at or at any time before the date of the agreement.
15.20.9 SFS neither owns nor has agreed to acquire, any asset, nor has
received or agreed to receive any services or facilities (including
without limitation, the benefit of any licences or agreements) the
consideration for the acquisition or provision of which was or will
be in excess of its market value, or otherwise than on an arms'
length basis.
15.20.10 SFS has not engaged in, or been a party to, any transaction or series
of transactions or scheme or arrangement falling within the
provisions of Section 33 of the Income Tax Act, Chapter 134 of
Singapore or any similar legislation of any relevant jurisdiction.
15.20.11 All documents to which SFS is a party or which form part of SFS's
title to any material asset owned or possessed by it or which SFS may
need to enforce or produce in evidence in the courts of Singapore
have been duly stamped and (where appropriate) adjudicated.
15.20.12 So far as the Vendor is aware, there are:
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(a) no loans made by SFS to the Vendor and/or any director of a
Related Company (as defined in section 6 of the Companies Act,
Chapter 50 of Singapore) and/or any person connected with any of
them, and SFS has not been a party to any transaction to which
any of the provision of Section 150A (Substantial property
transactions involving directors, etc), Section 160C (Liabilities
arising from contravention of Section 160A) or Section 162
(General restrictions on loans etc to directors and persons
connected with them) of the Companies Act Chapter 50 of Singapore
may apply;
(b) no debts owing to SFS by any director of SFS;
(c) no debts owing by SFS other than debts which have arisen in the
ordinary course of business; and
(d) no securities for any such loan or debts as aforesaid.
15.20.13 So f ar as the Vendor is aware, there are no existing contracts or
arrangements to which SFS is a party and in which the Vendor and/or
any director of a Related Company (as defined in section 6 of the
Companies Act, Chapter 50 of Singapore) and/or any person connected
with any of them are interested whether directly or indirectly.
15.20.14 So far as the Vendor is aware, there are no outstanding, nor during
the past six years have there been, any arrangements or
understandings (whether legally binding or not) between SFS and any
person who is a shareholder, or the beneficial owner of any interest
in SFS or in any company in which SFS is interested, or any person
connected with any such person, relating to the management of SFS's
business for a management fee, or the appointment or removal of
directors of SFS, or the ownership or transfer of ownership of the
letting of any of the assets of SFS, or the provision, supply or
purchase of finance, goods, services or other facilities to, by or
from SFS, or otherwise howsoever relating to its affairs.
15.20.15 Save to the extent (if any) to which provision or allowance has been
made in the last Accounts, SFS has not made or agreed to make any
payment to or provided or agreed to
79
provide any benefit for any present or former director or employee
which, so far as the Vendors are aware, is not allowable as a
deduction for the purposes of Taxation.
15.20.16 SFS does not have outstanding any undischarged liability to pay to
any governmental or regulatory authority in any jurisdiction any
Taxation, contribution or other impost arising in connection with the
employment or engagement of employees or directors by it.
15.21 Australia
In this clause 15.21:
"Australian Companies" means ▇▇▇▇▇▇▇▇▇ Group Pty Limited (ACN 002952
236), ▇▇▇▇▇▇▇▇▇ Film Service (Australia) Pty Limited (ACN 000 941
533), ▇▇▇▇ ▇▇▇▇▇ Group Pty Limited (ACN 000 599 262) and ▇▇▇▇▇▇▇▇▇
Cases (Australia) Pty Limited (ACN ▇▇▇ ▇▇▇ ▇▇▇) and "Australian
Company" has a corresponding meaning; and
"Tax Act" mans the Income Tax Assessment ▇▇▇ ▇▇▇▇ of the commonwealth
of Australia (as amended).
15.21.1 No dividend has been paid by any Australian Company:
(a) in respect of which the required franking amount (as provided for
in section 160AQE of the Tax Act has exceeded the franked amount
(as defined in section 160APA of the Tax Act) of the dividend; or
(b) which has been franked in excess of the required franking amount;
which would result in that company being liable to pay franking
deficit tax under section 160AQJ of the Tax Act or additional tax
under section 160ARX of the Tax Act.
15.21.2 There are no existing or pending statutory franking debits to the
franking account of any Australian Company in relation to dividend
streaming arrangements, on-market share buy-back purchases or
otherwise.
15.21.3 No asset of any Australian Company has been the subject of an
election for, or compulsory roll over relief under, Part IIIA of the
Tax Act either as a result of a claim
80
by the relevant Australian Company for relief or the compulsory
operation of the rollover relief provisions in Part IIIA of the Tax
Act.
15.21.4 Each Australian Company has correctly:
(a) credited or debited its Class C franking account after the
conversion time (as defined in section 160AS of the Tax Act) as
required under sections 160ASG, 160ASH and 160ASI of the Tax Act;
and
(b) debited and credited its Class A franking account and its Class B
franking account, and debited its Class C franking account as
required under section 160ASK of the Tax Act.
15.21.5 The requirements of sections 160AQF and 160AQH of the Tax Act were
met in respect of the franking of all dividends declared by any
Australian Company before Completion.
15.21.6 No debt or other obligation of any Australian Company has been
forgiven, waived, released or otherwise dealt with, nor has any
arrangement been entered into in relation to any such debts or
liabilities, since 27 June 1996.
15.21.7 The Vendor has fully and correctly disclosed to the Purchaser:
(a) all disposals of assets to which Division 19A of Part IIIA of the
Tax Act has applied in relation to any Australian Company prior
to the date of the agreement;
(b) the manner in which and the basis on which Division 19A of Part
IIIA of the Tax Act has applied in relation to each such
disposal;
(c) the effect which each such application of Division 19A of Part
IIIA of the Tax Act has had on the cost base (for the purposes of
Part IIIA of the Tax Act) to the relevant Australian Company of
any shares in or loans to any company which has prior to
Completion been a transferor as defined in and for the purposes
of Division 19A of Part IIIA;
81
(d) all information or evidence required or necessary to explain or
support each such application of Division 19A of Part IIIA of the
Tax Act.
15.22 France
15.22.1 Warranties 14.1.6, 15.1.1 and 15.1.8 do not apply to ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Cinema SA and Cinecam SARL.
15.22.2 The provisions for Taxation which appear in the Last Accounts of
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Cinema SA and Cinecam SARL are sufficient for the
payment of all Taxation due or accrued at the Accounts Date
(regardless of the date of the event which is the origin of the
Taxation and regardless of the date on which payment thereof is due).
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Cinema SA and Cinecam SARL have filed all national,
departmental and local tax and social declaration at the required
time and have kept copies of the originals filed. All Taxation owed
by ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Cinema SA and Cinecam SARL or payable which ought
to have been paid has been paid within the legal time limits.
15.22.3 ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Cinema SA and Cinecam SARL have withheld all Taxation
required to be withheld by them in respect of wages, licence fees in
interest or any other sum paid by them.
15.22.4 So far as the Vendor is aware, the interest paid to the shareholders
of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Cinema SA and Cinecam SARL prior to the date of the
agreement has never exceeded the maximum authorised by Articles 39-13
and 212 of the General Tax Code.
16 Finance
16.1 Since the last Accounts Date, the Group Companies have not disposed
of or realised capital assets or an interest in capital assets for
consideration in excess of (pound)200,000 in aggregate.
16.2 No Group Company has outstanding or has agreed to create or issue any
loan capital; and it has not factored any of its debts, or engaged in
financing of a type which would not require to be shown or reflected
in the Last Accounts.
82
16.3 No Group Company has received notice (whether formal or informal)
from a lender of money, requiring repayment or intimating the
enforcement of a security; and so far as the Vendor is aware there is
nothing likely to give rise to a notice.
16.4 Full and accurate statements of the bank accounts of each Group
Company, and of the credit or debit balances as at a date not more
than seven days before the date of this agreement, have been supplied
to the Purchaser.
16.5 In relation to all debentures, acceptance credits, overdrafts, loans
or other financial facilities outstanding or available to a Group
Company (referred to in this clause as "facilities"):
(a) there are attached to the Disclosure Letter accurate copies of
all documents relating to the facilities;
(b) there has been no material contravention of, or M with, the
provisions of those documents;
(c) no steps for the early repayment of indebtedness have been taken
or threatened;
(d) there have not been, nor are there, circumstances known to the
Vendor whereby the continuation of any of the facilities might be
prejudiced, or which might give rise to an alteration in its
terms; and
(e) none of the facilities is dependent on the guarantee or indemnity
of, or security provided by, a person other than a Group Company.
17 Assets
17.1 Except in relation to real property and assets subject to finance
lease or hire, hire purchase, credit sale or conditional sale
agreements as disclosed in the Disclosure Letter:
83
17.1.1 each asset acquired by a Group Company since the Accounts Date (other
than assets disposed of since that date in the ordinary course of
business) is legally and beneficially owned by that Group Company
free from any Encumbrance; and
17.1.2 each asset included in the Last Accounts and not disposed of in the
ordinary course of business since the Accounts Date which is
represented in the Last Accounts as an asset of a Group Company is
legally and beneficially owned by a Group Company free from any
Encumbrances.
17.2 No Group Company holds goods which it purchased on terms that
property does not pass until full payment is made or all indebtedness
discharged.
hidden text
17.3.1 all the assets and undertakings of each Group Company of an insurable
nature (excluding the Properties) are, and have at all material times
been, insured in amounts representing their full replacement or
reinstatement value against fire and other risks normally insured
against by persons carrying on the same business as that carried on
by it;
17.3.2 each Group Company is, and has at all material times been, adequately
covered against accident, damage, injury, third party loss (including
product liability), loss of profits and other risks normally insured
against by persons carrying on the same kind of business;
17.3.3 all insurance is in full force, and so far as the Vendor is aware,
nothing has been done or omitted to be done which could make any
policy of insurance void or voidable, or which is likely to result in
an increase in premium;
17.3.4 none of these policies is subject to any special or unusual terms or
restrictions or to the payment of any premium in excess of the normal
rate;
17.3.5 no claim is outstanding, or may be made, under any of the policies
and so far as the Vendor is aware no circumstances exist which are
likely to give rise to a claim.
17.4 All equipment used in connection with the business of each Group
Company is legally and beneficially owned by the relevant Group
Company save as disclosed in the Disclosure Letter and all that
equipment which has been subject of rental agreements
84
with customers during the period of six months prior to the date of this
agreement is in satisfactory working order and has been regularly and
properly maintained.
17.5 At Completion each of the Group Companies will have repaid all loans
and other indebtedness (including any indebtedness arising under any
finance leases or other financing arrangements outstanding in respect
of rental stocks) but excluding trade debt arising in the ordinary
course of business.
17.6 The rental asset inventory at 31 December 1996 included all items
shown in the inventory of rental assets of the Group Companies at 30
April 1997 in the Agreed Form except those rental assets that had
been disposed of in the ordinary course of business between 31
December 1996 and the date of the inventory in the Agreed Form and
except any assets acquired during that period and all such assets
were reflected in the management accounts of the Group Companies
prepared in respect of the months ended 31 January, 28 February, 31
March and 30 April 1997.
18 Real Property
18.1 The Properties comprise all land and premises owned, occupied or used
by, or in the possession of each Group Company.
18.2 The details of the Properties contained in Schedule 4 are correct in
all material respects.
18.3 The documents and information given by or on behalf of the Vendor to
the Vendor's Solicitors to produce the Certificates of Title are true
and accurate and not misleading.
18.4 Save in respect of the properties referred to in the Disclosure
Letter, no Group Company is actually or contingently liable in
respect of any lease or licence for any premises other than the
Property.
18.5 Except for obligations arising in relation to an informal arrangement
for occupation of Block ▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇, #▇▇-▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ Film Service Pte Limited has
no obligations or liabilities in respect of any other lease or
interest in real property.
85
18.6 Each of the leases of real or personal property to which either of
the Group Companies incorporated in France is a party, either as
lessor or lessee, is valid and enforceable in accordance with its
terms. Save as disclosed none of such leases contains any unusual
provisions. All the premises in which the Group Companies
incorporated in France carried on their activities under a commercial
lease subject to the provisions of the Decree of 30 September 1953
are registered with the relevant Commercial and Companies Registries.
No notice to terminate has been given to either of the Group
Companies incorporated in France in respect of any of the leases
referred to in Schedule 4 and neither of the companies has been
responsible for any act or omission which could justify the lessor in
terminating any such lease.
19 Pensions
19.1 There is not in operation, and no proposal has been announced to
enter into or establish, an agreement, arrangement, custom or
practice (whether legally enforceable or not and approved or not) for
the payment of, or payment of a contribution towards, a pension,
allowance, lump sum or other similar benefit on retirement, death or
during periods of sickness or disablement, for the benefit of a
director, former director, employee or former employee of a Group
Company or any of their dependants other than the ▇▇▇▇▇▇▇▇▇ Group PLC
1991 Pension Plan, the ▇▇▇▇▇▇▇▇▇ Group PLC Tier 2 VIP Pension Scheme,
the ▇▇▇▇▇▇▇▇▇ Film Service Limited Pension Scheme, the Cine Holdings
Executive Pension Scheme, the Cine Holdings Limited Staff Pensions
Scheme, the Cine Holdings Limited Group Death in Service Benefit
Scheme, the ▇▇▇▇▇▇ ▇▇▇▇▇▇ 401k Scheme, the ▇▇▇▇▇▇ Family
Superannuation Fund and the ▇▇▇▇▇▇ Family Superannuation Fund (the
"Disclosed Schemes") and other than arrangements to which Group
Companies are required by statute to contribute.
19.2 All material particulars (including details of benefits) relating to
the Disclosed Schemes and copies of all material documents relating
to the Disclosed Schemes which have not been superseded have been
disclosed to the Purchaser or its advisers.
19.3 No contribution due to the Disclosed Schemes is unpaid.
86
19.4 The Disclosed Schemes in all material respects comply with and have
been administered in accordance with all applicable laws including
the requirements of Article 119 of the Treaty of Rome. In particular
(but without affecting the generality of this warranty) no employee
or former employee of any Group Company has been excluded from or has
had benefits limited under the Disclosed Schemes whether directly or
indirectly on grounds of sex or because of part-time employment in
contravention of applicable law or Article 119 of the Treaty of Rome.
19.5 No undertaking or assurance (whether or not constituting a legally
binding commitment) has been given to any employee of any Group
Company about the continuation of the Disclosed Schemes or any
alteration to or exception from their terms or the increase or
improvement of benefits.
19.6 Each Group Company has observed and performed in all material
respects all provisions of the Disclosed Schemes which apply to it.
19.7 The Disclosed Schemes (excluding the ▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc 401K scheme)
are exempt approved within the meaning of Section 592 Taxes Act and
so far as the Vendor is aware there are no facts or circumstances
which may cause the withdrawal of any such approval by the Inland
Revenue.
19.8 Save for routine claims for benefits there are no actions, suits or
claims in progress, pending or threatened, in relation to the
Disclosed Schemes against by any employee or former employee of a
Group Company or any person claiming in respect of them against any
Group Company, the Vendor, the Disclosed Schemes or any of their
trustees. So far as the Vendor is aware, there are no investigations,
enquiries, complaints or disciplinary proceedings by or before any
government body, the Occupational Pensions Regulatory Authority or
the Pensions Ombudsman concerning the employees or former employees
of any Group Company and so far as the Vendor is aware none are
pending or threatened.
19.9 None of the assets of the Disclosed Schemes is an employer related
investment (within the meaning of Section 112 Pension Schemes Act
1993).
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19.10 No payment to which Section 602 Taxes Act applies has been made out
of the funds which are held for the purposes of the Disclosed
Schemes.
19.11 There have been no active members of the ▇▇▇▇▇▇▇▇▇ Film Service
Limited Pension Scheme since 1 May 1990. The Cine Holdings Executive
Pension Scheme has at all relevant time been a money purchase scheme.
20 Brokerage or Commissions
No person is entitled to receive from a Group Company a finder's fee,
brokerage or commission or fee for professional advice in connection
with this agreement or anything contained in it.
21 Information
All information set out in the Disclosure Letter (excluding the
documents annexed to or referred to in the Disclosure Letter) is
true, complete and accurate in all material respects and not
misleading in any material respect. The copy documents annexed to or
referred to in the Disclosure Letter are true and complete copies.
22 Guarantees
22.1 None of the Group Companies has given a written guarantee or written
indemnity of the obligations of any other Group Company or any other
person, other than those specified in the Disclosure Letter.
22.2 None of the Group Companies has been notified in writing of any claim
in respect of the guarantees and indemnities specified in the
Disclosure Letter.
23 Environmental Matters
23.1 So far as the Vendor is aware:
23.1.1 each Group Company is in compliance with and has at all material
times in the last six years complied in all material respects with
all Environmental Laws; and
23.1.2 each Group Company is in possession of, has obtained and complied in
all material respects with and has at all material times in the last
six years been in possession of and complied in all material respects
with the terms and conditions of all Permits applicable to the
conduct of the business of the Group Companies, the use of each of
the Properties and activities conducted from them;
23.1.3 in the last six years there have been (whether in relation to the
Group Companies or to any of the Properties or activities conducted
from them) no claims in respect of breaches of Environmental Laws or
Permits and so far as the Vendor is aware no circumstances exist
which might prejudice the renewal of any Permit.
23.2 In this Warranty the following words and expressions have the
meanings stated:
"Environment" air (including, without limitation, that
within buildings or natural or man-made
structures, whether above or below ground)
water (including without limitation inland
waters surface waters and ground water) and
land (including without limitation, river
bed under any water as described above,
surface land sub-surface land and any
building structure or receptacle in or on
land);
"Hazardous Substance" controlled waste and/or any substance
(including, without limitation, special
waste) which alone or in combination with
any other substance is hazardous, toxic,
radioactive, explosive or capable of
polluting the Environment or causing harm to
human health or to the health of any living
organism;
88
"Permit" any consent, approval, authorisation,
exemption, filing requirement, licence,
order, permission, recording or registration
(and references to obtaining Permits shall
be construed accordingly) under any
Environmental Law;
"Environmental Law" any legislation or regulation or directive
having the force of law (including
subordinate or delegated legislation), and
any judgement order or award of any court,
which relates to the protection of the
Environment and/or the control of discharges
or emissions and/or the prevention of harm
to human health or to the health of any
other living organism and/or to the storage,
disposal handling or transport of any
Hazardous Substance.
24 Investigations
No notice has been received by a Group Company that investigations or
enquiries by, or on behalf of, a governmental or other regulatory
body in respect of the affairs of a Group Company are taking place or
pending nor, so far as the Vendor is aware, are any such
investigations or enquiries pending or threatened.
25 Unfair trade and restrictive practices
25.1 No Group Company has committed, or omitted to do, anything which
could give rise to a fine or penalty.
25.2 No Group Company is a party to an agreement, practice or arrangement
which:
(a) contravenes the Trade Description ▇▇▇ ▇▇▇▇;
(b) contravenes the Fair Trading Act 1973 Part XI;
(c) would, or might, result in a reference of a "consumer trade
practice," within the meaning of the Fair Trading Act 1973
section XIII or be liable to reference to the Consumer Protection
Advisory Committee under Part II of the said Act;
89
(d) contravenes, or is invalidated (in whole or in part) by, or is
subject to registration under, the Restrictive Trade Practices
Acts 1976 and 1977;
(e) contravenes, or is invalidated by, the Re-sale Prices ▇▇▇ ▇▇▇▇;
(f) contravenes the Treaty of Rome;
(g) contravenes any other anti-trust, anti-monopoly or anti-cartel
legislation or regulation.
25.3 No Group Company has engaged in an anti-competitive practice as
defined in the Competition ▇▇▇ ▇▇▇▇.
26 Documents stamped
All documents which affect the right, title or interest of a Group
Company in to any of its properties or material assets and which
attract stamp duty have been duly stamped.
27 Transactions involving directors
No Group Company has been a party to a transaction to which CA
section 320 or section 330 may apply.
28 Powers of attorney
28.1 No power of attorney by a Group Company is in force.
28.2 No authorities (expressed or implied) by which another person may
enter into a contract or commitment to do anything on behalf of a
Group Company are outstanding.
29 Defective products
No Group Company has sold or supplied products which were in a
material respect faulty or defective, or which did not comply in a
material respect with warranties or representations expressly or
impliedly made by it, or with applicable regulations, standards and
requirements.
90
SCHEDULE 3
LIMITATIONS ON THE VENDOR'S LIABILITY
1 Limitation of Vendor's liability
The provisions in this Schedule shall operate to limit the liability
of the Vendor under and in respect of the Warranties and under the
covenants given by the Vendor contained or to be contained in the Tax
Deed and references in the Schedule to "hereof" "hereunder" and to
"liability hereunder" shall be construed to refer to such liability
as appropriate. Expressions defined in the Tax Deed shall where the
context so requires have the same meanings in this Schedule. Clause 7
and Schedule 2 of the agreement and the Tax Deed (and any warranties
given or referred to in the NZ Share Sale Agreement and the US Share
Sale Agreement) shall accordingly have effect subject to and as
qualified by the terms of this Schedule.
2 The Purchaser shall not be entitled to bring any claim under the
Warranties or the Tax Deed unless the loss thereby sustained shall
exceed(pound)2,500. For the purposes of this Schedule references to a
claim for breach of the Warranties or under the Tax Deed shall mean a
claim under the Warranties or under the Tax Deed where the loss
sustained thereby exceeds (pound)2,500.
3 No liability shall in any event arise in respect of any claim for
breach of the Warranties or under the Tax Deed unless the loss
thereby sustained (together with the aggregate amount of losses
sustained arising from previous claims, if any) shall exceed a total
sum of (pound)200,000 and in the event that such total sum is
exceeded the Vendor shall (subject always to the provisions of this
Schedule) be liable only for the amount of any excess over
(pound)200,000. The limitation in this paragraph 3 shall not apply to
the covenant in clause 2.1.1 of the Tax Deed in relation to a
Liability to Taxation resulting from or arising in respect of the
transfers of the businesses and assets of the video businesses of VDI
and ▇▇▇▇▇▇▇▇▇ Group referred to in that clause 2.1.1.
4 Save in the event of fraud or wilful non-disclosure by the Vendor the
maximum aggregate liability of the Vendor in respect of all claims
for breach of the Warranties and
91
under the Tax Deed made upon the Vendor hereunder (and Visual Action
Holdings Inc., under the US Share Sale Agreement) shall not exceed
(pound)30 million. For the avoidance of doubt there shall be included
in the aforesaid amount all legal and other professional fees costs
and expenses incurred by the Purchaser in establishing and presenting
any claim against the Vendor.
5 No claim shall be brought by the Purchaser against the Vendor in
respect of any breach of the Warranties or under the Tax Deed unless
notice in writing of any such claim (specifying in reasonably
sufficient detail the nature of the breach and so far as practicable
the amount claimed in respect thereof) has been given to the Vendor
(i) other than in relation to Tax Warranties or the Tax Deed, on or
before the later of eighteen months following Completion or the
signing of the audit certificate in respect of the accounts of each
Company for the period ending on 31 December 1997 or (ii) in relation
to Tax Warranties or under the Tax Deed on or before the seventh
anniversary of Completion; in each case, the "Expiry Date".
6 Any claim in respect of any breach of the Warranties or under the Tax
Deed which has been made before the Expiry Date shall if it has not
been previously satisfied settled or withdrawn be deemed to have been
withdrawn and shall become fully barred and unenforceable on the
expiry of the period of twelve months commencing on the date that
notice of the claim has been given to the Vendor pursuant to
paragraph 5 of this Schedule unless within such twelve month period
proceedings in respect thereof shall have been commenced against the
Vendor and for this purpose proceedings shall not be deemed to have
been commenced unless they shall have been issued and served upon the
Vendor.
7 If any payment is made by or on behalf of the Vendor to the Purchaser
(or, as the case may be, by the Vendor to Panavision) in respect of
any claim under the Warranties or the Tax Deed such payment shall, to
the extent permitted in law, operate to reduce the amount of the
Consideration payable under this agreement (or, as the case may be,
under the NZ Share Sale Agreement or the US Share Sale Agreement)
which reduction shall be allocated to the Consideration paid for the
Shares or, as the case may be, the Consideration paid for the shares
in VDI or Visual Action (NZ) in respect of which the relevant claim
is made.
92
8 In the event the Purchaser or any Group Company shall effect any
recovery or receive any benefit in money or money's worth (whether by
way of payment, rebate, discount, credit or otherwise) from any third
party (including any taxation authority) in respect of any matter for
which a claim has been made in respect of breach of any of the
Warranties and in relation to which the Vendor has made a payment
hereunder the Purchaser shall repay an amount equal to the amount so
recovered (less the costs and expenses of its recovery and any
Taxation payable by the Purchaser or a Group Company as a result of
its receipt) or (if the amount already paid to the Vendor is less
than the amount so recovered) the amount of such payment.
9 Specific limitations
9.1 No liability shall arise to the Vendor and the Purchaser shall not
have any claim whatsoever against the Vendor for breach of the
Warranties or under the Tax Deed:
9.1.1 for any Liability to Taxation for which a Group Company is, or may
become, liable wholly or primarily as a result of transactions in the
ordinary course of its business after the Accounts Date or to the
extent attributable to Taxation relating to actual income, profits or
gains of the Group Company arising or accruing after the Accounts
Date;
9.1.2 to the extent such breach or claim arises as a result of a change in
the law or its interpretation in any jurisdiction inside and/or
outside the UK, enacted or made after the date of this agreement, or
the withdrawal or amendment of any extra statutory concession or
practice made by a Taxation Authority after that date or occurs as a
result of any increase in the rates of Taxation made after the date
of this agreement;
9.1.3 to the extent such breach or claim arises as a result only of the
appropriate provision or reserve in the Last Accounts being
insufficient by reason of any increase in rates of Taxation made
after the date of this agreement;
9.1.4 if and to the extent that such breach or claim would not have arisen
but for any voluntary act, omission, transaction or arrangement of a
Group Company or the Purchaser or any subsidiary or holding company
of or any person connected with the Purchaser (including assigns and
successors in title) carried out, or occurring after the date of this
agreement
93
otherwise than in the ordinary, and usual course of business or in
accordance with an obligation existing on or before Completion;
9.1.5 to the extent that an appropriate provision or reserve in respect
thereof was made in the Last Accounts or was specifically referred to
in the notes to the Last Accounts;
9.1.6 to the extent that such breach or claim would not have arisen but for
the fact that the treatment of any assets or liabilities, or of the
Taxation attributable to timing differences in future accounts of a
Group Company, is different to the treatment in the Last Accounts;
9.1.7 to the extent that such breach or claim is, or can be, reduced,
mitigated or deferred by Vendor's Reliefs;
9.1.8 to the extent that such breach or claim would not have arisen but for
any Vendor's Reliefs being utilised in respect of Taxation
attributable to any act, omission or transaction occurring or entered
into after that date or resulting from or calculated by reference to
any income, profits or gains earned, accrued or received deemed to
have been earned, received or accrued after that date;
9.1.9 to the extent that such breach or claim would not have arisen (or
would not have arisen at the time that it does arise) but for any
claim, disclaimer, notice, election, consent or return (or withdrawal
or revocation or amendment thereof) made or given (or omitted to be
made or given within any requisite period) for any Taxation purpose
(including without limitation in respect of any capital allowances)
after the date of this agreement unless the same was assumed to be
made or given (or, as the case may be omitted to be made or given) in
or for the purpose of the Last Accounts;
9.1.10 to the extent that such breach or claim would not have arisen but for
any transfer, winding up or cessation after Completion of any trade
or business carried on by a Group Company or any major change in the
nature or conduct thereof, whether taking place after or partly
before and partly after Completion or any significant increase in the
capital of a Group Company after Completion (as determined for the
purposes of ICTA s768B);
94
9.1.11 to the extent that any Liability to Taxation or Claim to Taxation was
paid or discharged prior to Completion;
9.1.12 to the extent that there is a corresponding reduction in the
Liability to Taxation of or increase in Reliefs available to the
Group Company (which has the Liability to Taxation) for another
accounting period ending on or before Completion or to another Group
Company for any accounting period ending on or before Completion;
9.1.13 to the extent that such breach or claim arises by reason of the
disposal (including deemed disposal) after Completion of any asset
which is or has at any time been in use for the purposes of the trade
carried on by a Group Company (unless the Group Company was legally
obliged so to do pursuant to an agreement entered into before
Completion) or by reason of any such asset being or becoming a
wasting asset (within TCGA section 44) or ceasing to be used for any
such purpose or by reason of the expiration of a period of time
beginning with the acquisition of such an asset;
9.1.14 to the extent that such breach or claim arises by reason of any
change in the intentions of a Group Company after Completion as to
the use of any goods or services supplied to the Group Company on or
before Completion or by reason of the making of any exempt supply of
goods or services by the Group Company for the purposes of VAT after
Completion;
9.1.15 to the extent that it has been made good or otherwise compensated for
by the Vendor;
9.1.16 to the extent that a Group Company is entitled to claim indemnity
against any loss or damage suffered by a Group Company arising out of
such breach or claim under the terms of any insurance policy of a
Group Company in force at Completion and disclosed to the Purchaser
makes a claim under any such insurance policy and receives payment
pursuant to such claim, the Vendor hereby undertaking to procure that
such Group Company makes such a claim;
9.1.17 to the extent that a provision or reserve in the Last Accounts is
unnecessary or excessive or a liability for which provision is made
in the Last Accounts is less than the amount provided;
95
9.1.18 to the extent that it is or can be mitigated by any group relief,
advance corporation tax or a tax refund surrendered to or made
available to a Group Company and without limitation, to the extent
that the Vendor has surrendered or procured the surrender of amounts
to offset the Taxation or has offered to surrender or procure the
surrender of amounts with could have offset the Taxation but for a
failure to accept the surrender by a Group Company after Completion.
9.1.19 to the extent of any recovery by the Purchaser in respect of, or
arising from, the same Liability to Taxation or Claim for Taxation
under the Tax Deed or the Warranties (as appropriate);
9.1.20 to the extent it arises or is increased as a result of the Purchaser
or a Group Company failing to act in accordance with the reasonable
instruction of the Vendor in conducting any dispute (as referred to
in paragraph 12 of this Schedule or in clause 5 of the Tax Deed) in
respect of the claim.
9.2 Each of the above exclusions and limitations shall be construed
independently and none shall qualify any other or affect its
interpretation.
10 The Purchaser shall not be entitled to recover damages in respect of
any claim for breach of the Warranties or otherwise obtain
reimbursement or restitution more than once to the extent and in
respect of the same damage suffered.
11 The Purchaser shall not be entitled to claim that any fact or
circumstance constitutes a breach of any of the Warranties to the
extent that such fact or circumstance has been fairly disclosed in
the Disclosure Letter or in any other document attached or annexed to
the Disclosure Letter but for the avoidance of doubt disclosures made
in the Disclosure Letter or in any other document attached to or
annexed to the Disclosure Letter shall not affect liability under the
Tax Deed.
12 If any claim is received by or comes to the notice of the Purchaser
(including notice of circumstances likely to give rise to a claim)
for which the Vendor may be liable under this agreement except in
relation to a claim for a breach of Tax Warranty or under the Tax
Deed or if any claim against the Vendor arises in respect of or out
of circumstances
96
in which the Purchaser or any Group Company is entitled to recover
any amount in damages or otherwise from any third party then the
Purchaser shall (by way of covenant but not as a condition precedent
to the liability of the Vendor):
(a) as soon as reasonably practicable give written notice of each
such matter to the Vendor;
(b) not make any admission of liability or compromise with any person
body or authority in relation thereto without the prior agreement
of the Vendor such consent not to be unreasonably withheld or
delayed.
(c) give the Vendor and its professional advisers reasonable access
to the premises and personnel of the Company and to any relevant
accounts documents and records within its power possession or
control to enable the Vendor and its professional advisers to
examine such claim accounts documents and records and to take
copies thereof at their own expense;
(d) take such action as the Vendor may reasonably request to assess,
pursue or defend such claim or to compromise the same (provided
that for this purpose a request by the Vendor shall not be deemed
to be reasonable if it is likely to have a material adverse
affect on the reputation or commercial standing of the relevant
Group Company having regard to the magnitude of the amount
claimed) and permit either in its own name or in the name of the
Purchaser or any Group Company or in any such names to conduct
any proceedings initiated by the Purchaser or the Company or to
defend any proceedings brought against the Purchaser or the
Company, provided that the Vendor shall indemnify and secure the
Purchaser and each Group Company to the reasonable satisfaction
of the Purchaser against any liability costs damage or expenses
which may be incurred thereby and provided further that the
Vendor shall keep the Purchaser fully informed and consulted (in
advance where practicable) of all relevant matters including
providing the Purchaser with copies of all relevant
correspondence and documentation.
97
13 For the avoidance of doubt nothing in this agreement shall in any way
restrict or limit the general obligation at law of the Purchaser to
mitigate any loss or damage which it may suffer in consequence of any
breach by the Vendor of the terms of this agreement.
14 The Purchaser confirms:
(a) that it has not been induced to enter into this agreement, the NZ
Share Sale Agreement, the US Share Sale Agreement or the Tax Deed
or any of the other documents or arrangements referred to in it
by, and has not otherwise relied on, any statement of fact or
opinion, representation, warranty, covenant or undertaking of the
Vendor or of any employee, agent, adviser or consultant of the
Vendor save that it has entered into this agreement in reliance
on the Warranties and any representations or warranties in the
Tax Deed and the Purchaser waives all rights it has in respect of
representations (other than fraudulent representations) made to
it but not repeated in the Warranties or the Tax Deed;
(b) that it has not already formulated and does not presently
contemplate making any claim against the Vendor under the
Warranties.
15 No breach or breaches of any of the Warranties shall give rise to any
right on the Purchaser to rescind or terminate this agreement
following Completion.
16 For the purposes of the monetary limitations in paragraphs 2, 3 and 4
of this Schedule any claims in currencies other than Sterling shall
be converted into Sterling at the spot rate ruling in the London
Market on the date on which the Vendor first receives notice of a
claim in accordance with the provisions of this agreement.
98
SCHEDULE 4
*Connotes that a Certificate of Title will be given.
PART 1
▇▇▇▇▇▇▇▇▇ GROUP PLC
DETAILS OF GROUP PROPERTY IN THE UK
UK LEASES
PROPERTY DATE OF LEASE TERM OF LEASE RENT TENANT
----------------------------------------------------------------------------------------------------
*Unit 8 19.9.84 25 years 67,000 Cine Holdings Ltd
▇ ▇▇▇▇▇▇ ▇▇▇▇ commencing
White City Ind. Estate Wood 1.1.83
Lane
▇▇▇▇▇▇ ▇▇▇
*Unit 27 24.11.88 25 years 120,000 ▇▇▇▇▇▇▇▇▇ Group Ltd
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ commencing
The Metropolitan Centre 29.9.88
Greenford
*Units 28/29 9.7.86 25 years 139,000 Grip House Limited
(formerly 16/17) commencing 25
▇/▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ 12.85]
The Metropolitan Centre
Greenford
*Units 30/31/32 (formerly 9.7.86 25 years 171,000 Grip House Limited
13/14/15) commencing
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇ 25.12.85
The Metropolitan Centre
Greenford
99
*Unit 21 17.8.88 25 years 112,000 ▇▇▇▇▇▇▇▇▇ Group Ltd
Derby Road commencing
The Metropolitan Centre 25.12.87
Greenford
Unit E20 1.10.90 15 years from 12,825 Grip House Limited
Eleventh Avenue Kingsway 1.10.90
Interchange
Team Visual Action Holdings
Ind Estate
Newcastle upon Tyne
100
PART 2
DETAILS OF GROUP PROPERTY OUTSIDE THE UK
FOREIGN LEASES
PROPERTY DATE OF LEASE TERM OF LEASE RENT TENANT
----------------------------------------------------------------------------------------------------
*▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 1/1/96 3 years $400,000 pa ▇▇▇▇▇▇▇▇▇ Group Pty
Artarmon NSW Australia from1/1/96 currently Limited
-31/12/98 $503,9380 pa
*245-247 Normanby Road 26/4/94 5 years $106,500 pa ▇▇▇▇▇▇▇▇▇ Film Service
South Melbourne Australia from1/3/94 $110,655 pa (Australia) Pty Limited
currently
Building 7 12/10/94 5 years $13,186 ditto
Warner Roadshow Movie ▇▇▇▇▇/▇/▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇ 23/5/90 1/9/90-30/9/00 $15,323 per month ▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc
Chicago Illinois stepped up to
$16,592
3752 Dekalb Technology 31/8/89 and 5 years $7,413 per month ditto
Parkway 24/3/93 from1/12/89
Atlanta Termination date
Georgia extended to
30/11/97
101
▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇ 27/8/81 and 60 months from $14,320 per month ditto
▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇▇▇ Irving 7/2/94 1/10/94 ending
Texas 30/9/99
▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 8/6/1993 3, 6 or 9 years FF147,632 payable ▇▇▇▇▇▇▇▇▇ ▇▇▇▇-Cinema SA
from 1/1/1993 in advance in 4
equal quarterly
instalments
▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇(▇▇▇▇) 13/5/1994 3, 6, 9 years FF200,000 payable ▇▇▇▇▇▇▇▇▇ ▇▇▇▇-Cinema SA
from 1/1/1994 in advance in 4
equal quarterly
instalments
7 Rue de L'Industrie Gen 1/5/1994 3, 6, 9 years FF300,000 year Cinecam SARL
Mevilliers
▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Denis 1/1/1995 3, 6, 9 years FF1,100,000 year ▇▇▇▇▇▇▇▇▇ ▇▇▇▇-Cinema SA
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 17/5/96 9 years $230,000 pa Film Facilities Limited
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 17/5/96 9 years $9,116.66 per Film Facilities Limited
month
▇▇▇▇▇▇▇▇▇ Film Services Pte Limited has an arrangement with Cinevideo Asia Pte
Limited to share the occupation of Block ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, #▇▇-▇▇, ▇▇▇▇▇▇▇▇▇
102
159556. There is no formal written agreement for this arrangement and some of
the salient terms are as follows:
(i) in occupation of the premises since 12 April 1997;
(ii) a monthly payment of $2,500.00 to Cinevideo Asia Pte Limited; and
(iii) the arrangement is determinable at any time at Cinevideo Asia Pte
Limited's discretion.
103
PART 3
DETAILS OF GROUP PROPERTY OUTSIDE THE UK
FREEHOLD PROPERTY (OR EQUIVALENT)
*Lot ▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇/▇ ▇/▇ ▇/▇ Owners are ▇▇▇▇▇▇▇▇▇ Film
▇▇▇▇ Vale Service (Australia) Pty
Limited and ▇▇▇▇ ▇▇▇▇▇ Group
Pty Limited as tenants in
common in equal shares
104
SCHEDULE 5
TAX DEED
DATED: 1997
PARTIES:
1. "Vendor": VISUAL ACTION HOLDINGS PLC (registered no. 3054629) whose
registered office is at ▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, The Metropolitan Centre,
Greenford, Middlesex UB6 8UQ
2. "PEL": PANAVISION EUROPE LIMITED (registered no. 2532311) whose registered
office is at ▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇
3. "Panavision": PANAVISION INC (a corporation incorporated under the laws of
the State of Delaware, United States of America) whose principal office is
at ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
RECITAL
This deed is entered into in accordance with an agreement ("the Agreement") made
between the Vendor (1), PEL (2) and Panavision (3) relating to the sale by the
Vendor of the share capital of ▇▇▇▇▇▇▇▇▇ Group Limited (registered no. 598635),
to PEL and pursuant to which separate agreements have been entered into for the
sale of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc., (a company incorporated in Michigan, United States
of America) and Visual Action Holdings (N.Z.) Limited (a company incorporated in
New Zealand) to Panavision.
OPERATIVE PROVISIONS:
1 Definitions
In this deed:
1.1 the same meaning is given to words and expressions defined in the
Agreement except where otherwise provided or expressly defined below;
105
1.2 "Claim for Taxation" includes any notice, demand, assessment, letter
or other document issued, or action taken, by or on behalf of a
Taxation Authority, whereby it appears that the Company is, or may be,
subject to a Liability to Taxation (whether or not it is primarily
payable by the Company and whether or not the Company has, or may
have, any right of reimbursement);
1.3 "Completion" means completion of the Agreement;
1.4 "Consolidated Provision for Taxation" means the provision for Taxation
for the UK Group Companies computed on a consolidated basis as at the
Accounts Date by reference to the Last Accounts;
1.5 "Event" means any event, act, transaction or series of transactions
and without limitation the receipt or accrual of any income, the
realisation of any gains, any distribution or failure to distribute,
acquisition, disposal, transfer, payment, loan or advance;
1.6 "Final Determination" means (a) in the case of UK Taxation where there
is no appeal, the date when the assessment or other decision of the
relevant authority becomes final so that no appeal or further appeal
lies within any prescribed time limit and where there is an appeal the
date when there is made an agreement under TMA s54 (or any legislative
provision corresponding to that section) or a decision of a court or
tribunal from which either no appeal lies or in respect of which no
appeal is made within the prescribed time limit and (b) in the case of
other Taxation the date when any Claim for Taxation becomes finally
determined so that no appeal or further appeal lies within any
prescribed time limit or where no appeal lies, the date when any
Taxation in respect of a Claim for Taxation is paid. Cognitive
expressions shall be construed accordingly;
1.7 "group relief" means group relief within the meaning of s402(1) ICTA;
1.8 "Liability to Taxation" means any liability (including a liability
which is a primary liability of some other person) to make a payment
in respect of Taxation (or any such liability to make a payment which
would have arisen but for the utilisation of a Purchaser's Relief) but
does not include:
106
1.8.1 the loss, counteracting or clawing back of any Relief which would
otherwise have been available to the Company; or
1.8.2 the nullifying, cancellation or set-off of a right to repayment of
Taxation which would otherwise have been available to the Company
provided, however, that:
(a) if and to the extent that the Relief lost, counteracted or
clawed back is a Relevant Relief or Relevant Right, then,
where the same results in the Company suffering a liability
to make a payment in respect of Taxation, that liability
shall itself be a "Liability to Taxation" for the purposes
of this deed; and
(b) if a right to repayment nullified, cancelled or set off is a
Relevant Right, then, when such right to repayment would
otherwise have resulted in a payment to a Group Company, a
"Liability to Taxation" shall be deemed to arise for the
purposes of this deed;
1.9 "Original Group" means the Remaining Group and any other company which
is, or has been, a member of a group of companies of which a Group
Company is, or has been, a member;
1.10 "Purchaser's Relief" means any Relief to the extent the same arises to
the Company in respect of a period commencing after Completion or
wholly in respect of any Event occurring after Completion (assuming
for this purpose that a period commences immediately after
Completion);
1.11 "Relevant Relief" or "Relevant Right" means (respectively) a Relief or
right to repayment of Taxation taken into account in the Last Accounts
to the extent that it reduces or eliminates a provision for Taxation
or is shown as an asset;
1.12 "Relief" includes any relief, loss, allowance, exemption, set-off or
deduction in computing, or against, profits, income or gains of any
description or from any source, or credit against Taxation or a right
to repayment of Taxation;
107
1.13 "Specified Saving" means a Relief or right to repayment of Taxation or
other saving of Taxation or any other kind of benefit available to be
used or obtained by a Group Company (or a person connected with it);
1.14 "Specified Saving Date" means in relation to a Specified Saving:
1.14.1 in the case of a Relief the date upon which but for the Relief a Group
Company (or any person connected with it) would have otherwise been
liable to pay an amount of Taxation;
1.14.2 in the case of a right to repayment of Taxation, the date upon which a
Group Company (or any person connected with it) receives repayment
(whether by way of actual receipt or set off); and
1.14.3 in the case of any other saving or benefit, the date upon which it is
actually enjoyed;
1.15 "Taxation" means all forms of taxation, duties and levies whatsoever
and whenever imposed by a Taxation Authority and (without limitation)
includes:
1.15.1 income tax, corporation tax, advance corporation tax, capital gains
tax, inheritance tax, stamp duty, stamp duty reserve tax, value added
tax, goods and services tax, customs and other import duties and
national insurance, social security or other similar contributions and
any foreign taxes, duties or levies in the nature of Taxation whether
or not similar to any of the above and other taxes, duties or levies
supplementing or replacing any of the above;
1.15.2 all interest, surcharges, fines and penalties incidental, or relating,
to any of the above;
1.16 "Taxation Authority" means any local, municipal, governmental, state,
federal or other fiscal, revenue, customs or excise authority, body or
official anywhere in the world including without limitation the Inland
Revenue or HM Customs & Excise or any equivalent body in any relevant
jurisdiction or any officer thereof or other authority having
responsibility for charging or collecting Taxation;
108
1.17 "Taxation Returns" means all returns and computations of the Company
(including without limitation making all claims, elections,
disclaimers, revocations, consents, notices and surrenders) as may be
required or appropriate or which the Vendor considers desirable;
1.18 "UK Group Company" means a Group Company incorporated in the United
Kingdom;
1.19 "Vendor's Relief" means any Relief (other than a Relevant Relief or a
Purchaser's Relief) available to a Group Company at the date of
Completion (including Reliefs available by claiming capital allowances
or revoking disclaimers thereof) and any Relief (other than a Relevant
Relief or a Purchaser's Relief) arising wholly or mainly by reason of
any act, omission or transaction of the Vendor or member of the
Original Group which does not cause the Company to incur any
liability, cost or expense (unless the Company receives a satisfactory
indemnity against it);
1.20 where the context admits, "Company" includes each Group Company, so
that this deed shall apply to each Group Company as if it were the
Company;
1.21 references in this deed to "Purchaser" shall be references to PEL
except where the Liability to Taxation, Claim for Taxation or action
to be taken in question relates only to Visual Action (NZ) or Film
Facilities Limited or VDI when references shall be to Panavision and
as if Panavision owns 100% of the share capital of Visual Action (NZ)
and Film Facilities Limited and, where the context allows, references
shall be references to both PEL and Panavision;
1.22 references to utilisation of a Relief include any means by which such
Relief is enjoyed;
1.23 references to this deed to TMA, ICTA, CAA, VATA and TCGA are
respectively references to the Taxes Management ▇▇▇ ▇▇▇▇, Income and
Corporation Taxes ▇▇▇ ▇▇▇▇, Capital Allowances ▇▇▇ ▇▇▇▇, Value Added
Tax ▇▇▇ ▇▇▇▇ and Taxation of Chargeable Gains ▇▇▇ ▇▇▇▇ (as amended);
1.24 references to a person connected with another shall be construed in
accordance with ICTA section 839.
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2 Covenant
2.1 Subject as provided below, the Vendor covenants with the Purchaser to
pay to the Purchaser an amount equal to:
2.1.1 any Liability to Taxation of the Company including (without
limitation) any Liability to Taxation of the Company resulting from or
arising in respect of the transfer of the business and assets of the
Company's video division to Advanced Broadcast Systems, Inc., ("ABSI")
and the subsequent sale of ABSI and/or the transfer of the business
and assets of the Vendor's video business to other members of the
Remaining Group;
2.1.2 any settlement of a Claim for Taxation where the Claim relates to a
Liability to Taxation to which clause 2.1.1 would have applied;
2.1.3 the reasonable costs properly incurred by the Purchaser or the Company
in relation to any demands, actions, proceedings and claims in respect
of a Liability to Taxation to which clause 2.1.1 applies or a Claim
for Taxation relating to such a Liability to Taxation.
2.2 The covenant in clause 2.1 shall apply only where the Liability to
Taxation or the Claim for Taxation:
2.2.1 results from or is made wholly or primarily in respect of or in
consequence of any Event of the Company, or of the Vendor, occurring
or entered into on or before Completion; or
2.2.2 results from, or is calculated by reference to, any income, profits or
gains earned, received or accrued on or before Completion; or
2.2.3 results from, or is calculated by reference to, any dividend or
distribution paid or made, or deemed to have been paid or made in the
period from the Accounts Date to Completion.
2.3 If the Purchaser is satisfied that any payment due from the Vendor
will be, or has been, subject to a Liability to Taxation, it shall be
entitled to receive from the Vendor on demand such amount as will
ensure that the net receipt, after Taxation, to the Purchaser
110
in respect of the payment is the same as it would have been were the
payment not subject to Taxation in the hands of the Purchaser. For the
purpose of this clause 2.3, references to Purchaser shall be
references to PEL only.
3 Exclusions
The liability of the Vendor under this deed and for breach of any Tax
Warranty shall, in so far as it is expressly provided, be limited or
excluded in accordance with the provisions of Schedule 3 to the
Agreement.
4 Mitigation and group relief
4.1 The Vendor shall be entitled to require, in order to avoid, reduce or
mitigate any Liability to Taxation or Claim for Taxation in respect of
which the Vendor may be liable under this deed that the Purchaser
procures that the Group Companies co-operate and take all necessary
steps to claim or utilise any Vendor's Relief.
4.2 Without prejudice to the rights of the Vendor under clause 4.1, the
Vendor shall be entitled (for the avoidance of doubt) to require the
Purchaser to use reasonable endeavours to procure that the Group
Companies co-operate in making such claims for group relief (including
from the members of the Original Group), and that the Group Companies
shall surrender to each other (or to members of the Original Group)
such amount of group relief, for accounting periods ending on or
before Completion as appears to the Vendor reasonably necessary in
order to avoid, reduce or mitigate any Liability to Taxation in
respect of which the Vendor may be liable under this deed.
4.3 Where the Vendor has satisfied an obligation under this deed to make a
payment to the Purchaser in respect of a Liability to Taxation and the
Company has (whether by operation of law, contract or otherwise) a
right of reimbursement (including by way of indemnity) against any
other person or persons in respect of the Liability to Taxation then,
unless in the reasonable opinion of the Purchaser the future
relationship of the Purchaser or any Group Company with any Taxation
Authority or any other person would be materially prejudiced, the
Purchaser shall procure that the Company shall take all reasonable
steps to enforce the right and give credit to the Vendor for any sum
111
recovered by the Company by reason of the right (less any reasonable
costs properly incurred in relation to such recovery), or shall, at
the request and expense of the Vendor, assign the right to the Vendor,
in such form as it shall reasonably require.
4.4 Clause 4.5 shall apply where an amount of Taxation paid by the Group
Company or the Event giving rise to the Liability to Taxation or
liability for breach of a Tax Warranty may result or has resulted in a
Specified Saving and the Vendor has made a payment to the Purchaser in
respect of such Taxation under this deed or in respect of a breach of
a Tax Warranty.
4.5 The Purchaser shall:
4.5.1 procure that the Group Companies use all reasonable endeavours to use
or obtain the Specified Saving as soon as possible; and
4.5.2 pay to the Vendor an amount equal to the amount or value of the
Specified Saving within twelve days of receipt of written demand
therefore by the Vendor or the Specified Saving Date (if later).
4.6 The Purchaser shall notify the Vendor within twelve days of the
Specified Saving Date and immediately upon receipt of a written
request of the Vendor the Purchaser shall procure that the auditors of
the Group Company concerned shall certify the amount of set off under
clause 4.3 or any payment due to the Vendor under clause 4.5.
4.7 The Purchaser shall procure that, to the extent that any relief for
trading losses or other amounts eligible for group relief available
for surrender have arisen in a Group Company in respect of periods
ending on or before the Accounts Date, the Group Companies shall
surrender such losses or other amounts by way of group relief to such
members of the Original Group in such amounts and in such proportions
as the Vendor shall in its absolute discretion require provided that
the Vendor shall not be entitled to require a surrender to the extent
that such a surrender would result in the Consolidated Provision for
Taxation being an underprovision.
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4.8 The Purchaser shall use reasonable endeavours to procure that full
effect is given to all claims, surrenders and other utilisation of
losses and Reliefs to which this clause applies and that such claims,
surrenders and utilisations are allowed in full by the relevant
Taxation Authority and shall procure that all such notices, claims and
surrenders and all such other documents and returns as may be
necessary to secure that full effect is given to the surrenders and
claims within this clause are signed and submitted to the relevant
Taxation Authority within the applicable time limit and otherwise in
accordance with the relevant legislation.
5 Conduct of Claims
5.1 The Purchaser shall notify the Vendor in writing of any Claim for
Taxation which comes to its notice, whereby the Vendor is or may
become liable to make a payment to the Purchaser under this deed or
for breach of a Tax Warranty. Where a time limit for appeal applies to
the Claim for Taxation, the notification shall be given as soon as
reasonably practicable after the date on which the Claim for Taxation
comes to the notice of the Purchaser and in any event not later than
10 Business Days before the expiry of the time limit. Where no time
limit applies or the period to which the limit relates has not
commenced, the notification shall be given within 21 Business Days of
that date.
5.2 The Purchaser shall ensure that a Claim for Taxation to which this
deed applies, or in respect of which the Vendor is or may become
liable to make a payment to the Purchaser for a breach of a Tax
Warranty, is, so far as reasonably practicable, dealt with separately
from claims to which it does not apply and is not paid prematurely;
and, for this purpose, any payment made by the Company to avoid
incurring interest or a penalty in respect of unpaid Taxation shall be
deemed not to be paid prematurely.
5.3 The Purchaser shall take or use reasonable endeavours to procure that
the Company shall take such action as the Vendor shall reasonably
require to avoid, mitigate, resist or contest any Claim for Taxation
to which this deed applies or in respect of which the Vendor is or may
become liable to make a payment to the Purchaser in respect of a
breach of a Tax Warranty and in particular (but without limitation)
shall use all reasonable endeavours to ensure, at the request in
writing of the Vendor, that (a) the
113
Vendor is placed in a position to dispute on behalf of the Company any
Claim for Taxation to which this deed applies or in respect of which
the Vendor is or may become liable to make a payment to the Purchaser
in respect of a breach of a Tax Warranty and (b) provide the Vendor
with access to all relevant documents, accounting and other records
(including without restriction direct access to all relevant
employees) and (c) shall use reasonable endeavours to render, or cause
to be rendered, to the Vendor all such other assistance as the Vendor
may reasonably require in disputing the Claim for Taxation.
5.4 Subject to clause 5.5, the Vendor shall be entitled, on behalf of the
Company, to instruct such solicitors or other professional advisers as
the Vendor may nominate, to act on behalf of the Vendor or the
Company, to the intent that the conduct, and costs and expenses, of
the dispute shall be delegated entirely to and be borne solely by the
Vendor.
5.5 In connection with the conduct of any dispute relating to a Claim for
Taxation to which this deed applies or in respect of which the Vendor
is or may become liable to make a payment to the Purchaser for breach
of a Tax Warranty:
5.5.1 the Vendor shall keep the Company informed of relevant matters and
shall forward, or procure to be forwarded, to the finance director of
the Company copies of relevant correspondence and other written
communications;
5.5.2 the Vendor shall at the request of the Purchaser indemnify and secure
the Purchaser and each Group Company, to the reasonable satisfaction
of the Purchaser, in respect of any liability, costs and expenses of
disputing any Claim for Taxation to which this deed applies;
5.5.3 the Vendor shall not be entitled to require the Purchaser or the
Company to make any settlement or compromise of the dispute nor agree
any matter in the conduct of the dispute which is likely to affect
materially and adversely the basis of the future Liability to Taxation
of the Company, without the prior approval of the Purchaser, which
approval shall not be unreasonably withheld or delayed. The Purchaser
shall not be
114
entitled to withhold consent insofar as the settlement or compromise
involves the utilisation or reduction of Vendor's Reliefs or the
agreement affects such Reliefs.
6 Indemnity against secondary tax liability
6.1 The Purchaser shall indemnify on written demand the Vendor from and
against:
(a) any Liability to Taxation or Claim for Taxation recoverable
from the Vendor or any of its subsidiaries including former
subsidiaries; and
(b) all losses, costs and expenses attributable thereto or
arising in connection therewith
by reason of the Company or any Group Company failing to meet its or
their primary liability to Taxation when due and, in particular, but
without limitation, under ICTA section 767A in respect of corporation
tax assessed on the Company or any other Group Company.
6.2 The indemnity in clause 6.1 shall not apply to Taxation to the extent
that the Purchaser could claim payment in respect of it under clause
2.
6.3 If any payment due from the Purchaser under clause 6.1 is, or has
been, subject to a Liability to Taxation, the Vendor may calculate and
demand from the Purchaser such amount as will ensure that the net
receipt to the Vendor, after Taxation, in respect of the payment, is
the same as it would have been were the payment not subject to
Taxation in the hands of the Vendor.
7 Dates for and Quantum of Payments
7.1 This clause shall apply solely for determining the date on which any
payments or repayments shall be made by or to the Vendor pursuant to
clause 2 of this deed and (where expressly provided) the amounts of
the payments or repayments.
115
7.2 The Vendor shall make payment to the Purchaser to the extent that, and
on the date on which, the Company discharges or is deemed to discharge
a Liability to Taxation in respect of which the Purchaser is entitled
to receive a payment under this deed.
7.3 The Purchaser shall make a repayment to the Vendor to the extent that,
and on the date on which, the Company receives any repayment of any
amount paid in respect of any Liability to Taxation pursuant to clause
7.2. Any repayment to the Vendor pursuant to this clause 7.3 shall not
prejudice the rights of the Purchaser against the Vendor in the event
that a further Liability to Taxation (in respect of which the
Purchaser is entitled to payment under this deed) is imposed on the
Company whether in respect of matters to which the repayment relates
or otherwise.
7.4 For the purposes of clause 7.2, the Company shall be deemed to
discharge a Liability to Taxation:
7.4.1 on the date on which the Company pays any amount of Taxation in
respect of the Liability to Taxation;
7.4.2 where the Liability to Taxation has been avoided by the utilisation of
Relevant Reliefs or a Purchaser's Relief, on the date on which (had
there been no such utilisation) a Liability to Taxation falls to be
paid which would have otherwise been avoided by the utilisation of the
Relevant Relief or Purchaser's Relief in question or 10 days after
written notice thereof (whichever is the later).
7.5 For the purpose of clause 7.3, the Company shall be deemed to receive
a repayment:
7.5.1 on the date on which the Company receives a repayment of Taxation to
which clause 7.2 applies;
7.5.2 if and when the Company would have received a repayment but for a
Liability to Taxation in respect of which the Company is not entitled
to be indemnified under this deed;
7.5.3 if and when the Company would have received a repayment had the
Liability to Taxation been discharged by a payment of Taxation; or
116
7.5.4 if and when the Company is able to obtain the benefit of a reduction
in its Liability to Taxation as a result of the right to repayment.
7.6 Upon Final Determination of a relevant Claim for Taxation the Vendor
shall pay to the Company such amount, or further amount in addition to
any sums already paid under this deed, as is required to cover the
full liability of the Vendor under this deed.
7.7 Upon making any repayment to the Vendor pursuant to clause 7.3, the
Purchaser shall also pay to the Vendor an amount equal to any
repayment supplement, pursuant to ICTA section 825, or equivalent sum
attributable to that repayment, or any interest awarded or paid in
respect of it, less any attributable tax.
7.8 Any dispute in relation to the provisions of clauses 7.4, 7.5, 7.6 or
7.7 may be referred, by the Purchaser or the Vendor, to the auditors
for the time being of the Company (provided that the auditors are, in
the reasonable opinion of the Vendor, a firm of sufficient standing to
carry out such determination competently and to the reasonable
satisfaction of the Vendor), acting as experts and not as arbitrators,
whose certificate shall be final and binding upon the parties in the
absence of manifest error.
8 Tax returns for open accounting periods
8.1 The Purchaser shall procure that the Vendor (or its duly authorised
agents) shall, in respect of all accounting periods ending on or
before the Accounts Date, be entitled to:
(a) prepare and submit to the relevant Taxation Authority the
Taxation Returns;
(b) deal with all matters relating to Taxation which concern or
affect the Company including having the full conduct of all
negotiations and correspondence relating to any Taxation
Returns;
(c) be entitled to settle with a relevant Taxation Authority the
Taxation affairs of the Company; and
(d) where relevant notify the Company in writing of the amount
to be paid to any Taxation Authority at least seven Business
Days before such sum is due.
117
8.2 The Purchaser shall also procure that:
(a) the Company shall promptly provide to the Vendor and its
duly authorised agents and any relevant Taxation Authority
with all such information and documents as the Vendor (or
its duly authorised agents) shall reasonably require in
connection with the matters referred to in clause 8.1;
(b) the Vendor is as soon as reasonably practicable sent a copy
of any communication from any Taxation Authority insofar as
it relates to matters referred to in clause 8.1;
(c) the Company will give the Vendor and its duly authorised
agents such access (including the taking of copies) to the
books, accounts and records of the Company (including all
books, records and other documents kept for the purposes of
VAT) and such other assistance as it or they reasonably
require (including without limitation direct access to its
employees during normal business hours at such place as the
Purchaser shall reasonably specify upon reasonable notice)
for the purposes of:
(i) exercising its rights and discharging its
responsibilities under clause 8.1;
(ii) any matter relating to the Taxation affairs of the
Original Group; and
(iii) consultation in relation to the matters set out in
clause 8.5 below.
(d) the Vendor or its duly authorised agent has a proper
opportunity to exercise the rights and discharge their
responsibilities under clause 8.1.
8.3 The Vendor shall:
(a) keep the Purchaser fully informed of all relevant matters
arising in the course of exercising its rights and
discharging its responsibilities under
118
clause 8.1 and as to the state of any negotiations referred
to in clause 8.1(b) above; and
(b) provide the Company with such information as is reasonably
necessary to enable the Company and the Purchaser (if it so
requests) to review any return or document submitted to the
Company for signature.
8.4 The Vendor or its duly authorised agent shall deliver all Taxation
Returns or other documents which are required to be signed by or on
behalf of the Company to the Purchaser or (as the case may be) the
Company for authorisation, signing and submission to the relevant
Taxation Authority and the Purchaser shall procure that the Company
shall promptly sign any Taxation return or other document delivered to
it under this clause without delay (and in any event within any
relevant time limit) and without amendment provided that the Purchaser
shall be under no obligation to procure the authorisation, signing, or
submission to a Taxation Authority of any document delivered to it
under clause which it considers in its reasonable opinion to be false,
misleading, incomplete or inaccurate in any respect.
8.5 The Purchaser will, and will procure that each Group Company will,
consult with the Vendor in relation to the preparation and submission
to the Inland Revenue of the Taxation Returns of the Group Companies
for the accounting period (or periods) of the Group Companies in which
Completion takes place. The Purchaser will, and will procure that each
Group Company will, afford the Vendor a reasonable opportunity to
consider before submission such Taxation Returns and will take into
account the Vendor's reasonable representations.
8.6 The Purchaser will, and will procure that each Group Company will,
preserve all books, records and other documents kept for the purposes
of VAT for such period as is required by law.
9 General
9.1 The Purchaser shall procure that each Group Company performs its
obligations under this deed.
119
9.2 Clauses 16, 18, 19, 20, 21, 24 and 27 of the Agreement shall apply
mutatis mutandis to this deed as if set out here in full.
DELIVERED as a deed on the date of this document
120
SCHEDULE 6
RELEASE OF GUARANTEES
PART 1
To be released by the Purchaser
1. Letter of Awareness from Visual Action Holdings plc in respect of
Facilities provided to ▇▇▇▇▇▇▇▇▇ Group Pty Limited, ▇▇▇▇▇▇▇▇▇ Film Service
(Australia) Pty Limited, ▇▇▇▇ ▇▇▇▇▇ Group Pty Limited and ▇▇▇▇▇▇▇▇▇ Cases
(Australia) Pty Limited dated 18 July 1996.
2. Deed of Loan Subordination between National Australia Bank Limited, Visual
Action Holdings plc, ▇▇▇▇▇▇▇▇▇ Group Pty Limited, ▇▇▇▇▇▇▇▇▇ Film Service
(Australia) Pty Limited, ▇▇▇▇ ▇▇▇▇▇ Group Pty Limited and ▇▇▇▇▇▇▇▇▇ Cases
(Australia) Pty Limited in respect of monies, other than of a trade nature
owing to Visual Action Holdings Pty Limited dated 24 July 1996.
3. Letter of Comfort dated 14 August 1996 from Visual Action Holdings plc to
Bank of New Zealand.
4. Cross Composite Guarantee dated 26 February 1996 between Visual Action
Holdings plc, ▇▇▇▇▇▇▇▇▇ Group Limited, ▇▇▇▇▇▇▇▇▇ Film Services London
Limited, TP Sound Services, ▇▇▇▇▇▇▇▇▇ Communication Limited, Grip House
Limited, Samfreight Limited, Cine Holdings Limited, Cine-Europe Limited,
Cinevideo Limited only in so far as it relates to Group Companies.
5. ▇▇▇▇▇▇▇▇▇ Film Services Limited Trade Debt Guarantee dated 12 April 1996,
beneficiary Lloyds Bank Plc, issued under group facility letter.
6. Letter of Comfort dated 22 March 1994 from ▇▇▇▇▇▇▇▇▇ Group plc to Union
Bank of California, N.A. in respect of Audio Visual Headquarters
Corporation only in so far as it relates to facilities made available to
VDI.
121
PART 2
To be released by the Vendor
Property Guarantee
1. Unit 1 in favour of ACS Coffee Service Limited
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇
▇. ▇▇▇▇ ▇▇ in favour of ▇▇▇▇▇▇▇▇ Exempt Property Unit Trust
Hillmead Estate
Swindon
3. Unit 11 in favour of MNOPF Trustees Limited
Industrial Centre
(13 Field Way)
Western Avenue
Greenford
122
SCHEDULE 7
PENSIONS
1 Definitions
1.1 For the purposes of this Schedule the following expressions shall have
the following meanings:-
"Actuary"
means a person who is a Fellow of the Institute of Actuaries or a Fellow
of the Faculty of Actuaries in Scotland.
"AVC Fund"
means those assets which are referable to additional voluntary
contributions paid under the 1991 Scheme by any Transferring Member which
are used to provide money-purchase benefits.
"Cash Equivalent"
means, in relation to any benefits under a pension scheme, the amount
calculated in accordance with the Transfer Provisions and Guidance Note
11 published by the Institute and Faculty of Actuaries disregarding the
value of any discretionary benefits under that pension scheme and
disregarding any requirement or power to reduce the cash equivalent to
take account of an insufficiency of funds.
"Contracted-Out Benefits"
means in relation to a Joining Employee, any guaranteed minimum pension,
protected rights and all benefits accrued in respect of contracted-out
employment after 5th April 1997.
"Executive Scheme"
means the Cine Holdings Executive Pension Scheme.
123
"Joining Employee"
means a Pensionable Employee who is a member at Completion of the 1991
Scheme and accepts the offer of membership of the Purchaser's Plan made
under paragraph 4.3.
"Life Scheme"
means the Cine Holdings Group Death in Service Benefit Scheme.
"Money Purchase Schemes"
means the Executive Scheme, the Life Scheme, the VIP Scheme and the Staff
Scheme.
"Past Service Benefits"
means benefits (other than Contracted-Out Benefits) for, and in respect
of, each Transferring Member in relation to service up to Completion.
"Payment Date"
means in relation to the Transfer Amount 10 working days after the date
on which all of the conditions referred to in paragraph 7.1 have been
fulfilled.
"Pensionable Employees"
means employees of any Group Companies at Completion who are then members
accruing benefits under any of the Vendor's Pension Schemes.
"Purchaser's Actuary"
such actuary as is appointed by the Purchaser for the purposes of this
Schedule.
"Purchaser's Plan"
means the pension scheme or schemes which is, or are, to be established
or nominated by the Purchaser under paragraph 4.1.
124
"Seller's Actuary"
means the Actuary or firm of Actuaries appointed by the Vendor for the
purpose of this Schedule.
"Transfer Amount"
means in relation to each Transferring Member, the Cash Equivalent of the
benefits) accrued to or in respect of him under the 1991 Scheme less the
Cash Equivalent of the Contracted-Out Benefits.
"Transfer Provisions"
means Chapter IV, Part IV of the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇.
"Transferring Member"
means a Joining Employee who accepts the offer to transfer his Past
Service Benefits in accordance with this Schedule in lieu of his accrued
rights under the 1991 Scheme (other than his accrued rights to benefits
for which liability is retained by the 1991 Scheme).
VIP Scheme"
means the ▇▇▇▇▇▇▇▇▇ Group PLC Tier 2 VIP Scheme.
2 Conduct of the Vendor's Pension Scheme pending Completion
Pending Completion:-
(a) the Vendor shall procure that contributions are made to the Money
Purchase Schemes for and in respect of Pensionable Employees in
accordance with the terms of those Schemes;
(b) neither the Vendor nor any of its subsidiaries will do or permit
any act during that period which might prejudice the approval of
any of the Vendor's Pension Schemes;
125
(i) no discretion will be exercised under the Vendor's Pension
Schemes to :-
(ii) augment benefits thereunder in respect of any Pensionable
Employees;
(iii) admit to membership thereof an employee of any Group
Company who would not otherwise have been eligible for
admission to membership;
(iv) provide in respect of a Pensionable Employee a benefit
which has not otherwise been provided; or
(c) pay a contribution in respect of an employee of any Group Company
which would not otherwise have been paid
(d) the Vendor shall procure that all benefits payable under the
Vendor's Pension Schemes on the death of a member which are
currently insured continue to be insured on the same basis under a
policy effected with an insurance company of good repute.
(e) the Vendor will procure that save as required by law neither it
nor any of its subsidiaries will do or permit any act which would
result in:-
(i) any change in the terms of any of the Vendor's Pension
Schemes as they affect any Group Company or any of their
employees; or
(ii) any additional obligation of a Group Company to contribute
to any of the Vendor's Pension Schemes.
3 Money Purchase Schemes and 1991 Scheme
3.1 The Vendor shall procure that with effect from Completion there is
substituted in relation to each of the Money Purchase Schemes a company,
other than any Group Company, as
126
the principal employer in relation to each of the Money Purchase Schemes.
The Vendor shall pay to the Purchaser by way of reduction of the purchase
consideration an amount equal to any payment required to be made by any
Group Company in respect of any liability arising after Completion
incurred by such Group Company in its capacity as principal employer
under any of the Money Purchase Schemes.
3.2 Each Group Company which participates in the 1991 Scheme shall cease such
participation on Completion.
4 The Purchaser's Plan
4.1 The Purchaser will establish or nominate a pension scheme ("the
Purchaser's Plan") on, or before Completion. The Purchaser's Plan shall:-
(a) be an exempt approved scheme or so designed as to be capable of
treatment by the Commissioners of Inland Revenue as an exempt
approved scheme whether an occupational scheme or otherwise;
(b) be established and administered wholly in the United Kingdom.
4.2 The Purchaser will notify the Vendor of the reference number which has
been given to the Purchaser's Plan by the Pension Schemes Office of the
Inland Revenue as soon as practicable.
4.3 The Purchaser will procure that the Pensionable Employees will be invited
to become members of the Purchaser's Plan with effect from Completion.
5 Transfer from the 1991 Scheme
5.1 The Purchaser will procure that each Joining Employee shall have an
option to elect for, or to consent to, a transfer payment being made from
the 1991 Scheme to the Purchaser's Plan for the purpose of acquiring the
additional rights in the Purchaser's Plan described in paragraph 5.4.
127
5.2 An announcement letter ("the Transfer Letter") which sets out the terms
of the offer to transfer Past Services Benefits under the 1991 Scheme
will be sent to each Joining Employee no later than ten days after
determination of the Transfer Amount. The Transfer Letter shall state
that the offer must be accepted in the manner set out in the Transfer
Letter within six weeks.
5.3 The Transfer Letter (excluding details of the Transfer Amount) shall be
sent to the Vendor at least 7 working days before it is issued by the
Purchaser to Joining Employees. The Transfer Letter shall be subject to
the prior approval of the Vendor which approval must not be unreasonably
withheld or delayed.
5.4 Subject to payment of the Transfer Amount to the trustees of the
Purchaser's Plan, the Purchaser will procure that the Purchaser's Plan
will provide Past Service Benefits for, and in respect of each
Transferring Member. Those benefits will be calculated on a money
purchase basis by reference to the Transfer Amount attributable to such
Transferring Member.
6 Calculation of the Transfer Amount
6.1 The Purchaser shall notify the Vendor of the names of all the Joining
Employees within six weeks of Completion.
6.2 The Vendor shall procure that, as soon as practicable, and not later than
21 days after receiving the notification referred to in 6.1, the Seller's
Actuary shall calculate the Transfer Amount in relation to each Joining
Employee and notify such calculation to the Purchaser's Actuary.
6.3 The Vendor shall procure that the Seller's Actuary will provide, as soon
as practicable, to the Purchaser's Actuary such information and data as
the Purchaser's Actuary may reasonably require to enable him to
calculate, verify and agree such Transfer Amount.
6.4 If the Seller's Actuary and the Purchaser's Actuary are unable to agree
on the calculation of the Transfer Amount within 14 days of the date on
which the Purchaser's Actuary received the information and data under
paragraph 6.3 or such longer period as the
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Vendor and Purchaser shall agree the matter shall be dealt with in
accordance with paragraph 10.
6.5 The Vendor and the Purchaser undertake to use their respective best
endeavours to procure that all such information and data shall be true,
complete and accurate in all material respects as at the date the
information is required for the purpose of the Schedule and that it shall
be sufficient to enable all calculations or determinations to be made for
the purposes of the Schedule. The Vendor and the Purchaser undertake to
use their respective best endeavours to procure that all such information
and data shall be given to the Seller's Actuary and the Purchaser's
Actuary as soon as practicable and without unreasonable delay.
7 Payment of the Transfer Amount
7.1 The Transfer Amount is payable once the following conditions have been,
and remain, satisfied in relation to the 1991 Scheme:-
(a) the Purchaser's Plan has been established or nominated; and
(b) the trustees of the 1991 Scheme have received from the Purchaser
duly completed acceptances of the offer, in a form which is
consistent with the requirements of paragraph 5.2, from the
Transferring Members who elect for, or consent to, a transfer
payment being made; and
(c) the trustees of the 1991 Scheme have received written confirmation
from the trustees of the Purchaser's Plan that they are willing
and able to receive the Transfer Amount; and
(d) the Transfer Amount has been determined in accordance with
paragraph 6 or 10; and
(e) the satisfaction of any other conditions which are required to be
satisfied in connection with the transfer of assets and rights in
respect of the Transferring Members in accordance with statutory
provisions or Inland
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Revenue requirements or the requirements of any regulatory body
from time to time in force.
The Vendor and the Purchaser undertake to use their respective best
endeavours to procure that the above conditions which are applicable to
each of them respectively or to their respective professional advisers or
to the trustees of the 1991 Scheme or the Purchaser's Plan shall be, and
remain, satisfied.
7.2 Subject to paragraph 7.1, the Vendor undertakes to use its reasonable
endeavours to procure that the trustees of the 1991 Scheme shall, on or
before the Payment Date, transfer to the trustees of the Purchaser's Plan
a cash sum equal to the Transfer Amount.
7.3 If the Transfer Amount to be transferred by the 1991 Scheme is not
transferred in full to the trustees of the Purchaser's Plan within 14
days of the Payment Date, as provided for in paragraph 7.2, the Vendor
undertakes (as principal and not as guarantor), not later than one month
after receipt of a written demand from the Purchaser, to pay to the
Purchaser (or at the Purchaser's direction to the employers for the time
being of the Transferring Members), by way of an adjustment of the
consideration for the purchase of the Shares (as defined in this
Agreement) the Shortfall increased by Interest
In this paragraph :
"Shortfall" means the amount by which the Transfer Amount exceeds
the amount transferred from the 1991 Scheme to the Purchaser's
Plan (whether before or after the written demand referred to above
is received).
"Interest" means interest at two per cent over the base lending
rate of National Westminster Bank PLC from time to time in force,
calculated from day to day on the amount of the Shortfall which
remains outstanding from the Payment Date to the day on which the
Transfer Amount or the unpaid part of the Transfer Amount is
actually received by the trustees of the Purchaser's Plan.
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8 Additional Voluntary Contributions
8.1 The AVC Fund shall be disregarded for all purposes of this Schedule
except paragraphs 8.2 and 8.3.
8.2 The Vendor shall use reasonable endeavours to procure that the trustees
of the 1991 Scheme will transfer the AVC Fund to the trustees of the
Purchaser's Plan as soon as practicable after the Payment Date.
8.3 The Purchaser shall procure that the trustees of the Purchaser's Plan
shall apply the AVC Fund, so as to provide appropriate money purchase
benefits for, and in respect of, the appropriate Transferring Members.
9 Indemnity
The Vendor shall pay to the Purchaser by way of reduction of the purchase
consideration an amount equal to any payment which is made by any of the
Group Companies under s144 of the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ and s60 and
s75 Pensions Act in respect of the 1991 Scheme. The Purchaser
acknowledges that before permitting any Group Company to make a payment
in respect of s75, it will give the Vendor an opportunity to make
payments to the Vendor's Pension Scheme so as to remove any liability for
the Group Companies under s75 in respect of the 1991 Scheme.
10 Dispute
10.1 If there is a dispute between the Seller's Actuary and the Purchaser's
Actuary concerning the determination or agreement of the Transfer Amount
or of any other matter to be determined or agreed by them, they shall be
referred to an independent Actuary to be jointly appointed by the Vendor
and the Purchaser.
10.2 If the Vendor and the Purchaser fail to reach agreement under paragraph
10.1 on an appointment of an independent Actuay, either the Vendor or the
Purchaser may request the President for the time being of the Institute
of Actuaries to nominate an independent Actuary who shall then be
appointed by the Vendor and Purchaser. The computations and certificate
of the independent Actuary shall (in the absence of manifest error) be
final and binding on the Vendor and the Purchaser. The costs and fees of
the independent Actuary shall be paid one half by the Vendor and one half
by the Purchaser unless the independent Actuary determines some other
division between the two parties.
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SCHEDULE 8
OVERSEAS COMPLETION MATTERS
▇▇▇▇▇▇▇▇▇ GROUP ALGA CINEMA SA ("SAMALGA")
The Vendor shall deliver to the Purchaser:
1. duly completed and signed share transfer forms (ordres de mouvements) in
favour of the Purchaser or as it may direct, in respect of all the shares
held by shareholders other than ▇▇▇▇▇▇▇▇▇ Group;
2. a certified copy of the resolution of the board of directors of Samalga
approving the Purchaser and/or such other persons or corporations as the
Purchaser may specify as shareholders of Samalga;
3. the shareholder accounts of Samalga together with the Register of Transfers
in both cases up to date to record the transfers made pursuant to the share
transfer forms referred to in paragraph 1 hereof;
4. the minute books of board and shareholders' meetings of Samalga in both
cases up to date together with the attendance book in respect of board
meetings and the relevant attendance sheets and proxies in respect of
shareholders' meetings;
5. the unconditional resignation of the president, of the directors
(administrateurs) and of the general manager (directeur general) of
Samalga;
6. the unconditional resignation of the Statutory Auditors (Commissaires aux
Comptes) of Samalga and his substitute.
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CINECAM SARL ("CINECAM")
The Vendor shall deliver to the Purchaser:
1. a duly completed and signed purchase agreement (acte de cession de part
sociale) in favour of the Purchaser or as it may direct, in respect of the
one share not held by Samalga;
2. a certified copy of the resolution of the shareholders of Cinecam approving
the Purchaser or such other person or corporation as the Purchaser may
specify as shareholder of Cinecam;
3. the minute book of shareholders' meetings of Cinecam up to date together
with the proxies;
4. the unconditional resignation of the manager (gerant) of Cinecam.
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▇▇▇▇▇▇▇▇▇ GROUP PTY LIMITED
▇▇▇▇▇▇▇▇▇ FILM SERVICE (AUSTRALIA) PTY LIMITED
▇▇▇▇ ▇▇▇▇▇ GROUP PTY LIMITED
▇▇▇▇▇▇▇▇▇ CASES (AUSTRALIA) PTY LIMITED
1. the Vendor shall deliver to the Purchaser the resignation in the Agreed
Form of ▇ ▇ ▇▇▇▇▇ as a director of ▇▇▇▇▇▇▇▇▇ Group Pty Limited.
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SIGNED by ▇. ▇. ▇▇▇▇▇ ) /s/ ▇. ▇. ▇▇▇▇▇
)
for and on behalf of )
VISUAL ACTION HOLDINGS PLC )
in the presence of: )
▇▇▇▇▇ Lever /s/ ▇▇▇▇▇ Lever
Solicitor
▇▇▇▇▇▇ ▇▇▇
SIGNED by ▇. ▇. ▇▇▇▇▇▇▇▇▇ ) /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
)
for and on behalf of )
PANAVISION EUROPE LIMITED )
in the presence of: )
▇▇▇▇▇ Lever /s/ ▇▇▇▇▇ Lever
Solicitor
▇▇▇▇▇▇ ▇▇▇
SIGNED by /s/ ▇. ▇. ▇▇▇▇▇▇▇▇▇ ) /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
)
for and on behalf of )
PANAVISION INC )
in the presence of: )
▇▇▇▇▇ Lever /s/ ▇▇▇▇▇ Lever
Solicitor
▇▇▇▇▇▇ ▇▇▇
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