share sale purchase agreement.doc
TRANSCRIPT
DATED 200
1. [Vendor 1] & others
2. [Purchaser] plc / Ltd.
3. [Guarantor] plc / Ltd.
Draft/
SHARE SALE & PURCHASE AGREEMENTrelating to
[Target] Limited
Kidd Rapinet14 & 15 Craven Street
LondonWC2N 5AD
Tel: 020 7925 0303Fax: 020 7925 0334
www.kiddrapinet.co.ukRef: 1/PRW/CP/CLT1/1
/tt/file_convert/55cf91ee550346f57b91e4af/document.doc
Draft 0.22/17 April 2008Amendments marked with Track Changes favour the Vendors, and should be Rejected when preparing a
draft for the Purchaser
SHARE SALE & PURCHASE AGREEMENTrelating to
[Target] Limited
Table of Contents
DATE:............................................................................................................................................................ 3
PARTIES:...................................................................................................................................................... 3
RECITALS:................................................................................................................................................... 3
OPERATIVE PROVISIONS:....................................................................................................................... 3
1. DEFINITIONS AND INTERPRETATION..........................................................................................3
2. AGREEMENT FOR SALE................................................................................................................... 3
3. PURCHASE CONSIDERATION.........................................................................................................3
4. [CONDITIONS PRECEDENT] [MATTERS PRELIMINARY TO COMPLETION].......................3
5. [CONDUCT OF BUSINESS PRIOR TO COMPLETION].................................................................3
6. COMPLETION..................................................................................................................................... 3
7. [DETERMINATION OF NET ASSET VALUE].................................................................................3
8. WARRANTIES..................................................................................................................................... 3
9. TAX COVENANT................................................................................................................................. 3
10. LIMITATION OF LIABILITY........................................................................................................ 3
11. [INDEMNITIES]............................................................................................................................... 3
12. WARRANTIES AND UNDERTAKINGS BY THE PURCHASER................................................3
13. [GUARANTEE OF VENDOR’S OBLIGATIONS].........................................................................3
14. [GUARANTEE OF PURCHASER’S OBLIGATIONS]..................................................................3
15. RESTRICTIVE AGREEMENT.......................................................................................................3
16. FURTHER ASSURANCE................................................................................................................. 3
17. GENERAL......................................................................................................................................... 3
SCHEDULE 1: VENDORS, SHARES AND CONSIDERATION................................................................3
SCHEDULE 2: THE [GROUP] COMPAN[Y][IES]....................................................................................3
SCHEDULE 3: THE PROPERT[Y][IES].....................................................................................................3
SCHEDULE 4: WARRANTIES.................................................................................................................... 3
A. CORPORATE DETAILS...................................................................................................................... 3
B. GOOD STANDING............................................................................................................................... 3
C. SUBSIDIARIES AND OTHER INTERESTS.......................................................................................3
D. ACCOUNTS.......................................................................................................................................... 3
E. FINANCE.............................................................................................................................................. 3
F. [TAXATION (SHORT FORM WARRANTIES)]................................................................................3
G. [TAXATION (FULL WARRANTIES).............................................................................................3
H. TRADING......................................................................................................................................... 3
I. PROPERTIES....................................................................................................................................... 3
J. ENVIRONMENT.................................................................................................................................. 3
K. EMPLOYMENT............................................................................................................................... 3
L. PENSIONS............................................................................................................................................ 3
M. ASSETS............................................................................................................................................. 3
N. INSURANCES....................................................................................................................................... 3
O. INTELLECTUAL PROPERTY.......................................................................................................3
P. DATA PROTECTION AND PRIVACY...............................................................................................3
Q. [MILLENNIUM COMPLIANCE]...................................................................................................3
R. EURO COMPLIANCE......................................................................................................................... 3
S. [INDUSTRY-SPECIFIC WARRANTIES]...........................................................................................3
T. GENERAL............................................................................................................................................. 3
SCHEDULE 5: TAX COVENANT............................................................................................................... 3
1. DEFINITIONS AND INTERPRETATION..........................................................................................3
2. COVENANT.......................................................................................................................................... 3
3. EXCLUSIONS....................................................................................................................................... 3
4. CONDUCT OF CLAIMS...................................................................................................................... 3
5. DUE DATE AND INTEREST............................................................................................................... 3
6. WITHHOLDING AND TAXATION....................................................................................................3
7. OVER PROVISIONS, RELIEFS ETC.................................................................................................3
8. RECOVERY FROM OTHER PERSONS............................................................................................3
[SCHEDULE 6: COMPLETION ACCOUNTS]...........................................................................................3
[Schedule 7: Deferred Consideration].............................................................................................................. 3
SHARE SALE & PURCHASE AGREEMENTrelating to
[Target] Limited
Date:
200
Parties:
1. THE PERSONS whose names and addresses are set out in Column 1 of Schedule 1 (together the “Vendors”)
2. [COMPANY NAME] PUBLIC LIMITED COMPANY / LIMITED (registered no. [xxxxxxx]) the registered office of which is at [address] (the “Purchaser”)
3. [[NAME] of [address] and [NAME] of [address] (together the “Guarantors”)] [[PURCHASER’S HOLDING COMPANY] PUBLIC LIMITED COMPANY / LIMITED (registered no. [xxxxxxx]) the registered office of which is at [address] (the “Guarantor”)]
Recitals:
A. This Agreement sets out the terms agreed by the parties in relation to the sale by the Vendors to the Purchaser of the entire issued share capital of [TARGET] LIMITED (the “Company”).
B. Details of the Company are set out in [Part 1 of] Schedule 2.
C. [The Guarantor[s] [have][has] agreed to guarantee the [Vendor][Purchaser]’s obligations under this Agreement to the [Purchaser][Vendor].]
Operative Provisions:
1. Definitions and Interpretation
In this Agreement, where the context so admits:
1.1 The following words and expressions have the meanings set out against each or given in the provision of this Agreement cross-referenced against each (as applicable):
“Associate” as defined in section 422(4) of the Financial Services and Markets Act 2000 (so that in relation to any Vendor “H” is that Vendor and “C” or “D”, as applicable, is the Company)
“Auditors” the Company’s auditors
“Business” the businesses of the Company at the date of this Agreement
“Business Day” a day (not being a Saturday) on which banks are open for general banking business in the City of London
“CA” the Companies Act 1985 and any provisions of the
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Companies Act 2006 for the time being in force
“CAA” Capital Allowances Act 2001
[“Certificates of Title” the certificates of title with respect to the Propert[y][ies] to be given by the Vendors’ Solicitors in agreed terms]
“Companies Acts” CA, the Companies Act 1989 and the former Companies Acts (within the meaning of CA s735(1))
“Company” [Target] Ltd.; details of which are set out in [Part 1 of] Schedule 2
“Completion” completion of the sale and purchase of the Shares in accordance with Clause 6
[“Completion Accounts” the audited [consolidated] balance sheet as at [the date of Completion] and audited [consolidated] profit and loss account for the period from the Last Accounts Date to [the date of Completion], to be prepared in accordance with Clause 7.1.1 and Schedule 6]
“Computer Systems” all computer hardware, software, microprocessors and firmware and any other items that connect with any or all of them which in each case are products being developed or marketed by the Company or are used in the Company’s business or are in the possession of the Company
“Consideration” see Clause 3.1
[“Consideration Shares” ordinary shares of £1 each in the [Purchaser] [Guarantor], credited as fully-paid]
“Dangerous Substance” any natural or artificial substance (whether in solid or liquid form or in the form of a gas or vapour and whether alone or in combination with any other substance) capable of causing harm to man or any other living organism supported by the environment, or damaging the environment or public health or welfare, including but not limited to any controlled, special, hazardous, toxic or dangerous waste
[“Deferred Consideration”
the additional Consideration (if any) due to the Vendors and calculated in accordance with Schedule 7]
“Disclosure Letter” the disclosure letter in agreed terms making disclosure against the Warranties
“Environmental Law” all laws, regulations, codes of practice, circulars, guidance notices and the like (whether in the United Kingdom or elsewhere) concerning the protection of human health or the environment or the conditions of the workplace or the generation, transportation, storage, treatment or disposal
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of Dangerous Substances
“Environmental Licence”
any permit, licence, authorisation, consent or other approval required by any Environmental Law
[“FA” Finance Act]
“Group” as defined in section 474(1) of the Companies Act 2006
[“Group Companies” the Company and its subsidiaries for the time being]
[“Guarantor[s]” [[Name] and [Name]; together] [[Purchaser’s holding co] plc /Ltd.;] Party 3 to this Agreement]
“HMRC” Her Majesty’s Revenue & Customs (including where applicable their predecessors the Inland Revenue and Her Majesty’s Customs & Excise)
“ICTA” Income and Corporation Taxes Act 1988
“ITEPA” Income Tax (Earnings and Pensions) Act 2003
“Independent Accountant”
see Clause 1.2
“Intellectual Property Rights”
patents, trade marks, service marks, registered designs, internet domain names, applications for any of the above, copyright, design right, database rights, know-how, confidential information, trade secrets, trade or business names, [neighbouring rights,] [plant variety rights,] [semiconductor chip topography rights,] and any other similar protected rights in any country
[“ITA” Inheritance Tax Act 1984]
“Last Accounts” the audited balance sheet as at the Last Accounts Date and audited profit and loss account for the year ended on the Last Accounts Date of [the Company] [each Group Company, including in the case of the Company the audited consolidated balance sheet as at such date and the audited consolidated profit and loss account for such period], and the directors’ report and notes
“Last Accounts Date” [ ]; being the date to which the Last Accounts were prepared
[“Loan Notes” the [guaranteed] loan notes to be issued by the Purchaser in the agreed terms on Completion]
[“Net Asset Value” a sum equal to the total assets less the total liabilities of the [Company][Group Companies] at close of business on [the date of Completion], to be ascertained from the Completion Accounts and determined in accordance with Clause 7]
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“Planning Acts” as defined in Section 336 of the Town and Country Planning Act 1990
“Propert[y] [ies]” the propert[y][ies] of the [Company][Group Companies], brief particulars of which are set out in Schedule 3
“Purchaser” [Purchaser] plc / Ltd.; Party 2 to this Agreement
“Purchaser’s Accountants”
Messrs. [ ] of [ ]
“Purchaser’s Solicitors” Messrs. Kidd Rapinet of 14 & 15 Craven Street, London, WC2N 5AD
“Recognised Investment Exchange”
as defined in section 285(1)(a) of the Financial Services and Markets Act 2000
“Security Interest” any encumbrance, mortgage, charge, assignment for the purpose of security, pledge, lien, right of set off, retention of title or other security interest of whatever kind and any agreement, whether conditional or otherwise, to create any such interest
[“Service Agreement”] [“Consultancy Agreement]”
the [Service Agreement] [Consultancy Agreement] between the Vendor [name] and the Company in agreed terms
“Shares” the entire issued share capital of the Company; as detailed in [Part 1 of] Schedule 2
“Taxation” all forms of taxation, charge, duty, impost, withholding, deduction, rate, levy and governmental charge (whether national or local) in the nature of tax (including without limitation national insurance and other similar contributions, stamp duty, stamp duty land tax and stamp duty reserve tax), whatsoever and whenever created, enacted or imposed, and whether of the United Kingdom or elsewhere, and any amount whatever payable to any Taxation Authority or any other person as a result of any enactment relating to Taxation, together with all connected fines, penalties, interest, costs, charges, surcharges and expenses, and “Tax” is to be construed accordingly
“Taxation Authority” any statutory or governmental authority or body (whether in the United Kingdom or elsewhere) involved in the collection or administration of Taxation including (without limitation) HMRC
[“Taxation Statutes” includes statutes (and all regulations and arrangements whatsoever made under them) whether of the United Kingdom or elsewhere, and whether enacted before or after the date of this Agreement, providing for or imposing any Taxation]
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“Tax Covenant” the tax covenant in Schedule 5
[“TCGA” Taxation of Chargeable Gains Act 1992]
“TMA” Taxes Management Act 1970
[“VATA” Value Added Tax Act 1994]
“Vendors’ Accountants” Messrs. [ ] of [ ]
“Vendors” the persons named in Column 1 of Schedule 1; together Party 1 to this Agreement
“Vendors’ Solicitors” Messrs. [ ] of [ ]
“Warranties” the warranties and representations by the [Vendors] [Warrantors] in Clause 5 and Schedule 4
“Warrantors” the Vendors [and [ ]] [except for []]
“Year 2000 Conformity”
has the meaning set out in the document published by the part of the British Standards Institution called DISC entitled ‘A Definition of Year 2000 Conformity Requirements’ and which has the reference PD2000-1: 1998 (In construing the meaning of this definition have regard to the Amplification of the Definition and Rules set out in the same document)
1.2 References to a matter being determined by an “Independent Accountant” mean that it is to be determined by an independent chartered accountant or by an independent firm of chartered accountants to be nominated by agreement between the parties who were otherwise to have agreed the matter in question and have failed so to agree. In default of their agreeing such nomination, either or any of them may request the President for the time being of the Institute of Chartered Accountants in England and Wales (or his deputy) to nominate the Independent Accountant. The Independent Accountant must act as an expert and not as an arbitrator, and his decision will (in the absence of manifest error) be final and binding on the parties. His fees must be paid as he directs.
1.3 References to “SSAP” are to a statement of Standard Accounting Practice published by the Consultative Committee of Accounting Bodies of England and Wales;
1.4 References to “FRS” are to a financial reporting standard adopted or issued by The Accounting Standards Board Limited;
1.5 References to specific United Kingdom legislation, Taxes or Taxation Authorities include equivalent or similar legislation, Taxes or Taxation Authorities in other jurisdictions, and any accompanying wording is to be construed accordingly;
1.6 In the Warranties the phrases “to the best of the [Vendors][Warrantors]’ knowledge and belief” or “so far as the [Vendors][Warrantors] are aware”, or any similar phrase, are to be construed as meaning that the [Vendors][Warrantors] warrant that they have made all proper enquiries in respect of the matter in question, and for the purposes of the Warranties the knowledge, belief and awarenesss of each of the [Vendors][Warrantors] is deemed to be attributed to all of the [Vendors][Warrantors];
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1.7 References to the singular or plural numbers include each other, and references to the masculine, feminine or neuter genders include the others;
1.8 Headings are for ease of reference only, and are not intended to affect the construction of any provision;
1.9 References to Recitals, Clauses, Schedules and Annexures are references respectively to Recitals to this Agreement, Clauses of this Agreement, Schedules to this Agreement, and Annexures to this Agreement, references in Schedules to Paragraphs are to Paragraphs of that Schedule, and references to this Agreement include the Schedules;
1.10 References to an Annexure or other document being “in agreed terms” are to a draft document in a form signed or initialled by or on behalf of the parties for purposes of identification;
1.11 References to the parties are to the parties to this Agreement;
1.12 References to persons include individuals, bodies corporate, partnerships and unincorporated associations;
1.13 Obligations on the part of more than one person are joint and several;
1.14 References to statutory provisions are to those provisions as amended or re-enacted, or as their application is modified by other provisions, from time to time, and include references to any provisions of which they are re-enactments (whether with or without modification), except to the extent that any amendment, modification or re-enactment enacted after today’s date would extend or increase the liability of the [Warrantors] under the Warranties or Tax Covenant; and
1.15 Words and phrases the definitions of which are contained or referred to in Part XXVI of CA have the meanings which it gives them.
2. Agreement for Sale
2.1 Subject to the terms and conditions of this Agreement and with effect from the date of this Agreement, the Vendors sell with full title guarantee and the Purchaser purchases the Shares, free from all Security Interests and with all rights attaching to them, including (but not limited to) the right to receive and retain any dividends declared after the date of this Agreement.
2.2 The Vendors waive all rights of pre-emption (if any) over the Shares to which they may be entitled under the articles of association of the Company or otherwise in relation to the sale and purchase of the Shares pursuant to this Agreement.
3. Purchase Consideration
3.1 The purchase consideration for the Shares (the “Consideration”) is [£[ ]] [the aggregate of the following:
3.1.1 a sum equal to the Net Asset Value (estimated at £[ ]);
3.1.2 £[ ]; and
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3.1.3 [the Deferred Consideration (if any), calculated in accordance with Schedule 7].
3.2 The Consideration is payable as follows:
3.2.1 On Completion:
3.2.1.1 £[ ] in cash;
3.2.1.2 £[ ] in Consideration Shares;
3.2.1.3 £[ ] in Loan Notes;
3.2.2 [Payable on [ ] or on the final determination of the necessary figures to compute each (whichever is the later):
3.2.2.1 £[ ] in cash;
3.2.2.2 £[ ] in Consideration Shares;]
3.2.3 [The Deferred Consideration in accordance with Schedule 7]
3.3 The amount of the Consideration is subject to possible [upwards-only] adjustment in accordance with Clause [7.5.1].
3.4 The Vendors are entitled to the Consideration in the percentages set out against their respective names in Column 3 of Schedule 1.
3.5 [The Purchaser may deduct and set off against any of the Consideration any sums due from the Vendors to the Purchaser [or to the Guarantor] under any provision of this Agreement or otherwise.] [[Payment of any of the Consideration must not be made subject to any deduction or set off, whether of sums due or allegedly due from the Vendors to the Purchaser [or the Guarantor] under any provision of this Agreement or otherwise.]
4. [ Conditions Precedent] [Matters Preliminary to Completion]
4.1 [This Agreement is conditional upon:] [It is a condition of this Agreement that the Vendors have procured the following matters on or before Completion:]
4.1.1 [The Purchaser being reasonably satisfied with [the results of an accountants' investigation into the financial, contractual and trading position and prospects of the [Company] [Group Companies]] [the results of its accounting and legal due diligence];]
4.1.2 [A resolution being passed at a general meeting of the Guarantor approving the purchase of the Shares and creating and giving authority for the issue of the Consideration Shares;]
4.1.3 [The admission to the Official List by the Council of the Stock Exchange of the Consideration Shares (subject only to allotment) and [if so required by the Council to the despatch of a circular to the shareholders of the Purchaser and] the Rule 520 Notice being posted;]
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4.1.4 [Financial Assistance whitewash only: The Purchaser’s Accountants preparing a draft report on the state of affairs of the Company complying with CA s156(4), to be given by them when appointed as auditors of the Company;]
4.1.5 [The Purchaser being satisfied that its proposed acquisition of the Shares will not be referred to the Competition Commission under the Fair Trading Act 1973;]
4.1.6 [Clearance being obtained from The Pensions Regulator;] and
4.1.7 [Clearances or exemptions being obtained under or in respect of:
4.1.7.1 ICTA 1988, s 707 (Cancellation of tax advantages from certain transactions in securities);
4.1.7.2 TCGA s 138 (Company reconstructions and amalgamations).]
4.2 [If all of the above conditions have not been fulfilled within one month of the date of this Agreement or by such later date as the parties may agree in writing, this Agreement will become null and void and cease to have any further force or effect (except that Clauses 4.3, 17.10, 17.11 and 17.12 will remain in full force and effect notwithstanding the non-fulfilment of the conditions) and no party will have any claim against any other party arising from or in connection with any provision of this Agreement (except for Clauses 4.3, 17.10, 17.11 and 17.12 as above), except in respect of any prior breach.
4.3 The parties must use their respective best endeavours so far as it lies within their respective powers to ensure that this Agreement becomes unconditional by the date set pursuant to Clause 4.2, but subject to the Purchaser’s discretion under Clause 6.10. [The obligation of the Purchaser in relation to Clause 4.1.2 may be satisfied by the Guarantor sending a circular to its shareholders containing a recommendation to vote in favour of the appropriate resolutions.]
4.4 The Purchaser will be entitled to rescind this Agreement by notice in writing to the Vendors or the Vendors’ Solicitors if prior to Completion any of the Warranties is not or was not true and accurate in all material respects or if any act or event occurs which, had it occurred on or before the date of this Agreement, would have constituted a breach of any of the Warranties or if there is any material breach or non-fulfilment of any of the Warranties which (being capable of remedy) is not remedied prior to Completion.]
5. [ Conduct of Business prior to Completion ]
5.1 [Each of the Vendors undertakes with the Purchaser that he will promptly disclose in writing to the Purchaser any event or circumstance, which arises or becomes known to him after the date of this Agreement and prior to Completion, which is materially inconsistent with any of the Warranties or the contents of the Disclosure Letter or which might reasonably be considered material to be known by a purchaser for value of the Shares.
5.2 The Vendors must procure that, except so far as may be necessary to give effect to this Agreement, the Company does not at any time prior to Completion without the prior written consent of the Purchaser:
5.2.1 do, procure or allow anything which may cause, constitute or result in a breach
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of the Warranties; or
5.2.2 in any way depart from the usual course of business of the Company as regards its nature, scope or manner (including without limitation issuing or transferring any shares in the Company, or terminating, varying or entering into any key contracts).
5.3 The Vendors must procure that prior to Completion the Purchaser, its agents, representatives, accountants and Solicitors are given promptly on request all such facilities and information regarding the business, assets, liabilities, contracts and affairs of the Company, and of the documents of title and other evidence of ownership of its assets as the Purchaser may require.]
5.4 The Vendors covenant with and undertake to the Purchaser that they will not at any time prior to Completion:
5.4.1 dispose or attempt to dispose of any interest in the Shares or grant any option over, or mortgage, charge or otherwise encumber or dispose of any of the Shares; or
5.4.2 enter into discussions with any persons as regards the Shares or any possible sale of the Business or of the assets or undertaking of the Company or a material part of the Business or of the assets or undertaking of the Company.
5.5 Without prejudice to the above, the Vendors covenant with and undertake to the Purchaser that the Company will not at any time prior to Completion without the prior written consent of the Purchaser:
5.5.1 permit or cause to be proposed any alteration to its share capital (including any increase in it) or the rights attaching to its shares;
5.5.2 create, allot, issue, redeem, consolidate, convert or sub-divide any share or loan capital or grant or agree to grant any options for the issue of any share or loan capital;
5.5.3 subscribe or otherwise acquire, or dispose of any shares in the capital of the Company;
5.5.4 acquire or dispose of the whole or part of the undertaking of it or of any other person or acquire or dispose of an asset except in the ordinary course of its business or assume or incur a liability, obligation or expense (actual or contingent) except in the ordinary course of its business;
5.5.5 send any notice to its shareholders or pass any shareholder resolution;
5.5.6 cease or propose to cease to carry on it business or be wound up or enter into receivership, or any form of management or administration over its assets; or
5.5.7 permit or suffer any of its insurances to lapse or do anything which would make any policy of insurance void, null or voidable or might result in an increase in the premium payable under any policy of insurance or prejudice the ability to effect equivalent insurance in the future;
5.5.8 make any change to its auditors, its bankers or the terms of the mandate given to such bankers in relation to its account(s), or its accounting reference date;
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5.5.9 enter into or vary any transaction or arrangement with, or for the benefit of any of its directors or shareholders or any other person who is an Associate of any of its directors or shareholders;
5.5.10 borrow monies (other than by way of its agreed overdraft facility) or accept credit (other than normal trade credit) or make payments out of or drawings on its bank accounts other than in accordance with its usual practice prior to the date of this Agreement or amend the terms of its borrowings or indebtedness in the nature of borrowing;
5.5.11 make any payment otherwise than on an arms’ length basis;
5.5.12 enter into or give or permit or suffer to subsist any guarantee of or indemnity or contract or suretyship for or otherwise commit itself in respect of the due payment of money or the performance of any contract, engagement or obligation of any other person or body;
5.5.13 in relation to the Property;
5.5.13.1 apply for a planning permission or other permit or licence or implement one already obtained but not implemented;
5.5.13.2 change its existing use;
5.5.13.3 terminate, or give a notice to terminate, a lease, tenancy or licence;
5.5.13.4 apply for consent to do something requiring consent under a lease, tenancy or licence;
5.5.13.5 grant or refuse an application by a tenant or occupier to do something requiring its consent under a lease, tenancy or licence; or
5.5.13.6 agree a new rent or fee payable under a lease, tenancy or licence;
5.5.14 propose, pay, declare or make any dividend or propose, declare or make any other distribution;
5.5.15 enter into any partnership or joint venture;
5.5.16 incur any capital expenditure (including obligations under hire purchase and leasing arrangements) exceeding in aggregate £[ ] or as regards any single item £[ ];
5.5.17 dispose of any asset of a capital nature with a book or market value in excess of £[ ];
5.5.18 provide a gratuitous benefit to an officer or employee (or any of their dependents) or employ, engage or terminate the employment or engagement of a person;
5.5.19 vary or make any binding decisions on the terms of employment and service of any officer or employee increase or vary the salary or other benefits of any such officer or employee or appoint or dismiss any officer or such employee;
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5.5.20 create or permit the creation of or suffer to subsist any Security Interest over the whole or any part of its assets or redeem any Security Interest over any asset of the Company;
5.5.21 make any loan or give any credit (other than normal trade credit) or acquire any loan capital of any corporate body (wherever incorporated);
5.5.22 surrender or agree to any material change in the terms of any substantial agreement to which it is from time to time a party;
5.5.23 enter into or amend or vary any leasing, hire, hire purchase or other agreement for payment on deferred terms or any unusual or onerous contract or any other material or major or long term contract;
5.5.24 conduct any litigation (except for the collection of debts arising in the ordinary course of business) or settle or compromise any claim or dispute or waive a right in relation to litigation or arbitration proceedings; or
5.5.25 amend or discontinue (wholly or partly) any of the [Vendors Pension Schemes] (as defined in Warranty [ ] of Schedule 4) or communicate to any member or former member, officer or employee of any of the [Vendors Pension Schemes] a plan, proposal or an intention to amend, discontinue (wholly or partly), or exercise a discretion, in relation to such [Vendors Pension Schemes.]
5.6 [The Purchaser undertakes to the Vendors and for the benefit of the [Group] Compan[y][ies] that:
5.6.1 until Completion it will not at any time divulge or communicate to any person other than with the agreement of the Vendors any confidential information concerning the business, accounts, finance and contractual arrangements or other dealings, transactions or affairs of the [Group] Compan[y][ies] which may come to its knowledge pursuant to this Clause 5; and
5.6.2 if for any reason Completion does not take place, it will return to the [Group] Compan[y][ies] all books, records and other papers and information received by the Purchaser or its agents pursuant to the provisions of this Clause 5.]
6. Completion
6.1 [Provided that this Agreement has not been rescinded in accordance with Clause 4.4, completion of the sale and purchase of the Shares will take place at the offices of the Vendors’ Solicitors on the next Business Day [7] days after the fulfilment of the last outstanding condition under Clause 4.1.][Completion of the sale and purchase of the Shares will take place at the offices of the Vendors’ Solicitors immediately upon the execution of this Agreement [and satisfaction of the conditions in Clause 4.1].]
6.2 The parties’ respective obligations on Completion are as set out below, except in so far as they have already been complied with or the Purchaser waives any of the Vendors’ obligations.
6.3 The Vendors must deliver to the Purchaser:
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6.3.1 duly completed and signed transfers in favour of the Purchaser or as it may direct of the Shares, together with the corresponding share certificates;
6.3.2 duly completed and signed transfers in favour of the Company of all shares in the subsidiaries of the Company which are not registered in the sole name of the Company, together with the corresponding share certificates;
6.3.3 [Required for Financial Assistance whitewash/optional otherwise:] a power of attorney from each Vendor in agreed terms enabling the Purchaser to vote the Shares pending its registration as shareholder;
6.3.4 the resignations of [ ] from their respective offices as director and/or secretary of [the] [each Group] Company, with a written acknowledgement executed as a [deed] [compromise agreement] by each of them in agreed terms that he has no claim against [the] [any Group] Company on any grounds whatsoever;
6.3.5 the resignation of the existing auditors of [the] [each Group] Company, addressed to it at its registered office and confirming that they have no outstanding claims against it of any kind and containing a statement that there are no circumstances connected with their ceasing to hold office which they consider should be brought to the attention of the members or creditors of the Company;
6.3.6 the seal and certificate of incorporation and any certificates of incorporation on change of name of [the] [each Group] Company;
6.3.7 the statutory books of [the] [each Group] Company, complete and up-to-date;
6.3.8 evidence satisfactory to the Purchaser that all charges, debentures and other Security Interests affecting the Company have been discharged;
6.3.9 [duly executed deeds of waiver in agreed terms, waiving any indebtedness of the Company to the Vendors and their Associates;]
6.3.10 if applicable, as evidence of the authority of each person entering into an agreement or document on behalf of any of the Vendors, a certified copy of the power of attorney conferring such authority;
6.3.11 any waiver, consent or other document necessary to give the Purchaser full legal and beneficial ownership of the Shares;
6.3.12 [the Certificates of Title];
6.3.13 the title deeds relating to [each of] the Propert[y][ies]; and
6.3.14 the appropriate forms to amend the mandates given by [the] [each Group] Company to its bankers.
6.4 The parties must procure (so far as within their respective powers) that the following documents are duly executed by all persons required to execute them:
6.4.1 [the Shareholders’ Agreement in agreed terms;]
6.4.2 the [Service Agreement] [Consultancy Agreement];
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6.4.3 [the deeds of waiver of any indebtedness of the [Group] Compan[y][ies] to the Vendors and their Associates in agreed terms;] and
6.4.4 [the deed of assignment of intellectual property in agreed terms].
6.5 The Vendors must repay all monies then owing by them or any of their Associates to [the] [any Group] Company, whether due for payment or not.
6.6 A Board Meeting of the Company must be held at which:
6.6.1 such persons as the Purchaser may nominate are appointed additional directors and secretary;
6.6.2 the resignations referred to in Clauses 6.3.4 and 6.3.5 are submitted and accepted;
6.6.3 [Financial Assistance Whitewash only: the Purchaser’s Accountants are appointed as auditors of the Company;
6.6.4 the Purchaser’s Accountants give the report for the purposes of CA s156(4) referred to in Clause 4.1.4;
6.6.5 the directors of the Company make a statutory declaration complying with CA ss155(6) and 156;
6.6.6 the board meeting is adjourned and a special resolution complying with CA ss155(5) and 157 is passed by the Purchaser exercising the voting rights given to it by the powers of attorney referred to in Clause 6.3.3;] and
6.6.7 the transfers referred to in Clause 6.3.1 are approved (subject to stamping).
6.7 [Board Meetings of the other Group Companies must be held at which:
6.7.1 such persons as the Purchaser may nominate are appointed additional directors and secretary;
6.7.2 the transfers referred to in Clause 6.3.2 are approved (subject to stamping); and
6.7.3 the resignations referred to in Clauses 6.3.4 and 6.3.5 are submitted and accepted.]
6.8 [The parties must procure that the articles of association of the Company are amended so that they are in agreed terms].
6.9 When the Vendors’ above obligations on Completion have been fully complied with:
6.9.1 the Purchaser must deliver to the Vendors’ Solicitors:
6.9.1.1 by banker’s draft or telegraphic transfer, the cash Consideration of £[ ] payable pursuant to Clause 3.2.1.1;
6.9.1.2 a certified copy of the minutes of the board meeting of the [Guarantor] [Purchaser] at which it was resolved to issue the Consideration Shares to the Vendors pursuant to Clause 3.2.1.2;
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6.9.1.3 share certificates in respect of the Consideration Shares;
6.9.1.4 [a certified copy of the minutes of the board meeting of the Purchaser at which it was resolved to issue the Loan Notes to the Vendors]; and
6.9.1.5 [the Loan Notes].
6.10 If any of the conditions in Clause 4.1 have not been fulfilled and/or the provisions of Clauses 6.3 to 6.8 (inclusive) are not complied with in all respects by the Vendors on the date on which Completion is due to take place, then the Purchaser may in its absolute discretion:
6.10.1 waive such compliance, subject to such terms and conditions as it may specify; or
6.10.2 effect Completion so far as is practicable having regard to the defaults which have occurred, and without prejudice to the Vendors’ obligations in such respect; or
6.10.3 specify a new date for Completion (being a Business Day not more than 20 Business Days later, in which event the provisions of this Clause 6 (including this Clause 6.10) will apply to Completion as so deferred; or
6.10.4 rescind this Agreement forthwith by notice in writing to the Vendors without prejudice to any other remedy it may have.
6.11 With effect from Completion, the parties agree that the confidentiality agreement dated [ ] between the Vendors and the Purchaser relating to the [Group] Compan[y][ies] is terminated.
6.12 [ Following Completion, the Purchaser must use its best endeavours to procure the release of the Vendors from all liability arising after Completion under the guarantees given by them on behalf of the [Group] Compan[y][ies] and listed in the Disclosure Letter. Pending such releases the Purchaser must indemnify the Vendors against any such liability.]
7. [Determination of Net Asset Value ]
7.1 [Immediately after Completion the parties will instruct the Vendors’ Accountants (whose costs in this respect will be paid as to 50% by the Vendors and as to 50% by the Purchaser) to:
7.1.1 prepare the Completion Accounts in accordance with Schedule 6;
7.1.2 certify in writing the amount of the Net Asset Value as shown by the Completion Accounts;
7.1.3 deliver a draft of the Completion Accounts and such certificate to the Purchaser’s Accountants within 60 days after the date of Completion, with copies to the Vendors and the Purchaser.
7.2 If the Purchaser’s Accountants notify the Vendors’ Accountants in writing within 21 days after receipt of such draft that they agree the Completion Accounts and the amount of the Net Asset Value at the figure so certified, then the Completion
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Accounts and such certification will be final and binding upon the parties, and the Net Asset Value accordingly determined at that figure.
7.3 Otherwise the Vendors and Purchaser must use their respective best endeavours to procure that the Purchaser’s Accountants and the Vendors’ Accountants reach agreement upon the appropriate adjustments to the draft Completion Accounts to meet the objections of the Purchaser’s Accountants and the resulting figure for the Net Asset Value, and that once such agreement is reached, the Vendors’ Accountants deliver the final version of the Completion Accounts as so adjusted and a revised certification of the Net Asset Value as so agreed. The Completion Accounts and such certification will then be final and binding upon the parties, and the Net Asset Value accordingly determined at that figure.
7.4 If no such agreement has been reached within 42 days of receipt of the draft Completion Accounts, either the Vendors or the Purchaser may refer any matter in dispute to be determined by an Independent Accountant. In giving his decision, the Independent Accountant must state in writing what adjustments (if any) are to be made to the draft Completion Accounts so that they comply with Schedule 6 and what in his opinion is therefore the amount of the Net Asset Value. The Completion Accounts as so adjusted and the Independent Accountant’s opinion as to the amount of the Net Asset Value will then (in the absence of manifest error) be final and binding upon the parties, and the Net Asset Value accordingly determined at that figure.
7.5 When the Net Asset Value has been determined as above:
7.5.1 The amount of the Consideration will be adjusted accordingly;
7.5.2 The balance of the Consideration as so adjusted must be paid by the Purchaser or refunded by the Vendors (as appropriate) within 14 days, and any amount not paid when due will carry interest at the rate of [ ] per cent per annum above the base rate from time to time of [Purchaser’s] Bank plc from the due date until the date of actual payment (both before and after judgment); and
7.5.3 The Purchaser will have no claim against the Vendors under this Agreement or the Tax Covenant in respect of any liability or deficiency to the extent that the same was taken into account in the Completion Accounts but, except as above, preparation and agreement of the Completion Accounts by or on behalf of the Purchaser will be without prejudice to any claim which the Purchaser may have against the Vendors under this Agreement or the Tax Covenant.]
8. Warranties
8.1 The [Vendors][Warrantors] jointly and severally warrant to and for the benefit of the Purchaser that, except as fairly disclosed in the Disclosure Letter, the Warranties are true and accurate in all respects [and that the contents of the Disclosure Letter, and of all accompanying documents, are true and accurate in all material respects and fully, clearly and fairly disclose every matter to which they relate].
8.2 [The Warranties are deemed to be repeated in respect of each Group Company as if the references to the “Company” in the Warranties referred to it.]
8.3 [The Warranties are deemed to be repeated at all times between the date of this Agreement and Completion, and “now”, “the date hereof” and like expressions in the Warranties refer to the date of this Agreement, the date of Completion and all times
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between.
8.4 The [Vendors][Warrantors] must procure that (except only as may be necessary to give effect to this Agreement) neither they nor the Company knowingly do, allow or procure any act or omission before Completion which would constitute a material breach of any of the Warranties before or at Completion, or which would make any of the Warranties materially inaccurate or misleading in any material respect at any such time.]
8.5 Each of the Warranties is without prejudice to any other warranty or undertaking, and no Warranty or part of one is to be construed as limiting or governing the extent or application of any of the other Warranties or any part of them.
8.6 Each of the Warranties is to be construed as a separate and independent warranty, to the intent that the Purchaser will have a separate claim and right of action in respect of every breach, but not so as to recover the same loss more than once.
8.7 In respect of any breach of the Warranties the [Vendors][Warrantors] must pay to the Purchaser upon demand an amount equal to:
8.7.1 The amount necessary to put the [Group] Compan[y][ies] into the position which would have existed if the Warranties had been true when given or repeated; and
8.7.2 All reasonable costs and expenses incurred by the [Group] Compan[y][ies] and/or the Purchaser in connection with the matter giving rise to the claim for breach of the Warranties and the claim;
but the ability of the Purchaser to claim damages on any other basis is not restricted by this Clause 8.7.
8.8 [Without limitation to the provisions of Clause 8.7, in the event of a breach of the Environmental Warranties set out in Section J of the Warranties the Vendors agree to indemnify and hold the Purchaser and the [relevant Group] Company harmless from and against and to reimburse the Purchaser on a full indemnity basis for any and all losses, damages, liabilities, claims and expenses (including without limitation fines, penalties, clean-up costs, activities and obligations, legal fees, technical consultants’ engineers’ and experts’ fees, incidental and consequential damages and lost profits) (“Environmental Losses”) which may be sustained or suffered by the Purchaser or the [relevant Group] Company arising out of based upon or by reason of any Environmental Warranties being untrue or incorrect or by virtue of any Environmental Losses incurred by the Purchaser arising out of any use of the Propert[y][ies] or operation of the business of [any Group][the] Company prior to Completion, whether or not such liability was known to the Vendors or could reasonably have been known by the Vendors, and notwithstanding that all reasonable enquiries were made as to such liabilities by the Vendors prior to Completion [except in respect of those matters set out in the Disclosure Letter].]
8.9 [Without prejudice to any of the Warranties, the Vendors will be liable to the Purchaser for any breach of the Warranties in respect of the Propert[y][ies] to the same extent as if the Propert[y][ies] according to their tenure had been conveyed by the Vendors to the Purchaser for valuable consideration, in the conveyance the Vendors had been expressed to convey with full title guarantee, and the conveyance had been made subject only to all Security Interests and other adverse interests disclosed in the Disclosure Letter.]
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8.10 The rights and remedies of the Purchaser in respect of any breach of the Warranties are not affected by Completion, by any investigation made by or on behalf of the Purchaser into the affairs of [the] [any Group] Company, by any failure to exercise or delay in exercising any right or remedy or by any other event or matter whatsoever, except a specific and duly authorised written waiver or release.
8.11 None of the information supplied by [the] [any Group] Company or its professional advisers prior to the date of this Agreement to any of the [Vendors][Warrantors] or their 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 the [Group] Compan[y][ies], is to be deemed a representation, warranty or guarantee of its accuracy by the [Group] Compan[y][ies] to the [Vendors][Warrantors], and the [Vendors][Warrantors] waive any claims against the [Group] Compan[y][ies] which they might otherwise have in respect of it.
9. Tax Covenant
The provisions of Schedule 5 apply as if they were set out here.
10. Limitation of Liability
10.1 The provisions of this Clause 10 operate to limit the liability of the [Vendors] [Warrantors] under the Warranties (other than Warranties A.1 to A.7 inclusive) and (except for Clauses 10.2 and 10.3) the Tax Covenant and/or for misrepresentation (except fraudulent or grossly negligent misrepresentation) in respect of the matters covered by the Warranties, and references to “such liabilities” or to the Warranties are to be construed accordingly.
10.2 [No liability will attach to the [Vendors][Warrantors] in respect of any individual breach of the Warranties unless such liability exceeds £[ ].]
10.3 No liability will attach to the [Vendors][Warrantors] [unless][except to the extent that] the aggregate amount of such liabilities exceeds the total sum of £[ ][, but if such liabilities exceed that sum the [Vendors][Warrantors] will (subject to the other provisions of this Clause 10) be liable for the whole of such liabilities and not merely for the excess].
10.4 The aggregate amount of such liabilities will not exceed [the amount of the Consideration] [and the aggregate maximum liability of each Vendor will not exceed his Relevant Percentage (as defined below) of the amount of the Consideration.
10.5 [The Warranties and the Tax Covenant are given by each of the Vendors on a several basis, and each of the Vendors’ maximum liability in respect of the amount of any claims under the Warranties or under the Tax Covenant will be his Relevant Percentage (as defined below) of the total liability in that respect.]
10.6 For the purposes of Clauses 10.4 and 10.5 the expression “his Relevant Percentage” means in relation to each Vendor the percentage proportion which those of the Shares which he is selling under this Agreement bears to the aggregate amount of the Shares.]
10.7 Claims against the [Vendors][Warrantors] will be wholly barred and unenforceable unless written particulars of them (giving sufficient general details of the matter or claim in respect of which such claim is made to enable the [Vendors][Warrantors] to understand the facts giving rise to, the basis and the likely amount of the claim, so
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that they may take such steps as are available to them to deal with it) have been given to the [Vendors][Warrantors] within a period of 7 years from the date of this Agreement (in the case of any claim under Warranty [F][G] or otherwise in relation to Taxation or under the Tax Covenant) or [2][3] years from the date of this Agreement (in the case of any other claim in respect of such liabilities).
10.8 [Any claim in respect of which notice has been given in accordance with Clause 10.7 will be deemed to have been irrevocably withdrawn and lapsed (if not previously satisfied, settled or withdrawn) if proceedings in respect of such claim have not been issued and served on the Vendors within [12 months] after the date of such notice.]
10.9 The [Vendors][Warrantors] will have no such liability to the extent arising from the passing of, or change in, after the date of this Agreement, any law, regulation or rule of any government, governmental department, agency or regulatory body or any increase in the rates of Taxation or any imposition of Taxation not in effect at the date of this Agreement [or from the Company ceasing to have the benefit of the small companies’ rate of corporation tax].
10.10 [Where the Purchaser and/or any Group Company is or is likely to be entitled to recover from some other person any sum in respect of any matter giving rise to a claim for breach of the Warranties, then the Purchaser must procure that reasonable steps are taken to enforce such recovery, and if any sum is so recovered then either the amount payable by the Vendors in respect of that claim will be reduced by an amount equal to the sum so recovered (less the reasonable costs and expenses of recovering it and any Taxation payable by the Purchaser or a Group Company as a result of its receipt) or (if an amount has already been paid by any of the Vendors in respect of that claim) there must be repaid to the Vendors an amount equal to the amount so recovered (less the reasonable 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 less) the amount of such payment.
10.11 Without prejudice to the generality of Clause 10.10, its provisions apply where any Group Company is entitled to recover from its insurers (in respect of insurance effected on or before the Completion Date) any sum in respect of any matter giving rise to a claim under the Warranties.
10.12 The Vendors will have no liability (or such liability will be reduced) in respect of any claim for breach of any of the Warranties:
10.12.1 if and to the extent that provision or reserve for or in respect of the liability or other matter giving rise to such claim has been made in the Last Accounts;
10.12.2 if and to the extent any liability of any Group Company included in the Last Accounts has been discharged or satisfied below the amount attributed to it or included in respect of it in the Last Accounts;
10.12.3 if and to the extent any contingency or other matter provided against in the Last Accounts has in the event been over-provided for;
10.12.4 if and to the extent that any breach of the Warranties occurs as a result of or is otherwise attributable to the Purchaser or any Group Company disclaiming any part of the benefit of capital or other allowances against Taxation claimed or proposed to be claimed on or before the date of this Agreement;
10.12.5 if and to the extent that such claim is attributable to any voluntary act or
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omission of, or transaction or arrangement carried out by, the Purchaser or any Group Company after the Completion Date otherwise than in the ordinary course of business;
10.12.6 if and to the extent that such claim would not have arisen, or would have been reduced or eliminated, but for the failure or omission on the part of the Purchaser or any Group Company to make any claim, election, surrender or disclaimer or give notice or consent or do any other thing under the provisions of any enactment or regulation relating to Taxation after the date of Completion, the making, giving or doing of which was taken into account in computing the provision for Taxation in the Last Accounts;
10.12.7 if and to the extent that such claim relates to a liability for Taxation which would not have arisen but for any winding up or cessation after Completion of any trade or business carried on by any Group Company;
10.12.8 if and to the extent such claim would not have arisen but for a change of accounting policy or practice or accounting reference date of any Group Company after the date of Completion;
10.12.9 if and to the extent that such breach has arisen in respect of any act or omission stipulated or required to be carried out or omitted pursuant to the terms of this Agreement.
10.13 Nothing in this Clause 10 derogates from the Purchaser’s obligation to mitigate any loss which it suffers in consequence of a breach of the Warranties.
10.14 If in respect of any claim under the Warranties or under the Tax Covenant the liability of the Vendors or any Group Company is contingent only, then the Vendors will not be under any obligation to make any payment to the Purchaser (or such Group Company) until such time as the contingent liability ceases to be contingent and becomes actual, provided that the provisions of Clause 10.8 will not apply to such claim whilst such liability remains contingent.
10.15 Payment of any claim will to the same amount satisfy and discharge any other claim which is capable of being made in respect of the same subject matter.
10.16 If any claim is entitled to be made both under the Warranties and under the Tax Covenant, that claim must first be made under the Warranties.
10.17 Any amount paid by the Vendors to the Purchaser in satisfaction of any claim made under the Warranties [or under the Tax Covenant] will be treated as a reduction by that amount of the Consideration.
10.18 The Purchaser will have no remedy for any untrue statement made innocently to it, except to the extent that the statement (or part of it) has become a term of this Agreement.
10.19 The Purchaser will have no remedy for any untrue statement made negligently to it, except to the extent that the statement (or part of it) has become a term of this Agreement.
10.20 [ The Purchaser will have no remedy for any untrue statement made fraudulently to it, except to the extent that the statement (or part of it) has become a term of this Agreement.]
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10.21 Notwithstanding any of the above provisions of Clause 10, none of the limitations contained in Clause 10 [(except Clause 10.20)] apply to any claim arising out of any fraud, fraudulent conduct, conduct involving dishonesty, serious misdeclaration or persistent misdeclaration on the part of [the] [any Group] Company or any of the [Vendors][Warrantors] or any person acting on its or their behalf in relation to the matter giving rise to the claim.
10.22 The parties agree that each of the limitations contained in Clause 10 is separate and severable and enforceable accordingly, and, whilst those limitations are considered by the parties to be reasonable in all the circumstances at present (having been freely negotiated with a view to commercial certainty, and an acceptable compromise reached), nevertheless if any of the restrictions is adjudged to be void or ineffective for whatever reason, but would be adjudged to be valid and effective if part of its wording were deleted, the liabilities which it limits reduced in scope or the amounts or time limits stated were increased, it will then apply with the minimum modifications as may be necessary to make it valid and effective.
10.23 The Purchaser warrants to and for the benefit of the Vendors that it has identified to the Vendors and the Vendors’ Solicitors all statements upon which it has relied in entering into this Agreement, and is satisfied that they have been faithfully recorded in the Warranties as qualified by the Disclosure Letter (but not so that the Disclosure Letter constitutes any such statements in its own right, as its sole purpose is to qualify the statements in the Warranties).
11. [ Indemnities]
11.1 [The [Vendors][Warrantors] undertake that they and their successors in title will indemnify and hold harmless, and will keep each of the [Group] Compan[y][ies] and the Purchaser and their respective successors in title fully indemnified and held harmless, against any and all liabilities, claims, demands, actions, proceedings, losses, damages, costs and/or expenses in respect of any of the following matters no matter how or when they may arise or have arisen:
11.1.1 [to be specified depending on due diligence / disclosures]
11.2 Notwithstanding anything to the contrary elsewhere in this Agreement, the Tax Covenant and/or the Disclosure Letter, the matters listed in Clause 11.1 are deemed not to be stated in the Disclosure Letter in any way or otherwise to qualify the Warranties or relieve the [Vendors][Warrantors] from any liability to the [Group] Compan[y][ies] and/or the Purchaser in respect of any of them.]
12. Warranties and Undertakings by the Purchaser
12.1 The Purchaser warrants to and for the benefit of the Vendors that:
12.1.1 As at the date of this Agreement it is not aware of any fact, matter or circumstance causing any of the Warranties (as qualified by the Disclosure Letter) to be breached;
12.1.2 It has the requisite power and authority to enter into and perform this Agreement;
12.1.3 The execution and delivery of and the performance by it of its obligations under this Agreement will not:
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12.1.3.1 result in a breach of any provision of its memorandum or articles of association;
12.1.3.2 result in a breach or constitute a default under any agreement or instrument of which it is a party or by which it is bound;
12.1.3.3 result in a breach of any applicable order, judgment or decree of any court or governmental authority;
12.1.4 [It is acquiring the Shares as capital assets and not as trading stock.]
12.2 The Purchaser will indemnify the Vendors against any liability to Taxation arising in connection with the sale of the Shares under the provisions of Sections 703 to 709 of ICTA and all connected costs, damages or expenses incurred by them to the extent that they would not have accrued or been incurred but for the payment of an abnormal amount by way of dividend (as defined in Section 709 of ICTA) at any time after Completion.
12.3 The Purchaser undertakes to hold the Vendor and any member of the Vendor’s Group fully indemnified against any claim for Taxation recoverable from the Vendor or any member of the Vendor’s Group under or by reason of any of the following provisions:
12.3.1 TCGA Sections 178, 179 and 190 in respect of chargeable gains accruing or deemed to accrue to any of the Group Companies;
12.3.2 VATA 1994 Section 43 in respect of value added tax attributable to imports or supplies by any of the Group Companies;
12.3.3 ICTA Section 767AA in respect of outstanding liabilities of the Group Companies to Taxation as at Completion which are not indemnified by the [Vendors][Warrantors] in the Tax Covenant.
12.4 [The Purchaser undertakes to procure that promptly following Completion an application is made pursuant to Section 43(7) of VATA for the Group Companies to cease to be treated for value added tax purposes as members of a group which includes the Vendor or any other member of the Vendor’s Group.]
12.5 [The Purchaser undertakes to procure that all the land and interests in land held as trading stock by each of the Group Companies at Completion will be disposed of, in the normal course of trade, so as to procure that all opportunity of profit in respect of the land and interests (within the meaning of Section 776(1) of ICTA)), arises to that Group Company and so as to prevent any liability falling on any of the Vendors under Section 776 and 777 of ICTA.]
13. [ Guarantee of Vendor’s Obligations]
13.1 [In consideration of the Purchaser having entered into this Agreement with the Vendor at their request, the Guarantors guarantee the due performance by the Vendor of all its obligations under this Agreement, and agree to indemnify the Purchaser and keep it indemnified against all losses, costs, charges and expenses which the Purchaser may sustain or be put to by reason of the failure of the Vendor to perform or observe any of the terms of this Agreement.
11.2 The Guarantors’ liability will not in any way be diminished or affected by the
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Purchaser giving time or any indulgence to the Vendor nor by any release, agreement not to sue, composition or arrangement of any description entered into by the Purchaser to or with the Vendor, and the Guarantors will be liable to the Purchaser in respect of any such obligation of the Vendor as if the Guarantors were principals and not sureties.]
14. [ Guarantee of Purchaser’s Obligations]
14.1 [In consideration of the Vendors having entered into this Agreement with the Purchaser at its request, the Guarantor guarantees the due performance by the Purchaser of all its obligations under this Agreement, and agrees to indemnify the Vendors and keep them indemnified against all losses, costs, charges and expenses which the Vendors may sustain or be put to by reason of the failure of the Purchaser to perform or observe any of the terms of this Agreement.
14.2 The Guarantor’s liability will not in any way be diminished or affected by the Vendors giving time or any indulgence to the Purchaser or the Company nor by any release, agreement not to sue, composition or arrangement of any description entered into by the Vendors to or with the Purchaser or the Company, and the Guarantor will be liable to the Vendors in respect of any such obligation of the Purchaser as if the Guarantor were principal and not surety.]
15. Restrictive Agreement
15.1 For the purpose of assuring to the Purchaser the full benefit of the business and goodwill of the [Group] Compan[y][ies], each of the Vendors [and Guarantors] undertakes by way of further consideration for the obligations of the Purchaser under this Agreement as separate and independent agreements that he will not, except in the proper performance of his duties as an employee of or consultant to the [relevant Group] Company, and he will procure that none of his Associates will:
15.1.1 At any time after Completion:
15.1.1.1 disclose to anyone except to someone authorised by the [Group] Compan[y][ies] to know; or
15.1.1.2 use for his own purposes or for any purposes except those of the [Group] Compan[y][ies]; or
15.1.1.3 through any failure to exercise all due care and diligence cause any unauthorised disclosure of
any confidential information of [the] [any Group] Company and “know-how” relating to [the] [any Group] Company’s projects, or the working of any of the processes or inventions it owns or uses, details of its research projects (including their organisation and staff involved), lists or details of customers, prices, or commercial relationships or negotiations or which he has obtained by virtue of his employment or in respect of which [the] [any Group] Company is bound by an obligation of confidence to a third party. This restriction will only cease to apply to information or knowledge which becomes available to the public generally otherwise than by his default but will not at any time apply to any information which by virtue of his employment becomes part of his own skill and knowledge and apart from the provisions of this Agreement could lawfully be used by him for that purpose;
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15.1.2 Until the expiry of [two years] from Completion (less any period of garden leave under his Service Agreement) directly or indirectly:
15.1.2.1 carry on or be interested in any business which competes with any business carried on by [the] [any Group] Company at Completion provided that he may hold for investment purposes only up to 5% of the issued securities of any class of any company if the securities are listed on a Recognised Investment Exchange or traded on the Alternate Investment Market;
15.1.2.2 be a consultant or employee or officer in any executive, sales, marketing, research or technical support capacity in any business which competes with any business carried on by [the] [any Group] Company at Completion, but he may be a consultant or employee or officer in any business so far as his duties and work relate exclusively to work of a kind or nature with which he was not concerned to a material extent during the last two years of his employment by the [Group] Compan[y][ies];
15.1.2.3 solicit, canvass or approach any person who, to his knowledge, was provided with goods or services by [the] [any Group] Company at any time during the period of one year prior to Completion, or was then negotiating with [the] [any Group] Company for the provision by it of goods or services, or to offer to that person goods or services previously provided to him by it during that year or which were the subject of negotiations to do so at Completion; or
15.1.2.4 accept orders from such a person for goods or services similar to or competitive with the goods or services previously provided to him by [the] [any Group] Company during the period of one year prior to Completion or which were the subject of negotiations to do so at Completion; nor
15.1.2.5 attempt to solicit or entice away from [the] [any Group] Company or engage or employ any person employed by [the] [any Group] Company at Completion [or the period of three months before then] or procure that such a person be engaged or employed by any other business which competes with any business, carried on by [the] [any Group] Company at the date of that termination.
15.2 The parties agree that each of the covenants set out in Clause 15 is separate and severable and enforceable accordingly, and, whilst the restrictions contained in such covenants are considered by the parties to be reasonable in all the circumstances at present, it is acknowledged that restrictions of this nature may be invalid because of changing circumstances or other unforeseen reasons, and accordingly if any of the restrictions is adjudged to be void or ineffective for whatever reason, but would be adjudged to be valid and effective if part of its wording were deleted, or its period reduced, or its area reduced in scope, it will then apply with such modifications as may be necessary to make it valid and effective.
16. Further Assurance
16.1 Each of the parties must do and execute, and use its best endeavours to procure any
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other necessary person under its control to do and execute, all such further acts, things, deeds and documents as may be necessary to give effect to the terms of this Agreement.
16.2 Each party agrees to co-operate with and assist the other parties in the taking of all steps necessary or appropriate to complete the transactions contemplated by this Agreement, including (without limitation) the provision of information appropriate for submission to relevant Taxation Authorities, governmental or regulatory agencies.
17. General
17.1 This Agreement (together with any documents referred to in this Agreement, insofar as each of the parties is party to such documents) constitutes the entire agreement between the parties relating to its subject matter, and supersedes any previous agreement between the parties relating to that matter. For the avoidance of doubt, this Clause 17.1 does not apply to misrepresentations.
17.2 Each party acknowledges that it has not entered into this Agreement on the basis of, and does not rely on, any representation, warranty or other provision that is not expressly included in this Agreement, and it irrevocably and unconditionally waives any right it may have to claim damages and/or to rescind this Agreement on the basis of any misrepresentation that is not expressly included in this Agreement or breach of warranty that is not expressly included in this Agreement, unless such misrepresentation or breach of warranty was fraudulent or grossly negligent. The parties agree that this exclusion is reasonable as it is mutual and provides commercial certainty, and it is their intention that all representations and warranties in respect of the subject matter of this Agreement should be expressly set out in this Agreement. Notwithstanding the limitation of potential liability for misrepresentation in Clause 10, the parties therefore acknowledge that their intention is that the Warranties and Disclosure Letter should constitute an agreed statement of the allocation of risk between the parties in respect of the matters they cover and that, believing this to be the case, they have entered into this Agreement on that basis.
17.3 This Agreement may only be varied in writing, under the signature of all the parties or their authorised representatives.
17.4 Except to the extent that they have been performed, the warranties, indemnities, undertakings, agreements, representations and provisions contained in this Agreement remain in full force and effect notwithstanding Completion.
17.5 This Agreement will be binding upon and enure for the benefit of the successors of the parties.
17.6 A person who is not a party to this Agreement may not enforce any of its terms under the Contracts (Rights of Third Parties) Act 1999[, except that the [Group] Compan[y][ies] may enforce [Clause 5.6 and] the indemnit[y][ies] in [its][their] favour in Clause 11].
17.7 Any notice required to be given under this Agreement or communication in respect of this Agreement must be in writing, and served by sending it by pre-paid first class post (within the United Kingdom) or by fax or by delivering it by hand or by international courier service to the registered office for the time being of the addressee (if it is a company) or (if otherwise) to his address as stated in this Agreement, or to such other address as it may from time to time notify for the
24
purpose. If posted, the notice or communication will be deemed to have been served 48 hours after posting. If faxed it will be deemed to have been served upon transmission, unless transmitted after 17.00 hours, when it will be deemed to have been served on the next business day in the country of receipt. If delivered by hand or by international courier service it will be deemed to have been served upon delivery. Service by post may be proved by showing that the envelope was properly stamped, addressed and placed in the post. Service by fax may be proved by producing a transmission report or journal showing the addressee’s current fax number and indicating correct transmission of the right number of pages on a specified date at a specified time. Service by hand or by international courier service may be proved by showing personal delivery to the correct address.
17.8 Any date or period mentioned in this Agreement may be extended by mutual agreement between the Vendors and Purchaser, but as regards any date or period (whether or not so extended) the time is of the essence of this Agreement.
17.9 No delay or omission of any party in exercising any right or remedy in whole or in part is to be construed as a waiver of it, or to operate so as to limit or preclude any further or other exercise of it.
17.10 Except as may be required by the rules of any Recognised Investment Exchange, no announcement or disclosure of any kind may be made in relation to the existence and/or the subject matter of this Agreement unless specifically agreed by the parties both as to the timing and the contents of the announcement or disclosure.
17.11 Each party agrees to bear its own costs of and incidental to this Agreement and its subject matter. But if the Purchaser lawfully exercises any right conferred by this Agreement or by law to rescind this Agreement, the Vendors must indemnify the Purchaser against the expenses and costs incurred in investigating the affairs of the [Company][Group Companies] and in the preparation, negotiation and execution of this Agreement. The Purchaser must pay all stamp duties on the transfer of the Shares.
17.12 This Agreement is governed by and to be construed in all respects in accordance with English Law.
17.13 [In relation to any legal action or proceedings arising out of or in connection with this Agreement (“Proceedings”), each of the parties irrevocably submits to the jurisdiction of the English courts and waives any objection to Proceedings in such courts on the grounds of venue or on the grounds that Proceedings have been brought in an inappropriate forum.]
17.14 This Agreement may be executed in any number of counterparts, each of which is an original, but all of which together constitute one and the same instrument. This Agreement becomes effective at such time as its counterparts have been executed and delivered by the parties and it is not a condition to its effectiveness that each of the parties has executed the same counterpart.
EXECUTED as a deed in [two] originals on the date at the head of this Agreement.
25
Schedule 1: Vendors, Shares and Consideration (Party 1, Clauses 1.1, 3.4, Schedule 2)
(1) (2) (3)
Vendors’ names and addresses Shares %age entitlement to Consideration
[Name][Address]
[ ]%
[Name][Address]
[ ]%
[Name]
[Address][ ]%
Totals: 0.00 100%
Schedule 2: The [Group] Compan[y][ies](Recital B, Clause 1.1, Warranty A.1,)
[Part 1: the Company]
Company Name:
Country of Incorporation: England [and Wales]
Registered No:
Date of Incorporation:
Type of Company: [public][private] company limited by [shares] [guarantee]
Registered Office:
Main Objects: [general merchants and traders], etc.
Directors:
Secretary:
Authorised Capital: £[100] divided into [100 Ordinary] Shares of £[1] each
Issued Capital: [100 Ordinary] Shares, [fully] paid
Shareholders: [the Vendors, as set out in Columns (1) and (2) of Schedule 1]
Auditors:
Accounting Reference Date:
[Part 2: the Company’s subsidiaries]
Company Name:
Country of Incorporation: England [and Wales]
Registered No:
Date of Incorporation:
Type of Company: [public][private] company limited by [shares] [guarantee]
Registered Office:
Main Objects: [general merchants and traders], etc.
Directors:
Secretary:
Authorised Capital: £[100] divided into [100 Ordinary] Shares of £[1] each
Issued Capital: [100 Ordinary] Shares, [fully] paid
Shares held by the Companyor (where specified) by its subsidiaries or its or their nominee(s):
Other shareholders (if any):
Auditors:
Accounting Reference Date:
Schedule 3 : The Propert[y][ies] (Clause 1.1, Warranty I)
[insert brief particulars to comply with Warranties I.1.5 and I.9.1]
Schedule 4: Warranties (Clauses 1.1, 8)
A. Corporate Details
A.1 The information relating to the Company and its shareholders contained in [the relevant part of] Schedules 1 and 2 is true and complete in all respects.
A.2 The Shares constitute 100% of the issued and allotted share capital of the Company and are fully paid or properly credited as fully paid.
A.3 Each Vendor is entitled to enter into and carry out the provisions of this Agreement and each of the documents in the agreed form to which he is a party.
A.4 The Vendors are entitled to sell and transfer to the Purchaser the full legal and beneficial ownership of the Shares free from all Security Interests, options and pre-emption rights on the terms of this Agreement, without the consent of any third party.
A.5 Compliance with the terms of this Agreement, and any document entered into by the Vendors or either of them in accordance with it, does not and will not result in a breach of any order, judgment or decree of any court or governmental agency or Security Interest to which any of the Vendors is a party or by which any of the Vendors or any of their respective assets is bound.
A.6 There are no agreements or arrangements in force, other than this Agreement, which grant to any person the right to call for the issue, allotment, transfer or redemption of any share or loan capital of the Company.
A.7 In relation to such of the Shares as are registered in the name of any Vendor being an individual or a trustee:
A.7.1 the Shares concerned have never been the subject of a transaction at an undervalue and do not represent assets which have been the subject of a transaction at any undervalue;
A.7.2 insofar as the Shares concerned have been the subject of a transaction at an undervalue:
A.7.2.1 the donor has not at any time been insolvent for the purposes of the Insolvency Act 1986 and will not become insolvent within 5 years of the transaction at an undervalue; and
A.7.2.2 the transaction was not entered into for the purpose, or partly for the purpose, of putting assets beyond the reach, or otherwise prejudicing the interests, of creditors as contemplated by Section 423 of the Insolvency Act 1986.
A.8 The Company has not created or granted or agreed to create or grant any Security Interest in respect of any of its uncalled share capital.
A.9 The register of members and other statutory books of the Company have been properly kept and contain an accurate and complete record of the matters required to be entered in them by CA, and no notice or allegation that any of them is incorrect or should be rectified has been received.
A.10 All returns, particulars, resolutions and documents required by any legislation to be filed with the Registrar of Companies in respect of the Company have been duly filed and were correct.
A.11 The Memorandum and Articles of Association of the Company in the form of the copy annexed to the Disclosure Letter are complete, accurate and up-to-date, contain copies of all resolutions required to be annexed to them, set out in full the rights and restrictions attaching to the share capital of the Company, and all amendments to them (if any) were duly and properly made.
A.12 No person is a shadow director of the Company within the meaning of Section 741(2) CA.
A.13 No director of the Company is now or has at any time within the last 6 years been subject to any disqualification order under the Company Directors Disqualification Act 1986.
A.14 The Company has not been a party to any transaction to which any of the provisions of Sections 320, 322A or 330 CA may apply.
A.15 The Company has a common seal.
A.16 Due compliance has been made with all the provisions of the Companies Acts and other legal requirements in connection with the formation of the Company, the allotment or issue of any of its shares, debentures and other securities and the payment of dividends.
A.17 Except as disclosed in the Disclosure Letter the Company has not pursuant to any provision of CA:
A.17.1 Been notified by any of its members of an address for the purpose of the Company sending him any electronic communication;
A.17.2 Notified any of its members of an address for the purpose of his sending the Company any electronic communication; or
A.17.3 Agreed with any of its members to their having access to any documents on a web site.
B. Good Standing
B.1 No receiver, administrative receiver or administrator has been appointed, nor any notice given, petition presented or order made for the appointment of any such person over the whole or any part of the assets or undertaking of the Company or any of the Vendors.
B.2 No petition has been presented, no order has been made and no resolution has been passed for the winding up of the Company or for the appointment of a liquidator or provisional liquidator of the Company.
B.3 No voluntary arrangement has been proposed or is in force under the Insolvency Act 1986 Section 1 in respect of the Company.
B.4 The Company has not stopped payment of its debts, nor is it insolvent or unable to pay its debts as and when they fall due.
B.5 No unsatisfied judgment is outstanding against the Company, and no demand has been served on the Company under the Insolvency Act 1986 Section 123(1)(a).
B.6 No distress, execution or other process has been levied in respect of the Company which remains undischarged, nor is there any unfulfilled or unsatisfied judgment or court order outstanding against the Company.
B.7 No event has occurred causing, or which upon intervention or notice by any third party may cause, any floating charge created by the Company to crystallise over its business or assets or any of them or any charge created by it to become enforceable over its business or assets or any of them, nor has any such crystallisation occurred nor is such enforcement in process.
B.8 None of the activities or contracts or rights of the Company is ultra vires, unauthorised, invalid or unenforceable or in breach of any contract or covenant.
B.9 The Company is empowered and duly qualified to carry on business in all jurisdictions in which it now carries on business.
C. Subsidiaries and Other Interests
C.1 The Company has not since its incorporation been the holder or beneficial owner of, nor has it agreed to acquire any share or loan capital of, or any other interest, in any other company or business organisation (whether incorporated in the United Kingdom or elsewhere) [apart from the other Group Companies].
C.2 [The Company has not since its incorporation been a subsidiary of any other company.]
C.3 The Company does not control or take part in the management of any other company or business organisation.
C.4 The Company is not, nor has it agreed to become, a member of any joint venture, consortium, partnership or other unincorporated association.
C.5 The Company does not have any branch, agency or place of business or any permanent establishment (as the expression is defined in the relevant double taxation relief order current at the date of this Agreement) outside the United Kingdom or any substantial assets outside the United Kingdom.
C.6 [The relevant Group Company specified in Part 2 of Schedule 2 is (except as specified in Part 2 of Schedule 2) the sole and beneficial owner of the whole of the issued share capital of each Group Company listed in Part 2 of Schedule 2.
C.7 The whole of the issued share capital of each Group Company has been validly allotted and issued and is fully paid or properly credited as fully paid.
C.8 There is no Security Interest on, over or affecting any of the share capital of each Group Company, and there is no agreement or arrangement to give or create any such Security Interest. No claim has been or will be made by any person to be entitled to any such Security Interest.]
D. Accounts
D.1 The Last Accounts have been prepared in accordance with the historical cost
convention and generally accepted accounting principles in the United Kingdom consistently applied throughout, and the bases and policies of accounting adopted for the purpose of preparing the Last Accounts are the same as those adopted in preparing the audited accounts of the Company in respect of the three last preceding accounting periods.
D.2 The Last Accounts:
D.2.1 give a true and fair view of the assets, liabilities (making proper provision in respect of unquantified or disputed liabilities and including appropriate notes in respect of contingent liabilities) and commitments of the Company at the Last Accounts Date and its profits for the financial period ended on that date;
D.2.2 comply with the requirements of the Companies Acts and other relevant statutes;
D.2.3 comply with all current SSAPs, FRSs and relevant pronouncements applicable to a United Kingdom company;
D.2.4 are not affected by any extraordinary, exceptional or non-recurring item or by any other circumstance rendering the profits or losses unusually high or low;
D.2.5 do not include any amount in respect of any asset, whether fixed or current, which exceeds its purchase price or production cost (within the meaning of CA Schedule 4), or (in the case of current assets) its net realisable value at the Last Accounts Date; and
D.2.6 properly reflect the financial position of the Company as at their date.
D.3 Any slow moving stocks and non-recoverable work-in-progress included in the Last Accounts have been written down appropriately, any redundant or obsolete stocks and work-in-progress have been wholly written off, and the value attributed to the remaining stocks and work-in-progress does not exceed the lower of cost or net realisable value at the Last Accounts Date. The method of valuing stock and work-in-progress adopted in the Last Accounts was the same as that adopted in the audited consolidated balance sheet of the Company for both of the last two financial years of the Company preceding the financial year of the Company ended on the Last Accounts Date.
D.4 The rates of depreciation adopted in the Last Accounts by the Company were the same as the rates adopted in the audited consolidated balance sheet of the Company for both of the last two financial years of the Company preceding the financial year of the Company ended on the Last Accounts Date, and was sufficient for each of the fixed assets of the Company to be written down to nil by the end of its useful life.
D.5 The unaudited management accounts annexed to the Disclosure Letter:
D.5.1 give a true and accurate view of the profits, assets and liabilities of the Company’s business for the periods to which they relate;
D.5.2 have been prepared in accordance with the historical cost convention and generally accepted accounting principles in the United Kingdom consistently applied throughout, and the bases and policies of accounting adopted for the purpose of preparing the unaudited accounts are the same as those adopted in preparing the audited accounts of the Company in respect of the three last
preceding accounting periods;
D.5.3 properly reflect the financial position of the Company as at their date;
D.5.4 include full and accurate provisions for all known liabilities as at the end of the periods to which they relate, including an estimate of the Taxation position of the Company;
D.5.5 were not materially affected by any unusual, exceptional, non-recurring or extraordinary items; and
D.5.6 contain or make direct reference to all information and factors necessary to accurately determine the gross profit margin (as that term is commonly understood) on sales of products and the provision of services by the Company.
D.6 All the accounts, books, ledgers, financial and other records, of whatsoever kind, of the Company are in its possession, comply with the requirements of the Companies Acts and other relevant statutes and are properly maintained.
D.7 The accounting reference date of the Company for the purposes of Section 224 CA has always been the date specified as such in Schedule 2.
E. Finance
E.1 The Company had no capital commitments outstanding at the Last Accounts Date and the Company has not, since then, incurred or agreed to incur any capital expenditure or commitments or disposed of any capital assets.
E.2 Since the Last Accounts Date the Company has not paid or declared any dividend or made any other payment which is, or is treated as, a distribution for the purposes of ICTA Part VI.
E.3 The Company has not, since the Last Accounts Date, repaid, or become liable to repay, any indebtedness in advance of its stated maturity, has received no notice to repay under any agreement relating to any borrowing or indebtedness in the nature of borrowing on the part of the Company which is repayable on demand, and there has not occurred any event of default under any agreement relating to any other borrowing or indebtedness in the nature of borrowing on the part of the Company or any event which with the giving of notice and/or the lapse of time and/or a relevant determination would constitute such an event of default.
E.4 There are no liabilities (including contingent liabilities) which are outstanding on the part of the Company other than those liabilities disclosed in the Last Accounts or incurred, in the ordinary and proper course of trading, since the Last Accounts Date.
E.5 None of the facilities available to the Company is dependent on the guarantee or indemnity of, or any security provided by, a third party.
E.6 So far as the [Vendors][Warrantors] are aware, and subject to a provision for bad debts of £[ ], the amounts now due to the Company from debtors will be recoverable in full in the ordinary course of business, and in any event not later than twelve weeks from the date of this Agreement.
E.7 No part of the amounts included in the Last Accounts as owing by any debtor
remains unpaid or has been released on terms that any debtor pays less than the full book value of his debt.
E.8 The Company has, since the Last Accounts Date, paid its creditors in accordance with its normal practice as stated in the Disclosure Letter.
E.9 There is not now outstanding in respect of the Company any guarantee or agreement for indemnity or for suretyship given either by or for the accommodation of the Company.
E.10 There are no:
E.10.1 loans made by the Company to any of the Vendors and/or any Director of the Company and/or any person connected with them as described in Section 839 of ICTA (except that in construing Section 839 the term “control” is to have the meaning given by Section 840 or Section 416 of the Taxes Act 1988 so that there is control whenever either of those Sections would so require);
E.10.2 debts owing to the Company by any of the Vendors and/or any Directors of the Company and/or any such connected person;
E.10.3 debts owing by the Company other than debts which have arisen in the ordinary course of business; or
E.10.4 security for any such loans or debts as above.
E.11 A statement of the bank accounts of the Company and the credit or debit balances on them as at [ ] is attached to the Disclosure Letter, the Company has no other bank or deposit account (whether in credit or overdrawn) not included in such statement, since such statement there have been no payments out of any such accounts except for routine payments, and the present balances on such accounts are not now substantially different from the balances shown on such statements.
E.12 There are no unpresented cheques drawn by the Company:
E.12.1 in the normal course of business for amounts exceeding in aggregate £[10,000]; or
E.12.2 otherwise than in the normal course of business.
E.13 The Company has not given any guarantee, indemnity, warranty or bond or incurred any other similar obligation or created any security for or in respect of liabilities, actual or contingent, of any other person.
F. [Taxation (short form Warranties)]
F.1 [The Last Accounts make full provision or reserve for all Taxation (including deferred Taxation) which is liable to be or could be assessed on the Company, or for which it may be accountable, in respect of the period ended on the Last Accounts Date.
F.2 All returns (including, without limitation, returns under Section 11 of TMA), computations and payments which should be, or should have been, made by the Company for any Taxation purpose have been made within the requisite periods and are up-to-date, correct and on a proper basis and none of them is, or so far as the
Vendors are aware is likely to be, the subject of any dispute with HMRC or other Taxation authorities.
F.3 The Company has duly deducted and accounted for all amounts which it has been obliged to deduct in respect of Taxation and, in particular, has properly operated the PAYE system, by deducting tax, as required by law, from all payments made, or treated as made, to its employees or former employees, and accounting to HMRC for all tax so deducted and has properly completed all necessary Forms P11D in respect of all tax chargeable on benefits provided for its employees or former employees.
F.4 The Company is not, nor will it become, liable to pay, or make reimbursement or indemnity in respect of, any Taxation (or amounts corresponding thereto) in consequence of the failure by any other person 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) on or prior to the date of this Agreement.
F.5 The Company has not since the Last Accounts Date incurred, nor is, or has become, liable to incur after that date, expenditure which will not be wholly deductible in computing its taxable profits except for expenditure on the acquisition of an asset to be held otherwise than as stock-in-trade, details of which are set out in the Disclosure Letter.
F.6 The Company has not since the Last Accounts Date made or agreed to make a surrender of, or claim for, group relief pursuant to ICTA Sections 402 to 413 (Group relief) or is liable to make or entitled to receive a payment for group relief.
F.7 The execution or completion of this Agreement will not result in any profit or gain deemed to accrue to the Company for Taxation purposes.
F.8 The Company has not in the six years ending on the date of this Agreement carried out, or been engaged in, any transaction or arrangement in respect of which there may be substituted for the consideration given or received by the Company a different consideration for Taxation purposes.
F.9 If each of the capital assets of the Company were disposed of for a consideration equal to the book value of that asset in, or adopted for the purpose of, the Last Accounts, no liability to corporation tax on chargeable gains or balancing charge under CAA would arise.
F.10 The Company has duly registered and is a taxable person for the purposes of value added tax and has not applied for treatment as a member of a group.
F.11 All documents (other than those which have ceased to have any legal effect) to which the Company is a party have been duly stamped.]
G. [Taxation (full Warranties)
G.1 Residence
G.1.1 [The Company has never been resident for tax purposes in any jurisdiction other than the United Kingdom.] or [Each of the [Group Companies] is and has throughout the past six years been resident in the United Kingdom for corporation tax purposes and if any of the [Group Companies] is not so resident it is not a company incorporated in the United Kingdom.]
G.1.2 The Company has no branch, agency, place of business or permanent establishment outside the United Kingdom [and no non United Kingdom incorporated Group Company has a branch or agency inside the United Kingdom.]
G.1.3 The Company is not, nor has it within the past six years been, a dual resident company within the meaning of ICTA s404(4) and the Company has not been involved in a transaction to which ICTA s404 or any other provision (including any exclusion from a provision) relating to dual resident investment companies as defined in ICTA s404(4) could apply.1
G.1.4 The Company has not since the Last Accounts Date disposed of an asset or acquired an asset in circumstances such that the reliefs contained in TCGA 1992 ss 139, 171 or 175 are not available as a result of the acquiring company being regarded for the purpose of any double Taxation arrangements having effect by virtue of ICTA s.788 as resident in a territory outside the United Kingdom and is not liable in the United Kingdom to Taxation on a gain arising on a disposal of the relevant asset occurring immediately after its acquisition.2
G.2 Administration
G.2.1 All notices, returns, computations and registrations of the Company for the purposes of Taxation have been made punctually on a proper basis and are true and accurate [in all material respects] and none of them is, or [so far as the [Vendors][Warrantors] are aware] is likely to be the subject of any dispute with any Taxation Authority.3
G.2.2 All information supplied by the Company for the purposes of Taxation was when supplied and remains complete and accurate in all material respects.
G.2.3 All Taxation which the Company is liable to pay prior to Completion has been paid prior to Completion and the Company has made all such deductions and retentions as it was obliged or entitled to make and all such payments as should have been made including those pursuant to the provisions of ICTA sections 42A, 43, 118A-118K, 119, 123, 129, 348, 349, 350, 524, 536 555-558, 559-567, 582, 733. 736A and 737.4
G.2.4 The Company has not within the period of six years ending on the date of this Agreement paid or become liable to pay any penalty, fine, surcharge or interest charged by virtue of the provisions of TMA, VATA or any other Taxation Statute.
G.2.5 The Company has not received from any Taxation Authority any payment to which it was not entitled nor has the Company received any tax assessment in which its Taxation liability was understated.
1 only applies where dual resident investment company within the group has losses
2 applicable only where there are foreign group members in the target group – though note extended definition to include foreign companies
3 Note that VAT returns should be separately warranted as (for a purchaser) ‘materiality’ should not be conceded
4 section 43 repealed for payments on or after 6 April 1996, section 118A-118K repealed FA 2000, section 123 repealed FA 96, section 737 repealed FA 97
G.2.6 The Company is not, nor will it become liable to pay, to reimburse or to indemnify any person (including a Taxation Authority) in respect of the Taxation liability of any other person as a consequence of that other person failing to discharge the liability where that other person is or may become primarily liable for the Taxation in question including without prejudice to the generality of the foregoing any liability under sections 767A, 767AA and 777(8) ICTA, sections 189, 190 and (as amended by FA 2000) for periods after 1 April 2000 section 191 TCGA 1992 and section 96 FA 1990.
G.2.7 The Company has not been subject to any visit, audit, investigation, discovery or access order by any Taxation Authority and [so far as the [Vendors][Warrantors] are aware] there are no circumstances existing which make it likely that a visit, audit, investigation, discovery or access order will be made.
G.2.8 Full provision or reserve has been made in the Last Accounts for all Taxation assessed or liable to be assessed on the Company or for which it is accountable in respect of income, profits or gains earned, accrued or received or deemed to be earned, accrued or received on or before the Last Accounts Date, including distributions made down to such date or provided for in the Last Accounts and proper provision has been made in the Last Accounts for deferred Taxation in accordance with generally accepted accounting principles.
G.2.9 No relief from Taxation has been claimed by or given to the Company, or taken into account in determining the provision for Taxation in the Last Accounts, which could be withdrawn, postponed or restricted as a result of anything occurring after Completion.
G.2.10 The amount of Taxation chargeable on the Company during any accounting period ending on or within the six years before the Last Accounts Date has not depended on any concession, agreements or other formal or informal arrangements with any Taxation Authority.
G.2.11 All applications to any Taxation Authority for clearance or consent by the Company or on its behalf or affecting the Company have been made and obtained on the basis of full and accurate disclosure to the relevant Taxation Authority of all relevant material facts and considerations, and any transaction for which clearance or consent was obtained has been carried into effect only in accordance with the terms of the relevant clearance or consent.
G.2.12 The Company has sufficient records relating to past events to permit accurate calculation of the Taxation liability or relief which would arise upon a disposal or realisation on completion of each asset owned by the Company at the Last Accounts Date or acquired by the Company since that date but before Completion.
G.2.13 The Company has duly submitted all elections, claims and disclaimers the making of which has been assumed for the purposes of the Last Accounts and the same remain valid.
G.2.14 The Disclosure Letter contains full particulars of all matters relating to Taxation in respect of which the Company is entitled:
G.2.14.1 To make any claim (including a supplementary claim), disclaimer or election for relief under any Taxation Statute;
G.2.14.2 To appeal against any assessment or determination relating to Taxation; or
G.2.14.3 To apply for a postponement of Taxation.
G.2.15 The Company has not received or become entitled to income which is “unremittable income” within the meaning of section 584 ICTA (Relief for unremittable overseas income) or a gain to which section 279 TCGA (Foreign assets: delayed remittances) could apply.
G.3 Anti Avoidance Provisions
G.3.1 The Company has not entered into or been a party to any scheme or arrangement of which the main purpose, or one of the main purposes, was the avoidance of or the reduction in or the deferral of a liability to Taxation and the transaction in question has not been entered into other than for bona fide commercial purposes and has not entered into any transaction to which any of the following provisions could apply:
G.3.1.1 sections 29 to 34 TCGA (inclusive) (value shifting);
G.3.1.2 section 106 TCGA (Disposal of shares and securities by company within prescribed period of acquisition);
G.3.1.3 section 56 ICTA (Transactions in deposits with and without certificates or in debts);
G.3.1.4 section 176 or 177, 177A and 177B and Schedules 7A and 7AA TCGA (depreciatory transactions).
G.3.1.5 sections 116-118 ICTA (inclusive) (partnership transactions);
G.3.1.6 section 399 ICTA (dealings in commodity futures);
G.3.1.7 sections 729-746 (inclusive) (transfers of securities; transfer of assets abroad) or sections 770-778 ICTA (inclusive) and Schedule 28AA (transfer pricing and others);
G.3.1.8 section 767A (Change in company ownership: corporation tax);
G.3.1.9 section 779 (Sale and lease-back: limitation on tax reliefs);
G.3.1.10 section 781 (Assets leased to traders and others);
G.3.1.11 section 786 (Transactions associated with loans or credit);
G.3.1.12 sections 213-218 ICTA (inclusive) (demergers) and Schedule 18 FA 1980;
G.3.1.13 section 703-709 ICTA (transactions in securities) or section 135-138 or section 139 TCGA (company reconstructions) (for which advance clearance is available);
G.3.1.14 Part 2, Chapter 7 sections 218, 221-224, 232(1), 241-243 or 246(1) CAA (Anti Avoidance);
G.3.1.15 section 5 CAA (When capital expenditure is incurred).
G.3.2 The Company is not a party to any transaction or arrangement under which it may be required to pay for any asset or any services or facilities of any kind an amount which is in excess of the market value of that asset or those services or facilities, nor is or was the Company a party to any transaction or arrangements to which the provisions of section 770A and Schedule 28AA ICTA may apply, nor will the Company receive any payment for an asset or any services or facilities of any kind that it has supplied or provided or is liable to supply or provide which is less than the market value of that asset or those services or facilities.
G.3.3 The Company has not disposed of or acquired an asset in such circumstances that section 17 TCGA (Disposals and acquisitions treated as made at market value) could apply.
G.3.4 The Company has not without the prior consent of the Treasury carried out or agreed to carry out any transaction under section 765 ICTA which would be unlawful in the absence of such consent and has, where relevant, complied with the requirements of section 765A(2) ICTA (supply of information on movement of capital within the EU) and any regulations made or notice given thereunder.
G.3.5 The Company is not, nor at any time has it had, an associated company for the purposes of the Taxation Statutes.
G.4 Corporation Tax, including Gains
G.4.1 If each of the capital assets of the Company was disposed of on the date at which these Warranties are given for a consideration equal to the book value of that asset in, or adopted for the purposes of, the Last Accounts or, in the case of assets acquired since the Last Accounts Date, equal to the consideration given upon its acquisition, no liability to corporation tax on chargeable gains or balancing charges under CAA would arise, disregarding for the purpose of determining the liability to corporation tax on chargeable gains any relief and allowances available to the Company other than amounts falling to be deducted under section 38 TCGA.
G.4.2 No allowable loss has accrued to the Company to which section 18(3) TCGA will apply.
G.4.3 The Company is not treated as a limited partner under section 118 ICTA (Restriction on relief: companies).
G.4.4 The Company has not disposed or acquired an asset in such circumstances that section 17 TCGA could apply.
G.4.5 The Company is not owed a debt, other than a debt on a security, on the disposal or satisfaction of which a liability to corporation tax on chargeable gains will arise by reason of section 251 TCGA.
G.4.6 No claim for relief has been allowed to the Company pursuant to sections 253 and 254 TCGA in respect of any loan and no chargeable gain has or is likely to arise pursuant to section 253(5), (6), (7) or (8) or section 254(9) or (10) TCGA.
G.4.7 The Company has made no claim under any of the following:
G.4.7.1 section 280 TCGA (tax on chargeable gains payable by instalments);
G.4.7.2 section 24(2) TCGA (assets of negligible value);
G.4.7.3 section 35 TCGA (rebasing);
G.4.7.4 section 242(2) TCGA (small part disposals of land);
G.4.7.5 section 139 FA 1993 (deferral of unrealised exchange gains); or
G.4.7.6 section 140 TCGA; section 140A TCGA; section 140B TCGA; section 187 TCGA.
G.4.8 No part of the consideration given by the Company for a new holding of shares (within the meaning of section 126 TCGA (Reorganisation or reduction of share capital: Application of sections 127-131) will be disregarded by virtue of section 128(2) (Consideration given or received by the holder).
G.4.9 No asset owned by the Company has been the subject of a deemed disposal under Schedule 2, TCGA (Assets held on 6 April 1965), so as to restrict the extent to which the gain or loss, over the period of ownership, may be apportioned by reference to straightline growth.
G.4.10 The Disclosure Letter contains full particulars of all claims and elections made (or assumed to be made) under sections 23, 152-162 or 165, 175, 179B, 247, 247A, 248, 279, 279A-D TCGA insofar as they could affect the chargeable gain or allowable loss which would arise in the event of a disposal by the Company of any of its assets, and indicates which assets (if any) so affected would not on a disposal give rise to relief under Schedule 4 TCGA.
G.4.11 The Company does not own any asset which is a wasting asset (other than plant or machinery eligible for capital allowances or a lease to which Schedule 8 TCGA applies)
G.4.12 The Company has not received any assets by way of gift as mentioned in section 282 TCGA and the Company has not held, and does not hold, shares in a company to which section 125 TCGA could apply.
G.4.13 Non resident companies
G.4.13.1 There has not accrued or arisen any income, profit or gain in respect of which the Company may be liable to corporation tax by virtue of the provisions of section 13 TCGA (attribution of gains) or Chapter IV of Part XVII of Part XVII ICTA (controlled foreign companies).
G.4.13.2 The Company has not been served with a notice in respect of the unpaid corporation tax liability of any company pursuant to section 191 TCGA or section 190 TCGA for gains accruing after 31 March 2003.
G.4.14 The Company has not entered into any transaction to which the provisions of sections 779 or 780 ICTA (sale and leaseback) have been or could be applied.
G.4.15 The Company has not since 31st March 1982 received any foreign loan interest in respect of which double Taxation relief will or may be restricted under section 798 ICTA.
G.4.16 No rents, interest, annual payments or other sums of an income nature paid or payable by the Company or which the Company is under an existing obligation to pay in the future are or may be wholly or partially disallowable as deductions, management expenses or charges in computing profits for the purposes of corporation tax by reason of the provisions of sections 74, 79, 79A, 125, 338 - 338B, 339, 779 to 784 inclusive, 787 or 788 ICTA or any other statutory provision or otherwise.
G.4.17 No change of ownership of the Company has taken place in circumstances such that section 768 (change in ownership of company: disallowance of trading losses), section 768A (Change in ownership: disallowance of carry back of trading losses), section 768B (Change in ownership of investment company: deductions generally) or section 245 ICTA5 (change in ownership of company: calculation and treatment of advance corporation tax) has or may be applied to deny relief for a loss or losses incurred by the Company and within the period of three years ending with the date of this Agreement there has been no major change in the nature or conduct of any trade or business (as defined in section 768 and section 245 ICTA) carried on by the Company.
G.4.18 There are no circumstances in which any losses carried forward by the Company will be restricted or disallowed under the provisions of section 343 ICTA.
G.4.19 The Company has not within the last six years discontinued any trade.
G.4.20 No rent is or has been payable by the Company to which the provisions of sections 33A and 33B ICTA6 could have applied prior to their ceasing to have effect.
G.4.21 No claim has been made by the Company under sections 584, 585 or 723 ICTA or under section 279, 279A and 279B TCGA.
G.4.22 The Company has not made or agreed to make any payment to, or provided or agreed to provide any benefit for, any director or former director, officer or employee of the Company, whether as compensation for loss of office, termination of employment or otherwise, which is not allowable as a deduction in calculating the profits of the Company for Taxation purposes whether up to or after the Last Accounts Date.
G.4.23 The Company has not been a party to any transaction or arrangement whereby it is or may in future become liable for Taxation under or by virtue of section 23 (now repealed) and 42A ICTA (non resident landlords) [or regulations made thereunder or section 126 FA 1995].
G.4.24 The Company has not been and will not be charged to Taxation by reason only of any past transaction which falls within ICTA sections 34-36.
G.4.25 section 112 FA 1993 does not and will not apply so as to restrict any deduction 5 repealed FA 98 from 1 April 1999
6 repealed w.e.f. 1 April 1998
in respect of employers’ contributions by the Company to an exempt approved pension scheme.
G.4.26 There are no circumstances which might cause a disallowance of the carry forward by the Company of losses, expenses of management, debits in respect of loan relationships or excess charges under ICTA sections 393, 768, 768B, 768C or 768D or the carry back by the Company of losses under section 768A.
G.4.27 The Company is not an investment company as defined by section 130 ICTA.
G.4.28 No notice of the making of a direction under section 747 ICTA has been received by the Company and no circumstances exist which would entitle HMRC to make such a direction or to apportion any profits of a controlled foreign company to the Company pursuant to section 752 ICTA.
G.4.29 The Disclosure Letter contains full particulars of all liabilities of the Company to surplus advance corporation tax, surplus shadow advance corporation tax as at the Last Accounts Date and any shadow advance corporation tax arising since the Last Accounts Date.
G.5 Capital Allowances
G.5.1 All expenditure which the Company has incurred or may incur under any subsisting commitment on the provision of machinery or plant has qualified or will qualify (if not deductible as a trading expense of a trade carried on by the Company) for writing-down allowances under section 11 and Part 2, Chapter 5 CAA (Allowances and charges).
G.5.2 No event has occurred since the Last Accounts Date which may be treated as a notional sale by the Company of any machinery or plant pursuant to section 61 CAA.
G.5.3 No capital allowances made or to be made to the Company in respect of capital expenditure already incurred or to be incurred under a subsisting commitment arise from special leasing (as defined at section 19, CAA) or qualifying non-trade expenditure (as defined at section 469, CAA) on patents.
G.5.4 Since the Last Accounts Date the Company has not done, or omitted to do, or agreed to do, or permitted to be done, an act as a result of which a balancing allowance or balancing charge may be brought into account for capital allowances purposes, or there may be a recovery of excess relief under section 111 CAA (Excess allowances: standard recovery mechanism).
G.5.5 The Company is not in dispute with any person as to any entitlement to capital allowances under Part 2, Chapter 14 CAA (Fixtures) and at the date of this Agreement as far as the [Vendors][Warrantors] are aware there are no circumstances which might give rise to such a dispute.
G.5.6 All capital allowances made or to be made to the Company in respect of capital expenditure already incurred under any subsisting commitment have been made, or will be made, in taxing its trade.
G.5.7 The Company is not in dispute with any person [(not being another Group Company)] as to the entitlement to capital allowances under Part 2 Chapter 14 CAA, and so far as the [Vendors][Warrantors] are aware no circumstances
exist which may give rise to such a dispute.
G.5.8 The value attributed in the Last Accounts to each asset, or the aggregates of the values attributed to the assets in each pool of the Company’s assets in respect of which separate computations for capital allowances are required to be made or, as a result of any election, are made, is such that on a disposal of each such asset or pool of assets on the Last Accounts Date for a consideration equal to such a value or aggregate value no balancing charge would have arisen.
G.5.9 Nothing has occurred since the Last Accounts Date as a result of which the Company could be required to bring a disposal value into account or suffer a balancing charge or withdrawal of first year allowances or a recovery of excess relief for the purpose of capital allowances.
G.5.10 No asset in respect of which the Company has claimed or is entitled to claim capital allowances is leased to any person, nor is any such asset a fixture in circumstances where the right of the Company to claim allowances is or may be disputed, nor is any such asset a longlife asset for the purposes of Part 2 Chapter 10 CAA.
G.5.11 [The Company has not made any election under sections 83 to 88 (inclusive) CAA (short life assets) nor is it taken to have made such an election under section 89 and 575 CAA.]
G.5.12 The Company does not own any building or structure on which it incurred capital expenditure which qualified for allowances under sections 298 to 304 (inclusive) CAA (enterprise zones).
G.5.13 The Disclosure Letter gives full details of all disclaimers by the Company of capital allowances and writing down allowances on plant and machinery and of any reduction in initial allowances to the Company on industrial buildings holdings and agricultural buildings.
G.5.14 Sections 196 to 201 (inclusive) CAA do not apply to any fixtures acquired by the Company for a capital sum so as to determine the disposal value of the seller of the fixture.
G.5.15 The Company has not been party to a transfer of asset to or from a connected person with CAA part 12.
G.5.16 [The Company is not a lessee under a lease to which the provisions of Schedule 12 to the FA 1997 apply or could apply.]
G.6 Base values and acquisition costs
G.6.1 If each of the capital assets of the Company was disposed of at Completion for a consideration equal to its book value in, or adopted for the purpose of, the Accounts, no liability to corporation tax on chargeable gains and, on the assumption that expenditure on each asset was incurred for the purpose of a separate trade, no balancing charge under CAA 2001 would arise; and, for the purpose of determining the liability to corporation tax on chargeable gains, there shall be disregarded reliefs and allowances available to the Company other than amounts falling to be deducted under section 38 TCGA (Acquisition and disposal costs, etc., )
G.6.2 The Company has not made an election under section 35 TCGA (Assets held on 31 March 1982 (including assets held on 6 April 1965)) for capital gains and losses on all the assets held by it on 31 March 1982 to be computed by reference only to their market value on that date.
G.6.3 The Company has not since the Balance Sheet Date engaged in a transaction in respect of which there may be substituted, for Taxation purposes, a different consideration for the actual consideration given or received by it.
G.6.4 In determining the liability to corporation tax on chargeable gains in respect of any asset which has been acquired by the Company, or which the Company has agreed to acquire (whether conditionally, contingently or otherwise):
G.6.4.1 The sums allowable as a deduction will be determined solely in accordance with TCGA sections 38 (Acquisition and disposal costs etc.,) and 53 (The indexation allowance and interpretative provisions);
G.6.4.2 The amount or value of the consideration, determined in accordance with section 38(1)(a), will not be less than the amount or value of the consideration actually given by the Company for the asset; and
G.6.4.3 The amount of any expenditure on enhancing the value of that asset, determined in accordance with section 38(1)(b) will not be less than the amount or value of all expenditure actually incurred by the Company on the asset.
G.6.5 No asset owned, or agreed to be acquired, by the Company (other than plant and machinery in respect of which it is entitled to capital allowances) is a wasting asset within section 44 TCGA (Meaning of “wasted asset”)
G.6.6 The Company has not joined in the making of a claim under section 140A TCGA (Transfer of a UK Trade) in relation to the transfer to it of the whole or part of a trade carried on within the United Kingdom.
G.7 Replacement of business assets
G.7.1 The Company has not made a claim under TCGA sections 23 (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 (Roll-over relief on compulsory acquisition) which would affect the amount of the chargeable gain or allowable loss which would, but for the claim, have arisen on a disposal of any of its assets.
G.8 Loan Relationships
G.8.1 The Company has used an authorised accounting basis for the tax treatment of its loan relationships as defined under section 103 FA 1996, there are no loan relationships between the Company and connected parties such that section 87 FA 1996 would apply, and any foreign exchange transactions by the Company have been correctly treated under the provisions and rules contained in Chapter II FA 1993 for the period prior to 1 October 2002 and section 79 and Schedule 23 FA 2002 after then.
G.8.2 The Company accounts for all its loan relationships (as defined in section 81 FA 1996) on an authorised accruals basis and no circumstances exist by virtue of which a balancing debit or credit may be brought into account in an accounting period of the Company ending after Completion pursuant to section 89 FA 1996 for the period prior to 1 October 2002 and section 82 and Schedule 25 FA 2002 after then (inconsistent application of accounting methods) or section 90 FA 1996 (changes of accounting method).
G.8.3 The Company is not the debtor pursuant to any loan relationship:
G.8.3.1 to which the provisions of paragraph 2 Schedule 9, 10, 12 and 13 FA 1996 (late interest) have applied; or
G.8.3.2 which has an unallowable purpose within the meaning of paragraph 13 Schedule 9 FA 1996 (loan relationships for unallowable purposes).
G.8.4 The Company is not party to any loan relationship:
G.8.4.1 to which paragraph 11 or 11A Schedule 9 FA 1996 applies or may apply (transactions not at arm’s length); or
G.8.4.2 to which sections 92 (convertible securities etc) or 93 (relationships linked to the value of chargeable assets) 94 (indexed gilt-edged securities) FA 1996 apply.
G.8.5 The Company has not issued any relevant discounted securities (as defined in Schedule 13 FA 1996).
G.8.6 The Company is not party to any loan relationship to which the provisions of Schedule 15 FA 1996 apply.
G.9 Distributions
G.9.1 The Company has not issued any share capital to which the provisions of section 249 ICTA (stock dividends treated as income) could apply, nor does it own any such share capital.
G.9.2 The Company has not repaid, or agreed to repay, or redeemed, or agreed to redeem, any of its shares, or capitalised, or agreed to capitalise, in the form of redeemable shares or debentures, any profits or reserves.
G.9.3 No security issued by the Company and remaining in issue at the date at which these Warranties are given was issued in such circumstances that the interest payable on it falls to be treated as a distribution under sections 209 to 211 ICTA (meaning of distribution).
G.9.4 The Company has not:
G.9.4.1 made any repayment of share capital to which section 210 ICTA (bonus issue following repayment of share capital) or section 211 ICTA (repayment following a bonus issue) applies; or
G.9.4.2 issued any share capital or other security as paid up otherwise than by the receipt of new consideration within the meaning of Part VI ICTA.
G.9.5 The Company has not received any capital distribution to which the provisions of section 189 TCGA could apply.
G.10 Employees
G.10.1 All income tax deductible and payable under the PAYE system and/or any other Taxation Statute has, so far as is required to be deducted, been deducted from all payments made or treated as made by the Company and all amounts due to be paid to HMRC prior to the date of this Agreement have been so paid, including all Taxation chargeable on benefits provided for directors, employees or former employees of the Company or any persons required to be treated as such.
G.10.2 The Company has fully complied with all its obligations relating to Class 1 and Class 1A National Insurance Contributions, both primary and secondary.
G.10.3 No liability to National Insurance Contributions or obligation to account for income tax under the PAYE system could fall on the Company as a result of a chargeable event (within the meaning of Part 7, IT(EP)A), before, at or after Completion in respect of securities made available or securities options granted to an employee or director prior to Completion.
G.10.4 No officer or employee of the Company participates in any scheme approved under IT(EP)A Schedules 2 (Approved share incentive plans), 3 (Approved SAYE option schemes or 4 (Approved CSOP schemes) or has unapproved options (whether under IT(EP)A Schedule 5 (Enterprise Managing Incentives) or otherwise) or is a beneficiary or potential beneficiary of a qualifying employee share ownership trust as defined in Schedule 5 FA (employee share ownership trust).
G.10.5 All payments by the Company to any person which ought to have been made under deduction of Tax have been so made and the Company (if required by law to do so) has accounted to HMRC for the Tax so deducted.
G.10.6 The Company has maintained proper records in respect of all such deductions and payments and complied with all applicable regulations.
G.10.7 The Disclosure Letter contains details so far as they affect the Company of all current dispensations agreed with HMRC in relation to PAYE and all notifications given by HMRC under sections 144 and 166 ICTA and as substituted by Schedule 7 paragraphs 19 and 20 and Schedule 6 paragraphs 1 and 24 ITEPA for the period after 6 April 2003.
G.10.8 The Disclosure Letter contains full details of all employee share or benefit schemes in relation to the Company and the Company has complied with all statutory and scheme requirements in respect of each such scheme.
G.10.9 No scheme registered under Chapter III of Part V ICTA (profit-related pay) applied to the Company or any of its employees. 7
G.11 Groups 8
7 PRP abolished for periods after 1 January 2000
8 Note: ‘groups’ can now include foreign companies to form a group
G.11.1 [The Company is not, nor has it ever been a member of a group of companies however defined.] or [The first named member listed in Part 2 of Schedule 2, which relates to each member of the Group Companies (apart from the Company), is the beneficial owner of all the shares in that member of the Group Companies and no such shares are held such that any profit on the sale of those shares will be a trading receipt.]
G.11.2 There are no circumstances by virtue of which sections 410 or 413 of ICTA would prevent each member of the Group Companies being treated as a member of the same group of companies as each other such member was in Chapter IV Part X of ICTA for any accounting period commencing on or before the date of this Agreement.
G.11.3 No Group Company has made any surrender of or claim for:
G.11.3.1 group relief; or
G.11.3.2 any amount of surplus advanced corporation tax; or
G.11.3.3 a refund of Taxation within section 102 FA 1989;
which involves any company that is not a member of the Group Companies.
G.11.4 No Group Company has received any payment in respect of a surrender of group relief or of surplus advance corporation tax or of a tax refund which could, in any circumstances, be due to be repaid to any company other than another Group Company.
G.11.5 No Group Company is under any obligation to make any payment in respect of a surrender of group relief or of surplus advance corporation tax or a tax refund.
G.11.6 If any Group Company only became a member of the Group Companies after the Balance Sheet Date, the apportionment of profits and losses will be made under section 403B ICTA (Apportionment under section 403A) on a time basis according to the respective lengths of the component accounting periods.
G.11.7 The Company is not restricted in relation to the surrendering of group relief by section 404 ICTA (Limitation of group relief in relation to certain dual resident companies).
G.11.8 The Company has not agreed to surrender, otherwise than to another Group Company, any right to receive a tax refund under section 102 FA (Surrender of company tax refund , etc., with group).
G.11.9 No assessment may be made under section 247 ICTA on a Group Company in respect of advance corporation tax which should have been paid or income tax which should have been deducted.
G.11.10No Group Company owns an asset which was acquired from another company, which:
G.11.10.1 was, at the time, a member of the same group of companies (as defined in section 170 TCGA 1992 (groups of companies: interpretation of sections 170 to 181) as the relevant Group Company;
and
G.11.10.2 owned that asset otherwise than as trading stock within section 173 TCGA 1992 (transfers within a group: trading stock).
G.11.11No asset of any Group Company is or will be deemed under section 179 TCGA 1992 to have been disposed of and reacquired by virtue of or in consequence of the entering into or performance of this Agreement or any other event since the Last Accounts Date.
G.12 Close Companies
G.12.1 [The Company has not at any time been a close company within the meaning of sections 414 and 415 ICTA.] or [The Company has always been a close company as defined in section 414 ICTA.]
G.12.2 The Company has not in any accounting period beginning after 31st March 1989 been a close investment-holding company as defined in section 13A ICTA.
G.12.3 No distribution within section 418 ICTA has ever been made by the Company.
G.12.4 Any loans or advances made or agreed to be made by the Company within sections 419 and 420 or 422 ICTA have been disclosed in the Disclosure Letter and the Company has not released or written off or agreed to release or write off the whole or any part of any such loans or advances.
G.12.5 The Company has made no transfers of value within sections 94 and 202 ITA, nor has the Company received a transfer of value such that liability might arise under section 199 ITA, nor has the Company been party to associated operations in relation to a transfer of value as defined by section 268 ITA.
G.12.6 There is no unsatisfied liability to inheritance tax or capital transfer tax attached or attributable to the Shares and the Shares are not subject to an Inland Revenue charge as mentioned in paragraph 20 Schedule 4 FA 1975.
G.12.7 No person is liable to inheritance tax attached to or attributable to the Shares or any asset of the Company and none of such Shares or assets are subject to an Inland Revenue charge as mentioned in sections 237 and 238 ITA.
G.12.8 No asset owned by the Company nor any of the Shares is liable to be subject to any sale, mortgage or charge by virtue of section 212 ITA.
G.13 Value Added Tax [not buying a VAT Group]
G.13.1 The Company is registered in the United Kingdom for the purposes of the legislation relating to VAT and is not registered, and is not required to register, in any other jurisdiction in respect of VAT or any similar tax.
G.13.2 The Company has made, given, obtained and kept full, complete, correct and up-to-date records, invoices and other documents appropriate or required for those purposes and is not in arrears with any payments or returns due and has not been required by HMRC to give security under paragraph 4 of Schedule 11 VATA.
G.13.3 All VAT due and payable to HMRC and any relevant Taxation Authorities outside the United Kingdom has been declared and paid in full.
G.13.4 [The Company has never been treated as a member of a group under section 43 VATA, and no application has ever been made for the Company so to be treated.]
G.13.5 [The Disclosure Letter contains true, complete and accurate details of all companies which are, or have been treated as, a member of the same group of companies as the Company for the purposes of section 43 VATA, including details of the representative member of each such group.]
G.13.6 The Disclosure Letter contains full details of any claim for bad debt relief made by the Company in the three previous financial periods under section 36 VATA or under section 11 FA 1990.
G.13.7 The Company has not within the 12 months ending on the Last Accounts Date been in default in respect of any prescribed accounting period as mentioned in section 59(1) VATA.
G.13.8 The Company has at all times complied fully with its payment and other obligations under the legislation relating to VAT and has maintained complete, correct and up to date records and documents appropriate or required for VAT purposes, has not incurred any penalty, default, surcharge or interest in relation to VAT and has not within the 2 year period ending on Completion been served with any penalty liability notice within the provisions of section 64 VATA or any surcharge liability notice within section 59 VATA or been issued with any written warning within section 76(2)VATA.
G.13.9 The Company has not been the subject of or affected by the direction made pursuant to Schedule 9A VATA (anti-avoidance provisions: groups) or Paragraph 2 to Schedule 1 VATA (aggregation of business) and could not be the subject of or affected by any such direction in respect of any matter occurring prior to Completion.
G.13.10[The Company has not made an election to waive exemption in relation to any land in accordance with paragraph 2 to Schedule 10 VATA.] or [The Disclosure Letter contains true, complete and accurate details of each election to waive exemption in relation to any land in accordance with paragraph 2 to Schedule 10 VATA made by the Company, or by any relevant associate of the Company (for the purpose of Paragraph 3(7) of Schedule 10 VATA) and all such elections have been validly made and notified and are effective.]
G.13.11No circumstances have arisen which may give rise to a deemed self-supply by the Company in future for VAT purposes, whether in relation to land and buildings or otherwise.
G.13.12The Disclosure Letter contains full details of any assets of the Company to which the provisions of Part XV Value Added Tax Regulations 1995 (the Capital Goods Scheme) apply (irrespective of whether credit was obtained for all such input tax) and, in respect of each item, the extent to which it was used in making taxable supplies in the first interval for the purposes of Regulation 37D and in particular:
G.13.12.1 the identity (including in the case of leasehold property, the
terms of years), date of acquisition and cost of the asset; and
G.13.12.2 the proportion and amount of input tax for which credit has been claimed (either provisionally or finally in a tax year and stating which).
G.13.13The Company has not within the 12 months ending on the Last Accounts Date made supplies or carried out any transaction which is exempt, or partially exempt from VAT of such proportion that it is unable to claim credit for all input tax (as defined within section 24 VATA) paid or suffered by it.
G.13.14The Company is not, nor has it agreed to become:
G.13.14.1 an agent for any person for the purposes of section 47 VATA, or
G.13.14.2 a VAT representative for any person for the purposes of section 48 VATA.
G.13.15The Company has recovered VAT as input tax, to the extent that it is allowed to do so under the normal VAT rules and only where supported by valid VAT invoices.
G.13.16Any disposals of parts of the business of the Company were either fully charged with VAT, or were correctly treated as VAT free transfers of a going concern in accordance with the conditions of section 49 VATA and Article 5 of the Value Added Tax (Special Provisions) Order 1995 (Statutory Instrument 1995/1268).
G.13.17The Company does not own the fee simple in any building or civil engineering work which is new or not completed for the purposes of Group 1 of Schedule 9 VATA.
G.13.18No Group Company has obtained a credit for any input tax (as defined in section 24 VATA) which it could be treated as not being entitled to pursuant to section 36(4A) VATA (bad debts).
G.14 Value Added Tax [Buying the whole of a VAT Group]
G.14.1 Each member of the Group Companies is treated as a member of a group of companies for the purposes of section 43 VATA (the “VAT Group”) of which the representative member is the Company (the “Representative Member”) and no company which is not a member of the Group Companies is a member of the VAT Group nor has any such company been a member of the VAT Group within the last six years.
G.14.2 The Representative Member has made, given, obtained and kept full, complete correct and up-to-date records, invoices and other documents appropriate or required for the purposes of VATA, is not in arrears with any payments or returns due, and has not been required by HMRC to give security under paragraph 4 of Schedule 11 VATA.
G.14.3 All VAT due and payable by the VAT Group to HMRC has been declared and paid in full.
G.14.4 The Representative Member has not, since the date 12 months before the Last Accounts Date, been in default in respect of any prescribed accounting period, as mentioned in section 59(1) VATA.
G.14.5 No Group Company has, within the six years ending on the Last Accounts Date, been registered for the purposes of VATA otherwise than as part of the VAT Group and no member of the VAT Group has, within that period, been a member of any other group for the purposes of VATA.
G.14.6 The Disclosure Letter contains full details of any claim for bad debt relief under section 36 VATA made by the Representative.
G.14.7 No Group Company has made an election to waive exemption in relation to any land in accordance with paragraph 2 to Schedule 10 VATA.
G.14.8 The Disclosure Letter contains full details of any assets of each Group Company to which the provisions of Part XV Value Added Tax Regulations 1995 (the Capital Goods Scheme) apply and in particular:
G.14.8.1 the identity (including in the case of leasehold property, the terms of years), date of acquisition and cost of the asset; and
G.14.8.2 the proportion and amount of input tax for which credit has been claimed (either provisionally or finally in a tax year and stating which).
G.14.9 No Group Company has within the 12 months ending on the Last Accounts Date made supplies, or carried out any transaction which is exempt, or partially exempt from VAT of such proportion that it is unable to claim credit for all input tax (as defined within section 24 VATA) paid or suffered by it.
G.14.10No Group Company has obtained a credit for any input tax (as defined in section 24 VATA) which it could be treated as not being entitled to pursuant to section 36(4A) VATA (bad debts).
G.14.11No Group Company is, or has agreed to become:
G.14.11.1 an agent for any person for the purposes of section 47 VATA; or
G.14.11.2 a VAT representative for any person for the purposes of section 48 VATA.
G.15 Stamp Duty, and Stamp Duty Reserve Tax
G.15.1 No relief or exemption has been obtained from stamp duty under section 42 FA 1930 or sections 75, 76 and 77 FA 1986 by the Company or in relation to any asset of or shares in the Company which:
G.15.1.1 has become or is still capable of becoming liable to forfeiture; or
G.15.1.2 may be forfeited as a result of the sale of the Shares under this Agreement.
G.15.2 All instruments requiring stamping by the Company (other than those which have ceased to have any legal effect) executed by the Company in any part of the United Kingdom have been duly stamped; and no such instruments which are outside the United Kingdom would attract stamp duty if they were brought into the United Kingdom.
G.15.3 The Company has not entered into any transaction which has given or may give rise to a direct or indirect charge to tax on the Company under the provisions of Part IV FA 1986 (Stamp Duty Reserve Tax).
G.15.4 The Company does not have any outstanding liability to pay stamp duty reserve tax.
G.16 Stamp Duty Land Tax
G.16.1 A land transaction return was delivered to HMRC within 30 days of every notifiable land transaction which has in any way affected the right, title or interest of the Company in or to any of its property or other assets and all stamp duty land tax due in respect of each such return has been duly paid, together with any penalties and interest thereon.
G.16.2 No inquiries have been raised by HMRC into any land transaction return which has been so delivered.
G.16.3 The Company has not entered into any land transaction:
G.16.3.1 which was, or was deemed to be, a linked transaction (as defined in section 108(1) FA2003) and which have not been fully returned with any additional stamp duty land tax being paid;
G.16.3.2 which was exempt from stamp duty land tax under any of the following provisions:
G.16.3.2.1 section 57A FA2003 (sale and leaseback arrangements);
G.16.3.2.2 section 66 FA2003 (transfers involving public bodies);
G.16.3.2.3 section 62 and Parts 1 and 2 of Schedule 7 FA2003 (group relief and reconstruction or acquisition relief);
G.16.3.2.4 section 68 and Schedule 8 FA2003 (charities relief);
G.16.3.2.5 any regulations made under section 123(2) FA2003 (regulations reproducing in relation to stamp duty land tax the effect of enactments providing for exemption from stamp duty);
G.16.3.3 which may be regarded as the grant of a lease for an indefinite term or where the rent reserved may be regarded as variable;
G.16.3.4 which was treated as a VAT free transfer of a going concern in accordance with the conditions of section 49 VATA and Article 5 of the Value Added Tax (Special Provisions) Order 1995 (Statutory Instrument 1995/1268) and for which the period in which HMRC can reopen the relevant VAT return has not expired;
G.16.3.5 which has been substantially performed before completion, but has not been notified and stamp duty land tax paid as appropriate;
G.16.3.6 other than at market value;
G.16.3.7 other than entirely for a payment of money; or
G.16.3.8 in respect of which the consideration payable was uncertain, variable, contingent or payable in instalments.
G.16.4 The Company has taken independent professional advice on all apportionments of consideration between land and chattels, fixtures and fittings, service charges or any other valuable asset (e.g. goodwill to which land value can attach) on any transaction to which it has been party.
G.16.5 The Company has not obtained any relief from stamp duty land tax that has subsequently been withdrawn.
G.17 Duties
G.17.1 All import duty and other taxes or charges payable upon the importation of goods and all excise duties payable to HMRC payable in respect of any assets (including trading stock) imported, owned or used by the Company have been paid in full, and the Company has not been required to give security to HMRC in this respect.
G.18 Payment from pension funds
G.18.1 The Company has not received a payment out of funds held for the purposes of an exempt approved scheme in respect of which amount is recoverable by HMRC under section 601 ICTA (Charge to tax: payments to employers).
G.19 Inheritance tax
G.19.1 The Company has not made a transfer of value (as defined in section 3 IHTA 1984 (Transfers of value)).
G.19.2 No Inland Revenue charge for unpaid inheritance tax (as provided by section 237-238 IHTA (Inland Revenue charge for unpaid tax)) exists over an asset of the Company or in relation to shares in the capital of the Company.
G.20 Disclosure requirements
G.20.1 The Company has not notified HMRC of any notifiable arrangement (Meaning of “notifiable arrangements” and “notifiable proposal”) or notifiable proposal (as defined by section 306 FA) for the purpose of the Tax Avoidance Shemes (Information) REgulations 2004 and there are no circumstances in which any such disclosure should have been made by the Company.
G.20.2 The Company has not implemented any proposal or entered into any arrangement which are notifiable pursuant to FA sections 309 (Duty of person dealing with promoter outside United Kingdom) or 310 (Duty of parties to notifiable arrangements not involving promoter) and has not included any scheme reference on any of its tax returns pursuant to section 313 FA (Duty of parties to notifiable arrangements to notify Board of number, etc.) and there are
no circumstances in which such notification or inclusion of a reference should have been made by the Company.
G.21 [Additional Warranties for use in specific situations]
G.21.1 [Capital allowance on industrial building: None of the assets of the Company, expenditure on which has qualified for a capital allowance under Part I CAA, has at any time been used otherwise than as an industrial building or structure.]
G.21.2 [The Company has not acquired benefits under any policy of assurance otherwise than as the original holder of legal and beneficial title.]
G.21.3 [Only applies assets held on 6 April 1965: No asset owned by the Company is subject to a deemed disposal and reacquisition under Schedule 2 TCGA so as to restrict the extent to which the gain or loss over the period of ownership may be apportioned by reference to straightline growth.]
G.21.4 [Employee trusts – receipt of payments from trust by employer: The Company has not received a payment out of funds held for the purposes of an exempt approved scheme in respect of which an amount is recoverable by HMRC under section 601 ICTA.]
G.21.5 [The Disclosure Letter contain full particulars of elections made under:
G.21.5.1 Regulation 10 of The Exchange Gains and Losses (Alternative Method of Calculating of Gain or Loss) Regulations 1994 and whether or not such elections have been varied; and
G.21.5.2 Regulation 3 or 4 of The Local Currency Elections Regulations 1994 and such election is still valid.]
G.21.6 [Where trade has been discontinued: The Disclosure Letter contains details of any trade that has been discontinued by the Company, and no adjustment in the value of trading stock from the discontinuance of that trade is or has been required to be made under section 100 ICTA.]
G.21.7 [Company owning deep discount securities etc: The Company did not, before 1 April 1996, issue or own any:
G.21.7.1 deep discount securities (section 57 CTA 1988 and Schedule 4);
G.21.7.2 deep gain securities (Schedule 11 FA 1989);
G.21.7.3 convertible securities (section 56 FA 1990 and Schedule 10).]
G.21.8 [Company having transactions in futures and options: The Company has not entered into any transaction to which Schedule 5AA ICTA (transactions in futures and options) applies.]
G.21.9 [PH TO CHECK: The Company has made no election under section 34 and Schedule 6 FA 1983 or under Schedule 2 TCGA 1992.]
G.21.10[Trading assets appropriated to investments or vice versa: Since the Last
Accounts Date the Company has not appropriated any of its assets to or from trading stock.]
G.21.11[As at Completion the Company will have no unrelieved capital losses nor will it own any assets which if disposed of at Completion would give rise to a capital loss.]
G.21.12[When company has ceased to be UK resident: The Company has not made any deemed disposal of assets either by the Company ceasing to be resident in the United Kingdom or by the Company ceasing to be liable to United Kingdom Taxation.]]
H. Trading
H.1 Since the Last Accounts Date:
H.1.1 the business of the Company has been continued in the ordinary and normal course so as to maintain it as a going concern;
H.1.2 no material changes have occurred in the assets and liabilities (whether actual or contingent) shown in the Last Accounts, and the net asset position of the Company has not deteriorated in comparison with that at the Last Accounts Date;
H.1.3 there has been no material deterioration in the Company’s turnover or in its financial or trading position or prospects;
H.1.4 the business of the Company has not been materially and/or adversely affected by the loss of any important contract or customer or source of supply or by any abnormal factor not affecting similar businesses to a like extent, and after making due and careful enquiries the Vendors are not aware of any facts which are likely to give rise to any such effects; and
H.1.5 none of the amounts secured by the Security Interests disclosed in the Last Accounts has been increased beyond the amounts shown in the Last Accounts, all amounts secured by any Security Interest created after the Last Accounts Date are set out in the Disclosure Letter, and none of such amounts has been increased beyond the amounts set out in the Disclosure Letter.
H.2 The Company is not engaged in any litigation or arbitration proceedings, as claimant or defendant, there are no such proceedings pending or threatened, either by or against the Company, and so far as the [Vendors][Warrantors] are aware there are no circumstances which are likely to give rise to any litigation or arbitration.
H.3 No investigations or enquiries by, or on behalf of, any governmental or other body in respect of the affairs of the Company are taking place or, so far as the [Vendors][Warrantors] are aware, pending.
H.4 There is no dispute with any revenue or other official department in the United Kingdom or elsewhere in relation to the affairs of the Company, and so far as the [Vendors][Warrantors] are aware there are no facts which may give rise to any such dispute.
H.5 The Company does not use on its letterheads and other documents listed in Section 349 of CA, business cards, circulars, advertisements, web sites, or vehicles, or otherwise
carry on business under, any name other than its full corporate name.
H.6 The Company has conducted and is conducting its business in all respects in accordance with:
H.6.1 its memorandum and articles of association for the time being in force;
H.6.2 any other documents to which it is, or has been, a party;
H.6.3 all applicable laws and regulations, whether of the United Kingdom or (so far as the [Vendors][Warrantors] are aware) elsewhere.
H.7 The Company has obtained all licences, permissions, authorisations and consents required for the carrying on of its business, such licences, permissions, authorisations and consents are in full force and effect, and so far as the [Vendors][Warrantors] are aware there are no circumstances which indicate that any of such licences, permissions, authorisations or consents may be revoked or not renewed, in whole or in part.
H.8 No power of attorney given by the Company is in force.
H.9 There are no outstanding authorities (express or implied) by which any person other than the directors and employees of the Company may enter into any contract or commitment to do anything on behalf of the Company.
H.10 Except as disclosed in the Last Accounts there is no outstanding loan capital of the Company and no other loans to the Company are outstanding.
H.11 All documents of title relating to the assets of the Company (including, without limitation, an executed copy of all agreements to which the Company is a party and an original executed copy of every document or instrument creating or evidencing a Security Interest over any of its assets, property or undertaking) are in its possession.
H.12 All material agreements or arrangements for the supply of services, stock, products or goods to or by the Company are set out in the Disclosure Letter and the Company has not been notified of nor are the Vendors aware of any breach of any of the Company’s obligations under any such agreement or arrangement.
H.13 There is not outstanding any:
H.13.1 sale or purchase option or similar agreement or arrangement affecting any assets owned or used by the Company or by which the Company is bound;
H.13.2 joint venture, consortium, partnership or profit sharing agreement or arrangement to which the Company is party;
H.13.3 agreement, arrangement or understanding dependant on this Agreement;
H.13.4 agreement restricting the freedom of the Company to provide and take goods and services by such means and from and to such persons as it may from time to time think fit.
H.14 The Company is not a party to any contract, transaction arrangement or liability which:
H.14.1 is of an unusual or abnormal nature, or outside the ordinary and proper course of business, or
H.14.2 is for a fixed term of more than six months; or
H.14.3 is of a long-term nature (that is, unlikely to have been fully performed, in accordance with its terms, more than six months after the date on which it was entered into or undertaken); or
H.14.4 is incapable of termination by it, in accordance with its terms, on 60 days’ notice or less; or
H.14.5 is of a loss-making nature (that is, known to be likely to result in a loss to it on completion of performance); or
H.14.6 cannot readily be fulfilled or performed by it on time without undue or unusual expenditure of money, effort or personnel; or
H.14.7 involves payment by it of amounts determined by reference to fluctuations in the index of retail prices, or any other index, or in the rate of exchange for any currency; or
H.14.8 involves an aggregate outstanding expenditure by it of more than £5,000; or
H.14.9 involves, or is likely to involve, the supply of goods or services the aggregate sales value of which will represent in excess of 10 per cent of its turnover as shown in the Last Accounts; or
H.14.10is a contract for hire or rent, hire purchase, or purchase by way of credit sale or periodical payment; or
H.14.11involves consequences of a failure to perform by the Company which, by reason of their nature or magnitude, ought reasonably to be made known to the Purchaser.
H.15 The Company has not given any guarantee or warranty or made any representation in respect of articles of trading stock sold or contracted to be sold by it except for any warranty or guarantee implied by law and (except in that respect) has not accepted any liability or obligation to service, maintain, repair, take back or otherwise do or not do anything in respect of any articles of stock that would apply after any such article of stock has been delivered by it.
H.16 The Vendors have no knowledge of the invalidity of or grounds for rescission avoidance or repudiation of any agreement or other transaction to which the Company is party, and the Company has received no notice of any intention to terminate any such agreement or repudiate or disclaim any other transaction.
H.17 No party with whom the Company has entered into any agreement or arrangement is in default under that agreement or arrangement, being a default which would have a material and adverse effect on the financial or trading position or prospects of the Company, and, to the best of the knowledge, information and belief of the Vendors, there are no circumstances likely to give rise to any default.
H.18 The Company is not, nor will it with the lapse of time become, in material default in respect of any obligation or restriction binding upon it.
H.19 The Company is not a party to, nor have its profits or financial position during the three years prior to the date of this Agreement been affected by, any contract or arrangement which is not of an entirely arms’ length nature.
H.20 There are no existing contracts or engagements to which the Company is a party and in which any of the Vendors and/or any director of the Company and/or any of their respective Associates are interested.
H.21 The Vendors are not either individually or collectively or with any other person or persons engaged or concerned or interested in any way whatsoever in any other business of a similar nature to or competitive with that carried on by the Company.
H.22 During the three years ending on the date of this Agreement there has been no substantial change in the basis or terms on which any person is prepared to enter into contracts or do business with the Company (apart from normal price changes) and no such change is anticipated.
H.23 The [Vendors][Warrantors] are not aware, and have no grounds for believing, that after Completion (whether by reason of an existing agreement or arrangement or otherwise) or as a result of the acquisition of the Company by the Purchaser:
H.23.1 any supplier of the Company will cease, or be entitled to cease, supplying it or may substantially reduce its supplies; or
H.23.2 any customer of the Company will cease, or be entitled to cease, to deal with it or may substantially reduce its existing level of business; or
H.23.3 the Company will lose the benefit of any right or privilege which it enjoys; or
H.23.4 any officer or senior employee of the Company is likely to leave or will be entitled to leave prematurely.
H.24 Compliance with this Agreement will not:
H.24.1 breach or constitute a default under any agreement to which the Company is a party, or any provision of the memorandum or articles of association of the Company or any order, judgement, injunction, regulation or other restriction; or
H.24.2 relieve any person from any obligation to the Company (whether contractual or otherwise), or enable any person to determine an obligation, or any right or benefit enjoyed by the Company, or to exercise any right in respect of the Company; or
H.24.3 result in any indebtedness of the Company becoming due, or capable of being declared due and payable prior to its stated maturity, or any loan facilities being withdrawn.
H.25 No one is entitled to receive from the Company any finder’s fee, brokerage or commission in connection with this Agreement or anything contained in or to be done pursuant to it.
H.26 No disclosure has been made of any of the financial or trade secrets of the Company except in the ordinary course of business of the Company and upon the Company having secured the confidential nature of any such disclosure.
H.27 The Company is under no liability to repay any grant made to it by any government department or body, and no circumstances have arisen in which any such department or body would or might be entitled to require repayment of any such grant either in whole or in part.
H.28 The Company has not committed or omitted to do any act or thing which could give rise to any fine or penalty and in particular the Company is not nor has it been a party to any agreement, practice or arrangement which:
H.28.1 contravenes the Trade Descriptions Act 1968;
H.28.2 would or might result in a reference of a consumer trade practice, within the meaning of the Fair Trading Act 1973 Section 13, to the Consumer Protection Advisory Committee under Part II of that Act;
H.28.3 contravenes the provisions of the Consumer Credit Act 1974;
H.28.4 contravenes the Consumer Protection Act 1987;
H.28.5 contravenes or is invalidated (in whole or in part) by the Competition Act 1998;
H.28.6 contravened or was invalidated (in whole or in part) by or was subject to registration under the Restrictive Trade Practices Acts 1976 and 1977;
H.28.7 contravenes or is invalidated by the Unfair Contract Terms Act 1977 or the Unfair Terms in Consumer Contracts Regulations 1999;
H.28.8 contravenes any provisions of the Treaty of Rome;
H.28.9 contravenes any other anti-trust, anti-monopoly or anti-cartel legislation or regulations.
H.29 The Company has not engaged in any anti-competitive practice as defined in the Competition Act 1980.
H.30 The Company is not in a dominant position in any market for the purposes of Article 82 of the Treaty of Rome or Part II of the Competition Act 1998.
I. Properties
I.1 Title
I.1.1 [The Propert[y][ies] comprise[s] all the land or premises owned, occupied or otherwise used in connection with [its][their] business[es] by the [Company][Group Companies].] [The [Company has][Group Companies have] no interest in any land or premises.]
I.1.2 [The Company has not][No Group Company has] at any time:
I.1.2.1 had vested in it (whether as an original tenant or undertenant or as an assignee, transferee or otherwise) any freehold or leasehold property [other than the Propert[y][ies]]; or
I.1.2.2 given any covenant or entered into any agreement, deed or other
document (whether as a tenant or undertenant or as an assignee, transferee, guarantor or otherwise) in respect of any freehold or leasehold property [(other than those disclosed in the Disclosure Letter in relation to the Propert[y][ies])] in respect of which any contingent or potential liability remains with [the Company][any Group Company].
I.1.3 Those of the Properties which are occupied or otherwise used by the [Company][Group Companies] in connection with [its][their] business[es] are occupied or used by right of ownership or under lease or licence, the terms of which permit the occupation or use.
I.1.4 The [Company is][Group Companies are] the legal and beneficial owner[s] of the Propert[y][ies].
I.1.5 The information contained in Schedule 3 as to the tenure of each of the Properties, the principal terms of the leases or licences held by the [Company][Group Companies], and the principal terms of the tenancies and licences subject to and with the benefit of which the Properties are held is accurate in all respects.
I.1.6 The [Company has][Group Companies have] a good and marketable title to [each of] the Propert[y][ies].
I.1.7 The [Company is][Group Companies are] the proprietor[s] of the Propert[y][ies] registered at HM Land Registry with absolute title.
I.1.8 The [Company has in its][Group Companies have in their] possession, or under [its][their] control, all duly stamped deeds and documents which are necessary to prove title to [each of] the Propert[y][ies].
I.2 Encumbrances
I.2.1 The Properties are free from any mortgage, debenture, charge, rent-charge, lien or any other Security Interest securing the repayment of monies or other obligation or liability of [the Company][any of the Group Companies] or any other person.
I.2.2 The Properties are not subject to any outgoings other than business rates, water rates and insurance premiums, and in the case of leasehold Properties rent and service charges.
I.2.3 The Properties are not subject to any restrictive covenants, stipulations, easements, profits à prendre, wayleaves, licences, grants, restrictions, overriding interests or other similar rights vested in third parties.
I.2.4 Where any of the matters referred to in Warranties I.2.1, I.2.2 and I.2.3 have been disclosed in the Disclosure Letter, the obligations and liabilities imposed and arising under them have been fully observed and performed and any payments in respect of them due and payable have been duly paid.
I.2.5 The Properties are not subject to any option, right of pre-emption or right of first refusal.
I.3 Planning Matters
I.3.1 The use of each of the Properties is the permitted use for the purposes of the Planning Acts.
I.3.2 Planning permission has been obtained or is deemed to have been granted for the purposes of the Planning Acts with respect to the development of the Properties, no permission has been suspended or called in and no application for planning permission is awaiting decision.
I.3.3 Building regulation consents have been obtained with respect to all development, alterations and improvements to the Properties.
I.3.4 The [Company has][Group Companies have] complied and [is][are] complying with:
I.3.4.1 all permissions, orders and regulations applicable to the Properties;
I.3.4.2 all agreements under the Town and Country Planning Act 1971 Section 52 made or planning obligations under the Town and Country Planning Act 1990 Section 106 undertaken with respect to the Properties; and
I.3.4.3 all agreements made under the Highways Act 1980 Section 38 with respect to the Properties.
I.3.5 None of the Properties is listed as being of special historic or architectural importance or located in a conservation area.
I.3.6 All claims and liabilities under the Planning Acts or any other legislation have been discharged and no such claim or liability, contingent or otherwise, is outstanding, whether in relation to the Property or to any property formerly owned or occupied by the Company.
I.4 Statutory Obligations
I.4.1 The [Company has][Group Companies have] complied and [is][are] complying with all applicable statutory and bye-law requirements (and all other relevant orders, consents or permissions given under any of them) with respect to the Properties.
I.4.2 There is no outstanding and unobserved or unperformed obligation with respect to the Properties necessary to comply with the requirements (whether formal or informal) of any competent authority exercising statutory or delegated powers.
I.4.3 Where required a fire certificate has been issued for each Property and each Property complies with current fire regulations.
I.4.4 No licences are required whether under the Licensing Act 1988 or otherwise in relation to any of the Properties.
I.5 Adverse Orders
I.5.1 There are no compulsory purchase notices, orders or resolutions affecting any of the Properties, and there are no circumstances likely to lead to any being made.
I.5.2 There are no closing, demolition or clearance orders, enforcement notices or stop notices affecting the Properties, and there are no circumstances likely to lead to any being made.
I.6 Condition of the Properties
I.6.1 There are no structural or material defects in the buildings and other structures on the Properties and all such buildings or structures are in good and substantial repair and condition and fit for the purposes for which they are used.
I.6.2 Neither the Company nor the Vendor have received any adverse surveyors’, engineers’ or other professional reports in respect of the Properties and no material, substance or method of construction not in accordance with present design standard and current accepted good building practice was used in the construction of the Properties.
I.6.3 There are no disputes with any neighbouring owner with respect to boundary walls and fences or with respect to any easement or right over or means of access to any of the Properties.
I.6.4 The principal means of access to each of the Properties is over roads which have been taken over by the local or other highway authority and which are maintainable at the public expense, and no means of access to any of the Properties is shared with any other party nor subject to rights of determination by any other party.
I.6.5 Each of the Properties enjoys the mains services of water, drainage, electricity and gas.
I.6.6 None of the Properties is located in an area or subject to circumstances particularly susceptible to flooding.
I.7 Insurance
I.7.1 The Properties are covered by insurance of a type usually available in the United Kingdom insurance market against a comprehensive range of risks (including subsidence and terrorism) in their full reinstatement value, and against third party and public liabilities and professional fees to an adequate extent and for not less than three years’ loss of rent or such greater period as may be specified in the tenancies affecting the Properties.
I.7.2 All premiums payable in respect of insurance policies with respect to the Properties which have become due have been duly paid, [the premiums are recoverable in full from the tenants pursuant to the tenancies affecting the Properties] and no circumstances have arisen which would vitiate or permit the insurers to avoid the policies.
I.7.3 The information in the Disclosure Letter with respect to such insurance policies is accurate in all respects.
I.8 Leasehold Properties
I.8.1 The [Company has][relevant Group Companies have] paid the rent and observed and performed the covenants on the part of the tenant and the
conditions contained in any leases (which expression in this Warranty I.8 includes underleases) under which the Properties are held, the last demands (or receipts for rent if issued) were unqualified, and all the leases are valid and in full force.
I.8.2 All licences, consents and approvals required from the landlords and any superior landlords under any leases of the Properties have been obtained and the covenants on the part of the tenant contained in the licences, consents and approvals have been duly performed and observed.
I.8.3 There are no rent reviews under the leases of the Properties held by the [Company][Group Companies] in progress.
I.8.4 No obligation necessary to comply with any notice or other requirement given by the landlord under any leases of the Properties is outstanding and unobserved or unperformed.
I.8.5 There is no obligation to reinstate any of the Properties by removing or dismantling any alteration made to it by the [Company][Group Companies] or any predecessor in title to the [Company][Group Companies] or the occupational tenants of the Properties.
I.8.6 [The Company has not][No Group Company has] entered into an authorised guarantee agreement under the Landlord and Tenant (Covenants) Act 1995 Section 16 in respect of any property.
I.8.7 [The Company has not][No Group Company has] the right to call for an overriding lease of any property under the Landlord and Tenant (Covenants) Act 1995 Section 19.
I.8.8 [The Company has not][No Group Company has] entered into an agreement with the lessor of any of the Properties specifying circumstances in which it would be reasonable for the lessor to withhold its consent to an assignment in accordance with the Landlord and Tenant Act 1927 Section 19(1A).
I.9 Tenancies
I.9.1 The Properties are held subject to and with the benefit of the tenancies (which expression in this Warranty I.9 includes subtenancies) as set out in Schedule 3 and no others.
I.9.2 With respect to such tenancies there are accurately disclosed in the Disclosure Letter particulars of:
I.9.2.1 the rent and any rent reviews and, with respect to rent reviews, the date for giving notice of exercise of the reviews and the operative review date;
I.9.2.2 the term and any rights to break or renew the term;
I.9.2.3 the obligations of the landlord and tenant in respect of outgoings, repairs, insurance services and service charge;
I.9.2.4 any options, pre-emption or first refusal rights;
I.9.2.5 the user required or permitted under the terms of the tenancies;
I.9.2.6 any entitlement of a tenant of the whole or any part of the Properties to compensation on quitting the premises let to him in respect of disturbance and improvements or otherwise; and
I.9.2.7 any unusual provisions.
I.9.3 The Vendors are not aware of any material or persistent breaches of covenant by a tenant of any of the Properties, including the covenants to pay rent.
I.10 Taxation
I.10.1 The Propert[y][ies] ha[s][ve] at all times been held by the [Company][Group Companies] as an investment and not as trading stock.
I.11 Preliminary Enquiries
I.11.1 All the replies given to the preliminary enquiries raised by the Purchaser’s Solicitors in respect of the Properties are true, complete and accurate in all respects and contain all relevant information known or available to the [Company][Group Companies].
I.11.2 There is no other matter not disclosed in such replies to preliminary enquiries of which the Vendors are aware, or ought to be aware on reasonable enquiry, and which adversely affects the value of the Properties or casts any doubt on the right or title of the [Company][Group Companies] to the Properties.
J. Environment
J.1 The Company has obtained all requisite Environmental Licences and has at all times complied with all applicable Environmental Laws and with the terms and conditions of those Licences.
J.2 The Company has not received any notice or other communication from which it appears that it may be or is alleged to be in violation of any Environmental Law or Environmental Licence or that any Environmental Licence may be subject to modification, suspension or revocation, and there are no circumstances likely to give rise to any such violation or modification, suspension or revocation.
J.3 A suitable assessment of risk pursuant to the Control of Substances Hazardous to Health Regulations 1988 has been carried out by the Company, and full details of that assessment (including the costs of carrying out all remedial work) and of any other environmental assessment, audit, review or investigation conducted by or on behalf of any Company are contained in or annexed to the Disclosure Letter.
J.4 So far as the Vendors are aware, the Company has not used, disposed of, generated, stored, transported, dumped, released, deposited, buried or emitted any Dangerous Substance at, on, from or under any Property or any premises previously owned, leased, occupied or controlled by the Company or any other premises.
J.5 The Company has not disposed of any Dangerous Substance in the past in such a way that its disposal would now constitute a breach of any Environmental Law.
K. Employment
K.1 [The Company has no, and never has had any, employees.]
K.2 Full and accurate particulars of the identities, dates of commencement of employment, or appointment to office, and terms and conditions of employment of all the employees, workers and officers of the Company, including without limitation profit sharing, commission or discretionary bonus arrangements, are set out in the Disclosure Letter.
K.3 All employees of the Company have received a written statement of particulars of their employment as required by Section 1 of the Employment Rights Act 1996 to the extent they are so entitled.
K.4 The Company is not bound or accustomed to pay any moneys other than in respect of remuneration, or emoluments of employment, or pension benefits to, or for the benefit of, any employee, worker, officer or shadow director of the Company.
K.5 Since the Last Accounts Date, or (where employment or holding of office commenced after that date) since the commencing date of such employment or holding of office, no change has been made in the rate of remuneration, or the emoluments or pension benefits, of any employee, worker or officer of the Company.
K.6 No agreement has been reached with any employee, worker or officer of the Company, or with a trade union or other body representing employees, that will or may on a future date result in an increase in any employee’s, worker’s or officer’s rate of remuneration or enhanced emoluments or pension benefits.
K.7 No negotiations for any increase in the remuneration, emoluments or pension benefits of any employee, worker or officer of the Company are current or (based on past practice) anticipated to take place within 6 months after the date of Completion.
K.8 The salaries and other benefits of all employees, workers and officers of the Company have been paid up to Completion.
K.9 No employees, workers or officers of the Company are on secondment, maternity leave or absent on grounds of disability or other long term leave of absence.
K.10 No outstanding offer of employment has been made by the Company to any person, nor has any person accepted an offer of employment made by the Company but has not yet commenced such employment.
K.11 The Company has not entered into any actual or purported arrangements with self employed consultants except as detailed in the Disclosure Letter.
K.12 All subsisting contracts of employment or contracts for services to which the Company is a party are determinable at any time by the Company on 3 months’ notice or less without compensation (other than statutory compensation for unfair dismissal).
K.13 No contracts of employment or contracts for services with the Company contain pay in lieu clauses, liquidated damages clauses or other terms and conditions giving rise to any debt payable by the Company on the termination of any such contract.
K.14 No employee, worker or officer has given notice to the Company, or been given
notice by the Company, terminating his contract of employment which is outstanding as at the date of this Agreement, or will be entitled to give such notice as a result of the transaction contemplated by this Agreement.
K.15 The Vendors have no knowledge, information or belief that any employee, worker or officer of the Company will give notice terminating his employment as a result of the provisions of this Agreement.
K.16 No employee, worker or officer will be entitled by reason of the transactions contemplated by this Agreement to any one-off payment, bonus or commission or to terminate his employment other than on normal contractual terms.
K.17 No outstanding liability has been incurred by the Company for breach of any contract of employment or contract for services or redundancy payments, protective awards, compensation for wrongful dismissal or unfair dismissal or for failure to comply with any order for the reinstatement or re-engagement of any employee or in respect of any other liability arising out of the termination of any contract of employment or contract for services.
K.18 There are no claims pending or threatened, or capable of arising, against the Company by any former employee of the Company, whether in relation to the termination of his employment or otherwise.
K.19 There are no claims pending or threatened or capable of arising against the Company by an employee, independent contractor or any other third party, in respect of any accident, disease, illness or injury, which are not fully covered by insurance.
K.20 In the 12 months preceding this Agreement, no improvement or prohibition notice has been served on the Company in connection with the conduct of its business by any body responsible for Health and Safety.
K.21 In the 12 months preceding this Agreement, there has been in relation to the Company no recommendation made by an employment tribunal nor any investigation by any body responsible for investigating or enforcing matters relating to discrimination.
K.22 There are no terms or conditions under which any employee, worker or officer of the Company is employed, nor has anything occurred or not occurred prior to Completion, that may give rise to any claim for discrimination or equal pay either under domestic United Kingdom, European law or the laws of any other jurisdiction to the extent applicable whether by such employee, worker or officer or a former employee, worker or officer or a prospective employee, worker or officer or otherwise.
K.23 There are no schemes (whether contractual or discretionary) in operation by, or in relation to, the Company under which any employee, worker or officer of the Company or former employee, worker or officer is entitled to any bonus, profit-share, commission or other incentive scheme (whether calculated by reference to the whole or part of the turnover, profits/losses or sales of the Company or otherwise).
K.24 None of the following are in existence, and there are no proposals for any of the following, in relation to the employees, workers or officers of the Company:
K.24.1 Share option or incentive schemes;
K.24.2 “Phantom” share option or incentive schemes;
K.24.3 Employee share ownership trusts pursuant to the Finance Act 1989;
K.24.4 Employee benefit trusts; or
K.24.5 Enterprise management incentive schemes pursuant to Schedule 15 of ITEPA.
K.25 All employees, workers or officers of the Company who require a work permit have such a permit in force.
K.26 In relation to any contract of employment between the Company and any of its directors, all statutory requirements (including, without limitation, Part X of CA) have been fulfilled.
K.27 In relation to each of its employees and workers, the Company has complied in all material respects with all statutes, regulations, codes of conduct, collective agreements, terms and conditions of employment, and orders and awards relevant to their conditions of service or to the relations between it and its employees and workers or any recognised trade union.
K.28 During the period of 6 years preceding the date of this Agreement, the Company has not been a party to any “relevant transfer” (as defined in the Transfer of Undertakings (Protection of Employment) Regulations 2006) or failed to comply with any duty to inform and consult with appropriate representatives of any affected employees under Regulation 13 of the Transfer of Undertakings (Protection of Employment) Regulations 2006.
K.29 During the 12 months preceding the date of this Agreement, the Company has not given notice of any redundancies to the relevant Secretary of State or started consultations with any trade union under Chapter II of Part IV of the Trade Union and Labour Relations (Consolidation) Act 1992 or failed to comply with any of its obligations under Chapter II of Part IV of such Act.
K.30 There are no severance, redundancy or other similar agreements or schemes conferring any entitlement on any of the employees, workers or officers of the Company to receive any payment on the termination of their employment (except for contractual notice pay).
K.31 The Company has not entered into any collective agreement or arrangements with, nor does it recognise, a trade union, works council, staff association or other body representing any of its employees, nor has it done any act which might be construed as recognition.
K.32 The Company has received no employee request to negotiate an information and consultation agreement under the Information and Consultation of Employees Regulations 2004, nor has it initiated any such negotiations itself.
K.33 Neither the Company nor its employees or workers is involved in any actual or threatened trade dispute as defined by Section 218 Trade Union and Labour Relations (Consolidation) Act 1992.
K.34 No dispute has arisen during the 6 years preceding the date of this Agreement between the Company and any material number or category of its employees or workers (or any trade union or other body representing all or any of such employees
or workers) and, so far as the Vendors are aware, there are no facts, matters or circumstances which may give rise to any such dispute.
L. Pensions
[Short Form Pensions Warranties]
L.1 [Except for the pension scheme referred to in the Disclosure Letter (the “Scheme”), the Company is not under any legal or moral liability or obligation, or a party to any ex-gratia arrangement or promise, to pay pensions, gratuities, superannuation allowances or the like, or otherwise to provide “relevant benefits” within the meaning of ICTA s 612, to or for any of its past or present officers or employees or their dependents; and there are no retirement benefit, or pension or death benefit, or similar schemes or arrangements in relation to, or binding on, the Company.
L.2 Full particulars of the Scheme are contained in, or annexed to, the Disclosure Letter, including without limitation true copies of the trust deeds and latest actuarial report and full and accurate details of the assets, funding arrangements and current membership.
L.3 The assets, investments or policies held by the trustees of the Scheme are sufficient to satisfy the liabilities and obligations (both current and contingent) which the Scheme has to its members at today’s date.
L.4 The Scheme is an exempt approved scheme within the meaning of ICTA s592, and there is no reason why such approval may be withdrawn.]
[Long Form Pensions Warranties]
L.5 [In the following Warranties the following words and expressions have the following meanings:
L.5.1 “Defined Benefit Scheme” means a scheme under which the amount of some or all of the benefits payable to or in respect of a member of the scheme is calculated in accordance with a formula which takes account of the service of the member to retirement, death or withdrawal and the remuneration of the member averaged over his service at or close to his retirement, death or withdrawal;
L.5.2 “Defined Contribution Scheme” means a scheme under which the amount of the benefits or the amount of the benefits, other than some or all of the benefits payable on death before becoming a pensioner, payable to or in respect of a member of the scheme is calculated by reference to the contributions made to the scheme by and in respect of the member;
L.5.3 “Personal Pension Scheme” means any personal pension scheme approved or provisionally approved for the purposes of ICTA Part XIV Chapter IV to which contributions have been made or are intended to be made pursuant to any agreement, arrangement, custom or practice;
L.5.4 “Vendors’ Pension Scheme” means [name] established by the interim trust deed dated [date] and made between [parties].
L.6 Full and complete particulars of all obligations of and promises made by the Company (whether legally enforceable or not and whether or not approved or capable
of approval by HMRC for the purposes of ICTA Part XIV Chapter I) to pay any gratuity or to provide retirement, death, disability, sickness, accident, termination of employment (whether voluntary or not) or other like benefit or to contribute to or participate in any scheme or any arrangement providing any such benefits for or in respect of any employee of the Company have been disclosed to the Purchaser [in the Disclosure Letter][in writing prior to the date of this Agreement];
L.7 In relation to the Vendors’ Pension Scheme full details [are contained in or annexed to the Disclosure Letter][have been made available to the Purchaser prior to the date of this agreement], including (without limitation) the following:
L.7.1 copies of all agreements, deeds, plans, announcements, policies or other arrangements and rules governing or relating to the Vendors’ Pension Scheme;
L.7.2 copies of all explanatory literature (including in particular booklets) issued to employees of the Company who are or may become members of the Vendors’ Pension Scheme;
L.7.3 a copy of the report of the most recent actuarial valuation of the Vendors’ Pension Scheme together with copies of any written supplementary actuarial advice relating to the funding of the Vendors’ Pension Scheme;
L.7.4 details of any proposed amendment to the Vendors’ Pension Scheme which has been announced or is being considered;
L.7.5 details of any discretionary increases to pensions in payment under the Vendors’ Pension Scheme granted in the [number] years prior to the date of this Agreement;
L.7.6 details of any discretionary practices which may have led any person to expect additional benefits in a given set of circumstances;
L.7.7 copies of all policies effected with and agreements with any insurance company for the purposes of the Vendors’ Pension Scheme;
L.7.8 particulars of the assets of the Vendors’ Pension Scheme by reference to the categories listed in the Occupational Pension Schemes (Disclosure of Information) Regulations 1986 Schedule 3, including particulars of any self-investment (as defined in those Regulations) and of any investment in which more than 5% of the total value of the net assets of the Vendors’ Pension Scheme is invested;
L.7.9 a list of the active members, pensioners and deferred pensioners of the Vendors’ Pension Scheme, with all particulars of them relevant to their membership of the Vendors’ Pension Scheme and necessary to establish their entitlements to benefits; and
L.7.10 a copy of any agreement with any person providing services of any nature in connection with the Vendors’ Pension Scheme, including without limitation investment management or advisory services, administration and data-processing services.
L.8 No discretion or power has been exercised under the Vendors’ Pension Scheme to:
L.8.1 augment benefits;
L.8.2 admit to membership any individual who would not otherwise have been eligible for admission to membership;
L.8.3 admit to membership any individual member or group of members on terms which provided for or envisaged the payment of a transfer value or a transfer of assets from another scheme to the Vendors’ Pension Scheme in a case in which the payment or transfer has not been made or has not been made in full;
L.8.4 provide a benefit which would not otherwise be provided;
L.8.5 pay a contribution which would not otherwise have been paid; or
L.8.6 in the [number] year period ending on the date of this Agreement pay a transfer value or make a transfer of assets to another scheme the amount or value of which was greater than the cash equivalent to which the individual acquired a right under the Social Security Pensions Act 1975 Schedule 1A Part II.
L.9 All benefits (other than a refund of contributions from the Vendors’ Pension Scheme) payable under the Vendors’ Pension Scheme on the death of a member or during periods of sickness or disability of a member are at the date of this Agreement fully insured under a policy effected with an insurance company of good repute, each member has been covered for such insurance by such insurance company at its normal rates and on its normal terms for persons in good health, all insurance premiums payable have been paid and the [Vendors][Warrantors] do not know of any reason why payment of such benefits should be refused.
L.10 The Vendors’ Pension Scheme is approved as an exempt approved scheme within the meaning of ICTA Part XIV Chapter I, each employee of the Company who has been admitted to or promised admission to membership of the Vendors’ Pension Scheme has been admitted or promised admission on terms which are consistent with such continued approval, and the [Vendor][Warrantors] are not aware of any reason why such approval should be withdrawn. No payment or repayment of any of the assets of the Vendors’ Pension Scheme has been made to the Company or to any employee in the Vendors’ Pension Scheme since the date of the most recent actuarial valuation disclosed to the Purchaser.
L.11 The trustees of the Vendors’ Pension Scheme have legal title to all the assets of the Vendors’ Pension Scheme, and there are no Security Interests over any such assets.
L.12 At the date of this Agreement there is no contribution due but unpaid, nor any amount to be transferred into the Vendors’ Pension Scheme which remains outstanding.
L.13 Since the date of the most recent actuarial valuation of the Vendors’ Pension Scheme contributions have been made to the scheme at a rate or rates not lower than that or those recommended in the report of that actuarial valuation.
L.14 [The Vendors’ Pension Scheme is a Defined Benefit Scheme which is sufficiently and effectively funded on an on-going basis using actuarial assumptions which are within the range of generally accepted actuarial practice in relation to all relevant factors (which assumptions include without limitation those specified below) to ensure the payment of all benefits currently, prospectively and contingently payable under the Vendors’ Pension Scheme at least to the extent to which they have accrued at Completion. The assumptions referred to above include the following:
L.14.1 The members to whom the benefits relate remain in pensionable employment under the Vendors’ Pension Scheme until their normal pension date under the Vendors’ Pension Scheme subject to reasonable assumptions as to withdrawal, early retirement or death;
L.14.2 Each member’s remuneration used for determining benefits under the Vendors’ Pension Scheme will be increased in respect of the period from Completion to the member’s normal pension date or earlier assumed date of withdrawal, early retirement or death at a rate which is consistent with the assumption as to the yield on investments; and
L.14.3 Provision is made to reflect the recent practice of the Vendors’ Pension Scheme with regard to the provision of increases to pensions in payment and in deferment.]
L.15 [The Vendors’ Pension Scheme is a Defined Contribution Scheme and no assurance, promise or guarantee (whether oral or written) has been made or given to any member of the Vendors’ Pension Scheme of any particular level or amount of benefits (other than insured lump sum death in service benefits) to be provided for or in respect of him under the Vendors’ Pension Scheme on retirement, death or leaving service.
L.16 The Company may terminate any obligation it may have to contribute to the Vendors’ Pension Scheme without incurring any liability to any member of the Vendors’ Pension Scheme under any agreement or arrangement with the member.]
L.17 The Vendors’ Pension Scheme is a contracted-out scheme for the purposes of the Social Security Pensions Act 1975 and has been administered in accordance with the contracting-out requirements of Part III of that Act. The Company [holds][is named in] a current contracting-out certificate issued in relation to the Vendors’ Pension Scheme, and the [Vendors][Warrantors] are not aware of any reason why the certificate should be withdrawn or the Company’s name removed.
L.18 [There [is set out in or annexed to the Disclosure Letter] [has been disclosed to the Purchaser in writing prior to the date of this Agreement] a statement of the basis on which the Company has undertaken to contribute to each scheme which has been disclosed and which is a Personal Pension Scheme and the rate and the amount of the contributions in respect of each member of such scheme made in the 3 year period ending on the date of this Agreement.
L.19 No assurance, promise or guarantee (whether oral or written) has been made or given to any member of any disclosed scheme which is a Personal Pension Scheme of any particular level or amount of benefits to be provided for or in respect of him under such disclosed scheme on retirement, death or leaving service. The Company may terminate any obligation it may have to contribute to any such disclosed scheme being a Personal Pension Scheme without incurring any liability to any member of such scheme under any agreement or arrangement with the member.]]
Stakeholder Pensions
L.20 The Company has complied with the requirements set out in Section 3 of the Welfare Reform and Pensions Act 1999 (or is exempt from them for the reason stated in the Disclosure Letter), and in particular:
L.20.1 has designated the stakeholder pension schemes referred to in the Disclosure
Letter (the “Stakeholder Schemes”) for the purposes of Section 3(2) of that Act;
L.20.2 after consulting with its relevant employees and any organisations representing them as required by that section;
L.20.3 has complied with paragraphs 24 and 25 of the Stakeholder Pension Schemes Regulations 2000 in making payroll deduction of contributions and disclosing information as requested by employees; and
L.20.4 has complied with the timing requirements of the Pensions Regulator in making contribution payments to the Stakeholder Schemes.
L.21 Each Stakeholder Scheme is a stakeholder pension scheme for the purposes of Part I of the Welfare Reform and Pensions Act 1999.
L.22 Full particulars of each Stakeholder Scheme are contained in, or annexed to, the Disclosure Letter, including without limitation:
L.22.1 copies of the scheme instruments and written statements of investment principles, or of the trust instruments;
L.22.2 a copy of the last annual declaration;
L.22.3 evidence of its registration with the Pensions Regulator; and
L.22.4 full and accurate details of the current membership by the Company’s employees and their respective levels of employees’ and employers’ contributions.
M. Assets
M.1 The Company owned at the Last Accounts Date, and had good and marketable title to, and (except for current assets subsequently sold or realised in the ordinary course of business) still owns and has good and marketable title to, all the assets included in the Last Accounts and to all assets acquired since the Last Accounts Date and not subsequently sold or realised as mentioned.
M.2 The asset registers of the Company comprise a complete and accurate record of all the plant, machinery, equipment, vehicles and other assets owned or possessed by the Company.
M.3 The assets owned by the Company, together with assets held under the hire purchase, leasing or rental agreements listed in the Disclosure Letter, comprise all assets necessary for the continuance of its business as now carried on.
M.4 All stock of the Company is of normal merchantable quality, saleable in the normal course of business, and no goods sold or delivered or to be sold or delivered or in a state ready for sale and delivery have been or will be defective or in any way, fail or will fail to comply with their terms of sale or (in the case of goods ready for sale and delivery) would fail to comply with terms of sale similar to terms of sale upon which similar goods have previously been sold by the Company so as to give a right of action against the Company, whether pursuant to statutory provisions for the time being in force relating to the supply of goods or otherwise or for breach of contract, negligence or otherwise.
M.5 The stocks of raw materials, packaging materials and finished goods now held by the Company are not excessive and are adequate in relation to the current trading requirements of the business of the Company.
M.6 The plant, machinery, equipment, vehicles and other equipment used in connection with the business of the Company:
M.6.1 are in a good and safe state of repair and condition and satisfactory working order;
M.6.2 have been regularly and properly maintained;
M.6.3 are not to any extent surplus to requirements;
M.6.4 are in the possession and control of, and are the absolute property of, the Company, except for those items the subject of the hire purchase, leasing or rental agreements listed in the Disclosure Letter, or in respect of which each of the outstanding payments do not exceed £[ ];
M.6.5 are not expected to require replacements or additions at a cost in excess of £[ ] within six months from today’s date.
M.7 Maintenance contracts are in full force and effect in respect of all assets of the Company which it is normal or prudent to have maintained by independent or specialist contractors, and in respect of all assets which the Company is obliged to maintain or repair under any leasing or similar agreement. All such assets have been regularly maintained to a good technical standard, and in accordance with safety regulations usually observed in relation to them, and in accordance with the terms and conditions of any applicable leasing or similar agreement.
M.8 None of the assets used by the Company is owned by any of the Vendors or their Associates.
M.9 None of the assets owned by the Company is in the possession of any of the Vendors or their Associates.
M.10 The Company has not created or granted or agreed to create or grant any Security Interest or other encumbrance in respect of any of the fixed assets included in the Last Accounts (excluding the Properties) or acquired or agreed to be acquired since the Last Accounts Date, otherwise than in the ordinary course of its business.
M.11 Except as disclosed in the Last Accounts, none of the property, assets, undertaking, goodwill or uncalled capital of the Company (excluding the Properties) is subject to any Security Interest, option or right of pre-emption.
N. Insurances
N.1 There is attached to the Disclosure Letter a register of the current insurances maintained by the Company together with copies of the relevant insurance policies.
N.2 All such insurances are currently in full force and effect and nothing has been done or omitted or be done which could make any such policy of insurance void or voidable or which is likely to result in an increase in premium.
N.3 No claim is outstanding under any of such insurance policies and no circumstances
exist which are likely to give rise to a claim.
O. Intellectual Property
O.1 [The Company owns no Intellectual Property Rights.
O.2 No Intellectual Property Rights are required for the proper carrying on of the Company’s business as carried on at today’s date.]
O.3 [Particulars of all Intellectual Property Rights owned by the Company (the “Listed Intellectual Property Rights”) are listed in the Disclosure Letter and are true and accurate in all material respects.
O.4 The Company is the sole and absolute legal and beneficial owner and (where applicable) the registered proprietor of the Listed Intellectual Property Rights free from all Security Interests, options and third party rights.
O.5 Each of the Listed Intellectual Property Rights is valid, subsisting and enforceable and is capable of being validly assigned to the Purchaser, no act has been done or omission permitted whereby any of them has ceased to or might cease to be valid and enforceable, none of the Listed Intellectual Property Rights is the subject of any pending or threatened proceedings for opposition, cancellation, revocation or rectification or licence of right or similar proceedings anywhere in the world, there are no facts or matters which might give rise to any such proceedings, and all fees (including renewal and prosecution fees) now due in respect of the registered Listed Intellectual Property Rights have been paid.
O.6 The Listed Intellectual Property Rights are all the Intellectual Property Rights required for the proper carrying on of the Company’s business as carried on at today’s date.
O.7 The Company is not restricted in its use of the Listed Intellectual Property Rights in any way which adversely affects the proper carrying on of its business as at today’s date.
O.8 The Listed Intellectual Property Rights and the business of the Company (and of any licensee under a licence of the Listed Intellectual Property Rights granted by the Company) as now carried on do not, and are not likely to, infringe any Intellectual Property Right of any other person.
O.9 The Company does not require, or has been validly granted in writing, all licences or assignments in relation to any Intellectual Property Rights of any third party in respect of its business, and all such licences and assignments are in full force and effect and have been validly granted. Details of all licences or assignments to or from the Company are set out in the Disclosure Letter. The Company is not in breach of any licence, sub-licence or assignment granted in respect of any Intellectual Property Rights. The [Vendors][Warrantors] are not aware of any material breach by any third party of any licence, sub-licence or assignment granted to or by the Company.
O.10 No right has been granted to any person to do anything which would or might otherwise infringe any of the Listed Intellectual Property Rights, and none of the Listed Intellectual Property Rights is being or has been used by (except pursuant to a licence disclosed in the Disclosure Letter), or is being or has been infringed or threatened to be infringed by any person other than the Company.
O.11 The Company has not granted, nor is it obliged to grant, any Security Interest or assignment of any of the Listed Intellectual Property Rights.
O.12 No licence of Listed Intellectual Property Rights granted to or by the Company is determinable by virtue of any provisions of or the effect of this Agreement.
O.13 None of the Listed Intellectual Property Rights are capable of being, or are, subject to any claims arising under Sections 77 or 89 (Moral Rights) of the Copyright, Designs and Patents Act 1988 or any similar rights anywhere in the world.
O.14 The Company has no liability to pay compensation under the Patents Act 1977, Sections 40 and 41.]
O.15 The Company has not (except in the normal course of business) disclosed, or agreed to disclose, to any person other than the Purchaser any of its know-how, trade secrets, confidential information, price lists or lists of customers or suppliers.
O.16 The Company is not party to any secrecy agreement or agreement which may restrict the use or disclosure of information.
O.17 None of the Vendors own any Intellectual Property Rights of any kind which could, if transferred to the Company, be exploited by it in the normal course of or in conjunction with the business now carried on or proposed to be carried on by the Company.
O.18 [[If Company has computer software products:] Without prejudice to the generality of the above:
O.18.1 the Company is either the sole beneficial owner of all patent, copyright and all other rights of whatsoever nature in its computer software products (including programs and any associated documentation) used by the Company in or for the trading purposes of its business or such computer software products are used by the Company under an irrevocable licence;
O.18.2 in each case the Company has lawfully in its possession a copy of the source codes of all such computer software products and all other documentation and materials necessary for the proper maintenance and enhancement of such computer software products and the unfettered right to maintain and enhance them;
O.18.3 the Company’s use and proposed use and exploitation of such computer software products does not to the best of the Vendors’ knowledge infringe any right of any other person;
O.18.4 where any of such computer software products have been written either by an employee of the Company outside the normal scope of his employment or by any of the Vendors or by any consultant or contractor, the Company has in every such case obtained from such person a written assignment to it of the entire copyright in such computer software products;
O.18.5 except as disclosed in the Disclosure Letter the Company has not granted to any person the right to use any of such computer software products or disposed of any other right in them and no person is in possession of any copies of such computer software products or their source codes.]
P. Data Protection and Privacy
P.1 The Company has duly complied with all relevant requirements of the Data Protection Act 1998 including:
P.1.1 the data protection principles established in that Act;
P.1.2 requests from data subjects for access to data held by it;
P.1.3 the requirements relating to notification by data controllers.
P.2 The Company has not received any notice or allegation from either the Information Commissioner or a data subject alleging non-compliance with the data protection principles or prohibiting the transfer of data to a place outside the United Kingdom.
P.3 No individual has claimed or will have the right to claim compensation from the Company under the Data Protection Act 1998 for loss or unauthorised disclosure of data.
P.4 Copies of the Company’s email and internet policy for its employees and of its privacy policy for customers and other third parties dealing with it are annexed to the Disclosure Letter.
P.5 The Company has not intercepted communications in a manner which amounted to conduct that was not authorised by the Telecommunications (Lawful Business Practice) (Interception of Communications) Regulations 2000.
Q. [Millennium Compliance]
Q.1 [The Computer Systems have Year 2000 Conformity.
Q.2 The Company performed a Millennium Compliance Audit.
Q.3 The Computer Systems did not require any material remedial work and/or replacement to enable them (or any part of them) to continue functioning accurately before, during and/or after 1 January 2000 with Year 2000 Conformity.
Q.4 The Computer Systems and each element of them pass and will continue to pass date information between each other in a way which does not, and will not, create inaccuracies.]
R. Euro Compliance
R.1 All software comprised in the Computer Systems will be fully capable of correctly handling dual currency accounts and transactions in pounds sterling and euros by following the relevant recommendations of the “EMU - Economic Monetary Union Specification for Application Software” version 2.0 published by BASDA (the Business and Accounting Software Developers Association) in March 1998.
S. [Industry-specific Warranties]
S.1 [Hotel
S.1.1 The Property is an “hotel” within the meaning of the Hotel Proprietors Act 1956 (“HPA56”) and:
S.1.1.1 At all times that the Property has been one, a copy of the notice set out in the Schedule to HPA56 has been conspicuously displayed at the Property in accordance with the proviso to s2(3) HPA56;
S.1.1.2 There are no outstanding or (so far as the [Vendors][Warrantors] are aware) pending or threatened claims against the Company for liability as an innkeeper and/or under HPA56 which exceed the limits specified in s2(3) HPA56.
S.1.2 The landlord, proprietor, keeper, or manager of the Company’s hotel has not disposed of any goods, chattels, carriages, horses, wares or merchandise which may have been deposited with him otherwise than in accordance with s1 of the Innkeepers Act 1878.
S.1.3 The Property has been registered as a hotel by the appropriate tourist board established under the Development of Tourism Act 1969.
S.1.4 The Property is an “hotel” within the meaning of the Tourism (Sleeping Accommodation Price Display) Order 1977 (SI1977/1877) (the “Order”) and:
S.1.4.1 At all times that the Property has been one, a legible notice of current prices for sleeping accommodation has been prominently displayed at the Property in accordance with Article 3 of the Order;
S.1.4.2 No offence under the Order has been committed by the Company or with the consent or connivance of, or which is attributable to any neglect on the part of, any director, manager, secretary or other similar officer of the Company, or any other person who was purporting to act in any such capacity;
S.1.4.3 The affairs of the Company are not managed by its members in such a way that paragraph (1) of Article 6 of the Order might apply in relation to the acts and defaults of any member in connection with his functions of management as if he were a director of the Company.
S.1.5 No billets have been provided, or required to be provided, at the Property for any members of Her Majesty’s forces or their vehicles pursuant to Part IV of the Army Act 1955, Part IV of the Air Force Act 1955 or otherwise.
S.1.6 The Company carries on a “food business” within the meaning of the Food Safety Act 1990, as amended by the Food Standards Act 1999 (“FSA90”) at the Property and:
S.1.6.1 The Property is registered under the Food Premises (Registration) Regulations 1991 (SI1999/2825);
S.1.6.2 No offence has been committed by the Company, or by anyone for whose acts or omissions the Company may be liable, under FSA90 or any regulations made under FSA90;
S.1.6.3 There are no outstanding notices received by the Company or by any person in charge of any food source at the Property as a result of any inspection pursuant to FSA90 or any regulations made under FSA90.
S.1.7 There are disclosed in the Disclosure Letter, with specific reference to this
Warranty S.1.7, a list of all licences held for the sale of intoxicating liquor on the Property under the Licensing Act 1964 and for public dancing, music or entertainment under the London Government Act 1963 and/or the Local Government (Miscellaneous Provisions) Act 1982 (the “Licences”), specifying in each case the holder of the licence, the type of licence and annexing a copy of the licence, and:
S.1.7.1 All the Licences are valid and subsisting;
S.1.7.2 No other licences are required to carry on the hotel business presently carried on at the Property;
S.1.7.3 The Licences are not subject to any restrictions, conditions or limitations that are not disclosed in the Disclosure Letter;
S.1.7.4 No offences have been committed by the Company or by any licensee under any of the Licences under any of the statutes referred to in this Warranty S.1.7 or any related legislation;
S.1.7.5 There have been no convictions in respect of or endorsements upon the Licences, and there are no outstanding or (so far as the [Vendors][Warrantors] are aware) pending or threatened proceedings which might result in any such conviction or endorsement;
S.1.7.6 None of the Licences is subject to any mortgage, lien, charge or encumbrance;
S.1.7.7 The holder of each Licence is entitled to dispose of that Licence, and has not agreed to dispose of it to anyone other than the Purchaser.]
T. General
T.1 All written information given by any of the [Vendors][Warrantors], the Vendors’ Solicitors or the Vendors’ Accountants to the Purchaser, the Purchaser’s Solicitors or the Purchaser’s Accountants relating to the business, activities, affairs, or assets or liabilities of the Company was when given, and is now, accurate and comprehensive in all respects.
T.2 There are no material facts or circumstances, in relation to the assets, business or financial condition of the Company, which have not been fully and fairly disclosed in writing to the Purchaser or the Purchaser’s Solicitors, and which, if disclosed, might reasonably have been expected to affect the decision of the Purchaser to enter into this Agreement.
T.3 There are fully and accurately disclosed in the Disclosure Letter all matters:
T.3.1 which are necessary to qualify the statements set out in the above Warranties in order for such statements, when so qualified, to be fair, accurate and not misleading; or
T.3.2 which might materially and adversely affect the present or future value of the Shares; or
T.3.3 which might otherwise reasonably affect the willingness of the Purchaser to purchase the Shares or to purchase them for the consideration and upon the
terms set out in this Agreement.
Schedule 5: Tax Covenant(Clauses 1.1, 9)
1. Definitions and Interpretation
1.1 In this Tax Covenant:
1.1.1 [references to the “Company” include each other Group Company, as if this Deed had been entered into separately in respect of each Group Company;]
1.1.2 where the context so admits, the following words and expressions have the meanings set out against each or given in the provision of this Schedule cross-referenced against each (as applicable):
“Claim” any assessment, notice, demand, letters or other document issued, or action taken, by or on behalf of any person, authority or body in any part of the world from which it appears that the Company is liable or is sought to be made liable to make any payment of Taxation (whether or not the same is primarily payable by the Company and whether or not the Company has, or may have, any right of reimbursement against any other person), or is deprived or is sought to be deprived of any Relief or right to repayment of Taxation
“Due Date” see paragraph 5.3
“Event” any act, failure, omission or transaction whether or not the Company is a party to it and including (without limitation) completion of the sale of the Shares to the Purchaser and any distribution, acquisition, disposal, transfer, payment, loan, advance or land transaction (as defined in section 43 FA2003)
“Liability” (i) a Payment of Taxation made or to be made by the Company; or
(ii) the unavailability, loss, reduction or cancellation of a Relevant Relief; or
(iii) Inheritance Tax in respect of which HMRC has a charge on any of the shares or assets of the Company or which becomes a charge on or which gives rise to a power to sell, mortgage or charge any of the shares or assets of the Company; or
(iv) a liability of the Company to make a payment by way of reimbursement, recharge, indemnity, damages for breach of contract or management charge; or
(v) a payment or obligation to pay stamp duty
(together with interest and penalties); or
(vi) any costs or expenses reasonably incurred by the Purchaser or the Company; or
(vii) the setting off against tax liabilities, income, profits or gains earned, accrued incurred or received on, or before Completion, of any Relief not available before Completion, but arising in respect of any event occurring after Completion in circumstances where but for the setting off, the Company would have had an actual tax liability in respect of which the Purchaser would have had a claim under the Tax Covenant; and
(viii) the setting off of a right to the repayment of tax against any actual liability in respect of which the Purchaser would, but for the setting off, have been able to claim against the [Vendors][Warrantors];
“Payment of Taxation”
any payment of Taxation payable by the Company (and whether or not the Company has, or may have, any right of reimbursement against any other person) and including any payment of Taxation which would have been due to be made but for the utilisation of any Relevant Relief
“Relevant Amount” see paragraph 7.3
“Relevant Relief” any relief taken into account in computing and so reducing of eliminating any provision for Taxation to include deferred Taxation which is made in the Last Account or would be so made but for the absence of such Relief and so reducing or eliminating any provision for Taxation (including deferred tax) which appears in or is treated as an asset in the Last Accounts or any Relief which arises to the Company by reason of an Event occurring after Completion
“Relief” any loss, allowance, credit, relief, deduction or set off in respect of Taxation or any right to a repayment of Taxation
1.1.3 References to the result of Events on or before Completion include:
1.1.3.1 the combined result of two or more Events the first of which took place on or before Completion;
1.1.3.2 any Event which took place before Completion in respect of
which the Liability is recomputed after Completion;
1.1.4 References to income or profits or gains earned, accrued or received include income or profits or gains deemed to have been or treated as or regarded as earned, accrued or received for the purposes of any statutes relating to Taxation.
1.1.5 References to specific United Kingdom Taxes or Taxation Authorities include equivalent or similar Taxes or Taxation Authorities in other jurisdictions, and any accompanying wording is to be construed accordingly.
1.2 Without limiting the generality of the expression, reference in this Tax Covenant to anything “in the ordinary course of business” does not include:
1.2.1 an Event which results in the Company becoming liable for Taxation for which it is not primarily liable or as the United Kingdom representative of a person who is not resident in the United Kingdom;
1.2.2 the acquisition, disposal or supply or deemed acquisition, disposal or supply of any asset, service or facility (including a loan of money or the letting, hiring or licensing of tangible or intangible property) in a transaction which is not entered into at arms’ length;
1.2.3 the making of a distribution or deemed distribution, the creation, cancellation or reorganisation of any share or loan capital, or any company becoming or ceasing to be a member of a group of companies for any Taxation purpose;
1.2.4 the failure by the Company to deduct or account for Taxation;
1.2.5 any Liability arising from the disposal, acquisition or deemed disposal or acquisition of any asset other than trading stock;
1.2.6 an Event giving rise to a Liability under any of the statutory provisions specified in Warranty G.3 in Schedule 4 (Anti Avoidance Provisions);
1.2.7 any liability arising as a result of the Company ceasing for tax purposes to be a member of any group or associated with any other company;
1.2.8 a transaction or arrangement which includes, or a series of transactions or arrangements which includes, any step or steps having no commercial or business purpose apart from the reduction, avoidance or deferral of a liability for Taxation; or
1.2.9 any Event which gives rise to deemed income, profits or gains (including capital gains) or deemed supplies for value added tax purposes.
2. Covenant
2.1 Subject as provided in this Tax Covenant, the [Vendors][Warrantors] jointly and severally covenant with and undertake to the Purchaser to pay to the Purchaser an amount equal to any of the following Liabilities:
2.1.1 any Payment of Taxation made or to be made by the Company where such Taxation results from, or is calculated by reference to any income, profits or gains earned, received or accrued by the Company on or before Completion or
which results from or is calculated by reference to any Event which occurred on or before Completion or was deemed to occur on or before Completion for the purposes of any Taxation;
2.1.2 the value to the Company of a Relevant Relief which is unavailable, lost reduced or cancelled in consequence of an Event occurring on or before Completion (and for this purpose the value to the Company is the Taxation which would have been saved but for the unavailability, loss, reduction or cancellation of the Relevant Relief or the amount of the repayment of Taxation which is unavailable, lost, reduced or cancelled);
2.1.3 any Inheritance Tax which is unpaid at Completion and in respect of which HMRC has a charge on any of the shares or assets of the Company, or gives rise to a power to sell, mortgage or charge any of the shares or assets of the Company or which after Completion becomes a charge on or gives rise to a power to sell, mortgage or charge any of the shares or assets of the Company, being a liability in respect of Inheritance Tax payable as a result of the death of any person within seven years after a transfer of value (or a deemed transfer of value) if a charge on or power to sell, mortgage or charge any such shares or assets existed at Completion or would have existed at Completion, if the death had occurred immediately before Completion and the Inheritance Tax payable as a result of it had not been paid;
2.1.4 any reasonable costs or expenses properly incurred by the Purchaser or the Company in connection with or in consequence of any of the matters referred to in paragraphs 2.1.1 to 2.1.3 inclusive or any claim therefor or in taking or defending any action under this Tax Covenant.
2.2 Subject as provided in this Tax Covenant, the [Vendors][Warrantors] jointly and severally covenant with and undertake to the Purchaser to pay to the Purchaser in respect of a breach by the [Vendors][Warrantors] of any Warranty relating to stamp duty or stamp duty reserve tax a sum by way of damages in respect of the reduction in value of the Shares calculated as follows:
2.2.1 an amount equal to the stamp duty or stamp duty reserve tax paid or payable by the Company in respect of which there is such a breach of Warranty; plus
2.2.2 interest on all such damages under this paragraph 2.2 payable from the date of such breach to the date of payment of such damages at the rate or rates set by the Treasury for such period pursuant to Section 178 FA 1989
and for the purposes of this covenant such breach is to be treated as having occurred:
2.2.3 for stamp duty purposes, on the date on which interest begins to be payable on unpaid duty in accordance with Section 15A Stamp Act 1891; and
2.2.4 for stamp duty reserve tax purposes, on the date on which interest begins to be payable in accordance with regulations made under Section 89 FA 1985.
2.3 Each paragraph in the above sub-paragraphs 2.1.1 to 2.1.4 and paragraph 2.2 constitutes a separate covenant independent each from the other and its interpretation and extent is not restricted by any other such paragraph.
3. Exclusions
The covenant contained in paragraph 2.1 does not apply to any Liability:
3.1 to the extent that specific provision or reserve in respect of such Liability was made in the Last Accounts [or is made in the Completion Accounts];
3.2 to the extent that such Liability arises solely as a result of transactions in the ordinary course of business of the Company after the Last Accounts Date but on or before Completion;
3.3 to the extent that such Liability would not have arisen but for any voluntary act or omission of the Company after Completion which the Company knew would give rise to such Liability but excluding any act:
3.3.1 carried on pursuant to a legally binding obligation of the Company incurred prior to Completion;
3.3.2 pursuant to an obligation imposed by any law, regulation or requirement having the force of law;
3.3.3 taking place with the written approval of the [Vendors][Warrantors] or pursuant to the Agreement or any document executed pursuant to the Agreement;
3.3.4 occurring in the ordinary course of business of the Company; or
3.3.5 constituting the lodging of a document for stamp duty at the Stamp Office of HMRC (or other equivalent Taxation Authority outside the United Kingdom) or the bringing into the United Kingdom of any document executed prior to Completion outside the United Kingdom;
3.4 to the extent that such Liability arises or is increased only as a result of any increase in rates of Taxation made after Completion with retrospective effect or of any change in law occurring after Completion with retrospective effect;
3.5 to the extent that the Purchaser has made recovery in respect of such Liability under any provision of the Agreement;
3.6 to the extent that such Liability resulted from or is increased by the change of the accounting reference date of the Company on or after Completion or by any change in the accounting practices of the Company, except where such change is made to comply with generally accepted accounting practice; or
3.7 to the extent that the Liability is limited as stated in Clause 10 of this Agreement.
4. Conduct of Claims
4.1 If the Purchaser or the Company becomes aware of any Claim or of circumstances likely to give rise to such a Claim, the Purchaser or the Company (as the case may be) must as soon as reasonably practicable give written notice of it to the [Vendors][Warrantors] setting out reasonable particulars of it (but failure to give such notice will not be a waiver of the liability of the [Vendors][Warrantors] under this Tax Covenant).
4.2 Subject to paragraphs 4.3 and 4.4, if the [Vendors][Warrantors] indemnify and secure the Purchaser or the Company (as the case may be) to its reasonable satisfaction against any losses, fines, penalties, costs, charges, expenses, additional Taxation and interest which may be incurred thereby the Company must take, and the Purchaser must procure that the Company takes, such action as the [Vendors][Warrantors] may reasonably request to avoid, dispute, resist, appeal, compromise or defend such Claim.
4.3 The Company will not be obliged to comply with any request of the [Vendors][Warrantors] which involves contesting any Claim before any court or other appellate body unless the [Vendors][Warrantors] have obtained the written opinion of Tax Counsel of at least ten years’ call that such contest will, on the balance of probabilities, be successful.
4.4 The Purchaser and the Company will be free to take such action as they may in their absolute discretion think fit (and without prejudice to their rights and remedies under this Tax Covenant) if within 21 days of service of the notice under paragraph 4.1 the [Vendors][Warrantors] fail to notify the Purchaser of their intention to resist such Claim or fail within a reasonable period to give the indemnity and security referred to in paragraph 4.2.
4.5 Paragraph 4.2 does not apply if either the [Vendors][Warrantors] or the Company have committed acts or omissions which constitute or are alleged in writing by the relevant authority to constitute fraud or negligent conduct.
5. Due Date and Interest
5.1 The [Vendors][Warrantors] must pay to the Purchaser any amount covenanted to be paid under this Tax Covenant at least 3 business days prior to the date on which the Company is required to discharge or deemed to discharge the Claim or Liability for Tax in respect of which that amount is covenanted to be paid under this Tax Covenant.
5.2 For the purposes of paragraph 5.1 the Company is deemed to discharge a Claim:
5.2.1 on the date on which the Company pays any amount of Taxation;
5.2.2 on the date on which any Claim would have fallen due but for the availability of Reliefs, rights of repayment or other rights or claims of a similar nature.
5.3 Any sums not paid by the [Vendors][Warrantors] by the due date for their payment (the “Due Date”) will bear interest (accruing from day to day both before and after any judgement) at the rate of 6% per annum above the base rate of [Purchaser’s] Bank plc from the Due Date to and including the day of actual payment of such sums. Such interest must be paid on demand of the Purchaser.
6. Withholding and Taxation
6.1 Subject to paragraph 6.2 all payments made by the [Vendors][Warrantors] under this Tax Covenant must be made gross, free of any rights of counterclaim or set off and without any deductions or withholdings of any nature, except for such deductions or withholdings as are required by law.
6.2 If the [Vendors][Warrantors] are required by law to make any deduction or withholding from any payment under this Tax Covenant, they must do so and the
sum due in respect of such payment will be increased to the extent necessary to ensure that after the making of such deduction or withholding the Purchaser receives and retains (free of any liability in respect of any such deduction or withholding) a net sum equal to the sum it would have received and retained had no such deduction or withholding been required to be made. If the Purchaser subsequently receives a credit for such deduction or withholding, then such credit is to be applied in accordance with the provisions of paragraph 7.3.
6.3 If the payment under this Tax Covenant is subject to Taxation in the hands of the Purchaser the [Vendors][Warrantors] must within 7 days of notice being served on them by the Purchaser pay to the Purchaser such further amount or amounts as will ensure that the net amount received in respect of any payment due from the [Vendors][Warrantors] under this Tax Covenant after such Taxation is the same as it would have been were the payment not so subject to such Taxation.
7. Over provisions, reliefs etc
7.1 If any provision for Taxation in the Last Accounts (excluding any provision for deferred Taxation) has proved to be an over-provision, then provided that the auditors for the time being of the Company have certified the extent of the over-provision (at the request and expense of the [Vendors][Warrantors]) the amount of such over-provision is to be dealt with in accordance with paragraph 7.3.
7.2 If any Taxation which has resulted in a payment having been made or becoming due from the [Vendors][Warrantors] under this Tax Covenant will give rise to a Relief for the Company which would not otherwise have arisen, then provided that the auditors for the time being of the Company have certified (at the request and expense of the [Vendors][Warrantors]) the amount of such Relief as and when the liability of the Company to make an actual payment of or in respect of Taxation is reduced by reason of that Relief and after taking account of the effect of all other Reliefs that are or become available to the Company (including any Relief derived from a subsequent accounting period) the amount by which that liability is so reduced is to be dealt with in accordance with paragraph 7.3.
7.3 Where it is provided in this Tax Covenant that any amount (the “Relevant Amount”) is to be dealt with in accordance with this paragraph 7.3:
7.3.1 the Relevant Amount must first be set off against any payment then due from the [Vendors][Warrantors] under this Tax Covenant;
7.3.2 to the extent there is an excess, a refund must be made to the [Vendors][Warrantors] of any previous payment or payments made by the [Vendors][Warrantors] under this Tax Covenant or under the Warranties relating to Taxation and not previously refunded under this paragraph up to the amount of such excess; and
7.3.3 to the extent that the excess referred to in paragraph 7.3.2 is not exhausted under that paragraph, the remainder of that excess must be carried forward and set off against any future payment or payments which become due from the [Vendors][Warrantors] under this Tax Covenant or under the Warranties relating to Taxation.
7.4 Where any such certification as is mentioned in paragraphs 7.1 or 7.2 has been made, the [Vendors][Warrantors] or the Purchaser or the Company may request that the [auditors][accountants] for the time being of the Company review such certification
in the light of all relevant circumstances, including any facts which have become known only since such certification, and certify whether such certification remains correct or whether in the light of those circumstances the amount that was the subject of such certification should be amended.
7.5 If the [auditors][accountants] certify under paragraph 7.4 that an amount previously certified should be amended, then that amended amount must be substituted for the purposes of paragraph 7.3 as the Relevant Amount in respect of the certification in question in place of the amount originally certified, and such adjusting payment (if any) as may be required by virtue of the above-mentioned substitution must be made as soon as practicable by the [Vendors][Warrantors] or (as the case may be) dealt with in accordance with paragraph 7.3.
8. Recovery from other persons
If, in the event of any payment becoming due from the [Vendors][Warrantors] under the Tax Covenant, the Company either is immediately entitled at the due date for the making of that payment to recover from any person (not being [a Group Company or] an employee of the Company but including any Taxation Authority) any sum in respect of the Liability that has resulted in that payment becoming due from the [Vendors][Warrantors] or at some subsequent date becomes entitled to make such a recovery, then:
8.1 the Purchaser must procure that the Company promptly notifies the [Vendors][Warrantors] of its entitlement and, if so required by the [Vendors][Warrantors] and at the [Vendors][Warrantors]’ sole expense, takes all appropriate steps to enforce that recovery (keeping the [Vendors][Warrantors] fully informed of the progress of any action taken); and
8.2 if the [Vendors][Warrantors] have made a payment under the Tax Covenant in respect of the Liability in question, the Purchaser must account to the [Vendors][Warrantors] for whichever is the lesser of:
8.2.1 any sum so recovered by the Company in respect of that Liability (including any interest or repayment supplement paid by the Taxation Authority or other person on or in respect thereof but less any Taxation chargeable on the Company in respect of that interest and all costs and expenses reasonably and properly incurred by the Company or the Purchaser (as appropriate) by the [Vendors][Warrantors]); and
8.2.2 the amount paid by the [Vendors][Warrantors] under the Tax Covenant in respect of that Liability.
[Schedule 6: Completion Accounts][(Clause 7.1.1)
The Completion Accounts are to:
1. Consist of a [consolidated] balance sheet of the [Group][Compan[y][ies] as at the close of business on the date of Completion and a [consolidated] profit and loss account of the [Group][Compan[y][ies] in respect of the period from the Last Accounts Date to the date of Completion (both dates inclusive);
2. Be prepared as if the period from the Last Accounts Date to the date of Completion were a financial year of the Company;
3. Be prepared and audited in accordance with the requirements of CA and United Kingdom generally accepted accounting principles;
4. Show a true and fair view of the assets and liabilities of the [Group][Compan[y][ies] at the date of completion and the profits of the [Group][Compan[y][ies] for the period ended on the date of Completion;
5. Adopt the bases and policies of accounting applied for the purposes of the Last Accounts, except to the extent they would be inconsistent with the other paragraphs of this Schedule;
6. Notwithstanding any of the above, adopt the following bases, policies, adjustments or assumptions:
6.1 no value is to be attributed to goodwill or any other intangible asset;
6.2 other fixed assets are to be included at the value at which they were included in the Last Accounts, less depreciation on the written down value, calculated at the following annual rates:
Plant and machinery [ ]%
Fixtures and fittings [ ]%
Motor vehicles [ ]%
Immovable assets and improvements to them [ ]%
[Schedule 7: Deferred Consideration][(Clause 1.1, 3.1.3, 3.2.3)
1. In this Schedule where the context so admits the following expressions have the following meanings:
“Auditors” the auditors for the time being of the Company
“Group” as defined in Section 474(1) of the Companies Act 2006
“Combined Operations” the business and undertakings currently carried on at the date of this Agreement by the Company and the Purchaser respectively, irrespective of the entity/ies who may after Completion from time to time come to carry them on
2. Subject to paragraphs 6 and 7 of this Schedule, the Purchaser must pay to the Vendors the Deferred Consideration in the following amounts in accordance with paragraph 5 of this Schedule:
Period in respect of which Profit Before Tax is calculated
Date payable Amount
[ ]% of Profit Before Tax[ ]% of Profit Before Tax[ ]% of Profit Before Tax
3. The Profit Before Tax means the profits (less losses) as shown by the management accounts of the Combined Operations for each period stated in the above table, such accounts to be presented to, and approved by the Purchaser’s Audit Committee Accounts Review Panel and prepared in accordance with the Management Accounting rules of the Purchaser and the Finance Manual of the Purchaser Group at the date hereof, provided that they shall be adjusted so far as necessary to take account of the following matters:
3.1 no Taxation shall be deducted;
3.2 profits and losses shall be calculated after exceptional items and before extraordinary items (as defined in Financial Reporting Standard number 3 adopted by the Accounting Standards Board);
3.3 business rationalizations, redundancy and mergers costs in relation to actions planned before [ ] shall not be deducted;
3.4 any profit or loss on the disposal of any fixed assets shall be excluded;
3.5 the effects, including any increased depreciation charges, of any revaluation of any fixed assets shall be excluded;
3.6 any goodwill write-off relating to the acquisition of the Company by the Purchaser shall not be charged;
3.7 unless agreed in writing between the Purchaser and the Vendors there shall be excluded any charges in excess of £[ ] per annum made by any Group Company in respect of management or administration services as provided to the
Company at the date hereof, other than any charges incurred in respect of compliance with legal obligations;
3.8 an inter-company interest charge will be levied on the net inter-company debt between the Purchaser and the Company;
3.9 in respect of any transaction between any Group Company and the Company which is not at arms’ length, there shall be substituted terms which are at arms’ length and “transaction” shall include without limitation:
3.9.1 the lending or borrowing of money, and/or being party to any bank netting arrangement for the purposes of calculating interest;
3.9.2 the payment of remuneration or fees to any person who does not work full-time on the affairs of the Company;
3.9.3 the granting of assistance and facilities, including the secondment of employees and the sharing or leasing of premises;
3.10 any expenses for which the Company is liable but which are gratuitously met by the Vendors (or any person who is connected with the such Vendors as defined in section 839 ICTA) shall be deducted;
3.11 any liabilities in respect of any act or omission of the Company prior to Completion (otherwise than in the ordinary course of trading) shall be excluded;
3.12 any other adjustment as may be agreed in writing between the Vendors and the Company.
4. The Purchaser must procure that:
4.1 as soon as reasonably practical following the end of each period in respect of which the Profit Before Tax is to be calculated the Company will prepare and deliver to the Vendors a calculation of Profit Before Tax for the relevant year showing the application of the above provisions of this Schedule. The Vendors and the Purchaser will then endeavour in good faith to agree in writing the amount of Profit Before Tax. In the absence of agreement between the Vendors and the Purchaser as above within 15 Business Days after the Purchaser’s delivery of each such calculation, the Vendors may by notice in writing require the Profit Before Tax for the year in question to be reviewed and reported upon by the Independent Accountant (whose costs shall be paid as he or they shall direct and shall act as expert (and not as arbitrator) in connection with the giving of such report, which shall be binding except in the case of manifest error); and
4.2 the Vendors shall have the right to such access to and copies (at their own expense) of the books and accounts of the Company and such other relevant information as will be requested by the Vendors to enable him to assess calculations referred to in paragraph 4.1
5. The Deferred Consideration in respect of each year will be paid in cash to the Vendors within 30 days of the date for payment specified in the table on paragraph 2 above or (if later) within 10 Business Days of the agreement as to, or determination of, the Deferred Consideration.
6. The payment of the Deferred Consideration referred to in paragraph 2 of this Schedule is conditional upon the Vendors being employed by a company within the Purchaser’s Group or
having ceased to be so employed in circumstances where they were a Good leaver.
7. In the event that any of the Vendors are not employed by a company within the Purchaser’s Group at the relevant times referred to in paragraph 2 in circumstances where they were a Bad Leaver the remaining Vendor(s) shall be entitled to the Deferred Consideration which remains to be paid by the Purchaser in the proportions set out in Schedule 1 and the Vendor(s) who is/are no longer employee(s) of a company within the Purchaser’s Group in circumstances where they were a Bad Leaver shall forfeit their share of the Deferred Consideration. For the avoidance of doubt the proportion of the Deferred Consideration which would otherwise have been paid to a Bad Leaver shall be forfeit and no longer payable by the Purchaser.
8. In paragraphs 6 and 7 above:
8.1 “Good Leaver” refers to a Vendor (the “Leaver”) who ceases to be an employee of a company in the Purchaser’s Group where such cessation occurs as a result of wrongful dismissal or unfair dismissal, redundancy, death, retirement or Serious Ill Health, save that where such cessation occurs in circumstances where any Vendor has voted in favour of such cessation the Leaver shall not be a Good Leaver (whether such cessation was wrongful or unfair dismissal or for any other reason);
8.2 “Bad Leaver” refers to a Vendor who ceases to be a employee of a company in the Purchaser’s Group and who is not a Good Leaver;
8.3 “Serious Ill Health” means an illness or disability certified by a general medical practitioner as rendering the departing employee permanently incapable of carrying out his role as an employee of the Purchaser’s Group and shall be deemed to include dismissal under the provisions of Clause [ ] of the Service Agreement;
8.4 for the purpose of this paragraph 8 the date upon which a Vendor ceases to hold employment as described therein shall be:
8.4.1 where a contract of employment is terminated by the employer by giving notice to the employee of the termination of the employment, the date of that notice (whether or not a payment is made by the employer in lieu of all or part of the notice period required to be given by the employer in respect of such termination);
8.4.2 where a contract of employment is terminated by the employee by giving notice to the employer of the termination of the employment, the date of that notice;
8.4.3 save as provided in paragraph 8.4.1 where an employer or employee wrongfully repudiates the contract of employment and the other accepts that the contract of employment has been terminated, the date of such acceptance;
8.4.4 where a contract of employment is terminated under the doctrine of frustration, the date of the frustrating event; and
8.4.5 where a contract of employment is terminated for any reason other than in the circumstances set out in paragraphs 8.4.1 to 8.4.5 above, the date on which the action or event giving rise to the termination occurs.
9. The Purchaser will be entitled to deduct from the Deferred Consideration due to a Vendor under this Schedule the amount of any Settled Claim which may exist at the date upon which
the Deferred Consideration falls due to be paid to such Vendor. A “Settled Claim” is any claim whatsoever under this Agreement which is admitted or agreed by the Vendor or awarded by a court or tribunal (being an award or determination in respect of which all rights of appeal have been exhausted or have expired).
10. No Deferred Consideration shall be payable in respect of the years ending [ ] unless Profit Before Tax for that year shall be 5% or more of the turnover of the Combined Operations for that year.
11. The Purchaser undertakes to the Vendors that during the period commending on Completion and ending on [ ] the Purchaser will act in good faith so as to procure so far as is lawful that no act or omission on the part of the Company shall take place where such act or omission is intended by the Company to deliberately avoid or reduce the Deferred Consideration unless appropriate adjustments are made in the calculation of Profit Before Tax to exclude any profit or loss incurred by the Purchaser as a result of such breach.
SIGNED AS A DEED AND DELIVERED by [Vendor] in the presence of:
SIGNED AS A DEED for and on behalf of [PURCHASER] PUBLIC LIMITED COMPANY / LIMITED in the presence of:
}}}}
Director
Director/Secretary
SIGNED AS A DEED for and on behalf of [GUARANTOR] PUBLIC LIMITED COMPANY / LIMITED in the presence of:
}}}
Director
Director/Secretary
Additional Provisions
/tt/file_convert/55cf91ee550346f57b91e4af/document.docDraft 0.2/10 September 2004
OPERATION OF THE BUSINESS AFTER COMPLETION
1. OPERATION OF THE BUSINESS
After Completion and until [the first anniversary of Completion]:
1.1 the Business will be managed from [address];
1.2 the Business will continue to be managed with substantially the same accounts
department, systems and management controls in place as the date of this Agreement;
1.3 the Purchaser must use its best endeavours to procure that the Business is carried on
in good faith and in the normal course and on normal commercial forms and does not
do anything which is not of a routine nature;
1.4 the Purchaser must procure that the Business is run as a separate entity and that no
member of the Purchaser’s Group carries out any of the business normally carried out
by the Company and the Business.
2. DAY-TO-DAY MANAGEMENT
The Purchaser will have responsibility for the day-to-day management of the Business,
except that the following matters will require the prior approval of the Vendors:
2.1 the granting or acceptance of any loans, borrowings, mortgages and guarantees in
relation to the Business or over the assets of the Business involving any sum in
excess of £[ ];
2.2 the implementation of strategic business plans or operating budgets other than those
approved by the Vendors;
2.3 the formation of subsidiaries or joint ventures or profit sharing arrangements with
third parties;
2.4 changing of the nature of the Business or any geographical expansion of the
Business;
2.5 connecting or settling of litigation in excess of £[ ];
2.6 changing the accounting policies;
2.7 the employment or removal of any senior management;
2.8 the waiver or failure to enforce rights of the Business under any material contracts;
2.9 entry by the Business into any material contracts involving sums in excess of £
[ ]; or
2.10 incurring any capital expenditure exceeding £[ ] or entering into any commitment
to do so.
3. PURCHASER’S UNDERTAKINGS
3.1 The Purchaser undertakes with the Vendors that until the [first] anniversary of
Completion it will:
3.1.1 not alter any of the provisions of or terminate [the Consultancy
Agreement/Service Agreement];
3.1.2 not sell, transfer, licence or otherwise dispose of, otherwise than in the
ordinary course of business, any material part or parts of the Business or the
assets of the Business;
3.1.3 provide sufficient working capital to enable the Business to achieve a
turnover of £[ ];
3.1.4 permit [ ] and all senior management to devote substantially the
whole of their time and attention required of them pursuant to the
[Consultancy Agreement and to their Service Agreements] to the Business
and will not require them to make their services available to other members
of the Purchaser’s Group to the extent that it would materially conflict with
their duties as executives of the Purchaser or would otherwise conflict with
the above provisions of this clause;
3.1.5 take all reasonable steps and give all reasonable assistance to enable the
Vendor to maximise the [Deferred Consideration] payable by the Purchaser
to the Vendor;
3.1.6 that the annual accounts of the Company shall be prepared in accordance
with generally accepted accounting principles and standards applicable in
Ireland;
3.1.7 (save where their fiduciary obligations as advised to the directors of the
Company require otherwise) not to present any petition for the winding up of
the Company or take any steps to have the Company would up or to have an
administrator or receiver appointed thereto to enter into any composition or
scheme or arrangement with its creditors (or any of them) within the meaning
of the Companies Acts; and
Escrow Account / Retention provisions for SSPA:
Add to Definitions:
“Claim” any claim by the Purchaser for breach of the Warranties and/or under the Tax Covenant and/or under the indemnities in Clause [11]
“Escrow Account” an interest-bearing deposit account with [Barclays] Bank plc to be opened in the joint names of the Vendors’ Solicitors and the Purchaser’s Solicitors (whose respective partners will be the sole persons authorised to operate such account), who will hold such account as stakeholders (but interest will accrue on such account for the benefit of the relevant party)
“Retention” see Clause 1.2.1.2
Amend Clause 3:
1. Purchase Consideration
1.1 [ ]
1.2 The Consideration is payable as follows:
1.2.1 On Completion:
1.2.1.1 £[ ] in cash;
1.2.1.2 £[ ] (the “Retention”) into the Escrow Account;
1.2.2 [ ]
[ ]
1.3 [The Purchaser may deduct and set off against any of the Consideration any sums due from the Vendors to the Purchaser [or to the Guarantor] under any provision of this Agreement or otherwise.] [[Except as provided for in Clause 2 (Escrow Account), Ppayment of any of the Consideration must not be made subject to any deduction or set off, whether of sums due or allegedly due from the Vendors to the Purchaser [or the Guarantor] under any provision of this Agreement or otherwise.]
New Clause [12]:
2. Escrow Account
2.1 If on or before the [first] anniversary of Completion the Purchaser gives notice of a Claim in accordance with Clause [10.7] (notice of Claims), the estimated amount of the Claim (as stated in such notice) will be retained in the Escrow Account until it has been agreed or finally determined or adjudged to be payable. No withdrawal of that amount may be made from the Escrow Account pending the settlement or final determination or adjudication of such Claim.
2.2 The Vendors and the Purchaser hereby irrevocably instruct the Vendors’ Solicitors
and the Purchaser’s Solicitors to make payments out of the Escrow Account as follows:
2.2.1 As soon as possible following the settlement or final determination or adjudication of a Claim in respect of which a sum is being retained in the Escrow Account, to pay to the Purchaser a sum equal to the amount for which the Claim is settled or for which judgement is obtained or the balance standing to the credit of the Escrow Account (whichever is less);
2.2.2 As soon as possible after the [first] anniversary of Completion, to pay to the Vendors’ Solicitors the balance standing to the credit of the Escrow Account less the aggregate amount of outstanding estimated Claims by the Purchaser being retained in accordance with Clause 2.1;
2.2.3 As soon as possible following the settlement or final determination or adjudication of all outstanding Claims in respect of which sums were being retained in the Escrow Account after the [first] anniversary of Completion and any payments in respect of those Claims to the Purchaser in accordance with Clause 2.2.1 having been made, to pay to the Vendors’ Solicitors any balance standing to the credit of the Escrow Account;
2.2.4 Payments of principal out of the Escrow Account are to carry interest accrued on such amounts at the rate(s) earned on the Escrow Account from the date of deposit until the date of withdrawal.
2.3 If the amount for which a Claim is settled or for which judgement is obtained is greater than the amount paid to the Purchaser out of the Escrow Account in respect of the Claim, the [Vendors][Warrantors] will, subject to Clause 10 (Limitation of Liability), be liable to pay the balance to the Purchaser forthwith.
2.4 Any exercise by the Purchaser of its rights under this Clause will be without prejudice to the exercise of any other rights it may have under this Agreement or otherwise.