Documenti di Didattica
Documenti di Professioni
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200
Draft/
Kidd Rapinet
14 & 15 Craven Street
London
WC2N 5AD
Tel: 020 7925 0303
Fax: 020 7925 0334
www.kiddrapinet.co.uk
Ref: 1/PRW/CP/CLT1/1
/var/www/apps/conversion/tmp/scratch_4/263348076.doc
2.
3.
PURCHASE CONSIDERATION................................................................................................................3
4.
5.
6.
COMPLETION.............................................................................................................................................3
7.
8.
WARRANTIES..............................................................................................................................................3
9.
TAX COVENANT.........................................................................................................................................3
10.
LIMITATION OF LIABILITY...............................................................................................................3
11.
[INDEMNITIES].......................................................................................................................................3
12.
13.
14.
15.
RESTRICTIVE AGREEMENT..............................................................................................................3
16.
FURTHER ASSURANCE........................................................................................................................3
17.
GENERAL.................................................................................................................................................3
CORPORATE DETAILS..............................................................................................................................3
B.
GOOD STANDING.......................................................................................................................................3
C.
D.
ACCOUNTS...................................................................................................................................................3
E.
FINANCE.......................................................................................................................................................3
F.
G.
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.
Q.
[MILLENNIUM COMPLIANCE]..........................................................................................................3
R.
EURO COMPLIANCE................................................................................................................................3
S.
[INDUSTRY-SPECIFIC WARRANTIES]..................................................................................................3
T.
GENERAL.....................................................................................................................................................3
2.
COVENANT..................................................................................................................................................3
3.
EXCLUSIONS...............................................................................................................................................3
4.
CONDUCT OF CLAIMS.............................................................................................................................3
5.
6.
7.
8.
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
Auditors
Business
Business Day
CA
CAA
[Certificates of Title
Companies Acts
Company
Completion
[Completion Accounts
Computer Systems
Consideration
[Consideration Shares
Dangerous Substance
[Deferred
Consideration
Disclosure Letter
Environmental Law
Environmental Licence
[FA
Finance Act]
2
Group
[Group Companies
[Guarantor[s]
HMRC
ICTA
ITEPA
Independent
Accountant
Intellectual
Rights
Property
[ITA
Last Accounts
[Loan Notes
Planning Acts
Propert[y] [ies]
Purchaser
Purchasers
Accountants
Messrs. [ ] of [ ]
Purchasers Solicitors
Recognised Investment
Exchange
Security Interest
[Service Agreement]
[Consultancy
Agreement]
Shares
Taxation
Taxation Authority
[Taxation Statutes
Tax Covenant
[TCGA
TMA
[VATA
Vendors Accountants
Messrs. [ ] of [ ]
Vendors
Vendors Solicitors
Messrs. [ ] of [ ]
Warranties
Warrantors
1.2
1.3
1.4
1.5
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];
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
1.10
2.
3.
1.11
1.12
1.13
Obligations on the part of more than one person are joint and several;
1.14
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.
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.
Purchase Consideration
3.1
3.2
The purchase consideration for the Shares (the Consideration) is [[ ]] [the aggregate
of the following:
3.1.1
3.1.2
[ ]; and
3.1.3
[the Deferred Consideration (if any), calculated in accordance with Schedule 7].
3.2.2
On Completion:
3.2.1.1
[ ] in cash;
3.2.1.2
[ ] in Consideration Shares;
3.2.1.3
[ ] in Loan Notes;
[ ] in cash;
3.2.2.2
3.2.3
4.
[ ] in Consideration Shares;]
3.3
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.]
4.2
[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
4.1.2
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;]
4.1.4
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
4.1.7
4.1.7.2
[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
7
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.
5.
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 Purchasers 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.]
[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
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.
8
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
5.5.4
5.5.5
5.5.6
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;
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;
9
[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
10
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
6.
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.]
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
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
6.3.4
6.3.5
6.3.6
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;
11
6.3.9
[duly executed deeds of waiver in agreed terms, waiving any indebtedness of the
Company to the Vendors and their Associates;]
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
6.4.2
6.4.3
6.4.4
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
6.7
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
6.6.4
the Purchasers Accountants give the report for the purposes of CA s156(4)
referred to in Clause 4.1.4;
6.6.5
6.6.6
6.6.7
12
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
6.10
6.9.1.2
6.9.1.3
6.9.1.4
6.9.1.5
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
13
such liability.]
7.
[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
7.1.2
certify in writing the amount of the Net Asset Value as shown by the Completion
Accounts;
7.1.3
7.2
7.3
Otherwise the Vendors and Purchaser must use their respective best endeavours to
procure that the Purchasers Accountants and the Vendors Accountants reach
agreement upon the appropriate adjustments to the draft Completion Accounts to meet
the objections of the Purchasers 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 Accountants 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
7.5.2
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
14
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
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
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
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
15
9.
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.]
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.
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
10.3
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.
16
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
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
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
17
Nothing in this Clause 10 derogates from the Purchasers 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
18
Agreement.
11.
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.]
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).
[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
12.
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
19
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:
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 Vendors Group
fully indemnified against any claim for Taxation recoverable from the Vendor or any
member of the Vendors 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.
13.
12.4
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.]
[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
20
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
14.
15.
The Guarantors liability will not in any way be diminished or affected by the 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.]
[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 Guarantors 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.]
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] Companys 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
21
15.2
16.
15.1.2.4
15.1.2.5
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.
Further Assurance
16.1
Each of the parties must do and execute, and use its best endeavours to procure any
other necessary person under its control to do and execute, all such further acts, things,
22
deeds and documents as may be necessary to give effect to the terms of this Agreement.
16.2
17.
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.
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
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
addressees 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
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
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
EXECUTED as a deed in [two] originals on the date at the head of this Agreement.
24
(2)
(3)
Shares
%age entitlement to
Consideration
[Name]
[Address]
[Name]
[Address]
[Name]
[Address]
Totals:
[ ]%
[ ]%
[ ]%
0.00
100%
Registered No:
Date of Incorporation:
Type of Company:
Registered Office:
Main Objects:
Directors:
Secretary:
Authorised Capital:
Issued Capital:
Shareholders:
Auditors:
Accounting Reference Date:
Registered No:
Date of Incorporation:
Type of Company:
Registered Office:
Main Objects:
Directors:
Secretary:
Authorised Capital:
Issued Capital:
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 preemption 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
A.7.2
A.7.3
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.7.4
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
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
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
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
C.
D.
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
B.9
The Company is empowered and duly qualified to carry on business in all jurisdictions
in which it now carries on business.
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
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.]
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
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
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
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-inprogress 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
give a true and accurate view of the profits, assets and liabilities of the
Companys 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
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
D.5.6
E.
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.
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
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
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
E.13
F.
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.
[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
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.
G.
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.]
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
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
only applies where dual resident investment company within the group has losses
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, 559567, 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.
G.2.6
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
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
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.2.15 To make any claim (including a supplementary claim), disclaimer or election for
relief under any Taxation Statute;
G.2.16 To appeal against any assessment or determination relating to Taxation; or
G.2.17 To apply for a postponement of Taxation.
G.2.18 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
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.3.2
G.3.3
G.3.5
section 176 or 177, 177A and 177B and Schedules 7A and 7AA TCGA
(depreciatory transactions).
G.3.6
G.3.7
G.3.8
G.3.9
G.4
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
G.4.8
G.4.9
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.4.17 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.4.18 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.4.19 Non resident companies
G.4.20 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.4.21 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.4.22 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.4.23 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.4.24 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.4.25 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.4.26 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.4.27 The Company has not within the last six years discontinued any trade.
G.4.28 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.4.29 No claim has been made by the Company under sections 584, 585 or 723 ICTA
or under section 279, 279A and 279B TCGA.
G.4.30 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.4.31 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.4.32 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.4.33 section 112 FA 1993 does not and will not apply so as to restrict any deduction
in respect of employers contributions by the Company to an exempt approved
pension scheme.
G.4.34 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.4.35 The Company is not an investment company as defined by section 130 ICTA.
G.4.36 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.4.37 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
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
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 Companys 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
G.7
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
G.6.5
G.6.6
G.6.7
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.6.8
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.6.9
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.
The Company has not made a claim under TCGA sections 23 (Receipt of
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
G.8.4
G.8.5
G.8.6
G.8.7
G.8.8
G.8.9
The Company has not issued any relevant discounted securities (as defined in
Schedule 13 FA 1996).
G.8.10 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
G.10
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
G.9.5
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.9.6
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.9.7
The Company has not received any capital distribution to which the provisions
of section 189 TCGA could apply.
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
Groups8
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.11.4 group relief; or
G.11.5 any amount of surplus advanced corporation tax; or
G.11.6 a refund of Taxation within section 102 FA 1989;
which involves any company that is not a member of the Group Companies.
G.11.7 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.11.8 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.11.9 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.11.10 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.11.11 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.11.12 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.11.13 No Group Company owns an asset which was acquired from another company,
which:
G.11.14 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.11.15 owned that asset otherwise than as trading stock within section 173 TCGA 1992
(transfers within a group: trading stock).
G.11.16 No 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 31 st 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
particular:
G.13.13the identity (including in the case of leasehold property, the terms of years), date
of acquisition and cost of the asset; and
G.13.14the proportion and amount of input tax for which credit has been claimed (either
provisionally or finally in a tax year and stating which).
G.13.15The 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.13.16The Company is not, nor has it agreed to become:
G.13.17an agent for any person for the purposes of section 47 VATA, or
G.13.18a VAT representative for any person for the purposes of section 48 VATA.
G.13.19The 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.13.20Any 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.13.21The 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.13.22No 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
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.14.9 the identity (including in the case of leasehold property, the terms of years), date
of acquisition and cost of the asset; and
G.14.10the proportion and amount of input tax for which credit has been claimed (either
provisionally or finally in a tax year and stating which).
G.14.11 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.14.12No 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.14.13No Group Company is, or has agreed to become:
G.14.14an agent for any person for the purposes of section 47 VATA; or
G.14.15a VAT representative for any person for the purposes of section 48 VATA.
G.15
tax.
G.16
G.16.13The 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
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
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.21.6 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.21.7 Regulation 3 or 4 of The Local Currency Elections Regulations 1994 and such
election is still valid.]
G.21.8 [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.21.9 [Company owning deep discount securities etc: The Company did not, before 1
April 1996, issue or own any:
G.21.10deep discount securities (section 57 CTA 1988 and Schedule 4);
G.21.11 deep gain securities (Schedule 11 FA 1989);
G.21.12convertible securities (section 56 FA 1990 and Schedule 10).]
G.21.13[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.21.14[PH TO CHECK: The Company has made no election under section 34 and
Schedule 6 FA 1983 or under Schedule 2 TCGA 1992.]
G.21.15[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.21.16[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.21.17[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
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
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
H.3
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
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
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
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 Companys
obligations under any such agreement or arrangement.
H.13
H.14
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.14.11 involves 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
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
H.25
No one is entitled to receive from the Company any finders 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;
I.
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.
Properties
I.1
Title
I.1.1
I.1.2
I.1.3
I.1.4
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.1.5
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.1.6
The [Company is][Group Companies are] the legal and beneficial owner[s] of
the Propert[y][ies].
I.1.7
I.1.8
I.1.9
I.1.10 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.3
I.4
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
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.
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
I.3.5
I.3.6
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.3.7
all agreements made under the Highways Act 1980 Section 38 with respect to
the Properties.
I.3.8
I.3.9
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.
Statutory Obligations
I.4.1
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.5
I.6
I.7
I.4.2
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.
Adverse Orders
I.5.1
I.5.2
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
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.8
I.9
I.7.2
I.7.3
The information in the Disclosure Letter with respect to such insurance policies
is accurate in all respects.
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
I.8.5
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).
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
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.9.4
I.9.5
I.9.6
I.9.7
I.9.8
I.9.9
I.9.10 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
J.
Preliminary Enquiries
I.11.1
All the replies given to the preliminary enquiries raised by the Purchasers
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
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
K.
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.
Employment
K.1
[The Company has no, and never has had any, employees.]
K.2
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 employees, workers or officers rate of
remuneration or enhanced emoluments or pension benefits.
K.7
K.8
The salaries and other benefits of all employees, workers and officers of the Company
have been paid up to Completion.
K.9
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
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
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
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;
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
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
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 exgratia 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 todays 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.]
L.6
[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
L.5.4
Vendors Pension Scheme means [name] established by the interim trust deed
dated [date] and made between [parties].
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
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
L.7.2
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
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
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 dataprocessing 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
the payment or transfer has not been made or has not been made in full;
L.8.4
L.8.5
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 members remuneration used for determining benefits under the Vendors
Pension Scheme will be increased in respect of the period from Completion to
the members 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
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 Companys 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 Companys 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 todays date.
N.
O.
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.
Insurances
N.1
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
Intellectual Property
O.1
O.2
No Intellectual Property Rights are required for the proper carrying on of the
Companys business as carried on at todays 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 Companys business as carried on at todays 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 todays
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
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 Companys 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.
The Company has duly complied with all relevant requirements of the Data Protection
Act 1998 including:
P.1.1
P.1.2
P.1.3
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 Companys 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
Q.
R.
[Millennium Compliance]
Q.1
Q.2
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.]
Euro Compliance
R.1
S.
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.
[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.1.2
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.1.3
S.1.4
The landlord, proprietor, keeper, or manager of the Companys 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.1.5
The Property has been registered as a hotel by the appropriate tourist board
established under the Development of Tourism Act 1969.
S.1.6
S.1.7
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.1.8
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.1.9
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.1.10 No billets have been provided, or required to be provided, at the Property for
any members of Her Majestys forces or their vehicles pursuant to Part IV of the
Army Act 1955, Part IV of the Air Force Act 1955 or otherwise.
S.1.11 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.1.12 The Property is registered under the Food Premises (Registration) Regulations
1991 (SI1999/2825);
S.1.13 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.1.14 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.1.15 There are disclosed in the Disclosure Letter, with specific reference to this
Warranty S.1.15, 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.1.16 All the Licences are valid and subsisting;
S.1.17 No other licences are required to carry on the hotel business presently carried on
at the Property;
S.1.18 The Licences are not subject to any restrictions, conditions or limitations that are
not disclosed in the Disclosure Letter;
S.1.19 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.1.15 or
any related legislation;
S.1.20 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.1.21 None of the Licences is subject to any mortgage, lien, charge or encumbrance;
S.1.22 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
T.2
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
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 crossreferenced against each (as applicable):
Claim
Due Date
Event
Liability
(i)
(ii)
(iii)
(iv)
(v)
or
1.1.3
1.1.4
(vi)
(vii)
(viii)
Payment of
Taxation
Relevant Amount
Relevant Relief
Relief
the combined result of two or more Events the first of which took
place on or before Completion;
1.1.3.2
1.1.5
1.2
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
1.2.3
1.2.4
1.2.5
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
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.
Covenant
2.1
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
2.2
2.1.3
2.1.4
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:
2.3
3.
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.
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.
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
4.
3.3.1
3.3.2
3.3.3
3.3.4
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.
Conduct of Claims
4.1
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
5.
5.2
For the purposes of paragraph 5.1 the Company is deemed to discharge a Claim:
5.3
6.
7.
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.
5.2.1
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.
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 [Purchasers] 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.
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
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.
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
8.
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
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
the Purchaser must procure that the Company promptly notifies the [Vendors]
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
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
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
[ ]%
[ ]%
Motor vehicles
[ ]%
[ ]%
2.
In this Schedule where the context so admits the following expressions have the following
meanings:
Auditors
Group
Combined Operations
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 Date payable
which Profit Before Tax
is calculated
Amount
[
[
[
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 Purchasers 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
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
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;
4.
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
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.
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 Purchasers 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.
7.
In the event that any of the Vendors are not employed by a company within the Purchasers
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 Purchasers 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.
8.2
8.3
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
8.4.2
8.4.3
8.4.4
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.
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:
Director
Director/Secretary
Director
Director/Secretary
Additional Provisions
/var/www/apps/conversion/tmp/scratch_4/263348076.doc
Draft 0.2/10 September 2004
1.
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 Purchasers 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
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
];
2.6
2.7
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
to do so.
3.
PURCHASERS UNDERTAKINGS
3.1
The Purchaser undertakes with the Vendors that until the [first] anniversary of
Completion it will:
3.1.1
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
3.1.4
permit [
];
] and all senior management to devote substantially the whole
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
Escrow Account
Retention
Amend Clause 3:
1.
Purchase Consideration
1.1
[]
1.2
1.2.2
On Completion:
1.2.1.1
[ ] in cash;
1.2.1.2
[]
[]
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.]
Escrow Account
2.1
2.2
The Vendors and the Purchaser hereby irrevocably instruct the Vendors Solicitors and
the Purchasers Solicitors to make payments out of the Escrow Account as follows:
2.2.1
2.2.2
2.2.3
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.