DATED January 2000
---------------------
AGREEMENT FOR THE
ACQUISITION OF THE ISSUED
SHARE CAPITAL OF
Ilios Travel Limited
BY
LEISURE TRAVEL GROUP LIMITED
XxXxxxxx, Xxxxxxxxxx & Xxxx
City Tower B Level Four
00 Xxxxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Tel: 0000 000 0000
Fax: 0000 000 0000
CONTENTS
CLAUSE PAGE
------ ----
1. INTERPRETATION
2. AGREEMENT FOR SALE
3. PURCHASE CONSIDERATION
4. COMPLETION
5. WARRANTIES AND UNDERTAKINGS
6. RESTRICTIVE AGREEMENT
7. GENERAL
SCHEDULE 1 Shareholders
SCHEDULE 2 Details of the Company
SCHEDULE 3 The Property
SCHEDULE 4 Warranties
SCHEDULE 5 Deed of Indemnity
SCHEDULE 6 Vendor's Protection
SCHEDULE 7 Shareholders' Undertaking
2
THIS AGREEMENT is made on January 2000
----------------
BETWEEN:
(1) NITA EUGENIE XXXX XXXXXXXX of Stylehurst Paddock, Xxxxxxxx Xxxx, Xxxxx
Xxxxxx, Xxxxxx, Xxxxxx XX0 0XX (the "Vendor"); and
(2) LEISURE TRAVEL GROUP LIMITED a Company incorporated in England of
Xxxxxxxxx Xxxxx, 00Xxxxxxxx Xxxxx, Xxxxxx XX0 (xxx "Purchaser")
RECITALS
(A) Details relating to the Company and it Subsidiaries are set out in
Schedule 2.
(B) The Vendor is not the beneficial owner of all of the Shares but will
agree in this Agreement to procure the transfer thereof to the Purchaser.
(C) The Shares are registered in the names of the Shareholders as set out in
Schedule 1.
(D) The Vendor is willing to sell, or procure to be sold, the Shares to the
Purchaser on the terms and subject to the conditions set out in this
Agreement free from Encumbrances.
(E) The Vendor hereby makes representations to the Purchaser in the terms of
the Warranties to the intent that the Purchaser should rely on such
Warranties in entering into this Agreement.
THE PARTIES AGREE AS FOLLOWS:-
1. INTERPRETATION
1.1 The following provisions shall have effect for the interpretation of this
Agreement.
1.2 The following words, expressions and abbreviations shall, unless the
context otherwise requires, have the following meanings:-
"Activities" means any activity, operation or process carried
out by the Company at the Property whether or not
currently owned, occupied or used by the Company;
"Agreed Form" means the form agreed between the parties on or
prior to the Completion of this Agreement and
initialled for the purposes of identification by
their respective solicitors;
"Business Day" means a day (other than Saturday or Sunday) on
which banks generally are open for business in
London;
3
"CA" means the Companies Xxx 0000;
"CAA'90" means the Capital Xxxxxxxxxx Xxx 0000;
"CAA" means the Civil Aviation Authority;
"Completion" means the completion of the sale and purchase of
the Shares in accordance with clause 5;
"Completion Date" shall have the meaning assigned to it in clause 4;
"Company" means Ilios Travel Limited;
"Deed of Indemnity" means a deed of indemnity in the form set out in
Schedule 5;
"Disclosure Letter" means a letter at the Completion Date together
with the attachments thereto addressed by the
Vendor's Solicitors on behalf of the Vendor to the
Purchaser's Solicitors on behalf of the Purchaser
disclosing exceptions to the Warranties;
"Distribution" means a distribution as defined by sections 209 to
211 (inclusive) of the ICTA and section 418 of the
ICTA;
"Encumbrances" means any mortgage, charge (whether fixed or
floating), pledge, lien, security interest or
other third party right or interest (legal or
equitable) over or in respect of the relevant
asset, security or right;
"Environment" means any and all living organisms (including
without limitation, man ecosystems, property and
the media of air (including without limitation air
in buildings, natural or manmade structures, below
or above ground) water, (as defined in Section
104(1) of the Water Resources Xxx 0000 and within
drains and sewers) and land (including under any
water as described above and whether above or
below surface);
"Environmental means any consent, approval, permit, licence,
Consent" order, filing, authorisation, exemption,
registration, permission, reporting or notice
requirement and any related agreement required
under any Environmental Law;
"Environmental Laws" means all international, EU, national, or local
statutes, which for the avoidance of doubt shall
include section 57 and schedule 22 of the
Environment Xxx 0000 and the guidance and
regulations adopted under those provisions,
by-laws, orders,
4
regulations or other law or subordinate
legislation or common law, all orders, ordinances,
decrees or regulatory codes of practice,
circulars, guidance notes and equivalent controls
concerning the protection of human health or which
have as a purpose or effect the protection or
prevention of harm to the Environment or health
and safety which are binding in relation to the
Property and/or upon the Company in the relevant
jurisdiction in which the Company has been or is
operating on or before Completion;
"ICTA" means the Income and Corporation Taxes Xxx 0000;
"ITA" means the Inheritance Tax Xxx 0000 and any
reference thereto shall include any enactment
repealed or modified thereby as if section 275 of
the ITA applied in like manner to this Agreement;
"Last Accounts Date" means 31st October 1999 (being the date to which
the Principal Accounts have been prepared);
"Planning Acts" means the Town and Country Planning Acts for the
time being in force;
"Principal Accounts" means the audited profit and the loss accounts for
the year ended on the Last Accounts Date and the
audited balance sheet of the Company as at the
Last Accounts Date including the audited balance
sheet as at that date and the audited profit and
loss account for that year and the directors'
report and notes;
"Property" means the property of the Company shortly
described in Schedule 3;
"Purchaser's
Solicitors" means XxXxxxxx, Xxxxxxxxxx & Xxxx, Xxxx Xxxxx X
Xxxxx 0, 00 Xxxxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX;
"Shareholders" means the persons whose names are listed in
Schedule 1 as holders of the Shares;
"Shareholders'
Undertaking" means the undertaking under seal of even date
herewith executed by the Shareholders and set out
in Schedule 7;
"Shares" means the whole of the issued and allotted share
capital of the Company;
5
"subsidiary" means a subsidiary company as the same is defined
in s.736 CA;
"Taxation" means all forms of taxation including:-
(a) any charge, tax, duty or levy upon income,
profits, chargeable gains or development
value, land, any interest in land or in any
other property, or documents or supplies or
other transactions;
(b) income tax, corporation tax, capital gains
tax, inheritance tax, value added tax, stamp
duty, stamp duty reserve tax, capital duty,
customs and other import duties, national
insurance contributions, general rates, water
rates or other local rates;
(c) any liability for sums equivalent to any such
charge, tax, duty, levy or rates or for any
related penalty, fine or interest;
"TGCA" means the Taxation of Chargeable Gains Xxx 0000
and any reference thereto shall include any
enactment repealed or modified thereby;
"VATA" means the Value Added Tax Xxx 0000;
"Vendor's Solicitors" means Xxxxx Xxxxxxx & Co, 0 Xxxxxx Xxxx, Xxxxxxxxx
XX00 0XX;
"Warranties" means the representations and warranties,
covenants and undertakings set out in Clause 6 and
Schedule 4.
"Warranty Claim" means any claim made by the Purchaser for breach
of any of the Warranties or any claim made by the
Company under the Deed of Indemnity;
1.3 References to "FA" followed by a stated year means the Finance Act of
that year.
1.4 Words, expressions and abbreviations defined in the Deed of Indemnity
shall have the same meanings in this Agreement and the Deed of Indemnity
shall apply to this Agreement.
1.5 References to the parties hereto include the respective successors in
title to the whole of their respective undertakings and, in the case of
individuals, to their respective estates and personal representatives.
6
1.6 References to persons shall include bodies corporate and unincorporated,
associations, partnerships and individuals. Words denoting the singular
shall include the plural and words denoting any gender shall include all
genders.
1.7 References to statutes or statutory provisions include references to any
orders or regulations made thereunder and references to any statute,
provision, order or regulation include references to that statute,
provision, order or regulation as amended, modified, re-enacted or
replaced from time to time whether before or after the date hereof
(subject as otherwise expressly provided herein) and to any previous
statute, statutory provision, order or regulation amended, modified,
re-enacted or replaced by such statute, provision, order or regulation.
1.8 Headings to clauses, paragraphs and descriptive notes in brackets
relating to provisions of taxation statutes are for information only and
shall not form part of the operative provisions of this Agreement and
shall be ignored in construing the same.
1.8 References to recitals, clauses and Schedules are to recitals to, clauses
of and Schedules to this Agreement. The recitals and Schedules form part
of the operative provisions of this Agreement and references to this
Agreement shall, unless the context otherwise requires, include
references to the recitals and the Schedules.
2. AGREEMENT FOR SALE
2.1 Subject to the terms and conditions of this Agreement with effect from
and including Completion, the Vendor shall sell or procure the sale of
with full title guarantee and the Purchaser shall purchase the Shares
free from all liens, charges and encumbrances and with all rights
attaching to them.
2.2 The Vendor hereby waive any pre-emption rights they may have in relation
to any of the Shares under the articles of association of the Company or
otherwise.
3. PURCHASE CONSIDERATION
3.1 The purchase consideration for the Shares shall be the sum
of(pound)325,000 (Three hundred and twenty five thousand pounds).
4. COMPLETION
4.1 Completion will, subject to clause 4.5, take place on or before 14th
January 2000 (the "Completion Date") at the offices of the Company when
all the transactions mentioned in the following sub-clauses shall take
place.
4.2 The Vendor shall deliver to the Purchaser:-
7
4.2.1 duly completed and signed transfers in favour of the Purchaser or
as it may direct in respect of the Shares together with the
relative share certificates;
4.2.2 duly completed and signed transfers in favour of the Purchaser or
as it may direct of all the Shares together with the relative
share certificates;
4.2.3 the Deed of Indemnity duly executed by the Vendor and the Company;
4.2.4 the Shareholders' Undertaking;
4.2.5 the resignation of the existing auditors of the Company confirming
that they have no outstanding claims of any kind and containing a
statement under CA s 394(1) that there are no such circumstances
as are mentioned in that section;
4.2.6 the statutory books of the Company complete and up to date and
their certificate of incorporation and common seals;
4.2.7 the title deeds relating to the Property;
4.2.8 the appropriate forms to amend the mandates given by the Company
to bankers;
4.2.9 written confirmation from the Vendor that there are no subsisting
guarantees given by the Company in favour of or on behalf of the
Vendor and that the Vendor will not be indebted to the Company or
vice versa.
4.3 Board meetings of the Company shall be held at which:-
4.3.1 such persons as the Purchaser may nominate shall be appointed
additional directors;
4.3.2 the transfers referred to in clauses 4.2.1 or 4.2.2 (as the case
may be) shall be approved (subject to stamping); and
4.3.3 the resignation referred to in clause 4.2.5 shall be submitted and
accepted.
4.4 Upon completion of the matters referred to in clauses 4.2 and 4.3 the
Purchaser shall deliver to the Vendor's Solicitors by a bankers draft
drawn on a London Clearing Bank or such other payment method as the
Vendor's solicitors may reasonably approve the sum of the consideration
referred to in Clause 3.1.
4.5 Completion shall be conditional upon the approval of this Agreement and
the transaction for which it provides by Ernst & Young in connection with
an issue of shares by the Purchaser in the USA. If such condition shall
not have been fulfilled before the Completion Date, this Agreement shall
be null and void unless prior to the Completion Date the parties shall
have agreed in writing to the contrary.
8
5. WARRANTIES AND UNDERTAKINGS BY THE VENDOR
5.1 The Vendor warrants to the Purchaser that:-
5.1.1 the Vendor has and will have full power and authority to enter
into and perform this Agreement and the Deed of Indemnity which
constitute or when executed will constitute binding obligations on
her in accordance with their respective terms;
5.1.2 the Shares will at Completion constitute the whole of the issued
and allotted share capital of the Company ;
5.1.3 there is, and at Completion will be, no pledge, lien or other
encumbrance on, over or affecting the Shares and there is, and at
Completion will be, no agreement or arrangement to give or create
any such encumbrance and no claim has been or will be made by any
person to be entitled to any of the foregoing;
5.1.4 the Vendor and the Shareholders will be entitled to transfer the
full legal and beneficial ownership of the Shares to the Purchaser
on the terms of this Agreement without the consent of any third
party;
5.1.5 the information in Schedule 2 is true and accurate in all
respects;
5.1.6 save as set out in the Disclosure Letter, the Warranties in
Schedule 4 are, to the best of the knowledge and belief of the
Vendor, true and accurate in all material respects at the date of
this Agreement;
5.1.7 the contents of the Disclosure Letter and all of the accompanying
documents are, to the best of the knowledge and belief of the
Vendor, true and accurate in all material respects and fully,
clearly and accurately disclose every matter to which they relate.
5.2 The Vendor undertakes in relation to any Warranty which refers to the
knowledge, information or belief of the Vendor, that she has made
relevant enquiries into the subject matters of that Warranty.
5.3 Each of the Warranties is without prejudice to any other Warranty and,
except where expressly stated otherwise, no clause contained in this
Agreement shall govern or limit the extent or application of any other
clause.
5.5 The rights and remedies of the Purchaser in respect of any breach of the
Warranties shall not be affected by Completion, or failing to exercise or
delaying the exercise of any right or remedy or by any other event or
matter whatsoever, except a specific and duly authorised written waiver
or release, and no single or partial exercise of any right or remedy
shall preclude any further or other exercise.
9
5.6 None of the information supplied by the Company or its professional
advisers prior to the date of this Agreement to the Vendor or her 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 Company, shall be deemed a representation,
warranty or guarantee of its accuracy by the Company to the Vendor, and
the Vendor waives any claims against the Company which they might
otherwise have in respect of it.
5.7 The Vendor shall 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.
5.8 The provisions set out in Schedule 5 shall have effect in relation to the
Vendor's liability under the Warranties, representations, undertakings
and indemnities contained or referred to herein or in the Deed of
Indemnity.
5.9 The Purchaser acknowledges that it has not been induced to enter into
this Agreement by any representation or warranty other than the
Warranties.
6. RESTRICTIVE AGREEMENT
6.1 For the purpose of assuring to the Purchaser the full benefit of the
businesses and goodwill of the Company, the Vendor undertakes by way of
further consideration for the obligations of the Purchaser under this
Agreement as separate and independent agreements that they will not in
competition with the Purchaser:-
6.1.1 at any time after Completion disclose to any person, or itself use
for any purpose, and shall use her best endeavours to prevent the
publication or disclosure of, any information concerning the
business, accounts or finances of the Company any of its clients'
or customers' transactions or affairs, which may, or may have,
come to her knowledge;
6.1.2 for a period of two years after Completion either on her own
account or for any other person directly or indirectly solicit,
interfere with or endeavour to entice away from the Company any
person who to its knowledge is now or has during the years
preceding the date of this Agreement been a client, customer or
employee of, or in the habit of dealing with, the Company;
6.1.3 for a period of two years after Completion, without the
Purchaser's prior written consent either alone or jointly with or
as manager, agent for or employee of any person, directly or
indirectly carry on or be engaged or concerned or interested in
any business similar to any business carried on by the Company at
the date of this Agreement.
10
7. GENERAL
7.1 No announcement of any kind shall be made in respect of the subject
matter of this Agreement unless specifically agreed between the parties.
Any announcement by either party shall in any event be issued only after
prior consultation with the other party
7.2 If this Agreement shall cease to have effect the Purchaser will release
and return to the Company all documents concerning it provided to the
Purchaser or its advisers in connection with this Agreement and will not
use or make available to any other person any information which it or its
advisers have been given in respect of the Company and which is not in
the public domain.
7.3 If any of the Shares shall at any time be sold or transferred, the
benefit of each of the Warranties may be assigned to the purchaser or
transferee of those shares who shall accordingly be entitled to enforce
each of the Warranties against the Vendor as if he were named in this
Agreement as the Purchaser.
7.4 This Agreement shall be binding upon each party's successors and assigns
and personal representatives (as the case may be) but, except as
expressly provided above, none of the rights of the parties under this
Agreement or the Warranties may be assigned or transferred.
7.3 Save where expressly otherwise provided, all expenses incurred by or on
behalf of the parties, including all fees or agents, representatives,
solicitors, accountants and actuaries employed by any of them in
connection with the negotiation, preparation or execution of this
Agreement shall be borne solely by the party who incurred the liability
and the Company shall not have any liability in respect of them.
7.4 Time shall be of the essence of this Agreement, both as regards the dates
and periods specifically mentioned and as to any dates and periods which
may by Agreement in writing between or on behalf of the Vendor and the
Purchaser be substituted for them.
7.5 Any notice required to be given by any of the parties under this
Agreement may be sent by post to the address of the addressee as set out
in this Agreement or to such other address as the addressee may from time
to time have notified for the purpose of this clause. Communications sent
by post shall be deemed to have been received two Business Days after
posting. In proving service by post it shall only be necessary to prove
that the communication was contained in an envelope which was duly
addressed and posted in accordance with this clause.
7.6 The operative law relating to this Agreement shall be that of England and
Wales
AS WITNESS the hands of the parties hereto or their duly authorised
representatives on the date set out above
11
SIGNED by NITA EUGENIE )
XXXX XXXXXXXX in the ) /s/ NITA EUGENIE XXXX XXXXXXXX
presence of: )
SIGNED by ,)
Director, for and on behalf of )
LEISURE TRAVEL GROUP ) /s/ Illegible
LIMITED in the presence of: )
12
SCHEDULE 1
Shareholders' Holdings of Shares
Name and Address No. of Shares Consideration
Nita Eugenie Xxxx Xxxxxxxx 29,999 (pound)324,989.17
Stylehurst Paddock,
Xxxxxxxx Xxxx
Xxxxx Xxxxxx
Xxxxxx,
Xxxxxx XX0 0XX
and
Xxxxxxx Xxxx Xxxxxxxx
00 Xxxxxxxx Xxxxxx
Xxxxxx XX0 0XX
Xxxxxxx Xxxx Xxxxxxxx 1 (pound)10.83
00 Xxxxxxxx Xxxxxx
Xxxxxx XX0 0XX
13
SCHEDULE 2
Details of the Company
Ilios Travel Limited
Company Number: 1459479
Incorporated : 6th November 1979
Authorised share capital: (pound)100,000
Divided into 100 ordinary shares of
(pound)1 each
Issued share capital: (pound)30,000
Directors: Nita Eugenie Xxxx Xxxxxxxx
Xxxxx Xxxxxx Xxxx
Secretary: Xxxxx Xxxxxx Xxxx
Registered office: 00 Xxxxxx Xxxxxx
Xxxxxxx
Xxxx Xxxxxx XX00 0XX
14
SCHEDULE 3
The Property
Address Tenure Expiry of Lease
00 Xxxxxx Xxxxxx and Leasehold 6th November 2000
00X Xxxxxx Xxxxxx
Xxxxxxx
Xxxx Xxxxxx
Subject to the following Sub-lease
00X Xxxxxx Xxxxxx Leasehold 5th November 0000
Xxxxxxx
Xxxx Xxxxxx
Tenant Leaders Limited
00 Xxx Xxxx
Xxxxxxxx
Xxxx Xxxxxx
Rent (pound)10,000 per annum
15
SCHEDULE 4
Warranties
1. Constitution
2. Accounts
3. Business
4. Directors and Employees
5. Property
6. The Group and its Bankers
7. Accuracy of Information
8. Tax
9. Environmental Matters
10. Intellectual Property
11. Information Technology and Millennium Compliance
12. Pensions
16
1. CONSTITUTION
1.1 Memorandum and Articles
The Memorandum and Articles of Association of the Company in the form of
the copy attached to the Disclosure Letter are complete and accurate and
have embodied therein or annexed thereto copies of all resolutions and
agreements as are referred to in section 380 of the Companies Xxx 0000,
and all amendments thereto (if any) were duly and properly made.
1.2 Register of Members
The Register of Members of the Company contains true and accurate records
of the members from time to time and the Company has not been subject to
any application under the Companies Xxx 0000 for rectification of such
register.
1.3 Returns
All such resolutions returns and other documents required by the
Companies Xxx 0000 to be delivered to the Registrar of Companies have
been duly delivered and are true and accurate in all material respects.
1.4 Powers of Attorney
The Company has not executed any power of attorney or conferred on any
person other than its directors, officers and employees any authority to
enter into any transaction on behalf of or to bind the Company in any
way.
1.5 Subsidiaries
The Company has no subsidiaries and does not own any shares or stock in
the capital of nor has any beneficial interest in any other company or
business organisation and does not take part in the management of any
other company or business organisation.
2. ACCOUNTS
2.1 The Principal Accounts
The Principal Accounts comply with the provisions of the Companies Xxx
0000 as applicable and have been prepared in accordance with all relevant
statutes and with generally accepted accounting principles and practices
and give a true and fair view of all the assets and liabilities (whether
present or future, actual or contingent) and of the state of affairs,
financial position and results of the Company as at and up to the Last
Accounts Date.
17
2.2 Accounting Policy
The Principal Accounts have been prepared on a basis fully consistent
with the basis upon which all audited accounts of the Company have been
prepared.
2.3 Stock in Trade
The Company has no stock in trade.
2.4 Off Balance Sheet Financing
The Company has not engaged in any financing (including without prejudice
to the generality of the foregoing the incurring of any borrowing or any
indebtedness in the nature of borrowing including without limitation
liabilities in the nature of acceptances or acceptance credits) of a type
which would not be required to be shown or reflected in the Principal
Accounts.
2.5 Accounting Reference Date
The Company has notified to the Registrar of Companies 31st October as
being its accounting reference date pursuant to the Companies Xxx 0000.
2.6 Books of Account
The Company has properly kept and maintained all necessary books of
account (reflecting in accordance with generally accepted accounting
principles and practices all transactions effected by the Company or to
which it is or has been a party) minute books records register of members
and other statutory books. All such documents contain in all material
respects full and accurate records of all matters required to be recorded
therein and all deeds and documents (properly stamped where stamping is
necessary for enforcement thereof) belonging to the Company or which
ought to be in its possession and the common seal of the Company are in
its possession.
2.7 Management Accounts
Any management accounts prepared by the Company since the Last Accounts
Date were compiled with due care, on the same basis as the management
accounts of the Company had been prepared during the previous accounting
period prior to the Last Accounts Date and give a fair representation of
the financial position of the Company from the period from the Last
Accounts Date to the date to which they were drawn up and the state of
affairs of the Company as at the date to which they were drawn up.
18
3. BUSINESS
3.1 Business since the Last Accounts Date
Since the Last Accounts Date the business of the Company has been
conducted in the ordinary course of business as a licensed tour operator.
19
3.2 Acquisition and Disposal of Assets
The Company has not since the Last Accounts Date acquired or agreed to
acquire any asset for a consideration which is higher than the market
value at the time of acquisition and nor has disposed of or agreed to
dispose of any asset for a consideration which is lower than the market
value or the value thereof as shown in its books at the time of disposal.
3.3 Charges and Title to Assets
The Company has not created or agreed to create or suffered to arise any
Encumbrance over any part of its undertaking or assets and the Company
has and will at Completion have a good title to all the assets included
in the Principal Accounts and to all other assets (tangible or
intangible) used for the purpose of its business at the date hereof and
to all assets acquired since the Last Accounts Date and prior to
Completion.
3.4 Debts
All debts owed to the Company as recorded in the Company's books and
records are good and collectable in the ordinary course of business and
will realise their full face value within three months of Completion. The
rights of the Company in respect of such debts are valid and enforceable
and not subject to any defence, right of set-off or counterclaim,
withholding or other deduction and no act has been done or omission
permitted whereby any of them has ceased or might cease to be valid and
enforceable in whole or in part. No amount included in the Principal
Accounts as owing to the Company at the Last Accounts Date has been
released for an amount less than the value at which it was included in
the Principal Accounts or is now regarded by the Vendor as irrecoverable
in whole or in part. The Company has not factored or discounted any of
its debts or other receivables or agreed to do so.
3.5 Leasing etc. Agreements
Full and accurate details of any hiring or leasing agreements, hire
purchase agreement, credit or conditional sale agreement, agreement for
payment on deferred terms or any other similar agreement to which the
Company is a party are contained in the Disclosure Letter and copies
annexed thereto.
3.6 Onerous Obligations
The Company is not a party to any contract, transaction, arrangement or
liability which is Material and outside the ordinary course of business
of the Company and which:-
3.6.1 is of an unusual or abnormal nature;
3.6.2 is for a fixed term of more than six months;
20
3.6.3 is of a long term nature (that is, unlikely to have been fully
performed, in accordance with its terms, more than six months
after the date on which it was entered into or undertaken);
3.6.4 is incapable of termination in accordance with its terms, by the
Company, on 60 days' notice or less;
3.6.5 involves payment by the Company by reference to fluctuations in
the index of retail prices, or any other index or in the rate of
exchange for any currency;
3.6.6 involves an aggregate outstanding expenditure by the Company of
more than (pound)25,000;
3.6.7 restricts its freedom to engage in any activity or business or
confines its activity or business to a particular place.
Material is to be defined as material in the context of the affairs of
the Company.
3.7 Supply Contracts
All agreements or arrangements for the supply of services to or by the
Company which involve or are likely to involve the supply of services the
aggregate sale value of which will represent in excess of ten per cent of
the turnover for the preceding financial year of the Company have been
disclosed to the Purchaser in writing. The Company has not been notified
of nor is the Vendor aware of any breach of any of its obligations under
any contract, transaction or arrangement to which it is a party or which
binds it.
3.8 Events of Default
3.8.1 No event has occurred or is subsisting which constitutes or
results in or would with the giving of notice and/or lapse of time
constitute or result in a default or the acceleration of any
obligation under any agreement or arrangement to which the Company
is a party or by which it or any of its properties, revenues or
assets are bound.
3.8.2 The Company is not a party to any agreement or arrangement which
is capable of termination (without liability for compensation) by
any other person on a change in the management control or
shareholding of the Company or by reason of the sale of the Shares
under this Agreement.
3.9 Guarantees etc.
The Company has not given any guarantee, indemnity, warranty or bond
incurred any other similar obligation or created any security for or in
respect of liabilities, actual or contingent, of any other person.
21
3.10 Options over shares etc.
Since the Last Accounts Date no share or loan capital has been created or
issued or agreed to be created or issued and there are not any options or
other agreements outstanding which call or give any person the right to
call (whether or not subject to conditions) for the issue of any share or
loan capital of the Company and the Vendor is not under any obligation of
any kind whatsoever whether actual or contingent to sell, charge or
otherwise dispose of any of the Shares or any interest therein to any
other person.
3.11 Litigation
The Company is not engaged in any litigation, arbitration, prosecution or
other legal proceedings (whether as plaintiff, defendant or third party)
and there are no such proceedings pending or threatened or any
proceedings in respect of which the Company is or might be liable to
indemnify any other person concerned therein, there are no claims, facts
or events which are likely to give rise to any such proceedings and the
Company is not engaged in and has not in the last six years been engaged
in and no facts or events exist or have occurred which are likely to
cause it to be involved in proceedings or enquiries before any government
or municipal board of enquiry or commission or any other administrative
body (whether judicial quasi-judicial or otherwise) in which any
favourable judgment or decision would or might adversely affect the
business of the Company or the value of any of its assets.
3.12 Business name
The Company does not carry on, and has not in the past three years
carried on, any business under any name other than its corporate name.
3.13 Property in other companies
The Company is not liable to offer for sale transfer or otherwise dispose
of or purchase or otherwise acquire any assets, including shares held by
it in other bodies corporate under their articles of association or
agreement or arrangement or to take or suffer any action upon the
happening of any such event.
3.14 Insurance
3.14.1 The Company has produced to the Purchaser all insurance policies
in effect in relation to its business and assets and all such
policies are in full force and effect and not voidable.
3.14.2 The Company is now, and has at all material times been covered
against accident, damage, injury, third party loss (including
product liability), loss of profits and has at all times effected
such insurances as are required by law.
3.14.3 So far as the Vendor is aware, there are no circumstances which
might lead to any liability under such insurance being avoided by
the insurers or the premiums being increased and there is no claim
outstanding under any such policy nor is the
22
Vendor aware of any circumstances likely to give rise to a claim.
3.15 Licences
The Company has, so far as the Vendor are aware, all licences,
permissions, permits, consents and authorisations required for the
carrying on of its business and, so far as the Vendor is aware, is not in
breach of the terms or conditions of such licences, permissions, permits,
consents and authorisations and, so far as the Vendor is aware, there are
no pending or threatened proceedings which might in any way affect such
licences, permissions, permits, consents and authorisations and the
Vendor is not aware of any other reason why any of them should be
suspended, threatened or revoked or be invalid.
3.16 Grants
The Company has neither applied for nor received any financial assistance
from any supranational, national or local agency, body or authority.
4. DIRECTORS AND EMPLOYEES
4.1 The names of the Directors and Secretary shown in Schedule 2, are true
and complete and no person not named therein as such is a director of the
Company.
4.2 The particulars of all employees annexed to the Disclosure Letter show
all remuneration and other benefits:-
4.2.1 actually provided; and
4.2.2 which the Company is bound to provide (whether now or in the
future)
to each officer and employee of the Company and are true and complete and
include particulars of and details of participation in all profit
sharing, incentive, bonus, commission, share option, medical, permanent
health insurance, directors and officers insurance, travel, car,
redundancy and other benefit schemes, arrangements and understandings
(the "Schemes") operated for all or any employees or former employees of
the Company or their dependants whether legally binding on the Company or
not.
4.3 The particulars of all employees in the Disclosure Letter is correct.
4.4 There are no standard terms and conditions, staff handbooks and policies
which apply to employees of the Company.
4.5 There are no service agreements or contracts of employment between the
Company and any of its directors or employees containing any provision in
addition to the matters required to be contained under section 1 of the
ERA. All employees of the Company have received a written statement of
particulars of their employment as required by section 1
23
of the ERA.
4.6 So far as the Vendor is aware, there are no training schemes,
arrangements or proposals, whether past or present, in respect of which a
levy may henceforth become payable by the Company under the Industrial
Training Act 1982 (as amended) and pending Completion no such schemes,
arrangements or proposals will be established or undertaken.
4.7 Since the Last Accounts Date the Company has not made, announced or
proposed any changes to the emoluments or benefits of or any bonus to any
of its directors, officers or employees and the Company is under no
obligation to make any such changes with or without retrospective
operation.
4.8 No past or present directors, officer or employee has currently any claim
against the Company:
4.8.1 in respect or any accident or injury which is not fully covered by
insurance; or
4.8.2 in breach of contract of services or for services; or
4.8.3 for loss of office or arising out of or connected with the
termination of his office of employment (including any redundancy
payment) and, so far as the Vendor is aware, there is no event
which would or might give rise to any such claim.
4.9 The Company has maintained adequate and suitable records regarding the
service of its directors, officers and employees and such records comply
with the requirements of the Data Protection Xxx 0000.
4.10 There are no amounts owing or agreed to be loaned or advanced by either
the Vendor or the Company to any directors, officers and employees of the
Company (other than amounts representing remuneration accrued due for the
current pay period, accrued holiday pay for the current holiday year or
for reimbursement of expenses).
4.11 No current director, officer or employee of the Company has given or
received notice to terminate his or her employment.
4.12 Save in accordance with their respective contracts there are no
directors, officers or employees of the Company who are absent on grounds
of disability or other leave of secondment, maternity leave or absence.
5. PROPERTY
5.1 Title
5.1.1 The Property comprises all the properties owned, occupied or
otherwise used in connection with their business by the Company.
24
5.1.2 The Property occupied or otherwise used by the Company in
connection with its business is so occupied or used by right of
ownership or under lease or licence, and the terms of any such
lease or licence have been disclosed to the Purchaser.
5.1.3 The Company is the legal and beneficial owners of its leasehold
interest in the Property.
5.1.4 The information contained in Schedule 3 as to the tenure of the
Property is true and correct.
5.1.5 The Company has good title to the Property.
5.2 Encumbrances
5.2.1 The Property is free from any mortgage, debenture, charge,
rent-charge, lien or other encumbrance securing the repayment of
monies or other obligation or liability of the Company or any
other person.
5.2.2 The Property is not subject to any outgoings other than general
rates, water rates and insurance premiums and in the case of
leasehold property rent and service charges and as may be stated
in the leases.
5.2.3 Where any such matters as are referred to in clauses 5.2.1 and
5.2.2 have been disclosed in the Disclosure Letter, neither the
Vendor nor the Company has received any notice of breach of any of
the obligations and liabilities imposed and arising under such
clauses. Any payments in respect of them which are due and payable
have been duly paid.
5.2.4 The Property is not subject to any option, right or pre-emption or
right of first refusal.
5.3 Planning Matters
Neither the vendor nor the Company has received or is aware of any notice
of breach in connection with any of the matters set out below:
5.3.1 The use of the Property for the purposes of the Planning Acts.
5.3.2 Planning permission for development purposes.
5.3.3 Building regulation consents.
5.3.4 Planning permissions, orders, and regulations issued under the
Planning Acts, the
25
London Building Acts and building regulation consents and bye-laws
for the time being in force with respect to the Property.
5.3.5 Agreements under the Town and Country Xxxxxxxx Xxx 0000 s 52 made
with respect to the Property.
5.3.6 All agreements made under the Xxxxxxxx Xxx 0000 s 38 with respect
to the Property.
5.3.7 Requirements in connection with the Property being of special
historic or architectural importance or located in a conservation
area.
5.3.8 Any development charges, monetary claims and liabilities under the
Planning Acts or any other such legislation.
5.4 Statutory Obligations
Neither the Vendor nor the Company has received notice of breach in
connection with any of the matters listed below:
5.4.1 Compliance being made with all applicable statutory and by-law
requirements with respect to the Property, and in particular (but
without limitation) with the requirements as to fire precautions
and under the Public Health Acts and the Offices, Shops and
Railway Premises Xxx 0000.
5.4.2 Outstanding and unobserved or unperformed obligation with respect
to the Property necessary to comply with the requirements (whether
formal or informal) of any competent authority exercising
statutory or delegated powers.
5.4.3 Any licences whether under the Licensing Acts 1964 or otherwise
which apply to the Property.
5.5 Adverse Orders
Neither the Vendor nor the Company has received any of the following:
5.5.1 Compulsory purchase notices, orders or resolutions affecting any
of the Property.
5.5.2 Closing, demolition or clearance orders, enforcement notice or
stop notices affecting the Property.
5.6 Condition of the Property
5.6.1 There are no disputes with any adjoining or neighbouring owner
with respect to boundary walls and fences or with respect to any
easement, right or means of access to the Property.
26
5.6.2 The principal means of access to the Property is over roads which
have been taken over by the local or other highway authority and
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 the Property is shared with any other party nor subject
to rights of determination by any other party.
5.6.3 The Property enjoys the main service of water, drainage,
electricity and/or gas.
5.6.4 The Property is not located in an area or subject to circumstances
particularly susceptible to flooding.
5.7 Insurance
5.7.1 The Property is insured in its respective full reinstatement value
for not less than two years' loss of rent and against third party
and public liabilities to an adequate extent.
5.7.2 All premiums payable in respect of insurance policies with respect
to the Property which have become due have been duly paid and no
circumstances have arisen which would vitiate or permit the
insurers to avoid such policies.
5.7.3 The information in the Disclosure Letter with respect to the
insurance policies is up to date and true and accurate in all
respects.
5.8 Leasehold Property
5.8.1 The Company has paid the rent due under the lease of the Property
and neither the Vendor nor the Company has received any notice in
connection with the observation and performance of the covenants
on the part of the tenant and the conditions contained in any
leases (which expressions includes underleases) under which the
Property are held, and the last demands (or receipts for rent if
issued) were unqualified.
5.8.2 All licences, consents and approvals required from the landlords
and any superior landlords under any leases of the Property have
been obtained and the covenants on the part of the tenant
contained in such licences, consents and approvals have been duly
performed and observed.
5.8.3 There are no rent reviews under the leases of the Property held by
the Company currently in progress.
5.8.4 There is not outstanding and unobserved or unperformed any
obligation necessary to comply with any notice or other
requirement given by the landlord under any leases of the
Property.
27
5.8.5 There is no obligation to reinstate the Property by removing or
dismantling any alteration made to it by the Company or any
predecessor in title to the Company.
5.9 Tenancies
5.9.1 The Property is held subject only to and with the benefit of the
tenancies (which expression includes subtenancies) as set out in
Schedule 3 and none other.
5.9.2 With respect to such tenancies the details in the Disclosure
Letter are correct.
5.9.3 The Vendor is not aware of any material or persistent breaches of
covenant by a tenant of the Property including the covenants to
pay rent.
5.9.4 The Vendor shall procure (and the Purchaser agrees to) the service
by the Company prior to the Completion Date of a Tenant's Request
for a new tenancy pursuant to Section 26 of the Landlord and
Xxxxxx Xxx 0000 in respect of the Lease of the Company's premises
dated 6th November 1985 to take effect as soon as possible under
the terms of such Act.
6. THE COMPANY AND ITS BANKERS
6.1 Borrowings
The total amount borrowed by the Company from its bankers or any other
party does not exceed its facilities and the total amount borrowed by the
Company from whatsoever source does not exceed any limitation on its
borrowing contained in its articles of association, or in any debenture
or loan stock deed or other instrument.
6.2 Continuance of Facilities
Full and accurate details of all overdrafts, loans, leases or other
financial facilities outstanding or available to the Company have been
supplied to the Purchaser and (save for entry into this Agreement)
neither the Vendor nor the Company has done anything whereby the
continuance of any such facilities in full force and effect might be
affected or prejudiced.
6.3 Bank Accounts
A statement of all the bank accounts of the Company and of the credit or
debit balances on such accounts as at a date not more than seven days
before the date hereof has been supplied to the Purchaser. The Company
has no other bank or deposit accounts (whether in credit or overdrawn).
Since such statement there have been no payments out of any such accounts
except for routine payments and the balances on current account are not
28
now substantially different from the balances shown on such statements.
7. DISCLOSURE OF ALL MATERIAL MATTERS
So far as the Vendor is aware and to the best of her knowledge
information and belief after relevant enquiry, all information contained
or referred to in this Agreement (including the Schedules and the
documents in Agreed Terms) and in the Disclosure Letter or in any
annexure thereto or which has otherwise been disclosed by or on behalf of
the Vendor to the Purchaser or its advisers/others on or prior to the
date hereof is true and accurate in all material respects and the Vendor
is not aware of any other fact or matter which renders any such
information misleading because of any omission, ambiguity or for any
other reason. So far as the Vendor is aware and to the best of her
knowledge information and belief, the Vendor has disclosed to the
Purchaser all information and facts relating to the Company and its
business, assets and undertaking (including financial information) which
are or may be material for disclosure to a purchaser of the Company on
the terms of this Agreement and all information and facts so disclosed
are true and accurate in all material respects.
8. TAXATION
8.1 Returns
The Company has made all returns and supplied all information and given
all notices to the Inland Revenue or other authority as reasonably
requested or required by law within any requisite period and all such
returns and information and notices are correct and accurate in all
respects and are not the subject of any dispute and there are no facts or
circumstances likely to give rise to or be the subject of any such
dispute.
8.2 Disclosures
All statements and disclosures made to any authority in connection with
any provision of the taxation statutes whatsoever were when made and
remain complete and accurate in all material respects.
8.3 Clearances
No action has been taken by the Company in respect of which any consent
or clearance from the Inland Revenue or other authority was required save
in circumstances where such consent or clearance was validly obtained and
where any conditions attaching thereto were and will, immediately
following Completion, continue to be met.
29
8.4 Claims and Elections
The Company has not made nor is subject to any claim or election under
any or all of the following:-
8.4.1 sections 2/9(1) to (6) of the TCGA (foreign assets: delayed
remittances);
8.4.2 section 35 of the TCGA (capital gains rebasing to 31 March 1982);
8.4.3 section 24 of the TCGA (assets of negligible value or lost or
destroyed);
8.4.4 sections 154 and 175 of the TCGA and sections 152 and 153 of the
TCGA. (roll-over relief);
8.4.5 sections 242 of the ICTA (surplus franked investment income)
8.4.6 section 247 of the ICTA (group income)
8.4.7 sections 584, 585 or 723 of the ICTA (foreign income etc; delayed
remittances);
8.4.8 section 75 of the FA 1986 (stamp duty on reconstructions etc.)
8.4.9 section 161 TCGA (appropriations to and from Stock).
30
8.5 Payment of tax by instalments
The Company has not made an election or arrangement for the payment of
tax by instalments under sections 280 and 48 of the TCGA.
8.6 Deed of Indemnity
So far as the Vendor is aware, no event has occurred which would or might
give rise to claim under the Deed of Indemnity upon or after the
execution thereof.
PROVISION FOR AND PAYMENT OF TAX
8.7 General
The Principal Accounts make reasonable provision or reserve in respect of
any period ended on or before the Last Accounts Date for all tax assessed
or liable to be assessed on the Company or for which it is accountable at
the Last Accounts Date whether or not the Company has or may have any
right of reimbursement against any other person including in particular
(but without prejudice to the generality of the foregoing) tax in respect
of property (of whatever nature) income, profits or gains held, earned,
accrued or received by or to any person on or before the Last Accounts
Date or by reference to any event occurring act done or circumstances
existing on or before that date including distributions made down to such
date or provided for in the Principal Accounts and reasonable provision
has been made and shown in the Principal Accounts for deferred taxation
in accordance with generally accepted accounting principles.
8.8 Payment of Tax
8.8.1 The Company has duly and punctually paid all tax to the extent
that the same ought to have been paid and is not liable nor has it
within three years prior to the date hereof been liable to pay any
penalty or interest in connection therewith.
8.8.2 Without prejudice to clause 8.8.1 the Company has paid on the due
date:-
(i) all value added tax and customs and excise duties (at the
correct tariff rate) in respect of goods or services sold
or supplied or imported;
(ii) all tax due in respect of payments made by it to any person
which ought to have been made under deduction of tax and
all such tax has been properly deducted from all such
payments made;
31
(iii) all advance corporation tax due in respect of dividends and
other distributions made or paid by it; and
(iv) all social security contributions (both employers and
employees) due in respect of its employees and
ex-employees.
8.9 Pay As You Earn
The Company has properly operated the PAYE system and National Insurance
Contribution system deducting tax as required by law from all payments to
or treated as made to or benefits provided for its employees,
ex-employees or independent contractors (including any such payments
within section 134 of the ICTA) and duly accounted to the Inland Revenue
in connection with any such payments made or benefits provided, and no
PAYE audit or National Insurance or VAT audit in respect of the Company
has been made by the Inland Revenue, Contribution Agency or HM Customs &
Excise nor has the Company been notified that any such audit will be made
and the Company has complied with all other obligations in respect of
National Insurance.
8.10 Give as You Earn
Details of any payroll deduction scheme pursuant to section 202 of ICTA
operated by the Company are set out in the Disclosure Letter and any such
scheme has been operated in accordance with that section and regulations
made thereunder.
8.11 Secondary Liability
No transaction or event has occurred in consequence of which the Company
is or may be held liable for any tax or deprived of relief or allowances
otherwise available to it or may otherwise be held liable for or to
indemnify any person in respect of any tax for which some other company
or person was primarily liable (whether by reason of any such other
company being or having been a member of the same group of companies or
otherwise).
CORPORATION TAX
8.12 Changes in Trade etc.
8.12.1 Within the period of three years ending with the date hereof there
has been no major change in the nature or conduct of any trade or
business carried on by the Company within the meaning of section
245 or 768 of ICTA.
8.12.2 There has been no cessation or discontinuance of any trade carried
on by the Company nor has the scale of activities in any trade
carried on by the Company within three years hereof become small
or negligible.
32
8.12.3 Prior to the execution of this Agreement no change of ownership of
the Company has taken place such that either or both of sections
245 or 768 of ICTA has or may be applied to deny relief in respect
of loss or losses of the Company or surplus advance corporation
tax.
8.13 Trading Assets
In the event that any asset shown in the Principal Accounts as a fixed
asset is disposed of immediately following Completion the proceeds
derived from such asset will not be treated as a trading receipt for tax
purposes.
8.14 Deductions
The Company has not made any payment or incurred any liability to make
any payment which could be disallowed as a deduction in computing the
taxable profits of the Company or as a charge on the Company's income
including (but without prejudice to the generality of the foregoing) any
payment which could be disallowed under sections 74 (general rules as to
deductions not allowable), 338-340 (allowance of charges on income),
779-789 (leased assets), section 787 (restriction of relief for payments
of interest) or section 125 of the ICTA (annual payments for non-taxable
consideration).
8.15 Sales and undervalue/overvalue
All transactions entered into by the Company have been entered into on an
arm's length basis and the consideration (if any) charged or received or
paid by the Company on all transactions entered into by it has been equal
to the consideration which might have been expected to be charged
received or paid (as appropriate) between independent persons dealing at
arm's length and no notice or enquiry pursuant to section 770 of the ICTA
has been made in connection with any of such transactions.
8.16 Appropriations
Since the Last Accounts Date the Company has not appropriated any of its
assets to or from trading stock.
8.17 Chargeable Policies
The Company is not and will not become liable to tax in respect of any
policy of insurance (including any life policy or life annuity contracts)
whether or not acquired as original beneficial owner.
8.18 Deep Discount Securities
8.18.1 The Company has not issued or acquired any deep discount
securities as defined by paragraph 1 (1) of schedule 4 of the
ICTA.
33
8.18.2 In so far as the Company has issued or acquired any deep discount
securities as defined by paragraph 1(1) of schedule 4 of the ICTA
it has issued or acquired (as the case may be) a relevant
certificate in terms of paragraph 13 of schedule 4 of the ICTA.
8.19 Foreign Borrowings
The Company has not made borrowings in foreign currency whereby a
liability to tax may arise or may have arisen or a claim for tax has been
made.
8.20 Pension Fund Surplus
Since the Last Accounts Date the Company has not received any payment to
Schedule 22 of the ICTA applies.
CAPITAL ASSETS
8.21 Capital Allowances
8.21.1 No balancing charge in respect of any capital allowances claimed
or given would arise if any assets of the Company were to be
realised for a consideration equal to the amount of the book value
thereof as shown or included in the Principal Accounts.
8.21.2 All necessary conditions for all capital allowances (as defined in
section 832(1) of the ICTA) claimed by the Company were at all
material times satisfied and remain satisfied and the Company has
not since the Last Accounts Date become liable for any balancing
charge.
8.22 Finance Leases
8.22.1 The Company is not nor has been the lessee under any leases of
plant or machinery save for the leases specified in the Disclosure
Letter (the "Leases").
8.22.2 The machinery or plant subject to the Leases has in the period
which is the requisite period in respect of any expenditure
thereon by an owner or lessor for the purposes of section 39(1) of
the CAA been used and only been used for a qualifying purpose as
defined by the section.
8.22.3 No assets subject to the Leases have at any time been leased by
the Company or its lessees to a person who is not resident in the
UK and does not use the machinery or plant for the purposes of a
trade carried on there.
8.22.4 So far as the Vendor is aware there is no revenue investigation,
revenue enquiry or other circumstance which dictates that any
person who is or was a lessor or owner of equipment subject to any
of the Leases will or may be denied the first year allowances and
writing down allowances by reference to which the initial rental
under that Lease was calculated.
8.23 Investment grants
The Company has not received any investment grant or similar payment or
allowance receivable by virtue of any statute.
34
DISTRIBUTION
8.24 Repayments of Share Capital
8.24.1 The Company has not at any time after 6 April 1965 repaid or
agreed to repay or redeemed or agreed to redeem or purchase or
agreed to purchase (or made any contingent purchase contract
within the meaning of section 165 of the Companies Act 1985) in
respect of any of its issued share capital or any class thereof.
Further the Company has not after 6 April 1965 capitalised or
agreed to capitalise in the form of shares, debentures or other
securities or in paying up amounts unpaid on any shares,
debentures or other securities any profits or reserves of any
class or description or passed or agreed to be passed any
resolution to do so.
8.24.2 The Company has not made (and will not be deemed to have made) any
distribution within the meaning of sections 209, 210 and 236 of
ICTA since 5 April 1965 except dividends properly authorised and
shown in the Principal Accounts nor is the Company bound to make
any such distribution.
8.25 Payments to be treated as distributions
The Company has not issued any securities (within the meaning of section
254(1) of ICTA) which remain in issue where the interest payable thereon
fails to be treated as a distribution.
CHARGEABLE GAINS
8.26 Sales at Book Value
No chargeable gain or profit (disregarding the effects of any indexation
relief available) would arise if any assets of the Company (other than
trading stock) were to be realised for a consideration equal to the
amount of the book value thereof as shown or included in the Principal
Accounts.
8.27 Value shifting
The Company has been involved in any scheme or affected by any
arrangements whereby the value of any asset has been or will be reduced
such that sections 29 and/or 30 of TCGA might be applicable.
8.28 Valuation of Assets
8.28.1 The Company has not made any disposal of part of an asset part of
which is still
35
owned by the Company at the date hereof which has required or may
or will require any computation under section 42 of the TCGA (part
disposals of assets).
8.28.2 The Company has not disposed of or acquired any assets so that
section 17 of TCGA might apply to restrict the consideration
deemed to be given on such disposal or acquisition.
8.29 Chargeable debts
No gains chargeable to corporation tax on chargeable gains will accrue to
the Company on the disposal of any debt owing to it.
8.30 Reconstructions
The Company has been involved in any share for share exchange or any
scheme of reconstruction or amalgamation such as are mentioned in section
135 and 136 of the TCGA or section 139 of the TCGA under which shares or
debentures have been or will be issued or assets have been or will be
transferred.
8.31 Corporate Bonds
There has been no relevant transaction to which section 117(8) of TCGA
can apply to a corporate bond held by the Company.
8.32 Depreciatory transactions
No loss which has arisen or which may hereafter arise on a disposal by
the Company of shares in or securities of any company is liable to be
reduced by virtue of the application of section 176 of TCGA (transactions
in a group) or section 177 of TCGA (dividend stripping).
8.33 Transfers by way of gift
The Company has not made any such transfer of an asset at an undervalue
as is mentioned in section 125 of TCGA or received any assets by way of a
gift as mentioned in section 282 of TCGA.
ANTI AVOIDANCE PROVISIONS
8.34 Tax Schemes
The Company has not entered into nor been a party to nor otherwise
involved in any scheme or arrangement designed wholly or partly for the
purpose of avoiding or deferring tax.
36
8.35 Transactions in Securities
The Company has not:-
8.35.1 become liable for tax; or
8.35.2 received and will receive or be the subject of or be adversely
affected by any claim for tax arising under or imposed by or
resulting from the operation of sections 703-709 of ICTA (whether
alone or in conjunction with any other provisions of any taxation
statutes whatsoever) and which wholly or partly results or arises
from or is computed by reference in circumstances existing or
events occurring at any time on or before the date hereof whether
alone or in conjunction with other circumstances arising before or
after Completion.
8.36 Transactions in Land
The Company has not:-
8.36.1 become liable for tax; or
8.36.2 received and will not receive or be the subject of or be adversely
affected by any claim for tax
arising under or imposed by or resulting from the operation of sections
776-778 of ICTA (whether alone or in conjunction with any other
provisions of any taxation statutes whatsoever) and which wholly or
partly results or arises from or is computed by reference to
circumstances existing or events occurring at any time on or before the
date hereof whether alone or in conjunction with other circumstances
arising before or after Completion.
8.37 Sale and lease back of land
Since 22 June 1971 the Company has not entered into any transaction as is
mentioned in sections 34-37 or section 780 of ICTA.
8.38 Transactions between dealing and associated company
The Company has not entered into any transaction mentioned in section 774
of ICTA.
8.39 Loans or Credit
The Company has been involved in transactions such that section 786 of
ICTA (transactions associated with loans or credit) might apply.
37
FOREIGN ELEMENT
8.40 Treasury Consents
The Company has not without the prior consent of the Treasury entered
into any of the transactions specified in 765(1)(c) or (d) of ICTA
38
8.41 Company Migration
Since 15 March 1988, no election has been made by the Company as the
principal company as defined in section 187 of TCGA (postponement of
charge on deemed disposal of assets by company ceasing to be resident in
the United Kingdom) nor has any company over which the Company had
control or which was a member of the same group of companies as the
Company ceased to be resident in the United Kingdom otherwise than in
compliance with section 130 of the FA 1988.
8.42 Transfers to non-resident company
The Company has not made any such transfer as is mentioned in section 140
of the TCGA.
8.43 Double Taxation
The Company has not made nor is entitled to make any claim under part
XVIII of the ICTA and in respect of any such claims disclosed all
necessary conditions for all foreign tax credit claimed or to be claimed
by it were at all material times and remain satisfied and in particular
(but without prejudice to the generality of the foregoing) the Company
holds all tax deduction certificates or other documentation necessary for
production to HM Inland Revenue in respect of such foreign tax.
8.44 Controlled Foreign Companies
The Company does not have and never has had an interest in a controlled
foreign company within the meaning of section 747 of ICTA such that all
or any of the chargeable profits of the controlled foreign company have
been or with or may be apportioned to the Company.
8.45 Offshore Funds
The Company has not on or after 1 January 1984 disposed of and does not
now have a material interest in an offshore fund which at any material
time was or is a non-qualifying offshore fund within the meaning of
section 757 of ICTA such that a disposal thereof by it has given rise or
will or may give rise to an offshore income gain.
8.46 Agency for Non Residents
The Company is not nor has been assessable to tax by virtue of section 78
of the Taxes Management Xxx 0000
39
CLOSE COMPANY
8.47 The Company is a close company as defined by section 414 ICTA.
GROUPS OF COMPANIES
8.48 Group Relief
The Disclosure Letter contains particulars of all arrangements relating
to group relief under sections 402-413 of ICTA to which the Company is or
has been a party and:-
8.48.1 all claims by the Company for group relief were when made and are
now valid and have been or will be allowed by way of relief from
corporation tax;
8.48.2 the Company has not made nor is liable to make any payment for
group relief otherwise than in consideration for the surrender of
the group relief allowable to it by way of relief from corporation
tax;
8.48.3 the Company has received all payments due to it under any
arrangement or agreement for surrender of group relief by it;
8.48.4 no such payment exceeds or could exceed the amount permitted by
section 402(6) of ICTA;
8.48.5 there exists or existed for any period of account in respect of
which a surrender has been made or purports to have been made no
arrangements such as are specified in section 410(1)-(6) of ICTA.
8.49 Advance Corporation Tax
The Disclosure Letter contains particulars of all arrangements for the
surrender under section 240 of ICTA of any amount of advance corporation
tax and in respect of receipts and surrenders disclosed:-
8.49.1 the Company has not paid nor is liable to pay for the benefit of
any advance corporation tax which is or may become incapable of
set off against its liability to corporation tax;
8.49.2 the Company has received all payments due to it for all surrenders
or purported surrenders of advance corporation tax made by it;
8.49.3 no such payment exceeds or could exceed the amount permitted by
section 240(8) of ICTA; and
8.49.4 there exists or existed for any period in respect of which a claim
under section 240 of ICTA has been or is to be made no
arrangements such as are specified in sub-section (11) of that
section whereby any person could obtain control of the Company or
of any subsidiary to which such surrender purports or is purported
to be made.
40
8.50 Intra-Group Transfers
The Company has not acquired any asset other than trading stock from any
other company belonging at the time of acquisition to the same group of
companies as the Company within the meaning of section 170 of TCGA and no
member of any group of companies of which the Company is or has at any
material time been the principal company (as defined in section 170(2)(b)
of TCGA) has so acquired any asset.
41
INHERITANCE TAX
8.51 Gifts
8.51.1 The Company is nor will become, liable to be assessed to capital
transfer tax or inheritance tax as donor or donee of any gift or
transferor or transferee of value (actual or deemed) nor as a
result of any disposition chargeable transfer or transfer of value
(actual or deemed) made by or deemed to be made by any other
person.
8.51.2 The Company has been a party to associated operations in relation
to a transfer of value within the meaning of section 268 of ITA.
8.51.3 No asset owned by the Company is subject to any sale, mortgage or
charge by virtue of s212 of ITA.
8.52 Inland Revenue Charge
There is no unsatisfied liability to capital transfer tax attached or
attributable to the Shares or any asset of the Company and in consequence
no person has the power to raise the amount of such tax by sale or
mortgage of or by a terminable charge on any of the Shares or assets of
the Company as mentioned in section 212 of ITA and none of the Shares or
assets of the Company are subject to an Inland Revenue charge within
section 237 of ITA.
VALUE ADDED TAX
8.53 Value Added Tax
8.53.1 The Company is a registered taxable person for the purpose of the
VAT legislation and has not at any time been treated as a member
of a group of companies for such purpose and has not made any
application to be so treated and no circumstances exist whereby
the Company would or might become liable for value added tax as an
agent or otherwise by virtue of section 47 of VATA.
8.53.2 The Company has complied in all respects with the requirements and
provisions of VATA and all regulations and orders made thereunder
(the "VAT legislation") and has made and maintained and will
pending Completion make and maintain accurate and up-to-date
records invoices accounts and other documents required by or
necessary for the purposes of VAT legislation and each the Company
has at all times punctually paid and made all payments and returns
required thereunder.
8.53.3 That (without prejudice to the generality of clause 8.53.2) the
Company has not:-
42
(i) taken part in conduct involving dishonesty as described in
section 60 of VATA;
(ii) committed any serious misdeclaration or neglect as
described in section 63 of VATA;
(iii) issued unauthorised invoices or failed to do anything
contemplated by section 67 of VATA;
(iv) failed to comply with any regulatory requirements described
in section 69 of VATA;
(v) been notified of any assessment within sections 59 and 74
of VATA or a surcharge notice under section 59 of VATA;
(vi) made any agreement with the Commissioners of Customs and
Excise which agreement has not been put in writing as
contemplated by section 85 of VATA.
8.53.4 The Company has not made any exempt supplies in consequence of
which it is or will be unable to obtain credit for all input tax
paid by it during any VAT quarter ending after the Last Accounts
Date.
STAMP DUTY
8.54 Stamp Duty and Capital Duty
The Company has duly paid all capital duty and loan capital duty for
which it is or has at any time been liable and all documents in the
enforcement of which it is or may be interested have been duly stamped
and since the Last Accounts Date the Company has not been a party to any
transaction whereby it was or is or could become liable to stamp duty
reserve tax.
FINANCE XXX 0000
8.55 Loan Relationships
The Company is not a party to any loan relationship as defined in Chapter
11 of the Finance Xxx 0000 which may give rise to any debits or credits
as there mentioned.
9. ENVIRONMENTAL MATTERS
9.1 Consents
The Company does not require any Environmental Consent, nor has received
any notice of any requirement for any Environmental Consent.
43
9.2 Liability
The Company is in compliance with all environmental laws which are
currently applicable to its business (other than breaches which are
unintentional, minor or insignificant in effect).
There are no civil criminal arbitration or administrative actions claims
proceedings or suits pending or threatened against the Company arising
from or relating to Environmental Consents or Environmental Laws and
there are no circumstances which may lead to such actions claims
proceedings or suit.
10. INTELLECTUAL PROPERTY
10.1 The use by the Company of its Intellectual Property does not infringe the
rights of any third party.
10.2 There are no claims or proceedings in existence or threatened in respect
of the use by the Company of its Intellectual Property and there are no
circumstances likely to give rise to any such claims or proceedings
11. INFORMATION TECHNOLOGY AND MILLENIUM COMPLIANCE
11.1 None of the business systems forming part of the Company's Intellectual
Property has been copied wholly or substantially from any other material.
11.2 All the business systems, excluding software, used in the business of the
Company are owned and operated by and are under the control of the
Company and are not wholly or partly dependent on any facilities which
are not under the ownership operation or control of the Company. No
action will be necessary to enable such systems to continue to be used in
the business of the Company to the same extent and in the same manner as
they have been used prior to the date hereof.
11.3 The Company is validly licensed to use the software used in its business
and no action will be necessary to enable it to continue to use such
software to the same extent and in the same manner as they have been used
prior to Completion.
11.4 The Disclosure Letter sets out or has annexed to it copies of all
disaster recovery agreements used in the course of the business of the
Company.
11.5 The performance of the business systems used in the business of the
Company will not be adversely affected by either any changes in and to
data information used therein or any changes to inputs and other
manipulations of data in relation to dates from 1 January 2000 and
thereafter.
44
11.6 The Disclosure Letter has annexed to it copies of all computer hardware
and software maintenance agreements, all such agreements being in full
force and effect.
12. PENSIONS
12.1 The Company is not under a legal obligation or moral liability or
obligation and is not a party to any ex-gratia arrangement or promise to
pay pensions, gratuities, super-annuation allowances or the like, or
otherwise to provide "relevant benefits" within the meaning of s.612 of
the Income and Corporation Taxes Xxx 0000 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 or to which the
Company contributes.
45
SCHEDULE 5
1. Interpretation
1.1 The provisions of this Schedule 5 shall operate to limit or qualify the
liability of the Vendor under or in connection with any term of this
Agreement and the Warranties and indemnities in the Indemnity ("such
liabilities") and references to "such liabilities" shall be construed
accordingly.
1.2 In the Warranties, reference to "material" shall mean material in the
context of the business of the Company as a whole.
2. Cap
2.1 Notwithstanding any other provision hereof the maximum aggregate
liability of the Vendor in respect of all breaches of this Agreement and
the Warranties and the tax Deed shall not exceed (pound)325,000.
3. Time Limits
3.1 Subject to the provisions of paragraph 3.2 of this Schedule, no claim
shall be brought against the Vendor in respect of such liabilities unless
notice in writing of any such claim (specifying in reasonable detail the
nature of the breach and so far as is practicable the amount claimed in
respect thereof) has been given to the Vendor within twelve months of
Completion and any such claim which may have been made shall (if it has
not been previously satisfied settled or withdrawn) be deemed to have
been withdrawn on the expiration of six months from the date of the said
notice unless proceedings in respect thereof shall have been both issued
and served on the Vendor before such expiration.
3.2 No claim or claims shall be brought against the Vendor in respect of
which the subject matter relates to Taxation unless notice in writing of
any such claim (specifying in reasonable detail the nature of the claim
and so far as practicable the amount claimed in respect thereof) has been
given to the Vendor within six years of Completion and any such claim
which may have been made shall (if it has not been previously satisfied
settled or withdrawn) be deemed to have been withdrawn on the expiration
of six months from the date of the said notice unless proceedings in
respect thereof shall have been both issued and served on the Vendor
before such expiration.
4. Small Claims and Threshold
4.1 Notwithstanding the other provisions of this Schedule 5:-
4.1.1 no claim shall be brought in respect of any breach of any of the
Warranties or indemnities unless the amount of loss sustained in
respect of which a claim may properly be brought shall exceed the
sum of (pound)5,000 (such a claim which exceeds
46
that sum being herein referred to as a "Qualifying Claim"); and
4.1.2 no claim shall be brought in respect of any Qualifying Claim
unless the loss thereby sustained (when aggregated with any other
Qualifying Claims) exceeds (pound)25,000 whereupon all Qualifying
Claims and not merely the excess over (pound)25,000 may be
brought.
5. No Double Claims
5.1 Neither the Purchaser nor the Company shall be entitled to recover
damages in respect of any claim for breach of this Agreement or otherwise
obtain reimbursement or restitution more than once in respect of any one
breach of any of the Warranties contained in the Agreement or the
indemnities contained in the Deed of Indemnity and so that for this
purpose any recovery by the Purchaser shall be deemed to be a recovery
under either of the Warranties or indemnities and further any recovery in
respect of a claim for breach of any of the Warranties shall satisfy any
liability in respect of the circumstances giving rise to such claim and
vice versa.
6. General Limitations
6.1 The Vendor shall have no liability in respect of such liabilities and
accordingly no claim may be brought in respect thereof if and to the
extent that any one or more of the following provisions may apply:-
6.1.1 such liabilities are wholly or partly attributable to any
voluntary act omission transaction or arrangement of the Purchaser
or the Company after the date hereof;
6.1.2 either the Company or the Purchaser is entitled to claim
indemnified (and then only to the extent of the indemnity) against
any loss or damage suffered by any of them under the terms of any
insurance policy for the time being in force;
6.1.3 such liabilities arise in connection with any fact, matter or
circumstance fairly disclosed in the Disclosure Letter or
subsequently disclosed by the Vendor to the Purchaser or in the
schedules to this Agreement;
6.1.4 such liabilities arise in connection with any matter provided for
under the terms of this Agreement or arising from the
implementation of the same;
6.1.5 either such liabilities arise in connection with any exceptions or
matters included mentioned provided for reserved or referred to in
the Principal Accounts or the audited accounts for the two
previous accounting periods of the Company or in the notes thereto
or the subject matter of the claim giving rise to such liabilities
was taken into account in computing the amount of any such
provision or reserve or is noted therein;
47
6.1.6 such liabilities arise wholly or partly out of as a result of or
in connection with:-
6.1.6.1 any change in the nature of the business of the Company
(or in the manner of conducting the same) between the
date hereof and Completion which is authorised by the
Purchaser pursuant to this Agreement; or
6.1.6.2 any asset acquired or disposed of by the Company between
the date hereof and completion which is authorised by the
Purchaser pursuant to this Agreement; or
6.1.6.3 any statutory provision not in force at the date hereof
or any change in any statutory provision hereafter or any
decision of the Courts altering the generally accepted
interpretation of any statutory provision or the
withdrawal of any extra statutory concession previously
made by or any change in practice of the Inland Revenue
or other taxation authority or any increase in the rates
of Taxation in force at the date hereof;
6.1.6.4 the passing of a resolution for the winding up of the
Company after the date hereof; or
6.1.6.5 any change in the format, matter, bases, priorities and
principles used in the preparation of the accounts of the
Company from those used and adopted in the Principal
Accounts;
6.1.7 the loss or liability resulting from such liabilities has been or
is made good or otherwise compensated for at no expense to the
Purchaser and/or the Company;
6.1.8 the loss or liability resulting from such liabilities is less than
the aggregate of any over-provision made in the Principal Accounts
in respect of any liability and any undervalue of any asset
recorded in the Principal Accounts.
7. Purchaser's Covenant
7.1 The Purchaser hereby covenants with the Vendor that:
7.1.1 It is not aware of any fact, matter or thing as may be
inconsistent with any Warranty or that may give rise to any
liability on the part of the Vendor hereunder; and
7.1.2 It will procure repayment by the Company on or before 31st March
2000 of the Loan of (pound)10,000 made by the Vendor or take an
assignment thereof from the Vendor for a consideration equal to
the outstanding amount of such loan.
48
8. Subsequent Recovery from Third Party
8.1 The Purchaser shall reimburse to the Vendor forthwith an amount equal to
any sum paid by the Vendor in respect of any claim for such liabilities
which is subsequently recovered by or paid to the Company by any other
person (including but not limited to insurance payments) (less any
reasonable costs and expenses incurred by the Company in making such
recovery).
9. Assignment of Claim
9.1 Where having discharged any claim for breach of the Warranties the Vendor
requests the assignment to it of any right of the Purchaser or of the
Company to make recovery in whole or in part from any third party, the
Purchaser will assign at Vendor's expense or procure the assignment to
the Vendor of such right and, if the same is not legally capable of
effective assignment, will, subject to being indemnified to the
reasonable satisfaction of the Purchaser pursue such claim on behalf of
the Vendor and deliver over upon receipt to the Vendor all amounts
recovered.
10. Reliefs
10.1 Any such liabilities shall not extend to any part of the loss or damage
suffered by the Purchaser or the Company to the extent that such part
shall be used or shall be capable of being used by the Purchaser or the
Company or any present or future subsidiaries of either of them to offset
in whole or in part any past present or future liability to Taxation.
11. Third Party Claim
11.1 Where the Company or the Purchaser is entitled (whether by reason of
insurance or payment discount or otherwise) to recover from some other
person any sum in respect of Taxation or any other damage or liability
the subject of a claim against the Vendor under this Agreement or for
which a claim could be made hereunder (and whether before or after the
Vendor has made payment hereunder) the Purchaser shall if so required by
the Vendor and at her own cost and expense take or (as the case may
require) procure that the Company takes all steps (whether by way of a
claim against its insurers or otherwise) as the Vendor may reasonably
require to enforce such recovery and shall keep the Vendor informed to
their reasonable satisfaction of the progress of any action taken.
Thereafter any claim against the Vendor shall be limited (in addition to
the limitations on the liability of the Vendor referred to in this
Schedule 5) to the amount by which the loss or damage suffered by the
Purchaser as a result of such breach shall exceed the amount (if any) so
recovered. The Purchaser shall not be entitled to make any claim in
respect of such liabilities if it or the Company fails to act in
accordance with the reasonable instructions of the Vendor in conducting
any claim against a third party.
49
12. Right to Fight
12.1 The Vendor shall be entitled to require the Purchaser or the Company to
take all such reasonable steps or proceedings as the Vendor may consider
appropriate in order to mitigate any claim in respect of such liabilities
or in respect of the undertakings in this Agreement and the Purchaser
shall procure that the Company shall act in accordance with any such
requirements (subject to the Purchaser and/or the Company being
indemnified by the Vendor against all reasonable costs and expenses
incurred in connection therewith). For the purpose of enabling the Vendor
to remedy a breach or to mitigate or otherwise determine the amount of
any claim or to decide what steps or proceedings should be taken in order
to mitigate any claim the Purchaser shall:-
12.1.1 give notice to the Vendor within fourteen days of any breach or
circumstance giving or likely to give rise to a breach coming to
its notice or to the notice of the Company;
12.1.2 make or procure to be made available to the Vendor or her duly
authorised representatives all relevant personnel, books of
accounts, records and correspondence of the Company for the
purpose of enabling the Vendor to ascertain or extract any
relevant information; and
12.1.3 make no admission of the fact or amount of any liability on the
part of the Company or the Purchaser without the prior written
consent of the Vendor such consent not to be unreasonably
withheld.
The Purchaser shall not be entitled to make any claim in respect of a
breach of Warranty if it or the Company fails to give the said notice or
to act in accordance with the reasonable instructions of the Vendor in
conducting any dispute or negotiation in relation to the claim in
accordance with this paragraph 12.
13. Reliance on Statements
13.1 No claim shall be made against the Vendor in respect of any warranty,
representation, indemnity, covenant, undertaking or otherwise arising out
of or in connection with the sale of the issued share capital of the
Company except where the same is expressly contained in this Agreement or
the Schedules hereto or the Disclosure Letter and the Purchaser confirms
that it has not relied upon or been induced to enter into this Agreement
by any warranty, representation, indemnity, covenant or undertaking given
by any person which is not expressly contained in this Agreement.
14. No Rescission
14.1 Any breach of any of the Warranties or any other provision of this
Agreement by the Vendor shall give rise only to an action by the
Purchaser for damages and shall not entitle the Purchaser to rescind this
Agreement, save as expressly provided for in clause 4.2 of this
Agreement.
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Duty to Mitigate
15.1 Nothing in this Agreement shall be deemed to relieve the Purchaser from
its common law duty to the Vendor to mitigate their loss and without
prejudice to the generality of the foregoing the Purchaser shall take and
shall do all things in its power to procure that the Company shall take
all practicable and reasonable steps to avoid or mitigate any loss or
liability which may give rise to a claim under the Warranties or this
Agreement.
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SCHEDULE 6
Deed of Indemnity
THIS DEED OF INDEMNITY is made on ________________ 199
BETWEEN:-
(1) NITA EUGENIE XXXX XXXXXXXX of Stylehurst Paddock, Xxxxxxxx Xxxx, Xxxxx
Xxxxxx, Xxxxxx, Xxxxxx XX0 0XX (the "Covenantor"); and
(2) LEISURE TRAVEL GROUP LIMITED whose office is at Xxxxxxxxx Xxxxx 00
Xxxxxxxx Xxxxx Xxxxxx XX0 (xxx "Purchaser" which expression shall include
its successors and assigns).
RECITAL
This Deed of Indemnity is entered into pursuant to the provisions of an
agreement (the "Sale Agreement") made on 1999 pursuant to which the Purchaser
agreed to purchase the whole of the share capital of the Company.
THE PARTIES AGREE AS FOLLOWS:-
1. INTERPRETATION
1.1 Subject to clause 1.2 and unless the context otherwise indicates, words
expressions and abbreviations defined in the Sale Agreement shall have
the same meanings in this deed and any provisions of the Sale Agreement
concerning matters of construction or interpretations shall mutatis
mutandis apply to this deed.
1.2 The following words, expressions and abbreviations used in this deed
shall, unless the context otherwise requires, have the following
meanings:-
"Claim for Tax" means any of the following:-
(a) any liability to make a payment of Tax and any claim, assessment,
demand, notice or other document issued or action taken by or on
behalf of any person authority or body whatsoever and of
whatsoever country which claims payment of Tax or any submission,
return or correspondence from which it appears likely that there
may be a liability to Tax or Claim for Tax within (b) below, or
(b) any non-availability or loss of or reduction of any Relief
(including in particular a right to repayment) to the extent that
such Relief has been reflected in the Net
52
Assets of the Company as shown by the Principal Accounts.
"Company" shall have the same meaning as in the Sale Agreement.
"Group" shall be deemed to include the Company and any subsidiary.
"Group Relief" means any of the following:-
(a) relief surrendered or claimed pursuant to chapter IV part X of the
ICTA 1988;
(b) advance corporation tax surrendered or claimed pursuant to section
240 of the ICTA 1988;
(c) a Transferred Tax Refund.
"income profits or gains" includes any other measure by reference to
which Tax is computed;
"Purchaser's Relief" means any Relief to the extent that the same
either:-
(a) has been reflected in the Net Assets of the Company as shown by
the Principal Accounts; or
(b) arises in respect of periods after the Last Accounts Date;
"Relevant Event" means every event, act, omission, default, occurrence,
circumstance, transaction, dealing or arrangement of any kind whatsoever
done or omitted to be done by the Covenantor or the Company or which in
any way concerns or effects the Company whether or not done or omitted to
be done by the Company or the Covenantor;
"Relief" means any allowance, credit, exemption, deduction or relief
from, in computing against or in respect of Tax or any right to the
repayment of Tax;
"Tax" means any tax, and any duty, impost, levy or charge in the nature
of tax, whether domestic or foreign, and any fine, penalty or interest
connected therewith including (without prejudice to the foregoing)
corporation tax, advance corporation tax, income tax, national insurance
and social security contribution, capital gains tax, inheritance tax,
petroleum revenue tax, value added tax, customs excise and import duties,
stamp duty, stamp duty reserve tax, insurance premium tax, air passenger
duty, rates and water rates and any other payment whatsoever which the
Company is or may be or become bound to make to any person by reason of
any taxation statutes;
"taxation statutes" means all statutes, decrees, orders and regulations
whether domestic or foreign providing for or imposing any Tax;
"Transferred Tax Refund" means a tax refund relating to an accounting
period as defined
53
by section 102(3) of the FA 1989 in respect of which a notice has been
given pursuant to section 102(2) of the FA 1989.
"Utilisation of a Purchaser's Relief" means the utilisation or set off of
a Purchaser's Relief available to the Company.
1.3 References to income, profits or gains being earned accrued or received
before a particular date shall include deemed income profits or gains
treated as earned accrued or received prior thereto.
2. INDEMNITY
2.1 Subject to clause 2.2 the Covenantor hereby covenant with the Purchaser
to pay from time to time to the Purchaser:-
(a) such sums as would if paid to the Company indemnify and keep
indemnified the Company against each and every Claim for Tax where
the Claim for Tax in question arises whether in whole or in part:-
(i) in connection with or as a consequence of one or more
Relevant Events occurring or entered into on or before
Completion; or
(ii) in respect of or by reference to any income profits or
gains earned, accrued or received on or before Completion;
or
(iii) in consequence of the combined effect of two or more
Relevant Events of which at least one shall have occurred
on or before Completion but only in circumstances where
such Claim for Tax would not have been suffered by the
Company but for the failure of any person (other than a
Companies falling within the definition of the Companies
for the purposes of this deed) to discharge or pay any
liability for Tax;
(b) such sums as would if paid to the Company indemnify and keep
indemnified the Company against:-
(i) each and every loss in whole or in part of the right to
receive any payment for Group Relief to the extent that the
payment has been reflected in the Net Assets of the Company
as shown by the Principal Accounts; and/or
(ii) any liability to make any payment for Group Relief and/or
any liability to repay any repayment received for Group
Relief to the extent that any such liability has not been
reflected in the Net Assets of the Company as shown by the
Principal Accounts;
(c) such sums as will indemnify and keep indemnified the Purchaser and
such further sums as would if paid to the Company and/or any
subsidiary or holding company of the Purchaser (or any subsidiary
of any such holding companies) indemnify the
54
same against all costs and expenses incurred or payable in
connection with:-
(i) any Claim for Tax the subject of a claim under clause
2.1(a), including all legal proceedings relating thereto
and the settlement of any Claim for Tax and/or rebuttal of
any contention or in connection with any legal proceedings
and reasonable steps taken to avoid any Claim for Tax or
contention whether actual, threatened and/or anticipated;
(ii) any loss or liability as mentioned in clause 2.1(b)
including all legal proceedings relating thereto.
2.2 If any Claim for Tax or liability which would have otherwise given rise
to a Claim for Tax shall be reduced or avoided in consequence of any
Utilisation of a Purchaser's Relief this deed shall apply as if such
Purchaser's Relief had not been available so that the amounts paid by the
Covenantor hereunder shall be the amounts which would have been payable
in the absence of that or any other Purchaser's Relief.
2.3 The covenant contained in clause 2.1(a) shall not apply:-
(a) to any Claim for Tax to the extent that any Tax giving rise to the
same has been paid prior to the Last Accounts Date or that a full
and sufficient provision or reserve for the liability to which the
same relates has been made in the Principal Accounts and for the
purposes of this clause 2.3(a) no provision or reserve shall be
prevented from being full and sufficient if the same proves to be
inadequate by reason only of an increase in rates of Tax announced
after the date of the Sale Agreement;
(b) to any Claim for Tax to the extent that the same shall have arisen
in consequence of any act or transaction which could reasonably
have been avoided and which was carried out without the agreement
of the Covenantor by the Purchaser or the Company after Completion
otherwise than in the ordinary course of business of the Company,
and which the Purchaser was or should reasonably have been aware
would give rise to the Claim for Tax in question; or
(c) to any Claim for Tax to the extent that it arises in the ordinary
course of business of the Company after the Last Accounts Date but
on or before Completion and for this purpose, but without
limitation, the following shall not be regarded as being in the
ordinary course of business:-
(i) the declaration or payment of any dividend or the making of
any other distribution; or
(ii) any transaction entered into by the Company in the
circumstances where the consideration (if any) received by
or as the case may be, paid by the Company in respect
thereof is less than or more than the consideration deemed
to have been received or paid for Tax purposes but to the
extent
55
only of the Claim for Tax arising in respect of the amount
by which the deemed consideration exceeds or is less than
the actual consideration; or
(iii) the Company ceasing or being deemed to cease, for Tax
purposes, to be the member of any group or associated with
any other company or person whether in consequence of the
entering into of the Sale Agreement or anything done under
it or otherwise; or
(iv) a Relevant Event which gives rise to a liability of the
Company in respect of the income, profits or gains, whether
actual or deemed, of any non-resident person;
(v) any other Relevant Event which gives rise to a liability to
Tax on deemed (as opposed to actual) income, profits or
gains.
(d) to the Company becoming or being deemed to become or ceasing or
being deemed to cease, for Tax purposes, to be a member of any
group or associated with any other company or person whether in
consequence of the entering into of the Sale Agreement or anything
done under it or otherwise;
(e) to any Claim for Tax to the extent that the same is increased as a
result of any failure by the Purchaser or the Company to comply
with its obligations under clause 5.
2.4 In computing the amount to be paid by the Covenantor under this Deed in
respect of any Claim for Tax no account shall be taken of any Tax for
which the Company would have been liable in respect of such amount had it
in fact been paid to the Company.
2.5 All sums payable by the Covenantor under this Deed shall be paid free and
clear of all deductions or withholding (including Tax) unless the
deduction or withholding is required by law, in which event or in the
event that the Purchaser shall incur any liability for Tax chargeable or
assessable in respect of any payment pursuant to this deed, the
Covenantor shall pay such additional amounts as shall be required to
ensure that the net amount received and retained by the Purchaser (after
Tax) will equal the full amount which would have been received and
retained by it had no such deduction or withholding been made and/or no
such liability to Tax been incurred and in applying this clause 2.5 no
account shall be taken of the extent to which any liability for Tax may
be mitigated or offset by any Relief available to the Purchaser so that
where such Relief is available the additional amount payable hereunder
shall be the amount which would have been payable in the absence of such
availability.
3. TIMING
3.1 Where the Covenantor becomes liable to make any payment pursuant to
clause 2, the due date for the making of that payment shall be:-
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(a) in so far as the claim arises pursuant to clause 2.1(a) seven days
before the day on which a payment of Tax becomes due under or in
consequence of the Claim for Tax in question or seven days before
the day on which any repayment (or increased repayment) of Tax
which but for such Claim for Tax would have been available, would
have been due and for this purpose it shall be assumed that the
repayment would have become due at the earliest possible date;
(b) in so far as the liability arises pursuant to clause 2.1(b) nine
months after the end of the accounting period of the Company in
relation to which the Group Relief surrender was made or where the
liability arises as a consequence of a liability to repay any
payment received for or to make any payment for Group Relief,
seven days before the date on which the Company is liable to repay
or pay such amounts;
(c) in so far as the claim arises pursuant to clause 2.1(c), seven
days before the day on which the costs and expenses fall due for
payment;
(d) in so far as the claim arises pursuant to clause 2.2 the date on
which payment would have become due under sub-clause (a) above had
no Purchaser's Relief been available and for this purpose it shall
be assumed that the Claim for Tax would have been made and all Tax
would have become due at the earliest possible date (assuming no
application for postponement).
3.2 Where but for the non-availability, loss or reduction of any Purchaser's
Relief the Company could have surrendered the same to another company by
way of Group Relief this Deed and in particular clause 3.1(a) shall apply
as if the Tax which could have been saved as a consequence of any such
surrender would have been saved by the Company but for the said
non-availability, loss or reduction and at the same time.
3.3 For the purposes hereof where Tax is due or a repayment due is lost or
reduced or a Group Relief Payment is lost or reduced or falls to be
repaid or where, but for a Utilisation of a Purchaser's Relief Tax would
be due or costs and expenses fall due for payment, on more than one
occasion then paragraphs (a) to (d) of clause 3.1 shall apply separately
on each such occasion.
3.4 If any sum due under clause 2 is not paid by the Covenantor by the later
of the due date and the date seven days after the date of the demand made
therefor the same shall carry interest (from such later date until the
date of payment) at the rate of four per cent, over the base rate for the
time being of Barclays Bank Plc (or in the absence of such rate at such
equivalent rate as the Purchaser shall select) save that interest shall
not start to run in respect of any payments of Tax above until seven days
before the day on which the Company makes the payment of Tax due.
4. REBATE
4.1 If the Purchaser or as the case may be the Company is entitled to recover
from any person
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(other than the Covenantor the Purchaser or the Company) in respect of
any claim for tax which gives rise to a liability on the part of the
Covenantor under this Deed then:-
(a) the Purchaser shall give the Covenantor full details of the
entitlement as soon as practicable;
(b) subject to the Purchaser and the Company being indemnified to the
reasonable satisfaction of the Purchaser by the Covenantor against
all costs, expenses and other liabilities which may be thereby
incurred by the Purchaser or the Company or the Purchaser shall at
the request of the Covenantor take all reasonable and appropriate
steps to recover or procure the recovery of the sum keeping the
Covenantor fully informed of the progress of any action taken
provided that neither the Purchaser nor the Company shall be
required to take any action which they consider to be prejudicial
to their commercial interests.
4.2 The Purchaser undertakes that if after the Covenantor have paid in full
any amount due hereunder in respect of any claim for tax the Purchaser or
the Company is or becomes entitled to receive and receives (from any
person other than the Covenantor) a payment in respect of such claim for
tax the Purchaser shall or shall procure that the Company shall pay to
the Covenantor a sum equal to the lesser of:-
(a) the amount of any payment so received after deduction therefrom of
an amount equal to any costs reasonably and properly incurred in
obtaining it and any taxation liability in respect of it; and
(b) the amount paid by the Covenantor hereunder in respect of the
taxation liability in question.
4.3 If the liability of the Company to make an actual payment of tax is
reduced in consequence of the utilisation of a relief which would not
have arisen but for the circumstances giving rise to a claim for tax in
respect of which the Covenantor are liable under this Deed (relevant
relief) then:
(a) the Purchaser shall procure that details of the reduction in tax
liability are given to the Covenantor; and
(b) the Purchaser shall procure that as soon as practicable and after
the date on which the tax which has been reduced would otherwise
have been paid any payment made by the Covenantor in respect of
the Relevant Claim is paid to the Covenantor up to the amount of
the reduction (after deducting therefrom any reasonable and proper
costs and expenses incurred by the Purchaser or the Company in
obtaining such reduction) and that any interest or repayment
supplement received relating to the reduction so far as repaid is
also forthwith paid to the Covenantor.
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5. CONDUCT OF CLAIMS
5.1 If the Purchaser shall become aware of any claim which is likely to give
rise to a liability on the Covenantor hereunder the Purchaser shall by
way of covenant but not as a condition precedent to the liability of the
Covenantor hereunder gives notice thereof or procure that notice thereof
is given as soon as reasonably practical to the Covenantor and if
possible giving an estimate of the sums involved and shall not make any
communication with any taxation authority in relation to such claim.
5.2 As regards any claim the Purchaser shall take or shall procure that the
Company shall take any such action as the Covenantor may by written
notice given to the Purchaser reasonably request cause the claim to be
withdrawn or to dispute, resist, appeal against, compromise or defend the
claim and any determination in respect thereof or to apply to postpone
(so far as legally possible) the payment of any tax pending the
determination of any appeal but subject to the Purchaser and the Company
being indemnified and secured to the reasonable satisfaction of the
Purchaser by the Covenantor against all losses (including any additional
taxation liability) interest, costs, damages and expenses which may be
thereby incurred by the Purchaser or the Company and provided that :
(a) any request made by the Covenantor pursuant to this Clause 5.2
shall be made within a reasonable time of receipt by the
Covenantor of any notice given by the Purchaser to the Covenantor
in accordance with Clause 5.1 and if on the expiry of the period
of 14 days commencing on the date of receipt by the Covenantor of
such notice the Covenantor shall not have given to the Purchaser
notice of the Covenantor's intention in respect of the claim or
shall not have provided satisfactory indemnities or securities in
accordance with this Clause 5.2 the Purchaser and the Company
shall be entitled to be satisfied or settle or deal with the claim
on such terms as they shall in their absolute discretion think fit
without prejudice to their rights and remedies under this Deed;
(b) the Purchaser and the Company shall not be obliged to comply with
any request of the Covenantor which involves contesting any
assessment for taxation before any court or any other appellant
body unless they have been advised in writing by leading tax
Counsel instructed by agreement between the Purchaser and the
Covenantor at the expense of the Covenantor that an appeal against
the assessment for taxation in question will on the balance of
probably be won by the Purchaser or as the case may be the
Company;
(c) neither the Purchaser nor the Company shall be obliged to take any
action which is likely to increase the future taxation liability
of the Company in the group of companies of which the Purchaser is
for the time being a member; and
(d) the Purchaser may require the Covenantor to take in the name of
the Company the action requested in accordance with this Clause
5.2 on such terms as the Purchaser in its absolute discretion
thinks fit.
5.3 The Purchaser shall procure that the Company ensures that a claim to
which this Deed
59
applies is so far as is reasonably practicable dealt with separately from
claims to which it does not apply and that any claim to which it does
apply is not paid prematurely.
5.4 The Purchaser shall supply to the Covenantor copies of all material
written correspondence with the Inland Revenue in relation to any
dispute, failed negotiations or other proceedings conducted by or at the
request of the Covenantor pursuant to Clause 5.2.
60
IN WITNESS WHEREOF the parties hereto have executed this deed on the date set
out above
SIGNED by NITA EUGENIE XXXX ) /s/ NITA EUGENIE XXXX XXXXXXXX
XXXXXXXX in the presence of: )
SIGNED by )
duly authorised by LEISURE ) /s/ Illegible
TRAVEL GROUP LIMITED )
61
SCHEDULE 7
Shareholders Undertaking
We, Nita Eugenie Xxxx Xxxxxxxx and Xxxxxxx Xxxx Xxxxxxxx, being the registered
shareholders of all of the shares in Ilios Travel Limited (the "Company") give
this Undertaking pursuant to Clause 4 of an agreement of even date herewith made
between Nita Eugenie Xxxx Xxxxxxxx and Leisure Travel Group Limited (the
Agreement") concerning the sale of such shares.
1. Words and phrases defined in the Agreement shall bear the same meanings
in this Undertaking.
2. The Shares are held as set out in Schedule 1 to the Agreement.
3. We acknowledge receipt of the consideration for the Shares set out
opposite our names in Schedule 1.
4. We severally undertake to Leisure Travel Group Limited that if the Vendor
or the Covenantor shall be liable under the terms of the Agreement
(including but without limitation the Warranties and the Deed of
Indemnity) to make any payment to Leisure Travel Group Limited, we shall
on demand make such payment.
5. Our several liabilities hereunder shall be limited to the amount of
consideration we have received.
6. The provisions of Clause 7 of the Agreement shall apply to this
Undertaking mutatis mutandis.
IN WITNESS WHEREOF the parties hereto have executed this undertaking as a Deed
on the 1999
EXECUTED AS A DEED by XXXX )
EUGENIE XXXX XXXXXXXX in the )
presence of: )
EXECUTED AS A DEED by )
XXXXXXX XXXX XXXXXXXX in the )
presence of: )
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