Exhibit 10.2
AIOI INSURANCE COMPANY LIMITED
HILLCOT HOLDINGS LTD
CASTLEWOOD (EU) LTD
KENMARE HOLDINGS LTD
AND
SHINSEI BANK, LIMITED
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AGREEMENT FOR THE SALE AND
PURCHASE OF AIOI INSURANCE COMPANY OF EUROPE
LIMITED
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CONTENTS
CLAUSE PAGE
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1. Interpretation..................................................... 1
2. Sale And Purchase.................................................. 7
3. Conditions......................................................... 8
4. Completion......................................................... 9
5. Warranties......................................................... 9
6. Pre-Completion Conduct And Post Completion Matters................. 10
7. Seller's Additional Covenants And Indemnities...................... 11
8. The Buyer's Remedies............................................... 16
9. Limitations On The Seller's Liability.............................. 17
10. The Buyer's Warranties And Undertakings............................ 20
11. Commutation Of Quota Share Agreements.............................. 21
12. Buyer's Guarantors................................................. 22
13. Confidential Information........................................... 22
14. Announcements...................................................... 23
15. Costs.............................................................. 23
16. General............................................................ 23
17. Entire Agreement................................................... 24
18. Assignment......................................................... 24
19. Notices............................................................ 24
20. Governing Law And Jurisdiction..................................... 25
21. Governing Language................................................. 26
22. Counterparts....................................................... 26
Schedule 1 INFORMATION ABOUT THE COMPANY............................... 27
Schedule 2 COMPLETION REQUIREMENTS..................................... 28
Schedule 3 WARRANTIES.................................................. 32
Schedule 4 ACTION PENDING COMPLETION................................... 45
Schedule 5 NON-TRANSFERRING BUSINESS, NON-TRANSFERRING POLICIES,
NON-TRANSFERRING POLICY RECORDS AND NON-TRANSFERRING
RECORDS..................................................... 49
Schedule 6 TAX LOSSES*................................................. 51
* A copy of Schedule 6 will be furnished to the Commission upon request.
AGREED FORM DOCUMENTS
1. Tax Deed
2. Irrevocable power of attorney in respect of the Shares
3. Letter of Credit
4. Loan Note
5. LoC Supplemental Governance Deed
6. Security Charge
7. Deed of Variation to the Transfer Agreement
8. Commutation Agreement
9. Substitution of capital support arrangement and duration of the Letter of
Credit
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THIS AGREEMENT is made on 30 December 2005
BETWEEN:
(1) Aioi Insurance Company Limited, a company incorporated in Japan (registered
no. FC023165), whose registered office is at 00-0 Xxxxx, 0 - xxxxx
Xxxxxxx-xx, 000 - 0000, Xxxxx, Xxxxx (the "SELLER");
(2) Hillcot Holdings Ltd, a company incorporated in Bermuda (registered no. EC
32870, whose registered office is at Sofia House, 00 Xxxxxx Xxxxxx,
Xxxxxxxx, XX00, Xxxxxxx (xxx "BUYER");
(3) Castlewood (EU) Ltd, a company incorporated in England and Wales
(registered no. 3168082), whose registered office is at Xx Xxxx'x Xxxxx,
Xxxxxxx Xxxx, Xxxxxx XX0X 0XX ("CASTLEWOOD");
(4) Kenmare Holdings Ltd, a company incorporated in Bermuda (registered no.
30917), whose registered office is at Sofia House, 00 Xxxxxx Xxxxxx,
Xxxxxxxx, Xxxxxxx ("XXXXXXX"); and
(5) Shinsei Bank, Limited, a company incorporated under the laws of Japan and
having its principal place of business at 0-0 Xxxxxxxxxxxxx 0-xxxxx,
Xxxxxxx-xx, Xxxxx, 000-000, Xxxxx (together with Kenmare, the "BUYER'S
GUARANTORS").
THE PARTIES AGREE as follows:
1. INTERPRETATION
1.1 In this Agreement:
"ACCOUNTS" means the Company's accounts (as that term is used in section
226 of the Act) for the financial year ended on the Last Accounting Date,
the auditors' report on those accounts, the directors' report for that year
and the notes to those accounts;
"ACCOUNTS RELIEF" means a Relief, the availability of which has been shown
as an asset in the Accounts or has been taken into account in computing
(and reducing) a provision for deferred tax which appears in the Accounts
or has resulted in no provision for deferred tax being made in the
Accounts;
"ACT" means the Companies Xxx 0000;
"ADDENDUM TO THE RUN-OFF SERVICES AGREEMENT" means the addendum to the
Run-Off Services Agreement;
"AIOI MOTOR AND GENERAL" means Aioi Motor and General Insurance Company of
Europe Limited, a company incorporated in England and Wales (registered no.
05046406), whose registered office is at 0xx Xxxxx, 00 Xxxx Xxxx, Xxxxxx
XX0X 0XX;
"ASSESSMENT" means a claim, assessment, notice, demand or other document
issued or action taken by or on behalf of a Tax Authority by which the
Company is liable or is sought to be made liable to make a payment to the
Tax Authority or to another person (whether or not the payment is primarily
payable by the Company and whether or not the
Company has or may have a right of reimbursement against another person) or
is denied or sought to be denied a Relief;
"ASSOCIATE COMPANY" means Watershed Claims Services Limited, a company
incorporated in England and Wales (registered no. 03444444);
"BUSINESS DAY" means a day other than a Saturday or Sunday or a public
holiday in the UK, Bermuda or Japan;
"BUYER'S GROUP" means the Buyer and any company which is, on the date of
this Agreement, a subsidiary of the Buyer;
"BUYER'S GROUP COMPANY" means a member of the Buyer's Group;
"BUYER'S SOLICITORS" means Xxxxx & Co of 00 Xxxxxxxxx, Xxxxxx XX0X 0XX
(Ref: AH/0407451);
"CAA" means the Capital Allowances Xxx 0000;
"COMMUTATION AGREEMENT" means the agreement, in the agreed form, between
the Company and the Seller relating to the commutation of the Quota Share
Agreements;
"COMPANY" means Aioi Insurance Company of Europe Limited, a company
incorporated in England and Wales (registered number 1272965), whose
registered office is at 0xx Xxxxx, 00 Xxxx Xxxx, Xxxxxx XX0X 0XX, more
details of which appear in Schedule 1;
"COMPLETION" means completion of the sale and purchase of the Shares in
accordance with this Agreement;
"COMPLETION DATE" means the later of 27 March 2006 and the date which is
five Business Days after the date (not being later than 31 March 2006) on
which the last of the Conditions to be satisfied or waived is satisfied or
waived;
"CONDITION" means a condition set out in Clause 3.1 and "CONDITIONS" means
all of those conditions;
"CONFIDENTIAL INFORMATION" means all information which is used in or
otherwise relates to the Company's business, customers or financial or
other affairs including, without limitation, information relating to:
(a) the marketing of goods or services including, without limitation,
customer names and lists and other details of customers, sales
targets, sales statistics, market share statistics, prices, market
research reports and surveys, and advertising or other promotional
materials; or
(b) future projects, business development or planning, commercial
relationships and negotiations; or
(c) the Non-Transferring Business,
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but does not include information which is made public by, or with the
consent of, the Buyer;
"CONSIDERATION" means the purchase price of the Shares as stated in Clause
2.2;
"COURT" means the High Court of Justice of England and Wales;
"DEED OF VARIATION TO THE TRANSFER AGREEMENT" means the deed between the
Company, Aioi Motor and General and Castlewood in the agreed form;
"DISCLOSURE LETTER" means the letter from the Seller to the Buyer in
relation to the Warranties having the same date as this Agreement the
receipt of which has been acknowledged by the Buyer;
"EFFECTIVE DATE" means the date on which the Scheme becomes operative in
accordance with its terms;
"EMPLOYEES" means all person employed by the Company immediately prior to
Completion;
"ENCUMBRANCE" means a mortgage, charge, pledge, lien, option, restriction,
right of first refusal, right of pre-emption, third-party right or
interest, other encumbrance or security interest of any kind, or another
type of preferential arrangement (including, without limitation, a title
transfer or retention arrangement) having similar effect;
"EVENT" means an event, act, transaction or omission, including, without
limitation, a receipt or accrual of income, profit or gains, distribution,
failure to distribute, acquisition, disposal, transfer, payment, loan or
advance;
"EXCLUDED POLICIES REINSURANCE AGREEMENT" means the agreement between the
Company and Aioi Motor and General defined in the Scheme as the Reinsurance
Agreement relating to the reinsurance of Excluded Policies (as defined in
the Scheme);
"FSA" means the UK Financial Services Authority;
"FSMA" means the Financial Services and Markets Xxx 0000;
"ICTA" means the Income and Corporation Taxes Xxx 0000;
"INTELLECTUAL PROPERTY" means:
(a) patents, trade marks, service marks, registered designs, applications
and rights to apply for any of those rights, trade, business and
company names, internet domain names and e-mail addresses,
unregistered trade marks, service marks and design rights, copyrights,
database rights, rights in software, know-how, confidential
information, data, designs and inventions;
(b) rights under licences, consents, orders, statutes or otherwise in
relation to a right in paragraph (a);
(c) rights of the same or similar effect or nature as or to those in
paragraphs (a) and (b) which now or in the future may subsist; and
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(d) the right to xxx for past infringements of any of the foregoing
rights;
"INTELLECTUAL PROPERTY RIGHTS" means all Intellectual Property owned, used
or required to be used by the Company;
"LAST ACCOUNTING DATE" means 31 December 2004;
"LETTER OF CREDIT" means the letter of credit in the agreed form;
"LOAN NOTE" means the L12,000,000 loan note issued by the Buyer to the
Seller in the agreed form;
"LOC SUPPLEMENTAL GOVERNANCE DEED" means the deed of that name between the
Seller, Castlewood and the Buyer in the agreed form;
"LOCAL LEGISLATION" means national measures by way of legislation
implementing into national law the obligations of France, Germany, Belgium
and Netherlands under Council Directive 77/187/EEC as amended by Council
Directives 98/50/EC and 2001/23/EC;
"MANAGEMENT ACCOUNTS" means the unaudited profit and loss account of the
Company in respect of the period starting on the day after the Last
Accounting Date for each period ending 31 March 2005, 30 June 2005 and 30
September 2005 and the unaudited balance sheet of the Company for the same
periods;
"NCIS" means Netherlands Construction Insurance Services Limited a company
incorporated in England and Wales (registered no: 3296705), whose
registered office is at 00 Xxxxxxx Xxxxxx, Xxxxxx, X0 0XX and any company
which is on or at any time after the date of this Agreement a subsidiary of
NCIS, a holding company of NCIS or a subsidiary of such holding company;
"NON-TRANSFERRING BUSINESS" shall have the meaning set out in the Scheme;
"NON-TRANSFERRING POLICIES" shall have the meaning set out in the Scheme;
"NON-TRANSFERRING POLICY RECORDS" means the books and records of the
Company referable to the Non-Transferring Business in the Company's
possession or under its control as at the Completion Date including (but
not limited to) any books and records relating to:
(a) underwriting with respect to the Non-Transferring Business; and
(b) outstanding claims in respect of the Non-Transferring Business;
"ORDER" means an order made by the Court pursuant to Part VII of FSMA
sanctioning the Scheme and any order made by the Court which is ancillary
thereto;
"PROPERTY" means freehold, leasehold or other immovable property in any
part of the world;
"QUOTA SHARE AGREEMENTS" means the quota share agreements between the
Company and the Seller identified in the Commutation Agreement;
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"REINSURANCE AGREEMENTS" means the reinsurance agreements entered into by
the Company in relation to or in connection with the Non-Transferring
Business;
"RELEVANT CLAIM" means (i) a Warranty Claim; (ii) a claim by the Buyer
under the Tax Deed; or (iii) for the purposes of the limitations set out in
Clauses 9.2, 9.3.3 and 9.8 only, a claim under Clauses 7.1 to 7.9;
"RELIEF" means any loss, relief, allowance, exemption, set off, deduction,
right to repayment or credit or other relief of a similar nature granted by
or available in relation to Tax pursuant to any legislation or otherwise;
"RUN-OFF SERVICES AGREEMENT" means the Run-Off Services Agreement dated 6
May 2005 between the Company and Castlewood;
"SCHEME" means the scheme under Part VII of FSMA for the transfer of the
Transferring Business from the Company to Aioi Motor and General before the
High Court of Justice, Chancery Division, Companies Court under case number
6185 of 2005;
"SECURITY CHARGE" means the Security Over Shares Agreement between the
Buyer and the Seller as security for the Loan Note in the agreed form;
"SELLER'S GROUP" means the Seller and any company which is, on or at any
time after the date of this Agreement, a subsidiary of the Seller;
"SELLER'S GROUP COMPANY" means a member of the Seller's Group;
"SELLER'S SOLICITORS" means Xxxxxxxx Chance Limited Liability Partnership
of 00 Xxxxx Xxxx Xxxxxx, Xxxxxx X00 0XX;
"SHARES" means the 156,000,000 fully-paid ordinary shares of L1 each
of the Company comprising the whole of the allotted and issued share
capital of the Company;
"SUBSIDIARY UNDERTAKING" means Toyota Insurance Management Limited, a
company incorporated in England and Wales (registered no. 3787854);
"SUBSTITUTION OF CAPITAL SUPPORT ARRANGEMENT AND DURATION OF THE LETTER OF
CREDIT" means the deed between the Seller, Castlewood and the Buyer in the
agreed form;
"SURRENDER OF GROUP RELIEF" means a surrender of relief for trading losses
or other amounts eligible of surrender under Chapter IV of Part X of the
Taxes Act;
"SURRENDER OF TAX REFUND" means a surrender of tax refund under section 102
of the Finance Xxx 0000;
"SUPPLEMENTAL AGREEMENT" means the Supplemental Reinsurance Governance
Agreement between Aioi Motor and General and the Company as contemplated in
the Scheme;
"TAX" or "TAXATION" has the meaning given in the Tax Deed;
"TAX AUTHORITY" has the meaning given in the Tax Deed;
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"TAX CLAIM" means a claim under the Tax Deed or a claim for breach of the
tax warranties set out in paragraph 6 of Schedule 3;
"TAX DEED" means the tax deed in the agreed form between the Buyer and the
Seller;
"TAXES ACT" means the Income and Corporation Taxes Xxx 0000;
"TCGA" means the Taxation of Chargeable Gains Xxx 0000;
"TRANSACTION" means the sale of the Shares to the Buyer as contemplated by
the terms of this Agreement;
"TRANSACTION DOCUMENTS" means this Agreement, the Letter of Credit, the
Loan Note, the LoC Supplemental Governance Deed and the Tax Deed;
"TRANSFER" means the transfer of the Transferring Business from the Company
to Aioi Motor and General pursuant to the Transfer Agreement and the
Scheme;
"TRANSFER AGREEMENT" means the agreement dated 12 September 2005 entered
into between the Company and Aioi Motor and General relating to the
Transfer;
"TRANSFERRING BUSINESS" shall have the meaning set out in the Scheme;
"TRANSFERRING POLICIES" shall have the meaning set out in the Scheme;
"TUPE" means the Transfer of Undertakings (Protection of Employment)
Regulations 1981;
"VAT" means value added tax as imposed by the VATA and, in a jurisdiction
outside the United Kingdom, any equivalent taxation;
"VATA" means, in the UK, the Value Added Tax Xxx 0000 and, in a
jurisdiction outside the UK, any equivalent legislation;
"WARRANTY" means a statement contained in Schedule 3 and "WARRANTIES" means
all those statements; and
"WARRANTY CLAIM" means a claim by the Buyer under or pursuant to the
provisions of Clause 5.1 or Clause 5.2.
1.2 In this Agreement, a reference to:
1.2.1 a "SUBSIDIARY UNDERTAKING" or "PARENT UNDERTAKING" is to be construed
in accordance with section 258 of the Act and to a "SUBSIDIARY" or
"HOLDING COMPANY" is to be construed in accordance with section 736 of
the Act;
1.2.2 liability under, pursuant to or arising out of (or any analogous
expression) any agreement, contract, deed or other instrument includes
a reference to contingent liability under, pursuant to or arising out
of (or any analogous expression) that agreement, contract, deed or
other instrument;
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1.2.3 a party being liable to another party, or to liability, includes, but
is not limited to, any liability in equity, contract or tort
(including negligence) or under the Xxxxxxxxxxxxxxxxx Xxx 0000;
1.2.4 a document in the "AGREED FORM" is a reference to a document in a
form approved and for the purposes of identification initialled by or
on behalf of each party;
1.2.5 a statutory provision includes a reference to the statutory provision
as modified or re-enacted or both from time to time before the date of
this Agreement and any subordinate legislation made under the
statutory provision (as so modified or re-enacted) before the date of
this Agreement;
1.2.6 a "PERSON" includes a reference to any individual, firm, company,
corporation or other body corporate, government, state or agency of a
state or any joint venture, association or partnership, works council
or employee representative body (whether or not having separate legal
personality);
1.2.7 a person includes a reference to that person's legal personal
representatives, successors and permitted assigns;
1.2.8 a "PARTY" includes a reference to that party's successors and
permitted assigns;
1.2.9 a Clause, paragraph or Schedule, unless the context otherwise
requires, is a reference to a Clause or paragraph of, or Schedule to,
this Agreement;
1.2.10 any English legal term for any action, remedy, method of judicial
proceeding, legal document, legal status, court, official or any legal
concept or thing shall in respect of any jurisdiction other than
England be deemed to include what most nearly approximates in that
jurisdiction to the English legal term and to any English statute
shall be construed so as to include equivalent or analogous laws of
any other jurisdiction; and
1.2.11 times of the day are to London time.
1.3 The headings in this Agreement do not affect its interpretation.
1.4 A reference in Schedule 3 to the Seller's knowledge, information or belief
is deemed to include knowledge, information and belief which the Seller
would have if the Seller had made all reasonable enquiries of Xxxxx
Xxxxxx-Xxxxx, Xxxxxx Xxx, Xxxxxxxx Xxxxxxxxx, Xxxx Xxxxxxx and Michitoki
Yokoi.
1.5 Castlewood is only a party to this Agreement in order to take the benefit
of the covenants and indemnities from the Seller as set out in Clause 7.
2. SALE AND PURCHASE
2.1 The Seller agrees to sell with full title guarantee and the Buyer agrees to
buy the Shares and each right attaching to the Shares at or after the date
of this Agreement, free of any Encumbrance.
2.2 The purchase price of the Shares is L62,000,000.
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2.3 At Completion the Buyer shall pay to the Seller L50,000,000 in cash on
account of the Consideration payable under Clause 2.2 and shall deliver to
the Seller the Loan Note and the Security Charge duly executed by the
Buyer.
2.4 The Seller waives all rights of pre-emption and other restrictions on
transfer over the Shares conferred on it and shall procure that all such
rights conferred on any other person are waived no later than Completion so
as to permit the sale and purchase of the Shares.
3. CONDITIONS
3.1 Completion is conditional on the following Conditions being satisfied on or
before 12.00 pm on the Completion Date:
3.1.1 the Buyer having received a notice of approval from the FSA of all
persons who will acquire control of the Company on Completion in
accordance with section 184 of FSMA in terms reasonably satisfactory
to the Buyer or, in the absence of such notification, the period
during which the FSA may serve a notice of objection pursuant to
section 183 of FSMA in relation to the Buyer and such other relevant
persons having elapsed without the FSA having served notice of
objection on the Buyer;
3.1.2 the Court having granted the Order and any conditions to the Order
having been satisfied;
3.1.3 the Buyer having received a notice in writing from the FSA that it
does not object to the proposed reduction of the share capital of the
Company in an amount not exceeding L40,000,000 following Completion;
and
3.1.4 the Buyer having received a notice in writing from the FSA that it
does not object to the agreed form Substitution of capital support
arrangement and duration of the Letter of Credit.
3.2 The Buyer shall use all reasonable efforts to achieve satisfaction of the
Condition set out in Clause 3.1.1, Clause 3.1.3 and Clause 3.1.4 as soon as
possible before 27 March 2006. If, despite such reasonable efforts, the
Condition has not been satisfied by that date then the Buyer shall use all
reasonable efforts to achieve satisfaction of that Condition as soon as
practicable after that date and in any event not later than 12.00 pm on 31
March 2006.
3.3 The Seller shall use all reasonable efforts to achieve satisfaction of the
Condition set out in Clause 3.1.2 and Clause 3.1.4 as soon as possible
before 27 March 2006. If, despite such reasonable efforts, the Condition
has not been satisfied by that date then the Seller shall use all
reasonable efforts to achieve satisfaction of that Condition as soon as
practicable after that date and in any event not later than 12.00 pm on 31
March 2006.
3.4 If, at any time, the Seller or the Buyer becomes aware of a fact or
circumstance that might prevent a Condition being satisfied, it shall
promptly inform the other party.
3.5 If a Condition has not been satisfied by 12.00pm on 31 March 2006 this
Agreement shall automatically terminate with immediate effect.
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3.6 Each party's further rights and obligations cease immediately on
termination in accordance with Clause 3.5, but termination does not affect
a party's accrued rights and obligations at the date of termination.
4. COMPLETION
4.1 Completion shall take place at the offices of the Seller's Solicitors on
the Completion Date.
4.2 At Completion the Seller and the Buyer shall do all those things
respectively required of them in Schedule 2 and the Buyer shall pay or
procure the payment of the amount stated in Clause 2.2 to an account
notified by the Seller to the Buyer in writing prior to Completion.
4.3 The Buyer is not obliged to complete this Agreement unless:
4.3.1 the Seller complies with all its obligations under Clause 4 and
Schedule 2; and
4.3.2 the purchase of all the Shares is completed simultaneously.
4.4 If Completion does not take place on the Completion Date because the Seller
fails to comply with any of its obligations under Clause 4 and Schedule 2,
the Buyer may by notice to the Seller:
4.4.1 proceed to Completion to the extent reasonably practicable (but if
the Buyer exercises its right pursuant to this Clause 4.4.1,
completion of the purchase of some of the Shares does not affect the
Buyer's rights in connection with the others);
4.4.2 postpone Completion to a date not more than 28 Business Days after
the Completion Date; or
4.4.3 terminate this Agreement.
4.5 If the Buyer postpones Completion to another date in accordance with Clause
4.4.2, the provisions of this Agreement apply as if that other date is the
Completion Date.
4.6 If the Buyer terminates this Agreement pursuant to Clause 4.4.3, each
party's further rights and obligations cease immediately on termination,
but termination does not affect a party's accrued rights and obligations as
at the date of termination.
5. WARRANTIES
5.1 The Seller warrants to the Buyer that each Warranty (save for the
Warranties set out in paragraphs 8 and 9 of Schedule 3) is true, accurate
and not misleading at the date of this Agreement. Immediately before
Completion, the Seller warrants to the Buyer that each Warranty (save for
the Warranties set out in paragraphs 4, 7.5, 7.8 and 19.2 of Schedule 3) is
true, accurate and not misleading (and for this purpose only, where there
is an express or implied reference in a Warranty to "THE DATE OF THIS
AGREEMENT" that reference is also to be construed as a reference to
Completion).
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5.2 The Seller acknowledges that the Buyer is entering into this Agreement in
reliance on each Warranty, which is also given as a representation and with
the intention of inducing the Buyer to enter into this Agreement.
5.3 The Warranties are qualified by the facts and circumstances fully, fairly,
specifically and accurately disclosed in the Disclosure Letter. No other
knowledge relating to the Company (actual, constructive or imputed)
prevents or limits a claim made by the Buyer for breach of Clause 5.1.
5.4 Reference to any facts and circumstances being disclosed shall be deemed to
be a reference to them being fully, fairly, specifically and accurately
disclosed in the Disclosure Letter in such a manner that:
5.4.1 in the context of the disclosures contained in the Disclosure Letter:
(a) the significance of the information disclosed and its relevance
to a particular Warranty ought reasonably to be appreciated by
the Buyer, taking into account the paragraphs or subject matters
in relation to which the information was disclosed;
(b) there is not omitted from the information disclosed any
information which would have the effect of rendering the
information so disclosed misleading in any respect; and
5.4.2 in the context of any document treated as disclosed by the Disclosure
Letter, the matter disclosed is reasonably apparent from the terms of
the documents,
and nothing disclosed by the Seller to the Buyer other than in the
Disclosure Letter and in accordance with the provisions of this Clause 5.4
shall constitute disclosure for the purposes of this Agreement.
5.5 The Seller undertakes not to make any claim against the Company or a
director, officer or employee of the Company which it may have in respect
of a misrepresentation, inaccuracy or omission in or from information or
advice provided by the Company or a director, officer or employee of the
Company for the purpose of assisting the Seller to make a representation,
give a Warranty or prepare the Disclosure Letter.
5.6 Each Warranty is to be construed independently and (except where this
Agreement provides otherwise) is not limited by a provision of this
Agreement or another Warranty.
6. PRE-COMPLETION CONDUCT AND POST COMPLETION MATTERS
6.1 On the date of this Agreement, the Seller shall deliver to the Buyer the
Addendum to the Run-Off Services Agreement duly executed by the Company.
6.2 After the date of this Agreement, the Seller shall procure that the Company
requires the Company's auditors to provide such information and services to
the Buyer and/or Castlewood as they may require, subject to the Buyer
and/or Castlewood (as applicable) complying with the Company's reasonable
confidentiality requirements in relation to the disclosed information.
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6.3 Between the execution of this Agreement and Completion the Seller shall:
6.3.1 ensure that the Company complies with Schedule 4; and
6.3.2 notify the Buyer within two Business Days if it becomes aware of a
fact or circumstance which constitutes or which would or is likely to
constitute a material or repudiatory breach of Clause 5.1 or might
cause a Warranty to be untrue.
6.4 The Company's Corporation Tax Return for the twelve-month period ending 31
December 2006 to be filed with HM Revenue and Customs by 31 December 2007
shall deal with the allocation of tax losses between the Transferring
Business and the Non-Transferring Business. The method of allocation of
these tax losses shall be on a basis that is substantially consistent with
the figures set out in Schedule 6 (which deal with the allocation of tax
losses up to and including the year ended 31 December 2003) and the
Company's Corporation Tax Return shall be completed by including the
allocation of the 2004, 2005 and 2006 tax year profits and losses as they
become available. It is recognised by the parties that it is not within the
power or control of the parties to procure the agreement of HM Revenue and
Customs that tax losses will be allocated as aforesaid. In the event that
HM Revenue and Customs do not agree the aforesaid allocation, the parties
agree to be bound by such decision and the parties shall have no other
remedy under this Agreement or at law.
7. SELLER'S ADDITIONAL COVENANTS AND INDEMNITIES
7.1 The Seller and the Buyer believe that the termination of the agreement with
Axiom Consulting Limited ("AXIOM") dated 4 October 2001 (the "SLA"), the
termination of agreements between the Company and NCIS and the entering
into of the Run Off Services Agreement should not give rise to a relevant
transfer of an undertaking or part of an undertaking for the purposes of
TUPE and/or Local Legislation as between Axiom, NCIS, the Company and/or
Castlewood however the Seller has agreed to provide the following covenants
and indemnities to address any such risk.
7.2 The Seller and the Buyer further acknowledge that the Company has the
benefit of an indemnity from Axiom set out in "Addendum Number Two" to the
SLA (the "AXIOM INDEMNITY"). The Buyer shall procure that the Company shall
first seek indemnification for any liabilities, expenses or costs
(including all legal costs) covered by the subject matter of the Axiom
Indemnity from Axiom. The Company shall not be obliged to issue legal
proceedings against Axiom in pursuit of such indemnity. If the Company
shall not have been indemnified by Axiom within two months of its
requesting indemnification from Axiom, the Company shall then be entitled
to seek indemnification from the Seller under Clauses 7.3, 7.4 or 7.5. The
Seller acknowledges that the obligation to rely on the Axiom Indemnity set
out in this Clause 7.2 does not apply to the Buyer or Castlewood.
7.3 The Seller shall procure the discharge of all the Company's obligations in
respect of the Employees and any other persons engaged by the Company up to
and including Completion including, without limitation, all contractual and
non contractual rights under the contracts of employment, discharge of
statutory or other redundancy payment and the Company's obligations under
section 188 and section 188A of the Trade Union
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and Labour Relations (Consolidations) Xxx 0000 and under regulations 10 and
10A of TUPE up to Completion and the Seller shall discharge and indemnify
and keep fully and effectively indemnified (including all legal costs) upon
demand the Buyer, the Company and Castlewood against all liability:
7.3.1 arising from the Company or the Seller's failure to do so;
7.3.2 to an Employee or other person engaged or formerly engaged by the
Company which arises out of any act or omission by the Seller, the
Company and any Seller's Group Company or its or their employees,
officers or shareholders occurring before Completion;
7.3.3 arising from or in connection with the contract of employment and
termination of employment of any person who is determined by a Court
or Tribunal of competent jurisdiction to be an Employee and remains
employed by the Company at Completion (an "UNDISCLOSED EMPLOYEE")
provided that the Buyer procures that the Company shall within 7 days
of such determination of the Court or Tribunal of competent
jurisdiction, terminate the Undisclosed Employee's employment; and
7.3.4 in respect of any claim, demand, penalty or interest relating to a
failure to deduct the appropriate Taxation in respect of any payment
made or agreed to be made to any Employee prior to Completion or in
respect of an Undisclosed Employee at any time.
7.4 The Seller shall indemnify and keep fully and effectively indemnified upon
demand the Buyer, the Company and Castlewood against all liabilities,
expenses or costs (including all legal costs) which arise out of or in
connection with:
7.4.1 any act or omission by the Seller, the Company, any Seller's Group
Company, Axiom or NCIS, or any other event or occurrence prior to
Completion (or where such act or omission occurs prior to Completion
but gives rise to liability on the part of the Buyer, the Company or
Castlewood after Completion) in respect of any other person engaged by
the Company, the employees of Axiom or NCIS;
7.4.2 any act or omission by the Seller, the Company, any Seller's Group
Company, Axiom or NCIS in relation to the Employees, any other persons
engaged by the Company or the employees of Axiom or NCIS and which is
deemed to be an act or omission of the Buyer, the Company or
Castlewood; and
7.4.3 any claim made by or in respect of any person employed or formerly
employed by the Seller, the Company, and Seller's Group Company, Axiom
or NCIS claiming that the Buyer, the Company or Castlewood is liable.
7.5 If any contract of employment relating to a person employed or formerly
employed by the Seller, the Company, any Seller's Group Company, Axiom or
NCIS is found or is alleged to have effect as if originally made between
the Buyer, the Company or Castlewood and that employee as a result of the
sale and purchase of the Company, the termination of the SLA, the Company
terminating an agreement with NCIS and/or as a result of the Company
entering into the Run Off Services Agreement:
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7.5.1 the Buyer and/or the Company and/or Castlewood (as the case may be)
may (without prejudice to any other rights or remedies available to
it) upon becoming aware of that effect, terminate the contract; and
7.5.2 the Seller shall indemnify and keep fully and effectively indemnified
upon demand the Buyer, the Company and Castlewood against any
liabilities, expenses or costs (including all legal costs) sustained
or incurred by the Buyer, the Company and/or Castlewood by reason of
or on account of such termination and any sums payable under the
contract of employment following Completion.
7.6 The indemnities contained in Clauses 7.3 to 7.5 inclusive in respect of
employees or former employees of Axiom, shall only be effective for an
indemnity claim where such indemnity claim or facts or matters which would
or might give rise to such an indemnity claim are notified to the Seller in
accordance with Clause 19 up to and including 11 February 2006.
7.7 The Seller shall ensure that immediately prior to Completion, the
Non-Transferring Business, the Non-Transferring Policies, the
Non-Transferring Policy Records and the Non-Transferring Records are the
only assets and liabilities of the Company. The Seller shall indemnify and
keep fully and effectively indemnified the Buyer and the Company against
all liabilities, expenses or costs (including all legal costs) suffered or
incurred by either of them:
7.7.1 as a result of any breach of this Clause 7.7; or
7.7.2 arising from or in connection with the transfer of the property
referred to in paragraph 1.1.18 of Schedule 2; or
7.7.3 arising from or in connection with the proceedings brought by Xx
Xxxxxx in the Munich labour court (Germany) for alleged unfair
dismissal against the German branch of the Company, which were settled
on 26 March 2003; or
7.7.4 arising from or in connection with the occupational pension and
accident insurance arrangement which also provides disability, health
care and life assurance cover to employees of the Company in Germany;
or
7.7.5 arising from or in connection with the state pension plan which
employees of the Company in France currently contribute to; or
7.7.6 arising from or in connection with the Transferring Business, the
Transfer Agreement, the Supplemental Agreement, the Reinsurance
Agreements, the Excluded Policies Reinsurance Agreement, the Scheme
and the Order, except as specifically contemplated by the Transfer
Agreement, the Supplemental Agreement, the Reinsurance Agreements, the
Excluded Policies Reinsurance Agreement, the Scheme or the Order,
subject always to Clause 7.9.
7.8 The Seller shall indemnify and keep fully and effectively indemnified the
Buyer and the Company against all liabilities, expenses or costs (including
legal costs) suffered or incurred by either of them as a result of:
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7.8.1 a claim by Aioi Motor and General under the Transfer Agreement;
7.8.2 transfer or sale (as the case may be) of the Company's entire
shareholding in the Subsidiary Undertaking and the Associate Company;
and
7.8.3 any failure by Aioi Motor and General to make payment to the Company
in accordance with the terms of the Excluded Policies Reinsurance
Agreement, the Supplemental Agreement, the Scheme and the Deed of
Variation to the Transfer Agreement.
7.9 Notwithstanding anything contained to the contrary in the Transfer
Agreement, the Supplemental Agreement, the Reinsurance Agreements, the
Excluded Policies Reinsurance Agreement, the Order or the Scheme, the
Seller shall indemnify and keep fully and effectively indemnified the Buyer
and the Company against all professional fees (including without limitation
solicitors, counsel, experts, advertising costs and auditors) paid or
incurred by the Company in relation to those documents, the Order and the
Scheme.
7.10 The Seller shall procure that Aioi Motor and General and the Buyer shall
procure that the Company:
7.10.1 present claims to reinsurers in accordance with the terms of the
Supplemental Agreement; and
7.10.2 continue to present claims to reinsurers consistently with its
policy in presenting claims in the three year period immediately prior
to the date of this Agreement.
7.11 The Seller irrevocably and unconditionally guarantees to the Buyer and the
Company the due and punctual performance of the obligation (if any) of Aioi
Motor and General to pay to the Company the Losses (as defined in the
Transfer Agreement) payable under paragraph 2.2 of Part B of Schedule 1 of
the Transfer Agreement.
7.12 If the Buyer becomes aware of a matter which constitutes or which would or
might give rise to a claim under this Clause 7 (a "SPECIFIED CLAIM"):
7.12.1 the Buyer shall immediately give notice to the Seller of the matter
and shall consult with the Seller with respect to the matter;
7.12.2 the Buyer shall, and shall ensure that each Buyer's Group Company
will, provide to the Seller and its advisers reasonable access to
premises and personnel and to relevant assets, documents and records
within the power or control of each Buyer's Group Company for the
purposes of investigating the matter and enabling the Seller to take
the action referred to in Clause 7.12.4(a);
7.12.3 the Seller (at its cost) may take copies of the documents or
records, and photograph the premises or assets, referred to in Clause
7.12.2;
7.12.4 the Buyer shall, and shall ensure that each Buyer's Group Company
will:
(a) take any action, institute any proceedings and/or give any
information and assistance as the Seller may request to:
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(i) dispute, resist, appeal, compromise, defend, remedy or
mitigate the matter; or
(ii) enforce against a person (other than a Seller's Group
Company) the rights of a Buyer's Group Company in relation
to the matter; and
(b) in connection with proceedings related to the matter (other than
against a Seller's Group Company), use advisers nominated by the
Seller and, if the Seller requests, allow the Seller the sole
conduct of the proceedings,
and in each case on the basis that the Seller shall indemnify the
Buyer for the costs incurred by any Buyer's Group Company as a result
of a request or nomination by the Seller;
7.12.5 neither the Buyer nor the Buyer's Guarantors shall, and the Buyer
shall ensure that no Buyer's Group Company will, admit liability in
respect of, or compromise or settle the matter without the prior
written consent of the Seller (such consent not to be unreasonably
withheld or delayed); and
7.12.6 the Buyer shall take all reasonable action to mitigate any loss
suffered by it or any Buyer's Group Company in respect of a matter
giving rise to a Specified Claim.
7.13 If the Seller pays to the Buyer an amount in respect of a Specified Claim
(to the extent that the Specified Claim has been fully discharged as a
result of such payment) and a Buyer's Group Company subsequently recovers
from another person an amount which is referable to the matter giving rise
to the Specified Claim:
7.13.1 if the amount paid by the Seller in respect of the Specified Claim
is more than the Sum Recovered, the Buyer shall immediately pay to the
Seller the Sum Recovered; and
7.13.2 if the amount paid by the Seller in respect of the Specified Claim
is less than or equal to the Sum Recovered, the Buyer shall
immediately pay to the Seller an amount equal to the amount paid by
the Seller.
7.14 For the purposes of Clause 7.13, "SUM RECOVERED" means an amount equal to
the total of the amount recovered from the other person plus any interest
in respect of the amount recovered from the person less any Tax computed by
reference to the amount recovered from the person payable by a Buyer's
Group Company and less all costs incurred or which will be incurred by a
Buyer's Group Company in recovering the amount from the person.
7.15 Any amount payable by the Seller pursuant to this Clause 7 shall be:
7.15.1 made by the Seller within ten Business Days of written demand by the
Buyer; and
7.15.2 paid by way of repayment of and adjustment to the consideration
payable in accordance with Clause 2.2 to the extent of the amount so
payable.
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7.16 All sums payable by the Seller to the Buyer under this Clause 7 shall be
paid free and clear of all deductions or withholdings whatsoever, save only
as may be required by law.
7.17 If any deductions or withholdings are required by law to be made from any
of the sums payable as mentioned in Clause 7.16, the sum due from the
Seller shall be increased to the extent necessary to ensure that, after the
making of any deductions or withholdings, the Buyer receives a sum equal to
the sum it would have received had no deductions or withholdings been made.
7.18 If any sum payable by the Seller to the Buyer under this Clause 7 shall be
subject to a liability to Tax in the hands of the Buyer, the Seller shall
be under the same obligation to make an increased payment in relation to
that liability to Tax as if the liability were a deduction or withholding
required by law.
8. THE BUYER'S REMEDIES
8.1 If, at any time before Completion, the Buyer becomes aware that the Seller
is in breach of any provision of this Agreement, and such breach will have
a Material Adverse Effect on the Company, the Buyer may by notice in
writing to the Seller elect to proceed to Completion or terminate this
Agreement.
8.2 For the purpose of this Clause 8 "MATERIAL ADVERSE EFFECT" means any or all
of the following:
8.2.1 having a cost to remedy or involving a liability in excess of
L5,000,000; or
8.2.2 having the effect of reducing or extinguishing the Reserves of the
Company by more than L5,000,000.
8.3 For the purpose of this Clause 8.3 "RESERVES" means all provisions required
to be held by the Company to meet underwriting liabilities under the
Integrated Prudential Sourcebook for Insurers of the FSA in respect of the
Non-Transferring Business as at the date of this Agreement, including
(without limitation) unearned premium reserves, unexpired risk reserves,
outstanding claims (both notified and incurred but not reported), claims
expenses reserves, and funds and equalisation reserves.
8.4 For the purpose of determining whether the event, matter or circumstances
has or may have a Material Adverse Effect, the Buyer shall not be required
to take into account the existence or otherwise of any insurance against
the whole or any part of the loss or damage resulting from the event,
matter or circumstances.
8.5 If the Buyer terminates this Agreement pursuant to Clause 8.1:
8.5.1 the Seller shall indemnify the Buyer against all its reasonable costs
relating to the negotiation, preparation, execution or termination of
this Agreement and the satisfaction of any Conditions, but excluding
any and all costs relating to management time of the Buyer, a Buyer's
Group Company and their respective employees; and
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8.5.2 each party's further rights and obligations cease immediately on
termination, but termination does not affect a party's accrued rights
and obligations at the date of termination.
8.6 If, following Completion, the Buyer becomes aware:
8.6.1 of a fact or circumstance which gives rise to a Relevant Claim;
8.6.2 that there has been a breach of any other provision of this
Agreement; or
8.6.3 that the Buyer has a claim against the Seller under any
representation, statement, assurance, covenant, undertaking,
indemnity, guarantee or commitment given by or on behalf of the Seller
in connection with this Agreement,
the Buyer shall not be entitled to rescind this Agreement or treat this
Agreement as terminated but shall only be entitled to claim damages in
respect of such matter and, accordingly, the Buyer waives all and any
rights of rescission it may have in respect of any such matter (howsoever
arising or deemed to arise), other than any such rights in respect of
fraud.
9. LIMITATIONS ON THE SELLER'S LIABILITY
9.1 The Seller is not liable in respect of a Warranty Claim:
9.1.1 unless the amount that would otherwise be recoverable from the Seller
(but for this Clause 9.1) in respect of that Warranty Claim exceeds
L50,000; and
9.1.2 unless and until the amount that would otherwise be recoverable from
the Seller (but for this Clause 9.1) in respect of that Warranty
Claim, when aggregated with any other amount or amounts recoverable in
respect of other Warranty Claims, exceeds L250,000 and in the event
that the aggregated amounts exceed L250,000 the Seller shall be liable
in respect of the total aggregated amounts (subject to Clause 9.2) and
not the excess only.
9.2 The Seller's total liability in respect of all Relevant Claims is limited
to the total of L62,000,000.
9.3 The Seller is not liable for a Relevant Claim in respect of:
9.3.1 a Warranty contained in paragraph 6 of Schedule 3 or a claim under
the Tax Deed unless the Buyer has notified the Seller of the Relevant
Claim stating in reasonable detail the nature of the Relevant Claim on
or before 31st July 2012;
9.3.2 any other Warranty unless the Buyer has notified the Seller of the
Relevant Claim stating in reasonable detail the nature of the Relevant
Claim and, if practicable, the amount claimed on or before the second
anniversary of the Completion Date; and
9.3.3 a claim under Clauses 7.1 to 7.9 unless the Buyer has notified the
Seller of such claim and, if practicable, the amount claimed on or
before the fifth anniversary of the Completion Date.
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9.4 The Seller is not liable in respect of a Warranty Claim (other than a Tax
Claim):
9.4.1 to the extent that the matter giving rise to the Warranty Claim would
not have arisen but for:
(a) an Event after Completion by a Buyer's Group Company or a
director, employee or agent of a Buyer's Group Company; or
(b) the passing of, or a change in, after the date of this Agreement
a law, rule, regulation, interpretation of the law or
administrative practice of a government, governmental department,
agency or regulatory body or an increase in the Tax rates or an
imposition of Tax, in each case not actually or prospectively in
force at Completion;
9.4.2 to the extent that the matter giving rise to the Warranty Claim
arises from an Event before or after Completion at the written request
or written direction of, or with the written acquiescence or written
consent of, a Buyer's Group Company (which for this Clause 9.4.2
includes the Company only after Completion);
9.4.3 except as specifically contemplated in this Agreement, to the extent
that the matter giving rise to the Warranty Claim is an amount for
which the Company has a right of recovery against, or an indemnity
from, a person other than a Seller's Group Company, whether under a
provision of applicable law, insurance policy or otherwise howsoever;
9.4.4 if a Buyer's Group Company fails to act in accordance with Clause 9.7
in connection with the matter giving rise to the Warranty Claim;
9.4.5 to the extent that the matter giving rise to the Warranty Claim was:
(a) taken into account in computing the amount of an allowance,
provision or reserve in the Accounts or was specifically referred
to in the Accounts or in the notes to the Accounts; or
(b) not so taken into account or referred to, in accordance with
generally accepted accounting principles;
9.4.6 to the extent of the amount by which a liability (including a
provision against liabilities) included in the Accounts is overstated.
9.5 The Buyer is not entitled to recover more than once in respect of any one
matter giving rise to a Relevant Claim.
9.6 If in respect of any one matter a Relevant Claim may be made under the
Warranties and under the Tax Deed, then to the extent that the Relevant
Claim is satisfied under the Warranties, an amount payable under the Tax
Deed in respect of the same matter is reduced accordingly and vice versa.
9.7 If a Buyer's Group Company becomes aware of a matter which might give rise
to a Warranty Claim:
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9.7.1 the Buyer shall promptly give written notice to the Seller of the
matter and/or the Assessment and shall consult with the Seller with
respect to the matter;
9.7.2 the Buyer shall, and shall ensure that each Buyer's Group Company
will, provide to the Seller and its advisers reasonable access to
premises and personnel and to relevant assets, documents and records
within each Buyer's Group Company's power or control for the purposes
of investigating the matter and/or the Assessment and enabling the
Seller to take the action referred to in paragraph 9.7.4(a)(i);
9.7.3 the Seller (at its cost) may take copies the documents or records,
and photograph the premises or assets, referred to in paragraph 9.7.2;
9.7.4 the Buyer shall and shall ensure that each Buyer's Group Company
will:
(a) take any action and institute any proceedings, and give any
information and assistance, as the Seller may reasonably request
to:
(i) avoid, dispute, resist, appeal, compromise, defend, remedy
or mitigate the matter or, in the case of a Tax Claim,
postpone any Tax concerned; or
(ii) enforce against a person (other than the Seller) a Buyer's
Group Company's rights in relation to the matter; and
(b) in connection with proceedings related to the matter (other than
against the Seller) use advisers nominated by the Seller and, if
the Seller requests, allow the Seller the exclusive conduct of
the proceedings,
and in each case on the basis that the Seller shall fully indemnify,
and keep indemnified, each Buyer's Group Company on demand against all
costs incurred as a result of a request or nomination by the Seller;
9.7.5 the Buyer shall not, and shall ensure that no Buyer's Group Company
will, admit liability in respect of, or compromise or settle, the
matter without the prior written consent of the Seller (such consent
not to be unreasonably withheld or delayed); and
9.7.6 the Buyer shall take all reasonable action to mitigate any loss
suffered by it or any member of the Buyer's Group in respect of a
matter giving rise to a Relevant Claim;
9.8 If the Seller pays to the Buyer an amount in respect of a Relevant Claim
and the Buyer or the Company subsequently recovers or is or becomes
entitled to recover from another person an amount which is referable to the
matter giving rise to the Relevant Claim, the Buyer shall promptly notify
the Seller and, if relevant, shall (at the cost of the Seller) procure that
the Company shall take such action as the Seller may reasonably require to
enforce the recovery against the person in question; and
9.8.1 if the Seller has already paid an amount in satisfaction of a
Relevant Claim and the amount paid by the Seller in respect of the
Relevant Claim is more than the
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Sum Recovered, the Buyer shall immediately pay to the Seller the Sum
Recovered;
9.8.2 if the Seller has already paid an amount in satisfaction of a
Relevant Claim and the amount paid by the Seller in respect of the
Relevant Claim is less than or equal to the Sum Recovered, the Buyer
shall immediately pay to the Seller an amount equal to the amount paid
by the Seller; and
9.8.3 if the Seller has not already paid an amount in satisfaction of a
Relevant Claim, the amount of the Relevant Claim for which the Seller
would have been liable shall be reduced by and to the extent of the
Sum Recovered.
9.9 For the purposes of Clause 9.8, "SUM RECOVERED" means an amount equal to
the total of the amount recovered from the other person plus any interest
in respect of the amount recovered from the person less any Tax computed by
reference to the amount recovered from the person payable by a Buyer's
Group Company and less all costs incurred by a Buyer's Group Company in
recovering the amount from the person.
9.10 Nothing in Schedule 3 restricts or limits the Buyer's general obligation at
law to mitigate any loss or damage which it may incur in consequence of a
matter giving rise to a Warranty Claim.
9.11 If at any time after the date of this Agreement the Seller wants to insure
against its liabilities in respect of Relevant Claims, the Buyer shall (at
the Seller's cost) provide any information as a prospective insurer may
reasonably require before effecting the insurance.
9.12 The Buyer shall, and shall ensure that the Company will, preserve all
documents, records, correspondence, accounts and other information
whatsoever relevant to a matter which may give rise to a Relevant Claim.
9.13 Nothing in Clause 9 shall have the effect of limiting or restricting any
liability of the Seller in respect of a Relevant Claim arising as a result
of any fraud, wilful misconduct or wilful concealment.
9.14 The limitations in clause 3.2 of the Tax Deed shall apply to any Tax Claim.
10. THE BUYER'S WARRANTIES AND UNDERTAKINGS
10.1 The Buyer and the Buyer's Guarantors severally warrant to the Seller that:
10.1.1 each of the Buyer and the Buyer's Guarantors has the right, power
and authority, and has taken all action necessary, to execute, deliver
and exercise their rights and perform their respective obligations
under the Transaction Documents to which it is a party; and
10.1.2 the Buyer and the Buyer's Guarantors' obligations under the
Transaction Documents are, or when the Transaction Documents are
executed will be, enforceable in accordance with their respective
terms, except as such enforceability may be
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(a) limited by bankruptcy, insolvency or other similar laws affecting
the enforcement of creditors' rights; and
(b) subject to general principles of equity; and
10.1.3 the execution and delivery of, and the performance by the Buyer or
the Buyer's Guarantors of their respective obligations under the
Transaction Documents to which it is a party will not:
(a) result in a breach of any provision of the memorandum of
association or bye-laws of the Buyer or the Buyer's Guarantors;
(b) result in a breach of, or constitute a default under, any
instrument to which the Buyer is a party or by which the Buyer or
the Buyer's Guarantors is bound;
(c) result in a breach of any order, judgment or decree of any court
or governmental agency to which the Buyer or the Buyer's
Guarantors is a party or by which the Buyer or the Buyer's
Guarantors is bound; or
(d) require the consent of its shareholders or of any other person
(other than the FSA.)
10.2 With effect from Completion, the Buyer shall use its best endeavours to
ensure that all correspondence, discussions, or other communications
emanating from the Company, the Buyer or a Buyer's Group Company in respect
of the Company shall clearly reflect the change of Company name as referred
to in paragraph 1.1.4 of Schedule 2 to this Agreement. Nothing in this
Clause shall restrict the Company, the Buyer or Buyer's Group Company from
using the name "Aioi Insurance Company of Europe Limited" after such name
change in returns to the FSA after Completion and in order to reasonably
deal with the administration of any insurance business written before
Completion in so far and to the extent such use of the name "Aioi Insurance
Company of Europe Limited" is reasonably necessary.
10.3 The Buyer undertakes to the Seller for itself and as agent and trustee for
each other Seller's Group Company that (in the absence of fraud) the Buyer:
10.3.1 has no right against; and
10.3.2 may not make any claim against,
any employee, director, agent, officer or adviser of any member of the
Seller's Group on whom it may have relied before agreeing to any term of,
or entering into, the Transaction Documents or any other agreement or
document referred to herein.
11. COMMUTATION OF QUOTA SHARE AGREEMENTS
11.1 The Buyer and the Seller have in principle agreed that the Quota Share
Agreements are to be commuted in accordance with the Commutation Agreement.
It is, however, recognised that any commutation of the Quota Share
Agreements will constitute financial assistance as contemplated in section
151 of the Act. In order to endeavour to
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give effect to the intention of the Buyer and the Seller and to ensure that
the Company only enters into the Commutation Agreement if it is lawful for
it to do so under the Act, the Buyer and the Seller have agreed to the
remaining provisions of this Clause 11.
11.2 Subject to Clause 11.3, as soon as reasonably practicable following
Completion, the Buyer shall (and the Buyer's Guarantors undertake to use
their reasonable endeavours to procure that the Buyer shall) deliver to the
Seller the Commutation Agreement duly executed by the Company.
11.3 The Buyer's obligation under Clause 11.2 is subject to:
11.3.1 the Company (or if applicable, its holding company) and the
Company's directors being able to and having complied with the
provisions of sections 155 to 158 of the Act in respect of the
financial assistance contemplated in Clause 11.1; and
11.3.2 upon request by the Seller, deliver to it such evidence as is
reasonably satisfactory to the Seller of the Company's compliance with
sections 155 to 158 of the Act.
12. BUYER'S GUARANTORS
12.1 The Buyer's Guarantors irrevocably and unconditionally and jointly and
severally guarantee to the Seller the due and punctual performance of the
obligation of the Buyer to pay to the Seller L50,000,000 in cash on account
of the Consideration payable under Clause 2.2 at Completion. The Buyer's
Guarantors' obligations under this Clause 12.1 are primary obligations and
not those of a mere surety.
12.2 The Buyer's Guarantors are only a party to this Agreement for the purpose
of this Clause 12.
13. CONFIDENTIAL INFORMATION
13.1 The Seller undertakes to the Buyer, for itself and as agent and trustee for
the Company, that before and after Completion the Seller shall:
13.1.1 not use or disclose to any person Confidential Information it has or
acquires;
13.1.2 make every effort to prevent the use or disclosure of Confidential
Information; and
13.1.3 ensure that each Seller's Group Company complies with Clauses 13.1.1
and 13.1.2.
13.2 Clause 13.1 does not apply to disclosure of Confidential Information:
13.2.1 to a director, officer or employee of the Buyer, a Buyer's Group
Company, or of the Company whose function requires him to have the
Confidential Information;
13.2.2 required to be disclosed by law or by a governmental authority or
other authority with relevant powers to which the Seller is subject or
submits, whether or not the requirement has the force of law provided
that the disclosure shall so
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far as is practicable be made after consultation with the Buyer and
after taking into account the Buyer's reasonable requirements as to
its timing, content and manner of making or despatch; or
13.2.3 to an adviser for the purpose of advising the Seller in connection
with the transactions contemplated by this Agreement provided that
such disclosure is essential for these purposes and is on the basis
that Clause 13.1 applies to the disclosure by the adviser.
14. ANNOUNCEMENTS
14.1 Subject to Clause 14.2, neither party may, before or after Completion, make
or send a public announcement, communication or circular concerning the
transactions referred to in this Agreement unless it has first obtained the
other party's written consent, which may not be unreasonably withheld or
delayed.
14.2 Clause 14.1 does not apply to a public announcement, communication or
circular:
14.2.1 made or sent by the Buyer after Completion to a customer, client or
supplier of the Company informing it of the Buyer's purchase of the
Shares; or
14.2.2 required by law, by a rule of a listing authority by which either
party's shares are listed, a stock exchange on which either party's
shares are listed or traded or by a governmental authority or other
authority with relevant powers to which either party is subject or
submits, whether or not the requirement has the force of law, provided
that the public announcement, communication or circular shall, so far
as is practicable, be made after consultation with the other party and
after taking into account the reasonable requirements of the other
party as to its timing, content and manner of making or despatch.
15. COSTS
Except where this Agreement or the relevant document provides otherwise,
each party shall pay its own costs relating to the negotiation,
preparation, execution and performance by it of this Agreement each
document referred to in it.
16. GENERAL
16.1 A variation of this Agreement is valid only if it is in writing and signed
by or on behalf of each party.
16.2 The failure to exercise or delay in exercising a right or remedy provided
by this Agreement or by law does not impair or constitute a waiver of the
right or remedy or an impairment of or a waiver of other rights or
remedies. No single or partial exercise of a right or remedy provided by
this Agreement or by law prevents further exercise of the right or remedy
or the exercise of another right or remedy.
16.3 The rights and remedies of each party contained in this Agreement are
cumulative and not exclusive of rights or remedies provided by law.
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16.4 Except to the extent that they have been performed and except where this
Agreement provides otherwise, the obligations contained in this Agreement
remain in force after Completion.
16.5 If a party fails to pay a sum due from it under this Agreement on the due
date of payment in accordance with the provisions of this Agreement, that
party shall pay interest on the overdue sum from the due date of payment
until the date on which its obligation to pay the sum is discharged at the
rate of four per cent. per annum above the base rate of National
Westminster Bank plc (whether before or after judgment). Interest accrues
and is payable from day to day.
16.6 All payments made by the Seller in respect of a Relevant Claim shall be
made gross, free of right of counterclaim or set off and without deduction
or withholding of any kind other than any deductions or withholding
required by law.
16.7 If the Seller makes a deduction or withholding required by law from a
payment in respect of a Relevant Claim (other than interest), the sum due
from the Seller shall be increased to the extent necessary to ensure that,
after the making of any deduction or withholding, the Buyer receives a sum
equal to the sum it would have received had no deduction or withholding
been made.
16.8 If any payment in respect of a Relevant Claim (other than interest) will be
or has been subject to Tax the Seller shall on demand from the Buyer pay to
the Buyer the amount (after taking into account Tax payable in respect of
the amount) that will ensure that the Buyer receives and retains a net sum
equal to the sum it would have received had the payment not been subject to
Tax.
16.9 A person who is not a party to this Agreement has no right under the
Contracts (Rights of Third Parties) Xxx 0000 to enforce any term of this
Agreement, but this does not affect any right or remedy of a third party
which exists or is available apart from that Act.
17. ENTIRE AGREEMENT
17.1 This Agreement constitutes the entire agreement and supersedes any previous
agreements between the parties relating to the subject matter of this
Agreement.
17.2 Nothing in this Clause 17 shall have the effect of limiting or restricting
any liability arising as a result of any fraud, wilful misconduct or wilful
concealment.
18. ASSIGNMENT
Unless it first obtains the written consent of the other party to this
Agreement, such consent not to be unreasonably withheld or delayed, neither
party may assign, transfer or sub-contract or purport to assign, transfer
or sub-contract any right or obligation under this Agreement.
19. NOTICES
19.1 A notice or other communication under or in connection with this Agreement
(a "NOTICE") shall be:
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19.1.1 in writing;
19.1.2 in the English language; and
19.1.3 delivered personally or sent by first class post pre-paid recorded
delivery (and air mail if overseas) or by fax to the party due to
receive the Notice to the address set out in Clause 19.3 or to another
address, person, or fax number specified by that party by not less
than 7 Business Days' written notice to the other party received
before the Notice was despatched.
19.2 Unless there is evidence that it was received earlier, a Notice is deemed
given if:
19.2.1 delivered personally, when left at the address referred to in Clause
19.1.3;
19.2.2 sent by mail, except air mail, two Business Days after posting it;
19.2.3 sent by air mail, six Business Days after posting it; and
19.2.4 sent by fax, when confirmation of its transmission has been recorded
by the sender's fax machine.
19.3 The address referred to in Clause 19.1.3 is:
NAME OF PARTY ADDRESS FACSIMILE NO. MARKED FOR THE ATTENTION OF
------------- ------- ------------- ---------------------------
THE SELLER 0xx Xxxxx, 00 Xxxx Xxxx x00 00 0000 0000 The Managing Director of Aioi
London Motor and General Insurance
XX0X 0XX Company of Europe Limited
THE BUYER Windsor Place x0 000 000 0000 Xxxxxxx Xxxxxx, Director
00 Xxxxx Xxxxxx
Xxxxxxxx XX00
Xxxxxxx
20. GOVERNING LAW AND JURISDICTION
20.1 This Agreement is governed by English law.
20.2 The courts of England have exclusive jurisdiction to settle any dispute
arising from or connected with this Agreement (a "DISPUTE") including a
dispute regarding the existence, validity or termination of this Agreement
or the consequences of its nullity. Accordingly, the Buyer and/or the
Seller may only take proceedings relating to a Dispute ("PROCEEDINGS") in
the courts of England.
20.3 The parties agree that the courts of England are the most appropriate and
convenient courts to settle any Dispute and, accordingly, that they will
not argue to the contrary.
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20.4 The parties agree that the documents which start any Proceedings and any
other documents required to be served in relation to those Proceedings may
be served on the Buyer and/or the Seller in accordance with this Clause 20.
These documents may, however, be served in any other manner allowed by law.
This Clause applies to all Proceedings wherever started.
20.5 The Buyer agrees that the documents which start any Proceedings and any
other documents required to be served in relation to those Proceedings may
be served on the Seller's Solicitors on its behalf. These documents may,
however, be served in any other manner allowed by law. This Clause applies
to Proceedings in England and to Proceedings elsewhere.
20.6 The Seller agrees that the documents which start any Proceedings and any
other documents required to be served in relation to those Proceedings may
be served on the Seller's Solicitors on its behalf. These documents may,
however, be served in any manner allowed by law. This Clause applies to
Proceedings in England and to Proceedings elsewhere.
21. GOVERNING LANGUAGE
21.1 This Agreement is drawn up in the English language. If this Agreement is
translated into another language, the English language text prevails.
21.2 Each notice, demand, request, statement, instrument, certificate or other
communication given, delivered or made by a party to any other party under
or in connection with this Agreement shall be:
21.2.1 in English; or
21.2.2 if not in English, accompanied by an English translation made by a
translator, and certified by such translator to be accurate.
21.3 The receiving party shall be entitled to assume the accuracy of and rely
upon any English translation of any document provided pursuant to Clause
21.2.2.
22. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
when executed and delivered is an original and all of which together
evidence the same agreement.
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SCHEDULE 1
INFORMATION ABOUT THE COMPANY
THE COMPANY
1. Registered number: 1272965
2. Place of incorporation: England and Wales
3. Address of registered office: 0xx Xxxxx, 00 Xxxx Xxxx, Xxxxxx, XX0X 0XX
4. Type of company: Private company limited by shares
5. Principle Business: Non-life insurance/reinsurance
6. Authorised share capital: L200,000,000
7. Issued share capital: L156,000,000
8. Directors: Nigel Xxxx Xxxxxx Xxxxxx-Xxxxx, Xxxxxx Xxxxxx Xxxx, Xxxxxxx
Xxxxxx, Xxxxxxxx Xxxxxxxxx, Xx Xxxxxx Xxxxxxxxx, Xxxxx Xxxxxx Philippe
Osouf
9. Secretary: Xxxxx Xxxxxx-Read
10. Accounting reference date: 31 December
11. Auditors: Ernst & Young LLP
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SCHEDULE 2
COMPLETION REQUIREMENTS
1. SELLER'S OBLIGATIONS
1.1 At Completion the Seller shall deliver to the Buyer:
1.1.1 evidence in a form reasonably satisfactory to the Buyer (by way of a
certificate of the Seller's Solicitors or otherwise):
(b) of satisfaction of the Condition set out in Clause 3.1.2; and
(c) of transfer or sale (as the case may be) of the Company's entire
shareholding in the Subsidiary Undertaking and the Associate
Company;
1.1.2 duly executed transfer(s) in respect of the Shares to the Buyer or
its nominee(s) and the share certificate(s) for the Shares;
1.1.3 as evidence of the authority of each person executing a document
referred to in this Schedule on the Seller's behalf:
(a) a copy of the minutes of a duly held meeting of the directors of
the Seller (or a duly constituted committee thereof) authorising
the execution by the Seller of the document and, where such
execution is authorised by a committee of the board of directors
of the Seller, a copy of the minutes of a duly held meeting of
the directors constituting such committee or the relevant extract
thereof; or
(b) a copy of the power of attorney conferring the authority,
in each case certified to be true by a director or the secretary of
the Seller;
1.1.4 a copy of a shareholders' resolution of the Seller changing the
Company name to Brampton Insurance Company Limited with effect from
the Completion Date;
1.1.5 an irrevocable power of attorney in the agreed form duly executed by
the Seller and any other registered owner of the Shares in favour of
the Buyer or its nominee(s) to enable the Buyer (pending registration
of the relevant transfers) to exercise all voting and other rights
attaching to the Shares and to appoint proxies for this purpose;
1.1.6 any waiver, consent, release or other document necessary to give the
Buyer or its nominee(s) full legal and beneficial ownership of the
Shares;
1.1.7 the common seal (if any) of the Company; each register, minute book
and other book required to be kept by the Company under the Act made
up to the Completion Date; and each certificate of incorporation and
certificate of incorporation on change of name for the Company;
1.1.8 the Tax Deed duly executed by the Seller;
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1.1.9 a copy of a letter to the Company from its auditors resigning their
office with effect from Completion and containing the statement
referred to in section 394 of the Act, the original of the letter
having been deposited at the registered office of the Company;
1.1.10 resignations from each director and secretary of the Company
expressed to take effect from the end of the meeting held pursuant to
paragraph 1.2;
1.1.11 a copy of each bank mandate of the Company and copies of statements
of each bank account of the Company made up to a date not earlier than
two Business Days before the Completion Date;
1.1.12 evidence in a form satisfactory to the Buyer that the Company has
been released from:
(i) the charge created by the Company on 12 July 1996 in favour
of The Secretary of State for Health over freehold property
in Bexhill-on-Sea, title numbers SX36275 and ESX70659;
(ii) the charge created by the Company on 15 November 2001
pursuant to a rent deposit deed between the Company and AD
(Xxxx Xxxx) Nominee Limited (as trustee for Allied Xxxxxx
Assurance plc); and
(iii) the charge created by the Company on 1 November 1993
pursuant to a Memorandum of Deposit and Charge and Escrow
Agreement in favour of Pool Reinsurance Company Limited
securing the payment of all amounts which may become payable
under the terms of the Deed Supplemental to Risk Excess of
Loss Reinsurance Agreement dated 1 November 1993.
1.1.13 evidence in a form satisfactory to the Buyer that debts and accounts
between the Company and any Seller's Group Company have been fully
paid; and
1.1.14 the Letter of Credit duly executed/issued by the Seller and Citibank
International plc;
1.1.15 evidence in a form satisfactory to the Buyer (by way of signed
stamped stock transfer form) of the transfer of the shares held by the
Company in the Subsidiary Undertaking to Aioi Motor and General or any
other third party nominated for that purpose by the Seller and/or the
Company;
1.1.16 the Deed of Variation to the Transfer Agreement duly executed by the
Company and Aioi Motor and General;
1.1.17 the LoC Supplemental Governance Deed duly executed by the Seller;
1.1.18 evidence in a form satisfactory to the Buyer of the transfer of the
land situated at the west side of Cranleigh Close, Bexhill-on-Sea,
East Sussex registered at the Land Registry with title absolute under
title number ESX70659 to Aioi Motor and General;
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1.1.19 a list of the Non-Transferring Business, Non-Transferring Policies,
Non-Transferring Policy Records and Non-Transferring Records in the
form set out in Schedule 5 made up to a date five Business Days prior
to Completion;
1.1.20 the Substitution of capital support arrangement and duration of the
Letter of Credit duly executed by the Seller; and
1.1.21 the Security Charge duly executed by the Seller.
1.2 The Seller shall ensure that at Completion a meeting of the board of
directors of the Company is held at which the directors:
1.2.1 vote in favour of the registration of the Buyer or its nominee(s) as
member(s) of the Company in respect of the Shares (subject to the
production of properly stamped transfers);
1.2.2 change the Company's registered office to Xx Xxxx'x Xxxxx, Xxxxxxx
Xxxx, Xxxxxx, XX0X 0XX;
1.2.3 change the Company's name to Brampton Insurance Company Limited;
1.2.4 appoint Xxxxx Xxxxxxx Xxxxx, Xxxxxxxx Xxxxxx Xxxxxx, Xxxxxxx Xxxxx
Xxxxxx and Xxxxxxx Xxxxx as directors and Cornhill Secretaries Limited
as secretary;
1.2.5 with effect from the end of the meeting, authorise the secretary to
notify the amendment or revocation of all existing instructions, bank
mandate forms and authorities to the Company's bankers, investment
manager and custodian bank, and their replacement with alternative
instructions, bank mandate forms and authorities in such form as the
Buyer may require; and
1.2.6 accept the resignations of each director and secretary so as to take
effect from the end of the meeting.
2. BUYER'S OBLIGATIONS
At Completion the Buyer shall deliver to the Seller;
2.1 a certified copy of the notice of approval from the FSA in satisfaction of
the Condition set out in Clause 3.1.1 and written confirmation from the
Buyer of satisfaction of the Conditions set out in Clause 3.1.3 and Clause
3.1.4;
2.2 the Tax Deed duly executed by the Buyer; and
2.3 the Loan Note duly executed by the Buyer;
2.4 the LoC Supplemental Governance Deed duly executed by the Buyer and
Castlewood;
2.5 the Security Charge duly executed by the Buyer;
2.6 the Deed of Variation to the Transfer Agreement duly executed by
Castlewood;
2.7 the Substitution of capital support arrangement and duration of the Letter
of Credit duly executed by the Buyer and Castlewood; and
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2.8 as evidence of the authority of each person executing a document referred
to in this Schedule on the Buyer's behalf:
(a) a copy of the minutes of a duly held meeting of the directors of the
Buyer (or a duly constituted committee thereof) authorising the
execution by the Buyer of the document and, where such execution is
authorised by a committee of the board of directors of the Buyer, a
copy of the minutes of a duly held meeting of the directors
constituting such committee or the relevant extract thereof; or
(b) a copy of the power of attorney conferring the authority,
in each case certified to be a true copy by a director or the secretary of
the Buyer.
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SCHEDULE 3
WARRANTIES
TABLE OF CONTENTS
NO. SUBJECT MATTER
1. Capacity and Authority
2. Shares
3. Non-Transferring Business and Non-Transferring Business Policy Records
4. Accounts
5. Changes since the Last Accounting Date
6. Tax
7. Intellectual Property
8. Employees
9. Real Property
10. Agreements
11. Insurance
12. Effect of Sale
13. Liabilities
14. Insolvency, Winding up etc.
15. Litigation and Compliance with Law
16. Insider Agreements
17. Data Protection
18. Constitution, Registers and Returns
19. Pensions
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1. CAPACITY AND AUTHORITY
1.1 INCORPORATION AND EXISTENCE
The Company is a limited company incorporated under English law and has
been in continuous existence since incorporation.
1.2 RIGHT, POWER, AUTHORITY AND ACTION
1.2.1 The Seller has the right, power and authority, and has taken all
action necessary, to execute, deliver and exercise its rights, and
perform its obligations, under this Agreement and each document to be
executed at or before Completion.
1.2.2 The Company has the right, power and authority to conduct its
business as conducted at the date of this Agreement.
1.3 BINDING AGREEMENTS
1.3.1 The Seller's obligations under the Transaction Documents and each
document to be executed at or before Completion are, or when the
relevant document is executed will be, enforceable in accordance with
their terms.
1.3.2 The execution and delivery of, and the performance by the Seller of
its obligations under Transaction Documents to which it is a party
will not:
(a) result in a breach of any provision of the memorandum or articles
of association of the Seller;
(b) result in a breach of, or constituted to fault under, any
instrument which the Seller is a party or by which the Seller is
bound;
(c) result in a breach of any order, judgment or degree of any court
or governmental agency to which the Seller is a party or by which
the Seller is bound; or
(d) require the consent of its shareholder or of any other person.
2. SHARES
2.1 THE SHARES
2.1.1 The Seller is the sole legal and beneficial owner of the Shares.
2.1.2 The Shares comprise the whole of the Company's allotted and issued
share capital, have been properly allotted and issued and are fully
paid or credited as fully paid.
2.1.3 There is no Encumbrance, and there is no agreement, arrangement or
obligation to create or give an Encumbrance, in relation to any of the
Shares or unissued shares in the capital of the Company. No person has
claimed to be entitled to an Encumbrance in relation to any of the
Shares.
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2.1.4 Other than as set out in this Agreement, there is no agreement,
arrangement or obligation requiring the creation, allotment, issue,
transfer, redemption or repayment of, or the grant to a person of the
right (conditional or not) to require the allotment, issue, transfer,
redemption or repayment of, a share in the capital of the Company
(including, without limitation, an option or right of pre-emption or
conversion).
2.2 SUBSIDIARY UNDERTAKINGS/ASSOCIATE COMPANIES
2.2.1 As at the date of this Agreement the Company does not have any
subsidiary undertakings or associated companies.
2.2.2 The Company has no interest in, and has not agreed to acquire an
interest in or merge or consolidate with, a corporate body or any
other person.
3. NON-TRANSFERRING BUSINESS AND NON-TRANSFERRING BUSINESS POLICY RECORDS
3.1 The Non-Transferring Business Records and the Non-Transferring Policy
Records are materially up to date, sufficient to run the Non-Transferring
Business, are in the Company's possession or under its control and are
materially completed in accordance with all applicable law and regulations
in the UK for records of general insurance companies.
3.2 The information set out in Schedule 5 is true and accurate and not
misleading.
4. ACCOUNTS
4.1 GENERAL
4.1.1 The Accounts have been prepared and audited on a proper and
consistent basis in accordance with the law and applicable standards,
principles and practices generally accepted in the UK.
4.1.2 The Accounts show a true and fair view of the assets, liabilities and
state of affairs of the Company as at the Last Accounting Date and of
the profits and losses of the Company for the financial year ended on
the Last Accounting Date.
4.1.3 The Company's accounting records are up-to-date, in its possession or
under its control and are properly completed in accordance with the
law and applicable standards, principles and practices generally
accepted in the UK.
4.1.4 No change in accounting policies have been made in preparing the
accounts of the Company for each of the three financial years of the
Company ended on the Last Accounting Date, except as stated in the
audited balance sheet and profit and loss accounts for those years.
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4.2 DEBTS AND LIABILITIES
The Accounts fully disclose and provide adequately for all bad and doubtful
debts, all liabilities (actual, contingent or otherwise) and all financial
commitments existing at the Last Accounting Date.
4.3 EXTRAORDINARY AND EXCEPTIONAL ITEMS
The results shown by the audited profit and loss account of the Company for
each of the three financial years of the Company ended on the Last
Accounting Date have not (except as disclosed in those accounts) been
affected by an extraordinary, exceptional or non-recurring item or by
another fact or circumstance making the profit or loss for a period covered
by any of those accounts unusually high or low.
4.4 DEPRECIATION
4.4.1 The bases and rates of depreciation and amortisation used in the
Accounts were the same as those used in the audited accounts of the
Company for the two preceding financial years.
4.4.2 The rates of depreciation and amortisation used in the audited
accounts of the Company for the three financial years of the Company
ended on the Last Accounting Date were sufficient to ensure that each
fixed asset of the Company will be written down to nil by the end of
its useful life.
4.5 MANAGEMENT ACCOUNTS
The Management Accounts have been properly prepared on a basis consistent
with each other and with the Accounts.
4.6 ACCOUNTING RECORDS
The Company's accounting records are up-to-date, in its possession or under
its control and are properly completed in accordance with the law and
applicable standards, principles and practices generally accepted in the
UK.
5. CHANGES SINCE THE LAST ACCOUNTING DATE
Since the Last Accounting Date:
5.1 the Non-Transferring Business has been operated in the ordinary and usual
course so as to maintain it as a going concern;
5.2 there has been no material adverse change in the financial or trading
position or prospects of the Non-Transferring Business;
5.3 no material change has occurred in the assets and liabilities used in or
relating to the Non-Transferring Business shown in the Accounts and there
has been no reduction in the value of the net tangible assets of the
Company used in or relating to the Non- Transferring Business on the basis
of the valuations used in the Accounts;
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5.4 the Company has not, other than in the ordinary and usual course of its
business assumed or incurred, or agreed to assume or incur, a liability,
obligation or expense (actual or contingent) or acquired or disposed of, or
agreed to acquire or dispose of an asset of the Non-Transferring Business;
5.5 the Company has not factored, sold or agreed to sell a debt;
5.6 the Company has not, in relation to the Non-Transferring Business:
5.6.1 made, or agreed to make, capital expenditure exceeding in
total L50,000; or
5.6.2 incurred, or agreed to incur, a commitment or commitments involving
capital expenditure exceeding in total L50,000;
5.7 the Non-Transferring Business has not been materially and adversely
affected by the termination of, or a change in the terms of, an agreement
or by the loss of a customer or supplier or by an abnormal factor not
affecting similar businesses and to the best of the Seller's knowledge,
information and belief, no fact or circumstance exists which might have a
material and adverse effect on the Non-Transferring Business;
5.8 the Company has not declared, paid or made a dividend or distribution
(including, without limitation, a distribution within the meaning of the
Taxes Act) except as provided in the Accounts;
5.9 no resolution of the shareholder of the Company has been passed;
5.10 the Company has not changed its accounting reference period; and
5.11 the Company has not created, allotted, issued, acquired, repaid or redeemed
share or loan capital or made an agreement or arrangement or undertaken an
obligation to do any of those things.
6. TAX
6.1 The Company has maintained all records and made all returns, notifications
and computations required for Tax purposes. All Tax returns of the Company
have been made on a proper basis and are materially correct and no Tax
Authority disputes, or (so far as the Seller is aware) is likely to
dispute, any of them.
6.2 The Company has paid all Tax that it has been liable to pay and is not, and
has not been, liable to pay any penalty, fine, surcharge or interest in
connection with Tax.
6.3 The Company has deducted and accounted for all amounts that it has been
obliged to deduct in respect of Tax and the Company has made all payments
required to be made in respect of National Insurance Contributions.
6.4 During the three years ending on the date of this agreement, the Company
has not been subject to any audit, investigation, discovery or access order
by any Tax Authority.
6.5 So far as the Seller is aware, the Company's records enable it to calculate
the Tax liability or relief that would arise on a disposal of each asset
owned by it at the Last Accounting Date, or acquired by it since the Last
Accounting Date.
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6.6 So far as the Seller is aware, the Company is not, and has not been a party
to, any transaction or arrangement involving the actual or deemed
acquisition, disposal or supply of any asset, goods, service or facility of
any nature, for a consideration deemed for any Tax purpose to differ from
the actual consideration (if any) paid or received by the Company.
6.7 So far as the Seller is aware, the Company will not become liable to Tax
under section 179 of the TCGA, paragraphs 3, 4A, 9 or 11 of Schedule 7 to
the Finance Xxx 0000, or section 111 or 113 of the Finance Xxx 0000 as a
result of the execution of this Agreement or Completion.
6.8 The Company is and has always been resident for Tax purposes only in the
jurisdiction in which it is incorporated.
6.9 So far as the Seller is aware, the Company is not liable to be assessed in
respect of any Tax chargeable primarily against or attributable to another
person.
6.10 The Company is not and has not at any time been a close company within the
meaning of section 414 and section 415 of ICTA.
6.11 The Company is a taxable person duly registered for the purposes of the
VATA.
6.12 The Company does not own any capital items, the input tax on which may be
adjusted, in accordance with Part XV of the Value Added Tax Regulations
1995.
6.13 Neither the Company, nor any company of which the Company is a relevant
associate (within the meaning of paragraph 3(7) of Schedule 10 to the VATA)
has elected, intends to elect, or is obliged to elect, to waive exemption
under paragraph 2 of Schedule 10 to the VATA in relation to any land or
buildings.
6.14 So far as the Seller is aware, all documents by virtue of which the Company
has any right have been duly stamped.
6.15 The Company has not taken an assignment of a lease and has not been granted
a lease in circumstances where the grant was exempt from stamp duty land
tax.
6.16 The Company is not involved (and has not in the last 6 years been involved)
in a material dispute with, nor subject to an investigation by, any local,
municipal, governmental, state, federal or other fiscal, revenue, customs
or excise authority, body or official including, without limitation, the
Inland Revenue and HM Customs & Excise in relation to a matter likely to
materially adversely financially affect the Company following the Transfer
Date.
6.17 The Company has complied in all material respects with the provisions of
the VATA and with all statutory requirements, regulations, orders,
provisions, directions or conditions relating to value added tax, including
the terms of any agreement reached with the Commissioners of Customs &
Excise and has maintained full, complete, correct and up-to-date records,
invoices and other documents (as the case may be) appropriate or requisite
for the purposes thereof and has preserved such records, invoices and other
documents in such form and for such periods as are required by the relevant
legislation.
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6.18 The Disclosure Letter sets out full details of all current formal written
agreements or arrangements between the Company and the Inland Revenue, HM
Customs & Excise, the Department of Social Security and any other relevant
tax authority under which the Company is entitled to be taxed on a
non-statutory basis.
6.19 The Disclosure Letter sets out full details of any inquiry, investigation
or assessment (including the consequences thereof) by the Commissioners of
Customs & Excise within three years prior to the date hereof into or
affecting the payment of VAT in respect of the Company.
6.20 The Company is not and has not in the last six years been subject to Tax in
any jurisdiction other than the UK, France, Germany, Belgium, Norway and
the Netherlands.
6.21 The Accounts reserve in accordance with applicable accounting standards,
principles and practices generally accepted in the UK for all deferred
liabilities to Tax.
7. INTELLECTUAL PROPERTY
7.1 The Company is not the legal or beneficial owner of any registration, or
application for registration, in respect of any Intellectual Property.
7.2 So far as the Seller is aware, none of the activities of the Company
infringes or makes unauthorised use or disclosure of, or has in the
preceding 30 months infringed or made unauthorised use or disclosure of,
any third party rights in Intellectual Property. No claims or allegations
concerning any such infringement or unauthorised use have been made to the
Company in the preceding 30 months.
7.3 The Company has not granted and is not obliged to grant any licence,
sub-licence, assignment, charge, mortgage or other right, or has been
granted any licence, sub-licence or other rights in respect of any of the
Intellectual Property Rights.
7.4 So far as the Seller is aware, no third party is infringing or making
unauthorised use or disclosure of, or has in the preceding three years
infringed or made unauthorised use or disclosure of any of the Intellectual
Property Rights. No claims or allegations concerning any such infringement
or unauthorised use or disclosure have been made by the Company (or, in
connection with the Non-Transferring Business, any other person) in the
preceding 30 months.
7.5 The Intellectual Property Rights and the Company's ownership, licence or
rights in them will not be adversely affected by the transaction
contemplated by this Agreement.
7.6 The Company either legally and beneficially owns or has a licence to use
all the Intellectual Property necessary for the Company to operate its
business as it has been operated before the date of this Agreement and to
fulfil any existing plans or proposals.
7.7 The Company does not use or operate its business under a name other than
its corporate name.
7.8 So far as the Seller is aware, no third party has registered or uses any
domain name which is identical or confusingly similar to any trade xxxx
(whether or not registered) or name used by the Company.
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8. EMPLOYEES
The Seller warrants to the Buyer that as of Completion the Company has no
employees.
9. REAL PROPERTY
9.1 As at Completion, the Company does not have any estate or interest in or
any right or liability in respect of any Property.
9.2 The Company has no liability arising out of the conveyance, transfer,
lease, tenancy, licence, agreement or other document relating to the land,
premises or an interest in land or premises.
10. AGREEMENTS
10.1 Validity of agreements
Other than in respect of the Reinsurance Agreements:
10.1.1 to the best of the Seller's knowledge, information and belief, no
fact or circumstances exists which might invalidate or give rise to a
ground for termination, avoidance or repudiation of an agreement,
arrangement or obligation to which the Company is a party and which
relates to the Non-Transferring Business. No party with whom the
Company has entered into such an agreement, arrangement or obligation
has given notice of its intention to terminate, or has sought to
repudiate or disclaim the agreement, arrangement or obligation; and
10.1.2 neither the Company nor any party with whom the Company has entered
into an agreement, arrangement or obligation relating to the
Non-Transferring Business is in material breach of the agreement,
arrangement or obligation. To the best of the Seller's knowledge,
information and belief, no fact or circumstances exist which might
give rise to a breach of this type.
10.2 In connection with the Non-Transferring Business, the Company is not a
party to, and is not liable under, a long-term, onerous or unusual
agreement, arrangement or obligation including, without limitation:
10.2.1 an agreement, arrangement or obligation entered into other than in
the usual course of its business;
10.2.2 an agreement, arrangement or obligation entered into other than by
way of a bargain at arm's length;
10.2.3 an agreement, arrangement or obligation restricting the Company's
freedom to operate the whole or part of the Non-Transferring Business
or to use or exploit any of its assets;
10.2.4 a sale or purchase, option or similar agreement, arrangement or
obligation affecting an asset owned, occupied, possessed or used by
the Company or by which the Company is bound; or
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10.2.5 a material agreement, arrangement or obligation with which the
Company cannot comply on time or without undue or unusual expenditure
of money or effort.
10.3 The Company is not a member of a joint venture.
11. INSURANCE
11.1 POLICIES
The Disclosure Letter contains copies of current insurance and indemnity
policies (excluding contracts of reinsurance) in respect of which the
Company has an interest as beneficiaries (the "Policies").
11.2 Each of Policies is valid and enforceable and is not void. The Company has
not done anything or omitted to do anything, and as far as the Seller is
aware there is nothing, which might:
(a) make any of the Policies void or voidable; or
(b) prejudice the ability to effect the insurance on the same or better
terms in the future.
11.3 No insurers under any of the Policies has disputed, or given any indication
that they intend to dispute, the validity of any of the Policies.
11.4 None of the Policies contain any provisions as to change of control or
ownership of the insured.
11.5 No insurer has ever cancelled or refused to accept or continue any
insurance in relation to the Company.
11.6 CLAIMS
11.6.1 No single claim (over L50,000) is outstanding under any of the
Policies, nor has any event occurred which might give rise to a single
claim (over L50,000) which has not been notified to insurers.
11.6.2 None of the insurers under any of the Policies has refused, or given
any indication that it intends to refuse, any claim (in whole or in
part) under the Policies and nothing has been done or omitted to be
done which might entitle an insurer to make such refusal.
11.7 PREMIUMS
11.7.1 All premiums which are due under the Policies have been paid under
the terms of the Policies.
11.7.2 The Company has not received written notice that it has done
anything or omitted to do anything which might result in an increase
in the premium payable in respect of any of the Policies.
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12. EFFECT OF SALE
In respect of the Non-Transferring Business and except in consequence of or
arising from the Scheme or the Reinsurance Agreements, neither the
execution nor the performance of this Agreement or any document to be
executed at or before Completion will result in the Company losing the
benefit of an asset, grant, right or privilege which it enjoys at the date
of this Agreement or will:
12.1.1 conflict with;
12.1.2 result in a breach of;
12.1.3 give rise to an event of default under;
12.1.4 require the consent of a person under;
12.1.5 enable a person to terminate; or
12.1.6 relieve a person from an obligation under,
any agreement or arrangement to which the Company is a party or any legal
or administrative requirement by which the Company is bound.
13. LIABILITIES
13.1 INDEBTEDNESS
Except as disclosed in the Accounts or in the Disclosure Letter, the
Company does not have outstanding and has not agreed to create or incur
loan capital, borrowing or indebtedness in the nature of borrowing.
13.2 GUARANTEES AND INDEMNITIES
13.2.1 The Company is not a party to and is not liable under any guarantee,
indemnity or other agreement to secure or incur a financial or other
obligation with respect to another person's obligations.
13.2.2 No part of the loan capital, borrowing or indebtedness in the nature
of borrowing of the Company is dependent on the guarantee or indemnity
of, or security provided by, another person.
13.3 No event has occurred or has been alleged to have occurred which:
13.3.1 constitutes an event of default or otherwise gives rise to an
obligation to repay, under an agreement related to borrowing or
indebtedness in the nature of borrowing (or will do so with the giving
of notice or lapse of time or both); or
13.3.2 will lead to an Encumbrance constituted or created in connection
with borrowing, or indebtedness in the nature of borrowing, a
guarantee, an indemnity or other obligation of the Company becoming
enforceable (or will do so with the giving of notice or lapse of time
or both).
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14. INSOLVENCY, WINDING UP ETC.
14.1 WINDING UP AND ADMINISTRATION
No order has been made, petition presented or resolution passed for the
winding up of the Company or for the appointment of a provisional
liquidator to the Company and no administration order has been made in
respect of the Company.
14.2 RECEIVERSHIP
No receiver or receiver and manager has been appointed of the whole or part
of the Company's business or assets.
14.3 VOLUNTARY ARRANGEMENTS
No voluntary arrangement has been proposed under section 1 of the
Insolvency Xxx 0000 in respect of the Company. No compromise or arrangement
has been proposed, agreed to or sanctioned under section 425 of the Act in
respect of the Company.
14.4 INSOLVENCY
The Company is not insolvent or unable to pay its debts within the meaning
of section 123 of the Insolvency Xxx 0000.
14.5 UNSATISFIED JUDGMENTS
There is no unsatisfied judgment or court order outstanding against the
Company.
14.6 PAYMENT OF DEBTS
The Company is able to pay its debts as they fall due.
14.7 STRIKING OUT
No action is being taken by the Registrar of Companies to strike the
Company off the Register under section 652 of the Act.
14.8 UNDERVALUE/PREFERENCE
The Company has not at any time during the two years immediately prior to
the date of this Agreement:
14.8.1 entered into a transaction with any person at an undervalue (as
referred to in section 238(4) of the Insolvency Act 1986); or
14.8.2 been given a preference by any person (as referred to in section
239(4) of the Insolvency Act 1986).
15. LITIGATION AND COMPLIANCE WITH LAW
15.1 Neither the Company nor a person for whose acts or defaults the Company may
be vicariously liable is, so far as the Company is aware, involved, or has
during the two years ending on the date of this Agreement been involved, in
a civil, criminal, arbitration,
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administrative or other proceeding. No civil, criminal, arbitration,
administrative or other proceeding is pending or threatened by or against
the Company or a person for whose acts or defaults the Company may be
vicariously liable.
15.2 To the best of the Seller's knowledge, information and belief, no fact or
circumstance exists which might give rise to a civil, criminal,
arbitration, administrative or other proceeding involving the Company or a
person for whose acts or defaults the Company may be vicariously liable.
15.3 There is no outstanding judgment, order, decree, arbitral award or decision
of a court, tribunal, arbitrator or governmental agency against the Company
or a person for whose acts or defaults the Company may be vicariously
liable.
15.4 The Company has conducted its business and dealt with its assets in all
material respects in accordance with all applicable legal, regulatory and
administrative requirements.
15.5 Save as disclosed in the Disclosure Letter, there is not and has not been
any governmental or other investigation, enquiry or disciplinary proceeding
concerning the Company and none is pending or threatened. To the best of
the Seller's knowledge, information and belief, no fact or circumstance
exists which might give rise to an investigation, enquiry or proceeding of
that type.
16. INSIDER AGREEMENTS
There is not and during the three years ending on the date of this
Agreement, there has not been any agreement or arrangement (legally
enforceable or not) to which the Company is or was a party and in which the
Seller, a director or former director of the Company or a person connected
with any of them is or was interested in any way for this purpose,
"CONNECTED" has the meaning given by section 839 of the Taxes Act, except
that in construing section 839 "CONTROL" has the meaning given by section
840 or section 416 of the Taxes Act so that there is control whenever
either section 840 or 416 requires.
17. DATA PROTECTION
17.1 The Company has in all material respects at all times complied with the
Data Protection Xxx 0000, the Data Protection Xxx 0000, the
Telecommunications (Data Protection and Privacy) Regulations 1999, Part I
of the Regulation of Investigatory Powers Act 2000 and all other applicable
laws and regulations regulating data protection, privacy or the recording,
monitoring or interception of communications (the "DATA PROTECTION LAWS").
Particulars of the Company's registration or notification under the Data
Protection Act 1998 are set out in the Disclosure Letter.
17.2 The Company has not received any written communication from the Information
Commissioner or any other data protection or privacy authority with
competent authority over the Company's data processing activities,
indicating that he or she is investigating an allegation that the Company
is in material breach of the Data Protection Laws or that he or she
proposes to take, or is considering taking, enforcement action under any of
the Data Protection laws.
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18. CONSTITUTION, REGISTERS AND RETURNS
18.1 CONSTITUTION
The Company is operating and has always operated its business in all
respects in accordance with its memorandum and articles of association at
the relevant time.
18.2 REGISTERS ETC.
Each register, minute book and other book which the Act requires the
Company to keep has been properly kept and contains a complete and accurate
record of the matters which it is required by the Act to record. No notice
has been received or allegation made that a register or book is incorrect
or should be rectified.
18.3 RETURNS ETC.
Save as disclosed in the Disclosure Letter, all returns, particulars,
resolutions and other documents required to be delivered by the Company to
the Registrar of Companies or another governmental or other authority or
agency have been properly prepared and delivered.
18.4 POWERS OF ATTORNEY AND AUTHORITIES
Save as disclosed in the Disclosure Letter, the Company has not given a
power of attorney or other authority by which a person may enter into an
agreement, arrangement or obligation on the Company's behalf (other than an
authority for a director, other officer or employee to enter into an
agreement in the usual course of that person's duties).
19. PENSIONS
19.1 Neither the Company nor the Subsidiary Undertaking nor the Associate
Company has ever established, sponsored, participated in or contributed to
any arrangement (whether or not closed, funded or approved) for providing
pensions or other benefits on, or in anticipation of, the retirement,
death, accident or sickness of any current or former director or employee
of the Company, Subsidiary Undertaking or Associate Company, nor have they
agreed or announced any proposal to enter into or establish any such
arrangement.
19.2 The Company, the Subsidiary Undertaking and the Associate Company are
exempt from any duties to facilitate access to a stakeholder pension scheme
under section 3 of the Welfare Reform and Pensions Xxx 0000.
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SCHEDULE 4
ACTION PENDING COMPLETION
Unless otherwise directed by, or agreed in writing with, the Buyer, or required
by law or contractual obligation, the Seller shall ensure that the Company will:
1. not create, allot, issue, acquire, repay or redeem any share or loan
capital or agree, arrange or undertake to do any of those things or acquire
or agree to acquire, an interest in a corporate body or merge or
consolidate with a corporate body or any other person, enter into any
demerger transaction or participate in any other type of corporate
reconstruction;
2. operate the Non-Transferring Business in the ordinary and usual way so as
to maintain that business as a going concern;
3. not acquire or dispose of, or agree to acquire or dispose of, any revenues,
assets, business or undertakings with a value exceeding L50,000
except:
3.1 in the ordinary and usual course of its business;
3.2 pursuant to the Scheme; and
3.3 the Company may dispose of the area of freehold land on the west side of
Cranleigh Close, Bexhill-on-Sea, East Sussex registered at the Land
Registry with title absolute under title numbers SX36275 and ESX70659;
4. not assume or incur, or agree to assume or incur, a liability, obligation
or expense (actual or contingent) except in the usual course of its
business or pursuant to the Scheme;
5. not make, or agree to make, capital expenditure exceeding in total
L50,000 (or its equivalent at the time) or incur, or agree to incur,
a commitment or commitments involving capital expenditure exceeding in
total L50,000 (or its equivalent at the time);
6. not declare, pay or make a dividend or distribution;
7. other than in connection with or arising from the Scheme, not register any
transfer of shares or other investments;
8. other than in connection with or arising from the Scheme, not acquire any
shares or other interest in a body corporate;
9. not participate in any partnership or joint venture;
10. not establish a subsidiary or subsidiary undertaking;
11. not borrow any money or obtain any advance or credit;
12. not pass a shareholder's resolution;
13. not make a claim under section 152 or 153 of TCGA which affects an asset
owned by the Company;
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14. not create, or agree to create or amend, an Encumbrance over the Shares or
another asset or redeem, or agree to redeem, an existing Encumbrance over
the Shares or another asset;
15. not enter into a long-term, onerous or unusual agreement, arrangement or
obligation in each case, involving consideration, expenditure or
liabilities in excess of L50,000 other than as required by the
Scheme;
16. not, in relation to the Non-Transferring Business, amend or terminate a
material agreement, arrangement or obligation to which it is a party or
terminate any contract or commitment which is not capable of being
terminated without compensation or which involves or may involve total
annual expenditure of L50,000 or as required pursuant to the Scheme;
17. not amend the terms of employment or engagement of a director or other
officer or provide or agree to provide a gratuitous payment or benefit to a
director or officer (or any of their dependants) or employ or engage or
offer to employ or engage any person other than under or in terms of the
Company's standard remuneration policy;
18. not participate in any pension scheme;
19. not amend, or agree to amend, the terms of its borrowing or indebtedness in
the nature of borrowing or create, incur, or agree to create or incur,
borrowing or indebtedness in the nature of borrowing (except pursuant to
facilities disclosed in the Disclosure Letter where the borrowing or
indebtedness in the nature of borrowing does not exceed the amount
available to be drawn by the Company under those facilities);
20. not give, or agree to give, a guarantee, indemnity or other agreement to
secure, or incur financial or other obligations with respect to, another
person's obligation in relation to the Non-Transferring Business;
21. not start, settle or abandon litigation or arbitration proceedings, retain
or appoint any new Counsel or legal representatives in respect of existing
litigation in respect of the Non-Transferring Business in which it is
engaged, or admit any liability;
22. conduct the Non-Transferring Business in all respects in accordance with
all applicable legal and administrative requirements in any jurisdiction;
23. not enter into an agreement, arrangement or obligation (whether legally
enforceable or not) in which the Seller, a director or former director of
the Company or a person connected with any of them is interested. For this
purpose, "CONNECTED" has the meaning given by section 839 of the Taxes Act,
except that in construing section 839 "CONTROL" has the meaning given by
section 840 or section 416 of the Taxes Act so that there is control
whenever either section 840 or 416 requires;
24. except as may arise from or in connection with the Scheme, not make any
non-technical liability change or write-down or disposal of assets
(excluding assets held for investment purposes) in each case of an amount
or value in excess of L50,000;
25. not agree to any new letters of credit other than the Letter of Credit, or
increases in existing ones, in relation to the Non-Transferring Business;
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26. not commit to any material changes to its IT processes or any other
operational processes in relation to the Non-Transferring Business and the
Non-Transferring Policies;
27. not enter into or agree to enter into any insurance contract, reinsurance
contract or retrocession contract in respect of Non-Transferring Business;
and
28. not deal with any of its assets held for investment purposes in relation to
the Non-Transferring Business and the Non-Transferring Policies.
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SCHEDULE 5
NON-TRANSFERRING BUSINESS, NON-TRANSFERRING POLICIES, NON-TRANSFERRING POLICY
RECORDS AND NON-TRANSFERRING RECORDS
INWARDS
- Type (eg Fac/Direct)
- Class (eg Public/Products Liability)
- Territory
- Policy Reference
- Policy Year
- Broker
- Cedant Name
- Cedant Code
- Inception Date
- Expiry Date
- Principal Currency
- Limit
- Retention
- Signed Line
OUTWARDS
- Type (eg Fac/Direct)
- Class (eg Public/Products Liability)
- Territory
- Policy Reference
- Policy Year
- Broker
- Reinsurer Name
- Reinsurer Signed Line
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- Reinsurer Code
- Inception Date
- Expiry Date
- Principal Currency
- Limit
- Retention
- Reinstatement
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EXECUTED by the parties:
Signed by ) /s/
a duly authorised )
representative of/for )
and on behalf of )
Aioi Insurance Company Limited: )
Signed by ) /s/
a duly authorised )
representative of/for )
and on behalf of )
Hillcot Holdings Ltd: )
Signed by ) /s/
a duly authorised )
representative of/for )
and on behalf of )
Castlewood (EU) Ltd: )
Signed by ) /s/
a duly authorised )
representative of/for )
and on behalf of )
Kenmare Holdings Ltd: )
Signed by ) /s/
a duly authorised )
representative of/for )
and on behalf of )
Shinsei Bank, Limited: )
