Exhibit 4(a)(ii)
NOTE: This draft is subject to further review and amendment prior to signing
Dated • April 2003
Mitchells & Butlers PLC
and
Six Continents PLC
SHARE PURCHASE AGREEMENT
relating to the sale and purchase of the whole of the issued share capital of
various Retail companies
One Silk Street
London EC2Y 8HQ
Telephone (44-20) 7456 2000
Facsimile (44-20) 7456 2222
Ref MAS/JLF/SLM
This Agreement is made on • April 2003
Between:
| 1 |
[“Deeds of Substitution” means the two deeds to be entered into between Six Continents and Six Continents Retail Limited pursuant to which Six Continents Retail Limited is to become the principal employer in respect of the Six Continents Pension Schemes;] “Demerger” means the proposed demerger of the Hotels Business and the Retail Business of Six Continents in accordance with the terms of the Demerger Agreement and as more particularly described in the Circular; “Demerger Agreement” means an agreement expected to be entered into between M and B and IHG in relation to the proposed Demerger; “Demerger Sponsorship Agreement” means the agreement dated 17 February 2003 between Six Continents, M and B, IHG and Salomon Brothers International Limited; “Election” means any claim, election, surrender, disclaimer, notice or consent for any Taxation purpose; “Encumbrance” means any claim, charge, mortgage, security, lien, option, equity, power of sale, hypothecation or other third party right, retention of title, right of pre-emption, right of first refusal or security interest of any kind; “Group” means any company, its parent undertaking and any subsidiary undertaking of that company or of its parent undertaking; “Hotels Business” means the hotels and soft drinks businesses carried on by certain members of Six Continents’ Group prior to Completion as described in the listing particulars of IHG dated 17 February 2003; “Hotels Liability” means | ||
| (i) | any Liability in respect of NAS; | |
| (ii) | any Liability in respect of the Radegast Disposal; | |
| (iii) | any Liability in respect of White Shield; or | |
| (iv) | any other Liability relating exclusively or predominantly to the Hotels Business the amount of which exceeds £5,000,000 and Liabilities related to a series or a number of connected matters shall be aggregated for this purpose; | |
| ||
| “Hotels Tax Liability” means a Hotels Liability to the extent it relates directly or indirectly to Taxation; | ||
| “IHG” means InterContinental Hotels Group PLC , a public limited company registered in England and Wales with registered number 4551528; | ||
| “Lastbrew” means Lastbrew Limited, a private limited company registered in England and Wales with registered number 00075597 and with its registered office at 20 North Audley Street, London W1K 6WN; | ||
| “Lastbrew Liability” means any Liability arising in Lastbrew whether arising before or after Completion which relates to a time prior to Completion save to the extent that such Liability arises as a consequence of any action by M and B or a member of the M and B Group after Completion other than an action which it or any member of its Group is contractually compelled to take after Completion as the result of a contract made before Completion or is required in accordance with the terms of the proposed Demerger Agreement or this | ||
| 2 |
| Agreement or is specifically referred to in the Circular or the listing particulars of M and B dated 17 February 2003 or is required by law; | |
| “Liabilities” means all liabilities, Losses and obligations of every description, including fines, interest and penalties, whether deriving from contract, common law, statute or otherwise, whether present or future, actual or contingent, ascertained or unascertained or disputed and whether owed or incurred severally or jointly and as principal or surety and “Liability” means any one of them; | |
| “Losses” means all losses, liabilities, damages, reasonable costs (including, without limitation, legal costs), reasonable charges and reasonable expenses including those arising in respect of any actions, proceedings, claims or demands; | |
| “M and B Reduction” means the proposed reduction of capital of M and B in accordance with section 135 Companies Act 1985 as described in the Circular and reference to the M and B Reduction becoming effective shall mean that the M and B Reduction has been sanctioned by the Court and an office copy of the order of the Court has been registered by the Registrar of Companies in England and Wales; | |
| “M and B Share Consolidation” means the proposed consolidation and subdivision of the share capital of M and B as described in the Circular; | |
“NAS” means 20 North Audley Street, London W1K 6WN; “Notifying Party” has the meaning given in Clause 5.7.1; “Payment Account Details” means, in relation to any payment to be made under or pursuant to this Agreement, the name, account number, sort code, account location and other details specified by the payee and necessary to effect payment (whether by cheque, banker’s draft, telegraphic or other electronic means of transfer) to the payee; “Pensions Transfer Agreement” means one or more agreements entered into before the date of this Agreement governing the transfer of assets and liabilities with effect from 1 April 2003 from each of the Six Continents Group Pension Schemes; “Radegast Disposal” means the disposal by Bass Holdings Limited of shares in [Radegast] to [Nomura] on 22 September 1999; “Recipient” has the meaning given in Clause 5.7.1; “Recovering Party” has the meaning given in Clause 5.8.1; “Retail Business” means the managed pubs, bars, restaurants and property development business carried on by the retail division of Six Continents’ Group prior to Completion as described in the listing particulars of M and B dated 17 February 2003; “Retail Companies” means the companies details of which are set out in Schedule 1 and “Retail Company” means any one of them; “Retail Shares” means the entire issued share capital of each of the Retail Companies (other than Bede Retail Investment Limited) and membership of Bede Retail Investments Limited; “Scheme of Arrangement” means the scheme of arrangement pursuant to Section 425 Companies Act 1985 pursuant to which M and B was inserted as the new holding company of Six Continents; | |
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| “Settling Party” has the meaning given in Clause 5.8.1; | |||
| “Shared Liability” means: | |||
| (i) | any Lastbrew Liability; | ||
| (ii) | any Transactions Liability; and | ||
| (iii) | any other Liability which relates to any asset owned or business carried out or action taken prior to the M and B Reduction by any member of Six Continents’ Group as constituted at any time prior to the M and B Reduction becoming effective: | ||
| (a) | which does not relate exclusively or predominantly to either the Hotels Business or the Retail Business; | ||
| (b) | which neither party nor any member of its Group (as constituted immediately following Completion, but excluding, in the case of the M and B Group, Lastbrew Limited) knows about at the date of this Agreement; | ||
| (c) | which, if the parties had considered immediately prior to the execution of this Agreement, would have been treated as falling within this definition having regard to the principles which were taken into account in determining that the Liability identified in paragraph (i) above was a Shared Liability and to the general principles of ensuring that shareholders in M and B and IHG, as between themselves, are treated fairly; and | ||
| (d) | the amount of which exceeds £5,000,000 and Liabilities related to a series or a number of connected matters shall be aggregated for this purpose; | ||
| “Shared Tax Liability” means a Shared Liability to the extent it relates directly or indirectly to Taxation PROVIDED THAT it shall not include any matter specifically referred to in paragraph 3 of Schedule 5 (Taxation); | |||
| “Six Continents Group Pension Schemes” means the Six Continents Pension Plan and the Six Continents Executive Pension Plan; | |||
| “Tax” or “Taxation” means all forms of taxation whether direct or indirect, whether arising as a result of a primary or secondary liability and whether levied by reference to income, profits, gains, net wealth, asset value, turnover, added value, the transfer of assets or otherwise, and statutory, governmental, state, provincial, local governmental or municipal impositions, duties, contributions and levies (including, without limitation, social security contributions and any other payroll taxes but excluding rates or similar taxes), in each case whether of the United Kingdom or elsewhere, whenever imposed (whether imposed by way of withholding or deduction for or on account of taxation or otherwise), and all penalties, charges, fines, costs and interest relating thereto whether arising under the Instalment Regulations or otherwise PROVIDED THAT Taxation shall not include United Kingdom stamp duty but shall include stamp duty reserve tax. References to Tax or Taxation include the use of any Relief (whether the Relief arose before or after Completion) except where that use was taken into account in a return to a Taxation Authority made prior to Completion [or in relation to the period in which Completion occurs] in the accounts in the M and B or IHG Listing Particulars to reduce Taxation that would otherwise have arisen, and Liability or liability to Ta xation shall accordingly be construed as including the use of a Relief in circumstances where, had there been no Relief to use, a Taxation Liability would have arisen in respect of which a claim could have been made under this | |||
| 4 |
Agreement (and where appropriate such a Liability shall be taken to be a Liability to a Taxation Authority); “Taxation Authority” means any taxing or other statutory, governmental, state, provincial or local governmental authority, body, court, tribunal or official whatsoever (whether of the United Kingdom or elsewhere in the world) competent to impose, administer or collect any Taxation or make any decision or ruling on any matter relating to Taxation; “Taxes Act” or “TA” means the Income and Corporation Taxes Act 1988; “Taxation Liability” means a Liability to the extent it relates directly or indirectly to Taxation; “Transactions” means the implementation of the Scheme of Arrangement, this Agreement, the capitalisation by Six Continents of £[•] of the M and B Group, the funding of M and B to allow it to pay the outstanding consideration arising under this Agreement and the proposed M and B Share Consolidation BUT EXCLUDING the proposed M and B Reduction; “Transactions Liability” means any Liability in relation to the Transactions other than (a) any Liability relating to the publication of any listing particulars or supplementary listing particulars by IHG or M and B pursuant to the Listing Rules; (b) any Liability relating to the Form 20-F of M and B which is expected to be declared effective by the Securities Exchange Commission on or before Completion; (c) any Liability or obligation of IHG, Six Continents or M and B arising under any provision of this Agreement which does not relate to a Transactions Liability ; (d) any Liability or obligation of IHG, Six Continents or M and B arising under the [Demerger Agreement or the] Demerger Sponsorship Agreement; or (e) the obligation to pay the Return of Capital (as defined in the Circular); “Transitional Services Agreement” means the agreement dated [•] between Six Continents and [M and B] relating to the provision of certain transitional services; and White Shield” means [White Shield]. | |
1.2 | Subordinate Legislation | ||||
| References to a statutory provision include any subordinate legislation made from time to time under that provision. | |||||
1.3 | Modification etc. of Statutes | ||||
| Except to the extent that any statutory provision made or enacted after the date of this Agreement would create or increase any liability of either party under this Agreement, any reference to a statutory provision: | |||||
| 1.3.1 | shall include such provision as from time to time modified or re-enacted or consolidated whether before or after the date of this Agreement so far as such modification, re-enactment or consolidation applies or is capable of applying to any transactions entered into under this Agreement on or prior to Completion; and | ||||
| 1.3.2 | (so far as liability there under may exist or can arise) shall include also any past statutory provision (as from time to time modified, re-enacted or consolidated) which such provision has directly or indirectly replaced. | ||||
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| 5.1.2 | Six Continents as seller of the Retail Shares under this Agreement, shall indemnify and agrees to keep indemnified M and B as purchaser of the Retail Shares under this Agreement against any Liability of M and B or any other member of M and B’s Group (as constituted after Completion) which is a Hotels Liability. | ||
| 5.1.3 | The provisions of Schedule 3 shall apply to any claim under this Clause 5.1. | ||
| 5.1.4 | No obligations shall arise under this Clause 5.1 or under Schedule 5 in respect of any Liability to the extent that the matter giving rise to such Liability has been satisfied or settled prior to the M and B Reduction becoming effective. | ||
| 5.1.5 | Amounts paid under this Clause 5.1 shall be subject to repayment under Clause 5.8. | ||
| 5.2 | Taxation | ||
| 5.2.1 | Schedule 5 shall apply in relation to all the matters for which it makes provision and the provisions of Schedule 5 shall apply in relation to any matter dealt with in that Schedule instead of the provision of any other part of this Agreement. | ||
| 5.2.2 | When the provisions of Schedule 5 conflict with any other provision of this Agreement, Schedule 5 shall prevail if such conflict arises in relation to Taxation. | ||
| 5.2.3 | Where under this Agreement and apart from Schedule 5 and this Clause: | ||
| (i) | a party would become liable to make a payment to another; and | ||
| (ii) | that payment relates wholly to Taxation, or part of that payment relates to Taxation, | ||
| then no liability shall arise under this Agreement to make that payment or that part unless Schedule 5 so provides. | |||
| 5.2.4 | Where a claim for a payment arises under this Agreement (other than pursuant to Clause 8.4), then, to the extent that that claim relates to Taxation, the provisions of Schedule 5 shall apply in relation to any matter dealt with in that Schedule instead of the provisions of any other part of this Agreement. | ||
| 5.2.5 | Notwithstanding Clause 5.2.4, and for the avoidance of doubt, Clause 5.9 (Double Claims) shall apply to a claim made under Schedule 5 in the same way as it applies to any other claim made under this Agreement. | ||
| 5.3 | Trade Mark Licences | ||
| 5.3.1 | Six Continents shall terminate with effect from the M and B Reduction becoming effective all existing trade mark licences from it to any member of M and B’s Group, including without limitation any licence allowing a member of M and B’s Group to carry on business under names incorporating the words “Six Continents”, “SC”, “6C” or under the “6C” logo. | ||
| 5.3.2 | Within one month of the M and B Reduction becoming effective, M and B shall: | ||
| (i) | procure that all members of M and B’s Group which have the words “Six Continents”, “SC” or “6C” in their company name shall adopt new company names which do not incorporate the words “Six Continents”, “SC” or “6C”or any words resembling the same; and | ||
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| (ii) | forthwith hand to Six Continents duly certified copies of the relevant Special Resolutions. | ||
| 5.3.3 | M and B shall use reasonable endeavours to procure that all members of M and B’s Group cease using or carrying on business under any name or device incorporating the words “Six Continents”, “SC”, “6C” or the “6C” logo or any words or logos resembling the same by 31 December 2003, including without limitation; | ||
| (i) | removing those words and trade marks from their premises and from all materials and signage used in their business; | ||
| (ii) | replacing all business stationery with stationery that does not refer to these words and trade marks; | ||
| (iii) | destroying all unused stationery which refers to those trade marks or words; and | ||
| (iv) | transferring by novation or otherwise to Six Continents all domain names registered in the name of any member of M and B’s Group which contain the words “Six Continents” or any words resembling the same; | ||
| and M and B shall in any event procure that all members of M and B’s Group cease using or carrying on business under such names or devices by 31 December 2003. | |||
| 5.3.4 | Subject to sub-Clauses 5.3.2 and 5.3.3, Six Continents hereby grants to M and B for the benefit of all members of M and B’s Group a non-exclusive royalty-free worldwide licence from the M and B Reduction becoming effective until 31 December 2003 to use the “SIX CONTINENTS” word mark” and “6C” device mark in the manner and to the extent used by the members of M and B’s Group in the 12 months prior to the M and B Reduction becoming effective. | ||
| 5.4 | Further Assurance | ||
| 5.4.1 | M and B and Six Continents undertake to co-operate in good faith following Completion to ensure that they and their respective Groups do such acts and things at the joint cost of Six Continents and M and B as may reasonably be necessary for the purpose of giving to M and B, Six Continents and their respective Groups the full benefit of all relevant provisions of this Agreement and all other agreements entered into pursuant to this Agreement. Six Continents agrees to procure the due performance of the obligations of the members of Six Continents’ Group under this Agreement and all other agreements entered into by them in connection with the Demerger in consideration of M and B’s agreement to procure the due performance of the obligations of the members of M and B’s Group under this Agreement and all other agreements entered into by them in connection with the Demerger. | ||
| 5.4.2 | The parties shall use all reasonable endeavours following Completion to procure that (and to procure that the members of their respective Groups use all reasonable endeavours to procure that) any necessary third party shall at the joint cost of Six Continents and M and B execute such documents and do such acts and things as may reasonably be required for the purpose of giving to Six Continents and M and B the full benefit of all relevant provisions of this Agreement and all other agreements entered into by them (or members of their respective Groups) in connection with the Demerger. | ||
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| 5.4.3 | Save in relation to any guarantee, indemnity, counter-indemnity or letter of comfort given by a member of M and B’s Group which relates to a Shared Liability or Hotels Liability Six Continents agrees that it will use all reasonable endeavours after Demerger (so far as it is lawfully able to do so) to obtain a full and effective release of any member of M and B’s Group from any guarantees, indemnities, counter indemnities and letters of comfort (if any) which such member of M and B’s Group may have given in respect of any member of Six Continents’ Group and pending such release it shall indemnify M and B (for itself and as trustee for each member of M and B’s Group other than M and B) in respect of any claims made pursuant to such guarantees, indemnities, counter indemnities and letters of comfort. | ||
| 5.4.4 | Without prejudice to any other provision of this Agreement, the parties undertake to use reasonable endeavours following Completion to co-operate, and ensure that their respective groups co-operate, with each other in relation to inquiries from Government or regulatory bodies, investigations or other proceedings of a like nature (an “Investigation”) where: | ||
| (i) | the Investigation relates to a Hotels Liability or a Shared Liability; or | ||
| (ii) | they have a mutual interest in the Investigation; and | ||
| co-operating in such manner would not materially adversely affect any material interest of either of them. | |||
| 5.4.5 | Nothing in this Agreement shall require any party to act in breach of any provision of the Data Protection Act 1998 (the “DPA”) and each party shall only be required to fulfil its obligations under this Agreement to the extent permissible under the DPA or, without prejudice to the foregoing, no party shall be required to disclose or make available to the other any information the disclosure or making available of which would or might, in the reasonable opinion of the disclosing party, cause the disclosing party to be in breach of any duty of confidentiality (whether arising from contract, at common law or by statute) owed to any person other than the party requesting disclosure or any of its subsidiaries. | ||
| 5.5 | Where any bodies corporate, businesses, undertakings, activities or other assets are not acquired, directly or indirectly, by M and B pursuant to this Agreement, but would properly be regarded as bodies corporate, businesses, undertakings, activities or other assets which relate exclusively or predominantly to the Retail Business or were used exclusively or predominantly at or prior to Completion by any Company which becomes a member of M and B’s Group on Completion (the “ Relevant M and B Assets”), then Six Continents shall forthwith upon becoming aware of the same, give written notice to M and B of the same and, on notice from M and B (which M and B shall give within 60 days following written notice from Six Continents or as soon as reasonably practicable after M and B otherwise becomes aware of such matter) shall procure, at the joint cost of M and B and Six Continents, that the Relevant M and B Assets shall be transferred to M and B, or such other member of the M and B Group as M and B shall direct, as soon as reasonably practicable, subject to any third party consents (which Six Continents and M and B shall use all reasonable endeavours to obtain). As from Completion until the time of such transfer, the relevant member of Six Continents’ Group shall hold the Relevant M and B Assets on trust for the benefit of M and B and shall account to M and B accordingly. M and B shall indemnify Six Continents against any Losses properly incurred by any member of Six Continents’ Group in acting as trustee of the Relevant M and B Assets with effect from Completion or carrying out its functions in connection therewith this clause. The consideration for the transfer of the Relevant M and B Assets shall be deemed to have been satisfied by the payment of the Completion Amount and accordingly no additional consideration shall be paid by M and B. For the avoidance of doubt, subject to the franchise agreement between any member of the M and B Group and a member of the Six Continents Group relating to the operation of “Express by Holiday Inn” hotels, all rights to the trademarks and the names “Six Continents” and “Holiday Inn” belong to Six Continents. | ||
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| 5.6 | Where any bodies corporate, businesses, undertakings, activities or other assets are acquired, directly or indirectly, by M and B pursuant to this Agreement, but would properly be regarded as bodies corporate, businesses, undertakings, activities or other assets which relate exclusively or predominantly to the Hotels Business or were used exclusively or predominantly by any member of Six Continents’ Group (other than those companies which become member of M and B’s Group on Completion) at or prior to Completion (the “Relevant Six Continents Assets”), then M and B shall forthwith upon becoming aware of the same, give written notice to Six Continents and, on notice from Six Continents (which Six Continents shall give within 60 days following written notice from M and B or as soon as reasonably practicable after Six Continents otherwise becomes aware of such matter) shall procure, at the joint cost of Six Continents and M and B, that the Relevant Six Continents Assets shall be transferred to Six Continents or such other member of Six Continents’ Group as Six Continents shall direct, as soon as reasonably practicable subject to any third party consents (which Six Continents and M and B shall use all reasonable endeavours to obtain). As from Completion until the time of such transfer, the relevant member of M and B’s Group shall hold the Relevant Six Continents Assets on trust for the benefit of Six Continents and shall account to Six Continents accordingly. Six Continents shall indemnify M and B against any Losses properly incurred by any member of the M and B Group in acting as trustee with effect from Completion of the Relevant Six Continents Assets or carrying out its functions in connection therewith. The Relevant Six Continents Assets shall be deemed to have been incorrectly transferred, directly or indirectly, to M and B and accordingly none of the consideration paid to Six Continents in accordance with Clause 4 shall be repaid to M and B. | |
| 5.7 | Conduct of Claims | |
| 5.7.1 | If either party (in each case the “ Notifying Party”) becomes aware of any matter that may give rise to a claim against the other party (the “ Recipient”) under this Agreement including without limitation a claim from any third party which constitutes or may constitute a Shared Liability or in respect of which the Recipient is or may be liable to indemnify the Notifying Party under this Agreement, notice of that fact (together with all details of the matter in question as are available) shall be given by the Notifying Party to the Recipient as soon as is reasonably practicable (but in any event within such period as will afford the Recipient reasonable opportunity of requiring the Notifying Party to lodge a timely appeal or response). Any failure to give such notice shall not affect the rights of the Notifying Party except to the extent that the rights or interests of the Recipient are prejudiced by such failure. | |
| 5.7.2 | Other than in respect of a Shared Liability (which shall be dealt with in accordance with the provisions of Clause 5.7.4), without prejudice to the validity of the claim or alleged claim in question, the Notifying Party shall allow, and shall procure that any member of its Group allows, the Recipient and its accountants and professional advisers to investigate the matter or circumstance alleged to give rise to such claim and whether and to what extent any amount is payable in respect of such claim and for such purpose the Notifying Party shall, and shall procure that all members of its Group shall, at the expense of the Recipient, take all such action and give all such information, documentation and assistance, including access to premises and personnel, and the right to examine and copy or photograph any assets, accounts, documents, books and records, as the Recipient or its accountants or professional advisers may reasonably request for the purposes of investigating the matter or circumstance alleged to give rise to such claim provided that (i) the Notifying Party shall not be obliged to breach any confidentiality obligations to which a member of its Group is bound and (ii) the Notifying Party shall not be obliged to take any action which would prejudice any legal privilege of which it is aware and which attaches to any documents. | |
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| 5.7.3 | If the claim in question is a result of or in connection with a claim by or liability to a third party (other than in respect of a Shared Liability) then: | ||
| (i) | no admission of liability shall be made by or on behalf of the Notifying Party or any member of its Group and the claim shall not be compromised, disposed of or settled without the prior written consent of the Recipient (such consent not to be unreasonably withheld or delayed); | ||
| (ii) | subject to Clause 5.7.4, the Recipient shall be entitled at its own expense in its absolute discretion to take such action as it shall deem necessary to avoid, dispute, deny, defend, resist, appeal, postpone, settle, compromise or contest such claim or liability or any adjudication in respect thereof (including, without limitation, making counterclaims or other claims against third parties) in the name of and on behalf of the Notifying Party or any member of its Group concerned and to have the conduct of any related proceedings, negotiations or appeals; and | ||
| (iii) | the Notifying Party shall, and will procure that any relevant member of its Group shall, take all such action and give all such information, documentation and assistance, including access to premises and personnel, copies of any relevant correspondence and the right to examine and copy or photograph any assets, accounts, documents, books and records, for the purpose of avoiding, disputing, denying, defending, resisting, appealing, postponing, settling, compromising or contesting any such claim, liability or adjudication as the Recipient or its professional advisers reasonably request provided that the Recipient shall indemnify the Notifying Party against all third party costs and expenses that it or any member of its Group may reasonably and properly incur as a result of the Recipient taking the actions described in Clause 5.7.3(ii) and this Clause 5.7.3(iii) and, if so required by the Notifying Party, shall provide a reasonable estimate of the costs and expenses that the Notifying Party may incur as a result of taking such action as is then requested by the Recipient. The Recipient agrees to keep the Notifying Party fully informed as to the progress of any such claim and the defence thereof. | ||
| 5.7.4 | The parties agree that proceedings in respect of any Shared Liability shall be conducted by such entity against whom or in whose name such Liability arises unless the parties agree in writing that a member of the other party’s Group would be in a better position to deal with such proceedings. The parties will so agree where the chances of successfully negotiating a solution to the issue are more likely with one party than the other. The provisions of Schedule 4 shall apply in respect of any such proceedings. If the provisions of Clauses 5.1.1 and 5.1.2 cease to apply due to the provisions of paragraph 1.1 of Schedule 3, this Clause 5 shall cease to apply in respect of the relevant Liabilities. | ||
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| 5.8 | Recovery | |
| 5.8.1 | If either party (in each case the “Settling Party”) pays an amount in discharge of any claim under this Agreement and the other party (the “Recovering Party”) or any member of its Group has previously recovered or subsequently recovers (whether by payment, discount, credit, relief, set-off or otherwise including for the avoidance of doubt, of reduction of Taxation) from a third party or insurer a sum which is referable to the subject matter of the claim within [7] years of the making of the payment in discharge of the claim, the Recovering Party shall forthwith pay, or shall procure that the relevant member of its Group forthwith pays, to the Settling Party an amount equal to (i) the sum recovered from the third party including any interest or repayment supplement received as part of such payment (or 50 per cent. of the aggregate of such sum and such supplement and interest in the case of a Shared Liability) less any reasonable and proper costs and expenses of recovery and any Taxation suffered in respect of such recovery (or 50 per cent of the aggregate of such sum in the case of a Shared Liability) or (ii) if less, the amount previously paid by the Settling Party to the Recovering Party less any reasonable and proper costs and expenses of recovery (or 50 per cent. of such costs and expenses in the case of a Shared Liability). | |
| 5.8.2 | Where the Recovering Party has or may have a claim against a third party in relation to any matter which may give rise to, or has given rise to, a claim under this Agreement, the Recovering Party shall use all reasonable endeavours, and shall procure that all reasonable endeavours are used, to recover any amounts due from such third party within any applicable time limit referred in to Clause 5.8.1. | |
| 5.9 | Double Claims | |
| 5.9.1 | M and B shall not be entitled to recover from Six Continents or any member of its Group more than once in respect of the same Losses or Liabilities. | |
| 5.9.2 | Six Continents shall not be entitled to recover from M and B or any member of its Group more than once in respect of the same Losses or Liabilities. | |
| 5.10 | Mitigation of Loss | |
| Each party shall procure that all reasonable steps are taken and all reasonable assistance is given to avoid or mitigate any Losses which in the absence of mitigation might give rise to a liability (or an increase in any such liability) in respect of any claim under this Agreement. | ||
| 5.11 | Access to Records | |
| [To be discussed further including whether a time limit is to be introduced] | ||
| 5.11.1 | M and B shall, and shall procure that members of the M and B Group shall, upon reasonable notice, comply with any reasonable requests and shall allow Six Continents or Six Continents’ representatives to have reasonable access: | |
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| 8.4 | Interest | |
| If either party defaults in the payment when due of any sum payable under this Agreement (whether determined by agreement or pursuant to an order of a court or otherwise) the liability of such party (as the case may be) shall be increased to include a payment of interest on such sum (subject to deduction or withholding of Taxation as required by law) from the date when such payment is due until the date of actual payment (after as well as before judgement) at a rate per annum of 2 per cent above the base rate from time to time of National Westminster Bank PLC. Such interest shall accrue from day to day. | ||
| 8.5 | Payments | |
| Payments shall be made by the relevant party in relation to any claim under this Agreement within 30 days of receipt of a valid demand or invoice (as appropriate) from the party seeking payment. | ||
| 8.6 | Notices | |
| 8.6.1 | Any notice or other communication requiring to be given or served under or in connection with this Agreement shall be in writing and shall be sufficiently given or served if delivered or sent to the contact details of each party as notified by them in writing from time to time to the other. | |
| 8.6.2 | Any such notice or other communication shall be delivered by hand or sent by courier, fax or prepaid first class post. If sent by hand or courier such notice or communication shall conclusively be deemed to have been given or served at the time of despatch, in case of service in the United Kingdom, or on the following Business Day, in the case of international service. If sent by fax such notice or communication shall be deemed to have been given or served at the time of despatch provided a suitable confirmation of such delivery is received by the sender of such fax and a copy of the fax containing such notice or communication (together with such confirmation) is sent by post as soon as practicable thereafter. If sent by post such notice or communication shall conclusively be deemed to have been received two Business Days from the time of posting, in the case of inland mail in the United Kingdom, or four Business Days from the time of posting, in the case of international mail. | |
| 8.7 | Severance | |
| If any term or provision in this Agreement shall be held to be illegal or unenforceable, in whole or in part, under any enactment or rule of law, such term or provision or part shall to that extent be deemed not to form part of this Agreement but the enforceability of the remainder of this Agreement shall not be affected. Subject thereto, should any term or provision of this Agreement be or become ineffective, in whole or in part, for reasons beyond the control of the parties, the parties shall use reasonable efforts to agree upon a new provision which shall as nearly as possible have the same commercial effect as the ineffective term or provision or part thereof. | ||
| 8.8 | Entire Agreement | |
| This Agreement and the agreements and documents entered into pursuant to or in connection with this Agreement contain the whole agreement between the parties relating to the subject matter of this Agreement at the date hereof to the exclusion of any terms implied by law which may be excluded by contract. Each party acknowledges that it has not been induced to enter this Agreement by and, so far as is permitted by law, hereby waives any remedy in respect of (and acknowledges that neither the other party nor any of its agents, officers or employees have given) any warranties, representations, indemnities, undertakings or other statements whatsoever (written or oral) not expressly incorporated into this Agreement. | ||
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| 8.9 | Counterparts | ||
| This Agreement may be executed in any number of counterparts each of which when so executed and delivered shall be deemed an original, but all the counterparts shall together constitute one and the same instrument. | |||
| 8.10 | Contracts (Rights of Third Parties) Act 1999 | ||
| Except as provided in Clause 8.11.2(ii), this Agreement does not create any right under the Contracts (Rights of Third Parties) Act 1999 which is enforceable by any person who is not a party to it. | |||
| 8.11 | Governing Law and Dispute Resolution | ||
| 8.11.1 | This Agreement shall be governed by and construed in accordance with English law. | ||
| 8.11.2 | If any dispute or disagreement arises between Six Continents and M and B as to any matter referred to or in connection with this Agreement Six Continents and M and B agree that:- | ||
| (i) | as soon as reasonably practicable after they are aware of such dispute or disagreement, both parties shall discuss the issue giving rise to the dispute or disagreement and negotiate in good faith with a view to reaching an amicable and reasonable solution for a period of up to 10 Business Days; | ||
| (ii) | if discussions and negotiations fail to resolve such dispute or disagreement, such matter shall be referred to Six Continents’ Chief Executive (for the time being) (unless the M and B Reduction becomes effective, in which case such matter shall be referred to IHG’s Chief Executive (for the time being)) and M and B’s Chief Executive (for the time being) (or such other senior executive as Six Continents (or, if the M and B Reduction has become effective, IHG) or M and B shall nominate) who shall discuss such dispute or disagreement in good faith with a view to reaching an amicable and reasonable solution for a further period of up to 20 Business Days (or such longer period as Six Continents (or, if the M and B Reduction has become effective, IHG) and M and B may agree in writing) from the date on which such dispute or disagreement is referred to the Chief Executives; and | ||
| (iii) | in respect of all disputes or disagreements, if the Chief Executives are unable to resolve such dispute or disagreement within the period referred to in sub-Clause 8.11.2(ii), the matter will then be referred to mediation in accordance with the model procedure of the Centre for Dispute Resolution, London (“CEDR”), such mediation to be completed within 30 days of signature of the CEDR Mediation Agreement; | ||
| (iv) | in respect of all disputes or disagreements if the dispute or disagreement is not settled as a result of (and within the time specified under) the mediation process referred to in (iii), the parties shall submit to the exclusive jurisdiction of the English Courts. | ||
17
| In witness whereof this Agreement has been duly entered into on the date stated at the beginning. | |||
SIGNED by [NAME] in the presence of |  | ||
SIGNED by [NAME] in the presence of | |||
18
Schedule 1 | |
Retail Companies | |
1 | Bede Retail Investments Limited |
| Company Number: 04125272 | |
| Registered Office: 20 North Audley Street, London, W1K 6WN | |
2 | BHR Mexico Limited |
| Company Number: 03420338 | |
| Registered Office: 20 North Audley Street, London, W1K 6WN | |
3 | NAS (Jersey) Limited |
| Company Number: 638 | |
| Registered Office: Huguenot House, 28 La Motte Street, St. Helier, Jersey JE2 4SY | |
4 | Six Continents Lease Company Limited |
| Company Number: 03152524 | |
| Registered Office: Cape Hill Brewery, PO Box 27, Birmingham West Midlands, B16 0PQ | |
5 | Six Continents Retail Germany GmbH |
6 | Standard Commercial Property Developments Limited |
| Company Number: 00056525 | |
| Registered Office: No.1 First Avenue, Centrum 100, Burton on Trent, Staffs DE14 2WB |
19
Schedule 2
Six Continents’ Completion Obligations
| 20 |
Schedule 3
Limitations on Liability under Clause 5.1.3
| 21 |
| 2 | Prior Receipt | |
| If, before the Obligor pays an amount in discharge of any claim under Clause 5.1, the Indemnified Party or any member of the Indemnified Party’s Group recovers or is entitled to recover (whether by payment, discount, credit, relief or otherwise) from a third party a sum which is referable to the subject matter of the claim, the Indemnifying Party shall procure to the extent of that entitlement that before steps are taken against the Obligor under this Agreement all reasonable steps are taken to enforce such recovery and any actual recovery (less any reasonable costs incurred in such recovery and less any Taxation suffered on the recovery after taking account of any tax relief available in respect of any matter giving rise to the claim) shall pro tanto reduce or satisfy, as the case may be, such claim. | ||
| 22 |
Schedule 4
Conduct of Claims in Respect of Shared Liabilities
| In relation to any claim by or liability to a third party which is a Shared Liability, the following provisions shall apply:- | ||
| 1 | The party which has conduct of the claim in accordance with Clause 5.7.4 (the “Conducting Party”) shall only instruct legal advisers who are reasonably satisfactory to the other party (the “Other Party”). | |
| 2 | The Other Party shall provide the Conducting Party with such information, documentation and assistance, including access to premises and personnel, copies of any relevant correspondence and the right to examine and copy or photograph any assets, accounts, documents, books and records, for the purpose of avoiding, disputing, denying, defending, resisting, appealing, postponing, settling, compromising or contesting any such claim, liability or adjudication as the Conducting Party or its professional advisers reasonably request provided that (i) the Conducting Party shall not be obliged to breach any confidentiality obligations to which a member of its Group is bound and (ii) the Conducting Party shall not be obliged to take any action which would prejudice any legal privilege of which it is aware and which attaches to any document. | |
| 3 | The Conducting Party shall ensure that the Other Party is copied into all relevant documentation and correspondence and shall give the Other Party reasonable opportunity (so far as practicable) to review and comment upon any proposed course of action. In conducting the claim, the Conducting Party shall comply with all reasonable requests of the Other Party save to the extent such request might materially prejudice the day-to-day commercial interests of the Conducting Party . | |
| 4 | No admission of liability should be made by or on behalf of the Conducting Party or any member of its Group and the claim shall not be compromised, disposed of or settled without the prior written consent of the Other Party (such consent not to be unreasonably withheld or delayed). | |
| 5 | The terms of any settlement reached shall be kept confidential. If either party (or any member of its Group) is required by law or by any court of competent jurisdiction, any recognised stock exchange or any regulatory body to make an announcement relating to the settlement or the subject matter of such settlement, that party shall notify the other party and so far as reasonably practicable shall, prior to making any such announcement, consult with the other party as to the form of such announcement taking into account any reasonable concerns of that other party. | |
| 6 | The Other Party and the Conducting Party shall each pay 50 per cent of the aggregate of the reasonable costs and expenses incurred by the two parties in relation to conduct of the proceedings. The Other Party and the Conducting Party shall agree in writing the aggregate of such costs and expenses as soon as is reasonably practicable following completion of the proceedings. To the extent that one party has incurred less than 50 per cent of the agreed aggregate cost and expenses, it shall pay such amount to the other party as means that both parties have incurred 50 per cent of the agreed costs and expenses promptly upon receipt of written demand for such payment. | |
| 23 |
Schedule 5
Taxation
| It is agreed as follows: | |||
| 1 | Interpretation | ||
| In this Schedule, the headings shall not affect its interpretation and, unless the context otherwise requires, the provisions in this paragraph apply. | |||
| 1.1 | Definitions | ||
| In this Schedule, words and expressions defined in Clause 1 of the Agreement shall have the same meanings when used in this Schedule and the following words and expressions shall have the following meanings: | |||
| “Circular” means the circular dated 17 February 2003 to holders of ordinary shares in Six Continents. | |||
| “Debenture Premium” means the amount in excess of £250 million paid by Six Continents to redeem the Debentures; | |||
| “Debentures” means the £250 million 10 3/8% debentures due 2016 issued by Six Continents that were redeemed on [ •] 2003; “Effective Date” means the date of Completion; | |||
| “Group Relief” means trading losses or other amounts eligible for surrender under Chapter IV Part X TA 88; | |||
| “IHG Listing Particulars” means the listing particulars related to the expected admission of the ordinary shares of IHG to the Official List of the UK Listing Authority; | |||
| “M and B Debenture Relief” means the lower of: | |||
| (P – £30m) | |||
| (i) | the Six Continents Debenture Relief X | —————— | |
| P | |||
| where P is the amount of the Debenture Premium; and | |||
| (ii) | £75m. | ||
| “M and B Group” means M and B and each company which, immediately following Completion, is a subsidiary undertaking of M and B but excludes any company which is a member of the Six Continents Group; | |||
| “M and B Group Member” means a member of the M and B Group; | |||
| “M and B Listing Particulars” means the listing particulars related to the expected admission of the ordinary shares of M and B to the Official List of the UK Authority; | |||
| “M and B Reduction” means the proposed reduction of capital of M and B in accordance with section 135 Companies Act 1985 as described in the Circular and reference to the M and B Reduction becoming effective shall mean that the M and B Reduction has been sanctioned by the Court and an office copy of the order of the Court has been registered by the Registrar of Companies in England and Wales; | |||
| 24 |
25
26
27
28
29
| 30 |
| 9.1 | In this paragraph 9: | |
| (i) | the “Notifying Party” means a party to this Agreement which becomes aware of a matter that may give rise to a claim under this Schedule including any intention that it, or a member of its Group, might have to make a disclosure to a Taxation Authority that might give rise to such a claim; and | |
| (ii) | the “Liable Party” means M and B or any member of its Group which may become liable to make a payment relating, directly or indirectly, to Taxation in respect of which a payment may become due from Six Continents (or be paid by a member of its Group) under this Agreement. | |
| 9.2 | If the Notifying Party becomes aware of any matter that may give rise to a claim under this Schedule, written notice of that fact (together with all material details of the matter in question as are reasonably available) shall be given by the Notifying Party to the other party (the “Recipient”). Such notice shall be given: | |
| (i) | as soon as is reasonably practicable; | |
| (ii) | where the Recipient is Six Continents, in any event within such period as will afford Six Continents reasonable opportunity of requiring the Liable Party to lodge a timely return, appeal or response; and | |
| (iii) | in respect of a liability to a Taxation Authority asserted against a member of the M and B Group, at least 20 Business Days before any time limit for the Liable Party to make any response to a Taxation Authority. | |
| Any failure to give such notice shall not affect the rights of the Notifying Party except to the extent that the rights or interests of the Recipient are prejudiced by such failure. | ||
| 9.3 | Other than in respect of a Shared Tax Liability or a liability under paragraph 3.3 or 8.1, 8.2 or 8.3 (which shall, in each case, be dealt with in accordance with the provisions of paragraph 9.5): | |
| 9.3.1 | without prejudice to the validity of the claim or alleged claim in question, M and B shall allow, and shall procure that any member of its Group allows, Six Continents and its accountants and professional advisers to investigate the matter or circumstance alleged to give rise to such claim and whether and to what extent any amount is payable in respect of such claim; | |
| 9.3.2 | for such purpose M and B shall, and shall procure that all members of its Group shall, at the expense of Six Continents, take all such action and give all such information, documentation and assistance, including access to premises and personnel, and the right to examine and copy or photograph any assets, accounts, documents, books and records, as Six Continents or its accountants or professional advisers may reasonably request for the purposes of investigating the matter or circumstance alleged to give rise to such claim; and | |
| 9.4 | If the claim in question is a result of or in connection with a claim by or liability to a third party (other than a Shared Tax Liability or a liability under paragraph 3.3 or 8.1, 8.2 or 8.3) then: | |
| 9.4.1 | no admission of liability shall be made by or on behalf of M and B or any member of its Group and the claim shall not be compromised, disposed of or settled without the prior written consent of Six Continents (such consent not to be unreasonably withheld or delayed); | |
| 31 |
| 9.4.2 | Six Continents shall be entitled at its own expense in its absolute discretion to take such reasonable and proper action as it shall deem necessary to avoid, dispute, deny, defend, resist, appeal, postpone, settle, compromise or contest such claim or liability or any adjudication in respect thereof (including, without limitation, making counterclaims or other claims against third parties) in the name of and on behalf of M and B or any member of its Group concerned and to have the conduct of any related proceedings, negotiations or appeals in relation to such claim, liability or adjudication; and | |
| 9.4.3 | M and B shall, and will procure that any relevant member of its Group shall, take all such action and give all such information, documentation and assistance, including access to premises and personnel, copies of any relevant correspondence and the right to examine and copy or photograph any assets, accounts, documents, books and records for the purpose of avoiding, disputing, denying, defending, resisting, appealing, postponing, settling, compromising or contesting any such claim, liability or adjudication as Six Continents or its professional advisers reasonably request provided that Six Continents shall indemnify M and B against all costs and expenses that it or any member of its Group may reasonably and properly incur as a result of Six Continents taking the actions described in paragraph 9.4.2 and this paragraph 9.4.3 and, if so required M and B shall provide a reasonable estimate of the costs and expenses that M and B may incur as a result of taking such action as is then requested by Six Continents. Six Continents agrees to keep M and B fully informed as to the progress of any such claim and the defence thereof and to provide M and B with copies of all correspondence relating to the claim within 3 Business Days of receiving or sending such correspondence and to otherwise keep M and B informed of the progress of the claim including (i) providing M and B with draft copies of any correspondence that Six Continents intends to send before sending such correspondence, (ii) taking into account any reasonable comments that M and B might have in respect of such correspondence and (iii) informing M and B about its proposed conduct of the claim and taking into account any reasonable comments that M and B might have about such conduct; | |
| 9.4.4 | M and B shall respond to any request for assistance, information, documentation or access to premises or personnel from the other party with sufficient promptness to allow, or to procure that a member of its Group allows, Six Continents to respond to a Taxation Authority or other person in relation to which the liability arises or may arise within any prescribed time limit and, in any event, within a reasonable time; | |
| 9.4.5 | to the extent that M and B or a member of its Group is required or has the right to correspond with a Taxation Authority in respect of the matter, Six Continents shall draft any correspondence or response to be sent to the Taxation Authority and M and B shall, or shall procure that the relevant member of its Group shall, send, or procure the sending of, such correspondence or response, havi ng taken into account the reasonable comments of M and B, to the Taxation Authority promptly and, in any event, within any applicable time limit (unless Six Continents has not supplied M and B with such draft correspondence or response at least 20 Business Days before such time limit in which case M and B can correspond as it sees fit); | |
| 9.4.6 | [Intentionally left blank]; and |
| 32 |
| 9.4.7 | notwithstanding the above, (i) M and B shall not be obliged to, or to procure that any member of its Group will, breach any confidentiality obligations to which a member of its Group is bound and (ii) M and B shall not be obliged to, or to procure that any member of its Group will, take any action which would prejudice any legal privilege of which it is aware and which attaches to any documents. | ||
For the avoidance of doubt the provisions of 9.4.7(ii) and 9.5.3(ii) will permit M and B (or the relevant company) to show to Six Continents or its advisers or accountants a document to which legal privilege attaches, if it is so shown on such conditions as to confidentiality or otherwise which ensure that privilege is retained in that document. | |||
| 9.5 | Conduct of Claims in Respect of Shared Tax Liabilities and Liability under Paragraph 3.3 and 8.1, 8.2 or 8.3 | ||
| In relation to any claim by or liability to a third party which is a Shared Tax Liability or to any claim arising under paragraph 3.3 and 8.1, 8.2 or 8.3, the following provisions shall apply: | |||
| 9.5.1 | Six Continents and M and B agree that proceedings in respect of any Shared Tax Liability or of any claim arising under paragraph 3.3 or 8.6 shall be conducted by such entity against whom or in whose name such Liability arises unless the parties agree in writing that a member of the other party’s Group would be in a better position to deal with such proceedings. | ||
| 9.5.2 | The party which has conduct of the claim in accordance with paragraph 9.5.1 (the “Conducting Party”) shall have the option to instruct legal advisers reasonably satisfactory to the other party (the “Other Party”). | ||
| 9.5.3 | The Other Party shall provide the Conducting Party with such information, documentation and assistance, including access to premises and personnel, copies of any relevant correspondence and the right to examine and copy or photograph any assets, accounts, documents, books and records, for the purpose of avoiding, disputing, denying, defending, resisting, appealing, postponing, settling, compromising or contesting any such claim, liability or adjudication as the Conducting Party or its professional advisers reasonably request provided that: | ||
| (i) | the Other Party shall not be obliged to or to procure that any member of its Group will, breach any confidentiality obligations to which a member of its Group is a party; and | ||
| (ii) | the Other Party shall not be obliged to take any action which would prejudice any legal privilege of which it is aware and which attaches to any document. For the avoidance of doubt this will permit M and B (or the relevant company) to show to Six Continents or its advisers or accountants a document to which legal privilege attaches, if it is so shown on such conditions as to confidentiality or otherwise which ensure that privilege is retained in that document. | ||
| The Other Party shall respond to any request for information, documentation or assistance with sufficient promptness to allow the Conducting Party to respond to a Taxation Authority or any other relevant person within any prescribed time limit and, in any event, within a reasonable time. | |||
| 33 |
| 34 |
| 35 |
| 36 |
| 13.4 | In respect of accounting periods other than the Past Periods, M and B shall procure that: | ||
| 13.4.1 | the M and B Group Members shall accept any Group Relief that Six Continents or a Six Continents Group Member wishes to surrender to them to the extent that they have the capacity to do so; | ||
| 13.4.2 | the M and B Group Members shall disclaim any capital allowances to which they would otherwise be entitled to the extent necessary to ensure that they do have such capacity; and | ||
| 13.4.3 | where any Elections to be prepared by Six Continents in respect of Group Relief surrenders referred to in paragraph 13.4.1 require the consent or agreement of any M and B Group Member, such consent shall be given within 10 Business Days of receipt of such Elections from Six Continents in the required form and shall be submitted within the appropriate time limit and shall not be withdrawn, revoked or modified without the consent of Six Continents. | ||
| 13.5 | |||
| 13.5.1 | M and B shall procure that any M and B Group Member which accepts surrender of Group Relief from Six Continents or another Six Continents Group Member shall pay to Six Continents or the relevant Six Continents Group Member, to the extent that payment for the surrender has not already been made, the amounts set out below: | ||
| (i) | in respect of surrenders relating to Past Periods made under paragraph 13.2, payment shall be made within 5 Business Days of Completion and be of an amount equal to the Group Relief surrendered multiplied by the rate of corporation tax in force for the accounting period for which that Group Relief was claimed; | ||
| (ii) | in respect of surrenders relating to periods other than Past Periods: | ||
| (a) | by 30 June 2003 (i) Six Continents shall prepare an estimate of the losses of the Six Continents Group Members available for surrender as Group Relief and (ii) M and B shall prepare an estimate of the profits of the M and B Group Members against which such losses would be surrendered as Group Relief; | ||
| (b) | an estimate of the Group Relief to be surrendered by Six Continents Group Members to M and B Group Members shall be made by applying the estimates from (a) From that estimate there shall be deducted £92m. The result shall be multiplied by the rate of corporation tax in force for that accounting period to give the ‘resulting amount’. M and B shall pay, or procure that M and B Group Members pay amounts totalling to the resulting amount to Six Continents or the relevant Six Continents Group Members (as Six Continents shall direct). Such payment shall be made on 31 August 2003. | ||
| (c) | the estimate in (b) shall be refined on or before 30 April 2004. From the revised estimate there shall be deducted £75m. The result shall be multiplied by the rate of corporation tax in force for that accounting period to give the “revised resulting amount”. | ||
| To the extent that the revised resulting amount exceeds the resulting sum M and B shall pay or procure that M and B Group Members pay amounts totalling that excess to Six Continents or to such Six Continents Group Members as Six Continents shall direct. Such payment shall be made on 31 May 2004. | |||
| 37 |
| To the extent the resulting sum exceeds the revised resulting amount Six Continents shall pay or shall procure that Six Continents Group Members pay to such M and B Group Members as M and B shall direct amounts totallying such excess. Such payment shall be made on 31 May 2004. | ||||
| (d) | the final amount of Group Relief actually surrendered shall be fixed when it is agreed with the Inland Revenue. | |||
| (e) | On the day (the “Final Day”) which is later of:- | |||
| (i) | the day when the final amount of Group Relief is fixed; and | |||
| (ii) | the day when the Six Continents Debenture Relief is agreed with the Inland Revenue, | |||
| the final Group Relief Amount shall be determined. This is equal to the final amount of Group Relief as fixed less the amount of the M and B Debenture Relief determined by reference to the agreed amount of the Six Continents Debenture Relief. | ||||
| The final Group Relief Amount shall be multiplied by the rate of corporation tax in force for that accounting period. That is the final group relief payment. | ||||
| To the extent the final group relief payment exceeds the revised resulting amount M and B shall pay or procure the payment by M and B Group Members of amounts totalling that excess to such Six Continents Group Members as Six Continents shall direct. | ||||
| To the extent that the revised resulting amount exceeds the final group relief payment Six Continents shall procure that Six Continents Group Members pay sums totalling the excess to such M and B Group Members as M and B shall direct. | ||||
| Such payments will be made 10 Business Days after the Final Day. | ||||
| 13.5.2 | Six Continents shall procure that Group Relief is surrendered to M and B Group Members of a total amount at least equal to the M and B Debenture Relief. | |||
| 13.5.3 | Six Continents and M and B shall procure that the payments by the relevant companies pursuant to paragraph 13.5.1 above are made by the companies accepting or surrendering Group Relief as the case may be, so as to be payments within, or on account of, payments within, section 402(6) TA 88. | |||
| 13.5.4 | [Six Continents shall use reasonable endeavours to ensure that the Group Relief actually surrendered to M and B Group Companies is in total approximately equal to the refined estimate described in (c) above OR Payment under paragraph 13.5.1(c) above shall be made with interest at the rate per annum of the base rate of National Westminster Bank PLC from the day after 31 August 2003 to 31 May 2004. Payments under paragraph 13.5.1(d) above shall be made with interest at the rate per annum of the base rate of National Westminster Bank PLC from the day after 31 May 2004 until the Final Day. Such interest shall be paid as the Six Continents as M and B shall direct according to whether the payment is to Six Continents Group Members or M and B Group Members respectively] | |||
| 38 |
| 13.5.5 | [Six Continents shall keep M and B finally informed and shall seek M and B’s comments in relation to any correspondence with the Revenue which relates to the determination of the Six Continents Debenture Relief.] | |
| 13.6 | If the amount of Group Relief available for surrender by Six Continents or another Six Continents Group Member to a M and B Group Member is finally determined to be either more or less than the amount stated in the relevant Election made pursuant to paragraph 13.4, then any Election relating to such Group Relief shall be amended, signed and submitted to the Inland Revenue to reflect the maximum amount of Group Relief that could be surrendered or to change the M and B Group Member accepting the surrender and: | |
| 13.6.1 | to the extent that any M and B Group Member has paid for any Group Relief that it cannot utilise, Six Continents shall or shall procure that the relevant Six Continents Group Member shall make repayment accordingly plus an amount equal to interest at the rate per annum of the base rate of National Westminster Bank PLC from time to time from the date that Six Continents or the Six Continents Group Member received payment for the Group Relief until, but not including, the date of payment under this paragraph 13.6.1; and | |
| 13.6.2 | to the extent that an additional amount of Group Relief is surrendered to any M and B Group Member for which payment has not already been made under paragraph 13.5, that M and B Group Member shall make payment to Six Continents or the relevant Six Continents Group Member within 10 Business Days of being notified of the difference of an amount determined on the same basis as that applicable under 13.5 above together with any repayment supplement received or receivable in respect of the reduction in Taxation caused by the surrender. | |
| 13.7 | Six Continents agrees that it shall, or shall procure that the relevant Six Continents Group Member shall: | |
| 13.7.1 | surrender to the relevant M and B Group Member any amounts of Group Relief that are referred to in paragraph 13.2, 13.3 or 13.4; and | |
| 13.7.2 | to the extent that any amount of Group Relief referred to in paragraph 13.6.1 or that is surrendered in accordance with paragraph 13.2, 13.3 or 13.4 or otherwise is determined, at any time and for whatever reason, not to be available for surrender or incapable of being claimed (the “ Disallowed Relief”) repay to the M and B Group Member that made payment for the Disallowed Relief (to the extent not already repaid), as an adjustment to the amount received as payment for the intended surrender of the Disallowed Relief, an amount equal to the amount paid for the Disallowed Relief plus interest at a rate of per annum of the rate that the Inland Revenue charges for overdue tax from the date that Six Continents or the relevant Six Continents Group Member received payment for the Disallowed Relief until, but excluding, the date of repayment by Six Continents or the relevant Six Continents Group Member under this paragraph 13.7.2. | |
| 13.8 | [Intentionally blank] | |
| 39 |
| 14.5.1 | provide copies of any accounts and tax returns and any correspondence relating thereto in respect of the M and B accounting period current at the Effective Date to the extent that such accounts, returns or correspondence relate in any way to the Scheme of Arrangement, and, if it takes place, the M and B Reduction or the Demerger (together the “Current Period Returns”) to Six Continents for review and comment prior to finalisation of such accounts or submission of such returns or correspondence to a Taxation Authority; and | |
| 40 |
| 14.5.2 | take into account any reasonable comments that Six Continents might have in respect of those accounts, tax returns or correspondence to ensure that the information contained therein is correct in all material respects and correctly reflects the factual circumstances of the Scheme of Arrangement, and, if it takes place, the M and B Reduction and the Demerger and any related transactions. |
| 14.6 | Once the comments referred to in paragraph 14.5.2 have been incorporated into the Current Period Returns, Six Continents will confirm to M and B in writing whether, to the best of its knowledge and belief, the Current Period Returns accurately reflect the Reorganisation Transfers, the Transactions, and if it occurs the Demerger and that nothing stated in those Returns is inconsistent with the information that Six Continents has supplied or intends to supply to the Inland Revenue in respect of the accounts and tax returns for members of the Six Continents Group for the accounting period current at the Effective Date. |
| 14.7 | M and B shall provide Six Continents with, or shall procure that Six Continents shall be provided with, such assistance and information, including access to the personnel and the Records of the M and B Group and provision of copies of any such Records (such information and assistance to be provided free of charge), as Six Continents may reasonably require to enable it properly to prepare accounts and Taxation returns for the period current at the Effective Date and reasonably to satisfy itself that the Current Period Returns do correctly reflect the circumstances referred to in paragraph 14.5.2. |
| 14.8 | Subject to the provisions of paragraphs 14.1 to 14.5, M and B shall be responsible for the preparation and submission of all computations and returns relating to the Taxation of M and B Group Members and shall deal with all negotiations, correspondence and agreements with respect thereto, including finalising the relevant Taxation liabilities including for the avoidance of doubt the Current Period Returns. |
| 14.9 | M and B agrees that it will: |
| 14.9.1 | provide copies of any accounts and tax returns of the M and B Group Members and any material correspondence relating thereto in respect of the accounting period commencing on 1 October 2002 and (if different) the accounting period current at the Effective Date to Six Continents for review and comment prior to finalisation of such accounts or submission of such returns or any material correspondence to a Taxation Authority; and | |
| 14.9.2 | take into account any reasonable comments that Six Continents might have in respect of those accounts, tax returns or any material correspondence to ensure that the information contained therein is correct and complete in all material respects. | |
| 14.10 | Six Continents shall, and shall procure that the Six Continents Group Members shall, provide M and B with such assistance and information, including access to the personnel and Records of the Six Continents Group and provisions of copies of such Records, as M and B may reasonably require to enable it to properly comply with its obligations under paragraph 14.8 and to properly manage the Taxation affairs of the M and B Group Members. [Time limit to be discussed further] Such information and assistance to be provided free of charge unless it is provided as part of the provision of services by Six Continents to the M and B Group under the terms of the Transitional Services Agreement. |
| 41 |
| (i) | a member of either Group has submitted Taxation computations before the Effective Date on the basis that an Election will be made for any Taxation purpose; | |
| (ii) | any agreement entered into in connection with the Demerger envisages that an Election will be made for any Taxation purpose; or | |
| (iii) | other than in relation to rollover claims under s152 TCGA, it was assumed in preparing the IHG Listing Particulars or the M and B Listing Particulars that the Election would be made, | |
| Six Continents and M and B shall cooperate to ensure that the relevant Election shall be made within any applicable time limits unless the parties agree otherwise. | ||
| 15.3 | M and B and Six Continents agree that they shall, and shall procure that the members of their respective Groups shall, do anything required to give effect to any Elections that were taken into account in the preparation of the short form report contained in the M and B Listing Particulars and, if the Demerger takes place, in the IHG Listing Particulars | |
| 15.4 | Subject to paragraph 15.5, M and B and Six Continents shall each procure that members of their respective Groups shall inform the relevant members of the other Group before making any Election for any Taxation purpose which could have a material effect on the Taxation position of the other Group (a “Relevant Election”). | |
| M and B and Six Continents shall each procure that members of their respective Groups do not make a Relevant Election without receiving the consent in writing of: | ||
| (i) | M and B, in the case of a Relevant Election by a member of the Six Continents Group, or; | |
| (ii) | Six Continents, in the case of a Relevant Election by a member of the M and B Group, | |
such consent not be unreasonably withheld or delayed. | ||
| 42 |
| M and B and Six Continents shall consult in good faith, taking into account the Tax Liability Principle and the other provisions of this Schedule, with a view to agreeing whether it would be reasonable to withhold consent for the proposed Relevant Election and/or whether it would be reasonable to withhold consent unless a payment were made in the case of one Group using a Relief of the other Group. | ||
| Neither M and B nor Six Continents shall, and they shall procure that no members of their respective Groups shall, make any such Relevant Election where consent for such Relevant Election has been reasonably withheld in accordance with this paragraph 15.4. | ||
| 15.5 | Notwithstanding paragraph 15.2[, 15.3] and 15.4, neither M and B nor Six Continents’ will be required to agree, or procure that any member of their Groups will agree, to any Election relating to: | |
| (i) | Rollover Relief; | |
| (ii) | holdover relief pursuant to section 154 TCGA; | |
| (iii) | section 171A TCGA, | |
| (iv) | section 179A TCGA, and | |
| (v) | section 179B TCGA | |
| unless Six Continents and M and B agree, in their absolute discretion and in whatever terms they deem fit, to such Election. | ||
| 16 | Dispute Resolution |
| If any dispute or disagreement arises between Six Continents and M and B as to any matter referred to or in connection with this Schedule Six Continents and M and B agree that: | |
| (i) | as soon as reasonably practicable after they are aware of such dispute or disagreement, both parties shall discuss the issue giving rise to the dispute or disagreement and negotiate in good faith with a view to reaching an amicable and reasonable solution for a period of up to 10 Business Days; | |
| (ii) | if discussions and negotiations fail to resolve such dispute or disagreement, such matter shall forthwith be referred to Six Continents’ Chief Executive (for the time being) (unless the M and B Reduction becomes effective, in which case such matter shall be referred to IHG’s Chief Executive for the time being) and M and B’s Chief Executive (for the time being) (or such other senior executive as Six Continents or M and B (respectively) shall nominate) who shall discuss such dispute or disagreement in good faith with a view to reaching an amicable and reasonable solution for a further period of up to 20 Business Days (or such longer period as Six Continents (or, if the M and B Reduction becomes effective, IHG) and M and B may agree) from the date on which such dispute or disagreement is referred to the Chief Executives; and | |
| (iii) | if such discussions fail to resolve such disputes or disagreements within that period, the parties shall refer the matter to leading Tax Counsel mutually acceptable to the parties (and, in default, nominated by the Chairman of the Bar Council at the time) as soon as possible and the parties agree to settle the dispute or disagreement in accordance with the better view of such Counsel. | |
| 43 |
Appendix 1 – Reorganisation Transfers
[Will list the intra-group transfers effected in preparation for the Demerger (including Six Continents Retail Germany GmbH) or to be effected pursuant to this Agreement in respect of which adjudication for relief from stamp duty under section 42 FA 1930 or section 151 FA 151 has not been validly obtained prior to Completion]
| 44 |
| Appendix 2 – Group Relief Surrenders | |||||||||||||
| Part I | |||||||||||||
| GROUP RELIEF CLAIMS – OPEN YEARS | |||||||||||||
Company surrendering losses | Losses Surrendered | Tax Rate | Tax Value | Amount paid for losses | (Over)/under payment | Date paid [Needs updating] | |||||||
| £ | % | £ | £ | £ | |||||||||
| 1 | Six Continents Retail Ltd | ||||||||||||
| 1998 | SC Holdings Ltd | 9,317,144 | 31.0 | % | 2,888,315 | (2,888,315 | ) | 0 | 03.10.00 | ||||
| 1999 | SC PLC | 43,136,167 | 30.5 | % | 13,156,531 | (13,325,538 | ) | (169,007 | ) | 03.10.00 | |||
| 2000 | SC PLC | 47,392,545 | 30.0 | % | 14,217,764 | (14,217,764 | ) | 0 | 04.01.02 | ||||
| SC Hotels International Ltd | 10,675,892 | 30.0 | % | 3,202,768 | (3,202,768 | ) | 0 | 04.01.02 | |||||
| SC Car Leasing Ltd | 63,746 | 30.0 | % | 19,124 | (19,124 | ) | 0 | 04.01.02 | |||||
| Six Continents Leisure Group Ltd | 83,936 | 30.0 | % | 25,181 | (25,180 | ) | 0 | 04.01.02 | |||||
| 2001 | SC PLC | 54,508,000 | 30.0 | %` | 16,352,400 | (16,352,400 | ) | 0 | 19.07.02 | ||||
| 2 | SC Lease Company Ltd | ||||||||||||
| 1998 | SC PLC | 21,603,190 | 31.0 | % | 6,696,989 | (6,696,989 | ) | 0 | 03.10.00 | ||||
| 3 | Browns Restaurants Ltd | ||||||||||||
| 1998 | SC PLC | 1,837,816 | 31.0 | % | 569,723 | (569,723 | ) | 0 | 03.10.00 | ||||
| 4 | SCP Developments Ltd | ||||||||||||
| 2000 | SC PLC | 2,009,834 | 30.0 | % | 602,950 | (602,950 | ) | 0 | 04.01.02 | ||||
| 5 | SCP Investments Ltd | ||||||||||||
| 1998 | SC PLC | 854,594 | 31.0 | % | 264,924 | (264,924 | ) | 0 | 19.10.01 | ||||
| 1999 | SC PLC | 750,992 | 30.5 | % | 229,053 | (229,053 | ) | 0 | 29.09.00 | ||||
| 2000 | SC PLC | 794,266 | 30.0 | % | 238,280 | (238,280 | ) | 0 | 04.01.02 | ||||
| 6 | Lastbrew | ||||||||||||
| 1999 | SC PLC | 6,408,000 | 30.5 | % | 1,954,440 | (1,954,440 | ) | 0 | 29.09.00 | ||||
| 2000 | SC PLC | 10,358,515 | 30.0 | % | 3,107,555 | (3,107,555 | ) | 0 | 04.01.02 | ||||
| 45 |
| Part II | ||||||||
| ACT SURRENDERS – OPEN YEARS | ||||||||
YEAR | Company receiving ACT | Company surrendering ACT | ACT | Amount paid | (Over)/under | |||
| Surrendered | for losses | payment | Date paid | |||||
| £ | £ | £ | ||||||
| 1996 | ||||||||
| 1997 | ||||||||
| 1998 | Six Continents Retail Ltd | Six Continents PLC | 7,600,415 | (7,600,415 | ) | 0 | 06.07.00 | |
| SC Lease Company Ltd | Six Continents PLC | 1,100,000 | (1,100,000 | ) | 0 | 06.07.00 | ||
| 1999 | Six Continents Retail Ltd | Six Continents PLC | 10,136,125 | (10,136,125 | ) | 0 | 06.07.00 | |
Note: Need s102 claim details
| 46 |
Part III
SUMMARY OF TAX REFUND SURRENDERS UNDER SECTION 102 FA 1989
Year | Surrendering Company | Receiving Company | Amount | Surrender Documentation sent to IR | Intercompany payment processed | |
£ | ||||||
| 1996 | ||||||
| 1997 | SC PLC | SCP Developments Ltd | 190,899.97 | Yes | 18.04.2002 | |
| 1997 | SC PLC | SCP Investments Ltd | 98,164.40 | Yes | 26.06.2002 | |
| 1998 | SC PLC | SCP Lease Co. Ltd | 346,110.66 | Yes | 21.02.2002 | |
| 1999 | SC PLC | Lastbrew Ltd | 22,675.42 | Yes | 19.04.2002 | |
| 2000 | ||||||
| 2001 | SCP Securities | SCP Investments | 84,965.60 | Yes |
| 47 |
| i |
| ii |
