Exhibit 4(a)(i)
Draft Linklaters/17.02.03
Note: This draft is subject to
further review and amendment prior to signing
Dated • April 2003
Mitchells
& Butlers PLC
and
InterContinental
Hotels Group PLC
DEMERGER
AGREEMENT
relating to the demerger of
the hotels and soft drinks business of the
Six Continents’ Group from the retail business
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Telephone (44 - 20)
▇▇▇▇ ▇▇▇▇
Facsimile (44 - 20) 7456
2222
Ref MAS/JLF/SLM
This Agreement is made on •
2003 between:
| (1) |
Mitchells & Butlers
PLC a public limited company registered in England and Wales with registered
number 4551498 and whose registered office is at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (“M and B”); and |
| (2) |
InterContinental Hotels Group PLC
a public limited company registered in England and Wales with registered
number 4551528 and whose registered office is at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (“IHG”). |
Whereas:
| (A) |
M and B intends to implement
a demerger of its Hotels Business and Retail Business pursuant to which
it is proposed that Six Continents be transferred to a new holding company
pursuant to the M and B Reduction referred to in Recital (B). |
| (B) |
Subject to the satisfaction of certain
conditions, M and B will reduce its share capital by an amount at least
equal to the market value of the shares in Six Continents immediately prior
to such reduction, such reduction to be satisfied by the transfer of the
Six Continents Shares to IHG in sole consideration for which IHG will allot
and issue, credited as fully paid up, the IHG Shares to the M and B Shareholders. |
| (C) |
The parties wish to record certain terms
upon which the transaction referred to in Recitals (A) and (B) are to be
effected and upon which relations between them and their respective subsidiaries
shall be governed following Completion. |
It is agreed as follows:
| |
In this Agreement, including
the Schedules, the headings shall not affect its interpretation and, unless
the context otherwise requires, the provisions in this Clause 1 apply. |
| |
“▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Disposal” means the disposal of the ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ business
of running off-licensed shops effected by way of a sale and purchase
agreement between, inter alia, Bass Plc, Bass Holdings Limited, Allied ▇▇▇▇▇
PLC and Ind-Coope (Oxford & West) Limited dated 3 August 1993; |
| |
“▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Returned Leases” means the leases relating to (i) ▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇; (ii) ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇; (iii) ▇▇▇▇ ▇, ▇▇▇-▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ and (iv) ▇-▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇; [To be updated to reflect
the position at signing] |
| |
“Barcrest Disposal”
means the disposal of the amusement machines and related businesses effected
by way of a sale and purchase agreement dated 16 March 1998 between Bass
PLC, Bass Machine Holdings Limited, Bass International Holdings NV and IGT-UK
Limited; |
| |
“Bass Brewers Disposal”
means the disposal of the brewing business of Bass Holdings Limited and
various associated companies, assets and liabilities effected by way of
the Brewers Sale Agreement; |
| |
“Beer Supply Indemnity”
means the indemnity given by Six Continents to Bass Brewers Limited pursuant
to a Deed of Agreement dated 22 August 2000 between Bass PLC, Bass Brewers
Limited and Bass Taverns Limited in respect of obligations under a Beer
Supply Agreement dated 22 August 2000 between Bass Brewers Limited and Bass
Taverns Limited; |
1
| |
“Beer Tie Litigation”
means any claim relating to any beer supply agreement entered into as part
of, or ancillary to, lease arrangements for licensed premises; |
| |
“BLA Guaranteed
Leases” means the leases held by Six Continents Leisure Entertainments
Limited, the obligations in respect of which were or are guaranteed by Bass
Leisure Activities Limited (now known as Gala Holdings Limited); |
| |
“BLMS Disposal”
means the disposal of BLMS and Inn Style effected by way of a sale and purchase
agreement dated 31 July 1998 between Bass PLC, Bass Machine Holdings Limited
and Leisure Link Group Limited; |
| |
“BLMS Rent Deposits”
means [cross-reference to specific provisions re rent deposits
and the guarantees to be inserted to reflect position at time agreement
signed]; |
| |
[“BLSA Disposal”
means the disposal of Bass Leisure South Africa effected by way of a sale
and purchase agreement dated 27 August 1999 between Bass International Holdings
B.V. and Southern Sun;] Note: If warranty/indemnity period expired
and there are no claims this will be deleted prior to signing] |
| |
“BMH Group Indemnities”
means the indemnities given by Bass Machine Holdings Limited in clauses
11.2(b), 11.2(c) 11.2(d)(i), 11.2(d)(ii) and 11.2(d)(iii)(b) of the Brewers
Sale Agreement; |
| |
“BMH Retail Indemnities”
means the indemnities given by Bass Machine Holdings Limited in Clauses
11.2(a) and 11.2(d)(iii)(a) and 11.2(d)(iv) of the Brewers Sale Agreement; |
| |
“Brewers Leases”
means (i) the 14 leases which were not able to be assigned from Bass Holdings
Limited to Interbrew at the time of the Bass Brewers Disposal and (ii) those
[115] leases held by Bass Holdings Limited at the time of the Bass Brewers
Disposal which did not relate to the business disposed of; [Definition
to be updated to reflect number of relevant leases at time agreement signed] |
| |
“Brewers Leases
Guarantee Obligation” means the obligation on the part of Six
Continents as guarantor with respect to the Properties (as defined in the
Brewers Sale Agreement) transferred pursuant to the Brewers Sale Agreement; |
| |
“Brewers Sale Agreement”
means the sale and purchase agreement dated 14 June 2000 (as amended) between
Bass PLC, Bass Machine Holdings Limited, Bass Beers Worldwide Limited and
various Interbrew entities; |
| |
“Business Day”
means a day on which banks are open for business in London (excluding Saturdays,
Sundays and public holidays); |
| |
“Certificated Holder”
means a Six Continents Shareholder holding Six Continents Shares or a M
and B Shareholder holding M and B Shares, as appropriate, in certificated
form; |
| |
“CHAPS”
means clearing houses automated payment systems; |
| |
“Chateau Lascombes
Disposal” means the disposal of Chateau Lascombes by Six Continents
International Holdings B.V. to Colony Investors pursuant to a sale and purchase
agreement dated January 2001; |
2
| |
“Circular”
means the circular dated 17 February 2003 sent to Six Continents Shareholders; |
| |
“Completion”
means the time and date when the IHG Shares are issued to and registered
in the names of the M and B Shareholders in accordance with Clause 2.3; |
| |
“Coral Disposal”
means the disposal of companies which operated a chain of betting offices
in the UK and Ireland effected by way of a sale and purchase agreement dated
31 December 1997 between Bass PLC and Ladbrokes PLC; |
| |
“Court”
means the High Court of Justice in England and Wales; |
| |
“CRESTCo”
means CRESTCo Limited; |
| |
“CREST Instruction”
means the issuer-instruction to credit the M and B Shares or the IHG
Shares, as applicable, to accounts maintained by Uncertificated Holders
within the CREST System; |
| |
“CREST System”
means the settlement system operated by CRESTCo; |
| |
“▇▇▇▇ and Busters
Leases” means the 2 leases owned by Six Continents Leisure Entertainment
Limited and formerly used in the ▇▇▇▇ & Busters business; |
| |
“Demerger”
means the proposed demerger of the Hotels Business and the Retail Business
in accordance with the terms of this Agreement and as more particularly
described in the Circular; |
| |
“Demerger Sponsorship
Agreement” means the agreement dated 17 February 2003 between
Six Continents, IHG, M and B and Salomon Brothers International Limited; |
| |
“Enterprise Pubs
Disposal” means the disposal of certain pubs effected by way of
sale and purchase agreement dated 10 June 1999 between Bass Holdings Limited,
Bass Taverns Limited, Enterprise Inns and Century Inns; |
| |
“FSMA”
means the Financial Services and Markets ▇▇▇ ▇▇▇▇; |
| |
“Gala Disposals”
means (i) the disposal of Gala Holdings Limited effected by way of a share
purchase agreement dated 15 December 1997 between Bass PLC, Bass Leisure
Group Limited and Cangard Limited and (ii) the disposal of Binjoc S.A. effected
by way of a sale and purchase agreement dated 29 May 1998 betweenGala Leisure
S.A. and Leisure & Gaming Corporation; |
| |
“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 IHG
Listing Particulars dated 17 February 2003; |
| |
“ICTA”
means the Income and Corporation Taxes ▇▇▇ ▇▇▇▇; |
| |
“IHG Admission”
means (i) admission of the IHG Shares to the Official List of the UK Listing
Authority in accordance with paragraph 7.1 of the Listing Rules, and (ii)
admission of the IHG Shares to trading on the London Stock Exchange; |
| |
“IHG Board”
means the board of Directors of IHG or any duly authorised committee thereof;
|
3
| |
“IHG Introduction”
means the admission of the IHG Shares to the Official List of the UK Listing
Authority by way of introduction as described in the IHG Listing Particulars; |
| |
“IHG Listing Particulars”
means the listing particulars dated 17 February 2003 relating to the Hotels
Group and to the IHG Introduction; |
| |
“IHG Shares”
means the ordinary shares of £1 each of IHG to be allotted and issued,
credited as fully paid up, to the M and B Shareholders in accordance with
Clause 2.3; |
| |
“Instalment Regulations”
means the Corporation Tax (Instalment Payments) Regulations 1998; |
| |
“Leased Estate
Disposal” means the disposal of the Bass leased estate effected
by way of sale and purchase agreement dated 16 December 1997 between Bass
Holdings Limited and Punch Taverns Group Limited; |
| |
“Leisure Disposals”
means the [BLSA Disposal], the Gala Disposals, the Barcrest Disposal, the
Coral Disposal and the BLMS Disposal; [Note: It is assumed that this
covers the leases which have not been returned or released. To be confirmed] |
| |
“Leisure Division
Leases” means the leases in respect of (i) ▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇; and (ii) ▇▇▇▇ ▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇; [To
be updated before signing] |
| |
“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; |
| |
“Listing Rules”
means the Listing Rules made by the UK Listing Authority under Section 74
of the FSMA; |
| |
“London Stock Exchange”
means London Stock Exchange plc; |
| |
“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 Admission”
means (i) admission of the M and B Shares to the Official List of the UK
Listing Authority in accordance with Paragraph 7.1 of the Listing Rules
and (ii) admission of the M and B Shares to trading on the London Stock
Exchange; |
| |
“M and B Directors”
means the board of directors of M and B or any duly authorised committee
thereof; |
| |
“M and B Introduction”
means the admission of the M and B Shares to the Official List of the UK
Listing Authority by way of introduction as described in the M and B Listing
Particulars; |
| |
“M and B Liability“
means: |
| |
(i) |
any Liability in respect
of the Beer Supply Indemnity; |
| |
(ii) |
any Liability (subject, in relation
to pensions to the extent it is provided for by the Pensions Transfer Agreement
in respect of the Leased Estate Disposal; |
4
| |
(iii) |
any Liability (subject,
in relation to pensions to the extent it is provided for in the Pensions
Transfer Agreement in respect of the Enterprise Pubs Disposal; |
| |
(iv) |
any Liability in respect
of the Beer Tie Litigation; |
| |
(v) |
any Liability in respect of the ▇▇▇▇
and Busters Leases; |
| |
(vi) |
any Liability in respect of the BMH
Retail Indemnities; |
| |
(vii) |
any Liability in respect of the Brewers
Leases; |
| |
(viii) |
any Liability in respect of the BLA
Guaranteed Leases; |
| |
(ix) |
any Liability under the Six Continents
Executive Top-Up Scheme which relates to an individual whose last employment
in the Group was with a Retail Company or in the Retail Business and who
does not transfer to the M and B ETUS; and |
| |
(x) |
any other Liability relating exclusively
or predominantly to the Retail 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; |
| |
“M and B Listing
Particulars” means the listing particulars dated 17 February 2003
relating to M and B and to the M and B Introduction; |
| |
“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; |
| |
“M and B Shares”
means the issued ordinary shares of M and B; |
| |
“M and B Shareholders”
means the holders of M and B Shares on the register of members of M and
B immediately prior to the M and B Reduction becoming effective; |
| |
“M and B Tax Liability”
means a M and B Liability to the extent it relates directly or indirectly
to Taxation; |
| |
“Notifying Party”
has the meaning given in Clause 6.1; |
| |
“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; |
| |
“Pension Part-Timers
Claim” means any claim brought by persons who are, or were, employees
of a business disposed of prior to the date of this Agreement by any member
of Six Continents’ Group (as constituted prior to Completion of the
Reorganisation Agreement) and who allege sex discrimination in relation
to their eligibility to have participated in or participate in any Six Continents’
Group Pension Scheme; |
| |
“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 to (in each case either the Six Continents Hotels UK Pension Plan
or the Britivic Pension Plan, to the extent that the parties to those agreements
are both the trustees and the principal employers of each scheme concerned.; |
5
| |
“Prague Breweries
Litigation” means the claims by Prague Securities against (i)
Bass International Holdings N.V., Bass Overseas Holdings Limited and Bass
International Brewers Overseas Holdings Limited (in liquidation) dated February
1998 in relation to the alleged failure by those companies to make a mandatory
public offer for the shares in Prague Breweries; and (ii) Bass International
Brewers Overseas Holdings Limited dated December 1998 in relation to the
alleged invalid mandatory offer to shareholders in Prague Breweries; |
| |
“Recipient”
has the meaning given in Clause 6.1; |
| |
“Recovering Party”
has the meaning given in Clause 7.1; |
| |
“Reorganisation”
means the sale of the Retail Companies by Six Continents to M and B in accordance
with the terms of the Reorganisation Agreement; |
| |
“Reorganisation
Agreement” means the agreement dated [12] April 2003 between M
and B and Six Continents in relation to the sale of the whole of the issued
share capital of the Retail Companies by Six Continents to M and B; |
| |
“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 M and B Listing Particulars 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 Bede Retail Investment 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 and reference to the Scheme of Arrangement becoming effective
shall mean that the Scheme of Arrangement 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; |
6
| |
(i) |
any Liability (subject,
in relation to pensions, to the extent it is provided for by the Pensions
Transfer Agreement in respect of the Leisure Disposals other than in respect
of the BLA Guaranteed Leases or the Leisure Division Leases; |
| |
(ii) |
any Liability (subject,
in relation to pensions to the extent it is provided for by the Pensions
Transfer Agreement in respect of the Chateau Lascombes Disposal; |
| |
(iii) |
any Liability (subject,
in relation to pensions to the extent it is provided for by the Pensions
Transfer Agreement in respect of the ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Disposal other than
in respect of the ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Returned Leases; |
| |
(iv) |
any Liability (subject,
in relation to pensions to the extent it is provided for by the Pensions
Transfer Agreement in respect of the Bass Brewers Disposal other than to
the extent it relates to the Beer Supply Indemnity, the Brewers Leases and
the BMH Retail Indemnities; |
| |
(v) |
any Liability in respect
of the Brewers Leases Guarantee Obligation; |
| |
(vi) |
any Pension Part-Timers
Claim; |
| |
(vii) |
any Liability in respect
of the BMH Group Indemnities; |
| |
(viii) |
the Prague Breweries Litigation;
|
| |
(ix) |
any Transactions Liability;
and |
| |
(x) |
any other Liability which
relates to any asset owned or business carried out or action taken prior
to the M and Reduction becoming effective by any member of Six Continents’
Group (as constituted at any time prior to the M and 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 Liabilities identified in
paragraphs (i) to (ix) above were Shared Liabilities 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 4 (Taxation); |
| |
“Six Continents”
means Six Continents PLC, a public limited company registered in England
and Wales with registered number 913450; |
7
| |
“Six Continents
Group Pension Schemes” means the Six Continents Pension Plan and
the Six Continents Executive Pension Plan; |
| |
“Six Continents
Shareholders” means those persons on the register of members of
Six Continents immediately prior to the Scheme of Arrangement becoming effective; |
| |
“Six Continents
Shares” means all the issued shares of Six Continents, issued
and credited as fully paid up; |
| |
“Sub-Let Leases”
means (i) the sub-lease dated • between Six Continents and •
relating to ▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇; and (ii) the sub-lease
dated • between Six Continents and • relating to [Chiltern Street];
[To be updated at signing] |
| |
“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
Taxation 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 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; and |
| |
“Taxes Act”
or “TA” means the Income and Corporation Taxes Act; |
| |
“Taxation Liability”
means a Liability to the extent it relates directly or indirectly to Taxation; |
| |
“Transactions”
means the implementation of the Scheme of Arrangement, the Reorganisation
Agreement, the funding of M and B to allow it to pay the outstanding consideration
that arose under the Reorganisation Agreement, the capitalisation by Six
Continents of £[•] of the M and B Group, the M and B Share Consolidation
and the 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 |
8
| |
Exchange Commission on or
before Completion; (c) any Liability or obligation of IHG, Six Continents
or M and B arising under any provision of the Reorganisation Agreement or
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 Sponsorship Agreement; or (e) the obligation
to pay the Return of Capital (as defined in the Circular); |
| |
“UK Listing Authority”
means the Financial Services Authority in its capacity as competent authority
under the FSMA; and |
| |
“Uncertificated
Holder” means a Six Continents Shareholder who holds Six Continents
Shares or a M and B Shareholder who holds M and B Shares, as applicable,
in uncertificated form. |
| 1.2 |
Subordinate Legislation
|
| |
References to a statutory
provision include any subordinate legislation made from time to time under
that provision. |
| 1.3 |
Interpretation ▇▇▇ ▇▇▇▇ |
| |
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
shall apply to this Agreement in the same way as it applies to an enactment. |
| 1.4 |
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 any party under this Agreement,
any reference to a statutory provision: |
| |
1.4.1 |
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 |
| |
1.4.2 |
(so far as liability thereunder
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. |
| 1.5 |
Companies ▇▇▇ ▇▇▇▇ |
| |
The terms “subsidiary
undertaking” and “parent undertaking” shall
have the same meanings in this Agreement as their respective definitions
in the Companies ▇▇▇ ▇▇▇▇. |
| 1.6 |
Recitals, Clauses etc.
|
| |
References to this Agreement
include its Schedules and this Agreement as from time to time amended and
references to Recitals, Clauses, sub-Clauses and Schedules are to Recitals,
Clauses and sub-Clauses of, and Schedules to, this Agreement. |
| |
Headings shall be ignored
in construing this Agreement. |
| |
References to times of day
are to London time unless otherwise stated. |
9
| |
References in this Agreement
(including the definitions in Clause 1.1) to the singular include the plural
and vice versa. |
| |
Any reference to books,
records or other information means books, records or other information in
any form including paper, electronically stored data, magnetic media, film
and microfilm. |
| 2 |
Demerger |
| 2.1 |
Transfer of the Six Continents’
Group |
| |
M and B shall use reasonable
endeavours to ensure that the M and B Reduction becomes effective as contemplated
by, and in accordance with, the timetable set out in the Circular (or such
other date as the parties may agree). |
| 2.2 |
If the M and B Reduction
becomes effective: |
| |
2.2.1 |
M and B shall transfer or procure to
be transferred to IHG with full title guarantee the Six Continents Shares.
Except as otherwise expressly provided in this Agreement, no other warranties,
indemnities, representations or undertakings, in any case implied or expressed,
with regard to the Six Continents Shares or to the title of M and B thereto
or to the business conducted by members of Six Continents’ Group are
given by M and B, nor are the same to be implied by virtue of M and B entering
into this Agreement or executing any instruments pursuant to this Agreement
or conveying or transferring or agreeing to convey or transfer the same
pursuant hereto or thereto; |
| |
2.2.2 |
M and B shall deliver to IHG or as it
may direct duly executed transfers of the Six Continents Shares in favour
of IHG accompanied by the relevant share certificates; and |
| |
2.2.3 |
M and B shall deliver to IHG or as it
may direct a duly executed Power of Attorney to enable IHG or its nominee
(pending registration of the relevant transfers) to exercise all voting
and other rights attaching to the Six Continents Shares. |
| 2.3 |
Issue of the IHG Shares |
| |
2.3.1 |
In sole consideration for the Six Continents
Shares sold to IHG pursuant to Clause 2.2 above, upon the M and B Reduction
becoming effective, IHG shall allot and issue to each M and B Shareholder,
credited as fully paid and ranking pari passu in all respects, one
IHG Share for each fully paid M and B Share held by that M and B Shareholder
and shall procure that each IHG Share so allotted shall immediately be registered
in the names of the M and B Shareholders respectively entitled thereto. |
| |
2.3.2 |
The allotment and issue by IHG of the
IHG Shares pursuant to Clause 2.3.1 above to the M and B Shareholders shall
extinguish any obligation on IHG to issue any further shares in the capital
of IHG to any holder of any shares or other securities in M and B in connection
with the transfer of the Six Continents Shares by M and B to IHG. |
10
| |
2.3.3 |
Immediately after execution
of this Agreement, M and B shall provide IHG with the names and addresses
of the M and B Shareholders who will be entitled to receive IHG Shares pursuant
to the M and B Reduction and all other such information as IHG may reasonably
request with a view to enabling it to pay dividends to the holders of the
IHG Shares. |
| 2.4 |
Issue of Documents of
Title |
| |
IHG shall procure that (i)
definitive share certificates in respect of the IHG Shares will be despatched
to those Certificated Holders entitled thereto as soon as reasonably practicable
and in any event within 8 days of Completion; and (ii) the CREST Instruction
is sent so as to credit the IHG Shares to the accounts maintained in the
CREST System by Uncertificated Holders entitled thereto to take effect as
soon as practicable following IHG Admission, provided that if in the reasonable
opinion of IHG it is impracticable for the IHG Shares to be admitted to
the CREST System, IHG may procure that definitive share certificates be
despatched to the Uncertificated Holders. |
| 3 |
Action Pending Completion |
| |
Each of the parties undertakes
to procure that, prior to Completion except as required by law or by the
UK Listing Authority, the London Stock Exchange, the Securities Exchange
Commission or the New York Stock Exchange, no action will be taken by it
which is inconsistent with the provisions of this Agreement or in ensuring
that the M and B Reduction becomes effective in accordance with the terms
of the Circular. |
| 4 |
Post-Completion
Obligations |
| 4.1 |
M and B Liabilities,
Shared Liabilities and Sub-Let Leases Shortfall |
| |
4.1.1 |
M and B as seller of the Six Continents
Shares under this Agreement, shall indemnify and agrees to keep indemnified
IHG as purchaser of the Six Continents Shares under this Agreement against
any Liability of IHG or any other member of IHG’s Group which is a
Shared Liability to the extent of 50 per cent. of such Liability only. |
| |
4.1.2 |
M and B as seller of the Six Continents
Shares under this Agreement, shall indemnify and agrees to keep indemnified
IHG as purchaser of the Six Continents Shares under this Agreement against
any Liability of IHG or any other member of IHG’s Group which is a
M and B Liability. |
| |
4.1.3 |
The provisions of Schedule 2 shall apply
to any claim under this Clause 4.1. |
| |
4.1.4 |
The provisions of this Clause 4.1 and
4.2 are conditional upon the M and B Reduction becoming effective. |
| |
4.1.5 |
No obligations shall arise under this
Clause 4.1 [or under Schedule 4] 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. |
| |
4.1.6 |
Amounts paid under this Clause 4.1 shall
be subject to repayment under Clause 7. |
| |
4.1.7 |
M and B shall not be liable to IHG under
(x) of the definition of Shared Liability in this Agreement to the extent
that the Liability relates to any matter in respect of |
11
| |
|
which Six Continents has
a Liability pursuant to the Reorganisation Agreement. M and B agrees that
it shall not make any claim under (ii) the definition of Shared Liability
in the Reorganisation Agreement to the extent that such claim relates to
any matter in respect of which M and B has a Liability under this Agreement. |
| |
4.1.8 |
If the sub-tenant under
a Sub-Let Lease either (i) terminates that Sub-Let Lease; (ii) vacates the
premises to which such Sub-Let Lease relates; or (iii) ceases to make payment
by reason of default or otherwise, in any such circumstances where the sub-tenant
does not pay the full amount of rent which would have been payable for the
remainder of the Sub-Let Lease had the Sub-Let Lease continued until its
stated expiry date, then M and B shall pay to IHG (as trustee for Six Continents)
50 per cent of the difference between the shortfall and the amount of rent
received by Six Continents in respect of the same period from the relevant
sub-tenant. [Deal with other receipts: Premiums, varying rentals etc].
[Note: To be discussed and amended] |
| 4.2 |
Taxation |
| |
4.2.1 |
Schedule 4 shall apply in
relation to all the matters for which it makes provision and the provisions
of Schedule 4 shall apply in relation to any matter dealt with in that Schedule
instead of the provisions of any other part of this Agreement. |
| |
4.2.2 |
When the provisions of Schedule
4 conflict with any other provision of this Agreement, Schedule 4 shall
prevail if such conflict arises in relation to Tax. |
| |
4.2.3 |
Where under this Agreement
and apart from Schedule 4 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
4 so provides. |
| 4.3 |
Where a claim for a payment
arises under this Agreement (other than pursuant to Clause 14.5), then,
to the extent that that claim relates to Taxation, the provisions of Schedule
4 shall apply in relation to any matter dealt with in that Schedule instead
of the provision of any other part of this Agreement. |
| 4.4 |
Notwithstanding Clause 4.3, and for
the avoidance of doubt, Clause 8 (Double Claims) shall apply to a claim
made under Schedule 4 in the same way as it applies to any other claim made
under this Agreement. |
| 5 |
Further Assurance |
| 5.1 |
M and B and IHG 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 M and B and IHG as may
reasonably be necessary for the purpose of giving to M and B, IHG and their
respective Groups the full benefit of all relevant provisions of this Agreement
and all other agreements entered into pursuant to this Agreement. IHG agrees
to procure the due performance of the obligations of the members of IHG’s
Group under this Agreement and all other agreements entered into by them
in connection with the Demerger (including the Reorganisation Agreement)
in consideration of M and B’s agreement to procure the due |
12
| |
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. |
| 5.2 |
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 M
and B and IHG execute such documents and do such acts and things as may
reasonably be required for the purpose of giving to IHG and M and B the
full benefit of all relevant provisions of this Agreement. |
| 5.3 |
Save in relation to any
guarantee, indemnity, counter-indemnity or letter of comfort given
by a member of IHG’s Group which relates to a M and B Liability or
a Shared Liability, M and B agrees 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 IHG’s Group from any guarantees,
indemnities, counter indemnities and letters of comfort (if any) which such
member of IHG’s Group may have given in relation to any member of
M and B’s Group and pending such release it shall indemnify IHG (for
itself and as trustee for each member of IHG’s Group other than IHG)
in respect of any claims made pursuant to such guarantees, indemnities,
counter indemnities and letters of comfort. |
| 5.4 |
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: |
| |
5.4.1 |
the Investigation relates to a M and
B Liability or a Shared Liability; or |
| |
5.4.2 |
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. |
| 5.5 |
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 at common law or by statute) owed
to any person other than the party requesting disclosure or any of its subsidiaries. |
| 5.6 |
Wherever in this Agreement provision
is made for the payment by one party to another, such payment shall be effected
by crediting for same day value the account specified in the Payment Account
Details of the party entitled to the payment by way of CHAPS on or before
the due date for payment. Payment of such sum shall be a good discharge
to the payer of its obligation to make such payment. |
| 6 |
Conduct of Claims |
| 6.1 |
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 |
13
| |
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 reasonably 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. |
| 6.2 |
Other than in respect of
a Shared Liability (which shall be dealt with in accordance with the provisions
of Clause 6.4), 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 a party 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. |
| |
For the avoidance of doubt,
the above provisions will require the Notifying Party to show to the Recipient
or its advisers or accountants a document to which legal privilege attaches,
if it is so shown on such constitutions as to confidentiality or otherwise
which [•] that privilege is retained in that document. |
| 6.3 |
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: |
| |
6.3.1 |
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); |
| |
6.3.2 |
subject to Clauses 6.4 and 6.5, 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 |
| |
6.3.3 |
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, |
14
| |
|
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 6.3.2 and this Clause 6.3.3 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. |
| 6.4 |
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 3 shall
apply in respect of any such proceedings. If the provisions of Clauses 4.1.1
or 4.1.2 cease to apply due to the provisions of paragraph 1.1 of Schedule
2, this Clause 6 shall cease to apply in respect of the relevant Liabilities.
|
| 6.5 |
The parties acknowledge
that the M and B Group shall have conduct of (i) the Beer Tie Litigation;
(ii) any claims in respect of the Beer Supply Indemnity; (iii) any claims
in respect of the Brewers Leases; (iv) claims in respect of the ▇▇▇▇ and
Busters Leases; and (v) any Pensions Part-timers Claims. Clauses 6.3.2
and 6.3.3 shall apply to such matters. |
| 7 |
Recovery |
| 7.1 |
If either party (in each case the “Settling
Party“) pays an amount in discharge of any claim under this Agreement
and any 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 or 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). |
| 7.2 |
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 to in Clause 7.1. |
15
| |
IHG 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. |
| |
In mutual consideration
of the other party agreeing to comply with this Clause, 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 such liability) in respect
of any claim under this Agreement. |
| 10 |
Non-Solicitation
of Employees |
| 10.1 |
Non-Solicitation of Employees |
| |
M and B undertakes with
IHG (for itself and as trustee for other members of IHG’s Group) that
M and B will not, and will procure that no other member of M and B’s
Group will, during the Restricted Period induce or seek to induce any Restricted
Employee to become employed whether as employee, consultant or otherwise
by M and B or any other member of M and B’s Group whether or not such
Restricted Employee would thereby commit any breach of his contract of service.
The placing of an advertisement of a post available to a member of the public
generally and the recruitment of a person through an employment agency shall
not constitute a breach of this Clause 10 provided that M and B (or any
other member of M and B’s Group) does not encourage or advise such
agency to approach any such Restricted Employee. |
| 10.2 |
Reasonableness of Restrictions |
| |
M and B confirms that it
has received independent legal advice relating to all the provisions of
this Clause 10. M and B agrees that it considers that the restrictions contained
in this Clause 10 are no greater than is reasonable and necessary for the
protection of the interests of IHG but if any such restriction shall be
held to be void but would be valid if deleted in part or reduced in application,
such restriction shall apply with such deletion or modification as may be
necessary to make it valid and enforceable. |
| |
The following terms shall
have the following meanings respectively in this Clause 10: |
| |
10.3.1 |
“Restricted Employee”
means any employee of any member of IHG’s Group immediately following
Completion who (i) holds a position which is Band 4 (or any replacement
band) or higher and (ii) is not made redundant during the Restricted Period;
and |
| |
10.3.2 |
“Restricted Period”
means one year commencing on the M and B Reduction becoming effective. |
| |
With effect from Completion,
none of the parties to this Agreement shall and each shall procure that
no company which is, whether at Completion or in the future, a member of
its |
16
| |
Group shall, disclose to
any person information of a confidential nature relating to the other party
or any member of its Group or to the affairs of the other party or any member
of its Group unless such disclosure has been authorised beforehand in writing
by that other party PROVIDED THAT the provisions of this Clause 12 shall
not apply to information which (a) is or comes into the public domain otherwise
than through breach by any party of this Clause, (b) is generated or acquired
entirely independently of information possessed as at the date hereof by
any of the parties hereto or members of their Groups, or (c) is required
by law or by any court of competent jurisdiction, any recognised stock exchange
or any regulatory body to be disclosed. |
| |
The parties shall procure
that each of their respective officers, employees and representatives shall
keep confidential all such information. |
| 12 |
Termination |
| 12.1 |
This Agreement shall terminate if (i)
either the Demerger Sponsorship Agreement is terminated prior to Demerger
becoming effective, in which case this Agreement shall terminate immediately
upon termination of the Demerger Sponsorship Agreement or (ii) the M and
B Reduction does not become effective on or prior to •[date 5
weeks after date agreement is signed to be inserted] 2003. |
| 12.2 |
Upon termination of this Agreement (howsoever
arising), no party shall have any claim against the other. |
| 13 |
Waiver of Rights: No Rescission |
| |
Any right, power or remedy
hereby conferred upon a party shall be in addition, and without prejudice,
to all other rights, powers and remedies available to that party and no
exercise or failure to exercise or delay in exercising any such right, power
or remedy shall constitute a waiver by that party of any such other right,
power or remedy arising under this Agreement or otherwise. |
| |
No party hereto shall be
entitled to rescind this Agreement before or after Completion for any reason
whatsoever. |
| 14 |
Other Provisions |
| 14.1 |
Announcements |
| |
M and B and IHG shall consult
together as to the terms of, the timetable for and manner of publication
of, any announcement to shareholders, employees, customers and suppliers
or to the UK Listing Authority or to the London Stock Exchange, the New
York Stock Exchange or other authorities or to the media or otherwise which
either may desire or be obliged to make regarding this Agreement or the
consummation of the Demerger. |
17
| 14.2 |
Release, indulgence etc. |
| |
Any Liability to either
party under this Agreement may in whole or in part be released, compounded
or compromised or time or indulgence given by that party in its absolute
discretion without in any way prejudicing or affecting its rights against
the other under the same or a like [or any other] Liability. |
| 14.3 |
Successors and Assigns |
| |
This Agreement is personal
to the parties to it and the rights and obligations of the parties may not
be assigned or otherwise transferred. |
| |
No variation of this Agreement
shall be effective unless in writing and signed by, or on behalf of, each
of the parties to this Agreement. |
| |
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 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. |
| |
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. |
| 14.7 |
Notices |
| |
14.7.1 |
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. |
| |
14.7.2 |
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 the 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. |
18
| |
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. |
| |
This Agreement and the agreements
and documents entered into 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 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. |
| |
This Agreement may be executed
in any number of counterparts, each of which when so executed and delivered
shall be an original, but all the counterparts shall together constitute
one and the same instrument. |
| 14.11 |
Contracts (Rights of
Third Parties) ▇▇▇ ▇▇▇▇ |
| |
This Agreement does not
create any right under the Contracts (Rights of Third Parties) ▇▇▇ ▇▇▇▇
which is enforceable by any person who is not a party to it. |
| 14.12 |
Governing Law and Dispute
Resolution |
| |
14.12.1 |
This Agreement shall be
governed by and construed in accordance with English law. |
| |
14.12.2 |
If any dispute or disagreement
arises between the parties as to any matter referred to or in connection
with this Agreement the parties agree that:- |
|
|
(i) |
as soon as reasonably practicable after
they are aware of such dispute or disagreement, they 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
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 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 the
parties may agree in writing) from the date on which such dispute or disagreement
is referred to the Chief Executives; |
|
|
(iii) |
in respect of all disputes or agreements,
if the Chief Executives are unable to resolve such dispute or disagreement
within the period referred to in |
19
| |
|
|
sub-Clause 14.12.2(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 agreements 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. |
In witness whereof this
Agreement has been entered into on the date stated at the beginning.
SIGNED
by [ ] on
behalf of
Mitchells & Butlers PLC in the
presence of: |
} |
SIGNED
by [ ]
on behalf of
InterContinental Hotels Group PLC in
the presence of: |
} |
20
Schedule 1
Retail Companies
| 1 |
Bede Retail Investments
Limited |
| |
Registered Office: ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇ |
| |
Registered Office: ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇ |
| |
Registered Office: Huguenot
House, ▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇ |
| 4 |
Six Continents Lease
Company Limited |
| |
Registered Office: Cape
Hill Brewery, ▇▇ ▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ |
| 5 |
Six Continents Retail
Germany GmbH |
| 6 |
Standard Commercial Property Developments
Limited |
| |
Registered Office: ▇▇.▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ on ▇▇▇▇▇, Staffs ▇▇▇▇ ▇▇▇ |
21
Schedule 2
Limitations on Liability under Clause 4.1.3
| 1 |
Limitation of Liability
|
| |
Notwithstanding the provisions
of Clause 4, neither party (the “Obligor”) shall be liable
to the other (the “Indemnified Party”) under Clause 4:- |
| |
1.1.1 |
any claim to the extent it relates
to a Liability which is referred to in paragraph (x) of the definition of
a M and B Liability ; or |
| |
1.1.2 |
any claim to the extent it is a Shared
Liability |
| |
unless written notice of
such claim is given by the Indemnified Party to the Obligor setting out
reasonable details of the claim within 7 years of the date of this Agreement; |
| |
in respect of any claim
to the extent that any Losses arising from such claim are (after taking
account of Taxation on the insurance proceeds but giving credit in calculating
such Taxation for any tax relief available in respect of those Losses) covered
by a policy of insurance in force on or before the date of this Agreement
and payment is made by the insurer; |
| |
in respect of any claim
for any Losses suffered by the Indemnified Party or any member of the Indemnified
Party’s Group to the extent of any corresponding savings by or net
benefit to the Indemnified Party or any member of the Indemnified Party’s
Group arising directly therefrom; |
| 1.4 |
Contingent Liabilities |
| |
if any claim shall arise
by reason of liability which at the time the claim is notified to the Obligor
is contingent only, unquantifiable or not yet due, except in respect of
associated costs actually incurred, the Obligor shall not be liable to make
any payment to the Indemnified Person in respect of the claim unless and
until the contingent liability ceases to be so contingent or becomes quantifiable
or due. |
| |
If, before the Obligor pays
an amount in discharge of any claim under Clause 4.1, 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 Indemnified 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
in 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 3
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 6.4 (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 4
Taxation
| |
In this Schedule headings
shall not affect its interpretation and, unless the context otherwise requires,
the provisions in this paragraph apply. |
| |
In this Schedule, words
and expressions defined in Clause 1 shall have the same meaning when used
in this Schedule, unless otherwise stated, and the following words and expressions
shall have the following meanings: |
| |
“Effective Date”
means the date of Completion; |
| |
“IHG Group”
means IHG and each company which, immediately following Completion, is a
subsidiary undertaking of IHG; |
| |
”IHG Group Member”
means a member of the IHG Group; |
| |
“M and B Group”
means M and B and each company which, immediately following Completion,
is a subsidiary undertaking of M and B; |
| |
“M and B Group
Member” means a member of the M and B Group; |
| |
“Records”
means all books, accounts and documents, whether in written or electronic
form including, without limitation, all tax returns, computations, invoices,
ledgers and contracts and correspondence, agreements and concessions with
any Taxation Authority and all information contained therein; |
| |
“Relief”
includes any relief, right to repayment of tax, loss, allowance, exemption,
set-off, deduction or credit in computing or against profits or Taxation; |
| |
“Six Continents
Group” means Six Continents and its subsidiary undertakings; |
| |
“Tax Liability
Principle” means the principle that companies in each of the IHG
Group and the M and B Group should, except where express provision is made
to the contrary, be primarily liable for discharging their own Taxation
liabilities (as set out in paragraph 2); |
| |
“Taxes Act”
or “TA” means the Income and Corporation Taxes ▇▇▇ ▇▇▇▇; |
| |
“TCGA”
means the Taxation of Chargeable Gains ▇▇▇ ▇▇▇▇; |
| |
“VAT”
means value added tax as imposed by the Value Added Tax ▇▇▇ ▇▇▇▇ or any
similar tax imposed by the laws of a jurisdiction outside the United Kingdom; |
| |
“VATA”
means the Value Added Tax ▇▇▇ ▇▇▇▇. |
| 1.2 |
Rate of Corporation Tax |
| |
References in this Schedule
to the “rate of corporation tax” in force for an accounting
period of a company shall, where the rate of corporation tax has varied
during that accounting period, be construed as referring to a weighted average
rate which takes into account the length of the accounting period (in days)
and the number of days in that accounting period for which each relevant
rate of corporation tax has been in force. |
24
| |
References to this Schedule
include this Schedule as from time to time amended and references to paragraphs
are to paragraphs of this Schedule. |
| |
When an obligation arises
under this Schedule to make a payment in respect of the use of a Relief
to reduce Taxation that would otherwise have arisen, the amount of that
payment shall, subject to paragraph 4.2, be the amount of Taxation which
becomes payable which would not have been so payable had the Relief not
been so used. |
| 2 |
Tax Liability Principle |
| 2.1 |
Save as expressly provided in this Agreement
or in the Reorganisation Agreement, and without prejudice to the rights
and obligations contained in this Schedule, each member of the IHG Group
and each member of the M and B Group shall be responsible for discharging
any liability which may fall on it in respect of Taxation, and neither party
to this Agreement indemnifies or otherwise agrees to make payment to, or
to procure the making of payment to, the other in relation thereto. |
| 2.2 |
Nothing in this Schedule shall be construed
as removing the rights of members of the IHG Group or the M and B Group
to claim in relation to Taxation under contractual provisions entered into
prior to or after the date of this Agreement. |
| 3 |
Specific Indemnities |
| 3.1 |
Where: |
|
(i) |
any Taxation liability (other
than in respect of VAT) is by law the primary liability of a M and B Group
Member or any company which, immediately following Completion is either
in a group with M and B for any Taxation purposes or is controlled by M
and B for any Taxation purposes and, in each case, is not a IHG Group Member
(together a “M and B Tax Group Member”); and |
|
(ii) |
the relevant Taxation Authority recovers
that liability from IHG or any IHG Tax Group Member (being similarly defined)
under any statutory provision conferring a right of secondary recovery resulting
from circumstances in which a M and B Tax Group Member has not discharged
its primary liability to pay Tax, |
| |
M and B covenants to pay
or to procure that the relevant M and B Tax Group Member which is primarily
responsible for the Tax will pay to IHG or the IHG Tax Group Member from
which the Taxation Authority has sought recovery, an amount equal to any
such secondary liability recovered from IHG or the IHG Tax Group Member
save to the extent that payment has already been made pursuant to any statutory
right of recovery from the relevant M and B Tax Group Member. |
| 3.2 |
Where: |
|
(i) |
any Taxation liability is
a liability to account for VAT (and any related penalties or interest) in
respect of actual or deemed supplies, self-supplies, importations or
acquisitions made by any member of the M and B Group (including without
limitation any such VAT arising in the VAT return period in which Completion
takes place); and |
25
| |
(ii) |
such liability falls on
a member of the IHG Group as a result of its being or having been or becoming
for the whole or part of the VAT return period in question a member of,
or the representative member of, the same VAT group as the M and B Group
Member which made, or is deemed to have made, the supply, self-supply,
import or acquisition in question, |
| |
M and B agrees to pay or,
as the case may be, to procure that the relevant M and B Group Member which
made or is deemed to have made the actual or deemed supplies, self-supplies,
importations or acquisitions will pay, an amount equal to the VAT recovered
(plus any interest or penalties thereon except to the extent due to the
default or unreasonably delay of an IHG Group Member) paid by (or recovered
from) IHG or the IHG Group Member to IHG or the IHG Group Member which paid
the VAT (or from which the VAT has been recovered). |
| 3.3 |
M and B agrees to pay to
IHG an amount equal to 50 per cent. of any liability to Taxation of IHG
or any IHG Group Member arising as a result of the transfer of any asset
or interest in any asset executed or otherwise effected after the Effective
Date pursuant to Clause [5.5 or 5.6] (Further Assurance) of the Reorganisation
Agreement. |
| 3.4 |
M and B agrees to pay to
IHG an amount equal to any Taxation liability of a IHG Group Member arising
under section 31A TCGA where: |
| |
3.4.1 |
the “section 30 disposal”
referred to in section 31(8) TCGA is the disposal by Bass Machine Holdings
Limited (now known as Six Continents Holdings Limited) of the shares in
Bass Holdings Limited on 22 August 2000; and |
| |
3.4.2 |
the company holding
the relevant “asset with enhanced value” (as defined in section
31(6) TCGA) immediately following Completion is a M and B Group Member. |
| 4 |
Exclusions and Due Date
for Payment |
| 4.1 |
The due date for any payment
to be made pursuant to paragraph 3 or paragraph 5 shall be the later of: |
| |
4.11 |
ten (10) Business Days after the date
of service by IHG of a notice demanding payment hereunder; |
| |
4.12 |
in the case of a liability to a Taxation
Authority either (a) five (5) Business Days before the last date on which
payment of the Taxation giving rise to the right to payment can be made
to the relevant Taxation Authority in order to avoid a liability to interest
or penalties accruing or (b) in the case of the use of a Relief, (i) the
earliest date on which Taxation becomes payable which would not have been
payable had the Relief not been used or (ii) if earlier, the date falling
seven (7) years from the date of this Agreement; or |
| |
4.13 |
in the case of a liability in respect
of a payment other than to a Taxation Authority, five (5) Business Days
before the latest date on which the payment giving rise to the liability
is required to be made. |
| 4.2 |
Subject to paragraph 4.3,
where the liability under paragraph 3 or paragraph 5 relates to the use
of a Relief the amount of the liability to Taxation shall in a case when
paragraph 4.1.2(b)(ii) applies be the rate of corporation tax (or in the
case of any Tax other than |
26
| |
corporation tax, the appropriate
rate applying similar principles as apply to the determination of the “rate
of corporation tax”) in force in the accounting period in which the
due date for payment falls multiplied by the amount of the Relief used. |
| 4.3 |
To the extent that there
is a change in law between the date on which a Relief is used and the due
date for payment as provided for in paragraph 4.1.2(b)(ii) such that the
Relief (if it had not already been used) could no longer be utilised to
reduce a liability to Taxation, the amount of the liability to Taxation
resulting from the use of the Relief shall be treated, for the purposes
of this Schedule, as zero and the claim relating to the prior use of the
Relief shall lapse. |
| 4.4 |
If any claim by a Taxation
Authority in respect of which a payment has been made under paragraph 3
or paragraph 5 of this Schedule is subsequently finally determined by the
relevant Taxation Authority or by another relevant person in the case of
a claim relating to a liability to a person other than a Taxation Authority
to be less than the amount by reference to which that payment was calculated,
an appropriate amount shall be repaid within five (5) Business Days of such
determination. |
| 4.5 |
Any amount payable pursuant
to paragraph 3 or paragraph 5 shall bear interest on such sum from the due
date for payment until the date of actual payment at the rate specified
in Clause [14.5] (Interest) of this Agreement. Any amount due to be repaid
pursuant to paragraph 4.4 shall bear interest on such sum from the date
on which the determination referred to in paragraph 4.4 was made until the
date of repayment at the rate specified in Clause [14.5] of this Agreement.
All such interest shall accrue from day to day. |
| 4.6 |
M and B shall not be liable
to IHG under paragraph 3.1, 3.2 or 3.3 above for claims arising from any
single circumstance if the amount of the liability which it would otherwise
have does not exceed £500,000. Claims relating to a series of connected
matters shall be aggregated for this purpose. |
| 5 |
Shared Tax Liabilities
and M and B Tax Liabilities |
| 5.1 |
Shared Liabilities |
| |
M and B, as seller of the
Six Continents Shares, shall indemnify and agrees to keep indemnified IHG,
as purchaser of the Six Continents Shares, against any Liability of IHG
or any member of the IHG Group which is a Shared Tax Liability to the extent
of 50 per cent. of such Liability. |
| 5.2 |
M and B Tax Liabilities |
| |
M and B, as seller of the
Six Continents Shares, shall indemnify and agrees to keep indemnified IHG,
as purchaser of the Six Continents Shares, against any Liability of IHG
or any other member of the IHG Group which is a M and B Tax Liability. |
| 6 |
Limitations on Liability
|
| 6.1 |
Limitation of Liability under Paragraph
3 or Paragraph 5 |
| |
Notwithstanding the provisions
of paragraph 3 or paragraph 5, M and B shall not be liable to IHG under
paragraph 3 or paragraph 5: |
27
| |
|
(i) |
any claim under paragraph 3; |
| |
|
(ii) |
any claim to the extent it relates to
a M and B Tax Liability which is referred to in paragraph (x) of the definition
of M and B Liability; or |
| |
|
(iii) |
any claim to the extent that it is a
Shared Tax Liability, |
| |
|
unless written notice of
such liability is given by IHG to M and B setting out reasonable details
of the claim within seven (7) years of the date of this Agreement; |
| |
|
in respect of any claim
to the extent that any Losses arising from such claim are (after taking
account of Taxation on the insurance proceeds but giving credit in calculating
such Taxation for any Relief available in respect of those Losses) covered
by a policy of insurance in force on or before the date of this Agreement
and payment is made by the insurer; |
| |
|
in respect of any claim
for any Losses suffered by IHG or any member of the IHG Group to the extent
of any corresponding savings by or net benefit to IHG or any member of the
IHG Group arising directly therefrom; |
| |
6.1.4 |
Reorganisation Agreement |
| |
|
in respect of any obligation
under Schedule 5 (Taxation) of the Reorganisation Agreement. |
| 6.2 |
Limitation of Liability
under Paragraph 5 |
| |
M and B shall not be liable
to IHG under paragraph 5 in respect of the disallowance of any expenses
of management (as that term is used in section 75 Taxes Act) incurred in
connection with any matter giving rise to a Shared Tax Liability or a M
and B Tax Liability. |
| 6.3 |
Contingent Liabilities |
| |
If any claim shall arise
by reason of a Liability which at the time that the claim is notified to
M and B is contingent only, unquantifiable or not yet due, then, except
in respect of associated costs actually incurred, M and B shall not be liable
to make any payment in respect of the claim unless and until the contingent
liability has ceased to be so contingent or becomes quantifiable or due.
This is without prejudice to paragraph 4.1.2(b)(ii). |
| |
If, before M and B pays
an amount in discharge of any claim under this Schedule, IHG or any member
of the IHG 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, IHG shall procure that, to
the extent of such amount, before steps are taken against M and B under
this Schedule all reasonable steps are taken to enforce such recovery, and
any actual recovery (less any reasonable costs incurred in |
28
| |
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) (the “Net
Recovered Amount”) shall reduce or satisfy, as the case may be,
such claim to the extent of the Net Recovered Amount. |
| 7 |
Stamp Duty |
| 7.1 |
M and B agrees to pay an
amount to IHG equal to 50 per cent. of any stamp duty that arises as a result
of section 75 Finance ▇▇▇ ▇▇▇▇ not applying to the transfer of the shares
in Six Continents to IHG under this Agreement, plus an amount equal to 50
per cent. of any interest and penalties arising in respect of such stamp
duty except where the interest or penalties are due to the unreasonable
delay of IHG in stamping the document conveying the Six Continents shares. |
| 7.2 |
IHG agrees that it will
submit a letter to the Inland Revenue within thirty (30) days of Completion
requesting exemption from stamp duty pursuant to section 75 Finance ▇▇▇
▇▇▇▇ for the transfer of the shares in Six Continents by M and B to IHG
to effect the Demerger and will use reasonable endeavours to ensure that
such exemption is granted. |
| 7.3 |
M and B shall make any payment
due under paragraph 7.1 five (5) Business Days after the later of: |
|
(i) |
written demand from IHG;
and |
|
(ii) |
IHG making payment of the
stamp duty to the Inland Revenue. |
| 8 |
Conduct of Claims |
| 8.1 |
In this paragraph 8: |
|
(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 IHG 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 M and B (or be paid by a member of its Group) under
this Agreement. |
| 8.2 |
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 M
and B, in any event within such period as will afford M and B 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 IHG Group, at least
twenty (20) Business Days before any time limit for the Liable Party to
make any response to a Taxation Authority. |
29
| |
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. |
| 8.3 |
Other than in respect of a Shared
Tax Liability or a liability under paragraph 3.3 or 7.1 (which shall be
dealt with in accordance with the provisions of paragraph 8.6): |
| |
8.3.1 |
without prejudice to the
validity of the claim or alleged claim in question, IHG shall allow, and
shall procure that any member of its Group allows, M and B 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; |
| |
8.3.2 |
for such purpose IHG shall,
and shall procure that all members of its Group shall, at the expense of
M and B, 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 M and B 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. |
| 8.4 |
|
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 6.1) then:
|
| |
8.4.1 |
no admission of liability shall be made
by or on behalf of IHG or any member of its Group and the claim shall not
be compromised, disposed of or settled without the prior written consent
of M and B (such consent not to be unreasonably withheld or delayed); |
| |
8.4.2 |
M and B 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 IHG
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; |
| |
8.4.3 |
IHG 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 M and B or its professional advisers reasonably request
provided that M and B shall indemnify IHG against all costs and expenses
that it or any member of its Group may reasonably and properly incur as
a result of M and B taking the actions described in 8.4.2 and this paragraph
8.4.3 and, if so required IHG shall provide a reasonable estimate of the
costs and expenses that IHG may incur as a result of taking such action
as is then requested by M and B. M and B agrees to keep IHG fully informed
as to the progress of any such claim and the defence thereof, and to provide
IHG with copies of all correspondence relating to the claim within 3 Business
Days of receiving or sending such correspondence and |
30
| |
|
to otherwise keep IHG informed
of the progress of the claim including (i) providing IHG with draft copies
of any correspondence that M and B intends to send before sending such correspondence,
(ii) taking into account any reasonable comments that IHG might have in
respect of such correspondence and (iii) informing IHG about its proposed
conduct of the claim and taking into account any reasonable comments that
IHG might have about such conduct; |
| |
8.4.4 |
IHG 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, M and B to respond to a Taxation
Authority or other person in relation to which a liability arises or may
arise within any prescribed time limit and, in any event, within a reasonable
time; and |
| |
|
(v) |
to the extent that IHG or a member of
its Group is required or has the right to correspond with a Taxation Authority
in respect of the matter M and B shall draft any correspondence or response
to be sent to the Taxation Authority and IHG shall, or shall procure that
the relevant member of its Group shall, send, or procure the sending of,
such correspondence or response, having taken into account the reasonable
comments of IHG, to the Taxation Authority promptly and, in any event, within
any applicable time limit (unless M and B has not supplied IHG with such
draft correspondence or response at least twenty (20) Business Days before
such time limit, in which case IHG can correspond as it sees fit). |
| 8.5 |
Notwithstanding the above
, (i) IHG 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) IHG 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 paragraph 8.5(ii) and 8.6.3(ii) will permit IHG (or the
relevant company) to show to M and B 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. |
| 8.6 |
Conduct of Claims in
Respect of Shared Tax Liabilities and Liability Under Paragraphs 3.3 and
6.1 |
| |
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 6.1, the following provisions shall
apply: |
| |
8.6.1 |
IHG and M and B agree that proceedings
in respect of any Shared Tax Liability or of any claim arising under paragraph
3.3 or 6.1 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; |
| |
8.6.2 |
the party which has conduct of the claim
in accordance with paragraph 8.6.1 (the “Conducting Party”)
shall have the option to instruct legal advisers reasonably satisfactory
to the other party (the “Other Party”); |
| |
8.6.3 |
the Other Party shall provide the Conducting
Party with such information, documentation and assistance, including access
to premises and personnel, |
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| |
|
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
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 IHG (or the relevant company)
to show to M and B 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. |
| |
|
(ii) |
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; |
| |
8.6.4 |
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. The Conducting Party shall provide copies of
the draft documentation or correspondence at least twenty (20) Business
Days before any applicable time limit to submit such documentation or correspondence
to a Taxation Authority or any other relevant person, and the Other Party
shall provide any comments at least ten (10) Business Days before such time
limit and, in any event, within a reasonable time of receiving the drafts
from the Conducting Party; |
| |
8.6.5 |
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); and |
| |
8.6.6 |
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 costs 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. |
| 8.7 |
Notwithstanding anything
in this paragraph 8, if the party whose liability gives rise to the claim
under this Schedule wishes to take any action in relation to a claim which
would |
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| |
increase the liability of M and B under
this Schedule, M and B and IHG will discuss in good faith the terms on which
the Liable Party could take over conduct of the proceedings, including,
without limitation, the basis on which the Liable Party would provide information
to M and B and the maximum amount for which M and B might be liable in respect
of the claim under the terms of this Schedule with a view to enabling the
Liable Party to conduct the claim as it wishes and with a view to M and
B being liable only to the extent it would have been liable had the Liable
Party not so conducted the claim. |
| 8.8 |
The date for payment of
any obligation to indemnify for costs and expenses in this paragraph 8 shall
be ten (10) Business Days after a proper written demand is made for payment
specifying the costs and expenses incurred. |
| 8.9 |
The parties agree that the
provisions of this paragraph take precedence over paragraph 14 of Schedule
5 to the Reorganisation Agreement. |
| 9 |
Recovery |
| 9.1 |
If: |
|
(i) |
M and B pays an amount in discharge
of any claim under this Agreement; and |
|
(ii) |
IHG or any member of its Group has previously
recovered or subsequently recovers (whether by payment, discount, credit,
relief, set-off or otherwise) from a third party (including a Taxation
Authority 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, |
| |
then, to the extent that
such recovery has not already been taken into account under paragraph 6.1.2
or 6.1.3 above, IHG shall forthwith pay, or shall procure that the relevant
member of its Group forthwith pays, to M and B an amount equal to the lower
of: |
|
(i) |
the sum recovered from the third party
including any interest or repayment supplement received as part of such
payment less any reasonable and proper costs and expenses of recovery and
any Taxation suffered in respect of such recovery or where the relevant
payment was in respect of a Shared Tax Liability or arose under paragraph
3.3 or 7.1, half of that net amount; and |
|
(ii) |
the amount previously paid by M and B
to IHG. |
| 9.2 |
|
Where IHG 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 Schedule, IHG 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
to in paragraph 9.1. |
| 9.3 |
|
In the case of IHG or a IHG Group Member
being subject to a secondary liability to Taxation where: |
|
(i) |
the person who is primarily liable for
such Taxation is not a M and B Group Member or a IHG Group Member; and |
|
(ii) |
M and B, or a member of its Group, is
entitled to recover an amount from a third party (not being a member of
either the IHG Group or the M and B Group) relating to such liability to
Taxation, M and B shall, and shall procure that the members of its Group
shall, use all reasonable endeavours, at IHG’s expense, to recover
the amount from the third party and shall pay any amount recovered, up to
the amount of the secondary liability of the IHG Group Member to IHG, save
to the extent that payment has already been made pursuant to any statutory
right of recovery of the IHG Group Member. |
33
| |
M and B will not be liable
to IHG to the extent that its liability is created or increased is incurred
by reason of a member of IHG’s group failing to comply with the provisions
of paragraph [15.1] of Schedule [5] (Taxation) to the Reorganisation Agreement. |
| |
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 such liability) in respect of
any claim under this Schedule. This shall include, without limitation, the
use of any Relief that is available to mitigate a liability if its use would
not materially prejudice the party or the member of its Group using it and
doing everything reasonably possible to use such Relief in such circumstances. |
| 12 |
Gross Up etc. |
| 12.1 |
An agreement to indemnify or otherwise
make payment in accordance with this Agreement in respect of a Liability
will not (unless specifically provided by paragraph 12.2 below) require
the payer to indemnify or otherwise make payment to the recipient for or
in respect of any Tax suffered by the recipient on the payment. |
| 12.2 |
If, however, by reason of a failure
of one party or any member of its Group to discharge a Liability or in respect
of a payment made under paragraph 3.4 a payment becomes due under this Agreement
from that party to the other, then that payment will be grossed up so that
the other party retains after Taxation on the receipt an amount equal to
the payment it would have received had the receipt not been liable to Taxation
in its hands. |
| 12.3 |
Where an amount becomes payable pursuant
to paragraph 3.2 it shall be treated as having become due by reason of such
a failure as referred to in paragraph 12.2. |
| 12.4 |
In calculating the Liability of a party
under this Agreement, there shall be taken into account the amount (if any)
by which any Taxation for which the other party or any member of its Group
would otherwise have been accountable or liable to be assessed is actually
reduced or extinguished as a result of the matter giving rise to such Liability. |
| 13 |
Dispute Resolution |
| |
If any dispute or disagreement
arises between the parties as to any matter referred to or in connection
with this Schedule the parties agree that: |
| |
(i) |
as soon as reasonably practicable after
they are aware of such dispute or disagreement, they shall discuss the issue
giving rise to the dispute or |
34
| |
|
disagreement and negotiate
in good faith with a view to reaching an amicable and reasonable solution
for a period of up to ten (10) Business Days; |
| |
(ii) |
if discussions and negotiations
fail to resolve such dispute or disagreement, such matter shall forthwith
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 IHG 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 twenty (20) Business
Days (or such longer period as the parties may agree) from the date on which
such dispute or disagreement is referred to the Chief Executives; and |
| |
(iii) |
if such discussion fails
to resolve such disputes or disagreements within such 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. |
35
