CHAPTER NINE
THE COVENANTS
2.1 The Covenantors hereby covenant with the Buyer that, subject to the provisions of this Tax Covenant, the Covenantors shall pay to the Buyer, to the extent possible, but not so as to limit the amount payable where not wholly possible, by way of repayment of the Purchase Price for the Sale Shares, an amount equal to:
Executive Summary
A Care is needed in cases where the Consideration is nominal and there is a prospect of the payments by the Covenantors exceeding such consideration, due to the tax consequences of such payments. B The normal cut off point for Tax Liabilities is Completion, but there are a series of exceptions to this broad rule. Examples are interest for a post-completion period, tax liabilities arising from the Seller group after Completion and tax relating to the exercise of share options. There are also complexities in respect of losses carried back from a post-completion period. C It is very important to test the main operative clause, in conjunction with the related definitions, to ensure that it is not in force if the tax has been settled prior to the pivot point, and also only operates in respect of liabilities of the Company and is not cast more widely.
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