the tax covenant. The Buyer wishes to respond to HM Revenue & Customs without undue delay; he therefore places on the Covenantors an obligation to proceed with matters on a timely basis.
2.2 The concern of the Covenantors is that the Buyer can simply concede any tax matters which may arise, using the power of the covenant to pay to make recovery. This concern is very understandable: the Buyer may be quite content to settle and to claim from the Covenantors, unless the concession has an adverse impact on the profitability of the Company in the future. The Buyer is concerned that the tax affairs of the Company and his management time should not be unduly burdened. He does not want delay to be one of the tactics adopted by the Covenantors in respect of such a claim.
3 Ability of Buyer to Deal with a Tax Claim in Certain Circumstances
6.4 The Buyer shall (and will be entitled to procure that the Company shall) be at liberty without reference to the Covenantors to admit, compromise or otherwise deal with any Tax Claim after whichever is the earliest of:
6.4.1 the service of a notice in writing on the Buyer by the Covenantors to the effect that they consider that the Tax Claim should no longer be resisted;
6.4.2 the expiry of a period of fifteen Business Days following the service of a notice by the Buyer on one or more of the Covenantors containing a reasonable request to clarify or explain the terms of any request made under clause 6.2 above if no satisfactory written clarification or explanation is received by the Buyer within that period; or
6.4.3 if appropriate, the expiration of any period prescribed by applicable legislation or the decision of any court or tribunal in respect of such Tax Claim, as the case may be;
3.1 This is largely self-explanatory. It continues the theme of requiring any actions to defend a tax claim to proceed without delay. The Buyer imposes a requirement on the Covenantors to proceed with the management of any tax issue on a speedy basis.
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