Registration Statement of a Foreign Private Issuer for Securities Issued in a Business-Combination Transaction — Form F-4
Filing Table of Contents
Document/Exhibit Description Pages Size
1: F-4 Registration Statement of a Foreign Private Issuer 251 1.21M
for Securities Issued in a
Business-Combination Transaction
2: EX-2.1 Plan of Acquisition, Reorganization, Arrangement, 41 134K
Liquidation or Succession
11: EX-2.10 Plan of Acquisition, Reorganization, Arrangement, 6 19K
Liquidation or Succession
12: EX-2.11 Plan of Acquisition, Reorganization, Arrangement, 148 423K
Liquidation or Succession
13: EX-2.12 Plan of Acquisition, Reorganization, Arrangement, 71 176K
Liquidation or Succession
3: EX-2.2 Plan of Acquisition, Reorganization, Arrangement, 50 127K
Liquidation or Succession
4: EX-2.3 Plan of Acquisition, Reorganization, Arrangement, 66 158K
Liquidation or Succession
5: EX-2.4 Plan of Acquisition, Reorganization, Arrangement, 66 161K
Liquidation or Succession
6: EX-2.5 Plan of Acquisition, Reorganization, Arrangement, 35 60K
Liquidation or Succession
7: EX-2.6 Plan of Acquisition, Reorganization, Arrangement, 12 25K
Liquidation or Succession
8: EX-2.7 Plan of Acquisition, Reorganization, Arrangement, 9 25K
Liquidation or Succession
9: EX-2.8 Plan of Acquisition, Reorganization, Arrangement, 10 23K
Liquidation or Succession
10: EX-2.9 Plan of Acquisition, Reorganization, Arrangement, 9 25K
Liquidation or Succession
14: EX-3.1 Articles of Incorporation/Organization or By-Laws 39 106K
15: EX-3.2 Articles of Incorporation/Organization or By-Laws 26 85K
16: EX-3.3 Articles of Incorporation/Organization or By-Laws 14 56K
17: EX-3.4 Articles of Incorporation/Organization or By-Laws 26 70K
18: EX-4.1 Instrument Defining the Rights of Security Holders 129 533K
19: EX-4.3 Instrument Defining the Rights of Security Holders 20 91K
20: EX-5.1 Opinion re: Legality 4 21K
21: EX-10.1 Material Contract 28 123K
30: EX-10.10 Material Contract 1 15K
31: EX-10.11 Material Contract 1 15K
32: EX-10.12 Material Contract 8 33K
22: EX-10.2 Material Contract 107 523K
23: EX-10.3 Material Contract 34 120K
24: EX-10.4 Material Contract 23 62K
25: EX-10.5 Material Contract 54 144K
26: EX-10.6 Material Contract 29 56K
27: EX-10.7 Material Contract 28 54K
28: EX-10.8 Material Contract 10 46K
29: EX-10.9 Material Contract 1 15K
33: EX-12.1 Statement re: Computation of Ratios 3± 24K
34: EX-21.1 Subsidiaries of the Registrant 14 47K
35: EX-23.2 Consent of Experts or Counsel 1 14K
36: EX-24.1 Power of Attorney 9 45K
37: EX-25.1 Form T-1 5 29K
38: EX-99.1 Miscellaneous Exhibit 15 78K
39: EX-99.2 Miscellaneous Exhibit 3 21K
CONFORMED COPY
Dated 4th August 1997
ABBEY NATIONAL plc
and
WILLIS CORROON GROUP PLC
and
WILLIS NATIONAL HOLDINGS LIMITED
------------------------------------
SHAREHOLDERS' AGREEMENT
relating to
WILLIS NATIONAL HOLDINGS LIMITED
------------------------------------
Slaughter and May
35 Basinghall Street,
London EC2V 5DB
TNC/PJAB
CONTENTS
Page
----
1. Definitions 1
2. Business 6
3. Structure and employees 6
4. Conduct of business 8
5. Financing 8
6. Directors and officers 8
7. Management 8
8. Reserved Matters 8
9. Operational matters 8
10. Issue of shares 8
11. Transfer of shares 8
12. Distributions 8
13. Performance of agreement 8
14. Access to information 8
15. Non-competition 8
16. Term 8
17. Termination 8
18. Breach 8
19. Confidentiality 8
20. Costs and expenses 8
21. Variation 8
22. Waiver 8
23. Restrictive Trade Practices Act 1976 8
24. Partnership 8
25. Assignment 8
26. Entire agreement 8
27. Announcements 8
28. Notices 8
29. Governing law 8
Schedule 1 Reserved Matters 8
Schedule 2 Disputes Resolution Procedure 8
Schedule 3 Roulette Procedure 8
Schedule 4 Insurance 8
Schedule 5 Basis of Valuation of Shares 8
SHAREHOLDERS' AGREEMENT
THIS AGREEMENT is dated 4th August, 1997
BETWEEN:
(1) ABBEY NATIONAL plc (Registered in England No. 2294747) whose registered
office is at Abbey House, Baker Street, London NW1 6XL ("Abbey National");
(2) WILLIS CORROON GROUP PLC (Registered in England No. 621757) whose
registered office is at Ten Trinity Square, London EC3P 3AX ("Willis");
and
(3) WILLIS NATIONAL HOLDINGS LIMITED (Registered in England No. 3393377) whose
registered office is at Ten Trinity Square, London EC3P 3AX (the
"Company").
WHEREAS:
(A) At the date of this Agreement, the issued and paid up share capital of the
Company is beneficially owned as follows:
Name Number of Shares Percentage of issued share capital
---- ---------------- ----------------------------------
Abbey National 490 49%
Independent
Consultancy Group
Limited
Willis Corroon
Limited 510 51%
(B) The Company is the beneficial owner of the whole of the issued share
capital of ANIFA, W-IFA and Willis National.
(C) Abbey National and Willis have agreed to enter into certain arrangements
for the purpose of regulating their relationship with each other and
certain other aspects of the affairs of, and their dealings with, the IFA
Group.
NOW IT IS HEREBY AGREED as follows:
1. Definitions
1.1 In this Agreement and the recitals and Schedules, the following
expressions shall (save where the context otherwise requires) have the
following meanings:
2
"Abbey National Loan" means the subordinated loan of (pound)4,000,000
in principal amount made available by Abbey
National to ANIFA pursuant to a loan agreement
dated 1 August 1997 made between Abbey National,
ANIFA and PIA;
"Accounting Period" means the period commencing on the accounting
reference date of the Company in any year and
ending on the date preceding the accounting
reference date in the next following year;
"ANIFA" means Abbey National Independent Financial
Advisers Limited, registered in England and
Wales with number 2055101;
"Approval" means the approval of shareholders as required
by the rules of the London Stock Exchange
Limited or any necessary regulatory approval;
"Articles of Association" means, in relation to the Company, the Articles
of Association of the Company (a copy of which
has, for the purpose of identification only,
been initialled by, or on behalf of, Abbey
National and Willis) as the same may, from time
to time, be amended in accordance with the
provisions of this Agreement;
"Auditors" means Ernst & Young or such other firm of
accountants as may be appointed in accordance
with the provisions of this Agreement;
"Board" means the Board of Directors of the Company from
time to time;
"Business" means the business carried on by the IFA Group
from time to time in accordance with clause 2;
3
"Business Day" means any day (other than a Saturday or Sunday)
on which banks generally are open in the City of
London for the transaction of normal banking
business;
"Business Plan" means the three year rolling business plan for
the IFA Group for the time being as agreed by
the Shareholders in accordance with this
Agreement, the business plan relating to the
first period having been initialled for the
purpose of identification only by or on behalf
of the Shareholders;
"Chief Executive Officer" the individual occupying the most senior
executive position within the Company;
"Compliance Employees" means employees of companies within the Abbey
National Group or the Willis Group, as the case
may be, who, prior to the execution of this
Agreement, have been significantly involved in
the investigation of the affairs of affected
persons (as defined in Clause 8 of the Share
Sale Agreements);
"Directors" means, in relation to the Company, the directors
for the time being and from time to time
appointed in accordance with the provisions of
this Agreement;
"Group" means, in relation to any Shareholder, that
Shareholder together with any wholly-owned
subsidiary or holding company of such
Shareholder, and any wholly-owned subsidiary of
such holding company;
"Group Relief" means relief for trading losses and other
amounts eligible for relief from corporation tax
pursuant to Chapter IV Part X of the Income and
Corporation Taxes Act 1988;
4
"Human Resources Working means the agreed principles applicable to the
Paper" terms of employment of employees involved in the
Business, a copy of which has, for the purpose
of identification only, been initialled by, or
on behalf of, Abbey National and Willis;
"IFA Group" means the Company and its subsidiaries and,
where the context so admits, includes any one or
more of such companies;
"Independent Valuers" means such merchant bank, based in London, of
international repute (not being financial
advisers to the Abbey National Group or the
Willis Group) as Abbey National and Willis may
agree or, in default of agreement, as
determined upon the application of either
Shareholder by the President for the time
being of the London Investment Bankers'
Association;
"Initial Fixed Term" means the period commencing on the date of this
Agreement and ending on 31 December 2002
(inclusive);
"IP Licences" means the agreements of today's date between the
Company and each of Abbey National and Willis
whereby the Company and the IFA Group are
granted a licence to use certain intellectual
property rights of Abbey National and Willis;
"Joint Committee" means the committee referred to in Schedule 2
(Disputes Resolution Procedure) comprising the
Chief Executive Officers of Abbey National and
Willis from time to time appointed or such
alternates as the respective Chief Executive
Officers in their absolute discretion shall
appoint;
5
"Management Committee" shall mean a committee of the Board to Comprise
the Chief Executive Officer and such other
persons as shall be determined by the Board;
"PIA" means the Personal Investment Authority Limited;
shall have the meaning more particularly set
"Roulette Notice" out in paragraph 1 of Schedule 3;
"Services Agreement" means the agreement of today's date between the
Company, Abbey National and Willis whereby Abbey
National and Willis, as the case may be, agrees
to provide certain services to the Company;
means, in relation to the Company, a holder of
Shares in accordance with the provisions of
"Shareholder" this Agreement;
"Shares" means, in relation to the Company, any shares in
the Company and any interest in such shares;
"Share Sale Agreements" means the two share sale agreements dated today
and made between Abbey National Independent
Consulting Group Limited and the Company and
Willis Corroon Limited and the Company;
"Subordinated Loan" means the (pound)3,000,000 loan made by Willis
Limited to W-IFA pursuant to an agreement dated
11 January 1996 between W-IFA, Willis Corroon
Limited and the Personal Investment Authority
Limited;
"Termination Event" shall have the meaning more particularly set out
in Clause 17 (Termination);
6
"W-IFA" means Willis Corroon Financial Planning Limited,
registered in England and Wales with number
1877373;
"Willis National" means Willis National Limited, registered in
England and Wales with number 3379907.
1.2 References to clauses and schedules are to clauses of, and schedules to,
this Agreement.
1.3 The schedules form part of this Agreement and shall have the same force
and effect as if expressly set out in the body of this Agreement and
reference to this Agreement shall include the schedules.
1.4 Unless the context otherwise requires, in this Agreement, reference to a
statute or any statutory provisions shall include any statute or any
statutory provision which amends or replaces, or has amended or replaced,
it and shall include any subordinate legislation made under the relevant
statute.
1.5 References to the singular include references to the plural and vice versa
and references to any gender include references to every gender.
1.6 Words and expressions defined in the Companies Act 1985 (as amended)
shall, unless the context otherwise requires, have the same meanings when
used in this Agreement.
1.7 Headings are for convenience only and shall not effect the construction of
this Agreement.
1.8 To the extent that this Agreement is in conflict with the provisions of
the articles of association of any member of the IFA Group or any term of
the IP Licence Agreements or the Services Agreement, such provisions
and/or term shall, to the extent permitted by law, be deemed to be varied
hereby to the intent that the provisions of this Agreement shall prevail.
2. Business
2.1 The business of the IFA Group shall be to carry on such business (and only
such business) as is set out in the Business Plan.
2.2 The business of the IFA Group shall be carried on from such places in the
United Kingdom and such other places as the Board may from time to time
decide in accordance with the Business Plan.
7
2.3 Each of Abbey National and Willis will use its reasonable endeavours to
procure that all of the customers for the time being of the Abbey National
Group and the Willis Group respectively who express a desire for services
of a kind for the time being offered by the IFA Group are introduced to
the IFA Group with a view to the IFA Group providing such services to
those customers.
3. Structure and employees
3.1 Each of Abbey National and Willis agree that:
(A) on or prior to 1 January 1998 the businesses of ANIFA and W-IFA and
its subsidiaries will be transferred to Willis National on mutually
agreed terms; and
(B) with effect from 1 January 1998, and subject to the approval of the
PIA, the Business will be carried on exclusively by Willis National.
3.2 Following execution of this Agreement, and provided that an offer is made
on terms, taken as a whole, no less favourable than his existing terms of
employment, Abbey National shall use its best endeavours to transfer the
employment of Jeremy Budden, and Willis shall use its best endeavours to
transfer the employment of Allan Daffern, to Willis National or the
Company, on terms to be agreed between Jeremy Budden and Willis National
or the Company and between Allan Daffern and Willis National or the
Company, as the case may be, to take effect on or prior to 1 January 1998.
Such terms shall include restrictive covenants, and "garden leave"
arrangements, appropriate in the circumstances, having regard to the
seniority of those employees and the need to protect the Business. The
terms for Jeremy Budden shall also provide that in the event of the
Company becoming a subsidiary of the Sedgwick Group PLC the Company shall
be deemed to be in repudiatory breach of the contract of employment or the
terms of the secondment, as the case may be.
3.3 Following execution of this Agreement, Gillian Salt shall be seconded to
ANIFA or another IFA Group Company for an initial term of two years and
thereafter until such secondment is terminated by Abbey National giving to
ANIFA or that company not less than three months' written notice. During
such period, the provisions of clause 3.9 (A), (B) and (C) shall apply to
the secondment, mutatis mutandis.
3.4 As soon as practicable following the execution of this Agreement, Willis
shall procure that Willis Compliance Employees will be offered new
contracts of employment with W-IFA.
3.5 The Company will procure that the Compliance Employees will continue to
devote such proportion of their working time as shall be requested by
Abbey National or Willis, as the
8
case may be, to the investigation of the affairs of affected persons (as
defined in Clause 8 of the Share Sale Agreements) relating to Abbey
National or Willis, as the case may be.
3.6 The Company will ensure that no Compliance Employee is dismissed without
the prior written consent of the party with whose affairs that Compliance
Employee has been primarily involved. The Company shall also ensure that
no other person shall be employed or engaged by any member of the IFA
Group in order to devote the substantial majority of their time to the
investigation of the affairs of affected persons ("Future Compliance
Employees") without prior consultation with the party with whose affairs
that Future Compliance Employee is to be primarily involved.
3.7 The parties acknowledge that, from the date hereof until such time as
their employment is transferred to W-IFA or Willis National, those
individuals who work in W-IFA (other than the Willis Compliance Employees
or the Willis Future Compliance Employees) will remain employed by Willis
Corroon Limited (the "Relevant Willis Employees"). Willis shall use its
best endeavours to transfer the employment of the Relevant Willis
Employees to W-IFA or Willis National as soon as reasonably practicable
following the date of this Agreement and in any event by 30 September
1997.
3.8 The following provisions will apply to the Relevant Willis Employees:
(A) prior to the transfer of the Relevant Willis Employees' employment
to W-IFA, he or she will be seconded to W-IFA and will devote the
whole of his or her working time to the Business;
(B) Willis will procure that Willis Limited will not, without the prior
written consent of Abbey National, second any of the Relevant Willis
Employees to any company, other than a member of the IFA Group;
(C) Willis will procure that Willis Limited will not, without the prior
written consent of Abbey National, dismiss any of the Relevant
Willis Employees;
(D) Willis will not offer and will procure that no company within the
Willis Group offers employment to any Relevant Willis Employee
without the prior written consent of Abbey National;
(E) W-IFA and Willis National will be free to offer employment to any
Relevant Willis Employee at any time following the execution of this
Agreement;
(F) Willis will procure that Willis Limited will not, without the prior
written consent of Abbey National, amend the terms and conditions of
employment of the Relevant
9
Willis Employees; and
(G) individuals may be recruited after the date of this Agreement but
any such individual will be employed by W-IFA or ANIFA or Willis
National.
3.9 The following provisions will apply to Jeremy Budden and Allan Daffern
(each the "Seconded Employee") as the case may be until such time as they
enter a new service agreement pursuant to clause 3.2:
(A) prior to the transfer of the Seconded Employee's employment to
Willis National or the Company, he will be seconded to ANIFA or
W-IFA, as the case may be and will devote the whole of his working
time to the management and affairs of the IFA Group;
(B) Abbey National or Willis, as the case may be (the "Employer"), will
not without the prior written consent of the other, second the
Seconded Employee to any company other than a member of the IFA
Group;
(C) the Employer will not without the prior written consent of the other
dismiss the Seconded Employee;
(D) the Employer will not offer and will procure that no company within
its Group offers employment to the Seconded Employee without the
prior written consent of the other;
(E) subject to clause 3.2 above, any member of the IFA Group will be
free to offer employment to the Seconded Employee at any time
following the execution of this Agreement; and
(F) the Employer will not amend the terms and conditions of employment
of the Seconded Employee without the prior written consent of the
other.
3.10 For the period during which the Relevant Willis Employees, the Seconded
Employees or Gillian Salt (as the case may be) remain employed by their
employer, the relevant employer will continue to pay (but the Company will
procure that a member of the IFA Group shall indemnify that employer
against) all costs and expenses associated with the secondment save in
respect of any amount paid pursuant to the last sentence of clause 3.2.
4. Conduct of business
10
4.1 The Business will be carried on in accordance with the Business Plan and
the rules and regulations for the time being applicable to the IFA Group
and the Business.
4.2 The IFA Group will carry on the Business in accordance with sound and good
business practice and the highest professional and ethical standards
generally and, additionally, in accordance with all applicable laws,
regulatory requirements and best practices of the jurisdictions and
markets in which the Business is conducted from time to time.
4.3 The Business will, as of 1 January 1998, operate under the name "Willis
National". Between the date of this Agreement and 1 January 1998, ANIFA
and W-IFA shall continue to operate under their existing names. As soon as
practicable and in any event by 1 January 1998, the corporate name of
ANIFA shall be changed so as not to include the word "Abbey".
4.4 Abbey National and Willis will offer such support services to the IFA
Group as are more particularly set out in the Services Agreement.
4.5 Any services provided by Abbey National or Willis pursuant to clause 4.4
will be provided on an arm's length basis unless otherwise agreed by Abbey
National and Willis.
4.6 It is hereby agreed that Coopers & Lybrand shall remain auditors of ANIFA
until the accounts for ANIFA for the year ending 31 December 1997 have
been issued with an audit opinion included. Abbey National shall procure
their resignation as soon as practicable thereafter.
4.7 Abbey National and Willis agree to procure, as far as each is able, that
the appointment of James Hay Pension Trustees Limited as the appointed
representative of ANIFA will continue until at least 31 December 1997.
5. Financing
5.1 Abbey National and Willis acknowledge that, in addition to the share
capital subscribed or paid up at the date hereof, the IFA Group may
require further funds in order to fund its projected cash requirements
under the Business Plan. If such further finance is required, it is the
intention of Abbey National and Willis that, unless otherwise agreed, it
should be provided:
(A) firstly, by way of additional equity to be subscribed by the
Shareholders in proportion to their respective holdings of Shares;
(B) secondly, by way of loans or loan capital from the Shareholders in
proportion to
11
their respective holdings of Shares and on such commercial terms
(identical as between the Shareholders) as they may agree with the
Company; and
(C) thirdly, by third party finance on such terms as may be obtained by
the Company.
5.2 If the Company requires third party finance, it shall endeavour to obtain
such finance on the basis that there shall be no recourse to the
Shareholders and otherwise on the best terms which could reasonably be
expected to be obtained by the Company in the open market provided always
that nothing shall oblige any Shareholder to provide any guarantee or
security in respect thereof or to put up the finance concerned.
5.3 If in the reasonable judgment of the Board there is at any time a
likelihood that within a period of six months there will arise a
requirement to increase the share capital of the Company as a result of
any requirement or request of any regulatory authority (whether that
requirement or request relates to the Company or any other member of the
IFA Group), new Shares in the Company shall be offered to the Shareholders
in accordance with clause 10.
5.4 As soon as practicable after the date of this Agreement and in any event
by no later than 1 January 1998, the Shareholders shall procure, so far as
each is able, that the Subordinated Loan shall be capitalised or converted
or waived at the expense of Willis into share capital in W-IFA on terms to
be agreed between Abbey National and Willis and on the basis that any
share capital arising on capitalisation or conversion shall either carry
no effective right to income or capital or to vote or, if it does carry
any such rights, on the basis that the share capital arising on
capitalisation or conversion of the Subordinated Loan shall be transferred
immediately to a member of the IFA Group (other than W-IFA) for no
consideration. Willis shall use all reasonable endeavours to obtain the
agreement of any other party to the Subordinated Loan to such
capitalisation, conversion or waiver and shall, pending capitalisation,
conversion or waiver, not seek to charge any interest on or repayment of
the amounts outstanding under the Subordinated Loan. Willis shall
indemnify and keep indemnified W-IFA and each member of the IFA Group in
respect of all costs, expenses, liabilities or losses resulting, directly
or indirectly, from the continuation of the Subordinated Loan beyond the
date of this Agreement or from its capitalisation, conversion or waiver
pursuant to this clause.
5.5 (A) Following execution of this Agreement the Shareholders shall procure
so far as each is able that:
12
(i) as soon as practicable after the date of this Agreement and by
no later than 31 August 1997, the Company makes available to
ANIFA (pound)2,200,000 cash and that the Company procures
ANIFA to repay an equivalent amount of the Abbey National
Loan.
(ii) by no later than 31 December 1997, either the Abbey National
Loan (as reduced pursuant to sub-clause (i)) is assigned to
Willis National or the Company for cash consideration equal to
the outstanding principal amount plus accrued and unpaid
interest thereon or that the Abbey National Loan (as reduced
pursuant to sub-clause (i)) is repaid; and
(iii) the Company, Willis National and ANIFA use all reasonable
endeavours to obtain the consent of PIA to such assignment or
repayments;
(B) For the purposes of achieving the assignment or repayment of the
Abbey National Loan as described in sub-clause (A)((ii)), Abbey
National and Willis will provide to the Company sufficient finance
in the form of short term loans (or otherwise in such manner as
shall be agreed between them), pro-rata to their respective holdings
of Shares, to enable the Company to make available to ANIFA a
subordinated loan on the same terms mutatis mutandis as the Abbey
National Loan.
(C) To the extent that the financial resource requirement of ANIFA as
calculated in accordance with Chapter 13 of the Rule Book of PIA is
reduced at any time, the Company shall use all reasonable endeavours
to obtain the consent of PIA to the repayment by ANIFA of the
subordinated loan provided to ANIFA pursuant to sub-clause ((B))
and, upon any such repayment, the Company shall repay any short term
loans made to it by Abbey National or Willis for the purposes
thereof on a pro-rata basis.
(D) To the extent that any amount remains outstanding on the Abbey
National Loan beyond 31 August 1997, the Shareholders shall procure,
so far as each is able, that the Company pays and the Company
undertakes that it will pay, interest on the amount outstanding from
time to time at a rate equal to five month sterling LIBOR plus one
half of one per cent per annum.
6. Directors and officers
6.1 Unless otherwise agreed between the Shareholders, the number of Directors
of the Company shall be not less than two and not more than six.
13
6.2 Each Shareholder shall appoint an equal number of persons to become
directors of the Company.
6.3 The Chairman of the Company shall be appointed, following consultation
with the other Shareholder, by the owner for the time being of the
majority of the issued share capital of the Company.
6.4 The parties hereto agree and acknowledge that any Director appointed under
this Agreement and Articles of Association shall be entitled to pass to
the Shareholder appointing him full details of any information which may
come into his possession as such Director may, in his absolute discretion,
decide provided any such Shareholder shall be bound by clause 19
(Confidentiality).
6.5 Whenever any person ceases to be a Director of the Company his replacement
shall be appointed by the party who had the original rights of nomination
subject always to the provisions of clause 6.2.
6.6 Any Director may at any time be removed from office by the Shareholder who
nominated him as a Director. Any nomination or removal of a Director shall
be in writing delivered to the Company concerned and signed by or on
behalf of the Shareholder having the right to nominate such Director.
6.7 Unless otherwise agreed in writing by the parties hereto in respect of a
particular meeting:
(A) meetings of the Board shall take place at least four times each year
and additionally within seven days of receipt by the Company of a
written request to this effect from any Shareholder;
(B) every notice of such meeting shall be accompanied by an agenda and
no material business shall be conducted at such meeting unless
included in such agenda; and
(C) every such meeting shall be held at the head office for the time
being of the Company (or in such other place the Shareholders may
agree) on not less than seven clear days' written notice (except in
the case of emergency, when such notice as is reasonably practicable
shall suffice).
6.8 Any decisions made at any meeting of the Board shall be made by resolution
and no such resolution shall, subject to clause 8, be effective unless a
majority of the Directors (including any alternate for any Director)
present at the meeting of the Board vote in favour of it and any Director
who is acting as an alternate shall be entitled to vote in his
14
capacity as an alternate in addition to exercising his own right to vote.
The Chairman shall have a casting vote.
6.9 Subject to clause 8, a resolution in writing signed by or on behalf of all
the Directors (or their alternates) entitled to receive notice of a
meeting of Directors, or any committee of Directors, shall be as valid and
effectual as if it had been passed at a meeting of Directors, or (as the
case may be) a committee of Directors, duly convened and held and may
consist of several documents in the like form each signed by one or more
of the Directors.
6.10 The quorum necessary for the transaction of the business of the Board may
be fixed by unanimous decision of the Board and, unless so fixed at any
number, shall be two, such two to include one director appointed by Abbey
National pursuant to clause 6.2 (or any alternate director) and one
director so appointed by Willis (or any alternate director).
6.11 If, at any time at or before any meeting of the Directors, any Director or
any alternate appointed by any Director shall request that the meeting be
adjourned or reconvened to another time being not more than seven days
following the date of the adjourned meeting (whether to enable further
consideration to be given to any matter or for other Directors to be
present or for any other reason, which he need not state) then such
meeting shall be adjourned or reconvened accordingly, and no business
shall be conducted or proceeded with at that meeting after such request
has been made. No such request shall be made at a meeting which has been
reconvened following an adjournment.
6.12 All or any of the members of the Board may participate in a meeting of the
Board by means of a conference telephone or any communication equipment
which allows all persons participating in the meeting to speak to and hear
each other. A person so participating shall be deemed to be present in
person at the meeting and shall be entitled to vote or be counted in the
quorum accordingly, for the purposes of clause 6.10. Such a meeting shall
be deemed to take place where the largest group of those participating
have assembled, or, if there is no such group, where the Chairman of the
meeting then is.
6.13 Each of the Shareholders hereby undertakes that it will procure that none
of the Directors nominated by it shall wilfully and/or persistently absent
themselves from any meeting of the Board so as to prevent the
establishment of a quorum at that meeting and that any such Director will
exercise or refrain from exercising any voting rights so as to ensure that
the passing of any and every resolution necessary or desirable to procure
that the affairs of the IFA Group are conducted in accordance with the
provisions of this Agreement and otherwise to give full effect to the
provisions of this Agreement, and likewise, to ensure that no resolution
is passed which does not accord with such provisions.
15
7. Management
7.1 On one occasion and at such time in each Accounting Period as Abbey
National shall reasonably require (or, in the absence of a request by
Abbey National to the contrary by not later than three months before the
commencement of the subsequent Accounting Period, at such time), the
Company shall prepare a Business Plan covering the three-year period
commencing at the beginning of the subsequent Accounting Period. No
Business Plan shall take effect without the unanimous approval of the
Board in accordance with Part 1 of Schedule 1. The Shareholders shall
procure that the Business Plan is considered by the Board no later than
the last meeting of the Board prior to commencement of the subsequent
Accounting Period.
7.2 Without prejudice to clause 7.1, not less than 10 Business Days prior to
the date of the Board meeting at which it is proposed that the Board will
consider a resolution to approve a Business Plan, the Company shall
provide the Shareholders (either directly or through their respective
representatives nominated by them to the Board) with a copy of the
proposed Business Plan and shall consult with them as to the contents of
such plan and the appropriate means of implementing it, to the extent
reasonably required by them, and shall have due regard to their views
insofar as they are consistent with the commercial interests of the IFA
Group.
7.3 A copy of each Business Plan in the form approved by the Board shall be
supplied to the Shareholders (either directly or through their respective
representatives nominated by them to the Board) not more than 10 Business
Days after the date on which it is so approved.
7.4 The parties shall procure that the Company shall prepare and deliver to
the Shareholders (either directly or through their respective
representatives nominated by them to the Board) in each Accounting Period
a draft annual budget for the IFA Group relating to the subsequent
Accounting Period.
7.5 The draft budget to be prepared pursuant to clause 7.4 shall contain in
reasonable detail in respect of the Accounting Period to which it shall
relate:
(A) the forecast capital expenditure to be incurred by the IFA Group
during the relevant Accounting Period;
(B) an estimate of the revenues and operating expenditure of the IFA
Group for the relevant Accounting Period;
(C) details of any major or unusual items of capital or operating
expenditure forecast
16
to be incurred;
(D) details of any proposed amendments to the Business Plan for the
forthcoming year which are known at the date on which the draft
budget is prepared;
(E) details of any matters which would, if the draft budget were to take
effect, require unanimous Board or Shareholder approval in
accordance with Schedule 1.
7.6 The Board shall approve any draft budget not later than 10 Business Days
after delivery of the draft budget pursuant to clause 7.4. The Board shall
not approve any such budget if such budget contains anything which would,
if the budget were to take effect, require unanimous Board or Shareholder
approval in accordance with Schedule 1, without the Board having prior to
such approval by it obtained such approval in respect of such thing.
During the period from the date on which the draft budget is delivered to
the Shareholders pursuant to clause 7.4 to the date of approval of such
draft budget, to the extent reasonably required by the Shareholders (or by
their respective representatives nominated by them to the Board), the IFA
Group shall take due account of the views of the Shareholders (or by their
respective representatives on the Board) insofar as they are consistent
with the commercial interests of the IFA Group.
7.7 The Board will review the Business Plan and the budget at least once in
any calendar quarter. If the IFA Group proposes to make any significant
variation to or departure from any budget or Business Plan, it shall first
notify the Shareholders in writing of its intention to do so and shall
consult with the Shareholders (or with their respective representatives
nominated by them to the Board) as to the proposed changes and the
appropriate means of implementing them, to the extent reasonably required
by the Shareholders (or by their respective representatives nominated by
them to the Board), and shall take due account of the views of the
Shareholders (or their respective representatives nominated by them to the
Board) insofar as they are consistent with the commercial interests of the
Company.
7.8 The Board shall not approve any significant variation to or departure from
any budget or Business Plan until 10 Business Days have elapsed since the
date of the notice referred to in clause 7.7 unless, the Company having
served notice pursuant to clause 7.7 at the earliest reasonably
practicable opportunity, the Board resolves that circumstances require
amendment to the budget within a shorter period.
7.9 The accounting policies of the Company shall be decided by the Board from
time to time, subject to clause 8.
7.10 Each of the parties agrees to exercise its rights as a Shareholder to
procure that:
17
(A) the annual statements of account of the Company will be maintained
and audited in accordance with all applicable statutory and
regulatory requirements, all statements of standard accounting
practice and all other generally accepted accounting principles and
practices appropriate for the place of incorporation or residence of
the Company; and
(B) consolidated management and audited accounts shall be prepared in
respect of the IFA Group and will be reviewed and approved by the
Board on a regular basis.
7.11 The Shareholders shall not approve any variation or departure from the
budget or Business Plan unless such variation or departure has been
unanimously approved by the Board.
7.12 The Management Committee shall be responsible for:
(A) preparing the Business Plan to be submitted to the Board for
approval, as more particularly set out in clause 7.1;
(B) preparing the draft budget for submission to the Board on the basis
more particularly set out clause 7.5; and
(C) fulfilling such other functions as the Board shall determine from
time to time.
7.13 The Chief Executive Officer will, subject to clause 8, be appointed by the
Board. The first Chief Executive Officer shall be Jeremy Budden who shall,
pending his transfer to the Company or Willis National pursuant to clause
3.2, be seconded to the Company.
7.14 Subject to clause 7.13 the Chief Executive Officer shall be employed by
the Company on such terms and conditions as are more particularly set out
in his service contract.
8. Reserved Matters
8.1 Notwithstanding any provisions in clauses 6 or 7 but subject to clause
8.2, the Shareholders shall procure, so far as they are able, that:
(A) no action shall be taken or resolution passed by the board of
directors of any member of the IFA Group or any such member in
respect of the matters set out in Part 1 of Schedule 1 except with
the unanimous approval of the Board and
(B) no action shall be taken or resolution passed by the board of
directors of any
18
member of the IFA Group or any such member in respect of the matters
set out in Part 2 of Schedule 1 except with the unanimous consent of
the holders of each class of shares in the Company.
8.2 If any matter under this Agreement (including but not limited to those set
out in Schedule 1) shall give rise to a dispute between Abbey National and
Willis or if the Shareholders fail to reach an agreement with respect to
any matter set out in Schedule 1, in the absence of any agreement between
the parties to the contrary such a dispute shall be resolved in accordance
with Schedule 2.
8.3 If the procedure set out in Schedule 2 fails to resolve any dispute or
disagreement between the parties in respect of any matter (including but
not limited to those set out in Schedule 1), then either Shareholder may
serve a Roulette Notice on the other, in accordance with the provisions
set out in Schedule 3.
8.4 Abbey National and Willis each covenant to the other for the benefit of
each member of the other's Group and the IFA Group to perform or procure
performance of its obligations and the obligations of each member of its
Group as set out or implied in any agreement or arrangement (including,
without limitation, the Share Sale Agreements and the Tax Covenants
entered into pursuant thereto) made or entered into between it or any
member of its Group and any member of the IFA Group.
8.5 If any member of the IFA Group is proposing to amend or enforce any
agreement or arrangement with any Shareholder or member of a Shareholder's
Group (the "Affected Shareholder") or to exercise or waive any rights
under such agreement or arrangement, the decision whether or not to
approve such amendment, enforcement, exercise or waiver shall only be
effective if it is approved by the Board. The Directors appointed by the
Affected Shareholder may participate in discussions concerning the
decision and shall count as part of the quorum but shall not be entitled
to vote in relation to it. The Directors appointed by the other
Shareholder (the "Non-Affected Shareholder") shall act reasonably, having
regard to the interests of the IFA Group, at all times in relation to any
such decision.
8.6 If the Board decides pursuant to clause 8.5 to enforce any agreement or
arrangement against the Affected Shareholder, then:
(A) (i) the Shareholders shall procure, so far as each is able, that
no steps are taken by the Company to enforce the agreement or
arrangement unless both Shareholders consent;
(ii) the Non-Affected Shareholder shall enforce the relevant
agreement or arrangement against the Affected Shareholder
itself on behalf of the
19
relevant member of the IFA Group and in such circumstances the
Non-Affected Shareholder shall have all necessary access to
information, premises and personnel for these purposes; and
(B) if breach by either Abbey National or Willis of its covenant in
clause 8.4 amounts to a Termination Event in respect of that party,
the Independent Valuers appointed for the purpose of valuing the
Shares shall be instructed to deduct in arriving at the Termination
Price such reasonable amount as they consider to be necessary to
compensate the IFA Group in respect of, or to remedy, the breach.
8.7 Where it is proposed that any aspect of the consolidated financial
statements of the Company required to be included therein by the Companies
Act 1985 or the Financial Reporting Statements of the Accounting Standards
Board or any other statutory or stock exchange requirement is to be
approved by the Board notwithstanding an objection by one Shareholder, the
Shareholders and the Company shall, at the request of the objecting
Shareholder (and so far as each is able) acting reasonably at all times,
use their respective reasonable endeavours to make the Auditors discuss
that aspect with the auditors or other advisers of the objecting
Shareholder in good faith. If, notwithstanding such discussions, the Board
proposes to approve the aspect which is the subject of the objection:
(a) the Directors appointed by the objecting Shareholder may require the
Board to record the subject of the objection in the Board minutes of
the Company and to bring the matter to the notice of the Auditors
who shall, after consultation with the auditors and other advisers
of the objecting Shareholder, decide whether and if so, what form,
the matter should be disclosed in the Company's relevant financial
statements; and
(b) the objecting Shareholder may either serve a Roulette Notice on the
other in accordance with the provisions set out in Schedule 3 or
treat the inclusion of the matter to which it objects in the
relevant financial statements as a material breach of this Agreement
constituting a Termination Event for the purposes of clause 17
(disregarding for these purposes any discount to the value
determined for the Shares implied by clause 17.13 ((B))).
9. Operational matters
9.1 Willis shall ensure that, with effect from the transfer of ANIFA and W-IFA
to the Company, adequate insurance cover for the types of risk (including,
without limitation, professional indemnity insurance) and at the levels
agreed between Abbey National and Willis is in place for the benefit of
ANIFA and W-IFA with respect to matters arising in the period
20
after Completion (as defined in the Share Sale Agreements). For the
avoidance of doubt, Willis shall not be obliged to nor shall it provide
cover to ANIFA in respect of any claim whenever arising which relates to
ANIFA or its activities prior to Completion. Willis confirms that the
insurance that will be so available shall be on terms no less favourable
than as set out in Schedule 4. Following the date of this Agreement:
(i) the types of risk and levels of cover available shall be reviewed by
the Management Committee, and, if so determined by them, new cover
shall be obtained; and
(ii) Willis shall use its best endeavours to procure that, within 10
Business Days after the date of this Agreement, a quotation is
provided for the "buydown" facility referred to in column 4 of
Schedule 4 to be made available to each member of the IFA Group.
9.2 The Company, Abbey National and Willis shall, following signature of this
Agreement by the parties hereto, enter into the Services Agreement and the
IP License Agreements.
9.3 As soon as practicable following the date of this Agreement, the Company
shall adopt the following incentive schemes for the benefit of all or some
of the employees of the IFA Group:
(A) a retention incentive scheme, in which all employees of the IFA
Group (including for these purposes the Relevant Willis Employees,
the Seconded Employees and Gillian Salt) who are in employment with
such member of the IFA Group as at the date of Completion of this
Agreement (or become an employee of a member of the IFA Group by no
later than 1st January 1998) shall be entitled to participate, and
under which such employees shall receive a cash payment equivalent
to 10 per cent. of their then base salary if they remain an employee
of a member of the IFA Group for the period of one year immediately
following the date of this Agreement and at the end of that year
have not either given or been given notice and are not the subject
of any disciplinary notice or improvement notice for poor
performance;
(B) a long term incentive plan, in which all such employees shall be
entitled to participate, with effect from 1 January 1998 which shall
be substantially in the following form (including, without
limitation on the same financial terms):
(i) The plan will be a cash based profit sharing plan;
(ii) Each year the following amounts will be set aside into the
profit sharing
21
pool:
- Year 1: 40% of any pre-tax profits in excess of budget
- Year 2 and successive years
- 10% of pre-tax profits, and
- 30% of any pre-tax profits in excess of budget.
However, no funds will be allocated to the profit sharing pool
if the JV's pre-tax profit is less than 80% of budgeted
pre-tax profit.
(iii) The pool will be allocated between participants pro rata to
their base salaries as at the end of the year;
(iv) At the end of each year, participants will be advised what
their share of the pool for that year will be. However, their
share of the pool will not be paid out to them for a further
two years;
(v) For selected senior individuals, 30% of their annual share of
the pool is put at risk and will be forfeited if a three year
budgeted profit target is not met. If the three year profit
target is met, the 30% of their share of the pool will be paid
and will also be matched with a further 30% payment;
(vi) The intention is that the incentive plan should cover all
employees of the JV;
(vii) Employees joining the company before 1 July will be eligible
for a share in the profit pool relating to the current year.
Their share will be prorated for their length of service
during the year. Employees joining from 1 July onwards will be
eligible to participate from 1 January following their date of
joining; and
(viii) "Good" leavers e.g. those leaving due to retirement or
ill-health, will be eligible to receive awards, pro rated for
their length of service. Other leavers will forfeit their
awards.
The Shareholders shall use all reasonable endeavours to agree the detailed
terms of these schemes as soon as practicable after the date of this
Agreement, it being recognised that the retention and successful
incentivisation of employees of the IFA
22
Group is of fundamental importance to the success of the Business. In
other respects, the terms of employment of persons employed in the
Business shall be harmonised to the extent practicable, and shall
otherwise be in accordance with the principles set out in the Human
Resources Working Paper.
10. Issue of shares
10.1 The issue of new Shares shall be regulated in accordance with the
provisions set out herein and in the Articles of Association.
10.2 Unless otherwise agreed by the parties hereto, any Shares to be issued by
the Company shall before issue be offered for subscription in the first
instance to such persons as, at the date of the offer, are registered as
holders of that class of Shares in proportion to the number of such Shares
then held by them.
10.3 Any such offer as aforesaid shall be made by notice in writing specifying
the number of Shares offered and the price at which the same are offered
(the "Offer Price") which shall be a number and price unanimously approved
by the Board and shall remain open for acceptance for a period of not less
than 28 days. Any such offer not accepted within the period specified will
be deemed to be declined.
10.4 If any Shares offered by the Company in accordance with clause 10.2 are
not taken up, such Shares shall not be issued save that, if such Shares
are being offered as a result of any requirement or request of the kind
referred to in clause 5.3, such Shares may be subscribed by any
Shareholder who offered to subscribe for Shares under clause 10.3 as a
result of such offer on the terms set out in clauses 10.2 and 10.3.
11. Transfer of shares
11.1 Subject to clause 11.2, no Shareholder shall transfer any holding or
interest in its Shares during the Initial Fixed Term other than with the
consent of the other Shareholder. In the event that such consent to
transfer is forthcoming, the provisions set out in clause 11.3 shall
apply.
11.2 Notwithstanding clause 11.1, any Shareholder may effect a transfer of all
(but not some only) of its Shares to a company which is in the same Group
in circumstances where the entire legal and beneficial interest in all of
the share capital (together with all the rights attached and accruing to
such share capital) in each of:
(A) the transferee; and
23
(B) any company in the Group through which the Shareholder and the
transferee trace their Group relationship,
is held, in each case, by the Shareholder or a parent undertaking of that
Shareholder or where such transferee is the ultimate parent undertaking of
such Shareholder (a "Permitted Transferee"). Any transfer made pursuant to
this clause shall be made on terms that prior to any transferee ceasing to
be a Permitted Transferee the Shares held by it must be transferred back
to a company that satisfies the requirements of being a Permitted
Transferee by reference to the parties to this Agreement.
11.3 (A) Prior to making or agreeing to make any transfer of any Shares
(other than a transfer pursuant to and in accordance with sub-clause
11.2), the Shareholder whose Shares are to be transferred (the
"Offeror") shall give a notice in writing (the "Transfer Notice") to
the other Shareholder (the "Non-Transferring Shareholder") informing
it of the proposed transfer, setting out the identity of the third
party and the price and terms offered by the third party for the
Shares (the "Third Party Purchase Price").
(B) The Non-Transferring Shareholder shall have the option (the
"Option"), to acquire, at the Purchase Price (as defined below), all
(but not some only) of the Shares referred to in the Transfer
Notice, such option being exercisable by giving notice (an "Exercise
Notice") in writing to the Offeror within 10 Business Days of the
receipt by the Non-Transferring Shareholder of the Transfer Notice
or, where an Approval is required, such longer period not exceeding
30 Business Days as is reasonably required in order to obtain that
Approval.
(C) The "Purchase Price" shall be:
(i) the Third Party Purchase Price; or
(ii) if the Third Party Purchase Price is not entirely for cash,
then the value in cash of the Third Party Purchase Price as
agreed between the Non-Transferring Shareholder and the
Offeror or, in the absence of agreement, as determined by the
Independent Valuers on such basis as they in their discretion
consider appropriate acting on the instructions of the
Non-Transferring Shareholder. Where the Independent Valuers
are instructed for the purposes of this clause, clauses 17.6,
17.7 and 17.8
24
shall apply.
(D) Following the issue of an Exercise Notice by the Non-Transferring
Shareholder within the period stipulated in clause 11.3((B)), the
Offeror shall be obliged to sell, and the Non-Transferring
Shareholder shall be obliged to purchase the Shares on the date
falling 10 Business Days after the later of the date of the Exercise
Notice and the date upon which the Purchase Price is agreed or
determined as the case may be at such time and place as shall be
specified in the Exercise Notice (or such date, time and place as
may be agreed by the Offeror and the Non-Transferring Shareholder or
such other reasonable date, time and place as may be specified by
the Non-Transferring Shareholder).
(E) If the Non-Transferring Shareholder does not exercise the Option
within the period stipulated in clause 11.3((B)), the Offeror may
transfer the Shares to the third party named in the Transfer Notice
provided that:
(i) the Offeror shall procure that the third party named in the
Transfer Notice makes an offer to the Non-Transferring
Shareholder for all (but not some only) of its Shares on the
same terms (including, without limitation, as to price) per
Share as apply to the sale of Shares by the Offeror;
(ii) the price to be paid by the third party for the Shares is not
less than the Purchase Price without any rebate, allowance or
deduction whatever;
(iii) there are no collateral agreements which make the arrangement
more favourable to the third party; and
(iv) the transfer takes place within 30 Business Days of the date
of the Transfer Notice.
11.4 The Shares may not be offered in part to the other Shareholder or a third
party. Each Shareholder may only transfer Shares under this Agreement if
such transfer is to a single acquirer, purchasing all of the Shares owned
by the Shareholder.
11.5 The Shareholders will not cause any charge, lien, mortgage, security or
other third party interest to arise in respect of the Shares or allow any
such interest to subsist.
11.6 Save in circumstances where a transferee purchases the Shares of the
Non-Transferring Shareholder pursuant to clause 11.3((E)), no transfer of
Shares to a person who is not a Shareholder shall be effective unless and
until such transferee has signed an agreement, in a form reasonably
acceptable to the other Shareholder, under which the transferee
25
agrees to be bound by the provisions of this Agreement.
12. Distributions
12.1 Unless otherwise agreed by the parties, all the profits of the Company
available for distribution shall be distributed amongst the Shareholders
in accordance with the rights attached to the Shares. Any amendment to the
rights attached to the Shares which changes the nature or form of such
distribution in any respect will require the unanimous consent of the
Shareholders. Neither Shareholder will enter into any agreement with any
other person (other than this Agreement and any amendments hereto) with
respect to the voting rights attaching to the Shares held by it.
12.2 The Shareholders shall procure that, as far as possible, elections are
made and will remain in force pursuant to sections 247 and 248 of the
Income and Corporation Taxes Act 1988 to enable:
(A) dividends to be paid by the Company without giving rise to a
liability to account for advance corporation tax; and
(B) payments which are deductible payments in relation to the Company
for the purposes of corporation tax to be made by the Company
without deduction of income tax.
13. Performance of agreement
13.1 Abbey National and Willis shall, and shall use all reasonable endeavours
to procure that any necessary third party shall do, execute or perform all
such further deeds, documents, assurances, acts and things as may
reasonably be required to give effect to the terms of this Agreement, the
IP Licences, the Services Agreement and the Articles of Association.
13.2 Each Shareholder confirms and undertakes that it will at all times:
(A) use and exercise (or refrain from using or exercising) the votes
attaching to the Shares held or controlled by it to ensure the
maintenance and observance of the terms of this Agreement, the IP
Licences, the Services Agreements and the Articles of Association;
(B) exercise all rights and powers vested in it in its capacity as a
Shareholder and as a party to this Agreement in an expeditious and
efficient manner; and
(C) do all things reasonably within its power which are necessary or
desirable to give
26
effect to the spirit and intent of this Agreement, the IP Licences,
the Services Agreement and the Articles of Association.
13.3 No delay or omission on the part of any party in exercising any right,
power or remedy provided by law or under this Agreement, nor any
indulgence granted by any party, shall:
(A) impair such right, power or remedy; or
(B) be construed as a waiver thereof.
13.4 The single or partial exercise of any right, power or remedy provided by
law or under this Agreement shall not preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
13.5 The rights, powers and remedies provided in this Agreement are cumulative
and not exclusive of any rights, powers and remedies provided by law.
14. Access to information
14.1 Without prejudice to any other provision of this Agreement, the Company
shall provide the Shareholders with reasonable access to and (upon
reasonable request) copies of such financial, accounting and management
information and records relating to the Company (whether specifically or
generally) from time to time and which is available to the IFA Group under
its own management and financial systems.
14.2 Without prejudice to clause 14.1, the Company shall provide to the
Shareholders (either directly or through their respective representatives
nominated by them to the Board) in normal circumstances within ten
Business Days after the end of the period to which they relate:
(i) monthly management accounts of the Company and the IFA Group;
(ii) quarterly and half-yearly accounts and financial information of the
Company and IFA Group.
14.3 Without prejudice to clause 14.1, the Company shall provide to the
Shareholders (either directly or through their respective representatives
nominated by them to the Board):
(i) draft annual accounts of the Company as soon as they are available;
(ii) audited annual accounts of the Company promptly following their
approval by the
27
Board;
(iii) copies of any material correspondence with or notification from any
tax or regulatory authority, wherever situate (including, without
limitation, any which relates to any issue of substantive
disagreement) as soon as available;
(iv) draft public announcements and press releases of the Company as soon
as they are available; and
(v) any and all draft business plans, budgets and other financial data
as agreed between the Shareholders from time to time to be used in
the running of the Business.
14.4 Each of Abbey National and Willis reserve the right, at their sole
discretion to commission at their own cost, and at any time on giving not
less than 48 hours prior notice, a report on the Business or any aspect
thereof or on the IFA Group or any part of it. Such report may be produced
by Abbey National or Willis (or its employees) or by a third party and the
Company will make available such records and explanations as are, in the
reasonable opinion of the party commissioning the report, necessary. The
Company shall procure that its Directors and employees will co-operate
fully in the production of any such report.
14.5 Without prejudice to clause 14.1, the Company shall, on request, provide
to the Shareholders (either directly or through their respective
representatives nominated by them to the Board) all reports prepared by
the Company in respect of their obligations to any regulatory authority or
body under the Financial Services Act 1986 and also to provide copies of
all correspondence between such regulatory body and the Company.
14.6 The Company shall maintain, and shall at all times keep fully up-to-date,
a schedule showing any delegations of power or authority by it or by the
Board to any person. The schedule shall distinguish between the delegated
powers and authority reserved for the Board and the delegated powers and
authority below Board level. The Company shall provide the Shareholders
with access to and, upon reasonable request (but at the cost of the
requesting Shareholder), copies of such schedule.
14.7 The Company shall immediately notify the Shareholders if at any time it is
subject to any penalty, fine, sanction, disciplinary action or criticism
by any regulatory or judicial authority in any jurisdiction whatsoever or
if it receives notice or any suggestion that it may be so subject or that
any investigation by any such authority is pending or threatened.
15. Non-competition
28
15.1 Subject to clause 15.2, Abbey National and Willis will not operate any
business or engage in any form of commercial activity which competes with
the Business as carried on at the date of this Agreement other than in
their capacity as Shareholders.
15.2 Each of Abbey National and Willis agrees, while it or any member of its
Group is a party to this Agreement, that:
(A) it shall not (either on its own account or in conjunction with or on
behalf of any person, firm or company) directly or indirectly
acquire any interest in any business (an "acquired business") which
also includes a business which materially competes with the Business
of the IFA Group (a "competing business"). However, Abbey National
or Willis may, directly or indirectly, acquire an interest in any
acquired business which includes a competing business if (1) the
gross turnover of the competing business is less than one-third of
the gross turnover of the IFA Group or (2) (if the proportion in (1)
is greater than one-third) such competing business is (subject to
paragraph ((B)) below) disposed of by Abbey National or Willis, as
the case may be, within 18 months of its acquisition; and
(B) in any case where a Shareholder is obliged to dispose of a competing
business in accordance with sub-paragraph ((A)) above, each of the
Shareholders and the Company will enter into bona fide discussions
with a view to agreeing a sale to any member of the IFA Group of the
competing business.
15.3 For the purpose of clause 15.2((A)) the gross turnover of the competing
business and the IFA Group shall be extracted from the latest published
accounts of (or including) such business and the IFA Group respectively
available at the date of acquisition of the acquired business.
15.4 The provisions of this clause:
(A) will not subsist beyond the termination of this Agreement and
accordingly Abbey National and Willis may own or operate a business
competing with the Business from the moment it (and any member of
its Group) ceases to be a Shareholder;
(B) shall not prohibit or restrict Abbey National Independent Consulting
Group Limited or its subsidiaries for the time being from providing
as an ancillary activity products and services (in the areas of
group personal pensions, corporate financial planning, group
healthcare and insured company pension schemes (provided that any
such insured company pension scheme business or group personal
pension scheme administration business shall not, in either case,
constitute more than five per cent of the consolidated turnover of
such companies
29
in any financial period)) to its clients of a type similar to those
provided by the IFA Group as part of the Business; and
(C) shall not prevent or restrict any member of the Abbey National Group
or the Willis Group from being interested, for investment purposes,
in up to five per cent of the equity share capital of any company
whose shares are listed on a recognised stock exchange.
16. Term
16.1 Subject to clauses 16.2 and 17, this Agreement will continue for the
Initial Fixed Term.
16.2 This Agreement may be terminated by either party giving not less than
twelve months' notice of termination (the "Notice Period"), such notice to
expire on, or at any time after, the expiry of the Initial Fixed Term.
17. Termination
17.1 As between the Shareholders, this Agreement shall continue in full force
and effect notwithstanding the occurrence of a Termination Event or the
expiry of notice given pursuant to clause 16.2 and 17 until such time as
one Shareholder has transferred its Shares to the other Shareholder
pursuant to this clause or Schedule 3 or to a third party pursuant to
clause 11 (Transfer of shares).
17.2 A Termination Event in relation to a Shareholder will occur if:
(A) such Shareholder is in material breach of any terms of this
Agreement and fails to remedy such breach within 15 Business Days
from the service of a written notice from the other Shareholder
requiring such breach to be remedied;
(B) such Shareholder enters into a composition with its creditors, is
unable to pay its debts within the meaning of section 123(1)
Insolvency Act 1986, issues a notice convening a meeting for its
winding-up, is the subject of any winding-up petition which is not
dismissed within 14 days, has a provisional liquidator or
administrator appointed or an administrative receiver is appointed
over the whole or any part of its undertaking, property or the
assets;
(C) more than 50 per cent. of the issued share capital of such
Shareholder or any direct or indirect parent undertaking of such
Shareholder shall become beneficially owned by a third party which
is not a party to this Agreement as at the date of execution; or
30
17.3 (A) If a Termination Event occurs in relation to a Shareholder (the
"Defaulting Shareholder"), the other Shareholder shall be entitled,
by serving written notice (the "Termination Notice") on the
Defaulting Shareholder within 10 Business Days of the Termination
Event, to purchase (or procure the purchase of) all (but not some
only) of the Shares of the Defaulting Shareholder.
(B) These Shares may be acquired at the price agreed by the Shareholders
or, in the absence of agreement, at a price equal to the value
attributed to the Shares, as at the date of service of the
Termination Notice, by the Independent Valuers pursuant to Schedule
5 in a case where the Termination Event is that set out in clause
17.2((C)) or at a price equal to 80 per cent. of such value in a
case where the Termination Event is that set out in clause 17.2((A))
or ((B)).
17.4 If notice to terminate this Agreement is given by a Shareholder (the
"First Shareholder") pursuant to clause 16.1, the other Shareholder (the
"Other Shareholder") shall be entitled, by serving written notice on the
First Shareholder no later than one month prior to the expiry of the
Notice Period, to purchase (or procure the purchase of) all (but not some
only) of the Shares of the First Shareholder. These Shares may be acquired
at the price agreed by the Shareholders or, in the absence of agreement,
at a price equal to the value attributed to the Shares at the date of
expiry of the Notice Period by the Independent Valuers pursuant to
Schedule 5 (the "Termination Price"). If the Shares of the First
Shareholder are not so acquired by the Other Shareholder, the First
Shareholder shall be entitled to sell the Shares to any third party
without the consent of the Other Shareholder at the Termination Price at
any time within three months after the date upon which the Independent
Valuers notify to the Shareholders such price. The provisions of clauses
11.3((E)) and 11.6 shall apply to any such transfer to a third party (as
if references to the "Non-Transferring Shareholder" were references to the
"Other Shareholder").
17.5 If:
(a) within 20 Business Days of service of notice by one Shareholder to
the other pursuant to clause 17.3(A); or
(b) at the expiry of the Notice Period (for the purposes of clause
17.4),
as the case may be, the Shareholders have not agreed the price at which
the Shares held by the Defaulting Shareholder (in the case of clause 17.3)
or the First Shareholder (in the
31
case of clause 17.4) are to be acquired by the other Shareholder, such
other Shareholder may refer the matter to the Independent Valuers for
determination in accordance with Schedule 9. Where an Approval is
required, the transfer of Shares pursuant to clause 17.3(A) or 17.4 shall
take place within such period, as is reasonably required to obtain such an
Approval (not exceeding 30 Business Days), from the date the price is
agreed between the parties or, if later, is determined by the Independent
Valuers in accordance with Schedule 9. For the avoidance of doubt, any
such Approval shall not be a condition to any obligation to transfer
Shares under this clause and failure to obtain such an Approval shall
therefore constitute a breach of this Agreement.
17.6 The Independent Valuers shall act as experts and not as arbitrators and
their determination of any matter for the purposes of this Agreement
shall, in the absence of manifest error, be final and binding on the
Shareholders.
17.7 The Independent Valuers shall be instructed to prepare their valuation and
to determine the price payable for the relevant Shares pursuant to the
provisions of this Agreement as soon as practicable following their
appointment and, in any event, within 25 Business Days thereof. For these
purposes Abbey National and Willis shall, shall procure that any of their
respective subsidiary companies which is a Shareholder shall, and shall
use their respective reasonable endeavours to procure that the Company and
each other member of the IFA Group shall, make available to the
Independent Valuers all information that they may reasonably request
(including, without limitation, the Auditors' working papers in respect of
the financial statements of the IFA Group) and, upon being given
reasonable notice, procure access to all relevant personnel.
17.8 The costs of the Independent Valuers shall be borne by the Shareholders in
equal proportion unless the Independent Valuers determine otherwise.
17.9 If either (i) the Shares of the First Shareholder are not transferred to
the Other Shareholder or to a third party (as the case may be) within 85
Business Days after the date upon which the Independent Valuers notify the
Shareholders of the Termination Price pursuant to clause 17.4 or (ii) the
Shares of the Defaulting Shareholder are not purchased pursuant to clause
17.3 within 85 Business Days of the occurrence of the Termination Event
(or, if later, within one month after the date upon which the Independent
Valuers notify the Shareholders of the price determined pursuant to this
Agreement), either Shareholder in the case of (i) or the other Shareholder
in the case of (ii) may, by notice in writing to the Company, require the
convening of a general meeting of the Company for the purpose of
considering a resolution to wind up the Company and, at such meeting, only
the Shareholder making the request shall be entitled to vote
(notwithstanding any other provision of this Agreement).
32
17.10 In the event of termination of this Agreement pursuant to this clause, all
the rights and obligations of the parties shall forthwith cease, save that
the obligation on the parties under clause 19 (Confidentiality) shall
remain in full force and effect notwithstanding termination. Termination
of this Agreement shall not effect any rights or liabilities arising under
this Agreement prior to such termination nor the parties' respective
rights and obligations under this clause.
18. Breach
In the event of breach of any term of this Agreement the parties may
voluntarily submit themselves to the non-binding judgment of an arbitrator
under any recognised Alternative Disputes Resolution Procedure.
19. Confidentiality
19.1 The parties hereto acknowledge that each may provide to each other
information relating to their respective businesses prior to or after
signature of this Agreement. Any such information is supplied and/or
revealed solely for the purposes of the Business and/or this Agreement and
shall not be used by a receiving party otherwise than in connection with
the Business and/or this Agreement. Each party shall keep secret all
knowledge or information of a confidential nature including (but without
limitation) commercial and financial data, know-how, processes and other
trade secrets in each case relating to the Business and the businesses of
Abbey National and Willis and their respective subsidiaries ("Confidential
Information") provided that this clause shall not extend to Confidential
Information which:
(A) has entered the public domain other than by breach of this Agreement
by the party in question; or
(B) the party can show was lawfully obtained by it or its employees or
agents from a third party otherwise than as a result of a breach or
an obligation of confidentiality to a party hereto and in such event
the party in receipt of such information shall notify the other
party within 10 Business Days of receipt thereof; or
(C) is required to be disclosed by the law of any relevant jurisdiction
or any securities exchange or regulatory or governmental body to
which any party is subject or submits, wherever situated, whether or
not the requirement for information has the force of law; or
(D) is disclosed to members of the relevant Shareholder's Group and such
disclosure is considered necessary for the promotion of the Business
and such recipient
33
agrees to keep such information confidential.
19.2 A Shareholder on ceasing to be a Shareholder will hand over to the Company
all correspondence, budgets, Business Plans, reports, schedules, documents
and records belonging to or relating to the Business. However, a
Shareholder may retain such copies of such documentation as it is required
to retain in order to comply with applicable law and regulation.
20. Costs and expenses
Save as otherwise expressly agreed between the parties hereto, each party
shall bear its own costs and expenses of, and incidental to, the carrying
into effect this Agreement and any other agreement referred to in it.
21. Variation
The terms and conditions of this Agreement shall only be capable of being
varied by a supplemental agreement in writing or memorandum endorsed
hereon executed by all parties hereto.
22. Waiver
No waiver (whether express or implied) by one of the parties hereto of any
of the provisions of this Agreement or any breach of or default by the
other parties hereto in performing any of those provisions shall
constitute a continuing waiver or any other waiver of this Agreement and
no such waiver shall prevent the waiving party from enforcing any of the
other provisions of this Agreement or from acting upon any subsequent
breach of or default by the other parties hereto under any of the
provisions of this Agreement.
23. Restrictive Trade Practices Act 1976
If this Agreement (which for the purposes of this clause includes any
other agreement or arrangement of which it forms part or which is referred
to herein) contains any provision which causes or would cause it to be
subject to registration under the Restrictive Trade Practices Act 1976 and
if it is not a non-notifiable agreement under that Act, that provision
will not take effect until the day after particulars of this Agreement
have been furnished to the Director General of Fair Trading in accordance
with section 24 of that Act.
24. Partnership
Nothing in this Agreement shall be deemed at law to constitute a
partnership between the
34
parties and neither of them shall have any authority to bind to buying the
other in any other way.
25. Assignment
This Agreement and all rights and obligations hereunder are personal as to
the parties hereto and none of the parties shall assign or attempt to
assign any such rights or obligations except in connection with a transfer
of Shares in accordance with and subject to the provisions of this
Agreement.
26. Entire agreement
26.1 This Agreement and all documents referred to herein (the "Transaction
Documents") constitute the whole and only agreement between the parties
relating to the rights and obligations of the parties between themselves
with respect to the Company, the Business and the Shares and supersedes
and extinguishes any previous drafts, agreements, undertakings,
representations, warranties, promises, assurances and arrangements of any
nature whatsoever, whether or not in writing, relating thereto.
26.2 Each party acknowledges that in entering into this Agreement it is not
relying upon any agreement, undertaking, representation, warranty,
promise, assurance or arrangement made or given by any other party or any
other person, whether or not in writing, at any time prior to the
execution of this Agreement (or the other documents referred to herein)
which is not expressly set out herein.
26.3 None of the parties to this Agreement shall have any right of action
against the other arising out of or in connection with any agreement,
undertaking, representation, warranty, promise, assurance or arrangement
referred to in clauses 26.1 or 26.2 except in the case of fraud.
27. Announcements
27.1 Subject to clause 27.2, no announcement concerning any matter contemplated
by this Agreement or any ancillary matter shall be made by any party
without the prior written approval of the other, such approval not to be
unreasonably withheld or delayed.
27.2 A party may make an announcement concerning any transaction contemplated
by this Agreement or any ancillary matter if required by:
(A) law; or
(B) any securities exchange or regulatory or governmental body to which
that party is
35
subject, wherever situated.
provided that any such announcement shall be made only after consultation
with the other parties hereto.
28. Notices
Any notice required or permitted to be given by or under this Agreement
maybe given by facsimile or by delivering the same to the registered
office for the time being or such other address as the party concerned may
have notified to the other, the notice being marked for the attention of
the Company Secretary. Any such notice shall be deemed to be served in a
case of service by facsimile, 24 hours after it shall have been properly
despatched and in the case of personal service at the time of delivery to
the party concerned.
29. Governing law
This Agreement shall be governed by an construed in accordance with the
laws of the England.
AS WITNESS hand to the parties or their duly authorised representatives
the day and year first before written.
36
Schedule 1
Reserved Matters
Part 1
Reserved matters requiring unanimous approval of the Board
No action shall be taken or resolution passed by the board of directors of
any member of the IFA Group, except with the unanimous approval of the Board, in
respect of the following matters:
(A) the appointment, removal and conditions of employment of the Chief
Executive Officer, the chief financial officer and the compliance officer
of the IFA Group;
(B) the constitution of any committee of the Board;
(C) a change in the accounting reference date to a date other than the date
used by the ultimate parent undertaking of the Shareholder for the time
being holding a majority of the Shares for the purposes of its
consolidated financial statements;
(D) the acquisition of any assets or property (other than in the ordinary
course of business) at a total cost to the IFA Group (per transaction) of
more than (pound)500,000;
(E) without prejudice to clause 7.11, the approval or variation of any budget
or Business Plan or the incurring of expenditure in any material area
significantly in excess of the amount budgeted for that area in the
relevant budget;
(F) the borrowing by the IFA Group of amounts which when aggregated with all
other borrowings (or indebtedness in the nature of borrowing) of the IFA
Group would exceed (pound)500,000 or the creation of any charge or other
security over any assets or property of the IFA Group except for the
purposes of securing borrowings from bankers in the ordinary course of
business of amounts not exceeding in aggregate (pound)500,000;
(G) the disposal of or dilution of its interests, directly or indirectly, in
any of its subsidiaries;
(H) the acquisition of any share capital or other securities of any body
corporate;
(I) the creation, allotment, or issue of any shares or of any other security
or grant of any option or rights to subscribe in respect thereof or
convert any instrument into such shares;
37
(J) the payment or declaration of any dividend or other distribution on
account of shares;
(K) the cessation of any material business operation;
(L) the making of any material change in the nature or geographical area of
Business;
(M) the entering into, variation or amendment of any contract with a
Shareholder or a member of its Group or of any contract of a material
nature outside the normal course of the Business;
(N) the reduction of its capital, variation of the rights attaching to any
class of shares in its capital or any redemption, purchase or other
acquisition of any of its shares or other securities;
(O) the adoption of any bonus or profit-sharing scheme or any share option or
share incentive scheme or employee share trust or share ownership plan;
(P) the making of any change to the Memorandum of Association or Articles of
Association;
(Q) the presentation of any petition for winding-up;
(R) the approval of the provisions (general or specific) against liabilities
(actual, contingent or otherwise) to be included in, the application of
the Company's provisioning policies to and any decisions whether to make
provisions in, the consolidated financial statements of the Company;
(S) without prejudice to item (U), any amendment to accounting policies save
where the policies following such amendment are (i) consistent with the
accounting policies of the Shareholder holding for the time being the
majority of the Shares and (ii) appropriate for the business carried on by
the IFA Group;
(T) the approval of the consolidated financial statements of the Company other
than those aspects of such statements required to be included by the
Companies Act 1985, the Financial Reporting Standards of the Accounting
Standards Board or any other applicable statutory or stock exchange
requirements;
(U) the approval of any other matters to be included within the consolidated
financial statements of the Company that the Shareholders agree should
require unanimous approval;
(V) the entering into of material discussions, arrangements or agreements with
any regulatory authority;
38
(W) the making of a claim in respect of an accounting period of an IFA Group
member commencing on or after the date of this Agreement for Group Relief
surrendered by any Shareholder or member of a Shareholder's Group for
Group Relief purposes; and
(X) the surrender of Group Relief arising in an accounting period of an IFA
Group member commencing on or after the date of this Agreement to any
Shareholder or member of a Shareholder's Group for Group Relief purposes.
Part 2
Reserved matters requiring unanimous approval of the Shareholders
The Shareholders shall procure so far as they are able, that no action shall be
taken or resolution passed by any member of the IFA Group except with the
consent of the holders of each class of shares in the Company in respect of the
following matters:
(Y) the removal or appointment of the auditors except where the new firm to be
appointed auditors are a major firm of international standing;
(Z) the consolidation or amalgamation of the Company with any other company;
(AA) the creation, allotment, or issue of any shares or of any other security
or the grant of any option or right to subscribe in respect thereof or to
convert any instrument into such shares;
(BB) the reduction of the Company's capital, variation of the rights attaching
to any class of shares in its capital or any redemption, purchase or other
acquisition of any of its shares or other securities;
(CC) the making of any change to the Memorandum of Association or Articles of
Association; and
(DD) the passing of any resolution for winding-up.
Part 3
General
In determining whether any of the matters described above require the approval
in accordance with Part 1 or Part 2 of this Schedule, a series of transactions
which when aggregated exceed the figure specified in the relevant paragraph
shall be construed as a single transaction requiring such approval. The approval
of any budget or Business Plan does not imply the approval of any matter
referred to therein which would require unanimous approval under this Schedule.
39
Schedule 2
Disputes Resolution Procedure
1. If any matter under this Agreement (other than a matter alleged by either
Abbey National or Willis to give rise to a Termination Event pursuant to
clause 17) shall give rise to a dispute between Abbey National or Willis
then, in the absence of any agreement between the parties to the contrary,
such dispute shall be resolved in accordance with paragraph 2.
2. If any dispute or difference arises as described in paragraph 1 (a
"dispute") the parties shall first enter into negotiations in good faith.
Either party may commence this negotiation process by giving to the other
written notice of the existence of a dispute with a request to meet within
ten Business Days in London, England at a mutually agreed time and place
to resolve the matters in dispute through negotiation between senior
executives of the parties, to include at least one Director of each of
Abbey National and Willis. If such negotiations fail to reach agreement
within 10 Business Days the dispute may be referred to the Joint Committee
which shall be required to meet promptly, and in any event within 15 days
of such referral, to resolve the dispute within 4 weeks. In the absence of
resolution following such negotiation or referral, and subject to the
parties not agreeing to submit to arbitration or conciliation of the
dispute or to any other form of dispute resolution and subject to any
other agreement to the contrary agreed at the time in question by the
parties to the dispute any party shall be entitled to invoke the
provisions set out in Schedule 3.
40
Schedule 3
Roulette Procedure
1. In the event of the Shareholders failing to reach agreement in respect of
a dispute referred under the provisions set out in Schedule 2 either
Shareholder (in either case, the "Offeror") may serve on the other
Shareholder (the "Recipient") a written notice signed by or on behalf of
the Offeror (a "Roulette Notice") offering to sell the entire legal and
beneficial interest in all (but not some only) of its Shares to the
Recipient, free from all claims, liens, charges, encumbrances and equities
and together with all rights attached or accruing to those shares, at the
price per Share specified in the Roulette Notice.
2. The offer in the Roulette Notice shall be deemed to be open for 10
Business Days from the date of service of the Roulette Notice and shall be
irrevocable without the consent of the Recipient.
3. The Recipient may, within 10 Business Days (or, where an Approval is
required, such longer period not exceeding 30 Business Days as is
reasonably required in order to obtain that Approval) after service of the
Roulette Notice, serve a written notice (the "Response") on the Offeror
signed by or on behalf of the Recipient:
(A) accepting the offer, in which case the Offeror shall be bound to
sell its Shares and the Recipient to purchase them in accordance
with the Roulette Notice; or
(B) notifying the Offeror that the Recipient will sell its Shares to the
Offeror, in which case the Recipient shall be deemed to have offered
to sell to the Offeror the entire legal and beneficial interest in
all (but not some only) of the Recipient's Shares, free from all
claims, liens, charges, encumbrances and equities and together with
all rights attached or accruing to those Shares, but otherwise
subject to no other condition whatsoever, at the price per Share
specified in the Roulette Notice, and the Offeror shall be deemed to
have accepted that offer, so that the Recipient shall be bound to
sell its Shares and the Offeror to purchase them on those terms,
provided that if a valid written notice under this paragraph is not
received by the Offeror within the specified time limit, the Recipient
will be deemed to have served a notice under sub-paragraph ((A)).
4. Copies of both the Roulette Notice and the Response shall be delivered to
the Company as soon as practicable after service.
5. The Shareholders shall be obliged to complete the sale and purchase of
Shares within 10 Business Days after the expiry of the time limit under
paragraph 3, at such reasonable time and place as shall be specified by
written notice from the Shareholder who is bound to sell
41
its Shares pursuant to these provisions (the "Seller") to the Shareholder
who is bound to purchase Shares pursuant to these provisions (the
"Purchaser") served on the Purchaser not less than 2 Business Days before
completion, provided that neither Shareholder shall be obliged to complete
unless the sale and purchase of all Shares to be sold in accordance with
these provisions is completed simultaneously (although completion of the
sale and purchase of some Shares will not affect the rights of any party
with respect to the other Shares).
6. Upon completion of the sale from the Seller to the Purchaser in accordance
with paragraph 5:
(A) the Seller shall deliver to the Purchaser a duly executed transfer
in favour of the Purchaser, or such other person as it may nominate
by written notice served on the Seller not less than one clear
Business Day before completion, together with the relevant share
certificates and, if requested by the Purchaser, a power of attorney
in a form and in favour of a person nominated by the Purchaser not
less than one clear Business Day before completion, so as to enable
the Purchaser to exercise all rights of ownership in relation to the
Shares including, without limitation, the voting rights;
(B) against delivery in accordance with sub-paragraph ((A)), the
Purchaser shall pay the aggregate transfer price to the Seller by
bankers' draft for value on the date of completion or in such other
manner as shall be agreed by the Seller and the Purchaser before
completion;
(C) the parties shall procure (so far as they are able) that the
transfer of Shares is registered;
(D) the Seller shall do all such acts and/or execute all such documents
in a form satisfactory to the Purchaser as the Purchaser may
reasonably require to give effect to the transfer of Shares pursuant
to these provisions; and
(E) unless otherwise notified by the Purchaser by notice received not
less than one clear Business Day before completion, the Seller shall
procure the removal, with effect from completion, of all Directors
appointed by the Seller.
7. If any sum payable under these provisions is not paid (otherwise than as a
result of default by any party entitled to payment), the unpaid sum will
carry interest calculated on a daily basis which may, without limiting the
rights of any party entitled to payment, be claimed as a debt or
liquidated demand, for the period from and including the due date up to
the date of actual payment (after as well as before judgment) at a rate of
1 per cent. over the base rate from time to time of Lloyds Bank PLC.
42
8. If the Seller fails or refuses to transfer its Shares as required under
these provisions:
(A) the Company shall by written notice authorise some person to execute
and deliver on the Seller's behalf the necessary instrument of
transfer and to do any other acts and/or execute any other documents
on the Seller's behalf required in connection with the Transfer of
Shares under this Schedule;
(B) the Company may receive the aggregate transfer price in trust for
the Seller and receipt of the Company for the aggregate transfer
price shall be a good discharge for the Purchaser, who shall not be
bound to see to its application;
(C) the Company shall, subject to the instrument of transfer being duly
stamped, cause the transferee to be registered as holder of the
relevant shares; and
(D) once the transferee has been registered in exercise of this power,
the validity of the proceedings shall not be questioned by any
person.
43
Schedule 4
Insurance
The insurances detailed below have been effected by Willis Corroon Group plc on
behalf of W-IFA for the Policy Period 1 July 1997 to 30 June 1998
------------------------------------------------------------------------
[Enlarge/Download Table]
Programme Type of Cover Limit of Indemnity Policy Excess
Global 'All Risks' Property Full Reinstatement Basis UK/ROW - (pound)10,000 each and every
Damage/Business claim; USA - US$10,000 each and
Interruption every claim
Global Public Liability (pound)100M. Nil
Global Crime Bond (Fidelity (pound)50M. (pound)100,000 each and every claim.
Guarantee)
Global Professional Indemnity In excess of Lloyd's UK/ROW - (pound)150,000 each and every
(Errors & Omissions) Regulatory Authority claim; USA - US$250,000 each and
Requirements relevant to every claim. A `buydown'
Lloyd's Professional facility may be effected to
Brokers of (pound)30M. reduce the excess to a minimum of
(pound)50,000 each and every claim.
Global Directors' & Officers' In excess of (pound)25M. See Note 1 below.
Liability Insurance
UK Domestic Terrorism Full Reinstatement Basis (pound)10,000 each and every claim.
UK Domestic Employers' Liability (pound)100M. Nil.
UK Domestic Offshore Employers' (pound)2M. Nil.
Liability
44
[Enlarge/Download Table]
UK Domestic Personal Accident As per the policy Nil.
wording for personal
accident, medical
travel, cancellation
expenses, and
repatriation costs.
UK Domestic Personal Effects & (pound)5,000 any one person. (pound)150 each and every claim.
Baggage (pound)25,000 any one loss in
all.
UK Domestic Engineering Combined Damage to plant caused (pound)50 each and every claim.
by Explosion or Collapse;
(pound)250,000;
Sudden and unforeseen (pound)25 each and every claim.
loss of or damage to
Plant, other than above;
(pound)5,000;
Reasonable additional (pound)100 each and every claim.
expenses as per the
policy wording:(pound)500,000
UK Domestic Motor Unlimited Nil.
UK Domestic Marine Excess Third (pound)10M. Nil.
Party and Excess
Charterers Liability
UK Domestic Airside Liability (pound)50M any one occurrence. (pound)1,000 each and every loss in
respect of property damage only.
Note:
1. Nil each of the Directors & Officers each claim and in the aggregate for
claims first made during the Policy Period for a Wrongful Act; but
(pound)100,000 each Claim which the Company can pay as indemnification to
any of the Directors & Officers resulting from any Claim first made during
the Policy Period for a Wrongful Act. In respect of the USA US$1,000,000
Corporate Reimbursement each Claim.
45
Schedule 5
Basis of Valuation of Shares
1. The Company shall be valued in accordance with the principles set out in
this Schedule and a number of Shares shall have a value equal to the value
of the Company as so determined multiplied by the fraction A/B where A is
the number of Shares in question and B is the total number of Shares in
issue.
2. Subject to paragraph 7, the value of the Company shall be equal to the
weighted average of the consolidated profits after tax of the Company
("PAT") for the Calculation Period (as defined below), as adjusted
pursuant to paragraph 7, as shown by the audited consolidated financial
statements of the Company for the Accounting Periods included in the
Calculation Period, multiplied by such multiple as the Independent Valuers
shall consider appropriate in the circumstances (having regard inter alia
to the factors referred to in paragraph 8) and discounted as follows:
(a) where the valuation takes place as at a date on or prior to 31
December 1998 - 25 per cent.;
(b) where the valuation takes place as at a date after 31 December 1998
and on or before 31 December 1999 - 20 per cent.;
(c) where the valuation takes place as at a date after 31 December 1999
and on or before 31 December 2000 - 15 per cent.;
(d) where the valuation takes place as at a date after 31 December 2000
and on or before 31 December 2001 - 10 per cent.;
(e) where the valuation takes place as at a date after 31 December 2001
and on or before 31 December 2002 - 5 per cent.;
(f) where the valuation takes place as at a date after 31 December 2002
- no discount.
3. For the purposes of this Schedule, the Calculation Period shall mean:
(a) where there have been three completed Accounting Periods of the
Company after the date of this Agreement, the three completed
Accounting Periods preceding the date of the valuation ("AP-1",
"AP-2" and "AP-3" respectively, where AP-1 is the Accounting Period
immediately preceding the then current Accounting Period);
(b) where there have been only two completed Accounting Periods of the
Company
46
after the date of this Agreement, the two completed Accounting
Periods ("AP-4" and "AP-5" respectively, where AP-4 is the
Accounting Period immediately preceding the then current Accounting
Period);
(c) where there has been only one completed Accounting Period of the
Company after the date of this Agreement, that Accounting Period
("AP-6"); and
(d) where no Accounting Period has completed after the date of this
Agreement, such period as shall have passed after the date of this
Agreement, which period shall be deemed to be an Accounting Period
for the purposes of sub-paragraph (c) and paragraph 4.
4. Where any Accounting Period referred to in this Schedule is less than 12
months, PAT for that period shall, for the purposes of paragraph 2, be
multiplied by the fraction C/D where C is 365 and D is the number of days
included in that Accounting Period.
5. The weighted average PAT for the Calculation Period ("WAPAT") shall be
calculated as follows:
(a) PAT for AP-1 shall be multiplied by 3;
(b) PAT for AP-2 or for AP-4, as the case may be, shall be multiplied by
2;
(c) PAT for AP-3 or for AP-5 or for AP-6, as the case may be, shall be
multiplied by 1;
(d) where the Calculation Period is as set out in paragraph 3(a), WAPAT
shall be equal to the sum of the products of the relevant
calculations in sub-paragraphs (a), (b) and (c) divided by 6
i.e. WAPAT = 3 (PAT for AP-1) + 2 (PAT for AP-2) +1 (PAT for AP-3)
---------------------------------------------------
6
(e) where the Calculation Period is as set out in paragraph 3(b), WAPAT
shall be equal to the sum of the products of the relevant
calculations in sub-paragraphs (b) and (c) divided by 3
i.e. WAPAT = 2 (PAT for AP-4) + 1 (PAT for AP-5)
--------------------------------
3
(f) where the Calculation Period is as set out in paragraph 3(c), WAPAT
shall equal PAT for AP-6.
47
6. For the purposes of paragraph 2, the Independent Valuers shall be entitled
to make adjustments to PAT in order to take account, to the extent they
consider appropriate, of any objections raised by Abbey National pursuant
to clause 8.7 concerning the effect of the application of accounting
policies used for the purposes of preparing the relevant audited
consolidated financial statements of the Company or any items reflected
therein.
7. In determining the appropriate multiple to be used for the purposes of
paragraph 2, the Independent Valuers shall have regard to:
(a) the price/earnings multiples implied by the trading prices of any
listed companies whose businesses are similar to the Business
("comparable companies");
(b) the price/earnings multiples implied by any recent transactions
involving comparable companies; and
(c) the fact that Abbey National and Willis have agreed that a
price/earnings multiple of 10 is, at the date of this Agreement, the
appropriate multiple and the Independent Valuers shall give a
written application to the Shareholders of the reasons behind any
deviation from that multiple.
8. For the purposes of this Schedule, the Independent Valuers may have regard
to any other factors that they consider relevant in determining the value
of the Shares including, without limitation, any other events or
circumstances affecting the Company or the Business which are the result
of or are reasonably likely to result from termination of this Agreement
but excluding:
(a) any effect on commission income that will or may result from
business no longer being referred to the IFA Group by the
Shareholder whose Shares are being valued or by any member of that
Shareholder's Group; and
(b) any diminution in the value of the Company attributable to the
termination of any licence to use any name, brand or mark then used
by any member of the IFA Group granted by the Shareholder whose
Shares are being valued or the costs of rebranding the Business and
its products and services as a result thereof.
48
Signatures
----------
Signed by )
Charles Toner ) Charles Toner
for and on behalf of )
Abbey National plc )
Signed by )
George Nixon ) George Nixon
for and on behalf of )
Willis Corroon Group plc )
Signed by )
Allan Daffern )
for and on behalf of )
Willis National Holdings Limited ) Allan Daffern
Dated December 1998
ABBEY NATIONAL plc
and
WILLIS CORROON GROUP LIMITED
(previously WILLIS CORROON GROUP PLC)
and
WILLIS NATIONAL HOLDINGS LIMITED
----------------------------------------------
SUPPLEMENTAL AGREEMENT TO
SHAREHOLDERS' AGREEMENT
relating to
WILLIS NATIONAL HOLDINGS LIMITED
----------------------------------------------
Slaughter and May
35 Basinghall Street,
London EC2V 5DB
SUPPLEMENTAL SHAREHOLDERS' AGREEMENT
THIS AGREEMENT is dated 11th December, 1998
BETWEEN:
(1) ABBEY NATIONAL plc (Registered in England No. 2294747) whose registered
office is at Abbey House, Baker Street, London NW1 6XL ("Abbey National");
(2) WILLIS CORROON GROUP LIMITED (previously named Willis Corroon Group PLC)
(Registered in England No. 621757) whose registered office is at Ten
Trinity Square, London EC3P 3AX ("Willis"); and
(3) WILLIS NATIONAL HOLDINGS LIMITED (Registered in England No. 3393377) whose
registered office is at Ten Trinity Square, London EC3P 3AX (the
"Company").
WHEREAS:
(A) The parties have entered into a Shareholders' Agreement (the
"Shareholders' Agreement") on the 4th August, 1997 for the purpose of
regulating their relationship with each other.
(B) On 2nd September, 1998, a Termination Event as described in clause 17.2(C)
of the Shareholders' Agreement occurred in respect of Willis.
(C) Willis has prior to the date of this Agreement agreed to an extension to
14th December 1998 of the notice period referred to in clause 17.3 of the
Shareholders' Agreement for the exercise by Abbey National of its rights
thereunder.
(D) The parties have now decided to enter into this Agreement in order to
extend and amend the notice period allowed under clause 17.3 of the
Shareholders' Agreement for Abbey National to exercise its rights
thereunder and to grant to Abbey National an option on the terms and
subject to the conditions of this Agreement.
NOW THEREFORE in consideration of Abbey National not serving notice on Willis
under clause 17.3 of the Shareholders' Agreement by reason of the Termination
Event referred to in the recitals, the parties agree as follows:
1. Terms and expressions in the Shareholders Agreement shall, unless the
context otherwise requires, have the same meanings when used in this
Agreement.
2. The parties agree that Abbey National shall have an option (the "Call
Option") to acquire all (but not some only) of the Shares held directly or
indirectly by any member of the Willis Group exerciseable by notice in
writing to Willis at any time during the period from and including 2nd
June, 1999 to and including 2nd September, 1999.
3. Clauses 17.3 and 17.5 to 17.10 of the Shareholders' Agreement shall apply
to the Call Option as if Willis were the Defaulting Shareholder referred
to therein, the date of service of notice of exercise of the Call Option
were the date of the Termination Event referred to therein and in other
respects mutatis mutandis provided that the value attributed to the shares
by the Independent Valuers shall be subject to a 25 per cent. discount
notwithstanding the provisions of Schedule 5 (Valuation) of the
Shareholders' Agreement.
4. For the avoidance of doubt, clause 17.2(C) shall continue to apply to any
change in the ownership of the issued share capital of Willis or any
direct or indirect parent undertaking of Willis subsequent to the
Termination Event referred to in the recitals.
5. Save as set out in this Agreement, the terms and conditions of the
Shareholders' Agreement remain and shall continue in full force and effect
and shall apply to the provisions of this Agreement.
6. This Agreement shall be governed by and shall be construed in accordance
with English law.
Signatures
Signed by )
)
for and on behalf of )
Abbey National plc )
Signed by )
)
for and on behalf of )
Willis Corroon Group Limited )
3
Signed by )
)
for and on behalf of )
Willis National Holdings Limited )
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