-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BPuGgfDWniuUJ5+8R47RAGJ+G9sX3Za2BAYQZNkiBhQsnqlBOjtpwOTMXp203NTZ zOSDCG/EmIhmiBrVicIVjw== 0001047469-99-009929.txt : 19990317 0001047469-99-009929.hdr.sgml : 19990317 ACCESSION NUMBER: 0001047469-99-009929 CONFORMED SUBMISSION TYPE: F-4 PUBLIC DOCUMENT COUNT: 39 FILED AS OF DATE: 19990316 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WILLIS CORROON CORP CENTRAL INDEX KEY: 0001081003 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 135654526 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: F-4 SEC ACT: SEC FILE NUMBER: 333-74483 FILM NUMBER: 99566257 BUSINESS ADDRESS: STREET 1: 26 CENTURY BOULEVARD STREET 2: P O BOX 305026 CITY: NASHVILLE STATE: TN ZIP: 37214 BUSINESS PHONE: 6158723000 MAIL ADDRESS: STREET 1: 26 CENTURY BOULEVARD STREET 2: P O BOX 305026 CITY: NASHVILLE STATE: TN ZIP: 37214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WILLIS CORROON PARTNERS CENTRAL INDEX KEY: 0001081006 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 621761909 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: F-4 SEC ACT: SEC FILE NUMBER: 333-74483-01 FILM NUMBER: 99566258 BUSINESS ADDRESS: STREET 1: C/O WILLIS CORROON GROUP LIMITED STREET 2: TEN TRINITY SQUARE CITY: LONDON ENGLAND BUSINESS PHONE: 6158723000 MAIL ADDRESS: STREET 1: C/O WILLIS CORROON GROUP LIMITED STREET 2: TEN TRINITY SQUARE CITY: LONDON ENGLAND STATE: X0 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WILLIS CORROON GROUP LTD CENTRAL INDEX KEY: 0001081009 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 621761909 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: F-4 SEC ACT: SEC FILE NUMBER: 333-74483-02 FILM NUMBER: 99566259 BUSINESS ADDRESS: STREET 1: TEN TRINITY SQUARE CITY: LONDON ENGLAND MAIL ADDRESS: STREET 1: C/O WILLIS CORROON GROUP LIMITED STREET 2: TEN TRINITY SQUARE CITY: LONDON ENGLAND STATE: X0 F-4 1 F-4 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 16, 1999 REGISTRATION NO. 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------------- FORM F-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------------------- WILLIS CORROON GROUP WILLIS CORROON PARTNERS WILLIS CORROON LIMITED CORPORATION (Exact Name of Registrant (Exact Name of Registrant (Exact Name of Registrant Parent Guarantor as Guarantor as Specified in Issuer as Specified in Specified in its Charter) its Charter) its Charter) ENGLAND AND WALES DELAWARE DELAWARE (State or other (State or other (State or other jurisdiction of jurisdiction of jurisdiction of incorporation or incorporation or incorporation or organization) organization) organization) 6411 6411 6411 (Primary Standard (Primary Standard (Primary Standard Industrial Industrial Industrial Classification Code Classification Code Classification Code Number) Number) Number) NONE 62-1761909 13-5654526 (I.R.S. Employer (I.R.S. Employer (I.R.S. Employer Identification Number) Identification Number) Identification Number)
-------------------------- TEN TRINITY SQUARE LONDON EC3P 3AX ENGLAND (011) 44-171-488-8111 (Address, including zip code, and telephone number, including area code, of registrant parent guarantor's principal executive offices) ------------------------------ 26 CENTURY BOULEVARD P.O. BOX 305026 NASHVILLE, TN 37214 (615) 872-3000 (Address, including zip code, and telephone number, including area code, of registrant issuer's principal executive offices) (Name, address, including zip code, and telephone number, including area code, of agent for service) ------------------------------ WITH A COPY TO: EDWARD P. TOLLEY III, ESQ. SIMPSON THACHER & BARTLETT 425 LEXINGTON AVENUE NEW YORK, NEW YORK 10017 (212) 455-2000 -------------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective. If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. / / If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act Registration number of the earlier effective Registration Statement for the same offering. / / If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Registration Statement number of the earlier effective Registration Statement for the same offering. / / -------------------------- CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF SECURITIES TO BE REGISTERED BE REGISTERED PER NOTE OFFERING PRICE(1) REGISTRATION FEE 9% Senior Subordinated Notes due 2009 of Wills Corroon Corporation................. $550,000,000 100% $550,000,000 $152,900.00 Guarantees of 9% Senior Subordinated Notes due 2009 by Willis Corroon Group Limited and Willis Corroon Partners............... $550,000,000 100% $550,000,000 --(2)
(1) Estimated solely for the purpose of calculating the registration fee. (2) Pursuant to Rule 457(n) under the Securities Act of 1933, as amended, no separate fee for the Guarantees is payable. -------------------------- THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SUBJECT TO COMPLETION, DATED MARCH 16, 1999 THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. Prospectus $550,000,000 [LOGO] WILLIS CORROON CORPORATION OFFER TO EXCHANGE ALL OUTSTANDING 9% SENIOR SUBORDINATED NOTES DUE 2009 FOR 9% SENIOR SUBORDINATED NOTES DUE 2009, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 UNCONDITIONALLY GUARANTEED ON A SENIOR SUBORDINATED BASIS BY WILLIS CORROON GROUP LIMITED AND WILLIS CORROON PARTNERS THE EXCHANGE OFFER - - Willis Corroon Corporation will exchange all outstanding Notes that are validly tendered and not validly withdrawn for an equal principal amount of exchange Notes that are freely tradeable. - - You may withdraw tenders of outstanding Notes at any time prior to the expiration of the exchange offer. - - The exchange offer expires at 5:00 p.m., New York City time, on , 1999, unless extended. We do not currently intend to extend the expiration date. - - The exchange of outstanding Notes for exchange Notes in the exchange offer will not be a taxable event for U.S. federal income tax purposes. - - We will not receive any proceeds from the exchange offer. THE EXCHANGE NOTES - - The exchange Notes are being offered in order to satisfy certain of our obligations under the exchange and registration rights agreement entered into in connection with the placement of the outstanding Notes. - - The terms of the exchange Notes to be issued in the exchange offer are substantially identical to the outstanding Notes, except that the exchange Notes will be freely tradeable. RESALES OF EXCHANGE NOTES - - The exchange Notes may be sold in the over-the-counter market, in negotiated transactions or through a combination of such methods. We have applied for listing of the exchange Notes on the Luxembourg Stock Exchange. ---------------------------------------------- If you are a broker-dealer and you receive exchange Notes for your own account, you must acknowledge that you will deliver a prospectus in connection with any resale of such exchange Notes. By making such acknowledgment, you will not be deemed to admit that you are an "underwriter" under the Securities Act of 1933. Broker-dealers may use this prospectus in connection with any resale of exchange Notes received in exchange for outstanding Notes where such outstanding Notes were acquired by the broker-dealer as a result of market- making activities or trading activities. We will make this prospectus available to any broker-dealer for use in any such resale for a period of up to 90 days after the date of this prospectus. A broker-dealer may not participate in the exchange offer with respect to outstanding Notes acquired other than as a result of market-making activities or trading activities. If you are an affiliate of Willis Corroon or are engaged in, or intend to engage in, or have an agreement or understanding to participate in, a distribution of the exchange Notes, you cannot rely on the applicable interpretations of the Securities and Exchange Commission and you must comply with the registration requirements of the Securities Act of 1933 in connection with any resale transaction. YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 16 OF THIS PROSPECTUS BEFORE PARTICIPATING IN THE EXCHANGE OFFER. ---------------------------------------------- NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ---------------------------------------------- The date of this prospectus is , 1999. TABLE OF CONTENTS
PAGE ----- Prospectus Summary.................... 1 Risk Factors.......................... 16 Forward Looking Statements............ 30 Presentation of Currency and Financial Information; Exchange Rates......... 31 The Tender Offer and Related Financings.......................... 32 Use of Proceeds....................... 35 Capitalization........................ 36 Unaudited Condensed Pro Forma Consolidated Financial Information......................... 37 Selected Historical Consolidated Financial Data...................... 43 Management's Discussion and Analysis of Financial Condition and Results of Operations....................... 44 Supplemental Constant Currency Financial Data...................... 62 Business.............................. 67 Management............................ 86 Shareholders.......................... 91 PAGE ----- Certain Relationships and Related Transactions........................ 95 Description of the Senior Credit Facilities.......................... 96 Description of Preference Shares...... 99 The Exchange Offer.................... 100 Description of the Notes.............. 111 Registration Rights Agreement......... 169 Certain United States Federal Income Tax Consequences of the Exchange Offer............................... 173 Certain United States Federal Income Tax Consequences to Non-U.S. Holders............................. 173 Certain United Kingdom Tax Consequences........................ 175 Book-Entry; Delivery and Form......... 177 Plan of Distribution.................. 181 Legal Matters......................... 182 Experts............................... 182 Where You Can Find More Information... 182 Listing and General Information....... 183 Index to Financial Statements......... F-1
------------------------ The exchange Notes are not being offered in the United Kingdom to persons who are not persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business and neither this prospectus nor any other document issued in connection with the offering may be passed on to any person in the United Kingdom unless that person is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 (as amended) or is a person to whom the document may otherwise lawfully be issued or passed on. All applicable provisions of the Financial Services Act 1986 must be complied with in respect of anything done in relation to the exchange Notes in, from or otherwise involving the United Kingdom. i PROSPECTUS SUMMARY THIS SUMMARY HIGHLIGHTS CERTAIN INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS. IT IS NOT COMPLETE AND MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. WE ENCOURAGE YOU TO READ THIS PROSPECTUS IN ITS ENTIRETY. IN THIS PROSPECTUS, "WILLIS CORROON," "WE," "US" OR "OUR" REFERS TO WILLIS CORROON GROUP LIMITED AND ITS CONSOLIDATED SUBSIDIARIES (EXCLUDING OUR "ASSOCIATES," ENTITIES IN WHICH WILLIS CORROON MAINTAINS AN OWNERSHIP INTEREST OF AT LEAST 20% BUT NO MORE THAN 50%). UNLESS OTHERWISE SPECIFICALLY INDICATED, ALL MARKET INFORMATION OR OTHER STATEMENTS PRESENTED IN THIS PROSPECTUS REGARDING WILLIS CORROON'S POSITION RELATIVE TO ITS COMPETITION ARE BASED UPON STATISTICAL DATA OR INFORMATION, INCLUDING BROKERAGE REVENUES, PUBLISHED IN BUSINESS INSURANCE (JULY 20, 1998). FOR PURPOSES OF THE BUSINESS INSURANCE RANKINGS, BROKERAGE REVENUES ARE DEFINED AS GROSS REVENUES GENERATED BY INSURANCE BROKERAGE, CONSULTING AND RELATED SERVICES. THE COMPANY We are the third largest insurance broker in the world. We provide a broad range of value-added risk management consulting and insurance brokering services to some 50,000 clients worldwide. We trace our history to 1828 and we are a leading insurance broker in the U.K., the U.S. and, directly and through our associates, in many other countries. We are a recognized leader in providing specialized risk management advisory and other services on a global basis to clients in various industries, including the construction, aerospace, marine and energy industries. In our capacity as an advisor and insurance broker, we act as an intermediary between our clients and insurance carriers by: - advising our clients on their risk management requirements (many of which are highly complex); - helping clients determine the best means of managing their risks; and - ultimately negotiating and placing insurance policies with insurance carriers through our global distribution network. We also provide other value-added services, including employee benefits consulting, claims administration, captive insurance company management and self-insurance consulting. We do not underwrite insurance risks for our own account. We and our associates serve a diverse base of clients located in more than 125 countries. Such clients include major multinational and middle-market companies in a variety of industries, as well as public institutions. Many of our client relationships span decades. With approximately 12,000 employees around the world and a network of more than 250 offices in 69 countries, in each case including our associates, we believe we are one of only three insurance brokers in the world possessing the global operating presence, broad product expertise and extensive distribution network necessary to effectively meet the global risk management needs of many of our clients. For the twelve months ended December 31, 1998, our Reported Revenues were L718.2 million ($1,192.2 million) and our Reported EBITDA was L113.5 million ($188.4 million). For the same period, our Adjusted Operating Revenues (adjusted for acquisitions and dispositions) were L735.2 million ($1,220.4 million) and our Adjusted EBITDA (adjusted for acquisitions, dispositions, and non-recurring expenses) was L142.6 million ($236.7 million), in each case after giving pro forma effect to the following recent acquisitions: - the 50% interest in Gruppo Ital Brokers, which was acquired in July 1998 and its merger with our existing Italian operation; 1 - the 30% interest in Assurandrgruppen A/S, which was acquired in September 1998; and - the increased investment in our Spanish associate from 48% to 60% and the reorganization of the existing Spanish and Portuguese operations in July 1998 (referred to collectively as the "recent acquisitions"). See "--Summary Historical Consolidated Financial Information of Willis Corroon" and "--Summary Unaudited Pro Forma Consolidated Financial Information of Willis Corroon." INDUSTRY OVERVIEW Insurance brokers, such as Willis Corroon, provide essential services to users of insurance and reinsurance products. Such users include corporations, public institutions and insurance carriers. Brokers distribute insurance products and provide highly specialized (and often highly technical) value-added risk management consulting services. Through its knowledge of the insurance market and risk management techniques, the broker provides value to its clients and the insurance carriers with whom the broker deals by:
VALUE TO CLIENTS VALUE TO INSURANCE CARRIERS - -------------------------------------------------------- -------------------------------------------------------- - - assisting clients in their analysis of risk; - assessing a potential insurance user's risk management - - helping clients formulate appropriate strategies to needs, structuring an appropriate insurance program to manage those risks; meet those needs and placing risks to be insured with - - negotiating insurance policy terms and conditions; an insurance carrier; - - placing risks to be insured with insurance carriers - acting as a principal distribution channel for through its distribution network and taking advantage insurance products; and of its ability to place insurance at rates often lower - providing access to insurance buyers that most than the client could achieve on its own; and insurance companies are not equipped to reach on their - - providing specialized self-insurance consulting and own. other risk management consulting services apart from its traditional intermediary role.
There are three main subsectors of the brokerage industry: - retail brokering, which involves business and services transacted between brokers and commercial or individual customers; - wholesale brokering, which involves business and services transacted between two brokers (or agents) when one broker uses the services or products of another broker; and - reinsurance brokering, which involves placing reinsurance coverage for primary insurance and reinsurance carriers. Industry revenue has been relatively stable in recent years and, according to BUSINESS INSURANCE, the 192 largest commercial insurance brokers globally reported brokerage revenues totaling $16.7 billion in 1997. Recent consolidation among the largest insurance brokers, however, has 2 significantly altered the industry's competitive dynamics. Significant factors in broker consolidation include: - the increased need by clients for products and services with a global scope; and - better economies of scale available to larger firms. As a result, the insurance brokerage industry is now led by its three global participants: Marsh & McLennan Companies, Inc. (with approximately 35% of the worldwide market comprised of the 192 brokers in 1997 referred to above, 9% of which is attributable to Sedgwick Group plc, a company acquired by Marsh & McLennan in 1998), Aon Corporation (with approximately 24%) and Willis Corroon (with approximately 7%). The industry is highly fragmented beyond these three brokers with the next largest broker having less than a 3% share of the $16.7 billion market. RECENT MANAGEMENT INITIATIVES In 1996, we developed and launched a series of initiatives referred to as the "change program." The change program was designed to enhance revenues, improve efficiency and transition us from a traditional commission-based insurance broker to a more comprehensive professional advisory services firm. As part of the change program, we established certain key initiatives to: - enhance operating efficiencies; - intensify efforts to develop existing and new accounts; - increase cross-selling of both existing and new products and services to our existing clients; and - maximize leverage in placing insurance with insurance carriers. In addition, we developed initiatives focused on maximizing the talent and expertise of our brokers and consultants. Accordingly, we: - developed improved techniques for recruitment and assessment; - instituted a new incentive structure for brokers in the U.S.; - implemented a new and more frequent appraisal process, including peer review; - created new training and development programs; - invested in technology to enhance communication among employees; and - formed practice groups to share knowledge on specific industry or product areas. For a complete discussion of our recent management initiatives, see "Business--Recent Management Initiatives." COMPETITIVE STRENGTHS We believe that the following will enable us to develop our business in that we have: - a strong franchise with leading market positions; - a strong global presence; - an extensive and diverse client base; - a broad array of client-oriented services and products; - experienced and incentivized management; and - strong sponsorship. 3 For a complete discussion of our competitive strengths, see "Business--Competitive Strengths." BUSINESS STRATEGY Our strategic objectives are to continue to grow revenues and cash flow and to enhance our position as a leading global provider of risk management services. The key elements of this strategy are to: - capitalize on our strong global franchise; - emphasize value-added services; - increase operating efficiencies; and - pursue strategic growth opportunities. For a complete discussion of our business strategy, see "Business--Business Strategy." THE ISSUER Willis Corroon Corporation was incorporated in Delaware on December 20, 1928 and is an indirect, wholly-owned subsidiary of Willis Corroon Group Limited. Willis Corroon Corporation is a holding company for the operations of Willis Corroon's subsidiaries in North America. Willis Corroon Corporation's principal executive offices are located at 26 Century Boulevard, P.O. Box 305026, Nashville, TN 37214, and its telephone number is (615) 872-3000. THE GUARANTORS Willis Corroon Group Limited is a company with limited liability organized under the laws of England and Wales. Its principal executive offices are located at Ten Trinity Square, London EC3P 3AX, England, and its telephone number is (011) 44-171-488-8111. Willis Corroon Partners is a Delaware general partnership, the 99.9% general partner of which is Willis Corroon Group Limited and the 0.1% general partner of which is Willis Faber UK Group Limited, a wholly-owned subsidiary of Willis Corroon Group Limited. Willis Corroon Partners, formed on November 11, 1998, has no independent operations, and its sole activity is to hold the capital stock of Willis Corroon Corporation. Each of Willis Corroon Group and Willis Corroon Partners have jointly and severally, fully and unconditionally, guaranteed the outstanding Notes and will jointly and severally, fully and unconditionally, guarantee the exchange Notes. THE TENDER OFFER AND RELATED FINANCINGS The outstanding Notes were offered in connection with the tender offer on behalf of Trinity Acquisition plc, a public limited company organized under the laws of England and Wales, for the then-outstanding securities of Willis Corroon Group in order to refinance certain interim financings. See "The Tender Offer and Related Financings." Where pro forma financial data is presented after giving effect to the "Transactions," such reference is a collective reference to the following: - the offering of the outstanding Notes and the application of the proceeds therefrom; and - the recent acquisitions. RISK FACTORS You should carefully consider the information under the caption "Risk Factors" and all other information in this prospectus before tendering your outstanding Notes. 4 SUMMARY OF TERMS OF THE EXCHANGE OFFER On February 2, 1999, the Issuer completed the private offering of the outstanding Notes. References to "Notes" in this prospectus are references to both the outstanding Notes and the exchange Notes. The Issuer and the Guarantors entered into an exchange and registration rights agreement with the initial purchasers in the private offering in which the Issuer and the Guarantors agreed to deliver to you this prospectus and the Issuer agreed to complete the exchange offer within 270 days after the date of original issuance of the outstanding Notes. You are entitled to exchange in the exchange offer your outstanding Notes for exchange Notes which are identical in all material respects to the outstanding Notes except that: - the exchange Notes have been registered under the Securities Act; - the exchange Notes are not entitled to certain registration rights which are applicable to the outstanding Notes under the exchange and registration rights agreement; and - certain contingent interest rate provisions are no longer applicable. The Exchange Offer................ The Issuer is offering to exchange up to $550 million aggregate principal amount of exchange Notes for up to $550 million aggregate principal amount of outstanding Notes. Outstanding Notes may be exchanged only in integral multiples of $1,000. Resales........................... Based on an interpretation by the staff of the Securities and Exchange Commission (the "Commission") set forth in no-action letters issued to third parties, we believe that the exchange Notes issued pursuant to the exchange offer in exchange for outstanding Notes may be offered for resale, resold and otherwise transferred by you (unless you are an "affiliate" of Willis Corroon within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that you are acquiring the exchange Notes in the ordinary course of your business and that you have not engaged in, do not intend to engage in, and have no arrangement or understanding with any person to participate in, a distribution of the exchange notes. Each participating broker-dealer that receives exchange Notes for its own account pursuant to the exchange offer in exchange for outstanding Notes that were acquired as a result of market-making or other trading activity must acknowledge that it will deliver a prospectus in connection with any resale of the exchange Notes. See "Plan of Distribution." Any holder of outstanding Notes who - is an affiliate of Willis Corroon, - does not acquire exchange Notes in the ordinary course of its business, or - tenders in the exchange offer with the intention to participate, or for the purpose of participating, in a distribution of exchange Notes, cannot rely on the position of the staff of the Commission enunciated in Exxon Capital Holdings Corporation, Morgan
5 Stanley & Co. Incorporated or similar no-action letters and, in the absence of an exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with the resale of the exchange Notes. Expiration Date; Withdrawal of Tenders...................... The exchange offer will expire at 5:00 p.m., New York City time, on , 1999, or such later date and time to which the Issuer extends it (the "expiration date"). The Issuer does not currently intend to extend the expiration date. A tender of outstanding Notes pursuant to the exchange offer may be withdrawn at any time prior to the expiration date. The expiration date for the exchange offer will not in any event be extended to a date later than , 1999. Any outstanding Notes not accepted for exchange for any reason will be returned without expense to the tendering holder promptly after the expiration or termination of the exchange offer. Certain Conditions to the Exchange Offer.................. The exchange offer is subject to customary conditions, which the Issuer may waive. Please read the section captioned "The Exchange Offer--Certain Conditions to the Exchange Offer" of this prospectus for more information regarding the conditions to the exchange offer. Procedures for Tendering Outstanding Notes............... If you wish to accept the exchange offer, you must complete, sign and date the accompanying letter of transmittal, or a facsimile of the letter of transmittal, according to the instructions contained in this prospectus and the letter of transmittal. You must also mail or otherwise deliver the letter of transmittal, or a facsimile of the letter of transmittal, together with the outstanding Notes and any other required documents, to the exchange agent at the address set forth on the cover page of the letter of transmittal. If you hold outstanding Notes through The Depository Trust Company ("DTC") and wish to participate in the exchange offer, you must comply with the Automated Tender Offer Program procedures of DTC, by which you will agree to be bound by the letter of transmittal. By signing, or agreeing to be bound by, the letter of transmittal, you will represent to us that, among other things: - any exchange Notes that you receive will be acquired in the ordinary course of your business; - you have no arrangement or understanding with any person or entity to participate in a distribution of the exchange Notes; - if you are a broker-dealer that will receive exchange Notes for your own account in exchange for outstanding Notes that were acquired as a result of market-making activities, that you will deliver a prospectus, as required by law, in connection with any resale of such exchange Notes; - you are not an "affiliate," as defined in Rule 405 of the Securities Act, of Willis Corroon or, if you are an affiliate, you
6 will comply with any applicable registration and prospectus delivery requirements of the Securities Act; and - if you are a person in the United Kingdom, that your ordinary activities involve you in acquiring, holding, managing or disposing of investments, as principal or agent, for the purposes of your business. Special Procedures for Beneficial Owners............... If you are a beneficial owner of outstanding Notes which are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, and you wish to tender such outstanding Notes in the exchange offer, you should contact such registered holder promptly and instruct such registered holder to tender on your behalf. If you wish to tender on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your outstanding Notes, either make appropriate arrangements to register ownership of the outstanding Notes in your name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time and may not be able to be completed prior to the expiration date. Guaranteed Delivery Procedures...................... If you wish to tender your outstanding Notes and your outstanding Notes are not immediately available or you cannot deliver your outstanding Notes, the letter of transmittal or any other documents required by the letter of transmittal or comply with the applicable procedures under DTC's Automated Tender Offer Program prior to the expiration date, you must tender your outstanding Notes according to the guaranteed delivery procedures set forth in this prospectus under "The Exchange Offer--Guaranteed Delivery Procedures." Effect on Holders of Outstanding Notes........................... As a result of the making of, and upon acceptance for exchange of all validly tendered outstanding Notes pursuant to the terms of the exchange offer, we will have fulfilled a covenant contained in the registration rights agreement and, accordingly, there will be no increase in the interest rate on the outstanding Notes under the circumstances described in the registration rights agreement. If you are a holder of outstanding Notes and you do not tender your outstanding Notes in the exchange offer, you will continue to hold such outstanding Notes and you will be entitled to all the rights and limitations applicable to the outstanding Notes in the indenture, except for any rights under the registration rights agreement that by their terms terminate upon the consummation of the exchange offer. To the extent that outstanding Notes are tendered and accepted in the exchange offer, the trading market for outstanding Notes could be adversely affected. Consequences of Failure to Exchange........................ All untendered outstanding Notes will continue to be subject to the restrictions on transfer provided for in the outstanding Notes and in the indenture. In general, the outstanding Notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a
7 transaction not subject to, the Securities Act and applicable state securities laws. Other than in connection with the exchange offer, the Issuer does not currently anticipate that it will register the outstanding Notes under the Securities Act. Certain U.S. Federal Income Tax Considerations.............. The exchange of outstanding Notes for exchange Notes in the exchange offer will not be a taxable event for U.S. federal income tax purposes. See "Certain United States Federal Income Tax Consequences of the Exchange Offer." Use of Proceeds................... We will not receive any cash proceeds from the issuance of exchange Notes pursuant to the exchange offer. Exchange Agent.................... The Bank of New York is the exchange agent for the exchange offer. The address and telephone number of the exchange agent are set forth in the section captioned "Exchange Offer-- Exchange Agent" of this prospectus.
SUMMARY OF TERMS OF THE EXCHANGE NOTES Issuer............................ Willis Corroon Corporation Securities Offered................ $550,000,000 in principal amount of 9% Senior Subordinated Notes due 2009. Maturity Date..................... February 1, 2009. Interest.......................... Annual rate: 9% Payment frequency: every six months on February 1 and August 1. First payment: August 1, 1999. Optional Redemption............... On or after February 1, 2004, the Issuer may redeem some or all of the Notes at the redemption prices listed in the section entitled "Description of the Notes--Optional Redemption." At any time on or prior to February 1, 2002, the Issuer may redeem up to $192,500,000 of the Notes with the proceeds of certain public or private offerings of equity at the price listed in the section entitled "Description of the Notes--Optional Redemption." Change of Control................. Upon the occurrence of a change of control, you will have the right to require the Issuer to repurchase your Notes at a price equal to 101% of the principal amount together with accrued and unpaid interest, if any, to the date of repurchase. See "Description of the Notes--Repurchase at the Option of Holders--Change of Control." Ranking and Guarantees............ The outstanding Notes are, and the exchange Notes when issued will be, guaranteed by Willis Corroon Group Limited and Willis Corroon Partners. The Notes and the guarantees are unsecured senior subordinated debts. The Notes and the guarantees rank behind all of the Issuer's and the Guarantors' current and future indebtedness (other than trade payables), except indebtedness that expressly provides that it is not senior to the Notes or the guarantees and certain other types of indebtedness. See "Description of the Notes--Subordination."
8 Assuming the Issuer had completed the offering of the Notes on December 31, 1998 and applied the proceeds as intended, the Issuer: - would have had $460.1 million (L277.2 million) of senior secured debt to which the Notes would be subordinated; and - would have had no senior subordinated debt with which the Notes would rank equally. Certain Covenants................. The Issuer issued the outstanding Notes and will issue the exchange Notes under an indenture with The Bank of New York, the trustee. The indenture, among other things, restricts our ability and the ability of our subsidiaries to: - borrow money; - pay dividends on stock, purchase stock or issue certain types of stock; - make investments; - use assets as security in other transactions; - sell certain assets or merge with or into other companies; and - guarantee other indebtedness. For more details, see "Description of the Notes--Certain Covenants." Absence of a Public Market for the Exchange Notes.................. The exchange Notes generally will be freely transferable but will also be new securities for which there will not initially be a market. Accordingly, there can be no assurance as to the development or liquidity of any market for the exchange Notes. We have applied for listing of the exchange Notes on the Luxembourg Stock Exchange. The initial purchasers in the private offering of the outstanding Notes have advised us that they currently intend to make a market in the exchange Notes. However, they are not obligated to do so, and any market making with respect to the exchange Notes may be discontinued without notice.
9 SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF WILLIS CORROON The summary consolidated financial data presented below for the three years ended December 31, 1997 and the periods January 1 to September 1, 1998 and September 2 to December 31, 1998 and as of the end of the four years in the period ended December 31, 1998 have been derived from, and should be read in conjunction with, the audited consolidated financial statements of Willis Corroon and the notes thereto included elsewhere in this prospectus. Willis Corroon prepares its consolidated financial statements in accordance with U.K. GAAP, which differs in certain respects from U.S. GAAP. Under U.K. GAAP, the acquisition of Willis Corroon by Trinity Acquisition has no impact on the historical amounts reported subsequently by Willis Corroon and, accordingly, combined amounts for the year ended December 31, 1998 are presented. Under U.S. GAAP, the purchase of Willis Corroon by Trinity Acquisition established a new basis of accounting from September 2, 1998 for the purchased assets and liabilities. Accordingly, under U.S. GAAP, it is not appropriate to present combined amounts for the year December 31, 1998. Reconciliations of net income and shareholders' equity reflecting the significant differences between U.K. GAAP and U.S. GAAP are set forth in such financial statements.
JANUARY 1 TO SEPTEMBER 2 TO YEAR ENDED DECEMBER 31, SEPTEMBER 1, DECEMBER 31, ------------------------------- ------------- --------------- 1995 1996 1997 1998 1998 --------- --------- --------- ------------- --------------- (IN MILLIONS) STATEMENT OF INCOME DATA: Amounts in accordance with U.K. GAAP: Continuing operations Operating revenues....... L 706.4 L 725.0 L 692.0 L 468.8 L 249.2 Operating income before exceptional items(b)... 79.4 87.8 92.1 56.8 26.0 Share of profit of associates............. 6.8 3.5 1.9 7.7 (1.4) Interest expense......... (7.2) (2.2) (0.7) (2.0) (1.2) Income / (loss) before tax.................... 62.4 91.6 95.5 (1.3) 17.1 Total operations Net income / (loss)...... 29.0 54.2 56.9 (15.6) (25.7) Amounts in accordance with U.S. GAAP: Continuing operations Operating revenues....... 706.4 725.0 692.0 468.8 249.2 Operating income before exceptional items(b)... 60.6 70.9 63.1 43.4 14.1 Share of profit of associates(c).......... 6.8 3.5 1.9 7.7 (1.4) Interest expense......... (7.2) (2.2) (0.7) (2.0) (1.2) Income / (loss) before tax.................... 1.5 74.7 66.5 (5.1) 5.2 Total operations Net income / (loss)...... (18.0) 37.7 36.2 (19.0) (35.9) YEAR ENDED DECEMBER 31, ------------- 1998 1998 -- --------- STATEMENT OF INCOME DATA: Amounts in accordance with U.K. GAAP: Continuing operations Operating revenues.......L 718.0 $ 1,191.9(a) Operating income before exceptional items(b)...82.8 137.4 Share of profit of associates.............6.3 10.5 Interest expense.........(3.2) (5.3) Income / (loss) before tax....................15.8 26.2 Total operations Net income / (loss)......(41.3) (68.6) Amounts in accordance with U.S. GAAP: Continuing operations Operating revenues....... Operating income before exceptional items(b)... Share of profit of associates(c).......... Interest expense......... Income / (loss) before tax.................... Total operations Net income / (loss)......
10
JANUARY 1 TO SEPTEMBER 2 TO YEAR ENDED DECEMBER 31, SEPTEMBER 1, DECEMBER 31, ------------------------------- ------------- --------------- 1995 1996 1997 1998 1998 --------- --------- --------- ------------- --------------- (IN MILLIONS) OTHER FINANCIAL DATA: Amounts in accordance with U.K. GAAP: Adjusted operating revenues(d)............ 640.9 665.0 683.4 468.7 249.2 EBITDA(e)................ 110.6 115.8 116.7 80.0 33.5 Adjusted EBITDA(f)....... 106.2 127.0 130.5 92.0 47.0 Adjusted EBITDA margin(g).............. 15.5% 18.6% 18.8% 18.0% 19.4% Depreciation and amortization........... L 24.4 L 24.5 L 22.7 L 15.5 L 8.9 Capital expenditures..... 21.6 28.9 26.5 20.1 9.8 Ratio of earnings to fixed charges(h)....... 4.3x 7.6x 10.5x -- 10.9x Amounts in accordance with U.S. GAAP: Adjusted operating revenues(d)............ L 640.9 L 665.0 L 683.4 L 468.7 L 249.2 EBITDA(e)................ 110.6 115.8 116.7 80.0 33.5 Adjusted EBITDA(f)....... 106.2 127.0 130.5 92.0 47.0 Adjusted EBITDA margin(g).............. 15.5% 18.6% 18.8% 18.0% 19.4% Depreciation and amortization........... L 42.9 L 42.4 L 40.4 L 27.5 L 15.4 Capital expenditures..... 21.6 28.9 26.5 20.1 9.8 Ratio of earnings to fixed charges(h)....... 1.0x 6.4x 7.6x -- 4.8x BALANCE SHEET DATA (AT END OF PERIOD): Amounts in accordance with U.K. GAAP: Total assets(i)............ L3,703.7 L3,377.2 L3,304.3 L4,589.0 Total long-term debt(j).... 61.9 17.9 34.0 276.4 Total shareholders' equity................... 120.6 151.9 124.6 89.0 Amounts in accordance with U.S. GAAP: Total assets(i)............ 4,376.0 3,953.5 3,763.4 5,369.9 Total long-term debt(j).... 61.9 17.9 34.0 276.4 Total shareholders' equity................... 587.3 560.2 583.6 875.4 YEAR ENDED DECEMBER 31, ------------- 1998 1998 -- --------- OTHER FINANCIAL DATA: Amounts in accordance with U.K. GAAP: Adjusted operating revenues(d)............717.9 1,191.7 EBITDA(e)................113.5 188.4 Adjusted EBITDA(f).......139.0 230.7 Adjusted EBITDA margin(g)..............18.5% 18.5% Depreciation and amortization...........L 24.4 $ 40.5 Capital expenditures.....29.9 49.6 Ratio of earnings to fixed charges(h).......2.9x 2.9x Amounts in accordance with U.S. GAAP: Adjusted operating revenues(d)............ EBITDA(e)................ Adjusted EBITDA(f)....... Adjusted EBITDA margin(g).............. Depreciation and amortization........... Capital expenditures..... Ratio of earnings to fixed charges(h)....... BALANCE SHEET DATA (AT END OF PERIOD): Amounts in accordance with U.K. GAAP: Total assets(i)............L4,589.0 $ 7,617.7 Total long-term debt(j)....276.4 458.8 Total shareholders' equity...................89.0 147.7 Amounts in accordance with U.S. GAAP: Total assets(i)............5,369.9 8,914.0 Total long-term debt(j)....276.4 458.8 Total shareholders' equity...................875.4 1,453.2
See Notes to Summary Historical and Unaudited Pro Forma Consolidated Financial Information 11 SUMMARY UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION OF WILLIS CORROON The following table sets forth summary pro forma statement of income data, supplemental financial data and balance sheet data for Willis Corroon. The pro forma consolidated financial information is derived from, and should be read in conjunction with, the "Unaudited Condensed Pro Forma Consolidated Financial Information" and the notes thereto included elsewhere in this prospectus. The pro forma adjustments are based upon available information and certain assumptions that management believes are reasonable. The pro forma statement of income data give effect to the Transactions as if they had occurred as of January 1, 1998. The pro forma balance sheet data give effect to the Transactions as if they had occurred as of December 31, 1998. The pro forma financial data do not purport to represent what the financial position or results of operations of Willis Corroon would actually have been had such transactions in fact occurred on the assumed dates or to project the financial position or results of operations of Willis Corroon for any future period or date.
YEAR ENDED DECEMBER 31, -------------------- 1998 1998 --------- --------- (IN MILLIONS) STATEMENT OF INCOME DATA: Amounts in accordance with U.K. GAAP: Continuing operations Operating revenues...................................................................... L735.3 $ 1,220.6 Operating income before exceptional items(b)............................................ 86.0 142.8 Share of profit of associates........................................................... 6.7 11.1 Interest expense........................................................................ (53.4) (88.6) Income / (loss) before tax.............................................................. (30.8) (51.1) Total operations Net income / (loss)..................................................................... L(74.9) $ (124.3) Amounts in accordance with U.S. GAAP: Continuing operations Operating revenues...................................................................... L735.3 $ 1,220.6 Operating income before exceptional items(b)............................................ 56.7 94.1 Share of profit of associates(c)........................................................ 6.7 11.1 Interest expense........................................................................ (53.4) (88.6) Income / (loss) before tax.............................................................. (50.5) (83.8) Total operations Net income / (loss)..................................................................... L(91.9) $ (152.5) OTHER FINANCIAL DATA: Amounts in accordance with U.K. GAAP: Adjusted operating revenues(d).......................................................... L735.2 $ 1,220.4 EBITDA(e)............................................................................... 117.1 194.4 Adjusted EBITDA(f)...................................................................... 142.6 236.7 Adjusted EBITDA margin(g)............................................................... 18.5% 18.5% Depreciation and amortization........................................................... L24.4 $ 40.5 Capital expenditures.................................................................... 29.9 49.6 Ratio of EBITDA to interest expense..................................................... 2.2x 2.2x Ratio of Adjusted EBITDA to interest expense............................................ 2.7x 2.7x Ratio of earnings to fixed charges(h)................................................... -- -- Amounts in accordance with U.S. GAAP: Adjusted operating revenues(d).......................................................... L735.2 $ 1,220.4 EBITDA(e)............................................................................... 117.1 194.4 Adjusted EBITDA(f)...................................................................... 142.6 236.7 Adjusted EBITDA margin(g)............................................................... 18.5% 18.5% Depreciation and amortization........................................................... L45.2 75.0 Capital expenditures.................................................................... 29.9 49.6 Ratio of EBITDA to interest expense..................................................... 2.2x 2.2x Ratio of Adjusted EBITDA to interest expense............................................ 2.7x 2.7x Ratio of earnings to fixed charges(h)................................................... -- -- BALANCE SHEET DATA (AT END OF PERIOD): Amounts in accordance with U.K. GAAP: Total assets(i)......................................................................... L4,589.0 $ 7,617.7 Total long-term debt(j)................................................................. 598.3 993.2 Total shareholders' equity.............................................................. 89.0 147.7 Amount in accordance with U.S. GAAP: Total assets(i)......................................................................... L5,379.3 $ 8,929.6 Total long-term debt(j)................................................................. 607.7 1,008.8 Total shareholders' equity.............................................................. 875.4 1,453.2
See Notes to Summary Historical and Unaudited Pro Forma Consolidated Financial Information 12 NOTES TO SUMMARY HISTORICAL AND UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION (a) U.S. dollar amounts have been translated at the Noon Buying Rate on December 31, 1998 of $1.66 = L1.00 solely for your convenience. (b) Exceptional items charged against operating income from continuing operations for the year ended December 31, 1995 consisted of losses of L16.6 million relating to properties that were surplus to operational requirements. For the period January 1 to September 1, 1998, exceptional items charged against operating income totalled L35.8 million and consisted of provisions of L25.0 million for claims and costs associated with the review of personal pension plans sold between 1988 and 1994 and costs of L10.8 million incurred in connection with the acquisition of Willis Corroon by Trinity Acquisition. For the period September 2 to December 31, 1998 exceptional items charged against operating income totalled L5.0 million and consisted of debt issuance costs incurred in connection with the acquisition of Willis Corroon by Trinity Acquisition. See Note 4 of the Notes to the Consolidated Financial Statements. Under U.S. GAAP, such items would not be described as exceptional items. (c) Under U.S. GAAP, Willis Corroon's share of profits of associated companies would normally be presented on an after tax basis. The presentation adopted conforms to U.K. GAAP where Willis Corroon's share of profits of associated companies is shown on a before tax basis. (d) As set forth in the following table, Adjusted Operating Revenues represent actual operating revenues from continuing operations, adjusted to give effect to all significant dispositions since January 1, 1995 as if they had occurred on January 1, 1995. Such dispositions consisted of: (1) Willis Faber & Dumas (Agencies) Limited, a Lloyd's members' agent that was sold in October 1997; (2) Professional Liability Underwriting Management, part of the U.S. Wholesale operation, that was closed in the second quarter of 1998; (3) IRPC and PPC, two consulting companies part of U.K. Retail that were sold in 1996; (4) WF Corroon, a wholly-owned employee benefits consulting operation that was sold in 1996; and (5) Consumer Benefit Life Insurance Company, a wholly owned subsidiary, and two other U.S. business operations, that were sold in 1996. The table also presents Adjusted Operating Revenues on a pro forma basis for the year ended December 31, 1998 after giving effect to the following acquisitions since January 1, 1998 as if they had occurred on January 1, 1998: (1) the 50% interest in Gruppo Ital Brokers which was acquired in July 1998 and (2) the increased investment in our Spanish associate from 48% to 60% and the reorganization of the existing Spanish and Portuguese operations in July 1998. See "Unaudited Condensed Pro Forma Consolidated Financial Information" and "Management's Discussion and Analysis of Financial Condition and Results of Operations."
HISTORICAL -------------------------------------------------------------------------------- YEAR ENDED JANUARY 1 TO SEPTEMBER 2 TO PRO FORMA --------------- YEAR ENDED DECEMBER 31, SEPTEMBER 1, DECEMBER 31, DECEMBER 31, ------------------------------- ----------------- ----------------- -------------------------- 1995 1996 1997 1998 1998 1998 1998 --------- --------- --------- ----------------- ----------------- --------- --------------- (IN MILLIONS) Continuing operations operating revenues.......... L706.4 L725.0 L692.0 L468.8 L249.2 L718.0 L735.3 Adjustments for dispositions................ (65.5) (60.0) (8.6) (0.1) 0 (0.1) (0.1) --------- --------- --------- ------- ------- --------- ------- Adjusted operating revenues... L640.9 L665.0 L683.4 L468.7 L249.2 L717.9 L735.2 --------- --------- --------- ------- ------- --------- ------- --------- --------- --------- ------- ------- --------- -------
(e) EBITDA is defined as operating income from continuing operations before exceptional items and depreciation and amortization, plus share of profit of associates. Willis Corroon's share of profit of associates was L6.8 million, L3.5 million, L1.9 million and L6.3 million ($10.4 million) for 1995, 1996, 1997 and 1998 respectively. EBITDA is presented because management believes that it is a useful indicator of a company's ability to incur and service debt. EBITDA should not be considered by investors as an alternative to operating income or net income (as determined in accordance with either U.K. GAAP or U.S. GAAP) as an indicator of Willis Corroon's performance, nor as an alternative to cash flows from operating activities, investing activities or financing activities (as 13 determined in accordance with either U.K. GAAP or U.S. GAAP) as a measure of liquidity. Because all companies do not calculate EBITDA identically, the presentation of EBITDA contained herein may not be comparable to other similarly entitled measures of other companies. For U.S. GAAP purposes, EBITDA has been defined so as to exclude (1) non-cash adjustments for pension costs of L1.7 million, L(12.1) million and L(7.6) million ($(12.9) million) for 1995, 1996 and 1997, respectively, and L(1.6) million and L(1.7) million for the periods January 1 to September 1, 1998 and September 2 to December 31, 1998 respectively and L(5.0) million for the year ended December 31, 1998 on a pro forma basis, and (2) non-cash adjustments for revaluation of forward exchange contracts of L(2.0) million, L10.9 million and L(5.6) million ($(9.5) million) for 1995, 1996 and 1997, respectively, and L0.2 million and L(3.7) million for the periods January 1 to September 1, 1998, and September 2 to December 31, 1998 respectively and L(3.5) million for the year ended December 31, 1998 on a pro forma basis. The EBITDA data presented is, therefore, the same under U.S. GAAP as under U.K. GAAP. (f) As set forth in the following table, Adjusted EBITDA represents actual EBITDA, adjusted to give effect to (A) the dispositions described in note (d) above, together with the 50% interest in Heddington Brokers Limited, an associate based in Bermuda that was sold in December 1995, as if they had occurred on January 1, 1995, and (B) the following non-recurring items: (1) pension review claims and costs relating to the review of personal pension plans sold between 1988 and 1994; (2) costs relating to Willis Corroon's brokers' contribution to the Lloyd's Reconstruction and Renewal Plan; (3) severance costs incurred in connection with the change program; (4) other expenses relating to consulting costs incurred in connection with the change program, costs relating to acquisitions of broker teams and costs in connection with Willis Corroon's investment in the World Insurance Network; and (5) costs relating to the 1998 Projects described under "Management's Discussion and Analysis of Financial Condition and Results of Operations-- Overview." The table also presents Adjusted EBITDA on a pro forma basis for the year ended December 31, 1998 after giving effect to the following acquisitions as if they had occurred on January 1, 1998: (1) the 50% interest in Gruppo Ital Brokers which was acquired in July 1998; (2) the 30% interest in Assurand /orgruppen which was acquired in September 1998; and (3) the increased investment in our Spanish associate from 48% to 60% and the reorganization of the existing Spanish and Portuguese operations in July 1998. See "Management's Discussion and Analysis of Financial Condition and Results of Operations."
HISTORICAL -------------------------------------------------------------------------------- YEAR ENDED JANUARY 1 TO SEPTEMBER 2 TO PRO FORMA ------------- YEAR ENDED DECEMBER 31, SEPTEMBER 1, DECEMBER 31, DECEMBER 31, ------------------------------- ----------------- ----------------- ------------------------ 1995 1996 1997 1998 1998 1998 1998 --------- --------- --------- ----------------- ----------------- --------- ------------- (IN MILLIONS) Operating income from continuing operations before exceptional items.......................... L 79.4 L 87.8 L 92.1 L56.8 L26.0 L 82.8 L 86.0 Share of profit of associates.... 6.8 3.5 1.9 7.7 (1.4) 6.3 6.7 Depreciation and amortization.... 24.4 24.5 22.7 15.5 8.9 24.4 24.4 --------- --------- --------- ----- ----- --------- ------------- EBITDA........................... L110.6 L115.8 L116.7 L80.0 L33.5 L113.5 L117.1 Adjustments for dispositions..... (6.1) (9.8) (4.1) 0.6 -- 0.6 0.6 Other adjustments before exceptional items: Pension Review................. 1.0 0.2 2.3 -- -- -- -- Lloyd's Reconstruction and Renewal Plan................. -- 2.6 2.2 1.3 0.7 2.0 2.0 Severance...................... -- 11.3 3.4 4.6 5.0 9.6 9.6 Other expenses................. 0.7 6.9 10.0 4.4 6.1 10.5 10.5 1998 Projects.................. -- -- -- 1.1 1.7 2.8 2.8 --------- --------- --------- ----- ----- --------- ------------- Adjusted EBITDA.................. L106.2 L127.0 L130.5 L92.0 L47.0 L139.0 L142.6 --------- --------- --------- ----- ----- --------- ------------- --------- --------- --------- ----- ----- --------- ------------- Adjusted EBITDA margin........... 15.5% 18.6% 18.8% 18.0% 19.4% 18.5% 18.5%
14 Adjusted EBITDA should not be considered by investors as an alternative to operating income or net income (as determined in accordance with either U.K. GAAP or U.S. GAAP) as an indicator of Willis Corroon's performance, nor as an alternative to cash flows from operating activities, investing activities or financing activities (as determined in accordance with either U.K. GAAP or U.S. GAAP) as a measure of liquidity. Because all companies do not calculate EBITDA identically, the presentation of Adjusted EBITDA contained herein may not be comparable to EBITDA, Adjusted EBITDA or other similarly entitled measures of other companies. Investors should not conclude from the presentation of Adjusted EBITDA that additional costs arising from the same or similar items will not be incurred in the future. The Pension Review, Lloyd's Reconstruction and Renewal Plan and the change program are on-going and could result in additional costs being incurred in the future. (g) Adjusted EBITDA margin represents Adjusted EBITDA (less share of profit of associates) as a percentage of Adjusted Operating Revenues. (h) The ratio of earnings to fixed charges is computed by dividing earnings from continuing operations by fixed charges. For these purposes, "earnings" consists of income before taxation less the retained equity in share of profits of associates and fixed charges. "Fixed charges" consists of interest expense (including amortization of debt issuance costs) and the interest element of operating lease rentals. After taking an exceptional charge of L25 million in the period from January 1 to September 1, 1998 for the estimated cost in connection with the pension review (see "--U.K. Pension Review"), a L10.8 million exceptional charge for payment of fees and expenses relating to the Transactions and a non-cash exceptional charge of L29.6 million on the closure of Professional Liability Underwriting Management, earnings under U.K. GAAP and U.S. GAAP for the period January 1 to September 1, 1998 and the year ended December 31, 1998 on a pro forma basis were inadequate to cover fixed charges. The amounts of the deficiencies were L7.1 million and L35.1 million ($58.3 million), respectively, on a U.K. GAAP basis and L10.9 million and L54.8 million ($91.0 million), respectively, on a U.S. GAAP basis. (i) As an intermediary, Willis Corroon holds funds on a fiduciary basis for the account of third parties, typically as a result of premiums received from clients that are in transit to insurance carriers and claims due to clients that are in transit from insurance carriers. These fiduciary amounts are included in total assets but are not generally available to service Willis Corroon's indebtedness or for other general corporate purposes. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." (j) Under U.K. GAAP, debt issuance costs of L9.4 million ($15.6 million) are netted from the calculation of total debt and amortized over the life of the debt. Under U.S. GAAP, such costs are recorded as an asset and amortized over the life of the debt. Total long term debt does not give effect to dollar denominated intercompany debt owed to Trinity Acquisition pursuant to group intercompany notes (as defined), which are subordinated in right of payment to the Notes, and which are offset by note receivables in the form of corresponding pound sterling denominated Trinity intercompany notes (as defined). In addition, total long term debt does not give effect to a L92.9 million interest free convertible loan owed to Trinity Acquisition, which was converted into equity of Willis Corroon Group Limited on February 3, 1999. 15 RISK FACTORS BEFORE YOU PARTICIPATE IN THE EXCHANGE OFFER, YOU SHOULD BE AWARE THAT THERE ARE VARIOUS RISKS, INCLUDING THOSE DESCRIBED BELOW. YOU SHOULD CAREFULLY CONSIDER THESE RISK FACTORS, TOGETHER WITH THE OTHER INFORMATION IN THIS PROSPECTUS, BEFORE DECIDING TO PARTICIPATE IN THE EXCHANGE OFFER. FAILURE TO EXCHANGE--THERE MAY BE ADVERSE CONSEQUENCES IF YOU DO NOT EXCHANGE YOUR OUTSTANDING NOTES. If you do not exchange your outstanding Notes for exchange Notes under the exchange offer, then you will continue to be subject to the transfer restrictions on the outstanding Notes as set forth in the offering memorandum distributed in connection with the offering of the outstanding Notes. In general, the outstanding Notes may not be offered or sold unless they are registered or exempt from registration under the Securities Act and applicable state securities laws. Except as required by the registration rights agreement, we do not intend to register resales of the outstanding Notes under the Securities Act. You should refer to "Prospectus Summary--Summary of the Terms of Exchange Offer" and "The Exchange Offer" for information about how to tender your outstanding Notes. The tender of outstanding Notes under the exchange offer will reduce the principal amount of the outstanding Notes outstanding, which may have an adverse effect upon, and increase the volatility of, the market price of the outstanding Notes due to a reduction in liquidity. SUBSTANTIAL LEVERAGE AND DEBT SERVICE--WE HAVE SUBSTANTIAL INDEBTEDNESS AND HAVE SIGNIFICANT INTEREST PAYMENT REQUIREMENTS. As a result of the Transactions, Willis Corroon has a substantial amount of debt. Assuming that the Transactions had taken place on December 31, 1998, we would have had total long-term debt of L598.3 million (net of L9.4 million of issuance costs and not including unused commitments) and shareholders' equity of L89.0 million, giving us a total debt to equity ratio of 6.7 to 1.0 calculated on a U.K. GAAP basis and 0.7 to 1.0 calculated on a U.S. GAAP basis. In addition, subject to restrictions in our senior credit facilities and in the indenture governing the Notes, we may borrow more money for working capital, capital expenditures, acquisitions or for other purposes. Our high level of debt could have important consequences for you, including the following: - we may have difficulty borrowing money in the future for working capital, capital expenditures, acquisitions or other purposes; - we will need to use a large portion of the money earned by our subsidiaries to pay principal and interest on the senior credit facilities, the Notes and on other debt, which will reduce the amount of money available to us to finance our operations and other business activities; - some of our debt has a variable rate of interest, which exposes us to the risk of increased interest rates; - debt under the senior credit facilities will be secured and will mature prior to the Notes; - we may have a much higher level of debt than our competitors, which may put us at a competitive disadvantage; 16 - our debt level makes us more vulnerable to economic downturns and adverse developments in our business; - our debt level reduces our flexibility in responding to changing business and economic conditions, including increased competition in the insurance brokerage industry; and - our debt level limits our ability to pursue other business opportunities, borrow more money for operations or capital in the future and implement our business strategies. After taking an exceptional charge of L25 million in the period from January 1 to September 1, 1998 for the estimated cost in connection with the pension review (see "--U.K. Pension Review"), a L10.8 million exceptional charge for payment of fees and expenses relating to the Transactions and a non-cash exceptional charge of L29.6 million on the closure of Professional Liability Underwriting Management, earnings under U.K. GAAP and U.S. GAAP for the period from January 1 to September 1, 1998 were inadequate to cover fixed charges. The amounts of the deficiencies were L7.1 million under U.K. GAAP and L10.9 million under U.S. GAAP. After giving pro forma effect to the Transactions, our interest expense for the year ended December 31, 1998 would have been L53.4 million. Pro forma earnings under U.K. GAAP and U.S. GAAP for the year ended December 31, 1998 were inadequate to cover fixed charges. The amounts of the deficiencies were L35.1 million under U.K. GAAP and L54.8 million under U.S. GAAP. We expect to obtain the money to pay our expenses and to pay the principal and interest on the Notes, the senior credit facilities and other debt (and expect TA II Limited, a company with limited liability, organized under the laws of England and Wales, and an indirect parent of Willis Corroon, to obtain the money to pay dividends on its preference shares) from the operations of our subsidiaries and associates and from additional loans under the senior credit facilities. Our ability to meet our expenses thus depends on the future performance of our subsidiaries and associates, which will be affected by financial, business, economic and other factors. We will not be able to control many of these factors, such as economic conditions in the markets where our subsidiaries operate and pressure from competitors. We cannot be certain that the money earned by our subsidiaries will be sufficient to allow us to pay principal and interest on our debt (including the Notes) and meet our other obligations. If we do not have enough money, we may be required to refinance all or part of our existing debt, including the Notes, sell assets or borrow more money. We cannot guarantee that we will be able to refinance our debt, sell assets or borrow more money on terms acceptable to us. In addition, the terms of existing or future debt agreements, including the senior credit facilities and the indenture, may restrict us from adopting any of these alternatives. Under the senior credit facilities, we must also comply with certain specified financial ratios and tests. If we do not comply with these or other covenants and restrictions contained in the senior credit facilities, we could default under the senior credit facilities. Such debt, together with accrued interest, could then be declared immediately due and payable. Our ability to comply with such provisions may be affected by events beyond our control. CONTRACTUAL SUBORDINATION--THE NOTES AND THE GUARANTEES ARE CONTRACTUALLY SUBORDINATED TO OUR SENIOR DEBT. The Notes are contractually subordinated in right of payment to all senior indebtedness of the Issuer and the Guarantees are contractually subordinated in right of payment to all senior indebtedness of the Guarantors. Assuming the Transactions had occurred on December 31, 1998, the Issuer would have had approximately $460.1 million (L277.2 million) of senior indebtedness (excluding unused commitments), all of which would have been secured, and the Guarantors would have had no senior 17 indebtedness (excluding their guarantees of the Permanent Facility Agreement). The indenture permits the Issuer and the Guarantors to borrow certain additional debt, which may be senior indebtedness. If the Issuer or the Guarantors are declared bankrupt or insolvent, or if there is a payment default under any senior indebtedness, we are required to pay the lenders under the senior credit facilities and any other creditors who are holders of senior indebtedness in full before we pay you. Accordingly, we may not have enough assets remaining after payments to holders of such senior indebtedness to pay you. In addition, under certain circumstances, the Issuer may not pay any amount on the Notes if certain senior indebtedness (including debt under the senior credit facilities) is not paid when due or any other default on such senior indebtedness exists. See "Description of the Notes-- Subordination." Further, the senior credit facilities prohibit the Issuer from repurchasing any Notes prior to maturity, even though the indenture requires us to offer to repurchase Notes in certain circumstances. If the Issuer or the Guarantors make certain asset sales or if a change of control occurs when the Issuer is prohibited from repurchasing Notes, the Issuer could ask its lenders under the senior credit facilities if it may repurchase the Notes or it could attempt to refinance the borrowings that contain such prohibitions. If the Issuer does not obtain such a consent or repay such borrowings, the Issuer would be unable to repurchase the Notes. The Issuer's failure to repurchase tendered Notes at a time when such repurchase is required by the indenture would constitute an event of default under the indenture which, in turn, would constitute a default under the senior credit facilities. In such circumstances, the subordination provisions in the indenture would restrict payments to you. See "Description of the Senior Credit Facilities" and "Description of the Notes--Subordination." ASSET ENCUMBRANCES--OUR ASSETS ARE PLEDGED TO SECURE PAYMENT OF THE SENIOR CREDIT FACILITIES. In addition to being contractually subordinated to all existing and future senior indebtedness, our obligations under the Notes are unsecured while our obligations under the senior credit facilities are secured by the pledge of all of the capital stock of the Issuer, Willis Corroon Group and certain direct subsidiaries of the Issuer and Willis Corroon Group and a pledge of all the partnership interests of Willis Corroon Partners; the pledge of stock owned by Willis Corroon Group is supported by a general lien (known as a floating charge in the U.K.) filed in the U.K. against Willis Corroon Group's assets. If we default under the senior credit facilities, the lenders could declare all of the funds borrowed thereunder, together with accrued interest, immediately due and payable. If we were unable to repay such indebtedness, the lenders could foreclose on the pledged stock of our subsidiaries to your exclusion, even if an event of default exists under the indenture at such time. Furthermore, under the Guarantees, if all shares of Willis Corroon Group or partnership interests of Willis Corroon Partners are sold to persons pursuant to an enforcement of the pledge of shares in Willis Corroon Group or the pledge of the partnership interests in Willis Corroon Partners for the benefit of the senior lenders, then the applicable Guarantor will be released from its Guarantee automatically and immediately upon the sale. See "Description of the Notes--Guarantee." STRUCTURAL SUBORDINATION--THE NOTES ARE SUBORDINATED TO THE DEBT OF THE ISSUER'S SUBSIDIARIES AND THE DEBT OF THE GUARANTORS' SUBSIDIARIES. The Issuer is a holding company with assets at December 31, 1998 with a book value of $255 million, excluding the stock of its subsidiaries and intercompany receivables. In addition, Willis Corroon Group is a holding company with no significant assets other than (1) its 99.9% general partnership interest in Willis Corroon Partners and the stock of Willis Corroon Partners' subsidiaries (including the Issuer and the Issuer's subsidiaries) and (2) the stock of Willis Corroon Group's U.K. and 18 other subsidiaries. Willis Corroon Partners is also a holding company with no significant assets other than the stock of the Issuer and the Issuer's subsidiaries. As a holding company, each of the Issuer, Willis Corroon Group and Willis Corroon Partners is dependent upon dividends or other intercompany transfers of funds from its respective subsidiaries to meet its debt service and other obligations. Generally, creditors of a subsidiary will have a superior claim to the assets and earnings of such subsidiary than the claims of creditors of its parent company, except to the extent the claims of the parent's creditors are guaranteed by the subsidiary. The Notes therefore will be effectively subordinated to creditors of the direct and indirect subsidiaries of the Issuer and the Guarantees will be effectively subordinated to creditors of all of the direct and indirect subsidiaries of the Guarantors (other than the Issuer). As of December 31, 1998: - the Issuer's subsidiaries had total liabilities (including payables in respect of insurance broking transactions but excluding their guarantees under the Permanent Facility Agreement) of L1,103.3 million; and - Willis Corroon Group's subsidiaries (other than Willis Corroon Partners, the Issuer and the Issuer's subsidiaries) had total liabilities (including payables in respect of insurance broking transactions but excluding their guarantees under the Permanent Facility Agreement) of L2,345.0 million. Although the indenture limits the ability of the Issuer's and Guarantors' subsidiaries to incur indebtedness and preferred stock, there are certain significant qualifications and exceptions. The indenture does not limit such subsidiaries from incurring liabilities that are excluded from the definitions of indebtedness or preferred stock under the indenture. See "Description of the Notes--Certain Covenants--Limitations on Incurrence of Indebtedness and Issuance of Disqualified Stock." In addition, the ability of the Issuer's and Guarantors' subsidiaries to pay dividends and make other payments to them may be restricted by, among other things, applicable corporate and other laws and regulations and agreements of the subsidiaries. Although the indenture limits the ability of such subsidiaries to enter into consensual restrictions on their ability to pay dividends and make other payments, such limitations are subject to a number of significant qualifications and exceptions. See "Description of the Notes--Certain Covenants--Dividend and Other Payment Restrictions Affecting Subsidiaries." U.K. INSOLVENCY LAW AND FINANCIAL ASSISTANCE--U.K. INSOLVENCY LAW IS FAVORABLE TO SECURED CREDITORS AND U.K. LAWS PROHIBIT CERTAIN FINANCIAL ASSISTANCE. The procedural and substantive provisions of U.K. insolvency and administrative laws generally are more favorable to secured creditors than comparable provisions of U.S. laws and afford debtors only limited protection from such creditors. As a result, your ability to realize upon your claims against Willis Corroon Group may be more limited than with a U.S. guarantor. In addition, under U.K. insolvency law, the liabilities of Willis Corroon Group under its Guarantee will be paid in the event of a bankruptcy or similar proceeding only after repayment of certain debts of Willis Corroon Group which are entitled to priority under U.K. law. Such debts may include: - amounts owed to U.K. Inland Revenue; - amounts owed to U.K. Customs and Excise; - amounts owed under U.K. Social Security contributions; - amounts owed in respect of occupational pension schemes; 19 - amounts owed to employees; and - liquidation expenses. Under U.K. insolvency law, the liquidator or administrator of a company may apply to the court to rescind or vary a transaction entered into by such company at less than fair value, if such company was insolvent at the time of, or as a consequence of, the transaction and enters into a formal insolvency process within two years of the completion of the transaction. A transaction might be challenged if it involved a gift by the company or the company received consideration of significantly less value than the benefit given by such company. A court generally will not intervene if the company entered the transaction in good faith for the purposes of carrying on its business and there were reasonable grounds for believing the transaction would benefit the company. We believe that the Guarantee by Willis Corroon Group was not issued at less than fair value and that the Guarantee was issued in good faith for the purposes of carrying on Willis Corroon Group's business. Furthermore, we believe that there are reasonable grounds for believing that the Transactions would benefit Willis Corroon Group. We cannot provide any assurance, however, that the issuance of the Guarantee by Willis Corroon Group will not be challenged by a liquidator or administrator or that a court would support our analysis. The provision of the Guarantee by Willis Corroon Group and certain provisions of the exchange and registration rights agreement and the purchase agreement relating to the issuance of the outstanding Notes (the "Other Prohibited Matters") may have constituted unlawful financial assistance under U.K. law. However, the Companies Act 1985 of Great Britain provides an exemption procedure which can be used in certain circumstances to approve actions which may otherwise constitute unlawful financial assistance. Willis Corroon Group has complied with this procedure. The procedure requires that each of the directors of Willis Corroon Group swear certain statutory declarations relating to the solvency of Willis Corroon Group and that the auditors of Willis Corroon Group provide a report confirming they are not aware of anything to indicate the opinion of the directors in such statutory declarations is unreasonable in the circumstances. Furthermore, in connection with the issuance of the Guarantee and the Other Prohibited Matters, it is necessary that Willis Corroon Group had net assets which were not reduced as a result of giving the financial assistance or, to the extent that they are reduced, the assistance is provided out of distributable profits only. Willis Corroon Group has implemented the exemption procedure on the basis that the Guarantee and the Other Prohibited Matters did not reduce the net assets of Willis Corroon Group. If any of the requirements of the exemption procedure are not satisfied, and in particular if the giving of the Guarantee or the Other Prohibited Matters reduced the net assets of Willis Corroon Group, then such Guarantee or the Other Prohibited Matters, as the case may be, would be invalid. We have taken steps to ensure that the requirements of the exemption procedure have been complied with and believe that the issue of the Guarantee and the Other Prohibited Matters did not result in a reduction of the net assets of Willis Corroon Group, because we believe that the liabilities under the Guarantee and the Other Prohibited Matters were not likely to be or not certain to be incurred. However, we can provide no assurance that a court or a liquidator would concur with our view. U.S. FRAUDULENT TRANSFER CONSIDERATIONS--U.S. BANKRUPTCY OR FRAUDULENT CONVEYANCE LAW MAY INTERFERE WITH THE PAYMENT OF THE NOTES. The incurrence of indebtedness by the Issuer, such as the outstanding Notes, may be subject to review under U.S. federal bankruptcy law or relevant state fraudulent conveyance laws if a bankruptcy case or lawsuit is commenced by or on behalf of unpaid creditors of the Issuer. Under these laws, if in such a case or lawsuit a court were to find that, at the time the Issuer incurred indebtedness (including indebtedness under the Notes), 20 (1) the Issuer incurred such indebtedness with the intent of hindering, delaying or defrauding current or future creditors; or (2) (a) the Issuer received less than reasonably equivalent value or fair consideration for incurring such indebtedness; and (b) the Issuer - was insolvent or was rendered insolvent by reason of any of the transactions; - was engaged, or about to engage, in a business or transaction for which our assets remaining with the Issuer constituted unreasonably small capital to carry on our business; - intended to incur, or believed that it would incur, debts beyond our ability to pay as such debts matured (as all of the foregoing terms are defined in or interpreted under the relevant fraudulent transfer or conveyance statutes); or - was a defendant in an action for money damages, or had a judgment for money damages docketed against it (if, in either case, after final judgment the judgment is unsatisfied), then such court could avoid or subordinate the amounts owing under the Notes to presently existing and future indebtedness of the Issuer and take other actions detrimental to you. The measure of insolvency for purposes of the foregoing considerations will vary depending upon the law of the jurisdiction that is being applied in any such proceeding. Generally, however, the Issuer would be considered insolvent if, at the time it incurred the indebtedness, either (1) the sum of its debts (including contingent liabilities) is greater than its assets, at fair valuation, or (2) the present fair saleable value of its assets is less than the amount required to pay the probable liability on its total existing debts and liabilities (including contingent liabilities) as they become absolute and matured. There can be no assurance as to what standards a court would use to determine whether the Issuer was solvent at the relevant time, or whether, whatever standard was used, the Notes would not be avoided or further subordinated on another of the grounds set forth above. In rendering their opinions in connection with the Transactions, counsel for the Issuer will not express any opinion as to the applicability of federal or state fraudulent transfer and conveyance laws. We believe that at the time the Issuer initially incurred indebtedness represented by the outstanding Notes, the Issuer was: (1) (a) neither insolvent nor rendered insolvent thereby, (b) in possession of sufficient capital to run its businesses effectively and (c) incurring debts within its ability to pay as the same mature or become due; and (2) had sufficient assets to satisfy any probable money judgment against it in any pending action. 21 In reaching the foregoing conclusions, we have relied upon our analyses of internal cash flow projections and estimated values of assets and liabilities of the Issuer. There can be no assurance, however, that a court passing on such questions would reach the same conclusions. In addition, Willis Corroon Partners' Guarantee may be subject to review under relevant federal and state fraudulent conveyance and similar statutes in a bankruptcy or reorganization case or a lawsuit by or on behalf of creditors of Willis Corroon Partners. In such a case, the analysis set forth above would generally apply, except that Willis Corroon Partners could also be subject to the claim that, since its Guarantee was incurred for the benefit of the Issuer, the obligations of Willis Corroon Partners thereunder were incurred for less than reasonably equivalent value or fair consideration. A court could avoid Willis Corroon Partners' obligation under its Guarantee, subordinate the Guarantee to other indebtedness of Willis Corroon Partners or take other action detrimental to the holders of the Notes. CONTROL BY KKR--WE ARE CONTROLLED BY KOHLBERG KRAVIS ROBERTS & CO. L.P. The KKR 1996 Fund (Overseas), Limited Partnership, an Alberta, Canada limited partnership, the general partner of Profit Sharing (Overseas), Limited Partnership, an Alberta, Canada limited partnership, beneficially owns approximately 77% of the share capital of TA I Limited, a company with limited liability organized under the laws of England and Wales, the ultimate parent of Willis Corroon Group and the Issuer. The board of directors of TA I Limited consists of six designees of the KKR 1996 Fund (Overseas), Limited, one member of the management group and one independent director. As a result, the KKR 1996 Fund (Overseas), Limited controls our policies and operations and has the power to approve any action requiring stockholder approval (including adopting amendments to Willis Corroon Group's articles of association and approving mergers or sales of all or substantially all of our assets). There can be no assurance that the interests of the KKR 1996 Fund (Overseas), Limited will not conflict with your interests. See "Management" and "Shareholders." LACK OF PUBLIC MARKET--YOU MAY NOT BE ABLE TO SELL YOUR EXCHANGE NOTES. There is no existing market for the exchange Notes, and there can be no assurance as to the liquidity of any markets that may develop for the exchange Notes, your ability to sell your exchange Notes or the prices at which you would be able to sell your exchange Notes. Future trading prices of the exchange Notes will depend on many factors, including, among other things, prevailing interest rates, our operating results and the market for similar securities. The initial purchasers of the outstanding Notes have advised us that they currently intend to make a market in the exchange Notes. However, they are not obligated to do so and any market making may be discontinued at any time without notice. The outstanding Notes are eligible for trading in Nasdaq's PORTAL Market and are listed on the Luxembourg Stock Exchange. We have applied for listing of the exchange Notes on the Luxembourg Stock Exchange. Historically, the market for non-investment grade debt has been subject to disruptions that have caused volatility in prices. It is possible that the market for the exchange Notes will be subject to disruptions. Any such disruptions may have a negative effect on you (as a holder of the exchange Notes) regardless of our prospects and financial performance. LIMITATION ON CHANGE OF CONTROL--WE MAY NOT BE ABLE TO FINANCE A CHANGE OF CONTROL OFFER REQUIRED BY THE INDENTURE. Upon a change of control under the indenture, the Issuer will be required to offer to purchase all of the Notes then outstanding at 101% of their principal amount, plus accrued interest to the date of repurchase. If a change of control were to occur, we can provide no assurance that the Issuer would 22 have sufficient funds to pay the purchase price (as defined in the indenture) for the Notes then outstanding, and we expect that the Issuer would require third party financing; however, we can provide no assurance that the Issuer would be able to obtain such financing on favorable terms, if at all. In addition, the senior credit facilities restrict the Issuer's ability to repurchase the Notes, including pursuant to an offer in connection with a change of control. A change of control under the indenture will result in an event of default under the senior credit facilities and may cause the acceleration of other senior indebtedness, if any, in which case the subordination provisions of the Notes would require payment in full of the senior credit facilities and any other senior indebtedness before repurchase of the Notes. See "Description of the Notes--Repurchase at the Option of Holders--Change of Control" and "Description of the Senior Credit Facilities." The inability to repay senior indebtedness, if accelerated, and to purchase all of the tendered Notes, would constitute an event of default under the indenture. PREMIUMS AND COMMISSIONS--WE DO NOT CONTROL THE PREMIUMS ON WHICH OUR COMMISSIONS ARE BASED. Willis Corroon is primarily engaged in insurance brokerage activities, and derives most of its revenues from commissions and fees for brokering and consulting services. Willis Corroon does not determine insurance premiums on which commissions are generally based. Historically, premiums have been cyclical in nature and have varied widely based on market conditions. Since the late 1980s, general premium levels have been depressed as a result of a number of factors, including: - the expanded underwriting capacity of insurance carriers; - consolidation of both insurance intermediaries and insurance carriers; and - increased competition. In addition, as traditional risk-bearing insurance carriers continue to outsource the production of premium revenue to non-affiliated agents or brokers such as Willis Corroon, such insurance carriers may seek to further reduce their expenses by reducing the commission rates payable to such insurance agents or brokers. We cannot predict the timing or extent of future changes in commission rates or premiums and therefore cannot predict the effect, if any, that such changes would have on our operations. See "Business--Industry Overview." SOVEREIGN/WFUM--THERE IS UNCERTAINTY ABOUT THE RUN-OFF OF THE BUSINESS OF ONE OF OUR SUBSIDIARIES (SOVEREIGN/WILLIS FABER (UNDERWRITING MANAGEMENT)). Sovereign Marine & General Insurance Company Limited (in provisional liquidation), a wholly owned subsidiary of Willis Corroon Group, operated as an insurance company in the U.K. and from 1972 Sovereign's underwriting activities were managed by another wholly owned subsidiary of Willis Corroon Group, Willis Faber (Underwriting Management) Limited. Willis Faber (Underwriting Management) also provided underwriting agency and other services to the third-party insurance companies (the "Stamp Companies"), some of which are long-standing clients of Willis Corroon. As an underwriting agent, Willis Faber (Underwriting Management) did not retain any underwriting risks for its own account. As part of its services as agent, Willis Faber (Underwriting Management) arranged insurance and reinsurance business on behalf of Sovereign and the Stamp Companies in the following main classes of insurance: marine, non-marine, casualty and aviation. Willis Faber (Underwriting Management) also arranged for reinsurance for Sovereign and the Stamp Companies through third party brokers, as well as through brokers within Willis Corroon. In 1991, Sovereign ceased underwriting new business and Willis Faber (Underwriting Management) ceased arranging new business on behalf of Sovereign and the Stamp Companies. Since that time, Willis Faber (Underwriting Management) has been administering the 23 business it arranged on behalf of Sovereign and the other Stamp Companies (referred to as handling the "run-off" of the business). In July 1997, an unexpected adverse arbitration award was rendered against Sovereign in respect of a dispute between Sovereign and one of its reinsurers regarding the enforceability of certain reinsurance that Willis Faber (Underwriting Management) had arranged. The award is confidential and non-binding as to third parties. As a result of the award, the directors of Sovereign determined that Sovereign could not continue to trade unless Willis Corroon Group provided unlimited financial support. The directors of Willis Corroon Group decided that, in the interests of Willis Corroon Group's shareholders, such support for Sovereign could not be justified. Accordingly, Sovereign was placed into Provisional Liquidation on July 11, 1997. It is expected that the Provisional Liquidators and Sovereign's creditors will ultimately enter into an arrangement that will resolve Sovereign's liabilities and its creditors' claims and provide for the orderly winding up of Sovereign's business, although there can be no assurance that this will be the case. Willis Corroon and the Provisional Liquidators have agreed to certain arrangements, including the new structure to replace Willis Faber (Underwriting Management) described below, for the future run-off of the Sovereign business. Willis Corroon has similar agreements with certain of the Stamp Companies regarding arrangements for, and funding the costs of, the ongoing run-off of Sovereign. Willis Faber (Underwriting Management) made provisions in 1991 and Willis Corroon made provisions in 1995, in each case to cover the estimated expenses for administering the run-off by Willis Faber (Underwriting Management) which, based on the knowledge at that time, was expected to cover the handling of the run-off to 2025. At December 31, 1998, the remaining provisions for these costs were L20.8 million. Although the run-off of this business is expected to be conducted in an orderly manner, it may ultimately prove to be a lengthy and expensive process. As indicated above, Willis Corroon, the Provisional Liquidators and certain of the Stamp Companies have entered into arrangements pursuant to which a new subsidiary of Willis Corroon now provides run-off services. Those services have in turn been sub-contracted to a third party with experience in running off pools with an insolvent member. In the case of the Provisional Liquidators, the services are provided directly by such third party to Sovereign. The arrangement with the Provisional Liquidators and the arrangements with certain of the Stamp Companies include the agreement by Willis Corroon to fund, subject to certain agreed guidelines as to timing and amount, certain costs of the ongoing run-off. The amounts to be funded under the arrangements are currently within the aggregate of the provisions as of December 31, 1998. However, there can be no assurance that the provisions will be adequate to cover the actual run-off costs over time. Following the publication of the adverse arbitration award, Sovereign and certain of the Stamp Companies have expressed concern about the enforceability of other reinsurance put in place by Willis Faber (Underwriting Management) on behalf of Sovereign and the Stamp Companies. In addition, a reinsurer which participates on numerous reinsurance contracts has advised Sovereign, the Stamp Companies and Willis Faber (Underwriting Management) that it is in the process of adopting a number of legal positions, similar to those taken in the Sovereign arbitration, with the intended effect of having its contractual obligations under the reinsurance contracts reassessed with respect to enforceability and amount. Accordingly, there can be no assurance that there will be no further arbitration or litigation with respect to reinsurance arranged by Willis Faber (Underwriting Management). The Provisional Liquidators and the Stamp Companies have generally reserved their rights in respect of potential claims, and Willis Faber (Underwriting Management), Willis Corroon Group and certain broking subsidiaries of Willis Corroon Group are in the process of negotiating standstill agreements which will preserve the rights of such potential claimants with respect to their possible claims while circumstances are being investigated. Although the Sovereign arbitration award is non-binding as to third parties, other arbitrations may arise in the future. Further, if the Provisional Liquidators or the Stamp Companies 24 determine that they have valid claims against Willis Corroon Group, they may seek to bring claims directly against Willis Corroon Group and hold it responsible for the liabilities of its subsidiaries. Although such claims are generally difficult to successfully maintain under English law, there can be no assurance that claims will not be made or, if made, that such claims could not succeed. Claims could also be made against Willis Faber (Underwriting Management) and broking subsidiaries that arranged reinsurance on behalf of Sovereign and the Stamp Companies. Those Willis Corroon companies with insurance protection have notified their insurance providers of certain potential claims. Willis Corroon Group and its subsidiaries have not made any financial provisions in respect of possible future claims in respect of reinsurance placed by Willis Faber (Underwriting Management). Willis Corroon Group does not know whether any such claims will be made, and the validity and amount of such claims and the extent, if any, to which they will be covered by insurance (after giving effect to the applicable deductibles, exclusions and limits) can be assessed only when and if such claims are made. Willis Corroon Group and its subsidiaries plan to continue to deal with the foregoing matters in a manner designed to assist an orderly run-off of the obligations of Sovereign and of the other Stamp Companies while limiting the costs of resolution. It is possible that the foregoing matters or other circumstances may lead Willis Corroon Group to place Willis Faber (Underwriting Management) in Provisional Liquidation. Willis Corroon Group does not believe the resolution of these matters, including any possible Provisional Liquidation of Willis Faber (Underwriting Management), will have a material adverse impact on its consolidated results of operation or financial condition, although there can be no assurance this will be the case. U.K. PENSION REVIEW--WE MUST MAKE CERTAIN PAYMENTS AS THE RESULT OF THE U.K. PENSION REVIEW. As is the case for many companies involved in selling personal pension plans to individuals in the United Kingdom from 1988 to 1994, we face liabilities as a result of the "pension transfers and opt-outs review" initiated by the U.K. government. Sellers of personal pension plans have since been subject to liabilities based on claims that they allegedly "mis-sold" pension products or gave improper advice. In particular, companies that engaged in this business, such as our independent financial advisory business, Willis Corroon Financial Planning Limited, are required to compensate individuals who withdrew from their previous or existing company pension plans or who were otherwise advised to set up personal pension plans, to the extent that following withdrawal, and the consequent loss of the employer contribution, such individual's personal pension plan did not produce returns equal to those that would have been achievable with an employer's company-sponsored plan. Whether compensation is due to a particular individual, and the amount thereof, is dependent on the subsequent performance of the pension plan sold and the relative cost to reinstate such individual into his or her prior company pension plan. We initially allocated L5.0 million for Phase I "priority" cases (individuals who were nearing retirement, had retired or died). Following proposals by the U.K. regulator with respect to Phase II, or non-priority cases, we reserved a further L25.0 million to cover both the estimated costs of approximately 8,000 Phase II cases, which are now subject to review, and the estimated additional cost of completing the Phase I reviews. However, there is uncertainty as to the number of Phase II cases which may require compensation and the amount of that compensation, which is dependent upon U.K. interest rates prevailing at the time it is offered. Although we believe our provisions are reasonable, with the uncertainties of the Phase II review and the suggestions of further retrospective reviews of other business transacted by the life assurance industry and independent financial advisors, there remains a possibility that the provisions made will be insufficient. We expect to pay out these established provisions over the next three years. 25 REGULATION--WE ARE SUBJECT TO INSURANCE INDUSTRY REGULATION WORLDWIDE. Our operations worldwide are subject to numerous governmental and quasi-governmental regulations. Although we believe that we are substantially in compliance with such regulations, changes in legislation or regulations and actions by regulators, including changes in administration and enforcement policies, may from time to time require operational improvements or modifications at various locations or the payment of fines and penalties, or both. See "Business--Regulation." The U.K. government's Department of Customs & Excise has issued its proposals to change the way in which value added tax (VAT) can be received by partially exempt groups (which includes Willis Corroon and other companies in the insurance industry). We have made representations against the proposals, in common with professional advisors and others in the industry. If the proposals were implemented as drafted, the cost to us could be approximately L4 million before taxes per year although there would be various steps which could be taken to mitigate this cost. PUT AND CALL ARRANGEMENTS--WE HAVE ENTERED INTO SIGNIFICANT PUT AND CALL ARRANGEMENTS. In connection with many of our investments in our associates, we retain rights to increase our ownership percentage of such associates over time and, in certain cases, the existing owners also have a right to put their shares to us at prices based on formulae related to earnings and, in certain cases, revenue at the date of exercise. Between 2001 and 2012, we are subject to a put arrangement whereby, if fully exercised, we would have the obligation to buy shares of Gras Savoye (other than those held by management), possibly bringing our ownership interest from 33% to 90%. Management shareholders of Gras Savoye (approximately 10% thereof) do not have general put rights between 2001 and 2012, but have certain put rights on their death, disability or retirement pursuant to which payments are not expected to exceed L15 million (if the full 10% is exercised). From 2001 to 2005, the incremental 57% of Gras Savoye may be put to Willis Corroon at a price equal to the greater of approximately 800 million French francs (L86.1 million at December 31, 1998 exchange rates) (for the full 57%) or a price determined by a contractual formula based on earnings and revenue. After 2005, the put price is determined solely by the formula. The shareholders may put their shares individually at any time during the put period. We can provide no assurance that such amounts will not be greater. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources." COMPETITION--WE OPERATE IN A VERY COMPETITIVE BUSINESS ENVIRONMENT. Willis Corroon faces competition in all fields in which it operates. Competition in the insurance brokering and risk management businesses is based on global capability, product breadth, innovation, quality of service and price. We compete with the two other providers of global risk management services as well as with numerous regional and local firms. Insurance companies also compete with our brokers by directly soliciting insureds without the assistance of an independent broker or agent. Competition for premiums is intense in all our business lines and in every insurance market. Competition on premium rates has also exacerbated the pressures caused by a continuing reduction in demand in some classes of business. For example, insureds are currently retaining a greater proportion of their risk portfolios than previously. Industrial and commercial companies are increasingly relying upon captive insurance companies, self-insurance pools, risk retention groups, mutual insurance companies and other mechanisms for funding their risks, rather than buying insurance. Willis Corroon provides management and similar services for such alternative risk transfer programs. Additional competitive pressures arise from the entry of new market participants, such as banks, accounting firms and insurance carriers themselves, offering risk management or transfer services. We can offer no assurance 26 that we can successfully respond to these competitive pressures or that we will be successful in otherwise realizing or maintaining any of our competitive advantages. See "Business--Competition." KEY PERSONNEL--OUR SUCCESS DEPENDS ON OUR PERSONNEL. Our success depends to a substantial extent not only on the ability and experience of our senior management, but also on the individual brokers and teams that service our clients and maintain client relationships. The insurance brokerage industry has in the past experienced intense competition for the services of leading individual brokers and brokerage teams, and we have lost key individuals and teams to competitors in the past. While we maintain non-competition agreements with substantially all our senior managers and brokers and have 361 of our key employees invested in the shares of TA I Limited, we will continue to be subject to the risk that such individuals or teams may leave Willis Corroon. The loss of the services of one or more such persons or teams could have a negative impact on our business. YEAR 2000--WE MAY BE ADVERSELY AFFECTED BY THE YEAR 2000 PROBLEM. The "year 2000 problem" relates to computer systems that are designed using two digits, rather than four, to represent a given year. Therefore, such systems may recognize "00" as the year 1900 rather than 2000, possibly resulting in major system failures or miscalculations and causing disruptions in our operations. Also, our operations could be disrupted by reason of any failure by our clients, insurance carriers or other third parties with whom we conduct business to achieve their own year 2000 compliance in a timely fashion. We have conducted a review of our computer systems to identify the systems that could be affected by the year 2000 problem and are nearing completion of our plan to be year 2000 compliant prior to December 31, 1999. As part of the program, we retained outside consultants, who, working with our information technology staff, have tested computer systems and identified problem areas. We do not expect to exceed the L4.2 million we budgeted for expenditures related to our year 2000 compliance program. While we believe that we will be taking appropriate steps to achieve our year 2000 compliance in a timely fashion, there can be no assurance that our computers (or those of third parties with whom we conduct business) will be year 2000 compliant prior to December 31, 1999, or that the costs incurred will not materially exceed amounts budgeted. We have received inquiries from our clients regarding our year 2000 compliance efforts and it is likely that our clients will require us to confirm that we are year 2000 compliant substantially in advance of December 31, 1999. INTERNATIONAL OPERATIONS--OUR SIGNIFICANT INTERNATIONAL OPERATIONS EXPOSE US TO EXCHANGE RATE FLUCTUATIONS. A significant portion of our operations is conducted outside the United Kingdom. Accordingly, we are subject to legal, economic and market risks associated with operating in foreign countries, including: - devaluations and fluctuations in currency exchange rates; - imposition of limitations on conversion of foreign currencies into pounds or dollars or remittance of dividends and other payments by foreign subsidiaries; 27 - imposition or increase of withholding and other taxes on remittances and other payments by subsidiaries; - hyperinflation in certain foreign countries; - imposition or increase of investment and other restrictions by foreign governments; - longer payment cycles; - greater difficulties in accounts receivable collection; and - the requirement of complying with a wide variety of foreign laws. In particular we transact business in more than 125 countries and in more than 100 currencies. Historically, we have reported our operating results in pounds sterling. Outside the U.K., we predominantly generate revenues and expenses in the local currency. Thus the exchange exposure (excluding economic exposure) is restricted to translation exposure on the profits of the operations. In the U.K., however, we earn revenue in a number of different currencies but expenses are almost entirely incurred in sterling. This mismatch creates an exchange exposure and arises mainly from Global Specialties and Global Reinsurance which serve their clients world-wide primarily from a U.K. base of operations. In 1998, approximately 22% of our total operating revenues were earned in sterling, 63% in U.S. dollars and 15% in other currencies. However, in 1998, 44% of Willis Corroon's total operating expenses were incurred in sterling, 47% in U.S. dollars and 9% in other currencies. As such, when sterling appreciates, which it has in recent years, the revenue associated with non-sterling business is translated into fewer pounds, while expenses, incurred in sterling, are not impacted. As a result, if sterling appreciates, all other things being equal, revenues, profits and margins decline. Given these facts, the strength of sterling in recent years has had a material negative impact on our reported results and we can provide no assurance that such risks will not have a material adverse effect on Willis Corroon in the future. INTRODUCTION OF THE EURO--WE MAY BE ADVERSELY AFFECTED BY THE INTRODUCTION OF THE EURO. On January 1, 1999, the euro replaced the currencies of eleven member states of the European Union, including countries in which we operate. There can be no assurance that the introduction of the euro will not increase the volatility of sterling exchange rates or result in the future appreciation of sterling. The United Kingdom government has stated that it will not participate in the European Economic and Monetary Union at its commencement, although it is possible that under certain circumstances it may participate at a later date. If the United Kingdom were to participate in the single currency, the pound sterling would be replaced by the euro. It is not clear on what terms the United Kingdom would participate in the European Economic and Monetary Union. We have made certain amendments to our systems software necessary for us to be able to place, settle and account for business in euros, while retaining the flexibility to continue to transact business in the existing national currency units if necessary. We have incurred approximately L0.9 million in connection with our efforts to be euro compliant and believe that all necessary steps have been taken and tested, and staff trained in the changes to working practices. While we believe that we have taken appropriate steps to become euro compliant in a timely fashion, we can provide no assurance that our efforts to do so have been completed or that the costs we may still incur will not materially exceed amounts budgeted. 28 IMPLEMENTATION OF BUSINESS STRATEGY--OUR ABILITY TO MAKE INTEREST PAYMENTS ON THE NOTES DEPENDS ON OUR IMPLEMENTATION OF OUR BUSINESS STRATEGY. Willis Corroon's strategic objectives are to grow revenues and cash flow and enhance its position as a leading provider of risk management services. To achieve these objectives, we implemented the change program and seek to: - capitalize on our strong global franchise by cross-selling existing and new products and services to our existing clients; - capitalize on our strong global franchise by targeting new clients in need of Willis Corroon's global reach and specialized services; - emphasize our value-added, fee-based risk management services; - increase operating efficiencies through specific cost reduction measures; and - strengthen our global franchise through selective acquisitions and strategic investments. If the change program and other initiatives do not produce improved results as and when expected, there will be less cash available to support the business after paying interest expense on the indebtedness. In addition, there can be no assurance that further implementation of the change program across our business units or any other strategies that we have described in this prospectus will be successful or will improve operating results. Other conditions may exist, such as unforeseen costs and expenses or an economic downturn, that may offset any improved operating results that are attributable to such business strategies. Further, any growth through acquisitions and investments will be dependent upon identifying suitable acquisition or investment candidates and successfully consummating such transactions at reasonable costs. See "--Competition" and "Prospectus Summary--Business Strategy." 29 FORWARD LOOKING STATEMENTS This prospectus includes "forward-looking statements" within the meaning of Section 27a of the Securities Act and Section 21e of the Securities Exchange Act of 1934. All statements other than statements of historical facts included in this prospectus, including, without limitation, statements regarding Willis Corroon's future financial position, strategy, projected costs and plans and objectives of management for future operations, including the benefits expected to be derived from the implementation of the change program, may be deemed to be forward-looking statements. Although Willis Corroon believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from Willis Corroon's expectations ("cautionary statements") are disclosed under "Risk Factors" and elsewhere in this prospectus, including, without limitation, in conjunction with the forward-looking statements included in this prospectus. All forward-looking statements attributable to Willis Corroon or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements. 30 PRESENTATION OF CURRENCY AND FINANCIAL INFORMATION; EXCHANGE RATES In this prospectus, unless otherwise specified or unless the context otherwise requires, all references to "pounds sterling", "sterling", "pound", "L" and "pence" are to the lawful currency of the United Kingdom of Great Britain and Northern Ireland (the "United Kingdom" or the "U.K."). In this prospectus, unless otherwise specified or unless the context otherwise requires, all references to "dollars" or "$" are to United States dollars. The consolidated financial statements of Willis Corroon are prepared in pounds sterling. Amounts stated in dollars, unless otherwise indicated, have been translated from pounds sterling at an assumed rate solely for the convenience of the reader, and should not be construed as representations that amounts in pounds sterling actually represent such dollar amounts or could be converted into dollars at the rate indicated. Except as otherwise indicated, such dollar amounts have been translated from pounds sterling at the rate of L1.00 = $1.66, the noon buying rate in the City of New York for cable transfers in pounds sterling as announced by the Federal Reserve Bank of New York for customs purposes (the "Noon Buying Rate") on December 31, 1998. The following table sets forth, for the periods and dates indicated, certain information concerning the Noon Buying Rate for pounds sterling expressed in dollars per L1.00. No representation is made that the pounds sterling or dollar amounts referred to herein could have been or could in the future be converted into dollars or pounds sterling, as the case may be, at any particular rate or at all. On - 1999, the Noon Buying Rate was L1.00 = $ - .
YEAR ENDED DECEMBER 31, PERIOD END AVERAGE(A) HIGH LOW - ------------------------------------------------------------------------- --------------- --------------- ----------- --------- 1993..................................................................... 1.48 1.50 1.59 1.42 1994..................................................................... 1.57 1.54 1.64 1.46 1995..................................................................... 1.55 1.58 1.62 1.53 1996..................................................................... 1.71 1.56 1.71 1.51 1997..................................................................... 1.64 1.64 1.69 1.60 1998..................................................................... 1.66 1.66 1.72 1.61 1999 (through -, 1999)................................................... - - - -
- ------------------------ (a) The average of the Noon Buying Rates on the last day of each month during relevant period. Unless otherwise indicated, financial information in this prospectus has been prepared in accordance with accounting principles generally accepted in the U.K. ("U.K. GAAP"). U.K. GAAP differs in certain respects from U.S. generally accepted accounting principles ("U.S. GAAP"). For a discussion of the most significant differences between U.K. GAAP and U.S. GAAP relevant to the Issuer and Willis Corroon Group, see Note 31 of the Notes to the Consolidated Financial Statements of Willis Corroon included elsewhere in this prospectus. Unless otherwise specifically stated in this document, none of the accounts or financial information in this document constitutes statutory accounts of Willis Corroon Group within the meaning of section 240(5) of the Companies Act 1985 of Great Britain. Statutory accounts of Willis Corroon Group relating to each completed financial period up to December 31, 1997 to which the financial information in this document relates have been delivered to the Registrar of Companies in England and Wales. The auditors of Willis Corroon Group at the relevant time have made a report of the kind required by Section 235 of the Companies Act 1985 with respect to such statutory accounts and each such report was an unqualified report and contained no statement under section 237(2) or (3) of the Companies Act 1985 (accounting records or returns inadequate, accounts not agreeing with records or returns or failure to obtain necessary information or explanations). Certain amounts and percentages included in this prospectus have been rounded and accordingly may not total. Apart from the consolidated financial statements of Willis Corroon Group, we do not publish separate financial statements for the Issuer or Willis Corroon Partners. 31 THE TENDER OFFER AND RELATED FINANCINGS THE TENDER OFFER On July 27, 1998, Warburg Dillon Read (a division of UBS AG), Chase Manhattan plc and HSBC Investment Bank plc commenced an offer on behalf of Trinity Acquisition (the "Tender Offer"), upon the terms and subject to the conditions set forth in the offer to purchase dated July 27, 1998 and the related acceptance forms, for (i) all of the outstanding ordinary shares of 12.5 pence each ("Willis Corroon Ordinary Shares") of Willis Corroon Group for 200 pence per Willis Corroon Ordinary Share in cash without interest and (ii) all of the American Depositary Shares ("Willis Corroon ADSs"), each representing five Willis Corroon Ordinary Shares and evidenced by American Depositary Receipts, of Willis Corroon Group for L10.00 per Willis Corroon ADS in cash without interest. The directors of Willis Corroon Group who were not connected with the Tender Offer unanimously recommended that all holders of Willis Corroon Ordinary Shares and Willis Corroon ADSs accept the Tender Offer. Under the Tender Offer, certain holders of Willis Corroon Ordinary Shares who validly accepted the Tender Offer were entitled to elect to receive loan notes instead of some or all of the cash consideration to which they would otherwise have been entitled. The loan notes are unsecured, and are guaranteed as to principal and interest by The Chase Manhattan Bank, and such guarantees are supported by letters of credit issued under the Permanent Facility Agreement. As of the completion of the Tender Offer, loan notes in an aggregate principal amount of L3,176,384 were outstanding. Prior to the announcement of the Tender Offer, Trinity Acquisition agreed to purchase 9.9% of Willis Corroon Group's issued share capital from Philips & Drew Fund Management Limited, conditional on the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. On September 2, 1998, having received valid acceptances from, or acquired Willis Corroon Ordinary Shares from, holders of approximately 54% of Willis Corroon Group's issued share capital, Trinity Acquisition determined that all the other conditions to the Tender Offer had been satisfied or waived and declared the Tender Offer "unconditional" as to acceptances. On September 25, 1998, Trinity Acquisition announced it had received acceptances from holders of more than 90% of Willis Corroon Group's issued share capital subject to the Tender Offer, and commenced the compulsory acquisition procedure under the United Kingdom Companies Act 1985 to acquire the remaining issued and outstanding share capital of Willis Corroon Group. The compulsory acquisition procedure was completed on November 10, 1998. THE OUTSTANDING NOTES AND THE REFINANCINGS The net proceeds from the issuance and sale of the outstanding Notes, which were approximately $534.4 million (approximately L321.9 million) after deduction of underwriting discounts and other expenses, were applied towards the repayment of amounts outstanding under a $575 million subordinated bridge facility, entered into on November 19, 1998, and provided by The Chase Manhattan Bank. The proceeds of borrowings under the subordinated bridge facility and the Permanent Facility Agreement on November 19, 1998 were applied: (i) to refinance amounts outstanding under a tender offer facility agreement, (ii) to refinance a $575 million senior subordinated promissory note loaned by the KKR 1996 Fund (Overseas), Limited to Trinity Acquisition to finance in part the Tender Offer and for other corporate purposes, (iii) to refinance other existing indebtedness and (iv) to pay related fees and expenses. 32 The subordinated bridge facility had a final maturity on November 19, 2008, with no interim amortization. The loans thereunder accrued interest on the date repaid at a rate of 9.375% per annum, which rate was due to increase over time. The tender offer facility consisted of a $475 million, nine month delayed draw term loan, which was entered into on July 22, 1998. The term loan was used by Trinity Acquisition to purchase the shares tendered in the Tender Offer. In addition, a portion of the revolving credit facility, which is part of the Permanent Facility Agreement, was available to the Issuer after Trinity had purchased more than 50% of the shares of Willis Corroon Group and was used to fund its working capital requirements and to refinance a portion of Willis Corroon's existing indebtedness. Amounts outstanding under the tender offer facility agreement were incurred periodically from September to October 1998, accrued interest on the date repaid at a rate equal to 7.8% per annum and had a final maturity on April 22, 1999. Amounts outstanding under the senior subordinated promissory note were periodically incurred from September to November 1998, accrued interest on the date repaid at a rate equal to 9.375% per annum and had a final maturity on September 14, 2009. The indebtedness that was refinanced in connection with the Transactions consisted of an estimated L87.6 million under short-term revolving credit facilities used for working capital, which accrued interest at a rate per annum equal to, at the borrower's election, the cost of funds for U.S. dollar deposits at LIBOR for one, two, three or six months, plus a margin ranging from 0.18% to 0.35%, and matured in October and November 1998. 33 The following chart illustrates the final corporate structure of Willis Corroon: [LOGO] (1) 361 key employees invested an aggregate of L13.1 million directly in the non-voting equity of TA I Limited. The amounts presented include 1,815,593 TA I ordinary shares that are held in trust on behalf of management, subject to vesting, but exclude the effect of options issued under the 1998 Share Purchase and Option Plan for Key Employees of the Company. See "Shareholders." (2) Indirect, wholly-owned subsidiary of TA II Limited. (3) Trinity Acquisition, Willis Corroon Group Limited, Willis Corroon Partners, the U.S. subsidiaries and certain U.K. subsidiaries are guarantors of the senior credit facilities. (4) Guarantor of the Notes. (5) Willis Corroon Partners is a Delaware general partnership that has no independent operations and no assets other than the capital stock of Willis Corroon Corporation. (6) Upon receipt of the proceeds of a $575 million subordinated bridge facility and the term loan facilities, Willis Corroon Corporation made intercompany loans to Trinity Acquisition in an aggregate amount sufficient to repay amounts outstanding under the tender offer facility agreement and a $575 million senior subordinated promissory note. Willis Corroon Corporation repaid the subordinated bridge facility with the proceeds from the outstanding Notes. 34 USE OF PROCEEDS Willis Corroon will not receive any cash proceeds from the issuance of the exchange Notes. In consideration for issuing the exchange Notes as contemplated in this prospectus, Willis Corroon will receive in exchange a like principal amount of outstanding Notes, the terms of which are identical in all material respects to the exchange Notes. The outstanding Notes surrendered in exchange for the exchange Notes will be retired and canceled and cannot be reissued. Accordingly, issuance of the exchange Notes will not result in any change in the capitalization of Willis Corroon. 35 CAPITALIZATION The following table sets forth the unaudited consolidated capitalization of Willis Corroon as of December 31, 1998, calculated in accordance with U.K. GAAP and U.S. GAAP on a historical basis and as of December 31, 1998, calculated in accordance with U.K. GAAP and U.S. GAAP on a pro forma basis after giving effect to the Transactions as if they had been consummated on such date. This table should be read in conjunction with "Unaudited Condensed Pro Forma Consolidated Financial Information," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Consolidated Financial Statements of Willis Corroon and the notes thereto included elsewhere herein. Other than as a result of the Transactions, there has been no material change in the capitalization of Willis Corroon since December 31, 1998, other than as described in note (e) below.
DECEMBER 31, 1998 ------------------------------------------------------------------- HISTORICAL PRO FORMA -------------------------------------------- --------------------- U.K. GAAP U.S. GAAP U.K. GAAP -------------------- ---------------------- --------------------- (IN MILLIONS) DEBT(A): Revolving credit facility(c)......... L 6.1 $ 10.1(b) L 6.1 $ 10.1(b) L 6.1 $ 10.1(b) Term loan facilities(d)....... 270.3 448.7 270.3 448.7 270.3 448.7 Notes................. -- -- -- -- 321.9 534.4 --------- --------- ---------- ---------- --------- ---------- Total debt(e)......... L276.4 $ 458.8 L276.4 $ 458.8 L598.3 $ 993.2 --------- --------- ---------- ---------- --------- ---------- SHAREHOLDERS' EQUITY: Share capital......... 53.6 89.0 53.6 89.0 53.6 89.0 Share premium / paid in capital.......... 28.5 47.3 850.4 1,411.7 28.5 47.3 Revaluation reserve(f).......... 14.9 24.7 -- -- 14.9 24.7 Retained earnings (deficit)........... (8.0) (13.3) (28.6) (47.5) (8.0) (13.3) --------- --------- ---------- ---------- --------- ---------- Total shareholders' equity.............. 89.0 147.7 875.4 1,453.2 89.0 147.7 --------- --------- ---------- ---------- --------- ---------- TOTAL CAPITALIZATION...... L365.4 $ 606.5 L1,151.8 $ 1,912.0 L687.3 $ 1,140.9 --------- --------- ---------- ---------- --------- ---------- --------- --------- ---------- ---------- --------- ---------- U.S. GAAP -------------- DEBT(A): Revolving credit facility(c).........L 6.1 $ 10.1(b) Term loan facilities(d).......270.3 448.7 Notes.................331.3 550.0 -- ---------- Total debt(e).........L 607.7 $ 1,008.8 -- ---------- SHAREHOLDERS' EQUITY: Share capital.........53.6 89.0 Share premium / paid in capital..........821.8 1,364.2 Revaluation reserve(f)..........-- -- Retained earnings (deficit)...........-- -- -- ---------- Total shareholders' equity..............875.4 1,453.2 -- ---------- TOTAL CAPITALIZATION......L1,483.1 $ 2,462.0 -- ---------- -- ----------
- ------------------------ (a) Under U.K. GAAP, debt issuance costs are netted from the calculation of total debt and amortized over the life of the debt. Under U.S. GAAP, such costs are recorded as an asset and amortized over the life of the debt. As of December 31, 1998, there was $575 million outstanding under the subordinated bridge facility which was accounted for as a current liability. The proceeds of the issuance of the outstanding Notes were used to repay a portion of the subordinated bridge facility. (b) U.S. dollar amounts have been translated at the Noon Buying Rate on December 31, 1998 of $1.66 = L1.00 solely for your convenience. (c) The revolving credit facility provides for revolving loans of up to $150 million for working capital and general corporate purposes. The balance outstanding on the revolving credit facility was repaid on February 11, 1999. See "Description of the Senior Credit Facilities." (d) The term loan facilities were borrowed by the Issuer on November 19, 1998 and consisted of (i) a $50 million tranche A facility, (ii) a $150 million tranche B facility, (iii) a $150 million tranche C facility and (iv) a $100 million tranche D facility. The Issuer has amended the amounts allocated to the various tranches. See "Description of the Senior Credit Facilities." (e) Total debt does not give effect to dollar denominated intercompany debt owed to Trinity Acquisition pursuant to group intercompany notes, which are subordinated in right of payment to the Notes, and which are offset by note receivables in the form of corresponding pound sterling denominated Trinity Acquisition intercompany notes. In addition, total debt does not give effect to a L92.9 million interest free convertible loan owed to Trinity Acquisition, which was converted into equity of Willis Corroon on February 3, 1999. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources." (f) Under U.K. GAAP, it is permissible to revalue fixed assets to market value and to credit the gain to the revaluation reserve. Willis Corroon has revalued properties in this manner. Revaluations are not permitted under U.S. GAAP. 36 UNAUDITED CONDENSED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION The following unaudited condensed pro forma consolidated financial statements of Willis Corroon are based on the consolidated financial statements of the Company, which are prepared in accordance with U.K. GAAP, included elsewhere in this prospectus. The Unaudited Condensed Pro Forma Consolidated Statement of Income for the year ended December 31, 1998 gives pro forma effect to the Transactions as if they had occurred on January 1, 1998 and the Unaudited Condensed Pro Forma Consolidated Balance Sheet at December 31, 1998 gives pro forma effect to the Transactions as if they had occurred on December 31, 1998. The pro forma adjustments are based upon available information and certain assumptions that management believes are reasonable. The pro forma consolidated financial statements do not purport to represent what Willis Corroon's results of operations or financial condition would actually have been had the Transactions in fact occurred on such date or to project the results of operations of Willis Corroon for any future period or the financial condition of Willis Corroon for any future date. The Pro Forma Consolidated Financial Statements should be read in conjunction with Willis Corroon's consolidated financial statements included elsewhere in this prospectus and "Management's Discussion and Analysis of Financial Condition and Results of Operations." 37 WILLIS CORROON GROUP LIMITED UNAUDITED CONDENSED PRO FORMA CONSOLIDATED BALANCE SHEET AT DECEMBER 31, 1998
PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA ---------- ------------- --------------------- (IN MILLIONS) AMOUNTS IN ACCORDANCE WITH U.K. GAAP: ASSETS CURRENT ASSETS Cash and short-term deposits............................. L 317.1 L 331.3(b) L 317.1 $ 526.4(a) (9.4)(b) (321.9)(c) Investments.............................................. 281.6 -- 281.6 467.5 Receivables.............................................. 2,559.2 -- 2,559.2 4,248.3 Loan to parent company................................... 1,235.4 -- 1,235.4 2,050.7 ---------- ------------- ---------- --------- Total current assets................................... 4,393.3 -- 4,393.3 7,292.9 FIXED ASSETS Tangible assets.......................................... 141.6 -- 141.6 235.1 Intangible assets--Goodwill.............................. 19.7 -- 19.7 32.7 Investments.............................................. 34.4 -- 34.4 57.0 ---------- ------------- ---------- --------- Total fixed assets..................................... 195.7 -- 195.7 324.8 ---------- ------------- ---------- --------- TOTAL ASSETS............................................. 4,589.0 -- 4,589.0 7,617.7 ---------- ------------- ---------- --------- ---------- ------------- ---------- --------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Trade payables........................................... 2,860.3 -- 2,860.3 4,748.1 Due to parent company.................................... 714.1 22.1(c) 736.2 1,222.1 Corporate tax............................................ 17.7 -- 17.7 29.4 Accruals and deferred income............................. 67.6 -- 67.6 112.2 Existing bank overdrafts................................. 6.3 -- 6.3 10.5 Subordinated bridge facility............................. 344.0 (344.0)(c) 0.0 0.0 Term loans............................................... 2.4 -- 2.4 4.0 Other.................................................... 103.3 -- 103.3 171.4 ---------- ------------- ---------- --------- Total current liabilities.............................. 4,115.7 (321.9) 3,793.8 6,297.7 NONCURRENT LIABILITIES Term loans............................................... 270.3 -- 270.3 448.7 Revolving credit facility................................ 6.1 -- 6.1 10.1 Senior subordinated notes................................ -- 321.9(d) 321.9 534.4 ---------- ------------- ---------- --------- Total long-term debt................................... 276.4 321.9 598.3 993.2 Other.................................................... 5.0 -- 5.0 8.3 ---------- ------------- ---------- --------- Total noncurrent liabilities........................... 281.4 321.9 603.3 1,001.5 PROVISIONS FOR LIABILITIES AND CHARGES................... 94.8 -- 94.8 157.4 MINORITY INTERESTS....................................... 8.1 -- 8.1 13.4 ---------- ------------- ---------- --------- Total liabilities and minority interests............... 4,500.0 -- 4,500.0 7,470.0 SHAREHOLDERS' EQUITY Share capital............................................ 53.6 -- 53.6 89.0 Share premium............................................ 28.5 -- 28.5 47.3 Revaluation reserve...................................... 14.9 -- 14.9 24.7 Retained earnings (deficit).............................. (8.0) -- (8.0) (13.3) ---------- ------------- ---------- --------- Total shareholders' equity............................. 89.0 -- 89.0 147.7 ---------- ------------- ---------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY............... L 4,589.0 -- L 4,589.0 $ 7,617.7 ---------- ------------- ---------- --------- ---------- ------------- ---------- --------- AMOUNTS IN ACCORDANCE WITH U.S. GAAP (f): Total assets............................................. L 5,369.9 L 9.4(g) L 5,379.3 $ 8,929.6 Total long-term debt..................................... 276.4 331.3 607.7 1,008.8 Total shareholders' equity............................... 875.4 -- 875.4 1,453.2 ---------- ------------- ---------- --------- ---------- ------------- ---------- ---------
See Notes to the Unaudited Condensed Pro Forma Consolidated Balance Sheet 38 NOTES TO UNAUDITED CONDENSED PRO FORMA CONSOLIDATED BALANCE SHEET (a) U.S. dollar amounts have been translated at the Noon Buying Rate on December 31, 1998 of $1.66 = L1.00 solely for your convenience. (b) Represents cash proceeds from the Notes offering made in connection with the Transactions as described in the table below. Under U.K. GAAP, debt issuance costs are netted against the related debt and amortized over the life of the debt.
DEBT COSTS NET DEBT --------- --------- ------------------------ (IN MILLIONS) NEW DEBT: Notes offering.................................... L331.3 L 9.4 L 321.9 $ 534.4 --------- --------- ----------- ----------- --------- --------- ----------- -----------
(c) Represents the net proceeds from the Notes that were used to refinance a portion of the subordinated bridge facility. See "The Transactions."
AMOUNT -------------------- (IN MILLIONS) USE OF PROCEEDS: Repayment of subordinated bridge facility.............................. L321.9 $ 534.4 --------- --------- --------- ---------
The balance of the total outstanding amount of the subordinated bridge facility of L344.0 million ($571.0 million) was repaid by borrowing a further L22.1 million ($36.7 million) from Trinity Acquisition. (d) Represents the net new debt incurred in connection with the Notes offering. See note (b) above. (e) Total long-term debt does not give effect to dollar denominated intercompany debt owed to Trinity Acquisition pursuant to group intercompany notes, which are subordinated in right of payment to the Notes, and which are offset by note receivables in the form of corresponding pound sterling denominated Trinity intercompany notes. In addition, total long-term debt does not give effect to a L92.9 million interest free convertible loan owed to Trinity Acquisition, which was converted into equity of Willis Corroon Group Limited on February 3, 1999. (f) U.K. GAAP differs in certain respects from U.S. GAAP. Summaries of the significant differences as they apply to the historical financial statements of Willis Corroon are set forth in Note 31 of the Notes to the Consolidated Financial Statements included elsewhere herein. Following the Transactions, under U.S. GAAP, the effects of the purchase accounting adjustments made in the financial statements of Trinity Acquisition are required to be pushed down into the financial statements of Willis Corroon. These pushed down adjustments are already included in the historical numbers at December 31, 1998 in the table below.
PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA ----------- ------------ --------------------- (IN MILLIONS) Shareholders' equity under U.K. GAAP................ L 89.0 L -- L 89.0 $ 147.7 U.S. GAAP adjustments: Fixed assets Intangible assets-goodwill........................ 793.7 -- 793.7 1,317.5 Current assets Current asset investments......................... 0.8 -- 0.8 1.3 Revaluation of forward exchange contracts......... 2.7 -- 2.7 4.5 Pension costs..................................... (16.3) -- (16.3) (26.9) Debt issuance costs............................... -- 9.4 9.4 15.6 Noncurrent liabilities Senior subordinated notes......................... -- (9.4) (9.4) (15.6) Provisions for liabilities and charges Deferred tax on above adjustments................. 5.5 -- 5.5 9.1 ----------- ------------ --------- ---------- Shareholders' equity under U.S. GAAP................ L875.4 L -- L875.4 $ 1,453.2 ----------- ------------ --------- ---------- ----------- ------------ --------- ----------
(g) The pro forma adjustment to the total assets under U.S. GAAP is the debt issuance costs (L9.4 million--see note (b)). 39 WILLIS CORROON GROUP LIMITED UNAUDITED CONDENSED PRO FORMA CONSOLIDATED STATEMENT OF INCOME YEAR ENDED DECEMBER 31, 1998
PRO FORMA ACQUISITION HISTORICAL ADJUSTMENTS ADJUSTMENTS PRO FORMA ----------- ------------- ------------- ---------------------- (IN MILLIONS) AMOUNTS IN ACCORDANCE WITH U.K. GAAP: CONTINUING OPERATIONS Commissions and fees......................... L677.7 L -- L17.3(d) L695.0 $1,153.7(a) Interest and investment income............... 40.3 -- -- 40.3 66.9 ----------- ------------- ------ --------- ----------- TOTAL OPERATING REVENUES..................... 718.0 -- 17.3 735.3 1,220.6 Operating expenses........................... (635.2) -- (14.1)(d) (649.3) (1077.8) ----------- ------------- ------ --------- ----------- OPERATING INCOME Continuing operations before exceptional items...................................... 82.8 -- 3.2 86.0 142.8 Exceptional items............................ (40.8) -- -- (40.8) (67.8) ----------- ------------- ------ --------- ----------- Continuing operations........................ 42.0 -- 3.2 45.2 75.0 Discontinued operations...................... -- -- -- -- -- Gain on disposal of operations............... (29.3) -- -- (29.3) (48.6) Share of profit of associates................ 6.3 -- 0.4(e) 6.7 11.1 Interest expense............................. (3.2) (50.2)(b) -- (53.4) (88.6) ----------- ------------- ------ --------- ----------- INCOME/(LOSS) BEFORE TAXATION................ 15.8 (50.2) 3.6 (30.8) (51.1) Taxation..................................... (54.4) 15.6(c) (1.1)(c) (39.9) (66.3) ----------- ------------- ------ --------- ----------- INCOME/(LOSS) AFTER TAXATION................. (38.6) (34.6) 2.5 (70.7) (117.4) Minority interests........................... (2.7) -- (1.5) (4.2) (6.9) ----------- ------------- ------ --------- ----------- NET INCOME/(LOSS)............................ L(41.3) L(34.6) L 1.0 L(74.9) $(124.3) ----------- ------------- ------ --------- ----------- ----------- ------------- ------ --------- ----------- AMOUNTS IN ACCORDANCE WITH U.S. GAAP (f): Net income/(loss).......................... L(54.9) L(37.8) L 0.8 L(91.9) $(152.5) ----------- ------------- ------ --------- ----------- ----------- ------------- ------ --------- -----------
See Notes to the Unaudited Condensed Pro Forma Consolidated Statements of Income 40 NOTES TO UNAUDITED CONDENSED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME (a) U.S. dollar amounts have been translated at the Noon Buying Rate on December 31, 1998 of $1.66 = L1.00 solely for your convenience. (b) The pro forma adjustment for interest expense reflects (i) the elimination of the historical interest expense and (ii) the interest expense that would have been incurred on the Notes, the term loans and borrowings under the revolving credit facility as follows:
YEAR ENDED DECEMBER 31, 1998 -------------------- (IN MILLIONS) Elimination of historical interest expense.......................................... L 3.2 $ 5.3 Interest expense on $1,000 million of new debt using the actual blended interest rate at December 31, 1998 of 8.6% (including the actual 9% per annum rate on the Notes)............................................................................ (51.5) (85.5) Amortization of deferred financing costs on new debt................................ (1.9) (3.2) --------- --------- Total interest adjustment........................................................... L(50.2) $ (83.4) --------- --------- --------- ---------
(c) Taxation expense is adjusted to reflect the tax provision effect of the pro forma interest adjustments at the U.K. statutory rate of corporation tax of 31%. (d) This adjustment adds the results of (i) the 50% interest in Gruppo Ital Brokers, which was acquired in July 1998, and (ii) the increased investment in our Spanish associate from 48% to 60% and the reorganization of the existing Spanish and Portuguese operations in July 1998 as if the acquisitions and reorganization had occurred on January 1, 1998. (e) This adjustment adds the result of the 30% interest in Assurandrgruppen, which was acquired in September 1998, as if the acquisition had occurred on January 1, 1998. 41 NOTES TO UNAUDITED CONDENSED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME (CONTINUED) (f) U.K. GAAP differs in certain respects from U.S. GAAP. Summaries of the significant differences as they apply to the historical financial statements of Willis Corroon are set forth in Note 31 of the Notes to the Consolidated Financial Statements included elsewhere herein. Following the Transactions, under U.S. GAAP, the effects of the purchase accounting adjustments made in the financial statements of Trinity Acquisition are required to be pushed down into the financial statements of Willis Corroon.
PRO FORMA ACQUISITION HISTORICAL ADJUSTMENTS ADJUSTMENTS PRO FORMA ----------- ------------- --------------- -------------------- (IN MILLIONS) Net income/(loss) under U.K. GAAP............. L(41.3) L (34.6) L 1.0 L(74.9) $ (124.3) U.S. GAAP adjustments: Goodwill amortization....................... (18.5) 18.5(i) (0.2) (20.8) (34.5) (20.6)(ii) Goodwill amortization adjustment on disposal.................................. 9.6 -- -- 9.6 15.9 Revaluation of forward exchange contracts... (3.5) -- -- (3.5) (5.8) Pension costs............................... (3.3) (1.7)( ii) -- (5.0) (8.3) Deferred tax on above adjustments........... 2.1 0.6 -- 2.7 4.5 ----------- ------ ----- --------- --------- Net income/(loss) under U.S. GAAP............. L(54.9) L(37.8) L0.8 L(91.9) $ (152.5) ----------- ------ ----- --------- --------- ----------- ------ ----- --------- ---------
---------------------------- (i) Reversal of historical amortization of goodwill and expirations. (ii) Full year amortization of pushed down goodwill over 40 years. (iii) Revised full year pension cost pushed down. 42 SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA The selected consolidated financial data presented below for and as of the end of the five years in the period ended December 31, 1998 have been derived from, and should be read in conjunction with, the audited consolidated financial statements of Willis Corroon and the notes thereto that are included elsewhere in this prospectus. Willis Corroon prepares its consolidated financial statements in accordance with U.K. GAAP, which differs in certain respects from U.S. GAAP. Reconciliations of net income and shareholders' equity reflecting the significant differences between U.K. GAAP and U.S. GAAP are set forth in those financial statements. Under U.K. GAAP, the acquisition of Willis Corroon by Trinity Acquisition has no impact on the historical amounts reported subsequently by Willis Corroon and, accordingly, combined amounts for the years ended December 31, 1998 are presented. Under U.S. GAAP, the purchase of Willis Corroon by Trinity Acquisition established a new basis of accounting for the purchased assets and liabilities from September 2, 1998. Accordingly, under U.S. GAAP, it is not appropriate to present combined amounts for the year ended December 31, 1998.
YEAR ENDED JANUARY 1 TO SEPTEMBER 2 TO DECEMBER YEAR ENDED DECEMBER 31, SEPTEMBER 1, DECEMBER 31, 31, ------------------------------------------ --------------- --------------- --------- 1994 1995 1996 1997 1998 1998 1998 --------- --------- --------- --------- --------------- --------------- --------- (IN MILLIONS) STATEMENT OF INCOME DATA: Amounts in accordance with U.K. GAAP: Continuing operations Operating revenues.................... L 709.7 L 706.4 L 725.0 L 692.0 L468.8 L 249.2 L 718.0 Operating income before exceptional items(b)............................ 57.9 79.4 87.8 92.1 56.8 26.0 82.8 Share of profit of associates......... 5.9 6.8 3.5 1.9 7.7 (1.4) 6.3 Interest expense...................... (6.4) (7.2) (2.2) (0.7) (2.0) (1.2) (3.2) Income / (loss) before tax............ 8.3 62.4 91.6 95.5 (1.3) 17.1 15.8 Total operations Net income / (loss)................... 0.1 29.0 54.2 56.9 (15.6) (25.7) (41.3) Amounts in accordance with U.S. GAAP: Continuing operations Operating revenues.................... 709.7 706.4 725.0 692.0 468.8 249.2 Operating income before exceptional items(b)............................ 49.1 60.6 70.9 63.1 43.4 14.1 Share of profit of associates(c)...... 5.9 6.8 3.5 1.9 7.7 (1.4) Interest expense...................... (6.4) (7.2) (2.2) (0.7) (2.0) (1.2) Income / (loss) before tax............ 43.1 1.5 74.7 66.5 (5.1) 5.2 Total operations Net income / (loss)................... 16.2 (18.0) 37.7 36.2 (19.0) (35.9) OTHER FINANCIAL DATA: Amounts in accordance with U.K. GAAP: Depreciation and amortization......... 28.8 24.4 24.5 22.7 15.5 8.9 24.4 Capital expenditures.................. 35.3 21.6 28.9 26.5 20.1 9.8 29.9 Ratio of earnings to fixed charges(d).......................... 1.4x 4.3x 7.6x 10.5x -- 10.9x 2.9x Amounts in accordance with U.S. GAAP: Depreciation and amortization......... L 47.6 L 42.9 L 42.4 L 40.4 L 27.5 L 15.4 Capital expenditures.................. 35.3 21.6 28.9 26.5 20.1 9.8 Ratio of earnings to fixed charges(d).......................... 3.4x 1.0x 6.4x 7.6x -- 4.8x BALANCE SHEET DATA (AT PERIOD END): Amounts in accordance with U.K. GAAP: Total assets............................ L2,253.3 L3,703.7 L3,377.2 L3,304.3 L 4,589.0 L4,589.0 Total long-term debt.................... 115.1 61.9 17.9 34.0 276.4 276.4 Total shareholders' equity.............. 150.2 120.6 151.9 124.6 89.0 89.0 Amounts in accordance with U.S. GAAP: Total assets............................ 2,915.2 4,376.0 3,953.5 3,763.4 5,369.9 5,369.9 Total long-term debt.................... 115.1 61.9 17.9 34.0 276.4 276.4 Total shareholders' equity.............. 629.1 587.3 560.2 583.6 875.4 875.4 1998 --------- STATEMENT OF INCOME DATA: Amounts in accordance with U.K. GAAP: Continuing operations Operating revenues.................... $ 1,191.9(a) Operating income before exceptional items(b)............................ 137.4 Share of profit of associates......... 10.5 Interest expense...................... (5.3) Income / (loss) before tax............ 26.2 Total operations Net income / (loss)................... (68.6) Amounts in accordance with U.S. GAAP: Continuing operations Operating revenues.................... Operating income before exceptional items(b)............................ Share of profit of associates(c)...... Interest expense...................... Income / (loss) before tax............ Total operations Net income / (loss)................... OTHER FINANCIAL DATA: Amounts in accordance with U.K. GAAP: Depreciation and amortization......... 40.5 Capital expenditures.................. 49.6 Ratio of earnings to fixed charges(d).......................... 2.9x Amounts in accordance with U.S. GAAP: Depreciation and amortization......... Capital expenditures.................. Ratio of earnings to fixed charges(d).......................... BALANCE SHEET DATA (AT PERIOD END): Amounts in accordance with U.K. GAAP: Total assets............................ $ 7,617.7 Total long-term debt.................... 458.8 Total shareholders' equity.............. 147.7 Amounts in accordance with U.S. GAAP: Total assets............................ 8,914.0 Total long-term debt.................... 458.8 Total shareholders' equity.............. 1,453.2
- ---------------------------------- (a) U.S. dollar amounts have been translated at the Noon Buying Rate on December 31, 1998 of $1.66 = L1.00 solely for your convenience. (b) Exceptional items charged against continuing operations' operating income for the year ended December 31, 1995 consisted of losses of L16.6 million relating to properties that were surplus to operational requirements. For the period January 1 to September 1, 1998, exceptional items charged against operating income totalled L35.8 million and consisted of provisions of L25.0 million for claims and costs associated with the review of personal pensions plans sold between 1988 and 1994 and costs of L10.8 million incurred in connection with the acquisition of Willis Corroon by Trinity Acquisition. For the period September 2 to December 31, 1998 exceptional items charged against operating income totalled L5.0 million and consisted of debt issuance costs incurred in connection with the acquisition of Willis Corroon by Trinity Acquisition. See Note 4 of the Notes to the Consolidated Financial Statements. (c) Under U.S. GAAP, Willis Corroon's share of profits of associates would normally be presented on an after tax basis. The presentation adopted conforms to U.K. GAAP where Willis Corroon's share of profits of associates is shown on a before tax basis. (d) The ratio of earnings to fixed charges is computed by dividing earnings from continuing operations by fixed charges. For these purposes, "earnings" consists of income before taxation less the retained equity in share of profits of associates and fixed charges. "Fixed charges" consists of interest expense (including amortization of debt issuance costs) and the interest element of operating lease rentals. Due to the exceptional charges referred to in (b) above, the earnings under U.K. GAAP and U.S. GAAP for the period January 1 to September 1, 1998 were inadequate to cover fixed charges. The amount of the deficiencies were L7.1 million under U.K. GAAP and L10.9 million under U.S. GAAP. 43 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THE FOLLOWING DISCUSSION GENERALLY RELATES TO THE HISTORICAL CONSOLIDATED RESULTS OF OPERATIONS AND FINANCIAL CONDITION OF WILLIS CORROON AND SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED FINANCIAL STATEMENTS OF WILLIS CORROON INCLUDED ELSEWHERE HEREIN. FOR INFORMATION REGARDING THE PRO FORMA FINANCIAL CONDITION OF WILLIS CORROON, SEE "UNAUDITED CONDENSED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION" AND "--LIQUIDITY AND CAPITAL RESOURCES." THE FOLLOWING DISCUSSION AND ANALYSIS IS BASED ON THE CONSOLIDATED FINANCIAL STATEMENTS OF WILLIS CORROON, WHICH ARE PREPARED IN ACCORDANCE WITH U.K. GAAP. THE PRINCIPAL DIFFERENCES BETWEEN U.K. GAAP AND U.S. GAAP AS THEY RELATE TO WILLIS CORROON ARE DISCUSSED IN NOTE 31 OF THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF WILLIS CORROON INCLUDED ELSEWHERE HEREIN. OVERVIEW Willis Corroon generates revenue from: - commissions and fees on insurance placements; - fees from consulting and other services; and - interest earned on premiums held prior to remission to the insurer and on claims held prior to payment to the insured. Although commissions and interest have traditionally been the greatest sources of revenues, fee income (from both insurance placements and consulting and other services) has been increasing as a percentage of total revenues in recent years, while commission income has been declining largely because of (1) increased demand by clients for fee-generating risk management consulting services and (2) pressure on insurance premium rates (and therefore brokerage commissions) due to competitive factors impacting the insurance industry. Willis Corroon expects this trend toward increasing fee income to continue. See "Business--Industry Overview." Willis Corroon is a holding company, with two groups of subsidiary companies, one based in North America and one based in the U.K. From an operating standpoint, Willis Corroon conducts its activities through five business units: - North American Operations; - U.K. Retail; - Global Specialties; - Global Reinsurance; and - International. See "Business." During fiscal 1998, 41% of Willis Corroon's total revenues were derived from North American Operations, 22% were from Global Specialties, 18% were from U.K. Retail, 10% were from Global Reinsurance and 9% were from International operations. In terms of 1998 EBITDA (defined as operating income from continuing operations before exceptional items and depreciation and amortization, plus share of profit of associates), Global Specialties and U.K. Retail produced a higher percentage of EBITDA than revenues and North American Operations produced a lower percentage. In December 1995, John Reeve became Executive Chairman and the changes started in 1994 (cost controls and disposals of non-core businesses) were refocused and expanded with the 44 development of the change program. The initiatives under the change program were launched in 1996 and are designed to enhance revenues, improve efficiency and change Willis Corroon from a traditional commission-based insurance broker to a more comprehensive professional advisory services firm. As part of the change program, Willis Corroon has established certain key initiatives to: - enhance operating efficiencies; - intensify its efforts to develop existing and new accounts and - increase cross-selling of both existing and new products and services to its existing clients, thereby creating direct economic benefits for clients, carriers and Willis Corroon. Willis Corroon also intends to streamline administrative processes with a selected number of insurance carriers and also work closely with certain insurance carriers to generate new product and service ideas. In addition, Willis Corroon has developed initiatives focused on maximizing the talent and expertise of its brokers and consultants in order to more efficiently manage these resources. Accordingly, Willis Corroon has developed improved techniques for recruitment and assessment; implemented a new and more frequent appraisal process, including peer review; created new training and development programs; implemented a new incentive structure for producers in the U.S.; invested in technology to enhance communication and knowledge sharing among employees; and formed practice groups to share knowledge on specific industry or product areas. Since 1995, Willis Corroon has incurred a number of non-recurring expenses in its continuing operations, a portion of which relate to the change program. These expenses include the following: - PENSION REVIEW PROVISIONS--the provisions made for claims and costs associated with the review of personal pension plans sold between 1988 and 1994. Willis Corroon recorded provisions of L1.0 million, L0.2 million and L2.3 million for such claims and costs in 1995, 1996 and 1997, respectively and in 1998 recorded, as an exceptional item, a further L25.0 million provision for such claims. See "Business--Legal Proceedings." - LLOYD'S RECONSTRUCTION AND RENEWAL PLAN EXPENSES--the cost of Willis Corroon's brokers' contribution to the Lloyd's Reconstruction and Renewal Plan. See "Results of Operations-- Fiscal 1997 compared with Fiscal 1996" for a discussion of the Lloyd's Reconstruction and Renewal Plan. Willis Corroon incurred L2.6 million, L2.2 million and L2.0 million of such expenses in 1996, 1997 and 1998, respectively. There were no such expenses in 1995. Willis Corroon expects to continue to incur such expenses in 1999 and 2000. - SEVERANCE PROVISIONS--the provisions recorded for severance costs incurred as part of the change program. Willis Corroon incurred L11.3 million, L3.4 million and L9.6 million of such severance costs in 1996, 1997 and 1998, respectively. There were no provisions for severance costs connected with the change program recorded in 1995. - OTHER EXPENSES--consulting expenses primarily incurred in connection with the change program and costs incurred in connection with Willis Corroon's investment in World Insurance Network, a project set up by the then six largest brokers in the world to establish a secure and reliable medium for electronic commerce between insurance and reinsurance carriers, brokers and clients. Additionally, the 1997 and 1998 expenses included costs related to the acquisition of broker teams. Willis Corroon incurred L0.7 million, L6.9 million, L10.0 million and L10.5 million of such expenses in 1995, 1996, 1997 and 1998, 45 respectively. Expenses for 1998 also included, as an exceptional item, L15.8 million in expenses arising out of the acquisition of Willis Corroon by Trinity Acquisition. - 1998 PROJECTS--costs incurred in connection with (1) the European Economic and Monetary Union project to convert Willis Corroon's operating systems and procedures to be able to handle business denominated, accounted or settled in the euro, which was introduced as a trading currency on January 1, 1999; (2) the Peoplesoft project, which aims to provide replacement year 2000 and European Economic and Monetary Union compliant computer systems for the finance and human resources functions; (3) the Strategic Insurer Relations project in connection with Willis Corroon's efforts to enhance strategic relations with certain insurers; and (4) the Knowledge Management project, which provides an Intranet site containing information such as market and competitor news. Willis Corroon incurred L2.8 million of expenses in connection with such 1998 Projects in the year ended December 31, 1998. These non-recurring expenses affected Willis Corroon's actual reported results, offsetting the benefits in both margin and EBITDA improvement. While Willis Corroon will continue to incur additional severance and other costs relating to the change program in the future, these expenses are expected to decline as the remainder of the change program is implemented. In addition to these non-recurring expenses, in recent years Willis Corroon has completed a number of dispositions and acquisitions as part of its efforts to focus its operations out of non-core or non-profitable businesses and to expand its global capabilities. The following identifies the operations sold or closed from 1995 through 1998: - HEDDINGTON BROKERS LIMITED--an associate based in Bermuda in which Willis Corroon had a 50% interest, that was sold in 1995; - IRPC/PPC--two consulting companies, previously part of U.K. Retail, that were sold in 1996; - WF CORROON--a benefits consulting operation, previously part of North American Retail and U.K. Retail, that was sold in 1996; - CONSUMER BENEFIT LIFE INSURANCE COMPANY/MANAGEMENT SCIENCE ASSOCIATES --two North American retail business operations that were sold in 1996; - WILLIS FABER & DUMAS (AGENCIES) LIMITED--a Lloyd's members' agent that was sold in October 1997; and - PROFESSIONAL LIABILITY UNDERWRITING MANAGEMENT--part of North American Operations that was closed in the second quarter of 1998. In addition, in 1995 Willis Corroon sold its remaining interest in Gryphon Holdings, Inc., a discontinued operation which had been accounted for as an associate. During the same period, Willis Corroon has continued to expand its global presence through the following acquisitions and strategic investments: - GRAS SAVOYE--Willis Corroon acquired a 33% interest in Gras Savoye & Cie, France's leading insurance broker, in December 1997; 46 - JASPERS WUPPESAHL--Willis Corroon's then existing German associate, C. Wuppesahl & Co. Assekuranzmakler, merged with Jaspers Industrie Assekuranz GmbH & Co., KG in January 1998 to create the third largest insurance broker in Germany, in which Willis Corroon now has a 44.6% interest; - YORK WILLIS CORROON--Willis Corroon increased its investment in its Brazilian associate from 30% to 100% in April 1997; - WILLIS CORROON SCHEUER--Willis Corroon increased its investment in its Netherlands associate from 40% to 100% in January 1997; - WILLIS CORROON RICHARD OLIVER PTY LTD--Willis Corroon increased its investment in its Australian associate from 49.75% to 100% in January 1997; - WILLIS NATIONAL--in August 1997 Willis Corroon combined the operations of Willis Corroon Financial Planning Limited, its U.K. financial advisory business, with the independent financial advisory business of Abbey National plc to form a joint venture 51% owned by Willis Corroon within U.K. Retail; - GRUPPO ITAL BROKERS--Willis Corroon acquired a 50% interest in an Italian subsidiary in July 1998; and - ASSURANDRGRUPPEN--Willis Corroon acquired a 30% interest in a Danish associate in September 1998. - S&C WILLIS CORROON--Willis Corroon increased its investment in its Spanish associate from 48% to 60% and reorganized its existing Spanish and Portuguese operations in July 1998. In addition, Willis Corroon is in the process of combining all of its existing Spanish and Portuguese operations. Willis Corroon has also announced arrangements which are expected to result in Willis Corroon having a 45% interest in a Venezuelan retail broker and an estimated 75% interest in a Venezuelan reinsurance broker. These acquisitions and dispositions also affect the actual trends in operating revenues and EBITDA on a continuing operations basis. Because the impact of the dispositions has exceeded the impact of the acquisitions since 1995, the growth rates in the businesses currently operated by Willis Corroon are not apparent from Willis Corroon's financial statements. For a presentation of Willis Corroon's results after adjusting for dispositions, acquisitions and certain non-recurring items, see "Prospectus Summary--Summary Historical and Unaudited Pro Forma Consolidated Financial Information." In connection with many of its investments in associates, Willis Corroon retains rights to increase its ownership percentage of such associates over time and, in certain cases, the existing owners also have a right to put their shares to Willis Corroon. See "--Liquidity and Capital Resources." Willis Corroon typically obtains representation on the boards of directors which allows it to exercise influence over the associates' businesses. Willis Corroon's Consolidated Statement of Income includes an item captioned "Share of Profit of Associates." This item reflects Willis Corroon's share of the pre-tax profits of its associates (entities in which it owns more than 20% but no more than 50%). This amount on the income statement, however, does not reflect the cash flow from the associates. Willis Corroon typically receives a cash dividend (generally based on a percentage of net income, if positive). Willis Corroon's Consolidated Statement of Cash Flows includes the line entitled "Dividends from Associates". 47 Like many insurance brokers, Willis Corroon earns revenue in an uneven fashion during the year, primarily due to the timing of insurance policy renewals. Although the majority of revenue and profit has historically been earned in the first quarter and substantially all of such revenue and profit has historically been earned in the first half of the year, in recent years Willis Corroon's revenues and profits have been spread more equally throughout the year. For example, in 1994, Willis Corroon earned 72% of its annual operating income in the first quarter and 95% in the first half, as compared to 45% in the first quarter and 62% in the first half of 1998. The trend of declining premiums has contributed to the shifting of revenue into later in the year ("re-phasing") as clients delay purchasing long-term policies in order to benefit from declining rates. In addition, contingent commissions, which are generally based on volume placements or on the profitability of a risk class, have increased in recent years and are typically paid at the end of the year, further adding to revenue and profit in the fourth quarter. Expenses are incurred on a relatively even basis throughout the year. As a result of these re-phasing differences, period to period comparisons that are based on less than full year periods may not be valid. In recent years, operating revenues have not been significantly influenced by inflation. However, with Willis Corroon's staff and related costs generally accounting for approximately 65% of Willis Corroon's total operating expenses, Willis Corroon is affected by general inflationary pressures in each of the countries in which it operates. As an intermediary, Willis Corroon holds funds in a fiduciary capacity for the account of third parties, typically as the result of premiums received from clients that are in transit to insurance carriers and claims due to clients that are in transit from insurance carriers. Premiums which are held on account of or due from policyholders are reported as assets of Willis Corroon with a corresponding liability due to the insurance carriers. Claims held by or due to Willis Corroon which are due to clients are also shown as both assets and liabilities of Willis Corroon. All such balances due or payable are included in "receivables" and "trade payables" on the balance sheet. Willis Corroon earns interest on such funds during the time between the receipt of the cash and the time the cash is paid out. Fiduciary cash must be kept in certain regulated bank accounts subject to guidelines, which generally emphasize capital preservation and liquidity, and is not generally available to service Willis Corroon's debt or for other corporate purposes. Therefore, despite short-term deposits and cash of L317.1 million and investments of L281.6 million at December 31, 1998, Willis Corroon had minimal excess cash which it could access at such date. See "--Liquidity and Capital Resources." Although Willis Corroon discontinued its U.K. underwriting operations in 1991, it is still required to handle the administration of claims arising from insurance business previously written by Willis Faber (Underwriting Management) on behalf of Sovereign and third party insurance carriers. Sovereign was placed into provisional liquidation on July 11, 1997. See "Risk Factors--Sovereign/ WFUM" and "Business--Legal Proceedings." The strength of sterling in recent years has had a material impact on Willis Corroon's reported results, both by reducing revenues and reducing margins due to Willis Corroon's large sterling expense base. The discussion set forth below under "--Results of Operations" discusses both actual results of Willis Corroon's operating units and results on a "constant currency" basis, assuming, for the TWO applicable periods being compared, that the currency exchange rates used in the later period for (1) recording the non-sterling transactions of U.K. based subsidiaries at achieved rates of exchange and (2) translating the results of non-U.K. based subsidiaries at average rates of exchange, were also in effect in the earlier period. Willis Corroon believes that when comparing results of two periods, it is relevant to consider changes on the basis of constant currency exchange rates. See "Supplemental Constant Currency Financial Data" for an analysis of historical results from 1995 through 1998 adjusted for acquisitions, dispositions and non-recurring items and assuming constant currency rates in ALL periods presented. Willis Corroon Group is considering changing its reporting currency from pounds sterling to U.S. dollars. No decision has been made as to this matter. 48 RESULTS OF OPERATIONS FISCAL 1998 COMPARED WITH FISCAL 1997 The consolidated statement of income of Willis Corroon included elsewhere in this prospectus has been presented separately for the period from January 1, 1998 to September 1, 1998, the effective date of the acquisition by Trinity Acquisition of Willis Corroon, and for the period from September 2, 1998 to December 31, 1998 in accordance with the requirements of the U.S. Securities and Exchange Commission. Management believes that it is more appropriate to present financial data on a combined basis because, under U.K. GAAP, the acquisition does not change the basis of accounting for Willis Corroon. The discussion set forth below of Willis Corroon's performance is based on the combined period ended December 31, 1998 compared with the year ended December 31, 1997 which management believes is more meaningful for investors. The following table summarizes the combined results for the year ended December 31, 1998:
JANUARY 1 TO SEPTEMBER 2 TO YEAR ENDED SEPTEMBER 1, DECEMBER 31, DECEMBER 31, 1998 1998 1998 ----------------- ---------------- -------------- (IN MILLIONS) Continuing Operations Commissions and fees......................................... L441.9 L235.8 L677.7 Interest and investment income............................... 26.9 13.4 40.3 ------- ------- ------- 468.8 249.2 718.0 Discontinued Operations...................................... -- 0.2 0.2 ------- ------- ------- Total operating revenues..................................... 468.8 249.4 718.2 Net operating expenses....................................... (412.0) (223.4) (635.4) ------- ------- ------- Operating income before exceptional items.................... 56.8 26.0 82.8 Exceptional items............................................ (35.8) (5.0) (40.8) ------- ------- ------- Operating income............................................. 21.0 21.0 42.0 Share of profit of associates................................ 7.7 (1.4) 6.3 Loss on closure/disposal of operations....................... (28.0) (1.3) (29.3) Interest expense............................................. (2.0) (1.2) (3.2) ------- ------- ------- Income/(loss) before taxation................................ (1.3) 17.1 15.8 Taxation..................................................... (13.5) (40.9) (54.4) ------- ------- ------- Income/(loss) after taxation................................. (14.8) (23.8) (38.6) Minority interests........................................... (0.8) (1.9) (2.7) ------- ------- ------- Net income/(loss)............................................ (15.6) (25.7) (41.3) ------- ------- ------- ------- ------- -------
SUMMARY Operating revenues increased by L24.2 million (3.5%) from L694.0 million in fiscal 1997 to L718.2 million in fiscal 1998. In constant currency terms, operating revenues increased by 6%. Excluding the adverse effects of foreign currency exchange rate movements (L12.8 million), the loss of operating revenues from businesses sold (L8.5 million) and the operating revenues gained from acquisitions (L23.8 million), operating revenues were 3.2% higher in fiscal 1998 than in fiscal 1997. 49 Income before taxation and exceptional items decreased by L7.4 million (8%) from L93.3 million in fiscal 1997 to L85.9 million in fiscal 1998. In constant currency terms, income before taxation and exceptional items decreased by 4%. Excluding the adverse effects of foreign currency exchange rate movements (L4.1 million), the loss of income from businesses sold (L4.7 million), the income gained from acquisitions (L13.8 million) and also excluding the adverse effects of higher non-recurring expenses (L7.0 million), income before interest, taxation and exceptional items decreased by 1%. Three exceptional charges were made in fiscal 1998. A further provision amounting to L25.0 million was made as an exceptional item for costs expected to be incurred in connection with the pension review; L15.8 million was incurred by Willis Corroon in connection with the offer by Trinity Acquisition for all of the issued share capital of Willis Corroon Group; and a L29.3 million loss on disposal (which included a goodwill write-off of L29.6 million) was incurred almost entirely upon the closure of Professional Liability Underwriting Management, Willis Corroon's professional liability wholesale operation in the U.S. After these exceptional charges, income before taxation decreased by L79.7 million (83%) from L95.5 million in fiscal 1997 to L15.8 million in fiscal 1998. Net income decreased by L98.2 million (173%) from L56.9 million in fiscal 1997 to a loss of L41.3 million in fiscal 1998, partly as the result of the exceptional charges referred to above. In addition, the tax charge for fiscal 1998 included L33.1 million written off in respect of U.K. advance corporation tax and deferred tax balances (see "--Taxation.") COMMISSIONS AND FEES--CONTINUING OPERATIONS Commissions and fees earned from Willis Corroon's continuing operations increased by L25.7 million (3.9%) from L652.0 million in fiscal 1997 to L677.7 million in fiscal 1998. In constant currency terms, commissions and fees increased by 5.9%. Excluding the effects of businesses sold (L8.0 million) and businesses acquired (L24.3 million), commissions and fees increased by 3.4% in constant currency terms predominantly from improved results in North American Retail and Global Broking Services. NORTH AMERICAN OPERATIONS: Commissions and fees earned by Willis Corroon's North American Retail operations increased by L13.8 million (5.5%) from L249.7 million in fiscal 1997 to L263.5 million in fiscal 1998. In constant currency terms, commissions and fees increased by 7.2%, due in part to various initiatives implemented as part of the change program, which significantly enhanced new business gains and improved performance in obtaining renewed business. Commissions and fees earned by the Willis Corroon's U.S. Wholesale operations decreased by L2.0 (6.5%) million from L30.6 million in fiscal 1997 to L28.6 million in fiscal 1998. In constant currency terms, such commissions and fees decreased by 5.3%. Of this reduction, L1.2 million was attributable to Professional Liability Underwriting Management, Willis Corroon's professional liability wholesale operation, which was closed in the second quarter of 1998. Excluding the effect of this closure, commissions and fees of Willis Corroon's U.S. Wholesale operations decreased by 1.4% in constant currency terms, primarily due to a continuing decline in the public entity and schools businesses. U.K. RETAIL: Commission and fees earned by Willis Corroon's U.K. Retail operations increased by L5.0 million (4.4%) from L113.8 million in fiscal 1997 to L118.8 million in fiscal 1998. In constant currency terms, commissions and fees increased by 4.5%. Of this increase, L7.4 million was attributable to the Willis National joint venture, which was formed in August 1997. Excluding the effects of the formation of Willis National, commissions and fees decreased by 1.9% in constant currency terms due to competition in soft markets and delay or cancellation of construction contracts. GLOBAL SPECIALTIES: Commissions and fees earned by the business units of Global Specialties increased by L5.7 million (4.2%) from L134.5 million in fiscal 1997 to L140.2 million in fiscal 1998. In constant currency terms, commissions and fees increased by 4.9%. Premium rate reductions continued to affect most business areas. Global Broking Services, however, reported a 15.7% increase 50 in constant currency terms in commissions and fees as a result of strong new business gains and improved focus on renewals. GLOBAL REINSURANCE: Commissions and fees earned by Willis Corroon's Global Reinsurance business unit decreased by L2.3 million (3.3%) from L68.7 million in fiscal 1997 to L66.4 million in fiscal 1998. In constant currency terms, commissions and fees decreased by 0.7%. Expansion in the U.S. and Europe was offset by a disposal of part of the French portfolio to Gras Savoye following Willis Corroon Group's investment in Gras Savoye. INTERNATIONAL: Commission and fees earned by Willis Corroon's International operations increased by L12.4 million (25.9%) from L47.8 million in fiscal 1997 to L60.2 million in fiscal 1998. In constant currency terms, commissions and fees increased by 39.4%. Excluding the effect of the acquisition of Gruppo Ital Brokers, which was acquired in July 1998 and other acquisitions, commissions and fees increased by 0.3% in constant currency terms. WILLIS FABER & DUMAS (AGENCIES) LIMITED): Willis Faber & Dumas Agencies was sold in October 1997 to a company owned by its management. Commissions and fees earned during fiscal 1997 totalled L6.7 million. INTEREST AND INVESTMENT INCOME Interest and investment income from continuing operations was L40.0 million in fiscal 1997 and L40.3 million in fiscal 1998. In constant currency terms, interest and investment income increased by 4%. OPERATING EXPENSES Operating expenses for Willis Corroon's continuing operations before exceptional items increased by L35.5 million (5.9%) from L599.9 million in fiscal 1997 to L635.4 million in fiscal 1998, due to the increase in expenses from businesses acquired (L18.3 million) exceeding the reduction in expenses from businesses sold (L3.7 million). Excluding favorable foreign exchange rate movements (L8.9 million), the effects of acquisitions and dispositions and higher non-recurring costs (L8.2 million), operating expenses increased by 3.9% in constant currency terms. During fiscal 1998, a further contribution of L2.0 million was made to the Lloyd's Reconstruction and Renewal Plan. In common with most other U.K. independent financial advisors, Willis Corroon Financial Planning has been carrying out a review, in accordance with guidelines issued by its regulator, of pension advice previously given. In this connection, a further provision of L25.0 million was made as an exceptional item during fiscal 1998. At December 31, 1998, the remaining balance of such provision amounted to L20.6 million. ASSOCIATES Willis Corroon's share of income before taxation from associates increased by L4.4 million (232%) from L1.9 million in fiscal 1997 to L6.3 million in fiscal 1998. Adjusting for the increase (L5.1 million) due to investments in Gras Savoye and Jaspers Wuppesahl, which were acquired in December 1997 and January 1998, respectively, and, increased investments in some of the associates creating subsidiaries Willis Corroon's share of income from associates was in line with 1997. INTEREST PAYABLE Interest payable increased by L2.5 million from L0.7 million in fiscal 1997 to L3.2 million in fiscal 1998 as a consequence of new debt incurred to finance investments made in December 1997 in Gras Savoye and in January 1998 in Jaspers Wuppesahl. 51 DISPOSALS During fiscal 1998, the loss on disposals amounted to L29.3 million, consisting mainly of goodwill written of on the closure of Professional Liability Underwriting Management. DISCONTINUED OPERATIONS--UNDERWRITING Willis Corroon's U.K. underwriting operations, which consisted of Sovereign, an insurance company, and Willis Faber (Underwriting Management), an underwriting agent, were discontinued in 1991. Sovereign was placed into provisional liquidation in July 1997. Following the provisional liquidation of Sovereign, the net assets of Sovereign and its subsidiaries, amounting to L5.9 million and attributable goodwill of L4.1 million, were written off in fiscal 1997 against provisions previously established. TAXATION The tax charge for fiscal 1998 amounted to L54.4 million after writing off U.K. advance corporation tax of L9.7 million and deferred tax asset balances of L23.4 million. The timing of the recoverability of these assets was uncertain and, accordingly, it was judged appropriate under U.K. GAAP to write off the amounts. Excluding these write-offs and the Professional Liability Underwriting Management goodwill write-off of L29.6 million and costs of L15.8 million incurred in connection with the offer by Trinity Acquisition for Willis Corroon Group, for which no tax relief is available and, the further provisions amounting to L25.0 million in respect of costs expected to be incurred in connection with the pension review, the effective tax rate for fiscal 1998 was 36.0% compared with an effective tax rate of 39.9% in fiscal 1997. FISCAL 1997 COMPARED WITH FISCAL 1996 SUMMARY Total operating revenues decreased by L36.7 million (5.0%) from L730.7 million in fiscal 1996 to L694.0 million in fiscal 1997. In constant currency terms, operating revenues decreased by 1%. The decrease in operating revenues was due to the adverse impact of foreign exchange rate movements (L26.9 million) and the loss of operating revenue from businesses sold (L39.8 million), which revenue was not wholly replaced by operating revenue from businesses acquired and subsidiaries previously accounted for as associates (L21.4 million). Further, commissions earned by Willis Faber & Dumas Agencies, which was sold in October 1997, were L10.0 million lower in fiscal 1997 than in fiscal 1996. Operating revenues of discontinued operations decreased by L3.7 million from L5.7 million in fiscal 1996 to L2.0 million in fiscal 1997. Adjusting for each of these factors, operating revenues of continuing operations were 3% higher in constant currency terms in fiscal 1997 than in fiscal 1996. Income before taxation increased by L3.9 million (4%) from L91.6 million in fiscal 1996 to L95.5 million in fiscal 1997. In constant currency terms, income before taxation increased by 14%. Excluding the adverse effects of foreign currency exchange rate movements (L8.0 million), the loss of income from businesses sold (L5.7 million), income gained from acquisitions (L1.7 million) and also excluding the effects of lower non-recurring expenses (L3.1 million), income before tax increased by 14% in constant currency terms, primarily due to the impact of the change program. Willis Corroon's share of profit of associates was L1.6 million lower in fiscal 1997 than in fiscal 1996 mainly because two associates, Richard Oliver in Australia and Scheuer in the Netherlands, became subsidiaries on January 1, 1997 whereas they had been accounted for as associates during all of fiscal 1996. Willis Corroon reported a gain from the disposal of continuing operations of L2.2 million in fiscal 1997 as the result of the sale of Willis Corroon's interest in Willis Faber & Dumas Agencies, which was sold in October 1997, and Willis Corroon France SA, which was sold in December 1997 to Gras Savoye at the time Willis Corroon acquired its 33% interest in Gras Savoye. The gain on disposal also gives effect to a 52 write-off of goodwill of L2.5 million. Net income increased by L2.7 million (5%) from L54.2 million in fiscal 1996 to L56.9 million in fiscal 1997. LLOYD'S RECONSTRUCTION AND RENEWAL PLAN During fiscal 1996, an agreement was reached with the individuals who comprise the various Lloyd's underwriting syndicates for the reconstruction and renewal of the Lloyd's insurance market. As part of this plan, Lloyd's members' agencies and Lloyd's brokers, among others, agreed to contribute financially to the establishment of Equitas Reinsurance Limited which would reinsure the outstanding liabilities of such individuals for the 1992 and earlier underwriting years of account. In return, most of such individuals agreed to cease litigation against Lloyd's. Willis Corroon's subsidiary, Willis Faber & Dumas Agencies, a Lloyd's members agent, agreed to make a one-time contribution to the settlement of L3.4 million and Willis Corroon's broking operations agreed to contribute an annual levy for five years beginning in 1996 based on the volume of business transacted with Lloyd's. For fiscal 1996, this levy amounted to L2.6 million. In connection therewith, L14.5 million of commissions, which were based on the underlying profits of those individuals managed by Willis Faber & Dumas Agencies and which was due to Willis Faber & Dumas Agencies but had been delayed pending the settlement, was released. As a consequence of this settlement, Willis Corroon's operating revenue in fiscal 1996 benefitted by L14.5 million and Willis Corroon's income before taxation for fiscal 1996 benefitted by L8.2 million, after deducting related provisions of L0.3 million. COMMISSIONS AND FEES--CONTINUING OPERATIONS Commissions and fees earned by Willis Corroon's continuing operations decreased by L31.2 million (4.6%) from L683.2 million earned in fiscal 1996 to L652.0 million in fiscal 1997. In constant currency terms, commissions and fees decreased by 1.0%. Excluding the effects of businesses sold (L48.5 million) and businesses acquired (L18.3 million), commissions and fees increased by 4% in constant currency terms. NORTH AMERICAN OPERATIONS: Commissions and fees earned by Willis Corroon's North American Retail operations decreased by L28.9 million (10.4%) from L278.6 million in fiscal 1996 to L249.7 million in fiscal 1997. In constant currency terms, commissions and fees decreased by 6%. Excluding the effect of businesses sold in 1996 (L24.5 million), commissions and fees increased by 3% in constant currency terms. Competition among brokers for the business of middle market companies was intense, exacerbating the consequences of progressively reducing premium rates which have been on a downward trend for well over a decade. Commissions and fees earned by Willis Corroon's U.S. Wholesale operations decreased by L6.5 million (17.5%) from L37.1 million in fiscal 1996 to L30.6 million in fiscal 1997. In constant currency terms, U.S. Wholesale commissions and fees decreased by 14%, principally due to the competitiveness of the U.S. insurance market place. U.K. RETAIL: Commissions and fees earned by Willis Corroon's U.K. Retail operations decreased by L1.9 million (1.6%) from L115.7 million in fiscal 1996 to L113.8 million in fiscal 1997. In constant currency terms, commissions and fees decreased by 2%. Excluding the effects of disposals (L13.4 million) and the acquisition of a 51% interest in Willis National in August 1997 (L5.4 million), commissions and fees increased by 6% in constant currency terms, mainly arising from strong growth achieved by Willis Corroon's principal U.K. direct brokering company, reflecting the benefit of the change program initiatives. GLOBAL SPECIALTIES: Commissions and fees earned by the business units of Global Specialties increased by L3.0 million (2.3%) from L131.5 million in fiscal 1996 to L134.5 million in fiscal 1997. In constant currency terms, commissions and fees increased by 5%. Despite falling insurance premium rates across most business areas, increased new business gains, particularly from a 53 strengthened space risks team in Aerospace, as well as the Energy and Global Broking Services business units, contributed to this growth. GLOBAL REINSURANCE: Commissions and fees earned by Willis Corroon's Global Reinsurance business unit increased by L5.6 million (8.9%) from L63.1 million in fiscal 1996 to L68.7 million in fiscal 1997. In constant currency terms, commissions and fees increased by 7% against a background of reduced reinsurance premium rates and increased risk retention by clients, predominantly from the U.S. portfolio supported by new business in Europe and Australia. INTERNATIONAL: Commissions and fees earned by Willis Corroon's International operations increased by L9.2 million (23.8%) from L38.6 million in fiscal 1996 to L47.8 million in fiscal 1997. In constant currency terms, commissions and fees increased by 35%. Of this increase, L12.9 million was attributable to Willis Corroon increasing its holdings in both Richard Oliver and Scheuer to 100% on January 1, 1997. Excluding this effect, commissions and fees increased by 18% in constant currency terms, particularly from business growth in Eastern Europe. WILLIS FABER & DUMAS (AGENCIES) LIMITED: Willis Faber & Dumas Agencies was sold in October 1997 to a company owned by its management. Commissions and fees earned during fiscal 1997 totalled L6.9 million compared with L18.6 million in fiscal 1996 which included L14.5 million following implementation of the Lloyd's Reconstruction and Renewal Plan. INTEREST AND INVESTMENT INCOME Interest and investment income from continuing operations decreased by L1.8 million (4.5%) from L41.8 million in fiscal 1996 to L40.0 million in fiscal 1997. OPERATING EXPENSES Operating expenses from continuing operations decreased by L37.3 million (5.9%) from L637.2 million in fiscal 1996 to L599.9 million in fiscal 1997, largely due to the favorable impact of currency exchange rate movements (L18.7 million), the reduction in expenses from businesses sold (L45.7 million) being greater than the increase in expenses arising from businesses acquired and associates becoming subsidiaries (a total of L20.0 million). Severance costs in fiscal 1997 were L7.9 million lower than in fiscal 1996, the total contribution to the Lloyd's Reconstruction and Renewal Plan was L0.4 million lower and other non-recurring costs were L3.1 million lower in fiscal 1997 than in fiscal 1996. Adjusting for each of these factors, operating expenses were 2% higher in constant currency terms. In common with most other U.K. independent financial advisors, Willis Corroon Financial Planning has been carrying out a review, in accordance with guidelines issued by its regulator, of pension advice previously given and, in connection therewith, a charge of L2.3 million was taken during fiscal 1997. See "Business--Legal Proceedings." In October 1997, Willis Corroon Financial Planning merged with Abbey National Independent Financial Advisers Limited to form Willis National in which Willis Corroon holds a 51% interest. ASSOCIATES Willis Corroon's share of income before taxation from associates decreased by L1.6 million (45.7%) from L3.5 million in fiscal 1996 to L1.9 million in fiscal 1997. Excluding the reduction (L1.5 million) due to Richard Oliver and Scheuer, both of which ceased to be accounted for as associates from the beginning of January 1, 1997 when they became consolidated subsidiaries, Willis Corroon's share of income before taxation from associates decreased by L0.1 million. 54 INTEREST PAYABLE Interest payable decreased by L1.5 million from L2.2 million in fiscal 1996 to L0.7 million in fiscal 1997. Willis Corroon operated throughout most of fiscal 1997 without any material borrowings until the acquisition of Gras Savoye on December 30, 1997. DISPOSALS During fiscal 1997, the gain on disposals amounted to L2.2 million after writing off goodwill of L2.5 million. The principal business disposed of was Willis Faber & Dumas Agencies. DISCONTINUED OPERATIONS--UNDERWRITING Willis Corroon's U.K. underwriting operations, consisting of Sovereign, an insurance company, and Willis Faber (Underwriting Management), an agent, were discontinued in 1991. On July 11, 1997, Sovereign was placed into provisional liquidation. Following the provisional liquidation of Sovereign, the net assets of Sovereign and its subsidiaries, amounting to L5.9 million and attributable goodwill of L4.1 million, were written off against provisions previously established. TAXATION The tax charge of L38.1 million in fiscal 1997 produced an effective tax rate of 39.9%, the same as in fiscal 1996. The benefit arising from the reduction in the rate of U.K. corporation tax from 33% to 31% during fiscal 1997 was more than offset by the related write down of deferred tax assets established in prior periods. The provisional liquidation of Sovereign resulted in a write off of a deferred tax asset amounting to L2.7 million which was no longer considered recoverable. Adjusting for these items, the effective tax rate in fiscal 1997 would have been 36.5%. FINANCIAL RISK MANAGEMENT FOREIGN EXCHANGE RISK MANAGEMENT Approximately 50% of Willis Corroon's operating revenues earned in the United Kingdom arise in currencies other than sterling. Willis Corroon manages this exchange exposure to foreign currency revenues by entering into forward foreign currency exchange contracts and options, principally in U.S. dollars with lesser amounts in Japanese, German, French and Italian currencies. In fiscal 1998, Willis Corroon achieved a rate of $1.59 = L1.00 from the sale of U.S. dollar-denominated revenues earned in the United Kingdom compared with a rate of $1.59 achieved in fiscal 1997 and $1.54 in fiscal 1996. Together with the rates achieved in other hedged currencies, there was an adverse impact of L2.7 million on total operating revenues in fiscal 1998 and an adverse impact of L5.6 million in fiscal 1997, when compared with the exchange rates achieved in the preceding year. Willis Corroon is also exposed to the exchange effects of translating the net income of non-U.K.-based subsidiaries into sterling. Willis Corroon does not hedge this exposure. The average rate of exchange for the U.S. dollar against sterling moved from $1.56 in fiscal 1996 to $1.64 in fiscal 1997 and to $1.66 in fiscal 1998. Together with movements in other currencies, the effect of translating the income before taxation of non-U.K.-based subsidiaries into pounds sterling reduced Willis Corroon's net income before taxation in fiscal 1998 by L1.4 million and by L2.4 million in fiscal 1997, when compared with the exchange rates prevailing in the preceding year. The table below provides information about Willis Corroon's foreign currency forward exchange contracts which are sensitive to exchange rate risk. The table summarizes at December 31, 55 1998 the sterling equivalent amounts of each currency bought and sold forward and the weighted average contractual exchange rates. All forward exchange contracts mature within two years.
SETTLEMENT DATE BEFORE DECEMBER 31, ------------------------------------------------------------------------ 1999 2000 ---------------------------------- ------------------------------------ AVERAGE AVERAGE CONTRACT CONTRACTUAL CONTRACT CONTRACTUAL AMOUNT EXCHANGE RATE AMOUNT EXCHANGE RATE ----------- --------------------- ------------- --------------------- (L MILLIONS) (DENOMINATION PER L) (L MILLIONS) (DENOMINATION PER L) FOREIGN CURRENCY SOLD US Dollars............................. 41.5 1.58 21.4 1.59 Japanese Yen........................... 5.6 191.51 4.3 84.37 Deutschemarks.......................... 2.3 2.75 5.1 2.70 French Francs.......................... 1.6 8.33 -- -- Italian Lire........................... 1.4 2,537.25 -- -- FOREIGN CURRENCY BOUGHT Deutschemarks.......................... (10.4) 2.80 -- -- ----------- ----- Total.................................. 42.0 30.8 ----------- ----- ----------- ----- Fair Value (1)......................... 2.2 0.5 ----------- ----- ----------- -----
- ------------------------ (1) Represents the difference between the contract amount and the cash flow in sterling which would have been receivable had the foreign currency forward exchange contracts been entered into on December 31, 1998 at the forward exchange rates prevailing at that date. INTEREST RATE RISK MANAGEMENT Willis Corroon manages its exposure to declines in interest rates, which can have an adverse effect on interest and investment income, through the use of fixed interest deposits and borrowings, swaps, forward rate agreements and other financial instruments. The maximum hedging period is normally three years. Interest rate exposure is managed within parameters agreed by Willis Corroon Group's directors, which stipulate that at least 25% of the forecast interest income for each of the next three years is hedged. Average interest rates of 7.5% on sterling funds and 6.1% on U.S. dollar funds were achieved in fiscal 1998, compared with 7.0% and 6.2% respectively in fiscal 1997 and 7.3% and 5.9% respectively in fiscal 1996. When compared with average interest rates prevailing during the year, Willis Corroon's hedging activities added L2.6 million to Willis Corroon's income before taxation in fiscal 1998 and L2.5 million in fiscal 1997. The table below provides information about Willis Corroon's derivative instruments which are sensitive to changes in interest rates, including interest rate swaps and forward rate agreements. For interest rate swaps, the table presents notional principal amounts and average interest rates analyzed by expected maturity dates. Notional principal amounts are used to calculate the contractual payments to be exchanged under the contracts. The duration of interest rate swaps varies between one and five years, with an average re-fixing period of three months. Average variable rates are based on interest rates set at December 31, 1998 or, in the case of interest rate swaps not yet started, at the rates prevailing at December 31, 1998. The information is presented in sterling, which is Willis Corroon's reporting currency; the actual currencies of the instruments are indicated in parentheses. 56
EXPECTED TO MATURE BEFORE DECEMBER 31, ----------------------------------------------------- 1999 2000 2001 2002 2006 TOTAL FAIR VALUE(1) --------- --------- --------- --------- --------- --------- --------------- (L MILLION, EXCEPT PERCENTAGES) INTEREST RATE SWAPS Principal ($)................................ 97 170 119 16 -- 402 5.1 Fixed rate receivable.................... 6.45% 6.43% 5.73% 5.78% -- 6.20% Variable rate payable.................... 5.28% 5.20% 5.06% 5.06% -- 5.17% Principal ($)................................ -- -- -- -- 273 273 0.8 Fixed rate payable....................... -- -- -- -- 5.10% 5.10% Variable rate receivable................. -- -- -- -- 5.06% 5.06% Principal (L)................................ 55 62 35 14 -- 166 4.4 Fixed rate receivable.................... 7.92% 7.22% 6.52% 6.88% -- 7.27% Variable rate payable.................... 6.75% 6.55% 6.13% 6.13% -- 6.49% Principal (Deutschemarks).................... 4 7 7 -- -- 18 0.3 Fixed rate receivable.................... 4.55% 4.65% 4.23% -- -- 4.48% Variable rate payable.................... 3.65% 3.48% 3.36% -- -- 3.48% Principal (Deutschemarks).................... -- 4 -- -- -- 4 (0.1) Fixed rate payable....................... -- 4.61% -- -- -- 4.61% Variable rate receivable................. -- 3.56% -- -- -- 3.56% Principal (Italian Lire)..................... 2 -- 3 -- -- 5 0.1 Fixed rate receivable.................... 7.11% -- 4.69% -- -- 5.77% Variable rate payable.................... 4.59% -- 3.25% -- -- 3.85% Principal (Japanese Yen)..................... 7 -- 4 -- -- 11 0.1 Fixed rate receivable.................... 1.45% -- 1.70 -- -- 1.54% Variable rate payable.................... 0.40% -- 0.22% -- -- 0.33% FORWARD RATE AGREEMENTS Principal (L)................................ 56 -- -- -- -- 56 0.2 Fixed rate receivable.................... 7.02% -- -- -- -- 7.02% Variable rate payable.................... 6.13% -- -- -- -- 6.13%
- ------------------------ (1) Represents the net present value of the expected cash flows discounted at current market rates of interest. LIQUIDITY AND CAPITAL RESOURCES Willis Corroon's Statement of Consolidated Cash Flows is presented on the basis of total funds as opposed to "own funds." As discussed under "--Overview" above, Willis Corroon holds funds for the account of third parties, typically premiums received from clients and claims received from insurance carriers that are in transit to insurance carriers or clients, respectively. These amounts of fiduciary cash must be kept in certain regulated bank accounts and are not generally available to service Willis Corroon's debt or for other corporate purposes. Insurance broking transactions typically generate large cash flows and the timing of such cash flows can affect significantly the net cash balances held at the year-end. Willis Corroon's net cash inflow on a total funds basis before management of liquid resources and financing was L14.8 million in fiscal 1996 with a net cash outflow of L6.2 million in fiscal 1997 and net cash outflow of L95.4 million in fiscal 1998. See "Consolidated Financial Statements--Consolidated Statements of Cash Flows." Cash and liquid resources, net of overdrafts, decreased from L663.0 million at December 31, 1996 to L616.7 million at December 31, 1997 and decreased to L596.4 million at December 31, 1998. Of the decrease in fiscal 1996, liquid resources of L25.6 million were transferred with businesses sold and exchange adjustments, principally relating to the increasing strength of sterling, accounted for L47.7 million. In assessing Willis Corroon's "own funds" (as opposed to fiduciary funds) and working capital, Willis Corroon takes into account differing regulations in different countries and states. The 57 following table shows net working capital of L30.9 million at December 31, 1997 and L32.2 million at December 31, 1998, in each case on the assumption that uncollected brokerage (commissions owing to Willis Corroon included within premiums due from clients) is treated as an element of "own funds" working capital. On this basis, Willis Corroon's "own funds" working capital has consistently been between approximately L30 million to L60 million since 1995.
CONSOLIDATED "OWN FUNDS"(A) ------------------------------ ------------------------------ DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, 1997 1998 1997 1998 -------------- -------------- -------------- -------------- (IN MILLIONS) Fixed assets..................................... L154.0 L195.7 L154.0 L195.7 Trade receivables (excluding uncollected brokerage)..................................... 2,431.6 2453.0 84.7 111.2 Uncollected brokerage............................ 101.6 106.2 101.6 106.2 Investments, deposits and cash (b)............... 617.1 598.7 69.4 71.8 -------------- -------------- ------- ------- Total assets..................................... 3,304.3 3353.6 409.7 484.9 Trade payables................................... (3,050.0) (3053.9) (155.4) (185.2) Net debt......................................... (34.5) (107.8) (34.5) (107.8) Provisions (c)................................... (90.0) (94.8) (90.0) (94.8) -------------- -------------- ------- ------- Net assets....................................... 129.8 97.1 129.8 97.1 -------------- -------------- ------- ------- -------------- -------------- ------- ------- Net working capital (d).......................... L(516.8) L(494.7) L30.9 L32.2 -------------- -------------- ------- ------- -------------- -------------- ------- -------
- ------------------------ (a) "Own Funds" are based on management's estimates and assumes that uncollected brokerage is treated as an element of "Own Funds" working capital. (b) Investments, deposits and cash in own funds is to a large extent matched by liabilities within Willis Corroon's captive insurance companies. The remainder was used to service local working capital requirements and therefore Willis Corroon had minimal excess cash in each of the periods reflected above. (c) For an analysis of provisions, see Note 21 of the Notes to the Consolidated Financial Statements of Willis Corroon included elsewhere herein. (d) Trade receivables and uncollected brokerage, less trade payables. During fiscal 1996, Willis Corroon disposed of the following non-core operations and proceeds from these disposals, less acquisitions, contributed L16.2 million to Willis Corroon's net cash inflow: - L20.7 million from the sale of Consumer Benefit Life Insurance Company; - L6.1 million from the sale of WF Corroon with further consideration and payments for work in progress due in subsequent years; - L5.0 million from the sale of Management Science Associates; - L3.8 million in respect of other businesses sold; - less L19.4 million of cash held within businesses sold, net of businesses acquired. During fiscal 1997, the net cash outflow for acquisitions and disposals amounted to L63.0 million and consisted of: - L48.3 million for Willis Corroon's 33% interest in Gras Savoye, of which L15.2 million was deferred until July 1998; - L8.2 million, L4.3 million and L2.1 million for the increased investment in Richard Oliver, Scheuer and York Willis Corroon respectively; 58 - L4.9 million inflow in respect of further consideration from the sale in fiscal 1996 of WF Corroon, net of L1.0 million in respect of other businesses acquired and sold; - less L5.0 million of cash held within businesses sold. During fiscal 1998, the net cash outflow for acquisitions less proceeds from disposals amounted to L32.3 million and consisted of L13.9 million for the 30% interest in Jaspers Wuppesahl, L5.0 million for the 30% interest in Assurandrgruppen, L12.4 million for the 50% interest in Gruppo Ital Brokers and L1.0 million for other acquisitions, net of disposal proceeds. In connection with many of its investments in associates, Willis Corroon retains rights to increase its ownership percentage of such associates over time, typically to a majority or 100% ownership position. Willis Corroon increased its ownership in Jaspers Wuppesahl from 30% to 44.6% on January 4, 1999 for L10.4 million and has additional call rights whereby it may increase its ownership to over 50% by 2012. In addition, in certain instances, the other owners of the associates have a right, typically at a price calculated pursuant to a formula based on revenues or earnings, to put some or all of their shares in the associates to Willis Corroon. Willis Corroon has a put obligation in connection with its stake in Gras Savoye, the largest broker in France and the ninth largest broker in the world, in which Willis Corroon has a 33% interest. As part of the Gras Savoye transaction, Willis Corroon entered into a put arrangement, whereby the other shareholders in Gras Savoye (primarily two families, two insurance companies and Gras Savoye's executive management team) could put their shares to Willis Corroon. From 2001 to 2012, Willis Corroon would be obligated to buy the shares of such shareholders to the extent that such shareholders put their shares (potentially increasing its ownership from 33% to 90% if all shareholders put their shares) at a price determined by a contractual formula based on earnings and revenue. Management shareholders of Gras Savoye (approximately 10% thereof) do not have general put rights between 2001 and 2012, but have certain put rights on their death, disability or retirement pursuant to which payments are not expected to exceed L15 million. From 2001 to 2005, the incremental 57% of Gras Savoye may be put to Willis Corroon at a price equal to the greater of approximately 800 million French francs (L86.1 million at December 31, 1998 exchange rates) (for the full 57%) or a price based on the formula. After 2005, the put price is determined solely by the formula. The shareholders may put their shares individually at any time during the put period. While the management of neither Willis Corroon nor Gras Savoye expects significant exercises of the puts, on a separate or aggregate basis, in the near to medium term, nevertheless, management believes that, should the aggregate amount of shares be put to Willis Corroon, sufficient funds would be available to satisfy this obligation. Also, Willis Corroon believes that the price to be paid under the put options is reasonable in light of its valuation of Gras Savoye. The minimum price of approximately 800 million French francs from 2001 to 2005 (for the full 57%) represents a multiple of 1.2 times Gras Savoye's L113 million of 1997 revenues and 8.4 times Gras Savoye's L16.4 million of 1997 operating income. In addition Willis Corroon has a call option to move to majority ownership under certain circumstances and in any event by 2009. Upon exercising this call option, the remaining Gras Savoye shareholders have a put. In connection with the Willis National joint venture, the holder of 49% of the shares in Willis National Holdings Limited has an option to purchase Willis Corroon's 51% interest in that company at any time between June and September 1999 based on a profitability formula as set out in the shareholders' agreement between the two companies. During fiscal 1998, cash payments in connection with the renegotiated arrangements for administering the Sovereign run-off amounted to L12.0 million, which included pre-funding of estimated administrative costs through 2001. Accordingly, no significant additional cash payments for administrative costs are expected in fiscal 1999. Cash payments in connection with Willis Corroon's on- 59 going pension review amounted to L8.0 million in fiscal 1998 with further payments expected to total approximately L20.5 million over the next three fiscal years. There are also a number of legal proceedings against Willis Corroon, which together are not expected to have a material effect on Willis Corroon's financial position. See "Business--Legal Proceedings." Capital expenditures for fiscal years 1996, 1997 and 1998 were L28.9 million, L26.5 million, and L29.9 million, respectively. Willis Corroon has funded its requirements for capital expenditures by cash generated internally from operations and from external financing and expects to continue to do so in the future. Willis Corroon intends to evaluate acquisition opportunities from time to time. Willis Corroon has conducted a review of its computer systems to identify the systems that could be affected by the year 2000 problem and is nearing completion of its plan to be year 2000 compliant prior to December 31, 1999. The cost of undertaking this work is not expected to exceed L4.2 million, most of which has already been incurred. The cost of upgrading computer systems to deal with the single currency requirement of European Economic and Monetary Union was L0.9 million. Willis Corroon does not expect either the year 2000 issues or European Economic and Monetary Union will have a material adverse impact on its financial position or results of operations. Willis Corroon entered into the Permanent Facility Agreement on July 22, 1998. The Permanent Facility Agreement, as amended, is comprised of: - the $125 million tranche A facility; - the $125 million tranche B facility; - the $100 million tranche C facility; - the $100 million tranche D facility; and - the $150 million revolving credit facility. Borrowings under the term loan portions of the Permanent Facility Agreement were borrowed in full on November 19, 1998 - to refinance outstandings under the tender offer facility agreement, - to finance the repayment of certain existing indebtedness of Willis Corroon, - to make an intercompany loan to Trinity Acquisition, and - to finance the payment of fees and expenses incurred in connection with the Tender Offer. The revolving credit portion is available for working capital requirements and general corporate purposes, subject to certain limitations. The revolving credit facility will be available on a revolving basis for loans denominated in U.S. dollars, pounds sterling and certain other currencies and for letters of credit (including to support loan note guarantees). For a further description of the Permanent Facility Agreement, see "Description of the Senior Credit Facilities." The Issuer has entered into an interest rate swap agreement pursuant to which its LIBOR-based floating rate interest payment obligations on the full amount of the term loans under the Permanent Facility Agreement have been swapped for fixed rate interest payment obligations, resulting in an effective base rate of 5.099% per annum, plus the applicable margin, until the final maturity of such term loans. The swap agreement provides for a reduction of the notional amount of the swap obligation on a semi-annual basis and, to the extent the actual amount outstanding under the term loans exceeds the notional amount at any time, the Issuer would then become exposed to the risk of increased interest rates on such excess. 60 In connection with the refinancing of the tender offer facility and the senior subordinated promissory note on November 19, 1998, the Issuer made (i) a loan to Trinity Acquisition of the net proceeds from borrowings under the subordinated bridge facility (the "intercompany subordinated note") and (ii) a loan to Trinity Acquisition of the net proceeds from borrowings under the term loans under the Permanent Facility Agreement (the "intercompany bank note"), the proceeds of which loans were used by Trinity Acquisition to repay the senior subordinated promissory note, the tender offer facility and certain existing debt of Willis Corroon. Such loans to Trinity Acquisition generally mirror the terms and maturity dates of the applicable underlying loans. The intercompany subordinated note currently bears interest at a rate equal to the interest rate on the notes, plus 70 basis points, and the intercompany bank note bears interest at a rate equal to the interest rate for the Permanent Facility Agreement, plus 25 basis points. In addition, the indenture permits Willis Corroon Group and its subsidiaries to (i) make loans to Trinity Acquisition in exchange for notes issued by Trinity Acquisition ("Trinity intercompany notes"), so long as the proceeds of such loans are immediately used to make a loan to Willis Corroon Group or its subsidiaries, and (ii) issue notes in favor of Trinity Acquisition ("group intercompany notes") in consideration of a loan from, or the issuance of a note by, Trinity Acquisition. Willis Corroon Group and its subsidiaries may pay interest on any group intercompany note, and may make loans or pay dividends to Trinity Acquisition in an amount sufficient to enable Trinity Acquisition to pay interest and principal then due on any Trinity intercompany note, intercompany subordinated note or intercompany bank note, in each case so long as such amounts are immediately repaid to Willis Corroon Group or its subsidiaries. The aggregate amount of group intercompany notes outstanding is currently approximately $1,025 million, the aggregate amount of Trinity intercompany notes outstanding is currently approximately L614 million ($1,043 million). TA II Limited will be relying wholly on Willis Corroon to provide funds sufficient for TA II Limited to pay dividends on the Preference Shares. The Preference Shares (with an aggregate liquidation preference of approximately $270 million) carry the right to a cumulative dividend of 8.5% per annum (excluding the amount of any associated tax credits) on a fixed amount of $25 per Preference Share. TA II Limited has the option to satisfy 1% per annum of this cumulative dividend by the issuance of additional Preference Shares. The dividend is payable in dollars semi-annually on June 30 and December 31 of each year with the first dividend being payable on June 30, 1999. If the cash dividend has not been paid on three or more consecutive dividend payment dates, the holders of the Preference Shares have the right to appoint two directors to the board of TA II Limited. The Preference Shares may be redeemed at any time by TA II Limited by payment of a fixed amount of $25 per share plus any accrued and unpaid dividends. The Preference Shares are required to be redeemed in full by payment of a fixed amount of $25 per share plus any accrued and unpaid dividends on the earlier of (i) the thirteenth anniversary of the first date on which the Preference Shares were issued and (ii) the date that is six months after the scheduled maturity date of the Notes, or on the sale of all or substantially all of the business of Willis Corroon, including, without limitation, whether in a single transaction or series of transactions and whether by sale of shares, sale of assets or otherwise. Holders of Preference Shares have a preferential right to receive out of surplus assets arrears and accruals of dividends and $25 per share, but do not have any further right to participate in surplus assets. For a further description of the Preference Shares, see "Description of Preference Shares." The Notes will mature on February 1, 2009 and interest will be payable thereon semiannually on February 1 and August 1 of each year, commencing August 1, 1999. 61 SUPPLEMENTAL CONSTANT CURRENCY FINANCIAL DATA THIS PRESENTATION AND ANALYSIS IS INTENDED TO DEMONSTRATE THE IMPACT OF EXCHANGE RATES AND THE CHANGE PROGRAM ON DESIGNATED FINANCIAL LINE ITEMS ON A HISTORICAL BASIS. THIS PRESENTATION AND ANALYSIS IS INTENDED TO SUPPLEMENT THE PRESENTATION AND ANALYSIS OF OUR ACTUAL HISTORICAL RESULTS SET FORTH ELSEWHERE IN THIS PROSPECTUS. SEE "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS." OUR BUSINESS AND OUR ABILITY TO GENERATE CASH FLOW SUFFICIENT TO MEET OUR FIXED CHARGE OBLIGATIONS WILL CONTINUE TO BE AFFECTED BY EXCHANGE RATES AND THE FUTURE INCURRENCE OF CERTAIN COSTS WHICH HAVE BEEN ELIMINATED IN THE PRESENTATION AND ANALYSIS OF ADJUSTED OPERATING REVENUES, ADJUSTED EBITDA AND ALL ITEMS ON A CONSTANT CURRENCY BASIS. We and our associates transact business with some 50,000 clients in more than 125 countries and in over 100 currencies. Historically, we have reported our operating results in pounds sterling. Sterling, however, accounted for only approximately 22% of our revenues in 1998 and thus our reported revenues are directly impacted by movements in world currencies in relation to the pound. As the pound has appreciated in value relative to most major currencies in recent years, our revenues have been negatively impacted. In addition, while only approximately 22% of our revenues in 1998 were in sterling, approximately 44% of our expenses in 1998 were in pounds sterling. This is due to the fact that a number of our units, especially Global Specialties and Global Reinsurance, serve their clients worldwide primarily from their U.K. base of operations. Accordingly, when the pound appreciates, which it has in recent years, the revenues associated with non-sterling business are translated into fewer pounds, while expenses, incurred in sterling, are not impacted. As a result, as the pound appreciates, both revenues and margins decline on a reported basis. Accordingly, we have implemented a comprehensive hedging strategy to manage our exposure to currency movements. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Financial Risk Management." Because we derive a significant portion of our revenues and cash flow in U.S. dollars and other currencies and a disproportionate amount of our expenses in sterling, we are financing the Transactions in U.S. dollars. All historical reported results, including Operating Revenues and EBITDA and, accordingly, Adjusted Operating Revenues and Adjusted EBITDA, were derived by translating the financial statements of our non-U.K.-based subsidiaries into sterling using the average rates of exchange for the relevant period. Foreign currency transactions entered into by the U.K.-based subsidiaries have been translated at the achieved rates of exchange in the relevant period, which include the effects of our hedging program. The average rates of exchange and achieved rates of exchange are shown in footnote (a) to the table below. The "Adjusted Operating Revenues--Constant Currency" and "Adjusted EBITDA--Constant Currency" set forth in the table below represent Adjusted Operating Revenues and Adjusted EBITDA for each period re-translated using the same methodologies in all material respects for deriving reported results, but applying constant rates of exchange, thus allowing for a comparison that excludes the impact of exchange rate changes over all the periods presented. The constant rates of exchange used are set forth below. As indicated below, two groups of constant rates are assumed, one representing average rates and one representing achieved rates. The assumed constant rates are those currently used by us for internal budgeting and reporting purposes. Although there can be no assurance that if the exchange rates used in this analysis had actually prevailed over all the periods presented that the results would have been comparable to those presented, we believe that the trends indicated would have been comparable. We believe that combining the constant currency analysis detailed below with the Adjusted Operating Revenues and Adjusted EBITDA presentation illustrates the improvements in operating results achieved by us in recent years. 62
HISTORICAL ---------------------------------------------------------------------------- YEAR ENDED JANUARY 1- SEPTEMBER 2- DECEMBER 31, SEPTEMBER 1, DECEMBER 31, TOTAL ------------------------------- --------------- --------------- --------- 1995 1996 1997 1998 1998 1998 --------- --------- --------- --------------- --------------- --------- (IN MILLIONS) Reported Operating Revenues.............. L706.4 L725.0 L692.0 L468.8 L249.2 L718.0 Adjusted Operating Revenues.............. 640.9 665.0 683.4 468.7 249.2 717.9 Adjustments to Constant Exchange Rates... (35.3) (37.0) (10.9) 0.3 1.8 2.1 --------- --------- --------- ------- ------- --------- Adjusted Operating Revenues--Constant Currency............................... 605.6 628.0 672.5 469.0 251.0 720.0 Reported EBITDA.......................... 110.6 115.8 116.7 79.9 33.4 113.3 Reported EBITDA Margin................... 14.7% 15.5% 16.6% 15.4% 14.0% 14.9% Adjusted EBITDA.......................... L106.2 L127.0 L130.5 L91.9 L46.9 L138.8 Adjusted EBITDA Margin................... 15.5% 18.6% 18.8% 18.0% 19.4% 18.5% Adjustments to Constant Exchange Rates... L(14.8) L(12.4) L(3.7) L0.9 L(0.1) L0.8 Adjusted EBITDA--Constant Currency....... 91.4 114.6 126.8 92.8 46.8 139.6 Adjusted EBITDA Margin--Constant Currency............................... 14.0% 17.7% 18.6% 18.2% 19.2% 18.5% PRO FORMA --------------- YEAR ENDED DECEMBER 31, --------------- 1998 --------------- Reported Operating Revenues.............. L735.3 Adjusted Operating Revenues.............. 735.2 Adjustments to Constant Exchange Rates... 2.5 ------- Adjusted Operating Revenues--Constant Currency............................... 737.7 Reported EBITDA.......................... 116.9 Reported EBITDA Margin................... 15.0% Adjusted EBITDA.......................... L142.4 Adjusted EBITDA Margin................... 18.5% Adjustments to Constant Exchange Rates... L0.9 Adjusted EBITDA--Constant Currency....... 143.3 Adjusted EBITDA Margin--Constant Currency............................... 18.5%
- ------------------------ (a) The average rates of exchange and achieved rates of exchange for the five major currencies are shown in the following table. The constant exchange rates used in the constant currency analysis are also shown below:
YEAR ENDED DECEMBER 31, ------------------------------------------ CONSTANT 1995 1996 1997 1998 RATES --------- --------- --------- --------- ----------- (DENOMINATION PER POUND STERLING) AVERAGE RATES: Deutschemark................................................ 2.26 2.35 2.84 2.91 2.84 French Franc................................................ 7.87 7.99 9.56 9.77 9.50 Italian Lire................................................ 2,570.80 2,408.64 2,789.09 2,875.71 2,820.72 Japanese Yen................................................ 148.29 170.03 198.38 216.55 197.55 U.S. Dollar................................................. 1.58 1.56 1.64 1.66 1.67 ACHIEVED RATES: Deutschemark................................................ 2.31 2.44 2.28 2.60 2.66 French Franc................................................ 8.15 7.99 8.38 8.92 8.85 Italian Lire................................................ 2,537.01 2,474.20 2,724.97 2,771.21 2,759.19 Japanese Yen................................................ 156.53 163.83 169.64 190.51 184.50 U.S. Dollar................................................. 1.51 1.54 1.59 1.59 1.60
- ------------------------ (b) Reported EBITDA margin is defined as Reported EBITDA (less share of profit of associates) divided by Reported Operating Revenues. (c) Adjusted EBITDA margin is defined as Adjusted EBITDA (less share of profit of associates) divided by Adjusted Operating Revenues. (d) Adjusted EBITDA margin--Constant Currency is defined as Adjusted EBITDA--Constant Currency (less share of profit of associates) divided by Adjusted Operating Revenues--Constant Currency. As detailed above, Adjusted Operating Revenues--Constant Currency have grown from L605.6 million in 1995 to L720.0 million in 1998, a 5.9% annual growth rate since 1995 (3.8% excluding the impact of acquisitions completed from 1995 to 1998) (in an environment of significantly declining primary insurance and reinsurance premium rates), which compares to a 3.9% annual growth rate for Adjusted Operating Revenues and a 0.5% annual growth rate for Operating Revenues from continuing operations on a reported basis. Adjusted EBITDA--Constant Currency has grown from L91.4 million in 1995 to L139.6 million in 1998, a 15.2% annual growth rate (10.5% excluding the impact of acquisitions completed from 1995 to 1998), which compares to a 9.3% annual growth rate for Adjusted EBITDA and a 0.8% annual growth rate for EBITDA on a reported basis. We have improved our Adjusted EBITDA 63 margins--Constant Currency by 450 basis points, from 14.0% in 1995 to 18.5% in 1998 (also in an environment of declining premium rates and intense industry competition), which compares to 20 basis points, from 14.7% in 1995 to 14.9% in 1998, for EBITDA margins on a reported basis. These improvements in operating results on an adjusted constant currency basis since 1995 can be seen throughout most of our units, with the improvements most marked at those units at which the change program and other earlier initiatives were first implemented, such as U.K. Retail. The following is a brief discussion of the improvements in operating results by business unit and the specific initiatives implemented at each of our units, in each case on the adjusted constant currency basis described above. U.K. RETAIL--From 1995 to 1998, U.K. Retail has grown its Adjusted Operating Revenues-- Constant Currency at an annual compounded rate of 7.1% and has improved its Adjusted EBITDA margins--Constant Currency 580 basis points, despite significant competitive pressures in the U.K. market and declining premium rates. In conjunction with the change program, which was commenced in late 1996, the unit has - reorganized from a regional to client focus, allowing for better focus on cross-selling and new client prospecting, - closed five offices reducing headcount by 250 people (13%) and - centralized many back-office functions, significantly reducing costs. For the twelve months ended December 31, 1998, Adjusted Operating Revenues--Constant Currency grew by 3.9%, largely due to the formation of Willis National in 1997. Adjusted Operating Revenues--Constant Currency (after giving pro forma effect to the formation of Willis National as if it ocurred on January 1, 1997) decreased 2.2%, due to competitive pressures and account losses due to merger and acquisition activity. However, for the twelve months ended December 31, 1998, adjusted EBITDA margin--Constant Currency increased 110 basis points, and the pro forma Adjusted EBITDA margin--Constant Currency shows an increase of 210 basis points largely due to the effects of the change program. NORTH AMERICAN OPERATIONS--North American operations have two primary divisions: North American Retail and U.S. Wholesale. North American Retail's financial performance has improved since 1994. After disappointing results were sustained in the first quarter of 1994, the present management of Willis Corroon Corporation began re-engineering its operations and imposed stringent cost controls, embarked on a successful national program to reduce corporate overhead and real estate costs, and eliminated low value-added functions and redundant staff. As a result of this initial effort in 1994 and 1995, North American Retail improved its profitability, rebounding from approximately L2 million in operating income in 1994 to nearly L26 million in 1995, boosted by only an approximately L8 million increase in operating revenues over the same period. Since 1995, operating revenues and expenses both have increased by approximately 3% per annum. However, improvements in expense control have been offset by the opportunistic hiring of experienced teams and producers who came to us as a direct result of broker consolidation in the U.S. As a result, costs were incurred in 1997 to bring this expertise to us that did not translate into revenue growth until 1998. From 1995 to 1998, North American Retail has grown its Adjusted Operating Revenues--Constant Currency at an annual compounded rate of 4.5% and has improved its Adjusted EBITDA--Constant Currency margins by 140 basis points, for the reasons described above. In conjunction with the change program, which was commenced at the North American operations in 1997, following the cost reductions of 1994 and 1995, North American operations have 64 - eliminated the three divisional groupings in North American Retail and reduced the number of regional units from 14 to 7 to maximize potential for efficiencies and focus more intensely on client needs and cross-selling, - reduced real estate costs by disciplined use of space and quality standards, - reduced travel and entertainment expenses, - reduced purchasing costs by implementing national vendor programs, - reduced headcount by 156 people (5%), - streamlined and consolidated back-office functions and regionalized accounting centers, significantly reducing costs, - developed and implemented a new incentivization program for North American Retail and - invested in new development and training programs. These initiatives have begun to translate into improved results, as sales of new products as well as sales of existing products to new customers increased 17% ($12.6 million) in the year ended December 31, 1998 as compared to the year ended December 31, 1997, while EBITDA margins increased approximately 100 basis points. The business at U.S. Wholesale has been more difficult due to competitive pressures and other outside factors. We have moved out of unprofitable businesses (such as Professional Liability Underwriting Management) and have worked to reposition the remaining U.S. Wholesale businesses for greater future profitability. For the twelve months ended December 31, 1998, North American Retail's Adjusted Operating Revenues--Constant Currency grew by 7.4% and its Adjusted EBITDA margins--Constant Currency increased by 240 basis points for the reasons described above. GLOBAL SPECIALTIES--From 1995 to 1998, Global Specialties has grown its Adjusted Operating Revenues Constant--Currency at an annual compounded rate of 4.8% and has improved its Adjusted EBITDA margins--Constant Currency 790 basis points, despite premium rates that have declined at an annual rate of 10% or more. In conjunction with the implementation of the change program, which has only focused on the Global Broking Services segment of Global Specialties thus far, together with other initiatives begun in 1994, the unit has - undergone a comprehensive staff assessment planned to reduce back office costs by 20-30% and has already eliminated 113 people (10% of staff), - expanded the accounting office operations in Bombay to reduce the cost of insurance accounting and claims processing and - re-focused the operation on cross-selling and new client prospecting. Given the very recent implementation of the change program at Global Specialties, very limited benefits from the change program are reflected in the unit's historical results. For the twelve months ended December 31, 1998, Global Specialties increased its Adjusted Operating Revenues--Constant Currency by 5.0% and has improved its Adjusted EBITDA margins--Constant Currency by 60 basis points. The majority of this growth occurred in Global Broking Services due to strong performance in both revenue and profit in several specialist product lines. 65 GLOBAL REINSURANCE--From 1995 to 1998, Global Reinsurance has grown its Adjusted Operating Revenues--Constant Currency at an annual compounded rate of 4.0% and has improved its Adjusted EBITDA margins--Constant Currency by 180 basis points, despite significantly (more than 20% annually) declining premium rates. The unit has - merged eight business units, - reduced UK headcount by 113 people (25% of staff), eliminating redundant tasks and reducing costs, - created new business units with Cordis Consulting Limited and Willis Corroon Catastrophe Management Limited (See "Business") and - established three new key production offices. The change program has not yet been fully developed for Global Reinsurance, the implementation of which is expected to bring additional benefits to operating results. For the twelve months ended December 31, 1998, Global Reinsurance's Adjusted Operating Revenues--Constant Currency fell by 0.5%. Expansion in the U.S. and Europe was offset by a disposal of part of the French portfolio to Gras Savoye following Willis Corroon Group's investment in Gras Savoye. Adjusted EBITDA margins-- Constant Currency decreased by 10 basis points due to planned staff cost increases, predominantly in the U.S. INTERNATIONAL--From 1995 to 1998, International has grown through a number of acquisitions, the most significant being the increased investment in Willis Corroon Richard Oliver Pty Ltd in Australia and Willis Corroon Scheuer in the Netherlands, the acquisition of 33% of Gras Savoye in France, in January 1998, the acquisition of 30% of Jaspers Wuppesahl in Germany, the 50% interest in Gruppo Ital Brokers in July 1998, the 30% interest in Assurandrgruppen in September 1998, and the additional investment in Spain. Excluding these acquisitions, International has grown its Adjusted Operating Revenues--Constant Currency at an annual compounded rate of 2.3% and has grown its Adjusted EBITDA from a loss of L(0.8) million in 1995 to a gain of L1.7 million in 1998. The unit continues to make investments, including its recent strategic investments in Italy and Denmark and has announced planned transactions in Venezuela. The unit is now focused on exploiting the efficiencies of scale available by merging its Spanish operations with those of Gras Savoye. For the twelve months ended December 31, 1998, International increased its Adjusted Operating Revenues--Constant Currency by 5.2% and its Adjusted EBITDA--Constant Currency by 7.6 basis points largely due to growth in Western Europe after giving pro forma effect to the recent acquisitions. While significant improvements have been made thus far, we are implementing the change program in a series of stages and believe that significant future operating improvement will be generated as a result of change program initiatives. There can be no assurance, however, that such will be the case. 66 BUSINESS GENERAL We are the third largest insurance broker in the world. We provide a broad range of value-added risk management consulting and insurance brokering services to some 50,000 clients worldwide. We trace our history to 1828 and we are a leading insurance broker in the U.K., the U.S. and, directly and through our associates, in many countries. We are a recognized leader in providing specialized risk management advisory and other services on a global basis to clients in various industries, including the construction, aerospace, marine and energy industries. In our capacity as an advisor and insurance broker, we act as an intermediary between our clients and insurance carriers by: - advising our clients on their risk management requirements (many of which are highly complex); - helping clients determine the best means of managing their risks; and - ultimately negotiating and placing insurance risks with insurance carriers through our global distribution network. We also provide other value-added services, including employee benefits consulting, claims administration, captive insurance company management and self-insurance consulting. We do not underwrite insurance risks for our own account. We and our associates serve a diverse base of clients located in more than 125 countries. Such clients include major multinational and middle-market companies in a variety of industries, as well as public institutions. Many of our client relationships span decades. With approximately 12,000 employees around the world and a network of more than 250 offices in 69 countries, in each case including our associates, we believe we are one of only three insurance brokers in the world possessing the global operating presence, broad product expertise and extensive distribution network necessary to effectively meet the global risk management needs of many of our clients. For the twelve months ended December 31, 1998, our Reported Revenues were L718.2 million ($1,192.2 million) and our Reported EBITDA was L113.5 million ($188.4 million). For the same period, our Adjusted Operating Revenues were L735.2 million ($1,220.4 million) and our adjusted EBITDA was L142.6 million ($236.7 million), in each case after giving pro forma effect to the recent acquisitions. See "Prospectus Summary-- Summary Historical Consolidated Financial Information of Willis Corroon" and "Prospectus Summary-- Summary Unaudited Pro Forma Consolidated Financial Information of Willis Corroon." INDUSTRY OVERVIEW Insurance brokers, such as Willis Corroon, provide essential services to users of insurance and reinsurance products. Such users include corporations, public institutions and insurance carriers. Brokers distribute insurance products and provide highly specialized (and often highly technical) value-added risk management consulting services. Through its knowledge of the insurance market and risk management techniques, the broker provides value to its clients and the insurance carriers with whom the broker deals by: 67
VALUE TO CLIENTS VALUE TO INSURANCE CARRIERS - -------------------------------------------------------- -------------------------------------------------------- - - assisting clients in their analysis of risk; - assessing a potential insurance user's risk management - - helping clients formulate appropriate strategies to needs, structuring an appropriate insurance program to manage those risks; meet those needs and placing the insurance risks to be - - negotiating insurance policy terms and conditions; insured with an insurance carrier; - - placing insurance risks to be insured with insurance - acting as a principal distribution channel for carriers through its distribution network and taking insurance products; and advantage of its ability to place insurance at rates - providing access to insurance buyers that most often lower than the client could achieve on its own; insurance companies are not equipped to reach on their and own. - - providing specialized self-insurance consulting and other risk management consulting services apart from its traditional intermediary role.
The broker serves an important role in the distribution of insurance products. Willis Corroon believes that the percentage of insurance policies underwritten worldwide that are placed through insurance brokers has been relatively stable in recent years. According to the Independent Insurance Agents of America, Inc., in 1997 approximately 77% of commercial insurance in the U.S. was sold through insurance brokers. There are three main subsectors of the brokerage industry: - retail brokering, which involves business and services transacted between brokers and commercial or individual customers, - wholesale brokering, which involves business and services transacted between two brokers (or agents) when one broker uses the services or products of another broker and - reinsurance brokering, which involves placing reinsurance coverage for primary insurance and reinsurance carriers. Insurance brokers generate revenue from - commissions and fees on insurance placements, - fees from consulting and other services and - interest earned on premiums held prior to payment to the insurer and on claims held prior to payment to the insured. Commissions and interest have historically been the greatest sources of revenues for insurance brokers. However, in recent years, fee income (from both insurance placements and consulting and other services) has been increasing as a percentage of total revenues while commission income has been declining largely because of declining insurance premium rates due to competition among insurance carriers. Willis Corroon expects this trend toward increased fee income to continue. Industry revenue has been relatively stable in recent years and, according to BUSINESS INSURANCE, the 192 largest commercial insurance brokers globally reported brokerage revenues totalling 68 $16.7 billion in 1997. Recent consolidation among the largest insurance brokers, however, has significantly altered the industry competitive dynamics. Significant factors in broker consolidation include: - the increased need by clients for products and services on a global scope; and - better economies of scale available to larger firms. As a result, the insurance brokerage industry is now led by its three global participants: Marsh & McLennan Companies, Inc. (with approximately 35% of the worldwide market comprised of the 192 brokers in 1997 referred to above, 9% of which is attributable to Sedgwick Group plc, a company acquired by Marsh & McLennan in 1998), Aon Corporation (with approximately 24%), and Willis Corroon (with approximately 7%). The industry is highly fragmented beyond these three brokers with the next largest broker having less than a 3% share of the $16.7 billion market. Another trend in the industry is the increasing diversification of products and services offered by major insurance brokerage companies. In recent years, the largest brokers have added a variety of new products and services in order to meet the increasingly complex risk management needs of its clients. Some of these new products and services represent the unbundling of the traditional brokerage package, such as employee benefits consulting, captive insurance company management, self-insurance consulting and alternative risk financing solutions. This diversification is in response to - clients' increasing focus on the complex risks faced in the operation of their increasingly global businesses and - clients' desire to retain more of the risks themselves. As a result, the complexity of the risks managed has increased, while the proportion insured by traditional underwriters has decreased. This has led to an increased need for, and the development by brokerage firms of the capability to provide, services (in addition to their traditional role as an intermediary) that deliver expert solutions to clients with complex risk problems. RECENT MANAGEMENT INITIATIVES In 1996, Willis Corroon developed and launched a series of initiatives referred to as the "change program." The change program was designed to enhance revenues, improve efficiency and transition Willis Corroon from a traditional commission-based insurance broker to a more comprehensive professional advisory services firm. As part of the change program, Willis Corroon established certain key initiatives to: - enhance operating efficiencies; - intensify efforts to develop existing and new accounts; - increase cross-selling of both existing and new products and services to its existing clients; and - maximize leverage in placing insurance with insurance carriers. In addition, Willis Corroon developed initiatives focused on maximizing the talent and expertise of its brokers and consultants. Accordingly, Willis Corroon: 69 - developed improved techniques for recruitment and assessment; - instituted a new incentive structure for brokers in the U.S.; - implemented a new and more frequent appraisal process, including peer review; - created new training and development programs; - invested in technology to enhance communication among employees; and - formed practice groups to share knowledge on specific industry or product areas. Willis Corroon believes that the change program is primarily responsible for: - the 5.9% annual growth in constant currency Adjusted Operating Revenues from 1995 to 1998 (3.9% including the impact of currency movements; 3.8% on a constant currency basis excluding the impact of the recent acquisitions and the incremental investment in Willis Corroon Richard Oliver Pty Ltd and Willis Corroon Scheuer) and - the improvement in constant currency Adjusted EBITDA margins from 14.0% in 1995 to 18.5% in 1998, resulting in 15.2% annual growth in constant currency Adjusted EBITDA over such period (9.4% including the impact of currency movements; 10.5% on a constant currency basis excluding the impact of the Recent Acquisitions and the incremental investment in Willis Corroon Richard Oliver Pty Ltd and Willis Corroon Scheuer) despite the downward trend of insurance premium rates in recent years. See "Supplemental Constant Currency Financial Data" for an explanation of the adjustments and the presentation of constant currency data and EBITDA generally and for a discussion of trends in Constant Currency--EBITDA margins. Willis Corroon estimates that in 1997, the change program initiatives increased its profit before tax by L27 million with more than half of this improvement generated from revenue enhancements. Willis Corroon has implemented the change program in varying stages across its business units and expects the change program to generate significant additional benefits in the future, although there can be no assurance that this will be the case. COMPETITIVE STRENGTHS STRONG FRANCHISE WITH LEADING MARKET POSITIONS. Willis Corroon is the third largest insurance broker in the world and has leading market positions in the U.K., the U.S. and, directly and through its associates, in many other European countries. Willis Corroon is a recognized leader in providing specialized risk management advisory and other services on a global basis to clients in a variety of industries. For example, Willis Corroon believes that it is the leading insurance broker to the construction industry in the United States, one of the largest surety brokers in North America and a market leader in providing risk management services to the aerospace, marine and energy industries. Willis Corroon is also the largest reinsurance broker serving Japan. Willis Corroon's strong global franchise and leading market positions: - provide an extensive platform for selling new and existing products and services to its existing clients; - allow Willis Corroon to meet better the risk management needs of its existing clients and help attract new clients; 70 - create economies of scale and other efficiencies; and - attract talented professionals. STRONG GLOBAL PRESENCE. Willis Corroon believes it is one of only three insurance brokers in the world with the global operating platform, broad product expertise and insurance brokering distribution capabilities necessary to effectively meet the global risk management needs of large multinational and certain other clients. Willis Corroon has approximately 12,000 employees around the world and a network of more than 250 offices in 69 countries, in each case including associates. This strong global franchise enables Willis Corroon and its associates to serve over 50,000 clients located in more than 125 countries worldwide. Management estimates that, together with its associates, Willis Corroon enjoys leading market positions in the U.K., the U.S., France, Denmark, Greece, Germany, Italy, Poland, Spain and Sweden. In 1997 Willis Corroon placed insurance with over 4,000 insurance carriers, none of which individually accounted for more than 7% of the total premiums placed by Willis Corroon on behalf of its clients. Willis Corroon's worldwide franchise enables it to provide high quality services on a local basis with the resources of a global firm. EXTENSIVE AND DIVERSE CLIENT BASE. Willis Corroon's clients operate in many businesses and industries throughout the world and generally range in size from major multinational corporations to middle market companies. Many of Willis Corroon's client relationships span decades, such as its 20-year relationship with Allied Signal Inc. and its relationship with The Tokio Marine and Fire Insurance Co., Limited (the largest non-life insurance company in Japan), which dates back 100 years. In the United States, Willis Corroon serves approximately 10% of the Fortune 1,000 companies, with an average relationship of more than ten years. Willis Corroon's largest client accounted for less than 2% of Willis Corroon's total revenues in 1998, and Willis Corroon's 80 largest clients accounted for less than 10% of such revenues. This diversified client base provides a stable source of revenue and also offers significant additional revenue opportunities as Willis Corroon provides these clients with additional products and services and cross-sells existing products and services across its many areas of expertise. BROAD ARRAY OF CLIENT-ORIENTED SERVICES AND PRODUCTS. In order to serve its extensive client base, Willis Corroon offers a broad range of services and products designed to address their specific risk management needs. With its specialized product and industry teams around the world, Willis Corroon helps its clients assess the risks they encounter in their operations worldwide, from employee benefits and healthcare to the specialized risks of the aerospace industry. If the client desires to insure against these risks, Willis Corroon negotiates policy terms and places an appropriate insurance policy with an insurance underwriter using its significant placing power. If the client, however, wishes to retain some portion of the risk, Willis Corroon can help the client establish and maintain its own self-insurance or captive insurance program. As a result of Willis Corroon's ability to meet its clients' risk management needs, management believes that Willis Corroon enjoys a reputation for exceptional customer service throughout its product offerings. In an independent 1998 survey covering 143 U.S. insurance brokers, Willis Corroon's North American operations received the highest overall customer satisfaction rating. EXPERIENCED AND INCENTIVIZED MANAGEMENT. Willis Corroon's Executive Chairman, John Reeve, joined Willis Corroon in late 1995 and is responsible for instituting significant strategic and operating changes which have improved operating results and positioned Willis Corroon for further growth. Willis Corroon's top seven executives have an average of 27 years of experience in the insurance brokerage and insurance industries and an average of 20 years of experience with Willis Corroon itself. 361 key employees invested directly in the equity of Willis Corroon's ultimate parent company, TA I Limited. The investment by these employees, together with options granted to them at the time of investment and options expected to be granted in the future, is expected to represent between 14% and 20% of TA I Limited's ordinary share capital on a fully diluted basis. Additional equity-based 71 incentive plans, partly tied to performance (including the 1998 Share Purchase and Option Plan for Key Employees of TA I Limited), are expected to be put in place in the future. This broad distribution of equity throughout the organization should help Willis Corroon to retain and attract highly qualified managers, brokers and consultants. STRONG SPONSORSHIP. Kohlberg Kravis Roberts & Co. L.P. is a leading investment firm with significant investment experience in the insurance industry. In addition to the KKR 1996 Fund (Overseas), Limited, six major insurance companies, Guardian Royal Exchange, Royal & SunAlliance Insurance Group, The Chubb Corporation, The Hartford Financial Services Group, Inc., Travelers Property Casualty Corp. and The Tokio Marine and Fire Insurance Co., Limited, collectively invested approximately L203 million (approximately $346 million) in the common and preferred equity of Willis Corroon's parent corporations. The investment by these major insurance carriers represents a significant expression of confidence in Willis Corroon's future business prospects. In addition, Willis Corroon believes that such investment highlights (1) the importance of the role played by the global insurance broker to the insurance industry generally and (2) the importance of Willis Corroon individually as an independent alternative in a rapidly consolidating industry. BUSINESS STRATEGY Willis Corroon's strategic objectives are to continue to grow revenues and cash flow and to enhance its position as a leading global provider of risk management services. The key elements of this strategy are: CAPITALIZE ON STRONG GLOBAL FRANCHISE. As one of only three insurance brokers providing risk management services on a global basis, Willis Corroon is well positioned to take advantage of the increased demand for global risk management expertise. Willis Corroon intends to capitalize on its strong global franchise by: (1) cross-selling both existing and new products and services to its existing clients and (2) targeting new clients in need of Willis Corroon's global reach and specialized expertise and knowledge. To implement these objectives, Willis Corroon is improving the quality of its risk management consultants by: - investing in the training and development of its staff; - recruiting teams of risk management professionals with particular geographical or product expertise and client relationships; - implementing a new incentive structure which has a greater emphasis on business development and profitability; and - implementing programs and upgrading information systems to share product and client knowledge throughout the organization. Willis Corroon also seeks to work more closely with selected insurance carriers to develop new products and services for its clients. While these initiatives continue to be developed and implemented, Willis Corroon has begun to see improvements. For example, revenues from North American Retail's sale of new business increased 17% ($12.6 million) in 1998 compared to 1997. EMPHASIZE VALUE-ADDED SERVICES. Willis Corroon seeks to offer value-added, fee-based risk management services, such as risk management consulting advice, including captive insurance company management and self-insurance consulting, employee benefits consulting, and claims administration to complement its existing insurance brokerage business. These fee-based services have 72 increased as a percentage of Willis Corroon's total revenues and, unlike typical insurance brokerage commissions, are not directly tied to insurance premium rates, which have been declining in recent years. For fiscal 1997, the percentage of Willis Corroon's total revenues from fees (including from both insurance placements and consulting and other services) was approximately 26%, as compared to approximately 13% in 1993. Willis Corroon believes that by emphasizing these value-added risk management consulting services it can - increase the quality and scope of services it offers to its clients worldwide, - reduce Willis Corroon's exposure to fluctuations in insurance premium rates and - continue to enhance revenue growth and operating profit margins despite recent trends toward decreasing insurance premiums and brokerage commissions. INCREASE OPERATING EFFICIENCIES. In addition to its revenue growth and improved client service initiatives, Willis Corroon's change program includes a number of cost reduction measures designed to streamline work processes to increase efficiency without impacting client service. Thus far, these initiatives have reduced headcount in continuing operations by over 1,100 employees, or more than 10% of the workforce. Also, Willis Corroon reorganized its U.K. Retail operations from a regional focus to a market segment focus and reduced the number of U.K. Retail offices from 33 to 28 since January 1, 1996. Other on-going initiatives include - reducing real estate, travel, entertainment and other operating expenses, - further streamlining back-office functions and consolidating offices and - reducing purchasing costs by implementing vendor programs. Additionally, Willis Corroon intends to reduce the number of insurance carriers with which it does business in order to create direct economic benefits for clients, carriers and Willis Corroon. Willis Corroon also intends to streamline administrative processes with a selected number of insurance carriers and work closely with certain insurance carriers to generate new product and service ideas. Willis Corroon reduced expenses from continuing operations by approximately L10 million in 1997 due to the change program and believes that the change program is responsible in large part for the 15.2% annual growth in constant currency Adjusted EBITDA (9.4% including the impact of currency movements; 10.5% on a constant currency basis excluding the impact of the recent acquisitions and the additional investments in Willis Corroon Richard Oliver Pty Ltd and Willis Corroon Scheuer) from 1995 to 1998, despite the downward trend of insurance premium rates. Willis Corroon seeks to continue to increase operating efficiencies and reduce operating costs in the future. PURSUE STRATEGIC GROWTH OPPORTUNITIES. Willis Corroon intends to strengthen its global franchise through selective acquisitions and strategic investments. Willis Corroon believes that the consolidation in the brokerage and risk management consulting industry, coupled with the importance of a global presence, will provide Willis Corroon opportunities to acquire smaller brokers that have a strong regional or local market position or possess specialized product expertise which complements Willis Corroon's existing products. In addition to acquiring controlling interests in smaller brokers, Willis Corroon has also expanded internationally through strategic minority investments in, and developing a close working relationship with, other brokers. For example, in 1997, Willis Corroon acquired a one-third stake in Gras Savoye, the largest broker in France and the ninth largest broker in the world, and early in 1998 a 30% interest in Jaspers Wuppesahl, which Willis Corroon believes is the third largest broker in Germany. This interest increased to approximately 45% in January 1999. Willis Corroon also acquired a 73 50% interest in 1998 in a leading Italian broker, Gruppo Ital Brokers, a 30% interest in Assurandrgruppen, the leading broker in Denmark, a reinsurance brokering, and consulting operation in Germany, and has announced planned acquisitions in Venezuela. In 1997 and 1998, Willis Corroon increased its existing investments in Brazil, Sweden, Spain, Australia and Holland. In connection with these investments, Willis Corroon assumes an active role in management and generally retains the right to obtain ownership interests in excess of 50% over time. These and future strategic investments should significantly enhance Willis Corroon's global presence and enable it to better leverage its global platform. BUSINESS UNITS Willis Corroon conducts its activities through five units: - North American operations; - U.K. Retail; - Global Specialties; - Global Reinsurance; and - International, the operations of each of which are detailed below. NORTH AMERICAN OPERATIONS (41% OF 1998 OPERATING REVENUES) Willis Corroon's North American operations, which consist of North American Retail and U.S. Wholesale, provide risk management, insurance brokerage and related services to a wide variety of clients in the United States and Canada. Headquartered in Nashville, Tennessee, North American operations operate through a network of more than 100 offices located in 38 states in the U.S. and six offices in Canada. In addition, two other U.K.-based units, Global Specialties and Global Reinsurance also have operations in the U.S. NORTH AMERICAN RETAIL (90% OF NORTH AMERICAN OPERATIONS 1998 OPERATING REVENUES) North American Retail provides risk management, insurance brokerage and related services directly to corporations through 77 local offices in the U.S. and six offices in Canada. North American Retail's clients include both middle-market and major multinational companies. Approximately 45% of North American Retail's revenues are generated by providing property/casualty brokerage services to middle-market companies. The balance of the unit's revenues come from serving the complex risk management needs of multinational corporations and from its other consulting and brokerage services. Other consulting brokerage services are supplied to certain clients through four divisions: - construction; - employee benefits; 74 - healthcare; and - advanced risk management services. North American Retail's construction division specializes in providing risk management, insurance and surety bonding services to the construction industry. This division provides services to approximately 20% of the Engineering New Record Top 400 contractors (a listing of the largest 400 North American contractors based on revenue). Willis Corroon believes it is the largest construction insurance and surety broker (obtaining surety bonds, which guarantee the performance of a contractor's obligations under construction and other contracts) in North America. North American Retail's employee benefits division helps clients with the design and implementation of benefits and compensation plans. Its healthcare division provides insurance and consulting services to local healthcare professionals. Willis Corroon believes it is the fourth largest healthcare insurance broker/consultant in the United States. North American Retail's advanced risk management services division provides actuarial consulting, captive management services and a wide range of other risk consulting activities to large clients. Many of North American Retail's client relationships have existed for decades, such as its relationships with AT&T, Texaco and GE Capital. In addition, Willis Corroon serves approximately 10% of the Fortune 1000 companies in the United States. In an independent 1998 survey covering 143 U.S. insurance brokers, Willis Corroon received the highest overall customer satisfaction rating. During 1997, as part of the change program, North American Retail introduced a new regional structure, with six regions in the United States and one region for Canada, designed to streamline the existing management structure, focus more decision making closer to the customer, and reduce back office costs by concentrating administrative resources at the national and regional level. Additionally, North American Retail implemented specific programs designed to enhance revenues, such as increased cross-selling of products to its existing clients. U.S. WHOLESALE (10% OF NORTH AMERICAN OPERATIONS 1998 OPERATING REVENUES) The second, and much smaller, component of Willis Corroon's North American operations is U.S. Wholesale. Wholesale brokering is typically transacted between two brokers or agents and occurs when a broker has a client with a risk coverage need that falls outside its area of expertise. In these cases, a broker may call in a wholesale broker with such specific expertise to place the business and then receive a fee. U.S. Wholesale primarily serves its clients through three operating entities. As a wholesale broker and program manager, Public Entities National Company provides access to specialized coverage for governmental entities, schools and other municipality and public entities. Willis Corroon believes that the Stewart Smith Group is the fourth largest excess and surplus lines broker in the United States, providing specialist advice and market expertise in property and casualty insurance placement in a variety of industries, including manufacturing, real estate/habitational, transportation, financial services, utilities, entertainment, aerospace and construction. Special Program Management, a unit of the Stewart Smith Group, is an industry leader for placing specialty directors & officers coverage and related products to the high-technology industry. U.S. Wholesale's professional liability wholesale operation, Professional Liability Underwriting Management, was closed in the second quarter of 1998. 75 U.K. RETAIL (18% OF 1998 OPERATING REVENUES) Willis Corroon's U.K. Retail operation provides risk management and insurance brokerage services to clients in the U.K. through 28 offices located in the United Kingdom to industrial and individual clients. U.K. Retail arranges similar risk management and insurance brokerage services for U.K.-based clients outside the United Kingdom through North American Retail, overseas subsidiaries and associates. U.K. Retail has numerous long-standing relationships with both middle-sized and larger companies throughout the U.K., such as BAT Industries, British Steel and Cadbury Schweppes. In 1997, U.K. Retail established three new divisions (Willis Corroon Corporate, Willis Risk Solutions and Willis Corroon Commercial) to provide differentiated services according to client needs and buying preferences. Willis Corroon Corporate provides a wide range of integrated risk transfer and risk and loss management services to larger U.K.-based corporate clients. The division assists clients in reducing the cost of managing their risks by providing comprehensive risk management services, elements of which are available on an "unbundled" basis if required. Willis Risk Solutions is a professional services business delivering expert solutions to major, typically multinational, corporate and professional clients with complex risk problems. Willis Risk Solutions service is tailored to individual client needs and ranges from strategic risk assessment to transactional risk transfer and alternative risk financing solutions. The service includes the development and management of captive insurance companies, specialist insurance services, due diligence on mergers and acquisitions and project finance, and evaluating risks associated with new business ventures. Willis Risk Solutions is increasingly focused on providing more advisory and consulting services. Through Willis Risk Solutions, Willis Corroon is one of the largest managers of captive insurance companies in Europe. Willis Corroon Commercial provides traditional insurance brokerage services primarily to smaller companies. In a new venture announced in February 1998, Willis Corroon Commercial stated that it would be entering into franchise partnerships with local U.K. insurance brokers to handle the insurance requirements of small companies and individuals, utilizing specialized electronic systems linking the franchised brokers directly to the commercial panel of insurance carriers. These small companies and individuals represent a very large market in the U.K. (more than 60% of commercial insurance premiums in the U.K. are paid by companies with less than L10 million in revenue). Accordingly, Willis Corroon Commercial believes that the franchise program provides a significant opportunity for growth, and had ten franchise agreements in place at December 31, 1998. It expects to have 26 in place by the end of 1999. In addition to these services, U.K. Retail provides advice and services to corporate and individual clients on personal finance matters such as pension planning and investment products through Willis National Limited (a joint venture in which Willis Corroon has a 51% interest and Abbey National has the remaining 49%), the second largest independent financial advisor in the United Kingdom, according to information published in MONEY MARKETING (August 7, 1997). U.K. Retail also has teams which provide services in numerous specialty areas, such as construction, freight, credit insurance, transport, hotel and leisure, and professional indemnity through its other three divisions (Willis Construction Risk Specialists, Willis Corroon Cargo and Scotland/ Ireland). 76 During 1997, U.K. Retail completed the implementation of certain structural changes initiated towards the end of 1996 under the change program, and reorganized into seven major divisions from its prior regional focus. In connection with the reorganization, U.K. Retail centralized most of its back-office functions, closed five offices and reduced headcount by approximately 13%. The change program continued in 1998 with rationalization. GLOBAL SPECIALTIES (22% OF 1998 OPERATING REVENUES) The Global Specialties unit provides specialist brokerage and consulting services to clients throughout the world for the risks of specific industrial and commercial activities. In these operations, Willis Corroon has extensive specialized experience handling diverse lines of coverage, including the complex insurance programs for insurance companies and Lloyd's syndicates, and acting as an intermediary between retail brokers and insurers. Global Specialties increasingly provides consulting services on risk management with the objective of assisting clients to reduce the overall cost of risk. Global Specialties serves clients in more than 100 countries, primarily from its U.K. offices, although the unit also serves clients from offices in the U.S. The Global Specialties unit is organized into three distinct business areas: - Global Broking Services; - Willis Corroon Aerospace; and - Willis Faber Marine. Global Broking Services provides solutions to problems in the industrial, financial and professional sectors for large, complex, unusual and niche risks around the world. Global Broking Services operates through five business sub-units. The Global Property and Casualty unit designs and obtains innovative property coverage solutions for large or unusual exposures in a variety of industries, including mining and metals, chemicals and pharmaceuticals, telecommunications, offshore energy and construction, refining, power stations and other utilities, transport authorities and motor manufacturers and also handles the design, implementation and servicing of reinsurance protections for captive insurance companies. The Global Property and Casualty unit also provides comprehensive liability programs for coverage against environmental liability, libel and slander, and medical malpractice. The Global Financial Risks unit obtains directors and officers insurance, as well as errors and omissions insurance for professional firms and other insurance brokers. The Global Financial Risks unit is also a leader in designing and obtaining insurance coverage for political risk (including confiscation and expropriation). Crime, computer fraud and unauthorized trading risks are also covered on a worldwide basis. The Fine Art, Jewelry, and Specie unit provides specialist risk management and insurance services to fine art, diamond and jewelry businesses and operators of armored cars. Coverage is also obtained for the physical risks of financial institutions and similar operations, including vault and bullion risks. The Contingency Risks unit specializes in producing packages to protect corporations, groups and individuals against special contingencies such as kidnap and ransom, extortion, detention, political repatriation and product contamination. The Bloodstock unit services the insurance needs of the bloodstock and livestock industry and also arranges the reinsurance of bloodstock and livestock related business of insurance companies worldwide. Willis Corroon Aerospace is a market leader in the provision of insurance brokerage and risk management services to clients in the aerospace industry, including aircraft manufacturers, air cargo handlers and shippers, airport managers and other general aviation companies. Advisory services 77 provided by Aerospace include claims recovery and collections, contract and leasing risk management, safety services and markets information. Aerospace is a leading provider of risk transfer and advisory services for space vehicle launches and is also a leading reinsurance broker of aerospace risks. Aerospace's clients are spread throughout the world and include 250 airlines and more than 45% of the world's 30 leading non-American airports by passenger movement. Other clients include those introduced from other intermediaries as well as insurers seeking reinsurance. Willis Faber Marine provides marine insurance brokerage services, including hull, cargo and general marine liabilities. Marine's clients include direct buyers, other insurance intermediaries and insurance and reinsurance companies. Marine insurance brokerage is Willis Corroon's oldest line of business. Other services of Marine include claims collection and recoveries. Global Specialties is diversified from a geographical perspective. The unit's 1998 revenues were generated in the following geographical regions: 27% in the U.K.; 22% in North America and the Caribbean; 26% in continental Europe; 12% in Japan and the Far East; 5% in South America; 4% in the Middle East; and 4% in the rest of the world. In addition, this unit is diversified from a customer perspective, with no client accounting for more than 2% of its revenues in 1998. Under the change program, in 1998 Global Specialties has, among other things, reduced headcount by approximately 9%, merged its energy sub-unit into Global Broking Services to better focus its sales efforts and focused on cross-selling with Willis Corroon's other business lines. GLOBAL REINSURANCE (10% OF 1998 OPERATING REVENUES) The Global Reinsurance unit, operating under the trade name Willis Faber Re, provides international reinsurance brokerage services. These services are provided to insurance underwriters to reinsure all or a portion of the risks insured by them and to reinsurance underwriters to further reinsure their risks. Willis Corroon is one of the world's largest intermediaries for international reinsurance and has a significant market share in a number of major reinsurance markets. It is the largest reinsurance broker serving Japan. Global Reinsurance provides its clients, both insurance and reinsurance companies, with reinsurance transaction services as well as ancillary services such as risk analysis, modeling and consulting. The unit also provides reinsurance brokerage services to healthcare professionals and institutions. The U.K. operation represents clients in more than 90 countries and has long-standing relationships with leading insurers in Asia, Middle East, Latin America and in Western Europe. One such relationship, with The Tokio Marine and Fire Insurance Co., Limited, has existed for 100 years. Willis Corroon believes that from 1996 to 1998 premium rates in the global reinsurance market have decreased annually by approximately 20%. Global Reinsurance is developing new sources of revenue in addition to its traditional reinsurance brokerage services, investing in new capabilities and expanding its global reach. For example, in 1998 Global Reinsurance established Cordis Consulting Limited to market its capabilities in actuarial and catastrophe modeling as consulting products rather than as a part of its reinsurance package, and acquired Mansfeld, Hubener & Partner GmbH to provide a local presence in Germany (the largest European reinsurance market). In 1997 Willis Corroon launched Willis Corroon Asset Management Limited which manages funds invested in a new class of financial instruments linked to insurance and reinsurance risks. Additionally, under the change program, Willis Corroon has been integrating various reinsurance business units globally (eight business units have merged between 1995 and 1998 to 78 culminate in the creation of Willis Faber Re) and has gained more synergy, teamwork, and sharing of knowledge among top professionals around the world. Additionally, the headcount in the Global Reinsurance's U.K. operations has been reduced by approximately 25% since 1995. INTERNATIONAL (9% OF 1998 OPERATING REVENUES) Willis Corroon's International unit consists of a network of subsidiaries and associates other than those in the U.S. or U.K. controlled by the other business units. These operations are located in 59 countries worldwide, consisting of 21 countries in Europe, 13 in the Asia/Pacific region and 25 elsewhere in the world. The services provided are generally focused according to the characteristics of each market and are not identical in every office, but generally include direct risk management and insurance brokerage, specialist and reinsurance brokerage and employee benefits consulting. As part of its on-going strategy, Willis Corroon has significantly strengthened International's market share and operations through a number of acquisitions and strategic investments in recent years. The most significant of these was the acquisition of a 33% interest in Gras Savoye, France's leading insurance broker and the ninth largest broker in the world. In addition, in January 1998, Willis Corroon's associate in Germany, C. Wuppesahl & Co. Assekuranzmakler, merged with Jaspers Industries Assekuranz GmbH & Co. KG to create Jaspers Wuppesahl, the third largest insurance broker in Germany in which Willis Corroon now has an interest of approximately 45%. In July 1998, Willis Corroon acquired 50% of Gruppo Ital Brokers, which will be merged with UTA Willis Corroon SpA (in which Willis Corroon has a 50% interest), creating the third largest broker in Italy. Willis Corroon also acquired a 30% interest in Assurandrgruppen the leading broker in Denmark. Also, Willis Corroon has announced planned acquisitions in Venezuela. In addition, in 1997 and 1998 Willis Corroon entered into a joint venture in Indonesia and increased its existing investments in Brazil, Sweden, Spain, Australia and Holland. Finally, Willis Corroon is the first non-Japanese broker to be awarded a domestic license in Japan. The investments in 1997 and 1998 have improved the market positions of Willis Corroon and its associates worldwide. The following is a list of the associate investments currently held by Willis Corroon:
COMPANY COUNTRY % OWNERSHIP - ----------------------------------------------------------- ----------- ------------------- EUROPE Gras Savoye & Cie France 33% Jaspers Wuppesahl Industrie Assekuranz GmbH & Co., KG Germany 45% Willis Corroon Assurandrgruppen A/S Denmark 30% ASIA/PACIFIC Multi-Risk Consultants (Thailand) Limited Thailand 25% Willis Faber (Malaysia) Sdn Bhd Malaysia 30% Willis Faber Insurance Brokers (B) Sdn Bhd Brunei 38% REST OF WORLD Al-Futtaim Willis Faber (Private) Limited Dubai 49% Willis Faber EC Bahrain 49%
In connection with many of its investments in associates, Willis Corroon retains rights to increase its ownership percentage of such associates over time, typically to a majority or 100% 79 ownership position. In addition, in certain instances, the other owners of the associates have a right, typically pursuant to some price formula of revenues or earnings, to put some or all of their shares in the associates to Willis Corroon. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources." In addition to its strategic investments in associates, Willis Corroon has acquired a controlling interest in a variety of smaller brokers. The following is a list of International subsidiaries in which Willis Corroon has a controlling interest:
COMPANY COUNTRY % OWNERSHIP - ---------------------------------------------------- ------------------ ----------------- EUROPE Mansfeld, Hubener & Partner GmbH Germany 100% Willis Corroon AB Sweden 74% Willis Corroon Gothia AB Sweden 63% Willis Corroon Global Financial Risks AB Sweden 72% OY Willis Corroon AB Finland 74% Willis Corroon Italia SpA Italy 50% S&C Willis Corroon Correduria de Seguros y Reaseguros SA Spain 60% Surplus Corredores de Reaseguros SA Spain 100% Willis Corroon Corretores de Seguros Limitada Portugal 100% Willis Corroon (Management) Luxembourg SA Luxembourg 100% Willis Corroon Belgium SA Belgium 80% Willis Corroon Nederlands BV Netherlands 100% Willis Corroon Hellas (Insurance Brokers) SA Greece 100% Willis Corroon Kendriki SA Greece 100% Willis Corroon CIS Russia 100% Willis Corroon Polska Poland 70% Willis Corroon sro Czech Republic 100% Willis Corroon Hungary Kft Hungary 80% ASIA/PACIFIC Willis Corroon China (Hong Kong) Ltd. Hong Kong 100% Willis Corroon (Taiwan) Ltd. Taiwan 100% Willis Corroon (Pte) Limited Singapore 100% REST OF THE WORLD Willis Faber & Dumas (Mexico) Intermediario de Reaseguro SA de CV Mexico 100% Willis Faber Corretaje de Reaseguros Venezuela 100% Willis Faber (Middle East) SAL Lebanon 51% Willis Faber do Brasil Consultoria e Participacoes Brazil 100% SA York Willis Corroon Corretores de Seguros SA Brazil 100% Willis Faber Chile Limitada Chile 100% Richard Oliver International Pty Ltd (formerly Australia 100% Willis Corroon Richard Oliver Pty Ltd) Willis Corroon Limited New Zealand 99%
80 SIGNIFICANT SUBSIDIARIES Solely for purposes of compliance with Luxembourg Stock Exchange listing requirements, the following sets forth certain information pertaining to the significant subsidiaries (as defined by such exchange) of Willis Corroon (other than Willis Corroon Partners and the Issuer):
COUNTRY OF COMPANY REGISTRATION ACTIVITY % OWNERSHIP - ---------------------------------------------- ----------------------- ------------------------- --------------- Willis Corroon Europe B.V. Netherlands Holding Company 100% Willis Faber & Dumas Limited(1) England and Wales Lloyd's Broker 100% Willis Corroon Limited(2) England and Wales Lloyd's Broker 100% Willis Corroon Group Services Limited(3) England and Wales Service Company 100% Willis National Limited(4) England and Wales Financial Intermediary 51% Friars Street Insurance Limited Guernsey Captive Insurer 100%
- ------------------------------ (1) Profit arising out of ordinary activities, after tax, for the financial year ended December 31, 1997 amounted to L14.9 million and the amount of dividends received from Willis Faber & Dumas Limited in the course of that financial year was L14.0 million. (2) Profit arising out of ordinary activities, after tax, for the financial year ended December 31, 1997 amounted to L6.0 million and the amount of dividends received from Willis Corroon Limited in the course of that financial year was L5.3 million. (3) Profit arising out of ordinary activities, after tax, for the financial year ended December 31, 1997 amounted to L1.3 million. No dividends were received from Willis Corroon Group Services Limited in the course of that financial year. (4) Willis National Limited did not trade during the financial year ended December 31, 1997. Willis Corroon Europe B.V. and Friars Street Insurance Limited do not publish separate financial statements. The Issuer's shareholders' equity at December 31, 1998 consisted of 10,000 authorized shares of common stock, par value $0.01 per share, of which 3,339 shares were issued and outstanding. Other than - the senior credit facilities, - the Notes and - intercompany notes, all as disclosed in this prospectus, the Issuer has no other long-term debt. Willis Corroon Partners's capital at December 31, 1998 consisted of partnership interests of which Willis Corroon Group has a 99.9% interest and Willis Faber UK Group Limited has a 0.1% interest. Other than - the guarantee of the senior credit facilities, - the guarantee of the Notes and - intercompany notes, all as disclosed in this prospectus, Willis Corroon Partners has no other long-term debt. 81 SEGMENT INFORMATION The following tables show total operating revenues of Willis Corroon by category of activity and geographical location for each of the three years ended December 31, 1998. The information has been prepared in accordance with U.K. GAAP.
YEAR ENDED DECEMBER 31, ------------------------------- TOTAL OPERATING REVENUES 1996 1997 1998 - ----------------------------------------------------------------------------------- --------- --------- --------- (L MILLIONS) BY ACTIVITY Continuing operations -- Insurance brokering and risk management................... L725.0 L692.0 L718.0 Discontinued operations -- Underwriting (Sovereign/Willis Faber (Underwriting Management))..................................................................... 5.7 2.0 0.2 --------- --------- --------- 730.7 694.0 718.2 --------- --------- --------- --------- --------- --------- BY GEOGRAPHICAL AREA(1) United Kingdom..................................................................... 319.5 305.1 305.3 North America...................................................................... 371.3 336.6 351.4 Rest of the World.................................................................. 39.9 52.3 61.5 --------- --------- --------- 730.7 694.0 718.2 --------- --------- --------- --------- --------- ---------
- ------------------------------ (1) The geographical analysis is based on the location of the operating subsidiaries which does not necessarily reflect the original source of the business. CUSTOMERS Willis Corroon's clients operate on a global and local scale in a multitude of businesses and industries throughout the world and generally range in size from major multinational corporations to middle market companies. Further, many of Willis Corroon's client relationships span decades, such as its 20-year relationship with Allied Signal Inc. and its relationship with The Tokio Marine and Fire Insurance Co., Limited which dates back 100 years. In the United States, Willis Corroon serves approximately 10% of the Fortune 1,000 companies, with an average relationship of more than ten years. No one client accounted for more than 2% of revenues for fiscal year 1998 and Willis Corroon's 80 largest clients accounted for less than 10% of 1998 revenues. Additionally, Willis Corroon places insurance with over 4,000 insurance carriers, none of which individually accounted for more than 8% of the total premiums placed by Willis Corroon on behalf of its clients in 1998. EMPLOYEES At December 31, 1998, Willis Corroon had approximately 9,400 employees, including approximately 3,900 in the U.K., 4,400 in the U.S. and 1,100 in the rest of the world and its associates had approximately 2,600 employees. Willis Corroon is not involved in any material dispute with employees and management believes that relations with employees are good. COMPETITION Willis Corroon faces competition in all fields in which it operates. Competition in the insurance brokering and risk management businesses is based on global capability, product breadth, innovation, quality of service and price. Willis Corroon competes with the two other providers of global risk management services as well as with numerous regional and local firms. Insurance companies also compete with Willis Corroon's brokers by directly soliciting insureds without the assistance of an independent broker or agent. Competition for premiums is intense in all Willis Corroon's business lines and in every insurance market. Competition on premium rates has also exacerbated the pressures caused by a continuing reduction in demand in some classes of business. For example, insurers are 82 currently retaining a greater proportion of their risk portfolios than previously. Industrial and commercial companies are increasingly relying upon captive insurance companies, self-insurance pools, risk retention groups, mutual insurance companies and other mechanisms for funding their risks, rather than buying insurance. Willis Corroon provides management and similar services for such alternative risk transfer programs. Additional competitive pressures arise from the entry of new market participants, such as banks, accounting firms and insurance carriers themselves, offering risk management or transfer services. Willis Corroon believes that it is well-positioned to compete across the breadth of the products and services Willis Corroon offers. REGULATION Many of Willis Corroon's activities are subject to regulatory supervision in the various countries and jurisdictions in which they are based or undertaken. In the United Kingdom, many Company entities are subject to regulatory supervision. For example, Lloyd's brokers are regulated by the Council of Lloyd's and, together with the insurance broking subsidiaries, are regulated pursuant to the Insurance Brokers (Registration) Act 1977. In addition, Willis National and Willis Corroon Asset Management Limited are regulated by the Financial Services Authority pursuant to the provisions of the Financial Services Act 1986. Finally, the insurance companies which are in run-off are regulated by HM Treasury. The Society of Lloyd's and Financial Services Authority generally regulate the conduct of business and financial position of their respective members through the establishment of required levels of net worth and other financial criteria; Lloyd's by-laws and Financial Services Authority rules describe the methods by which Lloyd's brokers, independent financial advisors and investment managers, respectively, shall conduct business. The Insurance Brokers (Registration) Act requires, among other things, that insurance brokers be enrolled with a central professional body and comply with its rules in the conduct of their business. The Insurance Brokers (Registration) Act and Lloyd's generally requires that Willis Corroon maintain amounts of fiduciary cash in regulated bank accounts subject to guidelines which generally emphasize capital preservation and liquidity. Willis Corroon's activities in connection with insurance brokering services and third party administration within the United States are subject to regulation and supervision by state authorities. Although the scope of regulation and form of supervision may vary from jurisdiction to jurisdiction, insurance laws in the United States are often complex and generally grant broad discretion to supervisory authorities in adopting regulations and supervising regulated activities. Such supervision generally includes the licensing of insurance brokers and agents and third party administrators and the regulation of the handling and investment of client funds held in a fiduciary capacity. Willis Corroon's continuing ability to provide insurance brokering and third party administration in the jurisdictions in which it currently operates is dependent upon its compliance with the rules and regulations promulgated from time to time by the regulatory authorities in each of these jurisdictions. All companies carrying on similar activities in a given jurisdiction are subject to such regulation, and Willis Corroon does not consider that such controls adversely affect its competitive position. PROPERTIES Willis Corroon owns and leases a number of properties for use as offices throughout the world and believes that its properties are generally suitable and adequate for the purposes for which they are used. The principal properties are located in the United Kingdom and the United States. Willis Corroon's headquarters at Ten Trinity Square in London is a landmark building owned by Willis Corroon . The Issuer's principal office in the United States is at 26 Century Boulevard, Nashville, Tennessee, a leasehold property. 83 LEGAL PROCEEDINGS GENERAL. Willis Corroon has extensive operations and Willis Corroon and its subsidiaries are subject to claims and litigation in the ordinary course of business resulting principally from alleged errors and omissions in connection with their businesses. Most of the claims are covered by professional indemnity insurance and many of the defenses to these claims are being conducted by Willis Corroon's insurers. In respect of any self-insured deductibles applicable to such claims, Willis Corroon has established provisions which are believed to be adequate in the light of current information and legal advice. These provisions may be adjusted from time to time according to developments. Willis Corroon does not expect the outcome of such claims, either individually or in the aggregate, to have a material effect on Willis Corroon's operations or financial position. SOVEREIGN/WILLIS FABER (UNDERWRITING MANAGEMENT). For a description of the implications of the provisional liquidation of Sovereign Marine & General Insurance Company Limited and the associated run-off of Willis Faber (Underwriting Management) Limited and related matters, see "Risk Factors--Sovereign/WFUM." PENSION REVIEW. For a description of the implications of the "pension transfers and opt-outs review" initiated by the U.K. government, see "Risk Factors--U.K. Pension Review." HUGHES LITIGATION. In September 1990, Hughes Aircraft Co. filed suit in Los Angeles County Superior Court against certain London insurance companies, seeking coverage for environmental liabilities associated with groundwater contamination at its Tucson, Arizona facility. Also named as a defendant was Stewart Smith West, Inc., which is a subsidiary of Willis Corroon Group and the successor to Haidinger Hayes, Inc., a surplus line broker that assisted in the acquisition by Hughes Aircraft of various excess liability policies from 1952 to 1965. In addition, Willis Faber Property Holdings Limited, the successor to a London broker which assisted in the acquisition of the excess policies and which is an indirect subsidiary of Willis Corroon Group, has been brought into the suit. The claims against Stewart Smith and Willis Faber alleged that Stewart Smith and Willis Faber failed to preserve the identity of insurers participating in excess general liability insurance placed on Hughes Aircraft's behalf during the period from 1952 to 1965. Hughes Aircraft alleged that Stewart Smith and Willis Faber should "stand in the shoes" of the insurers whose identity is unknown due to the alleged breach of duty by the two subsidiaries of Willis Corroon Group in failing to retain the identity of the insurers. In addition, Hughes Aircraft has asserted a claim for $6 million, alleging that Stewart Smith should pay for the costs it has incurred in attempting to reconstruct the missing policies. In May 1998, the judge ordered a bifurcation of the case under which the claim against Willis Faber was tried separately from the claims against Stewart Smith. On June 4, 1998, a jury found in favor of Hughes Aircraft in its case against Willis Faber, finding that Willis Faber failed to retain the identity of the excess general liability insurers. Judgment was entered on this verdict, subject to appeal. The judgment, while requiring Willis Faber to "stand in the shoes" of Hughes Aircraft, does not address the issue of causation, i.e., whether the conduct of Willis Faber actually caused injury to Hughes Aircraft. This issue will turn on a number of factors, including, without limitation, whether Hughes' Aircraft ultimate exposure in relation to underlying claims made against it implicates the "missing" coverage. While the claim against Stewart Smith is dependent upon different facts than the claim against Willis Faber, evidence presented in the Willis Faber case has already established that Stewart Smith did receive the currently missing information as to the identity of the excess general liability insurers from Willis Faber. On October 16 and 20, 1998, the trial judge heard and subsequently granted two motions on behalf of Hughes Aircraft in relation to the Stewart Smith action. The judge granted Hughes Aircraft's motion for the summary adjudication that Stewart Smith had breached a duty to retain in perpetuity the identity and percentages of excess insurance procured by Stewart Smith for Hughes Aircraft. The judge also granted a motion in limine to preclude any evidence or argument that Hughes Aircraft is comparatively negligent. 84 On October 30, 1998, a settlement in principle was reached with Hughes Aircraft, with the involvement and prior approval of Willis Corroon's errors and omissions insurer. Under the settlement in principle: (a) a final, non-appealable judgment has been entered against Willis Faber; (b) a declaratory judgment, which Willis Corroon will explicitly have the right to appeal, has been entered against Stewart Smith; (c) payment of $3.5 million has been made, L1 million of which has been funded by the Company in respect of the deductible applicable under the pertinent errors and omissions insurance policy described below, and the balance of which has been funded by Willis Corroon's errors and omissions insurer; and (d) Hughes Aircraft has agreed that it may recover no more than L13 million against both Willis Faber and Stewart Smith for toxic tort claims, known or unknown, relating to any of the Hughes Aircraft sites. Willis Corroon expects a final, definitive settlement agreement to be executed in the near future. Willis Corroon has an errors and omissions insurance policy with limits of L20 million (which have been eroded to some extent by the expenses of defending this litigation to date) and a L1 million deductible. Willis Corroon believes that its errors and omissions insurer, into which this risk has been reinsured and which has assumed and controlled the defense of this litigation, is obligated to pay under this policy in response to any claims submitted and properly established by Hughes Aircraft, up to the agreed-upon L13 million cap described above. BACCALA & SHOOP. Prior to 1984, Baccala and Shoop Insurance Services, a subsidiary of Willis Corroon Group, acted as managing general agent for certain insurance issuing companies, including three subsidiaries of The Hartford Financial Services Group, Inc. Since Baccala and Shoop ceased active operations in 1983, issuing companies (including Hartford) have notified Baccala and Shoop of potential errors and omissions claims against Baccala and Shoop. In August 1987, Baccala and Shoop, the Issuer and Hartford entered into a Standstill Agreement, amended in 1994, pursuant to which the statutes of limitations on Hartford's claims against Baccala and Shoop were tolled indefinitely in exchange for Hartford's agreement to forbear filing complaints against Baccala and Shoop based on such potential claims. Since 1983, Willis Corroon has paid approximately $7.9 million in settlement of errors and omissions claims brought by certain other issuing companies, including issuing companies that went into liquidation. There has been no notification of additional potential claims from Hartford or other issuing companies since 1992. Hartford has not stated what it believes to be its total aggregate losses potentially attributable to Baccala and Shoop. For accounting purposes, the Issuer has established provisions in connection with the Baccala and Shoop-related claims, and believes such provisions to be adequate. However, there can be no assurance that the provisions will be adequate to cover claims over time. ENFORCEABILITY OF CIVIL LIABILITIES Willis Corroon Group is a company with limited liability organized under the laws of England and Wales. Certain of the directors and executive officers of Willis Corroon Group and its subsidiaries (and certain of the independent auditors named in this prospectus) are non-residents of the United States and all or a substantial portion of the assets of Willis Corroon Group and such persons are located outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon Willis Corroon Group or such persons, or to enforce against any of them judgments of U.S. courts predicated upon civil liabilities under U.S. federal securities laws. Willis Corroon Group has been advised by its English solicitors, Clifford Chance, that there is also doubt as to the enforceability in England in original actions, or in actions for the enforcement of judgments of U.S. courts, of liabilities that are predicated upon the civil liabilities provisions of the federal securities laws of the United States. 85 MANAGEMENT DIRECTORS OF TA I LIMITED, TA II LIMITED, TA III PLC AND TRINITY ACQUISITION The following table sets forth certain information regarding the directors of TA I Limited, the ultimate parent of Willis Corroon Group, as well as TA II Limited, TA III plc and Trinity Acquisition (ages as of December 31, 1998).
NAME AGE POSITION - ------------------------------------------------------ ------------------ ------------------------------------ Henry R. Kravis 55 Director George R. Roberts 55 Director Perry Golkin 45 Director Todd A. Fisher 33 Director Scott C. Nuttall 26 Director John Reeve 54 Director James R. Fisher 43 Director Raymond G. Viault 54 Director
Henry R. Kravis is a founding partner of KKR and, since January 1, 1996, has been a managing member of KKR & Co. L.L.C., the limited liability company which is the general partner of Kohlberg Kravis Roberts & Co. L.P. Mr. Kravis is also a general partner of KKR Associates, L.P. and a director of Accuride Corporation, Amphenol Corporation, Borden, Inc., The Boyds Collection, Ltd., BRW Acquisition, Inc., Evenflo Company, Inc., The Gillette Company, IDEX Corporation, KinderCare Learning Centers, Inc., KSL Golf Holdings, Inc., KSL Land Corporation, KSL Recreation Corporation, MedCath Incorporated, Newsquest plc, Owens-Illinois Group, Inc., Owens-Illinois, Inc., Neway Anchorlok International Inc., PRIMEDIA, Inc., Randalls Food Markets, Inc., Regal Cinemas, Inc., RELTEC Corporation, Safeway Inc., Sotheby's Holdings, Inc., Spalding Holdings Corporation and U.S. Natural Resources, Inc. George R. Roberts is a founding partner of Kohlberg Kravis Roberts & Co. L.P. and, since January 1, 1996, has been a managing member of KKR & Co. L.L.C. Mr. Roberts is also a general partner of KKR Associates, L.P. and a director of Accuride Corporation, Amphenol Corporation, Borden, Inc., The Boyds Collection, Ltd., BRW Acquisition, Inc., Evenflo Company, Inc., IDEX Corporation, KinderCare Learning Centers, Inc., KSL Land Corporation, KSL Recreation Corporation, MedCath Incorporated, Neway Anchorlok International Inc., Owens-Illinois Group, Inc., Owens-Illinois, Inc., PRIMEDIA, Inc., Randalls Food Markets, Inc., Regal Cinemas, Inc., RELTEC Corporation, Safeway, Inc., Spalding Holdings Corporation and U.S. Natural Resources, Inc. Perry Golkin has been a member of KKR & Co. L.L.C. since January 1, 1996. Mr. Golkin was a general partner of Kohlberg Kravis Roberts & Co. L.P. from 1995 to January 1996. Prior to 1995, he was an executive of Kohlberg Kravis Roberts & Co. L.P. He is a general partner of KKR Associates, L.P. He is a member of the board of directors of BRW Acquisition, Inc., PRIMEDIA, Inc., RR Holding Company Ltd. and Walter Industries, Inc. Todd A. Fisher has been an executive of Kohlberg Kravis Roberts & Co. L.P. since June 1993. Mr. Fisher was an associate at Goldman Sachs & Co. from July 1992 to June 1993. He is a member of the board of directors of Accuride Corporation, Layne Christensen Company and BRW Acquisition, Inc. Scott C. Nuttall has been an executive of Kohlberg Kravis Roberts & Co. L.P. since November 1996. Mr. Nuttall was an executive at The Blackstone Group from January 1995 to November 1996. Prior to 1995, he attended the Wharton School of Business at the University of Pennsylvania. 86 John Reeve joined the board of directors of Willis Corroon Group on September 19, 1995 and became Executive Chairman of Willis Corroon Group on December 1, 1995. He was managing director of Sun Life Corporation plc between April 1989 and October 1995. He is also a non-executive director of Temple Bar Investment Trust plc and a member of the executive committee and board of directors of the International Insurance Society, Inc.. James R. Fisher heads Fisher Capital Corp. LLC. From 1986 through March 1997, Mr. Fisher was a senior executive of American Re Corporation and served most recently as Senior Vice President and Chief Financial Officer of American Re-Insurance Company and America Re Corporation, President of American Re Financial Products, and President and Chief Executive Officer of American Re Asset Management. Raymond G. Viault joined the board of directors of Willis Corroon Group on January 1, 1997 and resigned on October 30, 1998. He has been vice chairman and a director of General Mills, Inc., since January 1996. He was formerly the president and chief executive officer of Kraft Jacobs Suchard. TA I Limited, TA II Limited, TA III plc and Trinity Acquisition have no executive officers. Mr. Kravis and Mr. Roberts are first cousins. DIRECTORS AND EXECUTIVE OFFICERS OF WILLIS CORROON GROUP The following table sets forth certain information regarding the directors and executive officers of Willis Corroon Group (ages as of December 31, 1998).
NAME AGE POSITION - ----------------------------------- ----------- ---------------------------------------------------------------------- John Reeve 54 Executive Chairman; Director Richard J. S. Bucknall 50 Chief Executive of Global Specialties (excluding Willis Faber Re), also Executive responsible for discontinued U.K. underwriting activities; Director Michael P. Chitty 47 Company Secretary Thomas Colraine 40 Group Finance Director; Director Brian D. Johnson 56 Executive responsible for North American Retail; Director Patrick Lucas 59 Managing Partner of Gras Savoye; Non-executive Director George F. Nixon 58 Chairman of U.K. Retail and Executive responsible for Willis Corroon International Holdings-Europe; Director John M. Pelly 45 Chairman of Willis Faber Re; Director Kenneth H. Pinkston 56 Group Executive Director responsible for North American Retail, U.S. Wholesale, Asia-Pacific and rest of the world; Director
Richard J.S. Bucknall joined the board of directors of Willis Corroon Group on November 1, 1998. He has been chief executive of Willis Corroon's Global Specialties unit since 1998 and has also been the executive responsible for discontinued U.K. underwriting since 1998. Mr. Bucknall has 32 years of experience in the insurance brokerage industry, of which 13 years have been at Willis Corroon. Michael P. Chitty has been Company Secretary since January 1, 1995. From April 1983 to October 1990 he was Secretary and from October 1990 to December 1994 he was Joint Secretary. 87 Mr. Chitty has 22 years of experience in the insurance brokerage industry, all 22 years of which have been at Willis Corroon. Thomas Colraine has been the Group Finance Director since September 1997 and joined the board of directors of Willis Corroon Group on August 31, 1997. From January 1995 to October 1996, he was chief financial officer of Willis Corroon's North American Operations and was change program director from October 1996 to September 1997. Mr. Colraine has 10 years of experience in the insurance brokerage industry, all 10 years of which have been at Willis Corroon. Brian D. Johnson joined the board of directors of Willis Corroon Group on January 1, 1993. He is an actuary and has been the executive responsible for Willis Corroon's North American retail activities since 1997. Mr. Johnson has 35 years of experience in the insurance brokerage industry, of which 33 years have been at Willis Corroon. Patrick Lucas joined the board of directors of Willis Corroon Group on April 15, 1998 as a non-executive director. He has been Managing Partner of Gras Savoye since 1991, and Chairman and Chief Executive Officer of Gras Savoye S.A. and Gras Savoye Reassurance since 1979 and 1976 respectively. He is a former Chairman of the Federation Francaise des Courtiers en Assurance (the French professional organization of insurance brokers). Mr. Lucas has 33 years of experience in the insurance brokerage industry. George F. Nixon joined the board of directors of Willis Corroon Group on January 1, 1993. He has been the executive responsible for Willis Corroon's U.K. retail activities since 1988 and has been chairman of the Company's European Retail Advisory Board since 1993. He is also a director of World Insurance Network Limited. Mr. Nixon has 42 years of experience in the insurance brokerage industry, of which 34 years have been at Willis Corroon. John M. Pelly joined the board of directors of Willis Corroon Group on November 1, 1998. He has been chairman and chief executive of Willis Faber Re since 1997. Mr. Pelly has 26 years of experience in the insurance brokerage industry, all 26 years of which have been at Willis Corroon. Kenneth H. Pinkston joined the board of directors of Willis Corroon Group on January 1, 1993. He has had executive overview responsibility for North American Retail since 1995, for U.S. Wholesale since 1993 and for Asia-Pacific and the rest of the world since 1997. He is also a director of SunTrust Bank, Nashville. Mr. Pinkston has 35 years of experience in the insurance brokerage industry, of which 27 years have been at Willis Corroon. 88 DIRECTORS AND EXECUTIVE OFFICERS OF THE ISSUER The following table sets forth certain information regarding the directors and executive officers of the Issuer (ages as of December 31, 1998).
NAME AGE POSITION - ----------------------------------- ----------- ---------------------------------------------------------------------- Kenneth H. Pinkston 56 Group Executive Director responsible for North American Retail, U.S. Wholesale, Asia-Pacific and rest of the world; Director; Brian D. Johnson 56 Executive responsible for North American Retail; Director Charles D. Hamilton 43 Senior Vice President, Director of Finance and Administration; Director Bart R. Schwartz 46 Senior Vice President, Corporate Secretary and General Counsel; Director Kimberly G. Windrow 41 Senior Vice President, Director of Human Resources, North America; Director
Charles D. Hamilton joined the Issuer on October 27, 1986 as a risk management consultant. On January 1, 1989 he became Vice President and Chief Financial Officer of Public Entities National Company and the Issuer's US wholesale operation. He became Vice President and Chief Administrative Officer of the Issuer in March 1995. He became Senior Vice President and Chief Financial Officer of the Issuer on October 1, 1996 and on February 2, 1997 he became Senior Vice President and Chief Financial Officer of Willis Corroon North America. Bart R. Schwartz joined the Issuer on July 25, 1994 as Senior Vice President and Deputy General Counsel. On January 1, 1995 he became Senior Vice President of the Issuer and Assistant Secretary of Willis Corroon Group. On May 21, 1996 he became Senior Vice President, Secretary and General Counsel of the Issuer, a position he still holds. Kimberly G. Windrow joined the Issuer on June 6, 1988 as Human Resource Manager. On January 1, 1992 she became Employee Relations Manager. On May 21, 1996, she became Human Resource Services Director. On October 1, 1997 she became Human Resource Director and on January 26, 1999, she became Senior Vice President for the Issuer. She is also a director of the Issuer. DIRECTORS AND EXECUTIVE OFFICERS OF WILLIS CORROON PARTNERS Willis Corroon Partners has no directors or executive officers, and its operations are managed solely by its general partners. COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS OF WILLIS CORROON GROUP AND THE ISSUER The aggregate compensation paid to all directors and executive officers of Willis Corroon Group and the Issuer, who held office during 1998, for services in such capacities for the year ended December 31, 1998 was L3,078,862, which included contributions made to the pension plans in respect of such directors and executive officers of Willis Corroon Group and Issuer of L564,621. For the year ended December 31, 1998, the highest paid director received L744,472, including pension plan contributions of approximately L220,000. Each non-executive director of Willis Corroon Group who is not an employee of Willis Corroon received an aggregate annual fee of either L21,000 or $39,000, payable in quarterly installments, for the 89 year ended December 31, 1998. Also, such directors receive attendance fees of L500 or $925 for committee meetings of Willis Corroon Group's board (L1,000 or $1,600 if they are Chairman of the committee) and a daily travel allowance of L650 or $1,000 for attending meetings of the board or its committees outside their country of residence. Directors who are also employees of Willis Corroon receive no remuneration for serving as directors. The compensation and other employment terms and conditions of the directors of Willis Corroon Group was determined in 1998 by the remuneration committee of Willis Corroon Group's board of directors which during 1998 was comprised of Messrs. Rodgers, Schreyer and Sykes (all former non-executive directors). The remuneration committee determined basic salaries and benefits as well as performance-related incentives. The Executive Chairman of Willis Corroon Group determines the compensation and benefits for the executive officers of Willis Corroon Group. Partners and employees of Kohlberg Kravis Roberts & Co. L.P. who serve as directors and officers of TA I Limited, TA II Limited, TA III plc or Trinity Acquisition do not receive additional compensation for service in such capacities, other than customary directors' fees. See "Certain Relationships and Related Transactions." 1998 STOCK OPTION PLAN TA I Limited has adopted the 1998 Share Purchase and Option Plan for Key Employees of TA I Limited providing for the grant of time-based vesting options ("Time Options"), performance-based vesting options ("Performance Options"), and various other share-based grants (collectively, the "Options") to employees of TA I Limited and its subsidiaries to purchase ordinary shares of TA I Limited. The 1998 Plan is intended (i) to promote the long term financial interests and growth of TA I Limited and its subsidiaries by attracting and retaining management personnel with the training, experience and ability to enable them to make a substantial contribution to the success of TA I Limited's business; (ii) to motivate management personnel by means of growth-related incentives to achieve long range goals; and (iii) to further the alignment of interests of participants with those of the shareholders of TA I Limited through opportunities for increased share ownership in TA I Limited. As of the closing date of the management equity offering, 10,988,483 Time Options have been granted and Willis Corroon expects that a comparable number of Performance Options will be granted . There are 30 million ordinary shares of TA I Limited available to be granted under the 1998 Plan. It is expected that under the 1998 Plan, unless otherwise provided by the Board of Directors of TA I Limited, Time Options would become exercisable in five equal annual installments beginning on the second anniversary of the date of grant and Performance Options would become exercisable to the extent, if any, that performance goals based on Willis Corroon's cash flow and EBITDA are achieved and thereafter in four equal annual installments, beginning on the third anniversary of the date of grant. The exercisability of the Options may accelerate or terminate based on the circumstances surrounding an optionee's termination of employment, and Time Options will (and Performance Options may, in the discretion of the Board of Directors of TA I Limited), fully accelerate upon a change in control of Willis Corroon. Unless sooner terminated by TA I Limited's Board of Directors, the 1998 Plan will expire ten years after its adoption. Such termination will not affect the validity of any grant outstanding on the date of termination. The Board of Directors of TA I Limited will administer the 1998 Plan, including, without limitation, the determination of the employees to whom grants will be made, the number of shares of ordinary shares of TA I Limited subject to each grant, and the various terms of such grants. The Board of Directors of TA I Limited may from time to time amend the terms of any grant, but, except for adjustments made upon a change in the ordinary shares of TA I Limited by reason of a stock split, spin-off, stock dividend, stock combination or reclassification, recapitalization, reorganization, consolidation, change of control, or similar event, such action shall not adversely affect the rights of any participant under the 1998 Plan with respect to the Options without such participant's consent. The Board of Directors of TA I Limited will retain the right to amend, suspend or terminate the 1998 Plan. 90 SHAREHOLDERS BENEFICIAL OWNERSHIP TA I Limited owns 100% of the issued and outstanding ordinary shares of TA II Limited, which owns 100% of the issued and outstanding shares of TA III plc, which owns 100% of the issued and outstanding shares of Trinity Acquisition, which owns 100% of the issued and outstanding ordinary shares of Willis Corroon Group. The following sets forth information with respect to the beneficial ownership of the voting and non-voting ordinary shares of TA I Limited as of the date of this prospectus (without giving effect to any options issued under the 1998 Plan) by (1) each person who is known by Willis Corroon Group to beneficially own more than 5% of the TA I Limited ordinary shares, as well as each member of the consortium, consisting of Guardian Royal Exchange, Royal & SunAlliance Insurance Group, The Chubb Corporation, The Hartford Financial Services Group, Inc., Travelers Property Casualty Corp. and The Tokio Marine and Fire Insurance Co., Limited, who are the limited partners of the direct parent of TA I Limited (referred to in this prospectus as the "consortium"), (2) each of TA I Limited's directors and each of the directors and executive officers of Willis Corroon Group and the Issuer and (3) all directors and executive officers of Willis Corroon Group and the Issuer as a group. Unless otherwise indicated, the address of each person named in the table below is Willis Corroon Group Limited, Ten Trinity Square, London EC3P 3AX, England.
BENEFICIAL OWNERSHIP PERCENTAGE OF TA I OF TA I ORDINARY ORDINARY NAME AND ADDRESS OF BENEFICIAL OWNER SHARES(1) SHARES OUTSTANDING - ------------------------------------------------------------- -------------------------- ------------------------- KKR 1996 Overseas, Limited(2)................................ 92,002,916 77.3% Henry R. Kravis(2)........................................... 92,002,916 77.3% George R. Roberts(2)......................................... 92,002,916 77.3% Perry Golkin(2).............................................. 92,002,916 77.3% Todd A. Fisher(2)............................................ 92,002,916 77.3% Scott C. Nuttall(2).......................................... 92,002,916 77.3% James R. Fisher(3)........................................... -- -- Raymond G. Viault............................................ -- -- Guardian Royal Exchange(4)................................... 4,000,000 3.4% Royal & SunAlliance Insurance Group(5)....................... 4,000,000 3.4% The Chubb Corporation(6)..................................... 4,000,000 3.4% The Hartford Financial Services Group, Inc.(7)............... 3,333,333 2.8% Travelers Property Casualty Corp.(8)......................... 4,000,000 3.4% The Tokio Marine and Fire Insurance Co., Limited(9).......... 1,000,000 0.8% John Reeve(10)............................................... 140,000 * Richard J.S. Bucknall........................................ 60,000 * Michael P. Chitty............................................ 12,000 * Thomas Colraine.............................................. 52,375 * Brian D. Johnson............................................. 100,000 * Patrick Lucas................................................ -- * George F. Nixon.............................................. 100,000 * John M. Pelly................................................ 100,000 * Kenneth H. Pinkston.......................................... 40,000 * Charles D. Hamilton(11)...................................... 6,000 * Bart R. Schwartz(11)......................................... 62,409 * Kimberly G. Windrow(11)...................................... 2,500 * All directors and executive officers of Willis Corroon Group and the Issuer as a group (12 persons)......................... 675,284 *
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BENEFICIAL OWNERSHIP PERCENTAGE OF TA I OF TA I ORDINARY ORDINARY NAME AND ADDRESS OF BENEFICIAL OWNER SHARES(1) SHARES OUTSTANDING - ------------------------------------------------------------- -------------------------- ------------------------- All directors and executive officers of Willis Corroon Group and the Issuer together with other employees as a group (361 persons)(12).......................................... 4,757,062 4.0%
- ------------------------ * Less than 1%. (1) The amounts and percentages of TA I ordinary shares beneficially owned are reported on the basis of regulations of the Securities and Exchange Commission governing the determination of beneficial ownership of securities. Under the rules of the Commission, a person is deemed to be a "beneficial owner" of a security if that person has or shares "voting power," which includes the power to vote or to direct the voting of such security, or "investment power," which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Under these rules, more than one person may be deemed to be a beneficial owner of the same securities and a person may be deemed to be a beneficial owner of securities as to which such person has no economic interest. The percentage of TA I ordinary share capital outstanding is based on 119,089,975 TA I ordinary shares outstanding on the date of this prospectus. (2) TA I ordinary shares shown as owned by KKR 1996 Overseas, Limited are owned of record by Profit Sharing (Overseas), Limited. Kohlberg Kravis Roberts & Co. L. P. is the general partner of KKR Associates II (1996), Limited Partnership, which is the general partner of the KKR 1996 Fund (Overseas), Limited, which is the general partner of Profit Sharing (Overseas), Limited, which beneficially owns approximately 77% of the issued and outstanding TA I ordinary shares. Messrs. Henry R. Kravis, George R. Roberts, James H. Greene, Jr., Paul E. Raether, Michael W. Michelson, Michael T. Tokarz, Perry Golkin, Robert I. McDonnell, Clifton S. Robbins, Scott M. Stuart and Edward A. Gilhuly, as members of KKR Overseas, may be deemed to share beneficial ownership of any shares beneficially owned by KKR 1996 Overseas, but disclaim such beneficial ownership. Messrs. Todd A. Fisher and Scott C. Nuttall are directors of TA I and are executives of Kohlberg Kravis Roberts & Co. L.P. Messrs. Fisher and Nuttall are also limited partners of KKR Associates II (1996), Limited Partnership. Messrs. Fisher and Nuttall disclaim beneficial ownership of any TA I ordinary shares beneficially owned by Kohlberg Kravis Roberts & Co. & L.P. and KKR Associates II (1996), Limited Partnership. The address of KKR Overseas and each individual listed above is c/o Kohlberg Kravis Roberts & Co., L.P., 9 West 57th Street, New York, New York 10019. (3) Fisher Capital Corp. LLC, of which Mr. James R. Fisher is an executive, is the beneficial owner of 181,071 TA I ordinary shares. Mr. Fisher disclaims beneficial ownership of such TA I ordinary shares. The address of Mr. Fisher and Fisher Capital Corp. LLC is 8 South River Road, Cranbury, NJ 08512. (4) TA I ordinary shares shown as owned by Guardian Royal Exchange are owned of record by its affiliate Guardian Insurance Limited, and its address is Royal Exchange, London EC2V 3LS. (5) The address of Royal & SunAlliance Insurance Group is 1 Cornhill, London, EC3V 3QR. (6) The address of The Chubb Corporation is 15 Mountain View, Warren, New Jersey 07059. (7) TA I ordinary shares shown as owned by The Hartford Financial Services Group, Inc. are owned of record by its affiliate Nutmeg Insurance Company, and its address is 690 Asylum Avenue, Hartford, Connecticut 06115. (8) TA I ordinary shares shown as owned by Travelers Property Casualty Corp. are owned of record by its affiliate Travelers Casualty and Surety Company and its address is One Tower Square, 10 CR Hartford, Connecticut 06183. (9) The address of The Tokio Marine and Fire Insurance Co., Limited is West 14th Floor, Otemachi First Square, 5-1, Otemachi 1-Chome, Chiyoda-ku, Tokyo, 100-0004 Japan. (10) 120,000 of the 140,000 TA I ordinary shares shown as owned by John Reeve are held by a family trust of which John Reeve is a beneficiary. (11) The address for such person is c/o Willis Corroon Corporation, 26 Century Boulevard, P.O. Box 305026, Nashville, TN 37214. (12) An additional 1,815,593 TA I ordinary shares are held in trust on behalf of the directors, executive officers and other employees of the Issuer and Willis Corroon Group subject to vesting. Such shares were issued in connection with the cancellation of unvested incentive awards owned by such employees prior to the Transactions. If all of such TA I ordinary shares were vested on the date hereof, such directors, executive officers and employees of the Issuer and Willis Corroon Group would beneficially own approximately 5.5% of the outstanding TA I ordinary shares in the aggregate. SHAREHOLDER RIGHTS AGREEMENT AND REGISTRATION RIGHTS AGREEMENT Pursuant to a shareholder rights agreement dated as of July 22, 1998 among TA I Limited, TA II Limited, Profit Sharing (Overseas), Limited and the members of the consortium referred to above, the holders of ordinary shares in TA I ("Trinity Group ordinary shares") and Preference Shares of TA II Limited are subject to rights of, and restrictions on, transfer, as well as the other provisions described below. 92 Pursuant to the shareholder rights agreement, each member of the consortium has the right to require a proposed acquirer of any of the Trinity Group ordinary shares held by Profit Sharing (Overseas), Limited or any of its affiliates to purchase a specified percentage of such member's holding of Trinity Group ordinary shares on similar terms. Additionally, if Profit Sharing (Overseas), Limited or any of its affiliates receives a bona fide offer from a third party to purchase a majority of the Trinity Group ordinary shares then owned by them, they may require each of the Insurance Companies to sell a similar proportion of their Trinity Group ordinary shares to such third party on similar terms. If, at any time prior to a public offering in the U.S. or a listing in the U.K. or on another major stock exchange of the Trinity Group ordinary shares, a member of the consortium receives a bona fide offer to purchase any of its Trinity Group ordinary shares from an offeror, the shareholder rights agreement requires that such member of the consortium first offer such Trinity Group ordinary shares on equivalent terms to the other members of the consortium. Any of the Trinity Group ordinary shares of such member of the consortium which were the subject of any such bona fide offer and which were not purchased by the other members of the consortium must be reoffered to those members of the consortium which exercised their right of first refusal and purchased some of such shares when such shares were initially offered. No member of the consortium may, however, accept such offer to the extent it would cause such member (together with its affiliates) beneficially to own more than 9.9% in aggregate of the Trinity Group ordinary shares. Any remaining Trinity Group ordinary shares must then be offered to Profit Sharing (Overseas), Limited which can purchase such Trinity Group ordinary shares or elect to find another purchaser for such Trinity Group ordinary shares. Any Trinity Group ordinary shares not purchased by Profit Sharing (Overseas), Limited or its elected purchaser may be sold to the third party that had initially made the bona fide offer. In the event of a transfer from Profit Sharing (Overseas), Limited to a third party which would result in Profit Sharing (Overseas), Limited and its affiliates having transferred legal and beneficial ownership of more than 25% but less than 50% of the Trinity Group ordinary shares subscribed by Profit Sharing (Overseas), Limited the shareholder rights agreement requires that a pro rata amount of the Preference Shares held by each member of the consortium but not such member's transferees (other than affiliates) must first have been redeemed or transferred, and if a transfer would result in Profit Sharing (Overseas), Limited and its affiliates having transferred legal and beneficial ownership of more than 50% of the Trinity Group ordinary shares, all of the Preference Shares held by each member of the consortium but not such member's transferees (other than affiliates) must first have been redeemed. Under the shareholder rights agreement, prior to September 2, 2000, none of Profit Sharing (Overseas), Limited , its affiliates nor TA I Limited or any of its subsidiaries may enter into a transaction that would result in a "Sale of the Business" (as defined in the shareholder rights agreement) nor may Profit Sharing (Overseas), Limited and its affiliates transfer in excess of 50% of the Trinity Group Original ordinary shares, unless the Trinity Group is experiencing financial difficulties of the type described by the shareholder rights agreement and the holders of 60% or more of the then outstanding Preference Shares have consented in writing to such transaction. Additionally, the shareholder rights agreement provides that for three years from September 2, 2000, if Profit Sharing (Overseas), Limited, any of its affiliates or TA I Limited or any of its subsidiaries receives a written, unsolicited offer from a third party to enter into a transaction which would result in a Sale of the Business, then the members of the consortium have the right to match the unsolicited offer, and such offer may not be accepted if any member of the consortium makes an offer at the same price and on the same terms in writing within 35 days of being notified of the unsolicited offer. In addition, if during such period Profit Sharing (Overseas), Limited or TA I Limited or any of its subsidiaries proposes to enter into a transaction which would result in a Sale of the Business other than pursuant to a unsolicited offer, it must first allow the members of the consortium to make an offer to enter into a similar transaction within 30 days, but if Profit Sharing (Overseas), Limited or TA I Limited decides to refuse such offer, or if no member of the consortium makes any such offer, then Profit 93 Sharing (Overseas), Limited or TA I Limited or any of its Subsidiaries, as the case may be, will be free to enter into a transaction resulting in a Sale of the Business, provided that a definitive agreement is entered into within specified time periods at the same or a higher price. These provisions will also apply to the entering into of a transaction or series of related transactions, whether pursuant to an unsolicited offer or a proposal by Profit Sharing (Overseas), Limited or any of its affiliates to enter into such a transaction, whereby Profit Sharing (Overseas), Limited and its affiliates would transfer at least 30% of the then issued Trinity Group ordinary shares to a single person or a group of persons acting in concert. The shareholder rights agreement also provides that Profit Sharing (Overseas), Limited must use its best efforts to ensure that TA I Limited has an independent director, and to remove and replace such director if so requested by the holders of at least 60% of the then outstanding Preference Shares, until (i) no member of the consortium owns at least 75% of the Preference Shares originally purchased by it and (ii) the members of the consortium collectively own in aggregate less than $80 million in redemption value of the Trinity Group Preference Shares. In the event that the members of the consortium have the right to appoint directors to the board of TA II Limited pursuant to the articles of association of TA II Limited and provided that the members of the consortium still hold at least a majority of the Preference Shares originally issued to them, and for so long as those conditions prevail, the members of the consortium are also entitled to nominate two directors for appointment to the board of TA I Limited. In any such event, Profit Sharing (Overseas), Limited shall use its best efforts to expand the size of the board of directors of TA I Limited by two and to cause the newly created directorships to be filled with such nominees. Pursuant to a registration rights agreement dated as of July 22, 1998, as amended, among TA I Limited, TA II Limited and the members of the consortium named therein, such members, as holders of Trinity Group ordinary shares and Preference Shares, have certain rights to require the issuer of such securities to register such securities under the Securities Act. 94 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS As of the issuance of the outstanding Notes, the KKR 1996 Fund (Overseas), Limited beneficially owned approximately 77% of the share capital of TA I Limited, which is the parent of TA II Limited, which is the parent of TA III plc, which is the parent of Trinity Acquisition, which owns all of the issued and outstanding share capital of Willis Corroon Group. The general partner of the KKR 1996 Fund (Overseas), Limited is KKR Associates II (1996), Limited Partnership, a limited partnership of which the general partner is KKR 1996 Overseas, Limited, a company in which Messrs. Kravis, Roberts and Golkin and other members of the limited liability company which is the general partner of Kohlberg Kravis Roberts & Co. L.P. own the voting shares, and certain present partners of Kohlberg Kravis Roberts & Co. L.P. and a former partner of Kohlberg Kravis Roberts & Co. L.P. own the non-voting shares. KKR 1996 Overseas, Limited has sole voting and investment power with respect to the share capital owned by the KKR 1996 Fund (Overseas), Limited. From time to time, Kohlberg Kravis Roberts & Co. L.P. may receive customary fees in connection with divestitures, acquisitions and certain other transactions involving Willis Corroon Group and its subsidiaries. In connection with the completion of the Tender Offer, Kohlberg Kravis Roberts & Co. L.P. has received aggregate fees of $7.5 million from Trinity Acquisition and Fisher Capital Corp. LLC has received aggregate fees of $2.0 million from Trinity Acquisition. In addition, Kohlberg Kravis Roberts & Co. L.P. and Fisher Capital Corp. LLC render management, consulting, and certain other services to Willis Corroon Group and its subsidiaries for annual fees payable quarterly in arrears. It is expected that such annual fees will initially be in an amount of $1 million, in the case of Kohlberg Kravis Roberts & Co. L.P., and $350,000, in the case of Fisher Capital Corp. LLC. Partners and employees of Kohlberg Kravis Roberts & Co. L.P. and Fisher Capital Corp. LLC who also serve as directors and officers of Willis Corroon Group do not receive additional compensation for service in such capacity, other than customary directors' fees. As of the date of this prospectus, the consortium beneficially owned approximately 17% of the share capital of TA I Limited in the aggregate. Willis Corroon has, and Willis Corroon will, place premiums with the members of the consortium in the ordinary course of Willis Corroon's business. R.J.S. Bucknall, G.F. Nixon and J.M. Pelly (directors of Willis Corroon Group) and Mrs. E.H. Rendle (an affiliate of M.R. Rendle, a former non-executive director of Willis Corroon Group) during 1998 were Underwriting Members of Lloyd's. Insurance brokering subsidiaries of Willis Corroon Group place risks with the syndicates in which the directors or certain of their affiliates participate in the normal course of their brokering activities on the same basis as such subsidiaries do with other Lloyd's syndicates. Willis Corroon Group has given J. Reeve a guarantee in respect of the performance obligations of Willis Faber & Dumas Limited, his employing company, in respect of an unfunded pension scheme established for him and Willis Corroon Group has guaranteed the performance obligations of Willis Corroon Corporation in respect of the pension benefits for B.D. Johnson and K.H. Pinkston under the Willis Corroon Executive Supplemental Plan, an unfunded pension plan. J. M. Pelly and M. P. Chitty, an executive officer of Willis Corroon Group, are directors of Sovereign. See "Risk Factors--Sovereign/WFUM." 95 DESCRIPTION OF THE SENIOR CREDIT FACILITIES To provide the senior financing required to complete the Tender Offer, Trinity Acquisition entered into a Credit Agreement, dated as of July 22, 1998 (as amended, the "tender offer facility agreement"), among Trinity Acquisition, as borrower, the lenders thereunder and The Chase Manhattan Bank, as Administrative Agent and Collateral Agent, providing up to $475 million in term loans and loan notes. In addition, to provide the long-term senior financing required to refinance the tender offer facility agreement and to provide a senior revolving credit facility for the general corporate purposes of Trinity Acquisition and its subsidiaries, Trinity Acquisition entered into a second Credit Agreement, dated as of July 22, 1998 (as amended, the "Permanent Facility Agreement"), among Trinity Acquisition, as guarantor, Willis Corroon Corporation, as borrower, Willis Corroon Group, as guarantor, the lenders thereunder and The Chase Manhattan Bank, as Administrative Agent and Collateral Agent, providing up to $450 million in term loans and $150 million in revolving credit facilities. GENERAL The Permanent Facility Agreement, as amended, is comprised of - a $125 million senior secured term loan facility (the "tranche A facility"), - a $125 million senior secured term loan facility (the "tranche B facility"), - a $100 million senior secured term loan facility (the "tranche C facility"), - a $100 million senior secured term loan facility (the "tranche D facility") and - a $150 million senior secured revolving credit facility (the "revolving credit facility"). Borrowings under the term loan portions of the Permanent Facility Agreement were borrowed in full on November 19, 1998 - to refinance outstanding indebtedness under the tender offer facility agreement and certain other outstanding indebtedness of Trinity Acquisition, - to finance the repayment of certain existing indebtedness of Willis Corroon, - to make an intercompany loan to Trinity Acquisition, and - to finance the payment of fees and expenses incurred in connection with the Tender Offer. The revolving credit facility is available for working capital requirements and general corporate purposes, subject to certain limitations. The revolving credit facility is available for loans denominated in U.S. dollars, pounds sterling and certain other currencies and for letters of credit (including to support loan note guarantees). AMORTIZATION; PREPAYMENTS The final maturity of the loans under the tranche A facility will be the seventh anniversary of November 19, 1998 (the "Initial Funding Date"), with interim amortization commencing on the thirtieth month after such Initial Funding Date. The final maturity of the loans under the tranche B facility will be the eighth anniversary of the Initial Funding Date, with nominal interim amortization. The final maturity of the loans under the tranche C facility will be the ninth anniversary of the Initial Funding Date, with nominal interim amortization. The final maturity of the loans under the tranche D facility collectively with the other term loans under the Permanent Facility Agreement (the "term loans") will be nine years and six months after the Initial Funding Date, with nominal interim amortization. The revolving credit facility will be available until the seventh anniversary of the Initial Funding Date, and extensions of credit outstanding thereunder on such seventh anniversary will mature on such date. Certain mandatory prepayments of term loans under the Permanent Facility Agreement will be required with the proceeds of certain non-ordinary course asset sales and other dispositions of property, to the extent not reinvested and subject to other exceptions, and, for each fiscal year in which 96 the ratio of consolidated total debt to consolidated adjusted EBITDA (as defined in the Permanent Facility Agreement) is equal to or greater than 3.0:1.0, 50% of excess cash flow (as defined in the Permanent Facility Agreement), to the extent not reinvested and subject to other exceptions. In addition, certain prepayments of the revolving credit facility will be required in the event that the aggregate dollar equivalent of all loans and letter of credit outstandings thereunder exceed 105% of the aggregate available commitments, which are denominated in dollars. INTEREST RATES; FEES Loans under the Permanent Facility Agreement bear interest at a rate per annum equal to, at the applicable borrower's election, either (i) a base rate determined by reference to the highest of an announced prime rate, the U.S. federal funds effective rate plus 1/2% or a rate for certificates of deposit plus 1% (loans with interest based on the foregoing being referred to herein as "Base Rate Loans") or (ii) the cost of funds for U.S. dollar deposits at LIBOR for one, two, three or six months (or certain other periods to the extent available, subject to certain conditions) as the applicable borrower may elect, adjusted for certain additional costs (loans with interest based on the foregoing being referred to herein as "LIBOR Loans"), plus, in each case, a margin which will be subject to adjustment depending on the ratio of consolidated total debt to consolidated adjusted EBITDA from time to time. The applicable margin for LIBOR Loans under the Permanent Facility Agreement will range, based on such performance pricing adjustments, from 2.25% to 0.875%, in the case of revolving credit loans and tranche A loans, from 2.50% to 1.75%, in the case of tranche B loans, from 2.75% to 2.00%, in the case of tranche C loans, and from 3.00% to 2.25%, in the case of tranche D loans, in each with applicable margins for Base Rate Loans being 1.25% lower than the margins for LIBOR Loans at the corresponding performance pricing levels. A commitment fee calculated based on the available unused commitments under the Permanent Facility Agreement is payable quarterly in arrears at a per annum rate of 0.50%, subject, in the case of commitments under the revolving credit facility, to adjustment in a range from 0.50% to 0.25% depending on the ratio of consolidated total debt to consolidated adjusted EBITDA from time to time. Fees in respect of letters of credit or loan note guarantees are calculated at a rate per annum equal to (i) in the case of letters of credit, the applicable margin for LIBOR Loans then applicable to utilizations under the revolving credit facility, less 0.25%, and (ii) in the case of loan note guarantees, 2.25%, based on the maximum amount of each letter of credit or loan note guarantee, payable quarterly in arrears and upon the termination of the revolving credit facility. In addition, a fronting fee calculated at a rate equal to 0.25% of the maximum amount of each letter of credit or loan note guarantee is payable for the account of the issuing bank in respect thereof, payable quarterly in arrears and upon the termination of the revolving credit facility. GUARANTEE; SECURITY All obligations of the borrower under the Permanent Facility Agreement are guaranteed by Trinity Acquisition and its U.K. and U.S. subsidiaries (including Willis Corroon Group), with certain exceptions. Obligations under the Permanent Facility Agreement are secured by a pledge of capital stock of certain subsidiaries of Trinity Acquisition (including capital stock of Willis Corroon Group, its direct subsidiaries (with certain exceptions), the Issuer and its direct U.S. subsidiaries), the partnership interests of Willis Corroon Partners, as well as, in some circumstances, certain intercompany notes and certain non-cash proceeds of asset sales, in each case subject to exceptions and conditions set forth in the Permanent Facility Agreement. The pledge of stock owned by Willis Corroon Group is supported by a general lien (known as a floating charge in the U.K.) filed in the U.K. against Willis Corroon Group's assets. 97 CERTAIN COVENANTS The Permanent Facility Agreement contains numerous operating and financial covenants, including, without limitation, requirements in the case of the Permanent Facility Agreement to maintain minimum ratios of adjusted EBITDA to interest and maximum levels of indebtedness in relation to adjusted EBITDA. In addition, the Permanent Facility Agreement includes covenants relating to the delivery of financial statements, reports and notices, limitations on liens, limitations on sales and other disposals of assets, limitations on indebtedness and other liabilities, limitations on capital expenditures, limitations on investments, mergers, acquisitions, loans and advances, limitations on dividends and other distributions, limitations on prepayment, redemption or amendment of the Notes, maintenance of property, environmental matters, employee benefit matters, maintenance of insurance, nature of business, compliance with applicable laws, corporate existence and rights, payment of taxes and access to information and properties. EVENTS OF DEFAULT The Permanent Facility Agreement contains events of default after expiration of applicable grace periods, including failure to make payments under the Permanent Facility Agreement, breach of covenants, breach of representations and warranties, certain events relating to employee benefit plans, invalidity of certain loan documents, default under other agreements or conditions relating to indebtedness (including the Notes), certain events of liquidation, moratorium, insolvency, bankruptcy or similar events, certain litigation or other proceedings, certain events relating to changes in control and certain issuances by TA II Limited of equity or debt securities. Upon the occurrence of an event of default, the banks will be able to terminate the commitments under the Permanent Facility Agreement, and declare all amounts, including accrued interest, under the Permanent Facility Agreement to be due and payable and take certain other actions, including enforcement of rights in respect of the collateral securing the Permanent Facility Agreement. 98 DESCRIPTION OF PREFERENCE SHARES In connection with the Tender Offer, six of the world's leading insurance companies invested in the preference shares of TA II Limited (the "Preference Shares"). See "The Tender Offer and Related Financings." The Preference Shares (with an aggregate liquidation preference of approximately $270 million) carry the right to a cumulative dividend of 8.5% per annum (excluding the amount of any associated tax credits) on a fixed amount of $25 per Preference Share. TA II Limited has the option to satisfy 1% per annum of this cumulative dividend by the issuance of additional Preference Shares. The dividend is payable in dollars semi-annually on June 30 and December 31 of each year with the first dividend being payable on June 30, 1999. If the cash dividend has not been paid on three or more consecutive dividend payment dates, the holders of the Preference Shares have the right to appoint two directors to the board of TA II Limited. The Preference Shares may be redeemed at any time by TA II Limited by payment of a fixed amount of $25 per share plus any accrued and unpaid dividends. The Preference Shares are required to be redeemed in full by payment of a fixed amount of $25 per share plus any accrued and unpaid dividends on the earlier of (i) the thirteenth anniversary of the first date on which the Preference Shares were issued and (ii) the date that is six months after the scheduled maturity date of the Notes, or on the sale of all or substantially all of the business of Willis Corroon, including, without limitation, whether in a single transaction or series of transactions and whether by sale of shares, sale of assets or otherwise. Holders of Preference Shares have a preferential right to receive out of surplus assets arrears and accruals of dividends and $25 per share, but do not have any further right to participate in surplus assets. The following is a brief description of each of the members of the consortium: GUARDIAN ROYAL EXCHANGE provides general, health, and life insurance and related services, including asset management, to its 7.5 million customers worldwide. Net premium income in 1998 was L4.1 billion. Guardian Royal Exchange has approximately 17,500 employees. The board of Guardian Royal Exchange has recommended to shareholders a cash and share offer from Sun Life and Provincial Holdings plc for the entire company. ROYAL & SUNALLIANCE INSURANCE GROUP is the U.K.'s largest general insurer, with 1998 net premium income exceeding L9.7 billion. Royal & SunAlliance Insurance Group provides general and life insurance products and services and asset management and administrative services. In addition to the U.K., Royal & SunAlliance Insurance Group operates in the United States, Canada, Scandinavia, and more than 100 countries worldwide, including 16 nations in Europe. THE CHUBB CORPORATION is a global leader in providing business and personal property and liability insurance. The company concentrates on specialty commercial lines and insuring high value homes and their contents. Founded in 1882, Chubb is headquartered in Warren, New Jersey, and has more than 110 offices in 30 countries worldwide. In 1998, Chubb had net written premiums of $5.5 billion. THE HARTFORD FINANCIAL SERVICES GROUP, INC. is one of the oldest insurance and financial services firms in the U.S., with 1998 revenues of $15.0 billion and assets of $150.6 billion. The company is a leading writer of commercial property and casualty insurance, and is the number one annuity writer in the U.S. It is also one of the largest writers of personal automobile and homeowners insurance through independent agents. The company has 25,000 employees worldwide and offices in 15 countries. TRAVELERS PROPERTY CASUALTY CORP. is one of the oldest and largest insurance groups in the U.S. The company writes all forms of property casualty insurance for businesses and individuals, primarily through independent agents. Its 1998 net written premiums were approximately $8.1 billion. Travelers Property Casualty Corp. is headquartered in Hartford, Connecticut and has approximately 20,000 employees. THE TOKIO MARINE AND FIRE INSURANCE CO., LIMITED is the largest casualty insurance firm in Japan, with 1997/8 net premiums of Y1,336.0 billion ($10.1 billion). The company writes marine, fire, casualty, automobile and allied lines of insurance, principally covering risks in Japan, and also offers life insurance. The company is headquartered in Tokyo, Japan and has approximately 13,750 employees. 99 THE EXCHANGE OFFER PURPOSE AND EFFECT OF THE EXCHANGE OFFER We have entered into an exchange and registration rights agreement with the initial purchasers of the outstanding Notes in which we agreed, under certain circumstances, to file a registration statement relating to an offer to exchange the outstanding Notes for exchange Notes. We also agreed to use our reasonable best efforts to cause such offer to be consummated within 270 days following the original issue of the outstanding Notes. The exchange Notes will have terms substantially identical to the outstanding Notes; except that the exchange Notes will not contain terms with respect to transfer restrictions, registration rights and additional interest for failure to observe certain obligations in the registration rights agreement. The outstanding Notes were issued on February 2, 1999. Under the circumstances set forth below, we will use our reasonable best efforts to cause the Securities and Exchange Commission to declare effective a shelf registration statement with respect to the resale of the outstanding Notes and keep the statement effective for up to two years after the effective date of the shelf registration statement. These circumstances include: - if any changes in law, Commission rules or regulations or applicable interpretations thereof by the staff of the Commission do not permit us to effect the exchange offer as contemplated by the registration rights agreement; - if any oustanding Notes validly tendered in the exchange offer are not exchanged for exchange Notes within 270 days after the original issue of the outstanding Notes; - if any initial purchaser of the outstanding Notes so requests (but only with respect to any outstanding Notes not eligible to be exchanged for exchange Notes in the exchange offer); or - if any holder of the outstanding Notes notifies us that it is not permitted to participate in the exchange offer or would not receive fully tradable exchange Notes pursuant to the exchange offer. If we fail to comply with certain obligations under the registration rights agreement, we will be required to pay additional interest to holders of the outstanding Notes. Please read the section captioned "Registration Rights Agreement" for more details regarding the registration rights agreement. Each holder of outstanding Notes that wishes to exchange such outstanding Notes for transferable exchange Notes in the exchange offer will be required to make the following representations: - any exchange Notes will be acquired in the ordinary course of its business; - such holder has no arrangement with any person to participate in the distribution of the exchange Notes; - such holder is not our "affiliate," as defined in Rule 405 of the Securities Act, or if it is our affiliate, that it will comply with applicable registration and prospectus delivery requirements of the Securities Act; and - if such holder is a person in the United Kingdom, that its ordinary activities involve it in acquiring, holding, managing or disposing of investments, as principal or agent, for the purposes of its business. 100 RESALE OF EXCHANGE NOTES Based on interpretations of the Commission staff set forth in no action letters issued to unrelated third parties, we believe that exchange Notes issued under the exchange offer in exchange for outstanding Notes may be offered for resale, resold and otherwise transferred by any exchange Note holder without compliance with the registration and prospectus delivery provisions of the Securities Act, if: - such holder is not an "affiliate" of Willis Corroon within the meaning of Rule 405 under the Securities Act; - such exchange Notes are acquired in the ordinary course of the holder's business; and - the holder does not intend to participate in the distribution of such exchange Notes; and - if such holder is a person in the United Kingdom, that its ordinary activities involve it in acquiring, holding, managing or disposing of investments, as principal or agent, for the purposes of its business. Any holder who tenders in the exchange offer with the intention of participating in any manner in a distribution of the exchange Notes: - cannot rely on the position of the staff of the Commission enunciated in "Exxon Capital Holdings Corporation" or similar interpretive letters; and - must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. This prospectus may be used for an offer to resell, resale or other retransfer of exchange Notes only as specifically set forth in this prospectus. With regard to broker-dealers, only broker-dealers that acquired the outstanding Notes as a result of market-making activities or other trading activities may participate in the exchange offer. Each broker-dealer that receives exchange Notes for its own account in exchange for outstanding Notes, where such outstanding Notes were acquired by such broker-dealer as a result of market- making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of the exchange Notes. Please read the section captioned "Plan of Distribution" for more details regarding the transfer of exchange Notes. TERMS OF THE EXCHANGE OFFER Upon the terms and subject to the conditions set forth in this prospectus and in the letter of transmittal, the Issuer will accept for exchange any outstanding Notes properly tendered and not withdrawn prior to the expiration date. The Issuer will issue $1,000 principal amount of exchange Notes in exchange for each $1,000 principal amount of outstanding Notes surrendered under the exchange offer. Outstanding Notes may be tendered only in integral multiples of $1,000. The form and terms of the exchange Notes will be substantially identical to the form and terms of the outstanding Notes except the exchange Notes will be registered under the Securities Act, will not bear legends restricting their transfer and will not provide for any additional interest upon failure of Willis Corroon to fulfill its obligations under the registration rights agreement to file, and cause to be effective, a registration statement. The exchange Notes will evidence the same debt as the outstanding Notes. The exchange Notes will be issued under and entitled to the benefits of the same indenture that authorized the issuance of the outstanding Notes. Consequently, both series will be treated as a single class of debt securities under that indenture. For a description of the indenture, see "Description of the Notes" below. 101 The exchange offer is not conditioned upon any minimum aggregate principal amount of outstanding Notes being tendered for exchange. As of the date of this prospectus, $550 million aggregate principal amount of the outstanding Notes are outstanding. This prospectus and the letter of transmittal are being sent to all registered holders of outstanding Notes. There will be no fixed record date for determining registered holders of outstanding Notes entitled to participate in the exchange offer. The Issuer intends to conduct the exchange offer in accordance with the provisions of the registration rights agreement, the applicable requirements of the Securities Act and the Securities Exchange Act of 1934 and the rules and regulations of the Commission. Outstanding Notes that are not tendered for exchange in the exchange offer will remain outstanding and continue to accrue interest and will be entitled to the rights and benefits such holders have under the indenture relating to the outstanding Notes and the registration rights agreement. The Issuer will be deemed to have accepted for exchange properly tendered outstanding Notes when it has given oral or written notice of the acceptance to the exchange agent. The exchange agent will act as agent for the tendering holders for the purposes of receiving the exchange Notes from us and delivering the exchange Notes to such holders. Subject to the terms of the registration rights agreement, the Issuer expressly reserves the right to amend or terminate the exchange offer, and not to accept for exchange any outstanding Notes not previously accepted for exchange, upon the occurrence of any of the conditions specified below under the caption "--Certain Conditions to the Exchange Offer." Holders who tender outstanding Notes in the exchange offer will not be required to pay brokerage commissions or fees or, subject to the instructions in the letter of transmittal, transfer taxes with respect to the exchange of outstanding Notes. We will pay all charges and expenses, other than certain applicable taxes described below, in connection with the exchange offer. It is important that you read the section labeled "--Fees and Expenses" below for more details regarding fees and expenses incurred in the exchange offer. EXPIRATION DATE; EXTENSIONS; AMENDMENTS The exchange offer will expire at 5:00 p.m., New York City time on , 1999, unless in its sole discretion, the Issuer extends it. In order to extend the exchange offer, the Issuer will notify the exchange agent orally or in writing of any extension. The Issuer will notify the registered holders of outstanding Notes of the extension no later than 9:00 a.m., New York City time, on the business day after the previously scheduled expiration date. The Issuer reserves the right, in its sole discretion: - to delay accepting for exchange any outstanding Notes; - to extend the exchange offer or to terminate the exchange offer and to refuse to accept outstanding Notes not previously accepted if any of the conditions set forth below under "--Certain Conditions to the Exchange Offer" have not been satisfied, by giving oral or written notice of such delay, extension or termination to the exchange agent; or - subject to the terms of the registration rights agreement, to amend the terms of the exchange offer in any manner. Any such delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by oral or written notice thereof to the registered holders of outstanding Notes. If 102 the Issuer amends the exchange offer in a manner that it determines to constitute a material change, the Issuer will promptly disclose such amendment in a manner reasonably calculated to inform the holders of outstanding Notes of such amendment. Without limiting the manner in which the it may choose to make public announcements of any delay in acceptance, extension, termination or amendment of the exchange offer, the Issuer shall have no obligation to publish, advertise, or otherwise communicate any such public announcement, other than by making a timely release to a financial news service. CERTAIN CONDITIONS TO THE EXCHANGE OFFER Despite any other term of the exchange offer, the Issuer will not be required to accept for exchange, or exchange any exchange Notes for, any outstanding Notes, and the Issuer may terminate the exchange offer as provided in this prospectus before accepting any outstanding Notes for exchange if in the Issuer's reasonable judgment: - the exchange Notes to be received will not be tradeable by the holder, without restriction under the Securities Act, the Securities Exchange Act of 1934 and without material restrictions under the blue sky or securities laws of substantially all of the states of the United States; - the exchange offer, or the making of any exchange by a holder of outstanding Notes, would violate applicable law or any applicable interpretation of the staff of the Commission; or - any action or proceeding has been instituted or threatened in any court or by or before any governmental agency with respect to the exchange offer that, in the Issuer's judgment, would reasonably be expected to impair the ability of Willis Corroon to proceed with the exchange offer. In addition, the Issuer will not be obligated to accept for exchange the outstanding Notes of any holder that has not made to the Issuer (i) the representations described under "--Purpose and Effect of the Exchange Offer," "--Procedures for Tendering" and "Plan of Distribution" and (ii) such other representations as may be reasonably necessary under applicable Commission rules, regulations or interpretations to make available to the Issuer an appropriate form for registration of the exchange Notes under the Securities Act. The Issuer expressly reserves the right, at any time or at various times, to extend the period of time during which the exchange offer is open. Consequently, the Issuer may delay acceptance of any outstanding Notes by giving oral or written notice of such extension to their holders. During any such extensions, all outstanding Notes previously tendered will remain subject to the exchange offer, and the Issuer may accept them for exchange. The Issuer will return any outstanding Notes that we do not accept for exchange for any reason without expense to their tendering holder as promptly as practicable after the expiration or termination of the exchange offer. The Issuer expressly reserves the right to amend or terminate the exchange offer, and to reject for exchange any outstanding Notes not previously accepted for exchange, upon the occurrence of any of the conditions of the exchange offer specified above. We will give oral or written notice of any extension, amendment, non-acceptance or termination to the holders of the outstanding Notes as promptly as practicable. In the case of any extension, such notice will be issued no later than 9:00 a.m., New York City time, on the business day after the previously scheduled expiration date. These conditions are for the sole benefit of the Issuer and the Issuer may assert them regardless of the circumstances that may give rise to them or waive them in whole or in part at any or at various times in its sole discretion. If the Issuer fails at any time to exercise any of the foregoing rights, 103 this failure will not constitute a waiver of such right. Each such right will be deemed an ongoing right that the Issuer may assert at any time or at various times. In addition, the Issuer will not accept for exchange any outstanding Notes tendered, and will not issue exchange Notes in exchange for any such outstanding Notes, if at such time any stop order will be threatened or in effect with respect to the registration statement of which this prospectus constitutes a part or the qualification of the indenture under the Trust Indenture Act of 1939. PROCEDURES FOR TENDERING Only a holder of outstanding Notes may tender such outstanding Notes in the exchange offer. To tender in the exchange offer, a holder must: - complete, sign and date the letter of transmittal, or a facsimile of the letter of transmittal; have the signature on the letter of transmittal guaranteed if the letter of transmittal so requires; and mail or deliver such letter of transmittal or facsimile to the exchange agent prior to the expiration date; or - comply with DTC's Automated Tender Offer Program procedures described below. In addition, either: - the exchange agent must receive outstanding Notes along with the letter of transmittal; or - the exchange agent must receive, prior to the expiration date, a timely confirmation of book-entry transfer of such outstanding Notes into the exchange agent's account at DTC according to the procedure for book-entry transfer described below or a properly transmitted agent's message; or - the holder must comply with the guaranteed delivery procedures described below. To be tendered effectively, the exchange agent must receive any physical delivery of the letter of transmittal and other required documents at the address set forth below under "--Exchange Agent" prior to the expiration date. The tender by a holder that is not withdrawn prior to the expiration date will constitute an agreement between such holder and the Issuer in accordance with the terms and subject to the conditions set forth in this prospectus and in the letter of transmittal. The method of delivery of outstanding Notes, the letter of transmittal and all other required documents to the exchange agent is at the holder's election and risk. Rather than mail these items, the Issuer recommends that holders use an overnight or hand delivery service. In all cases, holders should allow sufficient time to assure delivery to the exchange agent before the expiration date. Holders should not send the letter of transmittal or outstanding Notes to Willis Corroon. Holders may request their respective brokers, dealers, commercial banks, trust companies or other nominees to effect the above transactions for them. Any beneficial owner whose outstanding Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact the registered holder promptly and instruct it to tender on the owner's behalf. If such beneficial owner wishes to tender on its own behalf, it must, prior to completing and executing the letter of transmittal and delivering its outstanding Notes; either: - make appropriate arrangements to register ownership of the outstanding Notes in such owner's name; or 104 - obtain a properly completed bond power from the registered holder of outstanding Notes. The transfer of registered ownership may take considerable time and may not be completed prior to the expiration date. Signatures on a letter of transmittal or a notice of withdrawal described below must be guaranteed by a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or another "eligible institution" within the meaning of Rule 17Ad-15 under the Exchange Act, unless the outstanding Notes tendered pursuant thereto are tendered: - by a registered holder who has not completed the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" on the letter of transmittal; or - for the account of an eligible institution. If the letter of transmittal is signed by a person other than the registered holder of any outstanding Notes listed on the outstanding Notes, such outstanding Notes must be endorsed or accompanied by a properly completed bond power. The bond power must be signed by the registered holder as the registered holder's name appears on the outstanding Notes and an eligible institution must guarantee the signature on the bond power. If the letter of transmittal or any outstanding Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing. Unless waived by us, they should also submit evidence satisfactory to us of their authority to deliver the letter of transmittal. The exchange agent and DTC have confirmed that any financial institution that is a participant in DTC's system may use DTC's Automated Tender Offer Program to tender. Participants in the program may, instead of physically completing and signing the letter of transmittal and delivering it to the exchange agent, transmit their acceptance of the exchange offer electronically. They may do so by causing DTC to transfer the outstanding Notes to the exchange agent in accordance with its procedures for transfer. DTC will then send an agent's message to the exchange agent. The term "agent's message" means a message transmitted by DTC, received by the exchange agent and forming part of the book-entry confirmation, to the effect that: - DTC has received an express acknowledgment from a participant in its Automated Tender Offer Program that is tendering outstanding Notes that are the subject of such book-entry confirmation; - such participant has received and agrees to be bound by the terms of the letter of transmittal (or, in the case of an agent's message relating to guaranteed delivery, that such participant has received and agrees to be bound by the applicable notice of guaranteed delivery); and - the agreement may be enforced against such participant. The Issuer will determine in its sole discretion all questions as to the validity, form, eligibility (including time of receipt), acceptance of tendered outstanding Notes and withdrawal of tendered outstanding Notes. The Issuer's determination will be final and binding. The Issuer reserves the absolute right to reject any outstanding Notes not properly tendered or any outstanding Notes the acceptance of which would, in the opinion of the Issuer's counsel, be unlawful. The Issuer also reserves the right to waive any defects, irregularities or conditions of tender as to particular outstanding Notes. The Issuer's interpretation of the terms and conditions of the exchange offer (including the instructions in the letter of 105 transmittal) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of outstanding Notes must be cured within such time as the Issuer shall determine. Although the Issuer intends to notify holders of defects or irregularities with respect to tenders of outstanding Notes, neither the Issuer, the exchange agent nor any other person will incur any liability for failure to give such notification. Tenders of outstanding Notes will not be deemed made until such defects or irregularities have been cured or waived. Any outstanding Notes received by the exchange agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned to the exchange agent without cost to the tendering holder, unless otherwise provided in the letter of transmittal, as soon as practicable following the expiration date. In all cases, the Issuer will issue exchange Notes for outstanding Notes that it has accepted for exchange under the exchange offer only after the exchange agent timely receives: - outstanding Notes or a timely book-entry confirmation of such outstanding Notes into the exchange agent's account at DTC; and - a properly completed and duly executed letter of transmittal and all other required documents or a properly transmitted agent's message. By signing the letter of transmittal, each tendering holder of outstanding Notes will represent to the Issuer that, among other things: - any exchange Notes that the holder receives will be acquired in the ordinary course of its business; - the holder has no arrangement or understanding with any person or entity to participate in the distribution of the exchange Notes; - if the holder is not a broker-dealer, that it is not engaged in and does not intend to engage in the distribution of the exchange Notes; - if the holder is a broker-dealer that will receive exchange Notes for its own account in exchange for outstanding Notes that were acquired as a result of market-making activities, that it will deliver a prospectus, as required by law, in connection with any resale of such exchange Notes; - the holder is not an "affiliate," as defined in Rule 405 of the Securities Act, of Willis Corroon or, if the holder is an affiliate, it will comply with any applicable registration and prospectus delivery requirements of the Securities Act; and - if the holder is a person in the United Kingdom, that its ordinary activities involve it in acquiring, holding, managing or disposing of investments, as principal or agent, for the purposes of its business. BOOK-ENTRY TRANSFER The exchange agent will make a request to establish an account with respect to the outstanding Notes at DTC for purposes of the exchange offer promptly after the date of this prospectus; and any financial institution participating in DTC's system may make book-entry delivery of outstanding Notes by causing DTC to transfer such outstanding Notes into the exchange agent's account at DTC in accordance with DTC's procedures for transfer. Holders of outstanding Notes who are unable to deliver confirmation of the book-entry tender of their outstanding Notes into the exchange agent's account at DTC or all other documents required by the letter of transmittal to the exchange agent on or prior to the 106 expiration date must tender their outstanding Notes according to the guaranteed delivery procedures described below. GUARANTEED DELIVERY PROCEDURES Holders wishing to tender their outstanding Notes but whose outstanding Notes are not immediately available or who cannot deliver their outstanding Notes, the letter of transmittal or any other required documents to the exchange agent or comply with the applicable procedures under DTC's Automated Tender Offer Program prior to the expiration date may tender if: - the tender is made through an eligible institution; - prior to the expiration date, the exchange agent receives from such eligible institution either a properly completed and duly executed notice of guaranteed delivery (by facsimile transmission, mail or hand delivery) or a properly transmitted agent's message and notice of guaranteed delivery: - setting forth the name and address of the holder, the registered number(s) of such outstanding Notes and the principal amount of outstanding Notes tendered; - stating that the tender is being made thereby; and - guaranteeing that, within three (3) New York Stock Exchange trading days after the expiration date, the letter of transmittal (or facsimile thereof) together with the outstanding Notes or a book-entry confirmation, and any other documents required by the letter of transmittal will be deposited by the eligible institution with the exchange agent; and - the exchange agent receives such properly completed and executed letter of transmittal (or facsimile thereof), as well as all tendered outstanding Notes in proper form for transfer or a book-entry confirmation, and all other documents required by the letter of transmittal, within three (3) New York State Exchange trading days after the expiration date. Upon request to the exchange agent, a notice of guaranteed delivery will be sent to holders who wish to tender their outstanding Notes according to the guaranteed delivery procedures set forth above. WITHDRAWAL OF TENDERS Except as otherwise provided in this prospectus, holders of outstanding Notes may withdraw their tenders at any time prior to the expiration date. For a withdrawal to be effective: - the exchange agent must receive a written notice (which may be by telegram, telex, facsimile transmission or letter) of withdrawal at one of the addresses set forth below under "--Exchange Agent;" or - holders must comply with the appropriate procedures of DTC's Automated Tender Offer Program system. Any such notice of withdrawal must: - specify the name of the person who tendered the outstanding Notes to be withdrawn; 107 - identify the outstanding Notes to be withdrawn (including the principal amount of such outstanding Notes); and - where certificates for outstanding Notes have been transmitted, specify the name in which such outstanding Notes were registered, if different from that of the withdrawing holder. If certificates for outstanding Notes have been delivered or otherwise identified to the exchange agent, then, prior to the release of such certificates, the withdrawing holder must also submit: - the serial numbers of the particular certificates to be withdrawn; and - a signed notice of withdrawal with signatures guaranteed by an eligible institution unless such holder is an eligible institution. If outstanding Notes have been tendered pursuant to the procedure for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn outstanding Notes and otherwise comply with the procedures of such facility. The Issuer will determine all questions as to the validity, form and eligibility (including time of receipt) of such notices, and our determination shall be final and binding on all parties. The Issuer will deem any outstanding Notes so withdrawn not to have validity tendered for exchange for purposes of the exchange offer. Any outstanding Notes that have been tendered for exchange but that are not exchanged for any reason will be returned to their holder without cost to the holder (or, in the case of outstanding Notes tendered by book-entry transfer into the exchange agent's account at DTC according to the procedures described above, such outstanding Notes will be credited to an account maintained with DTC for outstanding Notes) as soon as practicable after withdrawal, rejection of tender or termination of the exchange offer. Properly withdrawn outstanding Notes may be retendered by following one of the procedures described under "--Procedures for Tendering" above at any time on or prior to the expiration date. EXCHANGE AGENT The Bank of New York has been appointed as exchange agent for the exchange offer. You should direct questions and requests for assistance, requests for additional copies of this prospectus or of the letter of transmittal and requests for the notice of guaranteed delivery to the exchange agent addressed as follows: FOR DELIVERY BY REGISTERED OR CERTIFIED FOR OVERNIGHT DELIVERY ONLY OR BY HAND: MAIL: The Bank of New York The Bank of New York 101 Barclay Street 101 Barclay Street New York, New York 10286 New York, New York 10286 Attn: Marcia Brown, Attn: Marcia Brown, Corporate Trust Operations, 7E Corporate Trust Operations, 7E
BY FACSIMILE TRANSMISSION (FOR ELIGIBLE INSTITUTIONS ONLY): The Bank of New York (212) 815-4699 Attn: Marcia Brown, Corporate Trust Operations, 7E DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF TRANSMITTAL. 108 FEES AND EXPENSES The Issuer will bear the expenses of soliciting tenders. The principal solicitation is being made by mail; however, we may make additional solicitation by telegraph, telephone or in person by our officers and regular employees and those of our affiliates. We have not retained any dealer-manager in connection with the exchange offer and will not make any payments to broker-dealers or others soliciting acceptances of the exchange offer. The Issuer will, however, pay the exchange agent reasonable and customary fees for its services and reimburse it for its related reasonable out-of-pocket expenses. The Issuer will pay the cash expenses to be incurred in connection with the exchange offer. The expenses are estimated in the aggregate to be approximately $ - . They include: - Commission registration fees; - fees and expenses of the exchange agent and trustee; - accounting and legal fees and printing costs; and - related fees and expenses. The Issuer will pay all transfer taxes, if any, applicable to the exchange of outstanding Notes under the exchange offer. The tendering holder, however, will be required to pay any transfer taxes (whether imposed on the registered holder or any other person) if: - certificates representing outstanding Notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered holder of outstanding Notes tendered; - tendered outstanding Notes are registered in the name of any person other than the person signing the letter of transmittal; or - a transfer tax is imposed for any reason other than the exchange of outstanding Notes under the exchange offer. If satisfactory evidence of payment of such taxes is not submitted with the letter of transmittal, the amount of such transfer taxes will be billed to that tendering holder. TRANSFER TAXES Holders who tender their outstanding Notes for exchange will not be required to pay any transfer taxes. However, holders who instruct the Issuer to register exchange Notes in the name of, or request that outstanding Notes not tendered or not accepted in the exchange offer be returned to, a person other than the registered tendering holder will be required to pay any applicable transfer tax. CONSEQUENCES OF FAILURE TO EXCHANGE Holders of outstanding Notes who do not exchange their outstanding Notes for exchange Notes under the exchange offer will remain subject to the restrictions on transfer of such outstanding Notes: - as set forth in the legend printed on the notes as a consequence of the issuance of the outstanding Notes pursuant to the exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws; and 109 - otherwise set forth in the offering memorandum distributed in connection with the private offering of the outstanding Notes. In general, you may not offer or sell the outstanding Notes unless they are registered under the Securities Act or the offer or sale is exempt from registration under the Securities Act and applicable state securities laws. Except as required by the registration rights agreement, we do not intend to register resales of the outstanding Notes under the Securities Act. Based on interpretations of the Commission staff, exchange Notes issued pursuant to the exchange offer may be offered for resale, resold or otherwise transferred by their holders (other than any such holder that is our "affiliate" within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that the holders acquired the exchange Notes in the ordinary course of the holders' business and the holders have no arrangement or understanding with respect to the distribution of the exchange Notes to be acquired in the exchange offer. Any holder who tenders in the exchange offer for the purpose of participating in a distribution of the exchange Notes: - cannot rely on the applicable interpretations of the Commission; and - must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. ACCOUNTING TREATMENT The Issuer will record the exchange Notes in its accounting records at the same carrying value as the outstanding Notes, which is the aggregate principal amount as reflected in the Issuer's accounting records on the date of exchange. Accordingly, the Issuer will not recognize any gain or loss for accounting purposes in connection with the exchange offer. The Issuer will record the expenses of the exchange offer as incurred. OTHER Participation in the exchange offer is voluntary, and you should carefully consider whether to accept. You are urged to consult your financial and tax advisors in making your own decision on what action to take. The Issuer may in the future seek to acquire untendered outstanding Notes in open market or privately negotiated transactions, through subsequent exchange offers or otherwise. The Issuer has no present plans to acquire any outstanding Notes that are not tendered in the exchange offer or to file a registration statement to permit resales of any untendered outstanding Notes. 110 DESCRIPTION OF THE NOTES GENERAL The outstanding Notes were issued and the exchange Notes will be issued pursuant to an Indenture, dated as of February 2, 1999, between Willis Corroon Group, Willis Corroon Partners, the Issuer and The Bank of New York, as trustee, a copy of the form of which will be made available to holders of outstanding Notes upon request. The Indenture is limited in aggregate principal amount to $550.0 million. Upon the issuance of the exchange Notes, or the effectiveness of the Shelf Registration Statement (as defined), the Indenture will be subject to and governed by the Trust Indenture Act of 1939. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act. The following summary of the material provisions of the Indenture does not purport to be complete and is qualified in its entirety by reference to the provisions of the Indenture, including the definitions therein of certain terms used below. The definitions of certain terms used in the following summary are set forth below under "--Certain Definitions." For purposes of this summary, - the term "Willis Corroon Group" refers only to Willis Corroon Group Limited and not to any of its Subsidiaries, - the term "Issuer" refers only to Willis Corroon Corporation and not to any of its Subsidiaries and - the term "Closing Date" refers to November 19, 1998, the date on which the Subordinated Bridge Agreement was executed. The outstanding Notes are and the exchange Notes will be general unsecured obligations of the Issuer and will be subordinated in right of payment to all existing and future Senior Indebtedness of the Issuer. As of December 31, 1998, on a pro forma basis giving effect to the Transactions, the aggregate amount of the Issuer's outstanding Senior Indebtedness would have been approximately L277.2 million, all of which would have been secured, and the Issuer would have had no Senior Subordinated Indebtedness outstanding other than the Notes. The Indenture will permit the incurrence of additional Senior Indebtedness in the future. See "Risk Factors--Substantial Leverage and Debt Service." Willis Corroon Group and Willis Corroon Partners, as primary obligors and not merely as sureties, will jointly and severally irrevocably and unconditionally Guarantee, on a senior subordinated basis, the performance and full and punctual payment when due, whether at Stated Maturity, by acceleration or otherwise, of all obligations of the Issuer under the Indenture and the Notes, whether for payment of principal of or interest on or liquidated damages in respect of the Notes, expenses, indemnification or otherwise, on the terms set forth in the Indenture by executing the Indenture. Sovereign Marine & General Insurance Company Limited, in provisional liquidation, was an Unrestricted Subsidiary on the date of issuance of the outstanding Notes. Under certain circumstances, Willis Corroon Group will be able to designate other current or future Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries will not be Guarantors or be subject to any of the restrictive covenants set forth in the Indenture. SUBORDINATION The payment of the Subordinated Note Obligations will be subordinated in right of payment, as set forth in the Indenture, to the prior payment in full in cash or cash equivalents of all Senior Indebtedness, whether outstanding on the date of the Indenture or thereafter incurred. Upon any 111 distribution to creditors of the Issuer in a liquidation or dissolution of the Issuer or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Issuer or its property, an assignment for the benefit of creditors or any marshalling of the Issuer's assets and liabilities, the holders of Senior Indebtedness will be entitled to receive payment in full in cash or cash equivalents of such Senior Indebtedness and all outstanding Letter of Credit Obligations will be fully cash collateralized before the Holders will be entitled to receive any payment with respect to the Subordinated Note Obligations, and until all Senior Indebtedness is paid in full in cash or cash equivalents, any distribution to which the Holders would be entitled shall be made to the holders of Senior Indebtedness (except that Holders may receive (i) shares of stock and any debt securities that are subordinated at least to the same extent as the Notes to (a) Senior Indebtedness and (b) any securities issued in exchange for Senior Indebtedness and (ii) payments made from the trusts described under "--Legal Defeasance and Covenant Defeasance"). The Issuer also may not make any payment upon or in respect of the Subordinated Note Obligations (except in such subordinated securities or from the trust described under "--Legal Defeasance and Covenant Defeasance") if - a default in the payment of the principal of, premium, if any, or interest on, or of unreimbursed amounts under drawn letters of credit or in respect of bankers' acceptances or fees relating to letters of credit or bankers' acceptances constituting, Designated Senior Indebtedness occurs and is continuing beyond any applicable period of grace (a "PAYMENT DEFAULT") or - any other default occurs and is continuing with respect to Designated Senior Indebtedness that permits holders of the Designated Senior Indebtedness as to which such default relates to accelerate its maturity without further notice (except such notice as may be required to effect such acceleration) or the expiration of any applicable grace periods (a "NON-PAYMENT DEFAULT") and the Trustee receives a notice of such default (a "PAYMENT BLOCKAGE NOTICE") from a representative of holders of such Designated Senior Indebtedness. Payments on the Notes, including any missed payments, may and shall be resumed: - in the case of a payment default, upon the date on which such default is cured or waived or shall have ceased to exist or such Designated Senior Indebtedness shall have been discharged or paid in full in cash or cash equivalents and all outstanding Letter of Credit Obligations shall have been fully cash collateralized; and - in case of a nonpayment default, the earlier of (x) the date on which such nonpayment default is cured or waived, (y) 179 days after the date on which the applicable Payment Blockage Notice is received (each such period, the "PAYMENT BLOCKAGE PERIOD") or (z) the date such Payment Blockage Period shall be terminated by written notice to the Trustee from the requisite holders of such Designated Senior Indebtedness necessary to terminate such period or from their representative. 112 No new Payment Blockage Period may be commenced unless and until 365 days have elapsed since the effectiveness of the immediately preceding Payment Blockage Notice. However, if any Payment Blockage Notice within such 365-day period is given by or on behalf of any holders of Designated Senior Indebtedness (other than the agent under the Senior Credit Facilities), the agent under the Senior Credit Facilities may give another Payment Blockage Notice within such period. In no event, however, may the total number of days during which any Payment Blockage Period or Periods is in effect exceed 179 days in the aggregate during any 365 consecutive day period. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been cured or waived for a period of not less than 90 days. If the Issuer fails to make any payment on the Notes when due or within any applicable grace period, whether or not on account of the payment blockage provision referred to above, such failure would constitute an Event of Default under the Indenture and would enable the Holders to accelerate the maturity thereof. The Indenture will further require that the Issuer promptly notify holders of Senior Indebtedness if payment of the Notes is accelerated because of an Event of Default. As a result of the subordination provisions described above, in the event of insolvency, bankruptcy, administration, reorganization, receivership or similar proceedings relating to the Issuer, Holders may recover less ratably than creditors of the Issuer who are holders of Senior Indebtedness. At December 31, 1998, on a pro forma basis after giving effect to the Transactions, the aggregate amount of the Issuer's outstanding Senior Indebtedness would have been approximately $460.1 million (L277.2 million) (excluding unused commitments), all of which would have been secured, the Issuer would have had no Senior Subordinated Indebtedness outstanding other than the Notes, the Guarantors would have had no Senior Indebtedness (excluding guarantees in respect of the Senior Credit Facilities) and no Senior Subordinated Indebtedness (excluding the Guarantees). As of December 31, 1998, the Issuer's subsidiaries had total liabilities (including payables in respect of insurance broking transactions but excluding their guarantees under the Permanent Facility Agreement) of L1,103.3 million and Willis Corroon Group's subsidiaries (other than Willis Corroon Partners, the Issuer and the Issuer's subsidiaries) had total liabilities (including payables in respect of insurance broking transactions but excluding their guarantees under the Permanent Facility Agreement) of L2,345.0 million. The Indenture permits the Issuer to incur additional indebtedness, including additional senior Indebtedness under the Senior Credit Facilities, subject to certain limitations. Although the Indenture contains limitations on the amount of additional Indebtedness that Willis Corroon Group and its Subsidiaries may incur, under certain circumstances the amount of such Indebtedness could be substantial and, in any case, such Indebtedness may be Senior Indebtedness. See "--Certain Covenants--Limitations on Incurrence of Indebtedness and Issuance of Disqualified Stock." "DESIGNATED SENIOR INDEBTEDNESS" means: - Senior Indebtedness under the Senior Credit Facilities; and - any other Senior Indebtedness permitted under the Indenture the principal amount of which is $25.0 million or more and that has been designated by Willis Corroon Group as Designated Senior Indebtedness. "SENIOR INDEBTEDNESS" means: (1) the Obligations under the Senior Credit Facilities; and 113 (2) the Obligations under any other Indebtedness permitted to be incurred by the Issuer under the terms of the Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is on a parity with or subordinated in right of payment to the Notes, including, with respect to clauses (1) and (2), interest accruing subsequent to the filing of, or which would have accrued but for the filing of, a petition for bankruptcy, in accordance with and at the rate (including any rate applicable upon any default or event of default, to the extent lawful) specified in the documents evidencing or governing such Senior Indebtedness, whether or not such interest is an allowable claim in such bankruptcy proceeding. Notwithstanding anything to the contrary in the foregoing, Senior Indebtedness will not include: - any liability for federal, state, local or other taxes owed or owing by the Issuer; - any obligation of the Issuer to its direct or indirect parent corporations or to any of its Subsidiaries; - any accounts payable or trade liabilities (including obligations in respect of funds held for the account of third parties) arising in the ordinary course of business (including guarantees thereof or instruments evidencing such liabilities) other than obligations in respect of letters of credit under the Senior Credit Facilities; - any Indebtedness that is incurred in violation of the Indenture; - Indebtedness which, when incurred and without respect to any election under Section 1111(b) of Title 11, United States Code, is without recourse to the Issuer; - any Indebtedness, guarantee or obligation of the Issuer which is subordinate or junior to any other Indebtedness, guarantee or obligation of the Issuer; - Indebtedness evidenced by the Notes; - Indebtedness evidenced by the Group Intercompany Notes or Convertible Loans; and - Capital Stock of the Issuer. "Senior Indebtedness" of Willis Corroon Group or any Guarantor has a correlative meaning. "SUBORDINATED NOTE OBLIGATIONS" means any principal of, premium, if any, and interest on the Notes payable pursuant to the terms of the Notes or upon acceleration, together with and including any amounts received upon the exercise of rights of rescission or other rights of action (including claims for damages) or otherwise, to the extent relating to the purchase price of the Notes or amounts corresponding to such principal, premium, if any, or interest on the Notes. The Notes will rank senior in right of payment to all Subordinated Indebtedness of the Issuer. At the issuance of the outstanding Notes, the Issuer had no Subordinated Indebtedness. PRINCIPAL, MATURITY AND INTEREST The Notes are limited in aggregate principal amount to $550,000,000 and will mature at par on February 1, 2009. Interest on the Notes will accrue at the rate of 9% per annum and will be payable semi-annually in arrears on February 1 and August 1, commencing on August 1, 1999, to Holders of record on the immediately preceding January 15 and July 15. Interest on the Notes will accrue from the 114 most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance of the outstanding Notes. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. Principal of, premium, if any, and interest on the Notes will be payable at the office or agency of the Issuer maintained for such purpose within the City and State of New York or, at the option of the Issuer, payment of interest may be made by check mailed to the Holders at their respective addresses set forth in the register of Holders; PROVIDED that all payments of principal, premium, if any, and interest with respect to Notes represented by one or more permanent global Notes registered in the name of or held by DTC or its nominee will be made by wire transfer of immediately available funds to the accounts specified by the Holder or Holders thereof. Until otherwise designated by the Issuer, the Issuer's office or agency in New York will be the office of the Trustee maintained for such purpose. The Notes will be issued in denominations of $1,000 and integral multiples thereof. If Certificated Notes are issued, the Issuer will appoint Kredietbank S.A. Luxembourgeoise, or such other Person located in Luxembourg and reasonably acceptable to the Trustee, as an additional paying and transfer agent. Upon the issuance of Certificated Notes, Holders will be able to receive principal, premium, if any, and interest with respect to the Notes and will be able to transfer Certificated Notes at the Luxembourg office of such paying and transfer agent, subject to the right of the Issuer to mail payments in accordance with the terms of the Indenture. MANDATORY REDEMPTION Except as set forth below under "--Repurchase at the Option of Holders," the Issuer is not required to make mandatory redemption or sinking fund payments with respect to the Notes. OPTIONAL REDEMPTION Except as described below, the Notes will not be redeemable at the Issuer's option prior to February 1, 2004. From and after February 1, 2004, the Notes will be subject to redemption at any time at the option of the Issuer, in whole or in part, upon not less than 30 nor more than 60 days' prior notice published in a leading newspaper having a general circulation in New York (which is expected to be the WALL STREET JOURNAL) (and, so long as the Notes are listed on the Luxembourg Stock Exchange and the rules of such stock exchange shall so require, a newspaper having a general circulation in Luxembourg (which is expected to be the LUXEMBURGER WORT)), or, in the case of Certificated Notes, by being so published and also mailed by first-class mail to each Holder's registered address, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest thereon, if any, to the applicable redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the twelve-month period beginning on February 1 of each of the years indicated below:
YEAR REDEMPTION PRICE - -------------------------------------------------------------------------- ------------------ 2004...................................................................... 104.500% 2005...................................................................... 103.000% 2006...................................................................... 101.500% 2007 and thereafter....................................................... 100.000%
In addition, at any time or from time to time, on or prior to February 1, 2002, the Issuer may, at its option, redeem up to 35% of the aggregate principal amount of Notes issued under the Indenture at a redemption price equal to 109% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), with the net proceeds of one or more Equity Offerings of the Issuer or any direct or indirect parent of the Issuer to the extent such net proceeds are contributed to the Issuer, or used to repay to the Issuer amounts outstanding in respect of the Trinity Intercompany Notes; PROVIDED that at least 65% of the aggregate principal amount of Notes 115 remains outstanding immediately after the occurrence of each such redemption; PROVIDED FURTHER that each such redemption occurs within 90 days of the date of closing of each such Equity Offering. The Trustee shall select the Notes to be purchased in the manner described under "--Repurchase at the Option of Holders--Asset Sales--Selection and Notice." REPURCHASE AT THE OPTION OF HOLDERS CHANGE OF CONTROL. The Indenture provides that, upon the occurrence of a Change of Control, the Issuer will make an offer to purchase all of the Notes pursuant to the offer described below (the "CHANGE OF CONTROL OFFER") at a price in cash (the "CHANGE OF CONTROL PAYMENT") equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date). The Indenture provides that within 30 days following any Change of Control, the Issuer will publish notice of such in a leading newspaper having a general circulation in New York (which is expected to be the WALL STREET JOURNAL), (and, so long as the Notes are listed on the Luxembourg Stock Exchange and the rules of such stock exchange shall so require, a newspaper having a general circulation in Luxembourg (which is expected to be the LUXEMBURGER WORT)), or, in the case of Certificated Notes, mail a notice to each Holder (, and so long as the Notes are listed on the Luxembourg Stock Exchange and the rules of such stock exchange shall so require, will publish notice in a newspaper having a general circulation in Luxembourg (which is expected to be the LUXEMBURGER WORT)), with a copy to the Trustee, with the following information: (1) a Change of Control Offer is being made pursuant to the covenant entitled "CHANGE OF CONTROL," and that all Notes properly tendered pursuant to such Change of Control Offer will be accepted for payment; (2) the purchase price and the purchase date, which will be no earlier than 30 days nor later than 60 days from the date such notice is mailed, except as may be otherwise required by applicable law (the "CHANGE OF CONTROL PAYMENT DATE"); (3) any Note not properly tendered will remain outstanding and continue to accrue interest; (4) unless the Issuer defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue interest on the Change of Control Payment Date; (5) Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender the Notes, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes completed, to the paying agent specified in the notice (which, if Certificated Notes are issued, will include a paying agent in Luxembourg) at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date; (6) Holders will be entitled to withdraw their tendered Notes and their election to require the Issuer to purchase such Notes, PROVIDED that the paying agent (which, if Certificated Notes are issued, will include a paying agent in Luxembourg) receives, not later than the close of business on the last day of the Offer Period (as defined in the Indenture), a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the 116 principal amount of Notes tendered for purchase, and a statement that such Holder is withdrawing his tendered Notes and his election to have such Notes purchased; and (7) that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $1,000 in principal amount or an integral multiple thereof. While the Notes are in global form and the Issuer makes an offer to purchase all of the Notes pursuant to the Change of Control Offer, a holder may exercise its option to elect for the purchase of the Notes through the facilities of DTC, Euroclear and Cedel, subject to their rules and regulations. The Indenture provides that, prior to complying with the provisions of this covenant, but in any event within 30 days following a Change of Control, the Issuer will either repay all its outstanding Senior Indebtedness that prohibits the Issuer from repurchasing Notes in a Change of Control Offer or obtain the requisite consents, if any, under any outstanding Senior Indebtedness in each case necessary to permit the repurchase of the Notes required by this covenant. The Issuer will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws or regulations are applicable in connection with the repurchase of the Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of the Indenture, the Issuer will comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations described in the Indenture by virtue thereof. The Indenture provides that on the Change of Control Payment Date, the Issuer will, to the extent permitted by law, (1) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (2) deposit with the paying agent an amount equal to the aggregate Change of Control Payment in respect of all Notes or portions thereof so tendered and (3) deliver, or cause to be delivered, to the Trustee for cancellation the Notes so accepted together with an Officers' Certificate stating that such Notes or portions thereof have been tendered to and purchased by the Issuer. The Indenture will provide that the paying agent will promptly mail to each Holder the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any, PROVIDED, that each such new Note will be in a principal amount of $1,000 or an integral multiple thereof. The Issuer will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. The Senior Credit Facilities will, and future credit agreements or other agreements relating to Senior Indebtedness to which Willis Corroon Group or the Issuer becomes a party may, prohibit the Issuer from purchasing any Notes as a result of a Change of Control and/or provide that certain change of control events with respect to the Issuer would constitute a default thereunder. In the event a Change of Control occurs at a time when the Issuer is prohibited from purchasing the Notes, Willis Corroon Group or the Issuer could seek the consent of its lenders to permit the purchase of the Notes or could attempt to refinance the borrowings that contain such prohibition. If the Company or the Issuer does not obtain such a consent or repay such borrowings, the Issuer will remain prohibited from purchasing the 117 Notes. In such case, the Issuer's failure to purchase tendered Notes would constitute an Event of Default under the Indenture. If, as a result thereof, a default occurs with respect to any Senior Indebtedness, the subordination provisions in the Indenture would restrict payments to the Holders under certain circumstances. The existence of a Holder's right to require the Issuer to repurchase such Holder's Notes upon the occurrence of a Change of Control may deter a third party from seeking to acquire the Company or the Issuer in a transaction that would constitute a Change of Control. ASSET SALES. The Indenture provides that Willis Corroon Group will not, and will not permit any Restricted Subsidiary to, cause, make or suffer to exist an Asset Sale, unless (1) Willis Corroon Group or such Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the fair market value (as determined in good faith by the Willis Corroon Group) of the assets sold or otherwise disposed of and (2) except in the case of Permitted Asset Swap, at least 75% of the consideration therefor received by Willis Corroon Group or such Restricted Subsidiary, as the case may be, is in the form of cash or Cash Equivalents; PROVIDED that the amount of (a) any liabilities (as shown on Willis Corroon Group's, or such Restricted Subsidiary's, most recent balance sheet or in the notes thereto) of Willis Corroon Group or any Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Notes) that are assumed by the transferee of any such assets, (b) any securities received by Willis Corroon Group or such Restricted Subsidiary from such transferee that are converted by Willis Corroon Group or such Restricted Subsidiary into cash (to the extent of the cash received) within 180 days following the closing of such Asset Sale and (c) any Designated Noncash Consideration received by Willis Corroon Group or any Restricted Subsidiary in such Asset Sale having an aggregate fair market value, taken together with all other Designated Noncash Consideration received pursuant to this clause (c) that is at that time outstanding, not to exceed the greater of (x) $100.0 million or (y) 10% of Total Revenues at the time of the receipt of such Designated Noncash Consideration (with the fair market value of each item of Designated Noncash Consideration being measured at the time received and without giving effect to subsequent changes in value), shall be deemed to be cash for purposes of this provision and for no other purpose. Within 365 days after Willis Corroon Group's or any Restricted Subsidiary's receipt of the Net Proceeds of any Asset Sale, Willis Corroon Group or such Restricted Subsidiary, at its option, may (i) apply the Net Proceeds from such Asset Sale to permanently reduce (x) Obligations under the Senior Credit Facilities (and to correspondingly reduce commitments with respect thereto), 118 (y) other Senior Indebtedness or Senior Subordinated Indebtedness (and to correspondingly reduce commitments with respect thereto) (PROVIDED that if the Issuer shall so reduce Obligations under Senior Subordinated Indebtedness, it will equally and ratably reduce Obligations under the Notes if the Notes are then prepayable or, if the Notes may not then be prepaid, the Issuer shall make an offer (in accordance with the procedures set forth below for an Asset Sale Offer) to all Holders to purchase their Notes at 100% of the principal amount thereof, plus the amount of accrued but unpaid interest, if any, on the amount of Notes that would otherwise be prepaid) or (z) Indebtedness of a Restricted Subsidiary (other than Indebtedness owed to Willis Corroon Group or another Restricted Subsidiary), (ii) apply the Net Proceeds from such Asset Sale to an investment in any one or more businesses (PROVIDED that such investment in any business may be in the form of the acquisition of Capital Stock so long as it results in Willis Corroon Group or a Restricted Subsidiary, as the case may be, owning all the Capital Stock of such business), capital expenditures or acquisitions of other assets in each case, used or useful in a Similar Business and/or (iii) apply the Net Proceeds from such Asset Sale to an investment in any one or more businesses (PROVIDED that such investment in any business may be in the form of the acquisition of Capital Stock so long as it results in Willis Corroon Group or a Restricted Subsidiary, as the case may be, owning all the Capital Stock of such business), properties or assets that replace the businesses, properties and assets that are the subject of such Asset Sale. The Indenture provides that any Net Proceeds from the Asset Sale that are not invested or applied as provided and within the time period set forth in the first sentence of this paragraph will be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $15.0 million, the Issuer shall make an offer to all Holders (an "ASSET SALE OFFER") to purchase the maximum principal amount of Notes, that is an integral multiple of $1,000, that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date fixed for the closing of such offer, in accordance with the procedures set forth in the Indenture. The Issuer will commence an Asset Sale Offer with respect to Excess Proceeds within ten Business Days after the date that Excess Proceeds exceeds $15.0 million by mailing the notice required pursuant to the terms of the Indenture, with a copy to the Trustee. To the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Issuer may use any remaining Excess Proceeds for general corporate purposes. If the aggregate principal amount of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be purchased in the manner described under "-- Selection and Notice" below. Upon completion of any such Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero. Pending the final application of any Net Proceeds pursuant to this covenant, Willis Corroon Group or the applicable Restricted Subsidiary may apply such Net Proceeds temporarily to reduce Indebtedness outstanding under a revolving credit facility or otherwise invest such Net Proceeds in Cash Equivalents or Investment Grade Securities. The Issuer will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws or regulations are applicable in connection with the repurchase of the Notes pursuant to an Asset Sale Offer. To the extent that the 119 provisions of any securities laws or regulations conflict with the provisions of the Indenture, the Issuer will comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations described in the Indenture by virtue thereof. The Senior Credit Facilities will, and future credit agreements or other agreements relating to Senior Indebtedness to which the Issuer becomes a party may, prohibit the Issuer from purchasing any Notes pursuant to this Asset Sales covenant. In the event the Issuer is prohibited from purchasing the Notes, the Issuer could seek the consent of its lenders to the purchase of the Notes or could attempt to refinance the borrowings that contain such prohibition. If the Issuer does not obtain such a consent or repay such borrowings, the Issuer will remain prohibited from purchasing the Notes. In such case, the Issuer's failure to purchase tendered Notes would constitute an Event of Default under the Indenture. If, as a result thereof, a default occurs with respect to any Senior Indebtedness, the subordination provisions in the Indenture would restrict payments to the Holders under certain circumstances. SELECTION AND NOTICE. If less than all of the Notes are to be redeemed at any time or if more Notes are tendered pursuant to an Asset Sale Offer than the Issuer is required to purchase, selection of such Notes for redemption or purchase, as the case may be, will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which such Notes are listed, or, if such Notes are not so listed, on a pro rata basis, by lot or by such other method as the Trustee shall deem fair and appropriate (and in such manner as complies with applicable legal requirements); PROVIDED that no Notes of $1,000 or less shall be purchased or redeemed in part. Notices of purchase or redemption shall be mailed by first class mail, postage prepaid, at least 30 but not more than 60 days before the purchase or redemption date to each Holder of Notes to be purchased or redeemed at such Holder's registered address. If any Note is to be purchased or redeemed in part only, any notice of purchase or redemption that relates to such Note shall state the portion of the principal amount thereof that has been or is to be purchased or redeemed. A new Note in principal amount equal to the unpurchased or unredeemed portion of any Note purchased or redeemed in part will be issued in the name of the Holder thereof upon cancellation of the original Note. On and after the purchase or redemption date unless the Issuer defaults in payment of the purchase or redemption price, interest shall cease to accrue on Notes or portions thereof purchased or called for redemption. CERTAIN COVENANTS LIMITATION ON RESTRICTED PAYMENTS. The Indenture provides that Willis Corroon Group will not, and will not permit any Restricted Subsidiary to, directly or indirectly: (i) declare or pay any dividend or make any distribution on account of Willis Corroon Group's or any Restricted Subsidiary's Equity Interests, including any dividend or distribution payable in connection with any merger or consolidation (other than (A) dividends or distributions by Willis Corroon Group payable in Equity Interests (other than Disqualified Stock) of Willis Corroon Group or in options, warrants or other rights to purchase such Equity Interests or (B) dividends or distributions by a Restricted Subsidiary so long as, in the case of any dividend or distribution payable on or in respect of any class or series of securities issued by a Subsidiary other than a Wholly Owned Subsidiary, Willis Corroon Group or a Restricted Subsidiary receives at least its pro rata share of such dividend or distribution in accordance with its Equity Interests in such class or series of securities); (ii) purchase, redeem, defease or otherwise acquire or retire for value any Equity Interests of Willis Corroon Group or any direct or indirect parent of Willis Corroon Group; 120 (iii) make any principal payment on, or redeem, repurchase, defease or otherwise acquire or retire for value in each case, prior to any scheduled repayment, or maturity, any Subordinated Indebtedness (other than (x) Indebtedness permitted under clauses (g), (h) and (q) of the covenant described under "--Limitations on Incurrence of Indebtedness and Issuance of Disqualified Stock" or (y) the purchase, repurchase or other acquisition of Subordinated Indebtedness purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of purchase, repurchase or acquisition); (iv) make any Restricted Investment; or (v) pay any principal of or interest on any Group Intercompany Note unless such amount is immediately repaid to Willis Corroon Group or a Restricted Subsidiary in respect of the principal of, or interest on, any Trinity Intercompany Note or pay any amount in respect of a Convertible Loan (all such payments and other actions set forth in clauses (i) through (v) above being collectively referred to as "Restricted Payments"), unless, at the time of such Restricted Payment: (a) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; (b) immediately after giving effect to such transaction on a pro forma basis, Willis Corroon Group could incur $1.00 of additional Indebtedness under the provisions of the first paragraph of "--Limitations on Incurrence of Indebtedness and Issuance of Disqualified Stock"; and (c) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by Willis Corroon Group and its Restricted Subsidiaries after the Closing Date (including Restricted Payments permitted by clauses (i), (ii) (with respect to the payment of dividends on Refunding Capital Stock pursuant to clause (b) thereof), (iv) (only to the extent that amounts paid pursuant to such clause are greater than amounts that could have been paid pursuant to such clause if $6 million and $12 million were substituted in such clause for $12.5 million and $25 million, respectively), (vi), (ix), (x) and (xiv) of the next succeeding paragraph, but excluding all other Restricted Payments permitted by the next succeeding paragraph), is less than the sum of (i) 50% of the Consolidated Net Income of Willis Corroon Group for the period (taken as one accounting period) from January 1, 1999, to the end of Willis Corroon Group's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, in the case such Consolidated Net Income for such period is a deficit, minus 100% of such deficit), PLUS (ii) 100% of the aggregate net cash proceeds and the fair market value, as determined in good faith by the Board of Directors, of marketable securities and 121 Qualified Proceeds received by Willis Corroon Group or the Issuer since immediately after the Closing Date from the issue or sale of (x) Equity Interests of Willis Corroon Group or the Issuer (including Retired Capital Stock (as defined below), but excluding cash proceeds, marketable securities and Qualified Proceeds received from the sale of (A) Equity Interests (1) to members of management, directors or consultants of Willis Corroon Group or the Issuer, any direct or indirect parent corporation of the Issuer and Willis Corroon Group's Subsidiaries after the Closing Date to the extent such amounts have been applied to Restricted Payments made in accordance with clause (iv) of the next succeeding paragraph or (2) pursuant to the Contribution Agreement and (B) Designated Preferred Stock) and, to the extent actually contributed to Willis Corroon Group or the Issuer, Equity Interests of Willis Corroon Group's direct or indirect parent corporations (excluding contributions of the proceeds from the sale of Designated Preferred Stock of such corporations) or (y) debt securities (other than that portion of the Convertible Loan made with the proceeds of Interim Refinancing Indebtedness) of Willis Corroon Group or the Issuer that have been converted into such Equity Interests of Willis Corroon Group or the Issuer; PROVIDED, HOWEVER, that this clause (ii) shall not include the proceeds from Refunding Capital Stock (as defined below), Equity Interests or convertible debt securities of Willis Corroon Group or the Issuer sold to a Restricted Subsidiary or Willis Corroon Group, as the case may be, Disqualified Stock or debt securities that have been converted into Disqualified Stock, PLUS (iii) 100% of the aggregate amount of cash, marketable securities and Qualified Proceeds contributed to the capital of Willis Corroon Group or the Issuer following the Closing Date (other than by a Restricted Subsidiary or Willis Corroon Group), PLUS (iv) 100% of the aggregate amount received in cash, the fair market value of marketable securities and Qualified Proceeds (other than Restricted Investments) received by means of (A) the sale or other disposition (other than to Willis Corroon Group or a Restricted Subsidiary) of Restricted Investments made by Willis Corroon Group and its Restricted Subsidiaries and repurchases and redemptions of such Restricted Investments from Willis Corroon Group and its Restricted Subsidiaries and repayments of loans or advances which constitute Restricted Investments by Willis Corroon Group and its Restricted Subsidiaries or 122 (B) the sale (other than to Willis Corroon Group or a Restricted Subsidiary) of the stock of an Unrestricted Subsidiary or a distribution from an Unrestricted Subsidiary (other than in each case to the extent the Investment in such Unrestricted Subsidiary was made by Willis Corroon Group or a Restricted Subsidiary pursuant to clauses (vii) or (xi) below or to the extent such Investment constituted a Permitted Investment) or a dividend from an Unrestricted Subsidiary PLUS (v) in the case of the redesignation of an Unrestricted Subsidiary as, or an Associate becoming, a Restricted Subsidiary, the fair market value of the Investment in such Unrestricted Subsidiary or Associate, as the case may be, as determined by the Board of Directors in good faith or if, in the case of an Unrestricted Subsidiary, such fair market value may exceed $25 million, in writing by an independent investment banking firm of nationally recognized standing, at the time of the redesignation of such Unrestricted Subsidiary as a Restricted Subsidiary (other than an Unrestricted Subsidiary to the extent the Investment in such Unrestricted Subsidiary or such Associate was made by Willis Corroon Group or a Restricted Subsidiary pursuant to clauses (vii) or (xi) below or to the extent such Investment constituted a Permitted Investment). The foregoing provisions will not prohibit: (i) the payment of any dividend within 60 days after the date of declaration thereof, if at the date of declaration such payment would have complied with the provisions of the Indenture; (ii) (a) the redemption, repurchase, retirement or other acquisition of any Equity Interests ("RETIRED CAPITAL STOCK") or Subordinated Indebtedness of Willis Corroon Group, or any Equity Interests of any direct or indirect parent corporation of Willis Corroon Group, in exchange for, or out of the proceeds of the substantially concurrent sale (other than to a Restricted Subsidiary or Willis Corroon Group) of, Equity Interests of Willis Corroon Group or the Issuer (in each case, other than any Disqualified Stock) ("REFUNDING CAPITAL STOCK") and (b) the declaration and payment of dividends on the Refunding Capital Stock (other than Refunding Capital Stock the proceeds of which were used to redeem, repurchase, retire or otherwise acquire any Equity Interests of any direct or indirect parent corporation of Willis Corroon Group) in an aggregate amount per year no greater than the aggregate amount of dividends per annum that was declarable and payable on such Retired Capital Stock immediately prior to such retirement; (iii) the redemption, repurchase or other acquisition or retirement of Subordinated Indebtedness of Willis Corroon Group or the Issuer made by exchange for, or out of the proceeds of the substantially concurrent sale of, new Indebtedness of Willis Corroon Group or the Issuer, as the case may be, which is incurred in compliance with "--Limitations on Incurrence of Indebtedness and Issuance of Disqualified Stock" so long as (A) the principal amount of such new Indebtedness does not exceed the principal amount of the Subordinated Indebtedness being so redeemed, repurchased, acquired or retired for value (PLUS the amount of any premium 123 required to be paid under the terms of the instrument governing the Subordinated Indebtedness being so redeemed, repurchased, acquired or retired), (B) such Indebtedness is subordinated to Senior Indebtedness and the Notes at least to the same extent as such Subordinated Indebtedness so purchased, exchanged, redeemed, repurchased, acquired or retired for value, (C) such Indebtedness has a final scheduled maturity date equal to or later than the final scheduled maturity date of the Subordinated Indebtedness being so redeemed, repurchased, acquired or retired and (D) such Indebtedness has a Weighted Average Life to Maturity equal to or greater than the remaining Weighted Average Life to Maturity of the Subordinated Indebtedness being so redeemed, repurchased, acquired or retired; (iv) a Restricted Payment to pay for the repurchase, retirement or other acquisition or retirement for value of common Equity Interests of Willis Corroon Group, any of its direct or indirect parent corporations or the Issuer held by any future, present or former employee, director or consultant of Willis Corroon Group, any of its Subsidiaries or any of its direct or indirect parent corporations pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement; PROVIDED, HOWEVER, that the aggregate Restricted Payments made under this clause (iv) do not exceed in any calendar year $12.5 million (with unused amounts in any calendar year being carried over to succeeding calendar years subject to a maximum (without giving effect to the following proviso) of $25.0 million in any calendar year); PROVIDED FURTHER that such amount in any calendar year may be increased by an amount not to exceed (A) the cash proceeds from the sale of Equity Interests of Willis Corroon Group, the Issuer and, to the extent contributed to Willis Corroon Group or the Issuer, Equity Interests of any of Willis Corroon Group's direct or indirect parent corporations, in each case to members of management, directors or consultants of Willis Corroon Group, any of its Subsidiaries or any of its direct or indirect parent corporations that occurs after the Closing Date (to the extent the cash proceeds from the sale of such Equity Interests have not otherwise been applied to the payment of Restricted Payments by virtue of clause (c) of the preceding paragraph) plus (B) the cash proceeds of key man life insurance policies received by Willis Corroon Group and its Restricted Subsidiaries after the Closing Date less (C) the amount of any Restricted Payments previously made pursuant to clauses (A) and (B) of this clause (iv); and PROVIDED FURTHER that cancellation of Indebtedness owing to Willis Corroon Group or the Issuer from members of management of Willis Corroon Group, any of its direct or indirect parent corporations or any Restricted Subsidiary in connection with a repurchase of Equity Interests of Willis Corroon Group, any of its direct or indirect parent corporations or the Issuer will not be deemed to constitute a Restricted Payment for purposes of this covenant or any other provision of the Indenture; 124 (v) the declaration and payment of dividends to holders of any class or series of Disqualified Stock of Willis Corroon Group, the Issuer or any other Guarantor issued in accordance with the covenant described under "--Limitations on Incurrence of Indebtedness and Issuance of Disqualified Stock" to the extent such dividends are included in the definition of Fixed Charges; (vi) (A) the declaration and payment of dividends to holders of any class or series of Designated Preferred Stock (other than Disqualified Stock) issued by Willis Corroon Group or the Issuer after the Closing Date, (B) the declaration and payment of dividends to a direct or indirect parent corporation of Willis Corroon Group, the proceeds of which will be used to fund the payment of dividends to holders of any class or series of Designated Preferred Stock (other than Disqualified Stock) of such parent corporation issued after the Closing Date (PROVIDED that the amount of dividends paid pursuant to this clause (B) shall not exceed the aggregate amount of cash actually contributed to Willis Corroon Group from the sale of such Designated Preferred Stock) or (C) the declaration and payment of dividends on Refunding Capital Stock in excess of the dividends declarable and payable thereon pursuant to clause (ii); PROVIDED, HOWEVER, in each case, that for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date of issuance of such Designated Preferred Stock or the declaration of such dividends on Refunding Capital Stock, after giving effect to such issuance or declaration on a pro forma basis, Willis Corroon Group and its Restricted Subsidiaries would have had a Fixed Charge Coverage Ratio of at least 2.00 to 1.00; (vii) Investments in Unrestricted Subsidiaries and Associates (or Persons that become Associates as a result of such Investments) having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (vii) that are at that time outstanding (without giving effect to the sale of an Unrestricted Subsidiary to the extent the proceeds of such sale do not consist of cash, marketable securities and/or Qualified Proceeds or do consist of distributions made pursuant to clause (xiii) below), not to exceed $25.0 million at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value); (viii) repurchases of Equity Interests deemed to occur upon exercise of stock options if such Equity Interests represent a portion of the exercise price of such options; (ix) the payment of dividends on Willis Corroon Group's Common Stock or the Issuer's Common Stock, following the first public offering of Willis Corroon Group's Common Stock, the Issuer's Common Stock or the Common Stock of any of its direct or indirect parent corporations after the Closing Date, of up to 6% per annum of the net proceeds received by Willis Corroon Group or the Issuer in such public offering, other than public offerings with respect to Willis Corroon Group's Common Stock or the Issuer's Common Stock registered on Form S-8; (x) a Restricted Payment to pay for the repurchase, retirement or other acquisition or retirement for value of common Equity Interests of Willis Corroon Group or any direct or indirect parent corporation of Willis Corroon Group in existence on the Closing Date and which are not held by Kohlberg Kravis Roberts & Co. L.P., the Consortium or any of their 125 Affiliates on the Closing Date (including any Equity Interests issued in respect of such Equity Interests as a result of a stock split, recapitalization, merger, combination, consolidation or otherwise, but excluding any management equity plan or stock option plan or similar agreement), PROVIDED that Willis Corroon Group and its Restricted Subsidiaries shall be permitted to make Restricted Payments under this clause only if after giving effect thereto, Willis Corroon Group would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first sentence of the covenant described under "--Limitations on Incurrence of Indebtedness and Issuance of Disqualified Stock"; PROVIDED FURTHER that notwithstanding the foregoing, Willis Corroon Group and the Restricted Subsidiaries shall be permitted to make Restricted Payments in an amount not to exceed $20.0 million to pay for the repurchase, retirement or other acquisition or retirement for value of common Equity Interests of Willis Corroon Group or any direct or indirect parent corporation of Willis Corroon Group held by the Consortium; (xi) Investments that are made with Excluded Contributions; (xii) other Restricted Payments in an aggregate amount not to exceed $25.0 million; (xiii) the distribution, as a dividend or otherwise, of shares of Capital Stock of, or Indebtedness owed to Willis Corroon Group or a Restricted Subsidiary of Willis Corroon Group by, Unrestricted Subsidiaries (with the exception of Investments in Unrestricted Subsidiaries acquired pursuant to clause (x) of the definition of Permitted Investments); (xiv) cash dividends or other distributions on Willis Corroon Group's Capital Stock used to, or loans the proceeds of which will be used to, (A) fund the payment of dividends (at a rate per annum not to exceed 8 1/2%) on the Consortium Preferred Stock (whether such dividends have accrued during the then-current fiscal year or any previous fiscal year) or (B) repay amounts outstanding under the Guaranteed Loan Notes; (xv) loans in respect of Interim Refinancing Indebtedness or the declaration and payment of dividends on the Closing Date to Trinity in an amount equal to the aggregate outstanding principal amount of and accrued and unpaid interest on, the Interim Financings and indebtedness of Willis Corroon Group and its Subsidiaries existing on the Closing Date and required to be repaid under the Senior Credit Facilities, the proceeds of which were used by Trinity to repay the Interim Financings and such other indebtedness; (xvi) the declaration and payment of dividends to, or the making of loans to, Trinity in an amount not to exceed the amount of principal and interest then due and payable on the Interim Refinancing Indebtedness, PROVIDED that the full amount of such dividend or loan is immediately repaid in cash to Willis Corroon Group or any Restricted Subsidiary; (xvii) the declaration and payment of dividends by Willis Corroon Group to, or the making of loans to, its parent corporation in amounts required for Willis Corroon Group's direct or indirect parent corporations to pay (A) franchise taxes and other fees, taxes and expenses required to maintain their corporate existence, (B) federal, state and local income taxes (and analogous taxes in the United Kingdom) to the extent such income taxes are attributable to the income of Willis Corroon Group and the Restricted Subsidiaries (and, to the extent of the 126 amounts actually received from its Unrestricted Subsidiaries, in amounts required to pay such taxes to the extent attributable to the income of such Unrestricted Subsidiaries), (C) customary salary, bonus and other benefits payable to officers and employees of any direct or indirect parent corporation of Willis Corroon Group to the extent such salaries, bonuses and other benefits are attributable to the ownership or operation of Willis Corroon Group and its Subsidiaries and (D) general corporate overhead expenses of any direct or indirect parent corporation of the Company to the extent such expenses are attributable to the ownership or operation of Willis Corroon Group and its Subsidiaries; (xviii) cash dividends or other distributions on Willis Corroon Group's Capital Stock used to, or the making of loans to Trinity the proceeds of which will be used to, fund the payment of fees and expenses incurred in connection with the Transactions or owed to Affiliates, in each case to the extent permitted by the covenant described under "-- Transactions with Affiliates"; (xix) distributions or payments of Receivables Fees; (xx) the making of loans in respect of Trinity Intercompany Notes; (xxi) the declaration and payment of dividends to, or the making of loans to, Trinity in an amount not to exceed the amount of principal and interest then due and payable on the Trinity Intercompany Notes, provided that the full amount of such dividend or loan is immediately repaid in cash to Willis Corroon Group or any Restricted Subsidiary; or (xxii) cash dividends or other distributions on Willis Corroon Group's Capital Stock used to, or loans made to Trinity to, fund the payment of net amounts required to be paid pursuant to any Trinity Hedging Obligations. As of the issuance of the Outstanding Notes, all of Willis Corroon Group's Subsidiaries (other than Sovereign Marine and General Insurance Company, in provisional liquidation) will be Restricted Subsidiaries. Willis Corroon Group will not permit any Unrestricted Subsidiary to become a Restricted Subsidiary except pursuant to the second to last sentence of the definition of "Unrestricted Subsidiary". For purposes of designating any Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding Investments by Willis Corroon Group and its Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so designated will be deemed to be Restricted Payments in an amount determined as set forth in the last sentence of the definition of "Investment". Such designation will be permitted only if a Restricted Payment in such amount would be permitted at such time (whether pursuant to the first paragraph of this covenant or under clauses (vii), (xi) and (xii)) and if such Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. Unrestricted Subsidiaries will not be subject to any of the restrictive covenants set forth in the Indenture. LIMITATION ON INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK. The Indenture provides that Willis Corroon Group will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, (collectively, "INCUR" and collectively, an "INCURRENCE") with respect to any Indebtedness (including Acquired Indebtedness) and that Willis Corroon Group will not issue any shares of Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; PROVIDED, HOWEVER, that Willis Corroon Group may incur Indebtedness (including 127 Acquired Indebtedness) or issue shares of Disqualified Stock, and the Issuer and any Restricted Subsidiary that is a Guarantor may incur Indebtedness, issue shares of Disqualified Stock and issue shares of preferred stock, if the Fixed Charge Coverage Ratio for Willis Corroon Group's and its Restricted Subsidiaries' most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or preferred stock is issued would have been at least 2.00 to 1.00, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the Disqualified Stock or preferred stock had been issued, as the case may be, and the application of proceeds therefrom had occurred at the beginning of such four-quarter period. The foregoing limitations will not apply to: (a) the existence of Indebtedness under Credit Facilities on the Closing Date together with the incurrence by Willis Corroon Group, the Issuer or any other Restricted Subsidiary of Indebtedness under Credit Facilities and the issuance and creation of letters of credit and bankers' acceptances thereunder (with letters of credit and bankers' acceptances being deemed to have a principal amount equal to the face amount thereof), up to an aggregate principal amount of $675.0 million outstanding at any one time; PROVIDED, HOWEVER, that the aggregate amount of Indebtedness incurred by Restricted Subsidiaries (other than the Issuer or any Guarantor) pursuant to this clause (a) may not exceed $150.0 million outstanding at any one time; (b) the incurrence by the Issuer of Indebtedness represented by the Notes; (c) Existing Indebtedness (other than Indebtedness described in clauses (a) and (b)); (d) Indebtedness (including Capitalized Lease Obligations) incurred by Willis Corroon Group or any of its Restricted Subsidiaries, to finance the purchase, lease or improvement of property (real or personal) or equipment (whether through the direct purchase of assets or the Capital Stock of any Person owning such assets) in an aggregate principal amount which, when aggregated with the principal amount of all other Indebtedness then outstanding and incurred pursuant to this clause (d) and including all Refinancing Indebtedness incurred to refund, refinance or replace any other Indebtedness incurred pursuant to this clause (d), does not exceed the greater of (x) $50.0 million and (y) 5% of Total Revenues. (e) Indebtedness incurred by Willis Corroon Group or any of its Restricted Subsidiaries constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including without limitation letters of credit in respect of workers' compensation claims, or other Indebtedness with respect to reimbursement type obligations regarding workers' compensation claims; PROVIDED, HOWEVER, that upon the drawing of such letters of credit or the incurrence of such Indebtedness, such obligations are reimbursed within 30 days following such drawing or incurrence; (f) Indebtedness arising from agreements of Willis Corroon Group or a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition; PROVIDED, HOWEVER, that 128 (i) such Indebtedness is not reflected on the balance sheet of Willis Corroon Group or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet for purposes of this clause (i)) and (ii) the maximum assumable liability in respect of all such Indebtedness shall at no time exceed the gross proceeds including noncash proceeds (the fair market value of such noncash proceeds being measured at the time received and without giving effect to any subsequent changes in value) actually received by Willis Corroon Group and its Restricted Subsidiaries in connection with such disposition; (g) Indebtedness of Willis Corroon Group to a Restricted Subsidiary; PROVIDED that any such Indebtedness is subordinated in right of payment to the Notes; PROVIDED FURTHER that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness (except to Willis Corroon Group or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness; (h) Indebtedness of a Restricted Subsidiary to Willis Corroon Group or another Restricted Subsidiary; PROVIDED that (i) any such Indebtedness is made pursuant to an intercompany note and (ii) if a Guarantor incurs such Indebtedness to a Restricted Subsidiary that is not the Issuer or a Guarantor such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor; PROVIDED FURTHER that any subsequent transfer of any such Indebtedness (except to Willis Corroon Group or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness; (i) shares of preferred stock of a Restricted Subsidiary issued to Willis Corroon Group or another Restricted Subsidiary; PROVIDED that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such shares of preferred stock (except to Willis Corroon Group or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock; (j) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (k) obligations in respect of performance and surety bonds and completion guarantees provided by Willis Corroon Group or any Restricted Subsidiary in the ordinary course of business; (l) Indebtedness of any Guarantor in respect of such Guarantor's Guarantee; (m) Indebtedness and Disqualified Stock of Willis Corroon Group or any of its Restricted Subsidiaries not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation 129 preference of all other Indebtedness and Disqualified Stock then outstanding and incurred pursuant to this clause (m), does not at any one time outstanding exceed the sum of (x) $250 million and (y) 100% of the net cash proceeds received by Willis Corroon Group or the Issuer since immediately after the Closing Date from the issue or sale of Equity Interests of Willis Corroon Group, any of its direct or indirect parent corporations or the Issuer or net cash proceeds contributed to the capital of Willis Corroon Group or the Issuer (in each case other than proceeds of Disqualified Stock or sales of Equity Interests to Willis Corroon Group or any of its Subsidiaries) as determined in accordance with clauses (c)(ii) and (c)(iii) of the first paragraph of "--Limitation on Restricted Payments" to the extent such net cash proceeds have not been applied pursuant to such clauses to make Restricted Payments or to make other payments or exchanges pursuant to the second paragraph of "--Limitation on Restricted Payments" or to make Permitted Investments (other than Permitted Investments specified in clauses (a) and (c) of the definition thereof) (it being understood that any Indebtedness incurred under this clause (m) shall cease to be deemed incurred or outstanding for purposes of this clause (m) but shall be deemed to be incurred for purposes of the first paragraph of this covenant from and after the first date on which Willis Corroon Group could have incurred such Indebtedness under the first paragraph of this covenant without reliance upon this clause (m)); (n) (i) any guarantee by Willis Corroon Group or the Issuer of Indebtedness or other obligations of any of its Restricted Subsidiaries so long as the incurrence of such Indebtedness incurred by such Restricted Subsidiary is permitted under the terms of the Indenture, (ii) any guarantee by a Restricted Subsidiary of Indebtedness of Willis Corroon Group or the Issuer or of the Trinity Hedging Obligations or the Facility Hedging Obligations, PROVIDED that such guarantee is incurred in accordance with the covenant described below under "--Limitation on Guarantees of Indebtedness by Restricted Subsidiaries" or (iii) any guarantee by the Issuer of the Trinity Hedging Obligations or the Facility Hedging Obligations; (o) the incurrence by Willis Corroon Group or any of its Restricted Subsidiaries of Indebtedness which serves to refund or refinance any Indebtedness incurred as permitted under the first paragraph of this covenant and clauses (b), (c) and (d) above, this clause (o) and clause (p) below or any Indebtedness issued to so refund or refinance such Indebtedness including additional Indebtedness incurred to pay premiums and fees in connection therewith (the "REFINANCING INDEBTEDNESS") prior to its respective maturity; PROVIDED, HOWEVER, that such Refinancing Indebtedness (i) has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining Weighted Average Life to Maturity of Indebtedness being refunded or refinanced, (ii) to the extent such Refinancing Indebtedness refinances Indebtedness subordinated or PARI PASSU to the Notes, such Refinancing Indebtedness is subordinated or PARI PASSU to the Notes at least to the same extent as the Indebtedness being refinanced or refunded and (iii) shall not include 130 (x) Indebtedness of a Subsidiary that refinances Indebtedness of Willis Corroon Group or (y) Indebtedness of Willis Corroon Group or a Restricted Subsidiary that refinances Indebtedness of an Unrestricted Subsidiary; and PROVIDED FURTHER that subclauses (i) and (ii) of this clause (o) will not apply to any refunding or refinancing of any Senior Indebtedness; (p) Indebtedness or Disqualified Stock of Persons that are acquired by Willis Corroon Group or any Restricted Subsidiary or merged into a Restricted Subsidiary in accordance with the terms of the Indenture; PROVIDED that such Indebtedness or Disqualified Stock is not incurred in contemplation of such acquisition or merger; and PROVIDED FURTHER that after giving effect to such acquisition or merger, either (i) Willis Corroon Group would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first sentence of this covenant or (ii) the Fixed Charge Coverage Ratio is greater than immediately prior to such acquisition or merger. Notwithstanding the foregoing, the second proviso of the immediately preceding sentence shall not apply to Indebtedness outstanding on the Closing Date of associates of Willis Corroon Group on the Closing Date that are acquired by Willis Corroon Group or any Restricted Subsidiary or merged into a Restricted Subsidiary; (q) Indebtedness in respect of the Group Intercompany Notes, PROVIDED that any subsequent transfer of a Group Intercompany Note by Trinity to a Person other than Willis Corroon Group or a Restricted Subsidiary shall be deemed to be an incurrence of such Indebtedness: (r) Indebtedness in respect of a Convertible Loan, PROVIDED that any subsequent transfer of a Convertible Loan by Trinity to a Person other than Willis Corroon Group or a Restricted Subsidiary shall be deemed to be an incurrence of such Indebtedness; (s) Indebtedness under any BACS Facility entered into in the ordinary course of business; (t) Indebtedness incurred in relation to arrangements made in the ordinary course of business to facilitate the operation of bank accounts on a net balance basis for the calculation of interest; (u) short-term Indebtedness from banks incurred in the ordinary course of business pursuant to a facility required in order to comply with, or otherwise falling within, paragraph 25 (2) of the Lloyd's Brokers By-law (No. 5 of 1988) (or any other by-law or regulation issued by Lloyd's from time to time with which the relevant company is required to comply); and (v) any guarantee facility entered into in the ordinary course of business and consistent with industry custom provided in relation to employees of Willis Corroon Group or any Restricted Subsidiary who are Lloyd's names. 131 For purposes of determining compliance with this covenant, in the event that an item of Indebtedness meets the criteria of more than one of the categories of permitted Indebtedness described in clauses (a) through (v) above or is entitled to be incurred pursuant to the first paragraph of this covenant, Willis Corroon Group shall, in its sole discretion, classify such item of Indebtedness in any manner that complies with this covenant and such item of Indebtedness will be treated as having been incurred pursuant to only one of such clauses or pursuant to the first paragraph hereof except as otherwise set forth in clause (m). Accrual of interest, the accretion of accreted value and the payment of interest in the form of additional Indebtedness will not be deemed to be an incurrence of Indebtedness for purposes of this covenant. For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term debt, or first committed, in the case of revolving credit debt; PROVIDED that (x) the U.S. dollar-equivalent principal amount of any such Indebtedness outstanding or committed on the Issuance Date shall be calculated based on the relevant currency exchange rate in effect on September 30, 1998, and (y) if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable U.S. dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such Refinancing, such U.S. dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced. The principal amount of any Indebtedness incurred to refinance other Indebtedness, if incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such respective Indebtedness is denominated that is in effect on the date of such refinancing. LIENS. The Indenture provides that Willis Corroon Group will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly create, incur, assume or suffer to exist any Lien that secures obligations under any Senior Subordinated Indebtedness or Subordinated Indebtedness on any asset or property of Willis Corroon Group or such Restricted Subsidiary, or any income or profits therefrom, or assign or convey any right to receive income therefrom, unless the Notes are equally and ratably secured (or senior to, in the event the Lien relates to Subordinated Indebtedness) with the obligations so secured or until such time as such obligations are no longer secured by a Lien. The Indenture provides that no Guarantor will directly or indirectly create, incur, assume or suffer to exist any Lien that secures obligations under any Senior Subordinated Indebtedness or Subordinated Indebtedness of such Guarantor on any asset or property of such Guarantor or any income or profits therefrom, or assign or convey any right to receive income therefrom, unless the Guarantee of such Guarantor is equally and ratably secured (or senior to, in the event the Lien relates to Subordinated Indebtedness) with the obligations so secured or until such time as such obligations are no longer secured by a Lien. MERGER, CONSOLIDATION OR SALE OF ALL OR SUBSTANTIALLY ALL ASSETS. The Indenture provides that neither Willis Corroon Group nor the Issuer may consolidate or merge with or into or wind up into (whether or not Willis Corroon Group or the Issuer, as the case may be, is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to any Person unless (i) Willis Corroon Group or the Issuer, as the case may be, is the surviving corporation or the Person formed by or surviving any such consolidation or merger (if other 132 than Willis Corroon Group or the Issuer, as the case may be) or to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made is a corporation organized or existing under the laws of (A) in the case of Willis Corroon Group, the United Kingdom or the United States, any state thereof, the District of Columbia, or any territory thereof or (B) in the case of the Issuer, the United States, any state thereof, the District of Columbia, or any territory thereof (the Company, the Issuer or such Person, as the case may be, being herein called the "SUCCESSOR COMPANY"); (ii) the Successor Company (if other than Willis Corroon Group or the Issuer) expressly assumes all the obligations of Willis Corroon Group or the Issuer, as the case may be, under the Indenture and the Notes pursuant to a supplemental indenture or other documents or instruments in form reasonably satisfactory to the Trustee; (iii) immediately after such transaction no Default or Event of Default exists; (iv) immediately after giving pro forma effect to such transaction, as if such transaction had occurred at the beginning of the applicable four-quarter period, (A) the Successor Company would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first sentence of the covenant described under "--Limitations on Incurrence of Indebtedness and Issuance of Disqualified Stock" or (B) the Fixed Charge Coverage Ratio for the Successor Company and the Restricted Subsidiaries would be greater than such Ratio for Willis Corroon Group and the Restricted Subsidiaries immediately prior to such transaction; (v) each Guarantor, unless it is the other party to the transactions described above, in which case clause (ii) of the next paragraph shall apply, shall have by supplemental indenture confirmed that its Guarantee shall apply to such Person's obligations under the Indenture and the Notes; and (vi) Willis Corroon Group or the Issuer, as the case may be, shall have delivered to the Trustee an Officers' Certificate and an opinion of counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the Indenture. The Successor Company will succeed to, and be substituted for, Willis Corroon Group or the Issuer, as the case may be, under the Indenture and the Notes. Notwithstanding the foregoing clause (iv), (a) any Restricted Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to Willis Corroon Group or the Issuer and (b) Willis Corroon Group or the Issuer may merge with an Affiliate incorporated solely for the purpose of reincorporating Willis Corroon Group or the Issuer in another State of the United States so long as the amount of Indebtedness of Willis Corroon Group and the Restricted Subsidiaries is not increased thereby. Subject to certain limitations described in the Indenture governing release of a Guarantee upon the sale or disposition of a Guarantor, each Guarantor other than Willis Corroon Group will not, and Willis Corroon Group will not permit any other Guarantor to, consolidate or merge with or into or wind up 133 into (whether or not such Guarantor is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions to, any Person unless (i) such Guarantor is the surviving corporation or the Person formed by or surviving any such consolidation or merger (if other than such Guarantor) or to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made is a corporation organized or existing under the laws of (A) the United Kingdom or (B) the United States, any state thereof, the District of Columbia, or any territory thereof (such Guarantor or such Person, as the case may be, being herein called the "SUCCESSOR GUARANTOR"); (ii) the Successor Guarantor (if other than such Guarantor) expressly assumes all the obligations of such Guarantor under the Indenture and such Guarantor's Guarantee pursuant to a supplemental indenture or other documents or instruments in form reasonably satisfactory to the Trustee; (iii) immediately after such transaction no Default or Event of Default exists; and (iv) Willis Corroon Group shall have delivered to the Trustee an Officers' Certificate and an opinion of counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the Indenture. Subject to certain limitations described in the Indenture, the Successor Guarantor will succeed to, and be substituted for, such Guarantor under the Indenture and such Guarantor's Guarantee. Notwithstanding the foregoing, any Guarantor may merge into or transfer all or part of its properties and assets to another Guarantor. TRANSACTIONS WITH AFFILIATES. The Indenture provides that Willis Corroon Group will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of Willis Corroon Group (each of the foregoing, an "AFFILIATE TRANSACTION") involving aggregate payments or consideration in excess of $5.0 million, unless (a) such Affiliate Transaction is on terms that are not materially less favorable to Willis Corroon Group or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by Willis Corroon Group or such Restricted Subsidiary with an unrelated Person and (b) Willis Corroon Group delivers to the Trustee with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, a resolution adopted by the majority of the Board of Directors approving such Affiliate Transaction and set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with clause (a) above. The foregoing provisions will not apply to the following: 134 (i) transactions between or among Willis Corroon Group and/or any of its Restricted Subsidiaries; (ii) Restricted Payments permitted by the provisions of the Indenture described above under the covenant "--Limitation on Restricted Payments"; (iii) the payment of customary annual management, consulting, monitoring and advisory fees and related expenses to Kohlberg Kravis Roberts & Co. L.P. and its Affiliates; (iv) the payment of reasonable and customary fees paid to, and indemnity provided on behalf of, officers, directors, employees or consultants of Willis Corroon Group, any of its direct or indirect parent corporations or any Restricted Subsidiary; (v) payments by Willis Corroon Group or any of its Restricted Subsidiaries to KKR and its Affiliates made for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including, without limitation, in connection with acquisitions or divestitures which payments are approved by a majority of the Board of Directors of Willis Corroon Group in good faith; (vi) transactions in which Willis Corroon Group or any of its Restricted Subsidiaries, as the case may be, delivers to the Trustee a letter from an Independent Financial Advisor stating that such transaction is fair to Willis Corroon Group or such Restricted Subsidiary from a financial point of view or meets the requirements of clause (a) of the preceding paragraph; (vii) payments or loans to employees or consultants of Willis Corroon Group, any of its direct or indirect parent corporations or any Restricted Subsidiary which are approved by a majority of the Board of Directors of Willis Corroon Group in good faith; (viii) any agreement as in effect as of the Closing Date (including, without limitation, each of the agreements entered into in connection with the Transactions) or any amendment thereto (so long as any such amendment is not disadvantageous to the Holders in any material respect) or any transaction contemplated thereby; (ix) the existence of, or the performance by Willis Corroon Group or any of its Restricted Subsidiaries of its obligations under the terms of, any stockholders agreement (including any registration rights agreement or purchase agreement related thereto) to which it is a party as of the Closing Date and any similar agreements which it may enter into thereafter; PROVIDED, HOWEVER, that the existence of, or the performance by Willis Corroon Group or any of its Restricted Subsidiaries of obligations under any future amendment to any such existing agreement or under any similar agreement entered into after the Closing Date shall only be permitted by this clause (ix) to the extent that the terms of any such amendment or new agreement are not otherwise disadvantageous to the Holders in any material respect; (x) the Transactions and the payment of all fees and expenses related to the Transactions; (xi) transactions with customers, clients, suppliers, or purchasers or sellers of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of the Indenture which are fair to Willis Corroon Group or its Restricted Subsidiaries, in the reasonable determination of the Board of Directors of Willis 135 Corroon Group or the senior management thereof, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party; (xii) the issuance of Equity Interests (other than Disqualified Stock) of Willis Corroon Group or the Issuer to any Permitted Holder; (xiii) any transaction between Willis Corroon Group or any Restricted Subsidiary and any Associate, including any transaction pursuant to which an Associate becomes a Restricted Subsidiary; and (xiv) sales of accounts receivable, or participations therein, in connection with any Receivables Facility. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES. The Indenture provides that Willis Corroon Group will not, and will not permit any of its Restricted Subsidiaries (other than the Issuer) to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or consensual restriction on the ability of any such Restricted Subsidiary to: (a) (i) pay dividends or make any other distributions to Willis Corroon Group or any of its Restricted Subsidiaries (1) on its Capital Stock or (2) with respect to any other interest or participation in, or measured by, its profits or (ii) pay any Indebtedness owed to Willis Corroon Group or any of its Restricted Subsidiaries; (b) make loans or advances to Willis Corroon Group or any of its Restricted Subsidiaries; or (c) sell, lease or transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries, except (in each case) for such encumbrances or restrictions existing under or by reason of: (1) contractual encumbrances or restrictions in effect on the Closing Date, including, without limitation, pursuant to Existing Indebtedness or the Senior Credit Facilities and their related documentation; (2) the Indenture and the Notes; (3) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the nature discussed in clause (c) above on the property so acquired; (4) applicable law or any applicable rule, regulation or order; (5) any agreement or other instrument of a Person acquired by Willis Corroon Group or any Restricted Subsidiary in existence at the time of such acquisition (but not created in contemplation thereof), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired; (6) contracts for the sale of assets, including, without limitation customary restrictions with respect to a Subsidiary pursuant to an agreement that 136 has been entered into for the sale or disposition of all or substantially all of the Capital Stock or assets of such Subsidiary; (7) secured Indebtedness otherwise permitted to be incurred pursuant to the covenants described under "--Limitations on Incurrence of Indebtedness and Issuance of Disqualified Stock" and "--Liens" that limit the right of the debtor to dispose of the assets securing such Indebtedness; (8) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business; (9) other Indebtedness or Disqualified Stock of Restricted Subsidiaries permitted to be incurred subsequent to the Closing Date pursuant to the provisions of the covenant described under "--Limitations on Incurrence of Indebtedness and Issuance of Disqualified Stock"; (10) customary provisions in joint venture agreements and other similar agreements entered into in the ordinary course of business; (11) customary provisions contained in leases and other agreements entered into in the ordinary course of business; (12) customary restrictions on fiduciary cash held by Willis Corroon Group's Subsidiaries; (13) any encumbrances or restrictions of the type referred to in clauses (a), (b) and (c) above imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (1) through (12) above, PROVIDED that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of Willis Corroon Group's Board of Directors, no more restrictive with respect to such dividend and other payment restrictions than those contained in the dividend or other payment restrictions prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing; or (14) restrictions created in connection with any Receivables Facility that, in the good faith determination of the Board of Directors of Willis Corroon Group or the Issuer, as the case may be, are necessary or advisable to effect such Receivables Facility. LIMITATION ON GUARANTEES OF INDEBTEDNESS BY RESTRICTED SUBSIDIARIES. (a) The Indenture provides that Willis Corroon Group will not permit any Domestic Subsidiary or U.K. Subsidiary of Willis Corroon Group that is not a Subsidiary of the Issuer or any Domestic Subsidiary of the Issuer (in each case, other than any such Restricted Subsidiary created in connection with a Receivables Facility) to guarantee the payment of any Indebtedness of Willis Corroon Group or the Issuer unless (A) such Restricted Subsidiary simultaneously executes and delivers a supplemental indenture to the Indenture providing for a Guarantee of payment of the Notes 137 by such Restricted Subsidiary except that with respect to a guarantee of Indebtedness of Willis Corroon Group or the Issuer (1) if the Notes are subordinated in right of payment to such Indebtedness, the Guarantee under the supplemental indenture shall be subordinated to such Restricted Subsidiary's guarantee with respect to such Indebtedness substantially to the same extent as the Notes are subordinated to such Indebtedness under the Indenture and (2) if such Indebtedness is by its express terms subordinated in right of payment to the Notes, any such guarantee of such Restricted Subsidiary with respect to such Indebtedness shall be subordinated in right of payment to such Restricted Subsidiary's Guarantee with respect to the Notes substantially to the same extent as such Indebtedness is subordinated to the Notes; (B) such Restricted Subsidiary waives and will not in any manner whatsoever claim or take the benefit or advantage of, any rights of reimbursement, indemnity or subrogation or any other rights against Willis Corroon Group or any other Restricted Subsidiary as a result of any payment by such Restricted Subsidiary under its Guarantee; and (C) such Restricted Subsidiary shall deliver to the Trustee an opinion of counsel to the effect that (1) such Guarantee of the Notes has been duly executed and authorized and (2) such Guarantee of the Notes constitutes a valid, binding and enforceable obligation of such Restricted Subsidiary, except insofar as enforcement thereof may be limited by bankruptcy, insolvency or similar laws (including, without limitation, all laws relating to fraudulent transfers) and except insofar as enforcement thereof is subject to general principles of equity; PROVIDED that this paragraph (a) shall not be applicable to any guarantee of any Restricted Subsidiary (x) that (1) existed at the time such Person became a Restricted Subsidiary and (2) was not incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary or (y) that guarantees the payment of Obligations of Willis Corroon Group, the Issuer or any Restricted Subsidiary under the Senior Credit Facilities or any other Senior Indebtedness and any refunding, refinancing or replacement thereof, in whole or in part, PROVIDED that such refunding, refinancing or replacement thereof constitutes Senior Indebtedness and PROVIDED FURTHER that any such Senior Indebtedness and any refunding, refinancing or replacement thereof is not incurred pursuant to a registered offering of securities under the Securities Act or a private placement of securities (including under Rule 144A) pursuant to an exemption from the registration requirements of the Securities Act, which private placement provides for registration rights under the Securities Act. (b) Notwithstanding the foregoing and the other provisions of the Indenture, any Guarantee by a Restricted Subsidiary of the Notes shall provide by its terms that it shall be automatically and unconditionally released and discharged upon 138 (i) any sale, exchange or transfer, to any Person not an Affiliate of Willis Corroon Group, of all of Willis Corroon Group's or the Issuer's Capital Stock in, or all or substantially all the assets of, such Restricted Subsidiary (which sale, exchange or transfer is not prohibited by the Indenture) or (ii) the release or discharge of the guarantee by such Restricted Subsidiary that is a Subsidiary of the Issuer which resulted in the creation of such Guarantee, except a discharge or release by or as a result of payment under such guarantee. LIMITATION ON OTHER SENIOR SUBORDINATED INDEBTEDNESS. The Indenture provides that Willis Corroon Group will not, and will not permit the Issuer or any other Guarantor to, directly or indirectly, incur any Indebtedness (including Acquired Indebtedness) that is subordinate in right of payment to any Indebtedness of Willis Corroon Group, the Issuer or any Guarantor, as the case may be, unless such Indebtedness is either (a) equal in right of payment with the Notes or Willis Corroon Group's or such other Guarantor's Guarantee, as the case may be, or (b) subordinate in right of payment to the Notes, or Willis Corroon Group's or such other Guarantor's Guarantee, as the case may be. REPORTS AND OTHER INFORMATION. Notwithstanding that neither Willis Corroon Group nor the Issuer may be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or otherwise report on an annual and quarterly basis on forms provided for such annual and quarterly reporting pursuant to rules and regulations promulgated by the Securities and Exchange Commission, the Indenture will require Willis Corroon Group to file with the Commission (and make available to the Trustee and Holders (without exhibits), without cost to each Holder, within 15 days after it files them with the Commission), (a) within 90 days after the end of each fiscal year, annual reports on Form 20-F (or any successor or comparable form) containing the information required to be contained therein (or required in such successor or comparable form); (b) within 45 days after the end of each of the first three fiscal quarters of each fiscal year, reports on Form 6-K, which will contain all quarterly information that would be required to be contained in Form 10-Q (or any successor or comparable form); (c) promptly from time to time after the occurrence of an event required to be therein reported, such other reports on Form 6-K (or any successor or comparable form); and (d) any other information, documents and other reports which Willis Corroon Group would be required to file with the Commission if it were subject to Section 13 or 15(d) of the Exchange Act; PROVIDED that all such information may be prepared in accordance with GAAP but shall contain a reconciliation to United States generally accepted accounting principles and PROVIDED, FURTHER, that Willis Corroon Group shall not be so obligated to file such reports with the Commission if the Commission does not permit such filing, in which event Willis Corroon Group will make available such information to prospective purchasers of Notes, in addition to providing such information to the Trustee and the Holders, in each case within 15 days after the time Willis Corroon Group would be required to file such information with the Commission, if it were subject to Sections 13 or 15(d) of the Exchange Act. 139 Notwithstanding the foregoing, such requirements shall be deemed satisfied prior to the commencement of the Exchange Offer or the effectiveness of the Shelf Registration Statement by the filing with the Commission of the Exchange Offer Registration Statement and/or Shelf Registration Statement, and any amendments thereto, with such financial information that satisfies Regulation S-X of the Securities Act, PROVIDED, HOWEVER, that in order for the provisions of clause (a) above to be deemed satisfied with respect to 1998, such Exchange Offer Registration Statement or Shelf Registration Statement must include audited financial statements for the year 1998. EVENTS OF DEFAULT AND REMEDIES The following events constitute Events of Default under the Indenture: (i) default in payment when due and payable, upon redemption, acceleration or otherwise, of principal of, or premium, if any, on the Notes whether or not such payment shall be prohibited by the subordination provisions relating to the Notes; (ii) default for 30 days or more in the payment when due of interest on or with respect to the Notes whether or not such payment shall be prohibited by the subordination provisions relating to the Notes; (iii) failure by Willis Corroon Group, the Issuer or any Guarantor for 30 days after receipt of written notice given by the Trustee or the holders of at least 30% in principal amount of the Notes then outstanding to comply with any of its other agreements in the Indenture or the Notes; (iv) default under any mortgage, indenture or instrument under which there is issued or by which there is secured or evidenced any Indebtedness for money borrowed by Willis Corroon Group or any of its Restricted Subsidiaries or the payment of which is guaranteed by Willis Corroon Group or any of its Restricted Subsidiaries (other than Indebtedness owed to Willis Corroon Group or a Restricted Subsidiary and other than any Group Intercompany Note, PROVIDED that such Group Intercompany Note is held by Trinity at such time), whether such Indebtedness or guarantee now exists or is created after the issuance of the Outstanding Notes, if both (A) such default either (1) results from the failure to pay any such Indebtedness at its stated final maturity (after giving effect to any applicable grace periods) or (2) relates to an obligation other than the obligation to pay principal of any such Indebtedness at its stated final maturity and results in the holder or holders of such Indebtedness causing such Indebtedness to become due prior to its stated maturity and (B) the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness in default for failure to pay principal at stated final maturity (after giving effect to any applicable grace periods), or the maturity of which has been so accelerated, aggregate $25 million or more at any one time outstanding; (v) failure by Willis Corroon Group, the Issuer or any of its Significant Subsidiaries to pay final judgments aggregating in excess of $25 million, which final judgments remain unpaid, undischarged and unstayed for a period of more than 60 days after such judgment becomes final, and in the event such judgment is covered by insurance, an enforcement 140 proceeding has been commenced by any creditor upon such judgment or decree which is not promptly stayed; (vi) certain events of bankruptcy or insolvency with respect to Willis Corroon Group, the Issuer or any of its Significant Subsidiaries; or (vii) the Guarantee of any Significant Subsidiary shall for any reason cease to be in full force and effect or be declared null and void or any responsible officer of Willis Corroon Group or any Guarantor that is a Significant Subsidiary denies that it has any further liability under its Guarantee or gives notice to such effect (other than by reason of the termination of the Indenture or the release of any such Guarantee in accordance with the Indenture). If any Event of Default (other than of a type specified in clause (vi) above) occurs and is continuing under the Indenture, the Trustee or the Holders of at least 30% in principal amount of the then outstanding Notes may declare the principal, premium, if any, interest and any other monetary obligations on all the then outstanding Notes to be due and payable immediately; PROVIDED, HOWEVER, that, so long as any Indebtedness permitted to be incurred under the Indenture as part of the Senior Credit Facilities shall be outstanding, no such acceleration shall be effective until the earlier of (1) acceleration of any such Indebtedness under the Senior Credit Facilities or (2) five business days after the giving of written notice to the Issuer and the administrative agent under the Senior Credit Facilities of such acceleration. Upon the effectiveness of such declaration, such principal and interest will be due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default arising under clause (vi) of the first paragraph of this section, all outstanding Notes will become due and payable without further action or notice. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Indenture provides that the Trustee may withhold from Holders notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal, premium, if any, or interest) if it determines that withholding notice is in their interest. In addition, the Trustee shall have no obligation to accelerate the Notes if in the best judgment of the Trustee acceleration is not in the best interest of the Holders of such Notes. The Indenture provides that the Holders of a majority in aggregate principal amount of the then outstanding Notes issued thereunder by notice to the Trustee may on behalf of the Holders of all of such Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest on, premium, if any, or the principal of any such Note held by a non-consenting Holder. In the event of any Event of Default specified in clause (iv) above, such Event of Default and all consequences thereof (including without limitation any acceleration or resulting payment default) shall be annulled, waived and rescinded, automatically and without any action by the Trustee or the Holders, if within 20 days after such Event of Default arose (x) the Indebtedness or guarantee that is the basis for such Event of Default has been discharged, or (y) the holders thereof have rescinded or waived the acceleration, notice or action (as the case may be) giving rise to such Event of Default, or (z) if the default that is the basis for such Event of Default has been cured. 141 The Indenture provides that the Issuer is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Issuer is required, within five Business Days, upon becoming aware of any Default or Event of Default or any default under any document, instrument or agreement representing Indebtedness of the Issuer or any Guarantor, to deliver to the Trustee a statement specifying such Default or Event of Default. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS No director, officer, employee, incorporator or stockholder of the Issuer or any Guarantor, shall have any liability for any obligations of the Issuer or the Guarantors under the Notes, the Guarantees or the Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. LEGAL DEFEASANCE AND COVENANT DEFEASANCE The obligations of the Issuer and the Guarantors under the Indenture will terminate (other than certain obligations) and will be released upon payment in full of all of the Notes. The Issuer may, at its option and at any time, elect to have all of its obligations discharged with respect to the outstanding Notes and have each Guarantor's obligation discharged with respect to its Guarantee ("LEGAL DEFEASANCE") and cure all then existing Events of Default except for (i) the rights of Holders of outstanding Notes to receive payments in respect of the principal of, premium, if any, and interest on such Notes when such payments are due solely out of the trust created pursuant to the Indenture, (ii) the Issuer's obligations with respect to Notes concerning issuing temporary Notes, registration of such Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust, (iii) the rights, powers, trusts, duties and immunities of the Trustee, and the Issuer's obligations in connection therewith and (iv) the Legal Defeasance provisions of the Indenture. In addition, the Issuer may, at its option and at any time, elect to have the obligations of the Issuer and each Guarantor released with respect to certain covenants that are described in the Indenture ("COVENANT DEFEASANCE") and thereafter any omission to comply with such obligations shall not constitute a Default or Event of Default with respect to the Notes. In the event Covenant Defeasance occurs, certain events (not including non-payment on other indebtedness, bankruptcy, receivership, rehabilitation and insolvency events) described under "Events of Default" will no longer constitute an Event of Default with respect to the Notes. In order to exercise either Legal Defeasance or Covenant Defeasance with respect to the Notes: (i) the Issuer must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination 142 thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest due on the outstanding Notes on the stated maturity date or on the applicable redemption date, as the case may be, of such principal, premium, if any, or interest on the outstanding Notes; (ii) in the case of Legal Defeasance, the Issuer shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exclusions, (A) the Issuer has received from, or there has been published by, the United States Internal Revenue Service a ruling or (B) since the issuance of the outstanding Notes, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion of counsel in the United States shall confirm that, subject to customary assumptions and exclusions, the Holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (iii) in the case of Covenant Defeasance, the Issuer shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exclusions, the Holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to such tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (iv) no Default or Event of Default shall have occurred and be continuing on the date of such deposit or, with respect to certain bankruptcy or insolvency Events of Default, on the 91st day after such date of deposit; (v) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, the Senior Credit Facilities or any other material agreement or instrument (other than the Indenture) to which, the Issuer or any Guarantor is a party or by which the Issuer or any Guarantor is bound; (vi) the Issuer shall have delivered to the Trustee an opinion of counsel to the effect that, as of the date of such opinion and subject to customary assumptions and exclusions following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally under any applicable U.S. federal or state law, and that the Trustee has a perfected security interest in such trust funds for the ratable benefit of the Holders; (vii) the Issuer shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Issuer with the intent of defeating, hindering, delaying or defrauding any creditors of the Issuer or any Guarantor or others; and (viii) the Issuer shall have delivered to the Trustee an Officers' Certificate and an opinion of counsel in the United States (which opinion of counsel may be subject to 143 customary assumptions and exclusions) each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance, as the case may be, have been complied with. SATISFACTION AND DISCHARGE The Indenture will be discharged and will cease to be of further effect as to all Notes issued thereunder, when either (a) all such Notes theretofore authenticated and delivered (except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust) have been delivered to the Trustee for cancellation; or (b) (i) all such Notes not theretofore delivered to such Trustee for cancellation have become due and payable by reason of the making of a notice of redemption or otherwise or will become due and payable within one year and the Issuer or any Guarantor has irrevocably deposited or caused to be deposited with such Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest to pay and discharge the entire indebtedness on such Notes not theretofore delivered to the Trustee for cancellation for principal, premium, if any, and accrued interest to the date of maturity or redemption; (ii) no Default or Event of Default with respect to the Indenture or the Notes shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Issuer or any Guarantor is a party or by which the Issuer or any Guarantor is bound; (iii) the Issuer or any Guarantor has paid or caused to be paid all sums payable by it under such Indenture; and (iv) the Issuer has delivered irrevocable instructions to the Trustee under such Indenture to apply the deposited money toward the payment of such Notes at maturity or the redemption date, as the case may be. In addition, the Issuer must deliver an Officers' Certificate and an opinion of counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied. WITHHOLDING TAXES All payments made by Willis Corroon Group with respect to its Guarantee will be made without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature (collectively, "Taxes") imposed or levied by or on behalf of the United Kingdom or any political subdivision thereof or any authority having power to tax therein (each a "U.K. Tax Authority"), unless the withholding or deduction of such Taxes is then required by law. If any deduction or withholding for, or on account of, any Taxes of any U.K. Tax Authority, shall at any time be required on any payments made by Willis Corroon Group with respect to its Guarantee, Willis Corroon Group will pay such additional amounts (the "Additional Amounts") as may be necessary in order that the net amounts received in respect of such payments by the Holders of the Notes or the 144 Trustee, as the case may be, after such withholding or deduction, equal the respective amounts which would have been received in respect of such payments in the absence of such withholding or deduction, except that no such Additional Amounts will be payable with respect to: (i) any payments on a Note held by or on behalf of a Holder or beneficial owner who is liable for such Taxes in respect of such Note by reason of the Holder or beneficial owner having some connection with the United Kingdom (including being a citizen or resident or national of, or carrying on a business or maintaining a permanent establishment in, or being physically present in, the United Kingdom) other than by the mere holding of such Note or enforcement of rights thereunder or the receipt of payments in respect thereof; (ii) any Taxes that are imposed or withheld by reason of the failure of the Holder or beneficial owner of the Note to comply with any request by Willis Corroon Group to provide information concerning the nationality, residence or identity of such Holder or beneficial owner or to make any declaration or similar claim or satisfy any information or reporting requirement, which is required or imposed by a statute, treaty, regulation or administrative practice of the taxing jurisdiction as a precondition to exemption from all or part of such Taxes; and (iii) any Note presented for payment (where presentation is required) more than 30 days after the relevant payment is first made available for payment to the Holder. Such Additional Amounts will also not be payable where, had the beneficial owner of the Note been the Holder of the Note, he would not have been entitled to payment of Additional Amounts by reason of clauses (i) to (iii) inclusive, above. References to principal, interest, premium or other amounts payable in respect of Willis Corroon Group's Guarantee shall be deemed also to refer to any Additional Amounts which may be payable. Willis Corroon Group will also (i) make such withholding or deduction and (ii) remit the full amount deducted or withheld to the relevant authority in accordance with applicable law. Upon request, Willis Corroon Group will provide the Trustee with documentation satisfactory to the Trustee evidencing the payment of Additional Amounts. Copies of such documentation will be made available to the Holders upon request. TRANSFER AND EXCHANGE A Holder may transfer or exchange Notes in accordance with the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Issuer may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Issuer is not required to transfer or exchange any Note selected for redemption. Also, the Issuer is not required to transfer or exchange any Note for a period of 15 days before a selection of Notes to be redeemed. 145 If Certificated Notes are issued, the Issuer will appoint and maintain a transfer agent (the "Transfer Agent") in Luxembourg for so long as the Notes are listed on the Luxembourg Stock Exchange, at which office a holder of a Certificated Note will be able to surrender its Note for registration of transfer. The Issuer will be able to at any time terminate the appointment of a Transfer Agent and appoint additional or other Transfer Agents. Notice of such termination or appointment and of any change in the specified office of a Transfer Agent will be provided in the manner described below in "--Notices." The registered Holder of a Note will be treated as the owner of the Note for all purposes. AMENDMENT, SUPPLEMENT AND WAIVER Except as provided in the next two succeeding paragraphs, the Indenture, any Guarantee and the Notes issued thereunder may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), and any existing default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes (including consents obtained in connection with a purchase of or tender offer or exchange offer for Notes). The Indenture provides that without the consent of each Holder affected, an amendment or waiver may not (with respect to any Notes held by a non-consenting Holder): (i) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver, (ii) reduce the principal of or change the fixed maturity of any such Note or alter or waive the provisions with respect to the redemption of the Notes (other than provisions relating to the covenants described above under the caption "--Repurchase at the Option of Holders"), (iii) reduce the rate of or change the time for payment of interest on any Note, (iv) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of such Notes and a waiver of the payment default that resulted from such acceleration), or in respect of a covenant or provision contained in the Indenture or any Guarantee which cannot be amended or modified without the consent of all Holders, (v) make any Note payable in money other than that stated in such Notes, (vi) make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of Holders to receive payments of principal of or premium, if any, or interest on the Notes, (vii) make any change in the foregoing amendment and waiver provisions, (viii) impair the right of any Holder to receive payment of principal of, or interest on such Holder's Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder's Notes or 146 (ix) make any change in the subordination provisions of the Indenture that would adversely affect the Holders. The Indenture provides that, notwithstanding the foregoing, without the consent of any Holder, the Issuer, any Guarantor (with respect to a Guarantee or the Indenture to which it is a party) and the Trustee may amend or supplement the Indenture, any Guarantee or the Notes: (i) to cure any ambiguity, omission, defect or inconsistency; (ii) to provide for uncertificated Notes in addition to or in place of certificated Notes; (iii) to comply with the covenant relating to mergers, consolidations and sales of assets; (iv) to provide for the assumption of the Issuer's or any Guarantor's obligations to Holders; (v) to make any change that would provide any additional rights or benefits to the Holders or that does not adversely affect the legal rights under the Indenture of any such Holder; (vi) to add covenants for the benefit of the Holders or to surrender any right or power conferred upon the Issuer; (vii) to comply with requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act; (viii) to evidence and provide for the acceptance and appointment under the Indenture of a successor Trustee pursuant to the requirements thereof; (ix) to provide for the issuance of Exchange Notes or private exchange notes (which are identical to Exchange Notes except that they are not freely transferrable; (x) to add a Guarantor under the Indenture; or (xi) to provide that Trinity be added as a Guarantor (along with Willis Corroon Group and Willis Corroon Partners). The consent of the Holders is not necessary under the Indenture to approve the particular form of any proposed amendment. It is sufficient if such consent approves the substance of the proposed amendment. NOTICES Notices regarding the Notes will be (i) published in a leading newspaper having circulation in New York (which is expected to be the WALL STREET JOURNAL) (and, so long as the Notes, are listed on the Luxembourg Stock Exchange and the rules of such stock exchange shall so require, a newspaper having a general circulation in Luxembourg (which is expected to be the LUXEMBURGER WORT)) or (ii) in the case of Certificated Notes, mailed to Holders by first-class mail at their respective addresses as they appear on the registration books of the Registrar (and, so long as the Notes are listed on the Luxembourg Stock Exchange and the rules of such stock exchange shall so require, published in a newspaper having a general circulation in Luxembourg (which is expected to be the LUXEMBURGER WORT)). Notices given by publication will be deemed given on the first date on which publication is made and notices given by first-class mail, postage prepaid, will be deemed given five calendar days after mailing. 147 CONCERNING THE TRUSTEE The Indenture contains certain limitations on the rights of the Trustee, should it become a creditor of the Issuer, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the Commission for permission to continue or resign. The Indenture provides that the Holders of a majority in principal amount of the outstanding Notes issued thereunder will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. The Indenture provides that in case an Event of Default shall occur (which shall not be cured), the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent person in the conduct of his own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any Holder of such Notes, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. GOVERNING LAW The Indenture, the Notes and the Guarantees will be, subject to certain exceptions, governed by and construed in accordance with the internal laws of the State of New York, without regard to the choice of law rules thereof. CERTAIN DEFINITIONS Set forth below are certain defined terms used in the Indenture. Reference is made to the Indenture for a full disclosure of all such terms, as well as any other capitalized terms used herein for which no definition is provided. For purposes of the Indenture, unless otherwise specifically indicated, the term "consolidated" with respect to any Person refers to such Person consolidated with its Restricted Subsidiaries, and excludes from such consolidation any Unrestricted Subsidiary as if such Unrestricted Subsidiary were not an Affiliate of such Person. "ACQUIRED INDEBTEDNESS" means, with respect to any specified Person, (i) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Restricted Subsidiary of such specified Person, including, without limitation, Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Restricted Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "AFFILIATE" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. 148 "ASSET SALE" means (i) the sale, conveyance, transfer or other disposition (whether in a single transaction or a series of related transactions) of property or assets (including by way of a sale and leaseback) of Willis Corroon Group or any Restricted Subsidiary (each referred to in this definition as a "DISPOSITION") or (ii) the issuance or sale of Equity Interests of any Restricted Subsidiary (whether in a single transaction or a series of related transactions), in each case, other than: (a) a disposition of Cash Equivalents or Investment Grade Securities or obsolete or worn out equipment in the ordinary course of business or inventory or goods held for sale in the ordinary course of business; (b) the disposition of all or substantially all of the assets of Willis Corroon Group in a manner permitted pursuant to the provisions described above under "--Certain Covenants--Merger, Consolidation or Sale of All or Substantially All Assets" or any disposition that constitutes a Change of Control pursuant to the Indenture; (c) the making of any Restricted Payment or Permitted Investment that is permitted to be made, and is made, under the covenant described above under "--Certain Covenants--Limitation on Restricted Payments"; (d) any disposition of assets or issuance or sale of Equity Interests of any Restricted Subsidiary with an aggregate fair market value of less than $2.5 million; (e) any disposition of property or assets or issuance of securities by a Restricted Subsidiary to Willis Corroon Group or by Willis Corroon Group or a Restricted Subsidiary to a Restricted Subsidiary; (f) any exchange of like property pursuant to Section 1031 of the Internal Revenue Code of 1986 for use in a Similar Business; (g) the lease, assignment or sub-lease of any real or personal property in the ordinary course of business; (h) any financing transaction with respect to property built or acquired by Willis Corroon Group or any Restricted Subsidiary after the Closing Date, including, without limitation, sale-leasebacks and asset securitizations; (i) foreclosures on assets; (j) any sale of Equity Interests in, or Indebtedness or other securities of, an Unrestricted Subsidiary (with the exception of Investments in Unrestricted Subsidiaries acquired pursuant to clause (b)(x) of the definition of Permitted Investments); and (k) sales of accounts receivable, or participations therein, in connection with any Receivables Facility. 149 "ASSOCIATE" means any Person engaged in a Similar Business of which at least 20% but not more than 50% of the Voting Stock thereof is owned by Willis Corroon Group or any Restricted Subsidiary. "BACS FACILITY" means a facility created to make automated payments through Banks' Automated Clearance System. "CAPITAL STOCK" means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "CAPITALIZED LEASE OBLIGATION" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto) in accordance with GAAP. "CASH EQUIVALENTS" means (i) United States dollars, (ii) pounds sterling, (iii) Euro, (iv) Japanese Yen, (v) Canadian dollars, (vi) Australian dollars, (vii) securities issued or directly and fully guaranteed or insured by the United States or United Kingdom government or any agency or instrumentality thereof with maturities of 24 months or less from the date of acquisition, (viii) certificates of deposit, time deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers' acceptances with maturities not exceeding one year and overnight bank deposits, in each case with any commercial bank having capital and surplus in excess of $500.0 million, (ix) repurchase obligations for underlying securities of the types described in clauses (vii) and (viii) entered into with any financial institution meeting the qualifications specified in clause (viii) above, 150 (x) commercial paper rated A-1 or the equivalent thereof by Moody's or S&P and in each case maturing within one year after the date of acquisition, (xi) investment funds investing 95% of their assets in securities of the types described in clauses (i)-(x) above, (xii) readily marketable direct obligations issued by any state of the United States of America or any political subdivision thereof having one of the two highest rating categories obtainable from either Moody's or S&P with maturities of 24 months or less from the date of acquisition and (xiii) Indebtedness or preferred stock issued by Persons with a rating of "A" or higher from S&P or "A2" or higher from Moody's with maturities of 24 months or less from the date of acquisition. Notwithstanding the foregoing, Cash Equivalents shall include amounts denominated in currencies other than those set forth in clauses (i) through (vi) above, PROVIDED that such amounts are converted into any currency listed in clauses (i) through (vi) as promptly as practicable and in any event within ten Business Days following the receipt of such amounts. "CHANGE OF CONTROL" means the occurrence of any of the following: (i) the sale, lease or transfer, in one or a series of related transactions, of all or substantially all of the assets of Willis Corroon Group and its Subsidiaries, taken as a whole, to any Person other than a Permitted Holder; or (ii) Willis Corroon Group becomes aware of (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) the acquisition by any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act), other than the Permitted Holders, in a single transaction or in a related series of transactions, by way of merger, consolidation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision) of 50% or more of the total Voting Stock of Willis Corroon Group or any of its direct or indirect parent corporations. "CLOSING DATE" means November 19, 1998, the date on which the Subordinated Bridge Agreement was executed. "CONSOLIDATED DEPRECIATION AND AMORTIZATION EXPENSE" means with respect to any Person for any period, the total amount of depreciation and amortization expense and other noncash charges (excluding any noncash item that represents an accrual or reserve for a cash expenditure for a future period) of such Person and its Restricted Subsidiaries for such period on a consolidated basis and otherwise determined in accordance with GAAP. "CONSOLIDATED INTEREST EXPENSE" means, with respect to any Person for any period, the sum, without duplication, of: (a) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, to the extent such expense was deducted in computing Consolidated Net Income (including amortization of original issue discount, non-cash interest payments, the 151 interest component of Capitalized Lease Obligations and net payments (if any) pursuant to Hedging Obligations, excluding amortization of deferred financing fees), (b) consolidated capitalized interest of such Person and its Restricted Subsidiaries for such period, whether paid or accrued and (c) the impact of any net payments or receipts related to Trinity Hedging Obligations, PROVIDED that any reduction of interest expense related to any net amounts to be received by Trinity are actually received by Willis Corroon Group within 31 days of the end of the period during which such reduction of interest expense was recorded; PROVIDED, HOWEVER, that Receivables Fees shall be deemed not to constitute Consolidated Interest Expense. Notwithstanding anything to the contrary stated above, Consolidated Interest Expense shall not include interest expense in respect of the Group Intercompany Notes; PROVIDED, HOWEVER, that such interest expense shall be included in Consolidated Interest Expense to the extent such interest expense is actually paid and not immediately repaid to Willis Corroon Group or a Restricted Subsidiary in respect of interest on any Trinity Intercompany Notes or Interim Refinancing Indebtedness. "CONSOLIDATED NET INCOME" means, with respect to any Person for any period, the aggregate of the Net Income, of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, and otherwise determined in accordance with GAAP; PROVIDED, HOWEVER, that (i) any net after-tax exceptional items (less all fees and expenses relating thereto) shall be excluded, (ii) the Net Income for such period shall not include the cumulative effect of a change in accounting principles during such period, (iii) any net after-tax income (loss) from discontinued operations and any net after-tax gains or losses on disposal of discontinued operations shall be excluded, (iv) any net after-tax gains or losses (less all fees and expenses relating thereto) attributable to asset dispositions other than in the ordinary course of business (as determined in good faith by the Board of Directors of Willis Corroon Group) shall be excluded, (v) the Net Income for such period of any Person that is not a Subsidiary, or is an Unrestricted Subsidiary, or that is accounted for by the equity method of accounting, shall be excluded; PROVIDED that Consolidated Net Income of Willis Corroon Group shall be increased by the amount of dividends or distributions or other payments that are actually paid in cash (or to the extent converted into cash) to the referent Person or a Restricted Subsidiary thereof in respect of such period, (vi) the Net Income of any Person acquired in a pooling of interests transaction shall not be included for any period prior to the date of such acquisition, (vii) the Net Income for such period of any Restricted Subsidiary (other than the Issuer and any Guarantor) shall be excluded if the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of its Net Income is not at the date of determination wholly permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule, or governmental regulation 152 applicable to that Restricted Subsidiary or its stockholders, unless such restriction with respect to the payment of dividends or in similar distributions has been legally waived; PROVIDED that Consolidated Net Income of Willis Corroon Group shall be increased by the amount of dividends or other distributions or other payments that could have been paid in cash (or to the extent converted into cash) to the referent Person or a Restricted Subsidiary thereof in respect of such period and (viii) the after-tax impact of any net payments or receipts related to Trinity Hedging Obligations shall be included, PROVIDED that any reduction of interest expense related to any net amounts to be received by Trinity are actually received by Willis Corroon Group within 31 days of the end of the period during which such reduction of interest expense was recorded. Notwithstanding the foregoing, for the purpose of the covenant described under "Certain Covenants-- Limitation on Restricted Payments" only (other than clause (c)(iv) thereof), there shall be excluded from Consolidated Net Income any income arising from any sale or other disposition of Restricted Investments made by Willis Corroon Group and its Restricted Subsidiaries, any repurchases and redemptions of Restricted Investments from Willis Corroon Group and the Restricted Subsidiaries, any repayments of loans and advances which constitute Restricted Investments by Willis Corroon Group or any Restricted Subsidiary, any sale of the stock of an Unrestricted Subsidiary or any distribution or dividend from an Unrestricted Subsidiary, in each case only to the extent such amounts increase the amount of Restricted Payments permitted under such covenant pursuant to clause (c)(iv) thereof. Notwithstanding anything to the contrary stated above, Consolidated Net Income shall not include (x) net after-tax income (net of any interest expense in respect of Group Intercompany Notes) relating to amounts received or accrued in respect of the Trinity Intercompany Notes and loans made in respect of Interim Refinancing Indebtedness or (y) net after-tax income (or losses) relating to payments received in respect of the Trinity Intercompany Notes or Interim Refinancing Indebtedness or payments made in respect of the corresponding Group Intercompany Note that are solely the result of exchange rate fluctuations or (z) net after-tax gain or loss relating to the impact of Facility Hedging Obligations being marked-to-market. "CONSORTIUM" means Guardian Royal Exchange, Royal & Sun Alliance Insurance Group, The Chubb Corporation, The Hartford Financial Services Group, Inc., The Tokio Marine and Fire Insurance Co., Limited and Travelers Property Casualty Corp. and their respective Affiliates or any replacement insurance company investors from time to time and their respective Affiliates. "CONSORTIUM PREFERRED STOCK" means (a) preferred stock of TA II having a liquidation preference of approximately $270,000,000 issued to the Consortium in connection with the Transactions and (b) any preferred stock that (i) is issued in exchange for, or to replace or refinance, all or a portion thereof, 153 (ii) is not subject to mandatory redemption or redemption at the option of the holder thereof prior to the date that is six months later than the maturity date of the Notes and (iii) may include, at the election of TA II, (A) provisions for required cash dividends (at a rate per annum not in excess of 7 1/2%, or a higher rate if the payment of cash dividends in excess of 7 1/2% is stated in the provisions of such preferred stock to be subject to the limitations set forth in the Indenture), (B) provisions for transferability, (C) provisions for customary voting rights and/or board representation upon the occurrence of non-payment of dividends and (iv) other terms customary for public issuances of preferred stock. "CONTINGENT OBLIGATIONS" means, with respect to any Person, any obligation of such Person guaranteeing any leases, dividends or other obligations that do not constitute Indebtedness ("PRIMARY OBLIGATIONS") of any other Person (the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (A) for the purchase or payment of any such primary obligation or (B) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, or (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation against loss in respect thereof. "CONTRIBUTION AGREEMENT" means the Contribution Agreement dated as of November 19, 1998, between Trinity and Willis Corroon Group in a form previously approved by the Administrative Agent under the Subordinated Bridge Agreement. "CONVERTIBLE LOAN" means an interest-free loan made by Trinity to Willis Corroon Group in exchange for a note that is convertible at the option of Willis Corroon Group into common equity interests in Willis Corroon Group, PROVIDED that the obligations of Willis Corroon Group under such note are subordinated in right of payment to the Notes in a form previously approved by the Administrative Agent under the Subordinated Bridge Agreement including, without limitation, that no payment may be made in respect of such note prior to the date that is 91 days after the Maturity Date. "CREDIT FACILITIES" means, with respect to Willis Corroon Group and the Issuer, one or more debt facilities (including, without limitation, the Senior Credit Facilities) or commercial paper facilities with banks or other institutional lenders or indentures providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against receivables), letters of credit or other long-term 154 indebtedness, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced (including increasing the amount borrowed thereunder) in whole or in part from time to time. "DEFAULT" means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default. "DESIGNATED NONCASH CONSIDERATION" means the fair market value of noncash consideration received by Willis Corroon Group or one of its Restricted Subsidiaries in connection with an Asset Sale that is so designated as Designated Noncash Consideration pursuant to an Officers' Certificate, setting forth the basis of such valuation, executed by an executive vice president and the principal financial officer of Willis Corroon Group or the Issuer, less the amount of cash or Cash Equivalents received in connection with a subsequent sale of such Designated Noncash Consideration. "DESIGNATED PREFERRED STOCK" means preferred stock of Willis Corroon Group, any of its direct or indirect parent corporations or the Issuer (in each case other than Disqualified Stock) that is issued for cash (other than to a Restricted Subsidiary) and is so designated as Designated Preferred Stock, pursuant to an Officers' Certificate executed by an executive vice president and the principal financial officer of Willis Corroon Group or the Issuer, any of its direct or indirect parent corporations or the Issuer, as the case may be, on the issuance date thereof, the cash proceeds of which are excluded from the calculation set forth in clause (c) of the first paragraph of the "--Certain Covenants--Limitation on Restricted Payments" covenant. "DISQUALIFIED STOCK" means, with respect to any Person, any Capital Stock of such Person which, by its terms (or by the terms of any security into which it is convertible or for which it is putable or exchangeable), or upon the happening of any event, matures or is mandatorily redeemable (other than as a result of a change of control or asset sale), pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof (other than as a result of a change of control or asset sale), in whole or in part, in each case prior to the date 91 days after the earlier of the maturity date of the Notes or the date the Notes are no longer outstanding; PROVIDED, HOWEVER, that if such Capital Stock is issued to any plan for the benefit of employees of Willis Corroon Group or its Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Stock solely because it may be required to be repurchased by Willis Corroon Group or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations. "DOMESTIC SUBSIDIARY" means, with respect to any Person, any Restricted Subsidiary of such Person other than a Foreign Subsidiary. "EBITDA" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus (a) provision for taxes based on income or profits of such Person for such period deducted in computing Consolidated Net Income, plus (b) Consolidated Interest Expense of such Person for such period paid by such Person or any of its Restricted Subsidiaries during such period, in each case to the extent the same was deducted in calculating such Consolidated Net Income, plus (c) Consolidated Depreciation and Amortization Expense of such Person for such period to the extent such depreciation and amortization were deducted in computing Consolidated Net Income, plus 155 (d) any expenses or charges related to any Equity Offering, Permitted Investment, acquisition (including amounts paid in connection with the acquisition or retention of one or more individuals comprising teams engaged in a Similar Business, PROVIDED that such payments are made at the time of such acquisition and are consistent with the customary practice in the industry at the time of such acquisition), recapitalization or Indebtedness permitted to be incurred by the Indenture (whether or not successful) (including such fees, expenses or charges related to the Transactions) and deducted in such period in computing Consolidated Net Income, plus (e) the amount of any restructuring charge deducted in such period in computing Consolidated Net Income (including any one-time costs incurred in connection with acquisitions after the Closing Date), plus (f) without duplication, any non-recurring charges relating to the Lloyd's Reconstruction and Renewal Plan, plus (g) without duplication, any other non-cash charges reducing Consolidated Net Income for such period (excluding any such charge that represents an accrual or reserve for a cash expenditure for a future period), plus (h) the amount of any minority interest expense deducted in calculating Consolidated Net Income, less, without duplication (i) non-cash items increasing Consolidated Net Income of such Person for such period (excluding any items which represent the reversal of any accrual of, or cash reserve for, anticipated cash charges in any prior period). "EMU" means economic and monetary union as contemplated in the Treaty on European Union. "EQUITY INTERESTS" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "EQUITY OFFERING" means any public or private sale of common stock or preferred stock of Willis Corroon Group, any of its direct or indirect parent corporations or the Issuer (excluding Disqualified Stock), other than (i) public offerings with respect to Willis Corroon Group's Common Stock registered on Form S-8 and (ii) any such public or private sale that constitutes an Excluded Contribution. "EURO" means the single currency of participating member states of the EMU. "EXCHANGE ACT" means the Securities Exchange Act of 1934 and the rules and regulations of the Commission promulgated thereunder. "EXCLUDED CONTRIBUTION" means net cash proceeds, marketable securities or Qualified Proceeds, in each case, received by Willis Corroon Group or the Issuer from (a) contributions to its common equity capital (other than, in the case of the Issuer, contributions by Willis Corroon Group) and (b) the sale (other than to a Subsidiary of Willis Corroon Group or to any Willis Corroon Group or Subsidiary management equity plan or stock option plan or any other management or employee benefit plan or agreement) of Capital Stock (other than Disqualified Stock and Designated Preferred Stock) of Willis Corroon Group or the Issuer, in each case designated as Excluded Contributions pursuant to an 156 Officers' Certificate executed by an executive vice president and the principal financial officer of Willis Corroon Group or the Issuer on the date such capital contributions are made or the date such Equity Interests are sold, as the case may be, which are excluded from the calculation set forth in clause (c) of the first paragraph under "--Certain Covenants--Limitation on Restricted Payments." "EXISTING INDEBTEDNESS" means Indebtedness of Willis Corroon Group or its Restricted Subsidiaries in existence on the Closing Date, plus interest accruing thereon, after application of the net proceeds of the loans made under the Subordinated Bridge Agreement. "FACILITY HEDGING OBLIGATIONS" means Hedging Obligations of Willis Corroon Group or the Issuer (other than Hedging Obligations entered into for speculative purposes) having an aggregate notional amount at any time outstanding not in excess of $1,175,000,000 less the notional amount of any Trinity Hedging Obligations outstanding at such time. "FIXED CHARGE COVERAGE RATIO" means, with respect to any Person for any period, the ratio of EBITDA of such Person for such period to the Fixed Charges of such Person for such period. In the event that Willis Corroon Group or any of its Restricted Subsidiaries incurs, assumes, guarantees or redeems any Indebtedness or issues or redeems Disqualified Stock or preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "CALCULATION DATE"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, guarantee or redemption of Indebtedness, or such issuance or redemption of Disqualified Stock or preferred stock, as if the same had occurred at the beginning of the applicable four-quarter period. For purposes of making the computation referred to above, Investments, acquisitions, dispositions, mergers, consolidations and discontinued operations (as determined in accordance with GAAP) that have been made by Willis Corroon Group or any of its Restricted Subsidiaries during the four-quarter reference period or subsequent to such reference period and on or prior to or simultaneously with the Calculation Date shall be calculated on a pro forma basis assuming that all such Investments, acquisitions, dispositions, mergers, consolidations and discontinued operations (and the change in any associated fixed charge obligations and the change in EBITDA resulting therefrom) had occurred on the first day of the four-quarter reference period. If since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into Willis Corroon Group or any Restricted Subsidiary since the beginning of such period) shall have made any Investment, acquisition, disposition, merger, consolidation or discontinued operation that would have required adjustment pursuant to this definition, then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect thereto for such period as if such Investment, acquisition, disposition, merger, consolidation or discontinued operation had occurred at the beginning of the applicable four-quarter period. For purposes of this definition, whenever pro forma effect is to be given to a transaction, the pro forma calculations shall be made in good faith by a responsible financial or accounting officer of Willis Corroon Group. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligations applicable to such Indebtedness). Interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a responsible financial or accounting officer of Willis Corroon Group to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP. For purposes of making the computation referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period. Interest on Indebtedness that may 157 optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate chosen as Willis Corroon Group may designate. "FIXED CHARGES" means, with respect to any Person for any period, the sum of (a) Consolidated Interest Expense of such Person for such period, (b) all cash dividend payments (excluding items eliminated in consolidation) on any series of (i) Disqualified Stock, (ii) preferred stock and (iii) to the extent paid pursuant to clause (vi)(B) of the covenant described under "--Certain Covenants--Limitation on Restricted Payments," other Capital Stock of such Person. "FOREIGN SUBSIDIARY" means, with respect to any Person, any Restricted Subsidiary of such Person that is not organized or existing under the laws of the United States, any state thereof, the District of Columbia, or any territory thereof. "GAAP" means generally accepted accounting principles in the United Kingdom which are in effect on the Closing Date. For the purposes of the Indenture, the term "consolidated" with respect to any Person means such Person consolidated with its Restricted Subsidiaries, and shall not include any Unrestricted Subsidiary. "GOVERNMENT SECURITIES" means securities that are (a) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged or (b) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuers thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such Government Securities or a specific payment of principal of or interest on any such Government Securities held by such custodian for the account of the holder of such depository receipt; PROVIDED that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the Government Securities or the specific payment of principal of or interest on the Government Securities evidenced by such depository receipt. "GROUP INTERCOMPANY NOTE" means a note issued by Willis Corroon Group or a Restricted Subsidiary in favor of Trinity (a) in consideration of the issuance of a Trinity Intercompany Note or (b) in connection with a loan made by Trinity to Willis Corroon Group or such Restricted Subsidiary out of the proceeds received from the issuance of a Trinity Intercompany Note, PROVIDED, in each case, that the obligations of Willis Corroon Group or such Restricted Subsidiary under such note are subordinated in 158 right of payment to the Notes in a form previously approved by the Administrative Agent under the Subordinated Bridge Agreement including, without limitation, that no payment shall be made in respect of such note if any Default on the Notes or any default under the Senior Credit Facilities has occurred and is continuing. "GUARANTEE" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness or other obligations. "GUARANTEE" means any guarantee of the obligations of Willis Corroon Group under the Indenture and the Notes by any Person in accordance with the provisions of the Indenture. When used as a verb, "Guarantee" shall have a corresponding meaning. "GUARANTEED LOAN NOTES" means loan notes of Trinity issued pursuant to the offer at the election of holders of the shares, having the terms contained in the Guaranteed Loan Notes Instrument and guaranteed by The Chase Manhattan Bank, acting through its London branch. "GUARANTEED LOAN NOTES INSTRUMENT" means the Guaranteed Loan Notes Instrument in the form of Exhibit J to the Senior Bridge Facility. "GUARANTOR" means any Person that incurs a Guarantee; PROVIDED that upon the release and discharge of such Person from its Guarantee in accordance with the Indenture, such Person shall cease to be a Guarantor. "HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of such Person under (i) currency exchange, interest rate or commodity swap agreements, currency exchange, interest rate or commodity cap agreements and currency exchange, interest rate or commodity collar agreements and (ii) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange, interest rates or commodity prices. "HOLDER" means a holder of the Notes. "INDEBTEDNESS" means, with respect to any Person, (a) any indebtedness (including principal and premium) of such Person, whether or not contingent (i) in respect of borrowed money, (ii) evidenced by bonds, notes, debentures or similar instruments or letters of credit or bankers' acceptances (or, without double counting, reimbursement agreements in respect thereof), (iii) representing the balance deferred and unpaid of the purchase price of any property (including Capitalized Lease Obligations), except any such balance that constitutes a trade payable or similar obligation to a trade creditor, in each case accrued in the ordinary course of business or (iv) representing any Hedging Obligations, if and to the extent that any of the foregoing Indebtedness (other than letters of credit and Hedging 159 Obligations) would appear as a liability upon a balance sheet (excluding the footnotes thereto) of such Person prepared in accordance with GAAP, (b) to the extent not otherwise included, any obligation by such Person to be liable for, or to pay, as obligor, guarantor or otherwise, on the Indebtedness of another Person (other than by endorsement of negotiable instruments for collection in the ordinary course of business) and (c) to the extent not otherwise included, Indebtedness of another Person secured by a Lien on any asset owned by such Person (whether or not such Indebtedness is assumed by such Person); PROVIDED, HOWEVER, that Contingent Obligations incurred in the ordinary course of business shall be deemed not to constitute Indebtedness, and obligations under or in respect of Receivables Facilities shall not be deemed to constitute Indebtedness. In addition, "Indebtedness" of any Person shall include Indebtedness described in the foregoing paragraph that would not appear as a liability on the balance sheet of such Person if (1) such Indebtedness is the obligation of a partnership or a joint venture that is not a Restricted Subsidiary (a "Joint Venture"), (2) such Person or a Restricted Subsidiary is a general partner of the Joint Venture (a "General Partner") and (3) there is recourse, by contract or operation of law, with respect to the payment of such Indebtedness to property or assets of such Person or a Restricted Subsidiary; and such Indebtedness shall be included in an amount not to exceed (x) the greater of (A) the net assets of the General Partner and (B) the amount of such obligations to the extent that there is recourse by, contract or operation of law, to the property or assets of such Person or a Restricted Subsidiary (other than the General Partner) or (y) if less than the amount determined pursuant to clause (x) immediately above, the actual amount of such Indebtedness that is recourse to such Person, if the Indebtedness is evidenced by a writing and is for a determinable amount and the related interest expense shall be included in Consolidated Interest Expense to the extent paid by Willis Corroon Group or its Restricted Subsidiaries. "INDEPENDENT FINANCIAL ADVISOR" means an accounting, appraisal, investment banking firm or consultant to Persons engaged in Similar Businesses of nationally recognized standing that is, in the good faith judgment of Willis Corroon Group or the Issuer, qualified to perform the task for which it has been engaged. "INTERIM FINANCINGS" means the Sponsor Promissory Note and the Senior Bridge Facility. "INTERIM REFINANCING INDEBTEDNESS" means indebtedness in respect of loans made to Trinity on the Closing Date by the Issuer using the proceeds from the borrowing under the Subordinated 160 Bridge Agreement and the borrowing of term loans under the Senior Credit Facilities, the proceeds of which were used (a) directly or indirectly to repay the Interim Financings, (b) to make a Convertible Loan, substantially all the proceeds of which were used to repay indebtedness of Willis Corroon Group and its Subsidiaries existing on the Closing Date and required to be repaid under the Senior Credit Facilities and (c) to pay related fees and expenses. "INVESTMENT GRADE SECURITIES" means (i) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (other than Cash Equivalents), (ii) debt securities or debt instruments with a rating of BBB-or higher by S&P or Baa3 or higher by Moody's or the equivalent of such rating by such rating organization, or, if no rating of S&P or Moody's then exists, the equivalent of such rating by any other nationally recognized securities rating agency, but excluding any debt securities or instruments constituting loans or advances among Willis Corroon Group and its Subsidiaries, (iii) investments in any fund that invests exclusively in investments of the type described in clauses (i) and (ii) which fund may also hold immaterial amounts of cash pending investment and/or distribution and (iv) corresponding instruments in countries other than the United States or the United Kingdom customarily utilized for high-quality investments. "INVESTMENTS" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of loans (including guarantees), advances or capital contributions (excluding accounts receivable, trade credit, advances to customers, commission, travel and similar advances to officers and employees, in each case made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities issued by any other Person and investments that are required by GAAP to be classified on the balance sheet (excluding the footnotes) of Willis Corroon Group in the same manner as the other investments included in this definition to the extent such transactions involve the transfer of cash or other property. For purposes of the definition of "Unrestricted Subsidiary" and the covenant described under "--Certain Covenants--Limitation on Restricted Payments," (i) "Investments" shall include the portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets of a Subsidiary of Willis Corroon Group at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, Willis Corroon Group shall be deemed to continue to have a permanent "Investment" in an Unrestricted Subsidiary in an amount (if positive) equal to (x) Willis Corroon Group's "Investment" in such Subsidiary at the time of such redesignation less (y) the portion (proportionate to Willis Corroon Group's equity interest in such Subsidiary) of the fair market value of the net assets of such Subsidiary at the time of such redesignation; and 161 (ii) any property transferred to or from an Unrestricted Subsidiary shall be valued at its fair market value at the time of such transfer, in each case as determined in good faith by Willis Corroon Group. "LETTER OF CREDIT OBLIGATIONS" means all Obligations in respect of Indebtedness of Willis Corroon Group with respect to letters of credit issued pursuant to the Senior Credit Facilities which Indebtedness shall be deemed to consist of (a) the aggregate maximum amount available to be drawn under all such letters of credit (the determination of such aggregate maximum amount to assume compliance with all conditions for drawing) and (b) the aggregate amount that has been paid by, and not reimbursed to, the issuers of such letters of credit. "LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction); PROVIDED that in no event shall an operating lease be deemed to constitute a Lien. "MANAGEMENT GROUP" means the directors and executive officers of the Issuer, Willis Corroon Group or its direct or indirect parent corporations. "MOODY'S" means Moody's Investors Service, Inc. "NET INCOME" means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends. "NET PROCEEDS" means the aggregate cash proceeds received by Willis Corroon Group or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any Designated Noncash Consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale and the sale or disposition of such Designated Noncash Consideration (including, without limitation, legal, accounting and investment banking fees, and brokerage and sales commissions), any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), amounts required to be applied to the repayment of principal, premium (if any) and interest on Senior Indebtedness required (other than required by clause (i) of the second paragraph of "--Repurchase at the Option of Holders--Asset Sales" to be paid as a result of such transaction) and any deduction of appropriate amounts to be provided by Willis Corroon Group as a reserve in accordance with GAAP against any liabilities associated with the asset disposed of in such transaction and retained by Willis Corroon Group after such sale or other disposition thereof, including, without limitation, pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations associated with such transaction. "OBLIGATIONS" means any principal, interest, penalties, fees, indemnifications, reimbursements (including, without limitation, reimbursement obligations with respect to letters of credit and banker's acceptances), damages and other liabilities, and guarantees of payment of such principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities, payable under the documentation governing any Indebtedness. 162 "OFFICER" means the Chairman of the Board, the President, any Executive Vice President, Senior Vice President or Vice President, the Treasurer or the Secretary of Willis Corroon Group, the Issuer or any Guarantor, as applicable. "OFFICERS' CERTIFICATE" means a certificate signed on behalf of Willis Corroon Group or the Issuer, as the case may be, by two Officers of Willis Corroon Group or the Issuer, as applicable, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of Willis Corroon Group or the Issuer, as applicable, that meets the requirements set forth in the Indenture. "PERMITTED ASSET SWAP" means any one or more transactions in which Willis Corroon Group or any Restricted Subsidiary exchanges assets for consideration consisting of (i) Equity Interests in or assets of a Person engaged in a Similar Business and (ii) any cash or Cash Equivalents, provided that such cash or Cash Equivalents will be considered Net Proceeds from an Asset Sale. "PERMITTED HOLDERS" means KKR, its Affiliates and the Management Group. "PERMITTED INVESTMENTS" means (a) with respect to fiduciary cash held by Willis Corroon Group or its Restricted Subsidiaries, Investments in which it is customary for Persons that are engaged in a Similar Business and that comply with all applicable laws and regulations; and (b) in all other cases (i) any Investment in Willis Corroon Group or any Restricted Subsidiary; (ii) any Investment in cash and Cash Equivalents or Investment Grade Securities; (iii) any Investment by Willis Corroon Group or any Restricted Subsidiary of Willis Corroon Group in a Person that is engaged in a Similar Business if as a result of such Investment (A) such Person becomes a Restricted Subsidiary or (B) such Person, in one transaction or a series of related transactions, is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, Willis Corroon Group or a Restricted Subsidiary; (iv) any Investment in securities or other assets not constituting cash or Cash Equivalents and received in connection with an Asset Sale made pursuant to the provisions of "--Repurchase at the Option of Holders--Asset Sales" or any other disposition of assets not constituting an Asset Sale; (v) any Investment existing on the Closing Date; (vi) advances to employees not in excess of $15.0 million outstanding at any one time, in the aggregate; 163 (vii) any Investment acquired by Willis Corroon Group or any of its Restricted Subsidiaries (A) in exchange for any other Investment or accounts receivable held by Willis Corroon Group or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable or (B) as a result of a foreclosure by Willis Corroon Group or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default; (viii) Hedging Obligations permitted under clause (j) of the covenant described in "--Certain Covenants--Limitation of Incurrence of Indebtedness and Issuance of Disqualified Stock" covenant; (ix) loans and advances to officers, directors and employees for business-related travel expenses, moving expenses and other similar expenses, in each case incurred in the ordinary course of business; (x) any Investment in a Similar Business having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (x) that are at that time outstanding (without giving effect to the sale of an Unrestricted Subsidiary to the extent the proceeds of such sale do not consist of cash, marketable securities and/or Qualified Proceeds), not to exceed the greater of (A) $125.0 million or (B) 12.5% of Total Revenues at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value); (xi) Investments the payment for which consists of Equity Interests of Willis Corroon Group, any of its direct or indirect parent corporations or the Issuer (exclusive of Disqualified Stock); PROVIDED, HOWEVER, that such Equity Interests will not increase the amount available for Restricted Payments under clause (c) of the first paragraph under the covenant described in "--Certain Covenants--Limitation on Restricted Payments;" (xii) additional Investments having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (xii) that are at that time outstanding (without giving effect to the sale of an Unrestricted Subsidiary to the extent the proceeds of such sale do not consist of cash, marketable securities and/or Qualified Proceeds or do consist of distributions made pursuant to clause (xiii) of the second paragraph of the covenant described in "--Certain Covenants--Limitation on Restricted Payments"), not to exceed $50.0 million at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value); (xiii) guarantees (including Guarantees) of Indebtedness permitted under the covenant described in "--Certain Covenants--Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock;" (xiv) any transaction to the extent it constitutes an investment that is permitted and made in accordance with the provisions of the second paragraph of the covenant described under "--Certain Covenants--Transactions with 164 Affiliates" (except transactions described in clauses (ii), (vi), (vii) and (xi) of such paragraph); (xv) Investments consisting of the licensing or contribution of intellectual property pursuant to joint marketing arrangements with other Persons; (xvi) any Investment by Willis Corroon Group or any Restricted Subsidiary in a Person that is an Associate on the Closing Date; and (xvii) Investments relating to any special purpose Wholly Owned Subsidiary of Willis Corroon Group or the Issuer organized in connection with a Receivables Facility that, in the good faith determination of the Board of Directors of Willis Corroon Group, are necessary or advisable to effect such Receivables Facility. "PERSON" means any individual, corporation, limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "PREFERRED STOCK" means any Equity Interest with preferential rights of payment of dividends or upon liquidation, dissolution, or winding up. "QUALIFIED PROCEEDS" means assets that are used or useful in, or Capital Stock of any Person engaged in, a Similar Business; PROVIDED that the fair market value of any such assets or Capital Stock shall be determined by the Board of Directors in good faith, except that in the event the value of any such assets or Capital Stock may exceed $25.0 million or more, the fair value shall be determined in writing by an independent investment banking firm of nationally recognized standing. "RECEIVABLES FACILITY" means one or more receivables financing facilities, as amended from time to time, pursuant to which the Company and/or any of its Restricted Subsidiaries sells its accounts receivable to a Person that is not a Restricted Subsidiary. "RECEIVABLES FEES" means distributions or payments made directly or by means of discounts with respect to any participation interest issued or sold in connection with, and other fees paid to a Person that is not a Restricted Subsidiary in connection with, any Receivables Facility. "RESTRICTED INVESTMENT" means an Investment other than a Permitted Investment. "RESTRICTED SUBSIDIARY" means, at any time, the Issuer and any direct or indirect Subsidiary of Willis Corroon Group (including any Foreign Subsidiary) that is not then an Unrestricted Subsidiary; PROVIDED, HOWEVER, that upon the occurrence of an Unrestricted Subsidiary ceasing to be an Unrestricted Subsidiary, such Subsidiary shall be included in the definition of "Restricted Subsidiary." "S&P" means Standard and Poor's Ratings Group. "SECURITIES ACT" means the Securities Act of 1933 and the rules and regulations of the Commission promulgated thereunder. "SENIOR BRIDGE FACILITY" means the Credit Agreement dated as of July 22, 1998, as amended and restated as of September 25, 1998, and as amended on October 30, 1998 and 165 November 13, 1998, among Trinity, the lenders party thereto and The Chase Manhattan Bank, as Administrative Agent. "SENIOR CREDIT FACILITIES" means the Credit Agreement dated as of July 22, 1998, as amended and restated as of September 1, 1998, September 25, 1998 and February 19, 1999, and as amended on October 28, 1998, among Willis Corroon Group, the Issuer, Trinity, the Lenders from time to time party thereto and The Chase Manhattan Bank, as Administrative Agent and Collateral Agent, including any collateral documents, instruments and agreements executed in connection therewith, and any amendments, supplements, modifications, extensions, renewals, restatements or refundings thereof and any indentures or credit facilities or commercial paper facilities with banks or other institutional lenders that replace, refund or refinance any part of the loans, notes, other credit facilities or commitments thereunder, including any such replacement, refunding or refinancing facility or indenture that increases the amount borrowable thereunder or alters the maturity thereof, PROVIDED, HOWEVER, that in connection with any facilities which refund, replace or refinance such Credit Agreement there shall not be more than one facility at any one time that is identified as the Senior Credit Facilities and, if at any time there is more than one facility which would constitute the Senior Credit Facilities, the Issuer will designate to the Trustee which one of such facilities will be the Senior Credit Facilities for purposes of the Indenture. "SENIOR SUBORDINATED INDEBTEDNESS" means (a) with respect to the Issuer, Indebtedness which ranks equal in right of payment to the Notes and (b) with respect to any Guarantor, Indebtedness which ranks equal in right of payment to the Guarantee of such Guarantor. "SIGNIFICANT SUBSIDIARY" means the Issuer and any other Restricted Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such regulation is in effect on the date hereof. "SIMILAR BUSINESS" means insurance brokering, risk management consulting, insurance agency, employee benefit consulting and any activities or businesses incidental or directly related or similar thereto, or any line of business engaged in by Willis Corroon Group or its Subsidiaries on the Issuance Date or any business activity that is a reasonable extension, development or expansion thereof or ancillary thereto. "SPONSOR PROMISSORY NOTE" means the subordinated promissory note dated as of July 22, 1998, issued by Trinity in favor of an affiliate of KKR in an amount not to exceed $575,000,000. "SUBORDINATED BRIDGE AGREEMENT" means the Senior Subordinated Loan Agreement dated as of November 19, 1998, among Willis Corroon Group, Willis Corroon Partners, the Issuer, the Lenders from time to time party thereto and The Chase Manhattan Bank, as Administrative Agent. "SUBORDINATED INDEBTEDNESS" means (a) with respect to the Issuer, any Indebtedness of the Issuer which is by its terms subordinated in right of payment to the Notes and (b) with respect to any Guarantor, any Indebtedness of such Guarantor which is by its terms subordinated in right of payment to the Guarantee of such Guarantor. "SUBSIDIARY" means, with respect to any Person, 166 (i) any corporation, association, or other business entity (other than a partnership, joint venture, limited liability company or similar entity) of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof and (ii) any partnership, joint venture, limited liability company or similar entity of which (x) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof whether in the form of membership, general, special or limited partnership or otherwise and (y) such Person or any Wholly Owned Restricted Subsidiary of such Person is a controlling general partner or otherwise controls such entity. "TA II" means TA II Limited, a company with limited liability organized under the laws of England and Wales. "TOTAL REVENUES" means the total operating revenues of Willis Corroon Group and its Restricted Subsidiaries, as shown on the most recent annual income statement of Willis Corroon Group. "TREATY ON EUROPEAN UNION" means the Treaty of Rome of March 25, 1957, as amended by the Single European Act 1986 and the Maastricht Treaty (which was signed at Maastricht on February 7, 1992, and came into force on November 1, 1993), as amended from time to time. "TRINITY" means Trinity Acquisition plc, a public limited company organized under the laws of England and Wales. "TRINITY HEDGING OBLIGATIONS" means Hedging Obligations of Trinity (other than Hedging Obligations entered into for speculative purposes) having an aggregate notional amount at any time outstanding not in excess of $1,175,000,000 less the notional amount of any Facility Hedging Obligations outstanding at such time. "TRINITY INTERCOMPANY NOTE" means any note issued by Trinity in favor of Willis Corroon Group or a Restricted Subsidiary (a) in consideration of the issuance of a Group Intercompany Note or (b) in connection with the making of a loan to Trinity by Willis Corroon Group or such Restricted Subsidiary (other than with respect to Interim Refinancing Indebtedness), PROVIDED that all the proceeds received by Trinity from such loan, if any, are immediately used to make a loan to Willis Corroon Group or a Restricted Subsidiary pursuant to a Group Intercompany Note. "U.K. SUBSIDIARY" means, with respect to any Person, any Restricted Subsidiary of such Person that is organized under the laws of England and Wales. "UNRESTRICTED SUBSIDIARY" means (i) Sovereign Marine & General Insurance Company Limited, in provisional liquidation, (ii) any Subsidiary of Willis Corroon Group which at the time of determination is an Unrestricted Subsidiary (as designated by the Board of Directors of Willis Corroon Group, as provided below) and (iii) any Subsidiary of an Unrestricted Subsidiary. 167 The Board of Directors of Willis Corroon Group may designate any Subsidiary of Willis Corroon Group (including any existing Subsidiary and any newly acquired or newly formed Subsidiary but excluding the Issuer) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Equity Interests or Indebtedness of, or owns or holds any Lien on, any property of, Willis Corroon Group or any Subsidiary of Willis Corroon Group (other than any Subsidiary of the Subsidiary to be so designated), PROVIDED that (a) any Unrestricted Subsidiary (other than Sovereign) must be an entity of which shares of the capital stock or other equity interests (including partnership interests) entitled to cast at least a majority of the votes that may be cast by all shares or equity interests having ordinary voting power for the election of directors or other governing body are owned, directly or indirectly, by Willis Corroon Group, (b) such designation complies with the covenants described under "--Certain Covenants--Limitation on Restricted Payments" and (c) each of (I) the Subsidiary to be so designated and (II) its Subsidiaries has not at the time of designation, and does not thereafter, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to any Indebtedness pursuant to which the lender has recourse to any of the assets of Willis Corroon Group or any of its Restricted Subsidiaries. The Board of Directors of Willis Corroon Group may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; PROVIDED that, immediately after giving effect to such designation no Default or Event of Default shall have occurred and be continuing and either (i) Willis Corroon Group could incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test described under "--Certain Covenants-- Limitations on Incurrence of Indebtedness and Issuance of Disqualified Stock" or (ii) the Fixed Charge Coverage Ratio for Willis Corroon Group and its Restricted Subsidiaries would be greater than such ratio for Willis Corroon Group and its Restricted Subsidiaries immediately prior to such designation, in each case on a pro forma basis taking into account such designation. Any such designation by the Board of Directors of Willis Corroon Group shall be notified by Willis Corroon Group to the Trustee by promptly filing with the Trustee a copy of the board resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing provisions. "VOTING STOCK" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. "WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness or Disqualified Stock, as the case may be, at any date, the quotient obtained by dividing (i) the sum of the products of the number of years from the date of determination to the date of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Disqualified Stock multiplied by the amount of such payment, by (ii) the sum of all such payments. "WHOLLY OWNED RESTRICTED SUBSIDIARY" is any Wholly Owned Subsidiary that is a Restricted Subsidiary. "WHOLLY OWNED SUBSIDIARY" of any Person means a Subsidiary of such Person, 100% of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person and one or more Wholly Owned Subsidiaries of such Person. 168 REGISTRATION RIGHTS AGREEMENT Willis Corroon Group, the Issuer, Willis Corroon Partners (which are collectively referred to as the "Willis Corroon" for purposes of this summary) and the initial purchasers under the issuance of outstanding Notes entered into an exchange and registration rights agreement on February 2, 1999. Pursuant to the registration rights agreement, Willis Corroon agreed to: - file with the Commission on or prior to 100 days after the date of issuance of the outstanding Notes a registration statement on an appropriate form under the Securities Act, relating to a registered exchange offer for the outstanding Notes under the Securities Act; and - use its reasonable best efforts to cause the exchange offer registration statement to be declared effective under the Securities Act within 240 days after the issuance of the outstanding Notes. As soon as practicable after the effectiveness of the exchange offer registration statement, the Issuer will offer to the holders of Transfer Restricted Securities (as defined below) who are not prohibited by any law or policy of the Commission from participating in the exchange offer the opportunity to exchange their Transfer Restricted Securities for an issue of a second series of notes that are identical in all material respects to the outstanding Notes (except that the exchange Notes will not contain terms with respect to transfer restrictions) and that would be registered under the Securities Act. The Issuer will keep the exchange offer open for not less than 20 business days (or longer, if required by applicable law) after the date on which notice of the exchange offer is mailed to the holders of the outstanding Notes. If - because of any change in law or applicable interpretations thereof by the staff of the Commission, Willis Corroon is not permitted to effect the exchange offer as contemplated hereby, - any outstanding Notes validly tendered pursuant to the exchange offer are not exchanged for exchange Notes within 270 days after the issuance of the outstanding Notes, - the initial purchasers so request with respect to outstanding Notes not eligible to be exchanged for exchange notes in the exchange offer, - any applicable law or interpretations do not permit any holder of outstanding Notes to participate in the exchange offer or - any holder of outstanding Notes that participates in the exchange offer does not receive freely transferable exchange Notes in exchange for tendered outstanding Notes, then Willis Corroon will file with the Commission a shelf registration statement to cover resales of Transfer Restricted Securities by such holders who satisfy certain conditions relating to the provision of information in connection with the shelf registration statement. For purposes of the foregoing, "Transfer Restricted Securities" means each outstanding Note until: - the date on which such outstanding Note has been exchanged for a freely transferable exchange Note in the exchange offer; 169 - the date on which such outstanding Note has been effectively registered under the Securities Act and disposed of in accordance with the shelf registration statement; or - the date on which such outstanding Note is distributed to the public pursuant to Rule 144 under the Securities Act or is salable pursuant to Rule 144(k) under the Securities Act. Willis Corroon will use its reasonable best efforts to have the exchange offer registration statement or, if applicable, the shelf registration statement declared effective by the Commission as promptly as practicable after the filing thereof. Unless the exchange offer would not be permitted by a policy of the Commission, the Issuer will commence the exchange offer and will use its reasonable best efforts to consummate the exchange offer as promptly as practicable, but in any event prior to 270 days after the issuance of the outstanding Notes. If applicable, Willis Corroon will use its reasonable best efforts to keep the shelf registration statement effective for a period until two years after the issuance of the outstanding Notes or such shorter period when all Notes covered by the shelf registration statement have been sold in the manner set forth and as contemplated in the shelf registration statement or when the outstanding Notes became eligible for resale pursuant to Rule 144 under the Securities Act without volume restrictions, if any. If (1) the applicable registration statement is not filed with the Commission on or prior to 100 days after the issuance of the outstanding Notes (or, in the case of a shelf registration statement required to be filed in response to a change in law or applicable interpretations of the staff of the Commission, if later, within 60 days after publication of the change in law or interpretations, but in no event before 100 calendar days after the issuance of the outstanding Notes); (2) the exchange offer registration statement or the shelf registration statement, as the case may be, is not declared effective within 240 days after the issuance of the outstanding Notes (or in the case of a shelf registration statement required to be filed in response to a change in law or applicable interpretations of the staff of the Commission, if later, within 90 days after publication of the change in law or interpretations, but in no event before 240 days after the issuance of the outstanding Notes); (3) the exchange offer is not consummated on or prior to 270 days after the issuance of the outstanding Notes (other than in the event Willis Corroon files a shelf registration statement); or (4) the shelf registration statement is filed and declared effective within the time periods specified in clause (2) above but shall thereafter cease to be effective (at any time that Willis Corroon is obligated to maintain the effectiveness thereof) without being succeeded within 90 days by an additional registration statement filed and declared effective (each such event referred to in clauses (1) through (4) above, a "Registration Default"), Willis Corroon will be obligated to pay liquidated damages to each holder of Transfer Restricted Securities, during the period of one or more such Registration Defaults, with respect to the first 90-day period immediately following the occurrence of the first Registration Default in an amount equal to one-quarter of one percent per annum (which rate will be increased by an additional one-quarter of one percent per annum for each subsequent 90-day period that any liquidated damages continue to accrue; provided that the rate at which liquidated damages accrue may in no event exceed 1.0% per annum) in respect of the 170 Notes constituting Transfer Restricted Securities held by such holder until the applicable registration statement is filed, the exchange offer registration statement is declared effective and the exchange offer is consummated or the shelf registration statement is declared effective or again becomes effective, as the case may be. All accrued liquidated damages shall be paid to holders in the same manner as interest payments on the Notes on semi-annual payment dates which correspond to interest payment dates for the Notes. Following the cure of all Registration Defaults, the accrual of liquidated damages will cease. Notwithstanding the foregoing, Willis Corroon may issue a notice that the shelf registration statement is unusable pending the announcement of a material corporate transaction and may issue any notice suspending use of the shelf registration statement required under applicable securities laws to be issued and, in the event that the aggregate number of days in any consecutive twelve-month period for which all such notices are issued and effective exceeds 60 days in the aggregate, then Willis Corroon will be obligated to pay liquidated damages to each holder of Transfer Restricted Securities in an amount equal to one-quarter of one percent per annum (which rate will be increased by an additional one-quarter of one percent per annum for each subsequent 90-day period that liquidated damages continue to accrue; provided that the rate at which liquidated damages accrue may in no event exceed 1.0% per annum) in respect of the Notes constituting Transfer Restricted Securities. Upon Willis Corroon declaring that the shelf registration statement is usable after the period of time described in the preceding sentence, the accrual of liquidated damages will cease. The registration rights agreement also provides that Willis Corroon - shall make available for a period of 90 days after the consummation of the exchange offer a prospectus meeting the requirements of the Securities Act to any broker-dealer for use in connection with any resale of any such exchange Notes and - shall pay expenses incident to the exchange offer and will indemnify certain holders of the Notes (including any broker-dealer) against certain liabilities, including liabilities under the Securities Act. A broker-dealer that delivers such a prospectus to purchasers in connection with such resales will be subject to certain of the civil liability provisions under the Securities Act and will be bound by the provisions of the exchange and registration rights agreement (including certain indemnification rights and obligations). Each holder of the outstanding Notes who wishes to exchange such outstanding Notes for exchange Notes in the exchange offer will be required to make certain representations, including representations that: - any exchange Notes to be received by it will be acquired in the ordinary course of its business; - it has no arrangement or understanding with any person to participate in the distribution of the Exchange Notes; - it is not an "affiliate" (as defined in Rule 405 under the Securities Act) of Willis Corroon, or if it is an affiliate, that it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable; and - if it is a person in the United Kingdom, that its ordinary activities involve it in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of its business. 171 If the holder is not a broker-dealer, it will be required to represent that it is not engaged in, and does not intend to engage in, the distribution of the exchange Notes. If the holder is a broker-dealer that will receive exchange Notes for its own account in exchange for outstanding Notes that were acquired as a result of market-making activities or other trading activities, it will be required to acknowledge that it will deliver a prospectus in connection with any resale of such exchange Notes. Holders of the outstanding Notes will be required to make certain representations to Willis Corroon (as described above) in order to participate in the exchange offer and will be required to deliver information to be used in connection with the shelf registration statement in order to have their outstanding Notes included in the shelf registration statement and benefit from the provisions regarding liquidated damages set forth in the preceding paragraphs. A holder who sells outstanding Notes pursuant to the shelf registration statement generally will be required to be named as a selling securityholder in the related prospectus and to deliver a prospectus to purchasers, will be subject to certain of the civil liability provisions under the Securities Act in connection with such sales and will be bound by the provisions of the registration rights agreement which are applicable to such a holder (including certain indemnification obligations). For so long as the Notes are outstanding, the Issuer will continue to provide to holders of the Notes and to prospective purchasers of the Notes the information required by Rule 144A(d)(4) under the Securities Act. The foregoing description of the registration rights agreement is a summary only, does not purport to be complete and is qualified in its entirety by reference to all provisions of the registration rights agreement. Willis Corroon will provide a copy of the registration rights agreement to holders of outstanding Notes identified to Willis Corroon by the initial purchasers under the offering of outstanding Notes upon request. Application will be made to list the exchange Notes on the Luxembourg Stock Exchange. The exchange Notes will be accepted for clearance through the accounts of the Euroclear Operator and Cedel Bank and they will have a new common code and a new ISIN number, which will be transmitted to the Luxembourg Stock Exchange. All documents prepared in connection with the exchange offer will be available at the office of the special agent in Luxembourg and all necessary actions and services in respect of the exchange offer may be done at the office of the special agent in Luxembourg. The special agent appointed for these purposes is Kredietbank S.A. Luxembourgeoise, 43, Boulevard Royal, L-2955 Luxembourg. All notices relating to the exchange offer will be published in accordance with the notice provisions of the indenture. See "Description of the Notes--Notices." So long as the outstanding Notes are listed on the Luxembourg Stock Exchange and the rules of such stock exchange shall require, prior to the commencement of the exchange offer, notice of the exchange offer will be given to the Luxembourg Stock Exchange and will be published in a newspaper having a general circulation in Luxembourg (which is expected to be the LUXEMBURGER WORT). Such notice will, among other things, provide details of the conditions to the exchange offer and the commencement and expected completion dates of the exchange offer. So long as the Notes are listed on the Luxembourg Stock Exchange and the rules of such stock exchange shall require, notice of the results of the exchange offer will be given to the Luxembourg Stock Exchange and will be published in a newspaper having a general circulation in Luxembourg (which is expected to be the LUXEMBURGER WORT), in each case, as promptly as practicable following the completion of the exchange offer. Similar notice will also be provided in connection with the payment of liquidated damages and the declaration of the effective date of interest rates. 172 CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER EXCHANGE OF NOTES The following summary describes the material United States federal income tax consequences of the exchange offer. The exchange of outstanding Notes for exchange Notes in the exchange offer will not constitute a taxable event to holders. Consequently, no gain or loss will be recognized by a holder upon receipt of an exchange Note, the holding period of the exchange Note will include the holding period the outstanding Note and the basis of the exchange Note will be the same as the basis of the outstanding Note immediately before the exchange. IN ANY EVENT, PERSONS CONSIDERING THE EXCHANGE OF OUTSTANDING NOTES FOR EXCHANGE NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO NON-U.S. HOLDERS The following summary describes the material United States federal income tax consequences of the ownership of Notes as of the date hereof by a Non-U.S. Holder (as defined below). Except where noted it deals only with Notes held as capital assets by Non-U.S. Holders. As used herein the term "Non-U.S. Holder" means any person or entity that is not a United States Holder ("U.S. Holder"). A U.S. Holder is any beneficial owner of a Note that is (i) a citizen or resident of the United States, (ii) a corporation or partnership created or organized in or under the laws of the United States or any political subdivision thereof, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source and (iv) a trust (x) that is subject to the supervision of a court within the United States and the control of one or more United States persons as described in section 7701(a)(30) or (y) that has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. The discussion below is based upon the provisions of the Internal Revenue Code of 1986, as amended (the "Code"), and regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities may be repealed, revoked or modified so as to result in United States federal income tax consequences different from those discussed below. PERSONS CONSIDERING THE PURCHASE, OWNERSHIP OR DISPOSITION OF NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION. Under present United States federal income and estate tax law, and subject to the discussion below concerning backup withholding: (a) no withholding of United States federal income tax will be required with respect to the payment by the Issuer or any paying agent of principal or interest on a Note owned by a Non-U.S. Holder, provided that (i) the beneficial owner does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of the Issuer entitled to vote within the meaning of section 871(h)(3) of the Code and the regulations thereunder, (ii) the beneficial owner is not a controlled foreign corporation that is related to the Issuer through stock ownership, (iii) the beneficial owner is not a bank whose receipt of interest on a Note is described in section 881(c)(3)(A) of the Code and (iv) the 173 beneficial owner satisfies the statement requirement (described generally below) set forth in section 871(h) and section 881(c) of the Code and the regulations thereunder; (b) no withholding of United States federal income tax will be required with respect to any gain or income realized by a Non-U.S. Holder upon the sale, exchange, retirement or other disposition of a Note; and (c) a Note beneficially owned by an individual who at the time of death is a Non-U.S. Holder will not be subject to United States federal estate tax as a result of such individual's death, provided that such individual does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of the company entitled to vote within the meaning of section 871(h)(3) of the Code and provided that the interest payments with respect to such Note would not have been, if received at the time of such individual's death, effectively connected with the conduct of a United States trade or business by such individual. It is unclear whether the payment of Liquidated Damages to a Non-U.S. Holder would be subject to withholding of U.S. federal income tax. To satisfy the requirement referred to in (a)(iv) above, the beneficial owner of such Note, or a financial institution holding the Note on behalf of such owner, must provide, in accordance with specified procedures, a paying agent of the Issuer with a statement to the effect that the beneficial owner is not a U.S. Holder. Currently, these requirements will be met if (1) the beneficial owner provides his name and address, and certifies, under penalties of perjury, that he is not a U.S. Holder (which certification may be made on an Internal Revenue Service ("IRS") Form W-8 (or successor form)) or (2) a financial institution holding the Note on behalf of the beneficial owner certifies, under penalties of perjury, that such statement has been received by it and furnishes a paying agent with a copy thereof. Under recently finalized Treasury regulations (the "Final Regulations"), the statement requirement referred to in (a)(iv) above may also be satisfied with other documentary evidence for interest paid after December 31, 1999 with respect to an offshore account or through certain foreign intermediaries. If a Non-U.S. Holder is engaged in a trade or business in the United States and interest on the Note is effectively connected with the conduct of such trade or business, the Non-U.S. Holder, although exempt from the withholding tax discussed above, will be subject to United States federal income tax on such interest on a net income basis in the same manner as if it were a U.S. Holder. In addition, if such holder is a foreign corporation, it may be subject to a branch profits tax equal to 30% (or lower applicable treaty rate) of its effectively connected earnings and profits for the taxable year, subject to adjustments. For this purpose, interest on a Note will be included in such foreign corporation's earnings and profits. Any gain or income realized upon the sale, exchange, retirement or other disposition of a Note generally will not be subject to United States federal income tax unless (i) such gain or income is effectively connected with the conduct of a trade or business in the United States by the Non-U.S. Holder, or (ii) in the case of a Non-U.S. Holder who is an individual, such individual is present in the United States for 183 days or more in the taxable year of such sale, exchange, retirement or other disposition, and certain other conditions are met. Special rules may apply to certain Non-U.S. Holders, such as "controlled foreign corporations," "passive foreign investment companies" and "foreign personal holding companies," that are subject to special treatment under the Code. Such entities should consult their own tax advisors to determine the U.S. federal, state, local and other tax consequences that may be relevant to them. 174 INFORMATION REPORTING AND BACKUP WITHHOLDING In general, no information reporting or backup withholding will be required with respect to payments made by the Issuer or any paying agent to Non-U.S. Holders if a statement described in (a)(iv) above has been received (and the payor does not have actual knowledge that the beneficial owner is a United States Person). In addition, backup withholding and information reporting will not apply if payments of the principal, interest or premium on a Note are paid or collected by a foreign office of a custodian, nominee or other foreign agent on behalf of the beneficial owner of such Note, or if a foreign office of a broker (as defined in applicable Treasury regulations) pays the proceeds of the sale of a Note to the owner thereof. If, however, such nominee, custodian, agent or broker is, for United States federal income tax purposes, a United States person, a controlled foreign corporation or a foreign person that derives 50% or more of its gross income for certain periods from the conduct of a trade or business in the United States, or, for taxable years beginning after December 31, 1999, a foreign partnership in which one or more United States persons, in the aggregate, own more than 50% of the income or capital interests in the partnership or a foreign partnership which is engaged in a trade or business in the United States, such payments will not be subject to backup withholding but will be subject to information reporting, unless (1) such custodian, nominee, agent or broker has documentary evidence in its records that the beneficial owner is not a United States person and certain other conditions are met or (2) the beneficial owner otherwise establishes an exemption. Payments of principal, interest and premium on a Note paid to the beneficial owner of a Note by a United States office of a custodian, nominee or agent, or the payment by the United States office of a broker of the proceeds of sale of a Note, will be subject to both backup withholding and information reporting unless the beneficial owner provides the statement referred to in (a)(iv) above and the payor does not have actual knowledge that the beneficial owner is a United States person or otherwise establishes an exemption. Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against such holder's United States federal income tax liability provided the required information is furnished to the IRS. CERTAIN UNITED KINGDOM TAX CONSEQUENCES CERTAIN UNITED KINGDOM TAX CONSEQUENCES OF PAYMENTS BY WILLIS CORROON GROUP AS GUARANTOR Under current law if Willis Corroon Group, as guarantor, makes any payments in respect of interest on the Notes (or other amounts due under the Notes other than repayment of principal) such payments may be subject to United Kingdom withholding tax at the basic rate (currently 23%). Relief from such withholding may be available pursuant to the provisions of any applicable double taxation treaty. In particular, under the terms of the U.S./U.K. double taxation treaty, Holders entitled to the benefit of that treaty would be able to recover in full any U.K. tax withheld by making a claim on the appropriate form. Alternatively, a claim may be made by a holder in advance of a payment in respect of interest. If the claim is accepted by the U.K. Inland Revenue, it will authorize subsequent payments to be made without deduction of U.K. withholding tax. Claims for repayment must be made within six years of the end of the U.K. year of assessment (generally April 5 in each year) to which the interest relates and must be accompanied by the original statement provided by the Company when the interest payment was made showing the amount of U.K. income tax deducted. Because a claim is not considered until the U.K. Inland Revenue receives the appropriate form from the Internal Revenue Service, forms should be sent 175 to the Internal Revenue Service, in the case of an advance claim well before the relevant interest payment date or, in the case of a claim for repayment of the tax, well before the end of the appropriate limitation period. As described above, Willis Corroon Group has agreed, subject to specific exceptions and limitations, to pay to the holders of the Notes Additional Amounts in respect of any applicable United Kingdom withholding tax in order that the interest (and other amounts due under the Notes) such holders receive, net of any applicable United Kingdom withhholding tax, will equal the amounts which would have been receivable by such holders in the absence of such United Kingdom withholding tax. See "Description of Notes--Withholding Taxes". TRANSFER TAXES ON TRANSFER OF NOTES IN THE UNITED KINGDOM Under current law the sale or transfer in the United Kingdom of the Notes will not be subject to stamp duty or stamp duty reserve tax or any other transfer tax in the United Kingdom. CERTAIN UNITED KINGDOM TAX CONSEQUENCES OF THE EXCHANGE OFFER The exchange of outstanding Notes for exchange Notes in the exchange offer may constitute a disposal for the purposes of taxation of capital gains or a transfer for the purposes of the accrued income scheme for an individual holder who is resident or ordinarily resident for tax purposes in the United Kingdom or who carries on a trade, profession or vocation through a branch or agency to which the Note is attributable. The exchange of outstanding Notes for exchange Notes will not constitute a taxable disposal for holders which are companies within the charge to corporation tax or for holders which are exempt from taxation. 176 BOOK-ENTRY; DELIVERY AND FORM The exchange Notes will initially be represented by one or more permanent global notes in definitive, fully registered book-entry form, without interest coupons (the "Global Notes") that will be deposited with, or on behalf of, DTC and registered in the name of Cede & Co., as nominee of DTC, on behalf of the acquirors of exchange Notes represented thereby for credit to the respective accounts of the acquirors (or to such other accounts as they may direct) at DTC, or Morgan Guaranty Trust Company of New York, Brussels Office, as operator of the Euroclear System, or Cedel Bank, societe anonyme. See "The Exchange Offer--Book Entry Transfer." Except as set forth below, the Global Notes may be transferred, in whole and not in part, solely to another nominee of DTC or to a successor of DTC or its nominee. Beneficial interests in the Global Notes may not be exchanged for Notes in physical, certificated form ("Certificated Notes") except in the limited circumstances described below. All interests in the Global Notes, including those held through Euroclear or Cedel, may be subject to the procedures and requirements of DTC. Those interests held through Euroclear or Cedel may also be subject to the procedures and requirements of such systems. CERTAIN BOOK-ENTRY PROCEDURES FOR THE GLOBAL NOTES The descriptions of the operations and procedures of DTC, Euroclear and Cedel set forth below are provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to change by them from time to time. The Issuer takes no responsibility for these operations or procedures, and investors are urged to contact the relevant system or its participants directly to discuss these matters. DTC has advised the Issuer that it is (i) a limited purpose trust company organized under the laws of the State of New York, (ii) a "banking organization" within the meaning of the New York Banking Law, (iii) a member of the Federal Reserve System, (iv) a "clearing corporation" within the meaning of the Uniform Commercial Code, as amended and (v) a "clearing agency" registered pursuant to Section 17A of the Exchange Act. DTC was created to hold securities for its participants (collectively, the "Participants") and facilitates the clearance and settlement of securities transactions between Participants through electronic book-entry changes to the accounts of its Participants, thereby eliminating the need for physical transfer and delivery of certificates. DTC's Participants include securities brokers and dealers (including the initial purchaser under the offering of outstanding Notes), banks and trust companies, clearing corporations and certain other organizations. Indirect access to DTC's system is also available to other entities such as banks, brokers, dealers and trust companies (collectively, the "Indirect Participants") that clear through or maintain a custodial relationship with a Participant, either directly or indirectly. Investors who are not Participants may beneficially own securities held by or on behalf of DTC only through Participants or Indirect Participants. 177 The Issuer expects that pursuant to procedures established by DTC ownership of the Notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC (with respect to the interests of Participants) and the records of Participants and the Indirect Participants (with respect to the interests of persons other than Participants). The laws of some jurisdictions may require that certain purchasers of securities take physical delivery of such securities in definitive form. Accordingly, the ability to transfer interests in the Notes represented by a Global Note to such persons may be limited. In addition, because DTC can act only on behalf of its Participants, who in turn act on behalf of persons who hold interests through Participants, the ability of a person having an interest in Notes represented by a Global Note to pledge or transfer such interest to persons or entities that do not participate in DTC's system, or to otherwise take actions in respect of such interest, may be affected by the lack of a physical definitive security in respect of such interest. So long as DTC or its nominee is the registered owner of a Global Note, DTC or such nominee, as the case may be, will be considered the sole owner or holder of the Notes represented by the Global Note for all purposes under the Indenture. Except as provided below, owners of beneficial interests in a Global Note will not be entitled to have Notes represented by such Global Note registered in their names, will not receive or be entitled to receive physical delivery of Certificated Notes, and will not be considered the owners or holders thereof under the Indenture for any purpose, including with respect to the giving of any direction, instruction or approval to the Trustee thereunder. Accordingly, each holder owning a beneficial interest in a Global Note must rely on the procedures of DTC and, if such holder is not a Participant or an Indirect Participant, on the procedures of the Participant through which such holder owns its interest, to exercise any rights of a holder of Notes under the Indenture or such Global Note. The Issuer understands that under existing industry practice, in the event that the Issuer requests any action of holders of Notes, or a holder that is an owner of a beneficial interest in a Global Note desires to take any action that DTC, as the holder of such Global Note, is entitled to take, DTC would authorize the Participants to take such action and the Participants would authorize holders owning through such Participants to take such action or would otherwise act upon the instruction of such holders. Neither the Issuer nor the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of Notes by DTC, or for maintaining, supervising or reviewing any records of DTC relating to such Notes. Payments with respect to the principal of, premium, if any, Liquidated Damages, if any, and interest on, any Notes represented by a Global Note registered in the name of DTC or its nominee on the applicable record date will be payable by the Trustee to or at the direction of DTC or its nominee in its capacity as the registered holder of the Global Note representing such Notes under the Indenture. Under the terms of the Indenture, the Issuer and the Trustee may treat the persons in whose names the Notes, including the Global Notes, are registered as the owners thereof for the purpose of receiving payment thereon and for any and all other purposes whatsoever. Accordingly, neither the Issuer nor the Trustee has or will have any responsibility or liability for the payment of such amounts to owners of beneficial interests in a Global Note (including principal, premium, if any, Liquidated Damages, if any, and interest). Payments by the Participants and the Indirect Participants to the owners of beneficial interests in a Global Note will be governed by standing instructions and customary industry practice and will be the responsibility of the Participants or the Indirect Participants and DTC. Transfers between Participants in DTC will be effected in accordance with DTC's procedures, and will be settled in same-day funds. Transfers between participants in Euroclear or Cedel will be effected in the ordinary way in accordance with their respective rules and operating procedures. 178 Subject to compliance with the transfer restrictions applicable to the Notes, cross-market transfers between the Participants in DTC, on the one hand, and Euroclear or Cedel participants, on the other hand, will be effected through DTC in accordance with DTC's rules on behalf of Euroclear or Cedel, as the case may be, by its respective depositary; however, such cross-market transactions will require delivery of instructions to Euroclear or Cedel, as the case may be, by the counterparty in such system in accordance with the rules and procedures and within the established deadlines (Brussels time) of such system. Euroclear or Cedel, as the case may be, will, if the transaction meets its settlement requirements, deliver instructions to its respective depositary to take action to effect final settlement on its behalf by delivering or receiving interests in the relevant Global Notes in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear participants and Cedel participants may not deliver instructions directly to the depositaries for Euroclear or Cedel. Because of time zone differences, the securities account of a Euroclear or Cedel participant purchasing an interest in a Global Note from a Participant in DTC will be credited, and any such crediting will be reported to the relevant Euroclear or Cedel participant, during the securities settlement processing day (which must be a business day for Euroclear and Cedel) immediately following the settlement date of DTC. Cash received in Euroclear or Cedel as a result of sales of interest in a Global Security by or through a Euroclear or Cedel participant to a Participant in DTC will be received with value on the settlement date of DTC but will be available in the relevant Euroclear or Cedel cash account only as of the business day for Euroclear or Cedel following DTC's settlement date. Although DTC, Euroclear and Cedel have agreed to the foregoing procedures to facilitate transfers of interests in the Global Notes among participants in DTC, Euroclear and Cedel, they are under no obligation to perform or to continue to perform such procedures, and such procedures may be discontinued at any time. Neither the Issuer nor the Trustee will have any responsibility for the performance by DTC, Euroclear or Cedel or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations. CERTIFICATED NOTES If (i) the Issuer notifies the Trustee in writing that DTC is no longer willing or able to act as a depositary or DTC ceases to be registered as a clearing agency under the Exchange Act and a successor depositary is not appointed within 90 days of such notice or cessation, (ii) Willis Corroon, at its option, notifies the Trustee in writing that it elects to cause the issuance of Notes in definitive form under the Indenture or (iii) upon the occurrence of certain other events as provided in the Indenture, then, upon surrender by DTC of the Global Notes, Certificated Notes will be issued to each person that DTC identifies as the beneficial owner of the Notes represented by the Global Notes. Upon any such issuance, the Trustee is required to register such Certificated Notes in the name of such person or persons (or the nominee of any thereof) and cause the same to be delivered thereto. Neither the Issuer nor the Trustee shall be liable for any delay by DTC or any Participant or Indirect Participant in identifying the beneficial owners of the related Notes and each such person may conclusively rely on, and shall be protected in relying on, instructions from DTC for all purposes 179 (including with respect to the registration and delivery, and the respective principal amounts, of the Notes to be issued). If Certificated Notes are issued, Willis Corroon will appoint Kredietbank S.A. Luxembourgeoise, or such other person located in Luxembourg and reasonably acceptable to the Trustee, as an additional paying and transfer agent. Upon the issuance of Certificated Notes, Holders will be able to transfer and exchange Certificated Notes at the Luxembourg office of such paying and transfer agent, PROVIDED that all transfers and exchanges must be effected in accordance with the terms of the Indenture and, among other things, be recorded in the register maintained by the registrar. YEAR 2000 DTC management is aware that some computer applications, systems, and the like for processing data ("Systems") that are dependent upon calendar dates, including dates before, on, and after January 1, 2000, may encounter "year 2000 problems." DTC has informed its Participants and other members of the financial community (the "Industry") that it has developed and is implementing a program so that its Systems, as the same relate to the timely payment of distributions (including principal and income payments) to securityholders, book-entry deliveries, and settlement of trades within DTC ("DTC Services"), continue to function appropriately. This program includes a technical assessment and a remediation plan, each of which is complete. Additionally, DTC's plan includes a testing phase, which is expected to be completed within appropriate time frames. However, DTC's ability to perform properly its services is also dependent upon other parties, including but not limited to issuers and their agents, as well as third party vendors from whom DTC licenses software and hardware, and third party vendors on whom DTC relies for information or the provision of services, including telecommunication and electrical utility service providers, among others. DTC has informed the Industry that it is contacting (and will continue to contact) third party vendors from whom DTC acquires services to: (i) impress upon them the importance of such services being year 2000 compliant; and (ii) determine the extent of their efforts for year 2000 remediation (and, as appropriate, testing) of their services. In addition, DTC is in the process of developing such contingency plans as it deems appropriate. 180 PLAN OF DISTRIBUTION Until , 1999 (90 days after the date of this prospectus), all dealers effecting transactions in the exchange Notes, whether or not participating in this distribution, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. Each broker-dealer that receives exchange Notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such exchange Notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of exchange Notes received in exchange for outstanding Notes only where such outstanding Notes were acquired as a result of market-making activities or other trading activities. Willis Corroon has agreed that it will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale for a period of 90 days from the date on which the exchange offer is consummated, or such shorter period as will terminate when all outstanding Notes acquired by broker-dealers for their own accounts as a result of market-making activities or other trading activities have been exchanged for exchange Notes and such exchange Notes have been resold by such broker-dealers. Willis Corroon will not receive any proceeds from any sale of exchange Notes by broker-dealers. Exchange Notes received by broker-dealers for their own account pursuant to the exchange offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the exchange Notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any exchange Notes. Any broker-dealer that resells exchange Notes that were received by it for its own account pursuant to the exchange offer and any broker or dealer that participates in a distribution of such exchange Notes may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of exchange Notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period of 90 days from the date on which the exchange offer is consummated, or such shorter period as will terminate when all outstanding Notes acquired by broker-dealers for their own accounts as a result of market-making activities or other trading activities have been exchanged for exchange Notes and such exchange Notes have been resold by such broker-dealers, Willis Corroon will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests such documents in the letter of transmittal. Willis Corroon has agreed to pay all expenses incident to the exchange offer other than commissions or concessions of any brokers or dealers and the fees of any counsel or other advisors or experts retained by the holders of outstanding Notes, except as expressly set forth in the registration rights agreement, and will indemnify the holders of outstanding Notes (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act. The exchange of outstanding Notes for exchange Notes will not be subject to stamp duty or stamp duty reserve tax or any other transfer tax in the United Kingdom. 181 LEGAL MATTERS Certain legal matters with respect to the Notes and the Guarantees are being passed upon on behalf of Willis Corroon by Simpson Thacher & Bartlett, New York, New York. EXPERTS The consolidated financial statements of Willis Corroon as of December 31, 1997 and 1998 and for the years ended December 31, 1996 and 1997 and periods January 1 to September 1, 1998 and September 2 to December 31, 1998 appearing in this prospectus and registration statement have been audited by Ernst & Young, independent auditors, as set forth in their reports appearing elsewhere herein and in the registration statement and are included in reliance upon such reports given upon the authority of such firm as experts in accounting and auditing. WHERE YOU CAN FIND MORE INFORMATION We have filed with the Commission a registration statement on Form F-4 under the Securities Act with respect to the exchange Notes being offered hereby. This prospectus, which forms a part of the registration statement, does not contain all of the information set forth in the registration statement. You should refer to the registration statement for further information. Statements contained in this prospectus as to the contents of any contract or other document are not necessarily complete, and, where such contract or other document is an exhibit to the registration statement, each such statement is qualified by the provision in such exhibit to which reference is hereby made. We are not currently subject to the informational requirements of the Securities Exchange Act of 1934. As a result of this offering of these securities, we will become subject to the informational requirements of the Securities Exchange Act of 1934. Accordingly, we will file reports and such other information with the Commission unless and until we obtain an exemption from such requirement. The registration statement, such other reports and other information can be inspected and copied at the Public Reference Section of the Securities and Exchange Commission located at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C. 20549 and at the regional public reference facilities maintained by the Securities and Exchange Commission located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade Center, Suite 1300, New York, New York 10048. Copies of such material, including copies of all or any portion of the registration statement, can be obtained from the Public Reference Section of the Securities and Exchange Commission at prescribed rates. Such material may be accessed electronically by means of the Commission's home page on the Internet (http://www.sec.gov). Furthermore, we agree that, even if we are not required to file periodic reports and information with the Commission, for so long as any exchange Note remains outstanding we will furnish to you the information that would be required to be furnished by us under Section 13 of the Securities Exchange Act of 1934. Prior to the consummation of the Tender Offer, Willis Corroon Group was subject to the periodic reporting and other information requirements of the Securities Exchange Act of 1934, and, in accordance therewith, filed reports and other information with the Commission. So long as the Notes are listed on the Luxembourg Stock Exchange and the rules of such stock exchange shall so require, copies of such information will also be available during normal business hours on any weekday at the office of Kredietbank S.A. Luxembourgeoise. 182 LISTING AND GENERAL INFORMATION 1. Application has been made to list the exchange Notes on the Luxembourg Stock Exchange. A legal notice relating to the issue of the outstanding Notes and the Certificate of Incorporation and Bylaws of the Issuer was deposited with the GREFFIER EN CHEF DU TRIBUNAL D'ARRONDISSEMENT DE ET A LUXEMBOURG, where such documents may be examined or copies obtained. 2. So long as the Notes are listed on the Luxembourg Stock Exchange and the rules of such stock exchange shall so require, copies of the Certificate of Incorporation and Bylaws of the Issuer, the Memorandum and Articles of Association of Willis Corroon Group, the Partnership Agreement of Willis Corroon Partners and the Indenture will be available at the office of Kredietbank S.A. Luxembourgeoise, 43, Boulevard Royal, L-2955 Luxembourg. So long as the outstanding Notes or the exchange Notes are listed on the Luxembourg Stock Exchange and the rules of such stock exchange shall so require, copies of the consolidated financial statements of Willis Corroon (the Issuer and Willis Corroon Partners do not publish separate financial statements) for the year ended December 31, 1998 and subsequent years and any and all annual and quarterly reports of Willis Corroon will be available during normal business hours on any weekday at the office of Kredietbank S.A. Luxembourgeoise, 43, Boulevard Royal, L-2955 Luxembourg. So long as the outstanding Notes or the exchange Notes are listed on the Luxembourg Stock Exchange and the rules of such stock exchange shall so require, copies of all other material documents referenced herein that are entered into in connection with the Transactions will be available during normal business hours on any weekday at the office of Kredietbank S.A. Luxembourgeoise, 43, Boulevard Royal, L-2955 Luxembourg. 3. The Issuer was incorporated under the laws of the State of Delaware on December 20, 1928. Willis Corroon Group was registered as a private limited company under the laws of England and Wales on November 10, 1998. Willis Corroon Partners was duly formed as a general partnership under the laws of Delaware on November 11, 1998. The creation and issuance of the Notes was authorized on behalf of the Issuer by resolutions adopted by the Board of Directors of the Issuer on January 26 and 28, 1999. The guarantees of the Notes were authorized on behalf of Willis Corroon Group by a resolution of the Board of Directors of Willis Corroon Group on January 25, 1999 and on behalf of Willis Corroon Partners by a unanimous written consent of the general partners of Willis Corroon Partners on January 27, 1999. 4. Willis Corroon Group accepts responsibility for the information contained in this prospectus. To the best knowledge of Willis Corroon Group, the information contained in this prospectus is in accordance with the facts and does not omit anything likely to affect the import of this prospectus. 5. There has been no material adverse change in the financial position of Willis Corroon since December 31, 1998. 6. Willis Corroon is not a party to any litigation that, in the judgment of Willis Corroon Group, could be material in the context of the issue of the Notes, except as disclosed herein. 7. The Auditors of Willis Corroon Group are Ernst & Young, London, who have audited Willis Corroon's financial statements for the years ended December 31, 1996 and 1997 and the periods January 1 to September 1, 1998 and September 2 to December 31, 1998. 8. The Issuer will not appoint a paying and transfer agent in Luxembourg until such time, if any, as Certificated Notes are issued. The Issuer has appointed Kredietbank S.A. Luxembourgeoise as its special agent to act as an intermediary between the Issuer and the holders of the Notes in Luxembourg until such time as the Issuer is required to appoint a transfer and paying agent located in 183 Luxembourg as provided in this prospectus. So long as the outstanding Notes or the exchange Notes are listed on the Luxembourg Stock Exchange and the rules of such stock exchange so require, the Issuer shall maintain a special agent so long as the outstanding Notes or the exchange Notes are in global form and appoint and maintain a paying and transfer agent upon the issuance of the Certificated Notes. The Issuer reserves the right to vary such appointment. 9. The exchange Notes have been accepted for clearance through the Euroclear Operator and Cedel Bank. The Global Notes have been assigned the following CUSIP number: and; a Euroclear common code number of ; and an ISIN number of . 184 INDEX TO FINANCIAL STATEMENTS
PAGE --------- Report of Independent Auditors............................................................................. F-2 Consolidated Financial Statements Consolidated Statement of Income......................................................................... F-3 Consolidated Balance Sheet............................................................................... F-4 Consolidated Statement of Movements in Shareholders' Equity.............................................. F-5 Consolidated Statement of Cash Flows..................................................................... F-6 Consolidated Statement of Total Recognized Gains and Losses.............................................. F-7 Notes to the Financial Statements........................................................................ F-8
F-1 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES REPORT OF INDEPENDENT AUDITORS TO: THE BOARD OF DIRECTORS WILLIS CORROON GROUP LIMITED We have audited the accompanying consolidated balance sheets of Willis Corroon Group Limited as of December 31, 1997 and 1998, and the related consolidated statements of income, movements in shareholders' equity, cash flows and total recognized gains and losses for the years ended December 31, 1996 and 1997 and the periods January 1 to September 1, 1998 and September 2 to December 31, 1998. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with United Kingdom auditing standards which do not differ in any significant respect from United States generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Willis Corroon Group Limited at December 31, 1997 and 1998, and the consolidated results of its operations and its consolidated cash flows for the years ended December 31, 1996 and 1997 and the periods January 1 to September 1, 1998 and September 2 to December 31, 1998, in conformity with accounting principles generally accepted in the United Kingdom, which differ in certain respects from those followed in the United States (see Note 31 of Notes to the Financial Statements). Ernst & Young London, England March 15, 1999 F-2 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, JANUARY 1 TO SEPTEMBER 2 TO ---------------------- SEPTEMBER 1, DECEMBER 31, NOTE 1996 1997 1998 1998 --------- ---------- ---------- ------------- --------------- (L MILLION) CONTINUING OPERATIONS Commissions and fees............................. 683.2 652.0 441.9 235.8 DISCONTINUED OPERATIONS Underwriting premiums, commissions and fees...... 2.3 0.3 -- 0.2 ---------- ---------- ------------- --------------- 3 685.5 652.3 441.9 236.0 Interest and investment income................... 5 45.2 41.7 26.9 13.4 ---------- ---------- ------------- --------------- TOTAL OPERATING REVENUES......................... 730.7 694.0 468.8 249.4 Operating expenses............................... (640.6) (603.7) (418.7) (223.2) Underwriting claims.............................. (4.1) (1.0) -- -- Utilization of provisions........................ 1.8 2.8 6.7 (0.2) ---------- ---------- ------------- --------------- OPERATING INCOME Continuing operations Before exceptional items......................... 87.8 92.1 56.8 26.0 Exceptional items................................ -- -- (35.8) (5.0) ---------- ---------- ------------- --------------- 87.8 92.1 21.0 21.0 Discontinued operations.......................... -- -- -- -- ---------- ---------- ------------- --------------- TOTAL OPERATING INCOME........................... 5 87.8 92.1 21.0 21.0 (Loss)/gain on closure/disposal of operations.... 2.5 2.2 (28.0) (1.3) Share of profit of associates.................... 3.5 1.9 7.7 (1.4) Net interest expense............................. 7 (2.2) (0.7) (2.0) (1.2) ---------- ---------- ------------- --------------- INCOME/(LOSS) BEFORE TAXATION.................... 8 91.6 95.5 (1.3) 17.1 Taxation......................................... 9 (36.6) (38.1) (13.5) (40.9) ---------- ---------- ------------- --------------- INCOME/(LOSS) AFTER TAXATION..................... 55.0 57.4 (14.8) (23.8) Minority interests............................... (0.8) (0.5) (0.8) (1.9) ---------- ---------- ------------- --------------- NET INCOME/(LOSS) (i)............................ 54.2 56.9 (15.6) (25.7) Dividends........................................ 10 (27.6) (27.6) (22.2) -- ---------- ---------- ------------- --------------- RETAINED INCOME/(LOSS)........................... 26.6 29.3 (37.8) (25.7) ---------- ---------- ------------- --------------- ---------- ---------- ------------- --------------- PER ORDINARY SHARE (i) Net income/(loss)................................ 11 13.0p 13.6p (3.7)p (6.0)p ---------- ---------- ------------- --------------- ---------- ---------- ------------- --------------- Average number of ordinary shares outstanding (in millions)...................... 419.7 421.5 424.6 427.1 ---------- ---------- ------------- --------------- ---------- ---------- ------------- ---------------
- ------------------------ (i) A summary of the significant adjustments to net income that would be required if United States generally accepted accounting principles were to be applied instead of those generally accepted in the United Kingdom is set forth in Note 31. The Notes to the Financial Statements are an integral part of these Financial Statements. F-3 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEET
DECEMBER 31, ------------------------------------------ NOTE 1997 1998 ----- -------------------- -------------------- (L MILLION) ASSETS CURRENT ASSETS Cash and short-term deposits...................................... 359.4 317.1 Investments....................................................... 12 257.7 281.6 Receivables....................................................... 13 2,533.2 3,794.6 --------- --------- Total current assets.......................................... 3,150.3 4,393.3 FIXED ASSETS Intangible assets................................................. 14 -- 19.7 Tangible assets................................................... 15 134.8 141.6 Investments....................................................... 16 19.2 34.4 --------- --------- Total fixed assets............................................ 154.0 195.7 --------- --------- TOTAL ASSETS...................................................... 3,304.3 4,589.0 --------- --------- --------- --------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Trade payables.................................................... 2,868.6 2,860.3 Corporate tax..................................................... 20.5 17.7 Accruals and deferred income...................................... 60.2 67.6 Bank loans and overdrafts......................................... 18 0.5 352.7 Dividends payable................................................. 7.1 -- Other............................................................. 17 89.9 817.4 --------- --------- Total current liabilities..................................... 3,046.8 4,115.7 NONCURRENT LIABILITIES Bank loans........................................................ 18 34.0 276.4 Other............................................................. 19 3.7 5.0 --------- --------- Total noncurrent liabilities.................................. 37.7 281.4 PROVISIONS FOR LIABILITIES AND CHARGES............................ 21 90.0 94.8 MINORITY INTERESTS................................................ 5.2 8.1 --------- --------- Total liabilities and minority interests...................... 3,179.7 4,500.0 SHAREHOLDERS' EQUITY (i) Share capital..................................................... 52.9 53.6 Share premium..................................................... 21.4 28.5 Revaluation reserve............................................... 14.9 14.9 Retained earnings/(deficit)....................................... 35.4 (8.0) --------- --------- Total shareholders' equity.................................... 124.6 89.0 --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........................ 3,304.3 4,589.0 --------- --------- --------- ---------
- ------------------------ (i) A summary of the significant adjustments to shareholders' equity that would be required if United States generally accepted accounting principles were to be applied instead of those generally accepted in the United Kingdom is set forth in Note 31. The Notes to the Financial Statements are an integral part of these Financial Statements. F-4 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF MOVEMENTS IN SHAREHOLDERS' EQUITY
ORDINARY SHARES ------------------------------ AUTHORIZED SHARE CAPITAL At January 1, 1996, December 31, 1996, December 31, 1997 NUMBER (000) (L MILLION) and December 31, 1998.............................................................. 528,000 66.0 ISSUED SHARE CAPITAL --------------- ------------- --------------- ------------- ------------------------ SHARE REVALUATION RETAINED ISSUED SHARE CAPITAL AND RESERVES ORDINARY SHARES PREMIUM(I) RESERVE(I) EARNINGS(II) ------------------------ ------------- --------------- ------------- NUMBER (000) (L MILLION) AT JANUARY 1, 1996.......................... 419,299 52.4 17.0 14.9 36.3 Retained income............................. -- -- -- -- 26.6 Issued for acquisitions..................... 38 -- -- -- -- Issued under employee share plans........... 740 0.1 1.0 -- -- Goodwill on acquisitions eliminated (iii)... -- -- -- -- (1.1) Goodwill reinstated on disposals............ -- -- -- -- 13.7 Exchange adjustments........................ -- -- -- -- (9.0) ----------- --- --- ----- ----- AT DECEMBER 31, 1996........................ 420,077 52.5 18.0 14.9 66.5 Retained income............................. -- -- -- -- 29.3 Issued for acquisitions..................... 1,545 0.2 1.8 -- -- Issued under employee share plans........... 1,352 0.2 1.6 -- -- Goodwill on acquisitions eliminated (iv).... -- -- -- -- (68.9) Goodwill reinstated on disposals............ -- -- -- -- 6.6 Exchange adjustments........................ -- -- -- -- 1.9 ----------- --- --- ----- ----- AT DECEMBER 31, 1997........................ 422,974 52.9 21.4 14.9 35.4 Retained income............................. -- -- -- -- (63.5) Scrip dividends............................. 1,758 0.2 2.2 -- -- Issued under employee share plans........... 3,683 0.5 4.9 -- -- Goodwill on acquisitions eliminated (v)..... -- -- -- -- 0.2 Goodwill reinstated on disposals............ -- -- -- -- 30.4 Exchange adjustments........................ -- -- -- -- (10.5) ----------- --- --- ----- ----- AT DECEMBER 31, 1998........................ 428,415 53.6 28.5 14.9 (8.0) ----------- --- --- ----- ----- ----------- --- --- ----- -----
- ------------------------ (i) The share premium and revaluation reserve are not distributable. (ii) Retained earnings at December 31, 1998 included L4.1 million (1997: L2.9 million, 1996: L4.9 million) in respect of associates. (iii) Goodwill eliminated in 1996 comprised subsidiaries (L1.1 million). (iv) Goodwill eliminated in 1997 comprised subsidiaries (L20.8 million) and associates (L48.1 million). (v) Goodwill eliminated in 1998 comprised adjustments relating to subsidiaries acquired before December 31, 1997. (vi) The cumulative amount of goodwill eliminated in 1998 and earlier financial years, net of goodwill relating to subsidiaries sold, amounts to L542.1 million. (vii) Trinity Acquisition plc ("Trinity Acquisition") has the right to convert the preferred shares it holds in a non-U.K. subsidiary into 563,580 ordinary shares of Willis Corroon Group Limited ("ordinary shares") at any time up to December 31, 2002. The Notes to the Financial Statements are an integral part of these Financial Statements. F-5 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED JANUARY 1 TO SEPTEMBER 2 TO DECEMBER 31, SEPTEMBER 1, DECEMBER 31, -------------------- --------------- --------------- NOTE 1996 1997 1998 1998 ----- --------- --------- --------------- --------------- (L MILLION) NET CASH INFLOW FROM OPERATING ACTIVITIES............... 23 63.7 113.4 127.5 (97.7) --------- --------- ------ ------- DIVIDENDS FROM ASSOCIATES............................... 1.5 0.9 1.9 0.5 --------- --------- ------ ------- RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest paid........................................... (2.0) (0.6) (1.8) (1.1) Bank fees on borrowings................................. -- -- -- (9.6) Interest element of finance lease rental payments....... (0.2) (0.1) (0.1) -- --------- --------- ------ ------- Net cash outflow for returns on investment and servicing of finance............................................ (2.2) (0.7) (1.9) (10.7) --------- --------- ------ ------- TAXATION................................................ (26.8) (23.7) (8.4) (18.5) --------- --------- ------ ------- CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Purchase of tangible fixed assets....................... (28.9) (26.5) (20.1) (9.8) Sale of tangible fixed assets........................... 13.1 4.7 2.4 1.0 Purchase of fixed asset investments..................... (0.9) (5.0) (1.9) -- --------- --------- ------ ------- Net cash (outflow)/inflow for capital expenditure and financial investment.................................. (16.7) (26.8) (19.6) (8.8) --------- --------- ------ ------- ACQUISITIONS AND DISPOSALS Purchase of subsidiaries................................ (1.2) (17.1) (1.5) (16.7) Purchase of associates.................................. -- (35.6) (14.9) (5.7) Sale of subsidiaries.................................... 36.4 10.5 5.0 1.6 Net cash transferred on purchase/sale of subsidiaries... (12.6) (0.5) 2.2 (2.3) --------- --------- ------ ------- Net cash (outflow)/inflow for acquisitions and disposals............................................. 22.6 (42.7) (9.2) (23.1) --------- --------- ------ ------- EQUITY DIVIDENDS PAID................................... (27.3) (26.6) (19.8) (7.6) --------- --------- ------ ------- CASH FLOW BEFORE MANAGEMENT OF LIQUID RESOURCES AND FINANCING............................................. 14.8 (6.2) 70.5 (165.9) --------- --------- ------ ------- MANAGEMENT OF LIQUID RESOURCES.......................... 25.2 2.8 (66.8) 122.2 --------- --------- ------ ------- FINANCING Issue of ordinary shares................................ -- 0.3 0.7 4.0 Amounts due from parent company......................... -- -- -- (858.3) Amounts due to parent company........................... -- -- -- 332.6 Convertible debentures.................................. -- -- -- (0.2) Debt due within a year: increase/(decrease) in short-term borrowings.......... (0.1) -- -- 349.4 Debt due beyond a year: increase/(decrease) in long-term borrowings........... (42.6) 15.7 32.6 208.7 Capital element of finance lease rental payments........ (0.6) (1.0) (0.6) -- --------- --------- ------ ------- Net cash inflow/(outflow) from financing................ (43.3) 15.0 32.7 36.2 --------- --------- ------ ------- INCREASE/(DECREASE) IN CASH............................. (3.3) 11.6 36.4 (7.5) --------- --------- ------ ------- --------- --------- ------ -------
- ------------------------ (i) Acquisitions and disposals and financing activities not involving cash consideration: The fair value of ordinary shares issued in connection with acquisitions in 1997 amounted to L2.0 million. (ii) The significant differences between the consolidated statement of cash flows presented above and that required under U.S. GAAP are described in Note 31. F-6 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF TOTAL RECOGNIZED GAINS AND LOSSES
YEAR ENDED DECEMBER JANUARY 1 TO SEPTEMBER 2 TO 31, SEPTEMBER 1, DECEMBER 31, -------------------- --------------- ----------------- 1996 1997 1998 1998 --------- --------- --------------- ----------------- (L MILLION) NET INCOME Parent and subsidiaries.................................... 51.3 55.4 (23.1) (22.6) Associates................................................. 2.9 1.5 7.5 (3.1) --- --- ----- ----- 54.2 56.9 (15.6) (25.7) CURRENCY TRANSLATION DIFFERENCES Parent and subsidiaries.................................... (9.7) 1.4 (2.2) (7.8) Associates................................................. 0.7 0.5 -- (0.5) --- --- ----- ----- TOTAL RECOGNIZED GAINS AND LOSSES FOR THE FINANCIAL YEAR... 45.2 58.8 (17.8) (34.0) --- --- ----- ----- --- --- ----- -----
- ------------------------------ (i) A statement of Comprehensive Income under U.S. GAAP is set forth in Note 31 of Notes to the Financial Statements. The Notes to the Financial Statements are an integral part of these Financial Statements. F-7 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS NOTE 1--ACCOUNTING POLICIES BASIS OF PREPARATION The consolidated financial statements of Willis Corroon Group Limited (the "Company") and its subsidiaries (together, the "Group") have been prepared on the going concern basis under the historical cost convention as modified by the revaluation of certain land and buildings. The Group's consolidated financial statements comply with accounting standards applicable in the United Kingdom. The Company was acquired by Trinity Acquisition effective September 2, 1998. While this acquisition has no impact on the basis of accounting for the Company, in accordance with the requirements of the U.S. Securities and Exchange Commission, financial information for the periods January 1 to September 1, 1998, and September 2 to December 31, 1998 is presented separately. Under U.S. GAAP, the acquisition establishes a new basis of accounting for the Company from September 2, 1998 as described in Note 31. BASIS OF CONSOLIDATION The Group's consolidated financial statements incorporate those of the Company and its subsidiaries together with the Group's share of the results and net assets of associates based on financial statements drawn up to December 31. The results of subsidiaries and associates acquired or disposed of during the year are included from or to the relevant dates of acquisition or disposal. GOODWILL Goodwill arising on acquisitions occurring after January 1, 1998 is capitalized and amortized on a systematic basis over its useful economic life. Goodwill on acquisitions completed before January 1, 1998 has been eliminated against retained earnings. On disposal of a business acquired before January 1, 1998, any goodwill which had been previously eliminated against retained earnings is reinstated and charged to the income statement. REVENUE RECOGNITION The Group takes credit for commission (including fees in lieu) at the date when the insured is debited or at the inception date of the policy, whichever is the later. Commissions on return and additional premiums and adjustments are brought into account as and when these occur; other fees and commissions are accounted for on a receivable basis. INSURANCE BROKING RECEIVABLES AND PAYABLES Insurance brokers usually act as agents in placing the insurable risks of their clients with insurers and, as such, generally are not liable as principals for amounts arising from such transactions. Notwithstanding the legal relationships with clients and insurers, insurance brokers are entitled to retain investment income on any cashflows arising from insurance broking transactions; accounting standards require receivables and payables arising from such transactions to be shown as assets and liabilities. Debit and credit balances arising from insurance broking transactions are reported as separate assets or liabilities unless such balances are due to or from the same party and the offset would survive the insolvency of that party, in which case they are aggregated into a single net balance. CURRENCY TRANSLATION Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction, or, in the case of forward contracts in respect of the current year's income, at the contracted rate. Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling F-8 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 1--ACCOUNTING POLICIES (CONTINUED) at the balance sheet date. Exchange differences arising on the translation of the net assets of overseas subsidiaries and associates, and the exchange differences arising on foreign currency borrowings taken out to provide a hedge against the exchange risk associated with those investments, are taken to retained earnings. The results of overseas subsidiaries and associates are translated into sterling at average rates of exchange and the difference between average rates and year end rates is taken to retained earnings. Other exchange differences are taken to income. DEPRECIATION Depreciation is calculated on a straight line basis at rates estimated to write down the value of assets over their expected useful lives. Depreciation on freehold buildings and long leaseholds is provided at 2% per annum. Other leaseholds are written off over the remaining period of the lease. Depreciation on fixed plant, furniture, equipment and vehicles is provided at rates between 4% and 33 1/3% per annum. No depreciation is provided on freehold land. DEFERRED TAX Provision for deferred tax is made using the liability method for all timing differences to the extent that it is probable that a liability will crystallize. No provision is made for tax that would be payable on the disposal of revalued properties until it is decided in principle to dispose of the asset. PENSIONS The regular cost of providing benefits is charged to operating income over the employees' service lives on the basis of a constant percentage of pensionable earnings. Variations from regular cost, arising from periodic actuarial valuations, are allocated to operating income on a systematic basis over the expected remaining service lives of current employees. NOTE 2--MAJOR ACQUISITIONS AND DISPOSALS YEAR ENDED DECEMBER 31, 1996 There were no material acquisitions in 1996. CONSUMER BENEFIT LIFE INSURANCE COMPANY ("CBL") During 1996, the Group disposed of its interest in CBL, a wholly owned subsidiary company. The net proceeds of disposal were L20.7 million and the net assets disposed of were L19.4 million. There was no gain or loss on disposal after charging positive goodwill of L1.3 million which had been previously included within retained earnings. W F CORROON During 1996, the Group disposed of its interests in W F Corroon, its wholly-owned employee benefit consulting operations. The net proceeds of disposal were L16.1 million and the net assets disposed of were L8.1 million. There was no gain or loss on disposal after charging positive goodwill of L8.0 million which had been previously included within retained earnings. YEAR ENDED DECEMBER 31, 1997 There were no material acquisitions of subsidiaries in 1997. F-9 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 2--MAJOR ACQUISITIONS AND DISPOSALS (CONTINUED) WILLIS FABER & DUMAS (AGENCIES) LIMITED ("WF&D AGENCIES") WF&D Agencies, a Lloyd's members' agent, was disposed of in October 1997. GRAS SAVOYE & CIE ("GRAS SAVOYE") On December 30, 1997, the Group acquired a 33% interest in Gras Savoye for a cash consideration of L47.8 million, of which L15.2 million was paid in July 1998. Goodwill eliminated against retained earnings amounted to L46.0 million. YEAR ENDED DECEMBER 31, 1998 GRUPPO ITAL BROKERS The Group acquired a 50% interest in Gruppo Ital Brokers in July 1998 for a consideration of L13.0 million. Following this acquisition, a merger was effected with the Group's existing Italian associate to form Willis Corroon Italia SpA. S&C WILLIS CORROON CORREDURIA DE SEGUROS Y REASEGUROS SA ("S&C WILLIS CORROON") The Group increased its investment from 48% to 60% in July 1998 and reorganized its existing Spanish and Portuguese operations. PROFESSIONAL LIABILITY UNDERWRITING MANAGEMENT ("PLUM") The Group's professional liability wholesale operation in the United States was closed in May 1998. The loss on closure amounted to L30.3 million including attributable goodwill which had previously been eliminated against retained earnings. The effect of acquiring subsidiaries (including major acquisitions), all of which were accounted for under the purchase method of accounting, was as follows:
YEAR ENDED DECEMBER 31, ------------------------------- 1996 1997 1998 --------- --------- --------- (L MILLION) NET ASSETS ACQUIRED Tangible assets.................................................... -- 3.9 4.3 Fixed asset investments............................................ -- 0.3 0.6 Receivables........................................................ 0.1 21.0 33.3 Cash and investments............................................... -- 4.7 3.2 Payables........................................................... -- (19.3) (34.9) Provisions for liabilities and charges............................. -- (3.9) -- Minority interest.................................................. -- (3.5) (2.7) Goodwill........................................................... 1.1 20.8 19.7 Net assets previously reported as associates....................... -- (2.6) (2.0) --- --------- --------- 1.2 21.4 21.5 --- --------- --------- --- --------- --------- COST OF ACQUISITIONS Cash............................................................... 1.2 17.1 17.5 Deferred consideration............................................. -- 2.3 4.0 Shares issued...................................................... -- 2.0 -- --- --------- --------- 1.2 21.4 21.5 --- --------- --------- --- --------- ---------
F-10 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 2--MAJOR ACQUISITIONS AND DISPOSALS (CONTINUED) Had the acquisitions been consummated at January 1, 1998 and at the beginning of the preceeding financial year, the unaudited consolidated pro forma results for those years would have been:
YEAR ENDED DECEMBER 31, -------------------- 1997 1998 --------- --------- (L MILLION, EXCEPT PER SHARE AMOUNTS) Total operating revenues.......................................... 724.4 735.5 Net income/(loss)................................................. 60.8 (39.1) Net income/(loss) per ordinary share.............................. 13.6p (9.2)p
The subsidiaries acquired during 1998 utilized L4.4 million of the Group's net operating cash flow, paid Lnil in respect of net returns on investments and servicing of finance, paid Lnil in respect of taxation and utilized L0.2 million for capital expenditure. The L18.2 million shown as "Purchase of subsidiaries" in the Consolidated Statement of Cash Flows includes L0.7 million relating to deferred consideration paid during 1998 in respect of acquisitions completed in 1997. These acquisitions would have had no material impact on the results for 1996, 1997 and 1998 had they been consummated at the beginning both of the respective years of acquisition and of the immediate preceding years. The effect of the above, and other, disposals (including provisional liquidation) was as follows:
YEAR ENDED DECEMBER 31, ------------------------------------------------ DISCONTINUED CONTINUING OPERATIONS OPERATIONS ------------------------------- --------------- 1996 1997 1998 1997 --------- --------- --------- --------------- (L MILLION) NET ASSETS DISPOSED OF Tangible assets...................................... 0.9 0.6 0.6 -- Investments.......................................... 25.6 -- -- -- Receivables.......................................... 16.8 8.1 2.8 23.2 Current asset investments............................ -- -- -- 38.3 Deposits and cash.................................... 12.6 5.2 3.3 20.0 Payables............................................. (25.7) (11.0) (5.2) (9.9) Insurance funds...................................... -- -- -- (73.0) --------- --------- --------- ----- 30.2 2.9 1.5 (1.4) Minority interest.................................... -- -- (0.3) -- Goodwill written off................................. 13.7 2.5 30.1 4.1 Loss/gain on disposal................................ 2.5 2.2 (27.5) (2.7) --------- --------- --------- ----- TOTAL PROCEEDS....................................... 46.4 7.6 3.8 -- --------- --------- --------- ----- --------- --------- --------- ----- SATISFIED BY Cash................................................. 36.4 4.5 3.0 -- Deferred consideration............................... 10.0 3.1 0.8 -- --------- --------- --------- ----- 46.4 7.6 3.8 -- --------- --------- --------- ----- --------- --------- --------- -----
Continuing operations sold during 1997 comprised WF&D Agencies which was sold on October 20, 1997 and Willis Corroon France SA on December 30, 1997. The contribution to Group income up to their respective dates of disposal was L5.1 million and L(0.5) million. F-11 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 2--MAJOR ACQUISITIONS AND DISPOSALS (CONTINUED) Discontinued operations disposed of comprise the net assets of Sovereign Marine & General Insurance Company Limited ("Sovereign") and its subsidiaries. Sovereign was placed into provisional liquidation on July 11, 1997. The operations disposed of during 1998 utilized L1.2 million (1997: contribution L2.7 million) of the Group's net operating cash flow and paid Lnil in respect of returns on investments and servicing of finance, paid Lnil million (1997: L3.1 million) in respect of taxation and utilized Lnil million for capital expenditure. The L6.6 million shown as "Sale of subsidiaries" in the Consolidated Statement of Cash Flows includes L3.6 million relating to deferred consideration received during 1998 in respect of disposals completed in prior years. NOTE 3--SEGMENTAL ANALYSIS The Group's continuing operations comprise its insurance broking and risk management consulting activities, which included employee benefits consulting operations up to November 1996 and Lloyd's members' agency operations up to October 1997, the respective dates of disposal. The Group's discontinued operations comprise its UK underwriting activities, which ceased underwriting in 1991, and include Sovereign up to July 11, 1997, when it was placed into provisional liquidation, and Willis Faber (Underwriting Management) Limited ("WFUM").
CONTINUING DISCONTINUED BUSINESS ANALYSIS OPERATIONS OPERATIONS TOTAL - --------------------------------------------------------------------------- ----------- ----------------- --------- (L MILLION) JANUARY 1 TO SEPTEMBER 1, 1998 COMMISSIONS AND FEES....................................................... 441.9 -- 441.9 Interest and investment income............................................. 26.9 -- 26.9 ----------- --- --------- TOTAL OPERATING REVENUES................................................... 468.8 -- 468.8 Operating expenses......................................................... (412.0) (6.7) (418.7) Exceptional items.......................................................... (35.8) -- (35.8) Utilization of provisions.................................................. -- 6.7 6.7 ----------- --- --------- OPERATING INCOME........................................................... 21.0 -- 21.0 ----------- --- --------- ----------- --- --------- SEPTEMBER 2 TO DECEMBER 31, 1998 COMMISSIONS AND FEES....................................................... 235.8 0.2 236.0 Interest and investment income............................................. 13.4 -- 13.4 ----------- --- --------- TOTAL OPERATING REVENUES................................................... 249.2 0.2 249.4 Operating expenses......................................................... (223.2) -- (223.2) Exceptional items.......................................................... (5.0) -- (5.0) Utilization of provisions.................................................. -- (0.2) (0.2) ----------- --- --------- OPERATING INCOME........................................................... 21.0 -- 21.0 ----------- --- --------- ----------- --- ---------
F-12 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 3--SEGMENTAL ANALYSIS (CONTINUED)
CONTINUING DISCONTINUED BUSINESS ANALYSIS OPERATIONS OPERATIONS TOTAL - --------------------------------------------------------------------------- ----------- ----------------- --------- (L MILLION) YEAR ENDED DECEMBER 31, 1997 COMMISSIONS AND FEES....................................................... 652.0 0.3 652.3 Interest and investment income............................................. 40.0 1.7 41.7 ----------- --- --------- TOTAL OPERATING REVENUES................................................... 692.0 2.0 694.0 Operating expenses......................................................... (599.9) (3.8) (603.7) Underwriting claims........................................................ -- (1.0) (1.0) Utilization of provisions.................................................. -- 2.8 2.8 ----------- --- --------- OPERATING INCOME........................................................... 92.1 -- 92.1 ----------- --- --------- ----------- --- --------- YEAR ENDED DECEMBER 31, 1996 COMMISSIONS AND FEES 683.2 2.3 685.5 Interest and investment income............................................. 41.8 3.4 45.2 ----------- --- --------- TOTAL OPERATING REVENUES................................................... 725.0 5.7 730.7 Operating expenses......................................................... (637.2) (3.4) (640.6) Underwriting claims........................................................ -- (4.1) (4.1) Utilization of provisions.................................................. -- 1.8 1.8 ----------- --- --------- OPERATING INCOME........................................................... 87.8 -- 87.8 ----------- --- --------- ----------- --- ---------
CONTINUING OPERATIONS ------------------------------------------------------------ YEAR ENDED JANUARY 1 TO SEPTEMBER 2 TO DECEMBER 31, SEPTEMBER 1 DECEMBER 31, ------------------------ --------------- ----------------- GEOGRAPHICAL ANALYSIS BY LOCATION OF CLIENT 1996 1997 1998 1998 - --------------------------------------------------------- ----------- ----------- --------------- ----------------- (L MILLION) COMMISSIONS AND FEES United Kingdom........................................... 175.0 164.7 110.2 54.9 North America............................................ 361.1 355.8 242.5 125.5 Rest of the World........................................ 147.1 131.5 89.2 55.4 ----- ----- ----- ----- 683.2 652.0 441.9 235.8 ----- ----- ----- ----- ----- ----- ----- -----
The above table analyzes commissions and fees by the address of the client from whom the business is derived. This does not necessarily reflect the original source or location of the business. F-13 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 3--SEGMENTAL ANALYSIS (CONTINUED)
CONTINUING OPERATIONS ---------------------------------------------------- YEAR ENDED JANUARY 1 TO SEPTEMBER 2 TO DECEMBER 31, SEPTEMBER 1 DECEMBER 31, -------------------- ------------- --------------- GEOGRAPHICAL ANALYSIS BY LOCATION OF COMPANY 1996 1997 1998 1998 - ----------------------------------------------------------- --------- --------- ------------- --------------- (L MILLION) COMMISSIONS AND FEES United Kingdom............................................. 287.8 276.6 190.9 87.6 North America.............................................. 357.7 325.2 223.6 115.9 Rest of the World.......................................... 37.7 50.2 27.4 32.3 --------- --------- ------------- ------- 683.2 652.0 441.9 235.8 --------- --------- ------------- ------- TOTAL OPERATING REVENUES United Kingdom............................................. 314.9 303.6 209.0 96.2 North America.............................................. 370.2 336.1 231.5 119.8 Rest of the World.......................................... 39.9 52.3 28.3 33.2 --------- --------- ------------- ------- 725.0 692.0 468.8 249.2 --------- --------- ------------- ------- OPERATING INCOME United Kingdom............................................. 49.6 56.5 (4.5) 8.6 North America.............................................. 33.4 27.7 22.1 3.6 Rest of the World.......................................... 4.8 7.9 3.4 8.8 --------- --------- ------------- ------- 87.8 92.1 21.0 21.0 --------- --------- ------------- ------- DEPRECIATION AND AMORTIZATION.............................. 24.5 22.7 15.5 8.9 --------- --------- ------------- ------- CAPITAL EXPENDITURE........................................ 28.9 26.5 20.1 9.8 --------- --------- ------------- ------- --------- --------- ------------- -------
Commissions and fees earned by the Group's discontinued operations arose in the United Kingdom.
CONTINUING OPERATIONS DECEMBER 31, ------------------------------- 1996 1997 1998 --------- --------- --------- (L MILLION) NET ASSETS United Kingdom................................................................... 114.0 93.7 0.5 North America.................................................................... 65.3 74.5 84.8 Rest of the World................................................................ 18.9 6.1 40.2 --------- --------- --------- 198.2 174.3 125.5 --------- --------- --------- TOTAL ASSETS United Kingdom................................................................... 2,006.4 1,958.0 2,581.7 North America.................................................................... 1,199.6 1,256.6 1,843.3 Rest of the World................................................................ 80.8 83.7 167.9 --------- --------- --------- 3,286.8 3,298.3 4,592.9 --------- --------- --------- --------- --------- ---------
Discontinued Operations: Net assets and total assets located in the United Kingdom at December 31, 1998 amounted to L(28.4) million (1997: L(44.5) million, 1996: L(52.8) million) and L(3.9) million (1997: L6.0 million, 1996: 73.3 million), respectively and in North America at December 31, 1996 amounted to L8.0 million and L17.1 million, respectively. F-14 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 4--EXCEPTIONAL ITEMS (I) PENSIONS REVIEW In March 1998, the Financial Services Authority and the Personal Investment Authority issued a consultation paper on proposals for phase 2 of the pension transfers and opt outs review. The Group has approximately 8,000 transfer cases to review and a small number of opt out cases. On the basis of both the Group's experience of settling phase 1 priority cases and the assumptions set out in the consultation paper, the Directors consider that, although there is still uncertainty as to the eventual outcome, a further provision of L25.0 million is a reasonable estimate to meet the costs of redress and related administration for both phase 1 and phase 2. (II) COSTS IN CONNECTION WITH THE OFFER BY TRINITY ACQUISITION Costs written off by the Group in connection with the acquisition by Trinity Acquisition of the whole of the issued share capital of the Company amounted to L15.8 million. (III) LOSS ON CLOSURE/DISPOSAL OF OPERATIONS The Group's U.S. professional liability wholesale operation, ("PLUM"), was closed in May 1998. The loss on closure amounted to L0.7 million before writing off attributable goodwill. In accordance with FRS 10, goodwill attributable to PLUM of L29.6 million, which had been previously eliminated directly against retained earnings, has been reinstated and written off as a component of the loss on closure. This accounting requirement does not affect the Group's net assets; the net impact after tax of the closure of PLUM was to reduce net assets by L0.4 million. The profit on disposal of other operations during 1998 amounted to L1.0 million. NOTE 5--OPERATING INCOME
YEAR ENDED JANUARY 1 TO SEPTEMBER 2 TO DECEMBER 31, SEPTEMBER 1, DECEMBER 31, -------------------- ----------------- ----------------- 1996 1997 1998 1998 --------- --------- ----------------- ----------------- (L MILLION) OPERATING INCOME WAS ARRIVED AT AFTER (CREDITING)/ CHARGING: Interest receivable........................................... (35.8) (30.0) (18.4) (8.7) Investment income............................................. (9.4) (11.7) (8.5) (4.7) --------- --------- ----- ----- INTEREST AND INVESTMENT INCOME................................ (45.2) (41.7) (26.9) (13.4) --------- --------- ----- ----- AUDITORS' REMUNERATION Audit fees.................................................. 1.1 1.1 0.7 0.4 Other services provided by Ernst & Young (United Kingdom only)..................................... 0.1 0.4 0.2 0.2 DEPRECIATION AND AMORTIZATION ON Owned assets................................................ 23.8 22.2 15.4 8.9 Finance leased assets....................................... 0.7 0.5 0.1 -- OPERATING LEASE RENTALS Land and buildings.......................................... 34.1 28.1 19.2 9.3 Equipment................................................... 3.5 2.7 1.9 1.1 --------- --------- ----- ----- --------- --------- ----- -----
F-15 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 6--EMPLOYEES
YEAR ENDED JANUARY 1 TO SEPTEMBER 2 TO DECEMBER 31, SEPTEMBER 1, DECEMBER 31, -------------------- --------------- ----------------- SALARIES AND ASSOCIATED EXPENSES 1996 1997 1998 1998 - -------------------------------------------------------------- --------- --------- --------------- ----------------- (L MILLION) Salaries...................................................... 360.9 345.7 240.4 131.5 Social security costs......................................... 24.6 23.7 16.7 7.7 Other pension costs........................................... 20.7 20.2 14.2 6.2 --------- --------- ----- ----- 406.2 389.6 271.3 145.4 --------- --------- ----- ----- --------- --------- ----- -----
AVERAGE FOR -------------------------------------------------------- YEAR ENDED JANUARY 1 TO SEPTEMBER 2 TO DECEMBER 31, SEPTEMBER 1, DECEMBER 31, -------------------- --------------- ----------------- NUMBER OF GROUP EMPLOYEES 1996 1997 1998 1998 - -------------------------------------------------------------- --------- --------- --------------- ----------------- (NUMBER) United Kingdom................................................ 4,444 3,938 3,910 3,777 North America................................................. 4,899 4,531 4,363 4,348 Rest of the World............................................. 621 893 942 1,179 --------- --------- ----- ----- 9,964 9,362 9,215 9,304 --------- --------- ----- ----- --------- --------- ----- -----
NOTE 7--NET INTEREST EXPENSE
YEAR ENDED DECEMBER 31, JANUARY 1 TO SEPTEMBER 2 TO SEPTEMBER 1, DECEMBER 31, ------------------------ ----------------- ------------------- 1996 1997 1998 1998 ----- ----- ----------------- ------------------- (L MILLION) Bank loans, overdrafts.......................................... 2.0 0.6 1.8 1.1 Interest payable by associates.................................. -- -- 0.1 0.1 Finance charges payable under finance leases.................... 0.2 0.1 0.1 0.0 -- -- -- -- 2.2 0.7 2.0 1.2 -- -- -- -- -- -- -- --
NOTE 8--INCOME BEFORE TAXATION
YEAR ENDED JANUARY 1 TO SEPTEMBER 2 TO DECEMBER 31, SEPTEMBER 1, DECEMBER 31, -------------------- --------------- ----------------- 1996 1997 1998 1998 --------- --------- --------------- ----------------- (L MILLION) United Kingdom................................................... 52.5 53.7 (4.9) 6.4 Other countries.................................................. 39.1 41.8 3.6 10.7 --- --- --- --- 91.6 95.5 (1.3) 17.1 --- --- --- --- --- --- --- ---
F-16 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 9--TAXATION
YEAR ENDED JANUARY 1 TO SEPTEMBER 2 TO DECEMBER 31, SEPTEMBER 1, DECEMBER 31, -------------------- --------------- ----------------- CHARGE FOR THE YEAR 1996 1997 1998 1998 - ---------------------------------------------------------------- --------- --------- --------------- ----------------- (L MILLION) UK corporation tax at 31% (1997: 31.5% 1996: 33%)............... 20.9 16.2 11.9 (0.4) Non-UK tax...................................................... 14.6 11.1 4.9 6.1 Deferred tax.................................................... 0.5 10.5 (3.4) 23.9 Advance corporation tax written off............................. -- -- -- 9.7 --- --- --- --- 36.0 37.8 13.4 39.3 Associates...................................................... 0.6 0.3 0.1 1.6 --- --- --- --- Charge for the year............................................. 36.6 38.1 13.5 40.9 --- --- --- --- --- --- --- ---
The deferred tax charge for 1998 includes the write-off of U.K. deferred tax assets amounting to L23.4 million. The timing of the recovery of these assets is uncertain. The deferred tax charge for 1997 included L1.1 million resulting from the reduction in U.K. corporation tax rate from 33% to 31% and L2.7 million in respect of discontinued operations which was no longer considered recoverable following the provisional liquidation of Sovereign. The total tax charge for 1998 includes a tax credit of L3.8 million relating to exceptional items.
YEAR ENDED JANUARY 1 TO SEPTEMBER 2 TO DECEMBER 31, SEPTEMBER 1, DECEMBER 31, ------------------------ ------------- ----------------- RECONCILIATION OF UK STATUTORY RATE TO EFFECTIVE RATE 1996 1997 1998 1998 - -------------------------------------------------------------- ----------- ----------- ------------- ----------------- % % % % UK statutory rate............................................. 33.0 31.0 31.0 31.0 Adjusted for: Rate change during the course of the year................... -- 0.5 -- -- Overseas profits taxed at other than UK statutory rate...... (0.7) 0.5 (47.2) 18.8 Capital gains not currently taxable or reduced by other reliefs................................................... (2.0) (0.8) 50.1 (0.6) Permanent differences and other items....................... 8.3 8.5 (111.6) 2.1 Prior year adjustments...................................... 1.3 0.2 -- (5.7) Disallowable costs incurred by the company on the acquisition............................................... -- -- (257.5) -- Disallowable consolidated goodwill eliminated on disposal... -- -- (703.5) -- --- --- ------------- --- Effective rate................................................ 39.9 39.9 (1,038.7) 45.6 --- --- ------------- --- --- --- ------------- ---
The effective rate excludes the write-off of advance corporation tax and deferred taxes. F-17 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 10--DIVIDENDS
YEAR ENDED DECEMBER JANUARY 1 TO SEPTEMBER 2 TO 31, SEPTEMBER 1, DECEMBER 31, -------------------- --------------- ----------------- 1996 1997 1998 1998 --------- --------- --------------- ----------------- (L MILLION) First interim................................................... 6.9 6.9 7.4 -- Second interim.................................................. 6.9 6.9 7.4 -- Third interim................................................... 6.9 6.9 7.4 -- Fourth interim.................................................. 6.9 6.9 -- -- --- --- --- --- 27.6 27.6 22.2 -- --- --- --- --- --- --- --- ---
NOTE 11--EARNINGS PER ORDINARY SHARE Earnings per ordinary share have been calculated using net income and the weighted average number of ordinary shares in issue during the periods January 1 to September 1, 1998 and September 2 to December 31, 1998 respectively of 424.6 million and 427.1 million respectively (1997: 418.4 million, 1996: 418.1 million) after excluding those ordinary shares on which dividends were waived. The dilution arising from the issue of ordinary shares in accordance with the Group's employee share plans and Willis Corroon Corporation's 7 1/2% convertible subordinated debentures would not have been material. NOTE 12--CURRENT ASSET INVESTMENTS
DECEMBER 31, -------------------- 1997 1998 --------- --------- (L MILLION) Listed investments (market value L49.8 million (1997 : L55.9 million)).......................... 55.6 48.7 Unlisted investments............................................................................ 202.1 232.9 --------- --------- 257.7 281.6 --------- --------- --------- ---------
Listed investments mainly comprise U.K. and U.S. government securities which were purchased with the intention of holding to maturity. F-18 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 13--RECEIVABLES
DECEMBER 31, -------------------- 1997 1998 --------- --------- (L MILLION) DUE WITHIN ONE YEAR Trade receivables......................................................................... 2,425.6 2,447.6 Less: provision for bad and doubtful debts................................................ 11.6 11.8 --------- --------- 2,414.0 2,435.8 Amounts owed by parent company............................................................ -- 965.1 Amounts owed by associates................................................................ 0.2 0.8 Corporate tax............................................................................. 2.8 2.0 Prepayments and accrued revenue........................................................... 26.0 54.1 Other receivables......................................................................... 38.8 35.0 --------- --------- 2,481.8 3,492.8 DUE AFTER MORE THAN ONE YEAR Trade receivables......................................................................... 4.0 6.2 Amounts owed by parent company............................................................ -- 270.3 Deferred tax (see Note 22)................................................................ 14.4 -- Advance corporation tax recoverable....................................................... 7.4 -- Other receivables......................................................................... 25.6 25.3 --------- --------- 2,533.2 3,794.6 --------- --------- --------- ---------
The level of insurance brokering receivables is no indication of credit risk, since the status of the insurance broker as agent means that generally the credit risk is borne by the principals; nor is it an indication of future cash flows as it is normal practice for insurance brokers to settle accounts with clients, insurers, other intermediaries and market settlement bureaux on a net basis. The simultaneous recording of an insurance brokering transaction between client and insurer results in a high level of correlation between insurance brokering receivables and payables. NOTE 14--INTANGIBLE ASSETS Goodwill arising on acquisition of subsidiaries during the year amounted to L20 million. Amortization of goodwill amounted to L0.3 million. F-19 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 15--TANGIBLE ASSETS
FURNITURE LAND AND EQUIPMENT BUILDINGS AND VEHICLES TOTAL ----------- ------------- --------- (L MILLION) YEAR ENDED DECEMBER 31, 1996 COST OR VALUATION January 1, 1996............................................................... 88.3 148.0 236.3 Exchange adjustments.......................................................... (0.5) (5.6) (6.1) Additions..................................................................... 2.7 26.2 28.9 Disposals..................................................................... (4.8) (25.9) (30.7) ----- ----- --------- December 31, 1996............................................................. 85.7 142.7 228.4 ----- ----- --------- DEPRECIATION January 1, 1996............................................................... (5.2) (87.3) (92.5) Exchange adjustments.......................................................... 0.1 3.2 3.3 Provided in the year.......................................................... (4.4) (20.1) (24.5) Disposals..................................................................... 2.0 15.4 17.4 ----- ----- --------- December 31, 1996............................................................. (7.5) (88.8) (96.3) ----- ----- --------- NET BOOK VALUE December 31, 1996............................................................. 78.2 53.9 132.1 ----- ----- --------- ----- ----- --------- YEAR ENDED DECEMBER 31, 1997 COST OR VALUATION January 1, 1997............................................................... 85.7 142.7 228.4 Exchange adjustments.......................................................... (0.5) 0.8 0.3 Additions..................................................................... 7.3 19.2 26.5 Disposals..................................................................... (1.5) (30.4) (31.9) Arising from acquisitions..................................................... 0.7 9.1 9.8 ----- ----- --------- December 31, 1997............................................................. 91.7 141.4 233.1 ----- ----- --------- DEPRECIATION January 1, 1997............................................................... (7.5) (88.8) (96.3) Exchange adjustments.......................................................... 0.4 (0.4) 0.0 Provided in the year.......................................................... (4.3) (18.4) (22.7) Disposals..................................................................... 0.9 25.7 26.6 Arising from acquisitions..................................................... (0.5) (5.4) (5.9) ----- ----- --------- December 31, 1997............................................................. (11.0) (87.3) (98.3) ----- ----- --------- NET BOOK VALUE December 31, 1997............................................................. 80.7 54.1 134.8 ----- ----- --------- ----- ----- ---------
F-20 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 15--TANGIBLE ASSETS (CONTINUED)
FURNITURE LAND AND EQUIPMENT BUILDINGS AND VEHICLES TOTAL ----------- ------------- --------- (L MILLION) JANUARY 1 TO DECEMBER 31, 1998 COST OR VALUATION January 1, 1998............................................................... 91.7 141.4 233.1 Exchange adjustments.......................................................... (0.3) (1.7) (2.0) Additions..................................................................... 3.4 16.7 20.1 Disposals..................................................................... (1.8) (10.6) (12.4) Arising from acquisitions..................................................... 1.3 4.7 6.0 ----- ----- --------- September 1, 1998............................................................. 94.3 150.5 244.8 Exchange and other adjustments................................................ 0.1 1.7 1.8 Additions..................................................................... 3.5 6.3 9.8 Disposals..................................................................... (1.8) (7.9) (9.7) Arising from acquisitions..................................................... 0.0 0.1 0.1 ----- ----- --------- December 31, 1998............................................................. 96.1 150.7 246.8 DEPRECIATION January 1, 1998............................................................... (11.0) (87.3) (98.3) Exchange adjustments.......................................................... 0.1 0.9 1.0 Provided in the period........................................................ (3.0) (12.0) (15.0) Disposals..................................................................... 1.5 8.1 9.6 Arising from acquisitions..................................................... -- (1.7) (1.7) ----- ----- --------- September 1, 1998............................................................. (12.4) (92.0) (104.4) Exchange adjustments.......................................................... (0.1) (0.8) (0.9) Provided in the period........................................................ (1.7) (6.7) (8.4) Disposals..................................................................... 1.5 7.0 8.5 ----- ----- --------- December 31, 1998............................................................. (12.7) (92.5) (105.2) ----- ----- --------- NET BOOK VALUE December 31, 1998............................................................. 83.4 58.2 141.6 ----- ----- --------- ----- ----- ---------
F-21 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 15--TANGIBLE ASSETS (CONTINUED)
DECEMBER 31, ------------------------------- NET BOOK VALUE OF LAND AND BUILDINGS 1996 1997 1998 - ------------------------------------------------------------------------------------------- --------- --------- --------- (L MILLION) Freehold: Land............................................................................. 17.4 17.3 18.4 Buildings......................................................................... 50.2 49.3 49.6 Leasehold: Long............................................................................ 0.4 0.2 0.1 Short........................................................................... 10.2 13.9 15.3 --- --- --- 78.2 80.7 83.4 --- --- --- --- --- ---
The Group's principal freehold properties were valued at December 31, 1995 on the basis of open market value for existing use. The carrying value of these revalued properties, at December 31, 1998, was L60.5 million (1997: L60.5 million, 1996: L60.5 million), and the accumulated depreciation was L6.1 million (1997: L4.0 million, 1996: L2.0). The historical cost was L61.6 million (1997: L61.6 million, 1996: L61.6 million) and the accumulated depreciation was L21.0 million (1997: L18.6 million, 1996: L16.3 million). No tax would be payable on the realization of revalued properties at their net book value by virtue of available capital losses. The net book value of assets held under finance leases included within furniture, equipment and vehicles was Lnil (1997: L0.7 million, 1996: L1.6 million). NOTE 16--INVESTMENTS
OWN OTHER ASSOCIATES SHARES INVESTMENTS TOTAL ------------- ------------- --------------- --------- (L MILLION) YEAR ENDED DECEMBER 31, 1996 COST January 1, 1996................................................. 6.0 10.7 1.5 18.2 Exchange adjustments............................................ (0.9) (0.7) (0.1) (1.7) Additions....................................................... -- 0.3 0.9 1.2 Disposals....................................................... -- (1.4) -- (1.4) Share of retained earnings of associates........................ 1.1 -- -- 1.1 ----- ----- --- --------- December 31, 1996............................................... 6.2 8.9 2.3 17.4 ----- ----- --- --------- PROVISIONS January 1, 1996................................................. -- (4.2) -- (4.2) Exchange adjustments............................................ -- 0.3 -- 0.3 Provided in the year............................................ -- -- (0.5) (0.5) Amortization.................................................... -- (1.8) -- (1.8) Disposals....................................................... -- 1.4 -- 1.4 ----- ----- --- --------- December 31, 1996............................................... -- (4.3) (0.5) (4.8) ----- ----- --- --------- NET BOOK VALUE December 31, 1996............................................... 6.2 4.6 1.8 12.6 ----- ----- --- --------- ----- ----- --- ---------
F-22 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 16--INVESTMENTS (CONTINUED)
OWN OTHER ASSOCIATES SHARES INVESTMENTS TOTAL ------------- ------------- --------------- --------- (L MILLION) YEAR ENDED DECEMBER 31, 1997 COST January 1, 1997................................................. 6.2 8.9 2.3 17.4 Exchange adjustments............................................ (0.4) 0.2 -- (0.2) Additions....................................................... 3.5 4.9 1.4 9.8 Net assets reclassified on becoming a subsidiary................ (2.6) -- -- (2.6) Investment reclassified on becoming an associate................ 2.6 -- (2.6) -- Disposals....................................................... -- (0.6) -- (0.6) Share of retained earnings of associates........................ 0.5 -- -- 0.5 ----- ----- --- --------- December 31, 1997............................................... 9.8 13.4 1.1 24.3 ----- ----- --- --------- PROVISIONS January 1, 1997................................................. -- (4.3) (0.5) (4.8) Exchange adjustments............................................ -- (0.1) -- (0.1) Amortization.................................................... -- (1.3) -- (1.3) Disposals....................................................... -- 0.6 -- 0.6 Other adjustments............................................... -- -- 0.5 0.5 ----- ----- --- --------- December 31, 1997............................................... -- (5.1) -- (5.1) ----- ----- --- --------- NET BOOK VALUE December 31, 1997............................................... 9.8 8.3 1.1 19.2 ----- ----- --- --------- ----- ----- --- ---------
F-23 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 16--INVESTMENTS (CONTINUED)
OWN OTHER ASSOCIATES SHARES TA I INVESTMENTS TOTAL ---------- ------ ---- ----------- ----- (L MILLION) JANUARY 1 TO DECEMBER 31, 1998 COST January 1, 1998............................................................ 9.8 13.4 -- 1.1 24.3 Exchange adjustments....................................................... (1.8) (0.2) -- (0.2) (2.2) Additions.................................................................. 14.7 0.2 -- 2.2 17.1 Transfer to subsidiary..................................................... (2.0) -- -- -- (2.0) Disposals.................................................................. -- (4.0) -- -- (4.0) Share of retained earnings of associates................................... 5.6 -- -- -- 5.6 --- ------ ---- --- ----- September 1, 1998.......................................................... 26.3 9.4 -- 3.1 38.8 Exchange adjustments....................................................... 0.5 0.1 -- 0.2 0.8 Additions.................................................................. 5.9 -- 3.6 -- 9.5 Disposals.................................................................. -- (1.3) -- -- (1.3) Shares exchanged for cash.................................................. -- (8.2) -- -- (8.2) Share of retained earnings of associates................................... (3.7) -- -- -- (3.7) --- ------ ---- --- ----- December 31, 1998.......................................................... 29.0 -- 3.6 3.3 35.9 --- ------ ---- --- ----- PROVISIONS January 1, 1998............................................................ -- (5.1) -- -- (5.1) Amortization............................................................... (0.4) (1.0) -- -- (1.4) Disposals.................................................................. -- 4.0 -- -- 4.0 --- ------ ---- --- ----- September 1, 1998.......................................................... (0.4) (2.1) -- -- (2.5) Amortization............................................................... (0.3) (0.9) -- -- (1.2) Disposals.................................................................. -- 1.3 -- -- 1.3 Other adjustments.......................................................... -- 1.7 (0.8) -- 0.9 --- ------ ---- --- ----- December 31, 1998.......................................................... (0.7) -- (0.8) -- (1.5) --- ------ ---- --- ----- NET BOOK VALUE December 31, 1998.......................................................... 28.3 -- 2.8 3.3 34.4 --- ------ ---- --- ----- --- ------ ---- --- -----
At December 31, 1998, the Group's employee share ownership plans held 1,815,593 management ordinary shares in TA I Limited. These shares are not listed on any stock exchange. F-24 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 17--OTHER CURRENT LIABILITIES
DECEMBER 31, -------------------- 1997 1998 --------- --------- (L MILLION) Amounts owed to parent company.................................................................. -- 714.1 Amounts owed to associates...................................................................... 0.4 -- Income tax and social security.................................................................. 2.4 2.6 Finance lease obligations....................................................................... 0.6 -- Other payables.................................................................................. 86.5 100.7 --- --------- 89.9 817.4 --- --------- --- ---------
Included within amounts owed to parent company, is an interest free convertible loan of L92.9 million. This was converted into 46,464,949 ordinary shares in the Company on February 3, 1999. NOTE 18--BANK LOANS AND OVERDRAFTS Bank loans and overdrafts due in less than one year includes a loan of $575 million (L348.5 million) under a fully drawn Subordinated Bridge Facility. This short-term loan was repaid on February 2, 1999 and refinanced by the issue of $550 million of unsecured Senior Subordinated Notes which mature in 2009 and accrue interest at a rate of 9%. The weighted average interest rate payable on short-term bank loans and overdrafts outstanding at December 31, 1998, amounting to L350.3 million (1997: L0.5 million) was 9.9% (1997: 4.9%). Included within bank loans and overdrafts are L4.4 million of debt issuance costs which were refunded after December 31, 1998.
DECEMBER 31, ---------------------- BANK LOANS REPAYABLE IN MORE THAN ONE YEAR 1997 1998 - ------------------------------------------------------------------------------------------------ ----------- --------- (L MILLION) between one and two years....................................................................... -- 2.4 between two and three years..................................................................... 12.0 5.4 between three and four years.................................................................... -- 6.7 between four and five years..................................................................... 22.0 8.5 thereafter...................................................................................... -- 253.4 --- --------- 34.0 276.4 --- --------- --- ---------
The Group entered into a Senior Credit Facility agreement comprising Term Loans of $450 million and a Revolving Credit Facility of $150 million. See Note 27. The Term Loans were fully drawn down on November 19, 1998 and are arranged in four tranches that are repayable between 2005 and 2008. The loans accrue interest at LIBOR plus a variable margin. With effect from February 19, 1999 the Group entered into a swap transaction to exchange the applicable LIBOR rate for a fixed rate. At that date the weighted average interest rate was 7.7%. The Revolving Credit Facility is available until 2005. At December 31, 1998, the balance drawn on this facility was L6.1 million ($10.0 million) with interest accruing at 7.8%. F-25 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 19--OTHER NONCURRENT LIABILITIES
DECEMBER 31, ---------------------- 1997 1998 ----------- --------- (L MILLION) Trade payables................................................................................... 3.1 4.3 Accruals and deferred income..................................................................... 0.4 0.7 US dollar 7.5% convertible subordinated debentures............................................... 0.2 -- --- --- 3.7 5.0 --- --- --- ---
The US dollar 7.5% convertible subordinated debentures due in June 2005 were repaid in the year. NOTE 20--OPERATING LEASE COMMITMENTS
LAND AND BUILDINGS OTHER -------------------- -------------------- DECEMBER 31, ------------------------------------------ 1997 1998 1997 1998 --------- --------- --------- --------- (L MILLION) Payments committed to be made within one year for leases expiring: in less than one year.......................................................... 2.2 2.5 0.2 0.6 between one and five years..................................................... 6.3 8.7 1.5 1.3 after five years............................................................... 15.4 13.1 -- -- --------- --------- --------- --------- 23.9 24.3 1.7 1.9 --------- --------- --------- --------- Payments committed to be made after one year: within two years............................................................... 22.8 22.4 1.3 1.2 between two and three years.................................................... 21.2 21.5 0.6 0.8 between three and four years................................................... 20.1 20.7 0.3 0.2 between four and five years.................................................... 18.7 16.9 0.1 0.1 thereafter..................................................................... 116.5 109.0 -- -- --------- --------- --------- --------- 199.3 190.5 2.3 2.3 --------- --------- --------- --------- 223.2 214.8 4.0 4.2 --------- --------- --------- --------- --------- --------- --------- ---------
F-26 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 21--PROVISIONS FOR LIABILITIES AND CHARGES
SURPLUS DISCONTINUED CLAIMS PROPERTY OPERATIONS OTHER DEFERRED PROVISIONS PROVISIONS(I) PROVISIONS(II) PROVISIONS(III) PROVISIONS TAX TOTAL - ----------------------------------- --------------- --------------- --------------- ------------- ----------- --------- (L MILLION) JANUARY 1, 1996.................... 35.6 32.1 40.5 6.2 -- 114.4 Charged to income.................. 2.9 3.9 -- (2.2) -- 4.6 Utilized in the year............... (5.8) (4.2) (1.8) (0.8) -- (12.6) Exchange and other adjustments..... (3.2) (7.0) -- (0.3) -- (10.5) ----- ----- ----- --- ----- --------- DECEMBER 31, 1996.................. 29.5 24.8 38.7 2.9 -- 95.9 Charged to income.................. 2.3 (1.6) (3.1) -- -- (2.4) Utilized in the year............... (5.0) (3.0) (2.8) (0.1) -- (10.9) Arising on acquisition............. 3.9 -- -- -- -- (3.9) Exchange and other adjustments..... 3.4 -- -- 0.1 -- 3.5 ----- ----- ----- --- ----- --------- DECEMBER 31, 1997.................. 34.1 20.2 32.8 2.9 -- 90.0 Charged to income.................. 34.5 -- -- -- (3.4) 31.1 Transferred to payables............ -- -- (5.5) -- -- (5.5) Transferred from receivables....... -- -- -- -- (14.4) (14.4) Utilized in the period............. (10.9) (1.9) (6.7) -- -- (19.5) Exchange and other adjustments..... (0.4) -- -- -- -- (0.4) ----- ----- ----- --- ----- --------- SEPTEMBER 1, 1998.................. 57.3 18.3 20.6 2.9 (17.8) 81.3 Charged to income.................. (2.8) (0.3) -- -- 23.9 20.8 Utilized in the period............. (6.9) (1.1) 0.2 -- -- (7.8) Exchange and other adjustments..... 0.6 -- -- -- (0.1) 0.5 ----- ----- ----- --- ----- --------- DECEMBER 31, 1998.................. 48.2 16.9 20.8 2.9 6.0 94.8 ----- ----- ----- --- ----- --------- ----- ----- ----- --- ----- ---------
- ------------------------ (i) The claims provisions include estimates for liabilities that may arise from potential claims for errors and omissions, including pension advice, which may not be covered by insurance arrangements. (ii) Provisions for properties surplus to operational requirements. (iii) Provisions for discontinued operations include estimates for future operating costs of administering the run-off of the business previously placed with Sovereign and certain other insurance companies. F-27 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 22--DEFERRED TAX
DECEMBER 31, -------------------- 1997 1998 --------- --------- (L MILLION) OPENING BALANCE................................................................................. (27.1) (14.4) Transfer to/(from) income....................................................................... 10.5 20.5 Other adjustments............................................................................... 2.2 (0.1) --------- --------- CLOSING BALANCE................................................................................. (14.4)* 6.0 --------- --------- --------- --------- The deferred tax (assets)/liabilities arise from: Capital allowances.............................................................................. 14.4 11.5 Short-term timing differences................................................................... (5.5) (5.1) Provisions...................................................................................... (23.3) (0.4) --------- --------- (14.4) 6.0 --------- --------- --------- ---------
- ------------------------ * Included in receivables (Note 13) NOTE 23--NOTES TO CONSOLIDATED STATEMENT OF CASH FLOWS
RECONCILIATION OF OPERATING ACTIVITIES TO NET CASH FLOW YEAR ENDED JANUARY 1 TO SEPTEMBER 2 TO FROM OPERATING ACTIVITIES DECEMBER 31, SEPTEMBER 1, DECEMBER 31, - ----------------------------------------------------------- -------------------- --------------- --------------- 1996 1997 1998 1998 --------- --------- --------------- --------------- (L MILLION) Operating income from total operations..................... 87.8 92.1 21.0 21.0 Exceptional items.......................................... -- -- (0.4) (4.0) Depreciation charges and loss on sale of tangible fixed assets................................................... 24.7 22.7 15.0 8.7 Amortization of goodwill................................... -- -- 0.5 0.5 Decrease/(increase) in receivables......................... 82.2 34.4 2.0 (24.5) (Decrease)/increase in payables............................ (106.0) (26.5) 78.4 (93.3) Net movement on provisions and insurance funds............. (25.0) (9.3) 11.0 (6.1) --------- --------- ----- ------ NET CASH INFLOW FROM OPERATING ACTIVITIES.................. 63.7 113.4 127.5 (97.7) --------- --------- ----- ------ --------- --------- ----- ------
F-28 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 23--NOTES TO CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
BORROWINGS ------------------------ CASH AND OVERDRAFTS DUE DUE AFTER RECONCILIATION OF NET CASH FLOW TO ----------------------------------- LIQUID WITHIN MORE THAN MOVEMENT IN NET FUNDS CASH OVERDRAFTS TOTAL RESOURCES ONE YEAR ONE YEAR NET FUNDS - ------------------------------------------- --------- ------------- --------- ----------- ----------- ----------- ----------- (L MILLION) JANUARY 1, 1996............................ 84.9 (1.4) 83.5 681.3 (0.8) (63.7) 700.3 Cash flow before management of liquid resources and financing.................. 14.1 0.7 14.8 -- -- -- 14.8 Management of liquid resources............. 25.2 -- 25.2 (25.2) -- -- -- Financing.................................. (43.3) -- (43.3) -- -- 43.3 -- Disposals.................................. -- -- -- (25.6) -- -- (25.6) Foreign exchange........................... (2.8) -- (2.8) (44.9) -- 1.4 (46.3) --------- --- --------- ----------- ----------- ----------- ----------- DECEMBER 31, 1996.......................... 78.1 (0.7) 77.4 585.6 (0.8) (19.0) 643.2 Cash flow before management of liquid resources and financing.................. (6.5) 0.3 (6.2) -- -- -- (6.2) Management of liquid resources............. 2.8 -- 2.8 (2.8) -- -- -- Financing.................................. 14.7 -- 14.7 -- 0.1 (14.8) -- Issue of share capital..................... 0.3 -- 0.3 -- -- -- 0.3 Provisional liquidation.................... -- -- -- (58.3) -- -- (58.3) Foreign exchange........................... (0.8) -- (0.8) 4.0 -- (0.4) 2.8 --------- --- --------- ----------- ----------- ----------- ----------- DECEMBER 31, 1997.......................... 88.6 (0.4) 88.2 528.5 (0.7) (34.2) 581.8 Cash flow before management of liquid resources and financing........... 77.0 (6.5) 70.5 -- -- -- 70.5 Management of liquid resources............. (66.8) -- (66.8) 66.8 -- -- -- Financing.................................. 32.0 -- 32.0 -- 0.6 (32.6) -- Issue of share capital..................... 0.7 -- 0.7 -- -- -- 0.7 Foreign exchange........................... (1.0) -- (1.0) (6.9) -- -- (7.9) --------- --- --------- ----------- ----------- ----------- ----------- SEPTEMBER 1, 1998.......................... 130.5 (6.9) 123.6 588.4 (0.1) (66.8) 645.1 Cash flow before management of liquid resources and financing........... (166.8) 0.9 (165.9) -- -- -- (165.9) Management of liquid resources............. 122.2 -- 122.2 (122.2) -- -- -- Financing.................................. 32.2 -- 32.2 -- (92.9) 60.7 -- Issue of share capital..................... 4.0 -- 4.0 -- -- -- 4.0 Foreign exchange........................... 1.3 (0.2) 1.1 9.1 (6.9) -- 3.3 --------- --- --------- ----------- ----------- ----------- ----------- DECEMBER 31, 1998.......................... 123.4 (6.2) 117.2 475.3 (99.9) (6.1) 486.5 --------- --- --------- ----------- ----------- ----------- ----------- --------- --- --------- ----------- ----------- ----------- -----------
F-29 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 23--NOTES TO CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
YEAR ENDED DECEMBER 31, ANALYSIS OF CASH AND SHORT-TERM DEPOSITS AND LIQUID RESOURCES ------------------------------- AS SHOWN IN THE BALANCE SHEET 1996 1997 1998 - ------------------------------------------------------------------------------------ --------- --------- --------- (L MILLION) CASH Cash and short-term deposits........................................................ 277.9 359.4 317.1 less short-term deposits classified as liquid resources............................. (199.8) (270.8) (193.7) --------- --------- --------- 78.1 88.6 123.4 --------- --------- --------- --------- --------- --------- LIQUID RESOURCES Current asset investments........................................................... 385.8 257.7 281.6 Short-term deposits................................................................. 199.8 270.8 193.7 --------- --------- --------- 585.6 528.5 475.3 --------- --------- --------- --------- --------- ---------
As described in Note 27, deposits and cash totalling L66.3 million are subject to a floating charge. NOTE 24--PENSIONS The Group operates two principal pension plans, one in the United Kingdom and the other in the United States, covering substantially all employees in those countries. Both plans are of the defined benefit type and are funded externally. The pension cost of both plans is assessed in accordance with the advice of professionally qualified actuaries, using the projected unit credit method. The most recent valuation of the U.K. plan, which was undertaken by a Group employee, was at December 31, 1995 and of the U.S. plan at January 1, 1997. The major assumption is that the rate of return on investments would exceed salary inflation by between 2.25% and 4.0% per annum. The market value of the investments at the respective dates of the latest actuarial valuations was L676 million and the actuarial value of the investments was sufficient to cover approximately 110% of the benefits that had accrued to members after allowing for expected future salary increases. NOTE 25--EMPLOYEE SHARE PLANS The Executive Option Scheme (1984) (the "1984 Plan") and the International Executive Option Scheme (the "International Plan") expired in November 1994 from which date no further options have been granted. Prior to that date, the 1984 Plan and the International Plan were open to those employees and Directors of the Group who worked for at least 20 hours per week (or, in the case of Directors, 25 hours per week) except, in the case of the 1984 Plan, those who were within 18 months of their normal retirement date. The option price per ordinary share was determined on the date of grant as the greater of (i) the nominal value of an ordinary share and (ii) the middle market quotation of an ordinary share derived from the Daily Official List of the London Stock Exchange on the business day immediately preceding the date of the grant of the option. No option would have been granted under the 1984 Plan and the International Plan if immediately thereafter the aggregate number of ordinary shares issued or issuable in respect of rights granted under the 1984 Plan and the International Plan would have exceeded either the lower of 30,000,000 ordinary shares or 5% of the issued share capital at the date of grant. Options were normally exercisable between three and ten years after the date of grant. F-30 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 25--EMPLOYEE SHARE PLANS (CONTINUED) The Willis Corroon Group plc Savings-Related Share Option Scheme 1995 (the "1995 Plan") replaced the Savings-Related Share Option Scheme (the "1981 Plan") which expired in November 1994 in respect of new grants. The 1995 Plan was open to any U.K. employee with at least 6 months' continuous service with participating Group companies (an "eligible employee"). An eligible employee was required to enter into a savings contract for a period of three years to which he would have contributed 36 monthly payments of between L5 and L250 in aggregate, or for a period of five or seven years to which he would contribute 60 monthly payments of between L5 and L250 in aggregate. He would then be entitled to exercise his option, the aggregate subscription price of which must not have exceeded the total amount contributed to the savings contract. The exercise price of any particular option was not less than the higher of (i) 80% of the market value of ordinary shares on the business day preceding the date an offer was made and (ii) the nominal value of an ordinary share. Options granted under the 1995 Plan and 1981 Plan were normally exercisable only for a period of six months commencing on the expiration of the eligible employee's savings contract. The number of ordinary shares which could have been issued under the 1995 Plan did not at any time exceed 10% of the issued share capital of the Company immediately prior to the date of grant when aggregated with the number of ordinary shares issued or placed under option to subscribe in the previous ten years under any other employee share plan adopted by the Company. In determining the limit, no account was taken of ordinary shares where the right to acquire such ordinary shares was released or lapsed without being exercised. Options under the 1984 Plan, International Plan, 1981 Plan and 1995 Plan lapsed on November 6, 1998. The following tables show movements under the Company's employee share plans since January 1996.
EXECUTIVE SHARE OPTION PLANS -------------------------------------------------------------------------------------- 1984 PLAN INTERNATIONAL PLAN ------------------------------------------ ------------------------------------------ NO. OF WEIGHTED NO. OF WEIGHTED ORDINARY AVERAGE ORDINARY AVERAGE SHARES OPTION PRICE PRICE RANGE SHARES OPTION PRICE PRICE RANGE ----------- --------------- ------------ ----------- --------------- ------------ (000) (P) (P) (000) (P) (P) Outstanding January 1, 1996................. 10,104 237 149-473 3,421 207 149-296 Exercised................................... -- -- -- -- -- -- Cancelled................................... (1,232) 342 149-473 (208) 214 149-296 ----------- ----------- Outstanding December 31, 1996............... 8,872 223 149-473 3,213 207 149-296 Exercised................................... -- -- -- -- -- -- Cancelled................................... (1,715) 257 149-378 (66) 244 152-296 ----------- ----------- Outstanding December 31, 1997............... 7,157 215 149-296 3,147 206 149-296 Exercised................................... (1,374) 165 149-198 (13) 149 149 Cancelled................................... (5,783) 226 149-296 (3,134) 206 149-296 ----------- --- ------------ ----------- --- ------------ Outstanding December 31, 1998............... -- -- -- -- -- -- ----------- --- ------------ ----------- --- ------------ ----------- --- ------------ ----------- --- ------------
F-31 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 25--EMPLOYEE SHARE PLANS (CONTINUED)
SAVINGS-RELATED OPTION PLANS -------------------------------------------------------------------------------------- 1981 PLAN 1995 PLAN ------------------------------------------ ------------------------------------------ NO. OF WEIGHTED NO. OF WEIGHTED ORDINARY AVERAGE ORDINARY AVERAGE SHARES OPTION PRICE PRICE RANGE SHARES OPTION PRICE PRICE RANGE ----------- --------------- ------------ ----------- --------------- ------------ (000) (P) (P) (000) (P) (P) Outstanding January 1, 1996................. 7,309 148 116-246 1,477 112 112 Granted..................................... -- -- -- 1,498 112 112 Exercised................................... (21) 117 116-119 (2) 112 112 Cancelled................................... (1,631) 159 116-246 (248) 112 112 ----------- ----------- Outstanding December 31, 1996............... 5,657 145 116-246 2,725 112 112 Granted..................................... -- -- -- 1,999 100 100 Exercised................................... (207) 117 116-119 (23) 112 112 Cancelled................................... (1,053) 181 116-246 (363) 109 100-112 ----------- ----------- Outstanding December 31, 1997............... 4,397 138 116-246 4,338 106 100-112 Exercised................................... (1,676) 130 116-186 (228) 111 100-112 Cancelled................................... (2,721) 143 116-246 (4,110) 106 100-112 ----------- --- ------------ ----------- --- ------------ Outstanding December 31, 1998............... -- -- -- -- -- -- ----------- --- ------------ ----------- --- ------------ ----------- --- ------------ ----------- --- ------------
The fair value of options granted during the year ended December 31, 1997 under the 1995 Plan was 30p (1996: 32p). The weighted average fair value of options granted was estimated using the Black-Scholes option pricing model with the following assumptions: dividend yield of 7% (1996: 6%), expected volatility of 30% (1996: 25%), risk-free interest rate of 7% (1996: 7%) and expected life of 5 years (1996: 5 years). F-32 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 25--EMPLOYEE SHARE PLANS (CONTINUED) The following table shows the movements in options over ordinary shares pursuant to the 1982 Share Option Plan of Stewart Wrightson Holdings plc ("Stewart Wrightson"). The options under that Plan were granted in substitution for outstanding options over Stewart Wrightson shares, upon the acquisition of that company in August 1987, from which date no further options were granted.
1982 SHARE OPTION PLAN -------------------------------------------- NO. OF WEIGHTED ORDINARY AVERAGE SHARES OPTION PRICE PRICE RANGE ------------- ------------- -------------- (000) (P) (P) Outstanding January 1, 1996.............................................. 38 298 298 Exercised................................................................ -- -- -- Cancelled................................................................ (38) 298 298 -- Outstanding December 31, 1996............................................ -- -- -- Exercised................................................................ -- -- -- Cancelled................................................................ -- -- -- -- Outstanding December 31, 1997............................................ -- -- -- Exercised................................................................ -- -- -- Cancelled................................................................ -- -- -- -- ----- -------------- Outstanding December 31, 1998............................................ -- -- -- -- -- ----- -------------- ----- --------------
The following table shows the movements in options over American Depositary Shares ("ADS") of the Company, each ADS representing five ordinary shares, pursuant to the Willis Corroon Corporation 1986 Long-Term Incentive Plan.
1986 LONG-TERM INCENTIVE PLAN ---------------------------------------------- WEIGHTED AVERAGE NO. OF ADSS OPTION PRICE PRICE RANGE --------------- ------------- -------------- (000) ($) ($) Outstanding January 1, 1996.......................................... 685 20.32 18.07-23.28 Exercised............................................................ -- -- -- Cancelled............................................................ (12) 20.73 18.59-22.52 --- Outstanding December 31, 1996........................................ 673 20.32 18.07-23.28 Exercised............................................................ -- -- -- Cancelled............................................................ (150) 19.04 18.59-22.52 --- Outstanding December 31, 1997........................................ 523 20.65 18.07-23.28 Exercised............................................................ -- -- -- Cancelled............................................................ (523) 20.65 18.07-23.28 --- ----- -------------- Outstanding December 31, 1998........................................ -- -- -- --- ----- -------------- --- ----- --------------
On May 1, 1997, options over 2,217 ADSs were exercised at 62.5p per ADS under the Herget Scheme and the balance of 2,233 ADSs were cancelled. F-33 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 26--CAPITAL COMMITMENTS Capital commitments to acquire fixed assets:
DECEMBER 31, ------------------------ 1997 1998 ----------- ----- (L MILLION) Expenditure contracted for................................................... 5.9 3.5 -- -- -- --
The Company and certain of its subsidiaries have call options over shares not already owned in a number of subsidiary and associated companies which are exercisable at various dates in the future at prices related to the then current and historic profits before tax at the date of exercise. There also exist put options which are exercisable at various dates in the future on a similar basis. The exact amounts payable depend on the future level of profitability of the companies concerned and exchange rates at the date of exercise. Based on current projections of profitability and exchange rates, the potential amounts payable arising from these options are not expected to exceed L160.1 million (1997: L108.0 million). Most of this relates to amounts which may be payable under put options, exercisable between 2001 and 2012, entered into with the shareholders of Gras Savoye. If, by 2012, the Group has not reached a majority shareholding in Gras Savoye, it has call options to increase its interest to over 50%. FINANCIAL COMMITMENTS The Company has undertaken to provide certain subsidiaries with financial support to enable them to meet their future operational obligations as they fall due. This financial support does not extend to providing finance for liabilities arising from negligence, breach of contract, breach of trust or any other breach of duty. NOTE 27--CONTINGENT LIABILITIES ASSETS SUBJECT TO CHARGE The Company has entered into a debenture in favor of The Chase Manhattan Bank in which it has charged by way of a first fixed charge its interests in the shares of Willis Faber Limited and, by way of a floating charge, all its assets not otherwise effectively mortgaged, charged or assigned by the first fixed charge. The Company has also entered into a Pledge Agreement in favor of The Chase Manhattan Bank whereby it has assigned and pledged its interest in the shares of Willis Corroon Corporation. Those subsidiaries which are Lloyd's brokers have each entered into a deed as required by the Lloyd's brokers bye-law under which all insurance brokering assets are subject to a floating charge held on trust by the Society of Lloyd's for the benefit of those companies' insurance brokering payables. The charge only becomes enforceable under certain circumstances as defined in the deed. The assets (including deposits and cash of L66.3 million) subject to this charge at December 31, 1998 amounted to L1,834 million (1997: L1,822 million) and the insurance brokering payables at that date amounted to L1,821 million (1997: L1,805 million). FINANCING OBLIGATIONS The Company has guaranteed, on a joint and several basis with other companies in the Group, the prompt and complete performance of Willis Corroon Corporation in respect of credit facilities ("facilities") made available to that company. At December 31, 1998 these facilities amounted to $1,175 million. F-34 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 27--CONTINGENT LIABILITIES (CONTINUED) On February 2, 1999, $575 million of the facilities were repaid and Willis Corroon Corporation issued $550 million 9% Senior Subordinated Notes due 2009 (the "Notes"). The Company together with its affiliate Willis Corroon Partners, has guaranteed Willis Corroon Corporation's obligations in respect of the Notes. OTHER The Company has given guarantees to bankers and other third parties amounting to L4.4 million (1997: L4.4 million). The Company has also given guarantees to bankers in respect of commitments entered into by them to provide security for membership of Lloyd's of certain Group employees who are not directors of the Company amounting to L0.3 million (1997: L0.3 million). The Company and certain of its U.K. subsidiaries have given the landlords of some of the leasehold properties occupied by the Group in the United Kingdom and the United States guarantees in respect of the performance of the lease obligations of the Group companies holding the leases. The operating lease obligations amounted to L104 million at December 31, 1998 (1997: L116 million). The Group has extensive international operations and the Company or its subsidiaries are subject to claims and litigation in the ordinary course of business resulting principally from alleged errors and omissions in connection with their businesses. Most of the claims are covered by professional indemnity insurance and many of the defenses to these claims are being conducted by the Group's insurers. In respect of any self-insured deductibles applicable to such claims, the Group has established provisions which are believed to be adequate in the light of current information and legal advice. These provisions may be adjusted from time to time according to developments. The Company does not expect the outcome of such claims, either individually or in the aggregate, to have a material effect on the Group's operations or financial position. NOTE 28--DIRECTORS' INTERESTS IN CONTRACTS The undermentioned Directors who held office during each of the three years in the period ended December 31, 1998 (except as otherwise indicated) and, where applicable, connected persons (as defined in section 346 of the Companies Act) were Underwriting Members of Lloyd's through the agency of WF&D Agencies, which was a subsidiary of the Company until October, 1997 as follows: R J S Bucknall (1998 Mrs E H Rendle only) G F Nixon J M P Taylor (in 1996 and 1997 only) J M Pelly (1998 only)
For the relevant years, the agreements between the above and WF&D Agencies were on similar terms to the agreements which govern all other members of the syndicates in which they participated. WF&D Agencies received a fee in respect of each of the above relating to his or her membership of Lloyd's. Fees exceeding L5,000 were paid to WF&D Agencies by:
YEAR ENDED DECEMBER 31, ------------------------------- 1996 1997 1998 --------- --------- --------- J M P Taylor............................................... L21,463 -- -- --------- --------- --------- --------- --------- ---------
F-35 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 28--DIRECTORS' INTERESTS IN CONTRACTS (CONTINUED) Insurance brokering subsidiaries of the Company place risks with the syndicates in which the Directors or connected persons (as defined above) participate in the normal course of their brokering activities on the same basis as such subsidiaries do with other Lloyd's syndicates. The Company has given J Reeve a guarantee in respect of the performance obligations of Willis Faber & Dumas Limited, his employing company, in respect of an unfunded pension scheme established for him. The Company has also guaranteed the performance obligations of Willis Corroon Corporation in respect of the pension benefits for B D Johnson and K H Pinkston under the Willis Corroon Executive Supplemental Plan, an unfunded pension plan. Save as disclosed above, no Director or connected person (as defined above) had any interest either during or at the end of the financial years 1996, 1997 and 1998 in any contract which was significant in relation to the Company's business, or in a contract, transaction or arrangement which required disclosure under section 232 of the Companies Act. NOTE 29--OFFICER'S INTERESTS The Company had guaranteed an amount of L30,000 in respect of a letter of credit issued to provide the required security for the membership of Lloyd's of an officer, which was released during 1996. NOTE 30--COMPANIES ACT 1985 These financial statements do not comprise the Company's statutory accounts within the meaning of section 240 of the Companies Act. Statutory accounts for the years ended December 31, 1996 and 1997 have been, and statutory accounts for the year ended December 31, 1998 will be, delivered to the Registrar of Companies for England and Wales. The auditors' reports on such accounts were unqualified. NOTE 31-- DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED KINGDOM AND THE UNITED STATES The Group's financial statements are prepared in accordance with U.K. GAAP which differ in certain respects from U.S. GAAP. Those differences which have a significant effect on the Group are described below. PUSHDOWN ACCOUNTING Under U.S. GAAP, Trinity Acquisition's cost of acquiring the Company should be "pushed down," i.e., used to establish a new accounting basis in the Company's separate financial statements. Under U.K. GAAP, there is no such requirement. GOODWILL Goodwill (which includes expirations) arising on acquisitions occurring after January 1, 1998 is capitalized and amortized on a systematic basis over its useful economic life. Goodwill arising on acquisitions completed before January 1, 1998 was eliminated against retained earnings and other reserves. Under U.S. GAAP, goodwill and expirations are capitalized and amortized over their respective useful economic lives. For the purposes of the reconciliation below, periods of 17 1/2 to 40 years have been utilized. The carrying amount of goodwill, and the amortization period assigned to it, are periodically reviewed for impairment by reference to expected future cash flows. Under U.K. GAAP, on the disposition of a business acquired before January 1, 1998, goodwill previously eliminated against F-36 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 31-- DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED KINGDOM AND THE UNITED STATES (CONTINUED) retained earnings is reinstated and charged to income in arriving at the gain or loss on disposal of an entity; under U.S. GAAP, only unamortized goodwill is charged. REVALUATION OF FREEHOLD LAND AND BUILDINGS Certain of the Group's freehold land and buildings are included in the financial statements at revalued amounts on which depreciation is calculated. Under U.S. GAAP such assets must be recorded at their historical cost less depreciation thereon. The depreciation charged on the revaluation increase is not significant. PENSION COSTS For the purposes of the reconciliation below, the Group has adopted the provisions of U.S. Statement of Financial Accounting Standards No. 87, "Employers' Accounting for Pensions", ("FAS 87") in respect of the Group's principal U.K. pension plan. This standard requires that the projected benefit obligation be matched against the market value of the underlying plan assets and other unrecognized actuarial gains and losses in determining the pension expense for the year. As a result, pension expense can be significantly different from that computed under U.K. GAAP which requires the cost of providing pension benefits to be expensed over the periods benefiting from the employees' service on the basis of a constant percentage of current and estimated future earnings. The additional information required by FAS 87 in respect of the principal U.K. and U.S. pension plans is given below. FORWARD EXCHANGE CONTRACTS AND OTHER FINANCIAL INSTRUMENTS The Group enters into forward exchange contracts and other financial instruments which, under U.K. GAAP, are treated as hedges of future income. Under U.S. GAAP such instruments would not be regarded as hedges and, accordingly, would be revalued at each balance sheet date and the gain or loss arising would be dealt with in income for the period then ended. EXCEPTIONAL ITEMS During 1994, the Group made provisions for job eliminations and for the net lease expense of properties no longer needed. Under U.S. GAAP, such provisions would only be recorded when the termination benefit arrangements had been communicated to the employees and when the leased property had no substantive use or benefit to the lessee. These provisions were charged under U.S. GAAP in 1995. INVESTMENTS Certain of the Group's investments, purchased with the intention of holding to maturity, have been valued at amortized cost. For U.S. GAAP purposes, all the Group's investments have been classified as available for sale and are reported at fair value with unrealized gains and losses reported as a separate component of shareholders' equity (net of tax effects). DEFERRED TAX Under U.K. GAAP, deferred taxes are accounted for using the liability method to the extent that is is considered probable that a liability or asset will crystallize in the foreseeable future. Under U.S. GAAP, F-37 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 31-- DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED KINGDOM AND THE UNITED STATES (CONTINUED) deferred taxes are accounted for using the liability method on all temporary differences and deferred tax assets are recognized where it is more likely than not that they will be realized. The effect on net income, comprehensive income and shareholders' equity of applying the significant differences between U.K. GAAP and U.S. GAAP described above is summarized as follows:
YEAR ENDED JANUARY 1 TO SEPTEMBER 2 TO DECEMBER 31, SEPTEMBER 1, DECEMBER 31, ---------------------------- ------------- --------------- NET INCOME 1996 1997 1998 1998 - ------------------------------------------- --------- ----------------- ------------- --------------- (L MILLION, EXCEPT PER ORDINARY SHARE) NET INCOME/LOSS AS REPORTED IN THE CONSOLIDATED STATEMENT OF INCOME......... 54.2 56.9 (15.6) (25.7) ADJUSTMENTS Amortization of goodwill and expirations... (17.9) (17.7) (12.0) (6.5) Gain on disposal of operations............. 2.2 5.9 9.6 -- Revaluation of forward exchange contracts and other financial instruments.......... 10.9 (5.6) 0.2 (3.7) Pension costs.............................. (12.1) (7.6) (1.6) (1.7) Deferred taxes--effect of above adjustments.............................. 0.4 4.3 0.4 1.7 --------- ------ ------ ------ NET INCOME/(LOSS) AS ADJUSTED TO ACCORD WITH U.S. GAAP........................... 37.7 36.2 (19.0) (35.9) --------- ------ ------ ------ --------- ------ ------ ------ COMPRISING Income/(loss) from continuing operations... 37.7 36.0 (19.0) (35.9) Income/(loss) from discontinued operations............................... -- 0.2 -- -- --------- ------ ------ ------ NET INCOME/(LOSS).......................... 37.7 36.2 (19.0) (35.9) --------- ------ ------ ------ --------- ------ ------ ------ PER ORDINARY SHARE (BASIC AND DILUTED) AS SO ADJUSTED Continuing operations...................... 9.0p 8.6p (4.5)p (8.4)p Discontinued operations.................... -- 0.1p -- -- --------- ------ ------ ------ NET INCOME/(LOSS).......................... 9.0p 8.7p (4.5)p (8.4)p --------- ------ ------ ------ --------- ------ ------ ------
F-38 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 31-- DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED KINGDOM AND THE UNITED STATES (CONTINUED)
YEAR ENDED DECEMBER JANUARY 1 TO SEPTEMBER 2 TO 31, SEPTEMBER 1, DECEMBER 31, -------------------- ------------- --------------- COMPREHENSIVE INCOME 1996 1997 1998 1998 - ---------------------------------------------------------- --------- --------- ------------- --------------- (L MILLION) NET INCOME/(LOSS) AS ADJUSTED TO ACCORD WITH U.S. GAAP............................................... 37.7 36.2 (19.0) (35.9) Other comprehensive income, net of tax: Foreign currency translation adjustments................ (35.5) 11.4 (6.5) 6.5 Unrealized holding gains................................ (0.9) (0.4) (0.1) 0.8 --------- --------- ------ ------ COMPREHENSIVE INCOME...................................... 1.3 47.2 (25.6) (28.6) --------- --------- ------ ------ --------- --------- ------ ------ Unrealized holding gains Beginning of period....................................... 1.4 0.5 0.1 -- Arising during the period................................. (0.9) (0.4) (0.1) 0.8 --------- --------- ------ ------ End of period............................................. 0.5 0.1 -- 0.8 --------- --------- ------ ------ --------- --------- ------ ------
DECEMBER 31, -------------------- SHAREHOLDERS' EQUITY 1997 1998 - ---------------------------------------------------------------------------------------------- --------- --------- (L MILLION) SHAREHOLDERS' EQUITY AS REPORTED IN THE CONSOLIDATED BALANCE SHEET............................ 124.6 89.0 ADJUSTMENTS Intangible assets Goodwill--cost.............................................................................. 580.1 800.6 --amortization....................................................................... (129.8) (6.9) Tangible assets Revaluation of freehold land and buildings.................................................. (14.9) -- Current assets Investments................................................................................. 0.1 0.8 Forward exchange contracts.................................................................. 6.1 2.7 Pension costs............................................................................... 16.0 (16.3) Provisions for liabilities and charges Deferred taxes--effect of above adjustments................................................. 1.4 5.5 --------- --------- SHAREHOLDERS' EQUITY AS ADJUSTED TO ACCORD WITH U.S. GAAP..................................... 583.6 875.4 --------- --------- --------- ---------
F-39 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 31-- DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED KINGDOM AND THE UNITED STATES (CONTINUED) ADDITIONAL INFORMATION REQUIRED BY FAS 87 The pension cost for the Group's two principal pension plans computed in accordance with the requirements of FAS 87 comprises:
YEAR ENDED JANUARY 1 TO SEPTEMBER 2 TO DECEMBER 31, SEPTEMBER 1, DECEMBER 31, -------------------- --------------- --------------- 1996 1997 1998 1998 --------- --------- --------------- --------------- (L MILLION) NET PENSION EXPENSE - ------------------------------------------------------------ Service cost................................................ 30.8 29.7 19.3 9.6 Interest cost............................................... 47.8 51.2 34.5 14.4 Return on plan assets....................................... (70.3) (123.0) (76.0) (17.8) Net amortization and deferral............................... 19.5 66.4 32.9 -- --------- --------- ------ ------ Net pension expense......................................... 27.8 24.3 10.7 6.2 --------- --------- ------ ------ --------- --------- ------ ------
YEAR ENDED JANUARY 1 TO SEPTEMBER 2 TO DECEMBER 31, SEPTEMBER 1, DECEMBER 31, --------------- --------------- --------------- 1997 1998 1998 --------------- --------------- --------------- (L MILLION) CHANGE IN BENEFIT OBLIGATION - ---------------------------------------------------------------- Benefit obligation--beginning of period......................... 675.8 810.7 811.9 Service cost.................................................... 29.7 19.3 9.6 Interest cost................................................... 51.2 34.5 14.4 Benefits paid................................................... (29.5) (20.6) (9.8) Actuarial gains and losses...................................... 83.5 (32.0) 26.8 ------ ------ ------ Benefit obligation--end of period............................... 810.7 811.9 852.9 ------ ------ ------ ------ ------ ------
YEAR ENDED JANUARY 1 TO SEPTEMBER 2 TO DECEMBER 31, SEPTEMBER 1, DECEMBER 31, --------------- --------------- --------------- 1997 1998 1998 --------------- --------------- --------------- (L MILLION) CHANGE IN PLAN ASSETS - ---------------------------------------------------------------- Plan assets--beginning of period................................ 683.0 798.4 799.9 Actual return on plan assets.................................... 129.9 11.0 111.2 Employer contribution........................................... 15.0 11.1 3.8 Benefits paid................................................... (29.5) (20.6) (9.8) ------ ------ ------ Plan assets--end of period...................................... 798.4 799.9 905.1 ------ ------ ------ ------ ------ ------
F-40 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 31-- DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED KINGDOM AND THE UNITED STATES (CONTINUED)
DECEMBER 31, SEPTEMBER 1, DECEMBER 31, --------------- --------------- --------------- 1997 1998 1998 --------------- --------------- --------------- (L MILLION) FUNDED STATUS - ---------------------------------------------------------------- Plan assets at fair value....................................... 798.4 799.9 905.1 Projected benefit obligation.................................... (810.7) (811.9) (852.9) ------ ------ ------ Plan assets in excess of projected benefit obligation........... (12.3) (12.0) 52.2 Transition assets............................................... (10.2) (7.6) -- Unrecognized net loss/(gain).................................... 45.3 42.8 (68.5) Prior service cost.............................................. (0.1) -- -- ------ ------ ------ Prepaid/(accrued) pension costs................................. 22.7 23.2 (16.3) ------ ------ ------ ------ ------ ------
The U.K. plan assets are invested mainly in U.K. fixed interest and equity securities and non-U.K. equity securities. The U.S. plan assets are invested mainly in U.S. fixed interest and equity securities. The major assumptions used in computing the funded status were:
DECEMBER 31, SEPTEMBER 1, DECEMBER 31, ----------------- ----------------- ----------------- 1997 1998 1998 ----------------- ----------------- ----------------- % % % U.K. PLAN Expected long-term rate of return on plan assets............... 8.5 7.5 7.5 Discount rate.................................................. 7.0 5.75 5.5 Expected long-term rate of earnings increases.................. 5.5 4.5 4.5 U.S. PLAN Expected long-term rate of return on plan assets............... 8.5 8.5 8.5 Discount rate.................................................. 7.0 6.0 6.0 Expected long-term rate of earnings increases.................. 5.0 5.0 5.0 -- -- -- -- -- --
CONSOLIDATED STATEMENT OF CASH FLOWS The Consolidated Statement of Cash Flows prepared under U.K. GAAP presents substantially the same information as that required under U.S. GAAP but may differ with regard to classification of items within the statements and as regards the definition of cash under U.K. GAAP and cash and cash equivalents under U.S. GAAP. Under U.K. GAAP, cash flows are presented separately for operating activities, returns on investments and servicing of finance, taxation, capital expenditure and financial investments, acquisitions and disposals, equity dividends paid, management of liquid resources and financing activities. U.S. GAAP requires only three categories of cash flow activity to be reported: operating, investing and financing. Cash flows from taxation and returns on investments and servicing of finance shown under U.K. GAAP would be included as operating activities under U.S. GAAP. Cash flows from capital expenditure and financial investment, acquisitions and disposals, shown separately under U.K. GAAP, would be included as part of the investing activities under U.S. GAAP. The payment of dividends would be included as a financing activity under U.S. GAAP. Cash, as defined by U.S. GAAP, would F-41 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 31-- DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED KINGDOM AND THE UNITED STATES (CONTINUED) include cash equivalents with initial maturities of less than three months and would exclude bank overdrafts. The categories of cash flow activity under U.S. GAAP can be summarized as follows:
YEAR ENDED JANUARY 1 TO SEPTEMBER 2 TO DECEMBER 31, SEPTEMBER 1, DECEMBER 31, -------------------- --------------- --------------- 1996 1997 1998 1998 --------- --------- --------------- --------------- (L MILLION) Cash inflow from operating activities....................... 36.2 89.9 119.1 (126.4) Cash (outflow)/inflow on investing activities............... (10.3) (60.4) 36.5 (27.4) Cash (outflow)/inflow on financing activities............... (71.3) (12.0) 19.4 27.9 --------- --------- ----- ------ Increase/(decrease) in cash and cash equivalents............ (45.4) 17.5 175.0 (125.9) Effect of foreign exchange rate changes..................... (30.7) (0.7) (9.0) 11.2 Cash and cash equivalents at start of period................ 507.9 431.8 448.6 614.6 --------- --------- ----- ------ Cash and cash equivalents at end of period.................. 431.8 448.6 614.6 499.9 --------- --------- ----- ------ --------- --------- ----- ------
FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK FORWARD FOREIGN EXCHANGE CONTRACTS AND CURRENCY OPTIONS The Group manages its exposure to foreign currencies by entering into forward foreign exchange contracts and currency options. At December 31, 1998, the Group had contracted to exchange foreign currency, principally U.S. dollars, equivalent to approximately L72.7 million (1997: L81.3 million). INTEREST RATE AGREEMENTS In order to manage interest rate risk, the Group enters into interest rate swap agreements and forward rate agreements effectively to change the interest receivable or payable on parts of its underlying investments and borrowings from variable to fixed rates and from fixed to variable rates. Accordingly, while the Group is exposed to market risk to the extent that receipts and payments under interest rate agreements are affected by market interest rates, any such fluctuations will be offset by changes to interest receipts or payments made on variable rate investments and borrowings. The Group accounts for interest rate agreements as hedges. F-42 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 31-- DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED KINGDOM AND THE UNITED STATES (CONTINUED) Outstanding interest swap agreements and forward rate agreements are summarized as follows:
DECEMBER 31, 1997 --------------------------------------------------------------------------------- INTEREST RATES ---------------------------------------------------- NOTIONAL PRINCIPAL TERMINATION FIXED VARIABLE FIXED VARIABLE BALANCE DATES RECEIVABLE PAYABLE PAYABLE RECEIVABLE ------------- ------------ ----------- ----------- ----------- ------------- (MILLIONS) % % % % U.S. dollars................................... 545 1998-2000 5.58-7.75 5.72-5.94 -- -- U.S. dollars................................... 15 1998 -- -- 6.91 5.81 Sterling....................................... 275 1998-2002 6.58-8.41 7.36-7.75 -- -- Deutschemark................................... 27 1998-2001 4.51-5.07 3.44-3.78 -- -- --- ------------ ----------- ----------- --- --- --- ------------ ----------- ----------- --- ---
DECEMBER 31, 1998 ------------------------------------------------------------------------------- INTEREST RATES ---------------------------------------------------- NOTIONAL PRINCIPAL TERMINATION FIXED VARIABLE FIXED VARIABLE BALANCE DATES RECEIVABLE PAYABLE PAYABLE RECEIVABLE ----------- ------------ ----------- ----------- ----------- ------------- (MILLIONS) % % % % U.S. dollars................................... 664 1999-2002 5.15-7.16 5.06-5.41 -- -- U.S. dollars................................... 450 2006 -- -- 5.10 5.06 Sterling....................................... 166 1999-2002 6.43-8.27 6.12-7.31 -- -- Deutschemark................................... 49 1999-2001 3.70-5.07 3.70-5.07 -- -- Deutschemark................................... 10 2000 -- -- 4.61 3.56 Japanese Yen................................... 2,060 1999-2001 1.45-1.70 0.22-0.40 -- -- Italian Lire................................... 14,600 2000-2001 4.54-7.10 3.25-4.59 -- -- ----------- ------------ ----------- ----------- --- --- ----------- ------------ ----------- ----------- --- ---
CONCENTRATION OF CREDIT RISK Potential concentrations of credit risk to the Group comprise principally cash and short-term deposits, current asset investments, trade receivables and foreign exchange contracts. The Group places cash and short-term deposits and undertakes foreign exchange contracts with a range of banks and financial institutions and controls its exposure to any one bank or financial institution. The Group's current asset investments comprise a broad range of financial instruments issued principally in the United Kingdom and the United States. Trade receivables include significant amounts due from clients and underwriters. The Group's insurance brokering client base is widely dispersed throughout the world, principally in the United Kingdom and the United States. The credit risk arising from amounts due from clients and underwriters in respect of insurance premiums and claims is minimized as such premiums and claims are not generally paid to the beneficiary until collected. At December 31, 1998, the Group did not consider there to be any significant concentration of credit risk. F-43 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 31-- DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED KINGDOM AND THE UNITED STATES (CONTINUED) FAIR VALUES OF FINANCIAL INSTRUMENTS The following information is presented in compliance with the requirements of FAS 107, "Disclosure about Fair Value of Financial Instruments". The carrying amounts and fair values of the material financial instruments of the Group are as follows:
DECEMBER 31, ---------------------------------------------- 1997 1998 ---------------------- ---------------------- CARRYING FAIR CARRYING FAIR AMOUNT VALUE AMOUNT VALUE ----------- --------- ----------- --------- (L MILLION) ASSETS Cash and short-term deposits............................................ 359.4 359.4 317.1 317.1 Current asset investments: Listed investments.................................................... 55.6 55.9 48.7 49.8 Unlisted investments.................................................. 202.1 203.5 232.9 236.9 LIABILITIES Bank loans and overdrafts............................................... (34.5) (34.5) (629.1) (629.1) OFF-BALANCE SHEET INSTRUMENTS Interest rate swaps and forward rate agreements....................... -- 3.7 -- 10.9 Forward foreign exchange contracts.................................... -- 6.1 -- 2.7 ----------- --------- ----------- --------- ----------- --------- ----------- ---------
The following methods and assumptions were used by the Group in establishing its fair value disclosures for financial instruments: CASH AND SHORT-TERM DEPOSITS: the carrying amount approximates fair value. LISTED INVESTMENTS AND UNLISTED INVESTMENTS: the fair value is based on market prices. BANK LOANS AND OVERDRAFTS: the carrying amount approximates fair value. OFF-BALANCE SHEET INSTRUMENTS: fair values of interest rate swap agreements are based on discounted cash flow analyses. Fair values of forward foreign exchange contracts are based on contractual and market rates and represent net unrealized gains and losses. ACCOUNTING AND DISCLOSURE OF STOCK-BASED COMPENSATION FAS 123, Accounting for Stock-Based Compensation, established accounting disclosure standards for stock-based employee compensation plans. The statement gives companies the option of continuing to account for such costs under APB 25, Accounting for Stock Issued to Employees, and related interpretations. The Group has chosen to continue to account for its employee share option plans under APB 25 and, accordingly, there is no compensation cost to the Group arising from these plans. Had the Group chosen to account for the costs of its employee share option plans under FAS 123, which requires such costs to be determined on the basis of the fair value of the options at the date of grant, the Group's net income for the year ended December 31, 1997 would have been L36.1 million (1996: L37.7 million) and net income per Ordinary Share would have been 8.6 pence (1996: 9.0 pence). Details of the fair value of stock awards are given in Note 25. Because options vest over several years and additional options grants may be made, the effects of these hypothetical calculations are not likely to be representative of similar future calculations. No options were granted in 1998. F-44 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 31-- DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED KINGDOM AND THE UNITED STATES (CONTINUED) DEBT AND EQUITY SECURITIES U.S. GAAP requires debt and equity investments to be classified into three categories: held-to-maturity, trading and available-for-sale. All the Group's investments have been classified as available-for-sale. The debt securities held at December 31, 1998 comprise:
AMORTIZED UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE ------------- --------------- ------------- ----------- (L MILLION) U.S. Government securities..................... 18.5 0.2 -- 18.7 U.K. Government securities..................... 2.7 0.1 -- 2.8 Other foreign government securities............ 4.3 0.2 -- 4.5 Corporate debt securities...................... 22.8 0.6 -- 23.4 -- --- --- --- 48.3 1.1 -- 49.4 -- -- --- --- --- --- --- ---
During 1998 sales of debt securities totaled L31.1 million (1997: L46.9 million), on which gross realized gains and gross realized losses were L0.3 million and Lnil million (1997: L0.1 million and L0.1 million) respectively. Maturities of debt securities held at December 31, 1998 are as follows:
(L MILLION) within one year................................................................... 10.2 after one year through five years................................................. 36.2 after five years through ten years................................................ 1.9 after more than ten years......................................................... -- --- 48.3 --- ---
NOTE 32--NEW ACCOUNTING STANDARDS Four U.K. accounting standards have recently been issued: FRS 12, "Provisions, Contingent Liabilities and Contingent Assets", was issued in September 1998 and is effective for accounting periods ending on or after March 23, 1999, though earlier adoption is permitted. This standard sets out rules on the recognition, measurement and disclosure of provisions and contingencies. The Company does not expect the adoption of this standard to have any impact on its financial statements for prior years or, currently, on its financial statements for future periods. FRS 13, "Derivatives and other Financial Instruments Disclosures", was also issued in September 1998 and is effective for accounting periods ending on or after March 23, 1999, though earlier adoption is permitted. This standard sets out narrative disclosure requirements which require an explanation of the role that financial instruments play in creating or changing the risks that the Company faces in its activities and its approach to the management of those risks, including a description of the objectives, policies and strategies for holding and issuing financial instruments. It also sets out numerical disclosure requirements with respect to interest rate risk, currency risk, liquidity risk, fair values, financial instruments used for trading, financial instruments used for hedging and certain commodity contracts. As this standard only relates to disclosures, its adoption F-45 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) NOTE 32--NEW ACCOUNTING STANDARDS (CONTINUED) will not impact the Company's results of operations or financial position reported under U.K. GAAP. The Company has not yet determined the impact that its adoption will have on its disclosures. FRS 14, "Earnings per Share", was issued in October 1998 and is effective for accounting periods ending after December 23, 1998. The Company's earnings per share computed under this standard will not differ from those previously reported. FRS 15, "Tangible Fixed Assets", was issued in February 1999 and is effective for accounting periods ending on or after March 23, 2000 though earlier adoption is permitted. This standard sets out the principles of accounting for the initial measurement, valuation and depreciation of tangible fixed assets. Adoption of this standard by the Company would have no impact on its financial statements. In June 1998, the FASB issued SFAS 133, "Accounting for Derivative Instruments and Hedging Activities" which has to be adopted for fiscal years beginning after June 15, 1999. This standard requires all derivatives to be recognized as either assets or liabilities on the balance sheet at their fair values. It also prescribes the accounting to be followed for the changes in the fair values of derivatives depending upon their intended use and resulting designation. It supersedes or amends the existing standards which deal with hedge accounting and derivatives. The Company has not yet evaluated the effect that adopting this standard will have on the U.S. GAAP amounts reported in its financial statements. NOTE 33--WILLIS CORROON CORPORATION AND WILLIS CORROON PARTNERS Summarized financial information under U.K. GAAP relating to Willis Corroon Corporation is as follows:
YEAR ENDED DECEMBER 31, ------------------------------- 1996 1997 1998 --------- --------- --------- (L MILLION) Total operating revenues............................................................. 356.7 321.4 340.0 Operating income..................................................................... 35.6 28.4 29.0 Net income........................................................................... 14.1 11.4 8.4 --------- --------- --------- --------- --------- --------- AT DECEMBER 31, -------------------- 1997 1998 --------- --------- (L MILLION) Current assets............................................................................. 1,201.2 1,806.5 Fixed assets............................................................................... 52.3 59.9 --------- --------- 1,253.5 1,866.4 --------- --------- --------- --------- Current liabilities........................................................................ 1,152.5 1,756.5 Noncurrent liabilities..................................................................... 35.5 35.8 Stockholders' equity....................................................................... 65.5 74.1 --------- --------- 1,253.5 1,866.4 --------- --------- --------- ---------
Willis Corroon Partners, formed on November 11, 1998, has no assets other than the capital stock of Willis Corroon Corporation and conducts no business other than the holding of such capital stock. F-46 HEAD OFFICE OF WILLIS CORROON GROUP Ten Trinity Square London EC3P 3AX HEAD OFFICE OF THE ISSUER 26 Century Boulevard P.O. Box 305026 Nashville, TN 37214 AUDITORS TO WILLIS CORROON GROUP Ernst & Young Rolls House 7 Rolls Buildings Fetter Lane London EC4A 1NH TRUSTEE AND EXCHANGE AGENT The Bank of New York 101 Barclay Street New York, New York 10286 LISTING AGENT Kredietbank S.A. Luxembourgeoise 43, Boulevard Royal L-2955 Luxembourg LEGAL ADVISERS TO WILLIS CORROON GROUP AS TO U.S. LAW AS TO ENGLISH LAW Simpson Thacher & Bartlett Clifford Chance 200 Aldersgate 425 Lexington Avenue Street New York, NY 10017 London EC1A 4JJ
[LOGO] $550,000,000 WILLIS CORROON CORPORATION OFFER TO EXCHANGE ALL OUTSTANDING 9% SENIOR SUBORDINATED NOTES DUE 2009 FOR 9% SENIOR SUBORDINATED NOTES DUE 2009, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 UNCONDITIONALLY GUARANTEED ON A SENIOR SUBORDINATED BASIS BY WILLIS CORROON GROUP LIMITED AND WILLIS CORROON PARTNERS UNTIL , 1999 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE EXCHANGE NOTES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS. English law does not permit a company to indemnify a director or an officer of the company against any liability which by virtue of any rule of law would otherwise attach to him in respect of negligence, default, breach of duty or breach of trust of which he may be guilty in relation to the company except liability incurred by such director or officer in defending any legal proceeding (whether civil or criminal) in which judgement is given in his favor or in which he is acquitted or in certain instances where, although he is liable, a court finds that such director or officer acted honestly and reasonably and that having regard to all the circumstances he ought fairly to be excused and relief is granted by the court. The Articles of Association of Willis Corroon Group Limited provide that, subject to the restrictions referred to in the immediately preceding paragraph, Willis Corroon Group Limited may indemnify each of its directors and officers or those of its subsidiaries against all costs, charges, losses, expenses and liabilities incurred by him in the actual or purported execution and/or discharge of his duties and/or the exercise or purported exercise of his powers and/or otherwise in relation to or in connection with his duties, power or office including (without prejudice to the generality of the foregoing) any liability incurred by him in defending any proceedings, civil or criminal, which relate to anything done or omitted or alleged to have been done omitted by him as an officer of Willis Corroon Group Limited and in which judgement is given in his favor (or the proceedings are otherwise disposed of without any finding or admission of any material breach of duty on his part) or in which he is acquitted or in connection with any application under any statute for relief from liability in respect of any such act or omission in which relief is granted to him by the court Pursuant to the Companies Act of 1985, as amended, companies may purchase and maintain liability insurance for directors and officers. Willis Corroon Group Limited currently maintains liability insurance for the directors and officers of TA I Limited and of its subsidiaries (which includes Willis Corroon Group Limited) to the extent authorized by English law and their governing instruments. Such insurance does not cover any dishonest, fraudulent or criminal act or omission by the directors and officers of Willis Corroon Group Limited. Section 145 of the Delaware General Corporation Law (the "DGCL") provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys' fees), judgments, lines, and amounts paid in settlement in connection with specified actions, suits or proceedings, whether civil, criminal, administrative, or investigative (other than action by or in the right of the corporation a "derivative action"), if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceedings, had no reasonable cause to believe their conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses (including attorneys' fees) incurred in connection with the defense or settlement of such actions, and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. Such 102(b)(7) of the DGCL permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duties as a director, except for liability (i) for any transaction from which the director derives an improper personal benefit, (ii) for acts or omissions not in good faith or that involve international misconduct or a knowing violation of law, (iii) for improper payment of dividends or redemptions of shares, or (iv) for any breach of a director's duty of loyalty to the company or II-1 its stockholders. Article Thirteen of Willis Corroon Corporation's Amended Certificate of Incorporation includes such a provision. The directors and officers of Willis Corroon Corporation are covered by the liability insurance for directors' and officers' maintained by Willis Corroon Group Limited. ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) Exhibits
EXHIBIT NO. DESCRIPTION OF EXHIBIT - ------------- ----------------------------------------------------------------------------------------------------- 2.1 Master Acquisition Agreement, dated October 13, 1998, among Willis Corroon Group plc, Willis Corroon Europe B.V., Tolbert Insurance & Finance B.V., UTA Willis Corroon S.p.A., Saint Gallen S.r.l., Olimpia S.r.l., Ital Brokers Holding S.p.A., and ARCEF N.V. 2.2 Stock Purchase Agreement, dated September 28, 1998, between Assurandrgruppen A/S and Willis Corroon Europe B.V. 2.3 WIFA Share Sale Agreement, dated August 4, 1997, between Willis Corroon Limited and Willis National Holdings Limited, including Side Agreement, dated December 11, 1998 2.4 ANIFA Share Sale Agreement, dated August 4, 1997, between Abbey National Independent Consulting Group Limited and Willis National Holdings Limited, including Side Agreement, dated December 11, 1998 2.5 Framework Agreement, dated January 28, 1998, for the Merger of the limited partnership Jaspers Industrie Assekuranz GmbH & Co. KG and the general partnership C. Wuppesahl & Co. Assekuranzmakler 2.6 Purchase and Transfer Agreement, dated January 27, 1998, concerning shares in Industrie-Assekuranz GmbH and Jaspers Industrie Assekuranz GmbH & Co. KG between Alexander & Alexander International Inc., Achtundsechzigste Verwaltungsgesellschaft Dammtor mbH, and Willis Corroon Group plc 2.7 Transfer of Shares, dated January 22, 1998, of Industrie-Assekuranz GmbH into Jaspers Industrie Assekuranz GmbH & Co. KG 2.8 Merger Contract, dated March 17, 1998, between Jaspers Industrie Assekuranz GmbH & Co. KG and C. Wuppesahl & Co. Assekuranzmakler 2.9 Purchase and Sales Agreement, dated January 27, 1998, on the acquisition of limited partner shares in Jaspers Wuppesahl Industrie Assekuranz GmbH & Co. KG among Ms. Irene Koenig, Ms. Doris Ballauff, Mr. Michael Emken, C. Wuppesahl Management GmbH, C. Wuppesahl, 68. Verwaltungsgesellschaft Dammtor mbH, and Willis Corroon GmbH 2.10 Purchase and Sales Agreement dated January 22, 1998 between Deutsche Bank Aktiengesellschaft, Willis Corroon GmbH and Willis Corroon Group plc in respect of a limited partnership interest of 14.6% in Jaspers Wuppesahl Industrie Assekuranz GmbH & Co. KG. 2.11 Agreement, dated July 23, 1997, among Assurances Generales de France IART, UAP Incendie-Accidents, Athena, Gras Savoye Euro Finance S.A., Mr. Emmanuel Gras, Mr. Patrick Lucas, Mr. Daniel Naftalski, Willis Corroon Group plc, Willis Corroon Europe B.V., and Gras Savoye & Cie, along with Amendment No. 1 thereto, dated December 11, 1997, and Addendum thereto dated July 23, 1997
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EXHIBIT NO. DESCRIPTION OF EXHIBIT - ------------- ----------------------------------------------------------------------------------------------------- 2.12 Sale and Purchase Agreement, dated October 20, 1997, among Willis Corroon Group plc, Acegiant Limited, Willis Corroon Group Services Limited and Willis Faber & Dumas (Agencies) Limited 3.1 Amended Certificate of Incorporation of Willis Corroon Corporation 3.2 By-laws of Willis Corroon Corporation 3.3 Partnership Agreement of Willis Corroon Partners 3.4 Memorandum and Articles of Association of Willis Corroon Group Limited 4.1 Indenture, dated February 2, 1999, among Willis Corroon Corporation, as issuer, Willis Corroon Partners and Willis Corroon Group Limited, as guarantors, and The Bank of New York, as trustee 4.2 Form of 9% Senior Subordinated Notes due 2009 (the "Exchange Note") (Included as part of Exhibit 4.1 hereto) 4.3 Exchange and Registration Rights Agreement, dated February 2, 1999, among Willis Corroon Corporation, Willis Corroon Partners, Willis Corroon Group Limited, Chase Securities Inc. and Chase Manhattan International Limited 5.1 Opinion of Simpson Thacher & Bartlett as to the legality of the securities being registred hereby 10.1 Purchase Agreement, dated January 28, 1999, among Willis Corroon Corporation, Willis Corroon Partners, Willis Corroon Group Limited, Chase Securities Inc. and Chase Manhattan International Limited 10.2 Credit Agreement, dated as of July 22, 1998, and amended and restated as of September 1, 1998, September 25, 1998 and February 19, 1999 and amended as of October 28, 1998, among Willis Corroon Corporation, as borrower, Willis Corroon Group Limited and Trinity Acquisition plc, as guarantors, the lenders thereunder and The Chase Manhattan Bank, as administrative agent and collateral agent 10.3 Master Shareholders' Agreement, dated October 13, 1998, among Willis Corroon Group plc, Willis Corroon Europe B.V., Tolbert Insurance & Finance B.V., Saint Gallen S.r.l., Olimpia S.r.l., Ital Brokers Holding S.p.A., ARCEF Holding N.V., and the Directors (as defined therein) 10.4 Shareholders' Agreement, dated September 28, 1998, among Willis Corroon Europe B.V. and the Current Shareholders (as defined therein) (relating to the Assurandrgruppen merger) 10.5 Shareholders' Agreement, dated August 4, 1997, among Abbey National plc, Willis Corroon Group plc, and Willis National Holdings Limited, as supplemented on December 11, 1998 10.6 Shareholders' Agreement, dated July 15, 1998, between Willis Corroon Europe B.V., Jaime Castellanos Borrego, Antonio Serrats Iriarte and Pedro Cardelus Munoz-Seca 10.7 Shareholders' Agreement, dated December 17, 1998, among Willis Corroon AB, Mr. Staffan Larsson and Mr. Tomas Larsson 10.8 1998 Share Purchase and Option Plan for Key Employees of TA I Limited 10.9 Guarantee by Willis Corroon Group Limited of pension scheme of John Reeve 10.10 Guarantee by Willis Corroon Group Limited of pension plan of Kenneth Pinkston 10.11 Guarantee by Willis Corroon Group Limited of pension plan of Brian Johnson
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EXHIBIT NO. DESCRIPTION OF EXHIBIT - ------------- ----------------------------------------------------------------------------------------------------- 10.12 TA I Limited Zero Cost Share Option Scheme 12.1 Computation of ratio of earnings to fixed charges 21.1 List of subsidiaries of Willis Corroon Group Limited 23.1 Consent of Simpson Thacher & Bartlett (Included as part of Exhibit 5.1 hereto) 23.2 Consent of Ernst & Young 24.1 Powers of Attorney 25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New York, as Trustee 99.1 Form of Letter of Transmittal 99.2 Form of Notice of Guaranteed Delivery
(b) Financial Statement Schedules
PAGE ----- Report of Independent Auditors on Schedule..................................................... S-1 Schedule II--Valuation and Qualifying Accounts................................................. S-2
ITEM 22. UNDERTAKINGS (a) Insofar as indemnification for liabilities arising under Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (b) The undersigned registrant hereby undertakes: (i) to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means and (ii) to arrange or provide for a facility in the U.S. for the purpose of responding to such requests. The undertaking in subparagraph (i) above includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. (c) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act II-4 (ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more that a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering; and (4) To file a post-effective amendment to the registration statement to include any financial statements required by Rule 3-19 at the start of any delayed offering or throughout a continuous offering. (d) The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. II-5 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant guarantor has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of London, Country of England, on March 15, 1999. WILLIS CORROON GROUP LIMITED BY: /S/ THOMAS COLRAINE ----------------------------------------- NAME: THOMAS COLRAINE TITLE: GROUP FINANCE DIRECTOR
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed on March 15, 1999 by or on behalf of the following persons in the capacities indicated with the registrant.
SIGNATURE TITLE - ------------------------------ --------------------------- Executive Chairman; * Director - ------------------------------ (Principal Executive John Reeve Officer) Chief Executive of Global Specialties; Executive * responsible for - ------------------------------ discontinued U.K. Richard J. S. Bucknall underwriting activities; Director Group Finance Director; * Director - ------------------------------ (Principal Financial and Thomas Colraine Accounting Officer) * Executive responsible for - ------------------------------ North American Retail; Brian D. Johnson Director * Managing Partner of Gras - ------------------------------ Savoye; Director Patrick Lucas Chairman of U.K. Retail and * Executive responsible for - ------------------------------ Willis Corroon George F. Nixon International Holdings-Europe; Director * Chairman of Willis Faber - ------------------------------ Re; Director John M. Pelly
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SIGNATURE TITLE - ------------------------------ --------------------------- Group Executive Director responsible for North * American Retail, U.S. - ------------------------------ Wholesale, Asia-Pacific Kenneth H. Pinkston and rest of the world; Director
*By: /s/ MICHAEL P. CHITTY -------------------- Michael P. Chitty ATTORNEY-IN-FACT
II-7 AUTHORIZED REPRESENTATIVE Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below in the City of Nashville, State of Tennessee on March 15, 1999 by the undersigned as the duly authorized representative of WILLIS CORROON GROUP LIMITED in the United States. /s/ BART R. SCHWARTZ ----------------------------------------- BART R. SCHWARTZ
II-8 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant guarantor has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, on March 15, 1999. WILLIS CORROON PARTNERS BY: WILLIS CORROON GROUP LIMITED, ITS GENERAL PARTNER BY: /S/ THOMAS COLRAINE ----------------------------------------- NAME: THOMAS COLRAINE TITLE: GROUP FINANCE DIRECTOR
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed on March 15, 1999 by or on behalf of the following persons in the capacities indicated with the general partner of registrant.
SIGNATURE TITLE - ----------------------------- --------------------------- Executive Chairman; * Director - ----------------------------- (Principal Executive John Reeve Officer) Chief Executive of Global Specialties; Executive * responsible for - ----------------------------- discontinued U.K. Richard J. S. Bucknall underwriting activities; Director Group Finance Director; * Director - ----------------------------- (Principal Financial and Thomas Colraine Accounting Officer) * Executive responsible for - ----------------------------- North American Retail; Brian D. Johnson Director * Managing Partner of Gras - ----------------------------- Savoye; Director Patrick Lucas Chairman of U.K. Retail and * Executive responsible for - ----------------------------- Willis Corroon George F. Nixon International Holdings-Europe; Director * Chairman of Willis Faber - ----------------------------- Re; Director John M. Pelly
II-9
SIGNATURE TITLE - ----------------------------- --------------------------- Group Executive Director responsible for North * American Retail, U.S. - ----------------------------- Wholesale, Asia-Pacific Kenneth H. Pinkston and rest of the world; Director
*By: /s/ MICHAEL P. CHITTY ------------------------- Michael P. Chitty ATTORNEY-IN-FACT
II-10 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant issuer has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, on March 15, 1999. WILLIS CORROON CORPORATION BY: /S/ BART R. SCHWARTZ ----------------------------------------- NAME: BART R. SCHWARTZ TITLE: SENIOR VICE PRESIDENT & GENERAL COUNSEL
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed on March , 1999 by or on behalf of the following persons in the capacities indicated with the registrant.
SIGNATURE TITLE - ----------------------------- --------------------------- Group Executive Director responsible for North American Retail, U.S. * Wholesale, Asia-Pacific - ----------------------------- and rest of the world; Kenneth H. Pinkston Director (Principal Executive Officer) * Executive responsible for - ----------------------------- North American Retail; Brian D. Johnson Director Senior Vice President; * Director of Finance and - ----------------------------- Administration; Director Charles D. Hamilton (Principal Financial and Accounting Officer) /s/ BART R. SCHWARTZ Senior Vice President; - ----------------------------- Corporate Secretary and Bart R. Schwartz General Counsel; Director Senior Vice President; * Director of Human - ----------------------------- Resources, North America; Kim Windrow Director
*By: /s/ BART R. SCHWARTZ ------------------------- Bart R. Schwartz ATTORNEY-IN-FACT
II-11 WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES REPORT OF INDEPENDENT AUDITORS ON SCHEDULE We have audited the consolidated financial statements of Willis Corroon Group Limited at December 31, 1997 and 1998 and for the years ended December 31, 1996 and 1997, and the periods January 1 to September 1, 1998 and September 2 to December 31, 1998, and have issued our report thereon dated March 15, 1999. Our audits also included the financial statement schedule listed in Item 21(b) of this Registration Statement. This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. Ernst & Young London, England March 15, 1999 S-1 SCHEDULE II WILLIS CORROON GROUP LIMITED AND SUBSIDIARY COMPANIES VALUATION AND QUALIFYING ACCOUNTS
ADDITIONS ADDITIONS BALANCE AT CHARGED TO CHARGED TO BALANCE AT BEGINNING COSTS AND OTHER END OF DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD - --------------------------------------------- ------------- --------------- --------------- --------------- ------------- Year ended December 31, 1996 Provision for bad and doubtful debts....... 26.9 0.8 (1.3)(a) (7.8) 18.6 --- --- --- --- --- Year ended December 31, 1997 Provision for bad and doubtful debts....... 18.6 (4.0) (3.0) 11.6 --- --- --- --- --- January 1 to September 1, 1998 Provision for bad and doubtful debts....... 11.6 1.5 (0.5) 12.6 --- --- --- --- --- September 2 to December 31, 1998 Provision for bad and doubtful debts....... 12.6 (0.4) 0.1(a) (0.5) 11.8
- ------------------------------ (a) Exchange adjustments S-2
EXHIBIT NO. DESCRIPTION OF EXHIBIT - ----------- --------------------------------------------------------------------------------------------------------- 2.1 Master Acquisition Agreement, dated October 13, 1998, among Willis Corroon Group plc, Willis Corroon Europe B.V., Tolbert Insurance & Finance B.V., UTA Willis Corroon S.p.A., Saint Gallen S.r.l., Olimpia S.r.l., Ital Brokers Holding S.p.A., and ARCEF N.V. 2.2 Stock Purchase Agreement, dated September 28, 1998, between Assurandrgruppen A/S and Willis Corroon Europe B.V. 2.3 WIFA Share Sale Agreement, dated August 4, 1997, between Willis Corroon Limited and Willis National Holdings Limited, including Side Agreement, dated December 11, 1998 2.4 ANIFA Share Sale Agreement, dated August 4, 1997, between Abbey National Independent Consulting Group Limited and Willis National Holdings Limited, including Side Agreement, dated December 11, 1998 2.5 Framework Agreement dated January 28, 1998 for the Merger of the limited partnership Jaspers Industrie Assekuranz GmbH & Co. KG and the general partnership C. Wuppesahl & Co. Assekuranzmakler 2.6 Purchase and Transfer Agreement dated January 27, 1998 concerning shares in Industrie-Assekuranz GmbH and Jaspers Industrie Assekuranz GmbH & Co. KG between Alexander & Alexander International Inc., Achtundsechzigste Verwaltungsgesellschaft Dammtor mbH, and Willis Corroon Group plc 2.7 Transfer of Shares dated January 22, 1998 of Industrie-Assekuranz GmbH to the Limited Partnership in the firm Jaspers Industrie Assekuranz GmbH & Co. KG 2.8 Merger Contract, dated March 17, 1998, between Jaspers Industrie Assekuranz GmbH & Co. KG and C. Wuppesahl & Co. Assekuranzmakler 2.9 Purchase and Sales Agreement, dated January 27, 1998, on the acquisition of limited partner shares in Jaspers Wuppesahl Industrie Assekuranz GmbH & Co. KG, among Ms. Irene Koenig, Ms. Doris Ballauff, Mr. Michael Emken, C. Wuppesahl Management GmbH, C. Wuppesahl, 68. Verwaltungsgesellschaft Dammtor mbH, and Willis Corroon GmbH 2.10 Purchase and Sales Agreement dated January 22, 1998 between Deutsche Bank Aktiengesellschaft, Willis Corroon GmbH and Willis Corroon Group plc in respect of a limited partnership interest of 14.6% in Jaspers Wuppesahl Industrie Assekuranz GmbH & Co. KG 2.11 Agreement, dated July 23, 1997, among Assurances Generales de France IART, UAP Incendie-Accidents, Athena, Gras Savoye Euro Finance S.A., Mr. Emmanuel Gras, Mr. Patrick Lucas, Mr. Daniel Naftalski, Willis Corroon Group plc, Willis Corroon Europe B.V., and Gras Savoye & Cie, along with Amendment No. 1 thereto, dated December 11, 1997, and Addendum thereto dated July 23, 1997 2.12 Sale and Purchase Agreement, dated October 20, 1997, among Willis Corroon Group plc, Acegiant Limited, Willis Corroon Group Services Limited, and Willis Faber & Dumas (Agencies) Limited 3.1 Amended Certificate of Incorporation of Willis Corroon Corporation 3.2 By-laws of Willis Corroon Corporation 3.3 Partnership Agreement of Willis Corroon Partners 3.4 Memorandum and Articles of Association of Willis Corroon Group Limited 4.1 Indenture, dated February 2, 1999, among Willis Corroon Corporation, as issuer, Willis Corroon Partners and Willis Corroon Group Limited, as guarantors, and The Bank of New York, as trustee
EXHIBIT NO. DESCRIPTION OF EXHIBIT - ----------- --------------------------------------------------------------------------------------------------------- 4.2 Form of 9% Senior Subordinated Notes due 2009 (the "Exchange Note") (Included as part of Exhibit 4.1 hereto) 4.3 Exchange and Registration Rights Agreement, dated February 2, 1999, among Willis Corroon Corporation, Willis Corroon Partners, Willis Corroon Group Limited, Chase Securities Inc. and Chase Manhattan International Limited 5.1 Opinion of Simpson Thacher & Bartlett as to the legality of the securities being registered hereby 10.1 Purchase Agreement, dated January 28, 1999, among Willis Corroon Corporation, Willis Corroon Partners, Willis Corroon Group Limited, Chase Securities Inc. and Chase Manhattan International Limited 10.2 Credit Agreement, dated as of July 22, 1998, and amended and restated as of September 1, 1998, September 25, 1998 and February 19, 1999 and amended as of October 28, 1998, among Willis Corroon Corporation, as borrower, Willis Corroon Group Limited and Trinity Acquisition plc, as guarantors, the lenders thereunder and The Chase Manhattan Bank, as administrative agent and collateral agent 10.3 Master Shareholders' Agreement, dated October 13, 1998, among Willis Corroon Group plc, Willis Corroon Europe B.V., Tolbert Insurance & Finance B.V., Saint Gallen S.r.l., Olimpia S.r.l., Ital Brokers Holding S.p.A., ARCEF Holding N.V., and the Directors (as defined therein) 10.4 Shareholders' Agreement, dated September 28, 1998, among Willis Corroon Europe B.V. and the Current Shareholders (as defined therein) (relating to the Assurandrgruppen merger) 10.5 Shareholders' Agreement, dated August 4, 1997, among Abbey National plc, Willis Corroon Group plc, and Willis National Holdings Limited, as supplemented on December 11, 1998 10.6 Shareholders' Agreement, dated July 15, 1998, between Willis Corroon Europe B.V., Jaime Castellanos Borrego, Antonio Serrats Iriarte and Pedro Cardelus Munoz-Seca 10.7 Shareholders' Agreement, dated December 17, 1998, among Willis Corroon AB, Mr. Staffan Larsson and Mr. Tomas Larsson 10.8 1998 Share Purchase and Option Plan for Key Employees of TA I Limited 10.9 Guarantee by Willis Corroon Group Limited of pension scheme of John Reeve 10.10 Guarantee by Willis Corroon Group Limited of pension plan of Kenneth Pinkston 10.11 Guarantee by Willis Corroon Group Limited of pension plan of Brian Johnson 10.12 TA I Limited Zero Cost Share Option Scheme 12.1 Computation of ratio of earnings to fixed charges 21.1 List of subsidiaries of Willis Corroon Group Limited 23.1 Consent of Simpson Thacher & Bartlett (Included as part of Exhibit 5.1 hereto) 23.2 Consent of Ernst & Young 24.1 Powers of Attorney 25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New York, as Trustee 99.1 Form of Letter of Transmittal 99.2 Form of Notice of Guaranteed Delivery
EX-2.1 2 EX. 2.1 Exhibit 2.1 page 1 of pages. Amsterdam, 13 October, 1998 WILLIS CORROON GROUP plc. WILLIS CORROON EUROPE B.V. TOLBERT INSURANCE & FINANCE B.V. UTA WILLIS CORROON S.p.A. SAINT GALLEN S.r.l. OLIMPIA S.r.l. Ital Brokers Holding S.p.A. ARCEF N.V. MASTER ACQUISITION AGREEMENT page 2 of pages. Index MASTER ACQUISITION AGREEMENT...................................................3 PREAMBLE.......................................................................5 THE ACCOMPLISHMENT OF THE FINAL STRUCTURE......................................9 WARRANTIES AND REPRESENTATIONS; INDEMNIFICATION OBLIGATIONS...................16 MISCELLANEOUS.................................................................31 MASTER ACQUISITION AGREEMENT By this Master Acquisition Agreement (the "MAA" or the "Agreement") executed in Amsterdam on October 13, 1998 (the "Execution Date"). WILLIS CORROON GROUP plc., a company organised and existing under the laws of United Kingdom, with registered office at Ten Trinity Square, London EC3P 3AX, authorised corporate capital of (pounds) 66.000.000 issued corporate capital (pounds) 53.222.386,13, fully paid in, registered no. 621757, represented by Ms. Sarah Turvill in her capacity as attorney and duly authorised to execute this Agreement (hereinafter referred to as "WILLIS Group"); WILLIS CORROON EUROPE B.V., a company organised and existing under the laws of The Netherlands, with registered office at Marten Meesweg 51, 3068 AV Rotterdam (The Netherlands), authorised share capital NLG 150.000.000, issued share capital NLG 115.493.000, registered no. 24135.835, represented by Ms.. Sarah Turvill in her capacity as Director and duly authorised to execute this Agreement (hereinafter referred to as "WILLIS Europe"); WILLIS Group and WILLIS Europe also being joint and collectively referred to as the "WILLIS"; TOLBERT INSURANCE & FINANCE B.V., a company organised and existing under the laws of The Netherlands, with registered office at "Olimpic Plaza", Fred. Roeskestraat 123 - I - 1076 EE Amsterdam - The Netherlands, authorised corporate capital of NLG 73.400.000, issued NLG 27.525.000, TradeRegister No 33.150.389, represented by Mr. Thomas J. Eltink in his capacity as attorney and duly authorised to execute this Agreement (hereinafter referred to as "Tolbert"); UTA WILLIS CORROON S.p.A., a company organised and existing under the laws of Italy with registered office at Via Padova 55, Turin (Italy), corporate capital of 1.000.000.000 (one billion) fully paid in, registered with the Companies Register of the Chamber of Commerce in Turin under no. 118566, represented by Mr. Enrico Boglione and Ms. Sarah Turvill, in their capacity as Directors duly authorised to execute this Agreement (hereinafter referred to as "UTA"); SAINT GALLEN S.r.l., a company organised and existing under the laws of Italy page 3 of pages. with registered office at Via A. Doria 15, 10123 Turin (Italy), corporate capital of ITL 20.000.000, fully paid in, registered with the Companies Register of the Chamber of Commerce in Turin under no. 548343, represented by Mr. Lorenzo Boglione in his capacity as Chairman and duly authorised to execute this Agreement (hereinafter referred to as "Saint Gallen"); OLIMPIA S.r.l., a company organised and existing under the laws of Italy with registered office at Via dei Giardini n. 7, Milan - Italy, corporate capital of ITL 20.000.000 (twenty billion) fully paid in, registered with the Companies Register of the Chamber of Commerce in Milan under no. 1420817 (REA), represented by Mr. Carlo Pasteur in his capacity as Amministratore Unico duly authorised to execute this Agreement (hereinafter referred to as "OLIMPIA"); Ital Brokers Holding S.p.A., a company organised and existing under the laws of Italy, with registered office at Via Galassi n. 2, Cagliari, corporate capital of ITL 5.000.000.000 fully paid in, registered in the Companies Register of the Chamber of Commerce in Cagliari under no. 151025, represented by Mr. Sebastiano Romeo or by Franco Lazzarini in their respective capacity as Chairman and Managing Director and duly authorised to execute this Agreement (hereinafter referred to as "HBC"); ARCEF N.V., a company organised and existing under the laws of The Netherlands Antilles , with registered office at Curacao, corporate capital of US $ 30.000, fully paid in, represented by Mr. Thomas J. Eltink in his capacity as attorney and duly authorised to execute this Agreement (hereinafter referred to as "ARCEF"). WHEREAS A. Willis Europe, Saint Gallen and Olimpia have full title to and directly own all the shares representing 100% of the authorised and issued capital of UTA; in particular, Willis Europe has full title to 50% of the authorised and issued capital of UTA, Saint Gallen to 40% of the authorised and issued capital of UTA and Olimpia to the remaining 10% of the authorised and issued capital of UTA. B. Tolbert has full title to and directly owns 100% of the authorised and issued capital of Italbroker S.p.A., an Italian corporation with registered offices at Via Albaro n. 3 - Genova (Italy), corporate capital of 5.000.000.000 (five billion) fully paid in, registered with the Registrar of Company of Genova at No. 39063, (hereinafter referred to as "Italbroker"); C. Furthermore, Tolbert has full title to and directly owns 100% of the authorised and issued capital of Interconsult Wise S.r.l., an Italian corporation with registered offices at Via Albaro 3 - Genova, corporate capital of 1.000.000.000 (one billion) fully paid in, registered with the Registrar of Company of Genova at No.337585, (hereinafter referred to as "ICW"); page 4 of pages. D. HBC has full title to and directly owns 50% of the authorised and issued capital of Tolbert, while ARCEF has full title to and directly owns the further 50% of the authorised and issued capital of Tolbert; E. The Parties are willing to cause UTA to acquire the whole capital stock of Gruppo (as below defined), and, as a consequence thereof, to cause Tolbert to acquire a 50% interest in UTA, as it will result from the Final Structure (as below defined), throughout the implementation of the various transactions and corporate actions described hereinbelow. NOW, THEREFORE, in consideration of the above whereas, which form an integral part of this Agreement, the Parties hereto hereby agree as follows:- PREAMBLE 1. DEFINITIONS. Unless differently provided for in this Agreement, the following terms and expressions shall have the meaning hereinafter specified: 1.1. "Accounting Principles" shall mean the accounting principles established by the "Ordine Nazionale dei Dottori Commercialisti" and by the "Collegio dei Ragionieri", as supplemented by the accounting principles established by the International Accounting Standards Committee; 1.2. "Accounts Receivable" shall mean all credits (also if discounted with banks or otherwise factored) notes and accounts receivable of Gruppo, of UTA Group and of Tolbert, as the case may be, also to include "ricevute bancarie", drafts and bills (i.e. "cambiali"); 1.3. "Business" shall mean any and all the activities carried out by each of the Company (as below defined); 1.4. "Company(ies)" shall mean each of Gruppo, UTA Group, or Tolbert, as from time to time indicated in the context of the provisions of this Agreement; 1.5. "Current Tolbert Shareholders" shall mean jointly the current shareholders of Tolbert, i.e. HBC and ARCEF; 1.6. "Current UTA Shareholders" shall mean jointly the current shareholders of UTA, page 5 of pages. i.e. Willis Europe, Saint Gallen and Olimpia; 1.7. "Encumbrances" shall mean any claims, interest, option or pre-emption right or other rights of shareholders or other parties, charges, pledges, mortgages, security, actions, liens, or encumbrances and the like of whatever nature (including, as to shares or quotas, inter alia, any "clausole di gradimento"); 1.8. "Execution Date" shall mean the date of execution of this Agreement and of the MSA (as below defined); 1.9. "Final Structure" shall mean the corporate structure resulting from the full implementation of this Agreement and as described under Exhibit 1 hereto; 1.10. "Financial Statement(s)" shall mean the duly and validly approved financial statements of each of the Company, as per the following reference dates: as to UTA, December 31, 1997; as to Tolbert: September 30, 1998; as to Gruppo: December 31, 1997; 1.11. "Gruppo" shall mean jointly Italbroker, ICW and their subsidiaries, as per the group chart contained under Exhibit 2 hereto; 1.12. "IASC Accounting Principles" shall mean the accounting principles established by the International Accounting Standard Committee; 1.13. "ICW Quotas" shall mean all of the outstanding quotas of ICW owned by Tolbert and representing its entire fully paid up capital stock of ITL 1.000.000.000; 1.14. "Italbroker Shares" shall mean No. 1.250.000 shares of Italbroker owned by Tolbert and representing its entire fully paid up capital stock of ITL 5.000.000.000; 1.15. "ITL" shall mean Italian Lire and all numerical expressions thereof follow the continental European convention, whereby the point (.) separates the thousands and the comma (,) separates the decimals; 1.16. "Liability(ies)" shall mean any and all liability of any nature, payments, losses, damages, obligations, claims, expenses and other costs, (including labour, social security, environmental, Taxes - as below defined-), product or third party liabilities), which (A) are not expressly disclosed in the Warranties and Representations (as below defined) made by the Seller (as below defined), or (B) in any way derive, wholly or partly, (i) from any fact not disclosed in said Warranties and Representations, or (ii) from the fact that one or more of the Warranties and Representations may not be accurate, complete, or true, for any reason whatsoever. page 6 of pages. 1.17. "MSA" shall mean the Master Shareholders Agreement which shall be entered into simultaneously to this Agreement, also by and between the Parties and the Directors (as defined under the MSA); 1.18. "Net Working Capital" shall mean the net working capital calculated in accordance with Exhibit 2.bis hereto; 1.19. "Net Worth" shall mean the net equity of each of the Company, i.e. issued capital + reserves and retained earnings + profit of the year (capitale sociale + fondi riserve ordinarie e straordinarie + utile di esercizio); 1.20. "NLG" shall mean Dutch Guilders and all numerical expressions thereof follow the continental European convention, whereby the point (.) separates the thousands and the comma (,) separates the decimals; 1.21. "Parties" shall mean jointly the parties to this Agreement; 1.22. "Party" shall mean individually each of the Parties to this Agreement; 1.23. "Short Form(s)" shall mean the document(s), whose texts are attached to this MAA under Exhibit 2ter, to be executed before a Notary Public and then "apostilled" with the limited scope to implement the transfer and/or acquisition of title to the relevant shares or quotas; 1.24. "Taxes" shall mean any and all liabilities or obligations of each of the Company for or in respect of any income, sales, franchise, excise, use, personal property, real property, payroll (whether imposed directly on the employer or imposed on the employees and required to be withheld from wages paid by the employer and including, for the purposes hereof, social contributions and other amount to be paid to INPS, INAIL, INPDAI, ARPA and other similar bodies or authorities, whether Italian or foreign, as the case may be, as required by the applicable law and regulations, by the collective national bargaining agreements or otherwise due), value added (IVA), leasing, transfer, stamp or other taxes, levies, duties, charges or withholdings, together with any penalties, fines or interest thereon; 1.25. "Timetable" shall mean the sequence of the events and corporate actions which need to be implemented in order to accomplish the Final Structure, which Timetable (contained under Exhibit 3 hereof) may be amended as required by applicable laws or in accordance with the common reasonable opinion of the Parties' Counsels; 1.26. "UTA Group" shall mean jointly UTA and its subsidiaries, as per the group chart contained under Exhibit 4 hereto; page 7 of pages. 1.27. "UTA Milan" shall mean UTA Willis Corroon Milano S.p.A., a company organised and existing under the laws of Italy, with a registered offices at Piazza Luigi di Savoia 24, Milan (Italy), corporate capital of ITL 200 million, fully paid in, registered with the Registrar of Companies of Milan under No. 146/274695; 1.28. "UTA RS" shall mean UTA Willis Corroon Rischi Speciali S.r.l. (acknowledging the Parties that the extraordinary shareholders' meeting has already resolved to amend it in "Willis Corroon Italia S.r.l."),a company organised and existing under the laws of Italy with registered office at Via dei Giardini 7, Milan (Italy), corporate capital of 90 million, fully paid in, registered with the Companies Register of the Chamber of Commerce in Milan under No. 197638. 2. TERMINATION OF PRIOR AGREEMENT AND PURPOSE OF THIS AGREEMENT. 2.1. The Parties wish to implement the Memorandum of Understanding entered into on June 5, 1998, as amended and integrated thereafter on July 22, 1998, on July 28,1998, and by means of subsequent letters, whose contents are agreed upon by the Parties (the "MoU"), where, inter alia, the main terms of this MAA and of the MSA have been set out, and which will be fully replaced by the present MAA and by the MSA and, therefore, is terminated. 2.2. Accordingly the MoU entered into by and among Willis Corroon Group plc, Willis Corroon Europe B.V., Tolbert Insurance & Finance B.V., Ital Broker Holding S.p.A., Arcef Holding NV, Uta Willis Corroon S.p.A., Saint Gallen S.r.l., and Olimpia S.r.l., is hereby terminated as of the date of this Agreement and all the Parties are reciprocally released from any liability and/or obligation arising therefrom for any reason whatsoever. 2.3. The purpose of this Agreement, to be implemented in good faith through the completion of the transactions and other operations contemplated and described herein, or in any event assumed hereunder, relates to the acquisition by UTA of the whole capital stock of Gruppo, and, as a consequence thereof, to the acquisition by Tolbert of a 50% interest in UTA, as described in the Final Structure. 2.4. In the light of the above, the Parties are fully aware and agree that all the provisions of this Agreement are non severable from each other (including the warranties and representations and the relevant indemnification obligations) and each of them is essential to the performance of this Agreement. Therefore, any default with respect to any provision of this Agreement (as well as of any action undertaken by any of the Parties in compliance with the Timetable, even if enforced prior to the execution of this Agreement), as well as any behaviour or act of one of the Parties (except for any behaviour or act caused by the act or omission of a third party, being agreed that a director of one of the involved companies shall not be deemed to be a third party) which page 8 of pages. may result in any unjustified delay, hindering, or default of any of them, shall be deemed to affect the entire Agreement also for purposes of damages. 2.5. In the event that the transaction envisaged in this MAA is not completed as a result of a breach by WILLIS, and if WILLIS, or any of its subsidiaries, within two years from June 5, 1998, uses information gained as a result of the discussion which have taken place or the due diligence, to acquire any Client of Gruppo, then the Current Tolbert Shareholders shall be entitled to an indemnity from WILLIS equal to 250% of the brokerage and fee income earned by Gruppo in relation to such client in the last 12 months before WILLIS acquires such Client. This indemnity will not apply in circumstances where WILLIS can show that it acquired a client of Gruppo for reasons entirely unconnected with the use by WILLIS of information gained as a result of the discussion which have taken place or the due diligence. 3. REFERENCE TO THE MASTER SHAREHOLDERS AGREEMENT. INTERIM PERIOD. 3.1. This MAA and the MSA shall be entered into simultaneously on the same date and any and all events regulated in these two agreements that shall occur at the Execution Date shall be deemed as to take place at the same time. If any of the transactions provided for in these two agreements should not take place, both this MAA, and the MSA shall remain without effect, unless otherwise agreed by the Parties, and each Party shall have recourse to all remedies available under applicable laws against the defaulting Party(ies). 3.2. Throughout the implementation of all actions set forth in this MAA and/or in the MSA and up and until the appointment of the new boards of directors of the interested companies as provided for in this MAA and/or MSA, the Parties agree to cause the boards of directors of all interested companies to conduct the day-to-day business in an ordinary and prudent manner with an aim to implementing the various actions provided for in this MAA and/or in the MSA, and to consult and agree among them should any extraordinary matter arise. Should the Parties fail to appoint new boards of directors, in any case the provisions set forth under the MSA shall apply with respect to the interested companies. 3.3. The Parties agree and acknowledge that a provision similar to this Article 3 has been provided for in the MSA. 3.4. In addition, it is agreed by the Parties that, simultaneously to the execution of this MAA, the Directors of the Company shall resign in writing; the new boards of directors shall be appointed by the relevant shareholders' meetings on the first possible date after the adoption of the new by-laws pursuant to Article 4.1.(d). page 9 of pages. THE ACCOMPLISHMENT OF THE FINAL STRUCTURE 4. UTA GROUP RE-ORGANISATION AND LOAN AGREEMENT. 4.1. In order to accomplish the Final Structure in accordance with the Timetable, Current UTA Shareholders shall: (a) take any further step for the implementation of the merger procedure between UTA and UTA Milan, which has been resolved by the respective extraordinary shareholders' meetings on July 28, 1998; (b) cause UTA to ask the competent Court to appoint an advisor in order to evaluate the current UTA brokerage business in order to contribute it in UTA RS at a value equal to the net worth of the contributed business, calculated in accordance with the book value as emerging by UTA financial statement and, as a consequence thereof, cause the increase in the capital stock in UTA RS for an equivalent amount, without premium, change the company scope of UTA from an operating company to a pure holding company and simultaneously amend the current corporate name of UTA into "Willis Corroon Italia Holding S.p.A."; (c) resolve the Second Capital Increase (as below defined); the Parties acknowledge that the extraordinary shareholders meeting of UTA, possibly in the "totalitaria" form, will be held not earlier than six days after the Contribution in Kind; (d) finally, adopt new By-laws, in conformity with the text which shall be agreed in good faith by the Parties within 30 days of the First Closing Date, in conformity with the MSA. 4.2. Prior to the First Closing Date, and with value date as of the said First Closing Date, UTA shall enter into a loan agreement in the amount of ITL 30,5 billion (the "Bank Loan") so as to fulfil the payment obligations of the first instalment of the price relating to the sale and purchase of ITB and ICW, as provided for under this Agreement. 4.3. The Bank Loan shall be entered into by UTA with Lloyds Bank - Amsterdam. Willis shall guarantee the full Bank Loan, provided that: (a) Tolbert will use its bank account at ABN Amro in Amsterdam, into which UTA will pay any sums in favour of Tolbert; (b) UTA will open a bank account at Istituto Bancario San Paolo di Torino, Sede Centrale, Piazza San Carlo, into which the sums relating to the First Capital Increase and to the Second Capital Increase shall be paid; page 10 of pages. (c) a Willis appointee will be a mandatory signatory on the UTA accounts to be used with reference to any payment or transactions provided for by this Agreement; (d) irrevocable instructions in relation to the payment of the first instalment of the price for the Italbroker Shares and for the ICW Quotas and of the First Capital Increase will be lodged at the banks on the First Closing Date. 5. SALE AND PURCHASE OF ITALBROKERS AND ICW. 5.1. UTA shall purchase from Tolbert, which shall sell and transfer to UTA at the First Closing, free of any Encumbrances, the Italbroker Shares by executing the Short Forms before a Notary Public in Amsterdam. 5.2. Subject to the homologation of the amendments to the current By-laws of UTA, as per Article 4.1.(b) hereinabove, UTA shall purchase from Tolbert, which shall sell and transfer to UTA at the Second Closing, free of any Encumbrances, the ICW Quotas by executing the Short Forms before a Notary Public in Amsterdam. 5.3. Subject to the price adjustment provided for under the following Article 11 hereof, the aggregate price for the transfer of title to the Italbroker Shares and to the ICW Quotas shall be equal to ITL 71 billion (the "Aggregate Price"), of which ITL 69,5 billion relating to Italbroker Shares and ITL 1,5 billion to ICW Quotas, and shall be adjusted in accordance with the Formula contained under Exhibit 5 hereto. 6. THE FIRST CAPITAL INCREASE. 6.1. The Parties acknowledge and agree that Current UTA Shareholders have already favourably resolved a capital increase in UTA, (already approved by the competent Tribunal), to be implemented by the issuance of No. 763.000 shares with a ITL 763.000.000 par value, for an aggregate amount of ITL 30.500.925.000 billion (of which ITL 763.000.000 as par value and ITL 29.737.925.000 as premium) (the "First Capital Increase"). 6.2. Subject to the previous renunciation by Willis Europe, Saint Gallen and Olimpia, of their pre-emption rights with reference thereto (being agreed that the said Willis Europe, Saint Gallen and Olimpia shall renounce their pre-emption rights on or before the First Closing Date), the First Capital Increase shall be subscribed and paid by Tolbert at the First Closing Date and upon completion of the transfer of the Italbroker Shares. 7. THE FIRST CLOSING AND RELATED FURTHER COMMITMENTS. page 11 of pages. 7.1. The First Closing shall take place in Amsterdam (The Netherlands), before a Notary Public of Stibbe, Simont, Monahan - Duhot, Notaries Public in The Netherlands (the "Notary Public"), on October 13, 1998 at 10,00 a.m. (the "First Closing Date"), simultaneously to the execution of this MAA. 7.2. At the First Closing:- (a) Tolbert shall sell, transfer and assign to UTA, which shall acquire, full title, free of Encumbrances, to the Italbroker Shares, by executing the Short Forms before the Notary Public and delivering to UTA the shares certificates No 15, 16, 18, 19; (b) UTA and Tolbert shall enter into a sale and purchase agreement with reference to the ICW Quotas, by executing the relevant Short Forms; this sale and purchase agreement shall be subject to the condition precedent of the homologation of the amendment in the company scope (i.e. oggetto sociale) of UTA from an operating company to a pure holding Company. New by-laws of UTA shall be adopted in conformity to the provision of Article 4.1(d) hereinabove. (c) UTA shall pay on Tolbert's bank account No. 403268656 at ABN Amro, Amsterdam, P.O. BOX 407 - 1000 AK - Amsterdam, a sum equal to ITL 30,5 billion to Tolbert, of which ITL 29,5 billion as a first instalment on the consideration for the Italbroker Shares and ITL 1 billion in advance and in account as a consideration for the ICW Quotas; (d) Tolbert shall subscribe and pay on UTA's bank account No 123396 at Istituto Bancario San Paolo di Torino, S.p.A. Sede di Torino, Piazza San Carlo n. 156, the ITL 30.500.925.000 relating to the First Capital Increase in UTA, with value date on October 13, 1998, save an express refusal of ABN Amro to comply with this value date, in which case the value date shall be not later than the first date available for the bank; (e) any further documents, guarantees, ancillary contracts and certificates, as provided for in this Agreement or, in any event, as necessary or appropriate for the contemplated transaction, shall be duly executed, prepared, filed, issued and delivered by the Parties. 7.3. On October 14 or 15, 1998, upon completion of the First Closing: (a) UTA Directors, upon delivery of the payment statement relating to the First Capital Increase, shall issue the declaration provided for by Article 2444 of the Italian Civil Code and shall deposit it with the competent Registry of Companies; page 12 of pages. (b) Thereafter, UTA Directors shall issue the new share certificates in favour of Tolbert and relating to the First Capital Increase and shall record Tolbert in the UTA Shareholders Register as a shareholder of UTA; (c) UTA shall reimburse to Lloyds Bank, Amsterdam, with value date on October 15, 1998 (save an express refusal of the banks to comply with this date, in which case the value date shall be not later than the first available date for the banks), the Bank Loan and Willis shall be consequently relieved from the granted relevant guarantee; (d) Italbroker Directors shall record UTA in the Italbroker Shareholders Register as the sole shareholder of Italbroker. 7.4. Within 20 days from the First Closing Date (unless the "totalitaria" fails, in which case the payment should be made immediately after the approval of the Second Capital Increase by an extraordinary shareholders meeting, which will be in any event duly convened and held not later than 30 days from the First Closing Date), Willis Europe shall pay to UTA and UTA shall pay to Tolbert on the same Tolbert's bank account No. 403268656 at ABN Amro, Amsterdam, P.O. BOX 407 - 1000 AK - Amsterdam, the further amount of ITL 30,5 billion, still due as the second instalment relating to the price for the transfer of the Italbrokers Shares and of the ICW Quotas, of which 30 billion representing the second instalment for the transfer of the Italbroker Shares and ITL 500 million representing the second instalment of the advanced payment relating to the ICW Quotas. 7.5. Upon completion of the First Capital Increase, the share capital of UTA shall be equal to ITL 1.763.000.000 and shall be owned as follows: (a) as to Tolbert, No 763.000 ordinary shares, representing 43,3 % of the First Increased UTA Share Capital; (b) as to Willis Europe, No 500.000 ordinary shares, representing 28,4 % of the First Increased UTA Share Capital; (c) as to Saint Gallen, No 400.000 ordinary shares, representing 22,7 % of the First Increased UTA Share Capital; (d) as to Olimpia, No 100.000 ordinary shares, representing 5,7 % of the First Increased UTA Share Capital. 8. THE CONTRIBUTION IN KIND IN TOLBERT 8.1. The Parties acknowledge and agree that the Current Tolbert Shareholders have resolved a redemption in capital in Tolbert in the amount of NLG 13.762.500 by page 13 of pages. decreasing the par value of the existing shares from NLG 36.700 to NLG 18.350. In addition, the Parties acknowledge and agree that Current Tolbert Shareholders have already favourably resolved a capital increase in Tolbert, reserved to the benefit of Saint Gallen and Olimpia, for an amount of NLG 13.762.500 par value, to be implemented by the issuance of No. 750 "B" shares (being the existing shares transformed into "A" shares) , and to be subscribed and paid by means of the contribution in kind, by the said Saint Gallen and Olimpia, of all of their shares in UTA, representing in aggregate 28,4% of the First Increased UTA Share Capital (the "Contribution in Kind"). 8.2. The final implementation of the Contribution in Kind shall take place in Amsterdam (NL), before the Notary Public , on October 20, 1998 (the "Contribution in Kind Date"). 8.3. At the Contribution in Kind Date, Saint Gallen and Olimpia, on the one side, and Tolbert, on the other side, shall execute the deed of issue relating to the Contribution in Kind, therefore transferring the property of all of their shares in UTA in favour of Tolbert, so as to finally accomplish the Contribution in Kind. Exhibit 6 contains a copy of the Deed of Issue, which shall be executed before the Notary Public. The Notary Public shall duly certify the relevant subscriptions of the representatives of Saint Gallen and Olimpia. The deed of issue shall be duly apostilled. Promptly after the execution of the issue deed relating to the Contribution in Kind and after all of the UTA shares have been endorsed or in any event transferred by Olimpia and Saint Gallen in favour of Tolbert, the relevant share certificates shall be sent to the registered offices of UTA, so as to permit the UTA directors to record Tolbert as a UTA shareholder also with reference to the said share certificates. Upon completion of the above record, the share capital of UTA, equal to ITL 1.763.000.000, shall be owned as follows: (a) as to Tolbert, No 1.263.000 ordinary shares, representing 71,6% of the First Increased UTA Share Capital; (b) as to Willis Europe, No 500.000 ordinary shares, representing 28,4% of the First Increased UTA Share Capital. 8.4. Upon completion of the Contribution in Kind, and upon elapse on November 2, 1998, of the two month period related to the redemption in capital mentioned under Article 8.1 hereinabove, the capital stock of Tolbert shall be equal to NLG 27.525.000, divided into No. 750 "A" shares and No. 750 "B" shares, with NLG 18.350 par value, and shall be owned as follows: (a) as to HBC, No. 375 "A" shares, representing 25% of the then outstanding 27.625.000 NLG Tolbert authorised and issued capital stock; page 14 of pages. (b) as to Arcef, No. 375 "A" shares, representing 25% of the then outstanding 27.625.000 NLG Tolbert authorised and issued capital stock; (c) as to Saint Gallen, No. 600 "B" shares, representing 40% of the then outstanding 27.625.000 NLG Tolbert authorised and issued capital stock; (d) as to Olimpia, No. 150 "B" Shares, representing 10% of the then outstanding 27.625.000 NLG Tolbert authorised and issued capital stock. 8.5. The Current Tolbert Shareholders, Saint Gallen and Olimpia shall take any appropriate actions so as to ensure that the issuance and existence of classes "A" and "B" of shares is used with the sole scope to permit the Current Tolbert Shareholders to obtain the payment of those dividends, reserves and/or retained earnings in Tolbert, which are or will be directly and strictly connected with the sale of Gruppo to UTA, (i.e. the Aggregate Price (including the Remaining Price), interest and indemnities). No dividends, earnings and available reserves shall be distributed, nor any different distribution and/or reimbursement shall be made in favour of any of the Current Tolbert Shareholders, other than in connection with the mentioned sale of Gruppo, notwithstanding the existence of two (or, in the future, even more) classes of shares in Tolbert. 9. THE SECOND CAPITAL INCREASE. 9.1. Not earlier than six days from the Contribution in Kind Date, the extraordinary shareholders meeting of UTA shall resolve (if possible in the "totalitaria" form, in which case the extraordinary meeting shall be held on October 28, 1998, 3p.m. at the offices of Notaio Morone in Turin, if not, in form of extraordinary shareholders' meeting convened in accordance with the relevant law and by-laws provisions) a second capital increase in cash in UTA, to be implemented by the issuance of No. 763.000 shares with a ITL 763.000.000 par value, for the aggregate amount of ITL 30.500.925.000 (of which ITL 763.000.000 as par value and ITL 29.737.925.000 as premium), (the "Second Capital Increase"). 9.2. The Second Capital Increase shall be subscribed and paid by Willis Europe, upon renounce of Tolbert from its pre-emption rights (being agreed that Tolbert shall renounce its pre-emption right on or before the Second Capital Increase), the day after the extraordinary shareholders meeting mentioned above has been validly held and it has validly resolved the Second Capital Increase. The payment shall be made by Willis Europe on UTA bank account No 123396 at Istituto Bancario San Paolo di Torino S.p.A., Sede di Torino, Piazza San Carlo n. 156. 9.3. Upon completion of the procedure relating to Second Capital Increase, the share page 15 of pages. capital of UTA shall be equal to ITL 2.526.000.000 (the "Second UTA Increased Capital") and shall be owned as follows: (a) as to Tolbert, No 1.263.000 ordinary shares, representing 50% of the Second UTA Increased Capital; (b) as to Willis Europe, No 1.263.000 ordinary shares, representing 50% of the Second UTA Increased Capital. 10. CONDITION PRECEDENT TO THE TRANSFER OF ICW QUOTAS. 10.1 Subsequent to the homologation of the new version of the By-laws of UTA (being agreed that the present by-laws shall be amended in good faith between the Parties within one month of the execution hereof) in accordance with the provision set forth under Article 5.2 hereof, UTA shall finally acquire from Tolbert, free of Encumbrances, the ICW Quotas, being agreed that the price relating thereto - equal to ITL 1,5 billion - shall have already been paid in advance in two instalment at the First Closing and after 20 days from the said First Closing. 10.2. Upon fulfilment of the said condition precedent, ICW Directors shall record UTA in the ICW shareholders register as the sole shareholder of ICW. 11. PRICE ADJUSTMENT. 11.1. Subject to the price adjustment provided for by this Article, the Aggregate Price for the acquisition by UTA of the Italbroker Shares and of the ICW Quotas has been in principle determined in the amount of ITL 71 billion. A part of it (i.e. ITL 61 billion) shall be allowed by UTA in favour of Tolbert at the First Closing and after the Second Capital Increase. 11.2. The remaining part of the Aggregate Price (the "Remaining Price") shall be calculated in accordance with Exhibit 5 by Gruppo current auditor (i.e. Deloitte & Touche Tomatsu S.p.A.) no later than April 30, 1999 at the Current Tolbert Shareholders' costs and expenses, being in addition understood that the Parties shall timely and deliver simultaneously to Gruppo current auditor and to Willis' auditor all the necessary documents, information and data for the said calculation. The report of Gruppo current auditor containing the calculation of the Remaining Price shall be then delivered, within the same term of April 30, 1999, to Willis' auditor, which will revise it (at Willis' costs and expenses) within 20 days of the delivery of Gruppo current auditor report, with the view of reaching a common determination of the Remaining Price. Failing this common determination within May 20, 1999, the following Article 11.3 shall page 16 of pages. apply. 11.3. Any dispute with reference to the Remaining Price (to include any dispute relating to the calculation of the Net Working Capital adjustment), should Gruppo current auditor and Willis' auditor not agree upon the Remaining Price within the term provided for above, shall be referred to a third party International accounting first ranking firm (the "Arbitrator"), to be jointly appointed by Gruppo current auditor and Willis' current auditor. Failing this joint appointment, the Arbitrator shall be appointed by the President of ICC upon request of the most diligent party. The Arbitrator shall determine the Remaining Price within 30 days from its acceptance of the said task. The Arbitrator's determination shall be final and binding upon the Parties and it shall be deemed to be an integral part of this Agreement. All the fees and costs relating to the determination by the Arbitrator of the Remaining Price shall be borne on a 50% basis by Willis Europe and by Current Tolbert Shareholders. 11.4. Subject to Article 8.5 hereinabove, the Remaining Price shall be paid by UTA in favour of Tolbert within 5 banking days of either the common calculation of the Remaining Price jointly made by Gruppo current auditor and by Willis' auditor, or the determination made by the Arbitrator. The payment will be made in accordance with the following procedure: (a) UTA will call an extraordinary shareholders meeting to resolve a capital increase in an amount equal to the Remaining Price; this capital increase will be subscribed 50% each by Willis Europe and Tolbert; Willis Europe will make, within the 5 day term set forth above, an advanced payment (i.e. "versamento in conto futuro aumento di capitale") with reference to its 50% part of the capital increase; UTA will use the sums of this advanced payment to the sole aim to paying 50% of the Remaining Price to Tolbert; (b) Tolbert will subscribe its 50% of the capital increase; in addition, UTA hereby undertakes not to oppose, in connection with this capital increase, the possibility for Tolbert to swap the payment of its part of the increase in capital with its credit vis-a-vis UTA with reference to the residual 50% of the Remaining Price. In any event, Willis and Tolbert will have the possibility to determine the best way to finance UTA with the aim of allowing the UTA to pay the Remaining Price in a tax efficient way for the UTA itself. Willis hereby guarantees to pay a sum equal 50% of the Remaining Price to Tolbert, in the event UTA does not comply with its obligation to pay the Remaining Price. 12. THE CONTRIBUTION IN UTA RS, THE MERGER AND THE FINAL STRUCTURE. page 17 of pages. 12.1. Upon completion of all transactions and corporate actions described under the above provisions, the Parties shall cause UTA to contribute its current brokerage business (being agreed that the participating interests in Subsidiaries and other companies shall not be contributed) in UTA RS, as per the terms set forth under Article 4.1.(b). 12.2. Furthermore, the Parties shall procure UTA to adopt new by-laws, in accordance with the provision of Article10.1 hereinabove and in accordance with the provision set forth under Article 4.1.(d) hereof. 12.3. Upon completion of all transactions and corporate actions described under the above provisions, the Parties shall take any adequate step so as to achieve, prior to December 31, 1999, the "horizontal merger" between Italbroker and UTA RS. 12.4. This "horizontal merger" shall take place at book values. The company resulting therefrom shall be named "Willis Corroon Italia S.p.A.". Any and all documents relating to this merger procedure shall be prepared in good faith by the interested parties and approved by the competent corporate bodies. 12.5. With the implementation of the "horizontal merger", the Final Structure will be accomplished. WARRANTIES AND REPRESENTATIONS; INDEMNIFICATION OBLIGATIONS 13. IN GENERAL. 13.1. For the purposes of this Agreement the Parties agree that certain warranties and representations set forth under Articles 14 and 15 hereinbelow (the "Warranties and Representations") shall be given: (a) severally by Willis Europe, Saint Gallen and Olimpia, and in proportion to their shareholding as at the date hereof in UTA respectively equal to 50%, 40% and 10% thereof, (but jointly between Saint Gallen and Olimpia with reference to their 40% and 10% of UTA) (the "Seller") in the ultimate favour of the Current Tolbert Shareholders, whether directly or indirectly through Tolbert, (the "Purchaser") in connection with the First Capital Increase (the "UTA Operation"); (b) jointly by Tolbert, by the Current Tolbert Shareholders (the "Seller") in page 18 of pages. favour of UTA (the "Purchaser") in connection with the sale and purchase of Gruppo (the "Gruppo Operation"); (c) jointly by Current Tolbert Shareholders (the "Seller(s)") in favour of Saint Gallen and Olimpia (the "Purchaser(s)") with respect to Tolbert and, on the other hand, jointly by Olimpia and Saint Gallen in favour of Current Tolbert Shareholders with respect to the UTA shares contributed in Tolbert, in connection with the Contribution in Kind described under Article 8 hereof (the "Tolbert Operation"); any claim concerning the Gruppo Operation arising from this MAA shall be exclusively in favour of UTA. 13.2. Therefore, for the avoidance of doubt: (a) "Seller(s)" shall mean, as the case may be, either: (i) Current UTA Shareholders with reference to the UTA Operation; or (ii) jointly Tolbert and Current Tolbert Shareholders with reference to the Gruppo Operation; or (iii) jointly Current Tolbert Shareholders or jointly Olimpia and Saint Gallen, with reference to the Tolbert Operation; (b) "Purchaser(s)" shall mean, as the case may be, either: (i) UTA with reference to the Gruppo Operation; or (ii) Tolbert with reference to the UTA Operation; or (iii) jointly either Saint Gallen and Olimpia, or Tolbert Current Shareholders, with reference to the Tolbert Operation; (c) "Interested Company" shall mean the Company that will be indemnified by the Seller, i.e.: (i) UTA, or its subsidiary, as the case may be, with reference to the UTA operation; or (ii) Gruppo with reference to the Gruppo Operation; and (iii) either Tolbert or UTA with reference to the Tolbert Operation. 13.3. The Parties undertake that in the event of any resolutions or actions to be taken by the Board of Directors of either UTA or Tolbert, as the case may be, by any of the Seller or Purchaser in respect of any of the Seller or the Purchaser, as the case may be, such resolutions or actions shall be resolved as follows: (a) If concerning the Gruppo Operation, by the Current UTA Shareholders' representatives only; (b) if concerning the UTA Operation by the Current Tolbert Shareholders's representatives only, it being understood that the other representatives of the new shareholders in UTA or in Tolbert, as the case may be, shall abstain from voting because in potential conflict of interest, provided that they are expressly relieved and held harmless page 19 of pages. from any liability deriving from any claim or actions resolved. 14. WARRANTIES AND REPRESENTATIONS. 14.1. Seller represents and warrants to Purchaser that (save as of that different date expressly indicated hereinbelow under this Article 14), as of the date of this Agreement, and: (i) as of the First Closing Date with reference to the UTA Group, to Italbroker and all its subsidiary and to ICW ; (ii) as of the implementation of the Contribution in Kind described under Article 8 as to Tolbert; (each of the date indicated under Articles 14.1((i)), 14.1. and 14.1.((ii)) hereinafter referred to as the "Relevant Date" as from time to time indicated in the context of this Agreement), all the above as made at and as of such Relevant Date: (b) Title. Seller has directly or indirectly full title to the Company shares or quotas, as the case may be, free and clear of any Encumbrances and may freely dispose thereof; no person, firm or corporate or unincorporated entity has any option or right to purchase or to be offered to purchase or otherwise acquire, in whole or in part, the Company quotas or shares. There is no requirement applicable to the Seller to make any filing with, or to obtain any permit, authorisation, consent, approval, or exemption of, any governmental, regulatory of financial authority, whether national or international, private or public, as a condition precedent to the lawful consummation of the transactions contemplated by this Agreement, or to the conduct of the business of the Company, or to the continuity of the validity of any loan, financing or other benefit of the Company. There is not any option or pre-emption right other than the ones set forth by of the relevant by-laws of each of the Company, which are in any event hereby waived to all effects . (c) No Violation. The execution of this Agreement and the consummation of the transactions contemplated herein have been regularly approved by the competent corporate authority of the Seller. Neither the execution and delivery of this Agreement by the Seller, nor the performance of its obligations pursuant thereto will conflict with or result in any breach of any agreement between the Seller and other parties. (d) Financial Statements. The Financial Statement of the Company is page 20 of pages. prepared in accordance with the Accounting Principles, as consistently applied over the years, and present fairly and with accuracy the related financial position of the Company, and the results of its operations for the relevant periods. (e) Taxes. The Company has always and duly paid the Taxes and duly filed within the times and in the manner prescribed by law all reports and returns of Taxes required to be filed by the applicable legislation; it has duly paid or made provisions for payment of all Taxes due and payable. There are no tax liens upon any of the assets of the Company. (f) Due Incorporation of the Company. The Articles of Incorporation and By-laws of the Company in effect on the date hereof are attached as Exhibits 7 through 10 and shall not be subject to any amendment, other than in respect of, and to comply with, the provisions of this Agreement, or, as to Tolbert, to comply with the redemption in capital resolved on August 21, 1998. The Company is a corporation duly incorporated and validly existing under either the laws of Italy, or the law of The Netherlands or other jurisdictions, as the case may be, and it has the requisite corporate powers or other capacities to own and lease its properties and to conduct its business as now conducted. The Company is not - nor ever has been - insolvent, or in a situation considered by art. 2446, 2447 or 2448 of the Italian civil code or by other similar provisions of the Dutch Law or of other applicable legislation, nor it is, or ever has been, declared bankrupt or liquidated, and no action or request is or shall be pending to declare the Company bankrupt or to make it subject to any insolvency proceedings. (g) Subsidiaries. The Company does not have any subsidiaries, nor branches, or offices, or facilities, nor they have participating interest in any other corporation, partnership, joint venture, consortium, E.I.E.G., or other person or entity, other than the ones specified under the Financial Statement. (h) The Capital of the Company. The authorised and issued capital of the each of the Company, as of the date hereof amounts, respectively, to ITL 1.000.000.000 for UTA, to ITL 5.000.000.000for Italbroker, to ITL 1.000.000.000 for ICW and to NLG 27.525.000 fully paid up for Tolbert, being the Parties aware of the redemption in capital by means of the redemption of the par value from NLG 36.700 to NLG 18.350 in progress with reference to Tolbert. The name of, and number of shares or quotas held by each of its registered shareholders are the ones specified in this Agreement and are duly recorded in the respective Company's shareholders book, in conformity with the applicable legislation and Company's by-laws. page 21 of pages. All shares or quotas have been validly issued, are fully paid up and entail no further obligation on the part of the shareholders, whether of payment or of any other action or additional performances. (i) Properties. The Company has exclusive, good and undisputed title to all its respective properties and assets as respectively owned or possessed by it, free and clear of all Encumbrances. All properties of the Company are in good operating condition, maintenance and repair sufficient for use in the ordinary course of the business and conform in all material respects to all applicable statutes, ordinances and regulations relating to their construction, use and operation, including inter alia to the obligations and requirements set forth under Dlgs. September 19, 1994, No 626 and relevant regulations, and similar provisions under the Dutch Law as to Tolbert, or other applicable legislation. In particular, and without prejudice to the above, as of the date of signature of this Agreement, the properties of the Company are in compliance with all the relevant applicable legislation, such as zoning, building permits, environmental law, etc. (j) Insurance. The Company and its assets of any insurable nature have at all relevant times been covered by insurance in adequate amounts against fire, accidents, third party and other risks (including but not limited to product liability), customarily covered by insurance by other companies engaged in similar businesses as the Business, and nothing has been or will be done or omitted to be done which would make any policy of insurance void or voidable. (k) Financial Leasing and Other Rental Agreements. All leases (both financial or rental agreements - 'locazioni'), pursuant to which the Company leases real or personal property, are in good standing, valid and effective in accordance with their respective terms. No person or entity, other than the Company, has any right to, or does in fact enjoy, in whole or in part, any of the real or personal property covered by these leases or utilised by the Company in its operations. (l) Intellectual Property. The Company (i) warrants that it will take all actions reasonably necessary to protect any intellectual property to which it may have right; and (ii) has not received any written notice or claim that the conduct of its business infringes any patent, copyright or trademark of any third party, and Seller, nor any representative of the Company, are aware of any basis for any such claim. Neither the Seller, nor any of the directors or employees of the Company, page 22 of pages. nor any other person have any rights or claim in any license, authorisation, approval, franchise, invention, patent, proprietary right, trademark, or any industrial or commercial property right in the intellectual property, nor the Seller or such other persons have any right of any nature whatsoever on invention, patent, proprietary right, trademark, or any industrial or commercial property right which is or is going to be used by the Company in the conduct of the Business. (m) Stock. All stock used by ICW is owned by it and consists of stock of the kind, quality, condition and quantity usable and sellable at current prices in the ordinary course of business. The stock is not excessive in kind or amount, in the light of the business done or expected to be done, nor has its book value been overvalued in the relevant company's account and Financial Statement. Since December 31, 1997, there has not been a material change in the level of the stock. (n) Receivables. All Accounts Receivable of the Company have arisen from bona fide transactions in the ordinary course of business and are hereby guaranteed to be valid, current and collectible (with the sole exception of receivables listed under Exhibit 11 , which shall be collected by the Italbroker not later than 12 month from the date hereof) and none of them is or shall be subject to any counterclaim or set-off (o) Banks. A true and complete list of all the banks with which the Company has an account, safe deposit box, outstanding loans or credit facilities, and of the names of all persons who have access thereto or hold a power of attorney is set forth on Exhibit 12. (p) Certain Contracts and Arrangements. The Company is not a party to: (i) any employment agreement - even if regarding personnel seconded from other undertakings - which grants rights with respect to termination or penalties, in the event of termination, in addition to the rights provided by applicable laws and labour collective bargaining agreements; (ii) except for what disclosed under Exhibit 13 hereto, any contract, plan or arrangement, including but not limited to plans relating to stock-options, pension, retirement, deferred compensation or incentive compensation, to which any of the directors or employees of the Company is a party or in which any of such directors or employee participates - even if regarding employees seconded from other undertakings; (iii) any encumbrance, mortgage, note, instalment obligation, loan agreement or other instrument relating to the borrowing or raising of money by the Company or the guarantee by the Company of any page 23 of pages. obligation for the borrowing or raising of money of third parties, except for what disclosed under Exhibit 14; (iv) any consultancy agreement providing a liability for the Company in excess of ITL 100 million, also with reference to several activities to be rendered or in any event effectively rendered during the course of the year, except for what disclosed under Exhibit 15; (v) any agreement, contract, lease, purchase or sale order, open bid or other commitment for the sale of products or services the quoted price and other terms and conditions of which (being entered without any perspective of margin, profit or even with the provision of losses) might be prejudicial or detrimental to the conduct of the business; (vi) any agreement, contract, lease or other commitment binding on the Company that restricts the sale of products in any territory; (vii) any agreement with townships, municipalities and the Public Administration in general; (viii) any agreement whatsoever that may be terminated by the other party upon a direct or indirect change of control of the Company; (ix) except for the agreements listed under Exhibit 15bis, any other undertaking, which involves a liability (directly or indirectly due to the Seller itself) for payment or otherwise by the Company in excess of ITL. 100 million, except for commissions paid in favour of entities, bodies or persons, other than directors of the Company, (which are and have been paid in the ordinary course of business and with reference to actual revenues cashed by the Company) any undertaking, other than the above mentioned. Without limiting the generality on the above, all the agreements, contracts, leases, purchase or sale orders, open bids and other commitments of the Company are valid and in full force and effect, and there is not, under any of such agreements, contracts, leases, purchase or sale orders, open bids or other commitments, any breach by the Company or by the other party or parties thereto nor any event has occurred which might give rise to a default. All purchase commitments of the Company to suppliers, and all goods or services sales or supply commitments of the Company to its customers, are completely and accurately reflected in the records of the Company. (q) Certain Guarantees. Except for the guarantees with reference to ordinary bank facilities given: (i) by Italbrokers Holding with reference to Italbroker in page 24 of pages. favour of Banca di Roma in the amount of ITL 2,7 billion, of Banca Nazionale dell'Agricoltura in the amount of ITL 1,5 billion, Canca Commerciale Italiana in the amount of 1,5 bln; and (ii) by Italbrokers Holding 150 million Banca Passadore, 150 million Banca Carige S.p.A., 600 millioni Banca Nazionale dell'Agricoltura (being agreed that any possible termination or revoke of the said guarantees shall not adversely affect Italbroker), neither the Seller, nor any other person has as of the date hereof, entered into any guarantee to any third party with respect to indebtedness or other obligations of the Company, including but not limited to indebtedness for borrowed money and obligations with respect to performance guarantees and in connection with the issuance of letters of credit. (r) Labour Matters. (i) Exhibit 16 contains the list of all the employees of the Company, their positions and category, salary and wages; (ii) The Company is in compliance with all applicable laws respecting employment and employment practices, and terms and conditions of employment, including but not limited to provisions thereof relating to wages, bonuses, hours of work and social security contributions, medical care and safety insurance (INPS, INAIL INPDAI, ARPA, and other similar bodies or authorities under local regulations, or under Dutch Law as to Tolbert, or under other applicable law) and therefore with the Taxes; (iii) there is no labour strike, dispute, slowdown, representation campaign or work stoppage pending or threatened against the Company; (iv) no grievance or arbitration proceedings arising out of or under any collective bargaining agreement is pending and no claim therefor has been asserted against the Company; (v) all pension plans and severance funds (TFR included, as to the Italian legislation, and similar provisions under Dutch law or other applicable legislation) required to be funded by the Company are adequately reserved for in accordance with applicable laws, regulations or statutes. (vi) except for the applicable National Collective Labour Agreement and similar acts in the relevant jurisdictions, there are no other agreements or understanding with the Unions or shop committees for any employee of the Company. (vii) Except for what disclosed under Exhibit 16bis, there are no employees on temporary lay-off plans (such as CIG) or under the so page 25 of pages. called "mobility procedure" (in mobilita) or similar procedures (including s.c. solidarieta contracts) nor are there any payments due, outstanding or that will become due in connection with these procedures; (s) Environmental Matters. As to all operations conducted by the Company: (a) the Company and its buildings (whether owned or rent) are currently in compliance, in all material respects, with all respective applicable national and EU laws, regulations and rulings relating to the Environmental Conditions, as in force at the relevant time; and (b) the Company is not party to, nor has received notice of or is aware of, and none of the said buildings is object of, any actual or threatened litigation or administrative proceedings concerning environmental claims or liabilities. There is no liability on the part of the Company arising out of any activities or operations of it or the state or condition of any properties now or formerly owned or occupied by it or facilities now or formerly used by it and in particular (but without limitation) any such liability in respect of: injury to persons, including impairment of health or interference with amenity; damage to land or personal property; interference with riparian or other proprietary or possessory rights; public or private nuisance; liability for waste or other substances; and damage to or impairment of the environment including living organisms. All structures, machinery, plant and equipment, whether movable or fixed, provided in connection with the activities, operations and premises of the Company for the protection of human safety, health and amenity, property and the environment, including (without limitation) for the abatement, arresting or treatment of polluting substances or emissions, the containment of substances and the prevention of spillage and contamination: (i) are in good repair and condition and satisfactory working order; (ii) conform to all statutory and other legal requirements. (t) Litigation. Except as disclosed under Exhibit 17, there is no claim, accident, action, proceeding or investigation pending or threatened against or relating to the Company or any of their properties or rights before any court, administrative or governmental or regulatory authority or body, also in relation, but not limited to, Taxes. The Company is not subject to any outstanding orders, writs, injunctions or decrees. No adverse consequences shall derive from the disclosed litigation. Each of the directors of the Company is not subject to any action or situation which would result in the cancellation from the Italian Register of Insurance Brokers (i.e. the so-called "Albo Brokers"). page 26 of pages. (u) Compliance with Laws. The Company has complied in all material respects with all applicable laws and regulations (including but not limited to laws and regulations relating to environmental standards and controls, real property and any material improvement thereon, zoning legislation, the maintenance of books and records, practice of insurance broker business) and has obtained all governmental approvals, authorisations, permits or licenses which are required in connection with its operations, the Business, real estate holdings. The Company has not received any order, decree, notice or claim of any violation of any laws, regulations, rules, orders, judgements, decrees or other requirements imposed by any authority. All books and records required to be maintained by the Company have been accurately maintained. (v) Projects. There is no oral or written plan or project involving the opening of new or the closing of current operations or the acquisition of any real property or existing business, in which the Company has been involved in the two-year period prior to the Relevant Date, which, if pursued, would require any such involvement. (w) Buildings. The Company has full title property of its buildings, lands and other real estates, free from any Encumbrances and from any right ("diritto"), or possession ("possesso" or "detenzione") of third parties, limiting its full title or their full utilization, and may freely dispose or enjoy thereof. The buildings and their equipment have been constructed and maintained in compliance with all the applicable zoning and construction laws, as well as with the environmental laws and with any applicable provisions on safety, earth-quake and fire prevention, and with any regional laws and local regulations, or any binding provisions coming from any national or local authority; the buildings are free from any "vizi", "oneri o diritti di godimento di terzi" and from any risk of "evizione", to be intended as in articles 1482, 1483, 1484, 1490 of the Italian civil code and in the relevant similar provisions under Dutch Law or other applicable legislation; the current actual situation and property of the buildings has been duly filed with the competent Conservatoria dei Registri Immobiliari, NCEU and NCT, or similar bodies under the relevant jurisdiction; the buildings do not need any extraordinary maintenance or repair. (x) Restructuring of the Company Group. Any past change of control of the Company, or transfer of its assets and/or employees, change of their name, type, capital, participation, or restructuring of the group to which the Company belongs, has always been executed in compliance with the applicable laws and cannot cause any future damage or claim (also relating to Taxes) against the Company, or their shareholders and owners. page 27 of pages. (y) Other material adverse effects on the Business. Safe all the above representations, to the best of Seller's knowledge there has been no other material fact or circumstance in the last three years (other than currency exchange fluctuations and than what normal in the ordinary course of business) that can materially and adversely affect the current and future Business of the Company, its market and trading position and the value of its assets. (z) Miscellaneous. (i) Apart from what disclosed under the following point, Seller does not have any right or claim against the Company (except for dividends generated by the incomes for the 1997 period in UTA, Tolbert and Italbroker, respectively equal to ITL. 680.000.000, NLG 1.200.000 and ITL 1.480.000.000, which have already been paid), or contractual relationships with the Company, or have received any payment therefrom during the last six months. (ii) Tolbert hereby undertakes that the financing granted in 1997 to Italbroker currently amounts to ITL 310 million ("finanziamento soci non fruttifero") will be converted in issue premium ("versamento soci in conto capitale") by the end of 1998. (iii) The directors leaving indemnity provision in Italbroker (equal to ITL 300 million) shall not be payable for a period of ten years as fro the First Closing Date. (iv) A specific and appropriate fund in Tolbert will be posted with reference to all costs of all the transactions provided for under, or in connection with, this MAA and the MSA (with the sole exception of: (i) costs relating to legal advise by the Notary Public with reference to taxes, (ii) Notary fees relating to the Contribution in Kind and (iii) taxes relating to the Contribution in Kind, which shall be borne also by Olimpia and Saint Gallen in proportion to their shareholdership in Tolbert as a consequence of the said Contribution in Kind), to include inter alia bank advice, which fund shall therefore reduce the dividends which the Current Tolbert Shareholders shall perceive in accordance with Article 8.5 hereinabove. (v) There are no contracts or undertakings between the Seller, on one side, and the Company, or other third party that concerns the Company, on the other side, including, but not limited to, any security and loan agreement. (vi) The Company is not subject to anti-trust proceedings or investigations by the EU Commission or the Autorita Garante della page 28 of pages. Concorrenza e del Mercato, nor of anti-trust, anti-dumping or anti-subsidies proceedings or investigations by authorities of other countries. (vii) There are no undisclosed facts known to the Seller concerning the Company that would adversely affect the Company. The warranties and representations contained in this Agreement are true and accurate; the disclosures are full and complete and no material fact or information has been omitted. 14.2. Absence of Certain Changes or Events. With specific reference to the period from December 31, 1997 through the Relevant Date, the Company, with the exception of disclosures contained under Exhibits 18 and 19, has no Liabilities of any nature, other than liabilities relating to the ordinary course of business, as conducted over the past years; there are not transactions which are unusual either by reference to the historic activities of the Company, or by reference to the activity typically engaged in by insurance broking companies (or, as to Tolbert, by pure holding companies) having a size comparable to the size of the Company; the Company accounts are in compliance with the Accounting Principles as consistently applied over the years. Without limiting the generality of all the above: (i) Net Worth. The Net Worth of Company as of the Relevant Date shall not be lower than the one resulting from the Financial Statement, save for the effects of the distribution of dividends mentioned under Article 14.1.(z).(i); (ii) the Company has not purchased or sold a shareholding of any nature whatsoever in another company or an interest of any nature in any concern; (iii) there has not been any investment in, acquisition, sale, exchange, or disposal of any asset or property of the Company in an amount exceeding ITL. 100 million; (iv) the Company has not undertook, pursued, participated in, or promoted any activity other than the Business; (v) the Company has not given any guarantee or indemnity or created any charge, lien or security of whatever nature over its assets; (vi) the Company and the Seller have not made or agreed any proposal for consolidation, amalgamation, merger or split up of the Company and/or of any Subsidiary, with or into any other company, except for what expressly disclosed under this Agreement; (vii) there has not been any disposal of or dilution of the Company's shareholding or interest, directly or indirectly, in any Subsidiary; page 29 of pages. (viii) the Company has not made any loan or advance to any person, firm, corporate body or any other business other than in the ordinary course of business, or borrowed any money, except by way of advance payments of premiums due by indemnification of agreed losses on behalf of insurance companies due to clients in the ordinary course of business; (ix) any shares, or any other securities, or any other option or right to subscribe, or any convert instrument of any nature whatsoever, have been created, allotted or issued, except for what expressly disclosed under this Agreement; (x) there has not been any termination of any material line of business operation of the Company; (xi) there has not been any material change in the Business or in the "oggetto sociale" (scope) of the Company, except for what expressly disclosed under this Agreement; (xii) the Company has not entered into any contract of material nature outside the normal course of the Business; (xiii) except for what expressly disclosed under this Agreement, there has not been any proposal of reduction, or actual reduction, of the Company's capital, variation of the rights attaching to any class of shares or quotas, or any redemption, purchase or other acquisition by the Company of any shares or other securities of the Company; (xiv) there are no proposal of adoption, or adoption, of any bonus or profit-sharing scheme or any share option or share incentive scheme or employee trust or ownership plan; (xv) there has not been any proposal of any change, or any change, to the Company's by-laws, except for what disclosed under this Agreement; (xvi) there has not been any formation of, or entry into, any partnership, association or joint venture, or the establishment of any new branches; (xvii) the Company has not entered into any transaction, arrangement or agreement outside the ordinary course of Business with or for the benefit of any director of the Company or any Subsidiary, or persons connected or associated with any such director; (xviii) the Company has not entered into any payment obligation by and between the Company and any of its shareholders, unless at arm's page 30 of pages. length in the ordinary course of business, except for what provided for with reference to Italbroker under Article 15.1.((b)).((i)); (xix) there has not been the commencement, settlement or defence of any action, proceedings or other litigation involving the Company; (xx) there has not been any change in the remuneration or powers of the Directors of the Company, other than as provided for by the relevant bodies respectively: on March 20, 1998 in Italbroker, on May 11, 1998 in ICW, and according to the Exhibit 19bis with reference to UTA Group; (xxi) there has not been the appointment or removal of any person as director or chairman of the Company; (xxii) the Company has not applied for its admittance to any regulated stock exchange market. (xxiii) the Company's business organisation has not been adversely affected, and the Company has not sustained any material loss or damage to its property, whether or not insured; (xxiv) the hiring and dismissal of employees and consultants has been conducted within the boundaries of the ordinary course of business and anyhow in compliance with applicable law and national collective agreements; there has not been any increase, out of the ordinary course of business, in the rate or terms of compensation or benefits payable or to become payable to any of the Company's directors, other than for what disclosed hereunder, officers or employees, other than for what mandatorily provided by law, except for certain sums (i.e. premi ed incentivi) that may have been corresponded una tantum in the past to some employees, for which there are no mandatory provisions to further and new payments. Further, Seller hereby warrants to Purchaser that no extraordinary benefit or compensation has been granted to the Company's Directors; (xxv) no agreements, contracts, leases or other commitments for: (i) amounts exceeding ITL 100 million; and/or (ii) requiring a termination notice period exceeding three month; (iii) and/or having a duration exceeding one year, have been entered into by the Company; (xxvi) Seller has and shall have maintained the Company solvent and in good standing; (xxvii) no transaction exceeding the ordinary course of business has taken nor shall take place between any of the Company, on the one side, and page 31 of pages. Seller, on the other side; (xxviii) no events which may have a significant impact on either the financial position, or future profitability of the Company have occurred. 15. SPECIAL WARRANTIES AND REPRESENTATIONS RELATING TO ITALBROKER. 15.1. In addition to the above and without prejudice to all the above, Tolbert hereby represents and warrants to UTA: (a) Warranties: (i) The special life policy arrangement entered into with INA and pledged in favour of San Paolo in relation to their financing is and was the only such arrangement that existed in Italbroker. This arrangement no longer exists in the Italbroker; (ii) No restoration costs in excess of ITL. 250 million will be incurred in the course of the current lease of Albaro 3 or at its termination; (iii) The valuation of the land owned by Fiduciaria performed in early 1998 was carried out by an independent consultant based in the area, who was given all material information about the land; (iv) All payments by Italbroker in connection with the purchase of part of the business of Servizi e Consulenze have been made and Italbroker has no residual liability in this regard; (v) The list exhibited at Schedule attached under Exhibit 20 hereto is a list of all major clients of Italbroker and the gross commissions payable by them for the year commencing 1st January 1997, with the exception resulting from the and consistent with the 1998 budget attached under Exhibit 21 hereto. No material adverse change has occurred in the business relationship with any of those clients. No such client has given written or verbal notice of its intention to cease purchasing services or, to reduce its purchases by any substantial amount, from Italbroker. (b) Indemnities: Without prejudice to the provisions under Articles 14, 16 and, and with specific reference to the special warranties and representations under Article 15.1), Tolbert undertakes to indemnify UTA - in accordance with the provisions set forth under the mentioned Articles 16 and below - against any Liability arising out of a breach of any of the said warranties and representations and, in addition, against any loss:- page 32 of pages. (i) in respect of any liability (other than the charge to Ital Brokers Holding S.p.A to cover interest costs, bank charges and withholding tax incurred in the normal course of the arrangement) arising in relation to the INA life policy arrangement. (ii) Arising out of a refusal by underwriters on Interconsult Wise container insurance policy to pay a claim in respect of container repairs on the grounds of any actual or alleged negligence or breach of duty of any kind prior to the First Closing; (iii) Arising out of any funding of claims monies due from insurers to clients of Gruppo prior to the date hereof; (iv) Arising from any claim by the INPS or any tax or regulatory authority in respect of any assessment it has made of the character of any agreement which Italbroker might have had with any employee, consultant, director or agent or any arrangements made by Italbroker in relation thereto. 16. INDEMNIFICATION OBLIGATIONS. 16.1. The Seller guarantees to the Purchaser and its successors, that the Warranties and Representations set forth in this Agreement are, and shall be as of each of the Relevant Date, and thereafter, in all respects true, accurate, complete and exhaustive. 16.2. The Seller agrees - by indemnifying the Interested Company - to indemnify, defend and hold the Purchaser and its successors, harmless from and against the full amount of any and all Liabilities which shall have been incurred by any of the Interested Company, on or before each of the Relevant Date (or thereinafter, when expressly provided for in this Agreement), or which arise thereinafter out of the conduct of any of the Interested Company (including transactions entered into, or facts, acts or omissions effected) on or before each of the Relevant Date, or which arise out of the conduct of the Seller (including transactions entered into, or facts, acts or omissions effected) on or before each of the Relevant Date, in accordance with the following:- (a) Seller shall have no obligation to indemnify the Interested Company with respect to any individual claims under Articles 14 and 15, unless and until the aggregate of such claims (once reduced by the net value or surplus value - i.e. sopravvenienza attiva - of any asset not reflected in the Financial Statements after giving effect to any specific provisions, allowance or reserve therefor -if any- made in the Financial Statements in respect thereto, and net of any tax effects to the Interested Company, as applicable, if any) shall have exceeded ITL 500 million,. page 33 of pages. (b) Once the aggregate amount of claims will have exceeded said limit of ITL. 500 million, Seller shall indemnify the Interested Company for all and any amount claimed (once reduced by the net value or surplus value - i.e. sopravvenienza attiva - of any asset not reflected in the Financial Statements after giving effect to any specific provisions, allowance or reserve therefor -if any- made in the Financial Statements in respect thereto, and net of any tax effects to the Interested Company, as applicable, if any), exceeding the said ITL 500 million deductible, up to the maximum amount of ITL 12,5 billion. (c) Seller shall only have indemnification obligation if a claim is made: (i) on or before the date falling 24 months after the First Closing Date, in respect of any Liability other than Taxes; and (ii) as per Liabilities relating to Taxes, on or before 60 days after the expiration of each of the applicable statutes of limitations (including the period of any extensions or waivers thereof). It is further agreed by the Parties that any claim for indemnification of a Liability based on any event or occurrence of which the Purchaser shall have given the Seller written notice prior to the date of termination of the indemnification obligations hereinabove provided shall survive such termination. 16.3. If Purchaser or its successors claims, in connection with any event, to the Seller the indemnification payment according to this Agreement: (i) the Purchaser agrees to notify the Seller as soon as possible, according to the circumstances of the case, in order jointly to review such event with the Seller, who agrees, if requested, to supply any information in possession of the Seller or any assistance that might be useful; (ii) the Seller undertakes to pay to the Interested Company the full amount claimed within 120 calendar days of the Purchaser notice, or (iii) in the event of disagreement, the Purchaser and the Seller shall try to amicably settle the dispute within the said 120 calendar day period; if this were not possible, the Purchaser and/or the Seller shall resort to the arbitration contemplated by this Agreement under Article 21 hereinbelow and the Seller shall make the relevant payment within 30 calendar days of the issuance of the arbitration award, notwithstanding any possible appeal thereto. 16.4. If the payment requested by the Purchaser refers to any third parties' claim, action or demand (the "Demand"), the Seller shall make the relevant payment as soon as the Demand becomes enforceable vis-a-vis the Interested Company, notwithstanding the right of opposing or appealing the deed or decision that has made the Demand enforceable, but without prejudice to any different decision which shall be taken in consequence of the opposition or appeal. The decision concerning the opportunity to oppose or appeal the above mentioned deed or decision (as well as any settlement of the Demand) shall be taken by the Seller, who shall therefore have the right to page 34 of pages. participate, at its exclusive costs, in the defence of the Claim with a counsel of its choice, alone or jointly with the Purchaser's counsel. However, such a decision by the Seller (as well as the manner to carry out any possible opposition, appeal or settlement) shall not be prejudicial to the interests of the each of the Interested Company and/or of the Purchaser. 16.5. In case of possibility to accept a tax amnesty (i.e. "condono fiscale", "concordato fiscale" or similar), Seller shall be entitled to cause the Interested Company to take advantage thereof; in this case, Seller shall reimburse the Interested Company of the costs, tax effects and fees incurred for applying to such tax amnesty. 16.6. It is in any event agreed that all the indemnification obligations shall be complied with and fulfilled by the relevant Seller in a tax efficient manner, to be determined in good faith by the tax counsels of all the Parties, provided that no adverse consequences may arise either on the Purchaser, or on the indemnified Company, in connection therewith. 16.7. The Purchaser shall not be entitled to recover more than once in respect of each single Liability. 16.8. Nothing in this Article shall in any way restrict or limit the general obligation at law of the Purchaser to mitigate any loss or damage which it may suffer in consequence of any matter giving rise to any indemnification obligation of the Seller. 16.9. For the avoidance of doubt, it is acknowledged and agreed that any due diligence investigation carried out by any Party in respect to any of the transactions contemplated in this Agreement shall not relief the other Party/ies from any of its obligations arising from the Warranties and Representations set out in this Agreement. MISCELLANEOUS 17. CONFIDENTIALITY. 17.1. The Parties hereby undertake to keep strictly confidential and not to disclose to any third party in any manner whatsoever without the prior written consent of the other Parties any information, documents or data of whatsoever nature contained or deriving from this Agreement. Each of the Parties undertakes that it shall not make any announcement or issue any circular or other publicity relating to the existence or subject matter of this Agreement page 35 of pages. without it being approved in writing by each of the other Parties as to its content, form and manner of publication (such approval not to be unreasonably withheld or delayed), save that any announcement or circular required to be made or issued by any Party by law or pursuant to the rules and regulations of the London Stock Exchange or other stock exchange on which the securities of that Party are traded may be made or issued by such Party without such approval. The Parties shall consult together upon the form of any such announcement or circular in relation to the subject matter of this agreement and the other Parties shall promptly provide such information and comment as the Party making the announcement or sending out the circular may from time to time reasonably request. 18. FINAL PROVISIONS. 18.1. No waiver of any right, breach or default hereunder shall be considered valid unless in writing and executed by the Party giving such waiver, and no waiver shall be deemed a waiver of a subsequent breach or default, whether or not of the same or of similar nature. 18.2. The Parties acknowledge to each other that there is no firm, corporation, or other person that is entitled to a finder's fee or any type of brokerage commission in relation to, or in connection with, the transactions contemplated in this Agreement as a result of any agreement or understanding with any of the parties hereto, nor has any party had any dealings relating to this transaction with any firm, corporation, agency or other person that may claim a brokerage or other commission. 18.3. This Agreement, including its Exhibits, together with the MSA, constitutes the entire agreement between the Parties with respect to the transactions contemplated herein and supersedes any prior understanding, written or oral, with respect to such transactions. No amendment of or supplement to this Agreement shall be valid or effective unless in writing and executed by the Parties hereto or their successors or assignees. 18.4. Article and article headings contained herein are for the purpose of convenience only and do not constitute part of this Agreement. 18.5. The Short Forms shall be executed, and the endorsements shall be made, as the case may be, for the sole purposes of effecting the transfer and assignment of the relevant quotas or shares, in accordance with the provisions of this Agreement, and complying with the relevant registration and stamp duty tax requirements and such further requirements as provided for by applicable legislation. Therefore, notwithstanding the above and notwithstanding any possible conflicting provisions contained in any Short Forms, the transfer of the quotas or of the shares are and shall only be governed by the provisions of this Agreement, which shall not be subject to page 36 of pages. novation (i.e. novazione) by reason of, or as a consequence of, the Short Forms, of the endorsements and their execution by the Parties. Therefore, the contractual terms and warranties relating to the transfer of the quotas and/or shares are and shall be governed by the provisions of this Agreement, which shall remain in full force and effect also after the said transfer by means of either the execution of the mentioned Short Forms, or of the endorsement of the shares. 18.6. This Agreement will be executed in 1 counterpart, and each of the Parties shall have the right to obtain, at its costs and expenses, from the Notary Public a copy thereof and of all the Exhibits hereto. 18.7. In the event of invalidity or ineffectiveness of any article of this Agreement, or portions thereof, the remaining portion of the Agreement shall not be affected thereby, but the Parties agree to negotiate in good faith to replace such article, or portions thereof, with other valid and effective agreements having substantially the same effect, having regard to the subject matters and purposes of this Agreement. 18.8. Each Party shall bear all costs and expenses for legal, accounting or other purposes, incurred by it, directly or upon his request, in connection with the negotiation, preparation and completion of this Agreement. In any event, it is agreed by the Parties that the so-called "fissati bollati" (or similar applicable duty) relating to the transfer of Italbroker Shares and to the ICW shall be borne by UTA. 18.9. The Notary Public fees shall be borne by Tolbert, with the sole exceptions listed under Article 14.1.(z).(iv). 19. COMMUNICATIONS. 19.1. Notices or communications required or permitted to be given under any provisions of this Agreement shall be in writing and shall be deemed to have been given the day of dispatch thereof, if sent by fax (to be confirmed by registered mail with return receipt), or upon actual receipt if sent by registered mail, return receipt requested, addressed to the addresses specified above, to the attention of: (a) (if to Willis Group, to Michael P. Chitty (fax No.: +44 171 481 7003); (b) if to Willis Europe, to Analies Majorie (fax No.: +31 20 6610654); (c) if to Tolbert, to Guido Nieuwehuizen (fax No.: +31 20 5771188); (d) if to UTA, to Studio Boidi, Dr.ssa Lucia Starola (fax No.: +39 011 8122300); (e) if to Saint Gallen, to Studio Boidi, Dr.ssa Lucia Starola (fax No.: +39 011 8122300); page 37 of pages. (f) if to Olimpia, to Paolo Fassio (fax No.: +39 02 6551805); (g) if to HBC, to Sebastiano Romeo (fax No.: +39 011 5619060); (h) if to Arcef, to Sergio Liberia (fax No.: +59 99 4613577). 19.2. Either Party may from time to time change its address by giving previous communication to the other Party in the manner aforesaid. 20. LANGUAGE. 20.1. This Agreement is drafted in the English language and the Parties acknowledge that they have so requested and have duly and fully agreed and understood any and all the previsions hereof. 21. APPLICABLE LAW AND ARBITRATION. 21.1. This MSA shall be governed by, construed, and enforced in accordance with Italian law, save for such provisions of Dutch law applicable to the implementation of any of the transactions above referred to Tolbert. 21.2. All disputes arising out or in connection with this MAA shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by three Arbitrators appointed in accordance with the said rules. The arbitrators shall decide ex aequo et bono. The place of the arbitration shall be Amsterdam. The language of the arbitration shall be the English language. It is in any event expressly agreed by the Parties that the provision of this arbitration procedure shall not prevent any party from requesting and enforcing any of the injunctions and interim orders (i.e. "provvedimenti cautelari") provided for by article 669-bis and following of the Italian Civil Procedure Code. IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the day first above written. LIST OF EXHIBITS: page 38 of pages. All the parties hereby irrevocably appoint and delegate Mr. Luca Garella and Mr. Giovanni Peracino to execute each of the Exhibits attached hereto, acknowledging the validity and effectiveness of the execution made by the said Messrs Luca Garella and Giovanni Peracino. Exhibit 1: Final Structure; Exhibit 2: Gruppo Chart; Exhibit 2bis: Net Working Capital; Exhibit 3: Timetable; Exhibit 4: UTA Group Chart; Exhibit 5: Formula; Exhibit 6: Deed of Issue; Exhibit 7: UTA By-laws; Exhibit 8: Tolbert By-laws; Exhibit 9: ICW By-laws; Exhibit 10: Italbroker By-laws; Exhibit 11: Receivables; Exhibit 12: Banks; Exhibit 13: Stock Options; Exhibit 14: Encumbrances; Exhibit 15: Consultancy Agreement; Exhibit 15bis: Other Agreements and Undertakings exceeding the amount of ITL 100 billion Exhibit 16: Employees; Exhibit 16bis: Mobilita Exhibit 17: Litigation; Exhibit 18: Disclosures with reference to UTA; page 39 of pages. Exhibit 19: Disclosures with reference to Italbroker; Exhibit 19bis: Boards of Directors Fees; Exhibit 20: Major Clients of Italbrokers; Exhibit 21: 1998 Budget of Italbroker. - ------------------------- Willis Corroon Group plc. Name and Capacity: Sarah Turvill, Attorney - --------------------------- Willis Corroon Europe B.V. Name and Capacity: Sarah Turvill, Director - ------------------------------- page 40 of pages. Tolbert Insurance & Finance B.V. Name and Capacity: Tomas J. Eltink, Attorney - -------------------------------- Saint Gallen S.R.L. Name and Capacity: Lorenzo Boglione, Chairman - ---------------------------- Olimpia S.R.L. Name and Capacity: Carlo Pasteur, Sole Director - -------------------------------- --------------------- Ital Brokers Holding S.p.A. page 41 of pages. Name and Capacity: Sebastiano Romeo, Chairman, Franco Lazzarini, Managing DIrectors - ---------------------------- Arcef Holding N.V. Name and Capacity: Tomas J. Eltink, Attorney - ---------------------------- ----------------------- UTA Willis Corroon S.p.A. Name and Capacity: Enrico Boglione, Chairman Sarah Turvill, Director EX-2.2 3 EX. 2.2 Exhibit 2.2 STOCK PURCHASE AGREEMENT between Assurandorgruppen A/S Willis Corroon Europe B.V. As of 28 September 1998 this Stock Purchase Agreement has been entered into between Assurandorgruppen A/S (Reg.No. A/S 164.725), Rosenornsgade 6, DK-8900 Randers, Denmark (the "Company") and Willis Corroon Europe B.V., Marten Meesweg 51, AV 3068 Rotterdam, the Netherlands (the "Investor") (the Company and the Investor also individually referred to as a "Party" and collectively as the "Parties"). RECITALS WHEREAS at an extraordinary general meeting held on 18 June 1998 the current shareholders of the Company (the "Current Shareholders") adopted a resolution to authorize the board of directors of the Company (the "Board of Directors") during the period until 31 December 1998 and without pre-emption rights for the Current Shareholders to increase the share capital of the Company by an amount not exceeding DKK 5,000,000 at market price. WHEREAS the Board of Directors has decided to exercise this authority by adopting at Closing (as defined below) a resolution in the form attached hereto as Exhibit 1 (the "Board Resolution") for an increase of the Company's share capital from nominal DKK 10,000,000 to nominal DKK 14,285,700 by issuing nominal DKK 4,285,700 shares to the Investor. NOW THEREFORE, in consideration of the foregoing and the mutual covenants and agreements set forth herein, the Parties hereto agree as follows: 1. Purchase and Sale of Shares 1.1 Subject to the terms and conditions of this Agreement, the Investor agrees to purchase at Closing and the Company agrees to sell and issue to the Investor at Closing DKK 4,285,700 nominal value of the Company's shares (the "Shares") for a purchase price of DKK 54,000,000 (the "Purchase Price") 2. Closing 2.1 The purchase and sale of the Shares shall take place at the offices of Kromann & Munter, 14 Radhuspladsen, DK-1550 Copenhagen V on 28 September 1998 or -2- at such other time and place as the Company and the Investor mutually agree upon orally or in writing (which time and place are designated as the "Closing"). At the Closing the Company shall deliver to the Investor an updated share register evidencing that the title of the Shares is recorded in the name of the Investor against payment of the Purchase Price by check or wire transfer. 2.2 At Closing the Parties undertake to adopt no later than 30 days from Closing a resolution in the form attached hereto as Exhibit 2 (the "Shareholders' Resolution") at an extraordinary general meeting of shareholders (the "EGM") for election of directors and for the restated Articles of Association of the Company in the form attached hereto as Exhibit 3 (the "Restated Articles"). 2.3 The Company shall file with the Danish Commerce and Companies Agency immediately after the Closing the Board Resolution, and immediately after the EGM the Shareholders' Resolution and the Restated Articles. 3. Shareholders' Agreement 3.1 At Closing the Investor and the Current Shareholders shall enter into a Shareholders' Agreement in the form attached hereto as Exhibit 4. 4. Partnership Agreement 4.1 At Closing the Company, the Current Shareholders and the Investor shall enter into a Partnership Agreement in the form attached hereto as Exhibit 5 regarding their interests in Assurandorgruppen I/S (the "Partnership"). Together the Company and the Partnership is referred to as the "AG Group". 4.2 The Company and the Partnership have not in all instances informed third parties to contracts with Assurandorgruppen ost I/S, Assurandorgruppen Midt I/S, Assurandorgruppen Syd I/S and Assurandorgruppen Alborg I/S about the merger as of 1 January 1998. The Current Shareholders covenant to indemnify and hold harmless the Investor from any damage or losses resulting from such third parties' refusal to consent to the merger. 5. Transfer of Willis Corroon A/S -3- 5.1 At Closing the Partnership and Willis Corroon A/S shall enter into a Business Transfer Agreement in the form attached hereto as Exhibit 6 regarding the Partnership's acquisition of the business of Willis Corroon A/S. 6. Warranties 6.1 The Company and the Current Shareholders by their signature hereto hereby represents and warrants to the Investor in the terms of the warranties (set out in Schedule 1), and the Company undertakes to indemnify and hold harmless the Investor for any damage, loss, liability or expense after tax resulted from a breach hereof provided that (i) subject to Section 6.2 no claim shall be made against the Company in respect of a misrepresentation or breach of any of the warranties unless the Investor's damage, loss, liability or expense after tax exceed DKK 100,000 for each separate misrepresentation or breach of warranty and unless the aggregate amount of such damage, loss, liability or expense after tax exceeds DKK 1,000,000, that (ii) subject to Section 6.2 no claim shall be made against the Company in respect of a misrepresentation or breach of any one of the warranties unless written notice of such claim containing specific details and documentation regarding the claim has been received by the Company from the Investor no later than 18 months from Closing, that (iii) the Investor's damage, loss, liability or expense shall be determined in proportion to the Investor's ownership share in the Company and with due regard to the Investor being held neutral against the Company's indemnification, and that (iv) the Current Shareholders by their signatures to this Agreement undertake to act as guarantors for the Company's obligations pursuant to this Clause 6. 6.2 The de minimis provision and the time limitation of claims in respect of a breach of the warranties as set out in Section 6.1 (i) and (ii), respectively, shall not apply -4- in respect of claims arising out of the warranties in respect of tax as set out in Section 6 of Schedule 1. Such claims can be made against the Company six months from the time where the Company received the claim from the tax authorities. 6.3 All warranties shall apply mutatis mutandis to the Partnership in which the Company holds a capital stake of 91.2% the remainder being held by 44 individual partners identical to the Current Shareholders. All references to the Company shall be construed as references also to the Partnership and by its co-signature to this Agreement the Partnership and the Current Shareholders confirm the warranties as applicable to the Partnership too. 6.4 The Company and the Current Shareholders acknowledge that the Investor has entered into this Agreement in reliance upon the warranties. 6.5 Each of the warranties (other than such which are fully performed at Closing) shall continue in full force and effect notwithstanding Closing, subject to 6.1-6.2. 6.6 To the extent that any breach of or claim under the warranties is capable of remedy, the Investor shall afford the Company such opportunity as is reasonable to remedy or procure the remedy of the breach or the situation complained of within a reasonable time (and in any event not exceeding 60 days from when the Company became aware of the breach unless the Investor consents to a longer period, such consent not to be unreasonably withheld). 7. Assignments 7.1 This Agreement and the benefit of each of the obligations and warranties undertaken or given by the Company shall be assignable by the Investor to any group company of the Investor provided the Investor remains fully liable for the fulfilment of the Agreement. Save for such assignment to a group company of the Investor, none of the rights or obligations under this Agreement may be assigned or transferred to any other person or entity without the prior written consent of both Parties hereto. 8. Notices -5- 8.1 All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, sent by telefax (receipt of which is confirmed by the recipient) or sent and received by registered post to the respective Parties at the following addresses (or at such other address for a Party as shall be specified by like notice): If to the Investor, to: Willis Corroon Europe B.V. Marten Messweg 51 AV 3068 Rotterdam The Netherlands Telefax: + 31 20 661 0654 for the attention of Colin Longhurst with copies to Willis Corroon International Holdings Ltd. Ten Trinity Square London EC3P 3AX England Telefax: +44 171 488 8882 for the attention of Sarah Turvill and Kromann & Munter 14 Raadhuspladsen DK-1550 Copenhagen V Denmark Telefax +45 33 11 80 28 for the attention of Vagn Thorup If to the Company, to: Assurandorgruppen A/S Rosenornsgade 6, 1 DK-8900 Randers Telefax: +45 87 10 07 70 -6- for the attention of Karin Holst with a copy to Advokatfirmaet Lou & Madsen Ostergade 4 DK-8900 Randers Telefax: +45 86 42 23 33 for the attention of Niels Simonsen. 9. Announcements 9.1 Neither the making of this Agreement nor its terms shall be disclosed by any Party hereto without the prior consent of the other Party, unless disclosure is required by law or the rules of the London Stock Exchange, and disclosure shall then only be made (a) after prior consultation with the other Party as to the terms of such disclosure; (b) strictly in accordance with any agreements as to the terms of disclosure; and (c) only to the person or persons and in the manner required by law or the London Stock Exchange or as otherwise agreed between the Parties hereto. 10. Effects of Closing 10.1 The terms of this Agreement shall insofar as not performed at Closing and subject as specifically otherwise provided in this Agreement continue in force after and notwithstanding Closing. 11. Entire Agreement 11.1 Subject to Section 12.3 this Agreement (together with any documents referred to herein) constitutes the entire agreement between the Parties hereto in -7- connection with the subject-matter of this Agreement. No Party has relied upon any representation save for any representation especially set out in this Agreement (or any document referred to herein). 12. Waiver, Amendment 12.1 No waiver of any term, provision or condition of this Agreement shall be effective unless such waiver is evidenced in writing and signed by the waiving Party. 12.2 No omission or delay on the part of either Party hereto in exercising any right, power or privilege hereunder shall operate as a waiver hereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise hereof, or of any other right, power or privilege. The rights and remedies herein provided are cumulative with and exclusive of any rights or remedies provided by the law. 12.3 No variation of this Agreement shall be effective unless made in writing and signed by both parties hereto. 13. Invalidity 13.1 If at any time any one or more of the provisions hereof is or becomes invalid, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions hereof shall not be in any way affected or impaired thereby. 14. Costs 14.1 Each Party to this Agreement shall pay its own costs incidental to this Agreement, and the sale and purchase hereby agreed to be made. The Current Shareholders shall reimburse the Company for any costs borne by the Company in this connection. 15. Governing Law and Arbitration 15.1 This Agreement shall be governed and construed in accordance with the laws of the Kingdom of Denmark. -8- 15.2 Any dispute between the Parties arising out of or in connection with this Agreement shall, provided the parties can not agree on a settlement through negotiation, be determined by arbitration with final, binding and enforceable effect in agreement with the following rules: 15.3 In the event of a dispute, either party shall be entitled to request that an arbitration tribunal be set up. 15.4 The party seeking resolution of a dispute by arbitration shall appoint an arbitrator and send a letter by registered mail to the other party (the "Respondent") requesting the Respondent to appoint its arbitrator within 14 days. The letter shall also contain a short statement of the question or questions to be determined by the arbitration. Where the Respondent does not appoint an arbitrator within the time-limit mentioned above, that arbitrator shall instead be appointed by the Danish Arbitration Institute. 15.5 The two arbitrators appointed for the parties shall jointly appoint an umpire. Failing agreement on the choice of an umpire, the appointed arbitrators shall jointly approach the Danish Arbitration Institute and request that it, following prior discussion with the parties, appoint an umpire to act as chairman of the arbitration tribunal. 15.6 The arbitration tribunal shall determine the matter according to applicable law and shall lay down the rules for its hearing of the matter in agreement with the general principles of the Danish Administration of Justice Act (Retsplejeloven). 15.7 The arbitration tribunal shall also decide how the costs of the arbitration are to be borne. The arbitration tribunal shall set a date for implementation of the award, which date shall normally be no later than 14 days after the award has been made. 15.8 The venue for the arbitration shall be Copenhagen, and the language of the proceedings shall be English. In witness whereof, the Parties hereto have caused this Agree-ment to be duly signed on -9- 28/9 1998 28/9 1998 Assurandorgruppen A/S Willis Corroon Europe B.V. By: By: ------------------------- ----------------------------- Acceded to Acceded to 28/9 1998 28/9 1998 Assurandorgruppen I/S by: ----------------------------- By: ------------------------- The Current Shareholders represented by the Board of Directors acting through Mr Niels Simonsen and Mr Kent Risvad List of Appendices: Schedule 1: Warranties Schedule 2: Disclosed Information Exhibit 1: Board Resolution Exhibit 2: Shareholders' Resolution Exhibit 3: Restated Articles Exhibit 4: Shareholders' Agreement Exhibit 5: Deed of Partnership -10- Exhibit 6: Business Transfer Agreement -11- Schedule 1 (Warranties) 1. Interpretation 1.1 Where any of the following paragraphs of this Schedule is qualified by the expression "to the best of the knowledge, information and belief of the Company" or "so far as the Company is aware" or any similar expression, that paragraph shall be deemed to include an additional warranty to the effect that the statement has been made after due diligent and careful enquiry and that the Company has used its best endeavours to ensure that all information given is true and accurate in all respects. 2. Disclosed Information 2.1 The statement of fact and information relating to the Company and/or its shareholders and/or officers and/or connected persons and associates (or any of them) and/or the business, finances, assets, liabilities, contracts, prospects, suppliers and customers of the Company given by or on behalf of the Company to the Investor or its advisers in the course of the negotiations leading to this Agreement listed in Schedule 2 to the Stock Purchase Agreement (the "Disclosed Information") are true complete and accurate in all respects and not misleading in any respect. 2.2. To the best of the knowledge information and belief of the Company there is no fact information or other matter which is not fairly and expressly disclosed which renders or which might render any of the Disclosed Information untrue, incomplete inaccurate or misleading in any material respect or which might reasonably be expected adversely to affect the willingness of a purchaser to purchase shares of the Company on the terms contemplated by this Agreement. 3. The Company 3.1 The Company is a private company limited by shares duly organized, validly existing and in good standing under the laws of the Kingdom of Denmark and has all requisite powers to enter into and perform this Agreement and the obligations to be assumed or performed by it pursuant thereto and the execution and delivery and completion of this Agreement:- a) does not and will not cause the Company to be in breach of any of the terms and provisions of any agreement or arrangement or order or injunction of any Court or competent tribunal; b) does not and will not relieve any person of or entitle any person to terminate any contractual or other obligation to the Company; and c) will not so far as the Company is aware result in any customer, supplier or other business partner of the Company ceasing to deal or substantially reducing the existing level of its dealings with the Company or terminate or result in the termination of any present or future benefit or privilege enjoyed by the Company. 3.2 The Shares when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein will be duly and validly issued, fully paid and non-assessable and will be free from restrictions of transfer other than restrictions in the Restated Articles and the Shareholders' Agreement and free from all claims liens encumbrances and equities. 3.3 There are not outstanding any options, warrants, rights or agreements for the purchase or acquisition from the Company of any of its shares. 3.4 The share register of the Company is correct and properly written up to date and there has been no notice of any proceedings to correct or rectify any such register. 3.5 Since the Accounting Date (as defined below) neither the Company nor any class of its members has passed any resolution, except from resolutions passed at the ordinary general meeting of Shareholders held on 27 May 1998 and at the extraordinary general meeting of shareholders held on 18 June 1998. 4. Accounts 4.1 The Annual Accounts as of 31 December 1997 (the "Accounts") comply with the provisions of Danish company and accounting laws and all other applicable legislative requirements and have been prepared in accordance with generally accepted accountancy practice and principles consistently applied and give an accurate and true and fair view of all the assets and liabilities (whether actual or contingent or otherwise) and of the state of affairs of the Company at the Accounting Date and of its results for the accounting period ended thereon. An exemption is made, however, as -3- regards the dividend paid to the Current Shareholders in 1998 which is in contravention of Danish law. Any damage, loss, liability or expense in this connection will be the responsibility of the Company and the Current Shareholders, cf. Section 6 of the Stock Purchase Agreement. 4.2 The value of the assets, included in the Accounts and, in respect of the position at the date hereof, the books and records of the Company is not materially overstated nor are the liabilities provided for therein understated and (in accordance with the said accountancy practice and principles) full provision or reserve has been made in the Accounts or such books and records for depreciation and all bad or doubtful debtors and liabilities (including contingent liabilities) and all present or contingent burdens and commitments as at the Accounting Date or at the date hereof, save from commitments relating to returned premiums. 4.3 The Accounts have been prepared on bases and policies consistent with those used in preparing the audited accounts of the Company for the last three financial periods of the Company ended on the Accounting Date. 4.4 All proper and necessary books of account and records (including records held in computer form) have been fully and accurately kept and promptly completed by the Company, and the same contain full and correct information relating to all transactions to which the Company has been a party in accordance with the law and generally accepted accounting practice and principles and all such books and records (including print outs of such records held in computer form) are in the exclusive possession of and are readily accessible to the Company. 5. Position since 31 December 1997 (the "Accounting Date") 5.1 Since the Accounting Date (i) there has been no material adverse change in the financial or trading position or prospects of the Company; (ii) the business of the Company has been carried on in the normal course; (iii) the Company has not declared or paid any dividends or effected any distribution (for tax purposes or otherwise) of or in respect of its assets or share capital except as disclosed in the Accounts; (iv) the Company has not acquired or disposed of any business or material assets other than in the ordinary course of business; and (v) the Company has not made or agreed to make any loan or payment or entered into any transaction or assumed or incurred any liabilities (including contingent liabilities) except in the ordinary course of trading and for full value and in the case of capital commitments all commitments made have been described in the Disclosed Information. -4- 5.2 No order has been made or position presented or resolution passed for the winding-up or other dissolution of the Company and no receiver or manager or administrator or similar officer under the laws of any jurisdiction has been appointed over any of its assets and there are no grounds on which any such appointment may be made. 6. Taxation 6.1 The Company has within the requisite time duly made all returns, given all notices, and supplied all other information required to be supplied to the Danish authorities with responsibility for taxation, and customs and excise and/or any other competent fiscal authority and all such information returns and notices were when given or supplied and are now accurate in all material respects and made on a proper basis and are not, so far as the Company is aware, likely to be the subject of any dispute with any of the relevant authorities concerned. 6.2 The Company has duly deducted, withheld, paid and accounted for all tax due to have been deducted, withheld, paid or accounted for by it before the date of this Agreement and is not and has not at any time since the Accounting Date been liable to pay interest on any unpaid taxation. 6.3 Since the Accounting Date the Company has not made and the Company is not subject to any present or future liability to make or provide any payments or consideration which could be disallowed as a deduction in computing the profits of the Company or as a charge on the Company's income for taxation purposes other than as described in the Disclosed Information. 6.4 The book value of each of the capital or fixed assets of the Company shown in the Accounts does not exceed their original cost and is such that on a disposal or deemed disposal of such assets or any of the same at that value no balancing charge or chargeable gain will arise accrue or crystallise. 6.5 The Company is not under any liability to taxation, contingent or otherwise, in respect of any other company which at any time has been a member of the same group or consortium as the Company or an associated company of the Company for taxation purposes or in respect of any transaction effected with or asset or benefit received from or given by the Company to any such other company. 6.6 The Company has not entered into or been a party to any scheme or arrangement -5- designed partly or wholly for the purposes of avoiding or deferring taxation, and no scheme or transaction of any nature has been carried out by or proposed in relation to the Company which has given rise or could give rise to a charge to taxation. 6.7 All of the documents relating to or necessary to prove the title of the Company to its assets or otherwise relating to the Company's business and affairs have been properly stamped with applicable stamp or other duty and such duty has been duly paid. 7. Assets 7.1 The Company was at the Accounting Date and (subject only to sales of current assets in the ordinary course of its day to day business) now is the owner of and has good and marketable title to all of the assets included in the Accounts and all assets now owned or used by it or in its possession except for leased assets. 8. Mortgages and Charges 8.1 The Company has not created nor has it agreed to create and nor is there subsisting any mortgage debenture lien charge or other similar encumbrance or security interest over all or any of its property whether present or future, save for the Company's treasury shares which are mortgaged in favour of Unibank A/S. 9. Guarantees 9.1 Except in the ordinary course of business and as disclosed to the Investor the Company is not and has not agreed to become bound by any guarantee, bond, warranty or indemnity or suretyship or similar commitment and there is not now outstanding any such guarantee bond warranty indemnity suretyship or similar commitment given for the accommodation of or in respect of any obligation or liability of the Company. 10. Borrowing Arrangements 10.1 The Disclosed Information contains full particulars in relation to all borrowings of the Company and all arrangements in the nature of borrowing or loan facilities. 10.2 The Company is not in breach of the terms of any of its borrowing obligations and in particular of any document governing the terms of or securing such borrowings and no event has occurred which will or might give any person the right to call for the immediate or early repayment of any of its borrowings or to terminate any loan facilities placed at its disposal or which is likely to cause a demand for the immediate -6- repayment of any of its borrowings which are repayable on demand. 10.3 There is no indebtedness of the Company exceeding DKK 100,000 in aggregate which is overdue for payment or discharge by more than three months and the Company has sufficient working capital for the purposes of carrying on its business in its present form for the period of twelve months after Closing. 10.4 The Company's credit facility agreement with its bank can continue unvaried regardless of the transaction. 11. Material Commitments and Agreements 11.1 The Company is not party to nor liable in respect of and none of the assets of or used by the Company is affected by:- a) any contract, covenant, commitment or arrangement (i) of an unusual nature or (ii) made otherwise than in the ordinary and usual course of the business of the Company as now carried on; b) any partnership, joint venture or consortium, other than the partnership agreement of 18 June 1998 regarding the Partnership; c) any contract, covenant, commitment or arrangement which in any material way restricts the freedom of the Company to carry on its business or any part thereof in any part of the world in such a manner as it thinks fit; save for (i) the Company's agreement with the Nordania Leasing Group according to which the Company is prevented from having any other leasing companies as customers without the prior approval of the Nordania Leasing Group, (ii) the Company's agreement with Advokaternes Serviceselskab I/S in principle preventing the Company from acting as broker in respect of Non-life business for the members of Advokaternes Serviceselskab I/S and (iii) the Company's agreement with Boligselskabernes Landsforening preventing the Company from having other housing associations East of the Great Belt as customers or d) any contract, covenant, commitment or arrangement which is or is liable to be terminated or altered by another party as a result of any change in the management or shareholders of the Company. e) No person is authorised to act as agent or attorney for the Company or to bind the Company otherwise than its Directors acting as a Board and Mr Kent Risvad, -7- Mr Lars Gundorph and Ms Karin Holst acting as Managers and others using the authority vested in them as employees. 12. Properties 12.1 Copies of all material documents relating to the premises used by the Company (the "Properties") have been supplied to the Investor prior to the date hereof. 12.2 The Company is entitled, without restriction and without breaching the terms of any lease or other rights of occupation or the provisions of any legislation to use the Properties for the purpose for which it presently uses the same or any part thereof. 12.3 The Company has fully complied with all its obligations in respect of such occupation and no notice has been served to terminate the right of the Company to continue the same and, there are no circumstances which could result in such right of occupation being determined otherwise than by the Company except as provided in the Landlord and Tenant Act (lejeloven). 13. Business of the Company 13.1 The Company does not carry on any business other than the business described in the Disclosed Information and the Company's business has always been carried out in compliance with all applicable legislation. 13.2 Other than what appears in the Disclosed Information as far as the Company is aware the Company has not received any process notice or communication (formal or informal) from any governmental, legislative, regulatory or consumer authority or other authority of any jurisdiction or competence. 13.3 The Company will incur expenses no greater than DKK 750,000 per year (1998 - figure as increased annually in accordance with the increase in the Danish Net Consumer Price Index) in relation to administration costs including without limitation directors' fees, D&O insurance, legal and audit fees. 14. Litigation 14.1 The Company is not engaged in any litigation arbitration prosecution or other legal proceedings (whether as plaintiff defendant or third party) and there are no such proceedings pending or threatened or any proceedings in respect of which the Company is or might be liable to indemnify or compensate any other person -8- concerned therein and to the best of the knowledge information and belief of the Company there are no claims facts event or other circumstances which are likely to give rise to any such proceedings which are not covered by the Company's e&o policy, save from claims put forward by Mr Knud Jakobsen in connection with his retirement from the Partnership, cf. 14.2. 14.2 The claims put forward by Mr Knud Jakobsen in connection with his retirement from the Partnership are unsubstantiated and unfounded. Moreover, the Company's refusal to consent to Mr Jakobsen's contemplated business activities as insurance auditor and/or independent insurance broker is substantiated in the Deed of Partnership. 15. Insurance 15.1 To the best of the Company's knowledge the Company is and at all material times has been adequately covered by valid insurances against all normal risks including, without limitation, professional and all other liabilities having regard to the type of business carried on and assets owned or used by it. 15.2 The policies of insurance to which the Company is a party are valid and enforceable; all premiums due have been paid; there are no outstanding claims or circumstances likely to give rise to a claim thereunder other than what is referred to in the Disclosed Information; and nothing has been done or omitted to be done which has made or could make any such policy void or voidable or whereby the renewal of any such policy might be affected or the premiums due in respect thereof are likely to be increased. 15.3 Claims or incidents reported under the policies of insurance to which the Company is a party do not give the Company reason to reserve potential losses in its financial statements. 16. Employees etc. 16.1 The Disclosed Information details the names and material particulars of all officers, employees, consultants and agents of the Company and their respective ages, length of service with or engagement by the Company and their special terms of employment or engagement including (without limitation) special payments and emoluments, bonuses, profit sharing arrangements and benefits in kind, commissions, fees, remuneration and other benefits. -9- 16.2 Bonuses paid to personnel in Copenhagen which they may have earned a legal right to receive in future years amounts to a maximum of DKK 300,000 in 1997. 16.3 No Key Personnel has given or received notice terminating his employment or engagement or is entitled (without giving proper notice) to terminate his employment or engagement with the Company. 17. Associates and Connected Persons 17.1 No shareholders of the Company nor any connected person or associate of any of them has any interest, direct or indirect, in any agreement or arrangement to which the Company is a party or in any business which has a close trading relationship with that of the Company or which is or is likely to become competitive with the business of the Company other than what follows from the Partnership Agreement as of 18 June 1998 and save for partners' interest regarding the lease in Aalborg. -10- - -------------------------------------------------------------------------------- Assurandorgruppen I/S DEED OF PARTNERSHIP TABLE OF CONTENTS Name, registered address, object page 2 Partners page 2 Financial matters page 3 The management of the partnership page 5 Various provisions page 8 Termination page 9 Breach page 10 Retirement for other reasons page 10 Financial matters in case of retirement page 11 Non-competition page 13 Arbitration page 14 List of appendices page 16 Signatures page 15 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 ASSURANDORGRUPPEN I/S The following deed of partnership shall apply to the cooperation of the partners in Assurandorgruppen I/S and shall replace the deeds of partnership applying so far. 1.0 NAME, REGISTERED ADDRESS AND OBJECT 1.1 Name: Assurandorgruppen I/S (hereinafter called I/S). 1.2 The registered address of I/S is in the district of Arhus. For the time being I/S has branch offices at the following addresses: Strandgade 4, DK-1401 Copenhagen K Brendstrupgaardsvej 13, DK-8200 Arhus N Nedergade 35, DK-5000 Odense C Hasserisvej 134, DK-9000 Aalborg Rosenornsgade 6, DK-8900 Randers 1.3 The object of I/S is to carry on insurance broking and related business. 2.0 PARTNERS 2.1 The partners in I/S are: 2.1.1 Assurandorgruppen A/S, reg. no. 164725 (hereinafter called A/S) with a 90 percentage share of I/S. 2.1.2 The remaining 10 percent is distributed on 50 shares of 0.2 percent as it is a condition that - apart from A/S - each partner shall and may only own a share of 0.2 percent. 2.1.3 For the time being A/S moreover possesses 6 shares of 0.2 percent which are presumed to be sold to new partners. 2.1.4 For the time being the remaining 44 I/S shares, a total of 8.8 percent, are distributed on the partners mentioned in appendix 1. 2.1.5 In addition Willis Corroon Europe B.V. ("WCE") has a right to a share of the profits of I/S as long as WCE remains a shareholder of A/S as further described in appendix 5. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 3 2.2 For the time being the shares of A/S are distributed as stated in the survey, appendix 2. 2.3 New partners may be taken in by resolution passed by the executive committee of I/S with a 5/6 majority after prior information to life/non-life partners respectively, depending on the field of activity of the new partner. Only insurance brokers and executives who place their entire working capacity at the disposal of I/S and who - upon demand by the executive committee acquire a block of shares in A/S, the size of which to be decided by the executive committee, can be taken in as partners. Efforts are being made to ensure that the acquisition of shares can take place in connection with the entry as a partner but by a simple majority of votes the executive committee may decide that the acquisition of shares shall be postponed. The purchase price for shares shall be decided in accordance with the share price fixed at the closing of the financial statements, cf. clause 9 below. A partner shall be entitled to acquire and hold the block of shares mentioned in a public or private limited company wholly owned by him. 3.0 FINANCIAL MATTERS 3.1 The balance sheet of I/S as at January 1 1998 is enclosed as appendix 3. The partners invest their respective shares in the existing regional partnerships and acquire/surrender shares so that subsequently the individual partners own an 0.2 percent share in I/S, cf. appendix 4. 3.2 The partners are pro rata owners of the assets and liabilities of I/S according to their I/S shares. 3.3 The partners shall be liable personally, directly and jointly and severally to third parties for the obligations of I/S; but among themselves the partners shall be liable pro rata in proportion to their I/S share. 3.4 A brokers' third party liability insurance policy shall be effected and maintained for the account of I/S. In the case of technical errors involving liability for damages where, for reasons ascribable to the partner, the insurance company does not cover the loss, the partner shall be liable for the loss suffered by I/S. As regards technical errors covered by the third party liability insurance the partner shall be liable for the first DKK 25,000 of the excess, whereas the - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 4 remaining excess shall be the liability of I/S. Where particular justifying elements speak for it, or where I/S chooses to make an ex gratia payment, the executive committee can reduce the liability of the partner or remove it entirely. 3.5 As regards the distribution of profit or loss according to the result for the year, including the calculation and advance payment of profit and profit for the year on account to the partners, reference is made to the enclosed appendix 5, which is an integral part of this deed of partnership. 3.6 The partners shall jointly obtain the necessary operating credits from A/S and they are under an obligation to provide security by way of assignment of existing and future outstanding accounts. 3.7 The financial year of I/S is the calendar year. 3.8 The accounts of I/S shall be prepared in accordance with proper and prudent accounting policy. 3.9 The accounts of I/S shall be audited by the state-authorized public accountant appointed as auditor of A/S. The auditor is entitled to participate in the meetings of I/S. 3.10 As regards guidelines and procedure for the financial statements and budgets of I/S, reference is made to the enclosed appendix 6 which is an integral part of this deed of partnership. 4.0 THE MANAGEMENT OF THE PARTNERSHIP 4.1 The meeting of partners 4.1.1 The meeting of partners is the highest authority of I/S. 4.1.2 Ordinary meetings of partners shall be held in April/May and November/December. At the April/May meeting the presentation and adoption of the financial statements for the preceding financial year shall be on the agenda. At the November/December meeting presentation and adoption of the budget for the next financial year shall be on the agenda. Proposals from the partners or from WCE to be dealt with at the April/May meeting must be submitted to the executive committee not later than on April 1 and proposals to be dealt with at the November/December meeting not later than on November 1. Provided - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 5 always that the executive committee is entitled to accept proposals received after these closing dates to the extent it deems possible. 4.1.3 Extraordinary meetings of partners shall be held, when convened by the executive committee or WCE or the management or at the written request of at least 5 partners, stating the agenda. 4.1.4 The executive committee shall convene meetings of partners at 14 days' notice at least by letter or e-mail to each partner and WCE. The agenda shall accompany the notice convening the meeting. 4.1.5 The executive committee shall decide where the meeting is to be held. 4.1.6 The meeting of partners shall be quorate, when A/S is represented and at least half of the other partners are present or represented. At the meetings of partners A/S shall be represented by a member of the management and/or of the board of directors. A representative of WCE is entitled to attend the meeting of partners with a right of speech. Partners who do not attend a meeting of partners can issue an instrument of proxy authorizing the holder to vote at the meeting of partners on behalf of the partner issuing the proxy. No person can appear with more than one proxy. The proxy must be in writing, dated and without reservations of any kind and it shall not be given for a period exceeding one year. 4.1.7 Where a meeting of partners held in accordance with the above provisions is found not to be quorate, another meeting of partners with the same agenda may be convened by the executive committee at 14 days' notice at least. This meeting will be quorate, when A/S is represented irrespective of the number of partners attending. 4.1.8 Meetings of partners shall be presided over by a chairman elected by the executive committee. The management shall cause minutes of the meeting to be prepared and sent to each of the partners. 4.1.9 At the meetings of partners, unless this deed of partnership prescribes otherwise, resolutions shall be made by a simple majority of votes in proportion to shares owned. 4.2 The executive committee 4.2.1 The board of directors of A/S elected at the time in question shall also be the executive - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 6 committee of I/S and shall be in charge of the overall management of the activities of I/S. 4.2.2 The chairman shall convene and preside over the meetings of the executive committee. Meetings shall be convened when decided by the chairman or when requested by 2 members of the executive committee. Meetings shall be convened at 8 days' notice but the chairman may convene meetings at shorter notice, if he deems it necessary. 4.2.3 The executive committee is quorate when at least half the members are present. Resolutions are passed by a simple majority of votes unless this deed of partnership or the Shareholders' Agreement regarding A/S provides otherwise. Each member of the executive committee has one vote. In case of equality of votes the chairman shall have the casting vote. 4.2.4 The executive committee shall cause minutes of the meetings of the committee to be prepared. 4.3 Management 4.3.1 The executive committee shall engage a management to be in charge of the day-to-day business. Members of the management cannot be members of the executive committee. The current organization will appear from appendix 7. Details of the duties and spheres of authority and other terms shall be laid down in service agreements. 4.3.2 The management shall decide on the engagement and dismissal of employees. 4.4 Power to bind I/S 4.4.1 I/S shall be bound by the chairman of the executive committee signing jointly with 1 manager or by the joint signatures of 3 members of the executive committee or by the joint signatures of the entire executive committee. 5.0 VARIOUS PROVISIONS 5.1 Each partner is under an obligation to use his entire capacity for work to promote the cooperative enterprise, cf. clause 10 below. 5.2 Each partner is under an obligation continuously to maintain and update his professional knowledge. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 7 5.3 With the exceptance of guarantee obligations for children or spouses of amounts which are not of decisive importance for their financial position, the partners commit themselves not to undertake any guarantee obligations or the like for third parties. 5.4 Each partner is under an obligation not to third parties to divulge internal or business matters which come to his knowledge through his participation in the activities of I/S and this obligation shall remain in force also after the partner has retired from I/S. 5.5 Each partner is entitled to holiday in accordance with the rules of the Holidays Act in force at the time in question. 5.6 In case of temporary loss of working capacity as a consequence of illness or accident, partners with less than 3 years' seniority shall receive advance payment of profit for the first 3 months in accordance with the provisions laid down in appendix 5, provided always that such advance payments of profit will be reduced by the amounts of benefit, if any, paid to them by the public authorities by reason of the loss of working capacity. In case of loss of working capacity for a period exceeding 3 consecutive months, the right to advance payment of profit will be lost whereas the share of profit/loss remains unchanged. In case of temporary loss of working capacity, partners with more than 3 years' seniority are entitled to advance payment of profit in accordance with appendix 5 for a period of 6 months, provided always that there will be a similar reduction as regards any benefits paid by the public authorities, cf. the above. Provided always that the advance payment of profit is reduced by 50 percent in case of loss of working capacity lasting more than 6 months and until 24 months. As regards loss of working capacity for a period exceeding 24 months reference is made to clause 8.4 below. Similar rules shall apply to administrative partners, provided always that advance payment of profit is replaced by the agreed consideration. 5.7 When a partner is absent on holiday or by reason of loss of working capacity, the other partners are under an obligation to attend to the client portfolio of the absent partner according to lines agreed on and adapted to the specific situation . 5.8 Spouses, cohabitees and children of partners shall only be engaged by I/S subject to resolution passed by the executive committee by a 5/6 majority of votes. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 8 5.9 The deed of partnership is a personal agreement between the partners for which reason the share shall only be transferred subject to the provisions concerning retirement, etc. stated below. By transfer in this connection is understood the sale, charging, succession, other administration of property and enforcement proceedings. The charging of shares as security for bank credits of I/S or A/S and bank loans for the purchase of I/S shares is permitted, however, provided that the lender respects this deed of partnership. 6. TERMINATION 6.1 Each partner is entitled to terminate his participation in I/S subject to 3 months' notice to the last day of a month (the date of retirement). 6.2 Subject to 3 months' notice and by a 5/6 majority of votes the executive committee can decide that a partner shall retire from I/S, provided always that the partner shall be entitled to an interview with the executive committee before the decision is made by the latter. Where a partner has a seniority exceeding 3 years, the notice given shall be 6 months, however. 7.0 BREACH 7.1 Where a partner significantly violates his obligations under this deed of partnership, the executive committee can demand the immediate retirement of the partner in question. Provided always that such demand shall be made within 1 month of the executive committee having received notice of the violation. 8.0 RETIREMENT FOR OTHER REASONS 8.1 Where a partner dies or is declared legally incompetent, he shall retire from I/S. The date of retirement shall be the death-day or the date of the declaration of legal incompetence. At the death of a partner 3 months' advance profit, in accordance with the provisions laid down in appendix 5, and in the case of administrative partners 3 months' consideration, shall be paid to a surviving spouse/cohabitee or children below 21 years of age. 8.2 A partner shall retire from I/S not later than on December 31 in the year in which he reaches the age of 67. 8.3 A partner against whom bankruptcy proceedings are instituted, or who makes a compulsory composition with his creditors, or who obtains debt relief, or against whom other general enforcement proceedings are instituted shall retire from I/S. The date of - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 9 retirement shall be the date of the making of the bankruptcy order or the date of the making of the decision to institute enforcement proceedings. 8.4 A partner whose incapacity for work on account of illness or accident has lasted for more than 24 months, and who has no prospects of lasting restoration to health, shall retire from I/S with the 1st day of the month following the 24-month period as date of retirement. 8.5 When a partner sells all of his shares in A/S he shall automatically retire from the I/S. 9.0 FINANCIAL MATTERS IN CASE OF RETIREMENT 9.1 At the retirement of a partner - irrespective of the reason for the retirement - his share of I/S shall be made up and paid to him according to the following guidelines. The partner's share of I/S shall be transferred to A/S unless a new partner is admitted at the same time in which case the share of I/S may be transferred to the new partner. 9.1.1 Prior to the meeting of partners in April/May the executive committee shall fix a price for the current financial year of a share of 0.2 percent. At the fixing of the price the assets of I/S, including the goodwill value and its liabilities shall be fixed at market value and in consideration of generally applicable accounting principles of depreciation and provisions. At the meeting of partners the executive committee shall give an account of the conditions forming the basis of the price fixing. In case a partner cannot accept the price fixed by the executive committee, an objection in writing and stating his reasons shall be submitted to the chairman of the executive committee not later than 2 weeks after the meeting of partners. The partnership's auditor shall then decide the price fixing issue and shall fix the price in an account to the executive committee stating his reasons. Within 1 week of having received the price fixed by the auditor, the executive committee shall inform the partners in writing about the price fixed by the auditor. In case a partner will not accept the price fixed by the auditor, he shall, within 2 weeks of having received information about the price fixed by the auditor, refer the matter to arbitration, cf. clause 11 below. Reference to arbitration shall be by complaint in writing forwarded to the executive committee and stating the reasons. The price fixed by the arbitration tribunal shall be final and binding on the partners and shall apply in case of retirement which takes place during the financial year, unless subsequent changes of applicable law or of the conditions of the trade or the like, which occur in the financial year, significantly change the conditions forming the basis of the fixing of the price. Where such changes occur, a partner shall be entitled to the executive committee to submit a written request for a change of the price fixed. The executive committee is - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 10 under an obligation within 2 weeks of having received such request to ask the partnership's auditor for a statement, and if the latter finds that the condition has been met, he shall change the price fixed. Both the fixing of a new price by the auditor and his refusal of making the change can be referred to arbitration. Where a request made by a partner for a change of the price fixed does not lead to changes of more than +/- 15 percent, the partner requesting the change shall pay all expenses in connection with it, including expenses for auditor and possible arbitration. 9.1.2 At the retirement of a partner A/S is entitled and under an obligation to the cash payment, as at the date of retirement at the latest, of the price fixed for the share of the retiring partner according to prior decision. Where the price fixed is not available until after the date of retirement, the price shall be paid 1 week at the latest, after the final price has been fixed. 9.1.3 In addition the retiring partner's capital account shall be paid out in cash as at the date of retirement together with a payment on account, according to the estimate of the executive committee, of the expected share of profits for the current financial year. This amount shall be made up when the financial statements have been finally adopted by the meeting of partners. 9.1.4 The executive committee shall be entitled to withhold payments to retiring partners in connection with possible claims for the repayment of too large account payments of profit and of any claim which I/S might have against the retiring partner, including claims for damages for breach. 9.1.5 Where the retirement is due to material breach, a 25 percent reduction shall be made when the price of the share is fixed. 9.1.6 Where the purchase price or capital account has not been paid, interest shall be payable on the amounts at the rate corresponding to the official discount rate + 5 percent as from the due date and until payment is effected. Interest shall similarly be paid on claims for the repayment of too large amounts paid out. 9.2 In case a partner gives notice of retirement, I/S is entitled to "lay off" the retiring partner for immediate retirement. I/S shall pay the usual share of profits for the period until the time of retirement according to the notice given. 10.0 NON-COMPETITION 10.1.1 No partner may without the permission of the executive committee be the owner of or take part - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 11 in any other business, whether in the same or another trade. 10.1.2 Investment of capital without any personal performance of any kind is permitted, provided always that such investment is not made in any firm or company, except such as are listed on the stock exchange, which directly or indirectly compete with I/S or are customers of I/S. 10.2 At the retirement of a partner, including at the dissolution of I/S irrespective of the reason for it, the following non-competition clause shall apply: 10.2.1 The partner shall not be entitled: a) for a period of 2 years from the time of the retirement directly or indirectly to carry on business in competition with the business carried on by I/S at the time of the retirement - whether on his own or in corporate form, b) for a period of 2 years from the time of the retirement to take up employment in any business which directly or indirectly carries on business, which competes with the business carried on by I/S at the time of the retirement. The provisions mentioned in a) and b) shall not prevent the partner from taking up employment in an insurance company, provided always that the partner shall not be entitled for a period of 2 years after the time of the retirement directly or indirectly to contribute to the acquisition of business from parties who were customers of I/S at the time of the retirement. The executive committee may grant exemption from the above. 10.2.2 The non-competition clause shall apply to competing activities everywhere in Denmark. 10.2.3 Violation of the non-competition clause may be stopped by a restraining injunction without security being given. 10.2.4 For each case of violation of the non-competition clause the partner in question shall pay a penalty corresponding to the purchase price received by him for his share at his retirement, provided always that the mimimum amount of such penalty shall be DKK 300,000 and in addition the partner shall pay damages according to the general rules of Danish law. The amount mentioned shall be adjusted in accordance with the Net Consumer-Price Index with effect as from July 1 1998. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 12 11.0 ARBITRATION 11.1 Disputes between the partners concerning the interpretation or violation of the provisions of this deed of partnership shall be settled by arbitration if one of the parties so requests. The arbitration tribunal consists of two persons appointed by the parties and an umpire appointed by the President of the Maritime and Commercial Court in Copenhagen. In case of equality of votes the umpire shall have the casting vote. The arbitration tribunal shall decide its own procedure. Where questions arise as to whether either of the arbitrators appointed are incompetent or unqualified for the task, the question shall be decided with binding effect by the President of the Maritime and Commercial Court and in case it is decided that the person in question is incompetent or unqualified, the President of the Maritime and Commercial Court will appoint another arbitrator instead. In connection with its award, which is final and conclusive and which cannot be brought before the courts of law, the arbitration tribunal may make a decision as regards the costs of the case and which of the parties is to pay the costs of the arbitration. 11.2 A dispute is referred to arbitration by the complainant writing to the executive committee stating the content of the complaint and the allegations he intends to raise before the arbitration tribunal. The complaint shall contain information as to who the complainant appoints arbitrator. 11.3 Otherwise the provisions of Act no. 181 of May 24 1972 on arbitration shall apply. Copenhagen, 28/9 1998 Assurandorgruppen A/S The Individual Partners By: By: --------------------------- --------------------------- Mr Niels Simonsen and Mr Kent Risvad according to authority vested in the Board of Directors of Assurandorgruppen A/S Willis Corroon Europe B.V.: By: --------------------------- LIST OF APPENDICES - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 13 1. List of partners as at January 1 1998, 0.2 percent shares. 2. List of shareholders of Assurandorgruppen A/S as at today. 3. Balance sheet as at January 1 1998. 4. Survey of partners' contribution/sale/acquisition of shares as at January 1 1998. 5. Distribution of profit/loss. 6. Accounting principles, etc. 7. Organizational chart. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- APPENDIX 5 to the deed of partnership of Assurandorgruppen I/S I. PROFIT / LOSS DISTRIBUTION 1. THE LIFE AND PENSIONS DIVISION 1.1. The profit made up according to appendix 6, shall be distributed with 30% to the partners according to ownership shares and with 70% (the "Advance Profit") among the partners who are insurance brokers, the administrative partners being paid via the operating costs, provided always, however, that the aggregate salaries of I/S (including both Life and Non-Life partners' salaries and normal salaries as defined in schedule A) shall not exceed 62% (in 1998), 61% (in 1999) and 60% (in 2000-2005), respectively, of the total income of I/S (excluding investment income). If the aggregate salaries of I/S exceed those thresholds a reduction of 30% of the excess amount shall be made in the Advance Profit and distributed to WCE. The reference to 30% above shall be changed to always correspond to WCE's percentage ownership of the shares of A/S. The parties agree to use their best endeavours to reach an operating margin as defined in Schedule B of at least 20%. In any event the parties agree that AG Group shall have a minimum operating margin of 15% in the years 2000 - 2005 and that in the event this figure is not reached the partners' salaries shall be reduced to an amount which enables AG Group to have a profit margin of 15%. In 2005 the shareholders and partners shall undertake a review process which shall determine both whether 60% remains a fair and reasonable demarcation for "aggregate salaries" and whether 20% remains a fair and reasonable expected operating margin; after having undertaken bench marking against other similar companies engaged in the same or similar businesses; and AG Group's profitability". 1.1.2. The advance profit is divided into a base consideration and a bonus consideration. 1.1.3. Between 90 and 95 percent of the budgetted advance profit shall be used as base consideration. The remaining 5-10 percent and advance profit in excess of the budgeted amount shall be set aside for bonus consideration. 1.1.4. Where the share of advance profit called base consideration is smaller than the budgeted amount, the deficit shall be distributed among the partners in proportion to the base consideration fixed for the year for the individual partner. 1.2. CONSIDERATION COMMITTEE - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1.2.1. A consideration committee shall be set up in which the life division manager participates as an ex-officio member and in which the other members shall be one partner (elected by lot or by agreement between the partners) from each office. 1.2.2. Election of members for next consideration year shall take place each year in November/December. 1.2.3. The committee shall be set up for one consideration year at a time so that the committee which has fixed the base consideration for the financial year shall also fix the bonus consideration for the same financial year. 1.2.4. Within the framework stated above the consideration committee shall decide the share of the advance profit to be used for base consideration and the share to be used for bonus consideration. 1.2.5. Prior to the 3rd payment of consideration in the coming year and not later than on February 15 the consideration committee shall decide the distribution of the base consideration for the coming year on the basis of an evaluation of the individual partner and of the whole and the committee shall decide the evaluation criteria. 1.2.6. For the first 2 months account payments shall be made corresponding to the amounts paid the foregoing year. When the base consideration for the coming year has been decided, the account payments for the first 2 months shall be adjusted. 1.2.7. At the end of the financial year, when the financial result is known the consideration committee distributes the bonus consideration. The bonus consideration is granted to the individual partner on the basis of a careful evaluation of his/her performance for the year and the committee shall decide the evaluation criteria. 1.2.8. Where the individual partner is not satisfied with the base consideration fixed by the consideration committee for him/her or with the distribution of the bonus consideration, he/she may bring the issue before the management, which shall then decide whether changes of the distribution should be made. The issue shall be brought before the management not later than one week after the partner has received information about his/her base consideration for the coming year. The decision of the management may be brought before the executive committee not later than 4 weeks after a partner has been notified of it. 1.2.9. When new partners are taken in, the base consideration shall be decided by the life division manager, who shall obtain the approval of the consideration committee, prior to the admission of the new partner. 1.2.10. By way of advance profit partners may draw a monthly amount on account corresponding to 1/12 of the budgeted base consideration. Where in the course of the year the budgeted base consideration pool becomes smaller than expected, the monthly amounts on account may be proportionally reduced. The monthly amounts on account shall be paid monthly in advance. The payment of monthly advance profit on account is effected on the condition that the - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- partners place their entire working capacity at the disposal of I/S. 2. THE NON-LIFE DIVISION 2.1.1. The profit made up according to appendix 6, shall be distributed with 30% to the partners according to ownership shares and with 70% (the "Advance Profit") among the partners who are insurance brokers, the administrative partners being paid via the operating costs, provided always, however, that the aggregate salaries of I/S (including both Life and Non-Life partners' salaries and normal salaries as defined in schedule A) shall not exceed 62% (in 1998), 61% (in 1999) and 60% (in 2000-2005), respectively, of the total income of I/S (excluding investment income). If the aggregate salaries of I/S exceed those thresholds a reduction of 30% of the excess amount shall be made in the Advance Profit and distributed to WCE. The reference to 30% above shall be changed to always correspond to WCE's percentage ownership of the shares of A/S. The parties agree to use their best endeavours to reach an operating margin as defined in Schedule B of at least 20%. In any event the parties agree that AG Group shall have a minimum operating margin of 15% in the years 2000 - 2005 and that in the event this figure is not reached the partners' salaries shall be reduced to an amount which enables AG Group to have a profit margin of 15%. In 2005 the shareholders and partners shall undertake a review process which shall determine both whether 60% remains a fair and reasonable demarcation for "aggregate salaries" and whether 20% remains a fair and reasonable expected operating margin; after having undertaken bench marking against other similar companies engaged in the same or similar businesses; and AG Group's profitability". 2.1.2. The advance profit is divided into a base consideration and a bonus consideration. 2.1.3. Between 90 and 95 percent of the budgetted advance profit shall be used as base consideration. The remaining 5-10 percent and advance profit in excess of the budgeted amount shall be set aside for bonus consideration. 2.1.4. Where the share of advance profit called base consideration is smaller than the budgeted amount, the deficit shall be distributed among the partners in proportion to the base consideration fixed for the year for the individual partner. 2.2. CONSIDERATION COMMITTEE 2.2.1. A consideration committee shall be set up in which the non-life division manager and the regional manager participate as ex-officio members and in which the other members shall be one partner (elected by lot or by agreement between the partners) from each office. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2.2.2. Election of members for next consideration year shall take place each year in November/December. (The election for 1998 has taken place, the next election will take place in November/December 1998 applying to the consideration year 1999). 2.2.3. The committee shall be set up for 1 consideration year at a time so that the committee which has fixed the base consideration for the financial year shall also fix the bonus consideration for the same financial year. 2.2.4. Within the framework stated above the consideration committee shall decide the share of the advance profit to be used for base consideration and the share to be used for bonus consideration. 2.2.5. Prior to the 4th payment of consideration in the coming year and not later than on March 15 the consideration committee shall decide the distribution of the base consideration for the coming year on the basis of an evaluation of the individual partner and of the whole and the committee shall decide the evaluation criteria. 2.2.6. For the first 3 months payments on account shall be made corresponding to the amounts paid the foregoing year. When the base consideration for the coming year has been decided, the payments on account for the first 3 months shall be adjusted. 2.2.7. At the end of the financial year, when the financial result is known the consideration committee distributes the bonus consideration. The bonus consideration is granted to the individual partner on the basis of a careful evaluation of his/her performance for the year and the committee shall decide the evaluation criteria. 2.2.8. Where the individual partner is not satisfied with the base consideration fixed by the consideration committee for him/her for the coming year, he/she may bring the issue before the management, which shall then decide whether changes of the distribution should be made. The decision made by the management shall then apply to the coming year. The issue shall be brought before the management not later than one week after the partner has received information about his/her base consideration for the coming year. 2.2.9. Where the individual partner is not satisfied with the base consideration fixed by the consideration committee for him/her or with the distribution of the bonus consideration, he/she may bring the issue before the management, which shall then decide whether changes of the distribution should be made. The issue shall be brought before the management not later than one week after the partner has received information about his/her base consideration for the coming year. The decision of the management may be brought before the executive committee not later than 4 weeks after a partner has been notified of it. 2.2.10. When new partners are taken in, the base consideration shall be decided by the non-life division manager, who shall obtain the approval of the consideration committee, prior to the admission of the new partner. 2.2.11. By way of advance profit partners may draw a monthly amount on account corresponding - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- to 1/12 of the budgeted base consideration. Where in the course of the year the budgeted base consideration pool becomes smaller than expected, the monthly amounts on account may be proportionally reduced. The monthly amounts on account shall be paid monthly in advance. The payment of monthly advance profit on account is effected on the condition that the partners place their entire working capacity at the disposal of I/S. 3. OTHER PROVISIONS CONCERNING PROFIT 3.1. Payments of profit received/payments of deficit made according to owner shares shall take place not later than two weeks after the adoption of the financial statements at the meeting of partners in April/May. List of Appendices Schedule A: Defintion of normal salaries and related excl. 70% partner's salary Schedule B: Profit Allocation model, including operating profit - -------------------------------------------------------------------------------- BUSINESS TRANSFER AGREEMENT between Willis Corroon A/S Assurandorgruppen I/S This Agreement is made the 28th day of September 1998 between Willis Corroon A/S (Reg.No. A/S 198.529) Christian IX's Gade 7, 3rd Floor, DK-1111 Copenhagen K (hereafter referred to as the "Vendor") and Assurandorgruppen I/S, Brendstrupgaardsvej 13, DK-8200 Arhus N (hereafter referred to as the "Purchaser"). WHEREAS Willis Corroon Europe B.V. a company incorporated under the laws of the Netherlands and being affiliated with the Vendor has decided to make an investment in Purchaser. WHEREAS Willis Corroon Europe B.V. desires after the investment to concentrate the activities in Denmark of the Willis Corroon Group which has hitherto been carried out by the Vendor in the Purchaser's business. NOW THEREFORE in consideration of the foregoing and the mutual covenants and agreements set forth herein the Vendor agrees to sell and the Purchaser agrees to purchase the business hitherto operated by the Vendor as further defined in this Agreement (the "Business") on the terms and conditions set out below. 1. Transfer Date 1.1 Effective from 28 September 1998 (the "Transfer Date") the Business shall be transferred from the Vendor to the Purchaser. 1.2 From the Transfer Date the Business shall be held for the account and risk of the Purchaser. The Vendor is solely responsible for any actions with regard to the Business made prior to the Transfer Date regardless of whether the effect of such actions are first seen after the Transfer Date. 1.3 The Vendor will receive commission in all instances where invoices are submitted by the Vendor prior to the Transfer Date. For invoices submitted by the Purchaser after the Transfer Date payment will be in the favour of the Purchaser. -2- 2. Assets Transferred and their Valuation 2.1 Equipment and Furniture 2.1.1 The Purchaser shall acquire all equipment, furniture and moveable property of any sort belonging to the Business for DKK 275,000. 2.2 Goodwill 2.2.1 The Purchaser shall acquire the goodwill of the Business for DKK 5,550,000. 3. Contracts 3.1 Service Contract 3.1.1 The Service Contract with Mr Jens Boeskov shall be transferred to the Purchaser. 3.1.2 The Purchaser will permit Mr Jens Boeskov in a reasonable period after the Transfer Date to use part of his time for the purpose of facilitating the transfer of the Vendor's business to the Purchaser including administration of receivables. 3.2 Employees 3.2.1 The employees hitherto employed in the Business, i.e. Jesper Danvad, Gitte Olsen and Kim Skafte Pedersen shall be transferred to the Purchaser pursuant to the Transfer Undertakings' Act (Virksomhedsoverdragelsesloven). 3.2.2 The Vendor and the Purchaser shall inform their own employees of the transfer no later than 28 September 1998 in accordance with Sections 5 and 6 of the Transfer Undertakings' Act. 3.2.3 Remuneration earned by employees but not due for payment before or on the Transfer Date including pay for holidays and weekdays contributions to ATP -3- and AUD, bonuses, profit bonuses, exgratia payments and the value of overtime not yet taken as time off in lieu shall be refunded in the statement of repayments, cf. Clause 5.3. The same shall apply to expenses defrayed by employees transferred which have not yet fallen due for payment. The Purchaser shall assume without indemnity obligations arising from length of service. 3.3. Commercial Contracts 3.3.1 The Purchaser shall assume the Vendor's rights and obligations in relation to all of the Vendor's commercial contracts entered into with insurance companies and clients for the purpose of the Business. The Purchaser shall not assume any other contracts unless provided for elsewhere in this Agreement. 3.3.2 Where the consent of a third party is required before the Purchaser may replace the Vendor in a contract the Purchaser shall be responsible for obtaining such consent. The Vendor shall render assistance when necessary but does not warrant the transferability of any contracts. 3.4 Insurance Policies 3.4.1 The Vendor's insurance policies connected with the Business shall not be assigned to the Purchaser. 4. Liabilities 4.1 The Purchaser shall not assume any of the Vendor's liabilities unless expressly provided for elsewhere in this Agreement. 5. Purchase Price Value Added Tax and Statement of Repayments 5.1 Purchase Price 5.1.1 The purchase price for the assets detailed in 2.0 shall be as follows: -4- equipment and furniture DKK 275,000 goodwill DKK 5,550,000 total purchase price DKK 5,825,000 5.1.2 The purchase price shall be paid on the Transfer Date in cash by wire transfer of same day funds to Willis Corroon Europe B.V.'s account no. 3100 3486 (Sort Code 30-94-55) at Lloyds Bank, 13 Cornhill, Ipswich, England, SWIFT LOYDGB2L. 5.1.3 After the Transfer Date the Purchaser shall maintain separate accounts for the Business until 31 December 1998. If it can be concluded that the sustainable income of the Business on the basis of the continued accounts prepared by the Purchaser does not exceed DKK 3.5m for the year 1998 or does not generate after tax profits after restructuring costs of a minimum of DKK 1m the parties shall enter into negotiations about a possible reduction of the purchase price. 5.2 Danish VAT 5.2.1 The transfer shall not be subject to VAT, cf. the Danish Value Added Tax Act, Section 8(1) as the Purchaser is registered for VAT. 5.3 Statement of Repayments 5.3.1 A usual statement of repayment shall be prepared by the Vendor's accountant no later than 31 October 1998 with the Transfer Date as the cut off date. The statement shall cover all current expenses, deposits, sums paid in advance etc. as well as payments according to 3.2.3 and returned premiums. The statement of repayments shall be prepared in accordance with normal accounting concepts for accruals, and shall be submitted to the Purchaser's accountant for approval. The balance shall be paid in cash with the addition of interest at the rate of 5% p.a. from the Transfer Date until payment is made. 6. Administrative Provisions 6.1 Administration of Receivables -5- 6.1.1 The transfer shall not include receivables due to the Vendor. The Vendor shall undertake collection of the receivables itself. 7. Miscellaneous Provisions 7.1 Confidentiality 7.1.1 Information received by the parties concerning each other in connection with the negotiations for and the implementation of this Agreement shall be deemed to be confidential information which the parties are without limit of time not entitled to use or pass on to third parties unless the information in question is available to the public or can be shown to have been received by one of the parties from a third party who is in lawful possession thereof and who may use the information in this way. A corresponding duty of confidentiality applies to the Vendor in relation to the information the Vendor has concerning the Business transferred. 7.2 Headings 7.2.1 The headings of the sections on this Agreement are for convenience only and shall not constitute a part hereof or affect in any way the meaning or interpretation of this Agreement. 7.3 Severability 7.3.1 If any provisions of this Agreement is invalid, illegal or unenforceable the remainder of this Agreement shall remain in effect and if any provision is inapplicable to one of the parties it shall nevertheless remain applicable to the other party. 7.4 Non-waiver 7.4.1 The waiver expressly or implied by either of the parties hereto of any rights hereunder for any failure to perform or breach by the other party hereto shall not constitute or be deemed to be a waiver of any other right hereunder for any -6- other failure to perform or breach hereof by the other party whether a similar or a dissimilar nature thereto. 7.5 Modification of Agreement 7.5.1 No oral explanation or oral information by either of the parties hereto shall alter the meaning or interpretation of this Agreement. No amendment, change or addition hereto shall be effective or binding on either of the parties hereto unless drawn up in writing and executed by the parties hereto. If any part of this Agreement is held unlawful, invalid or is declared void for any reason whatsoever the remaining provisions of this Agreement shall nevertheless remain in full force and effect. 7.6 Expenses 7.6.1 Expenses incurred in connection with stamping this Agreement shall be borne by the Purchaser. 7.6.2 Each party shall bear the fees and other expenses payable to its own advisors incurred in connection with entering into this Agreement. 7.7 Disputes 7.7.1 This Agreement shall be governed and construed in accordance with the laws of the Kingdom of Denmark. 7.7.2 Any dispute between the parties arising out of or in connection with this Agreement shall, provided the parties can not agree on a settlement through negotiation, be determined by arbitration with final, binding and enforceable effect in agreement with the following rules: 7.7.3 In the event of a dispute, either party shall be entitled to request that an arbitration tribunal be set up. 7.7.4 The party seeking resolution of a dispute by arbitration shall appoint an arbitrator -7- and send a letter by registered mail to the other party (the "Respondent") requesting the Respondent to appoint its arbitrator within 14 days. The letter shall also contain a short statement of the question or questions to be determined by the arbitration. Where the Respondent does not appoint an arbitrator within the time-limit mentioned above, that arbitrator shall instead be appointed by the Danish Arbitration Institute. 7.7.5 The two arbitrators appointed for the parties shall jointly appoint an umpire. Failing agreement on the choice of an umpire, the appointed arbitrators shall jointly approach the Danish Arbitration Institute and request that it, following prior discussion with the parties, appoint an umpire to act as chairman of the arbitration tribunal. 7.7.6 The arbitration tribunal shall determine the matter according to applicable law and shall lay down the rules for its hearing of the matter in agreement with the general principles of the Danish Administration of Justice Act (Retsplejeloven). 7.7.7 The arbitration tribunal shall also decide how the costs of the arbitration are to be borne. The arbitration tribunal shall set a date for implementation of the award, which date shall normally be no later than 14 days after the award has been made. 7.7.8 The venue for the arbitration shall be Copenhagen, and the language of the proceedings shall be English. This Agreement has been executed in two original copies and one copy has been given to each of the parties. Copenhagen, 28/9 1998 Copenhagen, 28/9 1998 - ----------------------- ----------------------- -8- Willis Corroon A/S Assurandorgruppen I/S -9- Exhibit 1 On 28 September 1998 a meeting of the Board of Directors of Assurandorgruppen A/S was held at the offices of Kromann & Munter, 14 Radhuspladsen, DK-1550 Copenhagen V. All board members were present. The only item on the agenda was a proposal to increase the share capital of the company. At the extraordinary general meeting of the company held on 18 June 1998 the Board of Directors were authorized to increase the share capital of the company by an amount not exceeding DKK 5,000,000, cf. clause 3.5 of the Articles of Association. The Board of Directors unanimously decided to exercise this authority by issuing nominal DKK 4,285,700 shares in the company at a price of DKK 12.60 per DKK 1 share to Willis Corroon Europe B.V. in accordance with the attached draft subscription list. The Board of Directors further approved the attached report according to section 29, subsection 2 of the Companies Act. As a consequence of the resolution passed the Board of Directors decided to abolish clause 3.5 of the Articles of Association of the Company. Copenhagen, on 28 September 1998 In the Board of Directors: Niels Simonsen Bent Roland Jorgen Kjaerulff - ------------------- Michael Hedeby Report from the Board of Directors in accordance with section 29, subsection 2 of the Companies Act In connection with the proposal to increase the capital of the company by DKK 4,285,700 through cash payment the Board of Directors states that since the end of the last fiscal period and the submission of the annual report no event of material importance to the position of the company including the equity capital of the company have occurred. Copenhagen, on 18 September 1998 In the Board of Directors: Niels Simonsen Bent Roland Jorgen Kjaerulff - ------------------- Michael Hedeby As the accountant for Assurandorgruppen A/S the undersigned hereby states under section 29, subsection 2 of the Companies Act that the report of the Board of Directors does not give any grounds for comments or additions thereto concerning the financial position of the company. Arhus, on 18 September 1998 ---------------------------- KPMG C. Jespersen State Authorized Accountants Subscription list In accordance with the above transcript of the minute book of the Board of Directors and subject to the terms and conditions of the attached Stock Purchase Agreement of today's date we, the undersigned, hereby subscribe to the following amount: Name: Amount: Date and signature: Willis Corroon Europe B.V. DKK 4,285,700 28/9-98 Sarah Turvill according to proxy EX-2.3 4 EX. 2.3 - -------------------------------------------------------------------------------- CONFORMED COPY Dated 4th August 1997 WILLIS CORROON LIMITED and WILLIS NATIONAL HOLDINGS LIMITED ----------------------------------- WIFA Share Sale Agreement ----------------------------------- Slaughter and May, 35 Basinghall Street, London EC2V 5DB Ref: TNC/JCXT - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CONTENTS Page 1. Interpretation 1 2. Sale and Purchase 3 3. Consideration 3 4. Completion 3 5. Seller's Warranties and Covenants 3 6. Purchaser's Remedies and Seller's Limitations on Liability 3 7. Indemnities 3 8. Provision of Business Information 3 9. Pensions and seconded employees 3 10. Access 3 11. Effect of Completion 3 12. Remedies and Waivers 3 13. Assignment 3 14. Further Assurance 3 15. Entire Agreement 3 16. Notices 3 17. Announcements 3 18. Confidentiality 3 19. Costs and Expenses 3 20. Counterparts 3 21. Time of Essence 3 22. Choice of Governing Law 3 Schedule 1 Completion Arrangements 3 Schedule 2 Warranties 3 Schedule 3 Seller's Limitations on Liability 3 Schedule 4 Tax Covenant 3 Schedule 5 Basic Information about the Company 3 Schedule 6 Intellectual Property 3 Schedule 7 Pensions 3 - -------------------------------------------------------------------------------- 2 SHARE SALE AGREEMENT THIS AGREEMENT is made 4th August 1997 BETWEEN:- 1. Willis Corroon Limited of Ten Trinity Square, London EC3P 3AX (registered in England No. 1646647) (the "Seller") AND 2. Willis National Holdings Limited of Ten Trinity Square, London EC3P 3AX (registered in England No. 3393377) (the "Purchaser"). WHEREAS: (A) Particulars of the Company are set out in Schedule 5 (Basic Information about the Company). (B) The Seller has agreed to sell and the Purchaser has agreed to purchase the Shares in each case on the terms and subject to the conditions of this Agreement. (C) The Purchaser has also agreed to purchase the whole of the issued share capital of the Other IFA Company on the terms and conditions of the Other IFA Company Agreement. (D) The Purchaser is intending to reorganise the structure of the Purchaser's Group following Completion. This will involve the disposal by the Company and the Other IFA Company of the whole or parts of their respective undertaking or assets by intra-group disposal. (E) At the date of this Agreement (and prior to Completion), the Purchaser has an authorised share capital of (pound)1,000 divided into 1,000 shares of (pound)1 each and two of these shares have been issued. NOW IT IS HEREBY AGREED as follows: 1. Interpretation 1.1 In this Agreement and the Schedules to it: 3 "Accounts" means the audited financial statements of the Company prepared in accordance with the Companies Acts, for the accounting reference period ended on the Accounts Date which financial statements comprise a balance sheet, profit and loss account, notes, auditors' and directors' reports, a copy of which has for the purpose of identification only been signed by the Seller and delivered to the Purchaser; "Accounts Date" means 31 December, 1996; "Books and Records" has its common law meaning and includes, without limitation, all notices, correspondence, orders, inquiries, drawings, plans, books of account and other documents and all computer disks or tapes or other machine legible programs or other records; "Business Day" means a day (other than a Saturday or a Sunday) on which banks are open for business in London; "Business Information" means all information, know-how and records (whether or not confidential and in whatever form held) including (without limitation) all data, manuals and instructions and all customer lists, sales information, business plans and forecasts, and all technical or other expertise and all computer software and all accounting and tax records, correspondence, orders and inquiries; "CGTA 1979" means the Capital Gains Tax Act 1979; "Companies Acts" means the Companies Act 1985, the Companies Consolidation (Consequential Provisions) Act 1985, the Companies Act 1989 and Part V of the Criminal Justice Act 1993; "Company" means Willis Corroon Financial Planning Limited, basic information concerning which is set out in Schedule 5 (Basic Information about the Company); "Completion" means completion of the sale and purchase of the Shares under this Agreement; "Completion Date" means the date of this Agreement; 4 "Confidential Business means Business Information which is confidential Information" or not generally known; "Consideration Shares" means 509 ordinary shares of (pound)1 each in the share capital of the Purchaser, credited as fully paid; "Disclosure Letter" means the letter dated with the date hereof written by the Seller to the Purchaser for the purposes of clause 5 (Sellers Warranties and Covenants) and delivered to the Purchaser before the execution of this Agreement; "Group" means the Company and all the Subsidiaries; "ICTA 1988" means the Income and Corporation Taxes Act 1988; "Intellectual Property" means trade marks and service marks, rights in designs, trade or business names, copyrights and topography rights (whether or not any of these is registered and including applications for registration of any such thing) and rights under licences and consents in relation to any such thing and all rights or forms of protection of a similar nature or having equivalent or similar effect to any of these which may subsist anywhere in the world; "Non-Tax Warranties" means the Warranties other than the Tax Warranties; "Other IFA Company" means Abbey National Independent Financial Advisers Limited (registered in England No. 2055101); "Other IFA Company means the share sale agreement dated with the Agreement" date hereof between Abbey National Independent Consulting Group Limited (1) and the Purchaser (2) in substantially the same terms as this Agreement; "Representative Member" means the representative member referred to in the definition of VAT Group; "Required for the has the meaning given in clause 8 (Provision of Business" Business Information); "RTPA 1976" means the Restrictive Trade Practices Act 1976; 5 "Seller's Group" means Willis Corroon Group plc and the subsidiary undertakings of that company other than the Company; "Shares" means all the issued shares in the capital of the Company (comprising 4,200,000 shares of (pound)1 each); "Share Purchase has the meaning given to it in clause 15 (Entire Documents" Agreement); "Subsidiary" means at any relevant time any then subsidiary undertaking of the Company; "Systems" means all computer hardware, software, networks or other information technology owned or used by the Company; "Tax" or "Taxation" means and includes all forms of taxation and statutory, governmental, supra-governmental, state, principal, local governmental or municipal impositions, duties, contributions and levies, in each case whether of the United Kingdom or elsewhere and whenever imposed, and all penalties, charges, costs and interest relating thereto and without limitation all employment taxes and any deductions or withholdings of any sort; "Tax Covenant" means the tax covenant referred to in Schedule 1 (Completion Arrangements) and Schedule 4 (Tax Covenant); "Tax Warranties" means Warranties numbered 28 to 45 in Schedule 2 "TCGA 1992" means the Taxation of Chargeable Gains Act 1992; "VATA 1994" means the Value Added Tax Act 1994; "VAT Group" means the group of companies of which the representative member for the purposes of section 43 VATA 1994 was Willis Faber & Dumas Limited (Registration number 334 1289 70); "Warranties" means the warranties set out in Schedule 2 (Warranties) given by the Seller and any other or warranties made by or on behalf of the Seller in this Agreement and "Warranty" shall be construed accordingly; and 6 "Working Hours" means 9.30 a.m. to 5.30 p.m. on a Business Day. 1.2 In this Agreement, unless otherwise specified: (A) references to clauses, sub-clauses, paragraphs, sub-paragraphs and Schedules are to clauses, sub-clauses, paragraphs, sub-paragraphs of, and Schedules to, this Agreement; (B) a reference to any statute or statutory provision shall be construed as a reference to the same as it may have been, or may from time to time be, amended, modified or re-enacted; (C) references to a "company" shall be construed so as to include any company, corporation or other body corporate, wherever and however incorporated or established; (D) references to a "person" shall be construed so as to include any individual, firm, company, government, state or agency of a state or any joint venture, association or partnership (whether or not having separate legal personality); (E) references to "indemnify" and "indemnifying" any person against any circumstance include indemnifying and keeping him harmless from all actions, claims and proceedings from time to time made against that person and all loss or damage and all payments, costs or expenses made or incurred by that person as a consequence of or which would not have arisen but for that circumstance; (F) the expressions "accounting reference date", "accounting reference period", "allotment", "body corporate", "current assets", "debentures", "holding company", "paid up", "profit and loss account", "subsidiary", "subsidiary undertaking" and "wholly-owned subsidiary" shall have the meaning given in the Companies Acts; (G) a person shall be deemed to be connected with another if that person is connected with another within the meaning of section 839 ICTA 1988; (H) references to writing shall include any modes of reproducing words in a legible and non-transitory form; (I) headings to clauses and Schedules are for convenience only and do not affect the interpretation of this Agreement; 7 (J) 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 any reference to this Agreement shall include the Schedules; (K) references to the knowledge, information, belief or awareness of any person shall be treated as including any knowledge, information, belief or awareness which the person would have if the person made all usual and reasonable enquiries; and (L) (i) the rule known as the ejusdem generis rule shall not apply and accordingly general words introduced by the word "other" shall not be given a restrictive meaning by reason of the fact that they are preceded by words indicating a particular class of acts, matters or things; and (ii) general words shall not be given a restrictive meaning by reason of the fact that they are followed by particular examples intended to be embraced by the general words. 2. Sale and Purchase 2.1 The Seller shall sell or procure the sale of, and the Purchaser shall purchase, the Shares with all rights attached or accruing to them at the date of this Agreement. 2.2 The Seller has the right to transfer legal and beneficial title to the Shares. 2.3 The Shares shall be free from all charges and encumbrances and from all other rights exercisable by or claims by third parties. 2.4 The Purchaser shall be entitled to exercise all rights attached or accruing to the Shares including, without limitation, the right to receive all dividends, distributions or any return of capital declared, paid or made by the Company on or after the date of this Agreement. 2.5 The Seller waives all rights of pre-emption over any of the Shares conferred upon him by the articles of association of the Company or in any other way and undertakes to take all steps necessary to ensure that any rights of pre-emption over any of the Shares are waived. 2.6 For the avoidance of doubt, Part 1 Law of Property (Miscellaneous Provisions) Act 1994 8 shall not apply for the purposes of this clause. 3. Consideration The total consideration for the sale of the Shares shall be the allotment to the Seller of the Consideration Shares in accordance with clause 4 (Completion). 4. Completion 4.1 Completion shall take place on the Completion Date at 35 Basinghall Street, London EC2V 5DB. 4.2 At Completion, the Seller shall do those things listed in Schedule 1 (Completion Arrangements). 4.3 The Purchaser shall not be obliged to complete this Agreement unless the Seller complies fully with the requirements of Schedule 1 (Completion Arrangements) so far as they relate to the Seller. 4.4 If the obligations of the Seller under Schedule 1 (Completion Arrangements) are not complied with on the Completion Date, the Purchaser may: (A) defer Completion (so that the provisions of this clause 4 shall apply to Completion as so deferred); or (B) proceed to Completion as far as practicable (without limiting its rights under this Agreement); or (C) treat this Agreement as terminated for breach of a condition. 4.5 Delivery of a share certificate in respect of the Consideration Shares in accordance with Schedule 1 paragraph 6 (Completion Arrangements) shall constitute payment of the consideration for the Shares and shall discharge the obligations of the Purchaser under clause 2 (Sale and Purchase). 5. Seller's Warranties and Covenants 5.1 The Seller warrants to the Purchaser that each of the Warranties is accurate in all material respects and not misleading in any material respect at the date of this Agreement and that if for any reason there is any interval of time between the date of this Agreement and Completion, the Warranties will be repeated on the Completion Date. 5.2 If the Warranties are repeated at Completion as referred to in clause 5.1, the Seller shall use its best endeavours to procure that no act shall be performed or omission allowed either 9 by it or by the Company in such interval which would result in any of the Warranties being materially breached or misleading in any material respect at any time up to and including the time of Completion. 5.3 The Seller accepts that the Purchaser is entering into this Agreement in reliance upon each of the Warranties. 5.4 The Seller undertakes to disclose in writing to the Purchaser anything which is or may constitute a breach of or be inconsistent with any of the Warranties immediately it comes to its notice both before and after Completion. 5.5 The Seller undertakes (if any claim is made against it in connection with the sale of the Shares to the Purchaser) not to make any claim against the Company or any director or employee of the Company or any other employees of the Seller's Group who are to be seconded to or employed by the Company on whom any of them may have relied before agreeing to any terms of this Agreement or of the Tax Covenant or authorising any statement in the Disclosure Letter. 5.6 Each of the Warranties shall be construed as a separate and independent warranty and (except where expressly provided to the contrary) shall not be limited or restricted by reference to or inference from the terms of any other Warranty or any other term of this Agreement. 5.7 If in respect of or in connection with any breach of any of the Warranties or any facts or matters warranted not being true and being misleading any amount payable to the Purchaser by the Seller is subject to Taxation, such payable amounts shall be paid to the Purchaser by the Seller so as to ensure that the net amount received by the Purchaser is equal to the full amount payable to the Purchaser under this Agreement provided that if the benefit of this Agreement has been assigned by the Purchaser, the Seller shall not be obliged to pay any amount in excess of that which would have been payable had the benefit of this Agreement not been so assigned. 5.8 The Seller undertakes to indemnify the Purchaser against all costs (including legal costs on an indemnity basis as defined in Order 62 of the Rules of the Supreme Court), expenses or other liabilities which the Purchaser may reasonably incur either before or after the commencement of any action in connection with: (A) the settlement of any claim that any of the Warranties are untrue or misleading or have been breached; (B) any legal proceedings in which the Purchaser claims that any of the Warranties 10 are untrue or misleading or have been breached and in which judgment is given for the Purchaser; or (C) the enforcement of any such settlement or judgment. 6. Purchaser's Remedies and Seller's Limitations on Liability 6.1 Subject to sub-clause 6.2 and to the limitations set out in Schedule 3 (Sellers Limitations on Liability), the Purchaser shall be entitled to claim both before and after Completion that any of the Warranties has or had been breached or is or was misleading and, without limitation, to claim under any covenant even if the Purchaser could have discovered on or before Completion that the Warranty in question had been breached or was misleading. Completion shall not in any way constitute a waiver of any of the Purchaser's rights. 6.2 The Purchaser shall not be entitled to claim that any fact causes any of the Warranties to be breached or renders any misleading if it has been fairly disclosed to the Purchaser in the Disclosure Letter in the absence of any fraud or dishonesty on the part of the Seller or their agents or advisers. 6.3 No liability shall attach to the Seller in respect of claims under the Warranties or the Tax Covenant if and to the extent that the limitations referred to in clause 6.1 and set out in Schedule 3 (Sellers Limitations on Liability) apply, in the absence of any fraud or dishonesty on the part of any of the Seller or their agents or advisers. 6.4 If, following Completion, the Purchaser becomes aware (whether it does so by reason of any disclosure made pursuant to clause 5 (Sellers Warranties and Covenants) or not) that there has been any material breach of the Warranties or any other term of this Agreement, the Purchaser shall not be entitled to treat this Agreement as terminated but shall be entitled to claim damages or exercise any other right, power or remedy under this Agreement or as otherwise provided by law. 6.5 If the Seller defaults in the payment when due of any sum payable under this Agreement (whether determined by agreement or pursuant to an order of a court or otherwise), the liability of the Seller shall be increased to include interest on such sum from the date when such payment is due until the date of actual payment (as well after as before judgment) at a rate per annum of one per cent. above the base rate from time to time of Lloyds Bank PLC. Such interest shall accrue from day to day and shall be compounded annually. 6.6 The Seller undertakes to indemnify the Purchaser against all costs, expenses or other liabilities which the Purchaser may reasonably incur either before or after the commencement of any action in connection with the Warranties in accordance with 11 clause 55.8 (Sellers Warranties and Covenants). 6.7 Except as stated expressly in this clause, this clause and Schedule 3 (Sellers Limitations on Liability) shall not limit any other clause of this Agreement. 7. Indemnities 7.1 The Seller agrees to indemnify and keep indemnified the Purchaser, for itself and as trustee for the Company from and against all claims, losses, costs or other liabilities which the Purchaser the Company may suffer or incur by reason of: (A) any legal obligation to any affected person; or (B) any requirement of a regulatory body (whether or not having the force of law) in relation to an affected person or to that regulatory body. 7.2 For the purposes of this clause, "affected person" means any person who directly or indirectly (whether by family relationship or otherwise) is entitled to receive any form of compensation ("Compensation") from the Company as a result of the Company (or its employees or agents) having advised any person prior to Completion either: (A) to transfer benefits accrued in and/or to direct future contributions to an occupational pension scheme (as defined in section 1 of the Pensions Schemes Act 1993) (an "Occupational Pension Scheme") either to a retirement annuity or to a personal pension scheme, approved under Chapter III and IV respectively of Part XIV of the Taxes Act 1988; or (B) to cease to accrue, or never to accrue, benefits in an Occupational Pension Scheme and instead to accrue benefits pursuant to a retirement annuity or a personal pension scheme so approved. 7.3 The liabilities to which this clause applies shall include: (A) any Compensation to which any affected person is entitled; (B) all costs and expenses of, and arising out of, any investigation into the affairs of those persons who may be affected persons, and the reinstatement of the accrued benefits of any affected person into an Occupational Pension Scheme, or any other rectification made to the accrued benefits of any affected person, including, without limitation, costs and expenses incurred by any member of the Purchaser's Group; 12 (C) any administrative costs charged in respect of affected persons by any Occupational Pension Scheme; (D) all costs and expenses of, and arising out of, any independent assessment of, or enquiry into, the circumstances of any affected person which any regulatory body may require to be carried out; and (E) any fines or penalties or other amounts levied by any regulatory body which relate in any way to any one or more affected persons or to affected persons as a class. 7.4 If at any time after Completion any allowance, provision or reserve made by the Company in the Accounts or otherwise taken account of or reflected therein in respect of any claims, losses, costs or other liabilities that would be recoverable by the Company from the Seller pursuant to this clause is found to be in excess of the matter for which such allowance, provision or reserve was made, the amount of such excess shall be repaid to the Seller. 8. Provision of Business Information 8.1 During the period of six years after Completion and without prejudice to any of the Warranties: (A) if any Business Information Required for the Business of the Company is not in the possession of the Purchaser or readily discoverable by the Purchaser but is in the possession or under the control of or available to the Seller, the Seller shall, so far as it is legally able, procure that such Business Information is provided to the Purchaser promptly on request; and (B) if any Books or Records of any Seller contain Business Information which should be provided to the Purchaser, the Seller shall procure that copies of such Books or Records are given to the Purchaser promptly on request. 8.2 For the purposes of this clause and this Agreement generally, "Required for the Business" means any Intellectual Property or Business Information of the Company which is or has in the last six years been used in the business of the Company or will be needed by the Company to carry on the business of the Company in the same manner as it is presently carried on or to fulfil any of the present contracts or projects of the Company in relation to the business of the Company or to comply with any law applicable in relation to the business of the Company or if it is vested in any of the Seller and its retention by the Seller after Completion of this Agreement would be damaging or detrimental to the business of the Company. 13 9. Pensions and seconded employees (A) Each of the parties shall comply with the requirements pertaining to that party set out in Schedule 7 (Pensions). (B) The Seller shall indemnify the Purchaser for itself and each member of the IFA Group in respect of all employment-related claims, losses, liabilities, costs and expenses suffered or incurred by the Purchaser or any such member resulting from any claim for unfair, wrongful or constructive dismissal or redundancy by any employee of the Seller's Group who at the date of this Agreement is seconded to the Company not accepting the transfer of his employment to the Company after execution of this Agreement. For the avoidance of doubt, this indemnity shall not extend to redundancies or other dismissals effected by the IFA Group as a consequence of any rationalisation of the Group. 10. Access As from the date of this Agreement, the Purchaser and any persons authorised by it, upon reasonable notice will be given full access to the premises and all the Books and Records and title deeds of the Company and the directors and employees of the Company and the Company will be instructed to give promptly all information and explanations to the Purchaser or any such persons as they may request. 11. Effect of Completion Any provision of this Agreement and any other documents referred to in it which is capable of being performed after but which has not been performed at or before Completion and all Warranties and covenants and other undertakings contained in or entered into pursuant to this Agreement shall remain in full force and effect notwithstanding Completion. 12. Remedies and Waivers 12.1 No delay or omission on the part of any party to this Agreement in exercising any right, power or remedy provided by law or under this Agreement or any other documents referred to in it shall: (A) impair such right, power or remedy; or (B) operate as a waiver thereof. 14 12.2 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. 12.3 The rights, powers and remedies provided in this Agreement are cumulative and not exclusive of any rights, powers and remedies provided by law. 13. Assignment 13.1 The rights or benefits of or under this Agreement and any agreements referred to in clause 15 (Entire Agreement), including without limitation the Warranties, may be assigned (together with any cause of action arising in connection with any of them) by the Purchaser to a wholly-owned subsidiary of the Purchaser. 13.2 Obligations under this Agreement shall not be assignable. 14. Further Assurance The Seller shall from time to time at its own cost, on being required to do so by the Purchaser, now or at any time in the future, do or procure the doing of all such acts and/or execute or procure the execution of all such documents in a form satisfactory to the Purchaser as the Purchaser may reasonably consider necessary for giving full effect to this Agreement and securing to the Purchaser the full benefit of the rights, powers and remedies conferred upon the Purchaser in this Agreement. 15. Entire Agreement 15.1 For the purpose of this clause, "Pre-contractual Statement" means a draft, agreement, undertaking, representation, warranty, promise, assurance or arrangement of any nature whatsoever, whether or not in writing, relating to the Share Purchase Documents or any of them (as defined in sub-clause 15.2) made or given by a party to any of the Share Purchase Documents or any other person at any time prior to execution of the Share Purchase Documents. 15.2 This Agreement, the Tax Covenant, the Disclosure Letter referred to in clause 6 (Purchasers Remedies and Sellers Limitations on Liability) and any other documents referred to in this Agreement (the "Share Purchase Documents") constitute the whole and only agreement between the parties relating to the sale and purchase of the Shares. 15.3 Except to the extent repeated in any of the Share Purchase Documents, the Share Purchase Documents supersede and extinguish any prior Pre-contractual Statement 15 relating thereto. 15.4 Each party acknowledges that in entering into the Share Purchase Documents or any of them on the terms set out therein, it is not relying upon any Pre-contractual Statement which is not expressly set out therein. 15.5 None of the parties shall have any right of action against any other party to this Agreement arising out of or in connection with any Pre-contractual Statement (except in the case of fraud). 15.6 This Agreement may only be varied in writing signed by each of the parties. 16. Notices 16.1 Any notice or other communication given or made under or in connection with the matters contemplated by this Agreement shall be in writing (other than writing on the screen of a visual display unit or other similar device which shall not be treated as writing for the purposes of this clause). 16.2 Any such notice or other communication shall be addressed as provided in sub-clause 16.3 and, if so addressed, shall be deemed to have been duly given or made as follows: (A) if sent by personal delivery, upon delivery at the address of the relevant party; (B) if sent by first class post, two Business Days after the date of posting; and (C) if sent by facsimile, when despatched; PROVIDED that if, in accordance with the above provisions, any such notice or other communication would otherwise be deemed to be given or made outside Working Hours, such notice or other communication shall be deemed to be given or made at the start of Working Hours on the next Business Day. 16.3 The relevant addressee, address, telex number and facsimile number of each party for the purposes of this Agreement, subject to sub-clause 16.4, are: Name of party Address Facsimile No. ------------- ------- ------------- 16 the Seller Ten Trinity Square F.A.O. Tracy Warren London EC3P 3AX 0171 481 7003 Company Secretary the Purchaser Ten Trinity Square F.A.O. Tracy Warren London EC3P 3AX 0171 481 7003 Company Secretary 16.4 A party may notify the other party to this Agreement of a change to its name, relevant addressee, address or facsimile number for the purposes of sub-clause 16.3 PROVIDED that such notification shall only be effective on: (A) the date specified in the notification as the date on which the change is to take place; or (B) if no date is specified or the date specified is less than five clear Business Days after the date on which notice is given, the date falling five clear Business Days after notice of any such change has been given. 17. Announcements 17.1 Subject to clause 17.2, no announcement concerning the sale of the Shares or any ancillary matter shall be made by either party without the prior written approval of the other, such approval not to be unreasonably withheld or delayed. 17.2 Either party may make an announcement concerning the sale of the Shares or any ancillary matter if required by: (A) the law of any relevant jurisdiction; or (B) any securities exchange or regulatory or governmental body to which either party is subject, wherever situated, including (without limitation) the London Stock Exchange, whether or not the requirement has the force of law, in which case the party concerned shall take all such steps as may be reasonable and practicable in the circumstances to agree the contents of such announcement with the party before making such announcement. 17.3 The restrictions contained in this clause shall continue to apply after Completion without limit in time. 17 18. Confidentiality 18.1 Subject to clause 18.2, each party shall treat as strictly confidential all information received or obtained as a result of entering into or performing this Agreement which relates to: (A) the provisions of this Agreement; (B) the negotiations relating to this Agreement; (C) the subject matter of this Agreement; or (D) the other party. 18.2 Either party may disclose information which would otherwise be confidential if and to the extent: (A) required by the law of any relevant jurisdiction; (B) required by any securities exchange or regulatory or governmental body or taxation authority to which either party is subject wherever situated, including (without limitation) the London Stock Exchange, whether or not the requirement for information has the force of law; (C) required to vest the full benefit of this Agreement in either party; (D) disclosed to the professional advisers, auditors and bankers of each party; (E) the information has come into the public domain through no fault of that party; or (F) the other party has given prior written approval to the disclosure, such approval not to be unreasonably withheld or delayed, PROVIDED that any such information disclosed pursuant to paragraph ((A)) or ((B)) shall be disclosed only after consultation with the other party. 18.3 The restrictions contained in this clause shall continue to apply after Completion of the sale and purchase of the Shares under this Agreement without limit in time. 19. Costs and Expenses 19.1 Except as otherwise stated in any other provision of this Agreement, each party shall pay 18 its own costs and expenses in relation to the negotiations leading up to the sale of the Shares and to the preparation, execution and carrying into effect of this Agreement and all other documents referred to in it and the Seller confirms that no expense of whatever nature relating to the sale of the Shares has been or is to be borne by the Company. 20. Counterparts 20.1 This Agreement may be executed in any number of counterparts, and by the parties on separate counterparts, but shall not be effective until each party has executed at least one counterpart. 20.2 Each counterpart shall constitute an original of this Agreement, but all the counterparts shall together constitute but one and the same instrument. 21. Time of Essence Except as otherwise expressly provided, time is of the essence of this Agreement. 22. Choice of Governing Law This Agreement shall be governed by and construed in accordance with English law. Schedule 1 Completion Arrangements At Completion: 1. the Seller shall deliver to the Purchaser: (A) duly executed transfers in respect of the Shares in favour of the Purchaser and share certificates for the Shares in the name of the relevant transferors and any power of attorney under which any transfer is executed on behalf of any Seller or nominee; (B) such waivers or consents as the Purchaser may require to enable the Purchaser or its nominees to be registered as holders of the Shares; and (C) powers of attorney in agreed terms; 2. the Seller shall execute and deliver to the Purchaser a Tax Covenant in the form referred to in Schedule 4 (Tax Covenant), the Services Agreement and the IP Licence Agreement; 3. the Seller shall deliver to the Purchaser such of the following as the Purchaser may require: (A) the statutory books (which shall be written up to but not including the Completion Date), the certificate of incorporation (and any certificate of incorporation on change of name) and common seal (if any) of the Company; (B) a copy of the minutes of a duly held meeting of the directors of the Seller authorising the execution by the Seller of this Agreement and the Tax Covenant (such copy minutes being certified as correct by the secretary of the Seller). 4. the Seller shall procure the present directors of the Company (other than Robert Guthrie, Allan Daffern, Susan Mortley, Roy Matthews, Sarah Fairclough, Richard Pearson, Michael Bigham, Clive Berry and David Smith) to resign their offices as such and to relinquish any rights which they may have under any contract of employment with the Company or under any statutory provision including any right to damages for wrongful dismissal, redundancy payment or compensation for loss of office or unfair dismissal, such resignations to be 20 tendered at the board meetings referred to in paragraph 5) or as soon as practicable thereafter; 5. the Seller shall procure board meetings of the Company to be held at which: (A) it shall be resolved that each of the transfers relating to the Shares shall be approved for registration and (subject only to the transfer being duly stamped) each transferee registered as the holder of the Shares concerned in the register of members; (B) the resignations of the directors referred to in paragraph 4 above shall be tendered and accepted so as to take effect at the close of the meeting and each of the persons tendering his resignation shall deliver to the Company an acknowledgement executed as a deed that he has no claim against the Company for breach of contract, compensation for loss of office, redundancy or unfair dismissal or on any other account whatsoever and that no agreement or arrangement is outstanding under which the Company has or could have any obligation to him, save that in the case of any such directors who have not at the time of the meeting executed such acknowledgement, the resignations should be tendered and accepted and the acknowledgements executed as deeds as soon as practicable thereafter; The Seller shall procure that minutes of the duly held board meeting, certified as correct by the secretary of the Company, and the resignations and acknowledgements referred to, are delivered to the Purchaser on completion or as soon as practicable thereafter. 6. the Purchaser shall: (A) deliver to the Seller a share certificate in respect of the Consideration Shares; and (B) deliver to the Seller a copy, certified as correct by the secretary of the Purchaser, of minutes of a duly held board meeting allotting the Consideration Shares to the Seller. Schedule 2 Warranties 1. Ownership of the Shares The Seller is the sole beneficial owner of the Shares. 2. Group Arrangements and Interests 2.1 No indebtedness (actual or contingent) and no contract or arrangement is outstanding between the Company and the Seller or any member of the Seller's Group or any person a director of or connected with any Seller or with the such member. 2.2 No member of the Seller's Group is engaged in any business which competes with the business carried on at the date of this Agreement by the Company or the other IFA Company. 3. Group Structure, etc. 3.1 The Shares comprise the whole of the issued and allotted share capital of the Company and all of them are fully paid up. 3.2 There is no agreement or commitment outstanding which calls for the allotment, issue or transfer of, or accords to any person the right to call for the allotment or issue of, any shares (including the Shares) or debentures in or securities of the Company. 3.3 The Company has no Subsidiaries at the date of this Agreement nor any interest in the share capital of any other body corporate or undertaking. 3.4 The Company does not act or carry on business in partnership with any other person nor is it a member of any corporate or unincorporated body, undertaking or association. 3.5 The Company does not have any branch, agency, place of business or permanent establishment outside the United Kingdom. 4. Options, Mortgages and Other Encumbrances 4.1 There is no option, right to acquire, mortgage, charge, pledge, lien or other form of security or encumbrance or equity on, over or affecting the Shares or any of them and there is no agreement or commitment to give or create any and no claim has been made by any person to be entitled to any. 4.2 No option, right to acquire, mortgage, charge, pledge, lien (other than a lien arising by 22 operation of law in the ordinary course of trading) or other form of security or encumbrance or equity on, over or affecting the whole or any part of the undertaking or assets of the Company) is outstanding and there is no agreement or commitment to give or create any and no claim has been made by any person to be entitled to any. 5. Accuracy and Adequacy of Information 5.1 The information given in Schedule 5 is true and accurate in all respects and is not misleading because of any omission or ambiguity or for any other reason. 5.2 The statutory books (including all registers and minute books) of the Company have been properly kept and contain an accurate and complete record of the matters which should be dealt with in those books and no notice or allegation that any of them is incorrect or should be rectified has been received. 6. Accounts 6.1 The Accounts: (A) were prepared in accordance with accountancy practices generally accepted in the United Kingdom at the time they were audited and commonly adopted by companies carrying on businesses similar to those carried on by the Company; (B) are complete and accurate in all material respects and in particular include full provision for bad and doubtful debts and for Taxation on profits (whether of an income or capital nature) relating to any period ending on or before the Accounts Date; (C) show a true and fair view of the state of affairs of the Company at the Accounts Date; and (D) except as the Accounts expressly disclose, are not affected by any unusual or non-recurring items. 6.2 At the Accounts Date, the Company had no liability (whether actual, contingent, unquantified or disputed) or outstanding capital commitment which is not adequately disclosed or provided for in the Accounts. 6.3 If a balance sheet of the Company (if relevant, on a consolidated basis) were drawn up as at the date of this Agreement in the manner in which and on the basis upon which the Accounts were prepared, the net asset position of the Company disclosed thereby would 23 be not less than (pound)4.28 million. 6.4 The accounting records of the Company have been kept on a proper and consistent basis (no change in the methods or bases of valuation or accountancy treatment having been made for at least six years prior to the Accounts Date or since), are up-to-date and contain complete and accurate details of the business activities of the Company and of all matters required by the Companies Acts to be entered in them. 7. Events Since the Accounts Date 7.1 Since the Accounts Date: (A) the business of the Company has been carried on in the ordinary and usual course and in the same manner (including nature and scope) as in the past and no unusual or onerous contract differing from the routine contracts necessitated by the nature of its trade has been entered into by the Company; (B) no asset of a value in excess of (pound)10,000 has been acquired or disposed of on capital account or has been agreed to be acquired or disposed of and no contract involving expenditure by it on capital account has been entered into by the Company; (C) no debts or other receivables and no material plant, machinery or equipment of the Company have been factored or sold or agreed to be sold; (D) no resolution of the Company in general meeting has been passed (other than resolutions relating to the routine business of annual general meetings); (E) no change in the accounting reference period of the Company has been made; and (F) there has been no material adverse change in the financial position or profits of the Company. 7.2 No indication has been received that any debt now owing to the Company is bad or doubtful save to the extent that provision has been made in the Company's books therefor. 8. Work in Progress 8.1 All work in progress represented in the Accounts has been valued on a basis excluding 24 profit and including adequate provision for losses which are or could reasonably be anticipated. 9. Contracts and Commitments 9.1 The Company is not under any obligation, nor is it a party to any contract, which cannot readily be fulfilled or performed by it on time and without undue or unusual expenditure of money or effort. 9.2 The Company is not a party to or has any liability (present or future) under any guarantee or indemnity or letter of credit or any leasing, hiring, hire purchase, credit sale or conditional sale agreement or has entered into any contract or commitment involving, or likely to involve, obligations or expenditure of an unusual or exceptional nature or magnitude. 9.3 The Company is not a party to any contract or arrangement which restricts its freedom to carry on its business in any part of the world in such manner as it may think fit, or to any agency, distributorship or management agreement. 9.4 The Company is not aware of any breach of, or any invalidity, or grounds for determination, rescission, avoidance or repudiation of, any contract to which it is a party or of any allegation of such a thing. 9.5 The Company is not a party to any joint venture agreement or arrangement or any agreement or arrangement under which it is to participate with any other in any business. 9.6 The Company is not a party to any agreement or arrangement or under any obligation under which it is or may become liable to make any investment (as defined in section 1(1) of the Financial Services Act 1986) with, or to deposit any money with, or to provide any loan or financial accommodation or credit (other than normal trade credit) to any person, or to subscribe, convert, acquire, dispose of or underwrite any investment. 9.7 The Company is not a party to any contract which falls within any of the cases specified below: (A) the contract is of a value which has material consequences in terms of expenditure or revenue expectations or it relates to matters not within the ordinary business of the Company or it constitutes a commercial transaction or arrangement deviant from the usual pattern for the Company; or (B) the contract can be terminated in the event of any change in the underlying 25 ownership or control of the Company or would be materially affected by such change; and for this purpose "contract" includes any understanding, arrangement or commitment however described. 10. Insider Contracts There is not, and there has not at any time during the last six years been, any contract or arrangement to which the Company is, or was, a party and in which the Seller, or any member of the Seller's Group or any person beneficially interested in any part of the share capital of the Company, or any director of the Company or any person connected with any such director is, or has been, interested, either directly or indirectly, and the Company is not a party to, nor have its profits or financial position during that period been affected by, any contract or arrangement which was not of an entirely arm's length nature; in particular, without limitation, the Company has not transferred any assets to another such member except at market value. 11. Licences All licences, consents and other permissions and approvals required for or in connection with the carrying on of the business now being carried on by the Company have been obtained, are not limited in duration or subject to onerous conditions and are in full force and effect and all reports, returns and information required by law or as a condition of any licence, consent, permit or approval to be made or given to any person or authority in connection with the business of the Company have been made or given to the appropriate person or authority and there is no circumstance which indicates that any licence, consent, permission or approval is likely to be revoked or which may confer a right of revocation. 12. Financial Facilities 12.1 Full details of all overdraft, loan and other financial facilities available to the Company and the amounts outstanding under them are set out in the Disclosure Letter and neither Seller nor the Company has done anything whereby the continuance of any of those facilities might be affected or prejudiced. 12.2 Except for the borrowings referred to in paragraph 2.1 and for any loan capital referred to in Schedule 5 (Basic Information about the Company) the Company does not have outstanding any loan capital nor has it incurred or agreed to incur any borrowing which it has not repaid or satisfied, or has lent or agreed to lend any money which has not been repaid to it or owns the benefit of any debt present or 26 future (other than debts due to it in respect of the provision of services in the normal course of trading) or is a party to or has any obligation under: (A) any loan agreement, debenture, acceptance credit facility, bill of exchange, promissory note, finance lease, debt or inventory financing, discounting or factoring arrangement or sale and lease back arrangement; or (B) any other arrangement the purpose of which is to raise money or provide finance or credit. 12.3 To the best of the knowledge, information and belief of the Seller, no event which is or, with the passing of any time or the giving of any notice, certificate, declaration or demand, would become an event of default under or any breach of any of the terms of any loan capital, borrowing, debenture or financial facility of the Company or would entitle any third party to call for repayment prior to normal maturity has occurred or been alleged. 12.4 The Company has not borrowed any amount, from whatever source, after the Accounts Date. 13. Insolvency 13.1 No order has been made and no resolution has been passed for the winding up of the Company or for a provisional liquidator to be appointed in respect of the Company and no petition has been presented and no meeting has been convened for the purpose of winding up the Company. 13.2 No administration order has been made and no petition for such an order has been presented in respect of the Company. 13.3 No receiver (which expression shall include an administrative receiver) has been appointed in respect of the Company or all or any of its assets. 13.4 The Company is not insolvent, or unable to pay its debts within the meaning of section 123 Insolvency Act 1986, or has stopped paying its debts as they fall due. 13.5 No voluntary arrangement has been proposed under section 1 Insolvency Act 1986 in respect of the Company. 13.6 No unsatisfied judgment is outstanding against the Company. 13.7 No guarantee, loan capital, borrowed money or interest is overdue for payment, and no 27 other obligation or indebtedness is outstanding which is substantially overdue for performance or payment. 14. Product Liability The Company has not provided any product or service which does not in any material respect comply with all applicable laws, regulations or standards or which is or not in accordance with any representation or warranty, express or implied, given in respect of it. 15. Litigation The Company is not engaged in any litigation or arbitration, administrative or criminal proceedings, whether as plaintiff, defendant or otherwise, and no litigation or arbitration, administrative or criminal proceedings by or against the Company is pending, threatened or expected and so far as the Seller is aware, there is no fact or circumstance likely to give rise to any such litigation or arbitration, administrative or criminal proceedings or to any proceedings against any director or employee (past or present) of the Company in respect of any act or default for which the Company might be vicariously liable. 16. Delinquent and Wrongful Acts 16.1 The Company has not committed or is liable for any criminal, illegal, unlawful or unauthorised act or breach of any obligation or duty whether imposed by or pursuant to statute, contract or otherwise, and no claim that it has or is remains outstanding against the Company. 16.2 The Company has not received notification that any investigation or inquiry is being or has been conducted by any governmental or other body in respect of the affairs of the Company and the Seller is not aware of any circumstances which would give rise to such investigation or inquiry. 17. Ownership and Condition of Assets 17.1 All assets used by the Company in the course of its business or which are necessary or desirable for the continuation of that business as it is now carried on are both legally and beneficially owned by the Company from any third party rights and all such assets are included in the Accounts. 17.2 Each of the assets included in the Accounts or acquired by the Company since the Accounts Date (other than current assets sold, realised or applied in the normal course of trading) is owned both legally and beneficially by the Company free from any third party 28 rights, and each of those assets capable of possession is in the possession of the Company. 17.3 All plant and machinery (including fixed plant and machinery), vehicles and office equipment used by the Company in connection with its business are in good repair and condition, regularly maintained and fully serviceable and capable of being efficiently and properly used in connection with the business of the Company and none is dangerous, inefficient, obsolete or in need of renewal or replacement. 18. Intellectual Property 18.1 Details of all rights in any Intellectual Property (other than copyright and unregistered designs) owned by the Company are set out in Part A of Schedule 6 (Intellectual Property). 18.2 Details of all material licences granted to or by the Company in respect of any Intellectual Property are set out in Part B of Schedule 6 (Intellectual Property). 18.3 All rights in all Intellectual Property and Confidential Business Information owned or otherwise Required for the Business of the Company are vested in or validly granted to the Company and are not subject to any limit as to time which is due to expire within 12 months of the date of this Agreement or any other limitation, right of termination (including, without limitation, on any change in the underlying ownership or control of the Company) or restriction which will become exerciseable or applicable to the Company as a result of this Agreement and all renewal fees and steps reasonably required for their maintenance or protection have been paid and taken. 18.4 Except as listed in Part B of Schedule 6 (Intellectual Property), the Company has not granted nor is it obliged to grant any licence, sub-licence or assignment in respect of any Intellectual Property owned or otherwise Required for the Business of the Company or has disclosed or is obliged to disclose any Confidential Business Information Required for the Business of the Company to any person, other than its employees for the purpose of carrying on its business. 18.5 To the best of the knowledge, information and belief of the Seller, the Company is not in breach of any licence, sub-licence or assignment granted to or by it in respect of any Intellectual Property owned or otherwise Required for the Business of the Company or of any agreement under which any Business Information was or is to be made available to it. 18.6 To the best of the knowledge, information and belief of the Seller, the processes and methods employed, the services provided and the businesses conducted by the Company within the last six years do not, and/or at the time of being employed, provided or conducted did not, infringe the rights of any other person in any Intellectual Property or 29 Business Information. 18.7 To the best of the knowledge, information and belief of the Seller, there is no, nor has there been at any time during the past six years any, unauthorised use or infringement by any person of any of the Intellectual Property or Confidential Business Information owned or otherwise Required for the Business of the Company. 18.8 To the best of the knowledge, information and belief of the Seller, the Company has, if required to do so under the Data Protection Act 1984, duly registered as a data user and has complied with the Data Protection Principles as set out in that Act. 19. Computers 91.1 Details of the Systems and all agreements or arrangements relating to the maintenance and support (including escrow agreements relating to the deposit of source codes), security, disaster recovery management and utilisation (including facilities management and computer bureau services agreements) of the Systems have been disclosed. 19.2 All Systems are either owned by or validly leased or licensed to the Company. 20. Competition and Trade Regulation Law 20.1 The Company is not nor has it been a party to nor is it or has it been concerned in any agreement or arrangement or is conducting or has conducted itself (whether by omission or otherwise) in a manner which: (A) has been or is required to be registered under RTPA 1976; (B) contravenes the provisions of any secondary legislation adopted under the Fair Trading Act 1973; (C) infringes Article 85 or 86 of the Treaty establishing the European Economic Community or any other anti-trust or similar legislation in any jurisdiction in which the Company has assets or carries or intends to carry on business or where its activities may have an effect; or (D) is registrable, unenforceable or void (whether in whole or in part) or renders it liable to civil, criminal or administrative proceedings by virtue of any anti-trust or similar legislation in any jurisdiction in which the Company has assets or carries on or intends to carry on business or where its activities may have an effect. 30 21.2 (A) The Company is not nor has it been a party to nor is it or has it been concerned in any agreement or arrangement in respect of which any undertaking has been given by or any order made against the Company pursuant to RTPA 1976. (B) The Company has not given an undertaking to, nor is it subject to any order of or investigation by, nor has it received any request for information from, any court or governmental authority (including, without limitation, any national competition authority and the Commission of the European Economic Community) under any anti-trust or similar legislation. (C) The Company is not nor has it been a party to nor is it or has it been concerned in any agreement or arrangement in respect of which an application for negative clearance and/or exemption has been made to the Commission of the European Community. 21. Insurances 21.1 Full details of the insurance policies in respect of which the Company has an interest have been disclosed in writing to the Purchaser, all such policies are in full force and effect and are not void or voidable, no claims are outstanding by the Company and, to the best of the knowledge, information and belief of the Seller, no event has occurred which might give rise to any claim. 22. Employment 22.1 A list of the names, jobs and short details of the terms of employment of every employee of the Company are set out in the Disclosure Letter. 22.2 Particulars of the terms of all consultancy agreements with the Company are contained in the Disclosure Letter. 22.3 Details of any material benefit received by any employee otherwise than in cash, and of any benefit received by any employee in cash which is related to sales, profits or performance, or which is otherwise variable (other than normal overtime), are set out in the Disclosure Letter. 22.4 Any contract of employment with any employee to which the Company is a party can be 31 terminated by the employing company without damages or compensation (other than that payable by statute) by giving at any time only the minimum period of notice applicable to that contract which is specified in section 86 of the Employment Rights Act 1996. 22.5 No senior employee of the Company has given notice terminating his contract of employment or is under notice of dismissal and no amount due to or in respect of any such employee or former employee of the Company is in arrear and unpaid. 22.6 Since the Accounts Date, no material change has been made in the emoluments or other terms of engagement of any employee and no such change, and no negotiation or request for such a change, is due or expected within six months from the date of this Agreement. 22.7 There is no dispute between the Company and any trade union or other organisation formed for a similar purpose existing, pending or threatened and there is no collective bargaining agreement or other arrangement (whether binding or not) to which the Company is a party. 22.8 Except in the normal course of business, the Company has outstanding no undischarged liability to pay to any governmental or regulatory authority in any jurisdiction any contribution, Taxation or other impost arising in connection with the employment or engagement of personnel by the Company. 22.9 The Company has at all relevant times complied in all material respects with all its obligations under statute and otherwise concerning the health and safety at work of its employees, and there are no claims capable of arising or threatened or pending by any employee or third party in respect of any accident or injury which are not fully covered by insurance. 22.10 No person working for the Company is an employee of the Seller's Group. 23. Fiduciary Arrangements 23.1 Where the Company has acted as trustee or fiduciary it has done so in a proper manner and in accordance with its obligations to its customers and the instructions of its customers. No right of set-off or contribution can be exercised by any person with whom assets (including money) held by the Company as trustee or fiduciary have been deposited, against such assets. 23.2 To the extent that the Company is required by the Pensions Act 1995 to have in place formal notices of appointment of its professional advisers, it has such notices in place and 32 all such notices are in full force and effect. 24. Asset Management and Safe Custody Where the Company has conducted asset management and safe custody business, it has conducted such business in a proper manner and in accordance with the terms of its standard form of asset management and safe custody agreements, copies of which are annexed to the Disclosure Letter. All assets (including securities) deposited with the Company as part of its asset management and safe custody business are in its possession or under its legal control and the Company has not encumbered or agreed to encumber or dispose of any such assets except in accordance with instructions from its customers. 25. Valuation of Managed Securities The valuation of securities held by the Company and the valuation of its portfolio managed for and on the account of its customers has been made in accordance with English law and accounting practices generally accepted in the United Kingdom at the time when such valuation is carried out. 26. Regulation 26.1 The internal procedures of the Company are in accordance with the requirements of the Money Laundering Regulations 1993 and its business has been conducted in accordance with those internal procedures and in accordance with the Money Laundering Regulations 1993. 26.2 The Company has received no notification or indication that it is in breach of the Money Laundering Regulations 1993 and, so far as the Seller is aware, there is no fact or circumstances which may give rise to such breach. 26.3 The Company has, if required to do so under the Consumer Credit Act 1974, obtained a licence covering the appropriate categories of credit business and has complied with the provisions under such Act and other statutory obligations relevant to its business. 26.4 The Company has at all times complied in all material respects with the Financial Services Act 1986 (the "FSA") and all applicable rules and regulations made thereunder and the Company does not engage or permits others to engage nor has it, at any time since the coming into force of the FSA, engaged or permitted others to engage in activities the carrying out of which constitutes carrying out investment business in the United Kingdom without itself or any relevant third party being authorised or exempt under the FSA in 33 respect thereof. 26.5 Full details of all authorisations to carry on investment business in the United Kingdom (including details of memberships of self-regulatory organisations ("SROs") as defined in the FSA) for which application has been made (whether or not the application is pending or was withdrawn, refused or granted) by or on behalf of the Company have been supplied in writing to the Purchaser, including, where applicable, full details of the scope of the Company's permitted business. 26.6 The Company has at all times complied with all rules and other requirements of the relevant SRO and/or the Securities Investment Board ("SIB") and there are no circumstances which, if known to the relevant SRO or to SIB, might prejudice its membership or authorisation. 26.7 No special conditions or limitations have been imposed by any relevant SRO or SIB in respect of the conduct of investment business by the Company, no waiver of any requirements has been sought by or granted to the Company and the Company has not engaged in any acts or practices or suffered to exist any state of affairs (i) which has led to a request (whether or not the request is pending or was subsequently withdrawn or refused) by the relevant SRO or SIB to alter or amend the manner in which investment business is or was being carried on or (ii) which has led to the imposition of specific conditions in respect of the conduct of investment business or (iii) which could if known to any relevant SRO or SIB lead to such a request or to the imposition of such conditions or otherwise adversely affect the Company's membership of an SRO or authorisation by SIB. 26.8 Copies of each annual review of the arrangements for compliance with the conduct of business rules of each relevant SRO and SIB undertaken by or on behalf of the Company and of each periodic inspection carried out by any SRO and SIB have been supplied to the Purchaser together with copies of all correspondence between the Company and the relevant SRO or SIB. 26.9 Any action requested any of the relevant SROs or SIB has been taken within any time limit specified and any request for action or activities to be discontinued has been complied with in a timely manner. 26.10 All complaints made to the Company in relation to investment business have been dealt with in accordance with the rules of the relevant SRO and SIB and none of such complaints remain outstanding. Copies of all such complaints have been supplied to the Purchaser including copies of all records relating thereto required to be kept by the rules of the relevant SRO or SIB. There are no investigations, disciplinary proceedings or other circumstances likely to lead to any complaint or claim or legal action, proceedings or 34 arbitration or prosecution by the relevant SRO or SIB or any other person. 26.11 The Company has all applicable up to date compliance manuals and is in compliance therewith. 26.12 Full details of all arrangements, whether or not legally binding, between the Company and any entity or person who is not an employee but which or who represents the Company or promotes contracts to which the Company is to be a party have been disclosed in the Disclosure Letter together with the name and address of each such entity or person. 26.13 All papers, documents and accounts have been supplied to the relevant SRO in accordance with its rules, including (without limitation) financial statements as at the Accounts Date and annual statements together with auditors' reports in respect of all relevant periods thereafter. 26.14 The Company is not required to comply with the Financial Services (Client Money) Regulations 1987 as amended. 26.15 To the extent that the Company is required by the rules of the relevant SRO to be registered, it is so registered and notification has been given to the relevant SRO of any information that is required to be given in relation to registration. 26.16 There are no moneys owing to any SRO in respect of registration fees of the Company. 26.17 There is no investment business carried on in the United Kingdom in respect of which the Company is exempt; the Company is not nor has it ever been an appointed representative of another entity pursuant to section 44 of the FSA; nor is it included in the list of institutions maintained by the Bank of England pursuant to section 43 of the FSA. No application for exempt status pursuant to section 43 of the FSA has been made and withdrawn or refused or is still pending. 26.18 To the best of the knowledge, information and belief of the Seller, no employee or other person who represents or promotes the products of the Company in connection with investment business has been disqualified under section 59 of the FSA and none is or has ever been a party to any disqualification proceedings. 26.19 The Company has not entered into any investment agreement in circumstances which may result in such agreement being or becoming unenforceable or cancellable at the option or application of the other party to the agreement or of any other party. 26.20 There are no penalties, fines or other disciplinary actions which may be taken against the 35 Company as a result of incomplete, erroneous or misleading returns made to the Occupational Pensions Board. 27. The Accounts and Tax 27.1 The Company has no liability in respect of Taxation (whether actual or contingent) that is not fully provided for in the Accounts and, in particular, has no outstanding liability for: (A) Taxation in any part of the world assessable or payable by reference to profits, gains, income or distributions earned, received or paid or arising or deemed to arise on or at any time prior to the Accounts Date or in respect of any period starting before the Accounts Date; or (B) for purchase, value added, sales or other similar tax in any part of the world referable to transactions effected on or before the Accounts Date that is not provided for in full in the Accounts. 27.2 The amount of the provision for deferred Taxation in respect of the Company contained in the Accounts was, at the Accounts Date, adequate and fully in accordance with accountancy practices generally accepted in the United Kingdom and commonly adopted by companies carrying on businesses similar to those carried on by the Company and, in particular, was in accordance with SSAP 15 (or any replacement of it instituted by the Accounting Standard Board). 27.3 If all facts and circumstances which are now known to the Company or the Seller had been known at the time the Accounts were drawn up, the provision for deferred Taxation that would be contained in the Accounts would be no greater than the provision which is so contained. 28. Tax Events Since the Accounts Date Since the Accounts Date: (A) the Company has not declared, made or paid any distribution within the meaning of ICTA 1988; (B) the accounting period of the Company has not ended; (C) there has been no disposal of any asset (including trading stock) or supply of any service or business facility of any kind (including a loan of money or the letting, 36 hiring or licensing of any property whether tangible or intangible) in circumstances where the consideration actually received or receivable for such disposal or supply was less than the consideration which could be deemed to have been received for tax purposes; (D) no event has occurred which will give rise to a tax liability on the Company calculated by reference to deemed (as opposed to actual) income, profits or gains or which will result in the Company becoming liable to pay or bear a tax liability directly or primarily chargeable against or attributable to another person, firm or company; (E) no disposal has taken place or other event occurred which will or may have the effect of crystallising a liability to Taxation which should have been included in the provision for deferred Taxation contained in the Accounts if such disposal or other event had been planned or predicted at the Accounts Date; (F) the Company has not made any payment or incurred any obligation to make a payment which will not be deductible in computing trading profits for the purposes of corporation tax, or be deductible as a management expense of an investment company; (G) the Company has not been a party to any transaction for which any tax clearance provided for by statute has been or could have been obtained; (H) the Company has not paid or become liable to pay any interest or penalty in connection with any tax, has otherwise paid any tax after its due date for payment or owes any tax the due date for payment of which has passed or will arise in the 30 days after the date of this Agreement. 29. Tax Returns, Disputes, Records and Claims, etc. 29.1 The Company has made or caused to be made all proper returns required to be made, and has supplied or caused to be supplied all information required to be supplied, to any revenue authority, including (but without limitation) the Inland Revenue and the Customs and Excise in each case within the requisite period. 29.2 There is no dispute or disagreement outstanding at the date of this Agreement with any revenue authority regarding liability or potential liability to any tax or duty (including in each case penalties or interest) recoverable from the Company or regarding the availability of any relief from tax or duty to the Company and there are no circumstances which make it likely that any such dispute or disagreement will commence. 37 29.3 The Company has sufficient records relating to past events, including any elections made, to calculate the tax liability or relief which would arise on any disposal or on the realisation of any asset owned at the Accounts Date by the Company or acquired by it since that date but before Completion. 29.4 The Company has duly submitted all claims and disclaimers which have been assumed to have been made for the purposes of the Accounts. 29.5 The amount of tax chargeable on the Company during any accounting period ending on or within six years before the Accounts Date has not, to any material extent, depended on any concession, agreement or other formal or informal arrangement with any revenue authority, including (but without limitation) the Inland Revenue or the Customs and Excise. 29.6 The Company has not received any notice from any revenue authority, including the Inland Revenue, which required or will or may require it to withhold tax from any payment made since the Accounts Date or which will or may be made after the date of this Agreement. 30. Stamp Duty and Stamp Duty Reserve Tax 30.1 All documents which are required to be stamped and which are in the possession of the Company or by virtue of which the Company has any right have been duly stamped. 30.2 Since the last Accounting Date, the Company has not incurred any liability to stamp duty reserve tax. 31. Value Added Tax 31.1 The Company is registered for the purposes of value added tax and has been so registered at all times that it has been required to be registered by the relevant legislation and has, throughout the six years ending on the Completion Date, been treated for the purposes of section 43 VATA 1994 as a member of the VAT Group. 31.2 The Company will cease to be a member of the VAT Group on the Completion Date. 31.3 The Representative Member has made, given, obtained and kept full, complete, correct and up-to-date returns, records, invoices and other documents appropriate or required for the purposes of VATA 1994 and is not in arrears with any payments or returns due and has not been required by the Commissioners of Customs & Excise to give security under paragraph 4 of Schedule 11 VATA 1994. 38 31.4 The Representative Member has not, since the date 12 months before the Accounts Date, been in default in respect of any prescribed accounting period as mentioned in section 59 or section 59A VATA 1994. 31.5 Within the six years ending on the Accounts Date, the Company has not been registered for the purposes of VATA 1994 otherwise than as part of the VAT Group referred to in 32.1 above and it has not, within that six-year period, been a member of any other group for the purposes of VATA 1994. 31.6 Full details of any claim made by the Company for bad debt relief under section 36 VATA 1994 have been disclosed in writing to the Purchaser. 31.7 The Company has not made an election to waive exemption in relation to any land in accordance with paragraph 2 of Schedule 10 VATA 1994. 31.8 The Disclosure Letter contains full details of any assets of the Company to which the provisions of Part XV Value Added Tax Regulations 1995 (the capital goods scheme) apply and in particular: (A) the identity (including, in the case of leasehold property, the term of years), date of acquisition and cost of the asset; and (B) the proportion of input tax for which credit has been claimed (either provisionally or finally in a tax year and stating which). 31.9 No agreement or arrangements have been made or are in place under which the Company is or could become liable (except as provided for in the Accounts) to make any payment to the Representative Member (or any other past or present member of the VAT Group) in respect of some or all of the Representative Member's liability to account to H.M. Customs & Excise for VAT. 31.10 The Company has not, at any time within the last six years, acted as agent of any person not resident in the United Kingdom for the purposes of section 47 VATA 1994 or been appointed as a VAT representative of any person for the purposes of section 48 VATA 1994. 32. Duties, etc. All value added tax, import duty and other taxes or charges payable to H.M. Customs and Excise upon the importation of goods and all excise duties payable to H.M. Customs and Excise in respect of any assets (including trading stock) imported, owned or used by the 39 Company have been paid in full. 33. Tax on Disposal of Assets On a disposal of all its assets by the Company for: (A) in the case of each asset owned by it at the Accounts Date, a consideration equal to the value attributed to that asset in preparing the Accounts; or (B) in the case of each asset acquired since the Accounts Date, a consideration equal to the consideration given for the acquisition then either: (i) in respect of any asset falling within ((A)) above, the liability to tax (if any) which would be incurred by it in respect of that asset would not exceed the amount taken into account in respect of that asset in computing the maximum liability to deferred Taxation as stated in the Accounts; or (ii) in respect of any asset within ((A)) above, no tax liability would be incurred by it in respect of that asset. 34. Replacement of Business Assets Full particulars of each claim under section 115, 116 or 117 CGTA 1979 or under sections 152, 153, 154 or 175 TCGA 1992 made prior to the date of this Agreement applies and which affects any asset which was owned by the Company on or after the Accounts Date have (except where the held over gain is treated as having accrued prior to the Accounts Date) been disclosed in writing to the Purchaser. 35. Distributions 35.1 Since 6 April 1965, the Company has not made any repayment of share capital to which section 210(1) ICTA 1988 applies or issued any share capital or other security as paid up otherwise than by the receipt of new consideration within the meaning of Part VI ICTA 1988. 35.2 No part of the amount payable on redemption of any share capital or security at par will be a distribution, as defined in ICTA 1988. 36. Rebasing 40 The Company has not made a disposal to which section 35 TCGA applies. 37. Close Company 37.1 The Company is not nor has it ever been a close company as defined in ICTA 1988. 37.2 The Company has no loan outstanding to which the provisions of section 419 ICTA 1988 would apply (loans to participators etc.). 37.3 The Company is a close investment-holding company as defined in section 13A ICTA 1988. 38. Non-Deductible Revenue Outgoings The Company is not under any obligation to make any future payment which will be prevented (whether on the grounds of being a distribution or for any other reason) from being deductible for corporation tax purposes, whether as a deduction in computing the profits of a trade or as an expense of management or as a charge on income or as a non-trading debit under Chapter II Part IV Finance Act 1996, by reason of any statutory provision, other than section 74(1)(f) ICTA 1988 (capital). 39. Deductions and Withholdings The Company has made all deductions in respect, or on account, of any tax from any payments made by it which it is obliged or entitled to make and has accounted in full to the appropriate authority for all amounts so deducted. 40. Intra-Group Transactions The Company has not, at any time within the six year period prior to the Accounts Date, acquired any asset from any other company which was, at the time of the acquisition, a member of the same group of companies as the Company for the purposes of any tax. 41. Residence The United Kingdom is the only country whose tax authorities seek to charge tax on the world-wide profits or gains of the Company and the Company has never paid tax on income profits or gains to any tax authority in any other country. 42. Group Arrangements 41 42.1 The Company has not made any surrender of or claim for (i) group relief or (ii) any amount of surplus advance corporation tax or (iii) a refund of tax within section 102 Finance Act 1989 which involves any other company which is not or was not a Subsidiary. 42.2 The Company has not received any payment in respect of a surrender of group relief or of surplus advance corporation tax or of a tax refund which could, in any circumstances, be due to be repaid to any other company which is not or was not a Subsidiary. 43. Demerger The Company has not been concerned in an exempt distribution (as defined in section 214(4) ICTA 1988). 44. Non-Arm's Length Transactions The Company is not a party to any transaction or arrangement under which it may be required to pay for any asset or services or facilities of any kind an amount which is in excess of the market value of that asset or services or facilities or will receive any payment for any asset or services or facilities of any kind that it has supplied or provided or is liable to supply or provide which is less than the market value of that asset or services or facilities. Schedule 3 Seller's Limitations on Liability A. Agreements to Which This Schedule is Applicable Notwithstanding anything in this Agreement to the contrary, the provisions of this schedule shall operate to limit, to the extent specified but not otherwise, the liability of the Seller in respect of any claim by the Purchaser for any breach of or inaccuracy in the Warranties, under the Tax Covenant or in respect of any other undertakings (an "Undertaking") given by or on behalf of the Seller in or pursuant to this Agreement. B. Limitations on Liability Under Warranties, Undertakings and the Tax Covenant 1. Limitation on Amount 1.1 The Purchaser shall not be entitled in any event to damages in respect of any claim or claims under any of the Warranties or under the Tax Covenant unless and until:- (A) the aggregate amount of all such substantiated claims exceeds (pound)100,000; and (B) the amount of any individual substantiated claim shall exceed (pound)10,000 where "substantiated" means a claim for which the Seller may be liable after taking into account the provisions of paragraph 11.1((B)) and which is admitted or proved in a court of competent jurisdiction, PROVIDED that the total aggregate liability of the Seller for breach of the Warranties or under the Tax Covenant shall not in any event exceed (pound)7,000,000. There shall be no limit on the liability of the Seller under the Undertakings including, without limitation, the Undertaking set out in clause 7 of this Agreement. 1.2 For the purpose of sub-paragraph 11.1((B)): (A) where a claim relates to more than one event, circumstance, act or omission which event, circumstance, act or omission would separately constitute a breach of or give rise to a claim for breach of any of the Warranties or under the Tax Covenant, such claim shall be treated as a separate claim in respect of each such event, circumstance, act or omission. (B) all claims arising out of or relating to the same or similar events or circumstances shall be treated as a single claim. 2. Time Limits for Bringing Claims 43 No claim shall be brought against the Seller in respect of any breach of the Warranties or under the Tax Covenant unless the Purchaser shall have given to the Seller written notice of such claim specifying (in reasonable detail) the matter which gives rise to the breach or claim, the nature of the breach or claim and the amount claimed in respect thereof (detailing the Purchaser's calculation of the loss thereby alleged to have been suffered by it or the Company if relevant):- (A) on or before the seventh anniversary of Completion in respect of claims in respect of any breach of the Tax Warranties or under the Tax Covenant; or (B) on or before the date falling three months after the completion of the accounts of the Company in respect of the financial year ending on 31 December 1998, in respect of any other matters. PROVIDED that the Purchaser's compliance with sub-clause (A) of clause 7 (Claims Procedure) of the Tax Covenant shall be sufficient notice of a claim under the Tax Covenant or in respect of any breach of the Tax Warranties for the purposes of this paragraph. No time limit shall apply in relation to claims under the Undertaking set out in clause 7 of this Agreement. 3. Conduct of Litigation 3.1 Upon the Purchaser or the Company becoming aware of any claim, action or demand against it or matter likely to give rise to any of these in respect of the Non-Tax Warranties, the Purchaser shall and shall procure that the Company shall:- (A) as soon as reasonably practicable notify the Seller by written notice as soon as it appears to the Purchaser that the Seller is or may become liable under the Non-Tax Warranties; (B) subject to the Seller indemnifying the Purchaser and/or the Company to their reasonable satisfaction against any liability, costs, damages or expenses which may be incurred thereby, take such action and give such information and access to personnel, premises, chattels, documents and records to the Seller and their professional advisers as the Seller may reasonably request and the Seller shall be entitled to require the Company to take such action and give such information and assistance in order to avoid, dispute, resist, mitigate, settle, compromise, defend or appeal any claim in respect thereof or adjudication with respect thereto; 44 (C) at the request of the Seller, allow the Seller to take the sole conduct of such actions as the Seller may deem appropriate in connection with any such assessment or claim in the name of the Purchaser or the Company and in that connection the Purchaser shall give or cause to be given to the Seller all such assistance as the Seller may reasonably require in avoiding, disputing, resisting, settling, compromising, defending or appealing any such claim and shall instruct such solicitors or other professional advisors as the Seller may nominate to act on behalf of the Purchaser or the Company, as appropriate, but to act in accordance with the Seller's sole instructions; (D) make no admission of liability, agreement, settlement or compromise with any third party in relation to any such claim or adjudication without the prior written consent of the Seller, such consent not to be unreasonably withheld or delayed; and (E) take all reasonable action (having regard to the commercial interests of the Company) to mitigate any loss suffered by it in respect of which a claim could be made under the Non-Tax Warranties. 4. No Liability if Loss is Otherwise Compensated for Single claim 4.1 The Seller shall not be liable for breach of any of the Non-Tax Warranties to the extent that the subject of the claim has been or is made good or is otherwise compensated for without cost to the Purchaser or to the Company. Taxation 4.2 In calculating the liability of the Seller for any breach of the Non-Tax Warranties, there shall be taken into account the amount by which any taxation for which the Company is now or in the future accountable or liable to be assessed is reduced or extinguished as a result of the matter giving rise to such liability. Insurances 4.3 If, in respect of any matter which would give rise to a breach of the Non-Tax Warranties or a claim under the Undertakings, the Company is entitled to claim under any policy of insurance, then no such matter shall be the subject of a claim under the Warranties or the Undertakings unless and until the Company shall have made a claim against its insurers and any such insurance claim (or any claim which could have been made had such policies or their equivalents been maintained as aforesaid) shall then reduce by the amount 45 recovered or extinguish any such claims for breach of the Non-Tax Warranties or under the Undertakings. Recovery From Third Parties 4.4 (A) Where the Purchaser and/or the Company are at any time entitled to recover from some other person any sum in respect of any matter giving rise to a claim under the Non-Tax Warranties the Purchaser shall, and shall procure that the Company shall, undertake all necessary steps to enforce such recovery prior to taking action against the Seller (other than to notify the Seller of the claim against the Seller) and, in the event that the Purchaser or the Company shall recover any amount from such other person, the amount of the claim against the Seller shall be reduced by the amount recovered, less all reasonable costs, charges and expenses incurred by the Purchaser or the Company recovering that sum from such other person. (B) If the Seller shall pay at any time to the Purchaser or the Company an amount pursuant to a claim in respect of the Non-Tax Warranties and the Purchaser or the Company subsequently become entitled to recover from some other person any sum in respect of any matter giving rise to such claim, the Purchaser shall, and shall procure that the Company shall take all necessary steps to enforce such recovery, and shall forthwith repay to the Seller so much of the amount paid by the Seller to the Purchaser or the Company as does not exceed the sum recovered from such other person less all reasonable costs, charges and expenses incurred by the Purchaser or the Company recovering that sum from such other person. (C) If any amount is repaid to the Seller by the Purchaser or the Company pursuant to sub-paragraph 4.4(B) above an amount equal to the amount so repaid shall be deemed never to have been paid by the Seller to the Purchaser for the purposes of paragraph 1. 5. Acts of the Purchaser 5.1 No claim shall lie against the Seller under the Non-Tax Warranties to the extent that such claim is wholly or partly attributable to:- (A) any voluntary act, omission, transaction, or arrangement carried out at the request of or with the consent of the Purchaser before Completion; 46 (B) any voluntary act, omission, transaction, or arrangement carried out by the Purchaser or on its behalf or by persons deriving title from the Purchaser on or after Completion; or (C) any explicit admission of liability made after the date hereof by the Purchaser or on its behalf or by persons deriving title from the Purchaser on or after Completion. 5.2 The Seller shall not be liable for any breach of Non-Tax Warranties which would not have arisen but for any reorganisation or change in ownership of the Company after Completion or any changes in the accounting basis on which the Company values its assets or any other change in accounting policy or practice of the Company after Completion. 6. Allowance, Provision or Reserve in the Accounts 6.1 No matter shall be the subject of a claim for breach of any of the Non-Tax Warranties or under the Undertakings to the extent that allowance, provision or reserve in respect of such matter shall have been made in the Accounts or has been included in calculating creditors or deducted in calculating debtors in the Accounts and (in the case of creditors or debtors) is identified in the records of the Company or shall have been otherwise taken account of or reflected in the Accounts. 6.2 Notwithstanding sub-paragraph 66.1 above, if at any time after Completion and, in the case of a claim under the Non-Tax Warranties, within the time limit applicable to the Non-Tax Warranties set out in paragraph 2 above (or at any time thereafter while any such claim remains not fully determined) the amount of any allowance, provision or reserve in respect of any liability of the Seller under the Non-Tax Warranties or the Undertakings (other than the Undertaking set out in clause 7) made in the Accounts or otherwise taken account of or reflected therein is found to be in excess of the matter for which such allowance, provision or reserve was made, the amount of such excess (the "Excess Amount") shall be applied in the following manner:- (A) if the Seller shall, prior to the date on which the Excess Amount is ascertained, have made any payment or payments in respect of the Non-Tax Warranties or the Undertakings then the Purchaser shall forthwith repay to the Seller a sum equal to such part of the Excess Amount as does not exceed the aggregate of those of such prior payments by the Seller as shall not have been previously refunded pursuant to this sub-clause; and (B) where sub-paragraph 6.2((A)) above does not apply or where such sub-paragraph does apply but there remains a balance of the Excess Amount after the application of that sub-paragraph, then the Excess Amount or the balance remaining, as the case may 47 be, shall be applied in reducing any liability of the Seller that may subsequently arise under the Non-Tax Warranties or the Undertakings. 7. Retrospective Legislation No liability shall arise in respect of any breach of any of the Non-Tax Warranties or under the Undertakings if and to the extent that liability for such breach occurs or is increased wholly or partly as a result of any legislation not in force at the date hereof which takes effect retrospectively. 8. Taxation Warranties 8.1 The Seller shall not be liable for a breach of a Tax Warranty relating to a post-Accounts Date tax liability unless such tax liability Abbey National as a consequence of or by reference to any of the events listed in paragraphs (a) to (e) inclusive of sub-clause (ii) of clause 2 (Covenant) of the Tax Covenant. In this paragraph 8.1, a post-Accounts Date tax liability means a tax liability of the Company which Abbey National as a consequence of or by reference to an event occurring or being deemed to occur after the Accounts Date. 8.2 Clauses 3 (Limits on Clause 2), 4 (Mitigation), 5 (Over-Provisions, Reliefs, etc), 6 (Recovery from Other Persons), 7 (Claims Procedure), 9 (Due Date of Payment) and 10 (Deductions from Payments, etc) of the Tax Covenant shall apply mutatis mutandis to claims, liabilities and payments in respect of the Tax Warranties as they apply to claims, liabilities and payments under the Tax Covenant. 9. Loss of Goodwill or Business No claim shall lie against the Seller under the Non-Tax Warranties to the extent that the subject of the claim relates to the fact that the Company has lost goodwill or possible business. 10. Payment of Claim to be Additional Consideration for the Consideration Shares Any payment made by the Seller in respect of any claim under the Warranties or the Undertakings shall be deemed to be additional consideration given by the Seller for the Consideration Shares under clause 3 (Consideration) of this Agreement. 48 Schedule 4 Tax Covenant The Tax Covenant shall be in the form of the deed prepared by Slaughter and May which has (for the purposes of identification only) already been initialled by the Seller. 49 Schedule 5 Basic Information about the Company 50 1. Registered number : 1877373 2. Date of incorporation : 15th January, 1985 3. Place of incorporation : England 4. Address of registered office : Ten Trinity Square London EC3P 3AX 5. Class of company : Private limited 6. Authorised share capital : (pound)2,000,000 7. Issued share capital : (pound)2,000,000 8. Loan capital : (pound)3,000,000 9. Directors: Full name Douglas Lyall Elliott Richard James Pearson Clive Rodney Berry Michael Angus Halliday Bigham Allan Lister Daffern Sarah Ann Fairclough Roderick Stewart Gray Robert Brown Guthrie Maurice Hammond David Daniel Hawkins Michael Anthony Johns Hugh Roy Matthews Susan Helen Mortley David Lloyd Smith Hugh Ammie Warren 51 10. Secretary: Full name Tracy Marina Warren 11. Accounting reference date : 31st December 12. Auditors : Ernst & Young 13. Tax residence : United Kingdom 14. Business activities : independent financial advisory company - -------------------------------------------------------------------------------- Schedule 6 Intellectual Property - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 53 Part A 1. Registered Trade and Service Marks Country Mark Number Class of goods or Date of next renewal services for which registered None 2. Trade Mark and Service Mark Applications Country Mark UK Forces Healthguard 3. Unregistered Trade and Service Marks Country Mark Date use commenced Class of goods or services on which used None 4. Registered Designs Country Number Subject matter Date of next renewal None - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 54 5. Registered Design Applications Country Subject matter Date of application None Part B 6. Licences and User Agreements 1. Details (grantor, grantee, country, subject matter and term) of all licences and user agreements granted to any member of the Group. None 2. Details (grantor, grantee, country, subject matter and term) of all licences and user agreements granted from any member of the Group None - -------------------------------------------------------------------------------- Schedule 7 Pensions 1. DEFINITIONS (A) For the purposes of this Schedule the following expressions shall have the following meanings:- the "Company" means Willis IFA "Completion Date" means the date of this Agreement "Former Schemes" means all occupational pension schemes (as defined in section 1 of the Pension Schemes Act 1993) in which the Company has participated at any time after 30 June 1992 and prior to Completion and to which the Company may be required to make a payment pursuant to Section 75 of the Pensions Act 1995 or otherwise as a result of the liabilities of the scheme exceeding the value of its assets, excluding any money purchase schemes (as defined in section 181 of the Pension Schemes Act 1993) and the Seller's Scheme. "Participation Period" means the period during which the Purchaser and/or the Company, as the case may be participates in the Seller's Scheme and ending no later than the date on which the Seller or any associated company ceases to own a shareholding in excess of 40% of the total issued share capital of the Purchaser or such lower figure as may be agreed by the Seller and Abbey National plc and which does not prejudice Inland Revenue approval of the continued participation pursuant to paragraph 2 of this Schedule. "Pensionable Age" means, in relation to a Pensionable Employee, the age specified in the rules of the Seller's Scheme as Normal Pension Date of such Pensionable Employee. 56 "Pensionable Employees" means: (i) such of the Relevant Employees at Completion as are then members of the Seller's Scheme; and (ii) such of the Relevant Employees who become members of the Seller's Scheme during the Participation Period. "Relevant Employees" means the employees of the Company at the date of this Agreement. "Seller's Scheme" means the Willis Faber Pension Scheme established by an interim trust deed dated 31st December 1971 and currently governed by a Deed of Variation dated 13th March, 1990 as amended by a Deed of Variation dated 8th March 1995 or, if the context so requires, the trustees of that scheme. (B) Save where specifically defined or where the context otherwise requires, words and expressions used in Chapter I of Part XIV of the Income and Corporation Taxes Act 1988 or in the Pension Schemes Act 1993 shall have the same meanings in this Schedule. (C) References in this Schedule to any statute or statutory provision shall include any statute or statutory provision which amends, extends, consolidates or replaces the same. 2. MATTERS RELATING TO THE SELLER'S SCHEME (A) The Seller's undertakings (i) The Seller shall procure that: (a) subject to the consent of the Commissioners of Inland Revenue (which the Seller shall use its reasonable endeavours to obtain) the Company is permitted to continue its participation and the Purchaser is admitted to participation in the Seller's Scheme for such time as they employ any Relevant Employee; (b) each of the Relevant Employees who during the Participation Period would have become a member of the Seller's Scheme but for the transactions provided for in this Agreement is permitted to become a member of the Seller's Scheme in respect of the Participation Period or the applicable part of it. 57 (ii) The Seller shall use reasonable endeavours to procure that: (a) the Seller's Scheme will be an exempt approved scheme for a period of at least one year from the Completion Date; and (b) the Seller's Scheme or alternative equivalent pension arrangements will be maintained in relation to the Pensionable Employees in full force and effect for a period of at least one year from the Completion Date; (B) The Purchaser's undertakings The Purchaser undertakes that it and the Company (for as long as they participate in the Seller's Scheme) will: (i) pay to the Seller's Scheme the contributions due and payable in respect of the Participation Period (but not any period before the Completion Date) to the Seller's Scheme by and in respect of each Pensionable Employee (but only for such part of the Participation Period that the Pensionable Employee is accruing benefits in the Seller's Scheme), calculated at the rates and otherwise on the basis applicable to all Employers in the Seller's Scheme; (ii) comply during the Participation Period in all other respects with the provisions of the Seller's Scheme; (iii) not do or omit to do during the Participation Period any act or thing whereby the approval of the Seller's Scheme as an exempt approved scheme or as a contracted-out scheme would or might be prejudiced; (iv) not exercise any power, right or discretion conferred on it under or in relation to the Seller's Scheme whether as an employer or otherwise, including (without limitation) any power, right or discretion conferred by law, without the prior written consent of the Seller (such consent not to be unreasonably withheld or delayed) and on such terms (whether as to payment of additional contributions to the Seller's Scheme or otherwise) as the Seller may agree; and (v) appoint such company as the Seller may nominate to act on its behalf in relation to the Seller's Scheme for the purpose of dealing with the provisions of the Pensions Act 1995 and the Pension Schemes Act 1993 and do all such acts and execute and/or sign all such documents as the Seller may reasonably consider necessary or desirable in connection therewith. 58 (C) Parties to do everything necessary to comply with contracting-out requirements The Seller and the Purchaser shall take, and the Purchaser shall procure that the Company take, such steps as may be required of them, including the completion of any notices and elections, to procure that the Purchaser and the Company: (i) holds or continues to be named in a contracting-out certificate on a reference scheme basis or otherwise, as the case may be, in relation to the Seller's Scheme in respect of the Participation Period; and (ii) ceases to hold or be named in such certificate with effect from the end of the Participation Period. (D) The Seller's covenant in respect of any residual liabilities in relation to the Former Schemes The Seller hereby covenants with the Purchaser to pay to the Purchaser (so far as possible by way of repayment of the consideration payable for the Shares pursuant to this Agreement) forthwith upon demand and together with interest at the Agreed Interest Rate from the date of such demand until the date of payment an amount equal to any payment the Company or any member of the Purchaser's Group is or becomes liable to make to any Former Scheme whether before, at or after Completion, whether pursuant to, Section 75 of the Pensions Act 1995, or otherwise other than payments pursuant to the other provisions of the Schedule. 3. PENSION WARRANTIES The Seller represents, warrants and undertakes, and save as disclosed in the Disclosure Letter, that: (A) Seller's Scheme is the only funded pension/disability arrangement Other than the Seller's Scheme and the State scheme there is no arrangement to which the Company contributes or under which it has any obligation (whether legally enforceable or not) under which benefits of any kind are payable to or in respect of any of the Relevant Employees on retirement, death or disability or on the attainment of a specified age or on the completion of a specified number of years of service or in relation to sickness after retirement. (B) All material Seller's Scheme documents supplied 59 The trust deeds and rules of the Seller's Scheme, together with all material announcements (to members of the Seller's Scheme who are Relevant Employees) which have not been incorporated into the Trust Deed and Rules of the Seller's Scheme have been supplied to the Purchaser or the Purchaser's advisers and are attached to the Disclosure Letter. (C) Exercise of discretion or power No discretion or power has been exercised under the Seller's Scheme in respect of members of that Scheme who are Relevant Employees to augment benefits or to provide a benefit which would not otherwise be provided. (D) Adherence The Company adheres to the Seller's Scheme in respect of the Pensionable Employees. (E) Exempt Approval The Seller's Scheme is an exempt approved scheme or capable of exempt approval. (F) Contracting-out The Seller's Scheme is a contracted-out scheme and the Company is named in a contracting-out certificate in relation to the Seller's Scheme. (G) Contributions There are not at the date hereof any contributions from or in respect of any of the Relevant Employees or other payments which have fallen due but are unpaid in respect of the Seller's Scheme except for contributions which may be due in respect of the current or previous four weekly accounting period. (H) Claims So far as the Seller is aware there are no actions, suits or claims (other than routine claims for benefits) outstanding, pending or threatened against the Trustees or Administrator of the Seller's Scheme or against the Seller or the Company in respect of any matter arising out of or in connection with the Seller's Schemes in respect of any Pensionable Employees. (I) Overriding Provisions (i) The Seller's Scheme does not distinguish between male and female members 60 (except in relation to maternity) in the provision of benefits relating to Pensionable Service after 17th May 1990 (with the exception of guaranteed minimum pensions) and no adverse alteration has been made to benefits already accrued at the date of announcing changes designed to equalise benefits. (ii) So far as the Seller is aware the Seller's Scheme has been administered in accordance with the preservation requirements within the meaning of section 69 Pension Schemes Act 1993. (iii) The Seller's Scheme has been administered in accordance with the equal access requirements of section 118 Pension Schemes Act 1993. (J) Former Scheme Liabilities (i) The Company has not participated in any Former Scheme immediately before or at a time when that scheme ceased to admit new members. (ii) The Company has no liability to make any payment to the Seller's Scheme or to any Former Scheme pursuant to section 75 of the Pensions Act 1995. (iii) The Company has no undischarged liability in respect of any Former Scheme pursuant to Regulation 3 of the Occupational Pensions Schemes (Deficiency on Winding up etc.) Regulations 1996. 61 Signatures Signed by ) George Nixon ) George Nixon for and on behalf of ) Willis Corroon Limited ) Signed by Jeremy Budden ) for and on behalf of ) Jeremy Budden Willis National ) Holdings Limited ) - -------------------------------------------------------------------------------- Dated 11th December 1998 WILLIS CORROON LIMITED and WILLIS NATIONAL HOLDINGS LIMITED ----------------------------------- WIFA Side Agreement to Share Sale Agreement ----------------------------------- Slaughter and May, 35 Basinghall Street, London EC2V 5DB Ref: JCXT/JMYA - -------------------------------------------------------------------------------- SIDE AGREEMENT THIS AGREEMENT is made 11th December 1998 BETWEEN:- 1. Willis Corroon Limited of Ten Trinity Square, London EC3P 3AX (registered in England No. 1646647) (the "Seller") AND 2. Willis National Holdings Limited of Ten Trinity Square, London EC3P 3AX (registered in England No. 3393377) (the "Purchaser"). WHEREAS: (A) The parties entered into a Share Sale Agreement on 4th August, 1997 (the "Share Sale Agreement") whereby the Purchaser acquired all the issued shares in Willis Corroon Financial Planning Limited ("WIFA") from the Seller. (B) Under Clause 7 of the Share Sale Agreement the Seller agreed to indemnify and keep indemnified the Purchaser from all claims, losses, costs or other liabilities which the Purchaser and/or WIFA may suffer in respect of pensions missellings. (C) The parties have decided to enter into this Side Agreement pursuant to Clause 15.6 with respect to extending the indemnity provided for under the Share Sale Agreement to include missellings of Free Standing Additional Voluntary Contributions ("FSAVC") schemes. IT IS AGREED AS FOLLOWS: 1. Terms and expressions in the Share Sale Agreement shall, unless the context otherwise requires, have the same meanings when used in this Side Agreement. 2. The parties agree that the definition of "affected person" set out in clause 7.2 of the Share Sale Agreement shall be amended by inserting after the words "Taxes Act 1988" in sub-paragraph (A) the following; "or a retirement benefits scheme (as defined in section 611 of ICTA 1988) established solely to accept contributions from employees to provide additional benefits to those provided by their employers' pension scheme (a free standing additional voluntary contribution scheme (including, without limitation, any such scheme approved by the Board of Inland Revenue pursuant to section 591(2)(h) of ICTA 1988)); and by inserting after the words "so approved" in sub-paragraph (B) the following: "or such a free standing additional voluntary contribution scheme". 3. Save as set out in this Side Agreement, the terms and conditions of the Share Sale Agreement remains and shall continue in full force and effect and shall apply to the provisions of this Side Agreement. 4. This Side Agreement shall be governed by and shall be construed in accordance with, English law. Signatures Signed by ) ) for and on behalf of ) Willis Corroon Limited ) Signed by ) ) for and on behalf of ) Willis National ) Holdings Limited EX-2.4 5 EX. 2.4 - -------------------------------------------------------------------------------- CONFORMED COPY Dated 4th August 1997 ABBEY NATIONAL INDEPENDENT CONSULTING GROUP LIMITED and WILLIS NATIONAL HOLDINGS LIMITED ----------------------------------- ANIFA Share Sale Agreement ----------------------------------- Slaughter and May, 35 Basinghall Street, London EC2V 5DB (Ref: TNC/JCXT) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CONTENTS Page 1. Interpretation 1 2. Sale and Purchase 3 3. Consideration 3 4. Completion 3 5. Seller's Warranties and Covenants 3 6. Purchaser's Remedies and Seller's Limitations on Liability 3 7. Indemnities 3 8. Provision of Business Information 3 9. Pensions 3 10. Access 3 11. Effect of Completion 3 12. Remedies and Waivers 3 13. Assignment 3 14. Further Assurance 3 15. Entire Agreement 3 16. Notices 3 17. Announcements 3 18. Confidentiality 3 19. Costs and Expenses 3 20. Counterparts 3 21. Time of Essence 3 22. Choice of Governing Law 3 Schedule 1 Completion Arrangements 3 Schedule 2 Warranties 3 Schedule 3 Seller's Limitations on Liability 3 Schedule 4 Tax Covenant 3 Schedule 5 Basic Information about the Company 3 Schedule 6 Intellectual Property 3 Schedule 7 Pensions 3 - -------------------------------------------------------------------------------- 2 SHARE SALE AGREEMENT THIS AGREEMENT is made 4th August 1997 BETWEEN:- 1. Abbey National Independent Consulting Group Limited of Abbey House, Baker Street, London NW1 6XL (registered in England No. 2506374) (the "Seller") AND 2. Willis National Holdings Limited of Ten Trinity Square, London EC3P 3AX (registered in England No. 3393377) (the "Purchaser"). WHEREAS:- (A) Particulars of the Company are set out in Schedule 5 (Basic Information about the Company). (B) The Seller has agreed to sell and the Purchaser has agreed to purchase the Shares in each case on the terms and subject to the conditions of this Agreement. (C) The Purchaser has also agreed to purchase the whole of the issued share capital of the Other IFA Company on the terms and conditions of the Other IFA Company Agreement. (D) The Purchaser is intending to reorganise the structure of the Purchaser's Group following Completion. This will involve the disposal by the Company and the Other IFA Company of the whole or parts of their respective undertaking or assets by intra-group disposal. (E) At the date of this Agreement (and prior to Completion), the Purchaser has an authorised share capital of (pound)1,000 divided into 1,000 shares of (pound)1 each and two of these shares have been issued. NOW IT IS HEREBY AGREED as follows:- 1. Interpretation 1.1 In this Agreement and the Schedules to it:- 3 "Accounts" means the audited financial statements of the Company prepared in accordance with the Companies Acts, for the accounting reference period ended on the Accounts Date which financial statements comprise a balance sheet, profit and loss account, notes, auditors' and directors' reports, a copy of which has for the purpose of identification only been signed by the Seller and delivered to the Purchaser; "Accounts Date" means 31 December, 1996; "Books and Records" has its common law meaning and includes, without limitation, all notices, correspondence, orders, inquiries, drawings, plans, books of account and other documents and all computer disks or tapes or other machine legible programs or other records; "Business Day" means a day (other than a Saturday or a Sunday) on which banks are open for business in London; "Business Information" means all information, know-how and records (whether or not confidential and in whatever form held) including (without limitation) all data, manuals and instructions and all customer lists, sales information, business plans and forecasts, and all technical or other expertise and all computer software and all accounting and tax records, correspondence, orders and inquiries; "CGTA 1979" means the Capital Gains Tax Act 1979; "Companies Acts" means the Companies Act 1985, the Companies Consolidation (Consequential Provisions) Act 1985, the Companies Act 1989 and Part V of the Criminal Justice Act 1993; "Company" means Abbey National Independent Financial Advisers Limited, basic information concerning which is set out in "Completion" means completion of the sale and purchase of the Shares under this Agreement; "Completion Date" means the date of this Agreement; 4 "Confidential Business means Business Information which is Information" confidential or not generally known; "Consideration Shares" means 489 ordinary shares of (pound)1 each in the share capital of the Purchaser, credited as fully paid; "Disclosure Letter" means the letter dated with the date hereof written by the Seller to the Purchaser for the purposes of clause ( ) and delivered to the Purchaser before the execution of this Agreement; "ICTA 1988" means the Income and Corporation Taxes Act 1988; "Intellectual Property" means trade marks and service marks, rights in designs, trade or business names, copyrights and topography rights (whether or not any of these is registered and including applications for registration of any such thing) and rights under licences and consents in relation to any such thing and all rights or forms of protection of a similar nature or having equivalent or similar effect to any of these which may subsist anywhere in the world; "Non-Tax Warranties" means the Warranties other than the Tax Warranties; "Other IFA Company" means Willis Corroon Financial Planning Limited (registered in England No. 1877373); "Other IFA Company means the share sale agreement dated with Agreement" the date hereof between Willis Group plc (1) and the Purchaser (2) in substantially the same terms as this Agreement; "Purchaser's Group" means the Purchaser and its subsidiary undertakings; "Representative Member" means the representative member referred to in the definition of VAT Group; "Required for the has the meaning given in clause 8 Business" (Provision of Business Information); "RTPA 1976" means the Restrictive Trade Practices Act 1976; 5 "Seller's Group" means Abbey National plc and the subsidiary undertakings of that company (other than, for the avoidance of doubt, the Company); "Shares" means all the issued shares in the capital of the Company (comprising 2,500 shares of (pound)1 each); "Share Purchase has the meaning given to it in clause has Documents" the meaning given to it in clause 15 (Entire Agreement); "Subsidiary" means at any relevant time any then subsidiary undertaking of the Company; "Systems" means all computer hardware, software, networks or other information technology owned or used by the Company; "Tax" or "Taxation" means and includes all forms of taxation and statutory, governmental, supra-governmental, state, principal, local governmental or municipal impositions, duties, contributions and levies, in each case whether of the United Kingdom or elsewhere and whenever imposed, and all penalties, charges, costs and interest relating thereto and without limitation all employment taxes and any deductions or withholdings of any sort; "Tax Covenant" means the tax covenant referred to in Schedule 1 (Completion Arrangements) and Schedule 4 (Tax Covenant); "Tax Warranties" means Warranties numbered 27 to 45 in "TCGA 1992" means the Taxation of Chargeable Gains Act 1992; "VATA 1994" means the Value Added Tax Act 1994; "VAT Group" means the group of companies of which the representative member for the purposes of section 43 VATA 1994 was Abbey National plc (Registration number 466264724); "Warranties" means the warranties set out in Schedule 2 (Warranties) given by the Seller and any other or warranties made by or on behalf of the Seller in this Agreement and "Warranty" shall be construed accordingly; and 6 "Working Hours" means 9.30 a.m. to 5.30 p.m. on a Business Day. 1.2 In this Agreement, unless otherwise specified:- (A) references to clauses, sub-clauses, paragraphs, sub-paragraphs and Schedules are to clauses, sub-clauses, paragraphs, sub-paragraphs of, and Schedules to, this Agreement; (B) a reference to any statute or statutory provision shall be construed as a reference to the same as it may have been, or may from time to time be, amended, modified or re-enacted; (C) references to a "company" shall be construed so as to include any company, corporation or other body corporate, wherever and however incorporated or established; (D) references to a "person" shall be construed so as to include any individual, firm, company, government, state or agency of a state or any joint venture, association or partnership (whether or not having separate legal personality); (E) references to "indemnify" and "indemnifying" any person against any circumstance include indemnifying and keeping him harmless from all actions, claims and proceedings from time to time made against that person and all loss or damage and all payments, costs or expenses made or incurred by that person as a consequence of or which would not have arisen but for that circumstance; (F) the expressions "accounting reference date", "accounting reference period", "allotment", "body corporate", "current assets", "debentures", "holding company", "paid up", "profit and loss account", "subsidiary", "subsidiary undertaking" and "wholly-owned subsidiary" shall have the meaning given in the Companies Acts; (G) a person shall be deemed to be connected with another if that person is connected with another within the meaning of section 839 ICTA 1988; (H) references to writing shall include any modes of reproducing words in a legible and non-transitor y form; (I) headings to clauses and Schedules are for convenience only and do not affect the interpretation of this Agreement; 7 (J) 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 any reference to this Agreement shall include the Schedules; (K) references to the knowledge, information, belief or awareness of any person shall be treated as including any knowledge, information, belief or awareness which the person would have if the person made all usual and reasonable enquiries; and (L) (i) the rule known as the ejusdem generis rule shall not apply and accordingly general words introduced by the word "other" shall not be given a restrictive meani ng by reason of the fact that they are preced ed by words indicat ing a particular class of acts, matter s or things; and (ii) general words shall not be given a restrictive meaning by reason of the fact that they are followed by particular examples intended to be embraced by the general words. 2. Sale and Purchase 2.1 The Seller shall sell or procure the sale of, and the Purchaser shall purchase, the Shares with all rights attached or accruing to them at the date of this Agreement. 2.2 The Seller has the right to transfer legal and beneficial title to the Shares. 2.3 The Shares shall be free from all charges and encumbrances and from all other rights exercisable by or claims by third parties. 2.4 The Purchaser shall be entitled to exercise all rights attached or accruing to the Shares including, without limitation, the right to receive all dividends, distributions or any return of capital declared, paid or made by the Company on or after the date of this Agreement. 2.5 The Seller waives all rights of pre-emption over any of the Shares conferred upon him by the articles of association of the Company or in any other way and undertakes to take all steps necessary to ensure that any rights of pre-emption over any of the Shares are waived. 2.6 For the avoidance of doubt, Part 1 Law of Property (Miscellaneous Provisions) Act 1994 8 shall not apply for the purposes of this clause. 3. Consideration The total consideration for the sale of the Shares shall be the allotment to the Seller of the Consideration Shares in accordance with clause 4 (Completion). 4. Completion 4.1 Completion shall take place on the Completion Date at 35 Basinghall Street, London EC2V 5DB. 4.2 At Completion, the Seller shall do those things listed in Schedule 1 (Completion Arrangements). 4.3 The Purchaser shall not be obliged to complete this Agreement unless the Seller complies fully with the requirements of Schedule 1 (Completion Arrangements) so far as they relate to the Seller. 4.4 If the obligations of the Seller under Schedule 1 (Completion Arrangements) are not complied with on the Completion Date, the Purchaser may:- (A) defer Completion (so that the provisions of this clause shall apply to Completion as so deferred); or (B) proceed to Completion as far as practicable (without limiting its rights under this Agreement); or (C) treat this Agreement as terminated for breach of a condition. 4.5 Delivery of a share certificate in respect of the Consideration Shares in accordance with Schedule 1 paragraph 6 (Completion Arrangements) shall constitute payment of the consideration for the Shares and shall discharge the obligations of the Purchaser under clause 2 (Sale and Purchase). 5. Seller's Warranties and Covenants 5.1 The Seller warrants to the Purchaser that each of the Warranties is accurate in all material respects and not misleading in any material respect at the date of this Agreement and that if for any reason there is any interval of time between the date of this Agreement and Completion, the Warranties will be repeated on the Completion Date. 5.2 If the Warranties are repeated at Completion as referred to in clause, the Seller shall use its best endeavours to procure that no act shall be performed or omission allowed either 9 by it in such interval which would result in any of the Warranties being materially breached or misleading in any material respect at any time up to and including the time of Completion. 5.3 The Seller accepts that the Purchaser is entering into this Agreement in reliance upon each of the Warranties. 5.4 The Seller undertakes to disclose in writing to the Purchaser anything which is or may constitute a breach of or be inconsistent with any of the Warranties immediately it comes to its notice both before and after Completion. 5.5 The Seller undertakes (if any claim is made against it in connection with the sale of the Shares to the Purchaser) not to make any claim against the Company or any director or employee of the Company or any other employees of the Seller's Group who are to be seconded to or employed by the Company on whom any of them may have relied before agreeing to any terms of this Agreement or of the Tax Covenant or authorising any statement in the Disclosure Letter. 5.6 Each of the Warranties shall be construed as a separate and independent warranty and (except where expressly provided to the contrary) shall not be limited or restricted by reference to or inference from the terms of any other Warranty or any other term of this Agreement. 5.7 If in respect of or in connection with any breach of any of the Warranties or any facts or matters warranted not being true and being misleading any amount payable to the Purchaser by the Seller is subject to Taxation, such payable amounts shall be paid to the Purchaser by the Seller so as to ensure that the net amount received by the Purchaser is equal to the full amount payable to the Purchaser under this Agreement provided that if the benefit of this Agreement has been assigned by the Purchaser, the Seller shall not be obliged to pay any amount in excess of that which would have been payable had the benefit of this Agreement not been so assigned. 5.8 The Seller undertakes to indemnify the Purchaser against all costs (including legal costs on an indemnity basis as defined in Order 62 of the Rules of the Supreme Court), expenses or other liabilities which the Purchaser may reasonably incur either before or after the commencement of any action in connection with:- (A) the settlement of any claim that any of the Warranties are untrue or misleading or have been breached; (B) any legal proceedings in which the Purchaser claims that any of the Warranties 10 are untrue or misleading or have been breached and in which judgment is given for the Purchaser; or (C) the enforcement of any such settlement or judgment. 6. Purchaser's Remedies and Seller's Limitations on Liability 6.1 Subject to sub-clause 6.2 and to the limitations set out in Schedule 3 (Sellers Limitations on Liability), the Purchaser shall be entitled to claim both before and after Completion that any of the Warranties has or had been breached or is or was misleading and, without limitation, to claim under any covenant even if the Purchaser could have discovered on or before Completion that the Warranty in question had been breached or was misleading. Completion shall not in any way constitute a waiver of any of the Purchaser's rights. 6.2 The Purchaser shall not be entitled to claim that any fact causes any of the Warranties to be breached or renders any misleading if it has been fairly disclosed to the Purchaser in the Disclosure Letter in the absence of any fraud or dishonesty on the part of the Seller or their agents or advisers. 6.3 No liability shall attach to the Seller in respect of claims under the Warranties or the Tax Covenant if and to the extent that the limitations referred to in clause 6.1 and set out in Schedule 3 (Sellers Limitations on Liability) apply, in the absence of any fraud or dishonesty on the part of any of the Seller or their agents or advisers. 6.4 If, following Completion, the Purchaser becomes aware (whether it does so by reason of any disclosure made pursuant to clause 5 (Sellers Warranties and Covenants) or not) that there has been any material breach of the Warranties or any other term of this Agreement, the Purchaser shall not be entitled to treat this Agreement as terminated but shall be entitled to claim damages or exercise any other right, power or remedy under this Agreement or as otherwise provided by law. 6.5 If the Seller defaults in the payment when due of any sum payable under this Agreement (whether determined by agreement or pursuant to an order of a court or otherwise), the liability of the Seller shall be increased to include interest on such sum from the date when such payment is due until the date of actual payment (as well after as before judgment) at a rate per annum of one per cent. above the base rate from time to time of Lloyds Bank PLC. Such interest shall accrue from day to day and shall be compounded annually. 6.6 The Seller undertakes to indemnify the Purchaser against all costs, expenses or other liabilities which the Purchaser may reasonably incur either before or after the commencement of any action in connection with 11 the Warranties in accordance with clause 55.8 (Sellers Warranties and Covenants). 6.7 Except as stated expressly in this clause, this clause and Schedule 3 (Sellers Limitations on Liability) shall not limit any other clause of this Agreement. 7. Indemnities 7.1 The Seller agrees to indemnify and keep indemnified the Purchaser, for itself and as trustee for the Company, from and against all claims, losses, costs or other liabilities which the Purchaser or the Company may suffer or incur by reason of:- (A) any legal obligation to any affected person; or (B) any requirement of a regulatory body (whether or not having the force of law) in relation to an affected person or to that regulatory body. 7.2 For the purposes of this clause, "affected person" means any person who directly or indirectly (whether by family relationship or otherwise) is entitled to receive any form of compensation ("Compensation") from the Company as a result of the Company (or its employees or agents) having advised any person prior to Completion either:- (A) to transfer benefits accrued in and/or to direct future contributions to an occupational pension scheme (as defined in section 1 of the Pensions Schemes Act 1993) (an "Occupational Pension Scheme") either to a retirement annuity or to a personal pension scheme, approved under Chapter III and IV respectively of Part XIV of the Taxes Act 1988; or (B) to cease to accrue, or never to accrue, benefits in an Occupational Pension Scheme and instead to accrue benefits pursuant to a retirement annuity or a personal pension scheme so approved. 7.3 The liabilities to which this clause applies shall include:- (A) any Compensation to which any affected person is entitled; (B) all costs and expenses of, and arising out of, any investigation into the affairs of those persons who may be affected persons, and the reinstatement of the accrued benefits of any affected person into an Occupational Pension Scheme, or any other rectification made to the accrued benefits of any affected person, including, without limitation, costs and expenses incurred by any member of the Purchaser's Group; 12 (C) any administrative costs charged in respect of affected persons by any Occupational Pension Scheme; (D) all costs and expenses of, and arising out of, any independent assessment of, or enquiry into, the circumstances of any affected person which any regulatory body may require to be carried out; and (E) any fines or penalties or other amounts levied by any regulatory body which relate in any way to any one or more affected persons or to affected persons as a class. 7.4 If at any time after Completion any allowance, provision or reserve made by the Company in the Accounts or otherwise taken account of or reflected therein in respect of any claims, losses, costs or other liabilities that would be recoverable by the Company from the Seller pursuant to this clause is found to be in excess of the matter for which such allowance, provision or reserve was made, the amount of such excess shall be paid to the Seller. 8. Provision of Business Information 8.1 During the period of six years after Completion and without prejudice to any of the Warranties:- (A) if any Business Information Required for the Business of the Company is not in the possession of the Purchaser or readily discoverable by the Purchaser but is in the possession or under the control of or available to the Seller, the Seller shall, so far as it is legally able, procure that such Business Information is provided to the Purchaser promptly on request; and (B) if any Books or Records of any Seller contain Business Information which should be provided to the Purchaser, the Seller shall procure that copies of such Books or Records are given to the Purchaser promptly on request. 8.2 For the purposes of this clause and this Agreement generally, "Required for the Business" means any Intellectual Property or Business Information of the Company which is or has in the last six years been used in the business of the Company or will be needed by the Company to carry on the business of the Company in the same manner as it is presently carried on or to fulfil any of the present contracts or projects of the Company in relation to the business of the Company or to comply with any law applicable in relation to the business of the Company or if it is vested in any of the Seller and its retention by the Seller after Completion of this Agreement would be damaging or detrimental to the business of the Company. 13 9. Pensions Each of the parties shall comply with the requirements pertaining to that party set out in Schedule 7 (Pensions). 10. Access As from the date of this Agreement, the Purchaser and any persons authorised by it, upon reasonable notice will be given full access to the premises and all the Books and Records and title deeds of the Company and the directors and employees of the Company and the Company will be instructed to give promptly all information and explanations to the Purchaser or any such persons as they may request. 11. Effect of Completion Any provision of this Agreement and any other documents referred to in it which is capable of being performed after but which has not been performed at or before Completion and all Warranties and covenants and other undertakings contained in or entered into pursuant to this Agreement shall remain in full force and effect notwithstanding Completion. 12. Remedies and Waivers 12.1 No delay or omission on the part of any party to this Agreement in exercising any right, power or remedy provided by law or under this Agreement or any other documents referred to in it shall:- (A) impair such right, power or remedy; or (B) operate as a waiver thereof. 12.2 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. 12.3 The rights, powers and remedies provided in this Agreement are cumulative and not exclusive of any rights, powers and remedies provided by law. 13. Assignment 13.1 The rights or benefits of or under this Agreement and any agreements referred to in 14 clause ( ), including without limitation the Warranties, may be assigned (together with any cause of action arising in connection with any of them) by the Purchaser to a wholly-owned subsidiary of the Purchaser. 13.2 Obligations under this Agreement shall not be assignable. 14. Further Assurance The Seller shall from time to time at its own cost, on being required to do so by the Purchaser, now or at any time in the future, do or procure the doing of all such acts and/or execute or procure the execution of all such documents in a form satisfactory to the Purchaser as the Purchaser may reasonably consider necessary for giving full effect to this Agreement and securing to the Purchaser the full benefit of the rights, powers and remedies conferred upon the Purchaser in this Agreement. 15. Entire Agreement 15.1 For the purpose of this clause, "Pre-contractual Statement" means a draft, agreement, undertaking, representation, warranty, promise, assurance or arrangement of any nature whatsoever, whether or not in writing, relating to the Share Purchase Documents or any of them (as defined in sub-clause) made or given by a party to any of the Share Purchase Documents or any other person at any time prior to execution of the Share Purchase Documents. 15.2 This Agreement, the Tax Covenant, the Disclosure Letter referred to in clause 6 (Purchasers Remedies and Sellers Limitations on Liability) and any other documents referred to in this Agreement (the "Share Purchase Documents") constitute the whole and only agreement between the parties relating to the sale and purchase of the Shares. 15.3 Except to the extent repeated in any of the Share Purchase Documents, the Share Purchase Documents supersede and extinguish any prior Pre-contractual Statement relating thereto. 15.4 Each party acknowledges that in entering into the Share Purchase Documents or any of them on the terms set out therein, it is not relying upon any Pre-contractual Statement which is not expressly set out therein. 15.5 None of the parties shall have any right of action against any other party to this Agreement arising out of or in connection with any Pre-contractual Statement (except in the case of fraud). 15 15.6 This Agreement may only be varied in writing signed by each of the parties. 16. Notices 16.1 Any notice or other communication given or made under or in connection with the matters contemplated by this Agreement shall be in writing (other than writing on the screen of a visual display unit or other similar device which shall not be treated as writing for the purposes of this clause). 16.2 Any such notice or other communication shall be addressed as provided in sub-clause and, if so addressed, shall be deemed to have been duly given or made as follows:- (A) if sent by personal delivery, upon delivery at the address of the relevant party; (B) if sent by first class post, two Business Days after the date of posting; and (C) if sent by facsimile, when despatched; PROVIDED that if, in accordance with the above provisions, any such notice or other communication would otherwise be deemed to be given or made outside Working Hours, such notice or other communication shall be deemed to be given or made at the start of Working Hours on the next Business Day. 16.3 The relevant addressee, address, telex number and facsimile number of each party for the purposes of this Agreement, subject to subclause, are:- Name of party Address Facsimile No. ------------- ------- ------------- the Seller Abbey House 0171 612 4442 F.A.O. Ian Christie Baker Street Company Secretary London NW1 6XL the Purchaser F.A.O. Tracy Warren Ten Trinity Square Company Secretary London EC3P 3AX 0171 481 7003 16.4 A party may notify the other party to this Agreement of a change to its name, relevant addressee, address or facsimile number for the purposes of sub-clause PROVIDED that such notification shall only be effective on:- 16 (A) the date specified in the notification as the date on which the change is to take place; or (B) if no date is specified or the date specified is less than five clear Business Days after the date on which notice is given, the date falling five clear Business Days after notice of any such change has been given. 17. Announcements 17.1 Subject to clause, no announcement concerning the sale of the Shares or any ancillary matter shall be made by either party without the prior written approval of the other, such approval not to be unreasonably withheld or delayed. 17.2 Either party may make an announcement concerning the sale of the Shares or any ancillary matter if required by:- (A) the law of any relevant jurisdiction; or (B) any securities exchange or regulatory or governmental body to which either party is subject, wherever situated, including (without limitation) the London Stock Exchange, whether or not the requirement has the force of law, in which case the party concerned shall take all such steps as may be reasonable and practicable in the circumstances to agree the contents of such announcement with the party before making such announcement. 17.3 The restrictions contained in this clause shall continue to apply after Completion without limit in time. 18. Confidentiality 18.1 Subject to clause, each party shall treat as strictly confidential all information received or obtained as a result of entering into or performing this Agreement which relates to:- (A) the provisions of this Agreement; (B) the negotiations relating to this Agreement; (C) the subject matter of this Agreement; or (D) the other party. 17 18.2 Either party may disclose information which would otherwise be confidential if and to the extent:- (A) required by the law of any relevant jurisdiction; (B) required by any securities exchange or regulatory or governmental body or taxation authority to which either party is subject wherever situated, including (without limitation) the London Stock Exchange, whether or not the requirement for information has the force of law; (C) required to vest the full benefit of this Agreement in either party; (D) disclosed to the professional advisers, auditors and bankers of each party; (E) the information has come into the public domain through no fault of that party; or (F) the other party has given prior written approval to the disclosure, such approval not to be unreasonably withheld or delayed, PROVIDED that any such information disclosed pursuant to paragraph paragraph ((A)), or ((B)) shall be disclosed only after consultation with the other party. 18.3 The restrictions contained in this clause shall continue to apply after Completion of the sale and purchase of the Shares under this Agreement without limit in time. 19. Costs and Expenses 19.1 Except as otherwise stated in any other provision of this Agreement, each party shall pay its own costs and expenses in relation to the negotiations leading up to the sale of the Shares and to the preparation, execution and carrying into effect of this Agreement and all other documents referred to in it and the Seller confirms that no expense of whatever nature relating to the sale of the Shares has been or is to be borne by the Company. 20. Counterparts 20.1 This Agreement may be executed in any number of counterparts, and by the parties on separate counterparts, but shall not be effective until each party has executed at least one counterpart. 20.2 Each counterpart shall constitute an original of this Agreement, but all the counterparts shall together constitute but one and the same instrument. 18 21. Time of Essence Except as otherwise expressly provided, time is of the essence of this Agreement. 22. Choice of Governing Law This Agreement shall be governed by and construed in accordance with English law. Schedule 1 Completion Arrangements At Completion:- 1. the Seller shall deliver to the Purchaser:- (A) duly executed transfers in respect of the Shares in favour of the Purchaser and share certificates for the Shares in the name of the relevant transferors and any power of attorney under which any transfer is executed on behalf of any Seller or nominee; (B) such waivers or consents as the Purchaser may require to enable the Purchaser or its nominees to be registered as holders of the shares; and (C) powers of attorney in agreed terms; 2. the Seller shall execute and deliver to the Purchaser a Tax Covenant in the form referred to in Schedule 4 (Tax Covenant) and shall procure that there is executed by Abbey National plc and delivered to the Purchaser the Services Agreement and the IP Licence Agreement; 3. the Seller shall deliver to the Purchaser such of the following as the Purchaser may require:- (A) the statutory books (which shall be written up to but not including the Completion Date), the certificate of incorporation (and any certificate of incorporation on change of name) and common seal (if any) of the Company; (B) a copy of the minutes of a duly held meeting of the directors of the Seller authorising the execution by the Seller of this Agreement and the Tax Covenant (such copy minutes being certified as correct by the secretary of the Seller). 4. the Seller shall procure the present directors of the Company (other than Jeremy Budden, Brian Carter and Charles Toner) to resign their offices as such and to relinquish any rights which they may have under any contract of employment with the Company or under any statutory provision including any right to damages for wrongful dismissal, redundancy payment or compensation for loss of office or unfair dismissal, such resignations to be 20 tendered at the board meetings referred to in paragraph; 5. the Seller shall procure a board meeting of the Company to be held at which:- (A) it shall be resolved that each of the transfers relating to the Shares shall be approved for registration and (subject only to the transfer being duly stamped) the Purchaser be registered as the holder of the Shares concerned in the register of members; and (B) the resignations of the directors referred to in paragraph 4 above shall be tendered and accepted so as to take effect at the close of the meeting and each of the persons tendering his resignation shall deliver to the Company an acknowledgement executed as a deed that he has no claim against the Company for breach of contract, compensation for loss of office, redundancy or unfair dismissal or on any other account whatsoever and that no agreement or arrangement is outstanding under which the Company has or could have any obligation to him; The Seller shall procure that minutes of the duly held board meeting, certified as correct by the secretary of the Company, and the resignations and acknowledgements referred to, are delivered to the Purchaser. 6. the Purchaser shall: (A) deliver to the Seller a share certificate in respect of the Consideration Shares; and (B) deliver to the Seller a copy, certified as correct by the secretary of the Purchaser, of minutes of a duly held board meeting allotting the Consideration Shares to the Seller. Schedule 2 Warranties 1. Ownership of the Shares The Seller is the sole beneficial owner of the Shares. 2. Group Arrangements and Interests 2.1 No indebtedness (actual or contingent) and no contract or arrangement is outstanding between the Company and the Seller or any member of the Seller's Group or any person a director of or connected with any Seller or with the such member. 2.2 No member of the Seller's Group is engaged in any business which competes with the business carried on at the date of this Agreement by the Company or the other IFA Company. 3. Group Structure, etc. 3.1 The Shares comprise the whole of the issued and allotted share capital of the Company and all of them are fully paid up. 3.2 There is no agreement or commitment outstanding which calls for the allotment, issue or transfer of, or accords to any person the right to call for the allotment or issue of, any shares (including the Shares) or debentures in or securities of the Company. 3.3 The Company has no Subsidiaries at the date of this Agreement nor any interest in the share capital of any other body corporate or undertaking. 3.4 The Company does not act or carry on business in partnership with any other person nor is it a member of any corporate or unincorporated body, undertaking or association. 3.5 The Company does not have any branch, agency, place of business or permanent establishment outside the United Kingdom. 4. Options, Mortgages and Other Encumbrances 4.1 There is no option, right to acquire, mortgage, charge, pledge, lien or other form of security or encumbrance or equity on, over or affecting the Shares or any of them and there is no agreement or commitment to give or create any and no claim has been made by any person to be entitled to any. 4.2 No option, right to acquire, mortgage, charge, pledge, lien (other than a lien arising by 22 operation of law in the ordinary course of trading) or other form of security or encumbrance or equity on, over or affecting the whole or any part of the undertaking or assets of the Company) is outstanding and there is no agreement or commitment to give or create any and no claim has been made by any person to be entitled to any. 5. Accuracy and Adequacy of Information 5.1 The information given in is true and accurate in all respects and is not misleading because of any omission or ambiguity or for any other reason. 5.2 The statutory books (including all registers and minute books) of the Company have been properly kept and contain an accurate and complete record of the matters which should be dealt with in those books and no notice or allegation that any of them is incorrect or should be rectified has been received. 6. Accounts 6.1 The Accounts:- (A) were prepared in accordance with accountancy practices generally accepted in the United Kingdom at the time they were audited and commonly adopted by companies carrying on businesses similar to those carried on by the Company; (B) are complete and accurate in all material respects and in particular include full provision for bad and doubtful debts and for Taxation on profits (whether of an income or capital nature) relating to any period ending on or before the Accounts Date; (C) show a true and fair view of the state of affairs of the Company at the Accounts Date; and (D) except as the Accounts expressly disclose, are not affected by any unusual or non-recurring items. 6.2 At the Accounts Date, the Company had no liability (whether actual, contingent, unquantified or disputed) or outstanding capital commitment which is not adequately disclosed or provided for in the Accounts. 6.3 If a balance sheet of the Company (if relevant, on a consolidated basis) were drawn up as at the date of this Agreement in the manner in which and on the basis upon which the Accounts were prepared, the net asset position of the Company disclosed thereby would 23 be not less than (pound)1.72 million. 6.4 The accounting records of the Company have been kept on a proper and consistent basis (no change in the methods or bases of valuation or accountancy treatment having been made for at least six years prior to the Accounts Date or since), are up-to-date and contain complete and accurate details of the business activities of the Company and of all matters required by the Companies Acts to be entered in them. 7. Events Since the Accounts Date 7.1 Since the Accounts Date:- (A) the business of the Company has been carried on in the ordinary and usual course and in the same manner (including nature and scope) as in the past and no unusual or onerous contract differing from the routine contracts necessitated by the nature of its trade has been entered into by the Company; (B) no asset of a value in excess of (pound)10,000 has been acquired or disposed of on capital account or has been agreed to be acquired or disposed of and no contract involving expenditure by it on capital account has been entered into by the Company; (C) no debts or other receivables and no material plant, machinery or equipment of the Company have been factored or sold or agreed to be sold; (D) no resolution of the Company in general meeting has been passed (other than resolutions relating to the routine business of annual general meetings); (E) no change in the accounting reference period of the Company has been made; and (F) there has been no material adverse change in the financial position or profits of the Company. 7.2 No indication has been received that any debt now owing to the Company is bad or doubtful save to the extent that provision has been made in the Company's books therefor. 8. Work in Progress 8.1 All work in progress represented in the Accounts has been valued on a basis excluding 24 profit and including adequate provision for losses which are or could reasonably be anticipated. 9. Contracts and Commitments 9.1 The Company is not under any obligation, nor is it a party to any contract, which cannot readily be fulfilled or performed by it on time and without undue or unusual expenditure of money or effort. 9.2 The Company is not a party to or has any liability (present or future) under any guarantee or indemnity or letter of credit or any leasing, hiring, hire purchase, credit sale or conditional sale agreement or has entered into any contract or commitment involving, or likely to involve, obligations or expenditure of an unusual or exceptional nature or magnitude. 9.3 The Company is not a party to any contract or arrangement which restricts its freedom to carry on its business in any part of the world in such manner as it may think fit, or to any agency, distributorship or management agreement. 9.4 The Company is not aware of any breach of, or any invalidity, or grounds for determination, rescission, avoidance or repudiation of, any contract to which it is a party or of any allegation of such a thing. 9.5 The Company is not a party to any joint venture agreement or arrangement or any agreement or arrangement under which it is to participate with any other in any business. 9.6 The Company is not a party to any agreement or arrangement or under any obligation under which it is or may become liable to make any investment (as defined in section 1(1) of the Financial Services Act 1986) with, or to deposit any money with, or to provide any loan or financial accommodation or credit (other than normal trade credit) to any person, or to subscribe, convert, acquire, dispose of or underwrite any investment. 9.7 The Company is not a party to any contract which falls within any of the cases specified below:- (A) the contract is of a value which has material consequences in terms of expenditure or revenue expectations or it relates to matters not within the ordinary business of the Company or it constitutes a commercial transaction or arrangement deviant from the usual pattern for the Company; or (B) the contract can be terminated in the event of any change in the underlying 25 ownership or control of the Company or would be materially affected by such change; and for this purpose "contract" includes any understanding, arrangement or commitment however described. 10. Insider Contracts There is not, and there has not at any time during the last six years been, any contract or arrangement to which the Company is, or was, a party and in which the Seller, or any member of the Seller's Group or any person beneficially interested in any part of the share capital of the Company, or any director of the Company or any person connected with any such director is, or has been, interested, either directly or indirectly, and the Company is not a party to, nor have its profits or financial position during that period been affected by, any contract or arrangement which was not of an entirely arm's length nature; in particular, without limitation, the Company has not transferred any assets to another such member except at market value. 11. Licences All licences, consents and other permissions and approvals required for or in connection with the carrying on of the business now being carried on by the Company have been obtained, are not limited in duration or subject to onerous conditions and are in full force and effect and all reports, returns and information required by law or as a condition of any licence, consent, permit or approval to be made or given to any person or authority in connection with the business of the Company have been made or given to the appropriate person or authority and there is no circumstance which indicates that any licence, consent, permission or approval is likely to be revoked or which may confer a right of revocation. 12. Financial Facilities 12.1 Full details of all overdraft, loan and other financial facilities available to the Company and the amounts outstanding under them are set out in the Disclosure Letter and neither Seller nor the Company has done anything whereby the continuance of any of those facilities might be affected or prejudiced. 12.2 Except for the borrowings referred to in paragraph 21.1 and for any loan capital referred to in Schedule 5 (Basic Information about the Company) the Company does not have outstanding any loan capital nor has it incurred or agreed to incur any borrowing which it has not repaid or satisfied, or has lent or agreed to lend any money which has not been repaid to it or owns the benefit of any debt present or 26 future (other than debts due to it in respect of the provision of services in the normal course of trading) or is a party to or has any obligation under:- (A) any loan agreement, debenture, acceptance credit facility, bill of exchange, promissory note, finance lease, debt or inventory financing, discounting or factoring arrangement or sale and lease back arrangement; or (B) any other arrangement the purpose of which is to raise money or provide finance or credit. 12.3 To the best of the knowledge, information and belief of the Seller, no event which is or, with the passing of any time or the giving of any notice, certificate, declaration or demand, would become an event of default under or any breach of any of the terms of any loan capital, borrowing, debenture or financial facility of the Company or would entitle any third party to call for repayment prior to normal maturity has occurred or been alleged. 12.4 The Company has not borrowed any amount, from whatever source, after the Accounts Date. 13. Insolvency 13.1 No order has been made and no resolution has been passed for the winding up of the Company or for a provisional liquidator to be appointed in respect of the Company and no petition has been presented and no meeting has been convened for the purpose of winding up the Company. 13.2 No administration order has been made and no petition for such an order has been presented in respect of the Company. 13.3 No receiver (which expression shall include an administrative receiver) has been appointed in respect of the Company or all or any of its assets. 13.4 The Company is not insolvent, or unable to pay its debts within the meaning of section 123 Insolvency Act 1986, or has stopped paying its debts as they fall due. 13.5 No voluntary arrangement has been proposed under section 1 Insolvency Act 1986 in respect of the Company. 13.6 No unsatisfied judgment is outstanding against the Company. 13.7 No guarantee, loan capital, borrowed money or interest is overdue for payment, and no 27 other obligation or indebtedness is outstanding which is substantially overdue for performance or payment. 14. Product Liability The Company has not provided any product or service which does not in any material respect comply with all applicable laws, regulations or standards or which is or not in accordance with any representation or warranty, express or implied, given in respect of it. 15. Litigation The Company is not engaged in any litigation or arbitration, administrative or criminal proceedings, whether as plaintiff, defendant or otherwise, and no litigation or arbitration, administrative or criminal proceedings by or against the Company is pending, threatened or expected and so far as the Seller is aware, there is no fact or circumstance likely to give rise to any such litigation or arbitration, administrative or criminal proceedings or to any proceedings against any director or employee (past or present) of the Company in respect of any act or default for which the Company might be vicariously liable. 16. Delinquent and Wrongful Acts 16.1 The Company has not committed or is liable for any criminal, illegal, unlawful or unauthorised act or breach of any obligation or duty whether imposed by or pursuant to statute, contract or otherwise, and no claim that it has or is remains outstanding against the Company. 16.2 The Company has not received notification that any investigation or inquiry is being or has been conducted by any governmental or other body in respect of the affairs of the Company and the Seller is not aware of any circumstances which would give rise to such investigation or inquiry. 17. Ownership and Condition of Assets 17.1 All assets used by the Company in the course of its business or which are necessary or desirable for the continuation of that business as it is now carried on are both legally and beneficially owned by a member of the Group free from any third party rights and all such assets are included in the Accounts. 17.2 Each of the assets included in the Accounts or acquired by the Company since the Accounts Date (other than current assets sold, realised or applied in the normal course of trading) is owned both legally and beneficially by the Company free from any third party 28 rights, and each of those assets capable of possession is in the possession of the Company. 17.3 All plant and machinery (including fixed plant and machinery), vehicles and office equipment used by the Company in connection with its business are in good repair and condition, regularly maintained and fully serviceable and capable of being efficiently and properly used in connection with the business of the Company and none is dangerous, inefficient, obsolete or in need of renewal or replacement. 18. Intellectual Property 18.1 Details of all rights in any Intellectual Property (other than copyright and unregistered designs) owned by the Company are set out in Part A of Schedule 6 (Intellectual Property). 18.2 Details of all material licences granted to or by the Company in respect of any Intellectual Property are set out in Part B of Schedule 6 (Intellectual Property). 18.3 All rights in all Intellectual Property and Confidential Business Information owned or otherwise Required for the Business of the Company are vested in or validly granted to the Company and are not subject to any limit as to time which is due to expire within 12 months of the date of this Agreement or any other limitation, right of termination (including, without limitation, on any change in the underlying ownership or control of the Company) or restriction which will become exerciseable or applicable to the Company as a result of this Agreement and all renewal fees and steps reasonably required for their maintenance or protection have been paid and taken. 18.4 Except as listed in Part B of Schedule 6 (Intellectual Property), the Company has not granted nor is it obliged to grant any licence, sub-licence or assignment in respect of any Intellectual Property owned or otherwise Required for the Business of the Company or has disclosed or is obliged to disclose any Confidential Business Information Required for the Business of the Company to any person, other than its employees for the purpose of carrying on its business. 18.5 To the best of the knowledge, information and belief of the Seller, the Company is not in breach of any licence, sub-licence or assignment granted to or by it in respect of any Intellectual Property owned or otherwise Required for the Business of the Company or of any agreement under which any Business Information was or is to be made available to it. 18.6 To the best of the knowledge, information and belief of the Seller, the processes and methods employed, the services provided and the businesses conducted by the Company within the last six years do not, and/or at the time of being employed, provided or conducted did not, infringe the rights of any other person in any Intellectual Property or 29 Business Information. 18.7 To the best of the knowledge, information and belief of the Seller, there is no, nor has there been at any time during the past six years any, unauthorised use or infringement by any person of any of the Intellectual Property or Confidential Business Information owned or otherwise Required for the Business of the Company. 18.8 To the best of the knowledge, information and belief of the Seller, the Company has, if required to do so under the Data Protection Act 1984, duly registered as a data user and has complied with the Data Protection Principles as set out in that Act. 19. Computers 19.1 Details of the Systems and all agreements or arrangements relating to the maintenance and support (including escrow agreements relating to the deposit of source codes), security, disaster recovery management and utilisation (including facilities management and computer bureau services agreements) of the Systems have been disclosed. 19.2 All Systems are either owned by or validly leased or licensed to the Company. 20. Competition and Trade Regulation Law 20.1 The Company is not nor has it been a party to nor is it or has it been concerned in any agreement or arrangement or is conducting or has conducted itself (whether by omission or otherwise) in a manner which:- (A) has been or is required to be registered under RTPA 1976; (B) contravenes the provisions of any secondary legislation adopted under the Fair Trading Act 1973; (C) infringes Article 85 or 86 of the Treaty establishing the European Economic Community or any other anti-trust or similar legislation in any jurisdiction in which the Company has assets or carries or intends to carry on business or where its activities may have an effect; or (D) is registrable, unenforceable or void (whether in whole or in part) or renders it liable to civil, criminal or administrative proceedings by virtue of any anti-trust or similar legislation in any jurisdiction in which the Company has assets or carries on or intends to carry on business or where its activities may have an effect. 30 20.2 (A) The Company is not nor has it been a party to nor is it or has it been concerned in any agreement or arrangement in respect of which any undertaking has been given by or any order made against the Company pursuant to RTPA 1976. (B) The Company has not given an undertaking to, nor is it subject to any order of or investigation by, nor has it received any request for information from, any court or governmental authority (including, without limitation, any national competition authority and the Commission of the European Economic Community) under any anti-trust or similar legislation. (C) The Company is not nor has it been a party to nor is it or has it been concerned in any agreement or arrangement in respect of which an application for negative clearance and/or exemption has been made to the Commission of the European Community. 21. Insurances 21.1 Full details of the insurance policies in respect of which the Company has an interest have been disclosed in writing to the Purchaser, all such policies are in full force and effect and are not void or voidable, no claims are outstanding by the Company and, to the best of the knowledge, information and belief of the Seller, no event has occurred which might give rise to any claim. 22. Employment 22.1 A list of the names, jobs and short details of the terms of employment of every employee of the Company are set out in the Disclosure Letter. 22.2 Particulars of the terms of all consultancy agreements with the Company are contained in the Disclosure Letter. 22.3 Details of any material benefit received by any employee otherwise than in cash, and of any benefit received by any employee in cash which is related to sales, profits or performance, or which is otherwise variable (other than normal overtime), are set out in the Disclosure Letter. 22.4 Any contract of employment with any employee to which the Company is a party can be 31 terminated by the employing company without damages or compensation (other than that payable by statute) by giving at any time only the minimum period of notice applicable to that contract which is specified in section 86 of the Employment Rights Act 1996. 22.5 No senior employee of the Company has given notice terminating his contract of employment or is under notice of dismissal and no amount due to or in respect of any such employee or former employee of the Company is in arrear and unpaid. 22.6 Since the Accounts Date, no material change has been made in the emoluments or other terms of engagement of any employee and no such change, and no negotiation or request for such a change, is due or expected within six months from the date of this Agreement. 22.7 There is no dispute between the Company and any trade union or other organisation formed for a similar purpose existing, pending or threatened and there is no collective bargaining agreement or other arrangement (whether binding or not) to which the Company is a party. 22.8 Except in the normal course of business, the Company has outstanding no undischarged liability to pay to any governmental or regulatory authority in any jurisdiction any contribution, Taxation or other impost arising in connection with the employment or engagement of personnel by the Company. 22.9 The Company has at all relevant times complied in all material respects with all its obligations under statute and otherwise concerning the health and safety at work of its employees, and there are no claims capable of arising or threatened or pending by any employee or third party in respect of any accident or injury which are not fully covered by insurance. 22.10 No person working for the Company is an employee of the Seller's Group. 23. Fiduciary Arrangements 23.1 Where the Company has acted as trustee or fiduciary it has done so in a proper manner and in accordance with its obligations to its customers and the instructions of its customers. No right of set-off or contribution can be exercised by any person with whom assets (including money) held by the Company as trustee or fiduciary have been deposited, against such assets. 23.2 To the extent that the Company is required by the Pensions Act 1995 to have in place formal notices of appointment of its professional advisers, it has such notices in place and 32 all such notices are in full force and effect. 24. Asset Management and Safe Custody Where the Company has conducted asset management and safe custody business, it has conducted such business in a proper manner and in accordance with the terms of its standard form of asset management and safe custody agreements, copies of which are annexed to the Disclosure Letter. All assets (including securities) deposited with the Company as part of its asset management and safe custody business are in its possession or under its legal control and the Company has not encumbered or agreed to encumber or dispose of any such assets except in accordance with instructions from its customers. 25. Valuation of Managed Securities The valuation of securities held by the Company and the valuation of its portfolio managed for and on the account of its customers has been made in accordance with English law and accounting practices generally accepted in the United Kingdom at the time when such valuation is carried out. 26. Regulation 26.1 The internal procedures of the Company are in accordance with the requirements of the Money Laundering Regulations 1993 and its business has been conducted in accordance with those internal procedures and in accordance with the Money Laundering Regulations 1993. 26.2 The Company has received no notification or indication that it is in breach of the Money Laundering Regulations 1993 and, so far as the Seller is aware, there is no fact or circumstances which may give rise to such breach. 26.3 The Company has, if required to do so under the Consumer Credit Act 1974, obtained a licence covering the appropriate categories of credit business and has complied with the provisions under such Act and other statutory obligations relevant to its business. 26.4 The Company has at all times complied in all material respects with the Financial Services Act 1986 (the "FSA") and all applicable rules and regulations made thereunder and the Company does not engage or permits others to engage nor has it, at any time since the coming into force of the FSA, engaged or permitted others to engage in activities the carrying out of which constitutes carrying out investment business in the United Kingdom without itself or any relevant third party being authorised or exempt under the FSA in 33 respect thereof. 26.5 Full details of all authorisations to carry on investment business in the United Kingdom (including details of memberships of self-regulatory organisations ("SROs") as defined in the FSA) for which application has been made (whether or not the application is pending or was withdrawn, refused or granted) by or on behalf of the Company have been supplied in writing to the Purchaser, including, where applicable, full details of the scope of the Company's permitted business. 26.6 The Company has at all times complied with all rules and other requirements of the relevant SRO and/or the Securities Investment Board ("SIB") and there are no circumstances which, if known to the relevant SRO or to SIB, might prejudice its membership or authorisation. 26.7 No special conditions or limitations have been imposed by any relevant SRO or SIB in respect of the conduct of investment business by the Company, no waiver of any requirements has been sought by or granted to the Company and the Company has not engaged in any acts or practices or suffered to exist any state of affairs (i) which has led to a request (whether or not the request is pending or was subsequently withdrawn or refused) by the relevant SRO or SIB to alter or amend the manner in which investment business is or was being carried on or (ii) which has led to the imposition of specific conditions in respect of the conduct of investment business or (iii) which could if known to any relevant SRO or SIB lead to such a request or to the imposition of such conditions or otherwise adversely affect the Company's membership of an SRO or authorisation by SIB. 26.8 Copies of each annual review of the arrangements for compliance with the conduct of business rules of each relevant SRO and SIB undertaken by or on behalf of the Company and of each periodic inspection carried out by any SRO and SIB have been supplied to the Purchaser together with copies of all correspondence between the Company and the relevant SRO or SIB. 26.9 Any action requested any of the relevant SROs or SIB has been taken within any time limit specified and any request for action or activities to be discontinued has been complied with in a timely manner. 26.10 All complaints made to the Company in relation to investment business have been dealt with in accordance with the rules of the relevant SRO and SIB and none of such complaints remain outstanding. Copies of all such complaints have been supplied to the Purchaser including copies of all records relating thereto required to be kept by the rules of the relevant SRO or SIB. There are no investigations, disciplinary proceedings or other circumstances likely to lead to any complaint or claim or legal action, proceedings or 34 arbitration or prosecution by the relevant SRO or SIB or any other person. 26.11 The Company has all applicable up to date compliance manuals and is in compliance therewith. 26.12 Full details of all arrangements, whether or not legally binding, between the Company and any entity or person who is not an employee but which or who represents the Company or promotes contracts to which the Company is to be a party have been disclosed in the Disclosure Letter together with the name and address of each such entity or person. 26.13 All papers, documents and accounts have been supplied to the relevant SRO in accordance with its rules, including (without limitation) financial statements as at the Accounts Date and annual statements together with auditors' reports in respect of all relevant periods thereafter. 26.14 The Company is in compliance with the Financial Services (Client Money) Regulations 1987 as amended. 26.15 To the extent that the Company is required by the rules of the relevant SRO to be registered, it is so registered and notification has been given to the relevant SRO of any information that is required to be given in relation to registration. 26.16 There are no moneys owing to any SRO in respect of registration fees of the Company. 26.17 There is no investment business carried on in the United Kingdom in respect of which the Company is exempt; the Company is not nor has it ever been an appointed representative of another entity pursuant to section 44 of the FSA; nor is it included in the list of institutions maintained by the Bank of England pursuant to section 43 of the FSA. No application for exempt status pursuant to section 43 of the FSA has been made and withdrawn or refused or is still pending. 26.18 To the best of the knowledge, information and belief of the Seller, no employee or other person who represents or promotes the products of the Company in connection with investment business has been disqualified under section 59 of the FSA and none is or has ever been a party to any disqualification proceedings. 26.19 The Company has not entered into any investment agreement in circumstances which may result in such agreement being or becoming unenforceable or cancellable at the option or application of the other party to the agreement or of any other party. 26.20 There are no penalties, fines or other disciplinary actions which may be taken against the 35 Company as a result of incomplete, erroneous or misleading returns made to the Occupational Pensions Board. 27. The Accounts and Tax 27.1 The Company has no liability in respect of Taxation (whether actual or contingent) that is not fully provided for in the Accounts and, in particular, has no outstanding liability for:- (A) Taxation in any part of the world assessable or payable by reference to profits, gains, income or distributions earned, received or paid or arising or deemed to arise on or at any time prior to the Accounts Date or in respect of any period starting before the Accounts Date; or (B) for purchase, value added, sales or other similar tax in any part of the world referable to transactions effected on or before the Accounts Date that is not provided for in full in the Accounts. 27.2 The amount of the provision for deferred Taxation in respect of the Company contained in the Accounts was, at the Accounts Date, adequate and fully in accordance with accountancy practices generally accepted in the United Kingdom and commonly adopted by companies carrying on businesses similar to those carried on by the Company and, in particular, was in accordance with SSAP 15 (or any replacement of it instituted by the Accounting Standard Board). 27.3 If all facts and circumstances which are now known to the Company or the Seller had been known at the time the Accounts were drawn up, the provision for deferred Taxation that would be contained in the Accounts would be no greater than the provision which is so contained. 28. Tax Events Since the Accounts Date Since the Accounts Date:- (A) the Company has not declared, made or paid any distribution within the meaning of ICTA 1988; (B) the accounting period of the Company has not ended; (C) there has been no disposal of any asset (including trading stock) or supply of any service or business facility of any kind (including a loan of money or the letting, 36 hiring or licensing of any property whether tangible or intangible) in circumstances where the consideration actually received or receivable for such disposal or supply was less than the consideration which could be deemed to have been received for tax purposes; (D) no event has occurred which will give rise to a tax liability on the Company calculated by reference to deemed (as opposed to actual) income, profits or gains or which will result in the Company becoming liable to pay or bear a tax liability directly or primarily chargeable against or attributable to another person, firm or company; (E) no disposal has taken place or other event occurred which will or may have the effect of crystallising a liability to Taxation which should have been included in the provision for deferred Taxation contained in the Accounts if such disposal or other event had been planned or predicted at the Accounts Date; (F) the Company has not made any payment or incurred any obligation to make a payment which will not be deductible in computing trading profits for the purposes of corporation tax, or be deductible as a management expense of an investment company; (G) the Company has not been a party to any transaction for which any tax clearance provided for by statute has been or could have been obtained; (H) the Company has not paid or become liable to pay any interest or penalty in connection with any tax, has otherwise paid any tax after its due date for payment or owes any tax the due date for payment of which has passed or will arise in the 30 days after the date of this Agreement. 29. Tax Returns, Disputes, Records and Claims, etc. 29.1 The Company has made or caused to be made all proper returns required to be made, and has supplied or caused to be supplied all information required to be supplied, to any revenue authority, including (but without limitation) the Inland Revenue and the Customs and Excise in each case within the requisite period. 29.2 There is no dispute or disagreement outstanding at the date of this Agreement with any revenue authority regarding liability or potential liability to any tax or duty (including in each case penalties or interest) recoverable from the Company or regarding the availability of any relief from tax or duty to the Company and there are no circumstances which make it likely that any such dispute or disagreement will commence. 37 26.3 The Company has sufficient records relating to past events, including any elections made, to calculate the tax liability or relief which would arise on any disposal or on the realisation of any asset owned at the Accounts Date by the Company or acquired by it since that date but before Completion. 26.4 The Company has duly submitted all claims and disclaimers which have been assumed to have been made for the purposes of the Accounts. 29.5 The amount of tax chargeable on the Company during any accounting period ending on or within six years before the Accounts Date has not, to any material extent, depended on any concession, agreement or other formal or informal arrangement with any revenue authority, including (but without limitation) the Inland Revenue or the Customs and Excise. 29.6 The Company has not received any notice from any revenue authority, including the Inland Revenue, which required or will or may require it to withhold tax from any payment made since the Accounts Date or which will or may be made after the date of this Agreement. 30. Stamp Duty and Stamp Duty Reserve Tax 30.1 All documents which are required to be stamped and which are in the possession of the Company or by virtue of which the Company has any right have been duly stamped. 30.2 Since the last Accounting Date, the Company has not incurred any liability to stamp duty reserve tax. 31. Value Added Tax 31.1 The Company is registered for the purposes of value added tax and has been so registered at all times that it has been required to be registered by the relevant legislation and has, throughout the six years ending on the Completion Date, been treated for the purposes of section 43 VATA 1994 as a member of the VAT Group. 31.2 The Company will cease to be a member of the VAT Group on the Completion Date. 31.3 The Representative Member has made, given, obtained and kept full, complete, correct and up-to-date returns, records, invoices and other documents appropriate or required for the purposes of VATA 1994 and is not in arrears with any payments or returns due and has not been required by the Commissioners of Customs & Excise to give security under paragraph 4 of Schedule 11 VATA 1994. 38 31.4 The Representative Member has not, since the date 12 months before the Accounts Date, been in default in respect of any prescribed accounting period as mentioned in section 59 or section 59A VATA 1994. 31.5 Within the six years ending on the Accounts Date, the Company has not been registered for the purposes of VATA 1994 otherwise than as part of the VAT Group referred to in 31.1 above and it has not, within that six-year period, been a member of any other group for the purposes of VATA 1994. 31.6 Full details of any claim made by the Company for bad debt relief under section 36 VATA 1994 have been disclosed in writing to the Purchaser. 31.7 The Company has not made an election to waive exemption in relation to any land in accordance with paragraph 2 of Schedule 10 VATA 1994. 31.8 The Disclosure Letter contains full details of any assets of the Company to which the provisions of Part XV Value Added Tax Regulations 1995 (the capital goods scheme) apply and in particular:- (A) the identity (including, in the case of leasehold property, the term of years), date of acquisition and cost of the asset; and (B) the proportion of input tax for which credit has been claimed (either provisionally or finally in a tax year and stating which). 31.9 No agreement or arrangements have been made or are in place under which the Company is or could become liable (except as provided for in the Accounts) to make any payment to the Representative Member (or any other past or present member of the VAT Group) in respect of some or all of the Representative Member's liability to account to H.M. Customs & Excise for VAT. 31.10 The Company has not, at any time within the last six years, acted as agent of any person not resident in the United Kingdom for the purposes of section 47 VATA 1994 or been appointed as a VAT representative of any person for the purposes of section 48 VATA 1994. 32. Duties, etc. All value added tax, import duty and other taxes or charges payable to H.M. Customs and Excise upon the importation of goods and all excise duties payable to H.M. Customs and Excise in respect of any assets (including trading stock) imported, owned or used by the 39 Company have been paid in full. 33. Tax on Disposal of Assets On a disposal of all its assets by the Company for:- (A) in the case of each asset owned by it at the Accounts Date, a consideration equal to the value attributed to that asset in preparing the Accounts; or (B) in the case of each asset acquired since the Accounts Date, a consideration equal to the consideration given for the acquisition then either:- (i) in respect of any asset falling within ((A)) above, the liability to tax (if any) which would be incurred by it in respect of that asset would not exceed the amount taken into account in respect of that asset in computing the maximum liability to deferred Taxation as stated in the Accounts; or (ii) in respect of any asset within ((B)) above, no tax liability would be incurred by it in respect of that asset. 34. Replacement of Business Assets Full particulars of each claim under section 115, 116 or 117 CGTA 1979 or under sections 152, 153, 154 or 175 TCGA 1992 made prior to the date of this Agreement applies and which affects any asset which was owned by the Company on or after the Accounts Date have (except where the held over gain is treated as having accrued prior to the Accounts Date) been disclosed in writing to the Purchaser. 35. Distributions 35.1 Since 6 April 1965, the Company has not made any repayment of share capital to which section 210(1) ICTA 1988 applies or issued any share capital or other security as paid up otherwise than by the receipt of new consideration within the meaning of Part VI ICTA 1988. 35.2 No part of the amount payable on redemption of any share capital or security at par will be a distribution, as defined in ICTA 1988. 36. Rebasing 40 The Company has not made a disposal to which Section 35 TCGA applies. 37. Close Company 37.1 The Company is not nor has it ever been a close company as defined in ICTA 1988. 37.2 The Company has no loan outstanding to which the provisions of section 419 ICTA 1988 would apply (loans to participators etc.). 37.3 The Company is a close investment-holding company as defined in section 13A ICTA 1988. 38. Non-Deductible Revenue Outgoings The Company is not under any obligation to make any future payment which will be prevented (whether on the grounds of being a distribution or for any other reason) from being deductible for corporation tax purposes, whether as a deduction in computing the profits of a trade or as an expense of management or as a charge on income or as a non-trading debit under Chapter II Part IV Finance Act 1996, by reason of any statutory provision, other than section 74(1)(f) ICTA 1988 (capital). 39. Deductions and Withholdings The Company has made all deductions in respect, or on account, of any tax from any payments made by it which it is obliged or entitled to make and has accounted in full to the appropriate authority for all amounts so deducted. 40. Intra-Group Transactions The Company has not, at any time within the six year period prior to the Accounts Date, acquired any asset from any other company which was, at the time of the acquisition, a member of the same group of companies as the Company for the purposes of any tax. 41. Residence The United Kingdom is the only country whose tax authorities seek to charge tax on the world-wide profits or gains of the Company and the Company has never paid tax on income profits or gains to any tax authority in any other country. 42. Group Arrangements 41 42.1 The Company has not made any surrender of or claim for (i) group relief or (ii) any amount of surplus advance corporation tax or (iii) a refund of tax within section 102 Finance Act 1989 which involves any other company which was not a Subsidiary. 42.2 The Company has not received any payment in respect of a surrender of group relief or of surplus advance corporation tax or of a tax refund which could, in any circumstances, be due to be repaid to any other company which was not a Subsidiary. 43. Demerger The Company has not been concerned in an exempt distribution (as defined in section 214(4) ICTA 1988). 44. Non-Arm's Length Transactions The Company is not a party to any transaction or arrangement under which it may be required to pay for any asset or services or facilities of any kind an amount which is in excess of the market value of that asset or services or facilities or will receive any payment for any asset or services or facilities of any kind that it has supplied or provided or is liable to supply or provide which is less than the market value of that asset or services or facilities. Schedule 3 Seller's Limitations on Liability A. Agreements to Which This Schedule is Applicable Notwithstanding anything in this Agreement to the contrary, the provisions of this schedule shall operate to limit, to the extent specified but not otherwise, the liability of the Seller both in respect of any claim by the Purchaser for any breach of or inaccuracy in the Warranties, under the Tax Covenant or in respect of any other undertakings (an "Undertaking") given by or on behalf of the Seller in or pursuant to this Agreement. B. Limitations on Liability Under Warranties, Undertakings and the Tax Covenant 1. Limitation on Amount 1.1 The Purchaser shall not be entitled in any event to damages in respect of any claim or claims under any of the Warranties or under the Tax Covenant unless and until:- (A) the aggregate amount of all such substantiated claims exceeds (pound)100,000; and (B) the amount of any individual substantiated claim shall exceed (pound)10,000 where "substantiated" means a claim for which the Seller may be liable after taking into account the provisions of paragraph 1.1((B)) and which is admitted or proved in a court of competent jurisdiction, PROVIDED that the total aggregate liability of the Seller for breach of the Warranties or under the Tax Covenant shall not in any event exceed (pound)7,000,000. There shall be no limit on the liability of the Seller under the Undertakings including, without limitation, the Undertaking set out in clause of this Agreement. 1.2 For the purpose of sub-paragraph 1.1((B)): (A) where a claim relates to more than one event, circumstance, act or omission which event, circumstance, act or omission would separately constitute a breach of or give rise to a claim for breach of any of the Warranties or under the Tax Covenant, such claim shall be treated as a separate claim in respect of each such event, circumstance, act or omission. (B) all claims arising out of or relating to the same or similar events or circumstances shall be treated as a single claim. 2. Time Limits for Bringing Claims 43 No claim shall be brought against the Seller in respect of any breach of the Warranties or under the Tax Covenant unless the Purchaser shall have given to the Seller written notice of such claim specifying (in reasonable detail) the matter which gives rise to the breach or claim, the nature of the breach or claim and the amount claimed in respect thereof (detailing the Purchaser's calculation of the loss thereby alleged to have been suffered by it or the Company if relevant):- (A) on or before the seventh anniversary of Completion in respect of claims in respect of any breach of the Tax Warranties or under the Tax Covenant; or (B) on or before the date falling three months after the completion of the accounts of the Company in respect of the financial year ending on 31 December 1998, in respect of any other matters. PROVIDED that the Purchaser's compliance with sub-clause (A) of clause 7 (Claims Procedure) of the Tax Covenant shall be sufficient notice of a claim under the Tax Covenant or in respect of any breach of the Tax Warranties for the purposes of this paragraph. No time limit shall apply in relation to claims under the Undertaking set out in clause of this Agreement. 3. Conduct of Litigation 3.1 Upon the Purchaser or the Company becoming aware of any claim, action or demand against it or matter likely to give rise to any of these in respect of the Non-Tax Warranties, the Purchaser shall and shall procure that the Company shall:- (A) as soon as reasonably practicable notify the Seller by written notice as soon as it appears to the Purchaser that the Seller is or may become liable under the Non-Tax Warranties; (B) subject to the Seller indemnifying the Purchaser and/or the Company to their reasonable satisfaction against any liability, costs, damages or expenses which may be incurred thereby, take such action and give such information and access to personnel, premises, chattels, documents and records to the Seller and their professional advisers as the Seller may reasonably request and the Seller shall be entitled to require the Company to take such action and give such information and assistance in order to avoid, dispute, resist, mitigate, settle, compromise, defend or appeal any claim in respect thereof or adjudication with respect thereto; 44 (C) at the request of the Seller, allow the Seller to take the sole conduct of such actions as the Seller may deem appropriate in connection with any such assessment or claim in the name of the Purchaser or the Company and in that connection the Purchaser shall give or cause to be given to the Seller all such assistance as the Seller may reasonably require in avoiding, disputing, resisting, settling, compromising, defending or appealing any such claim and shall instruct such solicitors or other professional advisors as the Seller may nominate to act on behalf of the Purchaser or the Company, as appropriate, but to act in accordance with the Seller's sole instructions; (D) make no admission of liability, agreement, settlement or compromise with any third party in relation to any such claim or adjudication without the prior written consent of the Seller, such consent not to be unreasonably withheld or delayed; and (E) take all reasonable action (having regard to the commercial interests of the Company) to mitigate any loss suffered by it in respect of which a claim could be made under the Non-Tax Warranties. 4. No Liability if Loss is Otherwise Compensated for Single claim 4.1 The Seller shall not be liable for breach of any of the Non-Tax Warranties to the extent that the subject of the claim has been or is made good or is otherwise compensated for without cost to the Purchaser or to the Company. Taxation 4.2 In calculating the liability of the Seller for any breach of the Non-Tax Warranties, there shall be taken into account the amount by which any taxation for which the Company is now or in the future accountable or liable to be assessed is reduced or extinguished as a result of the matter giving rise to such liability. Insurances 4.3 If, in respect of any matter which would give rise to a breach of the Non-Tax Warranties or a claim under the Undertakings, the Company is entitled to claim under any policy of insurance, then no such matter shall be the subject of a claim under the Warranties or the Undertakings unless and until the Company shall have made a claim against its insurers and any such insurance claim (or any claim which could have been made had such policies or their equivalents been maintained as aforesaid) shall then reduce by the amount 45 recovered or extinguish any such claims for breach of the Non-Tax Warranties or under the Undertakings. Recovery From Third Parties 4.4 (A) Where the Purchaser and/or the Company are at any time entitled to recover from some other person any sum in respect of any matter giving rise to a claim under the Non-Tax Warranties the Purchaser shall, and shall procure that the Company shall, undertake all necessary steps to enforce such recovery prior to taking action against the Seller (other than to notify the Seller of the claim against the Seller) and, in the event that the Purchaser or the Company shall recover any amount from such other person, the amount of the claim against the Seller shall be reduced by the amount recovered, less all reasonable costs, charges and expenses incurred by the Purchaser or the Company recovering that sum from such other person. (B) If the Seller shall pay at any time to the Purchaser or the Company an amount pursuant to a claim in respect of the Non-Tax Warranties and the Purchaser or the Company subsequently become entitled to recover from some other person any sum in respect of any matter giving rise to such claim, the Purchaser shall, and shall procure that the Company shall take all necessary steps to enforce such recovery, and shall forthwith repay to the Seller so much of the amount paid by the Seller to the Purchaser or the Company as does not exceed the sum recovered from such other person less all reasonable costs, charges and expenses incurred by the Purchaser or the Company recovering that sum from such other person. (C) If any amount is repaid to the Seller by the Purchaser or the Company pursuant to sub-paragraph 4.4(B) above an amount equal to the amount so repaid shall be deemed never to have been paid by the Seller to the Purchaser for the purposes of paragraph 1. 5. Acts of the Purchaser 5.1 No claim shall lie against the Seller under the Non-Tax Warranties to the extent that such claim is wholly or partly attributable to:- (A) any voluntary act, omission, transaction, or arrangement carried out at the request of or with the consent of the Purchaser before Completion; 46 (B) any voluntary act, omission, transaction, or arrangement carried out by the Purchaser or on its behalf or by persons deriving title from the Purchaser on or after Completion; or (C) any explicit admission of liability made after the date hereof by the Purchaser or on its behalf or by persons deriving title from the Purchaser on or after Completion. 5.2 The Seller shall not be liable for any breach of Non-Tax Warranties which would not have arisen but for any reorganisation or change in ownership of the Company after Completion or any changes in the accounting basis on which the Company values its assets or any other change in accounting policy or practice of the Company after Completion. 6. Allowance, Provision or Reserve in the Accounts 6.1 No matter shall be the subject of a claim for breach of any of the Non-Tax Warranties or under the Undertakings to the extent that allowance, provision or reserve in respect of such matter shall have been made in the Accounts or has been included in calculating creditors or deducted in calculating debtors in the Accounts and (in the case of creditors or debtors) is identified in the records of the Company or shall have been otherwise taken account of or reflected in the Accounts. 6.2 Notwithstanding sub-paragraph above, if at any time after Completion and, in the case of a claim under the Non-Tax Warranties, within the time limit applicable to the Non-Tax Warranties set out in paragraph above (or at any time thereafter while any such claim remains not fully determined) the amount of any allowance, provision or reserve in respect of any liability of the Seller under the Non-Tax Warranties or the Undertakings (other than the Undertaking set out in clause) made in the Accounts or otherwise taken account of or reflected therein is found to be in excess of the matter for which such allowance, provision or reserve was made, the amount of such excess (the "Excess Amount") shall be applied in the following manner:- (A) if the Seller shall, prior to the date on which the Excess Amount is ascertained, have made any payment or payments in respect of the Non-Tax Warranties or the Undertakings then the Purchaser shall forthwith repay to the Seller a sum equal to such part of the Excess Amount as does not exceed the aggregate of those of such prior payments by the Seller as shall not have been previously refunded pursuant to this sub-clause; and (B) where sub-paragraph 6.2((A)) above does not apply or where such sub-paragraph does apply but there remains a balance of the Excess Amount after the application of that sub-paragraph, then the Excess Amount or the balance remaining, as the case may 47 be, shall be applied in reducing any liability of the Seller that may subsequently arise under the Non-Tax Warranties or the Undertakings. 7. Retrospective Legislation No liability shall arise in respect of any breach of any of the Non-Tax Warranties or under the Undertakings if and to the extent that liability for such breach occurs or is increased wholly or partly as a result of any legislation not in force at the date hereof which takes effect retrospectively. 8. Taxation Warranties 8.1 The Seller shall not be liable for a breach of a Tax Warranty relating to a post-Accounts Date tax liability unless such tax liability Abbey National as a consequence of or by reference to any of the events listed in paragraphs (a) to (e) inclusive of sub-clause (ii) of clause 2 (Covenant) of the Tax Covenant. In this paragraph 8.1, a post-Accounts Date tax liability means a tax liability of the Company which Abbey National as a consequence of or by reference to an event occurring or being deemed to occur after the Accounts Date. 8.2 Clauses 3 (Limits on Clause 2), 4 (Mitigation), 5 (Over-Provisions, Reliefs, etc), 6 (Recovery from Other Persons), 7 (Claims Procedure), 9 (Due Date of Payment) and 10 (Deductions from Payments, etc) of the Tax Covenant shall apply mutatis mutandis to claims, liabilities and payments in respect of the Tax Warranties as they apply to claims, liabilities and payments under the Tax Covenant. 9. Loss of Goodwill or Business No claim shall lie against the Seller under the Non-Tax Warranties to the extent that the subject of the claim relates to the fact that the Company has lost goodwill or possible business. 10. Payment of Claim to be Additional Consideration for the Consideration Shares Any payment made by the Seller in respect of any claim under the Warranties or the Undertakings shall be deemed to be additional consideration given by the Seller for the Consideration Shares under clause 3 (Consideration) of this Agreement. 48 Schedule 4 Tax Covenant The Tax Covenant shall be in the form of the deed prepared by Slaughter and May which has (for the purposes of identification only) already been initialled by the Seller. 49 Schedule 5 Basic Information about the Company 50 1. Registered number : 2055101 2. Date of incorporation : 15 September 1986 3. Place of incorporation : England 4. Address of registered office : Abbey House Baker Street London NW1 6XL 5. Class of company : Private limited 6. Authorised share capital : (pound)2,500 7. Issued share capital : (pound)2,500 8. Loan capital : None 9. Directors: Full name Jeremy Jon Grahame Budden Brian Carter Duncan Craig Howorth Charles Gerard Toner 10. Joint Secretaries: Full name Ian Richard Christie/Leena Nagrecha 11. Accounting reference date : 31 December 51 12. Auditors : Coopers & Lybrand 13. Tax residence : United Kingdom 14. Business activities : independent financial advisory company - -------------------------------------------------------------------------------- Schedule 6 Intellectual Property Part A 1. Registered Trade and Service Marks Country Mark Number Class of goods or Date of next renewal services for which registered None 2. Trade Mark and Service Mark Applications Country Mark Number Date of application Class of goods or services for which protection sought None 3. Unregistered Trade and Service Marks Country Mark Date use commenced Class of goods or services on which used None - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 53 4. Registered Designs Country Number Subject matter Date of next renewal None 5. Registered Design Applications Country Subject matter Date of application None Part B 6. Licences and User Agreements A. Details (grantor, grantee, country, subject matter and term) of all licences and user agreements granted to the Company. Grantor Grantee Country Subject Matter Term ------- ------- ------- -------------- ---- None B. Details (grantor, grantee, country, subject matter and term) of all licences and user agreements granted from the Company None - -------------------------------------------------------------------------------- Schedule 7 Pensions 1. DEFINITIONS (A) For the purposes of this Schedule the following expressions shall have the following meanings:- the "Company" means Abbey National Independent Financial Advisers Limited "Completion Date" means the date of this Agreement "Former Schemes" means all occupational pension schemes (as defined in section 1 of the Pension Schemes Act 1993) in which the Company has participated at any time after 30 June 1992 and prior to Completion and to which the Company may be required to make a payment pursuant to Section 75 of the Pensions Act 1995 or otherwise as a result of the liabilities of the scheme exceeding the value of its assets, excluding any money purchase schemes (as defined in section 181 of the Pension Schemes Act 1993) and the Seller's Scheme. "Participation Period" means the period during which the Purchaser and/or the Company, as the case may be participates in the Seller's Scheme and ending no later than the date on which the Seller or any associated company ceases to own a shareholding in excess of 40% of the total issued share capital of the Purchaser or such lower figure as may be agreed by the Seller and Willis Group plc and which does not prejudice Inland Revenue approval of the continued participation pursuant to paragraph 2 of this Schedule. "Pensionable Age" means, in relation to a Pensionable Employee, the age specified in the rules of the Seller's Scheme as the age at which such Pensionable Employee should normally retire. 55 "Pensionable Employees" means: (i) such of the Relevant Employees at Completion as are then members of the Seller's Scheme; and (ii) such of the Relevant Employees who become members of the Seller's Scheme during the Participation Period. "Relevant Employees" means the employees of the Company at the date of this Agreement. "Seller's Scheme" means: (i) the Abbey National Group Pension Scheme constituted and established by an interim trust deed dated 5th August 1996 or, if the context so requires, the trustees of that scheme; or (ii) the Abbey National Money Purchase Pension Scheme constituted and established by an interim trust deed dated 24th June, 1991 and currently governed by a trust deed dated 3rd December 1996 or, if the context so requires, the trustees of that scheme; or (iii) the Abbey National (Associated Bodies) Pension Fund constituted and established by an interim trust deed dated 17th December 1986 and currently governed by a trust deed dated 31st May 1994, or, if the context so requires, the trustees of that scheme; or (iv) the Abbey National Amalgamated Pension Fund constituted and established by trust deeds dated 10th February 1954, 13th October 1958 and 1st September 1970 or, if the context so requires, the trustees of that scheme; or 56 (v) the National and Provincial Building Society Pension Fund constituted and established by a trust deed dated 1st April 1955, and currently governed by a definitive deed dated 25th March 1994 or, if the context so requires the trustees of that scheme. (B) The provisions of this Schedule shall apply separately to each Seller's Scheme and references to "Seller's Scheme" shall be construed accordingly. (C) Save where specifically defined or where the context otherwise requires, words and expressions used in Chapter I of Part XIV of the Income and Corporation Taxes Act 1988 or in the Pension Schemes Act 1993 shall have the same meanings in this Schedule. (D) References in this Schedule to any statute or statutory provision shall include any statute or statutory provision which amends, extends, consolidates or replaces the same. 2. MATTERS RELATING TO THE SELLER'S SCHEME (A) The Seller's undertakings (i) The Seller shall procure that: (a) subject to the consent of the Commissioners of Inland Revenue (which the Seller shall use its reasonable endeavours to obtain) the Company is permitted to continue its participation and the Purchaser is admitted to participation in the Seller's Scheme for such time as they employ any Relevant Employee; (b) each of the Relevant Employees who during the Participation Period would have become a member of the Seller's Scheme but for the transactions provided for in this Agreement is permitted to become a member of the Seller's Scheme in respect of the Participation Period or the applicable part of it. (ii) The Seller shall use reasonable endeavours to procure that: (a) the Seller's Scheme will be an exempt approved scheme for a period of at least one year from the Completion Date; and (b) the Seller's Scheme or alternative equivalent pension arrangements will be maintained in relation to the Pensionable Employees in full force and effect for a period of at least one year from the Completion Date; 57 (B) The Purchaser's undertakings The Purchaser undertakes that it and the Company (for as long as they participate in the Seller's Scheme) will: (i) pay to the Seller's Scheme the contributions due and payable in respect of the Participation Period (but not any period before the Completion Date) to the Seller's Scheme by and in respect of each Pensionable Employee (but only for such part of the Participation Period that the Pensionable Employee is accruing benefits in the Seller's Scheme), calculated at the rates and otherwise on the basis applicable to all Employers in the Seller's Scheme; (ii) comply during the Participation Period in all other respects with the provisions of the Seller's Scheme; (iii) not do or omit to do during the Participation Period any act or thing whereby the approval of the Seller's Scheme as an exempt approved scheme or as a contracted-out scheme would or might be prejudiced; (iv) not exercise any power, right or discretion conferred on it under or in relation to the Seller's Scheme whether as an employer or otherwise, including (without limitation) any power, right or discretion conferred by law, without the prior written consent of the Seller (such consent not to be unreasonably withheld or delayed) and on such terms (whether as to payment of additional contributions to the Seller's Scheme or otherwise) as the Seller may agree; and (v) appoint such company as the Seller may nominate to act on its behalf in relation to the Seller's Scheme for the purpose of dealing with the provisions of the Pensions Act 1995 and the Pension Schemes Act 1993 and do all such acts and execute and/or sign all such documents as the Seller may reasonably consider necessary or desirable in connection therewith. (C) Parties to do everything necessary to comply with contracting-out requirements The Seller and the Purchaser shall take, and the Purchaser shall procure that the Company take, such steps as may be required of them, including the completion of any notices and elections, to procure that the Purchaser and the Company: (i) holds or continues to be named in a contracting-out certificate on a reference 58 scheme basis or otherwise, as the case may be, in relation to the Seller's Scheme in respect of the Participation Period; and (ii) ceases to hold or be named in such certificate with effect from the end of the Participation Period. (D) The Seller's covenant in respect of any residual liabilities in relation to the Former Schemes The Seller hereby covenants with the Purchaser to pay to the Purchaser (so far as possible by way of repayment of the consideration payable for the Shares pursuant to this Agreement) forthwith upon demand and together with interest at the Agreed Interest Rate from the date of such demand until the date of payment an amount equal to any payment the Company or any member of the Purchaser's Group is or becomes liable to make to any Former Scheme whether before, at or after Completion, whether pursuant to, Section 75 of the Pensions Act 1995, or otherwise other than payments pursuant to the other provisions of the Schedule. 3. PENSION WARRANTIES The Seller represents, warrants and undertakes, and save as disclosed in the Disclosure Letter, that: (A) Seller's Scheme is the only funded pension/disability arrangement Other than the Seller's Scheme and the State scheme there is no arrangement to which the Company contributes or under which it has any obligation (whether legally enforceable or not) under which benefits of any kind are payable to or in respect of any of the Relevant Employees on retirement, death or disability or on the attainment of a specified age or on the completion of a specified number of years of service or in relation to sickness after retirement. (B) All material Seller's Scheme documents supplied The trust deeds and rules of the Seller's Scheme, together with all material announcements (to members of the Seller's Scheme who are Relevant Employees) which have not been incorporated into the Trust Deed and Rules of the Seller's Scheme have been supplied to the Purchaser or the Purchaser's advisers and are attached to the Disclosure Letter. (C) Exercise of discretion or power 59 No discretion or power has been exercised under the Seller's Scheme in respect of members of that Scheme who are Relevant Employees to augment benefits or to provide a benefit which would not otherwise be provided. (D) Adherence The Company adheres to the Seller's Scheme in respect of the Pensionable Employees. (E) Exempt Approval The Seller's Scheme is an exempt approved scheme or capable of exempt approval. (F) Contracting-out The Seller's Scheme is a contracted-out scheme and the Company is named in a contracting-out certificate in relation to the Seller's Scheme. (G) Contributions There are not at the date hereof any contributions from or in respect of any of the Relevant Employees or other payments which have fallen due but are unpaid in respect of the Seller's Scheme except for contributions which may be due in respect of the current or previous four weekly accounting period. (H) Claims So far as the Seller is aware there are no actions, suits or claims (other than routine claims for benefits) outstanding, pending or threatened against the Trustees or Administrator of the Seller's Scheme or against the Seller or the Company in respect of any matter arising out of or in connection with the Seller's Schemes in respect of any Pensionable Employees. (I) Overriding Provisions (i) The Seller's Scheme does not distinguish between male and female members (except in relation to maternity) in the provision of benefits relating to Pensionable Service after 17th May 1990 (with the exception of guaranteed minimum pensions) and no adverse alteration has been made to benefits already accrued at the date of announcing changes designed to equalise benefits. (ii) So far as the Seller is aware the Seller's Scheme has been administered in accordance with the preservation requirements within the meaning of section 69 60 Pension Schemes Act 1993. (iii) The Seller's Scheme has been administered in accordance with the equal access requirements of section 118 Pension Schemes Act 1993. (J) Former Scheme Liabilities (i) The Company has not participated in any Former Scheme immediately before or at a time when that scheme ceased to admit new members. (ii) The Company has no liability to make any payment to the Seller's Scheme or to any Former Scheme pursuant to section 75 of the Pensions Act 1995. (iii) The Company has no undischarged liability in respect of any Former Scheme pursuant to Regulation 3 of the Occupational Pensions Schemes (Deficiency on Winding up etc.) Regulations 1996. 61 Signatures Signed by ) Charles Toner ) Charles Toner for and on behalf of ) Abbey National Independent ) Consulting Group Limited ) Signed by ) Allan Daffern ) Allan Daffern for and on behalf of ) Willis National Holdings ) Limited ) - -------------------------------------------------------------------------------- Dated 11th December 1998 ABBEY NATIONAL INDEPENDENT CONSULTING GROUP LIMITED and WILLIS NATIONAL HOLDINGS LIMITED ----------------------------------- ANIFA Side Agreement to Share Sale Agreement ----------------------------------- Slaughter and May, 35 Basinghall Street, London EC2V 5DB Ref: JCXT/JMYA - -------------------------------------------------------------------------------- SIDE AGREEMENT THIS AGREEMENT is made 11th December 1998 BETWEEN:- 1. Abbey National Independent Consulting Group Limited of Abbey House, Baker Street London NW1 6XL (registered in England No. 2506374) (the "Seller") AND 2. Willis National Holdings Limited of Ten Trinity Square, London EC3P 3AX (registered in England No. 3393377) (the "Purchaser"). WHEREAS: (A) The parties entered into a Share Sale Agreement on 4th August, 1997 (the "Share Sale Agreement") whereby the Purchaser acquired all the issued shares in Willis Corroon Financial Planning Limited Abbey National Independent Financial Advisers Limited ("ANIFA")] from the Seller. (B) Under Clause 7 of the Share Sale Agreement the Seller agreed to indemnify and keep indemnified the Purchaser from all claims, losses, costs or other liabilities which the Purchaser and/or ANIFA may suffer in respect of pensions missellings. (C) The parties have decided to enter into this Side Agreement pursuant to Clause 15.6 with respect to extending the indemnity provided for under the Share Sale Agreement to include missellings of Free Standing Additional Voluntary Contributions ("FSAVC") schemes. IT IS AGREED AS FOLLOWS: 1. Terms and expressions in the Share Sale Agreement shall, unless the context otherwise requires, have the same meanings when used in this Side Agreement. 2. The parties agree that the definition of "affected person" set out in clause 7.2 of the Share Sale Agreement shall be amended by inserting after the words "Taxes Act 1988" in sub-paragraph (A) the following; "or a retirement benefits scheme (as defined in section 611 of ICTA 1988) established solely to accept contributions from employees to provide additional benefits to those provided by their employers' pension scheme (a free standing additional voluntary contribution scheme (including, without limitation, any such scheme approved by the Board of Inland Revenue pursuant to section 591(2)(h) of ICTA 1988)); and by inserting after the words "so approved" in sub-paragraph (B) the following: "or such a free standing additional voluntary contribution scheme". 3. Save as set out in this Side Agreement, the terms and conditions of the Share Sale Agreement remains and shall continue in full force and effect and shall apply to the provisions of this Side Agreement. 4. This Side Agreement shall be governed by and shall be construed in accordance with, English law. Signatures Signed by ) ) for and on behalf of ) Abbey National ) Independent Consulting ) Group Limited ) Signed by ) ) for and on behalf of ) Willis National Holdings ) Limited EX-2.5 6 EX. 2.5 Exhibit 2.5 The following exhibit no. 2.5 constitutes a fair and accurate English translation of the original copy of this document. /s/ Michael P. Chitty ---------------------------------------- Michael P. Chitty Company Secretary of Willis Corroon Group Limited Translation No. 56 of Deed Register for 1998 R e c o r d e d in Frankfurt am Main on 22 January 1998 Before the undersigned Notary Public in the district of the Higher Regional Court Frankfurt am Main Dr. Gunter Paul with office in Frankfurt am Main, Darmstadter Landstrasse 125, appeared today with the request of notarization of the Framework Agreement --------------------- JASPERS INDUSTRIE ASSEKURANZ GMBH & CO KG -2- WUPPESAHL & CO. ASSEKURANZMAKLER personally known to the acting notary public or identified by valid Federal German Identity Card: 1. for Frau Doris Ballauff, Inselstrasse 27, 22297 Hamburg, the lawyer Dr. Christian von Oertzen, business address: Darmstadter Landstrasse 125, 60598 Frankfurt am Main, pursuant to a power of attorney of 22 January 1998 granted to him which was at hand on notarization and is attached to this record as ANNEX 1. 2. for Herr Michael Emken, Parkallee 65, 20144 Hamburg, the lawyer Dr. Christian von Oertzen, business address: Darmstadter Landstrasse 125, 60598 Frankfurt am Main, pursuant to a power of attorney of 22 January 1998 granted to him which was at hand on notarization and is attached to this record as ANNEX 2. 3. for Frau Irene Koenig, Fuchshohl 5, 65812 Bad Soden, the lawyer Dr. Christian von Oertzen, business address: Darmstadter Landstrasse 125, 60598 Frankfurt am Main, pursuant to a power of attorney of 22 January 1998 granted to him which was at hand on notarization and is attached to this record as ANNEX 3. 4. for Deutsche Bank AG, Taunusanlage 12, 60325 Frankfurt am Main, the lawyer Dr. Christian von Oertzen, business address: Darmstadter Landstrasse 125, 60598 Frankfurt am Main, pursuant to a power of attorney of 22 January 1998 granted to him which was at hand on notarization and is attached to this record as ANNEX 4. 5. for Carl Jaspers Sohn GmbH, Gruneburgweg 102, 60323 Frankfurt am Main, the lawyer Dr. Christian von Oertzen, business address: Darmstadter Landstrasse 125, 60598 Frankfurt am Main, pursuant to a power of attorney of 22 January 1998 granted to him which was at -3- hand on notarization and is attached to this record as ANNEX 5. -4- 6. for Jaspers Industrie Assekuranz GmbH & Co. KG, Gruneburgweg 102, 60323 Frankfurt am Main, the lawyer Dr. Christian von Oertzen, business address: Darmstadter Landstrasse 125, 60598 Frankfurt am Main, pursuant to a power of attorney of 22 January 1998 granted to him which was at hand on notarization and is attached to this record as ANNEX 6. 7. for Industrie Assekuranz Gesellschaft mit beschrankter Haftung, Gruneburgweg 102, 60323 Frankfurt am Main, the lawyer Dr. Christian von Oertzen, business address: Darmstadter Landstrasse 125, 60598 Frankfurt am Main, pursuant to a power of attorney of 22 January 1998 granted to him which was at hand on notarization and is attached to this record as ANNEX 7. 8. for Willis Corroon GmbH, Warburgstrasse 50, 20354 Hamburg, the lawyer Dr. Holger Iversen, business address: Warburgstrasse 50, 20354 Hamburg, pursuant to a the power of attorney of 20 January 1998 granted to him which was at hand on notarization and is attached to this record as ANNEX 8. 9. for C. Wuppesahl & Co. Assekuranzmakler, Herrlichkeit 1, 28199 Bremen, the lawyer Dr. Christian von Oertzen, business address: Darmstadter Landstrasse 125, 60598 Frankfurt am Main, pursuant to a power of attorney of 21 January 1998 granted to him which was at hand on notarization and is attached to this record as ANNEX 9. 10. for C. Wuppesahl Management GmbH, Herrlichkeit 1, 28199 Bremen, the lawyer Dr. Christian von Oertzen, business address: Darmstadter Landstrasse 125, 60598 Frankfurt am Main, pursuant to a power of attorney of 21 January 1998 granted to him which was at hand on notarization and is attached to this record as ANNEX 10. 11. for C. Wuppesahl, Herrlichkeit 1, 28199 Bremen, the lawyer Dr. Christian von Oertzen, business address: Darmstadter Landstrasse 125, 60598 Frankfurt am Main, -5- pursuant to a power of attorney of 22 January 1998 granted to him which was at hand on notarization and is attached to this record as ANNEX 11. 12. for Achtundsechzigste Verwaltungsgesellschaft Dammtor mbH, Warburgstrasse 50, 20354 Hamburg, the lawyer Dr. Holger Iversen, business address: Warburgstrasse 50, 20354 Hamburg, pursuant to a power of attorney of 20 January 1998 granted to him which was at hand on notarization and is attached to this record as ANNEX 12. 13. for Willis Corroon Group plc, Ten Trinity Square, London EC3P 3AX, England, the lawyer Dr. Holger Iversen, business address: Warburgstrasse 50, 20354 Hamburg, pursuant to a power of attorney of 20 January 1998 granted to him which was at hand on notarization and is attached to this record as ANNEX 13. According to all powers of attorney the persons appeared are exempted from the restrictions of ss. 181 BGB. -6- The Appeared declared for the record the following Framework Agreement for the Merger of the limited partnership Jaspers Industrie Assekuranz GmbH & Co. KG, Frankfurt am Main and the general partnership C. Wuppesahl & Co. Assekuranzmakler, Bremen I. Preamble (1) Shareholders of Jaspers Industrie Assekuranz GmbH & Co. KG - hereinafter referred to also as "JIA" - are: a) as general partner: Industrie-Assekuranz Gesellschaft mit beschrankter Haftung, with seat in Frankfurt am Main - hereinafter referred to also as "IAG" - b) as limited partners: 1. Frau Doris Ballauff 2. Herr Michael Emken 3. Frau Irene Koenig 4. Deutsche Bank AG - hereinafter referred to also as "DB" - 5. Alexander & Alexander International Inc. - hereinafter referred to also as "A & A" - (2) Shareholders of the C. Wuppesahl & Co. Assekuranzmakler - hereinafter -7- referred to also as "Wuppesahl" - are: a) Willis Corroon GmbH, with seat in Hamburg, - hereinafter referred to also as "WCG" - b) C. Wuppesahl, with seat in Bremen, c) C. Wuppesahl Management GmbH, with seat in Bremen. (3) A & A withdraws from JIA and its general partner IAG effective on December 31, 1997. Willis Corroon Group plc - hereinafter referred to as "WC" - is taking over the shares through 68. Verwaltungsgesellschaft Dammtor mbH with seat in Hamburg - hereinafter referred to also as "Dammtor" - (see below section II). (4) After A & A's withdrawal JIA will be converted into a consolidated unit company (Einheitsgesellschaft) in such way that all shareholders of JIA contribute their shares in the general partner IAG to JIA (see section III below). (5) With effect of January 01, 1998, JIA and Wuppesahl will merge into a limited partnership with the corporate name Jaspers Wuppesahl Industrie Assekuranz GmbH & Co. KG - hereinafter referred to also as "JWIA" - (see section IV below). (6) In course of the merger WCG acquires from the limited partners Frau Irene Koenig, Frau Doris Ballauff and Herr Michael Emken - hereinafter referred to also as "JIA-Family Shareholders" - supplementary limited partnership shares to increase its and/or Dammtor's limited partner contribution from 20% in the limited partnership capital in the merged company JWIA by 10% to 30% (see section IV, below, paras 1 and 2). (7) As of December 31, 1998/1 January 1999, DB sells and transfers its shares in the merged company to WCG (see section IV, below, paras 3 and 4). -8- (8) The existing corporation agreement between A & A and JIA is not terminated because of the withdrawal of A & A from JIA. II. Repurchase of Shares (1) WC causes Dammtor to conclude with A & A in a separate document - pursuant to ANNEX II.1 - a purchase and transfer agreement concerning shares in IAG and JIA and to file without delay the change of the limited partners for registration with the commercial register of the Local Court Frankfurt am Main. All other partners are obliged to sign the application. (2) The approvals of IAG and JIA to the share transfer in para. 1 as well as the waiver of the shareholders of all their possible rights of first refusal and similar rights are attached to this agreement as - ANNEX II.2 and II.3 -. (3) Furthermore, the shareholders of JIA are concluding - pursuant to ANNEX II.4 - a special agreement on the distribution of the business profit for 1997. (4) Dammtor is entitled and obliged to transfer its shares to WCG once the merger -9- according to section IV has become effective. Until the shares are transferred Dammtor and WCG will be regarded as one shareholder. -10- III. CONVERSION of JIA into a CONSOLIDATED UNIT COMPANY ("Einheitsgesellschaft") (1) The limited partners of JIA, Frau Irene Koenig, Frau Doris Ballauff, Herr Michael Emken, DB, Carl Jaspers Sohn GmbH - hereinafter referred to also as "Jaspers" - as well as Dammtor agree in a separate document - pursuant to ANNEX III.1 - to transfer all of their shares in IAG (as general partner of JIA) to JIA immediately after the withdrawal of A & A and the joining of Dammtor as successor in interest of A & A has been recorded in the commercial register; Jaspers is thereby acting on behalf of Frau Doris Ballauff. (2) Together with the transfer of the shares of the general partner to the limited partnership the articles of association of IAG are in a separate document - pursuant to ANNEX III.2 - completely redrafted and the new version is filed without delay for registration with the commercial register. (3) The advisory board approved the conversion of JIA into a consolidated unit company and the acquisition of the shares in IAG by JIA. IV. MERGER of JIA and WUPPESAHL (1) Immediately after the withdrawal of A & A (see II, above), and the conversion of -11- JIA into a consolidated unit company (see III above), JIA and Wuppesahl oblige themselves to conclude a merger contract pursuant to the draft in - ANNEX IV.1 - and to merge both enterprises into one limited partnership under the corporate name Jaspers Wuppesahl Industrie Assekuranz GmbH & Co. KG. The merger shall take place according to the provision of the draft unless discussions of the draft with the works council require amendments. The contracting parties will then conclude the contract with the so agreed amendments. (2) The registered seat of the merged company shall be Frankfurt am Main and Bremen. If one of the commercial registers refuses to register the double seat (Doppelsitz) the only registered seat shall be Frankfurt am Main. (3) The shareholders of JIA and Wuppesahl will agree to the merger contract in separate shareholders resolutions - pursuant to ANNEXES IV.2a and b - (4) The shareholders of JIA and Wuppesahl undertake to conclude the articles of association of JWIA pursuant to - ANNEX IV.3 - For the business years 1998, 1999 and 2000 the profit of the company shall be - different from the articles of association - distributed as follows: 1. The shareholders of Wuppesahl (except WCG) receive an advance profit payment (Vorabgewinn) in the amount of 7.5% of the distributable profits. -12- 2. The shareholder WCG (including Dammtor) receives his shares in the profit according to the articles of association calculated on the total distributable profit. 3. The remaining profits after subtraction of the Vorabgewinn as well as the profit share of WCG (including Dammtor) is distributed among the shareholders (without WCG and Dammtor) according to their participation in the company. (5) The shareholders of JIA and Wuppesahl undertake to conclude the internal rules of the advisory board of the merged company pursuant to - ANNEX IV.4 -. (6) Mr. Georg Abegg, Herrlichkeit 1, 28199 Bremen, is appointed as further managing director (Geschaftsfuhrer) of IAG. He shall represent the company together with another Geschaftsfuhrer or Prokurist. A respective shareholder resolution of IAG is hereby concluded. (7) Up to the date of the merger of JIA and Wuppesahl is completed their managements agree as follows: 1. The managing directors shall form a working group with the function to jointly manage both companies. 2. The joint management shall conduct and also represent the enterprises up to the completion of the merger, as far as legally admissible, as one company. Thereby the future provisions of the articles of association of the limited partnership shall apply already now analogously inter partes to management powers and approval requirements. -13- 3. The shareholders of JIA shall already appoint the JIA advisory board in accordance with the future provisions in the articles of association of the merged company JWIA. -14- V. ADDITIONAL ACQUISITION of SHARES (1) At the same time of the merger the shareholders Frau Irene Koenig, Frau Doris Ballauff and Herr Michael Emken shall assign in a separate document - pursuant to ANNEX V.1 - in proportion of their limited capital shares to WCG such number of proportionate shares so that WCG together with Dammtor holds in toto a limited capital share of 30% in the merged company JWIA. (2) At the same time of the merger Frau Doris Ballauff, Herr Michael Emken and C. Wuppesahl Management GmbH shall assign in a separate document - pursuant to ANNEX V.2 - in proportion of their limited capital shares to Wuppesahl such number of proportionate shares respectively C. Wuppesahl Management GmbH all its shares so that Wuppesahl holds in total a limited capital share of 22% in the merged company JWIA. (3) As of December 31, 1998 / January 1, 1999, the shareholder DB sells and transfers in a separate document - pursuant to ANNEX V.2 - its shares in the merged company to WCG. -15- VI. JOINT PROVISIONS (1) As far as after this Framework Agreement limited partnership shares are transferred or merged, the shareholders of the company whose shares are involved in the transfer or merger make warranties and representations to the other contracting parties - pursuant to ANNEX VI.1 -; meaning that a) to the extent transfers have taken place the contracting parties to the transfer make the warranties and representations; regarding the share transfer from A & A to Dammtor according to section II also the JIA-Family Shareholders and DB, and b) as far as companies were merged, the shareholders who took part in the merger make the warranties and representations, unless it has been agreed expressly otherwise in the present Framework Agreement or its Annexes. (2) All warranties and representations are given for the point in time when this agreement is signed. (3) Warranties and representations are true only if they are appropriate, complete and correct in every respect, unless it has been agreed expressly otherwise in this agreement and its annexes. -16- (4) As far as reference is made to subjective knowledge within the scope of warranties and representations a written enquiry of the declaring party must be made with the management concerned. (5) Each contracting party shall declare the warranties and representations as his own personal declarations, also in such cases where the declaration is made jointly with other contracting parties. Knowledge of one contracting party shall not be attributed to the other party because the parties have given jointly warranties and representations. (6) As regards the warranties and representations in connection with the merger of the companies, facts which were notified to BDO Deutsche Warentreuhand AG Wirtschaftsprufungsgesellschaft in the course of their investigations for their expert opinion of 22 May 1997 on the ratio between the companies, and facts which were notified to the certified public accountants of one party in the course of their examinations shall be considered as notified to the other contracting party within the scope of warranties and representations. (7) WC guarantees the contracting parties the proper fulfillment of all commitments under this contract and the exercise of rights as set forth in this contract through Dammtor and WCG. (8) If any of the representations and warranties is untrue, incomplete or misleading in any respect the person liable therefore shall pay to JWIA such sum as may be sufficient to place JWIA in the position it would have been if the representations and warranties have been true, complete and not misleading. (9) Any claims resulting from any of the representations and warranties being untrue, inadequate or misleading shall be time-barred by 31 December 1999, unless -17- a) such claim has been notified to the other party before 31 December 1999 in writing, and b) within six months after the notification the parties have agreed on the claim or arbitration proceedings have commenced. For claims resulting from any of the representations and warranties contained in ANNEX VI.1 No. 7 (taxes) the period for notification shall not expire before the expiry of six months after the day on which a tax assessment giving rise to the claim became final. (10) All companies and shareholders hereby declare their approval to the transfer in section II (repurchase of shares), section III (conversion of JIA into a consolidated unit company) and section V (additional acquisition of shares) and waive any preemption rights they may have. (11) As far as under this agreement shareholder resolutions of IAG and/or JIA are concluded at a time when A & A still is a shareholder Dammtor also acts as agent without authority of A & A and hereby declares the approval of such resolutions for the time when it becomes shareholder of the company. (12) All declarations in this contract including its annexes are subject to the condition precedent that the repurchase agreement according to section II is concluded. VII. NOTICE TO THE CARTEL OFFICE The merger according to III to V has to be notified according to ss. 24a GWB. All respective agreements are therefore subject to the condition precedent that the German Federal Cartel Office approves the merger according to ss. 24a para. 4 GWG or the time period for an interdiction of the Cartel Office is expired. The contracting parties will notify the merger without delay to the German Federal Cartel Office. -18- VIII. POWER OF ATTORNEY (1) The appeared hereby authorise the employees of the notary Gisela Schmitt, Andrea Grober and Beatrice Appel, all with business address at: Darmstadter Landstrasse 125, 60598 Frankfurt am Main each of them alone and exempted from the restrictions of ss. 181 BGB under the responsible control of the acting notary a) to change and amend the merger contract b) to hold shareholder meetings and to adopt resolutions c) to change or amend applications to the commercial register. as far as these measures are necessary to finalise the transaction according to this agreement. (2) The parties agree internally that this power of attorney may only be used after written approval of the parties; the commercial register and all other public authorities do not have to prove whether the approval was given. IX. FINAL PROVISIONS (1) The contracting parties shall observe secrecy in all matters of the present contract and its execution and shall abstain from all measures which could be suited to impair the execution of the contract or the image of a contracting party in the public at large or among customers. -19- (2) Declarations under this contract shall be addressed by registered letter or courier to the aforegiven address or to such address last given by the addressee for such purpose. (3) In the event of a contracting party not making use of a contractual right or exercising such right at a later date this shall not be considered as a disclaimer of any such right. In the same way no party shall be excluded from exercising rights where such party has exercised any such right only partially. -20- (4) WC shall have the right to transfer the rights and duties as under the present contract to another German company as long as it has a dominating influence on such company (ss.17 AktG). In such case WC guarantees herewith that such company observes all provisions of this agreement and its annexes in the protection of rights and in the fulfillment of commitments. Sellers are entitled to assign purchase price claims as far as set-offs and rights of retention are not affected; otherwise the assignment of rights under this contract is excluded. (5) Each contracting party shall defray its costs of legal and economic consultancy incurred in connection with this basic agreement and all annexes, including taxes on income. The costs for this contract and its execution shall be borne by the company. The costs for the transfer of shares shall be borne by the purchasers. (6) Statements in respect of this contract, its conclusion or its execution require the prior consent of the other contracting parties. (7) This contract, plus its annexes, contains the entire agreement of the contracting parties on the subject matter of the contract. All earlier written or oral declarations during negotiations or other arrangements related thereto are thus cancelled. (8) Amendments to this contract require written form. (9) Should individual provisions of this contract and its annexes be or become legally ineffective, then the contract shall be so construed or amended that the economic purpose intended by the ineffective provision is achieved in the best possible way; this shall apply analogously to the filling of contractual gaps. The invalidity or ineffectiveness of individual provisions of this contract and its annexes shall not entail the invalidity or ineffectiveness of the remaining -21- provisions. (10) This contract shall be subject to German law. (11) All disputes between the contracting parties among each other which concern the contents of this contract or its coming to existence shall be decided by an arbitral tribunal pursuant toss.1025 German Code of Civil Procedure (ZPO) ousting jurisdiction of the normal courts subject to the separately signed arbitration agreement - pursuant to ANNEX VII.1 - which provides for further details and which then shall form part of this contract. (12) Venue shall be - as far as normal courts have jurisdiction and as far as legally admissible - Frankfurt am Main. The above record and it annexes was read aloud by the notary public to the appeared persons, was approved by them and signed by them in their own hand as follows: --------------------------------------- for Doris Ballauff --------------------------------------- for Michael Emken --------------------------------------- for Irene Koenig -22- --------------------------------------- for Deutsche Bank AG --------------------------------------- for Carl Jaspers Sohn GmbH --------------------------------------- for Jaspers Industrie Assekuranz GmbH & Co. KG ---------------------------------------- for Industrie Assekuranz Gesellschaft mit beschrankter Haftung --------------------------------------- for Willis Corroon GmbH --------------------------------------- for C. Wuppesahl & Co. Assekuranzmakler --------------------------------------- for C. Wuppesahl Management GmbH --------------------------------------- for C. Wuppesahl --------------------------------------- for C. Wuppesahl & Co. Assekuranzmakler --------------------------------------- for 68. Verwaltungsgesellschaft Dammtor mbH -23- --------------------------------------- for Willis Corroon Group plc --------------------------------------- Dr. Gunter Paul, Notary Public -1- ANNEX VI.1 Translation WARRANTIES AND REPRESENTATIONS ------------------------------ 1. REPRESENTATIONS UNDER COMPANY LAW (1) JIA is a Kommanditgesellschaf/KG (limited commercial partnership), IAG is a Gesellschaft mit beschrankter Haftung/GmbH (limited liability company), and Wuppesahl is an Offene Handelsgesellschaft/OHG (general commercial partnership). Said partnerships and company have been formally established and exist under German law. Since their establishment nothing occurred which would justify to strike off said corporate entities from the Handelsregister (German Commercial Register). No proceedings have been commenced or resolutions have been passed for the liquidation of said corporate entities, or insolvency proceedings have been initiated against them nor any composition proceedings in or out of court. (2) THE HANDELSREGISTERAUSZUGE (commercial register excerpts) - IN ANNEX VI.1.1 - contain all particulars of the partnerships/companies registered and requiring or capable of registration. 2. BRANCH ESTABLISHMENTS JUA, IAG and Wuppesahl hold no interests in the capital of any body corporate, neither -2- directly nor indirectly, or are a member of a partnership, or of another company, unless listed otherwise - IN ANNEX VI.1.2 - -3- 3. INTERESTS IN THE COMPANIES The particulars concerning the partners and shareholders of JIA, IAG and Wuppesahl - IN ANNEX VI.1.3 - are ture and accurate in all respects. 4. CONDUCT OF BUSINESS To the best of the knowledge of the partners/shareholders the business transactions of the partnerships/companies have always been conducted in compliance with all laws and regulations applicable to it in all relevant jurisdictions. 5. CONSENTS All consents to the conclusion and performance of the present agreement and its annexes have been obtained unless consents required have been expressly waived; in particular the partners and shareholders, the advisory board members and the managing directors of the companies have consented to the transfer transactions. 6. ANNUAL ACCOUNTS (1) All annual accounts (JAHRESABSCHLUSSE) of JIA, IAG and Wuppesahl required by law to be filed with the administrative or fiscal authorities, respectively, have been or will be duly filed with said authorities, together with all legally required documents, within the time limits set by these authorities. -4- (2) The Annual accounts of JIA, IAG and Wuppesahl for the fiscal years 1994 to, including 1996 (independent of whether or not they were filed pursuant to fig. 6.1, above) comply in all respects with the generally accepted principles of accounting valid in the Federal Republic of Germany; this applies equally to form and content of annual accounts of limited commercial partnerships, companies with limited liability or general commercial partnerships, respectively, the manner in which assets and liabilities are dealt with, including provisions and reserves for future risks or comparable contingent liabilities, and the profit and loss accounts of the respective bodies corporate concerned. Said principles and laws have been applied on a consistent basis. All annual accounts have been audited and testified by either Wirtschaftsprufungsunternehmen WEDIT Wollert-Elmendorff GmbH, WeissenburgerstraBe 20, 63739 Aschaffenburg or the auditor Joachim H. Clostermann, Bremen. (3) Depreciation for wear and tear on assets of JIA, IAG or Wuppesahl are in conformity with the fiscal provisions. (4) Since January 01, 1997 (a) business of JIA, IAG and Wuppesahl has been carried on in ordinary course; (b) no payments, business transactions or sales of assets were effected outside the ordinary course of business. Wuppesahl informs the other parties that it made at the end of 1997 a sale and lease back transaction with regard to its car pool; -5- (c) nothing has occurred or has been omitted which has adverse effects on the course of business of JIA, IAG or Wuppesahl, with the exception of matter disclosed - IN ANNEX VI. 1.4 - (5) Since January 01, 1998, no profits have been distributed to the shareholders of JIA or Wuppesahl and no dividends of IAG have been declared, with the exception of those listed - IN ANNEX VI. 1.5 - 7. TAXES ETC. (1) All taxes, fees, duties, impost, charges and levies, and the like, due in connection with the business of JIA,IAG and Wuppesahl have been paid fully and punctually. No fines or penalties are due or imminent. Taxes, fees, impost, charges and duties, and the like, which are still due from the past are covered by advance payments to the competent authorities and/or by provisions in the annual accounts of the year 1996. (2) All annual accounts, tax declarations, refunds and other documents related to taxes, fees, duties, impost, charges and levies, etc., which are to be filed in connection with business of JIA, IAG and Wuppesahl to any Federal authority, Land (state) authority, regional or other administrative authority have been filed punctually and their contents were complete and accurate at the time of their filing. None of the aforelisted authorities notified JAI, IAG or Wuppesahl that they assume that there is any incompleteness of omission or rectification as to any one of the aforelisted documents, or have threatened JIA, IAG or Wuppesahl to -6- start legal or administrative proceedings in relation to. (3) All legal transactions between JIA, IAG or Wuppesahl and its shareholders, partners or subsidiaries have at all times been conducted at arm's length. (4) The breakdown of the distributable equity capital (GLIEDERUNG DES VERWENDBAREN EIGENKAPITALS), as listed in the German Corporation Tax Return 1996 of IAG, is accurate in all respects. 8. LEASING AGREEMENTS (1) The list - IN ANNEX VI. 1.6 - Contains completely and accurately all leasing agreements (including gratuitous hire agreements (Leihvertrage), tenancy and lease agreements (MIET- UND PACHTVERTRAGE) and all other forms of contracts permitting the use of movable or immovable property in connection with the business of JIA, IAG or Wuppesahl) with an annual expenditure of DM 100,000 or more. (2) All rent payments and other sums due under the aforelisted agreements have been paid punctually in full, and all other obligations thereunder have been complied with punctually. -7- 9. MOVABLE PROPERTY JIA and IAG own all movable property employed in connection with their respective business, excepted such movable property as listed in -ANNEX VI. 1.6-. or such movable property for which the lease payment is below DM 100,000. All of such property is in good repair and operable and has been regularly maintained and serviced with the exception of the property listed in -ANNEX VI. 1.7-. Wuppesahl owns or has the legal right to use all movable property except such movable property as listed in Annex VI. 1.6. All of such property is in good repair and operable and has been regularly maintained and serviced. 10. INDUSTRIAL PROPERTY RIGHTS JIA, IAG and Wuppesahl are the registered owners or licensees of all industrial property rights (GEWERBLICHE SCHUTZRECHTE) they employ in connection with their respective business, and no licenses have been granted to anyone for these industrial property rights, and nobody has threatened any legal or administrative proceedings in connection with the use of said industrial property rights by JIA, IAG or Wuppesahl. -8- 11. LITIGATION JIA, IAG and Wuppesahl are not a party and have not been threatened to be made a party to any legal, administrative or arbitral proceedings in any jurisdiction. Moreover, they are not aware of any circumstances which reasonably could give cause to any such proceedings with the exception of those mentioned in -ANNEX VI. 1.8-. 12. CONTRACTS (1) With the exception of the contracts set forth in -ANNEX VI. 1.9-. JIA, IAG and Wuppesahl are not parties to any contracts which cannot be terminated without penalty at twelve months' notice or less nor to any contract (employment contracts excepted) which commit them to pay more than DM 100,000. (2) There are no warranties given or representations made by JIA, IAG or Wuppesahl as to commitments of third parties, and none of them is a contractual party to an agency, distribution or franchise agreement, except as disclosed in -ANNEX VI. 1.10-. -9- The corporation agreement between JIA and A & A is not terminated. (3) All materials contracts signed by JIA, IAG or Wuppesahl are in full force and effective, and no party to any such contract is in default of the performance of its obligations thereunder. 13. CUSTOMER RELATIONS The implementation of any of the matters contemplated by the present agreement constitute no breach of contract, and avoidance of commitments on the part of JIA, IAG or Wuppesahl, and entities no third party to terminate any agreement with JIA, IAG or Wuppesahl. 14. EMPLOYEES AND PENSIONS (1) The list in -ANNEX VI. 1.11-. contains all names of the employees of JIA, IAG and Wuppesahl with an annual salary of DM 100,000 or more as well as of all managing directors. In the column with the heading "Bonus" the highest amount is entered which such persons on the basis of promises, understandings or actual practices are receiving in addition to their salaries for the current year or will be receiving in future years. (2) The terms and conditions upon which the above mentioned persons are employed are substantially as set out in -10- -ANNEX VI.1.12-. (3) With the exception of pension or social security funds to which they are obliged by law to contribute and except as listed in -ANNEX VI.1.13-. JIA, IAG and Wuppesahl are not contracting parties or contributors to any funds, pension plans or pension commitments to past, present or future employees, managing directors or their spouses or offspring. All social security contributions have been paid punctually and in full. (4) None of the employees of JIA, IAG or Wuppesahl receiving an annual remuneration exceeding in the aggregate DM 100,000 has or has been given a notice of termination, nor have JIA, IAG or Wuppesahl plans to give such notice of termination. The former managing director Zilkens has been terminated. The following terminated employment relationships exist at JIA on January 1998: Branch Berlin Witte, Werner Termination to 31.03.1998 Branch Frankfurt Fehling, Bernd-Michael Termination to 31.10.1998 Branch Munich Schaffer, Kurt Termination without notice; termination is subject to court proceedings; employee is released from work until the end of his employment contract at 31 December 1999. -11- Wuppesahl informs the other parties that they have concluded with Mr. Harald Dux, Dusseldolf, a termination agreement with effect 28 February 1998. Furthermore, the company offered Ms. Anke Jones, Dusseldof, a new job in the branch office in Cologne. If Ms. Jones does not accept this reasonable transfer the company intends to terminate her employment agreement. (5) -ANNEX VI.1.14-. contains a complete and accurate list of all collective bargaining agreements (Tarifvertrage) and all in-house collective labour agreements (Betriebsvereinbarugen) which are binding on JIA, IAG or Wuppesahl. 15. Capital Expenditure JIA, IAG and Wuppesahl have not committed themselves to incur more than DM 1,164,000 in the future for the acquisition of capital goods (INVESTITIONSGUTER). 16. Insurance At all times all assets and liabilities of JIA, IAG and Wuppesahl were fully covered by insurance in accordance with the principles of prudent business policies at such amounts sufficing to cover all risks which can be reasonably be expected to affect business operations. The third party liability insurance for property damages of JIA has a limit of DM 60,000,000. EX-2.6 7 EX. 2.6 Exhibit 2.6 The following exhibit no. 2.6 constitutes a fair and accurate English translation of the original copy of this document. /s/ Michael P. Chitty ---------------------------------------- Michael P. Chitty Company Secretary of Willis Corroon Group Limited - 1 - Unofficial Translation No. 67 of Deed Register for 1998 R e c o r d e d in Frankfurt am Main on 27 January1998 Before the undersigned Notary Public in the district of the Higher Regional Court Frankfurt am Main Dr. Gunter Paul with office in Darmstadter Landstrasse 125, Frankfurt am Main, appeared today with the request of notarization of the PURCHASE AND TRANSFER AGREEMENT concerning shares in Industrie-Assekuranz GmbH and Jaspers Industrie Assekuranz GmbH & Co. KG - 2 - personally known to the acting notary public: 1. for Alexander & Alexander International Inc., Maryland - hereinafter referred to as "Seller" - Ms. Johanna Geertruida Maria (Carin) Verhagen, Marconistraat 16 3029 AK Rotterdam Netherlands with power of attorney, dated 20 January 1998, the original was at hand on notarization and a certified copy of which is attached to this record as ANNEX 1; 2. for Achtundsechzigste Verwaltungsgesellschaft Dammtor mbH Warburgstrasse 50 20354 Hamburg - hereinafter referred to as "Purchaser" - the lawyer Christoph von Teichman business address: Warburgstrasse 50 20354 Hamburg with power of attorney, dated 20 January 1998, the original was at hand on notarization and a certified copy of which is attached to this record as ANNEX 2. - 3 - 3. for Willis Corroon Group plc Ten Trinity Square London EC3P 3AX England the lawyer Christoph von Teichman business address: Warburgstrasse 50 20354 Hamburg with power of attorney, dated 20 January 1998, the original was at hand on notarization and a certified copy of which is attached to this record as ANNEX 3. - 4 - The Appeared declared: I. Object of Purchase (1) Seller holds a share of nominally DM 20,000.00 in Industrie-Assekuranz Gesellschaft mit beschrankter Haftung with seat in Frankfurt am Main and a share capital in the total amount of DM 100,000.00. (2) Seller holds further a limited partnership share in the amount of DM 1,000,000.00 in the firm Jaspers Industrie Assekuranz GmbH & Co. KG with seat in Frankfurt am Main and a limited liability capital in the total amount of DM 5,000,000.00. II. Sale and Transfer (1) Seller herewith sells and transfers a) its aforementioned share in the nominal value of DM 20,000.00 (fig.I, para. 1), as well as b) its aforementioned limited partnership share of DM 1,000,000.00 (fig. I, para. 2), to Purchaser. (2) Sale and transfer shall be effected with all rights and duties and in particular with - 5 - the right to receive dividends. However, the profit of the limited partnership Jaspers Industrie Assekuranz GmbH & Co. KG for the business year 1997 as well as the right to receive dividends for the business year 1997 of Industrie Assekuranz GmbH shall be due to Seller. (3) Sale and Transfer shall commercially become effective as of December 31,1997/January 01, 1998 (key date). Transfer of the shares (GmbH-Shares and KG-Shares) shall become effective in rem with the full payment of the purchase price in the account according to fig. III para (2), however not before Purchaser is registered as limited partner of Jaspers Industrie Assekuranz GmbH & Co. KG in the commercial register. (4) Assignment shall be in the form of singular succession. Seller receives no benefits of the limited partnership in connection with the assignment of its limited partnership share and its withdrawal from the partnership. (5) Purchaser herewith accepts the transfer of the GmbH-Share and of the KG-Share at the aforewritten conditions (paras 1 to 4). III. Purchase Price (1) Purchaser pays to Seller for the GmbH-Share and KG-Share sold a purchase price in the total amount of DM 20,000,000.00 (in words: twentymillion Deutschmark). plus interest in the amount of 4% for the period beginning 1 January 1998 until signing of this agreement. - 6 - (2) The purchase price plus interest is due on signing of the present agreement and was to be paid before this agreement was signed on the account of AON Deutschland GmbH, Hamburg, account no. 03066.05.00 with the Deutsche Bank AG, Hamburg, sort code 200 700 00. IV. Guarantee/Indemnification (1) Seller guarantees that the original capital contribution on the sold GmbH-Share as well as the limited partnership capital contribution on the KG-Share have been fully paid in and that no contributions were paid back. (2) Moreover, Seller guarantees that it can dispose unrestrictedly about the sold GmbH-Share and the sold KG-Share, and that both shares are not encumbered with the rights of third parties. (3) Above and beyond that any further guarantees on the part of Seller for material defects or deficencies in title of the Shares sold are excluded. (4) Purchaser holds Seller free and harmless of all claims from the companies and third parties arising out of action after the key-date raised after Seller's withdrawal. V. Approvals (1) The approvals of the companies pursuant to ss. 17.2 of the articles of association of the Industrie-Assekuranz Gesellschaft mit beschrankter Haftung and of the - 7 - articles of association of Jaspers Industrie Assekuranz GmbH & Co. KG are available and are attached to this record as ANNEXES 4 and 5. (2) All shareholders have waived their rights of preemption and of first refusal. The waivers have been attached to this record as ANNEX 6. - 8 - VI. Special Agreement for the distribution of profit, tax indemnification (1) The shareholders of Jaspers Industrie Assekuranz GmbH & Co. KG have resolved a special resolution on the distribution of profit for the business year 1997. The resolution is attached to this record as ANNEX 7. Purchaser declares to assist in the execution of the aforesaid resolution. (2) Purchaser indemnifies Seller of all possible German additional taxes following from the participation of Sellers as shareholders of Industrie-Assekuranz Gesellschaft mit beschrankter Haftung and Jaspers Industrie Assekuranz GmbH & Co. KG and which concern the time period after 1 January 1998. German tax advantages shall be charged against any tax disadvantages. VII. Guarantee Willis Corroon plc. hereby guarantees the full perfomance of all liabilities under this contract of 68. Verwaltungsgesellschaft Dammtor mbH. VIII. Instructions The notary public now instructed the Appeared that - - with the exclusion of guarantee in fig. IV., para. (1) to (4) Purchaser in case of a guarantee claim is not entitled to the ordinary legal rights; - - in relation to Industrie-Assekuranz Gesellschaft mit beschrankter Haftung only - 9 - such entity is considered as new shareholder whose acquisition has been notified to the company evidencing the transfer; - - precondition for today's agreed transfer is that Seller is the lawful owner of the shares transferred. The law does not provide for a bona fide acquisition; - - the notary public does not provide fiscal information. He recommended to obtain information from a tax office or tax consultant as to the implications of today's record; - - pursuant to ss. 54 German Income Tax Regulation (EStDV) (forwarding documents by notaries public), among other things, original, executed or certified copy of the original may be handed over to the parties only when a certified copy has been dispatched to the tax office designated in ss.20 of the German Tax Code. IX. Miscellaneous (1) Should a provision of this agreement be or become ineffective then this shall not affect the effectiveness of the remaining agreement; instead of the ineffective provision or a regulation gap such legally admissible provision shall be considered as agreed which, as far as possible, corresponds to what the parties intended or, within the meaning and purpose of the present agreement, would have intended had they recognized the ineffectiveness of the provision or regulation gap in question. (2) Changes of and amendments to the present agreement require for their effectivness written form unless notarial authentication is mandatory. - 10 - (3) All costs, (including costs of the notary public), incurred in connection with the signing and performance of the present agreement and all taxes shall be borne by Purchaser. Each of the contracting parties shall pay its consultancy fees. (4) The agreement shall be subject to German law. Venue shall be Frankfurt am Main, as far as is admissible. (5) The notary is instructed to notify the company immediately of the transfer of shares (Section 16 GmbH-Act). The aforewritten record was read aloud by the notary public to the Appeared, approved by them and signed by them in their own hand as follows: ------------------------------------------- for Alexander & Alexander Int. Inc. ------------------------------------------- for 68. Verwaltungsgesellschaft Dammtor mbH ------------------------------------------- for Willis Corroon Group plc. - 11 - ------------------------ Notary Public EX-2.7 8 EX. 2.7 Exhibit 2.7 The following exhibit no. 2.7 constitutes a fair and accurate English translation of the original copy of this document. /s/ Michael P. Chitty ---------------------------------------- Michael P. Chitty Company Secretary of Willis Corroon Group Limited -1- Translation No. 57 of Deed Register for 1998 R e c o r d e d in Frankfurt am Main on 22 January1998 Before the undersigned Notary Public in the district of the Higher Regional Court Frankfurt am Main Dr. GUNTER PAUL ----------------- with office in Frankfurt am Main, Darmstadter Landstrasse 125, appeared today with the request of notarization of the TRANSFER of SHARES of the general partner GmbH into the JASPERS INDUSTRIE ASSEKURANZ GmbH & Co. KG and amendment of the articles of association of the general partner GmbH -2- personally known to the acting notary or identified by valid Federal German Identity Card: 1. for Frau Doris Ballauff, the lawyer Dr. Christian von Oertzen, business address: Darmstadter Landstrasse 125 60598 Frankfurt am Main with the power of attorney of 22 January 1998 granted to him which was at hand on notarization and is attached to this record as ANNEX 1. 2. for Herr Michael Emken, the lawyer Dr. Christian von Oertzen, business address: Darmstadter Landstrasse 125 60598 Frankfurt am Main with the power of attorney of 22 January 1998 granted to him which was at hand on notarization and is attached to this record as ANNEX 2. 3. for Frau Irene Koenig, the lawyer Dr. Christian von Oertzen, business address: Darmstadter Landstrasse 125 60598 Frankfurt am Main with the power of attorney of 22 January 1998 granted to him which was at hand on notarization and is attached to this record as ANNEX 3. 4. for Deutsche Bank AG the lawyer Dr. Christian von Oertzen, business address: Darmstadter Landstrasse 125 60598 Frankfurt am Main -3- with the power of attorney of 22 January 1998 granted to him which was at hand on notarization and is attached to this record as ANNEX 4. 5. for Carl Jaspers Sohn GmbH, the lawyer Dr. Christian von Oertzen, business address: Darmstadter Landstrasse 125 60598 Frankfurt am Main with the power of attorney of 22 January 1998 granted to him which was at hand on notarization and is attached to this record as ANNEX 5. 6. for Achtundsechzigste Verwaltungsgesellschaft Dammtor mbH the lawyer Dr. Holger Iversen, business address: Warburgstrasse 50, 20354 Hamburg with the power of attorney of 22 January 1998 granted to him which was at hand on notarization and is attached to this record as ANNEX 6. 7. for Jaspers Industrie Assekuranz GmbH & Co. KG Gruneburgweg 102 D-60323 Frankfurt am Main the lawyer Dr. Christian von Oertzen, business address: Darmstadter Landstrasse 125 60598 Frankfurt am Main with the power of attorney of 22 January 1998 granted to him which was at hand on notarization and is attached to this record as ANNEX 7. -4- The Appeared declared subject of the registration of Achtundsechzigste Verwaltungsgesellschaft Dammtor as limited partner in the commercial register of Jaspers Industrie Assekuranz GmbH & Co. KG: ss. 1 Shareholdings The represented Appeared 1. to 6. - hereinafter referred to as "Transferors" - are the sole shareholders of Industrie Assekuranz Gesellschaft mit beschrankter Haftung, registered in the commercial register of the Local Court Frankfurt am Main under HRB 8621. The Transferors hold the following wholly paid shares: Frau Irene Koenig 25,100.00 DM Frau Doris Ballauff 16,300.00 DM Herr Michael Emken 17,400.00 DM Deutsche Bank AG 20,000.00 DM Carl Jaspers Sohn GmbH 1,200.00 DM 68. Verwaltungsgesellschaft Dammtor mbH 20,000.00 DM ss. 2 Transfer and Assignment The Tranferors herewith transfer their shares listed under ss. 1, above, to the Limited Partnership in the firm Jaspers Industrie Assekuranz GmbH & Co. KG with seat in Frankfurt am Main - hereinafter referred to as "Transferee" - and herewith assign the transferred shares, including the right to receive dividends, to the Transferee with effect from January 01, 1998. -5- Transferee accepts the assignment at the conditions set forth in the present agreement. Transferors in their capacity as sole shareholders of Industrie Assekuranz Gesellschaft mit beschrankter Haftung, Frankfurt am Main, herewith consent to the transfer and assignment of the aforelisted shares. ss. 3 Representation and Warranties The Transferors shall be severally liable a) that the shares are fully paid in, b) that the assigned shares in each case are their exclusive property not encumbered by rights of any third parties. ss. 4 Right to receive dividends The rights and duties connected with the shares assigned shall transfer to Transferee with effect from today, in such form as they exist on the date of the signing of this agreement, especially with all rights to receive dividends, if any, unless such right to receive dividends belong to the predecessor of 68. Verwaltungsgesellschaft Dammtor mbH. Thus, the transfer of all rights and duties to Transferee shall be effected in such manner that Transferors have neither to perform nor to claim anything from their interests held to this date. ss. 5 Fiduciary Relationships With the transfer of the shares of Carl Jaspers Sohn GmbH in the nominal amount of -6- DM 1,200 shall end the fiduciary relationship to the shareholder Doris Ballauff, thus Carl Jaspers Sohn GmbH transfers its share to the KG in the course of the winding up of the above mentioned fiduciary relationship on behalf and on account for Ms. Doris Ballauff. ss. 6 Costs The Transferee shall bear the costs of this agreement and its execution. ss. 7 Miscellaneous 1. Changes of and amendments to the present agreement shall require for their effectiveness the written form unless notarial authentication is mandatory. 2. Should a provision of this agreement be ineffective this shall not affect the effectiveness of the remaining agreement. Instead of the ineffective provision such legally admissible provision shall be considered as agreed which as far as possible corresponds to what the parties commercially intended. 3. All headings in this agreement are made to increase the legibility and shall be without legal effect on the content and interpretation of this contract. Declarations which are made in one provision of this agreement shall also apply to other provisions of this contract. ss. 8 Instructions The notary instructed the Appeared that - - the Company will only regard that person as shareholder whose acquisition was -7- notified to the Company; the notary is instructed to notify the Company of the transfer of shares (Section 16 GmbH-Act); - - condition for the today agreed transfer is that the Transferors are the legal owners of the transferred shares. The law does not recognise a good faith acquisition of shares; - - the notary does not give any tax advice. He recommended to consult either the tax authorities or the tax consultant on the tax consequences of this deed; - - according to Section 54 EStDV (Forwarding of Documents by Notaries) this deed or certified copies thereof may only be handed to the parties if a certified copy was sent to the tax authorities according to Section 20 Abgabenordnung (AO). The aforewritten record including the annexes was read aloud by the notary to the Appeared, approved by them and signed by them in their own hand as follows: ---------------------------------------------- for Doris Ballauff ---------------------------------------------- for Michael Emken ---------------------------------------------- for Irene Koenig ---------------------------------------------- for Deutsche Bank AG ---------------------------------------------- for Carl Jaspers Sohn GmbH ---------------------------------------------- for 68. Verwaltungsgesellschaft Dammtor mbH ---------------------------------------------- for Jaspers Industrie Assekuranz GmbH & Co. KG -8- ---------------------------------------------- Dr. Gunter Paul, notary EX-2.8 9 EX. 2.8 Exhibit 2.8 The following exhibit no. 2.8 constitutes a fair and accurate English translation of the original copy of this document. /s/ Michael P. Chitty ---------------------------------------- Michael P. Chitty Company Secretary of Willis Corroon Group Limited -1- Translation No. 179 of Deed Register for 1998 R e c o r d e d in Frankfurt am Main on 17 March 1998 Before the undersigned notary public in the District of the High Regional Court Frankfurt am Main Dr. Gunter Paul with office in Frankfurt am Main, Darmstadter Landstrasse 125, appeared today with the request of notarisation of the Merger Contract Jaspers Industrie Assekuranz GmbH & Co. KG C. Wuppesahl & Co. Assekuranzmakler -2- personally known to the acting notary public: 1. for Jaspers Industrie Assekuranz GmbH & Co. KG Gruneburgweg 102 60323 Frankfurt am Main represented by its general partner with the sole power of representation Industrie-Assekuranz Gesellschaft mit beschrankter Haftung Gruneburgweg 102 60323 Frankfurt am Main the latter represented by the lawyer Dr. Christian von Oertzen, business address: Darmstadter Landstrasse 125 60598 Frankfurt am Main pursuant to a power of attorney of 22 January 1998 granted him which was at hand on notarisation and which is attached to this Deed as ANNEX 1; 2. for C. Wuppesahl & Co. Assekuranzmakler Herrlichkeit 1 28199 Bremen represented by its partner with the sole power of representation C. Wuppesahl Management GmbH Herrlichkeit 1 28199 Bremen the latter represented by the lawyer Dr. Christian von Oertzen, business address: Darmstadter Landstrasse 125 60598 Frankfurt am Main pursuant to a power of attorney of 21 January 1998 granted him which was at hand on notarisation and which is attached to this Deed as ANNEX 2. -3- The appeared declared for the record the following: MERGER CONTRACT I. Merger by Consolidation (1) The limited partnership Jaspers Industrie Assekuranz GmbH & Co. KG and the partnership C. Wuppesahl & Co. Assekuranzmakler agreed to merge the two companies by way of a consolidation according to Sections 36 subs. of the German law regulating the transformation of companies of 28 October 1994 (UmwG). The merger shall be made according to book value in exchange for shares according to Section 24 of the German Tax Law regulating transformation of companies (UmwStG). (2) With effect of 31 December 1997 / 1 January 1998 the companies transfer by way of merger their entire business with all rights and liabilities to a hereby newly formed company with the corporate name Jaspers Wuppesahl Industrie Assekuranz GmbH & Co. KG with registered seat in Frankfurt and Bremen - hereinafter also referred to as "JWIA". II. General Partner Industrie-Assekuranz Gesellschaft mit beschrankter Haftung shall be the general partner. The company holds a share in the amount of DM 4,000. III. Limited Partners -4- (1) The limited liability capital of the company shall be DM 6,800,000. (2) The limited liability capital is divided as follows: 1. Ms. Irene Koenig, nee Mehl, Bad Soden, holds a limited partnership share of 18.32% for the time being a share in the amount of DM 1,245,964.00 2. Ms. Doris Ballauff, nee Strohlein, Hamburg, holds a limited partnership share of 12.74% for the time being a share in the amount of DM 866,218.00 3. Mr. Michael Emken, Hamburg, holds a limited partnership share of 12.74% for the time being a share in the amount of DM 866,218.00 4. The limited partnership C. Wuppesahl, Bremen, holds a limited partnership share of 18.9% for the time being a share in the amount of DM 1,285,200.00 5. Deutsche Bank AG, Frankfurt am Main, holds a limited partnership share of 14.6% for the time being a share in the amount of DM 992,800.00 6. Willis Corroon GmbH, Hamburg, holds a limited partnership share of 5.4% -5- for the time being a share in the amount of DM 367,200.00 7. 68. Verwaltungsgesellschaft Dammtor mbH holds a limited partnership share of 14.6% for the time being a share in the amount of DM 992,800.00 8. C. Wuppesahl Management GmbH holds a limited partnership share of 2.7% for the time being a share in the amount of DM 183,600.00 IV. Articles of Association, By-Laws for the Advisory Board (1) The Articles of Association of the limited partnership shall be as laid out in ANNEX 3. (2) The shareholders have resolved by-laws for the Advisory Board of the company according to ANNEX 4. V. Further Declarations (1) The business transactions of the companies Jaspers Industrie Assekuranz GmbH & Co. KG and C. Wuppesahl & Co. Assekuranzmakler shall be deemed to be made for the account of JWIA as of 1 January 1998. (2) Special rights in the meaning of Section 5 para. 1 no. 7 UmwG and special benefits in the meaning of Section 5 para. 1 no. 8 UmwG were not granted. (3) The transferring companies employ together currently 610 employees; these -6- employees shall be taken over by JWIA on the terms of their current employment agreements. (4) As far as the transferring companies have works councils, the companies acted according to the provisions on the notification of this Merger Contract to the works councils according to Section 5 para. 3 UmwG. (5) The merger shall be made according to the annual accounts of the transferring companies as of 31 December 1997. (6) The shareholders of the transferring companies retain the right to receive the profits for the time until 31 December 1997 for the respective company. VI. Real Estate The transferring companies own no real estate. VII. Approvals (1) This Merger Contract requires for its effectiveness the approval of the shareholders of the transferring companies. (2) According to its notification of 24 February 1998 the Federal Cartel Office has no objections against the merger. VIII. Costs and Taxes The costs of this agreement, its execution and of the shareholder meetings of the -7- respective companies which have to decide on the approval to this contract and other measures in connection with the merger and all other costs in connection with the merger shall be borne by the new company. IX. Power of Attorney The appeared hereby authorise the employees of the notary Gisela Schmitt, Andrea Gober and Beatrix Appel, all with business address at Darmstadter Landstrasse 125, 60598 Frankfurt am Main each of them alone and exempted from the restrictions of Section 181 BGB under the responsible control of the acting notary a) to change and amend the Merger Contract b) to hold shareholder meetings and to adopt resolutions c) to change or amend applications to the commercial register as far as these measures are necessary to finalise the merger between the two companies. X. Arbitration All disputes between the contracting parties among each other which concern the content of this Contract or its coming into existence shall be decided by an arbitration -8- tribunal pursuant to Section 1025 German Code of Civil Procedure (ZPO) ousting jurisdiction of the normal courts. This shall, however, only apply if all shareholders have signed a separate arbitration agreement which provides for further details and which then shall form part of this contract. XI. Instructions The acting notary instructed the Appeared that - - the merger will only become effective if all shareholders have approved the merger; - - the merger will also only become effective with the registration of the new company in the commercial register. The above record and its Annexes were read aloud by the notary public to the appeared person, was approved by him and signed by him in his own hands as follows: ------------------------------------------ for Industrie-Assekuranz GmbH, acting for Jaspers Industrie Assekuranz GmbH & Co. KG ------------------------------------------ for C. Wuppesahl Management GmbH, acting for C. Wuppesahl & Co. Assekuranzmakler -9- ------------------------------------------ Dr. Gunter Paul, notary EX-2.9 10 EX. 2.9 Exhibit 2.9 The following exhibit no. 2.9 constitutes a fair and accurate English translation of the original copy of this document. /s/ Michael P. Chitty ---------------------------------------- Michael P. Chitty Company Secretary of Willis Corroon Group Limited -1- Translation PURCHASE AND SALES AGREEMENT ON THE ACQUISITION OF LIMITED PARTNER SHARES between 1. Ms. Irene Koenig, nee Mehl Fuchshohl 5, 65812 Bad Soden 2. Ms. Doris Ballauff, nee Strohlein Inselstrasse 27, 22297 Hamburg 3. Mr. Michael Emken Parkallee 65, 20144 Hamburg 4. C. Wuppesahl Management GmbH Herrlichkeit 1, 28199 Bremen 5. C. Wuppesahl Herrlichkeit 1, 28199 Bremen 6. 68. Verwaltungsgesellschaft Dammtor mbH, Hamburg Warburgstrasse 50, 20354 Hamburg 7. Willis Corroon GmbH, Warburgstrasse 50, 20354 Hamburg -2- I. Object of Purchase The contracting parties and Deutsche Bank AG are the limited partners of the limited partnership in the firm Jaspers Wuppesahl Industrie Assekuranz GmbH & Co. KG (hereinafter referred to as "Company") with a total limited capital in the amount of DM 6,800,000.00. They hold the following shares: 1. Ms. Irene Koenig, nee Mehl, Bad Soden, holds a limited partnership share in the amount of DM 1,245,964.00 2. Ms. Doris Ballauff, nee Strohlein, Hamburg, holds a limited partnership share in the amount of DM 866,218.00 3. Mr. Michael Emken, Hamburg, holds a limited partnership share in the amount of DM 866,218.00 4. Limited partnership in the firm C. Wuppesahl, Bremen, holds a limited partnership share in the amount of DM 1,285,200.00 5. Deutsche Bank AG, Frankfurt am Main, holds a limited partnership share in the amount of DM 992,800.00 6. 68. Verwaltungsgesellschaft Dammtor GmbH, Hamburg, holds a limited partnership share in the amount of DM 992,800.00 7. Willis Corroon Deutschland GmbH, Hamburg, holds a limited partnership share in the amount of DM 367,200.00 8. C. Wuppesahl Management GmbH, holds a limited partnership share -3- in the amount of DM 183,600.00 II. Purchase and Transfer (1) Ms. Irene Koenig - hereinafter referred to also as "Seller" hereby sells and transfers of her above stated limited partnership share a partial share in the amount of DM 470,764 to Willis Corroon GmbH, Hamburg - hereinafter referred to as "Buyer". (2) Ms. Ballauff - hereinafter referred to also as "Seller" - hereby sells and transfers of her above stated limited partnership share a partial share in the amount of DM 104,618 to Willis Corroon GmbH, Hamburg - hereinafter referred to as "Buyer". (3) Mr. Emken - hereinafter referred to also as "Seller" - hereby sells and transfers of his above stated limited partnership share a partial share in the amount of DM 104,618 to Willis Corroon GmbH, Hamburg - hereinafter referred to as "Buyer". (4) 68. Verwaltungsgesellschaft Dammtor mbH - hereinafter referred to also as "Seller" - hereby transfers - following the winding-up of a fiduciary relationship - its above stated limited partnership share in the amount of DM 992,800 to Willis Corroon GmbH, Hamburg - hereinafter referred to as "Buyer". (5) Ms. Ballauff - hereinafter referred to also as "Seller" - hereby sells and transfers of her above stated limited partnership share a partial share in the amount of DM 13,600 to C. Wuppesahl hereinafter referred to as "Buyer". (6) Mr. Emken - hereinafter referred to also as "Seller" - hereby sells and transfers of his above stated limited partnership share a partial share in the amount of DM 13,600 to C. Wuppesahl hereinafter referred to as "Buyer". -4- (7) C. Wuppesahl Management GmbH - hereinafter referred to also as "Seller" - hereby transfers - following the winding-up of a fiduciary relationship - its above stated limited partnership share in the amount of DM 183,600 to C. Wuppesahl - hereinafter referred to as "Buyer". (8) Purchase and transfer shall take place with all rights and duties connected with the shares assigned in particular with the right to receive dividend as of 1 January 1998. (9) The transfer of the limited partnership shares shall become effective in rem with the full payment of the purchase price, however, not before the merger of Jaspers Industrie Assekuranz GmbH & Co. KG and C. Wuppesahl & Co. Assekuranzmakler is registered in both commercial registers. (10) The assignments shall be in the form of singular succession. Sellers received no benefits from the limited partnership in connection with the assignment of the limited partnership shares. (11) Buyers herewith accept assignment of the limited partnership shares at the afore- written conditions (para. 1 to 10). (12) Following the transfer, the limited partnership capital of the Company is divided as follows: 1. Ms. Irene Koenig, nee Mehl, Bad Soden, holds a limited partnership share of 11.4%, equal DM 775,200.00 2. Ms. Doris Ballauff, nee Strohlein, Hamburg, holds a limited partnership share of 11.0%, equal DM 748,000.00 -5- 3. Mr. Michael Emken, Hamburg, holds a limited partnership share of 11.0%, equal DM 748,000.00 -6- 4. Limited partnership in the firm C. Wuppesahl, Bremen, holds a limited partnership share of 22.0%, equal DM 1,496,000.00 5. Deutsche Bank AG, Frankfurt am Main, holds a limited partnership share of 14.6%, equal DM 992,800.00 6. Willis Corroon GmbH, Hamburg, holds a limited partnership share of 30.0%, equal DM 2,040.000.00 III. Purchase Price (1) Willis Corroon GmbH pays to Seller Ms. Irene Koenig for the sold limited partnership share a purchase price in the total amount of DM 13,846,000.00. (2) Willis Corroon GmbH pays to Seller Ms. Ballauff for the sold limited partnership share a purchase price in the total amount of DM 3,077,000.00. (3) Willis Corroon GmbH pays to Seller Mr. Emken for the sold limited partnership share a purchase price in the total amount of DM 3,077,000.00. (4) C. Wuppesahl pays to Seller Ms. Ballauff for the sold limited partnership share a purchase price in the total amount of DM 400,000.00. (5) C. Wuppesahl pays to Seller Mr. Emken for the sold limited partnership share a purchase price in the total amount of DM 400,000.00. (6) C. Wuppesahl pays to Seller C. Wuppesahl Management GmbH for the -7- transferred limited partnership share no purchase price. (7) Each purchase price is due on signing of the present agreement and is to be paid within three bank working days to a joint blocked account of the contracting parties at Deutsche Bank AG, account no. 040110906, sort code 200 700 00. (8) The bank is hereby instructed to pay the amount according to no. III, para. 1 to 6 to the respective Seller with interest as soon as the bank receives a certified extract from the commercial register of the Company showing that the merger of Jaspers Industrie Assekuranz GmbH & Co. KG and C. Wuppesahl & Co. Assekuranzmakler has been registered. IV. Approvals (1) On 22 January 1998 the Company approved the above mentioned share transfers. (2) All shareholders expressly waived their rights of first refusal and similar rights - if any. V. Miscellaneous (1) Should a provision of this agreement be or become ineffective this shall not affect the effectiveness of the remaining provisions. Instead of the ineffective provision or a regulation gap such legally admissible provision shall be considered as agreed which, as far as possible corresponds to what the parties intended or, within the meaning and purpose of the present agreement, would -8- have intended if they had recognised the ineffectiveness of the provision or regulation gap in question. (2) Changes of and amendments to the present agreement require for their effectiveness written form unless notarial authentication is mandatory. (3) All costs (including the costs of the notary public) incurred in connection with the signing and performance of this agreement and all taxes shall be paid by the Buyer. Each of the contracting parties shall pay its consultancy fees. Done in Frankfurt on 27 January 1998 ------------------------------------------- for Ms. Irene Koenig, nee Mehl ------------------------------------------- for Ms. Doris Ballauff, nee Strohlein ------------------------------------------- for Mr. Michael Emken ------------------------------------------- for C. Wuppesahl ------------------------------------------- for C. Wuppesahl Management GmbH ------------------------------------------- for 68. Verwaltungsgesellschaft Dammtor mbH ------------------------------------------- for Willis Corroon GmbH EX-2.10 11 EX. 2.10 Exhibit 2.10 The following exhibit no. 2.10 constitutes a fair and accurate English translation of the original copy of this document. /s/ Michael P. Chitty ---------------------------------------- Michael P. Chitty Company Secretary of Willis Corroon Group Limited TRANSLATION PURCHASE AND SALES AGREEMENT BETWEEN 1. Deutsche Bank Aktiengesellschaft - hereinafter also referred to as "DB" - with seat in Frankfurt am Main Taunusanlage 12 60325 Frankfurt am Main and 2. Willis Corroon GmbH - hereinafter also referred to as "WCG" - Warburgstrasse 50 20354 Hamburg and 3. Willis Corroon Group plc -- hereinafter also referred to as "WC" - Ten Trinity Square London EC3P 3AX England -2- I. OBJECT DB is a limited partner in the limited partnership Jaspers Wuppesahl Industrie Assekuranz GmbH & Co. KG - hereinafter also referred to as "Company" -; the Company has a limited capital in the amount of DM 6,800,000.00. DB holds a limited partnership share of 14.6% equal to DM 992,800.00. II. PURCHASE AND TRANSFER (1) DB hereby sells and transfers its limited partnership share to WCG. (2) The purchase and transfer shall take place with all rights and duties in particular with the right to receive dividend on 1 January 1999. (3) Purchase and transfer shall become legally effective 31 December 1998/1 January 1999. (4) The transfer of the limited partnership share shall become effective in rem with the full payment of the purchase price. (5) The assignment shall be in the form of singular succession. DB receives no benefits from the limited partnership in connection with the assignment of the limited partnership share. (6) WCG hereby accepts the assignment of the limited partnership share at the aforewritten conditions (para. 1 to 5). -3- III. PURCHASE PRICE (1) Purchase price for the sold limited partnership share shall be DM 29,200,000.00 and is to be paid on 4 January 1999 to the account DB, account no. 0034009 at Deutsche Bank AG, Frankfurt am Main, sort code 500 700 10. DB is obligated to confirm the receipt of the purchase price in writing without delay. (2) WC hereby guarantees the full performance of all obligations of WCG under this contract. IV. REPRESENTATIONS AND WARRANTIES (1) DB guarantees to WCG that a) the limited liability capital contribution regarding the sold limited partnership share has been fully paid in, and b) it can dispose unrestrictedly about the sold limited partnership share and that the share is not encumbered with any rights of third parties. (2) Moreover, the parties refer to the contracts concluded in connection with the merger of Jaspers Industrie Assekuranz GmbH & Co. KG and C. Wuppesahl & Co. Assekuranzmakler in particular to the framework agreement and the representations and warranties given therein. -4- V. APPROVALS (1) On 22 January 1998 the Company approved the above mentioned share transfer. (2) All shareholders expressly waived their rights of first refusal and similar rights - if any. VI. MISCELLANEOUS (1) Should a provision of this agreement be or become ineffective this shall not affect the effectiveness of the remaining provisions. Instead of the ineffective provision or a regulation gap such legally admissable provision shall be considered as agreed which, as far as possible corresponds to what the parties intended or, within the meaning and purpose of the present agreement, would have intended if they had recognized the ineffectiveness of the provision or regulation gap in question. (2) Changes of and amendments to the present agreement require for their effectiveness written form unless notarial authentication is mandatory. (3) All costs (including the costs of the notary public) incurred in connection with the signing and performance of this agreement and all taxes shall be paid by the WCG. Each of the contracting parties shall pay its consultancy fees. (4) Place of performance of this agreement shall be Frankfurt am Main. -5- Done in Frankfurt am Main on 22 January 1998 ----------------------------------------- for Deutsche Bank Aktiengesellschaft ----------------------------------------- for Willis Corroon GmbH ----------------------------------------- for Willis Corroon Group plc EX-2.11 12 EX. 2.11 Exhibit 2.11 The following exhibit no. 2.11 constitutes a fair and accurate English translation of the original copy of this document. /s/ Michael P. Chitty ---------------------------------------- Michael P. Chitty Company Secretary of Willis Corroon Group Limited Agreement page 1 AGREEMENT BETWEEN THE UNDERSIGNED: 1. Assurances Generales de France IART, a French law company having its registered office at 87 rue de Richelieu, 75002 Paris, registered with the Paris Commercial and Companies Registry under No. B 542 110 291, represented by Guy Lallour, in his capacity as Directeur DIDRE, fully empowered for the purposes hereof, hereinafter "AGF", 2. UAP INCENDIE - ACCIDENTS, a French law company having its registered office at 9, Place Vendome, 75001 Paris, registered with the Paris Commercial and Companies Registry under No. B 777 349 192, represented by Adrien Cadieux, acting pursuant to a special power and fully empowered for the purposes hereof, hereinafter "UAP", 3. Athena, a French law company having its registered office at 53/55 rue La Boetie, 75008 Paris, registered with the Paris Commercial and Companies Registry under No. B 304 951 833, represented by Daniel Ehrmann, acting pursuant to a special power and fully empowered for the purposes hereof, hereinafter "Athena", 4. Gras Savoye Euro Finance S.A., a Belgian law company having its registered office at 8 avenue Bel-Air, 1180 Uccle, Belgium, registered with the Brussels Commercial Registry under No. 258.054, represented by Patrick Lucas in his capacity as President, fully empowered for the purposes hereof, hereinafter "GS Euro Finance", Agreement page 2 5. Mr. Emmanuel Gras, residing at 3, rue Parmentier, 59370 Mons-en-Baroeul, in his capacity as a shareholder and general partner of Gras Savoye & Cie, acting as guarantor for the shareholders designated as the "Gras Shareholders" in Exhibit 1, 6. Mr. Patrick Lucas, residing at 3 avenue Emile Acollas, 75007 Paris, in his capacity as a shareholder and general partner of Gras Savoye & Cie, acting as guarantor for the shareholders designated as the "Lucas Shareholders" in Exhibit 1, 7. Mr. Daniel Naftalski, residing at 2, rue des Beaux-Arts, 75006 Paris, in his capacity as a shareholder and general partner of Gras Savoye & Cie, acting as guarantor for the shareholders designated as the "Other Individual Shareholders" in Exhibit 1, AND: Willis Corroon Group plc, an English law company whose registered office is at Ten Trinity Square, London EC3P 3AX, United Kingdom, registered with the England and Wales Companies Registration Office under No. 621757, represented by John Reeve in his capacity as Chairman, fully empowered for the purposes hereof, hereinafter "WCG", Willis Corroon Europe B.V., a Netherlands law company whose registered office is at Marten Meesweg 51, 3068 AV Rotterdam, Netherlands, registered with the Rotterdam Commercial Registry under No. 135.835, represented by Sarah Turvill, acting as a director and fully empowered for the purposes hereof, hereinafter "WCE BV", AND: Gras Savoye & Cie, a societe en commandite par actions, with a capital of FRF 9,952,000 divided into 49,760 shares of FRF 200 each (hereinafter the "Shares"), having its registered office at 2, rue Ancelle, 92200 Neuilly-sur-Seine, registered with the Nanterre Commercial and Companies Registry under number B 457 509 867, represented by Mr. Patrick Lucas, in his capacity as general partner gerant, fully empowered for the purposes hereof, hereinafter the "Company", Agreement page 3 WITNESSETH: On the date hereof, the Company's capital is held as indicated in Exhibit 1. WCG is considering acquiring, through a company of the WCG Group (as defined below), a shareholding in the Company's capital with the aim of developing with it a worldwide network of insurance and reinsurance brokers placed among the leaders in each region of the world, according to the principles set forth in the "Framework for Partnership" in Exhibit 7 hereto. In the context of the acquisition of this shareholding, the parties hereto have decided to enter into this Agreement in order to determine their respective rights and obligations in connection with their shareholding in the Company. NOW, THEREFORE, IT HAS BEEN AGREED AS FOLLOWS: ARTICLE 1 - ACQUISITION OF A SHAREHOLDING BY THE WCG GROUP Certain shareholders of the Company and WCG agreed to sign a share purchase agreement (the "Share Purchase Agreement"), pursuant to which a company of the WCG Group (as defined below) will purchase, subject to certain conditions, and such shareholders will sell, approximately 30.22% of the Company's capital, i.e., 15,105 Shares which, with the 680 GS Shares acquired simultaneously from GS Euro Finance in exchange for Willis Corroon France shares, corresponds to approximately 31.72% of the capital and approximately 33.36% of the voting rights of the Company, (hereinafter the "Initial Shareholding"). The Share Purchase Agreement and the Share Exchange Agreement are attached to this Agreement respectively in Exhibits 2 and 9. The parties represent that the acquisition and maintenance by the WCG Group of the Initial Shareholding giving it more than 33.35% of the Company's voting rights is an essential condition of its consent to the transactions provided for in this Agreement and its Exhibits. ARTICLE 2 - PROMISES TO BUY AND TO SELL On condition that the WCG Group has acquired the Initial Shareholding, the signatories hereto shall be bound by the promises to buy and to sell attached hereto in Exhibits 3, 3 bis, 3 ter, 4 and 5. ARTICLE 3 - AMENDMENTS TO THE BY-LAWS Agreement page 4 The parties agree that the societe en commandite par actions structure must continue for as long as Messrs. Gras or Lucas or Naftalski are general partners, it being stipulated that by the deadline of December 31, 2009, the Company will no longer have any general partners and will have to be transformed into a societe anonyme, without any provisions of the by-laws granting any special advantage to any one of the shareholders, provided that the WCG Group is the owner of 50.1% of the Company's capital or voting rights. The Company's by-laws must have been amended according to the text contained in Exhibit 6 no later than on the Closing Date and they shall keep such form for as long as the Company has the form of a societe en commandite par actions. It is specified that the shareholders who are individuals and members of the Gras and/or Lucas families are, on the date hereof, those indicated as such in Exhibit 1 hereto. ARTICLE 4 - SHAREHOLDERS' AGREEMENT All the shareholders and general partners of the Company expressly agree as follows: (i) The parties agree that the WCG and GS Groups (defined respectively as all of the companies controlled by WCG on the one hand and the Company on the other hand, it being understood that the concept of control shall mean here a direct or indirect holding of more than 50% of the capital or the actual control of management) shall organize their relations in accordance with the principles defined in the document entitled "Framework for Partnership", attached in Exhibit 7. (ii) An Advisory Committee of the Company shall be created as from the Closing Date until the transformation of the Company into a societe anonyme. This Advisory Committee shall be composed: o of the general partners, o of 2 representatives of WCG. This Advisory Committee shall meet from time to time, a minimum of once per quarter, and its task will be to discuss the following issues: * operational and financial relations, * the development of the activity of the Company and the Subsidiaries, and the situation of the insurance brokerage market, * the future of the Company and the Subsidiaries, Agreement page 5 * the adoption of any new computer system or any new management software program having a certain importance, * the evaluation of the solvency of insurance companies, * the financial objectives. (iii) The parties agree that the Company shall distribute every year to the shareholders, in the form of dividends, a minimum amount representing 40% of the Company's distributable profits (hereinafter the "Dividend Distribution"). However, the dividend distribution made within the legal time limit following the approval of the Company's accounts closed on December 31, 1997 and December 31, 1998 shall represent for each of the two years a minimum amount of FRF 10,000,000 for the WCG Group's Initial Shareholding. For subsequent years, the parties agree to fix the amount of the dividends to be paid to the shareholders by the Company at a level which takes into account the Company's investment budgets and working capital. Upon failure to agree, the amount of the dividends distributed shall be the Dividend Distribution. Subject to the rights of the general partners in accordance with the provisions of Article 18-3(degree) of the Company's by-laws, it is specified that the dividend distributions shall be identical for all the Company's shareholders, in proportion to their actual shareholding in the Company's capital. Messrs. Gras, Lucas and Naftalski guarantee that the competent corporate bodies of the Company's current or future Subsidiaries shall distribute an amount of dividends which is sufficient to allow the application of this clause. (iv) Within a period of time compatible with the Company's material requirements, the Company shall use reasonable efforts to supply financial and accounting information concerning the GS Group regularly to WCG in accordance with and in the form of Exhibit 8. Before this procedure is able to be set up, the Company shall provide WCG on a quarterly basis with the income statements concerning all its Subsidiaries (as defined in the Share Purchase Agreement) which are French, and its important foreign Subsidiaries, and on a six-monthly basis with a consolidated balance sheet of the Company. Immediately as from the Closing Date, the Company shall also provide WCG on a monthly basis with an income statement concerning Gras Savoye S.A., in the available form, i.e., without the inventory corrections having a connection with turnover. (v) The parties expressly undertake throughout the entire term hereof not to make any request to the relevant stock market authorities for the Agreement page 6 introduction onto a French or foreign stock market, whether regulated or not, of any of the securities of the Company or of any one of the Subsidiaries. (vi) The parties agree that the provisions referred to in Article 10-3 of the Company's by-laws requiring the prior authorization of the Supervisory Board by a three-quarters majority shall be applied to all the Company's Subsidiaries (as defined in the Share Purchase Agreement), it being understood that the amounts referred to in Article 10-3 of the Company's by-laws include all transactions carried out by the Company's Subsidiaries. In this regard, the Company's general partners shall set up internal procedures in each company of the GS Group allowing these provisions to be applied. (vii) As from the date hereof, and throughout the entire term of this Agreement, none of the general partners and none of the Class A individual shareholders of the Company, for as long as they carry on any professional activity whatsoever within or for the benefit (employment contract or consultancy agreement) of the Company and/or the Subsidiaries, (a) shall hold, or have an option to acquire, directly or indirectly, on any grounds whatsoever, a shareholding in a company or enterprise carrying on, principally, activities which are the same as or compete with those of the Company or one of the Subsidiaries, subject however to the shares or securities held by one of them in one or more companies meeting the above conditions which are listed on a regulated or non-regulated market in France or abroad, provided that such a shareholding does not exceed 5% of the capital or voting rights of the company concerned; (b) shall receive any compensation whatsoever from persons supplying goods or services to the Company or one of the Subsidiaries, or from persons acquiring goods or services from the Company or one of the Subsidiaries, insofar as the nature of the connection at the origin of such compensation constitutes a conflict of interest with the Company or one of the Subsidiaries. (viii) As from the time they cease their duties as gerant, or upon expiration of their capacity as general partner, for any reason whatsoever, Messrs. Lucas, Gras or Naftalski each undertake not to engage in any activity in the insurance and reassurance brokerage area resulting, directly or indirectly, in their personal name, on behalf of third parties and more generally in any capacity whatsoever, in their dealing with or soliciting in any manner whatsoever any one of the GS Group's clients existing as at the date they cease their duties as gerant or their capacity as general partner expires, or having been a client of the GS Group within the Agreement page 7 12 months preceding such event. This non-compete undertaking is made for a 3-year period following respectively the cessation of their duties as gerant or the expiration of their capacity as general partner, and shall be limited to French territory. (ix) The WCG Group and the Company, both on its own behalf and for any company of the GS Group, each undertake to make available to the other the resources necessary to offer a quality international homogeneous service to their clients immediately upon signature hereof. This undertaking shall remain in force for at least two years (i) as from the date hereof, in the event that the share transfer contemplated in the Share Purchase Agreement is not completed for any reason whatsoever or (ii) as from the actual completion of the change of control of WCG, if Promise to Sell No. 2 is exercised by the Beneficiaries of such promise. (x) The parties have taken note that GS Euro Finance holds as of this day 3,120 shares of the Company, these self-held shares not having voting rights, and take note that the WCG Group's Initial Shareholding gives it more than approximately 33.35% of the Company's voting rights due to the existence of the still remaining self-held shares. The shareholders and the general partners undertake to ensure that any transaction concerning the still remaining self-held shares shall be carried out with WCG's prior agreement, in order to preserve a minimum percentage holding of 33.35% of the Company's voting rights. (xi) The parties agree on the principle of setting up, at Company level and after the Closing Date, a Stock Option Plan for shares of the Company in favor of certain employees of the GS Group, by means of purchase options covering the existing shares of the Company, the terms and conditions of which shall be approved by the Company's corporate structures in accordance with the by-laws and the law. In particular, any use of the Company's shares held by the Belgian company, GS Euro Finance under this Stock Option Plan shall be authorized in accordance with the terms and conditions described above and must be carried out so that the WCG Group has the option of maintaining the minimum percentage holding of 33.35% of the Company's voting rights. (xii) The parties agree that it is in their interest and in the interest of the Company that a French institutional or financial group acquire a significant shareholding in the Company's capital, it being specified that this shareholding must be less than the WCG Group's Initial Shareholding, unless WCG otherwise agrees. Agreement page 8 (xiii) The parties undertake that the general meeting of the Company shall not amend Article 9.II.2(degree).B of the Company's by-laws as long as each and all of the Corporate Beneficiaries (within the meaning of the Promises to Buy) have not exercised their option to sell, wholly or partially, pursuant to such Promises to Buy. (xiv) For the purposes of the Promises to Buy and to Sell referred to in Article 2 above, the parties undertake that the Company shall not carry out any transaction involving the capital of the Company which may have an impact on the Price per Share, such as, in particular, a division of the par value or a distribution of free shares, without the parties having agreed to the modifications to be made to the Promises to Buy and to Sell. ARTICLE 5 - TRANSFER OF THE WILLIS CORROON FRANCE S.A. SHARES The WCG Group and GS Euro Finance agreed to sign a share exchange agreement, pursuant to which GS Euro Finance will acquire, on the Closing Date, 100% of the capital of Willis Corroon France S.A. so that this company is integrated into the GS Group. This share transfer shall be carried out in exchange for 680 Shares held by GS Euro Finance (hereinafter the "Share Exchange Agreement"). The Share Exchange Agreement is attached in Exhibit 9 hereto. The parties agree to use their best efforts so that the management employees and managers of Willis Corroon France S.A. (it being specified that Mr. Nicholas Davenport shall not be integrated into the GS Group) are integrated into the GS Group at positions of responsibility and at conditions of remuneration which are comparable with those they have at the moment and are compatible with those currently in force in the GS Group for persons holding equivalent positions at the time of their integration. ARTICLE 6 - CONDITION PRECEDENT The entry into force of this Agreement, with the exception of Article 4 (v), (vii), (viii) and (ix), Article 7 and Article 12, shall be subject to the condition precedent of the WCG Group's actually completing the acquisition of the Initial Shareholding, as provided for in the Share Purchase Agreement attached in Exhibit 2 and the Share Exchange Agreement attached in Exhibit 9 hereto, which must occur by December 31, 1997 or at a later date in the event of a contractual extension, as provided for in such Share Purchase Agreement and Share Exchange Agreement. Agreement page 9 ARTICLE 7 - OTHER UNDERTAKINGS (i) Until the Closing Date or prior thereto, on the date on which this Agreement automatically lapses for any reason whatsoever, the shareholders and general partners undertake (a) not to sell the Shares, except for an individual's donation to his or her descendants, (b) not to start negotiations without the prior agreement of WCG with any third party for the sale of all or part of the Shares and to stop any negotiations already started for this purpose, (c) not to pledge the Shares to be transferred under the Share Purchase Agreement or use them as collateral in any manner whatsoever, particularly by means of a transfer to a financial instruments account pledged in favor of any person whatsoever, and (d) more generally not to do anything which is likely to prevent or delay the actual transfer of the Shares to be transferred to the WCG Group on the Closing Date. All the undertakings provided for in this paragraph shall also apply to the GS Shares held by GS Euro Finance to be delivered to the WCG Group in exchange for 100% of the Willis Corroon France S.A. shares. (ii) Reciprocally, until the Closing Date or prior thereto, on the date on which this Agreement automatically lapses for any reason whatsoever, WCG undertakes not to start negotiations, directly or indirectly, for the acquisition principally of any French insurance or reinsurance brokerage company and/or to stop any negotiations already started for this purpose. (iii) WCG undertakes that, after the Closing Date, Mr. Patrick Lucas shall be appointed as a member of the Board of Directors of WCG, in accordance with the provisions of WCG's by-laws. In addition, WCG undertakes, as from the Closing Date, to appoint, subject to terms and conditions to be determined, management employees and managers of the GS Group to the appropriate international and/or regional boards or committees of the WCG Group. Reciprocally, as from the Closing Date, the GS Group undertakes to appoint management employees and managers of the WCG Group to the equivalent or appropriate boards or committees of the GS Group. (iv) No later than on the Closing Date, the general partners of the Company and the Company undertake that the entire capital of GS Euro Finance less one share shall be held directly or indirectly by the Company. (v) WCG undertakes that the commission sharing agreements in force on the date hereof, pursuant to which Willis Corroon France shares: (i) commissions with Willis Corroon Faber & Dumas Limited on the Agreement page 10 basis of a 50/50 share, with respect to French business covered by reinsurance agreements (whatever the nationality of the reinsurance companies); (ii) with other companies of the WCG Group on bases which are currently in force with respect to the other types of business not referred to in (i) above, shall be maintained. They may be modified with the sole agreement of the companies of the WCG Group concerned and the Company. ARTICLE 8 - TERM This Agreement shall be entered into for a 13-year term. ARTICLE 9 - MISCELLANEOUS PROVISIONS (i) This Agreement shall be governed by French law. (ii) Any disputes which might arise between the parties in connection with the interpretation and performance of this Agreement shall be submitted to the exclusive jurisdiction of the Nanterre Commercial Court, the place where the Company's registered office is located, where all the parties expressly declare that they elect domicile for the purposes hereof. (iii) This Agreement and, as applicable, the attached documents, shall be the subject of a press release which will be issued publicly immediately after its signature and which must have been approved by all the parties hereto. With the exception of the information which may be required by law or the stock market regulations applicable to WCG or by law or the stock market regulations applicable to the GS Group, any information concerning this Agreement or the attached documents shall be confidential. Any information obtained by any one of the parties hereunder shall be confidential in nature and shall in any event continue to be covered by the previously signed confidentiality undertaking. This undertaking shall continue in the event that this Agreement lapses automatically. (iv) This Agreement cancels and replaces any other agreements which might exist between the parties relating to its subject matter, including, on the Closing Date, the shareholders' agreement dated June 26, 1992 entered into between Mr. Patrick Lucas, Mr. Emmanuel Gras, Athena, AGF and UAP, and known to such parties only. Agreement page 11 (v) A refusal or a delay by one of the parties in exercising its rights arising out of this Agreement shall not be deemed to constitute a waiver of such rights or of other rights for the future. (vi) The respective obligations of each of the parties under this Agreement and its Exhibits shall form an indivisible whole. If for any reason whatsoever one of the clauses of this Agreement or its Exhibits proved to be invalid or unenforceable or if the fulfillment of any obligation by one of the parties was prevented or significantly delayed as a result of the failure to obtain any administrative authorization or as a result of any regulation, the parties undertake to negotiate in good faith as promptly as possible any provision intended to replace the invalid or unenforceable clause, and any other clause which may be affected, as the case may be, respecting the general equilibrium of their respective initial undertakings. It is however specified that the invalidity or unenforceability of any one of the non-essential clauses of this Agreement or its Exhibits shall not be such as to affect the validity or enforceability of the other clauses of this Agreement or its Exhibits. (vii) Each party shall assume the fees and expenses of its own counsel, accountants, brokers, representatives and attorneys-in-fact in connection with this Agreement. (viii) This Agreement shall be binding on the successors, heirs, legal representatives, assignees and assigns, whether for valuable consideration or as a gift, of the parties and shall inure to their benefit. (ix) The Exhibits to this Agreement form an integral part hereof. (x) In the event that any one of the provisions hereof contradicts the text of any one of the Exhibits hereto, the text of such Exhibits shall prevail. (xi) Any shareholder of the Company signing this Agreement guarantees that all of the Company's shareholders, existing now or on the Closing Date, and any subsequent transferee of the Shares, shall ratify this Agreement by the Closing Date, directly or on the basis of a power of attorney according to the model attached in Exhibit 10. In this regard, new originals of this Agreement shall be signed, directly or on the basis of a power of attorney, no later than on the Closing Date. (xii) In the event of the transfer of the Shares to a party outside of this Agreement, the recording of this new shareholder as the owner of the Company's securities shall be subordinated to such shareholder's prior written acceptance, with no restrictions or reservations, of this Agreement. (xiii) All the Gras Shareholders, as defined in Exhibit 1, represent that they Agreement page 12 have a common interest and they shall receive a single original of this Agreement and its Exhibits, delivered to Mr. Emmanuel Gras, to whom the selling shareholders grant power to receive this original, Mr. Emmanuel Gras being responsible for delivering certified true copies to them. (xiv) All the Lucas Shareholders, as defined in Exhibit 1, represent that they have a common interest and they shall receive a single original of this Agreement and its Exhibits, delivered to Mr. Patrick Lucas, to whom the selling shareholders grant power to receive this original, Mr. Patrick Lucas being responsible for delivering certified true copies to them. (xv) All the Other Individual Shareholders, as defined in Exhibit 1, represent that they have a common interest and they shall receive a single original of this Agreement and its Exhibits, delivered to Mr. Daniel Naftalski, to whom the selling shareholders grant power to receive this original, Mr. Daniel Naftalski being responsible for delivering certified true copies to them. (xvi) All the other signatories of this Agreement shall each receive an original of this Agreement and its Exhibits. (xvii) It is specified that in the event of the failure by any one of the parties to respect its undertakings under this Agreement and its Exhibits and independently of any provisions set forth herein, each of the parties shall be able to use all remedies at law to seek compensation for the damage suffered. (xviii) The Company undertakes to provide all the parties at any time at their request with all information concerning the price and the components used to calculate it in order to allow the parties to determine the conditions for the exercise of the Promises to Buy and to Sell provided for herein. ARTICLE 10 - INTERVENTION OF GRAS SAVOYE & CIE The Company has familiarized itself, in addition to its own undertakings, with the undertakings referred to in this Agreement and undertakes to do what is necessary for them to be respected. ARTICLE 11 - REPRESENTATIONS AND WARRANTIES OF WCG WCG represents and warrants that it has full power and has obtained all necessary authorizations to enter into and sign this Agreement, that its undertakings are valid and enforceable in accordance with their terms, subject Agreement page 13 to the condition precedent stipulated in Article 4 (f) of the Share Purchase Agreement. WCG guarantees the undertakings made by any company of the WCG Group that it might substitute for itself pursuant hereto. ARTICLE 12 - ATHENA - UAP - AGF The parties expressly acknowledge that Athena and UAP, with the exception of what is stipulated below, shall not be held liable in respect of any one of the other parties hereto for any reason whatsoever. The only obligations by which Athena and UAP are bound by this Agreement are: (i) to respect the Promise to Buy (Exhibit 3 bis for Athena and Exhibit 3 ter for UAP) and Promise to Sell No. 1, in accordance with Article 2 of this Agreement; (ii) to vote at Supervisory Board and general meetings in such a way as to allow the accomplishment of the provisions of this Agreement; and (iii) to respect the provisions of Articles 4 (v), 8 and 9, with the exception of Article 9 (xi). The parties expressly acknowledge that AGF, with the exception of what is stipulated below, shall not be held liable in respect of any one of the other parties hereto for any reason whatsoever. The only obligations by which AGF is bound by this Agreement are: (i) to respect the Share Purchase Agreement (Exhibit 2), in accordance with Article 1 of this Agreement; (ii) to vote at Supervisory Board and general meetings in such a way as to allow the accomplishment of the provisions of this Agreement; and (iii) to respect the provisions of Articles 4 (v), 8 and 9, with the exception of Article 9 (xi). Executed in 10 originals, For all the signatories excluding WCG and WCE BV, in Neuilly-sur-Seine, on July 23, 1997 at 12.00 p.m.. For WCG and WCE BV, in London, on July 23, 1997 at 5.00 p.m. For the shareholders: Agreement page 14 - ------------------------------------- ------------------------------------ For the Gras Shareholders For the Lucas Shareholders By Mr. Emmanuel Gras By Mr. Patrick Lucas - ------------------------------------- For the Other Individual Shareholders By Mr. Daniel Naftalski - ------------------------------------- ------------------------------------ Assurances Generales de France IART UAP Incendie - Accidents By Guy Lallour By Adrien Cadieux - ------------------------------------- Athena By Daniel Ehrmann For the general partner gerants: - ------------------------------------- ------------------------------------ Mr. Emmanuel Gras Mr. Patrick Lucas - ------------------------------------- Mr. Daniel Naftalski Agreement page 15 For the Company: - ------------------------------------- Gras Savoye & Cie By Mr. Patrick Lucas For GS Euro Finance: - ------------------------------------- Gras Savoye Euro Finance By Mr. Patrick Lucas For the Willis Corroon Group: - ------------------------------------- ------------------------------------ Willis Corroon Group Plc Willis Corroon Europe B.V. By Mr. John Reeve By Mrs. Sarah Turvill - -------------------------------------------------------------------------------- EXHIBIT 2 TO THE AGREEMENT SHARE PURCHASE AGREEMENT BETWEEN THE UNDERSIGNED 1. Assurances Generales de France IART, a French law company with its registered office at 87 rue de Richelieu, 75002 Paris, registered with the Paris Commercial and Companies Registry under No. B 542 110 291, represented by Guy Lallour acting as Directeur DIDRE and fully empowered for the purposes hereof, 2. The transferring individual shareholders of Gras Savoye & Cie, designated as such in Exhibit 1 to the Agreement, hereinafter jointly referred to as the "Transferors"; AND Gras Savoye Euro Finance S.A., a Belgian law company having its registered office at 8 avenue Bel-Air, 1180 Uccle, Belgium, registered with the Brussels Commercial Registry under No. 258.054, represented by Patrick Lucas acting as President and fully empowered for the purposes hereof, hereinafter referred to as "GS Euro Finance"; AND Willis Corroon Group Plc., an English law company with its registered office at Ten Trinity Square, London EC3P 3AX, United Kingdom, registered with the England and Wales Company Registration Office under No. 621757, represented by John Reeve acting as Chairman and fully empowered for the purposes hereof, - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 2 to the Agreement Share Purchase Agreement page 2 with the option to substitute for itself hereunder any company of the WCG Group (as defined in the Agreement), hereinafter the "Transferee". WHEREAS: A. Gras Savoye et Cie is a societe en commandite par actions with a capital of FRF 9,952,000 divided into 49,760 shares of FRF 200 each, with its registered office at 2 rue Ancelle, 92200 Neuilly sur Seine, registered at the Nanterre Commercial and Companies Registry under number B 457 509 867 (hereinafter referred to as the "Company"). At the date hereof, the capital of the Company is held as described in Exhibit 1 to the Agreement. The shares of the Company shall hereinafter be referred to as the "GS Shares". B. The Company has direct or indirect shareholdings in several other companies or other legal entities, a list of which, indicating the percentage of such shareholdings, is attached in Exhibit 1 to the Share Purchase Agreement. Those of such companies or other legal entities in which the Company directly or indirectly owns more than 50% of the capital or ensures the actual control of the management shall hereinafter be collectively referred to as the "Subsidiaries". C. The Transferee has informed the Transferors that it is interested in purchasing approximately 30.22% of the GS Shares, i.e. 15,105 GS Shares which, with the 680 GS Shares acquired simultaneously from Gras Savoye Euro Finance, corresponds to approximately 31.72% of the capital and approximately 33.36% of the voting rights of the Company, and the Transferors have also indicated that they are interested in such transfer. D. Among the companies of the Gras Savoye Group, the following are of particular importance, i.e.: (i) Gras Savoye & Cie S.C.A., (ii) Gras Savoye S.A., (iii) Gras Savoye Reassurance S.A. (iv) SAGERI S.A., (v) AMI, (vi) Gras Savoye Lanvin Lespiau, (vii) GS Re and (viii) Gras Savoye Euro Finance. These eight companies are hereinafter collectively referred to as the "Main Companies". - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 2 to the Agreement Share Purchase Agreement page 3 NOW, THEREFORE, THE FOLLOWING HAS BEEN AGREED UPON: 1. Acquisition (a) Subject to ordinary legal guarantees and to the terms and conditions of this Share Purchase Agreement, the Transferors shall jointly transfer to the Transferee, and the Transferee shall acquire from the Transferors, 15,105 GS Shares representing approximately 30.22% of the capital and, with the 680 GS Shares acquired simultaneously from GS Euro Finance, approximately 31.72% of the capital and approximately 33.36% of the voting rights of the Company, it being specified that the Transferee intends to purchase shares of a Transferor only if it is in a position to purchase shares from the other Transferors at the same time. The transferred GS Shares shall hereinafter be referred to as the "Shares". (b) The transfer of the Shares shall take effect on the date of the effective transfer of the Shares (hereinafter referred to as the "Closing Date") and the Transferee shall acquire the right to the full enjoyment of the Shares as from such date, with all the rights to dividends attached thereto. The class A Shares purchased by the Transferee in addition to the class B Shares purchased just before, shall as a matter of course become class B Shares on the Closing Date, pursuant to the Company's by-laws in effect as from the Closing Date. (c) The transfer and acquisition of the Shares shall only take place if all the conditions precedent set forth in Article 4 below have been fulfilled by the Closing Date. 2. Price of the Shares (A) Base Price The base price of the Shares (hereinafter the "Base Price") is FRF 453,406,785 (four hundred and fifty-three million four hundred and six thousand seven hundred and eighty-five French francs), i.e. FRF 30,017 (thirty thousand and seventeen French francs) per Share, (hereinafter referred to as the "Base Price per Share"). The Base Price has been determined on the basis of a valuation of the Company of FRF 1,400,000,000 (one billion four hundred million French francs). (B) Deciding Elements and Adjustment of the Price - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 2 to the Agreement Share Purchase Agreement page 4 If the accounting and legal audit conducted in accordance with Article 4 (d) below (hereinafter the "Audit") reveals one or more quantifiable or unquantifiable elements or facts, contrary to any of the deciding elements of the acquisition of the Shares indicated in Exhibits 2A and 2B to the Share Purchase Agreement (hereinafter the "Quantifiable Deciding Elements", the "Unquantifiable Deciding Elements" and together the "Deciding Elements"), the Transferee shall inform the Representative of the Transferors (as defined in Article 9 below) thereof no later than 8 business days in France (hereinafter the "Business Days") following the date of the end of the Audit set for October 20, 1997 at the latest, unless extended contractually (hereinafter referred to as the "Date of the End of the Audit"). The Transferee shall attach all the necessary information to such notification along with copies of any necessary documentary proofs. The notification shall also include the value of the Adjustment of the Price per Share (as defined below) claimed by the Transferee or its intention not to carry out the acquisition of the Shares, under the conditions set forth in this Article. (i) Inaccuracy in respect of any of the Quantifiable Deciding Elements If the Audit reveals one or more elements or facts in contradiction with any one of the Quantifiable Deciding Elements, a price reduction shall be calculated in accordance with the adjustment formula contained in Exhibit 3 (hereinafter the "Adjustment of the Price per Share"), subject, however, to the application of the Right of Withdrawal mentioned below. The Transferors, through the Representative of the Transferors, may notify the Transferee, within 6 Business Days following the notification received from the Transferee, of any dispute concerning such notification (hereinafter the "Notification in Response"), failing which they shall be deemed to have agreed to all the elements and to the Adjustment of the Price per Share notified by the Transferee, as a result of an inaccuracy in respect of one or more Quantifiable Deciding Elements. In the event of a dispute, the parties shall negotiate in good faith in order to reach an agreement on the existence or the amount of the Adjustment of the Price per Share. (a) Dispute of the Amount of the Consolidated Equity at June 30, 1997 and Absence of Dispute of the Estimated Consolidated Net Turnover at December 31, 1997 (excluding acquisitions) and Absence of an Estimate by the Transferee of an Estimated Group Share Consolidated Net Result at December 31, 1997 of less than FRF 30,000,000 In the event of the occurrence of the 4 following conditions which are cumulative: (x) dispute by the Transferors of the amount of the Consolidated Equity at June 30, 1997 (as defined in Exhibit 2A) estimated by - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 2 to the Agreement Share Purchase Agreement page 5 the Transferee; (y) absence of dispute by the Transferors of the Estimated Consolidated Net Turnover at December 31, 1997 (excluding acquisitions) (as defined in Exhibit 2A) estimated by the Transferee; (z) absence of an estimate by the Transferee of an Estimated Group Share Consolidated Net Result at December 31, 1997 (as defined in Exhibit 2A) of less than FRF 30,000,000; (t) absence of agreement between the parties within 6 Business Days following the Notification in Response received by the Transferee, the amount of the Consolidated Equity at June 30, 1997 shall be settled in accordance with the Expert Assessment Procedure (as defined below). The Expert shall accordingly determine the Price per Share within the period defined in Article 2. (B) (ii) below, and in any event prior to the Closing Date, by applying the formula contained in Exhibit 3. (b) Dispute of the Amount of the Estimated Consolidated Net Turnover at December 31, 1997 (excluding acquisitions) without such amount being estimated by the Transferee at less than FRF 850,000,000 and Absence of Estimate by the Transferee of an Estimated Group Share Consolidated Net Result at December 31, 1997 of less than FRF 30,000,000 In the event of the occurrence of the 3 following conditions which are cumulative: (x) dispute by the Transferors of the amount of the Estimated Consolidated Net Turnover at December 31, 1997 (excluding acquisitions) (as defined in Exhibit 2A) estimated by the Transferee without such amount being estimated by the Transferee at less than FRF 850,000,000; (y) absence of an estimate by the Transferee of an Estimated Group Share Consolidated Net Result at December 31, 1997 (as defined in Exhibit 2A) of less than FRF 30,000,000; (z) absence of agreement between the parties within 6 Business Days following the Notification in Response received by the Transferee, the amount of the Estimated Consolidated Net Turnover at December 31, 1997 (excluding acquisitions) shall be determined pursuant to the Expert Assessment - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 2 to the Agreement Share Purchase Agreement page 6 Procedure. In addition, in the event that the Transferors dispute the amount of the Consolidated Equity at June 30, 1997 as estimated by the Transferee, and in the absence of an agreement between the parties within 6 Business Days following the Notification in Response received by the Transferee, the amount of the Consolidated Equity at June 30, 1997 shall also be determined in accordance with the Expert Assessment Procedure. The Expert shall accordingly determine the Price per Share within the period of time set forth in Article 2. (B) (ii) below, by applying the formula contained in Exhibit 3. However, in the event that the Expert is unable to determine the amount of the Estimated Consolidated Net Turnover at December 31, 1997 (excluding acquisitions), it would determine the Price per Share on the basis of the amount of the Actual Consolidated Net Turnover at December 31, 1997 and the amount of the Consolidated Equity at December 31, 1997, as the case may be. (c) Right of Withdrawal Notwithstanding any provision to the contrary herein, and in addition to the provisions set forth in Article 2 (B) (iii) below, the Transferee shall be entitled, at its election, to a right of withdrawal (hereinafter the "Right of Withdrawal") under the following conditions. If, at the end of a period of 6 Business Days following the Notification in Response received by the Transferee, the parties agree that (x) the total price of the Shares is less than or equal to FRF 388,636,545 (three hundred and eighty-eight million six hundred and thirty-six thousand five hundred and forty-five French francs), i.e. FRF 25,729 per Share, following the application of the adjustment formula contained in Exhibit 3 hereto, or that (y) the Estimated Group Share Consolidated Net Result at December 31, 1997 is less than FRF 30,000,000, or that (z) the Estimated Consolidated Net Turnover at December 31, 1997 (excluding acquisitions) is less than FRF 850,000,000, the Transferee may notify its decision to the Transferors to end all of the transactions provided for herein within 6 Business Days following the parties' agreement. In such event, this Share Purchase Agreement shall automatically lapse, as shall any related and/or inseparable document (with the exception of the provisions of the Agreement expressly stipulated as surviving the lapsing of this Share Purchase Agreement), without any indemnity being due by either of the parties. In the event that, at the end of a period of 6 Business Days following the Notification in Response received by the Transferee, the parties disagree on any one of the assertions made in (x), (y) or (z) above, the Closing Date shall be postponed until the Expert fails to confirm, if such is the case, in the context - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 2 to the Agreement Share Purchase Agreement page 7 of the Expert Assessment Procedure, the reality of the assertion or assertions made. Should the Expert determine the reality of at least one of the assertion or assertions made by the Transferee referred to in (x), (y) or (z) above, the Transferee may notify the Transferors, within 6 Business Days following the confirmation by the Expert of the reality of at least one of the assertion or assertions made by the Transferee referred to in (x), (y) or (z) above, of its decision to end all of the transactions provided for herein. In such a case, this Share Purchase Agreement shall automatically lapse, as shall any related and/or inseparable document (with the exception of the provisions of the Agreement expressly stipulated as surviving the lapsing of this Share Purchase Agreement), without any indemnity being due by any one of the parties. In all cases where the Transferee does not exercise its Right of Withdrawal recognized by the parties or the Expert, and decides to acquire the Shares, the Price per Share shall be determined in accordance with the formula contained in Exhibit 3 on the basis of the Actual Consolidated Net Turnover at December 31, 1997 and the Consolidated Equity at December 31, 1997, it being specified that if the Price per Share is unable to be determined on the Closing Date, the amount of FRF 25,729 per Share shall be paid on such Date. In all cases where the Transferee decides to exercise its Right of Withdrawal, recognized by the parties or the Expert, the parties undertake to meet in order to determine together the optimum terms and conditions for the public announcement, if any, of the exercise of this Right of Withdrawal. Should the Expert fail to confirm the reality of all the assertions made by the Transferee referred to in (x), (y) and (z) above, the Transferee shall be required to acquire the Shares. The Expert shall determine the amount of the Estimated Consolidated Net Turnover at December 31, 1997 (excluding acquisitions) and as required of the Consolidated Equity at June 30, 1997 and shall deduce from it the Price per Share in accordance with the formula contained in Exhibit 3 hereto. If the Expert, having failed to confirm the reality of all of the assertions made by the Transferee referred to in (x), (y) and (z) above, is however unable to determine the amount of the Estimated Consolidated Net Turnover at December 31, 1997 (excluding acquisitions) and/or the amount of the Estimated Group Share Consolidated Net Result at December 31, 1997, the parties agree that a sum corresponding to FRF 25,729 per Share shall be paid on the Closing Date, the Expert being responsible for determining the price supplement on the basis of the elements described in the following paragraph. In any event, if the Expert was unable to determine the amount of the Estimated Consolidated Net Turnover at December 31, 1997 (excluding acquisitions) and/or the amount of the Estimated Group Share Consolidated Net Result at December 31, 1997, it would determine the Price per Share on - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 2 to the Agreement Share Purchase Agreement page 8 the basis of the Actual Consolidated Net Turnover at December 31, 1997 and, as the case may be, of the amount of the Consolidated Equity at December 31, 1997. It shall also determine, as the case may be, the Actual Group Share Consolidated Net Result at December 31, 1997. (ii) Expert Assessment Procedure For the purposes hereof, the procedure described below is called the "Expert Assessment Procedure". Failing an agreement within a period of 6 Business Days following the Notification in Response received by the Transferee, as provided in Article 2. (B) (i) above, the parties expressly agree that the existence and/or the amount of the inaccuracy alleged by the Transferee in respect of one or more of the Quantifiable Deciding Elements or the reality of any one of the assertions mentioned in Article 2. (B) (i) (c) above, shall be definitively settled, without recourse of any kind, unless an obvious material error has been made, by Coopers & Lybrand (hereinafter the "Expert"), within a period of 30 Business Days following: (x) the submission of the dispute to the Expert in order to determine the amount of the Consolidated Equity at June 30, 1997, or (y) the submission of the dispute to the Expert in order to determine the amount of the Estimated Consolidated Net Turnover at December 31, 1997 (excluding acquisitions), or (z) the submission of the dispute to the Expert in order to confirm or not confirm the reality of the assertions notified by the Transferee pursuant to paragraphs (x), (y) or (z) of Article 2 (i) (c) above, or (t) the submission of the dispute to the Expert, to which shall be attached a copy of the Company's consolidated accounts for financial year 1997, certified by the statutory auditor, in order to determine the amount of the Actual Consolidated Net Turnover at December 31, 1997 or the amount of the Consolidated Equity at December 31, 1997 if the Expert has for any reason whatsoever to take into consideration the amount of the Actual Consolidated Net Turnover at December 31, 1997 or the amount of the Consolidated Equity at December 31, 1997 or the Actual Group Share Consolidated Net Result at December 31, 1997. The dispute shall be submitted to the Expert at the request of the most diligent party in writing with a copy sent to the other parties, and one-half of the Expert's fees shall be paid by the Transferors and the other half by the Transferee. The party referring the dispute to the Expert shall provide the Expert with a copy of - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 2 to the Agreement Share Purchase Agreement page 9 the notifications exchanged between the parties. The Expert declared prior to the signature hereof that it accepted this appointment. Accordingly, the Expert shall determine the existence and/or the amount of the inaccuracy alleged by the Transferee in respect of one or more Quantifiable Deciding Elements, the reality of the assertions referred to in Article 2. (B) (i) (c) above, which determination shall be binding on the parties, and the Adjustment of the Price per Share which shall also be binding on the parties, in accordance with Article 1843-4 of the Civil Code, it being understood that not only the definitions contained in Exhibit 2A hereto but also the adjustment formula contained in Exhibit 3 and the accounting rules and methods contained in Exhibit 4 shall be binding on the Expert. If the Expert was unable to complete its mission for any reason whatsoever, with the exception of the cases in which it would be unable to determine the amount of the Estimated Consolidated Net Turnover at December 31, 1997 (excluding acquisitions) or the amount of the Estimated Group Share Consolidated Net Result at December 31, 1997, a new Expert chosen from the list of experts of the Court of Appeal of Versailles would be appointed by mutual agreement between the Transferee and the Representative of the Transferors or, failing this, by the Presiding Judge of the Commercial Court of Nanterre to which the matter shall be referred in summary proceedings (referes) upon the request of the most diligent party. The Transferors and the general partner gerants of the Company guarantee the Expert's access to the premises of the Company and/or its Subsidiaries as the case may be and the provision by the Company and/or its Subsidiaries to the Expert of any information that the Expert might reasonably request in connection with the accomplishment of its mission. (iii) Inaccuracy of any one of the Unquantifiable Deciding Elements If the Audit reveals one or more elements or facts that are contrary to any one of the Unquantifiable Deciding Elements, insofar as such Unquantifiable Deciding Elements are not disclosed in Exhibit 5, the Transferee may decide not to purchase the Shares. In such event, it shall notify the Representative of the Transferors within 6 Business Days following the Date of the End of the Audit of its intention not to purchase the Shares. The elements disclosed by the Transferors in Exhibit 5 hereto (it being observed that this Exhibit with its own Exhibits has been provided to the Transferee on the date of signature hereof, the Transferee not having been able to become familiar with them in a satisfactory manner, as acknowledged by the parties) which the Transferee has not valued on the date of signature hereof, shall not constitute the Transferee's waiver of asserting, within 6 Business Dates following the Date of the End of the Audit, any one of such elements (and in particular any elements contained in the Exhibits to Exhibit 5) which have or may have a significant effect on the value or the outlook of the Company and, as the case may be, of their being taken into consideration with respect to the Quantifiable Deciding Elements. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 2 to the Agreement Share Purchase Agreement page 10 In the event of a dispute by the Transferors concerning the inaccuracy in respect of the Unquantifiable Deciding Element(s) in question, it shall be the Transferors' responsibility to show within 10 Business Days following the notification received from the Transferee that the Unquantifiable Deciding Element(s) in question are in reality accurate or do not have a significant effect on the value or outlook of the Company. The Transferors shall also have the possibility within the same period of time of carrying out any relevant rectification, and presenting proof thereof to the Transferee, with regard to the Unquantifiable Deciding Element(s) in question. Failing that, this Share Purchase Agreement shall automatically lapse, as shall any related and/or inseparable document (with the exception of the provisions of the Agreement expressly stipulated as surviving the lapsing of this Share Purchase Agreement), without any indemnity being owed by either of the parties. (C) Payment terms and conditions (i) In the event of the determination of the Price per Share without using the Right of Withdrawal procedure (x) In the event of the definitive determination of the Price per Share, as revised, as the case may be, on the Closing Date, two-thirds of the total price of the Shares shall be paid in cash in French francs on the Closing Date in the form of a bank check delivered to the Representative of the Transferors, and the remaining third shall be paid in the form of promissory notes maturing on July 1, 1998, made out to each Transferor and guaranteed by a first rank European bank (AA or better rating), the whole to be delivered to the Representative of the Transferors on the Closing Date. (y) In the event that the Price per Share is not determined definitively on the Closing Date, two-thirds of the amount of FRF 388,636,545 (three hundred and eighty-eight million six hundred and thirty-six thousand five hundred and forty-five French francs), representing FRF 25,729 per Share, shall be paid in cash in French francs on the Closing Date in the form of a bank check delivered to the Representative of the Transferors and the remaining third shall be paid in the form of promissory notes maturing on July 1, 1998, made out to each Transferor and guaranteed by a first rank European bank (AA or better rating), the whole to be delivered to the Representative of the Transferors on the Closing Date. In such event, two-thirds of the difference between the total price of the Shares and FRF 388,636,545 (three hundred and eighty-eight million six hundred and thirty-six thousand five hundred and forty-five French francs), increased by interest at the rate of 4% as from the Closing Date, shall be payable to the Representative of the Transferors within 10 Business Days following the determination of the Price per Share, and the last third of the difference between the total price of the Shares and FRF 366,741,166 (three - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 2 to the Agreement Share Purchase Agreement page 11 hundred and sixty-six million seven hundred and forty-one thousand one hundred and sixty-six French francs) shall be paid in the form of promissory notes maturing on July 1, 1998, made out to each Transferor and guaranteed by a first rank European bank (AA or better rating), delivered to the Representative of the Transferors at the same time as the above-mentioned payment. (ii) In the event of the determination of the Price per Share after using the Right of Withdrawal procedure In the event that (a) the Expert fails to confirm the reality of all the assertions made by the Transferee referred to in (x), (y) and (z) of Article 2. (B) (i) (c) above, or (b) the Transferee waives exercising its Right of Withdrawal, recognized by the Expert or by mutual agreement between the parties, the total price of the Shares, as determined by the Expert or the parties in accordance with the provisions of Article 2. (A) and (B) above and with the formula in Exhibit 3, shall be payable as follows: (x) In the event of the definitive determination of the Price per Share, as adjusted, as the case may be, on the Closing Date, two-thirds of the total price of the Shares shall be paid in cash in French francs on the Closing Date in the form of a bank check delivered to the Representative of the Transferors, and the remaining third shall be paid in the form of promissory notes maturing on July 1, 1998, made out to each Transferor and guaranteed by a first rank European bank (AA or better rating), the whole being delivered to the Representative of the Transferors on the Closing Date. (y) If the Price per Share is not definitively determined on the Closing Date, two-thirds of the amount of FRF 388,636,545 (three hundred and eighty-eight million six hundred and thirty-six thousand five hundred and forty-five French francs), representing FRF 25,729 per Share, shall be paid in cash in French francs on the Closing Date in the form of a bank check delivered to the Representative of the Transferors, and the remaining third shall be paid in the form of promissory notes maturing on July 1, 1998, made out to each Transferor and guaranteed by a first rank European bank (AA or better rating), the whole being delivered to the Representative of the Transferors on the Closing Date. In this case, two-thirds of the difference between the total price of the Shares and FRF 388,636,545 (three hundred and eighty-eight million six hundred and thirty-six thousand five hundred and forty-five French francs) shall be payable, increased by interest at the rate of 6% as from the Closing Date, to the Representative of the Transferors within 10 Business Days following the determination of the Price per Share, and the last third of the difference between the total price of the Shares and FRF 388,636,545 (three hundred and eighty-eight million six hundred and thirty-six thousand five hundred and forty-five French francs), shall be paid in the form of promissory notes maturing on - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 2 to the Agreement Share Purchase Agreement page 12 July 1, 1998, made out to each Transferor and guaranteed by a first rank European bank (AA or better rating), delivered to the Representative of the Transferors at the same time as the payment provided for above. (iii) The Representative of the Transferors shall personally carry out all the formalities concerning the distribution of all or part of the Price of the Shares between the Transferors. 3. Closing Date The Closing Date shall be no later than 10 Business Days after the fulfillment of the last condition precedent set forth in Article 4, it being understood that the Closing Date shall not in any event be later than December 31, 1997, unless extended contractually or in the cases provided for in Article 2. (B) (i) (c) above. In these latter cases, all of the conditions precedent referred to in Article 4 below otherwise being fulfilled, the Closing Date shall be no later than 10 Business Days following (i) the delivery by the Expert of its report failing to confirm the assertions referred to in (x), (y) and (z) of Article 2. (B) (i) (c) above or (ii) the expiration of the period for the Transferee's exercise of the Right of Withdrawal. On the Closing Date, the part of the total price of the Shares which is due and payable shall be paid by the Transferee, as indicated in Article 2 above, in exchange for: (a) delivery to the Transferee of share transfer orders duly signed by the Transferors or by their duly authorized representative pursuant to a power of attorney, a model of which is contained in Exhibit 10 to the Agreement, and of all other documents required to enable the transfer of the Shares and to render such transfers enforceable against third parties, as well as the registration in the Company's shareholders' registers of the transfer of the Shares to the Transferee; (b) delivery to the Transferee of a copy of the Agreement and of all the related documents which are not separable from such Agreement, signed (directly or pursuant to a power of attorney) by all the prospective authorized signatories of such Agreement or of such documents; (c) delivery to the Transferee of a certified true copy of the minutes of the extraordinary general shareholders' meeting of the Company, with the consent of the general partners (i) resulting in the approval of the Transferee as shareholder of the Company and (ii) amending the Company's by-laws in accordance with Exhibit 6 to the Agreement, without the special benefits auditor (commissaire aux avantages particuliers) issuing any reserves in such respect; (d) delivery to the Transferee of a certified true copy of the minutes of the ordinary general shareholders' meeting of the Company appointing 3 new - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 2 to the Agreement Share Purchase Agreement page 13 members of the supervisory board designated by the Transferee at least three weeks before the Closing Date. 4. Conditions precedent The completion of the transfer of the Shares shall be subject to the following conditions precedent, to the exclusive benefit of the Transferee, which means that the Transferee alone may, completely freely, waive all or part of any one of the conditions precedent below: (a) approval of the Transferee by the extraordinary general shareholders' meeting of the Company with the consent of the majority of the general partners; (b) approval by the extraordinary general shareholders' meeting of the Company, with the unanimous consent of the general partners, of the new by-laws of the Company in accordance with Exhibit 6 to the Agreement, the special benefits auditor not issuing any reserves in such respect; (c) approval by the ordinary general shareholders' meeting of the Company of the appointment of 3 new members of the supervisory board designated by the Transferee; (d) completion of the Audit by the Transferee; (e) absence of any fact coming to light before the Closing Date likely to invalidate any one of the Quantifiable Deciding Elements or any one of the Unquantifiable Deciding Elements; (f) approval by the general shareholders' meeting of Willis Corroon Group plc of the completion of the transactions provided for in this Share Purchase Agreement and its Exhibits. In this respect, the Transferee declares, and the Transferors acknowledge that they have been informed, that such prior approval, as a result of British stock market regulations, is an essential condition of its undertaking. The conditions precedent referred to in (a), (b), (c), (e) and (f) above shall be accomplished by December 15, 1997. The condition precedent referred to in (d) above shall be accomplished by October 20, 1997. In the event that at least one of the conditions precedent is not fulfilled within the time limit indicated above for each condition respectively, and unless extended contractually, this transfer shall be considered to have automatically lapsed and shall not give rise to any indemnity on either side. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 2 to the Agreement Share Purchase Agreement page 14 5. Transfer of ownership The Transfer to the Transferee of the ownership and the right to the enjoyment of the Shares shall occur on the Closing Date in exchange for payment of the price of the Shares. 6. Administration of the companies (a) Between the date hereof and the Closing Date, the Transferors undertake to cause the Company and the Subsidiaries to be managed in a careful and prudent manner. Unless otherwise stipulated herein or consented to in writing by the Transferee, the Company and the Subsidiaries shall not conclude any undertaking nor undertake any activity outside the normal course of business and of prior normal practice, and, in particular, the Transferors shall take all measures necessary to ensure that (i) the Company does not decide on the distribution or payment of dividends of the Company (the Transferors, the Company and the general partners represent in this regard that no decision to distribute or pay dividends of the Company has been taken since January 1, 1997 outside of the context defined by the Company's general meeting of June 12, 1997 deciding to distribute a dividend to the shareholders of FRF 11,840,000, increased by the right to the profits due under the by-laws to the general partners, the whole being paid by the Company prior to June 30, 1997), or (ii) the Company and/or its Subsidiaries (x) do not amend their by-laws without WCG's agreement, which may not be unreasonably refused, with the exception of the amendments provided for herein or in any document attached inseparably hereto, (y) do not issue any share, option, right or other interest and security, (z) do not carry out any of the operations mentioned in Article 10 of the draft resolutions contained in Exhibit 6 to the Agreement, accounted as from the date hereof, without having previously informed and consulted the Transferee. (b) Messrs. Lucas, Gras and Naftalski, as general partner gerants of the Company, undertake to ensure the proper respect of this clause. 7. Representations and warranties AGF and GS Euro Finance (the "Corporate Transferors") on the one hand and the Transferee on the other hand have agreed to an indemnification undertaking which is contained in Exhibit 6 hereto and which forms an integral part hereof. It is specified that GS Euro Finance shall intervene in this Share Purchase Agreement only for the purposes of the representations and warranties and the indemnification undertaking insofar as GS Euro Finance otherwise transfers 680 GS Shares to the WCG Group pursuant to a Share - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 2 to the Agreement Share Purchase Agreement page 15 Exchange Agreement which is inseparable from this Share Purchase Agreement. The Corporate Transferors acknowledge that the Transferee has relied and shall rely on the said undertaking to enter into this Share Purchase Agreement and the purchase of the Shares and the Exchanged GS Shares (as defined in the Share Exchange Agreement), regardless of the investigations that have been conducted or shall be conducted concerning the facts described in such undertaking. In any event, each Transferor certifies and warrants to the Transferee that on the Closing Date, the Shares transferred by it shall be freely transferable and free of all option rights, claims, liens, guarantees, pledges, sureties, easements, charges or restrictions of any nature whatsoever and that on that same Date, the Transferee shall acquire full ownership of the Shares, free of all option rights, claims, liens, guarantees, pledges, sureties, easements, charges or restrictions of any nature whatsoever. Each Transferor undertakes to indemnify the Transferee for any adverse consequences and prejudice suffered by the Transferee as a result of any violation by it of the undertaking in this paragraph. 8. Other undertakings (i) The Transferors represent that the fulfillment of the conditions precedent set forth in Article 4 (a), (b), and (c) is under their control and undertake to carry out any action necessary for such conditions to be fulfilled as provided for by the parties. Reciprocally, the Transferee undertakes to proceed with the Audit provided for in Article 4 (d) above within a period of time compatible with its being completed by October 20, 1997. In addition, the Transferee undertakes to use its best efforts to hold the general meeting of Willis Corroon Group plc provided for in Article 4 (f) above within the required period of time and to provide its shareholders with sincere information with a view to voting at this general meeting. (ii) The Transferors or the Representative of the Transferors shall sign all declarations, reports and all other documents that may be necessary or useful for the final completion of the transactions set forth herein. (iii) The general partners of the Company guarantee the provision by the Company and/or its Subsidiaries of all documents and information that may be reasonably requested in writing by the Transferee and/or its representatives or counsel in the course of the Audit in order to establish its information. (iv) Until the Closing Date, the Transferors undertake (a) not to - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 2 to the Agreement Share Purchase Agreement page 16 transfer the Shares, unless they are donated by an individual to his descendants, (b) not to enter into discussions with any third party with a view to transferring all or part of the GS Shares and to end any negotiation previously started for such purpose, (c) not to pledge the Shares or use them as collateral in any manner whatsoever, in particular by transfer to a financial instruments account pledged in favor of any person whatsoever, and (d) more generally, not to do anything that may be likely to prevent or delay the effective transfer of the Shares to the Transferee on the Closing Date. The general partners of the Company guarantee this undertaking. 9. Representative of the Transferors The Transferors hereby expressly and irrevocably authorize Mr. Patrick Lucas or, in the event of his impediment or death, Mr. Emmanuel Gras or, in the event of his impediment or death, Mr. Daniel Naftalski (hereinafter referred to as the "Representative of the Transferors") to act jointly and severally in the name and on behalf of each of them in connection with the mission defined below: The mission of the Representative of the Transferors shall be as follows: (a) to take any decision concerning the price or the abandonment of the transactions set forth herein in accordance with Article 2 above; (b) collect any check, receive any promissory note and distribute all or part of the total price of the Shares between the Transferors; (c) receive any notification from the Transferee in connection with this Share Purchase Agreement and immediately inform each of the Transferors thereof individually; (d) send all notices in the name and on behalf of the Transferors in connection herewith; (e) more generally undertake any action necessary for the performance of the operations set forth in this Share Purchase Agreement and in any related and/or inseparable document. The Representative of the Transferors shall report on his mission to the Transferors. In this regard, the Representative of the Transferors undertakes in particular to keep the Transferors informed of any event likely to give rise to an indemnification under Exhibit 6 to the Share Purchase Agreement. If the Transferors required to indemnify contest all or part of the amount of the indemnification, the Representative of the Transferors must follow this order of - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 2 to the Agreement Share Purchase Agreement page 17 contestation, if reasonable, and keep the Transferors informed of the conduct of the proceedings. 10. Notices All notices to a party hereunder shall be sent in writing and shall not be deemed duly sent as regards the notifying party unless within the required periods of time they are: (i) sent by registered mail with return receipt requested, with a copy sent by fax: For the Transferee, to: Willis Corroon Group Plc 10 Trinity Square London EC3P 3AX United Kingdom For the attention of the Company Secretary Fax 00 44 171 488 88 82 and Fax 00 44 171 481 71 83 For the Transferors, to the Representative of the Transferors; Patrick Lucas Gras Savoye & Cie 2, rue Ancelle 92200 Neuilly sur Seine Fax 01 41 43 69 85 or, in the event of his impediment or death, Emmanuel Gras Gras Savoye & Cie 2, rue Ancelle 92200 Neuilly sur Seine Fax 03 20 42 43 59 or, in the event of his impediment or death, Daniel Naftalski Gras Savoye & Cie 2, rue Ancelle 92200 Neuilly sur Seine Fax 01 41 43 69 09 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 2 to the Agreement Share Purchase Agreement page 18 with a copy to the Directeur General Adjoint Administration et Finances Gras Savoye & Cie 2, rue Ancelle 92200 Neuilly sur Seine Fax 01 41 43 69 06 or to such other address as the Transferee or the Representative of the Transferors may designate by notice in accordance with this article, or (ii) hand delivered to a representative of the Transferee whose name is indicated above or to the Representative of the Transferors in exchange for a signed receipt. All notices made as indicated above shall be effective as regards the notified party or parties on the date on which they are presented for the first time for delivery (in the event they are sent by registered mail with return receipt requested) or on which they are delivered (in the event of hand delivery in exchange for a signed receipt). - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 1 to the Share Purchase Agreement EXHIBIT 1 TO THE SHARE PURCHASE AGREEMENT LIST OF SUBSIDIARIES - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 2A to the Share Purchase Agreement EXHIBIT 2A TO THE SHARE PURCHASE AGREEMENT QUANTIFIABLE DECIDING ELEMENTS A. Quantifiable Deciding Elements to be verified by the Transferee during the Audit Quantifiable Deciding Element Reference Value (FRF) Consolidated Equity at June 30, 1997 234,600,000 Estimated Consolidated Net Turnover at December 31, 1997 (excluding acquisitions) 950,000,000 Estimated Group Share Consolidated Net Result at December 31, 1997 59,500,000 B. Quantifiable Deciding Elements intended to be taken into consideration by the parties or the Expert, as the case may be, in accordance with Article 2 of the Share Purchase Agreement Quantifiable Deciding Element Reference Value (FRF) Consolidated Equity at June 30, 1997 234,600,000 Consolidated Equity at December 31, 1997 234,600,000 Estimated Consolidated Net Turnover at December 31, 1997 (excluding acquisitions) 950,000,000 Actual Consolidated Net Turnover at December 31, 1997 1,000,000,000 Estimated Group Share Consolidated Net Result at December 31, 1997 59,500,000 Actual Group Share Consolidated Net Result at December 31, 1997 59,500,000 Definitions of the Quantifiable Deciding Elements (attached below) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 2A to the Share Purchase Agreement EXHIBIT 2A TO THE SHARE PURCHASE AGREEMENT ACCOUNTING NOTE - DEFINITIONS [Translation to be provided by Ernst & Young] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 3 to the Agreement Promise to Buy page 1 EXHIBIT 3 TO THE AGREEMENT PROMISE TO BUY BETWEEN THE UNDERSIGNED WILLIS CORROON GROUP PLC, an English law company whose registered office is at 10, Trinity Square, London EC3P 3AX, Great Britain, registered with the England and Wales Company Registration Office under number 621757, hereinafter referred to as the "Promisor " or "WCG" ON THE ONE HAND, THE SHAREHOLDERS OF GRAS SAVOYE & CIE referred to in Exhibit A hereto, hereinafter collectively referred to as the "Beneficiaries " ON THE OTHER HAND, WHEREAS By virtue of an agreement entered into on this day between the Beneficiaries, the Corporate Beneficiaries and the Promisor (hereinafter the "Agreement"), it has notably been agreed that the Promisor shall grant to the Beneficiaries a promise to buy covering all of their shareholding in the Company (as defined in Article 1) in accordance with the terms and conditions of the present Contract. IT IS THEREFORE AGREED AS FOLLOWS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 3 to the Agreement Promise to Buy page 2 1. DEFINITIONS The terms and expressions beginning with a capital letter and not defined in the present Contract shall have the meaning ascribed to them in the Agreement. For purposes of the present Contract, the words and expressions below shall have the following meanings: GS Share Purchase Agreement means the agreement in Exhibit 2 to the Agreement. Promise to Sell No. 2 means the contract entered into on this day between WCG and Patrick Lucas, Emmanuel Gras and Daniel Naftalski, attached as Exhibit 5 to the Agreement. Closing Date means the date on which the Promisor or any company of the WCG Group has acquired the Initial Shareholding. Exceptional Event means any event whose origin was prior to the Closing Date and whose existence was unknown at the Closing Date and which, between the Closing Date and the three (3) years following the Closing Date, had the effect of reducing the Consolidated Equity by FRF 234,600,000. Business Day means any business day in France with the exception of any public holiday or day of rest in accordance with the legislation and regulations applicable in France. Company means Gras Savoye & Cie, societe en commandite par actions with a capital of FRF 9,952,000 divided into 49,760 shares of FRF 200 each, whose registered office is at 2, rue Ancelle (92200) Neuilly sur Seine and which is registered with the Nanterre Commercial and Companies Registry under number B 457 509 867. 2. UNILATERAL PROMISE TO BUY The Promisor hereby promises to each of the Beneficiaries, who accept such promise solely as a promise, to acquire, subject to ordinary legal guarantees and the prior satisfaction of the preemption right granted to the shareholders of the Company in accordance with the provisions of Article 9 (II) (2) (B) of the Company's by-laws, the shares of the Company which are referred to in Article 3, in accordance with the terms and conditions defined in the present Contract (hereinafter, the "Option"). The Promisor may substitute any company of the WCG Group for itself provided that it remains the guarantor thereof and provided that the company which has been substituted for the Promisor undertakes in writing in favor of the - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 3 to the Agreement Promise to Buy page 3 beneficiaries of Promise to Sell No. 2 to comply with the terms of such Promise. 3. SHARES The Option shall cover all of the shares of the Company referred to below (hereinafter the "Shares"). (a) All of the fully paid in, negotiable and non-amortized shares held on this day by each of the Beneficiaries and referred to in Exhibit A hereto. (b) In addition, if the shares of the Company referred to in subparagraph (a) above were to be exchanged as a result of a merger, scission, transformation of the Company or for any other reason, the Option shall automatically cover all substituted equity interests deriving from such shares in the Company. More generally, the Option shall cover all transferable securities or all equity interests issued by the Company between the date hereof and the date of exercise of the Option and which have been acquired by any means by the Beneficiaries between the date hereof and the date of exercise of the Option. (c) Notwithstanding the provisions of subparagraphs (a) and (b) above, and for as long as Patrick Lucas remains a general partner of the Company, the exercise of this Option by Patrick Lucas may not cause his shareholding in the Company's capital to fall to below five percent (5%) of the Company's capital on the day of exercise of the Option, it being understood that this minimum percentage shareholding of five percent (5%) of the Company's capital may be held by Patrick Lucas either in full ownership or in beneficial ownership provided that the ownership without use is kept by his descendants. (d) Notwithstanding the provisions of subparagraphs (a) and (b) above, and for as long as Emmanuel Gras remains a general partner of the Company, the exercise of this Option by Emmanuel Gras may not cause his shareholding in the Company's capital to fall to below five percent (5%) of the Company's capital on the day of exercise of the Option, it being understood that this minimum percentage shareholding of five percent (5%) in the Company's capital may be held by Emmanuel Gras either in full ownership or in beneficial ownership provided that the ownership without use is kept by his descendants. (e) Notwithstanding the provisions of subparagraphs (a) and (b) above, and for as long as Daniel Naftalski remains a general partner of the Company, the exercise of this Option by Daniel Naftalski may not cause his shareholding in the Company's capital to fall to below 0.26% of the Company's capital on the day of exercise of the Option, it being understood that this minimum percentage shareholding of 0.26% in the - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 3 to the Agreement Promise to Buy page 4 Company's capital may be held by Daniel Naftalski either in full ownership or in beneficial ownership provided that the ownership without use is kept by his descendants. 4. TERM OF THE OPTION The Option is granted for a period of twelve (12) years as from the Closing Date. It shall terminate in advance, as necessary, as from the earlier of the two following dates: (i) the date of the declaration of insolvency (cessation de paiements) made by the legal representative of the Company or of the Main Companies, with the exception of GS Re, or (ii) the date of the judgment establishing the insolvency (cessation de paiements) of the Company or of the Main Companies, with the exception of GS Re (hereinafter, the "Term of the Option"). 5. PERIOD OF EXERCISE OF THE OPTION The Option may not be exercised for a period of three (3) years as from the Closing Date (hereinafter the "Exemption Period"). Upon the expiration of the Exemption Period, the Option may be exercised, in one or more operations, at any time during the Term of the Option. However, the occurrence of the death or any circumstance which results in the total or permanent partial at least fifty percent (50%) invalidity of any one of the Beneficiaries during the Exemption Period will authorize the Beneficiary concerned or, depending on the case, his or her spouse, heirs or assigns, to exercise the Option, wholly or partially, at any time from the occurrence of the relevant circumstance (hereinafter, the "Period of Exercise of the Option"). 6. EXERCISE OF THE OPTION Each of the Beneficiaries may, in one or more times, exercise the Option by sending to the attention of the Promisor, with a copy to the Representative (as defined in Article 9), in accordance with the provisions of Article 11, a written notification conforming to the model attached hereto as Exhibit B (hereinafter "Notification No. 1"). In the event of exercise of the Option, the Beneficiary or Beneficiaries concerned will also inform the Company of the proposed transfer by sending to the Company, in accordance with the provisions of Article 9 (II) (2) (B) of the Company's by-laws, a written notification conforming to the model attached hereto as Exhibit C (hereinafter "Notification No. 2"). In the event of the exercise of the preemption right by the shareholders of the Company on a portion of the Shares, the actual transfer of the Shares to the transferee - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 3 to the Agreement Promise to Buy page 5 hereunder shall cover the balance of the Shares on which the Option has been exercised. Each Beneficiary certifies and warrants to the Promisor that on the date of actual transfer of the Shares on which the Option has been exercised, the Shares transferred by such Beneficiary shall be freely negotiable and free of all option rights, claims, liens, guarantees, pledges, sureties, easements, charges or restrictions of any nature and that on that same date, the transferee of such Shares will acquire full ownership thereof, free of all option rights, liens, guarantees, pledges, sureties, easements, charges or restrictions of any nature. Each Beneficiary undertakes to indemnify the transferee of the Shares for any adverse consequences and prejudice suffered by the transferee of the Shares due to any violation by such Beneficiary of the undertaking of the present paragraph. Furthermore, each Beneficiary undertakes to take all necessary measures so that the Option for the Shares on which the ownership without use and the beneficial ownership are not held by the same Beneficiary is exercised simultaneously by the Beneficiaries holding the ownership without use and the beneficial ownership of such Shares such that the full ownership pertaining to such Shares is acquired by WCG or any other company of the WCG Group. In this regard, it is specified that if the Beneficiaries concerned are not able to propose to the Promisor Shares whose ownership without use and beneficial ownership can be immediately grouped together after the transfer by the Promisor, the Promisor will not in any manner be obligated to acquire the ownership without use or the beneficial ownership of the corresponding Shares. The transferee of the Shares hereunder will acquire the right to full enjoyment of the Shares on which the Option has been exercised with all the attached rights to dividends on the date of the delivery by the Representative (as defined in Article 9) of the corresponding share transfer order(s) against payment of the price. If the Option is not exercised by the Beneficiaries during the Period of Exercise of the Option, such Option shall be deemed to have lapsed, without any right of indemnity for either party. 7. PRICE The price per Share to be paid under the present Option (hereinafter the "Transfer Price") shall be: (a) with regard to any transfer resulting from an exercise of the Option which is notified before the third anniversary of the Closing Date, the Price per Share of the Company, as defined in the GS Share Purchase Agreement, - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 3 to the Agreement Promise to Buy page 6 (b) with regard to any transfer resulting from an exercise of the Option which is notified after the third anniversary and before the sixth anniversary of the Closing Date, the greater of the two following amounts: (i) the Price per Share of the Company as defined in the GS Share Purchase Agreement, reduced, if relevant, in the event of the occurrence of an Exceptional Event, by an amount of FRF 5,030 per Share (i.e., 234,600,000/46,640), and (ii) the price calculated between April 15 and April 30 of each year and, for the first time, between April 15 and April 30, 2000, according to the formula provided for in Exhibit D, it being understood that this price shall be applicable to any transfer of Shares under the present Option until the establishment of the price which is based on the accounts of the following year and is calculated according to the same formula and in the same time period, (c) with regard to any transfer resulting from an exercise of the Option which is notified after the sixth anniversary of the Closing Date, the price calculated between April 15 and April 30 of each year according to the formula provided for in Exhibit D, it being understood that this price shall be applicable to any transfer of Shares under the present Option until the establishment of the price which is based upon the accounts of the following year and is calculated according to the same formula and in the same time period. The Transfer Price of the Shares for which the Option has been exercised will be payable in cash, within forty-five (45) calendar days of the date of Notification No. 1, by bank check denominated in French francs, against delivery by the Representative (as defined in Article 9) to the transferee of the Shares of the corresponding duly signed share transfer order(s) in favor of the transferee of the Shares, subject to the Beneficiaries' respecting their undertakings hereunder and the obtaining of any government or administrative authorization which may be necessary. However, if, due to the exercise of this Option or of the Options deriving from Exhibits 3 bis and 3 ter to the Agreement, the Promisor has to pay over a 12-month period an aggregate amount which is greater than one hundred and fifty million francs, the transfer price of the Shares under this Option and the Options deriving from Exhibits 3 bis and 3 ter mentioned above shall be payable in cash within ninety (90) calendar days of the date of Notification No. 1, according to the same conditions as those indicated above. In the event that the transfer of the Shares pursuant hereto is subject to the obtaining of any government or administrative authorization, the Promisor and the Beneficiaries shall mutually provide all assistance, exchange all information, - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 3 to the Agreement Promise to Buy page 7 sign all documents and, more generally, do all that is necessary or useful so that the competent authority may rapidly decide upon the contemplated transaction. 8. BENEFIT OF THE OPTION In the event of the death of a Beneficiary, the Option shall be deemed to be transferred to his/her spouse, heirs and/or all other assigns, even though they may be minors or otherwise legally incapable, without any other formality being necessary aside from the notification to the Promisor of the identity of such spouse, heirs and/or assigns and the number of Shares allotted to each of them. In the event of a gift made by a Beneficiary of all or part of his/her Shares, whether such gift is made in full ownership or in ownership without use, and subject to the provisions of the Company's by-laws, notably including Article 9 of such by-laws, the Option shall be deemed to be transferred to the donees without any other formality being necessary aside from the notification to the Promisor of the identity of such donees and the number of Shares allotted in full ownership or ownership without use to each of them. 9. POWER OF REPRESENTATION At the Promisor's request, the Beneficiaries expressly grant an irrevocable power to Patrick Lucas or, in the case of his impediment or death, to Emmanuel Gras or, in the case of his impediment or death, to Daniel Naftalski (hereinafter the "Representative"), to act jointly and severally in the name and on behalf of each of them within the framework of the mission defined as follows: (a) make any decision regarding the Transfer Price, (b) in the event of the exercise of the Option, deliver to the transferee of the Shares hereunder the share transfer order(s) corresponding to the Shares transferred, in return for the check(s) made out to each of the Beneficiaries concerned. 10. EXPENSES - DUTIES - REGISTRATION Each party shall bear the fees and expenses of its own counsel with regard to the performance of the present Contract. All other expenses, duties and taxes of any nature resulting from the signature or the performance of the present Contract shall be borne exclusively by the Promisor which so agrees. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 3 to the Agreement Promise to Buy page 8 11. NOTICES Unless specifically provided otherwise, all notifications, requests, applications, claims or other communications authorized or required under the present Contract (other than those which must be made in application of the by-laws of the Company) will as far as the notifying party is concerned be duly made if, within the required time period, they are delivered by hand in return for a release or sent by registered mail with return receipt requested to the addresses appearing above or to any other address notified beforehand in accordance with the provisions of the present Article. For purposes of this Contract, the notification date shall, as far as the notified party is concerned, be deemed to be the date of remittance, in the case of notification by hand, and the date of first presentation, in the case of notification by registered mail with return receipt requested. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EXHIBIT A TO EXHIBIT 3 OF THE AGREEMENT LIST OF BENEFICIARIES AND SHARES OF THE BENEFICIARIES - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EXHIBIT B TO EXHIBIT 3 OF THE AGREEMENT MODEL OF NOTIFICATION NO 1 At [_____], on [_____] To: Willis Corroon PLC Attention: [_____] 10 Trinity Square London EC3P 3AX Great Britain Copy to: Patrick Lucas Emmanuel Gras Daniel Naftalski (hereinafter the "Representative") Registered letter with return receipt requested Re: Exercise of the Promise to Buy of [_____], 1997 Gentlemen: (1) The undersigned (indicate full name of the signatory), acting as holder of the full ownership/ownership without use/beneficial ownership of the [_____] shares of Gras Savoye & Cie, hereby declares that it transfers to Willis Corroon Group PLC or to any other company of the WCG Group, the full ownership/ownership without use/beneficial ownership of the [_____] shares of Gras Savoye & Cie which it holds, in accordance with the terms and conditions of the promise to buy dated [_____], 1997. (2) In this regard, the undersigned informs Gras Savoye & Cie of the present transfer in accordance with the provisions of Article 9 (II) (2) (B) of such company's by-laws by letter dated this day. (3) Consequently the undersigned: (i) invites the Representative to take, as necessary, any decision relating to the purchase price of the [_____] shares hereby transferred, and (ii) requires Willis Corroon Group PLC or any company of the WCG Group to pay the transfer price within forty-five (45) calendar days - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 3 to the Agreement Promise to Buy page 11 of the date of this notification by remittance to the Representative of a bank check denominated in French francs made out to the undersigned against the delivery by such Representative of the share transfer order covering the transfer to Willis Corroon Group PLC or any other company of the WCG group of the [_____] shares hereby transferred. (4) All of the foregoing is conditional upon obtaining any government or administrative authorization which may be necessary for purposes of this transfer. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EXHIBIT C TO EXHIBIT 3 TO THE AGREEMENT MODEL OF NOTIFICATION No 2 At [_____], on [_____] To: Gras Savoye & Cie 2, rue Ancelle 92200 Neuilly sur Seine Registered letter with return receipt requested Re: Proposed transfer of shares Gentlemen: The undersigned (indicate full name of the signatory), acting as holder of the full ownership/ownership without use/beneficial ownership of the [_____] shares of Gras Savoye & Cie, respectfully informs you, in accordance with the provisions of Article 9 (II) (2) (B) of the by-laws of Gras Savoye & Cie, of its intention to transfer to Willis Corroon Group PLC or to any other company of the WCG Group the full ownership/ownership without use/beneficial ownership of the [_____] shares of Gras Savoye & Cie which it holds, at the price of FRF [_______] per share, in accordance with the terms and conditions of the promise to buy dated [_____], 1997. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EXHIBIT D TO EXHIBIT 3 TO THE AGREEMENT TRANSFER PRICE DETERMINATION FORMULA Price per Share = (60% x 1.4 x (CA n + CA n-1) x 0.5 + 40% x K x (RN n + RN n-1) x 0.5) --------------------------------------------------------------------- N where - - CA is the Consolidated Net Turnover at December 31 of the Gras Savoye Group, as defined in Exhibit 2A to the Share Purchase Agreement, - - n and n-1 are the reference financial years, n being the last closed financial year and n-1 the next before last closed financial year, - - K = (CB/E(n)) CB = the Willis Corroon Group's average daily end of session stock market capitalizations quoted on the London Stock Exchange during the 12 months preceding March 30 of the year during which the option price is determined. E = Consolidated Net Result at December 31 of the Willis Corroon Group being defined as the "earnings for the financial year" of the financial year being considered as published, adjusted by the elements included in the definition (given in Exhibit 2 A to the Share Purchase Agreement) of the Group Share Consolidated Net Result. In any event, the value taken for K may never be less than 14 or more than 18, it being understood that in the event that Willis Corroon Group is absorbed by another company listed on the London Stock Exchange, the K calculated will be that of such company. If K is unable to be determined, it will be determined by the Expert based on the corresponding data of the five leading insurance brokers world-wide listed on a regulated market. - - RN is the Consolidated Net Result of the Gras Savoye Group as defined in Exhibit 2A to the Share Purchase Agreement - - N = the number of shares composing the capital of Gras Savoye & Cie - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 3 to the Agreement Promise to Buy Exhibit D page 14 on the date of the close of financial year n, excluding any self-held shares. Between April 15 and April 30 of each year, and for the first time in 2000, the Representative (as defined in Article 9 of Exhibit 3 to the Agreement) shall notify WCG (hereinafter "Notification A") of the Transfer Price obtained from the application of the above formula (hereinafter the "Notified Price") and shall attach to Notification A all necessary supporting documentation. Within ten (10) Business Days following the date of Notification A, WCG may notify the Representative of any dispute concerning the Notified Price (hereinafter "Notification B"). Failing this, WCG shall be deemed to have accepted the Notified Price. In the event that WCG disputes the Notified Price, WCG and the Representative shall negotiate in good faith to reach an agreement on the Transfer Price. Upon failure to agree within ten (10) Business Days following the date of Notification B, the parties expressly agree that the Transfer Price shall be fixed definitively and without any possible recourse, except for an obvious material error, by Coopers & Lybrand (hereinafter the "Expert") within thirty (30) business days of the matter being referred to such Expert. The matter shall be referred to the Expert by the most diligent party and one-half of the expenses incurred in this regard shall be borne by the Promisor and the other half by the Beneficiaries. The party referring the matter to the Expert shall provide the Expert with a copy of the Notifications exchanged between the parties. The Expert shall determine the Transfer Price by applying the above formula and its decision shall be binding on the parties in accordance with Article 1843-4 of the Civil Code. If the Expert is unable to complete its mission for any reason whatsoever, a new Expert chosen from the list of experts of the Court of Appeal of Versailles would be appointed by mutual agreement between the Representative and the Promisor or, failing this, by the Presiding Judge of the Commercial Court of Nanterre to which the matter shall be referred in summary proceedings (referes) upon the request of the most diligent party. The Representative and the general partners of the Company guarantee the Expert's access to the premises of the Company and/or of its Subsidiaries and that the Expert will be provided by the Company and/or the Subsidiaries with any information which it might reasonably request in the context of the accomplishment of its mission. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 3 bis to the Agreement Promise to Buy page 1 EXHIBIT 3 BIS TO THE AGREEMENT PROMISE TO BUY BETWEEN THE UNDERSIGNED WILLIS CORROON GROUP PLC, an English law company whose registered office is at 10, Trinity Square, London EC3P 3AX, Great Britain, registered with the England and Wales Company Registration Office under number 621757, hereinafter referred to as the "Promisor " or "WCG" ON THE ONE HAND, ATHENA, a French law company whose registered office is at 53-55, rue de la Boetie, 75008 Paris, registered with the Paris Commercial and Companies Registry under number B 304 951 833, hereinafter referred to as "Athena " ON THE OTHER HAND, WHEREAS By virtue of an agreement entered into on this day between the shareholders of the Company, including Athena, and the Promisor (hereinafter the "Agreement"), it has notably been agreed that the Promisor shall grant to Athena a promise to buy covering all of its shareholding in the Company (as defined in Article 1) in accordance with the terms and conditions of the present Contract. IT IS THEREFORE AGREED AS FOLLOWS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 3 bis to the Agreement Promise to Buy page 2 1. DEFINITIONS The terms and expressions beginning with a capital letter and not defined in the present Contract shall have the meaning ascribed to them in the Agreement and its Exhibits. For purposes of the present Contract, the words and expressions below shall have the following meanings: Corporate Beneficiary means (i) any insurance company which conducts an activity referred to in Article 310-1 of the Insurance Code, any company which is under the direct or indirect control of such an insurance company and or any company which directly or indirectly controls one or more insurance companies, and (ii) holds shares in the Company (including Athena). GS Share Purchase Agreement means the agreement in Exhibit 2 to the Agreement; Closing Date means the date on which the Promisor or any company of the WCG Group has acquired the Initial Shareholding. Indemnification Undertaking means, by incorporation for purposes of this promise, the undertaking contained in Exhibit 6 to the GS Share Purchase Agreement, it being specified that the definition of "Corporate Transferors" also includes Athena. Business Day means any business day in France with the exception of any public holiday or day of rest in accordance with the legislation and regulations applicable in France. Promise to Sell No. 1 means the contract entered into on this day between WCG and the shareholders of the Company including Athena, attached as Exhibit 4 to the Agreement; Promise to Sell No. 2 means the contract entered into on this day between WCG and Patrick Lucas, Emmanuel Gras and Daniel Naftalski, attached as Exhibit 5 to the Agreement; Company means Gras Savoye & Cie, societe en commandite par actions with a capital of FRF 9,952,000 divided into 49,760 shares of FRF 200 each, whose registered office is at 2, rue Ancelle (92200) Neuilly sur Seine and which is registered with the Nanterre Commercial and Companies Registry under number B 457 509 867. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 3 bis to the Agreement Promise to Buy page 3 2. UNILATERAL PROMISE TO BUY The Promisor hereby promises to Athena, which accepts such promise solely as a promise, to acquire, subject to ordinary legal guarantees and the prior satisfaction of the preemption right granted to the shareholders of the Company in accordance with the provisions of Article 9 (II) (2) (B) of the Company's by-laws, all of the shares of the Company which Athena will own (hereinafter the "Shares") on the date on which the rights granted pursuant to this promise are exercised, in accordance with the terms and conditions defined in the present Contract (hereinafter, the "Option"). If the shares of the Company referred to above were to be exchanged following a merger, scission, transformation of the Company or for any other reason, the Option shall automatically be extended to all the substituted equity interests deriving from such shares of the Company. More generally, the Option shall be extended to all the marketable securities or all the equity interests issued by the Company between the date hereof and the date of exercise of the Option which may have been acquired by any means by the Beneficiary between the date hereof and the date of exercise of the Option. The Promisor may substitute any company of the WCG Group for itself provided that it remains the guarantor thereof and provided that the company which has been substituted for the Promisor undertakes in writing in favor of the beneficiaries of Promise to Sell No. 2 to comply with the terms of such Promise and in favor of Athena to respect the terms of this Promise. Athena may substitute for itself, subject to being the guarantor thereof, any company of the Athena group which shall have become the owner of the Shares on the date of exercise of the Option. A company shall be deemed to belong to the Athena group if it is under the control of, is controlled by, or is under common control with, Athena, control being defined in accordance with Article 355-1 of the law on commercial companies. 3. TERM OF THE OPTION The Option is granted for a period of twelve (12) years as from the Closing Date. It shall terminate in advance, as necessary, as from the earlier of the two following dates: (i) the date of the declaration of insolvency (cessation de paiements) made by the legal representative of the Company or of the Main Companies, with the exception of GS Re, or (ii) the date of the judgment establishing the insolvency (cessation de paiements) of the Company or of the Main Companies, with the exception of GS Re (hereinafter, the "Term of the Option"). - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 3 bis to the Agreement Promise to Buy page 4 4. PERIOD OF EXERCISE OF THE OPTION The Option may not be exercised for a period of three (3) years as from the Closing Date (hereinafter the "Exemption Period"). Upon the expiration of the Exemption Period, the Option may be exercised, in one or more operations, at any time during the Term of the Option. However, the Option may be exercised during the Exemption Period insofar as the shareholding of Athena (or of the company of the Athena group substituted for Athena) in the Company's capital has been reduced, for any reason whatsoever other than due to a transfer (in any manner whatsoever: contribution, sale, etc.) of shares by Athena (or by the company of the Athena group substituted for Athena), with the exception of a transfer resulting from the exercise of Promise to Sell No. 1, to an amount less than 10% of the Company's capital (hereinafter the "Period of Exercise of the Option"). 5. EXERCISE OF THE OPTION Athena (or the company of the Athena group substituted for Athena) may, in one or more times, exercise the Option by sending a written notification to the attention of the Promisor, in accordance with the provisions of Article 8 (hereinafter "Notification No. 1"). In the event of exercise of the Option, Athena will also inform the Company of the proposed transfer by sending a written notification to the Company, in accordance with the provisions of Article 9 (II) (2) (B) of the Company's by-laws, (hereinafter "Notification No. 2"). In the event of the exercise of the preemption right by the shareholders of the Company on a portion of the Shares, the actual transfer of the Shares to the transferee hereunder shall cover the balance of the Shares on which the Option has been exercised. Athena certifies and warrants to the Promisor that on the date of actual transfer of the Shares on which the Option has been exercised, such Shares shall be freely negotiable and free of all option rights, claims, liens, guarantees, pledges, sureties, easements, charges or restrictions of any nature and that on that same date, the transferee of such Shares will acquire full ownership, free of all option rights, claims, liens, guarantees, pledges, sureties, easements, charges or restrictions of any nature. Athena undertakes to indemnify the transferee of the Shares for any adverse consequences and prejudice suffered by the transferee of the Shares due to any violation by it of the undertaking of the present paragraph. The transferee of the Shares hereunder will acquire the right to full enjoyment of the Shares on which the Option has been exercised with all attached rights to dividends on the date of the delivery by Athena of the corresponding share - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 3 bis to the Agreement Promise to Buy page 5 transfer order against payment of the price. If the Option is not exercised by Athena during the Period of Exercise of the Option, such Option shall be deemed to have lapsed, without any right of indemnity for either party. 6. PRICE The price per Share to be paid under the present Option (hereinafter, the "Transfer Price") shall be: (a) with regard to any transfer resulting from an exercise of the Option which is notified before the third anniversary of the Closing Date, the Price per Share of the Company, as defined in the GS Share Purchase Agreement reduced, if necessary, by any amount which should have been paid by Athena under the Indemnification Undertaking, until each date of exercise of this Option, if the Shares for which the Option has been exercised had been transferred by Athena on the Closing Date, (b) with regard to any transfer resulting from an exercise of the Option which is notified after the third anniversary and before the sixth anniversary of the Closing Date, the greater of the two following amounts: (i) the Price per Share of the Company as defined in the GS Share Purchase Agreement, reduced, if relevant, by any amount which should have been paid under the Indemnification Undertaking, until each date of exercise of this Option, if the Shares for which the Option has been exercised had been transferred by Athena on the Closing Date, (ii) the price calculated between April 15 and April 30 of each year and, for the first time, between April 15 and April 30, 2000, according to the formula provided for in Exhibit D, it being understood that this price shall be applicable to any transfer of Shares under the present Option until the establishment of the price which is based on the accounts of the following year and is calculated according to the same formula and in the same time period, (c) with regard to any transfer resulting from an exercise of the Option which is notified after the sixth anniversary of the Closing Date, the price calculated between April 15 and April 30 of each year according to the formula provided for in Exhibit D, it being understood that this price shall be applicable to any transfer of Shares under the present Option until the establishment of the price which is based upon the accounts of the - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 3 bis to the Agreement Promise to Buy page 6 following year and is calculated according to the same formula and in the same time period. The Transfer Price of the Shares for which the Option has been exercised will be payable in cash, within forty-five (45) calendar days of the date of Notification No. 1, by bank check denominated in French francs, against delivery by Athena to the transferee of the Shares of the corresponding duly signed share transfer order(s) in favor of the transferee of the Shares, subject to Athena's respecting its undertakings hereunder and the obtaining of any government or administrative authorization which may be necessary. However, if, due to the exercise of this Option or of the Options deriving from Exhibits 3 and 3 ter to the Agreement, the Promisor has to pay over a 12-month period an aggregate amount which is greater than one hundred and fifty million francs, the transfer price of the Shares under this Option and the Options deriving from Exhibits 3 and 3 ter mentioned above shall be payable in cash within ninety (90) calendar days of the date of Notification No. 1, according to the same conditions as those indicated above. In the event that the transfer of the Shares pursuant hereto is subject to the obtaining of any government or administrative authorization, the Promisor and Athena shall mutually provide all assistance, exchange all information, sign all documents and, more generally, do all that is necessary or useful so that the competent authority may rapidly decide upon the contemplated transaction. 7. EXPENSES - DUTIES - REGISTRATION Each party shall bear the fees and expenses of its own counsel with regard to the performance of the present Contract. All other expenses, duties and taxes of any nature resulting from the signature or the performance of the present Contract shall be borne exclusively by the Promisor which so agrees. 8. NOTICES Unless specifically provided otherwise, all notifications, requests, applications, claims or other communications authorized or required under the present Contract (other than those which must be made in application of the by-laws of the Company) will as far as the notifying party is concerned be duly made if, within the required time period, they are delivered by hand in return for a release or sent by registered mail with return receipt requested to the addresses appearing above or to any other address notified beforehand in accordance with the provisions of the present Article. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 3 bis to the Agreement Promise to Buy page 7 For purposes of this Contract, the notification date shall, as far as the notified party is concerned, be deemed to be the date of remittance, in the case of notification by hand, and the date of first presentation, in the case of notification by registered mail with return receipt requested. - -------------------------------------------------------------------------------- EXHIBIT D TO EXHIBIT 3 TO THE AGREEMENT TRANSFER PRICE DETERMINATION FORMULA Price per Share = (60% x 1.4 x (CA n + CA n-1) x 0.5 + 40% x K x (RN n + RN n-1) x 0.5) --------------------------------------------------------------------- N where - - CA is the Consolidated Net Turnover at December 31 of the Gras Savoye Group, as defined in Exhibit 2A to the Share Purchase Agreement, - - n and n-1 are the reference financial years, n being the last closed financial year and n-1 the next before last closed financial year, - - K = (CB/E(n)) CB = the Willis Corroon Group's average daily end of session stock market capitalizations quoted on the London Stock Exchange during the 12 months preceding March 30 of the year during which the option price is determined. E = Consolidated Net Result at December 31 of the Willis Corroon Group being defined as the "earnings for the financial year" of the financial year being considered as published, adjusted by the elements included in the definition (given in Exhibit 2 A to the Share Purchase Agreement) of the Group Share Consolidated Net Result. In any event, the value taken for K may never be less than 14 or more than 18, it being understood that in the event that Willis Corroon Group is absorbed by another company listed on the London Stock Exchange, the K calculated will be that of such company. If K is unable to be determined, it will be determined by the Expert based on the corresponding data of the five leading insurance brokers world-wide listed on a regulated market. - - RN is the Consolidated Net Result of the Gras Savoye Group as defined in Exhibit 2A to the Share Purchase Agreement Exhibit 3 bis to the Agreement Promise to Buy Exhibit D page 1 - - N = the number of shares composing the capital of Gras Savoye & Cie on the date of the close of financial year n, excluding any self-held shares. Between April 15 and April 30 of each year, and for the first time in 2000, the Representative (as defined in Article 9 of Exhibit 3 to the Agreement) shall notify WCG (hereinafter "Notification A") of the Transfer Price obtained from the application of the above formula (hereinafter the "Notified Price") and shall attach to Notification A all necessary supporting documentation. Within ten (10) Business Days following the date of Notification A, WCG may notify the Representative of any dispute concerning the Notified Price (hereinafter "Notification B"). Failing this, WCG shall be deemed to have accepted the Notified Price. In the event that WCG disputes the Notified Price, WCG and the Representative shall negotiate in good faith to reach an agreement on the Transfer Price. Upon failure to agree within ten (10) Business Days following the date of Notification B, the parties expressly agree that the Transfer Price shall be fixed definitively and without any possible recourse, except for an obvious material error, by Coopers & Lybrand (hereinafter the "Expert") within thirty (30) business days of the matter being referred to such Expert. The matter shall be referred to the Expert by the most diligent party and one-half of the expenses incurred in this regard shall be borne by the Promisor and the other half by the Beneficiaries. The party referring the matter to the Expert shall provide the Expert with a copy of the Notifications exchanged between the parties. The Expert shall determine the Transfer Price by applying the above formula and its decision shall be binding on the parties in accordance with Article 1843-4 of the Civil Code. If the Expert is unable to complete its mission for any reason whatsoever, a new Expert chosen from the list of experts of the Court of Appeal of Versailles would be appointed by mutual agreement between the Representative and the Promisor or, failing this, by the Presiding Judge of the Commercial Court of Nanterre to which the matter shall be referred in summary proceedings (referes) upon the request of the most diligent party. The Representative and the general partners of the Company guarantee the Expert's access to the premises of the Company and/or of its Subsidiaries and that the Expert will be provided by the Company and/or the Subsidiaries with any information which it might reasonably request in the context of the accomplishment of its mission. Exhibit 3 bis to the Agreement Promise to Buy Exhibit D page 10 - -------------------------------------------------------------------------------- Exhibit 3 ter to the Agreement Promise to Buy page 1 EXHIBIT 3 TER TO THE AGREEMENT PROMISE TO BUY BETWEEN THE UNDERSIGNED WILLIS CORROON GROUP PLC, an English law company whose registered office is at 10, Trinity Square, London EC3P 3AX, Great Britain, registered with the England and Wales Company Registration Office under number 621757, hereinafter referred to as the "Promisor " or "WCG" ON THE ONE HAND, UAP INCENDIE-ACCIDENTS, a French law company whose registered office is at 9 place Vendome, 75001 Paris, registered with the Paris Commercial and Companies Registry under number B 977 349 192, hereinafter referred to as "UAP " ON THE OTHER HAND, WHEREAS By virtue of an agreement entered into on this day between the shareholders of the Company, including UAP, and the Promisor (hereinafter the "Agreement"), it has notably been agreed that the Promisor shall grant to UAP a promise to buy covering all of its shareholding in the Company (as defined in Article 1) in accordance with the terms and conditions of the present Contract. IT IS THEREFORE AGREED AS FOLLOWS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 3 ter to the Agreement Promise to Buy page 2 1. DEFINITIONS The terms and expressions beginning with a capital letter and not defined in the present Contract shall have the meaning ascribed to them in the Agreement and its Exhibits. For purposes of the present Contract, the words and expressions below shall have the following meanings: Corporate Beneficiary means (i) any insurance company which conducts an activity referred to in Article 310-1 of the Insurance Code, any company which is under the direct or indirect control of such an insurance company and or any company which directly or indirectly controls one or more insurance companies, and (ii) holds shares in the Company (including UAP). GS Share Purchase Agreement means the agreement in Exhibit 2 to the Agreement; Closing Date means the date on which the Promisor or any company of the WCG Group has acquired the Initial Shareholding. Indemnification Undertaking means, by incorporation for purposes of this promise, the undertaking contained in Exhibit 6 to the GS Share Purchase Agreement, it being specified that the definition of "Corporate Transferors" also includes UAP. Business Day means any business day in France with the exception of any public holiday or day of rest in accordance with the legislation and regulations applicable in France. Promise to Sell No. 1 means the contract entered into on this day between WCG and the shareholders of the Company including UAP, attached as Exhibit 4 to the Agreement; Promise to Sell No. 2 means the contract entered into on this day between WCG and Patrick Lucas, Emmanuel Gras and Daniel Naftalski, attached as Exhibit 5 to the Agreement; Company means Gras Savoye & Cie, societe en commandite par actions with a capital of FRF 9,952,000 divided into 49,760 shares of FRF 200 each, whose registered office is at 2, rue Ancelle (92200) Neuilly sur Seine and which is registered with the Nanterre Commercial and Companies Registry under number B 457 509 867. 2. UNILATERAL PROMISE TO BUY - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 3 ter to the Agreement Promise to Buy page 3 The Promisor hereby promises to UAP, which accepts such promise solely as a promise, to acquire, subject to ordinary legal guarantees and the prior satisfaction of the preemption right granted to the shareholders of the Company in accordance with the provisions of Article 9 (II) (2) (B) of the Company's by-laws, all of the shares of the Company which UAP will own (hereinafter the "Shares") on the date on which the rights granted pursuant to this promise are exercised, in accordance with the terms and conditions defined in the present Contract (hereinafter, the "Option"). If the shares of the Company referred to above were to be exchanged following a merger, scission, transformation of the Company or for any other reason, the Option shall automatically be extended to all the substituted equity interests deriving from such shares of the Company. More generally, the Option shall be extended to all the marketable securities or all the equity interests issued by the Company between the date hereof and the date of exercise of the Option which may have been acquired by any means by the Beneficiary between the date hereof and the date of exercise of the Option. The Promisor may substitute any company of the WCG Group for itself provided that it remains the guarantor thereof and provided that the company which has been substituted for the Promisor undertakes in writing in favor of the beneficiaries of Promise to Sell No. 2 to comply with the terms of such Promise and in favor of AXA to respect the terms of this promise. UAP may substitute for itself, subject to being the guarantor thereof, any company of the AXA group which shall have become the owner of the Shares on the date of exercise of the option. A company shall be deemed to belong to the AXA group if it is under the control of AXA-UAP, is controlled by AXA-UAP, or is under common control with UAP, control being defined in accordance with Article 355-1 of the law on commercial companies. 3. TERM OF THE OPTION The Option is granted for a period of twelve (12) years as from the Closing Date. It shall terminate in advance, as necessary, as from the earlier of the two following dates: (i) the date of the declaration of insolvency (cessation de paiements) made by the legal representative of the Company or of the Main Companies, with the exception of GS Re, or (ii) the date of the judgment establishing the insolvency (cessation de paiements) of the Company or of the Main Companies, with the exception of GS Re (hereinafter, the "Term of the Option"). 4. PERIOD OF EXERCISE OF THE OPTION - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 3 ter to the Agreement Promise to Buy page 4 The Option may not be exercised for a period of three (3) years as from the Closing Date (hereinafter the "Exemption Period"). Upon the expiration of the Exemption Period, the Option may be exercised, in one or more operations, at any time during the Term of the Option. However, the Option may be exercised during the Exemption Period insofar as the shareholding of UAP (or of the company of the AXA group substituted for UAP) in the Company's capital has been reduced, for any reason whatsoever other than due to a transfer (in any manner whatsoever: contribution, sale, etc.) of Shares by UAP (or by the company of the AXA group substituted for UAP), with the exception of a transfer resulting from the exercise of Promise to Sell No. 1, to an amount less than 10% of the Company's capital (hereinafter the "Period of Exercise of the Option"). 5. EXERCISE OF THE OPTION UAP (or the company of the AXA group substituted for UAP) may, in one or more times, exercise the Option by sending a written notification to the attention of the Promisor, in accordance with the provisions of Article 8 (hereinafter "Notification No. 1"). In the event of exercise of the Option, UAP will also inform the Company of the proposed transfer by sending a written notification to the Company, in accordance with the provisions of Article 9 (II) (2) (B) of the Company's by-laws, (hereinafter "Notification No. 2"). In the event of the exercise of the preemption right by the shareholders of the Company on a portion of the Shares, the actual transfer of the Shares to the transferee hereunder shall cover the balance of the Shares on which the Option has been exercised. UAP certifies and warrants to the Promisor that on the date of actual transfer of the Shares on which the Option has been exercised, such Shares shall be freely negotiable and free of all option rights, liens, guarantees, pledges, sureties, easements, charges or restrictions of any nature and that on that same date, the transferee of such Shares will acquire full ownership, free of all option rights, liens, guarantees, pledges, sureties, easements, charges or restrictions of any nature. UAP undertakes to indemnify the transferee of the Shares for any adverse consequences and prejudice suffered by the transferee of the Shares due to any violation by it of the undertaking of the present paragraph. The transferee of the Shares will hereby acquire the right to full enjoyment of the Shares on which the Option has been exercised with all the attached rights to dividends on the date of the delivery by UAP of the corresponding share transfer order against payment of the price. If the Option is not exercised by UAP during the Period of Exercise of the Option, such Option shall be deemed to have lapsed, without any right of - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 3 ter to the Agreement Promise to Buy page 5 indemnity for either party. 6. PRICE The price per Share to be paid under the present Option (hereinafter, the "Transfer Price") shall be: (a) with regard to any transfer resulting from an exercise of the Option which is notified before the third anniversary of the Closing Date, the Price per Share of the Company, as defined in the GS Share Purchase Agreement reduced, if necessary, by any amount which should have been paid by UAP under the Indemnification Undertaking, until each date of exercise of this Option, if the Shares for which the Option has been exercised had been transferred by UAP on the Closing Date, (b) with regard to any transfer resulting from an exercise of the Option which is notified after the third anniversary and before the sixth anniversary of the Closing Date, the greater of the two following amounts: (i) the Price per Share of the Company as defined in the GS Share Purchase Agreement, reduced, if relevant, by any amount which should have been paid under the Indemnification Undertaking, until each date of exercise of this Option, if the Shares for which the Option has been exercised had been transferred by UAP on the Closing Date, (ii) the price calculated between April 15 and April 30 of each year and, for the first time, between April 15 and April 30, 2000, according to the formula provided for in Exhibit D, it being understood that this price shall be applicable to any transfer of Shares under the present Option until the establishment of the price which is based on the accounts of the following year and is calculated according to the same formula and in the same time period, (c) with regard to any transfer resulting from an exercise of the Option which is notified after the sixth anniversary of the Closing Date, the price calculated between April 15 and April 30 of each year according to the formula provided for in Exhibit D, it being understood that this price shall be applicable to any transfer of Shares under the present Option until the establishment of the price which is based upon the accounts of the following year and is calculated according to the same formula and in the same time period. The Transfer Price of the Shares for which the Option has been exercised will be payable in cash, within forty-five (45) calendar days of the date of - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 3 ter to the Agreement Promise to Buy page 6 Notification No. 1, by bank check denominated in French francs, against delivery by UAP to the transferee of the Shares of the corresponding duly signed share transfer order(s) in favor of the transferee of the Shares, subject to UAP's respecting its undertakings hereunder and the obtaining of any government or administrative authorization which may be necessary. However, if, due to the exercise of this Option or of the Options deriving from Exhibits 3 and 3 bis to the Agreement, the Promisor has to pay over a 12-month period an aggregate amount which is greater than one hundred and fifty million francs, the transfer price of the Shares under this Option and the Options deriving from Exhibits 3 and 3 bis mentioned above shall be payable in cash within ninety (90) calendar days of the date of Notification No. 1, according to the same conditions as those indicated above. In the event that the transfer of the Shares pursuant hereto is subject to the obtaining of any government or administrative authorization, the Promisor and UAP shall mutually provide all assistance, exchange all information, sign all documents and, more generally, do all that is necessary or useful so that the competent authority may rapidly decide upon the contemplated transaction. 7. EXPENSES - DUTIES - REGISTRATION Each party shall bear the fees and expenses of its own counsel with regard to the performance of the present Contract. All other expenses, duties and taxes of any nature resulting from the signature or the performance of the present Contract shall be borne exclusively by the Promisor which so agrees. 8. NOTICES Unless specifically provided otherwise, all notifications, requests, applications, claims or other communications authorized or required under the present Contract (other than those which must be made in application of the by-laws of the Company) will as far as the notifying party is concerned be duly made if, within the required time period, they are delivered by hand in return for a release or sent by registered mail with return receipt requested to the addresses appearing above or to any other address notified beforehand in accordance with the provisions of the present Article. For purposes of this Contract, the notification date shall, as far as the notified party is concerned, be deemed to be the date of remittance, in the case of notification by hand, and on the date of first presentation, in the case of notification by registered mail with return receipt requested. - -------------------------------------------------------------------------------- Exhibit 3 ter to the Agreement Promise to Buy page 7 EXHIBIT D TO EXHIBIT 3 TO THE AGREEMENT TRANSFER PRICE DETERMINATION FORMULA Price per Share = (60% x 1.4 x (CA n + CA n-1) x 0.5 + 40% x K x (RN n + RN n-1) x 0.5)/N where - - CA is the Consolidated Net Turnover at December 31 of the Gras Savoye Group, as defined in Exhibit 2A to the Share Purchase Agreement, - - n and n-1 are the reference financial years, n being the last closed financial year and n-1 the next before last closed financial year, - - K = (CB/E(n)) CB = the Willis Corroon Group's average daily end of session stock market capitalizations quoted on the London Stock Exchange during the 12 months preceding March 30 of the year during which the option price is determined. E = Consolidated Net Result at December 31 of the Willis Corroon Group being defined as the "earnings for the financial year" of the financial year being considered as published, adjusted by the elements included in the definition (given in Exhibit 2 A to the Share Purchase Agreement) of the Group Share Consolidated Net Result. In any event, the value taken for K may never be less than 14 or more than 18, it being understood that in the event that Willis Corroon Group is absorbed by another company listed on the London Stock Exchange, the K calculated will be that of such company. If K is unable to be determined, it will be determined by the Expert based on the corresponding data of the five leading insurance brokers world-wide listed on a regulated market. Exhibit 3 ter to the Agreement Promise to Buy page 8 - - RN is the Consolidated Net Result of the Gras Savoye Group as defined in Exhibit 2A to the Share Purchase Agreement - - N = the number of shares composing the capital of Gras Savoye & Cie on the date of the close of financial year n, excluding any self-held shares. Between April 15 and April 30 of each year, and for the first time in 2000, the Representative (as defined in Article 9 of Exhibit 3 to the Agreement) shall notify WCG (hereinafter "Notification A") of the Transfer Price obtained from the application of the above formula (hereinafter the "Notified Price") and shall attach to Notification A all necessary supporting documentation. Within ten (10) Business Days following the date of Notification A, WCG may notify the Representative of any dispute concerning the Notified Price (hereinafter "Notification B"). Failing this, WCG shall be deemed to have accepted the Notified Price. In the event that WCG disputes the Notified Price, WCG and the Representative shall negotiate in good faith to reach an agreement on the Transfer Price. Upon failure to agree within ten (10) Business Days following the date of Notification B, the parties expressly agree that the Transfer Price shall be fixed definitively and without any possible recourse, except for an obvious material error, by Coopers & Lybrand (hereinafter the "Expert") within thirty (30) business days of the matter being referred to such Expert. The matter shall be referred to the Expert by the most diligent party and one-half of the expenses incurred in this regard shall be borne by the Promisor and the other half by the Beneficiaries. The party referring the matter to the Expert shall provide the Expert with a copy of the Notifications exchanged between the parties. The Expert shall determine the Transfer Price by applying the above formula and its decision shall be binding on the parties in accordance with Article 1843-4 of the Civil Code. If the Expert is unable to complete its mission for any reason whatsoever, a new Expert chosen from the list of experts of the Court of Appeal of Versailles would be appointed by mutual agreement between the Representative and the Promisor or, failing this, by the Presiding Judge of the Commercial Court of Nanterre to which the matter shall be referred in summary proceedings (referes) upon the request of the most diligent party. The Representative and the general partners of the Company guarantee the Expert's access to the premises of the Company and/or of its Subsidiaries and that the Expert will be provided by the Company and/or the Subsidiaries with any information which it might reasonably request in the context of the accomplishment of its mission. Exhibit 3 ter to the Agreement Promise to Buy page 9 - -------------------------------------------------------------------------------- Exhibit 4 to the Agreement Promise to Sell No. 1 page 1 EXHIBIT 4 TO THE AGREEMENT PROMISE TO SELL No. 1 BETWEEN THE UNDERSIGNED THE SHAREHOLDERS OF GRAS SAVOYE & CIE referred to in Exhibit A hereto, acting jointly for the purposes hereof, Hereinafter collectively referred to as the "Promisors" ONE THE ONE HAND WILLIS CORROON GROUP PLC, an English law company whose registered office is at 10, Trinity Square, London EC3P 3AX, Great Britain, registered with the England and Wales Company Registration Office under number 621757, hereinafter referred to as the "Beneficiary" or "WCG" ON THE OTHER HAND WHEREAS By virtue of an agreement entered into on this day between the Beneficiary and the Promisors (hereinafter the "Agreement"), it has notably been agreed that the Promisors shall grant to the Beneficiary a promise to sell covering all of their shareholding in the Company (as defined in Article 1) in accordance with the terms and conditions of the present Contract. IT IS THEREFORE AGREED AS FOLLOWS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 4 to the Agreement Promise to Sell No. 1 page 2 1. DEFINITIONS The terms and expressions beginning with a capital letter and not defined in the present Contract shall have the meaning ascribed to them in the Agreement and its Exhibits. For purposes of the present Contract, the words and expressions below shall have the following meanings: Change of Control means: (a) with regard to WCG, any operation of any nature (including a merger) which has the object or effect: (i) of resulting in the direct or indirect holding by any related entity or entity belonging to a group directly or indirectly controlling, within the meaning of Article 355-1 of Law No. 66-537 of July 24, 1996 on commercial companies, an insurance brokerage company ranked among the 10 leading insurance brokerage companies world-wide in terms of turnover or (ii) the 10 leading French insurance brokerage companies in terms of turnover, of at least 30% of the capital of WCG, or (ii) of giving any of the above-mentioned entities the power to appoint the majority of the members of the Board of Directors or any equivalent corporate organ of WCG, or (b) with regard to any Affiliated Company, any operation of any nature (including a merger) which has the object or effect (i) of causing WCG's direct or indirect control, within the meaning of Article 355-1 of Law No. 66-537 of July 24, 1996 on commercial companies, of any Affiliated Company to terminate, or (ii) of giving to a third party the power to appoint the majority of the members of the Board of Directors or any equivalent corporate organ of any Affiliated Company. GS Share Purchase Agreement means the agreement in Exhibit 2 to the Agreement. Closing Date means the date on which the Beneficiary or any company of the WCG Group has acquired the Initial Shareholding. Indemnification Undertaking means, by incorporation for purposes of this promise, the undertaking contained in Exhibit 6 to the GS Share Purchase Agreement, it being specified that the definition "Corporate Transferors" also includes Athena and UAP. Exceptional Event means any event whose origin was prior to the Closing - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 4 to the Agreement Promise to Sell No. 1 page 3 Date and whose existence was unknown at the Closing Date and which, between the Closing Date and the three (3) years following the Closing Date, had the effect of reducing the Consolidated Equity by FRF 234,600,000. Subsidiaries means all companies or other legal entities among those referred to in Exhibit 1 to the GS Share Purchase Agreement in which the Company directly or indirectly owns more than 50% of the capital or in which the Company maintains the effective control of the management. Business Day means any business day in France with the exception of any public holiday or day of rest in accordance with the legislation and regulations applicable in France. Promise to Buy means the contract in Exhibit 3 to the Agreement. Promise to Sell No. 2 means the contract entered into on this day between the Beneficiary, Patrick Lucas, Emmanuel Gras and Daniel Naftalski, attached as Exhibit 5 to the Agreement. Corporate Promisor means (i) any insurance company which conducts an activity referred to in Article 310-1 of the Insurance Code, any company which is under the direct or indirect control of such an insurance company and/or any company which directly or indirectly controls one or more insurance companies, and (ii) which holds shares in the Company. Company means Gras Savoye & Cie, a societe en commandite par actions with a capital of FRF 9,952,000 divided into 49,760 shares of FRF 200 each, whose registered office is at 2, rue Ancelle (92200) Neuilly sur Seine and which is registered with the Nanterre Commercial and Companies Registry under number B 457 509 867. Affiliated Company means any company (i) which at the relevant time is under the control of WCG within the meaning of Article 355-1 of Law No. 66-537 of July 24, 1996 on commercial companies, and (ii) which holds shares in the Company. Main Companies means the Company, Gras Savoye S.A., Gras Savoye Reassurance S.A., SAGERI S.A., AMI, Gras Savoye Lanvin Lespiau, GS Re and Gras Savoye Euro Finance. 2. UNILATERAL PROMISE TO SELL The Promisors hereby promise to the Beneficiary, which accepts such promise solely as a promise, to sell, pursuant to ordinary legal guarantees, the shares of the Company referred to in Article 3 below, in accordance with the terms and conditions defined in the present Contract (hereinafter the "Option"). - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 4 to the Agreement Promise to Sell No. 1 page 4 The Beneficiary may substitute for itself any company of the WCG Group provided that it remains the guarantor thereof and provided that the company which is substituted for it undertakes in writing in favor of the beneficiaries of Promise to Sell No. 2 to comply with the terms of such Promise. Athena and UAP may substitute for them respectively any company of the Athena group and the AXA group; i.e., a company which is under the control, within the meaning of Article 355-1 of the Law of July 24, 1996 on commercial companies, of Athena and AXA-UAP respectively, provided they remain the guarantors thereof respectively. 3. SHARES Subject to the provisions of Article 4, the Option shall cover all of the shares of the Company referred to below (hereinafter the "Shares"). (a) All of the fully paid in, negotiable and non-amortized shares held on this day by each of the Promisors and referred to in Exhibit A hereto. (b) In addition, if the shares of the Company described in subparagraph (a) above were to be exchanged as a result of a merger, scission, transformation of the Company or for any other reason, the Option shall automatically cover all the substituted equity interests deriving from such shares in the Company. More generally, the Option shall cover all transferable securities or all equity interests issued by the Company between the date hereof and the date of exercise of the Option and which have been acquired by any means by the Promisors between the date hereof and the date of exercise of the Option. (c) In the event of the exercise by the Promisors of their rights under the Promise to Buy, the Beneficiary's rights hereunder shall be deemed to cover the number of shares of the Company referred to in paragraphs (a) and (b) which are still available after the exercise of the Promisors' rights under the Promise to Buy. 4. OPTION LIMITATIONS The Option may only be exercised for the number of Shares necessary to allow the Beneficiary to achieve (taking into account, as the case may be, the shares of the Company held on whatever grounds by any Affiliated Company) the percentages of the capital, and in any event, of the voting rights of the Company set forth below: (a) either 50.1% of the capital and, in any event, of the voting rights of the - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 4 to the Agreement Promise to Sell No. 1 page 5 Company (hereinafter "Threshold A") in the event of the occurrence of one of the three following events (hereinafter "Event A"): (i) the first Business Day of the two (2) month period preceding the expiration of the Term of the Option (as defined below), or (ii) none of the three individuals (Patrick Lucas, Emmanuel Gras, Daniel Naftalski) continues to be a general partner of the Company for whatever reason, or (iii) the failure, by any one of the Promisors as general partner or shareholder of the Company, to comply with any one of the obligations incumbent upon him pursuant to the obligations not provided for in the by-laws referred to in Article 4 (v), (vi) and (x) of the Agreement and the provisions of Article 10-3 (g), (h), (i), (j) of the Company's by-laws and, as from January 1, 1998, pursuant to the provisions of Article 10-3 (a) to (f) of the Company's by-laws. In this regard, it is however expressly agreed that if the failure to comply with any of the obligations not provided for in the by-laws referred to in Article 4 (vi) of the Agreement results from the non-performance of such obligations by one of the Subsidiaries other than the Main Companies, the exercise of the Option under this Article 4 (a) would only be deemed to be permitted hereunder to the extent that the relevant non-performance was committed with full knowledge by one of the general partners of the Company and without such general partner having used his best efforts to ensure the proper performance of the unperformed obligation. (b) or 66.7% of the capital and, in any event, of the voting rights of the Company (hereinafter "Threshold B") in the event of the occurrence of the two following events (hereinafter "Event B"): (i) the Beneficiary (taking into account, as the case may be, the shares of the Company held on whatever grounds by any Affiliated Company) holds a shareholding in the Company corresponding to Threshold A, and (ii) the Company is not transformed into a societe anonyme within the four (4) months following the occurrence of the event referred to in (i) or (ii) of (a) of this Article 4, provided however that the failure to transform does not result from the non-representation or negative vote or abstention of the Beneficiary (including, as the case may be, of any Affiliated Company) at the general meeting called to decide on the transformation of the Company. For purposes hereof, the Promisors expressly undertake to transform the Company into a societe anonyme with a board of directors, - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 4 to the Agreement Promise to Sell No. 1 page 6 with no statutory provision conferring any particular advantage on any of the shareholders, within the four (4) months following the date of the occurrence of the Event referred to in (i) or (ii) of (a) of this Article 4. Thresholds A and B shall be calculated on the basis of all the shares and voting rights of the Company held by the Beneficiary and any Affiliated Company. 5. TERM OF THE OPTION The Option is granted for a period to end on February 1, 2010. It shall terminate in advance on the day on which the Beneficiary or any Affiliated Company is the subject of a Change of Control having given rise to the exercise of the option by virtue of Promise to Sell No. 2 (hereinafter the "Term of the Option"). 6. PERIOD OF EXERCISE OF THE OPTION The Option granted to the Beneficiary shall be exercised in the course of any one of the following periods (hereinafter the "Period of Exercise of the Option"): (a) within the thirty (30) Business Days following the date of the occurrence of Event A, with regard to attaining Threshold A, or (b) within the thirty (30) Business Days following the date of the occurrence of Event B, with regard to attaining Threshold B. 7. EXERCISE OF THE OPTION The Beneficiary may exercise the Option by sending, in accordance with the provisions of Article 12, a written notification to the attention of the Promisors (hereinafter the "Notification"). In the event of exercise of the Option other than on the basis of the provisions of Article 4 (a) (iii), the Shares to be transferred to WCG or to any other company of the WCG Group shall be divided among the Promisors in proportion to their respective shareholdings in the Company on the day on which the Option is exercised compared to the total of such shareholdings. Fractions of shares shall be divided among the greater of the shareholdings. In the event that the Option is exercised on the basis of the provisions of Article 4 (a) (iii), the Shares to be transferred to WCG or to any other company of the WCG Group shall be divided among the Promisors on the basis of the following - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 4 to the Agreement Promise to Sell No. 1 page 7 priority ranking: Shares held by (i) the general partner of the Company having the capacity of president of the defaulting Subsidiary, if required, (ii) then the other general partners of the Company in proportion to their respective shareholdings in the Company, and (iii) finally, all the other Promisors in proportion to their respective shareholdings in the Company. Each Promisor certifies and warrants to the Beneficiary that on the date of actual transfer of the Shares for which the Option has been exercised, such Shares shall be freely negotiable and free of all option rights, liens, guarantees, pledges, sureties, easements, charges or restrictions of any nature whatsoever and that on that same date, the transferee of such Shares will receive full ownership thereof, free of all option rights, claims, liens, guarantees, pledges, sureties, easements, charges or restrictions of any nature. Each Promisor undertakes to indemnify the transferee of the Shares for any adverse consequences and prejudice suffered by the transferee of the Shares due to any violation by such Promisor of the undertaking of the present paragraph. WCG or any other company of the WCG Group will hereby acquire the full right to the enjoyment of the Shares for which the Option has been exercised with all the attached rights to dividends on the date of the delivery of the corresponding share transfer orders against payment of the price. If the Beneficiary or any other company of the WCG Group fails to exercise the Option during the applicable Period of Exercise of the Option, such Option shall be deemed to have lapsed, without any right of indemnity for either party. 8. PRICE The price per Share to be paid under the present Option (hereinafter, the "Transfer Price") shall be: (a) with regard to any transfer resulting from an exercise of the Option which is notified before the third anniversary of the Closing Date, the Price per Share of the Company, as defined in the GS Share Purchase Agreement, reduced, if relevant, with regard to the Corporate Promisors, by any amount which should have been paid by each of them under the Indemnification Undertaking, up until each date on which this option is exercised, if the Shares for which the Option has been exercised had been transferred on the Closing Date, (b) with regard to any transfer resulting from an exercise of the Option which is notified after the third anniversary and before the sixth anniversary of the Closing Date, the greater of the two following amounts: (i) the Price per Share of the Company as defined in the GS Share Purchase Agreement, reduced, if relevant, - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 4 to the Agreement Promise to Sell No. 1 page 8 (x) with regard to all of the Individual Promisors, and in the event of the occurrence of an Exceptional Event, by an amount of FRF 5,030 per Share (i.e., 234,600,000/46,640), and (y) with regard to the Corporate Promisors, by any amount which should have been paid under the Indemnification Undertaking, up until each date on which this option is exercised, if the Shares for which the Option has been exercised had been transferred on the Closing Date, (ii) the price calculated between April 15 and April 30 of each year and, for the first time, between April 15 and April 30, 2000, according to the formula indicated in Exhibit D to the Promise to Buy, it being understood that this price shall be applicable to all transfers of Shares under the present Option until the establishment of the price which is based upon the accounts of the following year and is calculated according to the same formula and in the same time period, (c) with regard to any transfer resulting from an exercise of the Option which is notified after the sixth anniversary of the Closing Date, the price calculated between April 15 and April 30 of each year according to the formula provided for in Exhibit D to the Promise to Buy, it being understood that this price shall be applicable to all transfers of Shares under the present Option until the establishment of the price which is based upon the accounts of the following year and is calculated according to the same formula and in the same time period. The Transfer Price of the Shares for which the Option has been exercised will be payable in cash, within forty-five (45) calendar days of the date of Notification, by bank check denominated in French francs, against delivery by the Representative (as defined in Article 10) to WCG or to any other company of the WCG Group of the corresponding duly signed share transfer order(s) in favor of WCG or any other company of the WCG Group, subject to the Beneficiary's respecting its obligations hereunder and the obtaining of all government or administrative authorizations which may be necessary. In the event that the transfer of the Shares provided for herein is subject to the obtaining of any government or administrative authorization, the Promisors and the Beneficiary shall mutually provide all assistance, exchange all information, sign all documents and, more generally, do all that is necessary or useful so that the competent authority may rapidly decide upon the contemplated transaction. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 4 to the Agreement Promise to Sell No. 1 page 9 9. BENEFIT OF THE OPTION In the event of the death of a Promisor, his/her spouse, heirs and/or all other assigns, even though minors or otherwise legally incapable, shall be bound by the terms hereof. Each of the Promisors remains free to donate the full ownership or ownership without use of all or part of his/her Shares on condition however that the Promisor intending to make the donation (i) obtains from the concerned donee(s) the undertaking in favor of the Beneficiary to respect the terms of the present Contract for the number of Shares allotted to each of the donees, and (ii) remains the guarantor vis-a-vis the Beneficiary of the donee(s)' respect of the terms of the present Contract. Subject to the provisions of the by-laws, each of the Promisors remains free to transfer the Shares he/she owns to another Promisor. In such case, the Promisor who made such a transfer will inform the Beneficiary in writing of the identity of the Promisor to whom the transfer was made as well as the number of Shares which were the subject of such transfer, and the present promise will apply to the new number of shares held by the acquiring Promisor. 10. POWER OF REPRESENTATION At the Beneficiary's request, the Promisors (with the exception of the Corporate Promisors) expressly grant an irrevocable power to Patrick Lucas or, in the case of his impediment or death, to Emmanuel Gras or, in the case of his impediment or death, to Daniel Naftalski (hereinafter the "Representative"), to act jointly and severally in the name and on behalf of each of them within the framework of the mission defined as follows: (a) make any decision regarding the Transfer Price, (b) distribute the Shares to be transferred pursuant to the present Contract, (c) sign the corresponding share transfer orders, (d) receive the Transfer Price, issue a receipt for the same and distribute the same amongst the Promisors. 11. EXPENSES - DUTIES - REGISTRATION Each party shall bear the fees and expenses of its own counsel with regard to the performance of the present Contract. All other expenses, duties and taxes of any nature resulting from the signature - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 4 to the Agreement Promise to Sell No. 1 page 10 or the performance of the present Contract shall be borne exclusively by the Beneficiary which so agrees. 12. NOTICES Unless specifically provided otherwise, all notifications, requests, applications, claims or other communications authorized or required under the present Contract (other than those which must be made in application of the by-laws of the Company) will as far as the notifying party is concerned be duly made if, within the required time period, they are delivered by hand in return for a release or sent by registered mail with return receipt requested to the addresses appearing above or to any other address notified beforehand in accordance with the provisions of the present Article. For purposes of this Contract, the notification date shall, as far as the notified party is concerned, be deemed to be the date of remittance, in the case of notification by hand, and the date of first presentation, in the case of notification by registered mail with return receipt requested. 13. NO JOINT LIABILITY BETWEEN CORPORATE PROMISORS No provision may be considered to impose any obligation or liability whatsoever on a Corporate Promisor, for any reason whatsoever which might not be directly and totally attributable to it. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 5 to the Agreement Promise to Sell No. 2 page 1 EXHIBIT 5 TO THE AGREEMENT PROMISE TO SELL No. 2 BETWEEN THE UNDERSIGNED WILLIS CORROON GROUP PLC, an English law company whose registered office is at 10, Trinity Square, London EC3P 3AX, Great Britain, registered with the England and Wales Company Registration Office under number 621757, hereinafter referred to as the "Promisor" or "WCG" ON THE ONE HAND EMMANUEL GRAS residing at 3, rue Parmentier (59370) Mons en Baroeul, PATRICK LUCAS residing at 1, avenue Emile Acollas (75007) Paris, DANIEL NAFTALSKI residing at 2, rue des Beaux Arts (75006) Paris, hereinafter collectively referred to as the "Beneficiaries" ON THE OTHER HAND WHEREAS By virtue of an agreement entered into on this day between all the shareholders of the Company (including the Beneficiaries) and the Promisor (hereinafter the "Agreement"), it has notably been agreed that the Promisor shall grant to the Beneficiaries a promise to sell covering all of its shareholding in the Company (as defined in Article 1) in accordance with the terms and conditions of the present Contract. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 5 to the Agreement Promise to Sell No. 2 page 2 IT IS THEREFORE AGREED AS FOLLOWS 1. DEFINITIONS The terms and expressions beginning with a capital letter and not defined in the present Contract shall have the meaning ascribed to them in the Agreement and its Exhibits. For purposes of the present Contract, the words and expressions below shall have the following meanings: Change of Control means: (a) with regard to WCG, any operation of any nature (including a merger) which has the object or effect: (i) of resulting in the direct or indirect holding by any related entity or entity belonging to a group directly or indirectly controlling, within the meaning of Article 355-1 of Law No. 66-537 of July 24, 1996 on commercial companies, an insurance brokerage company ranked among the 10 leading insurance brokerage companies world-wide in terms of turnover or (ii) the 10 leading French insurance brokerage companies in terms of turnover, of at least 30% of the capital of WCG, or (ii) of giving any of the above-mentioned entities the power to appoint the majority of the members of the Board of Directors or any equivalent corporate organ of WCG, or (b) with regard to any Affiliated Company, any operation of any nature (including a merger) which has the object or effect (i) of causing WCG's direct or indirect control, within the meaning of Article 355-1 of Law No. 66-537 of July 24, 1996 on commercial companies, of any Affiliated Company to terminate, or (ii) of giving to a third party the power to appoint the majority of the members of the Board of Directors or any equivalent corporate organ of any Affiliated Company. GS Share Purchase Agreement means the agreement in Exhibit 2 to the Agreement. Closing Date means the date on which the Promisor or any company of the WCG Group has acquired the Initial Shareholding. Indemnification Undertaking means the undertaking contained in Exhibit 6 to the GS Share Purchase Agreement. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 5 to the Agreement Promise to Sell No. 2 page 3 Business Day means any business day in France with the exception of any public holiday or day of rest in accordance with the legislation and regulations applicable in France. Legal Entities means Gras Savoye Euro Finance, AGF and the beneficiaries of the Promise to Buy in Exhibits 3 bis and 3 ter to the Agreement. Promises to Buy means the contracts in Exhibits 3, 3 bis and 3 ter to the Agreement. Promise to Sell No. 1 means the contract in Exhibit 4 to the Agreement. Company means Gras Savoye & Cie, a societe en commandite par actions with a capital of FRF 9,952,000 divided into 49,760 shares of FRF 200 each, whose registered office is at 2, rue Ancelle (92200) Neuilly sur Seine and which is registered with the Nanterre Commercial and Companies Registry under number B 457 509 867. Affiliated Company means any company (i) which is under the control of WCG within the meaning of Article 355-1 of Law No. 66-537 of July 24, 1996 on commercial companies, and (ii) which holds shares in the Company. 2. UNILATERAL PROMISE TO SELL The Promisor hereby promises to the Beneficiaries, who accept such promise solely as a promise, and to any person which the Beneficiaries might substitute for the purposes hereof, to sell pursuant to ordinary legal guarantees, all of the shares of the Company which the Promisor will own (hereinafter the "Shares"), on the date on which the rights granted pursuant to this promise are exercised, in accordance with the terms and conditions defined in the present Contract (hereinafter, the "Option"). In the event that any Affiliated Company, and/or any company which is no longer an Affiliated Company, within the meaning hereof, holds shares in the Company on the date on which the Option is exercised, the compan(ies) concerned shall be bound by this promise for the shares in the Company that such compan(ies) hold, WCG guaranteeing the respect of the present promise by any Affiliated Company and any company which is no longer an Affiliated Company within the meaning hereof. In this respect, any transfer of Shares of any nature whatsoever to an Affiliated Company or any acquisition of Shares by an Affiliated Company shall not be deemed valid unless (i) WCG has obtained the prior written undertaking from the Affiliated Company concerned in favor of the Beneficiaries to respect the terms of the present Contract, and (ii) this written undertaking has been notified - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 5 to the Agreement Promise to Sell No. 2 page 4 to the Representative prior to the effective completion of the transfer in question. 3. TERM OF THE OPTION The Option is granted for a period of twelve (12) years as from the Closing Date (hereinafter the "Term of the Option"). 4. EXERCISE OF THE OPTION (a) The exercise of the Option granted to the Beneficiaries is subject to the following cumulative conditions (hereinafter the "Cumulative Conditions"): (i) Change of Control affecting WCG or any Company. In this regard, and as permitted by law or the applicable regulations, notably stock market regulations, WCG expressly undertakes to inform each of the Beneficiaries and the Company in writing of the occurrence and progress of any operation which is likely to result in a Change of Control of WCG or of any Affiliated Company. (ii) holding by WCG and/or any Affiliated Company of a total shareholding less than or equal to 50% of the capital of the Company, and (iii) Patrick Lucas or Emmanuel Gras or Daniel Naftalski has the capacity of general partner of the Company. (b) When the Cumulative Conditions are satisfied, the Option may be exercised under the conditions described below. (i) The Beneficiaries acting jointly must first inform the Promisor of the possible exercise of the Option by sending to WCG a written notification conforming to the provisions of Article 8, within two (2) months following the effective completion of any operation which resulted in a Change of Control of WCG or of any Affiliated Company (hereinafter "Notification No. 1"), and (ii) if necessary, they will then inform the Promisor of the effective exercise of the Option, by sending to WCG a written notification conforming to the provisions of Article 8, within five (5) months following the effective completion of any operation which resulted in a Change of Control of WCG or of any Affiliated Company (hereinafter "Notification No. 2"). In this regard, it is expressly agreed that (i) the time limits indicated in paragraphs (b) (i) and (ii) above shall only start and run to the extent that - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 5 to the Agreement Promise to Sell No. 2 page 5 the Beneficiaries and the Company have been informed in writing of the operation(s) in progress pursuant to paragraphs (a) (i) and (ii) above. In the event that such information was not furnished until after the date of the effective completion of the operation(s) resulting in a Change of Control of WCG or of any Affiliated Company, the date on which such information was given shall be used for purposes of calculating the time limits indicated in paragraphs (b) (i) and (ii) above. In the event that one of the Beneficiaries waives the benefit of the Option as in the case where one of them has ceased, for any reason whatsoever, to be a general partner of the Company, then the Option may only be exercised by the other Beneficiary or Beneficiaries jointly. In any event, the Option may only be exercised once. The exercise of the Option shall cover all of the Shares held by the company or companies in which the control has changed. (c) The Beneficiaries will acquire the full right to enjoyment of the Shares for which the Option has been exercised with all the attached rights to dividends on the date of the remittance of the corresponding share transfer orders against payment of the price. The Promisor certifies and warrants to the Beneficiaries that on the date of actual transfer of the Shares for which the Option has been exercised, such Shares shall be freely negotiable and free of all option rights, claims, liens, guarantees, pledges, sureties, easements, charges or restrictions of any nature whatsoever and that on that same date, the transferee of such Shares will receive full ownership thereof, free of all option rights, claims, liens, guarantees, pledges, sureties, easements, charges or restrictions of any nature. The Promisor undertakes to indemnify the transferee of the Shares for any adverse consequences and prejudice suffered by the transferee of the Shares due to any violation by it of the undertaking of the present paragraph. (d) If the Beneficiaries fail to exercise the Option during the Period of Exercise of the Option, such Option shall be deemed to have lapsed, without any right of indemnity for either party. 5. PRICE The price per Share to be paid under the present Option (hereinafter, the "Transfer Price") shall be: (a) with regard to the transfer resulting from the exercise of the Option which is notified before the third anniversary of the Closing Date, the Price per Share of the Company, as defined in the GS Share Purchase Agreement, it being understood that the aggregate price due by the - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 5 to the Agreement Promise to Sell No. 2 page 6 Beneficiaries hereunder shall be reduced, if necessary, by any amount which has been received by the Promisor under the Indemnification Undertaking, (b) with regard to the transfer resulting from the exercise of the Option which is notified after the third anniversary and before the sixth anniversary of the Closing Date, the greater of the two following amounts: (i) the Price per Share of the Company as defined in the GS Share Purchase Agreement, it being understood that the aggregate price due by the Beneficiaries hereunder shall be reduced, if necessary, by any amount which might have been paid by the Legal Entities or been deducted from the price paid to the Legal Entities, at the time of exercise of the Promises to Buy and to Sell, under the Indemnification Undertaking, and also the aggregate amount deducted from the price paid to the individual beneficiaries of the Promises to Buy and to Sell in the event that an Exceptional Event (as defined in the Promises to Buy and to Sell) has occurred, (ii) the price calculated between April 15 and April 30 of each year and, for the first time, between April 15 and April 30, 2000, according to the formula provided for in Exhibit D to the Promise to Buy, it being understood that this price shall be applicable to the transfer of the Shares under the present Option until the establishment of the price which is based upon the accounts of the following year and is calculated according to the same formula and in the same time period, (c) with regard to the transfer resulting from the exercise of the Option which is notified after the sixth anniversary of the Closing Date, the price calculated between April 15 and April 30 of each year according to the formula provided for in Exhibit D of the Promise to Buy, it being understood that this price shall be applicable to the transfer of the Shares under the present Option until the establishment of the price which is based upon the accounts of the following year and is calculated according to the same formula and in the same time period. The Transfer Price of the Shares for which the Option has been exercised will be payable in cash, within six (6) months, at the latest, following the date of the effective completion of the operation resulting in the Change of Control of WCG or of any Affiliated Company, by bank check denominated in French francs, in return for delivery by the Promisor to the Representative (as defined in Article 6) of the corresponding duly signed share transfer order(s) in favor of the Beneficiaries, subject to the obtaining of all government or administrative authorizations which may be necessary. In the event that the transfer of the Shares provided for herein is subject to the - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 5 to the Agreement Promise to Sell No. 2 page 7 obtaining of any government or administrative authorization, the Promisor and the Beneficiaries shall mutually provide all assistance, exchange all information, sign all documents and, more generally, do all that is necessary or useful so that the competent authority may rapidly decide upon the contemplated transaction. 6. POWER OF REPRESENTATION At the Promisor's request, the Beneficiaries expressly grant an irrevocable power to Patrick Lucas or, in the case of his impediment or death, to Emmanuel Gras or, in the case of his impediment or death, to Daniel Naftalski (hereinafter the "Representative"), to act jointly and severally in the name and on behalf of each of them within the framework of the mission defined as follows: (a) make any decision regarding the Transfer Price, and (c) receive the corresponding share transfer order(s) in return for remittance of the Transfer Price. 7. EXPENSES - DUTIES - REGISTRATION Each party shall bear the fees and expenses of its own counsel with regard to the performance of the present Contract. All other expenses, duties and taxes of any nature resulting from the signature or the performance of the present Contract shall be borne exclusively by the Promisor which so agrees. 8. NOTICES Unless specifically provided otherwise, all notifications, requests, applications, claims or other communications authorized or required under the present Contract (other than those which must be made in application of the by-laws of the Company) will as far as the notifying party is concerned be duly made if, within the required time period, they are delivered by hand in return for a release or sent by registered mail with return receipt requested to the addresses appearing above or to any other address notified beforehand in accordance with the provisions of the present Article. For purposes of this Contract, the notification date shall, as far as the notified party is concerned, be deemed to be the date of remittance, in the case of notification by hand, and the date of first presentation, in the case of notification by registered mail with return receipt requested. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 5 to the Agreement Promise to Sell No. 2 page 8 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 6 to the Agreement Draft Resolutions page 1 EXHIBIT 6 TO THE AGREEMENT DRAFT RESOLUTIONS FIRST RESOLUTION The general meeting, taking its decision pursuant to the same conditions of quorum and majority as the extraordinary general meeting, after becoming familiar with the proposed transfers notified to the company, pursuant to which various shareholders are proposing to sell to Willis Corroon Europe BV (a Netherlands law company whose registered office is in Marten Meerweg 51, 3068 AV Rotterdam, Netherlands), and to the company (a company of the Willis Corroon Group whose identity will have been notified to the company one month before the date of the general meeting), 16,213 shares they hold in the company, decides to authorize such transfers and to approve Willis Corroon Europe BV and the company __________ as new shareholders. SECOND RESOLUTION The general meeting, taking its decision pursuant to the same conditions of quorum and majority as the extraordinary general meeting, decides, provided that on the one hand the general partners unanimously agree to the amendments to the by-laws referred to below and that on the other hand the Third Resolution is approved by the shareholders which will hold the A shares and the Fourth Resolution is approved by the shareholders which will hold the B shares, to amend Articles 6, 9, 10, 13, 16 and 18 of the by-laws as follows: ARTICLE 6 - CAPITAL The capital shall be NINE MILLION NINE HUNDRED AND FIFTY-TWO THOUSAND (9,952,000) francs. It shall be divided into 49,760 shares of a par value of 200 francs each. The shares shall be divided into two classes, A and B. In the event that shares are transferred by a holder of shares of one class to a shareholder holding shares of another class, such shares would lose their qualification and would be deemed, as from the date of the transfer, to be - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 6 to the Agreement Draft Resolutions page 2 shares of the class to which the other shares held by the transferee belong. In the event that shares are transferred, for valuable consideration or as a gift, to a person who is not yet a shareholder, subject as the case may be to respecting the right of approval referred to in Article 9, they would continue to belong to the class to which they were deemed to belong before the change of ownership. Each share subscribed for in the context of a capital increase by a person who is already a shareholder shall be deemed to belong to the class to which the shares already held by such person belong. In the event that a person who is not yet a shareholder subscribes for shares in the context of a capital increase, the extraordinary general meeting of the shareholders, simultaneously with its approval decision concerning the admission of such person to the company's capital, shall decide on the class to which the shares subscribed for by such person will belong. In the event that, insofar as Willis Corroon is a shareholder, the total number of shares of one of the classes were to be less than one-quarter of the number of shares composing the company's capital, the breakdown of the company's shares into two classes of shares would automatically cease to exist. The same shall apply on the day on which none of the following three individuals: Mr. Patrick Lucas, Mr. Emmanuel Gras and Mr. Daniel Naftalski, is a general partner. The various provisions of these by-laws which refer to two classes of shares would be amended to take account of this situation. In this event, the management shall immediately convene a general meeting in order to record this amendment to the by-laws and to decide on the appointment of new members of the Supervisory Board. ARTICLE 9 I - Unchanged. II - Transmission and transfer of shares 1(degree) Unchanged. 2(degree)-A/ Transfers of shares, as a gift or for valuable consideration, to ascendants, descendants, brothers, sisters or the spouse of a shareholder or between shareholders who are individuals, members of the Gras and/or Lucas families, shall be freely carried out. The following shall also be free: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 6 to the Agreement Draft Resolutions page 3 - the contribution by a shareholder who is an individual of all or part of his/her shares to a legal entity controlled by him/her, alone or with his/her spouse, brothers and sisters, ascendants or descendants, provided that the contributors first undertake in respect of the other shareholders, in the event of the transfer of control of the legal entity receiving the contribution, that this transfer shall be treated in light of the provisions set forth in B/ and C/ below in the same manner as if the transfer concerned the company's shares directly, - any transfer, whether by means of a contribution or otherwise, by a legal entity of all or part of its shares to a company belonging to the same group as the legal entity, i.e., to a company which is controlled by, controls or is under common control with the transferring company, control being defined within the meaning of Article 355-1 of the law on commercial companies, or to the controlling company, - shares purchased pursuant to the provisions of Articles 208-1 to 208-8-2 of the law on commercial companies, - the allotment of shares to any assign following the partition of an estate or the liquidation of the community property between spouses, - transfers of A shares to owners of B shares, made in performance of Promise to Sell No. 1 granted by the owners of A shares pursuant to an Agreement signed in ___________ on ___________, 1997, - transfers of B shares, regardless of whether they are to a shareholder or third parties, made in performance of Promise to Sell No. 2 granted to Messrs. Patrick Lucas, Emmanuel Gras and Daniel Naftalski by the owners of B shares pursuant to an Agreement signed in ___________ on ___________, 1997, - transfers to persons who are members of the Supervisory Board of the share required for them to perform such duties, and transfers back of such shares. B/ All transmissions of shares between shareholders, other than - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 6 to the Agreement Draft Resolutions page 4 those made freely pursuant to A above, shall be subordinated to the exercise of a preemption right by all the A and B shareholders other than the Transferor according to the following conditions. The transferring shareholder shall notify the proposed transfer or change of ownership to the company by extra-judicial writ or by registered letter with return receipt requested, indicating the identity of the proposed transferee(s), the number of shares whose transfer or change of ownership is being considered and the price offered, if it concerns a sale of the shares, or the estimate of the price of the shares in the other cases (hereinafter referred to as the "Notification"). Within eight days following the Notification made to the company, the management shall notify the A and B shareholders other than the transferor, individually and by registered letter, of the number of shares transferred and the price indicated in the Notification. The shareholders shall have fifteen days in which to announce their intention of acquiring the shares at the price indicated in the Notification. In the event of applications exceeding the number of shares offered, the management shall divide out the shares between the applicants (including the proposed transferee(s)) in proportion to their fraction of the capital and within the limits of their applications. However, for as long as a same holder of A shares does not directly or indirectly hold a number of shares greater than the number of B shares, the distribution will be made as a priority among the owners of A shares in proportion to their fraction of the capital, then among the owners of B shares for the surplus of the non-preempted shares. In the event of applications for less than the number of shares offered, the proposed transfer or change of ownership may only be carried out for the shares which have not been preempted. The price of the preempted shares shall be equal to the price indicated in the Notification. Except as otherwise agreed, the price of the preempted shares shall be payable in cash. C/ Unchanged. D/ Unchanged. E/ Unchanged. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 6 to the Agreement Draft Resolutions page 5 F/ Unchanged. G/ Unchanged. ARTICLE 10 1/ The company shall be managed by one or more gerants, who shall be individuals and who may but do not need to be general partners. Any general partner shall automatically be a gerant. The appointment of a gerant who is not a general partner shall be made pursuant to a decision of the ordinary general meeting of the shareholders with the agreement of the majority of the general partners or, if there are less than three general partners, with the agreement of the general partner or partners. The appointment may also be made pursuant to a decision of the Supervisory Board taken by the majority of the members present or represented, in the event that the company no longer has any general partners. Other than the case referred to in paragraph 3/ of this article, the removal of a gerant who is not a general partner shall be made pursuant to the same conditions as for his appointment. Other than the case referred to in paragraph 3/ of this article, the removal of a gerant who is a general partner shall be made pursuant to a decision of the extraordinary general meeting of the shareholders with the agreement of the other general partners. If there is only one gerant who is a general partner, his removal may only be made for a legitimate cause by a court decision at the request of one or more shareholders representing more than one-half of the capital. 2/ Each of the gerants shall be vested with the broadest powers to act in all circumstances in the name of the company. The gerant shall exercise such powers within the limits of the corporate purpose and subject to those powers expressly conferred by the law on the shareholders' meetings. 3/ Any limitation of the gerant's powers shall not be enforceable against third parties. The gerants shall hold separately the same powers as far as third parties are concerned. However, an internal limitation of the individual powers shall concern the following decisions, which are decisions to be taken collectively by the gerants in office in the event of several gerants: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 6 to the Agreement Draft Resolutions page 6 - empowering any persons other than the gerant or gerants to bind the company; - all sureties, guarantees, mortgages, borrowings, loans and in general all transfers and all commitments of the company exceeding an amount fixed by the general partners taking their decision by a two-thirds majority in numbers, or unanimously if there are only two of them; - all operations entailing for the company the acquisition of the status of partner, in name or as a general partner. Any violation of the rule of collective decision-making provided for above shall be a faute lourde (gross misconduct) leading to the possible removal of the gerant having committed such fault pursuant to a decision of the majority of the general partners or, if the number of general partners is less than three, pursuant to a decision of the general partner or partners. If the gerant having committed the fault is himself a general partner, he shall not take part in the decision. Moreover, the gerant having committed the fault may be the subject of a claim for damages insofar as the violation is prejudicial to the company. Furthermore, it is agreed that the gerant or gerants, acting jointly or separately, may not, without first having been authorized by the Supervisory Board taking its decision by a three-quarters (3/4) majority of its members, carry out the following operations: a) Any acquisition not referred to in the investment budget approved by the Supervisory Board, by any means, directly or indirectly, in particular by the purchase of securities, any business, element of a business, client portfolio, enterprise (a) exceeding an exemption of FRF 50,000,000 excluding tax per calendar year, it being specified that to calculate this exemption, the only operations taken into consideration will be operations of more than FRF 2,000,000 excluding tax, or (b) exceeding an amount of FRF 25,000,000 excluding tax per operation; b) any sale not referred to in the investment budget approved by the Supervisory Board, by any means, directly or indirectly, in particular by the sale of securities, any business, element of a business, client portfolio, enterprise (a) exceeding an exemption of FRF 50,000,000 excluding tax per calendar year, it being specified that to calculate this exemption, the only operations taken into consideration will be operations of more than FRF 2,000,000 excluding tax, or (b) exceeding an amount of FRF 25,000,000 excluding tax per operation; - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 6 to the Agreement Draft Resolutions page 7 c) Any other acquisition of assets not referred to in the operating budget approved by the Supervisory Board and not being the subject matter of one of the above paragraphs, (a) exceeding an exemption of FRF 30,000,000 excluding tax per calendar year, it being specified that to calculate this exemption, the only operations taken into consideration will be operations of more than FRF 1,000,000 excluding tax, or (b) exceeding an amount of FRF 10,000,000 excluding tax per operation; d) Any other sale of assets not being the subject matter of one of the above paragraphs, (a) exceeding an exemption of FRF 30,000,000 excluding tax per calendar year, it being specified that to calculate this exemption, the only operations taken into consideration will be operations of more than FRF 1,000,000, or (b) exceeding an amount of FRF 10,000,000 excluding tax per operation; e) Any subscription of a loan or a long term financial facility (more than two years), the amount of which, in one or more operations, is greater than or equal to FRF 25,000,000 per calendar year, intended to finance an investment, excluding cash operations; f) Any constitution of a guarantee of any kind for a total amount per operation greater than or equal to FRF 25,000,000, or exceeding an exemption of FRF 100,000,000 per calendar year, whatever the amount of the guarantee; g) Any conclusion, renewal or termination of any undertaking or agreement, directly or indirectly, between the company on the one hand and one of the shareholders or one of the general partners or members of their family on the other hand, excluding employment contracts entered into or renewed at normal conditions assessed compared to the usual practice applicable in the Company; h) The terms and conditions of any stock option plan; i) Any entry into the capital of Gras Savoye Euro Finance of a third party, particularly by any share transfer; j) Any transfer of shares of Gras Savoye & Cie by Gras Savoye Euro Finance. Any investment budget which may be prepared by the company must be approved by the Supervisory Board by a three-quarters majority of its - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 6 to the Agreement Draft Resolutions page 8 members. 4/ In the event of several gerants, for all decisions to be taken collectively by the gerants, they shall form a management board composed of all the gerants in office. The board shall be chaired by a gerant who is a general partner. The chairman of the meeting shall be designated by the members present. The management board shall meet at the registered office as often as the interest of the company shall require upon being convened by one of the gerants. For the meeting to be validly held, each of the members must have been convened by any means at least seven days in advance of the meeting, unless all the members were present or represented at the meeting. A member may only be represented by another member. Collective decisions shall be taken by a majority of the gerants in office. If there are only two gerants in office, the decision must be unanimous. The board's decisions shall be recorded in minutes written in a special register and signed by the chairman of the meeting and another member present at the meeting. 5/ Subject to the provisions of Article 16.2/, if there is only one general partner left who is a gerant, he shall automatically cease to hold the office of gerant either at the close of the ordinary annual general meeting of the shareholders deciding on the accounts of the financial year during which the gerant reached the age of seventy or on the day on which he becomes the sole general partner gerant if on such day he is more than 70 years of age. ARTICLE 13 - SUPERVISORY BOARD 1/ Composition - Appointment a) The Supervisory Board shall be composed of eight members chosen exclusively from among the limited partners. Depending on the number of shares of each class, the breakdown of the members of the Supervisory Board shall be made as follows: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 6 to the Agreement Draft Resolutions page 9 - if the number of class B shares is between 25% and 50% of the capital, three members of the Supervisory Board out of eight must be chosen from among the candidates presented by the holders of class B shares and five from among the candidates presented by the holders of class A shares; - if the number of class B shares is equal to 50% of the capital, four members of the Supervisory Board out of eight must be chosen from among the candidates presented by the holders of class B shares and four from among the candidates presented by the holders of class A shares; - if the number of class B shares is above 50% and below 75% of the capital, five members of the Supervisory Board out of eight must be chosen from among the candidates presented by the holders of class B shares and three from among the candidates presented by the holders of class A shares. When, after one of the members of the Supervisory Board ceases to carry out his duties, the holders of shares of one category were no longer to be sufficiently represented on the Supervisory Board, the chairman of the Supervisory Board shall be required to convene the Supervisory Board within a maximum of 15 days in order to take note of the above situation and to appoint a new member by cooptation. In the event that one of the above thresholds is exceeded, the management shall notify all the other members of the Supervisory Board thereof immediately. If one of such members should fail to resign within fifteen days following this notification, the most senior in age of the members of the Supervisory Board belonging to the class of shares whose number of seats to be filled has been reduced shall be deemed to have resigned as a matter of course. The chairman of the Supervisory Board or the management shall convene the Supervisory Board within a maximum of fifteen days in order to take note of such resignation and appoint a new member of the Supervisory Board by cooptation. b) The members of the Supervisory Board shall be appointed by the ordinary general meeting of the shareholders for a maximum of - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 6 to the Agreement Draft Resolutions page 10 three years. The duties of a member of the Supervisory Board shall terminate at the close of the ordinary general meeting of the shareholders deciding on the accounts of the preceding financial year, held in the year during which such member's term of office expires. The members of the Supervisory Board are eligible for re-election. They may be removed at any time by the general meeting. The partners who are general partners may not participate in the appointment or removal of members of the Supervisory Board in general meetings. c) Each member of the Supervisory Board shall own at least ONE (1) share of the company. If a member of the Supervisory Board does not own ONE (1) share when he is appointed, he must acquire it within three (3) months of his appointment. d) In the event of a vacancy due to a death, resignation or for another reason, the Board may provisionally appoint new members, respecting the rules fixed above. These appointments shall be ratified by the following general meeting. The replacement member shall remain in office only for the remainder of his predecessor's term of office. If the provisional appointments are not ratified by the general meeting, the resolutions adopted by the Supervisory Board shall nevertheless be valid. 2/ Officers and meetings of the Supervisory Board The Board shall appoint a chairman from among its members who is required to be an individual. It shall in addition choose a secretary who may but does not need to be one of its members. In the absence of the chairman for any reason whatsoever for a period of at least six months, the Board shall elect a new chairman. In the absence of the chairman for a meeting, the Board shall designate one of its members to chair the meeting. The Board shall meet, upon being convened by its chairman or by one-half of its members, as often as the interest of the company shall require, and at least every six months, either at the registered office, or in any - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 6 to the Agreement Draft Resolutions page 11 other place indicated in the letter of convocation. It may also be convened by the gerant of the company, or by one of them if there are several. The presence of one-third of the members of the board shall be required for the validity of its proceedings. Except for another majority provided for in these by-laws, the decisions shall be taken by the majority of the members present or represented, one member present being able to represent a maximum of two absent members upon presentation of express powers of attorney. In the event of equal voting, the chairman of the Supervisory Board meeting shall have the casting vote. The Board's proceedings shall be recorded in minutes inserted or bound in a special register and be initialed in accordance with the law. They shall be signed by the Chairman of the meeting and the Secretary or by the majority of the members present. 3/ Duties of the Supervisory Board The Supervisory Board shall supervise permanently the management of the company, in accordance with the law. It shall authorize the gerant or gerants to carry out the operations referred to in paragraph 3/ of Article 10 above. It shall submit a report to the ordinary annual general meeting in which it shall point out in particular any irregularities or inaccuracies noted in the accounts of the financial year. It shall be informed of the documents made available to the statutory auditors. It may convene the general meeting of the shareholders, in which case its chairman shall chair such meeting. 4/ The Board members' directors' fees The Supervisory Board may be awarded a fixed annual compensation as directors' fees, the amount of which, charged to overheads, shall be determined by the ordinary general meeting of the shareholders and shall be maintained until otherwise decided by this general meeting. The Board shall distribute its directors' fees between its members in the proportions it considers appropriate. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 6 to the Agreement Draft Resolutions page 12 5/ Compensation of the chairman of the Supervisory Board The chairman of the Supervisory Board may be awarded a compensation which shall be fixed by the Supervisory Board in agreement with the general partners. 6/ Age limit The number of members of the Supervisory Board who are more than seventy years of age may not be more than one-third of the members in office. Any appointment contrary to this provision would be invalid. When this legal limit is exceeded, the member who is the most senior in age shall be deemed to have resigned as a matter of course. Moreover, as from the age of seventy, the duration of the term of office shall be one year. A Supervisory Board member who reaches the age of seventy cannot therefore remain in office beyond his seventy-first year, unless his term of office is renewed annually by the general meeting. ARTICLE 16 1/ There shall be at least one general partner. The general partner or partners may only be individuals. 2/ The general partners are: - Mr. Emmanuel Gras - Mr. Patrick Lucas - Mr. Daniel Naftalski Notwithstanding any other provisions of these by-laws, the general partners shall be appointed no later than until December 31, 2009. In the four months preceding this date, the general partner or partners still in office must have convened the extraordinary general meeting of the shareholders to transform the Company into a societe anonyme with a board of directors. 3/ The appointment of any new general partner shall be decided by the extraordinary general meeting of the shareholders following the unanimous proposal of the general partners, or the general partner if - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 6 to the Agreement Draft Resolutions page 13 there is only one, it being understood that the new general partner may only be chosen from among the candidate(s) presented by the general partner or partners. If there are no more general partners, the extraordinary general meeting of the shareholders shall be convened by the Supervisory Board, within three months following the occurrence of the event, to transform the company into a societe anonyme with a board of directors. 4/ The general partner who stops being a gerant for any reason whatsoever shall also no longer be a general partner. In the event of any legal incapacity, withdrawal of a general partner or a general partners' losing the status of general partner, the company shall not be dissolved. The general partner losing such status shall be a simple shareholder if he owns shares. The heirs of a deceased general partner shall not inherit the status of general partner. They shall be entitled to a proportion, prorata temporis, of the profit provided for in Article 18. The by-laws shall be amended automatically as a result; the amendment shall be recorded and published by a gerant. 5/ The decisions shall be subject to the approval of the collective body of the general partners, which shall decide by the majority of its members, if there are more than two, or unanimously if there are less than three, except when the by-laws provide for another majority and when it is a question of transforming the company into a societe anonyme or a societe a responsabilite limitee, in which case a simple majority is provided by the law (Article 262 of the law of July 24, 1966). However, the general partners may not decide on the appointment or removal of members of the Supervisory Board and the in-house auditors. The decisions of the collective body of the general partners may be made by means of a written consultation (ordinary letter, telegram, telex, fax, etc.), except for the annual approval of the accounts or when the general meeting of the shareholders is convened by one or more general partners. Each general partner shall have fifteen days in which to inform the management of his decision on each of the resolutions. A partner who does not reply within this period of time shall be considered to have abstained. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 6 to the Agreement Draft Resolutions page 14 The management shall prepare minutes mentioning the date and the method of consultation, the text of the resolutions and the answers given, which must be attached to the minutes. Copies of or excerpts from minutes shall be validly certified as true by the gerant or one of the gerants if there are more than one. ARTICLE 18 - ACCOUNTS OF THE COMPANY 1(degree) Each financial year shall begin on January 1 and end on December 31. 2(degree) The profit or loss of the financial year shall consist of the difference between the income and expenditure for the year, after deducting depreciation and allowances, as shown in the income statement. 3(degree) From the profits of the year, reduced by the prior losses, if any, a deduction shall first be made: o of at least five percent allocated to forming a reserve fund known as the "legal reserve". This deduction shall cease to be compulsory when the amount of the legal reserve reaches one-tenth of the capital; o of any amount allocated to the reserves pursuant to the law. The balance shall be distributed up to 3% to the general partners. The surplus must be distributed to the owners of shares, whether general or limited partners, in proportion to the number of their shares, up to 40% of its amount. After these distributions, the balance increased by the retained earnings, if any, may, upon the decision of the ordinary general meeting and with the agreement of the general partners, be distributed, or carried forward, or allocated to one or more general or special reserves. This or these reserve funds may be distributed solely to owners of shares or allocated to the total or partial amortization of the shares. THIRD RESOLUTION The general meeting, upon the unanimous decision of the shareholders who will hold B shares, after listening to the report of the special advantages drawn up by the auditor appointed by order of the Presiding Judge of the Nanterre Commercial Court, decides that the A shares shall be held, at the close of this general meeting, by: - - Mr. [___________] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 6 to the Agreement Draft Resolutions page 15 - - Mr. [___________] - - Mr. [___________] - - Mr. [___________] it being observed that all these persons before the general meeting agreed to hold A shares. The general meeting approves the special advantages awarded to owners of A shares, consisting of the right for the latter (i) to have a certain number of members out of the eight members to compose the Supervisory Board and (ii) to be able to exercise as a priority the preemption provided for in Article 9-II-2e-B/ of the by-laws. FOURTH RESOLUTION The general meeting, upon the unanimous decision of the shareholders who will hold A shares, after listening to the report of the special advantages drawn up by the auditor appointed by order of the Presiding Judge of the Nanterre Commercial Court, decides that the B shares shall be held, at the close of this general meeting, by: - - Mr. [___________] it being observed that this person before the general meeting agreed to hold B shares. The general meeting approves the special advantages awarded to owners of B shares, consisting of the right for the latter (i) to have a certain number of members out of the eight members to compose the Supervisory Board and (ii) to be able to acquire shares freely in the context of the performance of Promise to Sell No. 1 granted by the owners of A shares pursuant to an Agreement signed in _________ on _________, 1997. FIFTH RESOLUTION The general meeting, after listening to the report of the special advantages drawn up by the auditor designated by order of the Presiding Judge of the Nanterre Commercial Court, approves the special advantage granted to Messrs. Patrick Lucas, Emmanuel Gras and Daniel Naftalski to be able to acquire B shares or to have them acquired freely by a shareholder or by one or more third parties in performance of Promise to Sell No. 2, which was granted to them pursuant to an Agreement signed in _________ on _________, 1997. SIXTH RESOLUTION - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 6 to the Agreement Draft Resolutions page 16 The general meeting grants full powers to the bearer of an original or a copy of or an excerpt from these minutes in order to accomplish all filing, publication and other necessary formalities. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 9 to the Agreement page 1 EXHIBIT 9 TO THE AGREEMENT SHARE EXCHANGE AGREEMENT BETWEEN THE UNDERSIGNED: Willis Corroon Europe B.V., a Netherlands law company whose registered office is at Marten Meesweg 51, 3068 AV Rotterdam, Netherlands, registered with the Rotterdam Commercial Registry under No. 135.835, represented by Sarah Turvill, acting as a director, fully empowered for the purposes hereof, hereinafter "WCE BV", AND Gras Savoye Euro Finance S.A., a Belgian law company having its registered office at 8 avenue Bel-Air, 1180 Uccle, Belgium, registered with the Brussels Commercial Registry under No. 258.054, represented by Patrick Lucas in his capacity as President, fully empowered for the purposes hereof, hereinafter "GS Euro Finance". IT IS RECALLED THAT: A. Willis Corroon France S.A. is a societe anonyme with a capital of FRF 8,220,000, divided into 82,200 shares of FRF 100 each, having its registered office at 18, boulevard Malesherbes, 75008 Paris and which is registered with the Paris Commercial and Companies Registry under No. B 341 303 089 (hereinafter "WCF"). As of the Closing Date of the Exchange (as defined below), the capital of WCF will be held as described in Exhibit 1 hereto. The WCF shares are referred to hereinafter as the "WCF Shares". - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 9 to the Agreement page 2 B. GS Euro Finance has indicated to WCE BV that it is interested in an exchange of 82,200 WCF Shares representing 100% of the capital of WCF for 680 shares of Gras Savoye & Cie (hereinafter the "Exchanged GS Shares"), and WCE BV has indicated that it is interested in this exchange. C. The exchange contemplated by the parties will occur in the context of an overall transaction whose aim is (i) the acquisition by the WCG Group (as defined in the Agreement) of approximately 31.72% of the capital and approximately 33.36% of the voting rights of Gras Savoye & Cie and (ii) the integration of Willis Corroon France's activities into the GS Group (as defined in the Agreement). NOW, THEREFORE, IT IS AGREED AS FOLLOWS: 1. Exchange (a) Subject to ordinary legal guarantees and to the terms and conditions of this Share Exchange Agreement, WCE BV and GS Euro Finance exchange all of the WCF Shares held by WCE BV representing 100% of WCF's capital for the Exchanged GS Shares held by GS Euro Finance, in consideration for the Basic Cash Distribution referred to in Article 2 (B) below. (b) The exchange of the WCF Shares for the Exchanged GS Shares shall become effective on the date on which the WCF Shares are actually exchanged for the Exchanged GS Shares (hereinafter the "Closing Date of the Exchange") and GS Euro Finance and WCE BV shall acquire the right to the full enjoyment respectively of the WCF Shares and the Exchanged GS Shares as from such date, with all the attached rights to dividends. (c) The exchange of the WCF Shares for the Exchanged GS Shares shall only be carried out if the condition precedent set forth in Article 4 below has been fulfilled on the Closing Date of the Exchange. 2. Valuation and Cash Distribution (soulte) (A) Valuation The exchange provided for in Article 1 hereof shall be based on the one hand on a valuation of WCF at an amount of FRF 50,400,000 (fifty million four hundred thousand French francs), i.e., FRF 613 per WCF Share, and on the other hand on a valuation of the Company (as defined in the Agreement) of FRF 1,400,000,000 (one billion four hundred million French francs), - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 9 to the Agreement page 3 i.e., FRF 30,017 per Exchanged GS Share. This exchange shall take place in consideration for the Cash Distribution (as defined below), and for the other provisions set forth below. (B) Basic Cash Distribution A cash distribution amounting to FRF 29,988,440 (hereinafter the "Basic Cash Distribution") shall be paid by GS Euro Finance to WCE BV on the Closing Date of the Exchange. (C) WCF Quantifiable Deciding Element and Cash Distribution deriving from a Lower Valuation of WCF If the accounting and legal audit conducted by GS Euro Finance or by the GS Group (hereinafter the "WCF Audit") reveals one or more quantifiable elements or facts contrary to the quantifiable deciding element of the acquisition of the WCF Shares contained in Exhibit 2 (hereinafter the "WCF Quantifiable Deciding Element") to be verified during the WCF Audit, GS Euro Finance shall inform WCE BV thereof no later than 8 business days in France (hereinafter the "Business Days") following the date of the end of the WCF Audit set for October 20, 1997 at the latest, unless extended contractually (hereinafter referred to as the "Date of the End of the WCF Audit"). GS Euro Finance shall attach all the necessary information to such notification along with copies of any necessary documentary proofs. The notification shall also include the value of the WCF Cash Distribution (as defined below) claimed by GS Euro Finance. (i) Inaccuracy in respect of the WCF Quantifiable Deciding Element to be verified during the WCF Audit If the WCF Audit reveals one or more elements or facts in contradiction with the WCF Quantifiable Deciding Element to be verified during the WCF Audit, a cash distribution will be calculated according to the formula contained in Exhibit 3 (hereinafter the "WCF Cash Distribution"). WCE BV may notify GS Euro Finance within 6 Business Days following the notification received from GS Euro Finance, of any dispute concerning such notification (hereinafter the "Notification in Response"), failing which it shall be deemed to have agreed to all the elements and to the WCF Cash Distribution notified by GS Euro Finance, as a result of an inaccuracy in respect of the WCF Quantifiable Deciding Element. In the event of a dispute, the parties shall negotiate in good faith in order to reach an agreement on the existence or the amount of the WCF Cash Distribution. In the event of the occurrence of the 2 following conditions which are cumulative: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 9 to the Agreement page 4 (x) dispute by WCE BV of the amount of the Estimated Net Turnover at December 31, 1997 (as defined in Exhibit 2) estimated by GS Euro Finance; (y) absence of agreement between the parties within 6 Business Days following the Notification in Response received by GS Euro Finance, the amount of the Estimated Net Turnover at December 31, 1997 shall be determined in accordance with the Expert Assessment Procedure. The Expert shall accordingly determine the WCF Cash Distribution within the period set forth in Article 2. (C) (ii) below, by applying the formula contained in Exhibit 3. However, in the event that the Expert is unable to determine the amount of the Estimated Net Turnover at December 31, 1997, it would determine the WCF Cash Distribution on the basis of the amount of the Actual Net Turnover at December 31, 1997. (ii) Expert Assessment Procedure For the purposes hereof, the procedure described below is called the "Expert Assessment Procedure". Failing an agreement within a period of 6 Business Days following the Notification in Response received by GS Euro Finance, as provided in Article 2. (C) (i) above, the parties expressly agree that the existence and/or the amount of the inaccuracy alleged by GS Euro Finance in respect of the WCF Quantifiable Deciding Element will be definitively settled, without recourse of any kind, unless an obvious material error has been made, by Coopers & Lybrand (hereinafter the "Expert"), within a period of 30 Business Days following: (x) the submission of the dispute to the Expert in order to determine the amount of the Estimated Net Turnover at December 31, 1997, or (y) the submission of the dispute to the Expert, to which shall be attached a copy of WCF's accounts for financial year 1997, certified by the statutory auditor, in order to determine the amount of the Actual Net Turnover at December 31, 1997. The Expert shall also settle any dispute about either the determination of the amount of the Recurring Annual Expenditure, in accordance with Article 2 (D) below, or the certification of the Closing Financial Statements provided for in Article 2 (D) below, and shall within 30 Business Days of being - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 9 to the Agreement page 5 consulted reach a decision to determine the amount of the Recurring Annual Expenditure and/or to determine and certify the Closing Financial Statements and/or the net result for the period between the date of the Closing Financial Statements and December 31, 1997. The dispute shall be submitted to the Expert at the request of the most diligent party in writing with a copy sent to the other party, and one-half of its fees shall be paid by GS Euro Finance and the other half by WCE BV. The party submitting the dispute to the Expert shall provide the Expert with copies of the notifications exchanged between the parties. The Expert declared prior to the signature hereof that it accepted this appointment. Accordingly, the Expert shall determine the existence and/or the amount of the inaccuracy alleged by GS Euro Finance in respect of the WCF Quantifiable Deciding Element and the WCF Cash Distribution which shall be binding on the parties, in accordance with Article 1843-4 of the Civil Code, and shall fulfill any other mission conferred upon it hereunder, it being understood in particular that not only the definitions contained in Exhibit 2 to the Share Purchase Agreement but also the formula used to determine the WCF Cash Distribution contained in Exhibit 3 and the accounting rules and methods contained in Exhibit 4 to the Share Purchase Agreement (which is itself Exhibit 2 to the Agreement) shall be binding on the Expert. If the Expert was unable to complete its mission for any reason whatsoever, with the exception of the case in which it would be unable to determine the amount of the Estimated Net Turnover at December 31, 1997, a new Expert chosen from the list of experts of the Court of Appeal of Versailles would be appointed by mutual agreement between GS Euro Finance and WCE BV or, failing this, by the Presiding Judge of the Commercial Court of Nanterre to which the dispute shall be referred in summary proceedings (referes) at the request of the most diligent party. WCE BV guarantees the Expert's access to the premises of WCF and that WCF shall provide the Expert with any information that the Expert might reasonably request in connection with the accomplishment of its mission. (D) WCF Annual Expenditure For the purposes of this Share Exchange Agreement, the valuation of WCF has been established in particular on the basis of an estimated recurrent before tax result of WCF of FRF 3,000,000. Within three months as from the Closing Date of the Exchange, a balance sheet and income statement of WCF as at the last day of the month preceding the Closing Date of the Exchange (hereinafter the "WCF Closing Financial Statements") shall be drawn up by mutual agreement between the parties or, failing this, by the Expert, in the context of the Expert Assessment Procedure, which shall certify them. The WCF Closing Financial Statements shall in particular reflect the amount of the Equity on the Closing Date of the Exchange (as defined in Exhibit 2) and the amount of the Recurrent Annual Expenditure (as defined below). - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 9 to the Agreement page 6 WCE BV undertakes, prior the Closing Date of the Exchange, after informing and consulting the GS Group, to take all necessary measures so that the amount of the Recurrent Annual Expenditure (as defined below) is reduced to an amount corresponding at most to the difference between the Estimated Net Turnover at December 31, 1997 and FRF 3,000,000. For the purposes hereof, Recurrent Annual Expenditure is defined as the estimated expenditure of WCF for financial year 1997 reduced by the estimated recurrent savings obtained from all the measures implemented by WCF before the Closing Date of the Exchange and those that will be taken by mutual agreement and implemented by WCF after the Closing Date of the Exchange. If the WCF Closing Financial Statements reflect an amount of Recurrent Annual Expenditure higher than the difference between the Estimated Net Turnover at December 31, 1997 (or as the case may be the Actual Net Turnover at December 31, 1997) and FRF 3,000,000, WCE BV and any company of the GS Group undertake to collaborate in good faith in order to pursue together the measures to reduce the Recurrent Annual Expenditure initiated by WCE BV before the Closing Date of the Exchange and to adopt together and implement all additional necessary measures with the aim of achieving this level of Recurrent Annual Expenditure as promptly as possible. It is specified that the amount of the Recurrent Annual Expenditure taken into consideration after the Closing Date of the Exchange shall be calculated in constant management, i.e., excluding any expense of WCF related to a modification of the WCF management by GS Euro Finance or the GS Group, which resulted in an increase in WCF's management costs and which had not been approved by WCE BV. WCE BV undertakes to assume, or to indemnify WCF for (i) as from the date of the Closing Financial Statements and for a period of five months, the surplus of the amount of the Recurrent Financial Expenditure shown in the WCF Closing Financial Statements over the difference between the Estimated Net Turnover at December 31, 197 and FRF 3,000,000, these annual amounts being converted to a monthly basis to take into account the seasonal nature, and with the amounts due being payable at the end of the five months, (ii) all expenses of whatever kind on which the parties will have agreed, resulting from the implementation of the measures to reduce the Recurrent Annual Expenditure decided by mutual agreement, and (iii) the expenses borne while waiting for the effects of these measures if they have not already been assumed under (i) above. The parties agree that no later than at the end of a five-month period after the Closing Date of the Exchange, the amount of the Recurrent Annual Expenditure shall be determined in good faith by mutual agreement or, failing this, by the Expert in the context of the Expert Assessment Procedure. If at the end of this five-month period, the amount of the Recurrent - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 9 to the Agreement page 17 Annual Expenditure as determined is less than or equal to the difference between the Actual Net Turnover at December 31, 1997 and FRF 3,000,000, WCE BV shall be deemed to have satisfied all its obligations under this Article 2 (D) and shall be released from any obligation in this regard in the future, subject to the undertakings made by WCE BV in (ii) and (iii) of the second paragraph above. Conversely, if, at the end of this same five-month period, the amount of the Recurrent Annual Expenditure as determined is greater than the difference between the Actual Net Turnover at December 31, 1997 and FRF 3,000,000, WCE BV undertakes to pay GS Euro Finance, as a price reduction, an amount corresponding to 14 times the surplus from the amount of the Recurrent Annual Expenditure over the difference between the Actual Net Turnover at December 31, 1997 and FRF 3,000,000, reduced by the corporation tax at the applicable rate. WCE BV shall then be deemed to have satisfied all its obligations under this Article 2 (D) and shall be released from an obligation in this regard in the future, subject to the undertakings made by WCE BV in (ii) and (iii) of the third paragraph above. (E) Equity If the Closing Financial Statements, certified as necessary by the Expert as set forth in Article 2 (D) above, show an amount of Equity less than FRF 4,500,000, WCE BV shall pay GS Euro Finance, as a price reduction, a sum corresponding to the difference between FRF 4,500,000 and the amount of the Equity as determined by the Closing Financial Statements. It is specified that between the date of the Closing Financial Statements and December 31, 1997, WCF's net result shall be nil, WCE BV undertaking to pay GS Euro Finance any amount corresponding to a negative result over such period, unless this negative result is related to a modification in the management of WCF by GS Euro Finance or the GS Group which resulted in an increase in WCF's management costs and which had not been approved by WCE BV. (F) Cash Distribution deriving from a Lower Valuation of Gras Savoye & Cie In the event that the Price per Share (as defined in the Share Purchase Agreement in Exhibit 2 to the Agreement) was determined by the parties to such Share Purchase Agreement or by the Expert (as defined in such Share Purchase Agreement) at a value less than FRF 30,017, a cash distribution equal to the difference between FRF 30,017 and the Price per Share, multiplied by the number of Exchanged GS Shares, shall be payable by GS Euro Finance to WCE BV (hereinafter the "GS Cash Distribution"). (G) Payment terms and conditions The amounts due pursuant to the above provisions shall be payable - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 9 to the Agreement page 8 within 10 Business Days of their determination by contract or by the Expert by bank check delivered to the beneficiary. However, a set off shall be made automatically, in accordance with Article 1289 of the Civil Code, between all or part of such amounts on the day on the which such amounts are due, certain and liquid at the same date and between the same parties. Only the outstanding amount of these sums shall, as the case may be, be payable by the debtor party by bank check delivered to the beneficiary within 10 Business Days following the occurrence of the set off. 3. Closing Date of the Exchange The Closing Date of the Exchange shall be identical to the Closing Date provided for in the Share Purchase Agreement attached in Exhibit 2 to the Agreement. The actual completion of this exchange shall occur on the Closing Date (as defined in the Share Purchase Agreement), by the actual exchange of the Exchanged GS Shares for 82,200 WCF Shares, notwithstanding any provisional failure to determine the WCF Cash Distribution, the GS Cash Distribution or any other amount provided for in Article 2 above, as the case may be, on such date. On the Closing Date of the Exchange, the exchange of the WCF Shares for the Exchanged GS Shares shall be carried out as indicated in Article 2 above, as follows: (a) delivery to WCE BV of a share transfer order duly signed by GS Euro Finance and of all other documents required to enable the transfer of the Exchanged GS Shares and to render such transfer enforceable against third parties, as well as the registration in the shareholders' registers of Gras Savoye & Cie of the transfer of the Exchanged GS Shares to WCE BV; (b) delivery to GS Euro Finance of a certified true copy of the minutes of the board of directors' meeting of WCF approving GS Euro Finance as a new shareholder of WCF; (c) delivery to GS Euro Finance of a share transfer order duly signed by WCE BV and of all other documents required to enable the transfer of the WCF Shares and to render such transfers enforceable against third parties, as well as the registration in the shareholders' registers of WCF of the transfer of the WCF Shares to GS Euro Finance; (d) delivery to GS Euro Finance of a letter waiving a return to better fortune clause, substantially in the form of Exhibit 5 hereto; (e) delivery to WCE BV of a bank check for FRF 29,988,440; - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 9 to the Agreement page 9 (e) as the case may be, delivery to WCE BV or GS Euro Finance respectively of the amounts referred to in Article 2, other than the Basic Cash Distribution, or the outstanding amount from the set off between these two amounts. 4. Condition precedent The completion of the exchange of the WCF Shares for Exchanged GS Shares is subject to the condition precedent of the actual completion of the transfer of 15,105 shares of Gras Savoye & Cie to WCE BV (as defined in the Agreement) according to the conditions set forth in the Agreement and in the Share Purchase Agreement contained in Exhibit 2 to the Agreement. 5. Transfers of ownership The transfer to GS Euro Finance of the ownership and the right to the enjoyment of the WCF Shares, and the transfer to WCE BV of the ownership and the right to the enjoyment of the Exchanged GS Shares, shall occur on the Closing Date of the Exchange. 6. Administration of the companies Between the date hereof and the Closing Date of the Exchange, WCE BV undertakes to ensure that WCF is managed in a careful and prudent manner. Unless otherwise stipulated herein or consented to in writing by GS Euro Finance, WCF shall not conclude any undertaking nor engage in any activity outside the normal course of business and of prior normal practice, and, in particular, WCE BV shall take all measures necessary to ensure that WCF (i) does not decide to distribute or pay dividends, (ii) does not amend its by-laws, (iii) does not issue any share, option, right or other interest and security. However, WCE BV may until the date of the Closing Financial Statements decide to distribute and/or pay any WCF dividend provided that it is able to present an amount of Equity on the date of the Closing Financial Statements that is equal to or greater than FRF 4,500,000. 7. Representations and warranties WCE BV and GS Euro have agreed to an indemnification undertaking which is contained in Exhibit 4 hereto and forms an integral part hereof. WCE BV acknowledges that GS Euro Finance has relied and will rely on the said undertaking for the conclusion of this Share Exchange Agreement and the exchange of the WCF Shares for the Exchanged GS Shares, regardless of - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 9 to the Agreement page 10 the investigations that have been conducted or will be conducted concerning the facts described in such undertaking. In any event, WCE BV certifies and warrants to GS Euro Finance that on the Closing Date of the Exchange, the WCF Shares shall be freely negotiable and free of all option rights, claims, liens, guarantees, pledges, sureties, easements, charges or restrictions of any nature whatsoever and that on that same Date, GS Euro Finance shall acquire full ownership of the WCF Shares, free of all option rights, claims, liens, guarantees, pledges, sureties, easements, charges or restrictions of any nature whatsoever. WCE BV undertakes to indemnify GS Euro Finance for any adverse consequences and prejudice suffered by GS Euro Finance as a result of any violation by it of the undertaking of this paragraph. Reciprocally, and with regard to the Exchanged GS Shares, GS Euro Finance makes an undertaking in respect of WCE BV pursuant to the terms and conditions of the representations and warranties and the indemnification undertaking of the Share Purchase Agreement, which is attached as Exhibit 2 to the Agreement, and its Exhibits, as recalled in the Share Purchase Agreement. 8. Other undertakings (i) WCE BV on the one hand and GS Euro Finance on the other hand shall sign all declarations, all reports and all other documents that may be necessary or useful for the final completion of the transactions set forth herein. (ii) WCE BV guarantees the provision by WCF of all documents and information that may be reasonably requested in writing by GS Euro Finance and/or its representatives or counsel in the course of the WCF Audit in order to establish its information. GS Euro Finance and the GS Group undertake for their part to conduct the WCF Audit within a period of time compatible with its being completed by October 20, 1997. (iii) Until the Closing Date of the Exchange, WCE BV and GS Euro Finance undertake (a) not to transfer respectively the WCF Shares and the Exchanged GS Shares, (b) not to enter into discussions with any third party in connection with the sale of all or part of respectively the WCF Shares and the Exchanged GS Shares and to end any negotiation previously started for such purpose, (c) not to pledge respectively the WCF Shares and the Exchanged GS Shares or use them as collateral in any manner whatsoever, in particular by transfer to a financial instruments account pledged in favor of any person whatsoever, and (d) more generally, not to do anything that might be likely to prevent or delay the effective exchange of the WCF Shares for the Exchanged GS Shares on the Closing Date of the Exchange. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 9 to the Agreement page 11 (iv) WCE BV undertakes to obtain the resignations of the WCF directors as of the Closing Date of the Exchange and the convocation of a general shareholders' meeting of WCF to be held on the Closing Date of the Exchange with a view to appointing new directors. (v) WCE BV authorizes GS Euro Finance and the GS Group to use the corporate name and/or trade name Willis Corroon France until December 31, 1999. As from such date, WCE BV may notify GS Euro Finance and the GS Group at any time, upon giving 6 months' prior notice, of its prohibition of the use of the corporate name and/or trade name Willis Corroon France. 9. Notices All notices to a party hereunder shall be sent in writing and shall not be deemed duly sent as regards the notifying party unless within the required periods of time they are: (i) sent by registered mail with return receipt requested, with a copy sent by fax: For WCE BV: Willis Corroon Europe B.V. Marten Meesweg 51 3068 AV Rotterdam Netherlands For the attention of the Company Secretary Fax 00 31 20 661 0654 With a copy to: Willis Corroon Group Plc 10 Trinity Square London EC3P 3AX United Kingdom For the attention of: the Company Secretary Fax 00 44 171 488 88 82 and Fax 00 44 171 481 71 83 For GS Euro Finance: Gras Savoye Euro Finance 8 avenue Bel-Air 1180 Uccle - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 9 to the Agreement page 12 Belgium For the attention of Patrick Lucas With a copy to: Gras Savoye & Cie 2 rue Ancelle 92200 Neuilly sur Seine For the attention of Patrick Lucas, Emmanuel Gras and Daniel Naftalski Fax 00 33 1 41 43 69 85 With a copy to: Directeur General Adjoint Administration et Finances Gras Savoye & Cie 2 rue Ancelle 92200 Neuilly sur Seine Fax: 01 41 43 69 06 or to such other address as WCE BV or GS Euro Finance may designate by notice in accordance with this article, or (ii) hand delivered to the representative of GS Euro Finance whose name is indicated above or to the WCE BV Representative or WCE BV in exchange for a signed receipt. All notices made as indicated above shall be effective, as far as the notified party is concerned, on the date on which they are presented for the first time for delivery (in the event they are sent by registered mail with return receipt requested) or on which they are delivered (in the event of hand delivery in exchange for a signed receipt). Any notice may be validly made to or by Gras Savoye & Cie and/or Gras Savoye S.A. in the place and stead of GS Euro Finance. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EXHIBIT 1 TO THE SHARE EXCHANGE AGREEMENT SHAREHOLDERS OF WILLIS CORROON FRANCE S.A. Willis Corroon Europe B.V.: 82,200 WCF Shares (100% of the capital) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EXHIBIT 2 TO THE SHARE EXCHANGE AGREEMENT WCF QUANTIFIABLE DECIDING ELEMENTS A. WCF Quantifiable Deciding Elements to be verified by GS Euro Finance during the WCF Audit Quantifiable Deciding Element Reference Value (FRF) Estimated Net Turnover at December 31, 1997 36,000,000 B. WCF Quantifiable Deciding Elements intended to be taken into consideration by the parties or the Expert, as the case may be, in accordance with Article 2 of the Share Exchange Agreement Quantifiable Deciding Element Reference Value (FRF) Estimated Net Turnover at December 31, 1997 36,000,000 Actual Net Turnover at December 31, 1997 36,000,000 Definitions of the WCF Quantifiable Deciding Elements (attached in Exhibit 2 to the Share Purchase Agreement) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EXHIBIT 3 TO THE SHARE EXCHANGE AGREEMENT DETERMINATION OF THE WCF CASH DISTRIBUTION The parties have agreed to determine, as the case may be, the WCF Cash Distribution according to the terms and conditions set forth in Article 2 of the Share Exchange Agreement and according to the following formula. (A) Net Turnover for financial year 1997 (i) Estimated Net Turnover for financial year 1997 If subsequent to the Date of the End of the WCF Audit and prior to the Closing Date of the Exchange, the parties agree, or the Expert determines, that the Estimated Net Turnover of WCF at December 31, 1997 (as defined in Exhibit 2) will be less than FRF 34,200,000 (thirty-four million two hundred thousand French francs), a cash distribution will be equal franc for franc to 1.4 (one point four) times the difference between FRF 36,000,000 (thirty-six million French francs) and such Estimated Net Turnover for financial year 1997 on which the parties have agreed or which has been determined by the Expert (hereinafter "WCF Cash Distribution No. 1"). For example, if the Estimated Net Turnover of WCF for financial year 1997 on which the parties have agreed or which is determined by the Expert is FRF 34,000,000 (thirty-four million French francs), WCF Cash Distribution No. 1 will be in an amount equal to 1.4 (one point four) times FRF 2,000,000 (two million French francs) i.e. FRF 2,800,000 (two million eight hundred thousand French francs). Conversely, if the event described above does not take place, WCF Cash Distribution No. 1 will not be made. (ii) Actual Net Turnover for financial year 1997 If the parties have not been able to reach an agreement within 6 Business Days following the Notification in Response received from WCE BV by GS Euro Finance (as provided for in Article 2 of the Share Exchange Agreement) on the amount of the Estimated Net Turnover of WCF at December 31, 1997, and if the Expert for any reason whatsoever was unable to calculate WCF Cash Distribution No. 1 compared to the Estimated Net Turnover for financial year 1997 (as defined in Exhibit 2), a cash distribution (hereinafter "WCF Cash Distribution No. 2") will be determined as follows: If the Actual Net Turnover of WCF at December 31, 1997 is less than FRF 34,200,000 (thirty-four million two hundred thousand French francs), WCF - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 9 to the Agreement page 16 Cash Distribution No. 2 will be equal franc for franc to 1.4 (one point four) times the difference between FRF 36,000,000 (thirty-six million French francs) and the Actual Net Turnover at December 31, 1997. For example, if the Actual Net Turnover at December 31, 1997 is equal to FRF 34,000,000 (thirty-four million French francs), WCF Cash Distribution No. 2 will be in an amount of 1.4 (one point four) times FRF 2,000,000 (two million French francs), i.e. FRF 2,800,000 (two million eight hundred thousand French francs). Conversely, if the event described above does not take place, WCF Cash Distribution No. 2 will not be made. (B) WCF Cash Distribution The WCF Cash Distribution shall be equal, as the case may be, to WCF Cash Distribution No. 1 or WCF Cash Distribution No. 2. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EXHIBIT 4 TO THE SHARE EXCHANGE AGREEMENT INDEMNIFICATION UNDERTAKING - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EXHIBIT 5 TO THE SHARE EXCHANGE AGREEMENT WAIVER OF A RETURN TO BETTER FORTUNE [On Willis Corroon Europe BV letterhead] [date] Willis Corroon France S.A. 18, boulevard Malesherbes 75008 Paris Gentlemen, We hereby inform you of our irrevocable waiver of the return to better fortune clause provided for in the agreement dated December 21, 1996 signed between Willis Faber Europe BV, henceforth called Willis Corroon Europe B.V., and Willis Corroon France S.A., providing for a forgiveness of debt in the amount of FRF 24,600,000. Very truly yours, - ------------------------------------- Willis Corroon Europe B.V. - -------------------------------------------------------------------------------- Amendment No. 1 page 1 Translation from French - 15/12/97 - waf AMENDMENT NO. 1 TO THE AGREEMENT DATED JULY 23, 1997 BETWEEN THE UNDERSIGNED: 1. ASSURANCES GENERALES DE FRANCE IART, a French law company having its registered office at 87 rue de Richelieu, 75002 Paris, registered with the Paris Commercial and Companies Registry under No. B 542 110 291, represented by Mrs. Francoise Labbe, specially empowered for the purposes hereof, hereinafter "AGF", 2. UAP - INCENDIE - ACCIDENTS, a French law company having its registered office at 9, Place Vendome, 75001 Paris, registered with the Paris Commercial and Companies Registry under No. B 777 349 192, represented by Mr. Adrien Cadieux, specially empowered for the purposes hereof, hereinafter "UAP", 3. PFA TIARD, a French law company having its registered office at 1 cours Michelet, La Defense 10, 92800 Puteaux, registered with the Nanterre Commercial and Companies Registry under No. B 328 597 738, represented by Mr. Francois Thomazeau specially empowered for the purposes hereof, substituting itself for Athena, hereinafter "PFA", 4. GRAS SAVOYE EURO FINANCE S.A., a Belgian law company having its registered office at 8 avenue Bel-Air, 1180 Uccle, Belgium, registered with the Brussels Commercial Registry under No. 258.054, represented by Mr. Patrick Lucas in his capacity as President, fully empowered for the purposes hereof, hereinafter "GS Euro Finance", Amendment No. 1 page 2 5. Mr. Emmanuel Gras, residing at 3, rue Parmentier, 59370 Mons-en-Baroeul, in his capacity as a shareholder and general partner of Gras Savoye & Cie, 6. Mr. Patrick Lucas, residing at 1 avenue Emile Acollas, 75007 Paris, in his capacity as a shareholder and general partner of Gras Savoye & Cie, 7. Mr. Daniel Naftalski, residing at 2, rue des Beaux-Arts, 75006 Paris, in his capacity as a shareholder and general partner of Gras Savoye & Cie, 8. All of the shareholders of Gras Savoye & Cie listed in Exhibit 1 to this Amendment No. 1, who will agree to abide by the Initial Agreement and this Amendment No. 1 by ratification. AND: 9. WILLIS CORROON GROUP plc, an English law company whose registered office is at Ten Trinity Square, London EC3P 3AX, United Kingdom, registered with the England and Wales Companies Registration Office under No. 621757, represented by Mr. John Percy Maxwell Taylor acting as a director, fully empowered for the purposes hereof, hereinafter "WCG", 10. WILLIS CORROON EUROPE B.V., a Netherlands law company whose registered office is at Marten Meesweg 51, 3068 AV Rotterdam, Netherlands, registered with the Rotterdam Commercial Registry under No. 135.835, represented by Mrs. Sarah Turvill, acting as a director, fully empowered for the purposes hereof, hereinafter "WCE BV", 11. WILLIS CORROON B.V., a Netherlands law company whose registered office is at Marten Meesweg 51, 3068 AV Rotterdam, Netherlands, registered with the Amsterdam Commercial Registry under No. 239.060, represented by Mrs. Sarah Turvill, acting as a director, fully empowered for the purposes hereof, Amendment No. 1 page 3 hereinafter "WC BV", AND: 12. Gras Savoye & Cie, a societe en commandite par actions, with a capital of FRF 9,952,000 divided into 49,760 shares of FRF 200 each (hereinafter the "Shares"), having its registered office at 2, rue Ancelle, 92200 Neuilly-sur-Seine, registered with the Nanterre Commercial and Companies Registry under number B 457 509 867, represented by Mr. Patrick Lucas, in his capacity as general partner gerant, fully empowered for the purposes hereof, hereinafter the "Company", WITNESSETH: The parties agreed on July 23, 1997, in an agreement (the "Agreement"), pursuant to which WCG undertook amongst others to acquire a minority shareholding in the Company from certain selling shareholders, in consideration amongst others for the simultaneous completion of an exchange of Shares held by GS Euro Finance for the entire capital stock of Willis Corroon France ("WCF") to be held by WCE BV, and the entry into force on the Closing Date of certain promises to buy and to sell Shares, which were attached to such Agreement. The Agreement was completed by an addendum dated, as regards the last signatory, October 31, 1997 (the "Addendum"). Article 4 (f) of the Share Purchase Agreement attached as Exhibit 2 to the Agreement provides that the actual completion of the acquisition of the Initial Shareholding and of all the transactions provided for in the Agreement is subject to the condition precedent of the approval of such transactions by the general meeting of WCG's shareholders. This approval is necessary because of the qualification as "Super Class 1" of all the transactions provided for in the Agreement which has been made by the London Stock Exchange on the basis of the stock market regulations applicable to WCG. Article 4 referred to above provides in addition that the general meeting of WCG's shareholders approving the Agreement must have been held no later than December 15, 1997 and that all the conditions precedent stipulated in Article 4 of the Share Purchase Agreement must have been fulfilled at the latest by such date, failing which the Share Purchase Agreement, and as a consequence the Agreement, would lapse automatically without any indemnity on either side. Amendment No. 1 page 4 Article 6 of the Agreement and Article 3 of the Share Purchase Agreement provide that the Closing Date may not occur after December 31, 1997, unless contractually postponed. The parties have been informed and take note that WCG is not in a position to prepare all the documentation required by law and by the stock market regulations applicable to WCG, to be submitted to its shareholders for the general meeting, within a period of time which is compatible with the holding of such general meeting by December 15, 1997 at the latest. The purpose of this Amendment No. 1 is to amend several provisions of the Agreement and, in particular, to bring about the waiver by WCG of the condition precedent stipulated in its exclusive favor in Article 4 (f) of the Share Purchase Agreement, in consideration for an exercise of the promises to buy and to sell contained respectively in Exhibits 3, 3bis, 3ter, 4 and 5 of the Agreement, in a manner which is compatible at all times with the respect of the law and the stock market regulations applicable to WCG. NOW, THEREFORE, IT HAS BEEN AGREED AS FOLLOWS: DEFINITIONS The terms and expressions having an initial capital letter which are not defined herein shall keep the meaning ascribed to them in the Agreement. The terms and expressions set out below shall have the meanings set opposite them: "Notice of Attainment" shall mean the notice sent by WCG according to the conditions and in the form of the Article "Notices" of each of the promises contained in Exhibits 3, 3bis, 3ter, 4 and 5 of the Agreement concerning the attainment of the Threshold, as defined. "Initial Agreement" shall mean the Agreement to which the parties expressed their agreement on July 23, 1997, including the Addendum. "Amended Agreement" shall mean the Agreement, as amended by this Amendment No. 1. "Threshold" shall mean the threshold, such as WCG undertakes to indicate to the Company in the event of attainment of the Threshold, defined by the law and the stock market regulations applicable to WCG (whatever Amendment No. 1 page 5 the exact name of this threshold may be pursuant to such law and regulations), as such law and regulations exist on this day (rules applicable to Super Class 1 transactions referred to in Chapter 10 of the Listing Rules of the London Stock Exchange) and may exist in the future, above which any transaction of the acquisition, sale type, etc., of a certain magnitude requires for its validity, amongst others, a prior approval of the general meeting of WCG's shareholders convened for this purpose. ARTICLE 1 - AGREEMENT (i) Article 8 of the Initial Agreement is deleted and replaced by the following text: "This Agreement is entered into for a term of 15 (fifteen) years". (ii) Article 9 (xi) of the Initial Agreement is deleted. (iii) Article 9 (xii) of the Initial Agreement is deleted and replaced by the following text: "In the event of a sale of Shares to a party which is foreign to the Amended Agreement, the registration of this new shareholder as an owner of the Company's shares shall be conditional upon such shareholder's prior unrestricted and unconditional written agreement to abide by the Amended Agreement, as amended as the case may be". (iv) Exhibit 1 to the Initial Agreement is replaced by Exhibit 1 hereto. (v) The parties agree that PFA is substituted for Athena in the exercise of all the rights and obligations of Athena pursuant to the Amended Agreement. PFA ratifies all of the undertakings made by Athena pursuant to the Initial Agreement. (vi) In Article 4 (xi) of the Initial Agreement, the following paragraph is added: "In the event that, after approval by the extraordinary general meeting of the shareholders, a stock option plan is set up which calls up a promise by WCG to repurchase all or part of the shares obtained from the exercise of the options, the general partner gerants undertake to use their best efforts so that the Company or any other third party may be Amendment No. 1 page 6 substituted for WCG, subject to the provisions of the law and the regulations, in its obligations under the promise. In any event, WCG's financial effort as a consequence of this stock option plan shall be proportional to its holding in the Company's capital. Patrick Lucas and Emmanuel Gras may not benefit from this stock option plan". ARTICLE 2 - SHARE PURCHASE AGREEMENT (i) The Price per Share is fixed at FRF 30,017. It shall be paid in the amount of FRF 20,011 per Share on the Closing Date and in the amount of FRF 10,006 per Share by means of promissory notes with a July 1, 1998 maturity date, without any other amendment to the terms and conditions of Article 2 (C) of the Share Purchase Agreement. (ii) The Closing Date shall occur by December 31, 1997 at the latest, unless contractually postponed. However, if for any reason whatsoever the actual completion of all of the transactions provided for in the Amended Agreement does not take place on such date in accordance with its terms, the parties agree that the Closing Date shall automatically be put back to January 30, 1998 at the latest. (iii) Article 3 (b) of the Share Purchase Agreement is replaced by the following text: "delivery to the Buyer by each of the Company's shareholders existing on the Closing Date (not already signatories of Amendment No. 1) of a document constituting ratification of the Amended Agreement, in the form of Exhibit 2 to Amendment No. 1, amending Exhibit 10 to the Initial Agreement". (iv) By reason of the entry into force of Article 3 below, WCG waives the conditions precedent stipulated in its exclusive favor contained in Article 4 (e) and (f) of the Share Purchase Agreement. The parties acknowledge that the condition precedent contained in Article 4 (d) of the Share Purchase Agreement has been fulfilled. (v) The conditions precedent contained in Article 4 (a), (b) and (c) of the Share Purchase Agreement are stipulated in favor of all the parties to the Amended Agreement. The paragraph of Article 4 of the Share Purchase Agreement drafted as follows: "The conditions precedent referred to in (a), (b), (c), (e) and (f) above shall be accomplished by December 15, 1997", is deleted. Amendment No. 1 page 7 A new condition precedent is stipulated in Article 4 of the Share Purchase Agreement in favor of all the parties, as follows: "ratification of the Amended Agreement (i.e., both the Initial Agreement and Amendment No. 1) by all of the Company's shareholders (not already signatories of this Amended Agreement) existing on the Closing Date". The last paragraph of Article 4 of the Share Purchase Agreement is replaced by the following text: "In the event that at least one of the above conditions precedent (resulting from the Amended Agreement) is not fulfilled at the latest by January 30, 1998, unless contractually postponed, this transfer shall be considered to have automatically lapsed and shall not give rise to any indemnity on either side". ARTICLE 3 - PROMISES TO BUY AND TO SELL (i) The parties agree that the obligation of WCG, or any company of the WCG Group substituted for it, to buy or sell the Shares pursuant to the Promises to Buy and to Sell contained respectively in Exhibits 3, 3bis, 3ter, 4 and 5 of the Amended Agreement, is subject to the condition precedent of the approval of the general meeting of WCG's shareholders in the case of the attainment of the Threshold, according to the following conditions. If the exercise by one or more of their beneficiaries of one or more Promises to Buy or to Sell contained respectively in Exhibits 3, 3bis, 3ter and 5 of the Amended Agreement results in the attainment of the Threshold, WCG undertakes to send a Notice of Attainment to the beneficiary or beneficiaries having exercised their option and to the Corporate Beneficiaries within 10 Business Days following the date on which it was notified of the exercise of the option or options in question, according to the conditions and in the form of the Article "Notices" of the promise or promises concerned. If the exercise by WCG, or any company of the WCG Group substituted for it, of Promise to Sell No. 1 contained in Exhibit 4 to the Amended Agreement results in the attainment of the Threshold, WCG undertakes to inform the Company and the Corporate Beneficiaries thereof at the time when the option is exercised or once WCG becomes aware of the attainment of the Threshold, if later than the date on which the option is exercised. Amendment No. 1 page 8 If the Threshold is attained, WCG undertakes to hold, within 3 months following (a) the Notice of Attainment (for the exercise of the Promises to Buy or to Sell contained respectively in Exhibits 3, 3bis, 3ter and 5 of the Amended Agreement), or (b) its becoming aware of the attainment of the Threshold (for the exercise of Promise to Sell No. 1 contained in Exhibit 4 to the Amended Agreement), a general meeting of its shareholders called to approve the obligation of WCG, or any company of the WCG Group substituted for it, to acquire or sell the Shares under the exercise of the option or options in question. In these cases, and as an essential condition of the holding of the general meeting of WCG's shareholders within the above 3-month period, the Company and the general partners undertake to collaborate fully with WCG and its counsel and to provide all information and documents reasonably necessary for the preparation of the documentation to be submitted to WCG's shareholders for such general meeting. The Company and the general partners shall use their best efforts to ensure that WCG and/or its counsel through any third party, and particularly any statutory auditor, shall have free access to any documents or information reasonably requested by WCG and/or its counsel for the preparation of the documentation mentioned above. If in the case of the attainment of the Threshold any other formality or action required by the law or the stock market regulations applicable to WCG were to prove necessary to achieve the actual completion of the transactions provided for in the Promises to Buy and to Sell contained in Exhibits 3, 3bis, 3ter, 4 and 5 of the Amended Agreement, the parties undertake to collaborate in good faith to accomplish such formalities as promptly as possible so as to ensure the actual completion of the transactions provided for in the Promises to Buy and to Sell contained in Exhibits 3, 3bis, 3ter, 4 and 5 of the Amended Agreement, in compliance with the law or the regulations mentioned above. If in the case of the attainment of the Threshold the general meeting of WCG's shareholders refused the actual completion of the transactions following the exercise of one or more of the options to buy and to sell contained in Exhibits 3, 3bis, 3ter, 4 and 5 of the Amended Agreement, such Promises to Buy or to Sell would nevertheless continue to be valid and exercisable in accordance with their terms, subject to the Threshold not being attained. WCG represents that the transactions provided for in the Promises to Buy and to Sell, as amended by this Amendment No. 1, contained in Exhibits 3, 3bis, 3ter, 4 and 5 of the Amended Agreement, have been approved by its Board of Directors which, subject to the respect at all times of its duties and obligations (both individual and collective) towards WCG and its shareholders, has undertaken to use its best efforts so that Amendment No. 1 page 9 the general meeting of WCG's shareholders approves the purchase or the sale of Shares resulting from the exercise of one or more options in the event of the attainment of the Threshold. (ii) The parties specify that the obligation of WCG, or of any company of the WCG Group substituted for it, to acquire Shares pursuant to the Promises to Buy contained respectively in Exhibits 3, 3bis and 3ter of the Amended Agreement shall terminate in the event of the exercise, even partial, of the Option resulting from Promise to Sell No. 2 contained in Exhibit 5 to the Amended Agreement, subject to the Promisor's respecting its undertakings for the exercise, even partial, of such Option resulting from such Promise to Sell No. 2. The Beneficiaries of Promise to Sell No. 2 contained in Exhibit 5 to the Amended Agreement undertake in respect of the Beneficiaries of the Promises to Buy contained in Exhibit 3, 3bis and 3ter of the Agreement (hereinafter the "Promises to Buy") not to exercise such Promise to Sell No. 2 without having first substituted themselves for WCG in the Promises to Buy or without having obtained from the one or those substituted for them pursuant to Promise to Sell No. 2 that it or they shall substitute themselves for WCG in the Promises to Buy (the Beneficiaries of Promise to Sell No. 2 and, as the case may be, the one or those substituted for them are hereinafter referred to as the "Buyer"). In consideration for this prohibition, the Beneficiaries of the Promises to Buy undertake, at the first demand of the Beneficiaries of Promise to Sell No. 2, such demand occurring between January 1, 2001 and December 31, 2005, to exercise the option to sell available to them pursuant to their Promises to Buy and accordingly to sell to the Buyer, according to the conditions set forth in the Promises to Buy, a number of Shares allowing it to attain 50.1% of the capital of the Company. The number of Shares to be sold to the Buyer shall be broken down between the Beneficiaries of the Promises to Buy, in proportion to their respective shareholdings in the Company, unless another breakdown is agreed between some of such Beneficiaries. (iii) The second sentence of Article 3 (b) of the Promise to Buy contained in Exhibit 3 to the Initial Agreement is replaced by the following text: "More generally, the Option shall be extended to all securities or all equity interests issued by the Company until the date on which the Option is exercised and which have been acquired by any and all means by the Beneficiaries between the date hereof and the date on which the Option is exercised". The second sentence of Article 3 (b) of Promise to Sell No. 1 contained in Exhibit 4 of the Initial Agreement is replaced by the following text: Amendment No. 1 page 10 "More generally, the Option shall be extended to all securities or all equity interests issued by the Company until the date on which the Option is exercised and which have been acquired by any and all means by the Promisors between the date hereof and the date on which the Option is exercised". (iv) In Article 3 (e) of the Promise to Buy contained in Exhibit 3 of the Initial Agreement, the figure of "0.26%", as the minimum shareholding of the Company to be held by Mr. Daniel Naftalski, is replaced by "0.20%". (v) In Article 4 of the Promise to Buy contained in Exhibit 3 to the Initial Agreement and in Article 3 of the Promises to Buy contained in Exhibits 3bis and 3ter to the Initial Agreement, the initial term of twelve (12) years as from the Closing Date is replaced by a term of fourteen (14) years as from the Closing Date. (vi) The term "Affiliated Company" replaces the term "Company" in the first sentence of Article 4 (a) (i) of Promise to Sell No. 2 contained in Exhibit 5 to the Initial Agreement. (vii) Article 7 of the Promise to Buy contained in Exhibit 3 to the Initial Agreement is replaced by the following text: "The price per Share to be paid under the present Option (hereinafter the "Transfer Price") shall be: (a) with regard to any transfer resulting from an exercise of the Option which is notified before January 1, 2001: FRF 30,017, (b) with regard to any transfer resulting from an exercise of the Option which is notified after January 1, 2001 and before January 1, 2006, the greater of the two following amounts: (i) FRF 30,017, reduced, if necessary, in the event of the occurrence of an Exceptional Event, by an amount of FRF 5,030 per Share (i.e., 234,600,000/46,640), and (ii) the price calculated between April 15 and April 30 of each year and, for the first time, between April 15 and April 30, 2000, according to the formula provided for in Exhibit D to Exhibit 3 to the Agreement, it being understood that this price shall be applicable to any transfer of Shares under the present Option until the establishment of the price which is based on the accounts of the following year and is calculated according to the same formula and in the same time period, Amendment No. 1 page 11 (c) with regard to any transfer resulting from an exercise of the Option which is notified after January 1, 2006, the price calculated between April 15 and April 30 of each year according to the formula provided for in Exhibit D to Exhibit 3 to the Agreement, it being understood that this price shall be applicable to any transfer of Shares under the present Option until the establishment of the price which is based upon the accounts of the following year and is calculated according to the same formula and in the same time period. The Transfer Price of the Shares for which the Option has been exercised will be payable in cash, within forty-five (45) calendar days of the date of Notification No. 1, by bank check denominated in French francs, against delivery by the Representative (as defined in Article 9) to the transferee of the Shares of the corresponding duly signed share transfer order(s) in favor of the transferee of the Shares, subject to the Beneficiaries' respecting their undertakings hereunder and the obtaining of any government or administrative authorization which may be necessary. However, if, due to the exercise of this Option or of the Options deriving from Exhibits 3bis and 3ter to the Agreement, the Promisor has to pay over a 12-month period an aggregate amount which is greater than one hundred and fifty million francs, the transfer price of the Shares under this Option and the Options deriving from Exhibits 3bis and 3ter mentioned above shall be payable in cash within ninety (90) calendar days of the date of Notification No. 1, according to the same conditions as those indicated above. In the event that the transfer of the Shares pursuant hereto is subject to the obtaining of any government or administrative authorization, the Promisor and the Beneficiaries shall mutually provide all assistance, exchange all information, sign all documents and, more generally, do all that is necessary or useful so that the competent authority may rapidly decide upon the contemplated transaction". (viii) The definition of the "Indemnification Undertaking" contained in Article 1 of the Promises to Buy contained in Exhibits 3bis and 3ter of the Initial Agreement is deleted and replaced by the following definition: "Exceptional Event shall mean any event whose origin is prior to the Closing Date and whose existence was unknown on the Closing Date, the effect of which, between the Closing Date and the three (3) years following the Closing Date, is to reduce the Consolidated Equity by FRF 234,600,000". (ix) Article 6 of the Promise to Buy contained in Exhibit 3bis to the Initial Agreement is replaced by the following text: Amendment No. 1 page 12 "The price per Share to be paid under the present Option (hereinafter, the "Transfer Price") shall be: (a) with regard to any transfer resulting from an exercise of the Option which is notified before January 1, 2001: FRF 30,017, reduced, if necessary, in the event of the occurrence of an Exceptional Event, by an amount of FRF 5,030 per Share (i.e., 234,600,000/46,640), (b) with regard to any transfer resulting from an exercise of the Option which is notified after January 1, 2001 and before January 1, 2006, the greater of the two following amounts: (i) FRF 30,017, reduced, if necessary, in the event of the occurrence of an Exceptional Event, by an amount of FRF 5,030 per Share (i.e., 234,600,000/46,640), and (ii) the price calculated between April 15 and April 30 of each year and, for the first time, between April 15 and April 30, 2000, according to the formula provided for in Exhibit D to Exhibit 3 to the Agreement, it being understood that this price shall be applicable to any transfer of Shares under the present Option until the establishment of the price which is based on the accounts of the following year and is calculated according to the same formula and in the same time period, (c) with regard to any transfer resulting from an exercise of the Option which is notified after January 1, 2006, the price calculated between April 15 and April 30 of each year according to the formula provided for in Exhibit D to Exhibit 3 to the Agreement, it being understood that this price shall be applicable to any transfer of Shares under the present Option until the establishment of the price which is based upon the accounts of the following year and is calculated according to the same formula and in the same time period. The Transfer Price of the Shares for which the Option has been exercised will be payable in cash, within forty-five (45) calendar days of the date of Notification No. 1, by bank check denominated in French francs, against delivery by PFA to the transferee of the Shares of the corresponding duly signed share transfer order(s) in favor of the transferee of the Shares, subject to PFA's respecting its undertakings hereunder and the obtaining of any government or administrative authorization which may be necessary. However, if, due to the exercise of this Option or of the Options deriving from Exhibits 3 and 3ter to the Agreement, the Promisor has to pay over a 12-month period an Amendment No. 1 page 13 aggregate amount which is greater than one hundred and fifty million francs, the transfer price of the Shares under this Option and the Options deriving from Exhibits 3 and 3ter mentioned above shall be payable in cash within ninety (90) calendar days of the date of Notification No. 1, according to the same conditions as those indicated above. In the event that the transfer of the Shares pursuant hereto is subject to the obtaining of any government or administrative authorization, the Promisor and PFA shall mutually provide all assistance, exchange all information, sign all documents and, more generally, do all that is necessary or useful so that the competent authority may rapidly decide upon the contemplated transaction". (x) Article 6 of the Promise to Buy contained in Exhibit 3ter to the Initial Agreement is replaced by the following text: "The price per Share to be paid under the present Option (hereinafter, the "Transfer Price") shall be: (a) with regard to any transfer resulting from an exercise of the Option which is notified before January 1, 2001: FRF 30,017, reduced, if necessary, in the event of the occurrence of an Exceptional Event, by an amount of FRF 5,030 per Share (i.e., 234,600,000/46,640), (b) with regard to any transfer resulting from an exercise of the Option which is notified after January 1, 2001 and before January 1, 2006, the greater of the two following amounts: (i) FRF 30,017, reduced, if necessary, in the event of the occurrence of an Exceptional Event, by an amount of FRF 5,030 per Share (i.e., 234,600,000/46,640), and (ii) the price calculated between April 15 and April 30 of each year and, for the first time, between April 15 and April 30, 2000, according to the formula provided for in Exhibit D to Exhibit 3 to the Agreement, it being understood that this price shall be applicable to any transfer of Shares under the present Option until the establishment of the price which is based on the accounts of the following year and is calculated according to the same formula and in the same time period, (c) with regard to any transfer resulting from an exercise of the Option which is notified after January 1, 2006, the price calculated between April 15 and April 30 of each year according to the Amendment No. 1 page 14 formula provided for in Exhibit D to Exhibit 3 to the Agreement, it being understood that this price shall be applicable to any transfer of Shares under the present Option until the establishment of the price which is based upon the accounts of the following year and is calculated according to the same formula and in the same time period. The Transfer Price of the Shares for which the Option has been exercised will be payable in cash, within forty-five (45) calendar days of the date of Notification No. 1, by bank check denominated in French francs, against delivery by UAP to the transferee of the Shares of the corresponding duly signed share transfer order(s) in favor of the transferee of the Shares, subject to UAP's respecting its undertakings hereunder and the obtaining of any government or administrative authorization which may be necessary. However, if, due to the exercise of this Option or of the Options deriving from Exhibits 3 and 3bis to the Agreement, the Promisor has to pay over a 12-month period an aggregate amount which is greater than one hundred and fifty million francs, the transfer price of the Shares under this Option and the Options deriving from Exhibits 3 and 3bis mentioned above shall be payable in cash within ninety (90) calendar days of the date of Notification No. 1, according to the same conditions as those indicated above. In the event that the transfer of the Shares pursuant hereto is subject to the obtaining of any government or administrative authorization, the Promisor and UAP shall mutually provide all assistance, exchange all information, sign all documents and, more generally, do all that is necessary or useful so that the competent authority may rapidly decide upon the contemplated transaction". (xi) In the third paragraph of Article 7 of Promise to Sell No. 1 contained in Exhibit 4 to the Amended Agreement, the priority ranking currently defined is replaced by the following priority ranking: "Shares held by (i) the Corporate Promisors which might wish to sell their shares by notifying the Beneficiary within 10 Business Days following the date on which the Option is exercised by the Beneficiary, (ii) the general partner of the Company having the capacity of President of the defaulting Subsidiary, if required, (iii) then the other general partners of the Company in proportion to their respective shareholdings in the Company, and (iv) finally, all the other Promisors in proportion to their respective shareholdings in the Company". (xii) Article 8 of Promise to Sell No. 1 contained in Exhibit 4 to the Initial Agreement is replaced by the following text: "The price per Share to be paid under the present Option (hereinafter, Amendment No. 1 page 15 the "Transfer Price") shall be: (a) with regard to any transfer resulting from an exercise of the Option which is notified before January 1, 2001: FRF 30,017, reduced, if necessary, with regard to the Corporate Promisors, and in the event of the occurrence of an Exceptional Event, by an amount of FRF 5,030 per Share (i.e., 234,600,000/46,640), (b) with regard to any transfer resulting from an exercise of the Option which is notified after January 1, 2001 and before January 1, 2006, the greater of the two following amounts: (i) FRF 30,017, reduced, if necessary, with regard to all of the Individual or Corporate Promisors, and in the event of the occurrence of an Exceptional Event, by an amount of FRF 5,030 per Share (i.e., 234,600,000/46,640), and (ii) the price calculated between April 15 and April 30 of each year and, for the first time, between April 15 and April 30, 2000, according to the formula indicated in Exhibit D to Exhibit 3 to the Agreement, it being understood that this price shall be applicable to all transfers of Shares under the present Option until the establishment of the price which is based upon the accounts of the following year and is calculated according to the same formula and in the same time period, (c) with regard to any transfer resulting from an exercise of the Option which is notified after January 1, 2006, the price calculated between April 15 and April 30 of each year according to the formula provided for in Exhibit D to Exhibit 3 to the Agreement, it being understood that this price shall be applicable to all transfers of Shares under the present Option until the establishment of the price which is based upon the accounts of the following year and is calculated according to the same formula and in the same time period. The Transfer Price of the Shares for which the Option has been exercised will be payable in cash, within forty-five (45) calendar days of the date of Notification No. 1, by bank check denominated in French francs, against delivery by the Representative (as defined in Article 10) to WCG or to any other company of the WCG Group of the corresponding duly signed share transfer order(s) in favor of WCG or any other company of the WCG Group, subject to the Beneficiary's respecting its obligations hereunder and the obtaining of all government or administrative authorizations which may be necessary. Amendment No. 1 page 16 In the event that the transfer of the Shares provided for herein is subject to the obtaining of any government or administrative authorization, the Promisors and the Beneficiary shall mutually provide all assistance, exchange all information, sign all documents and, more generally, do all that is necessary or useful so that the competent authority may rapidly decide upon the contemplated transaction". (xiii) Article 5 of Promise to Sell No. 2 contained in Exhibit 5 to the Initial Agreement is replaced by the following text: "The price per Share to be paid under the present Option (hereinafter, the "Transfer Price") shall be: (a) with regard to the transfer resulting from any exercise of the Option which is notified before January 1, 2001, determined according to the following formula: A - B - C --------- D A being the total price paid (in view as the case may be of the impact of the Exceptional Event) by the Promisor for all the Shares acquired by it from the Closing Date inclusive until the date on which the Option is exercised. B being any amount which might be received by the Promisor from AGF and GS Euro Finance or those substituted for them under the Indemnification Undertaking. C being the price received by the Promisor for all the Shares sold by it in performance of this Promise to Sell No. 2 prior to the exercise of the Option concerned (it being specified that C shall equal 0 in the event of the purchase in a single transaction of all the Shares held by the Promisor). D being the number of Shares held by the Promisor on the day on which the Option is exercised. (b) with regard to the transfer resulting from any exercise of the Option which is notified after January 1, 2001 and before January 1, 2006, the greater of the two following amounts: (i) the Price per Share determined pursuant to the formula referred to in (a) above; (ii) the Price per Share calculated between April 15 and April 30 of each year and, for the first time, between April 15 and Amendment No. 1 page 17 April 30, 2000, according to the formula provided for in Exhibit D to the Promise to Buy in Exhibit 3 to the Agreement, it being understood that this price shall be applicable to the transfer of the Shares under the present Option until the establishment of the price which is based upon the accounts of the following year and is calculated according to the same formula and in the same time period, (c) with regard to the transfer resulting from any exercise of the Option which is notified after January 1, 2006, the price calculated between April 15 and April 30 of each year according to the formula provided for in Exhibit D to the Promise to Buy contained in Exhibit 3 to the Agreement, it being understood that this price shall be applicable to the transfer of the Shares under the present Option until the establishment of the price which is based upon the accounts of the following year and is calculated according to the same formula and in the same time period. The Transfer Price of the Shares for which the Option has been exercised will be payable in cash, (a) within six (6) months, at the latest, following the date of the effective completion of the operation resulting in the Change of Control of WCG or of any Affiliated Company (following the first Notification No. 2), or (b) within the four (4) months, at the latest, following the date of any Notification No. 2 (other than the first) or Notification No. 3 (as defined in this promise as amended by Amendment No. 1), by bank check denominated in French francs, in return for delivery by the Promisor to the Representative (as defined in Article 6) of the corresponding duly signed share transfer order(s) in favor of the Beneficiaries, subject to the obtaining of all government or administrative authorizations which may be necessary. In the event that the transfer of the Shares provided for herein is subject to the obtaining of any government or administrative authorization, the Promisor and the Beneficiaries shall mutually provide all assistance, exchange all information, sign all documents and, more generally, do all that is necessary or useful so that the competent authority may rapidly decide upon the contemplated transaction". (xiv) The first sentence of the Article entitled "Period of exercise of the Option" of the Promises to Buy contained in Exhibits 3, 3bis and 3ter of the Initial Agreement is deleted and replaced by the following text: "The Option may not be exercised before January 1, 2001 (hereinafter the "Exemption Period")". (xv) A new paragraph is added to Article 8 of the Promise to Buy contained in Amendment No. 1 page 18 Exhibit 3 to the Initial Agreement, drafted as follows: "The same shall apply in the case of a death or a donation between the date of the Amended Agreement and the Closing Date". (xvi) WCE BV, substituted for WCG under the Share Purchase Agreement, undertakes to comply with the terms of Promise to Sell No. 2 contained in Exhibit 5 to the Amended Agreement. (xvii) Exhibit A to the Promise to Buy contained in Exhibit 3 to the Initial Agreement is replaced by Exhibit 3 to this Amendment No. 1. (xviii) Exhibit A to Promise to Sell No. 1 contained in Exhibit 4 to the Initial Agreement is replaced by Exhibit 4 to this Amendment No. 1. (xix) The last sentence in the second to last paragraph of Article 4 (b) (ii) of Promise to Sell No. 2 contained in Exhibit 5 to the Agreement, drafted as follows: " In any event, the Option may only be exercised once", is deleted. The last paragraph of Article 4 (b) (ii) of Promise to Sell No. 2, contained in the Initial Agreement is amended as follows: "The exercise of the Option, on one or more occasions, shall cover in fine all of the Shares held by the company or companies in which the control has changed", and is completed as follows: "The Option may be exercised on one or more occasions, within a period expiring at the earlier of the two following dates: (x) December 31, 2009 or (y) two years and three months after the actual completion of the transfer of the Shares resulting from the first Notification No. 2. If the Option is only exercised partially, and notwithstanding any contrary provision herein, the Option may be deemed exercised at any time, at WCG's option, for all of the remaining shares, at the end of a twelve-month period following the actual completion of the transfer of the Shares resulting from the first Notification No. 2, during a period of twelve months following the partial exercise of the Option resulting from the first Notification No. 2 (hereinafter the "WCG Option). In this case, WCG shall notify the Beneficiaries of Promise to Sell No. 2, according to the conditions and in the form of Article 8 (hereinafter "Notification No. 3"). The terms and conditions of the actual completion of the transfer of the Shares following the exercise of the WCG Option by WCG by reason of a Notification No. 3 shall be identical, mutatis mutandis, to those resulting from the exercise of the Option following a Amendment No. 1 page 19 Notification No. 2. However, if the actual completion of the transfer of the Shares following the sending of Notification No. 3 by WCG does not occur within the time agreed due solely to WCG (hereinafter the "Failure to Close"), the period of two years and three months provided in (y) above shall be automatically extended in the sole favor of the Beneficiaries and shall apply as from the date of the Failure to Close, without the application of the December 31, 2009 deadline provided for in (x) above. ARTICLE 4 - AMENDMENTS TO THE BY-LAWS Exhibit 6 to the Initial Agreement is replaced by Exhibit 5 to this Amendment No. 1. The Company undertakes to convene an extraordinary general meeting of its shareholders before the Closing Date in order to approve Exhibit 6, as amended, to the Amended Agreement, with the agreement of all the general partners, such amended by-laws to enter into force no later than on the Closing Date. ARTICLE 5 - SHARE EXCHANGE AGREEMENT (i) The parties agree that WCE BV shall be substituted for WC BV under the Share Exchange Agreement and more generally the Initial Agreement as a whole. The parties therefore make an exception to Article 8 (iii) (a) of the Share Exchange Agreement. WC BV ratifies all of the undertakings made by WCE BV under the Initial Agreement. WC BV undertakes to respect the terms of Promise to Sell No. 2 contained in Exhibit 5 to the Amended Agreement. (ii) The parties agree that, provided that WC BV transfers all of the capital stock of WCF to GS Euro Finance on the Closing Date of the Exchange, WCE BV shall be released from any obligation, under both the Initial Agreement and the Amended Agreement, except for its obligation pursuant to Article 3 (d) of the Share Exchange Agreement and the obligations it may have to assume as the company substituted for WCG under the Share Purchase Agreement. WCG shall be the guarantor of WC BV's undertakings under the Share Exchange Agreement. (iii) The WCF Cash Distribution amounts to FRF 1,400,000 (one million four hundred thousand French francs); accordingly, Articles 3 (e) and (f) of Amendment No. 1 page 20 the Share Exchange Agreement are deleted and replaced by the following text: "(e) delivery to WCE BV of a bank check for FRF 28,588,440 (twenty-eight million five hundred and eighty-eight thousand four hundred and forty French francs); (iv) All the representations and warranties concerning the Exchanged GS Shares under the Share Exchange Agreement, that are made and given by GS Euro Finance in favor of WC BV as the company substituted for WCE BV, shall be exact as at the Closing Date of the Exchange. (v) For the purposes of Article 9 of the Share Exchange Agreement, all notices to WC BV shall be made to the following address: Willis Corroon B.V. Marten Meesweg 51, 3068 AV Rotterdam, Netherlands, For the attention of the Company Secretary Fax 00 31 20 661 06 54 With a copy to: Willis Corroon Group plc 10 Trinity Square London EC3P 3AX United Kingdom For the attention of the Company Secretary; Fax 00 44 171 488 88 82 and Fax 00 44 171 481 71 83 or by delivery by hand to the representative of WC BV or WCG, as indicated above, in return for delivery of a signed receipt. ARTICLE 6 - MISCELLANEOUS PROVISIONS (i) To the extent that the Initial Agreement is not amended hereby, its provisions shall remain in force. However, to the extent that any one of the provisions of the Initial Agreement which is contrary to this Amendment No. 1 has not been expressly amended hereby, the provision of the Initial Agreement concerned shall nevertheless be deemed to have been tacitly amended and shall be interpreted with a meaning allowing the actual completion of Amendment No. 1 page 21 the transactions provided for herein. (ii) As may be necessary, it is specified that Articles 9 (xiii) to 9 (xvi) of the Initial Agreement are expressly incorporated herein. Executed in 11 originals, For all of the signatories excluding WCG, WCE BV and WC BV, in Neuilly-sur-Seine on December 10, 1997, For WCG, WCE BV and WC BV, in London on December 11, 1997 For the shareholders: - --------------------------- --------------------------- Mr. Emmanuel Gras Mr. Patrick Lucas - --------------------------- Mr. Daniel Naftalski - --------------------------- --------------------------- Assurances Generales de France UAP Incendie - Accidents IART By Mr. Adrien Cadieux By Mrs. Francoise Labbe - --------------------------- PFA TIARD By Mr. Francois Thomazeau For the general partner gerants: - --------------------------- --------------------------- Mr. Emmanuel Gras Mr. Patrick Lucas - --------------------------- Mr. Daniel Naftalski For the Company: Amendment No. 1 page 22 - --------------------------- Gras Savoye & Cie By Mr. Patrick Lucas For GS Euro Finance: - --------------------------- Gras Savoye Euro Finance By Mr. Patrick Lucas For the Willis Corroon Group: - --------------------------- --------------------------- Willis Corroon Group Plc Willis Corroon Europe B.V. By Mr. John Percy Maxwell Taylor By Mrs. Sarah Turvill - --------------------------- Willis Corroon B.V. By Mrs. Sarah Turvill 1 TRANSLATION ADDENDUM TO THE PROTOCOL OF AGREEMENT DATED 23 JULY 1997 BETWEEN THE UNDERSIGNED: 1. ASSURANCES GENERALES DE FRANCE IART, a company incorporated under French law, domiciled at 87 rue de Richelieu, 75002 Paris, entered in the Paris Register of Commerce and Companies under no. B 542 110 291, represented by Mr Guy Lallour, acting in the capacity of DIDRE Manager, specially authorized for the purposes hereof, hereinafter called "AGF" 2. UAP - INCENDIE - ACCIDENTS, a company incorporated under French law, domiciled at 9, Place Vendome, 75001 Paris, entered in the Paris Register of Commerce and Companies under no. B 777 349 192, represented by Mr Adrien Cadieux, specially authorized for the purposes hereof, hereinafter called "UAP" 3. ATHENA, a company incorporated under French law, domiciled at 53/55 rue La Boetie, 75008 Paris, entered in the Paris Register of Commerce and Companies under no. B 304 951 833, represented by Mr Daniel Ehrmann, specially authorized for the purposes hereof, hereinafter called "ATHENA" 4. GRAS SAVOYE EURO FINANCE S.A., a company incorporated under Belgian law, domiciled at 8 avenue Bel-Air, 1180 Uccle, Belgium, entered in the Brussels Register of Commerce under no. 258,054, represented by Mr Patrick Lucas, acting in the capacity of Chairman and holding all powers for the purposes hereof, hereinafter called "GS Euro Finance" 5. Mr Emmanuel Gras, resident at 3, rue Parmentier, 59370 Mons-en-Baroeul, in the capacity of shareholder and sleeping partner of Gras Savoye & Cie., representing the shareholders named as "Gras shareholders" in Appendix 1 to the Protocol of Agreement dated 23 July 1997 6. Mr Patrick Lucas, resident at 3 avenue Emile Acollas, 75007 Paris, in the capacity of shareholder and sleeping partner of Gras Savoye & Cie., representing the shareholders named as "Lucas shareholders" in Appendix 1 to the Protocol of Agreement dated 23 July 1997 7. Mr Daniel Naftalski, resident at 2 rue des Beaux-Arts, 75006 Paris, in the capacity of shareholder and sleeping partner of Gras Savoye & Cie., representing the shareholders named as "Other shareholding natural persons" in Appendix 1 to the Protocol of Agreement dated 23 July 1997 AND: 8. WILLIS CORROON GROUP, a company incorporated under English law, domiciled at Ten Trinity Square, London EC3P 3AX, United Kingdom, entered in the Register of 2 Companies of England and Wales under no. 621757, represented by Mr John Reeve, acting in the capacity of Chairman and holding all powers for the purposes hereof, hereinafter called "WCG" 9. WILLIS CORROON EUROPE B.V., a company incorporated under Dutch law, domiciled at Marten Meesweg 51, 3068 AV Rotterdam, Netherlands, entered in the Rotterdam Register of Commerce under no. 135,835, represented by Mrs Sarah Turvill, acting in the capacity of director and holding all powers for the purposes hereof, hereinafter called "WCE BV" AND: 10. GRAS SAVOYE & CIE, a partnership limited by shares with a capital of FRF 9,952,000, divided into 49,760 shares of FRF 200 each (hereinafter called the "Shares"), domiciled at 2 rue Ancelle, 92200 Neuilly sur Seine, entered in the Nanterre Register of Commerce and Companies under no. B 457 509 867, represented by Mr Patrick Lucas, acting in the capacity of manager and sleeping partner and holding full powers for the purposes hereof, hereinafter called the "Company". SOLE ARTICLE The Parties recognize that the following appended and initialled page was omitted in error on signature of the Protocol of Agreement dated 23 July 1997. This page forms an integral part of Appendix 3 to the Share Transfer Agreement attached as Appendix 2 to this Protocol of Agreement. It is inserted between the two existing pages forming the aforesaid Appendix 3. As the Parties declared their agreement to the content of this page on 23 July 1997, this Addendum does not in any way constitute a new agreement between the Parties in relation to its object, the page appended below having to be interpreted as if it had been initialled on 23 July 1997. For the shareholders: [signed] - ------------------------------------- --------------------------------- for the Gras shareholders for the Lucas shareholders by Mr Emmanuel Gras by Mr Patrick Lucas - ------------------------------------- for the other shareholding natural persons by Mr Daniel Naftalski - ------------------------------------- --------------------------------- Assurances Generales de France IART UAP Incendie - Accidents by Mr Guy Lallour by Mr Adrien Cadieux - ------------------------------------- ATHENA by Mr Daniel Ehrmann 3 For the managers and ordinary partners: - ------------------------------------- --------------------------------- Mr Emmanuel Gras Mr Patrick Lucas - ------------------------------------- Mr Daniel Naftalski For the Company: - ------------------------------------- Gras Savoye & Cie by Mr Patrick Lucas For GS Euro Finance: - ------------------------------------- Gras Savoye Euro Finance by Mr Patrick Lucas For the Willis Corroon Group: - ------------------------------------- --------------------------------- Willis Corroon Group plc Willis Corroon Europe B.V. by Mr John Reeve by Mrs Sarah Turvill ...which the Parties agree, or determined by the Expert, divided by 46,640 (hereinafter called "Share Adjustment No. 2). For example, if the Estimated Consolidated Net Turnover for the 1997 financial year (net of acquisitions) on which the Parties agree amounts to FRF 860,000,000, Share Adjustment No. 2 shall be for an amount of 1.4 times FRF 90,000,000, i.e. FRF 126,000,000, divided by 46,640, i.e. FRF 2,702. Conversely, if the event described above does not occur, Share Adjustment No. 2 shall not take place. (ii) Actual Consolidated Net Turnover for the 1997 financial year If the Parties have not reached an agreement within a period of six Working Days following the Notification of Reply received by the Transferee from the Transferor's Representative (as provided for in Article 2 of the Share Transfer Contract) on the amount of the Estimated Consolidated Net Turnover at 31 December 1997 (net of acquisitions) (as defined in Appendix 2A), and if the Expert is unable to calculate Share Adjustment No. 2 in relation to that Estimated Consolidated Net Turnover at 31 December 1997 (net of acquisitions), the possible price adjustment per Share (hereinafter called "Share Adjustment No. 3") shall be determined as follows: If the Actual Consolidated Net Turnover at 31 December 1997 is less than FRF 950,000,000, Share Adjustment No. 3 shall be equal franc for franc to 1.4 times the difference between FRF 1,000,000,000 and the Actual Consolidated Net Turnover at 31 December 1997, divided by 46,640. For example, if the Actual Consolidated Net Turnover at 31 December is equal to FRF 900,000,000, Share Adjustment No. 3 will be for an amount of 1.4 times FRF 100,000,000, i.e. FRF 140,000,000, divided by 46,640, i.e. FRF 3,002. Conversely, if the event described above does not occur, Share Adjustment No. 3 will not take place. (C) Price per Share and Total Adjustments The price per Share (the "Price per Share") shall be equal to the Basic Price per Share less, where appropriate, Share Adjustment No. 1 and, where appropriate, Share Adjustment No. 2 or Share Adjustment No. 3. EX-2.12 13 EX. 2.12 Exhibit 2.12 The following exhibit no. 2.12 constitutes a fair and accurate English translation of the original copy of this document. /s/ Michael P. Chitty ---------------------------------------- Michael P. Chitty Company Secretary of Willis Corroon Group Limited Dated 1997 ---------------------------- WILLIS CORROON GROUP PLC - and - ACEGIANT LIMITED - and - WILLIS CORROON GROUP SERVICES LIMITED - and - WILLIS FABER & DUMAS (AGENCIES) LIMITED --------------------------------------- AGREEMENT for the sale and purchase of all of the issued shares of Willis Faber & Dumas (Agencies) Limited --------------------------------------- ASHURST MORRIS CRISP Broadwalk House 5 Appold Street London EC2A 2HA Tel: 0171-638 1111 Fax: 0171-972 7990 JNS/IDM/W84000029 DRAFT 6 CONTENTS CLAUSE PAGE 1. INTERPRETATION.......................................................... 4 2. SALE AND PURCHASE....................................................... 9 3. COMPLETION..............................................................10 4. POST COMPLETION ADJUSTMENTS.............................................12 5. WARRANTIES..............................................................14 6. INDEMNITY...............................................................18 7. PROTECTION OF GOODWILL..................................................21 8. CONFIDENTIAL INFORMATION................................................23 9. ACCESS TO RECORDS AND SERVICES ARRANGEMENTS.............................24 10. PENSIONS...............................................................24 11. ANNOUNCEMENTS..........................................................24 12. COSTS..................................................................25 13. EFFECT OF COMPLETION...................................................25 14. FURTHER ASSURANCES.....................................................25 15. ENTIRE AGREEMENT.......................................................26 16. VARIATIONS.............................................................26 17. WAIVER.................................................................27 18. INVALIDITY.............................................................27 19. SET-OFF................................................................27 20. NOTICES................................................................28 21. COUNTERPARTS...........................................................28 22. GOVERNING LAW AND JURISDICTION.........................................29 23. ASSIGNMENT.............................................................29 24. GENERAL PROVISIONS.....................................................29 SCHEDULE 1 Particulars relating to the Company........................................31 SCHEDULE 2 Profit Commission Determination............................................32 SCHEDULE 3 The Warranties.............................................................34 SCHEDULE 4 The Property...............................................................47 SCHEDULE 5 Pensions...................................................................51 SCHEDULE 6 Fixed Assets to be Acquired................................................62 SCHEDULE 7 Balance Sheet..............................................................63 SCHEDULE 8 Services...................................................................64 SCHEDULE 9 Relevant Claims............................................................65 SCHEDULE 10 Article 36.................................................................68 SCHEDULE 11 Software Licenses..........................................................69 THIS AGREEMENT is made on October 1997 BETWEEN:- (1) WILLIS CORROON GROUP PLC (No. 621757) whose registered office is at Ten Trinity Square, London, EC3P 3AX (the "Vendor"); and (2) ACEGIANT LIMITED (No. 3316542) whose registered office is at Lloyd's Building, 1 Lime Street, London EC3M 7DQ (the "Purchaser"); and (3) WILLIS CORROON GROUP SERVICES LIMITED (No. 1451456) whose registered office is at Ten Trinity Square, London, EC3P 3AX ("WCGS") (4) WILLIS FABER & DUMAS (AGENCIES) LIMITED (No. 867054) whose registered office is at Ten Trinity Square, London EC3P 3AX, (the "Company"). RECITALS (A) Details of the Company are set out in Schedule 1. (B) The Vendor is the beneficial owner and registered holder of all of the Shares other than one "A" Share of which it is the beneficial owner but which is registered in the name of Willis Faber Limited. (C) The Vendor has agreed to sell and the Purchaser has agreed to purchase all of the Shares on and subject to the terms of this Agreement. THE PARTIES AGREE AS FOLLOWS:- 1. INTERPRETATION 1.1 In this agreement the following words and expressions and abbreviations have the following meanings, unless the context otherwise requires:- "Accounts Date" means 31 December 1996; "Accounts" means the audited financial statements of the Company, comprising the balance sheet, profit and loss account and cash flow statement of the Company together with the notes thereon, directors' report and auditors' certificate as at and for the period ended on the Accounts Date; "associated company" has the meaning given to it in sections 416 et seq. TA; "Business Day" means a day (excluding Saturdays) on which banks generally are open - 4 - in London for the transaction of normal banking business; "Claim" means a claim for breach of any of the Warranties and/or a claim under the Tax Deed and/or a claim under the indemnity in clause 6; "Completion" means the completion of the sale and purchase of the Shares in accordance with clause 3; "Completion Date" means the date hereof; "Confidential Information" means all information relating to a company's business, or financial or other affairs (including future plans and targets of a company) which is not in the public domain; "Disclosure Letter" means a letter of today's date together with the attachments thereto addressed by the Vendor to the Purchaser disclosing exceptions to the Warranties; "distribution" means a distribution as defined by sections 209 to 211 (inclusive) of the TA and section 418 of the TA; "Encumbrance" means any mortgage, charge (fixed or floating), pledge, lien, hypothecation, trust, right of pre-emption, assignment by way of security, reservation of title or any other security interest of any kind however created or arising; "Heath Agreement" means the business acquisition agreement dated 14 November 1994 between the Company and Christopherson Heath Members Agency Limited; "Intellectual Property" means any and all patents, trade marks, rights in designs, get-up, trade, business or domain names, copyrights, and topography rights, (whether registered or not and any applications to register or rights to apply for registration of any of the foregoing), rights in inventions, know-how, trade secrets and all other intellectual property rights of a similar or corresponding character which may now or in the future subsist in any part of the world; "ITA" means the Inheritance Tax Act 1984; "Janson Green Agreement" means the business acquisition agreement dated 25 February 1994 between the Company and Janson Green Limited; "Lloyds" means the Society of Lloyd's incorporated by Lloyd's Act 1871 "Pre-Sale Dividend" means the dividend of (pound)2,692,055 declared and paid by the - 5 - Company on 17th October 1997; "1994 and Prior Year's Profit Commission" means the total amount of profit commission received by the Company after 30th June 1997 until 31 December 2002 in respect of the 1994 and any prior underwriting year of account less: (a) any amount of that profit commission contractually due and payable pursuant to the Janson Green Agreement and/or the Heath Agreement; and (b) an amount equal to such percentage thereof (following the deduction referred to in (a) above) as is arrived at by applying the effective rate of corporation tax applicable to the relevant financial year of the Company in respect of which corporation tax is payable in respect of such profit commission (and for payments made during a financial year if the amount deducted is different from the effective rate applicable to that year an appropriate adjustment will be made); "1995 Profit Commission" means the total amount of profit commission received by the Company until 31 December 2003 in respect of the 1995 underwriting year of account less: (a) any amount of that profit commission contractually due and payable pursuant to the Janson Green Agreement and/or the Heath Agreement; and (b) an amount equal to such percentage thereof (following the deduction referred to in (a) above) as is arrived at by applying the effective rate of corporation tax applicable to the relevant financial year of the Company in respect of which corporation tax is payable in respect of such profit commission (and for payments made during a financial year if the amount deducted is different from the effective rate applicable to that year an appropriate adjustment will be made); "1996 Profit Commission" means the total amount of profit commission received by the Company until 31 December 2004 in respect of the 1996 underwriting year of account less: - 6 - (a) any amount of that profit commission contractually due and payable pursuant to the Janson Green Agreement and/or the Heath Agreement ; and (b) an amount equal to such percentage thereof (following the deduction referred to in (a) above) as is arrived at by applying the effective rate of corporation tax applicable to the relevant financial year of the Company in respect of which corporation tax is payable in respect of such profit commission (and for payments made during a financial year if the amount deducted is different from the effective rate applicable to that year an appropriate adjustment will be made); "1997 Profit Commission" means the amount of profit commission received by the Company until 31 December 2005 in respect of the 1997 underwriting year of account less: (a) any amount of that profit commission contractually due and payable pursuant to the Janson Green Agreement and/or the Heath Agreement ; and (b) an amount equal to such percentage thereof (following the deduction referred to in (a) above) as is arrived at by applying the effective rate of corporation tax applicable to the relevant financial year of the Company in respect of which corporation tax is payable in respect of such profit commission (and for payments made during a financial year if the amount deducted is different from the effective rate applicable to that year an appropriate adjustment will be made); "Property" means the property described in schedule 4 or any part thereof; "Purchaser's Group" means the Purchaser and its subsidiary undertakings (including the Company), all of them and each of them as the context admits; "Purchaser's Solicitors" means Ashurst Morris Crisp of Broadwalk House, 5 Appold Street, London EC2A 2HA; "Related Person" means in relation to any party its holding companies and the subsidiary undertakings from time to time of it and such holding companies, all of them and each of them as the context admits; "Shares" means all of the issued shares in the capital of the Company; "TA" means the Income and Corporation Taxes Act 1988; "Tax" or "tax" has the meaning described thereto in the Tax Deed. - 7 - "Taxation Authority" has the meaning described thereto in the Tax Deed. "Tax Deed" means a deed of tax covenant in the agreed terms; "Taxation Statutes" has the meaning described thereto in the Tax Deed. "TCGA" means the Taxation of Chargeable Gains Act 1992; "TMA" means the Taxes Management Act 1970; "VATA" means the Value Added Tax Act 1994 and "VAT legislation" means VATA and all regulations and orders made thereunder; "Vendor's Group" means the Vendor and its subsidiary undertakings (excluding the Company), all of them and each of them as the context admits; "Vendor's Solicitors" means Lovell White Durrant of 65 Holborn Viaduct, London EC1A 2DY; "Warranties" means the warranties set out in schedule 3. 1.2 In this agreement unless otherwise specified, reference to:- (a) a "subsidiary undertaking" is to be construed in accordance with section 258 of the Companies Act 1985 and a "subsidiary" or "holding company" is to be construed in accordance with section 736 of that Act; (b) a document in the "agreed terms" is a reference to that document in the form approved and for the purposes of identification signed by or on behalf of each party; (c) "FA" followed by a stated year means the Finance Act of that year; (d) "includes" and "including" shall mean including without limitation; (e) a "party" means a party to this agreement and includes its permitted assignees (if any) and/or the successors in title to substantially the whole of its undertaking; (f) a "person" includes any person, individual, company, firm, corporation, government, state or agency of a state or any undertaking (whether or not having separate legal personality and irrespective of the jurisdiction in or under the law of which it was incorporated or exists); - 8 - (g) a "statute" or "statutory instrument" or "accounting standard" or any of their provisions is to be construed as a reference to that statute or statutory instrument or accounting standard or such provision as the same may have been amended or re-enacted before the date of this agreement; (h) "clauses", "paragraphs" or "schedules" are to clauses and paragraphs of and schedules to this agreement; (i) "writing" includes any methods of representing words in a legible form other than writing on an electronic or visual display screen or in other non-transitory form; (j) words denoting the singular shall include the plural and vice versa and words denoting any gender shall include all genders. 1.3 The schedules form part of the operative provisions of this agreement and references to this agreement shall, unless the context otherwise requires, include references to the schedules. 1.4 The index to and the headings and the descriptive notes in brackets relating to provisions of taxation statutes in this agreement are for information only and are to be ignored in construing the same. 1.5 Any question of whether a person is connected with another shall be determined in accordance with section 839 of the TA (except that in construing section 839 "control" has the meaning given by section 840 or section 416 of the TA so that there is control whenever section 840 or 416 requires) which shall apply in relation to this agreement as it applies in relation to the TA. 2. SALE AND PURCHASE 2.1 Upon the terms and subject to the conditions of this agreement, the Vendor as legal owner and with full title guarantee shall sell and the Purchaser shall purchase the Shares with effect from Completion free from any Encumbrance together with all accrued benefits and rights attached thereto and all dividends declared after the Accounts Date in respect of the Shares (other than the Pre-Sale Dividend). 2.2 The Vendor waives or agrees to procure the waiver of any rights or restrictions conferred upon it or any other person which may exist in relation to the transfer of the Shares under the articles of association of the Company or otherwise. 2.3 The Purchaser shall not be obliged to complete the purchase of any of the Shares unless the Vendor completes the sale of all of the Shares - 9 - simultaneously, but completion of the purchase of some Shares shall not affect the rights of the Purchaser with respect to its rights to the other Shares. 2.4 The consideration for the sale and purchase of the Shares shall be as set out in Part 1 of Schedule 2 which shall be payable in accordance with the provisions of Part 2 of Schedule 2. 2.5 At Completion WCGS as legal owner and with full title guarantee shall sell and the Company shall purchase: (i) all of the assets listed in Schedule 6; and (ii) all other assets currently used by the Company in the conduct of its business and which are located at the Property (irrespective of whether they are specifically referred to in Schedule 6) (the "Assets") with effect from Completion, free from any Encumbrance together with all accrued benefits and rights attached thereto, for a consideration of (pound)245,276.68 payable upon Completion. 2.6 The provisions of Schedule 4 Part II shall apply in relation to the Property. 3. COMPLETION 3.1 Completion shall take place at the offices of the Purchaser's Solicitors on the Completion Date. 3.2 On Completion the Vendor shall deliver to or, if the Purchaser shall so agree, make available to the Purchaser:- (a) stock transfer forms relating to all the Shares duly executed in favour of the Purchaser (or as it may direct); (b) share certificates relating to the Shares; (c) the consent of Lloyds to any transfer of Shares within the Vendor's Group prior to Completion; (d) the written resignations of the auditors of the Company containing an acknowledgement that they have no claim against the Company for compensation for loss of office, professional fees or otherwise and a statement under section 394(1) of the Companies Act 1985; (e) the common seals, certificates of incorporation and statutory books, - 10 - share certificate books and cheque books of the Company; (f) the Tax Deed duly executed by the Vendor; (g) to the extent not in the possession of the Company, all books of account and other records relating exclusively to the Company (other than those referred to in clause 6) and copies of all insurance policies in which the Company has an interest after Completion; (h) a Deed of Termination in the agreed terms between Willis Faber Limited and the Company terminating the subordinated loan agreement between them dated 12 June 1996 executed by Willis Faber Limited; (i) a signed written resolution of all of the members of the Company changing the name of the company from "Willis Faber & Dumas (Agencies) Limited" to WFDA Underwriting Limited. 3.3 The Vendor shall procure that on or before Completion:- (a) there is repaid all sums (if any) owing to the Company by any member of the Vendor's Group or by the directors of the Company or any of their connected persons up to 30th September 1997 (whether or not such sums are due for repayment); (b) there is repaid all sums (if any) owed by the Company to any member of the Vendor's Group or to the directors of the Company or any of their connected persons up to 30th September 1997 (whether or not such sums are due for repayment) and following Completion there shall be an adjustment made for amounts owing up to Completion. 3.4 Upon compliance by the Vendor with the provisions of clauses 3.2 and 3.3 the Purchaser shall:- (a) pay to the Vendor the sum of (pound)1 in cash; (b) deliver to the Vendor the written consent of Lloyd's to the transfer of the Shares to the Purchaser; and (c) deliver to the Vendor a counterpart of the Tax Deed duly executed by the Purchaser. 3.5 On Completion the Vendor shall cause a board meeting of the Company to be held at which the transfers of the Shares shall be approved for registration (subject only to the transfers being stamped at the cost of the Purchaser) the - 11 - deed of termination referred to in clause 3.2(i) shall be approved and signed on behalf of the Company and the resignation of the existing auditors of the Company shall be accepted and the appointment of Binder Hamlyn in their place shall be approved. 4. POST COMPLETION ADJUSTMENTS 4.1 In the event that on or before 20th October 1998 either:- (a) the shareholders of the Purchaser have sold or agreed to sell some or all of the shares in the Purchaser or the Purchaser has sold or agreed to sell some or all of the shares in the Company to a party other than to:- (i) a person who is a director of the Purchaser or the Company both at Completion and at the date of sale; or (ii) a company wholly owned and controlled by any such director or directors; or (iii) a wholly owned subsidiary company of the Purchaser or of any holding company of the Purchaser which is wholly owned by those who are the shareholders of the Purchaser at Completion; (and excluding any Permitted Transfer as referred to in Article 36 of the Company's proposed Articles of Association as set out in Schedule 10 or (with the prior written agreement of the Vendor) any other transfer effected by any shareholder of the Purchaser for personal tax planning purposes); or (b) the Company has sold or agreed to sell all or a material part of its business and/or assets to a party other than to:- (i) a person who is a director of the Purchaser or the Company both at Completion and at the date of sale; or (ii) a company wholly owned and controlled by any such director or directors; or (iii) the Purchaser or a wholly owned subsidiary company of the Purchaser or of any holding company of the Purchaser which is wholly owned by those who are the shareholders of the Purchaser at Completion; (in each case a "Disposal") then the Purchaser shall pay to the Vendor an amount equal to the difference between the proceeds of the Disposal and (pound)1, such payment to the Vendor to be made net of any taxation on the proceeds of - 12 - the Disposal in the hands of the recipient and subject, in the case of (b) above to the Company being in a position to lawfully distribute the proceeds of any such Disposal to the Purchaser PROVIDED THAT if such distribution has not occurred on or before the four month anniversary of the date of completion of the Disposal, such proceeds must be paid to the Vendor by the Purchaser in any event not more than 15 business days after the expiry of such four month period. 4.2 For the purposes of clause 4.1 the proceeds of the Disposal shall include the consideration paid and payable and any extractions or receipts following Completion and prior to the Disposal from the Purchaser or the Company for the benefit of the shareholders of the Purchaser where such extractions or receipts are effected as follows: (a) any dividend paid prior to the Disposal (other than ordinary dividends from current year profits, dividends paid to enable the Purchaser to fulfil its obligations pursuant to this agreement or to enable it to meet any costs incurred as a result of entering into this Agreement, or dividends paid to fund obligations of the Purchaser incurred in the course of trading); and/or (b) any increases in salary or bonuses or other forms of remuneration paid to the directors of the Purchaser or the Company in excess of 10% of their current annualised salary, bonuses or other forms of remuneration up to Completion; and/or (c) any other action (other than in the normal course of trading) which has the effect of reducing the net assets of the Company and/or the Purchaser as at the date of Disposal. 4.3 If there is any dispute between the Vendor and the Purchaser as to the amount of the proceeds on the Disposal and/or the amount payable to the Vendor under clause 4.1 then in default of agreement within 28 days from the date of the Disposal the matter shall be referred to an independent accountant or firm of accountants agreed between the parties, or in default of agreement nominated on the application of either the Vendor or the Purchaser by the President for the time being of the Institute of Chartered Accountants in England and Wales who shall act as an expert and not as an arbitrator. The decision of such expert shall in the absence of fraud or manifest error be final and binding on the Vendor and the Purchaser. The Vendor and the Purchaser shall each pay one half of such expert's costs in respect of a reference. 4.4 For the avoidance of doubt, the Vendor and the Purchaser agree that the provisions set out in clauses 4.1 to 4.3 inclusive have the intention of ensuring that should all or some of the shares in the Company or all or a material part of its business and/or assets be sold to a third party, the Vendor will be reimbursed - 13 - such that its economic position is not less favourable than it would have been had it entered into an agreement directly with such third party on the same terms as the Disposal. 5. WARRANTIES 5.1 The Vendor warrants to the Purchaser in the terms of the Warranties. 5.2 Any information supplied by or on behalf of the Company to or on behalf of the Vendor in connection with the Warranties, the Disclosure Letter or otherwise in relation to the business and affairs of the Company shall not constitute a representation or warranty or guarantee as to the accuracy thereof by the Company and the Vendor undertakes to the Purchaser (on behalf of itself and as trustee of the Company and their respective directors, employees, agents and advisers) that it will not bring any and all claims which it might otherwise have against the Company or any of its directors, employees, agents or advisers in respect of any such information in the absence of fraud, or wilful or dishonest concealment. 5.3 Each of the Warranties shall be construed as a separate warranty, and (unless expressly provided to the contrary) shall not be limited by the terms of any of the other Warranties or by any other term of this agreement. 5.4 The Vendor shall be under no liability in respect of any claim for breach of the Warranties (a "Warranty Claim") if and to the extent that the matter or circumstances giving rise thereto are fairly disclosed in the Disclosure Letter or such matters or circumstances giving rise thereto are otherwise actually known to the current executive directors of the Company on or prior to the date hereof and such executive directors knew that such matter or circumstances would give rise to a claim under the Warranties. Subject to the foregoing no letter, document or other communication shall constitute a disclosure for the purposes of the Warranties except and to the extent that the same is referred to in and a copy attached to the Disclosure Letter. 5.5 The Vendor shall give to the Purchaser all such information and documentation relating to the Company as the Purchaser shall reasonably require to enable it to satisfy itself as to whether there has been any breach of the Warranties. 5.6 (a) The Vendor shall not be liable in respect of any Warranty Claim (other than in respect of the Warranties in Section 16 of Schedule 3) unless the Purchaser has served on the Vendor a written notice by no later than 5.00 pm on the second anniversary of the Completion Date giving reasonable details of such Warranty Claim and has issued and served proceedings in respect thereof by the later of six months from the date of such written notice (or if later the date that any contingent liability in - 14 - respect of which the notice was served has become an actual liability) and the second anniversary of the Completion Date. (b) The Vendor shall not be liable in respect of any Warranty Claim in respect of the Warranties in Section 16 of Schedule 3 unless the Purchaser has served on the Vendor a written notice by no later than 5.00 pm on the seventh anniversary of the Completion Date giving reasonable details of such Warranty Claim and has issued and served proceedings in respect thereof by the later of six months from the date of such written notice (or if later the date that any contingent liability in respect of which the notice was served has become an actual liability) and the seventh anniversary of the Completion Date. 5.7 No claim shall be made in respect of any Warranty Claim unless and until the liability in respect of that Warranty Claim when aggregated with the liability of the Vendor in respect of all other Warranty Claims exceeds (pound)50,000 whereupon the full amount of any such Warranty Claim and not merely the excess above (pound)50,000 shall be recoverable. 5.8 The total amount of the liability of the Vendor in respect of all Claims (other than any claim or claims pursuant to Clause 12 of the Tax Deed, which claim or claims shall not be limited and which claim or claims shall not be counted towards the limits in this clause) shall be limited to and shall in no event exceed the greater of: (a) (pound)2 million; and (b) the aggregate of the total amount of the consideration received by the Vendor pursuant to clause 2.4 above (or which would have been received but for any right of set off pursuant to clause 19) and any payments received by the Vendor pursuant to clause 6.2(b) below (excluding any amount which the Company is entitled to retain pursuant to Clause 6.2(b) below in respect of the Relevant Claim referred to in paragraph c(2) of Schedule 9). PROVIDED THAT if and to the extent that the aggregate amount of any Claim or Claims is more than (pound)2 million and exceeds from time to time the amounts which have by then been received by the Vendor as referred to in paragraph (b) above, the Vendor shall only become liable to meet such Claim or Claims if and to the extent that it receives any further sums as referred to in paragraph (b) above (or would have received such sums but for any right of set off pursuant to Clause 19) which are sufficient to meet any such Claim or Claims but shall not otherwise be liable to make payment in respect thereof. 5.9 The Vendor shall not be liable in respect of any Warranty Claim if and to the extent that such Warranty Claim arises or is increased due to a voluntary act - 15 - transaction or omission carried out after Completion by the Purchaser or the Company otherwise than in the ordinary course of trading of the Purchaser or the Company (as the case may be) and which the Purchaser or the Company (as the case may be) knew or ought reasonably to have known would give rise to or increase such a Warranty Claim. 5.10 The Vendor shall not be liable in respect of any Warranty Claim if and to the extent that any such claim arises or is increased as a result of any change in legislation occurring after Completion. 5.11 The Vendor shall not be liable in respect of any Warranty Claim if and to the extent that any such claim arises as a result of: (a) any increase in rates of tax; or (b) any change in the published practice of the Inland Revenue, HM Customs and Excise or any other relevant taxation or excise authorities; (c) any change of accounting policy or practice of the Purchaser or the Company (without prejudice to the provisions of paragraph 3 of Schedule 3) in each case occurring after Completion. 5.12 If the Vendor pays to the Purchaser or the Company an amount in respect of any Warranty Claim (a "Damages Payment") and the Purchaser or the Company (as the case may be) subsequently recovers from a third party (including any insurer) a sum which is received in respect of the matter giving rise to the Warranty Claim in respect of which the Damages Payment was made, the Purchaser shall or shall procure that the Company (as the case may be) shall within five days following receipt of such sum repay to the Vendor an amount equal to the lesser of the amount of such sum (net of the Purchaser's or the Company's reasonable costs relating to such recovery and any taxation which the Purchaser or the Company incurs in respect of such recovery) and the Damages Payment. 5.13 The benefit of the Warranties the Tax Deed and the indemnity in Clause 6 shall not be capable of assignment by the Purchaser other than to another member of the Purchaser's Group to whom the Shares are transferred and shall be actionable only by the Purchaser or such other member of the Purchaser's Group and no other party PROVIDED THAT such assignment shall be on the following terms:- (a) the Purchaser shall procure that such member of the Purchaser's Group agrees with the Vendor to be bound by all of the obligations of the Purchaser under this Agreement; and - 16 - (b) such member of the Purchaser's Group shall cease to be entitled to enforce the Warranties, the Tax Deed and the indemnity in Clause 6 so assigned to it upon such member of the Purchaser's Group ceasing to be a member of the Purchaser's Group provided that such member of the Purchaser's Group shall be entitled to assign the benefit of the Warranties, the Tax Deed and the indemnity in Clause 6 to another member of the Purchaser's Group prior to its so ceasing. 5.14 Nothing contained in this clause 5 shall limit the Purchaser's or the Company's obligations to mitigate any loss or damage arising out of any circumstances giving rise to a Warranty Claim. 5.15 The Vendor shall not be liable in respect of any Warranty Claim to the extent that the matter giving rise to such claim was provided for in the unaudited balance sheet of the Company for the six months ended 30 June 1997 as set out in Schedule 7. 5.16 The Vendor shall not be liable in respect of any Warranty Claim if and to the extent that it relates to any loss in respect of which the Purchaser or the Company is entitled to recover and subsequently does recover under an insurance policy. 5.17 Where a matter which gives rise to a Warranty Claim involves a payment to be made by the Purchaser or the Company, the Vendor shall not be required to make any payment in respect of such amount to be paid by the Purchaser or the Company unless and until the Purchaser or the Company has itself made payment in respect thereof. 5.18 Any amount paid by the Vendor in respect of any Warranty Claim shall be deemed to reduce the amount of the purchase price paid by the Purchaser for the Shares. 5.19 If any Warranty Claim is made by the Purchaser, then for the purpose of determining the amount for which the Vendor is liable in respect of that claim, there shall be taken into account and credit given for the amount by which the Purchaser or the Company's tax liability has been reduced at the date of such claim by reason of any saving of tax having been obtained by the Purchaser and/or the Company by reason of any of the matters giving rise to such claim. 5.20 The Purchaser agrees that it will give written notice to the Vendor as soon as reasonably practicable of any claim by a third party against the Purchaser and/or the Company and any claim by the Purchaser and/or the Company against a third party in either case in respect of a matter which has or could reasonably be expected to give rise to a Warranty Claim. In respect of any such claim:- - 17 - (a) the Purchaser and the Company shall consult with the Vendor in relation to the claim and keep the Vendor informed of all material developments relating to the same and shall preserve and deliver to the Vendor any relevant documents, information, communications and notices which come into their possession in relation to the same; (b) the Purchaser and the Company shall take such action to pursue, litigate, defend, avoid, dispute, resist, appeal, compromise or contest the liability as may be reasonably requested by the Vendor who shall be entitled to have the conduct of any action, appeal, dispute, compromise or defence of the dispute and of any incidental negotiations but at its expense; (c) the Purchaser shall (and procure that the Company shall) make available to the Vendor such persons, documents and such information as the Vendor may reasonably require (to the extent it is within the Purchaser's power to do so and subject to the Vendor making every effort not to disrupt the Company's ongoing business) for pursuing, avoiding, disputing, resisting, appealing, compromising or contesting any such liability; and (d) the Vendor will indemnify the Purchaser and/or the Company (as the case may be) on an after-Tax basis and keep them indemnified against all and any actions, proceedings, claims, demands, liabilities, losses, damages, cost and expenses (in each case of any nature whatsoever) which may be incurred by the Purchaser and/or the Company by virtue of their compliance with paragraphs (b) and (c) above. 6. INDEMNITY 6.1 In this clause 6 the expression "Relevant Claim" means each and any of the claims listed in Schedule 9. 6.2 In relation to a Relevant Claim the parties agree as follows:- (a) the Vendor undertakes to pay to the Purchaser such sums as would if paid to the Company indemnify the Company against all costs, claims, damages, expenses, liabilities and losses incurred or suffered by the Company arising out of or in connection with any such Relevant Claim and any action taken by the Company or the Purchaser in connection with any such Relevant Claim pursuant to this clause 6.2); (b) the Purchaser and the Company confirm that the Vendor shall be entitled to retain the benefit of any such Relevant Claim and that subject to the Vendor complying with Clause 6.2(a) any award, judgment, settlement or payment in favour of the Company in respect of any such Relevant Claim - 18 - shall be due and payable to the Vendor and the Purchaser and the Company undertake that if the Purchaser or the Company receives from or on behalf of a third party any amounts due to the Vendor pursuant to this clause then such amount shall be paid by the Purchaser to the Vendor (less any Tax payable by the Company or the Purchaser in respect of such amount and less any reasonable external costs and expenses incurred by the Purchaser or the Company in recovering such amount) and provided that in the case of the Relevant Claim referred to in paragraph (c) 2 of Schedule 9 the amount recovered (less Tax, costs and other external expenses as aforesaid) shall belong as to 75% to the Vendor and as to 25% to the Company; (c) the Vendor will continue to have conduct of each Relevant Claim (but shall at all times consult with the Purchaser as to its conduct thereof) and Purchaser and the Company shall co-operate with the Vendor in respect thereof and inform the Vendor of any matters which arise in relation thereto which come to its attention; (d) the Purchaser and the Company shall at the Vendor's option and expense:- (i) assign to the Vendor (insofar as legally possible) without the giving of any further consideration any Relevant Claim or rights of action in respect thereof; and/or (ii) take such steps as the Vendor may reasonably require to litigate, defend, resist, compromise or pursue any Relevant Claim whether such steps are taken by the Company and/or the Purchaser, or by the Vendor in the name of the Company; (e) the Vendor shall be entitled to retain all relevant documents, information, files and records in relation to a Relevant Claim which are in the Vendor's possession on the date hereof until the settlement of the Relevant Claim (whether by way of agreement or as determined by the courts) whereupon they shall be returned to the Purchaser and/or the Company provided that prior to any such return the Vendor shall allow the Purchaser, the Company and their professional advisers to inspect and take copies of such documentation, information, files and records; (f) the Purchaser and the Company shall preserve and deliver to the Vendor any relevant documents, information, communications and notices which come into its possession after the date hereof in respect of a Relevant Claim which the Vendor shall be entitled to retain until the settlement of the Relevant Claim (whether by way of agreement or as determined by the courts) whereupon they shall be returned to the Purchaser and/or the Company and shall allow the Vendor and its professional advisers - 19 - access to inspect and take copies of any other documents and information which cannot be delivered to the Vendor; (g) the Purchaser and the Company shall: (i) require the personnel of the Company and/or the Purchaser to provide such statements or proofs of evidence as the Vendor may reasonably require and to attend to any trial or hearing to give evidence and provide such assistance as the Vendor may reasonably require with respect to any Relevant Claim; (ii) not settle or compromise any Relevant Claim without the prior written consent of the Vendor; and (iii) upon the Vendor's request, obtain the execution of all such consents, authorisations, settlements and agreements necessary or desirable for the continuation or conclusion of any Relevant Claim (including, without limitation, agreements to submit any Relevant Claim to arbitration or alternative dispute resolution). (h) The Vendor shall not be liable in respect of any Claim under the indemnity in Clause 6.2(a) above unless the Purchaser has served on the Vendor a written notice by no later than 5.00pm on the seventh anniversary of the Completion Date giving reasonable details of such Claim and has issued and served proceedings in respect thereof by the later of six months from the date of such written notice (or if later the date that any contingent liability in respect of which the notice was served has become an actual liability) and the seventh anniversary of the Completion Date. 6.3 All payments by the Vendor under the indemnities in this clause 6 shall be made gross, free of any right of counterclaim or set off and without deduction or withholding of any kind, other than any deduction or withholding required by law. Any such payments shall be deemed a reduction in the purchase price for the Shares. 6.4 If the Vendor makes a deduction or withholding required by law from any payment pursuant to the indemnities in this clause 6 the sum due from the Vendor shall be increased to the extent necessary to ensure that, after the making of any deduction or withholding, the Purchaser receives a sum equal to the sum it would have received had no deduction or withholding been made. 6.5 If a payment under the indemnities in this clause 6 will be or has been subject to tax, the Vendor shall pay the Purchaser on demand the amount (after taking into account any tax payable in respect of the amount and treating for these purposes as payable any tax that would be payable but for a relief, clearance, - 20 - deduction or credit) that will ensure that the Purchaser receives and retains a net sum equal to the sum it would have received had the payment not been subject to tax. 6.6 The Purchaser shall only be entitled to recover once for the same loss, damage, liability, claim, expense or cost in respect of a claim under this clause 6, a claim under the Tax Deed and a Warranty Claim for claims relating to the same subject matter. 7. PROTECTION OF GOODWILL 7.1 The Vendor hereby undertakes to procure that (except as otherwise agreed in writing with the Purchaser) no member of the Vendor's Group will either solely or jointly with any other person (either on its own account or as the agent of any other person):- (a) for a period of 3 years from Completion carry on or be engaged or concerned or (except as the holder of shares in a listed company which confer not more than five per cent. of the votes which can generally be cast at a general meeting of the company) interested directly or indirectly in a business which acts as or provides the services of or carries on the business of a Lloyd's member's agents or Lloyd's adviser as defined in the Lloyd's Acts and Bye-laws but excepting any activities currently carried on by any member of the Vendor's group (other than the Company) which such member shall be entitled to continue to carry on whether as a Lloyd's adviser (if required by any regulatory authority to register as such) or otherwise (a "Competing Business"); (b) for a period of 3 years from Completion solicit or accept (on its own account or as the agent of any other person) the custom of any person in respect of services comprised in a Competing Business where such services were supplied by the Company during the period of 6 months immediately prior to Completion, such person having been a customer or client of the Company in respect thereof during such period; (c) for a period of 3 years from Completion induce, solicit or endeavour to entice any person who during the period of 6 months prior to Completion was an employee of the Company likely (in the reasonable opinion of the Purchaser) to be:- (i) in possession of Confidential Information relating to the Company; or (ii) liable to influence the customer and client relationships or connections of the Company - 21 - to leave the service or employment of the Company. 7.2 The restrictions in clause 7.1(a) shall not apply (if it otherwise could be so construed) to the business activities of any company carrying on a Competing Business which is either:- (a) acquired by the Vendor or the Vendor's Group after the Completion Date where such company was carrying on such business prior to its acquisition by the Vendor or the Vendor's Group; or (b) is part of a group of companies which merges with or acquires the Vendor and the Vendor's Group where such company was carrying on such business prior to its merger with or acquisition of the Vendor and the Vendor's Group; and in the case of sub-clause (a) above where the Competing Business is not the principal trading activity of the company or business referred to in sub-clause (a) above PROVIDED THAT if the events contemplated by sub-clauses (a) or (b) above do occur, the Vendor undertakes to the Purchaser that it shall not (and shall procure that each member of the Vendor's Group and each member of such merging or acquiring company's group shall not) solicit or accept the custom of any person covered by the restrictions contained in clause 7.1(b) for the period specified in that clause. 7.3 The Vendor agrees that the undertakings contained in this clause 7 are reasonable and are entered into for the purpose of protecting the goodwill of the business of the Company and that accordingly the benefit of the undertakings may be assigned by the Purchaser and its successors in title without the consent of the Vendor. 7.4 Each undertaking contained in this clause 7 is and shall be construed as separate and severable and if one or more of the undertakings is held to be against the public interest or unlawful or in any way an unreasonable restraint of trade or unenforceable in whole or in part for any reason the remaining undertakings or parts thereof, as appropriate, shall continue to bind the Vendor. 7.5 If any undertaking contained in this clause 7 shall be held to be void but would be valid if deleted in part or reduced in application, such undertaking shall apply with such deletion or modification as may be necessary to make it valid and enforceable. Without prejudice to the generality of the foregoing, such period (as the same may previously have been reduced by virtue of this clause 7.4) shall take effect as if reduced by six months until the resulting period shall be valid and enforceable. 7.6 No provision of this agreement, by virtue of which this agreement is subject to registration (if such be the case) under the Restrictive Trade Practices Act 1976 - 22 - (unless this agreement is a non-notifiable agreement pursuant to section 27A of that Act), shall take effect until the day after particulars of this agreement have been furnished to the Director-General of Fair Trading pursuant to section 24 of that Act. For this purpose the expression "this agreement" includes any agreement or arrangement of which this agreement forms part and which is registrable or by virtue of which this agreement is registrable. 7.7 The Company undertakes within six months of the date of Completion to cease using the business name "WFDA" and the corporate name WFDA Underwriting Limited and from Completion to cease using any other name or mark currently used by or connected with the Vendor or the Vendor's Group. 8. CONFIDENTIAL INFORMATION 8.1 The Vendor shall:- (a) not and shall procure that no other member of the Vendor's Group or any director, officer or employee or adviser of the Vendor's Group shall after Completion use or disclose to any person Confidential Information in relation to any company in the Purchaser's Group; and (b) use all reasonable endeavours to prevent the use or disclosure after Completion of the Confidential Information referred to in paragraph (a) above by any person other than by members of the Purchaser's Group. 8.2 The Purchaser shall:- (a) not and shall procure that no other member of the Purchaser's Group or any director, officer or employee or adviser of the Purchaser's Group shall at any time use or disclose any Confidential Information in relation to any company in the Vendor's Group; and (b) use all reasonable endeavours to prevent the use or disclosure of the Confidential Information referred to in paragraph (a) above by any person other than by members of the Vendor's Group. 8.3 clauses 8.1 and 8.2 do not apply to:- (a) disclosure of Confidential Information to or at the written request of the Purchaser or the Vendor (as the case may be); (b) use or disclosure of Confidential Information required to be disclosed by law or the London Stock Exchange; (c) disclosure of Confidential Information to professional advisers for the purpose of advising the parties; or - 23 - (d) Confidential Information which becomes part of the public domain other than by a party's breach of clauses 8.1 or 8.2. 9. ACCESS TO RECORDS AND SERVICES ARRANGEMENTS 9.1 The Vendor undertakes to the Purchaser to preserve for not less than seven years from Completion those of the books of account or other records in any way relating to or concerning the business of the Company which are not delivered to the Purchaser at Completion pursuant to the provisions of clause 3.2(g) and to provide the Purchaser and the Company with reasonable access thereto during normal working hours. 9.2 The Purchaser and the Company hereby undertake that they will afford to the Vendor and its representatives upon reasonable notice and during normal working hours reasonable access to such of the books and records of the Company as are necessary to enable the Vendor to perform its obligations hereunder. 9.3 The Vendor undertakes to the Purchaser that it will continue to provide (or shall procure the continued provision of) the services set out in Schedule 8 (the "Services") for the period set out therein upon the same basis as they were rendered immediately prior to Completion (including as to the cost to the Company of such Services), as if the Company was still part of the Vendor's Group PROVIDED that the Vendor shall not be considered in breach of its obligations hereunder to the extent that the performance of any such obligation is prevented or delayed by any matter beyond its control (other than as a result of its own negligence or wilful default). 9.4 The Vendor undertakes to use its reasonable endeavours to assist the Company in securing the grant to the Company in its own name of a licence to use the software referred to in Schedule 11 without any additional charge by the licensor (or in the event of any charge being levied to use its reasonable endeavours to ensure that any additional charges are kept to a minimum) on the same or similar terms as such software is currently used by the Company and provided that for the avoidance of doubt, the Vendor shall not be obliged to pay any such charges itself. 10. PENSIONS The provisions of schedule 5 shall apply in relation to the Willis Faber Pension Scheme. 11. ANNOUNCEMENTS 11.1 No party shall without the prior consent of the other party disclose the making of - 24 - this agreement nor its terms (except those matters set out in the press release in the agreed terms) and each party shall procure that each of its Related Persons shall not make any such disclosure without the prior consent of the other party unless disclosure is:- (a) to its professional advisers; or (b) required by law or the rules of the London Stock Exchange or other regulatory body and disclosure shall then only be made by that party:- (i) after it has taken all such steps as may be reasonable in the circumstances to agree the contents of such announcement with the other party before making such announcement and provided that any such announcement shall be made only after notice to the other party/parties; and (ii) only to the person or persons and in the manner required by law or the London Stock Exchange or as otherwise agreed between the parties 11.2 The restrictions contained in clause 11.1 shall apply without limit of time and whether or not this agreement is terminated. 12. COSTS 12.1 Unless expressly otherwise provided in this agreement each of the parties shall bear its own legal, accountancy and other costs, charges and expenses connected with the sale and purchase of the Shares. 12.2 The Purchaser shall bear the costs of the stamp duty and any other taxes payable in respect of the transfer of the Shares and the assets effected by this agreement. 12.3 The Purchaser hereby warrants that no finders or agents fees are payable in respect of this agreement and the transactions effected hereunder. 13. EFFECT OF COMPLETION 13.1 The terms of this agreement (insofar as not performed at Completion and subject as specifically otherwise provided in this agreement) shall continue in force after and notwithstanding Completion. 13.2 The remedies of the Purchaser in respect of any breach of any of the Warranties shall continue to subsist notwithstanding Completion. 14. FURTHER ASSURANCES - 25 - 14.1 Following Completion the Vendor shall from time to time forthwith upon request from the Purchaser at the Vendor's expense do or procure the doing of all acts and/or execute or procure the execution of all such documents in a form reasonably satisfactory to the Purchaser for the purpose of vesting in the Purchaser the full legal and beneficial title to the Shares and the Assets. 14.2 As soon as practicable following Completion, the Vendor shall procure the release of the Company from any guarantee or indemnity or other similar obligation given or incurred by the Company in respect of or in relation to any obligations of the Vendor or any member of the Vendor's Group and pending such release shall keep the Company indemnified against any liability cost claim or expense incurred or suffered by the Company after Completion in respect of any such guarantee or indemnity or other similar obligation. 15. ENTIRE AGREEMENT 15.1 Each party on behalf of itself and as agent for each of its Related Persons acknowledges and agrees with the other party (each such party acting on behalf of itself and as agent for each of its Related Persons) that:- (a) this agreement together with any other documents referred to in this agreement (together the "Transaction Documents") constitute the entire and only agreement between the parties and their respective Related Persons relating to the subject matter of the Transaction Documents; (b) neither it nor any of its Related Persons have been induced to enter into any Transaction Document in reliance upon, nor have they been given, any warranty, representation, statement, assurance, covenant, agreement, undertaking, indemnity or commitment of any nature whatsoever other than as are expressly set out in the Transaction Documents and, to the extent that any of them have been, it (acting on behalf of itself and as agent on behalf of each of its Related Persons) unconditionally and irrevocably waives any claims, rights or remedies which any of them might otherwise have had in relation thereto; PROVIDED THAT the provisions of this clause 15 shall not exclude any liability which any of the parties or, where appropriate, their Related Persons would otherwise have to any other party or, where appropriate, to any other party's Related Persons or any right which any of them may have to rescind this agreement in respect of any statements made fraudulently by any of them prior to the execution of this agreement or any rights which any of them may have in respect of fraudulent concealment by any of them. 16. VARIATIONS - 26 - This agreement may be varied only by a document signed by each of the Vendor and the Purchaser. 17. WAIVER 17.1 A waiver of any term, provision or condition of, or consent granted under, this agreement shall be effective only if given in writing and signed by the waiving or consenting party and then only in the instance and for the purpose for which it is given. 17.2 No failure or delay on the part of any party in exercising any right, power or privilege under this agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege. 17.3 No breach of any provision of this agreement shall be waived or discharged except with the express written consent of the Vendor and the Purchaser. 17.4 The rights and remedies herein provided are cumulative with and not exclusive of any rights or remedies provided by law. 18. INVALIDITY 18.1 If any provision of this agreement is or becomes invalid, illegal or unenforceable in any respect under the law of any jurisdiction:- (a) the validity, legality and enforceability under the law of that jurisdiction of any other provision; and (b) the validity, legality and enforceability under the law of any other jurisdiction of that or any other provision, shall not be affected or impaired in any way. 19. SET-OFF The Purchaser shall be entitled to set off against the amounts payable to the Vendor under this agreement, the amount of any Claim which at the time the relevant payment is due is then outstanding against the Vendor. For the purposes of this clause 19, a Claim shall be treated as outstanding against the Vendor if it has been determined as payable by agreement between the Vendor and the Purchaser, by way of settlement between the Vendor and the Purchaser or as determined by a court of competent jurisdiction from which there is no appeal or from whose judgment the Vendor does not appeal within any applicable time limit. - 27 - 20. NOTICES 20.1 Any notice, demand or other communication given or made under or in connection with the matters contemplated by this agreement shall be in writing and shall be delivered personally or sent by fax or prepaid first class post (air mail if posted to or from a place outside the United Kingdom):- In the case of the Purchaser or the Company to:- Address Lloyds Building, One Lime Street, London EC3M 7DQ Fax: 0171 283 0538 Attention: Company Secretary In the case of the Vendor to:- Address Ten Trinity Square, London EC3P 3AX Fax: 0171 488 8034 Attention: Company Secretary and shall be deemed to have been duly given or made as follows:- (a) if personally delivered, upon delivery at the address of the relevant party; (b) if sent by first class post, two Business Days after the date of posting; (c) if sent by fax, when despatched; provided that if, in accordance with the above provision, any such notice, demand or other communication would otherwise be deemed to be given or made outside 9.00 a.m. - 5.00 p.m. such notice, demand or other communication shall be deemed to be given or made at 9.00 a.m. on the next Business Day. 20.2 A party may notify the other party to this agreement of a change to its name, relevant addressee, address or fax number for the purposes of clause 20.1 provided that such notification shall only be effective on:- (a) the date specified in the notification as the date on which the change is to take place; or (b) if no date is specified or the date specified is less than five Business Days after the date on which notice is given, the date falling five Business Days after notice of any such change has been given. 21. COUNTERPARTS - 28 - This agreement may be executed in any number of counterparts which together shall constitute one agreement. Any party may enter into this agreement by executing a counterpart and this agreement shall not take effect until it has been executed by all parties. 22. GOVERNING LAW AND JURISDICTION 22.1 This agreement (and any dispute, proceedings or claim of whatever nature arising out of or in any way relating to this agreement or its formation) shall be governed by and construed in accordance with English law. 22.2 Each of the parties to this agreement irrevocably agrees that the courts of England shall have exclusive jurisdiction to hear and decide any suit, action or proceedings, and/or to settle any disputes, which may arise out of or in connection with this agreement and, for these purposes, each party irrevocably submits to the jurisdiction of the courts of England. 23. ASSIGNMENT The Purchaser shall not be entitled to assign the benefit or burden of this Agreement in whole or in part without the prior written consent of the Vendor other than to another member of the Purchaser's Group to whom the Shares are transferred PROVIDED THAT such assignment shall be on the following terms:- (a) the Purchaser shall procure that such member of the Purchaser's Group agrees with the Vendor to be bound by all of the obligations of the Purchaser under this Agreement; and (b) such member of the Purchaser's Group shall cease to be entitled to enforce the rights assigned to it under this Agreement upon such member of the Purchaser's Group ceasing to be a member of the Purchaser's Group provided that such member of the Purchaser's Group shall be entitled to assign the benefit of the Warranties the Tax Deed and the indemnity in Clause 6 to another member of the Purchaser's Group prior to its so ceasing. 24. GENERAL PROVISIONS 24.1 The Purchaser shall have no right to rescind or terminate this Agreement for any reason whatsoever (other than fraud) and the Purchaser's sole remedy in respect of any claims under the Warranties and the Indemnity contained in clause 6.2(a) shall be in damages subject to the limitations contained in this Agreement. 24.2 If any amount required to be paid under this Agreement is not paid on the due date, such amount shall bear interest at the rate of 3 per cent per annum over - 29 - the base lending rate of Lloyd's Bank PLC from time to time calculated on a daily basis for the period from the relevant due date for payment up to and including the date of actual payment, as well after as before any judgment. IN WITNESS whereof this agreement has been executed on behalf of the parties on the date first above written. - 30 - SCHEDULE 1 Particulars relating to the Company Authorised share capital: 4,000 "A" Ordinary Shares of (pound)1 496,000 "B" Ordinary Shares of (pound)1 Issued share 4,000 "A" Ordinary Shares of (pound)1 capital: 496,000 "B" Ordinary Shares of (pound)1 Directors: J M Sinclair A Rayner A M Davidson J C Parkinson C Hulbert-Powell J N W Wooderson N de Rivaz A G Cooper Sir Stephen Waley-Cohen Secretary: A. Rayner Auditors: Ernst & Young Accounting reference date: 31 December Registered Office: Ten Trinity Square, London EC3P 3AX - 31 - SCHEDULE 2 Profit Commission Determination Part 1 Consideration for the Shares The consideration for the sale and purchase of the Shares shall be the aggregate of the following amounts which shall be payable in accordance with the provisions of part 2 of this Schedule 2:- (a) (pound)1; (b) an amount equal to the 1994 and Prior Years Profit Commission to the extent only that it exceeds the sum of (pound)4,595,000 (c) an amount equal to the 1995 Profit Commission; (d) an amount equal to the 1996 Profit Commission; (e) an amount equal to 50% of the 1997 Profit Commission. - 32 - Part 2 Payment of the Consideration 1. The sum of (pound)1 referred to in paragraph (a) of Part 1 of this Schedule 2 shall be paid on Completion. 2. In respect of the amounts payable to the Vendor referred to in paragraphs (c) to (e) (inclusive) of Part 1 of this Schedule 2, the Purchaser shall provide to the Vendor on 30 June in each year an estimate of the amount which is expected to be paid to the Vendor in accordance with the terms of this Agreement, which estimate shall not be binding on the Purchaser. 3. The following provisions shall apply to the payment by the Purchaser to the Vendor of each of the amounts referred to in paragraphs (b) to (d) inclusive of Part 1 of this Schedule 2 (each a "Relevant Amount"):- (a) individual amounts received by the Company which form part of the Relevant Amounts which in the aggregate from time to time exceed (pound)50,000 shall be paid by the Purchaser to the Vendor as follows:- (i) 75% of the amount received shall be paid within 15 days of the end of the month in which the aggregate amount was received and exceeded (pound)50,000; and (ii) 25% of the amount received shall be paid on the first anniversary of the date on which 75% of the payment was made in accordance with paragraph 3(a)(i) above. (b) individual amounts which in the aggregate from time to time are less than (pound)50,000 received by the Company which form part of the Relevant Amount shall be paid by the Purchaser to the Vendor as follows:- (i) 75% of the amount received shall be paid within 15 days of the end of the quarter in which the aggregate amount was received (the first quarter in each year to be for the three month period ending on 30th September); and (ii) 25% of the amount received shall be paid on the first anniversary of the date on which 75% of the payment was made in accordance with paragraph 3(b)(i) above. 4. The following provisions shall apply to the payment by the Purchaser to the Vendor of the amount referred to in paragraph (e) of part 1 of this Schedule 2:- (a) individual amounts which in the aggregate from time to time exceed - 33 - (pound)50,000 received by the Company in respect of such amount shall be paid within 15 days of the end of the month in which the aggregate amount was received and exceeded (pound)50,000; and (b) individual amounts which in the aggregate from time to time are less than (pound)50,000 received by the Company in respect of such amount shall be paid within 15 days of the end of the quarter in which the aggregate amount was received (the first quarter to be for the three month period ending on 30th September). 5. All payments made by the Purchaser to the Vendor pursuant to paragraph 3 and 4 above shall be accompanied by a written statement giving a breakdown of the payments and indicating the year to which each payment relates. 6. The Purchaser and the Company hereby undertake that they shall afford to the Vendor and its representatives and advisers upon reasonable notice during normal business hours reasonable access to (and the right to take copies of) such books and records as are necessary to enable the Vendor to verify the calculation of the profit commission received by the Company which is payable to the Vendor pursuant to the terms of this Agreement and the Purchaser and the Company further undertake to preserve all such books and records until 31 December 2012. 7. If at any time the Vendor and the Purchaser are in disagreement about the calculation of the profit commission payable to the Vendor pursuant to the terms of this Agreement, then in default of agreement by them within fourteen days of a disagreement being notified by one party to the other, the matter shall be referred to an independent accountant or firm of accountants agreed between the parties, or in default of agreement nominated on the application of either the Vendor or the Purchaser by the President for the time being of the Institute of Chartered Accountants in England and Wales who shall act as an expert and not as an arbitrator. The decision of such expert shall, in the absence of fraud or manifest error, be final and binding on the Vendor and the Purchaser. The Vendor and the Purchaser shall each pay one half of such expert's costs in respect of a reference. 8. The Purchaser and the Company hereby undertake to use their respective reasonable endeavours to collect all amounts comprised in the 1994 and Prior Years Profit Commission, the 1995 Profit Commission, the 1996 Profit Commission and the 1997 Profit Commission. 1. SCHEDULE 3 The Warranties Any Warranty expressed to be given "to the best of the Vendor's knowledge and belief" - 34 - or "so far as the Vendor is aware" or otherwise qualified by reference to the knowledge of the Vendor shall not be qualified in the manner stated unless the Vendor establishes that it has made all reasonable enquiries of the executive directors of the Company and of Heather Thomas, Michael Chitty, Douglas Paul, Alasdair Forman, David Roberts and Byron Jones to establish the truth and accuracy of that Warranty. - 35 - 1. VENDOR'S CAPACITY 1.1 Authorisations The Vendor has obtained all corporate authorisations and all other applicable governmental, statutory, regulatory or other consents, licences, waivers or exemptions required to empower it to enter into and to perform its obligations under this agreement and each document to be executed by it at or before Completion. 1.2 Proper Execution The Vendor's obligations under this agreement and each document to be executed at or before Completion are or when the relevant document is executed, will be enforceable in accordance with their terms. 2. THE COMPANY, THE SHARES AND THE SUBSIDIARIES 2.1 Incorporation and Existence The Company is a limited company incorporated under English law and has been in continuous existence since incorporation. 2.2 The Shares (a) The Vendor is the only legal and beneficial owner of the Shares. (b) The Company has not allotted any shares other than the Shares (details of which are set out in Schedule 1) and the Shares are fully paid or credited as fully paid. (c) There is no Encumbrance in relation to any of the Shares or unissued shares in the capital of the Company. No person has claimed to be entitled to an Encumbrance in relation to any of the Shares and no party (other than the Vendor pursuant to this Agreement) is under any obligation (whether actual or contingent) to sell, charge or otherwise dispose of any of the Shares or any interest therein to any person. (d) Other than this agreement, there is no agreement, arrangement or obligation requiring the creation, allotment, issue, sale, transfer, redemption or repayment of, or the grant to a person of the right (conditional or not) to require the allotment, issue, sale, transfer, redemption or repayment of, a share in the capital of the Company (including an option or right of pre-emption or conversion). - 36 - 2.3 Subsidiaries (a) The Company does not have any subsidiary undertakings. (b) The Company does not own any shares or stock in the capital of nor does it have any beneficial or other interest in any company or business organisation, nor does the Company control or take part in the management of any other company or business organisation. 3. ACCOUNTING MATTERS 3.1 The Accounts (a) The Accounts comply with the provisions of the Companies Act 1985 as applicable and have been prepared in accordance with the requirements of all relevant statutes and with generally accepted accounting principles and practices and are true and accurate in all respects so far as they are stated to be facts and not estimates and accordingly give a true and fair view of all the assets and liabilities (whether present or future, actual or contingent) and of the state of affairs, financial position and results of the Company as at and up to the Accounts Date and, without prejudice to the generality of the foregoing, the Accounts:- (i) make full provision or reserve for depreciation, bad or doubtful debts and other actual liabilities; (ii) either make full provision or reserve for or make fair disclosure in notes of all contingent, postponed or deferred liabilities (including in relation to Tax); (iii) do not overvalue assets or understate liabilities; and (iv) have not (save as disclosed in the Accounts) been affected by any extraordinary, exceptional or non-recurring item or by any other fact or circumstance rendering the profits or losses for the relevant period unusually high or low. (b) The Accounts have been prepared in accordance with the law and applicable standards, principles and practices generally accepted in the United Kingdom consistently applied. (c) The Accounts have been prepared on a basis consistent with the basis upon which all audited accounts of the Company have been prepared in respect of the three years before the Accounts Date. - 37 - 3.2 Balance Sheet The balance sheet of the Company as at 30 June 1997 and which is set out in Schedule 7: (a) has been prepared in accordance with the law and applicable standards, principles and practices generally accepted in the United Kingdom consistently applied; (b) has been prepared on a basis consistent with the basis upon which all audited accounts of the Company have been prepared in respect of the three years before the Accounts Date; (c) was not (save as disclosed therein) affected by any extraordinary, exceptional or non-recurring item; and (d) is true and accurate in providing that the net assets of the Company as at 30 June 1997, after payment of the Pre-Sale Dividend, were not less than (pound)2,450,000. 3.3 Records All deeds and documents (properly stamped where stamping is necessary for enforcement thereof) belonging to the Company or which ought to be in the possession of the Company are in the possession of the Company. 4. CHANGES SINCE THE ACCOUNTS DATE So far as the Vendor is aware since the Accounts Date:- (a) the Company has not declared, paid or made a dividend or other distribution (including a distribution within the meaning of the TA) except to the extent provided in the Accounts and save for the Pre-Sale Dividend; (b) no resolution of the shareholders of the Company has been passed; (c) the Company has not repaid or redeemed share or loan capital, or made (whether or not subject to conditions) an agreement or arrangement or undertaken an obligation to do any of those things; (d) the Company has not (save to the extent required pursuant to this agreement) repaid any sum in the nature of borrowings in advance of any due date or made any loan or incurred any indebtedness (including in each case inter group); and - 38 - (e) the Company has not paid nor is under an obligation to pay any service, management or similar charges or any interest or amount in the nature of interest to any member of the Vendor's Group person or incurred any liability to make such a payment or made any payment to any member of the Vendor's Group whatsoever (save as disclosed in the Company's monthly management accounts in the months January to September 1997). 5. ASSETS 5.1 Title and Condition (a) There are no Encumbrances, nor has the Company agreed to create any Encumbrances, over any part of its undertaking or assets (including the assets listed in Schedule 6). (b) Save for the benefit of those assets, contracts and rights made by or with the Vendor's Group (which the Company will cease to enjoy from Completion) the Company is the absolute owner of the assets used in its business save for any held under hire purchase or lease agreements which are disclosed in the Disclosure Letter. 5.2 Confidential Agreements Other than in respect of the Company's normal duty of confidentiality to its principals no member of the Vendor's Group has entered into any confidentiality or other agreement or is subject to any duty which restricts the free use or disclosure of any information used in the business of the Company. 6. EFFECT OF SALE 6.1 Neither the execution nor performance of this agreement or any document to be executed at or before Completion pursuant to it will, so far as the Vendor is aware:- (a) result in the termination of any agreement to which the Company is a party; or (b) result in the loss of any rights in either case which are material to the conduct of its business (other than the benefit of agreements and rights made by or with the Vendor's Group which the Company will cease to enjoy from Completion and which are disclosed in the Disclosure Letter); or (c) entitle a person properly to terminate, or be relieved from an obligation under, an agreement, arrangement or obligation to which the Company is - 39 - a party. 7. INSURANCE 7.1 Policies The Disclosure Letter contains: (a) a list of each current insurance and indemnity policy in respect of which the Company has an interest (together the "Policies"). Each of the Policies is valid and enforceable and is not void or voidable. There are no circumstances which might make any of the Policies void or voidable or lead any claim under the Policies to be avoided by the insurers; (b) details of outstanding claims by the Company under the Policies. 7.2 The Company has at all material times been and is at the date of this agreement insured against accident, damage, injury, third party loss (including product liability), loss of profits and any other risk normally insured against by a prudent person operating the types of business operated by the Company and has at all times effected such insurances as required by law. 8. CONTRACTS WITH CONNECTED PERSONS There is, and during the three years ending on the date of this agreement there has been, no agreement or arrangement (legally enforceable or not) to which the Company is or was a party and in which any member of the Vendor's Group, a director or former director of any member of the Vendor's Group or a person connected with any of them is or was interested in any way (other than underwriting at Lloyd's). The Company does not owe any sum to the Vendor or any of its connected persons other than in connection with the supply of services in accordance with and on the basis that such services have been rendered up to the date of Completion. 9. INFORMATION TECHNOLOGY 9.1 Systems All computer systems, excluding software, used in the business of the Company are owned and operated by and are under the control of the Company and are not wholly or partly dependent on any facilities which are not under the ownership, operation or control of the Company. 9.2 Software The Disclosure Letter contains details of the Software used by the Company in - 40 - its business. 10. LIABILITIES - GUARANTEES AND INDEMNITIES The Company is not a party to and is not liable (including contingently) under a guarantee, indemnity or other agreement to secure or incur a financial or other obligation with respect to another person's obligation. No part of the loan capital, borrowing or indebtedness in the nature of borrowing of the Company is dependent on the guarantee or indemnity of, or security provided by, another person. 11. INSOLVENCY No order has been made, petition presented or resolution passed for the winding up of the Company or for the appointment of a provisional liquidator to the Company. 12. BROKERAGE OR COMMISSIONS No person is entitled to receive from the Company a finder's fee, brokerage or commission in connection with this agreement or anything in it and the Company is not liable to pay to any of its directors, employees, agents and advisers any sum whatsoever in connection with the sale of the Shares. 13. DIRECTORS AND EMPLOYEES The particulars annexed to the Disclosure Letter show the names, job title, date of commencement of employment, date of birth, period of continuous employment (calculated in accordance with chapter 1 of part XIV of the ERA), identity of the employing company, salary and benefits of every person employed in the business of the company and no-one so employed has been omitted. 14. PROPERTY 14.1 The Property comprises all the freehold and leasehold land owned, used or occupied by and all the rights vested in the Company and all agreements whereby the Company has any financial entitlement relating to any land at the date hereof. 14.2 No Other Liabilities The Company has no actual or contingent obligations or liabilities (in any capacity including as principal contracting party or guarantor) in relation to any lease, licence or other interest in, or agreement relating to, land apart from the Property. - 41 - 14.3 Accuracy of Information The information in the replies to enquiries and the letters (together with the enclosures thereto) set out in Documents 17 and 18 annexed to the Disclosure Letter is true and accurate and the Vendor is not aware of any fact, matter or thing which has not been disclosed to the Purchaser or the Purchaser's Solicitors which makes any such information untrue or misleading at the date of this agreement. 15. PENSIONS 15.1 Full and accurate details of all superannuation, pension, life assurance, death benefit, sickness or accident benefit schemes or arrangements in respect of which the Company has or may have any liability to contribute or an obligation to any of its past or present officers or employees or their dependants are contained in the Disclosure Letter and save for the schemes or arrangements therein disclosed the Company has no such liabilities or obligations whether legally binding or not. 15.2 The Company is not making or has not regularly made or proposed to make and will not before Completion make any voluntary ex gratia payments to any employee or former employee or to any spouse, child or dependant of any of them. 15.3 As regards each of the retirement benefits schemes (as defined in Section 611 of the Income and Corporation Taxes Act 1988) referred to in the Disclosure Letter: (a) full and accurate details of the scheme have been disclosed, including (without limitation) copies of the current trust deeds and rules, booklets or announcements to members; (b) the identities of those of the employees of the Company who are members of the scheme are included in the Disclosure Letter and no other employees of the Company are members of the scheme; (c) the scheme is an exempt approved scheme within the meaning of Section 592 of the Income and Corporation Taxes Act 1988 and there is no reason why such approval may be withdrawn; (d) if the scheme is a contracted-out scheme within the meaning of the Pension Schemes Act 1993, there is in force a contracting-out certificate covering the Company and so far as the Vendor is aware there are no circumstances which might cause such certificate to be withdrawn or cease to apply; - 42 - (e) all insurance premiums and contributions due to be paid in respect of the scheme by the Company or the trustees of the scheme have been duly paid; (f) where any power under the scheme to provide additional benefits has been exercised in relation to any employee or officer of the Company, full and accurate details of those additional benefits have been disclosed; (g) so far as the Vendor is aware no legal proceedings, complaints to the Pensions Ombudsman or complaints under the scheme's Internal Dispute Resolution Procedure in connection with the scheme are pending or threatened and, so far as the Vendor is aware (having made due and careful enquiry), there is no fact or circumstance likely to give rise to any such proceedings or complaints. So far as the Vendor is aware: (h) the scheme has at all times been administered in accordance with the trusts powers and provisions of its governing documentation and has been administered in accordance with and complies with all applicable legislation and the general requirements of trust law; (i) since the date of the last actuarial valuation of the scheme no power or discretion has been exercised to augment or improve any benefit thereunder of or in respect of any employee or former employee of the Company nor any promise or announcement made to do so; (j) every employee or former employee of the Company who is or was entitled to membership of the scheme has been invited to join as at the date on which he became so entitled. 15.4 So far as the Vendor is aware no undertaking or assurance has been given by the Company to any of its employees or former employees as to the continuance, introduction, increase or improvement of any relevant benefit (as defined in Section 612 of the Income and Corporation Taxes Act 1988). 16. TAXATION 16.1 Returns The Company has made all returns and supplied all information and given all notices to the Inland Revenue or other Taxation Authority as reasonably requested or required by law within any requisite period and all such returns and information and notices are correct and accurate in all material respects and are not the subject of any dispute and, so far as the Vendor is aware, there are no facts or circumstances likely to give rise to or be the subject of any such dispute. - 43 - 16.2 Payment of Tax The Company has duly and punctually paid all Tax to the extent that the same ought to have been paid and is not liable nor has it within three years prior to the date hereof been liable to pay any penalty or interest in connection therewith. 16.3 Pay As You Earn The Company has properly operated the PAYE system deducting Tax as required by law from all payments to or treated as made to or benefits provided for employees, ex-employees or independent contractors of the Company (including any such payments within section 134 of the TA) and duly accounted to the Inland Revenue for Tax so deducted and has complied with all its reporting obligations to the Inland Revenue in connection with any such payments made or benefits provided, and no PAYE audit in respect of the Company has been made by the Inland Revenue nor has the Company been notified that any such audit will be made. 16.4 Secondary Liability No transaction or event has occurred in consequence of which the Company is or may be held liable for any Tax or deprived of relief or allowances otherwise available to it in consequence of any Tax or may otherwise be held liable for or to indemnify any person in respect of any Tax, where some other company or person is or may become primarily liable for the Tax in question (whether by reason of any such other company being or having been a member of the same group of companies or otherwise). 16.5 Withholding of Tax and Agency for Non-Residents The Company is not and has not been assessable to Tax by virtue of section 78 of the TMA or sections 42A or 43 of the TA, or section 126 of the FA 1995. 16.6 Intra-Group Transfers The Company has not acquired any asset other than trading stock from any other company belonging at the time of acquisition to the same group of companies as the Company within the meaning of section 170 of the TCGA and no member of any group of companies of which the Company is or has at any material time been the principal company (as defined in section 170(2)(b) of the TCGA) has so acquired any asset. 16.7 Group Relief and Consortium Relief The Disclosure Letter contains particulars of all arrangements relating to relief under sections 402-413 of the TA ("group relief") to which the Company is or - 44 - has been a party and:- (a) all claims by the Company for such relief were when made and are now valid; (b) the Company has not made nor is liable to make any payment for group relief otherwise than in consideration for the surrender of group relief allowable to the Company by way of relief from corporation tax; (c) the Company has received all payments due to it under any arrangement or agreement for surrender of group relief by it for periods prior to the Accounts Date; (d) no such payment exceeds or could exceed the amount permitted by section 402(6) of the TA; (e) there exist or existed for any period of account in respect of which a surrender has been made or purports to have been made no arrangements such as are specified in section 410(1)-(6) of the TA. 16.8 Advance Corporation Tax The Disclosure Letter contains particulars of all arrangements for the surrender under section 240 of the TA of any amount of advance corporation tax and in respect of receipts and surrenders disclosed:- (a) the Company has not paid nor is liable to pay for the benefit of any advance corporation tax which is or may become incapable of set off against the Company's liability to corporation tax; (b) the Company has received all payments due to it for all surrenders or purported surrenders of advance corporation tax made by it; (c) no such payment exceeds or could exceed the amount permitted by section 240(8) of the TA; and (d) there exist or existed for any period in respect of which a claim under section 240 of the TA has been or is to be made no arrangements such as are specified in sub-section (11) of that section whereby any person could obtain control of the Company or of any subsidiary to which such surrender purports or is purported to be made 16.9 Value Added Tax (a) The Company is a registered taxable person for the purpose of the VATA and all regulations and orders made thereunder (the "VAT legislation") - 45 - and is included as a member of a group of companies the representative member of which is Willis Faber & Dumas Limited for such purpose. (b) No circumstances exist whereby the Company would or might become liable for value added tax as an agent or otherwise by virtue of section 47 of the VATA. (c) The Company has complied in all respects with the requirements and provisions of the VAT legislation and has made and maintained and will pending completion make and maintain accurate and up to date records invoices accounts and other documents required by or necessary for the purposes of the VAT legislation and the Company and/or the representative member has at all times punctually paid and made all payments and returns required thereunder insofar as these relate to the Company. (d) The Company has not made any exempt supplies in consequence of which it is or will be unable to obtain credit for all input tax paid by it during any VAT quarter ending after the Accounts Date. 16.10 Stamp Duty All documents in the enforcement of which the Company is or may be interested have been duly stamped and since the Accounts Date the Company has not been a party to any transaction whereby the Company was or is or could become liable to stamp duty reserve tax. 17. INFORMATION The information set out in Schedules 1 and 4 Part I is complete accurate and not misleading. - 46 - SCHEDULE 4 PART I The Property Address: Rooms 701-723 and 708-720, forming part of Gallery 7 of the building known as Lloyd's, 1 Lime Street in the City of London Tenure: Leasehold for twenty five years from 29th September 1986 Description: Office accommodation as described above Mortgages or Charges: None Leases. The premises are held under a lease made the 15th October 1987 between Lloyds (1) and Willis Faber PLC (2). The Property is not subject to any sub-leases or tenancies. Use: Offices SCHEDULE 4 PART II 1. The Vendor shall on Completion or (if later) within five working days after the Consent referred to in clause 2.1 below has been obtained assign to the Company its leasehold interest in the Property. Such assignment is referred to below as "the Assignment". 2.1 Completion of the Assignment is conditional on the consent ("the Consent") of the Vendor's landlord ("the Landlord") being obtained to the assignment of the Lease by the Vendor to the Company. 2.2 The Vendor will as soon as practicable apply at its own expense for and use all - 47 - reasonable endeavours to obtain the Consent. 2.3 The Company shall fully and promptly: - supply all such references accounts and information as the Landlord may reasonably require in considering whether to grant the Consent - comply with the Landlord's lawful and reasonable requirements in relation to the granting of the Consent including if applicable the provision of guarantees and - sign or execute the Consent within three working days of any engrossment of the same in agreed form being submitted to it or its solicitors 3. If the Consent has not been obtained by the date twelve months after Completion either party may (having itself fulfilled its own obligations under clause 2 above) rescind the provisions of this Schedule by serving written notice in that behalf on the other 4. If the Consent has not been obtained by Completion the Company is hereby authorised by the Vendor to take up occupation of the Property from Completion until completion of the Assignment subject to the following conditions: - the Company will occupy the Property only as licensee without any tenancy or lease being created or security of tenure being obtained; - the Company shall pay to the Vendor a licence fee at the same annual rent and on the same dates and in the same manner as the rents service charges and other costs payable under the Lease of the Property; and - the Company shall perform and observe the covenants and conditions contained in the lease of the Property and will not knowingly do or permit anything which would be a breach of the said lease and will indemnify the Vendor against any breach thereof 5. If the Company fails to pay any licence fee in respect of the Property before completion of the Assignment or materially breaches any of the covenants agreements and conditions contained in the said lease and/or in this Agreement and such failure or event has not been remedied within five working days from receipt by the Company of a notice from the Vendor pointing out such default then the Vendor may terminate the provisions of this Schedule and the licence contained in clause 4 above by serving written notice in that behalf on the Company and such termination shall be without prejudice to any accrued rights of action of either party up to that time - 48 - 6. The licence to occupy the Property referred to in clause 4 above shall expire on the earliest of the following: - completion of the Assignment - the date these terms and conditions are rescinded or terminated - twenty working days after the Vendor notifies the Company that the Landlord has lawfully refused to grant consent to the relevant Assignment and/or requires the Company to vacate the Property 7. Upon the expiry of the licence set out in clause 4 above the Company shall vacate the Property forthwith. 8.1 It is the intention of the parties that the Purchaser and/or the Company will bear all costs relating to the Property with effect from the date hereof. 8.2 If the licence referred to in paragraph 4 above terminates without the Assignment being completed simultaneously, the Company will reimburse to the Vendor within 14 days of demand all sums and expenses properly paid or incurred by the Vendor in respect of the Property and/or pursuant to the lease of the Property, including (without prejudice to the generality of the foregoing) rent, service charge, insurance premiums, rates, the costs of repairs and decorations, the costs of power, fuel, water and other services consumed at the Property. 8.3 If the Landlord has refused consent to the lease of the Property being assigned to the Purchaser or the Company, the Vendor will (unless requested not to do so by the Company) use its reasonable endeavours to find an assignee for the Property which will include the employment by the Vendor of agents to market the Property in such situation. 8.4 The Company's obligations under this paragraph 8 will cease (though without prejudice to the rights of either party arising before or in relation to a period before such cesser) when the first of the following occurs: - - the lease of the Property determines - the lease of the Property is assigned to a person, firm or company which is not a member of the Willis Corroon Group plc group of companies 8.5 The Purchaser hereby covenants with the Vendor that the Company will perform its obligations under this paragraph 8, and that the Purchaser will indemnify the Vendor against all costs, expenses, damage and liability paid or incurred by the Vendor as a result of any breach or non-observance by the Company of its - 49 - obligations under this paragraph 8. - 50 - SCHEDULE 5 Pensions 1. DEFINITIONS 1.1 In this Schedule the following expressions shall, unless the context otherwise requires, have the following meanings: "Actuary" means a person who is a Fellow of the Institute of Actuaries or a Fellow of the Faculty of Actuaries in Scotland. "Actuary's Letter" means the letter from the Vendor's Actuary to the Purchaser's Actuary relating to this Schedule, a copy of which is annexed as the Appendix. "Appendix" means an appendix to this Schedule. "Consenting Members" means those Member Employees who are in active pensionable service under the Vendor's Scheme immediately before the Pension Transfer Date and who join the Purchaser's Scheme on the Pension Transfer Date and who have consented to the payment of a transfer amount from the Vendor's Scheme to the Purchaser's Scheme as mentioned in Paragraph 6.1 and "Consenting Member" shall be construed accordingly. "Company" means Willis Faber & Dumas (Agencies) Limited. "contracted-out scheme", "contracting-out certificate", "contracted-out employment" have the same meanings as in the Pension Schemes Act 1993. "Employees" means those persons who were employees of the Company at Completion. "exempt approved scheme" has the meaning as in Chapter 1 of Part XIV of the Income and Corporation Taxes Act 1988 and "exempt approved" shall be construed accordingly. "Investment Adjustment" means the Investment Adjustment set out in the Actuary's Letter. "Life Cover Employees" means such of the Employees who as at Completion were covered for benefits under Rule 1.4 of the Rules of the Vendor's Scheme (for such period only as they remain employed by the Purchaser) but are not Member Employees. "Member Employees" means such of the Employees who were in active pensionable service under the Vendor's Scheme at Completion (for such period only as they - 51 - remain in acive pensionable service). "Paragraph" means a paragraph of this Schedule. "Payment Date" means the date which is 30 days after the latest of: (a) the Pension Transfer Date; (b) the date on which the Vendor's Actuary and the Purchaser's Actuary agree the exact amount of the Transfer Amount pursuant to Paragraph 9; and (c) the date on which the consent of the Inland Revenue is obtained to the payment of the Transfer Amount. "Pension Transfer Date" means the date falling six calendar months after Completion or such other date as is agreed in writing between the Purchaser and the Vendor. "Purchaser's Actuary" means such Actuary as is nominated by the Purchaser for the purpose of this Schedule. "Purchaser's Scheme" means the retirement benefits scheme or schemes to be established or nominated in accordance with Paragraph 5.1 and which will accept an offer of the Transfer Amount. Where the context requires, "Purchaser's Scheme" includes the trustees thereof. "Relevant Amount" means such amount as represents the value at Completion of the benefits under the Vendor's Scheme in respect of the Member Employees at Completion (other than lump sum benefits in respect of death in service or which are based on additional voluntary contributions) on the basis of pensionable service (including all added pensionable service credited at or accrued to Completion under the Vendor's Scheme) up to and pensionable earnings at Completion, such liabilities and amount to be calculated in accordance with the Actuary's Letter. The Relevant Amount will be adjusted by the addition of an amount by which the contributions (other than additional voluntary contributions) made to the Vendor's Scheme in accordance with Paragraph 4 exceeds the cost of death in service benefits and administration expenses as set out in that Paragraph. The Relevant Amount will be calculated in accordance with Paragraph 7. "Transfer Amount" has the meaning given thereto in Paragraph 9. "Transitional Period" means the period from and including Completion up to but excluding the Pension Transfer Date. - 52 - "Vendor's Actuary" means an Actuary of Buck Consultants Limited, Ten Trinity Square, London EC3P 3AX. "Vendor's Scheme" means the Vendor's Scheme described in the Actuary's Letter. References to the Vendor's Scheme shall where the context requires include the trustee thereof. 2. THE TRANSITIONAL PERIOD 2.1 Subject to the approval of the Inland Revenue the Vendor shall use its best endeavours to procure that the Company may continue to participate in the Vendor's Scheme as an Employer (as defined in the Trust Deed of the Vendor's Scheme) up to the Pension Transfer Date but on terms that the Vendor may in its discretion exercise any powers and give any consents on behalf of the Company where those powers or consents arise under the Pensions Act 1995. 2.2 The Vendor undertakes: (a) to procure that no improvement in benefits or change in the percentage rate of member's contributions or in the type of earnings on which such contributions are paid which may be made under the Vendor's Scheme during the Transitional Period will apply to the Member Employees unless the Purchaser gives its prior written consent or such action is necessary in order to comply with the law or to avoid prejudice to Inland Revenue approval or its contracted-out status; (b) that it will not take any action which would cause the Vendor's Scheme to terminate or to be wound up in relation to Member Employees; (c) that it will not exercise any power under the Vendor's Scheme in a manner which could affect the benefits of the Member Employees or the Transfer Amount or in any manner which could or might impose or increase any obligation on or liability of the Purchaser without the written consent of the Purchaser; (d) that it will provide such information as the Purchaser reasonably requests so that the provisions of this paragraph 2.2 are observed. 2.3 The Purchaser hereby undertakes to the Vendor (both for itself and for the trustee of the Vendor's Scheme) that during the Transitional Period it will procure that the Company will insofar as it is able without contravening the requirements of the Inland Revenue: - 53 - (a) participate in the Vendor's Scheme in respect of the Member Employees and the Life Cover Employees and will in respect of such persons promptly pay its contributions and remit member's contributions calculated in accordance with Paragraph 4.1 to the Vendor's Scheme; (b) comply in all other material respects with the provisions of the Vendor's Scheme; (c) not exercise any powers or discretions which may be available to it as an Employer under the Vendor's Scheme without the written consent of the Vendor (which consent shall not be unreasonably withheld); (d) not increase the remuneration of any of the Member Employees or the Life Cover Employees which counts for benefits under the Vendor's Scheme by more than 5% or if less the yearly change in the last published Retail Prices Index; (e) not promote any Member Employee to Grade 11 or above; (f) not do or omit to do any act or thing which would or might lead to the approval of the Vendor's Scheme as an exempt approved scheme, or as a contracted-out scheme, being prejudiced; and (g) promptly deliver to the Vendor and the Vendor's Actuary drafts before they are issued and copies once they are issued of all notices and announcements relating to the Vendor's Scheme supplied to the Member Employees before the Pension Transfer Date. No such documents will be issued without the prior consent of the Vendor which will not be unreasonably withheld. 3. Contracting-out 3.1 The Purchaser shall make such elections, issue announcements and execute such documents as may be necessary to procure that the Member Employees continue to be in contracted-out employment by reference to the Vendor's Scheme throughout the Transitional Period. 3.2 The Purchaser shall give notice of intention in accordance with the Occupational Pension Schemes (Contracting-out) Regulations 1996 in good time to ensure that the Company shall be deleted from the contracting-out certificate relating to the Vendor's Scheme with effect from the Pension Transfer Date, and the Vendor will use its best endeavours to procure the deletion of the Company from the contracting-out certificate with effect from the same date. 4. Contributions during Transitional Period - 54 - The Purchaser shall during the Transitional Period on a monthly basis promptly pay or collect and remit (as appropriate) to or to the order of the Vendor's Scheme the following amounts in respect of each Member Employee who continues to participate in the Vendor's Scheme: (a) Members Grade 10 and below pre 1.1.95 joiners 13.5% of basic salaries, of which 3.5% represents the cost of death in service benefits and administration expenses. (b) Members Grade 10 and below post 31.12.94 joiners 13.5% of basic salaries (including members' contributions), of which 3.5% represents the cost of death in service benefits and administration expenses. - 55 - (c) Members Grade 11 and above 23% of basic salaries, of which 3.5% represents the cost of death in service benefits and administration expenses. (d) Life Cover Employees 0.8% of basic salaries, the whole amount of which represents the cost of death in service benefits and administration expenses. (e) Additional Voluntary Contributions The Purchaser will also pay to the Vendor's Scheme any additional voluntary contributions which relate to a Member. 5. The Purchaser's Undertakings 5.1 The Purchaser undertakes with the Vendor (both for itself and for the trustee of the Vendor's Scheme) that before the Pension Transfer Date it will establish or nominate in writing a retirement benefit scheme or schemes which at both the Pension Transfer Date and the Payment Date will: (a) be an exempt approved scheme or capable of being exempt approved; (b) apply that part of the Transfer Amount (and any Investment Adjustment) which relates to each Consenting Member wholly and exclusively for the benefit of that Consenting Member and those claiming under him; (c) credit any sum in respect of additional voluntary contributions transferred under Paragraph 11 as such under the terms of the Purchaser's Scheme to the appropriate Consenting Member. 5.2 The Purchaser hereby undertakes to the Vendor (both for itself and for the trustee of the Vendor's Scheme) that: (a) it and the trustees of the Purchaser's Scheme will use all reasonable endeavours to obtain in relation to the Purchaser's Scheme the approval of the Inland Revenue under Chapter I of Part XIV of the Income and Corporation Taxes Act 1988 (if not already obtained); (b) subject to payment of the Transfer Amount (adjusted by the Investment Adjustment if appropriate) in accordance with Paragraph 10 below, the Purchaser will procure that: (i) if the Purchaser's Scheme provides benefits which are of a final - 56 - salary type, the Purchaser's Scheme will provide for and in respect of each Consenting Member benefits in respect of pensionable service credited or completed in the Vendor's Scheme before the Pension Transfer Date which are no less favourable overall than the benefits that would have been provided for and in respect of him under the Vendor's Scheme in respect of that pensionable service if he remained in active pensionable service as a member of the Vendor's Scheme up to the date on which he ceases to be an employee of the Company. (ii) if the Purchaser's Scheme provides money purchase benefits, the part of the Transfer Amount (and any Investment Adjustment) which relates to each Consenting Member (as calculated by the Vendor's Actuary) will be credited to his individual account; but so that, if the Purchaser's Scheme is not a contracted-out scheme (as defined in the Pension Schemes Act 1993) or personal pension schemes for each Consenting Member which are appropriate schemes (also as defined in the Pension Schemes Act 1993), the benefits to be provided for the Consenting Members shall be reduced so as to allow for the benefit liabilities which the Vendor's Scheme cannot transfer to the Purchaser's Scheme because it is not a contracted-out scheme or because it is contracted-out on a different basis and the Transfer Amount shall be reduced by an amount calculated by the Vendor's Actuary and agreed by the Purchaser's Actuary as being the value of those benefit liabilities calculated using the assumptions in the Actuary's Letter or, at the Vendor's option, by an amount representing the cost of securing those benefit liabilities under an insurance policy; (c) neither it, nor any company directly or indirectly controlled by or connected with the Purchaser, will encourage or initiate any action or provide financial assistance for the purpose of requiring the Vendor or the Vendor's Scheme to pay a larger amount than the Transfer Amount to the Purchaser's Scheme. 5.3 The Purchaser hereby states that it will keep the Purchaser's Scheme in full force and effect for a period of at least one year from the Pension Transfer Date. 6. Notices and Information 6.1 The Purchaser will use its reasonable endeavours to procure that: (a) within three months after Completion all of the Member Employees will be invited to become active members of the Purchaser's Scheme with effect from the Pension Transfer Date; and - 57 - (b) within one month after the date on which the Relevant Amount for the Member Employees has been agreed all the Member Employees who have joined the Purchaser's Scheme will be invited to consent (in a form acceptable to the Vendor, such acceptance not to be unreasonably withheld) to the transfer of an appropriate sum from the Vendor's Scheme to the Purchaser's Scheme. 6.2 Within three months after the date on which the Relevant Amount for the Member Employees has been agreed the Purchaser shall supply to the Vendor the written consents of the Consenting Members to a transfer of an appropriate sum from the Vendor's Scheme to the Purchaser's Scheme. 7. Calculation of Relevant Amount 7.1 The Purchaser shall promptly upon request by the Vendor provide the Vendor with such information in the Purchaser's possession or control (which is not already within the control or knowledge of the Vendor) as may be reasonably required to facilitate the calculation of the Relevant Amount for the Member Employees and the Transfer Amount and to enable any necessary approvals of the Inland Revenue to a transfer of assets to the Purchaser's Scheme in respect of the Consenting Members to be obtained. 7.2 The Vendor shall procure that the Vendor's Actuary will within two months after the Pension Transfer Date calculate the Relevant Amount for the Member Employees. 8. Purchaser's Actuary to check calculation of Relevant Amount 8.1 The Vendor shall procure that the Vendor's Actuary will supply to the Purchaser's Actuary his calculations of the Relevant Amount upon completing the calculations and promptly upon request such information (in his or the Vendor's possession or control) as the Purchaser's Actuary may reasonably require in order to agree that those calculations are mathematically correct and in accordance with the terms of this Schedule. 8.2 The Purchaser shall procure that the Purchaser's Actuary agrees the Vendor's Actuary's calculations within one month after the date on which he receives the information referred to in Paragraph 8.1. 9. Calculation of the Transfer Amount 9.1 The Vendor and the Purchaser shall procure that the Vendor's Actuary and the Purchaser's Actuary agree the Transfer Amount within one month after the date on which the Vendor receives the written consents referred to in Paragraph 6.2. - 58 - 9.2 The Transfer Amount means that part of the Relevant Amount which relates to the Consenting Members adjusted between Completion (or in respect of contributions paid during the Transitional Period the date on which such contributions were received by the Vendor's Scheme) and the Pension Transfer Date by the Investment Adjustment. 10. The Payment of the Transfer Amount 10.1 Subject to any deduction made under Paragraph 10.3 below and provided the Purchaser has established a pension scheme or schemes which satisfy the provisions of this Schedule the Vendor shall pay or procure that the Vendor's Scheme pays to the Purchaser's Scheme on the Payment Date in cash the Transfer Amount adjusted by the Investment Adjustment from the Pension Transfer Date to the Payment Date. 10.2 The Transfer Amount and the Investment Adjustment under Paragraph 10.1 above shall be adjusted by the Investment Adjustment in respect of any period during which any part thereof remains unpaid after the Payment Date. 10.3 The Transfer Amount and the Investment Adjustment under Paragraphs 10.1 and 10.2 above shall be reduced if the Vendor's Scheme remains liable at the Payment Date to pay guaranteed minimum pensions to and in respect of the Consenting Members by an amount calculated in accordance with the Actuary's Letter. 10.4 The Vendor or the Vendor's Scheme shall be entitled on any day after the Payment Date to offer a payment or payments of amounts then outstanding, and the Purchaser will use its best endeavours to procure that such offer is accepted on account of the Transfer Amount on such basis. If any such offer cannot be accepted for any reason within the control of the Purchaser or of the trustees of the Purchaser's Scheme, the adjustment provided for in Paragraph 10.2 above shall not apply to the amount of the payment offered after the date of the offer. 11. Consenting Members' additional voluntary contributions Any additional voluntary contributions made to the Vendor's Scheme by any Member Employee (and the monies, interest and benefits derived from those contributions) which are used to provide money purchase benefits (as defined in the Pensions Schemes Act 1993) shall be disregarded for the purposes of calculating the Transfer Amount. Instead, the Vendor shall procure that on the Payment Date the Vendor's Scheme shall transfer to the Purchaser's Scheme either the value in cash of the additional voluntary contributions paid to the Vendor's Scheme by the Consenting Members and investment returns thereon or the assets representing the same. - 59 - 12. Approvals 12.1 Each of the parties hereto agree that it will use all reasonable endeavours to obtain any necessary consents of the Inland Revenue or the Department of Social Security for the purposes of: (a) maintaining approval of the Vendor's Scheme as an exempt approved scheme; (b) obtaining any necessary contracting-out certificates in accordance with Paragraph 3.1; (c) maintaining or obtaining (as appropriate) approval of the Purchaser's Scheme as an exempt approved scheme; (d) the participation of the Company in the Vendor's Scheme under Paragraph 2.1; and (e) the transfer of cash to the Purchaser's Scheme on the date and in the manner contemplated by Paragraphs 10 and 11; where under this Schedule it falls to it to obtain or procure the obtaining of such approval. - 60 - APPENDIX Actuary's Letter - 61 - SCHEDULE 6 Fixed Assets to be Acquired - 62 - SCHEDULE 7 Balance Sheet as at 30 June 1997 - 63 - SCHEDULE 8 Services Nature of Service Period to be provided - ----------------- Post Completion --------------------- COMPUTERS 6 months - - Quiet enjoyment and the benefit of the Software Licences as set out in Schedule 11 - - Service and support of AS400 computer in Ipswich - - Support for LAN - - Disaster Recovery COMMUNICATIONS 6 months - - Communication links between Vendor offices and Company's office - - Telephone Switchboard - - E-Mail SERVICES - - Archives 12 months - - Payroll including National Insurance 3 months - 64 - SCHEDULE 9 Relevant Claims (a) The current Lloyd's action group claims and/or litigation against the Company which have not yet been discontinued in respect of or in connection with the following syndicates or managing agents 1 - Feltrim 2 - Lambert 604 (Captain Wheeler only) 3 - King 745 4 - MacKinnon Hayter 134/184 5 - Merrett 418 6 - Wellington 448/406 (A J South only) 7 - Cuthbert Heath 404 (b) Any complaint, claim, arbitration or litigation against the Company by the following individual Names 1 - B P Dewe-Matthews 2 - Howard V More 3 - G T Lewis 4 - Sir Gerrard & Lady Peat 5 - Richard Harwood 6 - Executors of J R Bergne-Coupland dec'd 7 - A J South re Merrett 799 8 - A A Gillham (c) Other Open Claims 1 - The errors and omissions notification in respect of GTE/Wellington - 65 - 2 - The Wellington defence costs recovery action 3 - Claims brought by US names who did not accept the Lloyds Reconstruction and Renewal offer including without limitation the Proskauer case and any claims brought by any Californian Names. (d) Other Relevant Claims (whether current or arising at any time in the future) 1 - any claim arising from the Company's inability to recover from Names the amount of basic rate tax paid on their behalf to the Inland Revenue in respect of profits and surpluses for syndicate years of account reported as at 31 December 1995 despite using reasonable endeavours so to recover 2 - any claim by a Name or by the Inland Revenue in respect of the Company's failure to pay during the calendar year 1991 Names' tax liabilities, including any penalty or interest levied by the Inland Revenue in respect of late payment 3 - any claim arising from discrepancies between manual and computerised ledgers which were created between 1989 and 1995 as a result of maintaining both a manual and a computerised ledger for Collection and Distribution Account 4 - any expenses payable to third parties in the period up to 31st December 1996 in respect of the Lloyd's Reconstruction and Renewal exercise which (i) have not been accounted for at Completion and (ii) the Company is obliged to pay to such third party and (iii) the Company cannot recover from its Name(s) despite using reasonable endeavours so to do 5 - any claim made by any Name or Names action group on or in respect of any syndicate or syndicate year (including without limitation any syndicate where a syndicate year has been left open for 36 months or more) up to and including the 1996 year of account. 6 - any claim made by any Name or Names action group who did not accept the Lloyds Reconstruction and Renewal offer. 7 - any requirement or demand of the Company to pay any contribution in respect of the Members Agents Compensation Scheme where such requirement relates to pre-Completion events, acts or omissions. - 66 - 8 - any requirement of or claim against the Company to repay any profit commission received in respect of any underwriting year, or part of any underwriting year prior to Completion. 9 - any claim by a current or former employee of the Company arising from his or her employment and/or contract of employment or its termination where the matters complained of relate to a period pre-Completion 10 - any claim by a current or former employee of the Company in respect of any personal injury where the matters complained of relate to any period of employment pre-Completion, but only insofar as the injury was found or agreed to have been occasioned during such period - 67 - SCHEDULE 10 Article 36 - 68 - SCHEDULE 11 Software Licences - 69 - Signed by ) for and on behalf of WILLIS ) CORROON GROUP PLC ) in the presence of:- ) Signed by ) for and on behalf of ACEGIANT ) LIMITED in the presence of :- ) Signed by ) for and on behalf of WILLIS FABER ) & DUMAS (AGENCIES) LIMITED ) in the presence of:- ) Signed by ) for and on behalf of WILLIS CORROON ) GROUP SERVICES LIMITED in the ) presence of:- ) - 70 - EX-3.1 14 EX. 3.1 Exhibit 3.1 RESTATED CERTIFICATE OF INCORPORATION OF CORROON & BLACK CORPORATION 1. The name of this corporation is CORROON & BLACK CORPORATION and the name under which this corporation was originally incorporated is Corroon & Reynolds Corporation. The date of filing its original Certificate of Incorporation with the Secretary of State was December 27, 1928. 2. This Restated Certificate of Incorporation only restates and integrates and does not further amend the provisions of the Certificate of Incorporation of this corporation, as heretofore amended or supplemented, and there is no discrepancy between those provisions and the provisions of this Restated Certificate of Incorporation. 3. The text of the Certificate of Incorporation, as amended or supplemented heretofore, is hereby restated, with no further amendments or changes, to read as herein set forth in full: 1. The name of this corporation is CORROON & BLACK CORPORATION. 2. Its registered office in the State of Delaware is located at: 229 South State Street in the City of Dover in the County of Kent; The name and address of its registered agent is: The Prentice Hall-Corporation System, Inc. 229 South State Street Dover, Delaware 19901 3. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware, including but not limited to the following: To act as agents and or brokers and/or attorneys-in-fact and/or agency managers for any person, firm, corporation or association, and particularly for any person, firm, corporation or association engaged in the business of marine, fire, life, accident, casualty and fidelity insurance or reinsurance or any other kind of insurance or reinsurance; to obtain insurance protection of any kind for principals and employers, and any and all of its branches; to act as agents or representatives of owners, lessees, charterers or other persons or corporations having or claiming to have any insurance in merchandise, vessels, cargoes, freight or other subject of insurance, and to make and carry out any contracts for or in relation to any of the foregoing businesses; to act as an insurance adjuster, to adjust for the insured losses under policies or contracts of any kind and class of insurance in any and all of its branches. 4. The total number of shares which the corporation shall have authority to issue is twenty two million (22,000,000) shares of which (a) two million (2,000,000) shares shall be Preferred Stock, issuable in series, of the par value of $1.00 per share, and (b) twenty million (20,000,000) shares shall be Common Stock of the par value of $.25 per share. The designations, powers, preferences and rights and the qualifications, limitations or restrictions of the Preferred Stock and the Common Stock are as follows: A. PREFERRED STOCK The Preferred Stock may be issued from time to time in one or more series and with such designations for each such series as shall be stated and expressed in the resolution or resolutions providing for the issue of each such series adopted by the Board of Directors. The Board of Directors in any such resolution or resolutions is expressly authorized to state and express for each such series: (i) Voting rights, if any, including without limitation the authority to confer multiple votes per share, voting rights as to specified matters or issues such as mergers, consolidations or sales of assets, or voting rights to be exercised either together with holders of common stock as a single class, or independently as a separate class; (ii) The rate per annum and the times at and conditions upon which the holders of stock of such series shall be entitled to receive dividends, and whether such dividends shall be cumulative or noncumulative and if cumulative the terms upon which such dividends shall be cumulative; (iii) The price or prices and the time or times at and the manner in which the stock of such series shall be redeemable; (iv) The rights to which the holders of the shares of stock of such series shall be entitled upon any voluntary or involuntary liquidation, dissolution or winding up of the corporation; (v) The terms, if any, upon which the shares of stock of such series shall be convertible into, or exchangeable for, shares of stock of any other class or classes or of any other series of the same or any other class or classes, including the price or prices or the rate or rates of conversion or exchange and the terms of adjustment, if any; and (vi) Any other designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof so far as they are not inconsistent with the provisions of the Certificate of Incorporation, as amended, and to the full extent now or hereafter permitted by the laws of Delaware. All shares of the Preferred Stock of any one series shall be identical to each other in all respects, except that shares of any one series issued at different times may differ as to the dates from which dividends thereon, if cumulative, shall be cumulative. A. COMMON STOCK (i) Whenever dividends upon the Preferred Stock at the time outstanding shall have been paid in full for all past dividend periods or declared and set apart for payment, such dividends as may be determined by the Board of Directors may be declared by the Board of Directors and paid from time to time to the holders of the Common Stock. (ii) In the event of any liquidation, dissolution or winding up of the affairs of the corporation, whether voluntary or involuntary, all assets remaining after the payment to the holders of the Preferred Stock at the time outstanding of the full amounts to which they shall be entitled, shall be divided and distributed among the holders of the Common Stock according to their respective shares. (iii) Each holder of the Common Stock shall have one vote in respect of each share of such stock held by him. (iv) Holders of the Common Stock shall not have the preemptive right to subscribe for any new or increases shares of any class of stock of the corporation. 5. The minimum amount of capital with which the corporation will commence business is One Thousand Dollars ($1,000.00). 6. This corporation is to have perpetual existence. 7. The private property of the stockholders shall not be subject to the payment of corporate debts to any extent whatever. 8. No contract or other transaction between the corporation and any other corporation, association, partnership, firm, trustee, syndicate or individual, and no act of the corporation shall in any way be affected or invalidated by the fact that any of the directors of the corporation are pecuniarily or otherwise interested in or are directors or officers of such other corporation or association; any director individually, or any firm of which any director may be a partner or member, may be a party to, or may be pecuniarily or otherwise interested in, any contract or transaction of the corporation provided that the fact that he or such firm is so interested shall be disclosed or shall have been known to the Board of Directors or a majority thereof, and any director of the corporation who is also a director or officer of such other corporation, or who is so interested may be counted in determining the existence of a quorum at any meeting of the Board of Directors of the corporation which shall authorize such contract or transaction and may vote thereat to authorize any such contract or transaction with like force and effect as if he were not such officer or director of such other corporation or not so interested. 9. In furtherance, and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized (except as otherwise expressly provided in Article 4 hereof): To make and alter the by-laws of this corporation. To authorize and cause to be executed mortgages and liens upon the real and personal property of this corporation. To set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose or to abolish any such reserve in the manner in which it was created. By resolution or resolutions, passed by a majority of the whole Board to designate one or more committees, each committee to consist of two or more of the directors of the corporation, which, to the extent provided in said resolution or resolutions or in the by-laws of the corporation, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the corporation, and may have power to authorize the seal of the corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be stated in the by-laws of the corporation or as may be determined from time to time by resolution adopted by the Board of Directors. The corporation may in its by-laws confer powers upon its directors in addition to the foregoing, and in addition to the powers and authorities expressly conferred upon them by the statute. Both stockholders and directors shall have power, if the by-laws so provide, to hold their meetings, and to have one or more offices within or without the State of Delaware, and to keep the books of this corporation (subject to the provisions of the statutes) outside of the State of Delaware at such places as may be from time to time designated by the Board of Directors. 10. Whenever a compromise or arrangement is proposed between this corporation and its creditors or any class of them and/or between this corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this corporation or of any creditor or stockholder thereof, or on the application of any receiver or receivers appointed for this corporation under the provisions of Sections 3883 of the Revised Code of 1915 of said State, or on the application of trustees in dissolution or of any receiver or receivers appointed for this corporation under the provisions of Section 43 of the General Corporation Law of the State of Delaware, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the Court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this corporation, as the case may be, and also on this corporation. 11. A. In addition to the requirements of law, and the other provisions of this Certificate of Incorporation, the affirmative vote of the holders of 80% of the votes of the outstanding Voting Stock shall be required for the adoption or authorization of a Business Combination unless: (a) prior to the time any Related Party or any Affiliate of the Related Party becomes a Related Party, the Board of Directors approves the Business Combination; or (b) a majority of the Continuing Directors approves the Business Combination. B. For purposes of Articles 11, 12 and 13 of this Certificate of Incorporation the following definitions apply: (i) Affiliate shall mean a Person who directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with another Person and shall include, but not be limited to (A) any corporation (except the Corporation) or organization of which a Person is a director, officer or partner or is, directly or indirectly the Beneficial Owner of five percent or more of any class of equity securities of such corporation or partnership, (B) any trust or other estate in which a Person has a five percent or larger beneficiary interest of any nature or as to which a Person services as trustee (or co-trustee) or in a similar fiduciary capacity, (C) any spouse of a Person, and (D) any relative of a Person or any relative of a spouse of a Person, who has the same residence as such Person or spouse. (ii) Beneficial Ownership shall include without limitation (A) all shares directly or indirectly owned by a Person and the Affiliates of a Person, (B) all shares which such Person or Affiliate has the right to acquire through the exercise of any option, warrant or right (whether or not currently exercisable, through the conversion of a security, pursuant to the power to revoke a trust, discretionary account or similar arrangement), and (C) all shares to which such Person or Affiliate, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise (including without limitation any written or unwritten agreement to act in concert) has or shares voting power (which includes the power to vote or to direct the voting of such shares) or investment power (which includes the power to dispose or to direct the disposition of such shares) or both. (iii) Business Combination shall mean: (A) any merger or consolidation of the Corporation or a Subsidiary with or into a Related Party or an Affiliate of a Related Party, (B) any merger into the Corporation, or into a Subsidiary, of a Related Party or an Affiliate of a Related Party, (C) any sale, lease, exchange, transfer or other disposition, including without limitation a mortgage or other security device, (in one transaction or a series of transactions) of the assets of the Corporation or a Subsidiary (including the securities of a Subsidiary), to a Related Party or an Affiliate of a Related Party if the Fair Value of such assets be equal to or greater than 10% of thee value of the assets of the Corporation as shown on the Corporation's consolidated balance sheet for the fiscal year ending immediately prior to the determination of such Fair Value, (D) any issuance, sale or transfer by the Corporation or any subsidiary (in one transaction or a series of transactions) to a Related Party or an Affiliate of a Related Party of any shares of any class of Voting Stock of the Corporation or a Subsidiary, which shares either: (i) when combined with the Voting Stock already Beneficially Owned by the Related Party and its Affiliates, represent at least 80% of the voting power of all the outstanding shares of Voting Stock, or (ii) increase the Voting Stock Beneficially Owned by the Related Party and its Affiliates by an amount which constitutes more than 2% of the outstanding Voting Stock, or (E) any reclassification of securities (including any reverse stock split) or recapitalization of the Corporation, or any reorganization, merger or consolidation of the Corporation with any of its Subsidiaries or any similar transaction (whether or not with or into or otherwise involving a Related Party) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding securities of any class of equity securities of the Corporation or any Subsidiary which is directly or indirectly Beneficially Owned by any Related Party. (iv) Continuing Director shall mean, with respect to any Business Combination, (A) any director of the Corporation who is unaffiliated with the Related Party and was a director of the Corporation prior to the time the Related Party who is, or whose Affiliate is, to be a party to such Business Combination became a Related Party, and (B) any director of the Corporation who is unaffiliated with the Related Party and is chosen by a majority of the Continuing Directors to become a director of the Corporation. (v) Control shall mean the possession, directly or indirectly of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. (vi) Fair Value shall mean, with respect to any securities, property, assets or other consideration, the fair market value thereof at any time within 90 days prior to the date of the consummation of any transaction, which value and time shall be determined by a majority of the Continuing Directors who shall be advised on such value by an investment banking firm selected by them. (vii) Related Party shall mean a Person who Beneficially Owns a number of shares of Voting Stock which represents voting power exceeding ten percent of the aggregate voting power of all outstanding shares of Voting Stock. (viii) Person shall mean an individual, a corporation, a partnership, an association, a joint-stock company, a trust, any unincorporated organization, a government or political subdivision thereof and any other entity. (ix) Subsidiary shall mean any corporation with respect to which the Corporation or one or more Subsidiaries have the right to vote more than 50% of its outstanding securities representing the right to vote for the election of directors. (x) Voting Stock shall include the Common Stock and shall also include all other classes of capital stock of the Corporation, which, pursuant to the Delaware General Corporation Law, any provision of this Certificate of Incorporation, or any resolution of the Board of Directors adopted pursuant to Article 4 of this Certificate of Incorporation, would be entitled to vote as a single class with holders of the Common Stock on any Business Combination. C. (a) A majority of the Continuing Directors shall have the power to determine for the purposes of this Article 11, on the basis of information known to them, (i) the amount of Voting Stock Beneficially Owned by any Person, (ii) whether the Person is an Affiliate of another, (iii) whether a Person has a contract, arrangement or understanding with another as to any matter referred to in sub-paragraph B(ii)(C) of this Article 11, (iv) whether the Fair Value of the assets subject to any Business Combination constitutes 10% of the consolidated assets of the Corporation, and/or (v) any other factual matter relating to the applicability or effect of this Article 11. (b) any determination made by the Continuing Directors pursuant to this Article 11 in good faith and on the basis of such information and assistance as was then reasonably available for such purpose shall be conclusive and binding upon the Corporation and its stockholders, including any Related Person. D. This Article 11 shall not be altered, amended, changed or repealed without the affirmative vote of the holders of 80% of the votes of the outstanding Voting Stock. 12. No action required or permitted to be taken at any annual or special meeting of the stockholders of the Corporation may be taken without a meeting and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically denied. This Article 12 shall not be altered, amended, changed, or repealed without the affirmative vote of the holders of 80% of the votes of the outstanding Voting Stock. 13. Except as otherwise expressly provided in this Certificate of Incorporation, this Corporation reserves the right to amend, alter, change or repeal any provision contained in this amended Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. 14. This Restated Certificate of Incorporation was duly adopted by the Board of Directors in accordance withss.245 of the General Corporation Law of Delaware. IN WITNESS WHEREOF, CORROON & BLACK CORPORATION has caused its corporate seal to be hereunto affixed and this Certificate to be signed by ROBERT F. CORROON, its Chairman of the Board, and attested by JOSEPH V. AMBROSE, JR. its Secretary, this 16th day of December, 1983. CORROON & BLACK CORPORATION By: /s/ ------------------------------------- Chairman ATTEST: /s/ - ------------------------------------- Secretary STATE OF NEW YORK ) ) ss: COUNTY OF NEW YORK ) BE IT REMEMBERED that on this 16th day of December, 1983, personally came before me, a Notary Public in and for the County and State of aforesaid, ROBERT F. CORROON, Chairman of the Board of CORROON & BLACK CORPORATION, a corporation of the State of Delaware, and he duly executed said Certificate before me and acknowledged the said Certificate to be his act and deed and the act and deed of said Corporation and that the facts stated therein are true; and that the seal affixed to said Certificate and attested by the Secretary of said Corporation is the common or corporate seal of said Corporation. IN WITNESS WHEREOF, I have hereunto set my hand and the seal of office the day and year aforesaid. /s/ ------------------------------------- NOTARY PUBLIC Margaret M. Milne Notary Public, State of New York No. 30-7950200 Qualified in Naussau County Cert. Filed in New York County Commission Expires 3/30/1984 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION CORROON & BLACK CORPORATION, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, hereby certifies: FIRST: That at a meeting of the Board of Directors of Corroon & Black Corporation resolutions were duly adopted setting forth proposed amendments to the Certificate of Incorporation of said corporation, declaring said amendments to be advisable and calling a meeting of the stockholders of said Corporation for consideration thereof. The resolutions setting forth the proposed amendments are as follows: RESOLVED, that the first sentence of paragraph 4 of the Certificate of Incorporation of this corporation is hereby amends to that it shall read as follows: "4. The total number of shares which the corporation shall have authority to issue is forty-two million (42,000,000) shares of which (a) two million (2,000,000) shares shall be preferred stock issuable in series of the par value of $1.00 per share, and (b) forty million (40,000,000) shares shall be common stock of the par value of $.125 per share." SECOND: That thereafter, pursuant to resolution of its Board of Directors, an annual meeting of the stockholders of said corporation was duly called and held, upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware, at which meeting the necessary number of shares as required by statute were voted in favor of each of the amendments. THIRD: That said amendments were duly adopted in accordance with the provisions of Section 242 of the General Corporation law of the State of Delaware. FOURTH: That the capital of said Corporation will not be reduced under or by reason of said amendment. IN WITNESS WHEREOF, said CORROON & BLACK CORPORATION has caused its corporate seal to be hereunto affixed and its Certificate to be signed by its Chairman and attested by its Secretary this 24th day of April 1986. CORROON & BLACK CORPORATION By: /s/ ------------------------------------- Robert F. Corroon Chairman of the Board ATTEST: BY: /s/ --------------------------------- Joseph V. Ambrose, Jr. Secretary STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) On the date hereinafter set forth, before me came Robert F. Corroon and Joseph V. Ambrose, Jr., to me known to be the individuals who are described in, and who signed the foregoing Certificate of Amendment to Certificate of Incorporation, and they acknowledged to me that they subscribed and affirmed the same under penalties of perjury. Signed on the 24th day of April, 1986. /s/ ------------------------------------- Notary Public My Commission Expires: 3/30/87 Juanita Marvuglio Notary Public , State of New York No. 24-4797743 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION Corroon & black corporation a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, hereby certifies: FIRST: That a meeting of the Board of Directors of CORROON & BLACK CORPORATION held on March 4, 1987, resolutions were duly adopted setting forth proposed amendments to the Certificate of Incorporation of said Corporation, declaring said amendments to be advisable and calling a meeting of the stockholders of said Corporation for the consideration thereof. The resolutions setting forth the proposed amendments are as follows: "RESOLVED, that the Certificate of Incorporation of this Corporation be amended, subject to stockholder approval, to include a new Article 13 to read as follows: '13. A director of this Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit.' and be it further RESOLVED, that, upon the adoption of the above amendment to the Certificate of Incorporation, current Article 13 shall be renumbered Article 14." SECOND: That thereafter, pursuant to a resolution of its Board of Directors, an annual meeting of the stockholders of said Corporation was duly called and held, upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware, at which meeting the necessary number of shares as required by statute were voted in favor of the amendments. THIRD: That said amendments were duly adopted in accordance with the provisions of Section 242 of the General Corporation law of the State of Delaware. IN WITNESS WHEREOF, said CORROON & BLACK CORPORATION has caused its corporate seal to be hereunto affixed and this Certificate to be signed by its Chairman and attested by its Secretary this 29th day of April, 1987. CORROON & BLACK CORPORATION By: /s/ ------------------------------------- Robert F. Corroon Chairman of the Board ATTEST ATTEST: /s/ - --------------------------------- Joseph V. Ambrose, Jr. Secretary STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) On the date hereinafter set forth, before me came Robert F. Corroon and Joseph V. Ambrose, Jr., to me known to be the individuals who are described in, and who signed, the foregoing Certificate of Incorporation and they subscribed and affirmed the same under penalties of perjury. Signed on the 27th day of April, 1987. /s/ ------------------------------------- Notary Public William S. Youngman Notary Public State of New York No. 31 451 9807 Qualified in New York County Commission Expires: March 30, 1988 CERTIFICATE OF DESIGNATION OF CORROON & BLACK COPPORATION RESOLVED, that pursuant to the authority vested in the Board of Directors of the Corporation in accordance with the provisions of the Restated Certificate of Incorporation and Section 151 of the Delaware General Corporation Law, a series of Preferred Stock of the Corporation be and it hereby is created, and that the designation and amount thereof and the voting powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof are as follows: Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be designated as "Series A Junior Participating Preferred Stock, $1.00 par value per share" and the number of shares constituting such series shall be 300,000. Section 2. DIVIDENDS AND DISTRIBUTIONS. (A) Subject to the prior and superior rights of the holders of any shares of any series of Preferred Stock ranking prior and superior to the shares of Series A Junior Participating Preferred Stock with respect to dividends, the holders of shares of Series A Junior Participating Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the fifteenth day of March, June, September and December in each year (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Junior Participating Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $10.00 or (b) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock, $0.125 par value per share, of the Corporation (the "Common Stock") since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Junior Participating Preferred Stock. In the event the Corporation shall at any time after December 16, 1987 (the "Rights Declaration Date") (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount to which holders of shares of Series A Junior Participating Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (B) The Corporation shall declare a dividend or distribution on the Series A Junior Participating Preferred Stock as provided in paragraph (A) above immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $10.00 per share on the Series A Junior Participating Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. (C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Junior Participating Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Junior Participating Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Junior Participating Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Junior Participating Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Junior Participating Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 30 days prior to the date fixed for the payment thereof. Section 3. VOTING RIGHTS. The holders of shares of Series A Junior Participating Preferred Stock shall have the following voting rights: (A) Subject to the provision for adjustment hereinafter set forth, each share of Series A Junior Participating Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the number of votes per share to which holders of shares of Series A Junior Participating Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (B) Except as otherwise provided herein or by law, the holders of shares of Series A Junior Participating Preferred Stock and the holders of shares of Common Stock shall vote together as one class on-all matters submitted to a vote of stockholders of the Corporation. (C) (i) If at any time dividends on any Series A Junior Participating Preferred Stock shall be in arrears in an amount equal to six (6) quarterly dividends thereon, the occurrence of such contingency shall mark the beginning of a period (herein called a "default period") which shall extend until such time when all accrued and unpaid dividends for all previous quarterly dividend periods and for the current quarterly dividend period on all shares of Series A Junior Participating Preferred Stock then outstanding shall have been declared and paid or set apart for payment. During each default period, all holders of Preferred Stock (including holders of the Series A Junior Participating Preferred Stock) with dividends in arrears in an amount equal to six (6) quarterly dividends thereon, voting as a class, irrespective of series, shall have the right to elect two (2) Directors. (ii) During any default period, such voting right of the holders of Series A Junior Participating Preferred Stock may be exercised initially at a special meeting called pursuant to subparagraph (iii) of this Section 3(C) or at any annual meeting of stockholders, and thereafter at annual meetings of stockholders, provided that neither such voting right nor the right of the holders of any other series of Preferred Stock, if any, to increase, in certain cases, the authorized number of Directors shall be exercised unless the holders of ten percent (10%) in number of shares of Preferred Stock outstanding shall be present in person or by proxy. The absence of a quorum of the holders of Common Stock shall not affect the exercise by the holders of Preferred Stock of such voting right. At any meeting at which the holders of Preferred Stock shall exercise such voting right initially during an existing default period, they shall have the right, voting as a class, to elect Directors to fill such vacancies, if any, in the Board of Directors as may then exist up to two (2) Directors or, if such right is exercised at an annual meeting, to elect two (2) Directors. If the number which may be so elected at any special meeting does not amount to the required number, the holders of the Preferred Stock shall have the right to make such increase in the number of Directors as shall be necessary to permit the election by them of the required number. After the holders of the Preferred Stock shall have exercised their right to elect Directors in any default period and during the continuance of such period, the number of Directors shall not be increased or decreased except by vote of the holders of Preferred Stock as herein provided or pursuant to the rights of any equity securities ranking senior to or PARI PASSU with the Series A Junior Participating Preferred Stock. (iii) Unless the holders of Preferred Stock shall, during an existing default period, have previously exercised their right to elect Directors, the Board of Directors may order, or any stockholder or stockholders owning in the aggregate not less than ten percent (10%) of the total number of shares of Preferred Stock outstanding, irrespective of series, may request, the calling of a special meeting of the holders of Preferred Stock, which meeting shall thereupon be called by the Chairman of the Board, the President, a Vice-President or the Secretary of the Corporation. Notice of such meeting and of any annual meeting at which holders of Preferred Stock are entitled to vote pursuant to this paragraph (C) (iii) shall be given to each holder of record of Preferred Stock by mailing a copy of such notice to him at his last address as the same appears on the books of the Corporation. Such meeting shall be called for a time not earlier than 20 days and not later than 60 days after such order or request or in default of the calling of such meeting within 60 days after such order or request, such meeting may be called on similar notice by any stockholder or stockholders owning in the aggregate not less than ten percent (10%) of the total number of shares of Preferred Stock outstanding. Notwithstanding the provisions of this paragraph (C)(iii), no such special meeting shall be called during the period within 60 days immediately preceding the date fixed for the next annual meeting of the stockholders. (iv) In any default period, the holders of Common Stock, and other classes of stock of the Corporation if applicable, Shall continue to be entitled to elect the whole number of Directors until the holders of Preferred Stock shall have exercised their right to elect two (2) Directors voting as a class, after the exercise of which right (x) the Directors so elected by the holders of Preferred Stock shall continue in office until their successors shall have been elected by such holders or until the expiration of the default period, and (y) any vacancy in the Board of Directors may (except as provided in paragraph (C)(ii) of this Section 3) be filled by vote of a majority of the remaining Directors theretofore elected by the holders of the class of stock which elected the Director whose office shall have become vacant, or if no such Directors are in office, by the holders of the Preferred Stock. References in this paragraph (C) to Directors elected by the holders of a particular class of stock shall include Directors elected by such Directors to fill vacancies as provided in clause (y) of the foregoing sentence. (v) Immediately upon the expiration of a default period, (x) the right of the holders of Preferred Stock as a class to elect Directors shall cease, (y) the term of any Directors elected by the holders of Preferred Stock as a class shall terminate, and (z) the number of Directors shall be such number as may be provided for in the articles of incorporation or by-laws irrespective of any increase made pursuant to the provisions of paragraph (C)(ii) of this Section 3 (such number being subject, however, to change thereafter in any manner provided by law or in the articles of incorporation or by-laws). Any vacancies in the Board of Directors effected by the provisions of clauses (y) and (z) in the preceding sentence may be filled by a majority of the remaining Directors. (D) Except as set forth herein or otherwise required by law, holders of Series A Junior Participating Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action. Section 4. CERTAIN RESTRICTIONS. (A) Whenever quarterly dividends or other dividends or distributions payable on the Series A Junior Participating Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Junior Participating Preferred Stock outstanding shall have been paid in full, the Corporation shall not: (i) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Junior Participating Preferred Stock; (ii) declare or pay dividends on or make any other distributions on any shares of stock RANKING on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Junior Participating Preferred Stock, except dividends paid ratably on the Series A Junior Participating Preferred - Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Junior Participating Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Junior Participating Preferred Stock; (iv) purchase or otherwise acquire for consideration any shares of Series A Junior Participating Preferred Stock, or any shares of stock ranking on a parity with the Series A Junior Participating Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes. (B) The Corporation shall not permit any subsidiary of or any partnership controlled by the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner. Section 5. REACQUIRED SHARES. Any shares of Series A Junior Participating Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein. Section 6. LIQUIDATION, DISSOLUTION OR WINDING (A) Upon any liquidation (voluntary or otherwise), dissolution or winding up of the Corporation, no distribution shall be made to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Junior Participating Preferred Stock unless, prior thereto, the holders of shares of Series A Junior Participating Preferred Stock shall have received $100 per share plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment (the "Series A Liquidation Preference"). Following the payment of the full amount of the Series A Liquidation Preference, no additional distributions shall be made to the holders of shares of Series A Junior Participating Preferred Stock unless, prior thereto, the holders of shares of Common Stock shall have received an amount per share (the "Common Adjustment") equal to the quotient obtained by dividing (i) the Series A Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth in subparagraph C below to reflect such events as stock splits, stock dividends and recapitalizations with respect to the Common Stock) (such number in clause (ii), the "Adjustment Number"). Following the payment of the full amount of the Series A Liquidation Preference and the Common Adjustment in respect of all outstanding shares of Series A Junior Participating Preferred Stock and Common Stock, respectively, holders of Series A Junior Participating Preferred Stock and holders of shares of Common Stock shall receive their ratable and proportionate share of the remaining assets to be distributed in the ratio of the Adjustment Number to 1 with respect to such Preferred Stock and Common Stock, on a per share basis, respectively. (B) In the event, however, that there are not sufficient assets available to permit payment in full of the Series A Liquidation Preference and the liquidation preferences of all other series of preferred stock, if any, which rank on a parity with the Series A Junior Participating Preferred Stock, then such remaining assets shall be distributed ratably to the holders of such parity shares in proportion to their respective liquidation preferences. In the event, however, that there are not sufficient assets available to permit payment in full of the Common Adjustment, then such remaining assets shall be distributed ratably to the holders of Common Stock. (C) In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the Adjustment Number in effect immediately prior to such event shall be adjusted by multiplying such Adjustment Number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. Section 7. CONSOLIDATION, MERGER, ETC. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series A Junior Participating Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Junior Participating Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. Section 8. NO REDEMPTION. The shares of Series A Junior Participating Preferred Stock shall not be redeemable. Section 9. RANKING. The Series A Junior Participating Preferred Stock shall rank junior to all other series of the corporation's Preferred Stock as to the payment of dividends and to the distribution of assets, unless the terms of any such series shall provide otherwise. Section 10. AMENDMENT. The Restated Certificate of Incorporation of the Corporation shall not be further amended in any manner which would materially alter or change the powers, preferences or special rights of the Series A Junior Participating Preferred Stock so as to affect them adversely without the affirmative vote of the holders of two-thirds or more of the outstanding shares of Series A Junior Participating Preferred Stock, voting separately as a class. Section 11. FRACTIONAL SHARES. Series A Junior Participating Preferred Stock may be issued in fractions of a share which shall entitled the holder, in proportion to such holder's fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series A Junior Participating Preferred Stock. IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do affirm the foregoing as true under the penalties of perjury this 16th day of December, 1987. /s/ ------------------------------------- Robert Corroon Chairman and Chief Executive Officer Attest: /s/ ------------------------------------- Joseph P. Ambrose, Jr. Secretary CERTIFICATE OF MERGER OF WCFB CORPORATION INTO CORROON & BLACK CORPORATION The undersigned corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: 1. That the name and state of incorporation of each of the constituent corporations of the merger is as follows: NAME STATE OF INCORPORATION WCFB Corporation Delaware Corroon & Black Corporation Delaware 2. An agreement and plan of merger has been approved, adopted, certified, executed and acknowledged by each of the constituent corporations in accordance with Section 251 of the General Corporation Law of the State of Delaware. 3. The name of the surviving corporation of the merger is Corroon & Black Corporation. 4. The Restated Certificate of Incorporation of Corroon & Black Corporation shall be the certificate of the surviving corporation, except that paragraph 4 thereof shall be amended by deleting it in its entirety and inserting in lieu thereof the following new paragraph 4: "4. The total number of shares of stock of all classes which the Corporation has authority to issue is 3,000 shares of common stock, par value $.01 per share." 5. The executed agreement and plan of merger is on file at the principal place of business of the surviving corporation, the address of which is as follows: Corroon & Black Corporation Wall Street Plaza New York, New York 10005 Attention: Joseph V. Ambrose, Jr., Esq. 6. A copy of the agreement and plan of merger will be furnished by the surviving corporation, on request and without cost, to any stockholder of any constituent corporation. 7. The merger herein certified shall become effective upon filing with the Secretary of State of the State of Delaware. Dated: October 8, 1990 CORROON & BLACK CORPORATION By /s/ Joseph V. Ambrose, Jr. -------------------------------------- Senior Vice President Attest: By /s/ Robert M. Coffee -------------------------------------- Secretary CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF CORROON & BLACK CORPORATION It is hereby certified that: 1. The name of the corporation (hereinafter called the "corporation") is CORROON & BLACK CORPORATION. 2. The certificate of incorporation of the corporation is hereby amended by striking out Article 1 thereof and by substituting in lieu of said Article the following new Article. "The name of the corporation is Willis Corroon Corporation." 3. The certificate of incorporation of the corporation is hereby amended by striking out Article 12 thereof and by renumbering the following articles. 4. The amendments of the certificate of incorporation herein certified have duly adopted in accordance with the provisions of Sections 228 and 242 of the General Corporation Law of the State of Delaware. Signed and attested to on December 20, 1990. /s/ Robert M. Coffee ---------------------------------------- Vice-President Attest: /s/ Jane E. Nutson - -------------------------------------- Assistant Secretary CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF WILLIS CORROON CORPORATION It is hereby certified that: 1. The name of the corporation (hereinafter called the "corporation") is WILLIS CORROON CORPORATION. 2. The certificate of incorporation of the corporation is hereby amended by striking out Article 4 thereof and by substituting in lieu of said Article the following new Article. "The total number of shares of stock of all class which the Corporation has authority to issue is 10,000 shares of common stock, par value $.01 per share." 3. The amendment of the certificate of incorporation herein certified has been duly adopted in accordance with the provisions of Sections 228 and 242 of the General Corporation Law of the State of Delaware. Signed and attested to on January 31, 1991. /s/ Robert M. Coffee ---------------------------------------- Vice-President Attest: /s/ Jane E. Nutson - -------------------------------------- Assistant Secretary AGREEMENT OF MERGER OF Willis Corroon Corporation of Tennessee (a Tennessee corporation) AND Willis Corroon Corporation (a Delaware corporation) AGREEMENT OF MERGER entered into on December 9, 1991 by Willis Corroon Corporation of Tennessee, a business corporation of the State if Tennessee, and approved by resolution adopted by its Board of Directors on said date, and entered into on December 9, 1991 by Willis Corroon Corporation, a business corporation of the State of Delaware, and approved by resolution adopted by its Board of Directors on said date. WHEREAS Willis Corroon Corporation of Tennessee is a business corporation of the State of Tennessee with its registered office therein located 722 Chestnut Street, City of Chattanooga, County of Hamilton; and WHEREAS the total number of shares of stock which Willis Corroon Corporation of Tennessee has authority to issue is 10,000,000, all of which are of one class and of par value of $1.00 each; and WHEREAS Willis Corroon Corporation is a business corporation of the State of Delaware with its registered office therein located at 32 Loockerman Square, Suite L-100, City of Dover, County of Kent; and WHEREAS the total number of shares of stock of which Willis Corroon Corporation has authority to issue is 10,000, all of which are of one class and of the par value of $.0100 each; and WHEREAS the Tennessee Business Corporation Act permits a merger of a business corporation of the State of Tennessee with and into a business corporation of another jurisdiction; and WHEREAS the General Corporation Law of the State of Delaware permits the merger of a business corporation of another jurisdiction with and into a business corporation of the State of Delaware; and WHEREAS Willis Corroon Corporation of Tennessee and Willis Corroon Corporation and the respective Boards of Directors thereof deem it advisable and to the advantage, welfare, and best interests of said corporation and their respective stockholders to merge Willis Corroon Corporation of Tennessee with and into Willis Corroon Corporation pursuant to the provisions of the Tennessee business Corporation Act and pursuant to the provisions of the General Corporation Law of the State of Delaware upon the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the premises and of the mutual agreement of the parties hereto, being thereunto duly entered into by Willis Corroon Corporation of Tennessee and approved by a resolution adopted by its board of Directors and being thereunto duly entered into by Willis Corroon Corporation and approved by a resolution adopted by its Board of Directors, the (Plan and) Agreement of Merger and the terms and conditions thereof and the mode of carrying the same into effect, together with any provisions required or permitted to be set forth therein, are hereby determined and agreed upon as hereinafter in the (Plan and) Agreement set forth. 1. Willis Corroon Corporation of Tennessee and Willis Corroon Corporation shall, pursuant to the provisions of the Tennessee Business Corporation Act and the provisions of the General Corporation Law of the State of Delaware, be merged with and into a single corporation, to wit, Willis Corroon Corporation, which shall be the surviving corporation from and after the effective time of the merger, and which is sometimes hereinafter referred to as the "surviving corporation", and which shall continue to exist as said surviving corporation under its present name pursuant to the provisions of the General Corporation Law of the State of Delaware. The separate existence of Willis Corroon Corporation of Tennessee, which is sometimes hereinafter referred to as the "terminating corporation", shall cease at said effective time in accordance with the provisions of the Tennessee Business Corporation Act. 2. The Certificate of Incorporation of the surviving corporation shall be in force and effect at the effective time in the State of Delaware of the merger herein provided for; and said Certificate of Incorporation shall continue to be the Certificate of Incorporation of said surviving corporation until amended and changed pursuant to the provisions of the General Corporation Law of the State of Delaware. 3. The present by-laws of the surviving corporation will be the by-laws of said surviving corporation and will continue in full force and effect until changed, altered or amended as therein provided and in the manner prescribed by the provisions of the General Corporation Law of Delaware. 4. The effective time of the Agreement of Merger, and the time when the merger therein agreed upon shall become effective, shall be January 1, 1992. Dated: December 10, 1991 Willis Corroon Corporation By: /s/ Robert M. Coffee ------------------------------------- Vice President Attest: /s/ Joseph V. Ambrose, Jr. - ------------------------------------- Its: Assistant Secretary CERTIFICATE OF SECRETARY OF WILLIS CORROON CORPORATION The undersigned, being Assistant Secretary of Willis Corroon Corporation, does hereby certify that the foregoing Agreement of Merger has been adopted upon behalf of said corporation pursuant to the provisions of Subsection (f) of Section 251 of the General Corporation Law of the State of Delaware, and that, as of the date of this Certificate, the outstanding shares of said corporation were such as to render the provisions of said Subsection (f) applicable. Dated: December 10, 1991 /s/ Joseph V. Ambrose, Jr. ------------------------------------- Assistant Secretary of Willis Corroon Corporation CERTIFICATE OF ASSISTANT SECRETARY OF WILLIS CORROON CORPORATION OF TENNESSEE The undersigned, being the Assistant Secretary of Willis Corroon Corporation of Tennessee, does hereby certify that the foregoing Agreement of Merger has been adopted upon behalf of said corporation pursuant to the provisions of Subsection (f) of Section 251 of the General Corporation Law of the State of Delaware, and that, as of the date of this Certificate, the outstanding shares of said corporation were such as to render the provisions of said Subsection (f) applicable. Dated: December 10, 1991 /s/ Joseph V. Ambrose, Jr. ------------------------------------- Assistant Secretary of Willis Corroon Corporation of Tennessee AGREEMENT OF MERGER OF RELEX CORP. (a Delaware corporation) AND WILLIS CORROON CORPORATION (a Delaware corporation) AGREEMENT OF MERGER approved on December 9, 1991 by Relex Corp., a business corporation of the State of Delaware, and by resolution adopted by its Board of Directors on said date, and approved on December 9, 1991, by Willis Corroon Corporation, a business corporation of the State of Delaware, and by resolution adopted by its Board of Directors on said date. WHEREAS, Relex Corp. is a business corporation of the State of Delaware with its registered office therein located at 32 Loockerman Square, Suite L-100, City of Dover, County of Kent; and WHEREAS the total number of shares of stock which Relex Corp. has authority to issue is 25,000, all of which are of one class and of a par value of $5.00 each; and WHEREAS Willis Corroon Corporation is a business corporation of the State of Delaware with its registered office therein located at 32 Loockerman Square, Suite L-100, City of Dover, County of Kent; and WHEREAS the total number of shares of stock which Willis Corroon Corporation has authority to issue is 10,000, all of which are of one class and of the par value of $.0100 each; and WHEREAS Relex Corp. and Willis Corroon Corporation and the respective Board of Directors thereof deem it advisable and to the advantage, welfare and best interest of said corporations and their respective stockholders to merge Relex Corp. with and into Willis Corroon Corporation pursuant to the provisions of the General Corporation Law of the State of Delaware upon the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the premises and of the mutual agreement of the parties hereto, being thereunto duly approved by a resolution adopted by the Board of Directors of Relex Corp. and duly approved by a resolution adopted by the Board of Directors of Willis Corroon Corporation, the Agreement of Merger and the terms and conditions thereof and the mode of carrying the same into effect, together with any provisions required or permitted to be set forth therein, are hereby determined and agreed upon as hereinafter in this Agreement set forth. 1. Relex Corp. and Willis Corroon Corporation shall, pursuant to the provisions of the General Corporation Law of the State of Delaware, be merged with and into a single corporation, to wit, Willis Corroon Corporation, which shall be the surviving corporation from and after the effective time of the merger, and which is sometimes hereinafter referred to as the "surviving corporation", and which shall continue to exist as said surviving corporation under its present name pursuant to the provisions of the General Corporation Law of the State of Delaware. The separate existence of Relex Corp. which is hereinafter sometimes referred to as the "terminating corporation", shall cease at said effective time in accordance with the provisions of the General Corporation Law of the State of Delaware. 2. The Certificate of Incorporation of the surviving corporation as now in force and effect, shall continue to be the Certificate of Incorporation of said surviving corporation and said Certificate of Incorporation shall continue in full force and effect until amended and changed in the manner prescribed by the provisions of the General Corporation Law of the State of Delaware. 3. The present by-laws of the surviving corporation will be the by-laws of said surviving corporation and will continue in full force and effect until changed, altered or amended as therein provided and in the manner prescribed by the provisions of the General Corporation Law of Delaware. 4. The directors and officers in office of the surviving corporation at the effective time of the merger shall be the members of the first Board of Directors and the first officers of the surviving corporation, all of whom shall hold their directorships and offices until the election and qualification of their respective successors or until their tenure is otherwise terminated in accordance with the by-laws of the surviving corporation. 5. Each issued share of the terminating corporation shall, at the effective time of the merger, be surrendered and extinguished. The issued shares of the surviving corporation shall not be converted or exchanged in any manner, but each said share which is issued as of the effective time of the merge shall continue to represent one issued share of the surviving corporation. 6. In the event that this Agreement of Merger shall have been fully adopted upon behalf of the terminating corporation and of the surviving corporation in accordance with the provisions of the General Corporation Law of the State of Delaware, the said corporations agree that they will cause to be executed and filed and recorded any document or documents prescribed by the laws of the State of Delaware, and that they will cause to be performed all necessary acts within the State of Delaware and elsewhere to effectuate the merger herein provided for. 7. The Board of Directors and the proper officers of the terminating corporation and of the surviving corporation are hereby authorized, empowered and directed to do any and all acts and things, and to make, execute, deliver, file, and record any and all instruments, papers and documents which shall be or become necessary, proper or convenient to carry out or put into effect any of the provisions of this Agreement of Merger or of the merger herein provided for. 8. The effective time of the Agreement of Merger, and the time when the merger therein agreed upon shall become effective, shall be January 1, 1992. IN WITNESS WHEREOF, this Agreement of Merger is hereby signed and attested upon behalf of each of the constituent corporations parties thereto. Dated: December 10, 1991. Relex Corp. By /s/ Robert M. Coffee ----------------------------------- Its: Vice President Attest: /s/ Joseph V. Ambrose, Jr. - ------------------------------------- Its: Assistant Secretary Dated December 10, 1991. Willis Corroon Corporation By /s/ Robert M. Coffee ----------------------------------- Its: Vice President Attest: /s/ Joseph V. Ambrose, Jr. - ------------------------------------- Its: Assistant Secretary CERTIFICATE OF ASSISTANT SECRETARY The undersigned, being the Assistant Secretary of Willis Corroon Corporation, does hereby certify that the holders of all of the outstanding stock of said corporation dispensed with a meeting and vote of stockholders, and all of the stockholders entitled to vote consented in writing, pursuant to the provisions of Section 228 of the General Corporation Law of the State of Delaware, to the adoption of the foregoing Agreement of Merger. Dated: December 10, 1991 /s/ Joseph V. Ambrose, Jr. ------------------------------------- Assistant Secretary of Willis Corroon Corporation CERTIFICATE OF ASSISTANT SECRETARY The undersigned, being the Assistant Secretary Relex Corp., does hereby certify that the holders of all of the outstanding stock of said corporation dispensed with a meeting and vote of stockholders, and all of the stockholders entitled to vote consented in writing, pursuant to the provisions of Section 228 of the General Corporation Law of the State of Delaware, to the adoption of the foregoing Agreement of Merger. Dated: December 10, 1991 /s/ Joseph V. Ambrose, Jr. ------------------------------------- Assistant Secretary of Relex Corp. CERTIFICATE OF MERGER OF Golden Horseshoe Aviation, Inc. INTO Willis Corroon Corporation The undersigned corporation DOES HEREBY CERTIFY: FIRST: That the name and state of incorporation of each of the constituent corporation of the merger is as follows: NAME STATE OF INCORPORATION Golden Horseshoe Aviation, Inc. North Carolina Willis Corroon Corporation Delaware SECOND: That an Agreement of Merger between the parties to the merger has been approved, adopted, certified, executed and acknowledged by each of the constituent corporations in accordance with the requirements of section 252 of the General Corporation Law of Delaware. THIRD: That the name of the surviving corporation is Willis Corroon Corporation, a Delaware Corporation. FOURTH: That the Restated Certificate of Incorporation of Willis Corroon Corporation, a Delaware corporation which is surviving the merger, shall be the certificate of Incorporation of the surviving corporation. FIFTH: That the executed Agreement of Merger is on file at the principal place of business of the surviving corporation, the address of which is 26 Century Blvd., Nashville, TN 37214. SIXTH: That a copy of the Agreement of Merger will be furnished by the surviving corporation, on request and without cost, to any stockholder of any constituent corporation. SEVENTH: The authorized capital stock of the foreign corporation which is a party to the merger is as follows:
Par Value per share or statement that shares are Corporation Class Number of Shares Without Par Value. - ----------- ----- ---------------- ------------------ Golden Horseshoe Aviation, Inc. Common 100,000 $1.00
EIGHTH: That this Certificate of Merger shall be effective at the close of business on December 31, 1994. Dated: December 14, 1994 Willis Corroon Corporation By: /s/ Jane E. Nutson ----------------------------------- Jane E. Nutson Vice President & Secretary CERTIFICATE OF CHANGE OF REGISTERED AGENT AND REGISTERED OFFICE ***** Willis Corroon Corporation, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: The present registered agent of the corporation is The Prentice- Hall Corporation System, Inc., and the present registered office of the corporation is in the count of Kent. The Board of Directors of Willis Corroon Corporation adopted the following resolution on the 21st day of August, 1995. Resolved, that the registered office of Willis Corroon Corporation in the State of Delaware be and it hereby is changed to Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle, and the authorization of the present registered agent of this corporation be and the same is hereby withdrawn, and THE CORPORATION TRUST COMPANY, shall be and is hereby constituted and appointed the registered agent of this corporation at the address of its registered office. IN WITNESS WHEREOF, Willis Corroon Corporation has caused this statement to be signed by Bart R. Schwartz, its Senior Vice President and attested by Jane E. Nutson, its Secretary this 21st day of August, 1995. By /s/ Bart R. Schwartz ------------------------------------ Senior Vice President ATTEST: By: /s/ Jane E. Nutson ------------------------ Secretary EX-3.2 15 EX. 3.2 Exhibit 3.2 BY-LAWS OF CORROON & BLACK CORPORATION AS AMENDED DECEMBER 6, 1989 CORROON & BLACK CORPORATION BY-LAWS ARTICLE I. OFFICES. The Corporation shall maintain a registered office in the State of Delaware. In addition, the Corporation may maintain such other offices and places of business, both within and without the State of Delaware, as the Board of Directors may determine or as the business and affairs of the Corporation may require. ARTICLE II. MEETINGS OF STOCKHOLDERS. SECTION 1. PLACE OF MEETING. All meetings of the stockholders of the Corporation shall be held at such place, within or without the State of Delaware, as the Board of Directors shall determine. SECTION 2. ANNUAL MEETINGS. The annual meeting of the stockholders for the election of directors and for the transaction of such other business as may come before the meeting shall be held on the last Thursday of April in each year, or on such other date as may be fixed by resolution of the Board of Directors and set forth in the notice of such meeting. At any such meeting or any adjournment thereof, the stockholders shall elect a Board of Directors and transact any other business authorized or required to be transacted by the stockholders. SECTION 3. SPECIAL MEETINGS. Special meetings of the stockholders may be called at any time by the Chairman of the Board, the Chairman of the Executive Committee, the President or by order of the Board of Directors or of the Executive Committee. SECTION 4. NOTICE OF MEETINGS. Except as otherwise provided by statute, written notice stating the place, day and hour of the meeting, and in the case of a special meeting the purpose or purposes for which the meeting is called, shall be given not less than ten (1O) nor more than sixty (60) days before such meeting to each stockholder of record at such address as may appear on the stock books of the Corporation. SECTION 5. RECORD DATE. In order to determine the stockholders entitled to notice of or to vote at any meeting of the stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, and no more than sixty (60) days prior to any other action. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice of the meeting is given or at the close of business on the day next preceding the day on which the meeting is held, and such date for any other purpose shall be the date on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. SECTION 6. LIST OF STOCKHOLDERS. The Secretary shall prepare, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in his name. For said ten (10) days such list shall be open to the examination of any stockholder for any purpose germane to the meeting, during normal business hours, either at a place within the city where said election is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place of the meeting. The list shall also be produced and kept at the time and place of any meeting during the whole time thereof, and subject to the inspection of any stockholder who may be present. SECTION 7. QUORUM. At all meetings of the stockholders, the holders of a majority of the issued and outstanding stock of the Corporation entitled to vote thereat, present either in person or by proxy, shall constitute a quorum for the transaction of business except where otherwise provided by law, by the Certificate of Incorporation or by these by-laws. In the absence of a quorum, the presiding officer of the meeting shall have the power to adjourn the meeting from time to time without notice other than announcement at the meeting until the requisite amount of stock shall be represented. At any such adjourned meeting at which a quorum may be present any business may be transacted which might have been transacted at the meeting as originally called. SECTION 8. ORGANIZATION. At every meeting of the stockholders the Chairman of the Board, or in his absence, the President, or in the absence of both, the Chairman of the Executive Committee or in the absence of all three, any Vice President, or in the absence of all of said persons, a chairman chosen by the stockholders present in person and by proxy and entitled to vote thereat, by majority vote, shall act as chairman. To the maximum extent permitted by law, such chairman shall have the power to set procedural rules governing all aspects of the meeting, including the order of business. SECTION 9. VOTING. Except as provided in the Certificate of Incorporation, each stockholder entitled to vote in accordance with the terms of the Certificate of Incorporation and in accordance with the provisions of these by-laws shall be entitled to one vote, in person or by proxy, for each share of stock entitled to vote held by such stockholder, but no proxy shall be voted after three years from its date unless such proxy provides for a longer period. The vote for directors and, upon demand of any stockholder, the vote upon any questions before the meeting shall be by ballot. All matters shall be decided by a majority of shares present in person or by proxy and entitled to vote, except as otherwise provided by law, the Certificate of Incorporation or by these by-laws. SECTION 10. INSPECTORS OF ELECTION. All elections of directors and all votes where a ballot is required shall be conducted by two inspectors of election who shall be appointed by the Board of Directors; but in the absence of such appointment by the Board of Directors, the chairman of the meeting shall appoint such inspectors who shall not be directors or candidates for the office of director. ARTICLE III. BOARD OF DIRECTORS. SECTION 1. GENERAL POWERS. The property, affairs and business of the Corporation shall be managed by the Board of Directors. SECTION 2. NUMBER, QUALIFICATION AND TERM OF OFFICE. The number of directors shall be not less than nine (9) nor more than seventeen (17), as may be fixed from time to time by resolution of the Board of Directors. Directors need not be stockholders. The term of office of each director, subject to the provisions of the Certificate of Incorporation and except as herein limited, shall be until the next annual meeting of stockholders following his election and until his successor shall be duly elected and qualified or until his death, or until he shall resign or shall have been removed in the manner hereinafter provided in Section 11 of this Article. SECTION 3. ELECTION OF DIRECTORS. The directors of the Corporation shall be elected annually at the annual meeting of stockholders. SECTION 4. QUORUM AND MANNER OF ACTING. Except as otherwise provided by statute or by these by-laws, one-third of the number of directors at that time fixed by resolution of the Board of Directors shall constitute a quorum for the transaction of business at any meeting, and the act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors. In the absence of a quorum, a majority of the directors present may adjourn any meeting from time to time until a quorum be available. Notice of any adjourned meeting need not be given. SECTION 5. PLACE OF MEETINGS, OFFICES AND RECORDS. The Board of Directors may have one or more offices and keep the books and records of the Corporation within or without the State of Delaware, and may hold its meetings at such places as the Board may determine from time to time. SECTION 6. ANNUAL MEETING. The Board of Directors shall meet for the purpose of organization, the election of officers and the transaction of other business, as soon as practicable after each annual election of directors on the same day and at the same place at which regular meetings of the Board are held and notice of such meeting need not be given; such meeting, however, may be held at any other time or place which shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors or in a waiver of notice thereof signed by all the directors. SECTION 7. REgULAR MEETINGS. Regular meetings of the Board of Directors shall be held at such places and at such times as the Board shall from time to time by resolution determine. If any day fixed for a regular meeting shall be a legal holiday at the place where the meeting is to be held, then the meeting which would otherwise be held on that day shall be held at the same hour on the next succeeding business day not a legal holiday. Notice of regular meetings need not be given. SECTION 8. SPECIAL MEETINGS; NOTICE. Special meetings of the Board of Directors shall be held whenever called by the Chairman of the Board or by the Chairman of the Executive Committee or by the President or by order of the Executive Committee. Notice of each such meeting shall be mailed to each director addressed to such director at his residence or his usual place of business at least two days prior to such meeting or shall be sent to each director by telegram, by telephone, by facsimile transmission, radio or cable, or personally, at least twenty-four (24) hours before the meeting is to be held. Every such notice shall state the time and place of the meeting but need not state the purposes thereof except as otherwise expressly provided in these by-laws. Notice of any meeting of the Board need not be given to any director, however, if waived by him in writing or by telegraph or cable, whether before or after such meeting is to be held, or if he shall be present at the meeting; and any meeting of the Board shall be a legal meeting without any notice thereof having been given, if all of the directors shall be present thereat. SECTION 9. ORGANIZATION. At each meeting of the Board of Directors, the Chairman of the Board, or in his absence the President, or in the absence of both, the Chairman of the Executive Committee, or in the absence of all three, any Vice President chosen by a majority of the Directors present, or in the absence of all of said persons, a director chosen by a majority of the Directors present, shall act as chairman. To the maximum extent permitted by law, such chairman shall have the power to set procedural rules governing all aspects of the meeting, including the order of business. SECTION 10. RESIGNATIONS. Any director of the Corporation may resign at any time upon written notice to the Corporation. The resignation of any director shall take effect at the time specified therein; and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. SECTION 11. REMOVAL OF DIRECTORS. Subject to the provisions of the Certificate of Incorporation, any director may be removed, either with or without cause, at any time by the affirmative vote of a majority in interest of the holders of record of the stock having voting power at any meeting of the stockholders called for the purpose; and the vacancy in the Board caused by any such removal may be filled at such meeting by the stockholders entitled to vote thereat. SECTION 12. VACANCIES. Any vacancy in the Board of Directors caused by death, resignation, removal, disqualification, an increase in the number of directors, or any other cause, may be filled by the majority vote of the remaining directors then in office or by the stockholders of the Corporation at the next annual meeting or any special meeting called for the purpose and each director so elected, shall, except as otherwise provided, hold office for a term to expire at the next annual election of directors, and until his successor shall be duly elected and qualified, or until his death or until he shall resign or shall have been removed in the manner provided in Section 11 of this Article. SECTION 13. FEES. Each director shall be paid such fee, if any, as shall be fixed by the Board of Directors, for each meeting of the Board which he shall attend and in addition such transportation and other expenses actually and reasonably incurred by him in going to the meeting and returning therefrom. SECTION 14. MEETINGS BY CONFERENCE TELEPHONE. The Board of Directors and any committee designated by the Board may participate in a meeting of the Board or such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this subsection shall constitute presence in person at such meeting. ARTICLE IV. COMMITTEES. SECTION 1. EXECUTIVE COMMITTEE. The Board of Directors, by a resolution passed by a majority of the whole Board, may designate such number of their members, not less that two (2), as it may from time to time determine, to constitute and Executive Committee, each member of which, unless otherwise determined by the Board, shall continue to be a member thereof until the expiration of his term of office as a director. The Chairman of the Executive Committee or, in his absence, the Chairman of the Board, or in the absence of both, the President, shall preside at meetings of the Executive Committee and the Secretary of the Corporation shall act as secretary thereof. The Board may designate one or more directors as alternate members of the Executive Committee who may replace any absent or disqualified member at any meeting of the Committee. In the absence or disqualification of a member of the Executive Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. The Board of Directors shall have power to change the members of the Executive Committee at any time, to fill vacancies, and to discharge such committee, either with or without cause, at any time. SECTION 2. POWERS. During the intervals between the meetings of the directors, the Executive Committee shall have, and may exercise, all of the powers of the Board of Directors in the management of the business and affairs of the Corporation, including the power to authorize the issuance of stock of the Corporation to employees of it or its subsidiaries, in such manner as the Executive Committee shall deem for the proper interest of the Corporation in all cases in which specific directions shall not have been given by the Board of Directors, except that the Executive Committee shall not have the power or authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending the by-laws of the Corporation; and, unless specifically authorized to do so by the Certificate of Incorporation, these by-laws or by a resolution of the Board of Directors, no such committee shall have the powers or authority to declare a dividend or to authorize the issuance of stock. All actions by the Executive Committee shall be reported to the Board of Directors at its meeting next succeeding such action, and shall be subject to revision or alteration by the Board of Directors; provided that no rights or acts of third parties shall be affected by any such revision or alteration. SECTION 3. PROCEDURE; MEETINGS; QUORUM. The Executive Committee shall fix its owns rules of procedure, and shall meet at such times and at such place or places as may be provided by such rules, or by resolution of the Executive Committee or of the Board of Directors. At every meeting of the Executive Committee the presence of at least a majority of the members shall be necessary to constitute a quorum and the affirmative vote of at least a majority of the members present shall be necessary for the adoption by it of any resolution. SECTION 4. OTHER COMMITTEES. The Board of Directors, by resolution passed by a majority of the whole Board, may designate members of the Board to constitute other committees, which shall in each case consist of such number of directors and shall have and may exercise such powers as the Board may determine and specify in the respective resolutions appointing them. A majority of all members of any such committee may determine its action and fix the time and place of its meetings, unless the Board of Directors shall otherwise provide. The Board of Directors shall have power to change the members of any such committee at any time, to fill vacancies, and to discharge any such committee, either with or without cause, at any time. SECTION 5. FEES. Each member of the Executive Committee and any other committee shall be paid such fee, if any, as shall be fixed by the Board of Directors or the Executive Committee for each meeting of the Executive Committee and any other committee which he shall attend and in addition such transportation and other expenses actually and reasonably incurred by him in going to the meeting and returning therefrom. ARTICLE V. OFFICERS. SECTION 1. OFFICERS. The officers of the Corporation shall be a Chairman of the Board, a President, a Chief Executive Officer, a Chief Operating Officer, one or more Vice Presidents, a Treasurer, a Controller and a Secretary and such other officers as may be appointed in accordance with Section 4 of this Article. One person may hold the offices and perform the duties of any two of said offices, except those of: President and Vice President; Secretary and Assistant Secretary; Vice President and Assistant Vice President; Controller and Assistant Controller; or Treasurer and Assistant Treasurer. SECTION 2. ELECTION, TERM OF OFFICE AND QUALIFICATION. The officers shall be elected annually by the Board of Directors. Each officer, except such officers as may be appointed in accordance with provisions of Section 4 of this Article, shall hold office until his successor shall have been duly elected and qualified in his stead, or until his death or until he shall gave resigned or shall gave been removed in the manner hereinafter provided. The Chairman of the Board and the President shall be chosen from among the Directors. SECTION 3. DIVISION OFFICERS. The Board of Directors may by resolution provide that any part of the business of the Corporation shall be conducted under the name of a Division, or Divisions, with such title or titles as shall be adopted by the Board; and provide for Division officers, whose powers and duties, except as otherwise specifically provided by resolution of the Board of Directors or the Executive Committee, shall be limited to that part of the business of the Corporation which is conducted in the name of the Division of which they are officers. The officers of each Division so created by the Board shall be a President, one or more Vice Presidents and a Treasurer. The Board of Directors may also, at its discretion, elect a chairman of any division and define his powers. The Board of Directors or the Executive Committee may also elect or appoint subordinate officers of each Division as provided in Section 4 of this Article. An officer elected or appointed as an officer of the Corporation pursuant to this Article may also be elected or appointed an officer of any Division or Divisions, with the same or a different title. SECTION 4. SUBORDINATE OFFICERS. The Board of Directors or the Executive Committee may from time to time elect or appoint such other officers of committees as it may deem necessary for the conduct of the business of the Corporation or of any Division thereof, including one or more Assistant Vice Presidents, one or more Assistant Secretaries, one or more Assistant Controllers and one or more Assistant Treasurers. Such officers and committees shall hold office for such period, have such authority and perform such duties as provided in these by-laws or as may be prescribed by the Board, the Executive Committee of the officer making the appointment. SECTION 5. REMOVAL AND RESIGNATION. Any officer may be removed, either with or without cause, by the vote of a majority of the whole Board of Directors at any meeting called for the purpose, or, except in the case of an officer elected by the Board of Directors, by any committee or superior officer upon whom the power of removal may be conferred by the Board of Directors or by these by-laws. Any officer may resign at any time by giving written notice of resignation to the Corporation. Any such resignation shall take effect at the date of receipt of such notice by the Corporation or at any later date specified or provided for therein; and, unless otherwise specified therein, acceptance of such resignation shall not be necessary to make it effective. SECTION 6. VACANCIES. A vacancy in any office because of death, resignation, removal, disqualification or for any other cause may be filled for the unexpired portion of the term in the manner prescribed in there by-laws for regular election or appointment to such office. SECTION 7. CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside at all meetings of stockholders and of the Board of Directors. He shall be a member of the Executive Committee, unless the Board of Directors shall, by resolution, otherwise determine. He shall, at each annual meeting and from time to time, report to the stockholders and to the Board of Directors all matters under his jurisdiction of which he has knowledge, which the interest of the Corporation may require be brought to their notice. In general, he shall perform all duties incident to the office of Chairman of the Board and such of the duties as may be assigned him by the Board of Directors or Executive Committee or as are prescribed by these by-laws. In the absence or incapacity of the Chairman of the Board, his duties as Chairman shall be performed by the President. SECTION 8. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall have the responsibility for carrying out the policies of the Board of Directors and, subject to the control of the Board, shall provide general leadership in matters of policy and planning and have general and active charge, control and supervision of the property, business and affairs of the Corporation. The Chief Executive Officer shall be either the Chairman of the Board or the President, unless the Board of Directors shall, by resolution, otherwise determine. SECTION 9. PRESIDENT. The President shall perform such duties as may from time to time be assigned to him by the Board of Directors or the Executive Committee. He shall be a member of the Executive Committee unless the Board of Directors, shall, by resolution, otherwise determine. He shall at each annual meeting and from time to time report to the stockholders and to the Board of Directors all matters under his jurisdiction of which he has knowledge which the interest of the Corporation may require to be brought to their notice. He shall, in the absence of the Chairman of the Board, preside at all meetings of the stockholders and of the Board of Directors. SECTION 10. CHIEF OPERATING OFFICER. The Chief Operation Officer shall assist the Chief Executive Officer in the control and supervision of the property, business and affairs of the Corporation. The Chief Operating Officer shall be either the President or a Vice-President unless the Board of Directors shall, by resolution, otherwise determine. SECTION 11. VICE PRESIDENTS. During the absence or disability of the Chairman of the Board and the President to perform their duties or exercise their powers as set forth in these by-laws or in the law under which the Corporation exists, their powers shall be performed by a Vice President, and when so acting, he shall have all the powers and be subject to all the responsibilities hereby given to or imposed upon the officer for whom he is acting. Any Vice President shall perform such other duties as may from time to time be assigned to him by the Board of Directors, the Executive Committee, the Chief Executive Officer of the Chief Operating Officer. SECTION 12. ASSISTANT VICE PRESIDENTS. At the request of a Vice President or in his absence or disability, any Assistant Vice President shall have power to perform all the duties or the Vice President and, when so acting, shall have all the powers of and be subject to all the restrictions upon the Vice President. The Assistant Vice Presidents shall perform such other duties as from time to time may be assigned to them by the Board of Directors, the Executive Committee, the Chief Executive Officer, the Chief Operating Officer or, in the case of Division officers, by the President of the Division. SECTION 13. THE SECRETARY. The Secretary shall keep or cause to be kept in books provided for the purpose the minutes of the meetings of the stockholders, of the Board of Directors and of the Executive Committee; shall see that all notices are duly given in accordance with the provisions of these by-laws and as required by law; shall be custodian of the records and of the seal of the Corporation and see that the seal is affixed to all documents the execution of which on behalf of the Corporation under its seal is duly authorized; shall keep directly or through a transfer agent a register of the post office address of each stockholder, and make all proper in such register, retaining and filing his authority for all such entries; shall see that the books, reports, statements, certificates and all other documents and records required by law are properly kept and filed; and in general, the Secretary shall perform duties incident to the office of Secretary and such other duties as my from time to time be assigned to him by the Board of Directors or the Executive Committee, or by the Chief Executive Officer or the Chief Operating Officer. SECTION 14. ASSISTANT SECRETARIES. At the request of the Secretary or in his absence or disability, any Assistant Secretary shall have power to perform all the duties of the secretary and, when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Secretary. The Assistant Secretaries shall perform such other duties as from time to time may be assigned to them by the Board of Directors or the Executive Committee, or by the Chief Executive Officer or the Chief Operating Officer. SECTION 15. THE TREASURER. The Treasurer shall give such bond for the faithful performance of his duties as the Board of Directors shall require. He shall have charge and custody of, and be responsible for, all funds and securities of the Corporation, and deposit all such funds in the name of the Corporation in such banks, trust companies or other depositaries as shall be selected in accordance with the provisions of these by-laws; at all reasonable times exhibit his books of account and records of any corporation all of whose stock except directors' shares is owned by the Corporation, to any of the directors of the Corporation upon application during business hours at the office of the Corporation, or such other corporation, where such books and records are kept; render a statement of the condition of the finances of the Corporation at all regular meetings of the Board of Directors, and a full financial report at the annual meeting of the stockholders, if called upon to do so; receive, and give receipts for, moneys due and payable to the Corporation from any source whatsoever; and in general, perform all the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the Board of Directors or the Executive Committee, or the Chief Executive Officer or the Chief Operating Officer. SECTION 16. ASSISTANT TREASURERS. At the request of the Treasurer or in his absence or disability, any Assistant Treasurer shall have power to perform all the duties of the Treasurer, and when so acting, shall have all the powers of, and be subject to all the restriction upon, the Treasurer. The Assistant Treasurers shall perform such other duties as from time to time may be assigned to them by the Board of Directors or the Executive Committee, or the Chief Executive Officer or the Chief Operating Officer. SECTION 17. CONTROLLER. The Controller shall be the chief accounting officer of the Corporation. He shall keep or cause to be kept all books of account and accounting records of the Corporation and shall render to the Chairman, the President and the Board of Directors whenever they may require it, a report of the financial condition of the Corporation. He shall have such other powers and duties as shall be assigned to him by the Board of Directors or the Executive Committee, or the Chief Executive Officer or the Chief Operating Officer. SECTION 18. ASSISTANT CONTROLLER. At the request of the Controller or in his absence or disability, any Assistant Controller shall have power to perform all the duties of the Controller, and when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Controller. The Assistant Controller shall perform such other duties as from time to time may be assigned to them by the Board of Directors or the Executive Committee, or the Chief Executive Officer or the Chief Operating Officer. SECTION 19. SALARIES. The salaries of the officers, including Division officers, shall be fixed from time to time by the Board of Directors or a committee designated by the Board. No officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the Corporation. ARTICLE VI. CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC. SECTION 1. CONTRACTS. The Board of Directors, or the Executive Committee, except as in these by-laws otherwise provided, may authorize any officer or officers, agent or agents, of the Corporation to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation and such authority may be general or confined to specific instances; and, unless so authorized by the Board of Directors or by the Executive Committee or by these by-laws, no officer, agent of employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable pecuniarily for any purpose or to any amount. SECTION 2. LOANS. No loan shall be contracted on behalf of the Corporation, and no negotiable paper shall be issued in its name, unless authorized by the Board of Directors or by the Executive Committee. When so authorized, the Chairman of the Board, the President or any Vice President, and the Secretary or the Treasurer or any Assistant Secretary or any Assistant Treasurer of the Corporation may effect loans and advances at any time for the Corporation from any bank, trust company or other institution, or from any firm, corporation or individual, and for such loans and advances may make, execute and deliver promissory notes or other evidences of indebtedness of the Corporation and, when authorized as aforesaid, as security for the payment of any and all loans, advances, indebtedness and liabilities of the Corporation , may mortgage, pledge, hypothecate or transfer any real or personal property at any time held by the Corporation and to that end execute instruments of mortgage or pledge or otherwise transfer such property. Such authority may be general or confined to specific instances. SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for the payment of money, notes, or other evidences of indebtedness issued in the name of the Corporation, shall be signed by such officer or officers, employee or employees, of the Corporation as shall from time to time be determined by the Board of Directors or the Executive Committee. SECTION 4. DEPOSITS. All funds of the Corporation shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositaries as the Board of Directors or the Executive Committee may from time to time designate, or as may be designated by any officer or officers of the Corporation to whom such power may be delegated by the Board of Directors, or by the Executive Committee, and for the purpose of such deposit, the Chairman of the Board, the President, or any Vice President, or the Treasurer, or any Assistant Treasurer, or the Secretary, or any Assistant Secretary, may endorse, assign and deliver checks, drafts, and other orders for the payment of money which are payable to the order of the Corporation. SECTION 5. GENERAL AND SPECIAL BANK ACCOUNTS. The Board of Directors or the Executive Committee may from time to time authorize the opening and keeping with such bank, trust companies or other depositaries as it may designate of general and special bank accounts, and may make such special rules and regulations, with respect thereto, not inconsistent with the provisions of these by-laws, as it may deem expedient. SECTION 6. PROXIES. Except as otherwise in these by-laws or in the Certificate of Incorporation of the Corporation provided, and unless otherwise provided by resolution of the Board of Directors, or of the Executive Committee, the chairman of the Board, the President or any Vice President may from time to time appoint an attorney or attorneys or agent or agents, of the Corporation, in the name and on behalf of the Corporation to cast the votes which the Corporation may be entitled to cast as a stockholder or otherwise in any other corporation any of whose stock or other securities may be held by the Corporation, at meetings of the holders of the stock or other securities of such other corporations, or to consent in writing to any action by such other corporation, and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent, and may execute or cause to be executed in the name and on behalf of the Corporation and under its corporate seal, or otherwise, all such written proxies or other instruments as he may deem necessary or proper in the premises. ARTICLE VII. SHARES AND THEIR TRANSFER. SECTION 1. CERTIFICATES OF STOCK. Certificates for shares of the capital stock of the Corporation shall be numbered and shall be entered in the books of the Corporation as they are issued. They shall exhibit the holder's name and certify the number of shares owned by him and shall be signed by, or in the name of the Corporation by the Chairman of the Board, the President or a Vice President and the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Corporation; provided, however that where any such certificate is signed by a transfer agent acting on behalf of the Corporation or by a registrar, any and all other signatures on the certificates may be facsimiled, printed or engraved. The stock record books and the blank stock certificate books shall be kept by the Secretary or by a transfer agent or by any other officer or agent designated by the Board of Directors or by the Executive Committee. SECTION 2. TRANSFER OF STOCK. Transfers of shares of the capital stock of the Corporation shall be make only on the books of the Corporation by the holder thereof, or by his attorney thereunto authorized by a power of attorney duly executed and filed with the Secretary of the Corporation, or a transfer agent of the Corporation, if any, and on surrender of the certificate or certificates for such shares properly endorsed. A person in whose name shares of stock stand on the books of the Corporation shall be deemed the owner thereof as regards the corporation, and upon any transfer of shares of stock the person or persons into whose name or names such shares shall have been transferred on the books of the Corporation shall be substituted for the person or persons out of whose name or names such shares shall have been transferred, with respect to all rights, privileges and obligations of holders of stock of the Corporation and as against the Corporation or any other person or persons. The term "person" or "persons" wherever used therein shall be deemed to include any firm, corporation or association. Whenever any transfer of shares shall be made for collateral security, and not absolutely, such fact, if known to the Secretary or to said transfer agent, shall be so expressed in the entry of transfer. SECTION 3. ADDRESSES OF STOCKHOLDERS. Each stockholder shall designate to the Secretary of the Corporation an address at which notices of meetings and all other corporate notices may be served or mailed to him, and if any stockholder shall fail to designate such address, corporate notices may be served upon him by mail directed to him at his last known post office address. SECTION 4. LOST, STOLEN, DESTROYED AND MUTILATED CERTIFICATES. The holder of any stock of the Corporation shall immediately notify the Corporation of any loss, theft, destruction or mutilation of the certificate therefor, and the Board of Directors or the Executive Committee may, in its discretion, cause to be issued to him a new certificate or certificates of stock, upon the surrender of the mutilated certificate or, in case of loss, theft, or destruction of the certificate, upon satisfactory proof of such loss, theft, or destruction, and, the Board of Directors or the Executive Committee may, in its discretion, require the owner of the lost, stolen or destroyed certificate or his legal representative to give the Corporation an adequate bond, and with such surety or sureties, as it may direct, to indemnify the Corporation against any claim that may be made against it on account of alleged loss, theft or destruction of any such certificate. SECTION 5. TRANSFER AGENT AND REGISTRAR; REGULATION. The Corporation shall, if and whenever the Board of Directors or the Executive Committee shall so determine, maintain one or more transfer offices or agencies, each in charge of a transfer agent designated by the Board of Directors of by the Executive Committee, where the shares of the capital stock of the Corporation shall be directly transferable, and also one or more registry offices, each in charge of a Registrar designated by the Board of Directors or by the Executive Committee, where such shares of stock shall be registered, and no certificate for shares of the capital stock of the Corporation, in respect of which a Transfer Agent or Registrar shall have been designated, shall be valid unless countersigned by such Transfer agent and registered by such Registrar. The Board of Directors or the Executive Committee may also make such additional rules and regulations as it may deem expedient concerning the issue, transfer and registration of certificates for shares of the capital stock of the Corporation. SECTION 6. EXAMINATION OF BOOKS BY STOCKHOLDERS. The Board of Directors or the Executive Committee shall, subject to the laws of the State of Delaware, have power to determine from time to time whether and to what extent and under what conditions and regulations the accounts and books of the Corporation, or any of them, shall be open to the inspection of the stockholders; and no stockholder shall have any right to inspect any book or document of the Corporation, except as conferred by the laws of the State of Delaware, unless and until authorized so to do by resolution of the Board of Directors or the Executive Committee or of the stockholders of the Corporation. ARTICLE VIII. DIVIDENDS, SURPLUS, ETC. Subject to the provisions of the Certificate of Incorporation and any restrictions imposed by statute, the Board of Directors may declare dividends from the net assets of the Corporation in excess of its capital, or out of net profits or out of any funds at the time legally available for the declaration of dividends, (hereinafter referred to as "surplus or net profits") whenever, and in such amounts as, in its sole discretion, the condition of the affairs of the Corporation shall render advisable. The Board of Directors in its sole discretion may in accordance with law from time to time set aside from surplus or net profits such sum or sums as it, in its absolute discretion, may think proper as a reserve fund to meet contingencies, or for equalizing dividends, or for the purpose of maintaining or increasing the property or business of the Corporation, or for any other purpose it may think conductive to the best interests of the Corporation. ARTICLE IX. INDEMNIFICATION. SECTION 1. RIGHT TO INDEMNIFICATION. The Corporation shall to the fullest extent permitted by applicable law indemnify any person who is or was a director or officer of the Corporation (the "Indemnity") and who is or was involved in any manner (including, without limitation, as a party or a witness) or is threatened to be made so involved in any threatened, pending or completed investigation, claim, action, suit or proceeding, whether civil, criminal, administrative or investigative (including, without limitation, any action, suit or proceeding by or in the right of the Corporation to procure a judgment in its favor) (a "Proceeding") by reason of the fact that he is or was a director or officer of the Corporation or is or was serving, at the request of the Corporation, as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (including, without limitation, any employee benefit plan) against all expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonable incurred by him in connection with such Proceeding; provided, however, that except for a Proceeding initiated by a person pursuant to Section 4(d) hereof, seeking to enforce such person's right to indemnification hereunder, the Corporation shall indemnify a person in connection with a Proceeding (or part thereof) initiated by such person only if such Proceeding (or part thereof) has been approved by the Board of Directors of the Corporation. The indemnification provided for in this Article shall be a contract right and shall include the right to receive payment in advance of any expenses incurred by the Indemnity in connection with such Proceeding, consistent with the provisions of applicable law. The Corporation, by action of its Board of Directors, may provide indemnification to employees and agents of the Corporation and to any person serving, at the request of the Corporation, as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (including, without limitation, any employee benefit plan) in the same manner and with the same scope and effect as that provided to any Indemnity pursuant to this Article. SECTION 2. INSURANCE, CONTRACTS AND FUNDING. The Corporation may purchase and maintain insurance to protect itself and any Indemnity against any expenses, judgments, fines and amounts paid in settlement as specified in Section 1 of this Article or incurred by any Indemnity in connection with any Proceeding referred to in Section 1 of this Article, to the fullest extent permitted by applicable law as then in effect. The Corporation may enter into contracts with any Indemnity in furtherance of the provisions of this Article and may create a trust fund, grant a security interest or use other means (including, without limitation, a letter of credit) to ensure the payment of such amounts as may be necessary to effect indemnification as provided by this Article. SECTION 3. INDEMNIFICATION; NOT EXCLUSIVE RIGHT. The right of indemnification provided in this Article shall not be exclusive of any other rights to which those seeking indemnification may otherwise be entitled, and the provisions of this Article shall inure to the benefit of the heirs and legal representatives of any person entitled to indemnity under this Article and shall be applicable to Proceedings commenced or continuing after the adoption of this Article, whether arising from acts or omissions occurring before or after such adoption. SECTION 4. ADVANCEMENT OF EXPENSES; PROCEDURES; PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS; REMEDIES. In furtherance, but not in limitation of the foregoing provisions, the following procedures, presumptions and remedies shall apply with respect to advancement of expenses and the right to indemnification under this Articles: (a) ADVANCEMENT OF EXPENSES. All reasonable expenses incurred by or on behalf of the Indemnity in connection with any Proceeding shall be advanced to the Indemnity by the Corporation within 20 days after the receipt by the Secretary of the Corporation of a written statement or statements from the Indemnity requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the expenses incurred by the Indemnity and shall be accompanied by such documentation and information as is reasonably available to the Indemnity regarding the Proceeding. If required by law at the time of such advance, the Corporation shall be entitled, as a condition to such advance, to a written undertaking by or on behalf of the Indemnity to repay the amounts advanced if it should ultimately be determined that the Indemnity is not entitled to be indemnified against such expenses pursuant to this Article. (b) Procedure for Determination of Entitlement to Indemnification. (i) To Obtain indemnification under this Article, an Indemnity shall submit to the Secretary of the Corporation a written request, including such documentation and information as is reasonable available to the Indemnity and reasonably necessary to determine whether and to what extent the Indemnity is entitled to indemnification (the "Supporting Documentation"). The determination of the Indemnity's entitlement to the indemnification shall be made not later than 60 days after receipt by the Corporation of the written request for indemnification together with the Supporting Documentation. The Secretary of the Corporation shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that the Indemnity has requested indemnification. (ii) The Indemnity's entitlement to indemnifi-cation under this Article shall be determined in one of the following ways: (A) by a majority vote of the Disinterested Directors (as hereinafter defined), if they constitute a quorum of the Board of Directors; (B) by a written opinion of Independent Counsel (as hereinafter defined) if (x) a Change of Control (as hereinafter defined) shall have occurred and the Indemnity so requests or (y) a quorum of the Board of Directors consisting of Disinterested Directors is not obtainable or, even if obtainable, a majority of such Disinterested Directors so directs; (C) by the stockholders of the Corporation (but only if a majority of the Disinterested Directors, if they constitute a quorum of the Board of Directors, presents the issue of entitlement to indemnification to the stockholders for their determination); or (D) as provided in Section 4(c). (iii) In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 4(b)(ii), a majority of the Disinterested Directors shall select the Independent Counsel, but only an Independent Counsel to which the Indemnity does not reasonably object; provided, however, that if a Change of Control shall have occurred, the Indemnity shall select such Independent Counsel, but only an Independent Counsel to which a majority of the Disinterested Directors does not reasonably object. (c) PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS. Except as otherwise expressly provided in this Article, the Indemnity shall be presumed to be entitled to indemnification under this Article upon submission of a request for indemnification together with the Supporting Documentation in accordance with Section 4(b)(i), and thereafter the Corporation shall have the burden of proof to overcome that presumption in reaching a contrary determination. In any event, if the person or persons empowered under section 4(b) to determine entitlement to indemnification shall not have been appointed and shall not have made a determination within sixty (60) days after receipt by the Corporation of the request therefor together with the Supporting Documentation, the Indemnity shall be deemed to be entitled to indemnification and the Indemnity shall be entitled to such indemnification unless (i) the Indemnity misrepresented or failed to disclose a material fact in making the request for indemnification or in the Supporting Documentation or (ii) such indemnification is prohibited by law. The termination of any Proceeding described in Section 1, or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of NOLO CONTERDERE or its equivalent, shall not, of itself, adversely affect the right of the Indemnity to indemnification or create a presumption that the Indemnity did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, or with respect to any criminal Proceeding, that the Indemnity had reasonable cause to believe that his conduct was unlawful. (d) Remedies of Indemnity. (i) In the event that a determination is made pursuant to Section 4(b), that the Indemnity is not entitled to indemnification under this Article, (A) the Indemnity shall be entitled to seek an adjudication of his entitlement to such indemnification either, at the Indemnity's sole option, in (x) an appropriate court of the State of Delaware of any other court of competent jurisdiction or (y) an arbitration to be conducted by a single arbitrator pursuant to the rules of the American Arbitration Association; (B) any such judicial proceeding or arbitration shall be DE NOVO and the Indemnity shall not be prejudiced by reason of such adverse determination; and (c) in any such judicial proceeding or arbitration the Corporation shall have the burden of proving that the Indemnity is not entitled to indemnification under this Article. (ii) If a determination shall have been made or deemed to have been made, pursuant to Section 4(b) or (c), that the Indemnity is entitled to indemnification, the Corporation shall be obligated to pay the amounts constituting such indemnification within five days after such determination has been made or deemed to have been made and shall be conclusively bound by such determination unless (A) the Indemnity misrepresented or failed to disclose a material fact in making the request for indemnification or in the Supporting Documentation or (B) such indemnification is prohibited by law. In the event that (C) advancement of expenses is not timely made pursuant to Section 4(a) or (D) payment of indemnification is not made within five days after a determination of entitlement or indemnification has been made or deemed to have been made pursuant to Section 4(b) or (c), the Indemnity shall be entitled to seek judicial enforcement of the Corporation's obligation to pay to the Indemnity such advancement of expenses or indemnification. Notwithstanding the foregoing, the Corporation may bring an action, in an appropriate court in the state of Delaware or any other court of competent jurisdiction, contesting the right of the Indemnity to receive indemnification hereunder due to the occurrence of an event described in subclause (A) or (B) of this clause (ii) (a "Disqualifying Event"); provided, however, that in any such action the Corporation shall have the burden of proving the occurrence of such Disqualifying Event. (iii) The Corporation shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 4(d) that the procedures and pre-sumptions of this Article are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Corporation is bound by all the provisions of this Article. (iv) In the event that the Indemnity, pursuant to this Section 4(d), seeks a judicial adjudication of or an award in arbitration to enforce his rights under, or to recover damages for breach of, this Article, the Indemnity shall be entitled to recover from the Corporation, and shall be indemnified by the Corporation against, any expenses actually and reasonable incurred by him if the Indemnity prevails in such judicial adjudication or arbitration. If it shall be determined in such judicial adjudication or arbitration that the Indemnity is entitled to receive part but not all of the Indemnification or advancement of expenses sought, the expenses incurred by the Indemnity in connection with such judicial adjudication or arbitration shall be prorated accordingly. (e) Definitions. For purposes of this Section 4: (i) "Change in Control" means a change in control of the Corporation of a nature that would be required to be reported in response to item 5(f) of Schedule 14A of the Regulation 14A promulgated under the Securities Exchange Act of 1934 (the "Act"), whether or not the Corporation is then subject to such reporting requirement; provided that, without limitation, such a change in control shall be deemed to have occurred if (A) any "person" (as such term is used I Section 13(d) and 14 (d) of the Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Corporation representing 10% or more of the combined voting power of the Corporation's then outstanding securities without the prior approval of at least two-thirds of the members of the Board of Directors in office immediately prior to such acquisition; (B) the Corporation is a party to a merger, consolidation, sale of assets or other reorganization, or a proxy contest, as a consequence of which members of the Board of Directors in office immediately prior to such transaction or event constitute less than a majority of the Board of Directors thereafter; or (C) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (including for this purpose any new director whose election or nomination for election by the Corporation's stockholders was approved by a vote of at least a majority of the directors then still in office who were directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board of Directors. (ii) "Disinterested Director" means a director of the Corporation who is not or was not a party to the Proceeding in respect of which indemnification is sought by the Indemnity. (iii) "Independent Counsel" means a law firm or a member of a law firm that neither presently is, nor in the past five years has been, retained to represent: (A) the Corporation or the Indemnity in any matter material to either such party or (B) any other party to the Proceeding giving rise to a claim for indemnification under this Article. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing under the law of State of Delaware, would have a conflict of interest in representing either the Corporation or the Indemnity in an action to determine the Indemnity's rights under this Article. SECTION 5. SEVERABILITY. If any provision or provisions of this Article shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Article (including, without limitation, all portions of any paragraph of this Article containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Article (including, without limitation, all portions of any paragraph of this Article containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable. ARTICLE X. SEAL. The Board of Directors shall provide a corporate seal, which shall be in the form of a circle and shall have inscribed thereon the name of the Corporation, the year of its incorporation (1928) and the words "Corporate Seal Delaware". ARTICLE XI. FISCAL YEAR. The fiscal year of the Corporation shall begin on the first day of January in each year. ARTICLE XII. AMENDMENTS. All by-laws of the Corporation shall be subject to alteration or repeal, and new by-laws not inconsistent with any provision of the Certificate of Incorporation or any provision of law, may be made, either by the affirmative vote of the holders of record of a majority of the outstanding stock of the Corporation entitled to vote in respect thereof, given at an annual meeting or at any special meeting, provided that notice of the proposed alteration or repeal or of the proposed new by-laws be included in the notice of such meeting, or by the Board of Directors at any regular or special meeting. Consent of The Sole Shareholder of Willis Corroon Corporation The undersigned, being the sole shareholder of Willis Corroon Corporation, a Delaware corporation, does hereby consent to the adoption of the following resolution: RESOLVED, that, effective January 1, 1992 the first sentence of Article III, Section 2 of the Corporation's By-laws be amended to read as follows: "The number of directors shall not be less than one (l) nor more than five (5), as may be fixed from time to time by resolution of the Shareholder or the Board of Directors." and be it FURTHER RESOLVED, that, effective January 1, 1992 the number of directors of the Corporation be and it hereby is fixed at five (5); and be it FURTHER RESOLVED, that, effective January 1, 1992, the following individuals be, and each hereby is, elected a director of the Corporation, to serve until the Annual Meeting of Stockholders and until his successor is elected and qualified: Richard M. Miller John R. Lamberson Donald R. King J. Bransford Wallace Joseph V. Ambrose, Jr. FURTHER RESOLVED, that James R. McMasters be and he hereby is elected, effective January l,1992, Assistant Vice President and Claims Administrator of the Corporation and he shall hold such office until the election of his successor. DATED: December 31, 1991 Willis Corroon Group plc By /s/ Joseph V. Ambrose, Jr. -------------------------- Joint Secretary CONSENT OF THE BOARD OF DIRECTORS OF WILLIS CORROON CORPORATION The undersigned, being all of the Directors of Willis Corroon Corporation, a Delaware corporation, does hereby consent to the adoption of the following resolutions: RESOLVED, that effective immediately the Resignation of Frank F. White, Jr. as a Director of the Corporation be accepted; and further RESOLVED, that, effective immediately the number of Directors of the Corporation be and it hereby is Fixed at four (4); and further RESOLVED, that effective immediately the resignation of Richard M. Miller, as Chairman of the Board, President and Chief Executive Officer of the Corporation be accepted; and further RESOLVED, that effective immediately Kenneth H. Pinkston be and he hereby is elected Chairman of the Board, President and Chief Executive Officer of the Corporation. Dated: June 23, 1994 /s/ Joseph V. Ambrose, Jr. -------------------------- /s/ Brian D. Johnson -------------------------- /s/ Richard M. Miller -------------------------- /s/ Kenneth H. Pinkson -------------------------- Consent of The Sole Shareholder Of Willis Corroon Corporation The undersigned, being the sole shareholder of Willis Corroon Corporation, a Delaware corporation, does hereby consent to the adoption of the following resolution: RESOLVED, that effective at the close of business on December 31, 1995, the resignation of Richard M. Miller as a Director of the Corporation be accepted; and further RESOLVED, that, effective January 1, 1996 the first sentence of Article III, Section 2 of the Corporation's By-laws be amended to read as follows: "The number of directors shall not be less than one (1) nor more than six (6), as may be fixed from time to time by resolution of the Shareholder or the Board of Directors." and further RESOLVED, that, effective January 1, 1996 the number of directors of the Corporation be and it hereby is fixed at six (6); and further RESOLVED, that, effective January 1, 1996 the Board of Directors of the Corporation shall be comprised of the following individuals, each to serve until the annual Meeting of Stockholders and until the election of his successor: Thomas Colraine Charles D. Hamilton Brian D. Johnson Kenneth H. Pinkston Bart R. Schwartz Larry W. Taylor DATED: November 6, 1995 Willis Corroon Group plc By /s/ Michael Chitty ------------------------------------- Secretary EX-3.3 16 EXHIBIT 3.3 Exhibit 3.3 EXECUTION COPY PARTNERSHIP AGREEMENT OF WILLIS CORROON PARTNERS THIS PARTNERSHIP AGREEMENT ("Agreement") of Willis Corroon Partners (the "Partnership") is made as of November 17, 1998, by and among Willis Corroon Group Limited, a company with limited liability organized under the laws of England and Wales ("WCG"), and Willis Faber UK Group Limited, a company with limited liability organized under the laws of England and Wales ("WF"), each of which is hereinafter sometimes referred to as a "Partner," and both of which are hereinafter collectively referred to as "Partners." WITNESSETH: WHEREAS, the parties hereto desire to establish their interests as among themselves in the Partnership. NOW, THEREFORE, in consideration of the mutual promises and obligations contained herein, the parties hereto hereby agree as follows: 1. FORMATION. The parties hereby form a general partnership under and pursuant to the provisions of the Delaware Uniform Partnership Law, 6 Del. C. Sections 1501 (as amended from time to time and any successor statute thereto, the "GP Act"). The name of the Partnership shall be, and the business of the Partnership shall be conducted under the name of, "Willis Corroon Partners." The Partnership name shall be duly registered as required by 6 Del. C. Section 3101. 2. PURPOSES. The purposes of the Partnership are (a) to acquire, hold and sell investments, including shares of corporate or other investment securities, to borrow money and issue evidences of indebtedness, to secure the payment of that indebtedness and to lend money to its affiliates, (b) to engage in such other activities necessary, appropriate or incidental to any of the above-mentioned purposes, and (c) to engage in all other activities that may be conducted by a general partnership under the GP Act as the Partners may hereafter, from time to time, determine. 3. PARTNERS; PERCENTAGE INTERESTS. The Partners of the Partnership shall consist of the parties hereto and such additional or substitute persons as shall be admitted as Partners from time to time by unanimous consent of all persons who are then Partners or as otherwise provided in this Agreement. The Partners' interests in the Partnership are hereinafter referred to as the "Partnership Interests." Schedule I, attached hereto, sets forth the percentage interest of each Partner (the "Percentage Interest"). Schedule I shall be amended from time to time in accordance with the terms hereof to reflect changes in Percentage Interests resulting from the admission of additional or substitute Partners, the withdrawal of Partners or the transfer of Partnership Interests. The combined Percentage Interest of all Partners shall at all times equal 100%. 4. TERM. The term of the Partnership shall begin on the date of this Agreement and shall continue to the fullest extent permitted by the GP Act until dissolved: (i) by the unanimous vote of the Partners; 2 (ii) pursuant to the entry of a decree of judicial dissolution; (iii) by the failure of the Partners to come to an agreement, within seven (7) days of the emergence of a disagreement between them, in connection with a matter that concerns the Partnership; or (iv) by the bankruptcy, dissolution or death of a Partner, except that the Partnership shall not be dissolved upon the occurrence of such event if, within ninety (90) days after such event, the remaining Partners holding 66% of the remaining Percentage Interests agree to continue the business of the Partnership and to the appointment of one or more additional Partners, effective as of the date of such event; unless it is dissolved earlier as provided in the GP Act. On the expiration of its term, the Partnership shall be dissolved and its affairs shall be wound up. 5. CAPITAL CONTRIBUTIONS. The Partnership's initial capital shall consist of the capital contributions set forth on Schedule I (the "Capital Contributions"). Each Partner's contribution to the Partnership shall be paid in full or conveyed within 3 days after the date of this Agreement. Except as otherwise agreed by all Partners, no Partner shall have the right or obligation to make any further Capital Contributions to the Partnership. Persons or entities hereafter admitted as Partners shall make such contributions of cash (or promissory obligations), property or services to the Partnership as shall be determined by the Partners, acting unanimously, at the time of each such admissions. Unless otherwise agreed by all Partners, no interest shall be paid upon any contributions of capital to the Partnership or upon the balances of the Capital Account (as defined in Section 6 of this Agreement). Any advance of money to the Partnership by a Partner hereafter made shall not be deemed to be a capital contribution unless specifically designated as such with the consent of all Partners, but shall be deemed a loan made to the Partnership by such Partner. 6. CAPITAL ACCOUNTS; PROFITS AND LOSSES. (a) A single, separate capital account (a "Capital Account") shall be maintained for each Partner. Each Partner's Capital Account shall be credited with the amount of money and the fair market value of property (net of any liabilities assumed by the Partnership or to which the contributed property is subject) contributed by that Partner to the Partnership; the amount of any Partnership liabilities assumed by such Partners (other than in connection with a distribution of Partnership property), and such Partner's allocation of Partnership profits. Each Partner's Capital Account shall be debited with the amount of money and the fair market value of property (net of any liabilities that such Partner assumes or takes subject to) distributed to such Partner, the amount of any liabilities of such Partner assumed by the Partnership (other than in connection with a contribution), and such Partner's distributive share of Partnership losses. (b) Any Partner who shall receive a Partnership Interest (or whose interest shall be increased) by means of a transfer to it of all or a part of the Partnership Interest of another Partner shall have a Capital Account that reflects the Capital Account associated with the transferred Partnership Interest (or the applicable percentage thereof in case of a transfer of a part of an interest). (c) Each Partner shall be entitled to such Partner's share of all Partnership items of profits, losses, deductions, expenses, credit or allowance, if any, for any period or year pro rata in accordance with the Partner's respective Percentage Interests. (d) Each Partner shall, with the agreement of all other Partners, be entitled to receive within 10 working days of such agreement his entitlement to his share of the accumulated Partnership profit. In the event that the Partnership has a net loss, the Partner shall, upon request, be obliged within 3 10 working days to make good his share of the accumulated Partnership loss, such request coming from the Partnership. (e) No Partner shall be entitled to withdraw any part of its Capital Contribution or its Capital Account or to receive any distribution from the Partnership, except as provided in Section 12 of this Agreement. 7. PARTNERSHIP PROPERTY. All property and rights and interests in property originally brought into the Partnership or acquired, whether by purchase or otherwise, on account of the Partnership, or for the purposes and in the cause of the Partnership business, are called "Partnership Property," and will be held and applied by the Partnership exclusively for the purposes of the Partnership and in accordance with this Agreement. Each Partner shall be regarded as owning a proportionate share of the jointly held assets of the Partnership and, subject to Section 1515(a) of the GP Act, is liable to a proportionate share of the joint liabilities of the Partnership, based on its respective Capital Account balances at any time and accordingly in line with its right to surplus assets on dissolution of the Partnership in accordance with Section 12 of this Agreement. 8. MANAGEMENT. Except as set forth in this Agreement and Section 1509 (a) of the GP Act, the Partners shall have full, exclusive and complete discretion in the management and control of the business of the Partnership for the purposes herein stated and subject to the terms hereof, shall make all decisions affecting the business of the Partnership and may take such actions as they deem necessary or appropriate to accomplish the purposes of the Partnership as set forth herein. In connection with such management and control, the Partners shall have the power and authority to do or cause to be done any and all acts deemed by the Partners to be necessary or appropriate to carry out the purposes of the Partnership, including, without limitation, the following: . (i) to enter into and perform any contract, lease, arrangement or course of dealing with any Partner or Partners, or with any person, firm or corporation controlled by, under common control with, controlling or otherwise affiliated with any Partner or Partners; (ii) to borrow funds, lend Partnership funds, obligate the Partnership as a surety, guarantor or accommodation party to any obligation, including an obligation of any Partner, to give security on any Partnership Property, including real estate and in general, to enter into all such financial arrangements and pay all such expenses of the Partnership as the Partners shall deem appropriate; (iii) to acquire by purchase, lease, exchange or otherwise, any real or personal property; (iv) to dispose of, sell, exchange, lease, mortgage or otherwise transfer any assets of the Partnership in the ordinary course of business; (v) to deposit, withdraw, invest, pay, retain and distribute the Partnership's funds in any manner consistent with the provisions of this Agreement; (vi) to employ agents, employees, managers, accountants, attorneys, consultants and other persons necessary or appropriate to carry out the business and operations of the Partnership and to pay fees, expenses, salaries, wages and other compensation to such persons; 4 (vii) to pay, extend, renew, modify, adjust, submit to arbitration, prosecute, defend or compromise, upon such terms as it may determine and upon such evidence as it may deem sufficient, any obligation, suit, liability, cause of action or claim, including taxes, either in favor of or against the Partnership; (viii) to determine the appropriate accounting method or methods to be used by the Partnership; (ix) to maintain or cause to be maintained records of all rights and interests acquired for or disposed of by the Partnership, all correspondence relating to the Partnership business and the original records of all statements, bills and other instruments furnished to the Partnership in connection with its business; (x) to purchase and maintain, at their discretion and at the expense of the Partnership, liability, casualty and other insurance sufficient to protect the Partners, any person or persons employed or engaged by the Partners, the Partnership and its property from and against those liabilities and hazards which may be insured against in the conduct of the Partnership's business; (xi) to make, execute, assign, acknowledge and file on behalf of the Partnership, any and all documents or instruments of any kind which the Partners may deem appropriate in carrying out the purposes and businesses of the Partnership, including, without limitation, powers of attorney, agreements of indemnification, sales contracts, deeds, options, loan agreements, mortgages, deeds of trust, notes, documents or instruments of any kind or character and amendments thereto. Any person dealing with the Partners shall not be required to determine or inquire into the authority or power of the Partners to bind the Partnership and to execute, acknowledge and deliver any and all documents in connection therewith; and (xii) to exercise any right or power granted or permitted under the GP Act and not specifically enumerated in this Agreement. Notwithstanding anything in this Agreement to the contrary, the Partnership, and each Partner on behalf of the Partnership, is hereby authorized to execute, deliver and perform: (i) the Assumption Agreement, pursuant to which the Partnership will assume $400 million of indebtedness under the Credit Agreement, dated as of July 22, 1998, among Trinity Acquisition plc, Willis Corroon Group Limited, Willis Corroon Corporation, the lenders from time to time parties thereto and The Chase Manhattan Bank (as amended, the "Tender Offer Facility") from Willis Corroon Group Limited; (ii) the Senior Subordinated Loan Agreement, to be entered into by the Partnership, Willis Corroon Corporation, Willis Corroon Group Limited, the lenders parties thereto, The Chase Manhattan Bank and Chase Securities, Inc. (together with the exhibits thereto, the "Senior Subordinated Loan Agreement"); (iii) the Guarantee to be executed in connection with the Senior Subordinated Loan Agreement; 5 (iv) the Guarantee to be executed in connection with the Credit Agreement, dated as of July 22, 1998, among Trinity Acquisition plc, Willis Corroon Corporation, Willis Corroon Group Limited, the several lenders from time to time parties thereto, and The Chase Manhattan Bank (as amended, the "Senior Credit Agreement"); (v) the supplement to the Pledge Agreement executed in connection with the Senior Credit Agreement; (vi) the $190 million Promissory Note and the $210 million Promissory Note in favor of Willis Corroon Group Limited, in exchange for its obligations under the Tender Offer Facility; all without the need for any additional consent or act of any person. 9. PARTNERS. (a) The Partners shall devote such time and attention to the business of the Partnership as may be reasonably necessary to the conduct of such business and shall act as mutual agents of each other in their relationship as Partners. (b) The Partners may, directly or indirectly (including, without limitation, through an entity in which the Partners hold a material ownership interest), deal with the Partnership in connection with the construction, management, acquisition, operation or disposition of any assets of the Partnership or otherwise, as an independent contractor or as an agent for others, and may receive from such others or the Partnership normal profits, compensation, commissions or other income incident to such dealings without having to account to the Partnership therefor provided that such profits, compensation, commissions or other income shall be commensurate with commercial terms generally prevalent in the industry in question. (c) The Partners shall be reimbursed by the Partnership for expenses incurred in connection with the formation of the Partnership and, from time to time, for expenses incurred in connection with the operation and management of the Partnership. 10. APPOINTMENT OF A GENERAL MANAGER. (a) The Partners have the power and authority to delegate their rights and powers as Partners to perform managerial duties in relation to the business of the Partnership to a general manager (the "General Manager") who shall have the authority to perform, subject to any limitations imposed on such authority by the Partners, managerial duties in relation to the business of the Partnership. (b) The appointment of a General Manager shall not cause the Partners to cease to be Partners of the Partnership. (c) Until such time as the Partners shall otherwise agree, C. William Mooney is hereby appointed as General Manager of the Partnership to perform managerial duties in relation to the business of the Partnership, subject to the limitations set out below. (d) Subject to the express limitations contained in this Agreement, the General Manager shall have the right and authority to perform all the managerial duties in relation to the business of the Partnership provided for in this Agreement to be performed by the Partners including, without limitation, maintaining the accounts of the Partnership and providing such accounts on an annual basis to the Partners. 6 (e) Notwithstanding the foregoing, the General Manager shall not, without the consent of the Partners: (i) sell, assign, transfer or otherwise dispose of all or any substantial part of the assets of the Partnership or cause the Partnership to merge, consolidate or convert with or into any other entity or organization; (ii) guarantee the debt of, or cause the Partnership to incur indebtedness for borrowed funds to, unaffiliated third parties in an amount in excess of $10,000 at any time outstanding; (iii) do any act which would make it impossible to carry on the ordinary business of the Partnership; (iv) take any action which, under the other provisions of this Agreement, or by subsequent agreement of the Partners, requires the consent of all Partners, or which is inconsistent with any Partnership action taken by consent of all Partners; (v) amend this Agreement; (vi) admit any new partner to the Partnership; (vii) permit the transfer by a Partner of its interest in the Partnership; (viii) dissolve the Partnership other than pursuant to Section 12 of this Agreement; or (ix) commence a voluntary proceeding seeking reorganization or other relief with respect to the Partnership under the bankruptcy or similar law. 11. BOOKS, RECORDS AND REPORTS. (a) At all times during the continuance of the Partnership, the Partnership, acting through the General Manager, shall keep or cause to be kept full and true books of account, in which shall be entered fully and accurately each transaction of the Partnership. Such books of account, together with a copy of this Agreement, and any amendments hereto, shall at all reasonable times be open to inspection and examination by each Partner and its duly authorized representatives. (b) The Partnership books of account shall be closed and balanced at the end of each fiscal year. Annual statements showing the Partnership gross receipts and expenses for the fiscal year shall be prepared by the Partnership's accountants (or by the General Manager, with the consent of the Partners) and shall be transmitted to each Partner within a reasonable period of time after the close of each fiscal year. Further, as soon as possible after the close of each Partnership taxable year, a report shall be transmitted to each Partner indicating its share of Partnership profit or loss. On the demand of either Partner, the books of account of the Partnership shall be audited by a certified public accountant chosen by the Partners. The cost of any such audit shall be borne solely by the Partner demanding the audit, unless the other Partner agrees that such cost should be treated as a Partnership expense. 12. DISSOLUTION. (a) In the event of the dissolution of the Partnership subject to Section 4 of this Agreement, the Partnership shall immediately commence to wind up its affairs; however, a reasonable time shall be allowed for the orderly liquidation of the assets of the Partnership and the discharge of liabilities to creditors so as to enable the Partners to minimize the normal losses attendant upon a liquidation. The Partners shall continue to share net profits and net losses during 7 liquidation in the same proportions as before liquidation. The General Manager shall furnish to each Partner a statement prepared by the Partnership's accountants (or prepared by the General Manager, with the consent of the Partners) that shall set forth the assets and liabilities of the Partnership as of the date of complete liquidation. The proceeds of liquidation shall be distributed, as realized, in payment of the liabilities of the Partnership in the following order: (i) To satisfy (by payment or reasonable provision for payment) creditors of the Partnership other than Partners; (ii) To satisfy (by payment or reasonable provision for payment) any indebtedness of the Partnership to the Partners; and (iii) To distribute to the Partners the remaining proceeds of liquidation in accordance with the Percentage Interests of the Partners. (b) The Partnership may be liquidated by either: (i) selling the Partnership assets and distributing the net proceeds therefrom in the manner provided in paragraph (a) of this Section 12; or (ii) distributing the Partnership assets to the Partners in kind with each Partner accepting an undivided interest in the Partnership assets, subject to Partnership liabilities, in satisfaction of its proportionate interest in the Partnership. For the purpose of determining the amount distributed to each Partner, any property distributed in kind in the liquidation shall be valued at fair market value as of the date of distribution by the General Manager acting reasonably and such property shall be treated as though the property had been sold by the Partnership for such value and the cash proceeds distributed to the Partners. (c) The Partners may establish reserves that the Partners may deem reasonably necessary for any contingent, conditional or unmatured liabilities or obligations of the Partnership to creditors of the Partnership other than the Partners. The funds constituting reserves shall be paid over by the Partnership to an attorney-in-fact (which may be the General Manager), bank, trust company or title insurance company, as escrowee, to be held and applied by him or it during such period as the General Manager deems advisable in payment of the obligations and liabilities in respect of which such reserves were created, and at the end of such period the amount of any such reserves then remaining shall be distributed in the manner provided above. 13. RESTRICTION ON TRANSFER OF PARTNERS' INTERESTS. Partnership Interests may not be sold, transferred, assigned, mortgaged, pledged, alienated, disposed of or encumbered, in whole or in part, without the unanimous consent of the Partners, except for pledges or transfers contemplated by the Pledge Agreement. 8 14. NOTICES. All notices or other communications provided for in this Agreement shall be in writing, duly signed by the party giving such notice, and shall be delivered, or mailed by registered or certified mail, at the address set forth below: (a) if to the Partnership: Willis Corroon Partners c/o Willis Corroon Group Limited Ten Trinity Square London EC3P 3AX England Attention: Company Secretary (b) if to a Partner: Willis Corroon Group Limited Ten Trinity Square London EC3P 3AX England Attention: Company Secretary or Willis Faber UK Group Limited Ten Trinity Square London EC3P 3AX England Attention: Company Secretary 15. BINDING EFFECT. This Agreement shall be binding upon each Partner and its respective successors and assigns. 16. SEVERABILITY. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision had been omitted. 17. NO THIRD-PARTY BENEFICIARIES. None of the provisions of this Agreement shall be for the benefit of or enforceable by any third parties, including, without limitation creditors of the Partnership or of the Partners. 18. NO WAIVER. No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute a waiver of any such breach or of any covenant, agreement, term or condition. Any Partner by an instrument in writing may, but shall be under no obligations to, waive any of its rights or any conditions to its obligations hereunder, or any duty, or obligation or covenant of any other Partner, but no waiver shall be effective unless in writing and signed by the Partner making such waiver. No waiver shall affect or alter the remainder of the terms of this Agreement but each and every covenant, agreement, term and condition hereof shall continue in full force and effect with respect to any other then existing or subsequent breach. 19. APPLICABLE LAW. ALL MATTERS IN CONNECTION WITH THE POWER, AUTHORITY AND RIGHTS OF THE PARTNERS AND ALL MATTERS PERTAINING TO THE OPERATION, CONSTRUCTION, INTERPRETATION OR ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED AND DETERMINED BY THE INTERNAL LAWS OF THE 9 STATE OF DELAWARE. THE PARTIES ARE ENTERING INTO THIS AGREEMENT IN EXPRESS RELIANCE ON 6 DEL. C. Sections 2708 AND ACKNOWLEDGE THAT THIS AGREEMENT INVOLVES AT LEAST $100,000. 20. JURISDICTION. EACH PARTNER (A) HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY COURT OF THE STATE OF DELAWARE OR THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT WHICH IS BROUGHT BY OR AGAINST THE PARTNERSHIP OR ANY PARTNER, (B) HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND (C) TO THE EXTENT THAT IT HAS ACQUIRED, OR HEREAFTER MAY ACQUIRE, ANY IMMUNITY FROM JURISDICTION OF ANY SUCH COURT OR FROM ANY LEGAL PROCESS THEREIN, HEREBY WAIVES SUCH IMMUNITY TO THE FULLEST EXTENT PERMITTED BY LAW. EACH PARTNER HEREBY WAIVES, AND HEREBY AGREES NOT TO ASSERT, IN ANY SUCH SUIT, ACTION OR PROCEEDING, IN EACH CASE TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT (i) IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, (ii) IT IS IMMUNE FROM ANY LEGAL PROCESS, (iii) ANY SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, (iv) VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER OR (v) THIS AGREEMENT MAY NOT BE ENFORCED IN OR BY SUCH COURT. EACH PARTNER AGREES THAT PROCESS AGAINST IT OR THE PARTNERSHIP, IN CONNECTION WITH ANY SUIT, ACTION OR PROCEEDING FILED IN ANY SUCH REFERENCED COURT ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY BE SERVED ON IT, OR THE PARTNERSHIP, BY MAILING THE SAME TO SUCH PARTNER OR THE PARTNERSHIP BY REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO SUCH PERSON OR THE PARTNERSHIP AT ITS ADDRESS FOR NOTICES SET FORTH HEREIN, WITH THE SAME EFFECT IN EITHER CASE AS THOUGH SERVED UPON SUCH PERSON PERSONALLY. IN ADDITION, EACH PARTY HEREBY APPOINTS RL&F SERVICE CORP. AS ITS AGENT FOR SERVICE OF PROCESS ON SUCH PARTY FOR ANY SUIT, ACTION OR OTHER PROCEEDING FILED IN ANY SUCH REFERENCED COURT ARISING OUT OF OR RELATING TO THIS AGREEMENT. 21. CERTIFICATED INTERESTS. The Partnership interests shall be represented by a certificate substantially in the form attached hereto as Exhibit A (each, a "Partnership Certificate," and collectively, the "Partnership Certificates"). Each Partnership Certificate shall be issued in fully registered form. The Partnership Certificates shall be executed on behalf of the Partnership by the manual or facsimile signature of at least one Partner. Partnership Certificates bearing the manual or facsimile signature of a person who was, at the time when such signature shall have been affixed, authorized to sign on behalf of the Partnership, shall be validly issued and entitled to the benefits of this Agreement, notwithstanding that such person shall have ceased to be authorized prior to the delivery of such Partnerships Certificates. 22. UNIFORM COMMERCIAL CODE. It is hereby expressly provided that without further action by the Partnership or any Partner and for purposes of Article 8 of the Uniform Commercial Code as in effect in the State of Delaware (the "Delaware UCC"), the Partnership Interests shall be governed by Article 8 of the Delaware UCC, including, without limitation: (i) for purposes of the definition of "security" thereunder, the Partnership Interest of each Partner in the Partnership shall be a "security" governed by Article 8 of the Delaware UCC; (ii) for purposes of the definition of "security certificate" under the Delaware UCC, the Partnership Certificate representing the Partnership Interest of each Partner in the Partnership shall be a "security certificate" governed by Article 8 of the Delaware UCC; and (iii) for purposes of the definition of "certificated security" under the Delaware UCC, the 10 Partnership Interest of each Partner in the Partnership shall be a "certificated security" governed by Article 8 of the Delaware UCC. 23. COUNTERPARTS. This Agreement may be executed in two (2) counterpart copies each of which together shall constitute one Agreement binding on both parties hereto notwithstanding that both parties have not signed the same counterpart. 11 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. WILLIS CORROON GROUP LIMITED By: ------------------------ Name: Title: WILLIS FABER UK GROUP LIMITED By: ------------------------ Name: Title: SCHEDULE I
CAPITAL PERCENTAGE PARTNER CONTRIBUTIONS INTEREST Willis Corroon Group Limited 3,338 shares of common stock 9.9% of Willis Corroon Corporation, subject to $400 million of indebtedness under the Tender Offer Facility (net value of approximately $100 million) Willis Faber UK Group Limited $100,000 0.1%
EXHIBIT A THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT IN ACCORDANCE WITH THE PARTNERSHIP AGREEMENT (AS DEFINED BELOW) CERTIFICATE EVIDENCING PARTNERSHIP INTEREST OF WILLIS CORROON PARTNERS Willis Corroon Partners, a general partnership formed under the laws of the state of Delaware (the "Partnership"), hereby certifies that _________________________(the "Holder") is the registered owner of ___% partnership interest in the Partnership (the "Partnership Interest"). Subject to the terms of the Partnership Agreement (as defined below), the Partnership Interest is transferable on the books and records of the Partnership, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer. The designations, rights, privileges, restrictions, preferences and other terms and provisions of the Partnership Interest are set forth in, and this certificate and the Partnership Interest represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Partnership Agreement of the Partnership, dated as of ____________, 1998, by and between Willis Corroon Group Limited and Willis Faber UK Group Limited, as the same may be amended from time to time (the "Partnership Agreement"). The Partnership will furnish a copy of the Partnership Agreement to the Holder without charge upon written request to the Partnership by contacting one of the Partners. Upon receipt of this certificate, the Holder is bound by the Partnership Agreement and is entitled to the benefits thereunder. Terms used but not defined herein have the meanings set forth in the Partnership Agreement. IN WITNESS WHEREOF, one of the Partners of the Partnership has executed this certificate this __ day of _______, 1998. WILLIS CORROON PARTNERS By: [PARTNER] By:_____________________________ Name: Title: ASSIGNMENT FOR VALUE RECEIVED, the undersigned assigns and transfers this Partnership Interest to: - ------------------------------------------------------------------------------ (Insert assignee's social security or tax identification number) - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ (Insert address and zip code of assignee) and irrevocably appoints________________________________________________________ - ------------------------------------------------------------------------------ agent to transfer this certificate on the books of the Partnership. The agent may substitute another to act for him or her. Date: _________________________ Signature: _____________________________________________________________________ (Sign exactly as your name appears on the other side of this certificate) EX-3.4 17 EX. 3.4 No. of Company: 621757 The Companies Acts 1985 and 1989 --------------------------------- Private Company Limited by Shares --------------------------------- Memorandum and Articles of Association of WILLIS CORROON GROUP LIMITED (adopted pursuant to a Special Resolution passed on 10th November 1998) (Memorandum as amended by a Special Resolution passed on 8th March 1999) ================================================================================ Incorporated the 25th day of February 1959. Re-registered as a private company the 10th day of November 1998 [Coat of Arms] CERTIFICATE OF INCORPORATION ON RE-REGISTRATION OF A PUBLIC COMPANY AS A PRIVATE COMPANY Company No. 621757 The Registrar of Companies for England and Wales hereby certifies that WILLIS CORROON GROUP LIMITED formerly registered as a public company has this day been re-registered under the Companies Act 1985 as a private company, and that the Company is limited. Given at Companies House, London, the 10th November 1998. [Signature] Miss S Bashar For The Registrar of Companies [Logo] COMPANIES HOUSE No. 621757 THE COMPANIES ACTS 1985 AND 1989 ------------------------------------------------- PRIVATE COMPANY LIMITED BY SHARES ------------------------------------------------- MEMORANDUM OF ASSOCIATION of WILLIS CORROON GROUP LIMITED (as amended by a Special Resolution passed on 8th March 1999) 1. The Company's name is "Willis Corroon Group Limited" 2. The Company's registered office is to be situated in England. 3. The objects for which the Company is established are: (1) (a) To act as an investment holding company and to co-ordinate the businesses and administration of any companies in which the Company is for the time being interested. (b) To acquire (whether by original subscription, tender, purchase, exchange, underwriting or otherwise and whether conditionally or otherwise) shares or stocks, debentures, debenture stock, bonds, obligations or any other securities issued or guaranteed by any other corporation constituted or carrying on business in any part of the world and whether or not engaged or concerned in the same or similar trades or occupations as those carried on by the Company or its subsidiary companies and the debentures, debenture stocks, bonds, obligations or any other security issued or guaranteed by any government, sovereign, ruler, commissioner, public body or authority, whether supreme, local or otherwise in any part of the world and whether such shares, stocks, debentures, debenture stocks, bonds, obligations or other securities are 4 or are not fully paid up and to make payments thereon as called up or in advance of calls or otherwise and to hold the same with a view to investment or to sell, exchange or otherwise dispose of same. (2) To carry on the business of Insurance Brokers, Insurance Agents and Underwriting Agents in all its branches. (3) To act as Agents or Managers for any Insurance Company, club, syndicate, association or for any individual underwriter in connection with its or his insurance or underwriting business wherever the same may be carried on or any branch of the same and to enter into any agreement for such purpose with any such insurance company, club, association or underwriter. (4) To carry on the business of an Insurance and Guarantee Company in all its branches, insure against risks of all kinds which are insured against by insurance or underwriting business wherever the same may be carried on or any branch of the same and to enter into any agreement for such purpose with any such insurance company, club, association or underwriter. (5) To reinsure or counter-insure all or any of the risks undertaken by or on behalf or on account of the Company, and to undertake any authorised risks either direct or by way of reinsurance or counter-insurance. (6) To undertake and to carry on and execute all kinds of financial, commercial, trading and other operations, and to carry on any other business which may seem to be capable of being conveniently carried on in connection with any of these objects or calculated directly or indirectly to enhance the value or facilitate the realisation of or render profitable any of the Company's property or rights and to transact any or every description of agency, commission, commercial, manufacturing, mercantile and financial business. (7) To purchase, take on lease or tenancy or otherwise acquire for any estate or interest and to take options over any property, real or personal or rights of any kind which may appear to be necessary or convenient for any business of the Company (in any part of the world) and to develop, turn to account and deal with the same in such manner as may be thought expedient. (8) To obtain or acquire by application, purchase, licence or otherwise, and to exercise and use and grant licences to others to exercise and use patent rights, brevets d'invention, concessions or protection in any part of the world for any invention, mechanism or process, secret or otherwise, and to disclaim, alter or modify such patent rights or protection, and also to acquire, use and register trade marks, trade names, registered or other designs, right of copyright other 5 rights or privileges in relation to any business for the time being carried on by the Company. (9) To purchase or otherwise acquire and undertake, wholly or in part for cash or shares or otherwise howsoever, all or any part of the business or property and liabilities of any person or company carrying on any business which this Company is authorised to carry on or possessed of property suitable for the purposes of this Company. (10) To establish or promote or concur in establishing or promoting any company whose objects shall include the acquisition of all or any of the assets or liabilities of this Company or the promotion of which shall be considered likely to advance directly or indirectly the objects of this Company or the interests of its members. (11) To amalgamate with or enter into partnership or any joint purse or profit-sharing arrangement with or co-operate in any way with any company, firm or person carrying on or proposing to carry on any business within the objects of this Company. (12) To advance, lend or deposit money, securities and property to or with such persons and on such terms as may seem expedient. (13) To draw, make, accept, endorse, negotiate, execute and issue and to discount, buy, sell and deal in promissory notes, bills of exchange, bills of lading, warrants, debentures and other negotiable or transferable instruments. (14) To receive from any person or persons, whether a Member or Members, Director or Directors, employee or employees of the Company or otherwise, or from any corporate body, money or securities on deposit at interest or for safe custody or otherwise. (15) To subscribe for, underwrite, purchase or otherwise acquire, and to hold, dispose of and deal in shares, stocks and securities of any other company, whether British or foreign, or of any country, state, dominion, colony or government. (16) To invest any moneys of the Company not for the time being required for the general purposes of the Company in such investments (other than shares or stock of the Company) as may be thought proper, and to hold, sell or otherwise deal with such investments. (17) To enter into any guarantee or contract of indemnity or suretyship, and to provide security, including, without limitation, the guarantee and provision of security for the performance of the obligations of and the payment of any money (including, without limitation, capital, principal, premiums, dividends, interest, commissions, 6 charges, discount and any related costs or expenses whether on shares or other securities) by any person including, without limitation, any body corporate which is for the time being the Company's holding company, the Company's subsidiary, a subsidiary of the Company's holding company or any person which is for the time being a member or otherwise has an interest in the Company or is associated with the Company in any business or venture, with or without the Company receiving any consideration or advantage (whether direct or indirect), and whether by personal covenant or mortgage, charge or lien over all or part of the Company's undertaking, property, assets or uncalled capital (present and future) or by other means. For the purposes of paragraph (17) "guarantee" includes any obligation, however described, to pay, satisfy, provide funds for the payment or satisfaction of (including, without limitation, by advance of money, purchase of or subscription for shares or other securities and purchase of assets or services), indemnify against the consequences of default in the payment of, or otherwise be responsible for, any indebtedness of any other person. (18) To borrow or raise or secure the payment of money for the purposes of or in connection with the Company's business. (19) To sell, exchange, let on rent, share of profit, royalty or otherwise, grant licences, easements, options, servitudes, and other rights over and in any manner deal with or dispose of the undertaking, property assets, rights and effects of the Company or any part thereof for such consideration as may be though fit, and in particular for stocks, shares, whether fully or partly paid up, debentures, debenture stock or other obligations, or securities of any other company. (20) To distribute among the Members of the Company in specie any property of the Company. (21) To remunerate the Directors, officials and servants of the Company and others out of or in proportion to the returns or profits of the Company or otherwise as the Company may think proper, and to formulate and carry into effect any scheme for sharing the profits of the Company with employees of the Company or any of them. (22) To take all necessary or proper steps in Parliament, or with the authorities, national, local, municipal or otherwise, of any place in which the Company may have interests, and to carry on any negotiations or operations for the purpose of directly or indirectly carrying out the objects of the Company, or effecting any modification in the constitution of the Company, or furthering the interests of its members, and to oppose any such steps taken by any other company, firm or person which may be considered likely, directly or indirectly, to prejudice the 7 interests of the Company or its Members. (23) To procure the registration or incorporation of the Company, in or under the laws of any place outside England. (24) To establish and maintain or procure the establishment and maintenance of any non-contributory or contributory pension or superannuation funds for the benefit of, and to give or procure the giving of donations, gratuities, pensions, allowances or emoluments to any persons who are or were at any time in the employment or service of the Company, or of any company whose undertaking or any part thereof the Company shall acquire or of any company which is a subsidiary of the Company or is allied to or associated with the Company or with any such subsidiary Company, or other company as aforesaid, or who are or were at any time Directors or officers of the Company or of any such other company as aforesaid, and the wives, widows, families and dependants of any such persons, and also to establish and subsidise or subscribe to any institutions, associations, clubs or funds considered to be for the benefit of or to advance the interests and well-being of the Company or of any such other company as aforesaid, and to make payments for or towards the insurance of any such person as aforesaid, and to subscribe or guarantee money for any charitable or benevolent objects or for any exhibition, or for any public, general or useful object, and to do any of the matters aforesaid, either alone or in conjunction with any such other company as aforesaid. (25) To purchase and maintain insurance for or for the benefit of any persons who are or were at any time Directors, officers or employees of the Company, or of any other company in which the Company or any of the predecessors of the Company has any interest whether direct or indirect or which is in any way allied to or associated with the Company, or of any subsidiary undertaking of the Company or of any such other company, or who are or were at any time trustees of any pension fund or employees' share schemes in which any employees of the Company or of any such other company or subsidiary undertaking are interested, including (without prejudice to the generality of the foregoing) insurance against any liability incurred by such persons in respect of any act or omission in the actual or purported execution and/or discharge of their duties and/or in the exercise or purported exercise of their powers and/or otherwise in relation to their duties, powers or officers in relation to the Company or any such other company, subsidiary undertaking or pension fund or employees' share scheme and to such extent as may be permitted by law otherwise to indemnify or to exempt any such person against or from any such liability, for the purposes of this clause "subsidiary undertaking" shall have the same meaning as in the Companies Act 1985 (as modified or re-enacted from time to time). 8 (26) Subject to the provisions of Section 151 of the Companies Act 1985, to provide, in accordance with any scheme for the time being in force, money for the purchase of, or subscription for, fully paid shares or stock in the Company's holding company or in the Company, being a purchase or subscription by Trustees of or for shares or stock to be held by or for the benefit of employees of the Company, the Company's subsidiaries or, a subsidiary of the Company's holding company, including any director holding a salaried employment in the Company. (27) To do all such other things as may be considered to be incidental or conducive to the above objects or any of them. (28) To do all or any of the things and matters aforesaid in any part of the world and either as principals, agents, contractors, trustees or otherwise and by or through trustees, agents or otherwise and either alone or in conjunction with others. (29) To subscribe or guarantee money for or organise or assist any national, local, charitable, benevolent, public, general or useful object, or for any exhibition or for any purpose which may be considered likely directly or indirectly to further the objects of the Company or the interests of its members. AND it is hereby declared that the word "company" in this clause, except where used in reference to this Company, shall be deemed to include any partnership or other body of persons, whether corporate or unincorporate, and whether domiciled in the United Kingdom or elsewhere and further the intention is that the objects specified in each paragraph of this clause shall, except where otherwise expressed in such paragraphs, be in no wise limited by reference to any other paragraph or the name of the Company, but may be carried out in as full and ample a manner and shall be construed in as wide a sense as if each of the said paragraphs defined the objects of a separate, distinct and independent company. (a) The liability of the Members is limited. (b) The share capital of the Company is (pound)66,000,000 divided into 528,000,000 Ordinary Shares of 12 1/2 pence each, with power to divide the shares in the original or any increased capital into several classes and to attach thereto any preferential, deferred, qualified or other special rights, privileges and conditions. Minute approved by the Court The Capital of Willis Corroon Group plc was by virtue of a Special Resolution and with the sanction of an Order of the High Court of Justice dated 5 September 1984 reduced from (pound)13,900,000 divided into 1,400,000 7 per cent. Cumulative Preference Shares of 9 (pound)1 each and 50,000,000 Ordinary Shares of 25p each to (pound)12,500,000 divided into 50,000,000 Ordinary Shares of 25p each. At the date of this Minute 41,675,515 Ordinary Shares have been issued and are deemed to be fully paid up and the remainder are unissued. We, the several persons whose names, addresses and descriptions are subscribed, are desirous of being formed into a Company, in pursuance of this Memorandum of Association and we respectively agree to take the number of shares in the Capital of the Company set opposite our respective names. - -------------------------------------------------------------------------------- NAMES, ADDRESSES AND Number of Shares taken by each DESCRIPTIONS OF SUBSCRIBERS Subscriber - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- DENYS DONALD ORCHARD One 71 Wavendon Avenue Chiswick, London W4 Chartered Secretary - -------------------------------------------------------------------------------- JOHN DAVEY ECCLES One 7 Cheltenham Terrace London SW3 Solicitor - -------------------------------------------------------------------------------- DATED this 18th day of February, 1959 WITNESS to the above signatures: Richard Millett 85 London Wall EC2 Solicitor 10 Company No. 621757 THE COMPANIES ACTS 1985 AND 1989 ------------------------------------------------ PRIVATE COMPANY LIMITED BY SHARES ------------------------------------------------ ARTICLES OF ASSOCIATION of WILLIS CORROON GROUP LIMITED *(1) Incorporated 25th February 1959 (Adopted by special resolution passed on 10th November 1998) CLIFFORD CHANCE 12 Company No. 621757 THE COMPANIES ACT 1985 (AS AMENDED) ------------------------------------------- PRIVATE COMPANY LIMITED BY SHARES ------------------------------------------- ARTICLES OF ASSOCIATION of WILLIS CORROON GROUP LIMITED Incorporated 25th February 1959 (New Articles adopted by Special Resolution passed on 10th November 1998) ADOPTION OF TABLE A 1. The regulations contained in Table A in the Schedule to the Companies (Tables A to F) Regulations 1985 as amended at the date thereof ("Table A") shall apply to the Company, except where they are excluded or modified by these Articles. No other regulations contained in any statute or subordinate legislation apply as the regulations of articles of association of the Company. References herein to Regulations are to Regulations in Table A unless otherwise stated. 2. Regulations 2, 3, 24, 53, 54, 57, 60-62 inclusive, 64, 72-83 inclusive, the last sentence of regulation 84, 85-87, 93, 94, 112, 115 and 118 shall not apply to the Company. INTERPRETATION 13 3. Words and expressions which bear particular meanings in Table A shall bear the same meanings in these articles. References in these articles to writing include references to any method of representing or reproducing words in a legible and not-transitory form. Headings are for convenience only and shall not affect construction. 4. In these Articles and in Table A, so far as it applies to the Company, unless the context otherwise requires, the following expressions shall have the meanings hereby assigned to them:- "The Act" The Companies Act 1985 (as amended). "The Statutes" The Act and every other statute for the time being in force concerning companies and affecting the Company. "These Articles" These Articles of Association as from time to time altered. Words denoting the singular shall include the plural and vice versa. Words denoting the masculine shall include the feminine. Words denoting persons shall include bodies corporate and unincorporated associations. References to any statute or statutory provision shall be construed as relating to any statutory modification or re-enactment thereof for the time being in force (whether coming into force before or after the adoption of these Articles). References to "committees" shall, unless the context otherwise requires, include "sub-committees". PRIVATE COMPANY 5. The Company is a private company limited by shares and accordingly any invitation to the public to subscribe for any shares or debentures of the Company is prohibited. SHARE CAPITAL 6. The authorised share capital of the Company at the date of the adoption of these Articles is (pound)66 million divided into 528,000,000 Ordinary Shares of 12.5p each. 7. The Company shall not have power to issue share warrants to bearer. 14 RIGHTS ATTACHED TO SHARES 8. Subject to the provisions of the Act and to any rights conferred on the holders of existing shares or class of shares, any share may be issued with or have attached to it such rights and restrictions as the Company may be ordinary resolution decide or, if no such resolution has been passed, or so far as the resolution does not make specific provision, as the Directors may decide. UNISSUED SHARES 9. Subject to the provisions of the Act and to these Articles, all unissued shares of the Company (whether or not forming part of the original or any increased capital) shall be at the disposal of the Directors who may offer, allot, grant options over or otherwise dispose of them to such persons at such times and for such consideration and upon such terms and conditions as they may determine. INITIAL AUTHORITY TO ISSUE RELEVANT SECURITIES 10. Subject to any direction to the contrary which may be given by the Company in general meeting, the Directors shall be generally and unconditionally authorised pursuant to and in accordance with Section 80 of the Act to exercise all powers of the Company to allot relevant securities for a period expiring on the fifth anniversary of the date of adoption of this article. The maximum nominal amount of relevant securities that may be allotted under this authority shall be the nominal amount of the unissued share capital at the date of adoption of this article or such other amount as may from time to time be authorised by the Company in general meeting. The authority conferred on the Directors by this Article may be revoked varied or reviewed from time to time by the Company in general meeting in accordance with the Act. EXCLUSION OF PRE-EMPTIVE RIGHTS 11. Section 89(1) of the Act and the provisions of sub-sections (1) to (6) inclusive of section 90 of the Act shall not apply to the allotment by the Company of any equity security. ISSUE OF REDEEMABLE SHARES 12. Subject to the provisions of and so far as may be permitted by the act, the Company may issue shares which are to be redeemed or are liable to be redeemed at the option of the Company or the holder on such terms as may be provided by the articles. 15 LIEN ON SHARES 13. Regulation 8 shall be modified by omitting therefrom the words "(not being a fully paid share)". TRANSFER OF SHARES 14. The Directors may, in their absolute discretion and without giving any reason for so doing, decline to register any transfer of any share other than the shares referred to in Article 15, whether or not it is a fully paid share unless the transfer is pursuant to a share charge, share pledge or similar agreement or arrangement and the directors will register any such transfer. TRANSFER OF CERTAIN SHARES 15(1)(i) Any persons who becomes (whether by issue or otherwise) a holder of Ordinary Shares in the Company after the time of passing of the special resolution of the Company adopting this Article 15 (the "Vendor") may on any date give to Trinity whilst it is a shareholder in the Company (the "Purchaser") a notice requiring the Purchaser to purchase all the Ordinary Shares so acquired by the Vendor (the "Disposal Shares") for a cash consideration consisting of two hundred pence for each Ordinary Share and the Vendor shall be bound to transfer and the Purchase shall be bound to purchase the Disposal Shares for such consideration. (ii) The Purchaser may on any date give a notice to the Vendor requiring the Vendor to sell to the Purchaser the Disposal Shares for the consideration stated in Article 15(1)(i) and the Vendor shall be bound to transfer and the Purchaser shall be bound to purchase the Disposal Shares for such consideration. (iii) A notice given under this Article 15(1) shall be irrevocable. (2) To give effect to any transfer required by Article 15(1), the Company may appoint any person to receive notice on behalf of any Vendor under Article 15(1)(ii) and to execute as transferor, on behalf of the Vendor, a form of transfer in favour of the Purchaser or its nominee. Any such transfer will be made at such time and place as the Company determines. Any such transfer will constitute a transfer of the entire legal and beneficial interest in the Disposal Shares concerned. The amount of cash consideration to be paid to the Vendor will be despatched to him at this registered address at his risk by the Purchaser within 7 days of the date of transfer of the Disposal Shares concerned. 16 (3) Any notice given under Article 15(1)(i) after a notice given with respect to the same Disposal Shares under Article 15(1)(ii) will not be a valid notice and vice versa. NOTICE OF GENERAL MEETINGS 16. Notice of every General Meeting shall be given to all members (other than any who, under the provisions of these Articles or the terms of issue of the shares they hold, are not entitled to receive such notices from the Company). The last sentence of Regulation 38 shall not apply. PROCEEDINGS AT GENERAL MEETINGS 17. A poll may be demanded at any General Meeting of the Company by the Chairman or by any member present in person or by proxy, and entitled to vote. Regulation 46 shall be modified accordingly. VOTES OF MEMBERS 17.1 Every member present in person or by proxy shall on a show of hands have one vote, and upon a poll have one vote for every share held by him. 17.2 Subject to the provisions of the Act, a resolution in writing signed by all members for the time being entitled to attend and vote at general meetings (or being corporations by their duly authorised representatives) shall be as valid and effective as if the same had been passed at a general meeting of the Company duly convened and held. Any such resolution may consist of several documents in the like form each signed by one or more of the members (or being corporations by their duly authorised representatives). DELIVERY OF PROXIES 18. Any instrument appointing a proxy may be in any usual or common form or in the form of a facsimile or other machine made copy of the instrument appointing a proxy or in any other form which the Directors may approve. Such instruments (and, where it is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certified copy thereof) must either be delivered at such place or one of such places (if any) as may be specified for that purpose in or by way of note to the notice convening the meeting (or, if no place is so specified, at the registered office) before the time appointed for holding the meeting or adjourned meeting or (in the case of a poll taken otherwise than at or on the same day as the meeting or adjourned meeting) for the taking of the poll at which it is to be used, or be delivered to the Secretary (or the Chairman of the meeting) 17 on the day and at the place of the meeting or adjourned meeting or poll but in any event before the time appointed for holding the meeting or adjourned meeting or for the taking of the poll. An instrument of proxy shall not be treated as valid until such delivery shall have been effected. DIRECTORS 19. The minimum number of Directors shall be two and there shall be no maximum number. 20. A Director shall not be required to hold any shares of the Company by way of qualification. 21. The aggregate fees of the Directors shall from time to time be determined by the Directors except that such remuneration shall not exceed(pound)100,000 per annum in aggregate or such higher amount as may from time to time be determined by Ordinary Resolution of the Company and shall (unless such resolution otherwise provides) be divisible among the Directors as they may agree, or, failing agreement, equally, except that any Director who shall hold office for part only of the period in respect of which such remuneration is payable shall be entitled only to rank in such division for a proportion of remuneration related to the period during which he has held office. 22. The Directors shall also be entitled to be repaid all reasonable travelling, hotel and other expenses incurred by them respectively in or about the performance of their duties as Directors, including their expenses of travelling to and from Board Meetings. In the event of there being any dispute as to a reasonableness of any such expenses the same shall be referred to the Directors who shall determine the question and whose determination shall be final and binding upon both the Company and the Director in question. 23. The Directors may grant special remuneration to any Director who, being called upon, shall be willing to render any special or extra service to the Company or to go to or reside in any place other than where he usually resides, in connection with the conduct of the affairs of the Company. Such special remuneration shall be paid to such Director in addition to his ordinary remuneration as a Director and may be payable by a lump sum or by way of salary, or by a percentage of profits, or by any or all those modes. APPOINTMENT OF DIRECTORS BY BOARD 24. Without prejudice to the powers conferred by any other article, any person may 18 be appointed a Director by the Directors, either to fill a vacancy or as an additional Director. 25. Any provision of the Statutes which, subject to the provisions of these Articles, would have the effect of rendering any person ineligible for appointment or election as a Director or liable to vacate office as a Director on account of his having reached any specified age or of requiring special notice or any other special formality in connection with the appointment or election of any Director over a specified age, shall not apply to the Company. DISQUALIFICATION AND REMOVAL OF DIRECTOS 26. The office of a director is vacated if: (a) he ceases to be a director by virtue of any provision of the Act or he becomes prohibited by law from being a director; or (b) he becomes bankrupt or makes any arrangement or composition with his creditors generally; or (c) he becomes, in the opinion of all his co-directors, incapable by reason of mental disorder of discharging his duties as director; or (d) he resigns his office by notice to the Company; or (e) he is for more than six consecutive months absent without permission of the directors from meetings of directors held during that period and his alternate director (if any) has not during that period attended any such meetings instead of him, and directors resolve that his office be vacated; or (f) he is removed from office by notice addressed to him at his last-known address and signed by his co-directors. POWERS AND DUTIES OF DIRECTORS 27.1 The business and affairs of the Company shall be managed by the Directors, who may exercise all such powers of the Company as are not by the Statutes or by these Articles required to be exercised by the Company in a general meeting subject nevertheless to any regulations made by the Company under Article 27.2. 27.2 The Company in a General Meeting may by Ordinary Resolution at any time and 19 from time to time, give directions to the Directors concerning the management of the Company (including, without limitation, procedural and administrative matters) or the policy to be adopted by the Directors in relation to such management. The Directors shall use all reasonable endeavours to exercise their powers so as to manage the business of the Company in a manner consistent with such direction or directions, provided that no person dealing with the Company shall be concerned to see or enquire as to whether the powers of the Directors have been in any way restricted hereunder, and no obligation incurred or security given or transaction effected by the Company to or with any third party shall be invalid or ineffectual unless the third party had at the time express notice that the incurring of such obligation or the giving of such security or the effecting of such transaction was in excess of the powers of the Directors. No regulation so made by the Company shall invalidate any prior act of the Directors which would have been valid if such regulation had not been made. Regulation 70 shall be modified accordingly. 28. A Director may be a party to or in any way interested in any contact or transaction or arrangement to which the Company is a party or in which the Company is in any way interested. A Director may hold and be remunerated in respect of any office or place of profit (other than the office of Auditor of the Company or any subsidiary company thereof) under the Company or any other company in which the Company is in any way interested, and he or any firm of which he is a member may act in a professional capacity of the Company or any such other company and be remunerated therefore. On any matter in which a Director is any way interested, he may nevertheless vote and be taken into account for the purposes of a quorum and, (save as otherwise agreed), may retain for his own absolute use and benefit from all profits, benefits and advantages directly or indirectly accruing to him thereunder or in consequence thereof. 29. A Director who is in any way whether directly or indirectly interested in a contract, transaction or arrangement or a proposed contract, transaction or arrangement or a proposed contract, transaction or arrangement with the Company shall declare the nature of his interest at a meeting of the Directors in accordance with Section 317 of the Act. A general notice given to the Directors by any Director, to the effect that he is a member of any specified company or firm, and is to be regarded as interested in any contract, transaction or arrangement which may thereafter be made with that company or firm, or to the effect that he is to be regarded as interested in any contract, transaction or arrangement which may thereafter be made with a specified person who is connected with him (within the meaning of Section 346 of the Act), shall be deemed a sufficient declaration of 20 interest in relation to any such contract, transaction or arrangement, provided that no such notice shall be of effect, unless either it is given at a meeting of the Directors, or the Director takes reasonable steps to secure that it is brought up and read at the next meeting of the Directors, or the Director takes reasonable steps to secure that it is brought up and read at the next meeting of the Directors after it is given. 30. The Directors shall have power to pay and agree to pay gratuities, pensions or other retirement, superannuity, death or disability benefits to (or to any person in respect of) any Director or ex Director and for the purpose of providing any such gratuities, pensions or other benefits to contribute to any scheme or fund or to any premiums. 31. Without prejudice to the provisions of Article 45 the Directors shall have power to purchase and maintain insurance for or for the benefit of any persons who are or were at any time Directors, officers, employees of the Company, or for any other company which is its holding company or in which the Company or of such holding company or any of the predecessors of the Company or of such holding company has any interest whether directly or indirectly or which is in any way allied to or associated with the Company, or of any subsidiary undertaking of the Company or of any such other company, or who are or were at any time trustees of any pension fund or employees' share scheme in which employees of the Company or of any other such company or subsidiary undertaking are interested, including (without prejudice to the generality of the foregoing) insurance against any liability incurred by such persons in respect of any act or omission in the actual or purported execution and/or discharge of their duties and/or in the exercise or purported exercise of their powers and/or otherwise in relation to their duties, powers or offices in relation to the Company or any other such company, subsidiary undertaking, pension fund or employees' share scheme. NOTICE OF BOARD MEETINGS 32. Notice of a meeting of the Directors shall be deemed to be properly given to a Director if it is given to him personally, or by word of mouth, or sent in writing to him at his last known address in the United Kingdom or the United States, or any other address given by him to the Company for this purpose, or by any other means authorised in writing by the Director concerned. A Director absent or intending to be absent from the United Kingdom or the United States may request the Directors that notices of meetings of the Directors shall during his absence be sent in writing to him at an address or to a facsimile or telex number given by him to the Company for this purpose, but if no request is made to the Directors, it shall 21 not be necessary to give notice of a meeting of the Directors to any Director who is for the time being absent from the United Kingdom or the United States. A Director may waive notice of any meeting either prospectively or retrospectively. Regulation 88 shall be modified accordingly. PROCEEDINGS OF DIRECTORS 33. Without prejudice to the obligations of any director to disclose his interest in accordance with Section 317 of the Act, or Article 28 a director may vote at a meeting of directors or of a committee of directors on any resolution concerning a matter in respect of which he has, directly or indirectly, an interest or duty. The director must be counted in a quorum present at a meeting when any such resolution is under consideration and if he votes his vote must be counted. 34. Subject to the provisions of these Articles the Directors may meet together for the despatch of business, adjourn and otherwise regulate their meetings as they think fit. Any one or more (including, without limitation, all) of the Directors or members of any committee of the Directors, may participate in a meeting of the Directors or of such committee, (i) by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each at the same time or (ii) by a succession of telephone calls to Directors from the chairman of the meeting following disclosure to them of all material points. Participating by such means shall constitute presence in person at a meeting. Such meeting shall be deemed to have occurred in (i) at the place where most of the Directors participating are present or, if there is no such place, where the chairman of the meeting is present and in (ii) where the chairman of the meeting is present. At any time any Director may, and the Secretary at the request of the Director shall, summon a meeting of the Directors. It shall not be necessary to give notice of a meeting of Directors to any Director for the time being absent from the United Kingdom and the United States provided that if any Director who is for the time being absent from the United Kingdom and the United States shall have left with the Secretary a memorandum specifying an address outside the United Kingdom or the United States, as the case may be, to which such notices should be sent by telegraphic or facsimile transmission during any period, then during that period such Director shall be given notice of Directors' meetings by telegraphic or facsimile transmission sent to such address. Any Director may waive notice of any meeting and any such waiver may be retroactive. 35. The quorum necessary for the transaction of business of the Directors shall be two or such other number as may be fixed from time to time by the Directors and 22 may include any Director represented by an alternate Director. A meeting of the Directors at which a quorum is present shall be competent to exercise all powers and discretions for the time being exercisable by the Directors. 36. The Directors may delegate any of their powers or discretions (including without prejudice to the generality of the foregoing all powers and discretions whose exercise involves or may involve the payment of remuneration to or the conferring of any other benefit on all or any of the Directors) to committees. Any such committee shall, unless the Directors otherwise resolve, have power to sub-delegate to sub-committees any of the powers or discretions delegated to it. Any such committee shall consist of one or more Directors and (if thought fit) one or more other named person or persons to be co-opted as hereinafter provided. Insofar as any such power or discretion is delegated to a committee or sub-committee any reference in these Articles to the exercise by the Directors of such power or discretion shall be read and construed as if it were a reference to the exercise thereof by such committee or sub-committee. Any committee or sub-committee so formed shall in the exercise of the powers so delegated conform to any regulations which may from time to time be imposed by the Directors. Any such regulations may provide for or authorise the co-option to the committee of persons other than Directors and may provide for members who are not Director to have voting rights as members of the committee or sub-committee. 37. The meetings and proceedings of any such committee or sub-committee consisting of two or more members shall be governed mutatis mutandis by the provisions of these Articles regulating the meetings and proceedings of the Directors, so far as the same are not superseded by any regulations made by the Directors under the last preceding Article. 38. A resolution in writing signed by all the Directors, for the time being in the United Kingdom or the United States and by an alternate Director for the time being in the United Kingdom or the United States of a Director not for the time being in the United Kingdom or the United States (in each case entitled to vote thereon) shall be as valid and effectual as a resolution duly passed and may consist of several documents in the like form each signed by one or more of the Directors. 39. The Directors may dispense with the keeping of attendance books for the meetings of the Directors or committees of the Board. CASTING VOTE 40. Questions arising at any meeting of the Directors shall be determined by a 23 majority of votes. In case of an equality of votes the Chairman of the meeting shall have a second or casting vote. BORROWING POWERS 41. Subject to the provision of the Statutes, the Directors may exercise all the powers of the Company to borrow money, to enter into any guarantee or contract of indemnity or suretyship, and to provide security, including without limitation, the guarantee and provision of security for the performance of the obligations of and the payment of any money by any person including, without limitation, any body corporate which includes for the time being the Company's holding company, the Company's ultimate parent company, the Company's subsidiary, a subsidiary of the Company's holding, or ultimate parent company, or any person which is for the time being a member or otherwise has an interest in the Company or is associated with the Company in any business or venture, with or without the Company receiving any consideration or advantage. SECRETARY 42. If at any time the office of Secretary shall be vacant or if there is for any reason no Secretary capable of acting, the Directors may appoint any other officer of the Company to perform the duties of the Secretary for the duration of such vacancy or incapacity as the case may be. NOTICES 43. Any notice or other document (including a share certificate) may be served on or delivered to any member of the Company either personally, or by sending it by post addressed to the member at his registered address or by facsimile or telex to a number provided by the member for this purpose or by leaving it at his registered address addressed to the member, or by any other means authorised in writing by the member concerned. In the case of joint holders of a share, service or delivery of any notice or other document on or to one of the joint holders shall for all purposes be deemed a sufficient service on or delivery to all the joint holders. 24 TIME OF SERVICE 44. Any notice or other documents, if sent by post, shall be deemed to have been served or delivered twenty four hours (or, where second class mail is employed, forty-eight hours) after posting and, in proving such service or delivery, it shall be sufficient to prove that the notice or document was properly addressed, stamped and put in the post. Any notice or other document left at a registered address otherwise than by post, or sent by facsimile or telex or other instantaneous means of transmission, shall be deemed to have been served or delivered when it was so left or sent. INDEMNITY 45. Subject to the provisions of and so far as may be consistent with the Statutes, every Director, Secretary or other officer of the Company or its subsidiary undertakings shall be entitled to be indemnified by the Company out of its own funds against all costs, charges, losses, expenses and liabilities incurred by him in the actual or purported execution and/or discharge of his duties and/or the exercise or purported exercise of his powers and/or otherwise in relation to or in connection with his duties, powers or office including (without prejudice to the generality of the foregoing) any liability incurred by him in defending any proceedings, civil or criminal, which relate to anything done or omitted or alleged to have been done or omitted by him as an officer or employee of the Company and in which judgement is given in his favour (or the proceedings are otherwise disposed of without any finding or admission of any material breach of duty on his part) or in which he is acquitted or in connection with any application under any statue for relief from liability in respect of any such act or omission in which relief is granted to him by the Court. OVERRIDING PROVISIONS 46. Where Trinity Acquisition plc is the immediate parent company of the Company (the "Parent Company"), the following provisions shall apply and to the extent of any inconsistency shall have overriding effect over all other provisions of these Articles:- (a) the Parent Company may at any time and from time to time appoint any person to be a Director or remove from office any Director howsoever appointed or remove any Director from the office of Managing Director; 25 (b) the Parent Company may at any time by notice in writing to all the members of the Company entitled under these articles to receive notice of General Meetings convene any Extraordinary General Meeting of the Company, provided that such notice shall not be effective to convene such meeting unless it would have been effective for such purposes had it been given by the Company. 26 SOLE MEMBER 47. And for so long as the Company has only one member: (a) in relation to a general meeting, the sole member or a proxy for that member or (if the member is a corporation) a duly authorised representative of that member is a quorum and Regulation 40 of Table A is modified accordingly; (b) a proxy for the sole member may vote on a show of hands and regulation 54 of Table A is modified accordingly; (c) the sole member may agree that any general meeting, other than a meeting called for the passing of an elective resolution, be called by shorter notice than that provided for by the articles; and (d) all other provisions of the articles apply with any necessary modification (unless the provision expressly provides otherwise). - -------------------------------------------------------------------------------- (1)* The Special Resolution dated 10th November 1998 was passed to change the name of the Company from Willis Corroon Group plc to Willis Corroon Group Limited. 27 EX-4.1 18 EX. 4.1 Exhibit 4.1 EXECUTION COPY - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- WILLIS CORROON CORPORATION 9% Senior Subordinated Notes due 2009 --------- INDENTURE Dated as of February 2, 1999 --------- The Bank of New York, Trustee - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE OF CONTENTS
Page ---- ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE...............................................................1 SECTION 1.01. DEFINITIONS......................................................................1 SECTION 1.02. OTHER DEFINITIONS...............................................................20 SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT...............................21 SECTION 1.04. RULES OF CONSTRUCTION...........................................................22 ARTICLE 2 THE NOTES...............................................................................................22 SECTION 2.01. PRINCIPAL AMOUNT AND MATURITY...................................................22 SECTION 2.02. FORM AND DATING.................................................................22 SECTION 2.03. EXECUTION AND AUTHENTICATION....................................................23 SECTION 2.04. REGISTRAR AND PAYING AGENT......................................................23 SECTION 2.05. PAYING AGENT TO HOLD MONEY IN TRUST.............................................24 SECTION 2.06. NOTEHOLDER LISTS................................................................24 SECTION 2.07. TRANSFER AND EXCHANGE...........................................................24 SECTION 2.08. REPLACEMENT NOTES...............................................................25 SECTION 2.09. OUTSTANDING NOTES...............................................................26 SECTION 2.10. TEMPORARY NOTES.................................................................26 SECTION 2.11. CANCELATION.....................................................................26 SECTION 2.12. DEFAULTED INTEREST..............................................................26 SECTION 2.13. "CUSIP" OR "ISIN" NUMBERS.......................................................26 ARTICLE 3 REDEMPTION..............................................................................................27 SECTION 3.01. NOTICES TO TRUSTEE..............................................................27 SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED...............................................27 SECTION 3.03. NOTICE OF REDEMPTION............................................................27 SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION..................................................28 SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.....................................................28 SECTION 3.06. NOTES REDEEMED IN PART..........................................................28 ARTICLE 4 COVENANTS...............................................................................................29 SECTION 4.01. PAYMENT OF NOTES................................................................29 SECTION 4.02. SEC REPORTS.....................................................................29 SECTION 4.03. LIMITATION ON INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK....................................................................30 SECTION 4.04. LIMITATION ON RESTRICTED PAYMENTS...............................................34 SECTION 4.05. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES........................................................41 SECTION 4.06. ASSET SALES.....................................................................42 SECTION 4.07. TRANSACTIONS WITH AFFILIATES....................................................45 SECTION 4.08. CHANGE OF CONTROL...............................................................46 SECTION 4.09. COMPLIANCE CERTIFICATE..........................................................47 SECTION 4.10. FURTHER INSTRUMENTS AND ACTS....................................................48
SECTION 4.11. LIMITATION ON GUARANTEES OF INDEBTEDNESS BY RESTRICTED SUBSIDIARIES........................................................48 SECTION 4.12. LIENS...........................................................................49 SECTION 4.13. LIMITATION ON OTHER SENIOR SUBORDINATED INDEBTEDNESS............................49 SECTION 4.14. ADDITIONAL AMOUNTS..............................................................49 ARTICLE 5 SUCCESSOR COMPANY.......................................................................................50 SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ALL OR SUBSTANTIALLY ALL ASSETS.........................................................50 ARTICLE 6 DEFAULTS AND REMEDIES...................................................................................52 SECTION 6.01. EVENTS OF DEFAULT...............................................................52 SECTION 6.02. ACCELERATION....................................................................54 SECTION 6.03. OTHER REMEDIES..................................................................54 SECTION 6.04. WAIVER OF PAST DEFAULTS.........................................................54 SECTION 6.05. CONTROL BY MAJORITY.............................................................55 SECTION 6.06. LIMITATION ON SUITS.............................................................55 SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT............................................55 SECTION 6.08. COLLECTION SUIT BY TRUSTEE......................................................55 SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM................................................56 SECTION 6.10. PRIORITIES......................................................................56 SECTION 6.11. UNDERTAKING FOR COSTS...........................................................56 SECTION 6.12. WAIVER OF STAY OR EXTENSION LAWS................................................56 ARTICLE 7 TRUSTEE.................................................................................................57 SECTION 7.01. DUTIES OF TRUSTEE...............................................................57 SECTION 7.02. RIGHTS OF TRUSTEE...............................................................58 SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE....................................................59 SECTION 7.04. TRUSTEE'S DISCLAIMER............................................................59 SECTION 7.05. NOTICE OF DEFAULTS..............................................................59 SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS...................................................59 SECTION 7.07. COMPENSATION AND INDEMNITY......................................................59 SECTION 7.08. REPLACEMENT OF TRUSTEE..........................................................60 SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER.....................................................61 SECTION 7.10. ELIGIBILITY; DISQUALIFICATION...................................................61 SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER................................61 ARTICLE 8 DISCHARGE OF INDENTURE; DEFEASANCE......................................................................61 SECTION 8.01. DISCHARGE OF LIABILITY ON NOTES; DEFEASANCE.....................................61 SECTION 8.02. CONDITIONS TO DEFEASANCE........................................................63 SECTION 8.03. APPLICATION OF TRUST MONEY......................................................64 SECTION 8.04. REPAYMENT TO ISSUER.............................................................64 SECTION 8.05. INDEMNITY FOR GOVERNMENT OBLIGATIONS............................................64 SECTION 8.06. REINSTATEMENT...................................................................64
ARTICLE 9 AMENDMENTS..............................................................................................65 SECTION 9.01. WITHOUT CONSENT OF HOLDERS......................................................65 SECTION 9.02. WITH CONSENT OF HOLDERS.........................................................66 SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.............................................67 SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS AND WAIVERS...................................67 SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES................................................67 SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS......................................................67 SECTION 9.07. PAYMENT FOR CONSENT.............................................................68 ARTICLE 10 SUBORDINATION...........................................................................................68 SECTION 10.01. AGREEMENT TO SUBORDINATE.......................................................68 SECTION 10.02. LIQUIDATION, DISSOLUTION, BANKRUPTCY...........................................68 SECTION 10.03. DEFAULT ON SENIOR INDEBTEDNESS.................................................68 SECTION 10.04. ACCELERATION OF PAYMENT OF NOTES...............................................69 SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER............................................69 SECTION 10.06. SUBROGATION....................................................................69 SECTION 10.07. RELATIVE RIGHTS................................................................70 SECTION 10.08. SUBORDINATION MAY NOT BE IMPAIRED BY ISSUER....................................70 SECTION 10.09. RIGHTS OF TRUSTEE AND PAYING AGENT.............................................70 SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.......................................70 SECTION 10.11. ARTICLE 10 NOT TO PREVENT EVENTS OF DEFAULT OR LIMIT RIGHT TO ACCELERATE..........................................70 SECTION 10.12. TRUST MONEYS NOT SUBORDINATED..................................................71 SECTION 10.13. TRUSTEE ENTITLED TO RELY.......................................................71 SECTION 10.14. TRUSTEE TO EFFECTUATE SUBORDINATION............................................71 SECTION 10.15. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS.......................................................71 SECTION 10.16. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS ON SUBORDINATION PROVISIONS........................................71 SECTION 10.17. TRUSTEE'S COMPENSATION NOT PREJUDICED..........................................72 SECTION 10.18. DEFEASANCE.....................................................................72 ARTICLE 11 GUARANTEES..............................................................................................72 SECTION 11.01. GUARANTEES.....................................................................72 SECTION 11.02. LIMITATION ON LIABILITY........................................................74 SECTION 11.03. SUCCESSORS AND ASSIGNS.........................................................74 SECTION 11.04. NO WAIVER......................................................................74 SECTION 11.05. MODIFICATION...................................................................75 SECTION 11.06. EXECUTION OF SUPPLEMENTAL INDENTURE FOR FUTURE GUARANTORS..................................................75 ARTICLE 12 SUBORDINATION OF THE GUARANTEES.........................................................................75 SECTION 12.01. AGREEMENT TO SUBORDINATE.......................................................75 SECTION 12.02. LIQUIDATION, DISSOLUTION, BANKRUPTCY...........................................75 SECTION 12.03. DEFAULT ON SENIOR INDEBTEDNESS OF A GUARANTOR..................................76
SECTION 12.04. DEMAND FOR PAYMENT.............................................................76 SECTION 12.05. WHEN DISTRIBUTION MUST BE PAID OVER............................................77 SECTION 12.06. SUBROGATION....................................................................77 SECTION 12.07. RELATIVE RIGHTS................................................................77 SECTION 12.08. SUBORDINATION MAY NOT BE IMPAIRED BY A SUBSIDIARY GUARANTOR...........................................................77 SECTION 12.09. RIGHTS OF TRUSTEE AND PAYING AGENT.............................................77 SECTION 12.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.......................................78 SECTION 12.11. ARTICLE 12 NOT TO PREVENT EVENTS OF DEFAULT OR LIMIT RIGHT TO ACCELERATE................................................78 SECTION 12.12. TRUSTEE ENTITLED TO RELY.......................................................78 SECTION 12.13. TRUSTEE TO EFFECTUATE SUBORDINATION............................................78 SECTION 12.14. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS OF A GUARANTOR........................................79 SECTION 12.15. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS OF A GUARANTOR ON SUBORDINATION PROVISIONS.............................79 SECTION 12.16. DEFEASANCE.....................................................................79 ARTICLE 13 MISCELLANEOUS...........................................................................................79 SECTION 13.01. TRUST INDENTURE ACT CONTROLS...................................................79 SECTION 13.02. NOTICES........................................................................79 SECTION 13.03. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS....................................80 SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.............................81 SECTION 13.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION..................................81 SECTION 13.06. WHEN NOTES DISREGARDED.........................................................81 SECTION 13.07. RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR...................................81 SECTION 13.08. LEGAL HOLIDAYS.................................................................81 SECTION 13.09. GOVERNING LAW..................................................................82 SECTION 13.10. NO RECOURSE AGAINST OTHERS.....................................................82 SECTION 13.11. SUCCESSORS.....................................................................82 SECTION 13.12. MULTIPLE ORIGINALS.............................................................82 SECTION 13.13. TABLE OF CONTENTS; HEADINGS....................................................82
Appendix A - Provisions Relating to Initial Notes, Exchange Notes and Private Exchange Notes Exhibit A - Form of Initial Note Exhibit B - Form of Exchange Note Exhibit C - Form of Certificate to be Delivered in Connection with Transfers of Regulation S Global Note Exhibit D - Form of Transferee Letter of Representation Exhibit E - Form of Supplemental Indenture
INDENTURE dated as of February 2, 1999, between WILLIS CORROON CORPORATION, a Delaware corporation (the "Issuer"), WILLIS CORROON GROUP LIMITED, a company with limited liability organized under the laws of England and Wales (the "Company"), WILLIS CORROON PARTNERS, a Delaware general partnership ("USGP" and together with the Company, the "Guarantors") and THE BANK OF NEW YORK, a New York banking corporation, as trustee (the "Trustee"). Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of (i) the Issuer's 9% Senior Subordinated Notes due 2009 issued on the date hereof (the "Initial Notes"), (ii) if and when issued as provided in the Registration Agreement (as defined in Appendix A hereto (the "Appendix")), the Issuer's 9% Senior Subordinated Notes due 2009 issued in the Registered Exchange Offer in exchange for any Initial Notes (the "Exchange Notes"), and (iii) if and when issued as provided in the Registration Agreement, the Private Exchange Notes issued in the Private Exchange (as defined in the Appendix) in exchange for any Initial Notes (the "Private Exchange Notes" and together with the Initial Notes and any Exchange Notes issued hereunder, the "Notes"). Except as otherwise provided herein, the Notes shall be limited to $550,000,000 in aggregate principal amount outstanding. ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. DEFINITIONS. "ACQUIRED INDEBTEDNESS" means, with respect to any specified Person, (i) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Restricted Subsidiary of such specified Person, including, without limitation, Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Restricted Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "AFFILIATE" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. "ASSET SALE" means (i) the sale, conveyance, transfer or other disposition (whether in a single transaction or a series of related transactions) of property or assets (including by way of a sale and leaseback) of the Company or any Restricted Subsidiary (each referred to in this definition as a "DISPOSITION") or (ii) the issuance or sale of Equity Interests of any Restricted Subsidiary (whether in a single transaction or a series of related transactions), in each case, other than: 2 (a) a disposition of Cash Equivalents or Investment Grade Securities or obsolete or worn out equipment in the ordinary course of business or inventory or goods held for sale in the ordinary course of business; (b) the disposition of all or substantially all of the assets of the Company in a manner permitted pursuant to Section 5.01 or any disposition that constitutes a Change of Control pursuant to this Indenture; (c) the making of any Restricted Payment or Permitted Investment that is permitted to be made, and is made, pursuant to Section 4.04; (d) any disposition of assets or issuance or sale of Equity Interests of any Restricted Subsidiary with an aggregate fair market value of less than $2.5 million; (e) any disposition of property or assets or issuance of securities by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Restricted Subsidiary; (f) any exchange of like property pursuant to Section 1031 of the Code for use in a Similar Business; (g) the lease, assignment or sub-lease of any real or personal property in the ordinary course of business; (h) any financing transaction with respect to property built or acquired by the Company or any Restricted Subsidiary after the Closing Date, including, without limitation, sale-leasebacks and asset securitizations; (i) foreclosures on assets; (j) any sale of Equity Interests in, or Indebtedness or other securities of, an Unrestricted Subsidiary (with the exception of Investments in Unrestricted Subsidiaries acquired pursuant to clause (b)(x) of the definition of Permitted Investments); and (k) sales of accounts receivable, or participations therein, in connection with any Receivables Facility. "ASSOCIATE" means any Person engaged in a Similar Business of which at least 20% but not more than 50% of the Voting Stock thereof is owned by the Company or any Restricted Subsidiary. "BACS FACILITY" means a facility created to make automated payments through Banks' Automated Clearance System. "BOARD OF DIRECTORS" means the Board of Directors of the Issuer, the Company or any committee thereof duly authorized to act on behalf of such Board. "BUSINESS DAY" means each day which is not a Legal Holiday. "CAPITAL STOCK" means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a 3 partnership or limited liability company, partnership or membership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "CAPITALIZED LEASE OBLIGATION" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto) in accordance with GAAP. "CASH EQUIVALENTS" means (i) United States dollars, (ii) pounds sterling, (iii) Euro, (iv) Japanese Yen, (v) Canadian dollars, (vi) Australian dollars, (vii) securities issued or directly and fully guaranteed or insured by the United States or United Kingdom government or any agency or instrumentality thereof with maturities of 24 months or less from the date of acquisition, (viii) certificates of deposit, time deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers' acceptances with maturities not exceeding one year and overnight bank deposits, in each case with any commercial bank having capital and surplus in excess of $500.0 million, (ix) repurchase obligations for underlying securities of the types described in clauses (vii) and (viii) entered into with any financial institution meeting the qualifications specified in clause (viii) above, (x) commercial paper rated A-1 or the equivalent thereof by Moody's or S&P and in each case maturing within one year after the date of acquisition, (xi) investment funds investing 95% of their assets in securities of the types described in clauses (i)-(x) above, (xii) readily marketable direct obligations issued by any state of the United States of America or any political subdivision thereof having one of the two highest rating categories obtainable from either Moody's or S&P with maturities of 24 months or less from the date of acquisition and (xiii) Indebtedness or preferred stock issued by Persons with a rating of "A" or higher from S&P or "A2" or higher from Moody's with maturities of 24 months or less from the date of acquisition. Notwithstanding the foregoing, Cash Equivalents shall include amounts denominated in currencies other than those set forth in clauses (i) through (vi) above, PROVIDED that such amounts are converted into any currency listed in clauses (i) through (vi) as promptly as practicable and in any event within ten Business Days following the receipt of such amounts. "CHANGE OF CONTROL" means the occurrence of any of the following: (i) the sale, lease or transfer, in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, to any Person other than a Permitted Holder; or (ii) the Company becomes aware of (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) the acquisition by any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act), other than the Permitted Holders, in a single transaction or in a related series of transactions, by way of merger, consolidation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision) of 50% or more of the total Voting Stock of the Company or any of its direct or indirect parent corporations. 4 "CLOSING DATE" means November 19, 1998, the date on which the Subordinated Bridge Agreement was executed. "CODE" means the Internal Revenue Code of 1986, as amended. "COMMON STOCK" means, with respect to any Person, shares of common stock. "CONSOLIDATED" with respect to any Person refers to such Person consolidated with its Restricted Subsidiaries, and excludes from such consolidation any Unrestricted Subsidiary as if such Unrestricted Subsidiary were not an Affiliate of such Person. "CONSOLIDATED DEPRECIATION AND AMORTIZATION EXPENSE" means with respect to any Person for any period, the total amount of depreciation and amortization expense and other noncash charges (excluding any noncash item that represents an accrual or reserve for a cash expenditure for a future period) of such Person and its Restricted Subsidiaries for such period on a consolidated basis and otherwise determined in accordance with GAAP. "CONSOLIDATED INTEREST EXPENSE" means, with respect to any Person for any period, the sum, without duplication, of: (a) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, to the extent such expense was deducted in computing Consolidated Net Income (including amortization of original issue discount, non-cash interest payments, the interest component of Capitalized Lease Obligations and net payments (if any) pursuant to Hedging Obligations, excluding amortization of deferred financing fees), (b) consolidated capitalized interest of such Person and its Restricted Subsidiaries for such period, whether paid or accrued and (c) the impact of any net payments or receipts related to Trinity Hedging Obligations, PROVIDED that any reduction of interest expense related to any net amounts to be received by Trinity are actually received by the Company within 31 days of the end of the period during which such reduction of interest expense was recorded; PROVIDED, HOWEVER, that Receivables Fees shall be deemed not to constitute Consolidated Interest Expense. Notwithstanding anything to the contrary stated above, Consolidated Interest Expense shall not include interest expense in respect of the Group Intercompany Notes; PROVIDED, HOWEVER, that such interest expense shall be included in Consolidated Interest Expense to the extent such interest expense is actually paid and not immediately repaid to the Company or a Restricted Subsidiary in respect of interest on any Trinity Intercompany Notes or Interim Refinancing Indebtedness. "CONSOLIDATED NET INCOME" means, with respect to any Person for any period, the aggregate of the Net Income, of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, and otherwise determined in accordance with GAAP; PROVIDED, HOWEVER, that (i) any net after-tax exceptional items (less all fees and expenses relating thereto) shall be excluded, (ii) the Net Income for such period shall not include the cumulative effect of a change in accounting principles during such period, (iii) any net after-tax income (loss) from discontinued operations and any net after-tax gains or losses on disposal of discontinued operations shall be excluded, (iv) any net after-tax gains or losses (less all fees and expenses relating thereto) attributable to asset dispositions other than in the ordinary course of business (as determined in good faith by the Board of Directors of the Company) shall be excluded, (v) the Net Income for such period of any Person that is not a Subsidiary, or is an Unrestricted Subsidiary, or that is accounted for by the equity method of accounting, shall be excluded; PROVIDED that Consolidated Net Income of the Company shall be increased by the amount of dividends or distributions or other payments that are actually paid in cash (or to the extent converted into cash) to the referent Person or a Restricted Subsidiary thereof in respect of such period, (vi) the Net 5 Income of any Person acquired in a pooling of interests transaction shall not be included for any period prior to the date of such acquisition, (vii) the Net Income for such period of any Restricted Subsidiary (other than the Issuer and any Guarantor) shall be excluded if the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of its Net Income is not at the date of determination wholly permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule, or governmental regulation applicable to that Restricted Subsidiary or its stockholders, unless such restriction with respect to the payment of dividends or in similar distributions has been legally waived; PROVIDED that Consolidated Net Income of the Company shall be increased by the amount of dividends or other distributions or other payments that could have been paid in cash (or to the extent converted into cash) to the referent Person or a Restricted Subsidiary thereof in respect of such period and (viii) the after-tax impact of any net payments or receipts related to Trinity Hedging Obligations shall be included, PROVIDED that any reduction of interest expense related to any net amounts to be received by Trinity are actually received by the Company within 31 days of the end of the period during which such reduction of interest expense was recorded. Notwithstanding the foregoing, for the purpose of Section 4.04 only (other than clause (a)(3)(iv) thereof), there shall be excluded from Consolidated Net Income any income arising from any sale or other disposition of Restricted Investments made by the Company and its Restricted Subsidiaries, any repurchases and redemptions of Restricted Investments from the Company and the Restricted Subsidiaries, any repayments of loans and advances which constitute Restricted Investments by the Company or any Restricted Subsidiary, any sale of the stock of an Unrestricted Subsidiary or any distribution or dividend from an Unrestricted Subsidiary, in each case only to the extent such amounts increase the amount of Restricted Payments permitted under Section 4.04(a)(3)(iv). Notwithstanding anything to the contrary stated above, Consolidated Net Income shall not include (x) net after-tax income (net of any interest expense in respect of Group Intercompany Notes) relating to amounts received or accrued in respect of the Trinity Intercompany Notes and loans made in respect of Interim Refinancing Indebtedness or (y) net after-tax income (or losses) relating to payments received in respect of the Trinity Intercompany Notes or Interim Refinancing Indebtedness or payments made in respect of the corresponding Group Intercompany Note that are solely the result of exchange rate fluctuations or (z) net after-tax gain or loss relating to the impact of Facility Hedging Obligations being marked-to-market. "CONSORTIUM" means Guardian Royal Exchange, Royal & Sun Alliance Insurance Group, The Chubb Corporation, The Hartford Financial Services Group, Inc., The Tokio Marine and Fire Insurance Co., Limited and Travelers Property Casualty Corp. and their respective Affiliates or any replacement insurance company investors from time to time and their respective Affiliates. "CONSORTIUM PREFERRED STOCK" means (a) preferred stock of TA II having a liquidation preference of approximately $270,000,000 issued to the Consortium in connection with the Transactions and (b) any preferred stock that (i) is issued in exchange for, or to replace or refinance, all or a portion thereof, (ii) is not subject to mandatory redemption or redemption at the option of the holder thereof prior to the date that is six months later than the maturity date of the Notes and (iii) may include, at the election of TA II, (A) provisions for required cash dividends (at a rate per annum not in excess of 7 1/2%, or a higher rate if the payment of cash dividends in excess of 7 1/2% is stated in the provisions of such preferred stock to be subject to the limitations set forth in this Indenture), (B) provisions for transferability, (C) provisions for customary voting rights and/or board representation upon the occurrence of non-payment of dividends and (iv) other terms customary for public issuances of preferred stock. 6 "CONTINGENT OBLIGATIONS" means, with respect to any Person, any obligation of such Person guaranteeing any leases, dividends or other obligations that do not constitute Indebtedness ("PRIMARY OBLIGATIONS") of any other Person (the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (A) for the purchase or payment of any such primary obligation or (B) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, or (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation against loss in respect thereof. "CONTRIBUTION AGREEMENT" means the Contribution Agreement dated as of November 19, 1998, between Trinity and the Company in a form previously approved by the Administrative Agent under the Subordinated Bridge Agreement. "CONVERTIBLE LOAN" means an interest-free loan made by Trinity to the Company in exchange for a note that is convertible at the option of the Company into common equity interests in the Company, PROVIDED that the obligations of the Company under such note are subordinated in right of payment to the Notes in a form previously approved by the Administrative Agent under the Subordinated Bridge Agreement including, without limitation, that no payment may be made in respect of such note prior to the date that is 91 days after the Maturity Date. "CREDIT FACILITIES" means, with respect to the Company and the Issuer, one or more debt facilities (including, without limitation, the Senior Credit Facilities) or commercial paper facilities with banks or other institutional lenders or indentures providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against receivables), letters of credit or other long-term indebtedness, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced (including increasing the amount borrowed thereunder) in whole or in part from time to time. "DEFAULT" means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default. "DESIGNATED NONCASH CONSIDERATION" means the fair market value of noncash consideration received by the Company or one of its Restricted Subsidiaries in connection with an Asset Sale that is so designated as Designated Noncash Consideration pursuant to an Officers' Certificate, setting forth the basis of such valuation, executed by an executive vice president and the principal financial officer of the Company or the Issuer, less the amount of cash or Cash Equivalents received in connection with a subsequent sale of such Designated Noncash Consideration. "DESIGNATED PREFERRED STOCK" means preferred stock of the Company, any of its direct or indirect parent corporations or the Issuer (in each case other than Disqualified Stock) that is issued for cash (other than to a Restricted Subsidiary) and is so designated as Designated Preferred Stock, pursuant to an Officers' Certificate executed by an executive vice president and the principal financial officer of the Company, any of its direct or indirect parent corporations or the Issuer, as the case may be, on the issuance date thereof, the cash proceeds of which are excluded from the calculation set forth in Section 4.04(a)(3). 7 "DESIGNATED SENIOR INDEBTEDNESS" means (i) Senior Indebtedness under the Senior Credit Facilities and (ii) any other Senior Indebtedness permitted under this Indenture the principal amount of which is $25.0 million or more and that has been designated by the Company as Designated Senior Indebtedness. "DISQUALIFIED STOCK" means, with respect to any Person, any Capital Stock of such Person which, by its terms (or by the terms of any security into which it is convertible or for which it is putable or exchangeable), or upon the happening of any event, matures or is mandatorily redeemable (other than as a result of a change of control or asset sale), pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof (other than as a result of a change of control or asset sale), in whole or in part, in each case prior to the date 91 days after the earlier of the maturity date of the Notes or the date the Notes are no longer outstanding; PROVIDED, HOWEVER, that if such Capital Stock is issued to any plan for the benefit of employees of the Company or its Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Company or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations. "DOMESTIC SUBSIDIARY" means, with respect to any Person, any Restricted Subsidiary of such Person other than a Foreign Subsidiary. "EBITDA" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus (a) provision for taxes based on income or profits of such Person for such period deducted in computing Consolidated Net Income, PLUS (b) Consolidated Interest Expense of such Person for such period paid by such Person or any of its Restricted Subsidiaries during such period, in each case to the extent the same was deducted in calculating such Consolidated Net Income, PLUS (c) Consolidated Depreciation and Amortization Expense of such Person for such period to the extent such depreciation and amortization were deducted in computing Consolidated Net Income, PLUS (d) any expenses or charges related to any Equity Offering, Permitted Investment, acquisition (including amounts paid in connection with the acquisition or retention of one or more individuals comprising teams engaged in a Similar Business, PROVIDED that such payments are made at the time of such acquisition and are consistent with the customary practice in the industry at the time of such acquisition), recapitalization or Indebtedness permitted to be incurred by this Indenture (whether or not successful) (including such fees, expenses or charges related to the Transactions) and deducted in such period in computing Consolidated Net Income, PLUS (e) the amount of any restructuring charge deducted in such period in computing Consolidated Net Income (including any one-time costs incurred in connection with acquisitions after the Closing Date), PLUS (f) without duplication, any non-recurring charges relating to the Lloyd's Reconstruction and Renewal Plan, PLUS (g) without duplication, any other non-cash charges reducing Consolidated Net Income for such period (excluding any such charge that represents an accrual or reserve for a cash expenditure for a future period), PLUS (h) the amount of any minority interest expense deducted in calculating Consolidated Net Income, less, without duplication (i) non-cash items increasing Consolidated Net Income of such Person for such period (excluding any items which represent the reversal of any accrual of, or cash reserve for, anticipated cash charges in any prior period). "EMU" means economic and monetary union as contemplated in the Treaty on European Union. 8 "EQUITY INTERESTS" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "EQUITY OFFERING" means any public or private sale of common stock or preferred stock of the Company, any of its direct or indirect parent corporations or the Issuer (excluding Disqualified Stock), other than (i) public offerings with respect to the Company's Common Stock registered on Form S-8 and (ii) any such public or private sale that constitutes an Excluded Contribution. "EURO" means the single currency of participating member states of the EMU. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder. "EXCLUDED CONTRIBUTION" means net cash proceeds, marketable securities or Qualified Proceeds, in each case, received by the Company or the Issuer from (a) contributions to its common equity capital (other than, in the case of the Issuer, contributions by the Company) and (b) the sale (other than to a Subsidiary of the Company or to any Company or Subsidiary management equity plan or stock option plan or any other management or employee benefit plan or agreement) of Capital Stock (other than Disqualified Stock and Designated Preferred Stock) of the Company or the Issuer, in each case designated as Excluded Contributions pursuant to an Officers' Certificate executed by an executive vice president and the principal financial officer of the Company or the Issuer, as the case may be, on the date such capital contributions are made or the date such Equity Interests are sold, as the case may be, which are excluded from the calculation set forth in Section 4.04(a)(3). "EXISTING INDEBTEDNESS" means Indebtedness of the Company or of any Restricted Subsidiary in existence on the Closing Date, PLUS interest accruing thereon, after application of the net proceeds of the loans made under the Subordinated Bridge Agreement. "FACILITY HEDGING OBLIGATIONS" means Hedging Obligations of the Company or the Issuer (other than Hedging Obligations entered into for speculative purposes) having an aggregate notional amount at any time outstanding not in excess of $1,175,000,000 less the notional amount of any Trinity Hedging Obligations outstanding at such time. "FIXED CHARGE COVERAGE RATIO" means, with respect to any Person for any period, the ratio of EBITDA of such Person for such period to the Fixed Charges of such Person for such period. In the event that the Company or any of its Restricted Subsidiaries incurs, assumes, guarantees or redeems any Indebtedness or issues or redeems Disqualified Stock or preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "CALCULATION DATE"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, guarantee or redemption of Indebtedness, or such issuance or redemption of Disqualified Stock or preferred stock, as if the same had occurred at the beginning of the applicable four-quarter period. For purposes of making the computation referred to above, Investments, acquisitions, dispositions, mergers, consolidations and discontinued operations (as determined in accordance with GAAP) that have been made by the Company or any of its Restricted Subsidiaries during the four-quarter reference period or subsequent to such reference period and on or prior to or simultaneously with the Calculation Date shall be calculated on a pro forma basis assuming that all such 9 Investments, acquisitions, dispositions, mergers, consolidations and discontinued operations (and the change in any associated fixed charge obligations and the change in EBITDA resulting therefrom) had occurred on the first day of the four-quarter reference period. If since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period) shall have made any Investment, acquisition, disposition, merger, consolidation or discontinued operation that would have required adjustment pursuant to this definition, then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect thereto for such period as if such Investment, acquisition, disposition, merger, consolidation or discontinued operation had occurred at the beginning of the applicable four-quarter period. For purposes of this definition, whenever pro forma effect is to be given to a transaction, the pro forma calculations shall be made in good faith by a responsible financial or accounting officer of the Company. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligations applicable to such Indebtedness). Interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a responsible financial or accounting officer of the Company to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP. For purposes of making the computation referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate chosen as the Company may designate. "FIXED CHARGES" means, with respect to any Person for any period, the sum of (a) Consolidated Interest Expense of such Person for such period and (b) all cash dividend payments (excluding items eliminated in consolidation) on any series of (i) Disqualified Stock, (ii) preferred stock and (iii) to the extent paid pursuant to Section 4.04(b)(vi)(B), other Capital Stock of such Person. "FOREIGN SUBSIDIARY" means, with respect to any Person, any Restricted Subsidiary of such Person that is not organized or existing under the laws of the United States, any state thereof, the District of Columbia, or any territory thereof. "GAAP" means generally accepted accounting principles in the United Kingdom which are in effect on the Closing Date. For the purposes of this Indenture, the term "consolidated" with respect to any Person means such Person consolidated with its Restricted Subsidiaries, and shall not include any Unrestricted Subsidiary. "GOVERNMENT SECURITIES" means securities that are (a) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged or (b) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuers thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such Government Securities or a specific payment of principal of or interest on any such Government Securities held by such custodian for the account of the holder of such depository receipt; PROVIDED that (except as required by law) such custodian is not authorized to make any 10 deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the Government Securities or the specific payment of principal of or interest on the Government Securities evidenced by such depository receipt. "GROUP INTERCOMPANY NOTE" means a note issued by the Company or a Restricted Subsidiary in favor of Trinity (a) in consideration of the issuance of a Trinity Intercompany Note or (b) in connection with a loan made by Trinity to the Company or such Restricted Subsidiary out of the proceeds received from the issuance of a Trinity Intercompany Note, PROVIDED, in each case, that the obligations of the Company or such Restricted Subsidiary under such note are subordinated in right of payment to the Notes in a form previously approved by the Administrative Agent under the Subordinated Bridge Agreement including, without limitation, that no payment shall be made in respect of such note if any Default on the Notes or any default under the Senior Credit Facilities has occurred and is continuing. "GUARANTEE" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness or other obligations. "GUARANTEE" means any guarantee of the obligations of the Company under this Indenture and the Notes by any Person in accordance with the provisions of this Indenture. When used as a verb, "Guarantee" shall have a corresponding meaning. "GUARANTEED LOAN NOTES" means loan notes of Trinity issued pursuant to the offer at the election of holders of the shares, having the terms contained in the Guaranteed Loan Notes Instrument and guaranteed by The Chase Manhattan Bank, acting through its London branch. "GUARANTEED LOAN NOTES INSTRUMENT" means the Guaranteed Loan Notes Instrument in the form of Exhibit J to the Senior Bridge Facility. "GUARANTOR" means any Person that incurs a Guarantee; PROVIDED that upon the release and discharge of such Person from its Guarantee in accordance with this Indenture, such Person shall cease to be a Guarantor. "HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of such Person under (i) currency exchange, interest rate or commodity swap agreements, currency exchange, interest rate or commodity cap agreements and currency exchange, interest rate or commodity collar agreements and (ii) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange, interest rates or commodity prices. "HOLDER" or "NOTEHOLDER" means a holder of the Notes. "INDEBTEDNESS" means, with respect to any Person, (a) any indebtedness (including principal and premium) of such Person, whether or not contingent (i) in respect of borrowed money, (ii) evidenced by bonds, notes, debentures or similar instruments or letters of credit or bankers' acceptances (or, without double counting, reimbursement agreements in respect thereof), (iii) representing the balance deferred and unpaid of the purchase price of any property (including Capitalized Lease Obligations), except any such balance that constitutes a trade payable or similar obligation to a trade creditor, in each case accrued in the ordinary course of business or (iv) representing any Hedging 11 Obligations, if and to the extent that any of the foregoing Indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet (excluding the footnotes thereto) of such Person prepared in accordance with GAAP, (b) to the extent not otherwise included, any obligation by such Person to be liable for, or to pay, as obligor, guarantor or otherwise, on the Indebtedness of another Person (other than by endorsement of negotiable instruments for collection in the ordinary course of business) and (c) to the extent not otherwise included, Indebtedness of another Person secured by a Lien on any asset owned by such Person (whether or not such Indebtedness is assumed by such Person); PROVIDED, HOWEVER, that Contingent Obligations incurred in the ordinary course of business shall be deemed not to constitute Indebtedness, and obligations under or in respect of Receivables Facilities shall not be deemed to constitute Indebtedness. In addition, "Indebtedness" of any Person shall include Indebtedness described in the foregoing paragraph that would not appear as a liability on the balance sheet of such Person if (i) such Indebtedness is the obligation of a partnership or a joint venture that is not a Restricted Subsidiary (a "Joint Venture"), (2) such Person or a Restricted Subsidiary is a general partner of the Joint Venture (a "General Partner") and (3) there is recourse, by contract or operation of law, with respect to the payment of such Indebtedness to property or assets of such Person or a Restricted Subsidiary; and such Indebtedness shall be included in an amount not to exceed (x) the greater of (A) the net assets of the General Partner and (B) the amount of such obligations to the extent that there is recourse by, contract or operation of law, to the property or assets of such Person or a Restricted Subsidiary (other than the General Partner) or (y) if less than the amount determined pursuant to clause (x) immediately above, the actual amount of such Indebtedness that is recourse to such Person, if the Indebtedness is evidenced by a writing and is for a determinable amount and the related interest expense shall be included in Consolidated Interest Expense to the extent paid by the Company or its Restricted Subsidiaries. "INDENTURE" means this Indenture as amended or supplemented from time to time. "INDEPENDENT FINANCIAL ADVISOR" means an accounting, appraisal, investment banking firm or consultant to Persons engaged in Similar Businesses of nationally recognized standing that is, in the good faith judgment of the Company or the Issuer, qualified to perform the task for which it has been engaged. "INTERIM FINANCINGS" means the Sponsor Promissory Note and the Senior Bridge Facility. "INTERIM REFINANCING INDEBTEDNESS" means indebtedness in respect of loans made to Trinity on the Closing Date by the Issuer using the proceeds from the borrowing under the Subordinated Bridge Agreement and the borrowing of term loans under the Senior Credit Facilities, the proceeds of which were used (a) directly or indirectly to repay the Interim Financings, (b) to make a Convertible Loan, substantially all the proceeds of which were used to repay indebtedness of the Company and its Subsidiaries existing on the Closing Date and required to be repaid under the Senior Credit Facilities and (c) to pay related fees and expenses. "INVESTMENT GRADE SECURITIES" means (i) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (other than Cash Equivalents), (ii) debt securities or debt instruments with a rating of BBB- or higher by S&P or Baa3 or higher by Moody's or the equivalent of such rating by such rating organization, or, if no rating of S&P or Moody's then exists, the equivalent of such rating by any other nationally recognized securities rating agency, but excluding 12 any debt securities or instruments constituting loans or advances among the Company and its Subsidiaries, (iii) investments in any fund that invests exclusively in investments of the type described in clauses (i) and (ii) which fund may also hold immaterial amounts of cash pending investment and/or distribution and (iv) corresponding instruments in countries other than the United States or the United Kingdom customarily utilized for high-quality investments. "INVESTMENTS" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of loans (including guarantees), advances or capital contributions (excluding accounts receivable, trade credit, advances to customers, commission, travel and similar advances to officers and employees, in each case made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities issued by any other Person and investments that are required by GAAP to be classified on the balance sheet (excluding the footnotes) of the Company in the same manner as the other investments included in this definition to the extent such transactions involve the transfer of cash or other property. For purposes of the definition of "Unrestricted Subsidiary" and Section 4.04, (i) "Investments" shall include the portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets of a Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; PROVIDED, HOWEVER, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent "Investment" in an Unrestricted Subsidiary in an amount (if positive) equal to (x) the Company's "Investment" in such Subsidiary at the time of such redesignation less (y) the portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets of such Subsidiary at the time of such redesignation; and (ii) any property transferred to or from an Unrestricted Subsidiary shall be valued at its fair market value at the time of such transfer, in each case as determined in good faith by the Company. "ISSUANCE DATE" means February 2, 1999. "KKR" means Kohlberg Kravis Roberts & Co., L.P. "LETTER OF CREDIT OBLIGATIONS" means all Obligations in respect of Indebtedness of the Company with respect to letters of credit issued pursuant to the Senior Credit Facilities which Indebtedness shall be deemed to consist of (a) the aggregate maximum amount available to be drawn under all such letters of credit (the determination of such aggregate maximum amount to assume compliance with all conditions for drawing) and (b) the aggregate amount that has been paid by, and not reimbursed to, the issuers of such letters of credit. "LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction); PROVIDED that in no event shall an operating lease be deemed to constitute a Lien. "MANAGEMENT GROUP" means the directors and executive officers of the Issuer, the Company or its direct or indirect parent corporations. 13 "MATURITY DATE" is the maturity date for the Notes, February 1, 2009. "MOODY'S" means Moody's Investors Service, Inc. "NET INCOME" means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends. "NET PROCEEDS" means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any Designated Noncash Consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale and the sale or disposition of such Designated Noncash Consideration (including, without limitation, legal, accounting and investment banking fees, and brokerage and sales commissions), any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), amounts required to be applied to the repayment of principal, premium (if any) and interest on Senior Indebtedness required (other than required by clause (i) of Section 4.06(b) to be paid as a result of such transaction) and any deduction of appropriate amounts to be provided by the Company as a reserve in accordance with GAAP against any liabilities associated with the asset disposed of in such transaction and retained by the Company after such sale or other disposition thereof, including, without limitation, pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations associated with such transaction. "OBLIGATIONS" means any principal, interest, penalties, fees, indemnifications, reimbursements (including, without limitation, reimbursement obligations with respect to letters of credit and banker's acceptances), damages and other liabilities, and guarantees of payment of such principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities, payable under the documentation governing any Indebtedness. "OFFER PERIOD" means the period from the date of a Change of Control until and including the Change of Control Payment Date. "OFFERING MEMORANDUM" means the Offering Memorandum dated January 28, 1999, relating to the Issuer's 9% Senior Subordinated Notes due 2009. "OFFICER" means the Chairman of the Board, the President, any Executive Vice President, Senior Vice President or Vice President, the Treasurer or the Secretary of the Company, the Issuer or any Guarantor, as applicable. "OFFICERS' CERTIFICATE" means a certificate signed on behalf of the Company or the Issuer, as the case may be, by two Officers of the Company or the Issuer, as applicable, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company or the Issuer, as applicable, that meets the requirements set forth in this Indenture. "OPINION OF COUNSEL" means a written opinion from legal counsel who is reasonably acceptable to the Trustee. The counsel may be an employee of or counsel to the Issuer, the Company or the Trustee. 14 "PERMITTED ASSET SWAP" means any one or more transactions in which the Company or any Restricted Subsidiary exchanges assets for consideration consisting of (i) Equity Interests in or assets of a Person engaged in a Similar Business and (ii) any cash or Cash Equivalents, PROVIDED that such cash or Cash Equivalents will be considered Net Proceeds from an Asset Sale. "PERMITTED HOLDERS" means KKR, its Affiliates and the Management Group. "PERMITTED INVESTMENTS" means (a) with respect to fiduciary cash held by the Company or its Restricted Subsidiaries, Investments in which it is customary for Persons that are engaged in a Similar Business and that comply with all applicable laws and regulations; and (b) in all other cases (i) any Investment in the Company or any Restricted Subsidiary; (ii) any Investment in cash and Cash Equivalents or Investment Grade Securities; (iii) any Investment by the Company or any Restricted Subsidiary of the Company in a Person that is engaged in a Similar Business if as a result of such Investment (A) such Person becomes a Restricted Subsidiary or (B) such Person, in one transaction or a series of related transactions, is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary; (iv) any Investment in securities or other assets not constituting cash or Cash Equivalents and received in connection with an Asset Sale made pursuant to Section 4.06 or any other disposition of assets not constituting an Asset Sale; (v) any Investment existing on the Closing Date; (vi) advances to employees not in excess of $15.0 million outstanding at any one time, in the aggregate; (vii) any Investment acquired by the Company or any of its Restricted Subsidiaries (A) in exchange for any other Investment or accounts receivable held by the Company or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable or (B) as a result of a foreclosure by the Company or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default; (viii) Hedging Obligations permitted under Section 4.03(b)(x); (ix) loans and advances to officers, directors and employees for business-related travel expenses, moving expenses and other similar expenses, in each case incurred in the ordinary course of business; (x) any Investment in a Similar Business having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (x) that are at that time outstanding (without giving effect to the sale of an Unrestricted Subsidiary to the extent the proceeds of such sale do not consist of cash, marketable securities and/or Qualified Proceeds), not to exceed the greater of (A) $125.0 million or (B) 12.5% of Total Revenues at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value); (xi) Investments the payment for which consists of Equity Interests of the Company, any of its direct or indirect parent corporations or the Issuer (exclusive of Disqualified Stock); PROVIDED, HOWEVER, that such Equity Interests will not increase the amount available for Restricted Payments under Section 4.04(a)(3); (xii) additional Investments having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (xii) that are at that time outstanding (without giving effect to the sale of an Unrestricted Subsidiary to the extent the proceeds of such sale do not consist of cash, marketable securities and/or Qualified Proceeds or do consist of distributions made pursuant to Section 4.04(b)(xiii), not to exceed $50.0 million at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value); (xiii) guarantees (including Guarantees) of Indebtedness permitted under Section 4.03; (xiv) any transaction to the extent it constitutes an Investment that is permitted and made in accordance with Section 4.07(b) (except transactions described in clauses (ii), (vi), (vii) and (xi) of such paragraph); (xv) Investments consisting of the 15 licensing or contribution of intellectual property pursuant to joint marketing arrangements with other Persons; (xvi) any Investment by the Company or any Restricted Subsidiary in a Person that is an Associate on the Closing Date; and (xvii) Investments relating to any special purpose Wholly Owned Subsidiary of the Company or the Issuer organized in connection with a Receivables Facility that, in the good faith determination of the Board of Directors of the Company, are necessary or advisable to effect such Receivables Facility. "PERSON" means any individual, corporation, limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "PREFERRED STOCK" means any Equity Interest with preferential rights of payment of dividends or upon liquidation, dissolution, or winding up. "PRINCIPAL" of a Note means the principal of the Note plus the premium, if any, payable on the Note that is due or overdue or is to become due at the relevant time. "QUALIFIED PROCEEDS" means assets that are used or useful in, or Capital Stock of any Person engaged in, a Similar Business; PROVIDED that the fair market value of any such assets or Capital Stock shall be determined by the Board of Directors in good faith, except that in the event the value of any such assets or Capital Stock may exceed $25.0 million or more, the fair value shall be determined in writing by an independent investment banking firm of nationally recognized standing. "RECEIVABLES FACILITY" means one or more receivables financing facilities, as amended from time to time, pursuant to which the Company and/or any of its Restricted Subsidiaries sells its accounts receivable to a Person that is not a Restricted Subsidiary. "RECEIVABLES FEES" means distributions or payments made directly or by means of discounts with respect to any participation interest issued or sold in connection with, and other fees paid to a Person that is not a Restricted Subsidiary in connection with, any Receivables Facility. "REDEMPTION DATE" means with respect to any redemption of Notes, the date of redemption with respect thereto. "REPRESENTATIVE" means the trustee, agent or representative (if any) for an issue of Senior Indebtedness of the Company. "RESTRICTED INVESTMENT" means an Investment other than a Permitted Investment. "RESTRICTED SUBSIDIARY" means, at any time, the Issuer and any direct or indirect Subsidiary of the Company (including any Foreign Subsidiary) that is not then an Unrestricted Subsidiary; PROVIDED, HOWEVER, that upon the occurrence of an Unrestricted Subsidiary ceasing to be an Unrestricted Subsidiary, such Subsidiary shall be included in the definition of "Restricted Subsidiary." "S&P" means Standard and Poor's Ratings Group. "SEC" means the Securities and Exchange Commission. 16 "SECURITIES ACT" means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. "SENIOR BRIDGE FACILITY" means the Credit Agreement dated as of July 22, 1998, as amended and restated as of September 25, 1998, and as amended on October 30, 1998 and November 13, 1998, among Trinity, the Company, the Issuer, the Lenders party thereto and The Chase Manhattan Bank, as Administrative Agent. "SENIOR CREDIT FACILITIES" means the Credit Agreement dated as of July 22, 1998, as amended and restated as of September 25, 1998, and as amended on October 30, 1998 and November 13, 1998, among the Company, the Issuer, Trinity, the Lenders from time to time party thereto and The Chase Manhattan Bank, as Administrative Agent and Collateral Agent, including any collateral documents, instruments and agreements executed in connection therewith, and any amendments, supplements, modifications, extensions, renewals, restatements or refundings thereof and any indentures or credit facilities or commercial paper facilities with banks or other institutional lenders that replace, refund or refinance any part of the loans, notes, other credit facilities or commitments thereunder, including any such replacement, refunding or refinancing facility or indenture that increases the amount borrowable thereunder or alters the maturity thereof, PROVIDED, HOWEVER, that in connection with any facilities which refund, replace or refinance such Credit Agreement there shall not be more than one facility at any one time that is identified as the Senior Credit Facilities and, if at any time there is more than one facility which would constitute the Senior Credit Facilities, the Issuer shall designate to the Trustee which one of such facilities shall be the Senior Credit Facilities for purposes of this Indenture. "SENIOR INDEBTEDNESS" means (i) the Obligations under the Senior Credit Facilities and (ii) the Obligations under any other Indebtedness permitted to be incurred by the Issuer under the terms of this Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is on a parity with or subordinated in right of payment to the Notes, including, with respect to clauses (i) and (ii), interest accruing subsequent to the filing of, or which would have accrued but for the filing of, a petition for bankruptcy, in accordance with and at the rate (including any rate applicable upon any default or event of default, to the extent lawful) specified in the documents evidencing or governing such Senior Indebtedness, whether or not such interest is an allowable claim in such bankruptcy proceeding. Notwithstanding anything to the contrary in the foregoing, Senior Indebtedness shall not include (1) any liability for federal, state, local or other taxes owed or owing by the Issuer, (2) any obligation of the Issuer to its direct or indirect parent corporations or any of its Subsidiaries, (3) any accounts payable or trade liabilities (including obligations in respect of funds held for the account of third parties) arising in the ordinary course of business (including guarantees thereof or instruments evidencing such liabilities) other than obligations in respect of letters of credit under the Senior Credit Facilities, (4) any Indebtedness that is incurred in violation of this Indenture, (5) Indebtedness which, when incurred and without respect to any election under Section 1111(b) of Title 11, United States Code, is without recourse to the Issuer, (6) any Indebtedness, guarantee or obligation of the Issuer which is subordinate or junior to any other Indebtedness, guarantee or obligation of the Issuer, (7) Indebtedness evidenced by the Notes, (8) Indebtedness evidenced by the Group Intercompany Notes or the Convertible Loans and (9) Capital Stock of the Issuer. "Senior Indebtedness" of the Company or any Guarantor has a correlative meaning. "SENIOR SUBORDINATED INDEBTEDNESS" means (a) with respect to the Issuer, Indebtedness which ranks PARI PASSU in right of payment to the Notes and (b) with respect 17 to any Guarantor, Indebtedness which ranks PARI PASSU in right of payment to the Guarantee of such Guarantor. "SIGNIFICANT SUBSIDIARY" means the Issuer and any other Restricted Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such regulation is in effect on the date hereof. "SIMILAR BUSINESS" means insurance brokering, risk management consulting, insurance agency, employee benefit consulting and any activities or businesses incidental or directly related or similar thereto, or any line of business engaged in by the Company or its Subsidiaries on the Issuance Date or any business activity that is a reasonable extension, development or expansion thereof or ancillary thereto. "SPONSOR PROMISSORY NOTE" means the subordinated promissory note dated as of July 22, 1998, issued by Trinity in favor of an affiliate of KKR in an amount not to exceed $575,000,000. "SUBORDINATED BRIDGE AGREEMENT" means the Senior Subordinated Loan Agreement dated as of November 19, 1998, among the Company, USGP, the Issuer, the Lenders from time to time party thereto and The Chase Manhattan Bank, as Administrative Agent. "SUBORDINATED INDEBTEDNESS" means (a) with respect to the Issuer, any Indebtedness of the Issuer which is by its terms subordinated in right of payment to the Notes and (b) with respect to any Guarantor, any Indebtedness of such Guarantor which is by its terms subordinated in right of payment to the Guarantee of such Guarantor. "SUBORDINATED NOTE OBLIGATIONS" means any principal of, premium, if any, and interest on the Notes payable pursuant to the terms of the Notes or upon acceleration, together with and including any amounts received upon the exercise of rights of rescission or other rights of action (including claims for damages) or otherwise, to the extent relating to the purchase price of the Notes or amounts corresponding to such principal, premium, if any, or interest on the Notes. "SUBSIDIARY" means, with respect to any Person, (i) any corporation, association, or other business entity (other than a partnership, joint venture, limited liability company or similar entity) of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof and (ii) any partnership, joint venture, limited liability company or similar entity of which (x) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof whether in the form of membership, general, special or limited partnership or otherwise and (y) such Person or any Wholly Owned Restricted Subsidiary of such Person is a controlling general partner or otherwise controls such entity. "TA II" means TA II Limited, a company with limited liability organized under the laws of England and Wales. 18 "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of this Indenture. "TOTAL REVENUES" means the total operating revenues of the Company and its Restricted Subsidiaries, as shown on the most recent annual income statement of the Company. "TRANSACTIONS" has the meaning given to it in the Offering Memorandum. "TREATY ON EUROPEAN UNION" means the Treaty of Rome of March 25, 1957, as amended by the Single European Act 1986 and the Maastricht Treaty (which was signed at Maastricht on February 7, 1992, and came into force on November 1, 1993), as amended from time to time. "TRINITY" means Trinity Acquisition plc, a public limited company organized under the laws of England and Wales. "TRINITY HEDGING OBLIGATIONS" means Hedging Obligations of Trinity (other than Hedging Obligations entered into for speculative purposes) having an aggregate notional amount at any time outstanding not in excess of $1,175,000,000 less the notional amount of any Facility Hedging Obligations outstanding at such time. "TRINITY INTERCOMPANY NOTE" means any note issued by Trinity in favor of the Company or a Restricted Subsidiary (a) in consideration of the issuance of a Group Intercompany Note or (b) in connection with the making of a loan to Trinity by the Company or such Restricted Subsidiary (other than with respect to Interim Refinancing Indebtedness), PROVIDED that all the proceeds received by Trinity from such loan, if any, are immediately used to make a loan to the Company or a Restricted Subsidiary pursuant to a Group Intercompany Note. "TRUSTEE" means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor. "TRUST OFFICER" means any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such person's knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture. "UNIFORM COMMERCIAL CODE" means the New York Uniform Commercial Code as in effect from time to time. "U.K. SUBSIDIARY" means, with respect to any Person, any Restricted Subsidiary of such Person that is organized under the laws of England and Wales. "UNRESTRICTED SUBSIDIARY" means (i) Sovereign Marine & General Insurance Company Limited, in provisional liquidation ("Sovereign"), (ii) any Subsidiary of the Company which at the time of determination is an Unrestricted Subsidiary (as designated by the Board of Directors of the Company, as provided below) and (iii) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the Company may designate any Subsidiary of the Company (including any existing Subsidiary and any newly acquired or newly formed Subsidiary but excluding the Issuer) to be an Unrestricted Subsidiary 19 unless such Subsidiary or any of its Subsidiaries owns any Equity Interests or Indebtedness of, or owns or holds any Lien on, any property of, the Company or any Subsidiary of the Company (other than any Subsidiary of the Subsidiary to be so designated), PROVIDED that (a) any Unrestricted Subsidiary (other than Sovereign) must be an entity of which shares of the capital stock or other equity interests (including partnership interests) entitled to cast at least a majority of the votes that may be cast by all shares or equity interests having ordinary voting power for the election of directors or other governing body are owned, directly or indirectly, by the Company, (b) such designation complies with Section 4.04 and (c) each of (I) the Subsidiary to be so designated and (II) its Subsidiaries has not at the time of designation, and does not thereafter, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to any Indebtedness pursuant to which the lender has recourse to any of the assets of the Company or any of its Restricted Subsidiaries. The Board of Directors of the Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; PROVIDED that, immediately after giving effect to such designation no Default or Event of Default shall have occurred and be continuing and either (i) the Company could incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test described in Section 4.03(a) or (ii) the Fixed Charge Coverage Ratio for the Company and its Restricted Subsidiaries would be greater than such ratio for the Company and its Restricted Subsidiaries immediately prior to such designation, in each case on a pro forma basis taking into account such designation. Any such designation by the Board of Directors of the Company shall be notified by the Company to the Trustee by promptly filing with the Trustee a copy of the board resolution giving effect to such designation and an Officers' Certificate of the Company certifying that such designation complied with the foregoing provisions. "USGP" means Willis Corroon Partners, a Delaware general partnership. "VOTING STOCK" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. "WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness or Disqualified Stock, as the case may be, at any date, the quotient obtained by dividing (i) the sum of the products of the number of years from the date of determination to the date of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Disqualified Stock multiplied by the amount of such payment, by (ii) the sum of all such payments. "WHOLLY OWNED RESTRICTED SUBSIDIARY" of any person means any Wholly Owned Subsidiary that is a Restricted Subsidiary. "WHOLLY OWNED SUBSIDIARY" of any Person means a Subsidiary of such Person, 100% of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person and one or more Wholly Owned Subsidiaries of such Person.
SECTION 1.02. OTHER DEFINITIONS. Defined in Term Section ---- ---------- "Affiliate Transaction".......................................................... 4.07 "Asset Sale Offer"............................................................... 4.06(b)
20 "Asset Sale Purchase Date"....................................................... 4.06(b)(ii) "Bankruptcy Law"................................................................. 6.01 "Change of Control Offer"........................................................ 4.08(a) "Change of Control Payment"...................................................... 4.08(a) "Change of Control Payment Date"................................................. 4.08(b) "covenant defeasance option"..................................................... 8.01(b) "CUSIP"......................................................................... 2.13 "Custodian"...................................................................... 6.01 "Event of Default"............................................................... 6.01 "Excess Proceeds"................................................................ 4.06(b) "incur".......................................................................... 4.03(a) "Guaranteed Obligations"......................................................... 11.01 "legal defeasance option"........................................................ 8.01(b) "Legal Holiday".................................................................. 13.08 "non-payment default"............................................................ 10.03 "Offered Price".................................................................. 4.06(b) "Paying Agent"................................................................... 2.04 "Payment Blockage Notice"........................................................ 10.03 "Payment Blockage Period"........................................................ 10.03 "payment default"................................................................ 10.03 "protected purchaser"............................................................ 2.08 "Refinancing Indebtedness"....................................................... 4.03(b)(xv) "Refunding Capital Stock"........................................................ 4.04(b)(ii) "Registrar"...................................................................... 2.04 "Restricted Payments"............................................................ 4.04(a) "Retired Capital Stock".......................................................... 4.04(b)(ii) "Successor Company".............................................................. 5.01(a)(i) "Successor Guarantor"............................................................ 5.01(b)(i) "Transfer Agent"................................................................. 2.07
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. This Indenture is subject to the mandatory provisions of the TIA, which are incorporated by reference in and made a part of this Indenture. The following TIA terms have the following meanings: "Commission" means the SEC. "indenture securities" means the Notes. "indenture security holder" means a Holder or Noteholder. "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Trustee. "obligor" on the indenture securities means the Issuer, any Guarantor and any other obligor on the indenture securities. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions. 21 SECTION 1.04. RULES OF CONSTRUCTION. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; (4) "including" means including without limitation; (5) words in the singular include the plural and words in the plural include the singular; (6) unsecured Indebtedness shall not be deemed to be subordinate or junior to secured Indebtedness merely by virtue of its nature as unsecured Indebtedness; (7) the principal amount of any noninterest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet of the issuer dated such date prepared in accordance with GAAP; and (8) the principal amount of any Preferred Stock shall be (i) the maximum liquidation value of such Preferred Stock or (ii) the maximum mandatory redemption or mandatory repurchase price with respect to such Preferred Stock, whichever is greater. ARTICLE 2 THE NOTES SECTION 2.01. PRINCIPAL AMOUNT AND MATURITY. (a) The aggregate principal amount of Notes which may be authenticated and delivered under this Indenture is $550,000,000. (b) All Notes shall mature on the Maturity Date. SECTION 2.02. FORM AND DATING. Certain provisions relating to the Initial Notes, Exchange Notes and the Private Exchange Notes are set forth in the Appendix, which is hereby incorporated in and expressly made a part of this Indenture. The (i) Initial Notes and the Trustee's certificate of authentication and (ii) Private Exchange Notes and the Trustee's certificate of authentication shall each be substantially in the form of Exhibit A hereto, which is hereby incorporated in and expressly made a part of this Indenture. The Exchange Notes and any other Notes issued other than as Transfer Restricted Notes (as defined in the Appendix) and the Trustee's certificate of authentication shall each be substantially in the form of Exhibit B hereto, which is hereby incorporated and expressly made a part of this Indenture. The Notes may have notations, legends or endorsements required by law, stock exchange rule, agreements to which the Issuer is subject, if any, or usage (PROVIDED that any such notation, legend or endorsement is in a form acceptable to the Issuer). Each Note shall be dated the date of its authentication. 22 SECTION 2.03. EXECUTION AND AUTHENTICATION. One or more Officers shall sign the Notes for the Issuer by manual or facsimile signature. If an Officer whose signature is on a Note no longer holds that office at the time the Trustee authenticates the Note, the Note shall be valid nevertheless. A Note shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Note. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture. The Trustee shall authenticate and make available for delivery Notes as set forth in the Appendix. The Trustee may appoint an authenticating agent reasonably acceptable to the Issuer to authenticate the Notes. Any such appointment shall be evidenced by an instrument signed by a Trust Officer, a copy of which shall be furnished to the Issuer. Unless limited by the terms of such appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as any Registrar, Paying Agent or agent for service of notices and demands. SECTION 2.04. REGISTRAR AND PAYING AGENT. The Issuer shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange (the "REGISTRAR") and an office or agency where Notes may be presented for payment (the "PAYING AGENT"). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Issuer may have one or more co-registrars and one or more additional paying agents. The term "Paying Agent" includes any additional paying agent, and the term "Registrar" includes any co-registrars. The Issuer initially appoints the Trustee as (i) Registrar and Paying Agent in connection with the Notes and (ii) the Notes Custodian (as defined in the Appendix) with respect to the Global Notes. In the event that Definitive Notes (as defined in the Appendix) are issued, the Issuer shall also appoint Kredietbank S.A. Luxembourgeoise, or such other Person located in Luxembourg and reasonably acceptable to the Trustee, as an additional Paying Agent. Upon the issuance of Definitive Notes, Holders will be able to receive principal, premium, if any, and interest with respect to the Notes and will be able to transfer Definitive Notes at the Luxembourg office of such Paying Agent, subject to the right of the Issuer to mail payments in accordance with the terms of this Indenture. The Issuer shall enter into an appropriate agency agreement with any Registrar or Paying Agent not a party to this Indenture, which shall incorporate the terms of the TIA. The agreement shall implement the provisions of this Indenture that relate to such agent. The Issuer shall notify the Trustee of the name and address of any such agent. If the Issuer fails to maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.07. The Issuer or any of its Wholly Owned Subsidiaries that is a Domestic Subsidiary may act as Paying Agent or Registrar. The Issuer may remove any Registrar or Paying Agent upon written notice to such Registrar or Paying Agent and to the Trustee; PROVIDED, HOWEVER, that no such removal shall become effective until (1) acceptance of an appointment by a successor as evidenced by an appropriate agreement entered into by the Issuer and such successor Registrar or Paying Agent, as the case may be, and delivered to the Trustee or 23 (2) notification to the Trustee that the Trustee shall serve as Registrar or Paying Agent until the appointment of a successor in accordance with clause (1) above. The Registrar or Paying Agent may resign at any time upon written notice; PROVIDED, HOWEVER, that the Trustee may resign as Paying Agent or Registrar only if the Trustee also resigns as Trustee in accordance with Section 7.08. SECTION 2.05. PAYING AGENT TO HOLD MONEY IN TRUST. Prior to each due date of the principal and interest on any Note, the Issuer shall deposit with the Paying Agent (or if the Issuer or a Subsidiary is acting as Paying Agent, segregate and hold in trust for the benefit of the Persons entitled thereto) a sum sufficient to pay such principal and interest when so becoming due. The Issuer shall require each Paying Agent (other than the Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of Noteholders or the Trustee all money held by the Paying Agent for the payment of principal of or interest on the Notes and shall notify the Trustee of any default by the Issuer in making any such payment. If the Issuer or a Subsidiary of the Issuer acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund. The Issuer at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by the Paying Agent. Upon complying with this Section, the Paying Agent shall have no further liability for the money delivered to the Trustee. SECTION 2.06. NOTEHOLDER LISTS. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Noteholders. If the Trustee is not the Registrar, the Issuer shall furnish, or cause the Registrar to furnish, to the Trustee, in writing at least five Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Noteholders. SECTION 2.07. TRANSFER AND EXCHANGE. The Notes shall be issued in registered form and shall be transferable only upon the surrender of a Note for registration of transfer. When a Note is presented to the Registrar with a request to register a transfer, the Registrar shall register the transfer as requested if the requirements of Section 8- 401(a)(l) of the Uniform Commercial Code are met. When Notes are presented to the Registrar with a request to exchange them for an equal principal amount of Notes of other denominations, the Registrar shall make the exchange as requested if the same requirements are met. To permit registration of transfers and exchanges, the Issuer shall execute and the Trustee shall authenticate Notes at the Registrar's request. The Issuer may require payment of a sum sufficient to pay all taxes, assessments or other governmental charges in connection with any transfer or exchange pursuant to this Section. The Issuer shall not be required to make and the Registrar need not register transfers or exchanges of Notes selected for redemption (except, in the case of Notes to be redeemed in part, the portion thereof not to be redeemed) or any Notes for a period of 15 days before a selection of Notes to be redeemed. If Definitive notes are issued, the Issuer will appoint and maintain a transfer agent (the "Transfer Agent") in Luxembourg for so long as the Notes are listed on the Luxembourg Stock Exchange, at which office a Holder of a Definitive Note will be able to surrender its note for registration of transfer. The Issuer will be able to terminate at any time the appointment of Transfer Agent and appoint additional or other Transfer Agents. Notice of such termination or appointment and of any change in the specified office of a Transfer Agent will be provided in the manner described in Section 13.02 of this Indenture. 24 Prior to the due presentation for registration of transfer of any Note, the Issuer, the Trustee, the Paying Agent and the Registrar may deem and treat the Person in whose name a Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest, if any, on such Note and for all other purposes whatsoever, whether or not such Note is overdue, and none of the Issuer, the Trustee, the Paying Agent or the Registrar shall be affected by notice to the contrary. Any Holder of a Global Note shall, by acceptance of such Global Note, agree that transfers of beneficial interest in such Global Note may be effected only through a book-entry system maintained by (i) the Holder of such Global Note (or its agent) or (ii) any Holder of a beneficial interest in such Global Note, and that ownership of a beneficial interest in such Global Note shall be required to be reflected in a book entry. All Notes issued upon any transfer or exchange pursuant to the terms of this Indenture shall evidence the same debt and shall be entitled to the same benefits under this Indenture as the Notes surrendered upon such transfer or exchange. SECTION 2.08. REPLACEMENT NOTES. If a mutilated Note is surrendered to the Registrar or if the Holder of a Note claims that the Note has been lost, destroyed or wrongfully taken, the Issuer shall issue and the Trustee shall authenticate a replacement Note if the requirements of Section 8-405 of the Uniform Commercial Code are met, such that the Holder (i) satisfies the Issuer or the Trustee within a reasonable time after he has notice of such loss, destruction or wrongful taking and the Registrar does not register a transfer prior to receiving such notification, (ii) makes such request to the Issuer or the Trustee prior to the Note being acquired by a protected purchaser as defined in Section 8- 303 of the Uniform Commercial Code (a "PROTECTED PURCHASER") and (iii) satisfies any other reasonable requirements of the Trustee. If required by the Trustee or the Issuer, such Holder shall furnish an indemnity bond sufficient in the judgment of the Trustee to protect the Issuer, the Trustee, the Paying Agent and the Registrar from any loss that any of them may suffer if a Note is replaced. The Issuer and the Trustee may charge the Holder for their expenses in replacing a Note. In the event any such mutilated, lost, destroyed or wrongfully taken Note has become or is about to become due and payable, the Issuer in its discretion may pay such Note instead of issuing a new Note in replacement thereof. Every replacement Note is an additional obligation of the Issuer. The provisions of this Section 2.08 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, lost, destroyed or wrongfully taken Notes. SECTION 2.09. OUTSTANDING NOTES. Notes outstanding at any time are all Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancelation and those described in this Section as not outstanding. A Note does not cease to be outstanding because the Issuer or an Affiliate of the Issuer holds the Note. If a Note is replaced pursuant to Section 2.08, it ceases to be outstanding unless the Trustee and the Issuer receive proof satisfactory to them that the replaced Note is held by a protected purchaser. If the Paying Agent segregates and holds in trust, in accordance with this Indenture, on a Redemption Date or maturity date money sufficient to pay all principal and interest payable on that date with respect to the Notes (or portions thereof) to be redeemed or maturing, as the case may be, and the Paying Agent is not prohibited from 25 paying such money to the Noteholders on that date pursuant to the terms of this Indenture, then on and after that date such Notes (or portions thereof) shall cease to be outstanding and interest on them shall cease to accrue. SECTION 2.10. TEMPORARY NOTES. In the event that Definitive Notes (as defined in the Appendix) are to be issued under the terms of this Indenture, until such Definitive Notes are ready for delivery, the Issuer may prepare and the Trustee shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of Definitive Notes but may have variations that the Issuer considers appropriate for temporary Notes. Without unreasonable delay, the Issuer shall prepare and the Trustee shall authenticate Definitive Notes and deliver them in exchange for temporary Notes upon surrender of such temporary Notes at the office or agency of the Issuer, without charge to the Holder. In addition, the Temporary Regulation S Global Note (as defined in the Appendix) may also be issued in temporary form. SECTION 2.11. CANCELATION. The Issuer at any time may deliver Notes to the Trustee for cancelation. The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment or cancelation and deliver canceled Notes to the Issuer pursuant to written direction by an Officer. The Issuer may not issue new Notes to replace Notes it has redeemed, paid or delivered to the Trustee for cancelation. The Trustee shall not authenticate Notes in place of canceled Notes other than pursuant to the terms of this Indenture. SECTION 2.12. DEFAULTED INTEREST. If the Issuer defaults in a payment of interest on the Notes, the Issuer shall pay the defaulted interest (plus interest on such defaulted interest to the extent lawful) in any lawful manner. The Issuer may pay the defaulted interest to the Persons who are Noteholders on a subsequent special record date. The Issuer shall fix or cause to be fixed any such special record date and payment date and shall promptly mail or cause to be mailed to each Noteholder a notice that states the special record date, the payment date and the amount of defaulted interest to be paid. SECTION 2.13. "CUSIP" OR "ISIN" NUMBERS. The Issuer in issuing the Notes may use "CUSIP" or "ISIN" numbers (if then generally in use) and, if so, the Trustee shall use "CUSIP" or "ISIN" numbers in notices of redemption as a convenience to Holders; PROVIDED, HOWEVER, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such "CUSIP" or "ISIN" numbers. The Issuer shall promptly notify the Trustee after the Issuer becomes aware, through written notice, of a change in the "CUSIP" or "ISIN" numbers. ARTICLE 3 REDEMPTION SECTION 3.01. NOTICES TO TRUSTEE. If the Issuer elects to redeem Notes pursuant to paragraph 5 of the Notes, it shall notify the Trustee in writing of the Redemption Date and the principal amount of Notes to be redeemed. 26 The Issuer shall give each notice to the Trustee provided for in this Section at least 30 but not more than 60 days before the Redemption Date unless the Trustee consents to a shorter period. Such notice shall be accompanied by an Officers' Certificate from the Issuer to the effect that such redemption shall comply with the conditions herein. If fewer than all the Notes are to be redeemed, the record date relating to such redemption shall be selected by the Issuer and given to the Trustee, which record date shall be not fewer than 15 days after the date of notice to the Trustee. Any such notice may be canceled at any time prior to notice of such redemption being mailed to any Holder and shall thereby be void and of no effect. SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED. If fewer than all the Notes are to be redeemed, the Trustee shall select the Notes to be redeemed in compliance with the requirements of the principal national securities exchange, if any, on which such Notes are listed, or, if such Notes are not so listed, on a pro rata basis, by lot or by such other method as the Trustee shall deem fair and appropriate (and in such manner as complies with applicable legal requirements); PROVIDED that no Notes of $1,000 or less shall be purchased or redeemed in part. Provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. The Trustee shall notify the Issuer promptly of the Notes or portions of Notes to be redeemed. SECTION 3.03. NOTICE OF REDEMPTION. At least 30 days but not more than 60 days before the Redemption Date, the Issuer, or the Trustee at the Issuer's direction, shall (a) publish a notice of redemption in a leading newspaper having a general circulation in New York (which is expected to be the WALL STREET JOURNAL) (and, so long as the Notes are listed on the Luxembourg Stock Exchange and the rules of such stock exchange shall so require, a newspaper having a general circulation in Luxembourg (which is expected to be the LUXEMBURGER WORT)) and (b) in the case of Definitive Notes, shall also mail a notice of redemption by first-class mail, postage prepaid, to each Holder of Notes to be redeemed at such Holder's registered address; PROVIDED that in the event the Trustee is to mail such notice, the Issuer shall deliver to the Trustee, at least 45 days prior to the Redemption Date, an Officers' Certificate (which may be the same Officers' Certificate required by Section 3.01) requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the following items. The notice shall identify the Notes to be redeemed and shall state: (1) the Redemption Date; (2) the redemption price and the amount of accrued interest to the Redemption Date; (3) the name and address of the Paying Agent; (4) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price; (5) if fewer than all the outstanding Notes are to be redeemed, the certificate numbers and principal amounts of the particular Notes to be redeemed (or the portion thereof); 27 (6) that, unless the Issuer defaults in making such redemption payment, interest on Notes (or portion thereof) called for redemption ceases to accrue on and after the Redemption Date; (7) the CUSIP or ISIN number, if any, printed on the Notes being redeemed; and (8) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes. At the Issuer's request, the Trustee shall give the notice of redemption in the Issuer's name and at the Issuer's expense. In such event, the Issuer shall provide the Trustee with the information required by this Section. SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption is mailed, Notes called for redemption become due and payable on the Redemption Date and at the redemption price stated in the notice. Upon surrender to the Paying Agent, such Notes shall be paid at the redemption price stated in the notice, plus accrued interest, if any, to the Redemption Date; PROVIDED, HOWEVER, that if the Redemption Date is after a regular record date or a special record date and on or prior to the interest payment date, the accrued interest shall be payable to the Noteholder of the redeemed Notes registered on the relevant record date. Failure to give notice or any defect in the notice to any Holder shall not affect the validity of the notice to any other Holder. SECTION 3.05. DEPOSIT OF REDEMPTION PRICE. Prior to 10:00 a.m. on the Redemption Date, the Issuer shall deposit with the Paying Agent (or, if the Issuer or a Subsidiary is the Paying Agent, shall segregate and hold in trust) money sufficient to pay the redemption price of and accrued interest on all Notes to be redeemed on that date other than Notes or portions of Notes called for redemption that have been delivered by the Issuer to the Trustee for cancelation. SECTION 3.06. NOTES REDEEMED IN PART. A new Note in principal amount equal to the unredeemed portion of any Note redeemed in part shall be issued in the name of the Holder thereof upon cancelation of the original Note. On and after the Redemption Date unless the Issuer defaults in payment of the redemption price, interest shall cease to accrue on Notes or portions thereof called for redemption. ARTICLE 4 COVENANTS SECTION 4.01. PAYMENT OF NOTES. The Issuer shall promptly pay the principal of and interest on the Notes on the dates and in the manner provided in the Notes and in this Indenture. Principal and interest shall be considered paid on the date due if on such date the Trustee or the Paying Agent holds in accordance with this Indenture money sufficient to pay all principal and interest then due and the Trustee or the Paying Agent, as the case may be, is not prohibited from paying such money to the Noteholders on that date pursuant to the terms of this Indenture. The Issuer shall pay interest on overdue principal at the rate specified therefor in the Notes, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful. 28 SECTION 4.02. SEC REPORTS. Notwithstanding that neither the Company nor the Issuer may be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or otherwise report on an annual and quarterly basis on forms provided for such annual and quarterly reporting pursuant to rules and regulations promulgated by the Commission, the Company shall file with the Commission (and make available to the Trustee and Holders (without exhibits), without cost to each Holder, within 15 days after it files them with the Commission), (a) within 90 days after the end of each fiscal year, annual reports on Form 20-F (or any successor or comparable form) containing the information required to be contained therein (or required in such successor or comparable form); (b) within 45 days after the end of each of the first three fiscal quarters of each fiscal year, reports on Form 6-K, which shall contain all quarterly information that would be required to be contained in Form 10-Q (or any successor or comparable form); (c) promptly from time to time after the occurrence of an event required to be therein reported, such other reports on Form 6-K (or any successor or comparable form); and (d) any other information, documents and other reports which the Company would be required to file with the Commission if it were subject to Section 13 or 15(d) of the Exchange Act; PROVIDED that all such information may be prepared in accordance with GAAP but shall contain a reconciliation to United States generally accepted accounting principles and PROVIDED, FURTHER, that the Company shall not be so obligated to file such reports with the Commission if the Commission does not permit such filing, in which event the Company shall make available such information to prospective purchasers of Notes, in addition to providing such information to the Trustee and the Holders, in each case within 15 days after the time the Company would be required to file such information with the Commission, if it were subject to Sections 13 or 15(d) of the Exchange Act. Notwithstanding the foregoing, such requirements shall be deemed satisfied prior to the commencement of the Exchange Offer or the effectiveness of the Shelf Registration Statement by the filing with the Commission of the Exchange Offer Registration Statement and/or Shelf Registration Statement, and any amendments thereto, with such financial information that satisfies Regulation S-X of the Securities Act, PROVIDED, HOWEVER, that in order for the provisions of clause (a) above to be deemed satisfied with respect to 1998, such Exchange Offer Registration Statement or Shelf Registration Statement must include audited financial statements for the year 1998. Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including both the Company's and the Issuer's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates). SECTION 4.03. LIMITATION ON INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK. (a) The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise (collectively, "INCUR" and collectively, an "INCURRENCE") with respect to any Indebtedness (including Acquired Indebtedness) and the Company shall not issue any shares of Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; PROVIDED, HOWEVER, that the Company may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and the Issuer and any Restricted Subsidiary that is a Guarantor may incur Indebtedness, issue shares of Disqualified Stock and issue shares of preferred stock, if the Fixed Charge Coverage Ratio for the Company's and its Restricted Subsidiaries' most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or preferred 29 stock is issued would have been at least 2.00 to 1.00, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the Disqualified Stock or preferred stock had been issued, as the case may be, and the application of proceeds therefrom had occurred at the beginning of such four-quarter period. (b) The foregoing limitations shall not apply to: (i) the existence of Indebtedness under Credit Facilities on the Closing Date together with the incurrence by the Company, the Issuer or any other Restricted Subsidiary of Indebtedness under Credit Facilities and the issuance and creation of letters of credit and bankers' acceptances thereunder (with letters of credit and bankers' acceptances being deemed to have a principal amount equal to the face amount thereof), up to an aggregate principal amount of $675.0 million outstanding at any one time; PROVIDED, HOWEVER, that the aggregate amount of Indebtedness incurred by Restricted Subsidiaries (other than the Issuer or any Guarantor) pursuant to this clause (b)(i) may not exceed $150.0 million outstanding at any one time; (ii) the incurrence by the Issuer of Indebtedness represented by the Notes; (iii) Existing Indebtedness (other than Indebtedness described in clauses (b)(i) and (b)(ii)); (iv) Indebtedness (including Capitalized Lease Obligations) incurred by the Company or any of its Restricted Subsidiaries, to finance the purchase, lease or improvement of property (real or personal) or equipment (whether through the direct purchase of assets or the Capital Stock of any Person owning such assets) in an aggregate principal amount which, when aggregated with the principal amount of all other Indebtedness then outstanding and incurred pursuant to this clause (b)(iv) and including all Refinancing Indebtedness incurred to refund, refinance or replace any other Indebtedness incurred pursuant to this clause (b)(iv), does not exceed the greater of (A) $50.0 million and (B) 5% of Total Revenues. (v) Indebtedness incurred by the Company or any of its Restricted Subsidiaries constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including without limitation letters of credit in respect of workers' compensation claims, or other Indebtedness with respect to reimbursement type obligations regarding workers' compensation claims; PROVIDED, HOWEVER, that upon the drawing of such letters of credit or the incurrence of such Indebtedness, such obligations are reimbursed within 30 days following such drawing or incurrence; (vi) Indebtedness arising from agreements of the Company or a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition; PROVIDED, HOWEVER, that (A) such Indebtedness is not reflected on the balance sheet of the Company or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet shall not be deemed to be reflected on such balance sheet for purposes of this 30 clause (A)) and (B) the maximum assumable liability in respect of all such Indebtedness shall at no time exceed the gross proceeds including noncash proceeds (the fair market value of such noncash proceeds being measured at the time received and without giving effect to any subsequent changes in value) actually received by the Company and its Restricted Subsidiaries in connection with such disposition; (vii) Indebtedness of the Company to a Restricted Subsidiary; PROVIDED that any such Indebtedness is subordinated in right of payment to the Notes; PROVIDED FURTHER that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness (except to the Company or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness; (viii) Indebtedness of a Restricted Subsidiary to the Company or another Restricted Subsidiary; PROVIDED that (A) any such Indebtedness is made pursuant to an intercompany note and (B) if a Guarantor incurs such Indebtedness to a Restricted Subsidiary that is not the Issuer or a Guarantor, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor; PROVIDED FURTHER that any subsequent transfer of any such Indebtedness (except to the Company or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness; (ix) shares of preferred stock of a Restricted Subsidiary issued to the Company or another Restricted Subsidiary; PROVIDED that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such shares of preferred stock (except to the Company or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock; (x) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes); (xi) obligations in respect of performance and surety bonds and completion guarantees provided by the Company or any Restricted Subsidiary in the ordinary course of business; (xii) Indebtedness of any Guarantor in respect of such Guarantor's Guarantee; (xiii) Indebtedness and Disqualified Stock of the Company or any Restricted Subsidiary not otherwise permitted under this Section 4.03 in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness and Disqualified Stock then outstanding and incurred pursuant to this clause (b)(xiii), does not at any one time outstanding exceed the sum of (a) $250 million and (b) 100% of the net cash proceeds received by the Company or the Issuer since immediately after the Closing Date from the issue or sale of Equity Interests of the Company, any of its direct or indirect parent corporations or the Issuer or net cash proceeds contributed to the capital of the Company or the Issuer (in each case other than proceeds of Disqualified Stock or sales of Equity Interests to the Company or any of its Subsidiaries) as determined in accordance with clauses 31 (3)(ii) and (3)(iii) of Section 4.04(a) to the extent such net cash proceeds have not been applied pursuant to such clauses to make Restricted Payments or to make other payments or exchanges pursuant to Section 4.04(b) or to make Permitted Investments (other than Permitted Investments specified in clauses (b)(i) and (b)(iii) of the definition thereof) (it being understood that any Indebtedness incurred under this clause (xiii) shall cease to be deemed incurred or outstanding for purposes of this clause (xiii) but shall be deemed to be incurred for purposes of Section 4.03(a) from and after the first date on which the Company could have incurred such Indebtedness under Section 4.03(a) without reliance upon this clause (xiii)); (xiv) (i) any guarantee by the Company or the Issuer of Indebtedness or other obligations of any of its Restricted Subsidiaries so long as the incurrence of such Indebtedness incurred by such Restricted Subsidiary is permitted under the terms of this Indenture, (ii) any guarantee by a Restricted Subsidiary of Indebtedness of the Company or the Issuer or of the Trinity Hedging Obligations or the Facility Hedging Obligations, PROVIDED that such guarantee is incurred in accordance with Section 4.11 or (iii) any guarantee by the Issuer of the Trinity Hedging Obligations or the Facility Hedging Obligations; (xv) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness which serves to refund or refinance any Indebtedness incurred as permitted under Section 4.03(a) and clauses (ii), (iii) and (iv) of this Section 4.03(b), this clause (xv) and clause (xvi) below or any Indebtedness issued to so refund or refinance such Indebtedness including additional Indebtedness incurred to pay premiums and fees in connection therewith (the "REFINANCING INDEBTEDNESS") prior to its respective maturity; PROVIDED, HOWEVER, that such Refinancing Indebtedness (A) has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining Weighted Average Life to Maturity of Indebtedness being refunded or refinanced, (B) to the extent such Refinancing Indebtedness refinances Indebtedness subordinated or PARI PASSU to the Notes, such Refinancing Indebtedness is subordinated or PARI PASSU to the Notes at least to the same extent as the Indebtedness being refinanced or refunded and (C) shall not include (x) Indebtedness of a Subsidiary that refinances Indebtedness of the Company or (y) Indebtedness of the Company or a Restricted Subsidiary that refinances Indebtedness of an Unrestricted Subsidiary; and PROVIDED FURTHER that subclauses (A) and (B) of this clause (xv) shall not apply to any refunding or refinancing of any Senior Indebtedness; (xvi) Indebtedness or Disqualified Stock of Persons that are acquired by the Company or any Restricted Subsidiary or merged into a Restricted Subsidiary in accordance with the terms of this Indenture; PROVIDED that such Indebtedness or Disqualified Stock is not incurred in contemplation of such acquisition or merger; and PROVIDED FURTHER that after giving effect to such acquisition or merger, either (A) the Company would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.03(a) or (B) the Fixed Charge Coverage Ratio is greater than immediately prior to such acquisition or merger. Notwithstanding the foregoing, the second proviso of the immediately preceding sentence shall not apply to Indebtedness outstanding on the Closing Date of Associates of the Company on the Closing Date that are acquired by the Company or any Restricted Subsidiary or merged into a Restricted Subsidiary; 32 (xvii) Indebtedness in respect of the Group Intercompany Notes, PROVIDED that any subsequent transfer of a Group Intercompany Note by Trinity to a Person other than the Company or a Restricted Subsidiary shall be deemed to be an incurrence of such Indebtedness: (xviii) Indebtedness in respect of a Convertible Loan, PROVIDED that any subsequent transfer of a Convertible Loan by Trinity to a Person other than the Company or a Restricted Subsidiary shall be deemed to be an incurrence of such Indebtedness; (xix) Indebtedness under any BACS Facility entered into in the ordinary course of business; (xx) Indebtedness incurred in relation to arrangements made in the ordinary course of business to facilitate the operation of bank accounts on a net balance basis for the calculation of interest; (xxi) short-term Indebtedness from banks incurred in the ordinary course of business pursuant to a facility required in order to comply with, or otherwise falling within, paragraph 25 (2) of the Lloyds Brokers By-law (No. 5 of 1988) (or any other by-law or regulation issued by Lloyds from time to time with which the relevant company is required to comply); and (xxii) any guarantee facility entered into in the ordinary course of business and consistent with industry custom provided in relation to employees of the Company or any Restricted Subsidiary who are Lloyds names. (c) For purposes of determining compliance with Section 4.03, in the event that an item of Indebtedness meets the criteria of more than one of the categories of permitted Indebtedness described in clauses (i) through (xxii) of this Section 4.03(b) or is entitled to be incurred pursuant to Section 4.03(a), the Company shall, in its sole discretion, classify such item of Indebtedness in any manner that complies with this Section 4.03 and such item of Indebtedness shall be treated as having been incurred pursuant to only one of such clauses or pursuant to Section 4.03(a) except as otherwise set forth in clause (xiii). Accrual of interest, the accretion of accreted value and the payment of interest in the form of additional Indebtedness shall not be deemed to be an incurrence of Indebtedness for purposes of this Section 4.03. (d) For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term debt, or first committed, in the case of revolving credit debt; PROVIDED that (1) the U.S. dollar-equivalent principal amount of any such Indebtedness outstanding or committed on the Issuance Date shall be calculated based on the relevant currency exchange rate in effect on September 30, 1998, and (2) if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable U.S. dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such Refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced. The principal amount of any Indebtedness incurred to refinance other Indebtedness, if incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency 33 exchange rate applicable to the currencies in which such respective Indebtedness is denominated that is in effect on the date of such refinancing. SECTION 4.04. LIMITATION ON RESTRICTED PAYMENTS. (a) The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly: (i) declare or pay any dividend or make any distribution on account of the Company's or any Restricted Subsidiary's Equity Interests, including any dividend or distribution payable in connection with any merger or consolidation (other than (A) dividends or distributions by the Company payable in Equity Interests (other than Disqualified Stock) of the Company or in options, warrants or other rights to purchase such Equity Interests or (B) dividends or distributions by a Restricted Subsidiary so long as, in the case of any dividend or distribution payable on or in respect of any class or series of securities issued by a Subsidiary other than a Wholly Owned Subsidiary, the Company or a Restricted Subsidiary receives at least its pro rata share of such dividend or distribution in accordance with its Equity Interests in such class or series of securities); (ii) purchase, redeem, defease or otherwise acquire or retire for value any Equity Interests of the Company or any direct or indirect parent of the Company; (iii) make any principal payment on, or redeem, repurchase, defease or otherwise acquire or retire for value in each case, prior to any scheduled repayment, or maturity, any Subordinated Indebtedness (other than (x) Indebtedness permitted under clauses (vii), (viii) and (xvii) of Section 4.03(b) or (y) the purchase, repurchase or other acquisition of Subordinated Indebtedness purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of purchase, repurchase or acquisition); (iv) make any Restricted Investment; or (v) pay any principal of or interest on any Group Intercompany Note unless such amount is immediately repaid to the Company or a Restricted Subsidiary in respect of the principal of, or interest on, any Trinity Intercompany Note or pay any amount in respect of a Convertible Loan (all such payments and other actions set forth in clauses (i) through (v) above being collectively referred to as "Restricted Payments"), unless, at the time of such Restricted Payment: (1) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; (2) immediately after giving effect to such transaction on a pro forma basis, the Company could incur $1.00 of additional Indebtedness pursuant to Section 4.03(a); and (3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the Closing Date (including Restricted Payments permitted by clauses (i), (ii) (with respect to the payment of dividends on Refunding Capital Stock pursuant to clause (b) thereof), (iv) (only to the extent that amounts paid pursuant to such clause are greater than amounts that could have been paid pursuant to such clause if $6 million and $12 million were substituted in such clause for $12.5 million and $25 million, respectively), (vi), (ix), (x) and (xiv) of Section 4.04(b), but excluding all other Restricted Payments permitted by Section 4.04(b), is less than the sum of (i) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from January 1, 1999, to the end of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, in the case such Consolidated Net Income for such period is a deficit, minus 100% of such deficit), PLUS (ii) 100% of the aggregate net cash proceeds and the fair market value, as determined in good faith by the Board of Directors, of marketable 34 securities and Qualified Proceeds received by the Company or the Issuer since immediately after the Closing Date from the issue or sale of (x) Equity Interests of the Company or the Issuer (including Retired Capital Stock (as defined below), but excluding cash proceeds, marketable securities and Qualified Proceeds received from the sale of (A) Equity Interests (1) to members of management, directors or consultants of the Company or the Issuer, any direct or indirect parent corporation of the Issuer and the Company's Subsidiaries after the Closing Date to the extent such amounts have been applied to Restricted Payments made in accordance with Section 4.04(b)(iv) or (2) pursuant to the Contribution Agreement and (B) Designated Preferred Stock) and, to the extent actually contributed to the Company or the Issuer, Equity Interests of the Company's direct or indirect parent corporations (excluding contributions of the proceeds from the sale of Designated Preferred Stock of such corporations) or (y) debt securities (other than that portion of the Convertible Loan made with the proceeds of Interim Refinancing Indebtedness) of the Company or the Issuer that have been converted into such Equity Interests of the Company or the Issuer; PROVIDED, HOWEVER, that this clause (ii) shall not include the proceeds from Refunding Capital Stock (as defined below), Equity Interests or convertible debt securities of the Company or the Issuer sold to a Restricted Subsidiary or the Company, as the case may be, Disqualified Stock or debt securities that have been converted into Disqualified Stock), PLUS (iii) 100% of the aggregate amount of cash, marketable securities and Qualified Proceeds contributed to the capital of the Company or the Issuer following the Closing Date (other than by a Restricted Subsidiary or the Company), PLUS (iv) 100% of the aggregate amount received in cash, the fair market value of marketable securities and Qualified Proceeds (other than Restricted Investments) received by means of (A) the sale or other disposition (other than to the Company or a Restricted Subsidiary) of Restricted Investments made by the Company and its Restricted Subsidiaries and repurchases and redemptions of such Restricted Investments from the Company and its Restricted Subsidiaries and repayments of loans or advances which constitute Restricted Investments by the Company and its Restricted Subsidiaries or (B) the sale (other than to the Company or a Restricted Subsidiary) of the stock of an Unrestricted Subsidiary or a distribution from an Unrestricted Subsidiary (other than in each case to the extent the Investment in such Unrestricted Subsidiary was made by the Company or a Restricted Subsidiary pursuant to clauses (vii) or (xi) of Section 4.04(b) or to the extent such Investment constituted a Permitted Investment) or a dividend from an Unrestricted Subsidiary PLUS (v) in the case of the redesignation of an Unrestricted Subsidiary as, or an Associate becoming, a Restricted Subsidiary, the fair market value of the Investment in such Unrestricted Subsidiary or Associate, as the case may be, as determined by the Board of Directors in good faith or if, in the case of an Unrestricted Subsidiary, such fair market value may exceed $25 million, in writing by an independent investment banking firm of nationally recognized standing, at the time of the redesignation of such Unrestricted Subsidiary as a Restricted Subsidiary (other than an Unrestricted Subsidiary to the extent the Investment in such Unrestricted Subsidiary or such Associate was made by the Company or a Restricted Subsidiary pursuant to clauses (vii) or (xi) of Section 4.04(b) or to the extent such Investment constituted a Permitted Investment). (b) The foregoing provisions shall not prohibit: (i) the payment of any dividend within 60 days after the date of declaration thereof, if at the date of declaration such payment would have complied with the provisions of this Indenture; 35 (ii) (a) the redemption, repurchase, retirement or other acquisition of any Equity Interests ("RETIRED CAPITAL STOCK") or Subordinated Indebtedness of the Company, or any Equity Interests of any direct or indirect parent corporation of the Company, in exchange for, or out of the proceeds of the substantially concurrent sale (other than to a Restricted Subsidiary or the Company) of, Equity Interests of the Company or the Issuer (in each case, other than any Disqualified Stock) ("REFUNDING CAPITAL STOCK") and (b) the declaration and payment of dividends on the Refunding Capital Stock (other than Refunding Capital Stock the proceeds of which were used to redeem, repurchase, retire or otherwise acquire any Equity Interests of any direct or indirect parent corporation of the Company) in an aggregate amount per year no greater than the aggregate amount of dividends per annum that was declarable and payable on such Retired Capital Stock immediately prior to such retirement; (iii) the redemption, repurchase or other acquisition or retirement of Subordinated Indebtedness of the Company or the Issuer made by exchange for, or out of the proceeds of the substantially concurrent sale of, new Indebtedness of the Company or the Issuer, as the case may be, which is incurred in compliance with Section 4.03 so long as (A) the principal amount of such new Indebtedness does not exceed the principal amount of the Subordinated Indebtedness being so redeemed, repurchased, acquired or retired for value (PLUS the amount of any premium required to be paid under the terms of the instrument governing the Subordinated Indebtedness being so redeemed, repurchased, acquired or retired), (B) such Indebtedness is subordinated to Senior Indebtedness and the Notes at least to the same extent as such Subordinated Indebtedness so purchased, exchanged, redeemed, repurchased, acquired or retired for value, (C) such Indebtedness has a final scheduled maturity date equal to or later than the final scheduled maturity date of the Subordinated Indebtedness being so redeemed, repurchased, acquired or retired and (D) such Indebtedness has a Weighted Average Life to Maturity equal to or greater than the remaining Weighted Average Life to Maturity of the Subordinated Indebtedness being so redeemed, repurchased, acquired or retired; (iv) a Restricted Payment to pay for the repurchase, retirement or other acquisition or retirement for value of common Equity Interests of the Company, any of its direct or indirect parent corporations or the Issuer held by any future, present or former employee, director or consultant of the Company, any of its Subsidiaries or any of its direct or indirect parent corporations pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement; PROVIDED, HOWEVER, that the aggregate Restricted Payments made under this Section 4.04(b)(iv) do not exceed in any calendar year $12.5 million (with unused amounts in any calendar year being carried over to succeeding calendar years subject to a maximum (without giving effect to the following proviso) of $25.0 million in any calendar year); PROVIDED FURTHER that such amount in any calendar year may be increased by an amount not to exceed (A) the cash proceeds from the sale of Equity Interests of the Company, the Issuer and, to the extent contributed to the Company or the Issuer, Equity Interests of any of the Company's direct or indirect parent corporations, in each case to members of management, directors or consultants of the Company, any of its Subsidiaries or any of its direct or indirect parent corporations that occurs after the Closing Date (to the extent the cash proceeds from the sale of such Equity Interests have not otherwise been applied to the payment of Restricted Payments by virtue of Section 4.04(a)(3) PLUS (B) the cash proceeds of key man life insurance policies received by the Company and its Restricted Subsidiaries after 36 the Closing Date less (C) the amount of any Restricted Payments previously made pursuant to clauses (A) and (B) of this Section 4.04(b)(iv); and PROVIDED FURTHER that cancelation of Indebtedness owing to the Company or the Issuer from members of management of the Company, any of its direct or indirect parent corporations or any Restricted Subsidiary in connection with a repurchase of Equity Interests of the Company, any of its direct or indirect parent corporations or the Issuer shall not be deemed to constitute a Restricted Payment for purposes of this Section 4.04 or any other provision of this Indenture; (v) the declaration and payment of dividends to holders of any class or series of Disqualified Stock of the Company, the Issuer or any other Guarantor issued in accordance with Section 4.03 to the extent such dividends are included in the definition of Fixed Charges; (vi) (A) the declaration and payment of dividends to holders of any class or series of Designated Preferred Stock (other than Disqualified Stock) issued by the Company or the Issuer after the Closing Date, (B) the declaration and payment of dividends to a direct or indirect parent corporation of the Company, the proceeds of which shall be used to fund the payment of dividends to holders of any class or series of Designated Preferred Stock (other than Disqualified Stock) of such parent corporation issued after the Closing Date (PROVIDED that the amount of dividends paid pursuant to this clause (B) shall not exceed the aggregate amount of cash actually contributed to the Company from the sale of such Designated Preferred Stock) or (C) the declaration and payment of dividends on Refunding Capital Stock in excess of the dividends declarable and payable thereon pursuant to Section 4.04(b)(ii); PROVIDED, HOWEVER, in each case, that for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date of issuance of such Designated Preferred Stock or the declaration of such dividends on Refunding Capital Stock, after giving effect to such issuance or declaration on a pro forma basis, the Company and its Restricted Subsidiaries would have had a Fixed Charge Coverage Ratio of at least 2.00 to 1.00; (vii) Investments in Unrestricted Subsidiaries and Associates (or Persons that become Associates as a result of such Investments) having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (vii) that are at that time outstanding (without giving effect to the sale of an Unrestricted Subsidiary to the extent the proceeds of such sale do not consist of cash, marketable securities and/or Qualified Proceeds or do consist of distributions made pursuant to Section 4.04(b)(xiii) below), not to exceed $25.0 million at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value); (viii) repurchases of Equity Interests deemed to occur upon exercise of stock options if such Equity Interests represent a portion of the exercise price of such options; (ix) the payment of dividends on the Company's Common Stock or the Issuer's Common Stock, following the first public offering of the Company's Common Stock, the Issuer's Common Stock or the Common Stock of any of its direct or indirect parent corporations after the Closing Date, of up to 6% per annum of the net proceeds received by the Company or the Issuer in such public 37 offering, other than public offerings with respect to the Company's Common Stock or the Issuer's Common Stock registered on Form S-8; (x) a Restricted Payment to pay for the repurchase, retirement or other acquisition or retirement for value of common Equity Interests of the Company or any direct or indirect parent corporation of the Company in existence on the Closing Date and which are not held by KKR, the Consortium or any of their Affiliates on the Closing Date (including any Equity Interests issued in respect of such Equity Interests as a result of a stock split, recapitalization, merger, combination, consolidation or otherwise, but excluding any management equity plan or stock option plan or similar agreement), PROVIDED that the Company and its Restricted Subsidiaries shall be permitted to make Restricted Payments under this Section 4.04(b)(x) only if after giving effect thereto, the Company would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.03(a); PROVIDED FURTHER that notwithstanding the foregoing, the Company and the Restricted Subsidiaries shall be permitted to make Restricted Payments in an amount not to exceed $20.0 million to pay for the repurchase, retirement or other acquisition or retirement for value of common Equity Interests of the Company or any direct or indirect parent corporation of the Company held by the Consortium; (xi) Investments that are made with Excluded Contributions; (xii) other Restricted Payments in an aggregate amount not to exceed $25.0 million; (xiii) the distribution, as a dividend or otherwise, of shares of Capital Stock of, or Indebtedness owed to the Company or a Restricted Subsidiary of the Company by, Unrestricted Subsidiaries (with the exception of Investments in Unrestricted Subsidiaries acquired pursuant to clause (x) of the definition of Permitted Investments); (xiv) cash dividends or other distributions on the Company's Capital Stock used to, or loans the proceeds of which will be used to, (A) fund the payment of dividends (at a rate per annum not to exceed 8-1/2%) on the Consortium Preferred Stock (whether such dividends have accrued during the then-current fiscal year or any previous fiscal year) or (B) repay amounts outstanding under the Guaranteed Loan Notes; (xv) loans in respect of Interim Refinancing Indebtedness or the declaration and payment of dividends on the Closing Date to Trinity in an amount equal to the aggregate outstanding principal amount of and accrued and unpaid interest on, the Interim Financings and indebtedness of the Company and its Subsidiaries existing on the Closing Date and required to be repaid under the Senior Credit Facilities, the proceeds of which were used by Trinity to repay the Interim Financings and such other indebtedness; (xvi) the declaration and payment of dividends to, or the making of loans to, Trinity in an amount not to exceed the amount of principal and interest then due and payable on the Interim Refinancing Indebtedness, PROVIDED that the full amount of such dividend or loan is immediately repaid in cash to the Company or any Restricted Subsidiary; 38 (xvii) the declaration and payment of dividends by the Company to, or the making of loans to, its parent corporation in amounts required for the Company's direct or indirect parent corporations to pay (A) franchise taxes and other fees, taxes and expenses required to maintain their corporate existence, (B) federal, state and local income taxes (and analogous taxes in the United Kingdom) to the extent such income taxes are attributable to the income of the Company and the Restricted Subsidiaries (and, to the extent of the amounts actually received from its Unrestricted Subsidiaries, in amounts required to pay such taxes to the extent attributable to the income of such Unrestricted Subsidiaries), (C) customary salary, bonus and other benefits payable to officers and employees of any direct or indirect parent corporation of the Company to the extent such salaries, bonuses and other benefits are attributable to the ownership or operation of the Company and its Subsidiaries and (D) general corporate overhead expenses of any direct or indirect parent corporation of the Company to the extent such expenses are attributable to the ownership or operation of the Company and its Subsidiaries; (xviii) cash dividends or other distributions on the Company's Capital Stock used to, or the making of loans to Trinity the proceeds of which will be used to, fund the payment of fees and expenses incurred in connection with the Transactions or owed to Affiliates, in each case to the extent permitted by Section 4.07; (xix) distributions or payments of Receivables Fees; (xx) the making of loans in respect of Trinity Intercompany Notes; (xxi) the declaration and payment of dividends to, or the making of loans to, Trinity in an amount not to exceed the amount of principal and interest then due and payable on the Trinity Intercompany Notes, PROVIDED that the full amount of such dividend or loan is immediately repaid in cash to the Company or any Restricted Subsidiary; or (xxii) cash dividends or other distributions on the Company's Capital Stock used to, or loans made to Trinity to, fund the payment of net amounts required to be paid pursuant to any Trinity Hedging Obligations. As of the Issuance Date, all of the Company's Subsidiaries (other than Sovereign Marine and General Insurance Company, in provisional liquidation) shall be Restricted Subsidiaries. The Company shall not permit any Unrestricted Subsidiary to become a Restricted Subsidiary except pursuant to the second to last sentence of the definition of "Unrestricted Subsidiary". For purposes of designating any Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding Investments by the Company and its Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so designated shall be deemed to be Restricted Payments in an amount determined as set forth in the last sentence of the definition of "Investments." Such designation shall be permitted only if a Restricted Payment in such amount would be permitted at such time (whether pursuant to Section 4.04(a) or under clauses (vii), (xi) and (xii) of Section 4.04(b)) and if such Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. Unrestricted Subsidiaries shall not be subject to any of the restrictive covenants set forth in this Indenture. SECTION 4.05. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES. The Company shall not, and shall not permit any of its Restricted Subsidiaries (other than the Issuer) to, directly or indirectly, create or otherwise cause or 39 suffer to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary to: (a) (i) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or (2) with respect to any other interest or participation in, or measured by, its profits or (ii) pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries; (b) make loans or advances to the Company or any of its Restricted Subsidiaries; or (c) sell, lease or transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries, except (in each case) for such encumbrances or restrictions existing under or by reason of: (1) contractual encumbrances or restrictions in effect on the Closing Date, including, without limitation, pursuant to Existing Indebtedness or the Senior Credit Facilities and their related documentation; (2) this Indenture and the Notes; (3) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the nature discussed in clause (c) above on the property so acquired; (4) applicable law or any applicable rule, regulation or order; (5) any agreement or other instrument of a Person acquired by the Company or any Restricted Subsidiary in existence at the time of such acquisition (but not created in contemplation thereof), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired; (6) contracts for the sale of assets, including, without limitation customary restrictions with respect to a Subsidiary pursuant to an agreement that has been entered into for the sale or disposition of all or substantially all of the Capital Stock or assets of such Subsidiary; (7) secured Indebtedness otherwise permitted to be incurred pursuant to Sections 4.03 and 4.12 that limit the right of the debtor to dispose of the assets securing such Indebtedness; (8) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business; (9) other Indebtedness or Disqualified Stock of Restricted Subsidiaries permitted to be incurred subsequent to the Closing Date pursuant to Section 4.03; (10) customary provisions in joint venture agreements and other similar agreements entered into in the ordinary course of business; 40 (11) customary provisions contained in leases and other agreements entered into in the ordinary course of business; (12) customary restrictions on fiduciary cash held by the Company's Subsidiaries; (13) any encumbrances or restrictions of the type referred to in clauses (a), (b) and (c) of this Section 4.05 above imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (1) through (12) above, PROVIDED that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Company's Board of Directors, no more restrictive with respect to such dividend and other payment restrictions than those contained in the dividend or other payment restrictions prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing; or (14) restrictions created in connection with any Receivables Facility that, in the good faith determination of the Board of Directors of the Company or the Issuer, as the case may be, are necessary or advisable to effect such Receivables Facility. SECTION 4.06. ASSET SALES. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, cause, make or suffer to exist an Asset Sale, unless (x) the Company, or such Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the fair market value (as determined in good faith by the Company) of the assets sold or otherwise disposed of and (y) except in the case of Permitted Asset Swap, at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary, as the case may be, is in the form of cash or Cash Equivalents; PROVIDED that the amount of (i) any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet or in the notes thereto) of the Company or any Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Notes) that are assumed by the transferee of any such assets, (ii) any securities received by the Company or such Restricted Subsidiary from such transferee that are converted by the Company or such Restricted Subsidiary into cash (to the extent of the cash received) within 180 days following the closing of such Asset Sale and (iii) any Designated Noncash Consideration received by the Company or any Restricted Subsidiary in such Asset Sale having an aggregate fair market value, taken together with all other Designated Noncash Consideration received pursuant to this clause (iii) that is at that time outstanding, not to exceed the greater of (x) $100.0 million or (y) 10% of Total Revenues at the time of the receipt of such Designated Noncash Consideration (with the fair market value of each item of Designated Noncash Consideration being measured at the time received and without giving effect to subsequent changes in value), shall be deemed to be cash for purposes of this provision and for no other purpose. (b) Within 365 days after the Company's or any Restricted Subsidiary's receipt of the Net Proceeds of any Asset Sale, the Company or such Restricted Subsidiary, at its option, may (i) apply the Net Proceeds from such Asset Sale to permanently reduce (x) Obligations under the Senior Credit Facilities (and to correspondingly reduce commitments with respect thereto), (y) other Senior Indebtedness or Senior Subordinated Indebtedness (and to correspondingly reduce commitments with respect thereto) 41 (PROVIDED that if the Issuer shall so reduce Obligations under Senior Subordinated Indebtedness, it shall equally and ratably reduce Obligations under the Notes if the Notes are then prepayable or, if the Notes may not then be prepaid, the Issuer shall make an offer (in accordance with the procedures set forth below for an Asset Sale Offer) to all Holders to purchase their Notes at 100% of the principal amount thereof, plus the amount of accrued but unpaid interest, if any, on the amount of Notes that would otherwise be prepaid) or (z) Indebtedness of a Restricted Subsidiary (other than Indebtedness owed to the Company or another Restricted Subsidiary), (ii) apply the Net Proceeds from such Asset Sale to an investment in any one or more businesses (PROVIDED that such investment in any business may be in the form of the acquisition of Capital Stock so long as it results in the Company or a Restricted Subsidiary, as the case may be, owning all the Capital Stock of such business), capital expenditures or acquisitions of other assets in each case, used or useful in a Similar Business and/or (iii) apply the Net Proceeds from such Asset Sale to an investment in any one or more businesses (PROVIDED that such investment in any business may be in the form of the acquisition of Capital Stock so long as it results in the Company or a Restricted Subsidiary, as the case may be, owning all the Capital Stock of such business), properties or assets that replace the businesses, properties and assets that are the subject of such Asset Sale. Any Net Proceeds from the Asset Sale that are not invested or applied as provided and within the time period set forth in the first sentence of this paragraph shall be deemed to constitute "EXCESS PROCEEDS." When the aggregate amount of Excess Proceeds exceeds $15.0 million, the Issuer shall make an offer to all Holders (an "ASSET SALE OFFER") to purchase the maximum principal amount of Notes, that is an integral multiple of $1,000, that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date fixed for the closing of such offer (the "OFFERED PRICE"). The Issuer shall commence an Asset Sale Offer with respect to the Excess Proceeds within ten Business Days after the date on which Excess Proceeds exceeds $15.0 million, by mailing a notice to each Holder, with a copy to the Trustee, stating: (i) that the Holder has the right to require the Issuer to repurchase such Holder's Notes at the Offered Price, subject to proration in the event the Excess Proceeds are less than the aggregate Offered Price of all Notes tendered; (ii) the date of purchase of Notes pursuant to the Asset Sale Offer (the "ASSET SALE PURCHASE DATE"), which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed; (iii) that the Offered Price shall be paid to Holders electing to have Notes purchased on the Asset Sale Purchase Date, PROVIDED that a Holder must surrender its Note to the Paying Agent at the address specified in the notice prior to the close of business at least five Business Days prior to the Asset Sale Purchase Date; (iv) any Note not tendered shall continue to accrue interest pursuant to its terms; (v) that unless the Company defaults in the payment of the Offered Price, any Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrue interest on and after the Asset Sale Purchase Date; (vi) that Holders shall be entitled to withdraw their tendered Notes and their election to require the Company to purchase such Notes, PROVIDED that the Company receives, not later than the close of business on the third Business Day preceding the Asset Sale Purchase Date, a telegram, telex, facsimile transmission or letter setting forth 42 the name of the Holder, the principal amount of the Notes tendered for purchase, and a statement that such Holder is withdrawing its election to have such Notes purchased; (vii) that the Holders whose Notes are being purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $1,000 in principal amount or an integral multiple thereof; and (viii) the instructions a Holder must follow in order to have his Notes purchased in accordance with this Section 4.06. (c) To the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Issuer may use any remaining Excess Proceeds for general corporate purposes. If the aggregate principal amount of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be purchased in the manner described in Section 4.06(d). Upon completion of any such Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero. (d) If less than all of the Notes are to be redeemed at any time or if more Notes are tendered pursuant to an Asset Sale Offer than the Issuer is required to purchase, selection of such Notes for redemption or purchase, as the case may be, shall be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which such Notes are listed, or, if such Notes are not so listed, on a pro rata basis, by lot or by such other method as the Trustee shall deem fair and appropriate (and in such manner as complies with applicable legal requirements); PROVIDED that no Notes of $1,000 or less shall be purchased in part. (e) Notices of purchase or redemption shall be mailed by first class mail, postage prepaid, at least 30 but not more than 60 days before the Asset Sale Purchase Date or redemption date to each Holder of Notes to be purchased or redeemed at such Holder's registered address. If any Note is to be purchased or redeemed in part only, any notice of purchase or redemption that relates to such Note shall state the portion of the principal amount thereof that has been or is to be purchased or redeemed. A new Note in principal amount equal to the unpurchased or unredeemed portion of any Note purchased or redeemed in part shall be issued in the name of the Holder thereof upon cancelation of the original Note. On and after the purchase or redemption date, unless the Issuer defaults in payment of the purchase or redemption price, interest shall cease to accrue on Notes or portions thereof purchased or called for redemption. (f) Pending the final application of any Net Proceeds pursuant to this Section 4.06, the Company or the applicable Restricted Subsidiary may apply such Net Proceeds temporarily to reduce Indebtedness outstanding under a revolving credit facility or otherwise invest such Net Proceeds in Cash Equivalents or Investment Grade Securities. (g) The Issuer shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws or regulations are applicable in connection with the repurchase of the Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Indenture, the Issuer shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations described in this Indenture by virtue thereof. 43 SECTION 4.07. TRANSACTIONS WITH AFFILIATES. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Company (each of the foregoing, an "AFFILIATE TRANSACTION") involving aggregate payments or consideration in excess of $5.0 million, unless (i) such Affiliate Transaction is on terms that are not materially less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, a resolution adopted by the majority of the Board of Directors approving such Affiliate Transaction and set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with Section 4.07(a)(i). (b) The foregoing provisions shall not apply to the following: (i) transactions between or among the Company and/or any of its Restricted Subsidiaries; (ii) Restricted Payments permitted by Section 4.04; (iii) the payment of customary annual management, consulting, monitoring and advisory fees and related expenses to KKR and its Affiliates; (iv) the payment of reasonable and customary fees paid to, and indemnity provided on behalf of, officers, directors, employees or consultants of the Company, any of its direct or indirect parent corporations or any Restricted Subsidiary; (v) payments by the Company or any of its Restricted Subsidiaries to KKR and its Affiliates made for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including, without limitation, in connection with acquisitions or divestitures which payments are approved by a majority of the Board of Directors of the Company in good faith; (vi) transactions in which the Company or any of its Restricted Subsidiaries, as the case may be, delivers to the Trustee a letter from an Independent Financial Advisor stating that such transaction is fair to the Company or such Restricted Subsidiary from a financial point of view or meets the requirements of Section 4.07(a)(i); (vii) payments or loans to employees or consultants of the Company, any of its direct or indirect parent corporations or any Restricted Subsidiary which are approved by a majority of the Board of Directors of the Company in good faith; (viii) any agreement as in effect as of the Closing Date (including, without limitation, each of the agreements entered into in connection with the Transactions) or any amendment thereto (so long as any such amendment is not disadvantageous to the Holders in any material respect) or any transaction contemplated thereby; (ix) the existence of, or the performance by the Company or any of its Restricted Subsidiaries of its obligations under the terms of, any stockholders agreement (including any registration rights agreement or purchase agreement related thereto) to which it is a party as of the Closing Date and any similar agreements which it may enter into thereafter; PROVIDED, HOWEVER, that the existence of, or the performance by the Company or any of its Restricted Subsidiaries of obligations under any future amendment to any such existing agreement or under any similar agreement entered into after the Closing Date shall only be permitted by this clause (ix) to the extent that the terms of any such amendment or new agreement are not otherwise disadvantageous to the Holders in any material respect; (x) the Transactions and the payment of all fees and expenses related to the Transactions; (xi) transactions with customers, clients, suppliers, or purchasers or sellers of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of this Indenture which are fair to the Company or its Restricted Subsidiaries, in the reasonable determination of the Board of Directors of the Company or the senior management thereof, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party; (xii) the issuance of Equity Interests (other than 44 Disqualified Stock) of the Company or the Issuer to any Permitted Holder; (xiii) any transaction between the Company or any Restricted Subsidiary and any Associate, including any transaction pursuant to which an Associate becomes a Restricted Subsidiary; and (xiv) sales of accounts receivable, or participations therein, in connection with any Receivables Facility. SECTION 4.08. CHANGE OF CONTROL. (a) Upon the occurrence of a Change of Control the Issuer shall make an offer to purchase all of the Notes pursuant to the offer described below (the "CHANGE OF CONTROL OFFER") at a price in cash (the "CHANGE OF CONTROL PAYMENT") equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date). (b) Within 30 days following any Change of Control, the Issuer shall (i) publish notice of such in a leading newspaper having a general circulation in New York (which is expected to be the WALL STREET JOURNAL) (and, so long as the Notes are listed on the Luxembourg Stock Exchange and the rules of such stock exchange shall so require, a newspaper having a general circulation in Luxembourg (which is expected to be the LUXEMBURGER WORT)) and in the case of Definitive Notes, shall also mail a notice to each Holder, with a copy to the Trustee, with the following information: (1) a Change of Control Offer is being made pursuant to this Section 4.08 and all Notes properly tendered pursuant to such Change of Control Offer shall be accepted for payment; (2) the purchase price and the purchase date, which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed, except as may be otherwise required by applicable law (the "CHANGE OF CONTROL PAYMENT DATE"); (3) any Note not properly tendered shall remain outstanding and continue to accrue interest; (4) unless the Issuer defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest on the Change of Control Payment Date; (5) Holders electing to have any Notes purchased pursuant to a Change of Control Offer shall be required to surrender the Notes, with the form entitled "OPTION OF HOLDER TO ELECT PURCHASE" on the reverse of the Notes completed, to the paying agent (which, if Definitive Notes are issued, will include a Paying Agent in Luxembourg) specified in the notice at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date; (6) Holders shall be entitled to withdraw their tendered Notes and their election to require the Issuer to purchase such Notes, PROVIDED that the Paying Agent (which, if Definitive Notes are issued, will include a Paying Agent in Luxembourg) receives, not later than the close of business on the last day of the Offer Period, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes tendered for purchase, and a statement that such Holder is withdrawing his tendered Notes and his election to have such Notes purchased; and (7) that Holders whose Notes are being purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $1,000 in principal amount or an integral multiple thereof. (c) On the Change of Control Payment Date, the Issuer shall, to the extent permitted by law, (1) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (2) deposit with the paying agent an amount equal to the aggregate Change of Control Payment in respect of all Notes or portions thereof so tendered and (3) deliver, or cause to be delivered, to the Trustee for cancelation the Notes so accepted together with an Officers' Certificate stating that such Notes or portions thereof have been tendered to and purchased by the Issuer. The Paying Agent shall promptly mail to each Holder the Change of Control Payment for such Notes, and 45 the Trustee shall promptly authenticate and mail to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any, PROVIDED, that each such new Note shall be in a principal amount of $1,000 or an integral multiple thereof. The Issuer shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. (d) Prior to complying with the provisions of this Section 4.08, but in any event within 30 days following a Change of Control, the Issuer shall either repay all its outstanding Senior Indebtedness that prohibits the Issuer from repurchasing Notes in a Change of Control Offer or obtain the requisite consents, if any, under any outstanding Senior Indebtedness in each case necessary to permit the repurchase of the Notes required by this Section 4.08. (e) The Issuer shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws or regulations are applicable in connection with the repurchase of the Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Indenture, the Issuer shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations described in this Indenture by virtue thereof. SECTION 4.09. COMPLIANCE CERTIFICATE. The Company shall (i) deliver to the Trustee within 120 days after the end of each fiscal year of the Company, commencing with the fiscal year ending on December 31, 1999, an Officers' Certificate stating that in the course of the performance by the signers of their duties as Officers of the Company they would normally have knowledge of any Default and whether or not the signers know of any Default that occurred during such period and (ii) within five Business Days, upon becoming aware of any Default or Event of Default or any default under any document, instrument or agreement representing Indebtedness of the Company or any Guarantor, deliver to the Trustee a statement specifying such Default or Event of Default. The certificate or statement shall describe the Default, if any, its status and what action the Company is taking or proposes to take with respect thereto. The Company also shall comply with Section 314(a)(4) of the TIA. SECTION 4.10. FURTHER INSTRUMENTS AND ACTS. Upon request of the Trustee, the Company or the Issuer shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture. SECTION 4.11. LIMITATION ON GUARANTEES OF INDEBTEDNESS BY RESTRICTED SUBSIDIARIES. (a) The Company shall not permit any Domestic Subsidiary or U.K. Subsidiary of the Company that is not a Subsidiary of the Issuer or any Domestic Subsidiary of the Issuer (in each case, other than any such Restricted Subsidiary created in connection with a Receivables Facility) to guarantee the payment of any Indebtedness of the Company or the Issuer unless (A) such Restricted Subsidiary simultaneously executes and delivers a supplemental indenture to this Indenture providing for a Guarantee of payment of the Notes by such Restricted Subsidiary except that with respect to a guarantee of Indebtedness of the Company or the Issuer (1) if the Notes are subordinated in right of payment to such Indebtedness, the Guarantee under the supplemental indenture shall be subordinated to such Restricted Subsidiary's guarantee with respect to such Indebtedness substantially to the same extent as the Notes are subordinated to such Indebtedness under this Indenture and (2) if such Indebtedness is by its express terms subordinated in right of payment to the Notes, any such guarantee of such Restricted Subsidiary with respect to such Indebtedness shall be subordinated in 46 right of payment to such Restricted Subsidiary's Guarantee with respect to the Notes substantially to the same extent as such Indebtedness is subordinated to the Notes; (B) such Restricted Subsidiary waives and shall not in any manner whatsoever claim or take the benefit or advantage of, any rights of reimbursement, indemnity or subrogation or any other rights against the Company or any other Restricted Subsidiary as a result of any payment by such Restricted Subsidiary under its Guarantee; and (C) such Restricted Subsidiary shall deliver to the Trustee an opinion of counsel to the effect that (1) such Guarantee of the Notes has been duly executed and authorized and (2) such Guarantee of the Notes constitutes a valid, binding and enforceable obligation of such Restricted Subsidiary, except insofar as enforcement thereof may be limited by bankruptcy, insolvency or similar laws (including, without limitation, all laws relating to fraudulent transfers) and except insofar as enforcement thereof is subject to general principles of equity; PROVIDED that this paragraph (a) shall not be applicable to any guarantee of any Restricted Subsidiary (x) that (1) existed at the time such Person became a Restricted Subsidiary and (2) was not incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary or (y) that guarantees the payment of Obligations of the Company, the Issuer or any Restricted Subsidiary under the Senior Credit Facilities or any other Senior Indebtedness and any refunding, refinancing or replacement thereof, in whole or in part, PROVIDED that such refunding, refinancing or replacement thereof constitutes Senior Indebtedness and PROVIDED FURTHER that any such Senior Indebtedness and any refunding, refinancing or replacement thereof is not incurred pursuant to a registered offering of securities under the Securities Act or a private placement of securities (including under Rule 144A) pursuant to an exemption from the registration requirements of the Securities Act, which private placement provides for registration rights under the Securities Act. (b) Notwithstanding the provisions of Section 4.11(a) and the other provisions of this Indenture, any Guarantee by a Restricted Subsidiary of the Notes shall provide by its terms that it shall be automatically and unconditionally released and discharged upon (i) any sale, exchange or transfer, to any Person not an Affiliate of the Company, of all of the Company's or the Issuer's Capital Stock in, or all or substantially all the assets of, such Restricted Subsidiary (which sale, exchange or transfer is not prohibited by this Indenture) or (ii) the release or discharge of the guarantee by such Restricted Subsidiary that is a Subsidiary of the Issuer which resulted in the creation of such Guarantee, except a discharge or release by or as a result of payment under such guarantee. SECTION 4.12. LIENS. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly create, incur, assume or suffer to exist any Lien that secures obligations under any Senior Subordinated Indebtedness or Subordinated Indebtedness on any asset or property of the Company or such Restricted Subsidiary, or any income or profits therefrom, or assign or convey any right to receive income therefrom, unless the Notes are equally and ratably secured (or senior to, in the event the Lien relates to Subordinated Indebtedness) with the obligations so secured or until such time as such obligations are no longer secured by a Lien. (b) No Guarantor shall directly or indirectly create, incur, assume or suffer to exist any Lien that secures obligations under any Senior Subordinated Indebtedness or Subordinated Indebtedness of such Guarantor on any asset or property of such Guarantor or any income or profits therefrom, or assign or convey any right to receive income therefrom, unless the Guarantee of such Guarantor is equally and ratably secured (or senior to, in the event the Lien relates to Subordinated Indebtedness) with the obligations so secured or until such time as such obligations are no longer secured by a Lien. 47 SECTION 4.13. LIMITATION ON OTHER SENIOR SUBORDINATED INDEBTEDNESS. The Company shall not, and shall not permit any Issuer or any other Guarantor to, directly or indirectly, incur any Indebtedness (including Acquired Indebtedness) that is subordinate in right of payment to any Indebtedness of the Company, the Issuer or any Guarantor, as the case may be, unless such Indebtedness is either (a) PARI PASSU in right of payment with the Notes or the Company's or such other Guarantor's Guarantee, as the case may be, or (b) subordinate in right of payment to the Notes, or the Company's or such other Guarantor's Guarantee, as the case may be. SECTION 4.14. ADDITIONAL AMOUNTS. At least 10 days prior to the first date on which a payment of principal, redemption price, interest, liquidated damages or premium is to be made by the Company with respect to a Guarantee, and at least 10 days prior to any subsequent such date if there has been any change with respect to the matters set forth in the Officers' Certificate described in this Section 4.14, the Company will furnish the Trustee and all Paying Agents, if other than the Trustee, with an Officers' Certificate instructing the Trustee and any Paying Agent whether such payment with respect to a Guarantee shall be made to the Holders without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or other governmental charges of whatever nature (collectively "Taxes") imposed or levied by or on behalf of the United Kingdom or any political subdivision thereof or any authority having power to tax therein (each a "U.K. Tax Authority"), unless the withholding or deduction of such Taxes is then required by law. If any such withholding or deduction shall be required, then such Officer's Certificate shall specify the amount, if any, required to be withheld on such payments to such Holders and certify that the Company has remitted or will remit any required withholding payments to the appropriate governmental authority or authorities, as the case may be, and the Company shall pay to the Trustee or the Paying Agent the Additional Amounts pursuant to Paragraph 2 of the Initial Notes, the Exchange Notes or the Private Exchange Notes, as applicable. ARTICLE 5 SUCCESSOR COMPANY SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ALL OR SUBSTANTIALLY ALL ASSETS. (a) Neither the Company nor the Issuer may consolidate or merge with or into or wind up into (whether or not the Company or the Issuer, as the case may be, is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to any Person unless: (i) the Company or the Issuer, as the case may be, is the surviving corporation or the Person formed by or surviving any such consolidation or merger (if other than the Company or the Issuer, as the case may be), or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of (A) in the case of the Company, the United Kingdom or the United States, any state thereof, the District of Columbia, or any territory thereof or (B) in the case of the Issuer, the United States, any state thereof, the District of Columbia, or any territory thereof (the Company, the Issuer or such Person, as the case may be, being herein called the "SUCCESSOR COMPANY"); (ii) the Successor Company (if other than the Company or the Issuer) expressly assumes all the obligations of the Company or the Issuer, as the case 48 may be, under this Indenture and the Notes pursuant to a supplemental indenture or other documents or instruments in form reasonably satisfactory to the Trustee; (iii) immediately after such transaction no Default or Event of Default exists; (iv) immediately after giving pro forma effect to such transaction, as if such transaction had occurred at the beginning of the applicable four-quarter period, (A) the Successor Company would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.03(a) or (B) the Fixed Charge Coverage Ratio for the Successor Company and the Restricted Subsidiaries would be greater than such Ratio for the Company and the Restricted Subsidiaries immediately prior to such transaction; (v) each Guarantor, unless it is the other party to the transactions described above, in which case Section 5.01(a)(ii) shall apply, shall have by supplemental indenture confirmed that its Guarantee shall apply to such Person's obligations under this Indenture and the Notes; and (vi) the Company or the Issuer, as the case may be, shall have delivered to the Trustee an Officers' Certificate and an opinion of counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture. The Successor Company shall succeed to, and be substituted for, the Company or the Issuer, as the case may be, under this Indenture and the Notes. Notwithstanding Section 5.01(a) (iv), (a) any Restricted Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to the Company or the Issuer and (b) the Company or the Issuer may merge with an Affiliate incorporated solely for the purpose of reincorporating the Company or the Issuer in another State of the United States so long as the amount of Indebtedness of the Company and the Restricted Subsidiaries is not increased thereby. (b) Subject to the provisions of Section 11.02(b), each Guarantor other than the Company shall not, and the Company shall not permit any other Guarantor to, consolidate or merge with or into or wind up into (whether or not such Guarantor is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions to, any Person unless: (i) such Guarantor is the surviving corporation or the Person formed by or surviving any such consolidation or merger (if other than such Guarantor) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of (A) England and Wales or (B) the United States, any state thereof, the District of Columbia, or any territory thereof (such Guarantor or such Person, as the case may be, being herein called the "SUCCESSOR GUARANTOR"); (ii) the Successor Guarantor (if other than such Guarantor) expressly assumes all the obligations of such Guarantor under this Indenture and such Guarantor's Guarantee pursuant to a supplemental indenture or other documents or instruments in form reasonably satisfactory to the Trustee; 49 (iii) immediately after such transaction no Default or Event of Default exists; and (iv) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture. Subject to the provisions of Section 11.02(b), the Successor Guarantor shall succeed to, and be substituted for, such Guarantor under this Indenture and such Guarantor's Guarantee. Notwithstanding the foregoing, any Guarantor may merge into or transfer all or part of its properties and assets to another Guarantor. ARTICLE 6 DEFAULTS AND REMEDIES SECTION 6.01. EVENTS OF DEFAULT. An "EVENT OF DEFAULT" occurs if: (1) the Issuer defaults in payment when due and payable, upon redemption, acceleration or otherwise, of principal of, or premium, if any, on the Notes whether or not such payment shall be prohibited by Article 10; (2) the Issuer defaults in the payment when due of interest on or with respect to the Notes whether or not such payment shall be prohibited by Article 10 and such default continues for a period of 30 days; (3) the Company, the Issuer or any Guarantor defaults in the performance, or breaches any covenant, warranty or other agreement contained in this Indenture or any Guarantee (other than a default in the performance, or breach of a covenant, warranty or agreement which is specifically dealt with in clauses (1) or (2) of this Section 6.01) and such default or breach continues for a period of 30 days after the notice specified below; (4) the Company or any of its Restricted Subsidiaries defaults under any mortgage, indenture or instrument under which there is issued or by which there is secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries (other than Indebtedness owed to the Company or a Restricted Subsidiary and other than any Group Intercompany Note, PROVIDED that such Group Intercompany Note is held by Trinity at such time), whether such Indebtedness or guarantee now exists or is created after the Closing Date, if both (A) such default either (1) results from the failure to pay any such Indebtedness at its stated final maturity (after giving effect to any applicable grace periods) or (2) relates to an obligation other than the obligation to pay principal of any such Indebtedness at its stated final maturity and results in the holder or holders of such Indebtedness causing such Indebtedness to become due prior to its stated maturity and (B) the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness in default for failure to pay principal at stated final maturity (after giving effect to any 50 applicable grace periods), or the maturity of which has been so accelerated, aggregate $25 million or more at any one time outstanding; (5) the Company, the Issuer or any of its Significant Subsidiaries pursuant to or within the meaning of any Bankruptcy Law: (A) commences a voluntary case; (B) consents to the entry of an order for relief against it in an involuntary case; (C) consents to the appointment of a Custodian of it or for all or substantially all of its property; or (D) makes a general assignment for the benefit of its creditors; or takes any comparable action under any foreign laws relating to insolvency; (6) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that remains unstayed and in effect for 60 days and: (A) is for relief against the Company or any of its Significant Subsidiaries in an involuntary case; (B) appoints a Custodian of the Company or any of its Significant Subsidiaries or for all or substantially all of the property of the Company or any of its Significant Subsidiaries; or (C) orders the winding up or liquidation of the Company or any of its Significant Subsidiaries, PROVIDED that clauses (A), (B) and (C) shall not apply to an Unrestricted Subsidiary, unless such action or proceeding has a material adverse effect on the interests of the Company or any of its Significant Subsidiaries; (7) The failure by the Company, the Issuer or any of its Significant Subsidiaries to pay final judgments aggregating in excess of $25.0 million, which final judgments remain unpaid, undischarged and unstayed for a period of more than 60 days after such judgment becomes final, and in the event such judgment is covered by insurance, an enforcement proceeding has been commenced by any creditor upon such judgment or decree which is not promptly stayed; or (8) The Guarantee of any Significant Subsidiary shall for any reason cease to be in full force and effect or be declared null and void or any Officer of the Company or any Guarantor that is a Significant Subsidiary denies that it has any further liability under its Guarantee or gives notice to such effect (other than by reason of the termination of this Indenture or the release of any such Guarantee in accordance with this Indenture). The foregoing shall constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body. 51 The term "BANKRUPTCY LAW" means (i) the U.K. Insolvency Act 1986 as supplemented or amended together with all rules, regulations and instruments made thereunder and applicable United Kingdom law relating to bankruptcy, insolvency, winding up, administration, receivership and other similar matters and (ii) Title 11, UNITED STATES CODE, or any similar federal or state law for the relief of debtors. The term "CUSTODIAN" means any receiver, trustee, assignee, liquidator, administrator, administrative receiver, custodian or similar official under any Bankruptcy Law. A Default under clause (3) above is not an Event of Default until the Trustee or the Holders of at least 30% in principal amount of the outstanding Notes notify the Issuer of the Default and the Issuer does not cure such Default within the time specified in clause (3) after receipt of such notice. Such notice must specify the Default, demand that it be remedied and state that such notice is a "NOTICE OF DEFAULT". The Issuer shall deliver to the Trustee, within 30 days after the occurrence thereof, written notice in the form of an Officers' Certificate of any Event of Default under clause (4) or (8) and any event which with the giving of notice or the lapse of time would become an Event of Default under clause (3) or (7), its status and what action the Issuer is taking or proposes to take with respect thereto. SECTION 6.02. ACCELERATION. If any Event of Default (other than of a type specified in clause Section 6.01(5) or (6)) occurs and is continuing under this Indenture, the Trustee or the Holders of at least 30% in principal amount of the then outstanding Notes may declare the principal, premium, if any, interest and any other monetary obligations on all the then outstanding Notes to be due and payable immediately; PROVIDED, HOWEVER, that, so long as any Indebtedness permitted to be incurred under this Indenture as part of the Senior Credit Facilities shall be outstanding, no such acceleration shall be effective until the earlier of (i) acceleration of any such Indebtedness under the Senior Credit Facilities as communicated to the Trustee by the Representative or (ii) five Business Days after the giving of written notice to the Issuer and the administrative agent under the Senior Credit Facilities of such acceleration. Upon the effectiveness of such declaration, such principal and interest shall be due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default arising under Section 6.01(5) or (6), all outstanding Notes shall IPSO FACTO become due and payable without further action or notice. SECTION 6.03. OTHER REMEDIES. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of or interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Noteholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative. SECTION 6.04. WAIVER OF PAST DEFAULTS. The Holders of a majority in aggregate principal amount of the then outstanding Notes issued thereunder by notice to the Trustee may on behalf of the Holders of all of such Notes waive any existing Default or Event of Default and its consequences except (i) a continuing Default or Event of Default in the payment of interest on, premium, if any, or the principal of any such Note held by a non-consenting Holder, (ii) a Default arising from the failure to redeem or 52 purchase any Note when required pursuant to the terms of this Indenture or (iii) a Default in respect of a provision that under Section 9.02 cannot be amended without the consent of each Noteholder affected. In the event of any Event of Default specified in Section 6.01(4), such Event of Default and all consequences thereof (including without limitation any acceleration or resulting payment default) shall be annulled, waived and rescinded, automatically and without any action by the Trustee or the Holders, if within 20 days after such Event of Default arose (x) the Indebtedness or guarantee that is the basis for such Event of Default has been discharged, or (y) the holders thereof have rescinded or waived the acceleration, notice or action (as the case may be) giving rise to such Event of Default, or (z) if the default that is the basis for such Event of Default has been cured. When a Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default. SECTION 6.05. CONTROL BY MAJORITY. The Holders of a majority in principal amount of the Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or, subject to Section 7.01, that the Trustee determines is unduly prejudicial to the rights of other Noteholders or would involve the Trustee in personal liability; PROVIDED, HOWEVER, that the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction. Prior to taking any action hereunder, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action. SECTION 6.06. LIMITATION ON SUITS. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder may pursue any remedy with respect to this Indenture or the Notes unless: (1) the Holder gives to the Trustee written notice stating that an Event of Default is continuing; (2) the Holders of at least 30% in principal amount of the Notes make a written request to the Trustee to pursue the remedy; (3) such Holder or Holders offer to the Trustee reasonable security or indemnity against any loss, liability or expense; (4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of security or indemnity; and (5) the Holders of a majority in principal amount of the Notes do not give the Trustee a direction inconsistent with the request during such 60-day period. A Noteholder may not use this Indenture to prejudice the rights of another Noteholder or to obtain a preference or priority over another Noteholder. SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal of and liquidated damages and interest on the Notes held by such Holder, on or after the respective due dates expressed in the Notes, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. 53 SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of Default specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Issuer for the whole amount then due and owing (together with interest on any unpaid interest to the extent lawful) and the amounts provided for in Section 7.07. SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Noteholders allowed in any judicial proceedings relative to the Company, any Subsidiary or any Guarantor, their creditors or their property and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar functions and may participate as a member, voting or otherwise, of any official committee of creditors appointed in such matter, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.07. SECTION 6.10. PRIORITIES. If the Trustee collects any money or property pursuant to this Article 6, it shall pay out the money or property in the following order: FIRST: to the Trustee for amounts due under Section 7.07; SECOND: to Noteholders for amounts due and unpaid on the Notes for principal and interest, ratably, and any liquidated damages without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, any liquidated damages and interest, respectively, except that payment shall first be made to the holders of Senior Indebtedness to the extent required by Article 10; and THIRD: to the Issuer or any other obligor on the Notes. The Trustee may fix a record date and payment date for any payment to Noteholders pursuant to this Section 6.10. At least 15 days before such record date, the Trustee shall mail to each Noteholder and the Issuer a notice that states the record date, the payment date and amount to be paid. SECTION 6.11. UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in principal amount of the Notes. SECTION 6.12. WAIVER OF STAY OR EXTENSION LAWS. None of the Company, the Issuer or the Guarantors (to the extent it may lawfully do so) shall at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the 54 Company and each Guarantor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE 7 TRUSTEE SECTION 7.01. DUTIES OF TRUSTEE. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent Person would exercise or use under the circumstances in the conduct of such Person's own affairs. (b) Except during the continuance of an Event of Default: (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture, but shall not be obligated to recalculate or verify the contents thereof. (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own wilful misconduct, except that: (1) this paragraph does not limit the effect of Section 7.01(b); (2) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (3) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05. (d) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section. (e) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Issuer. (f) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. 55 (g) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers. (h) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 7.01 and to the provisions of the TIA. SECTION 7.02. RIGHTS OF TRUSTEE. (a) The Trustee may rely on any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Officers' Certificate or Opinion of Counsel. (c) The Trustee may act through agents, attorneys, custodians or nominees and shall not be responsible for the misconduct or negligence of any agent, attorney, custodian or nominee appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; PROVIDED, HOWEVER, that the Trustee's conduct does not constitute wilful misconduct or negligence. (e) The Trustee may consult with counsel of its selection, and the advice or Opinion of Counsel with respect to legal matters relating to this Indenture and the Notes shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel. (f) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, debenture, note or other paper or document unless requested in writing to do so by the Holders of not less than a majority in principal amount of the Notes at the time outstanding, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney. (g) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might reasonably be incurred by it in compliance with such request or direction. (h) The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Officer of the Trustee, and such notice references the Securities and this Indenture. 56 (i) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and to each agent, custodian and other Person employed to act hereunder. SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent, Registrar or co-paying agent may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11. SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Issuer's use of the proceeds from the Notes, and it shall not be responsible for any statement of the Company or the Issuer in this Indenture or in any document issued in connection with the sale of the Notes or in the Notes other than the Trustee's certificate of authentication. SECTION 7.05. NOTICE OF DEFAULTS. If a Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to each Holder notice of the Default within the earlier of 90 days after it occurs or 30 days after it is known to a Trust Officer. Except in the case of a Default in payment of principal of or interest on any Note (including payments pursuant to the mandatory redemption provisions of such Note, if any), the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding the notice is in the interests of Holders. SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS. As promptly as practicable after each May 15 beginning with the May 15 following the first anniversary of this Indenture, and in any event prior to May 15 in each subsequent year, the Trustee shall mail to each Noteholder a brief report dated as of May 15 that complies with Section 313(a) of the TIA. The Trustee shall also comply with Section 313(b) of the TIA. A copy of each report at the time of its mailing to Noteholders shall be filed with the SEC and each stock exchange (if any) on which the Notes are listed. The Issuer agrees to notify promptly the Trustee whenever the Notes become listed on any stock exchange and of any delisting thereof. SECTION 7.07. COMPENSATION AND INDEMNITY. The Issuer shall pay to the Trustee from time to time such compensation for its services as shall be agreed upon from time to time between the Issuer and the Trustee. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Issuer shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Trustee's agents, counsel, accountants and experts. The Issuer and each Guarantor, if any, jointly and severally shall indemnify the Trustee against any and all loss, liability or expense (including reasonable attorneys' fees) incurred by or in connection with the administration of this trust and the performance of its duties hereunder. The Trustee shall notify the Issuer of any claim for which it may seek indemnity promptly upon obtaining actual knowledge thereof; PROVIDED, HOWEVER, that any failure so to notify the Issuer shall not relieve the Issuer or any Guarantor of its indemnity obligations hereunder. The Issuer need not reimburse any expense or 57 indemnify against any loss, liability or expense incurred by an indemnified party through such party's own wilful misconduct, negligence or bad faith. The Trustee's right to receive payment of any amounts due under this Section 7.07 shall not be subordinated to any other liability or indebtedness of the Issuer (even though the Notes may be so subordinated). To secure the Issuer's payment obligations in this Section, the Trustee shall have a lien prior to the Notes on all money or property held or collected by the Trustee other than money or property held in trust to pay principal of and interest and any liquidated damages on particular Notes. The Issuer's payment obligations pursuant to this Section 7.07 shall survive the satisfaction or discharge of this Indenture, any rejection or termination of this Indenture under any bankruptcy law or the resignation or removal of the Trustee. When the Trustee incurs expenses after the occurrence of a Default specified in Section 6.01(5) or (6) with respect to the Company, the expenses are intended to constitute expenses of administration under the Bankruptcy Law. SECTION 7.08. REPLACEMENT OF TRUSTEE. The Trustee may resign at any time by so notifying the Issuer. The Holders of a majority in principal amount of the Notes may remove the Trustee by so notifying the Trustee and may appoint a successor Trustee. The Issuer shall remove the Trustee if: (1) the Trustee fails to comply with Section 7.10; (2) the Trustee is adjudged bankrupt or insolvent; (3) a receiver or other public officer takes charge of the Trustee or its property; or (4) the Trustee otherwise becomes incapable of acting. If the Trustee resigns, is removed by the Issuer or by the Holders of a majority in principal amount of the Notes and such Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event being referred to herein as the retiring Trustee), the Issuer shall promptly appoint a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Issuer. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Noteholders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.07. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee or the Holders of 10% in principal amount of the Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. 58 If the Trustee fails to comply with Section 7.10, any Noteholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. Notwithstanding the replacement of the Trustee pursuant to this Section, the Issuer and each Guarantor's obligations under Section 7.07 shall continue for the benefit of the retiring Trustee. SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee. In case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture any of the Notes shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Notes or in this Indenture provided that the certificate of the Trustee shall have. SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. The Trustee shall at all times satisfy the requirements of TIA ss. 310(a). The Trustee shall have a combined capital and surplus of at least $100,000,000 as set forth in its most recent published annual report of condition. The Trustee shall comply with TIA ss. 310(b); PROVIDed, HOWEVer, that there shall be excluded from the operation of TIA ss. 310(b)(1) any indenture or indentures under which other securities or certificates of interest or participation in other securities of the Issuer are outstanding if the requirements for such exclusion set forth in TIA ss. 310(b)(1) are met. SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER. The Trustee shall comply with TIA ss. 311(a), excluding any creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be subject to TIA ss. 311(a) to the extent indicated. ARTICLE 8 DISCHARGE OF INDENTURE; DEFEASANCE SECTION 8.01. DISCHARGE OF LIABILITY ON NOTES; DEFEASANCE. (a) Subject to Section 8.01(c), this Indenture shall be discharged and shall cease to be of further effect as to all Notes issued hereunder, when either (a) all such Notes theretofore authenticated and delivered (except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust) have been delivered to the Trustee for cancelation; or (b) (i) all such Notes not theretofore delivered to such Trustee for cancelation have become due and payable by reason of the making of a notice of redemption or otherwise or shall become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name and at the expense of the Issuer and the Issuer or any Guarantor has irrevocably deposited or caused to be deposited with such Trustee as trust funds in trust 59 solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as shall be sufficient without consideration of any reinvestment of interest to pay and discharge the entire indebtedness on such Notes not theretofore delivered to the Trustee for cancelation for principal, premium, if any, and accrued interest to the date of maturity or redemption; (ii) no Default or Event of Default shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit shall not result in a breach or violation of, or constitute a default under, any other instrument to which the Issuer or any Guarantor is a party or by which the Issuer or any Guarantor is bound; (iii) the Issuer or any Guarantor has paid or caused to be paid all sums payable by it under this Indenture and the Notes; and (iv) the Issuer has delivered irrevocable instructions to the Trustee under this Indenture to apply the deposited money toward the payment of such Notes at maturity or the Redemption Date, as the case may be. In addition, the Issuer must deliver an Officers' Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied. The Trustee, at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture upon the occurrence of the foregoing. (b) Subject to Sections 8.01(c) and 8.02, the Company or the Issuer at any time may terminate (i) all of its obligations under the Notes, the Guarantees and this Indenture ("LEGAL DEFEASANCE OPTION") or (ii) its obligations under Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12 and 4.13 and the operation of Sections 5.01, 6.01(3), 6.01(4), 6.01(5) (with respect to Significant Subsidiaries of the Company only), 6.01(6) (with respect to Significant Subsidiaries of the Company only), 6.01(7) and 6.01(8) and Articles 11 and 12 ("COVENANT DEFEASANCE OPTION"). The Company or the Issuer may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option. In the event that the Company or the Issuer terminates all of its obligations under the Notes and this Indenture by exercising either its legal defeasance option or its covenant defeasance option, the obligations under any Guarantee under Articles 11 and 12 shall each be terminated simultaneously with the termination of such obligations. If the Company or the Issuer exercises its legal defeasance option, payment of the Notes may not be accelerated because of an Event of Default. If the Issuer exercises its covenant defeasance option, payment of the Notes may not be accelerated because of an Event of Default specified in Section 6.01(3) (as such Section relates to Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12 and 4.13), 6.01(4), 6.01(5) (with respect to Significant Subsidiaries of the Company only), 6.01(6) (with respect to Significant Subsidiaries of the Company only), 6.01(7) and 6.01(8) or because of the failure of the Company or the Issuer to comply with Section 5.01. Upon satisfaction of the conditions set forth herein and upon request of the Company or the Issuer, the Trustee shall acknowledge in writing the discharge of those obligations that the Company or the Issuer terminates. (c) Notwithstanding clauses (a) and (b) above, the Issuer's obligations in Sections 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 2.10, 6.07, 7.07, 7.08 and in this Article 8 shall survive until the Notes have been paid in full. Thereafter, the Company's and the Issuer's obligations in Sections 7.07, 8.04 and 8.05 shall survive. 60 SECTION 8.02. CONDITIONS TO DEFEASANCE. In order to exercise either legal defeasance or covenant defeasance with respect to the Notes: (i) the Issuer must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, cash in U.S. dollars, non-callable Government Notes, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest due on the outstanding Notes on the stated maturity date or on the applicable Redemption Date, as the case may be, of such principal, premium, if any, or interest on the outstanding Notes; (ii) in the case of legal defeasance, the Issuer shall have delivered to the Trustee an Opinion of Counsel in the United States confirming that, subject to customary assumptions and exclusions, (A) the Issuer has received from, or there has been published by, the United States Internal Revenue Service a ruling or (B) since the Issuance Date, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel in the United States shall confirm that, subject to customary assumptions and exclusions, the Holders shall not recognize income, gain or loss for U.S. federal income tax purposes as a result of such legal defeasance and shall be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (iii) in the case of covenant defeasance, the Issuer shall have delivered to the Trustee an Opinion of Counsel in the United States confirming that, subject to customary assumptions and exclusions, the Holders shall not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and shall be subject to such tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (iv) no Default or Event of Default shall have occurred and be continuing on the date of such deposit or, with respect to certain bankruptcy or insolvency Events of Default, on the 91st day after such date of deposit; (v) such legal defeasance or covenant defeasance shall not result in a breach or violation of, or constitute a default under, the Senior Credit Facilities or any other material agreement or instrument (other than this Indenture) to which, the Issuer or any Guarantor is a party or by which the Issuer or any Guarantor is bound; (vi) the Issuer shall have delivered to the Trustee an Opinion of Counsel to the effect that, as of the date of such opinion and subject to customary assumptions and exclusions following the deposit, the trust funds shall not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally under any applicable U.S. federal or state law, and that the Trustee has a perfected security interest in such trust funds for the ratable benefit of the Holders; (vii) the Issuer shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Issuer with the intent of defeating, hindering, delaying or defrauding any creditors of the Issuer or any Guarantor or others; and 61 (viii) the Issuer shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel in the United States (which Opinion of Counsel may be subject to customary assumptions and exclusions) each stating that all conditions precedent provided for or relating to the legal defeasance or the covenant defeasance, as the case may be, have been complied with. Before or after a deposit, the Issuer may make arrangements satisfactory to the Trustee for the redemption of Notes at a future date in accordance with Article 3. SECTION 8.03. APPLICATION OF TRUST MONEY. The Trustee shall hold in trust money or Government Securities deposited with it pursuant to this Article 8. It shall apply the deposited money and the money from Government Securities through the Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Notes. Money and securities so held in trust are not subject to Article 10. SECTION 8.04. REPAYMENT TO ISSUER. The Trustee and the Paying Agent shall promptly turn over to the Issuer upon request any excess money or securities held by them at any time. Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay to the Issuer upon written request any money held by them for the payment of principal or interest that remains unclaimed for two years, and, thereafter, Noteholders entitled to the money must look to the Issuer for payment as general creditors. SECTION 8.05. INDEMNITY FOR GOVERNMENT OBLIGATIONS. The Issuer shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited Government Securities or the principal and interest received on such Government Securities. SECTION 8.06. REINSTATEMENT. If the Trustee or Paying Agent is unable to apply any money or Government Securities in accordance with this Article 8 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Issuer's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to this Article 8 until such time as the Trustee or Paying Agent is permitted to apply all such money or Government Securities in accordance with this Article 8; PROVIDED, HOWEVER, that, if the Issuer has made any payment of interest on or principal of any Notes because of the reinstatement of its obligations, the Issuer shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or Government Securities held by the Trustee or Paying Agent. ARTICLE 9 AMENDMENTS SECTION 9.01. WITHOUT CONSENT OF HOLDERS. The Issuer, any Guarantor (with respect to a Guarantee or the supplemental indenture to which it is a party) and the Trustee may amend this Indenture, the Notes or the Guarantees without notice to or consent of any Holder: (1) to cure any ambiguity, omission, defect or inconsistency; 62 (2) to comply with Article 5; (3) to provide for uncertificated Notes in addition to or in place of certificated Notes; PROVIDED, HOWEVER, that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code; (4) to provide for the assumption of the Issuer's or any Guarantor's obligations to Holders; (5) to add Guarantees with respect to the Notes or to secure the Notes; (6) to make any change that would provide any additional rights or benefits to the Holders or that does not adversely affect the legal rights under this Indenture of any such Holder; (7) to add covenants for the benefit of the Holders or to surrender any right or power herein conferred upon the Company; (8) to comply with any requirements of the SEC in connection with qualifying, or maintaining the qualification of, this Indenture under the TIA; (9) to evidence and provide for the acceptance and appointment under this Indenture of a successor Trustee pursuant to Article 7; or (10) to provide for the issuance of the Exchange Notes and the Private Exchange Notes, which shall have terms substantially identical in all material respects to the Initial Notes (except that the transfer restrictions contained in the Initial Notes shall be modified or eliminated, as appropriate), and which shall be treated, together with any outstanding Initial Notes, as a single issue of securities; and (11) to provide that Trinity become a Guarantor and that all references herein to the Company shall be deemed to be references to Trinity and to effect such other modifications to this Indenture necessary to give effect to the foregoing; PROVIDED that at the time Trinity is added as a Guarantor (and the Company remains a Guarantor), Trinity is a holding company that conducts no operations other than ownership of its subsidiaries (including the Company) and activities incidental thereto. After an amendment under this Section becomes effective, the Issuer shall mail to Holders a notice briefly describing such amendment. The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section. SECTION 9.02. WITH CONSENT OF HOLDERS. The Issuer, any Guarantor and the Trustee may amend this Indenture, the Notes or the Guarantees without notice to any Noteholder but with the written consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including consents obtained in connection with a tender offer or exchange for the Notes) and, subject to Article 6, any existing default or compliance with any provision of this Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes (including consents obtained in connection with a purchase of or tender offer or exchange 63 offer for Notes). However, without the consent of each Noteholder affected, an amendment may not (with respect to any Notes held by a non-consenting Holder): (i) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver; (ii) reduce the principal of or change the fixed maturity of any Note or alter or waive the provisions with respect to the redemption of the Notes (other than provisions relating to Sections 4.06 or 4.08); (iii) reduce the rate of or change the time for payment of interest on any Note; (iv) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of such Notes and a waiver of the payment default that resulted from such acceleration), or in respect of a covenant or provision contained in this Indenture, any Guarantee or the Notes which cannot be amended or modified without the consent of all Holders; (v) make any Note payable in money other than that stated in such Notes; (vi) make any change to Section 6.04 or 6.07; (vii) make any change to the second sentence of this Section 9.02; (viii) impair the right of any Holder to receive payment of principal of, or interest on, such Holder's Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder's Notes; or (ix) make any change to Article 10 that would adversely affect the Holders. It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof. After an amendment under this Section 9.02 becomes effective, the Issuer shall mail to Noteholders a notice briefly describing such amendment. The failure to give such notice to all Noteholders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 9.02. SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment to this Indenture or the Notes shall comply with the TIA as then in effect. SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS AND WAIVERS. A consent to an amendment or a waiver by a Holder of a Note shall bind the Holder and every subsequent Holder of that Note or portion of the Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent or waiver is not made on the Note. However, any such Holder or subsequent Holder may revoke the consent or waiver as to such Holder's Note or portion of the Note if the Trustee receives the notice of revocation before the date the amendment or waiver becomes effective. After an amendment or waiver becomes effective, it shall bind every Noteholder. An amendment or waiver becomes effective once both (i) the requisite number of consents have been 64 received by the Issuer or the Trustee and (ii) such amendment or waiver has been executed by the Issuer and the Trustee. The Issuer may, but shall not be obligated to, fix a record date for the purpose of determining the Noteholders entitled to give their consent or take any other action described above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Noteholders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 120 days after such record date. SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES. If an amendment changes the terms of a Note, the Trustee may require the Holder of the Note to deliver it to the Trustee. The Trustee may place an appropriate notation on the Note regarding the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Issuer in exchange for the Note shall issue and the Trustee shall authenticate a new Note that reflects the changed terms. Failure to make the appropriate notation or to issue a new Note shall not affect the validity of such amendment. SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS. The Trustee shall sign any amendment authorized pursuant to this Article 9 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may but need not sign it. In signing such amendment the Trustee shall be entitled to receive indemnity reasonably satisfactory to it and (subject to Section 7.01) shall be fully protected in relying upon an Officers' Certificate and an Opinion of Counsel stating that such amendment is authorized or permitted by this Indenture and that such amendment is the legal, valid and binding obligation of the Issuer and any Guarantors, enforceable against them in accordance with its terms, subject to customary exceptions, and complies with the provisions hereof (including Section 9.03). SECTION 9.07. PAYMENT FOR CONSENT. Neither the Issuer nor any Affiliate of the Issuer shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid to all Holders that so consent, waive or agree to amend in the time frame set forth in solicitation documents relating to such consent, waiver or agreement. ARTICLE 10 SUBORDINATION SECTION 10.01. AGREEMENT TO SUBORDINATE. The Issuer agrees, and each Noteholder by accepting a Note agrees, that the Indebtedness evidenced by the Notes is subordinated in right of payment, to the extent and in the manner provided in this Article 10, to the prior payment in full in cash or Cash Equivalents of all Senior Indebtedness of the Issuer and that the subordination is for the benefit of and enforceable by the holders of such Senior Indebtedness. The Notes shall in all respects rank PARI PASSU with all other Senior Subordinated Indebtedness of the Issuer and shall rank senior to all existing and future Subordinated Indebtedness of the Issuer; and only Indebtedness of the Issuer that is Senior Indebtedness of the Issuer shall rank senior to the Notes in 65 accordance with the provisions set forth herein. For purposes of this Article 10, the Indebtedness evidenced by the Notes shall be deemed to include the liquidated damages payable pursuant to the provisions set forth in the Notes and the Registration Agreement (as defined in the Appendix). All provisions of this Article 10 shall be subject to Section 10.12. SECTION 10.02. LIQUIDATION, DISSOLUTION, BANKRUPTCY. Upon any distribution to creditors of the Issuer in a liquidation or dissolution of the Issuer or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Issuer or its property, an assignment for the benefit of creditors or any marshaling of the Issuer's assets and liabilities, the holders of Senior Indebtedness shall be entitled to receive payment in full in cash or Cash Equivalents of such Senior Indebtedness and all outstanding Letter of Credit Obligations shall be fully cash collateralized before the Holders shall be entitled to receive any payment with respect to the Subordinated Note Obligations, and until all Senior Indebtedness is paid in full in cash or Cash Equivalents, any distribution to which the Holders would be entitled shall be made to the holders of Senior Indebtedness (except that Holders may receive (i) shares of stock and any debt securities that are subordinated at least to the same extent as the Notes to (a) Senior Indebtedness and (b) any securities issued in exchange for Senior Indebtedness and (ii) payments and other distributions made from the trusts described in Section 8.01). SECTION 10.03. DEFAULT ON SENIOR INDEBTEDNESS. The Issuer shall not make any payment upon or in respect of the Subordinated Note Obligations (except that Holders may receive (i) shares of stock and any debt securities that are subordinated at least to the same extent as the Notes to (a) Senior Indebtedness and (b) any securities issued in exchange for Senior Indebtedness and (ii) payments and other distributions made from the trusts described in Section 8.01) until all Senior Indebtedness has been paid in full in cash or Cash Equivalents if (i) a default in the payment of the principal of, premium, if any, or interest on, or of unreimbursed amounts under drawn letters of credit or in respect of bankers' acceptances or fees relating to letters of credit or bankers' acceptances constituting, Designated Senior Indebtedness occurs and is continuing beyond any applicable period of grace in the indenture, agreement or other document governing such Designated Senior Indebtedness (a "PAYMENT DEFAULT") or (ii) any other default occurs and is continuing with respect to Designated Senior Indebtedness that permits holders of the Designated Senior Indebtedness as to which such default relates to accelerate its maturity without further notice (except such notice as may be required to effect such acceleration) or the expiration of any applicable grace periods (a "NON-PAYMENT DEFAULT") and the Trustee receives a notice of such default (a "PAYMENT BLOCKAGE NOTICE") from a representative of holders of such Designated Senior Indebtedness. Payments on the Notes, including any missed payments, may and shall be resumed (a) in the case of a payment default, upon the date on which such default is cured or waived or shall have ceased to exist or such Designated Senior Indebtedness shall have been discharged or paid in full in cash or Cash Equivalents and all outstanding Letter of Credit Obligations shall have been fully cash collateralized and (b) in case of a nonpayment default, the earlier of (x) the date on which such nonpayment default is cured or waived, (y) 179 days after the date on which the applicable Payment Blockage Notice is received (each such period, the "PAYMENT BLOCKAGE PERIOD") or (z) the date such Payment Blockage Period shall be terminated by written notice to the Trustee from the requisite holders of such Designated Senior Indebtedness necessary to terminate such period or from their representative. No new Payment Blockage Period may be commenced unless and until 365 days have elapsed since the effectiveness of the immediately preceding Payment Blockage Notice. However, if any Payment Blockage Notice within such 365-day period is given by or on behalf of any holders of Designated Senior Indebtedness (other than the agent under the Senior Credit Facilities), the agent 66 under the Senior Credit Facilities may give another Payment Blockage Notice within such period. In no event, however, shall the total number of days during which any Payment Blockage Period or Periods is in effect exceed 179 days in the aggregate during any 365 consecutive day period. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been cured or waived for a period of not less than 90 days. SECTION 10.04. ACCELERATION OF PAYMENT OF NOTES. If payment of the Notes is accelerated because of an Event of Default, the Company or the Trustee shall promptly notify the holders of the Designated Senior Indebtedness (or their Representative) of the acceleration. If any Designated Senior Indebtedness is outstanding, the Issuer shall not pay the Notes until five Business Days after such holders or the Representative of the Designated Senior Indebtedness receive notice of such acceleration and, thereafter, shall pay the Notes only if this Article 10 otherwise permits payment at that time. SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER. If a distribution is made to Noteholders that because of this Article 10 should not have been made to them, the Noteholders who receive the distribution shall hold it in trust for holders of Senior Indebtedness of the Issuer and pay it over to them as their interests may appear. SECTION 10.06. SUBROGATION. After all Senior Indebtedness of the Issuer is paid in full and until the Notes are paid in full, Noteholders shall be subrogated to the rights of holders of such Senior Indebtedness to receive distributions applicable to Senior Indebtedness. A distribution made under this Article 10 to holders of such Senior Indebtedness which otherwise would have been made to Noteholders is not, as between the Issuer and Noteholders, a payment by the Issuer on such Senior Indebtedness. SECTION 10.07. RELATIVE RIGHTS. This Article 10 defines the relative rights of Noteholders and holders of Senior Indebtedness of the Issuer. Nothing in this Indenture shall: (1) impair, as between the Issuer and Noteholders, the obligation of the Issuer, which is absolute and unconditional, to pay principal of and interest on and liquidated damages in respect of, the Notes in accordance with their terms; or (2) prevent the Trustee or any Noteholder from exercising its available remedies upon a Default, subject to the rights of holders of Senior Indebtedness of the Issuer to receive distributions otherwise payable to Noteholders. SECTION 10.08. SUBORDINATION MAY NOT BE IMPAIRED BY ISSUER. No right of any holder of Senior Indebtedness of the Issuer to enforce the subordination of the Indebtedness evidenced by the Notes shall be impaired by any act or failure to act by the Issuer or by its failure to comply with this Indenture. SECTION 10.09. RIGHTS OF TRUSTEE AND PAYING AGENT. Notwithstanding Section 10.03, the Trustee or Paying Agent may continue to make payments on the Notes and shall not be charged with knowledge of the existence of facts that would prohibit the making of any such payments unless, not less than two Business Days prior to the date of such payment, a Trust Officer of the Trustee receives notice satisfactory to it that payments may not be made under this Article 10. The Issuer, the Registrar, the Paying Agent, a Representative or a holder of Senior Indebtedness of the Issuer may give the 67 notice; PROVIDED, HOWEVER, that, if an issue of Senior Indebtedness of the Issuer has a Representative, only the Representative may give the notice. The Trustee in its individual or any other capacity may hold Senior Indebtedness of the Issuer with the same rights it would have if it were not Trustee. The Registrar and the Paying Agent may do the same with like rights. The Trustee shall be entitled to all the rights set forth in this Article 10 with respect to any Senior Indebtedness of the Issuer which may at any time be held by it, to the same extent as any other holder of such Senior Indebtedness; and nothing in Article 7 shall deprive the Trustee of any of its rights as such holder. Nothing in this Article 10 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 7.07. SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE. Whenever a distribution is to be made or a notice given to holders of Senior Indebtedness of the Issuer, the distribution may be made and the notice given to their Representative (if any). SECTION 10.11. ARTICLE 10 NOT TO PREVENT EVENTS OF DEFAULT OR LIMIT RIGHT TO ACCELERATE. The failure to make a payment pursuant to the Notes by reason of any provision in this Article 10 shall not be construed as preventing the occurrence of a Default. Nothing in this Article 10 shall have any effect on the right of the Noteholders or the Trustee to accelerate the maturity of the Notes. SECTION 10.12. TRUST MONEYS NOT SUBORDINATED. Notwithstanding anything contained herein to the contrary, payments from money or the proceeds of Government Securities held in trust under Article 8 by the Trustee for the payment of principal of and interest on the Notes shall not be subordinated to the prior payment of any Senior Indebtedness of the Issuer or subject to the restrictions set forth in this Article 10, and none of the Noteholders shall be obligated to pay over any such amount to the Issuer or any holder of Senior Indebtedness of the Issuer or any other creditor of the Issuer. SECTION 10.13. TRUSTEE ENTITLED TO RELY. Upon any payment or distribution pursuant to this Article 10, the Trustee and the Noteholders shall be entitled to rely (i) upon any order or decree of a court of competent jurisdiction in which any proceedings of the nature referred to in Section 10.02 are pending, (ii) upon a certificate of the liquidating trustee or agent or other Person making such payment or distribution to the Trustee or to the Noteholders or (iii) upon the Representatives for the holders of Senior Indebtedness of the Issuer for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of such Senior Indebtedness and other Indebtedness of the Issuer, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 10. In the event that the Trustee determines, in good faith, that evidence is required with respect to the right of any Person as a holder of Senior Indebtedness of the Issuer to participate in any payment or distribution pursuant to this Article 10, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of such Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and other facts pertinent to the rights of such Person under this Article 10, and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. The provisions of Sections 7.01 and 7.02 shall be applicable to all actions or omissions of actions by the Trustee pursuant to this Article 10. 68 SECTION 10.14. TRUSTEE TO EFFECTUATE SUBORDINATION. Each Noteholder by accepting a Note authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination between the Noteholders and the holders of Senior Indebtedness of the Issuer as provided in this Article 10 and appoints the Trustee as attorney-in-fact for any and all such purposes. SECTION 10.15. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness of the Issuer and shall not be liable to any such holders if it shall mistakenly pay over or distribute to Noteholders or the Issuer or any other Person, money or assets to which any holders of Senior Indebtedness of the Issuer shall be entitled by virtue of this Article 10 or otherwise. SECTION 10.16. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS ON SUBORDINATION PROVISIONS. Each Noteholder by accepting a Note acknowledges and agrees that the foregoing subordination provisions are, and are intended to be, an inducement and a consideration to each holder of any Senior Indebtedness of the Issuer, whether such Senior Indebtedness was created or acquired before or after the issuance of the Notes, to acquire and continue to hold, or to continue to hold, such Senior Indebtedness and such holder of such Senior Indebtedness shall be deemed conclusively to have relied on such subordination provisions in acquiring and continuing to hold, or in continuing to hold, such Senior Indebtedness. SECTION 10.17. TRUSTEE'S COMPENSATION NOT PREJUDICED. Nothing in this Article 10 shall apply to amounts due to the Trustee pursuant to other sections of this Indenture. SECTION 10.18. DEFEASANCE. The terms of this Article 10 shall not apply to payments from money or the proceeds of Government Securities held in trust by the Trustee for the payment of principal of and interest on the Notes pursuant to the provisions described in Section 8.03. ARTICLE 11 GUARANTEES SECTION 11.01. GUARANTEES. Each Guarantor hereby jointly and severally unconditionally and irrevocably guarantees, as a primary obligor and not merely as a surety, to each Holder and to the Trustee and its successors and assigns (a) the full and punctual payment of principal of and interest on and liquidated damages in respect of the Notes when due, whether on the Maturity Date, by acceleration, by redemption or otherwise, and all other monetary obligations of the Issuer under this Indenture (including obligations to the Trustee) and the Notes and (b) the full and punctual performance within applicable grace periods of all other obligations of the Issuer whether for expenses, indemnification or otherwise under this Indenture and the Notes (all the foregoing being hereinafter collectively called the "GUARANTEED OBLIGATIONS"). Each Guarantor further agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice or further assent from each such Guarantor, and that each such Guarantor shall remain bound under this Article 11 notwithstanding any extension or renewal of any Guaranteed Obligation. Each Guarantor waives presentation to, demand of, payment from and protest to the Issuer of any of the Guaranteed Obligations and also waives notice of 69 protest for nonpayment. Each Guarantor waives notice of any default under the Notes or the Guaranteed Obligations. The obligations of each Guarantor hereunder shall not be affected by (a) the failure of any Holder or the Trustee to assert any claim or demand or to enforce any right or remedy against the Issuer or any other Person under this Indenture, the Notes or any other agreement or otherwise; (b) any extension or renewal of any thereof; (c) any rescission, waiver, amendment or modification of any of the terms or provisions of this Indenture, the Notes or any other agreement relating to this Indenture or the Notes; (d) the release of any security held by any Holder or the Trustee for the Guaranteed Obligations or any of them; (e) the failure of any Holder or the Trustee to exercise any right or remedy against any other guarantor of the Guaranteed Obligations; or (f) any change in the ownership of such Guarantor, except as provided in Section 11.02(b). Each Guarantor hereby waives any right to which it may be entitled to have its obligations hereunder divided among the Guarantors, such that such Guarantor's obligations would be less than the full amount claimed. Each Guarantor hereby waives any right to which it may be entitled to have the assets of the Issuer first be used and depleted as payment of the Issuer's or such Guarantor's obligations hereunder prior to any amounts being claimed from or paid by such Guarantor hereunder. Each Guarantor hereby waives any right to which it may be entitled to require that the Issuer be sued prior to an action being initiated against such Guarantor. Each Guarantor further agrees that its Guarantee herein constitutes a guarantee of payment, performance and compliance when due (and not a guarantee of collection) and waives any right to require that any resort be had by any Holder or the Trustee to any security held for payment of the Guaranteed Obligations. The Guarantee of each Guarantor is, to the extent and in the manner set forth in Article 12, subordinated and subject in right of payment to the prior payment in full of the principal of and premium, if any, and interest on all Senior Indebtedness of the relevant Guarantor and is made subject to such provisions of this Indenture. Except as expressly set forth in Sections 8.01(b) and 11.02, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Guaranteed Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Guarantor herein shall not be discharged or impaired or otherwise affected by the failure of any Holder or the Trustee to assert any claim or demand or to enforce any remedy under this Indenture, the Notes or any other agreement relating to this Indenture or the Notes, by any waiver or modification of any thereof, by any default, failure or delay, wilful or otherwise, in the performance of the obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of any Guarantor or would otherwise operate as a discharge of any Guarantor as a matter of law or equity. Each Guarantor agrees that its Guarantee shall remain in full force and effect until payment in full of all the Guaranteed Obligations. Each Guarantor further agrees that its Guarantee herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of or interest on any Guaranteed Obligation is rescinded or must otherwise be restored by any Holder or the Trustee upon the bankruptcy or reorganization of the Issuer or otherwise. 70 In furtherance of the foregoing and not in limitation of any other right which any Holder or the Trustee has at law or in equity against any Guarantor by virtue hereof, upon the failure of the Issuer to pay the principal of or interest on any Guaranteed Obligation when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise, or to perform or comply with any other Guaranteed Obligation, each Guarantor hereby promises to and shall, upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal to the sum of (i) the unpaid principal amount of such Guaranteed Obligations, (ii) accrued and unpaid interest on such Guaranteed Obligations (but only to the extent not prohibited by law) and (iii) all other monetary obligations of the Issuer to the Holders and the Trustee. Each Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Holders in respect of any Guaranteed Obligations guaranteed hereby until payment in full of all Guaranteed Obligations and all obligations to which the Guaranteed Obligations are subordinated as provided in Article 12. Each Guarantor further agrees that, as between it, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the Guaranteed Obligations guaranteed hereby may be accelerated as provided in Article 6 for the purposes of any Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Guaranteed Obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such Guaranteed Obligations as provided in Article 6, such Guaranteed Obligations (whether or not due and payable) shall forthwith become due and payable by such Guarantor for the purposes of this Section 11.01. Each Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys' fees and expenses) incurred by the Trustee or any Holder in enforcing any rights under this Section 11.01. SECTION 11.02. LIMITATION ON LIABILITY. (a) Any term or provision of this Indenture to the contrary notwithstanding, the maximum, aggregate amount of the Guaranteed Obligations guaranteed hereunder by any Guarantor shall not exceed the maximum amount that can be hereby guaranteed without rendering this Indenture, as it relates to such Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. (b) This Guarantee as to any Guarantor shall terminate and be of no further force or effect and such Guarantor shall be deemed to be released from all obligations under this Article 11 and Section 5.01(b) upon (i) the merger or consolidation of such Guarantor with or into any Person other than the Issuer or a Subsidiary or Affiliate of the Issuer where such Guarantor is not the surviving entity of such consolidation or merger or (ii) the sale, exchange or transfer to any Person not an Affiliate of the Company of all the Capital Stock in, or all or substantially all the assets of, such Guarantor; PROVIDED, HOWEVER, that each such merger, consolidation or sale (or, in the case of a sale by such a pledgee, the disposition of the proceeds of such sale) shall comply with Section 4.06. This Guarantee also shall be automatically released upon the release or discharge of (i) the guarantee of the Senior Credit Facilities, except a discharge or release by or as a result of payment under such guarantee or (ii) the Indebtedness that results in the creation of such Guarantee, as the case may be. At the request of the Issuer, the Trustee shall execute and deliver an appropriate instrument evidencing such release. SECTION 11.03. SUCCESSORS AND ASSIGNS. This Article 11 shall be binding upon each Guarantor and its successors and assigns and shall inure to the benefit 71 of the successors and assigns of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges conferred upon that party in this Indenture and in the Notes shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions of this Indenture. SECTION 11.04. NO WAIVER. Neither a failure nor a delay on the part of either the Trustee or the Holders in exercising any right, power or privilege under this Article 11 shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any right, power or privilege. The rights, remedies and benefits of the Trustee and the Holders herein expressly specified are cumulative and not exclusive of any other rights, remedies or benefits which either may have under this Article 11 at law, in equity, by statute or otherwise. SECTION 11.05. MODIFICATION. No modification, amendment or waiver of any provision of this Article 11, nor the consent to any departure by any Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Trustee, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on any Guarantor in any case shall entitle such Guarantor to any other or further notice or demand in the same, similar or other circumstances. SECTION 11.06. EXECUTION OF SUPPLEMENTAL INDENTURE FOR FUTURE GUARANTORS. Each Subsidiary which is required to become a Guarantor pursuant to Section 4.11 shall promptly execute and deliver to the Trustee a supplemental indenture in the form of Exhibit E hereto pursuant to which such Subsidiary shall become a Guarantor under this Article 11 and shall guarantee the Guaranteed Obligations. Concurrently with the execution and delivery of such supplemental indenture, the Issuer shall deliver to the Trustee an Opinion of Counsel and an Officers' Certificate to the effect that such supplemental indenture has been duly authorized, executed and delivered by such Subsidiary and that, subject to the application of bankruptcy, insolvency, moratorium, fraudulent conveyance or transfer and other similar laws relating to creditors' rights generally and to the principles of equity, whether considered in a proceeding at law or in equity, the Guarantee of such Guarantor is a legal, valid and binding obligation of such Guarantor, enforceable against such Guarantor in accordance with its terms. ARTICLE 12 SUBORDINATION OF THE GUARANTEES SECTION 12.01. AGREEMENT TO SUBORDINATE. Each Guarantor agrees, and each Noteholder by accepting a Note agrees, that the obligations of a Guarantor hereunder are subordinated in right of payment, to the extent and in the manner provided in this Article 12, to the prior payment in full in cash or Cash Equivalents of all Senior Indebtedness of such Guarantor and that the subordination is for the benefit of and enforceable by the holders of such Senior Indebtedness of such Guarantor. The obligations hereunder with respect to a Guarantor shall in all respects rank PARI PASSU with all other Senior Subordinated Indebtedness of such Guarantor and shall rank senior to all existing and future Subordinated Indebtedness of such Guarantor; and only Indebtedness of such Guarantor that is Senior Indebtedness of such Guarantor shall rank senior to the obligations of such Guarantor in accordance with the provisions set forth herein. 72 SECTION 12.02. LIQUIDATION, DISSOLUTION, BANKRUPTCY. Upon any payment or distribution of the assets of a Guarantor to creditors upon a total or partial liquidation or a total or partial dissolution of such Guarantor or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to such Guarantor and its properties, an assignment for the benefit of creditors or any marshalling of such Guarantor's assets: (1) holders of Senior Indebtedness of such Guarantor shall be entitled to receive payment in full in cash or Cash Equivalents of such Senior Indebtedness before Noteholders shall be entitled to receive any payment pursuant to any Guaranteed Obligations from such Guarantor; and (2) until the Senior Indebtedness of such Guarantor is paid in full, any payment or distribution to which Noteholders would be entitled but for this Article 12 shall be made to holders of such Senior Indebtedness as their respective interests may appear. SECTION 12.03. DEFAULT ON SENIOR INDEBTEDNESS OF A GUARANTOR. The Guarantor shall not make any payment upon or in respect of the Subordinated Note Obligations (except that Holders may receive (i) shares of stock and any debt securities that are subordinated at least to the same extent as the Notes to (a) Senior Indebtedness and (b) any securities issued in exchange for Senior Indebtedness) until all Senior Indebtedness of such Guarantor has been paid in full in cash or Cash Equivalents if (i) a default in the payment of the principal of, premium, if any, or interest on, or of unreimbursed amounts under drawn letters of credit or in respect of bankers' acceptances or fees relating to letters of credit or bankers' acceptances constituting, Designated Senior Indebtedness occurs and is continuing beyond any applicable period of grace in the indenture, agreement or other document governing such Designated Senior Indebtedness (a "PAYMENT DEFAULT") or (ii) any other default occurs and is continuing with respect to Designated Senior Indebtedness that permits holders of the Designated Senior Indebtedness as to which such default relates to accelerate its maturity without further notice (except such notice as may be required to effect such acceleration) or the expiration of any applicable grace periods (a "NON-PAYMENT DEFAULT") and the Trustee receives a notice of such default (a "PAYMENT BLOCKAGE NOTICE") from a representative of holders of such Designated Senior Indebtedness. Payments on the Notes, including any missed payments, may and shall be resumed (a) in the case of a payment default, upon the date on which such default is cured or waived or shall have ceased to exist or such Designated Senior Indebtedness shall have been discharged or paid in full in cash or Cash Equivalents and all outstanding Letter of Credit Obligations shall have been fully cash collateralized and (b) in case of a nonpayment default, the earlier of (x) the date on which such nonpayment default is cured or waived, (y) 179 days after the date on which the applicable Payment Blockage Notice is received (each such period, the "PAYMENT BLOCKAGE PERIOD") or (z) the date such Payment Blockage Period shall be terminated by written notice to the Trustee from the requisite holders of such Designated Senior Indebtedness necessary to terminate such period or from their representative. No new Payment Blockage Period may be commenced unless and until 365 days have elapsed since the effectiveness of the immediately preceding Payment Blockage Notice. However, if any Payment Blockage Notice within such 365-day period is given by or on behalf of any holders of Designated Senior Indebtedness (other than the agent under the Senior Credit Facilities), the agent under the Senior Credit Facilities may give another Payment Blockage Notice within such period. In no event, however, shall the total number of days during which any Payment Blockage Period or Periods is in effect exceed 179 days in the aggregate during any 365 consecutive day period. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee 73 shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been cured or waived for a period of not less than 90 days. SECTION 12.04. DEMAND FOR PAYMENT. If payment of the Notes is accelerated because of an Event of Default and a demand for payment is made on a Guarantor pursuant to Article 11, each such Guarantor or the Trustee shall promptly notify the holders of the Designated Senior Indebtedness of such Guarantor (or the Representative of such holders) of such demand. If any Designated Senior Indebtedness of such Guarantor is outstanding, such Guarantor shall not pay its Guarantee until five Business Days after such holders or the Representative of the holders of the Designated Senior Indebtedness of such Guarantor receive notice of such demand and, thereafter, may pay its Guarantee only if this Article 12 otherwise permits payment at that time. SECTION 12.05. WHEN DISTRIBUTION MUST BE PAID OVER. If a payment or distribution is made to Noteholders that because of this Article 12 should not have been made to them, the Noteholders who receive the payment or distribution shall hold such payment or distribution in trust for holders of the Senior Indebtedness of the relevant Guarantor and pay it over to them as their respective interests may appear. SECTION 12.06. SUBROGATION. After all Designated Senior Indebtedness of a Guarantor is paid in full and until the Notes are paid in full, Noteholders shall be subrogated to the rights of holders of Designated Senior Indebtedness of such Guarantor to receive distributions applicable to Designated Senior Indebtedness of such Guarantor. A distribution made under this Article 12 to holders of Designated Senior Indebtedness of such Guarantor which otherwise would have been made to Noteholders is not, as between such Guarantor and Noteholders, a payment by such Guarantor on Designated Senior Indebtedness of such Guarantor. SECTION 12.07. RELATIVE RIGHTS. This Article 12 defines the relative rights of Noteholders and holders of Designated Senior Indebtedness of a Guarantor. Nothing in this Indenture shall: (1) impair, as between a Guarantor and Noteholders, the obligation of a Guarantor, which is absolute and unconditional, to make payments with respect to the Guaranteed Obligations to the extent set forth in Article 11; or (2) prevent the Trustee or any Noteholder from exercising its available remedies upon a default by a Guarantor under its obligations with respect to the Guaranteed Obligations, subject to the rights of holders of Designated Senior Indebtedness of such Guarantor to receive distributions otherwise payable to Noteholders. SECTION 12.08. SUBORDINATION MAY NOT BE IMPAIRED BY A SUBSIDIARY GUARANTOR. No right of any holder of Designated Senior Indebtedness of a Guarantor to enforce the subordination of the obligations of such Guarantor hereunder shall be impaired by any act or failure to act by such Guarantor or by its failure to comply with this Indenture. SECTION 12.09. RIGHTS OF TRUSTEE AND PAYING AGENT. Notwithstanding Section 12.03, the Trustee or the Paying Agent may continue to make payments on the Notes and shall not be charged with knowledge of the existence of facts that would prohibit the making of any such payments unless, not less than two Business Days prior to the date of such payment, a Trust Officer of the Trustee receives notice satisfactory to it that payments may not be made under this Article 12. A Guarantor, the Registrar, the 74 Paying Agent, a Representative or a holder of Designated Senior Indebtedness of a Guarantor may give the notice; PROVIDED, HOWEVER, that if an issue of Designated Senior Indebtedness of a Guarantor has a Representative, only the Representative may give the notice. The Trustee in its individual or any other capacity may hold Senior Indebtedness of a Guarantor with the same rights it would have if it were not Trustee. The Registrar and the Paying Agent may do the same with like rights. The Trustee shall be entitled to all the rights set forth in this Article 12 with respect to any Senior Indebtedness of a Guarantor which may at any time be held by it, to the same extent as any other holder of Senior Indebtedness of such Guarantor; and nothing in Article 7 shall deprive the Trustee of any of its rights as such holder. Nothing in this Article 12 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 7.07. SECTION 12.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE. Whenever a distribution is to be made or a notice given to holders of Senior Indebtedness of a Guarantor, the distribution may be made and the notice given to their Representative (if any). SECTION 12.11. ARTICLE 12 NOT TO PREVENT EVENTS OF DEFAULT OR LIMIT RIGHT TO ACCELERATE. The failure of a Guarantor to make a payment on any of its obligations by reason of any provision in this Article 12 shall not be construed as preventing the occurrence of a default by such Guarantor under such obligations. Nothing in this Article 12 shall have any effect on the right of the Noteholders or the Trustee to make a demand for payment on a Guarantor pursuant to Article 11. SECTION 12.12. TRUSTEE ENTITLED TO RELY. Upon any payment or distribution pursuant to this Article 12, the Trustee and the Noteholders shall be entitled to rely (i) upon any order or decree of a court of competent jurisdiction in which any proceedings of the nature referred to in Section 12.02 are pending, (ii) upon a certificate of the liquidating trustee or agent or other Person making such payment or distribution to the Trustee or to the Noteholders or (iii) upon the Representatives for the holders of Designated Senior Indebtedness of a Guarantor for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Designated Senior Indebtedness of such Guarantor and other Indebtedness of a Guarantor, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 12. In the event that the Trustee determines, in good faith, that evidence is required with respect to the right of any Person as a holder of Designated Senior Indebtedness of a Guarantor to participate in any payment or distribution pursuant to this Article 12, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Designated Senior Indebtedness of such Guarantor held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and other facts pertinent to the rights of such Person under this Article 12, and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. The provisions of Sections 7.01 and 7.02 shall be applicable to all actions or omissions of actions by the Trustee pursuant to this Article 12. SECTION 12.13. TRUSTEE TO EFFECTUATE SUBORDINATION. Each Noteholder by accepting a Note authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination between the Noteholders and the holders of Designated Senior Indebtedness of each of 75 the Guarantors as provided in this Article 12 and appoints the Trustee as attorney-in-fact for any and all such purposes. SECTION 12.14. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS OF A GUARANTOR. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness of a Guarantor and shall not be liable to any such holders if it shall mistakenly pay over or distribute to Noteholders or the relevant Guarantor or any other Person, money or assets to which any holders of Senior Indebtedness of such Guarantor shall be entitled by virtue of this Article 12 or otherwise. SECTION 12.15. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS OF A GUARANTOR ON SUBORDINATION PROVISIONS. Each Noteholder by accepting a Note acknowledges and agrees that the foregoing subordination provisions are, and are intended to be, an inducement and a consideration to each holder of any Senior Indebtedness of a Guarantor, whether such Senior Indebtedness was created or acquired before or after the issuance of the Notes, to acquire and continue to hold, or to continue to hold, such Senior Indebtedness and such holder of Senior Indebtedness shall be deemed conclusively to have relied on such subordination provisions in acquiring and continuing to hold, or in continuing to hold, such Senior Indebtedness. SECTION 12.16. DEFEASANCE. The terms of this Article 12 shall not apply to payments from money or the proceeds of U.S. Government Obligations held in trust by the Trustee for the payment of principal of and interest on the Notes pursuant to the provisions described in Section 8.03. ARTICLE 13 MISCELLANEOUS SECTION 13.01. TRUST INDENTURE ACT CONTROLS. If any provision of this Indenture limits, qualifies or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control. SECTION 13.02. NOTICES. Any notice or communication shall be in writing and delivered in person, mailed by first-class mail addressed or by facsimile as follows: if to the Issuer: Willis Corroon Corporation 26 Century Boulevard Nashville, TN 37214 Facsimile: (615) 872-3037 Attention of: Bart Schwartz, Esq. 76 if to the Company or USGP: Willis Corroon Group Limited 10 Trinity Square London EC3P 3AX Facsimile: 44-171-488-8034 Attention of: Michael Chitty if to the Trustee: The Bank of New York 101 Barclay Street New York, New York 10286 Facsimile: (212) 815-5915 Attention of: Corporate Trust Administration International Finance Unit The Issuer or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications. Notices regarding the Notes (i) shall be published in a leading newspaper having a general circulation in New York (which is expected to be the WALL STREET JOURNAL) (and, so long as the Notes are listed on the Luxembourg Stock Exchange and the rules of such stock exchange shall so require, a newspaper having a general circulation in Luxembourg (which is expected to be the LUXEMBOURGER WORT)) or (ii) in the case of Definitive Notes, shall be mailed to the Noteholders at their respective addresses as they appear on the registration books of the Registrar (and, so long as the Notes are listed on the Luxemburg Stock Exchange and the rules of such stock exchange shall so require, a newspaper having a general circulation in Luxembourg (which is expected to be the LUXEMBURGER WORT)). Notices given by publication shall be deemed given on the first date on which its publication is made, and notices given by first-class mail, postage prepaid, will be deemed given five calendar days after mailing. Failure to mail a notice or communication to a Noteholder or any defect in it shall not affect its sufficiency with respect to other Noteholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. Notices to the Trustee shall be deemed effective only upon actual receipt. SECTION 13.03. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS. Noteholders may communicate pursuant to TIA ss. 312(b) with other Noteholders with respect to their rights under this Indenture or the Notes. The Issuer, the Trustee, the Registrar and anyone else shall have the protection of TIA ss. 312(c). 77 SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any request or application by the Issuer to the Trustee to take or refrain from taking any action under this Indenture, the Issuer shall furnish to the Trustee: (1) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, all such conditions precedent have been complied with. SECTION 13.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture shall include: (1) a statement that the individual making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such individual, such covenant or condition has been complied with. SECTION 13.06. WHEN NOTES DISREGARDED. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Issuer, any Guarantor or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer or any Guarantor shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes which the Trustee knows are so owned shall be so disregarded. Subject to the foregoing, only Notes outstanding at the time shall be considered in any such determination. SECTION 13.07. RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR. The Trustee may make reasonable rules for action by or a meeting of Noteholders. The Registrar and the Paying Agent may make reasonable rules for their functions. SECTION 13.08. LEGAL HOLIDAYS. A "LEGAL HOLIDAY" is a Saturday, a Sunday or a day on which banking institutions are not required to be open in the State of New York. If a payment date is a Legal Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. If a regular record date is a Legal Holiday, the record date shall not be affected. SECTION 13.09. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN 78 ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. SECTION 13.10. NO RECOURSE AGAINST OTHERS. No director, officer, employee, incorporator or stockholder of the Issuer or any Guarantor, shall have any liability for any obligations of the Issuer or the Guarantors under the Notes, the Guarantees or this Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. SECTION 13.11. SUCCESSORS. All agreements of the Issuer and each Guarantor in this Indenture and the Notes shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. SECTION 13.12. MULTIPLE ORIGINALS. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Indenture. SECTION 13.13. TABLE OF CONTENTS; HEADINGS. The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof. 79 IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above. WILLIS CORROON CORPORATION, by ----------------------------------------- Name: Title: WILLIS CORROON GROUP LIMITED, by ----------------------------------------- Name: Title: WILLIS CORROON PARTNERS, by Willis Corroon Group Limited, its General Partner, by ----------------------------------------- Name: Title: THE BANK OF NEW YORK, as Trustee, by ----------------------------------------- Name: Title: APPENDIX A PROVISIONS RELATING TO INITIAL NOTES, EXCHANGE NOTES AND PRIVATE EXCHANGE NOTES 1. DEFINITIONS 1.1 DEFINITIONS For the purposes of this Appendix A the following terms shall have the meanings indicated below: "APPLICABLE PROCEDURES" means, with respect to any transfer or transaction involving a Temporary or Permanent Regulation S Global Note or beneficial interest therein, the rules and procedures of the Depositary for such Global Note, Euroclear and Cedel, in each case to the extent applicable to such transaction and as in effect from time to time. "CEDEL" means Cedel Bank, S.A., or any successor securities clearing agency. "DEFINITIVE NOTE" means a certificated Initial Note, Exchange Note or Private Exchange Note (bearing the Restricted Notes Legend if the transfer of such Note is restricted by applicable law) that does not include the Global Notes Legend. "DEPOSITARY" means The Depository Trust Company, its nominees and their respective successors. "EUROCLEAR" means the Euroclear Clearance System or any successor securities clearing agency. "EXCHANGE NOTES" means the Notes of the Issuer issued in exchange for the Initial Notes pursuant to this Indenture in connection with the Registered Exchange Offer pursuant to the Registration Agreement. "GLOBAL NOTES LEGEND" means the legend set forth under that caption in Exhibit A to this Indenture. "IAI" means an institutional "accredited investor" as described in Rule 501(a)(1), (2), (3) or (7) under the Securities Act. "INITIAL PURCHASERS" means Chase Securities Inc. and Chase Manhattan International Limited. "NOTES CUSTODIAN" means the custodian with respect to a Global Note (as appointed by the Depositary) or any successor person thereto, who shall initially be the Trustee. "PRIVATE EXCHANGE" means an offer by the Issuer, pursuant to the Registration Agreement, to issue and deliver to certain purchasers, in exchange for the Initial Notes held by such purchasers as part of their initial distribution, a like aggregate principal amount of Private Exchange Notes. 2 "PRIVATE EXCHANGE NOTES" means the Notes of the Issuer issued in exchange for the Initial Notes pursuant to this Indenture in connection with the Private Exchange pursuant to the Registration Agreement. "PURCHASE AGREEMENT" means the Purchase Agreement dated January 28, 1999, among the Issuer, the Company, USGP and the Initial Purchasers. "QIB" means a "qualified institutional buyer" as defined in Rule 144A. "REGISTERED EXCHANGE OFFER" means the offer by the Issuer, pursuant to the Registration Agreement, to certain Holders of Initial Notes, to issue and deliver to such Holders, in exchange for their Initial Notes, a like aggregate principal amount of Exchange Notes registered under the Securities Act. "REGISTRATION AGREEMENT" means the Exchange and Registration Rights Agreement dated February 2, 1999, among the Issuer, the Company, USGP and the Initial Purchasers named therein. "REGULATION S" means Regulation S under the Securities Act, as amended. "REGULATION S NOTES" means all Initial Notes offered and sold outside the United States in reliance on Regulation S. "RESTRICTED PERIOD", with respect to any Notes, means the period of 40 consecutive days beginning on and including the later of (i) the day on which such Notes are first offered to persons other than distributors (as defined in Regulation S under the Securities Act) in reliance on Regulation S and (ii) the Issuance Date with respect to such Notes. "RESTRICTED NOTES LEGEND" means the legend set forth in Section 2.3(e)(i) herein. "RULE 501" means Rule 501(a)(1), (2), (3) or (7) under the Securities Act. "RULE 144A" means Rule 144A under the Securities Act, as amended. "RULE 144A NOTES" means all Initial Notes offered and sold to QIBs in reliance on Rule 144A. "SECURITIES ACT" means the Securities Act of 1933, as amended. "SHELF REGISTRATION STATEMENT" means a registration statement filed by the Issuer in connection with the offer and sale of Initial Notes pursuant to the Registration Agreement. "TRANSFER RESTRICTED NOTES" means Definitive Notes and any other Notes that bear or are required to bear the Restricted Notes Legend. 3 1.2 OTHER DEFINITIONS
Term: Defined in Section: ----- ------------------- "Agent Members"...........................................................2.1(b) "IAI Global Note".........................................................2.1(a) "Global Notes"............................................................2.1(a) "Permanent Regulation S Global Note"......................................2.3(d) "Regulation S Global Notes"...............................................2.1(a) "Rule 144A Global Note"...................................................2.1(a) "Temporary Regulation S Global Note"......................................2.1(a)
2. THE NOTES 2.1 FORM AND DATING The Initial Notes issued on the date hereof shall be (i) offered and sold by the Issuer pursuant to the Purchase Agreement and (ii) resold, initially only to (A) QIBs in reliance on Rule 144A and (B) Persons other than U.S. Persons (as defined in Regulation S) in reliance on Regulation S. Such Initial Notes may thereafter be transferred to, among others, QIBs, purchasers in reliance on Regulation S and, except as set forth below, IAIs in accordance with Rule 501. (a) GLOBAL NOTES. Rule 144A Notes shall be issued initially in the form of one or more permanent global Notes in definitive, fully registered form (collectively, the "RULE 144A GLOBAL NOTE") and Regulation S Notes shall be issued initially in the form of one or more temporary global Notes (collectively, the "TEMPORARY REGULATION S GLOBAL NOTE"), in each case without interest coupons and bearing the Global Notes Legend and Restricted Notes Legend, which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Notes Custodian, and registered in the name of the Depositary or a nominee of the Depositary, duly executed by the Issuer and authenticated by the Trustee as provided in this Indenture. One or more global securities in definitive, fully registered form without interest coupons and bearing the Global Notes Legend and the Restricted Notes Legend (collectively, the "IAI GLOBAL NOTE") shall also be issued on the Issuance Date, deposited with the Notes Custodian, and registered in the name of the Depositary or a nominee of the Depositary, duly executed by the Issuer and authenticated by the Trustee as provided in this Indenture to accommodate transfers of beneficial interests in the Notes to IAIs subsequent to the initial distribution. Except as set forth in Section 2.3, beneficial ownership interests in the Temporary Regulation S Global Note shall not be exchangeable for interests in the Rule 144A Global Note, the IAI Global Note, a Permanent Regulation S Global Note (as defined below) or any other Note without a Restricted Notes Legend until the expiration of the Restricted Period. Upon the expiration of the Restricted Period, beneficial interests in the Notes represented by the Temporary Regulation S Global Note may be exchanged for interests in the Permanent Regulation S Global Note as described below in Section 2.3(d). The Rule 144A Global Note, the IAI Global Note, the Temporary Regulation S Global Note and the Permanent Regulation S Global Note are each referred to herein as a Global Note and are collectively referred to herein as "GLOBAL NOTES." The Temporary Regulation S Global Note and the Permanent Regulation S Global Note are referred to herein as "REGULATION S GLOBAL NOTES." The aggregate principal amount of the Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee as hereinafter provided. 4 (b) BOOK-ENTRY PROVISIONS. This Section 2.1(b) shall apply only to a Global Note deposited with or on behalf of the Depositary. The Issuer shall execute and the Trustee shall, in accordance with Section 2.2 and pursuant to an order of the Issuer, authenticate and deliver initially one or more Global Notes that (a) shall be registered in the name of the Depositary for such Global Note or Global Notes or the nominee of such Depositary and (b) shall be delivered by the Trustee to such Depositary or pursuant to such Depositary's instructions or held by the Trustee as Notes Custodian. Members of, or participants in, the Depositary ("AGENT MEMBERS") shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depositary or by the Trustee as Notes Custodian or under such Global Note, and the Depositary may be treated by the Issuer, the Trustee and any agent of the Issuer or the Trustee as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Issuer, the Trustee or any agent of the Issuer or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices of such Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Note. (c) DEFINITIVE NOTES. Except as provided in Section 2.3 or 2.4, owners of beneficial interests in Global Notes will not be entitled to receive physical delivery of certificated Notes. 2.2 AUTHENTICATION. The Trustee shall authenticate and make available for delivery upon a written order of the Issuer signed by one Officer (1) Initial Notes for original issue on the date hereof in an aggregate principal amount of $550,000,000 and (2) the (A) Exchange Notes, for issue only in a Registered Exchange Offer and (B) Private Exchange Notes for issue only in the Private Exchange, in the case of each (A) and (B) pursuant to the Registration Agreement and for a like principal amount of Initial Notes exchanged pursuant thereto. Such order shall specify the amount of the Notes to be authenticated, the date on which the original issue of Notes is to be authenticated and whether the Notes are to be Initial Notes, Exchange Notes or Private Exchange Notes. The aggregate principal amount of Notes outstanding at any time may not exceed $550,000,000 except as provided in Section 2.08 of this Indenture. 2.3 TRANSFER AND EXCHANGE. (a) TRANSFER AND EXCHANGE OF DEFINITIVE NOTES. When Definitive Notes are presented to the Registrar with a request: (x) to register the transfer of such Definitive Notes; or (y) to exchange such Definitive Notes for an equal principal amount of Definitive Notes of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; PROVIDED, HOWEVER, that the Definitive Notes surrendered for transfer or exchange: (i) shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Issuer and the Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing; and 5 (ii) are accompanied by the following additional information and documents, as applicable: (A) if such Definitive Notes are being delivered to the Registrar by a Holder for registration in the name of such Holder, without transfer, a certification from such Holder to that effect (in the form set forth on the reverse side of the Initial Note); or (B) if such Definitive Notes are being transferred to the Issuer, a certification to that effect (in the form set forth on the reverse side of the Initial Note); or (C) if such Definitive Notes are being transferred pursuant to an exemption from registration in accordance with Rule 144 under the Securities Act or in reliance upon another exemption from the registration requirements of the Securities Act, (i) a certification to that effect (in the form set forth on the reverse side of the Initial Note) and (ii) if the Issuer so requests, an Opinion of Counsel or other evidence reasonably satisfactory to it as to the compliance with the restrictions set forth in the legend set forth in Section 2.3(e)(i). (b) RESTRICTIONS ON TRANSFER OF A DEFINITIVE NOTE FOR A BENEFICIAL INTEREST IN A GLOBAL NOTE. A Definitive Note may not be exchanged for a beneficial interest in a Global Note except upon satisfaction of the requirements set forth below. Upon receipt by the Trustee of a Definitive Note, duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Issuer and the Registrar, together with: (i) certification (in the form set forth on the reverse side of the Initial Note) that such Definitive Note is being transferred (A) to a QIB in accordance with Rule 144A, (B) to an IAI that has furnished to the Trustee a signed letter substantially in the form of Exhibit D or (C) outside the United States in an offshore transaction within the meaning of Regulation S and in compliance with Rule 904 under the Securities Act, together with a letter substantially in the form of Exhibit C; and (ii) written instructions directing the Trustee to make, or to direct the Notes Custodian to make, an adjustment on its books and records with respect to such Global Note to reflect an increase in the aggregate principal amount of the Notes represented by the Global Note, such instructions to contain information regarding the Depositary account to be credited with such increase, then the Trustee shall cancel such Definitive Note and cause, or direct the Notes Custodian to cause, in accordance with the standing instructions and procedures existing between the Depositary and the Notes Custodian, the aggregate principal amount of Notes represented by the Global Note to be increased by the aggregate principal amount of the Definitive Note to be exchanged and shall credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Global Note equal to the principal amount of the Definitive Note so canceled. If no Global Notes are then outstanding and the Global Note has not been previously exchanged for certificated securities pursuant to Section 2.4, the Issuer shall issue and the Trustee shall authenticate, upon written order of the Issuer in the form of an Officers' Certificate, a new Global Note in the appropriate principal amount. (c) TRANSFER AND EXCHANGE OF GLOBAL NOTES. (i) The transfer and exchange of Global Notes or beneficial interests therein shall be effected through the Depositary, in accordance with this Indenture (including applicable restrictions on transfer set forth herein, 6 if any) and the procedures of the Depositary therefor. A transferor of a beneficial interest in a Global Note shall deliver a written order given in accordance with the Depositary's procedures containing information regarding the participant account of the Depositary to be credited with a beneficial interest in such Global Note or another Global Note and such account shall be credited in accordance with such order with a beneficial interest in the applicable Global Note and the account of the Person making the transfer shall be debited by an amount equal to the beneficial interest in the Global Note being transferred. Transfers by an owner of a beneficial interest in the Rule 144A Global Note or the IAI Global Note to a transferee who takes delivery of such interest through the Regulation S Global Note, whether before or after the expiration of the Restricted Period, will be made only upon receipt by the Trustee of a certification from the transferor to the effect that such transfer is being made in accordance with Regulation S or (if available) Rule 144 under the Securities Act and that, if such transfer is being made prior to the expiration of the Restricted Period, the interest transferred will be held immediately thereafter through Euroclear or Cedel. In the case of a transfer of a beneficial interest in either the Temporary Regulation S Global Note or the Rule 144A Global Note for an interest in the IAI Global Note, the transferee must furnish a signed letter substantially in the form of Exhibit D to the Trustee. In the case of a transfer of an interest in either the Temporary Regulation S Global Note or the Permanent Regulation S Global Note to an interest in a Rule 144A Global Note or IAI Global Note, the transferor must furnish a letter substantially in the form of Exhibit C to the Trustee. (ii) If the proposed transfer is a transfer of a beneficial interest in one Global Note to a beneficial interest in another Global Note, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Global Note to which such interest is being transferred in an amount equal to the principal amount of the interest to be so transferred, and the Registrar shall reflect on its books and records the date and a corresponding decrease in the principal amount of Global Note from which such interest is being transferred. (iii) Notwithstanding any other provisions of this Appendix (other than the provisions set forth in Section 2.4), a Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. (iv) In the event that a Global Note is exchanged for Definitive Notes pursuant to Section 2.4 prior to the consummation of the Registered Exchange Offer or the effectiveness of the Shelf Registration Statement with respect to such Notes, such Notes may be exchanged only in accordance with such procedures as are substantially consistent with the provisions of this Section 2.3 (including the certification requirements set forth on the reverse of the Initial Notes intended to ensure that such transfers comply with Rule 144A, Regulation S or such other applicable exemption from registration under the Securities Act, as the case may be) and such other procedures as may from time to time be adopted by the Issuer. (d) RESTRICTIONS ON TRANSFER OF TEMPORARY REGULATION S GLOBAL NOTE. (i) Prior to the expiration of the Restricted Period, interests in the Temporary Regulation S Global Note may only be held through Euroclear or Cedel. During the Restricted Period, beneficial ownership interests in the Temporary Regulation S Global Note may only be sold, pledged or transferred through Euroclear or Cedel in accordance with the Applicable Procedures and only (A) to the Issuer, (B) so long as such security is eligible for resale pursuant to Rule 144A, to a person whom the selling holder reasonably believes is a QIB that purchases for its own account or for the account of a QIB to whom notice is given that the 7 resale, pledge or transfer is being made in reliance on Rule 144A, (C) in an offshore transaction in accordance with Regulation S, (D) pursuant to an exemption from registration under the Securities Act provided by Rule 144 (if applicable) under the Securities Act, (E) to an IAI purchasing for its own account, or for the account of such an IAI, in a minimum principal amount of Notes of $250,000 or (F) pursuant to an effective registration statement under the Securities Act, in each case in accordance with any applicable securities laws of any state of the United States. Prior to the expiration of the Restricted Period, transfers by an owner of a beneficial interest in the Temporary Regulation S Global Note to a transferee who takes delivery of such interest through the Rule 144A Global Note or the IAI Global Note will be made only in accordance with Applicable Procedures and upon receipt by the Trustee of a written certification from the transferor of the beneficial interest in the form provided on the reverse of the Initial Note to the effect that such transfer is being made to (i) a person whom the transferor reasonably believes is a QIB within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A or (ii) an IAI purchasing for its own account, or for the account of such an IAI, in a minimum principal amount of the Notes of $250,000. Such written certification will no longer be required after the expiration of the Restricted Period. In the case of a transfer of a beneficial interest in the Regulation S Global Note for an interest in the IAI Global Note, the transferee must furnish a signed letter substantially in the form of Exhibit D to the Trustee. (ii) Upon the expiration of the Restricted Period, beneficial ownership interests in the Temporary Regulation S Global Note may be exchanged for interests in a permanent global security in definitive, fully registered form without the Restricted Note Legend (the "PERMANENT REGULATION S GLOBAL NOTE") upon certification to the Trustee that such interests are owned either by non-U.S. persons or U.S. persons who purchased such interests pursuant to an exemption from, or transfer not subject to, the registration requirements of the Securities Act. Upon the expiration of the Restricted Period, the Issuer shall prepare and execute the Permanent Regulation S Global Note in accordance with the terms of this Indenture and deliver it to the Trustee for authentication. The Trustee shall retain the Permanent Regulation S Global Note as Notes Custodian. Any transfers of beneficial ownership interests in the Temporary Regulation S Global Note made in reliance on Regulation S shall thenceforth be recorded by the Trustee by making an appropriate increase in the principal amount of the Permanent Regulation S Global Note and a corresponding decrease in the principal amount of the Temporary Regulation S Global Note. At such time as the principal amount of the Temporary Regulation S Global Note has been reduced to zero, the Trustee shall cancel the Temporary Regulation S Global Note and deliver it to the Issuer. (e) LEGEND. (i) Except as permitted by the following paragraphs (ii), (iii) or (iv), each Note certificate evidencing the Global Notes and the Definitive Notes (and all Notes issued in exchange therefor or in substitution thereof) shall bear a legend in substantially the following form (each defined term in the legend being defined as such for purposes of the legend only): THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE 8 ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. Each Definitive Note will also bear the following additional legend: IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS. (ii) Upon any sale or transfer of a Transfer Restricted Security that is a Definitive Note, the Registrar shall permit the Holder thereof to exchange such Transfer Restricted Security for a Definitive Note that does not bear the legends set forth above and rescind any restriction on the transfer of such Transfer Restricted Security if the Holder certifies in writing to the Registrar that its request for such exchange was made in reliance on Rule 144 (such certification to be in the form set forth on the reverse of the Initial Note). 9 (iii) After a transfer of any Initial Notes or Private Exchange Notes during the period of the effectiveness of a Shelf Registration Statement with respect to such Initial Notes or Private Exchange Notes, as the case may be, all requirements pertaining to the Restricted Notes Legend on such Initial Notes or such Private Exchange Notes will cease to apply and any requirements that any such Initial Notes or such Private Exchange Notes be issued in global form will continue to apply. (iv) Upon the consummation of a Registered Exchange Offer with respect to the Initial Notes pursuant to which Holders of such Initial Notes are offered Exchange Notes in exchange for their Initial Notes, all requirements pertaining to Initial Notes that Initial Notes be issued in global form will continue to apply, and Exchange Notes in global form without the Restricted Notes Legend will be available to Holders that exchange such Initial Notes in such Registered Exchange Offer. (v) Upon the consummation of a Private Exchange with respect to the Initial Notes pursuant to which Holders of such Initial Notes are offered Private Exchange Notes in exchange for their Initial Notes, all requirements pertaining to such Initial Notes that Initial Notes be issued in global form will continue to apply, and Private Exchange Notes in global form with the Restricted Notes Legend will be available to Holders that exchange such Initial Notes in such Private Exchange. (vi) Upon a sale or transfer after the expiration of the Restricted Period of any Initial Note acquired pursuant to Regulation S, all requirements that such Initial Note bear the Restricted Notes Legend will cease to apply and the requirements requiring any such Initial Note be issued in global form will continue to apply. (f) CANCELATION OR ADJUSTMENT OF GLOBAL NOTE. At such time as all beneficial interests in a Global Note have either been exchanged for Definitive Notes, transferred, redeemed, repurchased or canceled, such Global Note shall be returned by the Depositary to the Trustee for cancelation or retained and canceled by the Trustee. At any time prior to such cancelation, if any beneficial interest in a Global Note is exchanged for Definitive Notes, transferred in exchange for an interest in another Global Note, redeemed, repurchased or canceled, the principal amount of Notes represented by such Global Note shall be reduced and an adjustment shall be made on the books and records of the Trustee (if it is then the Notes Custodian for such Global Note) with respect to such Global Note, by the Trustee or the Notes Custodian, to reflect such reduction. (g) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF NOTES. (i) To permit registrations of transfers and exchanges, the Issuer shall execute and the Trustee shall authenticate, Definitive Notes and Global Notes at the Registrar's request. (ii) No service charge shall be made for any registration of transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any transfer tax, assessments, or similar governmental charge payable in connection therewith (other than any such transfer taxes, assessments or similar governmental charge payable upon exchange or transfer pursuant to Section 3.06, 4.06, 4.08 and 9.05). (iii) Prior to the due presentation for registration of transfer of any Note, the Issuer, the Trustee, the Paying Agent or the Registrar may deem and treat the person in whose name a Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Note and for all other purposes whatsoever, 10 whether or not such Note is overdue, and none of the Issuer, the Trustee, the Paying Agent or the Registrar shall be affected by notice to the contrary. (iv) All Notes issued upon any transfer or exchange pursuant to the terms of this Indenture shall evidence the same debt and shall be entitled to the same benefits under this Indenture as the Notes surrendered upon such transfer or exchange. (h) NO OBLIGATION OF THE TRUSTEE. (i) The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Note, a member of, or a participant in the Depositary or any other Person with respect to the accuracy of the records of the Depositary or its nominee or of any participant or member thereof, with respect to any ownership interest in the Notes or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depositary) of any notice (including any notice of redemption or repurchase) or the payment of any amount, under or with respect to such Notes. All notices and communications to be given to the Holders and all payments to be made to Holders under the Notes shall be given or made only to the registered Holders (which shall be the Depositary or its nominee in the case of a Global Note). The rights of beneficial owners in any Global Note shall be exercised only through the Depositary subject to the applicable rules and procedures of the Depositary. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depositary with respect to its members, participants and any beneficial owners. (ii) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Depositary participants, members or beneficial owners in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof. 2.4 DEFINITIVE NOTES (a) A Global Note deposited with the Depositary or with the Trustee as Notes Custodian pursuant to Section 2.1 shall be transferred to the beneficial owners thereof in the form of Definitive Notes in an aggregate principal amount equal to the principal amount of such Global Note, in exchange for such Global Note, only if such transfer complies with Section 2.3 and (i) the Depositary notifies the Issuer that it is unwilling or unable to continue as a Depositary for such Global Note or if at any time the Depositary ceases to be a "clearing agency" registered under the Exchange Act, and a successor depositary is not appointed by the Issuer within 90 days of such notice, or (ii) an Event of Default has occurred and is continuing or (iii) the Issuer, in its sole discretion, notifies the Trustee in writing that it elects to cause the issuance of certificated Notes under this Indenture. (b) Any Global Note that is transferable to the beneficial owners thereof pursuant to this Section 2.4 shall be surrendered by the Depositary to the Trustee, to be so transferred, in whole or from time to time in part, without charge, and the Trustee shall authenticate and deliver, upon such transfer of each portion of such Global Note, an equal aggregate principal amount of Definitive Notes of authorized denominations. Any portion of a Global Note transferred pursuant to this Section shall be executed, authenticated and delivered only in denominations of $1,000 and any integral multiple thereof and registered in such names as the Depositary shall direct. Any certificated Initial Note in the form of a Definitive Note delivered in exchange for an interest in 11 the Global Note shall, except as otherwise provided by Section 2.3(e), bear the Restricted Notes Legend. (c) Subject to the provisions of Section 2.4(b), the registered Holder of a Global Note may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Notes. (d) In the event of the occurrence of any of the events specified in Section 2.4(a)(i), (ii) or (iii), the Issuer will promptly make available to the Trustee a reasonable supply of Definitive Notes in fully registered form without interest coupons. EXHIBIT A FORM OF FACE OF INITIAL NOTE UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF. THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION 2 REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. No. 9% Senior Subordinated Note due 2009 CUSIP No. ______ WILLIS CORROON CORPORATION, a Delaware corporation, promises to pay to Cede & Co., or registered assigns, the principal sum listed on the Schedule of Increases or Decreases in Global Note attached hereto on February 1, 2009. Interest Payment Dates: February 1 and August 1. Record Dates: January 15 and July 15. 2 Additional provisions of this Note are set forth on the following pages of this Note. IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed. WILLIS CORROON CORPORATION, by --------------------------------- Name: Title: Dated: TRUSTEE'S CERTIFICATE OF AUTHENTICATION THE BANK OF NEW YORK, as Trustee, certifies that this is one of the Notes referred to in the Indenture. By: -------------------------------- Authorized Signatory 3 FORM OF REVERSE SIDE OF INITIAL NOTE 9% Senior Subordinated Note due 2009 1. INTEREST (a) WILLIS CORROON CORPORATION, a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the "Issuer"), promises to pay interest on the principal amount of this Note at the rate per annum shown above. The Issuer will pay interest semiannually on February 1 and August 1 of each year, commencing August 1, 1999. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from August 1, 1999. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Issuer shall pay interest on overdue principal and Additional Amounts, if any, at the rate borne by the Notes, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful. (b) LIQUIDATED DAMAGES. The holder of this Note is entitled to the benefits of an Exchange and Registration Rights Agreement, dated as of February 2, 1999, among the Issuer, Willis Corroon Group Limited, Willis Corroon Partners (collectively, the "Guarantors") and the Initial Purchasers named therein (the "Registration Agreement"). Capitalized terms used in this paragraph (b) but not defined herein have the meanings assigned to them in the Registration Agreement. If (i) the applicable Registration Statement is not filed with the Commission on or prior to 100 days after the Issuance Date (or, in the case of a Shelf Registration Statement required to be filed in response to a change in law or applicable interpretations of the Commission's staff, if later, within 60 days after publication of the change in law or interpretations, but in no event before 100 calendar days after the Issuance Date), (ii) the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, is not declared effective within 240 days after the Issuance Date (or, in the case of a Shelf Registration Statement required to be filed in response to a change in law or applicable interpretations of the Commission's staff, if later, within 90 days after publication of the change in law or interpretations, but in no event before 240 days after the Issuance Date), (iii) the Registered Exchange Offer is not consummated on or prior to 270 days after the Issuance Date (other than in the event the Issuer files a Shelf Registration Statement), or (iv) the Shelf Registration Statement is filed and declared effective within 240 days after the Issuance Date but shall thereafter cease to be effective (at any time that the Issuer is obligated to maintain the effectiveness thereof) without being succeeded within 90 days by an additional Registration Statement filed and declared effective (each such event referred to in clauses (i) through (iv), a "REGISTRATION DEFAULT"), the Issuer and the Guarantors will be jointly and severally obligated to pay liquidated damages to each Holder of Transfer Restricted Notes, during the period of one or more such Registration Defaults, with respect to the first 90-day period immediately following the occurrence of the first Registration Default in an amount equal to .25% per annum (which rate shall be increased by an additional .25% per annum for each subsequent 90-day period that any liquidated damages continue to accrue; PROVIDED that the rate at which liquidated damages accrue may in no event exceed 1.00% per annum) in respect of the Notes constituting Transfer Restricted Notes held by such Holder until (i) the applicable Registration Statement is filed, (ii) the Exchange Offer Registration Statement is declared effective and the Registered Exchange Offer is consummated, (iii) the Shelf Registration Statement is declared effective or (iv) the Shelf Registration Statement again becomes effective, as the case may be. Following the cure of all Registration Defaults, the accrual of liquidated damages shall cease. Notwithstanding the foregoing provisions, the Issuer and the Guarantors may issue a notice that the Shelf Registration Statement is unusable pending the announcement of a material corporate transaction and may issue any notice suspending use of the Shelf Registration Statement required under applicable securities laws 4 to be issued and, in the event that the aggregate number of days in any consecutive twelve-month period for which all such notices are issued and effective exceeds 60 days in the aggregate, then the Issuer shall be obligated to pay liquidated damages to each Holder of Transfer Restricted Notes in an amount equal to 0.25% per annum (which rate shall be increased by an additional 0.25% per annum for each subsequent 90-day period that liquidated damages continue to accrue; PROVIDED that the rate at which liquidated damages accrue may in no event exceed 1.00% per annum) in respect of the Notes constituting Transfer Restricted Notes. Upon the Issuer declaring that the Shelf Registration Statement is usable after the period of time described in the preceding sentence the accrual of liquidated damages shall cease; PROVIDED, HOWEVER, that if after any such cessation of the accrual of liquidated damages the Shelf Registration Statement again ceases to be usable beyond the period permitted above, liquidated damages shall again accrue pursuant to the foregoing provisions. The Trustee shall have no responsibility with respect to the determination of the amount of any such liquidated damages. For purposes of the foregoing, "Transfer Restricted Notes" means (i) each Initial Note until the date on which such Initial Note has been exchanged for a freely transferable Exchange Note in the Registered Exchange Offer, (ii) each Initial Note or Private Exchange Note until the date on which such Initial Note or Private Exchange Note has been effectively registered under the Securities Act and disposed of in accordance with a Shelf Registration Statement or (iii) each Initial Note or Private Exchange Note until the date on which such Initial Note or Private Exchange Note is distributed to the public pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act. The liquidated damages due shall be payable on each interest payment date to the record holder entitled to receive the interest payment to be made on such date. 2. ADDITIONAL AMOUNTS All payments made by the Company with respect to the guarantees will be made without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature (collectively, "Taxes") imposed or levied by or on behalf of the United Kingdom or any political subdivision thereof or any authority having power to tax therein (each a "U.K. Tax Authority"), unless the withholding or deduction of such Taxes is then required by law. If any deduction or withholding for, or on account of, any Taxes of any U.K. Tax Authority, shall at any time be required on any payments made by the Company with respect to the guarantees, the Company will pay such additional amounts (the "Additional Amounts") as may be necessary in order that the net amounts received in respect of such payments by the Holders of the Notes or the Trustee, as the case may be, after such withholding or deduction, equal the respective amounts which would have been received in respect of such payments in the absence of such withholding or deduction; except that no such Additional Amounts will be payable with respect to: (i) any payments on a Note held by or on behalf of a Holder or beneficial owner who is liable for such Taxes in respect of such Note by reason of the Holder or beneficial owner having some connection with the United Kingdom (including being a citizen or resident or national of, or carrying on a business or maintaining a permanent establishment in, or being physically present in, the United Kingdom) other than by the mere holding of such Note or enforcement of rights thereunder or the receipt of payments in respect thereof; (ii) any Taxes that are imposed or withheld by reason of the failure of the Holder or beneficial owner of the Note to comply with any request by the Company to provide information concerning the nationality, residence or identity of such Holder or beneficial owner to make any declaration or similar claim or satisfy any 5 information or reporting requirement, which is required or imposed by a statue, treaty, regulation or administrative practice of the taxing jurisdiction as a precondition to exemption from all or part of such Taxes; or (iii) any Note presented for payment (where presentation is required) more than 30 days after the relevant payment is first made available for payment to the Holder. Such Additional Amounts will also not be payable where, had the beneficial owner of the Note been the Holder of the Note, he would not have been entitled to payment of Additional Amounts by reason of clauses (i) to (iii) inclusive above. References to principal, interest, premium or other amounts payable in respect of the guarantee shall be deemed also to refer to any Additional Amounts which may be payable. The Company will also (i) make such withholding or deduction and (ii) remit the full amount deducted or withheld to the relevant authority in accordance with applicable law. Upon request, the Company will provide the Trustee with documentation satisfactory to the Trustee evidencing the payment of Additional Amounts. Copies of such documentation will be made available to the Holders upon request. 3. METHOD OF PAYMENT The Issuer will pay interest on the Notes (except defaulted interest) and Additional Amounts, if any, to the Persons who are registered holders of Notes at the close of business on the January 15 or July 15 next preceding the interest payment date even if Notes are canceled after the record date and on or before the interest payment date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Issuer will pay principal and interest in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Notes represented by a Global Note (including principal, premium and interest) will be made by wire transfer of immediately available funds to the accounts specified by the Depositary. The Issuer will make all payments in respect of a certificated Note (including principal, premium and interest), by mailing a check to the registered address of each Holder thereof; PROVIDED, HOWEVER, that payments on the Notes may also be made, in the case of a Holder of at least $1,000,000 aggregate principal amount of Notes, by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 15 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion). 4. PAYING AGENT AND REGISTRAR Initially, The Bank of New York, a New York banking association (the "Trustee"), will act as Paying Agent and Registrar. The Issuer may appoint and change any Paying Agent, Registrar or co-registrar without notice. The Issuer or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar. In the event that Definitive Notes are issued, the Issuer will appoint Kredietbank S.A. Luxembourgeoise, or such other Person located in Luxembourg and reasonably acceptable to the Trustee, as an additional Paying Agent and Transfer Agent. Upon the issuance of Definitive Notes, Holders will be able to receive principal, premium, if any, and interest with respect to the Notes and will be able to transfer Definitive Notes at the Luxembourg office of 6 such Person, subject to the right of the Issuer to mail payments in accordance with the terms of this Indenture. 5. INDENTURE The Issuer issued the Notes under an Indenture dated as of February 2, 1999, (the "Indenture"), between the Issuer, the Guarantors and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the "TIA"). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Notes are subject to all such terms, and Noteholders are referred to the Indenture and the TIA for a statement of those terms. The Notes are senior subordinated unsecured obligations of the Issuer limited to $550,000,000 aggregate principal amount at any one time outstanding (subject to Sections 2.01 and 2.08 of the Indenture). This Note is one of the Initial Notes referred to in the Indenture issued in an aggregate principal amount of $550,000,000. The Notes include the Initial Notes and any Exchange Notes issued in exchange for Initial Notes. The Initial Notes and the Exchange Notes are treated as a single class of securities under the Indenture. The Indenture imposes certain limitations on the ability of the Issuer and its Restricted Subsidiaries to, among other things, make certain Investments and other Restricted Payments, incur Indebtedness and issue Disqualified Stock, enter into consensual restrictions upon the payment of certain dividends and distributions by such Restricted Subsidiaries, enter into or permit certain transactions with Affiliates, create or incur Liens, make asset sales, guarantee Indebtedness, or incur Indebtedness that is senior to Senior Subordinated Indebtedness but junior to Senior Indebtedness. The Indenture also imposes limitations on the ability of the Issuer to consolidate or merge with or into any other Person or convey, transfer or lease all or substantially all of the property of the Issuer. 6. OPTIONAL REDEMPTION Except as described below, the Notes will not be redeemable at the Issuer's option prior to February 1, 2004. From and after February 1, 2004, the Notes shall be subject to redemption at any time at the option of the Issuer, in whole or in part, upon not less than 30 nor more than 60 days' notice (as provided under paragraph 8 below), at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest thereon, if any and Additional Amounts, if any, to the applicable Redemption Date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date and Additional Amounts, if any, in respect thereof), if redeemed during the twelve-month period beginning on February 1 of each of the years indicated below:
Year Redemption Price - ---- ---------------- 2004.......................................................... 104.500% 2005.......................................................... 103.000% 2006.......................................................... 101.500% 2007 and thereafter........................................... 100.000%
In addition, at any time or from time to time, on or prior to February 1, 2002, the Issuer may, at its option, redeem up to 35% of the aggregate principal amount of Notes originally issued under the Indenture on the Issuance Date at a redemption price equal to 7 109% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon, if any, and Additional Amounts, if any, to the Redemption Date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date and Additional Amounts, if any, with the net proceeds of one or more Equity Offerings of the Issuer or any direct or indirect parent of the Issuer to the extent such net proceeds are contributed to the Issuer or used to repay to the Issuer amounts outstanding in respect of the Trinity Intercompany Notes; PROVIDED that at least 65% of the aggregate principal amount of Notes originally issued under the Indenture on the Issuance Date remains outstanding immediately after the occurrence of each such redemption; PROVIDED FURTHER that each such redemption occurs within 90 days of the date of closing of each such Equity Offering. 7. SINKING FUND The Notes are not subject to any sinking fund. 8. NOTICE OF REDEMPTION Notice of redemption shall be given at least 30 days but not more than 60 days before the Redemption Date by publishing in a leading newspaper having a general circulation in New York (which is expected to be the WALL STREET JOURNAL) (and, so long as the Notes are listed on the Luxembourg Stock Exchange and the rules of such stock exchange shall so require, a newspaper having a general circulation in Luxembourg (which is expected to be the LUXEMBURGER WORT)) and, in the case of Definitive Notes, by also mailing by first-class mail to each Holder of Notes to be redeemed at his or her registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of, accrued interest and Additional Amounts, if any, on all Notes (or portions thereof) to be redeemed on the Redemption Date is deposited with the Paying Agent on or before the Redemption Date and certain other conditions are satisfied, on and after such date interest and Additional Amounts, if any, shall cease to accrue on such Notes (or such portions thereof) called for redemption. 9. CHANGE OF CONTROL Upon a Change of Control, the Issuer shall, subject to certain conditions specified in the Indenture, make an offer to repurchase all of the Notes then outstanding at a purchase price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, and Additional Amounts, if any, to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date and Additional Amounts, if any, that is on or prior to the date of purchase) as provided in, and subject to the terms of, the Indenture. 10. SUBORDINATION The Notes are subordinated to Senior Indebtedness, as defined in the Indenture. To the extent provided in the Indenture, Senior Indebtedness must be paid before the Notes may be paid. The Issuer and each Guarantor agree, and each Noteholder by accepting a Note agrees, to the subordination provisions contained in the Indenture and any supplemental indenture and authorizes the Trustee to give them effect and appoints the Trustee as attorney-in-fact for such purpose. 11. DENOMINATIONS; TRANSFER; EXCHANGE The Notes are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Notes in accordance with 8 the Indenture. Upon any transfer or exchange, the Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Notes selected for redemption (except, in the case of a Note to be redeemed in part, the portion of the Note not to be redeemed) or to transfer or exchange any Notes for a period of 15 days prior to a selection of Notes to be redeemed. 12. PERSONS DEEMED OWNERS The registered Holder of this Note may be treated as the owner of it for all purposes. 13. UNCLAIMED MONEY If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Issuer at its written request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Issuer and not to the Trustee for payment. 14. DISCHARGE AND DEFEASANCE Subject to certain conditions, the Issuer at any time may terminate some of or all its obligations under the Notes and the Indenture if the Issuer deposits with the Trustee money or Government Securities for the payment of principal and interest on the Notes to redemption or maturity, as the case may be. 15. AMENDMENT, WAIVER Subject to certain exceptions, the Issuer, any Guarantor and the Trustee may amend the Indenture, the Notes or the Guarantees with the written consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including consents obtained in connection with a tender offer or exchange for the Notes) and, subject to Article 6 of the Indenture, any existing default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes (including consents obtained in connection with a purchase of or tender offer or exchange offer for the Notes). Subject to certain exceptions set forth in the Indenture, without the consent of any Holder of the Notes, the Issuer and the Trustee may amend the Indenture or the Notes to cure any ambiguity, omission, defect or inconsistency; to comply with Article 5 of the Indenture; to provide for uncertificated Notes in addition to or in place of certificated Notes; PROVIDED, HOWEVER, that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code; to provide for the assumption of the Issuer's or any Guarantor's obligations to Holders; to add Guarantees with respect to the Notes or to secure the Notes; to make any change that would provide any additional rights or benefits to the Holders or that does not adversely affect the legal rights under the Indenture of any such Holder; to add to the covenants for the benefit of the Holders or to surrender any right or power herein conferred upon the Issuer; to comply with any requirements of the SEC in connection with qualifying, or maintaining the qualification of, the Indenture under the TIA; to evidence and provide for the acceptance and appointment under the Indenture of a successor Trustee pursuant to Article 7 of the Indenture; or to provide for the issuance of the Exchange Notes or the Private Exchange Notes, which shall have terms substantially identical in all material respects to the Initial Notes (except that the transfer restrictions contained in the Initial Notes shall be modified or eliminated, as 9 appropriate), and which shall be treated, together with any outstanding Initial Notes, as a single issue of securities. 16. DEFAULTS AND REMEDIES If an Event of Default occurs (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Issuer) and is continuing, the Trustee or the Holders of at least 30% in principal amount of the outstanding Notes may declare the principal of and accrued but unpaid interest on all the Notes to be due and payable; PROVIDED, HOWEVER, that, so long as any Indebtedness permitted to be incurred under the Indenture as part of the Senior Credit Facilities shall be outstanding, no such acceleration shall be effective until the earlier of (i) acceleration of any such Indebtedness under the Senior Credit Facilities or (ii) five Business Days after the giving of written notice to the Issuer and the administrative agent under the Senior Credit Facilities of such acceleration. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Issuer occurs, the principal of and interest on all the Notes shall become immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Notes may rescind any such acceleration with respect to the Notes and its consequences. If an Event of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee reasonable indemnity or security against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder may pursue any remedy with respect to the Indenture or the Notes unless (i) such Holder has previously given the Trustee notice that an Event of Default is continuing, (ii) Holders of at least 30% in principal amount of the outstanding Notes have requested the Trustee in writing to pursue the remedy, (iii) such Holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense, (iv) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity and (v) the Holders of a majority in principal amount of the outstanding Notes have not given the Trustee a direction inconsistent with such request within such 60-day period. Subject to certain restrictions, the Holders of a majority in principal amount of the outstanding Notes are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability. Prior to taking any action under the Indenture, the Trustee will be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action. 17. TRUSTEE DEALINGS WITH THE ISSUER Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with and collect obligations owed to it by the Issuer or its Affiliates and may otherwise deal with the Issuer or its Affiliates with the same rights it would have if it were not Trustee. 18. NO RECOURSE AGAINST OTHERS No director, officer, employee, incorporator or stockholder of the Issuer or of any Guarantor, shall have any liability for any obligations of the Issuer or the Guarantors 10 under the Notes, the Guarantees or the Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. 19. AUTHENTICATION This Note shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Note. 20. ABBREVIATIONS Customary abbreviations may be used in the name of a Noteholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 21. GOVERNING LAW THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 22. CUSIP NUMBERS Pursuant to a recommendation promulgated by the Committee on Uniform Note Identification Procedures, the Issuer has caused CUSIP numbers to be printed on the Notes and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Noteholders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. THE ISSUER WILL FURNISH TO ANY HOLDER OF NOTES UPON WRITTEN REQUEST AND WITHOUT CHARGE TO THE HOLDER A COPY OF THE INDENTURE WHICH HAS IN IT THE TEXT OF THIS NOTE. 11 ASSIGNMENT FORM To assign this Note, fill in the form below: I or we assign and transfer this Note to (Print or type assignee's name, address and zip code) (Insert assignee's soc. sec. or tax I.D. No.) and irrevocably appoint agent to transfer this Note on the books of the Issuer. The agent may substitute another to act for him. - ------------------------------------------------------------ Date: Your Signature: -------------------- ------------------ - ------------------------------------------------------------ Sign exactly as your name appears on the other side of this Note. 12 CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER RESTRICTED NOTES This certificate relates to $_________ principal amount of Notes held in (check applicable space) ____ book-entry or _____ definitive form by the undersigned. The undersigned (check one box below): / / has requested the Trustee by written order to deliver in exchange for its beneficial interest in the Global Note held by the Depositary a Note or Notes in definitive, registered form of authorized denominations and an aggregate principal amount equal to its beneficial interest in such Global Note (or the portion thereof indicated above); / / has requested the Trustee by written order to exchange or register the transfer of a Note or Notes. In connection with any transfer of any of the Notes evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144(k) under the Securities Act, the undersigned confirms that such Notes are being transferred in accordance with its terms: CHECK ONE BOX BELOW (1) / / to the Issuer; or (2) / / pursuant to an effective registration statement under the Securities Act of 1933; or (3) / / inside the United States to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or (4) / / outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933; or (5) / / to an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933) that has furnished to the Trustee a signed letter containing certain representations and agreements; or (6) / / pursuant to another available exemption from registration provided by Rule 144 under the Securities Act of 1933. Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any Person other than the registered holder thereof; PROVIDED, HOWEVER, that if box (4), (5) or (6) is checked, the Trustee may require, prior to registering any such transfer of the Notes, such legal opinions, certifications and other information as the Issuer has reasonably requested to confirm 13 that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933. ------------------------------------- Your Signature Signature Guarantee: Date: ------------------------------- ------------------------------------- Signature must be guaranteed Signature of Signature by a participant in a Guarantee recognized signature guaranty medallion program or other signature guarantor acceptable to the Trustee - ------------------------------------------------------------ TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED. The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuer as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: ------------------------------- ------------------------------------- NOTICE: To be executed by an executive officer 14 SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE The initial principal amount of this Global Note is $[ ]. The following increases or decreases in this Global Note have been made:
Date of Amount of decrease in Amount of increase in Principal amount of this Signature of authorized Exchange Principal Amount of this Principal Amount of this Global Note following such signatory of Trustee or Global Note Global Note decrease or increase Notes Custodian
15 OPTION OF HOLDER TO ELECT PURCHASE IF YOU WANT TO ELECT TO HAVE THIS NOTE PURCHASED BY THE ISSUER PURSUANT TO SECTION 4.06 (ASSET SALE) OR 4.08 (CHANGE OF CONTROL) OF THE INDENTURE, CHECK THE BOX: ASSET SALE / / CHANGE OF CONTROL / / IF YOU WANT TO ELECT TO HAVE ONLY PART OF THIS NOTE PURCHASED BY THE ISSUER PURSUANT TO SECTION 4.06 OR 4.08 OF THE INDENTURE, STATE THE AMOUNT: $ DATE: YOUR SIGNATURE: ------------------ --------------------------------------- (SIGN EXACTLY AS YOUR NAME APPEARS ON THE OTHER SIDE OF THIS NOTE) SIGNATURE GUARANTEE: ------------------------------------------------------------ SIGNATURE MUST BE GUARANTEED BY A PARTICIPANT IN A RECOGNIZED SIGNATURE GUARANTY MEDALLION PROGRAM OR OTHER SIGNATURE GUARANTOR ACCEPTABLE TO THE TRUSTEE EXHIBIT B FORM OF FACE OF EXCHANGE NOTE No. $__________ 9% Senior Subordinated Note due 2009 CUSIP No. ______ WILLIS CORROON CORPORATION, a Delaware corporation, promises to pay to Cede & Co., or registered assigns, the principal sum [of Dollars] [listed on the Schedule of Increases or Decreases in Global Note attached hereto](1) on February 1, 2009. Interest Payment Dates: February 1 and August 1. Record Dates: January 15 and July 15. - -------- (1) Use the Schedule of Increases and Decreases language if Note is in Global Form. 2 Additional provisions of this Note are set forth on the following pages of this Note. IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed. WILLIS CORROON CORPORATION, by --------------------------------- Name: Title: Dated: TRUSTEE'S CERTIFICATE OF AUTHENTICATION THE BANK OF NEW YORK, as Trustee, certifies that this is one of the Notes referred to in the Indenture. By: -------------------------------- Authorized Signatory - ----------------- */ If the Note is to be issued in global form, add the Global Notes Legend and the attachment from Exhibit A captioned "TO BE ATTACHED TO GLOBAL NOTES - SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE". 3 FORM OF REVERSE SIDE OF EXCHANGE NOTE 9% Senior Subordinated Note due 2009 1. INTEREST WILLIS CORROON CORPORATION, a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the "Issuer"), promises to pay interest on the principal amount of this Note at the rate per annum shown above. The Issuer will pay interest semiannually on February 1 and August 1 of each year, commencing August 1, 1999. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from August 1, 1999. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Issuer shall pay interest on overdue principal and Additional Amounts, if any, at the rate borne by the Notes, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful. 2. ADDITIONAL AMOUNTS All payments made by the Company with respect to the guarantees will be made without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature (collectively, "Taxes") imposed or levied by or on behalf of the United Kingdom or any political subdivision thereof or any authority having power to tax therein (each a "U.K. Tax Authority"), unless the withholding or deduction of such Taxes is then required by law. If any deduction or withholding for, or on account of, any Taxes of any U.K. Tax Authority, shall at made by the Company with respect to the guarantees, the Company will pay such additional amounts (the "Additional Amounts") as may be necessary in order that the net amounts received in respect of such payments by the Holders of the Notes or the Trustee, as the case may be, after such withholding or deduction, equal the respective amounts which would have been received in respect of such payments in the absence of such withholding or deduction; except that no such Additional Amounts will be payable with respect to: (i) any payments on a Note held by or on behalf of a Holder or beneficial owner who is liable for such Taxes in respect of such Note by reason of the Holder or beneficial owner having some connection with the United Kingdom (including being a citizen or resident or national of, or carrying on a business or maintaining a permanent establishment in, or being physically present in, the United Kingdom) other than by the mere holding of such Note or enforcement of rights thereunder or the receipt of payments in respect thereof; (ii) any Taxes that are imposed or withheld by reason of the failure of the Holder or beneficial owner of the Note to comply with any request by the Company to provide information concerning the nationality, residence or identity of such Holder or beneficial owner to make any declaration or similar claim or satisfy any information or reporting requirement, which is required or imposed by a statue, treaty, regulation or administrative practice of the taxing jurisdiction as a precondition to exemption from all or part of such Taxes; or (iii) any Note presented for payment (where presentation is required) more than 30 days after the relevant payment is first made available for payment to the Holder. 4 Such Additional Amounts will also not be payable where, had the beneficial owner of the Note been the Holder of the Note, he would not have been entitled to payment of Additional Amounts by reason of clauses (i) to (iii) inclusive above. References to principal, interest, premium or other amounts payable in respect of the guarantee shall be deemed also to refer to any Additional Amounts which may be payable. The Company will also (i) make such withholding or deduction and (ii) remit the full amount deducted or withheld to the relevant authority in accordance with applicable law. Upon request, The Company will provide the Trustee with documentation satisfactory to the Trustee evidencing the payment of Additional Amounts. Copies of such documentation will be made available to the Holders upon request. 3. METHOD OF PAYMENT The Issuer shall pay interest on the Notes (except defaulted interest) and Additional Amounts, if, any, to the Persons who are registered holders of Notes at the close of business on the January 15 or July 15 next preceding the interest payment date even if Notes are canceled after the record date and on or before the interest payment date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Issuer will pay principal and interest in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Notes represented by a Global Note (including principal, premium and interest) will be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company. The Issuer will make all payments in respect of a certificated Note (including principal, premium and interest), by mailing a check to the registered address of each Holder thereof; PROVIDED, HOWEVER, that payments on the Notes may also be made, in the case of a Holder of at least $1,000,000 aggregate principal amount of Notes, by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 15 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion). 4. PAYING AGENT AND REGISTRAR Initially, The Bank of New York, a New York banking association (the "Trustee"), will act as Paying Agent and Registrar. The Issuer may appoint and change any Paying Agent, Registrar or co-registrar without notice. The Issuer or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar. In the event that Definitive Notes are issued, the Issuer will appoint Kredietbank S.A. Luxembourgeoise, or such other Person located in Luxembourg and reasonably acceptable to the Trustee, as an additional Paying Agent and Transfer Agent. Upon the issuance of Definitive Notes, Holders will be able to receive principal, premium, if any, and interest with respect to the Notes and will be able to transfer Definitive Notes at the Luxembourg office of such Person, subject to the right of the Issuer to mail payments in accordance with the terms of this Indenture. 5. INDENTURE The Issuer issued the Notes under an Indenture dated as of February 2, 1999 (the "Indenture"), between the Issuer and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture 5 Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the "TIA"). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Notes are subject to all such terms, and Noteholders are referred to the Indenture and the TIA for a statement of those terms. The Notes are senior subordinated unsecured obligations of the Issuer limited to $550,000,000 million aggregate principal amount at any one time outstanding, of which the entire $550,000,000 in aggregate principal amount were issued on the Issuance Date. This Note is one of the Exchange Notes referred to in the Indenture. The Notes include the Initial Notes and any Exchange Notes and Private Exchange Notes issued in exchange for the Initial Notes pursuant to the Indenture. The Initial Notes, the Exchange Notes and the Private Exchange Notes are treated as a single class of securities under the Indenture. The Indenture imposes certain limitations on the ability of the Issuer and its Restricted Subsidiaries to, among other things, make certain Investments and other Restricted Payments, incur Indebtedness and issue Disqualified Stock, enter into consensual restrictions upon the payment of certain dividends and distributions by such Restricted Subsidiaries, enter into or permit certain transactions with Affiliates, create or incur Liens, make asset sales, guarantee Indebtedness, or incur Indebtedness that is senior to Senior Subordinated Indebtedness but junior to Senior Indebtedness. The Indenture also imposes limitations on the ability of the Issuer to consolidate or merge with or into any other Person or convey, transfer or lease all or substantially all of the property of the Issuer. 6. OPTIONAL REDEMPTION Except as described below, the Notes will not be redeemable at the Issuer's option prior to February 1, 2004. From and after February 1, 2004, the Notes shall be subject to redemption at any time at the option of the Issuer, in whole or in part, upon not less than 30 nor more than 60 days' notice (as provided under paragraph 8 below), at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest thereon, if any, and Additional Amounts, if any, to the applicable Redemption Date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date and Additional Amounts, if any, in respect thereof), if redeemed during the twelve-month period beginning on February 1 of each of the years indicated below:
Year Redemption Price - ---- ---------------- 2004...................................................... 104.500% 2005...................................................... 103.000% 2006...................................................... 101.500% 2007 and thereafter...................................... 100.000%
In addition, at any time or from time to time, on or prior to February 1, 2002, the Issuer may, at its option, redeem up to 35% of the aggregate principal amount of Notes originally issued under the Indenture on the Issuance Date at a redemption price equal to 109% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon, if any, and Additional Amounts, if any, to the Redemption Date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date and Additional Amounts, if any ), with the net proceeds of one or more Equity Offerings of the Issuer or any direct or indirect parent of the Issuer to the extent such net proceeds are contributed to the Issuer or used to repay to the Issuer amounts outstanding in respect of the Trinity Intercompany Notes; PROVIDED that at least 65% of the aggregate principal amount of 6 Notes originally issued under the Indenture on the Issuance Date remains outstanding immediately after the occurrence of each such redemption; PROVIDED FURTHER that each such redemption occurs within 90 days of the date of closing of each such Equity Offering. 7. SINKING FUND The Notes are not subject to any sinking fund. 8. NOTICE OF REDEMPTION Notice of redemption shall be given at least 30 days but not more than 60 days before the Redemption Date by publishing in a leading newspaper having a general circulation in New York (which is expected to be the WALL STREET JOURNAL) (and, so long as the Notes are listed on the Luxembourg Stock Exchange and the rules of such stock exchange shall so require, a newspaper having a general circulation in Luxembourg (which is expected to be the LUXEMBURGER WORT)) and, in the case of Definitive Notes, by also mailing by first-class mail to each Holder of Notes to be redeemed at his or her registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of, accrued interest and Additional Amounts, if any, on all Notes (or portions thereof) to be redeemed on the Redemption Date is deposited with the Paying Agent on or before the Redemption Date and certain other conditions are satisfied, on and after such date interest and Additional Amounts, if any, shall cease to accrue on such Notes (or such portions thereof) called for redemption. 9. CHANGE OF CONTROL Upon a Change of Control, the Issuer shall, subject to certain conditions specified in the Indenture, make an offer to repurchase all of the Notes then outstanding at a purchase price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, and Additional Amounts, if any, to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date and Additional Amounts, if any, that is on or prior to the date of purchase) as provided in, and subject to the terms of, the Indenture. 10. SUBORDINATION The Notes are subordinated to Senior Indebtedness, as defined in the Indenture. To the extent provided in the Indenture, Senior Indebtedness must be paid before the Notes may be paid. The Issuer and each Guarantor agree, and each Noteholder by accepting a Note agrees, to the subordination provisions contained in the Indenture and any supplemental indenture and authorizes the Trustee to give them effect and appoints the Trustee as attorney-in-fact for such purpose. 11. DENOMINATIONS; TRANSFER; EXCHANGE The Notes are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Notes in accordance with the Indenture. Upon any transfer or exchange, the Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Notes selected for redemption (except, in the case of a Note to be redeemed in part, the portion of the Note not to be redeemed) or to transfer or exchange any Notes for a period of 15 days prior to a selection of Notes to be redeemed. 7 12. PERSONS DEEMED OWNERS The registered Holder of this Note may be treated as the owner of it for all purposes. 13. UNCLAIMED MONEY If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Issuer at its written request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Issuer and not to the Trustee for payment. 14. DISCHARGE AND DEFEASANCE Subject to certain conditions, the Issuer at any time may terminate some of or all its obligations under the Notes and the Indenture if the Issuer deposits with the Trustee money or Government Securities for the payment of principal and interest on the Notes to redemption or maturity, as the case may be. 15. AMENDMENT, WAIVER Subject to certain exceptions, the Issuer, any Guarantor and the Trustee may amend the Indenture, the Notes or the Guarantees with the written consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including consents obtained in connection with a tender offer or exchange for the Notes) and, subject to Article 6 of the Indenture, any existing default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes (including consents obtained in connection with a purchase of or tender offer or exchange offer for the Notes). Subject to certain exceptions set forth in the Indenture, without the consent of any Holder of the Notes, the Issuer and the Trustee may amend the Indenture or the Notes to cure any ambiguity, omission, defect or inconsistency; to comply with Article 5 of the Indenture; to provide for uncertificated Notes in addition to or in place of certificated Notes; PROVIDED, HOWEVER, that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code; to provide for the assumption of the Issuer's or any Guarantor's obligations to Holders; to add Guarantees with respect to the Notes or to secure the Notes; to make any change that would provide any additional rights or benefits to the Holders or that does not adversely affect the legal rights under the Indenture of any such Holder; to add to the covenants for the benefit of the Holders or to surrender any right or power herein conferred upon the Issuer; to comply with any requirements of the SEC in connection with qualifying, or maintaining the qualification of, the Indenture under the TIA; to evidence and provide for the acceptance and appointment under the Indenture of a successor Trustee pursuant to Article 7 of the Indenture; or to provide for the issuance of the Exchange Notes and the Private Exchange Notes, which shall have terms substantially identical in all material respects to the Initial Notes (except that the transfer restrictions contained in the Initial Notes shall be modified or eliminated, as appropriate), and which shall be treated, together with any outstanding Initial Notes, as a single issue of securities. 16. DEFAULTS AND REMEDIES If an Event of Default occurs (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Issuer) and is continuing, 8 the Trustee or the Holders of at least 30% in principal amount of the outstanding Notes may declare the principal of and accrued but unpaid interest on all the Notes to be due and payable; PROVIDED, HOWEVER, that, so long as any Indebtedness permitted to be incurred under the Indenture as part of the Senior Credit Facilities shall be outstanding, no such acceleration shall be effective until the earlier of (i) acceleration of any such Indebtedness under the Senior Credit Facilities or (ii) five Business Days after the giving of written notice to the Issuer and the administrative agent under the Senior Credit Facilities of such acceleration. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Issuer occurs, the principal of and interest on all the Notes shall become immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Notes may rescind any such acceleration with respect to the Notes and its consequences. If an Event of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee reasonable indemnity or security against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder may pursue any remedy with respect to the Indenture or the Notes unless (i) such Holder has previously given the Trustee notice that an Event of Default is continuing, (ii) Holders of at least 30% in principal amount of the outstanding Notes have requested the Trustee in writing to pursue the remedy, (iii) such Holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense, (iv) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity and (v) the Holders of a majority in principal amount of the outstanding Notes have not given the Trustee a direction inconsistent with such request within such 60-day period. Subject to certain restrictions, the Holders of a majority in principal amount of the outstanding Notes are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability. Prior to taking any action under the Indenture, the Trustee will be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action. 17. TRUSTEE DEALINGS WITH THE ISSUER Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with and collect obligations owed to it by the Issuer or its Affiliates and may otherwise deal with the Issuer or its Affiliates with the same rights it would have if it were not Trustee. 18. NO RECOURSE AGAINST OTHERS No director, officer, employee, incorporator or stockholder of the Issuer or of any Guarantor, shall have any liability for any obligations of the Issuer or the Guarantors under the Notes, the Guarantees or the Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. 9 19. AUTHENTICATION This Note shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Note. 20. ABBREVIATIONS Customary abbreviations may be used in the name of a Noteholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 21. GOVERNING LAW THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 22. CUSIP NUMBERS Pursuant to a recommendation promulgated by the Committee on Uniform Note Identification Procedures, the Issuer has caused CUSIP numbers to be printed on the Notes and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Noteholders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. THE ISSUER WILL FURNISH TO ANY HOLDER OF NOTES UPON WRITTEN REQUEST AND WITHOUT CHARGE TO THE HOLDER A COPY OF THE INDENTURE WHICH HAS IN IT THE TEXT OF THIS NOTE. 10 ASSIGNMENT FORM To assign this Note, fill in the form below: I or we assign and transfer this Note to (Print or type assignee's name, address and zip code) (Insert assignee's soc. sec. or tax I.D. No.) and irrevocably appoint agent to transfer this Note on the books of the Issuer. The agent may substitute another to act for him. - ------------------------------------------------------------ Date: Your Signature: ---------------- --------------------- - ------------------------------------------------------------ Sign exactly as your name appears on the other side of this Note. Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor acceptable to the Trustee. 11 OPTION OF HOLDER TO ELECT PURCHASE IF YOU WANT TO ELECT TO HAVE THIS NOTE PURCHASED BY THE ISSUER PURSUANT TO SECTION 4.06 (ASSET SALE) OR 4.08 (CHANGE OF CONTROL) OF THE INDENTURE, CHECK THE BOX: ASSET SALE / / CHANGE OF CONTROL / / IF YOU WANT TO ELECT TO HAVE ONLY PART OF THIS NOTE PURCHASED BY THE ISSUER PURSUANT TO SECTION 4.06 OR 4.08 OF THE INDENTURE, STATE THE AMOUNT: $ DATE: YOUR SIGNATURE: ------------------ ------------------ (SIGN EXACTLY AS YOUR NAME APPEARS ON THE OTHER SIDE OF THIS NOTE) SIGNATURE GUARANTEE: --------------------------------------- SIGNATURE MUST BE GUARANTEED BY A PARTICIPANT IN A RECOGNIZED SIGNATURE GUARANTY MEDALLION PROGRAM OR OTHER SIGNATURE GUARANTOR ACCEPTABLE TO THE TRUSTEE. EXHIBIT C Form of Certificate to be Delivered in Connection with Transfers of Regulation S Global Note The Bank of New York 101 Barclay Street New York, NY 10286 Attention of: Ming Shiang Re: WILLIS CORROON CORPORATION (the "Issuer") 9% Senior Subordinated Notes due 2009 (the "Notes") Ladies and Gentlemen: In connection with our proposed sale of $[________] aggregate principal amount of the Notes, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the United States Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we represent that: (1) the offer of the Notes was not made to a person in the United States; (2) either (a) at the time the buy order was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States or (b) the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States; (3) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable; and (4) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act. In addition, if the sale is made during a restricted period and the provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable thereto, we confirm that such sale has been made in accordance with the applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be. 2 You and the Issuer are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. Very truly yours, [Name of Transferor] By: ----------------------- Authorized Signature EXHIBIT D Form of Transferee Letter of Representation Willis Corroon Corporation c/o The Bank of New York 101 Barclay Street New York, NY 10286 Ladies and Gentlemen: This certificate is delivered to request a transfer of [ ] principal amount of the 9% Senior Subordinated Notes due 2009 (the "Notes") of Willis Corroon Corporation (the "Issuer"). Upon transfer, the Notes would be registered in the name of the new beneficial owner as follows: Name: ------------------------ Address: --------------------- Taxpayer ID Number: ---------- The undersigned represents and warrants to you that: 1. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the "Securities Act")) purchasing for our own account or for the account of such an institutional "accredited investor" at least $250,000 principal amount of the Notes, and we are acquiring the Notes not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act. We have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we invest in or purchase securities similar to the Notes in the normal course of our business. We, and any accounts for which we are acting, are each able to bear the economic risk of our or its investment. 2. We understand that the Notes have not been registered under the Securities Act and, unless so registered, may not be sold except as permitted in the following sentence. We agree on our own behalf and on behalf of any investor account for which we are purchasing Notes to offer, sell or otherwise transfer such Notes prior to the date that is two years after the later of the date of original issue and the last date on which the Issuer or any affiliate of the Issuer was the owner of such Notes (or any predecessor thereto) (the "Resale Restriction Termination Date") only (a) to the Issuer, (b) pursuant to a registration statement that has been declared effective under the Securities Act, (c) in a transaction complying with the requirements of Rule 144A under the Securities Act ("Rule 144A"), to a person we reasonably believe is a qualified institutional investor under Rule 144A (a "QIB") that purchases for its own account or for the account of a QIB and to whom notice is given that the transfer is being made in reliance on Rule 144A, (d) pursuant to offers and sales that occur outside the United States within the meaning of Regulation S under the Securities Act, (e) to an institutional "accredited investor" within 2 the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is purchasing for its own account or for the account of such an institutional "accredited investor," in each case in a minimum principal amount of Notes of $250,000, or (f) pursuant to any other available exemption from the registration requirements of the Securities Act, subject in each of the foregoing cases to any requirement of law that the disposition of our property or the property of such investor account or accounts be at all times within our or their control and in compliance with any applicable state securities laws. The foregoing restrictions on resale will not apply subsequent to the Resale Restriction Termination Date. If any resale or other transfer of the Notes is proposed to be made pursuant to clause (e) above prior to the Resale Restriction Termination Date, the transferor shall deliver a letter from the transferee substantially in the form of this letter to the Issuer and the Trustee, which shall provide, among other things, that the transferee is an institutional "accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act and that it is acquiring such Notes for investment purposes and not for distribution in violation of the Securities Act. Each purchaser acknowledges that the Issuer and the Trustee reserve the right prior to the offer, sale or other transfer prior to the Resale Termination Date of the Notes pursuant to clause (d), (e) or (f) above to require the delivery of an Opinion of Counsel, certifications or other information satisfactory to the Issuer and the Trustee. TRANSFEREE: , ----------------- by: ----------------------- EXHIBIT E FORM OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE (this "Supplemental Indenture") dated as of [ ], among [GUARANTOR] (the "New Guarantor"), WILLIS CORROON CORPORATION, a Delaware corporation, WILLIS CORROON GROUP LIMITED, a company with limited liability organized under the laws of England and Wales (the "Company"), WILLIS CORROON PARTNERS, a Delaware general partnership ("USGP" and together with the Company, the "Existing Guarantors") and The Bank of New York, a New York banking association, as trustee under the indenture referred to below (the "Trustee"). W I T N E S S E T H : WHEREAS the Issuer, and the Existing Guarantors have heretofore executed and delivered to the Trustee an Indenture (the "Indenture") dated as of February 2, 1999, providing for the issuance of an aggregate principal amount of up to $550,000,000 of 9% Senior Notes due 2009 (the "Securities"); WHEREAS Section 4.11 of the Indenture provides that under certain circumstances the Company is required to cause the New Guarantor to execute and deliver to the Trustee a supplemental indenture pursuant to which the New Guarantor shall unconditionally guarantee all the Company's obligations under the Securities pursuant to a Guarantee on the terms and conditions set forth herein; and WHEREAS pursuant to Section 11.06 of the Indenture, the Trustee, the Issuer and the Existing Guarantors are authorized to execute and deliver this Supplemental Indenture; NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the New Guarantor, the Issuer, the Existing Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the holders of the Securities as follows: 1. AGREEMENT TO GUARANTEE. The New Guarantor hereby agrees, jointly and severally with all the Existing Guarantors, to unconditionally guarantee the Issuer's obligations under the Securities on the terms and subject to the conditions set forth in Article 10 of the Indenture and to be bound by all other applicable provisions of the Indenture and the Securities. 2. RATIFICATION OF INDENTURE; SUPPLEMENTAL INDENTURES PART OF INDENTURE. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Securities heretofore or hereafter authenticated and delivered shall be bound hereby. 3. GOVERNING LAW. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT 2 THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 4. TRUSTEE MAKES NO REPRESENTATION. The Trustee makes no representation as to the validity or sufficiency of this Supplemental Indenture. 5. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 6. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not effect the construction thereof. IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written. [NEW GUARANTOR], by --------------------------------------- Name: Title: WILLIS CORROON CORPORATION, by --------------------------------------- Name: Title: WILLIS CORROON GROUP LIMITED, by --------------------------------------- Name: Title: WILLIS CORROON PARTNERS, by --------------------------------------- Name: Title: THE BANK OF NEW YORK, as Trustee, by --------------------------------------- Name: Title: EX-4.3 19 EX. 4.3 Exhibit 4.3 EXECUTION COPY WILLIS CORROON CORPORATION $550,000,000 9% Senior Subordinated Notes due 2009 EXCHANGE AND REGISTRATION RIGHTS AGREEMENT February 2, 1999 CHASE SECURITIES INC. 270 Park Avenue, 4th Floor New York, New York 10017 CHASE MANHATTAN INTERNATIONAL LIMITED 125 London Wall, 9th Floor London, EC2Y 5AJ England Ladies and Gentlemen: Willis Corroon Corporation, a Delaware corporation (the "COMPANY"), proposes to issue and sell to Chase Securities Inc. ("CSI") and Chase Manhattan International Limited (together with CSI, the "INITIAL PURCHASERS"), upon the terms and subject to the conditions set forth in a purchase agreement dated January 28, 1999 (the "PURCHASE AGREEMENT"), $550,000,000 aggregate principal amount of its 9% Senior Subordinated Notes due 2009 (the "SECURITIES") to be jointly and severally guaranteed on a senior subordinated basis by Willis Corroon Group Limited ("WCG") and Willis Corroon Partners ("USGP," and together with WCG, the "GUARANTORS"). Capitalized terms used but not defined herein shall have the meanings given to such terms in the Purchase Agreement. As an inducement to the Initial Purchasers to enter into the Purchase Agreement and in satisfaction of a condition to the obligations of the Initial Purchasers thereunder, the Company and the Guarantors agree with the Initial Purchasers, for the benefit of the holders (including the Initial Purchasers) of the Securities, the Exchange Securities (as defined herein) and the Private Exchange Securities (as defined herein) (collectively, the "HOLDERS"), as follows: 1. REGISTERED EXCHANGE OFFER. The Company and the Guarantors shall (i) prepare and, not later than 100 days following the date of original issuance of the Securities (the "ISSUE DATE"), file with the Commission a registration statement (the "EXCHANGE OFFER REGISTRATION STATEMENT") on an appropriate form under the Securities Act with respect to a proposed offer to the Holders of the Securities (the "REGISTERED EXCHANGE OFFER") to issue and deliver to such Holders, in exchange for the Securities, a like aggregate principal amount of debt securities of the Company (the "EXCHANGE SECURITIES") that are identical in all material respects to the Securities, except for the transfer restrictions relating to the Securities, (ii) use its reasonable best efforts to cause the Exchange Offer Registration Statement to become effective under the Securities Act no later than 240 days after the Issue Date and the Registered Exchange Offer to be consummated no later than 270 days after the Issue Date and (iii) keep the Exchange Offer Registration Statement effective for not less than 20 business days (or longer, if required by applicable law) after the date on which notice of the Registered Exchange Offer is mailed to the Holders (such period being called the "EXCHANGE OFFER REGISTRATION PERIOD"). The Exchange Securities will be issued under the Indenture or an indenture (the "EXCHANGE SECURITIES INDENTURE") between the Company, the Guarantors and the Trustee or such other bank or trust company that is reasonably satisfactory to the Initial Purchasers, as trustee (the "EXCHANGE 2 SECURITIES TRUSTEE"), such indenture to be identical in all material respects to the Indenture, except for the transfer restrictions relating to the Securities. Upon the effectiveness of the Exchange Offer Registration Statement, the Company shall promptly commence the Registered Exchange Offer, it being the objective of such Registered Exchange Offer to enable each Holder electing to exchange Securities for Exchange Securities (assuming that such Holder (a) is not an affiliate (as defined in Rule 405 under the Securities Act) of the Company or an Exchanging Dealer (as defined herein) not complying with the requirements of the next sentence, (b) is not an Initial Purchaser holding Securities that have, or that are reasonably likely to have, the status of an unsold allotment in an initial distribution, (c) acquires the Exchange Securities in the ordinary course of such Holder's business, (d) has no arrangements or understandings with any person to participate in the distribution of the Exchange Securities and (e) if it is a person in the United Kingdom, that its ordinary activities involve it in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of its business) and to trade such Exchange Securities from and after their receipt without any limitations or restrictions under the Securities Act and without material restrictions under the securities laws of the several states of the United States. The Company, the Guarantors, the Initial Purchasers and each Exchanging Dealer acknowledge that, pursuant to current interpretations by the Commission's staff of Section 5 of the Securities Act, each Holder that is a broker-dealer electing to exchange Securities, acquired for its own account as a result of market-making activities or other trading activities, for Exchange Securities (an "EXCHANGING DEALER"), is required to deliver a prospectus containing substantially the information set forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of the Exchange Offer" section and in Annex C hereto in the "Plan of Distribution" section of such prospectus (or any comparable section thereof) in connection with a sale of any such Exchange Securities received by such Exchanging Dealer pursuant to the Registered Exchange Offer. If, prior to the consummation of the Registered Exchange Offer, any Holder holds any Securities acquired by it that have, or that are reasonably likely to be determined to have, the status of an unsold allotment in an initial distribution, or any Holder is not entitled to participate in the Registered Exchange Offer, the Company shall, upon the request of any such Holder, simultaneously with the delivery of the Exchange Securities in the Registered Exchange Offer, issue and deliver to any such Holder, in exchange for the Securities held by such Holder (the "PRIVATE EXCHANGE"), a like aggregate principal amount of debt securities of the Company (the "PRIVATE EXCHANGE SECURITIES") that are identical in all material respects to the Exchange Securities, except for the transfer restrictions relating to such Private Exchange Securities. The Private Exchange Securities will be issued under the same indenture as the Exchange Securities, and the Company shall use its reasonable best efforts to cause the Private Exchange Securities to bear the same CUSIP number as the Exchange Securities. In connection with the Registered Exchange Offer, the Company shall: (a) mail to each Holder a copy of the prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal (which letter of transmittal shall also contain a representation that such Holder, if it is a person in the United Kingdom, that its ordinary activities involve it in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of its business) and related documents; (b) keep the Registered Exchange Offer open for not less than 20 business days (or longer, if required by applicable law) after the date on which notice of the Registered Exchange Offer is mailed to the Holders; (c) utilize the services of a depositary for the Registered Exchange Offer with an address in the Borough of Manhattan, The City of New York; 3 (d) permit Holders to withdraw tendered Securities at any time prior to the close of business, New York City time, on the last business day on which the Registered Exchange Offer shall remain open; and (e) otherwise comply in all respects with all laws that are applicable to the Registered Exchange Offer. As soon as practicable after the close of the Registered Exchange Offer and any Private Exchange, as the case may be, the Company shall: (a) accept for exchange all Securities tendered and not validly withdrawn pursuant to the Registered Exchange Offer and the Private Exchange; (b) deliver to the Trustee for cancelation all Securities so accepted for exchange; and (c) cause the Trustee or the Exchange Securities Trustee, as the case may be, promptly to authenticate and deliver to each Holder, Exchange Securities or Private Exchange Securities, as the case may be, equal in principal amount to the Securities of such Holder so accepted for exchange. The Company shall use its reasonable best efforts to keep the Exchange Offer Registration Statement effective and to amend and supplement the prospectus contained therein in order to permit such prospectus to be used by all persons subject to the prospectus delivery requirements of the Securities Act for such period of time as such persons must comply with such requirements in order to resell the Exchange Securities; PROVIDED that (i) in the case where such prospectus and any amendment or supplement thereto must be delivered by an Exchanging Dealer, such period shall be the lesser of 90 days and the date on which all Exchanging Dealers have sold all Exchange Securities held by them and (ii) the Company shall make such prospectus and any amendment or supplement thereto available to any broker-dealer for use in connection with any resale of any Exchange Securities for a period of not less than 90 days after the consummation of the Registered Exchange Offer. The Indenture or the Exchange Securities Indenture, as the case may be, shall provide that the Securities, the Exchange Securities and the Private Exchange Securities shall vote and consent together on all matters as one class and that none of the Securities, the Exchange Securities or the Private Exchange Securities will have the right to vote or consent as a separate class on any matter. Interest on each Exchange Security and Private Exchange Security issued pursuant to the Registered Exchange Offer and in the Private Exchange will accrue from the last interest payment date on which interest was paid on the Securities surrendered in exchange therefor or, if no interest has been paid on the Securities, from the Issue Date. Each Holder participating in the Registered Exchange Offer shall be required to represent to the Company that at the time of the consummation of the Registered Exchange Offer (i) any Exchange Securities received by such Holder will be acquired in the ordinary course of business, (ii) such Holder has no arrangements or understanding with any person to participate in the distribution of the Securities or the Exchange Securities within the meaning of the Securities Act and (iii) such Holder is not an affiliate of the Company or, if it is such an affiliate, such Holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. Notwithstanding any other provisions hereof, the Company and the Guarantors will ensure that (i) any Exchange Offer Registration Statement and any amendment thereto and any prospectus forming part thereof and any supplement thereto complies in all material respects with the Securities Act and the rules and regulations of the Commission thereunder, (ii) any Exchange Offer Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to 4 be stated therein or necessary to make the statements therein not misleading and (iii) any prospectus forming part of any Exchange Offer Registration Statement, and any supplement to such prospectus, does not, as of the consummation of the Registered Exchange Offer, include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 2. SHELF REGISTRATION. If (i) because of any change in law or applicable interpretations thereof by the Commission's staff the Company is not permitted to effect the Registered Exchange Offer as contemplated by Section 1 hereof, or (ii) any Securities validly tendered pursuant to the Registered Exchange Offer are not exchanged for Exchange Securities within 270 days after the Issue Date, or (iii) any Initial Purchaser so requests with respect to Securities or Private Exchange Securities not eligible to be exchanged for Exchange Securities in the Registered Exchange Offer and held by it following the consummation of the Registered Exchange Offer, or (iv) any applicable law or interpretations do not permit any Holder to participate in the Registered Exchange Offer, or (v) any Holder that participates in the Registered Exchange Offer does not receive freely transferable Exchange Securities in exchange for tendered Securities, then the following provisions shall apply: (a) The Company and the Guarantors shall use their reasonable best efforts to file as promptly as practicable with the Commission, and thereafter shall use its reasonable best efforts to cause to be declared effective, a shelf registration statement on an appropriate form under the Securities Act relating to the offer and sale of the Transfer Restricted Securities (as defined below) by the Holders thereof from time to time in accordance with the methods of distribution set forth in such registration statement (hereafter, a "SHELF REGISTRATION STATEMENT" and, together with any Exchange Offer Registration Statement, a "REGISTRATION STATEMENT"). (b) The Company and the Guarantors shall use their reasonable best efforts to keep the Shelf Registration Statement continuously effective in order to permit the prospectus forming part thereof to be used by Holders of Transfer Restricted Securities for a period ending on the earlier of (i) two years from the Issue Date or such shorter period that will terminate when all the Transfer Restricted Securities covered by the Shelf Registration Statement have been sold pursuant thereto and (ii) the date on which the Securities become eligible for resale without volume restrictions pursuant to Rule 144 under the Securities Act (in any such case, such period being called the "SHELF REGISTRATION PERIOD"). The Company and the Guarantors shall be deemed not to have used their reasonable best efforts to keep the Shelf Registration Statement effective during the requisite period if any of them voluntarily take any action that would result in Holders of Transfer Restricted Securities covered thereby not being able to offer and sell such Transfer Restricted Securities during that period, unless (A) such action is required by applicable law or (B) such action was permitted by Section 2(c). (c) Notwithstanding the provisions of Section 2(b) (but subject to the provisions of Section 3(b)), the Company and the Guarantors may issue a notice that the Shelf Registration Statement is unusable pending the announcement of a material corporate transaction and may issue any notice suspending use of the Shelf Registration Statement required under applicable securities laws to be issued. (d) Notwithstanding any other provisions hereof, the Company and the Guarantors will ensure that (i) any Shelf Registration Statement and any amendment thereto and any prospectus forming part thereof and any supplement thereto complies in all material respects with the Securities Act and the rules and regulations of the Commission thereunder, (ii) any Shelf Registration Statement and any amendment thereto (in either case, other than with respect to information included therein in reliance upon or in conformity with written information furnished to the Company by or on behalf of any Holder specifically for use therein (the "HOLDERS' INFORMATION")) does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any prospectus forming part of any Shelf Registration Statement, 5 and any supplement to such prospectus (in either case, other than with respect to Holders' Information), does not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 3. LIQUIDATED DAMAGES. (a) The parties hereto agree that the Holders of Transfer Restricted Securities will suffer damages if the Company and the Guarantors fail to fulfill their obligations under Section 1 or Section 2, as applicable, and that it would not be feasible to ascertain the extent of such damages. Accordingly, if (i) the applicable Registration Statement is not filed with the Commission on or prior to 100 days after the Issue Date (or, in the case of a Shelf Registration Statement required to be filed in response to a change in law or applicable interpretations of the Commission's staff, if later, within 60 days after publication of the change in law or interpretations, but in no event before 100 calender days after the Issue Date), (ii) the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, is not declared effective within 240 days after the Issue Date (or, in the case of a Shelf Registration Statement required to be filed in response to a change in law or applicable interpretations of the Commission's staff, if later, within 90 days after publication of the change in law or interpretations, but in no event before 240 days after the Issue Date), (iii) the Registered Exchange Offer is not consummated on or prior to 270 days after the Issue Date (other than in the event the Company files a Shelf Registration Statement), or (iv) the Shelf Registration Statement is filed and declared effective within the applicable time period specified in clause (ii) above but shall thereafter cease to be effective (other than for any period that the Company is not obligated to maintain the effectiveness thereof, including as set forth in Section 2(e) and 3(b)) without being succeeded within 90 days by an additional Registration Statement filed and declared effective (each such event referred to in clauses (i) through (iv), a "REGISTRATION DEFAULT"), the Company and the Guarantors will be jointly and severally obligated to pay liquidated damages to each Holder of Transfer Restricted Securities, during the period of one or more such Registration Defaults, with respect to the first 90-day period immediately following the occurrence of the first Registration Default in an amount equal to .25% per annum (which rate will be increased by an additional .25% per annum for each subsequent 90-day period that any liquidated damages continue to accrue; PROVIDED that the rate at which liquidated damages accrue may in no event exceed 1.00% per annum) in respect of the Securities constituting Transfer Restricted Securities held by such Holder until (i) the applicable Registration Statement is filed, (ii) the Exchange Offer Registration Statement is declared effective and the Registered Exchange Offer is consummated, (iii) the Shelf Registration Statement is declared effective or (iv) the Shelf Registration Statement again becomes effective, as the case may be. Following the cure of all Registration Defaults, the accrual of liquidated damages will cease. (b) Notwithstanding the foregoing provisions of Section 3(a), the Company and the Guarantors may issue a notice that the Shelf Registration Statement is unusable pending the announcement of a material corporate transaction and may issue any notice suspending use of the Shelf Registration Statement required under applicable securities laws to be issued and, in the event that the aggregate number of days in any consecutive twelve-month period for which all such notices are issued and effective exceeds 60 days in the aggregate, then the Company will be obligated to pay liquidated damages to each Holder of Transfer Restricted Securities in an amount equal to 0.25% per annum (which rate will be increased by an additional 0.25% per annum for each subsequent 90-day period that liquidated damages continue to accrue; PROVIDED that the rate at which liquidated damages accrue may in no event exceed 1.00% per annum) in respect of the Securities constituting Transfer Restricted Securities. Upon the Company declaring that the Shelf Registration Statement is usable after the period of time described in the preceding sentence the accrual of liquidated damages shall cease; PROVIDED, HOWEVER, that if after any such cessation of the accrual of liquidated damages the Shelf Registration Statement again ceases to be usable beyond the period permitted above, liquidated damages will again accrue pursuant to the foregoing provisions. (c) The Company shall notify the Trustee and the Paying Agent under the Indenture immediately upon the happening of each and every Registration Default or any event described in Section 3(b). The Company and the Guarantors shall pay the liquidated damages 6 due on the Transfer Restricted Securities by depositing with the Paying Agent (which may not be the Company for these purposes), in trust, for the benefit of the Holders thereof, prior to 10:00 a.m., New York City time, on the next interest payment date specified by the Indenture and the Securities, sums sufficient to pay the liquidated damages then due. The liquidated damages due shall be payable on each interest payment date specified by the Indenture and the Securities to the record holder entitled to receive the interest payment to be made on such date. Each obligation to pay liquidated damages shall be deemed to accrue from and including the date of the applicable Registration Default. (d) The parties hereto agree that the liquidated damages provided for in this Section 3 constitute a reasonable estimate of and are intended to constitute the sole damages that will be suffered by Holders of Transfer Restricted Securities by reason of the failure of (i) the Shelf Registration Statement or the Exchange Offer Registration Statement to be filed, (ii) the Shelf Registration Statement to remain effective or (iii) the Exchange Offer Registration Statement to be declared effective and the Registered Exchange Offer to be consummated, in each case to the extent required by this Agreement. (e) As used herein, the term "TRANSFER RESTRICTED SECURITIES" means (i) each Security until the date on which such Security has been exchanged for a freely transferable Exchange Security in the Registered Exchange Offer, (ii) each Security or Private Exchange Security until the date on which it has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement or (iii) each Security or Private Exchange Security until the date on which it is distributed to the public pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act. Notwithstanding anything to the contrary in Sections 3(a) and 3(b), the Company and the Guarantors shall not be required to pay liquidated damages to a Holder of Transfer Restricted Securities if such Holder failed to comply with its obligations to make the representations set forth in the second to last paragraph of Section 1 or failed to provide the information required to be provided by it, if any, pursuant to Section 4(n). 4. REGISTRATION PROCEDURES. In connection with any Registration Statement, the following provisions shall apply: (a) The Company shall (i) furnish to each Initial Purchaser, prior to the filing thereof with the Commission, a copy of the Registration Statement and each amendment thereof and each supplement, if any, to the prospectus included therein; (ii) include substantially the information set forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of the Exchange Offer" section and in Annex C hereto in the "Plan of Distribution" section (or in similarly titled sections) of the prospectus forming a part of the Exchange Offer Registration Statement, and include the information set forth in Annex D hereto in the Letter of Transmittal delivered pursuant to the Registered Exchange Offer; and (iii) if requested by any Initial Purchaser, include the information required by Items 507 or 508 of Regulation S-K, as applicable, in the prospectus forming a part of the Exchange Offer Registration Statement. (b) The Company shall advise each Initial Purchaser, and, in the cases of clauses (ii), (iii), (iv) or (v) below, each Exchanging Dealer and the Holders (if applicable) and, if requested by any such person, confirm such advice in writing (which advice pursuant to clauses (ii)-(v) hereof shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made): (i) when any Registration Statement and any amendment thereto has been filed with the Commission and when such Registration Statement or any post-effective amendment thereto has become effective; (ii) of any request by the Commission after the effective date for amendments or supplements to any Registration Statement or the prospectus included therein or for additional information; 7 (iii) of the issuance by the Commission of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Securities, the Exchange Securities or the Private Exchange Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and (v) of the happening of any event that requires the making of any changes in any Registration Statement or the prospectus included therein in order that the statements therein are not misleading and do not omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. (c) The Company and the Guarantors will make every reasonable effort to obtain the withdrawal at the earliest possible time of any order suspending the effectiveness of any Registration Statement. (d) The Company will furnish to each Holder of Transfer Restricted Securities included within the coverage of any Shelf Registration Statement, without charge, at least one conformed copy of such Shelf Registration Statement and any post-effective amendment thereto, including financial statements and schedules and, if any such Holder so requests in writing, all exhibits thereto (including those, if any, incorporated by reference). (e) The Company will, during the Shelf Registration Period, promptly deliver to each Holder of Transfer Restricted Securities included within the coverage of any Shelf Registration Statement, without charge, as many copies of the prospectus (including each preliminary prospectus) included in such Shelf Registration Statement and any amendment or supplement thereto as such Holder may reasonably request; and the Company consents to the use of such prospectus or any amendment or supplement thereto by each of the selling Holders of Transfer Restricted Securities in connection with the offer and sale of the Transfer Restricted Securities covered by such prospectus or any amendment or supplement thereto. (f) The Company will furnish to each Initial Purchaser and each Exchanging Dealer, and to any other Holder who so requests, without charge, at least one conformed copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including financial statements and schedules and, if any Initial Purchaser or Exchanging Dealer or any such Holder so requests in writing, all exhibits thereto (including those, if any, incorporated by reference). (g) The Company will, during the Exchange Offer Registration Period or the Shelf Registration Period, as applicable, promptly deliver to each Initial Purchaser, each Exchanging Dealer and such other persons that are required to deliver a prospectus following the Registered Exchange Offer, without charge, as many copies of the final prospectus included in the Exchange Offer Registration Statement or the Shelf Registration Statement and any amendment or supplement thereto as such Initial Purchaser, Exchanging Dealer or other persons may reasonably request; and the Company and the Guarantors consent to the use of such prospectus or any amendment or supplement thereto by any such Initial Purchaser, Exchanging Dealer or other persons, as applicable, as aforesaid. (h) Prior to the effective date of any Registration Statement, the Company and the Guarantors will use their reasonable best efforts to register or qualify, or cooperate with the Holders of Securities, Exchange Securities or Private Exchange Securities included therein and their respective counsel in connection with the registration or qualification of, such Securities, Exchange Securities or Private Exchange Securities for 8 offer and sale under the securities or blue sky laws of such jurisdictions as any such Holder reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Securities, Exchange Securities or Private Exchange Securities covered by such Registration Statement; PROVIDED that the Company and the Guarantors will not be required to qualify generally to do business in any jurisdiction where they are not then so qualified or to take any action which would subject them to general service of process or to taxation in any such jurisdiction where they are not then so subject. (i) The Company and the Guarantors will cooperate with the Holders of Securities, Exchange Securities or Private Exchange Securities to facilitate the timely preparation and delivery of certificates representing Securities, Exchange Securities or Private Exchange Securities to be sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as the Holders thereof may request in writing at least three business days prior to the closing date of any sale of Securities, Exchange Securities or Private Exchange Securities pursuant to such Registration Statement. (j) If any event contemplated by Section 4(b)(ii) through (v) occurs during the period for which the Company and the Guarantors are required to maintain an effective Registration Statement, the Company and the Guarantors will promptly prepare and file with the Commission a post-effective amendment to the Registration Statement or a supplement to the related prospectus or file any other required document so that, as thereafter delivered to purchasers of the Securities, Exchange Securities or Private Exchange Securities from a Holder, the prospectus will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (k) Not later than the effective date of the applicable Registration Statement, the Company will provide a CUSIP number for the Securities, the Exchange Securities and the Private Exchange Securities, as the case may be, and provide the applicable trustee with printed certificates for the Securities, the Exchange Securities or the Private Exchange Securities, as the case may be, in a form eligible for deposit with The Depository Trust Company. (l) The Company and the Guarantors will comply with all applicable rules and regulations of the Commission and the Company will make generally available to its security holders as soon as reasonably practicable after the effective date of the applicable Registration Statement an earning statement covering at least 12 months which shall satisfy the provisions of Section 11(a) of the Securities Act. (m) The Company and the Guarantors will cause the Indenture or the Exchange Securities Indenture, as the case may be, to be qualified under the Trust Indenture Act as required by applicable law in a timely manner. (n) The Company may require each Holder of Transfer Restricted Securities to be registered pursuant to any Shelf Registration Statement to furnish to the Company such information concerning the Holder and the distribution of such Transfer Restricted Securities as the Company may from time to time reasonably require for inclusion in such Shelf Registration Statement, and the Company may exclude from such registration the Transfer Restricted Securities of any Holder that fails to furnish such information within a reasonable time after receiving such request. (o) In the case of a Shelf Registration Statement, each Holder of Transfer Restricted Securities to be registered pursuant thereto agrees by acquisition of such Transfer Restricted Securities that, upon receipt of any notice from the Company pursuant to Section 2(c), 3(b) or 4(b)(ii) through (v), such Holder will discontinue disposition of such Transfer Restricted Securities until such Holder's receipt of copies of 9 the supplemental or amended prospectus contemplated by Section 4(j) or until advised in writing (the "ADVICE") by the Company that the use of the applicable prospectus may be resumed. If the Company shall give any notice under Section 2(c), 3(b) or 4(b)(ii) through (v) during the period that the Company is required to maintain an effective Registration Statement (the "EFFECTIVENESS PERIOD"), such Effectiveness Period shall be extended by the number of days during such period from and including the date of the giving of such notice to and including the date when each seller of Transfer Restricted Securities covered by such Registration Statement shall have received (x) the copies of the supplemental or amended prospectus contemplated by Section 4(j) (if an amended or supplemental prospectus is required) or (y) the Advice (if no amended or supplemental prospectus is required). (p) In the case of a Shelf Registration Statement, the Company and the Guarantors shall enter into such customary agreements (including, if requested by the Holders of a majority in aggregate principal amount of the Exchange Securities, an underwriting agreement in customary form) and take all such other action, if any, as Holders of a majority in aggregate principal amount of the Securities, Exchange Securities and Private Exchange Securities being sold or the managing underwriters (if any) shall reasonably request in order to facilitate any disposition of Securities, Exchange Securities or Private Exchange Securities pursuant to such Shelf Registration Statement. (q) In the case of a Shelf Registration Statement, the Company shall (i) make reasonably available for inspection by a representative of, and Special Counsel (as defined below) acting for, Holders of a majority in aggregate principal amount of the Securities, Exchange Securities and Private Exchange Securities being sold and any underwriter participating in any disposition of Securities, Exchange Securities or Private Exchange Securities pursuant to such Shelf Registration Statement, all relevant financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries and (ii) use its reasonable best efforts to have its officers, directors, employees, accountants and counsel supply all relevant information reasonably requested by such representative, Special Counsel or any such underwriter (an "INSPECTOR") in connection with such Shelf Registration Statement PROVIDED, HOWEVER, that such Inspector shall first agree in writing with the Company that any information that is reasonably and in good faith designated by the Company in writing as confidential at the time of delivery of such information shall be kept confidential by such Inspector, unless (i) disclosure of such information is required by court or administrative order or is necessary to respond to inquiries of regulatory authorities, (ii) disclosure of such information is required by law (including any disclosure requirements pursuant to Federal securities laws in connection with the filing of such Registration Statement or the use of any prospectus), (iii) such information becomes generally available to the public other than as a result of a disclosure or failure to safeguard such information by such Inspector or (iv) such information becomes available to such Inspector from a source other than the Company and its subsidiaries and such source is not known, after due inquiry, by the relevant Holder to be bound by a confidentiality agreement; PROVIDED FURTHER, that the foregoing investigation shall be coordinated on behalf of the Holders by one representative designated by and on behalf of such Holders and any such confidential information shall be available from such representative to such Holders so long as any Holder agrees to be bound by such confidentiality agreement. (r) In the case of a Shelf Registration Statement, the Company shall, if requested by Holders of a majority in aggregate principal amount of the Securities, Exchange Securities and Private Exchange Securities being sold, their Special Counsel or the managing underwriters (if any) in connection with such Shelf Registration Statement, use its reasonable best efforts to cause (i) its counsel to deliver an opinion relating to the Shelf Registration Statement and the Securities, Exchange Securities or Private Exchange Securities, as applicable, in customary form, (ii) its officers to execute and deliver all customary documents and certificates requested by Holders of a majority in aggregate principal amount of the Securities, Exchange Securities and Private 10 Exchange Securities being sold, their Special Counsel or the managing underwriters (if any) and (iii) its independent public accountants to provide a comfort letter or letters in customary form, subject to receipt of appropriate documentation as contemplated, and only if permitted, by Statement of Auditing Standards No. 72. 5. REGISTRATION EXPENSES. The Company and the Guarantors will jointly and severally bear all expenses incurred in connection with the performance of its obligations under Sections 1, 2, 3 and 4 and, other than in connection with the Exchange Offer Registration Statement, the Company will reimburse the Initial Purchasers and the Holders for the reasonable fees and disbursements of one firm of attorneys (in addition to any local counsel) chosen by the Holders of a majority in aggregate principal amount of the Securities, the Exchange Securities and the Private Exchange Securities to be sold pursuant to each Registration Statement (the "SPECIAL COUNSEL") acting for the Initial Purchasers or Holders in connection therewith, which counsel shall be approved by the Company (such approval to not be unreasonably withheld). Each Initial Purchaser and Holder shall pay all expenses of its counsel other than as set forth in the preceding sentence, underwriting discounts and commissions (prior to the reduction thereof with respect to selling concessions, if any) and transfer taxes, if any, relating to the sale or disposition of such Initial Purchaser's or Holder's Securities pursuant to the Shelf Registration Statement. 6. INDEMNIFICATION. (a) In the event of a Shelf Registration Statement or in connection with any prospectus delivery pursuant to an Exchange Offer Registration Statement by an Initial Purchaser or Exchanging Dealer, as applicable, the Company and the Guarantors shall jointly and severally indemnify and hold harmless each Holder (including, without limitation, any such Initial Purchaser or Exchanging Dealer), its affiliates, their respective officers, directors, employees, representatives and agents, and each person, if any, who controls such Holder within the meaning of the Securities Act or the Exchange Act (collectively referred to for purposes of this Section 6 and Section 7 as a Holder) from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof (including, without limitation, any loss, claim, damage, liability or action relating to purchases and sales of Securities, Exchange Securities or Private Exchange Securities), to which that Holder may become subject, whether commenced or threatened, under the Securities Act, the Exchange Act, any other federal or state statutory law or regulation, at common law or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in any such Registration Statement or any prospectus forming part thereof or in any amendment or supplement thereto or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and shall reimburse each Holder promptly upon demand for any legal or other expenses reasonably incurred by that Holder in connection with investigating or defending or preparing to defend against or appearing as a third party witness in connection with any such loss, claim, damage, liability or action as such expenses are incurred; PROVIDED, HOWEVER, that the Company and the Guarantors shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, an untrue statement or alleged untrue statement in or omission or alleged omission from any of such documents in reliance upon and in conformity with any Holders' Information; and PROVIDED, FURTHER, that with respect to any such untrue statement in or omission from any related preliminary prospectus, the indemnity agreement contained in this Section 6(a) shall not inure to the benefit of any Holder from whom the person asserting any such loss, claim, damage, liability or action received Securities, Exchange Securities or Private Exchange Securities to the extent that such loss, claim, damage, liability or action of or with respect to such Holder results from the fact that both (A) a copy of the final prospectus was not sent or given to such person at or prior to the written confirmation of the sale of such Securities, Exchange Securities or Private Exchange Securities to such person and (B) the untrue statement in or omission from the related preliminary prospectus was corrected in the final prospectus unless, in either case, such failure to deliver the final prospectus was a result of non-compliance by the Company with Section 4(d), 4(e), 4(f) or 4(g). 11 (b) In the event of a Shelf Registration Statement, each Holder shall indemnify and hold harmless the Company, its affiliates, their respective officers, directors, employees, representatives and agents, and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act (collectively referred to for purposes of this Section 6(b) and Section 7 as the Company), from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof, to which the Company may become subject, whether commenced or threatened, under the Securities Act, the Exchange Act, any other federal or state statutory law or regulation, at common law or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in any such Registration Statement or any prospectus forming part thereof or in any amendment or supplement thereto or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with any Holders' Information furnished to the Company by such Holder, and shall reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending or preparing to defend against or appearing as a third party witness in connection with any such loss, claim, damage, liability or action as such expenses are incurred; PROVIDED, HOWEVER, that no such Holder shall be liable for any indemnity claims hereunder in excess of the amount of net proceeds received by such Holder from the sale of Securities, Exchange Securities or Private Exchange Securities pursuant to such Shelf Registration Statement. (c) Promptly after receipt by an indemnified party under this Section 6 of notice of any claim or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party pursuant to Section 6(a) or 6(b), notify the indemnifying party in writing of the claim or the commencement of that action; PROVIDED, HOWEVER, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have under this Section 6 except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and PROVIDED, FURTHER, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have to an indemnified party otherwise than under this Section 6. If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 6 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than the reasonable costs of investigation; PROVIDED, HOWEVER, that an indemnified party shall have the right to employ its own counsel in any such action, but the fees, expenses and other charges of such counsel for the indemnified party will be at the expense of such indemnified party unless (1) the employment of counsel by the indemnified party has been authorized in writing by the indemnifying party, (2) the indemnified party has reasonably concluded (based upon advice of counsel to the indemnified party) that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party, (3) a conflict or potential conflict exists (based upon advice of counsel to the indemnified party) between the indemnified party and the indemnifying party (in which case the indemnifying party will not have the right to direct the defense of such action on behalf of the indemnified party) or (4) the indemnifying party has not in fact employed counsel reasonably satisfactory to the indemnified party to assume the defense of such action within a reasonable time after receiving notice of the commencement of the action, in each of which cases the reasonable fees, disbursements and other charges of counsel will be at the expense of the indemnifying party or parties. It is understood that the indemnifying party or parties shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one separate firm of attorneys (in addition to any local counsel) at any one time for all such indemnified party or parties. Each indemnified party, as a condition of the indemnity agreements 12 contained in Sections 6(a) and 6(b), shall use all reasonable efforts to cooperate with the indemnifying party in the defense of any such action or claim. No indemnifying party shall be liable for any settlement of any such action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with its written consent or if there be a final judgment for the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. No indemnifying party shall, without the prior written consent of the indemnified party (which consent shall not be unreasonably withheld), effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. 7. CONTRIBUTION. If the indemnification provided for in Section 6 is unavailable or insufficient to hold harmless an indemnified party under Section 6(a) or 6(b), then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Company from the offering and sale of the Securities, on the one hand, and a Holder with respect to the sale by such Holder of Securities, Exchange Securities or Private Exchange Securities, on the other, or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Guarantors, on the one hand, and such Holder, on the other, with respect to the statements or omissions that resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Guarantors, on the one hand, and a Holder, on the other, with respect to such offering and such sale shall be deemed to be in the same proportion as the total net proceeds from the offering of the Securities (before deducting expenses) received by or on behalf of the Company as set forth in the table on the cover of the Offering Memorandum, on the one hand, bear to the total proceeds received by such Holder with respect to its sale of Securities, Exchange Securities or Private Exchange Securities, on the other. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to the Company and the Guarantors or information supplied by the Company and the Guarantors, on the one hand, or to any Holders' Information supplied by such Holder, on the other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 7 were to be determined by PRO RATA allocation or by any other method of allocation that does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section 7 shall be deemed to include, for purposes of this Section 7, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending or preparing to defend any such action or claim. Notwithstanding the provisions of this Section 7, an indemnifying party that is a Holder of Securities, Exchange Securities or Private Exchange Securities shall not be required to contribute any amount in excess of the amount by which the total price at which the Securities, Exchange Securities or Private Exchange Securities sold by such indemnifying party to any purchaser exceeds the amount of any damages which such indemnifying party has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 8. RULES 144 AND 144A. The Company and the Guarantors covenants that they will take such further action as any Holder of Transfer Restricted Securities may reasonably request, all to the extent required from time to time to enable such Holder to sell Transfer Restricted Securities without registration under the Securities Act within the limitation of the exemptions provided by Rules 144 and 144A (including, without limitation, the requirements of 13 Rule 144A(d)(4)). Upon the written request of any Holder of Transfer Restricted Securities, the Company and the Guarantors shall deliver to such Holder a written statement as to whether they have complied with such requirements. Notwithstanding the foregoing, nothing in this Section 8 shall be deemed to require the Company to register any of its securities pursuant to the Exchange Act. 9. UNDERWRITTEN REGISTRATIONS. If any of the Transfer Restricted Securities covered by any Shelf Registration Statement are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will administer the offering will be selected by the Holders of a majority in aggregate principal amount of such Transfer Restricted Securities included in such offering, subject to the consent of the Company (which shall not be unreasonably withheld or delayed), and such Holders shall be responsible for all underwriting commissions and discounts in connection therewith. No person may participate in any underwritten registration hereunder unless such person (i) agrees to sell such person's Transfer Restricted Securities on the basis reasonably provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. 10. MISCELLANEOUS. (a) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of Holders of a majority in aggregate principal amount of the Securities, the Exchange Securities and the Private Exchange Securities, taken as a single class. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders whose Securities, Exchange Securities or Private Exchange Securities are being sold pursuant to a Registration Statement and that does not directly or indirectly affect the rights of other Holders may be given by Holders of a majority in aggregate principal amount of the Securities, the Exchange Securities and the Private Exchange Securities being sold by such Holders pursuant to such Registration Statement. (b) NOTICES. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail, telecopier or air courier guaranteeing next-day delivery: (1) if to a Holder, at the most current address given by such Holder to the Company in accordance with the provisions of this Section 10(b), which address initially is, with respect to each Holder, the address of such Holder maintained by the Registrar under the Indenture, with a copy in like manner to Chase Securities Inc. and Chase Manhattan International Limited; (2) if to an Initial Purchaser, initially at its address set forth in the Purchase Agreement; and (3) if to the Company, initially at the address of the Company set forth in the Purchase Agreement. All such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; one business day after being delivered to a next-day air courier; five business days after being deposited in the mail; and when receipt is acknowledged by the recipient's telecopier machine, if sent by telecopier. (c) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the Company and its successors and assigns. (d) COUNTERPARTS. This Agreement may be executed in any number of counterparts (which may be delivered in original form or by telecopier) and by the parties hereto 14 in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (e) DEFINITION OF TERMS. For purposes of this Agreement, (a) the term "business day" means any day on which the New York Stock Exchange, Inc. is open for trading, (b) the term "subsidiary" has the meaning set forth in Rule 405 under the Securities Act and (c) except where otherwise expressly provided, the term "affiliate" has the meaning set forth in Rule 405 under the Securities Act. (f) HEADINGS. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (g) GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. (h) NO INCONSISTENT AGREEMENTS. The Company and each Guarantor represents, warrants and agrees that (i) it has not entered into, shall not, on or after the date of this Agreement, enter into any agreement that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof, (ii) it has not previously entered into any agreement which remains in effect granting any registration rights with respect to any of its debt securities to any person and (iii) (with respect to the Company) without limiting the generality of the foregoing, without the written consent of the Holders of a majority in aggregate principal amount of the then outstanding Transfer Restricted Securities, it shall not grant to any person the right to request the Company to register any debt securities of the Company under the Securities Act unless the rights so granted are not in conflict or inconsistent with the provisions of this Agreement. (i) NO PIGGYBACK ON REGISTRATIONS. Neither the Company nor any of its security holders (other than the Holders of Transfer Restricted Securities in such capacity) shall have the right to include any securities of the Company in any Shelf Registration or Registered Exchange Offer other than Transfer Restricted Securities. (j) SEVERABILITY. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their reasonable best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. 15 Please confirm that the foregoing correctly sets forth the agreement among the Company, the Guarantors and the Initial Purchasers. Very truly yours, WILLIS CORROON CORPORATION, by --------------------------------------- Name: Title: WILLIS CORROON GROUP LIMITED, by --------------------------------------- Name: Title: WILLIS CORROON PARTNERS, By Willis Corroon Group Limited, Its General Partner by --------------------------------------- Name: Title: 16 Accepted: CHASE SECURITIES INC., by ------------------------------ Authorized Signatory CHASE MANHATTAN INTERNATIONAL LIMITED, by ------------------------------- Authorized Signatory ANNEX A Each broker-dealer that receives Exchange Securities for its own account pursuant to the Registered Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Securities where such Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 90 days after consummation of the Registered Exchange Offer (the "Expiration Date"), it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution". ANNEX B Each broker-dealer that receives Exchange Securities for its own account in exchange for Securities, where such Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. See "Plan of Distribution". ANNEX C PLAN OF DISTRIBUTION Each broker-dealer that receives Exchange Securities for its own account pursuant to the Registered Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Securities where such Securities were acquired as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 90 days after the Expiration Date, it will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until [ ], 199[ ], all dealers effecting transactions in the Exchange Securities may be required to deliver a prospectus. The Company will not receive any proceeds from any sale of Exchange Securities by broker-dealers. Exchange Securities received by broker-dealers for their own account pursuant to the Registered Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Securities or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such Exchange Securities. Any broker-dealer that resells Exchange Securities that were received by it for its own account pursuant to the Registered Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Securities may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of Exchange Securities and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period of 90 days after the Expiration Date the Company will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents in the Letter of Transmittal. The Company will indemnify the Holders of the Securities (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act. ANNEX D / / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name: Address: If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Securities. If the undersigned is a broker-dealer that will receive Exchange Securities for its own account in exchange for Securities that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Securities; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. EX-5.1 20 EX. 5.1 Exhibit 5.1 [LETTERHEAD OF SIMPSON THACHER & BARTLETT] , 1999 WILLIS CORROON CORPORATION WILLIS CORROON GROUP LIMITED WILLIS CORROON PARTNERS c/o Willis Corroon Group Limited Ten Trinity Square London EC3P 3AX Ladies and Gentlemen: We have acted as special U.S. counsel to Willis Corroon Corporation, a Delaware corporation (the "Issuer"), and to Willis Corroon Group Limited, a company with limited liability organized under the laws of England and Wales ("WCG"), and Willis Corroon Partners, a Delaware general partnership ("USGP", and together with WCG, the "Guarantors"), in connection with the Registration Statement on Form F-4 (the "Registration Statement") filed by the Issuer and the Guarantors with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended, relating to the issuance by the Issuer of $550,000,000 aggregate principal amount of its 9% Senior Subordinated Notes due 2009 (the "Exchange Notes") and the issuance by the Guarantors of guarantees (the "Guarantees") with respect to the Exchange Notes. The Exchange Notes and the Guarantees thereof will be issued under an Indenture, dated as of February 2, 1999 (the WILLIS CORROON CORPORATION WILLIS CORROON GROUP LIMITED WILLIS CORROON PARTNERS -2- , 1999 "Indenture"), among the Issuer, the Guarantors and The Bank of New York, as Trustee. The Exchange Notes will be offered by the Issuer in exchange (the "Exchange Offer") for $550,000,000 aggregate principal amount of its outstanding 9% Senior Subordinated Notes due 2009 (the "Notes"). We have examined the Registration Statement and the Indenture, which has been filed with the Commission as an exhibit to the Registration Statement. In addition, we have examined, and have relied as to matters of fact upon, the originals, duplicates or certified or conformed copies of such corporate records, agreements, instruments and other documents and have made such other and further investigations as we have deemed relevant and necessary in connection with the opinions hereinafter set forth. As to questions of fact material to this opinion we have relied upon certificates of public officials and officers and representatives of the Issuer and the Guarantors. In rendering the opinions set forth below, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the due organization and valid existence of USGP, the due authorization, execution and delivery of the Indenture by USGP, that all necessary partnership action has been taken by USGP to approve the terms of the Indenture and its Guarantee, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as duplicates or certified or conformed copies, and the authenticity of the originals of such latter documents. WILLIS CORROON CORPORATION WILLIS CORROON GROUP LIMITED WILLIS CORROON PARTNERS -3- , 1999 In rendering the opinions set forth below, we have also assumed that (1) WCG is validly existing under the laws of England and Wales and has duly authorized, executed and delivered the Indenture in accordance with its Memorandum and Articles of Association and the laws of England and Wales, (2) all necessary corporate action has been taken by WCG to approve the terms of the Indenture and its Guarantee, (3) the execution, delivery and performance by WCG of the Indenture do not violate the laws of England and Wales or any other applicable laws (excepting the laws of the State of New York and the federal laws of the Untied States) and (4) the execution, delivery and performance by WCG of the Indenture do not constitute a breach or violation of any agreement or instrument which is binding upon WCG. Based upon the foregoing, and subject to the qualifications and limitations stated herein, we are of the opinion that: 1. When the Exchange Notes have been duly executed, authenticated, issued and delivered in accordance with the provisions of the Indenture upon the exchange for Notes pursuant to the Exchange Offer, the Exchange Notes will constitute valid and legally binding obligations of the Issuer, enforceable against the Issuer in accordance with their terms. 2. When the Exchange Notes have been duly executed, authenticated, issued and delivered in accordance with the provisions of the Indenture upon the exchange for Notes pursuant to the Exchange Offer, the Guarantees will constitute valid and legally binding obligations of the Guarantors, enforceable against the Guarantors in accordance with their terms. Our opinions set forth above are subject to the effects of (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws WILLIS CORROON CORPORATION WILLIS CORROON GROUP LIMITED WILLIS CORROON PARTNERS -4- , 1999 relating to or affecting creditors' rights generally, (ii) general equitable principles (whether considered in a proceeding in equity or at law), (iii) an implied covenant of good faith and fair dealing and (iv) the possible judicial application of foreign laws or foreign governmental or judicial action affecting creditors' rights. We are members of the Bar of the State of New York, and we do not express any opinion herein concerning any law other than the law of the State of New York, the federal law of the United States and the Delaware General Corporation Law. We hereby consent to the filing of this opinion letter as Exhibit 5.1 to the Registration Statement and to the use of our name under the caption "Legal Matters" in the Prospectus included in the Registration Statement. Very truly yours, ----------------------------------- SIMPSON THACHER & BARTLETT EX-10.1 21 EXHIBIT 10.1 Exhibit 10.1 EXECUTION COPY WILLIS CORROON CORPORATION $550,000,000 9% Senior Subordinated Notes due 2009 PURCHASE AGREEMENT January 28, 1999 CHASE SECURITIES INC. 270 Park Avenue, 4th floor New York, New York 10017 CHASE MANHATTAN INTERNATIONAL LIMITED 125 London Wall, 9th Floor London, EC2Y 5AJ England Ladies and Gentlemen: Willis Corroon Corporation, a Delaware corporation (the "ISSUER"), proposes to issue and sell $550,000,000 aggregate principal amount of 9% Senior Subordinated Notes due 2009 (the "SECURITIES"). The Securities will be issued pursuant to an Indenture to be dated as of February 2, 1999 (the "INDENTURE"), among the Issuer, Willis Corroon Group Limited (the "COMPANY"), Willis Corroon Partners ("USGP", and together with the Company, the "GUARANTORS") and The Bank of New York, as trustee (the "TRUSTEE"). The Securities will be guaranteed on an unsecured, senior subordinated basis by each Guarantor and, following the Closing Date (as defined in Section 3), by certain subsidiaries under the circumstances set forth in the Indenture (the "ADDITIONAL GUARANTORS"). The Issuer and the Guarantors hereby confirm their agreement with Chase Securities Inc. ("CSI") and Chase Manhattan International Limited (collectively the "INITIAL PURCHASERS") concerning the purchase of the Securities from the Issuer by the Initial Purchasers. The Securities will be offered and sold to the Initial Purchasers without being registered under the Securities Act of 1933, as amended (the "SECURITIES ACT"), in reliance upon an exemption therefrom. The Company has prepared a preliminary offering memorandum dated December 23, 1998 (the "PRELIMINARY OFFERING MEMORANDUM") and will prepare an offering memorandum dated the date hereof (the "OFFERING MEMORANDUM") setting forth information concerning the Company, its Subsidiaries, its Associates and the Securities. Copies of the Preliminary Offering Memorandum have been, and copies of the Offering Memorandum will be, delivered by the Company to the Initial Purchasers pursuant to the terms of this Agreement. Any references herein to the Preliminary Offering Memorandum and the Offering Memorandum shall be deemed to include all amendments and supplements thereto, unless otherwise noted. The Company hereby confirms that it has authorized the use of the Preliminary Offering Memorandum and the Offering Memorandum 2 in connection with the offering and resale of the Securities by the Initial Purchasers in accordance with Section 2. Holders of the Securities (including the Initial Purchasers and their direct and indirect transferees) will be entitled to the benefits of an Exchange and Registration Rights Agreement, substantially in the form attached hereto as Annex A (the "REGISTRATION RIGHTS AGREEMENT"), pursuant to which the Company, the Issuer and USGP will agree to file with the Securities and Exchange Commission (the "COMMISSION") (i) a registration statement under the Securities Act (the "EXCHANGE OFFER REGISTRATION STATEMENT") registering an issue of senior subordinated notes of the Issuer (the "EXCHANGE SECURITIES") that are identical in all material respects to the Securities (except that the Exchange Securities will not contain terms with respect to transfer restrictions) and (ii) under certain circumstances, a shelf registration statement pursuant to Rule 415 under the Securities Act (the "SHELF REGISTRATION STATEMENT"). The proceeds from the sale of the Securities will be used solely to refinance the loans outstanding under the Senior Subordinated Loan Agreement dated as of November 19, 1998, among the Company, USGP, the Issuer, the Lenders from time to time party thereto, The Chase Manhattan Bank, as Administrative Agent and Chase Securities Inc., as Lead Arranger, and to pay related fees and expenses, all as described in the Offering Memorandum. Capitalized terms used but not defined herein shall have the meanings given to such terms in the Offering Memorandum. 1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. The Company, USGP and the Issuer jointly and severally represent and warrant to, and agree with, the several Initial Purchasers on and as of the date hereof and the Closing Date that: (a) As of its date and as of the Closing Date, the Offering Memorandum did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; PROVIDED that the Company, USGP and the Issuer make no representation or warranty as to information contained in or omitted from the Offering Memorandum in reliance upon and in conformity with written information relating to the Initial Purchasers furnished to the Company by or on behalf of any Initial Purchaser specifically for use therein (the "INITIAL PURCHASERS' INFORMATION"). (b) Each of the Preliminary Offering Memorandum and the Offering Memorandum, as of its respective date, contains all the information that, if requested by a prospective purchaser, would be required to be provided pursuant to Rule 144A(d)(4) under the Securities Act. (c) Each of the Company and each of its Restricted Subsidiaries is (i) duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation, (ii) has all requisite organizational power and authority to own, lease and operate its properties, and to conduct its business as described in the Offering Memorandum and (iii) is duly qualified to do business in each jurisdiction in which it owns or leases real property or in which the conduct of its business requires such qualification except where the failure to be so qualified would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the condition (financial or otherwise), business or results 3 of operations of the Company and its Subsidiaries taken as a whole (a "MATERIAL ADVERSE EFFECT"). (d) As of September 30, 1998, all of the issued and outstanding equity interests in the Company and each of its Restricted Subsidiaries have been duly authorized and validly issued, were not issued in violation of any preemptive or similar rights, and all equity interests in the Company and each of its Restricted Subsidiaries are fully paid and nonassessable; and the capital stock of the Company and its parent corporations conform in all material respects to the description thereof contained in the Offering Memorandum; except as described in the Offering Memorandum or as set forth on Schedule 1, all of the outstanding equity interests in each of the Company's Subsidiaries are owned, directly or indirectly, by the Company; all of the outstanding equity interests in the Company and each of its Subsidiaries owned by the Company are free and clear of all liens, encumbrances, equities and claims or restrictions on transferability (other than those imposed by the Securities Act and the securities or "Blue Sky" laws of certain jurisdictions) or voting, other than those contained in the Senior Credit Facilities; except as described in the Offering Memorandum, neither the Company nor any of its Subsidiaries has outstanding any options to purchase or any preemptive rights or other rights to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock or partnership interests, as the case may be, or any such options, rights, convertible securities or obligations. (e) The Issuer has all requisite corporate power and authority to execute, deliver and perform each of its obligations under the Securities and the Exchange Securities. The Securities, when issued, will be substantially in the form contemplated by the Indenture. The Securities and the Exchange Securities have been duly and validly authorized by the Issuer and, when issued, authenticated and delivered in accordance with the provisions of the Indenture (assuming due authorization, execution and delivery of the Indenture by the Trustee) and, in the case of the Securities, when delivered to and paid for by the Initial Purchasers in accordance with the terms of this Agreement and the Indenture, and, in the case of the Exchange Securities, when issued and delivered upon exchange for the Securities in accordance with the terms of the Registration Rights Agreement and the Indenture and will constitute valid and legally binding obligations of the Issuer, entitled to the benefits of the Indenture, enforceable against the Issuer in accordance with their terms, except to the extent that the enforcement of the Securities and the Exchange Securities may be subject to (i) bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting creditors' rights generally and (ii) general principles of equity (regardless of whether enforcement is in a proceeding at law or in equity) and the discretion of the court before which any proceeding therefor may be brought. (f) The Company, the Issuer and USGP each have all requisite power and authority to execute, deliver and perform their obligations under the Indenture. The Indenture meets the requirements for qualification under the Trust Indenture Act of 1939, as amended (the "TIA"). The Indenture has been duly and validly authorized by the Company, the Issuer and USGP. Assuming the due authorization, execution and delivery of the Indenture by the Trustee, the Indenture, when executed and delivered by the Company, the Issuer and USGP, will constitute a valid and legally binding agreement of the Company, the Issuer and USGP, enforceable against the Company, the Issuer and USGP in accordance with its terms, except to the extent that (A) the enforcement thereof may be subject to (i) bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting creditors' rights generally and 4 (ii) general principles of equity (regardless of whether enforcement is in a proceeding at law or in equity) and the discretion of the court before which any proceeding therefor may be brought and (B) any rights to indemnity or contribution thereunder may be limited by federal or state securities laws or public policy considerations. With respect to the foregoing, the Company, the Issuer and USGP make no representation or warranty with respect to the indemnification provisions contained in the Indenture to the extent they are deemed by a court of law to be contrary to public policy. (g) The Company, the Issuer and USGP each have all requisite power and authority to execute, deliver and perform their obligations under the Registration Rights Agreement. The Registration Rights Agreement has been duly and validly authorized by the Company, the Issuer and USGP. Assuming the due authorization, execution and delivery of the Registration Rights Agreement by the Initial Purchasers, the Registration Rights Agreement, when executed and delivered by the Company, the Issuer and USGP, will constitute a valid and legally binding agreement of the Company, the Issuer and USGP, enforceable against the Company, the Issuer and USGP in accordance with its terms, except to the extent that (A) the enforcement thereof may be subject to (i) bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting creditors' rights generally and (ii) general principles of equity (regardless of whether enforcement is in a proceeding at law or in equity) and the discretion of the court before which any proceeding therefor may be brought and (B) any rights to indemnity or contribution thereunder may be limited by federal or state securities laws or public policy considerations. (h) The Company, the Issuer and USGP each have all requisite corporate power and authority to execute, deliver and perform their obligations under this Agreement and to consummate the transactions contemplated hereby. This Agreement and the consummation by the Company, the Issuer and USGP of the transactions contemplated hereby have been duly authorized by the Company, the Issuer and USGP and this Agreement has been duly executed and delivered by the Company, the Issuer and USGP. The execution, delivery and performance by the Company, the Issuer and USGP of this Agreement, the Indenture, the Registration Rights Agreement and the Securities (collectively, the "TRANSACTION DOCUMENTS"), the compliance by the Company, the Issuer and USGP with the terms thereof and the consummation of the transactions contemplated by the Transaction Documents will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its Restricted Subsidiaries pursuant to, (i) any of the terms or provisions of any indenture, mortgage, deed of trust, loan agreement, note, lease, license, franchise agreement, permit, certificate, contract, partnership, joint venture agreement or other agreement or instrument to which the Company or any of its Restricted Subsidiaries is a party or to which any of them or their respective properties or assets is subject (collectively, "CONTRACTS"), (ii) the charter or by-laws (or similar organizational document) of the Company or any of its Restricted Subsidiaries or (iii) (assuming compliance with all applicable state securities laws or "Blue Sky" laws) any statute, judgment, decree, order, rule or regulation of any court or arbitrator or governmental agency or body having jurisdiction over the Company or any of its Restricted Subsidiaries or any of their respective properties or assets, except in the case of (i) or (iii) for such breaches, violations or defaults which would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; no consent, approval, authorization or order of, or filing with, any court or arbitrator or governmental agency or body is required for the execution, delivery and performance by the Company, the Issuer or USGP of each of the Transaction Documents or the consummation of the transactions 5 contemplated by the Transaction Documents, except such as (i) have been obtained or made, (ii) may be required to comply with the provisions of the Registration Rights Agreement or the Senior Credit Facilities or (iii) may be required under state securities laws or "Blue Sky" laws. (i) Each Transaction Document conforms in all material respects to the description thereof contained in the Offering Memorandum. (j) The audited consolidated financial statements of the Company and its consolidated Subsidiaries, and the related notes thereto, included in the Offering Memorandum present fairly in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries, as of the respective dates of such financial statements, and the results of operations and changes in financial position of the Company for the respective periods covered thereby. Such financial statements comply in all material respects with the requirements applicable to a registration statement on Form F-1 under the Securities Act (except that certain supporting schedules are omitted) and have been prepared in accordance with United Kingdom generally accepted accounting principles applied on a consistent basis, except as otherwise stated therein. The summary and selected financial data set forth in the Offering Memorandum under the captions "Summary--Summary Historical Consolidated Financial Information of the Company", "Summary--Summary Unaudited Pro Forma Consolidated Financial Information of the Company", "Capitalization", "Unaudited Condensed Pro Forma Consolidated Financial Information", "Selected Historical Consolidated Financial Data", "Summary Supplemental Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" fairly present in all material respects (subject to year-end audit adjustments with respect to interim financial information) the information set forth therein on the basis stated in the Offering Memorandum. The other financial and statistical information and data set forth in the Preliminary Offering Memorandum and the Offering Memorandum are based on or derived from sources which the Company and the Subsidiaries believe to be reliable and materially accurate. Ernst & Young, LLP are independent certified public accountants with respect to the Company and its Subsidiaries within the meaning of Rule 101 of the Code of Professional Conduct of the American Institute of Certified Public Accountants ("AICPA") and its interpretations and rulings thereunder. (k) The pro forma consolidated condensed financial statements and other pro forma financial information (including, without limitation, the notes thereto) included in the Offering Memorandum (A) present fairly in all material respects the information shown therein and (B) have been prepared in accordance with applicable requirements of Regulation S-X promulgated under the Exchange Act. The pro forma capitalization of the Company presented in the Offering Memorandum under the heading "Capitalization" presents fairly in all material respects the information shown therein. The assumptions used in the preparation of the pro forma financial statements and other pro forma financial information included in the Offering Memorandum (including, without limitation, the information under the heading "Capitalization") are reasonable and the adjustments used therein are appropriate to give effect to the transactions or circumstances referred to therein. The constant currency financial data included in the Offering Memorandum (including, without limitation, the constant currency financial data set forth in the section entitled "Summary Supplemental Financial Data") have been prepared on the basis described in the Offering Memorandum and present fairly in all material respects the information shown therein. The assumptions used in the preparation of the constant currency information are reasonable and appropriate for the purposes described therein. 6 (l) Neither the Company nor any of its Restricted Subsidiaries is (i) in violation of its charter or by-laws (or similar organizational document), (ii) in breach or violation of any statute, judgment, decree, order, rule or regulation applicable to the Company or its Restricted Subsidiaries or any of their properties or assets or (iii) in breach or default in the performance of any Contract, except for any such violation, breach or default that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. (m) Except as disclosed in the Offering Memorandum, there is (i) no action, suit or proceeding before or by any court, arbitrator or governmental agency, body or official, domestic or foreign, now pending, or to the knowledge of the Company or any of its Restricted Subsidiaries threatened or contemplated to which the Company or any of its Restricted Subsidiaries is or may be a party or to which the business, property or assets of the Company or any of its Restricted Subsidiaries is or may be subject, (ii) to the knowledge of the Company and its Restricted Subsidiaries, no statute, rule, regulation or order that has been enacted, adopted or issued by any governmental agency or that has been proposed by any governmental body (other than "Blue Sky" laws, regulations or orders), or (iii) no injunction, restraining order or order of any nature by a federal or state court of competent jurisdiction to which the Company or any of its Restricted Subsidiaries is or may be subject, issued and outstanding that, in the case of clauses (i), (ii) or (iii) above, could reasonably be expected to (x) have a Material Adverse Effect or (y) seek to restrain, enjoin, interfere with or adversely affect the transactions contemplated by the Transaction Documents in any material respect; and the Company, the Issuer and USGP have each complied with any and all requests by any securities authority in any jurisdiction for additional information to be included in the Preliminary Offering Memorandum and the Offering Memorandum. (n) The descriptions in the Offering Memorandum of statutes, legal and governmental proceedings and contracts and other documents are accurate and fairly present in all material respects the information that would be required to be described in a registration statement under the Securities Act or in a document incorporated by reference therein. (o) The Company and each of its Subsidiaries have good and marketable title, free and clear of all liens, claims, encumbrances and restrictions, to all property and assets described in the Offering Memorandum as being owned by it and good title to all leasehold estates in the real property described in the Offering Memorandum as being leased by it except for (i) liens for taxes not yet due and payable, (ii) such liens and encumbrances as are contemplated by the Senior Credit Facilities, (iii) such liens, claims, encumbrances and restrictions as do not materially interfere with the use made and proposed to be made of such properties (including, without limitation, purchase money mortgages), and (iv) to the extent the failure to have such title or the existence of such liens, claims, encumbrances and restrictions would not have a Material Adverse Effect. (p) Since the respective dates as of which information is given in the Offering Memorandum and, in the case of clauses (i) and (ii) below, other than intercompany loans and dividends that would have been permitted by the Indenture if it had been in effect at the time that such intercompany loans were made and such dividends were paid: (i) the Company and its Restricted Subsidiaries have not incurred any material liabilities or obligations, direct or contingent, or entered into any material agreement or other material transaction, which is not in the ordinary course of business; (ii) the Company has not paid or declared any dividends or other distributions with respect to its capital stock and the Company and its Restricted Subsidiaries are not in default in the payment of principal or 7 interest on any outstanding debt obligations; and (iii) there has not been any change in the condition (financial or otherwise), business or results of operations of the Company and its Restricted Subsidiaries, taken as a whole, which could have a Material Adverse Effect. (q) Each of the Company and its Subsidiaries possesses all licenses, permits, certificates, consents, orders, approvals and other authorizations from, and have made all declarations and filings with, all appropriate federal, state, local, foreign and other governmental authorities, all self-regulatory organizations and all courts and other tribunals, presently required or necessary to own or lease, as the case may be, and to operate their respective properties and to carry on the business of the Company and its Subsidiaries as now conducted as set forth in the Offering Memorandum, the lack of which would have a Material Adverse Effect ("PERMITS"); each of the Company and its Subsidiaries has fulfilled and performed all of its respective material obligations with respect to such Permits and, to the best knowledge of the Company, no event has occurred which allows, or after notice or lapse of time would allow, revocation or termination thereof or results in any other impairment of the rights of the holder of any such Permit, except where the failure to fulfill or perform such obligations or such impairment, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and neither of the Company nor any of its Subsidiaries has received any notice of any proceeding relating to revocation or modification of any such Permit except where such revocation or modification would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. (r) The Company and each of its Subsidiaries own or possess adequate licenses or other rights to use all patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights, licenses and know-how (including, without limitation, trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures) and copyrights necessary to conduct the business described in the Offering Memorandum, except where the failure to own or possess or have the ability to acquire any of the foregoing would not have a Material Adverse Effect, and neither the Company nor any of its Subsidiaries has received any notice of infringement of or conflict with asserted rights of others with respect to any patents, trademarks, service marks, trade names or copyrights which, if such assertion of infringement or conflict were sustained, would have a Material Adverse Effect. (s) Neither the Company nor any Restricted Subsidiary has any material liability for any prohibited transaction or funding deficiency or any complete or partial withdrawal liability with respect to any pension, profit sharing or other plan which is subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), to which it makes or ever has made a contribution and in which any employee of it is or has ever been a participant. With respect to such plans, the Company and each Restricted Subsidiary is in compliance in all material respects with all applicable provisions of ERISA. In addition, the Company has caused (i) all pension schemes maintained by or for the benefit of any of its Subsidiaries organized under the laws of England and Wales and/or any of its employees to be maintained and operated in all material respects in accordance with all applicable laws from time to time and (ii) all such pension schemes to be funded in accordance with the governing provisions of such schemes, except to the extent failure to do so could not reasonably be expected to have a Material Adverse Effect. (t) Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, to the best knowledge of the Company, the Company and its Restricted Subsidiaries are in material compliance with all applicable existing federal, state, local and foreign laws and regulations relating to the protection of 8 human health or the environment or imposing liability or requiring standards of conduct concerning any Hazardous Materials ("ENVIRONMENTAL LAWS"). The term "HAZARDOUS MATERIAL" means (a) any "hazardous substance" as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, (b) any "hazardous waste" as defined by the Resource Conservation and Recovery Act, as amended, (c) any petroleum or petroleum product, (d) any polychlorinated biphenyl and (e) any pollutant or contaminant or hazardous, dangerous or toxic chemical, material, waste or substance regulated under or within the meaning of any other Environmental Law. Neither the Company nor any of its Subsidiaries has received any written notice and there is no pending or, to the best knowledge of the Company and its Restricted Subsidiaries, threatened action, suit or proceeding before or by any court or governmental agency or body alleging liability (including, without limitation, alleged or potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, or penalties) of the Company or any of its Restricted Subsidiaries arising out of, based on or resulting from (i) the presence or release into the environment of any Hazardous Material at any location owned by the Company or any Restricted Subsidiary, or (ii) any violation or alleged violation of any Environmental Law, in either case (x) which alleged or potential liability would be required to be described in a registration statement under the Securities Act, or (y) which alleged or potential liability, singly or in the aggregate, would reasonably be expected to have a Material Adverse Effect. (u) Each of the Company and its Subsidiaries has filed all necessary federal, state and foreign (including, without limitation, United Kingdom) income and franchise tax returns required to be filed to the date hereof, except where the failure to so file such returns would not, individually or in the aggregate, have a Material Adverse Effect, and has paid all material taxes shown as due thereon; and other than tax deficiencies which the Company or any Subsidiary is contesting in good faith and for which the Company or such Subsidiary has provided adequate reserves, there is no tax deficiency that has been asserted against the Company or any of the Subsidiaries that would have, individually or in the aggregate, a Material Adverse Effect. (v) None of the Company or any of its Subsidiaries or any of their respective Affiliates (as defined in Rule 501(b) of Regulation D under the Securities Act) has directly, or through any agent, (i) sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any "security" (as defined in the Securities Act) which is or reasonably could be integrated with the sale of the Securities in a manner that would require the registration under the Securities Act of the Securities or (ii) engaged in any form of general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) in connection with the offering of the Securities or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act. Assuming (i) the accuracy of the Initial Purchasers' representations in Section 2 hereof and their compliance with the agreements set forth therein, (ii) compliance by the Initial Purchasers with the offering and transfer restrictions described in the Offering Memorandum and (iii) the accuracy of the representations, warranties and agreements of each of the purchasers to whom the Initial Purchasers initially resells the Securities in compliance with Section 2 hereof, it is not necessary in connection with the offer, sale and delivery of the Securities to the Initial Purchasers in the manner contemplated by this Agreement to register any of the Securities under the Securities Act or to qualify the Indenture under the TIA. (w) No securities of the Company, the Issuer or USGP are of the same class (within the meaning of Rule 144A under the Securities Act) as the Securities or are listed or 9 are on a national securities exchange registered under Section 6 of the Exchange Act, or quoted in a U.S. automated inter-dealer quotation system. (x) None of the Company, the Issuer or USGP is an "investment company" or "promoter" or "principal underwriter" for an "investment company" under the Investment Company Act of 1940, as amended, and the rules and regulations thereunder. (y) The Company and each of its Restricted Subsidiaries maintain insurance insuring against such losses and risks as the Company reasonably believes is adequate to protect the Company and each of its Restricted Subsidiaries and their respective businesses, except where the failure to maintain such insurance would not reasonably be expected to have a Material Adverse Effect. (z) Neither the Company nor any of its Subsidiaries has taken nor will it take, directly or indirectly, any action designed to or that might be reasonably expected to cause or result in stabilization or manipulation of the price of the Securities or to facilitate the sale or resale of the Securities. (aa) None of the Company, any of its affiliates or any person acting on its or their behalf has engaged or will engage in any directed selling efforts (as such term is defined in Regulation S under the Securities Act ("REGULATION S")), and all such persons have complied and will comply with the offering restrictions requirement of Regulation S to the extent applicable. (bb) Other than as contemplated by this Agreement there is no broker, finder or other party that is entitled to receive from the Company or the Initial Purchasers any brokerage or finder's fee or other fee or commission as a result of any of the transactions contemplated hereby or thereby. (cc) Neither the issuance, sale and delivery of the Securities, nor the application of the proceeds thereof by the Issuer as set forth in the Offering Memorandum, will violate Regulations T, U or X promulgated by the Board of Governors of the Federal Reserve System. (dd) Other than the Registration Rights Agreement, there are no contracts, agreements or understandings between the Company, the Issuer or USGP and any person granting such person the right to require the Company, the Issuer or USGP to file a registration statement under the Securities Act with respect to any debt securities of the Company, the Issuer or USGP owned or to be owned by such person or to require the Company, the Issuer or USGP to include such debt securities in the securities registered pursuant to an Exchange Offer Registration Statement or Shelf Registration Statement, or with any other securities being registered pursuant to any other registration statement filed by the Company under the Securities Act. (ee) None of the Company, the Issuer or USGP has distributed, nor will the Company, the Issuer or USGP distribute, any offering material in connection with the offering and sale of the Securities other than the Offering Memorandum and the other materials permitted by the Securities Act. (ff) Neither the Company nor any of its Restricted Subsidiaries is involved in any material labor dispute nor, to the best of the knowledge of the Company and its 10 Subsidiaries, is any material labor dispute threatened which, if such dispute were to occur, would reasonably be expected to have a Material Adverse Effect. (gg) The Securities satisfy the eligibility requirements of Rule 144A(d)(3) under the Securities Act. (hh) No stamp duty, stock exchange tax, value-added tax, withholding or any other similar duty or tax is payable in the United States, the United Kingdom or any other jurisdiction in which either the Company or any of its Subsidiaries is organized or engaged in business for tax purposes or, in each case, any political subdivision thereof or any authority having power to tax, in connection with the authorization, issuance, sale and delivery of the Securities by the Issuer to the Initial Purchasers and resales thereof by the Initial Purchasers in the manner contemplated by this Agreement and the Offering Memorandum. (ii) Under current laws and regulations (and interpretations thereof) of the United Kingdom and any political subdivision thereof (or of any other jurisdiction from or through which payment is to be made), all payments of principal made on the Securities and the Exchange Securities by the Company pursuant to its guarantee to Holders thereof who are non-residents of the United Kingdom (or such other jurisdiction) and do not have a branch, agency or permanent establishment nor carry on a trade in the United Kingdom (or such other jurisdiction) to which the holding of the Securities or Exchange Securities is attributable, will not be subject to income, withholding or other taxes under laws and regulations of the United Kingdom or any political subdivision or taxing authority thereof or therein (or of such other jurisdiction) and will otherwise be free and clear of any other tax, duty, withholding or deduction in the United Kingdom or any political subdivision or taxing authority thereof or therein (or such other jurisdiction) and without the necessity of obtaining any governmental authorization in the United Kingdom (or of such other jurisdiction) or any political subdivision or taxing authority thereof or herein. (jj) Neither the Company nor any of its Restricted Subsidiaries, and none of their respective properties or assets, has any immunity from the jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, executing or otherwise) under the laws of the United States or the United Kingdom. (kk) To ensure the legality, validity, enforceability and admissibility into evidence of each of this Agreement, the Exchange and Registration Rights Agreement, the Indenture, the Securities and any other document to be furnished hereunder or thereunder in the United Kingdom, it is not necessary that this Agreement, the Exchange and Registration Rights Agreement, the Indenture, the Securities or such other document be filed or recorded with any court or other authority in the United Kingdom or that any stamp of similar tax be paid in the United Kingdom on or in respect of this Agreement, the Exchange and Registration Rights Agreement, the Indenture, the Securities or any such other document. (ll) On and immediately after the Closing Date, the Company, the Issuer and USGP (after giving effect to the issuance of the Securities and the Transactions) will not be insolvent or unable to pay their debts as they fall due and could not be deemed to be unable to pay their debts for the purpose of (i) the Uniform Fraudulent Transfer Act; (ii) the Uniform Fraudulent Conveyance Act or (iii) Section 123(1) or (2) of the U.K. Insolvency Act 1986 (for this purpose omitting the words "proved to the satisfaction of the court" from Section 123(1)(e)). 11 (mm) The Company has complied in all material respects with the Financial Services Act 1986 and the Companies Act 1985 and all other applicable laws and regulations relevant in the context of the Transactions and has complied in all material respects with the City Code on Takeovers and Mergers. (nn) Application has been made to list the Securities on the Luxembourg Stock Exchange and, in connection therewith, the Company has caused to be prepared and submitted to the Luxembourg Stock Exchange an initial listing application with respect to the Securities (the "LISTING APPLICATION"). The Company will use its commercially reasonable efforts to (i) cause the Listing Application to comply in all material respects with the requirements of the Luxembourg Stock Exchange, (ii) submit the final Listing Application to the Luxembourg Stock Exchange and (iii) cause the final Listing Application to be approved by the Luxembourg Stock Exchange as promptly as practicable following the Closing Date (and in no event later than 30 days following the Closing Date, PROVIDED that the Company shall not be required to disclose any confidential information not otherwise disclosed in the Offering Memorandum). To the Company's knowledge, there is no requirement of the Luxembourg Stock Exchange to deliver the Listing Application or any document other than the Offering Memorandum to prospective purchasers or purchasers of Securities from the Initial Purchasers in connection with the offer and sale by the Initial Purchasers of the Securities in the manner contemplated by this Agreement and the Offering Memorandum. 2. PURCHASE AND RESALE OF THE SECURITIES. (a) On the basis of the representations, warranties and agreements contained herein, and subject to the terms and conditions set forth herein, the Issuer agrees to issue and sell to each of the Initial Purchasers, severally and not jointly, and each of the Initial Purchasers, severally and not jointly, agrees to purchase from the Issuer, the aggregate principal amount of Securities set forth opposite the name of such Initial Purchaser on Schedule 2 hereto at a purchase price equal to 97.25% of the principal amount thereof (subject to the partial credit set forth in the fee letter (the "FEE LETTER") dated September 1, 1998, among Trinity Acquisition plc, The Chase Manhattan Bank and Chase Securities Inc.). The Issuer shall not be obligated to deliver any of the Securities except upon payment for all of the Securities to be purchased as provided herein. If Chase Manhattan International Limited shall default in its obligation hereunder to purchase from the Issuer the aggregate principal amount of Securities set forth opposite its name on Schedule 2 hereto, CSI shall purchase such Securities. (b) Each of the Initial Purchasers represents and warrants (as to itself only) that it is a qualified institutional buyer ("QUALIFIED INSTITUTIONAL BUYER") as defined in Rule 144A under the Securities Act ("RULE 144A"). The Initial Purchasers have advised the Issuer that they propose to offer the Securities for resale upon the terms and subject to the conditions set forth herein and in the Offering Memorandum. Each Initial Purchaser, severally and not jointly, represents, warrants and agrees that (i) it is purchasing the Securities pursuant to a private sale exempt from registration under the Securities Act and the Securities may not be offered or sold within the United States unless the Securities are registered under the Securities Act or an exemption from the registration requirements of the Securities Act is available, (ii) it has not solicited offers for, or offered or sold, and will not solicit offers for, or offer or sell, the Securities by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) of Regulation D under the Securities Act ("REGULATION D") or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act and (iii) it has solicited and will solicit offers for the Securities only from, and has offered or sold and will offer, sell or deliver the Securities, as part of their initial offering, only (A) within the United States to persons whom 12 it reasonably believes to be Qualified Institutional Buyers, or if any such person is buying for one or more institutional accounts for which such person is acting as fiduciary or agent, only when such person has represented to it that each such account is a Qualified Institutional Buyer to whom notice has been given that such sale or delivery is being made in reliance on Rule 144A and in each case, in transactions in accordance with Rule 144A and (B) outside the United States to persons other than U.S. persons in reliance on Regulation S under the Securities Act ("REGULATION S"). (c) In connection with the offer and sale of Securities in reliance on Regulation S, each Initial Purchaser, severally and not jointly, represents, warrants and agrees that: (i) it has and will comply with all applicable laws and regulations in each jurisdiction in which it acquires, offers, sells or delivers Securities or has in its possession or distributed the Preliminary Offering Memorandum or Offering Memorandum at its own expense; (ii) the Securities have not been registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except pursuant to an exemption from, or in transactions not subject to, the registration requirements of the Securities Act; (iii)it has offered and sold the Securities, and will offer and sell the Securities, (A) as part of their distribution at any time and (B) otherwise until 40 days after the later of the commencement of the offering of the Securities and the Closing Date, only in accordance with Regulation S or Rule 144A or any other available exemption from registration under the Securities Act; (iv) neither the Initial Purchaser nor any of its affiliates or any other person acting on its or their behalf has engaged or will engage in any directed selling efforts with respect to the Securities, and all such persons have complied and will comply with the offering restriction requirements of Regulation S; (v) at or prior to the confirmation of sale of any Securities sold in reliance on Regulation S, it will have sent to each distributor, dealer or other person receiving a selling concession, fee or other remuneration that purchases Securities from it during the restricted period a confirmation or notice to substantially the following effect: "The Securities covered hereby have not been registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the offering of the Securities and the date of original issuance of the Securities, except in accordance with Regulation S or Rule 144A or any other available exemption from registration under the Securities Act. Terms used above have the meanings given to them by Regulation S." (vi) it has not and will not enter into any contractual arrangement with any distributor with respect to the distribution of the Securities, except with its affiliates or with the prior written consent of the Company or the Issuer. 13 Terms used in this Section 2(c) have the meanings given to them by Regulation S. (d) Each Initial Purchaser, severally and not jointly, represents, warrants and agrees that (i) it has not offered or sold and prior to the date six months after the Closing Date will not offer or sell any Securities to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995; (ii) it has complied and will comply with all applicable provisions of the Financial Services Act 1986 and the Public Offers of Securities Regulations 1995 with respect to anything done by it in relation to the Securities in, from or otherwise involving the United Kingdom; and (iii) it has only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with the issue of the Securities to a person who is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person to whom such document may otherwise lawfully be issued or passed on. (e) Each Initial Purchaser, severally and not jointly, agrees that, prior to or simultaneously with the confirmation of sale by such Initial Purchaser to any purchaser of any of the Securities purchased by such Initial Purchaser from the Issuer pursuant hereto, such Initial Purchaser shall furnish to that purchaser a copy of the Offering Memorandum (and any amendment or supplement thereto that the Company shall have furnished to such Initial Purchaser prior to the date of such confirmation of sale). In addition to the foregoing, each Initial Purchaser acknowledges and agrees that the Company and, for purposes of the opinions to be delivered to the Initial Purchasers pursuant to Sections 5(a) and (b), counsel for the Company and for the Initial Purchasers, respectively, may rely upon the accuracy of the representations and warranties of the Initial Purchasers and their compliance with their agreements contained in this Section 2, and each Initial Purchaser hereby consents to such reliance. (f) The Issuer acknowledges and agrees that the Initial Purchasers may sell Securities to any of its affiliates and that any such affiliate may sell Securities purchased by it to the Initial Purchasers. (g) The Initial Purchasers agree to notify the Issuer of the completion of the initial distribution of the Securities. 3. DELIVERY OF AND PAYMENT FOR THE SECURITIES. (a) Delivery of and payment for the Securities shall be made at the offices of Cravath, Swaine & Moore, New York, New York, or at such other place as shall be agreed upon by the Initial Purchasers and the Issuer, at 10:00 A.M., New York City time, on February 2, 1999, or at such other time or date, not later than seven full business days thereafter, as shall be agreed upon by the Initial Purchasers and the Issuer (such date and time of payment and delivery being referred to herein as the "CLOSING DATE"). (b) On the Closing Date, payment of the purchase price for the Securities shall be made to the Issuer by wire or book-entry transfer of same-day funds to such account or accounts as the Issuer shall specify prior to the Closing Date or by such other means as the parties hereto shall agree prior to the Closing Date against delivery to the Initial Purchasers of the certificates evidencing the Securities. Time shall be of the essence, and delivery at the time and place specified pursuant to this Agreement is a further condition of the obligations 14 of the Initial Purchasers hereunder. Upon delivery, the Securities shall be in global form, registered in such names and in such denominations as CSI on behalf of the Initial Purchasers shall have requested in writing not less than two full business days prior to the Closing Date. The Issuer agrees to make one or more global certificates evidencing the Securities available for inspection by CSI on behalf of the Initial Purchasers in New York, New York at least 24 hours prior to the Closing Date. 4. FURTHER AGREEMENTS OF THE COMPANY. The Company, the Issuer and USGP each agree with the several Initial Purchasers: (a) at any time prior to being advised by the Initial Purchasers of the completion of the initial distribution of Securities, to advise the Initial Purchasers promptly and, if requested, confirm such advice in writing, of the happening of any event which makes any statement of a material fact made in the Offering Memorandum untrue or which requires the making of any additions to or changes in the Offering Memorandum (as amended or supplemented from time to time) in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; to advise the Initial Purchasers promptly of any order preventing or suspending the use of the Preliminary Offering Memorandum or the Offering Memorandum, of any suspension of the qualification of the Securities for offering or sale in any jurisdiction and of the initiation or threatening of any proceeding for any such purpose; and to use its reasonable best efforts to prevent the issuance of any such order preventing or suspending the use of the Preliminary Offering Memorandum or the Offering Memorandum or suspending any such qualification and, if any such suspension is issued, to obtain the lifting thereof at the earliest possible time; (b) to cooperate with the Initial Purchasers in arranging for the qualification of the Securities for offering and sale under the securities or "Blue Sky" laws of such jurisdictions as the Initial Purchasers may designate and will continue such qualifications in effect for as long as may be necessary to complete the resale of the Securities; PROVIDED, HOWEVER, that in connection therewith, none of the Company, the Issuer or USGP shall be required to qualify as a foreign corporation or to execute a general consent to service of process in any jurisdiction or subject itself to taxation in excess of a nominal dollar amount in any such jurisdiction where it is not then so subject; (c) if, at any time prior to completion of the resale of the Securities by the Initial Purchasers, any event shall occur or condition exist as a result of which it is necessary, in the opinion of counsel for the Initial Purchasers or counsel for the Company, to amend or supplement the Offering Memorandum in order that the Offering Memorandum will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time it is delivered to a purchaser, not misleading, or if it is necessary to amend or supplement the Offering Memorandum to comply with applicable law, to promptly prepare such amendment or supplement as may be necessary to correct such untrue statement or omission or so that the Offering Memorandum, as so amended or supplemented, will comply with applicable law; (d) prior to making any amendment or supplement to the Offering Memorandum, to furnish a copy thereof each of the Initial Purchasers and counsel for the Initial Purchasers and not to effect any such amendment or supplement to which the Initial Purchasers shall reasonably object by notice to the Company after a reasonable period to review; 15 (e) at any time prior to being advised by the Initial Purchasers of the completion of the initial distribution of Securities, furnish, without charge, to the Initial Purchasers and their counsel as many copies of the Preliminary Offering Memorandum and the Offering Memorandum or any amendment or supplement thereto as the Initial Purchasers may from time to time reasonably request. The Company consents to the use, in accordance with the provisions of the Securities Act and with the securities or "Blue Sky" laws of the jurisdictions in which the Securities are offered by the several Initial Purchasers and by dealers, of each Preliminary Offering Memorandum and Offering Memorandum furnished by the Company; (f) to apply the net proceeds from the sale of the Securities as set forth in the Offering Memorandum under the heading "Use of Proceeds"; (g) for so long as any of the Securities remain outstanding, the Company will furnish to the Initial Purchasers, upon request, copies of all reports and other communications (financial or otherwise) furnished by the Company, the Issuer or USGP to the Trustee or to the holders of the Securities and, as soon as available, copies of any reports or financial statements furnished to or filed by the Company, the Issuer or USGP with the Commission or any national securities exchange on which any class of securities of the Company, the Issuer or USGP may be listed; (h) not to and to cause its affiliates not to sell, offer for sale or solicit offers to buy or otherwise negotiate in any respect of any "security" (as defined in the Securities Act) which could be integrated with the sale of the Securities in a manner which would require the registration under the Securities Act of the Securities; (i) except following the effectiveness of the Exchange Offer Registration Statement and any Shelf Registration Statement, not to, and not to permit any of its affiliates to, engage in any form of general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) in connection with the offering of the Securities or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act; and not to offer, sell, contract to sell or otherwise dispose of, directly or indirectly, any securities under circumstances where such offer, sale, contract or disposition would cause the exemption afforded by Section 4(2) of the Securities Act to cease to be applicable to the offering and sale of the Securities as contemplated by this Agreement and the Offering Memorandum; (j) to assist the Initial Purchasers in arranging for the Securities to be designated Private Offerings, Resales and Trading through Automated Linkages ("PORTAL") Market securities in accordance with the rules and regulations adopted by the National Association of Securities Dealers, Inc. ("NASD") relating to trading in the PORTAL Market and for the Securities to be eligible for clearance and settlement through The Depository Trust Company ("DTC"); (k) for a period of 90 days from the date of the Offering Memorandum, without the prior consent of the Initial Purchasers (which consent shall not be unreasonably withheld), not to, directly or indirectly, sell, offer to sell, contract to sell, or announce or file a registration statement for the offering of any debt securities of the Company, the Issuer or USGP designed to be traded or distributed in the public or private securities markets (other than the Securities and the Exchange Securities and other than in respect of borrowings under the Senior Credit Facilities); 16 (l) during the period from the Closing Date until two years after the Closing Date, without the prior written consent of the Initial Purchasers, not to, and not permit any of its affiliates (as defined in Rule 144 under the Securities Act) to, resell any of the Securities that have been reacquired by them, except for Securities purchased by the Company, the Issuer or any of their affiliates and resold in a transaction registered under the Securities Act; (m) in connection with the offering of the Securities, until CSI on behalf of the Initial Purchasers shall have notified the Company or the Issuer of the completion of the resale of the Securities, not to, and to cause its affiliated purchasers (as defined in Regulation M under the Exchange Act) not to, either alone or with one or more other persons, bid for or purchase, for any account in which it or any of its affiliated purchasers has a beneficial interest, any Securities, or attempt to induce any person to purchase any Securities; and not to, and to cause its affiliated purchasers not to, make bids or purchase for the purpose of creating actual, or apparent, active trading in or of raising the price of the Securities; (n) in connection with the offering of the Securities, to make its officers, employees, independent accountants and legal counsel reasonably available upon request by the Initial Purchasers; (o) at any time prior to being advised by the Initial Purchasers of the completion of the initial distribution of Securities, upon request of any holder of the Securities, to furnish to such holder, and to any prospective purchaser or purchasers of the Securities designated by such holder, information satisfying the requirements of subsection (d)(4) of Rule 144A under the Securities Act. This covenant, except for the indemnification provisions of Section 9, is intended to be for the benefit of the holders from time to time of the Securities, and prospective purchasers of the Securities designated by such holders. 5. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. The respective obligations of the several Initial Purchasers hereunder are subject to the accuracy, on and as of the date hereof and the Closing Date, of the representations and warranties of the Company, the Issuer and USGP contained herein, to the accuracy of the statements of the Company, the Issuer and USGP and its officers made in any certificates delivered pursuant hereto, to the performance by the Company, the Issuer and USGP of their respective obligations hereunder, and to each of the following additional terms and conditions: (a) Each of Simpson Thacher & Bartlett, Clifford Chance and Richards, Layton & Finger shall have furnished to the Initial Purchasers their written opinion, as counsel to the Issuer, the Company and USGP, respectively, addressed to the Initial Purchasers and dated the Closing Date, in form and substance reasonably satisfactory to the Initial Purchasers. (b) Bart Schwartz, General Counsel to the Company, and Heather Hunter, head of the Company's U.K. legal department, shall have furnished to the Initial Purchasers written opinions addressed to the Initial Purchasers and dated the Closing Date, in form and substance reasonably satisfactory to the Initial Purchasers. (c) The Initial Purchasers shall have received from Cravath, Swaine & Moore, counsel for the Initial Purchasers, such opinion or opinions, dated the Closing Date, with respect to such matters as the Initial Purchasers may reasonably require, and the 17 Company shall have furnished to such counsel such documents and information as they request for the purpose of enabling them to pass upon such matters. (d) The Company shall have furnished to the Initial Purchasers a letter (the "INITIAL LETTER") of Ernst & Young LLP, addressed to the Initial Purchasers and dated the date hereof, in form and substance reasonably satisfactory to the Initial Purchasers. (e) The Company shall have furnished to the Initial Purchasers a letter (the "Bring-Down Letter") of Ernst & Young LLP, addressed to the Initial Purchasers and dated the Closing Date (i) confirming that they are independent public accountants with respect to the Company and its Subsidiaries within the meaning of Rule 101 of the Code of Professional Conduct of the AICPA and its interpretations and rulings thereunder, (ii) stating, as of the date of the Bring-Down Letter (or, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in the Offering Memorandum, as of a date not more than three business days prior to the date of the Bring-Down Letter), that the conclusions and findings of such accountants with respect to the financial information and other matters covered by the Initial Letter are accurate and (iii) confirming in all material respects the conclusions and findings set forth in the Initial Letter. (f) Each of the Company, the Issuer and USGP shall have furnished to the Initial Purchasers a certificate or certificates, dated the Closing Date, of Michael Chitty, Company Secretary of the Company, Thomas Colraine, Group Finance Director of the Company and Bart Schwartz, Senior Vice President, Secretary and General Counsel of the Issuer, stating that (A) such officers have carefully examined the Offering Memorandum and to the extent deemed advisable by such officers, have discussed portions of the Offering Memorandum with officers of the Company or the Issuer having responsibility for the matters in question, including, when appropriate, John Reeve, the Executive Chairman of the Company, (B) in their opinion, the Offering Memorandum, as of its date, did not include any untrue statement of a material fact and did not omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and since the date of the Offering Memorandum, no event has occurred which should have been set forth in a supplement or amendment to the Offering Memorandum so that the Offering Memorandum (as so amended or supplemented) would not include any untrue statement of a material fact and would not omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading and (C) as of the Closing Date, the representations and warranties of the Company, the Issuer and USGP in this Agreement are true and correct in all material respects, each of the Company, the Issuer and USGP, as the case may be, has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder on or prior to the Closing Date, and subsequent to the date of the most recent financial statements contained in the Offering Memorandum, there has been no event or development that can reasonably be expected to result in a Material Adverse Effect. (g) On the Closing Date, the Initial Purchasers shall have received the Registration Rights Agreement executed by the Company, the Issuer and USGP and, assuming due execution and delivery by the Initial Purchasers, such agreement shall be in full force and effect. (h) The Indenture shall have been duly executed and delivered by the Company, the Issuer and USGP and duly authorized, executed and delivered by the Trustee, 18 and the Securities shall have been duly executed and delivered by the Issuer and duly authenticated by the Trustee. (i) If any event shall have occurred that requires the Company under Section 4(c) to prepare an amendment or supplement to the Offering Memorandum, such amendment or supplement shall have been prepared, the Initial Purchasers shall have been given a reasonable opportunity to comment thereon, and copies thereof shall have been delivered to the Initial Purchasers reasonably in advance of the Closing Date. (j) There shall not have occurred any invalidation of Rule 144A under the Securities Act by any court or any withdrawal or proposed withdrawal of any rule or regulation under the Securities Act or the Exchange Act by the Commission or any amendment or proposed amendment thereof by the Commission which in the judgment of the Initial Purchasers would materially impair the ability of the Initial Purchasers to purchase, hold or effect resales of the Securities as contemplated hereby. (k) Subsequent to the execution and delivery of this Agreement or, if earlier, the dates as of which information is given in the Offering Memorandum (exclusive of any amendment or supplement thereto), there shall not have been any event or development that can reasonably be expected to result in a Material Adverse Effect or any change specified in the letters referred to in paragraphs (d) and (e) of this section, the effect of which, in any such case described above, is, in the judgment of the Initial Purchasers, so material and adverse as to make it impracticable or inadvisable to proceed with the sale or delivery of the Securities on the terms and in the manner contemplated by this Agreement and the Offering Memorandum (exclusive of any amendment or supplement thereto). (l) No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any governmental agency or body which would, as of the Closing Date, prevent the issuance or sale of the Securities; and no injunction, restraining order or order of any other nature by any federal or state court of competent jurisdiction shall have been issued as of the Closing Date which would prevent the issuance or sale of the Securities. (m) Subsequent to the execution and delivery of this Agreement (i) no downgrading shall have occurred in the rating accorded the Securities or any of the Issuer's or the Company's other debt securities or preferred stock by any "nationally recognized statistical rating organization", as such term is defined by the Commission for purposes of Rule 436(g)(2) of the rules and regulations of the Commission under the Securities Act and (ii) no such organization shall have publicly announced that it has under surveillance or review (other than an announcement with positive implications of a possible upgrading), its rating of the Securities or any of the Issuer's, the Company's or USGP's other debt securities or preferred stock. (n) Subsequent to the execution and delivery of this Agreement there shall not have occurred any of the following: (i) trading in securities generally on the London Stock Exchange, the New York Stock Exchange, the American Stock Exchange or the over-the-counter market shall have been suspended or limited, or minimum prices shall have been established on any such exchange or market by the Commission, by any such exchange or by any other regulatory body or governmental authority having jurisdiction, or trading in any securities of the Issuer, the Company or USGP on any exchange or in the over-the-counter market shall have been suspended or (ii) any moratorium on commercial banking activities shall have been declared by United Kingdom or United States federal or New York state 19 authorities or (iii) an outbreak or escalation of hostilities in the United States or the United Kingdom or a declaration by the United States or the United Kingdom of a national emergency or war or (iv) a material adverse change in general economic, political or financial conditions in the United States or the United Kingdom (or the effect of international conditions on the financial markets in the United States or the United Kingdom shall be such) the effect of which, in the case of this clause (iv), is, in the reasonable judgment of the Initial Purchasers, so material and adverse as to make it impracticable or inadvisable to proceed with the sale or the delivery of the Securities on the terms and in the manner contemplated by this Agreement and in the Offering Memorandum (exclusive of any amendment or supplement thereto). (o) The Offering Memorandum (and any amendments or supplements thereto) shall have been printed and copies distributed to the Initial Purchasers as promptly as practicable on or following the date of this Agreement or at such other date and time as to which the Initial Purchasers may agree; and no stop order suspending the sale of the Securities in any jurisdiction shall have been issued and no proceeding for that purpose shall have been commenced or shall be pending or threatened. (p) None of the Initial Purchasers shall have discovered and disclosed to the Company on or prior to the Closing Date that the Offering Memorandum or any amendment or supplement thereto contains an untrue statement of a fact which, in the opinion of counsel for the Initial Purchasers, is material or omits to state any fact which, in the opinion of such counsel, is material and is required to be stated therein or is necessary to make the statements therein not misleading. (q) All corporate proceedings and other legal matters incident to the authorization, form and validity of each of the Transaction Documents and the Offering Memorandum, and all other legal matters relating to the Transaction Documents and the transactions contemplated thereby, shall be satisfactory in all material respects to the Initial Purchasers, and the Company, the Issuer and USGP shall have furnished to the Initial Purchasers all documents and information that they or their counsel may reasonably request to enable them to pass upon such matters. All opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form and substance reasonably satisfactory to counsel for the Initial Purchasers. 6. TERMINATION. The obligations of the Initial Purchasers hereunder may be terminated by the Initial Purchasers, in their absolute discretion, by notice given to and received by the Company or the Issuer prior to delivery of and payment for the Securities if, prior to that time, any of the events described in Section 5(k), (l), (m) or (n) shall have occurred and be continuing. 7. REIMBURSEMENT OF INITIAL PURCHASERS' EXPENSES. If this Agreement is terminated pursuant to Section 6 or if for any reason the purchase of the Securities by the Initial Purchasers is not consummated, each of the Company, the Issuer and USGP shall remain responsible (except to a defaulting Initial Purchaser) for the expenses to be paid or reimbursed by it pursuant to Section 12 and the respective obligations of the Company and the Initial Purchasers pursuant to Sections 9 and 10 shall remain in effect. In addition, if the purchase of the Securities by the Initial Purchasers is not consummated because any condition to the obligations of the Initial Purchasers set forth in Section 5 hereof (other than Section 5(n)) is not satisfied or because of any refusal, inability or failure on the part of the 20 Company, the Issuer or USGP to perform any agreement herein or comply with any provision hereof other than by reason of a default by the Initial Purchasers, the Company, the Issuer or USGP shall reimburse the Initial Purchasers upon demand accompanied by reasonable supporting documentation for all reasonable out-of-pocket expenses (including reasonable fees and disbursements of counsel) that shall have been incurred by them in connection with this Agreement and the proposed purchase and sale of the Securities. 8. INDEMNIFICATION. (a) The Company, the Issuer and USGP shall, jointly and severally, indemnify and hold harmless each Initial Purchaser, its affiliates, officers, directors, employees, representatives and agents, and each person, if any, who controls any Initial Purchaser within the meaning of the Securities Act or the Exchange Act (collectively referred to for purposes of this Section 8(a) and Section 9 as an Initial Purchaser), from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof (including, without limitation, any loss, claim, damage, liability or action relating to purchases and sales of the Securities), to which that Initial Purchaser may become subject, whether commenced or threatened, under the Securities Act, the Exchange Act, any other federal or state statutory law or regulation, at common law or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Offering Memorandum or the Offering Memorandum or in any amendment or supplement thereto or in any information provided by the Company, the Issuer or USGP pursuant to Section 4(o) or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and shall reimburse each Initial Purchaser promptly upon demand for any legal or other expenses reasonably incurred by that Initial Purchaser in connection with investigating or defending or preparing to defend against or appearing as a third party witness in connection with any such loss, claim, damage, liability or action as such expenses are incurred; PROVIDED, HOWEVER, that none of the Company, the Issuer or USGP shall be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, an untrue statement or alleged untrue statement in or omission or alleged omission from any of such documents in reliance upon and in conformity with any Initial Purchasers' Information; and PROVIDED, FURTHER, that with respect to any such untrue statement in or omission from the Preliminary Offering Memorandum, the indemnity agreement contained in this Section 8(a) shall not inure to the benefit of any such Initial Purchaser to the extent that the sale to the person asserting any such loss, claim, damage, liability or action was an initial resale by such Initial Purchaser and any such loss, claim, damage, liability or action of or with respect to such Initial Purchaser results from the fact that both (A) a copy of the Offering Memorandum was not sent or given to such person at or prior to the written confirmation of the sale of such Securities to such person and (B) the untrue statement in or omission from the Preliminary Offering Memorandum was corrected in the Offering Memorandum unless, in either case, such failure to deliver the Offering Memorandum was a result of non-compliance by the Company with Section 4(e). (b) Each Initial Purchaser, severally and not jointly, shall indemnify and hold harmless the Company, its affiliates, their respective officers, directors, employees, representatives and agents, and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act (collectively referred to for purposes of this Section 8(b) and Section 9 as the Company), from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof, to which the Company may become subject, whether commenced or threatened, under the Securities Act, the Exchange Act, any other federal or state statutory law or regulation, at common law or otherwise, 21 insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Offering Memorandum or the Offering Memorandum or in any amendment or supplement thereto or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with any Initial Purchasers' Information, and shall reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending or preparing to defend against or appearing as a third party witness in connection with any such loss, claim, damage, liability or action as such expenses are incurred. (c) Promptly after receipt by an indemnified party under this Section 8 of notice of any claim or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party pursuant to Section 8(a) or 8(b), notify the indemnifying party in writing of the claim or the commencement of that action; PROVIDED, HOWEVER, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have under this Section 8 except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and, PROVIDED, FURTHER, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have to an indemnified party otherwise than under this Section 8. If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 8 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation; PROVIDED, HOWEVER, that an indemnified party shall have the right to employ its own counsel in any such action, but the fees, expenses and other charges of such counsel for the indemnified party will be at the expense of such indemnified party unless (1) the employment of counsel by the indemnified party has been authorized in writing by the indemnifying party, (2) the indemnified party has reasonably concluded (based upon advice of counsel to the indemnified party) that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party, (3) a conflict or potential conflict exists (based upon advice of counsel to the indemnified party) between the indemnified party and the indemnifying party (in which case the indemnifying party will not have the right to direct the defense of such action on behalf of the indemnified party) or (4) the indemnifying party has not in fact employed counsel reasonably satisfactory to the indemnified party to assume the defense of such action within a reasonable time after receiving notice of the commencement of the action, in each of which cases the reasonable fees, disbursements and other charges of counsel will be at the expense of the indemnifying party or parties. It is understood that the indemnifying party or parties shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one separate firm of attorneys (in addition to any local counsel) at any one time for all such indemnified party or parties. Each indemnified party, as a condition of the indemnity agreements contained in Sections 8(a) and 8(b), shall use all reasonable efforts to cooperate with the indemnifying party in the defense of any such action or claim. No indemnifying party shall be liable for any settlement of any such action effected 22 without its written consent (which consent shall not be unreasonably withheld), but if settled with its written consent or if there be a final judgment for the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. No indemnifying party shall, without the prior written consent of the indemnified party (which consent shall not be unreasonably withheld), effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. The obligations of the Company, the Issuer, USGP and the Initial Purchasers in this Section 8 and in Section 9 are in addition to any other liability that the Company, the Issuer, USGP or the Initial Purchasers, as the case may be, may otherwise have, including, without limitation, in respect of any breaches of representations, warranties and agreements made herein by any such party. 9. CONTRIBUTION. If the indemnification provided for in Section 8 is unavailable or insufficient to hold harmless an indemnified party under Section 8(a) or 8(b), then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Company on the one hand and the Initial Purchasers on the other from the offering of the Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Initial Purchasers on the other with respect to the statements or omissions that resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Initial Purchasers on the other with respect to such offering shall be deemed to be in the same proportion as the total net proceeds from the offering of the Securities purchased under this Agreement (before deducting expenses) received by or on behalf of the Company, on the one hand, and the total discounts and commissions received by the Initial Purchasers with respect to the Securities purchased under this Agreement, on the other, bear to the total gross proceeds from the sale of the Securities under this Agreement, in each case as set forth in the table on the cover page of the Offering Memorandum. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to the Company or information supplied by the Company on the one hand or to any Initial Purchasers' Information on the other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The Company and the Initial Purchasers agree that it would not be just and equitable if contributions pursuant to this Section 9 were to be determined by PRO RATA allocation or by any other method of allocation that does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section 8 shall be deemed to include, for purposes of this Section 9, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending or preparing to defend any such action or claim. Notwithstanding the provisions of this Section 9, no Initial Purchaser shall be required to contribute any amount in excess of the amount by which the total discounts and commissions received by such Initial Purchaser with respect to the Securities 23 purchased by it under this Agreement exceeds the amount of any damages which such Initial Purchaser has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 10(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 10. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall inure to the benefit of and be binding upon the Initial Purchasers, the Company, the Issuer and USGP and their respective successors. This Agreement and the terms and provisions hereof are for the sole benefit of only those persons, except as provided in Sections 8 and 9 with respect to affiliates, officers, directors, employees, representatives, agents and controlling persons of the Company and the Initial Purchasers and in Section 4(o) with respect to holders and prospective purchasers of the Securities. Nothing in this Agreement is intended or shall be construed to give any person, other than the persons referred to in this Section 10, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein. 11. EXPENSES. The Company, the Issuer and USGP, jointly and severally agree with the Initial Purchasers to pay (a) the costs incident to the authorization, issuance, sale, preparation and delivery of the Securities; (b) the costs incident to the preparation, printing and distribution of the Preliminary Offering Memorandum, the Offering Memorandum and any amendments or supplements thereto; (c) the costs of reproducing and distributing each of the Transaction Documents; (d) the costs incident to the preparation, printing and delivery of the certificates evidencing the Securities, including, without limitation, stamp duties and transfer taxes, if any, payable upon issuance of the Securities; (e) the fees and expenses of the Company's independent accountant; (f) the fees and expenses of qualifying the Securities under the securities laws of the several jurisdictions as provided in Section 4(b) and of preparing, printing and distributing Blue Sky Memoranda (including, without limitation, related fees and expenses of counsel for the Initial Purchasers); (g) any fees charged by rating agencies for rating the Securities; (h) the fees and expenses of the Trustee and any paying agent (including, without limitation, related fees and expenses of any counsel to such parties); (i) all expenses and application fees incurred in connection with the application for the inclusion of the Securities on the PORTAL Market and the approval of the Securities for book-entry transfer by DTC; and (j) all other costs and expenses incident to the performance of the obligations of the Company, the Issuer and USGP under this Agreement which are not otherwise specifically provided for in this Section 11; PROVIDED, HOWEVER, that except as provided in this Section 11 and Section 7, the Initial Purchasers shall pay their own costs and expenses. 12. SURVIVAL. The respective indemnities, rights of contribution, representations, warranties and agreements of the Company, the Issuer, USGP and the Initial Purchasers contained in this Agreement or made by or on behalf of the Company, the Issuer, USGP or the Initial Purchasers pursuant to this Agreement or any certificate delivered pursuant hereto shall survive the delivery of and payment for the Securities and shall remain in full force and effect, regardless of any termination or cancelation of this Agreement or any investigation made by or on behalf of any of them or any of their respective affiliates, officers, directors, employees, representatives, agents or controlling persons. 13. NOTICES, ETC.. All statements, requests, notices and agreements hereunder shall be in writing, and: 24 (a) if to the Initial Purchasers, shall be delivered or sent by mail or telecopy transmission to Chase Securities Inc., 270 Park Avenue, New York, New York 10017, Attention: Legal Department; or (b) if to the Company, the Issuer or USGP, shall be delivered or sent by mail or telecopy transmission to the address of the Company set forth in the Offering Memorandum, Attention: Company Secretary; Any such statements, requests, notices or agreements shall take effect at the time of receipt thereof. 14. DEFINITION OF TERMS. For purposes of this Agreement, (a) the term "business day" means any day on which the New York Stock Exchange, Inc. is open for trading, (b) the term "Subsidiary" has the meaning set forth in Rule 405 under the Securities Act and (c) except where otherwise expressly provided, the term "affiliate" has the meaning set forth in Rule 405 under the Securities Act. 15. INITIAL PURCHASERS' INFORMATION. The parties hereto acknowledge and agree that, for all purposes of this Agreement, the Initial Purchasers' Information consists solely of the following information in the Preliminary Offering Memorandum and the Offering Memorandum: (i) the last two bullet points on the front cover page concerning the terms of the offering by the Initial Purchasers; and (ii) the statements concerning the Initial Purchasers contained in the first, second, third, fifth, sixth, ninth, tenth, eleventh, twelfth and thirteenth paragraphs under the heading "Plan of Distribution". 16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 17. COUNTERPARTS. This Agreement may be executed in one or more counterparts (which may include counterparts delivered by telecopier) and, if executed in more than one counterpart, the executed counterparts shall each be deemed to be an original, but all such counterparts shall together constitute one and the same instrument. 18. AMENDMENTS. No amendment or waiver of any provision of this Agreement, nor any consent or approval to any departure therefrom, shall in any event be effective unless the same shall be in writing and signed by the parties hereto. 19. HEADINGS. The headings herein are inserted for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement. If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to us a counterpart hereof, whereupon this instrument will become a binding agreement among the Company, the Issuer, USGP and the several Initial Purchasers in accordance with its terms. Very truly yours, WILLIS CORROON CORPORATION, By______________________________ Name: Title: WILLIS CORROON GROUP LIMITED, By______________________________ Name: Title: WILLIS CORROON PARTNERS, By Willis Corroon Group Limited, Its General Partner By______________________________ Name: Title: Accepted: CHASE SECURITIES INC., By____________________________ Authorized Signatory CHASE MANHATTAN INTERNATIONAL LIMITED, By____________________________ Authorized Signatory SCHEDULE 1 EQUITY INTERESTS OF CERTAIN SUBSIDIARIES OF THE COMPANY
Company Name Owned - ------------ ----- Willis National Holdings Limited 51% ANIFA Limited 100% Willis Corroon Financial Planning Limited 100% Willis National Limited 100% Gibraltar Insurance (Barbados) Limited 90% Willis Corroon Polska 70% S&C Willis Corroon Correduria de Seguros y Reaseguros SA 60% S&C e IC Willis Corroon Correduria de Seguros SA 100% Willis Corroon Assurand0rgruppen 85% KSA Vof 50% Willis Corroon Belgium S.A. 80% Willis Corroon Holdings (New Zealand) Limited 99% Willis Corroon Limited 100% Willis Corroon McNicoll Limited 100% Willis Corroon Hungary Kft 80% Willis Corroon AB 75% OY Willis Corroon AB 100% Willis Corroon Professional & Financial Risks AB 85% Willis Corroon Gothia AB 78% Willis Corroon I Orebro AB 51% Willis Faber (Middle East) S.A.L. 51% Willis Corroon Hellas (Insurance Brokers) SA 80% Willis Corroon Italia S.p.A. 50% UTA Willis Corroon Rischi Speciali S.R.L. 100% UTA Willis Corroon Milan S.R.L. 100%
SCHEDULE 2
Initial Purchasers Principal Amount of Securities ------------------ ------------------------------ Chase Securities Inc. $225,000,000 Chase Manhattan International Limited $225,000,000 ------------ Total $550,000,000
ANNEX A [Form of Exchange and Registration Rights Agreement] EX-10.2 22 EX. 10.2 Exhibit 10.2 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CREDIT AGREEMENT AMONG WILLIS CORROON CORPORATION, AS BORROWER, WILLIS CORROON GROUP LIMITED, AS A GUARANTOR, TRINITY ACQUISITION PLC, AS A GUARANTOR, THE SEVERAL LENDERS FROM TIME TO TIME PARTIES HERETO AND THE CHASE MANHATTAN BANK, AS ADMINISTRATIVE AGENT AND COLLATERAL AGENT DATED AS OF JULY 22, 1998, AS AMENDED AND RESTATED AS OF FEBRUARY 19, 1999 CHASE SECURITIES INC., AS LEAD ARRANGER AND BOOK MANAGER, MORGAN STANLEY DEAN WITTER, AS SYNDICATION AGENT, AND BANK OF AMERICA, AS DOCUMENTATION AGENT - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents
Page SECTION 1. Definitions.................................................................................2 1.1 Defined Terms...............................................................................2 1.2 Exchange Rates.............................................................................40 SECTION 2. Amount and Terms of Credit.................................................................40 2.1 Commitments................................................................................40 2.2 Minimum Amount of Each Borrowing; Maximum Number of Borrowings.............................44 2.3 Notice of Borrowing........................................................................44 2.4 Disbursement of Funds......................................................................45 2.5 Repayment of Loans; Evidence of Debt.......................................................46 2.6 Conversions and Continuations..............................................................49 2.7 Pro Rata Borrowings........................................................................51 2.8 Interest...................................................................................51 2.9 Interest Periods...........................................................................52 2.10 Increased Costs, Illegality, etc...........................................................53 2.11 Compensation...............................................................................55 2.12 Change of Lending Office...................................................................55 2.13 Notice of Certain Costs....................................................................55 2.14 Redesignation of $75,000,000 of Tranche B Term Loans and Tranche C Term Loans..................................................................55 SECTION 3. Letters of Credit..........................................................................56 3.1 Letters of Credit..........................................................................56 3.2 Letter of Credit Requests..................................................................56 3.3 Letter of Credit Participations............................................................56 3.4 Agreement to Repay Letter of Credit Drawings...............................................58 3.5 Increased Costs............................................................................59 3.6 Successor Letter of Credit Issuer..........................................................60 3.7 Sterling-Denominated Letters of Credit.....................................................61 SECTION 4. Fees; Commitments..........................................................................61 4.1 Fees.......................................................................................61 4.2 Voluntary Reduction of Revolving Credit Commitments........................................62 4.3 Mandatory Termination of Commitments.......................................................63 SECTION 5. Payments...................................................................................63 5.1 Voluntary Prepayments......................................................................63 5.2 Mandatory Prepayments......................................................................64 5.3 Method and Place of Payment................................................................67 5.4 Net Payments...............................................................................68 5.5 Computations of Interest and Fees..........................................................70 SECTION 6. [Intentionally Omitted]....................................................................70 SECTION 7A. [Intentionally Omitted]....................................................................70 SECTION 7B. [Intentionally Omitted]....................................................................70
ii SECTION 7C. Conditions Precedent to All Credit Events..................................................70 7C.1 No Default; Representations and Warranties.................................................71 7C.2 Notice of Borrowing; Letter of Credit Request..............................................71 SECTION 8. Representations, Warranties and Agreements.................................................71 8.1 Corporate Status...........................................................................71 8.2 Corporate Power and Authority..............................................................71 8.3 No Violation...............................................................................72 8.4 Litigation.................................................................................72 8.5 Margin Regulations.........................................................................72 8.6 Governmental Approvals.....................................................................72 8.7 Investment Company Act.....................................................................72 8.8 True and Complete Disclosure...............................................................72 8.9 Financial Condition; Financial Statements..................................................73 8.10 Tax Returns and Payments...................................................................73 8.11 Compliance with ERISA......................................................................73 8.12 Subsidiaries...............................................................................74 8.13 Patents, etc...............................................................................74 8.14 Environmental Laws.........................................................................74 8.15 Properties.................................................................................74 8.16 Year 2000..................................................................................74 SECTION 9. Affirmative Covenants......................................................................75 9.1 Information Covenants......................................................................75 9.2 Books, Record and Inspections..............................................................77 9.3 Maintenance of Insurance...................................................................77 9.4 Payment of Taxes...........................................................................77 9.5 Consolidated Corporate Franchises..........................................................78 9.6 Compliance with Statutes, Obligations, etc.................................................78 9.7 ERISA......................................................................................78 9.8 Good Repair................................................................................78 9.9 Transactions with Affiliates...............................................................79 9.10 End of Fiscal Years; Fiscal Quarters.......................................................79 9.11 Additional Guarantors......................................................................79 9.12 Pledges of Additional Stock and Evidence of Indebtedness...................................80 9.13 Use of Proceeds............................................................................80 9.14 Changes in Business........................................................................80 9.15 Ownership of Assets........................................................................80 SECTION 10. Negative Covenants.........................................................................81 10.1 Limitation on Indebtedness.................................................................81 10.2 Limitation on Liens........................................................................84 10.3 Limitation on Fundamental Changes..........................................................85 10.4 Limitation on Sale of Assets...............................................................86 10.5 Limitation on Investments..................................................................87 10.6 Limitation on Dividends....................................................................88 10.7 Limitations on Debt Payments and Amendments................................................90 10.8 Limitations on Sale Leasebacks.............................................................90 10.9 Consolidated Total Debt to Consolidated EBITDA Ratio.......................................91 10.10 Consolidated EBITDA to Consolidated Interest Expense Ratio.................................91 10.11 Capital Expenditures.......................................................................91
iii SECTION 11. Events of Default..........................................................................92 11.1 Payments...................................................................................92 11.2 Representations, etc.......................................................................92 11.3 Covenants..................................................................................92 11.4 Default Under Other Agreements.............................................................93 11.5 Bankruptcy, etc............................................................................93 11.6 ERISA......................................................................................94 11.7 Guarantee..................................................................................94 11.8 U.S. Pledge Agreement; U.K. Security Agreement.............................................94 11.9 Judgments..................................................................................94 11.10 Change of Control..........................................................................94 11.11 Newco 2 Securities.........................................................................94 SECTION 12. The Administrative Agent...................................................................95 12.1 Appointment................................................................................95 12.2 Delegation of Duties.......................................................................95 12.3 Exculpatory Provisions.....................................................................95 12.4 Reliance by Administrative Agent...........................................................96 12.5 Notice of Default..........................................................................96 12.6 Non-Reliance on Administrative Agent and Other Lenders.....................................96 12.7 Indemnification............................................................................97 12.8 Administrative Agent in Its Individual Capacity............................................97 12.9 Successor Agent............................................................................97 SECTION 13. Miscellaneous..............................................................................98 13.1 Amendments and Waivers.....................................................................98 13.2 Notices....................................................................................99 13.3 No Waiver; Cumulative Remedies............................................................100 13.4 Survival of Representations and Warranties................................................100 13.5 Payment of Expenses and Taxes.............................................................101 13.6 Successors and Assigns; Participations and Assignments....................................101 13.7 Replacements of Lenders under Certain Circumstances.......................................104 13.8 Adjustments; Set-off......................................................................104 13.9 Counterparts..............................................................................105 13.10 Severability..............................................................................105 13.11 Integration...............................................................................105 13.12 GOVERNING LAW.............................................................................105 13.13 Submission to Jurisdiction; Waivers.......................................................105 13.14 Acknowledgments...........................................................................106 13.15 WAIVERS OF JURY TRIAL.....................................................................106 13.16 Confidentiality...........................................................................106 13.17 Conversion of Currencies..................................................................106 13.18 European Economic and Monetary Union......................................................107 13.19 Margin Regulations........................................................................107
SCHEDULES Schedule 1.1 Commitments and Addresses of Lenders Schedule 1.1(a) Calculation of Additional Cost Schedule 2.1(a) Euro Revolving Credit Commitments Schedule 2.1(b) Yen Revolving Credit Commitments Schedule 8.12(a) Subsidiaries Schedule 8.12(b) Closing Date Excused Subsidiaries Schedule 10.1(a) Guarantee Obligations Schedule 10.1(b) Other Indebtedness Schedule 10.5 Investments EXHIBITS Exhibit A Form of Guarantee Exhibit B Form of U.S. Pledge Agreement Exhibit C-1 Form of Promissory Note (Term Loans) Exhibit C-2 Form of Promissory Note (Revolving Credit and Swingline Loans) Exhibit D Form of Letter of Credit Request Exhibit F Form of Assignment and Acceptance Exhibit H Form of Confidentiality Agreement Exhibit I Form of U.K. Security Agreement Exhibit J-1 Form of Tranche B Prepayment Option Notice Exhibit J-2 Form of Tranche C Prepayment Option Notice Exhibit J-3 Form of Tranche D Prepayment Option Notice CREDIT AGREEMENT dated as of July 22, 1998, as amended and restated as of February 19, 1999, among WILLIS CORROON CORPORATION, a Delaware corporation (the "BORROWER"), WILLIS CORROON GROUP LIMITED, a private limited company organized under the laws of England and Wales, as a guarantor ("PARENT"), TRINITY ACQUISITION plc, a public limited company organized under the laws of England and Wales, as a guarantor ("NEWCO 4"), the lending institutions from time to time parties hereto (each a "LENDER" and, collectively, the "LENDERS") and THE CHASE MANHATTAN BANK, as Administrative Agent (such term and each other capitalized term used but not defined in this introductory statement having the meaning provided in Section 1) and as Collateral Agent. Pursuant to an offer (the "OFFER") made by Warburg Dillon Read, Chase Manhattan plc and HSBC Investment Bank plc on behalf of Newco 4 on the terms and subject to the conditions referred to in the Press Release, Newco 4 acquired (the "ACQUISITION") all the outstanding ordinary shares (including ordinary shares represented by American Depositary Shares) (the "SHARES") of Parent. In connection with the financing of the Acquisition, (a) affiliates of Kohlberg Kravis Roberts & Co., L.P. ("SPONSOR") invested in newly issued ordinary shares of a newly formed private limited company organized under the laws of England and Wales ("NEWCO 1") that owns directly 100% of the issued share capital (other than the Preferred Stock) of a second newly formed private limited company organized under the laws of England and Wales ("NEWCO 2"), for consideration paid to Newco 1 of approximately (pound)183,600,000 (or the Dollar Equivalent amount) in cash (THE "SPONSOR EQUITY CONTRIBUTION"), (b) certain insurance carriers or their affiliates subscribed for and purchased newly issued ordinary shares of Newco 1, for consideration paid to Newco 1 of approximately (pound)40,700,000 in cash (the "CARRIER COMMON EQUITY CONTRIBUTION"), (c) members of the existing management of Parent and certain of its Subsidiaries and certain other investors contributed, directly or indirectly, approximately an additional (pound)13,500,000 (or the Dollar Equivalent amount) to Newco 1 as equity (the "Management Equity Contribution"), (d) Newco 2 issued preferred stock (the "PREFERRED STOCK") with an aggregate liquidation preference of approximately $267,300,000, for aggregate consideration paid to Newco 2 of approximately (pound)162,700,000 in cash (collectively with the Sponsor Equity Contribution, the Carrier Common Equity Contribution and the Management Equity Contribution, the "Equity Financings"), (e) Newco 1 and Newco 2 contributed the net cash proceeds of the Equity Financings indirectly to Newco 4 as common equity, (f) Newco 4 borrowed (i) an aggregate principal amount of $475,000,000 under the Senior Bridge Facility (including by way of issuing Guaranteed Loan Notes) and (ii) an aggregate principal amount of $426,000,000 under the Subordinated Bridge Facility (together with the Senior Bridge Facility, the "BRIDGE FACILITIES") and (g) fees and expenses incurred in connection with the Transactions (as defined below) were paid. The Offer, the Acquisition and the other transactions described in this introductory statement are referred to collectively as the "TRANSACTIONS". Following the consummation of the Acquisition, the proceeds of (a) Tranche A Term Loans in an aggregate principal amount of $50,000,000, (b) Tranche B Term Loans in an aggregate principal amount of $150,000,000, (c) Tranche C Term Loans in an aggregate principal amount of $150,000,000 and (d) Tranche D Term Loans in an aggregate principal amount of $100,000,000 made under this Agreement were used by the Borrower, together with the proceeds of the borrowing by the Borrower of the Subordinated Loans, (i) to make the Intercompany Loan, (ii) to prepay certain amounts of Revolving Credit Loans that were outstanding on the Term Loan Funding Date and (iii) to refinance all of the Newco 4 Indebtedness. Revolving Credit Loans made under this Agreement and Swingline Loans made under this Agreement will be used by the Borrower for general corporate purposes. Letters of Credit issued under this Agreement will be used by the Borrower for general corporate purposes. 2 The parties hereto hereby agree as follows: SECTION 1. DEFINITIONS. As used herein, the following terms shall have the meanings specified in this Section 1 unless the context otherwise requires (it being understood that defined terms in this Agreement shall include in the singular number the plural and in the plural the singular): 1.1 DEFINED TERMS. "ABR" shall mean, for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in the ABR due to a change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective Rate shall be effective as of the opening of business on the effective day of such change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective Rate, respectively. "ABR LOAN" shall mean each Loan bearing interest at the rate provided in Section 2.8(a) and, in any event, shall include all Swingline Loans. "ABR REVOLVING CREDIT LOAN" shall mean any Revolving Credit Loan bearing interest at a rate determined by reference to the ABR. "ACQUIRED EBITDA" shall mean, with respect to any Acquired Entity or Business, any Converted Restricted Subsidiary, any Sold Entity or Business or any Converted Unrestricted Subsidiary (any of the foregoing, a "PRO FORMA ENTITY") for any period, the sum of the amounts for such period of (a) Consolidated Earnings, (b) Consolidated Interest Expense, (c) depreciation expense, (d) amortization expense, including amortization of deferred financing fees, (e) exceptional losses and non-recurring charges, (f) non-cash charges (including the non-cash portion of pension expense), (g) losses on asset sales and (h) restructuring charges or provisions LESS the sum of the amounts for such period of (i) non-recurring profits, (j) non-cash profits and (k) profits on asset sales, all as determined on a consolidated basis for such Pro Forma Entity in accordance with GAAP. "ACQUIRED ENTITY OR BUSINESS" shall have the meaning provided in the definition of the term "Consolidated EBITDA". "ACQUISITION" shall have the meaning provided in the preamble to this Agreement. "ACQUISITION SUBSIDIARY" shall mean (a) any Subsidiary of Newco 4 that is formed or acquired after the Closing Date in connection with Permitted Acquisitions, PROVIDED that at such time (or promptly thereafter) the Borrower designates such Subsidiary an Acquisition Subsidiary in a written notice to the Administrative Agent, (b) any Restricted Subsidiary on the Closing Date subsequently re-designated as an Acquisition Subsidiary by the Borrower in a written notice to the Administrative Agent, PROVIDED that such re-designation shall be deemed to be an investment on the date of such re-designation in an Acquisition Subsidiary in an amount equal to the sum of (i) the net worth of such re-designated Restricted Subsidiary immediately prior to such re-designation (such net worth to be calculated without regard to any Guarantee provided by such re-designated Restricted Subsidiary) and (ii) the aggregate principal amount of any Indebtedness owed by such re-designated Restricted Subsidiary to Newco 4 or any other Restricted Subsidiary immediately prior to such re-designation (to the extent not repaid on the date 3 of such re-designation), all calculated, except as set forth in the parenthetical to clause (i), on a consolidated basis in accordance with GAAP, and (c) each Subsidiary of an Acquisition Subsidiary; PROVIDED, HOWEVER, that (i) at the time of any written re-designation by the Borrower to the Administrative Agent of any Acquisition Subsidiary as a Restricted Subsidiary, the Acquisition Subsidiary so re-designated shall no longer constitute an Acquisition Subsidiary, (ii) no Acquisition Subsidiary may be re-designated as a Restricted Subsidiary if a Default or Event of Default would result from such re-designation, (iii) the Borrower shall not be re-designated as an Acquisition Subsidiary and (iv) no Restricted Subsidiary may be re-designated as an Acquisition Subsidiary if a Default or Event of Default would result from such re-designation. On or promptly after the date of its formation, acquisition or re-designation, as applicable, each Acquisition Subsidiary (other than an Acquisition Subsidiary that is a Foreign Subsidiary) shall have entered into a tax sharing agreement containing terms that, in the reasonable judgment of the Administrative Agent, provide for an appropriate allocation of tax liabilities and benefits. "ADDITIONAL COST" shall mean, in relation to any Sterling Borrowing for any Interest Period, the cost as calculated by the Administrative Agent in accordance with Schedule 1.1(a) imputed to each Lender participating in such Sterling Borrowing of compliance with the mandatory liquid assets requirements of the Bank of England during that Interest Period, expressed as a percentage. "ADJUSTED TOTAL REVOLVING CREDIT COMMITMENT" shall mean at any time the Total Revolving Credit Commitment less the aggregate Revolving Credit Commitments of all Defaulting Lenders. "ADJUSTED TOTAL TERM LOAN COMMITMENT" shall mean at any time the Total Term Loan Commitment less the Term Loan Commitments of all Defaulting Lenders. "ADMINISTRATIVE AGENT" shall mean Chase, together with its affiliates, as the arranger of the Commitments and as the administrative agent for the Lenders under this Agreement and the other Credit Documents. "ADMINISTRATIVE AGENT'S OFFICE" shall mean the office of the Administrative Agent located at 270 Park Avenue, New York, New York 10017, or such other office in New York City as the Administrative Agent may hereafter designate in writing as such to the other parties hereto. "AFFILIATE" shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with such Person. A Person shall be deemed to control a corporation if such Person possesses, directly or indirectly, the power (a) to vote 10% or more of the securities having ordinary voting power for the election of directors of such corporation or (b) to direct or cause the direction of the management and policies of such corporation, whether through the ownership of voting securities, by contract or otherwise. "AGGREGATE REVOLVING CREDIT OUTSTANDINGS" shall have the meaning provided in Section 5.2(b). "AGREEMENT" shall mean this Credit Agreement, as the same may be amended, supplemented or otherwise modified from time to time. "APPLICABLE ABR MARGIN" shall mean, with respect to each ABR Loan at any date, the applicable percentage per annum set forth below based upon (a) whether such 4 loan is a Revolving Credit Loan, a Swingline Loan, a Tranche A Term Loan, a Tranche B Term Loan, a Tranche C Term Loan or a Tranche D Term Loan and (b) the Status in effect on such date:
Applicable ABR Loan Status Margin ---- ------ -------------- Revolving Credit Loans, Level I Status 1.000% Swingline Loans and Tranche A Terms Level II Status 0.750% Loans Level III Status 0.375% Level IV Status 0.125% Level V Status 0.000% Level VI Status 0.000% Tranche B Term Loans Level I Status 1.250% Level II Status 1.000% Level III Status 0.750% Level IV Status 0.500% Level V Status 0.500% Level VI Status 0.500% Tranche C Term Loans Level I Status 1.500% Level II Status 1.250% Level III Status 1.000% Level IV Status 0.750% Level V Status 0.750% Level VI Status 0.750% Tranche D Term Loans Level I Status 1.750% Level II Status 1.500% Level III Status 1.250% Level IV Status 1.000% Level V Status 1.000% Level VI Status 1.000%
"APPLICABLE EURODOLLAR MARGIN" shall mean, with respect to each Eurodollar Term Loan and Eurodollar Revolving Credit Loan at any date, the applicable percentage per annum set forth below based upon (a) whether such loan is a Revolving Credit Loan, a Tranche A Term Loan, a Tranche B Term Loan, a Tranche C Term Loan or a Tranche D Term Loan and (b) the Status in effect on such date:
Applicable Eurodollar Loan Status Margin ---- ------ ---------------------- Revolving Credit Loans and Tranche A Level I Status 2.250% Term Loans Level II Status 2.000% Level III Status 1.625% Level IV Status 1.375% Level V Status 1.125% Level VI Status 0.875%
5 Applicable Eurodollar Loan Status Margin ---- ------ --------------------- Tranche B Term Loans Level I Status 2.500% Level II Status 2.250% Level III Status 2.000% Level IV Status 1.750% Level V Status 1.750% Level VI Status 1.750% Tranche C Terms Loans Level I Status 2.750% Level II Status 2.500% Level III Status 2.250% Level IV Status 2.000% Level V Status 2.000% Level VI Status 2.000% Tranche D Terms Loans Level I Status 3.000% Level II Status 2.750% Level III Status 2.500% Level IV Status 2.250% Level V Status 2.250% Level VI Status 2.250%
"APPROVED FUND" shall mean, with respect to any Lender that is an investment fund that invests in bank loans, any other investment fund that invests in bank loans and is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor. "ASSET SALE PREPAYMENT EVENT" shall mean any sale, transfer or other disposition of any business units, assets or other properties of Newco 4 or any of the Restricted Subsidiaries not in the ordinary course of business. Notwithstanding the foregoing, the term "Asset Sale Prepayment Event" shall not include any transaction permitted by Section 10.3, 10.4 (other than Section 10.4(b)) or 10.5. "ASSOCIATED UNDERTAKING" shall mean an associated undertaking (as such term is used in the audited financial statements referred to in Section 9.1(a)) in respect of Newco 4 or a Restricted Subsidiary that is not a Subsidiary thereof. "ASSOCIATED UNDERTAKING NOTE" shall mean, with respect to any Associated Undertaking, any promissory note required to be issued by such Associated Undertaking pursuant to Section 10.5(n) and pledged to the Collateral Agent pursuant to Section 9.12. "AUTHORIZED OFFICER" shall mean the Chairman of the Board, the President, the Chief Financial Officer, the Treasurer or any other senior officer of Parent and the Borrower, respectively, designated as such in writing to the Administrative Agent by Parent or the Borrower, as applicable. "AVAILABLE AMOUNT" shall mean, on any date (the "REFERENCE DATE"), an amount equal to (a) the sum of (i) for the purposes of Sections 10.5(i) and 10.5(k), $100,000,000, (ii) the aggregate amount of Net Cash Proceeds from Prepayment Events refused by Term Loan Lenders and retained by the Borrower in accordance with Section 5.2(c)(ii) on or prior to the Reference Date, (iii) an amount equal to (x) the cumulative amount of Excess Cash Flow for all fiscal years completed prior to the Reference Date MINUS (y) the portion 6 of such Excess Cash Flow that has been on or prior to the Reference Date (or will be) applied to the prepayment of Loans in accordance with Section 5.2(a)(ii), (iv) the amount of any capital contributions (other than any equity contribution made on or prior to the Closing Date or made in accordance with Section 10.5(c)(i)) made in cash to Newco 4 from and including the Business Day immediately following the Closing Date through and including the Reference Date, (v) an amount equal to the Net Cash Proceeds received by Newco 4 on or prior to the Reference Date from any issuance of equity securities by Newco 4, (vi) the aggregate amount of all cash dividends and other cash distributions received by Newco 4, Parent, the Borrower or any other Guarantor from any Acquisition Subsidiaries, Minority Investments or Unrestricted Subsidiaries on or prior to the Reference Date (other than the portion of any such dividends and other distributions that is used by Newco 4, Parent, the Borrower or any other Guarantor to pay taxes), (vii) the aggregate amount of all cash repayments of principal received by Newco 4, Parent, the Borrower or any other Guarantor from any Acquisition Subsidiaries, Minority Investments or Unrestricted Subsidiaries on or prior to the Reference Date in respect of loans made by Newco 4, Parent, the Borrower or any other Guarantor to such Acquisition Subsidiaries, Minority Investments or Unrestricted Subsidiaries, (viii) the aggregate amount of all net cash proceeds received by Newco 4, Parent, the Borrower or any other Guarantor in connection with the sale, transfer or other disposition of its ownership interest in any Acquisition Subsidiary, Minority Investment or Unrestricted Subsidiary on or prior to the Reference Date and (ix) the amount, in respect of any Unrestricted Subsidiary redesignated on or prior to the Reference Date, of the investment therein determined as of such date of redesignation as set forth in the second proviso to the definition of the term "Unrestricted Subsidiary" MINUS (b) the sum of (i) the aggregate amount of any investments (including loans) made by Newco 4, Parent or any Restricted Subsidiary (other than any Acquisition Subsidiary) in or to Acquisition Subsidiaries pursuant to Section 10.5(i) on or prior to the Reference Date, (ii) the aggregate amount of any investments (including loans) made by Newco 4, Parent or any Restricted Subsidiary (other than any Acquisition Subsidiary) pursuant to Section 10.5(k) on or prior to the Reference Date, (iii) the aggregate price paid by the Borrower in connection with (x) any prepayment of the Subordinated Loans (other than with the Net Cash Proceeds of the Loans or the Subordinated Notes) or (y) any prepayment, repurchase or redemption of Subordinated Notes, in each case pursuant to Section 10.7(a) on or prior to the Reference Date and (iv) the aggregate price paid by Newco 2 in connection with any prepayment, repurchase or redemption of the Preferred Stock or the Replacement Preferred Stock, in each case pursuant to Section 10.6 on or prior to the Reference Date. "AVAILABLE COMMITMENT" shall mean at any time an amount equal to the excess, if any, of (a) the amount of the Total Revolving Credit Commitment over (b) the sum of (i) the aggregate principal amount (calculated by using the Dollar Equivalent at such time of the principal amount of any Foreign Currency Revolving Credit Loan) of all Revolving Credit Loans (but not Swingline Loans) then outstanding and (ii) the aggregate Letter of Credit Outstanding at such time. "AVAILABLE NON-CREDIT-PARTY INVESTMENT AMOUNT" shall mean, on any date (the "INVESTMENT DATE"), an amount equal to (a) the sum of (i) $100,000,000, (ii) the aggregate amount of all cash dividends and other cash distributions received by Newco 4, Parent, the Borrower or any other Guarantor from any Restricted Non-Credit-Party Subsidiaries on or prior to the Investment Date (other than the portion of any such dividends and other distributions that is used by Newco 4, Parent, the Borrower or any other Guarantor to pay taxes), (iii) the aggregate amount of all cash repayments of principal received by Newco 4, Parent, the Borrower or any other Guarantor from any Restricted Non-Credit-Party Subsidiaries on or prior to the Investment Date in respect of loans made by Newco 4, Parent, the Borrower or any other Guarantor to such Restricted Non-Credit- 7 Party Subsidiaries and (iv) the aggregate amount of all net cash proceeds received by Newco 4, Parent, the Borrower or any other Guarantor in connection with the sale, transfer or other disposition of its ownership interest in any Restricted Non-Credit-Party Subsidiary on or prior to the Investment Date MINUS (b) the aggregate amount of any investments (including loans) made by Newco 4, Parent or any Restricted Subsidiary (other than any Restricted Non-Credit-Party Subsidiary) in or to Restricted Non-Credit-Party Subsidiaries pursuant to Section 10.5(j) or 10.5(k) on or prior to the Investment Date. "AVAILABLE REVOLVING CREDIT COMMITMENT" shall mean, with respect to any Lender, an amount equal to the excess, if any, of (a) the amount of such Lender's Revolving Credit Commitment over (b) the sum of (i) the aggregate principal amount of all Dollar Revolving Credit Loans (but not Swingline Loans) of such Lender then outstanding, (ii) the aggregate amount of the Dollar Equivalents of the principal amounts of all Foreign Currency Revolving Credit Loans (but not Swingline Loans) of such Lender then outstanding, (iii) that portion of such Lender's LC Exposure attributable to Unpaid Drawings in respect of which such Lender has made (or is required to have made) payments to the Letter of Credit Issuer pursuant to Section 3.4(a) and (iv) that portion of such Lender's Swingline Exposure attributable to Swingline Loans in respect of which such Lender has made (or is required to have made) payments to Chase pursuant to Section 2.1(f). "BANKRUPTCY CODE" shall have the meaning provided in Section 11.5. "BASE CD RATE" shall mean the sum of (a) the product of (i) the Three-Month Secondary CD Rate and (ii) a fraction, the numerator of which is one and the denominator of which is one minus the C/D Reserve Percentage and (b) the C/D Assessment Rate. "BOARD" shall mean the Board of Governors of the Federal Reserve System of the United States (or any successor). "BORROWER" shall have the meaning provided in the preamble to this Agreement. "BORROWING" shall mean and include (a) the incurrence of Swingline Loans from Chase on a given date, (b) the incurrence of one Type of Term Loan on the Term Loan Funding Date (or resulting from conversions on a given date after the Term Loan Funding Date) having, in the case of Eurodollar Term Loans, the same Interest Period (PROVIDED that ABR Loans incurred pursuant to Section 2.10(b) shall be considered part of any related Borrowing of Eurodollar Term Loans) and (c) the incurrence of one Type of Revolving Credit Loan on a given date (or resulting from conversions on a given date) denominated in the same currency and having, in the case of Eurodollar Revolving Credit Loans, the same Interest Period (PROVIDED that ABR Loans incurred pursuant to Section 2.10(b) shall be considered part of any related Borrowing of Eurodollar Revolving Credit Loans). "BRIDGE FACILITIES" shall have the meaning provided in the preamble to this Agreement. "BUSINESS DAY" shall mean (a) for all purposes other than as covered by clause (b) below, any day excluding Saturday, Sunday and any day that shall be in The City of New York or London (or, with respect to any Yen Revolving Credit Loan, Tokyo) a legal holiday or a day on which banking institutions are authorized by law or other governmental actions to close, and (b) with respect to all notices and determinations in 8 connection with, and payments of principal and interest on, Eurodollar Loans, any day that is a Business Day described in clause (a) and which is also a day on which (i) in relation to any Eurodollar Loans denominated in a currency other than euro, banks are generally open for the types of business contemplated by this Agreement in the principal financial center of the country of such currency or (ii) in relation to any Eurodollar Loans denominated in the euro, the TARGET payment system is open for the settlement of payments in euro. "CALCULATION DATE" shall mean (a) the last Business Day of each calendar month, (b) if at any time the Aggregate Revolving Credit Outstandings exceed 75% of the Total Revolving Credit Commitment, the last Business Day of each week and (c) if a Default or an Event of Default shall have occurred and be continuing, such additional dates as the Administrative Agent or the Required Lenders shall specify. "CAPITAL EXPENDITURES" shall mean, for any period, the aggregate of all expenditures (whether paid in cash or accrued as liabilities and including in all events all amounts expended or capitalized under Capital Leases, but excluding any amount representing capitalized interest) by Newco 4 and the Restricted Subsidiaries during such period that, in conformity with GAAP, are or are required to be included as additions during such period to tangible fixed assets and other capital expenditures reflected in the consolidated balance sheet of Newco 4 and its Subsidiaries, PROVIDED that the term "Capital Expenditures" shall not include (a) expenditures made in connection with the replacement, substitution or restoration of assets (i) to the extent financed from insurance proceeds paid on account of the loss of or damage to the assets being replaced or restored or (ii) with awards of compensation arising from the taking by eminent domain or condemnation of the assets being replaced, (b) the purchase price of equipment that is purchased simultaneously with the trade-in of existing equipment to the extent that the gross amount of such purchase price is reduced by the credit granted by the seller of such equipment for the equipment being traded in at such time, (c) the purchase of tangible fixed assets and other capital expenditures made within one year of the sale of any asset to the extent purchased with the proceeds of such sale or (d) expenditures that constitute any part of rental expenses under operating leases for real or personal property. "CAPITAL LEASE", as applied to any Person, shall mean any lease of any property (whether real, personal or mixed) by that Person as lessee that, in conformity with GAAP, is, or is required to be, accounted for as a finance lease obligation on the balance sheet of that Person. "CAPITALIZED LEASE OBLIGATIONS" shall mean, as applied to any Person, all obligations under Capital Leases of such Person or any of its Subsidiaries, in each case taken at the amount thereof accounted for as liabilities in accordance with GAAP. "CARRIER COMMON EQUITY CONTRIBUTION" shall have the meaning provided in the preamble to this Agreement. "C/D ASSESSMENT RATE" shall mean for any day as applied to any ABR Loan, the annual assessment rate in effect on such day that is payable by a member of the Bank Insurance Fund maintained by the United States Federal Deposit Insurance Corporation or any successor thereto (the "FDIC") classified as well-capitalized and within supervisory subgroup "B" (or a comparable successor assessment risk classification) within the meaning of 12 C.F.R. ss. 327.4(a) (or any successor provision) to the FDIC for the FDIC's insuring time deposits at offices of such institution in the United States. 9 "C/D RESERVE PERCENTAGE" shall mean for any day as applied to any ABR Loan, the percentage (expressed as a decimal) that is in effect on such day, as prescribed by the Board, for determining the reserve requirement for a Depositary Institution (as defined in Regulation D of the Board) in respect of new non-personal time deposits in Dollars having a maturity that is 30 days or more. "CHANGE OF CONTROL" shall mean and be deemed to have occurred if (a) (i) Sponsor, its Affiliates and the Management Group shall at any time not own, in the aggregate, directly or indirectly, beneficially and of record, at least 35% of the outstanding Voting Stock of Newco 4 (other than as the result of one or more widely distributed offerings of Newco 4 Common Stock, in each case whether by Newco 4 or by Sponsor, its Affiliates or the Management Group) and/or (ii) any person, entity or "group" (within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended) or group of Persons "acting in concert" (as defined in the Takeover Code) shall at any time have acquired direct or indirect beneficial ownership of a percentage of the issued Voting Stock of Newco 4 that exceeds the percentage of such Voting Stock then beneficially owned, in the aggregate, by Sponsor, its Affiliates and the Management Group, unless, in the case of either clause (i) or (ii) above, Sponsor, its Affiliates and the Management Group have, at such time, the right or the ability by voting power, contract or otherwise to elect or designate for election a majority of the Board of Directors of Newco 4; (b) Newco 4 shall at any time cease to own, beneficially and of record, all the issued capital stock of Parent; and/or (c) at any time Continuing Directors shall not constitute a majority of the Board of Directors of Newco 4. "CHASE" shall mean The Chase Manhattan Bank, a New York banking corporation, and any successor thereto by merger, consolidation or otherwise. "CLOSING DATE" shall mean October 30, 1998. "CLOSING DATE EXCUSED SUBSIDIARIES" shall mean any Required Guarantor Subsidiaries that would not be required to become Guarantors by virtue of the proviso to Section 9.11 or that are dormant or otherwise have immaterial assets or revenues. "CODE" shall mean the United States Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder. Section references to the Code are to the Code, as in effect at the date of this Agreement, and any subsequent provisions of the Code, amendatory thereof, supplemental thereto or substituted therefor. "COLLATERAL" shall have the meaning provided in the U.S. Pledge Agreement and the U.K. Security Agreement. "COLLATERAL AGENT" shall mean Chase, together with its affiliates, as the collateral agent for the Lenders under this Agreement and the other Credit Documents. "COMMITMENT FEE RATE" shall mean, for any Lender for any day, the rate per annum equal to (a) in the case of such Lender's Tranche A Commitment, Tranche B Commitment, Tranche C Commitment and Tranche D Commitment, 0.500% and (b) in 10 the case of such Lender's Revolving Credit Commitment, the rate per annum set forth below opposite the Status in effect on such day:
Commitment Status Fee Rate ------ ---------- Level I Status 0.500% Level II Status 0.425% Level III Status 0.375% Level IV Status 0.300% Level V Status 0.300% Level VI Status 0.250%
"COMMITMENTS" shall mean, with respect to each Lender, such Lender's Term Loan Commitments, Revolving Credit Commitment, Euro Revolving Credit Commitment, if any, and Yen Revolving Credit Commitment, if any. "COMPANIES ACT 1985" shall mean the Companies Act 1985, as amended. "CONFIDENTIAL INFORMATION" shall have the meaning provided in Section 13.16. "CONFIDENTIAL INFORMATION MEMORANDUM" shall mean the Confidential Information Memorandum of the Borrower and the Addendum thereto delivered to the Lenders in connection with this Agreement (including all supplements thereto). "CONSOLIDATED CASH AVAILABLE FOR FIXED CHARGES" shall mean, for any period, Consolidated EBITDA for such period MINUS Capital Expenditures for such period, each such component determined on a consolidated basis for Newco 4 and the Restricted Subsidiaries in accordance with GAAP. "CONSOLIDATED CASH AVAILABLE FOR FIXED CHARGES TO CONSOLIDATED FIXED CHARGES RATIO" shall mean, as of any date of determination, the ratio of (a) Consolidated Cash Available for Fixed Charges for the relevant Test Period to (b) Consolidated Fixed Charges for such Test Period. "CONSOLIDATED EARNINGS" shall mean, for any period, profit on ordinary activities before taxation of Newco 4 and the Restricted Subsidiaries, excluding any currency translation gains and losses, for such period, determined in a manner consistent with the manner in which such amount was determined in accordance with the audited financial statements referred to in Section 9.1(a). "CONSOLIDATED EBITDA" shall mean, for any period, the sum, without duplication, of the amounts for such period of (a) Consolidated Earnings, (b) Consolidated Interest Expense, (c) depreciation expense, (d) amortization expense, including amortization of deferred financing fees, (e) exceptional losses and non-recurring charges, (f) non-cash charges (including the non-cash portion of pension expense), (g) losses on asset sales, (h) restructuring charges or provisions, (i) in the case of any period that includes a period ending during the fiscal year ending December 31, 1998, Transaction Expenses, (j) any expenses or charges incurred in connection with any issuance of debt or equity securities, (k) any fees and expenses related to Permitted Acquisitions and, to the extent otherwise deducted in arriving at Consolidated Earnings, other amounts paid at the time of consummation of any Permitted Broker Acquisition and consistent with customary practice in the industry to consummate such Permitted Broker Acquisition and (l) any deduction for minority interest expense LESS the sum of the amounts for such period of 11 (m) exceptional gains and non-recurring gains, (n) non-cash gains and (o) gains on asset sales, all as determined on a consolidated basis for Newco 4 (or Parent, for periods prior to the first full fiscal quarter for which financial results of Parent are consolidated with those of Newco 4 in the financial statements delivered hereunder, to the extent applicable) and the Restricted Subsidiaries in accordance with GAAP, PROVIDED that (i) except as provided in clause (ii) below, there shall be excluded from Consolidated Earnings for any period the income from continuing operations before corporate taxes and exceptional items of all Unrestricted Subsidiaries for such period to the extent otherwise included in Consolidated Earnings, except to the extent actually received in cash by Newco 4 or its Restricted Subsidiaries during such period through dividends or other distributions, and (ii)(x) there shall be included in determining Consolidated EBITDA for any period (A) the Acquired EBITDA of any Person, property, business or asset (other than an Unrestricted Subsidiary) acquired to the extent not subsequently sold, transferred or otherwise disposed of (but not including the Acquired EBITDA of any related Person, property, business or assets to the extent not so acquired) by Newco 4 or any Restricted Subsidiary during such period (each such Person, property, business or asset acquired and not subsequently so disposed of, an "ACQUIRED ENTITY OR BUSINESS"), and the Acquired EBITDA of any Unrestricted Subsidiary that is converted into a Restricted Subsidiary during such period (each, a "CONVERTED RESTRICTED SUBSIDIARY"), in each case based on the actual Acquired EBITDA of such Acquired Entity or Business or Converted Restricted Subsidiary for such period (including the portion thereof occurring prior to such acquisition or conversion) and (B) for purposes of the definition of the term "Permitted Acquisition" and Sections 10.3, 10.9 and 10.10, an adjustment in respect of each Acquired Entity or Business equal to the amount of the Pro Forma Adjustment with respect to such Acquired Entity or Business for such period (including the portion thereof occurring prior to such acquisition or conversion) as specified in the Pro Forma Adjustment Certificate delivered to the Lenders and the Administrative Agent and (y) for purposes of determining the Consolidated Total Debt to Consolidated EBITDA Ratio only, there shall be excluded in determining Consolidated EBITDA for any period the Acquired EBITDA of any Person, property, business or asset (other than an Unrestricted Subsidiary) sold, transferred or otherwise disposed of by Newco 4 or any Restricted Subsidiary during such period (each such Person, property, business or asset so sold or disposed of, a "SOLD ENTITY OR BUSINESS"), and the Acquired EBITDA of any Restricted Subsidiary that is converted into an Unrestricted Subsidiary during such period (each, a "CONVERTED UNRESTRICTED SUBSIDIARY"), in each case based on the actual Acquired EBITDA of such Sold Entity or Business or Converted Unrestricted Subsidiary for such period (including the portion thereof occurring prior to such sale, transfer, disposition or conversion). "CONSOLIDATED EBITDA TO CONSOLIDATED INTEREST EXPENSE RATIO" shall mean, as of any date of determination, the ratio of (a) Consolidated EBITDA for the relevant Test Period to (b) Consolidated Interest Expense for such Test Period. "CONSOLIDATED FIXED CHARGES" shall mean, for any period, the sum of (a) Consolidated Interest Expense for such period, (b) scheduled principal payments (other than in respect of final maturities and mandatory prepayments and giving effect, in any Test Period, to prepayments of such scheduled principal payments made prior to such Test Period) of Indebtedness made by Newco 4 or any Restricted Subsidiary to any person other than Newco 4 or any wholly owned Restricted Subsidiary of Newco 4 during such period and (c) Dividends made as permitted by Section 10.6(e); PROVIDED, HOWEVER, that Consolidated Fixed Charges for the Test Periods ending on the last day of the first, second and third full fiscal quarters of Newco 4 following the Statutory Declaration Date shall be determined by (i) in the case of the Test Period ending on the last day of the first full fiscal quarter of Newco 4 following the Statutory Declaration Date, multiplying 12 Consolidated Fixed Charges for such quarter by 4, (ii) in the case of the Test Period ending on the last day of the second full fiscal quarter of Newco 4 following the Statutory Declaration Date, multiplying Consolidated Fixed Charges for the two-fiscal-quarter period ending on such day by 2, and (iii) in the case of the Test Period ending on the last day of the third full fiscal quarter of Newco 4 following the Statutory Declaration Date, multiplying Consolidated Fixed Charges for the three-fiscal-quarter period ending on such day by 4/3. "CONSOLIDATED GROSS REVENUES" shall mean, for any fiscal year, the amount for such fiscal year of gross revenues from ordinary activities (including interest income earned on fiduciary balances) determined on a consolidated basis for Newco 4 and the Restricted Subsidiaries in accordance with GAAP, PROVIDED that for purposes of calculating such gross revenues, (i) the gross revenues of any business acquired during such fiscal year or in the succeeding fiscal year in a Permitted Acquisition shall be determined on a pro forma basis (based on assumptions believed by Parent in good faith to be reasonable) as if such Permitted Acquisition had been consummated on the first day of such first fiscal year and (ii) the gross revenues of any business sold or otherwise disposed of by Parent or any of its Subsidiaries during such fiscal year or in the succeeding fiscal year shall be excluded in their entirety. "CONSOLIDATED INTEREST EXPENSE" shall mean, for any period, cash interest expense (including that attributable to Capital Leases in accordance with GAAP), net of cash interest income (excluding any investment income related to Insurance Broking Account Assets), of Newco 4 and the Restricted Subsidiaries on a consolidated basis with respect to all outstanding Indebtedness of Newco 4 and the Restricted Subsidiaries, including, without limitation, all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing and net costs under Hedge Agreements (other than currency swap agreements, currency future or option contracts and other similar agreements), but excluding, however, amortization of deferred financing costs and any other amounts of non-cash interest, all as calculated on a consolidated basis in accordance with GAAP, PROVIDED that (a) except as provided in clause (b) below, there shall be excluded from Consolidated Interest Expense for any period the cash interest expense (or income) of all Unrestricted Subsidiaries for such period to the extent otherwise included in Consolidated Interest Expense and (b) for purposes of the definition of the term "Permitted Acquisition" and Sections 10.3, 10.10 and 10.11, there shall be included in determining Consolidated Interest Expense for any period the cash interest expense (or income) of any Acquired Entity or Business acquired during such period and of any Converted Restricted Subsidiary converted during such period, in each case based on the cash interest expense (or income) of such Acquired Entity or Business or Converted Restricted Subsidiary for such period (including the portion thereof occurring prior to such acquisition or conversion) assuming any Indebtedness incurred or repaid in connection with any such acquisition or conversion had been incurred or prepaid on the first day of such period; PROVIDED FURTHER, HOWEVER, that Consolidated Interest Expense for the Test Periods ending on the last day of the first, second and third full fiscal quarters of Newco 4 following the Statutory Declaration Date shall be determined by (i) in the case of the Test Period ending on the last day of the first full fiscal quarter of Newco 4 following the Statutory Declaration Date, multiplying Consolidated Interest Expense for such quarter by 4, (ii) in the case of the Test Period ending on the last day of the second full fiscal quarter of Newco 4 following the Statutory Declaration Date, multiplying Consolidated Interest Expense for the two-fiscal-quarter period ending on such day by 2, and (iii) in the case of the Test Period ending on the last day of the third full fiscal quarter of Newco 4 following the Statutory Declaration Date, multiplying Consolidated Interest Expense for the three-fiscal-quarter period ending on such day by 4/3. 13 "CONSOLIDATED NET INCOME" shall mean, for any period, the consolidated profit (or loss) on ordinary activities after taxation of Newco 4 and the Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP. "CONSOLIDATED TOTAL DEBT" shall mean, as of any date of determination, (a) the sum of (i) all Indebtedness of Newco 4 and the Restricted Subsidiaries for borrowed money outstanding on such date and (ii) all Capitalized Lease Obligations of Newco 4 and the Restricted Subsidiaries outstanding on such date, all calculated on a consolidated basis in accordance with GAAP, MINUS (b) the aggregate amount of cash (excluding cash related to Insurance Broking Account Assets) included in the cash accounts listed on the consolidated balance sheet of Newco 4 and the Restricted Subsidiaries and deposited with the Administrative Agent or Lenders domiciled in the United States or the United Kingdom as at such date to the extent the use thereof for application to payment of Indebtedness of Newco 4 and the Restricted Subsidiaries is not prohibited by law or any contract to which Newco 4 or any of the Restricted Subsidiaries is a party. "CONSOLIDATED TOTAL DEBT TO CONSOLIDATED EBITDA RATIO" shall mean, as of any date of determination, the ratio of (a) Consolidated Total Debt as of the last day of the relevant Test Period to (b) Consolidated EBITDA for such Test Period. "CONSOLIDATED WORKING CAPITAL" shall mean, at any date, the excess of (a) the sum of all amounts (other than cash, cash equivalents and bank overdrafts and Insurance Broking Account Assets) that would, in conformity with GAAP, be included in total current assets (or any like caption) on a consolidated balance sheet of Newco 4 and the Restricted Subsidiaries at such date over (b) the sum of all amounts that would, in conformity with GAAP, be included in total current liabilities (or any like caption) (other than Insurance Broking Account Liabilities) on a consolidated balance sheet of Newco 4 and the Restricted Subsidiaries on such date, but excluding (i) the current portion of any Funded Debt, and (ii) without duplication of clause (i) above, all Indebtedness consisting of Loans and Letter of Credit Exposure to the extent otherwise included therein. "CONTINUING DIRECTOR" shall mean, at any date, an individual (a) who is a member of the Board of Directors of Newco 4 on the date hereof, (b) who, as at such date, has been a member of such Board of Directors for at least the 12 preceding months, (c) who has been nominated to be a member of such Board of Directors, directly or indirectly, by Sponsor or one of its Affiliates or Persons nominated by Sponsor or one of its Affiliates or (d) who has been nominated to be a member of such Board of Directors by a majority of the other Continuing Directors then in office. "CONTROL DATE" shall mean the date on which Newco 4 acquired more than 50% of the Shares. "CONVERTED RESTRICTED SUBSIDIARY" shall have the meaning provided in the definition of the term "Consolidated EBITDA". "CONVERTED UNRESTRICTED SUBSIDIARY" shall have the meaning provided in the definition of the term "Consolidated EBITDA". "CREDIT DOCUMENTS" shall mean this Agreement, the Guarantee, the U.S. Pledge Agreement, the U.K. Security Agreement and any promissory notes issued by the Borrower hereunder. "CREDIT EVENT" shall mean and include the making (but not the conversion or continuation) of a Loan and the issuance of a Letter of Credit. 14 "CREDIT PARTY" shall mean each of Newco 4, Parent, the Borrower and the other Guarantors. "CUMULATIVE CONSOLIDATED NET INCOME AVAILABLE TO STOCKHOLDERS" shall mean, as of any date of determination, Consolidated Net Income less cash dividends paid with respect to capital stock for the period (taken as one accounting period) commencing on the Closing Date and ending on the last day of the most recent fiscal quarter for which Section 9.1 Financials have been delivered to the Lenders under Section 9.1. "DEBT INCURRENCE PREPAYMENT EVENT" shall mean any issuance or incurrence by Newco 4 or any of the Restricted Subsidiaries of any Indebtedness (excluding (a) the Subordinated Notes to the extent that the Net Cash Proceeds therefrom are applied to repay the principal of, and accrued interest on, the Subordinated Loans or the loans under the Subordinated Bridge Facility and (b) any other Indebtedness permitted to be issued or incurred under Section 10.1). "DEFAULT" shall mean any event, act or condition that with notice or lapse of time, or both, would constitute an Event of Default. "DEFAULTING LENDER" shall mean any Lender with respect to which a Lender Default is in effect. "DENOMINATION DATE" shall mean, in relation to any Foreign Currency Borrowing, the date that is three Business Days before the date of such Borrowing. "DEPOSITARY SHARES" shall mean each of the American Depositary Shares, evidenced by American Depositary Receipts, representing five Shares. "DIVIDENDS" shall have the meaning provided in Section 10.6. "DOCUMENTATION AGENT" shall mean Bank of America, as the documentation agent for the Lenders under this Agreement and the other Credit Documents. "DOLLAR BORROWING" shall mean a Borrowing comprised of Dollar Loans. "DOLLAR EQUIVALENT" shall mean, on any date of determination, with respect to any amount denominated in any currency other than Dollars, the equivalent in Dollars of such amount, determined by the Administrative Agent pursuant to Section 1.2(a) using the applicable Exchange Rate with respect to such currency at the time in effect. "DOLLAR LOANS" shall mean Loans denominated in Dollars. "DOLLAR REVOLVING CREDIT LOAN" shall mean a Revolving Credit Loan denominated in Dollars and made pursuant to Section 2.1(b). "DOLLARS" and "$" shall mean lawful currency of the United States. "DOLLAR SWINGLINE LOAN" shall have the meaning provided in Section 2.1(e). "DOMESTIC BORROWER SUBSIDIARY" shall mean each Subsidiary of the Borrower that is organized under the laws of the United States, any state or territory thereof, or the District of Columbia. 15 "DOMESTIC NEWCO 4 SUBSIDIARY" shall mean each Subsidiary of Newco 4 that is organized under the laws of England and Wales. "DRAWING" shall have the meaning provided in Section 3.4(b). "EMU" shall mean the Economic and Monetary Union as contemplated in the Treaty on European Union. "EMU LEGISLATION" shall mean the legislative measures of the European Union for the introduction of, changeover to or operation of the euro in one or more member states of the European Union. "ENVIRONMENTAL CLAIMS" shall mean any and all administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigations (other than internal reports prepared by Parent or any of its Subsidiaries (a) in the ordinary course of such Person's business or (b) as required in connection with a financing transaction or an acquisition or disposition of real estate) or proceedings relating in any way to any Environmental Law or any permit issued, or any approval given, under any such Environmental Law (hereinafter, "CLAIMS"), including, without limitation, (i) any and all Claims by governmental or regulatory authorities for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law and (ii) any and all Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment. "ENVIRONMENTAL LAW" shall mean any applicable United States Federal, state, foreign or local statute, law, rule, regulation, ordinance, code and rule of common law now or hereafter in effect and in each case as amended, and any binding judicial or administrative interpretation thereof, including any binding judicial or administrative order, consent decree or judgment, relating to the environment, human health or safety or Hazardous Materials. "ERISA" shall mean the United States Employee Retirement Income Security Act of 1974, as amended from time to time. Section references to ERISA are to ERISA as in effect at the date of this Agreement and any subsequent provisions of ERISA amendatory thereof, supplemental thereto or substituted therefor. "ERISA AFFILIATE" shall mean each person (as defined in Section 3(9) of ERISA) that together with Newco 4 or a Subsidiary of Newco 4 would be deemed to be a "single employer" within the meaning of Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code. "EURO" or "EURO" shall mean the single currency of the European Union as constituted by the Treaty on European Union and as referred to in EMU Legislation. "EURO BORROWING" shall mean a Borrowing comprised of Euro Revolving Credit Loans. "EURO EQUIVALENT" shall mean, on any date of determination, with respect to any amount denominated in any currency other than Euro, the equivalent in Euro of such amount, determined by the Administrative Agent pursuant to Section 1.2(a) using the applicable Exchange Rate then in effect. 16 "EURO LENDERS" shall mean the Persons listed on Schedule 2.1(a) as Euro Lenders and any other Person that shall accept an assignment of a Euro Revolving Credit Commitment pursuant to an Assignment and Acceptance, other than any such Person that ceases to have a Euro Revolving Credit Commitment pursuant to an Assignment and Acceptance. "EURO REVOLVING CREDIT COMMITMENT" shall mean, (a) with respect to each Euro Lender that is a Euro Lender on the Restatement Date, the amount set forth opposite such Euro Lender's name on Schedule 2.1(a) as such Euro Lender's "Euro Revolving Credit Commitment" and (b) in the case of any Euro Lender that becomes a Euro Lender after the Restatement Date, the amount specified as such Euro Lender's "Euro Revolving Credit Commitment" in the Assignment and Acceptance pursuant to which such Euro Lender assumed its Euro Revolving Credit Commitment, in each case as the same may be changed from time to time pursuant to the terms hereof. "EURO REVOLVING CREDIT LOAN" shall mean a Revolving Credit Loan denominated in Euro and made pursuant to Section 2.1(c). "EURODOLLAR LOAN" shall mean any Eurodollar Term Loan or Eurodollar Revolving Credit Loan. "EURODOLLAR RATE" shall mean, in the case of any Eurodollar Term Loan or Eurodollar Revolving Credit Loan (other than a Foreign Currency Revolving Credit Loan), with respect to each day during each Interest Period pertaining to such Eurodollar Loan, the rate of interest determined on the basis of the rate for deposits in Dollars for a period equal to such Interest Period commencing on the first day of such Interest Period appearing on Page 3750 of the Telerate screen as of 11:00 A.M., London time, two Business Days prior to the beginning of such Interest Period. In the event that such rate does not appear on Page 3750 of the Telerate screen (or otherwise on such service), and with respect to any Foreign Currency Revolving Credit Loan, the "Eurodollar Rate" for the purposes of this paragraph shall be determined by reference to such other publicly available service for displaying eurodollar rates as may be agreed upon by the Administrative Agent and the Borrower or, in the absence of such agreement, the "Eurodollar Rate" for the purposes of this paragraph shall instead be the rate per annum notified to the Administrative Agent by the Reference Lender as the rate at which the Reference Lender is offered Dollar, Euro, Yen or Sterling, as applicable, deposits at or about 10:00 A.M., New York time, or 11:00 A.M., London time, as applicable, two Business Days prior to the beginning of such Interest Period, in the interbank eurodollar market where the eurodollar and foreign currency and exchange operations in respect of its Eurodollar Loans are then being conducted for delivery on the first day of such Interest Period for the number of days comprised therein and in an amount comparable to the amount of its Eurodollar Term Loan or Eurodollar Revolving Credit Loan, as the case may be, to be outstanding during such Interest Period. If, in relation to the currency of any Subsequent Participant, the basis of accrual of interest or commitment commission expressed in this Agreement in respect of that currency shall be inconsistent with any convention or practice in the London interbank market for the basis of accrual of interest or commitment commission in respect of the euro, such expressed basis shall be replaced by such convention or practice with effect from the date on which such Subsequent Participant becomes a Participating Member State, PROVIDED that, if any Eurodollar Loan in the currency of such Subsequent Participant is outstanding immediately prior to such date, such replacement convention or practice shall take effect, with respect to such Eurodollar Loan, at the end of the then current Interest Period for such Eurodollar Loan. 17 "EURODOLLAR REVOLVING CREDIT LOAN" shall mean any Revolving Credit Loan bearing interest at a rate determined by reference to the Eurodollar Rate. "EURODOLLAR TERM LOAN" shall mean any Term Loan bearing interest at a rate determined by reference to the Eurodollar Rate. "EURO UNIT" shall mean the currency unit of the euro as defined in EMU Legislation. "EVENT OF DEFAULT" shall have the meaning provided in Section 11. "EXCESS CASH FLOW" shall mean, for any period, an amount equal to the excess of (a) the sum, without duplication, of (i) Consolidated Net Income for such period, (ii) an amount equal to the amount of all non-cash charges (including share of loss of associated undertakings) to the extent deducted in arriving at such Consolidated Net Income, (iii) decreases in Consolidated Working Capital for such period, (iv) an amount equal to the aggregate net non-cash loss on the sale, lease, transfer or other disposition of assets by Newco 4 and the Restricted Subsidiaries during such period (other than sales in the ordinary course of business) to the extent deducted in arriving at such Consolidated Net Income, and (v) the aggregate amount of dividends received from associated undertakings during such period OVER (b) the sum, without duplication, of (i) an amount equal to the amount of all non-cash credits included in arriving at such Consolidated Net Income (including share of profit of associated undertakings), (ii) the aggregate amount actually paid by Newco 4 and the Restricted Subsidiaries in cash during such period on account of Capital Expenditures (excluding the principal amount of Indebtedness incurred in connection with such Capital Expenditures, whether incurred in such period or in a subsequent period), (iii) the aggregate amount of all scheduled or mandatory prepayments of Revolving Credit Loans and Swingline Loans made during such period to the extent accompanying reductions of the Total Revolving Credit Commitment, (iv) the aggregate amount of all principal payments of Indebtedness of Newco 4 or the Restricted Subsidiaries (including, without limitation, any scheduled prepayments of Term Loans and the principal component of payments in respect of Capitalized Lease Obligations but excluding Revolving Credit Loans, Swingline Loans and mandatory (other than scheduled) and voluntary prepayments of Term Loans) made during such period (other than in respect of any revolving credit facility to the extent there is not an equivalent permanent reduction in commitments thereunder), (v) the aggregate amount of all mandatory prepayments made during such period with respect to any Asset Sale Prepayment Events (other than any portion of such prepayments that was not included in Consolidated Net Income, (vi) an amount equal to the aggregate net non-cash gain on the sale, lease, transfer or other disposition of assets by Newco 4 and the Restricted Subsidiaries during such period (other than sales in the ordinary course of business) to the extent included in arriving at such Consolidated Net Income, (vii) increases in Consolidated Working Capital for such period, (viii) payments by Newco 4 and the Restricted Subsidiaries during such period in respect of provisions for liabilities and charges and other long-term liabilities of Newco 4 and the Restricted Subsidiaries other than Indebtedness, (ix) the amount of investments made during such period pursuant to Section 10.5 to the extent that such investments were financed with internally generated cash flow of Newco 4 and the Restricted Subsidiaries, (x) the amount of dividends paid during such period pursuant to clause (b), (c), (d), (e) or (g) of the proviso to Section 10.6, (xi) the aggregate amount of expenditures actually made by Newco 4 and the Restricted Subsidiaries in cash during such period (including, without limitation, expenditures for the payment of financing fees) to the extent that such expenditures are not expensed during such period and (xii) the aggregate amount of any premium, make-whole or penalty payments actually paid in cash by Newco 4 and the Restricted 18 Subsidiaries during such period that are required to be made in connection with any prepayment of Indebtedness and that are accounted for as extraordinary items. "EXCHANGE RATE" shall mean, on any day, with respect to any currency other than Dollars (for purposes of determining the Dollar Equivalent), Sterling (for purposes of determining the Sterling Equivalent), Euro (for purposes of determining the Euro Equivalent) or Yen (for purposes of determining the Yen Equivalent), the rate at which such currency may be exchanged into Dollars, Sterling, Euro or Yen, as the case may be, as set forth at approximately 11:00 a.m., London time, on such date on the applicable Reuters World Currency Page. In the event that any such rate does not appear on any Reuters World Currency Page, the Exchange Rate shall be determined by reference to such other publicly available service for displaying exchange rates as may be agreed upon by the Administrative Agent and the Borrower, or, in the absence of such agreement, such Exchange Rate shall instead be the arithmetic average of the spot rates of exchange of the Administrative Agent in the market where its foreign currency exchange operations in respect of such currency are then being conducted, at or about 10:00 A.M., local time, on such date for the purchase of Dollars, Sterling, Euro or Yen, as the case may be, for delivery two Business Days later, PROVIDED that, if at the time of any such determination, for any reason, no such spot rate is being quoted, the Administrative Agent may use any reasonable method it deems appropriate to determine such rate, and such determination shall be presumed correct absent manifest error. "EXCHANGE RATE PROTECTION AGREEMENT" shall mean any Hedging Agreement that is designed to protect the Borrower against fluctuations in currency exchange rates and not for speculation. "EXISTING PARENT INDEBTEDNESS" shall mean all accrued interest with respect to and principal and any other amounts owing under the existing indebtedness for borrowed money of Parent and its Subsidiaries on the Closing Date (other than a portion thereof in an aggregate amount not to exceed $5,000,000). "FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any day, the weighted average of the per annum rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day of such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it. "FEES" shall mean all amounts payable pursuant to, or referred to in, Section 4.1. "FINAL DATE" shall mean the date on which the Revolving Credit Commitments, Euro Revolving Credit Commitments and Yen Revolving Credit Commitments shall have terminated, no Revolving Credit Loans shall be outstanding and the Letter of Credit Outstandings shall have been reduced to zero. "FOREIGN CURRENCY" shall mean a currency other than Dollars. "FOREIGN CURRENCY BORROWING" shall mean a Borrowing comprised of Foreign Currency Revolving Credit Loans. "FOREIGN CURRENCY REVOLVING CREDIT LOAN" shall mean a Revolving Credit Loan denominated in a Foreign Currency. 19 "FOREIGN BORROWER SUBSIDIARY" shall mean each Subsidiary of the Borrower that is not a Domestic Borrower Subsidiary. "FOREIGN NEWCO 4 SUBSIDIARY" shall mean each Subsidiary of Newco 4 that is not a Domestic Newco 4 Subsidiary. "FOREIGN SUBSIDIARY" shall mean any Foreign Newco 4 Subsidiary or any Foreign Borrower Subsidiary. "FRONTING FEE" shall have the meaning provided in Section 4.1 (c). "FUNDED DEBT" shall mean all Indebtedness of Newco 4 and the Restricted Subsidiaries for borrowed money that matures more than one year from the date of its creation or matures within one year from such date that is renewable or extendable, at the option of Newco 4 or one of the Restricted Subsidiaries, to a date more than one year from such date or arises under a revolving credit or similar agreement that obligates the lender or lenders to extend credit during a period of more than one year from such date, including, without limitation, all amounts of Funded Debt required to be paid or prepaid within one year from the date of its creation and, in the case of the Borrower, Indebtedness in respect of the Loans. "GAAP" shall mean generally accepted accounting principles in the United Kingdom as in effect from time to time; PROVIDED, HOWEVER, that if there occurs after the date hereof any change in GAAP that affects in any respect the calculation of any covenant contained in Section 10, the Lenders, Newco 4 and the Borrower shall negotiate in good faith amendments to the provisions of this Agreement that relate to the calculation of such covenant with the intent of having the respective positions of the Lenders, Newco 4 and the Borrower after such change in GAAP conform as nearly as possible to their respective positions as of the date of this Agreement and, until any such amendments have been agreed upon, the covenants in Section 10 shall be calculated as if no such change in GAAP has occurred. "GOVERNMENTAL AUTHORITY" shall mean any nation or government, any state or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "GUARANTEE" shall mean and include the Guarantee, made by the Required Guarantor Subsidiaries and any other Guarantors in favor of the Administrative Agent for the benefit of the Lenders, substantially in the form of Exhibit A, as the same may be amended, supplemented or otherwise modified from time to time. "GUARANTEE OBLIGATIONS" shall mean, as to any Person, any obligation of such Person guaranteeing or intended to guarantee any Indebtedness of any other Person (the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent, (a) to purchase any such Indebtedness or any property constituting direct or indirect security therefor, (b) to advance or supply funds (i) for the purchase or payment of any such Indebtedness or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such Indebtedness of the ability of the primary obligor to make payment of such Indebtedness or (d) otherwise to assure or hold harmless the owner of such Indebtedness against loss in respect thereof; PROVIDED, HOWEVER, that the term "Guarantee Obligations" shall not include endorsements of instruments for deposit or collection in the ordinary course of 20 business. The amount of any Guarantee Obligation shall be deemed to be an amount equal to the stated or determinable amount of the Indebtedness in respect of which such Guarantee Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith. "GUARANTEED LOAN NOTES" shall mean loan notes of Newco 4 issued pursuant to the Offer at the election of holders of the Shares, having the terms contained in the Guaranteed Loan Notes Instrument and guaranteed by The Chase Manhattan Bank, acting through its London branch. "GUARANTEED LOAN NOTES INSTRUMENT" shall mean the Guaranteed Loan Notes Instrument in the form of Exhibit J to the Credit Agreement dated as of July 22, 1998, among Newco 4, the lenders party thereto and Chase as Administrative Agent, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. "GUARANTOR" shall mean Newco 4, Parent and each other Subsidiary of Newco 4 that is a Restricted Subsidiary (other than the Borrower and any Foreign Borrower Subsidiary) and is or has become a party to the Guarantee. "HAZARDOUS MATERIALS" shall mean (a) any petroleum or petroleum products, radioactive materials, friable asbestos, urea formaldehyde foam insulation, transformers or other equipment that contain dielectric fluid containing regulated levels of polychlorinated biphenyls, and radon gas; (b) any chemicals, materials or substances defined as or included in the definition of "hazardous substances", "hazardous waste", "hazardous materials", "extremely hazardous waste", "restricted hazardous waste", "toxic substances", "toxic pollutants", "contaminants", or "pollutants", or words of similar import, under any applicable Environmental Law; and (c) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any Governmental Authority. "HEDGE AGREEMENTS" shall mean interest rate swap, cap or collar agreements, interest rate future or option contracts, currency swap agreements, currency future or option contracts and other similar agreements entered into by Parent or the Borrower in order to protect Parent or any of the Restricted Subsidiaries against fluctuations in interest rates or currency exchange rates. "INDEBTEDNESS" of any Person shall mean (a) all indebtedness of such Person for borrowed money, (b) the deferred purchase price of assets or services that in accordance with GAAP would be shown on the liability side of the balance sheet of such Person, (c) the face amount of all letters of credit issued for the account of such Person and, without duplication, all drafts drawn thereunder, (d) all Indebtedness of a second Person secured by any Lien on any property owned by such first Person, whether or not such Indebtedness has been assumed, (e) all Capitalized Lease Obligations of such Person, (f) all obligations of such Person under interest rate swap, cap or collar agreements, interest rate future or option contracts, currency swap agreements, currency future or option contracts and other similar agreements and (g) without duplication, all Guarantee Obligations of such Person, PROVIDED that Indebtedness shall not include trade payables and accrued expenses, in each case arising in the ordinary course of business. "INSURANCE BROKING ACCOUNT ASSETS" shall mean the sum of amounts owing from insurance broking transaction debtors, bank balances designated "insurance broking 21 accounts" and approved assets designated "insurance broking assets" at their net realization value. "INSURANCE BROKING ACCOUNT LIABILITIES" shall mean the sum of amounts owing to insurance broking transaction creditors and bank advances designated "insurance broking advances". "INTERCOMPANY LOAN" shall mean the loans made by the Borrower to Newco 4 on November 19, 1998, in the principal amounts of $450,000,000 and $575,000,000, respectively. "INTERCOMPANY NOTE" shall mean a promissory note evidencing the Intercompany Loan, as the same may be amended, restated or otherwise modified from time to time. "INTEREST PERIOD" shall mean, with respect to any Term Loan or Revolving Credit Loan, the interest period applicable thereto, as determined pursuant to Section 2.9. "L/C MATURITY DATE" shall mean the date that is five Business Days prior to the Revolving Credit Maturity Date. "L/C PARTICIPANT" shall have the meaning provided in Section 3.3(a). "L/C PARTICIPATION" shall have the meaning provided in Section 3.3(a). "LENDER" shall have the meaning provided in the preamble to this Agreement. "LENDER DEFAULT" shall mean (a) the failure (which has not been cured) of a Lender to make available its portion of any Borrowing or to fund its portion of any unreimbursed payment under Section 3.3 or (b) a Lender having notified the Administrative Agent and/or the Borrower that it does not intend to comply with the obligations under Section 2.1(b), 2.1(c), 2.1(d), 2.1(f) or 3.3, in the case of either clause (a) or clause (b) above, as a result of the appointment of a receiver or conservator with respect to such Lender at the direction or request of any regulatory agency or authority. "LETTER OF CREDIT" shall mean each standby letter of credit issued pursuant to Section 3.1. "LETTER OF CREDIT COMMITMENT" shall mean $50,000,000, as the same may be reduced from time to time pursuant to Section 3.1. "LETTER OF CREDIT EXPOSURE" shall mean, with respect to any Lender, the sum of (a) the amount of any Unpaid Drawings in respect of which such Lender has made (or is required to have made) payments to the Letter of Credit Issuer pursuant to Section 3.4(a), PROVIDED that the amount of any Unpaid Drawing denominated in Sterling shall be deemed to be, as of such date, the Dollar Equivalent thereof at such date and (b) such Lender's Revolving Credit Commitment Percentage of the Letter of Credit Outstanding (excluding the portion thereof consisting of Unpaid Drawings in respect of which the Lenders have made (or are required to have made) payments to the Letter of Credit Issuer pursuant to Section 3.4(a)). "LETTER OF CREDIT FEE" shall have the meaning provided in Section 4.1(b). "LETTER OF CREDIT ISSUER" shall mean Chase, any of its Affiliates or any successor pursuant to Section 3.6. 22 "LETTER OF CREDIT OUTSTANDING" shall mean, at any time, the sum of, without duplication, (a) the aggregate Stated Amount of all outstanding Letters of Credit and (b) the aggregate amount of all Unpaid Drawings in respect of all Letters of Credit, PROVIDED that the amount of any Stated Amount or Unpaid Drawing denominated in Sterling shall be deemed to be, as of such date, the Dollar Equivalent thereof at such date. "LETTER OF CREDIT REQUEST" shall have the meaning provided in Section 3.2. "LEVEL I STATUS" shall mean, on any date, the Consolidated Total Debt to Consolidated EBITDA Ratio is greater than or equal to 4.75:1.00 as of such date. "LEVEL II STATUS" shall mean, on any date, the circumstance that Level I Status does not exist and the Consolidated Total Debt to Consolidated EBITDA Ratio is greater than or equal to 4.25:1.00 as of such date. "LEVEL III STATUS" shall mean, on any date, the circumstance that neither Level I Status nor Level II Status exists and the Consolidated Total Debt to Consolidated EBITDA Ratio is greater than or equal to 3.75:1.00 as of such date. "LEVEL IV STATUS" shall mean, on any date, the circumstance that none of Level I Status, Level II Status or Level III Status exists and the Consolidated Total Debt to Consolidated EBITDA Ratio is greater than or equal to 3.25:1.00 as of such date. "LEVEL V STATUS" shall mean, on any date, the circumstance that none of Level I Status, Level II Status, Level III Status or Level IV Status exists and the Consolidated Total Debt to Consolidated EBITDA Ratio is greater than or equal to 2.75:1.00 as of such date. "LEVEL VI STATUS" shall mean, on any date, the circumstance that none of Level I Status, Level II Status, Level III Status, Level IV or Level V Status exists and the Consolidated Total Debt to Consolidated EBITDA Ratio is less than 2.75:1.00 as of such date. "LIEN" shall mean any mortgage, pledge, security interest, hypothecation, assignment, lien (statutory or other) or similar encumbrance (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement or any lease in the nature thereof). "LIMITED GUARANTOR" shall mean any Restricted Foreign Subsidiary of Newco 4 that is or has become a party to a Guarantee but the liability of which under such Guarantee is limited in amount. "LOAN" shall mean any Revolving Credit Loan, Swingline Loan or Term Loan made by any Lender hereunder. "MANAGEMENT EQUITY CONTRIBUTION" shall have the meaning provided in the preamble to this Agreement. "MANAGEMENT GROUP" shall mean, at any time, the General Executive Committee, the Chairman of the Board, the President, any Executive Vice President or Vice President, the Treasurer and the Secretary of Parent at such time. "MANDATORY BORROWING" shall have the meaning provided in Section 2.1(f). 23 "MARGIN STOCK" shall have the meaning provided in Regulation U. "MATERIAL ADVERSE CHANGE" shall mean any change in the business, assets, operations, properties or financial condition of Newco 4 and its Subsidiaries taken as a whole that would materially adversely affect the ability of the Borrower and the other Credit Parties taken as a whole to perform their obligations under this Agreement and the other Credit Documents taken as a whole. "MATERIAL ADVERSE EFFECT" shall mean a circumstance or condition affecting the business, assets, operations, properties or financial condition of Newco 4 and its Subsidiaries taken as a whole that would materially adversely affect (a) the ability of the Borrower and the other Credit Parties taken as a whole to perform their obligations under this Agreement and the other Credit Documents taken as a whole or (b) the rights and remedies of the Administrative Agent and the Lenders under this Agreement and the other Credit Documents taken as a whole. "MATERIAL SUBSIDIARY" shall mean, at any date of determination, (a) the Borrower and (b) any Restricted Subsidiary (other than the Borrower) (i) whose total assets at the last day of the Test Period ending on the last day of the most recent fiscal period for which Section 9.1 Financials have been delivered were equal to or greater than 5% of the consolidated total assets of Newco 4 and the Restricted Subsidiaries at such date or (ii) whose gross revenues for such Test Period were equal to or greater than 5% of the consolidated gross revenues of Newco 4 and the Restricted Subsidiaries for such period, in each case determined in accordance with GAAP. "MATURITY DATE" shall mean the Tranche A Maturity Date, the Tranche B Maturity Date, the Tranche C Maturity Date, the Tranche D Maturity Date or the Revolving Credit Maturity Date. "MINIMUM BORROWING AMOUNT" shall mean (a) with respect to a Borrowing of Term Loans or Revolving Credit Loans, $1,000,000 (or the Sterling Equivalent, Euro Equivalent or Yen Equivalent thereof, as applicable) and (b) with respect to a Borrowing of Swingline Loans, $100,000 (or the Sterling Equivalent thereof). "MINORITY INVESTMENT" shall mean any Person (other than a Subsidiary) in which Newco 4 or any Restricted Subsidiary owns capital stock or other equity interests. "MOODY'S" shall mean Moody's Investors Service, Inc. or any successor by merger or consolidation to its business. "NET CASH PROCEEDS" shall mean, with respect to any Prepayment Event or any issuance by Newco 4 of equity securities, (a) the gross cash proceeds (including payments from time to time in respect of installment obligations, if applicable) received by or on behalf of Newco 4 or any of the Restricted Subsidiaries in respect of such Prepayment Event or issuance, as the case may be, less (b) the sum of: (i) in the case of any Prepayment Event, the amount, if any, of all taxes paid or estimated to be payable by Newco 4 or any of the Restricted Subsidiaries in connection with such Prepayment Event, (ii) in the case of any Prepayment Event, the amount of any reasonable reserve established in accordance with GAAP against any liabilities (other than any taxes deducted pursuant to clause (i) above) (A) associated with the assets that are the subject of such Prepayment Event and (B) retained by Newco 4 or any of the Restricted 24 Subsidiaries, PROVIDED that the amount of any subsequent reduction of such reserve (other than in connection with a payment in respect of any such liability) shall be deemed to be Net Cash Proceeds of such a Prepayment Event occurring on the date of such reduction, (iii) in the case of any Prepayment Event, the amount of any Indebtedness secured by a Lien on the assets that are the subject of such Prepayment Event to the extent that the instrument creating or evidencing such Indebtedness requires that such Indebtedness be repaid upon consummation of such Prepayment Event, (iv) in the case of any Asset Sale Prepayment Event, the amount of any proceeds of such Asset Sale Prepayment Event that the Borrower has reinvested (or intends to reinvest within one year of the date of such Asset Sale Prepayment Event) in the business of Newco 4 or any of the Restricted Subsidiaries (subject to Section 9.14), PROVIDED that any portion of such proceeds that has not been so reinvested within such one-year period shall (x) be deemed to be Net Cash Proceeds of an Asset Sale Prepayment Event occurring on the last day of such one-year period and (y) be applied to the repayment of Term Loans in accordance with Section 5.2(a)(i), and PROVIDED FURTHER that, for purposes of the preceding proviso, such one-year period shall be extended by up to twelve months from the last day of such one-year period so long as (A) such proceeds are to be reinvested within such additional twelve-month period under Newco 4's business plan as most recently adopted in good faith by its Board of Directors and (B) Newco 4 believes in good faith that such proceeds will be so reinvested within such additional twelve-month period, and (v) in the case of any Prepayment Event or any issuance by Newco 4 of equity securities, reasonable and customary fees, commissions, expenses, issuance costs, discounts and other costs paid by Newco 4 or any of the Restricted Subsidiaries in connection with such Prepayment Event or issuance, as the case may be (other than those payable to Newco 4 or any Subsidiary of Newco 4), in each case only to the extent not already deducted in arriving at the amount referred to in clause (a) above. "NEWCO 1" shall have the meaning provided in the preamble to this Agreement. "NEWCO 2" shall have the meaning provided in the preamble to this Agreement. "NEWCO 3" shall mean a newly formed private limited company organized under the laws of England and Wales all the issued share capital of which is owned on the date hereof by Newco 2 and that owns all the issued share capital of Newco 4. "NEWCO 4" shall have the meaning provided in the preamble to this Agreement. "NEWCO 4 COMMON STOCK" shall mean any class of outstanding ordinary share capital of Newco 4 after giving effect to the Transactions. "NEWCO 4 INDEBTEDNESS" shall mean all accrued interest with respect to and principal and any other amounts owing under the Bridge Facilities on the Term Loan Funding Date. "NON-DEFAULTING LENDER" shall mean and include each Lender other than a Defaulting Lender. "NON-EXCLUDED TAXES" shall have the meaning provided in Section 5.4(a). "NOTICE OF BORROWING" shall have the meaning provided in Section 2.3. 25 "NOTICE OF CONVERSION OR CONTINUATION" shall have the meaning provided in Section 2.6. "OBLIGATIONS" shall mean all monetary amounts of every type or description at any time owing to the Administrative Agent, any Lender or, in the case of Hedge Agreements, any affiliate of a Lender pursuant to the terms of this Agreement, any other Credit Document or any Hedge Agreement. "OFFER" shall have the meaning provided in the preamble to this Agreement. "PARENT" shall have the meaning provided in the preamble to this Agreement. "PARTICIPANT" shall have the meaning provided in Section 13.6(a)(ii). "PARTICIPATING MEMBER STATE" shall mean any member state of the European Union that has the euro as its lawful currency. "PBGC" shall mean the United States Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto. "PERMITTED ACQUISITION" shall mean the acquisition, by merger or otherwise, by Newco 4 or any of the Restricted Subsidiaries of assets or capital stock or other equity interests, or the acquisition or retention (a "PERMITTED BROKER ACQUISITION") of one or more individuals comprising teams engaged in a business described in Section 9.14, so long as (a) such acquisition and all transactions related thereto shall be consummated in accordance with applicable law; (b) such acquisition shall, in the case of the acquisition of capital stock or other equity interests by Newco 4 or any Restricted Domestic Newco 4 Subsidiary, result in the issuer of such capital stock or other equity interests becoming a Guarantor and a direct Restricted Newco 4 Subsidiary in the case of such an acquisition by Newco 4; (c) such acquisition shall, in the case of the acquisition of capital stock or other equity interests by the Borrower or any Restricted Domestic Borrower Subsidiary, result in the issuer of such capital stock or other equity interests becoming a Restricted Domestic Borrower Subsidiary and a direct Restricted Domestic Borrower Subsidiary in the case of such an acquisition by the Borrower; (d) after giving effect to such acquisition, no Default or Event of Default shall have occurred and be continuing; and (e) Newco 4 shall be in compliance, on a pro forma basis after giving effect to such acquisition (including any Indebtedness assumed or permitted to exist or incurred pursuant to Sections 10.1(j) and 10.1(k), respectively, and any related Pro Forma Adjustment), with the covenants set forth in Sections 10.9, 10.10 and 10.11, as such covenants are recomputed as at the last day of the most recently ended Test Period under such Sections as if such acquisition had occurred on the first day of such Test Period. "PERMITTED BROKER ACQUISITION" shall have the meaning provided in the definition of the term "Permitted Acquisition". "PERMITTED INVESTMENTS" shall mean (a) with respect to Insurance Broking Account Assets, investments in which it is customary for Persons that are engaged in businesses similar to those of Parent and its Subsidiaries and subject to all applicable laws and regulations to invest, PROVIDED that it is consistent with the past practices of Parent and its Subsidiaries and all applicable laws and regulations to invest in such investments, and (b) in all other cases (i) securities issued or unconditionally guaranteed by the United States or United Kingdom government or any agency or instrumentality thereof, in each case having maturities of not more than 24 months from the date of acquisition thereof; (ii) securities issued by any state of the United States or any political 26 subdivision of any such state or any public instrumentality thereof or any political subdivision of any such state or any public instrumentality thereof having maturities of not more than 24 months from the date of acquisition thereof and, at the time of acquisition, having an investment grade rating generally obtainable from either S&P or Moody's (or, if at any time neither S&P nor Moody's shall be rating such obligations, then from another nationally recognized rating service); (iii) commercial paper issued by any Lender or any bank holding company owning any Lender; (iv) commercial paper maturing no more than 12 months after the date of creation thereof and, at the time of acquisition, having a rating of at least A-2 or P-2 from either S&P or Moody's (or, if at any time neither S&P nor Moody's shall be rating such obligations, an equivalent rating from another nationally recognized rating service); (v) domestic and eurodollar certificates of deposit or bankers' acceptances maturing no more than two years after the date of acquisition thereof issued by any Lender or any other bank having combined capital and surplus of not less than $250,000,000 in the case of domestic banks and $100,000,000 in the case of foreign banks; (vi) repurchase agreements with a term of not more than 30 days for underlying securities of the type described in clauses (i), (ii) and (iv) above entered into with any bank meeting the qualifications specified in clause (iv) above or securities dealers of recognized national standing; (vii) shares of investment companies that are registered under the United States Investment Company Act of 1940 and invest solely in one or more of the types of securities described in clauses (i) through (vi) above; and (viii) corresponding instruments in countries other than the United States or the United Kingdom customarily utilized for high-quality investments. "PERMITTED LIENS" shall mean (a) Liens for taxes, assessments or governmental charges or claims not yet due or which are being contested in good faith and by appropriate proceedings for which appropriate provisions have been established in accordance with GAAP; (b) Liens in respect of property or assets of Newco 4 or any of its Subsidiaries imposed by law, such as carriers', warehousemen's and mechanics' Liens and other similar Liens arising in the ordinary course of business, in each case so long as such Liens arise in the ordinary course of business and do not individually or in the aggregate have a Material Adverse Effect; (c) Liens arising from judgments or decrees in circumstances not constituting an Event of Default under Section 11.9; (d) Liens incurred or deposits made in connection with workers' compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations incurred in the ordinary course of business; (e) ground leases in respect of real property on which facilities owned or leased by Newco 4 or any of its Subsidiaries are located; (f) easements, rights-of-way, restrictions, minor defects or irregularities in title and other similar charges or encumbrances not interfering in any material respect with the business of Newco 4 and its Subsidiaries taken as a whole; (g) any interest or title of a lessor or secured by a lessor's interest under any lease permitted by this Agreement; (h) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; (i) Liens on goods the purchase price of which is financed by a documentary letter of credit issued for the account of Newco 4 or any of its Subsidiaries, PROVIDED that such Lien secures only the obligations of Newco 4 or such Subsidiaries in respect of such letter of credit to the extent permitted under Section 10.1; and (j) leases or subleases granted to others not interfering in any material respect with the business of Newco 4 and its Subsidiaries, taken as a whole. "PERMITTED SALE LEASEBACK" shall mean any Sale Leaseback consummated by Newco 4 or any of the Restricted Subsidiaries after the Closing Date, PROVIDED that such Sale Leaseback is consummated for fair value as determined at the time of consummation in good faith by Newco 4 and, in the case of any Permitted Sale Leaseback (or series of 27 related Permitted Sales Leasebacks) the aggregate proceeds of which exceed $15,000,000, the Board of Directors of Newco 4 (which such determination may take into account any retained interest or other investment of Newco 4 or such Restricted Subsidiary in connection with, and any other material economic terms of, such Sale Leaseback). "PERSON" shall mean any individual, partnership, joint venture, firm, corporation, limited liability company, association, trust or other enterprise or any Governmental Authority. "PLAN" shall mean any multiemployer or single-employer plan, as defined in Section 4001 of ERISA and subject to Title IV of ERISA, that is or was within any of the preceding five plan years maintained or contributed to by (or to which there is or was an obligation to contribute or to make payments of) Newco 4, a Subsidiary of Newco 4 or an ERISA Affiliate. "PLEDGED SUBSIDIARY" shall mean, at any date of determination, Parent and any Subsidiary of Newco 4 all the capital stock of which has been pledged to the Administrative Agent, for the benefit of the Lenders, on such date in accordance with Section 9.12. "PREFERRED STOCK" shall have the meaning provided in the preamble to this Agreement. "PREPAYMENT EVENT" shall mean any Asset Sale Prepayment Event and any Debt Incurrence Prepayment Event or any Permitted Sale Leaseback. "PRESS RELEASE" shall mean the press release made by or on behalf of Newco 4 on or about 22nd July, 1998, announcing an intention to make the Offer. "PRIME RATE" shall mean the rate of interest per annum publicly announced from time to time by the Administrative Agent as its reference rate in effect at its principal office in New York City (the Prime Rate not being intended to be the lowest rate of interest charged by Chase in connection with extensions of credit to debtors). "PRO FORMA ADJUSTMENT" shall mean, for any test period that includes any of the six fiscal quarters first following any Permitted Acquisition, with respect to the Acquired EBITDA of the applicable Acquired Entity or Business, the pro forma increase or decrease in such Acquired EBITDA projected by Newco 4 in good faith as a result of reasonably identifiable and supportable net cost savings or additional net costs, as the case may be, realizable during such period by combining the operations of such Acquired Entity or Business with the operations of Newco 4 and its Subsidiaries, PROVIDED that so long as such net cost savings or additional net costs will be realizable at any time during such period, it may be assumed, for purposes of projecting such pro forma increase or decrease to such Acquired EBITDA, that such net cost savings or additional net costs will be realizable during the entire such period, and PROVIDED FURTHER that any such pro forma increase or decrease to such Acquired EBITDA shall be without duplication for net cost savings or additional net costs actually realized during such period and already included in such Acquired EBITDA. "PRO FORMA ADJUSTMENT CERTIFICATE" shall mean any certificate of an Authorized Officer of Newco 4 delivered pursuant to Section 9.1(h) or setting forth the information described in clause (iv) to Section 9.1(d). "REFERENCE LENDER" shall mean Chase. 28 "REGISTER" shall have the meaning provided in Section 13.6(c). "REGULATION D" shall mean Regulation D of the Board as from time to time in effect and any successor to all or a portion thereof establishing reserve requirements. "REGULATION T" shall mean Regulation T of the Board as from time to time in effect and any successor to all or a portion thereof establishing margin requirements. "REGULATION U" shall mean Regulation U of the Board as from time to time in effect and any successor to all or a portion thereof establishing margin requirements. "REGULATION X" shall mean Regulation X of the Board as from time to time in effect and any successor to all or a portion thereof establishing margin requirements. "REPAYMENT AMOUNT" shall mean Tranche A Repayment Amount, Tranche B Repayment Amount, Tranche C Repayment Amount or Tranche D Repayment Amount. "REPAYMENT DATE" shall mean Tranche A Repayment Date, Tranche B Repayment Date, Tranche C Repayment Date or Tranche D Repayment Date. "REPLACEMENT PREFERRED STOCK" shall mean preferred stock of Newco 2 that (a) is issued in exchange for, or to replace or refinance, all or a portion of the Preferred Stock, (b) is not subject to mandatory redemption or redemption at the option of the holder thereof prior to the date that is six months later than the maturity date of the Subordinated Notes and (c) may include, at the election of Newco 2, (i) provisions for required cash dividends (at a rate per annum not in excess of 7 1/2%, or a higher rate if the payment of cash dividends in excess of 7 1/2% is stated in the provisions of such preferred stock to be subject to the limitations set forth in this Agreement), (ii) provisions for transferability, (iii) provisions for voting rights and/or board representation upon the occurrence of non-payment of dividends and (iv) other terms customary for public issuances of preferred stock and other terms, in each case so long as the Administrative Agent shall be reasonably satisfied that such customary or other terms, taken as a whole, do not adversely affect the interests of the Lenders in any material respect. "REPORTABLE EVENT" shall mean an event described in Section 4043 of ERISA and the regulations thereunder. "REQUIRED GUARANTOR SUBSIDIARY" shall mean each Subsidiary of Newco 4 other than (a) any Foreign Borrower Subsidiary and (b) any other Subsidiary of Newco 4 that is not organized under the laws of the United Kingdom, the United States, any state or territory of the United States or the District of Columbia. "REQUIRED LENDERS" shall mean, at any date, (a) Non-Defaulting Lenders having or holding a majority of the sum of (i) the Adjusted Total Revolving Credit Commitment at such date, (ii) the Adjusted Total Term Loan Commitment at such date and (iii) the outstanding principal amount of the Term Loans (excluding the Term Loans held by Defaulting Lenders) at such date or (b) if the Total Revolving Credit Commitment and the Total Term Loan Commitment have been terminated or for the purposes of acceleration pursuant to Section 11, the holders (excluding Defaulting Lenders) of a majority of the outstanding principal amount of the Loans and Letter of Credit Exposures (excluding the Loans and Letter of Credit Exposures of Defaulting Lenders) in the aggregate at such date, PROVIDED that the principal amount of any Loan or Letter of Credit Exposure denominated in a Foreign Currency shall be deemed to be, as of such date, the Dollar Equivalent thereof at such date. 29 "REQUIRED TRANCHE A LENDERS" shall mean, at any date, (a) Non-Defaulting Lenders having or holding a majority of the sum of (i) the Adjusted Total Revolving Credit Commitment at such date, (ii) the Adjusted Total Tranche A Commitment at such date and (iii) the outstanding principal amount of the Tranche A Term Loans (excluding the Tranche A Term Loans held by Defaulting Lenders) in the aggregate at such date or (b) if the Total Revolving Credit Commitment and the Total Tranche A Commitment have been terminated or for the purposes of acceleration pursuant to Section 11, the holders (excluding Defaulting Lenders) of a majority of Revolving Credit Loans, Tranche A Term Loans and Letter of Credit Exposures (excluding the Loans and Letters of Credit Exposures of Defaulting Lenders) in the aggregate at such date, PROVIDED that the principal amount of any Loan or Letter of Credit Exposure denominated in a Foreign Currency shall be deemed to be, as of such date, the Dollar Equivalent thereof at such date. "REQUIRED TRANCHE B, C AND D LENDERS" shall mean, at any date, Non-Defaulting Lenders having or holding a majority of the outstanding principal amount of Tranche B Term Loans, Tranche C Term Loans and Tranche D Term Loans (excluding the Tranche B Term Loans, Tranche C Term Loans and Tranche D Term Loans held by Defaulting Lenders) in the aggregate at such date. "REQUIREMENT OF LAW" shall mean, as to any Person, the Certificate of Incorporation and By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or assets or to which such Person or any of its property or assets is subject. "RESET DATE" shall have the meaning set forth in Section 1.2(a). "RESTATEMENT DATE" shall mean the Restatement Closing Date as defined in the Amendment Agreement dated as of February 19, 1999, among the Borrower, Parent, Newco 4, the Administrative Agent, the Collateral Agent, the Continuing Lenders (as defined therein) and the Additional Lenders (as defined therein). "RESTRICTED DOMESTIC BORROWER SUBSIDIARY" shall mean each Restricted Subsidiary that is also a Domestic Borrower Subsidiary. "RESTRICTED DOMESTIC NEWCO 4 SUBSIDIARY" shall mean each Restricted Subsidiary that is also a Domestic Newco 4 Subsidiary. "RESTRICTED FOREIGN BORROWER SUBSIDIARY" shall mean each Restricted Subsidiary that is also a Foreign Borrower Subsidiary. "RESTRICTED FOREIGN NEWCO 4 SUBSIDIARY" shall mean each Restricted Subsidiary that is also a Foreign Newco 4 Subsidiary. "RESTRICTED FOREIGN SUBSIDIARY" shall mean any Restricted Foreign Newco 4 Subsidiary or any Restricted Foreign Borrower Subsidiary. "RESTRICTED NON-CREDIT-PARTY SUBSIDIARY" shall mean any Restricted Subsidiary that is not a Credit Party. "RESTRICTED SUBSIDIARY" shall mean any Subsidiary of Newco 4 other than an Unrestricted Subsidiary. 30 "REVOLVING CREDIT COMMITMENT" shall mean, (a) with respect to each Lender that is a Lender on the date hereof, the amount set forth opposite such Lender's name on Schedule 1.1 as such Lender's "Revolving Credit Commitment" and (b) in the case of any Lender that becomes a Lender after the date hereof, the amount specified as such Lender's "Revolving Credit Commitment" in the Assignment and Acceptance pursuant to which such Lender assumed a portion of the Total Revolving Credit Commitment, in each case (i) subject to the proviso set forth in Section 2.1(b) and (ii) as the same may be changed from time to time pursuant to the terms hereof. Notwithstanding anything herein to the contrary, at all times the Revolving Credit Commitment of each Lender having a Euro Revolving Credit Commitment or Yen Revolving Credit Commitment shall be equal to or greater than such Lender's Euro Revolving Credit Commitment, if any, and Yen Revolving Credit Commitment, if any. "REVOLVING CREDIT COMMITMENT PERCENTAGE" shall mean at any time, for each Lender, the percentage obtained by dividing (a) such Lender's Available Revolving Credit Commitment by (b) the aggregate amount of the Available Revolving Credit Commitments, PROVIDED that at any time when the Total Revolving Credit Commitment shall have been terminated, each Lender's Revolving Credit Commitment Percentage shall be its Revolving Credit Commitment Percentage as in effect immediately prior to such termination. "REVOLVING CREDIT EXPOSURE" shall mean, with respect to any Lender at any time, the sum of (a) the aggregate principal amount of the Revolving Credit Loans (calculated by using the Dollar Equivalent at such time of the principal amount of any Foreign Currency Revolving Credit Loans) of such Lender then outstanding, (b) such Lender's Letter of Credit Exposure at such time and (c) such Lender's Swingline Exposure at such time. "REVOLVING CREDIT LOAN" shall have the meaning provided in Section 2.1. "REVOLVING CREDIT MATURITY DATE" shall mean the date that is nine months after the date hereof or, if such date is not a Business Day, the next preceding Business Day; PROVIDED HOWEVER, that if the Term Loans are funded on or before such date, the term "Revolving Credit Maturity Date" shall mean the date that is seven years after the Term Loan Funding Date, or, if such date is not a Business Day, the next preceding Business Day. "SALE LEASEBACK" shall mean any transaction or series of related transactions pursuant to which Newco 4 or any of the Restricted Subsidiaries (a) sells, transfers or otherwise disposes of any property, real or personal, whether now owned or hereafter acquired, and (b) as part of such transaction, thereafter rents or leases such property or other property that it intends to use for substantially the same purpose or purposes as the property being sold, transferred or disposed. "S&P" shall mean Standard & Poor's Ratings Service or any successor by merger or consolidation to its business. "SEC" shall mean the United States Securities and Exchange Commission or any successor thereto. "SECTION 9.1 FINANCIALS" shall mean the financial statements delivered, or required to be delivered, pursuant to Section 9.1(a) or (b) together with the accompanying officer's certificate delivered, or required to be delivered, pursuant to Section 9.1(d). 31 "SENIOR BRIDGE FACILITY" shall mean the senior secured term loan facility outstanding under the Credit Agreement dated as of July 22, 1998, as amended and restated as of September 25, 1998, as amended as of October 28, 1998, and as further amended as of November 13, 1998, among Newco 4, Chase and the other lenders parties thereto. "SENIOR BRIDGE FACILITY FINAL DATE" shall mean the Final Date (as defined in the Credit Agreement relating to the Senior Bridge Facility). "SOLD ENTITY OR BUSINESS" shall have the meaning provided in the definition of the term "Consolidated EBITDA". "SPECIFIED SUBSIDIARY" shall mean, at any date of determination, (a) any Material Subsidiary or (b) any Unrestricted Subsidiary (i) whose total assets at the last day of the Test Period ending on the last day of the most recent fiscal period for which Section 9.1 Financials have been delivered were equal to or greater than 15% of the consolidated total assets of Newco 4 and its Subsidiaries at such date or (ii) whose gross revenues for such Test Period were equal to or greater than 15% of the consolidated gross revenues of Newco 4 and its Subsidiaries for such period, in each case determined in accordance with GAAP. "SPONSOR" shall have the meaning provided in the preamble to this Agreement. "SPONSOR EQUITY CONTRIBUTION" shall have the meaning provided in the preamble to this Agreement. "STATED AMOUNT" of any Letter of Credit shall mean the maximum amount from time to time available to be drawn thereunder, determined without regard to whether any conditions to drawing could then be met. "STATUS" shall mean, as of any date, the existence of Level I Status, Level II Status, Level III Status, Level IV Status, Level V Status or Level VI Status, as the case may be, on such date. Changes in Status resulting from changes in the Consolidated Total Debt to Consolidated EBITDA Ratio shall become effective (the date of such effectiveness, the "EFFECTIVE DATE") as of the first day following the last day of the most recent fiscal year or period for which (a) Section 9.1 Financials are delivered to the Lenders under Section 9.1 and (b) an officer's certificate is delivered by Newco 4 to the Lenders setting forth, with respect to such Section 9.1 Financials, the then-applicable Status, and shall remain in effect until the next change to be effected pursuant to this definition, PROVIDED that (i) if the Borrower shall have made any payments in respect of interest or commitment fees during the period (the "INTERIM PERIOD") from and including the Effective Date to but excluding the day any change in Status is determined as provided above, then the amount of the next such payment due on or after such day shall be increased or decreased by an amount equal to any underpayment or overpayment so made by the Borrower during such Interim Period, (ii) notwithstanding the foregoing, for the period from and including the Closing Date to but excluding the date on which the Borrower shall deliver the Section 9.1 Financials for the second full fiscal quarter after the Statutory Declaration Date, the Status for purposes of this Agreement shall be Level I Status, and (iii) each determination of the Consolidated Total Debt to Consolidated EBITDA Ratio pursuant to this definition shall be made with respect to the Test Period ending at the end of the fiscal period covered by the relevant financial statements. "STATUTORY DECLARATION DATE" shall mean November 10, 1998. 32 "STERLING", "(L)" OR "pence" shall mean the lawful currency of the United Kingdom. "STERLING BORROWING" shall mean a Borrowing comprised of Sterling Loans. "STERLING EQUIVALENT" shall mean, on any date of determination, with respect to any amount denominated in any currency other than Sterling, the equivalent in Sterling of such amount, determined by the Administrative Agent pursuant to Section 1.2(a) using the applicable Exchange Rate then in effect. "STERLING LOANS" shall mean Loans denominated in Sterling. "STERLING REVOLVING CREDIT LOAN" shall mean a Revolving Credit Loan denominated in Sterling and made pursuant to Section 2.1(b). "STERLING SWINGLINE LOAN" shall have the meaning provided in Section 2.1(e). "STERLING SWINGLINE RATE" shall mean, at any time, the rate charged by The Chase Manhattan Bank in London for Sterling overdrafts at such time, plus the Applicable Eurodollar Margin for Sterling Revolving Credit Loans. "SUB-AGENT'S OFFICE" shall mean The Chase Manhattan Bank, Trinity Tower, Nine Thomas Moore Street, London E1 9TY, England, or such other office as the Administrative Agent may hereafter designate in writing as such to the other parties hereto. "SUBORDINATED BRIDGE FACILITY" shall mean (a) the borrowing facility made available pursuant to the Subordinated Promissory Note dated July 22, 1998, between the Borrower and an Affiliate of the Sponsor, the material terms of which shall be in the form previously approved by the Administrative Agent, and (b) any amendment, replacement or refinancing thereof having terms not materially less advantageous to the interests of the Lenders than the terms contemplated by the definition of the term "Subordinated Notes", PROVIDED that any such amendment, replacement or refinancing shall bear a rate of interest determined by the Board of Directors of the Borrower to be a market rate of interest at the date of such amendment, replacement or refinancing and have other terms customary for similar issuances under similar market conditions or otherwise be on terms reasonably acceptable to the Administrative Agent. "SUBORDINATED LOANS" shall mean subordinated loans made pursuant to the Subordinated Bridge Facility and having a final maturity not earlier than the date that is ten years after the Term Loan Funding Date. "SUBORDINATED NOTE INDENTURE" shall mean the Indenture between the Borrower and a trustee to be determined, pursuant to which the Subordinated Notes will be issued, as the same may be amended, supplemented or otherwise modified from time to time. "SUBORDINATED NOTES" shall mean (a) Senior Subordinated Notes of the Borrower or Newco 4 (i) issued pursuant to the Subordinated Note Indenture, (ii) bearing a rate of interest determined by the Board of Directors of the Borrower to be a market rate of interest at the date of issuance thereof, (iii) having a final maturity not earlier than the date that is ten years after the Term Loan Funding Date (or, if earlier, ten years after the initial issuance thereof so long as such maturity date is at least 91 days after the Final Tranche D Repayment Date) and (iv) having other terms customary for similar issuances under similar market conditions or otherwise on terms reasonably acceptable to the Administrative Agent and (b) any amendment, replacement or refinancing thereof having 33 terms not materially less advantageous to the interests of the Lenders than the terms thereof, PROVIDED that any such amendment, replacement or refinancing shall bear a rate of interest determined by the Board of Directors of the Borrower to be a market rate of interest at the date of such amendment, replacement or refinancing and have other terms customary for similar issuances under similar market conditions or otherwise be on terms reasonably acceptable to the Administrative Agent. "SUBSEQUENT PARTICIPANT" shall mean a member state of the European Union that adopts the euro as its lawful currency after January 1, 1999. "SUBSIDIARY" of any Person shall mean and include (a) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock or issued share capital of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person directly or indirectly through Subsidiaries and (b) any partnership, association, joint venture or other entity in which such Person directly or indirectly through Subsidiaries has more than a 50% equity interest at the time. Unless otherwise expressly provided, all references herein to a "Subsidiary" shall mean a Subsidiary of Parent and (c) any other corporation, partnership, joint venture or other entity (i) the accounts of which would be consolidated with those of such Person in such Person's consolidated financial statements if such statements were prepared in accordance with GAAP and (ii) that is controlled (as defined in clause (b) of the definition of such term in the definition of the term "Affiliate") by such Person. "SUPERMAJORITY TRANCHE A LENDERS" shall mean, at any date, (a) Non-Defaulting Lenders having or holding at least 66-2/3% of the sum of (i) the Adjusted Total Revolving Credit Commitment at such date and (ii) the outstanding principal amount of the Tranche A Term Loans (excluding the Tranche A Term Loans held by Defaulting Lenders) at such date or (b) if the Total Revolving Credit Commitment has been terminated or for the purposes of acceleration pursuant to Section 11, the holders (excluding Defaulting Lenders) of at least 66-2/3% of the outstanding principal amount of the Revolving Credit Loans, Tranche A Term Loans and Letter of Credit Exposures (excluding the Loans and Letter of Credit Exposures of Defaulting Lenders) in the aggregate at such date, PROVIDED that the principal amount of any Loan or Letter of Credit Exposure denominated in a Foreign Currency shall be deemed to be, as of such date, the Dollar Equivalent thereof at such date. "SUPERMAJORITY TRANCHE B, C AND D LENDERS" shall mean, at any date, Non-Defaulting Lenders having or holding at least 66-2/3% of the outstanding principal amount of the Tranche B Term Loans, Tranche C Term Loans and Tranche D Term Loans (excluding the Tranche B Term Loans, Tranche C Term Loans and Tranche D Term Loans held by Defaulting Lenders) in the aggregate at such date. "SWINGLINE COMMITMENT" shall mean $10,000,000. "SWINGLINE EXPOSURE" shall mean, at any time, the aggregate principal amount (calculated by using the Dollar Equivalent at such time of the principal amount of any Sterling Swingline Loans) of all Swingline Loans then outstanding. The Swingline Exposure of any Lender at any time shall mean the sum of (a) the amount (calculated by using the Dollar Equivalent at such time of the principal amount of any Sterling Swingline Loans) of Swingline Loans then outstanding in respect of which such Lender has made (or is required to have made) payments to Chase pursuant to Section 2.1(f) and (b) such Lender's Revolving Credit Commitment Percentage of the aggregate Swingline 34 Exposure (excluding the portion thereof consisting of Swingline Loans in respect of which the Lenders have made (or are required to have made) payments to Chase pursuant to Section 2.1(f)). "SWINGLINE LOANS" shall have the meaning provided in Section 2.1(e). "SWINGLINE MATURITY DATE" shall mean, with respect to any Swingline Loan, the date that is five Business Days prior to the Revolving Credit Maturity Date. "SYNDICATION AGENT" shall mean Morgan Stanley Dean Witter, as the syndication agent for the Lenders under this Agreement and the other Credit Documents. "TAKEOVER CODE" shall mean the City Code on Takeovers and Mergers. "TERM LOAN" shall mean any Tranche A Term Loan, Tranche B Term Loan, Tranche C Term Loan or Tranche D Term Loan. "TERM LOAN COMMITMENT" shall mean, with respect to each Lender, the sum of such Lender's Tranche A Commitment, Tranche B Commitment, Tranche C Commitment and Tranche D Commitment. "TERM LOAN FUNDING DATE" shall mean November 19, 1998. "TEST PERIOD" shall mean, for any determination under this Agreement, the four consecutive fiscal quarters of Newco 4 then last ended. "THREE-MONTH SECONDARY CD RATE" shall mean, for any day, the secondary market rate, expressed as a per annum rate, for three-month certificates of deposit reported as being in effect on such day (or, if such day shall not be a Business Day, the next preceding Business Day) by the Board through the public information telephone line of the Federal Reserve Bank of New York (which rate will, under the current practices of the Board, be published in Federal Reserve Statistical Release H.15(519) during the week following such day), or, if such rate shall not be so reported on such day or such next preceding Business Day, the average of the secondary market quotations for three-month certificates of deposit of major money center banks in New York City received at approximately 10:00 A.M., New York time, on such day (or, if such day shall not be a Business Day, on the next preceding Business Day) by the Administrative Agent from three New York City negotiable certificate of deposit dealers of recognized standing selected by it. "TOTAL COMMITMENT" shall mean the sum of the Total Term Loan Commitment and the Total Revolving Credit Commitment. "TOTAL CREDIT EXPOSURE" shall mean, at any date, the sum of (a) the Total Revolving Credit Commitment at such date, (b) the Total Term Loan Commitment at such date and (c) the outstanding principal amount of all Term Loans at such date. "TOTAL REVOLVING CREDIT COMMITMENT" shall mean the sum of the Revolving Credit Commitments of all the Lenders. "TOTAL TERM LOAN COMMITMENT" shall mean the sum of the Term Loan Commitments of all the Lenders. 35 "TRANCHE A COMMITMENT" shall mean, (a) in the case of each Lender that is a Lender on the date hereof, the amount set forth opposite such Lender's name on Schedule 1.1 as such Lender's "Tranche A Commitment" and (b) in the case of any Lender that becomes a Lender after the date hereof, the amount specified as such Lender's "Tranche A Commitment" in the Assignment and Acceptance pursuant to which such Lender assumed a portion of the Total Term Loan Commitment, in each case as the same may be changed from time to time pursuant to the terms hereof. "TRANCHE A MATURITY DATE" shall mean the date that is seven years after the Term Loan Funding Date, or, if such date is not a Business Day, the next preceding Business Day. "TRANCHE A REPAYMENT AMOUNT" shall have the meaning provided in Section 2.5(b). "TRANCHE A REPAYMENT DATE" shall have the meaning provided in Section 2.5(b). "TRANCHE A TERM LOAN" shall have the meaning provided in Section 2.1. "TRANCHE B COMMITMENT" shall mean, (a) in the case of each Lender that is a Lender on the date hereof, the amount set forth opposite such Lender's name on Schedule 1.1 as such Lender's "Tranche B Commitment" and (b) in the case of any Lender that becomes a Lender after the date hereof, the amount specified as such Lender's "Tranche B Commitment" in the Assignment and Acceptance pursuant to which such Lender assumed a portion of the Total Term Loan Commitment, in each case as the same may be changed from time to time pursuant to the terms hereof. "TRANCHE B MATURITY DATE" shall mean the date that is eight years after the Term Loan Funding Date, or, if such date is not a Business Day, the next preceding Business Day. "TRANCHE B REPAYMENT AMOUNT" shall have the meaning provided in Section 2.5(c). "TRANCHE B REPAYMENT DATE" shall have the meaning provided in Section 2.5(c). "TRANCHE B TERM LOAN shall have the meaning provided in Section 2.1. "TRANCHE C COMMITMENT" shall mean, (a) in the case of each Lender that is a Lender on the date hereof, the amount set forth opposite such Lender's name on Schedule 1.1 as such Lender's "Tranche C Commitment" and (b) in the case of any Lender that becomes a Lender after the date hereof, the amount specified as such Lender's "Tranche C Commitment" in the Assignment and Acceptance pursuant to which such Lender assumed a portion of the Total Term Loan Commitment, in each case as the same may be changed from time to time pursuant to the terms hereof. "TRANCHE C MATURITY DATE" shall mean the date that is nine years after the Term Loan Funding Date, or, if such date is not a Business Day, the next preceding Business Day. "TRANCHE C REPAYMENT AMOUNT" shall have the meaning provided in Section 2.5(d). "TRANCHE C REPAYMENT DATE" shall have the meaning provided in Section 2.5(d). 36 "TRANCHE C TERM LOAN" shall have the meaning provided in Section 2.1. "TRANCHE D COMMITMENT" shall mean, (a) in the case of each Lender that is a Lender on the date hereof, the amount set forth opposite such Lender's name on Schedule 1.1 as such Lender's "Tranche D Commitment" and (b) in the case of any Lender that becomes a Lender after the date hereof, the amount specified as such Lender's "Tranche D Commitment" in the Assignment and Acceptance pursuant to which such Lender assumed a portion of the Total Term Loan Commitment, in each case as the same may be changed from time to time pursuant to the terms hereof. "TRANCHE D MATURITY DATE" shall mean the date that is nine years and six months after the Term Loan Funding Date, or, if such date is not a Business Day, the next preceding Business Day. "TRANCHE D REPAYMENT AMOUNT" shall have the meaning provided in Section 2.5(e). "TRANCHE D REPAYMENT DATE" shall have the meaning provided in Section 2.5(e). "TRANCHE D TERM LOAN" shall have the meaning provided in Section 2.1. "TRANSACTION EXPENSES" shall mean any fees or expenses incurred or paid by Newco 4 or any of its Subsidiaries in connection with the Transactions, the financing therefor and the other transactions contemplated hereby and thereby. "TRANSACTIONS" shall have the meaning provided in the preamble to this Agreement. "TRANSFEREE" shall have the meaning provided in Section 13.6(e). "TREATY ON EUROPEAN UNION" shall mean the Treaty of Rome of March 25, 1957, as amended by the Single European Act 1986 and the Maastricht Treaty (which was signed at Maastricht on February 7, 1992, and came into force on November 1, 1993), as amended from time to time. "TYPE" shall mean (a) as to any Term Loan, its nature as an ABR Loan or a Eurodollar Term Loan and (b) as to any Revolving Credit Loan, its nature as an ABR Loan or a Eurodollar Revolving Credit Loan. "U.K. SECURITY AGREEMENT" shall mean and include the Debenture entered into by Newco 4, Parent, the other grantors party thereto and the Administrative Agent for the benefit of the Lenders, substantially in the form of Exhibit I, as the same may be amended, supplemented or otherwise modified from time to time. "UNFUNDED CURRENT LIABILITY" of any Plan shall mean the amount, if any, by which the present value of the accrued benefits under the Plan as of the close of its most recent plan year, determined in accordance with Statement of Financial Accounting Standards No. 87 as in effect on the date hereof, based upon the actuarial assumptions that would be used by the Plan's actuary in a termination of the Plan, exceeds the fair market value of the assets allocable thereto. "UNITED STATES" shall mean the United States of America. "UNPAID DRAWING" shall have the meaning provided in Section 3.4(a). 37 "UNRESTRICTED SUBSIDIARY" shall mean (a) any Subsidiary of Newco 4 that is formed or acquired after the Closing Date, PROVIDED that at such time (or promptly thereafter) the Borrower designates such Subsidiary an Unrestricted Subsidiary in a written notice to the Administrative Agent, (b) any Restricted Subsidiary on the Closing Date subsequently re-designated as an Unrestricted Subsidiary by the Borrower in a written notice to the Administrative Agent, PROVIDED that such re-designation shall be deemed to be an investment on the date of such re-designation in an Unrestricted Subsidiary in an amount equal to the sum of (i) the net worth of such re-designated Restricted Subsidiary immediately prior to such re-designation (such net worth to be calculated without regard to any Guarantee provided by such re-designated Restricted Subsidiary) and (ii) the aggregate principal amount of any Indebtedness owed by such re-designated Restricted Subsidiary to Newco 4 or any other Restricted Subsidiary immediately prior to such re- designation, all calculated, except as set forth in the parenthetical to clause (i), on a consolidated basis in accordance with GAAP, (c) each Subsidiary of an Unrestricted Subsidiary; PROVIDED, HOWEVER, that (i) at the time of any written re-designation by the Borrower to the Administrative Agent of any Unrestricted Subsidiary as a Restricted Subsidiary, the Unrestricted Subsidiary so re-designated shall no longer constitute an Unrestricted Subsidiary, (ii) no Unrestricted Subsidiary may be re-designated as a Restricted Subsidiary if a Default or Event of Default would result from such re-designation, (iii) neither Parent nor the Borrower shall be re-designated as an Unrestricted Subsidiary and (iv) no Restricted Subsidiary may be re-designated as an Unrestricted Subsidiary if a Default or Event of Default would result from such re-designation. On or promptly after the date of its formation, acquisition or re-designation, as applicable, each Unrestricted Subsidiary (other than an Unrestricted Subsidiary that is a Foreign Subsidiary) shall have entered into a tax sharing agreement containing terms that, in the reasonable judgment of the Administrative Agent, provide for an appropriate allocation of tax liabilities and benefits and (d) Sovereign Marine & General Insurance Company Limited. "U.S. PLEDGE AGREEMENT" shall mean and include the U.S. Pledge Agreement entered into by the Borrower, the other pledgors party thereto and the Administrative Agent for the benefit of the Lenders, substantially in the form of Exhibit B, as the same may be amended, supplemented or otherwise modified from time to time. "VOTING STOCK" shall mean, with respect to any Person, shares of such Person's capital stock having the right to vote for the election of directors of such Person under ordinary circumstances. "YEN" shall mean the lawful currency of Japan. "YEN BORROWING" shall mean a Borrowing comprised of Yen Revolving Credit Loans. "YEN EQUIVALENT" shall mean, on any date of determination, with respect to any amount denominated in any currency other than Yen, the equivalent in Yen of such amount, determined by the Administrative Agent pursuant to Section 1.2(a) using the applicable Exchange Rate then in effect. "YEN LENDERS" shall mean the Persons listed on Schedule 2.1(b) as Yen Lenders and any other Person that shall accept an assignment of a Yen Revolving Credit Commitment pursuant to an Assignment and Acceptance, other than any such Person that ceases to have a Yen Revolving Credit Commitment pursuant to an Assignment and Acceptance. 38 "YEN REVOLVING CREDIT COMMITMENT" shall mean, (a) with respect to each Yen Lender that is a Yen Lender on the Restatement Date, the amount set forth opposite such Yen Lender's name on Schedule 2.1(b) as such Yen Lender's "Yen Revolving Credit Commitment" and (b) in the case of any Yen Lender that becomes a Yen Lender after the Restatement Date, the amount specified as such Yen Lender's "Yen Revolving Credit Commitment" in the Assignment and Acceptance pursuant to which such Yen Lender assumed its Yen Revolving Credit Commitment, in each case as the same may be changed from time to time pursuant to the terms hereof. "YEN REVOLVING CREDIT LOAN" shall mean a Revolving Credit Loan denominated in Yen and made pursuant to Section 2.1(d). 1.2 EXCHANGE RATES. (a) Not later than 1:00 p.m., New York City time, on each Calculation Date, the Administrative Agent shall (i) determine the Exchange Rate as of such Calculation Date to be used for calculating relevant Dollar Equivalent, Euro Equivalent, Yen Equivalent and Sterling Equivalent amounts and (ii) give notice thereof to the Lenders and the Borrower. The Exchange Rates so determined shall become effective on the first Business Day immediately following the relevant Calculation Date (a "RESET DATE"), shall remain effective until the next succeeding Reset Date and shall for all purposes of this Agreement (other than any provision expressly requiring the use of a current Exchange Rate and except to the extent exchange rates are otherwise utilized in connection with determining compliance with financial covenant levels in accordance with GAAP) be the Exchange Rates employed in converting any amounts between the applicable currencies. (b) Not later than 5:00 p.m., New York City time, on each Reset Date and the date of any Borrowing of Foreign Currency Revolving Credit Loans, the Administrative Agent shall (i) determine the Dollar Equivalent of the aggregate principal amount of the Foreign Currency Revolving Credit Loans then outstanding (after giving effect to any Foreign Currency Revolving Credit Loans made or repaid on such date) and (ii) notify the Lenders and the Borrower of the results of such determination and of the Aggregate Revolving Credit Outstandings. (c) For purposes of determining compliance under Sections 10.1, 10.2, 10.4, 10.5, 10.6, 10.9, 10.10, 10.11 and 10.12 with respect to any amount in a currency other than Dollars, such amount shall be deemed to equal the Dollar Equivalent thereof at the time such amount was incurred or expended, as the case may be, or based on the average exchange rate for the relevant period, as determined by the Borrower in accordance with GAAP or as otherwise reflected in the Section 9.1 Financials in accordance with GAAP. SECTION 2. AMOUNT AND TERMS OF CREDIT. 2.1 COMMITMENTS. (a) Subject to and upon the terms and conditions herein set forth: (i) each Lender having a Tranche A Commitment severally agrees to make a loan or loans in Dollars (each a "TRANCHE A TERM LOAN" and, collectively, the "TRANCHE A TERM LOANS") to the Borrower, which Tranche A Term Loans (x) shall not exceed for any such Lender the Tranche A Commitment of such Lender and (y) shall be repaid in full on the Tranche A Maturity Date; (ii) each Lender having a Tranche B Commitment severally agrees to make a loan or loans in Dollars (each a "TRANCHE B TERM LOAN" and, collectively, the "TRANCHE B TERM LOANS") to the Borrower, which Tranche B Term Loans (x) shall not exceed for any 39 such Lender the Tranche B Commitment of such Lender and (y) shall be repaid in full on the Tranche B Maturity Date; (iii) each Lender having a Tranche C Commitment severally agrees to make a loan or loans in Dollars (each a "TRANCHE C TERM LOAN" and, collectively, the "TRANCHE C TERM LOANS") to the Borrower, which Tranche C Term Loans (x) shall not exceed for any such Lender the Tranche C Commitment of such Lender and (y) shall be repaid in full on the Tranche C Maturity Date; and (iv) each Lender having a Tranche D Commitment severally agrees to make a loan or loans in Dollars (each a "TRANCHE D TERM LOAN" and, collectively, the "TRANCHE D TERM LOANS") to the Borrower, which Tranche D Term Loans (x) shall not exceed for any such Lender the Tranche D Commitment of such Lender and (y) shall be repaid in full on the Tranche D Maturity Date. Such Term Loans (x) shall be made on the Term Loan Funding Date, (y) may, at the option of the Borrower, be incurred and maintained as, and/or converted into, ABR Loans or Eurodollar Term Loans, PROVIDED that all Term Loans made by each of the Lenders pursuant to the same Borrowing shall, unless otherwise specifically provided herein, consist entirely of Term Loans of the same Type, and (z) may be repaid in accordance with the provisions hereof. Once repaid, Term Loans may not be reborrowed. (b) Subject to and upon the terms and conditions herein set forth, each Lender having a Revolving Credit Commitment severally agrees to make a loan or loans denominated, at the option of the Borrower, in Dollars (each a "DOLLAR REVOLVING CREDIT LOAN" and, collectively, the "DOLLAR REVOLVING CREDIT LOANS") or Sterling (each a "STERLING REVOLVING CREDIT LOAN" and, collectively, the "STERLING REVOLVING CREDIT LOANS" and, together with the Dollar Revolving Credit Loans, Euro Revolving Credit Loans and Yen Revolving Credit Loans, the "REVOLVING CREDIT LOANS") to the Borrower, which Dollar Revolving Credit Loans and Sterling Revolving Credit Loans (i) shall be made at any time and from time to time on and after the Closing Date and prior to the Revolving Credit Maturity Date, (ii) in the case of Dollar Revolving Credit Loans, may, at the option of the Borrower, be incurred and maintained as, and/or converted into, ABR Loans or Eurodollar Revolving Credit Loans, PROVIDED that all Dollar Revolving Credit Loans made by each of the Lenders pursuant to the same Borrowing shall, unless otherwise specifically provided herein, consist entirely of Dollar Revolving Credit Loans of the same Type, (iii) in the case of Sterling Revolving Credit Loans, shall be incurred and maintained entirely as Eurodollar Revolving Credit Loans, (iv) may be repaid and reborrowed in accordance with the provisions hereof, (v) for any such Lender at any time, shall not result in such Lender's Revolving Credit Exposure at such time exceeding such Lender's Revolving Credit Commitment at such time and (vi) after giving effect thereto and to the application of the proceeds thereof, shall not result at any time in the aggregate amount of the Lenders' Revolving Credit Exposures at such time exceeding the Total Revolving Credit Commitment then in effect. Each Lender may at its option make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; PROVIDED that (i) any exercise of such option shall not affect the obligation of the Borrower to repay such Loan and (ii) in exercising such option, the Lender shall use its reasonable efforts to minimize any increased costs to the Borrower resulting therefrom (which obligation of the Lender shall not require it to take, or refrain from taking, actions that it determines would result in increased costs for which it will not be compensated hereunder or that it determines would be otherwise disadvantageous to it and in the event of such request for costs for which compensation is provided under this Agreement, the provisions of Section 3.5 shall apply). On the Revolving Credit Maturity Date, all Revolving Credit Loans shall be repaid in full. 40 (c) Subject to and upon the terms and conditions herein set forth, each Lender having a Euro Revolving Credit Commitment severally agrees to make a loan or loans denominated in Euro (each a "EURO REVOLVING CREDIT LOAN" and, collectively, the "EURO REVOLVING CREDIT LOANS") to the Borrower, which Euro Revolving Credit Loans (i) shall be made at any time and from time to time on and after the Restatement Date and prior to the Revolving Credit Maturity Date, (ii) shall be incurred and maintained entirely as Eurodollar Revolving Credit Loans, (iii) may be repaid and reborrowed in accordance with the provisions hereof, (iv) shall not exceed for any such Euro Lender at any time outstanding such Euro Lender's Euro Revolving Credit Commitment, (v) shall not, after giving effect thereto and to the application of the proceeds thereof, exceed for all Euro Lenders at any time outstanding that aggregate principal amount that has a Dollar Equivalent that, when added to the Dollar Equivalent of the aggregate principal amount of all outstanding Yen Revolving Credit Loans, equals $75,000,000, (vi) for any such Euro Lender at any time, shall not result in such Euro Lender's Revolving Credit Exposure at such time exceeding such Euro Lender's Revolving Credit Commitment at such time and (vii) after giving effect thereto and to the application of the proceeds thereof, shall not result at any time in the aggregate amount of the Lenders' Revolving Credit Exposures at such time exceeding the Total Revolving Credit Commitment then in effect. (d) Subject to and upon the terms and conditions herein set forth, each Lender having a Yen Revolving Credit Commitment severally agrees to make a loan or loans denominated in Yen (each a "YEN REVOLVING CREDIT LOAN" and, collectively, the "YEN REVOLVING CREDIT LOANS") to the Borrower, which Yen Revolving Credit Loans (i) shall be made at any time and from time to time on and after the Restatement Date and prior to the Revolving Credit Maturity Date, (ii) shall be incurred and maintained entirely as Eurodollar Revolving Credit Loans, (iii) may be repaid and reborrowed in accordance with the provisions hereof, (iv) shall not exceed for any such Yen Lender at any time outstanding such Yen Lender's Yen Revolving Credit Commitment, (v) shall not, after giving effect thereto and to the application of the proceeds thereof, exceed for all Yen Lenders at any time outstanding that aggregate principal amount that has a Dollar Equivalent that, when added to the Dollar Equivalent of the aggregate principal amount of all outstanding Euro Revolving Credit Loans, equals $75,000,000, (vi) for any such Yen Lender at any time, shall not result in such Yen Lender's Revolving Credit Exposure at such time exceeding such Yen Lender's Revolving Credit Commitment at such time and (vii) after giving effect thereto and to the application of the proceeds thereof, shall not result at any time in the aggregate amount of the Lenders' Revolving Credit Exposures at such time exceeding the Total Revolving Credit Commitment then in effect. (e) Subject to and upon the terms and conditions herein set forth, Chase in its individual capacity agrees, at any time and from time to time on and after the Closing Date and prior to the Swingline Maturity Date, to make a loan or loans (each a "SWINGLINE LOAN" and, collectively, the "SWINGLINE LOANS") to the Borrower, which Swingline Loans (i) may, at the option of the Borrower, be denominated in Dollars (each a "DOLLAR SWINGLINE LOAN" and, collectively, the "DOLLAR SWINGLINE LOANS") or Sterling (each a "STERLING SWINGLINE LOAN" and, collectively, the "STERLING SWINGLINE LOANS"), (ii) shall, in the case of Dollar Swingline Loans, be ABR Loans, (iii) shall, in the case of Sterling Swingline Loans, bear interest at the Sterling Swingline Rate, (iv) shall have the benefit of the provisions of Section 2.1(f), (v) shall not exceed at any time outstanding the Swingline Commitment, (vi) shall not, after giving effect thereto and to the application of the proceeds thereof, exceed in the aggregate at any time outstanding the principal amount that, when added to the aggregate principal amount (calculated by using the Dollar Equivalent at such time of the principal amount of any Foreign Currency Revolving Credit Loans) of all Revolving Credit Loans then outstanding and all Letter of Credit Outstanding at such time, equals the Total Revolving Credit Commitment then in effect and (vii) may be repaid and reborrowed in accordance with the provisions hereof. On the Swingline Maturity Date, each outstanding Swingline Loan shall be repaid in full. Chase shall not make any Swingline Loan after receiving a written notice from the Borrower or any Lender stating that a Default or Event 41 of Default exists and is continuing until such time as Chase shall have received written notice of (i) rescission of all such notices from the party or parties originally delivering such notice or (ii) the waiver of such Default or Event of Default in accordance with the provisions of Section 13.1. (f) On any Business Day, Chase may, in its sole discretion, give notice to the Lenders that all then-outstanding Swingline Loans shall be funded with a Borrowing of Revolving Credit Loans, in which case (i) in the case of then-outstanding Dollar Swingline Loans, a Borrowing of Dollar Revolving Credit Loans constituting ABR Loans and (ii) in the case of then-outstanding Sterling Swingline Loans, a Borrowing of Sterling Revolving Credit Loans (each such Borrowing, a "MANDATORY BORROWING") shall be made (x) in the case of Dollar Swingline Loans, on the immediately succeeding Business Day and (y) in the case of Sterling Swingline Loans, on the third succeeding Business Day, by all Lenders PRO RATA based on each Lender's Revolving Credit Commitment Percentage (determined as of the date of the notice referred to above), and the proceeds thereof shall be applied directly to Chase to repay Chase for such outstanding Swingline Loans. Each Lender hereby irrevocably agrees to make such Dollar Revolving Credit Loans upon one Business Day's notice and such Sterling Revolving Credit Loans upon three Business Days' notice pursuant to each Mandatory Borrowing in the amount and in the manner specified in the preceding sentence and on the date specified to it in writing by Chase notwithstanding (i) that the amount of the Mandatory Borrowing may not comply with the minimum amount for each Borrowing specified in Section 2.2, (ii) whether any conditions specified in Section 7 are then satisfied, (iii) whether a Default or an Event of Default has occurred and is continuing, (iv) the date of such Mandatory Borrowing or (v) any reduction in the Total Commitment after any such Swingline Loans were made. In the event that, in the sole judgment of Chase, any Mandatory Borrowing cannot for any reason be made on the date otherwise required above (including, without limitation, as a result of the commencement of a proceeding under the Bankruptcy Code in respect of the Borrower), each Lender hereby agrees that it shall forthwith purchase from Chase (without recourse or warranty) such participation of the outstanding Swingline Loans as shall be necessary to cause the Lenders to share in such Swingline Loans ratably based upon their respective Revolving Credit Commitment Percentages on such date, PROVIDED that all principal and interest payable on such Swingline Loans shall be for the account of Chase until the date the respective participation is purchased and, to the extent attributable to the purchased participation, shall be payable to the Lender purchasing same from and after such date of purchase. 2.2 MINIMUM AMOUNT OF EACH BORROWING; MAXIMUM NUMBER OF BORROWINGS. The aggregate principal amount of each Borrowing of Term Loans, Revolving Credit Loans or Swingline Loans shall be in a multiple of $100,000 (or the Sterling Equivalent, Euro Equivalent or Yen Equivalent, as applicable, thereof) and shall not be less than the Minimum Borrowing Amount with respect thereto (except that Mandatory Borrowings shall be made in the amounts required by Section 2.1(f)). More than one Borrowing may be incurred on any date, PROVIDED that at no time shall there be outstanding more than 20 Borrowings of Eurodollar Loans under this Agreement. Without prejudice and in addition to any method of conversion or rounding prescribed by any EMU Legislation, without prejudice to the obligations of the Borrower to the Lenders under or pursuant to this Agreement and without increasing the Commitments of any Lender, all references in this Agreement to a minimum amount (or an integral multiple thereof) in a national currency denomination of a Subsequent Participant to be paid to or by the Administrative Agent shall, immediately upon such Subsequent Participant becoming a Participating Member State, be replaced by a reference to such reasonably comparable and convenient amount (or an integral multiple thereof) in the euro unit as the Administrative Agent may specify. 2.3 NOTICE OF BORROWING. (a) The Borrower shall give the Administrative Agent at the locations set forth in Section 13.2 (i) prior to 12:00 Noon (London time) at least three 42 Business Days' prior written notice (or telephonic notice promptly confirmed in writing) of the Borrowing of Term Loans if all or any of such Term Loans are to be initially Eurodollar Loans and (ii) prior written notice (or telephonic notice promptly confirmed in writing) prior to 10:00 A.M. (London time) on the date of the Borrowing of Term Loans if all such Term Loans are to be ABR Loans. Such notice (together with each notice of a Borrowing of Revolving Credit Loans pursuant to Section 2.3(b) and each notice of a Borrowing of Swingline Loans pursuant to Section 2.3(c), a "NOTICE OF BORROWING") shall be irrevocable and shall specify (i) the aggregate principal amount of the Term Loans to be made on the Term Loan Funding Date, (ii) the Term Loan Funding Date (which shall be a Business Day) and (iii) whether the Term Loans shall consist of ABR Loans and/or Eurodollar Term Loans and, if the Term Loans are to include Eurodollar Term Loans, the Interest Period to be initially applicable thereto. The Administrative Agent shall promptly give each Lender written notice (or telephonic notice promptly confirmed in writing) of any Borrowing of Term Loans, of such Lender's proportionate share thereof and of the other matters covered by the related Notice of Borrowing. (b) Whenever the Borrower desires to incur Revolving Credit Loans hereunder (other than Mandatory Borrowings or borrowings to repay Unpaid Drawings), it shall give the Administrative Agent at the locations set forth in Section 13.2, (i) prior to (A) 12:00 Noon (London time) in the case of Dollar Revolving Credit Loans, (B) 11:00 A.M. (London time) in the case of Sterling Revolving Credit Loans and Euro Revolving Credit Loans or (C) 11:00 A.M. (Tokyo time) in the case of Yen Revolving Credit Loans, at least three Business Days' prior written notice (or telephonic notice promptly confirmed in writing) of each Borrowing of Eurodollar Revolving Credit Loans and (ii) prior to 12:00 Noon (London time) at least one Business Day's prior written notice (or telephonic notice promptly confirmed in writing) of each Borrowing of ABR Loans. Each such Notice of Borrowing, except as otherwise expressly provided in Section 2.10, shall be irrevocable and shall specify (i) whether such Borrowing is to be a Dollar Borrowing, a Yen Borrowing, a Euro Borrowing or a Sterling Borrowing, (ii) the aggregate principal amount of the Revolving Credit Loans to be made pursuant to such Borrowing (which, in the case of a Foreign Currency Borrowing, shall be stated in Dollars), (iii) the date of Borrowing (which shall be a Business Day), (iv) if such Borrowing is to be denominated in Dollars, whether the respective Borrowing shall consist of ABR Loans or Eurodollar Revolving Credit Loans, (v) if such Borrowing shall consist of Eurodollar Revolving Credit Loans, the Interest Period to be initially applicable thereto and (vi) the number and location of the account to which funds are to be disbursed. The Administrative Agent shall promptly give each Lender written notice (or telephonic notice promptly confirmed in writing) of each proposed Borrowing of Revolving Credit Loans, of such Lender's proportionate share thereof and of the other matters covered by the related Notice of Borrowing. (c) Whenever the Borrower desires to incur Swingline Loans hereunder, it shall give the Administrative Agent at the locations set forth in Section 13.2 written notice (or telephonic notice promptly confirmed in writing) of each Borrowing of Swingline Loans no later than 9:00 A.M. (London time) on the date of such Borrowing. Each such notice shall be irrevocable and shall specify (i) the aggregate principal amount and currency of the Swingline Loans to be made pursuant to such Borrowing and (ii) the date of Borrowing (which shall be a Business Day). The Administrative Agent shall promptly give Chase written notice (or telephonic notice promptly confirmed in writing) of each proposed Borrowing of Swingline Loans and of the other matters covered by the related Notice of Borrowing. (d) Mandatory Borrowings shall be made upon the notice specified in Section 2.1(f), with the Borrower irrevocably agreeing, by its incurrence of any Swingline Loan, to the making of Mandatory Borrowings as set forth in such Section. (e) Borrowings to reimburse Unpaid Drawings shall be made upon the notice specified in Section 3.4(c). 43 (f) Without in any way limiting the obligation of the Borrower to confirm in writing any notice it may give hereunder by telephone, the Administrative Agent may act prior to receipt of written confirmation without liability upon the basis of such telephonic notice believed by the Administrative Agent in good faith to be from an Authorized Officer of the Borrower. In each such case the Borrower hereby waives the right to dispute the Administrative Agent's record of the terms of any such telephonic notice. 2.4 DISBURSEMENT OF FUNDS. (a) No later than (i) 12:00 Noon (New York time) in the case of Dollar Borrowings, (ii) 12:00 Noon (London time) in the case of Euro Borrowings and Sterling Borrowings or (iii) 12:00 Noon (Tokyo time) in the case of Yen Borrowings, on the date specified in each Notice of Borrowing (including Mandatory Borrowings), each Lender will make available its PRO RATA portion, if any, of each Borrowing requested to be made on such date in the manner provided below, PROVIDED that all (i) Dollar Swingline Loans shall be made available in the full amount thereof by Chase no later than 3:00 P.M. (London time) on the date requested and (ii) Sterling Swingline Loans shall be made available in the full amount thereof by Chase no later than 2:00 P.M. (London time). (b) Each Lender shall make available all amounts it is to fund under any Borrowing in Dollars, Euro, Yen or Sterling (as specified in the applicable Notice of Borrowing) and immediately available funds to the Administrative Agent at the Administrative Agent's Office and the Administrative Agent will (except in the case of Mandatory Borrowings and Borrowings to repay Unpaid Drawings) make available to the Borrower by depositing to the Borrower's account at (i) the Administrative Agent's Office or (ii) the Sub-Agent's Office, as specified by the Borrower, the aggregate of the amounts so made available in Dollars, Euro, Yen or Sterling and the type of funds received. Unless the Administrative Agent shall have been notified by any Lender prior to the date of any such Borrowing that such Lender does not intend to make available to the Administrative Agent its portion of the Borrowing or Borrowings to be made on such date, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent on such date of Borrowing, and the Administrative Agent, in reliance upon such assumption, may (in its sole discretion and without any obligation to do so) make available to the Borrower a corresponding amount. If such corresponding amount is not in fact made available to the Administrative Agent by such Lender and the Administrative Agent has made available same to the Borrower, the Administrative Agent shall be entitled to recover such corresponding amount from such Lender. If such Lender does not pay such corresponding amount forthwith upon the Administrative Agent's demand therefor, the Administrative Agent shall promptly notify the Borrower, and the Borrower shall immediately pay such corresponding amount to the Administrative Agent. The Administrative Agent shall also be entitled to recover from such Lender or the Borrower, as the case may be, interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Administrative Agent to the Borrower to the date such corresponding amount is recovered by the Administrative Agent, at a rate per annum equal to (i) if paid by such Lender, the Federal Funds Effective Rate (or, in the case of a Euro Borrowing or Yen Borrowing, the rate reasonably determined by the Administrative Agent to be the cost to it of funding such amount) or (ii) if paid by the Borrower, the then-applicable rate of interest, calculated in accordance with Section 2.8, for the respective Loans. (c) Nothing in this Section 2.4 shall be deemed to relieve any Lender from its obligation to fulfill its commitments hereunder or to prejudice any rights that the Borrower may have against any Lender as a result of any default by such Lender hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to fulfill its commitments hereunder). 44 2.5 REPAYMENT OF LOANS; EVIDENCE OF DEBT. (a) The Borrower shall repay to the Administrative Agent, for the benefit of the Lenders, (i) on the Tranche A Maturity Date, the then-unpaid Tranche A Term Loans and Revolving Credit Loans, (ii) on the Tranche B Maturity Date, the then-unpaid Tranche B Term Loans, (iii) on the Tranche C Maturity Date, the then-unpaid Tranche C Term Loans, and (iv) on the Tranche D Maturity Date, the then-unpaid Tranche D Term Loans. The Borrower shall repay to the Administrative Agent, for the account of Chase, on the Swingline Maturity Date, the then-unpaid Swingline Loans. (b) The Borrower shall repay to the Administrative Agent, for the benefit of the Lenders of Tranche A Term Loans, on each date set forth below (each a "TRANCHE A REPAYMENT DATE"), the principal amount of the Tranche A Term Loans set forth below opposite such Repayment Date (each a "TRANCHE A REPAYMENT AMOUNT"):
Number of Months From Term Loan Funding Date Repayment Amount - ------------------------------- ---------------- 6 $ 0 12 0 18 0 24 0 30 2,500,000 36 2,500,000 42 3,500,000 48 3,500,000 54 5,000,000 60 5,000,000 66 6,000,000 72 6,000,000 78 8,000,000 84 83,000,000
(c) The Borrower shall repay to the Administrative Agent, for the benefit of the Lenders of Tranche B Term Loans, on each date set forth below (each a "TRANCHE B REPAYMENT DATE"), the principal amount of the Tranche B Term Loans set forth below opposite such Repayment Date (each a "TRANCHE B REPAYMENT AMOUNT"):
Number of Months From Term Loan Funding Date Repayment Amount ---------------------- ---------------- 6 $ 0 12 1,250,000 18 625,000 24 625,000 30 625,000 36 625,000 42 625,000 48 625,000 54 625,000 60 625,000 66 625,000 72 625,000 78 625,000 84 625,000 90 625,000
45 96 115,625,000
(d) The Borrower shall repay to the Administrative Agent, for the benefit of the Lenders of Tranche C Term Loans, on each date set forth below (each a "TRANCHE C REPAYMENT DATE"), the principal amount of the Tranche C Term Loans set forth below opposite such Repayment Date (each a "TRANCHE C REPAYMENT AMOUNT"):
Number of Months From Term Loan Funding Date Repayment Amount ---------------------- ---------------- 6 $ 0 12 1,000,000 18 500,000 24 500,000 30 500,000 36 500,000 42 500,000 48 500,000 54 500,000 60 500,000 66 500,000 72 500,000 78 500,000 84 500,000 90 500,000 96 500,000 102 500,000 108 91,500,000
(e) The Borrower shall repay to the Administrative Agent, for the benefit of the Lenders of Tranche D Term Loans, on each date set forth below (each a "TRANCHE D REPAYMENT 46 DATE"), the principal amount of the Tranche D Term Loans set forth below opposite such Repayment Date (each a "TRANCHE D REPAYMENT AMOUNT"):
Number of Months From Term Loan Funding Date Repayment Amount ---------------------- ---------------- 6 $ 0 12 1,000,000 18 500,000 24 500,000 30 500,000 36 500,000 42 500,000 48 500,000 54 500,000 60 500,000 66 500,000 72 500,000 78 500,000 84 500,000 90 500,000 96 500,000 102 500,000 108 500,000 114 91,000,000
(f) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to the appropriate lending office of such Lender resulting from each Loan made by such lending office of such Lender from time to time, including the amounts and currency of principal and interest payable and paid to such lending office of such Lender from time to time under this Agreement. (g) The Administrative Agent shall maintain the Register pursuant to Section 13.6, and a subaccount for each Lender, in which Register and subaccounts (taken together) shall be recorded (i) the amount and currency of each Loan made hereunder, whether such Loan is a Term Loan, a Revolving Credit Loan or a Swingline Loan, the Type of each Loan made and the Interest Period applicable thereto, (ii) the amount and currency of any principal or interest due and payable or to become due and payable from the Borrower to each Lender or Chase hereunder and (iii) the amount and currency of any sum received by the Administrative Agent hereunder from the Borrower and each Lender's share thereof. (h) The entries made in the Register and accounts and subaccounts maintained pursuant to paragraphs (f) and (g) of this Section 2.5 shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded; PROVIDED, HOWEVER, that the failure of any Lender or the Administrative Agent to maintain such account, such Register or such subaccount, as applicable, or any error therein, shall not in any manner affect the obligation of the Borrower to repay (with applicable interest) the Loans made to the Borrower by such Lender in accordance with the terms of this Agreement. 2.6 CONVERSIONS AND CONTINUATIONS. (a) The Borrower shall have the option on any Business Day to convert all or a portion equal to at least the Minimum Borrowing Amount of the out standing principal amount of Term Loans or Dollar Revolving Credit Loans of one Type into a Borrowing or Borrowings of another Type or to continue the outstanding principal amount of any Eurodollar Term Loans or Eurodollar Revolving Credit Loans as Eurodollar Term Loans 47 or Eurodollar Revolving Credit Loans, as the case may be, for an additional Interest Period, PROVIDED that (i) no partial conversion of Eurodollar Term Loans or Eurodollar Revolving Credit Loans shall reduce the outstanding principal amount of Eurodollar Term Loans or Eurodollar Revolving Credit Loans made pursuant to a single Borrowing to less than the Minimum Borrowing Amount, (ii) ABR Loans may not be converted into Eurodollar Term Loans or Eurodollar Revolving Credit Loans if a Default or Event of Default is in existence on the date of the conversion and the Administrative Agent has or the Required Lenders have determined in its or their sole discretion not to permit such conversion, (iii) Eurodollar Loans (other than Foreign Currency Revolving Credit Loans) may not be continued as Eurodollar Term Loans or Eurodollar Revolving Credit Loans for an additional Interest Period if a Default or Event of Default is in existence on the date of the proposed continuation and the Administrative Agent has or the Required Lenders have determined in its or their sole discretion not to permit such continuation, (iv) no Interest Period in excess of one month may be selected for any Foreign Currency Borrowing if a Default or Event of Default is in existence on the date of the proposed continuation and the Administrative Agent has or the Required Lenders have determined in its or their sole discretion not to permit such longer interest period and (v) Borrowings resulting from conversions pursuant to this Section 2.6 shall be limited in number as provided in Section 2.2. Notwithstanding clause (i) above, if the Dollar Equivalent of any Foreign Currency Revolving Credit Loan at the end of the Interest Period applicable thereto does not exceed by more than 5%, and is not less than 95% of, the Dollar Equivalent of such Foreign Currency Revolving Credit Loan on the relevant Denomination Date, then the Borrower may refinance such Foreign Currency Revolving Credit Loan with a new Foreign Currency Revolving Credit Loan with the same principal amount and in the same currency at the end of such Interest Period, notwithstanding that the Dollar Equivalent of the new Foreign Currency Revolving Credit Loan is not an integral multiple of $100,000. For purposes of this Section, any Foreign Currency Borrowing shall be deemed to be in an amount equal to the Dollar Equivalent of such Foreign Currency Borrowing determined as of its Denomination Date. Each such conversion or continuation shall be effected by the Borrower by giving the Administrative Agent at the locations set forth in Section 13.2 prior to (a) 12:00 Noon (London time) in the case of Term Loans and Dollar Revolving Credit Loans, (b) 11:00 A.M. (London time) in the case of Sterling Revolving Credit Loans and Euro Revolving Credit Loans and (c) 11:00 A.M. (Tokyo time) in the case of Yen Revolving Credit Loans, at least three Business Days' (or one Business Day's notice in the case of a conversion into ABR Loans) prior written notice (or telephonic notice promptly confirmed in writing) (each a "NOTICE OF CONVERSION OR CONTINUATION") specifying the Term Loans or Revolving Credit Loans to be so converted or continued, the Type of Term Loans or Revolving Credit Loans to be converted or continued into and, if such Term Loans or Revolving Credit Loans are to be converted into or continued as Eurodollar Term Loans or Eurodollar Revolving Credit Loans, the Interest Period to be initially applicable thereto. The Administrative Agent shall give each Lender notice as promptly as practicable of any such proposed conversion or continuation affecting any of its Term Loans or Revolving Credit Loans. This Section shall not be construed to permit the Borrower to (i) change the currency of any Borrowing or (ii) convert a Foreign Currency Borrowing to an ABR Borrowing. (b) If any Default or Event of Default is in existence at the time of any proposed continuation of any Eurodollar Term Loans or Eurodollar Revolving Credit Loans and the Administrative Agent has or the Required Lenders have determined in its or their sole discretion not to permit such continuation, such Eurodollar Term Loans or Eurodollar Revolving Credit Loans (other than Foreign Currency Revolving Credit Loans) shall be automatically converted on the last day of the current Interest Period into ABR Loans. If upon the expiration of any Interest Period in respect of Eurodollar Term Loans or Eurodollar Revolving Credit Loans, the Borrower has failed to elect a new Interest Period to be applicable thereto as provided in paragraph (a) above, the Borrower shall be deemed to have elected to convert such Borrowing (other than any Foreign Currency Borrowing) of Eurodollar Term Loans or Eurodollar Revolving Credit Loans, as the case may be, into a Borrowing of ABR Loans effective as of the expiration date of such 48 current Interest Period, or in the case of any Foreign Currency Borrowing, to have elected a new Interest Period of one month. 2.7 PRO RATA BORROWINGS. Each Borrowing of Term Loans under this Agreement shall be granted by the Lenders PRO RATA on the basis of their then-applicable Term Loan Commitments. Each Borrowing of Dollar Revolving Credit Loans and Sterling Revolving Credit Loans under this Agreement shall be granted by the Lenders PRO RATA on the basis of their then-applicable Available Revolving Credit Commitments. Each Borrowing of Euro Revolving Credit Loans under this Agreement shall be granted by the Euro Lenders PRO RATA on the basis of their then-applicable Euro Revolving Credit Commitments. Each Borrowing of Yen Revolving Credit Loans under this Agreement shall be granted by the Yen Lenders PRO RATA on the basis of their then-applicable Yen Revolving Credit Commitments. It is understood that no Lender shall be responsible for any default by any other Lender in its obligation to make Loans hereunder and that each Lender shall be obligated to make the Loans provided to be made by it hereunder, regardless of the failure of any other Lender to fulfill its commitments hereunder. 2.8 INTEREST. (a) The unpaid principal amount of each ABR Loan shall bear interest from the date of the Borrowing thereof until maturity (whether by acceleration or otherwise) at a rate per annum that shall at all times be the Applicable ABR Margin plus the ABR in effect from time to time. (b) The unpaid principal amount of each Eurodollar Term Loan or Eurodollar Revolving Credit Loan shall bear interest from the date of the Borrowing thereof until maturity thereof (whether by acceleration or otherwise) at a rate per annum that shall at all times be the Applicable Eurodollar Margin in effect from time to time plus the relevant Eurodollar Rate. (c) If all or a portion of (i) the principal amount of any Loan or (ii) any interest payable thereon shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum that is (x) in the case of overdue principal, the rate that would otherwise be applicable thereto PLUS 2% or (y) in the case of any overdue interest, to the extent permitted by applicable law, the rate described in Section 2.8(a) PLUS 2% from and including the date of such non-payment to but excluding the date on which such amount is paid in full (after as well as before judgment). (d) Interest on each Loan shall accrue from and including the date of any Borrowing to but excluding the date of any repayment thereof and shall be payable (i) in respect of each ABR Loan, quarterly in arrears on the last day of each March, June, September and December, (ii) in respect of each Eurodollar Term Loan or Eurodollar Revolving Credit Loan, on the last day of each Interest Period applicable thereto and, in the case of an Interest Period in excess of three months, on each date occurring at three-month intervals after the first day of such Interest Period, (iii) in respect of each Loan (except, in the case of prepayments, any ABR Loan), on any prepayment (on the amount prepaid), at maturity (whether by acceleration or otherwise) and, after such maturity, on demand. (e) All computations of interest hereunder shall be made in accordance with Section 5.5. (f) The Administrative Agent, upon determining the interest rate for any Borrowing of Eurodollar Loans, shall promptly notify the Borrower and the relevant Lenders thereof. Each such determination shall, absent clearly demonstrable error, be final and conclusive and binding on all parties hereto. 2.9 INTEREST PERIODS. At the time the Borrower gives a Notice of Borrowing or Notice of Conversion or Continuation in respect of the making of, or conversion into or 49 continuation as, a Borrowing of Eurodollar Term Loans or Eurodollar Revolving Credit Loans (in the case of the initial Interest Period applicable thereto) or prior to (a) 10:00 A.M. (London time) in the case of Term Loans and Dollar Revolving Credit Loans, (b) 11:00 A.M. (London time) in the case of Sterling Revolving Credit Loans and Euro Revolving Credit Loans and (c) 11:00 A.M. (Tokyo time) in the case of Yen Revolving Credit Loans, on the third Business Day prior to the expiration of an Interest Period applicable to a Borrowing of Eurodollar Term Loans or Eurodollar Revolving Credit Loans, the Borrower shall have the right to elect by giving the Administrative Agent written notice (or telephonic notice promptly confirmed in writing) the Interest Period applicable to such Borrowing, which Interest Period shall, at the option of the Borrower, be a one, two, three, six or (in the case of Revolving Credit Loans, if available to all the Lenders making such loans as determined by such Lenders in good faith based on prevailing market conditions) a nine or twelve month period, PROVIDED that the initial Interest Period may be for a period less than one month if agreed upon by the Borrower and the Administrative Agent. Notwithstanding anything to the contrary contained above: (a) the initial Interest Period for any Borrowing of Eurodollar Term Loans or Eurodollar Revolving Credit Loans shall commence on the date of such Borrowing (including the date of any conversion from a Borrowing of ABR Loans) and each Interest Period occurring thereafter in respect of such Borrowing shall commence on the day on which the next preceding Interest Period expires; (b) if any Interest Period relating to a Borrowing of Eurodollar Term Loans or Eurodollar Revolving Credit Loans begins on the last Business Day of a calendar month or begins on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period, such Interest Period shall end on the last Business Day of the calendar month at the end of such Interest Period; (c) if any Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day, PROVIDED that if any Interest Period in respect of a Eurodollar Term Loan or Eurodollar Revolving Credit Loan would otherwise expire on a day that is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the next preceding Business Day; and (d) the Borrower shall not be entitled to elect any Interest Period in respect of any Eurodollar Term Loan or Eurodollar Revolving Credit Loan if such Interest Period would extend beyond the applicable Maturity Date of such Loan. 2.10 INCREASED COSTS, ILLEGALITY, ETC. (a) In the event that (x) in the case of clause (i) below, the Administrative Agent or (y) in the case of clauses (ii) and (iii) below, any Lender shall have reasonably determined (which determination shall, absent clearly demonstrable error, be final and conclusive and binding upon all parties hereto): (i) on any date for determining the Eurodollar Rate for a Eurodollar Borrowing for any Interest Period that (x) deposits in the principal amounts of the Loans comprising such Eurodollar Borrowing and in the currency in which such Loan is to be denominated are not generally available in the relevant market or (y) by reason of any changes arising on or after the date hereof affecting the interbank eurodollar market, adequate and fair means do not exist for ascertaining the applicable interest rate on the basis provided for in the definition of Eurodollar Rate; or (ii) at any time, that such Lender shall incur increased costs or reductions in the amounts received or receivable hereunder with respect to any Eurodollar Loans (other than any such increase or reduction attributable to taxes) because of (x) any change since 50 the date hereof in any applicable law, governmental rule, regulation, guideline or order (or in the interpretation or administration thereof and including the introduction of any new law or governmental rule, regulation, guideline or order), such as, for example, but not limited to, a change in official reserve requirements, and/or (y) other circumstances affecting the interbank eurodollar market or the position of such Lender in such market; or (iii) at any time, that the making or continuance of any Eurodollar Loan has become unlawful by compliance by such Lender in good faith with any law, governmental rule, regulation, guideline or order (or would conflict with any such governmental rule, regulation, guideline or order not having the force of law even though the failure to comply therewith would not be unlawful), or has become impracticable as a result of a contingency occurring after the date hereof that materially and adversely affects the interbank eurodollar market; then, and in any such event, such Lender (or the Administrative Agent, in the case of clause (i) above) shall within a reasonable time thereafter give notice (if by telephone confirmed in writing) to the Borrower and to the Administrative Agent of such determination (which notice the Administrative Agent shall promptly transmit to each of the other Lenders). Thereafter (x) in the case of clause (i) above, Eurodollar Term Loans and Eurodollar Revolving Credit Loans shall no longer be available until such time as the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice by the Administrative Agent no longer exist (which notice the Administrative Agent agrees to give at such time when such circumstances no longer exist), and any Notice of Borrowing or Notice of Conversion given by the Borrower with respect to Eurodollar Term Loans or Eurodollar Revolving Credit Loans that have not yet been incurred shall be deemed rescinded by the Borrower, (y) in the case of clause (ii) above, the Borrower shall pay to such Lender, promptly after receipt of written demand therefor, such additional amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender in its reasonable discretion shall determine) as shall be required to compensate such Lender for such increased costs or reductions in amounts receivable hereunder (it being agreed that a written notice as to the additional amounts owed to such Lender, showing in reasonable detail the basis for the calculation thereof, submitted to the Borrower by such Lender shall, absent clearly demonstrable error, be final and conclusive and binding upon all parties hereto) and (z) in the case of clause (iii) above, the Borrower shall take one of the actions specified in Section 2.10(b) as promptly as possible and, in any event, within the time period required by law. (b) At any time that any Eurodollar Loan is affected by the circumstances described in Section 2.10(a)(ii) or (iii), the Borrower may (and in the case of a Eurodollar Loan affected pursuant to Section 2.10(a)(iii) shall) either (i) if the affected Eurodollar Loan is then being made pursuant to a Borrowing, cancel said Borrowing by giving the Administrative Agent telephonic notice (confirmed promptly in writing) thereof on the same date that the Borrower was notified by a Lender pursuant to Section 2.10(a)(ii) or (iii) or (ii) if the affected Eurodollar Loan is then outstanding, upon at least three Business Days' notice to the Administrative Agent, require the affected Lender to convert each such Eurodollar Revolving Credit Loan and Eurodollar Term Loan into an ABR Loan (such conversion to be made, in the case of a Foreign Currency Revolving Credit Loan, into Dollars at the applicable Exchange Rate), PROVIDED that if more than one Lender is affected at any time, then all affected Lenders must be treated in the same manner pursuant to this Section 2.10(b). (c) If, after the date hereof, the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, the National Association of Insurance Commissioners, central bank or comparable agency charged with the interpretation or 51 administration thereof, or compliance by a Lender or its parent with any request or directive made or adopted after the date hereof regarding capital adequacy (whether or not having the force of law) of any such authority, association, central bank or comparable agency, has or would have the effect of reducing the rate of return on such Lender's or its parent's capital or assets as a consequence of such Lender's commitments or obligations hereunder to a level below that which such Lender or its parent could have achieved but for such adoption, effectiveness, change or compliance (taking into consideration such Lender's or its parent's policies with respect to capital adequacy), then from time to time, promptly after demand by such Lender (with a copy to the Administrative Agent), the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or its parent for such reduction, it being understood and agreed, however, that a Lender shall not be entitled to such compensation as a result of such Lender's compliance with, or pursuant to any request or directive to comply with, any such law, rule or regulation as in effect on the date hereof. Each Lender, upon determining in good faith that any additional amounts will be payable pursuant to this Section 2.10(c), will give prompt written notice thereof to the Borrower, which notice shall set forth in reasonable detail the basis of the calculation of such additional amounts, although the failure to give any such notice shall not, subject to Section 2.13, release or diminish any of the Borrower's obligations to pay additional amounts pursuant to this Section 2.10(c) upon receipt of such notice. (d) Notwithstanding the foregoing, in the case of Sterling Loans, Euro Revolving Credit Loans and Yen Revolving Credit Loans affected by the circumstances described in Section 2.10(a)(i), as promptly as practicable but in no event later than three Business Days after the giving of the required notice by the Administrative Agent with respect to such circumstances, the Administrative Agent (in consultation with the Lenders) shall negotiate with the Borrower in good faith in order to ascertain whether a substitute interest rate (a "Substitute Rate") may be agreed upon for the maintaining of existing Sterling Loans, Euro Revolving Credit Loans or Yen Revolving Credit Loans, as applicable. If a Substitute Rate is agreed upon by the Borrower and all the Lenders, such Substitute Rate shall apply. If a Substitute Rate is not so agreed upon by the Borrower and all the Lenders within such time, each Lender's Sterling Loans, Euro Revolving Credit Loans or Yen Revolving Credit Loans, as applicable, shall thereafter bear interest at a rate equal to the sum of (i) the rate certified by such Lender to be its costs of funds (from such sources as it may reasonably select out of those sources then available to it) for such Sterling Loans, Euro Revolving Credit Loans or Yen Revolving Credit Loans, as applicable, PLUS (ii) the Applicable Eurodollar Margin PLUS (iii), in the case of Sterling Loans only, any Additional Cost incurred by such Lender in respect of such Sterling Loans from time to time. 2.11 COMPENSATION. If (a) any payment of principal of any Eurodollar Term Loan or Eurodollar Revolving Credit Loan is made by the Borrower to or for the account of a Lender other than on the last day of the Interest Period for such Eurodollar Loan as a result of a payment or conversion pursuant to Section 2.5, 2.6, 2.10, 5.1, 5.2 or 13.7, as a result of acceleration of the maturity of the Loans pursuant to Section 11 or for any other reason, (b) any Borrowing of Eurodollar Term Loans or Eurodollar Revolving Credit Loans is not made as a result of a withdrawn Notice of Borrowing, (c) any ABR Loan is not converted into a Eurodollar Term Loan or Eurodollar Revolving Credit Loan as a result of a withdrawn Notice of Conversion or Continuation, (d) any Eurodollar Loan is not continued as a Eurodollar Term Loan or Eurodollar Revolving Credit Loan as a result of a withdrawn Notice of Conversion or Continuation or (e) any prepayment of principal of any Eurodollar Term Loan or Eurodollar Revolving Credit Loan is not made as a result of a withdrawn notice of prepayment pursuant to Section 5.1 or 5.2, the Borrower shall, after receipt of a written request by such Lender (which request shall set forth in reasonable detail the basis for requesting such amount), pay to the Administrative Agent for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses that such Lender may reasonably incur as a result of such payment, failure to convert, failure to continue or failure to prepay, including, without limitation, any loss sustained in converting between any Foreign Currency and Dollars and any loss, cost or expense 52 (excluding loss of anticipated profits) actually incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Eurodollar Loan. 2.12 CHANGE OF LENDING OFFICE. Each Lender agrees that, upon the occurrence of any event giving rise to the operation of Section 2.10(a)(ii), 2.10(a)(iii), 2.10(b), 3.5 or 5.4 with respect to such Lender, it will, if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans affected by such event, PROVIDED that such designation is made on such terms that such Lender and its lending office suffer no economic, legal or regulatory disadvantage, with the object of avoiding the consequence of the event giving rise to the operation of any such Section. Nothing in this Section 2.12 shall affect or postpone any of the obligations of the Borrower or the right of any Lender provided in Section 2.10, 3.5 or 5.4. 2.13 NOTICE OF CERTAIN COSTS. Notwithstanding anything in this Agreement to the contrary, to the extent any notice required by Section 2.10, 2.11, 3.5 or 5.4 is given by any Lender more than 180 days after such Lender has knowledge (or should have had knowledge) of the occurrence of the event giving rise to the additional cost, reduction in amounts, loss, tax or other additional amounts described in such Sections, such Lender shall not be entitled to compensation under Section 2.10, 2.11, 3.5 or 5.4, as the case may be, for any such amounts incurred or accruing prior to the giving of such notice to the Borrower. 2.14. REDESIGNATION OF $75,000,000 OF TRANCHE B TERM LOANS AND TRANCHE C TERM LOANS. (a) On the Restatement Date, $25,000,000 of the Tranche B Term Loans and $50,000,000 of the Tranche C Term Loans, in each case outstanding immediately prior to the Restatement Date, shall be redesignated as Tranche A Term Loans such that, after giving effect to such redesignation of Tranche B Term Loans and Tranche C Term Loans, the outstanding Tranche A Term Loans, Tranche B Term Loans and Tranche C Term Loans for each Lender shall be as described on Schedule 1.1. (b) No Lender shall have an obligation to make any additional Term Loans, other than Term Loans made pursuant to continuations or conversions of Term Loans outstanding on the Restatement Date. SECTION 3. LETTERS OF CREDIT. 3.1 LETTERS OF CREDIT. (a) Subject to and upon the terms and conditions herein set forth, the Borrower, at any time and from time to time on or after the Closing Date and prior to the L/C Maturity Date, may request that the Letter of Credit Issuer issue, for the account of the Borrower, a standby letter of credit or letters of credit in such form as may be approved by the Letter of Credit Issuer in its reasonable discretion. Each Letter of Credit shall provide for drawings thereunder to be made in Dollars or, subject to Section 3.7, Sterling. (b) Notwithstanding the foregoing, (i) no Letter of Credit shall be issued the Stated Amount of which, when added to the Letter of Credit Outstanding at such time, would exceed the Letter of Credit Commitment then in effect; (ii) no Letter of Credit shall be issued the Stated Amount of which, when added to the sum of (x) the Letter of Credit Outstanding at such time and (y) the aggregate principal of all Revolving Credit Loans and Swingline Loans then outstanding, would exceed the Total Revolving Credit Commitment then in effect; (iii) each Letter of Credit shall have an expiry date occurring no later than one year after the date of issuance thereof, unless otherwise agreed upon by the Administrative Agent and the Letter of Credit Issuer, PROVIDED that in no event shall such expiry date occur later than the L/C Maturity Date; (iv) each Letter of Credit shall be denominated in Dollars; and (v) no Letter of Credit shall 53 be issued by the Letter of Credit Issuer after it has received a written notice from the Borrower or any Lender stating that a Default or Event of Default has occurred and is continuing until such time as the Letter of Credit Issuer shall have received a written notice of (x) rescission of such notice from the party or parties originally delivering such notice or (y) the waiver of such Default or Event of Default in accordance with the provisions of Section 13.1. (c) Upon at least one Business Day's prior written notice (or telephonic notice promptly confirmed in writing) to the Administrative Agent and the Letter of Credit Issuer (which notice the Administrative Agent shall promptly transmit to each of the Lenders), the Borrower shall have the right, on any day, permanently to terminate or reduce the Letter of Credit Commitment in whole or in part, PROVIDED that, after giving effect to such termination or reduction, the Letter of Credit Outstanding shall not exceed the Letter of Credit Commitment. 3.2 LETTER OF CREDIT REQUESTS. (a) Whenever the Borrower desires that a Letter of Credit be issued for its account, it shall give the Administrative Agent and the Letter of Credit Issuer at least five (or such lesser number as may be agreed upon by the Administrative Agent and the Letter of Credit Issuer) Business Days' written notice thereof. Each notice shall be executed by the Borrower and shall be in the form of Exhibit D (each a "LETTER OF CREDIT REQUEST"). The Administrative Agent shall promptly transmit copies of each Letter of Credit Request to each Lender. (b) The making of each Letter of Credit Request shall be deemed to be a representation and warranty by the Borrower that the Letter of Credit may be issued in accordance with, and will not violate the requirements of, Section 3.1(b). 3.3 LETTER OF CREDIT PARTICIPATIONS. (a) Immediately upon the issuance by the Letter of Credit Issuer of any Letter of Credit, the Letter of Credit Issuer shall be deemed to have sold and transferred to each other Lender that has a Revolving Credit Commitment (each such other Lender, in its capacity under this Section 3.3, an "L/C PARTICIPANT"), and each such L/C Participant shall be deemed irrevocably and unconditionally to have purchased and received from the Letter of Credit Issuer, without recourse or warranty, an undivided interest and participation (each an "L/C PARTICIPATION"), to the extent of such L/C Participant's Revolving Credit Commitment Percentage from time to time, in such Letter of Credit, each substitute letter of credit, each drawing made thereunder and the obligations of the Borrower under this Agreement with respect thereto, and any security therefor or guaranty pertaining thereto (although Letter of Credit Fees will be paid directly to the Administrative Agent for the ratable account of the L/C Participants as provided in Section 4.1(b) and the L/C Participants shall have no right to receive any portion of any Fronting Fees). (b) In determining whether to pay under any Letter of Credit, the Letter of Credit Issuer shall have no obligation relative to the L/C Participants other than to confirm that any documents required to be delivered under such Letter of Credit have been delivered and that they appear to comply on their face with the requirements of such Letter of Credit. Any action taken or omitted to be taken by the Letter of Credit Issuer under or in connection with any Letter of Credit issued by it, if taken or omitted in the absence of gross negligence or willful misconduct, shall not create for the Letter of Credit Issuer any resulting liability. (c) In the event that the Letter of Credit Issuer makes any payment under any Letter of Credit issued by it and the Borrower shall not have repaid such amount in full to the Letter of Credit Issuer pursuant to Section 3.4(a), the Letter of Credit Issuer shall promptly notify the Administrative Agent and each L/C Participant of such failure, and each L/C Participant shall promptly and unconditionally pay to the Administrative Agent, for the account of the Letter of Credit Issuer, the amount of such L/C Participant's Revolving Credit Commitment Percentage (determined as of the date of the notice referred to above) of such unreimbursed payment in 54 Dollars and in same day funds; PROVIDED, HOWEVER, that no L/C Participant shall be obligated to pay to the Administrative Agent for the account of the Letter of Credit Issuer its Revolving Credit Commitment Percentage of such unreimbursed amount arising from any wrongful payment made by the Letter of Credit Issuer under a Letter of Credit as a result of acts or omissions constituting willful misconduct or gross negligence on the part of the Letter of Credit Issuer. If the Letter of Credit Issuer so notifies, prior to 11:00 A.M. (New York time) on any Business Day, any L/C Participant required to fund a payment under a Letter of Credit, such L/C Participant shall make available to the Administrative Agent for the account of the Letter of Credit Issuer such L/C Participant's Revolving Credit Commitment Percentage of the amount of such payment on such Business Day in same day funds. If and to the extent such L/C Participant shall not have so made its Revolving Credit Commitment Percentage of the amount of such payment available to the Administrative Agent for the account of the Letter of Credit Issuer, such L/C Participant agrees to pay to the Administrative Agent for the account of the Letter of Credit Issuer, forthwith on demand, such amount, together with interest thereon for each day from such date until the date such amount is paid to the Administrative Agent for the account of the Letter of Credit Issuer at the Federal Funds Effective Rate. The failure of any L/C Participant to make available to the Administrative Agent for the account of the Letter of Credit Issuer its Revolving Credit Commitment Percentage of any payment under any Letter of Credit shall not relieve any other L/C Participant of its obligation hereunder to make available to the Administrative Agent for the account of the Letter of Credit Issuer its Revolving Credit Commitment Percentage of any payment under such Letter of Credit on the date required, as specified above, but no L/C Participant shall be responsible for the failure of any other L/C Participant to make available to the Administrative Agent such other L/C Participant's Revolving Credit Commitment Percentage of any such payment. (d) Whenever the Letter of Credit Issuer receives a payment in respect of an unpaid reimbursement obligation as to which the Administrative Agent has received for the account of the Letter of Credit Issuer any payments from the L/C Participants pursuant to paragraph (c) above, the Letter of Credit Issuer shall pay to the Administrative Agent and the Administrative Agent shall promptly pay to each L/C Participant that has paid its Revolving Credit Commitment Percentage of such reimbursement obligation, in Dollars and in same day funds, an amount equal to such L/C Participant's share (based upon the proportionate aggregate amount originally funded by such L/C Participant to the aggregate amount funded by all L/C Participants) of the principal amount of such reimbursement obligation and interest thereon accruing after the purchase of the respective L/C Participations. (e) The obligations of the L/C Participants to make payments to the Administrative Agent for the account of the Letter of Credit Issuer with respect to Letters of Credit shall be irrevocable and not subject to counterclaim, set-off or other defense or any other qualification or exception whatsoever and shall be made in accordance with the terms and conditions of this Agreement under all circumstances, including, without limitation, any of the following circumstances: (i) any lack of validity or enforceability of this Agreement or any of the other Credit Documents; (ii) the existence of any claim, set-off, defense or other right that the Borrower may have at any time against a beneficiary named in a Letter of Credit, any transferee of any Letter of Credit (or any Person for whom any such transferee may be acting), the Administrative Agent, the Letter of Credit Issuer, any Lender or other Person, whether in connection with this Agreement, any Letter of Credit, the transactions contemplated herein or any unrelated transactions (including any underlying transaction between the Borrower and the beneficiary named in any such Letter of Credit); 55 (iii) any draft, certificate or any other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (iv) the surrender or impairment of any security for the performance or observance of any of the terms of any of the Credit Documents; or (v) the occurrence of any Default or Event of Default; PROVIDED, HOWEVER, that no L/C Participant shall be obligated to pay to the Administrative Agent for the account of the Letter of Credit Issuer its Revolving Credit Commitment Percentage of any unreimbursed amount arising from any wrongful payment made by the Letter of Credit Issuer under a Letter of Credit as a result of acts or omissions constituting willful misconduct or gross negligence on the part of the Letter of Credit Issuer. 3.4 AGREEMENT TO REPAY LETTER OF CREDIT DRAWINGS. (a) The Borrower hereby agrees to reimburse the Letter of Credit Issuer, by making payment to the Administrative Agent in Dollars in immediately available funds at the Administrative Agent's Office, for any payment or disbursement made by the Letter of Credit Issuer under any Letter of Credit (each such amount so paid until reimbursed, an "UNPAID DRAWING") immediately after, and in any event on the date of, such payment, with interest on the amount so paid or disbursed by the Letter of Credit Issuer, to the extent not reimbursed prior to 5:00 P.M. (New York time) on the date of such payment or disbursement, from and including the date paid or disbursed to but excluding the date the Letter of Credit Issuer is reimbursed therefor, at a rate per annum that shall at all times be the Applicable ABR Margin plus the ABR as in effect from time to time, PROVIDED that, notwithstanding anything contained in this Agreement to the contrary, (i) unless the Borrower shall have notified the Administrative Agent and the Letter of Credit Issuer prior to (A) 10:00 A.M. on the date of such drawing or (B) in the case of drawings on and after the Term Loan Funding Date under Letters of Credit issued to the Issuing Lender (as defined in the Credit Agreement relating to the Senior Bridge Facility) in respect of such Issuing Lender's guarantees of the Guaranteed Loan Notes, 10:00 A.M. on the day after the date of such drawing that the Borrower intends to reimburse the Letter of Credit Issuer for the amount of such drawing with funds other than the proceeds of Loans, the Borrower shall be deemed to have given a Notice of Borrowing to the Administrative Agent requesting that the Lenders make Revolving Credit Loans (which shall initially be ABR Loans) on the date on which such drawing is honored in an amount equal to the amount of such drawing and (ii) each Lender shall, on such date, make Revolving Credit Loans in an amount equal to such Lender's pro rata portion of such Borrowing in accordance with the provisions of Section 2.4. (b) The Borrower's obligations under this Section 3.4 to reimburse the Letter of Credit Issuer with respect to Unpaid Drawings (including, in each case, interest thereon) shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment that the Borrower or any other Person may have or have had against the Letter of Credit Issuer, the Administrative Agent or any Lender (including in its capacity as an L/C Participant), including, without limitation, any defense based upon the failure of any drawing under a Letter of Credit (each a "DRAWING") to conform to the terms of the Letter of Credit or any non-application or misapplication by the beneficiary of the proceeds of such Drawing, PROVIDED that the Borrower shall not be obligated to reimburse the Letter of Credit Issuer for any wrongful payment made by the Letter of Credit Issuer under the Letter of Credit issued by it as a result of acts or omissions constituting willful misconduct or gross negligence on the part of the Letter of Credit Issuer. (c) Each payment by the Letter of Credit Issuer under any Letter of Credit shall constitute a request by the Borrower for an ABR Revolving Credit Loan in the amount of the 56 Unpaid Drawing in respect of such Letter of Credit. The Letter of Credit Issuer shall notify the Borrower and the Administrative Agent, by 10:00 A.M. (New York time) on any Business Day on which the Letter of Credit Issuer intends to honor a drawing under a Letter of Credit, of (i) the Letter of Credit Issuer's intention to honor such drawing and (ii) the amount of such drawing. Unless otherwise instructed by the Borrower by 10:30 A.M. (New York time) on such Business Day, the Administrative Agent shall promptly notify each Lender of such drawing and the amount of its Revolving Credit Loan to be made in respect thereof, and each Lender shall be irrevocably obligated to make an ABR Revolving Credit Loan to the Borrower in the amount of its Revolving Credit Commitment Percentage of the applicable Unpaid Drawing by 12:00 Noon (New York time) on such Business Day by making the amount of such Revolving Credit Loan available to the Administrative Agent at the Administrative Agent's Office. Such Revolving Credit Loans shall be made without regard to the Minimum Borrowing Amount. The Administrative Agent shall use the proceeds of such Revolving Credit Loans solely for purpose of reimbursing the Letter of Credit Issuer for the related Unpaid Drawing. 3.5 INCREASED COSTS. If after the date hereof, the adoption of any applicable law, rule or regulation, or any change therein, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or actual compliance by the Letter of Credit Issuer or any L/C Participant with any request or directive made or adopted after the date hereof (whether or not having the force of law), by any such authority, central bank or comparable agency shall either (a) impose, modify or make applicable any reserve, deposit, capital adequacy or similar requirement against letters of credit issued by the Letter of Credit Issuer, or any L/C Participant's L/C Participation therein, or (b) impose on the Letter of Credit Issuer or any L/C Participant any other conditions affecting its obligations under this Agreement in respect of Letters of Credit or L/C Participations therein or any Letter of Credit or such L/C Participant's L/C Participation therein; and the result of any of the foregoing is to increase the cost to the Letter of Credit Issuer or such L/C Participant of issuing, maintaining or participating in any Letter of Credit, or to reduce the amount of any sum received or receivable by the Letter of Credit Issuer or such L/C Participant hereunder (other than any such increase or reduction attributable to taxes) in respect of Letters of Credit or L/C Participations therein, then, promptly after receipt of written demand to the Borrower by the Letter of Credit Issuer or such L/C Participant, as the case may be (a copy of which notice shall be sent by the Letter of Credit Issuer or such L/C Participant to the Administrative Agent), the Borrower shall pay to the Letter of Credit Issuer or such L/C Participant such additional amount or amounts as will compensate the Letter of Credit Issuer or such L/C Participant for such increased cost or reduction, it being understood and agreed, however, that the Letter of Credit Issuer or a L/C Participant shall not be entitled to such compensation as a result of such Person's compliance with, or pursuant to any request or directive to comply with, any such law, rule or regulation as in effect on the date hereof. A certificate submitted to the Borrower by the Letter of Credit Issuer or a L/C Participant, as the case may be (a copy of which certificate shall be sent by the Letter of Credit Issuer or such L/C Participant to the Administrative Agent), setting forth in reasonable detail the basis for the determination of such additional amount or amounts necessary to compensate the Letter of Credit Issuer or such L/C Participant as aforesaid shall be conclusive and binding on the Borrower absent clearly demonstrable error. 3.6 SUCCESSOR LETTER OF CREDIT ISSUER. The Letter of Credit Issuer may resign as Letter of Credit Issuer upon 60 days' prior written notice to the Administrative Agent, the Lenders and the Borrower. If the Letter of Credit Issuer shall resign as Letter of Credit Issuer under this Agreement, then the Borrower shall appoint from among the Lenders with Revolving Credit Commitments a successor issuer of Letters of Credit, whereupon such successor issuer shall succeed to the rights, powers and duties of the Letter of Credit Issuer, and the term "Letter of Credit Issuer" shall mean such successor issuer effective upon such appointment. At the time such resignation shall become effective, the Borrower shall pay to the resigning Letter of Credit 57 Issuer all accrued and unpaid fees pursuant to Sections 4.1(c) and (d). The acceptance of any appointment as the Letter of Credit Issuer hereunder by a successor Lender shall be evidenced by an agreement entered into by such successor, in a form satisfactory to the Borrower and the Administrative Agent and, from and after the effective date of such agreement, such successor Lender shall have all the rights and obligations of the previous Letter of Credit Issuer under this Agreement and the other Credit Documents. After the resignation of the Letter of Credit Issuer hereunder, the resigning Letter of Credit Issuer shall remain a party hereto and shall continue to have all the rights and obligations of a Letter of Credit Issuer under this Agreement and the other Loan Documents with respect to Letters of Credit issued by it prior to such resignation, but shall not be required to issue additional Letters of Credit. After any retiring Letter of Credit Issuer's resignation as Letter of Credit Issuer, the provisions of this Agreement relating to the Letter of Credit Issuer shall inure to its benefit as to any actions taken or omitted to be taken by it (a) while it was Letter of Credit Issuer under this Agreement or (b) at any time with respect to Letters of Credit issued by such Letter of Credit Issuer. 3.7 STERLING-DENOMINATED LETTERS OF CREDIT. (a) The Borrower may request the issuance of a Letter of Credit providing for the payment of drawings in Sterling subject to the terms and conditions of this Section 3.7, in addition to the other conditions applicable to the issuance of Letters of Credit hereunder. (b) For purposes of determining the Letter of Credit Exposure and for purposes of calculating fees payable under Section 4.1(b), the amount of such Letter of Credit and of any unreimbursed payment in respect thereof shall be deemed to be, as of any date of determination, the Dollar Equivalent thereof at such date. The initial Dollar Equivalent of any such Letter of Credit shall be determined by the Issuing Bank on the date of issuance thereof and adjusted from time to time thereafter as provided below. The Dollar Equivalent of each such Letter of Credit outstanding shall be adjusted by the Issuing Bank on each Calculation Date. If a payment is made by the Issuing Bank under any such Letter of Credit, the Dollar Equivalent of such payment shall be determined by the Issuing Bank on the date that such payment is made. The Issuing Bank shall make each such determination to be made by it based upon the applicable Exchange Rate, except that the Dollar Equivalent of such payment may, at the option of the Issuing Bank, be made by the Issuing Bank by calculating the amount in Dollars that is actually required in order for the Issuing Bank to purchase an amount of Sterling equal to the amount of the relevant payment in order to make such payment, taking into account all foreign exchange costs actually incurred by the Issuing Bank. The Issuing Bank shall notify the Administrative Agent and the Borrower promptly of each such Dollar Equivalent determined by it, on the date that such determination is required to be made. (c) The obligation of the Borrower to reimburse the Issuing Bank for any payment made by the Issuing Bank under any Letter of Credit denominated in Sterling, and to pay interest thereon, shall be payable only in Sterling, and shall not be discharged by paying an amount in Dollars or any other currency. (d) The obligations of each Lender under Section 3.3(c) to pay its Revolving Credit Commitment Percentage of any unreimbursed payment made by the Issuing Bank under any Letter of Credit denominated in Sterling shall be payable in Sterling. SECTION 4. FEES; COMMITMENTS. 4.1 FEES. (a) The Borrower agrees to pay to the Administrative Agent in Dollars, for the account of each Lender (in each case pro rata according to the respective Available Revolving Credit Commitments of all such Lenders), a commitment fee for each day from and including the Restatement Date to but excluding the Final Date on the average daily unused 58 Revolving Credit Commitment. Such commitment fee shall be payable in arrears (i) on the last day of each March, June, September and December (for the three-month period (or portion thereof) ended on such day and (ii) on the Final Date (for the period ended on such date for which no payment has been received pursuant to clause (i) above), and shall be computed for each day during such period at a rate per annum equal to the Commitment Fee Rate in effect on such day on the Available Commitments in effect on such day. Notwithstanding the foregoing, the Borrower shall not be obligated to pay any amounts to any Defaulting Lender pursuant to this Section 4.1. (b) The Borrower agrees to pay to the Administrative Agent in Dollars for the account of the Lenders PRO RATA on the basis of their respective Letter of Credit Exposure, a fee in respect of each Letter of Credit (the "LETTER OF CREDIT FEE"), for the period from and including the date of issuance of such Letter of Credit to but not including the termination date of such Letter of Credit computed at the per annum rate for each day equal to the Applicable Eurodollar Margin for Revolving Credit Loans minus 0.25% per annum on the average daily Stated Amount of such Letter of Credit. Such Letter of Credit Fees shall be due and payable quarterly in arrears on the last day of each March, June, September and December and on the date upon which the Total Revolving Credit Commitment terminates and the Letter of Credit Outstandings shall have been reduced to zero. (c) The Borrower agrees to pay to the Administrative Agent in Dollars for the account of the Letter of Credit Issuer a fee in respect of each Letter of Credit issued by it (the "FRONTING FEE"), for the period from and including the date of issuance of such Letter of Credit to but not including the termination date of such Letter of Credit, computed at the rate for each day equal to 0.25% per annum on the average daily Stated Amount of such Letter of Credit. Such Fronting Fees shall be due and payable quarterly in arrears on the last day of each March, June, September and December and on the date upon which the Total Revolving Credit Commitment terminates and the Letter of Credit Outstandings shall have been reduced to zero. (d) The Borrower agrees to pay directly to the Letter of Credit Issuer in Dollars upon each issuance of, drawing under, and/or amendment of, a Letter of Credit issued by it such amount as the Letter of Credit Issuer and the Borrower shall have agreed upon for issuances of, drawings under or amendments of, letters of credit issued by it. (e) The Borrower agrees to pay to the Administrative Agent in Dollars, for the benefit of the Administrative Agent, the fees in the amounts and on the dates previously agreed to in writing by Newco 4 and the Administrative Agent. The Administrative Agent agrees to pay to each Lender, on behalf of the Administrative Agent, for each Lender's own account, the fees in the amounts and on the dates previously agreed to in writing by the Administrative Agent and such Lender. 4.2 VOLUNTARY REDUCTION OF REVOLVING CREDIT COMMITMENTS. Upon at least one Business Day's prior written notice (or telephonic notice promptly confirmed in writing) to the Administrative Agent at the Administrative Agent's Office (which notice the Administrative Agent shall promptly transmit to each of the Lenders), the Borrower shall have the right, without premium or penalty, on any day, permanently to terminate or reduce the Revolving Credit Commitments in whole or in part, PROVIDED that (a) any such reduction shall apply proportionately and permanently to reduce the Revolving Credit Commitment of each of the Lenders, (b) any partial reduction pursuant to this Section 4.2 shall be in the amount of at least $1,000,000, (c) after giving effect to such termination or reduction and to any prepayments of the Loans made on the date thereof in accordance with this Agreement, the sum of (i) the aggregate outstanding principal amount of the Revolving Credit Loans and the Swingline Loans and (ii) the Letter of Credit Outstandings shall not exceed the Total Revolving Credit Commitment, PROVIDED that the principal amount of any Loan and the amount of any Letter of Credit Outstandings 59 denominated in a Foreign Currency shall be deemed to be, as of such date, the Dollar Equivalent thereof at such date and (d) if, after giving effect to such reduction, the Total Revolving Credit Commitment is less than the aggregate amount of (i) all the Euro Revolving Credit Commitments or (ii) all the Yen Revolving Credit Commitments (such difference, the "EXCESS AMOUNT"), then the Euro Revolving Credit Commitments or Yen Revolving Credit Commitments, as applicable, shall automatically be reduced by the Excess Amount, PROVIDED that any such reduction pursuant to this clause (d) shall apply proportionately and permanently to reduce the Euro Revolving Credit Commitment or Yen Revolving Commitment, as applicable, of each of the Euro Lenders or Yen Lenders, as applicable. 4.3 MANDATORY TERMINATION OF COMMITMENTS. (a) The Total Term Loan Commitment shall terminate at 5:00 P.M. (New York time) on the date that is nine months after the date hereof. (b) The Total Revolving Credit Commitment, the Euro Revolving Credit Commitments and the Yen Revolving Credit Commitments shall terminate at 5:00 P.M. (New York time) on the Revolving Credit Maturity Date. (c) The Swingline Commitment shall terminate at 5:00 P.M. (New York time) on the Swingline Maturity Date. SECTION 5. PAYMENTS. 5.1 VOLUNTARY PREPAYMENTS. The Borrower shall have the right to prepay Term Loans, Revolving Credit Loans and Swingline Loans, without premium or penalty, in whole or in part from time to time on the following terms and conditions: (a) the Borrower shall give the Administrative Agent at the Administrative Agent's Office written notice (or telephonic notice promptly confirmed in writing) of its intent to make such prepayment, the amount of such prepayment and (in the case of Eurodollar Term Loans and Eurodollar Revolving Credit Loans) the specific Borrowing(s) pursuant to which made, which notice shall be given by the Borrower no later than (i) in the case of Term Loans or Dollar Revolving Credit Loans, 10:00 A.M. (New York time) one Business Day prior to, (ii) in the case of Sterling Revolving Credit Loans and Euro Revolving Credit Loans, 10:00 A.M. (London time), three Business Days prior to, (iii) in the case of Yen Revolving Credit Loans, 10:00 A.M. (Tokyo time), three Business Days prior to, or (iv) in the case of Swingline Loans, 10:00 A.M. (New York time) on, the date of such prepayment and shall promptly be transmitted by the Administrative Agent to each of the Lenders or Chase, as the case may be; (b) each partial prepayment of any Borrowing of Term Loans or Revolving Credit Loans shall be in an amount that is (or, in the case of any Foreign Currency Revolving Credit Loan, the Dollar Equivalent of which, determined as of the Denomination Date for the relevant Loan or Loans, is) a multiple of $100,000 and in an aggregate principal amount (calculated by using the Dollar Equivalent at such time of the principal amount of any Foreign Currency Revolving Loan) of at least $1,000,000 and each partial prepayment of Swingline Loans shall be in an amount that is (or, in the case of any Sterling Swingline Loan, the Dollar Equivalent of which, determined as of the Denomination Date for the relevant Loan or Loans, is) a multiple of $100,000 and in an aggregate principal amount (calculated by using the Dollar Equivalent at such time of the principal amount of any Sterling Swingline Loan) of at least $100,000, PROVIDED that no partial prepayment of Eurodollar Term Loans or Eurodollar Revolving Credit Loans made pursuant to a single Borrowing shall reduce the outstanding Eurodollar Term Loans or Eurodollar Revolving Credit Loans made pursuant to such Borrowing to an amount less than the Minimum Borrowing Amount for Eurodollar Term Loans or Eurodollar Revolving Credit Loans; (c) any prepayment of Eurodollar Term Loans or Eurodollar Revolving Credit Loans pursuant to this Section 5.1 on any day other than the last day of an Interest Period applicable thereto shall be subject to compliance by the 60 Borrower with the applicable provisions of Section 2.11; and (d) each prepayment in respect of any one or more tranches of Term Loans or Revolving Credit Loans made pursuant to a Borrowing shall be applied PRO RATA among such tranches of Term Loans or Revolving Credit Loans made pursuant to such Borrowing, PROVIDED that at the Borrower's election in connection with any prepayment pursuant to this Section 5.1, such prepayment shall not be applied to any Term Loan or Revolving Credit Loan of a Defaulting Lender. Each prepayment of Term Loans pursuant to this Section 5.1 shall be (a) applied to Tranche A Term Loans, Tranche B Term Loans, Tranche C Term Loans, Tranche D Term Loans or Revolving Credit Loans in such manner as the Borrower may determine and (b) applied to reduce the Repayment Amounts with respect to any such Term Loans in such order as the Borrower may determine. 5.2 MANDATORY PREPAYMENTS. (a) TERM LOAN PREPAYMENTS. (i) On each occasion that a Prepayment Event occurs, the Borrower shall, within five Business Days after the occurrence of such Prepayment Event, offer to prepay, in accordance with paragraph (c) below, the principal amount of Term Loans in an amount equal to 100% of the Net Cash Proceeds from such Prepayment Event. (ii) Not later than the date that is six months after the last day of any fiscal year commencing with the fiscal year 1999, if the Consolidated Total Debt to Consolidated EBITDA Ratio as of such day is equal to or greater than 3.00 to 1.00, the Borrower shall offer to prepay, in accordance with paragraph (c) below, the principal of Term Loans in an amount equal to (x) 50% of Excess Cash Flow for such fiscal year MINUS (y) the sum of (A) the amount of any such Excess Cash Flow that the Borrower has, prior to such date, reinvested in the business of Parent or any of its Subsidiaries (subject to Section 9.14) and (B) the amount of any prepayment of the Term Loans pursuant to Section 5.1 or prepayments of Revolving Credit Loans to the extent accompanied by reductions of the Revolving Credit Commitments. (b) AGGREGATE REVOLVING CREDIT OUTSTANDINGS. If on any date the sum of the outstanding principal amount of the Dollar Revolving Credit Loans and Swingline Loans, the aggregate amount of Letter of Credit Outstandings and the aggregate Dollar Equivalent of the outstanding principal amount of the Foreign Currency Revolving Credit Loans (all the foregoing, collectively, the "AGGREGATE REVOLVING CREDIT OUTSTANDINGS") exceeds 105% of the Total Revolving Credit Commitment as then in effect, the Borrower shall forthwith repay on such date the principal amount of Swingline Loans and, after all Swingline Loans have been paid in full, Revolving Credit Loans, in an amount equal to such excess. If, after giving effect to the prepayment of all outstanding Swingline Loans and Revolving Credit Loans, the Aggregate Revolving Credit Outstandings exceed the Total Revolving Credit Commitment then in effect, the Borrower shall pay to the Administrative Agent an amount in cash equal to such excess and the Administrative Agent shall hold such payment for the benefit of the Lenders as security for the obligations of the Borrower hereunder (including, without limitation, obligations in respect of Letter of Credit Outstandings) pursuant to a cash collateral agreement to be entered into in form and substance satisfactory to the Administrative Agent (which shall permit certain investments in Permitted Investments satisfactory to the Administrative Agent, until the proceeds are applied to the secured obligations). If on any date the aggregate amount of the Dollar Equivalents of the principal amounts of all outstanding Euro Revolving Credit Loans and Yen Revolving Credit Loans exceeds $78,750,000, the Borrower shall, on such day, prepay Euro Revolving Credit Loans or Yen Revolving Credit Loans in an amount equal to such excess (after giving effect to any other prepayment of Loans on such day). If on any date the aggregate amount of the Dollar Equivalents of the principal amounts of all Euro Revolving Credit Loans then outstanding exceeds 105% of the aggregate amount of all Euro Revolving Credit Commitments on such date, the Borrower shall, on such day, prepay Euro Revolving Credit Loans in an amount equal to such excess (after giving effect to any other prepayment of Euro Revolving Credit Loans on such day). If on any date the aggregate amount of the Dollar Equivalents of the principal amounts of all Yen Revolving Credit Loans then outstanding exceeds 105% of the aggregate amount of all Yen 61 Revolving Credit Commitments on such date, the Borrower shall, on such day, prepay Yen Revolving Credit Loans in an amount equal to such excess (after giving effect to any other prepayment of Yen Revolving Credit Loans on such day). (c) APPLICATION TO REPAYMENT AMOUNTS. An amount equal to each prepayment of Term Loans required by Section 5.2(a)(i) shall be (i) allocated PRO RATA among the Tranche A Term Loans, the Tranche B Term Loans, the Tranche C Term Loans and the Tranche D Term Loans and (ii) applied (A) in the case of the Tranche A Term Loans, to reduce the Tranche A Repayment Amounts in the manner described in paragraph (iii) below and (B) in the case of each of the Tranche B Term Loans, the Tranche C Term Loans and the Tranche D Term Loans, to reduce the Repayment Amounts with respect to such Loans in the manner described in paragraph (ii) below. Each prepayment of Term Loans pursuant to Section 5.2(a)(ii) shall be (a) allocated among the Tranche A Term Loans, the Tranche B Term Loans, the Tranche C Term Loans and the Tranche D Term Loans in such manner as the Borrower may determine and (b) applied (i) in the case of the Tranche A Term Loans, to reduce the Tranche A Repayment Amounts in the manner described in paragraph (iii) below and (ii) in the case of each of the Tranche B Term Loans, the Tranche C Term Loans and the Tranche D Term Loans, to reduce the Repayment Amounts with respect to such Loans in the manner described in paragraph (ii) below. (ii) Notwithstanding paragraph (i) above, with respect to the amount of any mandatory prepayment described in Section 5.2(a) that is allocated to the then-outstanding Tranche B Term Loans, Tranche C Term Loans or Tranche D Term Loans (such amounts, the "TRANCHE B PREPAYMENT AMOUNT", the "TRANCHE C PREPAYMENT AMOUNT" and the "TRANCHE D PREPAYMENT AMOUNT" , respectively), the Borrower will, in lieu of applying such amount to the prepayment of Tranche B Term Loans, Tranche C Term Loans and Tranche D Term Loans, respectively, as provided in paragraph (i) above, on the date specified in Section 5.2(a) for such prepayment, give the Administrative Agent telephonic notice (promptly confirmed in writing) requesting that the Administrative Agent prepare and provide to each Tranche B Lender, Tranche C Lender and Tranche D Lender a notice (each, a "PREPAYMENT OPTION NOTICE") as described below. As promptly as practicable after such notice, the Administrative Agent will send to each Tranche B Lender, Tranche C Lender and Tranche D Lender a Prepayment Option Notice, which shall be in the form of Exhibit J-1, J-2 or J-3, as applicable, and shall include an offer by the Borrower to prepay on a specified date (each a "MANDATORY PREPAYMENT DATE"), which shall not be less than 20 days or more than 25 days after the date of the Prepayment Option Notice, the Term Loans of such Lender by an amount equal to the portion of the Prepayment Amount indicated in such Lender's Prepayment Option Notice as being applicable to such Lender and such Lender's Tranche B Term Loans, Tranche C Term Loans and Tranche D Term Loans, respectively. On the Mandatory Prepayment Date, (A) the Borrower shall pay to the Administrative Agent the aggregate amount necessary to prepay that portion of the outstanding Term Loans in respect of which Tranche B Lenders, Tranche C Lenders and Tranche D Lenders have accepted prepayment as described above (such Lender, the "ACCEPTING LENDER"), and such amount shall be applied (x) with respect to prepayments pursuant to Section 5.2(a)(i), (I) first, sequentially, in the order of maturity, to the next four remaining unpaid Tranche B Repayment Amounts, Tranche C Repayment Amounts and Tranche D Repayment Amounts, as applicable, with respect to each Accepting Lender, and (II) thereafter, PRO RATA to the remaining Tranche B Repayment Amounts, Tranche C Repayment Amounts and Tranche D Repayment Amounts, as applicable, with respect to each Accepting Lender and (y) with respect to prepayments pursuant to Section 5.2(a)(ii), PRO RATA with respect to each Accepting Lender in such manner as the Borrower may determine, (B) the Borrower shall pay to the Administrative Agent an amount equal to 50% of the portion of the Tranche B Prepayment Amount, Tranche C Prepayment Amount and Tranche D Prepayment Amount not accepted by the Accepting Lenders, and such amount shall be applied to reduce the Tranche A Repayment Amounts in the manner described in paragraph (iii) below, and (C) the Borrower shall be entitled to retain the remaining 50% of the 62 portion of the Tranche B Prepayment Amount, Tranche C Prepayment Amount and Tranche D Prepayment Amount not accepted by the Accepting Lenders. (iii) An amount equal to each prepayment of Tranche A Term Loans required by this Section 5.2 (including any such prepayment required by the provisions of paragraph (ii) above) shall be applied (A) with respect to prepayments pursuant to Section 5.2(a)(i), (x) first, sequentially, in the order of maturity, to the next four remaining unpaid Tranche A Repayment Amounts, and (y) thereafter, PRO RATA to the remaining Tranche A Repayment Amounts and (B) with respect to prepayments pursuant to Section 5.2(a)(ii), in such manner as the Borrower may determine to the remaining Tranche A Repayment Amounts. (d) APPLICATION TO TERM LOANS. With respect to each prepayment of Term Loans required by Section 5.2(a), the Borrower may designate the Types of Loans that are to be prepaid and the specific Borrowing(s) pursuant to which made, PROVIDED that (i) Eurodollar Term Loans may be designated for prepayment pursuant to this Section 5.2 only on the last day of an Interest Period applicable thereto unless all Eurodollar Term Loans with Interest Periods ending on such date of required prepayment and all ABR Term Loans have been paid in full; and (ii) if any prepayment of Eurodollar Term Loans made pursuant to a single Borrowing shall reduce the outstanding Term Loans made pursuant to such Borrowing to an amount less than the Minimum Borrowing Amount for Eurodollar Term Loans, such Borrowing shall immediately be converted into ABR Loans. In the absence of a designation by the Borrower as described in the preceding sentence, the Administrative Agent shall, subject to the above, make such designation in its reasonable discretion with a view, but no obligation, to minimize breakage costs owing under Section 2.11. (e) APPLICATION TO REVOLVING CREDIT LOANS. With respect to each prepayment of Revolving Credit Loans required by Section 5.2(b), the Borrower may designate the Types of Loans that are to be prepaid and the specific Borrowing(s) pursuant to which made, PROVIDED that (i) Eurodollar Revolving Credit Loans may be designated for prepayment pursuant to this Section 5.2 only on the last day of an Interest Period applicable thereto unless all Eurodollar Revolving Credit Loans with Interest Periods ending on such date of required prepayment and all ABR Loans have been paid in full; (ii) if any prepayment of Eurodollar Revolving Credit Loans made pursuant to a single Borrowing shall reduce the outstanding Revolving Credit Loans made pursuant to such Borrowing to an amount less than the Minimum Borrowing Amount for Eurodollar Revolving Credit Loans, such Borrowing shall immediately be converted into ABR Loans (such conversion to be made, in the case of a Foreign Currency Revolving Credit Loan, into Dollars at the applicable Exchange Rate); (iii) each prepayment of any Loans made pursuant to a Borrowing shall be applied PRO RATA among such Loans; and (iv) notwithstanding the provisions of the preceding clause (iii), no prepayment made pursuant to Section 5.2(b) of Revolving Credit Loans shall be applied to the Revolving Credit Loans of any Defaulting Lender. In the absence of a designation by the Borrower as described in the preceding sentence, the Administrative Agent shall, subject to the above, make such designation in its reasonable discretion with a view, but no obligation, to minimize breakage costs owing under Section 2.11. (f) EURODOLLAR INTEREST PERIODS. In lieu of making any payment pursuant to this Section 5.2 in respect of any Eurodollar Loan other than on the last day of the Interest Period therefor, so long as no Default or Event of Default shall have occurred and be continuing, the Borrower at its option may deposit with the Administrative Agent an amount equal to the amount of the Eurodollar Loan to be prepaid and such Eurodollar Loan shall be repaid on the last day of the Interest Period therefor in the required amount. Such deposit shall be held by the Administrative Agent in a corporate time deposit account established on terms reasonably satisfactory to the Administrative Agent, earning interest at the then-customary rate for accounts of such type. Such deposit shall constitute cash collateral for the Obligations, PROVIDED that the 63 Borrower may at any time direct that such deposit be applied to make the applicable payment required pursuant to this Section 5.2. (g) MINIMUM AMOUNT. No prepayment shall be required pursuant to Section 5.2(a)(i) unless and until the amount at any time of Net Cash Proceeds from Prepayment Events required to be applied at or prior to such time pursuant to such Section and not yet applied at or prior to such time to prepay Term Loans pursuant to such Section exceeds $15,000,000 in the aggregate. (h) FOREIGN ASSET SALES. Notwithstanding any other provisions of this Section 5.2, (i) to the extent that any of or all the Net Cash Proceeds of any asset sale by a Restricted Foreign Subsidiary giving rise to an Asset Sale Prepayment Event (a "FOREIGN ASSET SALE") are prohibited or delayed by applicable local law from being repatriated to the United Kingdom or the United States, as applicable, the portion of such Net Cash Proceeds so affected will not be required to be applied to repay Term Loans at the times provided in this Section 5.2 but may be retained by the applicable Restricted Foreign Subsidiary so long, but only so long, as the applicable local law will not permit repatriation to the United Kingdom or the United States, as applicable, Parent hereby agreeing to cause the applicable Restricted Foreign Subsidiary to promptly take all actions required by the applicable local law to permit such repatriation), and once such repatriation of any of such affected Net Cash Proceeds is permitted under the applicable local law, such repatriation will be immediately effected and such repatriated Net Cash Proceeds will be promptly (and in any event not later than two Business Days after such repatriation) applied (net of additional taxes payable or reserved against as a result thereof) to the repayment of the Term Loans pursuant to this Section 5.2 and (ii) to the extent that Parent has determined in good faith that repatriation of any of or all the Net Cash Proceeds of any Foreign Asset Sale would have a material adverse tax cost consequence with respect to such Net Cash Proceeds, the Net Cash Proceeds so affected may be retained by the applicable Restricted Foreign Subsidiary, PROVIDED that, in the case of this clause (ii), on or before the date on which any Net Cash Proceeds so retained would otherwise have been required to be applied to reinvestments or prepayments pursuant to Section 5.2(a), (x) the Borrower applies an amount equal to such Net Cash Proceeds to such reinvestments or prepayments as if such Net Cash Proceeds had been received by the Borrower rather than such Restricted Foreign Subsidiary, less the amount of additional taxes that would have been payable or reserved against if such Net Cash Proceeds had been repatriated (or, if less, the Net Cash Proceeds that would be calculated if received by such Foreign Subsidiary) or (y) such Net Cash Proceeds are applied to the repayment of Indebtedness of a Restricted Foreign Subsidiary. 5.3 METHOD AND PLACE OF PAYMENT. (a) Except as otherwise specifically provided herein, all payments to be made by the Borrower under this Agreement shall be made, without set-off, counterclaim or deduction of any kind, to the Administrative Agent for the ratable account of the Lenders entitled thereto, the Letter of Credit Issuer or Chase, as the case may be, not later than 12:00 Noon (New York time), or, in the case of amounts payable in Sterling, Euro or Yen, prior to 12:00 Noon (local time at the place of payment) on the date when due and shall be made (i) in the case of amounts payable in Dollars, in immediately available funds at the Administrative Agent's Office, (ii) in the case of amounts payable in Euro, in immediately available, freely transferable, cleared funds at such account with such bank in Frankfurt am Main, Germany as the Administrative Agent shall from time to time specify for this purpose (or to such account with such bank in such other financial center or centers specified by the Administrative Agent at the relevant time for this purpose), or (iii) in the case of amounts payable in Sterling or Yen, in immediately available funds at such other office as the Administrative Agent shall specify for such purpose by notice to the Borrower, it being understood that written or facsimile notice by the Borrower to the Administrative Agent to make a payment from the funds in the Borrower's account at the Administrative Agent's Office shall constitute the making of such payment to the extent of such funds held in such account. All payments under each Credit 64 Document (whether of principal, interest or otherwise) shall be made (i) in the case of the principal of and interest on each Loan, in the currency in which such Loan is denominated, (ii) in the case of any indemnification or expense reimbursement payment, in Dollars or Sterling, as requested by the Person entitled to receive such payment, or (iii) in all other cases, in Dollars, except as otherwise expressly provided herein. Each obligation under this Agreement to make payment in the national currency denomination of a Subsequent Participant shall be redenominated into the euro unit immediately upon such Subsequent Participant becoming a Participating Member State (but otherwise in accordance with EMU legislation). The Administrative Agent will thereafter cause to be distributed on the same day (if payment was actually received by the Administrative Agent prior to 2:00 P.M. (New York time) on such day) like funds relating to the payment of principal or interest or Fees ratably to the Lenders entitled thereto. Any amount payable by the Administrative Agent to the Lenders under this Agreement in the currency of a Participating Member State shall be paid in the euro unit. A payment shall be deemed to have been made by the Administrative Agent on the date on which it is required to be made under this Agreement if the Administrative Agent has, on or before such date, taken steps to make such payment in accordance with the regulations or operating procedures of the clearing or settlement system used by the Administrative Agent in order to make such payment. (b) Any payments under this Agreement that are made later than 2:00 P.M. (New York time), or, in the case of amounts payable in Sterling, Euro or Yen, 12:00 Noon (local time at the place of payment) shall be deemed to have been made on the next succeeding Business Day. Whenever any payment to be made hereunder shall be stated to be due on a day that is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest shall be payable during such extension at the applicable rate in effect immediately prior to such extension. 5.4 NET PAYMENTS. (a) All payments made by the Borrower under this Agreement shall be made free and clear of, and without deduction or withholding for or on account of, any current or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding (i) net income taxes and franchise taxes (imposed in lieu of net income taxes) imposed on the Administrative Agent or any Lender and (ii) any taxes imposed on the Administrative Agent or any Lender as a result of a current or former connection between the Administrative Agent or such Lender and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from the Administrative Agent or such Lender having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement). If any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings ("NON-EXCLUDED TAXES") are required to be withheld from any amounts payable to the Administrative Agent or any Lender hereunder, the amounts so payable to the Administrative Agent or such Lender shall be increased to the extent necessary to yield to the Administrative Agent or such Lender (after payment of all Non-Excluded Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement; PROVIDED, HOWEVER, that the Borrower shall not be required to increase any such amounts payable to any Lender that is not organized under the laws of the United States or a state thereof if such Lender fails to comply with the requirements of paragraph (b) of this Section 5.4. Whenever any Non- Excluded Taxes are payable by the Borrower, as promptly as possible thereafter the Borrower shall send to the Administrative Agent for its own account or for the account of such Lender, as the case may be, a certified copy of an original official receipt received by the Borrower showing payment thereof. If the Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing authority or fails to remit to the Administrative Agent the required receipts or other required documentary evidence, the Borrower shall indemnify the Administrative Agent and the Lenders for any incremental taxes, interest, costs or penalties that may become payable by the Administrative Agent or any Lender 65 as a result of any such failure. The agreements in this Section 5.4(a) shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. (b) Each Lender that is not incorporated or organized under the laws of the United States or a state thereof shall: (i) deliver to the Borrower and the Administrative Agent two copies of either United States Internal Revenue Service Form 1001 or Form 4224 or, in the case of Non-U.S. Lender claiming exemption from U.S. Federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of "portfolio interest", a Form W-8, or any subsequent versions thereof or successors thereto (and, if such Non-U.S. Lender delivers a Form W-8, a certificate representing that such Non-U.S. Lender is not a bank for purposes of Section 881(c) of the Code, is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of the Borrower and is not a controlled foreign corporation related to the Borrower (within the meaning of Section 864(d)(4) of the Code)), properly completed and duly executed by such Non-U.S. Lender claiming complete exemption from, or reduced rate of, U.S. Federal withholding tax on payments by the Borrower under this Agreement; (ii) deliver to the Borrower and the Administrative Agent two further copies of any such form or certification on or before the date that any such form or certification expires or becomes obsolete and after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Borrower; and (iii) obtain such extensions of time for filing and complete such forms or certifications as may reasonably be requested by the Borrower or the Administrative Agent; unless in any such case any change in treaty, law or regulation has occurred prior to the date on which any such delivery would otherwise be required that renders any such form inapplicable or would prevent such Lender from duly completing and delivering any such form with respect to it and such Lender so advises the Borrower and the Administrative Agent. Each Person that shall become a Participant pursuant to Section 13.6 or a Lender pursuant to Section 13.6 shall, upon the effectiveness of the related transfer, be required to provide all the forms and statements required pursuant to this Section 5.4(b), provided that in the case of a Participant such Participant shall furnish all such required forms and statements to the Lender from which the related participation shall have been purchased. (c) The Borrower shall not be required to indemnify any Non-U.S. Lender, or to pay any additional amounts to any Non-U.S. Lender, in respect of U.S. Federal withholding tax pursuant to paragraph (a) above to the extent that (i) the obligation to withhold amounts with respect to U.S. Federal withholding tax existed on the date such Non-U.S. Lender became a party to this Agreement (or, in the case of a Non-U.S. Participant, on the date such Participant became a Participant hereunder); PROVIDED, HOWEVER, that this clause (i) shall not apply to the extent that (x) the indemnity payments or additional amounts any Lender (or Participant) would be entitled to receive (without regard to this clause (i)) do not exceed the indemnity payment or additional amounts that the person making the assignment, participation or transfer to such Lender (or Participant) would have been entitled to receive in the absence of such assignment, participation or transfer, or (y) such assignment, participation or transfer had been requested by the Borrower, (ii) the obligation to pay such additional amounts would not have arisen but for a failure by such Non-U.S. Lender or Non-U.S. Participant to comply with the provisions of paragraph (b) above or (iii) any of the representations or certifications made by a Non-U.S. Lender or Non-U.S. Participant pursuant to paragraph (b) above are incorrect at the time a payment hereunder is 66 made, other than by reason of any change in treaty, law or regulation having effect after the date such representations or certifications were made. (d) If the Borrower determines in good faith that a reasonable basis exists for contesting any taxes for which indemnification has been demanded hereunder, the relevant Lender or the Administrative Agent, as applicable, shall cooperate with the Borrower in challenging such taxes at the Borrower's expense if so requested by the Borrower. If any Lender or the Administrative Agent, as applicable, receives a refund of a tax for which a payment has been made by the Borrower pursuant to this Agreement, which refund in the good faith judgment of such Lender or Administrative Agent, as the case may be, is attributable to such payment made by the Borrower, then the Lender or the Administrative Agent, as the case may be, shall reimburse the Borrower for such amount as the Lender or Administrative Agent, as the case may be, determines to be the proportion of the refund as will leave it, after such reimbursement, in no better or worse position than it would have been in if the payment had not been required. A Lender or Administrative Agent shall claim any refund that it determines is available to it, unless it concludes in its reasonable discretion that it would be adversely affected by making such a claim. Neither the Lender nor the Administrative Agent shall be obliged to disclose any information regarding its tax affairs or computations to the Borrower in connection with this paragraph (d) or any other provision of this Section 5.4. (e) Each Lender represents and agrees that, on the date hereof and at all times during the term of this Agreement, it is not and will not be a conduit entity participating in a conduit financing arrangement (as defined in Section 7701(1) of the Code and the regulations thereunder) with respect to the Borrowings hereunder unless the Borrower has consented to such arrangement prior thereto. 5.5 COMPUTATIONS OF INTEREST AND FEES. (a) Except as provided in the next succeeding sentence, interest on Eurodollar Loans and ABR Loans shall be calculated on the basis of a 360-day year for the actual days elapsed. Interest on (i) Sterling Revolving Credit Loans, (ii) ABR Loans in respect of which the rate of interest is calculated on the basis of the Prime Rate and (iii) interest on overdue interest shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed. (b) Fees and Letter of Credit Outstanding shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed. SECTION 6. [Intentionally Omitted] SECTION 7A. [Intentionally Omitted] SECTION 7B. [Intentionally Omitted] SECTION 7C. CONDITIONS PRECEDENT TO ALL CREDIT EVENTS. The agreement of each Lender to make any Loan requested to be made by it on any date on or after the Restatement Date (excluding in the case of Section 7C.1 Mandatory Borrowings) and the obligation of the Letter of Credit Issuer to issue Letters of Credit on any date is subject to the satisfaction of the following conditions precedent: 7C.1 NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time of each Credit Event (other than the initial Credit Event) and also after giving effect thereto (a) there shall exist no Default or Event of Default and (b) all representations and warranties made by any Credit Party contained herein or in the other Credit Documents shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on 67 and as of the date of such Credit Event, except where such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects as of such earlier date (it being understood that, for purposes of the foregoing, the truth and correctness of the representations and warranties set forth in Section 8.8 shall be determined without reference to the knowledge of the Borrower). 7C.2 NOTICE OF BORROWING; LETTER OF CREDIT REQUEST. (a) Prior to the making of each Revolving Credit Loan (other than any Revolving Credit Loan made pursuant to Section 3.4(a)) and each Swingline Loan, the Administrative Agent shall have received a Notice of Borrowing (whether in writing or by telephone) meeting the requirements of Section 2.3. (b) Prior to the issuance of each Letter of Credit, the Administrative Agent and the Letter of Credit Issuer shall have received a Letter of Credit Request meeting the requirements of Section 3.2(a). The acceptance of the benefits of each Credit Event shall constitute a representation and warranty by each Credit Party to each of the Lenders that all the applicable conditions specified above exist as of that time. SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. In order to induce the Lenders to enter into this Agreement, to make the Loans and issue or participate in Letters of Credit as provided for herein, Newco 4, Parent and the Borrower make the following representations and warranties to, and agreements with, the Lenders, all of which shall survive the execution and delivery of this Agreement and the making of the Loans and the issuance of the Letters of Credit: 8.1 CORPORATE STATUS. Newco 4 and each Material Subsidiary (a) is a duly organized and validly existing corporation or other entity in good standing under the laws of the jurisdiction of its organization and has the corporate or other organizational power and authority to own its property and assets and to transact the business in which it is engaged and (b) has duly qualified and is authorized to do business and is in good standing in all jurisdictions where it is required to be so qualified, except where the failure to be so qualified could not reasonably be expected to result in a Material Adverse Effect. 8.2 CORPORATE POWER AND AUTHORITY. Each Credit Party has the corporate power and authority to execute, deliver and carry out the terms and provisions of the Credit Documents to which it is a party and has taken all necessary corporate action to authorize the execution, delivery and performance of the Credit Documents to which it is a party. Each Credit Party has duly executed and delivered each Credit Document to which it is a party and each such Credit Document constitutes the legal, valid and binding obligation of such Credit Party enforceable in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and subject to general principles of equity. 8.3 NO VIOLATION. Neither the execution, delivery and performance by any Credit Party of the Credit Documents to which it is a party nor compliance with the terms and provisions thereof nor the consummation of the Transactions and the other transactions contemplated therein will (a) contravene any applicable provision of any material law, statute, rule, regulation, order, writ, injunction or decree of any court or governmental instrumentality, (b) result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien upon any of the property or assets of Newco 4 or any of its Subsidiaries pursuant to, the terms of any material indenture (including the Subordinated Note Indenture), loan agreement, 68 lease agreement, mortgage, deed of trust, agreement or other material instrument to which Newco 4 or any of its Subsidiaries is a party or by which it or any of its property or assets is bound or (c) violate any provision of the certificate of incorporation or By-Laws of Newco 4 or any of its Subsidiaries. 8.4 LITIGATION. Except as set forth in Parent's audited financial statements for the fiscal year ended December 31, 1997, there are no actions, suits or proceedings (including, without limitation, Environmental Claims) pending or, to the knowledge of Newco 4 or Parent, threatened with respect to Newco 4 or any of its Subsidiaries that could reasonably be expected to result in a Material Adverse Effect. 8.5 MARGIN REGULATIONS. Neither the making of any Loan hereunder nor the use of the proceeds thereof will violate the provisions of Regulation T, U or X of the Board. 8.6 GOVERNMENTAL APPROVALS. No order, consent, approval, license, authorization, or validation of, or filing, recording or registration with, or exemption by, any Governmental Authority is required to authorize or is required in connection with (a) the execution, delivery and performance of any Credit Document or (b) the legality, validity, binding effect or enforceability of any Credit Document, except any of the foregoing the failure to obtain or make could not reasonably be expected to have a Material Adverse Effect. 8.7 INVESTMENT COMPANY ACT. Neither Newco 4, Parent nor the Borrower is an "investment company" within the meaning of the United States Investment Company Act of 1940, as amended. 8.8 TRUE AND COMPLETE DISCLOSURE. To the knowledge of the Borrower, (a) all factual information and data (taken as a whole) heretofore or contemporaneously furnished, by Newco 4, Parent, any of its Subsidiaries or any of their respective authorized representatives in writing to the Administrative Agent and/or any Lender on or before the Restatement Date (including, without limitation, (i) the Confidential Information Memorandum (whether furnished before, at or at any time after the Restatement Date) and (ii) all information contained in the Credit Documents) for purposes of or in connection with this Agreement or any transaction contemplated herein was (or, in the case of the Confidential Information Memorandum, will be) true and complete in all material respects on the date as of which such information or data is (or, in the case of the Confidential Information Memorandum, will be) dated or certified and was not (or, in the case of the Confidential Information Memorandum, will not be) incomplete by omitting to state any material fact necessary to make such information and data (taken as a whole) not misleading at such time in light of the circumstances under which such information or data was (or, in the case of the Confidential Information Memorandum, will be) furnished, it being understood and agreed that for purposes of this Section 8.8(a), such factual information and data shall not include projections and pro forma financial information. (b) The projections and pro forma financial information contained in the information and data referred to in paragraph (a) above were (or, in the case of the Confidential Information Memorandum, will be) based on good faith estimates and assumptions believed by such Persons to be reasonable at the time made, it being recognized by the Lenders that such projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ from the projected results. 8.9 FINANCIAL CONDITION; FINANCIAL STATEMENTS. The consolidated balance sheet of Parent and its Subsidiaries at December 31, 1997, and the related consolidated statements of operations and cash flows for the fiscal year ended as of such date, which statements have been audited by Ernst & Young, independent certified public accountants, who delivered an unqualified opinion with respect thereto, in each case present fairly in all material respects the 69 consolidated financial position of Parent and its Subsidiaries at the respective dates of said statements and the results of operations for the respective periods covered thereby. All such financial statements have been prepared in accordance with GAAP consistently applied except to the extent provided in the notes to said financial statements. There has been no Material Adverse Change since December 31, 1997, other than solely as a result of changes in general economic conditions. 8.10 TAX RETURNS AND PAYMENTS. Each of Parent and its Subsidiaries has filed all material tax returns, domestic and foreign, required to be filed by it and has paid all material taxes and assessments payable by it that have become due, other than those not yet delinquent or contested in good faith. Parent and each of its Subsidiaries have paid, or have provided adequate reserves (in the good faith judgment of the management of the Borrower) in accordance with GAAP for the payment of, all material income taxes applicable for all prior fiscal years and for the current fiscal year to the Restatement Date. 8.11 COMPLIANCE WITH ERISA. Each Plan is in compliance with ERISA, the Code and any applicable Requirement of Law; no Reportable Event has occurred (or is reasonably likely to occur) with respect to any Plan; no Plan is insolvent or in reorganization (or is reasonably likely to be insolvent or in reorganization), and no written notice of any such insolvency or reorganization has been given to Parent, any Subsidiary or any ERISA Affiliate; no Plan (other than a multiemployer plan) has an accumulated or waived funding deficiency (or is reasonably likely to have such a deficiency); neither Parent nor any Subsidiary nor any ERISA Affiliate has incurred (or is reasonably likely expected to incur) any liability to or on account of a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of the Code or has been notified in writing that it will incur any liability under any of the foregoing Sections with respect to any Plan; no proceedings have been instituted (or are reasonably likely to be instituted) to terminate or to reorganize any Plan or to appoint a trustee to administer any Plan, and no written notice of any such proceedings has been given to Parent, any Subsidiary or any ERISA Affiliate; and no lien imposed under the Code or ERISA on the assets of Parent, any Subsidiary or any ERISA Affiliate exists (or is reasonably likely to exist) nor has Parent, any Subsidiary or any ERISA Affiliate been notified in writing that such a lien will be imposed on the assets of Parent, any Subsidiary or any ERISA Affiliate on account of any Plan, EXCEPT to the extent that a breach of any of the foregoing representations, warranties or agreements in this Section 8.11 would not result, individually or in the aggregate, in an amount of liability that would be reasonably likely to have a Material Adverse Effect or relates to any matter disclosed in the financial statements of Parent contained in the Confidential Information Memorandum. No Plan (other than a multiemployer plan) has an Unfunded Current Liability that would, individually or when taken together with any other liabilities referenced in this Section 8.11, be reasonably likely to have a Material Adverse Effect. With respect to Plans that are multiemployer plans (as defined in Section 3(37) of ERISA), the representations and warranties in this Section 8.11, other than any made with respect to (a) liability under Section 4201 or 4204 of ERISA or (b) liability for termination or reorganization of such Plans under ERISA, are made to the best knowledge of Parent. The Borrower shall cause (a) all pension schemes maintained by or for the benefit of any Material Subsidiary organized under the laws of the United Kingdom and/or any of its employees to be maintained and operated in all material respects in accordance with all applicable laws from time to time and (b) all such pension schemes to be funded substantially in accordance with the governing provisions of such schemes, except to the extent failure to do so could not reasonably be expected to have a Material Adverse Effect. 8.12 SUBSIDIARIES. Schedule 8.12(a) lists each Subsidiary of Parent (and the direct and indirect ownership interest of Parent therein), in each case existing on the date hereof. To the knowledge of Parent, each Material Subsidiary as of the date hereof has been so designated on Schedule 8.12(a). Schedule 8.12(b) lists each Closing Date Excused Subsidiary. No Closing 70 Date Excused Subsidiary has, on the date hereof, total assets in excess of the amount set forth opposite the name of such Subsidiary on Schedule 8.12(b). 8.13 PATENTS, ETC. Newco 4 and each of the Restricted Subsidiaries have obtained all patents, trademarks, servicemarks, trade names, copyrights, licenses and other rights, free from burdensome restrictions, that are necessary for the operation of their respective businesses as currently conducted and as proposed to be conducted, except where the failure to obtain any such rights could not reasonably be expected to have a Material Adverse Effect. 8.14 ENVIRONMENTAL LAWS. (a) Other than instances of noncompliance that could not reasonably be expected to have a Material Adverse Effect: (i) Newco 4 and each of its Subsidiaries are in compliance with all Environmental Laws in all jurisdictions in which Parent and each of its Subsidiaries are currently doing business (including, without limitation, having obtained all material permits required under Environmental Laws) and (ii) Newco 4 will comply and cause each of its Subsidiaries to comply with all such Environmental Laws (including, without limitation, all permits required under Environmental Laws). (b) Neither Newco 4 nor any of its Subsidiaries has treated, stored, transported or disposed of Hazardous Materials at or from any currently or formerly owned Real Estate (as defined in Section 9.1(f)) or facility relating to its business in a manner that could reasonably be expected to have a Material Adverse Effect. 8.15 PROPERTIES. Newco 4 and each of the Restricted Subsidiaries have good title to or leasehold interest in all properties that are necessary for the operation of their respective businesses as currently conducted and as proposed to be conducted, free and clear of all Liens (other than any Liens permitted by this Agreement) and except where the failure to have such good title could not reasonably be expected to have a Material Adverse Effect. 8.16 YEAR 2000. Any reprogramming required to permit the proper functioning, in and following the year 2000, of (a) Newco 4 and its Subsidiaries' computer systems and (b) equipment containing embedded microchips (including systems and equipment supplied by others) and the testing of all such systems and equipment, as so reprogrammed, will be completed by July 1, 1999, except to the extent that the failure to complete such reprogramming and testing by such date could not reasonably be expected to have a Material Adverse Effect. The cost to Newco 4 and its Subsidiaries of such reprogramming and testing and of the reasonably foreseeable consequences of year 2000 to Newco 4 and its Subsidiaries (including, without limitation, reprogramming errors and the failure of others' systems or equipment) is not reasonably likely to have a Material Adverse Effect. SECTION 9. AFFIRMATIVE COVENANTS. Newco 4, Parent and the Borrower hereby covenant and agree that on the Closing Date and thereafter, for so long as this Agreement is in effect and until the Commitments, the Swingline Commitment and each Letter of Credit have terminated and the Loans and Unpaid Drawings, together with interest, Fees and all other Obligations incurred hereunder, are paid in full: 9.1 INFORMATION COVENANTS. Newco 4 and Parent will furnish to each Lender and the Administrative Agent: (a) ANNUAL FINANCIAL STATEMENTS. As soon as available and in any event on or before the date that is 120 days after the end of each fiscal year of Newco 4 (PROVIDED that, for purposes of this Section 9.1(a) only, fiscal year 1998 shall be deemed to end on December 31, 1998), the consolidated balance sheet of (i) Newco 4 and the Restricted Subsidiaries and (ii) Newco 4 and its Subsidiaries, in each case as at the end of such fiscal year and the related consolidated statement of operations and cash flows for such fiscal year and including a 71 reconciliation of such balance sheet and statements of operations and cash flows to financial statements prepared in accordance with United States generally accepted accounting principles, prepared in accordance with the requirements applicable to financial statements included in filings on SEC Form 20-F, setting forth comparative consolidated figures for the preceding fiscal year, and certified by independent certified public accountants of recognized national standing whose opinion shall not be qualified as to the scope of audit or as to the status of Newco 4 or any of the Material Subsidiaries as a going concern, together in any event with a certificate of such accounting firm stating that in the course of its regular audit of the business of Newco 4 and the Material Subsidiaries, which audit was conducted in accordance with generally accepted auditing standards, such accounting firm has obtained no knowledge of any Default or Event of Default relating to Section 10.9, 10.10 and 10.11 that has occurred and is continuing or, if in the opinion of such accounting firm such a Default or Event of Default has occurred and is continuing, a statement as to the nature thereof. (b) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in any event on or before the date that is 60 days after the end of such quarterly accounting period with respect to each of the first three quarterly accounting periods in each fiscal year of Newco 4 (including the quarterly accounting period ended on September 30, 1998), the consolidated balance sheet of (i) Newco 4 and the Restricted Subsidiaries and (ii) Newco 4 and its Subsidiaries, in each case as at the end of such quarterly period and the related consolidated statement of operations for such quarterly accounting period and for the elapsed portion of the fiscal year ended with the last day of such quarterly period (PROVIDED that, with respect to the quarterly accounting period ended on September 30, 1998, such elapsed portion shall include the previous twelve months), and the related consolidated statement of cash flows for the elapsed portion of the fiscal year ended with the last day of such quarterly period (PROVIDED that, with respect to the quarterly accounting period ended on September 30, 1998, such elapsed portion shall include the previous twelve months), and setting forth comparative consolidated figures for the related periods in the prior fiscal year or, in the case of such consolidated balance sheet, for the last day of the prior fiscal year, and including a reconciliation of such balance sheet and statements of operations and cash flows to financial statements prepared in accordance with United States generally accepted accounting principles, prepared in the same manner as the reconciliation referred to in Section 9.1(a), all of which shall be certified by an Authorized Officer of Newco 4, subject to changes resulting from audit and normal year-end audit adjustments. (c) BUDGETS. Within 60 days after the commencement of each fiscal year of the Borrower, budgets of Newco 4 in reasonable detail for the fiscal year as customarily prepared by management of Newco 4 for its internal use, setting forth the principal assumptions upon which such budgets are based. (d) OFFICER'S CERTIFICATES. At the time of the delivery of the financial statements provided for in Sections 9.1(a) and (b), a certificate of an Authorized Officer of Parent to the effect that no Default or Event of Default exists or, if any Default or Event of Default does exist, specifying the nature and extent thereof, which certificate shall set forth (i) the calculations required to establish whether the Borrower and its Subsidiaries were in compliance with the provisions of Sections 10.9, 10.10 and 10.11 as at the end of such fiscal year or period, as the case may be, (ii) a specification of any change in the identity of the Restricted Subsidiaries, Unrestricted Subsidiaries, Acquisition Subsidiaries, Foreign Subsidiaries and Restricted Non-Credit Party Subsidiaries as at the end of such fiscal year or period, as the case may be, from the Restricted Subsidiaries, Unrestricted Subsidiaries, Acquisition Subsidiaries, Foreign Subsidiaries and Restricted Non-Credit Party Subsidiaries, respectively, provided to the Lenders on the date hereof or the most recent fiscal year or period, as the case may be, (iii) the then applicable Status and (iv) the amount of any Pro Forma Adjustment not previously set forth in a Pro Forma Adjustment Certificate or any change in the amount of a Pro Forma Adjustment set forth in any Pro Forma Adjustment Certificate previously provided and, in either case, in reasonable detail, 72 the calculations and basis therefor; and at the time of the delivery of the financial statements provided for in Section 9.1(a), a certificate of an Authorized Officer of Parent setting forth in reasonable detail the Available Amount as at the end of the fiscal year to which such financial statements relate. (e) NOTICE OF DEFAULT OR LITIGATION. Promptly after an Authorized Officer of Newco 4 or any of its Subsidiaries obtains knowledge thereof, notice of (i) the occurrence of any event that constitutes a Default or Event of Default, which notice shall specify the nature thereof, the period of existence thereof and what action Newco 4 proposes to take with respect thereto, and (ii) any litigation or governmental proceeding pending against Newco 4 or any of its Subsidiaries that could reasonably be expected to result in a Material Adverse Effect. (f) ENVIRONMENTAL MATTERS. Parent will promptly advise the Lenders in writing after obtaining knowledge of any one or more of the following environmental matters, unless such environmental matters would not, individually or when aggregated with all other such matters, be reasonably expected to result in a Material Adverse Effect: (i) Any pending or threatened Environmental Claim against Newco 4 or any of its Subsidiaries or any Real Estate (as defined below); (ii) Any condition or occurrence on any Real Estate that (x) results in noncompliance by Newco 4 or any of its Subsidiaries with any applicable Environmental Law or (y) could reasonably be anticipated to form the basis of an Environmental Claim against Newco 4 or any of its Subsidiaries or any Real Estate; (iii) Any condition or occurrence on any Real Estate that could reasonably be anticipated to cause such Real Estate to be subject to any restrictions on the ownership, occupancy, use or transferability of such Real Estate under any Environmental Law; and (iv) The taking of any removal or remedial action in response to the actual or alleged presence of any Hazardous Material on any Real Estate. All such notices shall describe in reasonable detail the nature of the claim, investigation, condition, occurrence or removal or remedial action and Parent's response thereto. The term "REAL ESTATE" shall mean land, buildings and improvements owned or leased by Newco 4 or any of its Subsidiaries, but excluding all operating fixtures and equipment, whether or not incorporated into improvements. (g) OTHER INFORMATION. Promptly upon filing thereof, copies of any filings on Form 20-F, 6-K, 10-K, 10-Q or 8-K or registration statements with, and reports to, any Governmental Authority by Newco 4 or any of its Subsidiaries (other than amendments to any registration statement (to the extent such registration statement, in the form it becomes effective, is delivered to the Lenders), exhibits to any registration statement and any registration statements on Form S-8) and copies of all financial statements, proxy statements, notices and reports that Newco 4 or any of its Subsidiaries shall send to the holders of any publicly issued debt of Newco 4 and/or any of its Subsidiaries (including the Subordinated Notes) in their capacity as such holders (in each case to the extent not theretofore delivered to the Lenders pursuant to this Agreement) and, with reasonable promptness, such other information (financial or otherwise) as the Administrative Agent on its own behalf or on behalf of any Lender may reasonably request in writing from time to time. (h) PRO FORMA ADJUSTMENT CERTIFICATE. Not later than the consummation of the acquisition of any Acquired Entity or Business by Newco 4 or any Restricted Subsidiary for which there shall be a Pro Forma Adjustment, a certificate of an Authorized Officer of Parent 73 setting forth the amount of such Pro Forma Adjustment and, in reasonable detail, the calculations and basis therefor. 9.2 BOOKS, RECORD AND INSPECTIONS. Newco 4 and Parent will, and will cause each of the Specified Subsidiaries to, permit officers and designated representatives of the Administrative Agent or the Required Lenders to visit and inspect any of the properties or assets of Newco 4, the Borrower and any such Specified Subsidiary in whomsoever's possession to the extent that it is within Newco 4's, Parent's or such Specified Subsidiary's control to permit such inspection, and to examine the books of account of Newco 4, Parent and any such Specified Subsidiary and discuss the affairs, finances and accounts of Newco 4, of Parent and of any such Specified Subsidiary with, and be advised as to the same by, its and their officers and independent accountants, all at such reasonable times and intervals and to such reasonable extent as the Administrative Agent or the Required Lenders may desire. 9.3 MAINTENANCE OF INSURANCE. Newco 4 and Parent will, and will cause each of the Material Subsidiaries to, at all times maintain in full force and effect, with insurance companies that Parent believes (in the good faith judgment of the management of Parent) are financially sound and responsible at the time the relevant coverage is placed or renewed, insurance in at least such amounts and against at least such risks (and with such risk retentions) as are usually insured against in the same general area by companies engaged in the same or a similar business; and will furnish to the Lenders, upon written request from the Administrative Agent, information presented in reasonable detail as to the insurance so carried. 9.4 PAYMENT OF TAXES. Newco 4 and Parent will pay and discharge, and will cause each of their Subsidiaries to pay and discharge, all material taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits, or upon any properties belonging to it, prior to the date on which material penalties attach thereto, and all lawful material claims that, if unpaid, could reasonably be expected to become a material Lien upon any properties of Newco 4 or any of the Restricted Subsidiaries, PROVIDED that neither Newco 4 nor any of its Subsidiaries shall be required to pay any such tax, assessment, charge, levy or claim that is being contested in good faith and by proper proceedings if it has maintained adequate reserves (in the good faith judgment of the management of Parent) with respect thereto in accordance with GAAP. 9.5 CONSOLIDATED CORPORATE FRANCHISES. Newco 4 and Parent will do, and will cause each Material Subsidiary to do, or cause to be done, all things necessary to preserve and keep in full force and effect its existence, corporate rights and authority, except to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect; PROVIDED, HOWEVER, that Newco 4 and its Subsidiaries may consummate any transaction permitted under Section 10.3, 10.4 or 10.5. 9.6 COMPLIANCE WITH STATUTES, OBLIGATIONS, ETC. Newco 4 and Parent will, and will cause each Subsidiary to, comply with all applicable laws, rules, regulations and orders, except to the extent the failure to do so could not reasonably be expected to have a Material Adverse Effect. 9.7 ERISA. Promptly after Parent or any of its Subsidiaries or any ERISA Affiliate knows or has reason to know of the occurrence of any of the following events that, individually or in the aggregate (including in the aggregate such events previously disclosed or exempt from disclosure hereunder, to the extent the liability therefor remains outstanding), would be reasonably likely to have a Material Adverse Effect, Parent will deliver to each of the Lenders a certificate of an Authorized Officer or any other senior officer of Parent setting forth details as to such occurrence and the action, if any, that the Parent, such Subsidiary or such ERISA Affiliate is required or proposes to take, together with any notices (required, proposed or 74 otherwise) given to or filed with or by Parent, such Subsidiary, such ERISA Affiliate, the PBGC, a Plan participant (other than notices relating to an individual participant's benefits) or the Plan administrator with respect thereto: that a Reportable Event has occurred; that an accumulated funding deficiency has been incurred or an application is to be made to the Secretary of the Treasury for a waiver or modification of the minimum funding standard (including any required installment payments) or an extension of any amortization period under Section 412 of the Code with respect to a Plan; that a Plan having an Unfunded Current Liability has been or is to be terminated, reorganized, partitioned or declared insolvent under Title IV of ERISA (including the giving of written notice thereof); that a Plan has an Unfunded Current Liability that has or will result in a lien under ERISA or the Code; that proceedings will be or have been instituted to terminate a Plan having an Unfunded Current Liability (including the giving of written notice thereof); that a proceeding has been instituted against the Borrower, any of its Subsidiaries or an ERISA Affiliate pursuant to Section 515 of ERISA to collect a delinquent contribution to a Plan; that the PBGC has notified the Borrower, any of its Subsidiaries or any ERISA Affiliate of its intention to appoint a trustee to administer any Plan; that the Borrower, any of its Subsidiaries or any ERISA Affiliate has failed to make a required installment or other payment pursuant to Section 412 of the Code with respect to a Plan; or that the Borrower, any of its Subsidiaries or any ERISA Affiliate has incurred or will incur (or has been notified in writing that it will incur) any liability (including any contingent or secondary liability) to or on account of a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of the Code. 9.8 GOOD REPAIR. Newco 4 and Parent will, and will cause each of the Restricted Subsidiaries to, ensure that its properties and equipment used or useful in its business in whomsoever's possession they may be to the extent that it is within Newco 4's, Parent's or such Restricted Subsidiary's control to cause same, are kept in good repair, working order and condition, normal wear and tear excepted, and that from time to time there are made in such properties and equipment all needful and proper repairs, renewals, replacements, extensions, additions, betterments and improvements thereto, to the extent and in the manner customary for companies in similar businesses and consistent with third party leases, except in each case to the extent the failure to do so could not be reasonably expected to have a Material Adverse Effect. 9.9 TRANSACTIONS WITH AFFILIATES. Newco 4 and Parent will conduct, and cause each of the Restricted Subsidiaries to conduct, all transactions with any of its Affiliates (other than Newco 4, Parent or any Restricted Subsidiary) on terms that are substantially as favorable to Newco 4, Parent or such Restricted Subsidiary as it would obtain in a comparable arm's-length transaction with a Person that is not an Affiliate, PROVIDED that the foregoing restrictions shall not apply to (a) the payment of customary annual fees to Sponsor and/or its Affiliates for management, consulting and financial services rendered to Newco 4, Parent and their Subsidiaries and investment banking fees paid to Sponsor and its Affiliates for services rendered to Newco 4, Parent and their Subsidiaries in connection with divestitures, acquisitions, financings and other transactions, (b) customary fees paid to members of the Board of Directors of Newco 4, Parent and their Subsidiaries, (c) transactions between and among Newco 4, Parent and the Restricted Subsidiaries that do not involve any other Affiliate and (d) transactions permitted by Section 10.6. 9.10 END OF FISCAL YEARS; FISCAL QUARTERS. Newco 4 will, for financial reporting purposes, cause (a) each of its, and each of its Subsidiaries', fiscal years to end on December 31 of each year and (b) each of its, and each of its Subsidiaries', fiscal quarters to end on dates consistent with such fiscal year-end and Newco 4's past practice; PROVIDED, HOWEVER, that Newco 4 may, upon written notice to the Administrative Agent, change the financial reporting convention specified above (i) in the case of a change prior to December 31, 1998, to a fiscal year ending at a month-end prior thereto (in which case Test Periods beginning prior to such new year-end will be calculated on a PRO FORMA basis reasonably acceptable to the Administrative 75 Agent to give effect to a 12-month Test Period ending on the last day of such Test Period (which the Borrower may determine utilizing an annualization method in accordance with customary PRO FORMA accounting conventions)), or (ii) otherwise to any other financial reporting convention reasonably acceptable to the Administrative Agent, in which case Newco 4, Parent, the Borrower and the Administrative Agent will, and are hereby authorized by the Lenders to, make any adjustments to this Agreement that are necessary in order to reflect such change in financial reporting. 9.11 ADDITIONAL GUARANTORS. Except as provided in Section 10.1(j) or (k), Newco 4 will cause any Required Guarantor Subsidiary (other than any Unrestricted Subsidiary or Acquisition Subsidiary) formed or otherwise purchased or acquired after the date hereof and (b) any Subsidiary of Newco 4 (other than any Unrestricted Subsidiary or Acquisition Subsidiary) that is not a Required Guarantor Subsidiary on the date hereof but subsequently becomes a Required Guarantor Subsidiary (other than any Unrestricted Subsidiary or Acquisition Subsidiary), in each case to execute a supplement to the Guarantee (in the form provided as an appendix thereto or otherwise in form and substance reasonably satisfactory to the Administrative Agent), in order to become a Guarantor, provided that nothing in this Section 9.11 (or any other provision of any Credit Document) shall require any Subsidiary of Newco 4 to incur obligations under any Guarantee that would (i) cause such Subsidiary to violate any applicable law, rule or regulation or any requirement of any relevant regulatory authority; (ii) result in a reduction in such Subsidiary's capital or financial resources position for applicable regulatory purposes; or (iii) result in a breach of any existing joint venture or other shareholder agreement relating to such Subsidiary between Parent or any of its Subsidiaries and a third-party shareholder in the relevant Subsidiary. 9.12 PLEDGES OF ADDITIONAL STOCK AND EVIDENCE OF INDEBTEDNESS. (a) Except as provided in Section 10.1(j) or (k), Newco 4 and, after the date this document has been executed by Parent, Parent will pledge, and, in the case of clause (ii), will cause each direct subsidiary of Newco 4 or Parent to pledge, to the Administrative Agent, for the benefit of the Lenders, (i) all the capital stock of each direct subsidiary of Newco 4 or Parent (other than, prior to the Term Loan Funding Date, the Shares and other than capital stock of any Unrestricted Subsidiary, any Acquisition Subsidiary or any Subsidiary that is not a Guarantor) formed or otherwise purchased or acquired after the date hereof, in each case pursuant to a supplement to the U.K. Security Agreement (in the form provided as an appendix thereto or otherwise in form and substance reasonably satisfactory to the Administrative Agent), (ii) all evidences of Indebtedness in excess of $5,000,000 received by Newco 4, Parent or any of their direct Subsidiaries (other than any Unrestricted Subsidiary or Acquisition Subsidiary) in connection with any disposition of assets pursuant to Section 10.4(b), and (iii) all Associated Undertaking Notes, in each case pursuant to a supplement to the U.K. Security Agreement (in the form provided as an appendix thereto or otherwise in form and substance reasonably satisfactory to the Administrative Agent). (b) Except as provided in Section 10.1(j) or (k), the Borrower will pledge, and, in the case of clause (iii), will cause each direct Domestic Borrower Subsidiary to pledge, to the Administrative Agent, for the benefit of the Lenders, (i) all the capital stock of each direct Domestic Borrower Subsidiary (other than any Unrestricted Subsidiary, Acquisition Subsidiary or any Domestic Borrower Subsidiary the assets of which consist primarily of capital stock of Foreign Subsidiaries) and 65% of all the capital stock of each direct Material Subsidiary that is a Foreign Borrower Subsidiary (other than any Unrestricted Subsidiary or Acquisition Subsidiary), in each case, formed or otherwise purchased or acquired after the date hereof, in each case pursuant to a supplement to the U.S. Pledge Agreement in form and substance reasonably satisfactory to the Administrative Agent, (ii) all the capital stock of any direct Domestic Borrower Subsidiary (other than any Unrestricted Subsidiary or Acquisition Subsidiary) and 65% of all the capital stock of each direct Material Subsidiary that is a Foreign Borrower Subsidiary (other than any Unrestricted Subsidiary or Acquisition Subsidiary), in each case that is not a 76 direct Subsidiary on the date hereof but subsequently becomes a direct Subsidiary (other than an Unrestricted Subsidiary or Acquisition Subsidiary), in each case pursuant to a supplement to the U.S. Pledge Agreement in form and substance reasonably satisfactory to the Administrative Agent, (iii) all evidences of Indebtedness in excess of $5,000,000 received by the Borrower or any of the direct Domestic Borrower Subsidiaries (other than any Unrestricted Subsidiary or Acquisition Subsidiary) in connection with any disposition of assets pursuant to Section 10.4(b), and (iv) all Associated Undertaking Notes, in each case pursuant to a supplement to the U.S. Pledge Agreement in form and substance reasonably satisfactory to the Administrative Agent. 9.13 USE OF PROCEEDS. The Borrower will use the Letters of Credit and the proceeds of all Loans for the purposes set forth in the introductory statement to this Agreement. 9.14 CHANGES IN BUSINESS. From the Control Date, Newco 4 and its Subsidiaries taken as a whole will not fundamentally and substantively alter the character of their business taken as a whole from the business conducted by Parent and its Subsidiaries taken as a whole on the date hereof and other business activities incidental or related to any of the foregoing. 9.15 OWNERSHIP OF ASSETS. Newco 4 and Parent will, from and after the date of this Agreement, refrain from engaging in or permitting to occur any transaction or other event that results, after giving effect to such transaction or event, in the Pledged Subsidiaries (and their Restricted Subsidiaries) holding assets representing less than the lesser of (i) a substantial majority of the aggregate fair value of the assets of Newco 4 and its Subsidiaries (determined by the Borrower in good faith on a consolidated basis) at such time and (ii) an aggregate fair value at such time substantially equal to the fair value (determined by the Borrower in good faith on a consolidated basis) at such time of the assets held by Pledged Subsidiaries (and their Restricted Subsidiaries) on the date hereof. SECTION 10. NEGATIVE COVENANTS. Newco 4, Parent and the Borrower hereby covenant and agree that on the Closing Date and thereafter, for so long as this Agreement is in effect and until the Commitments, the Swingline Commitment and each Letter of Credit have terminated and the Loans and Unpaid Drawings, together with interest, Fees and all other Obligations incurred hereunder, are paid in full: 10.1 LIMITATION ON INDEBTEDNESS. Newco 4 and Parent will not, and will not permit any of the other Restricted Subsidiaries to, create, incur, assume or suffer to exist any Indebtedness, except: (a) Indebtedness arising under the Credit Documents; (b) Indebtedness of (i) Newco 4 to any Subsidiary of Newco 4, (ii) Parent to Newco 4 or any Subsidiary of Newco 4, (iii) the Borrower to Newco 4 or any Subsidiary of Newco 4 and (iv) any Restricted Subsidiary to Newco 4 or any other Subsidiary of Newco 4; (c) Indebtedness in respect of any bankers' acceptance, letter of credit, warehouse receipt or similar facilities entered into in the ordinary course of business; (d) except as provided in clauses (j) and (k) below, Guarantee Obligations incurred by (i) Restricted Subsidiaries in respect of Indebtedness of Newco 4 or other Restricted Subsidiaries that is permitted to be incurred under this Agreement and (ii) Newco 4 in respect of Indebtedness of the Restricted Subsidiaries that is permitted to be incurred under this Agreement, PROVIDED that no Restricted Subsidiary shall guarantee the Subordinated Bridge Facility or the Subordinated Notes unless (A) it has also guaranteed the Obligations pursuant to the Guarantee and (B) such guarantee of the Subordinated Bridge Facility or the Subordinated Notes is 77 subordinated to such Guarantee of the Obligations on terms no less favorable to the Lenders than the subordination provisions of the Subordinated Notes; (e) Guarantee Obligations incurred in the ordinary course of business consistent with those described in Schedule 10.1(a); (f) (i) Indebtedness (including Indebtedness arising under Capital Leases) incurred within 270 days of the acquisition, construction or improvement of fixed or capital assets to finance the acquisition, construction or improvement of such fixed or capital assets or otherwise incurred in respect of Capital Expenditures permitted by Section 10.11, (ii) Indebtedness arising under Capital Leases entered into in connection with Permitted Sale Leasebacks and (iii) Indebtedness arising under Capital Leases, other than Capital Leases in effect on the date hereof and Capital Leases entered into pursuant to subclauses (i) and (ii) above, PROVIDED that the aggregate amount of Indebtedness incurred pursuant to this subclause (iii) shall not exceed $25,000,000 at any time outstanding, and (iv) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i), (ii) or (iii) above, PROVIDED that the principal amount thereof is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension; (g) Indebtedness outstanding on the date hereof or incurred pursuant to facilities in place on the date hereof and in each case listed on Schedule 10.1 (b) and any refinancing, refunding, renewal or extension thereof, PROVIDED that (i) the principal amount thereof is not increased above the principal amount thereof outstanding or available immediately prior to such refinancing, refunding, renewal or extension, except to the extent otherwise permitted hereunder, and (ii) the direct and contingent obligors with respect to such Indebtedness are not changed; (h) Indebtedness in respect of Hedge Agreements; (i) Indebtedness in respect of (i) (A) the Subordinated Bridge Facility and (B) the Subordinated Notes, PROVIDED that the aggregate principal amount of such Indebtedness at any one time outstanding shall not exceed $575,000,000 and (ii) prior to the Term Loan Funding Date, the Senior Bridge Facility; (j) (i) Indebtedness of a Person or Indebtedness attaching to assets of a Person that, in either case, becomes a Restricted Subsidiary (including a Restricted Subsidiary that is also an Acquisi tion Subsidiary) or Indebtedness attaching to assets that are acquired by Newco 4 or any Restricted Subsidiary (including any Acquisition Subsidiary), in each case after the Closing Date as the result of a Permitted Acquisition, PROVIDED that (w) such Indebtedness existed at the time such Person became a Restricted Subsidiary or at the time such assets were acquired and, in each case, was not created in anticipation thereof, (x) such Indebtedness is not guaranteed in any respect by Newco 4 or any Restricted Subsidiary (other than any such person that so becomes a Restricted Subsidiary), (y)(A) Newco 4 or the Borrower pledges the capital stock of such Person to the Administrative Agent to the extent required under Section 9.12, (B) such Person executes a supplement to the Guarantee to the extent required under Section 9.11 and (C) if any such Indebtedness is secured, (1) the Guarantee referred to in the preceding subclause (B) is equally and ratably secured or (2) in the case of assets acquired by Newco 4, Parent or the Borrower or any other Restricted Subsidiary (other than any Acquisition Subsidiary), the Borrower's obligations hereunder or Newco 4's, Parent's or such Restricted Subsidiary's Guarantee, as the case may be, are equally and ratably secured, PROVIDED that the requirements of this subclause (y) shall not apply to an aggregate amount at any time outstanding of up to (and including) $100,000,000 of the aggregate of (1) such Indebtedness and (2) all Indebtedness as to which the proviso to clause (k)(i)(y) below then applies, and (z) the aggregate amount of such Indebtedness and all Indebtedness incurred under clause (k) below, when taken together, does not exceed $200,000,000 in the aggregate at any time outstanding, PROVIDED that, 78 when calculating the outstanding amount of Indebtedness for purposes of this subclause (z), Indebtedness of any Acquisition Subsidiary, Indebtedness attaching to assets of any Acquisition Subsidiary and Indebtedness attaching to assets acquired by any Acquisition Subsidiary shall be excluded, and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above, PROVIDED that, except to the extent otherwise permitted hereunder, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension and (y) the direct and contingent obligors with respect to such Indebtedness are not changed; (k) (i) Indebtedness of Newco 4 or any Restricted Subsidiary (including any Acquisition Subsidiary) incurred to finance a Permitted Acquisition, PROVIDED that (x) such Indebtedness is not guaranteed in any respect by any Restricted Subsidiary (other than any Person acquired (the "ACQUIRED PERSON") as a result of such Permitted Acquisition or the Restricted Subsidiary so incurring such Indebtedness) or, in the case of Indebtedness of any Restricted Subsidiary, by Newco 4, (y)(A) Newco 4, Parent or the Borrower pledges the capital stock of such acquired Person to the Administrative Agent to the extent required under Section 9.12, (B) such acquired Person executes a supplement to the Guarantee to the extent required under Section 9.11 and (C) if a guarantee by such acquired Person of any such Indebtedness is secured by assets of such acquired Person, the Guarantee referred to in the preceding subclause (B) is equally and ratably secured, PROVIDED that the requirements of this subclause (y) shall not apply to an aggregate amount at any time outstanding of up to (and including) $100,000,000 of the aggregate of (1) such Indebtedness and (2) all Indebtedness as to which the proviso to clause (j)(i)(y) above then applies, and (z) the aggregate amount of such Indebtedness and all Indebtedness assumed or permitted to exist under clause (j) above, when taken together, does not exceed $200,000,000 in the aggregate at any time outstanding, PROVIDED that, when calculating the outstanding amount of Indebtedness for purposes of this subclause (z), Indebtedness of any Acquisition Subsidiary shall be excluded, and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above, PROVIDED that (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension and (y) the direct and contingent obligors with respect to such Indebtedness are not changed, except to the extent otherwise permitted hereunder; (l) Indebtedness of Restricted Non-Credit Party Subsidiaries in an aggregate amount at any time outstanding not to exceed (i) $75,000,000 MINUS (ii) the amount, if any, by which the aggregate amount of Indebtedness incurred and outstanding at such time pursuant to clause (o) below exceeds $125,000,000; (m) (i) Indebtedness incurred in connection with any Permitted Sale Leaseback and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above, PROVIDED that, except to the extent otherwise permitted hereunder, (x) the principal amount of any such Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding, renewal or extension and (y) the direct and contingent obligors with respect to such Indebtedness are not changed; (n) the Guaranteed Loan Notes; (o) (i) additional Indebtedness, PROVIDED that the aggregate amount of Indebtedness incurred and remaining outstanding pursuant to this clause (o) shall not at any time exceed the sum of (x) $125,000,000 and (y) the amount, if any, by which $75,000,000 exceeds the aggregate amount of Indebtedness then outstanding under clause (l) above, and (ii) any refinancing, refunding, renewal or extension of any Indebtedness specified in subclause (i) above; 79 (p) Indebtedness under any BACS Facility used in the ordinary course of business; (q) Indebtedness incurred in relation to arrangements made in the ordinary course of business to facilitate the operation of bank accounts on a net balance basis for the calculation of interest; (r) Indebtedness that is subject to a Letter of Credit provided pursuant to the Revolving Credit Facility; (s) short-term Indebtedness from banks incurred in the ordinary course of business pursuant to a facility required in order to comply with, or otherwise falling within, paragraph 25(2) of the Lloyds Brokers By-law (No. 5 of 1988) (or any other by-law or regulation issued by Lloyds from time to time with which the relevant company is required to comply); and (t) any guarantee facility entered into in the ordinary course of business consistent with industry custom provided in relation to employees who are Lloyds names. 10.2 LIMITATION ON LIENS. Newco 4 and Parent will not, and will not permit any of the Restricted Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any property or assets of any kind (real or personal, tangible or intangible) of Newco 4, Parent or any Restricted Subsidiary, whether now owned or hereafter acquired, except: (a) Liens arising under the Credit Documents and, on and after the Statutory Declaration Date and prior to the Term Loan Funding Date, Liens securing Indebtedness in respect of the Senior Bridge Facility; (b) Permitted Liens; (c) Liens securing Indebtedness permitted pursuant to Section 10.1(f), PROVIDED that such Liens attach at all times only to the assets so financed; (d) Liens existing on the date hereof; (e) Liens existing on the assets of any Person that becomes a Restricted Subsidiary, or existing on assets acquired, pursuant to a Permitted Acquisition to the extent the Liens on such assets secure Indebtedness permitted by Section 10.1(j), PROVIDED that such Liens attach at all times only to the same assets that such Liens attached to, and secure only the same Indebtedness that such Liens secured, immediately prior to such Permitted Acquisition; (f) (i) Liens placed upon the capital stock of any Restricted Subsidiary acquired pursuant to a Permitted Acquisition to secure Indebtedness of Newco 4 or any Restricted Subsidiary incurred pursuant to Section 10.1(k) in connection with such Permitted Acquisition, (ii) Liens placed upon the assets of such Restricted Subsidiary to secure a guarantee by such Restricted Subsidiary of any such Indebtedness of Newco 4 or any Restricted Subsidiary and (iii) Liens placed upon the capital stock or assets of any Acquisition Subsidiary to secure Indebtedness of such Acquisition Subsidiary incurred pursuant to Section 10.1(k) in connection with any Permitted Acquisition; (g) the replacement, extension or renewal of any Lien permitted by clauses (a) through (f) above upon or in the same assets theretofore subject to such Lien or the replacement, extension or renewal (without increase in the amount or change in any direct or contingent obligor except to the extent otherwise permitted hereunder) of the Indebtedness secured thereby; 80 (h) Liens incurred by Restricted Non-Credit-Party Subsidiaries so long as the aggregate principal amount of the obligations so secured does not exceed $50,000,000 at any time outstanding; (i) additional Liens so long as the aggregate principal amount of the obligations so secured does not exceed $25,000,000 at any time outstanding; (j) charges in favor of Lloyds over IBA accounts to the extent required to be created under the Lloyds Brokers By-law (No. 5 of 1988) (or any other by-law or regulation issued by Lloyds from time to time with which the relevant company is required to comply); (k) Liens existing over IBA assets as contemplated by the Lloyds Brokers By-law (No. 5 of 1988) (or any other by-law or regulation issued by Lloyds from time to time with which the relevant company is required to comply); (l) Liens over credit balances created in favor of any bank in order to facilitate the operation of bank accounts on a net balance basis for the calculation of interest or in connection with any BACS facility used in the ordinary course of business; (m) Liens comprised by escrow arrangements entered into in connection with asset sales, transfers or other dispositions permitted pursuant to Section 10.4; and (n) Liens on escrowed amounts of up to (pound)5,500,000 in connection with run-off arrangements relating to Willis Faber Underwriting Management Limited. 10.3 LIMITATION ON FUNDAMENTAL CHANGES. Except as expressly permitted by Section 10.4 or 10.5, Newco 4 and Parent will not, and will not permit any of the Restricted Subsidiaries to, enter into any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer or otherwise dispose of, all or substantially all its business units, assets or other properties, except that: (i) any Subsidiary of the Borrower or any other Person may be merged or consolidated with or into the Borrower, PROVIDED that (i) the Borrower shall be the continuing or surviving corporation or the Person formed by or surviving any such merger or consolidation (if other than the Borrower) shall be a corporation organized or existing under the laws of the United States, any state thereof, the District of Columbia or any territory thereof (the Borrower or such Person, as the case may be, being herein referred to as the "SUCCESSOR BORROWER"), (ii) the Successor Borrower (if other than the Borrower) shall expressly assume all the obligations of the Borrower under this Agreement and the other Credit Documents pursuant to a supplement hereto or thereto in form reasonably satisfactory to the Administrative Agent, (iii) no Default or Event of Default would result from the consummation of such merger or consolidation, (iv) the Successor Borrower shall be in compliance, on a pro forma basis after giving effect to such merger or consolidation, with the covenants set forth in Sections 10.9, 10.10 and 10.11, as such covenants are recomputed as at the last day of the most recently ended Test Period under such Section as if such merger or consolidation had occurred on the first day of such Test Period, (v) each Guarantor, unless it is the other party to such merger or consolidation, shall have by a supplement to the Guarantee confirmed that its Guarantee shall apply to the Successor Borrower's obligations under this Agreement and (vi) the Borrower shall have delivered to the Administrative Agent an officer's certificate and an opinion of counsel, each stating that such merger or consolidation and such supplement to this Agreement 81 or any Guarantee comply with this Agreement, PROVIDED FURTHER that if the foregoing are satisfied, the Successor Borrower (if other than the Borrower) will succeed to, and be substituted for, the Borrower under this Agreement; (ii) any Subsidiary of Newco 4 or Parent (other than Parent and the Borrower) or any other Person may be merged or consolidated with or into any one or more Subsidiaries of Newco 4, PROVIDED that (i) in the case of any merger or consolidation involving one or more Restricted Subsidiaries, (A) a Restricted Subsidiary shall be the continuing or surviving corporation or (B) Newco 4 and Parent shall take all steps necessary to cause the Person formed by or surviving any such merger or consolidation (if other than a Restricted Subsidiary) to become a Restricted Subsidiary, (ii) in the case of any merger or consolidation involving one or more Guarantors, a Guarantor shall be the continuing or surviving corporation or the Person formed by or surviving any such merger or consolidation (if other than a Guarantor) shall execute a supplement to the Guarantee in form and substance reasonably satisfactory to the Administrative Agent in order to become a Guarantor, (iii) no Default or Event of Default would result from the consummation of such merger or consolidation, (iv) in the case of any such merger or consolidation involving a Person other than Newco 4 or any Restricted Subsidiary, Newco 4 shall be in compliance, on a pro forma basis after giving effect to such merger or consolidation, with the covenants set forth in Sections 10.9, 10.10 and 10.11, as such covenants are recomputed as at the last day of the most recently ended Test Period under such Section as if such merger or consolidation had occurred on the first day of such Test Period, and (v) in the case of any such merger or consolidation involving a Person other than Newco 4 or any Restricted Subsidiary, the Borrower shall have delivered to the Administrative Agent an Officers' Certificate stating that such merger or consolidation and such supplement to any Guarantee comply with this Agreement; (iii) any Restricted Subsidiary that is not the Borrower or a Guarantor may, subject to Section 9.15, sell, lease, transfer or otherwise dispose of any or all of its assets (upon voluntary liquidation or otherwise) to Newco 4, a Guarantor or any other Restricted Subsidiary, and (iv) any Guarantor may sell, lease, transfer or otherwise dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the Borrower or any other Guarantor. 10.4 LIMITATION ON SALE OF ASSETS. Newco 4 and Parent will not, and will not permit any of the Restricted Subsidiaries to, (i) convey, sell, lease, assign, transfer or otherwise dispose of any of its property, business or assets (including, without limitation, receivables and leasehold interests), whether now owned or hereafter acquired (other than any such sale, transfer, assignment or other disposition resulting from any casualty or condemnation of any assets of Parent or the Restricted Subsidiaries) or (ii) sell any shares owned by it of any Restricted Subsidiary's capital stock to any Person other than Newco 4, another Guarantor or a Restricted Foreign Subsidiary, except that: (a) Newco 4 and the Restricted Subsidiaries may sell, transfer or otherwise dispose of used or surplus equipment, vehicles, inventory and other assets in the ordinary course of business; (b) Newco 4 and the Restricted Subsidiaries may sell, transfer or otherwise dispose of other assets for fair value, PROVIDED that (i) the aggregate amount of such sales, transfers and disposals by Newco 4 and the Restricted Subsidiaries taken as a whole pursuant to 82 this clause (b) shall not exceed in the aggregate $300,000,000 during the term of this Agreement, (ii) any consideration in excess of $5,000,000 received by the Borrower or any Guarantor in connection with such sales, transfers and other dispositions of assets pursuant to this clause (b) that is in the form of Indebtedness shall be pledged to the Administrative Agent pursuant to Section 9.12, (iii) with respect to any such sale, transfer or disposition (or series of related sales, transfers or dispositions) in an aggregate amount in excess of $10,000,000, Parent shall be in compliance, on a pro forma basis after giving effect to such sale, transfer or disposition, with the covenants set forth in Sections 10.9, 10.10 and 10.11, as such covenants are recomputed as at the last day of the most recently ended Test Period under such Sections as if such sale, transfer or disposition had occurred on the first day of such Test Period, and (iv) after giving effect to any such sale, transfer or disposition, no Default or Event of Default shall have occurred and be continuing; (c) Newco 4 and the Restricted Subsidiaries may make sales of assets to Newco 4 or to any Restricted Subsidiary, PROVIDED that any such sales to Restricted Non-Credit Party Subsidiaries shall be for fair value; (d) any Restricted Subsidiary may effect any transaction permitted by Section 10.3; and (e) in addition to selling or transferring accounts receivable pursuant to the other provisions hereof, Newco 4 and the Restricted Subsidiaries may sell or discount without recourse accounts receivable arising in the ordinary course of business in connection with the compromise or collection thereof. 10.5 LIMITATION ON INVESTMENTS. Newco 4 and Parent will not, and will not permit any of the Restricted Subsidiaries to, make any advance, loan, extensions of credit or capital contribution to, or purchase any stock, bonds, notes, debentures or other securities of or any assets of, or make any other investment in, any Person, except: (a) extensions of trade credit and asset purchases in the ordinary course of business; (b) Permitted Investments; (c) loans and advances to officers, directors and employees of Newco 4 or any of its Subsidiaries (i) to finance the purchase of capital stock of Newco 4 and (ii) for additional purposes not contemplated by subclause (i) above in an aggregate principal amount at any time outstanding with respect to this clause (ii) not exceeding $10,000,000; (d) investments existing on the date hereof and any extensions, renewals or reinvestments thereof, so long as the aggregate amount of all investments pursuant to this clause (d) is not increased at any time above the amount of such investments existing on the date hereof; (e) investments in Hedge Agreements permitted by Section 10.1(h); (f) investments received in connection with the bankruptcy or reorganization of suppliers or customers and in settlement of delinquent obligations of, and other disputes with, customers arising in the ordinary course of business; (g) investments constituting non-cash proceeds of sales, transfers and other dispositions of assets to the extent permitted by Section 10.4; 83 (h) investments in any Guarantor or Limited Guarantor; PROVIDED, HOWEVER, that in the case of investments in any Limited Guarantor, the aggregate amount of such investments at any time outstanding shall not exceed the amount of such Limited Guarantor's Guarantee at such time; (i) investments constituting Permitted Acquisitions, PROVIDED that the aggregate amount of any such investment made by Newco 4 or any Restricted Subsidiary (other than any Acquisition Subsidiary) in any Acquisition Subsidiary shall not exceed the Available Amount at the time of such investment, and PROVIDED FURTHER that the aggregate amount of any such investment made by Newco 4 or any Restricted Subsidiary (other than any Restricted Non-Credit-Party Subsidiary) in any Restricted Non-Credit-Party Subsidiary shall not exceed (i) the Available Non-Credit-Party Investment Amount at the time of such investment MINUS (ii) the portion of the Available Non-Credit-Party Investment Amount being used at such time for investments made pursuant to clause (k) below; (j) investments in any Restricted Non-Credit-Party Subsidiary, PROVIDED that the aggregate amount of any such investment made by Newco 4 or any Restricted Subsidiary (other than any Restricted Non-Credit-Party Subsidiary) shall not exceed (i) the Available Non-Credit-Party Investment Amount at the time of such investment MINUS (ii) the portion of the Available Non-Credit- Party Investment Amount being used at such time for investments made pursuant to clause (k) below; (k) additional investments (including investments in Minority Investments, Unrestricted Subsidiaries and Acquisition Subsidiaries) in an aggregate amount at the time of such investment not in excess of the sum of (i) the Available Amount at such time and (ii) the amount equal to one-half of the Available Non-Credit-Party Investment Amount at such time; (l) investments permitted under Section 10.6.; (m) investments listed on Schedule 10.5; (n) loans to any Associated Undertaking, PROVIDED that (i) the aggregate principal amount of all such loans shall not exceed $50,000,000 at any one time outstanding and (ii) if the aggregate principal amount of all loans made to any Associated Undertaking pursuant to this Section 10.5 exceeds $25,000,000, all such loans made to such Associated Undertaking shall be evidenced by an Associated Undertaking Note; and (o) investments to the extent that payment for such investments is made solely with capital stock of Newco 4. 10.6 LIMITATION ON DIVIDENDS. Newco 4 will not and, after the Control Date and prior to the consummation of the Acquisition, Parent will not declare or pay any dividends (other than dividends payable solely in its capital stock to Newco 3) or return any capital to its stockholders or make any other distribution, payment or delivery of property or cash to its stockholders as such, or redeem, retire, purchase or otherwise acquire, directly or indirectly, for consideration, any shares of any class of its capital stock or the capital stock of any direct or indirect parent of Newco 4 now or hereafter outstanding (or any warrants for or options or stock appreciation rights in respect of any of such shares), or set aside any funds for any of the foregoing purposes, or permit any of the Restricted Subsidiaries to purchase or otherwise acquire for consideration (other than in connection with an investment permitted by Section 10.5) any shares of any class of the capital stock of Newco 4, now or hereafter outstanding (or any options or warrants or stock appreciation rights issued by such Person with respect to its capital stock) (all of the foregoing "DIVIDENDS"), PROVIDED that, so long as no Default or Event of Default exists or would exist after giving effect thereto, (a) Newco 4 may redeem in whole or in part any capital 84 stock of Newco 4 (i) for another class of capital stock or rights to acquire capital stock of Newco 4 or (ii) with proceeds from substantially concurrent equity contributions or issuances of new shares of capital stock, PROVIDED that such other class of capital stock contains terms and provisions at least as advantageous to the Lenders in all respects material to their interests as those contained in the capital stock redeemed thereby, (b) Newco 4 may, or may pay Dividends to Newco 3 to enable Newco 3 to, repurchase (or pay Dividends to enable its parent company to repurchase, in the case of Newco 3 and Newco 2) shares of capital stock of Newco 4, Newco 3, Newco 2 or Newco 1 (and/or options or warrants in respect thereof) held by its officers, directors and employees so long as such repurchase is pursuant to, and in accordance with the terms of, management and/or employee stock plans, stock subscription agreements or shareholder agreements, (c) Newco 4 and Parent may make investments permitted by Section 10.5, (d) Newco 4 may declare and pay dividends on its capital stock, PROVIDED that (i) the aggregate amount of dividends paid pursuant to this clause (d) and clause (e) shall not at any time exceed 50% of Cumulative Consolidated Net Income Available to Stockholders at such time less the amount of dividends previously paid pursuant to this clause (d) and clause (e) following the last day of the most recent fiscal quarter for which Section 9.1 Financials have been delivered to the Lenders under Section 9.1 and (ii) at the time of the payment of any such dividends and after giving effect thereto, the Consolidated Total Debt to Consolidated EBITDA Ratio on the date of such payment of such dividends shall be less than 3.00:1.00, (e) Newco 4 may declare and pay cash dividends and/or make distributions on its capital stock to Newco 3 (i) to fund the payment of dividends (at a rate per annum not in excess of 7 1/2%) on the Preferred Stock outstanding on the Term Loan Funding Date, on any Replacement Preferred Stock and on any thereof accreting in lieu of dividends (whether such dividends have accrued during the then-current fiscal year or any previous fiscal year), (A) to the extent that the Consolidated Cash Available for Fixed Charges to Consolidated Fixed Charges Ratio for the Test Period most recently ended prior to the date on which such dividends would be paid, calculated on a pro forma basis to give effect to the payment of such dividends (assuming, for this purpose, that if there were two dividend payments on such Preferred Stock or Replacement Preferred Stock during such Test Period, the payment of the proposed dividends is made in lieu of the first such dividend payment during such Test Period), would be equal to or greater than the ratio (the "Target Ratio") set forth in the table below opposite the period during which such Test Period ends or (B) if the Consolidated Cash Available for Fixed Charges to Consolidated Fixed Charges Ratio for such Test Period (calculated on such pro forma basis) would be less than the Target Ratio, in an additional amount to the extent that, after giving effect to the payment of such additional dividends, the aggregate amount of dividends paid pursuant to this clause (B) during the term of this Agreement would not exceed $20,000,000, and (ii) so long as no Default or Event of Default has occurred and is continuing, to fund (A) the repurchase of outstanding shares of the Preferred Stock or the Replacement Preferred Stock for an aggregate purchase price not in excess of the Available Amount at the time of such repurchase and (B) the payment of accrued but unpaid dividends on the Preferred Stock or the Replacement Preferred Stock in an amount not in excess of the Available Amount at the time of such dividend payment, (f) Newco 4 may declare and pay dividends and/or make distributions on its capital stock, the proceeds of which will be used by Newco 3 solely to pay taxes of Newco 3 and its Subsidiaries as part of a consolidated tax filing group, along with franchise taxes, administrative and similar expenses related to its existence and ownership of Newco 4, PROVIDED that the amount of such dividends does not exceed in any fiscal year the amount of such taxes and expenses payable for such fiscal year, (g) Parent may declare and pay a dividend to be paid to holders of the Shares pro rata during the fiscal quarter ending December 31, 1998, if such dividend is declared prior to the Control Date in accordance with 85 past practice and (h) Parent may pay dividends to Newco 4 for use by Newco 4 for any of the purposes permitted in clauses (a) through (g) above.
Fiscal Year Ratio ----------- ----- 1999 1.25:1.00 2000 1.45:1.00 2001 1.60:1.00 2002 1.70:1.00 2003 1.80:1.00 2004 1.85:1.00 2005 1.95:1.00 2006 2.25:1.00 2007 3.00:1.00 2008 3.75:1.00
10.7 LIMITATIONS ON DEBT PAYMENTS AND AMENDMENTS. (a) Neither the Borrower nor Newco 4 will (i) prepay, repurchase or redeem or otherwise defease any portion of the Subordinated Bridge Facility or (ii) prepay, repurchase or redeem or otherwise defease any Subordinated Notes; PROVIDED, HOWEVER, that (A) Newco 4 may prepay the principal of, and accrued interest on, the Subordinated Bridge Facility with the Net Cash Proceeds of the Subordinated Notes or any refinancing or replacement of the Subordinated Bridge Facility that has terms material to the interests of the Lenders not materially less advantageous to the Lenders than the terms contemplated by the definition of the term "Subordinated Bridge Facility" and (B) so long as no Default or Event of Default has occurred and is continuing, the Borrower may prepay, repurchase or redeem Subordinated Notes (x) for an aggregate price not in excess of the Available Amount at the time of such prepayment, repurchase or redemption or (y) with the proceeds of subordinated Indebtedness that (1) is permitted by Section 10.1 and (2) has terms material to the interests of the Lenders not materially less advantageous to the Lenders than those of the Subordinated Notes. (b) Neither the Borrower nor Newco 4 will waive, amend, modify, terminate or release the documentation pursuant to which the Subordinated Loans were made or the Subordinated Note Indenture to the extent that any such waiver, amendment, modification, termination or release would be adverse to the Lenders in any material respect. 10.8 LIMITATIONS ON SALE LEASEBACKS. Newco 4 will not, and will not permit any of the Restricted Subsidiaries to, enter into or effect any Sale Leasebacks, other than Permitted Sale Leasebacks. 10.9 CONSOLIDATED TOTAL DEBT TO CONSOLIDATED EBITDA RATIO. Newco 4 and Parent will not permit the Consolidated Total Debt to Consolidated EBITDA Ratio for any Test 86 Period ending during any period set forth below to be greater than the ratio set forth below opposite such period:
Period Ratio ------ ------- First two fiscal quarters of 1999 6.00:1.00 Second two fiscal quarters of 1999 5.75:1.00 First two fiscal quarters of 2000 5.50:1.00 Second two fiscal quarters of 2000 5.25:1.00 First two fiscal quarters of 2001 5.00:1.00 Second two fiscal quarters of 2001 4.75:1.00 First two fiscal quarters of 2002 4.50:1.00 Second two fiscal quarters of 2002 4.25:1.00 Fiscal year 2003 through Tranche D Maturity Date 4.00:1.00
10.10 CONSOLIDATED EBITDA TO CONSOLIDATED INTEREST EXPENSE RATIO.Newco 4 and Parent will not permit the Consolidated EBITDA to Consolidated Interest Expense Ratio for any Test Period ending during any period set forth below to be less than the ratio set forth below opposite such period:
Period Ratio ------ ------- First two fiscal quarters of 1999 1.70:1.00 Second two fiscal quarters of 1999 1.80:1.00 First two fiscal quarters of 2000 1.90:1.00 Second two fiscal quarters of 2000 2.00:1.00 First two fiscal quarters of 2001 2.10:1.00 Second two fiscal quarters of 2001 2.20:1.00 First two fiscal quarters of 2002 2.30:1.00 Second two fiscal quarters of 2002 2.40:1.00 Fiscal year 2003 through Tranche D Maturity Date 2.50:1.00
10.11 CAPITAL EXPENDITURES. (a) Newco 4 and Parent will not, and will not permit any of the Restricted Subsidiaries to, make any Capital Expenditures (other than Permitted Acquisitions that constitute Capital Expenditures), that would cause the aggregate amount of such Capital Expenditures made by Newco 4 and the Restricted Subsidiaries in any fiscal year of Newco 4 to exceed the greater of (i) $55,000,000 and (ii) an amount equal to 4.75% of Consolidated Gross Revenues for the immediately preceding fiscal year. 87 (b) To the extent that Capital Expenditures (other than Permitted Acquisitions that constitute Capital Expenditures) made by Newco 4 and the Restricted Subsidiaries during any fiscal year are less than the maximum amount permitted to be made for such fiscal year, 50% of such unused amount (each such amount, a "CARRY-FORWARD AMOUNT") may be carried forward to the immediately succeeding fiscal year and utilized to make such Capital Expenditures in such succeeding fiscal year in the event the amount set forth above for such succeeding fiscal year has been used (it being understood and agreed that (i) no carry-forward amount may be carried forward beyond the first two fiscal years immediately succeeding the fiscal year in which it arose and, (ii) no portion of the carry-forward amount available for any fiscal year may be used until the entire amount of such Capital Expenditures permitted to be made in such fiscal year (without giving effect to such carry-forward amount) shall be made and (iii) if the carry forward amount available for any fiscal year is the sum of amounts carried forward from each of the two immediately preceding fiscal years, no portion of such carry-forward amount from the earlier of the two immediately preceding fiscal years may be used until the entire portion of such carryforward amount from the more recent immediately preceding fiscal year shall have been used for such Capital Expenditures made in such fiscal year). (c) Newco 4 and the Restricted Subsidiaries may also make Capital Expenditures in any fiscal year, in addition to the maximum amount permitted to be made for such fiscal year in accordance with the foregoing, in an amount equal to $25,000,000 (each such amount, a "CARRY-BACK AMOUNT") carried back from the immediately succeeding fiscal year (it being understood and agreed that (i) the maximum amount of Capital Expenditures permitted to be made in such next succeeding fiscal year shall be reduced by the carry-back amount used in such prior fiscal year and (ii) no carry-back amount may be carried back beyond the immediately preceding fiscal year). SECTION 11. EVENTS OF DEFAULT. Upon the occurrence of any of the following specified events (each an "EVENT OF DEFAULT"): 11.1 PAYMENTS. The Borrower shall (a) default in the payment when due of any principal of the Loans or (b) default, and such default shall continue for five or more days, in the payment when due of any interest on the Loans or any Fees or any Unpaid Drawings or of any other amounts owing hereunder or under any other Credit Document; or 11.2 REPRESENTATIONS, ETC. Any representation, warranty or statement made or deemed made by any Credit Party herein or in the Guarantee, the U.S. Pledge Agreement, the U.K. Security Agreement or any certificate delivered or required to be delivered pursuant hereto or thereto shall prove to be untrue in any material respect on the date as of which made or deemed made (it being understood that, for purposes of the foregoing, the truth of the representations and warranties set forth in Section 8.8 shall be determined without reference to the knowledge of the Borrower); or 11.3 COVENANTS. Any Credit Party shall (a) default in the due performance or observance by it of any term, covenant or agreement contained in Section 9.1(e), 9.15 or Section 10 or (b) default in the due performance or observance by it of any term, covenant or agreement (other than those referred to in Section 11.1 or 11.2 or clause (a) of this Section 11.3) contained in this Agreement, the Guarantee, the U.S. Pledge Agreement or the U.K. Security Agreement and such default shall continue unremedied for a period of at least 30 days after receipt of written notice by the Borrower from the Administrative Agent or the Required Lenders; or 11.4 DEFAULT UNDER OTHER AGREEMENTS. (a) Newco 4 or any of the Restricted Subsidiaries shall (i) default in any payment with respect to any Indebtedness (other than the 88 Obligations) in excess of $20,000,000 in the aggregate, for Newco 4 and such Subsidiaries, beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness was created or (ii) default in the observance or performance of any agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness was created, or (except in the case of Indebtedness consisting of any Hedge Agreement) any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, any such Indebtedness to become due prior to its stated maturity; or (b) without limiting the provisions of clause (a) above, any such Indebtedness (other than Indebtedness consisting of any Hedge Agreement) shall be declared to be due and payable, or required to be prepaid other than by a regularly scheduled required prepayment or as a mandatory prepayment, prior to the stated maturity thereof; or 11.5 BANKRUPTCY, ETC.. The Borrower or any other Specified Subsidiary that is organized under the laws of the United States, any state or territory thereof or the District of Columbia shall commence a voluntary case concerning itself under Title 11 of the United States Code entitled "Bankruptcy," as now or hereafter in effect, or any successor thereto (the "BANKRUPTCY CODE"); or an involuntary case is commenced against the Borrower or any such Specified Subsidiary and the petition is not controverted within 10 days after commencement of the case; or an involuntary case is commenced against the Borrower or any such Specified Subsidiary and the petition is not dismissed within 60 days after commencement of the case; or a custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge of, all or substantially all of the property of the Borrower or any such Specified Subsidiary; or Newco 4 or any Specified Subsidiary commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to Newco 4 or any Specified Subsidiary; or there is commenced against Newco 4 or any Specified Subsidiary any such proceeding that remains undismissed for a period of 60 days; or Newco 4 or any Specified Subsidiary is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or Newco 4 or any Specified Subsidiary suffers any appointment of any custodian or the like for it or any substantial part of its property to continue undischarged or unstayed for a period of 60 days; or Newco 4 or any Specified Subsidiary makes a general assignment for the benefit of creditors; or any corporate action is taken by Newco 4 or any Specified Subsidiary for the purpose of effecting any of the foregoing; or Newco 4 or any Specified Subsidiary organized under the laws of the United Kingdom is unable to pay its debts as they fall due, or makes a general assignment for the benefit of or a composition with its creditors generally; or Newco 4 or any Specified Subsidiary organized under the laws of the United Kingdom takes any corporate action or other steps are taken or legal proceedings are started for its winding-up, dissolution, administration or insolvent re-organization or for the appointment of a liquidator, administrator or administrative receiver of it. 11.6 ERISA. (a) Any Plan shall fail to satisfy the minimum funding standard required for any plan year or part thereof or a waiver of such standard or extension of any amortization period is sought or granted under Section 412 of the Code; any Plan is or shall have been terminated or is the subject of termination proceedings under ERISA (including the giving of written notice thereof); an event shall have occurred or a condition shall exist in either case entitling the PBGC to terminate any Plan or to appoint a trustee to administer any Plan (including the giving of written notice thereof); any Plan shall have an accumulated funding deficiency (whether or not waived); Parent, any of its Subsidiaries or any ERISA Affiliate has incurred or is likely to incur a liability to or on account of a Plan under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of the Code (including the giving of written notice thereof); (b) there could result from any event or events set forth in 89 clause (a) of this Section 11.6 the imposition of a lien, the granting of a security interest, or a liability, or the reasonable likelihood of incurring a lien, security interest or liability; and (c) such lien, security interest or liability will or would be reasonably likely to have a Material Adverse Effect; or 11.7 GUARANTEE. The Guarantee or any material provision thereof shall cease to be in full force or effect or any Guarantor thereunder or any Credit Party shall deny or disaffirm in writing such Guarantor's obligations under such Guarantee; or 11.8 U.S. PLEDGE AGREEMENT; U.K. SECURITY AGREEMENT. The U.S. Pledge Agreement, the U.K. Security Agreement or any material provision thereof shall cease to be in full force or effect (other than pursuant to the terms hereof or thereof or as a result of acts or omissions of the Administrative Agent or any Lender) or any Pledgor or grantor thereunder or any Credit Party shall deny or disaffirm in writing such Pledgor's or grantor's obligations under the U.S. Pledge Agreement or the U.K. Security Agreement, as applicable; or 11.9 JUDGMENTS. One or more judgments or decrees shall be entered against Newco 4 or any of the Restricted Subsidiaries involving a liability of $20,000,000 or more in the aggregate for all such judgments and decrees for Newco 4 and the Restricted Subsidiaries (to the extent not paid or fully covered by insurance provided by a carrier not disputing coverage) and any such judgments or decrees shall not have been satisfied, vacated, discharged or stayed or bonded pending appeal within 60 days from the entry thereof; 11.10 CHANGE OF CONTROL. A Change of Control shall occur; or 11.11. NEWCO 2 SECURITIES. Newco 2 shall issue any equity or debt security in exchange for the redemption or cancelation of the Preferred Stock other than Replacement Preferred Stock; then, and in any such event, and at any time thereafter, if any Event of Default shall then be continuing, the Administrative Agent shall, upon the written request of the Required Lenders, by written notice to the Borrower, take any or all of the following actions, without prejudice to the rights of the Administrative Agent or any Lender to enforce its claims against the Borrower, except as otherwise specifically provided for in this Agreement (PROVIDED that, if an Event of Default specified in Section 11.5 shall occur with respect to Newco 4 or any Specified Subsidiary, the result that would occur upon the giving of written notice by the Administrative Agent as specified in clauses (i), (ii) and (iv) below shall occur automatically without the giving of any such notice): (i) declare the Total Term Loan Commitment and the Total Revolving Commitment terminated, whereupon the Commitments and Swingline Commitment, if any, of each Lender or Chase, as the case may be, shall forthwith terminate immediately and any Fees theretofore accrued shall forthwith become due and payable without any other notice of any kind; (ii) declare the principal of and any accrued interest in respect of all Loans and all Obligations owing hereunder and thereunder to be, whereupon the same shall become, forthwith due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; (iii) terminate any Letter of Credit that may be terminated in accordance with its terms; and/or (iv) direct the Borrower to pay (and the Borrower agrees that upon receipt of such notice, or upon the occurrence of an Event of Default specified in Section 11.5 with respect to Newco 4 or any Specified Subsidiary, it will pay) to the Administrative Agent at the Administrative Agent's Office such additional amounts of cash, to be held as security for the Borrower's reimbursement obligations for Drawings that may subsequently occur thereunder, equal to the aggregate Stated Amount of all Letters of Credit issued and then outstanding. 90 SECTION 12. THE ADMINISTRATIVE AGENT. 12.1 APPOINTMENT. Each Lender hereby irrevocably designates and appoints the Administrative Agent as the agent of such Lender under this Agreement and the other Credit Documents, and each such Lender irrevocably authorizes the Administrative Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Credit Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Credit Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Credit Document or otherwise exist against the Administrative Agent. Neither the Syndication Agent nor the Documentation Agent, in their respective capacities as such, shall have any obligations, duties or responsibilities under this Agreement. 12.2 DELEGATION OF DUTIES. The Administrative Agent may execute any of its duties under this Agreement and the other Credit Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys in-fact selected by it with reasonable care. 12.3 EXCULPATORY PROVISIONS. Neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be (a) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Credit Document (except for its or such Person's own gross negligence or willful misconduct) or (b) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by the Borrower or any Guarantor or any officer thereof contained in this Agreement or any other Credit Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Credit Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Credit Document or for any failure of the Borrower or any Guarantor to perform its obligations hereunder or thereunder. The Administrative Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Credit Document, or to inspect the properties, books or records of the Borrower. 12.4 RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Borrower), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent may deem and treat the Lender specified in the Register with respect to any amount owing hereunder as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Credit Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining 91 from acting, under this Agreement and the other Credit Documents in accordance with a request of the Required Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans. 12.5 NOTICE OF DEFAULT. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Administrative Agent has received notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders, PROVIDED that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders (except to the extent that this Agreement requires that such action be taken only with the approval of the Required Lenders or each of the Lenders, as applicable). 12.6 NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS. Each Lender expressly acknowledges that neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representations or warranties to it and that no act by the Administrative Agent hereinafter taken, including any review of the affairs of the Borrower or any Guarantor, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Borrower and any Guarantor and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Credit Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Borrower and any Guarantor. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, assets, operations, properties, financial condition, prospects or creditworthiness of the Borrower or any Guarantor that may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates. 12.7 INDEMNIFICATION. The Lenders agree to indemnify the Administrative Agent in its capacity as such (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective portions of the Total Credit Exposure in effect on the date on which indemnification is sought (or, if indemnification is sought after the date upon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in accordance with their respective portions of the Total Credit Exposure in effect immediately prior to such date), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time (including, without limitation, at any time following the payment of the Loans) be imposed on, incurred by or asserted against the Administrative Agent in any way relating to or arising out of, the Commitments, this Agreement, any of the other Credit Documents or any documents contemplated by or referred to herein or 92 therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Administrative Agent under or in connection with any of the foregoing, PROVIDED that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent's gross negligence or willful misconduct. The agreements in this Section 12.7 shall survive the payment of the Loans and all other amounts payable hereunder. 12.8 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY. The Administrative Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrower and any Guarantor as though the Administrative Agent were not the Administrative Agent hereunder and under the other Credit Documents. With respect to the Loans made by it, the Administrative Agent shall have the same rights and powers under this Agreement and the other Credit Documents as any Lender and may exercise the same as though it were not the Administrative Agent, and the terms "Lender" and "Lenders" shall include the Administrative Agent in its individual capacity. 12.9 SUCCESSOR AGENT. The Administrative Agent may resign as Administrative Agent upon 20 days' prior written notice to the Lenders and the Borrower. If the Administrative Agent shall resign as Administrative Agent under this Agreement and the other Credit Documents, then the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor agent shall be approved by the Borrower (which approval shall not be unreasonably withheld), whereupon such successor agent shall succeed to the rights, powers and duties of the Administrative Agent, and the term "Administrative Agent" shall mean such successor agent effective upon such appointment and approval, and the former Administrative Agent's rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the Loans. After any retiring Administrative Agent's resignation as Administrative Agent, the provisions of this Section 12 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement and the other Credit Documents. SECTION 13. MISCELLANEOUS. 13.1 AMENDMENTS AND WAIVERS. Neither this Agreement nor any other Credit Document, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this Section 13.1. The Required Lenders may, or, with the written consent of the Required Lenders, the Administrative Agent may, from time to time, (a) enter into with the relevant Credit Party or Credit Parties written amendments, supplements or modifications hereto and to the other Credit Documents for the purpose of adding any provisions to this Agreement or the other Credit Documents or changing in any manner the rights of the Lenders or of the Borrower hereunder or thereunder or (b) waive, on such terms and conditions as the Required Lenders or the Administrative Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Credit Documents or any Default or Event of Default and its consequences; PROVIDED, HOWEVER, that no such waiver and no such amendment, supplement or modification shall directly (i) forgive any portion of any Loan or extend the final scheduled maturity date of any Loan or reduce the stated rate, or forgive any portion, or extend the date for the payment, of any interest or fee payable hereunder (other than as a result of waiving the applicability of any post-default increase in interest rates) or extend the final expiration date of any Lender's Commitment or extend the final expiration date of any Letter of Credit beyond the L/C Maturity Date or increase the aggregate amount of the Commitments of any Lender, in each case without the written consent of each Lender directly and adversely affected thereby, or (ii) amend, modify or waive any provision of this Section 13.1 or reduce the percentages specified in the definitions of the terms "Required Lenders", "Required 93 Tranche A Lenders", "Required Tranche B, C and D Lenders", "Supermajority Tranche A Lenders" and "Supermajority Tranche B, C and D Lenders" or consent to the assignment or transfer by the Borrower of its rights and obligations under any Credit Document to which it is a party (except as permitted pursuant to Section 10.3), in each case without the written consent of each Lender directly and adversely affected thereby, or (iii) amend, modify or waive any provision of Section 12 without the written consent of the then-current Administrative Agent, or (iv) amend, modify or waive any provision of Section 3 without the written consent of the Letter of Credit Issuer, or (v) amend, modify or waive any provisions hereof relating to Swingline Loans without the written consent of Chase, or (vi) change any Revolving Credit Commitment to any other Commitment (other than a Tranche A Commitment), change any Euro Revolving Credit Commitment or Yen Revolving Credit Commitment to any other Commitment, change any Tranche A Commitment to any other Commitment (other than a Revolving Credit Commitment) or change any Tranche B Commitment, Tranche C Commitment or Tranche D Commitment to any other Commitment, in each case without the prior written consent of each Lender directly and adversely affected thereby, or (vii) decrease any Tranche A Repayment Amount, extend any scheduled Tranche A Repayment Date or decrease the amount of any mandatory prepayment to be received by any Lender holding any Tranche A Loans, in each case without the written consent of the Required Tranche A Lenders, or (viii) decrease any scheduled Tranche B Repayment Amount, Tranche C Repayment Amount or Tranche D Repayment Amount, extend any Tranche B Repayment Date, Tranche C Repayment Date or Tranche D Repayment Date or decrease the amount of any mandatory prepayment to be received by any Lender holding any Tranche B Loans, Tranche C Loans or Tranche D Loans, in each case without the written consent of the Required Tranche B, C, and D Lenders, or (ix) release all or substantially all the Collateral or release all or substantially all the Guarantors under the Guarantee, in each case without the written consent of (A) the Supermajority Tranche A Lenders and (B) the Supermajority Tranche B, C and D Lenders, and PROVIDED FURTHER that at any time that no Default or Event of Default has occurred and is continuing, the Revolving Credit Commitment of any Lender may be increased to finance a Permitted Acquisition, with the consent of such Lender, the Borrower and the Administrative Agent (which consent, in the case of the Administrative Agent, shall not be unreasonably withheld) and without the consent of the Required Lenders, so long as (i) the Increased Commitment Amount (as defined below) at such time, when added to the amount of Indebtedness incurred pursuant to Section 10.1(k) and outstanding at such time, does not exceed the limits set forth therein, (ii) the Borrower shall pledge the Capital Stock of any person acquired pursuant thereto to the Administrative Agent for the benefit of the Lenders to the extent required under Section 9.12 and (iii) to the extent determined by the Administrative Agent to be necessary to ensure pro rata borrowings commencing with the initial borrowing after giving effect to such increase, the Borrower shall prepay any Eurodollar Loans outstanding immediately prior to such initial borrowing; as used herein, the "Increased Commitment Amount" means, at any time, aggregate amount of all increases pursuant to this proviso made at or prior to such time less the aggregate amount of all voluntary reductions of the Revolving Credit Commitments made prior to such time. Any such waiver and any such amendment, supplement or modification shall apply equally to each of the affected Lenders and shall be binding upon the Borrower, such Lenders, the Administrative Agent and all future holders of the affected Loans. In the case of any waiver, the Borrower, the Lenders and the Administrative Agent shall be restored to their former positions and rights hereunder and under the other Credit Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing, it being understood that no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. 13.2 NOTICES. All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by facsimile transmission), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered, or three days after being deposited in the mail, postage prepaid, or, in the case of 94 telecopy notice, when received, addressed as follows in the case of the Borrower and the Administrative Agent, and as set forth on Schedule 1.1 in the case of the other parties hereto, or to such other address as may be hereafter notified by the respective parties hereto: The Borrower: Willis Corroon Corporation 26 Century Blvd. P.O. Box 305026 Nashville, TN 37214 Attention: Bart Schwartz, Esq. Fax: (615) 872-3037 with a copy to: Willis Corroon Group Limited 10 Trinity Square London EC3P 3AX Attention: Thomas Colraine Fax: 011-44-171-481-7154 and to: Trinity Acquisition plc In care of Kohlberg Kravis Roberts & Co., L.P. 9 West 57th Street New York, NY 10019 Attention: Scott Nuttall Fax: (212) 750-0003 The Administrative Agent: The Chase Manhattan Bank c/o The Loan and Agency Services Group One Chase Manhattan Plaza, Eighth Floor New York, NY 10081 Attention: Janet Belden Fax: (212) 552-5658 with a copy to: The Chase Manhattan Bank 270 Park Avenue New York, NY 10017 Attention: Helen Newcomb Fax: (212) 270-1001 95 and a copy to: The Chase Manhattan Bank Trinity Tower Nine Thomas Moore Street London E1 9TY, England Attention: Steven Clarke Fax: 011-44-171-777-2360 PROVIDED that any notice, request or demand to or upon the Administrative Agent or the Lenders pursuant to Sections 2.3, 2.6, 2.9, 4.2 and 5.1 shall not be effective until received. 13.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right, remedy, power or privilege hereunder or under the other Credit Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 13.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties made hereunder, in the other Credit Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans hereunder. 13.5 PAYMENT OF EXPENSES AND TAXES. The Borrower agrees (a) to pay or reimburse the Agents for all their reasonable out-of-pocket costs and expenses incurred in connection with the development, preparation and execution of, and any amendment, supplement or modification to, this Agreement and the other Credit Documents and any other documents prepared in connection herewith or therewith, and the consummation and administration of the transactions contemplated hereby and thereby, including, without limitation, the reasonable fees, disbursements and other charges of counsel to the Agents, (b) to pay or reimburse each Lender and the Administrative Agent for all its reasonable and documented costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement, the other Credit Documents and any such other documents, including, without limitation, the reasonable fees, disbursements and other charges of counsel to each Lender and of counsel to the Administrative Agent, (c) to pay, indemnify, and hold harmless each Lender and the Administrative Agent from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other similar taxes, if any, that may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the other Credit Documents and any such other documents, and (d) to pay, indemnify, and hold harmless each Lender and the Administrative Agent and their respective directors, officers, employees, trustees and agents from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever, including, without limitation, reasonable and documented fees, disbursements and other charges of counsel, with respect to the execution, delivery, enforcement, performance and administration of this Agreement, the other Credit Documents and any such other documents, including, without limitation, any of the foregoing relating to the violation of, noncompliance with or liability under, any Environmental Law applicable to the operations of the Borrower, any of its Subsidiaries or any of the Properties (all the foregoing in this clause (d), collectively, the "INDEMNIFIED LIABILITIES"), PROVIDED that the Borrower shall have no obligation hereunder to the Administrative Agent or any Lender nor any 96 of their respective directors, officers, employees and agents with respect to indemnified liabilities arising from (i) the gross negligence or willful misconduct of the party to be indemnified or (ii) disputes among the Administrative Agent, the Lenders and/or their transferees. The agreements in this Section 13.5 shall survive repayment of the Loans and all other amounts payable hereunder. 13.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS. (a)(i) This Agreement shall be binding upon and inure to the benefit of Newco 4, Parent, the Borrower, the Lenders, the Administrative Agent and their respective successors and assigns, except that the Borrower may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of each Lender. (ii) Any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time sell to one or more banks or other entities ("PARTICIPANTS") participating interests in any Loan owing to such Lender, any Commitment of such Lender or any other interest of such Lender hereunder and under the other Credit Documents (including to loan derivative counterparties in respect of swaps or similar arrangements having the practical or economic effect thereof). In the event of any such sale by a Lender of a participating interest to a Participant, such Lender's obligations under this Agreement to the other parties to this Agreement shall remain unchanged, such Lender shall remain solely responsible for the performance thereof, such Lender shall remain the holder of any such Loan for all purposes under this Agreement and the other Credit Documents, and the Borrower and the Administrative Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and the other Credit Documents. In no event shall any Participant under any such participation have any right to approve any amendment or waiver of any provision of any Credit Document, or any consent to any departure by any Credit Party therefrom, except to the extent that such amendment, waiver or consent would directly forgive any principal of any Loan or reduce the stated rate, or forgive any portion, or postpone the date for the payment, of any interest or fee payable hereunder (other than as a result of waiving the applicability of any post-default increase in interest rates), or increase the aggregate amount of the Commitments of any Lender or postpone the date of the final scheduled maturity of any Loan, in each case to the extent subject to such participation. The Borrower agrees that if amounts outstanding under this Agreement are due or unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall, to the maximum extent permitted by applicable law, be deemed to have the right of setoff in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement, PROVIDED that, in purchasing such participating interest, such Participant shall be deemed to have agreed to share with the Lenders the proceeds thereof as provided in Section 13.7 as fully as if it were a Lender hereunder. The Borrower also agrees that each Participant shall be entitled to the benefits of Sections 2.10 and 2.11 with respect to its participation in the Commitments and the Loans outstanding from time to time as if it were a Lender, PROVIDED that no Participant shall be entitled to receive any greater amount pursuant to any such Section than the transferor Lender would have been entitled to receive in respect of the amount of the participation transferred by such transferor Lender to such Participant had no such transfer occurred. (iii) Any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time and from time to time assign to any Lender or any Affiliate thereof or Approved Fund with respect thereto (with the consent of the Borrower if any increased costs would result therefrom) or, with the consent of the Borrower and the Administrative Agent (which in each case shall not be unreasonably withheld, it being 97 understood that, without limitation, the Borrower shall have the right to withhold its consent to any assignment if, in order for such assignment to comply with applicable law, the Borrower would be required to obtain the consent of, or make any filing or registration with, any Governmental Authority), to an additional bank or fund that is regularly engaged in making, purchasing or investing in loans or securities or financial institution (an "ASSIGNEE") all or any part of its rights and obligations under this Agreement and the other Credit Documents pursuant to an Assignment and Acceptance, substantially in the form of Exhibit F, executed by such Assignee, such assigning Lender (and, in the case of an Assignee that is not then a Lender, an Affiliate thereof or an Approved Fund with respect thereto, by the Borrower and the Administrative Agent) and delivered to the Administrative Agent for its acceptance and recording in the Register, PROVIDED that, (a) except in the case of an assignment of all of a Lender's interests under this Agreement, unless otherwise agreed to by the Borrower and the Administrative Agent, no such assignment to an Assignee (other than any Lender, any Affiliate thereof or any Approved Fund with respect thereto) shall be in an aggregate principal amount of less than $5,000,000 and (b) after giving effect to each such assignment, the Revolving Credit Commitment of each Lender having a Euro Revolving Credit Commitment or Yen Revolving Credit Commitment shall be equal to or greater than such Lender's Euro Revolving Credit Commitment, if any, and Yen Revolving Credit Commitment, if any. Upon such execution, delivery, acceptance and recording, from and after the effective date determined pursuant to such Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto and, to the extent provided in such Assignment and Acceptance, have the rights and obligations of a Lender hereunder with a Commitment as set forth therein and (y) the assigning Lender thereunder shall, to the extent provided in such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such assigning Lender shall cease to be a party hereto). Notwithstanding any provision of this Agreement to the contrary, the consent of the Borrower shall not be required for any assignment that occurs at any time when any of the events described in Section 11.5 shall have occurred and be continuing with respect to the Borrower. (b) (b) Nothing herein shall prohibit any Lender from pledging or assigning all or any portion of its Loans to any Federal Reserve Bank in accordance with applicable law, and any Lender that is an investment fund that invests in bank loans may, without the consent of the Borrower or the Administrative Agent, pledge or assign all or any portion of its Loans and promissory notes evidencing such Loans to any trustee or any other representative of holders of obligations owed or securities issued by such investment fund as security for such obligations or securities, PROVIDED that no such pledge or assignment shall release a Lender from any of its obligations hereunder, substitute any such pledgee or assignee for such Lender as party hereto or increase the obligations of the Borrower hereunder. In order to facilitate such pledge or assignment, the Borrower hereby agrees that, upon request of any Lender at any time and from time to time after the Borrower has made its initial borrowing hereunder, the Borrower shall provide to such Lender, at the Borrower's own expense, a promissory note, substantially in the form of Exhibit C-1 or C-2, as the case may be, evidencing the Term Loans and Revolving Credit Loans, respectively, owing to such Lender. (c) The Administrative Agent, on behalf of the Borrower, shall maintain at the address of the Administrative Agent referred to in Section 13.2 a copy of each Assignment and Acceptance delivered to it and a register (the "REGISTER") for the recordation of the names and addresses of the Lenders and the Commitment of, and principal amount of the Loans (whether or not evidenced by a promissory note) owing to, each Lender from time to time. The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the 98 Register as the owner of a Loan or other obligation hereunder as the owner thereof for all purposes of this Agreement and the other Credit Documents, notwithstanding any notice to the contrary. Any assignment of any Loan or other obligation hereunder (whether or not evidenced by a promissory note) shall be effective only upon appropriate entries with respect thereto being made in the Register. Any assignment of all or part of a Loan evidenced by a promissory note shall be registered on the Register only upon surrender for registration of assignment or transfer of such promissory note evidencing such Loan, accompanied by a duly executed Assignment and Acceptance, and thereupon one or more new promissory notes in the same aggregate principal amount shall be issued to the designated Assignee and the old promissory notes shall be returned by the Administrative Agent to the Borrower marked "canceled". The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. (d) The Administrative Agent shall (i) upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an Assignee (and, in the case of an Assignee that is not then a Lender, an Affiliate thereof or an Approved Fund with respect thereto, by the Borrower and the Administrative Agent) together with payment to the Administrative Agent of a registration and processing fee of $3,500, promptly accept such Assignment and Acceptance and (ii) on the effective date determined pursuant thereto record the information contained therein in the Register and give notice of such acceptance and recordation to the Lenders and the Borrower. (e) Subject to Section 13.16, the Borrower authorizes each Lender to disclose to any Participant or Assignee (each, a "TRANSFEREE") and any prospective Transferee any and all financial information in such Lender's possession concerning the Borrower and its Affiliates that has been delivered to such Lender by or on behalf of the Borrower pursuant to this Agreement or which has been delivered to such Lender by or on behalf of the Borrower in connection with such Lender's credit evaluation of the Borrower and its Affiliates prior to becoming a party to this Agreement, PROVIDED that neither the Administrative Agent nor any Lender shall provide to any Transferee or prospective Transferee any of the Confidential Information unless such person shall have previously executed a Confidentiality Agreement in the form of Exhibit H. 13.7 REPLACEMENTS OF LENDERS UNDER CERTAIN CIRCUMSTANCES. The Borrower shall be permitted to replace any Lender that (a) requests reimbursement for amounts owing pursuant to Section 2.10, 2.12, 3.5 or 5.4, (b) is affected in the manner described in Section 2.10(a)(iii) and as a result thereof any of the actions described in such Section is required to be taken or (c) becomes a Defaulting Lender, with a replacement bank or other financial institution, PROVIDED that (i) such replacement does not conflict with any Requirement of Law, (ii) no Event of Default shall have occurred and be continuing at the time of such replacement, (iii) the Borrower shall repay (or the replacement bank or institution shall purchase, at par) all Loans and other amounts (other than any disputed amounts), pursuant to Section 2.10, 2.11, 2.12, 3.5 or 5.4, as the case may be) owing to such replaced Lender prior to the date of replacement, (iv) the replacement bank or institution, if not already a Lender, and the terms and conditions of such replacement, shall be reasonably satisfactory to the Administrative Agent, (v) the replaced Lender shall be obligated to make such replacement in accordance with the provisions of Section 13.6 (provided that the Borrower shall be obligated to pay the registration and processing fee referred to therein) and (vi) any such replacement shall not be deemed to be a waiver of any rights that the Borrower, the Administrative Agent or any other Lender shall have against the replaced Lender. 13.8 ADJUSTMENTS; SET-OFF. (a) If any Lender (a "BENEFITTED LENDER") shall at any time receive any payment of all or part of its Loans, or interest thereon, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 11.5, or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of such other 99 Lender's Loans, or interest thereon, such benefitted Lender shall purchase for cash from the other Lenders a participating interest in such portion of each such other Lender's Loan, or shall provide such other Lenders with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such benefitted Lender to share the excess payment or benefits of such collateral or proceeds ratably with each of the Lenders; PROVIDED, HOWEVER, that if all or any portion of such excess payment or benefits is thereafter recovered from such benefitted Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. (b) After the occurrence and during the continuance of an Event of Default, in addition to any rights and remedies of the Lenders provided by law, each Lender shall have the right, without prior notice to the Borrower, any such notice being expressly waived by the Borrower to the extent permitted by applicable law, upon any amount becoming due and payable by the Borrower hereunder (whether at the stated maturity, by acceleration or otherwise) to set-off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender or any branch or agency thereof to or for the credit or the account of the Borrower. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such set-off and application made by such Lender, PROVIDED that the failure to give such notice shall not affect the validity of such set-off and application. 13.9 COUNTERPARTS. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by facsimile transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrower and the Administrative Agent. 13.10 SEVERABILITY. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 13.11 INTEGRATION. This Agreement and the other Credit Documents represent the agreement of the Borrower, the Administrative Agent and the Lenders with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Administrative Agent or any Lender relative to subject matter hereof not expressly set forth or referred to herein or in the other Credit Documents. 13.12 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 13.13 SUBMISSION TO JURISDICTION; WAIVERS. Each of Newco 4, Parent and the Borrower hereby irrevocably and unconditionally: (a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Credit Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York and appellate courts from any thereof; 100 (b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Borrower at its address set forth in Section 13.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto; (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section 13.13 any special, exemplary, punitive or consequential damages. 13.14 ACKNOWLEDGMENTS. Each of Newco 4, Parent and the Borrower hereby acknowledges that: (a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Credit Documents; (b) neither the Administrative Agent nor any Lender has any fiduciary relationship with or duty to the Borrower arising out of or in connection with this Agreement or any of the other Credit Documents, and the relationship between Administrative Agent and Lenders, on one hand, and the Borrower, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and (c) no joint venture is created hereby or by the other Credit Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among the Borrower and the Lenders. 13.15 WAIVERS OF JURY TRIAL. NEWCO 4, PARENT, THE BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. 13.16 CONFIDENTIALITY. The Administrative Agent and each Lender shall hold all non-public information furnished by or on behalf of the Borrower in connection with such Lender's evaluation of whether to become a Lender hereunder or obtained by such Lender or the Administrative Agent pursuant to the requirements of this Agreement ("CONFIDENTIAL INFORMATION"), in accordance with its customary procedure for handling confidential information of this nature and (in the case of a Lender that is a bank) in accordance with safe and sound banking practices and in any event may make disclosure as required or requested by any governmental agency or representative thereof or pursuant to legal process or to such Lender's or the Administrative Agent's attorneys, professional advisors or independent auditors or Affiliates, PROVIDED that unless specifically prohibited by applicable law or court order, each Lender and the Administrative Agent shall notify the Borrower of any request by any governmental agency or representative thereof (other than any such request in connection with an examination of the financial condition of such Lender by such governmental agency) for disclosure of any such non-public information prior to disclosure of such information, and PROVIDED FURTHER that in no event 101 shall any Lender or the Administrative Agent be obligated or required to return any materials furnished by the Borrower or any Subsidiary of the Borrower. Each Lender and the Administrative Agent agrees that it will not provide to prospective Transferees or to prospective direct or indirect contractual counterparties in swap agreements to be entered into in connection with Loans made hereunder any of the Confidential Information unless such Person shall have previously executed a Confidentiality Agreement in the form of Exhibit H. 13.17 CONVERSION OF CURRENCIES. (a) If, for the purpose of obtaining judgment in any court, it is necessary to convert a sum owing hereunder in one currency into another currency, each party hereto agrees, to the fullest extent that it may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures in the relevant jurisdiction the first currency could be purchased with such other currency on the Business Day immediately preceding the day on which final judgment is given. (b) The obligations of the Borrower in respect of any sum due to any party hereto or any holder of the obligations owing hereunder (the "APPLICABLE CREDITOR") shall, notwithstanding any judgment in a currency (the "JUDGMENT CURRENCY") other than the currency in which such sum is stated to be due hereunder (the "AGREEMENT CURRENCY"), be discharged only to the extent that, on the Business Day following receipt by the Applicable Creditor of any sum adjudged to be so due in the Judgment Currency, the Applicable Creditor may in accordance with normal banking procedures in the relevant jurisdiction purchase the Agreement Currency with the Judgment Currency; if the amount of the Agreement Currency so purchased is less than the sum originally due to the Applicable Creditor in the Agreement Currency, the Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Applicable Creditor against such loss. The obligations of the Borrower contained in this Section 13.17 shall survive the termination of this Agreement and the payment of all other amounts owing hereunder. 13.18 EUROPEAN ECONOMIC AND MONETARY UNION. Except as expressly provided herein, each provision of this Agreement shall be subject to such reasonable changes of construction as the Administrative Agent may from time to time reasonably specify to be appropriate to reflect the adoption of the euro in any Participating Member State and any relevant market conventions or practices relating to the euro. 13.19 MARGIN REGULATIONS. (a) Notwithstanding anything in this Agreement or any other Credit Document to the contrary, prior to the Term Loan Funding Date, the Borrowings hereunder are not, and are not intended to be, secured by the Shares. (b) Notwithstanding anything in this Agreement or any other Credit Document to the contrary, prior to the Term Loan Funding Date, no covenant set forth in this Agreement or any other Credit Document shall be deemed to have been breached, and no Default or Event of Default shall be deemed to have occurred, as the result of (a) the granting of any Lien on any of the Shares, (b) any sale or disposition of the Shares for fair value received by the Borrower in cash (PROVIDED that the Borrower (i) holds the proceeds of such sale as cash or (ii) invests the proceeds of such sale in certificates of deposit, U.S. or U.K. government securities, commercial paper or other money market instruments that are exempted securities under the United States Federal securities laws or are of similar investment quality to the foregoing or (c) any change in the market value of the Shares. 102 IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Agreement to be duly executed and delivered as of the date first above written. WILLIS CORROON CORPORATION, as Borrower, by ------------------------------- Name: Title: WILLIS CORROON GROUP LIMITED, as a Guarantor, by ------------------------------- Name: Title: TRINITY ACQUISITION plc, as a Guarantor, by ------------------------------- Name: Title: THE CHASE MANHATTAN BANK, as Administrative Agent and as a Lender, by ------------------------------- Name: Title: EX-10.3 23 EX. 10.3 Exhibit 10.3 page 1 of pages. \Amsterdam, October 13, 1998 WILLIS CORROON GROUP plc WILLIS CORROON EUROPE B.V. TOLBERT INSURANCE & FINANCE B.V. SAINT GALLEN S.r.l. OLIMPIA S.r.l. ITAL BROKERS Holding S.p.A. ARCEF Holding N.V. and the Directors (as defined) MASTER SHAREHOLDERS' AGREEMENT INDEX MASTER SHAREHOLDERS' AGREEMENT........................................2 WHEREAS.............................................................2 PREAMBLE............................................................2 1. RECITALS AND EXHIBITS........................................2 2. TERMINATION OF PRIOR AGREEMENTS..............................2 3. DEFINITIONS..................................................2 4. REFERENCE TO THE MASTER ACQUISITION AGREEMENT AND INTERIM PERIOD.......................................................2 5. PURPOSE AND EFFECTS OF THIS MASTER SHAREHOLDERS' AGREEMENT...2 SHAREHOLDERS' PROVISIONS CONCERNING THE COMPANY.....................2 6. LIMITATIONS TO THE TRANSFER OF SHARES IN THE COMPANY.........2 7. COMPOSITION OF THE BOARD OF DIRECTORS AND OF THE COMMITTEE OF STATUTORY AUDITORS........................................2 8. MANAGEMENT OF THE COMPANY....................................2 9. CONDUCT OF BUSINESS..........................................2 10. AMENDMENT OF THE BY-LAWS....................................2 11. RECIPROCAL UNDERTAKINGS ON BUSINESS.........................2 SHAREHOLDER'S PROVISIONS CONCERNING TOLBERT.........................2 12. LIMITATIONS TO THE TRANSFER OF SHARES.......................2 13. RIGHT OF PREEMPTION AND CONSOLIDATION OF CERTAIN SHAREHOLDERS................................................2 14. COMPOSITION OF THE BOARD....................................2 15. CONDUCT OF BUSINESS.........................................2 16. AMENDMENT OF THE BY-LAWS....................................2 PUT AND CALL OPTIONS PROVISIONS.....................................2 17. PUT OPTIONS BY TOLBERT......................................2 18. CALL OPTIONS BY WILLIS......................................2 19. SPECIAL TOLBERT PUT AND CALL OPTION.........................2 20. PUT AND CALL OPTIONS DEFINITIONS............................2 21. GENERAL CONDITIONS CONCERNING PUT AND CALL OPTIONS..........2 22. RESTRICTIVE COVENANTS.......................................2 GENERAL PROVISIONS..................................................2 23. RIGHT OF INFORMATION........................................2 24. WARRANTIES..................................................2 25. COMMUNICATIONS..............................................2 26. DURATION....................................................2 27. MISCELLANEOUS...............................................2 28. GOVERNING LAW AND ARBITRATION...............................2 ANNEX 3 - COMPANY BY-LAWS..........................................2 ANNEX 16.1 - TOLBERT BY-LAWS.......................................2 page 2 of pages. MASTER SHAREHOLDERS' AGREEMENT By this Master Shareholders' Agreement (the "MSA" or the "Agreement") executed in Amsterdam on 13 October 1998 (the "Execution Date"), by and between WILLIS CORROON GROUP plc., a company organised and existing under the laws of United Kingdom, with registered office at Ten Trinity Square, London EC3P 3AX, authorised corporate capital of (pound) 66.000.000 issued corporate capital (pound) 53.222.386,13, fully paid in, registered no. 621757, represented by Ms. Sarah Turvill in her capacity as attorney and duly authorised to execute this Agreement (hereinafter referred to as "WILLIS Group"); - - WILLIS CORROON EUROPE B.V., a company organised and existing under the laws of The Netherlands, with registered office at Marten Meesweg 51, 3068 AV Rotterdam (The Netherlands), authorised share capital NLG 150.000.000, issued share capital NLG 115.493.000, registered no. 24135.835, represented by Ms.. Sarah Turvill in her capacity as Director and duly authorised to execute this Agreement (hereinafter referred to as "WILLIS Europe"); WILLIS Group and WILLIS Europe also being joint and collectively referred to as the "WILLIS"; - - TOLBERT INSURANCE & FINANCE B.V., a company organised and existing under the laws of The Netherlands, with registered office at "Olimpic Plaza", Fred. Roeskestraat 123 - I - 1076 EE Amsterdam - The Netherlands, corporate capital of NLG 73.400.000 (seventy-three-million-fourhundred-thousand) fully paid in, Trade Register No 33.150.389, represented by Mr. Eltink and by Mr. _____________in their capacity as attorney duly empowered to execute this Agreement (hereinafter referred to as "Tolbert"); - - SAINT GALLEN S.r.l., a company organised and existing under the laws of Italy with registered office at Via A. Doria 15, 10123 Turin (Italy), corporate capital of ITL page 3 of pages. 20.000.000, fully paid in, registered with the Companies Register of the Chamber of Commerce in Turin under no. 548343, represented by Mr. Lorenzo Boglione in his capacity as Chairman and duly authorised to execute this Agreement (hereinafter referred to as "Saint Gallen"); - - OLIMPIA S.r.l., a company organised and existing under the laws of Italy with registered office at Via dei Giardini n. 7, Milan - Italy, corporate capital of ITL 20.000.000 (twenty billion) fully paid in, registered with the Companies Register of the Chamber of Commerce in Milan under no. 1420817 (REA), represented by Mr. Carlo Pasteur in his capacity as Amministratore Unico duly authorised to execute this Agreement (hereinafter referred to as "OLIMPIA"); - - ITAL BROKERS Holding S.p.A., a company organised and existing under the laws of Italy, with registered office at Via Galassi n. 2, Cagliari, corporate capital of ITL 5.000.000.000 fully paid in, registered in the Companies Register of the Chamber of Commerce in Cagliari under no. 151025, represented by Mr. Sebastiano Romeo or Mr. Franco Lazzarini in their respective capacity as Chairman and Managing Director and duly authorised to execute this Agreement (hereinafter referred to as "HBC"); - - ARCEF Holding N.V., a company organised and existing under the laws of Netherlans Antilles, with registered office at Chuchubiweg 17, Curacao, corporate capital of USD 30,000 (thirty-thousand) fully paid in, represented by Mr. T.J. Eltink in his capacity as attorney duly empowered to execute this Agreement (hereinafter referred to as "NP"); and, - - Mr. Lorenzo Boglione, an Italian citizen, resident in Italy and domiciled at Via Padova, 55, 10152 Turin, Italy, (hereinafter "Mr. L. Boglione"); Mr. Enrico Boglione, an Italian citizen, resident in Italy and domiciled at Via Padova, 55, 10152 Turin, Italy, (hereinafter "Mr. E. Boglione"); and, Mr. Francesco Boglione, an Italian citizen, resident in the United Kingdom and domiciled at Via Padova, 55, 10152 Turin, Italy, (hereinafter "Mr. F. Boglione"); Mr. Marco Gallotti, an Italian citizen, resident in Italy and domiciled at Via Padova, 55, 10152 Turin, Italy, (hereinafter "Mr. Gallotti"); and, Mr. Giovanni Peracino, an Italian citizen, resident in Italy and domiciled at Via Padova, 55, 10152 Turin, Italy, (hereinafter "Mr. Peracino"); Messrs. Lorenzo Boglione, Enrico Boglione, Francesco Boglione, Marco Gallotti e Giovanni Peracino, also being jointly and collectively referred to as the "SG Directors"; and, - - Mr. Carlo Pasteur, an Italian citizen, resident in Italy and domiciled at Via Stampa 8, 20123 Milan (hereinafter "Mr. C. Pasteur"); and, Mr. Edoardo Pasteur, an Italian citizen, resident in Italy and domiciled at Via Santa Maria Valle 5, 20123 Milan, (hereinafter "Mr. E. Pasteur"); Messrs. Carlo Pasteur and Edoardo Pasteur, being jointly and collectively referred to as the "OLIMPIA Directors"; and, - - Mr. Franco Lazzarini, an Italian citizen, resident in Italy and domiciled at Via Albaro 3, Genova (hereinafter "Mr. Lazzarini"); Mr. Sebastiano Romeo, an Italian citizen, resident in Italy and domiciled at Via Albaro 3, Genova (hereinafter "Mr. page 4 of pages. Romeo"); and, Mr. Gian Carlo Gardella, an Italian citizen, resident in Italy and domiciled at Via Albaro 3, Genova (hereinafter "Mr. Gardella"); Messrs. Franco Lazzarini, Sebastiano Romeo and Gian Carlo Gardella, also being jointly and collectively referred to as the "HBC Directors"; WHEREAS A. All the parties to this MSA (the "Parties") will become, by effect of a Master Acquisition Agreement (as defined below), the direct and indirect shareholders owning 100% of the shares of the Company (as defined below). B. The Parties wish to implement the Memorandum of Understanding entered into on June 5, 1998, as amended and integrated thereafter on July 22, 1998, on July 28,1998, and by means of subsequent letters, whose contents are agreed upon by the Parties (the "MoU"), where, inter alia, the main terms of this MAA and of the MSA have been set out, and which will be fully replaced by the present MAA and by the MSA and, therefore, is terminated. C. Certain of the parties hereto have entered into a shareholders' agreement dated July 22, 1997, which will be fully replaced by the present MSA and therefore has to be terminated. Therefore, the Parties hereto undertake and agree as follows:- PREAMBLE 1. RECITALS AND EXHIBITS. The preambles hereto are to be construed as a material and integral part of this Master Shareholders' Agreement as well as the Exhibits and Annexes hereto. 2. TERMINATION OF PRIOR AGREEMENTS. The Shareholders' Agreement dated 22 July 1997, entered into by and among WILLIS, SG, Olimpia, SG Stockholders and Messrs. Pasteur, as they are defined in such shareholders' agreement, and the MoU entered into by and among Willis Corroon Group plc, Willis Corroon Europe B.V., Tolbert Insurance & Finance B.V., Ital Broker Holding page 5 of pages. S.p.A., Arcef Holding N.V, Uta Willis Corroon S.p.A., Saint Gallen S.r.l., and Olimpia S.r.l., are hereby terminated as of the date of this Agreement and all the parties are reciprocally released from any liability and/or obligation arising therefrom for any reason whatsoever. 3. DEFINITIONS. In this MSA, the following expressions shall have the following meanings unless the context otherwise requires: (a) "Business" means the business currently conducted by the Company as defined below, Ital Brokers S.p.A. and Interconsultwise S.r.l; (b) "Company" means Uta Willis Corroon S.p.A., a company organised and existing under the laws of Italy with registered office at Via Padova 55, Turin (Italy), registered with the Companies Register of the Chamber of Commerce in Turin under no. 118566, whose corporate capital is equal to ITL 1.000.000.000 (one billion) fully paid in and shall be held 50% by Willis Europe and 50% by Tolbert, as resulting from the homologation of certain capital increases and of the new version of the by-laws, which - inter alia - will also modify the name of the Company into "Willis Corroon Italia Holding" and its business scope from an operating company to a holding company; (c) "Company's By-laws" means the current by-laws of the Company, attached hereto under Annex 3, and their new version to be adopted in accordance with the provisions of this MSA and to be attached under the same annex once homologated. (d) "Director(s)" means any of Messrs. Lorenzo Boglione, Enrico Boglione, Francesco Boglione, Marco Gallotti, Giovanni Peracino, Carlo Pasteur, Edoardo Pasteur, Franco Lazzarini, Sebastiano Romeo, Gian Carlo Gardella, who owns (or will own as of First Closing) a direct or indirect interest as shareholders in Tolbert; furthermore any of Messrs. Enrico Boglione, Carlo Pasteur, Edoardo Pasteur, Marco Gallotti, Giovanni Peracino, Franco Lazzarini, Sebastiano Romeo and Gian Carlo Gardella, also defined as "Strategic Director(s)" with respect to certain rights and obligations provided hereunder. (e) "Execution Date" means the date of signature of this MSA and of the MAA as defined below; (f) "Fiduciary Funds" means all premiums and claims monies paid to or received by the Company from any source which relates to the insurance transactions of any page 6 of pages. kind relating to clients in connection with the business of the Company. (g) "First Closing" has the same meaning of the term First Closing as defined in the MAA; (h) "First Option" means the put option set forth under paagraph 17.2 letter (a) or the call option set forth under paragraph 18.2 letter (a). (i) "Master Acquisition Agreement" or "MAA" means the agreement entered into on Execution Date by and among Willis, Tolbert, SG, Olimpia, HBC, NP, which, inter alia, provides for the acquisition by the Company of 100% of Italbrokers S.p.A. and Interconsultwise SRL, and the acquisition by Tolbert of a 50% interest in the Company following certain transactions and corporate action. (j) "Put and/or Call Options" means an irrevocable obligation of WILLIS to purchase all or part of the Shares from Tolbert (the "Put Options") and an irrevocable obligation of Tolbert to sell to WILLIS Europe all or part of the Shares in accordance with the terms and conditions provided hereunder (the "Call Options"), in accordance with the terms and conditions provided under the Put and/or Call Options Provisions of this MSA; (k) "Shareholder(s)" means jointly or severally a shareholder or the shareholders of the Company; (l) "Share(s)" means (i) the shares or the quotas in a company, (ii) any shares issued in exchange therefor by way of conversion or reclassification, (iii) any shares or quotas representing or deriving from such shares or quotas in case of any consolidation, merger or split up of such company with or into another legal entity, or in case of any sale or conveyance to another legal entity of any property of such company as a whole, (iv) any shares or quotas representing or deriving from such property as a result of any increase in, reorganisation of, or variation of the capital of such company, (v) any warrants, subscription or stock option rights, or any other form of security or instrument that would create rights to hold an equity interest in such company, which may be created or authorised from time to time and (vi) any respective interest in a legal entity deriving from such shares or quotas by way of change to such company's legal form; (m) "Subsidiary" means any subsidiary of the Company, in relation to which at least one of the conditions referred to in the first paragraph of article 2359 of the Italian Civil Code is met; (n) "Tolbert Shareholder(s)" means jointly or severally a shareholder or the shareholders of Tolbert; and, (o) "Transfer" means to sell, assign, contribute into another company, swap, exchange, assign in usufruct, assign the sole ownership ("nuda proprieta"), page 7 of pages. dispose of, or otherwise transfer (whether by way of pledge, encumbrance or otherwise) any of the Shares, be it for a consideration or on a nil consideration basis (also by deed of gift), directly or indirectly owned, or enter into a commitment to do any of the foregoing. (p) "Willis Corroon Italia" means UTA Willis Corroon Rischi Speciali S.R.L. - which is and shall be controlled by the Company and the name of which shall be changed to "Willis Corroon Italia". 4. REFERENCE TO THE MASTER ACQUISITION AGREEMENT AND INTERIM PERIOD 4.1. This MSA and the MAA shall be entered into simultaneously on the same date and any and all events regulated in these two agreements that shall occur at Execution Date shall be deemed as to take place at the same time. If any of the transactions provided for in these two agreements should not take place, both this MSA, and the MAA shall remain without effect, unless otherwise agreed by the Parties, and each Party shall have recourse to all remedies available under applicable laws against the defaulting Party(ies). 4.2. Throughout the implementation of all actions set forth in this MAA and/or in the MSA and up and until the appointment of the new boards of directors of the interested companies as provided for in this MAA and/or MSA, the Parties agree to cause the boards of directors of all interested companies to conduct the day-to-day business in an ordinary and prudent manner with an aim to implementing the various actions provided for in this MAA and/or in the MSA, and to consult and agree among them should any extraordinary matter arise. Should the Parties fail to appoint new boards of directors, in any case the provisions set forth under the MSA shall apply with respect to the interested companies. 4.3. The Parties agree and acknowledge that a provision similar to this Article 4 has been provided for in the MAA. 4.4. The Directors hereby declare that even though they are not party to the MAA they fully acknowledge and agree all of the provisions set forth therein. 5. PURPOSE AND EFFECTS OF THIS MASTER SHAREHOLDERS' AGREEMENT. 5.1. The Parties hereto acknowledge and agree that the aim of this MSA is to regulate their respective direct or indirect interests in the Company and in Tolbert as from the date of First Closing and to ensure that all rights and obligations of each of the Parties hereto are satisfied. However the provisions of this MSA set forth under paragraphs 6.1, 13.1 and 13.2 shall be valid and binding among the Parties from Execution Date. page 8 of pages. 5.2. In particular, the Parties are fully aware that all the provisions of this MSA are non severable from each other (including the Put and/or Call Options and the related obligations to ensure their enforcement) and each of them is essential to the performance of the whole MSA. 5.3. Therefore, any default with respect to any provision of this MSA whatsoever, as well as any behaviour or act which may result in any unjustified delay, hindering, or default of any of them, shall be deemed to affect the entire MSA also for purposes of damages. SHAREHOLDERS' PROVISIONS CONCERNING THE COMPANY 6. LIMITATIONS TO THE TRANSFER OF SHARES IN THE COMPANY. 6.1. In view of the Put and/or Call Options provided hereunder, the Shareholders undertake not to Transfer any of the Shares of the Company up until 31st December 2007, unless prior written consent is obtained from the other Parties and, where the proposed transferee is not already a party to this Agreement, subject to this latter entering and being bound by all of the provisions set forth under this MSA. 6.2. The Parties expressly undertake not to abrogate the pre-emption right provided for under the current Company's by-laws and to amend it, and keep it so amended, in order to appropriately reflect (i) the definition of Shares and Transfer provided for under Article 3 above; and (ii) the Formula Price as defined under paragraph 20.1 below. 6.3. However, such pre-emption right shall not prejudice the exercise of the Put and/or Call Options and, to such effect, all of the Parties hereby waive any and all pre-emption rights they may be entitled to in respect of any Transfer of the Shares of the Company in accordance with the Put and/or Call Options. 7. COMPOSITION OF THE BOARD OF DIRECTORS AND OF THE COMMITTEE OF STATUTORY AUDITORS. 7.1. Upon the homologation of the new by-laws of the Company, its board of directors shall consist of 17 directors. 7.2. WILLIS will have the right to appoint 9 directors and Tolbert will have the right to appoint 8 directors. Should one of the directors need to be replaced or removed the new director shall be designated by the same Shareholder who has designated the replaced page 9 of pages. director and the other Shareholders shall vote at the general meeting of the Company in accordance with the instruction received by such Shareholder. 7.3. The Shareholders agree that, up until the exercise date of the First Option, the following appointments shall remain in place in the Company and in any of its subsidiaries: Director Office company Enrico Boglione Chairman & Managing Director the Company and Willis Corroon Italia Franco Lazzarini Deputy Chairman & Managing the Company and Willis Director Corroon Italia Sebastiano Romeo Deputy Chairman & Managing the Company and Willis Director Corroon Italia Giancarlo Gardella Managing Director the Company and Willis Corroon Italia Carlo Pasteur Managing Director the Company and Willis Corroon Italia Lorenzo Boglione Board Member the Company and Willis Corroon Italia Edoardo Pasteur Board Member the Company and Willis Corroon Italia NP designee Board Member the Company Marco Gallotti Board member Willis Corroon Italia Giovanni Peracino Board member Willis Corroon Italia Notwithstanding the partial exercise of the Put and/or Call Options, each of the Directors listed above shall be confirmed in his office(s) while he owns an indirect stake in the Company. 7.4. The Parties expressly agree that, up until the date of exercise of the First Option, each of the Directors shall be granted a directors' fee which shall not be lower than the fee currently received by each of them in relation to their respective office for the year commencing on January 1st, 1998. However, with effect as from January 1, 1999, Mr. Enrico Boglione shall be granted a directors' fee equal to the fee currently received by Mr. Franco Lazzarini and Mr. Sebastiano Romeo. 7.5. The Committee of Statutory Auditors of the Company shall consist of 3 effective members and 2 substitute members. WILLIS shall have the right to appoint two effective members and one substitute member of the Committee of Statutory Auditors, and Tolbert shall have the right to appoint one effective member, who shall be the President of the Committee, and one substitute member. 8. MANAGEMENT OF THE COMPANY. page 10 of pages. 8.1. Criteria for the management of the Company. Each party agrees to exercise all his/its respective rights, powers and faculties, as Shareholder and/or Director of the Company, to procure that: (a) the Company performs and complies with all its obligations under this MSA and the Company's by-laws; (b) all matters reserved by law or by the By-laws to the decision of the ordinary Shareholders' meeting of the Company shall be resolved upon with the favourable vote of Shareholders representing at least the majority of the entire issued share capital of the Company. Notwithstanding the provisions set forth under this letter (b), the Parties agree that in respect of the approval of the yearly accounts of the Company, a 91% majority of the entire issued share capital of the Company shall be reached; (c) all matters reserved by law or by the By-laws to the decision of the extraordinary Shareholders' meeting of the Company shall be resolved upon with the favourable vote of Shareholders representing at least the 91% of the entire issued share capital of the Company; (d) the Business is conducted in accordance with sound and good business practice, the highest ethical standards and the applicable provisions of laws and regulations; (e) the Fiduciary Funds shall not be used for the purpose of paying any of the Company's expenditures of whatsoever nature to which purpose the Shareholders and the Directors shall procure that such funds shall be always held in a separate designated interest bearing account. (This account may be at the same bank as the Company's other bank accounts). In any case the Shareholders and the Directors agree to manage the Company in the most careful and diligent manner. In particular, the Shareholders and the Directors undertake that the Company shall not carry out any activity which may be outside the normal course of Business and inconsistent with the past practice, except as expressly provided for under this Shareholders' Agreement or with the prior written consent of all the Shareholders. 8.2. Duty of previous consultation. In order to achieve the Company's object the Shareholders and the Directors undertake to consult each other prior to any material resolution to be adopted by the Shareholders' Meeting or the Board of the Company, or prior to any material act to be performed by or involving the Company, for the purpose of taking a common position in accordance with the Company's interest. 8.3. Day to Day Management. The Shareholders agree that the day to day management of the ordinary activity of the Company shall be entrusted to the Chairman page 11 of pages. and to all of the Managing Director(s). 8.4. List of items requiring approval of the Board. Notwithstanding the foregoing, the Shareholders agree that the following decisions and actions may not be made or taken by the Board unless they have been approved with the affirmative vote of a simple majority of the directors in office, such majority being obtained by the affirmative vote of at least two directors appointed by WILLIS and two appointed by Tolbert (of which one among the directors designated by SG and OLIMPIA, and one among the directors designated by HBC and NP): (a) the purchase or sale by the Company of a shareholding of any nature whatsoever in another company or an interest of any nature in any concern; (b) the investment in, acquisition, sale, exchange, or disposal by the Company of any asset or property in an amount exceeding ITL. 500,000,000- to be adjusted each year for inflation on the basis of the ISTAT index; (c) the undertaking, pursuing, participating in, or promoting by the Company any activity other than the Business; (d) the giving by the Company of any guarantee or indemnity or the creation of any charge, lien or security of whatever nature over the assets of the Company; (e) the proposal for consolidation, amalgamation, merger or split up of the Company and/or of any Subsidiary, with or into any other company; (f) the disposal of or dilution of the Company's shareholding or interest, directly or indirectly, in any Subsidiary; (g) the making of any loan or advance to any person, firm, corporate body or any other business other than in the ordinary course of business in excess of ITL. 150,000,000 - to be adjusted each year for inflation on the basis of the ISTAT index or the borrowing of any money except by way of advance payments of premiums due by clients or indemnification of agreed losses on behalf of insurance companies due to clients in the ordinary course of business; (h) the creation, allotment or issue of any Shares or any other securities or the grant of any option or right to subscribe in respect thereof or convert any instrument into Shares; (i) the termination of any material line of business operation of the Company; (j) the making any material change in the Business (or its proposal to the Shareholders if such amendment requires a change in the "oggetto sociale" (scope) of the Company); page 12 of pages. (k) the making by the Company of any contract of material nature outside the normal course of the Business; (l) the proposal of reduction of the Company's capital, variation of the rights attaching to any class of Shares or any redemption, purchase or other acquisition by the Company of any Shares or other securities of the Company; (m) the proposal of adoption of any bonus or profit-sharing scheme or any share option or share incentive scheme or employee trust or ownership plan; (n) the proposal of any change to the Company's by-laws; (o) the presentation of any position for the winding up of the Company, the suspension of payments or voluntary bankruptcy; (p) the approval of annual capital and revenue budgets and any modification thereto; (q) the formation of, or entry into, any partnership, association or joint venture, or the establishment of any new branches; (r) the entry into any transaction, arrangement or agreement outside the ordinary course of Business with or for the benefit of any director of the Company or any Subsidiary, or persons connected or associated with any such director; (s) the entry into any payment obligation by and between the Company and any of the Shareholders, unless at arm's length in the ordinary course of business; (t) the commencement, settlement or defence of any action, proceedings or other litigation involving the Company, outside the ordinary course of business; (u) the change in the remuneration or powers of the Chairman and the Managing Directors appointed upon designation of Tolbert; (v) subject to paragraph 7.3 above the appointment or removal of any person as managing director or chairman of the Company; (w) to vote the shares held by the Company in the Subsidiaries and in any other legal entity; (x) to apply for the admittance of the Company to any regulated stock exchange market. In determining whether any of the matters described above require the approval of the Board, a series of related transactions in any financial year which when aggregated exceed the figures specified in the relevant paragraph shall be construed as a single transaction requiring such approval. page 13 of pages. WILLIS acknowledges that the board resolutions under letter (u) above require the affirmative vote of at least two Directors appointed by Tolbert and consequently, the vote cast by the Directors appointed by Tolbert with respect to such board resolutions shall not be deemed to be in conflict with the interests of the Company. The Shareholders further agree (i) that with respect to the matters listed above in this paragraph 8.4, they will not vote in ordinary shareholders' meetings in a manner contrary to the determination already expressed in the resolution of the Board; and (ii) to not approve any resolution unless a resolution on the same matter has been duly resolved by the Board. 9. CONDUCT OF BUSINESS. 9.1. Security of Markets. In light of the fact that WILLIS has been engaged for a long time in, and has acquired a significant international experience on, the Business and in order to have the Company benefit from such experience, the Parties hereby agree and undertake that the Company will use for the placing of the Business on behalf of its clients such insurance companies and markets as shall have been approved by the Willis Market Security Committee from time to time if applicable in relation to the Italian market. 9.2. Insurance. The Directors and the Shareholders shall procure that the Company take out "Errors and Omissions" insurance cover considered adequate by WILLIS. 9.2.1. Subject to Article 9.2 above, WILLIS shall use reasonable endeavours to procure that the Company shall be included in the Willis Group Errors and Omissions Insurance Policy (the "Policy") in respect of amounts in excess of any underlying policies which the Company may take out. 9.2.2. Subject to the Company being included in the Policy in accordance with Article 9.2.1 above the Company shall participate fully in the Policy and shall pay to WILLIS a reasonable share of premium, on the basis of an equitable allocation across all companies covered by such policies and taking account of the total premium handled by the Company, its retained brokerage and number of employees. 9.3. Budgets and financial information. The Directors and the Shareholders agree that the Board shall: page 14 of pages. (a) supply WILLIS on or before 1st October of each year with detailed revenue and capital budgets for the Company and its Subsidiaries (including estimated major items of revenue and capital expenditure) for the following calendar year, broken down on a monthly basis, and accompanying cash flow forecast, together with a balance sheet showing the projected position of the following calendar year and such additional statements and documents as deemed appropriate by WILLIS; (b) supply WILLIS within 4 (four) days after the end of each calendar month, with monthly non-audited management accounts, such accounts to include a detailed profit and loss account, balance sheet and cash flow statement in a format prescribed by WILLIS and a review of the budget together with a reconciliation of results with revenue and capital budgets for the corresponding month; (c) supply WILLIS with all the monthly and other periodical or occasional accounting reports and documents that are produced by the Company at the time when such reports and documents are drawn by or delivered to the management of the Company; (d) supply WILLIS with such documents, information or data on the financial or economic situation of the Company and of the Subsidiaries which are available and which WILLIS may reasonably request within a reasonable period of time from the request of WILLIS; and (e) immediately inform WILLIS of any technical, legal or administrative event which has already occurred or is threatened or likely to occur and which may materially prejudice the financial or economic situation of the Company and/or the Subsidiaries. 9.4. Dividend policy. To the extent that the legal reserves and other necessary provisions have been duly allocated in compliance with the applicable provisions of law and the by-laws, the Shareholders hereby undertake and agree to procure that the Company and all its subsidiaries shall distribute the maximum dividends possible in accordance with sound and good business practice, and diligent and careful management. It being understood that the intention is that dividends should be as near 100% of the annual distributable profits as is possible. 10. AMENDMENT OF THE BY-LAWS. All Shareholders undertake to fully co-operate so as to incorporate, to the extent permitted by applicable laws, any of the provisions of this MSA in the new Company's By-laws. 11. RECIPROCAL UNDERTAKINGS ON BUSINESS. page 15 of pages. 11.1. WILLIS expressly undertakes not to vote capital increases aimed at diluting Tolbert's shareholding in the Company, always provided that any capital increase in the Company shall be justified by Company's business expansion and take place at terms and conditions based on a fair evaluation of the liquidity required to finance such Company's business expansion. 11.2. WILLIS undertakes: (i) to channel all its Italian business through the Company; and, (ii) not to provide the WILLIS Retail Network to other brokers operating in Italy. 11.3. The Shareholders and Tolbert Shareholders undertake: (i) to cause the Company to channel all its business outside Italy to WILLIS and its retail network, making their best efforts to pursue the said purpose. Such obligation will not be applicable to the countries where WILLIS does not have any established presence (i.e. where WILLIS does not have any interest in any local company, firm or entity); and, (ii) to use their best endeavours to direct all wholesale business (including reinsurance, both facultative and treaty) generated directly or indirectly by the Business to WILLIS Faber & Dumas Limited or such other WILLIS company as appropriate. In the event that WILLIS does not offer competitive rates and remuneration or does not have the specialist expertise to handle such business it will be discussed constructively among and agreed by the Parties with a view to reaching a mutually acceptable solution, including, if appropriate, the use of a third party broker. 11.4. Notwithstanding the above, the Directors, Tolbert and Tolbert Shareholders recognise that WILLIS has a considerable reinsurance and wholesale activity in Italy connected to other Italian insurers and Italian brokers, and hereby agree that WILLIS is and will be free to carry on and expand the above activities provided that such expansion will not conflict with the activity of the Company. Consequently, the Directors, Tolbert and Tolbert Shareholders hereby undertake and warrant to exercise their best endeavours to cause the Company not to conduct itself in a way which will conflict with or be detrimental to WILLIS' existing wholesale relationships. However, WILLIS expressly undertakes not to give insurance or reinsurance assistance or risk management consultancy in any manner whatsoever to other brokers or insurers operating in Italy who are competing with the Company as regards the same clients or prospective customers in connection with the Company's activities, and always provided that the Company has previously informed WILLIS that it is negotiating with such clients or prospective customers. WILLIS agrees and undertakes to inform the Company on a regular basis of any major wholesale initiative to be carried out in Italy with other brokers and/or insurers. 11.5. The Parties hereby undertake not to acquire other than through the Company, any participation, directly or indirectly, in any other insurance broker operating in Italy, unless a previous negotiation has been carried out and an agreement reached thereon among themselves. page 16 of pages. 11.6. The Directors, Tolbert and Tolbert Shareholders acknowledge however, that WILLIS may acquire an indirect shareholding or other participation in an insurance broker operating in Italy as a result of an acquisition of a company outside Italy. In such an event, it shall be expressly agreed that WILLIS shall not be in default hereunder provided that WILLIS will either put the new company under the control of the Company or resell or dispose of its interest. SHAREHOLDER'S PROVISIONS CONCERNING TOLBERT 12. LIMITATIONS TO THE TRANSFER OF SHARES. In view of the Put and/or Call Options provided hereunder, the Tolbert Shareholders undertake not to Transfer any of the Shares of Tolbert, or any Share of SG, OLIMPIA or HBC, up until 31st December 2007. 13. RIGHT OF PREEMPTION AND CONSOLIDATION OF CERTAIN SHAREHOLDERS. 13.1. The Parties expressly undertake not to abrogate the pre-emption right provided for under the current Tolbert' s by-laws and to amend it in order to (i) appropriately reflect the definition of Shares and Transfer provided for under Article 3 above, and (ii) set as the purchase price of the Shares of Tolbert, to be so offered in pre-emption, the Formula Price (as defined below), as proportionate to the Shares of the Company corresponding to such offered Shares, net of any cost or tax effect. 13.2. However, such pre-emption right shall not prejudice the exercise of the Put and/or Call Options provided hereunder and, to such effect, all of the Parties hereby waive any and all pre-emption rights they may be entitled to in respect of any Transfer of the Shares of Tolbert in accordance with the Put and/or Call Options provided for hereunder. 13.3. The Parties hereto acknowledge and all Tolbert Shareholders undertake and agree not to oppose any act or resolution of SG and OLIMPIA aimed at merging or otherwise consolidating or contractually bound together their interest in Tolbert. 14. COMPOSITION OF THE BOARD. 14.1. The Board shall consist of up to 4 directors. page 17 of pages. 14.2. SG, HBC and NP will have the right to appoint 1 director each. SG and OLIMPIA will have the right to jointly appoint 1 director. Should one of the Directors need to be replaced or removed the new director shall be designated by the same Tolbert Shareholder who has designated the replaced director and the other Tolbert Shareholders shall vote at the general meeting of Tolbert in accordance with the instruction received by such Tolbert Shareholder. 14.3. In the event of a change in the ownership of Tolbert the composition of the Board shall be adjusted accordingly, and each shareholder should have the right to designate a director(s) in proportion to its holdings. 14.4. To the extent permitted by applicable law, the Board of Directors of Tolbert shall be vested with all powers of ordinary and extraordinary management and the meetings shall be validly constituted only if a majority of the directors in office are attending. 14.5. To the extent permitted by applicable law the Board of Directors of Tolbert shall in particular be vested with the power to exercise the Put Options provided hereunder upon specific written instructions of any of its shareholders and to sell any of the Shares as a consequence of a Call Options (as provided for hereunder). 14.6. All decisions of the Board of Directors shall be resolved upon with the favourable vote of the majority of the directors (without casting vote) in attendance. 15. CONDUCT OF BUSINESS. 15.1. Scope of Tolbert. Tolbert Shareholders undertake to keep Tolbert as a pure holding company for the sole purposes of holding an equity interest in the Company, with the sole exception of the 50% participation in Medsea International Insurance Broker Ltd. ("Medsea") The Shareholders and Tolbert Shareholders expressly agree that (i) Medsea shall not book, and consequently shall refrain from booking, any brokerage service in relation to NESCO; and that Medsea shall not compete with the Company and in particular with the business previously carried out by Italbroker S.p.A.. Any of such activities may be carried out by Medsea only upon previous and express consent to be released by the Board of the Company. 15.2. Dividend Policy. To the extent that the legal reserves and other necessary provisions have been duly allocated in compliance with the applicable provisions of law and the By-laws, the Tolbert Shareholders hereby undertake and agree to procure that Tolbert shall distribute the maximum dividends possible in accordance with sound and good business practice, and diligent and careful management. It being understood that page 18 of pages. the intention is that dividends should be as near 100% of the annual distributable profits as is possible. 16. AMENDMENT OF THE BY-LAWS. 16.1. All Tolbert Shareholders agree that, unless as otherwise specified hereunder, Tolbert shall be governed by Tolbert's By-laws as attached hereto as Annex 16.1. 16.2. Tolbert's By-laws shall, to the extent permitted by applicable law and advised by the respective counsels, incorporate any relevant provision of this MSA and in particular be drafted so as to permit the timely and duly exercise of the Put and/or Call Options (as defined below) to the benefit of WILLIS or to the indirect benefit of any of the Tolbert Shareholders as provided hereunder; and to allow the timely and duly compliance with the provisions set forth under Article 8.5 of the MAA. 16.3. All matters reserved by law or by the By-laws to the decision of the shareholders' meeting of Tolbert shall be resolved upon with the favourable vote of Tolbert Shareholders representing at least the majority of the entire issued share capital of Tolbert. 16.4. Tolbert Shareholders undertake to negotiate in good faith appropriate deadlock provisions to prevent the dissolution of Tolbert in the event that Tolbert's corporate bodies do not reach the majority required to pass their resolutions. PUT AND CALL OPTIONS PROVISIONS 17. PUT OPTIONS BY TOLBERT. 17.1. The Put Options to be exercised by Tolbert relate to the Shares of the Company owned by Tolbert and may be exercised only if the interested shareholder(s) of Tolbert give written instructions to that effect to the Board. If, under applicable law, the exercise of the Put Option shall be authorised by a shareholders meeting of Tolbert, all other shareholder(s) of Tolbert shall attend such meeting and undertake to vote in favour of the exercise of the Put Option by Tolbert. Tolbert shall exercise the Put Option only in respect of such number of Shares of the Company as proportionate to the shares of Tolbert owned by the shareholder of Tolbert who made the request. All proceeds arising from the exercise of the Put Option shall be distributed to the shareholder of Tolbert, who made the request, in accordance with applicable corporate and tax laws and regulations, through appropriate legal structures (inter alia by making use of different classes of page 19 of pages. shares in Tolbert, and/or deposit of the Shares of the Company with a Trustee), net of any cost or tax impact for Tolbert. 17.2. The Put Options shall be exercised, under penalty of forfeiture, as follows:- (a) Not earlier than August 1, 2003 and not later than September 30, 2003, each of the Tolbert Shareholders will have the right to cause Tolbert to exercise the Put Option, in whole or in part, over 60% of its holding - as after the Second Capital Increase has been completed - at the Formula Price (as defined below). Any non-exercised Put Option may be exercised at the next Put Option exercise date. (b) Not earlier than August 1, 2005 and not later than September 30, 2005, each of the Tolbert Shareholders will have the right to cause Tolbert to exercise the Put Option, in whole or in part, over 20% of its holding - as after the Second Capital Increase has been completed - at the Formula Price. Any non-exercised Put Option may be exercised at the next Put Option exercise date. (c) Not earlier than August 1, 2007 and not later than September 30, 2007, each of the Tolbert Shareholders will have the right to cause Tolbert to exercise the Put Option over the remaining Shares at the Formula Price. (d) In the event that WILLIS is taken over - in any way which results in a change of control - by one of the top five global insurance broking groups (measured by revenue), any of the Tolbert Shareholders will have the right to cause Tolbert to exercise the Put Option, in whole or in part, at the Formula Price with a Minimum, as defined below in paragraph 17.3, up until the third anniversary of First Closing and at the Formula Price at any time thereafter. This Put Option shall be exercised, under penalty of forfeiture, within 2 months from the notice of the event, to be communicated in writing by Willis to Tolbert. 17.3. The following Put Options are to be exercised by Tolbert only if requested by such Tolbert Shareholder(s) of which the Director referred in the events listed in this Article 17.3 is a shareholder and only in respect of such number of Shares as proportionate to the shares of Tolbert indirectly owned by the Director who made the request through a shareholder of Tolbert The following Put Options shall be exercised, under penalty of forfeiture, within and not later than 4 months from the event: (a) if a Director: (i) at any time, is removed from office as a Director or manager of the Company without Cause - as defined in paragraph 20.3 below - or if he voluntarily leaves the Company, or in the event of death or permanent disablement, at the Formula Price; page 20 of pages. (ii) at any time, is removed for Cause, at 50% of the Formula Price if he is removed within 5 years from First Closing, or at the 75% of the Formula Price if he is removed after 5 years from First Closing; (b) if a Strategic Director: (i) at any time, prior to 31st December 2003, voluntarily leaves the Company, or is removed for Cause, at 50% of the Formula Price; (ii) at any time, after 31st December 2003, voluntarily leaves the Company, or is removed for Cause, at 75% of the Formula Price; (iii) at any time, in the event of death or permanent disablement, at the Formula Price; (iv) at any time, ceases to be a shareholder in any of SG, OLIMPIA and HBC or if any of such companies ceases to be controlled by Directors, at the 50% of the Formula Price if the event occur within 5 years from First Closing, or at 75% of the Formula Price if the event occur after 5 years from First Closing; (v) at any time, is removed from office as a Director or manager of the Company without Cause, at the Formula Price with a Minimum as defined below; (c) if a Director listed under paragraph 7.3 above, is not re-appointed in his office as a Director of the Company, in accordance with the provisions set forth under the same paragraph, provided that he owns an indirect holding in the Company, at the Formula Price with a Minimum as defined below; (d) at any time, if WILLIS is in breach of this Agreement, which breach has not been remedied within a 90 day period from a notice in writing from Tolbert to WILLIS to such effect (copy of such notice shall be communicated by Tolbert its shareholders and to the Directors), at the Formula Price, subject to a Formula Price with a Minimum equal to a value of ITL. 110 billion for the Company, increased from the date of the First Closing by the Italian Consumer Price Index (hereinafter "CPI") multiplied by the percentage of the shareholding to be sold (the "Formula Price with a Minimum"). Should the event provided for hereinabove take place, also NP will have the right to exercise a put option to be exercised, under penalty of forfeiture, within 4 months from the expiry of the notice in writing to WILLIS above mentioned, in respect of such number of Shares of the Company as proportionate to the shares of Tolbert owned by NP, at the Formula Price with a Minimum (as above defined). page 21 of pages. 17.4. Upon receipt of the Put Option notice WILLIS acknowledges and agrees to give to the Director's co-shareholders in SG, OLIMPIA or HBC, as the case may be, the right to acquire its shares at the same price (net of any cost or tax effect for Tolbert and/or SG, OLIMPIA, HBC or NP, as the case may be) that the Director would have received from WILLIS through Tolbert via SG, OLIMPIA, or HBC, as the case may be, in case of exercise of such Put Option. The Director's co-shareholders shall be requested to exercise such right of pre-emption within 30 days from receipt of the notice from WILLIS to such effect, under penalty of forfeiture. 17.5. Should any of the co-shareholders in any of SG, Olimpia or HBC, not wish to exercise the pre-emption right provided for under Article 17.4 above , the same will be offered to any of SG, Olimpia, HBC, or NP, as the case may be, that will be entitled to exercise pro-rata the pre-emption rights. Such pre-emption right should be exercised within 20 days from receipt of the notice from WILLIS to such effect, under penalty of forfeiture. 18. CALL OPTIONS BY WILLIS. 18.1. The Parties expressly agree that any of the Call Options to be exercised by Willis are in relation to the Shares of the Company owned by Tolbert. All proceeds arising from the exercise of the Call Options shall be to the benefit of the Tolbert, except as provided for under Article 18.4 below. 18.2. The Call Options shall be exercised under penalty of forfeiture, as follows:- (a) not earlier than July 1, 2003 and not later than July 31, 2003, over a 20% share of the total holding of Tolbert - as after the Second Capital Increase has been completed - at the Formula Price subject to a Formula Price with a Minimum (as above defined); (b) not earlier than July 1, 2005 and not later than July 31, 2005, if the option set out in Article 18.2 letter (a) above has not been exercised, over a 20% share of the total holding of Tolbert - as after the Second Capital Increase has been completed -at the Formula Price; (c) not earlier than July 1, 2007 and not later than July 31, 2007, over all the outstanding Shares owned by Tolbert, at the Formula Price. 18.3. Furthermore, with respect to the exercise of the Call Options provided for under Article below the Parties hereby agree that, through appropriate legal structures - inter alia by making use of different classes of shares in Tolbert, and/or deposit of the Shares with a Trustee, and/or certain Put and/or Call Options between the shareholders of page 22 of pages. Tolbert and/or the Directors: (a) the number of Shares subject to such Call Options shall be proportionate to the shares of Tolbert indirectly owned by the Director referred to hereinbelow through SG, OLIMPIA or HBC, as the case may be; and (b) the proceeds (net of any tax effect for Tolbert and/or SG, OLIMPIA or HBC, as the case may be and without any additional cost for WILLIS) of any sale subsequent to such Call Options shall be distributed by appropriate legal structures to the benefit of the interested Director, so as to obtain the same effects as if the exercise of the Call Option were exercised by Willis directly vis-a-vis the said shareholder of Tolbert of which the Director is a Shareholder. 18.4. Such Call Options shall be exercised, under penalty of forfeiture, within and not later than 6 months from the event: (a) if a Director: (i) at any time, is removed from office as a Director or manager of the Company without Cause, or if he voluntarily leaves the Company, or in the event of death or permanent disablement, at the Formula Price; (ii) at any time, is removed for Cause, at the 50% of the Formula Price if he is removed within 5 years from First Closing, or at the 75% of the Formula Price if he is removed after 5 years from First Closing; (b) if a Strategic Director: (i) at any time prior to 31st December 2003, voluntarily leaves the Company, or is removed for Cause, at 50% of the Formula Price; (ii) at any time after 31st December 2003, voluntarily leaves the Company, or is removed for Cause, at 75% of the Formula Price; (iii) at any time, in the event of death or permanent disablement, at the Formula Price; (iv) at any time, ceases to be a shareholder in any of SG, OLIMPIA and HBC or if any of such companies ceases to be controlled by Directors, at the 50% of the Formula Price if the event occur within 5 years from First Closing, or at 75% of the Formula Price if the event occur after 5 years from First Closing; (v) at any time, is removed from office as a Director or manager of the Company without Cause, at the Formula Price with a Minimum. page 23 of pages. 18.5. In case of any event that may determine the exercise of a Call Option under Article 18.4 above, WILLIS acknowledges and agrees to give to the Director's co-shareholders in SG, OLIMPIA or HBC, as the case may be, the right to acquire its shares at the same price (net of any cost or tax effect for Tolbert and/or SG, OLIMPIA, HBC or NP, as the case may be) that the Director would have received from WILLIS through Tolbert via SG, OLIMPIA, or HBC, as the case may be, in case of exercise of such Call Option. The Director's co-shareholders shall be requested to exercise such right of pre-emption within 30 days from receipt of the notice from WILLIS to such effect, under penalty of forfeiture. 18.6. Should any of the co-shareholders in any of SG, Olimpia or HBC, not wish to exercise the pre-emption right provided for under Article 18.5 above , the same will be offered to any of SG, Olimpia, HBC, or NP, as the case may be, that will be entitled to exercise pro-rata the pre-emption rights. Such pre-emption right should be exercised within 20 days from receipt of the notice from WILLIS to such effect, under penalty of forfeiture. 19. SPECIAL TOLBERT PUT AND CALL OPTION. Should WILLIS purchase another insurance broker operating in Italy in breach of the arrangements to be entered into in accordance with Article 11, or appoint another broker as the WILLIS Retail Network partner in Italy: (i) Tolbert will have an option to buy from WILLIS and WILLIS shall be bound accordingly to sell to Tolbert, upon the exercise of such option, all (but not part of) the shares held in the Company by WILLIS, at 75% of the Formula Price; or (ii) Tolbert will have an option to sell to WILLIS and WILLIS shall be bound accordingly to buy from Tolbert, upon the exercise of such option, all (but not part of) the capital holdings held by Tolbert at 125% of the Formula Price. In the event that Tolbert exercises an option pursuant to the terms of this Article 19 then restrictive covenants will apply to the selling Shareholder(s). The terms of such restrictive covenants will be identical to those set out in Article 22 below with the exception that they will apply for one year from the date on which the selling Shareholders cease to be Shareholders. 20. PUT AND CALL OPTIONS DEFINITIONS. 20.1. "Formula Price":- (a) Means the price obtained by applying the p/e of WILLIS Group diminished by 2 to the average Normalised Consolidated After Tax Earnings of the Company for the last two completed and audited financial years subject to the applied p/e being a minimum of 10 and a maximum of 17. The p/e of WILLIS Group will be calculated as the average share price for the preceding twelve months to the page 24 of pages. date of the exercise of the option divided by the average normalised earnings of the latest two financial years. The normalised earnings of WILLIS Group will be calculated using accounting policies and principles consistent with and on the same basis as the basis used in the preparation of the WILLIS Group's 1997 accounts. (b) For the purposes of calculating the average Normalised Consolidated After Tax Earnings (as defined below) of the Company, such earnings of the Company for the first of the two years only will be increased by the ltalian CPI percentage increase during the second of the two years. (c) Should WILLIS Group at any time during the life of this Agreement no longer be listed, the p/e of WILLIS Group will be the average share price over the twelve month period beginning with a date fifteen months prior to the date of any announcement concerning the possible de-listing and ending three months before that date, divided by the normalised earnings of the latest financial year subject to the maximum and minimum p/e's set out above. (d) In the event that an option is exercised other than those set out in Article 17.2 letter (d) in 1998 or 1999, the formula will apply to the Normalised Consolidated After Tax Earnings (as defined below) of 1998 only. 20.2. "Normalised Consolidated After Tax Earnings":- (a) Means the earnings after tax net of any actual after-tax effect of all Exceptional, Extraordinary and Prior Year Items which by their nature are not recurring items and before the actual after tax effects of the amortisation of goodwill. For the purposes of the above, Extraordinary, Exceptional and Prior Year items will be identified by the auditors as those exceptional, extraordinary and prior year items requiring disclosure in the accounts of the Company in accordance with the applicable accounting policies (International Accounting Standards and the accounting principles established by the "Ordine Nazionale dei Dottori Commercialisti" and by the "Collegio dei Ragionieri"). In the event of conflicting accounting guidelines, the International Accounting Standards are to take priority. (b) Normal tax rate will be defined as the effective tax rate (being the standard rates of tax applicable to the Company at the relevant time on a consolidated basis) to include the effect of normal disallowable items but adjusted to exclude the tax effect of any goodwill, brought forward losses or other exceptional items. It is agreed that none of the parties will take any action, or omit to take any action, as part of its tax planning, that will have an impact on the effective tax rate. 20.3. "Cause" means :- page 25 of pages. (i) serious and persistent breach of contract; and, (ii) any action or situation which would result in a Director's or Strategic Director's registration with the ltalian Association of lnsurance Brokers being cancelled. 21. GENERAL CONDITIONS CONCERNING PUT AND CALL OPTIONS. 21.1. Formula Price Determination. For the purposes of exercising the Put and/or Call Options, the Parties agree that the Company shall give mandate to its external auditors to calculate the Formula Price simultaneously to the approval of the yearly accounts respectively ending on December 31, 2002, December 31, 2004, and December 31, 2006, to be resolved by the Company shareholders' meeting. 21.2. Option's (s') Exercise. It is expressly agreed among the Parties, that each of the Parties undertakes to waive his/its pre-emption right as granted to him/it under the By-laws of respectively the Company, and/or Tolbert, as the case may be, on the Shares/stock of the other which shall be submitted to a Put or a Call Option as the case may be. It is further agreed and understood among the Parties hereto that no consideration shall be owed to any Party or to any third party by any other Party for waiver of their respective pre-emption rights. 21.2.1. The Put and/or Call Options shall be exercised by written notice, to be given, via registered mail, return receipt, or via fax (to be confirmed by registered mail, return receipt), within and not later than the respective deadlines (as above indicated) (the "Option Notice") to the from time to time addressee Party (the "Interested Party"). In the Option Notice the Option price shall be set by the party addressing the Option Notice (the "Exercising Party"). 21.2.2. In the event of disagreement on the Put and/or Call Option price or should the Put and/or Call Option price not be indicated in the Option Notice, the Interested Party and the Exercising Party shall jointly defer the determination of the Formula Price to an independent accounting firm of international standing ( the "Arbitrator") within 20 days from the receipt of the Option Notice. 21.2.3. In case of impossibility or refusal of the Arbitrator or should the Exercising Party and the Interested Party fail to jointly appoint the Arbitrator within the term of 20 days from receipt of the Option Notice, the determination of the Put and/or Call Option price shall be deferred to an independent arbitrator to be appointed by the President of the Tribunal of Turin upon application of the most diligent party, for the final determination of the Put and/or Call Option price. 21.2.4. The Arbitrator shall determine the Put and/or Call Option price (and interests if applicable) within 60 days from its acceptance of the said task. page 26 of pages. The Arbitrator's determination shall be final and binding upon the Parties and it shall be deemed to be a part of the provisions of this Agreement and communicated by written notice, to be given, via registered mail, return receipt, or via fax (to be confirmed by registered mail, return receipt) (the "Arbitrator's Notice). All the fees and costs relating to the determination by the Arbitrator of the Put and/or Call Option price shall be borne : (i) by the Interested Party, should the Arbitrator substantially confirm the amount of the Put and/or Call Option price as indicated in the Option Notice; or (ii) by the Exercising Party, should the Put and/or Call Option price determined by the Arbitrator be substantially different from the amount indicated in the Option Notice. 21.3. Subject to the authorisations and procedures required by the London Exchange if any or applicable, any stockholdings sale pursuant to the exercise of any of the Put and/or Call Options shall be duly perfected by the relevant Parties within 15 days after the receipt of the Option Notice or after the receipt of the Arbitrator's Notice: (i) by transferring the stockholdings in the Company or in SG, Olimpia, HBC or NP as applicable, from the relevant selling Party to the relevant purchasing Party, pursuant to the requirements of applicable law; and (ii) by simultaneously paying the relevant price. 21.4. The transfer of the stockholdings pursuant to Article 21.3 above shall be carried out at the time and in the place which shall be agreed in writing by the relevant Parties. 21.5. No representations and warranties shall be given by the selling Party in relation to the transfer of any stockholding pursuant to the Put and/or Call Options, other than representations and warranties regarding the freedom of the shares transferred from pledges, encumbrances and third party rights of any nature. 21.6. The dividend on the shareholding in the Company or in SG, Olimpia, HBC or NP as applicable, as the case may be, subject to the Put and/or Call Options shall pro rata accrue on the relevant selling Party up until the date of their exercise and accordingly such dividends shall pro rata accrue on the relevant purchasing Party from the day after date of Option's(s') exercise. 22. RESTRICTIVE COVENANTS. page 27 of pages. In view of the above rights indirectly granted to the Directors under the Put Options provided above each Director shall undertake during the currency of this Agreement and for a period of two years from the date upon which he shall have ceased to be a Director, or a director, employee, or advisor of the Company and/or a Subsidiary (the "Period"), not to, directly or indirectly in his own name and behalf or on behalf of third parties: (a) solicit or handle the business of any client of the Company or of a Subsidiary which the Company or a Subsidiary handled at any time in the two years prior to the commencement of the Period; (b) not to employ any of the employees of the Company or of a Subsidiary; (c) not to make use of or disclose to any third party any information concerning customers of the Company or of a Subsidiary. GENERAL PROVISIONS 23. RIGHT OF INFORMATION. The Parties agree and undertake to use their best efforts to ensure that any significant proposal, scheme or project to be entered into by the Company shall be submitted to Willis and all the Directors a reasonable period in advance of any approval which may be required thereof by the board of the Company. In addition, the Parties agree that in any case Willis shall be given ample opportunity to review anew any such proposed deal prior to any decision of the board of the Company. 24. WARRANTIES. Each Party warrants that: (a) it/he has the power to execute this MSA and perform the transactions contemplated hereby and that such execution and transactions have been authorised by all necessary corporate or other action or body and do not and will not violate any applicable law or regulation or, in the case of a corporate party, any provision of its incorporation documents; (b) this MSA constitutes its/his legal, valid and binding obligations in accordance with its terms; and (c) all consents and authorisations necessary for it/him in relation to the execution of this MSA have been obtained and all consents and authorisations necessary for page 28 of pages. it/him in relation to the transactions contemplated hereby have been or will, prior to such transaction, be obtained. 25. COMMUNICATIONS. 25.1. Notices or communications required or permitted to be given under any provisions of this MSA shall be in writing and shall be deemed to have been given the day of dispatch thereof, if sent by fax (to be confirmed by registered mail with return receipt), or upon actual receipt if sent by registered mail, return receipt requested, addressed to the addresses specified above, to the attention of: (a) if to Willis Group, to Michael P. Chitty (fax + 44 171 481 70 03); (b) if to Willis Europe, to Analies Majorie (fax + 31 20 661 06 54); (c) if to Tolbert, to Guido Nieuwehuizen (fax + 31 20 577 11 88); (d) if to UTA, to Studio Boidi, Dr.ssa Lucia Starola (fax + 39 011 812 23 00); (e) if to saint Gallen, to Studio Boidi, Dr.ssa Lucia Starola (fax + 39 011 812 23 00) (f) if to Olimpia, to Paolo Fassio (fax + 39 02 655 18 05); (g) if to HBC, to Sebastiano Romeo (fax + 39 011 561 90 60); (h) if to Arcef, to Sergio Liberia (fax + 59 994 61 35 77). 25.2. Either Party may from time to time change its address by giving previous communication to the other Party in the manner aforesaid. 26. DURATION. 26.1. This MSA, shall be in force from the date hereof, up until the day of completion of the last of the Put or Call Option provided above. page 29 of pages. 27. MISCELLANEOUS. 27.1. Undertaking. Each of the Parties hereby undertakes to perform all such actions necessary to obtain that the provisions of this MSA be fully implemented in accordance with its terms and conditions hereunder. 27.2. Obligations of the Parties. Any obligation imposed by this MSA on any Party, to procure a particular event or thing, shall be construed as an obligation on such Party to exercise all its votes and other legal rights and powers, and to use all other reasonable endeavours, to bring about such event or thing. 27.3. Amendments. No amendment of or supplement to this MSA shall be valid or effective unless in writing and executed by the Parties hereto or their successors or assignees. 27.4. Waiver. No waiver of any right, breach or default hereunder shall be considered valid unless in writing and executed by the Party giving such waiver, and no waiver shall be deemed a waiver of a subsequent breach or default, whether or not of the same or of similar nature. 27.5. Severability. Should any provision of this MSA or part thereof be held null, void or unenforceable in any respect, such holding shall not invalidate the remainder of this MSA, which shall continue in full force and effect. In the event of invalidity or ineffectiveness of any provision of this MSA, or portions thereof, the remaining part of this MSA shall not be affected thereby but the parties agree to negotiate in good faith to replace such provision, or parts thereof, with other valid and effective agreements having substantially the same effect, having regard to the subject matter and purposes of such provision and of this MSA. 27.6. Binding effect. This MSA shall be binding upon and inure to the benefit of the Parties and their respective successors and assignees which shall be bound by its terms, as appropriate. In the event of any inconsistency between the provisions of this MSA, the Tolbert By-laws, the Company By-laws or such other documents which would have been adopted afterwards, the provisions of this MSA shall prevail. 27.7. Confidentiality. All the Parties undertake to keep strictly confidential any information concerning this MSA, and no Party shall divulge any information or make any announcement relating to the subject matter of this MSA, without the prior written consent of the other Parties, save that any announcement or circular required to be made or issued by any Party either by law or regulations, or pursuant to the rules and regulations of any stock exchange or other regulated markets on which the securities of that Party are traded may be made or issued by such Party without such approval. page 30 of pages. 27.8. Entire Agreement. This MSA, together with its Annexes, and together with the MAA constitutes the entire agreement among the Parties as to its subject matter and supersedes any prior agreement between and among any and all the Parties hereto, in particular the MoU, and together with the MAA constitutes the entire agreement between them. 27.9. Language. This Agreement is drafted in the English language and the Parties acknowledge that they have so requested and have duly and fully agreed and understood any and all the previsions hereof. 28. GOVERNING LAW AND ARBITRATION. 28.1. This MSA shall be governed by, construed, and enforced in accordance with Italian law, save for such provisions of Dutch law applicable to the implementation of any of the transactions above referred to Tolbert. 28.2. All disputes arising out or in connection with this MAA shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by three Arbitrators appointed in accordance with the said rules. The arbitrators shall decide ex aequo et bono. The place of the arbitration shall be Amsterdam. 28.3. It is in any event expressly agreed by the Parties that the provision of this arbitration procedure shall not prevent any party from requesting and enforcing any of the injunctions and interim orders (i.e. "provvedimenti cautelari") provided for by article 669-bis and following of the Italian Civil Procedure Code. o o IN WITNESS WHEREOF each Party hereto, by its respective representative duly authorised, has caused this Master Shareholders' Agreement to be signed as of the day and year first written above. -------------------------- Willis Corroon Group plc. Name and Capacity: Ms. Sarah Turvill, attorney. -------------------------- page 31 of pages. Willis Corroon Europe B.V. Name and Capacity: Ms. Sarah Turvill, attorney. -------------------------- Tolbert Insurance & Finance B.V. Name and Capacity: Mr. T.J. Eltink, attorney. -------------------------- Tolbert Insurance & Finance B.V. Name and Capacity: -------------------------- Saint Gallen S.R.L. Name and Capacity: Lorenzo Boglione, Chairman. -------------------------- Olimpia S.R.L. Name and Capacity: Carlo Pasteur, sole Managing Director. -------------------------- Ital Brokers Holding S.p.A. Name and Capacity: Franco Lazzarini, Managing Director -------------------------- Arcef Holding N.V. Name and Capacity: Mr. T.J. Eltink Attorney. page 32 of pages. Lorenzo Boglione ---------------------------- Enrico Boglione ---------------------------- Francesco Boglione ---------------------------- Marco Gallotti ---------------------------- Giovanni Peracino ---------------------------- Carlo Pasteur ---------------------------- Edoardo Pasteur ---------------------------- Franco Lazzarini ---------------------------- For Sebastiano Romeo ---------------------------- Luca Garella, Attorney Gian Carlo Gardella ---------------------------- LIST OF EXHIBITS AND ANNEXES: Annex 3 - Company by-laws Annex 16.1 - Tolbert by-laws All the parties hereby irrevocably appoint and delegate Mr. Luca Garella and Mr. Mr. Carlo Pasteur to execute each of the Exhibits and Annexes attached hereto, acknowledging the validity and effectiveness of the execution made by the said Messrs Mr. Luca Garella and Mr. Mr. Carlo Pasteur. page 33 of pages. ANNEX 3 - COMPANY BY-LAWS ANNEX 16.1 - TOLBERT BY-LAWS EX-10.4 24 EX. 10.4 Exhibit 10.4 VAGN THORUP SHAREHOLDERS' AGREEMENT Assurandorgruppen A/S As of 28 September 1998 this Shareholders' Agreement has been entered into between on the one hand Willis Corroon Europe B.V., Marten Meesweg 51, AV 3068 Rotterdam, the Netherlands (hereinafter referred to as "WCE") and on the other hand Bent Roland, Per Kaersgaard, Lars Gundorph, Kent Risvad, Carsten Sehested-Blad, Kjeld N0rhave, Per Beck Andersen, Johannes Dahl, Svend-Erik Knudsen, J0rgen Kjaerulff Nielsen, Peter Theilgaard, Willy Berg, Jens Hatting, Lars Bach Nielsen, Kjeld Mogens Ranum, Ole S0rensen, Jess Folke Andersen, Helge Flou-Jensen, Michael Hedeby, Henrik Nielsen, Clinton B. Perry, Benny Petersen, Kim Sejer, Steen Skaarup, Peter Svare-Andersen, Karin Holst, Erling Hornebo, Arne Erikslev, Steen Krogh, Per Sehested-Blad, Jan Linde, Erik Qvist, Kai Jensen, Kim G. Madsen, Erik M0ller, Johan Ellemann, Kim S0ndergard, Svend Larsen, Jim Alkirk, Niels Christian H0jberg, Helle Guldager, Henrik Boysen, Lars Christensen, Krogenberg ApS and Poul 0rum (hereinafter referred to collectively as the "Current Shareholders" and individually a "Partner") (WCE and the Current Shareholders collectively referred to as the "Parties") concerning the Parties' shareholdings in Assurand0rgruppen A/S (reg.no. 164.725) of 6 Rosen0rnsgade, DK-8900 Randers, Denmark (the "Company"). RECITALS WHEREAS the Company holds a 91.2% share of Assurand0rgruppen I/S (the "Partnership") a partnership established under the laws of the Kingdom of Denmark carrying on insurance broking and related business. The Company and the Partnership collectively referred to as the "AG Group". WHEREAS 1.2% of shares of the Partnership held by the Company is intended for distribution in shares of 0.2% to new partners admitted in the future. WHEREAS the remainder of the shares of the Partnership are held by the Current Shareholders in equal shares of 0.2% each. WHEREAS the Company has invited WCE to obtain a minority capital stake in the Company by issuing to WCE DKK 4,285,700 nominal shares (the "Shares") at a price of DKK 54,000,000. -2- WHEREAS the Company and WCE have agreed to the terms of this investment and on 28 September 1998 WCE will subscribe to the Shares on the terms of the Stock Purchase Agreement in the form of Annex 1. WHEREAS the Shares will be issued by the Company at a board meeting to be held on 28 September 1998 in accordance with the authority granted by the Current Shareholders to the Board of Directors as stipulated in Clause 3.5 of the Company's Articles of Association by adopting a resolution in the form of Annex 2. WHEREAS the Current Shareholders and the Company agree that as a consequence of WCE's investment in the Company the Partnership's Deed of Partnership on 28 September 1998 will be amended to the form of Annex 3. NOW THEREFORE, in consideration of the foregoing and the mutual covenants and agreements set forth herein, the Parties agree as follows: 1. The share capital of the Company 1.1 The share capital of the Company is DKK 14,285,700 divided into shares of DKK 1 or multiples hereof. 1.2 The Parties' shareholdings are distributed as detailed in Schedule 1. 2. Articles of Association To the extent the Articles of Association of the Company are inconsistent with this Agreement, the provisions of this Agreement shall prevail and any one of the Parties is obliged to vote in favour of any amendment of the Articles of Association which is permissible under Danish law and which is required to give the fullest possible effect to this Agreement. 3. Board of Directors 3.1 The board of directors of the Company (the "Board of Directors") shall consist of four (4) to seven (7) members elected by the shareholders for two years at a -3- time. Two alternative members shall be elected. Reelection may take place and the Parties agree that continuity of the work of the board of directors shall be endeavoured. The Board of Directors shall form the Executive Committee of the Partnership. 3.2 WCE shall have a right to appoint two (2) directors. When WCE's shareholding in the Company reaches 50% WCE, cf. 8.7, shall have the right to appoint a majority of directors. 3.3 The rest of the directors are elected by the Current Shareholders at the annual general meeting and WCE refrains from exercising its voting right in this election. 3.4 At the first meeting after the annual general meeting of shareholders the Board of Directors shall elect its Chairman amongst themselves. 3.5 The Board of Directors shall form a quorum when more than half of the directors are present or represented. A director may be represented by proxy in writing to another director granted for the individual board meeting. However, to the extent possible, no resolutions may be made without all directors having had an opportunity to participate in the transactions of the business concerned. 3.6 Decisions amongst the Board of Directors shall, save from such matters referred to in 3.7 below, be made with a simple majority of votes. In case of equality of votes the Chairman has the casting vote. 3.7 The below resolutions or proposals whether in the Board of Directors of the Company or in the Executive Committee of the Partnership may be made only subject to a simple majority of votes amongst directors appointed by the Current Shareholders and the acceptance of all directors appointed by WCE unless they have already been accounted for in a budget approved by the Board of Directors of the Company or in the Executive Committee of the Partnership with such majority: (1) The acquisition by the AG Group of any one asset or any number of assets closely connected to each other at a total cost of more than DKK 500,000, -4- (2) The sale or disposition of any one asset or any number of assets closely connected to each other of the AG Group for a total price of more than DKK 500,000, (3) The creation of any charge or other security over any assets of the AG Group, (4) The giving by the AG Group of any guarantee or indemnity or the creation of any security of whatever nature over the assets of the Company or the Partnership, (5) The consolidation or amalgamation of the AG Group with any other company, (6) The disposal of or dilution of the Company's shareholding or interest, directly or indirectly, in the Partnership, save for instances as described in 11.1, (7) The acquisition by the AG Group of any share capital or other securities of any body corporate, (8) The making of any loan or advance to any person, firm, body corporate or other business in excess of DKK 300,000 or the borrowing of any money except by way of overdraft in the ordinary course of business, save in cases of distribution of advance profit, (9) The creation, allotment or issue of any shares in the capital of the AG Group or of any other security or the grant of any option or rights to subscribe in respect thereof or convert any instrument into such shares, (10) The making of any significant change in the business of the AG Group, (11) The making by the AG Group of any contract of a significant nature outside the normal course of the business, -5- (12) The reduction of its capital, variation of the rights attaching to any class of shares in the capital of the AG Group, (13) 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, (14) The presentation of any position for the winding-up of the Company or the Partnership, the suspension of payments or voluntary bankruptcy, (15) The approval of annual capital and revenue budgets and any modification thereto, (16) The approval of the Annual Report and Accounts, (17) Change in the Company's accounting principles, (18) The commitment of any funds for specified or unspecified capital expenditure in excess of DKK 500,000, (19) The formation of or entry into any partnership, association or joint venture or the establishment of any new branches, (20) The payment of any money or the giving of any benefit to any person engaged in the management of the AG Group (including any member of the Board of Directors) by way of remuneration or reimbursements of costs or expenses or otherwise where that payment or benefit has been calculated on a basis different from that currently applied ignoring for these purposes alternative methods of payment made or benefit given to ensure compliance with Danish law, unless such payment or benefit has been provided for in a budget previously approved in accordance with this sub-clause, (21) The entry into any transaction, arrangement or agreement outside of the ordinary course of business with or for the benefit of any director -6- of the AG Group or person connected or associated with any such director, (22) The appointment as bankers of any bank otherwise than in accordance with the Willis Corroon Group Plc list of approved banks (Unibank A/S is pre-approved), (23) The commencement, settlement or defence of any action, or proceedings or other litigation brought by and against the AG Group other than what is required in order not to jeopardise the AG Group's legal position, (24) The appointment or dismissal or change in the remuneration or terms of employment of any employee or officer of the AG Group in senior management, (25) Any other proposed event, act or omission which would have a significant effect on the AG Group. 4. The Management of the Company 4.1 Until WCE becomes owner of 50% of the share capital of the Company the Board members appointed by the Current Shareholders shall be solely responsible for appointing a management consisting of one or more members to be in charge of the day-to-day operation of the Company. 5. Audit and Accounts 5.1 The accounts of the Company shall be audited by a stateauthorized public accountant elected by the ordinary general meeting for one year at a time. 5.2 The accounts of the Company shall be rendered in accordance with generally recognised international accounting principles. 6. General Meetings 6.1 All resolutions at general meetings shall be made by a simple majority of votes -7- unless a different majority is required according to 6.2, the Articles of Association or legislation. 6.2 The Parties agree that resolutions of an essential or far-reaching nature as defined below may be adopted only by the general meeting if both (i) a simple majority of votes amongst the Current Shareholders and (ii) WCE vote in favour of the resolution: (i) Proposals to amend the Articles of Association of the Company. (ii) Proposals to merge, demerge or liquidate the Company. (iii) Proposals to increase or decrease the share capital of the Company. (iv) Appointment of the auditor of the Company. (v) Allocation and payment of dividend. 7. Dividend and Capital Redemption 7.1 The Parties shall take such action as may be necessary to procure that the Company distributes to and among its shareholders 100% of its profits available for distribution in each financial year subject to the appropriation of such reasonable and proper reserves for working capital or otherwise as the Board of Directors may think appropriate and subject to what is established by legislation. 7.2 Save as stipulated in 7.3 dividends shall be distributed to the shareholders of the Company in proportion to their ownership shares. 7.3 In 1999 WCE shall be entitled to receive 25% of the ordinary dividend payable in respect of the 1998 accounting year to WCE in proportion to its ownership shares. 7.4 No later than 30 November 1998 an extraordinary general meeting shall be held in the Company at which the Company's share capital shall be increased with DKK 40,000,000 through a transfer from the Company's share premium -8- account following which the Company will have an issued, fully paid up and registered share capital of DKK 54,285,700. The new shares shall be issued to the Company's shareholders in proportion to their respective ownership shares. 7.5 No later than 31 January 1999 an extraordinary general meeting shall be held in the Company at which the Company's share capital shall be decreased with DKK 40,000,000 through distribution to the Parties in proportion to their respective shareholdings and reduction of their nominal shareholdings in the same proportion. Distribution shall be effected after expiry of the 3 months' notice period pursuant to Section 46 of the Danish Companies Act. 8. WCE's Options to Increase Shareholding 8.1 Subject to 8.2 the Current Shareholders are obliged to sell 10% of the shares of the Company to WCE on 31 December 2003 resulting in WCE becoming owner of 40% of the Company's share capital. Such sale shall be effected by each shareholder disposing of a proportionate amount of shares in the Company pursuant to the ratio with which they hold shares in the Company. 8.2 The Current Shareholders' obligation under 8.1 shall be conditional upon WCE forwarding to the Chairman of the Board of Directors a letter by telefax and registered mail in the period from 1 January - 30 October 2003 stating that WCE wishes to exercise its option to acquire shares in the Company as stipulated in 8.1. 8.3 In case WCE exercises the option under 8.1 the shares acquired shall be transferred by the Current Shareholders on 31 December 2003 against cash payment from WCE within 30 days at a P/E of 11,5 x the Formula Profit of the AG Group as defined in 8.10. 8.4 Subject to 8.5 the Current Shareholders are obliged to sell 10% of the shares of the Company to WCE on 31 December 2008 or at any 31 December thereafter resulting in WCE becoming owner of 50% of the Company's share capital. Such sale shall be effected by each shareholder disposing of a proportionate amount of shares in the Company pursuant to the ratio with which they hold shares in the Company. -9- 8.5 The Current Shareholders' obligation under 8.4 shall be conditional upon WCE forwarding to the Chairman of the Board of Directors a letter by telefax and registered mail in the period from 1 January - 30 October in the exercise year stating that WCE wishes to exercise its option to acquire shares in the Company as stipulated in 8.4. 8.6 In case WCE exercises the option under 8.4 the shares acquired shall be transferred by the Current Shareholders on 31 December 2008 or at any 31 December thereafter as the case may be against cash payment from WCE within 30 days at a P/E of 10 x the Formula Profit of the AG Group as defined in 8.10. 8.7 Subject to 8.8 the Current Shareholders are obliged to sell a portion of the shares of the Company to WCE on 31 December 2013 or at any 31 December thereafter in an amount resulting in WCE becoming owner of 51% or more of the Company's share capital. Such sale shall be effected by each shareholder disposing of a proportionate amount of shares in the Company pursuant to the ratio with which they hold shares in the Company. 8.8 The Current Shareholders' obligation under 8.7 shall be conditional upon WCE forwarding to the Chairman of the Board of Directors a letter by telefax and registered mail in the period from 1 January - 30 October in the exercise year stating that WCE wishes to exercise its option to acquire new shares in the Company as stipulated in 8.7. 8.9 In case WCE exercises the option under 8.7 the shares acquired shall be transferred by the Current Shareholders on 31 December 2013 or at any 31 December thereafter, as the case may be, against cash payment from WCE within 30 days at a P/E of 10 x the Formula Profit of the AG Group as defined in 8.10. 8.10 The "Formula Profit" referred to in this Agreement shall mean the normalised average after tax earnings of the AG Group for the previous three years calculated by multiplying the normalised after tax earnings (cf. Schedule B to Annex 3): in the case of the eldest year by 1; -10- in the case of the second eldest year by 2, and in the case of the youngest year by 3 and then dividing the aggregate amount by 6, subject to a minimum price per share of the shares acquired by WCE equal to a proportionate share of the original valuation (DKK 140 million) of the Company increased annually by the percentage increase in the Danish Consumer Price Index, from 31 December 1998 depending on the percentage of shares being sold. 9. WCE's Obligation to acquire Shares from Current Shareholders 9.1 Upon WCE holding 50% of the share capital of the Company, cf. 8.4, each Partner may demand that WCE acquires his shares in the Company at a P/E of 10 x the Formula Profit with the exception, however, that the minimum price per share as described in the definition of Formula Profit in 8.10 shall not apply in this case. 9.2 If a Partner wishes to exercise this right he shall forward to the Chairman of the Board of Directors by telefax and registered mail his offer. The Chairman shall forthwith without undue delay reforward the offer to WCE with a copy to the other shareholders. The offer must comprise all shares owned by the Partner. 9.3 The purchase price for the shares offered pursuant to 9.1 shall be paid in cash by WCE within 60 days of receipt of the offer against the Partner's delivery of the shares free of any charges, liens or encumbrances. Any share transfer tax shall be paid by the Partner. 10. Transfer of Shares 10.1 Save in transfers comprised by 8, if a Partner (the "Offeror") wishes to sell his shares in the Company other than to a public or private limited company which is 100% owned by the Partner the other Current Shareholders have a pre-emptive right to acquire those shares in proportion to the ratio with which they hold shares in the Company. 10.2 The offer in writing shall be forwarded to the Chairman of the Board of Directors by the Offeror by telefax and registered mail. The Chairman of the Board of -11- Directors shall forthwith without undue delay re-forward the offer to the other Parties. The offer must comprise all shares owned by the Offeror. 10.3 If a Partner intends to exercise his pre-emptive rights this shall be done by telefax and registered mail to the Chairman of the Board of Directors within 30 days of receipt of the offer to exercise the pre-emptive right. Acceptance of the offer shall comprise all shares offered to a Partner by the Offeror. 10.4 If one or more of the Current Shareholders do not exercise their pre-emptive right with regard to the offered shares the Current Shareholders are allowed within 14 days from the expiry date of the offer to agree to a whole or partly allocation amongst themselves of the shares not taken up. 10.5 If a portion of shares is still not taken up after exhaustion of the procedure pursuant to 10.2 - 10.4 the pre-emptive right shall transfer to WCE subject to a renewal of the procedure pursuant to 10.2 - 10.3. 10.6 If WCE does not wish to exercise its pre-emptive right pursuant to 10.5 the Board of Directors may within 30 days decide to allow the Company to buy back any remaining portion of shares. 10.7 Subject always first to the order of pre-emption rights described in 10.2 - 10.6 and the exhaustion of this order if a portion of the shares offered is still not taken up the Offeror shall within 3 months from the decision of the Board of Directors be entitled to find a buyer himself. When the Offeror has found a buyer, he shall inform the Board of Directors hereof. The Board of Directors shall then have 7 days to try again to find a buyer of the shares at the price, which has now been obtained by the Offeror. Where the Board of Directors does not want to avail itself of this right, the Offeror may complete the sale, subject however to 11. 10.8 If WCE wishes to sell its shares in the Company, other than to a company which is affiliated with WCE the Current Shareholders have a pre-emptive right to acquire the shares. 10.1 - 10.4 above shall apply mutatis mutantis to the Current Shareholders' pre-emptive right. 10.9 Subject always first to the order of pre-emption rights and the exhaustion of this order if the shares offered by WCE has not been taken up by the Current -12- Shareholders, WCE shall within expiry of a term of 12 weeks from expiry of the acceptance deadline mentioned in 10.3 be entitled to sell the shares to a third party on terms which are not more favourable for the third party than the terms on which they were offered to be taken up by the Current Shareholders. 10.10 When WCE becomes owner of 50% of the shares of the Company, cf. 8.4, the pre-emptive right for the Current Shareholders described in 10.1 shall transfer to WCE. 10.2 - 10.6 shall apply mutatis mutandis. 10.11 If WCE does not wish to exercise its pre-emptive right, the Offeror shall offer his shares to the other Partners in proportion to the ratio with which they hold shares in the Company and subject to a renewal of the procedure pursuant to section 10.2 - 10.6 and subsequent renewal of the procedure which shall be mandatory in case one of the other shareholders decides not to take up his proportion of the shares offered. 10.12 If a portion of shares offered is still not taken up 10.7 shall apply mutatis mutandis. 10.13 The purchase price for shares in all transfers under 10.1 - 10.10 shall be paid in cash not later than 30 days after the term and price have become final, cf. 13, against the Offeror's delivery of the shares free of any charges, liens or encumbrances. 11. Admission of new Partners 11.1 Where it is decided to admit a new partner in the Partnership and that such new partner shall acquire shares in the Company the Current Shareholders and WCE shall waive their respective pre-emptive rights pursuant to 10. 11.2 Sale of shares in the Company to a new partner shall take place either from the Current Shareholders' portion of shares or from the Company's holding of own shares, if any. Sale can be effected also to a public or private limited company which is 100% owned by the new partner. 11.3 Transfer of shares to a new partner shall moreover be subject to the consent of the Board of Directors and provided always that such consent shall only be given if the transferee at the transfer becomes the owner of an interest in the -13- Partnership or is an executive officer of the Partnership or the Company. 11.4 Finally transfer of shares to a new partner shall be subject to his covenant with the other parties to this agreement to observe this agreement and be treated as a Partner and Current Shareholder for the purpose of this agreement. 12. Mandatory transfer of shares 12.1 A Partner shall be considered as having made an offer for sale of his shares pursuant to 10.1 in the following instances: a) a Partner's death, b) a Partner is no longer a partner or employee of the Partnership or employed by the Company, c) a Partner becomes subject to bankruptcy proceedings, suspends his payments, enters into voluntary or compulsory arrangement of debt, is liquidated or dissolved or materially breaches its obligations according to this Agreement and does not within 14 days of written demand correct the breach and remedy its effects. 12.2 If, while WCE owns less than 50% of the shares of the Company the control of WCE is taken over by one of the four largest insurance broking groups (by revenue) or by an insurance company (other than an insurance company providing finance to secure WCE's continuing independence) the Current Shareholders may demand that WCE transfer its shares to the Current Shareholders or as they direct at a purchase price calculated in accordance with 8.3. 12.3 Payment of the purchase price under 12.2 shall take place within 60 days from the letter of demand against WCE's delivery of its shares free of any charges, liens or encumbrances. 13. Share Price 13.1 In any transfer of shares under this agreement other than as set forth in Section 8 -14- and 9 herein the price for the shares transferred shall be fixed as stipulated below. 13.2 Prior to the annual general meeting the Board of Directors fixes a price which shall apply throughout the current financial year. At the fixing of the price the Company's assets and liabilities shall be assessed at the market value and considering the general accounting principles applying to depreciation and provisions. 13.3 The Board of Directors shall explain the basis of the fixing of the price at the general meeting. 13.4 In case a shareholder cannot accept the price fixed by the Board of Directors, an objection in writing and stating his reasons shall be submitted to the Chairman of the Board of Directors not later than 2 weeks after the general meeting. The Company's auditor shall then decide the price fixing issue and shall fix the price in an account to the Board of Directors stating his reasons. Within one week of having received the price fixed by the auditor, the Board of Directors shall inform the shareholders in writing about the price fixed by the auditor. 13.5 In case a shareholder will not accept the price fixed by the auditor he shall, within 2 weeks of having received information about the price fixed by the auditor, refer the matter to arbitration, in accordance with Section 29. The price fixed by the arbitration tribunal shall be final and binding on the shareholders. 13.6 Where a request made by a shareholder for a change of the price fixed does not lead to changes of more than +/- 15%, the shareholder requesting the change shall pay all expenses in connection with it, including expenses for auditor and possible arbitration. 13.7 The purchase price for the shares shall be paid in cash not later than one week after the fixing of price have been finally decided. 14. Reciprocal Undertakings 14.1 The AG Group will be the member of the Willis Corroon Retail Network for Denmark in accordance with the network procedures and rules existing from time to time. -15- 14.2 Willis undertakes to channel all its Danish retail business through the AG Group using its best efforts to achieve the said procedure. 14.3 The Current Shareholders undertake (i) to cause the AG Group to channel all its retail business outside Denmark to members of the Willis Corroon group of companies ("Willis") and its retail network making their best efforts to pursue the said purpose and (ii) to use their best endeavours to direct all wholesale business (including reinsurance, both facultative and treaty) generated directly or indirectly by the AG Group to Willis Faber & Dumas Limited or such other Willis company as appropriate. In the event that Willis does not offer competitive rates and remuneration or does not have the specialist expertise to handle such business it will be discussed constructively among and agreed by the parties with a view to reaching a mutually acceptable solution, including, if appropriate, the use of a third party broker. 14.4 Notwithstanding the above, the parties recognise that Willis has existing wholesale activity in Denmark connected to other Danish brokers, and hereby agree that Willis is and will be free to carry on and expand this wholesale activity provided that such expansion will not conflict with the activity of the AG Group. However, Willis expressly undertakes not to give insurance or reinsurance assistance or risk management consultancy in any manner whatsoever to other brokers or insurers operating in Denmark who are competing with the AG Group as regards the same clients or prospective customers in connection with the AG Group's activities, and always provided that the AG Group has previously informed Willis that it is negotiating with such clients or prospective customers. Willis agrees and undertakes to inform the AG Group on a regular basis of any major wholesale initiative to be carried out in Denmark with other brokers or insurers. 14.5 The Current Shareholders hereby undertake and warrant to procure that the AG Group will not conduct itself in a way which will conflict with or affect -16- detrimentally Willis' existing wholesale relationships. 15. Market Security 15.1 The AG Group will use for the placing of business on behalf of its clients such insurance companies and markets as shall have been approved by the Willis Corroon Markets Security Committee from time to time if applicable in relation to the Danish market. 16. Systems Development 16.1 The Parties agree that they will involve and work closely with the WCE Systems Division in relation to any proposed developments in the AG Group's Corporate Systems. 17. Errors and Omissions 17.1 The Parties shall procure that the AG Group maintains at all times Errors and Omissions insurance cover considered adequate by WCE and the Current Shareholders. 17.2 Subject to 17.1 WCE shall use reasonable endeavours to procure that the Company shall be involved within the Willis Corroon Group's Errors and Omissions insurance policy ("Policy") in respect of amounts in excess of underlying policies which the AG Group may take out. 17.3 Subject to the AG Group being included within the Policy in accordance with 17.2 the AG Group shall comply with Willis policies and procedures in respect of Errors and Omissions and shall pay to Willis a reasonable share of premium on the basis of an equitable allocation across all companies covered by the Policy and taking account of the total premium of the AG Group, retained brokerage and the number of employees. 18. Name 18.1 The Company shall have the right and obligation to use the words "Willis Corroon Group" or similar indication to show its connection with the Willis Corroon -17- Group on notepaper, letterhead and material intended to come to the attention of third parties. 19. Rights to Information 19.1 The Company shall permit any person designated by WCE to discuss the affairs, finances and accounts of the AG Group with their officers and other principal executives all at such time as may reasonably be requested, and all books, records, accounts, documents and vouchers relating to the business and the affairs of the AG Group shall at such time be open to the inspection of WCE who may make such copies thereof or extracts therefrom as WCE may deem appropriate. Any information secured as a consequence of such discussions and examinations shall be kept strictly confidential by WCE. 20. Confidentiality 20.1 All communications between the parties, the Company, the Partnership, Willis Corroon, and/or any of them and all information and other material supplied to or received by any of them from the others which is either marked "confidential" or is by its nature intended to be for the knowledge of the recipient alone, and all information concerning the business transactions and the financial arrangements of the Parties or the AG Group with any person with whom any of them is in a confidential relationship with regard to the matter in question to the knowledge of the recipient shall be kept confidential by the recipient unless or until the recipient party can reasonably demonstrate that any such communication, information and material is, or part of it is, in the public domain through no fault of its own, whereupon to the extent that it is in the public domain or is required to be disclosed by law or in pursuance of employment duties, this obligation shall cease. 20.2 The shareholders shall use all reasonable endeavours to procure the observance of the above-mentioned restrictions by the Company and shall take all reasonable steps to minimise the risk of disclosure of confidential information, by ensuring that only they themselves and such of their employees and directors whose duties will require them to possess any of such information shall have access thereto, and will be instructed to treat the same as confidential. -18- 20.3 The obligation contained in this Clause 20 shall endure, even after the termination of this Agreement, without limit in point of time except and until such confidential information enters the public domain as set out above. 20.4 Notwithstanding Clauses 20.1 to 20.3 WCE may at any time disclose any such information and communications to its Associated Companies and as required by applicable Stock Exchange Regulation. 20.5 A shareholder on ceasing to be a shareholder will hand over to the Company all correspondence, budgets, schedules, documents and records belonging to or relating to the business of the Company and will not keep any copies thereof. 21. Restrictive Covenants 21.1 The Current Shareholders are comprised by the restrictive covenants in the Partnership Agreement. 22. Notices 22.1 Notices, demands or other communications required or permitted to be given or made hereunder shall be in writing in English and delivered personally or sent by prepaid first class post with recorded delivery, or by telex, or legible telefax addressed to the intended recipient at its address set out in this Agreement or to such other address or telex or telefax numbers as any party may from time to time duly notify to the others. Any such notice, demand or communication to a Partner may be sent to the Chairman of the Board of Directors. Any such notice, demand or communication shall, unless the contrary is proven, be deemed to have been duly served (if given or made by telefax or telex) on the next following business day in the place of receipt of (if given or made by first class letter) 48 hours after posting and in proving the same it shall be sufficient to show in the case of a letter that it was duly addressed, correctly stamped and posted and, in the case of a telex or telefax, that such telex or telefax was duly despatched to a current telex or telefax number of the addressee. 23. Remedies 23.1 No remedy conferred by any of the provisions of this Agreement is intended to be -19- exclusive of any other remedy which is otherwise available at law, in equity by statute or otherwise, and each and every other remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law, in equity, by statute or otherwise, the election of any one or more of such remedies by any of the parties hereto shall not constitute a waiver by such party of the right to pursue any other available remedy. 24. Severance 24.1 If any provision of this Agreement or part thereof is rendered void, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 25. Survival of Rights, Duties and Obligations 25.1 Termination of this Agreement for any cause shall not release a party from any liability which at the time of termination has already accrued to another party of which thereafter may accrue in respect of any act or omission prior to such termination. 26. Entire Agreement 26.1 This Agreement (together with the Schedules hereto and agreements and documents referred to herein) constitutes the entire agreement between the parties and save as otherwise expressly provided no modification, amendment or waiver of any of the provisions of this Agreement shall be effective unless made in writing specifically referring to this Agreement and duly signed by the Parties hereto. 27. Assignment 27.1 This Agreement shall be binding on the Parties hereto and their respective successors and assigns. 27.2 None of the Parties hereto shall be entitled to assign this Agreement or any of its rights and obligations hereunder. -20- 28. Governing Law 28.1 This Agreement shall be governed by and construed in accordance with the laws of Denmark. 29. Disputes 29.1 Any dispute between the Parties arising out of or in connection with this Agreement shall, provided the parties can not agree on a settlement through negotiation, be determined by arbitration with final, binding and enforceable effect in agreement with the following rules: 29.2 In the event of a dispute, either party shall be entitled to request that an arbitration tribunal be set up. 29.3 The party seeking resolution of a dispute by arbitration shall appoint an arbitrator and send a letter by registered mail to the other party (the "Respondent") requesting the Respondent to appoint its arbitrator within 14 days. The letter shall also contain a short statement of the question or questions to be determined by the arbitration. Where the Respondent does not appoint an arbitrator within the time-limit mentioned above, that arbitrator shall instead be appointed by the Danish Arbitration Institute. 29.4 The two arbitrators appointed for the parties shall jointly appoint an umpire. Failing agreement on the choice of an umpire, the appointed arbitrators shall jointly approach the Danish Arbitration Institute and request that it, following prior discussion with the parties, appoint an umpire to act as chairman of the arbitration tribunal. 29.5 The arbitration tribunal shall determine the matter according to applicable law and shall lay down the rules for its hearing of the matter in agreement with the general principles of the Danish Administration of Justice Act (Retsplejeloven). 29.6 The arbitration tribunal shall also decide how the costs of the arbitration are to be borne. The arbitration tribunal shall set a date for implementation of the award, which date shall normally be no later than 14 days after the award has been -21- made. 29.7 The venue for the arbitration shall be Copenhagen, and the language of the proceedings shall be English. 28/9 1998 28/9 1998 Willis Cooroon Europe B.V. The Current Shareholders By: By: -------------------------- ----------------------------- Mr Niels Simonsen and Mr Kent Risvad acting for the Board of Directors of the Company autho- rized to execute this Agreement by the Current Shareholders Acceded to 28/9 1998 Assurand0rgruppen I/S By: ------------------------- Mr Niels Simonsen and Mr Kent Risvad acting for the Board of Directors of the Company authorized to exe- cute this Agreement by the Current Shareholders -22- List of Appendices: Schedule 1: List of Shareholdings Annex 1: Stock Purchase Agreement Annex 2: Board Resolution Annex 3: Deed of Partnership Acceded to 28/9 1998 Assurand0rgruppen A/S By: ------------------------- -23- EX-10.5 25 EX. 10.5 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 ------------------------------------------------------------------------
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 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 ) EX-10.6 26 EX. 10.6 Exhibit 10.6 A G R E E M E N T This Agreement is dated the 15th day of July 1998 BETWEEN: 1. WILLIS CORROON EUROPE BV with registered address at Marten Meesweg 51, 3068 Rotterdam (hereinafter "Willis Corroon") represented by Sarah Joan Turvill, holder of British Passport No. 3362379. 2. JAIME CASTELLANOS BORREGO for these purposes domiciled at Paseo de la Castellana 36-38, Madrid and holder of Identity Card No. 14.899.002 (hereinafter "JCB"). 3. ANTONIO SERRATS IRIARTE for these purposes domiciled at Paseo de la Castellana 36-38, Madrid and holder of Identity Card no. 15.882.313 (hereinafter "ASI") 4. PEDRO CARDELUS MUNOZ-SECA for these purposes domiciled at Paseo de la Castellana 36-38, Madrid and holder of Identity Card no. 50012296 (hereinafter "PC") Parties 2, 3 and 4 are hereinafter together described as the "Other Shareholders" WHEREAS: FIRST - Willis Corroon is a 60% shareholder in the Company " " (hereinafter "the Company") and the Other Shareholders hold 40% in the Company, which company owns 100% of the capital of S&C Willis Corroon, S.A., S.A. 1 SECOND - This Agreement cancels and replaces the Shareholders Agreement dated 28th September 1990 and addendum thereto entered into between the shareholders of S&C Willis Corroon, S.A., S.A. and the subsequent agreement amending the aforesaid agreement dated 21st March 1996. THIRD - The parties wish to regulate their relationship as shareholders in the Company and the management responsibilities within S&C Willis Corroon, S.A., S.A. Now therefore, the parties having acknowledged each other's legal capacity to bind therefore by this contract, they hereby agree as follows: 1. DEFINITIONS In this Agreement (including the Recitals) the following words and expressions shall have the following meanings: "Associated Company" means a subsidiary or holding company of a Shareholder, and a subsidiary of such holding company; "Audited Accounts" means the report and audited accounts or consolidated accounts of the Company or, as the case may be, the Group for the financial year ending on the relevant balance sheet date; "Board" means the board of directors of the Company; "Business" means the business of the Company of insurance and reinsurance broking and consultancy; 2 "Executive Committee" means in relation to a Group Company an Executive Committee established pursuant to Clause. 4.4 "Group" means the Company and its subsidiaries (if any) from time to time and "Group Company" means any one of them; "IPC" means the "Indice de Precios de Consumo" in Spain or any such index substituted therefore; "Shares" means the existing [13,000] registered shares in the capital of the Company and any shares issued in exchange therefore by way of conversion or reclassification and any shares representing or deriving from such shares as a result of any increase in or reorganisation or variation of the capital of the Company and any other shares held by the Shareholders in the capital of the company from time to time; "Shareholders" means (subject to Clause 9) the Other Shareholders and Willis Corroon; "Statutes" means the new Statutes of the Company set out in Schedule 2 and to be adopted pursuant to Clause ------- 2. OPTIONS TO SELL/PURCHASE FURTHER SHARES 2.1 In consideration of the sum of one pound Sterling paid to Willis Corroon 3 by each of the Other Shareholders, receipt of which is hereby acknowledged, it is hereby agreed that each of the Other Shareholders may sell and Willis Corroon shall acquire at the option of each of the Other Shareholders some or all of the Shares held by them at the price set out in paragraph 3 headed Exercise Price at the following times and in the following circumstances: (i) at 31.12.2002 over a 50% holding of each of his Shares; 4 (ii) at 31.12.2008 or at any time thereafter over all his remaining Shares; (iii) at any time between 1.1.2003 and 31.12.2008 over all his remaining Shares in the event of their retirement from the business; (iv) at any time in the event of a third party which is or is the owner of a major world wide competitor of the Willis Corroon Group and which has a subsidiary in Spain which is a major competitor of S&C Willis Corroon, S.A., S.A. acquiring a significant percentage holding in Willis Corroon Group p.l.c with a controlling interest (other than as a result of a reconstruction, amalgamation or other reorganisation of the Willis Corroon Group); (v) at any time in the event of permanent disablement of the Shareholder concerned. (vi) In the event of death of any of the Other Shareholders, the Option shall be transferred to his heirs or assignees and shall be exercisable by them at any time. (vii) at any time in the event that Willis Corroon is in breach of the terms of this Agreement which breach is not remedied within a reasonable time, or terminates the employment agreement with S&C Willis Corroon, S.A., S.A. of this of the Other Shareholder concerned without cause or with cause attributed to S&C Willis Corroon, S.A., S.A.. 2.2 In such circumstances the option to sell only applies to the Other Shareholders concerned. 5 2.3 In consideration of the sum of one pound Sterling paid to each of the Other Shareholders, receipt of which is hereby acknowledged, each of the Other 6 Shareholders hereby grants to Willis Corroon an option to purchase all the shares held by him at the price set out in Paragraph 3 headed Exercise Price in the following circumstances: (i) On the Other Shareholder ceasing to be employed by S&C Willis Corroon, S.A., S.A. for any reason; (ii) in the event of a breach of the Shareholders Agreement by the Shareholder concerned, which breach has not been remedied within a reasonable time; 2.4 Completion of any purchase resulting from the exercise of any option hereunder by Willis Corroon or the Other Shareholders shall be subject to compliance by Willis Corroon Group plc with all the requirements of the London Stock Exchange. Willis Corroon will take all necessary steps to comply with the requirements of the London Stock Exchange. 3. EXERCISE PRICE 3.1.1 Subject to the provisions contained in this paragraph the Exercise Price at which the options set out in paragraph 2 above will be exercised shall be the price in Spanish Pesetas per share payable by Willis Corroon calculated as follows: EP = EPS x PE Where- EP = the Exercise Price EPS = E --- S 7 Where: E = average yearly net profit after tax but before the after tax effect of exceptional, extraordinary or prior year items and the after tax effect of the amortisation of goodwill of the Company for the following years- (a) The previous two financial years ending 31 December or such other date at which audited accounts are drawn up, increased for both years to take account of increases in the IPC from the date of the accounting year end of the applicable year until the date of exercise hereunder- and (b) the budgeted net profit after tax but before the after tax effect of exceptional, extraordinary or prior year items and the after tax effect of the amortisation of goodwill for the year in which the option is exercised. S = the number of shares then in issue- and PE = the prevailing price earnings multiple (price per share divided by earnings per share) for Willis Corroon Group plc at the date of the exercise less 2 points provided that the PE shall never be less than 13. Where: The earnings per share shall be the after tax earnings per share of the last four published quarters before the after tax effect of exceptional, extraordinary or prior year items and before the after tax effect of the amortisation of goodwill- and the price shall be 8 average share price over the four week period prior to the date of exercising the option- and adjusted for any change in the issue share capital occurring after the publication of earnings per share above and not reflected therein. 3.1.2 On the date of the publication of the Audited Accounts for the year within which any of the options is exercised the Exercise Price shall be recalculated adjusting E by substituting the budgeted net profit after tax as referred to in part (b) of the definition of E in clause 3.1 with the actual net profit after tax but before the after tax effect of excepcional, extraordinary or prior year items and the after tax effect of the amortisation of goodwill of the Company for the relevant year. Within 14 days of the calculation of the Exercise Price so adjusted, an adjusting payment shall be made by or to the Minority Shareholders by Willis Corroon. 3.2 In relation to options exerciseable under paragraphs 2.1(i), 2.1(iii) 2.1.(iv), 2.1(v) or 2.1.(vi) hereof the Exercise Price will be subject to a minimum figure per share equal to ESP 1,56Om divided the number of shares held by the Other Shareholders at the date hereof. In the event that the shares are divided or amalgamated the price per share will be adjusted accordingly. This minimum price will be increased to take account of increases in the IPC from 31.12.1998 to the date of exercise of the relevant options. 3.3 In relation to options exerciseable under paragraph 2.2 in the circumstances set out below the Exercise Price will be subject to the provisions set out below. (i) In the event that the Other Shareholder ceases to be an employee of S&C Willis Corroon, S.A., S.A. prior to 31.12.99 for any of the following reasons: a) he resigns 9 b) he is dismissed for cause the Exercise Price will be reduced by 25% (ii) In the event that the one of Other Shareholders ceases to be an employee because of death, permanent disability or because his employment has been terminated without cause up to and including 31.12.2008 the Exercise Price will be subject to the minimum figure per share as set out in paragraph 3.2 above. 4. THE BUSINESS OF S&C WILLIS CORROON, S.A. AND ITS MANAGEMENT 4.1 Conduct of the Business Each of the Shareholders agrees to exercise his or its respective rights hereunder and as a shareholder in the Company and (insofar as it lawfully can) to procure that each representative Director, if any, exercises his rights as such so as to ensure that- 4.1.1 S&C Willis Corroon, S.A., S.A. performs and complies with all obligations on its part under this Agreement and complies with the restrictions imposed upon it under its Bye-laws; 4.1.2 the Business is conducted in accordance with sound and good business practices and the highest ethical standards and in particular that S&C Willis Corroon, S.A., S.A. and its directors do not give any discount, rebate or commission in order to procure, or in connection with, any business transacted by or on behalf S&C Willis Corroon, S.A., S.A., which discount, rebate or commission is not in accordance with the law and good Spanish business practice; and 4.1.3 Insurers' Funds shall not be used for the purpose of financing any of S&C Willis Corroon, S.A., S.A.'s expenditure of whatever nature 10 4.2 Insurance 4.2.1 The Shareholders shall procure that S&C Willis Corroon, S.A. take out "Errors and Omissions" insurance cover considered adequate by Willis Corroon and S&C Willis Corroon, S.A.; 4.2.2 Willis Corroon shall use reasonable endeavours to procure that S&C Willis Corroon, S.A. shall be included in the Group Errors and Omissions Insurance Policy (the "Policy") held by Willis Corroon in respect of amounts in excess of those considered adequate by Willis Corroon and S&C Willis Corroon, S.A. under Clause 4.2.1; 4.2.3 Subject to S&C Willis Corroon, S.A. being included in the Policy in accordance with sub-clause 4.2.2 S&C Willis Corroon, S.A. shall participate fully in the Policy and shall pay to Willis Corroon a reasonable share of premium, as determined by Willis Corroon, on the basis of an equitable allocation across all companies covered by such policies and taking account of the total premium handled by S&C Willis Corroon, S.A., its retained brokerage and number of employees. 4.3 Board of Directors 4.3.1 Subject to and in accordance with the following provisions of this paragraph, Willis Corroon shall be entitled to appoint a majority of the Directors of the Company. The Shareholders agree that for so long as the Other Shareholders hold at least 10% of the Company all such directors will be appointed after consultation with and by 11 agreement between the Shareholders. 4.3.2 The Directors of the Company shall be responsible for appointing Directors to the Board of S&C Willis Corroon, S.A.. 4.3.3 Notwithstanding the provisions of the Statutes, no Shareholder will appoint a Director without reasonable prior consultation with the other Shareholders with a view to reaching agreement as the person to be appointed. 4.4 Executive Committee The parties agree that there shall be established an Executive Committee of S&C Willis Corroon, S.A.. The Executive Committee shall consist of JCB, ASI, PC and such others as may be agreed from time to time. The Executive Committee shall be responsible for the day to day management of S&C Willis Corroon, S.A. and the operation of the business. 4.5 Limitations on the Board's Powers of management The Shareholders shall procure that the Board of Directors of the Company and of S&C Willis Corroon, S.A. and of each Group Company shall conduct the affairs of the Company concerned and shall exercise all voting and other rights or powers of control exerciseable by the Company concerned in relation to the subsidiaries of that Company for the time 12 being so as to secure that no action shall be taken or resolution passed by that Group Company or any such subsidiary in relation to the following matters unless with the sanctions of the affirmative vote of not less than a majority of the directors of that Company for the time being, such vote having the support of one Director who is an employee of Willis Corroon Group in London and one Director who is an Other Shareholder. 4.5.1 The appointment and removal of the Secretary or any director of any subsidiary; 4.5.2 The acquisition by a Group Company or any assets of property at a total cost to the Group Company (per transaction) of more that (pound)125,000; 4.5.3 The sale or disposition of any assets or property of a Group Company for a total price per transaction of more than (pound)125,000 4.5.4 The creation of any charge or other security over any assets or property of a Group Company; 4.5.5 The giving by any Group Company of any guarantee or indemnity or the creation of any security of whatever nature over the assets of a Group Company; 4.5.6 The consolidation or amalgamation of any Group Company with any other company; 4.5.7 The disposal of or dilution of the Company's shareholding or interest, directly or indirectly, in any of its subsidiaries; 4.5.8 The acquisition by any Group Company of any share capital or 13 other securities of any body corporate; 4.5.9 The making of any loan or advance to any person, firm, body corporate or other business in excess of (pound)125,000 or the borrowing of any money except by way of overdraft in the ordinary course of business; 4.5.10 The creation, allotment or issue of any shares in the capital of a Group Company or of any other security or the grant of any option or rights to subscribe in respect thereof or convert any instrument into such shares; 14 4.5.11 The payment or declaration by the Company of any dividend or other distribution on account of shares in its capital; 4.5.12 The making of any significant change in the business of a Group Company; 4.5.13 The making by any Group Company of any contract of a significant nature outside the normal course of the business of such Group Company; 4.5.14 The reduction of its capital, variation of the rights attaching to any class of shares in the capital of the Company or any redemption, purchase or other acquisition by the Company of any shares or other securities of the Company; 4.5.15 The adoption of any bonus or profit-sharing scheme or any share option or share incentivo scheme or employee share trust or share ownership plan; 4.5.16 The making of any change to a Group Company's documents; 4.5.17 The presentation of any position for the winding-up of a Group Company, the suspension of payments or voluntary bankruptcy; 4.5.18 The approval of annual capital and revenue budgets and any modification thereto; 4.5.19 The approval of the Annual Report and Accounts. 4.5.20 The commitment of any funds for specified or unspecified capital expenditure not provided for in the approval capital and revenue 15 budgets in excess of the equivalent of (pound)125,000. 4.5.21 The formation of or entry into any partnership, association or joint venture or the establishment of any new branches; 4.5.22 The payment of any money or the giving of any benefit to any person engaged in the management of a Group Company (including any member of the Board of Directors) by way of remuneration or reimbursement of costs or expenses or otherwise where that payment or benefit has been calculated on a basis different from that currently applied ignoring for these purposes alternative methods of payment made or benefit given to ensure compliance with Spanish law, unless such payment or benefit has been provided for in a budget previously approved in accordance with this sub-clause; 4.5.23 The entry into any transaction, arrangement or agreement outside of the ordinary course of business with or for the benefit of any director of the Company or person connected or associated with any such director; 4.5.24 The appointment as bankers of any bank otherwise than in accordance with the Willis Corroon Group plc list of approved banks". 4.5.25 The commencement, settlement or defence of any action, or proceedings or other litigation brought by a Group Company; 4.5.26 The appointment or dismissal or change in the remuneration or terms of employment of any employee or officer of a Group Company in senior management; 16 4.5.27 The appointment or removal of any person as a Managing Director or Chairman of the Company; 4.5.28 Any other proposed event, act or omission which would have a significant effect on the Company. 17 In determining whether any of the matters described above require the approval of the Directors as aforesaid a series of related transactions in any financial year which when aggregated exceed the figure specified in the relevant paragraph shall be construed as a single transaction requiring such approval. 4.7 Budgets & Financial Information The Company and S&C Willis Corroon, S.A. and Group Companies shall prepare and submit to the Directors and Shareholders such monthly profit and loss account and balance sheet management and financial information, budgets, forecasts and business plans in accordance with the Willis Corroon Group plc timetable from time to time. 4.8 Auditors The auditors of the Company and S&C Willis Corroon, S.A. shall be Ernst & Young. In the event that another firm is appointed by Willis Corroon Group plc as its worldwide auditors, such firm will be appointed as auditors to the Company and S&C Willis Corroon, S.A. unless such firm is not entered in the Official Register and/or the Other Shareholders object to such appointment and have reasonable grounds for such objection. 4.9 Market Security S&C Willis Corroon, S.A. and Group Companies will only use as security those insurance companies as shall have been approved for use by the Willis Corroon Group Security Committee. 5. DIVIDENDS 18 The shareholders shall take such action as may be necessary to procure that the Company distributes to and among its shareholders 100 per cent of its profits available for distribution in each financial year subject to the appropriation of such reasonable and proper reserves for working capital or otherwise as the Board may think appropriate and subject to what is stablished by the Law or by the Company's By-laws 6. TRANSFER OF SHARES 6.1 Before any transfer by one of the an Other Shareholder of any Shares to a third party, the person proposing to transfer them (the "Proposing Transferor") shall give a notice in writing (a "Transfer Notice") to Willis Corroon that he desires to transfer them and specify the price at which he is offering to transfer them (the "Prescribed Price"). 6.2 On receipt of a Transfer Notice Willis Corroon shall have a right of first refusal to acquire the Shares the subject of the Transfer Notice at a price equal to the Exercise Price as calculable for the exercise of the options granted pursuant to Clause 2 (adjustable in the manner set out in Clause 3.2 and 3.3), mutatis mutandis, or the Prescribed Price, whichever is lower. 6.3 If Willis Corroon declines to exercise its right of first refusal within 45 days of the Transfer Notice, the Proposing Transferor shall be at liberty to transfer those Shares to any person on a bona fide sale at the Prescribed price (after deducting, where appropriate, any dividend or other distribution declared or made after the date of the Transfer Notice and to be retained by the Proposing Transferor). 6.4 Before any transfer by Willis Corroon of any Shares to a third party each 19 of the Other Shareholders shall have a right of first refusal to acquire the Shares to be transferred on the same terms, mutatis mutandis, as for transfers by Other Shareholders pursuant to Clauses 6.1, 6.2 and 6.3, provided that, and it is expressly agreed, Willis Corroon 20 shall be able to transfer any Shares held by it to an Associated Company in which case the Other Shareholders agree to waive any rights of pre-emption in favour of them. In the event that two or more of the Other Shareholders exsercise the right of first refusal to acquire the shares to be transferred by Willis Corroon , each of them shall have the right acquire a number of the Shares to be transferred equivalent pro rata the number of Shares held by each of them at the date of the Transfer Notice. 6.5 The Shareholders shall procure compliance with any formalities necessary or conducive to the implementation of any transfers of Shares pursuant to this Clause 6. 7. DURATION AND TERMINATION 7.1 Except as otherwise provided herein, this Agreement shall continue in full force and effect without limit in point of time until the earlier of the following events: 7.1.1 When the holders of 100 per cent of the Shares in issue agree in writing to terminate this Agreement; and 7.1.2 When an effective resolution is passed or a binding order is made for the winding-up of the Company; Provided, however, that this Agreement shall cease to have effect as regards any Shareholder who ceases to hold any Shares save for any 21 provisions hereof which are expressed to continue in force thereafter. 8. NEW SHAREHOLDERS 22 The parties shall procure that no person other than a Shareholder acquires Shares in the Company (whether by transfer or allotment) unless he covenants with the other parties to this Agreement (in a form reasonably acceptable to each of them) to observe this Agreement and, in the case of a transferee, to perform all the obligations of the transferor under this Agreement and thereupon each such transferee or allottee shall be treated as a Shareholder for the purposes of this Agreement. 9. RIGHTS TO INFORMATION; CONFIDENTIALITY 9.1 Rights of inspection and information The Company shall permit any person designated by Willis Corroon or the Other Shareholders in Writing to discuss the affairs, finances and accounts of the Company and its subsidiaries with their offices and other principal executives all at such time as may reasonably be requested, and all books, records, accounts, documents and vouchers relating to the business and the affairs of the Company and its subsidiaries shall at such time be open to the inspection of Willis Corroon or the other Shareholders, as applicable, who may make such copies thereof or extracts therefrom as Willis Corroon or the Other Shareholders, as applicable, may deem appropriate. Any information secured as a consequence of such discussions and examinations shall be kept strictly confidential by Willis Corroon or the Other Shareholders, as applicable. 9.2 Confidentiality 9.2.1 All communications between the parties, the Company, S&C Willis Corroon, S.A. and/or any of them and all information and other materias supplied to or received by any of them from the others 23 which is either market "confidencial" or is by its nature intended to be for the knowledge of the recipient alone, and all information concerning the business transactions and the financial 24 arrangements of the parties or the Company with any person with whom any of them is in a confidential relationship with regard to the matter in question to the knowledge of the recipient shall be kept confidencial by the recipient unless or until the recipient party can reasonably demonstrate that any such communication, information and material is, or part of it is, in the public domain through no fault of its own, whereupon to the extent that it is in the public domain or is required to be disclosed by law or in pursuance of employment duties, this obligation shall cease. 9.2.2 the Shareholders shall use all reasonable endeavours to procure the observance of the above-mentioned restrictions by the Company and shall take all reasonable steps to minimise the risk of disclosure of confidencial information, by ensuring that only they themselves and such of their employees and directors whose duties will require them to possess any of such information shall have access thereto, and will be instructed to treat the same as confidential. 9.2.3 The obligation container in this Clause 9 shall endure, even after the termination of this Agreement, without limit in point of time except and until such confidencial information enters the public domain as set out above. 9.2.4 Notwithstanding Clauses 9.2.1 to 9.2.3, the Shareholders may at any time disclose any such information and communications to their Associated Companies. 9.2.5 A Shareholder on ceasing to be a Shareholder will hand over to the Company all correspondence, budgets, schedules, documents and records belonging to or relating to the business of the Company and will not keep any copies thereof. 25 10. RESTRICTIVE COVENANTS Each of the Other Shareholders who is also an employee of S&C Willis Corroon, S.A. agrees with Willis Corroon and the Company and S&C Willis Corroon, S.A. in the following terms: 10.1 In consideration of the option arrangements in Clause 2 hereof, he will not whilst he continues to be a Shareholder or employee of the Company or S&C Willis Corroon, S.A., nor will he for a period of 2 years from the date upon which he ceases to be a Shareholder of the Company be employed or otherwise be interested in any way in any business in Spain which is in competition with the Business. 10.2 In consideration of the option arrangements in Clause 2 hereof, he will not for a period of two years after he ceases to be an employee of the Company Company or S&C Willis Corroon, S.A., canvass or solicit in competition with the company or any other Group Company the custom of or in any way act for any firm, person or company who at any time during the last two years of his service with the Company was a client of the Company or, as the case may be, any Group Company. 10.3 He will not for a period of two years after he ceases to be an employee of the Company or S&C Willis Corroon, S.A., either or on his own behalf or for any other person, firm or organisation, employ any person who was at any time during the last two years of his service with the Company an employee, director or agent of the company or any Group Company. 11. NOTICES AND GENERAL 11.1 Notices, demands or other communications required or permitted to be 26 given or made hereunder shall be in writing in English and Spanish and delivered personally or sent by prepaid first class post with recorded delivery, or by telex, or legible telefax addressed to the intended recipient at its address set out in this Agreement or to such other address or telex or telefax number as any party may from time to time duly notify to the others. Any such notice, demand or communication shall, unless the contrary is proved, be deemed to have been duly served (if given or made by telefax or telex) on the next following business day in the place of receipt or (if given or made by first class letter) 48 hours after posting and in proving the same it shall be sufficient to show in the case was duly addressed, correctly stamped and posted and, in the case of a telex or telefax, that such telex or telefax was duly despatched to a current telex or telefax number of the addressee. 11.2 Remedies No remedy conferred by any of the provisions of this Agreement is intended to be exclusivef of any other remedy which is otherwise available at law, in equity by statute or otherwise, and each and every other remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law, in equity, by statute or otherwise. the election of any one or more of such remedies by any of the parties hereto shall not constitute a waiver by such party of the right to pursue any other available remedy. 11.3 Severance If any provision of this Agreement or part thereof is rendered void, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 11.4 Survival of Rights, Duties and Obligations 27 Termination of this Agreement for any cause shall not release a party from any liability which at the time of termination has already accrued to another party of which thereafter may accrue in respect of any act or omission prior to such termination. 11.5 Costs S&C Willis Corroon, S.A. shall bear the costs and expenses incurred by it in connection with this agreement. 11.6 Entire Agreement This Agreement (together with the Schedules hereto) constitutes the entire agreement between the parties and save as otherwise expressly provided no modification, amendment or waiver of any of the provisions of this Agreement shall be effective unless made in writing specifically referring to this Agreement and duly signed by the parties hereto. 11.7 Assignment 11.7.1 This Agreement shall be binding on the parties hereto and their respective successors and assigns. 11.7.2 None of the parties hereto shall be entitled to assign this Agreement or any of its rights and obligations hereunder except as envisaged by Clause [ ] or to a permitted transferee of that party's Shares which has complied with Clause 11.8 Conflict with the Statutes In the event of any ambiguity or discrepancy between the provisions of 28 this Agreement and the Statutes, then it is the intention that to extend this Agreement governs the rights of the parties inter se the provisions of this Agreement shall prevail and accordingly the parties shall exercise all voting and other rights and powers available to them so as to give effect to the provisions of this Agreement and shall further if necessary procure any required amendment to the Statutes. Willis Corroon Europe BV p.p. Sarah Turvill D. Jaime Castellanos Borrego Anton Serrats Iriarte Pedro Cardelus Munoz-Seca 29 EX-10.7 27 EX. 10.7 Exhibit 10.7 1 SHAREHOLDERS AGREEMENT THIS AGREEMENT is made the 17th day of December, 1998, between Willis Corroon AB, ("WCAB"), Mr Staffan Larsson and Mr Tomas Larsson ("SL and "TL" or jointly the "Directors"). WCAB and the Directors are together called the Parties. WHEREAS: A. WCAB is a company in the Willis Corroon Group (the "Group"). For the purpose of this Agreement, the Group shall be deemed to consist of all companies in which Willis Corroon Group Ltd directly or indirectly holds more than 50 % of the shares or the votes. B. WCAB is the owner of all 510 A shares in Willis Corroon i Orebro AB (the Company). C. The Parties have found it to be in their mutual interest that the Directors become shareholders in the Company. D. The Directors, who have been in the insurance broking and risk management business for many years, will be employed by the Company according to separate employment agreements. 2 NOW, THEREFORE, the parties hereto agree as follows: ss. 1 Subscription for shares 1.1 The Company will resolve upon a new issue of 490 B shares, each share with a nominal value of SEK 100, directed at the Directors, of which shares SL will subscribe for 294 shares and TL for 196 shares. The 490 B shares will not carry any entitlement for dividends. ss. 2 Object of the Company and Articles of Association 2.1 The object of the Company is to carry on business as consultant and broker in regard to insurance activities, to render assistance in the management of business and to conduct activities compatible therewith. 2.2 The Articles of Association of the Company shall be as set out in Exhibit A attached hereto. ss. 3 Board of directors, managing director and auditor 3.1 The Company's board of directors shall consist of up to five directors, unless the Parties agree otherwise. 3.2 Three directors may be nominated by WCAB and two directors by the Directors. The Directors shall have the right to nominate 3 directors for so long as they collectively own at least 33 % of the Company's shares. 3.3 WCAB undertakes to consult with the Directors before nominating directors. 3.4 The Parties agree that the annual general meeting of shareholders of the Company shall appoint the thus nominated directors. 3.5 The board of directors shall appoint a managing director. SL shall be appointed the first managing director. The board of directors may at any time appoint a new managing director. If as a result of a decision by the board, SL ceases to be managing director he will still be employed by the Company as per his employment agreement, which may only be amended or terminated in accordance with its terms. 3.6 The board of directors shall be responsible for the organisation of the Company and the over all management of its affairs. The managing director shall be in charge of the day-to-day management of the Company according to guidelines and instructions laid down by the board. 3.7 The auditor of the Company shall be nominated by the board of directors. The Parties agree that the annual general meeting of shareholders shall appoint the thus nominated auditor. 4 ss. 4 Business of the Company 4.1 The business of the Company shall be direct insurance broking business and the provision of technical services in relation to Swedish and foreign enterprises in Sweden as well as to foreign subsidiaries and branch offices of Swedish enterprises, provided that such business is operated in accordance with the Willis Corroon Retail Network Rules and in accordance with the agreement signed between WCAB and the Company. 4.2 WCAB and the Company will at all times work in close co-operation. While it is inappropriate to lay down strict rules, the following principles will apply: (i) WCAB and the Company will meet to discuss and agree the targets of each year on a regular basis. (ii) The central point for all incoming international business will be WCAB. Outgoing business will be handled as agreed between WCAB and the Company. 4.3 The Company will be operated at all times so that it complies with the Group's operational and financial standards. 4.4 As a subsidiary of WCAB the Company is subject to WCAB's operating procedures and commission sharing agreements and will have access to the Willis Corroon Retail Network. 4.5 Management and administration charges will be charged by 5 WCAB to the Company in accordance with a formulae used from time to time to apportion charges between all the Willis Corroon Group offices in Sweden. 4.6 The Company will only use for the placing of business on behalf of its clients such insurance companies and markets as shall have been approved by the Willis Corroon Group Ltd market security committee from time to time. 4.7 If the Company wishes to place any insurance or reinsurance business outside Sweden, it shall first offer to place such business with or through Willis Faber & Dumas Ltd or such other company in the Group that shall operate in the country in which such business is to be placed, provided that the terms offered are competitive, unless a client specifically requests to the contrary. 4.8 Where business is placed with Willis Faber & Dumas Ltd in London, commission arising thereon will be shared 50% to the Company, 50 % to Willis Faber & Dumas Ltd. ss. 5 Limitation on the powers of management of the board 5.1 A change of managing director or general manager will require a decision by a majority of four directors. 5.2 No resolution, recommendation, direction, or proposal relating to the matters specified below shall be passed, approved, made, considered by or proposed by the board of directors, unless such 6 resolution, recommendation, direction or proposal has been approved by a majority of the board of directors including one director nominated by WCAB who is an employee of the Group in the United Kingdom and no such resolution, recommendation, direction or proposal shall be considered by the board of directors at a meeting unless reasonable notice of the resolution has been given to such director. (1) The approval of annual capital, revenue and cash budgets. (2) The commitment by the Company or any of its subsidiaries of unbudgeted funds in excess of SEK 100,000. (3) The commitment of budgeted funds as follows: a) specified capital investments or revenue expense with individual costs in excess of SEK 1,000,000; b) capital investments not specified in the budget with individual costs in excess of SEK 500,000. (4) Any transaction involving the mortgage, sale, lease, license, encumbrance or other disposal of one or more assets of the Company, or its subsidiaries, having an original book value in excess of SEK 500,000. (5) a) The acceptance by the Company of any overdraft facilities; b) The contracting of any loan, excluding short term funding in the normal course of business within the Company's 7 overdraft facilities, by the Company or its subsidiaries whether as a borrower or a lender exceeding in any one transaction, the sum of SEK 50,000; c) The giving of any guarantee, suretyship or indemnity; d) The contracting of short-term investments/deposits to banks outside the Willis Corroon authorised bank list. (6) The exercise by the Company of any powers as shareholder in any other company. (7) The approval of the appointment, including the terms of reference, or the removal of Directors having remuneration per annum in excess of 75 % of the salary of the managing director of the Company and the approval of any change in the emoluments of any such employee. (8) The nomination of auditor of the Company. (9) The approval of the making of any payment calculated to provide or assist in the provision of any pension superannuation allowance, super annuation gratuity or any other employee benefit package for any employee or past employee of the Company or any subsidiary outside the terms of such employee's employment contract. (10) The grant by the Company or any of its subsidiaries of any power of attorney. 8 (11) The commencement or defence of any litigation, arbitration or other proceedings other than debt collections in the normal course of business. (12) The formation of any branch, agency or subsidiary, the entry into any partnership, association or joint venture or the acquisition of any share or loan capital, debentures or other securities in a body corporate. (13) The entry by the Company into any business other than that of direct insurance brooking and risk management services. (14) The proposal for declaration of any dividends or other distributions out of the assets of the Company or its subsidiaries. (15) The issue of any authorised but unissued shares of the Company. (16) The increase of the authorised share capital of any of the Company's subsidiaries. (17) The entry by the Company or any of its subsidiaries into any long term or unusual contract arrangements or commitments. (18) Any transaction in relation to real property. (19) Any other proposed event, act or omission which would have a significant effect upon the Company. 9 ss. 6 Resolutions by the general meeting of shareholders requiring a qualified majority 6.1 A change of the Articles of Association shall require a majority of 75 % of the votes, unless a higher majority is required by the Companies Act. 6.2 WCAB agrees that it will not cause the Company to issue further shares to it or any third party, or share options or convertible bonds without the agreement of the Directors. ss. 7 Cover of loss and provision of working capital 7.1 Provided that the Company's business is conducted in accordance with this Agreement, WCAB shall cause all reasonable loss in the Company to be covered during the first two fiscal years of its existence. 7.2 If WCAB covers losses in the form of shareholders contributions or group contributions (Sw. koncernbidrag), such contributions shall be repayable with accrued interest to WCAB from future profits in the Company. Such repayment shall be decided by a Shareholders meeting and have priority over dividend to the shareholders. 10 7.3 Subject to claause 7.1 above and provided that the Company's business is conducted in accordance with this Agreement, WCAB will provide working capital to the Company as required in accordance with the cash flow projections for fiscal years 1999 and 2000 set out in Exhibit B attached hereto. WCAB shall not be obliged to provide any further funds to the Company for any reason. ss. 8 Dividend policy 8.1 The Parties hereto agree that the shareholders meeting shall declare a dividend equal to the profit available for distribution each year subject to clause 7.2 and after the appropriation of such reasonable and proper reserves for working capital as the Company's board of directors may think appropriate. No dividend shall be declared until any loans made to the Company from WCAB or the Group shall have been repaid. ss. 9 Budgets and financial information 9.1 The Company will prepare and submit to the Parties hereto 1. on or before the first of October each year detailed revenue and capital budgets for the Company and any subsidiaries (including estimated major items or revenue and capital expenditure) for the following calendar year, broken down on 11 a monthly basis, and an accompanying cash flow fore- cast together with a balance sheet showing the projected position of the Company (and its subsidiaries) as at the end of the following calendar year and such additional statements and documents as deemed appropriate by WCAB; 2. within four days after the end of each calendar month unaudited management accounts, such accounts to include a detailed profit and loss account, balance sheet and cash flow statement in a format prescribed by WCAB and a review of the budget together with a reconciliation of the results with revenue and capital budgets for the corresponding months; and 3. such additional financial information as may be reasonably requested from time to time by the Group. ss. 10 Errors and omissions 10.1 The Company shall have an errors and omissions insurance cover considered adequate by WCAB. 10.2 WCAB shall use reasonable endeavours to procure that the Company shall be included in the Group errors and omissions insurance policy held by Willis Corroon Group Ltd and, subject to its being included, the Company shall participate fully in the policy and pay to Willis Corroon Group Ltd a reasonable share of 12 premium as determined by Willis Corroon Group Ltd on the basis of an equitable allocation across all companies covered by such policies and taking account of the total premium handled by the Company, its retained brokerage and number of Directors. ss. 11 Restrictive covenants 11.1 The Directors undertake that they will not whilst they continue to be shareholders or Directors of the Company, either on their own behalf or on behalf of any other person, firm or organisation, canvass or solicit clients in competition with any company in the Group. The Directors further undertake that they will not for a period of two years from the date upon which they cease to be shareholders and/or employees in the Company, either on their own behalf or on behalf of any other person, firm or organisation, canvass, solicit or handle the business of any client whose business any of them handled while working for the Company. This does not mean that the Directors are prevented from taking up employment with such a client. This clause 11.1 shall not apply in the event that the Company terminates the employment of the Director without cause and the Director ceases to be a shareholder. 11.2 The Directors undertake for a period of two years after they 13 cease to be shareholders or Directors of the Company, that they will not, either on their own behalf or on behalf of any other person, firm or organisation, employ any person who was at any time during the last two years of their involvement with the Company, an employee, director or agent of any company in the Group. This clause 11.2 shall not apply in the event that the Company terminates the employment of the Director without cause and the Director ceases to be a shareholder. 11.3 If any of the Directors fails to comply with this non-competition clause, he shall be obliged to pay to WCAB a penalty of SEK 400,000 for each violation of this clause and also to compensate WCAB fully for any loss (including i.e. loss of profit) resulting therefrom. ss. 12 Restrictions on the transfer of shares 12.1 The Directors undertake not to sell any of their shares in the Company without WCAB's consent in writing. 12.2 Should either of the Directors die, his shares in the Company shall be offered to the other Director and if the shares are not purchased by him, to WCAB. The price to be paid for the shares by the other Director and WCAB shall be the equal to the proportion of the B shares held by the Director in relation to the total number of shares in the 14 Company times the Revenue of the Company in the last completed financial year as set out in the audited annual accounts or if the death occurs after 31 August in a year, that financial year will be the year to be considered under this sub-paragraph. If the death occurs in 1999, the audited annual accounts for 1999 will be considered. If the death occurs after 31 August, WCAB will make a preliminary payment equalling the Revenue for the period ending on 31 August for the next preceding financial year of the Company according to the audited annual accounts. If the death occurs in 1999, WCAB will make a preliminary payment based on the Revenue according to the management accounts for the period ending on the month when the death occurred. The purchase price shall be finally established once the annual accounts for the financial year have been audited. Any further payment of price or repayment, as the case may be, shall be made within 30 days after the price has been finally established. If the other Director buys the shares in accordance with this clause 12.2. the shares shall be held in accordance with this Agreement and thereby inter alia be subject to the option rights of WCAB set out in this Agreement. 12.3 WCAB may sell or otherwise transfer all or some of its shares in the Company to another company in the Group. The clause of first refusal in the Articles of Association of the Company shall not apply to such transfer if the purchaser assumes WCAB's 15 obligations according to this Agreement by signing it. The transfer shall be reported in writing to the Directors. 12.4 Should WCAB want to sell all or some of its shares in the Company to somebody outside the Group, WCAB shall give the Directors an offer to buy the shares. The offer shall be in writing. The Directors shall have the right to purchase the shares in relation to their share holding and at the price equal to the fair value (verkliga vardet) of the shares. If the fair value cannot be agreed, the auditor of the Company shall be instructed to make an appraisal of the value of the shares and submit it to the Parties in writing within 60 days. The auditor's determination of the fair value shall be binding on the parties, unless (i) it is proven that a third party at arm's length is willing and able, within the actual period, to pay a higher price than determined by the auditor; or (ii) an essential event in the actual period, unknown to the auditor, will strongly affect the value of the shares; or (iii) the auditor's determination is very unclear and ambiguous. If, within two weeks of the offer being made, the Directors have not declared that they want to buy the shares offered to them, WCAB has the right to sell the shares to somebody else, 16 provided that the price paid by the purchaser is at least equal to the price at which the shares were offered to the Directors. If WCAB has not sold the shares initially offered to the Directors within a period of six months from the time of the offer, this clause of first refusal will once again be applicable. ss. 13 Option to purchase/sell shares 13.1 Put and call options shall be exercisable on the shares in the Company owned by the Directors at the following times: 1. WCAB shall have the right to purchase (call option) 50 % of the B shares ( ie 147 shares from SL and 98 shares from TL) within two weeks of the auditors of the Company delivering to the board of the Company the audited annual accounts for fiscal year 2000. In case this option is not exercised, the Directors shall have the right to sell (put option) to WCAB 50 % of the B shares (ie 147 shares of SL and 98 shares of TL) earliest four weeks and latest six weeks of the auditors of the Company delivering to the board of the Company the audited annual accounts for fiscal year 2000. The options under this clause 13.1.1 are referred to as the First Options. 17 2. WCAB shall have the right to purchase 50% of the B shares (ie 147 shares from SL and 98 shares from TL) within two weeks of the auditors of the Company delivering to the board of the Company the audited annual accounts for fiscal year 2000. In case this option is not exercised, the Directors shall have the right to sell to WCAB 50% of the B shares (i.e. 147 shares of SL and 98 shares of TL) earliest four weeks and latest six weeks of the auditors of the Company delivering to the board of the Company the audited annual accounts for fiscal year 2000. The options under this clause 13.1.2 are referred to as the Second Options. The Directors rights to sell under the First Options and the Second Options are subject to the following: (a) the Directors continuing to be employed by the Company; (b) the Company continuing to trade; and (c) in the case of the Second Options, (i) the First Option being exercised; (ii) the Directors having fulfilled their obligations according to this Agreement; and 18 (iii) the Directors fulfilling their obligations under clause 14.1 below. 13.2 The price at which the First Options shall be exercised shall be equal to 50% of the Revenue of the Company for the financial year 2000 provided that the price is equal to a P/E of 6 or less based upon the audited Normalised After Tax Earnings, as defined in clause 15.1 below, of the Company for the fiscal year 2000. If the Normalised After Tax Earning of the Company for fiscal year 2000 gives a P/E of more than 6, the price payable for the B shares under the First Options shall be an amount equal to 50 % of the sum derived from the following formula: Price = R multiplied by X divided by Y, where; Price is the aggregate price payable under the First Options; R is the Revenue of the Company for the fiscal year 2000: X is a P/E of 6; and Y is the Actual P/E. In the case of the Second Options, the payment shall be settled in shares in WCAB. The number of shares in WCAB to be subscribed and received shall be determined by a comparative valuation of WCAB and the Company based upon the average Revenues of WCAB (excluding the Company) and the Company for fiscal years 1999 and 2000 according to their respective 19 audited annual accounts and apportioning 50 percent of the value attributable to the Company to the B shares which are subject to the Second Options. 13.3 Irrespective of whether or not the options under clauses 13.1 above have been exercised and consequently, irrespective of how many shares SL and TL will own in the Company January 2006 the following will apply. WCAB will have the right to purchase the remainder of SL's shares and TL's shares during the month of February 2006. In case this option is not exercised, SL and TL shall have the right to sell to WCAB the remainder of their shares during the month of March 2006. The price at which the options pursuant to this clause 13.3 shall be exercised shall be ten (10) times the average Normalised After Tax Earnings of the Company for the three financial years prior to the exercise of the option divided by the total number of shares in the Company at that time. 13.4 Put and call options shall further be exercisable on the shares in the Company owned by the Directors at the following times/on the occurrence of the following events: 1. If, for any reason, any of the Directors ceases to be employed by the Company (except where paragraph 2 below is applicable), he shall have the right to sell his shares 20 to WCAB and WCAB shall have the right to purchase his shares. 2. If either of the Directors resign or is dismissed by the Company for cause, his shares in the Company shall be offered to the other Director and, if not purchased by him, to WCAB. 3. If any of the Directors becomes bankrupt whilst being employed by the Company, WCAB shall have the right to purchase his shares. 13.5 The following prices per share are to be paid if and when an option pursuant to clause 13.4 above is exercised: 1. In all circumstances other than if the employment ends because the Directors resign or are dismissed for cause: the price shall be established according to clause 12.2 and for the purpose thereof the date of cessation or bankruptcy shall be the relevant date. 2. If any of the Directors leaves his employment or his employment is terminated for cause before having become a shareholder in WCAB according to clause 13.1.2 above, the price for the shares will be equal to 50% of the price according to clause 12.2. 13.6 Options granted pursuant to this Agreement shall be exercised in writing. Subject to clause 13.1 third paragraph (c) (i) 21 above, as regards the First Options and the Second Options, it shall be stated if either or both of the options are exercised. 13.7 The purchase price under the options granted pursuant to this Agreement (save for the Second Option) shall be paid by WCAB within two months from the date of exercise of the respective options. ss. 14 Shareholding in WCAB and Third Options 14.1 As a condition precedent to the Directors acquiring shares in WCAB, they shall become parties to the then existing shareholders agreement between the shareholders in WCAB and be bound in all respects of the terms and conditions of such agreement. 14.2 The Directors will have a right to sell their shares in WCAB to Willis Corroon Europe B.V. ("WCBV") and WCBV will have the right to buy the shares in WCAB from the Directors as set out below. WCBV shall have the right to purchase (call option) the shares in WCAB within two weeks of the auditors of WCAB delivering to the board of WCAB the audited annual accounts for fiscal year 2005. In case this option is not exercised, the Directors shall have 22 the right to sell (put option) to WCBV the shares in WCAB earliest four weeks and latest six weeks of the auditors of WCAB delivering to the board of WCAB the audited annual accounts for fiscal year 2005. The options under this Clause 14.2 are referred to as the Third Options. 14.3 The price at which the Third Options shall be exercised shall be ten (10) times the average Normalised After Tax Earnings of WCAB for the three financial years prior to the exercise of the option divided by the total number of shares in WCAB at that time (the "Formula Price"). 14.4 Put and call options shall further be exercisable on the shares in WCAB owned by the Directors at the following times/on the occurrence of the following events: 1. If, for any reason, any of the Directors ceases to be employed by the Company (except where paragraph 2 below is applicable), he shall have the right to sell his shares to WCBV and WCBV shall have the right to purchase his shares. 2. If either of the Directors resign or is dismissed by the Company for cause, his shares in WCAB shall be offered to WCBV. 3. If any of the Directors becomes bankrupt whilst being 23 employed by the Company, WCBV shall have the right to purchase his shares in WCAB. 14.5 The following prices are to be paid for the shares if and when an option under clause 14.4 above is exercised: 1. In the case of clause 14.4.2 the price will be 0,5 x the Formula Price. 2. In all circumstances other than under clause 14.4.2 above, the price will be the Formula Price. ss. 15 Normalised After Tax Earnings etc 15.1 For the purpose of this Agreement (i) Normalised After Tax Earnings means the earnings after tax but excluding the actual after tax effects of all exceptional, extraordinary and prior year items, which by their very nature are not recurring items. The normal tax rate will be defined as the effective tax rate (being the standard rates of tax applicable to the Company) to include the effect of normal disallowable items but adjusted to exclude the tax effect of brought forward losses or other exceptional items. (ii) Normalised After Tax Earnings shall be adjusted to exclude exceptional/extraordinary and non recurring income and 24 expenditure. (iii) Revenue means revenues determined in accordance with the revenue recognition policy of WCAB. This will be subject to the following: - The income from a policy year and its subsequent renewal should not both be recognised in the same financial year. - Income from policies covering more than a twelve month period should be phased over the relevant periods (i.e. only twelve months of income should be recognised in any one financial year). (iv) Subject to (i) - (iii) above, Revenue and Normalised After Tax Earnings shall be established in accordance with Swedish generally accepted accounting principles as applied by the Company or WCAB, as the case may be. 15.2 If the Parties fail to agree on the Revenue or Normalised After Tax Earnings figure or on any adjustments to the After Tax Earnings, the matter shall be finally decided by the auditor of the Company or WCAB, as the case may be. ss. 16 Pledge 16.1 The Directors may not pledge their shares in the Company as a 25 security to a third party without WCAB's consent in writing. 16.2 The B shares shall be pledged by the Directors as security for the fulfilment of their obligations pursuant to this Agreement. The share certificates of all shares held by the Directors shall be deposited, endorsed in blank with Handelsbanken in Stockholm or such other bank as the parties may agree upon. The cost for this deposit is to be borne by WCAB. ss. 17 Period of the Agreement 17.1 This Agreement shall remain in force until the end of the year 2006. If neither party has given written notice of termination one year before the expiration of the agreed term, the Agreement shall be extended for a new period of two years at a time with the same period of notice. Notwithstanding the foregoing, this Agreement shall expire on the earlier date when the Directors no longer hold any shares in the Company. ss. 18 Breach of agreement 18.1 Should a party hereto commit a material breach of this Agreement and thereby cause a loss to another party hereto, he shall compensate said other party in full for its loss, unless the breach is remedied in all material respects within one month upon receipt of a written notice to remedy the breach. 26 18.2 If such a breach is committed by any of the Directors and not remedied, he shall further, at the request of WCAB, be obliged to sell all his shares in the Company to WCAB. The purchase price to be paid by WCAB shall be determined in accordance with Clause 13.5.2. ss. 19 Closure of business and winding up of the Company 19.1 The business of the Company may be closed, if so requested by WCAB, and the Company be winded up, if all or any of the following events occur. (a) if the Company makes a loss in the fiscal year 1999 according to the audited annual accounts for 1999, (b) if WCAB and the Directors so agree. If a winding up is requested by WCAB, the Directors will take such actions as may be required by them in order to wind up the Company. ss. 20 Amendments 20.1 Any amendments to this Agreement shall be valid only if made in writing by the Parties hereto. 27 ss. 21 Choice of law; arbitration 21.1 The validity, construction and performance of this Agreement shall be governed by Swedish law. 21.2 A dispute on the interpretation or application of this Agreement may not be brought before a public court but shall be finally settled by arbitration in accordance with the provisions of the Swedish act on arbitration. The proceedings shall take place in Stockholm and be conducted in English, if requested by either of the Parties. The arbitration panel shall apply the rules of the Swedish code of procedure relative to cumulation of cases, judgement in part, casting of votes and allocation of cost of litigation, except that WCAB, if it is party to the dispute, will pay all reasonable costs for the arbitrators irrespective of the outcome of the dispute, unless the other party or the other parties thereto has started the arbitration proceedings without reasonable reason. --------------------------- THIS AGREEMENT has been executed in three originals on the day first above written. Stockholm, 17 December, 1998 WILLIS CORROON AB - ------------------------------------ ------------------------------------- STAFFAN LARSSON 28 ------------------------------------- THOMAS LARSSON Accepted and agreed for the purpose of clauses 14, 15 and 21 above. Stockholm, 17 December, 1998 WILLIS CORROON EUROPE B.V. - ------------------------------------ EX-10.8 28 EX. 10.8 Exhibit 10.8 1998 SHARE PURCHASE AND OPTION PLAN FOR KEY EMPLOYEES OF TA I LIMITED 1. Purpose of Plan The 1998 Share Purchase and Option Plan for Key Employees of TA I Limited (the "Plan") is designed: (a) to promote the long term financial interests and growth of TA I Limited (the "Company") and its subsidiaries by attracting and retaining management personnel with the training, experience and ability to enable them to make a substantial contribution to the success of the Company's business; (b) to motivate management personnel by means of growth-related incentives to achieve long range goals; and (c) to further the alignment of interests of participants with those of the shareholders of the Company through opportunities for increased share ownership in the Company. 2. Definitions As used in the Plan, the following words shall have the following meanings: (a) "Affiliate" shall mean with respect to any Person, any entity directly or indirectly controlling, controlled by or under common control with such Person. (b) "Board of Directors" means the Board of Directors of the Company. (c) "Change of Control" means (i) a sale of all or substantially all of the assets of the Company to a Person who is not Kohlberg Kravis Roberts & Co., L.P. ("KKR") or an Affiliate of KKR, (ii) a sale by KKR or any of its Affiliates resulting in more than 50% of the voting shares of the Company being held by a Person or Group (other than a Person or Group in which KKR or any of its respective Affiliates has a material interest) or (iii) a takeover, reconstruction or winding-up involving the Company or KKR or any of its respective Affiliates resulting in a Person or Group (other than a Person or Group in which KKR or any of its respective Affiliates has a material interest) holding more than 50% of the voting ordinary shares of the Company (or the resulting controlling entity) immediately after any such business combinations; if and only if any such event results in the inability of the KKR Partnership (as defined herein) to elect a majority of the Board of Directors of the Company (or the resulting entity). (d) "Committee" means the Compensation Committee of the Board of Directors. (e) "Employee" means a person, including an officer, in the regular employment of the Company or one of its Subsidiaries who, in the opinion of the Committee, is, or is expected to be, primarily responsible for the management, growth or protection of some part or all of the business of the Company. 2 (f) "Exchange Act" means the U.S. Securities Exchange Act of 1934, as amended. (g) "Fair Market Value" means such value of a Share as determined no less than annually (or more frequently if the Board of Directors so determines is required), in good faith by the Board of Directors, after it has taken into consideration certain factors (including, without limitation, the general condition of the Company's industry, the historical performance of the Company, and the Company's financial prospects) and after it has consulted with an independent investment banking firm selected with the consent of the Group Executive Committee. In addition, after determining the Fair Market Value, the value of an individual Participant's shares, on a per share basis, shall not be reduced to reflect the illiquidity or minority nature associated with such Participant's shares. (h) "Grant" means an award made to a Participant pursuant to the Plan and described in Paragraph 5, including, without limitation, an award of an U.S. Incentive Stock Option U.S. Non-Qualified Stock Option, Share Appreciation Right, Dividend Equivalent Right, Restricted Share, Purchase Share, Performance Unit, Performance Share or any Other Share-Based Grant or any combination of the foregoing. (i) "Grant Agreement" means an agreement between the Company and a Participant that sets forth the terms, conditions and limitations applicable to a Grant. (j) "Group" means two or more Persons acting together as a partnership, limited partnership, syndicate or other group for the purpose of acquiring, holding or disposing of securities of the Company. (k) "KKR Partnership" means Profit-Sharing (Overseas) Limited Partnership, an affiliate of KKR. (1) "Options" means the collective reference to "U.S. Incentive Stock Options" and "U.S. Non-Qualified Stock Options". (m) "Option Agreement" means an agreement between the Company and a Participant that sets forth the terms, conditions and limitations applicable to a Option. (n) "Ordinary Shares" or "Share" means ordinary shares in the Company. (o) "Participant" means an Employee to whom one or more Options have been granted and such Options have not all been forfeited or terminated under the Plan. (p) "Person" means an individual, partnership, corporation, limited liability company business trust, joint share company, trust, unincorporated association, joint venture, governmental authority or other entity of whatever nature. (q) "Share-Based Grants" means the collective reference to the grant of Share Appreciation Rights, Dividend Equivalent Rights, Restricted Shares, Performance Units, Performance Shares, and Other Share-Based Grants. 3 (r) "Subsidiary" shall mean a body corporate which is a subsidiary of the Company (within the meaning of Section 736 of the Companies Act 1985). 3. Administration of Plan (a) The Plan shall be administered by the Committee. None of the members of the Committee shall be eligible to be selected for Grants under the Plan, or have been so eligible for selection within one year prior thereto; provided, however, that the members of the Committee shall qualify to administer the Plan for purposes of Rule 16b-3 (and any other applicable rule) promulgated under Section 16(b) of the Exchange Act to the extent that the Company is subject to such rule. The Committee may adopt its own rules of procedure, and action of a majority of the members of the Committee taken at a meeting, or action taken without a meeting by unanimous written consent, shall constitute action by the Committee. The Committee shall have the power and authority to administer, construe and interpret the Plan, to make rules for carrying it out and to make changes in such rules. Any such interpretations, rules, and administration shall be consistent with the basic purposes of the Plan. (b) The Committee may delegate to the Chief Executive Officer and to other senior officers of the Company its duties under the Plan subject to such conditions and limitations as the Committee shall prescribe except that only the Committee may designate and make Grants to Participants who are subject to Section 16 of the Exchange Act. (c) The Committee may employ lawyers, consultants, accountants, appraisers, brokers or other persons. The Committee, the Company, and the officers and directors of the Company shall be entitled to rely upon the advice, opinions or valuations of any such persons. All actions taken and all interpretations and determinations made by the Committee in good faith shall be final and binding upon all Participants, the Company and all other interested persons. No member of the Committee shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or the Grants, and all members of the Committee shall be fully protected by the Company with respect to any such action, determination or interpretation. 4. Eligibility The Committee may from time to time make Grants under the Plan to such Employees and in such form and having such terms, conditions and limitations as the Committee may determine. No Grants may be made under this Plan to non-employee directors of Company or any of its Subsidiaries. The terms, conditions and limitations of each Grant under the Plan shall be set forth in a Grant Agreement, in a form approved by the Committee, consistent, however, with the terms of the Plan; provided, however, that such Grant Agreement shall contain provisions dealing with the treatment of Grants in the event of the termination, death or disability of a Participant, and may also include provisions concerning the treatment of Grants in the event of a change of control of the Company. 5. Grants 4 From time to time, the Committee will determine the forms and amounts of Grants for Participants. Such Grants may take the following forms in the Committee's sole discretion: (a) U.S. Incentive Stock Options - These are stock options within the meaning of Section 422 of the U.S. Internal Revenue Code of 1986, as amended ("Code"), to purchase Ordinary Shares. In addition to other restrictions contained in the Plan, an option granted under this Paragraph 5(a), (i) may not be exercised more than 10 years after the date it is granted, (ii) may not have an option price less than the Fair Market Value of Ordinary Shares on the date the option is granted, (iii) must otherwise comply with Code Section 422, and (iv) must be designated as an "Incentive Stock Option" by the Committee. The maximum aggregate Fair Market Value of Ordinary Shares (determined at the time of grant) with respect to which Incentive Stock Options are first exercisable with respect to any participant under this Plan and any Incentive Stock Options granted to the Participant for such year under any plans of the Company or any Subsidiary in any calendar year is $100,000. Payment of the option price shall be made in cash in accordance with the terms of the Plan, the Option Agreement, and of any applicable guidelines of the Committee in effect at the time. (b) U.S. Non-Qualified Stock Options - These are options to purchase Ordinary Shares which are not designated by the Committee as "U.S. Incentive Stock Options". At the time of grant the Committee shall determine, and shall include in the Option Agreement or other Plan rules, the option exercise period, the option price, and such other conditions or restrictions on the grant or exercise of the option as the Committee deems appropriate. In addition to other restrictions contained in the Plan, an option granted under this Paragraph 5(b) may not be exercised more than 10 years after the date it is granted. Payment of the option price shall be made in cash in accordance with the terms of the Plan, the Option Agreement and of any applicable guidelines of the Committee in effect at the time. (c) Share Appreciation Rights - These are rights that on exercise entitle the holder to receive the excess of (i) the Fair Market Value of a share of Ordinary Shares on the date of exercise over (ii) the Fair Market Value on the date of Grant (the "base value") multiplied by (iii) the number of rights exercised as determined by the Committee. Share Appreciation Rights granted under the Plan may, but need not be, granted in conjunction with an Option under Paragraph 5(a) or 5(b). The Committee, in the Grant Agreement or by other Plan rules, may impose such conditions or restrictions on the exercise of Share Appreciation Rights as it deems appropriate, and may terminate, amend, or suspend such Share Appreciation Rights at any time. No Share Appreciation Right granted under this Plan may be exercised less than 6 months or more than 10 years after the date it is granted except in the event of death or disability of a Participant. To the extent that any Share Appreciation Right that shall have become exercisable but shall not have been exercised or cancelled or by reason of any termination of employment, shall have become non-exercisable, it shall be deemed to have been exercised automatically, without any notice of exercise, on the last day of which it is exercisable, provided that any conditions or limitations on its exercise are satisfied (other than (i) notice of exercise and (ii) exercise or election to exercise during the period prescribed) and the Share Appreciation Right shall then have value. Such exercise shall be deemed to specify that the holder elects to receive cash and that such exercise of a Share Appreciation Right shall be effective as of the time of automatic exercise. 5 (d) Restricted Shares - Restricted Shares are Ordinary Shares delivered to a Participant with or without payment of consideration with restrictions or conditions on the Participant's right to transfer or sell such shares. If a Participant irrevocably elects in writing in the calendar year preceding a Grant of Restricted Shares, dividends paid on the Restricted Shares granted may be paid in Shares of Restricted Shares equal to the cash dividend paid on Ordinary Shares. The number of Shares of Restricted Shares and the restrictions or conditions on such Shares shall be as the Committee determines, in the Grant Agreement or by other Plan rules, and the certificate for the Restricted Shares shall bear evidence of the restrictions or conditions. No Restricted Shares may have a restriction period of less than 6 months, other than in the case of death or disability. (e) Purchase Shares - Purchase Shares are shares of Ordinary Shares offered to a Participant at such price as determined by the Committee, the acquisition of which will make him eligible to receive under the Plan, including, but not limited to, U.S. Non-Qualified Stock Options. (f) Dividend Equivalent Rights - These are rights to receive cash payments from the Company at the same time and in the same amount as any cash dividends paid on an equal number of Ordinary Shares to shareholders of record during the period such rights are effective. The Committee, in the Grant Agreement or by other Plan rules, may impose such restrictions and conditions on the Dividend Equivalent Rights, including the date such rights will terminate, as it deems appropriate, and may terminate, amend, or suspend such Dividend Equivalent Rights at any time. (g) Performance Units - These are rights to receive at a specified future date, payment in cash of an amount equal to all or a portion of the value of a unit granted by the Committee. At the time of the Grant, in the Grant Agreement or by other Plan rules, the Committee must determine the base value of the unit, the performance factors applicable to the determination of the ultimate payment value of the unit and the period over which Company performance will be measured. These factors must include a minimum performance standard for the Company below which no payment will be made and a maximum performance level above which no increased payment will be made. The term over which Company performance will be measured shall be not less than six months. (h) Performance Shares - These are rights to receive at a specified future date, payment in cash or Ordinary Shares, as determined by the Committee, of an amount equal to all or a portion of the Fair Market Value for all days that the Ordinary Shares are traded during the last forty-five (45) days of the specified period of performance of a specified number of shares of Ordinary Shares at the end of a specified period based on Company performance during the period. At the time of the Grant, the Committee, in the Grant Agreement or by Plan rules, will determine the factors which will govern the portion of the rights so payable and the period over which Company performance will be measured. The factors will be based on Company performance and must include a minimum performance standard for the Company below which no payment will be made and a maximum performance level above which no increased payment will be made. The term over which Company performance will be measured shall be not less than six months. Performance Shares will be granted for no consideration. 6 (i) Other Share-Based Grants - The Committee may make other Grants under the Plan pursuant to which Ordinary Shares (which may, but need not, be Restricted Shares pursuant to Paragraph 5(d)), are or may in the future be acquired, or Grants denominated in Share units, including ones valued using measures other than market value. Other Share-Based Grants may be granted with or without consideration. Such Other Share-Based Grants may be made alone, in addition to or in tandem with any Grant of any type made under the Plan and must be consistent with the purposes of the Plan. 6. Limitations and Conditions (a) The number of Shares available for Grants under this Plan shall be 30,000,000 Shares; provided, however, that in no event shall the total number of Shares subject to options and other equity for current and future Participants exceed 25% of the equity of the Company on a fully diluted basis. Shares subject to Grants that are forfeited, terminated, cancelled or expire unexercised, shall immediately become available for other Grants. (b) No Grants shall be made under the Plan beyond ten years after the effective date of the Plan, but the terms of Grants made on or before the expiration of the Plan may extend beyond such expiration. At the time a Grant is made or amended or the terms or conditions of a Grant are changed, the Committee may provide for limitations or conditions on such Grant. (c) Nothing contained herein shall affect the right of the Company to terminate any Participant's employment at any time or for any reason. The rights and obligations of any individual under the terms of his office or employment with the Company or any Subsidiary shall not be affected by his participation in this Plan or any right which he may have to participate in it, and an individual who participates in it shall waive any and all rights to compensation or damages in consequence of the termination of his office or employment for any reason whatsoever insofar as those rights arise or may arise from his ceasing to have rights under or be entitled to exercise any Grant as a result of such termination. (d) Other than as specifically provided in the Management and Employee Shareholders' and Subscription Agreement attached hereto as Exhibit A with regard to the death of a Participant, no benefit under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any attempt to do so shall be void. No such benefit shall, prior to receipt thereof by the Participant, be in any manner liable for or subject to the debts, contracts, liabilities, engagements, or torts of the Participant. (e) Participants shall not be, and shall not have any of the rights or privileges of, shareholders of the Company in respect of any Shares purchasable in connection with any Grant unless and until certificates representing any such Shares have been issued by the Company to such Participants. (f) No Grant may be exercised during a Participant's lifetime by anyone other than the Participant except by a legal representative appointed for or by the Participant. 7 (g) Absent express provisions to the contrary, any Grant made under this Plan shall not be deemed compensation for purposes of computing benefits or contributions under any retirement plan of the Company or its Subsidiaries and shall not affect any benefits under any other benefit plan of any kind now or subsequently in effect under which the availability or amount of benefits is related to level of compensation. This Plan is not a "Retirement Plan" or "Welfare Plan" under the U.S. Employee Retirement Income Security Act of 1974, as amended. (h) Unless the Committee determines otherwise, no benefit or promise under the Plan shall be secured by any specific assets of the Company or any of its Subsidiaries, nor shall any assets of the Company or any of its Subsidiaries be designated as attributable or allocated to the satisfaction of the Company's obligations under the Plan. 7. Transfers and Leaves of Absence For purposes of the Plan, unless the Committee determines otherwise: (a) a transfer of a Participant's employment without an intervening period of separation among the Company and any Subsidiary shall not be deemed a termination of employment, and (b) a Participant who is granted in writing a leave of absence shall be deemed to have remained in the employ of the Company during such leave of absence. 8. Adjustments (a) In the event of any increase or variation of the share capital of the Company, the Committee may make such adjustments as it considers appropriate under Paragraph 8(b) below. (b) An adjustment made under this Paragraph 8(b) shall be to one or more of the following: (i) the number of Shares in respect of which any Option or Other Share-Based Grant may be exercised; (ii) the price at which Shares may be acquired by the exercise of any Option or Other Share-Based Grant; (iii) where any Option or Other Share-Based Grant has been exercised but no Shares have been allotted or transferred pursuant to the exercise, the number of Shares which may be so allotted or transferred and the price at which they may be acquired. (c) An adjustment under Paragraph 8(b) above may have the effect of reducing the price at which Shares may be acquired by the exercise of an Option or Other Share-Based Grant to less than their nominal value, but only if and to the extent that the Board of Directors shall be authorized to capitalise from the reserves of the Company a sum equal to the amount by which the nominal value of the Shares in respect of which the Option or Other Share-Based Grant is exercised and which are to be allotted pursuant to such exercise exceeds the price at which the same may be subscribed for and to apply that sum in paying up that amount on the Shares; and so 8 that on exercise of any Option or Other Share-based Grant in respect of which such a reduction shall have been made the Board shall capitalise such sum (if any) and apply it in paying up such amount as aforesaid. 9. Exchange, Acquisition, Liquidation or Dissolution (a) In its absolute discretion, and on such terms and conditions as it deems appropriate, coincident with or after the grant of any Option or Other Share-Based Grant, the Committee may provide that such Option or Other Share-Based Grant cannot be exercised after the exchange of all or substantially all of the assets of the Company for the securities of another corporation, the acquisition by another corporation of 80% or more of the Company's then outstanding voting Shares, liquidation or dissolution of the Company, any variation of the share capital of the Company, and if the Committee so provides, it may, in its absolute discretion and on such terms and conditions as it deems appropriate, also provide, either by the terms of such Option or Other Share-Based Grant or by a resolution adopted prior to the occurrence of such exchange, acquisition, any variation of the share capital of the Company, liquidation or dissolution, that, for some period of time prior to such event, such Option or Other Share-Based Grant shall be exercisable as to all Shares subject thereto, notwithstanding anything to the contrary herein (but subject to the provisions of Paragraph 6(b)) and that, upon the occurrence of such event, such Option or Other Share-Based Grant shall terminate and be of no further force or effect; provided, however, that the Committee may also provide, in its absolute discretion, that even if the Option or Other Share-Based Grant shall remain exercisable after any such event, from and after such event, any such Option or Other Share-Based Grant shall be exercisable only for the kind and amount of securities and/or other property, or the cash equivalent thereof receivable as a result of such event by the holder of a number of Shares for which such Option or Other Share-Based Grant could have been exercised immediately prior to such event. (b) If any person becomes bound or entitled to acquire shares in the Company under sections 428 of 430F of the Companies Act 1985, or if under section 425 of that Act the Court sanctions a compromise or arrangement proposed for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company or companies, or if the Company passes a resolution for voluntary winding up, or if an order is made for the compulsory winding up of the Company, the Committee shall forthwith notify every Participant thereof and any Option or Other Share-Based Grant may be exercised within one month of such notification, but to the extent that it is not exercised within that period shall (notwithstanding any other provision of this Plan) lapse on the expiration thereof 10. Amendment and Termination The Committee shall have the authority to make such amendments to any terms and conditions applicable to outstanding Grants as are consistent with this Plan provided that, except for adjustments under Paragraph 8 or 9 hereof, no amendment to the disadvantage of any Participant shall be made unless: (a) the Committee shall have invited every such Participant to give an indication as to whether or not he approves the amendment, and 9 (b) the amendment is approved by a majority of those Participants who have given such an indication. The Board of Directors may amend, suspend or terminate the Plan except that no such action, other than an action under Paragraph 8 or 9 hereof, may be taken which would, without shareholder approval, increase the aggregate number of Shares available for Grants under the Plan, decrease the price of outstanding Grants, change the requirements relating to the Committee or extend the term of the Plan. 11. International Options and Rights The Committee may make Grants to Employees who are subject to the laws of countries other than the United States or the United Kingdom, which Grants may have terms and conditions that differ from the terms thereof as provided elsewhere in the Plan for the purpose of complying with foreign laws. 12. Withholding Taxes, Allotment and Transfer (a) The Company shall have the right to deduct from any cash payment made under the Plan any federal, state or local income or other taxes required by law to be withheld with respect to such payment. (b) Within 30 days after an Option has been exercised by any person, before delivery of Restricted Shares or payment of Performance Shares (if paid in Ordinary Shares) or before exercise, settlement or payment (if paid in Ordinary Shares) of any Other Share-Based Grant, the Board of Directors shall allot to such person (or a nominee for him) or, as appropriate, procure the transfer to him (or a nominee for him) of the number of Shares in respect of which the option has been exercised, provided that: (i) the Board of Directors considers that the issue or transfer thereof would be lawful in all relevant jurisdictions; and (ii) in a case where the Company or any Subsidiary ("Group Member") is obliged to (or would suffer a disadvantage if it were not to) account for any tax (in any jurisdiction) for which the person in question is liable by virtue of the exercise of the option and/or for any social security, contributions recoverable from the person in question (together, the "Tax Liability"), that person has either: (A) made a payment to the Group Member of an amount equal to the Tax Liability; or (B) entered into arrangements acceptable to that or another Group Member to secure that such a payment is made (whether by authorizing the sale of some or all of the Shares on his behalf and 10 the payment to the Group Member of the relevant amount out of the proceeds of sale or otherwise). (c) All Shares allotted under this Plan shall rank equally in all respects with Shares of the same class then in issue except for any rights attaching to such Shares by reference to a record date prior to the date of the allotment. 13. Effective Date and Termination Dates The Plan shall be effective on and as of the date of its approval by the shareholders of the Company and shall terminate ten years later, subject to earlier termination by the Board of Directors pursuant to Paragraph 10. 14. Financial Assistance The Company and any Subsidiary may provide money to the trustees of any trust or any other person to enable them or him to acquire Shares to be held for the purposes of the Plan, or enter into any guarantee or indemnity for these purposes or provide financial assistance of any other kind, to the extent permitted by section 153 of the Companies Act 1985. 15. Miscellaneous The masculine pronoun shall include the feminine and neuter, and the singular the plural, where the context so indicates. EX-10.9 29 EX. 10.9 Exhibit 10.9 Conformed Copy GUARANTEE 1. In consideration of Willis Faber & Dumas Limited ("WFD") entering into a contract of employment with John Reeve (the "Director") dated 19 September 1995 ("the Contract") and a Deed in respect of an unfunded pension scheme dated 19 September 1995 ("the Deed"), Willis Corroon Group plc ("the Guarantor") hereby conditionally and irrevocably guarantees to the Director (and his successors) the due and punctual performance by WFD of its obligations under the Contract and the Deed. 2. If the Guarantor is unable to procure that WFD duly and punctually performs its obligations, then it shall indemnify the Director in respect of all costs, damages, charges and expenses incurred or suffered by the Director as a result of the failure by WFD to perform its obligations duly and punctually. 3. Subject to clause 1 above, this guarantee shall continue and remain in full force and effect until all the obligations of WFD under the Contract and the Deed shall have been duly performed and discharged to the satisfaction of the Director. 4. The guarantee shall not be affected in any way by any time or indulgence or release of any obligation under the Contract and the Deed nor by the liquidation or dissolution of WFD nor by the appointment of a receiver or administrator nor by any circumstances affecting the obligations of WFD to meet its liabilities under the Contract and the Deed. In the event of any matters as aforesaid, the Guarantor shall become liable for the obligations of WFD arising under the Contract and the Deed as if it were a primary obligor. 5. The Guarantor shall not be entitled to prove in the liquidation of WFD in competition with the Director until the Director shall have been paid in full all monies owed to the Director pursuant to the terms of the Contract and the Deed. The Common Seal of Willis Corroon Group plc was hereunto affixed in the presence of:- - ---------------------------------- --------------------------------------- Director Secretary Dated: 18 September 1995 EX-10.10 30 EX. 10.10 Exhibit 10.10 Conformed Copy GUARANTEE 1. Effective as of January 1, 1991, Willis Corroon Corporation ('WCC') adopted a supplemental retirement plan known as the Willis Corroon Executive Supplemental Retirement Plan ('the Plan') for the benefit of a select group of management or highly compensated employees who WCC wishes to retain. 2. K H Pinkston is a member of the Plan ('WCC employee') and in consideration for continuing to remain an employee and observing the terms and conditions of the Plan Willis Corroon Group plc ('the Guarantor') hereby conditionally and irrevocably guarantees to theWCC employee (and his successors) the due and punctual performance by WCC of its obligations regarding the vesting to the WCC employee of his Accrued Benefits under the Plan ('the obligation'). 3. If the Guarantor is unable to procure that WCC duly and punctually performs its obligation, then it shall indemnify the WCC employee in respect of all costs, damages, charges and expenses incurred or suffered by the WCC employee as a result of the failure by WCC to perform its obligations duly and punctually. 4. This guarantee shall continue and remain in full force and effect until the obligation of WCC under the Plan towards the WCC employee shall have been duly performed and discharged. 5. The guarantee shall not be affected in any way by any time or indulgence or release of any obligation under the Plan nor by the liquidation or dissolution of WCC nor by the appointment of a receiver or administrator nor by any circumstances affecting the obligations of WCC to meet its liabilities under the Plan. In the event of any matters as aforesaid, the Guarantor shall become liable for the obligation of WCC arising under the Plan as if it were a primary obligor. 6. The Guarantor shall not be entitled to prove in the liquidation of WCC in competition with the WCC employee until the WCC employee shall have been paid in full all monies owed to the WCC employee pursuant to the terms of the Plan. The Common Seal of Willis Corroon Group plc was hereunto affixed in the presence of:- - ---------------------------------- --------------------------------------- Director Secretary Dated: 17 July 1998 EX-10.11 31 EX. 10.11 Exhibit 10.11 Conformed Copy GUARANTEE 1. Effective as of January 1, 1991, Willis Corroon Corporation ('WCC') adopted a supplemental retirement plan known as the Willis Corroon Executive Supplemental Retirement Plan ('the Plan') for the benefit of a select group of management or highly compensated employees who WCC wishes to retain. 2. B D Johnson is a member of the Plan ('WCC employee') and in consideration for continuing to remain an employee and observing the terms and conditions of the Plan Willis Corroon Group plc ('the Guarantor') hereby conditionally and irrevocably guarantees to the WCC employee (and his successors) the due and punctual performance by WCC of its obligations regarding the vesting to the WCC employee of his Accrued Benefits under the Plan ('the obligation'). 3. If the Guarantor is unable to procure that WCC duly and punctually performs its obligation, then it shall indemnify the WCC employee in respect of all costs, damages, charges and expenses incurred or suffered by the WCC employee as a result of the failure by WCC to perform its obligations duly and punctually. 4 This guarantee shall continue and remain in full force and effect until the obligation of WCC under the Plan towards the WCC employee shall have been duly performed and discharged. 5. The guarantee shall not be affected in any way by any time or indulgence or release of any obligation under the Plan nor by the liquidation or dissolution of WCC nor by the appointment of a receiver or administrator nor by any circumstances affecting the obligations of WCC to meet its liabilities under the Plan. In the event of any matters as aforesaid, the Guarantor shall become liable for the obligation of WCC arising under the Plan as if it were a primary obligor. 6. The Guarantor shall not be entitled to prove in the liquidation of WCC in competition with the WCC employee until the WCC employee shall have been paid in full all monies owed to the WCC employee pursuant to the terms of the Plan. The Common Seal of Willis Corroon Group plc was hereunto affixed in the presence of:- - ---------------------------------- --------------------------------------- Director Secretary Dated: 17 July 1998 EX-10.12 32 EX. 10.12 Exhibit 10.12 THE TA 1 LIMITED ZERO COST SHARE OPTION SCHEME CLIFFORD CHANCE 200 Aldersgate Street London EC1A 4JJ Ref: RTT/K0556/00620 TABLE OF CONTENTS Page ---- 1 DEFINITIONS AND INTERPRETATION..............................................1 2 GRANT OF OPTIONS............................................................2 3 EXERCISE OF OPTIONS.........................................................3 4 CASH PAYMENT................................................................4 5 TAKEOVER, RECONSTRUCTION AND WINDING-UP.....................................4 6 VARIATION OF CAPITAL........................................................5 7 ALTERATIONS.................................................................5 8 MISCELLANEOUS...............................................................6 i 1 DEFINITIONS AND INTERPRETATION 1.1 In this Scheme, unless the context otherwise requires: "THE BOARD" means the board of directors of the Company or a committee appointed by them; "THE COMPANY" means TA 1 Limited (registered in England and Wales No. 3588080); "EDIP" means the Willis Corroon Group Executive Deferred Incentive Plan; "THE GRANT DATE" in relation to an option means the date on which the option was granted; "GROUP MEMBER" means: 1.1.1 a Participating Company or a body corporate which is (within the meaning of section 736 of the Companies Act 1985) the Company's holding company or a subsidiary of the Company's holding company, or 1.1.2 a body corporate which is (within the meaning of section 258 of that Act) a subsidiary undertaking of a body corporate within paragraph 1.1.1 above and has been designated by the Board for this purpose; "PARTICIPANT" means a person who holds an option granted under this Scheme; "PARTICIPATING COMPANY" means the Company or any Subsidiary; "PERMANENT DISABILITY" means the definition in the Group Member's long term disability plan applicable to the Participant or, if no such plan is applicable, in the event the Participant is unable by reason of physical or mental illness or other similar disability, to perform the material duties and responsibilities of his job for a period of 180 consecutive business days out of 270 business days; "REGISTERED HOLDER" means Willis Corroon ESOP Management Limited; "RETIREMENT" means the Participant's termination of employment at age 65 or over (or such other age as applies in the applicable jurisdiction, pursuant to an existing written policy of a Group Member or the age provided in the Participant's contract of employment as normal retirement age or as may be approved by the Board) with any Group Member after the Participant has been employed by any Group Member for at least three years; 2 "SALE PARTICIPATION AGREEMENT" means the agreement of such name which the Registered Holder enters into at the same time as the Trustee Subscription Agreement; "THE SCHEME" means the TA l Limited Zero Cost Share Option Scheme as herein set out but subject to any alterations or additions made under Rule 7 below; "SHARE" means a Management Ordinary Share in the capital of the Company having the rights and restrictions described in Articles [122] to [131] of the Company's Articles; "TRUSTEE SUBSCRIPTION AGREEMENT" means the agreement whereby the Registered Holder subscribes for Shares in return for the Participant giving up an award under the EDIP or UK RSP; "SUBSIDIARY" means a body corporate which is a subsidiary of the Company (within the meaning of section 736 of the Companies Act 1985); "UK RSP" means the Willis Corroon Group Restricted Share Plan. 1.2 Any reference in this Scheme to any enactment includes a reference to that enactment as from time to time modified extended or re-enacted. Where the context so admits the singular shall include the plural and vice versa and the masculine shall include the feminine. 2 GRANT OF OPTIONS 2.1 The Board may grant to any director or employee of a Participating Company an option to purchase Shares, upon the terms set out in this Scheme in return for that director or employee giving up an award he or she held under the EDIP or UK RSP. 2.2 The price at which all the Shares may be purchased by the exercise of an option granted under this Scheme shall be a total of L1. 2.3 The number of Shares for which a person may be granted an option shall be such number as the Registered Holder subscribes with an aggregate subscription price equal to the cash which is the subject of the surrendered award under the EDIP and/or the UK RSP. 2.4 An option granted under this Scheme to any person: 2.4.1 shall not be capable of being transferred or assigned by him; and 2.4.2 shall lapse forthwith if he is adjudged bankrupt. 3 3 EXERCISE OF OPTIONS 3.1 The exercise of an option shall be effected in the form and manner prescribed by the Board. 3.2 Subject to sub-rules 3.3 and 3.4 below and to Rule 5 below, an option may not be exercised before the date on which the cash which was the subject of the surrendered award under the EDIP and/or the UK RSP would have been transferred to the participant (the "Original Vesting Date"). 3.3 If any Participant ceases to be a director or employee of a Participating Company before the Original Vesting Date, any option granted to him may be exercised only if the Participant would in those circumstances have received the cash which was the subject of the surrendered award under the EDIP and/or the UK RSP (and subject to Rule 3.5 below). 3.4 If any Participant ceases to be a director or employee of a Participating Company on or after the Original Vesting Date, the following provisions apply in relation to any option granted to him (subject to Rule 3.5 below): 3.4.1 if he so ceases by reason of death, Permanent Disability or Retirement, the option may (and must if at all) be exercised within the period which shall expire 12 months after his so ceasing; 3.4.2 if he so ceases for any other reason, the option may (and must if at all) be exercised within the period which shall expire 15 days after his so ceasing. 3.5 Notwithstanding any other provision of this Scheme, an option granted under this Scheme may not be exercised more than 15 days after the exercise of any put or call right to purchase the Participant's Shares pursuant to the Management and Employee Stockholders' and Subscription Agreement. 3.6 Notwithstanding any other provision of this Scheme, an option granted under this Scheme may not be exercised after the expiration of the period of 10 years beginning with the Grant Date. 3.7 Within 30 days after an option has been exercised by any person, the Board shall procure the transfer to him (or a nominee for him) of the number of Shares in respect of which the option has been exercised, provided that: 3.7.1 the Board considers that the issue or transfer thereof would be lawful in all relevant jurisdictions; and 4 3.7.2 in a case where a Group Member is obliged to (or would suffer a disadvantage if it were not to) account for any tax (in any jurisdiction) for which the person in question is liable by virtue of the exercise of the option and/or for any social security contributions recoverable from the person in question (together, the "Tax Liability"), that person has either: (a) made a payment to the Group Member of an amount equal to the Tax Liability; or (b) entered into arrangements acceptable to that or another Group Member to secure that such a payment is made (whether by authorising the sale of some or all of the Shares on his behalf and the payment to the Group Member of the relevant amount out of the proceeds of sale or otherwise). 4 CASH PAYMENT 4.1 If a Participant has not exercised his option granted under this Scheme, and the Registered Holder is required to sell the Shares which are the subject of the option pursuant to the exercise of any put and call right to purchase the Registered Holder's Shares in the event that the Participant ceases employment or sells the Shares under the "drag-along" or "tag-along" rights and obligations under the Sale Participation Agreement or in any other circumstances envisaged by the Trustee Subscription Agreement, the Participant shall thereupon immediately cease to be able to exercise the option granted under the Scheme but shall be entitled to receive a cash payment which shall equal the amount which the Registered Holder receives for the sale of the relevant Shares PROVIDED THAT the Participant would in those circumstances have been entitled to have received the cash which was the subject of the surrendered award under the EDIP and/or the UK RSP. 4.2 There shall be made from any payment under this Rule such deductions (on account of tax or similar liabilities) as may be required by law or as the Board may reasonably consider to be necessary or desirable. 5 TAKEOVER, RECONSTRUCTION AND WINDING-UP 5.1 If any person obtains control of the Company (within the meaning of section 840 of the Income and Corporation Taxes Act 1988) as a result of making a general offer to acquire shares in the Company, or having obtained such control makes such an offer, the Board shall within 7 days of becoming aware thereof notify every Participant thereof and, subject to sub-rules 3.4, 3.5 and 3.6 above, any option may be exercised within one month (or such longer period as the Board may permit) of such notification. 5.2 For the purposes of sub-rule 5.1 above, a person shall be deemed to have obtained control of the Company if he and others acting in concert with him have together obtained control of it. 5 5.3 If any person becomes bound or entitled to acquire shares in the Company under sections 428 to 430F of the Companies Act 1985, or if under section 425 of that Act the Court sanctions a compromise or arrangement proposed for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company or companies, or if the Company passes a resolution for voluntary winding up, or if an order is made for the compulsory winding up of the Company, the Board shall forthwith notify every Participant thereof and subject to sub-rules 3.4, 3.5 and 3.6 above, any option may be exercised within one month of such notification, but to the extent that it is not exercised within that period shall (notwithstanding any other provision of this Scheme) lapse on the expiration thereof. 6 VARIATION OF CAPITAL 6.1 In the event of any increase or variation of the share capital of the Company, the Board may make such adjustments as it considers appropriate under sub-rule 6.2 below. 6.2 An adjustment made under this sub-rule shall be to one or both of the following: 6.2.1 the number of Shares in respect of which any option may be exercised; 6.2.2 where any option has been exercised but no Shares have been transferred pursuant to the exercise, the number of Shares which may be so transferred. 7 ALTERATIONS 7.1 Subject to sub-rule 7.2 below, the Board may at any time alter this Scheme, or the terms of any option granted under it, in any respect. 7.2 No alteration to the disadvantage of any subsisting rights of a Participant shall be made under sub-rule 7.1 above unless: 7.2.1 the Board shall have invited every relevant Participant to give an indication as to whether or not he approves the alteration; and 7.2.2 the alteration is approved by a majority of those Participants who have given such an indication. 7.3 As soon as reasonably practicable after making any alteration under sub-rule 7.1 above, the Board shall give notice in writing thereof to any Participant affected thereby. 8 MISCELLANEOUS 8.1 The rights and obligations of any individual under the terms of his office or employment with any Participating Company shall not be affected by his participation in this Scheme or any right which he may have to participate in it, and an individual who participates in it shall waive any and all rights to compensation or damages in consequence of the termination of 6 his office or employment for any reason whatsoever insofar as those rights arise or may arise from his ceasing to have rights under or be entitled to exercise any option as a result of such termination. 8.2 Any notice or other communication under or in connection with this Scheme may be given by personal delivery or by sending the same by post, in the case of a company to its registered office, and in the case of an individual to his last known address, or, where he is a director or employee of a Participating Company, either to his last known address or to the address of the place of business at which he performs the whole or substantially the whole of the duties of his office or employment. 8.3 This Scheme shall be governed by, and construed in accordance with, English law. CLIFFORD CHANCE 200 Aldersgate Street London EClA 4JJ EX-12.1 33 EX. 12.1
Exhibit 12.1 WILLIS CORROON GROUP LIMITED COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES HISTORICAL ------------------------------------------------------------------------ JANUARY 1 TO YEAR ENDED DECEMBER 31 SEPTEMBER 1 -------------------------------------------------------- -------------- 1994 1995 1996 1997 1998 -------------------------------------------------------- -------------- (L MILLION EXCEPT RATIOS) UK GAAP Income/(loss) before tax........................... 8.3 62.4 91.6 95.5 (1.3) Less: Profit of associates......................... (5.9) (6.8) (3.5) (1.9) (7.7) Add: Dividends from associates..................... 5.1 5.9 1.5 0.9 1.9 ---- ---- ----- ----- ----- Adjusted income/(loss) before tax (A).............. 7.5 61.5 89.6 94.5 (7.1) ---- ---- ----- ----- ----- Interest expense................................... 6.4 7.2 2.2 0.7 (2.0) Amortisation of debt expense....................... -- -- -- -- -- Interest element of operating lease rental expense. 11.3 11.5 11.3 9.2 6.3 ---- ---- ----- ----- ----- Fixed Charges (B).................................. 17.7 18.7 13.5 9.9 4.3 ---- ---- ----- ----- ----- ---- ---- ----- ----- ----- Earnings (A)+(B)................................... 25.2 80.2 103.1 104.4 (2.8) ==== ==== ===== ===== ===== Ratio of Earnings to Fixed Charges................. 1.4 4.3 7.6 10.5 -- Deficiency of earnings to fixed charges............ 7.1 US GAAP Income/(loss) before tax........................... 43.1 1.5 74.7 66.5 (5.1) Less: Profit of associates......................... (5.9) (6.8) (3.5) (1.9) (7.7) Add: Dividends from associates..................... 5.1 5.9 1.5 0.9 1.9 ---- ---- ----- ----- ----- Adjusted income/(loss) before tax (A).............. 42.3 0.6 72.7 65.5 (10.9) ---- ---- ----- ----- ----- Interest expense................................... 6.4 7.2 2.2 0.7 (2.0) Amortisation of debt expense....................... -- -- -- -- -- Interest element of operating lease rental expense. 11.3 11.5 11.3 9.2 6.3 ---- ---- ----- ----- ----- Fixed Charges (B).................................. 17.7 18.7 13.5 9.9 4.3 ---- ---- ----- ----- ----- ---- ---- ----- ----- ----- Earnings (A)+(B)................................... 60.0 19.3 86.2 75.4 (6.6) ==== ==== ===== ===== ===== Ratio of Earnings to Fixed Charges................. 3.4 1.0 6.4 7.6 -- Deficiency of earnings to fixed charges............ 10.9 HISTORICAL PRO FORMA ------------------------------- ------------- SEPTEMBER 2 TO YEAR ENDED YEAR ENDED DECEMBER 31 DECEMBER 31 DECEMBER 31 ------------------------------- ------------- 1998 1998 1998 ------------------------------- ------------- (L MILLION EXCEPT RATIOS) UK GAAP Income/(loss) before tax........................... 17.1 15.8 (30.8) Less: Profit of associates......................... 1.4 (6.3) (6.7) Add: Dividends from associates..................... 0.5 2.4 2.4 ---- ---- ----- Adjusted income/(loss) before tax (A).............. 19.0 11.9 (35.1) ---- ---- ----- Interest expense................................... (1.2) (3.2) 51.5 Amortisation of debt expense....................... -- -- 1.9 Interest element of operating lease rental expense. 3.1 9.5 9.5 ---- ---- ----- Fixed Charges (B).................................. 1.9 6.3 62.9 ---- ---- ----- ---- ---- ----- Earnings (A)+(B)................................... 20.9 18.2 27.8 ==== ==== ===== Ratio of Earnings to Fixed Charges................. 10.9 2.9 -- Deficiency of earnings to fixed charges............ 35.1 US GAAP Income/(loss) before tax........................... 5.2 (50.5) Less: Profit of associates......................... 1.4 (6.7) Add: Dividends from associates..................... 0.5 2.4 ---- ----- Adjusted income/(loss) before tax (A).............. 7.1 (54.8) ---- ----- Interest expense................................... (1.2) 51.5 Amortisation of debt expense....................... -- 1.9 Interest element of operating lease rental expense. 3.1 9.5 ---- ----- Fixed Charges (B).................................. 1.9 62.9 ---- ----- ---- ----- Earnings (A)+(B)................................... 9.0 8.1 ==== ===== Ratio of Earnings to Fixed Charges................. 4.7 -- Deficiency of earnings to fixed charges............ 54.8
EX-21.1 34 EX. 21.1 Exhibit 21.1
SUBSIDIARIES OF WILLIS CORROON GROUP LIMITED Country of Company Name Registration - ------------ ------------ WILLIS CORROON CORPORATION U.S.A. WF Corroon Corporation - Great Lakes U.S.A. WF Corroon Corporation - Nevada U.S.A. Willis Corroon Constructions Services Corporation of New U.S.A. Jersey Willis Corroon Corporation of Birmingham U.S.A. Willis Corroon Corporation of Michigan U.S.A. Baccala & Shoop Insurance Services U.S.A. CBL Equities Inc U.S.A. Corroon & Black Financial Corporation of U.S.A. California Guy Benefits Consulting Inc. U.S.A. McAlear Associates Inc. (Michigan) U.S.A. McAlear Associates Inc (Ohio) U.S.A. MedTrac Inc U.S.A. Municipal Insurance Marketing Services U.S.A. Corporation Pacific International Brokers Limited U.S.A. Professional Liability Underwriting Managers Inc U.S.A. Public Entities National Company - Midwest U.S.A. Public Entities National Company of Idaho U.S.A. Queenswood Properties Inc U.S.A. Stewart Smith East Inc U.S.A. Stewart Smith Southeast Inc U.S.A. Stewart Smith Southwest Inc. U.S.A.
-1-
SUBSIDIARIES OF WILLIS CORROON GROUP LIMITED Country of Company Name Registration - ------------ ------------ Wrightson & Co Inc U.S.A. Stewart Smith West of Arizona Inc U.S.A. WF Corroon Corporation - California U.S.A. WF Corroon Corporation - Greater New York U.S.A. WF Corroon Corporation - Tennessee U.S.A. WF Corroon Corporation - Texas U.S.A. Willis Corroon Administrative Services U.S.A. Corporation Public Entities National Company of U.S.A. Indiana Public Entities National Company of U.S.A. Louisiana Public Entities National Company of U.S.A. Nevada Public Entities National Company of U.S.A. Wyoming PENCO - Insurance Agency Inc U.S.A. Public Entities National Company of U.S.A. Arizona Public Entities National Company of U.S.A. Colorado Public Entities National Company of U.S.A. Kentucky Public Entities National Company of U.S.A. Mississippi Public Entities National Company of U.S.A. Oklahoma
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SUBSIDIARIES OF WILLIS CORROON GROUP LIMITED Country of Company Name Registration - ------------ ------------ Public Entities National Company of U.S.A. Utah Public Entities National Company of U.S.A. Virginia Willis Corroon Corporation of Louisville U.S.A. Willis Corroon & Associates Inc U.S.A. Willis Corroon Risk Management U.S.A. Corporation Willis Corroon CID Americas, Inc. U.S.A. Willis Corroon Corporation of Anchorage U.S.A. Willis Corroon Corporation of Arizona U.S.A. Willis Corroon Corporation of California U.S.A. Willis Corroon Corporation of Georgia U.S.A. Willis Corroon Corporation of Greater New York U.S.A. Willis Corroon Corporation of Illinois U.S.A. Commercial Excess Marketing Corp U.S.A. Willis Corroon Corporation of Kansas U.S.A. Willis Corroon Corporation of Los Angeles U.S.A. Willis Corroon Corporation of Louisiana U.S.A. Willis Corroon Corporation of Maryland U.S.A. Willis Corroon Corporation of Massachusetts U.S.A. Willis Corroon Corporation of Minnesota U.S.A. Willis Corroon Corporation of Mississippi U.S.A. Willis Corroon Corporation of Missouri U.S.A. Willis Corroon Corporation of Mobile U.S.A.
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SUBSIDIARIES OF WILLIS CORROON GROUP LIMITED Country of Company Name Registration - ------------ ------------ Willis Corroon Corporation of Nevada U.S.A. Willis Corroon Corporation of New Hampshire U.S.A. Willis Corroon Corporation of New Jersey U.S.A. Willis Corroon Corporation of New York U.S.A. Willis Corroon Construction Services U.S.A. Corporation of Connecticut Willis Corroon Corporation of North Carolina U.S.A. Willis Corroon Corporation of Orange County U.S.A. Willis Corroon Corporation of Pennsylvania U.S.A. Willis Corroon Corporation of Oregon U.S.A. Willis Corroon Corporation of Sacramento U.S.A. Willis Corroon Corporation of San Diego U.S.A. Willis Corroon Corporation of San Jose U.S.A. Willis Corroon Corporation of Seattle U.S.A. Willis Corroon Corporation of Fairbanks U.S.A. Willis Corroon Corporation of Tennessee U.S.A. Willis Corroon Corporation of Wisconsin U.S.A. CRRUX Inc U.S.A. Willis Corroon Energy, Inc U.S.A. Willis Faber North America Inc U.S.A. Cordis Consulting, Inc. U.S.A. Reinsurance Alternatives Inc. U.S.A. RAI Marketing, Inc U.S.A. Willis Corroon Corporation of Ohio U.S.A.
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SUBSIDIARIES OF WILLIS CORROON GROUP LIMITED Country of Company Name Registration - ------------ ------------ Willis Corroon Corporation of Utah U.S.A. Willis Corroon Inc U.S.A. SOVEREIGN MARINE & GENERAL INSURANCE COMPANY LIMITED (in England & Wales provisional liquidation) Greyfriars Insurance Company Limited England & Wales Associated International Insurance (Bermuda) Bermuda Limited Sovereign Insurance (UK) Limited England & Wales EASTERN INSURANCE & REINSURANCE LIMITED England & Wales HARRAP BROTHERS LIFE & PENSIONS LIMITED England & Wales STEWART WRIGHTSON NORTH AMERICA HOLDINGS LIMITED England & Wales WILLIS FABER MANAGEMENT SERVICES (GUERNSEY) LIMITED (in Guernsey liquidation) WILLIS FABER (GUERNSEY) LIMITED (in liquidation) Guernsey WILLIS FABER PENSION TRUSTEES LIMITED England & Wales WILLIS FABER & DUMAS LIMITED England & Wales Bloodstock & General Insurance Services Limited England & Wales Claims and Recovery Services Limited England & Wales Claims & Recovery Services (Moscow) Russia Hughes-Gibb & Company Limited England & Wales Special Contingency Risks Limited England & Wales Willis Faber Corretaje de Reaseguros S.A. Venezuela Willis Faber (Aegean) Limited England & Wales Willis Corroon CIS Russia
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SUBSIDIARIES OF WILLIS CORROON GROUP LIMITED Country of Company Name Registration - ------------ ------------ WILLIS CORROON LIMITED England & Wales E.J. Welton & Co. Limited England & Wales QRM Healthcare Limited England & Wales Robinson, Clemmit, Chisem & Marshall Limited England & Wales VEAGIS Limited England & Wales Willis Corroon Cargo Limited England & Wales Willis Corroon Construction Risks Limited England & Wales Willis Corroon Credit Limited England & Wales Willis Corroon (FR) Limited England & Wales Willis Corroon Harris Marrian Limited Northern Ireland Willis Corroon Hinton Limited England & Wales Willis Corroon Transportation Risks Limited England & Wales Willis Corroon Scotland Limited Scotland Willis Corroon Services Limited England & Wales Willis First Response Limited England & Wales Willis National Holdings Limited England & Wales ANIFA Limited England & Wales Willis Corroon Financial Planning Limited England & Wales Willis National Limited England & Wales WILLIS CORROON INTERNATIONAL HOLDINGS LIMITED England & Wales Friars Street Insurance Limited Guernsey Gibraltar Insurance (Barbados) Limited Barbados Meridian Insurance Company Limited Bermuda Willis Corroon (Bermuda) Limited Bermuda
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SUBSIDIARIES OF WILLIS CORROON GROUP LIMITED Country of Company Name Registration - ------------ ------------ Willis Corroon Dublin Limited Eire Willis Corroon Management (Cayman) Limited Grand Cayman Willis Corroon Douglas Limited Isle of Man Willis Corroon Investments Limited England & Wales Willis Corroon Jersey Limited Jersey Willis Corroon Management (Bermuda) Limited Bermuda Willis Corroon Management (Dublin) Limited Eire Willis Corroon Management (Gibraltar) Limited Gibraltar Willis Corroon Management (Luxembourg) S.A. Luxembourg Willis Corroon Europe B.V. Netherlands Willis Corroon Polska Poland Global Special Risks Holdings Inc Hong Kong Global Special Risks Inc U.S.A. Global Special Risks Inc of New York U.S.A. Global Special Risks Insurance Services Inc U.S.A. Global Special Risks Insurance Services U.S.A. California Global Special Risks Inc of Texas U.S.A. Global Special Risks Inc of Houston U.S.A. Johnson & Higgins Willis Faber Holdings Inc U.S.A. S & C Willis Corroon Correduria de Seguros y Spain Reaseguros SA S & C - Willis Corroon Correduria de Spain Seguros SA (CATALUNA)
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SUBSIDIARIES OF WILLIS CORROON GROUP LIMITED Country of Company Name Registration - ------------ ------------ S & C e IC Willis Corroon Correduria de Spain Seguros SA (SEVILLE) S & C Med Correduria de Seguros SA Spain (VALENCIA) Surplus Corredores de Reaseguros SA Spain Trinity Computer Processing (India) Limited India Willis Corroon Italia S.p.A. Italy UTA Willis Corroon Rischi Speciali S.R.L. Italy UTA Willis Corroon Firenze S.R.L. Italy UTA Willis Corroon Liguria S.R.L. Italy UTA Willis Corroon Milan S.R.L. Italy UTA Willis Corroon Vicenza S.R.L. Italy WFB Limitada Brazil Willis Corroon Nederlands BV Netherlands Willis Corroon BV Netherlands Scheuer Verzekeringen BV Netherlands Prospero Underwriting Management Netherlands BV Prospero Underwriting Services BV Netherlands KSA Vof Netherlands Willis Corroon Beligium S.A. Belgium Willis Corroon Canada Inc. Canada MHR International Inc Canada Willis Corroon Canada (1999) Inc Canada
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SUBSIDIARIES OF WILLIS CORROON GROUP LIMITED Country of Company Name Registration - ------------ ------------ 177225 Canada Inc Canada 9019-2386 Quebec Inc Canada (formerly Lajoie Meunier Lemieux Inc) Richards, Melling (Quebec) Canada Inc Willis Corroon Aerospace of Canada Canada Limited Willis Corroon Kendriki SA Greece Willis Corroon sro (shares held on trust by WC Czech Republic Europe Ltd) Willis Corroon GmbH (shares held on trust by Germany WCG Ltd) Mansfeld, Hubener & Partner GmbH Germany Mansfeld Cordis Consulting GmbH & Co. Germany KG (limited partnership) Willis Corroon Management (Guernsey) Limited Guernsey Willis Corroon Management (Jersey) Jersey Limited Willis Corroon Secretarial Services Limited Guernsey Willis Corroon Management (Isle of Man) Limited Jersey Willis Corroon Australia Limited Australia Willlis Corroon Richard Oliver Professional Australia Services Limited Willis Corroon Holdings (New Zealand) New Zealand Limited Willis Corroon Limited New Zealand
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SUBSIDIARIES OF WILLIS CORROON GROUP LIMITED Country of Company Name Registration - ------------ ------------ Willis Faber & Dumas Limited Australia Richard Oliver International Pty Limited Australia Willis Corroon Richard Oliver Australia Nominees Pty Limited Industrial Mutual Insurance Pty Australia Limited Richard Oliver Australia Pty Australia Limited Richard Oliver Pty Limited Australia Richard Oliver U.S.A. International Inc Richard Oliver Singapore International Pte Limited Richard Oliver USA U.S.A. Inc Richard Oliver International Limited England & Wales Richard Oliver (NZ) Limited New Zealand Richard Oliver International PTY Hong Kong Limited Richard Oliver Underwriting Australia Managers Pty Limited Rocap Pty Limited Australia Willis Corroon Hungary Kft Hungary Willis Corroon Ireland Limited Eire Kindlon Ryan Insurances Limited Eire Willis Corroon (Taiwan) Limited Taiwan
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SUBSIDIARIES OF WILLIS CORROON GROUP LIMITED Country of Company Name Registration - ------------ ------------ Willis Corroon AB Sweden OY Willis Corroon AB Finland Willis Corroon Global Financial Risks AB Sweden (34% held by WCE BV) Willis Corroon Gothia AB Sweden Willis Corroon i Orebro AB Sweden Willis Faber Advisory Services Limited Zambia Willis Faber AG Switzerland Willis Faber & Dumas (Mexico) Intermediario de Mexico Reaseguro S.A. de C.V. Willis Faber Anclamar S.A. Spain Willis Faber Chile Limitada Chile Willis Faber Chile Corredores de Reaseguro Chile Limitada Willis Corroon Hellas (Insurance Brokers) SA Greece Willis Faber Do Brasil Consultoria e Participacoes Brazil S.A. Willis Faber GmbH Germany Willis Faber Insurance Services Limitada Chile Willis Corroon Corretores de Seguros Limitada Portugal Willis Faber Correduria de Reaseguros S.A. Spain Willis Corroon China (Hong Kong) Limited Hong Kong Willis Faber Consulting (Far East) Limited Hong Kong Willis Faber (Middle East) S.A.L. Lebanon Willis Corroon (Pte) Limited Singapore
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SUBSIDIARIES OF WILLIS CORROON GROUP LIMITED Country of Company Name Registration - ------------ ------------ Willis Faber Services Limited Bermuda WILLIS FABER LIMITED England & Wales Cordis Consulting Limited England & Wales Friars Street Trustees Limited England & Wales Run-Off 1997 Limited England & Wales United African Insurance Brokers Limited England & Wales Willis Consulting Group Limited England & Wales W F C Trustees (C.I.) Limited Guernsey Willis Corroon Asia Pacific Limited England & Wales Willis Corroon Asset Management Limited England & Wales Willis Corroon ESOP Management limited Guernsey Willis Corroon Japan Limited England & Wales Willis Corroon Licensing Limited England & Wales Willis Faber Kirke-Van Orsdel Limited (in liquidation) England & Wales WILLIS CORROON GROUP SERVICES LIMITED England & Wales Stewart Wrightson Management Services Limited England & Wales Willis Corroon Nominees Limited England & Wales WILLIS FABER UNDERWRITING AGENCIES LIMITED England & Wales Devonport Underwriting Agency Limited England & Wales Willis Faber (Underwriting Management) Limited England & Wales Willis Faber Underwriting Services Limited England & Wales WILLIS FABER UK GROUP LIMITED England & Wales Arbuthnot Insurance Services Limited England & Wales
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SUBSIDIARIES OF WILLIS CORROON GROUP LIMITED Country of Company Name Registration - ------------ ------------ Stewart Wrightson International Group Limited England & Wales Armed Forces Financial Advisory Services Limited England & Wales C D D Gilmour (Underwriting Agencies) Limited England & Wales Durant, Wood Limited England & Wales Galbraith Pembroke (Insurance) Limited England & Wales Hinton & Higgs Limited England & Wales Hinton & Holt Limited England & Wales Hinton Safety Limited (in liquidation) England & Wales International Claims Bureau Limited England & Wales Invest for School Fees Limited England & Wales J.C. Armstrong & Company Limited (in liquidation) England & Wales Lloyd Armstrong & Ramsey Limited Eire Martin Boag & Co Limited England & Wales Mathews Wrightson & Co Limited England & Wales Mercantile U.K. Limited England & Wales Rattray Daffern & Partners Limited England & Wales Stewart Wrightson Group Limited England & Wales Willis Faber Property Holdings Limited England & Wales Stewart Wrightson (Regional Offices) England & Wales Limited Stewart Wrightson Marine Hull Limited England & Wales Stewart Wrightson Marine (Hellas) Limited Greece Stewart Wrightson Members' Agency Limited England & Wales Stewart Wrightson Surety & Specie Limited England & Wales
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SUBSIDIARIES OF WILLIS CORROON GROUP LIMITED Country of Company Name Registration - ------------ ------------ Stewart Wrightson (Overseas Holdings) Limited England & Wales Stewart Wrightson (Private) Limited Zimbabwe Ten Trinity Brokers Limited England & Wales W F Corroon International Limited England & Wales Willis Corroon China Limited England & Wales Willis Corroon Europe Limited England & Wales Willis Corroon Hinton (Ireland) Limited Eire Willis Corroon North Limited England & Wales Willis Corroon Risk Management Holdings Limited England & Wales CARTER, WILKES & FANE (HOLDING) LIMITED England & Wales Bevis Marks (Group) Limited England & Wales Johnson Puddifoot and Last Limited England & Wales Stephenson's Campus (Berwick) Limited England & Wales Carter, Wilkes & Fane Limited England & Wales Fane Stevenson & Co Limited England & Wales
-14- EX-23.2 35 EX. 23.2 EXHIBIT 23.2 CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" and to the use of our reports dated March 15, 1999 in the Registration Statement (Form F-4) and related Prospectus of Willis Corroon Group Limited, Willis Corroon Partners and Willis Corroon Corporation for the registration of $550,000,000 of Willis Corroon Corporation's 9% Senior Subordinated Notes Due 2009. ERNST & YOUNG London, England March 15, 1999 EX-24.1 36 EX. 24.1 Exhibit 24 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that I the undersigned, being a director of WILLIS CORROON GROUP LIMITED (the "Guarantor"), hereby constitute and appoint MICHAEL P. CHITTY, THOMAS COLRAINE, and BART R. SCHWARTZ and each of them, my true and lawful attorney and agent, to do any and all acts and all things and to execute any and all instruments which said attorney and agent may deem necessary or desirable to enable the Guarantor to comply with the Securities Act of 1933, as amended (the "Act"), and any rules, regulations and requirements of the Securities and Exchange Commission thereunder, in connection with the registration under the Act of the Exchange Notes (the "Securities"), including, without limitation, the power and authority to sign my name in my capacity as a director to the Registration Statement on Form F-4 to be filed with the Securities and Exchange Commission with respect to such Securities, to any and all amendments or supplements to such Registration Statement, whether such amendments or supplements are filed before or after the effective date of such Registration Statement, to any related Registration Statement filed pursuant to Rule 462 under the Act, and to any and all instruments or documents filed as part of or in connection with such Registration Statement or any and all amendments thereto, whether such amendments are filed before or after the effective date of such Registration Statement; and I hereby ratify and confirm all that such attorney and agent shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF this Power of Attorney has been executed as a deed this 8th day of March 1999. Signed and DELIVERED as a } DEED by Richard J.S. Bucknall } /s/ Richard J.S. Bucknall ----------------------------------------- in the presence of: (witness - please sign and print name and address) /s/ V. Cunliffe - ------------------------- V. Cunliffe - ------------------------- J. Constable Gardens - ------------------------- Edgware Middlesex HA8 5SF - ------------------------- POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that I the undersigned, being a director and officer of WILLIS CORROON GROUP LIMITED (the "Guarantor"), hereby constitute and appoint MICHAEL P. CHITTY, THOMAS COLRAINE, and BART R. SCHWARTZ and each of them, my true and lawful attorney and agent, to do any and all acts and all things and to execute any and all instruments which said attorney and agent may deem necessary or desirable to enable the Guarantor to comply with the Securities Act of 1933, as amended (the "Act"), and any rules, regulations and requirements of the Securities and Exchange Commission thereunder, in connection with the registration under the Act of the Exchange Notes (the "Securities"), including, without limitation, the power and authority to sign my name in my capacity as a director and officer to the Registration Statement on Form F-4 to be filed with the Securities and Exchange Commission with respect to such Securities, to any and all amendments or supplements to such Registration Statement, whether such amendments or supplements are filed before or after the effective date of such Registration Statement, to any related Registration Statement filed pursuant to Rule 462 under the Act, and to any and all instruments or documents filed as part of or in connection with such Registration Statement or any and all amendments thereto, whether such amendments are filed before or after the effective date of such Registration Statement; and I hereby ratify and confirm all that such attorney and agent shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF this Power of Attorney has been executed as a deed this 10th day of March 1999. Signed and DELIVERED as a } DEED by Thomas Colraine } /s/ Thomas Colraine ----------------------------------------- in the presence of: (witness - please sign and print name and address) /s/ Julian MacKenzie - ------------------------- Julian MacKenzie - ------------------------- Ten Trinity Square - ------------------------- London ECP 3AX - ------------------------- POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that I the undersigned, being a director of WILLIS CORROON GROUP LIMITED (the "Guarantor"), hereby constitute and appoint MICHAEL P. CHITTY, THOMAS COLRAINE, and BART R. SCHWARTZ and each of them, my true and lawful attorney and agent, to do any and all acts and all things and to execute any and all instruments which said attorney and agent may deem necessary or desirable to enable the Guarantor to comply with the Securities Act of 1933, as amended (the "Act"), and any rules, regulations and requirements of the Securities and Exchange Commission thereunder, in connection with the registration under the Act of the Exchange Notes (the "Securities"), including, without limitation, the power and authority to sign my name in my capacity as a director to the Registration Statement on Form F-4 to be filed with the Securities and Exchange Commission with respect to such Securities, to any and all amendments or supplements to such Registration Statement, whether such amendments or supplements are filed before or after the effective date of such Registration Statement, to any related Registration Statement filed pursuant to Rule 462 under the Act, and to any and all instruments or documents filed as part of or in connection with such Registration Statement or any and all amendments thereto, whether such amendments are filed before or after the effective date of such Registration Statement; and I hereby ratify and confirm all that such attorney and agent shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF this Power of Attorney has been executed as a deed this 3rd day of March 1999. Signed and DELIVERED as a } DEED by Brian D. Johnson } /s/ Brian D. Johnson ----------------------------------------- in the presence of: (witness - please sign and print name and address) /s/ Marcia Hillenbrand - ------------------------- Marcia Hillenbrand - ------------------------- 26 Century Boulevard - ------------------------- Nashville TN 37214 - ------------------------- POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that I the undersigned, being a director of WILLIS CORROON GROUP LIMITED (the "Guarantor"), hereby constitute and appoint MICHAEL P. CHITTY, THOMAS COLRAINE, and BART R. SCHWARTZ and each of them, my true and lawful attorney and agent, to do any and all acts and all things and to execute any and all instruments which said attorney and agent may deem necessary or desirable to enable the Guarantor to comply with the Securities Act of 1933, as amended (the "Act"), and any rules, regulations and requirements of the Securities and Exchange Commission thereunder, in connection with the registration under the Act of the Exchange Notes (the "Securities"), including, without limitation, the power and authority to sign my name in my capacity as a director to the Registration Statement on Form F-4 to be filed with the Securities and Exchange Commission with respect to such Securities, to any and all amendments or supplements to such Registration Statement, whether such amendments or supplements are filed before or after the effective date of such Registration Statement, to any related Registration Statement filed pursuant to Rule 462 under the Act, and to any and all instruments or documents filed as part of or in connection with such Registration Statement or any and all amendments thereto, whether such amendments are filed before or after the effective date of such Registration Statement; and I hereby ratify and confirm all that such attorney and agent shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF this Power of Attorney has been executed as a deed this 8th day of March 1999. Signed and DELIVERED as a } DEED by Patrick Lucas } /s/ Patrick Lucas ----------------------------------------- in the presence of: (witness - please sign and print name and address) /s/ Hilt Valerie - ------------------------- 5 rue Gilbert Degreront - ------------------------- 92500 Rueil Mal Maison - ------------------------- - ------------------------- POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that I the undersigned, being a director of WILLIS CORROON GROUP LIMITED (the "Guarantor"), hereby constitute and appoint MICHAEL P. CHITTY, THOMAS COLRAINE, and BART R. SCHWARTZ and each of them, my true and lawful attorney and agent, to do any and all acts and all things and to execute any and all instruments which said attorney and agent may deem necessary or desirable to enable the Guarantor to comply with the Securities Act of 1933, as amended (the "Act"), and any rules, regulations and requirements of the Securities and Exchange Commission thereunder, in connection with the registration under the Act of the Exchange Notes (the "Securities"), including, without limitation, the power and authority to sign my name in my capacity as a director to the Registration Statement on Form F-4 to be filed with the Securities and Exchange Commission with respect to such Securities, to any and all amendments or supplements to such Registration Statement, whether such amendments or supplements are filed before or after the effective date of such Registration Statement, to any related Registration Statement filed pursuant to Rule 462 under the Act, and to any and all instruments or documents filed as part of or in connection with such Registration Statement or any and all amendments thereto, whether such amendments are filed before or after the effective date of such Registration Statement; and I hereby ratify and confirm all that such attorney and agent shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF this Power of Attorney has been executed as a deed this 3rd day of March 1999. Signed and DELIVERED as a } DEED by George Frederick Nixon } /s/ George Frederick Nixon ----------------------------------------- in the presence of: (witness - please sign and print name and address) /s/ T.M. Warren - ------------------------- Miss T.M. Warren - ------------------------- Ten Trinity Square - ------------------------- London EC3P 3AX - ------------------------- POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that I the undersigned, being a director of WILLIS CORROON GROUP LIMITED (the "Guarantor"), hereby constitute and appoint MICHAEL P. CHITTY, THOMAS COLRAINE, and BART R. SCHWARTZ and each of them, my true and lawful attorney and agent, to do any and all acts and all things and to execute any and all instruments which said attorney and agent may deem necessary or desirable to enable the Guarantor to comply with the Securities Act of 1933, as amended (the "Act"), and any rules, regulations and requirements of the Securities and Exchange Commission thereunder, in connection with the registration under the Act of the Exchange Notes (the "Securities"), including, without limitation, the power and authority to sign my name in my capacity as a director to the Registration Statement on Form F-4 to be filed with the Securities and Exchange Commission with respect to such Securities, to any and all amendments or supplements to such Registration Statement, whether such amendments or supplements are filed before or after the effective date of such Registration Statement, to any related Registration Statement filed pursuant to Rule 462 under the Act, and to any and all instruments or documents filed as part of or in connection with such Registration Statement or any and all amendments thereto, whether such amendments are filed before or after the effective date of such Registration Statement; and I hereby ratify and confirm all that such attorney and agent shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF this Power of Attorney has been executed as a deed this 10th day of March 1999. Signed and DELIVERED as a } DEED by John Marriot Pelly } /s/ John Marriot Pelly ----------------------------------------- in the presence of: (witness - please sign and print name and address) /s/ Sandra L. Preston - ------------------------- Sandra Preston - ------------------------- 40 Waterbank Road - ------------------------- London SE6 3DU - ------------------------- POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that I the undersigned, being a director of WILLIS CORROON GROUP LIMITED (the "Guarantor"), hereby constitute and appoint MICHAEL P. CHITTY, THOMAS COLRAINE, and BART R. SCHWARTZ and each of them, my true and lawful attorney and agent, to do any and all acts and all things and to execute any and all instruments which said attorney and agent may deem necessary or desirable to enable the Guarantor to comply with the Securities Act of 1933, as amended (the "Act"), and any rules, regulations and requirements of the Securities and Exchange Commission thereunder, in connection with the registration under the Act of the Exchange Notes (the "Securities"), including, without limitation, the power and authority to sign my name in my capacity as a director to the Registration Statement on Form F-4 to be filed with the Securities and Exchange Commission with respect to such Securities, to any and all amendments or supplements to such Registration Statement, whether such amendments or supplements are filed before or after the effective date of such Registration Statement, to any related Registration Statement filed pursuant to Rule 462 under the Act, and to any and all instruments or documents filed as part of or in connection with such Registration Statement or any and all amendments thereto, whether such amendments are filed before or after the effective date of such Registration Statement; and I hereby ratify and confirm all that such attorney and agent shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF this Power of Attorney has been executed as a deed this 4th day of March 1999. Signed and DELIVERED as a } DEED by Kenneth Pinkston } /s/ K.H. Pinkston ----------------------------------------- in the presence of: (witness - please sign and print name and address) /s/ Janet M. Wilkins - ------------------------- Janet M. Wilkins - ------------------------- 26 Century Boulevard - ------------------------- Nashville TN 37214 - ------------------------- POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that I the undersigned, being a director and officer of WILLIS CORROON GROUP LIMITED (the "Guarantor"), hereby constitute and appoint MICHAEL P. CHITTY, THOMAS COLRAINE, and BART R. SCHWARTZ and each of them, my true and lawful attorney and agent, to do any and all acts and all things and to execute any and all instruments which said attorney and agent may deem necessary or desirable to enable the Guarantor to comply with the Securities Act of 1933, as amended (the "Act"), and any rules, regulations and requirements of the Securities and Exchange Commission thereunder, in connection with the registration under the Act of the Exchange Notes (the "Securities"), including, without limitation, the power and authority to sign my name in my capacity as a director and officer to the Registration Statement on Form F-4 to be filed with the Securities and Exchange Commission with respect to such Securities, to any and all amendments or supplements to such Registration Statement, whether such amendments or supplements are filed before or after the effective date of such Registration Statement, to any related Registration Statement filed pursuant to Rule 462 under the Act, and to any and all instruments or documents filed as part of or in connection with such Registration Statement or any and all amendments thereto, whether such amendments are filed before or after the effective date of such Registration Statement; and I hereby ratify and confirm all that such attorney and agent shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF this Power of Attorney has been executed as a deed this 9th day of March 1999. Signed and DELIVERED as a } DEED by John Reeve } /s/ J. Reeve ----------------------------------------- in the presence of: (witness - please sign and print name and address) /s/ S.R. Cadman - ------------------------- S. R. Cadman - ------------------------- 48 More Close - ------------------------- St. Paul's Court - ------------------------- West Kensington WI4 9BN - ------------------------- EXHIBIT 24.1 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being an officer or director, or both, of WILLIS CORROON CORPORATION (the "Issuer"), in his capacity as set forth below, hereby constitutes and appoints MICHAEL P. CHITTY, THOMAS COLRAINE, and BART R. SCHWARTZ and each of them, his true and lawful attorney and agent, to do any and all acts and all things and to execute any and all instruments which said attorney and agent may deem necessary or desirable to enable the Issuer to comply with the Securities Act of 1933, as amended (the "Act"), and any rules, regulations and requirements of the Securities and Exchange Commission thereunder, in connection with the registration under the Act of the Exchange Notes (the "Securities"), including, without limitation, the power and authority to sign the name of each of the undersigned in the capacities indicated below to the Registration Statement on Form F-4 to be filed with the Securities and Exchange Commission with respect to such Securities, to any and all amendments or supplements to such Registration Statement, whether such amendments or supplements are filed before or after the effective date of such Registration Statement, to any related Registration Statement filed pursuant to Rule 462 under the Act, and to any and all instruments or documents filed as part of or in connection with such Registration Statement or any and all amendments thereto, whether such amendments are filed before or after the effective date of such Registration Statement; and each of the undersigned hereby ratifies and confirms all that such attorney and agent shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF this Power of Attorney has been signed below on the dates indicated by the following persons in the capacities indicated with the registrant.
SIGNATURE TITLE DATE - ------------------------------ -------------------------- ------------------- Group Executive Director responsible for North /s/ KENNETH H. PINKSTON American Retail, U.S. - ------------------------------ Wholesale, Asia-Pacific March 8, 1999 Kenneth H. Pinkston and rest of world; Director /s/ BRIAN D. JOHNSON Executive responsible for - ------------------------------ North American Retail; March 9, 1999 Brian D. Johnson Director /s/ CHARLES D. HAMILTON Senior Vice President, - ------------------------------ Director of Finance and March 8, 1999 Charles D. Hamilton Administration; Director /s/ BART R. SCHWARTZ Senior Vice President; - ------------------------------ Corporate Secretary and March 8, 1999 Bart R. Schwartz General Counsel; Director Senior Vice President; /s/ KIM WINDROW Director of Human - ------------------------------ Resources; North America; March 8, 1999 Kim Windrow Director
EX-25.1 37 FORM T-1 Exhibit 25.1 ================================================================================ FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| ------------ THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) One Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) ------------ WILLIS CORROON CORPORATION (Exact name of obligor as specified in its charter) Delaware 13-5654526 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) WILLIS CORROON PARTNERS (Exact name of obligor as specified in its charter) Delaware 62-1761909 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 26 Century Boulevard P.O. Box 305026 Nashville, TN 37214 (Address of principal executive offices) (Zip code) WILLIS CORROON GROUP LIMITED (Exact name of obligor as specified in its charter) England and Wales None (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Ten Trinity Square London EC3P 3AX England (Address of principal executive offices) (Zip code) ------------- 9% Senior Subordinated Notes due 2009 (Title of the indenture securities) ================================================================================ 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. - -------------------------------------------------------------------------------- Name Address - -------------------------------------------------------------------------------- Superintendent of Banks of the 2 Rector Street, New York, State of New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Washington, D.C. 20429 Corporation New York Clearing House New York, New York 10005 Association (B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(D). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 12th day of March, 1999. THE BANK OF NEW YORK By: /s/ REMO J. REALE --------------------------- Name: REMO J. REALE Title: ASSISTANT VICE PRESIDENT EXHIBIT 7 - -------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of One Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business December 31, 1998, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act. Dollar Amounts ASSETS in Thousands Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin.. $3,951,273 Interest-bearing balances........................... 4,134,162 Securities: Held-to-maturity securities......................... 932,468 Available-for-sale securities....................... 4,279,246 Federal funds sold and Securities purchased under agreements to resell................................ 3,161,626 Loans and lease financing receivables: Loans and leases, net of unearned income..................................37,861,802 LESS: Allowance for loan and lease losses...............................619,791 LESS: Allocated transfer risk reserve......................................3,572 Loans and leases, net of unearned income, allowance, and reserve............................ 37,238,439 Trading Assets......................................... 1,551,556 Premises and fixed assets (including capitalized leases)............................................. 684,181 Other real estate owned................................ 10,404 Investments in unconsolidated subsidiaries and associated companies................................ 196,032 Customers' liability to this bank on acceptances outstanding......................................... 895,160 Intangible assets...................................... 1,127,375 Other assets........................................... 1,915,742 ----------- Total assets........................................... $60,077,664 =========== LIABILITIES Deposits: In domestic offices................................. $27,020,578 Noninterest-bearing.......................11,271,304 Interest-bearing..........................15,749,274 In foreign offices, Edge and Agreement subsidiaries, and IBFs............................ 17,197,743 Noninterest-bearing..........................103,007 Interest-bearing..........................17,094,736 Federal funds purchased and Securities sold under agreements to repurchase............................ 1,761,170 Demand notes issued to the U.S.Treasury................ 125,423 Trading liabilities.................................... 1,625,632 Other borrowed money: With remaining maturity of one year or less......... 1,903,700 With remaining maturity of more than one year through three years............................... 0 With remaining maturity of more than three years.... 31,639 Bank's liability on acceptances executed and outstanding......................................... 900,390 Subordinated notes and debentures...................... 1,308,000 Other liabilities...................................... 2,708,852 ----------- Total liabilities...................................... 54,583,127 ----------- EQUITY CAPITAL Common stock........................................... 1,135,284 Surplus................................................ 764,443 Undivided profits and capital reserves................. 3,542,168 Net unrealized holding gains (losses) on available-for-sale securities....................... 82,367 Cumulative foreign currency translation adjustments.... (29,725) ----------- Total equity capital................................... 5,494,537 ----------- Total liabilities and equity capital................... $60,077,664 =========== I, Thomas J. Mastro, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Thomas J. Mastro We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. Thomas A. Reyni | Gerald L. Hassell |- Directors Alan R. Griffith | - -------------------------------------------------------------------------------- EX-99.1 38 EX. 99.1 EXHIBIT 99.1 LETTER OF TRANSMITTAL FOR 9% SENIOR SUBORDINATED NOTES DUE 2009 OF WILLIS CORROON CORPORATION THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00P.M., NEW YORK CITY TIME, ON (THE "EXPIRATION DATE") UNLESS EXTENDED BY WILLIS CORROON CORPORATION. THE EXCHANGE AGENT IS: THE BANK OF NEW YORK
BY REGISTERED OR CERTIFIED MAIL: BY HAND DELIVERY: The Bank of New York The Bank of New York 101 Barclay Street 101 Barclay Street New York, New York 10286 New York, New York 10286 Attn: Marcia Brown, Corporate Trust Operations, 7E Attn: Marcia Brown, Corporate Trust Operations, 7E BY OVERNIGHT DELIVERY: BY FACSIMILE: The Bank of New York The Bank of New York 101 Barclay Street Facsimile No. (212) 815-4699 New York, New York 10286 Attn: Marcia Brown, Corporate Trust Operations, 7E Attn: Marcia Brown, Corporate Trust Operations, 7E
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. The undersigned acknowledges receipt of the Prospectus dated , 1999 (the "Prospectus") of Willis Corroon Corporation (the "Company"), and this Letter of Transmittal (the "Letter of Transmittal"), which together describe the Company's offer (the "Exchange Offer") to exchange its 9% Senior Subordinated Notes due 2009, which have been registered under the Securities Act of 1933, as amended (the "Securities Act") (the "Exchange Notes") for each of its outstanding 9% Senior Subordinated Notes due 2009 (the "Outstanding Notes" and, together with the Exchange Notes, the "Notes") from the holders thereof. The terms of the Exchange Notes are identical in all material respects (including principal amount, interest rate and maturity) to the terms of the Outstanding Notes for which they may be exchanged pursuant to the Exchange Offer, except that the Exchange Notes are freely transferable by holders thereof (except as provided herein or in the Prospectus). Capitalized terms used but not defined herein shall have the same meaning given them in the Prospectus. YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT. The undersigned has checked the appropriate boxes below and signed this Letter of Transmittal to indicate the action the undersigned desires to take with respect to the Exchange Offer. PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY BEFORE CHECKING ANY BOX BELOW. List below the Outstanding Notes to which this Letter of Transmittal relates. If the space provided below is inadequate, the certificate numbers and aggregate principal amounts should be listed on a separate signed schedule affixed hereto.
---------------------------------------------------------------------------------------------------- DESCRIPTION OF OUTSTANDING NOTES TENDERED HEREWITH ---------------------------------------------------------------------------------------------------- AGGREGATE PRINCIPAL AMOUNT REPRESENTED BY PRINCIPAL NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE OUTSTANDING AMOUNT (PLEASE FILL IN) NUMBER(S)* NOTES* TENDERED** - ------------------------------------------------------------------------------------------------------ ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- TOTAL - ------------------------------------------------------------------------------------------------------
* Need not be completed by book-entry holders. ** Unless otherwise indicated, the holder will be deemed to have tendered the full aggregate principal amount represented by such Outstanding Notes. See instruction 2. Holders of Outstanding Notes whose Outstanding Notes are not immediately available or who cannot deliver all other required documents to the Exchange Agent on or prior to the Expiration Date or who cannot complete the procedures for book-entry transfer on a timely basis, must tender their Outstanding Notes according to the guaranteed delivery procedures set forth in the Prospectus. Unless the context otherwise requires, the term "holder" for purposes of this Letter of Transmittal means any person in whose name Outstanding Notes are registered or any other person who has obtained a properly completed bond power from the registered holder or any person whose Outstanding Notes are held of record by The Depository Trust Company ("DTC"). / / CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING: Name of Registered Holder(s) _______________________________________________ Name of Eligible Institution that Guaranteed Delivery ______________________ Date of Execution of Notice of Guaranteed Delivery _________________________ If Delivered by Book-Entry Transfer: Name of Tendering Institution ______________________________________________ Account Number _____________________________________________________________ Transaction Code Number ____________________________________________________ 2 / / CHECK HERE IF EXCHANGE NOTES ARE TO BE DELIVERED TO PERSON OTHER THAN PERSON SIGNING THIS LETTER OF TRANSMITTAL: Name _______________________________________________________________________ Address ____________________________________________________________________ / / CHECK HERE IF EXCHANGE NOTES ARE TO BE DELIVERED TO ADDRESS DIFFERENT FROM THAT LISTED ELSEWHERE IN THIS LETTER OF TRANSMITTAL: Name _______________________________________________________________________ Address ____________________________________________________________________ / / CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED OUTSTANDING NOTES FOR ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING ACTIVITIES AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name: ______________________________________________________________________ Address: ___________________________________________________________________ If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Notes. If the undersigned is a broker-dealer that will receive Exchange Notes for its own account in exchange for Outstanding Notes that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Notes; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. A broker-dealer may not participate in the Exchange Offer with respect to Outstanding Notes acquired other than as a result of market-making activities or other trading activities. Any holder who is an "affiliate" of the Company or who has an arrangement or understanding with respect to the distribution of the Exchange Notes to be acquired pursuant to the Exchange Offer, or any broker-dealer who purchased Outstanding Notes from the Company to resell pursuant to Rule 144A under the Securities Act or any other available exemption under the Securities Act must comply with the registration and prospectus delivery requirements under the Securities Act. 3 PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: Upon the terms and subject to the conditions of the Exchange Offer, the undersigned hereby tenders to the Company the principal amount of the Outstanding Notes indicated above. Subject to, and effective upon, the acceptance for exchange of all or any portion of the Outstanding Notes tendered herewith in accordance with the terms and conditions of the Exchange Offer (including, if the Exchange Offer is extended or amended, the terms and conditions of any such extension or amendment), the undersigned hereby exchanges, assigns and transfers to, or upon the order of, the Company all right, title and interest in and to such Outstanding Notes as are being tendered herewith. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent as its true and lawful agent and attorney-in-fact of the undersigned (with full knowledge that the Exchange Agent also acts as the agent of the Company, in connection with the Exchange Offer) to cause the Outstanding Notes to be assigned, transferred and exchanged. The undersigned represents and warrants that it has full power and authority to tender, exchange, assign and transfer the Outstanding Notes and to acquire Exchange Notes issuable upon the exchange of such tendered Outstanding Notes, and that, when the same are accepted for exchange, the Company will acquire good and unencumbered title to the tendered Outstanding Notes, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim. The undersigned also warrants that it will, upon request, execute and deliver any additional documents deemed by the Exchange Agent or the Company to be necessary or desirable to complete the exchange, assignment and transfer of the tendered Outstanding Notes or transfer ownership of such Outstanding Notes on the account books maintained by the book-entry transfer facility. The undersigned further agrees that acceptance of any and all validly tendered Outstanding Notes by the Company and the issuance of Exchange Notes in exchange therefor shall constitute performance in full by the Company of its obligations under the Exchange and Registration Rights Agreement dated February 2, 1999, among the Company, Willis Corroon Partners, Willis Corroon Group Limited, Chase Securities Inc., and Chase Manhattan International Limited (the "Registration Rights Agreement"), and that the Company shall have no further obligations or liabilities thereunder except as provided in the first paragraph of Section 2 of such agreement. The undersigned will comply with its obligations under the Registration Rights Agreement. The undersigned has read and agrees to all terms of the Exchange Offer. The Exchange Offer is subject to certain conditions as set forth in the Prospectus under the caption "The Exchange Offer--Certain Conditions to the Exchange Offer." The undersigned recognizes that as a result of these conditions (which may be waived, in whole or in part, by the Company), as more particularly set forth in the Prospectus, the Company may not be required to exchange any of the Outstanding Notes tendered hereby and, in such event, the Outstanding Notes not exchanged will be returned to the undersigned at the address shown above, promptly following the expiration or termination of the Exchange Offer. In addition, the Company may amend the Exchange Offer at any time prior to the Expiration Date if any of the conditions set forth under "The Exchange Offer--Certain Conditions to the Exchange Offer" occur. The undersigned understands that tenders of Outstanding Notes pursuant to any one of the procedures described in the Prospectus and in the instructions attached hereto will, upon the Company's acceptance for exchange of such tendered Outstanding Notes, constitute a binding agreement between the undersigned and the Company upon the terms and subject to the conditions of the Exchange Offer. The undersigned recognizes that, under circumstances set forth in the Prospectus, the Company may not be required to accept for exchange any of the Outstanding Notes. By tendering shares of Outstanding Notes and executing this Letter of Transmittal, the undersigned represents that Exchange Notes acquired in the exchange will be obtained in the ordinary course of business of the undersigned, that the undersigned has no arrangement or understanding with any person to participate in a distribution (within the meaning of the Securities Act) of such Exchange Notes, that the undersigned is not an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act and that if the undersigned or the person receiving such Exchange Notes, whether or not such person is the undersigned, is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Notes. If the undersigned or the person receiving such Exchange Notes, whether or not such person is the undersigned, is a broker-dealer that will receive Exchange Notes for its own account in exchange for Outstanding Notes that were acquired as a result of 4 market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Notes; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. If the undersigned is a person in the United Kingdom, the undersigned represents that its ordinary activities involve it in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of its business. Any holder of Outstanding Notes using the Exchange Offer to participate in a distribution of the Exchange Notes (i) cannot rely on the position of the staff of the Securities and Exchange Commission enunciated in its interpretive letter with respect to Exxon Capital Holdings Corporation (available April 13, 1989) or similar interpretive letters and (ii) must comply with the registration and prospectus requirements of the Securities Act in connection with a secondary resale transaction. All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned and every obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Tendered Outstanding Notes may be withdrawn at any time prior to the Expiration Date in accordance with the terms of this Letter of Transmittal. Except as stated in the Prospectus, this tender is irrevocable. Certificates for all Exchange Notes delivered in exchange for tendered Outstanding Notes and any Outstanding Notes delivered herewith but not exchanged, and registered in the name of the undersigned, shall be delivered to the undersigned at the address shown below the signature of the undersigned. The undersigned, by completing the box entitled "Description of Outstanding Notes Tendered Herewith" above and signing this letter, will be deemed to have tendered the Outstanding Notes as set forth in such box. 5 TENDERING HOLDER(S) SIGN HERE (Complete accompanying substitute Form W-9) MUST BE SIGNED BY REGISTERED HOLDER(S) EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATE(S) FOR OUTSTANDING NOTES HEREBY TENDERED OR IN WHOSE NAME OUTSTANDING NOTES ARE REGISTERED ON THE BOOKS OF DTC OR ONE OF ITS PARTICIPANTS, OR BY ANY PERSON(S) AUTHORIZED TO BECOME THE REGISTERED HOLDER(S) BY ENDORSEMENTS AND DOCUMENTS TRANSMITTED HEREWITH. IF SIGNATURE IS BY A TRUSTEE, EXECUTOR, ADMINISTRATOR, GUARDIAN, ATTORNEY-IN-FACT, OFFICER OF A CORPORATION OR OTHER PERSON ACTING IN A FIDUCIARY OR REPRESENTATIVE CAPACITY, PLEASE SET FORTH THE FULL TITLE OF SUCH PERSON. SEE INSTRUCTION 3. ________________________________________________________________________________ ________________________________________________________________________________ (SIGNATURE(S) OF HOLDER(S)) Date ___________________________________________________________________________ Name(s) ________________________________________________________________________ ________________________________________________________________________________ (PLEASE PRINT) Capacity (full title) __________________________________________________________ Address ________________________________________________________________________ ________________________________________________________________________________ (INCLUDING ZIP CODE) Daytime Area Code and Telephone No. ____________________________________________ Taxpayer Identification No. ____________________________________________________ 6 GUARANTEE OF SIGNATURE(S) (IF REQUIRED--SEE INSTRUCTION 3) Authorized Signature ___________________________________________________________ Dated _____________________________________ Name ___________________________________________________________________________ Title __________________________________________________________________________ Name of Firm ___________________________________________________________________ Address ________________________________________________________________________ ________________________________________________________________________________ (INCLUDE ZIP CODE) Area Code and Telephone No. ____________________________________________________ SPECIAL ISSUANCE INSTRUCTIONS (SEE INSTRUCTIONS 3 AND 4) To be completed ONLY if Exchange Notes or Outstanding Notes not tendered are to be issued in the name of someone other than the registered holder of the Outstanding Notes whose name(s) appear(s) above. Issue / / Outstanding Notes not tendered to: / / Exchange Notes to: Name(s) ________________________________________________________________________ Address ________________________________________________________________________ ________________________________________________________________________________ (INCLUDE ZIP CODE) Daytime Area Code and Telephone No. ____________________________________________ Tax Identification No. _________________________________________________________ 7 SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 3 AND 4) To be completed ONLY if Exchange Notes or Outstanding Notes not tendered are to be sent to someone other than the registered holder of the Outstanding Notes whose name(s) appear(s) above, or such registered holder(s) at an address other than that shown above. Mail / / Outstanding Notes not tendered to: / / Exchange Notes to: Name(s) ____________________________________________________________________ Address ____________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ (INCLUDE ZIP CODE) Area Code and Telephone No. ________________________________________________ 8 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER 1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY PROCEDURES. A holder of Outstanding Notes may tender the same by (i) properly completing and signing this Letter of Transmittal or a facsimile hereof (all references in the Prospectus to the Letter of Transmittal shall be deemed to include a facsimile thereof) and delivering the same, together with the certificate or certificates, if applicable, representing the Outstanding Notes being tendered and any required signature guarantees and any other documents required by this Letter of Transmittal, to the Exchange Agent at its address set forth above on or prior to the Expiration Date, or (ii) complying with the procedure for book-entry transfer described below, or (iii) complying with the guaranteed delivery procedures described below. Holders of Outstanding Notes may tender Outstanding Notes by book-entry transfer by crediting the Outstanding Notes to the Exchange Agent's account at DTC in accordance with DTC's Automated Tender Offer Program ("ATOP") and by complying with applicable ATOP procedures with respect to the Exchange Offer. DTC participants that are accepting the Exchange Offer should transmit their acceptance to DTC, which will edit and verify the acceptance and execute a book-entry delivery to the Exchange Agent's account at DTC. DTC will then send a computer-generated message (an "Agent's Message") to the Exchange Agent for its acceptance in which the holder of the Outstanding Notes acknowledges and agrees to be bound by the terms of, and makes the representations and warranties contained in, this Letter of Transmittal, the DTC participant confirms on behalf of itself and the beneficial owners of such Outstanding Notes all provisions of this Letter of Transmittal (including any representations and warranties) applicable to it and such beneficial owner as fully as if it had completed the information required herein and executed and transmitted this Letter of Transmittal to the Exchange Agent. Delivery of the Agent's Message by DTC will satisfy the terms of the Exchange Offer as to execution and delivery of a Letter of Transmittal by the participant identified in the Agent's Message. DTC participants may also accept the Exchange Offer by submitting a Notice of Guaranteed Delivery through ATOP. THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE OUTSTANDING NOTES AND ANY OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER, AND EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. IF SUCH DELIVERY IS BY MAIL, IT IS SUGGESTED THAT REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, BE USED. IN ALL CASES SUFFICIENT TIME SHOULD BE ALLOWED TO PERMIT TIMELY DELIVERY. NO OUTSTANDING NOTES OR LETTERS OF TRANSMITTAL SHOULD BE SENT TO THE COMPANY. Holders whose Outstanding Notes are not immediately available or who cannot deliver their Outstanding Notes and all other required documents to the Exchange Agent on or prior to the Expiration Date or comply with book-entry transfer procedures on a timely basis must tender their Outstanding Notes pursuant to the guaranteed delivery procedure set forth in the Prospectus. Pursuant to such procedure: (i) such tender must be made by or through an Eligible Institution (as defined below); (ii) on or prior to the Expiration Date, the Exchange Agent must have received from such Eligible Institution a letter, telegram or facsimile transmission (receipt confirmed by telephone and an original delivered by guaranteed overnight courier) setting forth the name and address of the tendering holder, the names in which such Outstanding Notes are registered, and, if applicable, the certificate numbers of the Outstanding Notes to be tendered; and (iii) all tendered Outstanding Notes (or a confirmation of any book-entry transfer of such Outstanding Notes into the Exchange Agent's account at a book-entry transfer facility) as well as this Letter of Transmittal and all other documents required by this Letter of Transmittal, must be received by the Exchange Agent within three New York Stock Exchange trading days after the date of execution of such letter, telegram or facsimile transmission, all as provided in the Prospectus. No alternative, conditional, irregular or contingent tenders will be accepted. All tendering holders, by execution of this Letter of Transmittal (or facsimile thereof), shall waive any right to receive notice of the acceptance of the Outstanding Notes for exchange. 2. PARTIAL TENDERS; WITHDRAWALS. If less than the entire principal amount of Outstanding Notes evidenced by a submitted certificate is tendered, the tendering holder must fill in the aggregate principal amount of Outstanding Notes tendered in the box entitled 9 "Description of Outstanding Notes Tendered Herewith." A newly issued certificate for the Outstanding Notes submitted but not tendered will be sent to such holder as soon as practicable after the Expiration Date. All Outstanding Notes delivered to the Exchange Agent will be deemed to have been tendered unless otherwise clearly indicated. If not yet accepted, a tender pursuant to the Exchange Offer may be withdrawn prior to the Expiration Date. To be effective with respect to the tender of Outstanding Notes, a written notice of withdrawal must: (i) be received by the Exchange Agent at one of the addresses for the Exchange Agent set forth above before the Company notifies the Exchange Agent that it has accepted the tender of Outstanding Notes pursuant to the Exchange Offer; (ii) specify the name of the person who tendered the Outstanding Notes to be withdrawn; (iii) identify the Outstanding Notes to be withdrawn (including the principal amount of such Outstanding Notes, or, if applicable, the certificate numbers shown on the particular certificates evidencing such Outstanding Notes and the principal amount of Outstanding Notes represented by such certificates); (iv) include a statement that such holder is withdrawing its election to have such Outstanding Notes exchanged; and (v) be signed by the holder in the same manner as the original signature on this Letter of Transmittal (including any required signature guarantee). The Exchange Agent will return the properly withdrawn Outstanding Notes promptly following receipt of notice of withdrawal. If Outstanding Notes have been tendered pursuant to the procedure for book-entry transfer, any notice of withdrawal must specify the name and number of the account at the book-entry transfer facility to be credited with the withdrawn Outstanding Notes or otherwise comply with the book-entry transfer facility's procedures. All questions as to the validity of notices of withdrawals, including time of receipt, will be determined by the Company, and such determination will be final and binding on all parties. Any Outstanding Notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offer. Any Outstanding Notes which have been tendered for exchange but which are not exchanged for any reason will be returned to the holder thereof without cost to such holder (or, in the case of Outstanding Notes tendered by book-entry transfer into the Exchange Agent's account at the book entry transfer facility pursuant to the book-entry transfer procedures described above, such Outstanding Notes will be credited to an account with such book-entry transfer facility specified by the holder) as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Outstanding Notes may be retendered by following one of the procedures described under the caption "The Exchange Offer--Procedures for Tendering" in the Prospectus at any time prior to the Expiration Date. 3. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed by the registered holder(s) of the Outstanding Notes tendered hereby, the signature must correspond with the name(s) as written on the face of the certificates without alteration, enlargement or any change whatsoever. If any of the Outstanding Notes tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If a number of Outstanding Notes registered in different names are tendered, it will be necessary to complete, sign and submit as many separate copies of this Letter of Transmittal as there are different registrations of Outstanding Notes. When this Letter of Transmittal is signed by the registered holder or holders (which term, for the purposes described herein, shall include the book-entry transfer facility whose name appears on a security listing as the owner of the Outstanding Notes) of Outstanding Notes listed and tendered hereby, no endorsements of certificates or separate written instruments of transfer or exchange are required. If this Letter of Transmittal is signed by a person other than the registered holder or holders of the Outstanding Notes listed, such Outstanding Notes must be endorsed or accompanied by separate written instruments of transfer or exchange in form satisfactory to the Company and duly executed by the registered holder, in either case signed exactly as the name or names of the registered holder or holders appear(s) on the Outstanding Notes. If this Letter of Transmittal, any certificates or separate written instruments of transfer or exchange are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary 10 or representative capacity, such persons should so indicate when signing, and, unless waived by the Company, proper evidence satisfactory to the Company of their authority so to act must be submitted. Endorsements on certificates or signatures on separate written instruments of transfer or exchange required by this Instruction 3 must be guaranteed by an Eligible Institution. Signatures on this Letter of Transmittal must be guaranteed by an Eligible Institution, unless Outstanding Notes are tendered: (i) by a holder who has not completed the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" on this Letter of Transmittal; or (ii) for the account of an Eligible Institution (as defined below). In the event that the signatures in this Letter of Transmittal or a notice of withdrawal, as the case may be, are required to be guaranteed, such guarantees must be by an eligible guarantor institution which is a member of a firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or another "eligible institution" within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (an "Eligible Institution"). If Outstanding Notes are registered in the name of a person other than the signer of this Letter of Transmittal, the Outstanding Notes surrendered for exchange must be endorsed by, or be accompanied by a written instrument or instruments of transfer or exchange, in satisfactory form as determined by the Company, in its sole discretion, duly executed by the registered holder with the signature thereon guaranteed by an Eligible Institution. 4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering holders should indicate, as applicable, the name and address to which the Exchange Notes or certificates for Outstanding Notes not exchanged are to be issued or sent, if different from the name and address of the person signing this Letter of Transmittal. In the case of issuance in a different name, the tax identification number of the person named must also be indicated. Holders tendering Outstanding Notes by book-entry transfer may request that Outstanding Notes not exchanged be credited to such account maintained at the book-entry transfer facility as such holder may designate. 5. TRANSFER TAXES. The Company shall pay all transfer taxes, if any, applicable to the transfer and exchange of Outstanding Notes to it or its order pursuant to the Exchange Offer. If a transfer tax is imposed for any reason other than the transfer and exchange of Outstanding Notes to the Company or its order pursuant to the Exchange Offer, the amount of any such transfer taxes (whether imposed on the registered holder or any other person) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exception therefrom is not submitted herewith the amount of such transfer taxes will be billed directly to such tendering holder. 6. WAIVER OF CONDITIONS. The Company reserves the absolute right to waive, in whole or in part, any of the conditions to the Exchange Offer set forth in the Prospectus. 7. MUTILATED, LOST, STOLEN OR DESTROYED SECURITIES. Any holder whose Outstanding Notes have been mutilated, lost, stolen or destroyed, should contact the Exchange Agent at the address indicated below for further instructions. 8. SUBSTITUTE FORM W-9 Each holder of Outstanding Notes whose Outstanding Notes are accepted for exchange (or other payee) is required to provide a correct taxpayer identification number ("TIN"), generally the holder's Social Security or federal employer identification number, and certain other information, on Substitute Form W-9, which is provided under "Important Tax Information" below, and to certify that the holder (or other payee) is not subject to backup withholding. Failure to provide the information on the Substitute Form W-9 may subject the holder (or other payee) to a $50 penalty imposed by the Internal Revenue Service and 31% federal income tax backup withholding on payments made in connection with the Outstanding Notes. The box in Part 3 of the Substitute Form W-9 may be checked if the holder (or other payee) has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 3 is checked and a TIN is not provided by the time any payment is made in connection with the Outstanding Notes, 31% of all such payments will be withheld until a TIN is provided. 11 9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the procedure for tendering, as well as requests for additional copies of the Prospectus and this Letter of Transmittal, may be directed to the Exchange Agent at the address and telephone number set forth above. In addition, all questions relating to the Exchange Offer, as well as requests for assistance or additional copies of the Prospectus and this Letter of Transmittal, may be directed to the Exchange Agent at the address and telephone number indicated above. IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE OR COPY THEREOF (TOGETHER WITH CERTIFICATES OF OUTSTANDING NOTES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE. IMPORTANT TAX INFORMATION Under U.S. Federal income tax law, a holder of Outstanding Notes whose Outstanding Notes are accepted for exchange may be subject to backup withholding unless the holder provides The Bank of New York, as Paying Agent (the "Paying Agent"), through the Exchange Agent, with either (i) such holder's correct taxpayer identification number ("TIN") on Substitute Form W-9 attached hereto, certifying that the TIN provided on Substitute Form W-9 is correct (or that such holder of Outstanding Notes is awaiting a TIN) and that (A) the holder of Outstanding Notes has not been notified by the Internal Revenue Service that he or she is subject to backup withholding as a result of a failure to report all interest or dividends or (B) the Internal Revenue Service has notified the holder of Outstanding Notes that he or she is no longer subject to backup withholding; or (ii) an adequate basis for exemption from backup withholding. If such holder of Outstanding Notes is an individual, the TIN is such holder's social security number. If the Paying Agent is not provided with the correct TIN, the holder of Outstanding Notes may be subject to certain penalties imposed by the Internal Revenue Service. Certain holders of Outstanding Notes (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. However, exempt holders of Outstanding Notes should indicate their exempt status on Substitute Form W-9. For example, a corporation must complete the Substitute Form W-9, providing its TIN and indicating that it is exempt from backup withholding. In order for a foreign individual to qualify as an exempt recipient, the holder must submit a Form W-8, signed under penalties of perjury, attesting to that individual's exempt status. A Form W-8 can be obtained from the Paying Agent. See the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for more instructions. If backup withholding applies, the Paying Agent is required to withhold 31% of any such payments made to the holder of Outstanding Notes or other payee. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. The box in Part 3 of the Substitute Form W-9 may be checked if the surrendering holder of Outstanding Notes has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 3 is checked, the holder of Outstanding Notes or other payee must also complete the Certificate of Awaiting Taxpayer Identification Number below in order to avoid backup withholding. Notwithstanding that the box in Part 3 is checked and the Certificate of Awaiting Taxpayer Identification Number is completed, the Paying Agent will withhold 31% of all payments made prior to the time a properly certified TIN is provided to the Paying Agent. The holder of Outstanding Notes is required to give the Paying Agent the TIN (e.g., social security number or employer identification number) of the record owner of the Outstanding Notes. If the Outstanding Notes are in more than one name or are not in the name of the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional guidance on which number to report. 12 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER FOR THE PAYEE (YOU) TO GIVE THE PAYER.--Social security numbers have nine digits separated by two hyphens: i.e., 000-00-0000. Employee identification numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the number to give the payer. All "Section" references are to the Internal Revenue Code of 1986, as amended. "IRS" is the Internal Revenue Service.
- ----------------------------------------------------- GIVE THE SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT: NUMBER OF-- - ----------------------------------------------------- 1. Individual The individual 2. Two or more The actual owner of individuals (joint the account or, if account) combined funds, the first individual on the account(1) 3. Custodian account of The minor(2) a minor (Uniform Gift to Minors Act) 4. a. The usual The revocable savings grantor-trustee(1) trust account (grantor is also trustee) b. So-called trust The actual owner(1) account that is not a legal or valid trust under state law 5. Sole proprietorship The owner(3) - ----------------------------------------------------- GIVE THE EMPLOYER IDENTIFICATION FOR THIS TYPE OF ACCOUNT: NUMBER OF-- - ----------------------------------------------------- 6. Sole proprietorship The owner(3) 7. A valid trust, The legal entity(4) estate, or pension trust 8. Corporate The corporation 9. Association, club, The organization religious, charitable, educational, or other tax-exempt organization account 10. Partnership The partnership 11. A broker or The broker or registered nominee nominee 12. Account with the The public entity Department of Agriculture in the name of a public entity (such as a state or local government, school district, or prison) that receives agricultural program payments
- --------------------------------------------- - --------------------------------------------- 1 List first and circle the name of the person whose number you furnish. If only one person on a joint account has a social security number, that person's number must be furnished. 2 Circle the minor's name and furnish the minor's social security number. 3 You must show your individual name, but you may also enter your business or "doing business as" name. You may use either your social security number or your employer identification number (if you have one). 4 List first and circle the name of the legal trust, estate, or pension trust. (Do not furnish the taxpayer identification number of the personal representative or trustee unless the legal entity itself is not designated in the account title.) NOTE: IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE NAME, THE NUMBER WILL BE CONSIDERED TO BE THAT OF THE FIRST NAME LISTED. 13 OBTAINING A NUMBER If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5. Application for a Social Security Card, at the local Social Administration office, or Form SS-4, Application for Employer Identification Number, by calling 1 (800) TAX-FORM, and apply for a number. PAYEES EXEMPT FROM BACKUP WITHHOLDING PAYEES SPECIFICALLY EXEMPTED FROM WITHHOLDING INCLUDE: - - An organization exempt from tax under Section 501(a), an individual retirement account (IRA), or a custodial account under Section 403(b)(7), if the account satisfies the requirements of Section 401(f)(2). - - The United States or a state thereof, the District of Columbia, a possession of the United States, or a political subdivision or wholly-owned agency or instrumentality of any one or more of the foregoing. - - An international organization or any agency or instrumentality thereof. - - A foreign government and any political subdivision, agency or instrumentality thereof. - - Payees that may be exempt from backup withholding include: - - A corporation. - - A financial institution. - - A dealer in securities or commodities required to register in the United States, the District of Columbia, or a possession of the United States. - - A real estate investment trust. - - A common trust fund operated by a bank under Section 584(a). - - An entity registered at all times during the tax year under the Investment Company Act of 1940. - - A middleman known in the investment community as a nominee or who is listed in the most recent publication of the American Society of Corporate Secretaries, Inc., Nominee List. - - A futures commission merchant registered with the Commodity Futures Trading Commission. - - A foreign central bank of issue. PAYMENTS OF DIVIDENDS AND PATRONAGE DIVIDENDS GENERALLY EXEMPT FROM BACKUP WITHHOLDING INCLUDE: - - Payments to nonresident aliens subject to withholding under Section 1441. - - Payments to partnerships not engaged in a trade or business in the United States and that have at least one nonresident alien partner. - - Payments of patronage dividends not paid in money. - - Payments made by certain foreign organizations. - - Section 404(k) payments made by an ESOP. PAYMENTS OF INTEREST GENERALLY EXEMPT FROM BACKUP WITHHOLDING INCLUDE: - - Payments of interest on obligations issued by individuals. NOTE: You may be subject to backup withholding if this interest is $600 or more and you have not provided your correct taxpayer identification number to the payer. - - Payments of tax-exempt interest (including exempt-interest dividends under Section 852). - - Payments described in Section 6049(b)(5) to nonresident aliens. - - Payments on tax-free covenant bonds under Section 1451. - - Payments made by certain foreign organizations. - - Mortgage interest paid to you. Certain payments, other than payments of interest, dividends, and patronage dividends, that are exempt from information reporting are also exempt from backup withholding. For details, see the regulations under sections 6041, 6041A, 6042, 6044, 6045, 6049, 6050A and 6050N. EXEMPT PAYEES DESCRIBED ABOVE MUST FILE FORM W-9 OR A SUBSTITUTE FORM W-9 TO AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" IN PART II OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE OF INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. PRIVACY ACT NOTICE.--Section 6109 requires you to provide your correct taxpayer identification number to payers, who must report the payments to the IRS. The IRS uses the number for identification purposes and may also provide this information to various government agencies for tax enforcement or litigation purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to payer. Certain penalties may also apply. PENALTIES (1) FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you make a false statement with no reasonable basis that results in no backup withholding, you are subject to a $500 penalty. (3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX 14 CONSULTANT OR THE INTERNAL REVENUE SERVICE. PAYER'S NAME: SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN -------------------- FORM W-9 THE BOX AT RIGHT AND CERTIFY BY Social Security Number DEPARTMENT OF THE TREASURY SIGNING AND DATING BELOW. OR INTERNAL REVENUE SERVICE ------------------------- Employer Identification Number Payer's Request for PART 2 PART 3-- Taxpayer CERTIFICATION--Under the penalties / / Awaiting TIN Identification of perjury, I certify that: Number (TIN) (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me), and (2) I am not subject to backup withholding because (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding. CERTIFICATE INSTRUCTIONS--You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because of under-reporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out such item (2). SIGNATURE > SIGN HERE DATE
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER, PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (1) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office, or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of payment, 31% of all reportable payments made to me will be withheld. Signature ------------------------------------- Date ------------------------, 1998
15 EX-99.2 39 EX. 99.2 NOTICE OF GUARANTEED DELIVERY FOR TENDER OF ALL OUTSTANDING 9% SENIOR SUBORDINATED NOTES DUE 2009 IN EXCHANGE FOR NEW 9% SENIOR SUBORDINATED NOTES DUE 2009 OF WILLIS CORROON CORPORATION Registered holders of outstanding 9% Senior Subordinated Notes due 2009 (the "Outstanding Notes") who wish to tender their Outstanding Notes in exchange for a like principal amount of new 9% Senior Subordinated Notes due 2009 (the "Exchange Notes") and whose Outstanding Notes are not immediately available or who cannot deliver their Outstanding Notes and Letter of Transmittal (and any other documents required by the Letter of Transmittal) to The Bank of New York (the "Exchange Agent") prior to the Expiration Date, may use this Notice of Guaranteed Delivery or one substantially equivalent hereto. This Notice of Guaranteed Delivery may be delivered by hand or sent by facsimile transmission (receipt confirmed by telephone and an original delivered by guaranteed overnight courier) or mail to the Exchange Agent. See "The Exchange Offer--Procedures for Tendering" in the Prospectus. THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS: THE BANK OF NEW YORK
BY HAND DELIVERY: BY MAIL: The Bank of New York (INSURED OR REGISTERED RECOMMENDED) 101 Barclay Street The Bank of New York New York, New York 10286 101 Barclay Street Attn: Marcia Brown, New York, New York 10286 Corporate Trust Operations, 7E Attn: Marcia Brown, Corporate Trust Operations, 7E BY OVERNIGHT COURIER: BY FACSIMILE: The Bank of New York (212) 815-4699 Attn: Marcia Brown, 101 Barclay Street Corporate Trust Operations, 7E New York, New York 10286 Attn: Marcia Brown, Corporate Trust Operations, 7E CONFIRM BY TELEPHONE: (212) 815-3428
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. This Notice of Guaranteed Delivery is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an eligible institution (as defined in the Prospectus), such signature guarantee must appear in the applicable space provided on the Letter of Transmittal for Guarantee of Signatures. Ladies and Gentlemen: The undersigned hereby tenders the principal amount of Outstanding Notes indicated below, upon the terms and subject to the conditions contained in the Prospectus dated , 1999 of Willis Corroon Corporation (the "Prospectus"), receipt of which is hereby acknowledged. DESCRIPTION OF OUTSTANDING NOTES TENDERED
NAME AND ADDRESS OF CERTIFICATE NUMBER(S) REGISTERED HOLDER AS IT OF OUTSTANDING NOTES APPEARS ON THE TENDERED (OR ACCOUNT PRINCIPAL AMOUNT OF NAME OF TENDERING OUTSTANDING NOTES NUMBER AT BOOK- OUTSTANDING NOTES HOLDER (PLEASE PRINT) ENTRY FACILITY) TENDERED - --------------------------- --------------------------- --------------------------- ---------------------------
SIGN HERE NAME OF REGISTERED OR ACTING HOLDER: ___________________________________________ SIGNATURE(S): __________________________________________________________________ NAME(S) (PLEASE PRINT): ________________________________________________________ ADDRESS: _______________________________________________________________________ ________________________________________________________________________________ TELEPHONE NUMBER: ______________________________________________________________ DATE: __________________________________________________________________________ IF SHARES OF OUTSTANDING NOTES WILL BE TENDERED BY BOOK-ENTRY TRANSFER, PROVIDE THE FOLLOWING INFORMATION: DTC ACCOUNT NUMBER: ________________________________________________________ DATE: ______________________________________________________________________ THE FOLLOWING GUARANTEE MUST BE COMPLETED GUARANTEE OF DELIVERY (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a member of a recognized signature guarantee medallion program within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, hereby guarantees to deliver to the Exchange Agent at one of its addresses set forth on the reverse hereof, the certificates representing the Outstanding Notes (or a confirmation of book-entry transfer of such Outstanding Notes into the Exchange Agent's account at the book-entry transfer facility), together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guarantees, and any other documents required by the Letter of Transmittal within three New York Stock Exchange trading days after the Expiration Date (as defined in the Letter of Transmittal). Name of Firm: (Authorized Signature) Address: Title: Name: (Zip Code) (Please type or print) Area Code and Telephone No.: Date:
NOTE: DO NOT SEND OUTSTANDING NOTES WITH THIS NOTICE OF GUARANTEED DELIVERY. OUTSTANDING NOTES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. -----END PRIVACY-ENHANCED MESSAGE-----