exv4w35



 



EXHIBIT 4.35


DATED 12 March 2003




NORTHERN STATES AGENCY, INC.



- and -



CONVERIUM AG



- and -



MÜNCHENER RÜCKVERSICHERUNGS-GESELLSCHAFT

AKTIENGESELLSCHAFT IN MÜNCHEN



- and -



ROYAL & SUN ALLIANCE INSURANCE plc



- and -



GLOBAL AEROSPACE UNDERWRITING MANAGERS LIMITED







SHAREHOLDERS’ AGREEMENT












 






	 	 	 	 	 	 	 	 	 
	Contents	 	 	 	Page
	1.
	 	DEFINITIONS AND INTERPRETATION	 	 	2	 
	2.
	 	INITIAL DIRECTORS	 	 	13	 
	3.
	 	BUSINESS OF THE GLOBAL GROUP	 	 	15	 
	4.
	 	RESERVED MATTERS	 	 	17	 
	5.
	 	MANAGEMENT APPOINTMENTS	 	 	22	 
	6.
	 	PROCEEDINGS OF DIRECTORS	 	 	25	 
	7.
	 	ACCESS TO INFORMATION AND ACCOUNTS	 	 	27	 
	8.
	 	BUSINESS PLAN	 	 	30	 
	9.
	 	ISSUE OF SHARES	 	 	31	 
	10.
	 	RESTRICTIONS ON DEALING WITH SHARES	 	 	35	 
	11.
	 	PERMITTED TRANSFERS	 	 	35	 
	12.
	 	OTHER VOLUNTARY TRANSFERS	 	 	36	 
	13.
	 	TRANSFER OF SHARES ON DEFAULT	 	 	44	 
	14.
	 	INELIGIBLE PERSONS	 	 	48	 
	15.
	 	COMPLETION OF SHARE TRANSFERS	 	 	48	 
	16.
	 	CONSENT TO TRANSFER FOR THE PURPOSES OF THE NEW ARTICLES AND SHAREHOLDER LOANS	 	 	49	 
	17.
	 	EFFECT OF DEED OF ADHERENCE	 	 	50	 
	18.
	 	PRESCRIBED VALUE	 	 	50	 
	19.
	 	SHAREHOLDER UNDERTAKINGS	 	 	51	 
	20.
	 	UNDERTAKING BY THE COMPANY	 	 	54	 
	21.
	 	REGULATORY MATTERS	 	 	54	 
	22.
	 	CONFIDENTIALITY	 	 	54	 
	23.
	 	ANNOUNCEMENTS	 	 	57	 
	24.
	 	TERMINATION	 	 	57	 








 




	 	 	 	 	 	 	 	 	 	 	 	 	 
	25.
	 	ASSIGNMENT	 	 	 	 	 	 	58	 
	26.
	 	ENTIRE AGREEMENT	 	 	 	 	 	 	58	 
	27.
	 	NOTICES	 	 	 	 	 	 	59	 
	28.
	 	REMEDIES AND WAIVERS	 	 	 	 	 	 	60	 
	29.
	 	NO PARTNERSHIP	 	 	 	 	 	 	61	 
	30.
	 	COSTS AND EXPENSES	 	 	 	 	 	 	61	 
	31.
	 	COUNTERPARTS	 	 	 	 	 	 	62	 
	32.
	 	CHOICE OF GOVERNING LAW	 	 	 	 	 	 	62	 
	33.
	 	JURISDICTION	 	 	 	 	 	 	62	 
	34.
	 	DISPUTE RESOLUTION	 	 	 	 	 	 	63	 
	SCHEDULE 1	 	FORM OF DEED OF ADHERENCE	 	 	 	 	65	 
	ANNEX 1	 	FORM OF NEW ARTICLES OF ASSOCIATION	 	 	 	 	69	 








 



THIS AGREEMENT is made on 12 March 2003



BETWEEN:



	1.	 	NORTHERN STATES AGENCY, INC., a company incorporated in Minnesota, USA,
whose registered office is at 2145 Ford Parkway, Suite 202, St Paul,
Minnesota, United States of America 55116-1862 (“NSA”);
	 
	2.	 	CONVERIUM AG, a company incorporated in Switzerland, whose registered
office is at General Guisan-Quai 26, 8022 Zürich, Switzerland
(“Converium”);
	 
	3.	 	MÜNCHENER RÜCKVERSICHERUNGS-GESELLSCHAFT AKTIENGESELLSCHAFT IN MÜNCHEN, a
company incorporated in Germany whose principal office is at Königinstraße
107, 80802 München, Germany (“Munich Re”);
	 
	4.	 	ROYAL & SUN ALLIANCE INSURANCE plc, a company incorporated in England
under registered number 93792 whose registered office is at St. Mark’s
Court, Chart Way, Horsham, West Sussex RH12 1XL (“RSA”); and
	 
	5.	 	GLOBAL AEROSPACE UNDERWRITING MANAGERS LIMITED (formerly British Aviation
Insurance Group Limited), a company incorporated in England under
registered number 2512067 whose registered office is at Fitzwilliam House,
10 St. Mary Axe, London EC3A 8EQ (the “Company”).



WHEREAS:




	(A)	 	The Company was established by RSA, CGU International Insurance plc, a
company incorporated in England (No. 21487) whose registered office is at
St. Helen’s, 1 Undershaft, London EC3P 3DQ (“Aviva”) and a number of other
insurance companies for the purpose, inter alia, of the writing of
insurance for aerospace, aviation and all related and incidental insurance
and reinsurance risks as their disclosed agent.
	 
	(B)	 	As a result of, inter alia, the acquisition by RSA pursuant to an
agreement dated 27th July 2000 of the shares in the Company previously
owned by British Aviation Insurance Company Limited, RSA and Aviva became
the owners, in equal parts, of the entire issued share capital of the
Company.
	 
	(C)	 	Pursuant to a members’ agreement relating to a pool managed by the
Company and AAU (as defined below) engaged in the business of writing
aviation and aerospace insurance and reinsurance and related and
incidental insurance risks (the “Global Aerospace Pool”) dated 27th
September 2000 (the “2001 Pool Members’ Agreement”) and a management
services agreement of even date therewith (the “2001 Management Services
Agreement”), both agreements being made between the Company, AAU, Aviva,
RSA, The Tokio Marine and Fire Insurance Co. Ltd (“Tokio”), Munich Re,
Eagle Star Insurance Company
Limited, Mitsui Marine and Fire Insurance Co. Ltd (“Mitsui”), Federal
Insurance Company (“Federal”) and the Continental Insurance Company



1






 





	 	 	(“Continental”), the Company and AAU were appointed as managers of the
Global Aerospace Pool.
	 
	(D)	 	Pursuant to a share purchase agreement dated 27 November 2002 (the “Share
Purchase Agreement”) Aviva agreed to sell its entire shareholding in the
Company consisting of 12,500,000 ordinary shares in the capital of the
Company, RSA agreed to sell 9,975,000 of the 12,500,000 ordinary shares in
the capital of the Company held by it and NSA, Converium and Munich Re
agreed to purchase 10,000,000, 6,250,000 and 6,225,000 ordinary shares in
the Company respectively, which sales and purchases (the “Transaction”)
have been completed on the date hereof.
	 
	(E)	 	In connection with the Transaction, it was agreed that the Global
Aerospace Pool hitherto managed by the Company and AAU under the 2001 Pool
Members’ Agreement would cease to be open for new business after 31st
December 2002 and that the risks outstanding as at close of business on
that day will thereafter continue in run-off under the management of the
Company and AAU under the terms of the 2001 Pool Members’ Agreement and
2001 Management Services Agreement (in each case as amended).
Furthermore, a new aviation and aerospace underwriting pool (the “New
Global Aerospace Pool”) has been established among the Insurers under the
management of the Company and AAU and for this purpose a new agreement
dated 27 November 2002 has been entered into between the Company, AAU and
the Insurers (as defined below) (the “New Pool Members’
Agreement”), which
will take effect in respect of risks written after that date and attaching
on and from 1st January 2003.
	 
	(F)	 	The parties are entering into this agreement for the purpose of
regulating the management of the Company, the relationship of the
Shareholders with each other in relation to the Company and the Global
Group and certain aspects of the affairs of, and their dealings with, the
Company and the Global Group.



IT IS AGREED as follows:




	1.	 	DEFINITIONS AND INTERPRETATION
	 
	1.1	 	Definitions
	 
	 	 	In this agreement, except where the context requires otherwise:




	 	 	 	 	 
	 	 	
“2001 Management Services Agreement”
	 	has the meaning set out in recital (C);
	 	 	 	 	 
	 	 	
“2001 Pool Members’ Agreement”
	 	has the meaning set out in recital (C);
	 	 	 	 	 
	 	 	
“Acceptance Period”
	 	has the meaning set out in clause 9.2(B)(iv)
(Pre-emption on Issue);



2






 




	 	 	 	 	 
	 	 	
“AAU”
	 	means Associated Aviation Underwriters Inc.,
a Delaware corporation;
	 	 	 	 	 
	 	 	
“Accounting Period”
	 	means the period
commencing on 1st January
and ending on 31st December in any year or
such other accounting period as may be
adopted by the Company in accordance with
clause 4 (Reserved Matters);
	 	 	 	 	 
	 	 	
“Acquisition Value”
	 	means the price per share at which the Shares
were acquired under the Share Purchase
Agreement;
	 	 	 	 	 
	 	 	
“Active Member”
	 	means an insurance or reinsurance company
which is, from time to time, a member of the
New Global Aerospace Pool and whose
Respective Proportion (as such term is used
in the New Pool Members’ Agreement) is equal
to or exceeds five per cent;
	 	 	 	 	 
	 	 	
“Agreed Form”
	 	in relation to any document means that
document in the form agreed by the
Shareholders contemporaneously with the
execution of this agreement and initialled
for the purposes of identification by or on
behalf of the Shareholders or such other form
as the Shareholders may from time to time
agree;
	 	 	 	 	 
	 	 	
“Allocation Notice”
	 	has the meaning set out in clause 12.1(H)
(Pre-emption Rights);
	 	 	 	 	 
	 	 	
“Business”
	 	means the business activities of the Global
Group described in clause 3 (Business of the
Global Group) or, if the business of the
Global Group is altered in accordance with
clause 4 (Reserved Matters), the business of
Global Group as so altered;
	 	 	 	 	 
	 	 	
“Business Day”
	 	means a day (other than a Saturday or Sunday)
on which banks are open for business (other
than solely for trading and settlement in
euro) in London;
	 	 	 	 	 
	 	 	
“Chairman”
	 	means the chairman from time to time of the
board of directors of the Company;



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“Continental”
	 	has the meaning set out in recital (C);
	 	 	 	 	 
	 	 	
“Control”
	 	has the meaning set out in section 840 of the
Income and Corporation Taxes Act 1988;
	 	 	 	 	 
	 	 	
“Deed of Adherence”
	 	means a deed of adherence referred to in
clause 17 (Effect of Deed of Adherence);
	 	 	 	 	 
	 	 	
“Default Notice”
	 	has the meaning set out in clause 13.2(A)
(Default Options);
	 	 	 	 	 
	 	 	
“Defaulting Shareholder”
	 	has the meaning set out in clause 13.2(A)
(Default Options);
	 	 	 	 	 
	 	 	
“Directors”
	 	means the directors of the Company from time
to time;
	 	 	 	 	 
	 	 	
“Disposal”
	 	in relation to a Share, includes without
limitation:




	 	 	 
	 	(a)	
sale, assignment or transfer;
	 	 	 
	 	(b)	
creating or permitting to subsist any
pledge, charge, mortgage, lien or other
security interest or encumbrance;
	 	 	 
	 	(c)	
creating any trust or conferring any
interest;
	 	 	 
	 	(d)	
any agreement, arrangement or
understanding in respect of votes or
the right to receive dividends;
	 	 	 
	 	(e)	
the renunciation or assignment of
any right to subscribe or receive a
Share or any legal or beneficial
interest in a Share (excluding any
revocation by Munich Re under
clause 9.2 (Pre-emption on Issue) of
any right to have allotted to it any
Unissued Shares);
	 	 	 
	 	(f)	
any agreement to do any of the
above, except an agreement to
transfer Shares which is conditional
on compliance with the terms of this
agreement; and



4






 




	 	 	 
	 	(g)	
the transmission of a Share by
operation of law;




	 	 	 	 	 
	 	 	
“Effective Termination Notice”
	 	has the meaning set out in clause 12.4
(Deemed Transfer Notice on Pool Default);
	 	 	 	 	 
	 	 	
“Encumbrance”
	 	means any mortgage, charge (fixed or
floating), pledge, lien, hypothecation,
trust, right of set off or other third party
right or interest (legal or equitable)
including any right of pre-emption,
assignment by way of security, reservation of
title or any other security interest of any
kind however created or arising or any other
agreement or arrangement (including a sale
and repurchase arrangement) having similar
effect;
	 	 	 	 	 
	 	 	
“Event of Default”
	 	has the meaning set out in clause 13.1
(Events of Default);
	 	 	 	 	 
	 	 	
“Excess Shares”
	 	has the meaning set out in clause 12.1(D)
(Pre-emption Rights);
	 	 	 	 	 
	 	 	
“Excess Unissued Shares”
	 	has the meaning set out in clause 9.2(C)
(Pre-emption on Issue);
	 	 	 	 	 
	 	 	
“Executive Director”
	 	has the meaning set out in clause 5.1(A)
(Appointment and Removal of Directors);
	 	 	 	 	 
	 	 	
“Federal”
	 	has the meaning set out in recital (C);
	 	 	 	 	 
	 	 	
“Global Aerospace Pool”
	 	has the meaning set out in recital (C);
	 	 	 	 	 
	 	 	
“Global Group”
	 	means the group comprising the Company and
any other body corporate which is from time
to time a subsidiary undertaking of the
Company and “member of the Global Group”
shall be construed accordingly;



5






 




	 	 	 	 	 
	 	 	
“Global Group Budget”
	 	means, in relation to any Accounting Period,
the budget to be adopted in relation to the
Global Group (PROVIDED THAT “Global Group”
shall include, for these purposes only, any
holdings of the Global Group in British
Aviation Insurance Group Underwriting
Services Limited to the extent these holdings
have been retained by the Global Group from
time to time) in accordance with the
procedure set out in clause 4 (Reserved
Matters) (as distinct from the budgets to be
prepared in relation to the New Global
Aerospace Pool under the New Pool Members’
Agreement), as from time to time amended or
replaced in accordance with that procedure;
	 	 	 	 	 
	 	 	
“Global Group Business Plan”
	 	means, in relation to any Accounting Period,
the business plan to be adopted in relation
to the Global Group (PROVIDED THAT “Global
Group” shall include, for these purposes
only, any holdings of the Global Group in
Ortac Underwriting Agency Limited (“Ortac”)
and British Aviation Insurance Group
Underwriting Services Limited to the extent
these holdings have been retained by the
Global Group from time to time), in
accordance with the procedure set out in
clause 8.1 (Preparation of Global Group
Business Plan) (as distinct from any business
plan that may be adopted in relation to the
New Global Aerospace Pool under the New Pool
Members’ Agreement), as from time to time
amended or replaced in accordance with that
procedure;
	 	 	 	 	 
	 	 	
“Group”
	 	in relation to any body corporate, means a
group consisting of that body corporate, any
subsidiary undertaking of that body
corporate, that body corporate’s Ultimate
Parent Company and its Ultimate Parent
Company’s subsidiary undertakings from time
to time;



6






 




	 	 	 	 	 
	 	 	
“Group Transferee”
	 	means a body corporate to whom Shares have
been transferred under clause 11.1 (Transfers
within a Group);
	 	 	 	 	 
	 	 	
“Indemnified Group Member”
	 	has the meaning set out in clause 5.2
(Indemnity);
	 	 	 	 	 
	 	 	
“Indemnified Director”
	 	has the meaning set out in clause 19.2(A)
(Indemnity of Company Officers);
	 	 	 	 	 
	 	 	
“Indemnity”
	 	has the meaning set out in clause 19.2(B)
(Indemnity of Company Officers);
	 	 	 	 	 
	 	 	
“Insurers”
	 	means, together, the persons who are, from
time to time, Insurers as such term is used
in the New Pool Members’ Agreement who, as
from 1st January 2003 (subject to the terms
of the New Pool Members Agreement) shall be
National Indemnity Company, Converium, Munich
Re, RSA, Tokio and Mitsui;
	 	 	 	 	 
	 	 	
“Intended Transferee”
	 	has the meaning set out in clause
12.1(B)(Pre-emption Rights);
	 	 	 	 	 
	 	 	
“Issue Notice”
	 	has the meaning set out in clause 9.2(B)
(Pre-emption on Issue);
	 	 	 	 	 
	 	 	
“Maximum Period”
	 	has the meaning set out in clause 12.2(D)
(Repurchase by the Company or Transfer to a
Third Party);
	 	 	 	 	 
	 	 	
“Member Applicant”
	 	has the meaning set out at clause 12.1(H)
(Pre-emption Rights);
	 	 	 	 	 
	 	 	
“Minimum Period”
	 	has the meaning set out in clause 12.1(J)
(Pre-emption Rights);
	 	 	 	 	 
	 	 	
“Mitsui”
	 	has the meaning set out in recital (C);
	 	 	 	 	 
	 	 	
“New Articles of Association”
	 	means the articles of association adopted as
the articles of association of the Company in
the form set out in Annex 1 or, if the
articles of association of the Company as so
adopted are amended or replaced in accordance
with clause 4 (Reserved Matters), the
articles of association of the Company as so
amended or replaced;



7






 




	 	 	 	 	 
	 	 	
“New Global Aerospace Pool”
	 	has the meaning set out in recital (E);
	 	 	 	 	 
	 	 	
“New Pool Members’ Agreement”
	 	has the meaning set out in recital (E);
	 	 	 	 	 
	 	 	
“Offeree”
	 	has the meaning set out in clause 9.2(A)
(Pre-emption on Issue);
	 	 	 	 	 
	 	 	
“Offer Terms”
	 	has the meaning set out in clause
12.1(B)(iii) (Pre-emption Rights);
	 	 	 	 	 
	 	 	
“Offered Shares”
	 	has the meaning set out in clause 12.1(B)(i)
(Pre-emption Rights);
	 	 	 	 	 
	 	 	
“Pre-contractual Statement”
	 	has the meaning set
out in clause 26.1 (Pre-contractual
Statement);
	 	 	 	 	 
	 	 	
“Prescribed Value”
	 	in relation to any Shares, means the value of
those Shares determined in accordance with
clause 18
(Prescribed Value);
	 	 	 	 	 
	 	 	
“Proceedings”
	 	has the meaning set out in clause 33.1
(Jurisdiction of English courts);
	 	 	 	 	 
	 	 	
“Recipient”
	 	has the meaning set out in clause 12.1(A)
(Pre-emption Rights);
	 	 	 	 	 
	 	 	
“Regulatory Action”
	 	means:




	 	 	 
	 	(a)	
any order of a court of competent
jurisdiction; or
	 	 	 
	 	(b)	
any order, decision or conclusive view
made, given or expressed by a competent
national, supranational, governmental or
regulatory authority or agency; or
	 	 	 
	 	(c)	
any enactment of a legislative body:



8






 




	 	 	 
	 	(i)	
which prohibits or restricts to a
material extent carrying on of the Business;
or
	 	 	 
	 	(ii)	
in consequence of which, any of the
parties would incur fines or a liability in
damages were this agreement to be performed
in accordance with its terms;




	 	 	 	 	 
	 	 	
“Reserved Matter”
	 	means any action referred to in clause 4.1
(Requirement for Majority Approval of
Shareholder Directors) or clause 4.2
(Requirement for Majority Approval of
Shareholders);
	 	 	 	 	 
	 	 	
“Share Purchase Agreement”
	 	has the meaning set out in Recital (D);
	 	 	 	 	 
	 	 	
“Shareholder”
	 	means each of NSA, Converium, Munich Re and
RSA (as those expressions are defined on page
1 of this agreement), such parties together
being the “Shareholders” PROVIDED THAT (i)
any such party shall only remain a
“Shareholder” whilst it continues to hold
Shares; and (ii) such term shall also include
any other person or persons for the time
being holding Shares pursuant to any
allotment, or transfer permitted by this
agreement and who has entered into a Deed of
Adherence in accordance with clause 17
(Effect of Deed of Adherence), and
“Shareholders” shall, from time to time, be
construed accordingly;
	 	 	 	 	 
	 	 	
“Shareholder Director”
	 	means a Director appointed and not removed
from time to time by a Shareholder pursuant
to clause 5.1 (Appointment and Removal of
Directors) PROVIDED THAT the first
Shareholder Directors are as specified in
clause 2.1 (Appointed Directors);
	 	 	 	 	 
	 	 	
“Shareholder Loan”
	 	means any loan provided to the Company by any
Shareholder;



9






 




	 	 	 	 	 
	 	 	
“Shares”
	 	means the ordinary shares of £1 each in the
capital of the Company having the rights and
restrictions set out in the New Articles of
Association;
	 	 	 	 	 
	 	 	
“Specified Risks”
	 	means aerospace, aviation and related and
incidental risks, in respect of which the
Company is or shall be authorised in
accordance with the terms of the New Pool
Members’ Agreement to write insurance and
reinsurance on behalf of the Insurers;
	 	 	 	 	 
	 	 	
“Supervising Party”
	 	has the meaning set out in clause 19.2(D)
(Indemnity of Company Officers);
	 	 	 	 	 
	 	 	
“Surplus Offered Shares”
	 	has the meaning set out in clause 12.1(F)
(Pre-emption Rights);
	 	 	 	 	 
	 	 	
“Surplus Unissued Shares”
	 	has the meaning set out in clause 9.2(E)
(Pre-emption on Issue);
	 	 	 	 	 
	 	 	
“Termination Payment”
	 	means any payment made to any employee of the
Global Group as a consequence of termination
of employment including contractual and
statutory redundancy payments but excluding
any amounts which may become payable pursuant
to
	 	 	 	 	 




	 	 	 
	 	(a)	
complaints for breach of contract of
employment, unfair or wrongful
dismissal; or
	 	 	 
	 	(b)	
failure to comply with obligations
under the Employment Rights Act
1996, The Trade Union and Labour
Relation (Consolidation) Act 1992,
The Sex Discrimination Act 1975,
The Race Relations Act 1976, Article
141 EC Treaty (ex Article 119), The
Equal Treatment Directive or the
Disability Discrimination Act 1995);




	 	 	 	 	 
	 	 	
“Third Party”
	 	has the meaning set out in clause 28.5 (No
Third Party Rights);
	 	 	 	 	 
	 	 	
“Tokio”
	 	has the meaning set out in recital (C);



10






 




	 	 	 	 	 
	 	 	
“Transfer Group”
	 	in relation to any body corporate, means a
group consisting of that body corporate and
any subsidiary for the time being of that
body corporate and any holding company of
which that body corporate is a subsidiary and
any other body corporate which is a
subsidiary of such holding company, and for
the purposes of this definition, any
references to a “majority” in section 736 of
the Companies Act 1985 shall be deemed to be
a reference to a majority of 75 per cent. or
more;
	 	 	 	 	 
	 	 	
“Transfer Notice”
	 	has the meaning set out in clause 12.1(A)
(Pre-emption Rights);
	 	 	 	 	 
	 	 	
“Transferor”
	 	has the meaning set out in clause 12.1(A)
(Pre-emption Rights);
	 	 	 	 	 
	 	 	
“U.K. GAAP”
	 	means generally accepted accounting standards
in the United Kingdom;
	 	 	 	 	 
	 	 	
“Ultimate Parent Company”
	 	in relation to a Shareholder, means the body
corporate (if any) which has ultimate Control
of that Shareholder, either directly or
through a chain of bodies corporate each of
which has Control over the next body
corporate in the chain;
	 	 	 	 	 
	 	 	
“Unissued Shares”
	 	has the meaning set out in clause 9.2(A)
(Pre-emption on Issue);
	 	 	 	 	 
	 	 	
“U.S. GAAP”
	 	means generally accepted accounting standards
in the United States;
	 	 	 	 	 
	 	 	
“Withdrawal Notice”
	 	has the meaning set out in clause 12.3(A)
(Deemed Transfer Notice on Withdrawal);
	 	 	 	 	 
	 	 	
“Withdrawing Shareholder”
	 	has the meaning set out in clause 12.3(A)
(Deemed Transfer Notice on Withdrawal); and
	 	 	 	 	 
	 	 	
“Working Hours”
	 	means 9.30 a.m. to 5.30 p.m. on a Business
Day.



11






 


	1.2	 	Interpretation
	 
	 	 	In construing this agreement, unless otherwise specified:





	 	(A)	 	references to clauses and Schedules are to clauses of, and
Schedules to, this agreement;
	 
	 	(B)	 	use of any gender includes the other genders;
	 
	 	(C)	 	references to a “person” shall be construed so as to include
any individual, firm, company or other body corporate, government,
state or agency of a state, local or municipal authority or
government body or any joint venture, association or partnership
(whether or not having separate legal personality);
	 
	 	(D)	 	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;
	 
	 	(E)	 	any reference to a “day” (including within the phrase
“Business Day”) shall mean a period of 24 hours running from
midnight to midnight;
	 
	 	(F)	 	references to times are to London times;
	 
	 	(G)	 	references to “indemnifying” any person against any
circumstance include indemnifying and keeping him harmless, on an
after tax basis (which shall include any irrecoverable value added
tax), from all actions, claims and proceedings from time to time
made against him and all loss, damage, payments, costs or expenses
suffered made or incurred by him as a consequence of that
circumstance;
	 
	 	(H)	 	a reference to any other document referred to in this
agreement is a reference to that other document as amended, varied,
novated or supplemented (other than in breach of the provisions of
this agreement) at any time;
	 
	 	(I)	 	headings and titles are for convenience only and do not
affect the interpretation of this agreement;
	 
	 	(J)	 	a reference to any English legal term for any action, remedy,
method of judicial proceeding, legal document, legal status, court,
official or any legal concept or thing shall in respect of any
jurisdiction other than England be treated as a reference to any
analogous term in that jurisdiction;
	 
	 	(K)	 	references to “£” are to pounds sterling and reference to any
amount in such currency shall be deemed to include reference to an
equivalent amount in any other currency;



12






 







	 	(L)	 	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 the words “other”, “include” and “including” do not
connote limitation in any way;
	 
	 	(M)	 	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; and
	 
	 	(N)	 	“holding company” and “subsidiary” shall have the meanings
set out in section 736 of the Companies Act 1985 and “parent
undertaking” and “subsidiary undertaking” shall have the meanings
set out in section 258 of the Companies Act 1985.




	1.3	 	Schedule
	 
	 	 	Schedule 1 forms 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 such Schedule.
	 
	2.	 	INITIAL DIRECTORS
	 
	2.1	 	Appointed Directors




	 	(A)	 	The parties acknowledge that, notwithstanding the provisions
of clause 5 (Management Appointments), the following persons have
been appointed as the first Shareholder Directors, and each shall be
deemed to have been appointed by the Shareholder whose name appears
to the right of his name:




	 	 	 
	Shareholder Director	 	Appointing Shareholder
	
	 	

	Forrest Krutter	 	
NSA
	Michael Lawler	 	
NSA
	Mario Montelatici	 	
Converium
	Hartmut Hesse	 	
Munich Re
	David Reeves	 	
RSA




	 	(B)	 	Mr. A. Medniuk and Mr. P. Bernhard, being the two Executive
Directors at the date of this agreement, shall continue in office
with the same executive positions and titles as at the date of this
agreement, subject to clause 4 (Reserved Matters).



13






 





	2.2	 	Remuneration Committee




	 	(A)	 	The Board shall from time to time constitute a remuneration
committee (the “Remuneration Committee”) comprising of one
Shareholder Director appointed by each Shareholder entitled to
appoint a Shareholder Director (or their respective alternates) who
shall have prior authority to consider and approve:




	 	(i)	 	the level of remuneration and extent of
benefits and other terms and conditions of the employment of
the Executive Directors, the Head of Finance, General Counsel
of the Company and the Chief Operating Officer of AAU;
	 
	 	(ii)	 	in respect of all employees of any member of
the Global Group, any contractual profit sharing or bonus
schemes or similar arrangements and any variations thereto;
	 
	 	(iii)	 	any ad hoc or gratuitous payment or other
payment not provided for as part of an employee’s basic
salary or in the Company’s profit sharing or bonus scheme to
any employee of any member of the Global Group in excess of
£50,000;
	 
	 	(iv)	 	in respect of any prospective employee of any
member of the Global Group any contract of employment with a
notice period of one year or more in duration; and
	 
	 	(v)	 	the termination of any contract of employment
of any employee of the Global Group where:
	 


	 	(a)	 	such employee’s basic salary is
£150,000 or more per annum; and/or
	 
	 	(b)	 	as a consequence of such
termination of employment any Termination Payment of
£150,000 or more in aggregate is to be made to such
employee ; and/or
	 
	 	(c)	 	the Chairman refers to the
Remuneration Committee any decision concerning a
termination of employment in accordance with the
provisions of clause 5.3(F) (Chairman).




	 	(B)	 	The notice, voting and quorum requirements for the
Remuneration Committee meetings shall be the same as for meetings of
the board of Directors save that the Executive Directors shall not
be entitled to attend or vote and their presence shall not be a
requirement for there to be a quorum at any Remuneration Committee
meeting.



14






 





	3.	 	BUSINESS OF THE GLOBAL GROUP




	 	(A)	 	Except to the extent that a change in the business of the
Global Group is approved in accordance with clause 4 (Reserved
Matters), the business of the Global Group shall be:




	 	(i)	 	the business of writing insurance and
reinsurance in respect of Specified Risks (or certain of
them, as provided in the New Pool Members’ Agreement) as
disclosed agent for the Insurers, and as their agent
reinsuring such risks and managing any run-off of such
business; and
	 
	 	(ii)	 	managing the run-off of any other business of
any insurers (whether or not also Insurers) relating to
Specified Risks; and
	 
	 	(iii)	 	managing such business on behalf of any
insurer and/or Insurer; and
	 
	 	(iv)	 	doing such other things ancillary or incidental
thereto as may from time to time be permitted or required by
or pursuant to the New Pool Members’ Agreement and/or any
other applicable arrangements or management agreements
relating to such business in accordance with the Global Group
Business Plan.




	 	(B)	 	Subject to the provisions of this agreement, the Companies
Act 1985, the memorandum of association of the Company and the New
Articles of Association and, without prejudice to this agreement,
any directions given by a special resolution of the Shareholders,
the business of the Company shall be managed by the Directors who
may exercise all the powers of the Company.
	 
	 	(C)	 	The Shareholders agree and the Company undertakes to each of
the Shareholders on behalf of itself and each member of the Global
Group, that the Business of the Company and the Global Group shall
be conducted in accordance with the Global Group Business Plan (as
amended or replaced from time to time in accordance with clause 4
(Reserved Matters)).
	 
	 	(D)	 	Except for the Shareholder Loans, none of the Shareholders
has undertaken or undertakes to provide any loan or share capital to
the
Global Group nor to give any guarantee or indemnity in respect of
the liabilities or obligations of any member of the Global Group.
	 
	 	(E)	 	The Company undertakes to each of the Shareholders on behalf
of itself and each member of the Global Group that:




	 	(i)	 	the Company shall implement measures, under the
direction of the secretary of the Company, with a view to
ensuring that the board of Directors of the Company shall be
promptly informed of any action or agreement of the Company
or any member of the



15






 





	 	 	 	Global Group which is, from time to
time, a prohibited activity under any laws and regulations of
the United States, including the Foreign Corrupt Practices
Act, 15 U.S.C §§ 78m(b), 78dd-1 et seq. (the “FCPA”) and
foreign assets control regulations enacted from time to time
by the U.S. Government (the “FAC Regulations”), which
proscribe dealings by covered persons, wherever located, in
specified countries outside the United States as well as
generally proscribing certain actions with respect to foreign
governments (such laws, rules and regulations being
generally, the “Foreign Practices Laws”);
	 
	 	(ii)	 	the Company shall implement such measures,
under the direction of the secretary of the Company, with a
view to ensuring that the board of Directors of the Company
shall be promptly informed of any action or agreement of the
Company or any member of the Global Group which is, from time
to time, a prohibited activity under any laws, rules and
regulations of any jurisdiction which may affect any
Shareholder or any member of a Shareholder’s Group (such
laws, rules and regulations being generally, “Foreign
Activities Laws”);
	 
	 	(iii)	 	if it shall at any time be proposed that
any member of the Global Group shall undertake any activity
which may be or may involve a prohibited activity under the
FCPA, the FAC Regulations, other Foreign Practices Laws or
Foreign Activities Laws, and which would result in legal
sanctions or other liability against, or other material
adverse event for any Shareholder, any member of a
Shareholder’s Group or any Shareholder Director, arising out
of or relating to the FCPA, the FAC Regulations or other
Foreign Practices Laws, then the Company and the relevant
Shareholder shall first seek to agree on measures which,
based on the advice of legal advisers to the relevant
Shareholder, are likely to avoid any such liability or
adverse event for the relevant Shareholder, any member of a
Shareholder’s Group or any Shareholder Directors appointed by
the relevant Shareholder and, in the event that no such
measures can reasonably be agreed, the relevant Shareholder
and any Shareholder Directors appointed by it shall be
entitled to
require the proposal to be put to a vote of the Directors
and shall be entitled to vote against that proposal, having
regard to their own interests and without being in breach of
any fiduciary or other duties owed by them as Shareholders
in or as Directors of the Company, and to require that any
vote against any such proposal be recorded in the minutes of
each such meeting of the board of Directors of the Company.





	 	(F)	 	Save in the case of fraud or wilful misconduct:




	 	(i)	 	no member of the Global Group, nor any
Shareholder or any member of any Shareholder’s Group (or any
director, officer, employee or other person connected to any
of them) shall be



16






 





	 	 	 	liable to another Shareholder (whether for
breach of contract, in tort (including negligence) or
otherwise) in connection with a breach by the Company of
clause 3(E); and
	 
	 	(ii)	 	in the event that any member of any
Shareholder’s Group or any director, officer, employee of,
or other person connected to, any Shareholder or any member
of any Shareholder’s Group (in either case such Shareholder
being the “Indemnifying Shareholder”) makes any claim, action
or demand (whether in tort, (including negligence), or
otherwise) against any member of the Global Group, or any
member of any Shareholder’s Group or any director, officer,
employee or other person connected to any of them (any such
person or party being, for the purposes of this clause 3(F),
the “Indemnified Party”) in respect of or in connection with
any breach by the Company of clause 3(E), then the
Indemnifying Shareholder shall indemnify each Indemnified
Party in respect of any liability, award, cost (including
reasonable legal costs) or other expense incurred by such
Indemnified Party in connection with, or arising from, such
claim, action or demand,
	 
	 	 	 	PROVIDED THAT nothing in clause 3(F) shall exclude or limit
the liability of any person for death or personal injury
caused by such person’s negligence.




	4.	 	RESERVED MATTERS
	 
	4.1	 	Requirement for Majority Approval of Shareholder Directors
	 
	 	 	The Shareholders agree and the Company undertakes (if and to the extent
permitted by law, for which purpose each paragraph below shall be a
separate and independent undertaking by the Company) to each of the
Shareholders, that the Company shall not without the prior approval of a
resolution of the Directors in respect of which Shareholder Directors who
have been appointed by Shareholders holding in aggregate more than 75 per
cent. by nominal value of
the Shares (excluding any Shares which are held by a Shareholder which is
not entitled to appoint a Shareholder Director) voted in favour, take any
of the following actions:




	 	(A)	 	any change in the nature or scope of the Business or
Specified Risks, including the introduction or discontinuance of any
field of activity, other than as provided in the Global Group
Business Plan;
	 
	 	(B)	 	the entering into, variation or termination of any agreement
or arrangement outside the ordinary scope of the Business;
	 
	 	(C)	 	the delegation of the whole or any material part of the
functions of the Company or (as the case may be) AAU pursuant to the
New Pool Members’ Agreement;



17






 





	 	(D)	 	the variation or termination of the New Pool Members’
Agreement or the exercise of the power given to the Company pursuant
to the New Pool Members’ Agreement to cease to provide services to
any defaulting Insurer or terminating Insurer (each as defined in
the New Pool Members’ Agreement) or to terminate its appointment as
agent pursuant to the New Pool Members’ Agreement;
	 
	 	(E)	 	any change in the basis of accounting or accounting standards
or policies employed by the Company other than as required by law or
accounting policies or standards generally accepted in any
applicable jurisdiction (including without limitation Canada, the
United Kingdom or the United States of America) from time to time;
	 
	 	(F)	 	any change of the auditors or the Accounting Period of the
Company;
	 
	 	(G)	 	the adoption of any Global Group Business Plan or any
amendment to any current Global Group Business Plan, or the approval
of any departure from the current Global Group Business Plan;
	 
	 	(H)	 	the adoption of any new Global Group Budget or any amendment
to any current Global Group Budget, or the approval or ratification
of any departure from the current Global Group Budget (where such
departure involves a material deviation), involving additional
expenditure or the re-allocation of expenditure in any Accounting
Period. For the purposes of this clause 4.1(H) “material deviation”
means any deviation (i) involving expenditure by any Group Company
or (ii) involving the reallocation of expenditure within the Global
Group Budget, to the value of £350,000 or more, which has not
previously been provided for in the then current Global Group
Business Plan;
	 
	 	(I)	 	other than as agent for one or more insurers or reinsurers,
whether or not Insurers, the commencement or settlement in any
jurisdiction of legal or
arbitration proceedings which proceedings involve or might involve
an amount (including related costs) in excess of £1,000,000 or
relate to the seeking of any equitable remedy by the Company;
	 
	 	(J)	 	making any loan or advance (otherwise than in the ordinary
course of the Business) to or investment, or the liquidation of any
investment made by the Company, in any other person or business;
	 
	 	(K)	 	the formation or acquisition by the Company of any subsidiary
undertaking;
	 
	 	(L)	 	the acquisition of any asset or group of connected assets for
a consideration exceeding £1,000,000;
	 
	 	(M)	 	the disposal of, or the grant of any option or right of
pre-emption in respect of or any lease or licence over, any asset or
group of connected assets valued in the Company’s books at more than
£1,000,000;



18






 





	 	(N)	 	the raising of any debt finance from lenders other than
Shareholders (whether by way of loan, acceptance credit, factoring,
finance lease or otherwise) in excess of an aggregate value of
£500,000, or the variation or termination of any agreement for the
raising of any such finance (including without limitation early
repayment or reduction);
	 
	 	(O)	 	save for any Shareholder Loan provided to the Company at
completion of the Transaction, the provision to any member of the
Global Group by any Shareholder of any further funding (whether by
means of loan or otherwise), or the provision by any Shareholder of
any guarantee or indemnity in respect of the liabilities or
obligations of the Company;
	 
	 	(P)	 	the creation or redemption of any mortgage, charge,
debenture, pledge, lien or other encumbrance or security interest
over any of the assets, property, undertaking or uncalled capital of
the Company;
	 
	 	(Q)	 	the entering into or variation of any transaction by the
Company with (i) a Shareholder or any member of its Group or (ii)
any director or officer of any Shareholder or of any member any
Shareholder’s Group excluding for the avoidance of doubt, in the
case of (i) above, transactions entered into in connection with the
purchase of reinsurance in respect of risks insured by insurers
(whether or not Insurers) entered into or varied at arms’ length in
the ordinary course of business, or transactions entered into or
varied pursuant to this agreement or the Share Purchase Agreement or
the New Pool Members’ Agreement;
	 
	 	(R)	 	the appointment or dismissal of any person as a Director
other than a Shareholder Director PROVIDED THAT there shall be no
more than two Executive Directors at any one time;
	 
	 	(S)	 	save as provided in clause 2.2(A) (Remuneration Committee),
the establishment of any committee of the board of Directors;
	 
	 	(T)	 	the creation or acquisition of any unincorporated business or
the formation of any partnership or joint venture with any person;
	 
	 	(U)	 	subscribing for or otherwise acquiring any interest in the
share capital or instruments convertible into share capital of any
other company, body corporate or other entity or making any
investment in any of the foregoing;
	 
	 	(V)	 	the taking out of any directors’ and officers’ professional
indemnity insurance policy in respect of any of its directors,
officers or employees;
	 
	 	(W)	 	except in the ordinary course of business, the entry into of
any agreement or arrangement restricting the Company’s competitive
freedom to provide and take goods and services by such means and
from and to such persons as it may think fit;



19






 





	 	(X)	 	save as provided in clause 16.2 (Shareholder Loans), the
assignment or novation of any Shareholder Loan (or any proportion
thereof);
	 
	 	(Y)	 	the effecting of any of the above matters by or in relation
to any member of the Global Group (excluding the Company) (as if
references above to the Company were to such member of the Global
Group (excluding the Company), mutatis mutandis).




	 	 	The Executive Directors shall each be entitled to one vote on the above
matters, notwithstanding that any such vote shall not be required for the
purposes of approving such matters.
	 
	4.2	 	Requirement for Majority Approval of Shareholders
	 
	 	 	Unless otherwise agreed in writing between the Shareholders holding more
than 75 per cent. of the Shares by nominal value, the Shareholders agree
and the Company undertakes (if and to the extent permitted by law, for
which purpose each paragraph below shall be a separate and severable
undertaking by the Company) to each of the Shareholders that the Company
shall not take any of the following actions:




	 	(A)	 	any amendment to the memorandum or articles of association of
the Company;
	 
	 	(B)	 	any change to the rights attaching to any class of shares in
the Company which are not set out in the memorandum or the New
Articles of Association of the Company;
	 
	 	(C)	 	the creation, consolidation, sub-division, conversion or
cancellation of any share capital of the Company;
	 
	 	(D)	 	the issue or allotment of any share capital of the Company or
the creation of any option or right to subscribe or acquire, or
convert any security into, any share capital of the Company;
	 
	 	(E)	 	any reduction of the share capital of the Company;
	 
	 	(F)	 	the purchase or redemption of any share capital of the
Company;
	 
	 	(G)	 	any application for the listing of any shares or other
securities of the Company on any stock exchange or for permission
for dealings in any shares or other securities of the Company in any
securities market;
	 
	 	(H)	 	any resolution to wind up the Company;
	 
	 	(I)	 	the filing of a petition for winding up the Company or the
making of any arrangement with creditors generally or any
application for an administration order or for the appointment of a
receiver or administrator;



20






 






	 	(J)	 	the repayment of capital or assets to members;
	 
	 	(K)	 	any decision not to declare or pay a dividend in respect of a
particular Accounting Period in accordance with clause 6.8
(Dividends) or the declaration or making of any other distribution;
	 
	 	(L)	 	any change of the Company’s name;
	 
	 	(M)	 	the effecting of any of the above matters by or in relation
to any member of the Global Group (excluding the Company) of the
Company (as if references above to the Company were to such member
of the Global Group (excluding the Company), mutatis mutandis).




	4.3	 	Disenfranchisement




	 	(A)	 	To the extent that the votes of any Shareholder or
Shareholder Director appointed by such Shareholder are to be
disregarded pursuant to clause 6.5 (Directors’ Interests), clause
12.2 (Repurchase by the Company or Transfer to a Third Party) or
clause 13.2 (Default Options), then, for the purposes of (i) any
resolution approving any Reserved Matter under clause 4.1, and/or
(ii) any agreement of the Shareholders under clause 4.2 in respect
of which such votes are to be disregarded, the reference to “75”
specified in clause 4.1 and/or clause 4.2 (as the case may be) shall
be reduced so that it is equal to “B”, as calculated below:




	 	 	 	 	 	 	 	 	 
	 	 	 	 	(100 - Z)	 	 	 	 
	B	=
	75
	  x
	
	 	 	 	 
	 	 	 	 	100	 	 	 	 




	 	 	 	where “Z” = the percentage of the Shares held by the Shareholder
or Shareholders whose votes are to be disregarded, or, as the case
may be, the percentage of the Shares held by the Shareholder or
Shareholders which appointed the Shareholder Director or
Shareholder Directors whose votes are to be disregarded.
	 
	 	(B)	 	For the avoidance of doubt, a Shareholder Director whose
votes are to be disregarded in accordance with clause 4.3(A) shall
not be entitled to vote upon any resolution in respect of any
Reserved Matter under clause 4.1 in respect of which his votes are
to be disregarded and his presence shall not be a requirement for
there to be a quorum in respect of such matter.
	 
	 	(C)	 	The Shareholders agree that where any matter has been decided
pursuant to clause 4.1 and/or clause 4.2 (as the case may be) , then
the Shareholder whose votes or whose Shareholder Director’s (or
Shareholder Directors’, as the case may be) votes have been
disregarded pursuant to the provisions of clause 4.3(A) shall not
vote against any resolution to be passed in general meeting by the
members of the Company (or in any separate class meeting thereof) to
approve such matter and/or any consequential steps required to be
taken to implement such matter.



21






 





	4.4	 	Members of the Global Group
	 
	 	 	To the extent that the effecting of any of the matters referred to in
clause 4.1 (Requirement for Majority Approval of Shareholder Directors)
or 4.2 (Requirement for Majority Approval of Shareholders) by or in
relation to any member of the Global Group (excluding the Company) would
require a decision or resolution by the directors or managers or
shareholders of such member, the parties hereto undertake with each other
to ensure, insofar as it is within their power to do so (including by the
exercise of voting rights or other powers of control), that the relevant
decision or resolution is taken or passed only with the approval of a
resolution of the Directors which satisfies the appropriate requirements
with respect to approval by Shareholder Directors or Shareholders under
clause 4.1 (Requirement for Majority Approval of Shareholder Directors)
or 4.2 (Requirement for Majority Approval of Shareholders) (as the case
may be).
	 
	4.5	 	Effect of Approval of Global Group Business Plan and Global Group Budgets
	 
	 	 	The approval of any Global Group Business Plan or Global Group Budget
shall not imply or be deemed to be an approval of any matter within that
Global Group Business Plan or Global Group Budget which would require
approval in
accordance with clause 4.1 (Requirement for Majority Approval of
Shareholder Directors), clause 4.2 (Requirement for Majority Approval of
Shareholders) or clause 4.4 (Members of the Global Group).
	 
	5.	 	MANAGEMENT APPOINTMENTS
	 
	5.1	 	Appointment and Removal of Directors




	 	(A)	 	Every person who holds or is to hold executive office with
the Company and is or is to be appointed a Director (an “Executive
Director”) shall be appointed and removed in accordance with clause
4.1(R) (Requirement of Majority Approval of Shareholder Directors)
and the New Articles of Association. The Executive Directors as at
the commencement of this agreement are as set out in clause 2.1(B)
(Appointed Directors). At any one time there shall be no more than
two Executive Directors and the parties undertake to each other to
ensure, insofar as it is within their power to do so, that a
replacement shall be appointed in accordance with clause 4.1 (R)
(Requirement for Majority Approval of Shareholder Directors) for any
Executive Director who has vacated or been removed from office as
soon as is reasonably practicable thereafter, such that there shall
always be at least one Executive Director.
	 
	 	(B)	 	Subject to clause 5.1(C), each Shareholder from time to time
holding five per cent. or more of the ordinary issued share capital
of the Company shall be entitled, by notice in writing to the
Company and each other Shareholder, to appoint and maintain the
appointment of one Director (each such Director being a “Shareholder
Director”) except that any Shareholder from time to time holding 40
per cent. or more of the Shares



22






 





	 	 	 	in issue from time to time shall be
entitled to appoint and maintain the appointment of two such
Shareholder Directors, and, by like notice in writing, to remove any
such Shareholder Director appointed by it from time to time. The

first Shareholder Directors whose names are set out in clause 2.1(A)
(Appointed Directors) shall be deemed to have been appointed for the
purposes of this Clause 5.1(B).
	 
	 	(C)	 	If at any time any Shareholder who was entitled to and has
appointed and not removed two Shareholder Directors in accordance
with clause 5.1(B) shall cease to be the holder of 40 per cent. or
more of the Shares in issue from time to time, then, PROVIDED THAT
such Shareholder remains the holder of five per cent. or more of
such Shares, such Shareholder shall forthwith cause one of its
Shareholder Directors to be removed in accordance with clause
5.1(B). If at any time any Shareholder who was entitled to and has
appointed and not removed one or more Shareholder Directors in
accordance with clause 5.1(B) shall cease to be the holder of five
per cent. or more of the Shares in issue from time to time such
Shareholder shall forthwith cause each such Shareholder Director to
be removed in accordance with clause 5.1(B). Any Shareholder
Director
who has not been removed in contravention of this clause 5.1(C)
shall not be entitled to attend or vote at any meeting of the
Directors, whether to consider a Reserved Matter or otherwise and
his presence shall not be required for there to be a quorum.
	 
	 	(D)	 	Each Shareholder shall, prior to appointing any person as a
Shareholder Director, give each of the other Shareholders a
reasonable opportunity to express any concern as to his suitability.
	 
	 	(E)	 	Subject to clause 5.4 (Alternate Directors), other than (i)
the Executive Directors holding office pursuant to clause 2.1(B)
(Appointed Directors) or appointed in accordance with clause 4.1(R)
(Requirement of Majority Approval of Shareholder Directors), and
(ii) the Shareholder Directors, the Company shall have no other
Directors.




	5.2	 	Indemnity
	 
	 	 	The Shareholder which removes a Shareholder Director from office in
accordance with clause 5.1 (Appointment and Removal of Directors) or
whose appointee under clause 5.15.1(B) vacates or is deemed to have vacated
office under the New Articles of Association shall indemnify on an
after-tax basis the other Shareholders and each member of their
respective Groups and the Company and every other member of the Global
Group (each an “Indemnified Group Member”) against any claim, whether for
compensation for loss of office, wrongful dismissal or otherwise, which
arises out of that Director ceasing to hold office.
	 
	5.3	 	Chairman




	 	(A)	 	The Chairman shall be appointed from among the Shareholder
Directors, subject to the provisions of this clause 5.3. The first
Chairman shall be



23






 





	 	 	 	appointed at Completion, and shall hold office
until 31st December 2004. Thereafter, a Chairman shall be appointed
from among the Shareholder Directors in accordance with clause 6.4
(Voting at Directors’ Meetings) for successive two-year terms. A
Chairman may be re-appointed for an unlimited number of terms,
subject to the requirements of this clause 5.3. If, by the end of
the term of any existing Chairman the requisite majority of the
Shareholder Directors has not appointed a succeeding Chairman, then
if a majority of the Shareholder Directors voting in accordance with
clause 6.4 (Voting at Directors’ Meetings) (excluding the votes of
each and every Shareholder Director appointed by the Shareholder
whose appointee is the then current Chairman), approve the
continuance of the existing Chairman, such Chairman shall, if he is
willing to do so, continue as Chairman until such majority of the
Shareholder Directors can elect or re-elect a new Chairman, from
which time the person so elected or re-elected (as the case may be)
shall serve as Chairman for a term ending two years after the end of
the term of the previous Chairman
or the end of his previous two-year term (if re-appointed) (as the
case may be).
	 
	 	(B)	 	Before any person is nominated to take office as Chairman,
the Directors shall be given a reasonable opportunity to express any
concerns as to his suitability for the post.
	 
	 	(C)	 	The Directors shall be entitled to replace the Chairman by a
decision of the Shareholder Directors voting in accordance with
clause 6.4 (Voting at Directors’ Meetings) with another Shareholder
Director if the incumbent Chairman vacates office as a Director.
The replacement Chairman shall hold office as Chairman for the
unexpired portion of the term of his predecessor.
	 
	 	(D)	 	The Chairman shall preside at any Directors’ meeting in which
he participates. If the Chairman is not present or does not
participate in any Directors’ meeting or if no Chairman has been
appointed or is so continuing in office, the Directors shall appoint
an ad hoc Chairman to preside at that meeting.
	 
	 	(E)	 	The Chairman shall not have a casting vote.
	 
	 	(F)	 	The Company shall not authorise or permit the termination of
any contract of employment of any employee of the Global Group
without the prior written authorisation of the Chairman where:




	 	(i)	 	such employee’s basic salary is £100,000 or
more, but less than £150,000, per annum; and/or
	 
	 	(ii)	 	as a consequence of such termination of
employment any Termination Payment of £100,000 or more, but
less than £150,000, in aggregate, is to be made to such
employee



24






 







	 	 	 	and the Chairman may, in his absolute discretion, refer a decision
concerning any such termination of employment to the Remuneration
Committee for it to consider, in accordance with the provisions of
clause 2.2(A)(v)(c) (Remuneration Committee).




	5.4	 	Alternate Directors
	 
	 	 	The Shareholders shall be entitled, by notice in writing to the Company
and to the other Shareholders, to appoint any person as an alternate
director to attend, speak and vote on behalf of their respective
Shareholder Directors at any one or more meetings of the Directors. An
Executive Director shall be entitled to appoint any person as his
alternate director in accordance with the New Articles of Association
PROVIDED THAT all Shareholder Directors approve in advance the
appointment in writing. A person who holds office as an alternate
director shall, if his appointer is not present, be counted in the quorum
for the meeting. As the context permits references in this agreement to
“Director”, “Executive Director” and “Shareholder Director” shall be
construed to include an alternate director appointed in accordance with
this clause 5.4.
	 
	5.5	 	Members of the same Group
	 
	 	 	For the purposes of this clause 5, all Shareholders who are members of
the same Group shall be deemed to be one Shareholder and shall act
together in the exercise of their rights and be jointly and severally
liable under this clause 5.
	 
	6.	 	PROCEEDINGS OF DIRECTORS
	 
	6.1	 	Convening Directors’ Meetings
	 
	 	 	A Director may, and the secretary of the Company at the request of a
Director or Shareholder shall, call a meeting of the Directors. The
Directors shall hold meetings at least once during every rolling period
of three calendar months.
	 
	6.2	 	Notice of Directors’ Meetings
	 
	 	 	Unless otherwise agreed by any Director in relation to himself only, at
least ten Business Days’ notice of each meeting of the Directors shall be
given to each Director entitled to attend (whether or not he shall be
absent from or resident outside the United Kingdom) and the notice shall
be accompanied by an agenda and, to the extent the same has been
prepared, a board paper setting out in such reasonable detail as may be
practicable in the circumstances the subject matter of the meeting.
	 
	6.3	 	Quorum at Directors’ Meetings




	 	(A)	 	Subject to clause 4.3(B) (Disenfranchisement), and clause
5.1(C) (Appointment and Removal of Directors), a quorum shall exist
at any Directors’ meeting if at least one Shareholder Director
appointed by each of the Shareholders is present or represented by
an alternate. A Shareholder Director may, by notice in writing to
the Company, waive



25






 







	 	 	 	his right to be present or represented for the
purpose of determining a quorum.
	 
	 	(B)	 	If a quorum is not present at a meeting of the Directors at
the time when any business is considered the meeting shall be
adjourned to be reconvened in accordance with the following
provisions of this clause. At least ten Business Days’ notice of
the reconvened meeting will be given unless all the Directors agree
otherwise. At the reconvened meeting, a quorum shall exist with
respect to those matters on the agenda but not disposed of at the
original meeting if Shareholder Directors appointed by any two or
more of the Shareholders (which are not
members of the same Group) are present or represented by an
alternate, and any Shareholder Director not so present or
represented shall be deemed to have waived his right to be so
present or so represented.




	6.4	 	Voting at Directors’ Meetings
	 
	 	 	Resolutions of the Directors shall be decided by majority of the votes
cast and each Director present shall have one vote, PROVIDED THAT:




	 	(A)	 	the majority required to pass any resolution must include
votes from Shareholder Directors whose appointing Shareholders
constitute at least half of the Shareholders who hold more than 20
per cent. of the Shares at the time of such resolution (if any) and
whose Shareholder Directors are entitled to vote and have not waived
their right, or have not been deemed to have waived their right, to
be present or represented at the relevant Directors’ meeting
pursuant to clause 6.3(A) or clause 6.3(B) (as the case may be); and
	 
	 	(B)	 	no resolution of the Directors to take any of the actions
listed in clause 4.1 (Requirement for Majority Approval of
Shareholder Directors) or clause 4.2 (Requirement for Majority
Approval of Shareholders) or to take any such decision or pass any
such resolution as is referred to in clause 4.4 (Members of the
Global Group) shall be effective unless the requirements of the
relevant clause are fulfilled.




	6.5	 	Directors’ Interests
	 
	 	 	A Shareholder Director shall not be counted in the quorum (nor shall his
presence be required in order to constitute a quorum if it would
otherwise be required under this clause 6 or the New Articles of
Association), nor shall he be entitled to vote, in respect of (i) any
action to be taken or decision to be made by the Company or the Directors
under clause 12 (Other Voluntary Transfers) where his appointing
Shareholder has served or is deemed to have served a Transfer Notice
under this agreement, or (ii) any action by any member of the Global
Group against the Shareholder who appointed him or any member of that
Shareholder’s Group or any action by the Shareholder who appointed him or
any member of that Shareholder’s Group against any member of the Global
Group and for the purposes of any resolution of the Directors or written
agreement of the Shareholders which is required under clause 4.1
(Requirement for Majority



26






 





	 	 	Approval of Shareholder Directors) or clause
4.2 (Requirement for Majority Approval of Shareholders) (as the case may
be) in connection with any such action, the votes of the relevant
Shareholders and of every Shareholder Director appointed by such
Shareholder shall be disregarded in accordance with the provisions of
clause 4.3 (Disenfranchisement).
	 
	6.6	 	Participation Arrangements
	 
	 	 	Any one or more Directors (or his or their alternates) may participate in
and vote at Directors’ meetings by means of a conference telephone, video
conference facility or any other communication equipment which allows all
persons participating in the meeting to speak and to hear each other.
Any Director (or alternate) so participating in a meeting shall be deemed
to be present in person and shall count towards the quorum.
	 
	6.7	 	Written Resolutions
	 
	 	 	A resolution in writing signed by all the Directors shall be as valid and
effective for all purposes as a resolution passed by the Directors at a
meeting duly convened, held and constituted.
	 
	6.8	 	Dividends
	 
	 	 	In respect of any Accounting Period in which any profits are lawfully and
properly available for distribution such profits shall, to the extent
permissible under applicable law, be distributed by the Company unless
agreed otherwise by the Shareholders as a Reserved Matter pursuant to
clause 4.2(K) (Requirement for Majority Approval of the Shareholders) and
the Company shall, insofar as it is able, procure other members of the
Global Group to distribute up any profits which are lawfully and properly
available for distribution, unless agreed otherwise by the Shareholders
as a Reserved Matter pursuant to clause 4.2(K).
	 
	7.	 	ACCESS TO INFORMATION AND ACCOUNTS
	 
	7.1	 	Provision of Information by the Company




	 	(A)	 	The Company shall provide, or shall procure that each member
of the Global Group provides, each Shareholder (at the cost of that
Shareholder) with access to and copies of such information and
records of each member of the Global Group and Ortac as that
Shareholder may reasonably require from time to time (which may
include correspondence with the auditors, regulatory and tax
authorities and copies of board and committee meetings), such access
to extend to a right for the Shareholders, with their advisers, to
attend on reasonable notice at the premises of the Company,
interview Executive Directors and review the requested information
and records.
	 
	 	(B)	 	The Company shall, in a timely manner, keep each Shareholder
fully informed of and shall provide each Shareholder with all
material information with respect to all material facts and matters
of which the



27






 







	 	 	 	Global Group becomes aware which (i) have not
previously been reported to the Shareholders (whether as part of any
Global Group Business Plan, Global Group Budget or otherwise), (ii)
which relate to
the business of the Global Group or any member thereof, and (iii)
the provision of which would not (a) involve a breach of a duty of
confidentiality owing by the Global Group to a third party, or (b)
give rise to a waiver by the Global Group of legal privilege it
would otherwise enjoy in respect of such information or records in
the context of actual or probable litigation or arbitration
proceedings involving the Global Group, or (c) directly cause
significant financial or reputational detriment to the Global
Group.
	 
	 	(C)	 	The Company shall provide or procure the provision to each of
the Shareholders of copies of all minutes of any meeting of the
board of directors (and any committees thereof) or shareholders of
any member of the Global Group.




	7.2	 	Retention of Records
	 
	 	 	All records of the Company shall be retained for a period of at least
seven years from the end of the year to which such record relates. All
material documentation relating to policies and ceded and assumed
reinsurance contracts shall be retained by the Company in accordance with
the policies adopted by the Directors from time to time.
	 
	7.3	 	Provision of Information by Directors
	 
	 	 	Each Shareholder Director is irrevocably authorised by the Company to
disclose to the Shareholder who appointed him any information or records
belonging to or concerning any member of the Global Group or such
member’s business and assets, other than any information or records the
said disclosure of which such Shareholder Director has been made aware or
should reasonably be aware would (a) involve a breach of a duty of
confidentiality owing by any member of the Global Group to a third party,
or (b) give rise to a waiver by any member of the Global Group of legal
privilege it would otherwise enjoy in respect of such information or
records in the context of actual or probable litigation or arbitration
proceedings involving any member of the Global Group and is known to such
Director, or (c) directly cause significant financial or reputational
detriment to any member of the Global Group. The exceptions to the
aforesaid authorisation to disclose shall not in any event apply to any
information or record which is in the possession of a Shareholder
Director which is required by his appointing Shareholder to be disclosed
or published to such Shareholder in order for that Shareholder or any
member of its Group to comply with the requirements of U.K. GAAP, U.S.
GAAP or any other applicable accounting standards, if the Company has
failed to comply with any proper request therefor made by such
Shareholder in writing under clause 7.5(D) (Annual Accounts) within 30
days of the date on which such request was made.



28






 





	7.4	 	Quarterly Financial Reporting
	 
	 	 	The Company, through the Executive Directors, will submit a report
concurrently to the other Directors and each Shareholder (and in normal
circumstances within 30 Business Days of the end of the calendar quarter
to which it relates) (a) showing, inter alia, the revenues, operating
results, overall results and relevant cash flow information on a
quarterly and year-to-date basis and performance compared to the Business
Plan, (b) describing any material changes to the Global Group’s business,
financial position or prospects since the end of the preceding quarter
and the status of the implementation of the Global Group strategy and
major projects as set out in the Budget, (c) updating details of
projected capital requirements, and (d) containing a summary description
of the business conducted by the Global Group under the New Pool Members’
Agreement.
	 
	7.5	 	Annual Accounts
	 
	 	 	The Shareholders shall exercise their respective powers in relation to
the Company so as to ensure, so far as by the exercise of such powers
they can so ensure, and the Company undertakes to each of the
Shareholders:




	 	(A)	 	that audited accounts for each member of the Global Group
required to produce audited accounts under English law and
consolidated audited accounts for the Company and its subsidiaries
complying in each case with the Companies Acts 1985 to 1989 shall be
prepared and reported on by the auditors of the relevant company
within three months from the end of the Accounting Period in
question and shall be forthwith thereafter delivered to each
Shareholder. Accounts for any member of the Global Group required
to be prepared under the laws of any jurisdiction other than the
United Kingdom shall be prepared, reported or audited and otherwise
dealt with in accordance with the laws of that jurisdiction;
	 
	 	(B)	 	that the audited unconsolidated and consolidated accounts of
each member of the Global Group for each Accounting Period shall,
unless otherwise required under the laws or generally accepted
accounting standards applicable in any jurisdiction, be prepared
under the historical cost basis and shall otherwise comply with all
applicable standard accounting practices and financial reporting
standards (including, without limitation, to the extent applicable,
those of Canada, the United Kingdom and the United States);
	 
	 	(C)	 	that the auditors to the Company from time to time (i) shall
at the expense of the Company, certify the profits of each member of
the Global Group as disclosed in the audited accounts which are
available for distribution for each Accounting Period at the same
time as they sign their report on the audited consolidated accounts
of the Company for that Accounting Period, and (ii) shall generally
prepare such certificates and
calculations concerning the financial position of the Global Group
as may be reasonably required by the Shareholders from time to
time, and (iii) shall be given such assistance and information by
each member of



29






 





	 	 	 	the Global Group in connection with the performance
of any duties imposed upon such member of the Global Group
hereunder or by the New Articles of Association;
	 
	 	(D)	 	to procure that such financial and accounting information and
accounting reports or statements are provided or made available, as
soon as reasonably practicable, to each Shareholder as is reasonably
required by any such Shareholder in order for it or any member of
its Group to comply with the requirements of U.K. GAAP or any other
applicable English accounting law or regulation and, to the extent
reasonably requested by any Shareholder, any other applicable
accounting standards, and relevant accounting laws or regulations
applicable to any such Shareholder or any member of its Group as
soon as reasonably practicable following the request of such
Shareholder at no direct cost to the relevant Shareholder.




	8.	 	BUSINESS PLAN
	 
	8.1	 	Preparation of Global Group Business Plan
	 
	 	 	No later than 60 days prior to the end of each Accounting Period, and
following approval of the business plan adopted in relation to the New
Global Aerospace Pool under the provisions of the New Pool Members’
Agreement, the Company, through the Executive Directors, shall submit to
the other Directors and the Shareholders concurrently a draft Global
Group Business Plan covering the three-year period commencing at the end
of such Accounting Period. Each draft Global Group Business Plan shall
include:




	 	(A)	 	business forecasts;
	 
	 	(B)	 	appropriate explanations of the Directors’ proposed strategy;
	 
	 	(C)	 	details of the assumptions used;
	 
	 	(D)	 	a detailed annual budget for the first Accounting Period
covered by the draft Global Group Business Plan, including a
detailed breakdown of:




	 	(i)	 	consolidated revenues, operating expenses and operating
results;
	 
	 	(ii)	 	quarterly material capital expenditures and quarterly cash
flows;
	 
	 	(iii)	 	consolidated balance sheet as at the end of
each Accounting Period and profit and loss account for each
Accounting Period; and
	 
	 	(iv)	 	expected funding requirements and the proposed
methods of meeting those requirements; and




	 	(E)	 	a summary annual business plan for each of the second and
third Accounting Periods covered by the draft Global Group Business
Plan.



30






 





	8.2	 	Adoption of Global Group Business Plans
	 
	 	 	The Shareholders shall use all reasonable endeavours to agree each draft
Global Group Business Plan submitted in accordance with clause 8.1
(Preparation of Global Group Business Plan) with such amendments as they
may think fit and to procure the adoption of the Global Group Business
Plan in accordance with clause 4 (Reserved Matters) prior to the
beginning of the period to which it relates. The Global Group Business
Plan shall not take effect until approved in accordance with the
provisions of clause 4.1(G) (Requirement for Majority Approval of
Shareholder Directors).
	 
	8.3	 	Relationship with Global Group Budgets
	 
	 	 	The Executive Directors shall prepare a draft Global Group Budget on a
basis consistent with the then current Global Group Business Plan
approved in accordance with clause 4 (Reserved Matters) and the
provisions of any business plan adopted in relation to the New Global
Aerospace Pool under the New Pool Members’ Agreement and shall be amended
to the extent required to take into account any amendments to any Global
Group Business Plan approved in accordance with clause 4 (Reserved
Matters). The Shareholders shall use all reasonable endeavours to agree
each draft Global Group Budget submitted in accordance with this clause
with such amendments as they may think fit and to procure the adoption of
the Global Group Budget in accordance with clause 4 (Reserved Matters)
prior to the beginning of the period to which it relates. The Global
Group Budget shall not take effect until approved in accordance with the
provisions of clause 4.1(H) (Requirement for Majority Approval of
Shareholder Directors).
	 
	9.	 	ISSUE OF SHARES
	 
	9.1	 	Issue of Shares
	 
	 	 	Shares shall only be issued in accordance with clause 4.2 (Requirement
for Majority Approval of Shareholders) and clause 9.2 below.
	 
	9.2	 	Pre-emption on Issue




	 	(A)	 	Save with the prior written approval of all of the
Shareholders (excluding any Defaulting Shareholder in respect of
which it has been determined in accordance with clause 13.2(B)(iv)
(Default Options) that the relevant Event of Default has been
substantiated or has not been remedied) (each
an “Offeree”), any Shares which are unissued from time to time and
which are proposed to be offered for issue to any person
(including a Shareholder or any member of that Shareholder’s
Group) (“Unissued Shares”) shall, before they are so offered, be
offered for issue to the Offerees, in the proportion, as nearly as
may be, which their respective holdings of Shares immediately
prior to such offer bear to one another in accordance with the
following provisions of this clause 9.2.



31






 







	 	(B)	 	In the event of an offer to issue the Unissued Shares as
described in clause 9.2(A), the Company shall make such offer by
serving a notice (the “Issue Notice”) on each and every Offeree,
specifying:




	 	(i)	 	the total number of Unissued Shares proposed to
be issued;
	 
	 	(ii)	 	the proportionate entitlement of each Offeree;
	 
	 	(iii)	 	the offer price at which the Unissued Shares
are proposed to be issued; and
	 
	 	(iv)	 	a limiting period (not being less than 21 days)
(the “Acceptance Period”) after which the offer, if not
accepted, will be deemed to have been declined.




	 	(C)	 	It shall, subject to clause 9.2(B)(iv), be open to each
Offeree, upon receipt of an Issue Notice, to state by written notice
to the Company and each of the other Offerees whether or not it is
willing to accept the offer, and whether or not it is willing to
accept the issue and allotment to it of Unissued Shares in excess of
its proportionate entitlement (“Excess Unissued Shares”) and, if
such Offeree states that it is so willing, it shall state the
maximum number of Excess Unissued Shares it is willing to accept.
	 
	 	(D)	 	After the expiry of the Acceptance Period the Directors
shall, subject to clause 9.2(E) below, allot the Unissued Shares in
the following manner:




	 	(i)	 	if the total number of Unissued Shares applied
for (including Excess Unissued Shares) by all relevant
Offerees is equal to or less than the available number of
Unissued Shares, the Directors shall allot the Unissued
Shares in accordance with such applications;
	 
	 	(ii)	 	if the total number of Unissued Shares applied
for (including Excess Unissued Shares) by all relevant
Offerees is more than the available number of Unissued
Shares:




	 	(a)	 	the Directors shall allot the
Unissued Shares to the relevant Offerees in the
proportion, as nearly as may be,
which their holdings of Shares immediately prior to
service of the Issue Notice bear to one another (or,
in the case of any particular Offeree, such lesser
number of Unissued Shares for which it may have
applied); and
	 
	 	(b)	 	Excess Unissued Shares applied for
shall be allotted in accordance with such applications
or, in the event of competition, to each such Offeree
applying for Excess Unissued Shares in the proportion,
as nearly as may be, which their respective holdings of
Shares immediately prior to service of the Issue Notice
bear to one another,



32






 





	 	 	 	PROVIDED THAT no such Offeree
shall be allocated more Excess Unissued Shares than it
shall have stated itself willing to accept. Any

remaining Unissued Shares shall be allotted by applying
this clause 9.2(D)(ii)(b), on more than one occasion if
necessary, without taking account of any Offeree whose
application has already been satisfied in full, until
such time as either all of the Unissued Shares have
been allotted or all applications therefore have been
satisfied in full.




	 	(E)	 	If pursuant to the operation of clause 9.2(D), an Offeree
would, but for this clause 9.2(E), be entitled to be allotted such a
number of Unissued Shares as would increase its holding of Shares to
50 per cent. or more of the Shares in issue, the Directors shall
first allot to such Offeree the maximum number of Unissued Shares
which may be allotted to it without increasing such Offeree’s
holding of Shares to a number of Shares representing 50 per cent. or
more in nominal value of the Shares in issue. The balance of such
Offeree’s entitlement to Unissued Shares (“Surplus
Unissued Shares”)
shall be dealt with as follows:




	 	(i)	 	where clause 9.2(D)(i) applies, none of the
Surplus Unissued Shares shall be allotted to any other
Offeree;
	 
	 	(ii)	 	if the number of such Surplus Unissued Shares
is equal to or more than the number of Unissued Shares
required to satisfy all unsatisfied applications for Unissued
Shares (including Excess Unissued Shares) made by all other
Offerees, the Surplus Unissued Shares shall be allotted
accordingly; and
	 
	 	(iii)	 	if the number of Surplus Unissued Shares is
less than the number of Unissued Shares required to satisfy
all unsatisfied applications for Unissued Shares (including
Excess Unissued Shares) made by all other Offerees:




	 	(a)	 	such Surplus Unissued Shares shall
be allotted to each of the other Offerees which have
not had allotted to them the
total number of Unissued Shares (including Excess
Unissued Shares) for which they applied, in the
proportion, as nearly as may be, which their
respective holdings of Shares immediately prior to
service of the Issue Notice bear to one another,
PROVIDED THAT no such Offeree shall be allotted more
than the total number of Unissued Shares (including
Excess Unissued Shares) it may have originally
applied for; and
	 
	 	(b)	 	any Surplus Unissued Shares which
remain to be allotted shall be allotted so as to
satisfy any unsatisfied applications for Unissued
Shares (including Excess Unissued Shares) made by other
Offerees PROVIDED THAT, in the event of competition,
the Surplus Unissued



33






 





	 	 	 	Shares shall be allotted to each
such Offeree in the proportion, as nearly as may be,
which their respective holdings of Shares immediately
prior to service of the Issue Notice bear to one
another, PROVIDED THAT no such Offeree shall be
allotted more Unissued Shares than it shall have stated
itself willing to accept. Any remaining Surplus
Unissued Shares shall be allotted by applying this
clause 9.2(E)(iii)(b), on more than one occasion if
necessary, without taking account of any Offeree whose
application has already been satisfied in full, until
such time as either all of the Surplus Unissued Shares
have been allotted or all applications for Unissued
Shares have been satisfied in full.
	 
	 	(iv)	 	If after the application of clauses 9.2(E)(i)
to (iii) above, any Surplus Unissued Shares have not been
allotted to any other Offeree, they shall be allotted to the
Offeree referred to in clause 9.2(E) notwithstanding that, as
a result of such allotment, that Offeree’s holding of Shares
shall increase to 50 per cent. or more of the Shares in
issue.




	 	(F)	 	References in clause 9.2(D) and clause 9.2(E) to the holding
of Shares by any Offeree shall be taken to mean such Offeree’s
holding of Shares aggregated with each and every holding of Shares
held by other members of that Offeree’s Group.
	 
	 	(G)	 	Any Unissued Shares not accepted by Offerees, or not capable
of being allocated among them except by way of fractions, shall
(subject to clause 14 (Ineligible Persons) and the provisions of
section 80 of the Companies Act 1985) be at the disposal of the
Directors PROVIDED THAT no such Share shall be allotted:





	 	(i)	 	after the expiry of the period of four months
from the date of the Issue Notice; and
	 
	 	(ii)	 	on terms which are more favourable to the
allottee than the terms on which they were offered to
existing holders of Shares; and
	 
	 	(iii)	 	unless the proposed allottee (if it is not
already a Shareholder) shall first have entered into a Deed
of Adherence in accordance with clause 17 (Effect of Deed of
Adherence).




	 	(H)	 	Notwithstanding any of the foregoing provisions of this
clause 9.2, if, upon any allotment of Shares made in accordance with
this clause 9.2, Munich Re would hold Shares representing 25 per
cent. or more of the total number of Shares which would, following
such allotment, be in issue or 25 per cent. or more of the total
voting rights which, following such allotment, would normally be
exercisable at general meetings of the Company, the Directors shall
prior to the relevant allotment of Unissued Shares notify Munich Re
in writing of such fact and Munich Re shall be



34






 



	 	 	 	entitled, at any time
within 10 Business Days following receipt of such notice, to revoke
its right to have allotted to it such number of Unissued Shares as
it may in its absolute discretion decide. Any such revocation by
Munich Re shall be made by written notice to the Company specifying
the number of Unissued Shares in respect of which it wishes to
revoke its rights and, save with prior written consent of all of the
Offerees, none of those Unissued Shares shall be allotted to any
other Offeree or any third party other than in accordance with a
further offer made in accordance with this clause 9.2. Subject
thereto, the Directors may allot the remaining Unissued Shares taken
up in the manner provided for in this clause 9.2.




	9.3	 	Rights to Subscribe or Convert
	 
	 	 	No right to subscribe for, or convert any security into, a Share shall be
allotted or issued except with the prior consent in writing of the
Shareholders.
	 
	10.	 	RESTRICTIONS ON DEALING WITH SHARES
	 
	 	 	No Disposal of any Share or any legal or beneficial interest in a Share
shall be permitted except a transfer of the entire legal and beneficial
interest in the Share which is permitted by the other terms of this
agreement and the New Articles of Association.
	 
	11.	 	PERMITTED TRANSFERS
	 
	11.1	 	Transfers within a Group
	 
	 	 	A Shareholder may transfer any Share to any other body corporate in the
same Transfer Group (a “Group Transferee”) without restriction as to
price or otherwise PROVIDED THAT the Group Transferee (if it is not
already a party to this agreement) shall first have entered into a Deed
of Adherence in accordance with clause 17 (Effect of Deed of Adherence).
	 
	11.2	 	Group Transferee Leaving the Group
	 
	 	 	A Group Transferee holding Shares shall transfer, in a manner and to a
transferee permitted by this agreement, all the Shares held by it before
it ceases to be in the same Transfer Group as the Shareholder who
transferred (such transfer being, for the purposes of this clause 11.2
only, the “Original Transfer”) the relevant Shares to the Group
Transferee in question (for the purposes of this clause 11.2 only, an
“Original Transferor”) or, in the event that such Original Transferor has
itself ceased to be in the same Transfer Group as such Shareholder at a
time immediately before such transfer would take place, the Group
Transferee shall instead transfer the Shares in a manner permitted by
this agreement, to any other body corporate who was and remains a member
of the same Transfer Group as such Original Transferor at the time of the
Original Transfer.



35






 







	11.3	 	Transfers Between Shareholders
	 
	 	 	Nothing in this agreement shall prevent the transfer by any Shareholder
(without restriction as to price or otherwise), on not more than one
occasion during any rolling period of 12 calendar months, of Shares
representing one per cent. of the total number of Shares from time to
time in issue or carrying one per cent. of the voting rights normally
exercisable at general meetings of the Company (whichever shall be the
higher) to any other Shareholder or as such Shareholder may direct, to
any member of that Shareholder’s Group PROVIDED THAT no such transfer
pursuant to this clause 11.3 shall be made to any other Shareholder or to
any member of that Shareholder’s Group where that Shareholder’s holding
of Shares would be increased to 50 per cent. or more in nominal value of
the Shares in issue. References in this clause 11.3 to the holding of
Shares by any Shareholder shall be taken to mean such Shareholder’s
holding of Shares aggregated with each and every holding of Shares held
by other members of that Shareholder’s Group. Each Shareholder hereby
separately and independently confirms and declares that it has not, as at
the date of this agreement, agreed to transfer to any other Shareholder
or any member of any Shareholder’s Group any such Shares and it is not
party to any arrangement or understanding with respect to any such
transfer or the terms thereof.
	 
	11.4	 	Information and Evidence
	 
	 	 	The transferor and the transferee of any Share transferred under this
clause 11 shall each provide to the Company and the other Shareholders,
in each case at its own expense, any information and evidence reasonably
requested in writing by any or all of the other Shareholders for the
purpose of determining whether the transfer to the proposed transferee
complies with the terms of this clause 11.
	 
	11.5	 	Compliance with Agreement
	 
	 	 	Each Shareholder who has transferred its Shares to a Group Transferee
shall procure that the Group Transferee holding such Shares and any
subsequent Group Transferee complies with the terms of this agreement.
	 
	12.	 	OTHER VOLUNTARY TRANSFERS
	 
	12.1	 	Pre-emption Rights




	 	(A)	If any Shareholder proposes to transfer any Shares (otherwise
than in accordance with clause 11 (Permitted Transfers)), such
Shareholder (the “Transferor”) shall serve a notice (“Transfer
Notice”) on the Company and each of the other Shareholders
(excluding any Defaulting Shareholder in respect of which it has
been determined in accordance with clause 13.2(B)(iv) (Default
Options) that the relevant Event of Default has been substantiated
or has not been remedied) (each such Shareholder being a
“Recipient”).



36






 





	 	(B)	 	The Transfer Notice shall:




	 	(i)	 	inform the Company and the Recipients thereof
of the proposed transfer of the Shares and shall specify the
number of Shares proposed to be transferred (“Offered
Shares”);
	 
	 	(ii)	 	if any person has expressed an interest in
acquiring the Offered Shares (or any of them), state the
identity of that person (an “Intended Transferee”);
	 
	 	(iii)	 	state the price and other terms (“Offer
Terms”) on which the Offered Shares are proposed to be
transferred, and if no price is specified, the price shall be
deemed to be the Prescribed Value;
	 
	 	(iv)	 	invite every Recipient to state in writing to
the Company and to the Transferor within the Minimum Period
whether it is willing to purchase any and, if so, how many of
the Offered Shares.




	 	(C)	 	A Transfer Notice given or deemed to be given in accordance
with this agreement shall be deemed to appoint the Company as agent
of the
Transferor for the offer, allocation and sale of the Offered
Shares in accordance with this clause 12 and shall, subject to
clause 12.1(I), be revocable only with the consent in writing of
all of the Recipients, and if it is revoked:




	 	(i)	 	no further Transfer Notice in respect of a
number of Shares up to the number of Shares which were the
subject of the revoked Transfer Notice may be given by the
Transferor (or any other member of its Group) within six
months after the date on which the Transfer Notice is
revoked, unless all of the Recipients agree in writing; and
	 
	 	(ii)	 	the remaining provisions of this clause 12
shall cease to apply in relation to the revoked Transfer
Notice.




	 	(D)	 	The Offered Shares shall be offered to the Recipients on
terms that, in the event of competition, the Offered Shares shall,
subject to clauses 12.1(E) and 12.1(F) be sold to the Recipients
accepting the offer in the proportion, as nearly as may be, which
their respective holdings of Shares immediately prior to service of
the original Transfer Notice bear to one another. Each such
Recipient shall state in its written notice to the Transferor under
clause 12.1(B)(iv) whether or not it is willing to purchase Offered
Shares in excess of its proportionate entitlement (“Excess Shares”)
and, if such Recipient states that it is so willing, it shall state
the maximum number of Excess Shares it is willing to purchase.
	 
	 	(E)	 	Within five Business Days after the expiry of the Minimum
Period (as defined in clause 12.1(J)) (or sooner if each and every
Recipient has given notice in writing under clause 12.1(B)(iv) or
informed the



37






 




	 	 	 	Company in writing that it does not wish to purchase
any of the Offered Shares), the Directors shall, subject to clause
12.1(F) below, allocate the Offered Shares in the following manner:




	 	(i)	 	if the total number of Offered Shares applied
for (including Excess Shares) by all relevant Recipients is
equal to or less than the available number of Offered Shares,
the Directors shall allocate the Offered Shares in accordance
with such applications;
	 
	 	(ii)	 	if the total number of Offered Shares applied
for (including Excess Shares) by all relevant Recipients is
more than the available number of Offered Shares:




	 	(a)	 	the Directors shall allocate the
Offered Shares to the relevant Recipients in the
proportion, as nearly as may be, which their holdings
of Shares immediately prior to service of the Transfer
Notice bear to one another (or, in
the case of any particular Recipient, such lesser
number of Offered Shares for which it may have
applied); and
	 
	 	(b)	 	applications for Excess Shares
shall be allocated in accordance with such applications
or, in the event of competition, to each such Recipient
applying for Excess Shares in the proportion, as nearly
as may be, which their respective holdings of Shares
immediately prior to service of the Transfer Notice
bear to one another, PROVIDED THAT no such Recipient
shall be allocated more Excess Shares than it shall
have stated itself willing to take. Any remaining
Offered Shares shall be allocated by applying this
clause 12.1(E)(ii)(b), on more than one occasion if
necessary, without taking account of any Recipient
whose application has already been satisfied in full,
until such time as either all of the Offered Shares
have been allocated or all applications therefor have
been satisfied in full.




	 	(F)	 	If under clause 12.1(E), a Recipient would otherwise be
entitled to be allocated such number of Offered Shares as would
increase its holding of Shares to 50 per cent. or more of the Shares
in issue, the Directors shall first allocate to such Recipient the
maximum number of Offered Shares which may be allocated to it
without increasing such Recipient’s holding of Shares to a number of
Shares representing 50 per cent. or more in nominal value of the
Shares in issue. The balance of such Recipient’s entitlement to
Offered Shares (“Surplus Offered Shares”) shall be dealt with as
follows:




	 	(i)	 	where clause 12.1(E)(i) applies, none of the
Surplus Offered Shares shall be allocated to any other
Recipient;
	 
	 	(ii)	 	if the number of such Surplus Offered Shares is
equal to or more than the number of Offered Shares required
to satisfy all



38






 



	 	 	 	unsatisfied applications for Offered Shares
(including Excess Shares) made by all other Recipients, the
Surplus Offered Shares shall be allocated accordingly; and
	 
	 	(iii)	 	if the number of Surplus Offered Shares is
less than the number of Offered Shares required to satisfy
all unsatisfied applications for Offered Shares (including
Excess Shares) made by all other Recipients:




	 	(a)	 	such Surplus Offered Shares shall
be allocated to each of the other Recipients which have
not had allocated to them the total number of Offered
Shares (including Excess Shares) for which they
applied, in the proportion, as nearly as may be, which
their respective holdings of Shares
immediately prior to service of the original Transfer
Notice bear to one another, PROVIDED THAT no such
Recipient shall be allocated more than the total
number of Offered Shares (including Excess Shares)
than it may have originally applied for; and
	 
	 	(b)	 	any Surplus Offered Shares which
remain unallocated shall be allocated so as to satisfy
any unsatisfied applications for Offered Shares
(including Excess Shares) made by other Recipients
PROVIDED THAT, in the event of competition, the Surplus
Offered Shares shall be allocated to each such
Recipient in the proportion, as nearly as may be, which
their respective holdings of Shares immediately prior
to service of the Transfer Notice bear to one another,
PROVIDED THAT no such Recipient shall be allocated more
Offered Shares than it shall have stated itself willing
to take. Any remaining Surplus Offered Shares shall be
allocated by applying this clause 12.1(F)(iii)(b), on
more than one occasion if necessary, without taking
account of any Recipient whose application has already
been satisfied in full, until such time as either all
of the Surplus Offered Shares have been allocated or
all applications for Offered Shares have been satisfied
in full.




	 	(G)	 	If after the application of clauses 12.1(F)(i) to (iii)
above, any Surplus Offered Shares have not been allocated to any
other Recipient, they shall be allocated to the Recipient referred
to in clause 12.1(F) notwithstanding that, as a result of such
allocation, that Recipient’s holding of Shares shall increase to 50
per cent. or more of the Shares in issue.
	 
	 	(H)	 	Upon final allocation of the Offered Shares in accordance
with the foregoing provisions, the Directors shall forthwith give
notice of the allocation (an “Allocation Notice”) to each of the
Recipients to whom Offered Shares have been allocated (a “Member
Applicant”). The Allocation Notice shall specify the time (subject
to clause 12.3(C)



39






 





	 	 	 	(Deemed Transfer Notice on Withdrawal) not being
less than 48 hours nor more than seven Business Days after the date
such notice is served) and place in the United Kingdom for
completion of the sale and purchase of the Offered Shares which are
the subject of the Allocation Notice. Subject to clause 12.1(I),
Completion shall take place at such time and place in accordance
with clause 15 (Completion of Share Transfers).
	 
	 	(I)	 	If after the application of the preceding provisions of this
clause 12, not all of the Offered Shares have been allocated, the
Transferor may, by notice in writing to the Company and each
Recipient to which Offered Shares have been allocated, revoke its
Transfer Notice and, if the
Transferor does revoke such Transfer Notice, clauses 12.1(C)(i)
and (ii) shall apply. Any such notice must be served on the
Company and each such Recipient no later than 5.00 p.m. on the
third Business Day prior to the date set for completion. If a
Transfer Notice is revoked, clause 12.2 (Repurchase by the Company
or Transfer to a Third Party) shall not apply in respect of the
Offered Shares which are the subject of such Transfer Notice.
	 
	 	(J)	 	The “Minimum Period” shall be the period expiring 30 days
after the date of service of the Transfer Notice or, if later, the
date on which the Prescribed Value, if required to be agreed or
determined, is agreed or determined in accordance with clause 18
(Prescribed Value) plus such further number of days (not exceeding
90), if any, as any Recipient may, by notice in writing to the
Transferor, the Company and all other Recipients given no later than
30 days after the date of service of the Transfer Notice, specify as
being in the Recipient’s opinion necessary to enable it to obtain
all requisite regulatory and other third party consents to the sale
and purchase that would result from acceptance by the relevant
Recipient of the offer contained or deemed to be contained in the
Transfer Notice (including any change in indirect shareholder or
controller interest in any member of the Global Group).
	 
	 	(K)	 	References in clause 12.1(F) and clause 12.1(G) to the
holding of Shares by any Recipient shall be taken to mean such
Recipient’s holding of Shares aggregated with each and every holding
of Shares held by other members of that Recipient’s Group.




	12.2	 	Repurchase by the Company or Transfer to a Third Party




	 	(A)	If after the proper application of clause 12.1, not all of
the Offered Shares specified in a Transfer Notice duly served in
accordance with clause 12.1(A) (Pre-emption Rights) have been
allocated and purchased, the Company shall, subject to clause
12.1(I) (Pre-emption Rights), have the right to purchase the
remaining Offered Shares or any of the them at the price specified
or deemed specified in the Transfer Notice, subject to:




	 	(i)	 	the Company first obtaining any necessary
approval required under clauses 4.1 (Requirement for Majority
Approval of Shareholder Directors) and 4.2 (Requirement for
Majority



40






 





	 	 	 	Approval of Shareholders) of this agreement, except
that, for the purposes of any resolution of the Directors or
written agreement of the Shareholders which is required under
either such clause in connection with such purchase by the
Company, the votes of the Transferor and of every Shareholder
Director appointed by the Transferor shall be disregarded in
accordance with the provisions of clause 4.3
(Disenfranchisement);
	 
	 	(ii)	 	the Company complying in all respects with all
applicable laws with respect to such purchase including
without limitation, sections 159 to 181 of the Companies Act
1985,
	 




	 	 	 	PROVIDED THAT the Company shall in no circumstances be entitled to
exercise its rights to purchase any Offered Shares under this
clause if, as a result of any such purchase, any Shareholder or
any member of its Group would be in breach of any applicable law
or regulation in any relevant jurisdiction.




	 	(B)	 	Subject to clause 12.2(A) above, the Company may exercise its
rights thereunder to purchase Offered Shares by giving written
notice to the Transferor concerned at any time during the period of
30 Business Days commencing on the day on which the pre-emption
provisions contained in clause 12.1 (Pre-emption Rights) have been
exhausted (being the expiry of the Minimum Period with no Offered
Shares having been applied for or the day on which the sale and
purchase of the Offered Shares taken up is completed). If a notice
is served, completion of the purchase by the Company shall be
completed in accordance with clause 15 (Completion of Share
Transfers) at such time (not being less than 48 hours nor more than
seven Business Days after the date such notice is served) and place
in the United Kingdom as shall be specified in such notice.
	 
	 	(C)	 	In the event that not all of the Offered Shares the subject
of a Transfer Notice are sold by the Company in accordance with the
provisions of clause 12.1 (Pre-emption Rights) or purchased by the
Company in accordance with the provisions of clause 12.2(A) and
clause 12.2(B), any remaining Offered Shares may be transferred by
the Transferor to (but only to) an Intended Transferee PROVIDED
THAT:




	 	(i)	 	the entire legal and beneficial interest in
each of the Shares is transferred;
	 
	 	(ii)	 	clause 14 (Ineligible Persons) is complied
with;
	 
	 	(iii)	 	the price is not less than the price set out
in the Transfer Notice;
	 
	 	(iv)	 	the other terms of sale to the third party are
not more favourable than the Offer Terms;



41






 





	 	(v)	 	there are no collateral agreements which make
the arrangement more favourable to the third party;
	 
	 	(vi)	 	the transfer takes place within the Maximum
Period (as defined in clause 12.2(D));
	 
	 	(vii)	 	the Transferor and the Intended Transferee
shall provide to the Shareholders, at the expense of the
Transferor or Intended Transferee (as the case may be), any
information and evidence requested in writing for the purpose
of determining whether the transfer complies with the terms
of this clause 12.2; and
	 
	 	(viii)	 	the Intended Transferee shall, prior to the transfer, enter
into a Deed of Adherence in accordance with clause 17 (Effect
of Deed of Adherence).




	 	(D)	 	The “Maximum Period” shall be the period of seven days after
the pre-emption provisions in clause 12.1 (Pre-emption Rights) have
been exhausted and, where applicable, the period of 30 Business Days
referred to in clause 12.2(B) has expired, plus such further number
of days (not exceeding 90) if any, as the Transferor may, by notice
in writing to the other Shareholders given no later than seven days
after the expiry of the Minimum Period, specify as being in the
opinion of the Transferor necessary to enable the Intended
Transferee to obtain all requisite regulatory and other third party
consents to the said transfer (including any change in indirect
shareholder or controller interest in any member of the Global
Group).




	12.3	 	Deemed Transfer Notice on Withdrawal




	 	(A)	 	If, at any time, (i) a Shareholder which is an Active Member,
or (ii) a member of any Shareholder’s Group which is an Active
Member, serves or is deemed to have served a notice to withdraw
from, terminate or reduce its participation in the New Global
Aerospace Pool (a “Withdrawal Notice”) such that its Respective
Proportion (as defined in the New Pool Members’ Agreement) will fall
below five per cent. in respect of Insured Risks (as defined
therein) attaching on or after 1st January in the year following
such service (in all cases where neither the Shareholder nor any
member of its Group will be an Active Member or has become
unconditionally bound (by means of a written agreement with all of
the Insurers to become, an Active Member in respect of such Insured
Risks) such Withdrawal Notice shall be deemed to constitute an offer
made by or on behalf of the relevant Shareholder (the “Withdrawing
Shareholder”) to sell all of its Shares, and the Withdrawing
Shareholder shall for all purposes be deemed on the date of such
Withdrawal Notice to have served on the Company a Transfer Notice in
accordance with the provisions of clause 12.1 (Pre-emption Rights).



42






 




	 	(B)	 	The Company shall, within five Business Days of receiving the
Withdrawal Notice ,serve a notice on all the other Shareholders that
a Transfer Notice has been deemed served by the Withdrawing
Shareholder.
	 
	 	(C)	 	For the purposes of this clause 12.3, the Withdrawing
Shareholder shall not be entitled to withdraw the deemed Transfer
Notice in accordance with clause 12.1(I), and clause 12.2(C) shall
not apply. The Allocation Notice shall state that the time for
completion of the sale and purchase of any Shares for sale shall be
31st December in the year of service of the deemed Transfer Notice.
The Shares shall be offered for Sale at their Prescribed Value.




	12.4	 	Deemed Transfer Notice on Pool Default




	 	(A)	 	If, at any time, a Shareholder or a member of any
Shareholder’s Group has a “termination notice” served upon it under
clause 15.3 of the New Pool Members’ Agreement which notice becomes
effective in accordance with clause 28.5 thereof (an “Effective
Termination Notice”), such Effective Termination Notice shall be
deemed to constitute an offer made by or on behalf of the relevant
Shareholder to sell all of its Shares, and the relevant Shareholder
shall for all purposes be deemed on the date of such Effective
Termination Notice:
	 



	 	(i)	 	to have served on the Company a Transfer Notice
in accordance with the provisions of clause 12.1 (Pre-emption
Rights); and
	 
	 	(ii)	 	to be a Defaulting Shareholder and the
provisions of clause 13.2(B)(v), clause 13.2(C) and clauses
13.2(E) to (G) inclusive shall apply.




	 	(B)	 	In the event that a Transfer Notice is deemed served (on the
same day) under the provisions of both clause 13.2(B)(iv) and clause
12.4(A), then the provisions of 13.2(B)(iv) shall prevail, except
where a Transfer Notice is deemed served under clause 12.4(A) by
virtue of an Effective Termination Notice triggered by a breach of
clause 15.2(h) of the New Pool Members’ Agreement, in which
circumstances the provisions of clause 12.4(A) shall prevail.




	12.5	 	Transfers to Eligible Persons
	 
	 	 	Notwithstanding any other provision of this agreement, if all of the
Shareholders (excluding any Defaulting Shareholders in respect of which
it has been determined in accordance with clause 13.2(B)(iv) (Default
Options) that the relevant Event of Default has been substantiated or
has not been remedied) (the “relevant Shareholders”) other than the
Transferor agree in writing, at any time prior to the completion of any
transfer to any person (including any Intended Transferee) or purchase
by the Company of any Shares in accordance with this clause 12, that
all or any of the Shares which are the subject of the Transfer Notice
(or deemed Transfer Notice) may be transferred to any person



43






 





	 	 	who is an
eligible person in accordance with clause 14 (Ineligible Persons), such
Shares shall, notwithstanding the terms of any Allocation Notice which
may have been issued, be transferred to any such person nominated by
the relevant Shareholders by written notice to the Company and the
Transferor. Any Shares which remain the subject of any Allocation
Notice shall be transferred in accordance with clause 12.1(H)
(Pre-emption Rights) in such numbers and to such of the Member
Applicants named therein as the relevant Shareholders shall specify in
their written notice to the Company referred to in this clause 12.5.
References in this clause to “Transferor” shall include any Withdrawing
Shareholder or Defaulting Shareholder who has been deemed to serve a
Transfer Notice in accordance with this agreement.
	 
	13.	 	TRANSFER OF SHARES ON DEFAULT
	 
	13.1	 	Events of Default
	 
	 	 	The following are “Events
of Default”:




	 	(A)	 	any Shareholder makes any Disposal of any Shares which is in
breach of this agreement;
	 
	 	(B)	 	any Shareholder is in material breach of any of the other
provisions of this agreement and such breach has not, if capable of
remedy, been remedied to the reasonable satisfaction of every other
Shareholder within 30 days of receipt by the Shareholder in breach
of written notice from any other Shareholder requiring such remedy,
or any Shareholder is in persistent breach (which by its persistence
becomes material) of any of the provisions of this agreement;
	 
	 	(C)	 	a Group Transferee, whilst holding Shares, ceases to be a
member of the same Transfer Group as the Shareholder who transferred
the relevant Shares to the Group Transferee in question;
	 
	 	(D)	 	any procedure is commenced with a view to the winding-up or
re-organisation of any Shareholder or any parent undertaking of such
Shareholder;
	 
	 	(E)	 	any procedure is commenced with a view to the appointment of
an administrator, receiver, administrative receiver or trustee in
bankruptcy in relation to any Shareholder or any parent undertaking
of such Shareholder or all or substantially all of its assets and
that procedure is not terminated or discharged within 30 days;
	 
	 	(F)	 	the holder of any security over all or substantially all of
the assets of any Shareholder or any parent undertaking of such
Shareholder takes any step to enforce that security and that
enforcement is not discontinued within 30 days;



44






 





	 	(G)	 	all or substantially all of the assets of any Shareholder or
any parent undertaking of such Shareholder is subject to attachment,
sequestration, execution or any similar process and that process is
not terminated or discharged within 30 days;
	 
	 	(H)	 	any Shareholder or any parent undertaking of such Shareholder
is unable to pay its debts as they fall due or enters into a
composition or arrangement with its creditors or any class of them;
	 
	 	(I)	 	any Shareholder or any parent undertaking of such Shareholder
ceases or threatens to cease wholly or substantially to carry on its
business;
	 
	 	(J)	 	a change in the Control of the Ultimate Parent Company of any
Shareholder (or, where there is no such Ultimate Parent Company, the
Shareholder itself), PROVIDED THAT no transfer by an individual of
shares in the Ultimate Parent Company of NSA shall constitute such
a change in the Control of NSA; or
	 
	 	(K)	 	any Shareholder has reasonably requested information in
writing from a Shareholder to enable it to determine whether any of
the above circumstances apply to a particular Shareholder, and such
information is not provided to the reasonable satisfaction of the
Company or the Shareholder which requested the information within 15
Business Days after the request is received.




	13.2	 	Default Options




	 	(A)	 	Clause 13.2(B) shall apply if any of the Events of Default
listed at 13.1 (A) to (K) (inclusive) is alleged to have occurred
(and, in the case of any remediable Event of Default, is alleged to
be continuing) in relation to any Shareholder (“Defaulting
Shareholder”). In such circumstances any one or more of the
Shareholders, other than the Defaulting Shareholder, (the “Non
Defaulting Shareholders”) may serve notice (“Default
Notice”) on the
Defaulting Shareholder in the terms set out in 13.2(B) below.
	 
	 	(B)	 	If in any case it is alleged by any one or more of the
Shareholders that another Shareholder is a Defaulting Shareholder
under clause 13.2(A):




	 	(i)	 	the Default Notice may be served by any one or
more of the Non Defaulting Shareholders on the Shareholder
which is alleged to be the Defaulting Shareholder and copied
to the Company and every other Shareholder specifying in
reasonable detail the basis for the allegation, and the
Shareholder which is alleged to be the Defaulting Shareholder
shall then have a period of 15 days within which to make
representations to the board of Directors of the Company and to the other
Shareholders and/or to remedy the Event of Default (if remediable);



45






 



	 	(ii)	 	if following receipt of those representations
or the expiry of the 15 day period without any
representations having been made, a majority of the
Non-Defaulting Shareholders determine that the allegation is
unsubstantiated or that any Event of Default has been
remedied, the allegation shall be deemed to have been
withdrawn;
	 
	 	(iii)	 	pending determination by the agreement of the
Defaulting Shareholder or by a first instance decision
(including a summary judgment) of the court (which
proceedings have been commenced with the consent of a
majority of the Non Defaulting Shareholders and are in
accordance with the provisions of clause 33 (Jurisdiction))
that the allegation is substantiated or the Event of Default
has not been remedied, the Defaulting Shareholder in respect
of whom the allegation has been made shall not be regarded as
being in default for the purposes of this agreement.
	 
	 	(iv)	 	If it is determined by the agreement of the
Defaulting Shareholder, or by a first instance decision
(including a summary judgment) of the court (which
proceedings have been commenced with the consent of a
majority of the Non Defaulting Shareholders and are in
accordance with the provisions of clause 33 (Jurisdiction))
that the allegation is substantiated or the Event of Default
has not been remedied, such determination shall constitute an
offer by the Defaulting Shareholder to sell all of its
Shares, and the Defaulting Shareholder shall, notwithstanding
any other remedy available at law or under the terms of this
agreement to the Company or the other Shareholders, for all
purposes be deemed on the date of such determination to have
served on the Company a Transfer Notice in accordance with
the provisions of clause 12.1 (Pre-emption rights).
	 
	 	(v)	 	The Non Defaulting Shareholders shall notify
the Company of the determination and the Company shall,
within five Business Days of receiving such notification,
serve a notice on all the Non-Defaulting Shareholders that a
Transfer Notice has been deemed served by the Defaulting
Shareholder. The Defaulting Shareholder shall not be
entitled to withdraw the deemed Transfer Notice in accordance
with clause 12.1(I) (Pre-emption Rights) and clause 12.2(C)
(Repurchase by the Company or Transfer to a Third Party)
shall not apply. The Shares for sale shall be offered at
their Prescribed Value, except that Shares offered for sale:
	 


	 	(a)	 	pursuant to an Event of Default
under clause 13.1(A) to clause 13.1(C) (inclusive); or
	 
	 	(b)	 	pursuant to an Effective
Termination Notice triggered by a breach of clause
15.2(h) of the New Pool Members’ Agreement,



46






 





	 	 	 	shall be offered for sale at the lower of their Acquisition
Value and their Prescribed Value.
	 



	 	(C)	 	The parties shall, where applicable, use all reasonable
endeavours to determine or procure the determination of the
Prescribed Value of the relevant Shares as soon as reasonably
practical after the deemed service of a Transfer Notice.
	 
	 	(D)	 	The Non-Defaulting Shareholder who served (or the
Non-Defaulting Shareholders who together served) a Default Notice
may revoke (and, if more than one, may acting together revoke) the
Default Notice within 14 Business Days after the Prescribed Value of
the relevant shares has been determined. If the Default Notice is
revoked, no further Default Notice may be served in respect of the
circumstances comprising the relevant Event of Default.
	 
	 	(E)	 	The Defaulting Shareholder shall pay any present and future
stamp, documentary and other duties and taxes, if any, payable in
respect of the sale or transfer of Shares resulting from clause 12.4
(Deemed Transfer Notice on Pool Default) or this clause 13.2.
	 
	 	(F)	 	If either:
	 



	 	(i)	 	a Default Notice has been served on a
Defaulting Shareholder pursuant to clause 13.2(A) and it has
been determined that the allegation has been substantiated or
the Event of Default has not been remedied in accordance with
clause 13.2(B)(iv); or
	 
	 	(ii)	 	an Effective Termination Notice has been served
as set out in clause 12.4 (Deemed Transfer Notice on Pool
Default),
	 



	 	 	 	then the votes of the Defaulting Shareholder and of every
Shareholder Director appointed by the Defaulting Shareholder
shall, for the purposes of any resolution of the Directors or
written agreement of the Shareholders (as the case may be)
required under clause 4.1 (Requirement for Majority Approval of
Shareholder Directors) or clause 4.2 (Requirement for Majority
Approval of Shareholders) for any purpose in connection with any
matter, be disregarded in accordance with the provisions of clause
4.3 (Disenfranchisement) and all the Shares then held by the
Defaulting Shareholder (including any further Shares issued to the
Defaulting Shareholder) shall cease to entitle the Defaulting
Shareholder to have any right to attend or vote at any general
meeting of the Company.
	 
	 	(G)	 	Where a Defaulting Shareholder has been deemed to have served
a Transfer Notice in respect of its Shares as set out in clause 12.4
(Deemed Transfer on Pool Default) or pursuant to this clause 13 and
not all of its Shares have been purchased in accordance with the
provisions of clause 12.1 (Pre-emption Rights) or purchased by the
Company in accordance with clause 12.2 (Repurchase by the Company or
Transfer to a Third



47






 





	 	 	 	Party), then, as from the date on which the provisions have been
exhausted and the Company’s rights under clause 12.2 have expired,
clause 13.2(F) above shall no longer apply unless
	 



	 	(i)	 	the Event of Default which triggered service of
the Transfer Notice was one of those set out in clauses 13.1(A)
to (C) (Events of Default) inclusive; or
	 
	 	(ii)	 	the service of an Effective Transfer Notice was
triggered by a breach of clause 15.2(h) of the New Pool
Members’ Agreement.






	14.	 	INELIGIBLE PERSONS
	 
	14.1	 	Notwithstanding anything in this agreement, no allotment or transfer of
any Share shall be made to any person who:




	 	(A)	 	is not a body corporate;
	 
	 	(B)	 	has not first obtained all necessary consents or approvals
pursuant to any applicable financial services or other relevant
legislation in connection with the proposed allotment or transfer of
the relevant shares or who has obtained such approvals subject to
conditions which in the reasonable opinion of any Shareholder would
materially restrict the ability of the Company to carry on the
Business in accordance with the Global Group Business Plan; or
	 
	 	(C)	 	is not or has not become unconditionally bound (by means of a
binding written agreement with all of the Insurers) to become an
Active Member in respect of Insured risks attaching on or after 1st
January next following the effective date of transfer or does not
have a member of its Group which is or is unconditionally bound (by
means of a binding written agreement with all of the Insurers) to
become an Active Member in respect of Insured Risks attaching on or
after such 1st January.




	15.	 	COMPLETION OF SHARE TRANSFERS
	 
	15.1	 	Encumbrances and Rights



Where this clause 15 applies to the transfer of any Share or the purchase
by the Company of any Share, the Share shall be transferred with full
title guarantee, free of Encumbrances and with all rights attaching
thereto.




	15.2	 	Obligations at Completion


On completion of any transfer of Shares under this agreement:





	 	(A)	 	the seller shall deliver to the purchaser a duly executed
transfer in favour of the purchaser together with the certificate
representing the relevant Shares and a power of attorney in favour
of the purchaser in such form as the purchaser may reasonably
require, so as to enable the purchaser,



48






 





	 	 	 	pending registration, to exercise all rights of ownership in
relation to the Shares transferred to it including, without
limitation, the voting rights;
	 
	 	(B)	 	Subject to clause 13.2.(E) (Default Options), the purchaser
shall pay the aggregate transfer price payable in respect of the
relevant Shares to the seller by bankers’ draft for value on the
date of completion or in such other manner as may be agreed by the
seller and the purchaser before completion;
	 
	 	(C)	 	the seller shall do all such other acts and/or execute all
such other documents in a form satisfactory to the purchaser as the
purchaser may reasonably require to give effect to the transfer of
Shares to it;
	 
	 	(D)	 	the seller shall remove all Shareholder Directors appointed
by it in accordance with clause 5.1 (Appointment and Removal of
Directors) unless the seller retains sufficient Shares to appoint
one or more Shareholder Directors; and
	 
	 	(E)	 	the purchaser shall undertake to ensure that the transfer is
duly stamped or submitted for adjudication by the Stamp Office and
the appropriate amount in respect of stamp duty (if any) is paid
within all relevant statutory time limits.




	16.	 	CONSENT TO TRANSFER FOR THE PURPOSES OF THE NEW ARTICLES AND SHAREHOLDER
LOANS
	 
	16.1	 	Consent to Transfer


This agreement constitutes the irrevocable written consent of each
Shareholder for itself and each and every member of that Shareholder’s
Group for the purposes of the New Articles of Association to any transfer
of Shares which is permitted or required by this agreement.




	16.2	 	Shareholder Loans




	 	(A)	 	Unless agreed otherwise by the Shareholder Directors as a
Reserved Matter pursuant to clause 4.1(X) (Requirement for Majority
Approval of the Shareholder Directors), and save to the extent that
a transfer of Shares is made to a Group Transferee in accordance
with the provisions of clause 11.1 (Transfers within a Group), no
Share (or any interest in a Share) shall be transferred unless there
is also transferred, to the same transferee and at the same time,
such proportion of the Shareholder Loans (if any) held by the
transferring Shareholder as is equal to the proportion which the
number of Shares to be transferred by it bears to the total number
of Shares held by it immediately prior to such transfer.
	 
	 	(B)	 	All (but not a part thereof) of a Shareholder Loan may be
transferred to any member of a Transfer Group of the relevant
Shareholder PROVIDED THAT the relevant Shareholder (or, if a
transfer of Shares has occurred under clause 11.1 (Transfers within
a Group), the relevant



49






 





	 	 	 	Group Transferee) shall procure that, immediately prior to the
member of the Transfer Group from time to time holding the
Shareholder Loan (whether such holder is the Shareholder, a Group
Transferee or any other member of the Transfer Group) ceasing to
be a member of such Transfer Group, the Shareholder Loan shall be
transferred to a body corporate who was and will remain a member
of such Transfer Group.




	17.	 	EFFECT OF DEED OF
ADHERENCE


The Shareholders and the Company shall procure that before any person
(other than a person who is already a Shareholder) (a “New Party”) is
registered as a holder of any share in the Company such person shall
enter into a Deed of Adherence in the form set out in Schedule 1. The
Company shall not register any such person as the holder of any Share
until such a deed has been executed by the New Party. The parties agree
to extend the benefit of this agreement to any person who acquires Shares
in accordance with this agreement and enters into a Deed of Adherence in
the form set out in Schedule 1, but without prejudice to the continuation
inter se of the rights and obligations of the original parties to this
agreement and any other persons who have entered into such a Deed of
Adherence.




	18.	 	PRESCRIBED VALUE


The “Prescribed Value” of any Shares shall be determined as follows:




	 	(A)	 	the Prescribed Value of any Shares shall be a percentage of
the market value of the total issued share capital of the Company,
such percentage being equal to the percentage of such total issued
share capital represented by those Shares;
	 
	 	(B)	 	the market value of the total issued share capital of the
Company shall be determined on the basis of a sale between a willing
seller and a willing buyer of the whole of the issued share capital
of the Company, save that such valuation shall not include any
premium reflecting sole or majority ownership or control of the
Company;
	 
	 	(C)	 	the Prescribed Value shall be as agreed between the
Shareholders or (in the absence of agreement) as certified in a
reasoned certificate by an individual or firm expert in company
valuations who or which is appointed by agreement between the
relevant parties within ten days of a notice under clause 27
(Notices) or, on the application of any Shareholder, is nominated by
the President for the time being of the Institute of Chartered
Accountants in England and Wales as being, in his opinion, expert as
aforesaid and independent of the Shareholders, and any individual or
firm so agreed or nominated shall immediately be appointed by the
Transferor. The individual or firm appointed as aforesaid shall act
as expert and not as arbitrator and his or its decision shall be
final and binding and his or its fees and other terms and



50






 





	 	 	 	conditions of appointment, shall be borne by either the
Transferor, the Withdrawing Shareholder, the Terminating
Shareholder (as the case may be) (in accordance with the
provisions of clause 12 (Other Voluntary Transfers)) or the
Defaulting Shareholder (in accordance with the provisions of
clause 13 (Transfer of Shares on Default)), as the case may be.
For the purposes of this clause 18(C), “relevant parties” shall
mean the Transferor and Recipients, save that when this clause
18(C) is applied pursuant to clause 13.2 (Default Options), it
shall mean the Non-Defaulting Shareholders.




	19.	 	SHAREHOLDER UNDERTAKINGS
	 
	19.1	 	Each Shareholder


Each Shareholder undertakes with each other Shareholder that it will:




	 	(A)	 	comply with each of the provisions of this agreement;
	 
	 	(B)	 	exercise its voting rights and other rights as a member of
the Company in order (insofar as it is able to do so through the
exercise of such rights and to the extent not contrary to the laws
of the jurisdiction in which it is domiciled) to give full effect to
the terms of this agreement and the rights and obligations of the
parties as set out in this agreement; and
	 
	 	(C)	 	procure that any Shareholder Director appointed by it from
time to time shall (subject to their fiduciary duties to the
Company) exercise their voting rights and other powers and
authorities in order (insofar as they are able to do so through the
exercise of such rights, powers and authorities and to the extent
not contrary to the laws of the jurisdiction in which it is
domiciled) to give full effect to the terms of this agreement and
the rights and obligations of the parties as set out in this
agreement.




	19.2	 	Indemnity of Company Officers




	 	(A)	 	The Shareholders hereby undertake to indemnify every
Executive Director and other officer of the Company from time to
time (excluding, for the avoidance of doubt, the Shareholder
Directors), to the extent that they are by virtue of section 310 of
the Companies Act 1985 constrained from receiving the benefit of
such an indemnity directly from the Company (each being an
“Indemnified Director”) against all claims, costs (including,
subject to clause 19.2(F), legal costs), losses, expenses and
liabilities properly made against or incurred by the Indemnified
Director in the purported execution of and discharge of his duties
including, without limitation, 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 PROVIDED THAT:
	 



	 	(i)	 	the Indemnified Director shall not be
indemnified if and to the extent that any of the said claims,
losses, expenses and liabilities



51






 





	 	 	 	arise from any criminal, wilful or fraudulent act or
omission on his part; and
	 
	 	(ii)	 	the Indemnified Director shall not be
indemnified if and to the extent that (a) he obtains
effective indemnification under any insurance policy, or (b)
is entitled to obtain effective indemnification (i) from the
Company under the deed of indemnity dated 2nd July 2002 or
otherwise, or (ii) from the Company under the Articles of
Association of the Company, or (iii) pursuant to the
2001/2002 Pool Members Agreement or the New Pool Members
Agreement in respect of the Global Group’s activities in
relation to the Global Aerospace Pool or the New Global
Aerospace Pool
	 



	 	 	 	and nothing herein shall be interpreted to obligate any
Shareholder to make any indemnification by reason of the default
of an Insurer under the New Pool Members’ Agreement.
	 
	 	(B)	 	Each Shareholder shall be liable under the indemnity given in
clause 19.2(A) (the “Indemnity) only for its proportionate share of
any claim, (being the proportion which the Shares it (and members of
its Group) hold bears to the issued share capital of the Company as
at the time the act or omission or other event took place) as a
separate and independent obligation and with several liability only,
and there shall be no joint, or joint and several, liability under
the Indemnity.
	 
	 	(C)	 	For the avoidance of doubt, the Indemnity shall apply for the
benefit of any person who was an Indemnified Director at the time at
which the act or omission or other event giving rise or alleged to
give rise to the liability took place, even if that person
subsequently ceased to be a director or other officer of the Company
PROVIDED THAT the Shareholder Directors may determine that the
benefit of the Indemnity should not apply in circumstances where the
employment of the Indemnified Director concerned has been terminated
by the Company as a direct result of the incident giving rise to the
liability.
	 
	 	(D)	 	If any proceedings shall be instituted against any of the
Indemnified Directors which may give rise to a claim under the
Indemnity, the Company shall as soon as reasonably practicable give
notice thereof in writing to the Shareholders who shall choose one
of the Shareholders to act on their behalf in overseeing the conduct
of such proceedings (the “Supervising Party”). Failing such
agreement the Supervising Party shall be the Shareholder whose
Shareholder Director is the Chairman of the board of Directors.
	 
	 	(E)	 	The Supervising Party shall have the option, subject to
giving to the relevant Indemnified Director(s) such indemnities and
security as such Indemnified Director(s) may reasonably require, to
assume the defence thereof, including the instruction of legal
advisers selected by the Supervising Party to represent the
Indemnified Director and any others



52






 





	 	 	 	which the Supervising Party may designate in such proceedings and
the Supervising Party shall pay the fees and disbursements of such
legal advisers related to such proceedings.
	 
	 	(F)	 	In any such proceedings any Indemnified Director shall have
the right to retain his own legal advisers, but the fees and
expenses of such legal advisers shall be at the expense of such
Indemnified Director unless:
	 


	 	(i)	 	the Supervising Party and the Indemnified
Director shall have mutually agreed in writing to the
retention of such legal advisers; or
	 
	 	(ii)	 	the named parties to any such proceedings
(including any added parties) include both the Supervising
Party and the Indemnified Director and representation of both
parties by the same legal advisers would be inappropriate due
to actual or potential differing interests between them,
	 


	 	 	 	in which case such fees and expenses shall be borne by the
Shareholders, provided that, in the case of clause 19.2(F)(ii),
the Supervising Party has consented (such consent not to be
unreasonably withheld or delayed) to the identity of the retained
legal advisers.
	 
	 	(G)	 	The Shareholders shall not be liable for any settlement of
any proceedings effected without the written consent of the
Supervising Party where it has not assumed the defence thereof under
clause 19.2(E).
	 
	 	(H)	 	If the Supervising Party does not exercise the option
contained in clause 19.2(E), the Indemnified Director shall
thereafter, if so required by the Supervising Party, maintain
consultation with the Supervising Party on all aspects of any such
proceedings and shall provide the Supervising Party with all
information reasonably requested by it in relation to such
proceedings.
	 
	 	(I)	 	If the Supervising Party exercises the option in clause
19.2(E), it shall thereafter, if so required by the Indemnified
Director, maintain consultation with the Indemnified Director on all
aspects of such proceedings and shall provide the Indemnified
Director with all information reasonably requested by him in
relation to such proceedings.
	 
	 	(J)	 	Clauses 19.2(A) to 19.2(I) shall not be amended or the
Indemnity or any of the other rights or obligations contained in
those provisions terminated without the prior agreement of each
Indemnified Director who is an officer of the Company at the time of
the relevant amendment.
	 
	 	(K)	 	Each Indemnified Director shall be entitled to enforce the
terms of clauses 19.2(A) to 19.2(J) under the Contracts (Rights of
Third Parties) Act 1999.



53






 




	20.	 	UNDERTAKING BY THE COMPANY


To the extent to which it is able to do so by law, the Company undertakes
with each of the Shareholders that it and so far as applicable, every
other member of the Global Group, will comply with each of the provisions
of this agreement. Each undertaking by the Company in respect of each
provision of this agreement shall be construed as a separate undertaking
and if any of the undertakings is unlawful or unenforceable the remaining
undertakings shall continue to bind the Company.




	21.	 	REGULATORY MATTERS
	 
	21.1	 	Co-operation


So far as permitted by law and regulation, the parties shall co-operate
with each other to ensure that all information necessary or desirable for
making (or responding to any requests for further information following)
any notification or filing made in respect of this agreement, or the
transactions contemplated by it, is supplied to the party dealing with
such notification and filing and that they are properly, accurately and
promptly made.




	21.2	 	Regulatory Action


If any material Regulatory Action is taken or threatened, the parties
shall promptly meet to discuss:




	 	(A)	 	the situation and the action to be taken as a result; and
	 
	 	(B)	 	whether any modification to the terms of this agreement (or
any agreement entered into pursuant to this agreement) should be
made in order that any requirement (whether as a condition of giving
any approval, exemption, clearance or consent or otherwise) of any
regulatory authority may be reconciled with, and within the intended
scope of, the business arrangements contemplated by this agreement.
The parties shall co-operate to give effect to any agreed
modifications but no Shareholder shall be obligated to agree to any
modifications.




	22.	 	CONFIDENTIALITY
	 
	22.1	 	Confidential Information


Except as provided in clause 22.3 each party shall hold in confidence and
shall not divulge to any party or third party any Confidential
Information (as defined below) obtained as a result of negotiating and
entering into this agreement or, in the case of a Shareholder, through
its interest in the Company or any of its business or assets and which
relates to:




	 	(A)	 	the provisions of this agreement (except clause 10
(Restrictions on Dealing with Shares) and clause 12 (Other Voluntary
Transfers));



54






 




	 	(B)	 	the negotiations relating to this agreement;
	 
	 	(C)	 	the Company or any other members of the Global Group or the
business or assets of any of them; or
	 
	 	(D)	 	any Shareholder or its business or assets.




	22.2	 	Use of Confidential Information


Each party shall:




	 	(A)	 	not disclose any such Confidential Information to any person
other than:
	 


	 	(i)	 	a Shareholder Director appointed by it (in the
case of a Shareholder), or any of its or any of its Group
Companies’ directors or employees whose duties include the
management or monitoring of the business of the Company or
any other members of the Global Group and who needs to know
such information in order to discharge his duties; or
	 
	 	(ii)	 	a person to whom any Share is bona fide
proposed to be transferred under clause 12.2 (Repurchase by
the Company or Transfer to a Third Party); or
	 
	 	(iii)	 	another party to this agreement.
	 



	 	(B)	 	not use any such Confidential Information other than for the
purpose of conducting the Business or managing or monitoring its
investment in the Company;
	 
	 	(C)	 	procure that any person to whom such Confidential Information
is disclosed by it pursuant to clause 22.3(F) or clause 22.3(G)
complies with the restrictions set out in this clause as if such
person were a party to this agreement.




	22.3	 	Permitted Disclosure


Notwithstanding the previous provisions of this clause 22, any party may
disclose any such Confidential Information:




	 	(A)	 	in respect of any party to any other party with the prior
written consent of the first party;
	 
	 	(B)	 	with the consent of the other parties (such consent not to be
unreasonably withheld or delayed);
	 
	 	(C)	 	if and to the extent required by law or for the purpose of
any judicial proceedings;
	 
	 	(D)	 	if and to the extent required or permitted by this agreement;



55






 







	 	(E)	 	if and to the extent required by any securities exchange or
regulatory or governmental body or tax authority to which that party
or a member of its Group is subject, wherever situated;
	 
	 	(F)	 	to any member of its Group and to its officers and employees
or those of such member, in any such case to the extent that such
person needs to know such information in order to manage or monitor
its business or in the performance of his or its duties;
	 
	 	(G)	 	to its professional advisers, auditors and bankers;
	 
	 	(H)	 	if and to the extent the information has come into the public
domain through no fault of that party;
	 
	 	(I)	 	subject to the relevant party complying with any relevant
confidentiality obligations owing to any third party, to any other
party if the Confidential Information relates to the potential
inability of any party to perform its obligations under this
agreement; or
	 
	 	(J)	 	if an Insurer has purchased or seeks reinsurance referable to
the Insured Risks (as such term is defined in the New Pool Members’
Agreement) for its own account, to the extent necessary for that
Insurer to obtain the benefits of or seek such reinsurance.




	22.4	 	Duration of Obligations


The restrictions contained in this clause 22 shall continue to apply to
each party (including any Shareholder who has ceased to hold Shares)
without limit in time; PROVIDED THAT, in the case of a Shareholder who
has ceased to hold Shares, the said restrictions binding on it shall
cease to bind it, and the benefit of such restrictions on the part of
other parties hereto shall cease to be enforceable by it, on and from the
fifth anniversary of its ceasing to hold Shares.




	22.5	 	Confidential Information


For the purposes of this clause 22 “Confidential Information” means:




	 	(A)	 	all information obtained by a party as a result of
negotiating and entering into this agreement;
	 
	 	(B)	 	all financial or other information received by a party
pursuant to this agreement in respect of the Global Group;
	 
	 	(C)	 	all financial or other information received by a party
pursuant to this agreement in respect of a Shareholder; and
	 
	 	(D)	 	information as to the terms of this agreement or of any
agreement referred to in it and information relating to the
performance by any party of its obligations under this agreement or
any agreement referred to in it.



56






 





	23.	 	ANNOUNCEMENTS
	 
	23.1	 	Restriction on Announcements


No announcement concerning this agreement or the business or assets of
the Company or any other member of the Global Group shall be made by any
party without the prior written approval of the other parties, such
approval not to be unreasonably withheld or delayed.




	23.2	 	Permitted Announcements


Notwithstanding the previous provisions of this clause 23, any party may,
whenever practicable after consultation with the other parties, make an
announcement concerning this agreement or the business or assets of the
Company or any other member of the Global Group if required by:




	 	(A)	 	law;
	 
	 	(B)	 	if and to the extent required or permitted, the New Pool
Members’ Agreement and/or the Share Purchase Agreement; or
	 
	 	(C)	 	any securities exchange or regulatory or governmental body to
which that party is subject, wherever situated.




	23.3	 	Duration of Restrictions


The restrictions contained in this clause 23 shall continue to apply to
each party (including any Shareholder who has ceased to hold Shares)
without limit in time PROVIDED THAT, in the case of a Shareholder who has
ceased to hold Shares, the said restrictions binding on it shall cease to
bind it, and the benefit of such restrictions on the part of other
parties hereto shall cease to be enforceable by it, on and from the fifth
anniversary of its ceasing to hold Shares.




	24.	 	TERMINATION


This agreement shall terminate immediately (except for clause 22, clause
23, clause 27 and all those provisions expressly stated to continue
without limit in time and without prejudice to any rights or liabilities
arising under this agreement prior to such termination to which clause 33
(Jurisdiction) will continue to apply):




	 	(A)	 	if the Shares are listed or are admitted to trading on, or
dealings in the Shares commence in, a securities market;
	 
	 	(B)	 	if only one Shareholder (together with members of its Group)
remains holding Shares;
	 
	 	(C)	 	in respect of the rights and obligations of any Shareholder
if it and all members of its Group cease to hold any Shares and the
person to whom Shares have been transferred by that Shareholder and
members of its



57






 





	 	 	 	Group has entered into a Deed of Adherence in accordance with
clause 17 (Effect of Deed of Adherence).




	25.	 	ASSIGNMENT


This agreement shall be binding on and inure for the benefit of each
party’s successors in title. No party shall assign (or declare any trust
in favour of a third party over) all or any part of the benefit of, or
its rights or benefits under, this agreement.




	26.	 	ENTIRE AGREEMENT
	 
	26.1	 	Pre-contractual Statement


For the purposes of this clause 26, “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 subject matter of this agreement or the New Pool
Members’ Agreement made or given by any person at any time prior to the
date of this agreement.




	26.2	 	 Whole and Only Agreement


This agreement and the agreements referred to in it constitute the whole
and only agreement between the parties relating to the subject matter of
this agreement.




	26.3	 	 Pre-contractual Statements Superseded


Except to the extent repeated in this agreement, this agreement
supersedes and extinguishes any Pre-contractual Statement.




	26.4	 	 No Reliance on Pre-contractual Statements


Each party acknowledges that in entering into this agreement and any
agreement referred to in it is not relying upon any Pre-contractual
Statement which is not set out in this agreement or in the relevant
agreement.




	26.5	 	Exclusion of Other Rights of Action


Except in the case of a fraudulent Pre-contractual Statement no party
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
to the extent that such Pre-contractual Statement is repeated in this
agreement.




	26.6	 	Variation


This agreement may only be varied in writing signed by each of the parties.



58






 




	26.7	 	Conflict with New Articles of Association


In the event of any ambiguity or discrepancy between the provisions of
this agreement and the New Articles of Association, the provisions of
this agreement shall prevail as between the Shareholders for so long as
this agreement remains in force. Each of the Shareholders shall exercise
all voting and other rights and powers available to it so as to give
effect to the provisions of this agreement and, if necessary, to procure
(so far as it is able to do so) any required amendment to the New
Articles of Association.




	27.	 	NOTICES
	 
	27.1	 	 Notices to be in Writing


A notice under this agreement shall only be effective if it is in writing
(which may include notices by fax) and shall be deemed to have been duly
given only if so given in accordance with clause 27.3. Telexes and
e-mail are not permitted.




	27.2	 	 Addresses


Notices under this agreement shall be sent to a party at its address and
for the attention of the individual set out below:




	 	 	 	 	 
	 	 	 	 	Facsimile
	Party and title of individual	 	Address	 	Number
	
	 	
	 	

	NSA 

Attention: General Counsel	 	
3024 Harney Street, Omaha,

NE, USA 68131
	 	USA 402 536

3030
	 	 	 	 	 
	Converium 

Attention: Chris Bell/Christian

Felderer	 	
General Guisan-Quai 26,

8022 Zürich, Switzerland
	 	00 41 1639 9066
	 	 	 	 	 
	Munich Re

Attention: Dr Thomas Braune,

Head of Group Investments/

Hartmut Hesse, Head of

Aviation and Space	 	
Königinstraße 107, 80802

München Germany
	 	00 49 89 3891

9030
	 	 	 	 	 
	RSA 

Attention: Company Secretary	 	
St Mark’s Court, Chart Way 

Horsham, West Sussex 

RH12 1XL
	 	00 44 207 569 

6607
	 	 	 	 	 
	the Company 

Attention: Company Secretary	 	
Fitzwilliam House, 10 St 

Mary Axe, London, EC3A 

8EQ
	 	00 44 207 369

2245





	 	 	PROVIDED THAT a party may change its notice details on giving notice to
the other parties of the change in accordance with this clause 27. That
notice shall



59






 





	 	 	only be effective on the date falling five clear Business Days after the
notification has been received or such later date as may be specified in
the notice.




	27.3	 	 Receipt of Notices




	 	(A)	 	Any notice given under this agreement shall, in the absence
of earlier receipt, be deemed to have been duly given as follows:
	 



	 	(i)	 	if delivered personally, on delivery;
	 
	 	(ii)	 	if posted or sent by international courier
delivery service of repute, when the envelope containing the
same was delivered into the custody of the recipients
organisation (as evidenced by the delivery records of the
postal service or international courier delivery service as
the case may be); and
	 
	 	(iii)	 	if communicated by facsimile transmission, be
deemed to have been received upon receipt by the sender of a
facsimile transmission report (or other appropriate evidence)
that the facsimile has been transmitted to the recipient.
	 



	 	(B)	 	Despite the provisions of clause 27.3(A), any notice given
under clause 12 (Other Voluntary Transfers) or clause 13 (Transfer of
Shares on Default) shall not be effective until received by the
intended recipient.
	 
	 	(C)	 	Any notice given under this agreement outside Working Hours
in the place to which it is addressed shall be deemed not to have
been given until the start of the next period of Working Hours in
such place.




	28.	 	REMEDIES AND WAIVERS
	 
	28.1	 	Delay or Omission


No delay or omission by any party to this agreement in exercising any
right, power or remedy provided by law or under this agreement shall:




	 	(A)	 	affect that right, power or remedy; or
	 
	 	(B)	 	operate as a waiver of it.




	28.2	 	 Single or Partial Exercise


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 of it or the exercise of any other right, power or remedy.



60






 





	28.3	 	Cumulative Rights


The rights, powers and remedies provided in this agreement are cumulative
and not exclusive of any rights, powers and remedies provided by law.




	28.4	 	 Damages not an Adequate Remedy


Notwithstanding any express remedies provided under this agreement and
without prejudice to any other right or remedy which any party may have,
each party acknowledges and agrees that damages alone may not be an
adequate remedy for any breach by it of the provisions of this agreement,
so that in the event of a breach or anticipated breach of such
provisions, the remedies of injunction and/or an order for specific
performance may in appropriate circumstances be available.




	28.5	 	No Third Party Rights




	 	(A)	 	The parties to this agreement do not intend that any term of
this agreement (with the exception of clause 3(F) (Business of the
Global Group), clause 5.2 (Indemnity) and clause 19.2 (Indemnity of
Company Officers) each of which may be enforced by the relevant
Indemnified Party, Indemnified Group Member or Indemnified Director,
as the case may be, (a “Third Party”)) should be enforceable, by
virtue of the Contracts (Rights of Third Parties) Act 1999, by any
person who is not a party to this agreement. Notwithstanding the
foregoing exception, clause 3(F) and clause 5.2 may be rescinded or
varied in any way and at any time by the parties to this agreement
without the consent of any of the Third Parties.
	 
	 	(B)	 	A Third Party shall be entitled to enforce the terms of
clause 3(F) (Business of the Global Group) and clause 5.2 (Indemnity
of Company Officers) referred to in clause 28.5(A) only by way of
dispute resolution in accordance with 34.7 (Third Parties) and
therefor by way of proceedings in the courts specified in clause
33.5 (Third Parties).
	 
	 	(C)	 	A Third Party shall be entitled to enforce the terms of
clause 19.2 (Indemnity of Company Officers) only by way of
proceedings in the courts specified in clause 33.5 (Third Parties).




	29.	 	NO PARTNERSHIP


Nothing in this agreement and no action taken by the parties under this
agreement shall constitute a partnership, association or other
co-operative entity between any of the parties or constitute any party
the agent of any other party for any purpose.




	30.	 	COSTS AND EXPENSES


Each party shall pay its own costs and expenses in relation to the
negotiation, preparation, execution and carrying into effect of this
agreement.



61






 







	31.	 	COUNTERPARTS


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. Each counterpart shall
constitute an original of this agreement, but all the counterparts shall
together constitute but one and the same instrument.




	32.	 	CHOICE OF GOVERNING LAW


This agreement is to be governed by and construed in accordance with
English law.




	33.	 	JURISDICTION
	 
	33.1	 	 Jurisdiction of English courts


Each party agrees that any proceeding, suit or action arising out of or
in connection with this agreement (“Proceedings”) may, subject as
provided in clause 34 (Dispute Resolution), be brought in the courts of
England.




	33.2	 	Proceedings in other courts


This clause shall not limit the right of either party to take Proceedings
against the other in any other court.




	33.3	 	 Waiver of objections


Each party waives (and agrees not to raise) any objection, on the ground
of forum non conveniens or on any other ground, to the taking of
Proceedings in any court sitting in England in accordance with this
clause. Each party also agrees that a judgment against it in Proceedings
brought in England in accordance with this clause shall be conclusive and
binding upon it and may be enforced in any other jurisdiction.




	33.4	 	 Irrevocable submission


Each party irrevocably submits and agrees to submit to the jurisdiction
of the English courts. Nothing herein shall be construed as an agreement
by any party to consent to jurisdiction in any court sitting outside
England.




	33.5	 	 Third Parties


Any proceedings brought by the Third Party to enforce the terms of clause
3(F) (Business of the Global Group), clause 5.2 (Indemnity) or clause
19.2 (Indemnity of Company Officers) referred to in clause 28.5 (No Third
Party Rights) must be brought in the courts sitting in England in
accordance with clauses 33.1 to 33.4 (inclusive).



62






 







	34.	 	DISPUTE RESOLUTION
	 
	34.1	 	Good Faith


Any dispute arising out of in connection with this agreement shall as a
condition precedent of the bringing of proceedings pursuant to clause 33
(Jurisdiction), be subject to good faith efforts of resolution in
accordance with the procedures specified in this clause 34.




	34.2	 	 Notice of Dispute


The parties shall attempt in good faith to resolve any dispute arising
out of or relating to this agreement promptly by negotiation between
senior executives of the parties who have authority to settle the
dispute. Any party may give to any other party or parties written notice
of any dispute not resolved in the normal course of business. Within
seven days of delivery of the notice, the receiving party or parties may
submit to the disputing party a written response. The notice and
response(s) can include:




	 	(A)	 	a short statement of each party’s position and a summary of
the arguments supporting that position; and
	 
	 	(B)	 	the name and title of the senior executive who will represent
that party and of any other person who will accompany such
executive.




	34.3	 	 Resolution of Dispute


Within 14 days after delivery of the disputing party’s notice, the senior
executives of all parties involved shall meet at a mutually acceptable
time and place, and thereafter as often as they reasonably deem
necessary, to attempt to resolve the dispute. All reasonable requests
for information made by one party to another will be honoured.




	34.4	 	Mediation


If the dispute has not been resolved by these persons within 21 days of
the disputing party’s notice the parties involved shall endeavour to
settle the dispute by mediation in such location as may be agreed under
the auspices of the Centre for Effective Dispute Resolution of London,
England. If such mediation fails to resolve the dispute to the
satisfaction of any party involved in the mediation within 30 days, such
party may have recourse to any remedies at law which are available to
that party including, without limitation, the bringing of Proceedings in
accordance with clause 33 (Jurisdiction).




	34.5	 	Confidentiality


All negotiations pursuant to this clause 34 are confidential and shall be
treated as compromise and settlement negotiations for purposes of
applicable rules of confidentiality, evidence and professional secrecy.



63






 





	34.6	 	Injunctive Relief


The parties shall not be under any obligation to go to mediation in
accordance with the provisions of clause 34.4 above in circumstances
where injunctive relief is sought.




	34.7	 	Third Parties


For the avoidance of doubt clauses 34.1 to 34.6 (inclusive) shall apply
to (except as provided for in clause 34.8) disputes between the parties
and a Third Party as they apply to disputes between the parties
themselves.




	34.8	 	Exclusion of Mediation


For the avoidance of doubt, this clause 34 shall not apply in respect of
any dispute arising out of or in connection with clause 13 (Transfer of
Shares on Default) or clause 19.2 (Indemnity of Company Officers).



IN WITNESS of which this agreement has been executed and delivered as a
deed on the date which first appears on page 1 of this agreement.


64






 



Schedule 1



Form of Deed of Adherence



THIS DEED is made on [         ]


by [         ], a company incorporated [in / under the laws
of] [        ] under registered number [       ], whose [registered /
principal] office is at
[         ] (the
“New Shareholder”).


WHEREAS:



	 	 	 
	(A)	 	
By a transfer dated [         ], [        
] transferred to the New Shareholder [         ] Shares of £1
each in the capital of Global Aerospace Underwriting Managers Limited (the
“Company”).
	 	 	 
	(B)	 	
This Deed is entered into in compliance with the terms of clause 17 of an
agreement dated [         ] 2002 made between (1)
Northern States Agency, Inc., (2) Converium AG, (3) Münchener
Rückversicherungs-Gesellschaft Aktiengesellschaft In
München, (4) Royal &
Sun Alliance Insurance plc and (5) the Company, as such agreement shall
have been or may be amended, supplemented or novated from time to time
(the “Shareholders’ Agreement”).



THIS DEED WITNESSES as follows:



	 	 	 
	1	 	
The New Shareholder undertakes to adhere to and be bound by the
provisions of the Shareholders’ Agreement, and to perform the obligations
imposed by the Shareholders’ Agreement which are to be performed on or
after the date of this Deed, in all respects as if the New Shareholder
were a party to the Shareholders’ Agreement and named therein as such.
	 	 	 
	2	 	
This Deed is made for the benefit of (a) the original parties to the
Shareholders’ Agreement and (b) any other person or persons who after the
date of the Shareholders’ Agreement (and whether or not prior to or after
the date of this Deed) adheres to the Shareholders’ Agreement.
	 	 	 
	3	 	
The address and facsimile number of the New Shareholder for the purposes
of clause 27 of the Shareholders’ Agreement are as follows:




	 	 	 	 	 	 	 
	 	Party and title	 	Address	 	Facsimile no.	 
	 	of
individual
	 	
	 	
	 
	 	 	 	 	 	 




	 	 	 
	4	 	
This Deed shall be governed by and construed in accordance with English
law.
	 	 	 
	5	 	
The courts of England are to have jurisdiction to settle any dispute
arising out of or in connection with this Deed. Any proceeding, suit or
action arising out of or



65






 

	 	 	 
	 	 	
 in connection with this agreement (“Proceedings”)
may therefore be brought in the English courts. The New Shareholder
agrees that this jurisdiction agreement is irrevocable and that it is for
the benefit of each of the parties referred to in paragraph 2 of this
Deed. Nothing contained in this clause shall limit the right of any
person having the benefit of this Deed to take Proceedings against the New
Shareholder in any other court or in the courts of more than one
jurisdiction at the same time.




IN WITNESS of which this Deed has been executed and delivered by the New
Shareholder on the date which first appears above.



	 	 	 	 	 
	Executed as a deed by [name of	 	
)
	 	

	English company] acting by [a	 	
)
	 	Director
	director and its secretary/ two	 	
)
	 	 
	directors]	 	
)
	 	

	 	 	 	 	Director/Secretary



[OR]




	 	 	 	 	 
	The common seal of [name of	 	
)
	 	[Common seal to be affixed here]
	English company] was affixed	 	
)	 	 
	in the presence of:	 	
)	 	 
	 
	
	 	 	 	 
	Director	 	 	 	 
	 	 	 	 	 
	
	 	 	 	 
	Director/Secretary/Person authorised	 	 	 	 
	by the board of directors of [name of	 	 	 	 
	company]	 	 	 	 



[OR]




	 	 	 	 	 
	Executed as a deed by [name of	 	
)
	 	

	foreign company] acting by [name	 	
)
	 	Authorised signatory(ies)
	of authorised signatory(ies)] [who,	 	
)	 	 
	in accordance with the laws of the	 	
)	 	 
	territory in which [name of foreign	 	
)	 	 
	company] is incorporated, [is/are]	 	
)	 	 
	acting under the authority of [name	 	
)	 	 
	of foreign company]]	 	
)	 	 



[If the New Shareholder is domiciled in Luxembourg] Without prejudice to the
execution of this agreement by the parties, the New Shareholder expressly and
specifically confirms its agreement with the provisions of clause 1 of this
Deed for the purposes of (a) Article I of the Protocol annexed to the
Convention on jurisdiction and


66






 



the enforcement of judgments in civil and
commercial matters signed at Brussels on 27 September 1968, and (b) Article I
of Protocol No. 1 annexed to the Convention on jurisdiction and the enforcement
of judgments in civil and commercial matters opened for signature at Lugano on
16 September 1988.


[Name of Luxembourg party]


	 	 	 
	
	 	


	(Signature of authorised person)	 	
(Signature of authorised person)
	 
	Name:

	 	
Name:



	 
	Title:


	 	
Title:







67






 



Annex 1



Form of New Articles of Association




 






 




81




	 	 	 	 	 	 	 	 
	Executed as a deed by NORTHERN	 	 	 	)	 	 	 
	STATES AGENCY, INC.	 	 	 	)	 	/s/ Forrest N.
Krutter
	 
	acting by Forrest N. Krutter, Secretary	 	 	 	)	 	Authorised signatory	 
	and Janelle K. Kay, Assistant Secretary	 	 	 	)	 	 	 
	who, in accordance with the laws of the	 	 	 	)	 	/s/ Janelle K. Kay
	 
	State in which Northern States Agency,	 	 	 	)	 	Authorised signatory	 
	Inc. is incorporated, are acting under the	 	 	 	)	 	 	 
	authority of Northern States Agency, Inc.	 	 	 	)	 	 	 
	 	 	 	 	 	 	 	 
	Executed as a deed by CONVERIUM	 	 	 	)	 	 	 
	AG acting by Christian
Felder  and	 	 	 	)	 	/s/ Christopher Bell
	 
	Christopher Bell who, in accordance	 	 	 	)	 	Authorised signatory	 
	with the laws of the territory in which	 	 	 	)	 	 	 
	Converium AG is incorporated, are	 	 	 	)	 	/s/ Christian Felder
	 
	acting under the authority of Converium	 	 	 	)	 	Authorised signatory	 
	AG	 	 	 	)	 	 	 
	 	 	 	 	 	 	 	 
	Executed as a deed by MÜNCHENER	 	 	 	)	 	 	 
	RÜCKVERSICHERUNGS-	 	 	 	)	 	/s/ Hartmut Hesse
	 
	GESELLSCHAFT	 	 	 	)	 	Authorised signatory	 
	AKTIENGESELLSCHAFT IN	 	 	 	)	 	 	 
	MÜNCHEN acting by Hartmut Hesse	 	 	 	)	 	/s/ Thomas Braune
	 
	and Thomas Braune who, in accordance	 	 	 	)	 	Authorised signatory	 
	with the laws of the territory in which	 	 	 	)	 	 	 
	Münchener Rückversicherungs-	 	 	 	)	 	 	 
	Gesellschaft Aktiengesellschaft in	 	 	 	)	 	 	 
	München is incorporated, are	 	 	 	)	 	 	 
	acting under the authority of Münchener	 	 	 	)	 	 	 
	Rückversicherungs-Gesellschaft	 	 	 	)	 	 	 
	Aktiengesellschaft in München	 	 	 	)	 	 	 
	 	 	 	 	 	 	 	 
	Executed as a deed by ROYAL & SUN	 	 	 	)	 	 	 
	ALLIANCE INSURANCE plc	 	 	 	)	 	/s/ Illegible
	 
	acting by two directors or a director and	 	 	 	)	 	Director	 
	its secretary	 	 	 	)	 	 	 
	 	 	 	 	 	 	/s/
Illegible
Secretary	 



 






 



82




	 	 	 	 	 	 	 	 
	Executed as a deed by GLOBAL	 	 	 	)	 	 
	AEROSPACE UNDERWRITING	 	 	 	)	 	/s/ Illegible

	MANAGERS LIMITED acting by two	 	 	 	)	 	Director
	directors or a director and its secretary	 	 	 	)	 	 
	 	 	 	 	 	 	/s/
Illegible
Secretary