A G R E E M E N T
entered into between
NEDCOR INVESTMENT BANK HOLDINGS LIMITED
---------------------------------------
(a company duly incorporated in the Republic of South Africa
with its principal place of business at 1 Newtown Avenue,
Killarney)
(Registration No. 1963/003972/06)
and
NEDCOR INVESTMENT BANK LIMITED
------------------------------
(a company duly incorporated in the Republic of South Africa
with its principal place of business at 1 Newtown Avenue,
Killarney)
(Registration No. 1955/003181/06)
and
TEMPLETON INTERNATIONAL, INC.
-----------------------------
(a company incorporated in accordance with the laws of the
State of Delaware
with its principal place of business at Suite 2100, 500 East
Broward Boulevard
Fort Lauderdale, Florida, 33394)
(Corporate File No. 230 9185)
and
FRANKLIN TEMPLETON ASSET MANAGEMENT (PROPRIETARY) LIMITED
---------------------------------------------------------
(a company incorporated in accordance with the laws of the
Republic of South Africa with its principal place of
business at Harrow Court, Isle of Houghton,
Boundary Road, Parktown)
(Registration No. 1997/009637/07)
and
TEMPLETON GLOBAL ADVISORS LIMITED
---------------------------------
(a company incorporated in accordance with the laws of the
Commonwealth of the Bahamas with its principal place of
business at Lyford Cay, Nassau, Bahamas)
(Reference No. 38,984)
TABLE OF CONTENTS
CLAUSE NO. DESCRIPTION PAGE
PART I - PRELIMINARY.........................................1
1. INTERPRETATION.........................................1
2. PREAMBLE...............................................9
3. CONDITION PRECEDENT...................................10
4. DUE DILIGENCE INVESTIGATIONS..........................11
PART II - SALE OF THE SOLD SHARES, SOLD CLAIMS
AND THE BUSINESS................................12
5. SALE OF THE SOLD SHARES AND THE SOLD CLAIMS...........12
6. SALE OF THE BUSINESS..................................12
7. PURCHASE PRICE........................................14
8. PAYMENT OF THE PURCHASE PRICE.........................14
9. THE DESIGNATED ACCOUNTS AND THE EFFECTIVE DATE ACCOUNTS16
10. IMPLEMENTATION........................................18
11. WARRANTIES AND REPRESENTATIONS........................20
12. RELEASE FROM GUARANTEES...............................22
13. SALE..................................................24
14. PURCHASE PRICE........................................25
15. PAYMENT OF THE PURCHASE PRICE.........................25
PART IV - GENERAL...........................................27
16. SHAREHOLDERS AGREEMENT................................27
17. PRE-IMPLEMENTATION DATE MATTERS.......................27
18. POST IMPLEMENTATION DATE MATTERS......................29
19. PUBLICITY.............................................31
CLAUSE NO. DESCRIPTION PAGE
20. ARBITRATION...........................................31
21. WHOLE AGREEMENT, NO AMENDMENT.........................34
22. NOTICES...............................................36
23. NO CESSION OR ASSIGNMENT..............................39
24. INTEREST ON OVERDUE AMOUNTS...........................39
25. COSTS.................................................39
26. INDIVISIBILITY........................................40
27. GOVERNING LAW.........................................40
ANNEXURE A - FAM DESIGNATED ACCOUNTS.........................1
ANNEXURE B - NIBAM DESIGNATED ACCOUNTS.......................1
ANNEXURE C - SHAREHOLDERS AGREEMENT..........................1
ANNEXURE D - THE BUSINESS....................................1
ANNEXURE E - PROVISIONS OF PAYMENT OF PURCHASE PRICE.........1
ANNEXURE F - SCHEDULE OF WARRANTIES GIVEN BY THE SELLER......1
ANNEXURE G - SCHEDULE OF WARRANTIES GIVEN BY TII.............1
ANNEXURE H - FORM OF UNDERTAKING TO THE
FINANCIAL SERVICES BOARD........................1
WHEREBY IT IS AGREED AS FOLLOWS :
- ------------------------------------
PART I - PRELIMINARY
1. INTERPRETATION
The headings of the clauses in this agreement are for the purpose of
convenience and reference only and shall not be used in the interpretation
of nor modify nor amplify the terms of this agreement nor any clause
hereof. Unless a contrary intention clearly appears -
1.1. words importing -
1.1.1. any one gender include the other two genders;
1.1.2. the singular include the plural and VICE VERSA; and
1.1.3. natural persons include created entities
(corporate or unincorporate) and the state and VICE VERSA;
1.2. the following terms shall have the meanings
assigned to them hereunder and cognate expressions
shall have corresponding meanings, namely -
1.2.1. "Act" means the Companies Act No 61 of 1973;
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1.2.2. "business" means the asset management
business and related activities presently
conducted by the NIBAM group referred to in
clause 6.1;
1.2.3. "Competition Commission" means the
Competition Commission established under the
Competition Act, 1998;
1.2.4. "condition precedent" means the condition precedent
in clause 3.1;
1.2.5. "conversion rate" means, in converting from US dollars to
South African Rands, the mid spot rate of exchange quoted
by the treasury division of NEDCOR INVESTMENT BANK LIMITED
at 11h00 (South African time) on the implementation date;
1.2.6. "effective date" means 1 August 2000, provided that if the
condition precedent has not been fulfilled by 31 August
2000, the effective date shall be the first day of the
calendar month during which the condition precedent is
fulfilled;
1.2.7. "FAM designated accounts" means the unaudited draft
financial statements of the companies comprising the FAM
group as at the close of business on 30 June 2000 which
are annexed hereto marked ANNEXURE A;
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1.2.8. "FAM effective date accounts" means the
audited financial statements of the companies
comprising the FAM group as at the close of
business on the date preceding the effective
date;
1.2.9. "FAM group" means collectively:-
1.2.9.1. the purchaser;
1.2.9.2. FRANKLIN TEMPLETON MANAGEMENT
COMPANY LIMITED;
1.2.10. "implementation date" means the later of:-
1.2.10.1. 1 August 2000; and
1.2.10.2. the business day following
that upon which the condition
precedent is fulfilled;
1.2.11. "liabilities" means, in respect of the members of the
NIBAM group and the members of the FAM group, any
liability of any member of the relevant group, whether
actual or contingent, which arose prior to the effective
date including without limiting the generality of the
aforegoing, any claims or liabilities (including claims
or liabilities for consequential loss) as a result of any
breach of contract or legislation or any delict occurring
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prior to the effective date, and any liability of any
member of the relevant group for taxation arising from
or out of the profits or income or activities of any
member of the relevant group for any period prior to the
effective date;
1.2.12. "merger" means the merger of the
asset management businesses conducted by
each of the members of the NIBAM group and
the members of the FAM group as
contemplated by this agreement;
1.2.13. "NIBAM" means NIB ASSET MANAGEMENT LIMITED;
1.2.14. "NIBAM companies" means collectively:-
1.2.14.1. NIBAM;
1.2.14.2. NIB MANAGEMENT COMPANY LIMITED;
1.2.15. "NIBAM designated accounts" means the unaudited draft
financial statements of each of the companies and the
business comprising the NIBAM group as at the close of
business on 30 June 2000, which are annexed hereto as
ANNEXURE B;
1.2.16. "NIBAM effective date accounts"
means the audited financial statements of
each of the companies and the business
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comprising the NIBAM group as at the close
of business on the day preceding the
effective date;
1.2.17. "NIBAM group" means collectively:-
1.2.17.1. the NIBAM companies; and
1.2.17.2. the business;
1.2.18. "NIBF" means NIB INTERNATIONAL FINANCE LIMITED (a
company incorporated in the Isle of Man, having its
principal place of business at Nedcor House, 29 - 33 Bucks
Road, Douglas, Isle of Man, 1M1 3DD (Registration No.
096059C));
1.2.19. "purchaser" means FRANKLIN
TEMPLETON ASSET MANAGEMENT (PROPRIETARY)
LIMITED;
1.2.20. "seller" means NEDCOR INVESTMENT BANK HOLDINGS LIMITED;
1.2.21. "shareholders agreement" means the agreement to be entered
into between the seller, the purchaser, TGAL and TII in the
form of the draft agreement which is ANNEXURE C hereto, which
will be signed simultaneously with this agreement, regulating
their relationship INTER SE as shareholders of the purchaser;
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1.2.22. "sold claims" means all claims of
whatsoever nature and from whatsoever cause
arising, if any, which the seller may have
against each of the NIBAM companies on the
implementation date;
1.2.23. "sold shares" means collectively
the entire issued share capital of each of
the NIBAM companies;
1.2.24. "taxation" shall include:-
1.2.24.1. levies payable to government authorities;
1.2.24.2. income tax;
1.2.24.3. sales tax;
1.2.24.4. value-added tax;
1.2.24.5. any taxation arising from new
assessments of taxation and/or the
reopening of any taxation
assessments for any period prior
to the effective date;
1.2.24.6. donations tax;
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1.2.24.7. customs duty;
1.2.24.8. stamp duty;
1.2.24.9. all other forms of taxation, other
than deferred tax benefits;
1.2.24.10. any penalties or interest on
any of the aforegoing;
1.2.24.11. regional services levies;
1.2.25. "TGAL" means TEMPLETON GLOBAL ADVISORS LIMITED;
1.2.26. "TII" means TEMPLETON INTERNATIONAL, INC.;
1.3. any reference in this agreement to "date of
signature hereof" shall be read as meaning a
reference to the date of the last signature of
this agreement;
1.4. any reference to an enactment is to that enactment
as at the date of signature hereof and as amended
or re-enacted from time to time;
1.5. if any provision in a definition is a substantive
provision conferring rights or imposing
obligations on any party, notwithstanding that it
Page 8
is only in the definition clause, effect shall be
given to it as if it were a substantive provision
in the body of the agreement;
1.6. when any number of days is prescribed in this agreement,same shall be
reckoned exclusively of the first and inclusively of the last day
unless the last day falls on a Saturday, Sunday or public holiday, in
which case the last day shall be the next succeeding day which is not
a Saturday, Sunday or public holiday;
1.7. where figures are referred to in numerals and in words, if there is
any conflict between the two, the words shall prevail;
1.8. expressions defined in this agreement shall bear the same meanings in
schedules or annexures to this agreement which do not themselves
contain their own conflicting definitions;
1.9. the use of any expression in this agreement covering a process
available under South African law such as a winding-up (without
limitation EIUSDEM GENERIS) shall, if any of the parties to this
agreement is subject to the law of any other jurisdiction, be
construed as including any equivalent or analogous proceedings under
the law of such jurisdiction;
1.10. where any term is defined within the context of any particular clause
in this agreement, the term so defined, unless it is clear from the
clause in question that the term so defined has limited application
Page 9
to the relevant clause, shall bear the meaning ascribed to it for all
purposes in terms of this agreement, notwithstanding that that term
has not been defined in this interpretation clause;
1.11. the expiration or termination of this agreement shall not affect such
of the provisions of this agreement as expressly provide that they
will operate after any such expiration or termination or which of
necessity must continue to have effect after such expiration or
termination, notwithstanding that the clauses themselves do not
expressly provide for this;
1.12. the rule of construction that the contract shall be interpreted
against the party responsible for the drafting or preparation of the
agreement, shall not apply.
2. PREAMBLE
It is recorded that:-
2.1. each of:-
2.1.1. the seller, through the NIBAM group;
2.1.2. the purchaser, through the FAM group,
provides asset management and related services;
Page 10
2.2. it has been agreed to merge the aforementioned
asset management activities and conduct those
activities through the vehicle of the purchaser;
2.3. the parties have reached agreement as to the terms
and conditions of the merger and on the basis upon
which the relationship between the seller and TII,
as shareholders of the purchaser, will be governed;
2.4. the parties wish to record the terms of the
agreement in writing.
3. CONDITION PRECEDENT
3.1. This agreement, save for the provisions of this clause 3 and clauses
19, 20, 21, 22, 23, 24 and 25 which shall be of immediate force and
effect, is subject to the following suspensive condition, namely the
approval, insofar as and to the extent required, of:-
3.1.1. the Registrar of Banks;
3.1.2. the Financial Services Board;
3.1.3. the Exchange Control Department of the
South African Reserve Bank; and
3.1.4. the Competition Commission,
Page 11
to the conclusion and implementation of this
agreement.
3.2. Forthwith after signature of this agreement, the
seller shall use its best endeavours to procure
the fulfilment, at the purchaser's cost, of the
condition referred to in clause 3.1. To this end:-
3.2.1. the purchaser and TII undertake to give whatever assistance
to and as may be required by the seller, including, but
without limitation, the information and documentation
applicable to the FAM group necessary for the filing with
the Competition Commission;
3.2.2. the seller and TII shall sign and send to the Executive
Officer of the Financial Services Board an undertaking in
the form of the draft undertaking attached hereto as
ANNEXURE H.
3.3. Unless the condition is fulfilled by not later than 31 December 2000,
or such later date as may be agreed to by the parties in writing, the
provisions of this clause 3 and clauses 19, 20, 21, 22, 23, 24 and 25
shall continue to be of force or effect, but the remainder of this
agreement shall never become effective.
4. DUE DILIGENCE INVESTIGATIONS
It is recorded that:-
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4.1. the seller has conducted a due diligence
investigation into the business and affairs of the
FAM group; and
4.2. TII has conducted a due diligence investigation
into the business and affairs of the NIBAM group.
PART II - SALE OF THE SOLD SHARES, SOLD CLAIMS AND THE BUSINESS
5. SALE OF THE SOLD SHARES AND THE SOLD CLAIMS
5.1. The seller sells to the purchaser, which purchases
as one indivisible transaction, the sold shares
and the sold claims.
5.2. Notwithstanding the date upon which this agreement is signed and the
date upon which the sold shares and sold claims are delivered to the
purchaser, the sold shares and sold claims are sold with effect on
and as from the effective date, from which date all risk in and
benefits attaching to them shall be deemed to have passed to the
purchaser.
6. SALE OF THE BUSINESS
6.1. The seller sells, transfers and cedes to the purchaser as a going
concern, with effect from the effective date from which date the risk
in and the benefit to the business shall vest in the purchaser, the
business described in ANNEXURE D hereto and comprising the assets and
liabilities as reflected in the NIBAM effective date accounts
applicable to the business.
Page 13
6.2. The parties agree that Section 197(2) of the Labour Relations Act,
1995 is applicable to the seller in terms of this agreement and that
accordingly the employment of each employee of the seller, employed
in regard to the business, will continue in force with the purchaser
as the "new employer". The parties agree that no agreements
contemplated in terms of section 197(3) of that Act will be
concluded.
6.3. This transaction shall not be advertised as contemplated by Section
34 of the Insolvency Act, 1936. The seller hereby indemnifies the
purchaser against any loss or damage which may be sustained or
incurred by the purchaser as a result of the provisions of section 34
of the Insolvency Act, 1936, being invoked by any creditor in respect
of the business.
6.4. The seller and the purchaser agree that the business is disposed of
as a going concern and for the purposes of Section 11(1)(e) of the
Value- Added Tax Act, 1991, agree that the business will be an income
earning activity on the effective date and the implementation date
and that the assets which are necessary for carrying on the business
have been disposed of by the seller to the purchaser in terms hereof.
If, notwithstanding the aforegoing, value-added tax is payable in
respect of any of the assets sold in terms hereof, the same shall be
borne and paid by the purchaser.
Page 14
7. PURCHASE PRICE
7.1. The aggregate purchase price of the sold shares, the sold claims and
the business is the South African Rand equivalent of US $54 000
000,00 (fifty four million US dollars) converted at the conversion
rate.
7.2. Of the purchase price:-
7.2.1. so much as does not exceed the face value
of the sold claims shall be allocated in
respect of the sold claims;
7.2.2. the South African Rand equivalent of US $ 2 628 570,00
(two million six hundred and twenty eight thousand five
hundred and seventy US dollars) converted at the conversion
rate, less the amount referred to in clause 7.2.1, shall be
allocated in respect of the sold shares; and
7.2.3. the balance shall be allocated in respect of the business.
8. PAYMENT OF THE PURCHASE PRICE
8.1. The purchase price shall be payable by the
purchaser to the seller as follows -
8.1.1. as to an amount equal to the equivalent amount in South
African Rands of US $9 000 000,00 (nine million US dollars),
converted at the conversion rate, by the allotment and issue
to the seller or its nominee, on the implementation date and
Page 15
against compliance by the seller of its obligations in terms
of clause 10, of 100 (one hundred) ordinary shares of R1,00
(one rand) each in the capital of the purchaser ranking PARI
PASSU with the remaining issued ordinary shares in the
capital of the purchaser, at the appropriate premium. Of the
shares to be allotted and issued to the seller or its
nominee as aforesaid, 50% (fifty per cent) thereof shall be
allotted in renounceable form so as to facilitate the sale
contemplated by clause 13. The balance of such shares shall
be allotted and issued to and registered in the name of the
seller. The purchaser and the seller hereby record and agree
that payment in terms of this clause 8.1.1 constitutes a
full and proper discharge of the purchase price of the sold
shares and the sold claims, and a partial discharge of the
purchase price of the business;
8.1.2. the balance of the purchase price of the business, being an
amount equal to the equivalent amount in South African Rands
of US $45 000 000,00 (forty five million US dollars),
converted at the conversion rate, shall constitute a claim
on loan account in favour of the seller against the
purchaser and, save as may otherwise be provided herein, the
relevant provisions of the shareholders agreement governing
the terms and conditions of shareholder claims on loan
account against the purchaser applying to such claim.
Page 16
8.2. Unless the effective date occurs on or prior to Friday 4 August 2000,
the purchase price shall bear interest at the 3 (three) month LIBOR
rate quoted by Chase from 5 August 2000 to the implementation date,
both days inclusive. Such interest, if payable in accordance with the
aforegoing provisions, shall be paid to the seller on the
implementation date against compliance by the seller of its
obligations in terms of clause 10.
9. THE DESIGNATED ACCOUNTS AND THE EFFECTIVE DATE ACCOUNTS
9.1. The seller warrants in favour of the purchaser in
regard to the NIBAM designated accounts that, save
as disclosed and/or noted-
9.1.1. they have been prepared in accordance with
the provisions of the Act and any other
applicable legislation;
9.1.2. they fairly present the state of affairs of
the NIBAM group as at 30 June 2000;
9.1.3. there has in the preparation thereof been
taken into account good and generally
accepted accounting principles and
practice; and
9.1.4. all actual liabilities shall be reflected as actual
liabilities and all contingent liabilities and future
commitments will have been provided for or noted.
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9.2. TII warrants in favour of the seller in regard to
the FAM designated accounts that, save as
disclosed and/or noted:-
9.2.1. they have been prepared in accordance with
the provisions of the Act and any other
applicable legislation;
9.2.2. they fairly present the state of affairs of
the FAM group as at 30 June 2000;
9.2.3. there has in the preparation thereof been
taken into account good and generally
accepted accounting principles and
practice; and
9.2.4. all actual liabilities shall be reflected as actual
liabilities and all contingent liabilities and future
commitments will have been provided for or noted.
9.3. As soon as practicable after the effective date, the seller shall
cause the NIBAM effective date accounts to be prepared and completed
and a copy delivered to TII. The seller gives to the purchaser the
same warranties MUTATIS MUTANDIS in regard to the NIBAM effective
date accounts as those set out in clauses 9.1.1 to 9.1.4 and in
addition warrants that the same accounting methods and bases as were
used in the preparation of the NIBAM designated accounts will be
employed in the preparation thereof.
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9.4. As soon as practicable after the effective date, TII shall cause the
FAM effective date accounts to be prepared and completed and a copy
delivered to the seller. TII gives to the seller the same warranties
MUTATIS MUTANDIS in regard to the FAM effective date accounts as
those set out in clauses 9.2.1 to 9.2.4 and in addition warrants that
the same accounting methods and bases as were used in the preparation
of the FAM designated accounts will be employed in the preparation
thereof.
10. IMPLEMENTATION
On the implementation date, representatives of the parties shall meet at
the offices of the seller. At that meeting the seller shall deliver to the
purchaser against compliance by the purchaser with its obligations in
terms of clauses 8.1.1, 8.2 and 15:-
10.1. as regards the sold shares and the sold claims:-
10.1.1. the share certificates in respect of the sold shares,
together with declarations for the transfer thereof in blank
as to transferee, duly signed by the seller/registered
holders on a date not being more than 14 (fourteen) days
before the date of delivery and otherwise complying with the
provisions of the company's articles of association and the
Stamp Duties Act, 1968;
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10.1.2. a certified copy of a resolution
passed by the directors of each of the
NIBAM companies -
10.1.2.1. approving of the transfer of the
sold shares to the purchaser;
10.1.2.2. noting the cession of the sold
claims;
10.1.3. such other documents as are
necessary in order to enable the purchaser
to procure the registration of the sold
shares into its name;
10.1.4. the books, licences, registers,
records, title deeds, leases and other
documents of whatsoever nature of each of
the NIBAM companies.
10.2. as regards the business:-
10.2.1. the delivery of all assets forming
part of the business;
10.2.2. such documentation as may be
necessary in order to enable ownership of
the assets comprising the business to be
transferred to, and where applicable
registered in, the name of the purchaser.
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11. WARRANTIES AND REPRESENTATIONS
11.1. The seller gives to the purchaser all the warranties in respect of
the NIBAM group set out in ANNEXURE F hereto as read with any
disclosure schedule attached hereto by the seller when it signs.
11.2. The purchaser shall not be entitled to cancel this agreement as a
consequence of a breach by the seller of any warranty referred to in
clauses 9.1, 9.3 or in ANNEXURE F, unless the breach is incapable of
being remedied by being caused to cease or by the payment of
compensation or otherwise or, if it is capable of so being remedied,
the seller fails so to remedy the breach within 30 (thirty) days (or
such longer period as may be reasonably necessary in the
circumstances) of the receipt of written notice calling upon it to do
so.
11.3. Save for the warranties referred to in clauses 9.1, 9.3 and 11.5, and
in ANNEXURE F hereto, the seller has not given and accordingly shall
not be bound by any warranties or representations of whatsoever
nature, whether express or implied, in respect of the NIBAM group.
11.4. Notwithstanding anything to the contrary hereinbefore contained, the
purchaser shall not have any claim against the seller in respect of
any action arising from a breach of any warranty unless the aggregate
of amounts payable as a result of all such breaches exceeds R100
000,00 (one hundred thousand rand). Any such claim shall be limited
to the amount in excess of R100 000,00 (one hundred thousand rand).
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11.5. The seller gives to TII the same warranties as it gives to the
purchaser in clauses 9.1, 9.3 and in ANNEXURE F hereto provided that
TII shall only be entitled to exercise its rights pursuant to a
breach of warranty if the purchaser is precluded, through any act or
omission on the part of the seller, from instituting proceedings
against the seller for a breach of the warranty in question given in
its favour, in which event the purchaser shall not be entitled to
exercise its rights pursuant to a breach of the relevant warranty
given in its favour.
11.6. TII gives to the seller all the warranties in respect of the FAM
group set out in ANNEXURE G hereto as read with any disclosure
schedule attached hereto by TII when it signs.
11.7. The seller shall not be entitled to cancel this agreement as a
consequence of a breach by TII of any warranty referred to in clauses
9.2, 9.4 or in ANNEXURE G, unless the breach is incapable of remedied
by being caused to cease or by the payment of compensation or
otherwise or, if it is capable of so being remedied, TII fails so to
remedy the breach within 30 (thirty) days (or such longer period as
may be reasonably necessary in the circumstances) of the receipt of
written notice calling upon it to do so.
11.8. Save for the warranties referred to in clauses 9.2, 9.4 and in
ANNEXURE G hereto, TII has not given and accordingly shall not be
bound by any warranties or representations of whatsoever nature,
whether express or implied, in respect of the FAM group.
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11.9. Notwithstanding anything to the contrary herein before contained, the
seller shall not have any claim against the purchaser in respect of
any action arising from a breach of any warranty unless the aggregate
of amounts payable as a result of all such breaches exceeds R100
000,00 (one hundred thousand rand) . Any such claim shall be limited
to the amounts in excess of R100 000,00 (one hundred thousand rand).
12. RELEASE FROM GUARANTEES
12.1. TII shall use its best endeavours to procure the release of the
seller from 50% (fifty per cent) of any liability which the seller
may have from causes arising after the effective date under all
guarantees, suretyships or indemnities which have been given by the
seller for the obligations of the NIBAM group; provided that TII
shall -
12.1.1. not be obliged to discharge any
principal obligation or agree to any
variation of the terms of any such
guarantee, suretyship or indemnity nor
shall it be obliged to cause the
company to discharge the principal debt;
12.1.2. tender its own guarantee, suretyship or
indemnity if that is necessary,
to procure any such release.
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12.2. Until the release of the seller is procured, TII indemnifies the
seller against 50% (fifty per cent) of any liability referred to in
clause 12.1. TII shall be obliged to make payment under this
indemnity as soon as the seller becomes obliged to make payment in
respect of any such liability.
12.3. The seller shall use its best endeavours to procure the release of
TII from 50% (fifty per cent) of any liability which TII may have
from causes arising after the effective date under all guarantees,
suretyships or indemnities which have been given by TII for the
obligations of the FAM group; provided that the seller shall:-
12.3.1. not be obliged to discharge any
principal obligation or agree to any
variation of the terms of any such
guarantee, suretyship or indemnity nor
shall it be obliged to cause the
company to discharge the principal debt;
12.3.2. be obliged to tender its own guarantee,
suretyship or indemnity if that is
necessary,
to procure any such release.
12.4. Until the release of TII is procured, the seller indemnifies TII
against 50% (fifty per cent) of any liability referred to in clause
12.3. The seller shall be obliged to make payment in respect of any
such liabilities as soon as TII becomes obliged to make payment in
respect of any such liability.
Page 24
PART III - SALE OF PORTION OF THE SELLER'S SHARES IN AND
CLAIMS AGAINST THE PURCHASER
13. SALE
13.1. The seller hereby cedes and sells, with effect from the effective
date but immediately following the implementation of clause 8.1:-
13.1.1. to TII, 50% (fifty per cent) of the
shares to be allotted and issued to the
seller or its nominee in terms of
clause 8.1.1 (namely the shares to be
allotted in renounceable form), the
transfer of such shares (hereinafter
referred to as "the specified TII
shares") to be effected by way of a
renunciation by the seller in favour of
TII; and
13.1.2. to TGAL, 50% (fifty per cent) of the
loan account referred to in
clause 8.1.2 (such loan account being
hereinafter referred to as "the
specified loan account").
13.2. Notwithstanding the date upon which this agreement is signed, the
specified TII shares and the specified loan account are ceded and
sold with effect on and as from the effective date, from which date
all risk in and benefits attaching thereto shall be deemed to have
passed to TII and TGAL respectively.
Page 25
14. PURCHASE PRICE
The purchase price of the specified TII shares and the
specified loan account is:-
14.1. in respect of the specified TII shares, an amount equal to the
equivalent in South African Rands of US $4 500 000,00 (four million
five hundred thousand US dollars), converted at the conversion rate;
14.2. in respect of the specified loan account, an amount equal to the
equivalent in South African Rands of US $22 500 000,00 (twenty two
million five hundred thousand US dollars) , converted at the
conversion rate.
15. PAYMENT OF THE PURCHASE PRICE
The purchase price of the specified TII shares and the specified loan
account shall be payable to the seller as follows:-
15.1. an amount of US $4 500 000,00 (four million five hundred thousand US
dollars) shall be discharged by TII paying such amount, on the
implementation date and in cash, to NIBF as payment and collection
agent for and behalf of the seller and such payment shall constitute
a full and proper discharge by TII of the purchase price of the
specified TII shares;
15.2. an amount of US $9 000 000,00 (nine million US dollars) shall be
discharged by TGAL paying such amount, on the implementation date and
Page 26
in cash, to NIBF as payment and collection agent for and behalf of
the seller and such payment shall constitute a full and proper
discharge by TGAL of such portion of the purchase price of the
specified loan account;
15.3. the balance of the purchase price shall be paid to
the seller in South African Rands on the fifth
anniversary of the implementation date. In this
regard:-
15.3.1. the balance of the purchase price, for
the aforegoing purpose, shall be
converted into South African Rands at
the conversion rate;
15.3.2. an amount of US $13 500 000,00
(thirteen million five hundred thousand
US dollars), being the US dollar
equivalent on the implementation date
of the Rand amount referred to in
clause 15.3.1, shall, on the
implementation date, be paid by TGAL to
NIBF to be held by NIBF (as security
agent on behalf of the seller) as
security for the due and proper
discharge by the purchaser of its
obligations to pay the balance of the
purchase price, it being recorded that
an agreement governing the terms of
this security will be entered into
between the parties concerned.
Page 27
All payments to be effected by the purchaser to the seller/NIBF in
terms of this Part III shall be effected in accordance with the
provisions of ANNEXURE E hereto. By its signature hereto, TII binds
itself in favour of the seller as surety for and co-principal debtor
IN SOLIDUM with TGAL for the due and punctual performance by TGAL of
its obligations hereunder.
PART IV - GENERAL
16. SHAREHOLDERS AGREEMENT
Simultaneously with signature of this agreement, the parties shall sign
the shareholders agreement.
17. PRE-IMPLEMENTATION DATE MATTERS
TII undertakes to procure that:-
17.1. all its shares in and claims against FRANKLIN TEMPLETON MANAGEMENT
COMPANY LIMITED ("FTManco) are sold to and registered in the name of
the purchaser for a purchase consideration of R2 322 651,00 (two
million three hundred and twenty two thousand six hundred and fifty
one rand) such that, prior to the implementation date but with effect
from the effective date, FTManco will be a wholly owned subsidiary of
the purchaser. The purchase price shall constitute a claim on loan
account in favour of TII which shall be repaid by the purchaser as
soon as possible after the implementation date but which claim on
loan account shall not be subject to the provisions of clause 19.2 of
Page 28
the shareholders' agreement relating to the PRO RATA provision of
loan accounts;
17.2. the aggregate of its claims on loan account against the purchaser as
at the effective date are (other than the claim of R2 322 651,00 (two
million three hundred and twenty two thousand six hundred and fifty
one rand) arising pursuant to the implementation of clause 17.1),
prior to the implementation date, applied in subscribing for one new
share in the capital of the company at an appropriate premium, thus
effectively capitalising such claims;
17.3. the authorised share capital of the purchaser will be such as to
facilitate the implementation of this agreement;
17.4. the seller will subscribe for 101 (one hundred and one) ordinary
shares of R1,00 (one rand) each in the share capital of the
purchaser, at par, which shares shall be issued to the seller upon
payment, on the implementation date, of the subscription price of
R101,00 (one hundred and one rand) and which shall, upon issue, rank
pari passu in all respects with the then issued share capital of the
purchaser;
17.5. the employment contracts of the employees of FTManco will, prior to
the implementation date but with effect from the effective date, be
assigned to the purchaser.
Page 29
It is recorded that the parties are in the course of concluding employment
contracts, embodying, INTER ALIA, restraint of trade provisions, with key
personnel who will be employed, or continue to be employed, by the
purchaser.
18. POST IMPLEMENTATION DATE MATTERS
18.1. It is recorded that the following
agreements/matters have been or are currently in
the course of being concluded/undertaken, namely:-
18.1.1. an agreement of lease between the
purchaser (as tenant) and the seller
(as landlord) in respect of premises
from which the Cape Town operations of
the merged business will be conducted
with effect from the implementation
date, it being recorded that any
on-going liability in respect of
premises currently occupied by the
NIBAM group and the FAM group in
respect of their business operations in
Cape Town shall be borne and paid by
the purchaser;
18.1.2. an agreement between NIBAM and
FinSource (PROPRIETARY) LIMITED
(Registration No. 1998/004065/07)
(which will incorporate appropriate
provisions to enable the agreement to
be assigned to the purchaser) relating
to the outsourcing of certain functions;
Page 30
18.1.3. service level agreements between NEDCOR
INVESTMENT BANK LIMITED and the
purchaser;
18.1.4. a sub-distributor agreement between
TGAL and the purchaser regulating the
distribution of off-shore business;
18.1.5. the completion and filing of all
taxation (including provisional tax)
returns of the purchaser by no later
than 31 August 2000.
The parties shall liaise and consult with each other in regard to the
finalisation of these agreements.
18.2. It is agreed that unutilised asset swap capacity of or available to
the merged business will, insofar as legally permissible, be applied,
within 3 (three) months of the date of signature hereof, to off-shore
funds nominated by TII provided that such funds are reasonably
acceptable to the seller taking cognisance of client mandates and
client interests.
18.3. It is intended that NIBAM will continue to operate on the same basis
and in the same manner as hitherto.
18.4. The parties undertake to procure, as soon as reasonably possible
after the implementation date, that the articles of association of
Page 31
the purchaser are amended so as to permit share buy-backs, buy-ins
and payments to shareholders as contemplated by sections 85 - 90 of
the Act.
19. PUBLICITY
No party shall publish to any third party the fact of or any information
concerning the conclusion of this agreement or the terms hereof without
the consent of the others, which consent shall not be unreasonably
withheld, save for any publication required by the Johannesburg Stock
Exchange and/or as required by law.
20. ARBITRATION
20.1. Save in respect of those provisions of the agreement which provide
for their own remedies which would be incompatible with arbitration,
a dispute which arises in regard to -
20.1.1. the interpretation of; or
20.1.2. the carrying into effect of; or
20.1.3. any of the parties' rights and obligations
arising from; or
20.1.4. the termination or purported termination of or
arising from the termination of; or
20.1.5. the rectification or proposed rectification of
Page 32
this agreement, or out of or pursuant to this agreement or
on any matter which in terms of this agreement requires
agreement by the parties, (other than where an interdict is
sought or urgent relief may be obtained from a court of
competent jurisdiction), shall be submitted to and decided
by arbitration.
20.2. That arbitration shall be held -
20.2.1. with only the parties and their
representatives present thereat;
20.2.2. at Sandton.
It is the intention that the arbitration shall, where possible, be
held and concluded in 21 (twenty one) working days after it has been
demanded. The parties shall use their best endeavours to procure the
expeditious completion of the arbitration. The arbitrator shall
determine his own rules of procedure and the parties shall be bound
thereby.
20.3. The arbitration shall not be subject to the arbitration legislation
for the time being in force in the Republic of South Africa.
20.4. The arbitrator shall be, if the matter in dispute is principally -
Page 33
20.4.1. a legal matter, a practising senior
advocate of not less than 5 (five)
years standing as such and practising
at the Johannesburg or Sandton Bar's,
or a senior lawyer (whether or not an
attorney as contemplated by the
Attorneys Act, No 53 of 1979) of not
less than 15 (fifteen) years standing,
in either case specialising in
commercial law;
20.4.2. an accounting matter, a practising
chartered accountant of not less than
15 (fifteen) years standing;
20.4.3. any other matter, an independent person
agreed upon between the parties.
If the parties fail to agree on an arbitrator within 7 (seven) days
after the arbitration has been demanded, the arbitrator shall be
nominated by the President for the time being of the Law Society of
the Transvaal (or its successor-in-Gauteng). If the parties fail to
agree whether the dispute is of a legal, accounting or other nature
within the said 7 (seven) day period, it shall be considered a matter
referred to in clause 20.4.3.
20.5. The parties shall keep the evidence in the
arbitration proceedings and any order made by any
arbitrator confidential unless otherwise
contemplated herein.
Page 34
20.6. The arbitrator shall be obliged to give his award in writing fully
supported by reasons. The arbitrator shall make an award as to costs
which shall be paid accordingly, it being agreed that the arbitrator
shall, in making any costs award in favour of TII, take cognisance of
the costs that may necessarily have been incurred by TII in arranging
for non-South African residents to be present in South Africa so as
to attend the arbitration proceedings and/or prepare therefor.
20.7. The provisions of this clause are severable from the rest of this
agreement and shall remain in effect even if this agreement is
terminated for any reason.
20.8. The arbitrator shall have the power to give default judgment if any
party fails to make submissions on due date and/or fails to appear at
the arbitration.
21. WHOLE AGREEMENT, NO AMENDMENT
21.1.This agreement constitutes the whole agreement between the parties
relating to the subject matter hereof.
21.2. No amendment or consensual cancellation of this agreement or any
provision or term hereof or of any agreement, bill of exchange or
other document issued or executed pursuant to or in terms of this
agreement and no settlement of any disputes arising under this
agreement and no extension of time, waiver or relaxation or
suspension of or agreement not to enforce or to suspend or postpone
Page 35
the enforcement of any of the provisions or terms of this agreement
or of any agreement, bill of exchange or other document issued
pursuant to or in terms of this agreement shall be binding unless
recorded in a written document signed by the parties (or in the case
of an extension of time, waiver or relaxation or suspension, signed
by the party granting such extension, waiver or relaxation). Any such
extension, waiver or relaxation or suspension which is so given or
made shall be strictly construed as relating strictly to the matter
in respect whereof it was made or given.
21.3. No extension of time or waiver or relaxation of any of the provisions
or terms of this agreement or any agreement, bill of exchange or
other document issued or executed pursuant to or in terms of this
agreement, shall operate as an estoppel against any party in respect
of its rights under this agreement, nor shall it operate so as to
preclude such party thereafter from exercising its rights strictly in
accordance with this agreement.
21.4. To the extent permissible by law no party shall be bound by any
express or implied term, representation, warranty, promise or the
like not recorded herein, whether it induced the contract and/or
whether it was negligent or not.
Page 36
22. NOTICES
22.1. The parties choose for all purposes under this agreement, whether in
respect of court process, notices or other documents or
communications of whatsoever nature, the following addresses :
22.1.1. NEDCOR INVESTMENT BANK HOLDINGS LIMITED
Physical: 1 Newtown Avenue
Killarney
2193
Postal: P O Box 582
Johannesburg
2000
Telefax: (011) 480-1779/80
22.1.2. NEDCOR INVESTMENT BANK LIMITED
Physical: 1 Newtown Avenue
Killarney
2193
Postal: P O Box 582
Johannesburg
2000
Telefax: (011) 480-1779/80
22.1.3. TEMPLETON INTERNATIONAL, INC.
Physical: c/o Templeton Asset Management Limited
Harrow Court II
Isle of Houghton
Boundary Road
Parktown
2193
Page 37
Postal: P O Box 87587
Houghton
2041
Telefax: (011) 643-1366
US Telefax: (091) 954 847-2229
22.1.4. FRANKLIN TEMPLETON ASSET MANAGEMENT (PROPRIETARY) LIMITED
Physical: c/o Templeton Asset Management Limited
Harrow Court II
Isle of Houghton
Boundary Road
Parktown
2193
Postal: P O Box 87587
Houghton
2041
Telefax: (011) 643-1366
22.1.5. TEMPLETON GLOBAL ADVISORS LIMITED
Physical: c/o Templeton Asset Management Limited
Harrow Court II
Isle of Houghton
Boundary Road
Parktown
2193
Postal: P O Box 87587
Houghton
2041
Telefax: (011) 643-1366
22.2. Any notice or communication required or permitted to be given in
terms of this agreement shall be valid and effective only :-
22.2.1. if delivered or given by telefax;
Page 38
22.2.2. in the case of a notice or
communication to the purchaser, if a
copy thereof is also delivered or given
by telefax both to the seller and TII
(in the case of TII, by telefax
transmission to its US telefax, the
number of which appears in clause
22.1.3).
22.3. Any party may by notice to any other party change its' address to
another physical address in South Africa or its telefax number,
provided that the change shall become effective VIS-A-VIS that
addressee on the 10th (tenth) business day from the receipt of the
notice by the addressee.
22.4. Any notice to a party -
22.4.1. delivered by hand to a responsible
person during ordinary business hours
at its chosen physical address shall be
deemed to have been received on the day
of delivery; or
22.4.2. sent by telefax to its chosen telefax
number stipulated in clause 22.1, shall
be deemed to have been received on the
date of despatch (unless the contrary
is proved).
22.5. Notwithstanding anything to the contrary herein contained a written
notice or communication actually received by a party shall be an
Page 39
adequate written notice or communication to it notwithstanding that
it was not sent by telefax to or delivered at its chosen address.
23. NO CESSION OR ASSIGNMENT
Save as otherwise expressly provided in this agreement, neither the seller
on the one hand nor the purchaser nor TII on the other shall be entitled
to cede their rights or assign their rights and obligations hereunder to
any third party without the prior consent of the other of them, which
consent shall not be withheld unreasonably.
24. INTEREST ON OVERDUE AMOUNTS
Any amount falling due for payment by any party to any other in terms of
or pursuant to this agreement and not paid on due date, including any
amount which may be payable as damages, shall bear interest at Standard
Bank's prime overdraft rate compounded monthly in arrear. Damages for the
breach of any warranty or representation as to a stipulated state of
affairs shall be deemed to have been sustained on the date to which such
warranty or representation relates. In the case of a dispute as to
Standard Bank's prime overdraft rate, a certificate in writing by a
manager or accountant of Standard Bank shall be PRIMA FACIE evidence
thereof.
25. COSTS
25.1. The seller shall pay the costs of preparing the NIBAM designated
accounts and the NIBAM effective date accounts.
25.2. TII shall pay the costs of preparing the FAM designated accounts and
the FAM effective date accounts.
Page 41
25.3.The purchaser shall pay all other costs of and
incidental to the implementation of this agreement
including, but without limitation :-
25.3.1. the stamp duty in respect of:-
25.3.1.1. the registration of transfer of the sold
shares into the purchaser's name;
25.3.1.2. the creation, allotment and issue of the new
shares in the capital of the purchaser to be
allotted and issued as contemplated by clause
8.1.1;
25.3.1.3. all stamp duty and other costs
relating to the implementation of
the provisions of clause 17;
25.3.2. labour related costs, lease cancellation costs,
relocation costs and the like. If and to the extent
permitted, such costs shall be written off against the
company's share premium account.
26. INDIVISIBILITY
The transactions recorded in this agreement are indivisible.
27. GOVERNING LAW
27.1. This agreement shall be governed by and interpreted in accordance
with the substantive laws of the Republic of South Africa.
27.2. Save as otherwise provided herein, the parties submit to the
exclusive jurisdiction of the High Court of South Africa.
SIGNED by the parties and witnessed on the following dates and at the following
places respectively:
DATE PLACE WITNESS SIGNATURE
- ---- ----- ------- ---------
For: NEDCOR INVESTMENT BANK
HOLDINGS LIMITED
1. /s/ Izak Botha
-----------------
2.
For: NEDCOR INVESTMENT BANK
LIMITED
1. /s/ Izak Botha
-----------------
2.
For: TEMPLETON INTERNATIONAL,
INC.
1. /s/ Charles E. Johnson
----------------------
2.
For: FRANKLIN TEMPLETON ASSET
MANAGEMENT (PROPRIETARY)
LIMITED
1. /s/ Charles E. Johnson
----------------------
2.
DATE PLACE WITNESS SIGNATURE
For: TEMPLETON GLOBAL ADVISORS
LIMITED
1. /s/ Charles E. Johnson
----------------------
2.
ANNEXURE A - FAM DESIGNATED ACCOUNTS
ANNEXURE B - NIBAM DESIGNATED ACCOUNTS
ANNEXURE C - SHAREHOLDERS AGREEMENT
ANNEXURE D - THE BUSINESS
The business comprises the management of assets in terms of the mandates
received by NIB Asset Management Limited from institutional and private clients.
Such mandates are fulfilled principally on an active judgemental basis by
portfolio managers.
0
ANNEXURE E - PROVISIONS OF PAYMENT OF PURCHASE PRICE
ANNEXURE F - SCHEDULE OF WARRANTIES GIVEN BY THE SELLER
1. In this annexure -
1.1. the "agreement" means the agreement to which
this annexure is attached;
1.2. a reference to "the company" is a reference to
each of the NIBAM companies;
1.3. a reference to "employees" is a reference to
each employee listed in ANNEXURE F1 hereto;
1.4. a reference to "SYFRETS" means SYFRETS LIMITED,
a subsidiary of NIBH;
1.5. a reference to "marks" means any registered or
unregistered trademarks, trade names or other
devices used by the company;
1.6. to the extent that at signature of the
agreement, the effective date may already have
passed, and accordingly the use of any tense may
be inappropriate, the warranties shall be read
in the appropriate tense;
1.7. the warranties will be qualified by any
disclosure made by the seller in the attached
disclosure schedule.
Page 2
2. On the effective date and on the implementation date -
2.1. the company will be regularly incorporated as a
company with limited liability according to the
laws of the Republic of South Africa;
2.2. no steps will have been taken in respect of the
company in terms of section 73 of the Act;
2.3. neither the company nor its directors will be
under any obligation (whether contingently upon
the exercise of any right or otherwise) to
increase or reduce or otherwise alter its
authorised or issued share capital;
2.4. the seller will be entitled and able to give
free and unencumbered title to the sold shares
and sold claims to the purchaser;
2.5. no person will have any right (including any option or right of first
refusal) to acquire any of the sold shares or the sold claims or to
subscribe for, take up or acquire any of the unissued shares in the
capital of the company, present or future;
2.6. no resolution will have been passed, nor will
the company be obliged, to alter any of the
rights attaching to any of the shares in the
capital of the company or to alter the
memorandum or articles of association of the
company or to create or to issue any debentures;
Page 3
2.7. no person will have any right to obtain an order
for the rectification of the register of members
of the company;
2.8. the company's books and records will have been properly maintained
according to law and will in all material respects accurately
reflect, in accordance with generally accepted and sound accounting
principles and standards, all of the transactions entered into by the
company or to which it is a party;
2.9. no resolutions will have been passed by the
directors or members of the company which will
not be reflected in the minute books of the
company or which have been submitted to the
purchaser for inspection;
2.10.as regards the business, the seller will be able to give to the
purchaser free and unencumbered title of the assets forming part of
the business and the business itself;
2.11.the business and its assets will be insured against the risks to
which they are subject for amounts which accord with sound business
practice for a period terminating not earlier than 60 days after the
implementation date, all premiums due in respect of that insurance
will have been paid and the seller will have complied with all of the
conditions to which liability of the insurers under those policies is
subject;
Page 4
2.12.SYFRETS and the company will not be in breach of
any of their material statutory or other legal
obligations in respect of the business;
2.13.there are at the date of signature of this agreement by the seller no
disputes or pending litigation, arbitration, criminal, review or
expropriation proceedings in respect of the business or the company
which are material to this transaction (including without limitation
in respect of the assets of the business) and neither the seller,
SYFRETS nor the company is aware of any circumstances which may lead
to any dispute or proceedings;
2.14.no person other than the purchaser will have any right (including any
option or right of first refusal) to purchase any of the assets of
the business or the company, other than in the ordinary course of
business;
2.15.the use of the marks used by SYFRETS or the
company does not infringe the rights of any
third party;
2.16.neither NEDCOR, SYFRETS nor the company is a party to any proceedings
under the Labour Relations Act of 1995, as amended, in respect of the
employees;
Page 5
2.17.no material transaction will have been entered into in connection
with the business since 30 June 2000 save in the ordinary and regular
course of conduct of the business;
2.18.none of the seller, SYFRETS nor the company,
will have done or omitted to do anything which
would:-
2.18.1. materially prejudice the continued
goodwill of the business;
2.18.2. materially reduce the scope of the
business;
2.18.3. result in any business associate
ceasing to a material extent to
transact business with the company or
to vary the terms upon which it
transacts business with the company
(but this sub-clause 2.18.3 shall not
apply in respect of the contracts
constituting the institutional client
portfolio or the private client
direct portfolio of the business, as
they are set out in ANNEXURES F2 AND
F3 respectively);
2.19.none of the seller, SYFRETS or the company is
aware of any facts, matters or circumstances
which may give rise to:-
Page 6
2.19.1. any of the licences, consents,
permits, approvals or other
authorities required for the
operation of the business being
cancelled or not being renewed in the
future or only being renewed subject
to the imposition of onerous terms;
or
2.19.2. the cancellation of any of the
contracts the rights to which the
purchaser is acquiring in terms of
this agreement, whether as a result
of any breach thereof by SYFRETS or
the company or otherwise;
2.20.this transaction does not constitute a breach of any of the material
contractual obligations of the seller, SYFRETS or the company in
respect of the business, nor will it entitle any person to terminate
any contract to which the purchaser is acquiring rights to under this
agreement;
2.21.no person other than the seller and its subsidiaries is entitled to
an order requiring the company to cease using any of the marks which
it uses;
2.22.none of the liabilities in the NIBAM designated
accounts arose other than in the ordinary course
of conduct of business;
Page 7
2.23.no person other than the shareholders of the purchaser or employees
of the company (in the latter case in respect only of their
participation in a profit sharing scheme approved by the seller's
remuneration committee for the current financial year, up to the
effective date) will, on or after the implementation date, have any
right to participate in any revenues or profits generated by the
business;
2.24.no resolution will have been passed by the members of the seller,
SYFRETS or the company for its winding-up, and, as far as the seller
is aware, no application for that winding-up will have been presented
by any creditor or member of the seller at the closing date;
2.25.neither the seller, SYFRETS, any company nor any
member, agent, employee or other person
authorised to act on its behalf has:-
2.25.1. established or maintained any
unlawful or unrecorded fund or
corporate monies or other corporate
assets; or
2.25.2. made or promised to make any bribe, kick-back, pay-off, or
other unlawful payment of a similar or comparable nature,
to any person or entity, private or public, regardless of
form, whether in money, property or services with regard to
the business;
Page 8
2.26.all the employees of the NIBAM group are listed
in ANNEXURE F1 hereto;
2.27.none of the employees is entitled to any exceptional leave privilege,
accumulated leave, payment IN LIEU of leave, pension or the like,
and, during the period of 12 (twelve) months ending immediately prior
to the effective date, the terms of employment or remuneration
payable to any such employees will not have been varied and
compensation or other benefits payable on or in connection with the
termination of or retirement from employment or office of any of
those person will not have been agreed, except for:-
2.27.1. normal salary and other remuneration
reviews in the ordinary course;
2.27.2. changes arising from changes in the
employment status of any of those
persons (for instance, promotions and
transfers) all of which have been in
the ordinary course of the business;
and
2.27.3. the employees referred to in ANNEXURE
F1 whose names are marked with
asterisks, and whose terms and
conditions of employment have been
amended as disclosed to
representatives of TII;
Page 9
2.28.without limiting clause 2.27, no employee will
be entitled to accumulated or accrued leave in
excess of fifty working days;
2.29.subject to the provisions of the Labour Relations Act, 1995, and with
the exception of the employees referred to in clause 2.27.3 of this
Annexure, the purchaser will, after the effective date, be legally
entitled to terminate the employment of any of the employees on one
month's notice;
2.30.subject to the provisions of the Labour Relations Act, 1995, if any
of the employees is retrenched by the purchaser after the effective
date, that employee will not be contractually entitled to receive any
compensation in excess of that provided for in section 196 of the
Labour Relations Act, 1995 (which provides for payment of one week's
pay for every completed year of service);
2.31.no employee will be entitled to more than thirty six working days'
leave for each 12 (twelve) months of completed service;
2.32.no employee will on the effective date be entitled to participate in
any employee share incentive or participation scheme, other than the
NIBH Share Incentive Scheme, or the profit sharing scheme referred to
in sub-clause 2.23;
Page 10
2.33.no employee will on the effective date have any claims for any
bonuses, gratuities, share of profits or the like, other than through
their participation in the profit sharing scheme referred to in
sub-clause 2.23;
2.34.the company has no obligations to contribute on behalf of any
employee to any pension/provident fund scheme other than the Nedcor
Group scheme in which the employees participate;
2.35.neither NEDCOR INVESTMENT BANK LIMITED nor the company has unusual
obligations to any of its employees arising from their employment
contracts (and for purposes of this warranty any term which is not a
"standard" term applicable to all employees or all employees of that
particular class or category shall be considered as unusual).
3. Between the date of signature of the agreement and
the implementation date, save as disclosed in the
attached disclosure schedule -
3.1. the company will continue to carry on its business in the ordinary,
normal and regular course thereof and will not incur any liability or
obligation or enter into any transaction or sell or alienate any of
its assets otherwise than in the ordinary, normal and regular course
of business;
Page 11
3.2. the company will continue to trade in accordance
with the trading style presently adopted by it;
3.3. there will be no material adverse change in the
company's financial position;
3.4. no transaction will be entered into and no
assets will be acquired or disposed of and no
liabilities will be incurred otherwise than in
the normal, ordinary and regular course of the
business.
4. At the effective date the company will have no
liabilities other than those disclosed in the NIBAM
effective date accounts, and at the implementation
date the company will have no liabilities other than
those disclosed in the NIBAM effective date accounts
and other than those incurred between the effective
date and the implementation date in the ordinary,
normal and regular course of the company's business.
5. Save as disclosed in the schedule hereto, the NIBAM effective date
accounts will reflect a financial position not materially worse than the
financial position reflected in the NIBAM designated accounts.
6. All income tax and other statutory returns of the company which were due
on or before the effective date have been submitted to the revenue or
other competent statutory or regulatory authorities.
Page 12
7. The institutional client portfolio list which is
ANNEXURE F2 and the private client direct portfolio
which is ANNEXURE F3, each accurately reflects the
clients of the business constituting that portfolio
as at the date set forth in that annexure and the
values of the investments in each of the client
portfolios at that date, and the unit trust portfolio
list which is ANNEXURE F4 accurately reflects the
unit trusts constituting that portfolio as at the
date set forth in that annexure and the values of the
portfolios in each of those unit trusts at that date.
8. The memorandum by Peter Brown dated 31 July 2000 accurately reflects the
unutilized asset swap capacity in the portfolios in ANNEXURES F2, F3 AND
F4 at 31 July 2000.
9. The execution, delivery and performance of this agreement by the seller
and NEDCOR INVESTMENT BANK LIMITED does not and will not violate or result
in the breach of any material provision of, or require the consent or
approval of any person (other than as contemplated in clause 3 of the
agreement) under -
9.1. any statute or government or regulatory
authority regulation or rule;
9.2. judgment or order of any court, or aware of any
arbitration or equivalent tribunal;
9.3. the memorandum or articles of association of the
company.
Page 13
10. The payment of any amounts under the agreement of NIBF will not cause TII
or TGAL to breach or violate any South African law, regulation or rule.
ANNEXURE G - SCHEDULE OF WARRANTIES GIVEN BY TII
1. In this annexure -
1.1. the "agreement" means the agreement to which this
annexure is attached;
1.2. the "business" means the asset management business
and related activities presently conducted by the
FAM group;
1.3. a reference to "the company" is a reference to
each of the members of the FAM group;
1.4. a reference to "employees" is a reference to each
employee listed in ANNEXURE G1 hereto;
1.5. a reference to "marks" means any registered or
unregistered trademarks, trade names or other
devices used by the company;
1.6. to the extent that at signature of the agreement,
the effective date may already have passed, and
accordingly the use of any tense may be
inappropriate, the warranties shall be read in the
appropriate tense;
1.7. the warranties will be qualified by any disclosure
made by TII in the attached disclosure schedule;
Page 2
1.8. to the extent that the agreement requires TII and/or the company to
perform certain action(s) contrary to any warranty recorded herein,
such warranty shall be subject to the relevant clause(s) of the
agreement that require the performance of such action(s) to the
extent necessary to facilitate the implementation of the agreement.
2. On the effective date and on the implementation date -
2.1. the company will be regularly incorporated as a
company with limited liability according to the
laws of the Republic of South Africa;
2.2. no steps will have been taken in respect of the
company in terms of section 73 of the Act;
2.3. neither the company nor its directors will be
under any obligation (whether contingently upon
the exercise of any right or otherwise) to
increase or reduce or otherwise alter its
authorised or issued share capital;
2.4. TII will be entitled and able to give free and
unencumbered title to the shares referred to
clause 17.4 of the agreement;
Page 3
2.5. no person will have any right (including any
option or right of first refusal) to acquire any
of the shares or the claims or to subscribe for,
take up or acquire any of the unissued shares in
the capital of the company, present or future;
2.6. no resolution will have been passed, nor will the
company be obliged, to alter any of the rights
attaching to any of the shares in the capital of
the company or to alter the memorandum or articles
of association of the company or to create or to
issue any debentures;
2.7. no person will have any right to obtain an order
for the rectification of the register of members
of the company;
2.8. the company's books and records will have been properly maintained
according to law and will in all material respects accurately
reflect, in accordance with generally accepted and sound accounting
principles and standards, all of the transactions entered into by the
company or to which it is a party;
2.9. no resolutions will have been passed by the
directors or members of the company which will not
be reflected in the minute books of the company or
which have been submitted to the purchaser for
inspection;
2.10.as regards the business, TII will be able to give to the purchaser
free and unencumbered title of the assets forming part of the
business and the business itself;
Page 4
2.11.the business and its assets will be insured against the risks to
which they are subject for amounts which accord with sound business
practice for a period terminating not earlier than 60 days after the
implementation date, all premiums due in respect of that insurance
will have been paid and TII will have complied with all of the
conditions to which liability of the insurers under those policies is
subject;
2.12.the company will not be in breach of any of its
material statutory or other legal obligations in
respect of the business;
2.13.there are at the date of signature of this agreement by TII no
disputes or pending litigation, arbitration, criminal, review or
expropriation proceedings in respect of the company which are
material to this transaction and neither TII nor the company is aware
of any circumstances which may lead to any dispute or proceedings;
2.14.no person other than the shareholders of the
purchaser will have any rights in and to the
assets of the business or the company;
2.15.the use of the marks by the company does not
infringe the rights of any third party;
2.16.the company is a not a party to any proceedings
under the Labour Relations Act of 1995, as
amended, in respect of the employees;
Page 5
2.17.no material transaction will have been entered into in connection
with the business since 30 June 2000 save in the ordinary and regular
course of conduct of the business;
2.18.the company will not have done or omitted to have
done anything which would:-
2.18.1. materially prejudice the continued
goodwill of the business;
2.18.2. materially reduce the scope of the
business;
2.18.3. result in any business associate
ceasing to a material extent to
transact business with the company or
to vary the terms upon which it
transacts business with the company
(but this sub-clause 2.18.3 shall not
apply in respect of the contracts
constituting the institutional client
portfolio or the private client direct
portfolio of the business, as they are
set out in ANNEXURE G2);
2.19.the company is not aware of any facts, matters or
circumstances which may give rise to:-
Page 6
2.19.1. any of the licences, consents, permits,
approvals or other authorities required
for the operation of the business being
cancelled or not being renewed in the
future or only being renewed subject to
the imposition of onerous terms; or
2.19.2. the cancellation of any of the
contracts the rights to which the
seller is acquiring in terms of this
agreement, whether as a result of any
breach thereof by TII, the company or
otherwise;
2.20.this transaction does not constitute a breach of any of the material
contractual obligations of TII or the company in respect of the
business, nor will it entitle any person to terminate any contract to
which the seller is acquiring rights to under this agreement;
2.21.no person other than TII or a member of the TII group (as defined in
the Shareholders Agreement, attached to the agreement as ANNEXURE C)
is entitled to an order requiring the company to cease using any of
the marks which it uses;
2.22.none of the liabilities in the FAM designated
accounts arose other than in the ordinary course
of conduct of business;
2.23.no resolution will have been passed by the company for its
winding-up, and, as far as TII is aware, no application for that
winding-up will have been presented by any creditor or member of the
company at the closing date;
Page 7
2.24.neither TII, the company, any other company nor any member, agent,
employee or other person authorised to act on its behalf has:-
2.24.1. established or maintained any unlawful
or unrecorded fund or corporate monies
or other corporate assets; or
2.24.2. made or promised to make any bribe, kick-back, pay-off, or
other unlawful payment of a similar or comparable nature,
to any person or entity, private or public, regardless of
form, whether in money, property or services with regard to
the business;
2.25.all the employees of the FAM group are listed in
ANNEXURE G1 hereto;
2.26.none of the employees is entitled to any exceptional leave privilege,
payment IN LIEU of leave, pension or the like, and, during the period
of 12 (twelve) months ending immediately prior to the effective date,
the terms of employment or remuneration payable to any such employees
will not have been varied and compensation or other benefits payable
on or in connection with the termination of or retirement from
employment or office of any of those person will not have been
agreed, except for:-
2.26.1. normal salary and other remuneration
reviews in the ordinary course;
Page 8
2.26.2. changes arising from changes in the
employment status of any of those
persons (for instance, promotions and
transfers) all of which have been in
the ordinary course of the business;
and
2.26.3. the employees referred to in ANNEXURE
G1 whose names are marked with
asterisks, and whose terms and
conditions of employment have been
amended as disclosed to representatives
of the seller;
2.27.without limiting clause 26, no employee will be entitled to
accumulated or accrued leave in excess of fifty working days;
2.28.subject to the provisions of the Labour Relations Act, 1995, and with
the exception of the employees referred to in clause 2.26.3 of this
Annexure, the purchaser will, after the effective date, be legally
entitled to terminate the employment of any of the employees on one
month's notice;
2.29.subject to the provisions of the Labour Relations Act, 1995, if any
of the employees is retrenched by the purchaser after the effective
date, that purchaser will not be contractually entitled to receive
any compensation in excess of that provided for in section 196 of the
Labour Relations Act, 1995 (which provides for payment of one week's
pay for every completed year of service);
Page 9
2.30.no employee will be entitled to more than thirty six working days'
leave for each 12 (twelve) months completed service;
2.31.no employee will on the effective date be entitled
to participate in any employee share incentive or
participation scheme, other than the Franklin
Resources Inc. Restricted Stock Bonus Plan and the
1998 Stock Option Plan;
2.32.no employees will on the effective date have any claims for any
bonuses, gratuities, share of profits or the like, other than through
their participation in the profit sharing scheme referred to in
sub-clause 2.31;
2.33.the company has no obligations to contribute on
behalf of any employee to any pension/provident
fund scheme other than the .................
scheme in which the employees participate;
2.34.the company has no unusual obligations to any of its employees
arising from their employment contracts (and for purposes of this
warranty any term which is not a "standard" term applicable to all
employees or all employees of that particular class or category shall
be considered as unusual).
3. Between the date of signature of the agreement and the
implementation date, save as disclosed in the attached
disclosure schedule :-
Page 10
3.1. the company will continue to carry on its business in the ordinary,
normal and regular course thereof and will not incur any liability or
obligation or enter into any transaction or sell or alienate any of
its assets otherwise than in the ordinary, normal and regular course
of business;
3.2. the company will continue to trade in accordance
with the trading style presently adopted by it;
3.3. there will be no material adverse change in the
company's financial position;
3.4. no transaction will be entered into and no assets
will be acquired or disposed of and no liabilities
will be incurred otherwise than in the normal,
ordinary and regulator course of the business.
4. At the effective date the company will have no
liabilities other than those disclosed in the FAM
effective date accounts, and at the implementation date
the company will have no liabilities other than those
disclosed in the FAM effective date accounts and other
than those incurred between the effective date and the
implementation date in the ordinary, normal and regular
course of the company's business.
5. Save as disclosed in the schedule hereto, the FAM effective date accounts
will reflect a financial position not materially worse than the financial
position reflected in the FAM designated accounts.
Page 11
6. All income tax and other statutory returns of the company which were due
on or before the effective date will have been submitted to the revenue or
other competent statutory or regulatory authorities no later than the
implementation date.
7. The institutional client, private client direct portfolio and the unit
trust portfolio list which is ANNEXURE G2, accurately reflects the clients
of the business constituting those portfolios and the values of the
investments in each of those portfolios as at the date set forth in that
annexure.
8. The executive, delivery and performance of this agreement by TII and the
company does not and will not violate or result in the breach of any
material provision of, or require the consent or approval of any person
(other than as contemplated in clause 3 of the agreement) under -
8.1. any statute or government or regulatory authority
regulatory or rule;
8.2. judgment or order of any court, or aware of any
arbitration or equivalent tribunal;
8.3. the memorandum or articles of association of the
company.
9. The Net Asset Value of FT Manco as at the effective date shall equal or
exceed the amount of R2 300 000,00 (two million three hundred thousand
rand).
Page 12
10. As regards the leases in respect of the following
premises :-
10.1. Harrow Court 2, Isle of Houghton
Boundary Road, Parktown
Johannesburg; and
10.2. Letterstedt House, Fedsure on Main,
Main Road, Claremont
Cape Town; and
10.3. Suite 6, 9 Frosterly,
Frosterly Park
La Lucia Ridge
the landlord, insofar as may be required, will prior to the implementation
date, have approved the change of shareholding in the purchaser and the
landlord will approve thereto..
ANNEXURE H - FORM OF UNDERTAKING TO THE FINANCIAL SERVICES BOARD
ANNEXURE C
A G R E E M E N T
entered into between
TEMPLETON INTERNATIONAL, INC.
(a company incorporated in accordance with the laws of the State of Delaware
with its principal place of business at Suite 2100, 500 East Broward Boulevard
Fort Lauderdale, Florida, 33394)
(Corporate File No. 230 9185)
and
NEDCOR INVESTMENT BANK HOLDINGS LIMITED
---------------------------------------
(a company duly incorporated in the Republic of South Africa
with its principal place of business at 1 Newtown Avenue, Killarney)
(Registration No. 1963/003972/06)
and
FRANKLIN TEMPLETON ASSET MANAGEMENT (PROPRIETARY) LIMITED (a company
incorporated in accordance with the laws of the Republic of South
Africa with its principal place of business at Harrow Court,
Isle of Houghton, Boundary Road, Parktown)
(Registration No. 1997/009637/07)
and
TEMPLETON GLOBAL ADVISORS LIMITED
(acompany incorporated in accordance with the laws of the Commonwealth of the
Bahamas with its principal place of business at Lyford Cay, Nassau,
Bahamas)
(Reference No. 38,984)
TABLE OF CONTENTS
CLAUSE NO. DESCRIPTION PAGE
1. INTERPRETATION AND PRELIMINARY.........................1
2. CONFLICTS WITH MEMORANDUM AND/OR
ARTICLES OF ASSOCIATION................................7
3. ISSUE OF SHARES........................................8
4. APPOINTMENT OF DIRECTORS...............................8
5. QUORUM FOR DIRECTORS' MEETINGS.........................9
6. QUORUM FOR SHAREHOLDERS' MEETINGS.....................10
7. OFFICERS..............................................10
8. RESOLUTIONS...........................................12
9. GOVERNANCE AND MANAGEMENT.............................14
10. GENERAL PROVISIONS RELATING TO TRANSFERS OF SHARES....16
11. PUT...................................................23
12. CALL..................................................27
13. DISPOSALS OF SHARES...................................30
14. NAME OF THE PURCHASER AND BRANDING....................37
15. EXCLUSIVITY...........................................38
16. EMPOWERMENT ASSET MANAGEMENT COMPANY..................41
17. RESTRUCTURING AND OTHER CHARGES.......................41
18. LODGING OF SHARES.....................................41
19. CAPITAL AND LOAN ACCOUNTS.............................42
20. GOOD FAITH............................................44
21. RIGHT OF MEMBERS TO INSPECT BOOKS OF THE COMPANY......44
22. APPLICATION OF THE SHAREHOLDERS' AGREEMENT TO
SUBSIDIARIES OF THE COMPANY...........................44
CLAUSE NO. DESCRIPTION PAGE
23. WHOLE AGREEMENT, NO AMENDMENT.........................44
24. OPERATIONAL ISSUES....................................46
25. NOTICES...............................................46
26. COSTS.................................................49
27. GOVERNING LAW.........................................49
28. ARBITRATION...........................................49
ANNEXURE A - TII GROUP NAMES.................................1
ANNEXURE B - NIBH GROUP NAMES................................1
ANNEXURE C - CATEGORIES OF SERVICES..........................1
WHEREBY IT IS AGREED AS FOLLOWS :
- -------------------------------
1. INTERPRETATION AND PRELIMINARY
The headings of the clauses in this agreement are for the purpose of
convenience and reference only and shall not be used in the interpretation
of nor modify nor amplify the terms of this agreement nor any clause
hereof. Unless a contrary intention clearly appears -
1.1. words importing -
1.1.1. any one gender include the other two genders;
1.1.2. the singular include the plural and VICE VERSA; and
1.1.3. natural persons include created entities (corporate or
unincorporate) and the state and VICE VERSA;
1.2. the following terms shall have the meanings assigned to them
hereunder and cognate expressions shall have corresponding
meanings, namely -
1.2.1. "business" means the provision of asset management and
related services;
1.2.2. "company" means FRANKLIN TEMPLETON ASSET MANAGEMENT
(PROPRIETARY) LIMITED;
Page 2
1.2.3. "FR" means FRANKLIN RESOURCES INC;
1.2.4. "implementation date" means the implementation date as
defined in the merger agreement;
1.2.5. "initial period" means the period of 21 (twenty one)
months reckoned from midnight on the last day of the
calendar month during which the implementation date occurs;
1.2.6. "merger agreement" means the agreement to which this
agreement is attached as ANNEXURE C;
1.2.7. "NEDCOR" means NEDCOR LIMITED;
1.2.8. "NIBH" means NEDCOR INVESTMENT BANK HOLDINGS LIMITED and a
reference to NIBH embraces a reference to any permitted
successor-in-title;
1.2.9. "NIBH group" means NIBH and its subsidiaries and NEDCOR
and NEDCOR's subsidiaries from time to time;
1.2.10. "QUANTS" means QUANTITATIVE ASSET MANAGEMENT
(PROPRIETARY) LIMITED;
Page 3
1.2.11. "shareholders" means the registered shareholders in
the company from time to time;
1.2.12. "strike price" for the purposes of clauses 11 and 12
means the price determined by applying the following
formula:-
x = a [1,2% * b) + (2,45% * c)]
where:-
x = strike price;
a = the percentage equivalent to the TII
group's percentage shareholding in the
company as at the relevant effective date;
b = the average of the company's audited
month-end institutional funds under
management over the 6 (six) month period
ending on the last day of the calendar month
preceding the month during which the
relevant effective date occurs;
c = the average of the company's audited
month-end non-institutional funds under
Page 4
management over the 6 (six) month period
ending on the last day of the calendar month
preceding the month during which the
relevant effective date occurs;
1.2.13. "subsidiary" means a subsidiary as defined in and
contemplated by the South African Companies Act, Act No
61 of 1973;
1.2.14. "territory" means the countries comprising the
South African Development Community;
1.2.15. "TGAL" means TEMPLETON GLOBAL ADVISERS LIMITED;
1.2.16. "TII" means TEMPLETON INTERNATIONAL, INC. and a reference
to TII embraces a reference to any permitted
successor-in-title;
1.2.17. "TII group" means TII and its subsidiaries and FR and
FR's subsidiaries from time to time;
1.2.18. "trigger event" shall mean:-
1.2.18.1. NIBH ceasing to be a subsidiary of NEDCOR; and/or
1.2.18.2. TII ceasing to be a subsidiary of FR; and/or
Page 5
1.2.18.3. a third party (excluding a trust for the benefit
of the disposing shareholders and/or their
descendants but only for so long as the trust is
for the benefit of those persons) acquiring
beneficially, whether directly or indirectly,
more than 25% (twenty five per cent) of the
issued share capital of NIBH; and/or
1.2.18.4. a third party (excluding a trust for the benefit
of the disposing shareholders and/or their
descendants but only for so long as the trust is
for the benefit of those persons) acquiring
beneficially, whether directly or indirectly
more than 25% (twenty five per cent) of the
issued share capital of TII;
1.2.18.5. a meeting of directors or shareholders is
adjourned for the third (or more) successive
occasion for want of a quorum;
1.3. any reference in this agreement to "date of signature hereof"
shall be read as meaning a reference to the date of the last
signature of this agreement;
1.4. any reference to an enactment is to that enactment as at the date of
signature hereof and as amended or re-enacted from time to time;
Page 6
1.5. if any provision in a definition is a substantive provision
conferring rights or imposing obligations on any party,
notwithstanding that it is only in the definition clause, effect
shall be given to it as if it were a substantive provision in the
body of the agreement;
1.6. when any number of days is prescribed in this agreement, same shall
be reckoned exclusively of the first and inclusively of the last day
unless the last day falls on a Saturday, Sunday or public holiday, in
which case the last day shall be the next succeeding day which is not
a Saturday, Sunday or public holiday;
1.7. where figures are referred to in numerals and in words, if there is
any conflict between the two, the words shall prevail;
1.8. expressions defined in this agreement shall bear the same meanings in
schedules or annexures to this agreement which do not themselves
contain their own conflicting definitions;
1.9. the use of any expression in this agreement covering a process
available under South African law such as a winding-up (without
limitation EIUSDEM GENERIS) shall, if any of the parties to this
agreement is subject to the law of any other jurisdiction, be
construed as including any equivalent or analogous proceedings under
the law of such jurisdiction;
Page 7
1.10. where any term is defined within the context of any particular
clause in this agreement, the term so defined, unless it is clear
from the clause in question that the term so defined has limited
application to the relevant clause, shall bear the meaning ascribed
to it for all purposes in terms of this agreement, notwithstanding
that that term has not been defined in this interpretation clause;
1.11. the expiration or termination of this agreement shall not affect
such of the provisions of this agreement as expressly provide that
they will operate after any such expiration or termination or which
of necessity must continue to have effect after such expiration or
termination, notwithstanding that the clauses themselves do not
expressly provide for this;
1.12. the rule of construction that the contract shall be
interpreted against the party responsible for the drafting or
preparation of the agreement, shall not apply.
2. CONFLICTS WITH MEMORANDUM AND/OR ARTICLES OF ASSOCIATION
2.1. If there is any conflict between the provisions of this agreement
and the memorandum and articles of association of the company at any
time, the provisions of this agreement shall prevail.
2.2. If required by any of the shareholders, the shareholders and the
company undertake to take all such steps and do all such things as
Page 8
may be necessary to alter (promptly after a notice of such request is
given to the company) the memorandum and articles of association of
the company so as to reflect, insofar as may be appropriate, the
provisions of this agreement.
3. ISSUE OF SHARES
After the implementation date, no shares in the capital of the company
shall be issued other than by way of a PRO RATA rights offer to the
shareholders at the time. If any shareholder does not personally follow
its rights, it shall be deemed to have renounced same to the other
shareholders who do follow their rights in the same proportions as they
follow their rights.
4. APPOINTMENT OF DIRECTORS
4.1. TII shall be entitled by written notice to the company to appoint 5
(five) directors of the company. TII shall be entitled to remove any
such directors appointed and to replace any such director who is so
removed or who ceases for any reason other than pursuant to clause
4.2 to be a director of the company. NIBH shall be entitled by
written notice to the company to appoint 5 (five) directors of the
company. NIBH shall be entitled to remove any such directors
appointed and to replace any such director who is so removed or who
ceases for any reason other than pursuant to clause 4.2 to be a
director of the company. Each of TII and NIBH is entitled to appoint
alternate directors.
Page 9
4.2. If TII or NIBH disposes of all of its shares, it shall, unless the
remaining shareholder agrees otherwise, remove any directors of the
company appointed by it as directors of the company without any
claims for compensation -
4.2.1. if such shares are acquired by other existing
shareholders in the company, on payment in full of the
purchase price by those purchasing shareholders; or
4.2.2. if such shares are to be acquired by a third party, on
the implementation of the sale agreement with the third
party
and the shareholder which appointed such directors indemnifies the
company if the directors fail or refuse to resign.
5. QUORUM FOR DIRECTORS' MEETINGS
A meeting of directors shall be convened on not less than 14 (fourteen)
days written notice. It is intended that directors' meetings will be
convened quarterly. The quorum for any directors' meetings of the company
shall be 2 (two) non-executive directors appointed by TII and 2 (two)
non-executive directors appointed by NIBH or the alternate(s) of any such
director, provided that if, within 30 (thirty) minutes from the time
appointed for a meeting, a quorum is not present, the meeting shall stand
adjourned to the same day in the next week, at the same time and place or,
if that day be a public holiday, a Saturday or a Sunday, to the next
succeeding day other than a public holiday, a Saturday or a Sunday,
Page 10
provided that if within 30 (thirty) minutes from the time appointed for
the meeting a quorum is not present, the meeting shall again stand
adjourned as aforesaid and this procedure shall continue until a quorum is
present.
6. QUORUM FOR SHAREHOLDERS' MEETINGS
A shareholders' meeting shall be convened on not less than 14 (fourteen)
days written notice. The quorum for shareholders' meetings of the company
shall be TII and NIBH present in person or by proxy, provided that if,
within 30 (thirty) minutes from the time appointed for a meeting, a quorum
is not present, the meeting shall stand adjourned to the same day in the
next week, at the same time and place or, if that day be a public holiday,
a Saturday or a Sunday, to the next succeeding day other than a public
holiday, a Saturday or a Sunday, provided that if within 30 (thirty)
minutes from the time appointed for the meeting a quorum is not present,
the meeting shall again stand adjourned as aforesaid and this procedure
shall continue until a quorum is present.
7. OFFICERS
7.1. NIBH shall appoint the person to preside as the Chairperson of any:-
7.1.1. shareholders' meeting;
7.1.2. directors' meeting from amongst the directors on the
board,
Page 11
during the first year of this agreement and thereafter such
Chairpersons shall be appointed in respect of each succeeding year in
rotation by NIBH and TII. Such Chairpersons shall not have a casting
vote.
7.2. TII shall appoint the chief operating officer of the company whose
appointment shall be subject to the prior written approval of NIBH
which approval shall not be withheld unreasonably. To the extent that
the remuneration package payable from time to time to the chief
operating officer exceeds, in cost to the company, the package that
would in the ordinary and normal course be paid to such an officer
employed by another company of comparable size engaged in the
business of asset management in South Africa, such excess portion
shall not be paid by the company but shall be the responsibility of
TII and shall be paid by TII or a party nominated by TII.
7.3. NIBH shall appoint the chief executive officer of the company whose
appointment shall be subject to the prior written approval of TII
which approval shall not be withheld unreasonably. To the extent that
the remuneration package payable from time to time to the chief
executive officer exceeds, in cost to the company, the package that
would in the ordinary and normal course be paid to such an officer
employed by another company of comparable size engaged in the
business of asset management in South Africa, such excess portion
shall not be paid by the company but shall be the responsibility of
and shall be paid by NIBH.
Page 12
7.4. It is recorded that each of the shareholders shall bear the costs of
reasonable travel expenses incurred by directors appointed by it in
attending meetings of the board.
8. RESOLUTIONS
8.1. Resolutions of directors of the company in order to be of force and
effect must be approved unanimously by the directors (or their
alternates) present at a meeting.
8.2. In circumstances where there is a failure to achieve unanimity on a
resolution at a directors' meeting, the resolution in question shall
be referred for determination to the shareholders.
8.3. Resolutions of shareholders of the company in order to be of force
and effect must be approved unanimously by the shareholders of the
company present at any meeting in person or by proxy. In
circumstances where there is a failure to achieve unanimity on a
resolution at a shareholders' meeting, the resolution in question
shall fail.
8.4. Resolutions signed in writing by all the directors or shareholders
(as the case may be) shall be as valid and effectual as if passed at
a meeting of directors or shareholders, as the case may be.
8.5. In the case of matters requiring urgent resolution or, if for any
reason it is impracticable to meet or pass a resolution as
contemplated by the Articles of Association of the company,
Page 14
proceedings may be conducted by utilising telephone or video
conference facilities, provided that the required quorum is met. A
resolution agreed to unanimously by the directors or shareholders, as
the case may be, participating during the course of such proceedings
shall be as valid and effectual as if it had been passed at a meeting
of the directors or shareholders, as the case may be, duly called and
constituted. The secretary of the company shall as soon as is
reasonably possible after such meeting has been held, be notified
thereof by the relevant parties to the meeting, and the secretary
shall prepare a written minute thereof.
8.6. If any resolution of the company is proposed that the company
institute any legal proceedings against any shareholder or any member
of a group of which the shareholder forms part or any director of the
company, such resolution shall be deemed to be within the
shareholders' domain not the directors' domain. If any shareholder
vetos any such resolution, and as a result the requisite majority to
pass the resolution cannot be obtained then, provided that the
remaining shareholders furnish an indemnity to the company against
all costs, losses or damages of whatsoever nature which the company
may sustain in bringing any such legal proceedings, such vetoing
shareholder shall be deemed to have voted in favour of the
resolution.
Page 14
9. GOVERNANCE AND MANAGEMENT
9.1. As soon as reasonably possible after the merger agreement becomes
unconditional, the shareholders will procure that structures are
put into place to ensure that:-
9.1.1. the company is managed and its affairs conducted in
accordance with the highest standards of corporate
governance; and
9.1.2. the business and affairs of the company will be managed
and conducted professionally and efficiently within such
corporate governance structures.
9.2. To this end, the shareholders shall procure that, as soon as
reasonably possible after the implementation date:-
9.2.1. appropriate corporate governance principles are formulated
and adopted. This will include, INTER ALIA the appointment
of an audit committee and a remuneration committee which
will report to the board of directors of the company;
9.2.2. formulate a "household policy document" which will
incorporate principles, policies, guidelines and directives
regarding the implementation of the merger and the ongoing
management of the business including, INTER ALIA:-
Page 15
9.2.2.1. the appointment of management and the
establishment of a management committee which
representatives of the shareholders shall be
entitled to attend;
9.2.2.2. the basis upon which authority is delegated by
the board to management and the levels of
authority so delegated including, but without
limitation, authority regarding capital
expenditure, borrowings and signing powers;
9.2.2.3. reporting procedures applicable to management and
to the executive members of the board, it being
recorded in this regard that (a) the chief
executive officer will report to a director
designated by the board and (b) the chief
operating officer will report to the board in
relation to those issues designated by the
board from time to time and to the chief
executive officer in relation to all other
matters;
9.2.2.4. risk and compliance procedures and accounting
practices and standards.
Page 16
9.3. It is recorded that the board of NIBH has, at a duly convened meeting
confirmed its intention to make Messrs I Botha and J Bestbier
available, subject to their agreement, to devote sufficient time to
the business and affairs of the company, over and above their duties
and functions as non-executive directors of the company and within
the parameters of the structures contemplated by clauses 9.1 and 9.2,
so as to assist in ensuring the growth and success of the company and
the maximisation of shareholder value.
10. GENERAL PROVISIONS RELATING TO TRANSFERS OF SHARES
10.1. Unless otherwise agreed in writing by all the shareholders of the
company but subject to the provisions of clause 10.2, a shareholder
may sell or otherwise dispose of or transfer (including but not
limited to EJUSDEM GENERIS by way of donation or dividend) the shares
held by it in the company only in terms of the provisions of this
agreement specifically providing for disposal, and only if, in one
and the same transaction, it likewise sells, disposes of or alienates
a PRO RATA share of its claim against the company on loan account
("loan account"). Accordingly, all references in this agreement and
in the lien, transmission and forfeiture provisions of the articles
of association of the company to the offer, sale, disposal,
alienation, transfer or transmission of a share in the company shall,
unless the context otherwise requires, be deemed to apply also to the
PRO RATA share of the loan account of the holder of such share and to
any rights offers or allotments.
Page 17
10.2.
10.2.1. It is recorded that notwithstanding the provisions of
clause 10.1, an exception has been made in regard to TII
such that TII's claims on loan account against the company
will pursuant to the merger agreement be acquired and held
by TGAL and/or one or more other TII group companies
nominated by TII. Similarly it is agreed that any
additional funding that shareholders may be obliged to
provide to the company from time to time in accordance
with the provisions of clause 19 will, in the case of TII,
be contributed by TGAL and/or one or more other TII group
companies nominated by TII. For the purposes of this clause
10, the holder/s of all such claims on loan account shall
hereinafter be referred to as "the designated loan
account holder".
10.2.2. Notwithstanding the aforegoing, the company and NIBH shall
be entitled to regard TII and not the designated loan
account holder as the loan account creditor as if it and
not the designated loan account holder was the actual loan
account creditor, and as regards any obligations imposed
on a shareholder VIS-A-VIS its claim on loan account
against the company, the company and NIBH shall be
entitled to enforce compliance of those obligations by
TII and TII shall be obliged to procure that the
designated loan account holder complies with such
obligations.
Page 18
10.2.3.For the avoidance of doubt and by way of example only:-
10.2.3.1. to the extent that a shareholder is obliged to
capitalise its claim on loan account against the
company in terms of this agreement or any other
agreement between the shareholders of the
company, TII shall be obliged to subscribe for
the appropriate number of additional shares in
the capital of the company, at the appropriate
subscription price, and the proceeds will be
utilised to repay the relevant portion of the
designated loan account holder's claim against
the company;
10.2.3.2. if TII disposes of its shares in the capital of
the company, the designated loan account holder
shall be obliged, as provided for in clause 10.1,
to dispose of its claims on loan account against
the company to the purchaser of TII's shares and
TII shall be obliged to procure that the
designated loan account holder complies with
such obligations.
10.3. Subject to clause 10.7-
10.3.1. all (and not part only of) the shares held by TII may,
provided that the transferee is approved by NIBH in writing
which approval it may not withhold unreasonably, be
Page 19
transferred by TII to any other member of the TII group and
VICE VERSA and from any member of the TII group to any other
member of the TII group (provided that if it ceases to be a
member of the TII group, it shall transfer same to any other
member of the TII group within 30 (thirty) days of such
cessation failing which TII shall be deemed to have offered
all its shares to NIBH at the strike price and the
provisions of clauses 13.1.2 (save in relation to the
identity of a third party purchaser), 13.1.3 (excluding
13.1.3.1) and 13.1.4 shall apply MUTATIS MUTANDIS on the
basis that the offer will be deemed to have been received by
NIBH when NIBH becomes aware that transfer to any other
member of the TII group did not occur within the said 30
(thirty) day period following such cessation);
10.3.2. all (and not part only of) the shares held by NIBH may ,
provided that the transferee is approved by TII in writing
which approval it may not withhold unreasonably, be
transferred by NIBH to any other member of the NIBH group
and VICE VERSA and from any member of the NIBH group to any
other member of the NIBH group (provided that if it ceases
to be a member of the NIBH group, it shall transfer same to
any other member of the NIBH group within 30 (thirty)days of
such cessation failing which NIBH shall be deemed to have
offered all its shares to TII at the strike price and the
Page 20
provisions of clauses 13.2.2 (save in relation to the
identity of a third party purchaser), 13.2.3 (excluding
13.2.3.1) and 13.2.4 shall apply MUTATIS MUTANDIS on the
basis that the offer will be deemed to have been received
by TII when TII becomes aware that transfer to any other
member of the NIBH group did not occur within the said 30
(thirty) day period following such cessation),
provided however that:
10.3.3. TII, by its signature hereto, binds itself as surety for and
co-principal debtor IN SOLIDUM with any transferee
contemplated by clause 10.3.1 for the due and punctual
fulfilment and performance by the transferee of all its
obligations hereunder;
10.3.4. NIBH, by its signature hereto, binds itself as surety for
and co-principal debtor IN SOLIDUM with any transferee
contemplated by clause 10.3.2 for the due and punctual
fulfilment and performance by the transferee of all its
obligations hereunder.
10.4. Any disposal of shares to any non-shareholder of the company
(including as contemplated by clauses 10.3.1 and 10.3.2) shall be
subject to the condition that the transferee shall undertake in
writing not, whilst it is a shareholder, to operate in competition to
Page 21
the business of the company by providing asset management services in
the territory that are substantially the same as those provided by
the company.
10.5. Subject to clause 10.7, transfer of any shares acquired in
terms of the provisions of this agreement, shall be given to the
person so acquiring them.
10.6. Except as provided in any express provision of this agreement, or in
any written agreement in force between all the shareholders, no share
may be disposed of, pledged or transferred without the written
consent of all shareholders, which consent shall not be withheld
unreasonably.
10.7. Notwithstanding anything to the contrary herein contained,
no shares shall be transferred to a non-shareholder unless:-
10.7.1. the shares constitute all (and not fewer) of the shares in
the company held by the transferor;
10.7.2. the non-shareholder agrees to be bound by any written
agreement in force between the company and its shareholders
and/or between the shareholders governing their
relationship as shareholders in the company and nominates
an address for the purposes of clause 25.
Page 22
10.8. Any shareholder which disposes of its shares as contemplated
by clause 13 shall be entitled to stipulate as a condition of such
sale that -
10.8.1. the disposing shareholder shall be released as a surety or
guarantor or indemnitor on behalf of the company,subject to
the purchaser of the shares in question binding itself as
surety or guarantor or indemnitor in its stead; or
10.8.2. if the release contemplated in clause 10.8.1 cannot be
achieved, or pending such release being implemented, the
disposing shareholder shall be indemnified by the purchaser
of the shares against any claims made against the disposing
shareholder by reason of such suretyship, guarantee or
indemnity. Such purchaser shall be liable for any amount
payable in terms hereof together with value-added tax
thereon.
10.9. The transferee of any shares and loan accounts acquired in terms of
this agreement, shall pay the stamp duty and any other similar duties
payable thereon.
10.10. The company will be entitled, with effect from the effective date
of a sale pursuant to the exercise of a put or call as contemplated
by clauses 11 and 12, to the benefit of all ongoing income, of the
Page 23
type received by it prior to the effective date, flowing from
transactions concluded prior to the effective date.
10.11. For the purposes of this clause 10, any transfer and/or disposal of
shares among members of the TII group or among members of the NIBH
group shall be treated as a transfer or disposal to a shareholder of
the company.
11. PUT
11.1. TII shall be entitled
(a) at any time after the initial period;
(b) within the initial period or at any time thereafter if
pursuant to the occurrence of a trigger event,
by giving written notice to this effect, to put all (but not a
portion only) of the TII group's shares in and claims on loan account
against the company to NIBH (provided that in the event of the put
being exercised pursuant to the occurrence of a trigger event, such
written notice shall be given within (but not after) 60 (sixty) days
after the date upon which the occurrence of the relevant trigger
event comes to the attention of TII) in which event a sale of such
shares and claims shall be deemed to have been concluded on the
following terms and conditions:-
Page 24
11.1.1. the shares and claims shall be acquired with effect from
the date on which the notice was given ("the effective
date") from which date all risk in and benefits attaching
to the shares and claims shall pass to NIBH;
11.1.2. the purchase price of the shares and claims shall be:-
11.1.2.1. an amount equal to the strike price less 12,5%
(twelve comma five per cent) thereof; provided that
11.1.2.2. if the put was exercised by TII pursuant to the
occurrence of a trigger event, the purchase price of
the shares and claims shall be an amount equal to the
strike price unless the trigger event was that
contemplated by clause 1.2.18.5 and TII's appointees
on the board or TII itself, as the case may be, was
responsible for the failure to achieve a quorum on
each occasion, in which event the purchase price of
the shares and claims shall be an amount equal to the
strike price less 12,5% (twelve comma five per cent);
11.1.3. the purchase price shall be payable on the later of:-
Page 25
11.1.3.1. the expiry of 90 (ninety) days reckoned from the
effective date; and
11.1.3.2. the date upon which the sale becomes
unconditional; and
11.1.3.3. in the event of:-
(a) a dispute as contemplated by clause 11.2; and
(b) it being determined that the put was
exercised pursuant to a trigger event,
the date of such determination.
11.1.4. the sale shall be subject to a suspensive condition,
namely the approval, to the extent necessary, of all
regulatory and other competent authorities (including
the Competition Commission) provided that if the
suspensive condition has not been fulfilled within 180
(one hundred and eighty) days of the effective date (or
such later date as the parties may agree to in writing)
by reason of the disapproval of the transaction by the
Competition Commission or any other competent regulatory
authority, the sale shall never become effective;
Page 26
11.1.5. if the sale does not become effective by reason of the
disapproval of the transaction by the Competition
Commission or any other competent regulatory authority,
TII shall not, until the lapse of a period of 12
(twelve) months reckoned from the failure of the
suspensive condition, be entitled again to exercise its
rights under this clause 11. Thereafter, in the event
of a sale not becoming effective by virtue of the
disapproval of the transaction by the Competition
Commission or any other competent regulatory authority
pursuant to a subsequent exercise of the put, the put
may be exercised only once in each successive 12
(twelve) month cycle;
11.1.6. TII and NIBH undertake to use their best endeavours to
procure the fulfilment of the suspensive condition
referred to in clause 11.1.4.
11.2. If there is a dispute between the parties as to whether or not the
put was exercised pursuant to the occurrence of a trigger event, such
dispute shall be determined in accordance with the provisions of
clause 28.
Page 27
12. CALL
12.1. NIBH shall be entitled
(a) at any time after the initial period;
(b) within the initial period or at any time thereafter if
pursuant to the occurrence of a trigger event,
by giving written notice to this effect, to call upon TII to sell to
it all (but not a portion only) of the TII group's shares in and
claims on loan account against the company to NIBH (provided that in
the event of the call being exercised pursuant to the occurrence of a
trigger event, such written notice shall be given within (but not
after) 60 (sixty) days after the date upon which the occurrence of
the relevant trigger event comes to the attention of NIBH) in which
event a sale of such shares and claim shall be deemed to have been
concluded on the following terms and conditions:-
12.1.1. the shares and claims shall be acquired with effect from
the date on which the notice was given ("the effective
date") from which date all risk in and benefits attaching
to the shares and claims shall pass to NIBH;
12.1.2. the purchase price of the shares and claims shall be,
Page 28
12.1.2.1. an amount equal to the strike price plus 12,5%
(twelve comma five per cent) thereof; provided
that
12.1.2.2. if the call was exercised by NIBH pursuant to the
occurrence of a trigger event, the purchase price
of the shares and claims shall be an amount equal
to the strike price unless the trigger event was
that contemplated by clause 1.2.18.5 and NIBH's
appointees on the board or NIBH itself, as the
case may be, was responsible for the failure to
achieve a quorum on each occasion, in which event
the purchase price of the shares and claims shall
be an amount equal to the strike price plus 12,5%
(twelve comma five per cent);
12.1.3. the purchase price shall be payable on the later of:-
12.1.3.1. the expiry of 90 (ninety) days reckoned from the
effective date; and
12.1.3.2. the date upon which the sale becomes
unconditional; and
12.1.3.3. in the event of:-
Page 29
(a) a dispute as contemplated by clause 12.2; and
(b) it being determined that the call was exercised
pursuant to the occurrence of a trigger event,
the date of such determination.
12.1.4. the sale shall be subject to a suspensive condition
namely the approval, to the extent necessary, of all
regulatory and other competent authorities (including
the Competition Commission), provided that if the
suspensive condition has not been fulfilled within 180
(one hundred eighty) days of the effective date (or such
later date as the parties may agree to in writing) by
reason of the disapproval of the transaction by the
Competition Commission or any other competent regulatory
authority, the sale shall never become effective;
12.1.5. if the sale does not become effective by reason of the
disapproval of the transaction by the Competition
Commission or any other competent regulatory authority,
NIBH shall not, until the lapse of a period of 12
Page 30
(twelve) months reckoned from the failure of the
suspensive condition, be entitled again to exercise its
rights under this clause 12. Thereafter, in the event
of a sale not becoming effective by virtue of the
disapproval of the transaction by the Competition
Commission or any other competent regulatory authority
pursuant to a subsequent exercise of the call, the call
may be exercised only once in each successive 12
(twelve) month cycle;
12.1.6. TII and NIBH undertake to use their best endeavours to
procure the fulfilment of the suspensive condition
referred to in clause 12.1.4.
12.2. If there is a dispute between the parties as to whether or not the
call was exercised pursuant to the occurrence of the trigger event,
such dispute shall be determined MUTATIS MUTANDIS in accordance with
the provisions of clause 28.
13. DISPOSALS OF SHARES
13.1. DISPOSAL BY TII
13.1.1. The provisions of this clause 13.1 shall apply only in the
event of TII having exercised its put in terms of clause 11
but the sale not becoming effective by virtue of the
non-fulfilment of the suspensive condition.
Page 31
13.1.2. When it is intended by TII to dispose of its shares (other
than in terms of clause 11) TII shall, in writing, offer
all (and not a portion only) of its shares to NIBH ("the
offer"), stating the price (which shall sound in money in
South African currency) and the terms of payment required
by it and no other terms shall be stipulated save for that
contemplated in clauses 10.7.2 and 10.8 and if it intends
selling or otherwise disposing or transferring all its
shares to a particular third party if the offer is not
accepted by the other shareholders, it shall disclose the
name of such third party.
13.1.3. If, within 90 (ninety) days after the receipt of the offer
during which period the offer shall be irrevocable ("the
offer period"), it is not accepted in writing in respect of
all the shares offered, by NIBH, then if -
13.1.3.1. a third party was named in the offer, TII may
within a further 90 (ninety) days or such
extended period as the parties may agree in
writing, but not thereafter without again
making an offer to NIBH in terms of
clause 13.1, dispose of the shares offered (but
not fewer) to the third party only, at a price
not lower and on terms not more favourable to
such person than the price at and terms on
Page 32
which NIBH was entitled to purchase them;
13.1.3.2. a third party was not named in the offer, TII
shall notify NIBH in writing of the proposed
third party acquirer after finding a third
party acquirer (but if no such notice is
received by NIBH within 60 (sixty) days after
the expiry of the offer period, TII shall if it
wishes to dispose of the shares, be obliged to
recommence entirely the procedure in this
clause 13.1) and the offer shall be deemed to
have been made to NIBH for a period of 48
(forty-eight) hours from such notification on
the same terms (during which it shall be
irrevocable). If it is not accepted by NIBH in
writing within 48 (forty-eight) hours in
respect of all the shares offered, by NIBH, TII
may dispose of the shares offered (but not
fewer) to such third party (provided such
disposal occurs within 30 (thirty) days of the
expiry of the 48 (forty eight) hour period
referred to above, but not thereafter without
again making an offer to NIBH in terms of this
Page 33
clause 13.1), to such named third party at a
price not lower and on terms not more
favourable to such person than the price and
terms at and on which was entitled to purchase
them.
13.1.4. The fact that TII gives any third party such warranties as
would be usual for transactions of such a nature, such
shall not constitute terms more favourable than those given
to NIBH who will not be given any warranties; save that TII
shall be deemed to have warranted in favour of NIBH that it
will be the registered and beneficial owner of its shares
which will constitute all of the issued shares in the
capital of the company held by it and will be able to give
free and unencumbered title thereof to NIBH or its nominee.
13.1.5. It is recorded for the sake of clarity and the avoidance of
doubt that a reference in this clause 13.1 to a third party
is a reference to one third party only and as such for this
purpose the singular does not include the plural.
13.2. DISPOSAL BY NIBH
13.2.1. The provisions of this clause 13.2 shall apply only in the
event of NIBH having exercised its call in terms of clause
Page 34
04515MAM.ACF
ACF/gl/13d/0e/04122000
NEDC6093-078
SHAREHOLDERS AGREEMENT
13.2.1. 12 but the sale not becoming effective by virtue of the
non-fulfilment of the suspensive condition.
13.2.2. When it is intended by NIBH to dispose of its shares
(other than in terms of clause 12 NIBH shall, in writing,
offer all (and not a portion only) of its shares to TII
("the offer"), stating the price (which shall sound in
money in South African currency) and the terms of payment
required by it and no other terms shall be stipulated save
for that contemplated in clauses 10.7.2 and 10.8 and if
it intends selling or otherwise disposing or transferring
all its shares to a particular third party if the offer is
not accepted by the other shareholders, it shall disclose
the name of such third party.
13.2.3. If, within 90 (ninety) days after the receipt of the offer
during which period the offer shall be irrevocable ("the
offer period"), it is not accepted in writing in respect of
all the shares offered, by TII, then if -
13.2.3.1. a third party was named in the offer, NIBH may
within a further 90 (ninety) days or such
extended period as the parties may agree in
writing, but not thereafter without again
making an offer to TII in terms of clause 13.2,
Page 35
dispose of the shares offered (but not fewer)
to the third party only, at a price not lower
and on terms not more favourable to such person
than the price at and terms on which TII was
entitled to purchase them;
13.2.3.2. a third party was not named in the offer, NIBH
shall notify TII in writing of the proposed
third party acquirer after finding a third
party acquirer (but if no such notice is
received by TII within 60 (sixty) days after
the expiry of the offer period, NIBH shall if
it wishes to dispose of the shares, be obliged
to recommence entirely the procedure in this
clause 13.2) and the offer shall be deemed to
have been made to TII for a period of 48
(forty-eight) hours from such notification on
the same terms (during which it shall be
irrevocable). If it is not accepted by TII in
writing within 48 (forty-eight) hours in
respect of all the shares offered, NIBH may
dispose of the shares offered (but not fewer)
to such third party (provided such disposal
occurs within 30 (thirty) days of the expiry of
Page 36
the 48 (forty eight) hour period referred to
above, but not thereafter without again making
an offer to TII in terms of this clause 13.2),
to such named third party at a price not lower
and on terms not more favourable to such person
than the price and terms at and on which it was
entitled to purchase them.
13.2.4. The fact that NIBH gives any third party such warranties as
would be usual for transactions of such a nature, such
shall not constitute terms more favourable than those given
to TII who will not be given any warranties; save that NIBH
shall be deemed to have warranted in favour of TII that it
will be the registered and beneficial owner of its shares
which will constitute all of the issued shares in the
capital of the company held by it and will be able to
give free and unencumbered title thereof to TII or its
nominee.
13.2.5. It is recorded for the sake of clarity and the avoidance of
doubt that a reference in this clause 13.2 to a third party
is a reference to one third party only and as such for this
purpose the singular does not include the plural.
Page 37
14. NAME OF THE PURCHASER AND BRANDING
14.1. The name of the company will, as soon as reasonably possible after
signature hereof, be changed to "FRANKLIN TEMPLETON NIB ASSET
MANAGEMENT (PROPRIETARY) LIMITED" and the business of the company
will be conducted under such name and style as is determined by the
board.
14.2. It is intended that the names of existing FAM group and NIBAM group
(as defined in the merger agreement) investment products will remain
unchanged for a period of 6 (six) months (or such extended period as
may be necessary so as to obtain all relevant regulatory approvals)
during which time the board of the company will determine the
branding that will apply with effect from the expiry of such 6 (six)
month period.
14.3. If the company or any of its subsidiaries bears or uses any
distinctive part of the name or uses any trademarks or trade names or
similar devices of the TII group or the NIBH group ("the marks"), and
TII or NIBH, as the case may be, disposes of its shares in the
company or if any subsidiary ceases to be a subsidiary, it shall be
entitled but not obliged to require the company and/or the relevant
subsidiary to change its name or cease using the marks within 120
(one hundred and twenty) days of the giving by the shareholder of
written notice to that effect to the company (or such extended period
as may be necessary so as to obtain all relevant regulatory
approvals) and the company shall comply and procure compliance
therewith.
Page 38
14.4. If any investment products marketed by the company or any of its
subsidiaries from time to time bears any distinctive part of the name
of the TII group or the NIBH group or bears any of the names
reflected in ANNEXURE A hereto (in relation to TII) or ANNEXURE B
hereto (in relation to NIBH) or any derivation thereof which
resembles such name or employs the marks of or associated with the
TII group or the NIBH group, and TII or NIBH, as the case may be,
disposes of its shares in the company or if any subsidiary ceases to
be a subsidiary, TII or NIBH, as the case may be, shall be entitled
but not obliged to require the company and/or the relevant subsidiary
to change the name of the relevant investment products and to cease
using such marks within 120 (one hundred and twenty) days of the
giving of written notice to this effect to the company (or such
extended period as may reasonable and necessary in the circumstances)
and the company shall comply and procure compliance therewith.
15. EXCLUSIVITY
15.1. Subject to clauses 15.2 and 15.3, each of NIBH and TII undertake not,
within the territory, whether directly or indirectly, to compete with
the business of the company, it being recorded that the TII group
will market all its products intended for South African residents
through the company. TII undertakes to procure that FR binds itself
to the provisions of this clause 15.1. The provisions hereof shall
endure for so long as NIBH and TII hold shares in the capital of the
company unless agreed otherwise. Notwithstanding the aforegoing the
Page 39
parties agree that should the company decide not to market such
products during the term of this agreement, any FR subsidiary will be
entitled to market such products in South Africa.
15.2. It is recorded that NIBH:-
15.2.1. through QUANTS and otherwise, conducts an asset management
business utilising quantitative analyses and hedge fund
techniques to manage its funds;
15.2.2. through its subsidiary companies and other equity
investments conducts or may in the future conduct an asset
management business through a multi-manager approach where
third party asset managers manage the relevant funds;
15.2.3. has an equity interest in COMMUNITY GROWTH ASSET
MANAGEMENT COMPANY (PROPRIETARY) LIMITED, which is a client
of NIBAM.
Nothing herein contained shall be construed as limiting NIBH from:-
15.2.4. conducting the businesses referred to in clauses 15.2.1
and 15.2.2;
Page 40
15.2.5. continuing to hold the equity interest referred to in
clause 15.2.3; and
15.2.6. acquiring and/or continuing to hold equity and other
interests, whether directly or indirectly, in companies
(other than those of which it is a holding company as
contemplated by the South African Companies Act, Act No. 61
of 1973) which do not at the time of acquisition provide
asset management services as part of their business but
which subsequently undertake the business of asset
management. In such circumstances however NIBH will use
reasonable efforts to procure that the assets of the
companies in question are placed under management of the
company in terms of a service level agreement.
15.3. It is recorded that TEMPLETON ASSET MANAGEMENT LIMITED ("TAML"),
through one or more representative offices, undertakes research
activities within the territory. Nothing herein contained shall be
construed as limiting TAML from continuing to undertake such research
activities within the territory.
15.4. It is recorded that subsidiaries of FR currently manages non-South
African domiciled funds and accounts that invest in South African
securities. Nothing herein contained shall be construed as limiting
any FR subsidiary from investing in South Africa Securities.
Page 41
16. EMPOWERMENT ASSET MANAGEMENT COMPANY
It is recorded that NIBH has undertaken to introduce an empowerment
company to market asset management services, and will use reasonable
efforts to ensure that the relevant assets will be managed by the company
in terms of a service level agreement.
17. RESTRUCTURING AND OTHER CHARGES
17.1. NIBH will fund appropriate loyalty and performance bonuses to certain
personnel currently employed by NEDCOR INVESTMENT BANK LIMITED and
the company in respect of the business which are estimated to amount
to approximately R14 000 000,00 (fourteen million rand) in the
aggregate.
17.2. TII shall bear the costs of termination of any existing employment
contract of an employee of the company if such employee had been
seconded by the TII group.
17.3. The company will be responsible for all other costs and charges of
and arising from any restructuring that may be undertaken by the
company pursuant to the implementation of the merger contemplated by
the merger agreement.
18. LODGING OF SHARES
In order to ensure compliance with the provisions of this agreement, each
shareholder shall be obliged to lodge the share certificates in respect of
Page 42
its shares with KPMG, one of the initial joint auditors of the company, in
trust.
19. CAPITAL AND LOAN ACCOUNTS
19.1. The amount of funding required from time to time by the company shall
be determined by the board of directors of the company but in no
event shall the borrowings of the company exceed a debt to equity
ratio of 3:1 as determined in accordance with Practice Note 2 issued
by SARS on 14 May 1996.
19.2. All funding required from time to time as determined in accordance
with the provisions of clause 19.1, after having regard to such
funding as is made available to the company from outside sources,
shall be provided on loan account by the shareholders PRO RATA to
their respective shareholdings.
19.3. Save as may be, unanimously otherwise determined in writing by
shareholders of the company, shareholders' loan accounts against the
company shall be subject to the following terms and conditions,
namely -
19.3.1. subject to clause 19.4, they shall bear interest at
Standard Bank's prime lending rate, compounded monthly in
arrear. Such interest shall be due and payable monthly in
arrear;
Page 43
19.3.2. subject to clauses 19.3.3 and 19.3.4 and subject to the
availability of funds of the company, they shall be repaid
as may unanimously be agreed from time to time between the
company and its shareholders;
19.3.3. they shall in any event be repaid on the granting of any
order (whether provisional or final) placing the company
under judicial management or in liquidation or on the
granting of any final judgement against the company if the
company does not satisfy the judgement within 30 (thirty)
days after it becomes final;
19.3.4. all repayments by the company to the shareholders shall be
made PRO RATA to their respective loan accounts but to the
extent that any shareholder's loan account exceeds its PRO
RATA share based on its shareholding in the company such
excess shall first be repaid.
19.4. For so long as funding required by the company as contemplated in
this clause 19 is not provided by the shareholders PRO RATA to their
respective shareholdings, interest shall accrue and be payable
monthly in arrears on the amount by which any shareholder's loan
account exceeds such shareholder's PRO RATA share of all loan
accounts of shareholders, at the publicly quoted basic rate per annum
ruling from time to time at which Standard Bank lends on overdraft
plus 2% (two per cent) per annum, compounded monthly in arrear.
Page 44
19.5. Nothing herein shall be construed as precluding the NIBH group from
providing funding and/or facilities to the company on an arms-length
basis which are not and which will not be treated as shareholder
claims on loan account against the company.
20. GOOD FAITH
Shareholders shall owe to each other a duty of good faith at all times.
21. RIGHT OF MEMBERS TO INSPECT BOOKS OF THE COMPANY
The books of account and other books and documents of the company shall be
kept at the registered office of the company and, subject to the
reasonable restrictions as to the time and manner of inspecting same that
may be imposed by a resolution of the members of the company in general
meeting, shall be open to inspection of the members during the hours of
business.
22. APPLICATION OF THE SHAREHOLDERS' AGREEMENT TO SUBSIDIARIES OF THE COMPANY
All provisions of this shareholders' agreement shall apply MUTATIS
MUTANDIS to any subsidiaries of the company from time to time.
23. WHOLE AGREEMENT, NO AMENDMENT
23.1. This agreement constitutes the whole agreement between the parties
relating to the subject matter hereof.
23.2. No amendment or consensual cancellation of this agreement or any
provision or term hereof or of any agreement, bill of exchange or
Page 45
04515MAM.ACF
ACF/gl/13d/0e/04122000
NEDC6093-078
SHAREHOLDERS AGREEMENT
other document issued or executed pursuant to or in terms of this
agreement and no settlement of any disputes arising under this
agreement and no extension of time, waiver or relaxation or
suspension of or agreement not to enforce or to suspend or postpone
the enforcement of any of the provisions or terms of this agreement
or of any agreement, bill of exchange or other document issued
pursuant to or in terms of this agreement shall be binding unless
recorded in a written document signed by the parties (or in the case
of an extension of time, waiver or relaxation or suspension, signed
by the party granting such extension, waiver or relaxation). Any such
extension, waiver or relaxation or suspension which is so given or
made shall be strictly construed as relating strictly to the matter
in respect whereof it was made or given.
23.3. No extension of time or waiver or relaxation of any of the provisions
or terms of this agreement or any agreement, bill of exchange or
other document issued or executed pursuant to or in terms of this
agreement, shall operate as an estoppel against any party in respect
of its rights under this agreement, nor shall it operate so as to
preclude such party thereafter from exercising its rights strictly in
accordance with this agreement.
23.4. To the extent permissible by law no party shall be bound by any
express or implied term, representation, warranty, promise or the
like not recorded herein, whether it induced the contract and/or
whether it was negligent or not.
Page 46
24. OPERATIONAL ISSUES
Simultaneously with or as soon as reasonably possible or convenient after
signature of this agreement, arrangements shall be concluded between the
company and each of TII and NIBH regulating the terms and conditions
applicable to the supply of value added services by each of TII and NIBH
to the company. Set out in ANNEXURE C hereto are the categories of
services that it is intended will be provided by each of TII and NIBH, it
being recorded that the provision of such value added services which will
involve skills and knowledge transfer is essential to the success of the
merged business.
25. NOTICES
25.1. The parties choose for all purposes under this agreement, whether in
respect of court process, notices or other documents or
communications of whatsoever nature, the following addresses :
25.1.1. TII
Physical: c/o Templeton Asset Management Limited
Harrow Court II
Isle of Houghton
Boundary Road
Parktown
2193
Postal: P O Box 87587
Houghton
2041
Telefax: (011) 643-1366
US Telefax: (091) 954 847-2229
Page 47
25.1.2. NIBH
Physical: 1 Newtown Avenue
Killarney
2193
Postal: P O Box 582
Johannesburg
2000
Telefax: (011) 480-1779/80
25.1.3. FRANKLIN TEMPLETON ASSET MANAGEMENT (PROPRIETARY) LIMITED
Physical: c/o Templeton Asset Management Limited
Harrow Court II
Isle of Houghton
Boundary Road
Parktown
2193
Postal: P O Box 87587
Houghton
2041
Telefax: (011) 643-1366
25.1.4. TEMPLETON GLOBAL ADVISORS LIMITED
Physical: c/o Templeton Asset Management Limited
Harrow Court II
Isle of Houghton
Boundary Road
Parktown
2193
Postal: P O Box 87587
Houghton
2041
Telefax: (011) 643-1366
Page 48
25.2. Any notice or communication required or permitted to be given in
terms of this agreement shall be valid and effective only :-
25.2.1. if delivered or given by telefax;
25.2.2. in the case of a notice or communication to the company, if
a copy thereof is also delivered or given by telefax both
to NIBH and TII (in the case of TII, by telefax
transmission to its US telefax, the number of which appears
in clause 25.1.1).
25.3. Any party may by notice to any other party change it's address to
another physical address in South Africa or its telefax number,
provided that the change shall become effective VIS-A-VIS that
addressee on the 10th (tenth) business day from the receipt of the
notice by the addressee.
25.4. Any notice to a party -
25.4.1. delivered by hand to a responsible person during ordinary
business hours at its chosen physical address shall be
deemed to have been received on the day of delivery; or
25.4.2. sent by telefax to its chosen telefax number stipulated in
clause 25.1, shall be deemed to have been received on the
date of despatch (unless the contrary is proved).
Page 49
25.5. Notwithstanding anything to the contrary herein contained a written
notice or communication actually received by a party shall be an
adequate written notice or communication to it notwithstanding that
it was not sent by telefax to or delivered at its chosen address.
26. COSTS
The company will pay the costs of and incidental to the preparation of
this agreement.
27. GOVERNING LAW
27.1. This agreement shall be governed by and interpreted in accordance
with the substantive laws of the Republic of South Africa.
27.2. Save as otherwise provided herein, the parties submit to the
exclusive jurisdiction of the High Court of South Africa.
28. ARBITRATION
28.1. Save in respect of those provisions of the agreement which provide
for their own remedies which would be incompatible with arbitration,
a dispute which arises in regard to -
28.1.1. the interpretation of; or
28.1.2. the carrying into effect of; or
28.1.3. any of the parties' rights and obligations arising from;
or
Page 50
28.1.4. the termination or purported termination of or arising
from the termination of; or
28.1.5. the rectification or proposed rectification of
this agreement, or out of or pursuant to this agreement or on any
matter which in terms of this agreement requires agreement by the
parties, (other than where an interdict is sought or urgent relief
may be obtained from a court of competent jurisdiction), shall be
submitted to and decided by arbitration.
28.2. That arbitration shall be held -
28.2.1. with only the parties and their representatives present
thereat;
28.2.2. at Sandton.
It is the intention that the arbitration shall, where possible, be
held and concluded in 21 (twenty one) working days after it has been
demanded. The parties shall use their best endeavours to procure the
expeditious completion of the arbitration. The arbitrator shall
determine his own rules of procedure and the parties shall be bound
thereby.
28.3. The arbitration shall not be subject to the arbitration legislation
for the time being in force in the Republic of South Africa.
Page 51
28.4. The arbitrator shall be, if the matter in dispute is principally -
28.4.1. a legal matter, a practising senior advocate of not less
than 5 (five) years standing as such and practising at the
Johannesburg or Sandton Bar's, or a senior lawyer (whether
or not an attorney as contemplated by the Attorneys Act, No
53 of 1979) of not less than 15 (fifteen) years standing,
in either case specialising in commercial law;
28.4.2. an accounting matter, a practising chartered accountant
of not less than 15 (fifteen) years standing;
28.4.3. any other matter, an independent person agreed upon
between the parties.
If the parties fail to agree on an arbitrator within 7 (seven) days
after the arbitration has been demanded, the arbitrator shall be
nominated by the President for the time being of the Law Society of
the Transvaal (or its successor-in-Gauteng). If the parties fail to
agree whether the dispute is of a legal, accounting or other nature
within the said 7 (seven) day period, it shall be considered a matter
referred to in clause 28.4.3.
28.5. The parties shall keep the evidence in the arbitration proceedings
and any order made by any arbitrator confidential unless otherwise
contemplated herein.
28.6. The arbitrator shall be obliged to give his award in writing fully
supported by reasons. The arbitrator shall make an award as to costs
which shall be paid accordingly, it being agreed that the arbitrator
shall, in making any costs award in favour of the TII group, take
cognisance of the costs that may necessarily have been incurred by
the TII group in non-South African residents attending the
arbitration proceedings and/or the preparation therefor.
28.7. The provisions of this clause are severable from the rest of this
agreement and shall remain in effect even if this agreement is
terminated for any reason.
28.8. The arbitrator shall have the power to give default judgment if any
party fails to make submissions on due date and/or fails to appear at
the arbitration.
SIGNED by the parties and witnessed on the following dates and at the following
places respectively:
DATE PLACE WITNESS SIGNATURE
For: TEMPLETON INTERNATIONAL,
INC.
1.
August 2000 Johannesburg /s/ Charles E. Johnson
----------------------
2.
Page 2
DATE PLACE WITNESS SIGNATURE
For: NEDCOR INVESTMENT BANK
HOLDINGS LIMITED
1.
August 2000 Johannesburg /s/ Izak Botha
2. ---------------
For: FRANKLIN TEMPLETON ASSET
MANAGEMENT (PROPRIETARY)
LIMITED
1.
August 2000 Johannesburg /s/ Charles E. Johnson
-----------------------
2.
For: TEMPLETON GLOBAL ADVISERS
LIMITED
August 2000 Johannesburg /s/ Charles E. Johnson
-----------------------
1.
2.
ANNEXURE A - TII GROUP NAMES
ANNEXURE B - NIBH GROUP NAMES
1. Nedcor
2. NIB
3. NIBH
4. Life Time Wealth Creator
5. Prime Select
6. Quants
7. Woolworths (Trust Fund)
ANNEXURE C - CATEGORIES OF SERVICES