Exhibit 10.45
THIS DEED OF COVENANT is made the 9 day of July 1998
BETWEEN:
(1) John Robert Charman of Dell House, Wilderness Avenue, Sevenoaks, Kent,
TN15 OEA (the "Covenantor")
(2) Tarquin Limited a company registered in England under number 2983302 whose
registered office is at 1 Minster Court, Mincing Lane, London EC3R 7AA (the
"Company");
(3) The companies whose names and addresses are set out in Schedule I
(individually a "Subsidiary Undertaking" and collectively the "Subsidiary
Undertakings"); and
WHEREAS:
(A) Pursuant to the provisions of an Agreement of the same date between amongst
others the Covenantor, the Company and ACE Limited, (the "Sale Agreement")
ACE Limited has agreed to acquire the entire issued share capital of the
Company and the Covenantor has agreed to enter into this Deed.
(B) This Deed is conditional upon and will take effect upon the offer by ACE
Limited for Tarquin Limited becoming unconditional in all respects. In the
event that the offer does not become unconditional this agreement will be
of no further force or effect and none of the parties to this Deed shall be
bound by its terms.
(C) The Covenantor is employed by ACE London Services Limited, a member of the
Group, and performs services in the course of that employment for Group
Companies. The covenants given in this Deed are given in connection with
that employment.
OPERATIVE TERMS:
1. Interpretation
1.1 In this Deed unless the context or subject matter otherwise requires,
expressions defined in the Sale Agreement shall have the same meanings and
in addition the following expressions shall have the following meanings:
"Associated (a) a holding company of the Company; or
Company" (b) any subsidiary of any such holding company or of the
Company; or
(c) a company over which the Company has control within the
meaning of s.840 and Corporation Taxes Act 1998.
"Businesses" (a) the business of a managing agency at Lloyd's (being
the business of the management of syndicates and their
underwriting of international, national and local insurance
business) (a "Managing Agency Business"); and
(b) the business of a corporate member of Lloyd's being the
underwriting of international, national and local
insurance and
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the provision of funds or security in connection
therewith (a "Corporate Member Business");
in each case carried on by any Group Company as at the Termination Date and
the period of 12 months prior thereto within the United Kingdom and the
business of any Group Company at the Termination Date to which the
Covenantor has rendered services or by which he has been engaged at any
time during the period of 12 months prior to the Termination Date;
"Council" the Council of Lloyd's which includes its delegates and persons
by whom it acts;
"directly or indirectly" (without prejudice to the generality of the
expression) whether as principal or agent or in accordance with any
delegated authority, either alone or jointly or in partnership with any
other person firm company or (except as the holder of securities listed
dealt in or traded on a recognised Stock Exchange, not exceeding three per
cent in nominal value of the securities of that class) as a shareholder,
director, partner, independent contractor, consultant, employee, manager or
in any other way;
"Group" means the Company and any Associated Company at the date of this
Agreement or from time to time and "Group Company" shall mean any of them;
"Information" information or knowledge of a confidential nature concerning
and relating to the goodwill of the Business including (without prejudice
to the generality of the foregoing) information and know-how as to proposed
policy wordings or proposed insurance policies to be offered by any Group
Company but which are not available at Lloyd's during the Restriction
Period, and information and know-how as to suppliers, Lloyd's Brokers,
Members' Agents, Lloyd's Advisers, business policy and expansion or forward
planning programmes and reports, reviews or analyses derived (in whole or
in part) from any such information or knowledge which the Covenantor shall
have acquired before the Termination Date;
"Lloyd's Adviser" a person who is listed on the register of Lloyd's
Advisers maintained under the Lloyd's Advisers Bylaw (No. 19 of 1993);
"Lloyd's Broker" a partnership or body corporate permitted by the Council
to broke insurance business at Lloyd's;
"Members' Agent" an underwriting agent which is listed as a members' agent
on the register of underwriting agents maintained under the Underwriting
Agents Byelaw (No. 4 of 1984);
"the Restriction Period" means in relation to the Covenantor the period
beginning on the date of this Deed and ending on the later of:
(a) 24 months from the date of this Deed; or
(b) twelve months after the Termination Date;
"Senior Executive" a person who is or was at any time whilst the Covenantor
was employed or engaged by any Group Company:
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(a) engaged or employed as an employee, director or consultant of that
company; and
(b) engaged in a capacity in which he obtained Information; and
(c) entitled to emoluments (including commission/bonus if any) exceeding
the annual rate of (Pounds)35,000; and
(d) so engaged at any time during the period of 12 months prior to the
Termination Date;
and with whom the Covenantor had contact during that period;
"Syndicate" shall have the same meaning as contained in the Underwriting
Agents Byelaw (No. 4 of 1984); and
"Tarquin Corporate Members" any corporate member being a Group Company;
"Tarquin Syndicates" any syndicates managed by any Group Company as at the
Termination Date;
"Termination Date" the date of the termination of the Covenantor's
employment.
1.2 The provisions of clauses 1.2 to 1.11 (inclusive) of the Sale Agreement
shall apply in this Deed (mutatis mutandis) as if repeated in this Deed and
set out in full herein.
2. Acknowledgement
The parties hereto agree and acknowledge and it is accepted by the
Covenantor upon entering into this Agreement that great harm would be
caused to the goodwill and trade connections of the Businesses if the
Covenantor were to compete with, canvass, solicit or entice away custom
from the Businesses or solicit a Senior Executive and it is agreed that it
is reasonable for the Businesses to be protected against such activity for
the time set out in this Agreement. Each Covenantor confirms that he has
taken advice on the contents of this Agreement and has been advised that
the covenants set out below are reasonable and necessary for the Businesses
to protect their business interests.
3. Consideration
In consideration of the covenants given in clause 4 below and the agreement
given in clause 5 below the Company agrees to pay to the Covenantor in
sterling the amount of US$6,658,775.81 at the exchange rate prevailing at
the date of payment such payment to be made after such deductions as are
required by law in respect of income tax and employee's National Insurance
Contributions.
4. Covenants
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The Covenantor accordingly covenants with the Company and each of the
Subsidiary Undertakings that in view of the circumstances referred to in
paragraph 2 of this Deed, he will not without the prior written consent of
the Company (such consent to be withheld only so far as may be reasonably
necessary to protect the legitimate interests of any of the Group
Companies) directly or indirectly:
4.1 in relation to the provision of services of a kind with which the
Covenantor was concerned during the 12 months prior to the Termination Date
for any Group Company at any time during the Restriction Period:
(a) be engaged or concerned or interested or participate in a Managing
Agency Business which competes with any of the Tarquin Syndicates in
the City of London with which he has been involved in the 12 months
prior to the Termination Date PROVIDED ALWAYS THAT this shall not
restrain him from being so engaged or concerned in so far as his
duties relate to the provision of services of a kind with which he was
not concerned during the 12 months prior to the Termination Date;
(b) be engaged or concerned or interested or participate in a Corporate
Member Business which competes with any of the Tarquin Corporate
Members in the City of London with which he has been involved in the
12 months prior to the Termination Date PROVIDED ALWAYS THAT this
shall not restrain him from being so engaged or concerned in so far as
his duties relate to the provision of services of a kind with which he
was not concerned during the 12 months prior to the Termination Date;
(c) in relation to a business which may in any way be in competition with
any of the Businesses, canvass, solicit or entice (or cause to be
canvassed, solicited or enticed) the custom of:
(i) any person who at any time during the period of two years prior
to the Termination Date has been a Members' Agent or Lloyd's
Adviser providing as agent for and on behalf of its Names
capacity of at least (Pounds)10 million to one or more of the
Tarquin Syndicates and with whom the Covenantor has had contact
during such period; or
(ii) any person who at any time during the period of two years prior
to the Termination Date has been a Lloyd's Broker or other
intermediary introducing material business to one or more of the
Tarquin Syndicates and with whom the Covenantor has had contact
during such period save that this paragraph 4.1(c)(ii) shall not
place any restriction on dealing with any such Broker or
intermediary;
and for the purposes of this clause "material business" shall mean
business amounting to at least 5% of the business of any Syndicate in
any underwriting year during that period.
4.2 at any time during the Restriction Period:
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(a) induce, solicit, entice or procure or endeavour to induce, solicit,
entice or procure any Senior Executive to leave his employment with
any Group Company;
(b) be personally involved to a material extent in (i) accepting into
employment or (ii) otherwise engaging or using the services of any
Senior Executive of any Group Company.
4.3 at any time:
(a) disclose to any person (except as required by law or any regulatory
body or to the Covenantor's legal advisors in their capacity as such)
or use to the detriment of any Group Company any Information which he
has acquired before the Termination Date;
(b) falsely represent himself as being connected with or interested in any
Group Company or in the Businesses;
(c) at any time carry on a business under the name "ACE" or "Tarquin" or
any combination of those names or any similar or other name likely to
confuse or mislead any part of the public.
5. Agreement
The Covenantor agrees to the insertion of the restriction set out in clause
14 of the Service Agreement annexed hereto.
6. Severability and applicability
6.1 The Covenantor hereby acknowledges and agrees with the Company that in all
the circumstances as at the date hereof:
(a) each of the subclauses contained in paragraph 3 of this Deed
constitutes an entirely separate severable and independent covenant
and restriction on him;
(b) the duration, extent and application of each of the restrictions
contained in paragraph 3 are reasonable and no greater than is
necessary for the protection of the goodwill and trade connections of
the Businesses; and
(c) in the event that any restriction on him contained in paragraph 3 of
this Deed shall be found void as going beyond what is reasonable in
all the circumstances for the protection of the interests of any Group
Company but would be valid if some part thereof were deleted such
restriction shall apply with any such deletion as may be necessary to
make it valid and effective.
7. Assignment and Variation
7.1 The benefit of any of the covenants contained in clause 4 shall only be
assignable in
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whole or in part by the Company to any Group Company provided that if any
such assignee shall cease to be a member of the Group, the Company shall
procure that the benefit of all rights hereunder shall be transferred to a
company in the Group.
7.2 No variation of any of the Terms of this Deed shall be effective unless it
is in writing and signed by or on behalf of each of the Covenantor and the
Company.
7.3 The Company's rights under this Deed shall be capable of being enforced by
any successor in title to the Company and by a liquidator on a distribution
of the Company's assets and by any recipient of the Company's rights under
this Deed on any such distribution by a liquidator.
8. General provisions
8.1 The following provisions of the Sale Agreement shall apply to this Deed as
if the same had been set out herein in full save that references therein to
the Vendor, his address and the Agreement respectively shall be construed
as references to each Covenantor, his address specified in this Deed and
this Deed:
(a) clause 9.9 Notices
(b) clause 4.5 Waiver
(c) clause 9.13 Governing law
(d) clause 9.11 Counterparts
8.2 For the avoidance of doubt, in the event of any conflict between the
provisions of this Agreement and the provisions of an employment agreement
entered into between the Covenantor and ACE London Services Limited the
terms of this Agreement shall prevail.
IN WITNESS whereof this Deed has been entered into the day and year first before
written.
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Schedule I
The Subsidiary Undertakings
Charman Group Limited
7th Floor, 1 Minster Court, Mincing Lane, London EC3R 7AA
Tarquin Underwriters Limited
7th Floor, 1 Minster Court, Mincing Lane, London EC3R 7AA
Charman Underwriting Agencies Limited
7th Floor, 1 Minster Court, Mincing Lane, London EC3R 7AA
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EXECUTED as a deed by
Tarquin Limited
acting by
Director
Director/Secretary
EXECUTED as a deed by
Charman Underwriting Agencies Limited
acting by
Director
Director/Secretary
EXECUTED as a deed by
Charman Group Limited
acting by
Director
Director/Secretary
EXECUTED as a deed by
Tarquin Underwriters Limited
acting by
Director
Director/Secretary
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EXECUTED as a deed by J R Charman )
in the presence of: )