THIS GOVERNING AGREEMENT is made on 15 April 1999
BETWEEN
XXXX INTERNATIONAL P.L.C. a company incorporated in England with registered
number 77536 and having its registered office at 00 Xxxxxxxx Xxxxxx, Xxxxxx XX0X
OEX (Xxxx);
ELSEVIER NV a company incorporated in The Netherlands with Chamber of Commerce
file number 33155037, and having its principal office at Van xx Xxxxx
Bakhuyzenstraat 4, XX Xxx 000, 0000 XX Xxxxxxxxx, Xxx Xxxxxxxxxxx (Elsevier).
WHEREAS
(A) Xxxx and Elsevier announced on 17 September 1992 that they had agreed in
principle to merge their businesses.
(B) The parties entered into an Implementation Agreement on 30 October 1992
which was amended subsequently (the Implementation Agreement) pursuant to which
the parties entered into a Governing Agreement dated 1 January 1993 which was
amended subsequently (the Original Governing Agreement).
(C) Subject to requisite shareholder approvals at the 1999 annual general
meetings of Xxxx and Elsevier, the parties have agreed to make certain
amendments to the Original Governing Agreement, to provide for a more unified
management structure for Xxxx, Elsevier and Xxxx Elsevier. Those amendments,
together with all the surviving provisions of the Original Governing Agreement
are set out in this Governing Agreement and shall be effective from the later of
such approvals.
(D) (1) Xxxx holds 10,000 "R" shares and 100,000 "G" shares in the capital of
Xxxx Elsevier and 101 R shares in the capital of Elsevier Xxxx Finance; (2)
Elsevier holds 10,000 "E" shares in the capital of Xxxx Elsevier, 119 E shares
in the capital of Elsevier Xxxx Finance, 250 E shares in the capital of Xxxx
Elsevier Nederland BV and 5 E shares in the capital of Xxxx Elsevier Overseas
BV; (3) RHBV, a wholly-owned subsidiary of Xxxx, holds 4,049,951 Exchange shares
in Elsevier; and (4) Xxxx Elsevier Holdings BV, a wholly-owned subsidiary of
Xxxx Elsevier, holds the remaining issued capital of Xxxx Elsevier Nederland BV
and Xxxx Elsevier Overseas BV.
(E) This Agreement sets out the terms of the continuing relationship of Xxxx and
Elsevier including their relationship as shareholders in Xxxx Elsevier and
Elsevier Xxxx Finance, and the basis on which the parties will work together in
good faith to give effect to the intention of the directors of Xxxx and Elsevier
to make distributions in accordance with schedule 1 to this Agreement.
1. INTERPRETATION
1.1 In this Agreement and the recitals hereto, unless the context otherwise
requires or provides:
Amended Xxxx Elsevier Articles means the articles of association of Xxxx
Elsevier, adopted conditional on the passing of the shareholder resolutions at
the annual general meeting of Xxxx and Elsevier as described in Recital (C) as
amended, in the form attached hereto and initialled by or on behalf of each of
the parties hereto for the purposes of identification;
Board of Elsevier means:
(a) in the case of an executive director, the Elsevier Executive Board; and
(b) in the case of a non-executive director, the Elsevier Supervisory Board.
Board of Xxxx means the board of directors of Xxxx (or a duly appointed
committee of that board);
Board of Xxxx Elsevier means the board of directors of Xxxx Elsevier;
Chairman means, in the case of Elsevier, Chairman of the Supervisory Board;
Chief Executive means, in the case of Elsevier, the Chairman of the Elsevier
Executive Board;
Code means the City Code on Takeovers and Mergers, as in force at the date of
this Agreement;
Elsevier Combined Board means a combined meeting of the members of the Elsevier
Supervisory Board and the Elsevier Executive Board, referred to in the articles
of association of Elsevier as the combined board;
Elsevier Executive Board means the executive or management board (`Raad van
Bestuur') of Elsevier;
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Elsevier Xxxx Finance means Elsevier Xxxx Finance BV, a company incorporated in
The Netherlands with file number 33145842 at the Amsterdam Chamber of Commerce;
Elsevier Supervisory Board means the supervisory board (`Raad van
Commissarissen') of Elsevier;
Exchange shares means shares of the series R in the capital of Elsevier;
Finance Group means Elsevier Xxxx Finance and its subsidiaries from time to
time;
holding company, subsidiary and wholly-owned subsidiary shall be construed in
accordance with section 736 of the Companies Xxx 0000 as in force at the date of
this Agreement;
Nominations Committee means the joint nominations committee formed by Xxxx and
Elsevier;
person includes individuals, bodies corporate (wherever incorporated),
unincorporated associations, partnerships and other unincorporated bodies (in
each case, wherever resident and for whatever purpose);
Xxxx Elsevier means Xxxx Elsevier plc, a company incorporated in England with
registered number 2746616;
Xxxx Elsevier Group means Xxxx Elsevier and its subsidiaries from time to time;
Xxxx Elsevier Holdings BV means the company incorporated in The Netherlands with
file number 33201111 at the Amsterdam Chamber of Commerce;
Xxxx Elsevier Nederland BV means the company incorporated in The Netherlands
with file number 33156677 at the Amsterdam Chamber of Commerce;
Xxxx Elsevier Overseas BV means the company incorporated in The Netherlands with
file number 33241720 at the Amsterdam Chamber of Commerce;
RHBV means Xxxx Holding BV, a company incorporated in The Netherlands with file
number 33241739 at the Amsterdam Chamber of Commerce;
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Security Interest means any mortgage, charge, pledge or lien, or any security
interest whatsoever, howsoever created or arising.
1.2 The schedules to this Agreement form part of this Agreement and shall have
effect as if set out in full in it. References to this Agreement shall include
reference to the schedules.
1.3 A reference to a director of a company is:
(a) in the case of a company incorporated in England, a reference to a person
who has been appointed as a member of the board of that company; and
(b) in the case of a company incorporated in The Netherlands, a person who has
been appointed as a member of that company's executive or management board
or supervisory board.
1.4 Except where the context otherwise requires, references to clauses or
schedules are to clauses of or schedules to this Agreement; references to
sub-clauses are to sub-clauses of the clause in which the reference appears; and
references in a schedule to paragraphs are references to the paragraph of the
schedule in which the reference appears.
1.5 The headings are inserted for convenience only and shall not affect the
construction of this Agreement.
2. PURPOSE AND EFFECTIVE DATE
2.1 The parties have merged their businesses with a view to achieving the
objectives described in the circular dated 30 October 1992 to the holders of
shares and bearer depository receipts in Elsevier and to the holders of shares
in Xxxx. The Original Governing Agreement governs aspects of the relations
between them following the merger.
2.2 This Agreement will become effective on resolutions approving the execution
and performance of this Agreement by each party being passed by each party's
shareholders in annual general meeting.
2.3 The provisions of this Agreement shall supersede the provisions of the
Original Governing Agreement with effect from the date on which the last of the
resolutions referred to in clause 2.2 is passed but this shall be without
prejudice to the accrued (whether or not asserted) rights of either of the
parties under the Original Governing Agreement.
2.4 Xxxx and Elsevier acting in good faith shall each do or procure to be done
all such acts and things as may be necessary or desirable, to ensure so
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far as practicable the complete and punctual fulfilment, observance and
performance of the provisions of this Agreement, and shall each exercise all
voting rights and powers, direct or indirect, available to it in relation to any
of its subsidiaries or to any member of the Xxxx Elsevier Group or the Finance
Group, to ensure so far as practicable that members of the Xxxx Elsevier Group
and the Finance Group perform all obligations owed to Xxxx or Elsevier and
generally that full effect is given to this Agreement.
3. MANAGEMENT
Board Composition
3.1. Xxxx and Elsevier agree that:
(a) subject to (c) and (d) below and clause 3.2, the Boards of each of Xxxx,
Elsevier and Xxxx Elsevier will comprise the same people;
(b) subject to (d) below, Xxxx, Elsevier and Xxxx Elsevier will have the same
Chairman and Chief Executive and, for the purposes of this Agreement, if a
person's appointment to the Board of Elsevier is pending that person shall,
from the moment he has been appointed the Chairman or the Chief Executive
of Xxxx and Xxxx Elsevier, be treated as if he were the Chairman or Chief
Executive (as appropriate) of Elsevier;
(c) without prejudice to the operation of clause 3.2, up to two additional
members of the Elsevier Supervisory Board may be appointed who are not
directors of Xxxx or Xxxx Elsevier;
(d) a person may be appointed and serve as a director of Xxxx and of Xxxx
Elsevier pending his or her appointment to the Board of Elsevier and such
person shall be counted as a director for the purposes of clause 3.1(e)
below; and
(e) other than in circumstances where the parties agree in writing that for the
time being it is not practicable or possible and subject to clause 3.2:
(i) there shall be no less than three and no more than five executive
directors (including the Chief Executive and the Chief Financial
Officer) on the Board of Xxxx, the Elsevier Executive Board and the
Board of Xxxx Elsevier; and
(ii) there shall be six non-executive directors on the Board of Xxxx and
the Board of Xxxx Elsevier and no less than six and no
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more than eight non-executive directors on the Elsevier Supervisory
Board.
3.2 Xxxx and Elsevier agree that if a person is elected as a director of Xxxx or
Elsevier by a resolution passed by its shareholders in general meeting which was
proposed by one or more of that company's shareholders and was not proposed or
recommended for approval by that company's directors, then sub-clauses 3.1(a),
(c), and (e):
(a) will not apply in respect of that person; and
(b) will continue to apply, other than in respect of that person.
Nominations Committee
3.3 Xxxx and Elsevier shall, by separate board resolutions, create a joint
committee (the Nominations Committee) and delegate to that committee sole
responsibility for nominating persons for appointment as directors of each of
Xxxx, Elsevier and Xxxx Elsevier. The Nominations Committee shall be comprised
of the following persons:
(a) the Chairman of Xxxx and Elsevier from time to time;
(b) the Chief Executive of Xxxx and Elsevier from time to time;
(c) a representative appointed by the Board of Xxxx, being a non-executive
director of Xxxx as well as a member of the Elsevier Supervisory Board; and
(d) a representative appointed by the Elsevier Combined Board, being a member
of the Elsevier Supervisory Board (as well as a non-executive director of
Xxxx).
3.4 Each of Xxxx and Elsevier shall appoint and remove its representative on the
Nominations Committee by giving to the other and the Chairman of the Nominations
Committee at the time, notice in writing. If Xxxx or Elsevier gives notice that
a person is to be appointed or removed as its representative on the Nominations
Committee, then the other must take any action which is necessary to ensure that
the representative is so appointed or removed.
3.5 From time to time and as required, the Nominations Committee shall nominate
persons for appointment:
(a) to the Board of Xxxx, the Board of Elsevier and the Board of Xxxx Elsevier;
or
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(b) in respect of the two additional members referred to in clause 3.1(c),
solely to the Elsevier Supervisory Board.
None of the Board of Xxxx, the Board of Elsevier or the Board of Xxxx Elsevier
may appoint or propose or recommend the appointment of a person as a director
who has not first been nominated for that appointment by the Nominations
Committee.
Board appointments - Xxxx and Xxxx Elsevier
3.6. A person may only be appointed by the Board of Xxxx as a director of Xxxx
and by the shareholders or Board of Xxxx Elsevier as a director of Xxxx
Elsevier, provided that:
(a) the person has been nominated for that appointment by the Nominations
Committee;
(b) in the case of an appointment to the Board of Xxxx, the Board of Xxxx
Elsevier has also resolved to appoint the person as a director of Xxxx
Elsevier;
(c) in the case of an appointment to the Board of Xxxx Elsevier, the Board of
Xxxx has also resolved to appoint the person as a director of Xxxx;
(d) the Elsevier Combined Board has resolved to recommend the appointment of
that person at the next Annual General Meeting of Elsevier; and
(e) the person has executed the Deed of Undertaking contained in Schedule 2.
That person may be recommended for re-election at the next appropriate general
meeting of Xxxx or Xxxx Elsevier provided that the person:
(i) is, at the time, a director of Xxxx and of Xxxx Elsevier and of Elsevier
(or the Elsevier Combined Board has resolved to recommend the person for
appointment to the Board of Elsevier); and
(ii) is willing to stand for re-election,
without prejudice, however, to the obligations of the Board of Xxxx and the
Board of Xxxx Elsevier to express to their shareholders an opinion as to whether
a person is suitable for appointment as a director.
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3.7. If the Board of Xxxx resolves not to appoint a person nominated by the
Nominations Committee as a director, then the Nominations Committee may be
directed by the Board of Xxxx to nominate an alternative person for appointment
as a director of Xxxx, Elsevier and Xxxx Elsevier.
Board appointments - Elsevier
3.8. A person may:
(a) only be recommended for election to the Board of Elsevier at the earlier of
the next Annual General Meeting or the next Extraordinary General Meeting
of Elsevier; and
(b) until that general meeting, be entitled to attend meetings of the Elsevier
Combined Board, the Elsevier Executive Board or the Elsevier Supervisory
Board (as the case may be) as an observer,
provided that:
(i) the person has been nominated for that appointment by the Nominations
Committee;
(ii) (other than where the person has only been nominated for appointment
to the Elsevier Supervisory Board) the Board of Xxxx and the Board of
Xxxx Elsevier have both resolved to appoint the person as a director;
and
(iii) the person has executed the Deed of Undertaking contained in Schedule 2,
without prejudice to the obligations of the Elsevier Combined Board to express
to Elsevier shareholders an opinion as to whether a person is suitable for
appointment as a director.
3.9 If the Elsevier Combined Board resolves not to recommend a person nominated
by the Nominations Committee for election by Elsevier shareholders as a
director, then the Nominations Committee may be directed by the Elsevier
Combined Board to nominate an alternative person for appointment as a director
of Xxxx, Elsevier and Xxxx Elsevier.
Appointment of Chairman and Chief Executive
3.10 If the Nominations Committee nominates a person for appointment as Chairman
or Chief Executive:
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(a) subject to the person being or becoming a member of the Board of Xxxx and
the Board of Xxxx Elsevier, the Board of Xxxx and the Board of Xxxx
Elsevier shall promptly appoint that person to that position in Xxxx and
Xxxx Elsevier respectively; and
(b) subject to paragraph (a) being satisfied and the person being or becoming a
member of the Board of Elsevier, the person shall promptly be appointed to
that position in Elsevier.
Retirement of directors
3.11 Xxxx and Elsevier shall ensure that each director of Xxxx, Elsevier and
Xxxx Elsevier (other than in respect of paragraphs (b) and (c), a person who is
only a director of the Elsevier Supervisory Board):
(a) retires from the Boards of Xxxx and Elsevier at least every three years;
(b) if retiring, retires from the Board of Xxxx and the Board of Elsevier at
the Annual General Meeting in the same year; and
(c) if being proposed for re-election, is proposed for re-election to the Board
of Xxxx and the Board of Elsevier at the relevant Annual General Meeting in
the same year; and
(subject to Xxxx'x and Elsevier's obligations under paragraph (c) being without
prejudice to the obligations of the Board of Xxxx and Elsevier to express to
their respective shareholders an opinion as to whether a person is suitable for
appointment as a director).
Removal of director
3.12 The Board of Xxxx and the Elsevier Combined Board shall each, so far as it
is able, ensure that a director retires or resigns or is removed forthwith from
its Board and from the Board of Xxxx Elsevier if:
(a) the appointment or re-election of that person is not also approved by the
requisite majority of shareholders of Xxxx or Elsevier in general meeting;
(b) that director ceases to be a director of Xxxx, Elsevier or Xxxx Elsevier
whether pursuant to a board resolution, a resolution of shareholders or any
other provision of the relevant articles of association;
(c) that director resigns as a director of one or more of Xxxx, Elsevier and
Xxxx Elsevier; or
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(d) that director otherwise ceases, for whatever reason, to be a director of
Xxxx, Elsevier or Xxxx Elsevier.
Remuneration committee
3.13 The Board of Xxxx Elsevier shall establish a remuneration committee with
responsibility for (a) recommending the remuneration arrangements for the
company's executive directors and (b) such other matters as may be delegated to
it.
Remuneration of directors by Xxxx and Elsevier
3.14 The Xxxx Elsevier remuneration committee shall not make recommendations in
relation to the fees or remuneration payable to a person in that person's
capacity as a director of Xxxx or as a member of the Elsevier Supervisory Board
or the Elsevier Executive Board. Proposals and recommendations relating to the
fees to be paid to a person in such capacity shall be made by the Chairman and
Chief Executive of Xxxx and Elsevier from time to time but shall not be effected
without the prior approval of each of the Board of Xxxx and the Elsevier
Combined Board.
Audit committee
3.15 The Board of Xxxx Elsevier shall establish an audit committee with
responsibility for (a) reviewing and advising the directors of Xxxx Elsevier on
matters relating to the audit of Xxxx Elsevier and its subsidiaries, the
effectiveness of internal controls over financial and management information,
and the half-year and annual financial statements and (b) such other matters as
may be delegated to it.
Elsevier Xxxx Finance
3.16 Xxxx and Elsevier may each:
(a) nominate persons to be appointed members of the management or the
supervisory board of Elsevier Xxxx Finance; and
(b) propose the suspension or dismissal of a person appointed a member of the
management or the supervisory board of Elsevier Xxxx Finance pursuant to
its nomination,
subject to not more than half the maximum number of directors fixed from time to
time pursuant to the articles of association of Elsevier Xxxx Finance being
persons nominated for appointment by Xxxx, and not more than half being persons
so nominated by Elsevier. Xxxx and Elsevier shall not nominate a person for
appointment as a member of the management or the
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supervisory board of Elsevier Xxxx Finance without the prior approval of the
other, which approval shall not be withheld or delayed unreasonably.
3.17 The majority of directors of Elsevier Xxxx Finance shall at all times be
persons not resident in the UK.
3.18 Upon a nomination, or a proposal for suspension or dismissal, being made in
accordance with sub-clause 3.16 Xxxx and Elsevier shall each sign forthwith, a
resolution in writing in accordance with article 34 paragraph 1 of the articles
of association of Elsevier Xxxx Finance to appoint the person so nominated or to
dismiss or suspend the person whose proposal or dismissal has been so proposed.
If Xxxx and Elsevier are not able to ensure that such a resolution in writing is
adopted forthwith, they will take all necessary measures to have a similar
resolution adopted as soon as possible in a general meeting of shareholders of
Elsevier Xxxx Finance.
4. GENERAL UNDERTAKINGS
Shareholder approval
4.1 If:
(a) whether by reason of law, the rules or regulations of any stock exchange or
any other applicable regulatory requirement, it is proposed to convene a
general meeting of shareholders to consider and, if thought fit, to pass a
resolution (the Principal Shareholders' Resolution); or
(b) the Board of Xxxx, the Elsevier Supervisory Board, the Elsevier Executive
Board or the Elsevier Combined Board proposes to pass a resolution in
relation to a matter concerning its company which would, whether by reason
of law, the rules or regulations of any stock exchange or any other
applicable regulatory requirement, be required to be approved or effected
by a resolution approved at a general meeting of shareholders of the other
party if the matter concerned that other party (the Principal Board
Resolution),
the Board of Xxxx, the Elsevier Supervisory Board, the Elsevier Executive Board
or the Elsevier Combined Board, as the case may be (the Proposing Board), shall
give notice, in the case of the Board of Xxxx, to the Elsevier Combined Board,
and, in the case of the Elsevier Supervisory Board, the Elsevier Executive Board
or the Elsevier Combined Board, to the Board of Xxxx (each recipient of such
notice being the Second Board) that it proposes to convene a meeting to consider
and, if thought fit, to pass the Principal Shareholders' Resolution or, as the
case may be, that it proposes to pass the
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Principal Board Resolution. If the Second Board gives notice (the Second Board's
Notice) to the Proposing Board within seven days that it considers the Principal
Shareholders' Resolution or the Principal Board Resolution to be of such
importance to its shareholders that it is appropriate to convene a general
meeting to consider and, if thought fit, to pass a resolution of similar effect
to the Principal Shareholders' Resolution or the Principal Board Resolution (a
Confirmatory Resolution), the Proposing Board shall take such action as it
considers necessary to ensure that the action to which the Principal
Shareholders' Resolution or the Principal Board Resolution relates does not take
effect until the Confirmatory Resolution has been duly passed (if necessary by
expressing the Principal Shareholders' Resolution or the Principal Board
Resolution to be conditional on a Confirmatory Resolution being duly passed).
The Second Board shall ensure that a Confirmatory Resolution is proposed in
terms such that it will be passed if passed by a simple majority, shall convene
a general meeting as soon as practicable to consider the Confirmatory Resolution
and shall take such other action as it can reasonably take to ensure that such
resolution is considered and voted upon by those currently entitled to be
present and to vote at a general meeting as soon as is reasonably practicable
and in any event, unless some other period is agreed by the Proposing Board,
within 30 days of the date on which the Second Board's Notice was given.
Without prejudice to any other provisions of this Agreement, the requirements of
this sub-clause shall not apply:
(a) to the extent that it would involve directors taking action which is
prohibited by law or applicable regulatory requirements or their being in
breach of a duty owed by them to the company in question;
(b) if notice in the form set out above is not given by the Second Board within
the period of 7 days; and
(c) in relation to a Principal Shareholders' Resolution concerning the approval
of accounts, the appointment or re-appointment of directors, the
appointment or re-appointment of auditors, an increase in authorised
capital, the grant to directors of Xxxx of authority to allot or issue
shares, the extension of the competence of the Elsevier Combined Board to
issue shares, the disapplication of pre-emption rights, the grant of
authority to purchase own shares, the approval of employee share option
schemes and the approval of arrangements for the issue of shares in lieu of
a cash dividend.
When determining whether it is appropriate to convene a general meeting to
consider and, if thought fit, to pass a Confirmatory Resolution, the Second
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Board shall have regard inter alia (but without limitation) to the implications
of any delay which might arise as a result of holding such a general meeting and
to any particular circumstances which would suggest that, in the context of that
company and/or the subject matter of the Principal Shareholders' Resolution or
the Principal Board Resolution, it would not be appropriate for the Second Board
to seek the approval of its shareholders.
Controls on the Xxxx Elsevier Group and the Finance Group
4.2 Xxxx and Elsevier shall each, so far as it is able, ensure that Xxxx
Elsevier, Elsevier Xxxx Finance and their respective subsidiaries do not
authorise, approve, execute or do any document, deed, act or thing:
(a) without the prior approval of the Board of Xxxx and of the Elsevier
Combined Board if:
(i) by reason of law, regulation or the rules or regulations of any stock
exchange or regulatory authority a resolution would first be required
to be passed by the shareholders of Xxxx or Elsevier (including for
this purpose circumstances where, on the basis that, as confirmed by
the London Stock Exchange, the continuing obligations set out in its
"Admission of Securities to Listing" apply to Xxxx, Xxxx would be
obliged by such obligations to obtain its shareholders' approval); or
(ii) by reason of law, regulation or the rules of any regulatory authority
(other than a stock exchange), Xxxx or Elsevier would first be
required to make any filing with or notification to, or to obtain any
consent or authorisation from any regulatory or governmental authority
(other than a stock exchange); or
(b) without the prior approval of the Board of Xxxx and of the Elsevier
Combined Board if the event in question would cause Xxxx or Elsevier or
their directors to be in breach of any contract to which Xxxx or Elsevier
is a party, or to be in breach of any restriction contained in the articles
of association of Xxxx or Elsevier, provided that the contract is one to
which Xxxx or, as the case may be, Elsevier is permitted by this Agreement
to be party or the restriction in the articles of association was contained
in the articles of association at the date of this Agreement or was adopted
after that date in accordance with this Agreement.
Share capital
4.3 Xxxx and Elsevier shall not, without the prior approval of the other:
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(a) grant any right to subscribe, exchange for or convert into any share in its
capital;
(b) except on exercise of rights which were outstanding at the date the
Original Governing Agreement became effective, allot or issue any share in
its capital;
(c) consolidate, sub-divide, convert or alter the rights attaching to any class
of shares;
(d) purchase its own shares, redeem any shares or reduce its share capital in
any way whatsoever, except, in the case of Xxxx, if the Board of Xxxx is
required to give notice to redeem shares which were issued on terms that
they were redeemable; or
(e) amend its articles of association or adopt new articles of association.
Limitation of activities of Xxxx and Elsevier
4.4 Xxxx and Elsevier shall not, and shall each, so far as it is able, ensure
that its subsidiaries do not, without the prior approval of the other:
(a) borrow any money, or incur any liability in the nature of borrowings;
(b) guarantee the obligations of any person, grant an indemnity to any person
against loss, damage or expense of whatsoever nature, or mortgage or charge
its undertaking, property or uncalled capital;
(c) carry on or be interested in any business other than (i) the ownership of
assets held at the date of the Original Governing Agreement as envisaged by
the Implementation Agreement or acquired after that date with the prior
approval of the other, (ii) subject to the other provisions of this
sub-clause, the exercise of rights relating to such assets, and (iii)
giving effect to such arrangements with members of the Xxxx Elsevier Group
or the Finance Group as may be agreed from time to time;
(d) lend any moneys to, or deposit any moneys with, any person other than with
the approval of the Board of Xxxx Elsevier to or with a member of the Xxxx
Elsevier Group or the Finance Group;
(e) dispose of, or grant any Security Interest over, any share in the capital
of any body corporate including, without limitation, any share in the
capital of a subsidiary of it, a member of the Xxxx Elsevier Group or a
member of the Finance Group, or any interest in a share in a body corporate
and in particular shall not surrender to any other person the
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power to exercise the voting rights attaching to any share in a body
corporate;
(f) sell, transfer or assign, other than with the approval of the Board of Xxxx
Elsevier to a member of the Xxxx Elsevier Group or the Finance Group, the
benefit of any obligation owed by a subsidiary of it, by a member of the
Xxxx Elsevier Group or by a member of the Finance Group, or any interest in
such an obligation;
(g) dispose of any asset not falling within (e) or (f), or any interest in such
an asset, except with the approval of the Board of Xxxx Elsevier on terms
which are at arm's length, or (with such approval) to a member of the Xxxx
Elsevier Group or the Finance Group;
(h) acquire any asset of any nature whatsoever from any person who is not a
member of the Xxxx Elsevier Group or the Finance Group, other than in the
course of a business falling within (c);
(i) incur any liability of any nature other than:
(i) liabilities which are incidental to or which arise out of the
businesses mentioned in paragraph (c) above (save that paragraph
(c)(ii) shall not authorise the voluntary assumption of any
liability of a pecuniary nature);
(ii) liabilities which arise by virtue of or are connected with the
existence or nature of the relevant company or the need properly
to conduct its affairs or maintain corporate records or which are
otherwise of a corporate housekeeping nature (including
reasonable remuneration or fees for directors and other officers
and reasonable registrars, auditors' and advisors' fees);
(iii) liabilities which are connected with or arise out of the listing
or quotation of the relevant company's shares or other securities
on any stock exchange;
(iv) taxation or similar liabilities arising out of any action which
the relevant company is or was permitted to take pursuant to this
Agreement or the Original Governing Agreement;
(v) liabilities which arise out of or are connected with borrowings
or other commitments of the relevant company which existed at the
date of the Original Governing Agreement (save that this
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shall not authorise the voluntary assumption of any liability of
a pecuniary nature).
Business of Xxxx and Elsevier
4.5 Xxxx and Elsevier shall continue to manage their affairs with a view to the
nature of their respective businesses being limited to dealings with members of
the Xxxx Elsevier Group and the Finance Group, the holding of shares in members
of the Xxxx Elsevier Group and shares in Elsevier Xxxx Finance, in the case of
Xxxx, holding shares in RHBV and holding Exchange shares directly or indirectly,
and such other matters as may be agreed from time to time by the parties.
Application of cash
4.6 Xxxx and Elsevier shall each lend or otherwise make available surplus cash
to the Xxxx Elsevier Group or the Finance Group on such terms as they may
respectively agree from time to time with Xxxx Elsevier and, if appropriate, the
board of any member of the Xxxx Elsevier Group or the Finance Group which may be
party to such arrangements.
Xxxx and Elsevier liquidity
4.7 Xxxx and Elsevier agree that they may each require loan facilities from time
to time to meet Permitted Liabilities (as defined in article 105.1 of the
articles of association of Xxxx Elsevier). Upon the request of either of them,
they shall both use all reasonable endeavours to ensure that a member of the
Finance Group or the Xxxx Elsevier Group provides or procures the provision of
an appropriate loan facility to the party making the request for the purpose of
meeting Permitted Liabilities.
5. GUARANTEES AND INDEMNITIES
5. Xxxx and Elsevier agree, without prejudice to sub-clause 4.4(b), that any
guarantees or indemnities which are given by them shall normally be given on a
joint and several basis. Xxxx and Elsevier shall not be required to give any
guarantee or indemnity at the request of the other or at the request of any
member of the Xxxx Elsevier Group or the Finance Group.
6. EXCHANGE SHARES/SHARES IN RHBV
Exchange shares
6.1 Xxxx undertakes to Elsevier that it will continue, so far as it is able, to
ensure that RHBV performs the obligations assumed by it in the agreement
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between RHBV and Elsevier of even date with the Original Governing Agreement.
Shares in RHBV
6.2 Xxxx undertakes to Elsevier to ensure that, unless Elsevier agrees
otherwise, RHBV will at all times be the wholly-owned subsidiary of Xxxx.
Listing
6.3 Elsevier undertakes to Xxxx, for its own benefit and that of RHBV, that,
upon conversion of Exchange shares into ordinary shares in the capital of
Elsevier, it will use all reasonable endeavours to ensure the admission to
listing or quotation, on all stock exchanges on which ordinary shares in the
capital of Elsevier are for the time being listed or quoted, of the ordinary
shares arising on such conversion.
7. EQUALISATION
7.1 The parties shall give effect to the provisions of schedule 1.
8. STANDSTILL
8.1 Xxxx and Elsevier shall each not, and shall, so far as it is able, ensure
that persons acting in concert with it in relation to the other do not, without
the prior approval of the other:
(a) acquire or dispose of any interest in the share capital of the other;
(b) announce or make any offer (including a partial or tender offer) for shares
in the capital of the other or take any step which might give rise to an
obligation (under the City Code on Takeovers and Mergers or otherwise) to
announce or make such an offer;
(c) exercise any right to require a general meeting of the other to be convened
or otherwise to require the other to arrange for a resolution to be
considered by all or some of the members of the other; or
(d) solicit or encourage any other person, or enter into any agreement or
arrangement with any other person for that other person, to do any of the
foregoing or any other act or thing which could result in that or any other
person acquiring control of either Xxxx or Elsevier.
8.2 For the purposes of this clause and clause 9, interest in shares shall have
the meaning conferred by section 212(5) Companies Xxx 0000 and persons acting in
concert shall have the meaning conferred by the Code.
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For the purposes of this clause, control shall have the meaning conferred by
the Code.
9. CHANGE OF CONTROL
9.1 If a person (together with persons acting in concert with him) (the
Acquirer) acquires shares, or control of the voting rights attaching to shares,
carrying more than 50 per cent. of the votes ordinarily exercisable at general
meetings of Xxxx or Elsevier (control) and has not made a Comparable Takeover
Offer (as defined below), the party in which control has not been obtained (the
Party giving Notice) may, at any time while such circumstances persist (and from
time to time), give notice suspending or modifying the operation of certain
provisions of this Agreement, withdraw such a notice, and give further notices
varying the effect of any previous notice (all such notices having effect from
time to time constituting a Notice of Suspension).
A Notice of Suspension shall state which of the following provisions of this
Agreement are to be of no effect while the Notice of Suspension is operative:
(a) sub-clause 3.1;
(b) sub-clause 3.2;
(c) sub-clause 3.3;
(d) sub-clause 3.4;
(e) sub-clause 3.5;
(f) sub-clause 3.6;
(g) sub-clause 3.7;
(h) sub-clause 3.8;
(i) sub-clause 3.9;
(j) sub-clause 3.10;
(k) sub-clause 3.11;
(l) sub-clause 3.12;
(l) sub-clause 4.1, insofar as it imposes obligations on the Party giving
Notice;
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(m) sub-clause 6.2;
(n) sub-clause 8.1, insofar as it imposes obligations on the Party giving
Notice.
A Notice of Suspension shall also state whether, for the purposes only of the
obligations imposed by them on the Party giving Notice:
(1) sub-clause 3.16 is to be modified by the substitution of the phrase
"without the prior approval of the other, which approval shall not be
withheld or delayed unreasonably" with the phrase "without the prior
approval of the Party giving Notice";
(2) sub-clause 4.2 is to be modified so as to require the prior approval of the
Board of Xxxx Elsevier (A) instead of Xxxx or the Board of Xxxx if the
Party giving notice is Elsevier or (B) instead of the Elsevier Combined
Board, if the Party giving notice is Xxxx;
(3) sub-clause 4.3 and/or 4.4 are to be modified by the substitution of the
phrase "without the prior approval of the other" with the phrase "without
the prior approval of the Board of Xxxx Elsevier"; and/or
(4) sub-clause 4.5 is to be modified by the substitution of the phrase "as may
be agreed from time to time by the parties" with the phrase "as the Board
of Xxxx Elsevier may approve".
9.2 A Notice of Suspension shall cease to have effect if the parties agree or
if:
(a) the other party provides evidence to the Party giving Notice which
satisfies the Party giving Notice acting in good faith that there is no
person who, with persons acting in concert with him, controls that other
party; or
(b) within 90 days of the acquisition of control a Comparable Takeover Offer
has been made.
Unless otherwise agreed by the parties, upon a Notice of Suspension ceasing to
have effect all provisions of this Agreement shall again be in full force and
effect without modification, but the Party giving Notice shall not be required
to take any action to restore the position to that which would have prevailed
had provisions of this Agreement not been affected by a Notice of Suspension.
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9.3 Comparable Takeover Offer means offers to acquire:
(a) all the shares other than those which, as respects dividends and capital,
carry a right to participate only up to a specified amount in a
distribution (equity securities); and
(b) all the securities which are convertible into equity securities;
in the capital of the Party giving Notice, other than shares held by it, which:
(1) are unconditional save for an acceptance condition of the kind permitted by
Rule 9.3 and a condition reflecting terms of the kind permitted by Rule
9.4;
(2) are cash offers (in sterling, if the Party giving Notice is Xxxx, or in
euros, if the Party giving Notice is Elsevier) at a price not lower than
the Required Price;
(3) are communicated to the offerees in the manner required by the Code or, if
that is impracticable, in such other manner as the Party giving Notice may
reasonably specify;
(4) are open for acceptance for not less than the period required by Rule 31;
(5) comply with the General Principles and Rules;
(6) has become unconditional in all respects or, if it has lapsed without
becoming unconditional in all respects, has lapsed solely as a result of
failure to obtain sufficient acceptances of the offer to satisfy any
condition as to acceptances which is permitted by this clause,
in each case on the basis that the Code applies to the offers; provided that, if
any such offer would, at the time it would be required to be made, be illegal or
contravene any applicable regulatory requirement (including any successor to the
Code) in either the United Kingdom or The Netherlands then the expression
Comparable Takeover Offer shall mean offers which satisfy the above requirements
as nearly as is possible having regard to applicable law and regulatory
requirements in such jurisdictions.
9.4 For the purpose of this clause:
General Principles means the General Principles of the Code;
Required Price means whichever shall be the higher of:
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(a) the highest price paid for securities of the relevant class by the person
who shall have obtained control or any person acting in concert with that
person during whichever shall be the longer of the following periods:
(i) the 12 months preceding the acquisition of control and the period
since such acquisition; and
(ii) the period since that person (together with persons acting in concert
with that person) shall have become interested in shares carrying more
than 30 per cent. of the votes ordinarily exercisable at general
meetings of Xxxx or, as the case may be, Elsevier; and
(b) the price which would be required by Rules 14 and 15 having regard to the
price required to be offered for the relevant ordinary shares;
and, for this purpose:
(1) if the Party giving Notice is Xxxx, ordinary shares in Elsevier acquired by
any relevant person shall be deemed to be ordinary shares in Xxxx and to
have been acquired at a price calculated by dividing the price at which
they were in fact acquired by the Equalisation Factor and, if necessary,
converting that price into sterling at the closing mid-point euro-sterling
exchange rate for the date of the acquisition as shown in the London
edition of the Financial Times (or such other point of reference as the
parties shall agree);
(2) if the Party giving Notice is Elsevier, ordinary shares in Xxxx acquired by
any relevant person shall be deemed to be ordinary shares in Elsevier and
to have been acquired at a price calculated by multiplying the price at
which they were in fact acquired by the Equalisation Factor and, if
necessary, converting that price into euros at the exchange rate referred
to in (1) above,
where Equalisation Factor means the larger number in the Equalisation Ratio (as
defined in schedule 1) at the time the shares in question were acquired divided
by the smaller number in the Equalisation Ratio at that time; and
references to Rules are to Rules of the Code.
Page 21
10. INTELLECTUAL PROPERTY RIGHTS
10. Xxxx and Elsevier shall each, to the extent it has the right to do so,
permit members of the Xxxx Elsevier Group and members of the Finance Group to
use, in the course of their respective businesses, the names "Xxxx", "Elsevier",
their respective logos, any associated names which Xxxx, Elsevier or the
subsidiaries of either of them are entitled to use in the course of their
respective businesses and the Xxxx trademarks detailed in schedule 3 of the
Implementation Agreement (the Names). Any such permission shall be on such terms
as may reasonably be required to protect the intellectual property rights
subsisting in the Names.
11. ACCOUNTING MATTERS, CORPORATE GOVERNANCE AND DISCLOSURE OBLIGATIONS
Accounting reference date
11.1 The financial year of Xxxx and Elsevier shall end on 31 December until they
agree otherwise.
Audit committees
11.2 The audit committees of the Boards of Xxxx and Elsevier will continue.
Accounting policies and practices
11.3 Xxxx and Elsevier shall so far as practicable adopt the same accounting
policies and apply the same accounting practices. These will be developed by the
Chief Financial Officer of Xxxx Elsevier and his team and will be approved by
the Xxxx Elsevier audit committee with input as appropriate from the Xxxx audit
committee and the Elsevier audit committee.
Corporate Governance and disclosure standards
11.4 Each of Xxxx, Elsevier and Xxxx Elsevier will comply with the highest
standards of corporate governance and disclosure policies applying in the UK and
Netherlands with the effect that a mandatory obligation applying to one of Xxxx
or Elsevier will be observed by the other and Xxxx Elsevier (except to the
extent that the observance of that obligation would place a party in breach of a
mandatory obligation applying directly to it).
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12. INFORMATION
The Operating Group and the Finance Group
12.1 Xxxx and Elsevier shall each be entitled to have and shall each ensure that
the other has reasonable access to the separate books, records and accounts kept
from time to time by members of the Xxxx Elsevier Group and the Finance Group
and to be supplied by those companies with such information as they each may
reasonably require from time to time to keep themselves properly informed about
the business and affairs of those companies and generally to protect their
respective interests.
Xxxx and Elsevier
12.2 Xxxx and Elsevier shall provide the other with such information as is
reasonably required by the other in connection with the exercise of rights or
the performance of obligations under this Agreement or otherwise in relation to
matters arising out of it.
Confidentiality
12.3 A party receiving information under this clause which is confidential to
the company from which it is acquired shall not divulge that information to any
other person without the prior approval of that company, which shall not be
withheld unreasonably.
13. STOCK EXCHANGE OBLIGATIONS
13. The parties shall co-operate, and shall each, so far as it is able, ensure
that members of the Xxxx Elsevier Group and members of the Finance Group
co-operate, to ensure that Xxxx and Elsevier are in a position to comply with
obligations imposed on them by stock exchanges on which their shares are from
time to time listed, quoted or traded. In particular, Xxxx and Elsevier shall
use all reasonable endeavours to ensure, as far as practicable, that they
co-ordinate the content and timing of release of announcements required by each
such stock exchange. Whenever practicable, the parties shall endeavour to secure
the approval of any such announcement by the Xxxx Elsevier Board, to the extent
it relates to the business or results of the Xxxx Elsevier Group.
14. RELATIONSHIP TO ARTICLES OF ASSOCIATION
14. In the event of any conflict between the provisions of this Agreement and
the memorandum or articles of association or other constitutional document of
any member of the Xxxx Elsevier Group or of the Finance
Page 23
Group, the provisions of this Agreement shall prevail as between the parties.
The parties shall exercise all voting and other rights and powers available to
them so as to give effect to the provisions of this Agreement and shall further
(if necessary) ensure any required amendment to the memorandum or articles of
association or other constitutional document of any member of the Xxxx Elsevier
Group or of the Finance Group as may be necessary to give effect to the intent
and purpose of this Agreement.
15. NOTICES
Form of Notice
15.1 Any communication or document, including process in any legal action or
proceedings (a Communication) which either party may desire to give or deliver
in connection with this Agreement shall be:
(a) in writing;
(b) delivered by hand or sent by prepaid first class post (in the case of
communications within the same country) or by airmail post (in the case of
communications being sent from one country to another) or by fax to the
addressee at its address or fax number set out in sub-clause 15.3; and
(c) marked in the manner described in sub-clause 15.3.
Time of Service
15.2 A Communication shall be deemed to have been given, if delivered by hand,
at the time of delivery, if sent by post, on the second business day after the
envelope or package containing the same shall have been put into the post or, if
sent by fax, on the business day on which the same shall have been transmitted
and receipt has been confirmed.
In this clause, business day means a day, other than a Saturday or Sunday, on
which banks are generally open for business (a) in the case of delivery by hand
or transmission by facsimile, in the country of the recipient, and (b) in the
case of postal delivery, also in the country where the envelope containing the
notice was posted.
Addresses
15.3 The current addresses and fax numbers of, and exterior markings required
by, the parties for the purposes of Communications are as follows:
Elsevier
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Address: Van xx Xxxxx
Bakhuyzenstraat 4,
XX Xxx 000
0000 Xx Xxxxxxxxx,
Xxx Xxxxxxxxxxx
Fax number: 3120 515 9251
Requisite Marking: "Urgent - For the attention of the
Company Secretary"
Xxxx
Address: 00 Xxxxxxxx Xxxxxx,
Xxxxxx,
XX0X 0XX
Fax number: 0171 227 5651
Requisite Marking: "Urgent - For the attention of the Company
Secretary"
The parties may change their address, fax number or the requisite marking for
the purpose of receipt of communication by serving notice on the other party in
accordance with this clause.
Proof of service
15.4 In proving service of a Communication, it shall be sufficient to prove that
the envelope containing the Communication was properly addressed and delivered
either to the address shown thereon or into the custody of the postal
authorities as a prepaid first class or airmail letter, or that facsimile
transmission of the Communication was made after obtaining in person or by
telephone appropriate evidence of the capacity of the addressee to receive the
same, as the case may be.
16. MISCELLANEOUS
Regulatory
16.1 The parties shall respectively co-operate with each other from time to time
to ensure that all information necessary or desirable for the making of (or
responding to any requests for further information consequent upon) any
notifications or filings made in respect of this Agreement, or the transactions
contemplated hereunder, is supplied to the party dealing with such
Page 25
notification and filings and that they are properly, accurately and promptly
made.
No assignment
16.2 Neither of the parties may assign any of its rights or obligations under
this Agreement in whole or in part without the approval of the other.
No waiver
16.3 No waiver by a party of a failure or failures by any of the other parties
to perform any provision of this Agreement shall operate or be construed as a
waiver in respect of any other or further failure whether of a like or different
character.
Amendment
16.4 Except where specifically provided, this Agreement may be amended only by
an instrument in writing signed by duly authorised representatives of each of
the parties.
No partnership or agency
16.5 Nothing in this Agreement (or in any of the arrangements contemplated
hereby) shall be deemed to constitute a partnership between the parties or any
of them, nor constitute any party the agent of any other party for any purpose.
Severance
16.6 If any of the provisions of this Agreement is or becomes invalid, illegal
or unenforceable, the validity, legality or enforceability of the remaining
provisions shall not in any way be affected or impaired. Notwithstanding the
foregoing, the parties shall thereupon negotiate in good faith in order to agree
the terms of a mutually satisfactory provision, achieving as nearly as possible
the same commercial effect, to be substituted for the provision found to be
invalid, illegal or unenforceable.
17. TERMINATION
17. This Agreement may not be terminated without the agreement of both parties.
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18. COUNTERPARTS
18. This Agreement may be entered into in any number of counterparts and by the
parties to them on separate counterparts, each of which when executed by one or
more parties shall be an original, but all the counterparts shall together
constitute one and the same instrument.
19. JURISDICTION
19.1 Subject to articles 21 and 22 of the Convention on Jurisdiction and the
Enforcement of Judgments in Civil and Commercial Matters signed on 27 September
1968 (as in force from time to time), the parties hereby irrevocably agree to
submit to the exclusive jurisdiction of the Courts of England and The
Netherlands in respect of any dispute which may arise in connection with the
validity, effect, interpretation or performance of, or the legal relationships
established by, this Agreement or otherwise arising in connection with this
Agreement.
19.2 Neither party shall seek to recover, pursue any claim for, or enforce any
judgment for, damages against the other in respect of any dispute arising out of
or in connection with this Agreement or the Original Governing Agreement,
provided that this sub-clause shall not prevent either party from:
(a) exercising or enforcing any rights or obligations arising under this
Agreement or the Original Governing Agreement; or
(b) seeking or pursuing such other remedies (including, but not limited to,
specific performance and injunctive or declaratory relief) as may be
available in respect of any such dispute.
20. FORUM NON CONVENIENS
20. The parties hereby irrevocably waive any objections on the grounds of venue
or forum non conveniens to the jurisdiction of the Courts of England or The
Netherlands in the event that any proceedings are brought in either jurisdiction
in accordance with clause 19.
21. AGENT FOR PROCESS
21.1 Elsevier shall at all times maintain an agent for service of process and
any other documents in proceedings in England. Such agent shall be Hackwood
Secretaries Limited of 0 Xxxx Xxxxxx, Xxxxxx XX0X 0XX and any writ, judgment or
other notice of legal process shall be sufficiently served on Elsevier if
delivered to such agent at its address for the time being. Elsevier irrevocably
undertakes not to revoke the authority of the said agent and if,
Page 27
for any reason, Xxxx requests Elsevier to do so, Elsevier shall promptly appoint
another such agent with an address in England and shall advise Xxxx. If,
following such a request, Elsevier fails to appoint another agent, Xxxx shall be
entitled to appoint one on behalf of Elsevier.
21.2 Xxxx shall at all times maintain an agent for service of process and any
other documents in proceedings in The Netherlands. Such agent shall be Xxxxx
Dutilh, Weena 750, 3014 DA, 1110 3000 BC, Rotterdam, The Netherlands, marked for
the attention of Mr Willem Calkoen and any writ, judgment or other notice of
legal process shall be sufficiently served on Xxxx if delivered to such agent at
its address for the time being. Xxxx irrevocably undertakes not to revoke the
authority of the said agent and if, for any reason, Elsevier requests Xxxx to do
so, Xxxx shall promptly appoint another such agent with an address in The
Netherlands and shall advise Elsevier. If, following such a request, Xxxx fails
to appoint another agent, Elsevier shall be entitled to appoint one on behalf of
Xxxx.
21.3 Nothing contained in this Agreement shall affect the right to serve process
in England or The Netherlands in any other manner permitted by law or the right
to bring proceedings in any other jurisdiction for the purposes of the
enforcement or execution of any judgment of, or other settlement in proceedings
before, the Courts of England or The Netherlands or other settlement in any
other courts.
22. GOVERNING LAW
22. This Agreement shall be governed by and construed in accordance with English
law.
AS WITNESS this Agreement has been signed by the duly authorised representatives
of the parties the day and year first before written.
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SCHEDULES
SCHEDULE 1
FIRST EQUALISATION
Equalisation
INTERPRETATION
1.1 In this schedule, unless the context otherwise requires or provides:
Applicable Exchange Rate means in relation to any proposed dividend payment by
Xxxx or Elsevier, the average of the closing mid-point spot euro-sterling
exchange rates for the five consecutive Business Days commencing with the tenth
Business Day before the Dividend Determination Date relating to the Xxxx
Elsevier dividend which is intended to enable Xxxx and Elsevier to fund those
proposed dividend payments, as shown in the London edition of the Financial
Times (or such other point of reference as the parties shall agree);
Business Day means a day on which banks are generally open for business in both
the City of London and Amsterdam;
Capital Distribution means the aggregate cash amount which would be paid by Xxxx
or Elsevier (respectively) to a holder of one Xxxx Ordinary share or of one
Elsevier Ordinary share on a liquidation of the paying company before reduction
by the amount of any tax (other than, for the avoidance of doubt, any tax on the
paying company's income, profits or gains) which would be required to be
deducted or withheld from the payments in the liquidation of the paying company;
Dividend Determination Date means the date on which the directors of Xxxx
Elsevier resolve to pay or recommend any dividend;
Elsevier Ordinary shares means, subject to paragraph 8.4 below, Ordinary shares
of DFl 1 each in the capital of Elsevier;
Equalisation Ratio means the ratio of 1.538:1, subject to adjustment in
accordance with paragraphs 8 and 9 and subject to such further adjustments as
Xxxx and Elsevier may from time to time agree;
Financial Period means a financial year of either Xxxx or Elsevier or any other
period for which the accounts of either of them may by mutual agreement be made
up;
Page 29
Xxxx International Group means Xxxx and its subsidiaries from time to time;
Xxxx Ordinary shares means, subject to paragraph 8.4 below, Ordinary shares of
25 xxxxx each in the capital of Xxxx.
1.2 Words and expressions defined in or for the purposes of articles 105 (Income
Rights) and 106 (Capital Rights) of the articles of association of Xxxx Elsevier
have the same meaning when used in this schedule.
PRINCIPLES OF EQUALISATION
Income
2.1 Xxxx and Elsevier propose, except in relation to their 1992 final dividends
and, in the case of Xxxx, its 1992 interim dividend and except in the further
circumstances described in this schedule, to pay dividends on their ordinary
shares on the basis that the ratio of the Gross Dividend Amount on one Elsevier
Ordinary share to the Gross Dividend Amount on one Xxxx Ordinary share,
translated using the Applicable Exchange Rate, will be the Equalisation Ratio.
Capital
2.2 Xxxx and Elsevier propose, on the bases and assumptions set out or referred
to in this schedule, that the interests of their respective shareholders in the
underlying capital of the Xxxx Elsevier Group, having regard to their interests
in the Finance Group, should reflect the Equalisation Ratio.
Liabilities etc
2.3 Having regard to the principles set out above, the parties intend to agree
the amounts of all dividends to their respective shareholders and to ensure that
dividends paid to Xxxx and Elsevier from companies within the Xxxx Elsevier
Group and the Finance Group are sufficient to fund those dividends to the
shareholders having regard to available assets and liabilities of Xxxx and
Elsevier respectively and any deficiencies in distributable reserves which may
from time to time arise.
However, it is further intended that any expenditure or liability of Xxxx or
Elsevier (a) directly or indirectly constituting, or resulting from or arising
out of, any act of omission by or matter concerning the relevant party which has
constituted a breach of this Agreement or the Original Governing Agreement or
which would not have existed had clause 4.2 of the Implementation Agreement been
observed by that party or (b) incurred in
Page 30
discharge of a liability, or being a liability, to pay to the other party
damages or any other amount by way of compensation for breach of contract or
other wrongful act or incurred in settlement of any claim by the other party
(whether or not liability is admitted) or in discharge of expenses incurred in
the settlement of such a claim, shall be left out of account in determining
their dividend entitlements from the Xxxx Elsevier Group and/or the Finance
Group in such a way that such expenditure or liability may result in dividend
payments by Xxxx and Elsevier not reflecting the Equalisation Ratio.
Operation of principles
2.4 Xxxx and Elsevier will keep under review (and agree to amend where
necessary) the detailed arrangements for equalisation embodied in this schedule
and in the articles of association of Xxxx Elsevier, with a view to ensuring
that those arrangements work in conformity with the principles stated above.
DIVIDEND CALENDAR
3.1 Xxxx and Elsevier shall co-operate with a view to announcing their interim
and final dividends respectively at the same time and on the same day.
3.2 All dividends on Xxxx Ordinary shares and Elsevier Ordinary shares shall
become payable to shareholders (or, in the case of bearer shares, to paying
agents for collection by shareholders) on the same date.
3.3 Xxxx and Elsevier shall co-operate so far as practicable in co-ordinating
the timing of all other aspects of dividend payment.
EQUALISATION OF GROSS DIVIDEND AMOUNTS
4.1.1 In relation to each proposed dividend payment to their shareholders, the
Board of Xxxx and the Elsevier Combined Board shall agree from time to time the
Gross Dividend Amounts in respect of dividends to be declared, paid or, where
appropriate, recommended for payment by them respectively. The amounts so agreed
shall, subject as provided in paragraph 4.5 below, form the basis for
calculation of the E Target Dividend and the R Target Dividend respectively for
the purposes of article 105 (Income Rights) of the articles of association of
Xxxx Elsevier.
4.1.2 Subject to the provisions of this schedule, the Board of Xxxx and the
Elsevier Combined Board shall declare, pay or recommend dividends of such an
amount that, in relation to any proposed dividend payment, the ratio of the
Gross Dividend Amount in respect of the proposed dividend payment on
Page 31
one Elsevier Ordinary share to the Gross Dividend Amount in respect of the
proposed dividend payment on one Xxxx Ordinary share, calculated using the
Applicable Exchange Rate, is the Equalisation Ratio.
4.2.1 Notwithstanding the provisions of sub-paragraph 4.1.2, either the Board of
Xxxx or the Elsevier Combined Board may decide, with the consent of the other
party, to declare, pay or recommend a dividend which is lower than the amount
that would be implied by the Equalisation Ratio if it considers that payment of
a dividend by Xxxx or Elsevier, as appropriate, according to the Equalisation
Ratio:
(a) would result in the payment of a dividend which it would be unlawful to
pay, whether by reason of (i) the inadequacy of distributable reserves or
the amounts payable to it pursuant to paragraphs (a) to (e) of article
105.2 of the articles of association of Xxxx Elsevier being insufficient to
enable it to discharge its liabilities and to pay all preferential
dividends or the existence of Excluded Shares or (ii) otherwise; or
(b) would, because of movements in the euro-sterling exchange rate, result in
it declaring, paying or recommending a dividend of an amount which it would
be unreasonable to pay having regard in particular to (i) the level of the
corresponding interim or final dividend in respect of the last preceding
Financial Period and/or (ii) the development of the level of earnings of
the Xxxx Elsevier Group and the Finance Group, expressed respectively in
sterling and euro, and/or (iii) any special circumstances in the country of
incorporation of Xxxx or Elsevier, as appropriate, relevant to the decision
as to the level of dividend which would be reasonable.
4.2.2 In addition, the parties acknowledge that, in relation to any proposed
dividend payment, the amounts declared, paid or recommended by the Board of Xxxx
or the Elsevier Combined Board may not reflect the Equalisation Ratio:
(a) where, as a result of the matters mentioned in the second paragraph of
paragraph 2.3 above, the dividend which that party receives under article
105 (Income Rights) of the articles of association of Xxxx Elsevier is
insufficient to enable it to make onward payment of the R Target Dividend
or the E Target Dividend, as appropriate; or
(b) where, following the reduction by one party of its dividend payment to
shareholders in accordance with sub-paragraphs 4.2.1(a)(ii) or 4.2.1(b)
above, subsequent compensatory payments are to be made to
Page 32
the relevant shareholders as contemplated in sub-paragraph 4.3.1, 4.3.2 and 4.4
below; or
(c) where, following a disposal by Xxxx of all or part of its indirect interest
in the Exchange shares, it makes a distribution to its shareholders from
the proceeds of disposal.
4.2.3 Where, for any of the reasons stated in sub-paragraphs 4.2.1 or 4.2.2
above either the Board of Xxxx or the Elsevier Combined Board decides not to
declare, pay or recommend a dividend according to the Equalisation Ratio, Xxxx
and Elsevier shall make available to their shareholders, together with and in
the same manner as the announcement of the dividend, a statement explaining why
dividends have been or will be declared, paid or recommended which are not in
accordance with the Equalisation Ratio and the implications of that fact for
future dividends (insofar as they are known).
4.3.1 Where, in accordance with sub-paragraph 4.2.1(a)(ii), the Board of Xxxx or
the Elsevier Combined Board has resolved to declare, pay or recommend a dividend
lower than the amount that would be implied by the Equalisation Ratio, the
parties shall discuss how to give effect to the principle that the body of
shareholders receiving the lower dividend should, as soon as practicable after
it becomes possible as a matter of law and over such period as the parties agree
to be reasonable, be compensated for the amount foregone (though this will not
necessarily involve any payment of interest or any other form of additional
compensation to reflect the delay in receipt). Any future compensatory dividends
shall be paid at the same time as routine dividend payments by Xxxx and
Elsevier.
4.3.2 The arrangements which the parties consider appropriate to give effect to
the principle referred to in sub-paragraph 4.3.1 may include, without
limitation, either:
(a) provision for the amount that would otherwise be payable in respect of the
Target Dividend Amount of the party affected in relation to the relevant
dividend payment to be reduced, with the amount of the reduction being
credited to a separate reserve denominated in sterling in the books of Xxxx
Elsevier and being preserved by Xxxx Elsevier (so far as reasonably
possible) so as to be available for payment to the affected party (together
with any notional interest or other compensation to reflect the delay in
receipt, if the parties have so agreed) when circumstances permit its
onward distribution to shareholders of that party (and, in this event, the
rights of the parties to capital on a winding-up of Xxxx Elsevier shall
also take account of the amount remaining credited at the Commencement Date
to such
Page 33
separate reserve) and the parties shall agree arrangements to protect their
respective shareholders against significant prejudice caused by currency
fluctuations affecting the value of the separate reserve measured in terms
of the currency in which payment of the compensatory dividend will be made;
or
(b) provision for a reserve on similar terms to be set up in the books of
Elsevier Xxxx Finance (but no reserve shall be established or maintained in
favour of Xxxx in Elsevier Xxxx Finance unless there is at all relevant
times also a corresponding reserve, of an equal or higher amount, in favour
of Elsevier); or
(c) provision for the whole of the relevant Target Dividend Amount to be paid
to the affected party in full ignoring the fact that the affected party
will pay a lesser amount by way of dividends to its shareholders, in which
event the affected party shall establish a reserve in its own books of the
amount so received which it is unable to pay on to its shareholders
(translated into euros, in the case of Elsevier) and the rights of the
affected party, whether to income or capital, from Xxxx Elsevier shall have
regard to the purpose for which that reserve is maintained.
4.3.3 The arrangements to give effect to the principle in sub-paragraph 4.3.1
may also include arrangements to deal with (a) changes in the share capital of
the relevant party and (b) changes in the taxation regime or rates of tax or tax
credit applicable to the relevant party or to the payment of dividends to or by
it, in either case prior to the relevant compensatory dividends having been
paid.
4.4 Where, in accordance with sub-paragraph 4.2.1(b), the Board of Xxxx or the
Elsevier Combined Board has resolved to declare, pay or recommend a dividend
which is lower than the amount that would be implied by the Equalisation Ratio,
the parties acknowledge that it will not normally be appropriate for the body of
shareholders receiving the lower dividend to be compensated for the amount
foregone. If the parties agree otherwise, they shall also agree the arrangements
necessary to permit such compensatory payments, having regard to the provisions
of sub-paragraph 4.3 above.
4.5 For the purposes of article 105 (Income Rights) of the articles of
association of Xxxx Elsevier, Gross Dividend Amounts and Target Dividend Amounts
shall be calculated ignoring any requirement or the possibility of any decision
to pay a different amount by reason of any of the circumstances described in
paragraph 4.2 above.
Page 34
4.6 For the avoidance of doubt, where either party pays a dividend lower than
the amount implied by the Equalisation Ratio by reason of the circumstances
described in sub-paragraph 4.2.1(a)(i) or in sub-paragraph 4.2.2(a), the parties
do not envisage that any arrangements shall be made to enable any future
compensatory payments to be made in respect of the amounts foregone.
DIVIDEND PROCEDURE
5.1 In the period prior to any Dividend Determination Date, the parties shall
consult with a view to agreeing, as envisaged by sub-paragraph 4.1.1, the Gross
Dividend Amount to be declared, paid or recommended for payment by each of them
(subject to final determination of the Applicable Exchange Rate) and hence the
Target Dividend which each proposes to notify to Xxxx Elsevier on the Dividend
Determination Date pursuant to article 105 (Income Rights) of the articles of
association of Xxxx Elsevier.
5.2 The parties shall also, prior to each Notification Time, provide to each
other (and to Xxxx Elsevier) information as to the amounts which they intend to
notify to Xxxx Elsevier prior to the relevant Notification Time in accordance
with article 105 (Income Rights) of the articles of association of Xxxx Elsevier
as to, respectively, their:
(a) Cash Requirements, Relevant Cash and Permitted Liabilities;
(b) Deficit Amounts;
(c) Preference Share Amounts; and
(d) Target Dividend Amounts.
Each party shall supply to the other such further information as the other may
reasonably request as to the bases of, and assumptions underlying, the
calculation of any such figures. The parties shall procure that Xxxx Elsevier
supplies them with the information as to the timing of future dividend
declaration and payments which they require for the purpose of calculating the
relevant amounts.
5.3 The parties envisage that, on each Dividend Determination Date, the
following events will, so far as practicable, occur in the sequence set out
below:
(a) by the passing of shareholder resolutions, Xxxx Elsevier Nederland BV and
Xxxx Elsevier Overseas BV declare the dividends,
Page 35
if any, payable by them respectively on the shares in their respective
capital held by Elsevier;
(b) by the passing of a shareholder resolution, Elsevier Xxxx Finance declares
the dividends, if any, payable on the shares held by Xxxx and the shares
held by Elsevier respectively;
(c) Xxxx and Elsevier give to Xxxx Elsevier the formal notifications required
by article 105 (Income Rights) of the articles of association of Xxxx
Elsevier as to their respective Cash Requirements, Relevant Cash, Permitted
Liabilities, Deficit Amounts, Preference Share Amounts, Target Dividends
and Target Dividend Amounts;
(d) the Board of Xxxx Elsevier resolves to declare, pay or recommend for
payment dividends in accordance with article 105 (Income Rights) of the
articles of association of Xxxx Elsevier;
(e) meetings of the Boards of Xxxx and Elsevier respectively take place to
approve announcements or make declarations or recommendations of their
dividends to shareholders, with a view to simultaneous public announcements
being made.
5.4 The parties acknowledge that it is their intention that Xxxx Elsevier pay
all dividends by way of interim dividend, rather than by payment of a final
dividend requiring approval by the shareholders of Xxxx Elsevier. If final
dividends are recommended for payment by the Board of Xxxx Elsevier, Xxxx and
Elsevier undertake to exercise their votes as shareholders to ensure that the
resolution to approve the dividend recommended by the Board is passed.
5.5 Neither party shall, without the consent of the other, declare or pay any
dividend other than:
(a) dividends not exceeding the R Target Dividend or the E Target Dividend, as
the case may be, from time to time notified to Xxxx Elsevier;
(b) dividends by Xxxx of the proceeds of sale of all or part of its indirect
interest in the Exchange shares;
(c) dividends of amounts reflecting the release of any reserve maintained
pursuant to sub-paragraph 4.3.2 or paragraph 4.4 above; or
Page 36
(d) dividends of amounts paid to the relevant party pursuant to paragraph (g)
of article 105.2 of the articles of association of Xxxx Elsevier.
5.6 Elsevier shall pay to the holders of its Exchange shares any amount which it
has, in notifying the E Target Dividend and Target Dividend Amount, indicated
that it intends to pay in respect of those shares.
5.7 The parties agree to consider, in relation to each dividend payment, the
arrangements which should be effected with a view to ensuring that changes in
currency exchange rates after the Dividend Determination Date do not prejudice
the ability of either party to discharge its liabilities or pay its Target
Dividend.
5.8 The parties shall comply with their obligations under the provisions of
article 105.6 and 105.10 of the articles of association of Xxxx Elsevier.
DISTRIBUTIONS IN SPECIE
6. Xxxx and Elsevier shall not make any distribution in specie.
CAPITAL RIGHTS
7.1.1 In the event of a winding-up of Xxxx Elsevier, the intention of the
parties is that, on the basis of the Assumptions set out in article 106 (Capital
Rights) of the articles of association of Xxxx Elsevier and subject to Xxxx and
Elsevier having complied with their respective obligations under the
Implementation Agreement, the Original Governing Agreement and the Governing
Agreement and to the application of paragraphs 4.3 and 4.4 above or 9.2 below,
the sums paid up to Elsevier and Xxxx respectively in the winding-up should be
such that the ratio of the Capital Distribution which Elsevier would be able to
make on one Elsevier Ordinary share to the Capital Distribution which Xxxx would
be able to make on one Xxxx Ordinary share (assuming full distribution as
capital of the aggregate amounts available in each of Xxxx and Elsevier on the
basis of the Assumptions) would be the Equalisation Ratio. On the occasion of
each successive interim or final distribution of capital by Xxxx Elsevier, the
exchange rate to be used in applying the Equalisation Ratio shall be the average
euro sterling exchange rate over the period of 365 days ending on the fifth
Business Day before the date on which the relevant Proposed Distribution is
notified by the Liquidator pursuant to paragraph (a) of article 106.3 of the
articles of association of Xxxx Elsevier (the Notification Date) (determined by
reference to the closing spot mid point rates for each Business Day in such
period of 365 days as shown in the London edition of the Financial Times or such
other point of reference as the parties shall agree).
Page 37
7.1.2 Sums to be distributed to Xxxx and Elsevier in accordance with the
principle in sub-paragraph 7.1.1 and as an interim or final distribution
pursuant to paragraph (e) of article 106.2 of the articles of association of
Xxxx Elsevier will be calculated by reference to the following formulae:
R + E + D (R + E S ) (P ) (D S )
R R R ( E E B) ( E) ( E A)
ER X ____________ = (________ X __) + (__)_ + (___ X____)
N ( N S ) (N ) (N S )
R ( E N) ( E) ( E M)
A = D + D
R E
where:
R = the aggregate of:
R
(a) the amount (if any) by which the R Available Assets exceed the sum of R
Permitted Liquidation Liabilities and the R Preference Capital Amount;
(b) the aggregate of the amounts which would be received by Xxxx (directly or
indirectly, but taking account of tax costs in RHBV, except to the extent
such tax costs would not arise but for, or are increased by, a breach of
the terms of clause 4.2 of the Implementation Agreement, or of the Original
Governing Agreement or of this Agreement or of the agreement referred to in
sub-clause 6.1 of this Agreement) in the liquidation of Elsevier if (i) the
Assumptions were fulfilled and (ii) Elsevier were to distribute in
sterling:
(A) the amount (if any) by which its Available Assets exceed the sum of
its Permitted Liquidation Liabilities and Preference Capital Amount,
to the extent such amount would in fact be capable of distribution by
the E shareholder having regard, amongst other things, to liabilities
of the E shareholder which are not Permitted Liquidation Liabilities,
plus the Excess Amount of Elsevier, all multiplied by X; and
(B) the aggregate of all amounts received by Elsevier pursuant to
paragraph (e) of article 106.2 of the articles of association of Xxxx
Elsevier (but for this purpose the Excess Amount of Elsevier shall not
be deemed to have been so received), each such amount being multiplied
by Y;
Page 38
(c) the cash amount of all previous distributions made to the R
shareholder pursuant to paragraph (e) of article 106.2 of the articles
of association of Xxxx Elsevier;
E = the Excess Amount of Xxxx in relation to the relevant Proposed
R Distribution;
D = the cash amount to be paid to Xxxx;
R
N = the number of R Ordinary shares (excluding any Excluded Shares)
R in issue at the Commencement Date;
ER= the Equalisation Ratio;
R = the amount (if any) by which the E Available Assets exceed the sum of the
E E Permitted Liquidation Liabilities and the E Preference Capital Amount;
P the cash amount of all previous distributions made to the E shareholder
E pursuant to paragraph (e) of article 106.2 of the articles of association
of Xxxx Elsevier, multiplied by the amount of S[u]A and divided by S[u]M
in each case, as applicable to the Proposed Distribution which resulted
in the relevant distribution;
E = the Excess Amount of Elsevier in relation to the relevant Proposed
E Distribution;
D = the cash amount to be paid to Elsevier;
E
N = the number of E Ordinary shares (excluding any Excluded Shares) in issue at
E the Commencement Date plus the number of Exchange shares in issue to the
extent that they would be entitled to rank pari passu with the E Ordinary
shares in any liquidation of Elsevier;
A = the Residual Amount in relation to the relevant Proposed Distribution;
S = the average number of euros per pound sterling which would have been
A obtained had an amount in sterling approximately equal to half the Residual
Amount in relation to the relevant Proposed Distribution been converted
into euros at an exchange rate equal to the average of the closing rates
for the sale of euros for sterling for the five consecutive Business Days
commencing with the tenth Business Day prior to the Notification Date as
quoted by Barclays Bank PLC (or such other point of reference as the
parties shall agree) and after deducting commission and other costs
associated with the exchange;
Page 39
S = the amount of S[u]A in relation to the first Proposed Distribution;
B
S = the average of the closing mid-point spot euro-sterling exchange rates
M (expressed as a number of euros per pound sterling) over the period of 365
days ending on the fifth Business Day before the Notification Date as shown
in the London edition of the Financial Times (or such other point of
reference as the parties shall agree);
S = the amount of S[u]M in relation to the first Proposed Distribution;
N
S = the average of the closing mid-point euro-sterling exchange rates
O (expressed as a number of euros per pound sterling) over the five days
referred to in the definition of S[u]A as shown in the London edition of
the Financial Times (or such other point of reference as the parties shall
agree);
S = the amount of S[u]O in relation to the first Proposed Distribution;
P
2
(S )
S = ( B) ;
----
(S )
( P)
Y = (in relation to each amount referred to in (b) in the definition of R[u]R
above),
2
(S )
( A), S[u]A, and S[u]O being in each case the figures applicable to the
----
(S ) Proposed Distribution which resulted in the relevant
( O) distribution to Elsevier;
provided that if, pursuant to the above formula, either D[u]R or D[u]E would be
less than zero, the amount required to be paid to the relevant shareholder shall
be nil and the amount required to be paid to the other shareholder shall equal
the Residual Amount.
For the purpose of this paragraph, Excess Amount means, in relation to either
Xxxx or Elsevier and any Proposed Distribution, the amount (if any) by which the
amount paid (or deemed by virtue of the proviso to paragraph (b) of article
106.9 of the articles of association of Xxxx Elsevier to have been paid) to the
relevant party pursuant to paragraph (d) of article 106.2 of the articles of
association of Xxxx Elsevier exceeds the Preference Capital Amount of that
party.
7.2 In the event of a liquidation of Xxxx Elsevier the parties shall comply with
their obligations under article 106 of the articles of association of Xxxx
Elsevier and shall co-operate with each other and with the Liquidator with a
view to agreeing all matters necessary in connection with that liquidation. In
Page 40
particular, the parties shall supply to each other and to the Liquidator such
information as shall reasonably be requested for the purpose of determining
either party's Available Assets, Permitted Liquidation Liabilities, Residual
Value (and, in the case of Xxxx, the RHBV Residual Value), Excess Liabilities
Requirement, Preference Capital Amount and Target Capital Distribution Amount or
understanding the bases and assumptions underlying those figures.
7.3 Xxxx and Elsevier acknowledge that changes in the taxation regime applicable
to, or to the payment of dividends or capital distributions by or to, either of
them or Xxxx Elsevier may result in the rights attaching to the shares in Xxxx
Elsevier not having, or potentially not having, the economic effect contemplated
by the parties at the date of the Original Governing Agreement. In particular,
Xxxx and Elsevier acknowledge that, if any imputation or similar system were
introduced in respect of the taxation of distributions of capital in
liquidations of English or Dutch companies, this might result in the relative
effective economic values which their shareholders enjoy, in terms of capital
rights, in relation to the Xxxx Elsevier Group and the Finance Group ceasing to
reflect the Equalisation Ratio. In these circumstances, the parties agree that
they will discuss in good faith the appropriate revisions to the rights
attaching to their holdings in the Xxxx Elsevier Group and the Finance Group in
order to redress any disadvantage or potential disadvantage so arising, taking
full account of the accounting and other implications of such revisions.
FURTHER SHARE ISSUES AND THE EQUALISATION RATIO
Existing Commitments
8.1 No adjustment shall be made or required to the Equalisation Ratio to reflect
the exercise, or lapse, of any right which any person may have held at the date
the Original Governing Agreement became effective to subscribe, exchange for or
convert into any share in the capital of either Xxxx or Elsevier. To the extent
any rights outstanding at the date of the Original Governing Agreement lapse in
future, the parties shall consider whether it is appropriate to take steps (for
example by the placing of new shares in one party or by the purchase by one
party of its own shares) to restore the ratio of their respective issued share
capitals to the ratio that would have applied had all such outstanding rights
been exercised in full.
Grant of new options to subscribe
8.2 It is contemplated that issues of shares by either party pursuant to any
agreed employee share option arrangements implemented after the date the
Page 41
Original Governing Agreement became effective have been or will be on terms
which enable the Equalisation Ratio to continue without adjustment, without
unfairness to the ordinary shareholders of either Xxxx or Elsevier. It is not
contemplated that issues of this nature will be such as, by themselves, result
in significant long-term imbalances to the ratio of the aggregate dividends paid
by the Xxxx Elsevier Group and the Finance Group to Xxxx and Elsevier
respectively.
Scrip or Stock Dividends
8.3 Neither party shall make available to its shareholders any scrip or stock
dividend or equivalent facility without the consent of the other. In principle,
however, if either party does introduce such a facility for its shareholders,
with the consent of the other party, no adjustment shall be made or required to
the Equalisation Ratio unless the relevant new shares are issued at below the
prevailing market price of the relevant Company's shares at the date of issue.
It is not contemplated that issues of this nature will be such as by themselves
result in significant long-term imbalances to the ratio of the aggregate
dividends paid by the Xxxx Elsevier Group and the Finance Group to Xxxx and
Elsevier respectively.
Consolidation and sub-division
8.4 If, with the consent of the other party, either Xxxx or Elsevier shall give
effect to a consolidation or sub-division of its share capital, the appropriate
arithmetical adjustment shall be made to the Equalisation Ratio and in the
values of N[u]R or, as appropriate, N[u]E in paragraph 9.2 below (and the
definition in this schedule of "Elsevier Ordinary shares" or "Xxxx Ordinary
shares", as appropriate, shall be construed accordingly).
Capitalisation issues
8.5 If, with the consent of the other party, either Xxxx or Elsevier shall make
an issue of ordinary shares (except an issue made in lieu of the payment of cash
dividends) by way of capitalisation of profits or reserves, the appropriate
arithmetical adjustment shall be made to the Equalisation Ratio and in the
values of N[u]R or, as appropriate, N[u]E in paragraph 9.2 below .
Issues for non-cash consideration
8.6 Where the parties agree, shares or other securities of either Xxxx or
Elsevier (or both) may be issued as consideration for the acquisition of shares
or other assets by Xxxx and/or Elsevier (or Xxxx Elsevier), as appropriate, on
terms that there shall be no adjustment to the Equalisation
Page 42
Ratio provided that satisfactory arrangements are put in place to ensure that
the ultimate benefit of, and the ultimate burden of any liability resulting
from, such acquisition are shared by the shareholders of Xxxx and Elsevier in a
manner consistent with the Equalisation Ratio.
Non-pre-emptive issues for cash
8.7 Where the parties agree, shares or other securities of either Xxxx or
Elsevier may be issued on a non-pre-emptive basis for a cash consideration on
terms that there shall be no adjustment to the Equalisation Ratio provided that
satisfactory arrangements are put in place to ensure that the ultimate benefit
of, and the ultimate burden of any liability resulting from, such an issue are
shared by the shareholders of Xxxx and Elsevier in a manner consistent with the
Equalisation Ratio.
Rights issues and rights offers
8.8.1 Where the parties agree, either Xxxx or Elsevier (or both) may offer (or
procure another person to offer) their respective shares or other securities to
their respective shareholders by way of rights.
8.8.2 Subject to sub-paragraph 8.8.3 below, no adjustment to the Equalisation
Ratio shall be required provided satisfactory arrangements are put in place to
ensure that the ultimate benefit of the proceeds of, and the ultimate burden of
any liability resulting from, such an offer by way of rights are shared by the
shareholders of Xxxx and Elsevier in a manner consistent with the Equalisation
Ratio.
8.8.3 Where, however, the effect of:
(a) the price at which shares or other securities are offered to shareholders,
relative to the prevailing market price;
(b) the number of shares or other securities offered by Xxxx and Elsevier
respectively (or the fact that such shares or other securities are offered
by one party alone); and
(c) any other relevant circumstances,
is such that the shareholders of either Xxxx or Elsevier benefit in a manner
that is not consistent with the Equalisation Ratio, the parties envisage that an
adjustment to the Equalisation Ratio may be required.
Page 43
EXCHANGE SHARES IN ELSEVIER
9.1 If any of the Exchange shares or any of the Elsevier Ordinary shares into
which they are converted are disposed of with the agreement of Elsevier by RHBV
(or any other member of the Xxxx International Group which from time to time
holds those shares with the agreement of Elsevier) and all or part of the
proceeds of sale are distributed (in whatever manner) to shareholders of Xxxx,
the Equalisation Ratio shall be adjusted in such manner as the parties shall
agree to be appropriate to reflect that distribution.
9.2 If any of the Exchange shares or any of the Elsevier Ordinary shares into
which they are converted are disposed of (a) in circumstances in which the
agreement of Elsevier is not required or (b) in breach of the Original Governing
Agreement, this Agreement or the agreement referred to in sub-clause 6.1 of this
Agreement, then whether or not any of the proceeds of sale are distributed to
shareholders of Xxxx, unless the parties otherwise agree, such proceeds shall be
held by Xxxx on terms that enable the shareholders of Xxxx alone to benefit, to
the extent they are not so distributed, and the Equalisation Ratio shall be
adjusted in accordance with the following formula:
N
R
ER = _________
2 N + 2 N
E X
where:
ER = the new Equalisation Ratio;
2
N = subject to paragraphs 8.4 and 8.5 above, 568,403,622 (being the number of
R Xxxx Ordinary shares in issue at the date on which the Implementation
Agreement was signed, plus the number of unissued Xxxx Ordinary shares over
which there then subsisted options, conversion rights or other rights to
subscribe);
N = subject to paragraphs 8.4 and 8.5 above, 65,814,744, (being the number of
E Elsevier Ordinary shares in issue at the date on which the Implementation
Agreement was signed, plus the number of unissued Elsevier Ordinary shares
over which there then subsisted options, conversion rights or other rights
to subscribe), plus the number of Exchange shares (or, if larger, the
number of Elsevier Ordinary shares into which they are convertible) or
Elsevier Ordinary shares deriving therefrom, disposed of by members of the
Xxxx International Group in the relevant disposal; and
Page 44
N = subject to paragraphs 8.4 and 8.5 above, the number of Exchange shares, and
X any Elsevier Ordinary shares resulting from conversion of Exchange shares,
held by members of the Xxxx International Group after the relevant
disposal.
The parties acknowledge that the numbers set out for N[u]R and N[u]E above may
require adjustment to reflect adjustments to the Equalisation Ratio in the
various circumstances described in paragraph 8 above.
9.3 Except as mentioned above, a sale of the Exchange shares or any of the
Elsevier Ordinary shares into which they are converted shall not result in an
adjustment to the Equalisation Ratio.
9.4 If any shares in any company which holds Exchange shares or any Elsevier
Ordinary shares into which they are converted, or in any holding company of any
such companies, are disposed of by Xxxx or by any of its subsidiaries, the
foregoing provisions of this paragraph 9 shall apply mutatis mutandis.
ADJUSTMENTS TO THE EQUALISATION RATIO
10. Upon any adjustment to the Equalisation Ratio, the parties shall:
(a) make such public announcements as are appropriate, having regard to the
regulatory requirements to which they are respectively subject; and
(b) notify Xxxx Elsevier in writing of the adjustment.
Page 45
SCHEDULE 2
Deed of undertaking for directors
THIS DEED OF UNDERTAKING is made by me, [name of director] of [address] on
[date].
I hereby undertake to Xxxx Elsevier plc a company registered in England with
number 2746616 (Xxxx Elsevier), Xxxx International P.L.C., a company registered
in England with number 77536 (Xxxx) and to Elsevier NV, a company incorporated
in The Netherlands whose principal office is at [address at the time of making
the deed] (Elsevier) that if:
(a) at a general meeting, a resolution proposing my appointment or re-election
as a director of Xxxx or Elsevier is not passed by the requisite majority;
or
(b) I am removed or resign from the board, or otherwise cease for any reason to
be a director, of any of Xxxx, Elsevier or Xxxx Elsevier,
then, to the extent that I hold such a position at that time, I shall
immediately resign from the position of director of any and all of Xxxx,
Elsevier or Xxxx Elsevier except in circumstances where a Notice of Suspension
has been given under clause 9 of the Governing Agreement between Xxxx and
Elsevier. If a Notice of Suspension has been given, I may continue as a director
of each of Xxxx, Elsevier and Xxxx Elsevier unless:
(i) I am removed from any of those companies in accordance with their
respective articles of association, in which case I shall cease to be a
director of that company; or
(ii) in circumstances where I am a director of a `Party giving Notice' (as
defined in clause 9 of the Governing Agreement):
(A) I am removed as a director in accordance with a resolution of the
shareholders of that party; or
(B) after retiring and being proposed for re-election, I fail to be
re-elected as a director by the shareholders of that party,
in which case I shall also immediately resign from my position as a
director of Xxxx Elsevier.
This deed of undertaking shall be governed by and construed in accordance with
English law.
Page 46
SIGNED as a deed and delivered by
.............................
[Director]
in the presence of:
[Witness
Occupation
Address]
SIGNED as a deed and delivered by
.............................
[Director]
in the presence of
[Witness
Occupation
Address]
Page 47
SIGNED by XXXXX XXXXXXXXX )
for and on behalf of )
XXXX INTERNATIONAL P.L.C. )
in the presence of Xxxxxx Xxxxx )
SIGNED by XXXXXX XXXXXXXX )
for and on behalf of ELSEVIER NV )
in the presence of Xxxx Xxxxx )
SIGNED by )
XXXXXX XXXXXXXXXX )
Chairman of the Supervisory Board of )
ELSEVIER NV in the presence of )
Xxxx Xxxxx )
Page 48
DATED 15 APRIL 1999
XXXX INTERNATIONAL P.L.C.
ELSEVIER NV
========================
GOVERNING AGREEMENT
(Conformed copy)
=========================
CONTENTS
Clause Page
1. Interpretation 2
2. Purpose and effective date 4
3. Management 5
Board Composition 5
Nominations Committee 6
Board appointments - Xxxx and Xxxx Elsevier 7
Board appointments - Elsevier 8
Appointment of Chairman and Chief Executive 8
Retirement of directors 9
Removal of director 9
Remuneration committee 10
Remuneration of directors by Xxxx and Elsevier 10
Audit committee 10
Elsevier Xxxx Finance 10
4. General undertakings 11
Shareholder approval 11
Controls on the Xxxx Elsevier Group and the Finance Group 13
Share capital 13
Limitation of activities of Xxxx and Elsevier 14
Business of Xxxx and Elsevier 16
Application of cash 16
Xxxx and Elsevier liquidity 16
5. Guarantees and indemnities 16
6. Exchange shares/shares in RHBV 16
Exchange shares 16
Shares in RHBV 17
Listing 17
7. Equalisation 17
8. Standstill 17
9. Change of control 18
10. Intellectual property rights 22
11. Accounting matters, corporate governance and disclosure obligations 22
Accounting reference date 22
Audit committees 22
Accounting policies and practices 22
Corporate Governance and disclosure standards 22
12. Information 23
The Operating Group and the Finance Group 23
Xxxx and Elsevier 23
Page I
Clause Page
Confidentiality 23
13. Stock exchange obligations 23
14. Relationship to articles of association 23
15. Notices 24
Form of Notice 24
Time of Service 24
Addresses 24
Proof of service 25
16. Miscellaneous 25
Regulatory 25
No assignment 26
No waiver 26
Amendment 26
No partnership or agency 26
Severance 26
17. Termination 26
18. Counterparts 27
19. Jurisdiction 27
20. Forum non conveniens 27
21. Agent for process 27
22. Governing law 28
SCHEDULES 29
Page II
