As filed with the United States Securities and Exchange
Commission, via EDGAR, on February 13, 1997
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 20-F
[X] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
OR
[ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended ___________________
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _____________ to _________________
Commission file number __________________________________________
Display.IT Holdings plc
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(Exact name of Registrant as specified in its charter)
England and Wales
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(Jurisdiction of incorporation or organization)
46 Cannon Street, London EC4N 6JJ
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(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of each class Name of each Exchange
on which registered
None None
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Securities registered or to be registered pursuant to Section 12(g) of the Act.
Title of Class
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American Depositary Shares of 5 pence each
Ordinary Shares of 5 pence each*
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* Not for trading, but only in connection with the Registration of American
Depositary Shares, pursuant to the requirements of the Securities and
Exchange Commission.
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Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act.
None
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(Title of Class)
As of January 31, 1997, there were outstanding 15,246,720 ordinary
shares of 5 pence each (the "Ordinary Shares") of the Registrant.
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d)of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes No X
--- ---
Indicate by check mark which financial statement item the Registrant
has elected to follow.
Item 17 Item 18 X
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Pursuant to a Deposit Agreement (the "Deposit Agreement") to be entered
into between the Registrant, the Depositary and the owners and holders from time
to time of American Depositary Receipts ("ADRs") evidencing ADSs, the Depositary
will be able to charge any party depositing or withdrawing Shares (as defined in
the Deposit Agreement) or any party surrendering ADRs or to whom ADRs are issued
(including, without limitation, issuance pursuant to a stock dividend or stock
split declared by the Registrant or an exchange of stock regarding the ADRs or
Deposited Securities (as defined in the Deposit Agreement) or a distribution of
ADRs pursuant to the Deposit Agreement), a fee of $1.50 or less per certificate
for an ADR or ADRs for transfers made pursuant to the Deposit Agreement. See
"Item 14. Description of Securities to be Registered -- Description of American
Depositary Receipts -- Charges of Depositary."
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TABLE OF CONTENTS
Page
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PART I
Item 1. Description of Business..................................... 1
Item 2. Description of Property .................................... 19
Item 3. Legal Proceedings .......................................... 19
Item 4. Control of Registrant....................................... 19
Item 5. Nature of Trading Market ................................... 20
Item 6. Exchange Controls and Other Limitations
Affecting Security Holders ................................. 21
Item 7. Taxation ................................................... 22
Item 8. Selected Financial Data..................................... 25
Item 9. Management's Discussion and Analysis of Financial
Condition and Results of Operations ........................ 28
Item 10. Directors and Officers of Registrant ....................... 35
Item 11. Compensation of Directors and Officers ..................... 38
Item 12. Options to Purchase Securities from
Registrant or Subsidiaries ............................... 38
Item 13. Interest of Management in Certain Transactions ............. 40
Part II
Item 14. Description of Securities to be Registered ................. 42
Part III*
Item 15. Defaults Upon Senior Securities*
Item 16. Changes in Securities and Changes in
Security for Registered Securities*
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* Not applicable
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Page
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Part IV
Item 17. Financial Statements*
Item 18. Financial Statements ....................................... 56
Item 19. Financial Statements and Exhibits .......................... 56
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* Not applicable
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information included in this
Registration Statement on Form 20-F and other materials filed or to be filed by
the Company with the Securities and Exchange Commission (as well as information
included in oral statements or other written statements made or to be made by
the Company) contains statements that are forward-looking, such as statements
relating to plans for increased functionality of existing software and other
software development activities, as well as plans relating to various methods of
future revenue generation, entering into various business-enhancing agreements,
future expansion, other capital spending, financing sources and the effects of
competition. Such forward-looking information involves important risks and
uncertainties that could significantly affect anticipated results in the future
and, accordingly, such results may differ from those expressed in any
forward-looking statements made by or on behalf of the Company. These risks and
uncertainties include, but are not limited to, those relating to software
development activities, product acceptance, the ability to keep pace with
technological evolution, competition, dependence on existing management, global
economic conditions and the possibility of future restrictive governmental
regulation of the financial information industry.
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INTRODUCTORY NOTE
Unless the context indicates otherwise, (i) "Display.IT Holdings"
refers to Display.IT Holdings plc, a public limited company incorporated in
England and Wales under the Companies Act of 1985 of Great Britain (the
"Companies Act"), (ii) "Display.IT Limited" refers to Display.IT Limited, a
private company limited by shares incorporated in England and Wales under the
Companies Act, and (iii) the "Company" or "Display.IT" refers collectively to
Display.IT Holdings and Display.IT Limited, a wholly owned subsidiary of
Display.IT Holdings. All references herein to the Ordinary Shares, the prices
thereof, or to options to acquire Ordinary Shares give retroactive effect to a
four-for-one bonus issue (the "Bonus Issue") whereby on December 6, 1996
shareholders of Display.IT Holdings were issued four additional Ordinary Shares
for each Ordinary Share held.
The Company publishes its consolidated financial statements expressed
in United Kingdom ("U.K.") pounds sterling. In this Registration Statement,
references to "$" are to United States ("U.S.") dollars and references to
"(pound sterling)" or "pounds sterling" or "pounds" and "pence" or "p" are to
U.K. currency. For historical information regarding rates of exchange between
U.S. dollars and pounds sterling, see "Item 8. Selected Financial Data --
Exchange Rate Information." On January 31, 1997, noon buying rate in New York
City for cable transfers in pounds sterling as certified for customs purposes by
the Federal Reserve Bank of New York (the "Noon Buying Rate") was $1.6012 to
(pound sterling)1.00.
Any cash dividends paid by Display.IT Holdings will be in pounds
sterling, and exchange rate fluctuations will affect the U.S. dollar amounts
received by holders of American Depositary Receipts ("ADRs") on conversion of
such dividends. Moreover, fluctuations in the exchange rates between pounds
sterling and the U.S. dollar will affect the dollar equivalent of the pounds
sterling price of the ordinary shares of 5 pence each of Display.IT Holdings
(the "Ordinary Shares") trading off exchange in London, England on a trading
facility known as OFEX ("OFEX"), and, as a result, are likely to affect the
market price of Display.IT Holdings' American Depositary Shares of 5 pence each
("ADSs") which are represented by the ADRs in the United States.
Display.IT Holdings will furnish The Bank of New York (the
"Depositary"), with annual reports containing Consolidated Financial Statements
and an opinion thereon by independent public accountants. Such financial
statements will be prepared on the basis of accounting principles generally
accepted in the U.K. ("U.K. GAAP"). The annual reports will contain a
reconciliation to accounting principles generally accepted in the U.S. ("U.S.
GAAP") of net income and shareholders' equity. Although it is not required to do
so, Display.IT Holdings anticipates that it will also furnish the Depositary
with semi-annual reports prepared in conformity with U.K. GAAP, which will
contain unaudited interim consolidated financial information. Upon
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receipt thereof, the Depositary will mail all such reports to record holders
("Record Holders") of ADRs, evidencing ADSs. Display.IT Holdings will also
furnish to the Depositary all notices of shareholders' meetings and other
reports and communications that are made generally available to shareholders of
Display.IT Holdings. The Depositary will make such notices, reports and
communications available for inspection by Record Holders of ADRs and will mail
to all Record Holders of ADRs notices of shareholders' meetings received by the
Depositary. Display.IT Holdings is not required to report quarterly financial
information.
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PART I
Item 1. Description of Business.
General Development of Business
On June 19, 1995, Display.IT Limited was incorporated in England and
Wales as a private company limited by shares under the Companies Act with
authorized capital of 10,000 ordinary shares of (pound sterling)1 each. All of
Display.IT Limited's outstanding ordinary shares were issued to Peter Levin.
Display.IT Limited, under the direction of Mr. Levin, began the development of
the Display.IT software with the goal of creating a Windows-based software
package that would enable users involved in financial markets to access near
real-time financial data and news freely available over the Internet and
real-time financial data and other information available from certain
third-party providers of financial information. See "Item 1. Description of
Business -- Industry Overview" and "-- Products and Services -- Display.IT
Software."
On May 3, 1996, Display.IT Holdings was incorporated in England and
Wales under the Companies Act as Law 737 Limited, a private company limited by
shares. On June 20, 1996, Display.IT Holdings entered into an agreement (the
"Share Exchange Agreement") with Mr. Levin whereby Display.IT Holdings acquired
from Mr. Levin all of the outstanding ordinary shares of Display.IT Limited (the
"Display.IT Limited Shares") in exchange for the crediting as fully paid up the
200 Ordinary Shares held by Mr. Levin and the issuance to him of an additional
9,999,800 Ordinary Shares. Display.IT Limited thereby became a wholly owned
subsidiary of Display.IT Holdings. See "Item 13. Interest of Management in
Certain Transactions -- Acquisition of Display.IT Limited Shares."
On June 24, 1996, Display.IT Holdings was re-registered as a public
limited company and its name was changed to Display.IT Holdings plc. Also on
that date, Display.IT Holdings commenced the offering of 5,000,000 Ordinary
Shares at a price of (pound sterling)0.20 per Ordinary Share to certain persons
in the United Kingdom (the "U.K. Private Placement"). By June 27, 1996, 19
investors had purchased all of the Ordinary Shares offered in the U.K. Private
Placement. On June 28, 1996, the Ordinary Shares began trading on OFEX. See
"Item 5. Nature of Trading Market."
On December 6, 1996, an extraordinary general meeting of Display.IT
Holdings was convened at which resolutions were passed approving the Bonus
Issue. Under the terms of the Bonus Issue, shareholders of Display.IT Holdings
were entitled to receive four additional Ordinary Shares for each Ordinary Share
held. In addition, on December 13, 1996, Display.IT Holdings received the
authorization of its shareholders to sell up to 3,500,000 Ordinary Shares in a
private placement transaction or series of
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such transactions. In connection therewith, as of January 31, 1997, the Company
had sold an aggregate of 506,720 Ordinary Shares to two investors in return for
an aggregate consideration of (pound sterling)1,839,996.
Industry Overview
According to Waters Information Services, Inc. ("Waters"), in 1995,
participants in the financial information industry generated approximately $5.3
billion in revenues world wide. Waters' research indicates that approximately
34.4% of these revenues were generated by participants in North America, 40.6%
by participants in Europe and the remaining 25% by participants in Asia and the
Pacific.
Generally, the financial information industry consists of three types
of participants: those that capture or develop information ("originators"),
those that deliver the information ("information or data providers") and those
that ultimately use the information ("end-users"). Originators, such as stock
exchanges and the Nasdaq Stock Market, capture or develop financial data, which
include equity and bond prices and certain information regarding mutual funds,
currencies and commodities, and originators such as Reuters Holdings PLC
("Reuters") and Bloomberg L.P. ("Bloomberg") capture or develop financial news.
Information providers serve as conduits through which information obtained from
originators (or, in some cases, other information providers) is delivered to
end-users.
Financial data can be delivered to end-users either simultaneously as
it is generated ("real-time financial data") or subject to a brief delay,
typically 15 to 20 minutes ("near real-time financial data"). Most information
providers that deliver real-time financial data, such as Bloomberg, Dow Jones
Telerate Inc. ("Telerate") and Reuters (Bloomberg and Reuters are both
originators of financial news and information providers of financial news and
data), do so through dedicated information feeds and special computer terminals
which can be used only to access the financial data and news made available by
that information provider. Certain of these information providers have developed
extensive, proprietary non-Internet delivery mechanisms and other
infrastructures for the provision of their information to end-users.
The Company is an information provider that has developed software
that, utilizing the Internet as a non-proprietary delivery mechanism, delivers
in a format that management believes is familiar to professional end-users and
intuitive for non-professional end-users (i) near real-time financial data and
financial news available from originators and other information providers via
the Internet without charge, and (ii) real-time financial data and other
information available from certain other information providers via the Internet
for a charge. See "Item
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1. Description of Business -- Products and Services -- Display.IT Software" and
"-- Risks of New Product Development."
Operations
The Display.IT software was under development throughout 1996 and a
working model of the product was first available in late April 1996. Development
and testing of the Display.IT software continued until late November 1996 when
management determined that the product was ready for release to the public. The
Company anticipates that marketing of the Display.IT software will be conducted
by resellers, consisting of hardware manufacturers, software distribution
companies, telecommunications providers, marketing companies and consultants,
that will make the Display.IT software available to end-users. See "Item 1.
Description of Business -- Principal Markets" and "-- Distribution."
During the first half of 1997, the Company intends to aggressively
promote and market the Display.IT software through resellers, and will seek to
enter into marketing agreements with resellers to distribute the Display.IT
software through various channels in a manner designed to increase revenues
generated from sales of the product. As of January 31, 1997, the Company had
entered into two such marketing agreements. On November 24, 1996, the Company
entered into a cooperation and distribution agreement with a marketing company
(the "Marketing Company") pursuant to which the Marketing Company has agreed to
serve as a non-exclusive distributor of Display.IT software. The agreement gives
the Marketing Company the right to sell the software via the Internet,
telemarketing and direct field sales, and to receive as a sales commission a
percentage of the price for which each Display.IT software package is sold. In
January 1997, the Company entered into a distributorship agreement with
Independent Economic Analysis (Holdings) Pte Limited ("IDEA") pursuant to which
IDEA has also agreed to serve as a non-exclusive distributor of Display.IT
software. The terms of the distributorship agreement obligate IDEA to purchase a
minimum of 50,000 Display.IT software packages, at an agreed upon price, for
resale to end-users over the course of the first year of the agreement. See
"Item 1. Description of Business -- Distribution," "-- Preliminary Arrangements"
and "-- Development Stage Company; Expectation of Losses; Negative Cash Flows."
In addition, the Company has been engaged in discussions with several
other resellers contemplating the purchase of Display.IT software for resale
through retail channels and directly to end-users. See "Item 1. Description of
Business -- Distribution" and "-- Preliminary Arrangements."
Since it commenced operations, the Company has outsourced, and for
1997, the Company intends to continue to outsource, where possible, cost
centers, such as software development, accounting and marketing activities, as
well as end-user assistance, or
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"help desk" services (which have been outsourced to British Telecommunications
plc ("BT")). Management believes that outsourcing the Company's cost-centers
enables management to focus on the Company's core business functions, including
directing the execution of software development and information management, and
enables the Company to minimize staffing levels and related fixed costs. See
"Item 1. Description of Business -- Products and Services -- Customer Support"
and "-- Distribution."
The Company currently anticipates that during 1997 it will spend
approximately (pound sterling)300,000 on research and development in an effort
designed to maintain its position in the market for Internet delivery-based
financial information products, to continue development of the Display.IT
software to enhance and improve its features, and to design new products based
on or related to the Display.IT software. The Company, pursuant to a software
development agreement, retained a software development firm to assist in the
development of the Display.IT software and anticipates that it will retain the
same and/or other software development firms to assist the Company in the
development of any enhancements and improvements to the Display.IT software and
any new software products, although no assurance to that effect can be given.
See "Item 1. Description of Business -- Risks of New Product Development" and
"-- Research and Development Policy."
In 1997 and beyond, the Company may seek to acquire businesses,
products and/or technologies that extend or enhance the Company's current
business and product offerings. The Company does not currently have any
agreements, arrangements or understandings, and is not involved in any
negotiations, with respect to any such acquisition. See "Item 9. Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources."
Products and Services
Display.IT Software
General. The Display.IT software first became available to end-users in
late November 1996. Once installed on a Windows-based personal computer ("PC"),
the Display.IT software displays on the end-user's PC near real-time financial
data and financial news available without charge via the Internet, and real-time
financial data and other financial information available via the Internet for a
fee from certain information providers, in a format which management believes is
familiar to professional users, and intuitive for non-professional users. This
information is currently gathered from approximately 250 sites on the Internet's
World Wide Web (the "Web") and covers over 100,000 instruments ranging from the
traditional -- including, without limitation, equities, bonds, options,
commodities and currency exchange rates -- to the highly specialized -- such as
Japanese tin futures.
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Conceptually, the Display.IT software can be regarded as operating in
two parts. First, information identifying the location on the Web of financial
data and news has been organized by the Display.IT software into a directory.
Second, the Display.IT software, in response to the query of an end-user,
accesses requested financial information using the directory to locate the
information, and then displays it on the end-user's PC. For example, a typical
stock price request is translated by the software into a search through the
directory for the most up-to-date information available through known sources on
the Internet relating to the particular stock for which pricing and other data
are available. The Display.IT software does not store or replicate any financial
data; rather, it uses information in the directory to identify a source of the
data on the Internet and the location of the data within that source, and then
retrieves that data via the Internet for display on the end-user's PC.
Display.IT software is Microsoft Corporation ("Microsoft") accredited
and compliant which makes it compatible with any PC running Windows 95 or
Windows NT. The Company has developed the Display.IT software to be Microsoft
compatible so that end-users would have the ability to include financial data,
such as stock, bond and mutual fund prices, delivered to end-users via the
software in a database and to use other Microsoft applications to manipulate the
data in order to, among other things, develop graphs and spreadsheets. As of
December 31, 1996, the data storage and manipulation feature was still
undergoing testing and not available to end-users. See "Item 1. Description of
Business -- Risks of New Product Development."
As of January 31, 1997, financial data and information ("Fee-Based
Information") consolidated by Green Eye Limited ("Green Eye"), IDEA, Standard &
Poor's ComStock ("S&P ComStock") and Emerging Markets Data plc ("EMD")
(collectively, the "Fee-Based Information Providers") was available for a fee
to Display.IT end-users. The Fee-Based Information consolidated by Green Eye
consists of three-to-five year old historical financial data pertaining to
various business entities; the Fee-Based Information consolidated by IDEA
consists of forward-looking, predictive market information based on extensive
research; the Fee-Based Information consolidated by S&P ComStock consists of
real-time financial data; and the Fee-Based Information consolidated by EMD
consists of real-time financial data and financial news regarding business
entities in emerging markets. In addition to Fee-Based Information, certain
information consolidated by the Fee-Based Information Providers is available to
Display.IT end-users free of charge (other than the cost of the Display.IT
software and any upgrades). See "Item 1. Description of Business -- Products and
Services -- Access to Third Party Data."
End-users obtaining Fee-Based Information through the Display.IT
software will have access to a dynamic body of
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financial information consolidated, updated and maintained by the Fee-Based
Information Providers that make the information available. On the other hand,
the body of information available to end-users who obtain access only to the
near real-time financial data available through the Display.IT software is
static -- i.e., there is a set number of Web sites that the software will access
to obtain financial information. In order to have the number of Web sites that
the Display.IT software will access increased, end-users must pay for software
upgrades which will be periodically released by the Company. An end-user who
does not obtain Fee-Based Information or purchase software upgrades generally
will not have access to financial information regarding, for instance, new
issues of equity securities. BT currently provides limited customer support
services to Display.IT end-users and the Company is seeking to enter into an
agreement with BT whereby BT, pursuant to service contracts, would offer varying
levels of expanded customer support to Display.IT end-users. It is currently
anticipated that certain of the service contracts offered would entitle
Display.IT end-users to software upgrades at no cost (other than that of the
service contract). See "Item 1. Description of Business -- Products and Services
- -- Customer Support" and "-- Preliminary Arrangements."
The Company anticipates that it will generate revenues from, among
other things, sales of the Display.IT software, and that sales will be made
pursuant to license agreements. See "Item 1. Description of Business --
Development Stage Company; Expectation of Losses; Negative Cash Flows," "--
Intellectual Property" and "Item 9. Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Other Operating Income."
Delivery Mechanism. Generally, providers of access ("access providers")
to the Web utilize infrastructures that often include public telephone lines.
When an end-user connected to the Web via such an access provider accesses a Web
site connected to the Web by an access provider utilizing a different
infrastructure, the information retrieved by the end-user undergoes a series of
"hops" from one infrastructure to the next until it reaches the infrastructure
of the access provider through which the end-user is connected to the Web. The
hops that the information undergoes do not follow a predictable path, and it is
possible for information to travel thousands of miles through the Web to get to
an end-user located only a short distance from the Web site accessed. The
combination of these factors -- i.e., hopping and the use of public telephone
lines -- can lead to delays in the transmission of information to the end-user.
In order to minimize transmission delays which could compromise the
value of the real-time and near real-time financial data delivered to end-users
by the Display.IT software, the Company is connected to the Web through BT, an
access provider utilizing the Concert InternetPlus infrastructure. BT, through a
series of peering agreements with other premium
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Internet access providers, has created a global infrastructure, Concert
InternetPlus, that reduces hops. The Concert InternetPlus infrastructure
utilizes international private leased circuits ("IPLCs") of high-bandwidth for
the transmission of information through the Web. These IPLCs generally have
fewer users than public telephone lines and their high-bandwidth allows for
great resiliency, which generally results in significantly faster information
transmission among end-users and Web sites connected to Concert InternetPlus,
regardless of the distance between them.
The Company seeks to educate its end-users as to the decreased
information transmission times that generally can be achieved when they connect
to the Web through access providers utilizing the Concert InternetPlus
infrastructure. The Company anticipates that by educating its end-users in this
way, they will be more likely to take advantage of the efficiency of the Concert
InternetPlus infrastructure which should result in increased end-user
satisfaction with the Display.IT software. The Company is seeking to enter into
agreements with BT and other access providers providing access to the Web via
the Concert InternetPlus infrastructure that would reduce the cost associated
with access to the Web through such companies to both Display.IT and its
end-users. See "Item 1. Description of Business -- Preliminary Arrangements."
The Company has an understanding (the "CellNet Understanding") with
CellNet, a telecommunications company that owns and operates one of the two
mobile telephone networks in the United Kingdom and which allows for mobile
connectivity to the Concert InternetPlus infrastructure. Pursuant to the CellNet
Understanding, the Company is to encourage its end-users who require mobile
connectivity to the Internet to utilize the CellNet network in order to obtain
such connectivity, and, in return, CellNet is to pay a percentage of all
revenues generated by it in connection with the Display.IT software to the
Company. Management expects that within the next few months the Company will
enter into a definitive written agreement with CellNet based on the CellNet
Understanding. However, no assurance can be given that the Company will be
successful in entering into such a written agreement, or, in the event such a
written agreement is entered into, that such agreement will be on terms similar
to those of the CellNet Understanding. See "Item 9. Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Other Operating
Income."
Access to Third Party Data. The Company utilizes the Internet access
and transmission services offered by telecommunications companies to provide a
medium for the delivery to end-users of financial data and news developed or
compiled by certain originators and other information providers. Some of these
information providers supply a wide range of real-time price and analytical
information to their subscribers. This data is available through the Display.IT
software to end-users.
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Management believes that, prior to the introduction of the Display.IT
software, data providers have had three choices to deliver information to
customers. First, like Reuters, Telerate and Bloomberg have done, they have had
the option of developing their own non-Internet data delivery mechanism, which
management believes, in certain instances, may be expensive and time consuming.
Second, they have been able to provide their data through one or more
other information providers with existing delivery mechanisms, such as Reuters,
Telerate and Bloomberg. This method enables only end-users who pay the
information provider with the existing delivery mechanism for service to access
the information desired. In addition, in order to obtain the desired
information, the end-user, in most instances, must have a dedicated information
feed and special computer terminal installed.
Third, they have been able to establish their own Internet Web sites
allowing end-users to display financial data in the form presented. Generally,
end-users obtaining financial data from these Web sites cannot store and
manipulate the data accessed to develop, among other things, graphs and
spreadsheets. In addition, management believes that, to date, financial data Web
sites have not provided a standardized display mechanism.
Display.IT has developed a fourth method for the delivery of financial
data to end-users. By utilizing the existing, well-developed infrastructure of
the Internet, the Company has avoided the cost of having to develop its own data
delivery mechanism, thereby allowing it to deliver real-time and near real-time
financial data and financial news to its end-users free of charge (not including
the cost of the software and any upgrades). Management believes that use of the
Internet as a delivery mechanism also allows data providers disseminating
real-time financial data through the Display.IT software to charge lower rates
to Display.IT's end-users accessing such data than those charged by information
providers using their own non-Internet data delivery mechanisms for the
provision of real-time financial data to end-users. No assurance can be given,
however, that data providers delivering real-time financial data via the
Display.IT software will charge lower rates to end-users than would be charged
by data providers delivering such data via proprietary delivery mechanisms.
The Company has entered into agreements with IDEA, S&P ComStock and
EMD, and has an understanding with Green Eye (the "Green Eye Understanding"),
pursuant to which end-users will be granted access through the Display.IT
software to the real-time financial data and other financial information
consolidated by those information providers. In order to obtain Fee-Based
Information from any of the Fee-Based Information Providers, Display.IT
end-users enter into agreements with the Fee-Based Information Provider or
Fee-Based Information Providers whose
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information they wish to obtain pursuant to which the end-users pay fees
directly to the Fee-Based Information Provider or Fee-Based Information
Providers for access to its or their information. Each of the agreements between
the Company, on the one hand, and IDEA, S&P ComStock and EMD, on the other, and
the Green Eye Understanding, obligate the Fee-Based Information Providers to pay
to the Company a percentage of the fees they receive in connection with the
Fee-Based Information accessed via the Display.IT software. Display.IT intends
to seek to enter into similar agreements with additional real-time financial
data providers and providers of other types of value-added financial data and
information. See "Item 1. Description of Business -- Preliminary Arrangements,"
"-- Development Stage Company; Expectation of Losses; Negative Cash Flows" and
"Item 9. Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Other Operating Income." With respect to the Green Eye
Understanding, management expects that within the next few months the Company
will enter into a definitive written agreement with Green Eye based on the Green
Eye Understanding. However, no assurance can be given that the Company will be
successful in entering into such a written agreement, or, in the event such a
written agreement is entered into, that such agreement will be on terms similar
to those of the Green Eye Understanding.
The Company is seeking to generate an additional source of recurring
revenue in connection with information providers by pursuing an agreement with
an Internet access provider pursuant to which the access provider would pay a
royalty or finder's fee to the Company for each information provider that, on
the Company's recommendation, agrees to transmit data via the Internet through
the access provider. As of December 31, 1996, no such agreement had been entered
into. See "Item 1. Description of Business -- Preliminary Arrangements," "--
Development Stage Company; Expectation of Losses; Negative Cash Flows" and "Item
9. Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Other Operating Income."
Customer Support
The Company has entered into an agreement with BT whereby BT has agreed
to provide the Company's end-users with help desk and other technical support
services during normal office hours in the United Kingdom (i.e., 8:00 a.m. to
5:30 p.m. United Kingdom local time). End-users seeking help at other times have
the option of leaving a message to which BT will respond during its normal
office hours.
The Company is seeking to enter into another agreement with BT pursuant
to which BT would agree to offer a range of service contracts to Display.IT
end-users so that the end-user may select the level of service most appropriate
to their needs. For example a busy global trading floor may require 24-hour
support,
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<PAGE>
whereas an occasional user may prefer to pay for services as needed by incurring
premium rate telephone charges, such as "900" services. It is anticipated that
this agreement will require BT to pay the Company a portion of the revenues that
it generates from the sale of service contracts, although no assurance to that
effect can be given. See "Item 1. Description of Business -- Preliminary
Arrangements," "-- Development Stage Company; Expectation of Losses; Negative
Cash Flows" and "Item 9. Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Other Operating Income."
Principal Markets
Professional
Real-Time Financial Data. Based on research conducted by Waters, as of
December 31, 1995, the world wide market for financial screens among
professionals, including PCs, workstations and other proprietary hardware, was
estimated to be about 760,000 screens. Securities dealers, brokers and analysts
and other financial professionals obtain real-time financial data and other
information with respect to stocks, bonds, currencies, commodities and futures
through these screens. Historically, these financial screens have been displayed
on either special purpose computer terminals installed by real-time financial
data providers, such as Reuters and Bloomberg, or networked PCs to which
real-time financial data is distributed through in-house servers.
Management believes that end-users can access real-time financial data
through the Display.IT software for less cost than they can from real-time
financial data providers that use dedicated information feeds and special
computer terminals to deliver and display their information. Management believes
that these information providers must take into account the costs associated
with the development and maintenance of a non-Internet delivery mechanism and
installation of dedicated information feeds and special computer equipment in
determining what to charge end-users of their information. A real-time financial
data provider allowing for access to its data via the Display.IT software incurs
none of these costs as it uses the Internet as its delivery mechanism (which
obviates the need for a dedicated information feed) and the information is
displayed on an ordinary PC with the Display.IT software installed.
Management believes that it is also less costly to access real-time
financial data through the Display.IT software than through an in-house server
and networked PCs. In-house servers require the utilization of floor space
(which is generally expensive and can often be put to more efficient use) and a
Management Information Systems ("MIS") Department to monitor and maintain them.
Management believes that these costs can be reduced when real-time financial
data is accessed through the Display.IT software because the software can be
directly
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<PAGE>
installed in a number of PCs (and thus does not need to be distributed by an
in-house server), and all maintenance of the software can be handled by BT
pursuant to service contracts, which management believes generally entail less
cost than establishing and maintaining an MIS Department. An additional
advantage associated with not routing real-time financial data through in-house
servers is that at times of peak information demand, the servers can become
overloaded which can lead to delays in the delivery of real-time financial data
to end-users.
End-users may also incur less cost by accessing real-time financial
data through the Display.IT software than by accessing such data by either of
the other two methods because they will be able to avoid the duplication of
exchange fees. Typically, an originator of real-time financial data, such as a
stock exchange or the Nasdaq Stock Market, charges fees for the use of such
data. These fees are generally assessed by the originator with respect to each
financial screen displaying such data. If an end-user of real-time financial
data displays data captured by a particular originator on special computer
terminals installed by more than one data provider, the end-user is typically
assessed fees with respect to each screen on which the data is displayed. The
Display.IT software avoids any duplication of exchange fees by allowing
end-users to access real-time financial data delivered by multiple data
providers on one PC.
Management believes that the delivery of real-time financial data via
the Display.IT software offers professional end-users advantages in addition to
cost savings. When using PC networks to distribute financial screens,
custom-designed software packages are required to manage and display the data,
which may be developed or compiled from various sources. Management believes
that these software packages often cause financial data to be presented in
nonstandard formats or formats that are not familiar to professional end-users.
Management believes that the Display.IT software, by presenting the screens in a
standard format that management believes is familiar to financial professionals,
offers such end-users the advantages associated with reduced training
requirements and increased operator efficiency.
Also, the Display.IT software gives end-users the capability to access
real-time financial data from outside of the office. In order to obtain
financial data through the Display.IT software, the end-user need only be able
to connect to the Internet. Lap-top computers can be equipped with cellular
phone lines and access to the Internet can be obtained through such phone lines
from practically anywhere. Real-time financial data providers that utilize
dedicated information feeds and special computer equipment for the delivery of
their information cannot offer this degree of accessibility as their terminals
are not mobile and their delivery mechanisms cannot be accessed through cellular
phone lines.
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<PAGE>
For these reasons, management believes, but cannot assure, that
Display.IT will be able to capture a portion of the professional market for
financial screens from companies providing real-time financial data through
dedicated information feeds and special computer equipment and through in-house
servers to networked PCs. In addition, management believes that the relatively
low cost of obtaining real-time financial data through the Display.IT software
makes it marketable to professional end-users who traditionally did not have
access to such data. It is anticipated that this marketability could lead to the
expansion of the professional market for real-time financial data screens. No
assurance to this effect can be given, however.
Near Real-Time Financial Data. In addition to the professional market
for access to real-time financial data, research conducted by Waters indicates
that there is demand for screen-based financial data from employees (typically
middle and back office, management and analysts) of financial and related
institutions who do not require real-time financial data, and do not merit its
expense. Management believes, but cannot assure, that the Company can obtain a
share of this segment of the professional market because of the low data costs
associated with, and the professional display format utilized by, the Display.IT
software in connection with its provision of near real-time financial data to
end-users.
Consumer
Management believes that consumers who own PCs and who are interested
in their personal savings and investment represent a potential market for the
Display.IT software. The Display.IT software organizes and displays near
real-time financial data freely available over the Internet from numerous
sources, and real-time financial data delivered through the Internet for a
charge, in a format convenient and intuitive for the household end-user. The
Display.IT software is Microsoft accredited and compliant and therefore
compatible with any PC running under Windows 95 or Windows NT. The Company has
developed the Display.IT software to be Microsoft compatible so that end-users
would have the ability to include financial data, such as stock, bond and mutual
fund prices, delivered to the end-user via the software in a database and to use
other Microsoft applications to manipulate the data in order to, among other
things, develop graphs and spreadsheets. As of December 31, 1996, the data
storage and manipulation feature was still undergoing testing and not available
to end-users. See "Item 1. Description of Business -- Risks of New Product
Development."
The Company anticipates that while a market among sophisticated
consumers will develop for real-time financial data delivered through the
Display.IT software, the greatest demand for the Display.IT software among
consumers will emanate from consumers interested only in obtaining access to the
near real-time financial data and news delivered by the software.
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<PAGE>
Distribution
The Company anticipates that sales and distribution to end-users of the
Display.IT software will be conducted through resellers that generally have
distribution networks in place and access to wide customer bases to whom they
can market the Display.IT software. In order to target both the professional and
consumer markets, the Company is currently negotiating with five types of
companies -- hardware manufacturers, software distribution companies,
telecommunications providers, marketing companies and consultants -- in order to
reach agreements for the purchase by such companies of Display.IT software for
resale. Management intends to enter into agreements with resellers whereby the
resellers agree to commit to purchase a certain number of Display.IT software
packages per year for resale, although it realizes that alternative arrangements
may be necessary. See "Item 1. Description of Business -- Preliminary
Arrangements."
The Company has identified and had discussions with certain companies
within each of the five aforementioned categories and management believes that
significant interest in the product exists. On November 24, 1996, the Company
entered into a cooperation and distribution agreement with the Marketing Company
pursuant to which the Marketing Company has agreed to serve as a non-exclusive
distributor of Display.IT software. The agreement gives the Marketing Company
the right to sell the software via the Internet, telemarketing and direct field
sales, and to receive as a sales commission a percentage of the price for which
each Display.IT software package is sold. The initial term of the agreement is
one year and it is to continue thereafter for successive one-year renewal terms,
until terminated by either party on not less than three months' prior written
notice effective on the expiration of the initial term or then current renewal
term. The agreement may also be terminated by either party by delivering written
notice to the other not less than 90 days before the end of the first six months
of the initial term (effective 90 days after such six month period), or in
connection with certain occurrences such as a change of control, bankruptcy,
insolvency or default of the other party. In order to accomplish Internet sales,
the Marketing Company will maintain a Web site through which the Display.IT
software can be ordered and downloaded over the Internet directly to the
end-user's PC. The Company's Web site has a button which, when pushed, gives
end-users interested in purchasing the Display.IT software access to the
Marketing Company's Web site.
In January 1997, the Company entered into a distributorship agreement
with IDEA, pursuant to which IDEA agreed to serve as a non-exclusive distributor
of Display.IT software. The initial term of the agreement is three years with an
automatic three-year renewal term. The agreement is terminable by either party
on not less than six months' prior written notice to the other, or in connection
with the happening of certain specified events such as
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<PAGE>
the bankruptcy, insolvency or default of the other party. The terms of the
agreement obligate IDEA to purchase a minimum of 50,000 Display.IT software
packages, at an agreed upon price, for resale to end-users over the course of
the first year of the agreement. Thereafter the parties are to agree to a
minimum number of Display.IT software packages to be purchased by IDEA for each
year that the agreement remains in effect.
In addition, the Company has been engaged in discussions with several
other resellers contemplating the purchase of Display.IT software for resale
through retail channels and directly to end-users. See "Item 1. Description of
Business -- Preliminary Arrangements."
Management believes that by outsourcing marketing activities the
Company will be able to reduce product marketing costs and concentrate its
marketing efforts on procuring real-time financial data providers and providers
of other types of value-added financial information, from which management
anticipates Display.IT will derive a large portion of its recurring revenues.
Typically, data providers consolidating real-time financial data and other types
of value-added financial information will pay a proportion of revenues generated
in connection with the Display.IT software to Display.IT. These types of data
providers are numerous, and a senior executive has been recently recruited to
develop income from them. See "Item 1. Description of Business -- Products and
Services -- Display.IT Software -- Access to Third Party Data," "-- Development
Stage Company; Expectation of Losses; Negative Cash Flows" and "Item 9.
Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Other Operating Income."
Preliminary Arrangements
The Company is seeking to enter into agreements with a variety of
vendors and service providers in an effort to enhance the marketability of the
Display.IT software and to market the Display.IT software to end-users. Included
in those agreements the Company is seeking to enter into with third parties are:
(i) agreements whereby real-time financial data providers and providers of other
types of value-added financial information would offer access to their
information via the Display.IT software for a charge to end-users and pay a
portion of the charges received to the Company, (ii) agreements with Internet
access providers utilizing the Concert InternetPlus infrastructure for less
expensive connection to the Internet for the Company and its end-users, (iii)
agreements with resellers for purchase of the Display.IT software for resale,
(iv) an agreement with an access provider for royalties or finder's fees to be
paid to the Company with respect to each information provider that, on the
Company's recommendation, agrees to connect to the Internet via the access
provider, and (v) an agreement with BT whereby BT would offer a range of service
contracts to Display.IT end-users and pay a portion of the revenues received
-14-
<PAGE>
in connection therewith to the Company. There can be no assurance that the
Company will be successful in entering into any of these agreements or other
agreements upon which the success of the Company's business and its prospects
may depend or may, in the future, come to depend. Furthermore, even if the
Company is able to enter into such agreements, there can be no assurance that
the terms of such agreements will be favorable to the Company or permit it to
operate profitably.
Risks of New Product Development
The Company has only recently introduced the Display.IT software and
thus there can be no assurance that, despite testing by the Company and
potential customers, errors will not be found in the software, or, if
discovered, successfully corrected in a timely and cost-effective manner.
Moreover, with respect to enhancements of the Display.IT software, such as the
data storage and manipulation feature, and any future products that may be
developed by the Company, no assurance can be given that the Company will not
experience difficulties that could delay or prevent the successful development,
introduction and marketing of such enhancements and products. In the event
errors in the Display.IT software are discovered and not corrected on a timely
and cost-effective basis, or, if the development, introduction and marketing of
product enhancements and new products is hindered by difficulties of a technical
nature or otherwise, the Company's operating results and financial condition
could be materially adversely affected.
Development Stage Company; Expectation of Losses; Negative Cash Flows
The Company was founded in June 1995 and, as a development stage
company, has not yet generated revenues in connection with the Display.IT
software. As of December 31, 1996, the Company had cumulative net losses since
inception of (pound sterling)848,073, and the Company expects to continue to
incur losses and negative cash flow for an indeterminate period of time in the
future. No assurance can be given that the Company will be able to generate
revenues in connection with the Display.IT software or any other products that
it may develop, or, that if it does, as to the amount, sources or composition of
such revenues. Whether or not revenues will be generated in connection with such
products will be largely dependent upon matters beyond the control of the
Company, including, without limitation, product acceptance, technological
evolution, competition, global economic conditions, taxes, the availability of
(and ability to retain) the services of talented personnel and the possibility
of future restrictive governmental regulation of the financial information
industry. In the event revenues are generated in connection with the Display.IT
software and any future products, there can be no assurance that such revenues
will be sufficient to allow the Company to operate profitably or become cash
flow positive at any time in the future.
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<PAGE>
Composition of Total Sales and Revenue
A working model of the Display.IT software was completed in late April
1996, and the product has been available for sale since late November 1996. In
the approximately ten weeks between the date on which the Display.IT software
was made available to the public and the date of this Registration Statement,
the Company had not yet generated any revenues from, or in connection with, the
sale of Display.IT software. See "Item 1. Description of Business -- Development
Stage Company; Expectation of Losses; Negative Cash Flows" and "Item 9.
Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Other Operating Income."
Research and Development Policy
Display.IT Limited was continuously engaged in research and development
in order to create the Display.IT software from early January 1996 to June 20,
1996, when Display.IT Limited was acquired by Display.IT Holdings. The Company
continued that effort until late November 1996, when the development and testing
of the Display.IT software was completed. Since November 1996, the Company has
continued to make research and development expenditures in an effort to keep the
Display.IT software current with evolving technology, to enhance and improve
upon the Display.IT software and to design new products related to and/or based
on the Display.IT software. See "Item 1. Description of Business -- Risks of New
Product Development," "Item 9. Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Research and Development" and "--
Development Costs."
The Company, pursuant to a software development agreement, retained a
software development firm to assist in the development of the Display.IT
software. The Company anticipates that it will retain the same and/or other
software development firms to assist in the development of any enhancements and
improvements to the Display.IT software and any new software products, although
no assurances to that effect can be given.
The following table sets forth the estimated amount spent by Display.IT
Limited and/or the Company, as applicable, in each of 1995 and 1996, on
company-sponsored research and development:
Research and
Development Expenditures(Pound Sterling)
----------------------------------------
Year Ended December 31, 1995 --
January 1, 1996 to December 31, 1996 312,223
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<PAGE>
Intellectual Property
Display.IT holds all relevant intellectual property rights to the
Display.IT software and source code. These rights are held by Display.IT either
as owner or as licensee in relation to third party components included in the
software.
Display.IT relies primarily on a combination of copyright, trademark
and trade secret laws, as well as confidentiality agreements and contractual
protection to protect its proprietary rights in the software and source code.
The Display.IT software is sold pursuant to software license
agreements, which, in most cases, grant end-user customers a non-exclusive,
non-transferable license to use the software and contain terms and conditions
prohibiting the unauthorized reproduction or transfer of the software. In
addition, the Company's key employees and distributors are required to give
confidentiality undertakings with respect to the Display.IT software. Despite
these protective measures, it may be possible for unauthorized third parties
(including competitors) to copy aspects of the Company's product or to obtain
the use of information that the Company regards as confidential and proprietary.
Any such misappropriation could have an adverse material effect on the Company's
operating results and financial condition.
The Company does not believe that the Display.IT software infringes
upon the proprietary rights of any third parties. There can be no assurance,
however, that one or more third parties will not make a contrary assertion. The
cost of responding to any such assertion may be material, regardless of whether
or not there is merit to the assertion.
Employees
As of December 31, 1996, the Company had four employees, all of whom
were based in the United Kingdom. None of the Company's employees is a member of
any union and thus the Company is not party to any collective bargaining
agreements.
The Company recognizes the contribution of committed and well-motivated
employees, who are rewarded through the Display.IT Holdings Share Option Scheme.
Employee participation in the Company is encouraged and all of the Company's
employees are option holders. See "Item 12. Options to Purchase Securities from
Registrant or Subsidiaries -- Share Option Scheme."
Management believes that relations with its employees are generally
good.
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<PAGE>
Competition
The Company faces competition from other information providers such as
Bloomberg, Knight-Ridder Financial Inc., Reuters and Telerate, all of which have
significantly greater financial, marketing and technical resources than the
Company. Display.IT differentiates itself from these companies by, to
management's knowledge, being the only such company that provides access to near
real-time and real-time financial data and other financial information
consolidated by numerous sources using the Internet as the delivery mechanism,
and displays such data in a consistent format. A number of the Company's
competitors provide special computer terminals for the display of data as well
as the data feeds that supply the terminals with information. Management
believes that these competitors have a vested interest in limiting the data
available on their terminals to the data they compile (for which they receive
revenues) and noncompetitive data from other data providers that usually pay
them substantial royalties. The Company is aware of data providers, including
Bloomberg and Reuters, that are developing products to supply financial data
over the Internet; however, as of December 31, 1996, none of these products was
available.
In the event these competitive products reach the market, management
believes that Display.IT will remain in a favorable position due to its delivery
of financial data consolidated from numerous sources. Display.IT does not
provide or re-publish any financial data, and as a result of its seeking to
enter into agreements with real-time financial data providers and providers of
other types of value-added financial information in addition to the Fee-Based
Information Providers, the Company anticipates that the choice of data available
to Display.IT software users will escalate, rather than being tied to one
particular source of data which is often the case with the solutions offered by
other information providers. See "Item 1. Description of Business -- Preliminary
Arrangements." There can be no assurance, however, that the competitive products
of which management is aware, or other competitive products, will not render the
Display.IT software obsolete, be perceived by end-users to be superior to the
Display.IT software or otherwise obtain greater market acceptance than the
Display.IT software, in the event such products reach the market. The occurrence
of any such event would likely have a material adverse effect on the Company's
operating results and financial condition.
In addition to the competitors discussed above, the Company faces
competition from a number of other financial information providers that utilize
various media other than the Internet and similar methods of information
transmission in order to make their information available to end-users. For
example, consumers interested in stock quotes and related financial data can
obtain access to such information from a variety of sources including television
and newspapers (information obtained from these
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sources, however, will generally not be as current as the information provided
by the Display.IT software).
Item 2. Description of Property.
The Company currently occupies approximately 1,250 square feet of
administrative, marketing and research and development space at 46 Cannon
Street, London EC4N 6JJ pursuant to an agreement to enter into a lease. The
property serves as the principal executive offices for the Company. The Company
pays approximately (pound sterling)3,230 per month in rent and service charges
for this space.
Management is in the process of negotiating a lease for the space. It
is anticipated, but no assurances can be given, that the terms of the lease will
include, among other things, monthly rent and service charges in the same amount
as the Company is currently paying for the space and an expiration date of June
1, 2009, subject to the unilateral right of the Company to terminate on either
June 24, 2001 or June 24, 2004 on six months' notice to the lessor. Management
anticipates, but cannot assure, that there will be no option to extend the term
of the lease.
Item 3. Legal Proceedings.
Solicitors to Reuters wrote to the Company on September 13, 1996
alleging that Display.IT's product infringed Reuter's copyright and was being
passed off as being connected in the course of trade with Reuters. The letter
threatened legal action within 14 days unless certain undertakings were given.
Display.IT vigorously denies Reuters' allegations. A detailed rebuttal of the
allegations has been made, and, as of December 31, 1996, no legal action had
been taken by Reuters in relation to its threat against Display.IT.
Management believes that the main purpose of Reuters' allegations was
to seek to exclude Display.IT from the market either temporarily or permanently.
Accordingly, on October 25, 1996, the Company submitted a complaint to the
European Commission in Brussels, Belgium which sets out Display.IT's argument
that Reuters' allegations are unfounded and Display.IT's belief that certain of
Reuter's business practices may infringe the competition rules of the European
Union.
Item 4. Control of Registrant.
As far as known to management, Display.IT Holdings is not directly or
indirectly owned or controlled by another corporation or by any foreign
government.
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The following table sets forth the number of, and the percentage of the
then outstanding, Ordinary Shares owned as of January 31, 1997 by (i) any person
known by the Company to be the owner of more than 10 percent of the Ordinary
Shares, the sole class of Display.IT Holdings' voting securities, and (ii) the
officers and directors of Display.IT Holdings as a group:
Identity of Number of Ordinary Percent
Person or Group Shares Owned of Total(1)
--------------- ------------------ -----------
Peter Levin 10,000,000 65.59%
All officers and
directors as a group 10,000,000 65.59%
- ----------
(1) Based on 15,246,720 Ordinary Shares outstanding on January 31, 1997.
For information concerning the number of Ordinary Shares under option
held by directors and officers of the Company, see Item 12. Options to Purchase
Securities from Registrant or Subsidiaries.
As of January 31, 1997, there were no arrangements known to the
Company, the operation of which may at a subsequent date result in a change in
control of Display.IT Holdings.
Item 5. Nature of Trading Market.
As of December 31, 1996, the only non-United States trading market for
the Ordinary Shares was OFEX, through which the Ordinary Shares have been
qualified for trading since June 28, 1996. Prior to such date, there was no
public market for the Ordinary Shares. OFEX is an off-exchange mechanism for
London Stock Exchange member firms to deal between each other to effect trades
in the securities of certain companies. J.P. Jenkins, LTD. ("J.P. Jenkins")
operates OFEX and serves as its only market maker. J.P. Jenkins generally makes
a market only in those securities in which at least a moderate level of investor
interest is expressed, and it usually sets a bid and offer price, based on a
fixed spread, for the securities in which it makes a market. As of January 9,
1997, the spread for the Ordinary Shares was 20 pence.
Over the course of the second (beginning on June 28) and third quarters
of 1996, the extent of trading in the Ordinary Shares was very limited. Over the
course of the fourth quarter of 1996 and the first quarter of 1997 (ending
January 31), however, the extent of trading in the Ordinary Shares increased to
a level where approximately 5,000 to 10,000 Ordinary Shares changed hands daily.
There can be no assurance that this level of trading will be sustained.
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As of December 31, 1996, there was no United States trading market for
the Ordinary Shares or the ADSs. Display.IT Holdings, however, intends to apply
to have its ADSs, each representing one Ordinary Share, listed on the Nasdaq
SmallCap Market ("Nasdaq"). Management anticipates that The Bank of New York
will serve as the depositary for the ADSs which will be evidenced by ADRs. In
the event application for listing the ADSs on Nasdaq is made, there can be no
assurance that such application will be accepted. In addition, there can be no
assurance that an active trading market for the ADSs in the U.S. will develop or
be sustained.
The prices set forth in the following table represent the high and low
averages of the bid and offer prices set by J.P. Jenkins for the Ordinary
Shares, for each full quarterly period since the Ordinary Shares became
qualified for trading on OFEX on June 28, 1996:
<TABLE>
<CAPTION>
Price per Ordinary Share
Year ended -------------------------------------
December 31, High Low
------------ ---- ---
1996
- ----
<S> <C> <C>
Second Quarter (beginning June 28) (pound sterling)0.54 (pound sterling)0.40
Third Quarter (pound sterling)0.76 (pound sterling)0.55
Fourth Quarter (pound sterling)5.60 (pound sterling)0.70
1997
- ----
First Quarter (ending January 31) (pound sterling)8.09 (pound sterling)5.57
</TABLE>
To the knowledge of the Company, as of January 31, 1997, approximately
385,000 Ordinary Shares, or approximately 2.53% of all Ordinary Shares
outstanding on such date, were held in the United States by approximately 35
accounts in the United States.
Item 6. Exchange Controls and Other Limitations Affecting Security Holders.
There is currently no U.K. law, decree or regulation which restricts
the export or import of capital, including, but not limited to, U.K. foreign
exchange controls, or that affects the remittance of dividends (except as
otherwise set forth under Item 7. "Taxation") or other payments to nonresident
holders of the Ordinary Shares or ADSs.
Members of Display.IT Holdings entitled to vote on matters affecting
Display.IT Holdings generally do so in person or by proxy at annual or
extraordinary general meetings. The Articles of Association of Display.IT
Holdings provide that notice shall
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be given in connection with either type of meeting, however, such Articles also
provide that any member who has failed to supply Display.IT Holdings with an
address within the U.K. for the service of notices shall not be entitled to
receive notices from Display.IT Holdings. Other than as set forth above in this
paragraph, there are no limitations under U.K. law or Display.IT Holdings'
Memorandum or Articles of Association on the right of nonresident or foreign
owners to hold or vote the Ordinary Shares or ADSs.
Item 7. Taxation.
U.K. Income Tax
The following discussion of taxation is intended only as a descriptive
summary, and it does not purport to be a complete technical analysis or listing
of all potential tax effects relevant to the Ordinary Shares or ADSs. The
statements of U.K. and U.S. tax law set forth below are based (i) on the laws of
the U.K., the U.K. Inland Revenue practice and published Statements of Practice,
the U.S. Internal Revenue Code of 1986, as amended, applicable Treasury
Regulations and administrative and judicial interpretations thereof in force as
of the date of this report and (ii) in part on representations of the Depositary
and assumes that each obligation in the deposit agreement among Display.IT
Holdings, the Depositary and the holders from time to time of ADRs and any
related agreement will be performed in accordance with its terms. The statements
herein are subject to any changes occurring after the date of this report in
U.K. or U.S. law, or in the double taxation conventions between the United
States and the United Kingdom with respect to income and capital gains taxes
(the "Income Tax Convention") and with respect to estates and gifts taxes (the
"Estate Tax Convention").
When paying a dividend, Display.IT Holdings is generally required to
account to the U.K. Inland Revenue for an advance payment of corporation tax
("ACT"). The rate of ACT for dividends paid in the year to April 5, 1996 was 1/4
of the cash dividend paid. A UK resident individual holding an Ordinary Share or
ADR and in receipt of a dividend from Display.IT Holdings will be liable for
income tax on an amount equal to the sum of the cash dividend paid to him plus a
tax credit equal to 1/4 of the amount of the cash dividend. The tax credit is
available to be set off against the individual's tax liability on the dividend
and may in appropriate cases be refunded to him.
Under the current Income Tax Convention, a U.S. resident individual or
corporate holder of an Ordinary Share or ADR who or which satisfied the
following conditions (an "Eligible U.S. Holder"):
(i) is resident in the United States for the purposes of the
Income Tax Convention (and, in the case of
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<PAGE>
a corporation, not also resident in the United Kingdom for
U.K. tax purposes);
(ii) is not a corporation which, alone or together with one or more
associated corporations, controls, directly or indirectly, 10%
or more of the voting stock of Display.IT Holdings;
(iii) whose holding of the Ordinary Shares or ADRs is not
effectively connected with a permanent establishment in the
United Kingdom through which such holder carries on a business
or with a fixed base in the United Kingdom from which such
holder performs independent personal services; and
(iv) under certain circumstances, is not an investment or holding
company 25% or more of the capital of which is owned, directly
or indirectly, by persons that are neither individual
residents nor citizens of the United States,
will generally be entitled under the current Income Tax Convention to receive,
in addition to any dividend paid by Display.IT Holdings, an amount equal to the
tax credit available to U.K. resident shareholders in respect of such dividend,
but subject to withholding tax equal to 15% of the sum of the dividend paid and
the tax credit.
For example with the tax credit at the rate of 1/4 of the cash
dividend, a dividend of (pound sterling)80.00 will entitle such a holder to
receive, upon compliance with the refund procedures described below an
additional payment of (pound sterling)5.00 (i.e., the tax credit of (pound
sterling)20.00 less withholding tax of (pound sterling)15.00). The refund may
not be available in certain circumstances if the holder is exempt from U.S. tax
on the dividend received.
Arrangements have been made by the Depositary so that, subject to
certain exemptions, the tax credit will be refunded, net of the withholding tax,
to a U.S. ADR holder if the ADR holder completes the declaration on the reverse
of the dividend check and presents the check for payment within three months
from the date of issue of the check. The exceptions include certain investment
or holding companies.
ADR holders who do not satisfy the foregoing requirements, and holders
of Ordinary Shares, must, in order to obtain a refund of tax credit (net of the
withholding tax), file in the manner and at the time described in U.S. Revenue
Procedure 80-18, 1980-1 C.B. 623, and U.S. Revenue Procedure 81-58, 1981-2 C.B.
678, a claim for refund of tax credit identifying the dividends with respect to
which the tax credit was paid. Claims for refund of tax credit must be made
within six years of the U.K. year of assessment (the 12-month period ending
April 5 in each year) in which the related dividend was paid. The first claim
for a
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refund of tax credit is made by sending the appropriate U.K. form in duplicate
to the Director of the Internal Revenue Service Center with which the holder's
last federal income tax return was filed. Forms may be obtained from the IRS
Assistant Commissioner (International), 950 L'Enfant Plaza South, S.W.,
Washington, D.C. 20024, Attention: Taxpayers Service Division. Because a refund
claim is not considered made until the U.K. tax authorities receive the
appropriate form from the Internal Revenue Service, forms should be sent to the
Internal Revenue Service well before the end of the applicable limitation
period. Any claim for refund of tax credit by a U.S. holder after the first
claim should be filed directly with FICO International, Fitzroy House, P.O. Box
46, Nottingham NG2 1BD, England.
Dividends (including amounts in respect of the tax credit and any
amounts withheld) must be included in gross income by a U.S. holder, and will
generally constitute foreign source "passive" or "financial services" income for
purposes of applying the foreign tax credit limitations. Such dividends will
generally not be eligible for the dividends received deduction allowed to U.S.
corporations. Subject to certain limitations, the applicable U.K. withholding
tax will be treated as a foreign tax eligible for credit against such holder's
U.S. federal income tax.
U.K. Taxation on Capital Gains
Under the current Income Tax Convention, the United States and the
United Kingdom each may, in general, tax capital gains in accordance with the
provisions of its domestic law. Under current U.K. law, residents of the United
States who are not resident or ordinarily resident in the United Kingdom will
not be liable for U.K. capital gains tax on capital gains made on the disposal
of their ADRs or Ordinary Shares unless those ADRs or Ordinary Shares are held
in connection with a trade carried on through a permanent U.K. establishment. A
U.S. holder of an ADR or Ordinary Share will be liable for U.S. federal income
tax on such gains to the same extent as on any other gains from sales of stock.
U.K. Inheritance Tax
Under the current Estate Tax Convention, ADRs or Ordinary Shares held
by an individual who for the purpose of the convention is domiciled in the
United States and is not a national of the United Kingdom will not, provided any
tax chargeable in the United States is paid, be subject to U.K. inheritance tax
on the disposal of ADRs or Ordinary Shares by way of gift or upon the
individual's death unless the ADRs or Ordinary Shares are part of the business
property of a permanent U.K. establishment of the individual or, in the case of
a holder who performs independent personal services, pertain to a fixed base
situated in the United Kingdom. In the exceptional case where the ADRs or
Ordinary Shares are subject both to United
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<PAGE>
Kingdom inheritance tax and to U.S. federal gift or estate tax, the Estate Tax
Convention generally provides for double taxation to be relieved by means of
credit relief.
U.K. Stamp Duty and Stamp Duty Reserve Tax
Transfer of ADRs will not be subject to U.K. stamp duty provided that
the transfer instrument is not executed in, and at all times remains outside of,
the United Kingdom.
Under the Finance Act of 1986, stamp duty or stamp duty reserve tax
("SDRT") at a rate of 1 1/2% is payable on all transfers to the Depositary, or
its nominee, of Ordinary Shares for inclusion in ADRs. Such stamp duty or SDRT
is calculated on the purchase price or market value of the Ordinary Shares so
transferred.
Item 8. Selected Financial Data.
The summarized financial data (expressed in pounds sterling) set out
below should be read in conjunction with "Item 9. Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Consolidated
Financial Statements of the Company and the Notes thereto included elsewhere in
this Registration Statement.
The selected financial data for the year ended December 31, 1996 and as
at December 31, 1996 have been extracted from, and are qualified in their
entirety by reference to, the audited Consolidated Financial Statements of the
Company and the Notes thereto included elsewhere in this Registration Statement,
which have been audited by Deloitte & Touche, independent auditors.
The Consolidated Financial Statements of the Company have been prepared
in accordance with U.K. GAAP, which differ in certain significant respects from
U.S. GAAP. The principal differences between U.K. GAAP and U.S. GAAP are
summarized in Note 20 to the audited Consolidated Financial Statements of the
Company.
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<PAGE>
Consolidated Profit and Loss Account Data (1)
<TABLE>
<CAPTION>
Company Display.IT Holdings
Year ended May 3, 1996 to
December 31, 1996 December 31, 1996
----------------- -------------------
(Pound Sterling) (Pound Sterling)
<S> <C> <C>
Amounts in accordance
with U.K. GAAP and U.S.
GAAP
Research and development (130,478) --
Administrative expenses (779,538) (26,003)
Other operating income 42,500 --
--------- -------
Operating loss (867,516) (26,003)
Interest receivable and
similar income 27,770 --
Interest payable and
similar charges (6,466) --
--------- -------
Loss on ordinary
activities before
taxation (846,212) (26,003)
Taxation (1,861) --
--------- -------
Loss for the year (848,073) (26,003)
========= =======
Loss per share (3) 6.75p
=========
Consolidated Cash Flow Statement Data (1)
Amounts in accordance
with U.K. GAAP
Net cash outflow from
operating activities (689,292) --
========= =======
Net cash outflow from
returns on investments
and servicing of finance (7,444) --
========= -------
Net cash outflow from
investing activities (324,673) --
========= =======
Net cash inflow from
financing 1,322,835 --
========= =======
</TABLE>
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<PAGE>
Amounts in accordance
with U.S. GAAP
Net cash used in
operating activities (681,848) --
========= =======
Net cash used in
investing activities (324,673) --
========= =======
Net cash provided by
financing activities 1,322,835 --
========= =======
Consolidated Balance Sheet Information
Amounts in accordance with U.K. GAAP and U.S. GAAP
Company Company (2)
December 31, December 31,
1996 1995
------------ ------------
(Pound Sterling) (Pound Sterling)
Fixed assets
Intangible assets 181,745 --
Tangible assets 133,072 --
Investments -- --
Current assets
Debtors 85,830 2
Cash at bank and in hand 316,314 --
--------- ---------
Total assets 716,961 2
Creditors: amounts falling
due within one year (256,057) --
--------- ---------
Equity shareholders' funds 460,904 2
========= =========
- -----------------
(1) The Company did not trade during the preceding financial period and
there were no cash flows. No profit and loss nor cash flow information
is therefore presented.
(2) Display.IT Holdings was incorporated on May 3, 1996 and, under merger
accounting principles, a comparative group balance sheet is presented.
See Note 1 to Notes to the Company's Consolidated Financial Statements.
(3) Under U.S. GAAP, the primary loss per share is 6.44p and the
fully diluted loss per share is 6.43p.
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<PAGE>
Dividends
The Company has not paid dividends on Ordinary Shares since inception.
It is currently anticipated that the Company will retain all of its earnings to
finance its operations and future growth and does not expect to pay any cash
dividends in the foreseeable future.
Exchange Rate Information
The table below sets forth, for the periods and dates indicated,
certain information concerning the exchange rate between pounds sterling and
U.S. dollars, based on the Noon Buying Rate for pounds sterling, expressed in
U.S. dollars per (pound sterling)1.00. Fluctuations in the exchange rate between
the pound sterling and the U.S. dollar will affect, among other things, the U.S.
dollar amount received by holders of ADRs on conversion by the Depositary of any
cash dividends paid in pounds sterling on the Ordinary Shares.
Period Period
Year ended December 31, High Low Average(1) End
- ----------------------- ---- --- ---------- ------
1992 . . . . . . . . . 2.0035 1.5095 1.7555 1.5130
1993 . . . . . . . . . 1.5900 1.4175 1.4965 1.4775
1994 . . . . . . . . . 1.6368 1.4615 1.5393 1.5665
1995 . . . . . . . . . 1.6440 1.5302 1.5803 1.5535
1996 . . . . . . . . . 1.7123 1.4948 1.5733 1.7123
- ---------------
(1) The average of the Noon Buying Rates on the last business day of each
full month during the period.
Item 9. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following discussion and analysis should be read in conjunction
with "Item 8. Selected Financial Data" and the Consolidated Financial Statements
of the Company and the Notes thereto included elsewhere in this Registration
Statement.
The Consolidated Financial Statements have been prepared in accordance
with U.K. GAAP, which differs in certain significant respects from U.S. GAAP. A
summary of the principal differences between U.K. GAAP and U.S. GAAP as they
relate to the Company is
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<PAGE>
included in Note 20 to the Consolidated Financial Statements of the Company.
The discussion below relates to the operations for the year ended
December 31, 1996 and is based upon the audited Consolidated Financial
Statements of the Company. The Company did not trade during the period ended
December 31, 1995.
Overview
Display.IT Limited, a wholly owned subsidiary of Display.IT Holdings,
develops, markets and supports Display.IT software, a software package which,
when installed in a PC, displays near real-time financial data and financial
news freely available via the Internet. The Display.IT software may also be used
to access real-time financial data and other types of value-added financial
information available for a charge from certain information providers through
the Internet.
The Display.IT software was under development throughout 1996 with a
working model being first available at the end of April of that year.
Development work continued until late November 1996 when the software became
available to end-users.
Development has continued since November 1996 and it is intended that
software upgrades will be released periodically over the course of the coming
years to keep the information available to end-users who obtain only near
real-time financial data and information through the Display.IT software
current, and to keep the product current with evolving technologies. End-users
will be charged for software upgrades. See "Item 1. Description of Business --
Products and Services -- Display.IT Software."
The Company has been actively marketing the product to resellers
throughout the year. As of January 31, 1997, the Company had entered into
agreements with two resellers for distribution of the Display.IT software and
was in the process of negotiating distribution contracts with a number of other
resellers. See "Item 1. Description of Business -- Operations," "--
Distribution" and "-- Preliminary Arrangements."
Company Structure
Display.IT Holdings was incorporated on May 3, 1996 and acquired the
entire share capital of Display.IT Limited on June 20, 1996 in exchange for the
issuance to Peter Levin of 10,000,000 Ordinary Shares of Display.IT Holdings.
See "Item 1. Description of Business -- General Development of Business" and
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<PAGE>
"Item 13. Interest of Management in Certain Transactions -- Acquisition of
Display.IT Limited Shares."
Display.IT Holdings and Display.IT Limited have been consolidated using
merger accounting principles as discussed in Note 1 of Notes to the Company's
Consolidated Financial Statements. Display.IT Holdings is primarily a holding
company with Display.IT Limited being the main trading company.
Results of Operations
Consolidated
year ended
December 31, 1996
-----------------
(Pound Sterling)
Research and development (130,478)
Administrative expenses (779,538)
Other operating income 42,500
--------
Operating loss (867,516)
Interest receivable and
similar income 27,770
Interest payable and similar
charges (6,466)
--------
Loss on ordinary activities
before taxation (846,212)
========
Research and Development
Research and development represents the cost of development of the
Display.IT software product prior to the establishment of a working model in
April 1996, development costs incurred since the release of the product in
November and amortization of capitalized development costs. See "Item 9.
Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Development Costs."
Administrative Expenses
Administrative expenses relate to staff costs, office expenses and
sales and marketing costs.
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<PAGE>
The largest single component of administrative expenses was staff costs
including fees paid to directors which totaled (pound sterling)176,757 for the
year ended December 31, 1996.
Marketing costs for the year of (pound sterling)72,825 were also
significant and reflect the efforts made by the Company to promote the
Display.IT software.
Professional fees for the year totaled (pound sterling)260,937 and
relate to set up costs, costs associated with the OFEX listing and the proposed
Nasdaq listing. See "Item 5. Nature of Trading Market." Professional fees of
(pound sterling)53,028 have been charged to the share premium account during the
year. See "Item 9. Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources."
Other Operating Income
Other operating income relates to an amount invoiced to a third party
for specific development work. The Company does not expect that it will perform
specific development work in the future on a regular basis, if at all.
There is no line item for revenue or sales because no revenue in
connection with the distribution of the Display.IT software was generated during
1996.
Management expects that revenues generated by the Company in the
future, if any, will fall into two categories -- fixed revenues and recurring
revenues. Fixed revenues are expected to be generated from sales of the
Display.IT software to resellers. Recurring revenues are expected to be
generated from a number of sources: (i)(A) agreements between the Company and
information providers (as of January 31, 1997, the Company had entered into
three such agreements and was seeking to enter into more), (B) a prospective
agreement between the Company and BT and (C) the CellNet Understanding, all of
which are anticipated to provide for royalties to be paid to the Company, (ii) a
prospective agreement between the Company and an access provider which is
anticipated to provide for royalties or finder's fees to be paid to the Company
and (iii) sales of Display.IT software upgrades. See "Item 1. Description of
Business -- Products and Services -- Display.IT Software," "-- Customer
Support," "-- Preliminary Arrangements" and "-- Development Stage Company;
Expectation of Losses; Negative Cash Flows."
Management expects, but cannot assure, that over the course of the
following 18-month period, sales of the Display.IT software to resellers will
account for the vast majority of any
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<PAGE>
revenues generated by the Company. Management believes that over time recurring
revenues will account for an increasing percentage of total revenue, although no
assurances to that effect can given. See "Item 1. Description of Business --
Development Stage Company; Expectation of Losses; Negative Cash Flows."
Interest Receivable and Similar Income
Interest receivable of (pound sterling)13,910 has been earned on funds
deposited at Arbuthnot Latham & Co. Limited during the year.
Foreign exchange gains of (pound sterling)13,860 have resulted from
fluctuations in exchange rates during the year in relation to transactions
associated with a loan from a director during the year as discussed in Note 14
of the Notes to the Company's Consolidated Financial Statements. See "Item 13.
Interest of Management in Certain Transactions -- Loan Transaction."
Interest Payable and Similar Charges
Interest payable of (pound sterling)6,466 related to interest on a loan
from a director for part of the year. See "Item 13. Interest of Management in
Certain Transactions -- Loan Transaction."
Development Costs
Display.IT Limited has incurred development costs for the year ended
December 31, 1996 of (pound sterling)312,223. See "Item 1. Description of
Business -- Research and Development Policy."
In accordance with U.K. GAAP and U.S. GAAP, software development costs
since the establishment of a working model have been capitalized. The
capitalized development costs have been amortized since the Display.IT software
launch. Costs incurred prior to establishment of technical feasibility have been
written off as incurred.
Technical feasibility was established in April 1996 and the completed
Display.IT software was launched at the end of November 1996. Development costs
incurred prior to April 30, 1996 of (pound sterling)72,500 have therefore been
written off during the year and costs incurred between April 30, 1996 and
November 30, 1996 of (pound sterling)187,223 have been capitalized on the
balance sheet.
The Display.IT software is considered to have a three year life from
the date of launch provided that regular updates are made. Amortization has
therefore commenced on December 1, 1996 and an amortization charge of
(pound sterling)5,478 has been included in cost of
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<PAGE>
sales for the year. The cost of software upgrades will be written off as
incurred.
Liquidity and Capital Resources
Since inception, the Company's primary capital needs have been to fund
research and development, working capital requirements and capital expenditures
necessary to provide for the development, marketing and distribution of the
Display.IT software. See "Item 9. Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Research and Development," "--
Administrative Expenses" and "-- Development Costs."
Display.IT is a development-stage company and development and testing
of the Display.IT software, the Company's only product as of December 31, 1996,
was not completed until late-November 1996. In the approximately ten weeks
between the completion of the Display.IT software and the date of this
Registration Statement, the Company has not generated any revenue in connection
with sales of the product. Accordingly, cash flows from operations have been
negative since the inception of the Company. See "Item 1. Description of
Business -- Development Stage Company; Expectation of Losses; Negative Cash
Flow" and "Item 9. Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Other Operating Income."
The Company's net cash used by operating activities was (pound
sterling)689,292 for fiscal 1996, including (pound sterling)125,000 to fund
research and development. During 1996, the Company's capital expenditures
totaled approximately (pound sterling)137,450. Capital expenditures have
generally been comprised of purchases of computer hardware and software as well
as leasehold improvements related to leased facilities and capitalized software
development costs. See "Item 9. Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Research and Development" and
"-- Development Costs."
At December 31, 1996, the Company's primary source of liquidity was
(pound sterling)316,314 in cash and cash equivalents. The Company's primary
sources of financing have been the private placement of equity securities and
loans. In April 1996, Marjorie Moe, a director of the Company, loaned $210,000
((pound sterling)139,944) to Display.IT Limited. The Company repaid the loan in
full, including (pound sterling)6,466 in interest, in two installments during
the year. Exchange gains of (pound sterling)13,860 were realized on the
transaction. See "Item 13. Interest of Management in Certain Transactions --
Loan Transaction." In June 1996, the Company raised (pound sterling)1,000,000
through the U.K. Private Placement.
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<PAGE>
Professional fees of (pound sterling)53,028 were incurred in connection with the
U.K. Private Placement and charged against the share premium account. On
December 11, 1996, the Company raised (pound sterling)12,000 in connection with
the exercise of options for Ordinary Shares, and on December 13, 1996, the
Company raised (pound sterling)350,003 through an allotment of Ordinary Shares.
See "Item 1. Description of Business -- General Development of Business" and
"Item 12. Options to Purchase Securities from Registrant or Subsidiaries --
Options Issued in Connection With U.K. Private Placement."
Financing
Share capital (1)
Private placing
Share capital subscribed 1,000,000
Share capital expenses (53,028)
Exercise of options 12,000
Allotment of shares 350,003
---------
1,308,975
=========
Loan capital
Loan from director 139,944
Repayment of loan (29,757)
Repayment of loan (96,327)
Exchange difference (13,860)
---------
--
=========
- ---------------
(1) All amounts are in pounds sterling.
Management believes, but cannot assure, that existing cash and cash
equivalents together with cash flows currently expected to be generated from
operations will be sufficient to meet the Company's presently anticipated
operating requirements through the end of 1997, as well as any increases therein
due to increases in development activities to a level in excess of that which is
presently anticipated.
Before the end of 1997, the Company may engage in acquisitions of
complementary businesses, products and/or technologies, which could increase
cash requirements. Management believes, but cannot assure, that the Company
would be able to
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<PAGE>
obtain financing that alone or together with existing cash and cash equivalents
and expected operational cash flows will be sufficient to cover any such
increased cash requirements. The Company does not currently have any agreements,
arrangements or understandings, and is not involved in any negotiations, with
respect to any such acquisition.
Item 10. Directors and Officers of Registrant.
The directors and officers, and certain key employees, of Display.IT
Holdings as of December 31, 1996 were as follows:
Initially
Name Age Position Appointed
---- --- -------- ---------
Peter Levin 40 Managing Director June 20, 1996
and Chief
Executive Officer
David G. Familiant 68 Chairman and Non- June 24, 1996
executive Director
Marjorie Moe 47 Non-executive June 20, 1996
Director
Catita Edward 52 Non-executive June 24, 1996
Director
Gerald R. Giombetti 61 Non-executive October 22, 1996
Director
Duncan Coward 29 Software Projects October 1, 1996
Manager
T. Mark Proffitt 33 Sales Manager November 26, 1996
Thomas A. Mackay 47 Secretary June 20, 1996
Mr. Levin founded Display.IT Holdings in May of 1996 and has served as
its Managing Director and Chief Executive Officer since that date. Prior
thereto, Mr. Levin worked for CSK Micrognosis, ltd. ("CSK Micrognosis") a
worldwide trading room systems company, which he joined in 1993. In 1994, Mr.
Levin was promoted to Vice President of Marketing and Field Operations of CSK
Micrognosis. Prior to joining CSK Micrognosis, in 1989, Mr. Levin founded and
directed the operations of TransTech Management, an international investment and
consulting firm for the high-technology industry.
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<PAGE>
Mr. Familiant has served as Chairman and non-executive director of
Display.IT Holdings since June 24, 1996. Mr. Familiant also currently serves as
Executive Vice President for International Operations of the Gartner Group, an
organization he joined in 1988. Over the course of his career, Mr. Familiant has
amassed some 44 years of experience in the information technology and management
industry and worked with companies such as IBM and Control Data Corporation.
Ms. Moe has served as a non-executive director of Display.IT Holdings
since June 20, 1996. Ms. Moe is also currently self-employed as a U.S.-based
consultant to a number of world-wide companies in the trading technology
industry. Prior to joining Display.IT Holdings and developing her consulting
business, Ms. Moe was employed by Micrognosis Inc., a trading information
systems company, for 17 years. Ms. Moe was involved in the start-up of
Micrognosis Inc., was responsible for operations for nine years, in 1986 ran the
company's newly formed Asia/Pacific Region and in 1991 was given responsibility
for international account management and global sales support. During her tenure
at Micrognosis Inc., Ms. Moe also served as a director of the company for 13
years, as well as serving as a director of a number of its subsidiaries.
Mrs. Edward has served as a non-executive director of Display.IT
Holdings since June 24, 1996. Mrs. Edward also currently serves as Senior Vice
President of Marketing and Sales for the German American Trade Center, a
division of GATC Corp., a company that provides various services to a number of
German companies with headquarters in the United States. Mrs. Edward began
working for the German American Trade Center in February 1996. Prior thereto,
since 1988, Mrs. Edward was self-employed and provided international marketing,
sales and strategic planning consulting services to a number of companies.
Mr. Giombetti has served as a non-executive director of Display.IT
Holdings since October 22, 1996. Mr. Giombetti also currently serves as Manager
of the European office of the U.S. law firm of Frederikson & Byron where he
specializes in international corporate and commercial matters. Mr. Giombetti
joined Frederikson & Byron in 1992. Prior thereto, Mr. Giombetti served as Vice
President and Assistant General Counsel of Control Data Corporation, a computer
software and services integration company, which he joined in 1990.
Mr. Coward joined Display.IT Holdings, on October 1, 1996 as its
Software Projects Manager. Prior thereto, Mr. Coward was employed by CSK
Micrognosis, which he joined on January 1, 1991. Mr. Coward's last position at
CSK Micrognosis was Product Manager.
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<PAGE>
Mr. Proffitt began working for Display.IT Holdings on November 26, 1996
as its Sales Manager. Prior to joining Display.IT Holdings, Mr. Proffitt served
as a Senior Account Manager for S&P ComStock, where he began in July 1995. Prior
thereto, Mr. Proffitt had been employed as a Major Account Manager by Telerate
from August 1992 to July 1995 and as an Account Director by Bull Information
Systems from August 1990 to August 1992.
Mr. Mackay has served as Secretary of Display.IT Holdings since June
20, 1996. Mr. Mackay is a partner at the City of London law firm, Taylor Joynson
Garrett, specializing in Stock Exchange and Venture Capital work. Mr. Mackay has
been with Taylor Joynson Garrett since 1993. Prior thereto, Mr. Mackay served as
the head of the legal department at the London Stock Exchange, where he began in
1991. Before his work with the London Stock Exchange, Mr. Mackay served as a
director and head of the legal department of 3i plc, a venture capital
organization he joined in 1978.
Mr. Levin and Mrs. Edward are brother and sister. Mr. Levin and Ms. Moe
are engaged to be married.
On June 24, 1996, Mr. Levin entered into an employment agreement with
Display.IT Holdings to serve as its Managing Director and Chief Executive
Officer. The employment agreement is terminable by either party on 12 months'
notice or, in any event, on Mr. Levin's reaching 65 years of age. Each of the
non-executive Directors, other than Mr. Giombetti, has been appointed for a
term of three years from June 24, 1996, subject to re-election when appropriate
at annual general meetings. See "Item 13. Interest of Management in Certain
Transactions -- Employment Arrangements."
As Managing Director of Display.IT Holdings, Mr. Levin will not be
subject to retirement by rotation after the expiration of his employment
agreement, and can continue as a director as long as he holds such office or
until he resigns or is removed. All of the other directors are subject to
retirement by rotation, one-third (or, if their number is not a multiple of
three, the number nearest to but not greater than one-third) retiring and being
eligible for reappointment by the shareholders at each annual general meeting.
The Secretary serves at the discretion of the Board of Directors.
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<PAGE>
Item 11. Compensation of Directors and Officers.
In fiscal 1996, the aggregate amount of compensation paid by the
Company to all of its directors and officers as a group for services in all
capacities was approximately (pound sterling)170,072. In fiscal 1996, the
Company did not set aside or accrue any funds to provide pension, retirement or
similar benefits for its directors and officers.
The following table sets forth the name of each director and officer
with respect to whom the Company has previously provided compensation
information to its shareholders and the approximate amount of compensation paid
to each by the Company for services in all capacities in 1996.
Director or Officer Compensation (Pound Sterling)
------------------- -----------------------------
Peter Levin 137,752
David G. Familiant 5,711
Marjorie Moe 4,846
Catita Edward 4,846
Gerald R. Giombetti --
Item 12. Options to Purchase Securities from Registrant or Subsidiaries.
Share Option Scheme
As of December 31, 1996, options to subscribe for 1,615,705 Ordinary
Shares had been granted by Display.IT Holdings of which 1,565,705 were
outstanding. Options to subscribe for 415,705 of such Ordinary Shares were
granted under Display.IT Holdings' share option scheme (the "Share Option
Scheme"). All directors and employees of Display.IT Holdings (other than Peter
Levin), and of any of its subsidiaries nominated as eligible to participate by
the committee (the "Committee") that administers the Share Option Scheme, may,
at the discretion of the Committee, be invited to apply for options ("Options"),
each exercisable for an Ordinary Share. Pursuant to the Share Option Scheme,
Options are exercisable at a price not lower than the nominal value of an
Ordinary Share or the average of the middle market quotations or, in relation to
Nasdaq only, the last sale price of an Ordinary Share as derived from a
screen-based financial information system (if the Ordinary Shares are traded on
OFEX) or the Daily Official List of the London Stock Exchange (if the Ordinary
Shares are
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listed on the Official List or traded on the Alternative Investment Market) or
the Wall Street Journal (if the Ordinary Shares are listed on Nasdaq) for the
three consecutive dealing days immediately preceding the day on which the
invitation to apply for an Option was issued.
The name of each director and officer, and certain key employees, with
respect to whom the Company has previously provided Option information to its
shareholders, as well as the number of Options granted to each such director,
officer or key employee as of December 31, 1996, and the exercise price and
latest date of expiration of each such Option are as follows:
<TABLE>
<CAPTION>
Exercise
Name Number Price(Pound Sterling) Expiration Date
---- ------ -------------------- ---------------
<S> <C> <C> <C>
David G. Familiant 62,855 0.70 October 4, 2001
Marjorie Moe 51,425 0.70 October 10, 2001
Catita Edward 51,425 0.70 October 10, 2001
Duncan Coward 75,000 0.70 October 10, 2001
T. Mark Proffitt 150,000 4.07 December 23, 2001
</TABLE>
Options Issued in Connection With the U.K. Private Placement
The remaining 1,200,000 options were granted to Alasdair N. Macleod, G.
W. Bennet Turnbull, John A. Scott and David R. J. Foster (each a "Broker" and
collectively, the "Brokers") for services rendered in connection with the U.K.
Private Placement, pursuant to agreements dated June 24, 1996. Each Broker was
granted options exercisable for 150,000 Ordinary Shares, exercisable at any time
before 5:00 p.m. on June 30, 2002, and options exercisable for an additional
150,000 Ordinary Shares exercisable at any time after June 30, 1999 and before
5:00 p.m. on June 30, 2002. The exercise price of the options granted to the
Brokers is (pound sterling)0.24. On December 11, 1996, options to purchase
50,000 Ordinary Shares were exercised by one of the Brokers. See "Item 9.
Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
Ordinary Shares for Which Management Options May Be Exercised
Options exercisable for an aggregate of 390,705 Ordinary Shares which
have been granted to Mr. Familiant, Ms. Moe, Mrs. Edward, Mr. Coward and T. Mark
Proffitt pursuant to the Share
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Option Scheme, represent, as of December 31, 1996, all of the Ordinary Shares
called for by all options held by the directors and officers of Display.IT
Holdings as a group.
Item 13. Interest of Management in Certain Transactions.
Employment Arrangements
On June 24, 1996, Peter Levin entered into an employment agreement (the
"Employment Agreement") with Display.IT Holdings to serve as its Managing
Director and Chief Executive Officer. The Employment Agreement is terminable by
either party on 12 months' written notice and terminates automatically on the
date on which Mr. Levin reaches the age of 65. The Employment Agreement contains
various restrictive covenants relating to the disclosure of confidential
information, competition with Display.IT Holdings, solicitation of Display.IT
Holdings' customers and employees, and interference with Display.IT Holdings'
suppliers. Pursuant to the Employment Agreement, Mr. Levin is entitled to
receive an annual salary which must be reviewed by the Board of Directors not
less than annually, but which is not subject to reduction. As of December 31,
1996, Mr. Levin's salary was (pound sterling)144,000 per year.
Pursuant to letter agreements dated June 24, 1996, each of Catita
Edward, Marjorie Moe and David G. Familiant were appointed to serve on the Board
of Directors for three-year terms, subject to re-election when appropriate at
annual general meetings of Display.IT Holdings, and provided with directors'
stipends of (pound sterling)10,000 per annum. Currently, Mr. Familiant receives
an annual director's stipend of (pound sterling)11,000, and Ms. Moe, Mrs. Edward
and Gerald R. Giombetti each receive an annual director's stipend of (pound
sterling)9,000.
Acquisition of Display.IT Limited Shares
Prior to June 20, 1996, Mr. Levin owned the Display.IT Limited Shares.
Pursuant to the Share Exchange Agreement, Display.IT Holdings acquired the
Display.IT Limited Shares in exchange for crediting as fully paid up the 200
Ordinary Shares held by Mr. Levin and the issuance to him of an additional
9,999,800 Ordinary Shares. This transaction (the "Exchange") caused Display.IT
Limited to become, and as of December 31, 1996 it remained, the wholly-owned
subsidiary of Display.IT Holdings. See "Item 1. Description of Business --
General Development of Business."
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Loan Transaction
Pursuant to a loan agreement (the "Loan Agreement") dated April 22,
1996, Ms. Moe loaned $210,000 ((pound sterling)139,944) (the "Loan") to
Display.IT Limited. Interest on the Loan was to accrue at an interest rate of
10% per annum during the first year, 15% per annum during the second year, 16%
per annum during the third year, 18% per annum during the fourth year and 20%
per annum thereafter. As of December 31, 1996, the Company had repaid the Loan
in full, including (pound sterling)6,466 in interest. Exchange gains of (pound
sterling)13,860 were realized on the transaction. See "Item 9. Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources."
As security for the Loan, pursuant to a debenture (the "Debenture")
dated April 22, 1996, Display.IT Limited granted a first mortgage and security
interest in all of its real and personal property and assets, both tangible and
intangible, to Ms. Moe. In addition, pursuant to a guarantee (the "Guarantee")
dated April 22, 1996, Mr. Levin guaranteed repayment of the Loan by Display.IT
Limited to Ms. Moe and, by way of a pledge agreement (the "Pledge Agreement")
dated April 22, 1996, secured such Guarantee with a pledge of the Display.IT
Limited Shares.
In order to facilitate the Exchange in accordance with the terms of the
Share Exchange Agreement which required that Mr. Levin convey the Display.IT
Limited Shares to Display.IT Holdings free and clear of any and all security
interests, liens, pledges, rights of others or other encumbrances, Ms. Moe,
pursuant to the Share Exchange Agreement, agreed to terminate the Pledge
Agreement. In consideration therefor, Mr. Levin entered into a new pledge
agreement (the "New Pledge Agreement") dated June 20, 1996 by the terms of which
he pledged to Ms. Moe the 10,000,000 Ordinary Shares owned by him.
In connection with the repayment of the Loan by the Company, the
Debenture, Guarantee and New Pledge Agreement were terminated.
Indebtedness of Management to Company
As of December 31, 1996, no director or officer or the Company, or any
associate thereof, was indebted to the Company in any amount.
Legal Services
Each of Frederikson & Byron, a law firm of which Mr. Giombetti, a
non-executive director of Display.IT Holdings, is a
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partner and Taylor Joynson Garrett, a law firm of which Thomas A. Mackay, the
Secretary of Display.IT Holdings, is a partner has provided legal services to
the Company at some time during the Company's last fiscal year and has, or will
likely, provide legal services to the Company in the current fiscal year. See
"Item 10. Directors and Officers of Registrant." For fiscal 1996, the aggregate
amount of fees paid by the Company to: (i) Frederikson & Byron did not exceed
five percent of the gross revenues of such law firm for 1996, and (ii) Taylor
Joynson Garrett did not exceed five percent of the gross revenues of such law
firm for 1996.
<PAGE>
PART II
Item 14. Description of Securities to be Registered.
As of December 31, 1996, the authorized share capital of Display.IT
Holdings was (pound sterling)1,500,000 divided into 30,000,000 Ordinary Shares
of 5 pence each. Display.IT Holdings' Articles of Association empower it to
create and issue shares with such preferred or other special rights ("Preferred
Stock") as may be determined by resolution of the shareholders. The rights,
preferences and privileges of holders of Ordinary Shares are subject to, and may
be adversely affected by, the rights of the holders of shares of any series of
Preferred Stock which Display.IT Holdings may designate and issue in the future.
The following is a description of (i) the Ordinary Shares, (ii) the
ADRs, and (iii) the agreement that is expected to govern the deposit of ADSs,
each of which will represent one Ordinary Share, and the issuance by the
Depositary of ADRs.
Description of Ordinary Shares
Dividend Rights
Holders of Ordinary Shares are entitled to receive ratably such
dividends, if any, as may be declared by the shareholders by resolution (but no
such dividends shall exceed the sum recommended by the Board of Directors) out
of funds legally available therefor, subject to any preferential dividend rights
of any outstanding Preferred Stock. The Board of Directors may retain any
dividend or other moneys payable on or in respect of an Ordinary Share in which
Display.IT Holdings has a lien, and may apply the same in or towards
satisfaction of the obligations in respect of which the lien exists. The Board
may withhold dividends payable on Ordinary Shares after there has been a failure
to provide Display.IT Holdings with information
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concerning interests in such Ordinary Shares required to be provided by the
Companies Act as to past and present beneficial ownership of such shares until
such failure has been remedied.
Voting Rights
Holders of Ordinary Shares are entitled to one vote for each Ordinary
Share held on all matters submitted to a poll of the shareholders, and to one
vote on all matters to be decided by a show of hands of the shareholders. With
respect to a poll, the affirmative vote of a majority of the Ordinary Shares
entitled to vote is necessary to approve an action. With respect to a show of
hands, the affirmative vote of a majority of the holders of Ordinary Shares
present in person and entitled to vote is necessary to approve an action. At
shareholder meetings, resolutions are decided by a show of hands unless a poll
is demanded by the chairman of the meeting, not fewer than five shareholders
entitled to vote at the meeting, a shareholder or shareholders representing not
less than one-tenth of the total voting rights of all shareholders entitled to
vote at the meeting, or a shareholder or shareholders holding Ordinary Shares
entitled to vote at the meeting on which an aggregate sum has been paid up equal
to not less than one-tenth of the total sum paid up on all Ordinary Shares
entitled to vote at the meeting.
Liquidation Rights
Upon the liquidation, dissolution or winding up of Display.IT Holdings,
the holders of Ordinary Shares are entitled to receive ratably the net assets of
Display.IT Holdings available after payment of all debts and other liabilities
and subject to the prior rights of any outstanding Preferred Stock.
Pre-emptive, Conversion and Redemption Rights; Sinking Fund
Provisions
Holders of Ordinary Shares have statutory pre-emptive rights and no
conversion or redemption rights. There are no sinking fund provisions in effect
with respect to the Ordinary Shares.
Liability to Further Calls or to Assessment by Registrant
The Board of Directors may from time to time make calls upon the
holders of Ordinary Shares in respect of any money unpaid on their Ordinary
Shares (whether on account of the nominal value of the Ordinary Shares or, when
permitted, by way of premium) but subject always to the terms of issue of such
Ordinary Shares. A holder of Ordinary Shares upon whom a call is made shall
remain
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liable on such call notwithstanding the subsequent transfer of the Ordinary
Shares in respect of which the call was made.
Description of American Depositary Receipts and the Deposit
Agreement
The following is a summary of certain provisions of the Deposit
Agreement (the "Deposit Agreement"), to be entered into by Display.IT Holdings,
the Depositary, and the owners (the "Owners") and holders from time to time of
ADRs issued thereunder.
This summary does not purport to be complete and is subject to and
qualified in its entirety by reference to the Deposit Agreement, including the
form of ADRs. Terms used herein and not otherwise defined will have the meanings
set forth in the Deposit Agreement. Copies of the Deposit Agreement and the
Articles of Association of Display.IT Holdings will be available for inspection
at the Corporate Trust Office of the Depositary, currently located at 101
Barclay Street, New York, New York 10286, and at the principal office of the
agent of the Depositary (the "Custodian"), currently located at the London
office of The Bank of New York - London. The Depositary's principal executive
office is located at 48 Wall Street, New York, New York 10286.
American Depositary Receipts
ADRs evidencing ADSs are issuable by the Depositary pursuant to the
Deposit Agreement. Each ADS will represent one Ordinary Share or evidence of the
right to receive one Ordinary Share (together with any additional shares of
Ordinary Shares at any time deposited or deemed deposited under the Deposit
Agreement and any and all other securities, cash and property received by the
Depositary or the Custodian in respect thereof and at such time held under the
Deposit Agreement) (the "Shares"). Only persons in whose names ADRs are
registered on the books of the Depositary will be treated by the Depositary and
Display.IT Holdings as Owners.
Deposit, Transfer and Withdrawal
The Depositary has agreed, subject to the terms and conditions of the
Deposit Agreement, that upon delivery to the Custodian of Shares (or evidence of
rights to receive Shares) and pursuant to appropriate instruments of transfer in
a form satisfactory to the Custodian, the Depositary will, upon payment of the
fees, charges and taxes provided in the Deposit Agreement, execute and deliver
at its Corporate Trust Office to, or upon the written order of, the person or
persons named in the notice of
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the Custodian delivered to the Depositary or requested by the person depositing
such Shares with the Depositary, an ADR or ADRs, registered in the name or names
of such person or persons, and evidencing any authorized number of ADSs
requested by such person or persons.
Upon surrender at the Corporate Trust Office of the Depositary of an
ADR for the purpose of withdrawal of the Deposited Securities represented by the
ADSs evidenced by such ADR, and upon payment of the fees of the Depositary for
the surrender of Receipts, governmental charges and taxes provided in the
Deposit Agreement, and subject to the terms and conditions of the Deposit
Agreement, the Owner of such ADR will be entitled to delivery, to him or upon
his order, of the amount of Deposited Securities at the time represented by the
ADS or ADSs evidenced by such ADR. The forwarding of share certificates, other
securities, property, cash and other documents of title for such delivery will
be at the risk and expense of the Owner.
Subject to the terms and conditions of the Deposit Agreement and any
limitations established by the Depositary, the Depositary may execute and
deliver ADRs prior to the receipt of Shares (a "Pre-Release") and deliver Shares
upon the receipt and cancellation of ADRs which has been Pre-Released, whether
or not such cancellation is prior to the termination of such Pre-Release or the
Depositary knows that such ADR has been Pre-Released. The Depositary may receive
ADRs in lieu of Shares in satisfaction of a Pre-Release. Each Pre-Release must
be (a) preceded or accompanied by a written representation from the person to
whom the ADRs or Shares are to be delivered that such person, or its customer,
owns the Shares or ADRs to be remitted, as the case may be, (b) at all times
fully collateralized with cash or such other collateral as the Depositary deems
appropriate, (c) terminable by the Depositary on not more than five (5) business
days' notice and (d) subject to such further indemnities and credit regulations
as the Depositary deems appropriate. The number of American Depositary Shares
which are outstanding at any time as a result of Pre-Releases will not normally
exceed thirty (30%) of the Shares deposited hereunder; provided, however, that
the Depositary reserves the right to change or disregard such limit from time to
time as it deems appropriate.
The Depositary may retain for its own account any compensation received
by it in connection with the foregoing.
Dividends, Other Distributions and Rights
The Depositary will convert or cause to be converted into
Dollars, to the extent that in its judgment it can do so on a
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reasonable basis and can transfer the resulting Dollars to the United States,
all cash dividends and other cash distributions denominated in a currency other
than Dollars, including pounds sterling ("Foreign Currency"), that it receives
in respect of the deposited Shares, and to distribute the resulting Dollar
amount (net of the expenses incurred by the Depositary in converting such
Foreign Currency) to the Owners entitled thereto, in proportion to the number of
ADSs representing such Deposited Securities evidenced by ADRs held by them,
respectively. Such distribution may be made upon an averaged or other
practicable basis without regard to any distinctions among Owners on account of
exchange restrictions or the date of delivery of any ADR or ADRs or otherwise.
The amount distributed to the Owners of ADRs will be reduced by any amount on
account of taxes to be withheld by the Company or the Depositary. See "Item 14.
Description of Securities -- Description of American Depositary Receipts --
Liability of Owner for Taxes."
If the Depositary determines that in its judgment any Foreign Currency
received by the Depositary cannot be converted on a reasonable basis into
Dollars transferable to the United States, or if any approval or license of any
government or agency thereof which is required for such conversion is denied or
in the opinion of the Depositary is not obtainable, or if any such approval or
license is not obtained within a reasonable period as determined by the
Depositary, the Depositary may distribute the Foreign Currency received by the
Depositary to, or in its discretion may hold such Foreign Currency uninvested
and without liability for interest thereon for the respective accounts of, the
Owners entitled to receive the same. If any such conversion of Foreign Currency,
in whole or in part, cannot be effected for distribution to some of the Owners
entitled thereto, the Depositary may in its discretion make such conversion and
distribution in U.S. Dollars to the extent permissible to the Owners entitled
thereto, and may distribute the balance of the Foreign Currency received by the
Depositary to, or hold such balance uninvested and without liability for
interest thereon for, the respective accounts of, the Owners entitled thereto.
If any distribution upon any Deposited Securities consists of a
dividend in, or free distribution of, Shares, the Depositary may, and will if
Display.IT Holdings so requests, distribute to the Owners of outstanding ADRs
entitled thereto, in proportion to the number of ADSs evidenced by the ADRs held
by them, respectively, additional ADRs evidencing an aggregate number of ADSs
that represents the amount of Shares received as such dividend or free
distribution, subject to the terms and conditions of the Deposit Agreement with
respect to the deposit of Shares and the issuance of ADSs evidenced by ADRs,
including the withholding of any tax or other governmental charge and the
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payment of fees of the Depositary as provided in the Deposit Agreement. The
Depositary may withhold any such distribution of ADRs if it has not received
satisfactory assurances from Display.IT Holdings that such distribution does not
require registration under the Securities Act or is exempt from registration
under the provisions of such Act. In lieu of delivering ADRs for fractional ADSs
in the event of any such dividend or free distribution, the Depositary will sell
the amount of Shares represented by the aggregate of such fractions and
distribute the net proceeds in accordance with the Deposit Agreement. If
additional ADRs are not so distributed, each ADS will thenceforth also represent
the additional Shares distributed upon the Deposited Securities represented
thereby.
If Display.IT Holdings offers or causes to be offered to the holders of
any Deposited Securities any rights to subscribe for additional Shares or any
rights of any other nature, the Depositary will have discretion as to the
procedure to be followed in making such rights available to any Owners of ADRs
or in disposing of such rights for the benefit of any Owners and making the net
proceeds available in Dollars to such Owners or, if by the terms of such rights
offering or for any other reason, the Depositary may not either make such rights
available to any Owners or dispose of such rights and make the net proceeds
available to such Owners, then the Depositary shall allow the rights to lapse.
If at the time of the offering of any rights the Depositary determines in its
discretion that it is lawful and feasible to make such rights available to all
Owners or to all or certain Owners but not to other Owners, the Depositary may
distribute to any Owner to whom it determines the distribution to be lawful and
feasible, in proportion to the number of ADSs held by such Owner, warrants or
other instruments therefor in such form as it deems appropriate. If the
Depositary determines in its discretion that it is not lawful and feasible to
make such rights available to all or certain Owners, it may sell the rights,
warrants or other instruments in proportion to the number of ADSs held by the
Owners to whom it has determined it may not lawfully or feasibly make such
rights available, and allocate the net proceeds of such sales for the account of
such Owners otherwise entitled to such rights, warrants or other instruments,
upon an averaged or other practical basis without regard to any distinctions
among such Owners because of exchange restrictions or the date of delivery of
any ADR or ADRs, or otherwise.
In circumstances in which rights would not otherwise be distributed, if
an Owner of ADRs requests the distribution of warrants or other instruments in
order to exercise the rights allocable to the ADSs of such Owner, the Depositary
will make such rights available to such Owner upon written notice from
Display.IT Holdings to the Depositary that (a) the Display.IT
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Holdings has elected in its sole discretion to permit such rights to be
exercised and (b) such Owner has executed such documents as Display.IT Holdings
has determined in its sole discretion are reasonably required under applicable
law. Upon instruction pursuant to such warrants or other instruments to the
Depositary from such Owner to exercise such rights, upon payment by such Owner
to the Depositary for the account of such Owner of an amount equal to the
purchase price of the Shares to be received in exercise of the rights, and upon
payment of the fees of the Depositary as set forth in such warrants or other
instruments, the Depositary will on behalf of such Owner, exercise the rights
and purchase of the Shares, and Display.IT Holdings shall cause the Shares so
purchased to be delivered to the Depositary on behalf of such Owner. As agent
for such Owner, the Depositary will cause the Shares so purchased to be
deposited, and will execute and deliver Receipts to such Owner, pursuant to the
Deposit Agreement.
The Depositary will not offer rights to Owners unless both the rights
and the securities to which such rights relate are either exempt from
registration under the Securities Act of 1933 with respect to a distribution to
all Owners or are registered under the provisions of such Act; provided, that
nothing in the Deposit Agreement will create, or be construed to create, any
obligation on the part of Display.IT Holdings to file a registration statement
with respect to such rights or underlying securities or to endeavor to have such
a registration statement declared effective. If an Owner of ADRs requests the
distribution of warrants or other instruments, notwithstanding that there has
been no such registration under such Act, the Depositary will not effect such
distribution unless it has received an opinion from recognized counsel in the
United States for Display.IT Holdings upon which the Depositary may rely that
such distribution to such Owner is exempt from such registration. The Depositary
will not be responsible for any failure to determine that it may be lawful or
feasible to make such rights available to Owners in general of any Owner in
particular.
Whenever the Depositary receives any distribution other than cash,
Shares or rights in respect of the Deposited Securities, the Depositary will
cause the securities or property received by it to be distributed to the Owners
entitled thereto, after deduction or upon payment of any fees and expenses of
the Depositary or any taxes or other governmental charges, in proportion to
their holdings, respectively, in any manner that the Depositary may deem
equitable and practicable for accomplishing such distribution; provided,
however, that if in the opinion of the Depositary such distribution cannot be
made proportionately among the Owners entitled thereto, or if for any other
reason (including, but not limited to, any requirement that
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the Company or the Depositary withhold an amount on account of taxes or other
governmental charges or that such securities must be registered under the
Securities Act of 1933 in order to be distributed to Owners or holders the
Depositary deems such distribution not to be feasible, the Depositary may adopt
such method as it may deem equitable and practicable for the purpose of
effecting such distribution, including, but not limited to, the public or
private sale of the securities or property thus received, or any part thereof,
and the net proceeds of any such sale (net of the fees of the Depositary) will
be distributed by the Depositary to the Owners entitled thereto as in the case
of a distribution received in cash.
If the Depositary determines that any distribution of property
(including Shares and rights to subscribe therefor) is subject to any taxes or
other governmental charges which the Depositary is obligated to withhold, the
Depositary may, by public or private sale, dispose of all or a portion of such
property in such amount and in such manner as the Depositary deems necessary and
practicable to pay such taxes or charges and the Depositary will distribute the
net proceeds of any such sale after deduction of such taxes or charges to the
Owners entitled thereto in proportion to the number of ADSs held by them,
respectively.
Upon any change in nominal or par value, split-up, consolidation or any
other reclassification of Deposited Securities, or upon any recapitalization,
reorganization, merger or consolidation or sale of assets affecting Display.IT
Holdings or to which it is a party, any securities which shall be received by
the Depositary or Custodian in exchange for, in conversion of, or in respect of
Deposited Securities will be treated as new Deposited Securities under the
Deposit Agreement, and the ADSs will thenceforth represent, in addition to the
existing Deposited Securities, the right to receive the new Deposited Securities
so received in exchange or conversion, unless additional ADRs are delivered
pursuant to the following sentence. In any such case the Depositary may, and
will, if Display.IT Holdings so requests, execute and deliver additional ADRs as
in the case of a dividend in Shares, or call for the surrender of outstanding
ADRs to be exchanged for new ADRs specifically describing such new Deposited
Securities.
Record Dates
Whenever any cash dividend or other cash distribution shall become
payable or any distribution other than cash shall be made, or whenever rights
shall be issued with respect to the Deposited Securities, or whenever for any
reason the Depositary causes a
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change in the number of Shares that are represented by each ADS, or whenever the
Depositary shall receive notice of any meeting of holders of Shares or other
Deposited Securities, the Depositary will fix a record date, (a) for the
determination of the Owners who will be (i) entitled to receive such dividend,
distribution or rights, or the net proceeds of the sale thereof, or
(ii) entitled to give instructions for the exercise of voting rights at any such
meeting, or (b) on or after which each ADS will represent the changed number of
Shares, all subject to the provisions of the Deposit Agreement.
Voting of Deposited Securities
Upon receipt of notice of any meeting of holders of Shares or other
Deposited Securities, if requested in writing by Display.IT Holdings, the
Depositary will, as soon as practicable thereafter, mail to all Owners a notice,
the form of which notice will be in the sole discretion of the Depositary,
containing (a) such information included in such notice of meeting received by
the Depositary from Display.IT Holdings, and (b) a statement that the Owners as
of the close of business on a specified record date will be entitled, subject to
any applicable provision of U.K. law and of the Articles of Association of
Display.IT Holdings, to the amount of Shares or other Deposited Securities
represented by their respective ADSs. Upon the written request of an Owner on
such record date, received on or before the date established by the Depositary
for such purpose, the Depositary will endeavor, insofar as practicable, to vote
or cause to be voted the amount of Shares or other Deposited Securities
represented by the ADSs evidenced by such ADRs in accordance with the
instructions set forth in such request. The Depositary will not vote or attempt
to exercise the right to vote that attaches to the Shares or other Deposited
Securities, other than in accordance with such instructions.
There can be no assurance that the Owners generally or any Owner in
particular will receive the notice described in the preceding paragraph
sufficiently prior to the date established by the Depositary for the receipt of
instructions to ensure that the Depositary will vote the Shares or Deposited
Securities in accordance with the provisions set forth in the preceding
paragraph.
Reports and Other Communications
The Depositary will make available for inspection by ADR Owners at its
Corporate Trust Office any reports and communications, including any proxy
soliciting material, received from Display.IT Holdings, which are both
(a) received by the
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<PAGE>
Depositary as the holder of the Deposited Securities and (b) made generally
available to the holders of such Deposited Securities by Display.IT Holdings.
The Depositary will also, upon written request, send to the Owners copies of
such reports when furnished by Display.IT Holdings pursuant to the Deposit
Agreement.
Amendment and Termination of the Deposit Agreement
The form of ADRs and any provisions of the Deposit Agreement may at any
time and from time to time be amended by agreement between Display.IT Holdings
and the Depositary in any respect which they may deem necessary or desirable
without the consent of the Owners of ADRs; provided, however, that any amendment
that imposes or increases any fees or charges (other than taxes and other
governmental charges, registration fees, cable, telex or facsimile transmission
costs, delivery costs or other such expenses), or which otherwise prejudices any
substantial existing right of ADR Owners, will not take effect as to outstanding
ADRs until the expiration of 30 days after notice of any amendment has been
given to the Owners of outstanding ADRs. Every Owner of an ADR, at the time any
amendment so becomes effective, will be deemed, by continuing to hold such ADR,
to consent and agree to such amendment and to be bound by the Deposit Agreement
as amended thereby. In no event will any amendment impair the right of the Owner
of any ADR to surrender such ADR and receive therefor the Deposited Securities
represented thereby, except to comply with mandatory provisions of applicable
law.
The Depositary will at any time at the direction of Display.IT Holdings
terminate the Deposit Agreement by mailing notice of such termination to the
Owners of the ADRs then outstanding at least 90 days prior to the date fixed in
such notice for such termination. The Depositary may likewise terminate the
Deposit Agreement by mailing notice of such termination to Display.IT Holdings
and the Owners of all ADRs then outstanding if, any time after 90 days have
expired after the Depositary will have delivered to Display.IT Holdings a
written notice of its election to resign and a successor depositary will not
have been appointed and accepted its appointment, in accordance with the terms
of the Deposit Agreement. If any ADRs remain outstanding after the date of
termination of the Deposit Agreement, the Depositary thereafter will discontinue
the registration of transfers of ADRs, will suspend the distribution of
dividends to the Owners thereof and will not give any further notices or perform
any further acts under the Deposit Agreement, except the collection of dividends
and other distributions pertaining to the Deposited Securities, the sale or
rights and the delivery of underlying Deposited Securities, together with any
dividends or other distributions
-51-
<PAGE>
received with respect thereto and the net proceeds of the sale of any rights or
other property, in exchange for surrendered ADRs (after deducting, in each case,
the fees of the Depositary for the surrender of an ADR and other expenses set
forth in the Deposit Agreement and any applicable taxes or governmental
charges). At any time after the expiration of one year from the date of
termination, the Depositary may sell the Deposited Securities then held
thereunder and hold uninvested the net proceeds of such sale, together with any
other cash, unsegregated and without liability for interest, for the pro rata
benefit of the Owners that have not theretofore surrendered their Receipts, such
Owners thereupon becoming general creditors of the Depositary with respect to
such net proceeds. After making such sale, the Depositary will be discharged
from all obligations under the Deposit Agreement, except to account for net
proceeds and other cash (after deducting, in each case, the fee of the
Depositary and other expenses set forth in the Deposit Agreement for the
surrender of an ADR and any applicable taxes or other governmental charges.
Charges of Depositary
The Depositary will charge any party depositing or withdrawing Shares
or any party surrendering ADRs or to whom ADRs are issued (including, without
limitation, issuance pursuant to a stock dividend or stock split declared by
Display.IT Holdings or an exchange of stock regarding the ADRs or Deposited
Securities or a distribution of ADRs pursuant to the Deposit Agreement)
whichever applicable: (1) taxes and other governmental charges; (2) such
registration fees as may from time to time be in effect for the registration of
transfers of Shares generally on the share register of Display.IT Holdings or
Foreign Registrar and applicable to transfers of Shares to the name of the
Depositary or its nominee or the Custodian or its nominee on the making of
deposits or withdrawals; (3) such cable, telex and facsimile transmission
expenses as are expressly provided in the Deposit Agreement to be at the expense
of persons depositing Shares or Owners; (4) such expenses are incurred by the
Depositary in the conversion of Foreign Currency pursuant to the Deposit
Agreement; (5) a fee of $5.00 or less per 100 ADSs (or portion thereof) for the
execution, delivery and surrender of ADRs pursuant to the Deposit Agreement;
(6) a fee of $.02 or less per ADS (or portion thereof) for any cash distribution
made pursuant to the Deposit Agreement including, but not limited to, Section
4.1 through 4.4 thereof; (7) a fee of $1.50 or less per certificate for an ADR
or ADRs for transfers made pursuant to the Deposit Agreement and; (8) a fee for
the distribution of securities pursuant to the Deposit Agreement, such fee being
in an amount equal to the fee for the execution and delivery of ADSs referred to
above which
-52-
<PAGE>
would have been charged as a result of the deposit of such securities (for
purposes of this clause (8) treating all such securities as if they were
Shares), but which securities are instead distributed by the Depositary to
Owners and the net proceeds distributed.
The Depositary, pursuant to the Deposit Agreement, may own and deal in
any class of securities of Display.IT Holdings and its affiliates and in ADRs.
Liability of Owner for Taxes
If any tax or other governmental charge shall become payable by the
Custodian or the Depositary with respect to any ADR or any Deposited Securities
represented by the ADRs, such tax or other governmental charge will be payable
by the Owner of such ADR to the Depositary. The Depositary may refuse to effect
any transfer of such ADR or any withdrawal of Deposited Securities underlying
such ADR until such payment is made, and may withhold any dividends or other
distributions, or may sell for the account of the Owner thereof any part or all
of the Deposited Securities underlying such ADR and may apply such dividends,
distributions or the proceeds of any such sale to pay any such tax or other
governmental charge and the Owner of such ADR will remain liable for any
deficiency.
General
Neither the Depositary nor Display.IT Holdings will be liable to any
Owner or holder of any ADR, if by reason of any provision of any present or
future law or regulation of the United States, or any other country, or of any
governmental or regulatory authority or stock exchange, or by reason of any
provision, present or future, of the Articles of Association of Display.IT
Holdings, or by reason of any act of God or war or other circumstances beyond
its control, the Depositary or Display.IT Holdings shall be prevented, delayed
or forbidden from, or be subject to any civil or criminal penalty on account of,
doing or performing any act or thing which by the terms of the Deposit Agreement
it is provided will be done or performed; nor will the Depositary or Display.IT
Holdings incur any liability to any Owner or holder of any ADR by reason of any
nonperformance or delay, caused as aforesaid, in the performance of any act or
thing which by the terms of the Deposit Agreement it is provided will or may be
done or performed, or by reason of any exercise of, or failure to exercise, any
discretion provided for under the Deposit Agreement. Where, by the terms of a
distribution pursuant to the Deposit Agreement, or an offering or distribution
pursuant to the Deposit Agreement, or for any other
-53-
<PAGE>
reason, such distribution or offering may not be made available to Owners, and
the Depositary may not dispose of such distribution or offering on behalf of
such Owners and make the net proceeds available to such Owners, then the
Depositary will not make such distribution or offering, and will allow the
rights, if applicable to lapse.
Display.IT Holdings and the Depositary assume no obligation nor will
they be subject to any liability under the Deposit Agreement to Owners or
holders of ADRs, except that they agree to perform their respective obligations
specifically set forth under the Deposit Agreement without negligence or bad
faith.
The ADRs are transferable on the books of the Depositary, provided that
the Depositary may close the transfer books at any time or from time to time
when deemed expedient by it in connection with the performance of its duties. As
a condition precedent to the execution and delivery, registration of transfer,
split-up, combination or surrender of any Deposited Securities, the Depositary,
the Custodian or the Registrar may require payment from the person presenting
the ADR or the depositor of the Shares of a sum sufficient to reimburse it for
any tax or other governmental charge and any stock transfer or registration fee
with respect thereto (including any such tax or charge and fee with respect to
Shares being deposited or withdrawn) and payment of any applicable fees payable
by the Owners and holders of ADRs. The Depositary may refuse to deliver ADRs, to
register the transfer of any ADR or to make any distribution on, or related to,
Shares until it has received such proof of citizenship or residence, exchange
control approval or other information as it may deem necessary or proper. The
delivery, transfer, registration of transfer of outstanding ADRs and surrender
of ADRs generally may be suspended or refused during any period when the
transfer books of the Depositary, Display.IT Holdings or the Foreign Registrar
are closed or if any such action is deemed necessary or advisable by the
Depositary or Display.IT Holdings, at any time or from time to time.
Notwithstanding any other provision of the Deposit Agreement or the Receipts,
the surrender of outstanding Receipts and withdrawal of Deposited Securities may
not be suspended subject only to (i) temporary delays caused by closing the
transfer books of the Depositary or the Issuer or the deposit of Shares in
connection with voting at a shareholders' meeting, or the payment of dividends,
(ii) the payment of fees, taxes and similar charges, and (iii) compliance with
any U.S. or foreign laws or governmental regulations relating to the Receipts or
to the withdrawal of the Deposited Securities. Without limitation of the
foregoing, the Depositary shall not knowingly accept for deposit under the
Deposit Agreement any Shares required to be
-54-
<PAGE>
registered under the provisions of the Securities Act of 1933, unless a
registration statement is in effect as to such Shares.
The Depositary will keep books, at its Corporate Trust Office, for the
registration and transfer of ADRs, which at all reasonable times will be open
for inspection by the Owners, provided that such inspection will not be for the
purpose of communicating with Owners in the interest of a business or object
other than the business of Display.IT Holdings or a matter related to the
Deposit Agreement or the ADRs.
The Depositary may appoint one or more co-transfer agents for the
purpose of effecting transfers, combinations and split-ups of ADRs at designated
transfer offices on behalf of the Depositary. In carrying out its functions, a
co-transfer agent may require evidence of authority and compliance with
applicable laws and other requirements by Owners or persons entitled to ADRs and
will be entitled to protection and indemnity to the same extent as the
Depositary.
Governing Law
The Deposit Agreement will be governed by the laws of the State of New
York.
PART III
Item 15. Defaults Upon Senior Securities.
Not applicable.
Item 16. Changes in Securities and Changes in Security for Registered
Securities.
Not applicable.
PART IV
Item 17. Financial Statements.
Not applicable.
-55-
<PAGE>
Item 18. Financial Statements.
See pages F-1 through F-28, incorporated herein by reference.
Item 19. Financial Statements and Exhibits.
(a) Financial Statements.
The following financial statements, together with the report thereon of
Deloitte & Touche, are filed as part of this Registration Statement.
Page
----
Report of Independent Auditors with respect to the
financial statements of the Company.................... F-1
Financial Statements
Consolidated Profit and Loss Account of the Company
for the year ended December 31, 1996................... F-2
Profit and Loss Account of Display.IT Holdings for
the year ended December 31, 1996....................... F-3
Consolidated Balance Sheets of the Company as of
December 31, 1995 and December 31, 1996................ F-4
Balance Sheet of Display.IT Holdings as of
December 31, 1996...................................... F-5
Consolidated Statement of Cash Flows of the Company
for the year ended December 31, 1996................... F-6
Notes to the Financial Statements............................ F-8
Report of Independent Auditors with respect to the
financial statements of Display.IT Limited............. F-25
Financial Statements
Balance Sheet of Display.IT Limited as of
December 31, 1995...................................... F-26
Notes to the Financial Statements............................ F-27
(b) Exhibits.
The following Exhibits are filed as a part of this Registration Statement.
1.1 Memorandum of Association
1.2 New Articles of Association
2.1 Form of Deposit Agreement to be entered into by
and between Display.IT Holdings plc and The
Bank of New York
The Company has not issued any, and is not party to any instrument
authorizing the issuance of, long-term debt securities.
-56-
<PAGE>
3.1 Share Exchange Agreement by and among
Display.IT Holdings plc, Peter Levin and
Marjorie Moe, dated June 20, 1996
3.2 Form of Placing Letter entered into by and
between Display.IT Holdings plc and 19
investors, together with schedule of the 19
investors
3.3 Option Deed by and between Display.IT Holdings
plc and Alasdair Norman Macleod, dated June 24,
1996, together with schedule of three other
parties who entered into substantially
identical Option Deeds with Display.IT Holdings
plc
3.4 Bonus Option Deed by and between Display.IT
Holdings plc and Alasdair Norman Macleod, dated
June 24, 1996, together with schedule of three
other parties who entered into substantially
identical Bonus Option Deeds with Display.IT
Holdings plc
3.5 Agreement for Share Subscription by and between
Display.IT Holdings plc and Independent
Economic Analysis (Holdings) Pte Limited, dated
November 25, 1996
3.6 Agreement for Share Subscription by and between
Display.IT Holdings plc and Hestia Investments
S.A., dated December 19, 1996
3.7 Service Agreement by and between Display.IT
Holdings plc and Peter Levin, dated June 24,
1996
3.8 Letter Agreement by and between Display.IT
Holdings plc and David G. Familiant, dated June
24, 1996, together with schedule of two other
parties who have entered into substantially
identical Letter Agreements with Display.IT
Holdings plc
3.9 Loan Agreement by and between Display.IT
Limited and Marjorie Moe, dated April 22, 1996
3.10 Debenture by and between Display.IT Limited and
Marjorie Moe, dated April 22, 1996
3.11 Guarantee by and between Marjorie Moe and Peter
Levin, dated April 22, 1996
3.12 Pledge Agreement by and between Peter Levin and
Marjorie Moe, dated April 22, 1996
3.13 Pledge Agreement by and between Peter Levin and
Marjorie Moe, dated June 20, 1996
3.14 Rules of the Display.IT Holdings plc Share
Option Scheme
-57-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
DISPLAY.IT HOLDINGS PLC
Dated: February 13, 1997 By: /S/ PETER LEVIN
-------------------------------
Name: Peter Levin
Title: Managing Director
and Chief Executive
Officer
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<PAGE>
FINANCIALS
<PAGE>
Company Registration No. 3194225
DISPLAY.IT HOLDINGS PLC
(a development stage company)
Report and Financial Statements
December 31, 1996
Deloitte & Touche
Hill House
1 Little New Street
London EC4A 3TR
<PAGE>
DISPLAY.IT HOLDINGS PLC
(a development stage company)
REPORT AND FINANCIAL STATEMENTS 1996
CONTENTS Page
Auditors' report F-1
Consolidated profit and loss account F-2
Company profit and loss account F-3
Consolidated balance sheet F-4
Company balance sheet F-5
Consolidated cash flow statement F-6
Notes to the accounts F-8
<PAGE>
INDEPENDENT AUDITORS' REPORT TO THE DIRECTORS AND SHAREHOLDERS
OF
DISPLAY.IT HOLDINGS PLC
(A DEVELOPMENT STAGE COMPANY)
We have audited the accompanying consolidated balance sheet of Display.IT
Holdings Plc (a development stage company) and its subsidiary (the "group") as
of December 31, 1996 and as of December 31, 1995 and the related consolidated
profit and loss account and cashflow statement for the year ended December 31,
1996. These consolidated financial statements are the responsibility of the
group's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing standards
in the United Kingdom and the United States of America. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the group at December 31, 1996 and
December 31, 1995 and the results of its operations and its cash flows for the
year ended December 31, 1996 in conformity with generally accepted accounting
principles in the United Kingdom (which differs in certain significant respects
from generally accepted accounting principles in the United States of America -
see note 20).
DELOITTE & TOUCHE
Chartered Accountants
London, England
January 24, 1997
F-1
<PAGE>
DISPLAY.IT HOLDINGS PLC
(a development stage company)
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Year ended December 31, 1996
Note 1996
(Pound Sterling)
Research and development (130,478)
Administrative expenses (779,538)
Other operating income 42,500
--------
OPERATING LOSS 3 (867,516)
Interest receivable and similar income 4 27,770
Interest payable and similar charges 5 (6,466)
--------
LOSS ON ORDINARY ACTIVITIES
BEFORE TAXATION (846,212)
Tax on loss on ordinary activities 6 (1,861)
--------
LOSS FOR THE YEAR 13 (848,073)
========
Loss per share 14 6.75p
========
All activities derive from continuing operations.
The group did not trade in the preceding financial period. There were no
recognized gains or losses attributable to shareholders other than the loss for
the year.
F-2
<PAGE>
DISPLAY.IT HOLDINGS PLC
(a development stage company)
COMPANY PROFIT AND LOSS ACCOUNT
Period from May 3, 1996 (date of incorporation) to December 31, 1996
Period from
May 3, 1996
to December
31, 1996
Note (Pound Sterling)
Administrative expenses (26,003)
------
OPERATING LOSS (26,003)
LOSS FOR THE PERIOD 13 (26,003)
======
All activities derive from continuing operations.
The company was incorporated on May 3, 1996. There were no recognized gains or
losses attributable to the shareholders other than the loss for the period.
F-3
<PAGE>
DISPLAY.IT HOLDINGS PLC
(a development stage company)
CONSOLIDATED BALANCE SHEET
December 31, 1996
<TABLE>
<CAPTION>
Note 1996 1995
(Pound Sterling) (Pound Sterling)
<S> <C> <C> <C>
FIXED ASSETS
Intangible fixed assets 7 181,745 --
Tangible fixed assets 8 133,072 --
-------- -------
314,817 --
-------- -------
CURRENT ASSETS
Debtors 10 85,830 2
Cash at bank and in hand 316,314 --
-------- -------
402,144 2
CREDITORS: amounts falling due within
one year 11 (256,057) --
-------- -------
NET CURRENT ASSETS 146,087 2
-------- -------
TOTAL NET ASSETS 460,904 2
======= =======
CAPITAL AND RESERVES
Called up share capital 12 758,238 100,000
Share premium account 13 650,737 --
Profit and loss account 13 (948,071) (99,998)
-------- -------
EQUITY SHAREHOLDERS' FUNDS 460,904 2
======== =======
</TABLE>
F-4
<PAGE>
DISPLAY.IT HOLDINGS PLC
(a development stage company)
COMPANY BALANCE SHEET
December 31, 1996
Note 1996
(Pound Sterling)
FIXED ASSETS
Investment 9 100,000
CURRENT ASSETS
Debtors 10 1,288,683
CREDITORS: amounts falling due
within one year 11 (5,711)
---------
NET CURRENT ASSETS 1,282,972
=========
TOTAL NET ASSETS 1,382,972
=========
CAPITAL AND RESERVES
Called up share capital 12 758,238
Share premium account 13 650,737
Profit and loss account 13 (26,003)
---------
EQUITY SHAREHOLDERS' FUNDS 1,382,972
=========
The company was incorporated on May 3, 1996 and hence no corresponding period
balance sheet is presented.
F-5
<PAGE>
DISPLAY.IT HOLDINGS PLC
(a development stage company)
CONSOLIDATED CASH FLOW STATEMENT
Year ended December 31, 1996
<TABLE>
<CAPTION>
Note 1996
(Pound Sterling)
<S> <C> <C>
Net cash outflow from operating activities 1 (689,292)
Returns on investments and servicing of
financing
Interest received 13,910
Interest paid (6,466)
----------
Net cash inflow from returns on
investments and servicing of finance 7,444
----------
Investing activities
Payments to acquire tangible fixed assets (137,450)
Investment in intangible fixed assets (187,223)
----------
Net cash outflow from investing activities (324,673)
----------
Net cash outflow before financing (1,006,521)
----------
Financing
Issue of ordinary shares (net of expenses) 3 1,308,975
Director loan advanced 3 139,944
Repayment of director loan 3 (126,084)
----------
Net cash inflow from financing 1,322,835
----------
Increase in cash and cash equivalent 2 316,314
==========
</TABLE>
The group did not trade in the preceding financial period and there were no cash
flows.
F-6
<PAGE>
DISPLAY.IT HOLDINGS PLC
(a development stage company)
NOTES TO THE CASH FLOW STATEMENT
Year ended December 31, 1996
1. RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW
FROM OPERATING ACTIVITIES
1996
(Pound Sterling)
Operating loss (867,516)
Depreciation of tangible fixed assets 4,378
Amortization of development costs 5,478
Increase in debtors (85,828)
Increase in creditors 254,196
--------
Net cash outflow from operating activities (689,292)
========
2. ANALYSIS OF CHANGES IN CASH AND CASH EQUIVALENTS
DURING THE YEAR
(Pound Sterling)
Balance at January 1, 1996 --
Net cash inflow 316,314
-------
Balance at December 31, 1996 316,314
=======
3. ANALYSIS OF CHANGES IN FINANCING DURING THE YEAR
<TABLE>
<CAPTION>
Share
capital
(including
share
premium) Loans
(Pound Sterling) (Pound Sterling)
---------------- ----------------
<S> <C> <C>
At January 1, 1996 100,000 --
Cash inflow from financing 1,308,975 139,944
Cash outflow from financing -- (126,084)
Foreign exchange movement -- (13,860)
--------- --------
At December 31, 1996 1,408,975 --
========= ========
</TABLE>
The share capital at January 1, 1996 represents notional share capital and
arises from consolidation using merger accounting principles (see note 1).
F-7
<PAGE>
DISPLAY.IT HOLDINGS PLC
(a development stage company)
NOTES TO THE ACCOUNTS
Year ended December 31, 1996
1. ACCOUNTING POLICIES
The financial statements are prepared in accordance with applicable
accounting standards. The particular accounting policies adopted are
described below.
Accounting convention
The financial statements are prepared under the historical cost
convention.
Basis of consolidation
The group accounts consolidate the accounts of Display.IT Holdings plc
and its subsidiary undertaking at the year end using merger accounting
principles.
Display.IT Holdings plc was incorporated on May 3, 1996 and acquired
the whole of the share capital of Display.IT Limited on June 20, 1996,
the consideration being satisfied by the allotment of fully paid shares
(see note 12). Consolidated financial statements have therefore been
presented for the current and preceding financial period.
The increased share capital of Display.IT Holdings plc is disclosed on
both the current and preceding period balance sheets with the share
capital in the balance sheet at December 31, 1995 being notional share
capital.
Tangible fixed assets and depreciation
Depreciation is provided on the cost of tangible fixed assets to write
them down to their estimated residual values over their expected useful
lives. The rates of depreciation are as follows:
Computer systems 4 years
Fixtures and fittings and office equipment 5 years
The carrying value of long-lived assets is reviewed for impairment
whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable.
F-8
<PAGE>
DISPLAY.IT HOLDINGS PLC
(a development stage company)
NOTES TO THE ACCOUNTS
Year ended December 31, 1996
Software development costs
Costs incurred in developing new software products are written off
until technical feasibility has been ascertained and a working model
produced. Thereafter, further expenditure incurred prior to launching
the product is capitalized and amortized over a three year period based
upon a prudent assessment of the life of the product. Amortization
commences in the month of first release of the product.
All other research and development is written off in the year in which
it is incurred.
Foreign currencies
Monetary assets and liabilities denominated in foreign currency are
translated into sterling at the rates of exchange ruling at the balance
sheet date. Transactions denominated in foreign currencies are
translated into sterling at the rates ruling at the dates of the
transactions. Profits and losses on the translation of foreign
currencies arising from trading transactions are included in operating
profits, and profits and losses on translation of foreign currencies
arising from financing arrangements are included below operating profit
in the profit and loss account.
Leases
Rentals are charged to profit and loss in equal annual amounts over the
lease term.
Loss per share
The loss per share is based upon the weighted average number of
ordinary shares in issue throughout the period and is calculated on the
loss on ordinary activities after taxation.
Use of estimates and assumptions
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
F-9
<PAGE>
DISPLAY.IT HOLDINGS PLC
(a development stage company)
NOTES TO THE ACCOUNTS
Year ended December 31, 1996
2. INFORMATION REGARDING DIRECTORS AND EMPLOYEES
1996
(Pound Sterling)
Directors' emoluments
Fees 15,403
Salaries and taxable benefits 137,752
-------
153,155
=======
Chairman's emoluments
Fees 5,711
=======
Emoluments of highest paid director
Salaries and taxable benefits 137,752
=======
Emoluments of the directors, excluding
pension contributions, were within
the following scales: No.
(Pound Sterling) 0 - (Pound Sterling) 5,000 4
(Pound Sterling) 135,001 - (Pound Sterling) 140,000 1
=======
Employees
Average number of employees, excluding
directors, in the year:
Sales and administration 1
=======
Staff costs, excluding directors, incurred during
the year in respect of these employees were:
Wages and salaries 21,416
Social security costs 2,186
-------
23,602
=======
There were no employees in the preceding period and there were no
emoluments paid to the directors in this preceding period.
F-10
<PAGE>
DISPLAY.IT HOLDINGS PLC
(a development stage company)
NOTES TO THE ACCOUNTS
Year ended December 31, 1996
3. OPERATING LOSS
1996
(Pound Sterling)
Operating loss is after charging:
Auditors' remuneration
Audit fees 5,000
Depreciation of tangible fixed assets 4,378
Amortization of development costs 5,478
Hire of equipment 6,514
Research and development 125,000
Rentals under operating leases:
Land and buildings 10,350
Other operating leases 1,196
=======
4. INTEREST RECEIVABLE AND SIMILAR INCOME
1996
(Pound Sterling)
Foreign exchange gains 13,860
Bank interest 13,910
-------
27,770
=======
5. INTEREST PAYABLE AND SIMILAR CHARGES
1996
(Pound Sterling)
Interest on borrowings 6,466
=======
F-11
<PAGE>
DISPLAY.IT HOLDINGS PLC
(a development stage company)
NOTES TO THE ACCOUNTS
Year ended December 31, 1996
6. TAX ON LOSS AND ORDINARY ACTIVITIES
1996
(Pound Sterling)
United Kingdom corporation tax at
25% based on the loss for the year 1,861
=======
Tax is charged on the interest received by Display.IT Limited in the
period before trading commenced.
7. INTANGIBLE FIXED ASSETS
Software
development
costs
(Pound Sterling)
Cost
At January 1, 1996 --
Additions 187,223
-------
At December 31, 1996 187,223
-------
Accumulated depreciation
At January 1, 1996 --
Charge for the year 5,478
-------
At December 31, 1996 5,478
-------
Net book value
At December 31, 1996 181,745
=======
F-12
<PAGE>
DISPLAY.IT HOLDINGS PLC
(a development stage company)
NOTES TO THE ACCOUNTS
Year ended December 31, 1996
8. TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
Fixtures
and fittings
Computer and office
systems equipment Total
(Pound Sterling) (Pound Sterling) (Pound Sterling)
Cost
<S> <C> <C> <C>
At January 1, 1996 -- -- --
Additions 105,011 32,439 137,450
------- ------- -------
At December 31, 1996 105,011 32,439 137,450
------- ------- -------
Accumulated depreciation
At January 1, 1996 -- -- --
Charge for the year 3,409 969 4,378
------- ------- -------
At December 31, 1996 3,409 969 4,378
------- ------- -------
Net book value
At December 31, 1996 101,602 31,470 133,072
======= ======= =======
</TABLE>
9. INVESTMENTS HELD AS FIXED ASSETS
Shares in
subsidiaries
(Pound Sterling)
At January 1, 1996 --
Addition 100,000
-------
At December 31, 1996 100,000
=======
On June 20, 1996 the company acquired the whole of the ordinary share
capital of Display.IT Limited, the consideration being satisfied by the
allotment of 2,000,000 ordinary shares of 5p each credited as fully
paid. The principal activity of Display.IT Limited is that of software
development and distribution. Display.IT Limited was incorporated in
Great Britain and registered in England and Wales.
Consolidated financial statements are prepared using merger accounting
principles. The fair value of the consideration was (pound
sterling)100,000. The loss of Display.IT Limited for the period from
January 1, 1996 to June 20, 1996 was (pound sterling)219,159 and
Display.IT Limited did not trade in the previous period.
F-13
<PAGE>
DISPLAY.IT HOLDINGS PLC
(a development stage company)
NOTES TO THE ACCOUNTS
Year ended December 31, 1996
10. DEBTORS
<TABLE>
<CAPTION>
Group Company
1996 1996
(Pound Sterling) (Pound Sterling)
<S> <C> <C>
Loan to subsidiary undertaking -- 1,286,058
Other debtors 79,615 2,625
Prepayments 6,215 --
------ ---------
85,830 1,288,683
====== =========
</TABLE>
The loan to subsidiary undertaking is due in greater than one year.
The debtor of (pound sterling)2 shown on the consolidated balance sheet
atDecember 31, 1995 represents called up share capital not paid. The
debtor was settled at December 31, 1996.
11. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
<TABLE>
<CAPTION>
Group Company
1996 1996
(Pound Sterling) (Pound Sterling)
<S> <C> <C>
Trade creditors 209,115 --
Directors' current accounts 4,140 --
Accruals and deferred income 30,484 5,711
Other creditors including tax and social security 12,318 --
-------- -----
256,057 5,711
======== =====
</TABLE>
Other creditors including tax and social security include corporate tax
payable by the group of (pound sterling)1,861. The directors' current
accounts relate to balances owed to directors for expenses.
F-14
<PAGE>
DISPLAY.IT HOLDINGS PLC
(a development stage company)
NOTES TO THE ACCOUNTS
Year ended December 31, 1996
12. CALLED UP SHARE CAPITAL
1996
(Pound Sterling)
Authorized:
30,000,000 ordinary shares of 5p each 1,500,000
==========
Allotted and fully paid:
15,164,755 ordinary shares of 5p each 758,238
==========
Display.IT Holdings plc was incorporated in England and Wales with
limited liability on May 3, 1996 with an authorized share capital of
(pound sterling)1,000 divided into 1,000 shares of (pound sterling)1
each, of which two such shares were issued nil paid to the subscribers
to the Memorandum of Association of the company. On June 20, 1996 each
of the existing ordinary shares of (pound sterling)1 each in the
company was sub-divided into 20 ordinary shares of 5p each and the
authorized share capital was increased from (pound sterling)1,000 to
(pound sterling)200,000 by the creation of 3,980,000 ordinary shares of
5p each.
On June 20, 1996 the company acquired the whole of the ordinary share
capital of Display.IT Limited, the consideration being satisfied by the
allotment of 2,000,000 ordinary shares of 5p each credited as fully
paid.
On June 28, 1996 the company offered 1,000,000 shares of 5p each in a
private placing for trading on OFEX (off-exchange for the London Stock
Exchange). All shares were taken up at a price of 100p and the 95p
premium of each of these shares has been credited to the share premium
account. Legal and accounting fees incurred in connection with the
placing have been charged to the share premium account.
On December 6, 1996 the company passed an ordinary resolution to
increase the authorized share capital from (pound sterling)200,000 to
(pound sterling)1,500,000 by the creation of 26,000,000 new ordinary
shares of 5p each ranking pari passu in all respects with existing
ordinary shares.
Pursuant to the increase in the authorized share capital, the company
undertook a four for one bonus issue. The issued share capital for the
company increased as a result from 3,000,000 ordinary shares of 5p each
to 15,000,000 ordinary shares of 5p each. The sum of (pound
sterling)600,000 was transferred from the share premium account.
F-15
<PAGE>
DISPLAY.IT HOLDINGS PLC
(a development stage company)
NOTES TO THE ACCOUNTS
Year ended December 31, 1996
On December 11, 1996 holders of share options purchased 50,000 ordinary
shares of 5p each at 24p per share. Share premium of (pound
sterling)9,500 was credited to the share premium account.
On December 13, 1996 the company allotted 114,755 ordinary shares of 5p
each at (pound sterling)3.05 per share. Total proceeds were (pound
sterling)350,003 and share premium of (pound sterling)344,265 was
credited to the share premium account.
Employee options
Under the company's share option scheme, employees held options at
December 31, 1996 for 415,705 ordinary shares of 5p each (1995 - nil)
as follows:
<TABLE>
<CAPTION>
Number of Exercise
options price Date option granted Expiration date
(Pound Sterling)
<S> <C> <C> <C> <C>
David Familiant 62,855 0.70 October 4, 1996 October 4, 2001
Marjorie Moe 51,425 0.70 October 10, 1996 October 10, 2001
Catita Edward 51,425 0.70 October 10, 1996 October 10, 2001
Duncan Coward 75,000 0.70 October 10, 1996 October 10, 2001
Mark Proffitt 150,000 4.07 December 23, 1996 December 23, 2001
Dawn Sizer 25,000 4.07 December 23, 1996 December 23, 2001
</TABLE>
All options were granted at fair value. The number of options and
exercise price have been adjusted for the bonus issue on December 6,
1996.
Other options
On June 24, 1996 the company granted options to four third parties in
respect of 60,000 ordinary shares each at a price of (pound
sterling)1.20 per share. Subsequent to the bonus issue on December 6,
1996, the holders of these options are entitled to subscribe for
300,000 ordinary shares each at a price of 24p per share.
The option over the first 30,000 ordinary shares (150,000 ordinary
shares after the bonus issue) for each individual may be exercised up
to June 30, 2002 after which the options will lapse. The option over
the remaining 30,000 ordinary shares (150,000 ordinary shares after the
bonus issue) for each individual may be exercised between June 30, 1999
and June 30, 2002.
On December 11, 1996 holders of share options purchased 50,000 ordinary
shares. No other options were exercised at the year end.
F-16
<PAGE>
DISPLAY.IT HOLDINGS PLC
(a development stage company)
NOTES TO THE ACCOUNTS
Year ended December 31, 1996
13. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
<TABLE>
<CAPTION>
Share Profit and
Group Share premium loss
capital account account Total
(Pound Sterling) (Pound Sterling) (Pound Sterling) (Pound Sterling)
<S> <C> <C> <C> <C>
At January 1, 1996 100,000 -- (99,998) 2
Private placing:
Share capital issued (net) 50,000 896,972 -- 946,972
Bonus issue 600,000 (600,000) -- --
Exercise of options 2,500 9,500 -- 12,000
Allotment of shares 5,738 344,265 -- 350,003
Loss for the year -- -- (848,073) (848,073)
-------- --------- -------- ---------
At December 31, 1996 758,238 650,737 (948,071) 460,904
======== ========= ======== =========
Company
At January 1, 1996 -- -- -- --
Shares issued on incorporation 2 -- -- 2
Shares issued on acquisition of
Display.IT Limited 99,998 -- -- 99,998
Private placing:
Share capital issued (net) 50,000 896,972 -- 946,972
Bonus issue 600,000 (600,000) -- --
Exercise of options 2,500 9,500 -- 12,000
Allotment of shares 5,738 344,265 -- 350,003
Loss for the period -- -- (26,003) (26,003)
-------- --------- -------- ---------
At December 31, 1996 758,238 650,737 (26,003) 1,382,972
======== ========= ======== =========
</TABLE>
The proceeds from the private placing are shown net of issue expenses
of (pound sterling)53,028.
The share capital at January 1, 1996 represents notional share capital
and arises on consolidation using merger accounting principles (see
note 1). The profit and loss account balance at January 1, 1996
represents the excess of par value of shares issued over par value of
shares of the merged company acquired.
F-17
<PAGE>
DISPLAY.IT HOLDINGS PLC
(a development stage company)
NOTES TO THE ACCOUNTS
Year ended December 31, 1996
14. LOSS PER SHARE
The loss per share is based upon a loss on ordinary activities after
taxation of (pound sterling)848,073 and a weighted average of
12,572,802 ordinary shares.
15. RELATED PARTY TRANSACTIONS
A non-executive director of the company, Marjorie Moe, granted a loan
of (pound sterling)139,944 to Display.IT Limited during the year. The
loan has been repaid in full during the year, together with interest of
(pound sterling)6,466.
Display.IT Limited generated income of (pound sterling)42,500 during
the year from a member of Display.IT Holdings plc, Independent Economic
Analysis (Holdings) PTE Limited.
16. FINANCIAL COMMITMENTS
At the year end the group was committed to making the following
payments during the next year in respect of operating leases:
<TABLE>
<CAPTION>
Land and
buildings Other Total
(Pound Sterling) (Pound Sterling) (Pound Sterling)
<S> <C> <C> <C>
Leases which expire:
Within two to five years 21,600 12,516 34,116
======= ======= ======
</TABLE>
The group leases its office premises, certain equipment and motor
vehicles under operating leases. The future financial years' minimum
operating lease commitments as at December 31, 1996 are as follows:
(Pound Sterling)
Year ending
December 31, 1997 34,116
1998 34,116
1999 31,512
2000 21,600
2001 10,800
Thereafter --
-------
--
132,144
=======
Peter Levin has an employment contract with the group to serve as its
managing director and chief executive officer. The employment contract
is terminable on 12 months' notice at any time after June 23, 1997. The
principal term of Mr. Levin's contract of employment is a current
salary of (pound sterling)144,000 per annum.
F-18
<PAGE>
DISPLAY.IT HOLDINGS PLC
(a development stage company)
NOTES TO THE ACCOUNTS
Year ended December 31, 1996
17. CONTINGENT LIABILITIES
The company has received an allegation that its product infringed
another party's copyright and was being passed off as being connected
with that third party. The company denies the allegations and has been
advised that they have no legal basis. A detailed rebuttal of the
allegations has been made and to date no legal action has been taken by
the third party in relation to its threat against the company.
Management believes that the main purpose of the allegations was to
seek to exclude Display.IT Limited from the market either temporarily
or permanently. Accordingly, the company has submitted a complaint to
the European Commission in Brussels, Belgium.
18. CONTROLLING SHAREHOLDER
Peter Levin had a beneficial interest in 10,000,000 ordinary shares of
the company at the year end. This represents a controlling interest in
the share capital of the company.
19. POST BALANCE SHEET EVENT
The company has issued a total of 391,965 ordinary shares subsequent to
the balance sheet date. Total proceeds were (pound sterling)1,489,993.
20. SUMMARY OF DIFFERENCES BETWEEN GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (GAAP) IN THE UNITED KINGDOM AND
THE UNITED STATES
The consolidated financial statements are prepared in accordance with
UK GAAP, which differ in certain significant respects from US GAAP. The
differences that are significant to the group relate to the following
items:
Development costs
Display.IT Limited, the subsidiary of Display.IT Holdings plc, is a
development stage enterprise as defined in Statement of Financial
Accounting Standard No. 7 under US GAAP. Development expenditure
incurred since inception is (pound sterling)312,223 of which (pound
sterling)187,223 has been capitalized.
Display.IT Limited is developing an application to display financial
news and price information to the desktop via the Internet.
F-19
<PAGE>
DISPLAY.IT HOLDINGS PLC
(a development stage company)
NOTES TO THE ACCOUNTS
Year ended December 31, 1996
The risks faced by the group include:
o obtaining sufficient working capital;
o obtaining regulatory approval;
o obtaining sufficient customer demand for the product.
Under UK GAAP, development costs are classified as an intangible fixed
asset, whereas under US GAAP they are classified as a tangible fixed
asset.
Deferred taxation
Under UK GAAP, deferred taxation is provided at the rates at which the
taxation is expected to become payable. No provision is made for
amounts which are not expected to become payable in the foreseeable
future and no account is taken of deferred tax assets in accordance
with Statement of Standard Accounting Practice 15.
Under US GAAP, deferred taxation is provided on all temporary
differences under the liability method at rates at which the taxation
would be payable in the relevant future year as prescribed by Statement
of Financial Accounting Standard No. 109, "Accounting for Income
Taxes".
There is a deferred tax asset of (pound sterling)211,000 relating to
losses carried forward which is not recognized under UK GAAP. The
deferred tax asset under US GAAP is reduced to nil by a valuation
allowance of an equal amount.
Reconciliation of effective tax rate
Display.IT Holdings plc's effective tax rate varies from the statutory
tax rate as a result of the following factors:
1996
%
Statutory tax rate 33
Timing differences not provided for (25)
Non-qualifying expenditure (9)
----
Effective tax rate (1)
====
F-20
<PAGE>
DISPLAY.IT HOLDINGS PLC
(a development stage company)
NOTES TO THE ACCOUNTS
Year ended December 31, 1996
Loss per share
Under UK GAAP, loss per share is based upon the weighted average number
of ordinary shares in issue throughout the period and is calculated on
the loss on ordinary activities after taxation and after other finance
charges in respect of non-equity shares, but before equity dividends.
Under US GAAP, loss per share is based upon the weighted average number
of ordinary shares in issue throughout the period and is calculated on
the net loss for the period.
Primary loss per share 6.44p
The primary loss per share is based upon a net loss of (pound
sterling)848,073 and a weighted average of 13,164,387 ordinary shares,
after taking into account the diluting effect of the options
outstanding at the year end.
Fully diluted loss per share 6.43p
The fully diluted loss per share is based upon a net loss of (pound
sterling)848,073 and a weighted average of 13,193,345 ordinary shares,
after taking into account the maximum diluting effect of the options
outstanding at the year end.
Consolidated statements of cash flows
The consolidated statements of cash flows prepared under UK GAAP differ
in certain presentational respects from the format required under
Statement of Financial Accounting Standard ("SFAS") 95. Under UK GAAP,
a reconciliation of profit from operations to cash flows from operating
activities is presented in a note, and cash paid for interest and
income taxes are presented separately from cash flows from operating
activities. Under SFAS 95, cash flows from operating activities are
based on net profit, include interest and income taxes and are
presented on the face of the statement. UK GAAP requires cash and cash
equivalents to be presented net of overdrafts; SFAS 95 treats
overdrafts with financing activities.
F-21
<PAGE>
DISPLAY.IT HOLDINGS PLC
(a development stage company)
NOTES TO THE ACCOUNTS
Year ended December 31, 1996
A reconciliation between the consolidated statements of cash flows
presented in accordance with UK GAAP and US GAAP is set out below.
<TABLE>
<CAPTION>
(Pound Sterling)
<S> <C>
Operating activities
Net cash outflow from operating activities (UK GAAP) (689,292)
Interest received 13,910
Interest paid (6,466)
---------
Net cash used in operating activities (US GAAP) (681,848)
=========
Investing activities
Net cash outflow from investing activities (UK GAAP) (324,673)
---------
Net cash used in investing activities (US GAAP) (324,673)
=========
Financing activities
Net cash inflow from financing activities (UK GAAP) 1,322,835
---------
Net cash provided by financing activities (US GAAP) 1,322,835
=========
</TABLE>
Consolidation
The group accounts consolidate the accounts of Display.IT Holdings plc
and its subsidiary undertaking using merger accounting principles.
Under UK GAAP the difference between the nominal value of the shares
issued and the nominal value of the shares acquired may be taken to the
profit and loss reserve. Under US GAAP the difference is offset against
share capital.
F-22
<PAGE>
Registration No. 3069667
DISPLAY.IT LIMITED
(formerly Lamdis Limited)
Report and Financial Statements
June 19, 1995 (Date of Incorporation)
December 31, 1995
Deloitte & Touche
Hill House
1 Little New Street
London EC4A 3TR
F-23
<PAGE>
DISPLAY.IT LIMITED
(formerly Lamdis Limited)
REPORT AND FINANCIAL STATEMENTS 1995
CONTENTS Page
Auditors' report F-25
Balance sheet F-26
Notes to the accounts F-27
F-24
<PAGE>
INDEPENDENT AUDITORS' REPORT TO THE DIRECTORS AND SHAREHOLDERS
OF
DISPLAY.IT LIMITED
(FORMERLY LAMDIS LIMITED)
We have audited the accompanying balance sheet of Display.IT Limited as of
December 31, 1995. This financial statement is the responsibility of the
company's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We have conducted our audit in accordance with generally accepted auditing
standards in the United Kingdom and the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall balance sheet presentation. We believe that our audit
of the balance sheet provides a reasonable basis for our opinion.
In our opinion, such balance sheet presents fairly, in all material respects,
the financial position of the company at December 31, 1995 in conformity with
generally accepted accounting principles in the United Kingdom and the United
States of America.
DELOITTE & TOUCHE
Chartered Accountants
London, England
September 24, 1996
F-25
<PAGE>
DISPLAY.IT LIMITED
(formerly Lamdis Limited)
BALANCE SHEET
December 31, 1995
Note 1995
(Pound Sterling)
CURRENT ASSETS
Debtors 2 2
=======
CAPITAL AND RESERVES
Called up equity share capital 3 2
=======
F-26
<PAGE>
DISPLAY.IT LIMITED
(formerly Lamdis Limited)
NOTES TO THE ACCOUNTS
Period ended December 31, 1995
1. ACCOUNTING POLICY
The financial statements are prepared in accordance with applicable
accounting standards. The particular accounting policy adopted is
described below.
Accounting convention
The financial statements are prepared under the historical cost
convention.
2. OTHER DEBTORS
Other debtors represent amounts unpaid in respect of equity share
capital. The debtor was subsequently settled.
3. CALLED UP EQUITY SHARE CAPITAL
1995
(Pound Sterling)
Authorized:
10,000 ordinary shares of(pound sterling)1 each 10,000
=======
Allotted and unpaid:
2 ordinary shares of(pound sterling)1 each 2
=======
4. PROFIT AND LOSS ACCOUNT
The company has not traded during the period, accordingly no profit and loss
account has been prepared. The audit fee of (pound sterling)2,000 has been
paid by the shareholder. The director did not receive any remuneration
during the period. There are no recognized gains or losses for the period.
F-27
<PAGE>
DISPLAY.IT LIMITED
(formerly Lamdis Limited)
NOTES TO THE ACCOUNTS
Period ended December 31, 1995
Under US GAAP, the audit fee of (pound sterling)2,000 would be recognized in
the profit and loss account for the period. The profit and loss account
would therefore show at net loss for the period of (pound sterling)2,000.
5. CASH FLOW STATEMENT
The company has not traded in the period and there were no cash flows.
Accordingly, no cash flow statement has been prepared.
6. RECONCILIATION OF MOVEMENT ON SHAREHOLDERS' FUNDS
1995
(Pound Sterling)
June 19 --
Issue of ordinary share capital 2
-------
December 31 2
=======
F-28
<PAGE>
EXHIBIT INDEX
The following Exhibits are filed as part of this Registration Statement.
<TABLE>
<S> <C>
1.1 Memorandum of Association
1.2 New Articles of Association
2.1 Form of Deposit Agreement to be entered into by and between Display.IT
Holdings plc and The Bank of New York
The Company has not issued any, and is not party to any instrument
authorizing the issuance of, long-term debt securities.
3.1 Share Exchange Agreement by and among Display.IT Holdings plc, Peter
Levin and Marjorie Moe, dated June 20, 1996
3.2 Form of Placing Letter entered into by and between Display.IT Holdings
plc and 19 investors, together with schedule of the 19 investors
3.3 Option Deed by and between Display.IT Holdings plc and Alasdair
Norman Macleod, dated June 24, 1996, together with schedule of three
other parties who entered into substantially identical Option Deeds
with Display.IT Holdings plc
3.4 Bonus Option Deed by and between Display.IT Holdings plc and Alasdair
Norman Macleod, dated June 24, 1996, together with schedule of
three other parties who entered into substantially identical Bonus
Option Deeds with Display.IT Holdings plc
3.5 Agreement for Share Subscription by and between Display.IT Holdings plc
and Independent Economic Analysis (Holdings) Pte Limited, dated
November 25, 1996
3.6 Agreement for Share Subscription by and between Display.IT Holdings plc
and Hestia Investments S.A., dated December 19, 1996
3.7 Service Agreement by and between Display.IT Holdings plc and Peter
Levin, dated June 24, 1996
3.8 Letter Agreement by and between Display.ITHoldings plc and David G. Familiant,
dated June 24, 1996, together with schedule of two other parties who have
entered into substantially identical Letter Agreements with Display.IT
Holdings plc
3.9 Loan Agreement by and between Display.IT Limited and Marjorie Moe,
dated April 22, 1996
3.10 Debenture by and between Display.IT Limited and Marjorie Moe, dated
April 22, 1996
3.11 Guarantee by and between Marjorie Moe and Peter Levin, dated April 22,
1996
3.12 Pledge Agreement by and between Peter Levin and Marjorie Moe, dated
April 22, 1996
3.13 Pledge Agreement by and between Peter Levin and Marjorie Moe, dated
June 20, 1996
3.14 Rules of the Display.IT Holdings plc Share Option Scheme
</TABLE>
<PAGE>
EXHIBIT 1.1
<PAGE>
The Companies Acts 1985 - 1989
-------------------------------------
COMPANY LIMITED BY SHARES
-------------------------------------
MEMORANDUM OF ASSOCIATION
of
Display.IT Holdings plc
- -------------------------------------------------------------------------------
1. The name of the Company is Display.IT Holdings plc.1
2. The company is to be a public company.
3. The registered office of the Company will be situate in England and Wales.
4. The objects for which the Company is established are:2
(1) To carry on the business of a holding company in all its branches, and
to acquire by purchase, lease, concession, grant, licence or otherwise
such businesses, options, rights, privileges, lands, buildings, leases,
underleases, stocks, shares, debentures, debenture stock, bonds,
obligations, securities, reversionary interests, annuities, policies of
assurance and other property and rights and interests in property as the
Company shall deem fit and generally to hold, manage, develop, lease,
sell or dispose of the same; and to vary any of the investments of the
Company, to act as trustees of any deeds constituting or securing any
debentures, debenture stock or other securities
- ----------
1 On 24 June 1996 the company changed its name from Law 737 Limited and re-
registered as a public company under the name Display.IT Holdings plc.
2 Clause 3(1) was adopted by special resolution dated 20 June 1996.
<PAGE>
or obligations; to enter into, assist, or participate in financial,
commercial, mercantile, industrial and other transactions, undertakings and
businesses of every description, and to establish, carry on, develop and
extend the same or sell, dispose of or otherwise turn the same to account, and
to co-ordinate the policy and administration of any companies of which this
Company is a member or which are in any manner controlled by, or connected
with the Company, and to carry on all or any of the businesses of capitalists,
trustees, financiers, financial agents, company promoters, bill discounters,
insurance brokers and agents, mortgage brokers, rent and debt collectors,
stock and share brokers and dealers and commission and general agents,
merchants and traders; and to manufacture, buy, sell, maintain, repair and
deal in plant, machinery, tools, articles and things of all kinds capable of
being used for the purposes of the above-mentioned businesses or any of them,
or likely to be required by customers of or persons having dealings with the
Company.
(2) To carry on in any part of the world any other business or activity
which may seem to the directors of the Company capable of being
conveniently or advantageously carried on in connection with any of the
above businesses or directly or indirectly to further or facilitate the
objects of the Company or to enhance the value of or render more
profitable any of the Company's property or assets.
(3) To purchase, take on lease, or in exchange, hire or otherwise acquire,
hold and manage any lands or buildings of freehold, leasehold or other
tenure or any estate or interest therein, and any other property of any
description, whether real or personal, and any easements privileges
options or rights over through under the same or in connection
therewith, and to develop, deal with and turn the same to account in all
respects as may seem expedient.
(4) To construct, erect, maintain, alter, replace, or remove any buildings,
works, offices, erections, plant, machinery, tools or equipment as may
seem desirable for any of the businesses of or in the interests of the
Company, and to manufacture, buy, sell and generally deal in any plant,
tools, machinery, goods or things of any description which may be
conveniently or advantageously dealt with in connection with any of the
Company's objects.
<PAGE>
(5) Either with or without the Company receiving any consideration or
advantage, direct or indirect, therefrom, to transfer by way of gift or
at an undervalue or otherwise all or any part of the assets or property
of the Company to or enter into any arrangement at an undervalue with
any person including without prejudice to the generality of the
foregoing any holding company subsidiary company or fellow subsidiary
company; to waive or release, with or without consideration any rights
of, or any debts liabilities or obligations owed to, the Company from
any company including without prejudice to the generality of the
foregoing any holding company subsidiary company or fellow subsidiary
company.
(6) Either with or without the Company receiving any consideration or
advantage, direct or indirect, from giving any such guarantee, to
guarantee by personal covenant or by mortgaging or charging all or any
part of its undertaking, property and assets present and future and
uncalled capital or by any combination of such methods or by any other
means whatsoever the performance of the obligations (whether legally
binding or not) and the payment of any moneys (including but not limited
to capital or principal, premiums, dividends or interest, commissions,
charges, discount and any costs or expenses relating thereto whether on
any stocks, shares or securities or in any other manner whatsoever) by
any company, firm or person including but not limited to any company
which is for the time being the Company's holding company as defined by
Section 736 of the Companies Act, 1985 (or any statutory amendment or
re-enactment thereof from time to time) or a subsidiary of the Company
or of the Company's holding company as so defined or any company, firm
or person who is for the time being a member or otherwise has any
interest in the Company or is associated with the Company in any
business or venture or any other person firm or company whatsoever and
for the purposes of this paragraph (6) any references to the
guaranteeing of any obligations or payments shall be taken to include
the giving of any indemnities in respect of any loss suffered by virtue
of any failure to perform such obligations or make such payments.
(7) To do research work and make experiments in connection with any business
of the Company, and to apply for, purchase or otherwise acquire,
protect, prolong, extend or renew and to hold in any part of the world
any patents, patent rights, brevets d'invention, trademarks, licences,
protections, concessions and intellectual property rights of whatever
nature which may appear likely to be advantageous or useful to the
Company, and to use and manufacture under or grant licences or
privileges in respect of or sell or let the same or any interest
therein, and to expend money in experimenting upon and testing and in
improving or seeking to improve any patents, inventions or rights which
the Company may acquire or propose to acquire; to register any patent
for any invention or any trademarks, designs or other industrial
property rights.
<PAGE>
(8) To adopt such means for making known any goods or services provided by
the Company and keeping the same before the public as may be deemed
expedient and in particular to employ advertising and public relations
techniques of all kinds.
(9) To acquire and undertake the whole or any part of the share capital,
business, goodwill and assets of any company and as part of the
consideration for such acquisition to undertake all or any of the
liabilities of such company or to acquire an interest in, amalgamate or
enter into any arrangement for sharing profits, or for co-operation or
for limiting competition, or for mutual assistance, with any such
company, and to give or accept by way of consideration for any of the
acts or things aforesaid or property acquired, any shares, monies,
assets, rights, debentures, debenture stock or other securities that may
be agreed, and to hold and retain or sell, mortgage or otherwise deal
with any shares, monies, assets, rights, debentures, debenture stock or
other securities so received.
(10) To establish or promote or concur in establishing or promoting any
company the establishment or promotion of which shall be considered
desirable in the interests of the Company and to subscribe for,
underwrite, purchase or otherwise acquire and hold the shares, stocks,
debentures, debenture stock or other securities and obligations of any
such company.
(11) To enter into partnerships or into any arrangement for sharing profits,
union of interests, co-operation, reciprocal concessions, or otherwise,
with any person or company carrying on business within the objects of
the Company.
(12) To sell, exchange, mortgage, let on rent, share of profit or otherwise,
grant licences, easements, options and other rights over and in any
other manner deal with or dispose of all or any part of the undertaking,
property, assets, rights and effects of the Company for such
consideration as may be thought fit and in particular for shares,
stocks, debentures, debenture stock or other obligations or securities,
whether fully or partly paid up, of any other company.
(13) To vest any real or personal property, rights or interests acquired by
or belonging to the Company in any company on behalf or for the benefit
of the Company, with or without any declared trust in favour of the
Company.
(14) To invest and deal with the monies of the Company in any manner.
(15) To borrow and raise money and secure or discharge any debt or
obligation of or binding on the Company in such manner as may be thought
fit and in particular by mortgages of or charges upon the undertaking
and all or any part of the real and personal property (present and
future) and the uncalled capital of the Company or by the creation and
issue of debentures, debenture stock or other obligations or securities
of any description.
<PAGE>
(16) To lend and advance money or give credit or financial accommodation to
any company on such terms as may seem expedient, and in particular to
customers and others having dealings with the Company.
(17) To acquire by original subscription, purchase or otherwise and to hold,
realise, sell or otherwise dispose of shares (whether credited as paid
up in full or in part), stock, debentures, debenture stock or other
securities or obligations of any other company.
(18) To draw, make, accept, endorse, discount, execute and issue cheques,
promissory notes, bills of exchange, bills of lading, warrants,
debentures, debenture stock and other negotiable or transferable
instruments.
(19) To apply for, promote, and obtain any Act of Parliament, charter,
contract, decree, right, privilege, concession, licence or authorisation
of any Government, State or municipality, Provisional Order or Licence
of the Department of Trade or other authority for enabling the Company
to carry any of its objects into effect or for extending any of the
powers of the Company or for effecting any modification of the
constitution of the Company, or for any other purpose which may seem
expedient, to carry out, exercise and comply with any such charter,
contract, decree, right, privilege, concession, licence or authorisation
and to oppose any proceedings or applications which may seem calculated
directly or indirectly to prejudice the Company's interests.
(20) To enter into any arrangements with any governments organisations
association clubs or authorities (supreme, municipal, local or
otherwise) or any companies that may seem conducive to the objects of
the Company or any of them.
(21) To act as agents or brokers (but not as stock or share brokers) and as
trustees for any company and to undertake and perform sub-contracts.
(22) To remunerate any company rendering services to the Company, whether by
cash payment or by the allotment of shares, debentures, debenture stock,
or other securities of the Company credited as paid up in full or in
part or otherwise.
(23) To pay out of the funds of the Company all expenses which the Company
may lawfully pay of or incidental to the promotion, formation and
registration of or the raising of money for the Company or any other
company or to contract with any other company to pay the same or the
issue of its capital, including brokerage and commissions for obtaining
applications for or taking, placing or underwriting or procuring the
underwriting of shares, debentures, debenture stock or other securities
of the Company or any other company.
<PAGE>
(24) To establish and maintain or procure the establishment and maintenance
of, any pension or superannuation funds or schemes (whether contributory
or otherwise) for the benefit of and to give or procure the giving of
donations, gratuities, pensions, allowances and emoluments to any
persons who are or were at any time in the employment or service of the
Company, or any of its predecessors in business or of any company which
is a subsidiary of the Company or is allied to or associated with the
Company or with any such subsidiary, or who may be or have been
Directors or officers of the Company, or of any such other company as
aforesaid, or any persons in whose welfare the Company or any such other
company as aforesaid is or has been at any time interested, and the
wives, widows, families, relations and dependants of any such persons,
and to establish, subsidise and subscribe to any institutions,
associations, societies, clubs or funds calculated directly or
indirectly to be for the benefit of, or to advance the interests and
well-being of the Company or of any other company as aforesaid or of any
such persons as aforesaid, and to make payments for or towards the
insurance of any such persons as aforesaid.
(25) To subscribe or guarantee money for charitable or benevolent objects,
or for any exhibition, or for any public, general or useful object, or
for any purpose likely directly or indirectly to further the objects of
the Company.
(26) To insure the life of any person or to insure against any accident to
any person who may, in the opinion of the Directors, be of value to the
Company as having or holding for the Company interests, goodwill or
influence or other assets and to pay the premiums on such insurance.
(27) To procure the Company and any branch office of the Company to be
registered or recognised in any part of the world.
(28) To distribute among the members of the Company in kind any property of
the Company (whether by way of dividend or otherwise) and in particular
any shares, debentures, debenture stock or other securities belonging to
the Company or of which the Company may have the power of disposing.
(29) To do all or any of the above things in any part of the world, and
either as principals, agents, trustees, contractors or otherwise and
either alone or in conjunction with others and either by or through
agents, sub-contractors, trustees or otherwise.
(30) To do all such things as may be deemed incidental or conducive to the
attainment of the above objects or any of them.
And it is hereby declared that:
<PAGE>
(i) The word "company" in this clause, except where used in
reference to the Company, shall be deemed to include any
partnership, firm or other person or body of persons whether
corporate or unincorporate, and whether domiciled in the United
Kingdom or elsewhere, and,
(ii) The objects specified in each of the paragraphs of this clause
shall be regarded as independent objects, and accordingly shall in
no way be limited or restricted (except where otherwise expressed
in such paragraphs) by reference to or inference from the terms of
any other paragraph or the name of the Company, but may be carried
out in as full and ample a manner and construed in as wide a sense
as if each of the said paragraphs defined the objects of a separate
and distinct company
5. The liability of the members is limited.
6.3 The initial authorised share capital of the Company is (pound sterling)1,000
divided into 1,000 ordinary shares of (pound sterling)1 each. The shares in
the original or any increased capital may be divided into several classes,
and have attached thereto respectively any preferential, deferred or other
special rights, privileges, conditions or restrictions as to dividend,
capital, voting or otherwise.
- ----------
3 By special resolution dated 20 June 1996 the authorised share capital of the
company was increased and sub-divided so that the authorised share capital is
(pound)200,000 divided into 4,000,000 ordinary shares of 5p each. By special
resolution dated 13 December 1996 the authorised share capital of the company
was increased from (pound sterling)200,000 to (pound sterling)1,500,000 so
that the authorised share capital of the company is (pound sterling)1,500,000
divided into 30,000,000 ordinary shares of 5p each.
<PAGE>
WE the several persons whose names, addresses and descriptions are subscribed,
are desirous of being formed into a Company in pursuance of this Memorandum of
Association and we respectively agree to take the number of shares in the
capital of the Company set opposite our respective names.
- --------------------------------------------------------------------------------
NAMES, ADDRESSES AND DESCRIPTIONS Number of Shares
OF SUBSCRIBERS taken by each
Subscriber
(in words)
- --------------------------------------------------------------------------------
Huntsmoor Nominees Limited, One
Carmelite
50 Victoria Embankment
LONDON EC4Y 0DX
Limited company
Diarmuid Cummins
For and on behalf of Huntsmoor Nominees Limited
Huntsmoor Limited, One
Carmelite
50 Victoria Embankment
LONDON EC4Y 0DX
Limited company
Diarmuid Cummins
For and on behalf of Huntsmoor Limited
DATED the 25th day of April 1995
- -----
WITNESS to the above signatures:
- -------
Marion Williams
Carmelite
50 Victoria Embankment
LONDON EC4Y 0DX
Clerk
<PAGE>
EXHIBIT 1.2
<PAGE>
The Companies Acts 1985 - 1989
-------------------------------------
COMPANY LIMITED BY SHARES
-------------------------------------
NEW
ARTICLES OF ASSOCIATION
of
Display.IT Holdings plc
(Adopted by special resolution passed on 24 June 1996)
(Amended by special resolution passed on 13 December 1996)
- -------------------------------------------------------------------------------
1. Preliminary
Table A not to apply
1.1 No regulations set out in any statute, or in any statutory instrument
or other subordinate legislation made under any statute, concerning
companies shall apply as regulations or articles of the Company.
Interpretation
1.2 In these articles, unless the context otherwise requires, the following
words and expressions have the meanings set out opposite them:
the "Act" means the Companies Act 1985;
"these articles" means these articles of association as altered from
time to time;
<PAGE>
"Board" means the directors for the time being of the Company or the
directors present at a meeting of the directors at which a quorum is
present;
"Company" means Display.IT Holdings plc;
"month" means calendar month;
"paid" means paid or credited as paid;
"Register" means the register of members of the Company;
"Registered Office" means the registered office of the Company for the
time being;
"Secretary" means the secretary of the Company or any other person
appointed to perform the duties of the secretary of the Company
including a joint, assistant or deputy secretary;
"Statutes" means the Act, the Companies Act 1989 and all other
statutes, orders, listing rules, regulations and other subordinate
legislation for the time being in force concerning companies so far as
they apply to the Company;
"United Kingdom" includes England, Scotland, Wales and Northern Ireland
but excludes the Channel Islands and the Isle of Man;
"in writing" means written or produced by any substitute for writing or
partly one and partly another; and
"year" means calendar year.
1.3 In these articles:
(a) reference to any statute or statutory provision includes a
reference to that statute or statutory provision as amended,
extended or re-enacted and to any regulation, order,
instrument or subordinate legislation under the relevant
statute or statutory provision;
(b) reference to the singular includes a reference to the plural
and vice versa;
(c) reference to any gender includes a reference to all other
genders;
(d) headings are included only for convenience and shall not
affect meaning;
(e) references to persons include bodies corporate, unincorporated
associations and partnerships and any reference to any party
who is an individual is also deemed to include their
respective legal personal representatives; and
<PAGE>
(f) unless the context (or this or the preceding article)
otherwise require, words or expressions bear the same meaning
as in the Act.
Registered Office
1.4 The Registered Office shall be at such place in England and Wales as
the Board shall from time to time appoint.
2. Share Capital
Authorised share capital
2.1 The share capital of the Company at the date of the adoption of this
article is (pound)1,500,000 divided into 30,000,000 ordinary shares of
5p each.
Variation of rights
2.2 Whenever the share capital of the Company is divided into different
classes of shares, the special rights attached to any class may,
subject to the provisions of the Statutes, be varied or abrogated
either with the consent in writing of the holders of not less than
three-fourths in nominal value of the issued shares of the class or
with the sanction of an extraordinary resolution passed at a separate
general meeting of the holders of the shares of the class (but not
otherwise) and may be so varied or abrogated whilst the Company is a
going concern or during or in contemplation of a winding-up. To every
such separate general meeting all the provisions of these articles
relating to general meetings of the Company and to the proceedings at
such general meetings shall with necessary modifications apply, except
that:
(a) the necessary quorum shall be two persons holding or
representing by proxy at least one-third in nominal value of
the issued shares of the class (but so that if at any
adjourned meeting a quorum as defined above is not present,
any one holder of any shares of the class present in person or
by proxy shall be a quorum); and
(b) any holder of shares of the class present in person or by
proxy may demand a poll and every such holder shall on a poll
have one vote for every share of the class held by him.
2.3 The preceding article shall apply to the variation or abrogation of the
special rights attached to some only of the shares of any class as if
each group of shares of the class differently treated formed a separate
class the special rights of which are to be varied.
<PAGE>
2.4 The special rights attached to any class of shares having preferential
rights shall not, unless otherwise expressly provided by the terms of
issue of that class of shares, be deemed to be varied:
(a) by the creation or issue of further shares ranking as regards
participation in the profits or assets of the Company in some
or all respects equally with such shares but in no respect in
priority to such shares; or
(b) by the purchase by the Company of any of its own shares.
Increase in share capital
2.5 The Company may from time to time by ordinary resolution increase its
capital by such sum to be divided into shares of such amounts as the
resolution shall prescribe. All new shares shall be subject to the
provisions of the Statutes and of these articles with reference to
allotment, payment of calls, lien, transfer, transmission, forfeiture
and otherwise.
Consolidation, subdivision and cancellation
2.6 The Company may by ordinary resolution:
(a) consolidate and divide all or any of its share capital into
shares of larger nominal value than its existing shares;
(b) cancel any shares which, at the date of the passing of the
resolution, have not been taken, or agreed to be taken, by any
person and diminish the amount of its capital by the amount of
the shares so cancelled;
(c) subject to the provisions of the Statutes, sub-divide its
shares, or any of them, into shares of smaller nominal value
than is fixed by the memorandum of association and so that the
resolution whereby any share is sub-divided may determine
that, as between the shares resulting from the sub-division,
any of them may have any preference or advantage or be subject
to any restriction as compared to the others.
Fractions on consolidation
2.7 Whenever as a result of a consolidation of shares any members would
become entitled to fractions of a share, the Board may deal with the
fractions as it thinks fit and in particular may sell the shares
representing the fractions to any person (including, subject to the
provisions of the Statutes, the Company) and distribute the net
proceeds of sale in due proportion among those members and the Board
<PAGE>
may authorise some person to transfer or deliver the shares to, or in
accordance with the directions of, the purchaser. The person to whom
any shares are transferred or delivered shall not be bound to see to
the application of the purchase money nor shall his title to the shares
be affected by any irregularity in, or invalidity of, the proceedings
relating to the sale.
Reduction or cancellation
2.8 The Company may by special resolution reduce or cancel its share
capital or any revaluation reserve or share premium account or any
other reserve fund in any manner and with and subject to any
confirmation or consent required by law.
Purchase of own shares
2.9 Subject to the provisions of the Statutes, the Company may purchase or
may enter into any contract under which it will or may purchase, any of
its own shares of any class (including any redeemable shares). Any
shares to be so purchased may (subject to any resolution of the Company
in general meeting) be selected in any manner determined by the Board.
2.10 Where there are in issue convertible securities convertible into or
carrying a right to subscribe for equity shares of a class proposed to
be purchased, a separate meeting of the holders of the convertible
securities must be held and their approval by extraordinary resolution
obtained before the Company enters into any contract to purchase equity
shares of the relevant class. Subject to this and notwithstanding
anything to the contrary contained in these articles, the rights and
privileges attached to any class of shares shall be deemed not to be
altered or abrogated by anything done by the Company in pursuance of
any resolution passed under the powers conferred by the preceding
article.
3. Shares
Trust etc interest not recognised
3.1 Except as ordered by a court of competent jurisdiction or as required
by law, the Company shall not be bound by or required in any way to
recognise (even when it has notice) the terms of any trust on which any
shares are held or any equitable, contingent, future or partial
interest in any share or any interest in any fractional part of a share
or (except only as otherwise provided by these articles or by law) any
other right in respect of any share except an absolute right to the
entirety of such share.
<PAGE>
Rights attaching to shares on issue
3.2 Without prejudice to any special rights previously conferred on the
holders of any shares or class of shares for the time being issued, any
share in the Company may be issued with such preferred, deferred or
other special rights, or subject to such restrictions, whether in
regard to dividend, return of capital, voting or otherwise, as the
Company may from time to time by ordinary resolution determine (or, in
the absence of any such determination, as the Board may determine).
Redeemable shares
3.3 Subject to the provisions of the Statutes and of any resolution of the
Company in general meeting passed in pursuance of such provisions, the
Company may issue shares which are to be redeemed or are liable to be
redeemed at the option of the Company or the shareholder, and such
shares shall be redeemed on such terms and in such manner as may from
time to time be provided by these articles.
Board's power to allot
3.4 Subject to the provisions of the Statutes (and of any resolution of the
Company in general meeting passed pursuant to such provisions) and of
these articles, all unissued shares shall be at the disposal of the
Board and it may allot with or without conferring a right of
renunciation, grant options over or otherwise dispose of them to such
persons, at such times and on such terms as it thinks fit.
Commissions on issue of shares
3.5 The Company may exercise the powers of paying commissions conferred by
the Statutes to the full extent thereby permitted. The Company may also
on any issue of shares pay such brokerage as may be lawful.
Renunciation of allotment
3.6 Subject to the provisions of the Statutes and of these articles, the
Board may at any time after the allotment of any share but before any
person has been entered in the Register as the holder recognise a
renunciation of such share by the allottee in favour of some other
person and may accord to any allottee of a share a right to effect such
renunciation upon and subject to such terms and conditions as the Board
may think fit to impose.
<PAGE>
4. Share Certificates
General
4.1 Subject to the Statutes, the Board may by resolution determine, either
generally or in any particular case or cases, that share certificates
need not be issued under a seal. The Board may by resolution decide,
either generally or in any particular case or cases, that any
signatures on any share certificate need not be autographic but may be
applied to the certificates by mechanical means or may be printed on
them or that the certificates need not be signed by any person.
4.2 A share certificate (other than a bearer certificate) must include the
following matters on its face (or on the reverse in the case of (f)
below):
(a) the authority under which the issuer is constituted and the
country of incorporation and registered number;
(b) the number or amount of securities the certificate represents
and, if applicable, the number and denomination of units (in
the top right-hand corner);
(c) a footnote stating that no transfer of the security or any
portion of the security represented by the certificate can be
registered without production of the certificate;
(d) if applicable, the minimum amount and multiples of that amount
in which the security is transferable;
(e) the date of the certificate; and
(f) for shares with preferential rights, on the face (or, if not
practicable, on the reverse), a statement of the conditions as
to capital, dividends and (where applicable) conversion or
redemption.
4.3 The overall size of a share certificate (other than a bearer
certificate) must be no larger than 22.5cm x 20cm.
Joint holders
4.4 In the case of a share held jointly by several persons the Company
shall not be bound to issue more than one certificate for such share
and delivery of a certificate to one of two or more joint holders shall
be sufficient delivery to all.
<PAGE>
Issue of share certificate
4.5 Subject to the provisions of these articles, every person (except a
London Stock Exchange nominee in respect of which the Company is not by
law required to complete and have ready for delivery a certificate)
whose name is entered in the Register in respect of any shares of any
one class, shall upon the issue or transfer of such shares, be entitled
without payment to a certificate for such shares (in the case of issue)
within one month (or such longer period as the terms of issue shall
provide) after allotment or (in the case of a transfer of fully-paid
shares) within fourteen days after lodgment of the transfer or (in the
case of a transfer of partlypaid shares) within two months after
lodgment of transfer.
Balance certificate
4.6 Where some only of the shares comprised in a share certificate are
transferred the old certificate shall be cancelled and a new
certificate for the balance of such shares shall be issued without
charge.
Replacement of share certificates
4.7 Any two or more certificates representing shares of any one class held
by any member may at his request be cancelled and a single new
certificate for such shares issued in lieu without charge.
4.8 If any member shall surrender for cancellation a share certificate
representing shares held by him and request the Company to issue in
lieu two or more share certificates representing such shares in such
proportion as he may specify, the Board may, if it thinks fit, comply
with such request.
4.9 If a share certificate shall be defaced, worn out or alleged to have
been lost, stolen or destroyed, it shall be replaced without charge
(other than exceptional out-of-pocket expenses) but on such terms (if
any) as to evidence and indemnity and to payment of any expenses of the
Company in investigating such evidence and preparing such indemnity as
the Board may think fit and, where it is defaced or worn out, after
delivery of the old certificate to the Company.
4.10 In the case of shares held jointly by several persons any request for a
new share certificate may be made by any one of the joint holders.
<PAGE>
5. Calls on Shares
Power to make calls
5.1 The Board may from time to time make calls upon the members in respect
of any money unpaid on their shares (whether on account of the nominal
value of the shares or, when permitted, by way of premium) but subject
always to the terms of issue of such shares. A call shall be deemed to
have been made at the time when the resolution of the Board authorising
the call was passed and may be made payable by instalments. A person
upon whom a call is made shall remain liable on such call
notwithstanding the subsequent transfer of shares in respect of which
the call was made.
Liability for calls
5.2 Each member shall (subject to receiving no fewer than fourteen days'
notice specifying the time or times and place of payment) pay to the
Company at the time or times and place so specified the sum called on
his shares. The joint holders of a share shall be jointly and severally
liable to pay all calls in respect of such share. A call may be revoked
or postponed as the Board may determine.
Interest on overdue sums
5.3 If a sum called in respect of a share is not paid before or on the day
appointed for payment of such sum, the person from whom the sum is due
shall pay interest on the sum from the day appointed for payment of
such sum to the time of actual payment at such rate (not exceeding 15
per cent. per annum) as the Board determines but the Board shall be at
liberty to waive payment of such interest wholly or in part.
Other sums due on shares
5.4 Any sum (whether on account of the nominal value of the share or by way
of premium) which by the terms of issue of a share becomes payable upon
allotment or at any fixed date shall for all the purposes of these
articles be deemed to be a call duly made and payable on the date on
which by the terms of issue the same becomes payable. In case of
non-payment all the relevant provisions of these articles as to payment
of interest and expenses, forfeiture or otherwise shall apply as if
such sum had become payable by virtue of a call duly made and notified.
<PAGE>
Power to differentiate between holders
5.5 The Board may on the issue of shares differentiate between the holders
as to the calls to be made and the times of payment.
Payment of calls in advance
5.6 If the Board thinks fit the Company may receive from any member who is
willing to advance them all or any part of the moneys uncalled and
unpaid upon the shares held by him and upon all or any of the moneys so
advanced may (until they would, but for the advance, become payable)
pay interest at such rate, not exceeding (unless the Company by
ordinary resolution shall otherwise direct) 15 per cent. per annum as
the Board may decide. While any amount paid up in advance of calls on
any share may entitle the holder of the share to interest it shall not
entitle the holder to participate in respect of that amount in any
dividend.
6. Forfeiture and Lien
Notice on failure to pay a call
6.1 If a member fails to pay in full any call or instalment of a call on
the due date for payment of such call or instalment, the Board may at
any time after the failure serve a notice on him requiring payment of
so much of the call or instalment as is unpaid together with any
interest which may have accrued on such call or instalment and any
expenses incurred by the Company by reason of such non-payment.
6.2 The notice shall name a further day (being not fewer than seven days
from the date of service of the notice) on or before which, and the
place where, the payment required by the notice is to be made, and
shall state that in the event of non-payment in accordance with such
notice the shares on which the call was made will be liable to be
forfeited.
Forfeiture for non-compliance
6.3 If the requirements of any such notice as is referred to in the
preceding article are not complied with, any share in respect of which
such notice has been given may at any time after the non compliance,
before payment of all calls and interest and expenses due in respect of
such share has been made, be forfeited by a resolution of the Board to
that effect. Such forfeiture shall include all dividends declared in
respect of the forfeited share and not actually paid before forfeiture.
The Board may accept a surrender of any share liable to be forfeited
under these articles.
<PAGE>
Notice on previous holder
6.4 Where any share has been forfeited, notice of the forfeiture shall be
served upon the person who was the holder of the share before
forfeiture, but no forfeiture shall be invalidated in any manner by any
omission or neglect to give such notice.
Disposal of forfeited shares
6.5 A share forfeited or surrendered shall become the property of the
Company and may be sold, re-allotted or disposed of in any other way
either to the person who was the holder of such share or entitled to
such share before such forfeiture or surrender, or to any other person
upon such terms and in such manner as the Board shall think fit and at
any time before a sale, re-allotment or other disposition the
forfeiture may be annulled by the Board on such terms as it thinks fit.
The Board may, if necessary, authorise some person to transfer a
forfeited or surrendered share to any such other person.
Holder to remain liable despite forfeiture
6.6 A member whose shares have been forfeited or surrendered shall cease to
be a member in respect of the shares (and shall surrender to the
Company for cancellation the certificate for such shares) but shall
notwithstanding the forfeiture or surrender remain liable to pay to the
Company all moneys which at the date of forfeiture or surrender were
presently payable by him to the Company in respect of the shares with
interest on such shares at such rate (not exceeding 15 per cent. per
annum) as the Board may determine from the date of forfeiture or
surrender until payment. The Board may at its absolute discretion
enforce payment without any allowance for the value of the shares at
the time of forfeiture or surrender or waive payment in whole or in
part.
Lien on partly-paid shares
6.7 The Company shall have a first and paramount lien on every share (not
being a fully paid share) for all moneys (whether presently payable or
not) called or payable at a fixed time in respect of such share. The
Board may waive any lien which has arisen and may resolve that any
share shall for some limited period be exempt wholly or partially from
the provisions of this article.
Sale of shares subject to lien
6.8 The Company may sell in such manner as the Board thinks fit any share
on which the Company has a lien, but no sale shall be made unless some
sum in respect of which the lien exists is presently payable nor until
the expiration of fourteen days
<PAGE>
after a notice in writing stating and demanding payment of the sum
presently payable and giving notice of intention to sell in default
shall have been given to the holder for the time being of the share or
the person entitled to such share by reason of his death, bankruptcy,
liquidation or otherwise.
Proceeds of sale of shares subject to lien
6.9 The net proceeds of sale of shares subject to a lien (after payment of
the costs of such sale) shall be applied in or towards payment or
satisfaction of the debts or liabilities in respect of which the lien
exists so far as the same are presently payable and any residue shall
(subject to a like lien for liabilities not presently payable as
existed upon the shares prior to the sale) be paid to the person
entitled to the shares at the time of the sale. For giving effect to
any such sale the Board may authorise some person to transfer the
shares sold to, or in accordance with the directions, of, the
purchaser.
Evidence of forfeiture
6.10 A statutory declaration in writing that the declarant is a director or
the Secretary and that a share has been duly forfeited or surrendered
or sold to satisfy obligations covered by a lien of the Company on a
date stated in the declaration shall be conclusive evidence of the
facts stated in the declaration as against all persons claiming to be
entitled to the share. Such declaration shall (subject to the execution
of a transfer if the same be required) constitute a good title to the
share and the person to whom the share is sold, re-allotted or disposed
of shall be registered as the holder of the share and shall not be
bound to see to the application of the purchase moneys (if any) nor
shall his title to the share be affected by any irregularity or
invalidity in the proceedings relating to the forfeiture, surrender,
sale, re-allotment or other disposal of the share.
7. Transfer of Shares
Transfer of securities without a written instrument
7.1 Title to any securities of the Company may be evidenced and title to
and interests in securities may be transferred without a written
instrument in accordance with statutory regulations from time to time
made under the Statutes, and the Board shall have power to implement
any arrangements it may think fit for such evidencing and transfer
which accord with those regulations.
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Form of transfer
7.2 Subject to the preceding article, all transfers of shares may be
effected by transfer in writing in any usual or common form or in any
other form acceptable to the Board and may be under hand only. The
instrument of transfer shall be signed by or on behalf of the
transferor and (except in the case of fully paid shares) by or on
behalf of the transferee. The transferor shall remain the holder of the
shares concerned until the name of the transferee is entered in the
Register in respect of such shares. All instruments of transfer which
are registered may be retained by the Company.
Closing of Register
7.3 The registration of transfers may be suspended at such times and for
such periods (not exceeding 30 days in any year) as the Board may from
time to time determine and either generally or in respect of any class
of shares.
Right to refuse to register a transfer
7.4 The Board may in its absolute discretion and without assigning any
reason for its actions refuse to register any transfer of any share
which is not a fully paid share.
Other rights to decline registration
7.5 The Board may decline to recognise any instrument of transfer unless:
(a) the instrument of transfer:
(i) is in respect of only one class of share;
(ii) is lodged at the Registered Office or such other
place as the Board may appoint; and
(iii) is accompanied by the relevant share certificate(s)
and such other evidence as the Board may reasonably
require to show the right of the transferor to make
the transfer (and, if the instrument of transfer is
executed by some other person on his behalf, the
authority of that person so to do); and
(b) in the case of a transfer to joint holders, the number of
joint holders does not exceed four.
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Notice of refusal
7.6 If the Board refuses to register a transfer, it shall send notice of
the refusal to the transferee within two months of the date on which
the transfer was lodged with the Company.
Transfer without certificate
7.7 In the case of a transfer by a recognised clearing house or a nominee
of a recognised clearing house or of a recognised investment exchange
the lodgment of share certificates with the instrument of transfer will
only be necessary if and to the extent that certificates have been
issued in respect of the shares in question. The expressions
"recognised clearing house" and "recognised investment exchange" shall
have the meanings given to them in the Financial Services Act 1986.
Branch Register
7.8 Subject to and to the extent permitted by the Statutes, the Company, or
the Board on behalf of the Company, may cause a branch register to be
kept in any territory of members resident in such territory, and the
Board may make and vary such regulations as they may think fit in
respect of the keeping of any such register.
No fee for registration
7.9 No fee will be charged by the Company in respect of the registration of
any instrument of transfer, or probate, or letters of administration,
or certificate of marriage or death, or stop notice, or power of
attorney, or other document relating to or affecting the title to any
shares or otherwise for making any entry in the Register affecting the
title to any shares.
8. Transmission of Shares
Persons entitled on death
8.1 On the death of a shareholder, the survivors or survivor where the
deceased was a joint holder, and the executors or administrators of the
deceased where he was a sole or only surviving holder, shall be the
only person or persons recognised by the Company as having any title to
or interest in the shares, but nothing in this article shall release
the estate of a deceased holder (whether sole or joint) from any
liability in respect of any share held by him.
<PAGE>
Election by persons entitled by transmission
8.2 Any person becoming entitled to a share in consequence of the death or
bankruptcy of a member or of any other event giving rise by operation
of law to such entitlement may (subject as provided in these articles)
upon supplying to the Company such evidence as the Board may reasonably
require to show his title to the share either be registered himself as
holder of the share upon giving to the Company notice in writing of his
desire to be so registered or transfer such share to some other person.
If he shall elect to have his nominee registered, he shall signify his
election by signing an instrument of transfer of such share in favour
of his nominee. All the limitations, restrictions and provisions of
these articles relating to the right to transfer and the registration
of transfers of shares shall be applicable to any such notice or
transfer as if the death or bankruptcy of the member or other event had
not occurred and the notice or transfer were a transfer executed by
such member.
Rights of persons entitled by transmission
8.3 Save as otherwise provided by or in accordance with these articles a
person becoming entitled to a share in consequence of the death or
bankruptcy of a member or other event giving rise by operation of law
to such entitlement (upon supplying to the Company such evidence as the
Board may reasonably require to show his title to the share) shall be
entitled to the same dividends and other advantages as those to which
he would be entitled if he were the registered holder of the share
except that he shall not be entitled in respect of such share (except
with the authority of the Board) to exercise any right conferred by
membership in relation to meetings of the Company until he shall have
been registered as a member in respect of the share. The Board may at
any time give notice requiring any such person to elect either to be
registered himself or to transfer the share and if the notice is not
complied with within sixty days the Board may after that withhold
payment of all dividends and other moneys payable in respect of the
share until the requirements of the notice have been complied with.
9. Share Warrants to Bearer
Share warrants to bearer may be issued by the Board in respect of
fully-paid shares on such terms and conditions as to voting and in all
other respects as they may prescribe, providing that no new share
warrant to bearer shall be issued to replace one that has been lost
unless it is proved beyond reasonable doubt to the satisfaction of the
Board to have been destroyed. The bearer of a share warrant shall be
subject to the terms and conditions governing share warrants for the
time being in force, whether made before or after the issue of such
share warrant.
<PAGE>
10. General Meetings
Annual general meetings
10.1 The Board shall convene and the Company shall hold general meetings as
annual general meetings in accordance with the requirements of the
Statutes.
Extraordinary general meetings
10.2 Any general meeting of the Company other than an annual general meeting
shall be called an extraordinary general meeting.
Calling of general meetings
10.3 The Board may whenever it thinks fit, and shall on requisition in
accordance with the Statutes, proceed with proper expedition to convene
an extraordinary general meeting.
Form of resolution
10.4 Subject to the Statutes, where for any purpose an ordinary resolution
of the Company is required, a special or extraordinary resolution shall
also be effective and where for any purpose an extraordinary resolution
is required a special resolution shall also be effective.
Resolution in writing
10.5 A resolution in writing executed by or on behalf of each member who
would have been entitled to vote upon it if it had been proposed at a
general meeting at which he was present shall be as effectual as if it
had been passed at a general meeting properly convened and held and may
consist of several instruments in the like form each executed by or on
behalf of one or more members.
11. Notice of General Meetings
Length of notice for general meetings
11.1 An annual general meeting and an extraordinary general meeting at which
it is proposed to pass a special resolution or (save as provided by the
Statutes) a
<PAGE>
resolution of which special notice has been given to the Company, shall
be called by not fewer than twenty-one days' notice in writing and any
other extraordinary general meeting by not fewer than fourteen days'
notice in writing. The period of notice shall in each case be exclusive
of the day on which it is served or deemed to be served and of the day
on which the meeting is to be held. A general meeting, notwithstanding
that it has been called by a shorter notice than that specified above,
shall be deemed to have been duly called if it is so agreed:
(a) in the case of an annual general meeting by all the members
entitled to attend and vote at that annual general meeting;
and
(b) in the case of an extraordinary general meeting by a majority
in number of the members having a right to attend and vote at
that extraordinary general meeting, being a majority together
holding not less that 95 per cent. in nominal value of the
shares giving that right.
11.2 The accidental omission to give notice to or the non-receipt of notice
by any person entitled to such notice shall not invalidate any general
meeting or any proceedings at such general meeting.
Contents of notice of general meetings
11.3 Every notice calling a general meeting shall:
(a) specify the place and the day and hour of the meeting, and
contain a reasonably prominent statement that a member
entitled to attend and vote is entitled to appoint one or more
proxies to attend and, on a poll, vote instead of him and that
a proxy need not be a member of the Company;
(b) in the case of an annual general meeting, specify the meeting
as such;
(c) in the case of any annual general meeting at which business
other than ordinary business is to be transacted, specify the
general nature of such business; and
(d) if any resolution is to be proposed as an extraordinary
resolution or as a special resolution, set out in full the
resolution to be proposed as an extraordinary resolution or as
a special resolution as the case may be.
Ordinary business
11.4 Ordinary business in relation to an annual general meeting shall mean:
(a) receiving or adopting the accounts;
<PAGE>
(b) declaring a dividend;
(c) reappointing directors and appointing directors to replace
those retiring at the meeting not offering themselves for
reappointment;
(d) reappointing auditors and authorising the Board to fix their
remuneration; and
(e) granting, renewing or varying authority under section 80 of
the Act or (providing the authority or disapplication
terminates no later than fifteen months after the annual
general meeting) disapplying section 89 of the Act.
12. Proceedings at General Meetings
Chairman
12.1 The chairman of the Board (if any), failing whom the deputy chairman
(if any), shall preside as chairman at a general meeting. If there is
no such chairman or deputy chairman, or if at any meeting neither the
chairman nor deputy chairman is present within five minutes after the
time appointed for holding the meeting, or if neither of them is
willing to act as chairman, the directors present shall choose one of
their number (or, if no director is present or if all the directors
present decline to take the chair, the persons present and entitled to
vote on a poll shall choose one of their number), to be chairman of the
meeting.
Quorum
12.2 No business other than the appointment of a chairman shall be
transacted at any general meeting unless a quorum is present at the
time when the meeting proceeds to business. Two members present in
person or by proxy and entitled to vote at that meeting shall be a
quorum for all purposes.
Adjournment
12.3 The chairman of any general meeting may with the consent of the meeting
at which a quorum is present (and shall if so directed by the meeting)
adjourn the meeting from time to time (or without a date being fixed)
and from place to place, but no business shall be transacted at any
adjourned meeting except business which might lawfully have been
transacted at the meeting from which the adjournment took place. Where
a meeting is adjourned without a date being fixed, the time and place
for any adjourned meeting shall be fixed by the Board.
<PAGE>
12.4 When a meeting is adjourned for thirty days or more or without a date
being fixed, not fewer than seven days' notice of any adjourned meeting
shall be given in the same manner as in the case of the original
meeting.
12.5 If within five minutes (or such longer time not exceeding one hour as
the chairman of the meeting may determine to wait) after the time
appointed for the meeting a quorum is not present, or if during the
meeting a quorum ceases to be present, the meeting, if convened on the
requisition of members, shall be dissolved. In any other case it shall
stand adjourned to such other day (not being fewer than fourteen nor
more than twenty-eight days after such meeting) and at such other time
or place as the chairman of the meeting may determine and that such
adjourned meeting one member present in person or by proxy (whatever
the number of shares held by him) shall be a quorum. The Company shall
give not fewer than seven days' notice in writing of any meeting
adjourned through want of a quorum and such notice shall state that one
member present in person or by proxy (whatever the number of shares
held by him) shall be a quorum.
Notice of adjourned meeting
12.6 Except as expressly provided in these articles, it shall not be
necessary to give any notice of an adjournment or of the business to be
transacted at an adjourned meeting.
Amendments to resolutions
12.7 If an amendment shall be proposed to any resolution under consideration
but shall in good faith be ruled out of order by the chairman of the
meeting the proceedings on the substantive resolution shall not be
invalidated by an error in such ruling. In the case of a resolution
duly proposed as a special or extraordinary resolution no amendment to
such resolution (other than a mere clerical amendment or to correct a
patent error) may in any event be considered or voted upon.
Declaration by chairman
12.8 Unless a poll is required a declaration by the chairman of the meeting
that a resolution has been carried, or carried unanimously, or by a
particular majority, or lost, and an entry to that effect in the minute
book, shall in the absence of manifest error, be conclusive evidence of
that fact without proof of the number or proportion of the votes
recorded for or against such resolution.
<PAGE>
Demand for poll
12.9 At any general meeting a resolution put to the vote of the meeting
shall be decided on a show of hands unless (before or on the
declaration of the result of the show of hands) a poll is demanded by:
(a) the chairman of the meeting;
(b) not fewer than five members present in person or by proxy and
entitled to vote at the meeting;
(c) a member or members present in person or by proxy and
representing not less than one-tenth of the total voting
rights of all the members having the right to vote at the
meeting; or
(d) a member or members present in person or by proxy and holding
shares in the Company conferring a right to vote at the
meeting being shares on which an aggregate sum has been paid
up equal to not less than one-tenth of the total sum paid up
on all the shares conferring that right.
Withdrawal of demand for poll
12.10 A demand for a poll may be withdrawn at any time before the poll is
taken or the close of the meeting, whichever is earlier, but only with
the consent of the chairman and a demand so withdrawn shall not be
taken to have invalidated the result of a show of hands declared before
the demand was made.
Procedure on a poll
12.11 If a poll is required, it shall be taken in such a manner (including
the use of ballot or voting papers or tickets) as the chairman of the
meeting may direct, and the result of the poll shall be deemed to be
the resolution of the meeting at which the poll was demanded. The
chairman of the meeting may (and if so directed by the meeting shall)
appoint scrutineers and may adjourn the meeting to some place and time
fixed by him for the purpose of declaring the result of the poll.
Timing of poll
12.12 A poll demanded on the election of a chairman of the meeting or on a
question of adjournment shall be taken immediately. A poll demanded on
any other question shall be taken either immediately or at such
subsequent time (not being more than thirty days from the date of the
meeting) and place as the chairman of the meeting may direct. No notice
need be given of a poll not taken immediately.
<PAGE>
Continuing the meeting after a demand for a poll
12.13 A demand for a poll shall not prevent the continuance of the meeting
for the transaction of any business other than the question on which
the poll has been demanded.
13. Votes of Members
Votes attaching to shares
13.1 Subject to any special rights or restrictions as to voting attached by
or in accordance with these articles to any shares or class of shares,
on a show of hands every member who is present in person shall have one
vote and on a poll every member who is present in person or by proxy
shall have one vote for every share of which he is the holder.
Chairman's casting vote
13.2 In the case of an equality of votes, whether on a show of hands or on a
poll, the chairman of the meeting at which the show of hands takes
place or at which the poll is demanded shall be entitled to a casting
vote.
Votes of joint holders
13.3 In the case of joint holders of a share the vote of the senior who
tenders a vote, whether in person or by proxy, shall be accepted to the
exclusion of the votes of the other joint holders and for this purpose
seniority shall be determined by the order in which the names stand in
the Register in respect of the share.
Votes by guardian
13.4 Where in the United Kingdom or elsewhere a guardian, receiver, curator
bonis or other person (by whatever name called) has been appointed by
any court claiming jurisdiction in that behalf to exercise powers with
respect to the property or affairs of any member on the ground (however
formulated) of mental disorder or being otherwise incapable of managing
his affairs, the Board may in its absolute discretion, upon or subject
to production of such evidence of the appointment as the Board may
require, permit such guardian, receiver, curator bonis or other person
on behalf of such member to vote in person or by proxy at any general
<PAGE>
meeting or to exercise any other right conferred by membership in
relation to meetings of the Company.
No voting rights where calls outstanding
13.5 No member shall, unless the Board otherwise determines, be entitled, in
respect of any share held by him, to vote at a general meeting either
personally or by proxy or to exercise any other right conferred by
membership in relation to meetings of the Company if any call or other
sum presently payable by him to the Company in respect of that share
remains unpaid.
Validity and result of vote
13.6 No objection shall be raised as to the admissibility of any vote except
at the meeting or adjourned meeting at which the vote objected to is or
may be given or tendered and every vote not disallowed at such meeting
shall be valid for all purposes. Any such objection shall be referred
to the chairman of the meeting whose decision shall be final and
conclusive.
13.7 Unless a poll is taken a declaration by the chairman of the meeting
that a resolution has been carried, or carried unanimously, or by a
particular majority, or lost, and an entry to that effect in the minute
book, shall be conclusive evidence of that fact without proof of the
number or proportion of the votes recorded for or against such
resolution.
Voting on a poll
13.8 On a poll votes may be given either personally or by proxy and a person
entitled to more than one vote need not use all his votes or cast all
the votes he uses in the same way.
14. Disclosure of Interests
14.1 For the purposes of these articles, unless the context otherwise
requires:
(a) "Disclosure Notice" means a notice issued by or on behalf of
the Company requiring disclosure of interests in shares
pursuant to section 212 of the Act;
(b) "Specified Shares" means all or, as the case may be, some of
the shares specified in a Disclosure Notice;
<PAGE>
(c) "Restrictions" means one or more, as determined by the Board,
of the following:
(i) that the member holding the Specified Shares shall
not be entitled, in respect of those shares, to
attend or be counted in the quorum or vote either
personally or by proxy at any general meeting or at
any separate meeting of the holders of any class of
shares or upon any poll or to exercise any other
right or privilege in relation to any general meeting
or any meeting of the holders of any class of shares;
(ii) that no transfer of the Specified Shares shall be
effective or shall be registered by the Company;
(iii) that no dividend shall be paid in respect of the
Specified Shares and that, in circumstances where an
offer of the right to elect to receive shares instead
of cash in respect of any dividend is or has been
made, any election made under that offer in respect
of such Specified Shares shall not be effective
provided that only the restriction referred to in
sub-paragraph (i) may be determined by the Board to apply if
the Specified Shares represent less than 0.25% of the relevant
class;
(d) "Restriction Notice" means a notice issued by or on behalf of
the Company stating, or substantially to the effect, that the
Specified Shares referred to in that notice shall be subject
to one or more of the Restrictions stated in that notice;
(e) a person other than the member holding a share shall be
treated as appearing to be interested (as that word is
construed for the purpose of section 212 of the Act) in that
share if:
(i) the member has informed the Company, whether under
any statutory provision relating to disclosure of
interests or otherwise, that the person is, or may
be, or has been at any time during the three years
immediately preceding the date upon which the
Disclosure Notice is issued, so interested; or
(ii) the Board (after taking account of any information
obtained from the member or, pursuant to a Disclosure
Notice, from any other person) knows or has
reasonable cause to believe that the person is, or
may be, or has been at any time during the three
years immediately preceding the date upon which the
Disclosure Notice is issued, so interested; or
<PAGE>
(iii) in response to a Disclosure Notice, the member or any
other person appearing to be so interested has failed
to establish the identities of all those who are so
interested and (after taking into account the
response and any other relevant information) the
Company has reasonable cause to believe that such
person is or may be so interested; and
(f) the Company shall not be treated as having received the
information required by a Disclosure Notice in accordance with
the terms of such Disclosure Notice in circumstances where the
Board knows or has reasonable cause to believe that the
information provided is false or materially incorrect.
14.2 Notwithstanding anything in these articles to the contrary, if:
(a) a Disclosure Notice has been served on a member or any other
person appearing to be interested in the Specified Shares; and
(b) the Company has not received (in accordance with the terms of
such Disclosure Notice) the information required in the notice
in respect of any of the Specified Shares within fourteen days
after the service of such Disclosure Notice:
then the Board may determine that the member holding the Specified
Shares shall, upon the issue of a Restriction Notice referring to those
Specified Shares in respect of which information has not been received,
be subject to the Restrictions referred to in such Restriction Notice,
and upon the issue of such Restriction Notice such member shall be so
subject. As soon as practicable after the issue of a Restriction Notice
the Company shall serve a copy of the notice on the member holding the
Specified Shares.
14.3 The Restrictions on shares shall cease to apply:
(a) either in whole or in part at any time the Board may
determine;
(b) if the Company receives in accordance with the terms of the
relevant Disclosure Notice the information required in that
Disclosure Notice in respect of those shares; or
(c) if the Company receives an executed instrument of transfer in
respect of those shares, which would otherwise be given effect
to, pursuant to a sale to a party not connected (within the
meaning given in section 839 Income and Corporation Taxes Act
1988) with the member holding such shares or with any other
person appearing to be interested in such shares where such
sale is:
<PAGE>
(i) on a recognised investment exchange;
(ii) on any stock exchange outside the United Kingdom on
which the Company's shares are normally dealt; or
(iii) on the acceptance of an offer made to all the holders
(or all the holders other than the person making the
offer or his nominees) of the shares of the class of
which the shares subject to the Restrictions form
part to acquire those shares or a specified portion
of them.
14.4 Notwithstanding sub-paragraph (c) of the preceding article the
Restrictions on shares shall continue to apply if within ten days of
receipt of the instrument of transfer the Board decides that it has
reasonable cause to believe that the change in the registered holder of
those shares would not be as a result of an arm's length sale resulting
in a material change in the beneficial interests in those shares. Where
the Board makes a decision pursuant to this article, the Company shall
notify the purported transferee of the decision as soon as practicable
and any person may make representations in writing to the Board
concerning the decision. The Company shall not be liable to any person
as a result of having imposed Restrictions or deciding that such
Restrictions shall continue to apply if the Board acted in good faith.
14.5 Where dividends or other moneys are not paid as a result of
Restrictions having been imposed on shares, such dividends or other
moneys shall accrue and, upon the relevant restriction ceasing to
apply, shall be payable (without interest) to the person who would have
been entitled had the restriction not been imposed.
14.6 Shares which the Company offers or procures to be offered pro rata (or
pro rata ignoring fractional entitlements and ignoring shares not
offered to certain members by reason of legal or practical problems
associated with offering shares outside the United Kingdom) to holders
of shares which are subject to Restrictions shall on issue become
subject to the same Restrictions.
14.7 The Board shall at all times have the right, at its discretion, to
suspend, in whole or in part, any Restriction Notice either permanently
or for any given period and to pay to a trustee any dividend payable in
respect of any shares subject to Restrictions or in respect of any
shares issued in right of shares subject to Restrictions. Notice of any
suspension, specifying the sanctions suspended and the period of
suspension, shall be given to the relevant holder in writing within
seven days after any decision to implement such a suspension.
14.8 The limitations on the powers of the Board to impose and retain
Restrictions are without prejudice to the Company's power to apply to
the court pursuant to the Statutes to apply the Restrictions or any
other restrictions on any conditions.
<PAGE>
15. Proxy
Proxy need not be a member
15.1 A proxy need not be a member of the Company.
Form of proxy
15.2 An instrument appointing a proxy shall be in writing in any usual or
common form or in any other form which the Board may approve and:
(a) in the case of an individual shall be signed by the appointor
or by his attorney; and
(b) in the case of a corporation shall be either given under its
common seal or signed on its behalf by an officer, attorney or
other person authorised to sign it.
Signature on proxy
15.3 The signature on an instrument appointing a proxy need not be
witnessed. Where an instrument appointing a proxy is signed on behalf
of the appointor by an attorney, the letter or power of attorney or a
duly certified copy of such letter or power of attorney must (failing
previous registration with the Company) be lodged with the instrument
of proxy pursuant to the following article, failing which the
instrument may be treated as invalid.
Deposit of form of proxy
15.4 An instrument appointing a proxy must be left at the Registered Office
or such place or one of such places (if any) as may be specified for
that purpose in or by way of note to the notice convening the meeting
no fewer than forty-eight hours before the time appointed for the
holding of the meeting or adjourned meeting or (in the case of a poll
taken otherwise than at or on the same day as the meeting or adjourned
meeting) for the taking of the poll at which it is to be used, and in
default shall not be treated as valid. An instrument of proxy relating
to more than one meeting (including any adjournment of such meeting)
having once been so delivered for the purposes of any meeting shall not
have to be delivered again for the purposes of any subsequent meeting
to which it relates.
<PAGE>
Rights of proxy
15.5 An instrument appointing a proxy shall be deemed to include the right
to demand or join in demanding a poll but shall not confer any further
right to speak at the meeting, except with the permission of the
chairman of the meeting. The instrument shall, unless the contrary is
stated on such instrument, be valid as well for any adjournment of the
meeting as for the meeting to which it relates. No instrument
appointing a proxy shall be valid after the expiration of twelve months
from the date named in it as the date of its execution. Delivery of an
instrument appointing a proxy shall not preclude a member from
attending and voting at the meeting or poll convened.
Revocation of proxy
15.6 A vote cast or demand for a poll made by proxy shall not be invalidated
by the previous death or insanity of the principal or by the revocation
of the appointment of the proxy or of the authority under which the
appointment was made unless written notice of such death, insanity or
revocation shall have been received by the Company at the Registered
Office at least one hour before the commencement of the meeting or
adjourned meeting or (in the case of a poll taken otherwise than at or
on the same day as the meeting or adjourned meeting) the time appointed
for the taking of the poll at which the vote is cast.
16. Corporations acting by representatives
Any corporation which is a member of the Company may by resolution of
its directors or other governing body authorise such person as it
thinks fit to act as its representative at any meeting of the Company
or of any class of members of the Company. The person so authorised
shall be entitled to exercise the same powers on behalf of such
corporation as the corporation could exercise if it were an individual
member of the Company and such corporation shall for the purpose of
these articles be deemed to be present in person at any such meeting if
a person so authorised is present at such meeting.
17. Directors
Number of directors
17.1 Subject as provided in these articles the directors shall not be fewer
than two nor more than ten in number. The Company may by ordinary
resolution from time to time vary the minimum number and/or maximum
number of directors.
<PAGE>
Share qualification
17.2 A director shall not be required to hold any shares of the Company by
way of qualification. A director who is not a member of the Company
shall nevertheless be entitled to attend and speak at shareholders'
meetings.
Directors' fees
17.3 The ordinary remuneration of the directors shall from time to time be
determined by the Board and shall be divisible among the directors as
the Board may agree, or, failing agreement, equally, except that any
director who shall hold office for part only of the period in respect
of which such remuneration is payable shall be entitled only to rank in
such division for a proportion of remuneration related to the period
during which he has held office.
Other remuneration of directors
17.4 Any director who holds any executive office (including for this purpose
the office of chairman or deputy chairman whether or not such office is
held in an executive capacity), or who serves on any committee of the
Board, or who otherwise performs services which in the opinion of the
Board are outside the scope of the ordinary duties of a director, may
be paid such extra remuneration by way of salary, commission or
otherwise or may receive such other benefits as the Board may
determine.
Directors' expenses
17.5 The Board may repay to any director all such reasonable expenses as he
may incur in attending and returning from meetings of the Board or of
any committee of the Board or shareholders' meetings or otherwise in
connection with the business of the Company.
Directors' pensions and other benefits
17.6 The Board shall have power to pay and agree to pay gratuities, pensions
or other retirement, superannuation, death or disability benefits to
(or to any person in respect of) any director or ex-director and for
the purpose of providing any such gratuities, pensions or other
benefits to contribute to any scheme or fund or to pay premiums.
<PAGE>
Directors' interest in contracts
17.7 A director may be party to or in any way interested in any contract or
arrangement or transaction to which the Company is a party or in which
the Company is in any way interested and he may hold and be remunerated
in respect of any office or place of profit (other than the office of
auditor) under the Company or any other company in which the Company is
in any way interested and he (or any firm of which he is a member) may
act in a professional capacity for the Company or any such other
company and be remunerated for his acts and in any such case (save as
otherwise agreed by him) he may retain for his own absolute use and
benefit all profits and advantages accruing to him under or in
consequence of his acts.
Appointment of executive directors
17.8 The Board may from time to time appoint one or more of their body to be
the holder of any executive office (including, where considered
appropriate, the office of chairman or deputy chairman) on such terms
and for such period as they may (subject to the provisions of the
Statutes) determine and, without prejudice to the terms of any contract
entered into in any particular case, may at any time revoke or vary the
terms of any such appointment.
Ceasing to be a director
17.9 The appointment of any director to the office of chairman or deputy
chairman or chief executive or managing or joint managing or deputy or
assistant managing director shall automatically determine if he ceases
to be a director but without prejudice to any claim for damages for
breach of any contract of service between him and the Company. The
appointment of any director to any other executive office shall not
automatically determine if he ceases from any cause to be a director,
unless the contract or resolution under which he holds office shall
expressly state otherwise, in which event such determination shall be
without prejudice to any claim for damages for breach of any contract
of service between him and the Company.
Powers of executive directors
17.10 The Board may entrust to and confer upon any director holding any
executive office any of the powers exercisable by them as directors
upon such terms and conditions and with such Restrictions as they think
fit, and either collaterally with or to the exclusion of their own
powers, and may from time to time revoke, withdraw, alter or vary all
or any of such powers.
<PAGE>
18. Appointment and retirement of directors
Power of Company to appoint directors
18.1 Subject to the provisions of these articles, the Company may by
ordinary resolution appoint any person who is willing to act to be a
director, either to fill a vacancy or as an addition to the existing
Board, but so that the total number of directors shall not at any time
exceed any maximum number fixed by or in accordance with these
articles.
Power of Board to appoint directors
18.2 Without prejudice to the power of the Company in general meeting
pursuant to any of the provisions of these articles to appoint any
person to be a director, the Board may appoint any person who is
willing to act to be a director, either to fill a vacancy or as an
addition to the existing Board, but so that the total number of
directors shall not at any time exceed any maximum number fixed by or
in accordance with these articles. Any director so appointed must
retire from office at, or at the end of, the next following annual
general meeting and will then be eligible to stand for election but
shall not be taken into account in determining the directors or the
number of directors who are to retire by rotation at that meeting.
Age limit
18.3 Any provision of the Statutes which, subject to the provisions of these
articles, would have the effect of rendering any person ineligible for
appointment or election as a director or liable to vacate office as a
director on account of his having reached any specified age or of
requiring special notice or any other special formality in connection
with the appointment or election of any director over a specified age,
shall not apply to the Company.
Retirement by rotation
18.4 At each annual general meeting one-third of the directors for the time
being (or, if their number is not a multiple of three, the number
nearest to but not greater than one-third) shall retire from office by
rotation. Provided that no director holding office as chief executive
or managing or joint managing director shall be subject to retirement
by rotation or be taken into account in determining the number of
directors to retire.
<PAGE>
Selection of directors to retire by rotation
18.5 The directors to retire by rotation shall include (so far as necessary
to obtain the number required) any director who wishes to retire and
not to offer himself for re-election. Any further directors so to
retire shall be those of the other directors subject to retirement by
rotation who have been longest in office since their last re-election
and so that as between persons who became or were last re-elected
directors on the same day those to retire shall (unless they otherwise
agree among themselves) be determined by lot. A retiring director shall
be eligible for re-election.
Re-election of retiring directors
18.6 The Company at the meeting at which a director retires under any
provision of these articles may by ordinary resolution fill the office
being vacated by electing to that office the retiring director or some
other person eligible for election. In default the retiring director
shall be deemed to have been re-elected except in any of the following
cases:
(a) where at such meeting it is expressly resolved not to fill
such office or a resolution for the re-election of such
director is put to the meeting and lost;
(b) where such director has given notice in writing to the Company
that he is unwilling to be re-elected;
(c) where such director has attained any retiring age applicable
to him as director; or
(d) where the default is due to the moving of a resolution in
contravention of the next following article.
Election of two or more directors
18.7 A resolution for the election of two or more persons as directors by a
single resolution shall not be moved at any general meeting unless a
resolution that it shall be so moved has first been agreed to by the
meeting without any vote being given against it; and any resolution
moved in contravention of this provision shall be void.
<PAGE>
Timing of retirement
18.8 The retirement of a director at any general meeting shall not have
effect until the conclusion of the meeting except where a resolution is
passed to elect some other person in place of the retiring director or
a resolution for his re-election is put to the meeting and lost and
accordingly a retiring director who is re-elected or deemed to have
been re-elected will continue in office without a break.
Nomination of Director for election
18.9 No person other than a director retiring at the meeting shall, unless
recommended by the Board for election, be eligible for election as a
director at any general meeting unless not fewer than seven nor more
than 42 days (inclusive of the date on which the notice is given)
before the date appointed for the meeting there shall have been lodged
at the Registered Office notice in writing signed by some member (other
than the person to be proposed) duly qualified to attend and vote at
the meeting for which such notice is given of his intention to propose
such person for election and also notice in writing signed by the
person to be proposed of his willingness to be elected.
Vacation of office
18.10 The office of a director shall be vacated if:
(a) he ceases to be a director by virtue of any provision of the
Statutes or he becomes prohibited by law from being a
director;
(b) he becomes bankrupt or makes any arrangement or composition
with his creditors generally;
(c) he is, or may be suffering from mental disorder and either:
(i) he is admitted to hospital in pursuance of an
application for admission for treatment under the
Mental Health Act 1983 or, in Scotland, an
application for admission under the Mental Health
(Scotland) Act 1960; or
(ii) an order is made by a court having jurisdiction
(whether in the United Kingdom or elsewhere) in
matters concerning mental disorder for his detention
or for the appointment of a receiver, curator bonis
or other person to exercise powers with respect to
his property or affairs;
<PAGE>
(d) he resigns by writing under his hand left at the Registered
Office or he offers in writing to resign and the Board
resolves to accept such offer;
(e) he shall for more than six consecutive months have been absent
without permission of the Board from meetings of the Board
held during that period and the Board resolves that his office
be vacated; or
(f) notice stating he is removed from office as a director is
served upon him signed by all his co-directors who must
account to the members at the next general meeting of the
Company. If a director holds an appointment to an executive
office which automatically determines on his removal from
office under this or the preceding sub-paragraph such removal
shall be deemed an act of the Company and shall have effect
without prejudice to any claim for damages for breach of any
contract of service between him and the Company.
Removal of director
18.11 The Company may in accordance with and subject to the provisions of the
Statutes by ordinary resolution of which special notice has been given
remove any director from office (notwithstanding any provision of these
articles or of any agreement between the Company and such director, but
without prejudice to any claim he may have for damages for breach of
any such agreement) and elect another person in place of a director so
removed from office. Any person so elected shall be treated for the
purpose of determining the time at which he or any other director is to
retire by rotation as if he had become a director on the day on which
the director in whose place he is elected was last elected a director.
In default of such election the vacancy arising upon the removal of a
director from office may be filled as a casual vacancy.
19. Meetings and proceedings of directors
Convening of meetings of directors
19.1 Subject to the provisions of these articles the Board may meet together
for the despatch of business, adjourn and otherwise regulate their
proceedings as they think fit. At any time any director may, and the
Secretary at the request of a director shall, summon a meeting of the
Board. It shall not be necessary to give notice of a meeting of the
Board to any director for the time being absent from the United
Kingdom. Any director may waive notice of any meeting and any such
waiver may be retroactive.
<PAGE>
Quorum
19.2 The quorum necessary for the transaction of business of the Board may
be fixed from time to time by the Board and unless so fixed at any
other number shall be two. A meeting of the Board at which a quorum is
present shall be competent to exercise all powers and discretions for
the time being exercisable by the directors.
Chairman
19.3 The Board may elect from their number a chairman and a deputy chairman
(or two or more deputy chairmen) and determine the period for which
each is to hold office. If no chairman or deputy chairman shall have
been appointed or if at any meeting of the Board no chairman or deputy
chairman shall be present within five minutes after the time appointed
for holding the meeting, the directors present may choose one of their
number to be chairman of the meeting.
Deputy chairman
19.4 If at any time there is more than one deputy chairman the right in the
absence of the chairman to preside as chairman at a meeting of the
Board or of the Company shall be determined as between the deputy
chairmen present (if more than one) by seniority in length of
appointment or otherwise as resolved by the Board.
Casting vote
19.5 Questions arising at any meeting of the Board shall be determined by a
majority of votes. In the case of an equality of votes, the chairman of
the meeting shall have a second or casting vote.
Restrictions on voting
19.6 A director shall not vote (save as provided in the following two
articles) in respect of any contract or arrangement or any other
proposal whatsoever in which he has an interest which (together with
any interest of any person connected with him within the meaning given
by section 346 of the Act) is a material interest otherwise than by
virtue of his interests in shares or debentures or other securities of,
or otherwise in or through, the Company. A director shall not be
counted in the quorum at a meeting in relation to any resolution on
which he is not entitled to vote.
<PAGE>
19.7 Subject to the provisions of the Statutes, a director shall (in the
absence of some other material interest than is indicated below) be
entitled to vote (and be counted in the quorum) in respect of any
resolution:
(a) relating to the giving of any security, guarantee or indemnity
in respect of:
(i) money lent or obligations incurred by him or by any
other person at the request of or for the benefit of
the Company or any of its subsidiary undertakings; or
(ii) a debt or obligation of the Company or any of its
subsidiary undertakings for which he himself has
assumed responsibility in whole or part under a
guarantee or indemnity or by the giving of security;
(b) where the Company or any of its subsidiary undertakings is
offering securities in which offer the director is or may be
entitled to participate as a holder of securities or in the
underwriting or sub-underwriting of which the director is to
participate;
(c) relating to another company in which he does not hold an
interest in shares (as that term is used in part VI of the
Act) representing one per cent. or more of either any class of
the equity share capital, or the voting rights in such
company;
(d) relating to a pension, superannuation or similar scheme or
retirement, death or disability benefits scheme or employees'
share scheme which has been approved by the Inland Revenue or
is conditional upon such approval or does not award him any
privilege or benefit not awarded to the employees to whom such
scheme relates; or
(e) concerning insurance which the Company proposes to maintain or
purchase for the benefit of directors or for the benefit of
persons including directors.
19.8 Where proposals are under consideration concerning the appointment
(including fixing or varying the terms of appointment) of two or more
directors to offices or employments with the Company or any body
corporate in which the Company is interested, the proposals may be
divided and considered in relation to each director separately and in
such case each of the directors concerned (if not debarred from voting
under the preceding article) shall be entitled to vote (and be counted
in the quorum) in respect of each resolution except that concerning his
own appointment.
19.9 If a question arises at any time as to the materiality of a director's
interest or as to his entitlement to vote and such question is not
resolved by his voluntarily
<PAGE>
agreeing to abstain from voting, such question shall be referred to the
chairman of the meeting and his ruling in relation to any director
other than himself shall be final and conclusive except in a case where
the nature or extent of the interest of such director has not been
fairly disclosed.
19.10 The Company may by ordinary resolution ratify any transaction not duly
authorised by reason of a contravention of any restrictions in these
articles of a directors entitlement to vote.
Number of directors below minimum
19.11 The continuing directors may act notwithstanding any vacancies, but if
and so long as the number of directors is reduced below the minimum
number fixed by or in accordance with these articles the continuing
directors or director may act for the purpose of filling such vacancies
or of summoning general meetings, but not for any other purpose. If
there are no directors or director able or willing to act, then any two
members may summon a general meeting for the purpose of appointing
directors.
Written resolutions
19.12 A resolution in writing signed by all the directors entitled to vote on
that resolution shall be as valid and effectual as a resolution duly
passed at a meeting of the Board and may consist of several documents
(including a telex, facsimile, cable or telegram) each accurately
stating the terms of the resolution and each signed by or emanating
from one or more directors.
Validity of proceedings
19.13 All acts done by any meeting of the Board, or of any committee of the
Board, or by any person acting as a director or as a member of any such
committee, shall as regards all persons dealing in good faith with the
Company, notwithstanding that there was some defect in the appointment
of any of those persons so acting, or that any such persons were
disqualified or had vacated office, or were not entitled to vote, be as
valid as if every such person had been duly appointed and was qualified
and had continued to be a director or member of the committee and had
been entitled to vote.
Telephone meetings
19.14 Any director may participate in a meeting of directors by means of a
conference telephone or similar communications system whereby all those
participating in the
<PAGE>
meeting can hear and address each other. Such participation shall be
deemed to constitute presence in person at such meeting for all
purposes including that of establishing a quorum. A meeting held by
such means shall be deemed to take place where the largest group of
participators in number is assembled. In the absence of such a majority
the location of the chairman shall be deemed to be the place of the
meeting.
20. Committees of the directors
Appointment and constitution of committees
20.1 The Board may delegate any of their powers or discretions (including
without prejudice to the generality of the foregoing all powers and
discretions whose exercise involves or may involve the payment of
remuneration to or the conferring of any other benefit on all or any of
the directors) to committees consisting of one or more directors and
(if thought fit) one or more other named persons or person to be
co-opted as hereinafter provided. Insofar as any such power or
discretion is delegated to a committee, any reference in these articles
to the exercise by the Board of the power or discretion so delegated
shall be read and construed as if it were a reference to the exercise
of such power or discretion by such committee. Any committee so formed
shall in the exercise of the powers so delegated conform to any
regulations which may from time to time be imposed by the Board. Any
such regulations may provide for or authorise the co-option to the
committee of persons other than directors and may provide for members
who are not directors to have voting rights as members of the
committee.
Proceedings of committee meetings
20.2 The meetings and proceedings of any such committee consisting of two or
more persons shall (with necessary changes only) be governed by the
provisions of these articles regulating the meetings and proceedings of
the Board, so far as the same are not superseded by any regulations
made by the Board under the last preceding article.
21. Powers of directors
General powers
21.1 The business and affairs of the Company shall be managed by the Board,
who may pay all expenses incurred in forming and registering the
Company, and may exercise all such powers of the Company as are not by
the Statutes or by these
<PAGE>
articles required to be exercised by the Company in general meeting
subject nevertheless to any regulations of these articles, to the
provisions of the Statutes and to such regulations as may be prescribed
by special resolution of the Company, but no regulation so made by the
Company shall invalidate any prior act of the Board which would have
been valid if such regulation had not been made. The general powers
given by this article shall not be limited or restricted by any special
authority or power given to the Board by any other article.
Local boards
21.2 The Board may establish any local boards or agencies for managing any
of the affairs of the Company, either in the United Kingdom or
elsewhere, and may appoint any persons to be members of such local
boards, or any managers or agents, and may fix their remuneration, and
may delegate to any local board, manager or agent any of the powers,
authorities and discretions vested in the Board, with power to
sub-delegate, and may authorise the members of any local boards, or any
of them, to fill any vacancies in their number, and to act
notwithstanding vacancies, and any such appointment or delegation may
be made upon such terms and subject to such conditions as the Board may
think fit, and the Board may remove any person so appointed, and may
annul or vary any such delegation, but no person dealing in good faith
and without notice of any such annulment or variation shall be affected
by such annulment or variation.
Appointment of attorney
21.3 The Board may from time to time and at any time by power of attorney or
otherwise appoint any company, firm or person or any fluctuating body
of persons, whether nominated directly or indirectly by the Board, to
be the attorney or attorneys of the Company for such purposes and with
such powers, authorities and discretions (not exceeding those vested in
or exercisable by the Board under these articles) and for such period
and subject to such conditions as they may think fit, and any such
appointment may contain such provisions for the protection and
convenience of persons dealing with any such attorney as the Board may
think fit, and may also authorise any such attorney to sub-delegate all
or any of the powers, authorities and discretions vested in him.
President
21.4 The Board may from time to time elect a president of the Company and
may determine the period for which he shall hold office. Such president
may be either honorary or paid such remuneration as the Board in its
discretion shall think fit, and need not be a director but shall, if
not a director, be entitled to receive notice of and attend and speak,
but not to vote, at all meetings of the Board.
<PAGE>
Signature on cheques etc.
21.5 All cheques, promissory notes, drafts, bills of exchange, and other
negotiable or transferable instruments, and all receipts for moneys
paid to the Company, shall be signed, drawn, accepted, endorsed, or
otherwise executed, as the case may be, in such manner as the Board
shall from time to time by resolution determine.
22. Alternate directors
22.1 Any director may at any time by writing under his hand and deposited at
the Registered Office, or delivered at a meeting of the Board, appoint
any person (including another director) to be his alternate director
and may in like manner at any time terminate such appointment. Such
appointment, unless previously approved by the Board or unless the
appointee is another director, shall have effect only upon and subject
to being approved by the Board.
22.2 The appointment of an alternate director shall determine on the
happening of any event which if he were a director would cause him to
vacate such office or if his appointor ceases to be a director,
otherwise than by retirement at a general meeting at which he is
re-elected.
22.3 An alternate director shall (except when absent from the United
Kingdom) be entitled to receive notices of meetings of the Board and
shall be entitled to attend and vote as a director at any such meeting
at which the director appointing him is not personally present and
generally at such meeting to perform all functions of his appointor as
a director and for the purposes of the proceedings at such meeting the
provisions of these articles shall apply as if he (instead of his
appointor) were a director. If he shall be himself a director (or shall
attend any such meeting as an alternate for more than one director),
his voting rights shall be cumulative but he shall not be counted more
than once for the purposes of the quorum. If his appointor is for the
time being temporarily unable to act through ill health or disability
his signature to any resolution in writing of the Board shall be as
effective as the signature of his appointor. To such extent as the
Board may from time to time determine in relation to any committees of
the Board the foregoing provisions of this article shall also apply
with necessary changes only to any meeting of any such committee of
which his appointor is a member. An alternate director shall not (save
as aforesaid) have power to act as a director, nor shall he be deemed
to be a director for the purposes of these articles, nor shall he be
deemed to be the agent of his appointor.
22.4 An alternate director shall be entitled to contract and be interested
in and benefit from contracts or arrangements or transactions and to be
repaid expenses and to be indemnified to the same extent with necessary
changes only as if he were a director but he shall not be entitled to
receive from the Company in respect of his
<PAGE>
appointment as alternate director any remuneration except only such
part (if any) of the remuneration otherwise payable to his appointor as
such appointor may by notice in writing to the Company from time to
time direct.
23. Secretary
The Secretary shall be appointed by the Board on such terms and for
such period as they may think fit. Any Secretary so appointed may at
any time be removed from office by the Board, but without prejudice to
any claim for damages for breach of any contract of service between him
and the Company. If thought fit two or more persons may be appointed as
joint secretaries. The Board may also appoint from time to time on such
terms as they may think fit one or more deputy and/or assistant
secretaries.
24. Provision for Employees
The Board may by resolution exercise any power conferred by the
Statutes to make provision for the benefit of persons employed or
formerly employed by the Company or any of its subsidiaries in
connection with the cessation or the transfer to any person of the
whole or part of the undertaking of the Company or any of its
subsidiaries.
25. Untraceable members
25.1 The Company shall be entitled to cease sending dividend warrants by
post if such warrants have been returned undelivered or left uncashed,
provided that this power may not be exercised until either such
warrants have been so returned or left uncashed on two consecutive
occasions or, following one such occasion, reasonable enquiries have
failed to establish any new address of the registered holder.
25.2 The Company shall be entitled to sell at the best price reasonably
obtainable at the time of sale the shares of a member or the shares to
which a person is entitled by transmission on death or bankruptcy or
otherwise by operation of law provided that this power may not be
exercised unless:
(a) during the period of 12 years prior to the date of the
publication of the advertisements referred to in sub-paragraph
(b) (or, if published on different dates, the first date) no
communication has been received by the Company from the member
or the person entitled by transmission and no cheque or
warrant sent by the Company in respect of the shares has been
cashed and no fewer than three dividends in respect of the
shares have become payable and no dividend in respect of those
shares has been claimed;
<PAGE>
(b) the Company shall on expiry of such period of 12 years have
inserted advertisements in both a national daily newspaper and
in a newspaper circulating in the area in which the last known
address of the member or the address at which service of
notices may be effected in the manner authorised by these
articles is located giving notice of its intention to sell the
shares;
(c) during such period of 12 years and the period of three months
following the publication of such advertisements, the Company
shall have received no communication from such member or
person; and
(d) if the Company has any of its securities admitted to the
Official List of the London Stock Exchange notice shall have
been given to the London Stock Exchange of its intention to
make such sale.
25.3 To give effect to any such sale the Company may appoint any person to
execute as transferor an instrument of transfer of the said shares and
such instrument of transfer shall be as effective as if it had been
executed by the registered holder of or person entitled by transmission
on death or bankruptcy or otherwise by operation of law to such shares
and the title of the transferee shall not be affected by any
irregularity or invalidity in the proceedings relating to the transfer.
The net proceeds of sale shall belong to the Company which shall be
obliged to account to the former member or other person previously
entitled for a sum equal to such proceeds and shall enter the name of
such former member or other person in the books of the Company as a
creditor for such sum which shall be a permanent debt of the Company.
No trust shall be created in respect of the debt, no interest shall be
payable in respect of the same and the Company shall not be required to
account for any money earned on the net proceeds, which may be employed
in the business of the Company or invested in such investments (other
than shares of the Company or its holding company if any) as the Board
may from time to time think fit.
26. Borrowing powers
The Board may exercise all the powers of the Company to borrow money,
to give guarantees and to mortgage or charge its undertaking, property
and assets (present and future) and uncalled capital, and to issue
debentures and other securities, whether outright or as collateral
security for any debt, liability or obligation of the Company or of any
third party.
<PAGE>
27. The Seal
27.1 The Board shall provide for the safe custody of the common seal of the
Company which shall not be used without the authority of the Board or
of a committee authorised by the Board in that behalf.
27.2 Every instrument to which the common seal of the Company shall be
affixed shall be signed by one director and the Secretary or by two
directors save that as regards any certificates for shares or
debentures or other securities of the Company the Board may by
resolution determine that such signature or either of them be dispensed
with or affixed by some method or system of mechanical signatures.
27.3 Any instrument signed by one director and the Secretary or by two
directors and expressed to be executed by the Company shall have the
same effect as if executed under the common seal of the Company,
provided that no instrument which makes it clear on its face that it is
intended to have effect as a deed shall be so signed without the
authority of the Board or of a committee authorised by the Board in
that behalf.
27.4 The Company may exercise the powers conferred by the Statutes with
regard to having an official seal for use abroad and such powers shall
be vested in the Board.
28. Authentication of documents
Any director or the Secretary or any person appointed by the Board for
the purpose shall have power to authenticate any documents affecting
the constitution of the Company and any resolution passed by the
Company or the Board or any committee, and any book, record, document
or account relating to the business of the Company and to certify
copies or extracts of such resolution, book, record, document or
account as true copies or extracts, and if any resolution, book,
record, document or account is elsewhere than at the Registered Office
the local manager or other officer of the Company having the custody of
them shall be deemed to be a person appointed by the Board. A document
purporting to be a copy of a resolution, or an extract from the minutes
of a meeting, of the Company or of the Board or any committee, which is
certified shall be conclusive evidence in favour of all persons dealing
with the Company upon the faith of such certified copy that such
resolution has been duly passed or, as the case may be, that any minute
so extracted is a true and accurate record of proceedings at a duly
constituted meeting.
<PAGE>
29. Reserves
Establishment of reserves
29.1 The Board may from time to time set aside out of the profits of the
Company and carry to reserve such sums as they think proper which, at
the discretion of the Board, shall be applicable for any purpose to
which the profits of the Company may properly be applied and pending
such application may either be employed in the business of the Company
or be invested. The Board may divide the reserve into such special
funds as they think fit and may consolidate into one fund any special
funds or any parts of any special funds into which the reserve may have
been divided. The Board may also without placing the same to reserve
carry forward any profits. In carrying sums to reserve and in applying
the same, the Board shall comply with the provisions of the Statutes.
Business bought as from past date
29.2 Subject to the provisions of the Statutes, where any asset, business or
property is acquired by the Company as from a past date (whether such
date be before or after the incorporation of the Company) the profits
and losses arising from such asset, business or property as from such
date may at the discretion of the Board in whole or in part be carried
to revenue account and treated for all purposes as profits or losses of
the Company. If any shares or securities are purchased with the next
dividend or interest payment accruing to the purchaser, such dividend
or interest may at the discretion of the Board be treated as revenue,
and it shall not be obligatory to capitalise the same or any part of
such dividend or interest.
30. Dividends
Final dividends
30.1 The Company may by ordinary resolution declare dividends but no such
dividends shall exceed the sum recommended by the Board.
Interim dividends
30.2 In so far as in the opinion of the Board, the profits the Company
justify such payments, the Board may declare and pay the fixed
dividends on any class of shares carrying a fixed dividend expressed to
be payable on fixed dates on the half-yearly or other dates prescribed
for the payment of such dividends and may also from time to time
declare and pay interim dividends on shares of any class of
<PAGE>
such sums and on such dates and in respect of such periods as it thinks
fit. Provided the directors act in good faith they shall not incur any
liability to the holders of shares conferring preferred rights for any
loss they may suffer by the lawful payment of an interim dividend on
any shares having deferred or non-preferred rights.
Ranking of shares for dividend
30.3 Unless and to the extent that the rights attached to any shares or the
terms of issue of such shares otherwise provide, all dividends shall
(as regards any shares not fully paid throughout the period in respect
of which the dividend is paid) be apportioned and paid pro rata
according to the sums paid on the shares during any portion or portions
of the period in respect of which the dividend is paid. For the
purposes of this article no sum paid on a share in advance of calls
shall be treated as paid on the share.
No dividend except out of profits
30.4 No dividend shall be paid otherwise than out of profits available for
distribution under the provisions of the Statutes.
No interest on dividends
30.5 No dividend or other moneys payable on or in respect of a share shall
bear interest as against the Company.
Retention of dividends
30.6 The Board may retain any dividend or other moneys payable on or in
respect of a share on which the Company has a lien, and may apply the
same in or towards satisfaction of the debts, liabilities or
engagements in respect of which the lien exists.
30.7 The Board may retain the dividends payable upon shares in respect of
which any person is under the provisions as to the transmission of
shares hereinbefore contained entitled to become a member, or which any
person is under those provisions entitled to transfer, until such
person shall become a member in respect of such shares or shall
transfer the same.
<PAGE>
Waiver of dividend
30.8 The waiver in whole or in part of any dividend on any share by any
document (whether or not executed as a deed) shall be effective only if
such document is signed by the holder of such share (or the person
becoming entitled to the share in consequence of the death, bankruptcy
or mental disorder of the holder or by operation of law or any other
event) and delivered to the Company and if or to the extent that the
same is accepted as such or acted upon by the Company.
Unclaimed dividend
30.9 The payment by the Board of any unclaimed dividend or other moneys
payable on or in respect of a share into a separate account shall not
constitute the Company a trustee in respect of such unclaimed dividend
or other moneys and any dividend unclaimed after a period of twelve
years from the date the dividend became due for payment shall be
forfeited and shall revert to the Company.
Distribution in specie
30.10 The Company may upon the recommendation of the Board by ordinary
resolution direct payment of a dividend in whole or in part by the
distribution of specific assets (and in particular of paid-up shares or
debentures of any other company) and the Board shall give effect to
such resolution. Where any difficulty arises in regard to such
distribution, the Board may settle the same as it thinks expedient and
in particular:
(a) may issue fractional certificates;
(b) may fix the value for distribution of such specific assets or
any part of such specific assets;
(c) may determine that cash payments shall be made to any member
upon the footing of the value so fixed in order to adjust the
rights of all parties; and
(d) may vest any such specific assets in trustees as may seem
expedient to the Board.
Manner of payment of dividends
30.11 Any dividend or other moneys payable in cash on or in respect of a
share may be paid by cheque or warrant sent through the post to the
registered address of the member or person entitled to such dividend or
other moneys (or, if two or more persons are registered as joint
holders of the share or are entitled to such share in
<PAGE>
consequence of the death, bankruptcy or mental disorder of the holder
or by operation of law or any other event, to any one of such persons)
or to such person and such address as such member or person or persons
may in writing direct. Every such cheque or warrant shall be made
payable to the order of the person to whom it is sent or to such person
as the holder or joint holders or person or persons entitled to the
share in consequence of the death, bankruptcy or mental disorder of the
holder or by operation of law or any other event may direct and payment
of the cheque or warrant by the banker upon whom it is drawn shall be a
good discharge to the Company. Every such cheque or warrant shall be
sent at the risk of the person entitled to the money represented by
such cheque or warrant.
30.12 Subject to the provisions of these articles and to the rights attaching
to any shares, any dividend or other moneys payable on or in respect of
a share may be paid in such currency as the Board may determine.
Joint holders
30.13 If two or more persons are registered as joint holders of any share, or
are entitled jointly to a share in consequence of the death, bankruptcy
or mental disorder of the holder or otherwise by operation of law or
any other event, any one of them may give effectual receipts for any
dividend or other money payable or property distributable on or in
respect of the share.
Record date for dividends
30.14 Any resolution declaring a dividend on shares of any class, whether a
resolution of the Company in general meeting or a resolution of the
Board, may specify that the same shall be payable to the persons
registered as the holders of such shares at the close of business on a
particular date, notwithstanding that it may be a date prior to that on
which the resolution is passed, and upon that date the dividend shall
be payable to them in accordance with their respective holdings so
registered, but without prejudice to the rights among themselves in
respect of such dividend of transferors and transferees of any such
shares.
31. Capitalisation of profits and reserves
31.1 The Board may, with the sanction of an ordinary resolution of the
Company, capitalise any sum standing to the credit of any of the
Company's reserve accounts (including any share premium account,
capital redemption reserve, or other undistributable reserve) or any
sum standing to the credit of profit and loss account.
<PAGE>
31.2 Such capitalisation shall be effected by appropriating such sum to the
holders of ordinary shares on the Register at the close of business on
the date of the resolution (or such other date as may be specified in
such resolution or determined as provided in such resolution) in
proportion to their holdings of ordinary shares and applying such sum
on their behalf in paying up in full unissued ordinary shares (or,
subject to any special rights previously conferred on any shares or
class of shares for the time being issued, unissued shares of any other
class not being redeemable shares) for allotment and distribution
credited as fully paid up to and amongst them in proportion to their
holdings.
31.3 The Board may do all acts and things considered necessary or expedient
to give effect to any such capitalisation, with full power to the Board
to make such provision as it thinks fit for any fractional entitlements
which would arise on the basis aforesaid (including provisions whereby
fractional entitlements are disregarded or the benefit of such
fractional entitlements accrues to the Company rather than to the
members concerned). The Board may authorise any person to enter on
behalf of all the members interested into an agreement with the Company
providing for any such capitalisation and matters incidental to such
capitalisation and any agreement made under such authority shall be
effective and binding on all concerned.
32. Accounts
Accounting records
32.1 Accounting records sufficient to show and explain the Company's
transactions and otherwise complying with the Statutes shall be kept at
the Registered Office, or at such other place as the Board thinks fit,
and shall always be open to inspection by the officers of the Company.
No member of the Company or other person shall have any right of
inspecting any account or book or document of the Company except as
conferred by Statute or these articles or as ordered by a court of
competent jurisdiction or as authorised by the Board.
Copies of accounts for members
32.2 A copy of every balance sheet and profit and loss account which is to
be laid before a general meeting of the Company (including every
document required by law to be comprised in such balance sheet and
profit and loss account or attached or annexed to such balance sheet
and profit and loss account) shall no fewer than twenty-one days before
the date of the meeting be sent to every member of, and every holder of
debentures of, the Company and to every other person who is entitled to
receive notice of meetings from the Company under the provisions of the
Statutes or of these articles. Provided that this article shall not
require a copy
<PAGE>
of these documents to be sent to any member to whom a summary financial
statement is sent in accordance with the Statutes nor to more than one
of joint holders nor to any person of whose address the Company is not
aware, but any member or holder of debentures to whom a copy of these
documents has not been sent shall be entitled to receive a copy free of
charge on application at the Registered Office.
33. Auditors
Validity of auditor's acts
33.1 Subject to the provisions of the Statutes, all acts done by any person
acting as an auditor shall, as regards all persons dealing in good
faith with the Company, be valid, notwithstanding that there was some
defect in his appointment or that he was at the time of his appointment
not qualified for appointment or subsequently became disqualified.
Auditor's rights to attend general meetings
33.2 An auditor shall be entitled to attend any general meeting and to
receive all notices of and other communications relating to any general
meeting which any member is entitled to receive and to be heard at any
general meeting on any part of the business of the meeting which
concerns him as auditor.
34. Notices
Service of notices
34.1 Any notice or document (including a share certificate) may be served on
or delivered to any member by the Company either personally or by
sending it through the post in a prepaid cover addressed to such member
at his registered address, or (if he has no registered address within
the United Kingdom) to the address, if any, within the United Kingdom
supplied by him to the Company as his address for the service of
notices, or by delivering it to such address addressed as aforesaid. In
the case of a member registered on a branch register any such notice or
document may be posted either in the United Kingdom or in the territory
in which such branch register is maintained.
34.2 Where a notice or other document is served or sent by post, service or
delivery shall be deemed to be effected at the expiration of
twenty-four hours (or, where second-class mail is employed, forty-eight
hours) after the time when the cover
<PAGE>
containing the same is posted and in proving such service or delivery
it shall be sufficient to prove that such cover was properly addressed,
stamped and posted.
34.3 The accidental failure to send, or the non-receipt by any person
entitled to, any notice of or other document relating to any meeting or
other proceeding shall not invalidate the relevant meeting or other
proceeding.
34.4 A member present either in person or by proxy, at any meeting of the
Company or the holders of any class of shares in the Company shall be
deemed to have received notice of the meeting and, where requisite, of
the purpose for which it was called.
Joint holders
34.5 Any notice given to that one of the joint holders of a share whose name
stands first in the Register in respect of the share shall be
sufficient notice to all the joint holders in their capacity as such.
For such purpose a joint holder having no registered address in the
United Kingdom and not having supplied an address within the United
Kingdom for the service of notices shall be disregarded.
Deceased and bankrupt members
34.6 A person entitled to a share in consequence of the death, bankruptcy or
mental disorder of a member or by operation of law or any other event
upon supplying to the Company such evidence as the Board may reasonably
require to show his title to the share, and upon supplying also an
address within the United Kingdom for the service of notices, shall be
entitled to have served upon or delivered to him at such address any
notice or document to which the member but for his death or bankruptcy
or other event would be entitled, and such service or delivery shall
for all purposes be deemed a sufficient service or delivery of such
notice or document on all persons interested (whether jointly with or
as claiming through or under him) in the share. Save as aforesaid any
notice or document delivered or sent by post to or left at the address
of any member in pursuance of these articles shall, notwithstanding
that such member be then dead or bankrupt or in liquidation, and
whether or not the Company have notice of his death or bankruptcy or
liquidation, be deemed to have been duly served or delivered in respect
of any share registered in the name of such member as sole or
first-named joint holder.
Overseas members
34.7 A member who (having no registered address within the United Kingdom)
has not supplied to the Company an address within the United Kingdom
for the service of notices shall not be entitled to receive notices
from the Company.
<PAGE>
Suspension of postal services
34.8 If at any time by reason of the suspension or curtailment of postal
services within the United Kingdom the Company is unable to convene a
general meeting effectively by notices sent through the post, a general
meeting may be convened by a notice advertised on the same date in no
fewer than one national daily newspaper with appropriate circulation
and such notice shall be deemed to have been duly served on all members
entitled to such notice at noon on the day when the advertisement
appears. In any such case the Company shall send confirmatory copies of
the notice by post if at least seven days prior to the meeting the
posting of notices to addresses throughout the United Kingdom again
becomes practicable.
Statutory requirements as to notices
34.9 The provisions in these articles regarding the serving of notices and
other documents are subject to any requirements in the Statutes that a
particular offer, notice or other document be served in any particular
manner.
35. Destruction of documents
The Company may destroy:
(a) any share certificate which has been cancelled at any time
after the expiry of one year from the date of such
cancellation;
(b) any variation or cancellation of any dividend mandate at any
time after the expiry of two years from the date such
variation or cancellation was recorded by the Company;
(c) any notification of change of name or address at any time
after the expiry of two years from the date such notification
was recorded by the Company;
(d) any instrument of transfer of shares which has been registered
at any time after the expiry of six years from the date of
registration; and
(e) any other document on the basis of which any entry in the
Register is made at any time after the expiry of six years
from the date an entry in the Register was first made in
respect of it;
and it shall conclusively be presumed in favour of the Company that
every share certificate so destroyed was a valid certificate duly and
properly cancelled and that every instrument of transfer so destroyed
was a valid and effective instrument duly
<PAGE>
and properly registered and that every other document destroyed under
this article was a valid and effective document in accordance with the
recorded particulars of that document in the books or records of the
Company. Provided always that:
(i) the foregoing provisions of this article shall apply only to
the destruction of a document in good faith and without
express notice to the Company that the preservation of such
document was relevant to a claim;
(ii) nothing contained in this article shall be construed as
imposing upon the Company any liability in respect of the
destruction of any document earlier than as stated in this
article or in any case where the conditions of proviso (i) are
not fulfilled; and
(iii) references in this article to the destruction of any document
include references to its disposal in any manner.
36. Winding up
Director's power to petition
36.1 The Board shall have power in the name and on behalf of the Company to
present a petition to the court for the Company to be wound up.
Distribution of assets in specie
36.2 If the Company shall be wound up (whether the liquidation is voluntary,
under supervision, or by the court) the liquidator may, with the
authority of an extraordinary resolution and subject to any provision
sanctioned in accordance with the provisions of the Insolvency Act
1986, divide among the members in specie or kind the whole or any part
of the assets of the Company and whether or not the assets shall
consist of property of one kind or shall consist of properties of
different kinds, and may for such purpose set such value as he deems
fair upon any one or more class or classes of property and may
determine how such division shall be carried out as between the members
of different classes of members. The liquidator may, with the like
authority, vest any part of the assets in trustees upon such trusts for
the benefit of members as the liquidator with the like authority shall
think fit, and the liquidation of the Company may be closed and the
Company dissolved, but so that no contributory shall be compelled to
accept any shares or other property in respect of which there is a
liability. The liquidator may make any provision referred to in, and
sanctioned in accordance with the provisions of the Insolvency Act
1986.
<PAGE>
37. Indemnity
37.1 Subject to the provisions of and so far as may be consistent with the
Statutes, every director, auditor, Secretary or other officer of the
Company shall be indemnified by the Company out of its own funds
against and exempted by the Company from all costs, charges, losses,
expenses and liabilities incurred by him in the actual or purported
execution or discharge of his duties or the exercise or purported
exercise of his powers or otherwise in relation to or in connection
with his duties, powers or office including (without prejudice to the
generality of the foregoing) any liability incurred by him in defending
any proceedings, civil or criminal, which relate to anything done or
omitted or alleged to have been done or omitted by him as an officer or
employee of the Company and in which judgment is given in his favour
(or the proceedings are otherwise disposed of without any finding or
admission of any material breach of duty on his part) or in which he is
acquitted or in connection with any application under any statute for
relief from liability in respect of any such act or omission in which
relief is granted to him by the Court.
37.2 Without prejudice to the preceding article the Board shall have power
to purchase and maintain insurance for or for the benefit of any
persons who are or were at any time directors, officers, employees or
auditors of any Relevant Company (as defined in the following article)
or who are or were at any time trustees of any pension fund or
employees' share scheme in which employees of any Relevant Company are
interested, including (without prejudice to the generality of the
foregoing) insurance against any liability incurred by such persons in
respect of any act or omission in the actual or purported execution or
discharge of their duties or in the exercise or purported exercise of
their powers or otherwise in relation to their duties, powers or
offices in relation to any Relevant Company, or any such pension fund
or employees' share scheme.
37.3 For the purpose of the preceding article "Relevant Company" shall mean
the Company, any holding company of the Company or any other body,
whether or not incorporated, in which the company or such holding
company or any of the predecessors of the Company or of such holding
company has or had any interest whether direct or indirect or which is
in any way allied to or associated with the Company, or any subsidiary
undertaking of the Company or of such other body.
<PAGE>
INDEX
1. Preliminary
2. Share capital
3. Shares
4. Share certificates
5. Calls on shares
6. Forfeiture and lien
7. Transfer of shares
8. Transmission of shares
9. Share warrants to bearer
10. General meetings
11. Notice of general meetings
12. Proceedings at general meeting
13. Votes of members
14. Disclosure of interests
15. Proxy
16. Corporations acting by representations
17. Directors
18. Appointment and retirement of directors
19. Meetings and proceedings of directors
20. Committees of the directors
21. Powers of directors
22. Alternate directors
23. Secretary
24. Provision for employees
25. Untraceable members
26. Borrowing powers
27. The seal
28. Authentication of documents
29. Reserves
30. Dividends
31. Capitalisation of profits and reserves
32. Accounts
33. Auditors
34. Notices
35. Destruction of documents
36. Winding up
37. Indemnity
<PAGE>
EXHIBIT 2.1
<PAGE>
================================================================================
DISPLAY.IT HOLDINGS PLC
AND
THE BANK OF NEW YORK
As Depositary
AND
OWNERS AND HOLDERS OF AMERICAN DEPOSITARY RECEIPTS
Deposit Agreement
Dated as of ____________, 1997
================================================================================
<PAGE>
DEPOSIT AGREEMENT
DEPOSIT AGREEMENT dated as of ______________, 1996 among DISPLAY.IT
HOLDINGS PLC, incorporated under the laws of the United Kingdom (herein called
the Issuer), THE BANK OF NEW YORK, a New York banking corporation (herein called
the Depositary), and all Owners and holders from time to time of American
Depositary Receipts issued hereunder.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Issuer desires to provide, as hereinafter set forth in
this Deposit Agreement, for the deposit of Shares (as hereinafter defined) of
the Issuer from time to time with the Depositary or with the Custodian (as
hereinafter defined) as agent of the Depositary for the purposes set forth in
this Deposit Agreement, for the creation of American Depositary Shares
representing the Shares so deposited and for the execution and delivery of
American Depositary Receipts evidencing the American Depositary Shares; and
WHEREAS, the American Depositary Receipts are to be substantially
in the form of Exhibit A annexed hereto, with appropriate insertions,
modifications and omissions, as hereinafter provided in this Deposit Agreement;
<PAGE>
NOW, THEREFORE, in consideration of the premises, it is agreed by
and between the parties hereto as follows:
ARTICLE 1. DEFINITIONS.
The following definitions shall for all purposes, unless otherwise
clearly indicated, apply to the respective terms used in this Deposit Agreement:
SECTION 1.1. American Depositary Shares.
The term "American Depositary Shares" shall mean the
securities representing the interests in the Deposited Securities and evidenced
by the Receipts issued hereunder. Each American Depositary Share shall represent
________ ( ) Share(s), until there shall occur a distribution upon Deposited
Securities covered by Section 4.3 or a change in Deposited Securities covered by
Section 4.8 with respect to which additional Receipts are not executed and
delivered, and thereafter American Depositary Shares shall evidence the amount
of Shares or Deposited Securities specified in such Sections.
SECTION 1.2. Article; Section.
Wherever references are made in this Deposit Agreement
to an "Article" or "Articles" or to a "Section" or "Sections", such references
shall mean an article or articles or a section or sections of this Deposit
Agreement, unless otherwise required by the context.
SECTION 1.3. Commission.
<PAGE>
The term "Commission" shall mean the Securities and
Exchange Commission of the United States or any successor governmental agency
in the United States.
SECTION 1.4. Custodian.
The term "Custodian" shall mean the London office of
The Bank of New York, as agent of the Depositary for the purposes of this
Deposit Agreement, and any other firm or corporation which may hereafter be
appointed by the Depositary pursuant to the terms of Section 5.5, as substitute
or additional custodian or custodians hereunder, as the context shall require
and shall also mean all of them collectively.
SECTION 1.5. Deposit Agreement.
The term "Deposit Agreement" shall mean this
Agreement, as the same may be amended from time to time in accordance with the
provisions hereof.
SECTION 1.6. Depositary; Corporate Trust Office.
The term "Depositary" shall mean The Bank of New York,
a New York banking corporation and any successor as depositary hereunder. The
term "Corporate Trust Office", when used with respect to the Depositary, shall
mean the office of the Depositary which at the date of this Agreement is 101
Barclay Street, New York, New York, 10286.
SECTION 1.7. Deposited Securities.
The term "Deposited Securities" as of any time shall
mean Shares at such time deposited or deemed to be deposited under this Deposit
Agreement and any and all other securities, property and cash received by the
Depositary or the Custodian in
<PAGE>
respect thereof and at such time held hereunder, subject as to cash to the
provisions of Section 4.5.
SECTION 1.8. Dollars; Pence.
The terms "Dollars" and the symbol "$" shall mean
United States dollars. The terms "Pounds" and "Pence" and the symbol "p" shall
refer to the lawful currency of the United Kingdom.
SECTION 1.9. Foreign Registrar.
The term "Foreign Registrar" shall mean the entity
that presently carries out the duties of registrar for the Shares or any
successor as registrar for the Shares and any other appointed agent of the
Issuer for the transfer and registration of Shares.
SECTION 1.10. Issuer.
The term "Issuer" shall mean Display.IT Holdings plc,
incorporated under the laws of the United Kingdom, and its successors.
SECTION 1.11. Owner.
The term "Owner" shall mean the person in whose name
a Receipt is registered on the books of the Depositary maintained for such
purpose.
SECTION 1.12. Receipts.
The term "Receipts" shall mean the American
Depositary Receipts issued hereunder evidencing American Depositary Shares.
SECTION 1.13. Registrar.
<PAGE>
The term "Registrar" shall mean any bank or trust
company having an office in the Borough of Manhattan, The City of New York,
which shall be appointed to register Receipts and transfers of Receipts as
herein provided.
SECTION 1.14. Restricted Securities.
The term "Restricted Securities" shall mean Shares,
or Receipts representing such Shares, which are acquired directly or indirectly
from the Issuer or its affiliates (as defined in Rule 144 under the Securities
Act of 1933) in a transaction or chain of transactions not involving any public
offering or which are subject to resale limitations under Regulation D under
that Act or both, or which are held by an officer, director (or persons
performing similar functions) or other affiliate of the Issuer, or which are
subject to other restrictions on sale or deposit under the laws of the United
States or the United Kingdom, or under a shareholder agreement or the Articles
of Association and By-laws of the Issuer.
SECTION 1.15. Securities Act of 1933.
The term "Securities Act of 1933" shall mean the
United States Securities Act of 1933, as from time to time amended.
SECTION 1.16. Shares.
The term "Shares" shall mean ordinary shares in
registered form of the Issuer, par value _____________________ each, heretofore
validly issued and outstanding and fully paid, nonassessable and free of any
pre-emptive rights of the holders of outstanding Shares or hereafter validly
issued and outstanding and fully paid, nonassessable and free of any pre-emptive
rights
<PAGE>
of the holders of outstanding Shares or interim certificates representing such
Shares.
ARTICLE 2. FORM OF RECEIPTS, DEPOSIT OF SHARES, EXECUTION AND DELIVERY, TRANSFER
AND SURRENDER OF RECEIPTS.
SECTION 2.1. Form and Transferability of Receipts.
Definitive Receipts shall be substantially in the form
set forth in Exhibit A annexed to this Deposit Agreement, with appropriate
insertions, modifications and omissions, as hereinafter provided. No Receipt
shall be entitled to any benefits under this Deposit Agreement or be valid or
obligatory for any purpose, unless such Receipt shall have been executed by the
Depositary by the manual or facsimile signature of a duly authorized signatory
of the Depositary and, if a Registrar for the Receipts shall have been
appointed, countersigned by the manual or facsimile signature of a duly
authorized officer of the Registrar. The Depositary shall maintain books on
which each Receipt so executed and delivered as hereinafter provided and the
transfer of each such Receipt shall be registered. Receipts bearing the manual
or facsimile signature of a duly authorized signatory of the Depositary who was
at any time a proper signatory of the Depositary shall bind the Depositary,
notwithstanding that such signatory has ceased to hold such office prior to the
execution and delivery of such Receipts by the Registrar or did not hold such
office on the date of issuance of such Receipts.
The Receipts may be endorsed with or have incorporated
in the text thereof such legends or recitals or modifications not inconsistent
with the provisions of this Deposit Agreement as may be required by the
Depositary or required to comply with any applicable law or regulations
thereunder or with
<PAGE>
the rules and regulations of any securities exchange upon which American
Depositary Shares may be listed or to conform with any usage with respect
thereto, or to indicate any special limitations or restrictions to which any
particular Receipts are subject by reason of the date of issuance of the
underlying Deposited Securities or otherwise.
Title to a Receipt (and to the American Depositary
Shares evidenced thereby), when properly endorsed or accompanied by proper
instruments of transfer, shall be transferable by delivery with the same effect
as in the case of a negotiable instrument; provided, however, that the
Depositary, notwithstanding any notice to the contrary, may treat the Owner
thereof as the absolute owner thereof for the purpose of determining the person
entitled to distribution of dividends or other distributions or to any notice
provided for in this Deposit Agreement and for all other purposes.
SECTION 2.2. Deposit of Shares.
Subject to the terms and conditions of this Deposit
Agreement, Shares or evidence of rights to receive Shares may be deposited by
delivery thereof to any Custodian hereunder, accompanied by any appropriate
instrument or instruments of transfer, or endorsement, in form satisfactory to
the Custodian, together with all such certifications as may be required by the
Depositary or the Custodian in accordance with the provisions of this Deposit
Agreement, and, if the Depositary requires, together with a written order
directing the Depositary to execute and deliver to, or upon the written order
of, the person or persons stated in such order, a Receipt or Receipts for the
number of
<PAGE>
American Depositary Shares representing such deposit. No Share shall be accepted
for deposit unless accompanied by evidence satisfactory to the Depositary that
any necessary approval has been granted by any governmental body in the United
Kingdom which is then performing the function of the regulation of currency
exchange. If required by the Depositary, Shares presented for deposit at any
time, whether or not the transfer books of the Issuer or the Foreign Registrar,
if applicable, are closed, shall also be accompanied by an agreement or
assignment, or other instrument satisfactory to the Depositary, which will
provide for the prompt transfer to the Custodian of any dividend, or right to
subscribe for additional Shares or to receive other property which any person in
whose name the Shares are or have been recorded may thereafter receive upon or
in respect of such deposited Shares, or in lieu thereof, such agreement of
indemnity or other agreement as shall be satisfactory to the Depositary.
At the request and risk and expense of any person
proposing to deposit Shares, and for the account of such person, the Depositary
may receive certificates for Shares to be deposited, together with the other
instruments herein specified, for the purpose of forwarding such Share
certificates to the Custodian for deposit hereunder.
Upon each delivery to a Custodian of a certificate or
certificates for Shares to be deposited hereunder, together with the other
documents above specified, such Custodian shall, as soon as transfer and
recordation can be accomplished, present such certificate or certificates to the
Issuer or the Foreign Registrar, if applicable, for transfer and recordation of
the Shares being deposited in the name of the Depositary or its nominee or such
Custodian or its nominee.
<PAGE>
Deposited Securities shall be held by the Depositary
or by a Custodian for the account and to the order of the Depositary or at such
other place or places as the Depositary shall determine.
SECTION 2.3. Execution and Delivery of Receipts.
Upon receipt by any Custodian of any deposit pursuant
to Section 2.2 hereunder (and in addition, if the transfer books of the Issuer
or the Foreign Registrar, if applicable, are open, the Depositary may in its
sole discretion require a proper acknowledgment or other evidence from the
Issuer that any Deposited Securities have been recorded upon the books of the
Issuer or the Foreign Registrar, if applicable, in the name of the Depositary or
its nominee or such Custodian or its nominee), together with the other documents
required as above specified, such Custodian shall notify the Depositary of such
deposit and the person or persons to whom or upon whose written order a Receipt
or Receipts are deliverable in respect thereof and the number of American
Depositary Shares to be evidenced thereby. Such notification shall be made by
letter or, at the request, risk and expense of the person making the deposit, by
cable, telex or facsimile transmission. Upon receiving such notice from such
Custodian, or upon the receipt of Shares by the Depositary, the Depositary,
subject to the terms and conditions of this Deposit Agreement, shall execute and
deliver at its Corporate Trust Office, to or upon the order of the person or
persons entitled thereto, a Receipt or Receipts, registered in the name or names
and evidencing any authorized number of American Depositary Shares requested by
such person or persons, but only upon payment to the Depositary of the fees of
the Depositary for the execution and delivery of such Receipt or Receipts as
<PAGE>
provided in Section 5.9, and of all taxes and governmental charges and fees
payable in connection with such deposit and the transfer of the Deposited
Securities.
SECTION 2.4. Transfer of Receipts; Combination and
Split-up of Receipts.
The Depositary, subject to the terms and conditions of
this Deposit Agreement, shall register transfers of Receipts on its transfer
books from time to time, upon any surrender of a Receipt, by the Owner in person
or by a duly authorized attorney, properly endorsed or accompanied by proper
instruments of transfer, and duly stamped as may be required by the laws of the
State of New York and of the United States of America. Thereupon the Depositary
shall execute a new Receipt or Receipts and deliver the same to or upon the
order of the person entitled thereto.
The Depositary, subject to the terms and conditions of
this Deposit Agreement, shall upon surrender of a Receipt or Receipts for the
purpose of effecting a split-up or combination of such Receipt or Receipts,
execute and deliver a new Receipt or Receipts for any authorized number of
American Depositary Shares requested, evidencing the same aggregate number of
American Depositary Shares as the Receipt or Receipts surrendered.
The Depositary may appoint one or more co-transfer
agents for the purpose of effecting transfers, combinations and split-ups of
Receipts at designated transfer offices on behalf of the Depositary. In carrying
out its functions, a co-transfer agent may require evidence of authority and
compliance with applicable laws and other requirements by Owners or persons
<PAGE>
entitled to Receipts and will be entitled to protection and
indemnity to the same extent as the Depositary.
SECTION 2.5. Surrender of Receipts and Withdrawal of Shares.
Upon surrender at the Corporate Trust Office of the
Depositary of a Receipt for the purpose of withdrawal of the Deposited
Securities represented by the American Depositary Shares evidenced by such
Receipt, and upon payment of the fee of the Depositary for the surrender of
Receipts as provided in Section 5.9 and payment of all taxes and governmental
charges payable in connection with such surrender and withdrawal of the
Deposited Securities, and subject to the terms and conditions of this Deposit
Agreement, the Owner of such Receipt shall be entitled to delivery, to him or
upon his order, of the amount of Deposited Securities at the time represented by
the American Depositary Shares evidenced by such Receipt. Delivery of such
Deposited Securities may be made by the delivery of (a) certificates in the name
of such Owner or as ordered by him or by certificates properly endorsed or
accompanied by proper instruments of transfer to such Owner or as ordered by him
and (b) any other securities, property and cash to which such Owner is then
entitled in respect of such Receipts to such Owner or as ordered by him. Such
delivery shall be made, as hereinafter provided, without unreasonable delay.
A Receipt surrendered for such purposes may be
required by the Depositary to be properly endorsed in blank or accompanied by
proper instruments of transfer in blank, and if the Depositary so requires, the
Owner thereof shall execute and
<PAGE>
deliver to the Depositary a written order directing the Depositary to cause the
Deposited Securities being withdrawn to be delivered to or upon the written
order of a person or persons designated in such order. Thereupon the Depositary
shall direct the Custodian to deliver at the London, England office of such
Custodian, subject to Sections 2.6, 3.1 and 3.2 and to the other terms and
conditions of this Deposit Agreement, to or upon the written order of the person
or persons designated in the order delivered to the Depositary as above
provided, the amount of Deposited Securities represented by the American
Depositary Shares evidenced by such Receipt, except that the Depositary may make
delivery to such person or persons at the Corporate Trust Office of the
Depositary of any dividends or distributions with respect to the Deposited
Securities represented by the American Depositary Shares evidenced by such
Receipt, or of any proceeds of sale of any dividends, distributions or rights,
which may at the time be held by the Depositary.
At the request, risk and expense of any Owner so
surrendering a Receipt, and for the account of such Owner, the Depositary shall
direct the Custodian to forward any cash or other property (other than rights)
comprising, and forward a certificate or certificates and other proper documents
of title for, the Deposited Securities represented by the American Depositary
Shares evidenced by such Receipt to the Depositary for delivery at the Corporate
Trust Office of the Depositary. Such direction shall be given by letter or, at
the request, risk and expense of such Owner, by cable, telex or facsimile
transmission.
SECTION 2.6. Limitations on Execution and Delivery, transfer and
Surrender of Receipts.
<PAGE>
As a condition precedent to the execution and
delivery, registration of transfer, split-up, combination or surrender of any
Receipt or withdrawal of any Deposited Securities, the Depositary, Custodian or
Registrar may require payment from the depositor of Shares or the presentor of
the Receipt of a sum sufficient to reimburse it for any tax or other
governmental charge and any stock transfer or registration fee with respect
thereto (including any such tax or charge and fee with respect to Shares being
deposited or withdrawn) and payment of any applicable fees as herein provided,
may require the production of proof satisfactory to it as to the identity and
genuineness of any signature and may also require compliance with any
regulations the Depositary may establish consistent with the provisions of this
Deposit Agreement, including, without limitation, this Section 2.6.
The delivery of Receipts against deposits of Shares
generally or against deposits of particular Shares may be suspended, or the
transfer of Receipts in particular instances may be refused, or the registration
of transfer of outstanding Receipts generally may be suspended, during any
period when the transfer books of the Depositary are closed, or if any such
action is deemed necessary or advisable by the Depositary or the Issuer at any
time or from time to time because of any requirement of law or of any government
or governmental body or commission, or under any provision of this Deposit
Agreement, or for any other reason, subject to the provisions of Section 7.7
hereof. Notwithstanding any other provision of this Deposit Agreement or the
Receipts, the surrender of outstanding Receipts and withdrawal of Deposited
Securities may not be suspended subject only to (i) temporary delays caused by
closing the transfer books of the Depositary or
<PAGE>
the Issuer or the deposit of Shares in connection with voting at a shareholders'
meeting, or the payment of dividends, (ii) the payment of fees, taxes and
similar charges, and (iii) compliance with any U.S. or foreign laws or
governmental regulations relating to the Receipts or to the withdrawal of the
Deposited Securities. Without limitation of the foregoing, the Depositary shall
not knowingly accept for deposit under this Deposit Agreement any Shares
required to be registered under the provisions of the Securities Act of 1933,
unless a registration statement is in effect as to such Shares.
SECTION 2.7. Lost Receipts, etc.
In case any Receipt shall be mutilated, destroyed,
lost or stolen, the Depositary shall execute and deliver a new Receipt of like
tenor in exchange and substitution for such mutilated Receipt upon cancellation
thereof, or in lieu of and in substitution for such destroyed, lost or stolen
Receipt. Before the Depositary shall execute and deliver a new Receipt in
substitution for a destroyed, lost or stolen Receipt, the Owner thereof shall
have (a) filed with the Depositary (i) a request for such execution and delivery
before the Depositary has notice that the Receipt has been acquired by a bona
fide purchaser and (ii) a sufficient indemnity bond and (b) satisfied any other
reasonable requirements imposed by the Depositary.
SECTION 2.8. Cancellation and Destruction of Surrendered Receipts.
All Receipts surrendered to the Depositary shall be
cancelled by the Depositary. The Depositary is authorized to destroy Receipts so
cancelled.
SECTION 2.9. Pre-Release of Receipts.
<PAGE>
Notwithstanding Section 2.3 hereof, the Depositary may
execute and deliver Receipts prior to the receipt of Shares pursuant to Section
2.2 ("Pre-Release"). The Depositary may, pursuant to Section 2.5, deliver Shares
upon the receipt and cancellation of Receipts which have been Pre-Released,
whether or not such cancellation is prior to the termination of such Pre-
Release or the Depositary knows that such Receipt has been Pre-Released. The
Depositary may receive Receipts in lieu of Shares in satisfaction of a
Pre-Release. Each Pre-Release will be (a) preceded or accompanied by a written
representation from the person to whom Receipts are to be delivered that such
person, or its customer, owns the Shares or Receipts to be remitted, as the case
may be, (b) at all times fully collateralized with cash or such other collateral
as the Depositary deems appropriate, (c) terminable by the Depositary on not
more than five (5) business days notice, and (d) subject to such further
indemnities and credit regulations as the Depositary deems appropriate. The
number of American Depositary Shares which are outstanding at any time as a
result of Pre-Releases will not normally exceed thirty percent (30%) of the
Shares deposited hereunder; provided, however, that the Depositary reserves the
right to change or disregard such limit from time to time as it deems
appropriate.
The Depositary may retain for its own account any
compen sation received by it in connection with the foregoing.
ARTICLE 3. CERTAIN OBLIGATIONS OF OWNERS OF RECEIPTS.
SECTION 3.1. Filing Proofs, Certificates and Other Information.
<PAGE>
Any person presenting Shares for deposit or any Owner
of a Receipt may be required from time to time to file with the Depositary or
the Custodian such proof of citizenship or residence, exchange control approval,
or such information relating to the registration on the books of the Issuer or
the Foreign Registrar, if applicable, to execute such certificates and to make
such representations and warranties, as the Depositary may deem necessary or
proper. The Depositary may withhold the delivery or registration of transfer of
any Receipt or the distribution of any dividend or sale or distribution of
rights or of the proceeds thereof or the delivery of any Deposited Securities
until such proof or other information is filed or such certificates are executed
or such representations and warranties made.
SECTION 3.2. Liability of Owner for Taxes.
If any tax or other governmental charge shall become
payable with respect to any Receipt or any Deposited Securities represented by
any Receipt, such tax or other governmental charge shall be payable by the Owner
of such Receipt to the Depositary. The Depositary may refuse to effect any
transfer of such Receipt or any withdrawal of Deposited Securities represented
by American Depositary Shares evidenced by such Receipt until such payment is
made, and may withhold any dividends or other distributions, or may sell for the
account of the Owner thereof any part or all of the Deposited Securities
represented by the American Depositary Shares evidenced by such Receipt, and may
apply such dividends or other distributions or the proceeds of any such sale in
payment of such tax or other governmental charge and the Owner of such Receipt
shall remain liable for any deficiency.
SECTION 3.3. Warranties on Deposit of Shares.
<PAGE>
Every person depositing Shares under this Deposit
Agreement shall be deemed thereby to represent and warrant that such Shares and
each certificate therefor are validly issued, fully paid, nonassessable and free
of any pre-emptive rights of the holders of outstanding Shares and that the
person making such deposit is duly authorized so to do. Every such person shall
also be deemed to represent that the deposit of such Shares and the sale of
Receipts evidencing American Depositary Shares representing such Shares by that
person are not restricted under the Securities Act of 1933. Such representations
and warranties shall survive the deposit of Shares and issuance of Receipts.
ARTICLE 4. THE DEPOSITED SECURITIES.
SECTION 4.1. Cash Distributions.
Whenever the Depositary shall receive any cash
dividend or other cash distribution on any Deposited Securities, the Depositary
shall, subject to the provisions of Section 4.5, convert such dividend or
distribution into Dollars and shall distribute the amount thus received (net of
the fees of the Depositary as provided in Section 5.9 hereof, if applicable) to
the Owners entitled thereto, in proportion to the number of American Depositary
Shares representing such Deposited Securities held by them respectively;
provided, however, that in the event that the Issuer or the Depositary shall be
required to withhold and does withhold from such cash dividend or such other
cash distribution an amount on account of taxes, the amount distributed to the
Owner of the Receipts evidencing American Depositary Shares representing such
Deposited Securities shall be reduced accordingly. The Depositary shall
distribute only such amount, however, as can be distributed without attributing
to any
<PAGE>
Owner a fraction of one cent. Any such fractional amounts shall be rounded to
the nearest whole cent and so distributed to Owners entitled thereto. The Issuer
or its agent will remit to the appropriate governmental agency in the United
Kingdom all amounts withheld and owing to such agency. The Depositary will
forward to the Issuer or its agent such information from its records as the
Issuer may reasonably request to enable the Issuer or its agent to file
necessary reports with governmental agencies, and the Depositary or the Issuer
or its agent may file any such reports necessary to obtain benefits under the
applicable tax treaties for the Owners of Receipts.
SECTION 4.2. Distributions Other Than Cash, Shares or Rights.
Subject to the provisions of Section 4.11 and Section
5.9, whenever the Depositary shall receive any distribution other than a
distribution described in Sections 4.1, 4.3 or 4.4, the Depositary shall cause
the securities or property received by it to be distributed to the Owners
entitled thereto, in proportion to the number of American Depositary Shares
representing such Deposited Securities held by them respectively, in any manner
that the Depositary may deem equitable and practicable for accomplishing such
distribution; provided, however, that if in the opinion of the Depositary such
distribution cannot be made proportionately among the Owners entitled thereto,
or if for any other reason (including, but not limited to, any requirement that
the Issuer or the Depositary withhold an amount on account of taxes or other
governmental charges or that such securities must be registered under the
Securities Act of 1933 in order to be distributed to Owners or holders) the
Depositary deems such distribution not to be feasible, the Depositary may adopt
such method as it may deem equitable and practicable for the purpose
<PAGE>
of effecting such distribution, including, but not limited to, the public or
private sale of the securities or property thus received, or any part thereof,
and the net proceeds of any such sale (net of the fees of the Depositary as
provided in Section 5.9) shall be distributed by the Depositary to the Owners
entitled thereto as in the case of a distribution received in cash.
SECTION 4.3. Distributions in Shares.
If any distribution upon any Deposited Securities
consists of a dividend in, or free distribution of, Shares, the Depositary may,
and shall if the Issuer shall so request, distribute to the Owners of
outstanding Receipts entitled thereto, in proportion to the number of American
Depositary Shares representing such Deposited Securities held by them
respectively, additional Receipts evidencing an aggregate number of American
Depositary Shares representing the amount of Shares received as such dividend or
free distribution, subject to the terms and conditions of the Deposit Agreement
with respect to the deposit of Shares and the issuance of American Depositary
Shares evidenced by Receipts, including the withholding of any tax or other
governmental charge as provided in Section 4.11 and the payment of fees of the
Depositary as provided in Section 5.9. In lieu of delivering Receipts for
fractional American Depositary Shares in any such case, the Depositary shall
sell the amount of Shares represented by the aggregate of such fractions and
distribute the net proceeds, all in the manner and subject to the conditions
described in Section 4.1. If additional Receipts are not so distributed, each
American Depositary Share shall thenceforth also represent the additional Shares
distributed upon the Deposited Securities represented thereby.
<PAGE>
SECTION 4.4. Rights.
In the event that the Issuer shall offer or cause to
be offered to the holders of any Deposited Securities any rights to subscribe
for additional Shares or any rights of any other nature, the Depositary shall
have discretion as to the procedure to be followed in making such rights
available to any Owners or in disposing of such rights on behalf of any Owners
and making the net proceeds available to such Owners or, if by the terms of such
rights offering or for any other reason, the Depositary may not either make such
rights available to any Owners or dispose of such rights and make the net
proceeds available to such Owners, then the Depositary shall allow the rights to
lapse. If at the time of the offering of any rights the Depositary determines in
its discretion that it is lawful and feasible to make such rights available to
all Owners or to certain Owners but not to other Owners, the Depositary may
distribute to any Owner to whom it determines the distribution to be lawful and
feasible, in proportion to the number of American Depositary Shares held by such
Owner, warrants or other instruments therefor in such form as it deems
appropriate.
In circumstances in which rights would otherwise not
be distributed, if an Owner of Receipts requests the distribution of warrants or
other instruments in order to exercise the rights allocable to the American
Depositary Shares of such Owner hereunder, the Depositary will make such rights
available to such Owner upon written notice from the Issuer to the Depositary
that (a) the Issuer has elected in its sole discretion to permit such rights to
be exercised and (b) such Owner has executed such documents as the Issuer has
determined in its sole discretion are reasonably required under applicable law.
<PAGE>
If the Depositary has distributed warrants or other
instruments for rights to all or certain Owners, then upon instruction from such
an Owner pursuant to such warrants or other instruments to the Depositary from
such Owner to exercise such rights, upon payment by such Owner to the Depositary
for the account of such Owner of an amount equal to the purchase price of the
Shares to be received upon the exercise of the rights, and upon payment of the
fees of the Depositary and any other charges as set forth in such warrants or
other instruments, the Depositary shall, on behalf of such Owner, exercise the
rights and purchase the Shares, and the Issuer shall cause the Shares so
purchased to be delivered to the Depositary on behalf of such Owner. As agent
for such Owner, the Depositary will cause the Shares so purchased to be
deposited pursuant to Section 2.2 of this Deposit Agreement, and shall, pursuant
to Section 2.3 of this Deposit Agreement, execute and deliver Receipts to such
Owner. In the case of a distribution pursuant to the second paragraph of this
section, such Receipts shall be legended in accordance with applicable U.S.
laws, and shall be subject to the appropriate restrictions on sale, deposit,
cancellation, and transfer under such laws.
If the Depositary determines in its discretion that it
is not lawful and feasible to make such rights available to all or certain
Owners, it may sell the rights, warrants or other instruments in proportion to
the number of American Depositary Shares held by the Owners to whom it has
determined it may not lawfully or feasibly make such rights available, and
allocate the net proceeds of such sales (net of the fees of the Depositary as
provided in Section 5.9 and all taxes and governmental charges payable in
connection with such rights and subject to the terms
<PAGE>
and conditions of this Deposit Agreement) for the account of such Owners
otherwise entitled to such rights, warrants or other instruments, upon an
averaged or other practical basis without regard to any distinctions among such
Owners because of exchange restrictions or the date of delivery of any Receipt
or otherwise.
The Depositary will not offer rights to Owners unless
both the rights and the securities to which such rights relate are either exempt
from registration under the Securities Act of 1933 with respect to a
distribution to Owners or are registered under the provisions of such Act. If an
Owner of Receipts requests distribution of warrants or other instruments,
notwithstanding that there has been no such registration under such Act, the
Depositary shall not effect such distribution unless it has received an opinion
from recognized counsel in the United States for the Issuer upon which the
Depositary may rely that such distribution to such Owner is exempt from such
registration.
The Depositary shall not be responsible for any
failure to determine that it may be lawful or feasible to make such rights
available to Owners in general or any Owner in particular.
SECTION 4.5. Conversion of Foreign Currency.
Whenever the Depositary shall receive foreign cur
rency, by way of dividends or other distributions or the net proceeds from the
sale of securities, property or rights, and if at the time of the receipt
thereof the foreign currency so received can in the judgment of the Depositary
be converted on a reasonable basis into Dollars and the resulting Dollars
transferred to the United States, the Depositary shall convert or
<PAGE>
cause to be converted, by sale or in any other manner that it may determine,
such foreign currency into Dollars, and such Dollars shall be distributed to the
Owners entitled thereto or, if the Depositary shall have distributed any
warrants or other instruments which entitle the holders thereof to such Dollars,
then to the holders of such warrants and/or instruments upon surrender thereof
for cancellation. Such distribution may be made upon an averaged or other
practicable basis without regard to any distinctions among Owners on account of
exchange restrictions, the date of delivery of any Receipt or otherwise and
shall be net of any expenses of conversion into Dollars incurred by the
Depositary as provided in Section 5.9.
If such conversion or distribution can be effected
only with the approval or license of any government or agency thereof, the
Depositary shall file such application for approval or license, if any, as it
may deem desirable.
If at any time the Depositary shall determine that in
its judgment any foreign currency received by the Depositary is not convertible
on a reasonable basis into Dollars transferable to the United States, or if any
approval or license of any government or agency thereof which is required for
such conversion is denied or in the opinion of the Depositary is not obtainable,
or if any such approval or license is not obtained within a reasonable period as
determined by the Depositary, the Depositary may distribute the foreign currency
(or an appropriate document evidencing the right to receive such foreign
currency) received by the Depositary to, or in its discretion may hold such
foreign currency uninvested and without liability for interest
<PAGE>
thereon for the respective accounts of, the Owners entitled to
receive the same.
If any such conversion of foreign currency, in whole
or in part, cannot be effected for distribution to some of the Owners entitled
thereto, the Depositary may in its discretion make such conversion and
distribution in Dollars to the extent permissible to the Owners entitled thereto
and may distribute the balance of the foreign currency received by the
Depositary to, or hold such balance uninvested and without liability for
interest thereon for the respective accounts of, the Owners entitled thereto.
SECTION 4.6. Fixing of Record Date.
Whenever any cash dividend or other cash distribution
shall become payable or any distribution other than cash shall be made, or
whenever rights shall be issued with respect to the Deposited Securities, or
whenever for any reason the Depositary causes a change in the number of Shares
that are represented by each American Depositary Share, or whenever the
Depositary shall receive notice of any meeting of holders of Shares or other
Deposited Securities, the Depositary shall fix a record date (a) for the
determination of the Owners who shall be (i) entitled to receive such dividend,
distribution or rights or the net proceeds of the sale thereof or (ii) entitled
to give instructions for the exercise of voting rights at any such meeting, or
(b) on or after which each American Depositary Share will represent the changed
number of Shares. Subject to the provisions of Sections 4.1 through 4.5 and to
the other terms and conditions of this Deposit Agreement, the Owners on such
record date shall be entitled, as the case may be, to receive the amount
distributable by the Depositary with respect to such dividend or other
distribution or
<PAGE>
such rights or the net proceeds of sale thereof in proportion to the number of
American Depositary Shares held by them respectively and to give voting
instructions and to act in respect of any other such matter.
SECTION 4.7. Voting of Deposited Securities.
Upon receipt of notice of any meeting of holders of
Shares or other Deposited Securities, if requested in writing by the Issuer the
Depositary shall, as soon as practicable thereafter, mail to the Owners a
notice, the form of which notice shall be in the sole discretion of the
Depositary, which shall contain (a) such information as is contained in such
notice of meeting, and (b) a statement that the Owners as of the close of
business on a specified record date will be entitled, subject to any applicable
provision of English law and of the Articles of Association of the Issuer, to
instruct the Depositary as to the exercise of the voting rights, if any,
pertaining to the amount of Shares or other Deposited Securities represented by
their respective American Depositary Shares and (c) a statement as to the manner
in which such instructions may be given. Upon the written request of an Owner on
such record date, received on or before the date established by the Depositary
for such purpose, (the "Instruction Date") the Depositary shall endeavor, in so
far as practicable, to vote or cause to be voted the amount of Shares or other
Deposited Securities represented by the American Depositary Shares evidenced by
such Receipt in accordance with the instructions set forth in such request. The
Depositary shall not vote or attempt to exercise the right to vote that attaches
to the Shares or other Deposited Securities, other than in ac cordance with such
instructions.
<PAGE>
There can be no assurance that Owners generally or any
Owner in particular will receive the notice described in the preceding paragraph
sufficiently prior to the Instruction Date to ensure that the Depositary will
vote the Shares or Deposited Securities in accordance with the provisions set
forth in the preceding paragraph.
SECTION 4.8. Changes Affecting Deposited Securities.
In circumstances where the provisions of Section 4.3
do not apply, upon any change in nominal value, change in par value, split-up,
consolidation or any other reclassification of Deposited Securities, or upon any
recapitalization, reorganization, merger or consolidation or sale of assets
affecting the Issuer or to which it is a party, any securities which shall be
received by the Depositary or a Custodian in exchange for or in conversion of or
in respect of Deposited Securities, shall be treated as new Deposited Securities
under this Deposit Agreement, and American Depositary Shares shall thenceforth
represent the new Deposited Securities so received in exchange or conversion,
unless additional Receipts are delivered pursuant to the following sentence. In
any such case the Depositary may, and shall if the Issuer shall so request,
execute and deliver additional Receipts as in the case of a dividend in Shares,
or call for the surrender of outstanding Receipts to be exchanged for new
Receipts specifically describing such new Deposited Securities.
SECTION 4.9. Reports.
The Depositary shall make available for inspection by
Owners at its Corporate Trust Office any reports and communications, including
any proxy soliciting material, received from the Issuer which are both (a)
received by the Depositary as
<PAGE>
the holder of the Deposited Securities and (b) made generally available to the
holders of such Deposited Securities by the Issuer. The Depositary shall also,
upon written request, send to the Owners copies of such reports furnished by the
Issuer pursuant to Section 5.6.
SECTION 4.10. Lists of Owners.
Promptly upon request by the Issuer, the Depositary
shall, at the expense of the Issuer, furnish to it a list, as of a recent date,
of the names, addresses and holdings of American Depositary Shares by all
persons in whose names Receipts are registered on the books of the Depositary.
SECTION 4.11. Withholding.
In the event that the Depositary determines that any
distribution in property (including Shares and rights to subscribe therefor) is
subject to any tax or other governmental charge which the Depositary is
obligated to withhold, the Depositary may by public or private sale dispose of
all or a portion of such property (including Shares and rights to subscribe
therefor) in such amounts and in such manner as the Depositary deems necessary
and practicable to pay any such taxes or charges and the Depositary shall
distribute the net proceeds of any such sale after deduction of such taxes or
charges to the Owners entitled thereto in proportion to the number of American
Depositary Shares held by them respectively.
ARTICLE 5. THE DEPOSITARY, THE CUSTODIANS AND THE ISSUER.
<PAGE>
SECTION 5.1. Maintenance of Office and Transfer Books by the
Depositary.
Until termination of this Deposit Agreement in
accordance with its terms, the Depositary shall maintain in the Borough of
Manhattan, The City of New York, facilities for the execution and delivery,
registration, registration of transfers and surrender of Receipts in accordance
with the provisions of this Deposit Agreement.
The Depositary shall keep books for the registration
of Receipts and transfers of Receipts which at all reasonable times shall be
open for inspection by the Owners, provided that such inspection shall not be
for the purpose of communicating with Owners in the interest of a business or
object other than the business of the Issuer or a matter related to this Deposit
Agreement or the Receipts.
The Depositary may close the transfer books, at any
time or from time to time, when deemed expedient by it in connection with the
performance of its duties hereunder.
If any Receipts or the American Depositary Shares
evidenced thereby are listed on one or more stock exchanges in the United
States, the Depositary shall act as Registrar or appoint a Registrar or one or
more co-registrars for registry of such Receipts in accordance with any
requirements of such exchange or exchanges.
SECTION 5.2. Prevention or Delay in Performance by the
Depositary or the Issuer.
Neither the Depositary nor the Issuer shall incurany
liability to any Owner or holder of any Receipt, if by reason of
<PAGE>
any provision of any present or future law or regulation of the United States or
any other country, or of any governmental or regulatory authority or stock
exchange, or by reason of any provision, present or future, of the Articles of
Association of the Issuer, or by reason of any act of God or war or other
circumstances beyond its control, the Depositary or the Issuer shall be
prevented or forbidden from, or be subject to any civil or criminal penalty on
account of, doing or performing any act or thing which by the terms of this
Deposit Agreement it is provided shall be done or performed; nor shall the
Depositary or the Issuer incur any liability to any Owner or holder of any
Receipt by reason of any non-performance or delay, caused as aforesaid, in the
performance of any act or thing which by the terms of this Deposit Agreement it
is provided shall or may be done or performed, or by reason of any exercise of,
or failure to exercise, any discretion provided for in this Deposit Agreement.
Where, by the terms of a distribution pursuant to Sections 4.1, 4.2, or 4.3 of
the Deposit Agreement, or an offering or distribution pursuant to Section 4.4 of
the Deposit Agreement, or for any other reason, such distribution or offering
may not be made available to Owners, and the Depositary may not dispose of such
distribution or offering on behalf of such Owners and make the net proceeds
available to such Owners, then the Depositary shall not make such distribution
or offering, and shall allow any rights, if applicable, to lapse.
SECTION 5.3. Obligations of the Depositary, the Custodian
and the Issuer.
The Issuer assumes no obligation nor shall it be
subject to any liability under this Deposit Agreement to Owners or holders of
Receipts, except that it agrees to perform its
<PAGE>
obligations specifically set forth in this Deposit Agreement
without negligence or bad faith.
The Depositary assumes no obligation nor shall it be
subject to any liability under this Deposit Agreement to any Owner or holder of
any Receipt (including, without limitation, liability with respect to the
validity or worth of the Deposited Securities), except that it agrees to perform
its obligations specifically set forth in this Deposit Agreement without
negligence or bad faith.
Neither the Depositary nor the Issuer shall be under
any obligation to appear in, prosecute or defend any action, suit or other
proceeding in respect of any Deposited Securities or in respect of the Receipts,
which in its opinion may involve it in expense or liability, unless indemnity
satisfactory to it against all expense and liability shall be furnished as often
as may be required, and the Custodian shall not be under any obligation
whatsoever with respect to such proceedings, the responsibility of the Custodian
being solely to the Depositary.
Neither the Depositary nor the Issuer shall be liable
for any action or nonaction by it in reliance upon the advice of or information
from legal counsel, accountants, any person presenting Shares for deposit, any
Owner or any other person believed by it in good faith to be competent to give
such advice or information.
The Depositary shall not be liable for any acts or
omissions made by a successor depositary whether in connection with a previous
act or omission of the Depositary or in connection with any matter arising
wholly after the removal or
<PAGE>
resignation of the Depositary, provided that in connection with the issue out of
which such potential liability arises the Depositary performed its obligations
without negligence or bad faith while it acted as Depositary.
The Depositary shall not be responsible for any
failure to carry out any instructions to vote any of the Deposited Securities,
or for the manner in which any such vote is cast or the effect of any such vote,
provided that any such action or nonaction is in good faith.
No disclaimer of liability under the Securities Act of
1933 is intended by any provision of this Deposit Agreement.
SECTION 5.4. Resignation and Removal of the Depositary.
The Depositary may at any time resign as Depositary
hereunder by written notice of its election so to do delivered to the Issuer,
such resignation to take effect upon the appointment of a successor depositary
and its acceptance of such appointment as hereinafter provided.
The Depositary may at any time be removed by the
Issuer by written notice of such removal effective upon the appointment of a
successor depositary and its acceptance of such appointment as hereinafter
provided.
In case at any time the Depositary acting hereunder
shall resign or be removed, the Issuer shall use its best efforts to appoint a
successor depositary, which shall be a bank or trust company having an office in
the Borough of Manhattan, The City
<PAGE>
of New York. Every successor depositary shall execute and deliver to its
predecessor and to the Issuer an instrument in writing accepting its appointment
hereunder, and thereupon such successor depositary, without any further act or
deed, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor; but such predecessor, nevertheless, upon payment
of all sums due it and on the written request of the Issuer shall execute and
deliver an instrument transferring to such successor all rights and powers of
such predecessor hereunder, shall duly assign, transfer and deliver all right,
title and interest in the Deposited Securities to such successor, and shall
deliver to such successor a list of the Owners of all outstanding Receipts. Any
such successor depositary shall promptly mail notice of its appointment to the
Owners.
Any corporation into or with which the Depositary may
be merged or consolidated shall be the successor of the Depositary without the
execution or filing of any document or any further act.
SECTION 5.5. The Custodians.
The Custodian shall be subject at all times and in all
respects to the directions of the Depositary and shall be responsible solely to
it. Any Custodian may resign and be discharged from its duties hereunder by
notice of such resignation delivered to the Depositary at least 30 days prior
to the date on which such resignation is to become effective. If upon such
resignation there shall be no Custodian acting hereunder, the Depositary shall,
promptly after receiving such notice, appoint a substitute custodian or
custodians, each of which shall thereafter be a Custodian hereunder. Whenever
the Depositary in
<PAGE>
its discretion determines that it is in the best interest of the Owners to do
so, it may appoint substitute or additional custodian or custodians, which shall
thereafter be one of the Custodians hereunder. Upon demand of the Depositary any
Custodian shall deliver such of the Deposited Securities held by it as are
requested of it to any other Custodian or such substitute or additional
custodian or custodians. Each such substitute or additional custodian shall
deliver to the Depositary, forthwith upon its appointment, an acceptance of such
appointment satisfactory in form and substance to the Depositary.
Upon the appointment of any successor depositary
hereunder, each Custodian then acting hereunder shall forthwith become, without
any further act or writing, the agent hereunder of such successor depositary and
the appointment of such successor depositary shall in no way impair the
authority of each Custodian hereunder; but the successor depositary so appointed
shall, nevertheless, on the written request of any Custodian, execute and
deliver to such Custodian all such instruments as may be proper to give to such
Custodian full and complete power and authority as agent hereunder of such
successor depositary.
SECTION 5.6. Notices and Reports.
On or before the first date on which the Issuer gives
notice, by publication or otherwise, of any meeting of holders of Shares or
other Deposited Securities, or of any adjourned meeting of such holders, or of
the taking of any action in respect of any cash or other distributions or the
offering of any rights, the Issuer agrees to transmit to the Depositary and the
Custodian a copy of the notice thereof in the form given or to be given to
holders of Shares or other Deposited Securities.
<PAGE>
The Issuer will arrange for the prompt transmittal by
the Issuer to the Depositary and the Custodian of such notices and any other
reports and communications which are made generally available by the Issuer to
holders of its Shares. If requested in writing by the Issuer, the Depositary
will arrange for the mailing, at the Issuer's expense, of copies of such
notices, reports and communications to all Owners. The Issuer will timely
provide the Depositary with the quantity of such notices, reports, and
communications, as requested by the Depositary from time to time, in order for
the Depositary to effect such mailings.
SECTION 5.7. Distribution of Additional Shares, Rights, etc.
The Issuer agrees that in the event of any issuance or
distribution of (1) additional Shares, (2) rights to subscribe for Shares, (3)
securities convertible into Shares, or (4) rights to subscribe for such
securities, (each a "Distribution") the Issuer will promptly furnish to the
Depositary a written opinion from U.S. counsel for the Issuer, which counsel
shall be satisfactory to the Depositary, stating whether or not the Distribution
requires a Registration Statement under the Securities Act of 1933 to be in
effect prior to making such Distribution available to Owners entitled thereto.
If in the opinion of such counsel a Registration Statement is required, such
counsel shall furnish to the Depositary a written opinion as to whether or not
there is a Registration Statement in effect which will cover such Distribution.
The Issuer agrees with the Depositary that neither the
Issuer nor any company controlled by, controlling or under common control with
the Issuer will at any time deposit any
<PAGE>
Shares, either originally issued or previously issued and reacquired by the
Issuer or any such affiliate, unless a Registration Statement is in effect as
to such Shares under the Securities Act of 1933.
SECTION 5.8. Indemnification.
The Issuer agrees to indemnify the Depositary, its
directors, employees, agents and affiliates and any Custodian against, and hold
each of them harmless from, any liability or expense (including, but not limited
to, the fees and expenses of counsel) which may arise out of acts performed or
omitted, in accordance with the provisions of this Deposit Agreement and of the
Receipts, as the same may be amended, modified or supplemented from time to
time, (i) by either the Depositary or a Custodian or their respective directors,
employees, agents and affiliates, except for any liability or expense arising
out of the negligence or bad faith of either of them, or (ii) by the Issuer or
any of its directors, employees, agents and affiliates.
The Depositary agrees to indemnify the Issuer, its
directors, employees, agents and affiliates and hold them harmless from any
liability or expense which may arise out of acts performed or omitted by the
Depositary or its Custodian or their respective directors, employees, agents and
affiliates due to their negligence or bad faith.
SECTION 5.9. Charges of Depositary.
The Issuer agrees to pay the fees, reasonable
expenses and out-of-pocket charges of the Depositary and those of any Registrar
only in accordance with agreements in writing entered into between the
Depositary and the Issuer from time to
<PAGE>
time. The Depositary shall present its statement for such charges and expenses
to the Issuer once every three months. The charges and expenses of the Custodian
are for the sole account of the Depositary.
The following charges shall be incurred by any party
depositing or withdrawing Shares or by any party surrendering Receipts or to
whom Receipts are issued (including, without limitation, issuance pursuant to a
stock dividend or stock split declared by the Issuer or an exchange regarding
the Receipts or Deposited Securities or a distribution of Receipts pursuant to
Section 4.3), whichever applicable: (1) taxes and other governmental charges,
(2) such registration fees as may from time to time be in effect for the
registration of transfers of Shares generally on the Share register of the
Issuer or Foreign Registrar and applicable to transfers of Shares to the name of
the Depositary or its nominee or the Custodian or its nominee on the making of
deposits or withdrawals hereunder, (3) such cable, telex and facsimile
transmission expenses as are expressly provided in this Deposit Agreement, (4)
such expenses as are incurred by the Depositary in the conversion of foreign
currency pursuant to Section 4.5 (5) a fee of $5.00 or less per 100 American
Depositary Shares (or portion thereof) for the execution and delivery of
Receipts pursuant to Section 2.3, 4.3 or 4.4, and the surrender of Receipts
pursuant to Section 2.5 or 6.2, (6) a fee of $.02 or less per American
Depositary Share (or portion thereof) for any cash distribution made pursuant to
the Deposit Agreement including, but not limited to, Sections 4.1 through 4.4
hereof, (7) a fee of $1.50 or less per certificate for a Receipt or Receipts for
transfers made pursuant to Section 2.4 and (8) a fee for the distribution of
securities pursuant to Section 4.2, such fee being in an amount equal to the fee
for the execution
<PAGE>
and delivery of American Depositary Shares referred to above which would have
been charged as a result of the deposit of such securities (for purposes of this
clause (8) treating all such securities as if they were Shares), but which
securities are instead distributed by the Depositary to Owners.
The Depositary, subject to Section 2.9 hereof, may own
and deal in any class of securities of the Issuer and its affiliates and in
Receipts.
SECTION 5.10. Retention of Depositary Documents.
The Depositary is authorized to destroy those
documents, records, bills and other data compiled during the term of this
Deposit Agreement at the times permitted by the laws or regulations governing
the Depositary unless the Issuer requests that such papers be retained for a
longer period or turned over to the Issuer or to a successor depositary.
SECTION 5.11. Exclusivity.
The Issuer agrees not to appoint any other depositary
for issuance of American Depositary Receipts so long as The Bank of New York is
acting as Depositary hereunder.
SECTION 5.12. List of Restricted Securities Owners.
From time to time, the Issuer shall provide to the
Depositary a list setting forth, to the actual knowledge of the Issuer, those
persons or entities who beneficially own Restricted Securities and the Issuer
shall update that list on a regular basis. The Issuer agrees to advise in
writing each of the persons or entities so listed that such Restricted
Securities are
<PAGE>
ineligible for deposit hereunder. The Depositary may rely on such a list or
update but shall not be liable for any action or omission made in reliance
thereon.
ARTICLE 6. AMENDMENT AND TERMINATION.
SECTION 6.1. Amendment.
The form of the Receipts and any provisions of this
Deposit Agreement may at any time and from time to time be amended by agreement
between the Issuer and the Depositary in any respect which they may deem
necessary or desirable. Any amendment which shall impose or increase any fees or
charges (other than taxes and other governmental charges, registration fees,
cable, telex or facsimile transmission costs, delivery costs or other such
expenses), or which shall otherwise prejudice any substantial existing right of
Owners, shall, however, not become effective as to outstanding Receipts until
the expiration of thirty days after notice of such amendment shall have been
given to the Owners of outstanding Receipts. Every Owner at the time any
amendment so becomes effective shall be deemed, by continuing to hold such
Receipt, to consent and agree to such amendment and to be bound by the Deposit
Agreement as amended thereby. In no event shall any amendment impair the right
of the Owner of any Receipt to surrender such Receipt and receive therefor the
Deposited Securities represented thereby, except in order to comply with
mandatory provisions of applicable law.
SECTION 6.2. Termination.
The Depositary shall at any time at the direction of
the Issuer terminate this Deposit Agreement by mailing notice of such
termination to the Owners of all Receipts then outstanding at least 90 days
prior to the date fixed in such notice for such
<PAGE>
termination. The Depositary may likewise terminate this Deposit Agreement by
mailing notice of such termination to the Issuer and the Owners of all Receipts
then outstanding if at any time 90 days shall have expired after the Depositary
shall have delivered to the Issuer a written notice of its election to resign
and a successor depositary shall not have been appointed and accepted its
appointment as provided in Section 5.4. On and after the date of termination,
the Owner of a Receipt will, upon (a) surrender of such Receipt at the Corporate
Trust Office of the Depositary, (b) payment of the fee of the Depositary for the
surrender of Receipts referred to in Section 2.5, and (c) payment of any
applicable taxes or governmental charges, be entitled to delivery, to him or
upon his order, of the amount of Deposited Securities represented by the
American Depositary Shares evidenced by such Receipt. If any Receipts shall
remain outstanding after the date of termination, the Depositary thereafter
shall discontinue the registration of transfers of Receipts, shall suspend the
distribution of dividends to the Owners thereof, and shall not give any further
notices or perform any further acts under this Deposit Agreement, except that
the Depositary shall continue to collect dividends and other distributions
pertaining to Deposited Securities, shall sell rights as provided in this
Deposit Agreement, and shall continue to deliver Deposited Securities, together
with any dividends or other distributions received with respect thereto and the
net proceeds of the sale of any rights or other property, in exchange for
Receipts surrendered to the Depositary (after deducting, in each case, the fee
of the Depositary for the surrender of a Receipt, any expenses for the account
of the Owner of such Receipt in accordance with the terms and conditions of this
Deposit Agreement, and any applicable taxes or governmental
<PAGE>
charges). At any time after the expiration of one year from the date of
termination, the Depositary may sell the Deposited Securities then held
hereunder and may thereafter hold uninvested the net proceeds of any such sale,
together with any other cash then held by it hereunder, unsegregated and without
liability for interest, for the pro rata benefit of the Owners of Receipts which
have not theretofore been surrendered, such Owners thereupon becoming general
creditors of the Depositary with respect to such net proceeds. After making such
sale, the Depositary shall be discharged from all obligations under this Deposit
Agreement, except to account for such net proceeds and other cash (after
deducting, in each case, the fee of the De positary for the surrender of a
Receipt, any expenses for the account of the Owner of such Receipt in accordance
with the terms and conditions of this Deposit Agreement, and any applicable
taxes or governmental charges). Upon the termination of this Deposit Agreement,
the Issuer shall be discharged from all obligations under this Deposit Agreement
except for its obligations to the Depositary under Sections 5.8 and 5.9 hereof.
ARTICLE 7. MISCELLANEOUS.
SECTION 7.1. Counterparts.
This Deposit Agreement may be executed in any number
of counterparts, each of which shall be deemed an original and all of such
counterparts shall constitute one and the same instrument. Copies of this
Deposit Agreement shall be filed with the Depositary and the Custodians and
shall be open to inspection by any holder or Owner of a Receipt during business
hours.
SECTION 7.2. No Third Party Beneficiaries.
<PAGE>
This Deposit Agreement is for the exclusive benefit of
the parties hereto and shall not be deemed to give any legal or equitable right,
remedy or claim whatsoever to any other person.
SECTION 7.3. Severability.
In case any one or more of the provisions contained in
this Deposit Agreement or in the Receipts should be or become invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein or therein shall in no way be
affected, prejudiced or disturbed thereby.
SECTION 7.4. Holders and Owners as Parties; Binding Effect.
The holders and Owners of Receipts from time to time
shall be parties to this Deposit Agreement and shall be bound by all of the
terms and conditions hereof and of the Receipts by acceptance thereof.
SECTION 7.5. Notices.
Any and all notices to be given to the Issuer shall be
deemed to have been duly given if personally delivered or sent by mail or cable,
telex or facsimile transmission confirmed by letter, addressed to Mr. Peter
Levin, Chief Executive Officer, Display.IT Holdings plc, 46 Cannon Street,
London EC4N 6JJ, United Kingdom, or any other place to which the Issuer may have
transferred its principal office.
Any and all notices to be given to the Depositary
shall be deemed to have been duly given if in English and
<PAGE>
personally delivered or sent by mail or cable, telex or facsimile transmission
confirmed by letter, addressed to The Bank of New York, 101 Barclay Street, New
York, New York 10286, Attention: American Depositary Receipt Administration, or
any other place to which the Depositary may have transferred its Corporate Trust
Office.
Any and all notices to be given to any Owner shall be
deemed to have been duly given if personally delivered or sent by mail or cable,
telex or facsimile transmission confirmed by letter, addressed to such Owner at
the address of such Owner as it appears on the transfer books for Receipts of
the Depositary, or, if such Owner shall have filed with the Depositary a written
request that notices intended for such Owner be mailed to some other address, at
the address designated in such request.
Delivery of a notice sent by mail or cable, telex or
facsimile transmission shall be deemed to be effected at the time when a duly
addressed letter containing the same (or a confirmation thereof in the case of a
cable, telex or facsimile transmission) is deposited, postage prepaid, in a
post-office letter box. The Depositary or the Issuer may, however, act upon any
cable, telex or facsimile transmission received by it, notwithstanding that such
cable, telex or facsimile transmission shall not subsequently be confirmed by
letter as aforesaid.
SECTION 7.6. Governing Law.
This Deposit Agreement and the Receipts shall be
interpreted and all rights hereunder and thereunder and provisions hereof and
thereof shall be governed by the laws of the State of New York.
<PAGE>
SECTION 7.7. Compliance with U.S. Securities Laws.
Notwithstanding anything in this Deposit Agreement to
the contrary, the Issuer and the Depositary each agrees that it will not
exercise any rights it has under this Deposit Agreement to prevent the
withdrawal or delivery of Deposited Securities in a manner which would violate
the U.S. securities laws, including, but not limited to, Section I.A.(1) of the
General Instructions to the Form F-6 Registration Statement, as amended from
time to time, under the Securities Act of 1933.
<PAGE>
IN WITNESS WHEREOF, DISPLAY.IT HOLDINGS PLC and THE BANK OF NEW
YORK have duly executed this agreement as of the day and year first set forth
above and all Owners shall become parties hereto upon acceptance by them of
Receipts issued in accordance with the terms hereof.
DISPLAY.IT HOLDINGS PLC
By: ______________________
THE BANK OF NEW YORK,
as Depositary
By: ______________________
<PAGE>
EXHIBIT 3.1
<PAGE>
THIS AGREEMENT is made the day of 1996.
PARTIES:
1. LAW 737 LIMITED (registration number 3194225 proposing to re-register
as Display.IT Holdings plc) whose registered office is at Carmelite, 50
Victoria Embankment, London EC4Y ODX ("the Company"); and
2. THE PERSON whose name and address is set out in column 1 in schedule 1
to this agreement ("the Vendor"); and
3. MARJORIE MOE of 4 Mountain View, Ridgefield, CT 06877 USA ("the
Pledgee").
INTRODUCTION:
(1) Display.IT Limited (registration number 3069667) ("Display.IT Limited")
was incorporated with limited liability on the 19 June 1995, has its
registered office at 79 Knightsbridge London SW1X 7RB and has at
today's date an authorised share capital of(pound sterling)10,000
divided into 10,000 ordinary shares of(pound sterling)1 each of which
2 such ordinary shares have been issued and are fully paid.
(2) The Vendor is the beneficial owner with full title guaranteed of all
the issued shares in Display.IT Limited as is more particularly set
opposite his name in column 2 of schedule 1 to this agreement ("the
Sale Shares").
(3) The Vendor entered into a pledge agreement ("the Pledge Agreement")
with the Pledgee on 22 April 1996 in which the Sale Shares were pledged
to the Pledgee by the Vendor. In order to permit the Company to acquire
the Sale Shares with full title guaranteed the Pledgee intends to
terminate the Pledge Agreement and enter into a new pledge agreement
with the Pledgor in respect of the Purchase Shares (as defined in
clause 2 hereof).
(4) The Company was incorporated in England and Wales with limited
liability on 3 May 1996 with an authorised share capital of (pound
sterling)1000 divided into 1000 shares of (pound sterling)1 each, of
which two such shares were issued nil paid to the subscribers to the
Memorandum of Association of the Company. On 20 June 1996 each of the
existing ordinary shares of (pound sterling)1 each in the Company were
sub-divided into 20 ordinary shares of 5p each and the authorised
share capital was increased from (pound sterling)1000 to (pound
sterling)200,000 by the creation of 3,980,000 ordinary shares of 5p
each. On 20 June 1996 the 40 ordinary shares of 5p each representing
the subscribers' shares were transferred to Peter Levin.
(5) The Company wishes to buy and the Vendor, with the consent of the
Pledgee, wishes to sell the Sale Shares on the terms set out below.
<PAGE>
AGREED TERMS:
1. Sale of Shares
1.1 The Vendor shall sell the Sale Shares with full title
guaranteed to the Company and the Company relying on the
warranties contained in clause 5 below shall purchase the Sale
Shares upon the terms and conditions set out in this
agreement.
1.2 The Vendor and the Pledgee irrevocably waive all or any
pre-emption rights that they or their nominees may have
pursuant to the articles of association of Display.IT Limited
or to any other agreement relating to the Sale Shares so as to
enable the sale of the Sale Shares to the Company to proceed
free from any such pre-emption rights.
2. The Consideration
The consideration for the purchase of the Sale Shares shall be
satisfied by:
(a) the issue and allotment to the Vendor or his nominee of
1,999,960 ordinary shares of 5p each in the capital of the
Company credited as fully paid;
(b) the crediting as fully paid up of the 40 ordinary shares of 5p
each (representing the original subscriber shares) held by
Peter Levin
the above shares in the Company hereinafter collectively called "the
Purchase Shares" and set out in column 3 of schedule 1 to this
agreement.
3. Completion
Completion shall take place upon execution of this agreement when the
Company and the Vendor shall comply in full with his obligations in
clause 4 below.
4. Completion Obligations
4.1 At Completion the Vendor shall deliver or cause to be
delivered to the Company duly executed transfers of the Sale
Shares in favour of the Company together with the share
certificates in respect of the Sale Shares.
4.2 The Vendor and the Pledgee shall use their best endeavours to
procure the passing of the board resolution of Display.IT
Limited directing the registration of the transfers of the
Sale Shares to the Company subject to such transfers being
duly stamped and presented together with the relevant
certificates.
<PAGE>
4.3 Subject to compliance with the provisions of sub-clauses 4.1
and 4.2 above, the Company shall deliver or cause to be
delivered to the Vendor share certificates for the Purchase
Shares.
5. Termination of Pledge Agreement
5.1 The Pledgee and the Vendor hereby agree that the Pledge
Agreement dated 22 April 1996 is terminated and, for the
avoidance of doubt, the Pledgee expressly consents to the sale
of the Sale Shares by the Vendor for the purpose of this and
any other agreement and agrees to procure that the
certificates representing the Sale Shares are delivered to the
Vendor in order for the Vendor to satisfy sub-clauses 4.1 and
4.2 above.
5.2 In consideration of the Pledgee terminating the Pledge
Agreement referred to in sub-clause 5.1 above the Vendor
agrees to enter into a new pledge agreement in respect of the
Purchase Shares in the form of the pledge agreement set out in
schedule 2 to this Agreement.
6. Warranties
The Vendor hereby warrants and represents to and undertakes with the
Company (and agrees to indemnify the Company against any breach of any
such terms) that:
(a) the Sale Shares constitute the whole of the issued and
allotted share capital of Display.IT Limited; and
(b) the Vendor is the beneficial owner with full title guaranteed
in the Sale Shares and that the Sale Shares are free from all
liens charges and encumbrances or interest in favour of any
other person save for the Pledgee.
7. Counterparts
This Agreement may be executed in any number of counterparts and by the
parties to it on separate counterparts, each of which, when executed
and delivered, shall be an original, but all the counterparts shall
together constitute one and the same instrument.
8. Law and jurisdiction
This agreement shall be governed by and construed in accordance with
English law and each party to this agreement submits to the
non-exclusive jurisdiction of the English courts.
This agreement has been executed and delivered as a deed the date first above
mentioned.
<PAGE>
SCHEDULE 1
<TABLE>
<CAPTION>
Column 2 Column 3
Number and Percentage Number and Percentage
Column 1 of Sale Shares of Purchase Shares
Name and address
Number Percentage Number Percentage
<S> <C> <C> <C> <C>
Peter Levin, 10
Chesterfield Hill, London
W1X 7RN 2 100 2,000,000 100
</TABLE>
<PAGE>
SCHEDULE 2
DATED 1996
- ------------------------------------------------------------------------
PETER LEVIN
AND
MARJORIE MOE
----------------
PLEDGE AGREEMENT
----------------
<PAGE>
THIS PLEDGE AGREEMENT is made the day of 1996
BETWEEN
(1) MR PETER LEVIN of 10 Chesterfield Hill, London W1X 7RN (hereinafter
called "the Pledgor"); and
(2) MS MARJORIE MOE of 4 Mountain View Avenue, Ridgefield, CT 06877, USA
(hereinafter called "the Pledgee")
WHEREAS:
A. Pursuant to a Guarantee dated 22 April 1996 made between the Pledgor
and the Pledgee ("the Guarantee"), the Pledgor agreed to guarantee
certain payments to the Pledgee under a loan agreement dated 22 April
1996 between the Pledgee and the Company (as hereinafter defined) and
entered into a pledge as security for the said payments.
B. Pursuant to a Share Exchange Agreement dated 20 June 1996 made between
the Pledgor, the Pledgee and the Parent (as hereinafter defined) the
Pledgor, with the consent of the Pledgee and the termination of the
pledge of 22 April 1996, agreed to sell his shares in the Company to
the Parent in exchange for the issue of 2,000,000 ordinary shares of 5p
each by the Parent.
C. Pursuant to the Share Exchange Agreement the Pledgor agreed to enter
into a new pledge agreement with the Pledgee in respect of the shares
acquired under the Share Exchange Agreement in order to preserve the
security given by the Pledgor to the Pledgee in relation to payments of
the Company guaranteed by the Pledgor under the Guarantee.
NOW IT IS HEREBY AGREED as follows:
1. DEFINITIONS
In this Pledge Agreement, except where the context otherwise requires:
"the Company" means Display.IT Limited, a company registered in England
under number 3069667.
"the Parent" means the parent company of Display.IT Limited being the
company known as Law 737 Limited (to be re-registered as Display.IT
Holdings plc) and registered in England under company number 3194225.
"the Debt" means the debt guaranteed by the Pledgor in accordance with
the terms of the Guarantee.
<PAGE>
"Loan Agreement" means the loan agreement dated 22 April 1996 between
the Pledgee and the Company for an interest bearing loan of US$ 210,000
by the Pledgee to the Company.
"Fredrikson & Byron" means Fredrikson & Byron of 79 Knightsbridge,
London SW1X 7RB.
"Pledge Agreement" means this Pledge Agreement as amended from time to
time.
"the Security" means all the two million Ordinary Shares of 5p each in
the capital of the Parent, the share certificates for which are to be
deposited by the Pledgor with Fredrikson & Byron and the other property
pledged under clauses 2.1 and 2.2 hereof.
2. PLEDGE
2.1 Pledge: As continuing security for the due and punctual payment of the
Debt the Pledgor as legal and beneficial owner of the Security, hereby
pledges, assigns, transfers, hypothecates, mortgages, charges and
encumbers (and with the intent also of creating a security interest and
a lien thereon) by way of first equitable charge to and in favour of
the Pledgee the Security and all his present and future rights, title
and interest thereto and therein.
2.2 Other Property Pledged: The pledge, assignment, transfer,
hypothecation, mortgage, charge, encumbrance, security, interest and
lien hereby created shall affect, and the Security shall include (i)
all dividends and interest paid or payable thereon (if any) and (ii)
all stocks, shares, notes, bonds, debentures and certificates of
deposit or other securities (and in each case the dividends and
interest paid or payable thereon (if any), rights, monies or other
property paid, distributed, accruing or offered at any time (by way of
dividend, bonus, redemption, rights, preference, option, warrant or
otherwise) on, to or in respect of or in substitution for any Security
and (iii) the proceeds of sale, repayment and redemption and any
payment or receipt of, on or in respect of any of the Security all and
any of which shall be promptly delivered to the Pledgee.
2.3 Non-Recourse: This pledge shall be without recourse to the assets of
the Pledgor other than the Security.
2.4 Custody; Resignation: Subject as otherwise provided in this Agreement,
the Security shall be held by Fredrikson & Byron and the Pledgor shall
immediately after the execution and delivery of this Pledge Agreement
deliver or cause to be delivered to Fredrikson & Byron the Security
with duly executed blank transfers for all such shares. The Security
shall be kept thereafter in the custody of Fredrikson & Byron or their
nominee.
3. ENFORCEMENT
<PAGE>
3.1 Time for Enforcement: The security hereby created shall become
immediately enforceable upon the non-payment of the Debt or any part of
it and thereupon any sum payable under this Pledge Agreement shall
become immediately due and payable.
<PAGE>
3.2 Rights of Pledgee: At any time after the security hereby created shall
become enforceable the Pledgee may (without notice to the Pledgor) from
time to time do any one or more of the following:
(a) take possession of the Security and hold and/or procure that
its nominees hold the Security to the order of the Pledgee
absolutely; and/or
(b) cause to be delivered to the Pledgee as the Pledgee may direct
the Security; and/or
(c) execute and do, and/or procure its nominees to execute and do,
(at the expense of the Pledgor) all such conveyances,
transfers, assignments, assurances, deeds, acts and things as
the Pledgee may require for the perfecting or protecting the
security hereby created or intended to be created or for
facilitating the realisation of the Security and for
exercising all or any of the rights, powers and discretions
conferred on the Pledgee by or pursuant to this Pledge
Agreement; and/or
(d) exercise or direct the exercise of any powers or rights
incident to the ownership of the Security and the fact of
membership of the Parent; and/or
(e) collect and receive any and all interest, dividends, proceeds
of repayment or redemption (whether total or partial) and
other payments or receipts of, on or in respect of the
Security; and/or
(f) sell, exchange, convert into money or otherwise dispose of or
realise (or concur in selling, exchanging, converting into
money or otherwise disposing of or realising) and Security and
for this purpose complete the blank transfers referred to in
clause 2.4, either by public offer or private contract for
such consideration and in such currency or currencies and on
such terms as it may think fit and so that (without prejudice
to the generality of the foregoing) it may do any of those
things for a consideration consisting of cash, certificates of
deposit, debentures and any such considerations may be payable
or deliverable in a lump sum whether immediately or on a
deferred basis or by instalments spread over such period as it
may think fit and with full power to buy in or rescind or vary
any contract for the sale of the Security and to resell the
same, all without being responsible for any loss which may be
occasioned thereby and with full power to compromise and
effect compositions; and/or
(g) generally act in relation to the Security as if the Pledgee
were the absolute beneficial owner of the same.
3.3 Application of Proceeds: Any monies arising from the enforcement of the
security hereby created shall be applied by the Pledgee as follows:
<PAGE>
(a) first, in or towards payment of all costs and expenses
incurred by the Pledgee in connection with this Pledge
Agreement and the exercise of all or any of the powers hereby
confirmed;
(b) secondly, in or towards payment of the Debt (the Pledgor
remaining liable for any shortfall), and
(c) thirdly, in payment of any surplus to the Pledgor, or
(d) other person entitled thereto.
3.4 Notice to Purchaser from Pledgor: Upon any sale of the Security or any
part of it which the Pledgee may make or purport to make under the
provisions hereof a statutory declaration made by the Pledgee that the
Pledgor has made default and that the power of sale has become
exercisable shall be conclusive evidence of the fact in favour of any
purchase or other person - to whom the Security may be transferred
under such sale or other appropriation and the Pledgor or any part of
it agrees to indemnify the Pledgee against any claim which may be made
against the Pledgee by such purchaser or person by reason of any defect
in the title of the Pledgor to such Security or part thereof.
3.5 Beneficial Owner Warranty: The Pledgor warrants that it is the absolute
and beneficial owner of the Security free from encumbrances subject to
the terms hereof and that it will be the absolute and beneficial owner
free from encumbrances of any security which may hereafter become
subject to the terms hereof.
3.6 Powers Non-Exclusive: The powers conferred on the Pledgee by this
Pledge Agreement are in addition to and not in substitution for the
powers conferred on mortgagees under the Law of Property Act 1925,
which shall apply to the security hereby created except insofar as they
are expressly or impliedly excluded. Where there is any ambiguity or
conflict between the powers contained in that Act and those conferred
by the Pledge Agreement, the terms of this Pledge Agreement shall
prevail.
3.7 Exclusion of Statutory Rights: The restrictions contained in Section 93
and Section 103 of the Law of Property Act 1925 shall not apply to this
Pledge Agreement.
3.8 No Duty to Enquire etc.: No person dealing with the Pledgee shall be
concerned to enquire whether the security hereby created has become
enforceable or whether any event has happened upon which any of the
powers, authorities and discretions conferred by or pursuant to this
Pledge Agreement are or may be exercisable by the Pledgee or otherwise
as to the propriety or regularity of acts purporting or intended to be
in exercise of any such powers and authorities and all the protection
to purchasers contained in Sections 104 and 107 of the Law of Property
Act 1925 shall apply to any person purchasing from or dealing with the
Pledgee.
<PAGE>
3.9 Avoidance of Payments: No assurance, security or payment which may be
avoided under any law relating to bankruptcy or insolvency, and no
release, settlement or discharge given or made by the Pledgee on the
faith of any such assurance, security or payment, shall prejudice or
affect the right of the Pledgee to enforce the security hereby created
in respect of the full extent of the monies thereby secured.
4. GENERAL
4.1 Further Assurances: The parties hereto hereby agree to execute and do
all such further deeds and documents (at the expense of the requesting
party) as may reasonably be required by the requesting party to give
full force and effect to this Pledge Agreement.
4.2 Power of Attorney: The Pledgor hereby irrevocably and by way of
security appoints the Pledgee to be its attorney and agent and on its
behalf and in its name or otherwise to execute and do (at the expense
of the Pledgee) all such conveyances, transfers, assignments,
assurances, deeds, acts and things which it ought to execute or do
under the provisions of this Pledge Agreement and generally in its name
or otherwise and on its behalf to exercise all or any of the powers,
authorities and discretions conferred on the pledgee by or pursuant to
this Pledge Agreement or the Law of Property Act 1925 and (without
prejudice to the generality of the foregoing) to seal and deliver and
otherwise perfect any conveyance, transfer, assignment, assurance,
deed, act or thing which the Pledgee may deem proper in or for the
purpose of exercising any of such powers, authorities and discretions.
4.3 Security Additional: The security hereby created shall be in addition
to and shall not in any way prejudice or be prejudiced by any other
security, guarantee, indemnity, right of set-off, remedy or lien of
whatever nature which the Pledgee may now or at any time hereafter have
or to which the Pledgee may at any time be entitled, whether by law or
otherwise, for or in respect of all or any part of the sum due under
the Guarantee.
4.4 Illegality: If at any time any provision hereof is or becomes illegal,
invalid or unenforceable in any respect under the law of any
jurisdiction, neither the legality, validity or enforceability of the
remaining provisions hereof nor the legality, validity or
enforceability of such provision under the laws of any other
jurisdiction shall in any way be affected or impaired thereby.
4.5 Waivers: No failure or delay on the part of the Pledgee in exercising
any right or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right or remedy preclude
any other or further exercise thereof or the exercise of any other
right or remedy. The rights and remedies provided in this Pledge
Agreement are cumulative and not exclusive of any rights or remedies
which the Pledgee would otherwise have.
4.6 Counterparts: This Agreement may be executed in any number of
counterparts each of which when executed by one or more of the parties
hereto shall
<PAGE>
constitute an original but all of which shall constitute one and the
same instrument.
4.7 Successors: This Pledge Agreement and the security evidenced shall be
binding on each of the successors and assigns of the Pledgor.
5. NOTICE
Any notice demand or other communication to be given hereunder by
either of the parties shall be addressed to the parties at their
respective addresses shown in this Pledge Agreement or such other
address as the party shall previously have specified in writing to the
other for such purpose and may be given in person or sent by
first-class pre-paid post or airmail if overseas or facsimile
transmission or telex and shall be deemed to have been served if hand
delivered at the time of delivery or if posted at the expiration of
forty-eight (48) hours or (in the case of airmail) seven days after the
envelope containing the same was put into the post or if sent by
facsimile or telex transmission at the end of the transmission provided
that if the original communication is not transmitted between the hours
of 9.00am to 6.00pm on a day when banks are open for business in London
then on the next such day at 9.00am.
6. GOVERNING LAW
This Pledge Agreement shall be governed by and construed in accordance
with the laws of England and the Pledgor in relation to any legal
action or proceedings arising out of or in connection with this Pledge
Agreement unconditionally submits to the non-exclusive jurisdiction of
the High Court of Justice in England.
IN WITNESS whereof this Pledge Agreement has been duly executed as a deed and
delivered the day and year first above written.
SIGNED as a Deed by PETER LEVIN )
in the presence of: )
SIGNED as a Deed by MARJORIE )
MOE in the presence of: )
<PAGE>
EXECUTED as a deed by )
LAW 737 LIMITED acting by: )
............................
Director
............................
Director/Secretary
in the presence of:
EXECUTED as a deed )
by PETER LEVIN )
in the presence of: )
EXECUTED as a deed )
by MARJORIE MOE )
in the presence of: )
<PAGE>
EXHIBIT 3.2
<PAGE>
DISPLAY.IT HOLDINGS PLC
Carmelite, 50 Victoria Embankment, London EC4Y ODX (ref: TAM)
Fax: 00 44 171 936 266
Issue of 1,000,000 Ordinary Shares of
5p each at a price of (pound sterling)1 per share
APPLICATION FORM
NUMBER OF ORDINARY SHARES AMOUNT PAID AT (pound sterling)1 PER ORDINARY
APPLIED FOR SHARE
......................... (pound sterling)............................
Having read the confidential Private Placement Memorandum dated 24 June 1996
(the "Private Placement Memorandum") and subject to the terms and conditions set
out below and to the Memorandum and Articles of Association of Display.IT
Holdings PLC, the applicant hereby irrevocably applies for the above number of
fully paid Ordinary Shares. The applicant confirms and warrants that the
applicant has transferred the amount specified above in full to:
National Westminster Bank Plc
Law Court, Chancery Lane Branch
95 Chancery Lane, London WC2A IDX
Bank sort code: 56 00 16
Taylor Joynson Garrett client account (Ref: DIS-4-2): 03666328
The amount is to be held in the client account of Taylor Joynson Garrett,
solicitors, on behalf of the applicant until:
(a) applications have been received by the Company for all the Placing
Shares;
(b) either a minimum of (pound sterling)1,000,000 cash has been received
from the applicants or associates of Shaw & Co. Limited and the Company
are satisfied that any outstanding cash is from institutional
applicants who have instructed payment from a UK bank; and
(c) admission to OFEX becoming effective on or before Friday 28 June 1996
(or such later date as may be agreed by the Company but in any event no
later than Friday 26 July 1996).
The applicant requests and authorizes you to register any shares for which this
application is accepted in the name set out below:
APPLICANT'S NAME:
- --------------------------------------------------------------------------------
ADDRESS:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PHONE NUMBER:
- --------------------------------------------------------------------------------
FAX NUMBER:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature Date:
- --------------------------------------------------------------------------------
<PAGE>
TERMS & CONDITIONS
1. The applicant hereby acknowledges that the acceptance and basis of
allocation of Ordinary Shares is at the absolute discretion of the
directors ("the Directors") of Display.IT Holdings plc and that the
Directors have reserved the right to reject in whole or in part or to
scale down any application including without limitation multiple or
suspected multiple application or any application considered by the
Directors to have been made by a nominee. If the Placing conditions are
not satisfied by 28 July 1996 or if any application is not accepted or
is accepted for fewer shares than the number applied for then the
application monies or the balance thereof (as the case may be) will be
returned without interest by CHAPS payment if Taylor Joynson Garrett
have been given the applicant's bank sort code, account number and
title of account (or at the discretion of Taylor Joynson Garret by
solicitors' cheque in favour of the applicant by post and at the risk
of the person entitled thereto the applicant's above address).
2. In consideration of the Directors agreeing to consider and process this
application for Ordinary Shares and as a separate contract with the
Company which will become binding on dispatch by post of this
application form:
(a) the applicant understands that any application for Ordinary
Shares in the Company shall be deemed to be an irrevocable offer
up to the value of the application and that such offer shall be
deemed to take effect on dispatch by post of this application
form;
(b) the applicant confirms that the applicant is not relying on any
information or representation in relation to the Company other
than that contained in the Private Placement Memorandum and
agrees that neither the Company nor any person responsible for
the Private Placement Memorandum shall have any liability for any
information or representation not so contained;
(c) the applicant hereby authorizes Taylor Joynson Garrett to send
any monies returnable to the applicant either by CHAPS payment or
by cheque by first class post at the applicant's risk to the
address given above;
(d) the applicant agrees to accept the same or lesser number of
Ordinary Shares in respect of which this application may be
accepted;
(e) the applicant warrants that the applicant is entitled to
subscribe for Placing Shares under the laws of all relevant
jurisdictions applicable to the applicant and that the applicant
has fully observed such laws and obtained all governmental and
other consents which may be required thereunder and complied with
all necessary formalities; and
(f) the applicant warrants that the applicant is not, nor is the
applicant applying on behalf of a person who is, under the age
of 18.
3. The applicant declares that the applicant has read, understood and
agrees to the terms and conditions contained in the Private Placement
Memorandum and this application form and has taken all the appropriate
professional advise on the special risks involved in participating in
an investment of this nature and the applicant understands that this
application is made upon the terms of the Private Placement Memorandum
and this application form.
<PAGE>
4. The applicant acknowledges that in relation to the transactions
described in the Private Placement Memorandum, advisors to the Company
mentioned therein are acting for the Company and not for the
applicant's account and that accordingly they will not be responsible
to me for the providing protections afforded to their clients, for
advising the applicant on any transaction described therein or for
insurance that any such transaction is suitable for the applicant.
5. Terms and expressions used in this application form shall have the
meaning set out in the Private Placement Memorandum unless the context
requires otherwise.
6. The terms and conditions of the Placing and this application will be
governed by, and construed in accordance with, the laws of England and
the applicant agrees to submit to the jurisdiction of the courts of
England.
<PAGE>
SCHEDULE TO EXHIBIT 3.2
Placing Letters substantially identical in all material respects to the
form of Placing Letter filed herewith as Exhibit 3.2 were entered into with the
19 investors listed below. The material details of the Placing Letters are
identified.
1) Placing Letter by and between Display.IT Holdings plc and
Deutsche Bank AG with respect to the application for 125,000 Ordinary Shares at
(pound sterling)1 per Ordinary Share, dated June 25, 1996
2) Placing Letter by and between Display.IT Holdings plc and
James Calvocoressi with respect to the application for 10,000 Ordinary Shares at
(pound sterling)1 per Ordinary Share, dated June 26, 1996
3) Placing Letter by and between Display.IT Holdings plc and
AURIGEST Company LTD with respect to the application for 50,000 Ordinary Shares
at (pound sterling)1 per Ordinary Share, dated June 25, 1996
4) Placing Letter by and between Display.IT Holdings plc and
Assets Nominees Limited with respect to the application for 40,000 Ordinary
Shares at (pound sterling)1 per Ordinary Share, dated June 25, 1996
5) Placing Letter by and between Display.IT Holdings plc and
St. Michael Nominees Limited with respect to the application for 20,000 Ordinary
Shares at (pound sterling)1 per Ordinary Share, dated June 25, 1996
6) Placing Letter by and between Display.IT Holdings plc and Glyn
Mills Nominees (Lombard Street) Limited with respect to the application for
90,000 Ordinary Shares at (pound sterling)1 per Ordinary Share, dated June 26,
1996
7) Placing Letter by and between Display.IT Holdings plc and
Dr. Christopher McFadden with respect to the application for 15,000 Ordinary
Shares at (pound sterling)1 per Ordinary Share, dated June 25, 1996
8) Placing Letter by and between Display.IT Holdings plc and
Clariden Bank with respect to the application for 20,000 Ordinary Shares at
(pound sterling)1 per Ordinary Share, dated June 25, 1996
9) Placing Letter by and between Display.IT Holdings plc and
Anderson Finance Ltd with respect to the application for 25,000 Ordinary Shares
at (pound sterling)1 per Ordinary Share, dated June 25, 1996
10) Placing Letter by and between Display.IT Holdings plc and Roy
Nominees Limited with respect to the application for 20,000 Ordinary Shares at
(pound sterling)1 per Ordinary Share, dated June 27, 1996
11) Placing Letter by and between Display.IT Holdings plc and
Ranelagh Nominees Ltd with respect to the application for 10,000 Ordinary Shares
at (pound sterling)1 per Ordinary Share, dated June 26, 1996
<PAGE>
12) Placing Letter by and between Display.IT Holdings plc and J.P.
Jenkins Ltd with respect to the application for 10,000 Ordinary Shares at
(pound sterling)1 per Ordinary Share, dated June 25, 1996
13) Placing Letter by and between Display.IT Holdings plc and
Glendower Limited with respect to the application for 25,000 Ordinary Shares at
(pound sterling)1 per Ordinary Share, dated June 25, 1996
14) Placing Letter by and between Display.IT Holdings plc and
Diamond Crescent Ltd with respect to the application for 25,000 Ordinary Shares
at (pound sterling)1 per Ordinary Share, dated June 25, 1996
15) Placing Letter by and between Display.IT Holdings plc and
Vivian Gray Nominees Ltd with respect to the application for 10,000 Ordinary
Shares at (pound sterling)1 per Ordinary Share, dated June 25, 1996
16) Placing Letter by and between Display.IT Holdings plc and Lex
Trust Company Limited with respect to the application for 10,000 Ordinary Shares
at (pound sterling)1 per Ordinary Share, dated June 24, 1996
17) Placing Letter by and between Display.IT Holdings plc and
Vessel LTD with respect to the application for 50,000 Ordinary Shares at
(pound sterling)1 per Ordinary Share, dated June 24, 1996
18) Placing Letter by and between Display.IT Holdings plc and Shaw
& Co. Limited with respect to the application for 155,000 Ordinary Shares at
(pound sterling)1 per Ordinary Share, dated June 25, 1996
19) Placing Letter by and between GFM International Investors Ltd
and Display.IT Holdings plc with respect to the application for 290,000 Ordinary
Shares, not dated
EXHIBIT 3.3
<PAGE>
THIS OPTION DEED is made on June 1996
BETWEEN
(1) DISPLAY.IT HOLDINGS PLC (registration number 3194225 and formerly
called Law 737 Limited) whose registered office is situate at
Carmelite, 50 Victoria Embankment, Blackfriars, London EC4Y ODX ("the
Company") and
(2) ALASDAIR NORMAN MACLEOD of Genins Nook, Harley Lane, Heathfield, East
Sussex TN21 8AQ ("the Holder").
INTRODUCTION
This deed and three similar deeds are entered into with the authority and
sanction of a special resolution of the shareholders of the Company dated
June 1996 and pursuant to a resolution of the directors dated June 1996.
AGREED TERMS
1. The Option
1.1 The Company grants to the Holder an option ("the Option") to subscribe
for 30,000 unissued ordinary shares of 5p each in the capital of the
Company at a price of (pound sterling)36,000 ("the Option Price")
subject to the terms of this deed.
1.2 The Option shall lapse and shall be deemed never to have been granted
if the sum of (pound sterling)1,000,000 has not been invested in the
company for one third of the then issued equity share capital by 5 July
1996 or such other date as may be agreed in writing by both parties.
1.3 Subject to clause 3 this Option is personal to the Holder and shall not
be assignable and any purported assignment, transfer, charge, disposal
or dealing with the rights and interests of the Holder hereunder shall
cause this Option to lapse.
2. Exercise of the Option
2.1 The Option may be exercised in multiples of (pound sterling)10,000 or
in whole (subject to the terms of this deed) at any time after the date
of this deed and before 5pm, 30 June 2002 ("the Option Period").
<PAGE>
2.2 This Option may be exercised only by the Holder giving notice in
writing to the Company in the form set out in the schedule hereto. Such
notice must be accompanied by a remittance for the Option Price and
this Option Deed. This Option shall be deemed to be exercised upon the
receipt by the Company of the said documentation and the payment of the
Option Price.
3. Death of holder
3.1 If the Holder dies, his legal personal representatives may exercise
this Option within the period of 6 months from the date of death but at
the end of that period the Option shall lapse.
4. Takeover, reconstruction or members' voluntary winding up
4.1 If any person obtains 51% or more of the issued share capital of the
Company ("Control") as a result of making a general offer to acquire
the whole of the issued ordinary share capital of the Company this
Option may be exercised within the period of 6 months from the time
when the person making the offer obtains Control of the Company and any
condition subject to which the offer was made is satisfied but at the
end of that period the Option shall lapse.
4.2 If under Section 425 of the Companies Act 1985 the Court sanctions a
compromise or arrangement proposed for the purposes of or in connection
with a scheme for the reconstruction of the Company or its amalgamation
with any other company or companies, this Option may be exercised
within the period of 6 months from the Court sanctioning the compromise
or arrangement but at the end of that period the Option shall lapse.
4.3 If any person becomes bound or entitled to acquire shares in the
Company under sections 428-430 of the Companies Act 1985, this Option
may be exercised within the period during which that person remains so
bound or entitled but thereafter shall lapse.
4.4 If the Company passes a resolution for voluntary winding up, this
Option may be exercised within 6 months of the passing of such
resolution but thereafter shall lapse.
<PAGE>
4.5 For the purposes of this clause a person shall be deemed to have
obtained Control of the Company if he and others acting in concert with
him have together obtained Control of the Company.
5. Allotment of shares and listing
5.1 The shares subject to this Option shall be allotted and issued to the
Holder credited as fully paid no later than 30 days after the due
exercise of this Option.
5.2 The Company shall at all times keep available for allotment sufficient
unissued ordinary shares to satisfy an exercise of the Option.
5.3 A share issued upon the exercise of the Option shall be identical to
and rank pari passu with the other issued ordinary shares in the
capital of the Company except that the Holder shall not be entitled to
a dividend where the relevant record date falls before the date on
which the relevant shares are allotted to him.
5.4 This Option shall not be quoted or dealt in on any stock exchange or
other market but if at the time of the allotment of any shares pursuant
to a due exercise of the Option the issued ordinary shares have been
admitted to the Alternative Investment Market or to the Official List
of the London Stock Exchange then upon the allotment of any shares
pursuant to a due exercise of the Option the Company shall apply for
such shares to be admitted to the Alternative Investment Market or to
the Official List (as the case may be).
6. Variation of share capital
6.1 In the event of any variation of the ordinary share capital of the
Company by way of capitalisation or by consolidation, sub-division or
reduction of capital the number of shares comprised in this Option
shall be adjusted in such manner as the auditors for the time being of
the Company shall in writing advise the board of directors of the
Company ("the Board") to be in their opinion fair and reasonable.
6.2 As soon as reasonably practicable after making any such adjustment the
Board shall give written notice thereof to the Holder and at the
written request of the Holder and/or upon the surrender of this Option
Deed shall either endorse a memorandum thereon recording such
adjustment (under the hand of a director of the Company) and return the
same to the Holder or execute and deliver to the Holder a new deed
reflecting such adjustment but in all other respects incorporating the
terms hereof (save to the extent amended in accordance with clause
7.2).
<PAGE>
7. Administration
7.1 Notices or documents required to be given to the Holder shall be sent
by first class post to the Holder's address as shown above. Notices or
documents required to be given to the Company shall be addressed to the
Secretary of the Company and shall either be delivered by hand or sent
by first class post to the registered office of the Company. Notices
sent by first class post shall be deemed to have been given 2 working
days after such posting.
7.2 The Board shall have power from time to time to make or vary
regulations for the administration and operation of the terms hereof
provided that the same are not inconsistent with the terms hereof and
the decision of the Board as to any matter, question or dispute arising
from the terms hereof shall be final and conclusive and binding on the
Company and the Holder.
8. General
8.1 The Company shall not be liable for any tax to which the Holder may
become subject as a result of the grant or exercise of this Option or
the sale of any of the shares allotted upon any exercise hereof.
This deed has been executed and delivered on the date first written above.
<PAGE>
EXECUTED by DISPLAY.IT HOLDINGS PLC )
acting by: )
-------------------------------
Director
-------------------------------
Director/Secretary
Signed by ALASDAIR NORMAN MACLEOD )
in the presence of: )
- ---------------------------- Witness signature
- ---------------------------- Witness name
- ---------------------------- Occupation
- ---------------------------- Address
- ----------------------------
- ----------------------------
- ----------------------------
<PAGE>
SCHEDULE TO EXHIBIT 3.3
Option Deeds substantially identical in all material respects to the
Option Deed by and between Display.IT Holdings plc and Alasdair Norman Macleod,
dated June 24, 1996, were entered into with the three parties listed below. The
material details in which the Option Deeds listed below differ from the Option
Deed by and between Display.IT Holdings plc and Alasdair Norman Macleod are
identified.
i) Option Deed by and between Display.IT Holdings plc and David
Rupert Jack Foster, dated June 24, 1996
ii) Option Deed by and between Display.IT Holdings plc and John
Allen Scott, dated June 24, 1996
iii) Option Deed by and between Display.IT Holdings plc and George
William Bennet Turnbull, dated June 24, 1996
<PAGE>
EXHIBIT 3.4
<PAGE>
THIS OPTION DEED is made on June 1996
BETWEEN
(1) DISPLAY.IT HOLDINGS PLC (registration number 3194225 and formerly
called Law 737 Limited) whose registered office is situate at
Carmelite, 50 Victoria Embankment, Blackfriars, London EC4Y ODX ("the
Company") and
(2) ALASDAIR NORMAN MACLEOD of Genins Nook, Harley Lane, Heathfield, East
Sussex TN21 8AQ ("the Holder").
INTRODUCTION
This deed and three similar deeds are entered into with the authority and
sanction of a special resolution of the shareholders of the Company dated
June 1996 and pursuant to a resolution of the directors dated June 1996.
AGREED TERMS
1. The Option
1.1 The Company grants to the Holder a bonus option ("the Bonus Option") to
subscribe for 30,000 unissued ordinary shares of 5p each in the capital
of the Company at a price of (pound sterling)36,000 ("the Bonus Option
Price") subject to the terms of this deed.
1.2 The Bonus Option shall lapse and shall be deemed never to have been
granted unless:
(a) applications have been received by the Company for all the
placing shares in the Company no later than 28 June 1996; and
(b) either a minimum of (pound sterling)1,000,000 cash has been
received no later than 28 June 1996 from the applicants in the
placing by the Company for one million ordinary shares of the
Company and held in cleared funds in the Client Account number
03666328 of Taylor Joynson Garrett held with National
Westminster Bank Plc, Law Courts, London branch or the Company
and associates of Shaw & Co. Limited are satisfied that any
outstanding cash is from institutional applicants who will
instruct payment from a UK bank prior to admission of the
Company's ordinary shares to trading on OFEX.
<PAGE>
1.3 Subject to clause 3 this Bonus Option is personal to the Holder and
shall not be assignable and any purported assignment, transfer, charge,
disposal or dealing with the rights and interests of the Holder
hereunder shall cause this Bonus Option to lapse.
2. Exercise of the Bonus Option
2.1 The Bonus Option may be exercised in multiples of (pound
sterling)10,000 or in whole (subject to the terms of this deed) at any
time after 30 June 1999 and before 5pm, 30 June 2002 ("the Bonus Option
Period").
2.2 This Bonus Option may be exercised only by the Holder giving notice in
writing to the Company in the form set out in the schedule hereto. Such
notice must be accompanied by a remittance for the Bonus Option Price
and this Option Deed. This Bonus Option shall be deemed to be exercised
upon the receipt by the Company of the said documentation and the
payment of the Bonus Option Price.
3. Death of holder
3.1 If the Holder dies, his legal personal representatives may exercise
this Bonus Option within the period of 6 months from the date of death
but at the end of that period the Bonus Option shall lapse.
4. Takeover, reconstruction or members' voluntary winding up
4.1 If any person obtains 51% or more of the issued share capital of the
Company ("Control") as a result of making a general offer to acquire
the whole of the issued ordinary share capital of the Company this
Bonus Option may be exercised within the period of 6 months from the
time when the person making the offer obtains Control of the Company
and any condition subject to which the offer was made is satisfied but
at the end of that period the Bonus Option shall lapse.
4.2 If under Section 425 of the Companies Act 1985 the Court sanctions a
compromise or arrangement proposed for the purposes of or in connection
with a scheme for the reconstruction of the Company or its amalgamation
with any other company or companies, this Bonus Option may be exercised
within the period of 6 months from the Court sanctioning the compromise
or arrangement but at the end of that period the Bonus Option shall
lapse.
4.3 If any person becomes bound or entitled to acquire shares in the
Company under sections 428-430 of the Companies Act 1985, this Bonus
Option may be exercised within the period during which that person
remains so bound or entitled but thereafter shall lapse.
<PAGE>
4.4 If the Company passes a resolution for voluntary winding up, this Bonus
Option may be exercised within 6 months of the passing of such
resolution but thereafter shall lapse.
4.5 For the purposes of this clause a person shall be deemed to have
obtained Control of the Company if he and others acting in concert with
him have together obtained Control of the Company.
5. Allotment of shares and listing
5.1 The shares subject to this Bonus Option shall be allotted and issued to
the Holder credited as fully paid no later than 30 days after the due
exercise of this Bonus Option.
5.2 The Company shall at all times keep available for allotment sufficient
unissued ordinary shares to satisfy an exercise of the Bonus Option.
5.3 A share issued upon the exercise of the Bonus Option shall be identical
to and rank pari passu with the other issued ordinary shares in the
capital of the Company except that the Holder shall not be entitled to
a dividend where the relevant record date falls before the date on
which the relevant shares are allotted to him.
5.4 This Bonus Option shall not be quoted or dealt in on any stock exchange
or other market but if at the time of the allotment of any shares
pursuant to a due exercise of the Bonus Option the issued ordinary
shares have been admitted to the Alternative Investment Market or to
the Official List of the London Stock Exchange then upon the allotment
of any shares pursuant to a due exercise of the Bonus Option the
Company shall apply for such shares to be admitted to the Alternative
Investment Market or to the Official List (as the case may be).
6. Variation of share capital
6.1 In the event of any variation of the ordinary share capital of the
Company by way of capitalisation or by consolidation, sub-division or
reduction of capital the number of shares comprised in this Bonus
Option shall be adjusted in such manner as the auditors for the time
being of the Company shall in writing advise the board of directors of
the Company ("the Board") to be in their opinion fair and reasonable.
6.2 As soon as reasonably practicable after making any such adjustment the
Board shall give written notice thereof to the Holder and at the
written request of the Holder and/or upon the surrender of this Option
Deed shall either endorse a
<PAGE>
memorandum thereon recording such adjustment (under the hand of a
director of the Company) and return the same to the Holder or execute
and deliver to the Holder a new deed reflecting such adjustment but in
all other respects incorporating the terms hereof (save to the extent
amended in accordance with clause 7.2).
7. Administration
7.1 Notices or documents required to be given to the Holder shall be sent
by first class post to the Holder's address as shown above. Notices or
documents required to be given to the Company shall be addressed to the
Secretary of the Company and shall either be delivered by hand or sent
by first class post to the registered office of the Company. Notices
sent by first class post shall be deemed to have been given 2 working
days after such posting.
7.2 The Board shall have power from time to time to make or vary
regulations for the administration and operation of the terms hereof
provided that the same are not inconsistent with the terms hereof and
the decision of the Board as to any matter, question or dispute arising
from the terms hereof shall be final and conclusive and binding on the
Company and the Holder.
8. General
8.1 The Company shall not be liable for any tax to which the Holder may
become subject as a result of the grant or exercise of this Bonus
Option or the sale of any of the shares allotted upon any exercise
hereof.
<PAGE>
This deed has been executed and delivered on the date first written above.
EXECUTED by DISPLAY.IT HOLDINGS PLC )
acting by: )
.............................
Director
.............................
Director/Secretary
Signed by ALASDAIR NORMAN MACLEOD )
in the presence of: )
............................ Witness signature
............................ Witness name
............................ Occupation
............................ Address
............................
............................
............................
<PAGE>
SCHEDULE TO EXHIBIT 3.4
Bonus Option Deeds substantially identical in all material respects to
the Option Deed by and between Display.IT Holdings plc and Alasdair Norman
Macleod, dated June 24, 1996, were entered into with the three parties listed
below. The material details in which the Bonus Option Deeds listed below differ
from the Bonus Option Deed by and between Display.IT Holdings plc and Alasdair
Norman Macleod are identified.
i) Bonus Option Deed by and between Display.IT Holdings plc and David
Rupert Jack Foster, dated June 24, 1996
ii) Bonus Option Deed by and between Display.IT Holdings plc and John
Allen Scott, dated June 24, 1996
iii) Bonus Option Deed by and between Display.IT Holdings plc and
George William Bennett Turnbull, dated June 24, 1996
<PAGE>
EXHIBIT 3.5
DSB:415341.1
<PAGE>
Dated the 25th day of November 1996
DISPLAY.IT HOLDINGS PLC
- and -
INDEPENDENT ECONOMIC ANALYSIS (HOLDINGS) PTE LIMITED
AGREEMENT FOR SHARE SUBSCRIPTION
Taylor Joynson Garrett
Carmelite
50 Victoria Embankment
London EC4Y 0DX
Tel: 0171 353 1234
Ref: TAM
<PAGE>
THIS AGREEMENT is made the 25th day of November 1996
BETWEEN
(A) DISPLAY.IT HOLDINGS PLC (registered number 3194225) whose registered
office is at Carmelite, 50 Victoria Embankment, London EC4Y 0DX (the
"Company"); and
(B) INDEPENDENT ECONOMIC ANALYSIS (HOLDINGS) PTE LIMITED whose registered
office is at COSCO Building, No.8 Robinson Road, Singapore 048544 (the
"Investor").
INTRODUCTION
The Investor has agreed to make an investment in the Company upon the terms and
conditions hereafter contained.
AGREED TERMS
1. Nature of investment
1.1 The Investor shall subscribe in cash a total of (pound sterling)599,996
for 196,720 ordinary shares of 5p each in the capital of the Company
(representing approximately 1.3% of the issued share capital of the
Company) subject only to:
(a) the shareholders of the Company passing the resolutions set
out in the notice of general meetings sent to the shareholders
of the Company on 21 November 1996;
(b) the capitalisation issue referred to in such resolutions
having taken place;
(c) the Investor not having advised the Company by 9 am London
time on 28 November 1996 that the proposed subscription by the
Investor is in contravention of Singapore securities law or UK
securities law.
1.2 It is acknowledged that the price has been agreed at
(pound sterling)3.05 per share being the price given by OFEX as the
closing price on the business day prior to the date of this Agreement
adjusted to reflect the proposed capitalisation issue.
1.3 The subscription monies shall be paid by telegraphic transfer as set
out in column (1) below and the ordinary shares shall be allotted as
set out in column (2) below on the dates as set out in column (3)
below:
<PAGE>
(1) (2) (3)
Subscription monies Shares allotted Dates
(pound sterling) 350,002.75 114,755 13 December 1996
(pound sterling) 249,993.25 81,965 31 March 1997
---------- -----------
(pound sterling) 599,996.00 196,720
================ ========== ===========
1.4 Subject to payment of the subscription monies due thereon the Company
shall procure that 114,755 ordinary shares of 5p each in the capital of
the Company are allotted forthwith to the Investor and shall within 5
days thereafter deliver to the Investor the share certificate therefor.
Similarly, subject to the payment of the subscription monies due
thereon the Company shall procure that 81,965 ordinary shares of 5p
each in the capital of the Company are allotted forthwith to the
Investor and shall within 5 days thereafter deliver to the Investor the
share certificate therefor. Such shares shall have attached thereto the
rights set out in the articles of association of the Company at the
date hereof.
2. Early payment
Subject to payment of the initial subscription monies the Investor may
at any time pay early the balance of the subscription monies as is for
the time being unpaid and forthwith on such payment the Company shall
allot those shares and within 5 days thereafter deliver a share
certificate in respect thereof.
3. Compulsory payment
The Company may by notice in writing to the Investor demand the
immediate payment of all monies due by the Investor to the Company
forthwith at any time if the Investor does not pay on the due date or
within 24 hours thereafter any money which may have become due
hereunder or under any document supplemental hereto.
4. No right of set-off
The Investor shall have no right to set off any sum claimed by the
Investor from the Company (whether in respect of any sum due to the
Investor under a contract with the Company or otherwise) against any
part of the subscription monies referred to in this Agreement.
<PAGE>
5. Variation of share capital
5.1 In the event of any variation of the ordinary share capital of the
Company by way of capitalisation or by consolidation, sub-division or
reduction of capital the number of shares comprised in this Agreement
shall be adjusted in such manner as the auditors for the time being of
the Company shall in writing advise the Company and the Investor to be
in their opinion fair and reasonable.
5.2 As soon as reasonably practicable after making any such adjustment the
Company shall give written notice thereof to the Investor and at the
written request of the Investor and/or upon the surrender of this
Agreement shall either endorse a memorandum thereon recording such
adjustment (under the hand of a director of the Company) and return the
same to the Investor or execute and deliver to the Investor a new
agreement reflecting such adjustment but in all other respects
incorporating the terms hereof.
6. Publicity
Subject to approval of the Board of the Investor, as soon as
practicable after the date of this Agreement, the Company and the
Investor shall agree an announcement of the Investor's acquisition of
shares in the Company pursuant to this Agreement. The Investor will use
its best endeavours to procure such approval of its Board by 9 am
London time on 28 November 1996.
7. Notices
7.1 Any notice or other written communication given under or in connection
with this Agreement may be delivered personally or sent by first class
post (airmail if overseas) or by telex or facsimile.
7.2 The address for service on the Company or on the Investor shall be
their respective registered offices.
7.3 The fax number for service on the Investor is 00 65 536 3842.
7.4 Any such notice or other written communication shall be deemed to have
been served;
(a) if delivered personally, at the time of delivery;
(b) if posted, at the expiry of forty-eight hours after it was
posted;
(c) if sent by telex or facsimile message, at the time of
transmission.
7.5 In proving such service it shall be sufficient to prove that personal
delivery was made, or that such notice or other written communication
was properly addressed stamped and
<PAGE>
posted or in the case of a telex that the intended recipient's
answerback code is shown on the copy retained by the sender at the
beginning and end of the message or in the case of a facsimile message
that an activity or other report from the sender's facsimile machine
can be produced in respect of the notice or other written communication
showing the recipient's facsimile number and the number of pages
transmitted.
8. Counterparts
This Agreement may be entered into any number of counterparts and by
the parties to it on separate counterparts, each of which when so
executed and delivered shall be an original, but all the counterparts
shall together constitute one and the same instrument.
9. Law and Jurisdiction
This Agreement shall be governed by and construed in accordance with
English law and each party to this Agreement submits to the
non-exclusive jurisdiction of the English Courts.
10. Testimonium
This Agreement has been executed and delivered as a deed on the date
first written above.
EXECUTED for )
and on behalf of )
DISPLAY.IT HOLDINGS PLC )
................................
Director duly authorised to sign
EXECUTED for )
and on behalf of )
INDEPENDENT ECONOMIC ANALYSIS )
(HOLDINGS) PTE LIMITED )
................................
Director duly authorised to sign
<PAGE>
EXHIBIT 3.6
<PAGE>
Dated 19th December, 1996
DISPLAY.IT HOLDINGS PLC
-and-
HESTIA INVESTMENTS S.A.
AGREEMENT FOR SHARE SUBSCRIPTION
<PAGE>
THIS AGREEMENT is made the 19th day of December, 1996
BETWEEN
(A) DISPLAY.IT HOLDINGS PLC (registered number 3194226) whose registered
office is at Carmelita, 50 Victoria Embankment, London EC46 JDX (the
"Company"); and
(B) HESTIA INVESTMENTS SA (registered number 4168513) whose registered
office is at 50 Shirley Street CB 13937 Nassau Bahamas (the
"Investor").
INTRODUCTION
The Investor has agreed to make an investment in the Company upon the terms and
conditions hereafter contained.
AGREED TERMS
1. Nature of Investment
1.1 The Investor shall subscribe in cash a total of(pound
sterling)1,240,000 for 310,000 ordinary shares of 5p each in the
capital of the Company.
1.2 It is acknowledged that the price has been agreed at(pound sterling)4
per share.
1.3 The subscription monies shall be paid by telegraphic transfer as set
out in column (1) below and the ordinary shares shall be allotted as
set out in column (2) below on the dates as set out in column (3)
below:
(1) (2) (3)
Subscription monies Shares allotted Dates
(pound sterling)1,240,000.00 310,000 02/17/96
1.4 Subject to payment of the subscription monies due thereof, the Company
shall procure that 310,000 ordinary shares of 5p each in the capital of
the Company are allotted to the Investor and shall within 5 business
days thereafter deliver to the Investor the share certificate thereof.
Such shares shall have attached thereto the rights set out in the
articles of association of the Company at the date hereof.
2. Publicity
As soon as practical after the date of this agreement, the Company and
the Investor shall agree on announcement of the Investor's acquisition
of share in the Company pursuant to the Agreement.
<PAGE>
3. Notices
3.1 Any notice or other written communication given under or in connection
with this Agreement may be delivered personally or sent by first class
post (airmail if overseas) or by telex or facsimile.
3.2 The address for service on the Company or on the Investor shall be
their respective registered offices.
3.3 Any such notice or other written communication shall be deemed to have
been served:
(a) if delivered personally, at the time of delivery;
(b) if posted, at the expiry of forty-eight hours after it was
posted;
(c) if sent by telex or facsimile message, at the time of
transmission.
3.4 In proving such service, it shall be sufficient to prove that personal
delivery was made, or that such notice or other written communication
was properly addressed, stamped and posted or in the case of a telex,
that the intended recipient's answerback code is shown on the copy
retained by the sender at the beginning and end of the message or in
the case of facsimile message, that an activity or other report from
the sender's facsimile machine can be produced in respect of the notice
or other written communication showing the recipient's facsimile number
and the number of pages transmitted.
4. Counterparts
This Agreement may be entered into any number of counterparts and by
the prices to it on separate counterparts, each of which when so
executed and delivered shall be an original, but all the counterparts
shall together constitute one and the same instrument.
5. Law and Jurisdiction
This Agreement shall be governed by and construed in accordance with
English Law and each party to this Agreement submits to the
non-exclusive jurisdiction of the English Courts.
<PAGE>
6. Testimonium
This Agreement has been entered into on the date first written above.
SIGNED for )
and on behalf of )
DISPLAY.IT HOLDINGS PLC )
- ------------------------------------
Director duly authorized to sign
SIGNED for )
and on behalf of )
HESTIA INVESTMENTS SA )
- ------------------------------------
Authorized Signatory FOR JORDANS (Isle of Man) LIMITED
<PAGE>
EXHIBIT 3.7
<PAGE>
DATED 24 June 1996
------------------
DISPLAY.IT HOLDINGS PLC
- and -
PETER LEVIN
- -------------------------------------------------------------------------------
SERVICE AGREEMENT
- ------------------------------------------------------------------------------
TAYLOR JOYNSON GARRETT
Carmelite
50 Victoria Embankment
Blackfriars
London EC4Y 0DX
Tel No: 0171-353 1234
Fax No: 0171-936 2666
Ref: TAM/JCS
<PAGE>
INDEX
Clause No. Heading Page No.
1. Definitions and Interpretations............................. 1
2. Period of Employment........................................ 2
3. Duties...................................................... 2
4. Place of Employment......................................... 3
5. Remuneration and Benefit.................................... 3
6. Expenses.................................................... 4
7. Company Car................................................. 4
8. Pension..................................................... 4
9. Holidays.................................................... 4
10. Sickness or Injury.......................................... 5
11. Outside Interests........................................... 6
12. Confidential Information and Trade Secrets.................. 6
13. Dismissal................................................... 7
14. Suspension.................................................. 8
15. Grievance and Disciplinary Procedure........................ 8
16. Duties upon Termination..................................... 9
17. Restrictions................................................ 9
18. Notices..................................................... 12
19. Miscellaneous............................................... 12
20. Law and Jurisdiction........................................ 13
The Schedule ............................................................ 15
<PAGE>
THIS AGREEMENT is made the day of June 1996
BETWEEN:
(1) DISPLAY.IT HOLDINGS PLC whose registered office is at Carmelite, 50
Victoria Embankment, Blackfriars, London EC4Y 0DX (the "Company"); and
(2) PETER LEVIN of 10 Chesterfield Hill, London W1X 7RN (the "Executive").
AGREED TERMS:
1. Definitions and Interpretations
1.1 In this agreement and the schedule the following expressions shall have
the following meanings:
"Board" means the board of directors of the Company from time to time;
"Business Day" means any day other than a Saturday, Sunday or any other
day which is a public holiday in the place from which the notice in
question was sent;
"Effective Date" means the date of this agreement;
"Employment" means the employment established by this agreement; and
1.2 In this agreement and the schedule:
(a) reference to any statute or statutory provision includes a
reference to that statute or statutory provision as amended,
extended or re-enacted and to any regulation, order,
instrument or subordinate legislation under the relevant
statute or statutory provision;
(b) reference to the singular includes a reference to the plural
and vice versa;
(c) reference to any clause, sub-clause or schedule is to a
clause, sub-clause or schedule (as the case may be) of or to
this agreement;
(d) reference to any gender includes a reference to all other
genders; and
<PAGE>
(e) references to persons include bodies corporate, unincorporated
associations and partnerships and any reference to any party
who is an individual is also deemed to include their
respective legal personal representative(s).
2. Period of Employment
2.1 The Company shall employ the Executive as a Managing Director and Chief
Executive Officer.
2.2 The Employment shall begin on the Effective Date and shall continue
until terminated in accordance with the terms of this agreement.
2.3 There is no employment with a previous employer which counts as part of
the Executive's continuous period of employment for the purposes of the
Employment Protection (Consolidation) Act 1978.
2.4 (a) The Company may terminate the Employment by giving the
Executive twelve months' written notice to expire at any time
on or after the first anniversary of this agreement.
(b) The Executive may terminate the Employment by giving the
Company twelve months' written notice to expire at any time on
or after the first anniversary of this agreement.
(c) The Employment shall in any event terminate without notice
upon the Executive's sixty-fifth birthday.
2.5 If written notice is given by the Executive or by the Company to
terminate the Employment the Company may notwithstanding any other
terms of this agreement but subject to sub-clause 2.6:
(a) require the Executive to continue to perform such duties as
the Board may direct; or
(b) require the Executive to perform no duties; and
in each case the Company will continue to pay the Executive salary and
provide all other benefit arising under this agreement.
2.6 If written notice is given by the Executive or by the Company to
terminate the Employment the Company may require that the Executive
shall accept a payment of salary in lieu of notice and the Employment
shall terminate upon such payment being made but without prejudice to
any other claim the Company or the Executive may have against the
other.
<PAGE>
3. Duties
The Executive shall:
(a) exercise the powers and functions and perform the duties
assigned to him from time to time by or under the authority of
the Board in such manner as shall be specified by the Board;
(b) devote the whole of his time attention and abilities to the
performance of his duties during the Company's normal business
hours of 9.30 a.m. to 5.30 p.m. Monday to Friday inclusive and
at such other times as may reasonably be necessary in the
interests of the Company (unless prevented by illness or other
incapacity and except as may from time to time be permitted or
required by the Board);
(c) well and faithfully serve the Company and use his best
endeavours to promote and protect the interests of the
Company; and
(d) when requested to do so, fully and promptly give the Board
such explanations, information and assistance as it may
require.
4. Place of Employment
The Executive's place of employment shall be at the London offices of
the Company from time to time or at such other place within the United
Kingdom as both the Company and the Executive agree in writing. If the
Company requires the Executive to change his residence the Company will
reimburse such removal and other incidental expenses as the Company
considers fair and reasonable in the circumstances. In addition, the
Executive shall travel to such parts of the world as the Board may
direct or authorise. If the Company requires the Executive to work
outside the United Kingdom for a period of more than one month it will
provide him with written details of any terms and conditions which may
apply to that work and his return to the United Kingdom.
5. Remuneration and Benefit
5.1 (a) The Executive shall be paid a basic salary at the rate
of (pound sterling)70,000 per annum, or at such other rate as
may be agreed in writing for the proper performance of his
duties. This salary shall accrue from day to day and shall be
payable by equal monthly instalments in arrears on the last
Friday day of each month and shall include any sums receivable
as director's fees.
(b) The salary shall be reviewed by the Board on or with effect
from 1 September 1996 and thereafter not less than once in
each calendar
<PAGE>
year. The Executive's salary shall not be less than that
payable immediately before each such review.
5.2 The Executive shall also receive the following benefits:
(a) the Executive shall be entitled to be a member of Norwich
Union Premier Care medical expenses scheme provided the
Executive meets the normal underwriting requirements of the
scheme and is accepted at normal rates of premium;
(b) the Executive shall be entitled to the benefit of the
Connecticut Mutual's life insurance cover provided the
Executive meets the normal underwriting requirements of the
scheme and is accepted at normal rates of premium;
(c) the Executive shall be entitled to be a member of Norwich
Union Premier Care permanent health insurance scheme provided
the Executive meets the normal underwriting requirements of
the scheme and is accepted at normal rates of premium.
6. Expenses
6.1 The Executive shall be reimbursed all reasonable hotel, travelling,
entertainment and other expenses properly incurred by him in the course
of the Employment in accordance with the Company's regulations from
time to time. If required by the Board, the Executive shall produce
receipts for such expenses acceptable to the Company.
6.2 Any credit card supplied to the Executive by the Company shall be used
only for expenses incurred by him in the course of the Employment.
7. Company Car
The Executive shall be provided with an Audi V8 Quattro car or a car of
similar value for his use in the business of the Company and the
Company shall pay road tax, insurance premiums for insuring the car in
the name of the Company and the running expenses of the car while on
the business of the Company and for reasonable private use including
petrol, oil, maintenance and repairs. The car shall at all times remain
the property of the Company and the Executive shall immediately return
it upon being asked to do so. The Executive shall comply with the
Company's rules relating to the use of the car.
<PAGE>
8. Pension
8.1 A contracting-out certificate is in force in respect of the Executive's
employment.
8.2 Subject to any applicable Inland Revenue requirements and overriding
legislation, the Company shall contribute to such personal pension
arrangement as the Executive nominates and the Company approves (such
approval not to be unreasonably withheld) at the rate of 10% of the
basic salary from time to time payable to the Executive under
sub-clause 5.1(a).
9. Holidays
9.1 The Executive shall in addition to normal statutory and bank holidays
be entitled to five weeks' (25 working days') paid holiday during each
year commencing on 1 January and pro rata for any shorter period. The
Company shall endeavour to meet the Executive's reasonable requests as
to time and duration of holidays but it reserves the right to arrange
holidays in its interest. The Executive's entitlement to holidays and
to holiday pay shall be subject to the rules of the Company from time
to time in force relating to holiday entitlement and holiday pay.
9.2 The Company's current holiday rules are set out in schedule 1.
10. Sickness or Injury
Payment
10.1 If, in the reasonable opinion of the Board, the Executive is unable to
perform his duties properly for a period, or periods, not exceeding six
months (whether or not any days not worked are normal working days) in
the aggregate in any period of twelve months by reason of illness
(including mental illness), accident or any other cause beyond the
control of the Executive, then he shall be entitled during that time to
receive his full remuneration. Thereafter any payment shall be at the
discretion of the Board.
Procedures
10.2 If the Executive is prevented by any of the factors mentioned in
sub-clause 10.1 from performing his duties properly he shall report
this fact promptly to the Managing Director's office by telephone on
the first morning of absence or as soon as reasonably practical
thereafter. If the Executive is absent for more than three consecutive
working days he must complete a self-certification sickness form on his
return and deliver it to the Managing Director's office. If the
<PAGE>
absence continues for five or more working days he shall provide an
appropriate medical certificate from his doctor in the manner required
by the rules of the Company. Thereafter the Executive should submit a
further appropriate medical certificate at weekly intervals during the
whole period of absence.
10.3 Payment of any remuneration to the Executive under sub-clause 10.1 is
conditional upon the prompt compliance by the Executive of his
obligations under sub-clauses 10.2 and 10.5 as well as with any other
rules of the Company from time to time in force relating to sickness or
injury.
SSP
10.4 Statutory sick pay ("SSP") will be paid by the Company in accordance
with the legislation in force at the time of absence. Any payment of
remuneration under sub-clause 10.1 for a day of absence will discharge
its obligation to pay SSP for that day.
Medical Examination
10.5 The Company may at any time require the Executive to be medically
examined at its expense by a medical practitioner nominated by it and
for a report of that examination to be provided to the Board.
Termination
10.6 If, in the reasonable opinion of the Board, the Executive is or has
been unable to perform his duties properly for a period or periods
exceeding the aggregate period and because of any of the factors
specified in sub-clause 10.1 or if the Board at any time has reason to
believe that because of any such cause the Executive may be unable
properly to perform his duties for a continuous period of six months or
more, the Company shall be entitled at any time to give to the
Executive not fewer than six months' notice of termination of his
employment less the aggregate of any periods during which he has been
paid salary under sub-clause 10.1 during the twelve months prior to the
giving of such notice.
11. Outside Interests
During the Employment the Executive shall not (save with the prior
written consent of the Board):
(a) directly or indirectly be engaged, concerned or interested in
any capacity except as as occasional dealer in commodities and
financial
<PAGE>
instruments, in any business, trade or occupation other than
that of the Company except as a holder of not more than five
per cent of the issued shares or securities of any companies
which are listed or dealt in on any recognised stock exchange
or market. For this purpose "occupation" shall include any
public, private, or charitable work which the Board considers
may hinder or interfere with the performance of the
Executive's duties; or
(b) introduce or transact business of any kind other than
occasional trading in commodities or other financial
instruments to, or for the account of himself or any other
person firm or company with which the Company is likely to
deal.
12. Confidential Information and Trade Secrets
12.1 The Executive acknowledges that in the ordinary course of the
Employment he will be exposed to information about the Company's
business and that of its suppliers and customers which amounts to a
trade secret, is confidential or is commercially sensitive and which
may not be readily available to others engaged in a similar business to
that of the Company or to the general public and which if disclosed
will be liable to cause serious harm to the Company.
12.2 The Executive shall keep secret and shall not at any time either during
the Employment, or after its termination, for whatever reason, use,
communicate or reveal to any person for the Executive's own or
another's benefit, any secret or confidential information concerning
the business, finances or organisation of the Company, its systems,
techniques or know-how or customers which shall have come to his
knowledge during the course of the Executive's Employment. The
Executive shall also use his best endeavours to prevent the
publication, disclosure or use of any such information.
12.3 For the purposes of this clause and by way of illustration and not
limitation information will prima facie be secret and confidential if
it is not in the public domain and relates to:
(a) research and developments;
(b) formulae, formulations;
(c) suppliers and their production and delivery capabilities;
(d) customers and details of their particular requirements;
(e) costings, profit margins, discounts, rebates and other
financial information;
<PAGE>
(f) marketing strategies and tactics;
(g) current activities and current and future plans relating to
all or any of development, production or sales including the
timing of all or any such matters;
(h) the development of new products;
(i) production or design secrets; or
(j) technical design or specifications of the Company's products;
(k) pricing, credit policies, credit procedures, payment policies,
payment procedures and systems for the same whether of the
Company or of any client or supplier.
12.4 The restrictions contained in this clause shall not apply to:
(a) any disclosure or case authorised by the Board or required in
the ordinary and proper course of the Employment or as
required by the order of a court of competent jurisdiction or
an appropriate regulatory authority; or
(b) any information which the Executive can demonstrate was known
to the Executive prior to the commencement of his employment
by the Company or is in the public domain otherwise than as a
result of a breach of this clause.
13. Dismissal
Notwithstanding the provisions of clause 2, the Company shall be
entitled to terminate the Employment summarily by oral or written
notice and without any payment in lieu of notice (but without prejudice
to the rights and remedies of the Company for any breach of this
agreement and to the Executive's continuing obligations under this
agreement) in any of the following events:
(a) if the Executive shall commit any serious or wilful or
persistent breach or breaches of any express or implied term
of his employment;
(b) if the Board shall have reason to believe that the Executive
has committed any criminal offence or been guilty of any
dishonesty or serious misconduct in each case whether during
the performance of his duties or otherwise which in the
opinion of the Board renders the Executive unfit to continue
as an executive of the Company or which would be likely
adversely to prejudice the reputation or interests of the
Company; or
<PAGE>
(c) if, and without prejudice to the generality of the terms of
this clause 13, the Executive shall wilfully abuse or misuse
the Company's computer system, or any password relating to
that computer system or shall gain access to any file or load
any information or program contrary to the Company's interests
or procedures.
14. Suspension
If the Board has reason to suspect that any one or more of the events
set out in sub-clauses 13(a) to 13(c) (inclusive) has or have occurred
(or if the circumstances in sub-clause 10.6 appear to exist) the Board
may suspend the Executive on full salary and other benefits or
otherwise as the Board may think fit pending further investigations
PROVIDED THAT in the event of any such suspension being made the
Executive shall have the right to terminate his employment forthwith
by notice in writing to the Company but without any claim for
compensation.
15. Grievance and Disciplinary Procedure
If the Executive has any grievance relating to the Employment he should
raise the matter with the Board orally or in writing and the matter
will be discussed with the Executive. If the matter is not then settled
the Executive may submit his grievance to the Board which shall as soon
as possible consider such grievance at a meeting of the Board and will
give the Executive a written response as soon as practicable
thereafter.
16. Duties upon Termination
Upon termination of the Employment for whatever reason the Executive
shall immediately:
(a) hand over to the Company all documents, books, materials,
records, correspondence, papers and information (on whatever
media and wherever located) relating to the business of the
Company, any magnetic discs on which information relating to
the business is stored and any keys, credit cards and other
property of the Company (including in particular any car
provided to the Executive) which may be in his possession,
custody, care or control and shall provide a signed statement
that he has complied fully with the terms of this clause;
<PAGE>
(b) irretrievably delete any information relating to the business
of the Company stored on any magnetic or optical disc or
memory and all matter derived therefrom which is in his
possession, custody, care or control outside the premises of
the Company and shall produce such evidence of compliance with
this sub-clause as the Company may require; and
(c) resign any office or appointment held by him in the Company
without any claim for compensation or damages for loss of such
office or appointment and the Executive hereby irrevocably
appoints the Company his agent to execute letters of
resignation of such offices or appointments on his behalf.
17. Restrictions
17.1 For the purposes of this clause the following words have the following
meanings:
"Customer" means any customer or client of the Company in connection
with the Restricted Business or any other person, firm or company to
whom the Company has presented or with whom the Company has negotiated
with a view to that person becoming a customer or client of the Company
in connection with the Restricted Business and in each case provided
that during the six month period immediately prior to the Executive
ceasing to be employed the Executive has dealt or sought to deal on
behalf of the Company with that customer, client or person or the
Executive has been responsible during such period for that customer,
client or person.
"Designated Area" means London;
"Restricted Business" means the design marketing or sale of Internet
software products relating to financial price and news information but
limited to services with which the Executive has dealt on behalf of the
Company during the six month period immediately prior to the Executive
ceasing to be employed or for which the Executive has been responsible
during such period;
"Restricted Area" means the United Kingdom;
17.2 The Executive hereby undertakes to the Company that:
(a) the Executive shall not for the period of twelve months after
ceasing to be employed under this agreement whether directly
or indirectly:
<PAGE>
(i) take up or hold any office in or with any business
which is engaged or is intended to be engaged in the
Restricted Business within the Designated Area;
(ii) take up or hold any post or position which enables or
permits the Executive to exercise whether personally
or by an agent and whether on his own account or in
association with or for the benefit of any other
person either a controlling influence over any
business which is engaged or is intended to be
engaged in the Restricted Business within the
Designated Area; or
which would have the necessary or probable result of the
Executive being engaged within the Designated Area in business
activities which are the same or similar to the Restricted
Business.
(b) the Executive shall not for a period of twelve months after
the termination of the Employment and within the Restricted
Area either personally or by an agent and either on his own
account or by or in association with any other person directly
or indirectly canvass, solicit, approach or seek out or cause
to be canvassed, solicited, approached or sought out or by any
other means endeavour to entice away from the Company any
person for orders or instructions in respect of any goods or
services provided or supplied by the Company in the course of
the Restricted Business and with whom the Company has
transacted or sought to transact the Restricted Business as a
Customer;
(c) the Executive will not for a period of six months after the
date of his ceasing to be employed by the Company and within
the Restricted Area either personally or by an agent and
either on his own account or by an association with any other
person or otherwise directly or indirectly engage in the
Restricted Business with any Customer;
(d) the Executive shall not for a period of twelve months after
the termination of the Employment either personally or by an
agent and either on his own account or for or in association
with any other person directly or indirectly interfere or seek
to interfere or take such steps as may interfere with the
continuance of supplies to the Company in respect of the
Restricted Business (or the terms relating to such supplies)
from any supplier who has supplied goods or services to the
Company the twelve month period immediately prior to the
Executive ceasing to be employed by the Company;
<PAGE>
(e) the Executive shall not for a period of six months after the
termination of the Employment either personally or by an agent
and either on his own account or for or in association with
any other person directly or indirectly canvass, solicit,
approach, seek out, or cause to be canvassed, solicited,
approached or sought out or by any other means endeavour to
entice away from the Company, or aid or assist any other
person or persons in employing or otherwise retaining the
services of anyone who is employed by the Company or who is a
consultant to the Company and in either case is engaged as a
senior executive, or in a senior technical or advisory
capacity in the Restricted Business at the time when, or in
the 3 month period immediately prior to, notice to terminate
the Employment is given by or to the Executive with the object
of:
(i) that person procuring the commission of any act which
if done by the Executive would be in breach of the
terms of this agreement (or where that would be the
necessary or probable result); or
(ii) that person directly or indirectly disclosing or
using the business secrets or confidential
information of the Company within the meaning of
clause 12 (or where that would be the necessary or
probable result).
17.3 Whilst the restrictions in sub-clause 17.2 are considered by the
parties to be reasonable in all the circumstances as at the date of
this agreement it is acknowledged that restrictions of such a nature
may be invalid because of changing circumstances or other unforseen
reasons and accordingly it is agreed and declared that if any one or
more of those restrictions is judged to be void as going beyond what is
reasonable in all the circumstances for the protection of the interests
of the Company but would be valid if part of the wording of the
restriction was deleted or its duration was reduced or the range of
activities covered by it was reduced in scope then each restriction(s)
shall apply with such modification(s) as may be necessary to make it
valid and effective and any such modification shall not thereby affect
the validity of any other restriction contained in this clause.
17.4 The Executive further undertakes with the Company that he will observe
any substitute restrictions (in place of those set out in sub-clause
17.2) as the Company may from time to time specify in writing which are
in all respects less restrictive in extent than those specified in
sub-clause 17.2.
17.5 If any breach or violation of any of the terms of sub-clause 17.2
occurs, the Executive and the Company agree that damages alone may not
compensate for such breach or violation and that injunctive relief is
reasonable and essential to safeguard the interests of the Company and
that an injunction in addition to any other remedy may accordingly be
obtained by the Company. No waiver of any
<PAGE>
such breach or violation shall be implied from the forbearance or
failure by the Company to take action in respect of such breach or
violation.
17.6 The Executive fully understands the meaning and effect of the covenants
given by him in this agreement and confirms that he has taken separate
and independent legal advice on the terms of this agreement.
17.8 No restriction contained in this agreement by virtue of which this
agreement or any arrangement of which it forms part is registrable
under the Restrictive Trade Practices Act 1976 shall come into effect
or be enforced until the day after particulars of this agreement and
any arrangement of which it forms part shall have been delivered to the
Director General of Fair Trading in accordance with the Act provided
that such suspension shall not extend or increase the periods during
which the provisions of sub-clause 17.2 are in force.
18. Notices
18.1 Any notice or other written communication given under or in connection
with this agreement may be delivered personally or sent by first class
post (airmail if overseas) or by telex or facsimile.
18.2 The address for service of the Company shall be its registered office
marked for the attention of the managing director and in the case of
the Executive shall be his address stated in this agreement or if any
other permanent address has previously been notified to the Company to
the address so notified.
18.3 Any notice or other written communication shall be deemed to have been
served:
(a) if delivered personally, at the time of delivery;
(b) if posted, at the expiry of two Business Days or in the case
of airmail four Business Days after it was posted;
(c) if sent by telex or facsimile message, at the time of
transmission (if sent during normal business hours, that is
9.30 to 17.30 local time) in the place from which it was sent
or (if not sent during such normal business hours) at the
beginning of the next Business Day in the place from which it
was sent.
18.4 In proving service it shall be sufficient to prove that personal
delivery was made, or that such notice or other written communication
was properly addressed stamped and posted or in the case of a telex
that the intended recipient's answerback code is shown on the copy
retained by the sender at the beginning and end of the message or in
the case of a facsimile message that an activity or other report from
the sender's facsimile machine can be produced in
<PAGE>
respect of the notice or other written communication showing the
recipient's facsimile number and the number of pages transmitted.
19. Miscellaneous
19.1 Save as expressly provided in this agreement no term or provision of
this agreement shall be varied or modified by any prior or subsequent
statement, conduct or act of any party. The Company and the Executive
may amend this agreement only by letter or written instrument signed by
both the Company and the Executive.
19.2 The headings to the clauses and any underlining in this agreement and
in the schedule are for ease of reference only and shall not form any
part of this agreement for the purposes of construction.
19.3 This agreement sets out the entire agreement and understanding between
the parties in connection with the Employment save only for any terms
implied by law. There are no collective agreements which directly
affect the terms and conditions of the Employment.
19.4 If at any time any term or provision in this agreement shall be held to
be illegal, invalid or unenforceable, in whole or in part, under any
rule of law or enactment, such term or provision or part shall to that
extent be deemed not to form part of this agreement, but the
enforceability of the remainder of this agreement shall not be
affected.
20. Law and Jurisdiction
20.1 This agreement shall be governed by and construed in accordance with
English law and each party to this agreement submits to the
non-exclusive jurisdiction of the English courts.
20.2 The Executive irrevocably agrees that the courts and tribunals of
England shall have jurisdiction to settle any dispute which may arise
out of or in connection with this agreement and that accordingly any
suit, action or proceedings arising out of this agreement (together in
this clause referred to as "Proceedings") may be brought in such courts
and tribunals.
20.3 The Executive irrevocably waives any objection which he may have now or
hereafter to the laying of the venue of any Proceedings in any such
courts and tribunals as are referred to in sub-clause 20.2 and any
claim that any such Proceedings have been brought in an inconvenient
forum and further irrevocably agree that a judgment in any Proceedings
brought in the English courts shall be conclusive and binding upon the
Executive and may be enforced in the courts of any other jurisdiction.
The Executive hereby expressly waives
<PAGE>
all rights of jurisdiction in any Proceedings which he may have now or
hereafter by reason of his present domicile or by reason of any
subsequent or other domicile.
20.4 Nothing contained in this clause shall limit the right of the Company
to take Proceedings against the Executive in any other court of
competent jurisdiction, nor shall the taking of Proceedings in one or
more jurisdictions preclude the taking of Proceedings in any other
jurisdiction, whether concurrently or not.
20.5 The Executive hereby consents generally in respect of any Proceedings
arising out of or in connection with this agreement to the giving of
any relief or the issue of any process in connection with such
execution against any property or assets whatsoever or any order or
judgment which may be made or given in such proceedings.
20.6 The Executive irrevocably agrees that any writ, judgment or other
notice of process shall be sufficiently and effectively served on him
if delivered, in connection with Proceedings in England, to his address
as stated in this agreement.
<PAGE>
SCHEDULE 1
Holiday Rules
1. The holiday year is from 1 January to 31 December. 5 days' holiday in
any holiday year may be carried forward into the next year at the
Company's discretion.
2. The time at which annual holidays may be taken is at the discretion of
the Company, but not more than 2 weeks may be taken at any one time.
3. On termination of the Employment the Executive will be entitled to
receive holidays on a pro rata basis for the number of completed
calendar months he has worked during the current holiday year less any
holidays already taken in this period.
4. If the Executive leaves after taking holidays which would not be deemed
to have accrued under this paragraph he will be required to refund to
the Company the unearned holiday pay.
5. On termination of the Employment the Executive will be entitled to
receive payment for any holiday accrued but not taken.
<PAGE>
Executed as a deed on the day and in the year first written above.
The parties to this agreement have signed and entered into this agreement on the
day and year first written above
SIGNED by )
for and on behalf of )
DISPLAY.IT HOLDINGS PLC )
in the presence of: )
SIGNED by PETER LEVIN )
in the presence of: )
EXHIBIT 3.8
<PAGE>
DISPLAY.IT HOLDINGS PLC
Carmelite
50 Victoria Embankment
Blackfriars
London EC4Y 0DX
- -------------------------------------------------------------------------------
24 June 1996
Mr. David G Familant
31 Ave Princesse Grace
MC 98000
Monaco
Dear David
Display.IT (the "Company")
On behalf of the Company I write to confirm your appointment as a non-executive
director of the company with effect from 24 June 1996 on the following terms:
1. Your appointment, subject to re-election when appropriate by the Annual
General Meeting of the Company, will be for a term of 3 years until 23
June 1999.
2. You will be entitled to a fee for your services as a director
of (pound sterling)10,000 per annum.
3. As a non-executive director you will perform the duties normally
attendant to that office, including (without limitation) attending
board meeting, which are normally held every two months.
4. You will also be entitled to reasonable out-of-pocket expenses incurred
in carrying out your duties.
5. During the period of your appointment you will comply with the Code of
Conduct which incorporates the Stock Exchange Model Code for Securities
Transactions by Directors of Public Companies.
6. Notwithstanding the other provisions of this letter, the Company shall
be entitled to terminate your appointment in accordance with the
provisions of the Articles of Association of the Company and on such
termination no notice or fees will be due to you.
<PAGE>
7. Both during the term of your appointment and after its termination you
will observe the obligations of confidentiality which are attendant on
the office of director.
Please confirm your agreement to the above by signing and returning to me the
duplicate of this letter.
I look forward to your joining us at the next board meeting.
Yours sincerely
PETER LEVIN
- -----------
For and on behalf of Display.IT plc
I confirm and agree to the above
- -----------------------------------------------
<PAGE>
SCHEDULE TO EXHIBIT 3.8
Letter Agreements substantially identical in all material respects to
the Letter Agreement by and between Display.IT Holdings plc and David G.
Familiant, dated June 24, 1996, were entered into with the two parties listed
below. The material details in which the Letter Agreements listed below differ
from the Letter Agreement by and between Display.IT Holdings plc and David G.
Familiant are identified.
1) Letter Agreement by and between Display.IT Holdings plc and
Catita Edward, dated June 24, 1996
2) Letter Agreement by and between Display.IT Holdings plc and
Marjorie Moe, dated June 24, 1996
<PAGE>
EXHIBIT 3.9
<PAGE>
THIS LOAN AGREEMENT is made the 22nd day of April 1996
BETWEEN:
(1) DISPLAY.IT LIMITED (registered in England under no. 3069667) whose
registered office is at 79 Knightsbridge, London SWIX 7RB (hereinafter
referred to as "the Borrower"), and
(2) MARJORIE MOE of 4 Mountain View Avenue, Ridgefield, CT 06877 USA
(hereinafter referred to as "the Lender").
WHEREAS:
(A) The Borrower wishes to borrow the sum of two hundred and ten thousand
US Dollars (US $210,000) from the Lender and the Lender has agreed to
lend such sum to the borrower upon the terms and conditions of this
Loan Agreement.
(B) The Borrower has agreed to procure Mr. Peter Levin to guarantee the due
payment by the Borrower of the loan (as hereinafter defined).
NOW IT IS HEREBY AGREED as follows:
1. The Lender hereby agrees to lend to the Borrower and the Borrower
agrees to borrow the sum of two hundred and ten thousand US Dollars (US
$210,000) (hereinafter referred to as "the Loan") repayable in full and
without deduction in accordance with clauses 5, 9 and 10 below.
2. The Loan shall bear interest on the amount outstanding from time to
time as follows:
2.1 ten percent (10%) per annum during the first year;
2.2 fifteen percent (15%) per annum during the second year;
2.3 sixteen percent (16%) per annum during the third year;
2.4 eighteen percent (18%) per annum during the fourth year;
2.5 twenty percent (20%) per annum during the fifth year and each
subsequent year thereafter;
AND FOR THE AVOIDANCE OF DOUBT any interest accrued due in any year of
this Loan Agreement shall not be added to the amount of the Loan then
outstanding for the purpose of calculating the interest due in any
subsequent year.
3. For the purposes of clause 2. a year shall be the period from 22 April
in each year and ending on 21 April in the following year, both days
inclusive.
<PAGE>
4. As security for the payment to be made by the Borrower to the Lender
under this Loan Agreement, the Borrower shall execute a first fixed and
floating charge in favour of the Lender in the form set out in Schedule
1 hereof and the Borrower will procure Mr. Levin to execute and deliver
a guarantee in the form of the draft set out in Schedule 2 hereof.
5. The Borrower shall be entitled to repay or prepay the Loan in whole or
in part.
6. The Borrower shall be entitled to draw down the Loan in one tranche
upon execution of this Loan Agreement and the fixed and floating charge
and guarantee set out in Schedules 1 and 2 respectively.
7. Subject to the provisions of clauses 9 and 10 below, the Loan and all
accrued interest thereon shall be repayable as follows:
7.1 as to $50,000 of the Loan on 15 November 1996;
7.2 as to the balance of $160,000 of the Loan and all accrued
interest on seven days written notice from the Lender to the
Borrower at any time on or after the first anniversary of the
date hereof.
8. The Borrower will reimburse the Lender on demand for all expenses
(including without prejudice to the generality of the foregoing) legal
fees and out of pocket expenses incurred by the Lender in connection
with this Loan or in the enforcement of any provision hereof and the
Borrower will pay all stamp and other duties and registration fees if
any applicable to this Loan or this Agreement.
9. In the event that:
9.1 the Borrower shall become insolvent or unable to pay its other
debts or shall cease or threaten to cease payment of the debt; or
9.2 the Borrower shall cease or threaten to cease to carry on its
business or a substantial part thereof; or
9.3 a distress or execution shall be levied or enforced upon or
against any of the chattels of the property or the Borrower and is
not paid out or discharged within fourteen days; or
9.4 an encumbrancer takes possession or a receiver or similar officer
is appointed over the whole or any substantial part of the
undertaking or any property or assets of the Borrower and is not
discharged within seven days of being levied; or
9.5 the Borrower is in default of any of its obligations hereunder; or
<PAGE>
9.6 a petition for the winding up or liquidation of the Borrower is
presented.
THEN the Loan shall become immediately repayable.
10. If at any time after the date hereof, Mr. Peter Levin ceases to be an
employee or consultant of the Company then at any time upon written
notice from the Borrower, the Loan shall become immediately due and
payable.
11. Any notice to be given under this Agreement shall either be delivered
personally or sent by first class pre-paid post (airmail if overseas)
or tested telex or fax or full rate telegram. The address for service
shall (in the case of a company) be its registered office for the time
being and (in the case of an individual) shall be his address stated
above or any other address for service previously notified to the other
party or (in the absence of any such notification) his last known place
of residence. A notice shall be deemed to have been served if
personally delivered, at the time of delivery; if posted, at the
expiration of 24 hours or (in the case of airmail) five days after the
envelope containing the same was put into the post and if sent by telex
or fax, at the time of transmission.
In proving such service it shall be sufficient to prove that personal
delivery was made, or that the envelope containing such notice was
properly addressed and put into the post as a prepaid first class or
airmail letter (as appropriate) or that the telex or fax was
transmitted on a tested line as the case may be.
12. The parties hereto hereby agree to execute and do all such further
deeds and documents (at the expense of the requesting party) as may
reasonably be required by the requesting party to give full force and
effect to this Agreement.
13. This Agreement may be executed in any number of counterpart each of
which when executed by one or more of the parties hereto shall
constitute an original but all of which shall constitute one and the
same instrument.
14. This Agreement shall be governed by and construed in accordance with
the Laws of England and the parties hereto submit to the non-exclusive
jurisdiction of the English Court.
IN WITNESS WHEREOF the parties hereto have executed this agreement as a deed and
delivered it the day and year first before written.
<PAGE>
Signed as a DEED by DISPLAY.IT )Director..............................
LIMITED acting by a director and its )
secretary )Secretary.............................
Signed as a DEED by MARJORIE MOE in )
the presence of:- )
Witness: signature______________
Name: __________________________
Address: _______________________
Occupation: ____________________
EXHIBIT 3.10
<PAGE>
DATED 1996
----------
DISPLAY.IT LIMITED
AND
MARJORIE MOE
------------------------------
DEBENTURE
------------------------------
REF: 2990.19 (3)
<PAGE>
Date: 1996
Parties:
1. "The Debenture Holder": MARJORIE MOE of 4 Mountain View Avenue,
Ridgefield, CT 06877 USA
2. "The Company": DISPLAY.IT LIMITED (a company incorporated in England
under number 3069776) whose registered office is at 79 Knightsbridge,
London SW1X 7Rb.
Recitals:
(A) The Company is indebted to the Debenture Holder in the principal sum of
two hundred and ten thousand US Dollars under a loan agreement of even
date herewith between the Debenture Holder and the Company ("Loan
Agreement").
(B) As security for the Indebtedness ("as hereinafter defined") the Company
has agreed to grant a first fixed and floating charge in favour of the
Debenture Holder.
Operative provisions:
1. Interpretation
1.1 In this Debenture:
"ACTS" means the Law of Property Act 1925 and the Insolvency
Act 1986 (or any statutory modification or re-enactment of
those acts for the time being in force).
"ASSETS" means the property, undertaking the assets of the
Company expressed to be charged to the Debenture Holder now or
hereafter under clause 2.
"THE DEBENTURE HOLDER" shall include, unless the context
otherwise requires, the Debenture Holder's successors and
assigns PROVIDED ALWAYS that the security granted by this Deed
shall not be assignable without the written consent of the
Company such consent not to be unreasonably withheld or
delayed.
"INDEBTEDNESS" means the principal sum of two hundred and ten
thousand US Dollars (US $210,000) owing by the Company to the
Debenture
<PAGE>
Holder (hereinafter together referred to as the Principal Sum)
which Principal Sum shall bear interest from the date of draw
down of the loan under the Loan Agreement and to the date of
actual payment (as well after as before judgment) as follows:
(a) ten percent (10%) per annum during the first year;
(b) fifteen percent (15%) per annum during the second
year;
(c) sixteen percent (16%) per annum during the third
year;
(d) eighteen percent (18%) per annum during the fourth
year;
(e) twenty percent (20%) per annum during the fifth year
and each subsequent year thereafter;
AND FOR THE AVOIDANCE OF DOUBT any interest accrued due in any
year of the Loan Agreement shall not be added to the amount of
the Loan then outstanding for the purpose of calculating the
interest due in any subsequent year (and for the purpose of
calculating the interest due, a year shall be the period from
22 April in each year and ending on 21 April in the following
year, both days inclusive) together with interest, commission,
and any other costs, charges and legal expenses (on a full
indemnity basis) charged or incurred by the Debenture Holder
after the date hereof in connection with this Debenture or the
Principal Sum and including those arising from the Debenture
Holder perfecting or enforcing or attempting to enforce this
Debenture or any other security (and its rights thereunder)
held by the Debenture Holder from time to time.
"PROPERTY" means all leasehold and freehold property referred
to in clauses 2.3.1 and 2.3.2, and
"RECEIVER" has the meaning given to it in clause 6.1.
1.2 Clause headings are for ease of reference only.
2. Charge
2.1 The Company hereby covenants to pay or discharge the
Indebtedness to the Debenture Holder in accordance with the
terms of the Loan Agreement.
2.2 The Company shall be entitled at any time to prepay all or any
part of the amount owing by it to the Debenture Holder at that
time under clause 2.1 which are outstanding on the security of
this Debenture together with all interest accrued.
2.3 As security for the payment and discharge of the Indebtedness,
the Company, as beneficial owner, hereby charges the Debenture
Holder:
<PAGE>
2.3.1 by the way of legal mortgage, all freehold and leasehold
property now vested in the Company, together with all
buildings, fixtures (including trade fixtures) and fixed plant
and machinery from time to time on that property;
2.3.2 by way of fixed charge, all estates or interests in any
freehold and leasehold property of the Company (not being
property charged by clause 2.3.1) now and in the future vested
in the Company, together with all buildings, fixtures
(including trade fixtures) and fixed plant and machinery from
time to time on that property;
2.3.3 by way of fixed charge, all the goodwill and uncalled capital
for the time being of the Company;
2.3.4 by way of fixed charge, all book debts and other debts now an
in the future due or owing to the Company;
2.3.5 by way of fixed charge, all intellectual property rights,
chooses in action and claims now and in the future belonging
to the Company;
2.3.6 by way of floating charge, all the Company's present and
future undertaking and assets, whatever and wherever,
including (without limitation) all other property and assets
not subject to a fixed charge under this Debenture.
3. Covenants
3.1 The Company shall not sell transfer or otherwise deal in its
intellectual property rights including pending applications
therefore (and the intellectual property rights of the Company
for the purposes of this Debenture shall include the benefit
of any pledge or contract or any trust (whether express or
otherwise) under which the Company shall have any right in
intellectual property and shall include present and future
intellectual property) without discharging the Indebtedness in
full save that it may with the written consent of the
Debenture Holder or any of them deal in its intellectual
property rights other than intellectual property rights
constituted by patents, utility models, petty patents,
applications for any of the foregoing or the right to apply
therefore and for the avoidance of doubt any intellectual
property right which is patentable whether or not an
application to register a patent for the same is made provided
always however that:-
(a) the consent aforesaid shall not be unreasonably
withheld
<PAGE>
(b) a request for consent aforesaid shall be considered
with reasonable diligence in all circumstances
AND the Company shall not without prior written consent of the
Debenture Holder;
3.1.1 (except for charges in favour of the Debenture Holder
created under or pursuant to this Debenture create or
permit to subsist any mortgage, charge or lien or any
of its undertaking or assets purporting to rank or
which can by any means be made to rank in priority to
or pari passu with the security hereby created;
3.1.2 sell, transfer or otherwise dispose of its
undertaking and other assets or any part of them,
except by getting in and realizing them in the
ordinary and proper course of its business;
3.1.3 remove any plant and machinery from the premises
(except for necessary repairs or the substitution of
full value replacements);
3.1.4 deal with its book or other debts or securities for
money except by getting in and realizing them in the
ordinary and proper course of its business, but so
that this exception shall not permit the realization
of debts by means of block discounting or factoring;
or
3.2 The Company shall:
3.2.1 keep such of the Assets as are insurable
comprehensively insured to the Debenture Holder's
satisfaction in writing (and, if so required by the
Debenture Holder, in the joint names of itself and
the Debenture Holder) against loss or damage by fire
and such other risks as the Debenture Holder may
require, to their full replacement value and, where
such insurance is not in joint names, procure that
the Debenture Holder's interest is noted on all
policies required under this clause 3.3.1;
3.2.2 duly and promptly pay all premiums and other moneys
necessary for maintaining the insurances required
under clause 3.3.1 and on demand produce the
insurance policies and premium receipts to the
Debenture Holder;
3.2.3 keep all buildings and all plant, machinery,
fixtures, fittings and other effects in good repair
and working order;
<PAGE>
3.2.4 promptly notify the Debenture Holder of any
application for or any meeting at which a resolution
for the appointment of an administrator, receiver,
liquidator or similar official in respect of the
Company or any of its Assets is to be proposed and,
if any such official is appointed, of his
appointment.
3.2.5 The Company shall notify the Debenture Holder
forthwith upon being served with any proceedings or
legal process and shall provide to the Debenture
Holder such details of the claim made against the
Company and of the prosecution thereof and the
Company's defense thereto and of any applications
orders summonses and warrants as may be made issued
or served in the proceedings as shall be requested by
the Debenture Holder and such details as shall be so
requested shall be provided forthwith or immediately
after they shall be known to the Company.
3.3 If the Company fails to perform any of its obligations under
clauses 3.3.1, 3.3.2 or 3.3.3, the Debenture Holder may take
out or renew any insurance or effect such repairs and take
such other action as it may deem appropriate to remedy such
failure and recover the premiums and other expenses so
incurred from the Company on demand.
3.4 The Company will at any time if and when required by the
Debenture Holder execute to the Debenture Holder or as the
Debenture Holder shall direct such further legal or other
assignments, mortgages, securities or charges as the Debenture
Holder shall require of and on all the Company's estate and
interest in any freehold and leasehold and heritable
properties and intellectual property rights now or at any time
hereafter acquired by or belonging to the Company (including
any vendor's lien) and of and on all or any of the matters
described in clauses 2.3.4 and 2.3.5 of this deed to secure
all money and liabilities and other sums hereby agreed to be
paid or intended to be hereby secured such assignments,
mortgages, securities or charges to be prepared by or on
behalf of the Debenture Holder at the cost of the Company and
to contain all such clauses for the benefit of the Debenture
Holder as the Debenture Holder may reasonably require.
4. Crystallization
The floating charge shall crystallize immediately:
(a) if an order is made or a resolution is passed for the
winding-up of the Company; or
<PAGE>
(b) if the Company ceases or threatens to cease to carry
on its business or substantially the whole of its
business; or
(c) if an encumbrancer takes possession or a receiver,
administrative receiver or administrator is appointed
of the undertaking property or assets of the Company
or any part thereof or if the Company enters into any
voluntary arrangement within the meaning of Section 1
of the Insolvency Act 1986 or any statutory
modification or reenactment thereof from time to
time;
(d) if any part of the Indebtedness (whether of capital
or any payment on account of interest) is not paid
within 14 days of the due date for payment;
(e) if control (as defined in section 840 of the Income
and Corporation Taxes Act 1988 or any statutory
modification or re-enactment thereof from time to
time) of the Company passes to any person or persons
acting either individually or in concert where the
Debenture Holder have not given their prior written
agreement to such change in control;
(f) if a monetary judgment shall be given against the
Company by any court in an amount which together with
interest and costs shall be (pound sterling)10,000 or
more or if an order shall be made against the Company
by any authority having jurisdiction and authority in
that behalf as a result of which any asset of the
Company to a value of (pound sterling)10,000 or more
shall become subject to distraint sequestration
detention or the Company's title therein or its
liberty to deal therein otherwise impaired;
AND, notwithstanding the provisions of clause 2.1, the balance
of the Indebtedness under clause 1.1 shall immediately become
due and payable and for the avoidance of doubt, the provisions
of clause 2.2 shall not apply to any part of the Indebtedness
realized after the floating charge has crystallized.
5. Register of Debenture Holder
5.1 A register of debentures shall be kept at the Company's
registered office wherein there will be entered the name,
address and description of the registered holders of this
Debenture.
5.2 Any person entitled to this Debenture by reason of the
bankruptcy of a Debenture Holder or otherwise by operation of
law may upon producing such
<PAGE>
evidence of his or her title as the Company may reasonably
require be registered as the holder hereof and subject to the
conditions hereof as to transfer may transfer the same and in
any such case a note of such registration shall be endorsed
hereon and in the case of a transfer, the Company shall be
entitled to retain a certified copy of the transfer.
5.3 The Company shall recognize and treat the Debenture Holder as
the joint owners hereof and entitled to receive and give
effectual discharges for the money hereby secured and the
Company shall not be affected by notice of any trust or any
right, title or claim of any person other than the Debenture
Holder to this Debenture.
5.4 The monies hereby secured shall be paid and this Debenture
shall be transferable without regard to any set-off cross
claim or equities between the Company and the original or any
intermediate holder of this Debenture and the receipt of the
sole holder or of joint holders (as the case may be) shall be
a good discharge to the Company.
6. Receiver
6.1 At any time after the Debenture Holder's demand for payment
from the Company of any Indebtedness (or if so requested by
the Company), or if at any time after the floating charge
hereby created crystallizes the Debenture Holder may without
the necessity of any further demand or notice appoint by
writing any person or persons to be an administrative receiver
or a receiver and manager or receivers and managers ("the
Receiver", which expression shall include any substituted
receiver(s) and manager(s) of all or any part of the Assets).
Without limiting the Debenture Holder's rights under this
clause 6.1 or at law, the Debenture Holder may, whether or not
any demand has been made for payment of the Indebtedness,
appoint a Receiver if the Debenture Holder becomes aware of
any of the matters referred to in clause 3.3.4 or if the
security created by this Debenture shall be in jeopardy.
6.2 The Debenture Holder may from time to time determine the
remuneration of the Receiver and may remove the Receiver and
appoint another in his place.
6.3 The Receiver shall be the Company's agent and shall have all
powers conferred by the ACTS. The Debenture Holder shall not
incur any liability in respect of any contracts, engagements,
acts, omissions, defaults or losses of the Receiver or for
liabilities incurred by him or for any misconduct by him or
for his remuneration (either to the Company or to any other
person whatsoever) by reason of its making his appointment as
such Receiver or of its having made or given any regulation or
direction to such Receiver or for any other reason whatsoever
and the Company alone shall be responsible for
<PAGE>
his acts and omissions and for his remuneration. In
particular, but without limiting any general powers or the
Debenture Holder's power of sale, the Receiver shall have the
power:
6.3.1 to take possession or collect and get in all or any
part of the Assets and for that purpose to take any
proceedings in the Company's name or otherwise as he
shall think fit;
6.3.2 to carry on or concur in carrying on the Company's
business and raise money from the Debenture Holder or
others on the security of all or any part of the
Assets;
6.3.3 to sell, let and/or terminate or to accept surrenders
of leases or tenancies of any part of the Property,
in such manner and on such terms as he thinks fit;
6.3.4 to take, continue or defend any proceedings and make
any arrangement or compromise which the Debenture
Holder or he shall think fit;
6.3.5 to make and effect all repairs, improvements and
insurances;
6.3.6 to appoint managers, officers and agents for any of
the above purposes, at such salaries as the Receiver
may determine;
6.3.7 to call up any of the Company's uncalled capital;
6.3.8 to promote the formation of a subsidiary company or
companies of the Company, so that such subsidiary may
purchase, lease, license or otherwise acquire
interests in all or any part of the Assets; and
6.3.9 to do all other acts and things which he may consider
to be incidental or conducive to any of the above
powers.
6.4 Any moneys received under this Debenture shall be applied:
6.4.1 first, in satisfaction of all costs, charges and
expenses properly incurred and payments properly made
by the Debenture Holder or the Receiver and of the
remuneration of the Receiver;
6.4.2 secondly, in or towards satisfaction of the
Indebtedness in such order as the Debenture Holder
shall determine, and
<PAGE>
6.4.3 thirdly, the surplus (if any) shall be paid to the
person or persons entitled to it.
7. Miscellaneous
7.1 No statutory or other power of granting or agreeing to grant
or of accepting or agreeing to accept surrenders of leases or
tenancies of any part of the Property may be exercised by the
Company without the Debenture Holder's prior written consent.
Section 93 of the Law of Property Act 1925 shall not apply.
7.2 By notice in writing to the Company, the Debenture Holder may
at any time convert the floating charge created by clause
2.3.6 into a specific charge over any Assets specified in the
notice which the Debenture Holder reasonably considers to be
in danger of being seized or sold under any form of distress,
attachment or other legal process or to be otherwise in
jeopardy. The Company, at its expense, shall at any time on
the Debenture Holder's request, promptly execute and deliver
to the Debenture Holder any other or further mortgage, charge
or other instrument conferring a fixed charge on any of its
Assets (including any of the Assets charged by clause 2.3.6)
or such other charges as the Debenture Holder may in its
discretion think fit for securing the Indebtedness.
7.3 This Debenture shall be:
7.3.1 a continuing security to the Debenture Holder,
notwithstanding any part settlement of account or
other matter or thing whatever;
7.3.2 without prejudice and in addition to any other
security for the Indebtedness (whether by way of
mortgage, equitable charge or otherwise) which the
Debenture Holder may hold now or hereafter on all or
any part of the Assets; and
7.3.3 in addition to any rights, powers and remedies at
law.
7.4 Section 103 of the Law of Property Act 1925 shall not apply.
The statutory power of sale shall be exercisable at any time
after the execution of this Debenture. The Debenture Holder
shall not exercise its power of sale until payment has been
demanded, but this provision shall not affect a purchaser or
put him on inquiry whether such demand has been made.
<PAGE>
7.5 No failure or delay on the Debenture Holder's part in the
exercise of any of its rights, powers and remedies under this
Debenture or at law shall operate or be construed as a waiver.
No waiver of any of the Debenture Holder's rights shall
preclude any further or other exercise of that right or of
any other right.
7.6 The Debenture Holder may give time or other indulgence or make
any other arrangement, variation or release with any person in
respect of the Indebtedness or any other security or guarantee
for the Indebtedness without derogating from the Company's
liabilities or the Debenture Holder's rights under this
Debenture.
7.7 The Company certifies that the charges created by this
Debenture do not contravene any provision of its memorandum
and articles of association or any agreement binding on it or
any of the Assets.
8. Power of Attorney
8.1 By way of security, the Company hereby irrevocably appoints
the Debenture Holder and any Receiver appointed by the
Debenture Holder jointly and severally as its attorney, with
full power of delegation, for it and in its name and on its
behalf and as its act and deed or otherwise, to seal, deliver
and otherwise perfect any deed, assurance, agreement,
instrument or act which may be required or may be deemed
proper for any of the above purposes.
8.2 The company hereby ratifies and confirms to ratify and confirm
whatever any such attorney as is mentioned in clause 8.1 shall
do or purport to do in the exercise or purported exercise of
all or any of the powers, authorities and discretions referred
to in clause 8.1.
9. Costs
All costs, charges and expenses incurred by the Debenture Holder and
all other monies paid by the Debenture Holder or the Receiver in
perfecting or otherwise in connection with this Debenture and all costs
of the Debenture Holder or the Receiver of all proceedings for
enforcement of this Debenture shall be recoverable from the Company as
a debt, may be debited to any account of the Company, bear interest
accordingly and shall be charged on the Assets.
<PAGE>
10. Severance
If at any time any provision in this Debenture is or becomes invalid,
illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions of this Debenture shall not be impaired.
11. Notices
Any demand, notice or other communication hereunder shall be in writing
and may be delivered personally or sent by post, telemessage, cable,
telex or telecopier to such party at its address set out above or such
other address notified to the other in writing. Any such notice, demand
or other communication shall be deemed to have been served 24 hours
after posting (where sent by first class prepaid post) immediately upon
such delivery (where delivered personally) and immediately on sending
(where sent by telemessage, cable, telex or telecopier) whether or not
it is actually received.
12. Law
This Debenture shall be governed by and construed in accordance with
English law.
<PAGE>
IN WITNESS WHEREOF the parties hereto have executed this Debenture as a deed and
duly delivered it the day and year first before written.
Signed as a Deed by DISPLAY.IT )Director ______________________________
LIMITED acting by a director and its )
secretary )Secretary _____________________________
Signed as a DEED by MARJORIE MOE in )
the presence of: )
Witness: signature__________________________________
Name: ______________________________________________
Address: ___________________________________________
Occupation: ________________________________________
<PAGE>
EXHIBIT 3.11
<PAGE>
DATED 1996
-----------------------------
PETER LEVIN
AND
MARJORIE MOE
------------------------------
GUARANTEE
------------------------------
REF: 2990.19 22.4.96 (2)
<PAGE>
Date: 1996
Parties:
1. "The Guarantor": PETER LEVIN of 10 Chesterfield Hill, London W1X
7RN
2. "The Beneficiary": MARJORIE MOE of 4 Mountain View Avenue,
Ridgefield, CT 06877 USA
WHEREAS:
(A) The Beneficiary has agreed to provide a loan facility to Display.It
Limited (a company registered in England under number 3069667) ("the
Company") under a Loan Agreement between the Beneficiary and the
Company of even date herewith for a sum of US $210,000 with interest
thereon of 10% per annum ("the Total Facility").
(B) As security for such loan facility, the Company has agreed to procure
that the Guarantor enters into this Guarantee.
Operative provisions:
1. Guarantee
In consideration of the Beneficiary agreeing to provide the loan
facilities and other accommodations to the Company referred to above,
the Guarantor, as primary obligor, hereby unconditionally and
irrevocably guarantees to the Beneficiary, the due payment and
discharge of the Company's present and future indebtedness and other
liabilities to the Beneficiary under the Loan Agreement, whether actual
or contingent and of all interest, commission, charges and expenses
payable in respect thereof ("the Indebtedness"). It is also agreed that
the amount of the Indebtedness shall be reduced each time repayment or
settlement is made of any part of the Total Facility by a sum equal to
each such repayment or settlement.
2. Demand
If there is a shortfall such as specified in clause 1, the Guarantor
shall pay to the Beneficiary on demand, without set-off or other
deduction, an amount equal to the Indebtedness subject to clause 3.2. A
certificate by the Beneficiary's officer of the Indebtedness shall be
conclusive unless manifestly incorrect.
3. Guarantor's liability
3.1 As between the Beneficiary and the Guarantor but without
affecting the Company's obligations, the Guarantor agrees that
the Guarantor shall be liable under this
<PAGE>
Guarantee as if the Guarantor were the principal obligor and not
merely a surety and the Guarantor shall not be discharged nor
shall the Guarantor's liability be affected by any act, omission,
matter or thing which but for this provision might operate to
release or otherwise discharge the Guarantor or affect the
Guarantor's liability if the Guarantor were the principal obligor
including:
3.1.1 any time, indulgence, waiver or consent at any time
given to the Company by the Beneficiary;
3.1.2 any other security or other guarantee or indemnity
given in connection with
this Guarantee;
3.1.3 the making or absence of any demand on the Company or
any other persons for payment;
3.1.4 the illegality, the invalidity or unenforceability of
or any defect in any provision of this Guarantee or
any of the Company's obligations in respect of the
Indebtedness;
3.1.5 the Guarantor not having notice of any neglect or
omission on the part of the Company to make payment.;
3.1.6 the Beneficiary having any outstanding remedy against
the Company to make payment.
3.2 This Guarantee shall:
3.2.1 be a continuing guarantee, and will not be discharged
by any intermediate settlement of any part of the
Indebtedness;
3.2.2 remain in effect until the Indebtedness is discharged
in full in which event this Guarantee shall
immediately terminate and be of no further effect; and
3.2.3 enure to the benefit of the Beneficiary, its
successors and assigns.
4. Notice
Any notice, demand or other communication to be given hereunder by
either of the parties hereto shall be addressed to the parties at their
respective addresses shown in this Agreement or such other address as
the party shall previously have specified in writing to the other for
such purpose and may be given in person or sent by first-class pre-paid
post or airmail if overseas or facsimile transmission or telex and
shall be deemed to have been served if hand delivered at the time of
delivery or if posted at the expiration of forty-eight (48) hours or
(in the case of airmail) seven days after the envelope containing the
same was put into the post or if sent by facsimile or telex
transmission at the end of the transmission provided that if
<PAGE>
the original communication is not transmitted between the hours of 9:00
am to 6:00 pm on a day when banks are open for business in London then
on the next such day at 9:00 am.
5. Law and Jurisdiction
This Guarantee is governed by and shall be construed in accordance with
English law and the parties hereto hereby submit to the non-exclusive
jurisdiction of the English courts.
IN WITNESS WHEREOF this Guarantee has been executed as a Deed by the parties
hereto and delivered the day and year first before written.
Signed as a Deed by PETER LEVIN in the )
presence of: )
Witness: signature_________________
Name: _____________________________
Address: __________________________
Occupation: _______________________
Signed as a DEED by MARJORIE MOE in )
the presence of: )
Witness: signature_________________
Name: _____________________________
Address: __________________________
Occupation: _______________________
EXHIBIT 3.12
<PAGE>
DATED 22nd April 1996
PETER LEVIN
AND
MARJORIE MOE
-------------------------
PLEDGE AGREEMENT
-------------------------
<PAGE>
THIS PLEDGE AGREEMENT is made the 22nd day of April 1996
B E T W E E N :
(1) MR. PETER LEVIN of 10 Chesterfield Hill, London W1X 7 RN (hereinafter
called "the Pledgor")
(2) MS. MARJORIE MOE of 4 Mountain View Avenue, Ridgefield, CT 06877 USA
(hereinafter called "the Pledgee")
W H E R E A S :
Pursuant to the Guarantee of even date herewith made between the Pledgor and the
Pledgee ("the Guarantee"), the Pledgor has agreed to guarantee certain payments
to the Pledgee under a loan agreement of even date herewith between the Pledgee
and the Company (as hereinafter defined) and to enter into this Pledge as
security for the said payments.
NOW IT IS HEREBY AGREED as follows:
1. DEFINITIONS
In this Pledge Agreement, except where the context otherwise requires:
"the Company" means Display.IT Limited, a company registered in England
under number 3069667.
"the Debt" means the debt guaranteed by the Pledgor in accordance with
the terms of the Guarantee.
"Loan Agreement" means the loan agreement of even date herewith between
the Pledgee and the Company for an interest bearing loan of US$210,000
by the Pledgee to the Company.
"Fredrikson & Byron" means Fredrikson & Byron Pa of 79 Knightsbridge,
London SW1X7RB.
"Pledge Agreement" means this Pledge Agreement as amended from time to
time.
"The Security" means all the two Ordinary Shares of L1 each in the
capital of the Company the share certificates for which have been
deposited by the Pledgor with Fredrikson and Byron and the other
property pledged under clauses 2.1 and 2.2 hereof.
<PAGE>
2. PLEDGE
2.1 Pledge: As Continuing security for the due and punctual
payment of the Debt the Pledgor as legal and beneficial owner
of the Security, hereby pledges, assigns, transfers,
hypothecates, mortgages, charges and encumbers (and with the
intent also of creating a security interest and a lien
thereon) by way of first equitable charge to and in favour of
the Pledgee the security and all his present and future
rights, title and interest thereto and therein.
2.2 Other Property Pledged: The pledge, assignment, transfer,
hypothecation, mortgage, charge, encumbrance, security,
interest and lien hereby created shall affect, and the
Security shall include (i) all dividends and interest paid or
payable thereon (if any) and (ii) all stocks shares, notes,
bonds, debentures and certificates of deposit or other
securities (and in each case the dividends and interest paid
or payable thereon (if any), rights, monies or other property
paid, distributed, accruing or offered at any time (by way of
dividend, bonus, redemption, rights, preference, option,
warrant or otherwise) on, to or in respect of or in
substitution for any Security and (iii) the proceeds of sale,
repayment and redemption and any payment or receipt of, on or
in respect of any of the Security all and any of which shall
be promptly delivered to the Pledgee.
2.3 Non-Recourse: This Pledge shall be without recourse to the
assets of the Pledgor other than the Security.
2.4 Custody; Registration: Subject as otherwise provided in this
Agreement, the Security shall be held by Fredrikson & Byron
and the Pledgor shall immediately after the execution and
delivery of this Pledge Agreement deliver or cause to be
delivered to Fredrikson & Byron the Security with duly
executed blank transfers for all such shares. The Security
shall be kept thereafter in the custody of Fredrikson & Byron
or their nominee.
3. ENFORCEMENT
3.1 Time for enforcement: The security hereby created shall become
immediately enforceable upon the non-payment of the debt or
any part of it and thereupon any sum payable under this Pledge
Agreement
-2-
<PAGE>
3.2 Rights of Pledgee: At any time after the security hereby
created shall become enforceable the Pledgee may (without
notice to the Pledgor) from time to time do any one or more of
the following:
3.2.1 take possession of the Security and hold and/or
procure that its nominees hold the Security to the
order of the Pledgee absolutely; and/or
3.2.2 cause to be delivered to the pledgee or as the
Pledgee may direct the Security; and/or
3.2.3 execute and do, and/or procure its nominees to
execute and do, (at the expense of the Pledgor) all
such conveyances, transfers, assignments, assurances,
deeds, acts and things as the Pledgee may require for
perfecting or protecting the security hereby created
or intended to be created or for facilitating the
realization of the Security and for exercising all or
any of the rights, powers and discretions conferred
on the Pledgee by or pursuant to this Pledge
Agreement.
3.2.4 exercise or direct the exercise of any powers or
rights incident to the ownership of the Security and
the fact of membership of the Company.
3.2.5 collect and receive any and all interest, dividends,
proceeds of repayment or redemption (whether total or
partial) and other payments or receipts of, on or in
respect of the Security.
3.2.6 sell, exchange, convert into money or otherwise
dispose of or realize (or concur in selling,
exchanging, converting into money or otherwise
disposing of or realizing) the Security and for this
purpose complete the blank transfers referred to in
Clause 2.4, either by public offer or private
contract for such consideration and in such currency
or currencies and on such terms as it may think fit
and so that (without prejudice to the generality of
the foregoing) it may do any of those things for a
consideration consisting of
-3-
<PAGE>
cash, certificates of deposit, debentures or other
obligations, shares, stock or other valuable
consideration and any such considerations may be
payable or deliverable in a lump sum whether
immediately or on a deferred basis or by installments
spread over such period as it may think fit and with
full power to buy in or rescind or vary any contract
for the sale of the Security and to resell the same,
all without being responsible for any loss which may
be occasioned thereby and with full power to
compromise and effect compositions.
3.2.7 generally act in relation to the Security as if the
Pledgee were the absolute beneficial owner of the
same.
3.3 Application of Proceeds: Any monies arising from the
enforcement of the security hereby created shall be applied by
the Pledgee as follows:
3.3.1 first, in or towards payment of all costs and
expenses incurred by the Pledgee in connection with
this Pledge Agreement and the exercise of all or any
of the powers hereby confirmed;
3.3.2 secondly, in or towards payment of the Debt (the
Pledgor remaining liable for any shortfall); and
3.3.3 thirdly, in payment of any surplus to the Pledgor or
3.3.4 other person entitled thereto.
3.4 Notice to Purchaser from Pledgor: Upon any sale of the
Security or any part of it which the Pledgee may make or
purport to make under the provisions hereof a statutory
declaration made by the Pledgee that the Pledgor has made
default and that the power of sale has become exercisable
shall be
-4-
<PAGE>
conclusive evidence of the fact in favour of any purchaser or
other person to whom the Security may be transferred under
such sale or other appropriation and the Pledgor or any part
of it agrees to indemnify the Pledgee against any claim which
may be made against the Pledgee by such purchaser or person by
reason of any defect in the title of the Pledgor to such
Security or part thereof.
3.5 Beneficial Owner Warranty: The Pledgor warrants that it is the
absolute and beneficial owner of the Security free from
encumbrances subject to the terms hereof and that it will be
the absolute and beneficial owner free from encumbrances of
any security which may hereafter may become subject to the
terms hereof.
3.6 Powers Non-Exclusive: The powers conferred on the Pledgee by
this Pledge Agreement are in addition to and not in
substitution for the powers conferred on mortgagees under the
Law of Property Act 1925, which shall apply to the security
hereby created except insofar as they are expressly or
impliedly excluded. Where there is any ambiguity or conflict
between the powers contained in that Act and those conferred
by the Pledge Agreement, the terms of this Pledge Agreement
shall prevail.
3.7 Exclusion of Statutory Rights: The restrictions contained in
Section 93 and Section 103 of the Law of Property Act 1925
shall not apply to this Pledge Agreement.
3.8 No Duty to Inquire, Etc.: No person dealing with the Pledgee
shall be concerned to inquire whether the security hereby
created has become enforceable or whether any event has
happened upon which any of the powers, authorities and
discretions conferred by or pursuant to this Pledge Agreement
are or may be exercisable by the Pledgee or otherwise as to
the propriety or regularity of acts purporting or intended to
be in exercise of any such powers and authorities and all the
protection to purchasers contained in Sections 104 and 107 of
the law of
-5-
<PAGE>
Property Act 1925 shall apply to any person purchasing from or
dealing with the Pledgee.
3.9 Avoidance of Payments: No assurance, security or payment which
may be avoided under any law relating to bankruptcy or
insolvency, and no release, settlement or discharge given or
made by the Pledgee on the faith of any such assurance,
security or payment, shall prejudice or affect the right of
the Pledgee to enforce the security hereby created in respect
of the full extent of the moneys thereby secured.
4. GENERAL
4.1 Further Assurances: The parties hereto hereby agree to execute
and do all such further deeds and documents (at the expense of
the requesting party) as may reasonably be required by the
requesting party to give full force and effect to this
Agreement.
4.2 Power of Attorney: The Pledgor hereby irrevocably and by way
of security appoints the Pledgee to be its attorney and agent
and on its behalf and in its name or otherwise to execute and
do (at the expense of the Pledgee) all such conveyances,
transfers, assignments, assurances, deeds, acts and things
which it ought to execute or do under the provisions of this
Pledge Agreement and generally in its name or otherwise and on
its behalf to exercise all or any of the powers, authorities
and discretions conferred on the Pledgee by or pursuant to
this Pledge Agreement or the Law of Property Act 1925 and
(without prejudice to the generality of the foregoing) to seal
and deliver and otherwise perfect any conveyance, transfer,
assignment, assurance, deed, act or thing which the Pledgee
may deem proper in or for the purpose of exercising any of
such powers, authorities and discretions.
4.3 Security Additional: The security hereby created shall be in
addition to and shall not in any way prejudice or be
prejudiced by any other security, guarantee, indemnity, right
of set-off, remedy or lien of whatever nature which the
Pledgee may now
-6-
<PAGE>
or at any time hereafter have or to which the Pledgee may at
any time be entitled, whether by law or otherwise, for or in
respect of all or any part of the sum due under the Guarantee.
4.4 Illegality: If at any time any provision hereof is or becomes
illegal, invalid or unenforceable in any respect under the law
of any jurisdiction, neither the legality, validity or
enforceability of the remaining provisions hereof nor the
legality, validity or enforceability of such provision under
the laws of any other jurisdiction shall in any way be
affected or impaired thereby.
4.5 Waivers: No failure or delay on the part of the Pledgee in
exercising any right or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of
any right or remedy preclude any other or further exercise
thereof or the exercise of any other right or remedy. The
rights and remedies provided in this Pledge Agreement are
cumulative and not exclusive of any rights or remedies which
the Pledgee would otherwise have.
4.6 Counterparts: This Agreement may be executed in any number of
counterpart each of which when executed by one or more of the
parties hereto shall constitute an original but all of which
shall constitute one and the same instrument.
4.7 Successors: This Pledge Agreement and the security evidenced
shall be binding on each of the successors and assigns of the
Pledgor.
5. NOTICE
Any notice demand or other communication to be given hereunder
by either of the parties hereto shall be addressed to the
parties at their respective addresses shown in this Agreement
or such other address as the party shall previously have
specified in writing to the other for such purpose and may be
given in person or sent by first-class pre-paid post or
airmail if overseas or facsimile transmission or telex and
shall be deemed to have been served if
-7-
<PAGE>
hand delivered at the time of delivery or if posted at the
expiration of forty-eight (48) hours or (in the case of
airmail) seven days after the envelope containing the same was
put into the post or if sent by facsimile or telex
transmission at the end of the transmission provided that if
the original communication is not transmitted between the
hours of 9:00 am to 6:00 pm on a day when banks are open for
business in London then on the next such day at 9:00 am.
6. GOVERNING LAW
This Pledge Agreement shall be governed by and construed in
accordance with the laws of England and the Pledgor in
relation to any legal action or proceedings arising out of or
in connection with this Pledge Agreement unconditionally
submits to the non-exclusive jurisdiction of the High Court
of Justice in England.
-8-
<PAGE>
IN WITNESS whereof this Pledge Agreement has been duly executed as a deed and
delivered the day and year first above written.
Signed as a DEED by PETER LEVIN in the )
presence of: )
Witness signature: _____________________________
Name: __________________________________________
Address: _______________________________________
Occupation: ____________________________________
Signed as DEED by MARJORIE MOE in )
the presence of: )
Witness signature: _____________________________
Name: __________________________________________
Address: _______________________________________
Occupation: ____________________________________
-9-
<PAGE>
EXHIBIT 3.13
<PAGE>
DATED 1996
-----------------------------
PETER LEVIN
AND
MARJORIE MOE
-----------------------------
PLEDGE AGREEMENT
-----------------------------
<PAGE>
THIS PLEDGE AGREEMENT is made the day of 1996
BETWEEN
(1) MR PETER LEVIN of 10 Chesterfield Hill, London W1X 7RN (hereinafter
called "the Pledgor"); and
(2) MS MARJORIE MOE of 4 Mountain View Avenue, Ridgefield, CT 06877,
USA (hereinafter called "the Pledgee")
WHEREAS:
A. Pursuant to a Guarantee dated 22 April 1996 made between the
Pledgor and the Pledgee ("the Guarantee"), the Pledgor agreed to
guarantee certain payments to the Pledgee under a loan agreement
dated 22 April 1996 between the Pledgee and the Company (as
hereinafter defined) and entered into a pledge as security for the
said payments.
B. Pursuant to a Share Exchange Agreement dated 20 June 1996 made
between the Pledgor, the Pledgee and the Parent (as hereinafter
defined) the Pledgor, with the consent of the Pledgee and the
termination of the pledge of 22 April 1996, agreed to sell his
shares in the Company to the Parent in exchange for the issue of
2,000,000 ordinary shares of 5p each by the Parent.
C. Pursuant to the Share Exchange Agreement the Pledgor agreed to
enter into a new pledge agreement with the Pledgee in respect of
the shares acquired under the Share Exchange Agreement in order to
preserve the security given by the Pledgor to the Pledgee in
relation to payments of the Company guaranteed by the Pledgor under
the Guarantee.
NOW IT IS HEREBY AGREED as follows:
1. DEFINITIONS
In this Pledge Agreement, except where the context otherwise
requires:
"the Company" means Display.IT Limited, a company registered in
England under number 3069667.
"the Parent" means the parent company of Display.IT Limited being
the company known as Law 737 Limited (to be re-registered as
Display.IT Holdings plc) and registered in England under company
number 3194225.
<PAGE>
"the Debt" means the debt guaranteed by the Pledgor in accordance
with the terms of the Guarantee.
"Loan Agreement" means the loan agreement dated 22 April 1996
between the Pledgee and the Company for an interest bearing loan of
US$210,000 by the Pledgee to the Company.
"Fredrikson & Byron" means Fredrikson & Byron of 79 Knightsbridge,
London SW1X 7RB.
"Pledge Agreement" means this Pledge Agreement as amended from time
to time.
"the Security" means all the two million Ordinary Shares of 5p each
in the capital of the Parent, the share certificates for which are
to be deposited by the Pledgor with Fredrikson & Byron and the
other property pledged under clauses 2.1 and 2.2 hereof.
2. PLEDGE
2.1 Pledge: As continuing security for the due and punctual payment
of the Debt the Pledgor as legal and beneficial owner of the
Security, hereby pledges, assigns, transfers, hypothecates,
mortgages, charges and encumbers (and with the intent also of
creating a security interest and a lien thereon) by way of first
equitable charge to and in favour of the Pledgee the Security
and all his present and future rights, title and interest
thereto and therein.
2.2 Other Property Pledged: The pledge, assignment, transfer,
hypothecation, mortgage, charge, encumbrance, security, interest
and lien hereby created shall affect, and the Security shall
include (i) all dividends and interest paid or payable thereon
(if any) and (ii) all stocks, shares, notes, bonds, debentures
and certificates of deposit or other securities (and in each
case the dividends and interest paid or payable thereon (if
any), rights, monies or other property paid, distributed,
accruing or offered at any time (by way of dividend, bonus,
redemption, rights, preference, option, warrant or otherwise)
on, to or in respect of or in substitution for any Security and
(iii) the proceeds of sale, repayment and redemption and any
payment or receipt of, on or in respect of any of the Security
all and any of which shall be promptly delivered to the Pledgee.
2.3 Non-Recourse: This pledge shall be without recourse to the
assets of the Pledgor other than the Security.
2.4 Custody; Resignation: Subject as otherwise provided in this
Agreement, the Security shall be held by Fredrikson & Byron and
the Pledgor shall immediately after the execution and delivery
of this Pledge Agreement deliver
<PAGE>
or cause to be delivered to Fredrikson & Byron the Security with
duly executed blank transfers for all such shares. The Security
shall be kept thereafter in the custody of Fredrikson & Byron or
their nominee.
3. ENFORCEMENT
3.1 Time for Enforcement: The security hereby created shall become
immediately enforceable upon the non-payment of the Debt or any
part of it and thereupon any sum payable under this Pledge
Agreement shall become immediately due and payable.
3.2 Rights of Pledgee: At any time after the security hereby created
shall become enforceable the Pledgee may (without notice to the
Pledgor) from time to time do any one or more of the following:
(a) take possession of the Security and hold and/or procure
that its nominees hold the Security to the order of the
Pledgee absolutely; and/or
(b) cause to be delivered to the Pledgee as the Pledgee may
direct the Security; and/or
(c) execute and do, and/or procure its nominees to execute
and do, (at the expense of the Pledgor) all such
conveyances, transfers, assignments, assurances, deeds,
acts and things as the Pledgee may require for the
perfecting or protecting the security hereby created or
intended to be created or for facilitating the
realisation of the Security and for exercising all or
any of the rights, powers and discretions conferred on
the Pledgee by or pursuant to this Pledge Agreement;
and/or
(d) exercise or direct the exercise of any powers or rights
incident to the ownership of the Security and the fact
of membership of the Parent; and/or
(e) collect and receive any and all interest, dividends,
proceeds of repayment or redemption (whether total or
partial) and other payments or receipts of, on or in
respect of the Security; and/or
(f) sell, exchange, convert into money or otherwise dispose
of or realise (or concur in selling, exchanging,
converting into money or otherwise disposing of or
realising) and Security and for this purpose complete
the blank transfers referred to in clause 2.4, either by
public offer or private contract for such consideration
and in such currency or currencies and on such terms as
it may think
<PAGE>
fit and so that (without prejudice to the generality of
the foregoing) it may do any of those things for a
consideration consisting of cash, certificates of
deposit, debentures and any such considerations may be
payable or deliverable in a lump sum whether immediately
or on a deferred basis or by instalments spread over
such period as it may think fit and with full power to
buy in or rescind or vary any contract for the sale of
the Security and to resell the same, all without being
responsible for any loss which may be occasioned thereby
and with full power to compromise and effect
compositions; and/or
(g) generally act in relation to the Security as if the
Pledgee were the absolute beneficial owner of the same.
3.3 Application of Proceeds: Any monies arising from the enforcement
of the security hereby created shall be applied by the Pledgee
as follows:
(a) first, in or towards payment of all costs and expenses
incurred by the Pledgee in connection with this Pledge
Agreement and the exercise of all or any of the powers
hereby confirmed;
(b) secondly, in or towards payment of the Debt (the Pledgor
remaining liable for any shortfall), and
(c) thirdly, in payment of any surplus to the Pledgor, or
(d) other person entitled thereto.
3.4 Notice to Purchaser from Pledgor: Upon any sale of the Security
or any part of it which the Pledgee may make or purport to make
under the provisions hereof a statutory declaration made by the
Pledgee that the Pledgor has made default and that the power of
sale has become exercisable shall be conclusive evidence of the
fact in favour of any purchase or other person - to whom the
Security may be transferred under such sale or other
appropriation and the Pledgor or any part of it agrees to
indemnify the Pledgee against any claim which may be made
against the Pledgee by such purchaser or person by reason of any
defect in the title of the Pledgor to such Security or part
thereof.
3.5 Beneficial Owner Warranty: The Pledgor warrants that it is the
absolute and beneficial owner of the Security free from
encumbrances subject to the terms hereof and that it will be the
absolute and beneficial owner free from encumbrances of any
security which may hereafter become subject to the terms hereof.
3.6 Powers Non-Exclusive: The powers conferred on the Pledgee by
this Pledge Agreement are in addition to and not in substitution
for the powers conferred
<PAGE>
on mortgagees under the Law of Property Act 1925, which shall
apply to the security hereby created except insofar as they are
expressly or impliedly excluded. Where there is any ambiguity or
conflict between the powers contained in that Act and those
conferred by the Pledge Agreement, the terms of this Pledge
Agreement shall prevail.
3.7 Exclusion of Statutory Rights: The restrictions contained in
Section 93 and Section 103 of the Law of Property Act 1925 shall
not apply to this Pledge Agreement.
3.8 No Duty to Enquire etc.: No person dealing with the Pledgee
shall be concerned to enquire whether the security hereby
created has become enforceable or whether any event has happened
upon which any of the powers, authorities and discretions
conferred by or pursuant to this Pledge Agreement are or may be
exercisable by the Pledgee or otherwise as to the propriety or
regularity of acts purporting or intended to be in exercise of
any such powers and authorities and all the protection to
purchasers contained in Sections 104 and 107 of the Law of
Property Act 1925 shall apply to any person purchasing from or
dealing with the Pledgee.
3.9 Avoidance of Payments: No assurance, security or payment which
may be avoided under any law relating to bankruptcy or
insolvency, and no release, settlement or discharge given or
made by the Pledgee on the faith of any such assurance, security
or payment, shall prejudice or affect the right of the Pledgee
to enforce the security hereby created in respect of the full
extent of the monies thereby secured.
4. GENERAL
4.1 Further Assurances: The parties hereto hereby agree to execute
and do all such further deeds and documents (at the expense of
the requesting party) as may reasonably be required by the
requesting party to give full force and effect to this Pledge
Agreement.
4.2 Power of Attorney: The Pledgor hereby irrevocably and by way of
security appoints the Pledgee to be its attorney and agent and
on its behalf and in its name or otherwise to execute and do (at
the expense of the Pledgee) all such conveyances, transfers,
assignments, assurances, deeds, acts and things which it ought
to execute or do under the provisions of this Pledge Agreement
and generally in its name or otherwise and on its behalf to
exercise all or any of the powers, authorities and discretions
conferred on the pledgee by or pursuant to this Pledge Agreement
or the Law of Property Act 1925 and (without prejudice to the
generality of the foregoing) to seal and deliver and otherwise
perfect any conveyance, transfer, assignment, assurance, deed,
act or thing
<PAGE>
which the Pledgee may deem proper in or for the purpose of
exercising any of such powers, authorities and discretions.
4.3 Security Additional: The security hereby created shall be in
addition to and shall not in any way prejudice or be prejudiced
by any other security, guarantee, indemnity, right of set-off,
remedy or lien of whatever nature which the Pledgee may now or
at any time hereafter have or to which the Pledgee may at any
time be entitled, whether by law or otherwise, for or in respect
of all or any part of the sum due under the Guarantee.
4.4 Illegality: If at any time any provision hereof is or becomes
illegal, invalid or unenforceable in any respect under the law
of any jurisdiction, neither the legality, validity or
enforceability of the remaining provisions hereof nor the
legality, validity or enforceability of such provision under the
laws of any other jurisdiction shall in any way be affected or
impaired thereby.
4.5 Waivers: No failure or delay on the part of the Pledgee in
exercising any right or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any
right or remedy preclude any other or further exercise thereof
or the exercise of any other right or remedy. The rights and
remedies provided in this Pledge Agreement are cumulative and
not exclusive of any rights or remedies which the Pledgee would
otherwise have.
4.6 Counterparts: This Agreement may be executed in any number of
counterparts each of which when executed by one or more of the
parties hereto shall constitute an original but all of which
shall constitute one and the same instrument.
4.7 Successors: This Pledge Agreement and the security evidenced
shall be binding on each of the successors and assigns of the
Pledgor.
5. NOTICE
Any notice demand or other communication to be given hereunder by
either of the parties shall be addressed to the parties at their
respective addresses shown in this Pledge Agreement or such other
address as the party shall previously have specified in writing to the
other for such purpose and may be given in person or sent by
first-class pre-paid post or airmail if overseas or facsimile
transmission or telex and shall be deemed to have been served if hand
delivered at the time of delivery or if posted at the expiration of
forty-eight (48) hours or (in the case of airmail) seven days after the
envelope containing the same was put into the post or if sent by
facsimile or telex transmission at the end of the transmission provided
that if the original communication is not transmitted between the hours
of 9.00am to 6.00pm on a day when banks are open for business in London
then on the next such day at 9.00am.
<PAGE>
6. GOVERNING LAW
This Pledge Agreement shall be governed by and construed in accordance
with the laws of England and the Pledgor in relation to any legal
action or proceedings arising out of or in connection with this Pledge
Agreement unconditionally submits to the non-exclusive jurisdiction of
the High Court of Justice in England.
IN WITNESS whereof this Pledge Agreement has been duly executed as a deed and
delivered the day and year first above written.
SIGNED as a Deed by PETER LEVIN )
in the presence of: )
SIGNED as a Deed by MARJORIE )
MOE in the presence of: )
EXHIBIT 3.14
<PAGE>
RULES OF THE
DISPLAY.IT HOLDINGS plc SHARE OPTION SCHEME
1. Definitions
1.1 In these Rules the following words and expressions shall have the
following meanings:
"Acquisition Price" means the price at which each Share subject to an
Option may be acquired on the exercise of that Option determined in
accordance with Rule 2;
"Committee" means a committee appointed by the board and chaired by a
non-executive director in order to administer and amend the Scheme;
"Company" means Display.IT Holdings plc;
"Control" has the same meaning as in Section 840 of the Income and
Corporation Tax Act 1988;
"Date of Grant" means the date on which an Option is, was, or is to be
granted under the Scheme;
"Eligible Executive" means any director or employee of any
Participating Company;
"Market Value" means on any day the average of the middle market
quotations or in relation to NASDAQ only the last sale price of a Share
as derived from a screen-based financial information system (if the
shares are traded on OFEX) or the Daily Official List of the London
Stock Exchange (if the shares are listed on the Official List or traded
on the Alternative Investment Market) or the Wall Street Journal (if
the shares are traded on NASDAQ) for the 3 immediately preceding
dealing days (being days on which OFEX or the Stock Exchange or NASDAQ
as appropriate is open for the transaction of business);
"Option" means a right to acquire Shares granted (or to be granted) in
accordance with the Rules of this Scheme;
"Option Holder" means an individual to whom an Option has been granted;
"Participating Company" means the Company and any other company of
which the Company has Control and which is for the time being nominated
by the Committee to be a Participating Company;
<PAGE>
"Scheme" means the share option scheme constituted and governed by
these Rules as from time to time amended;
"Share" means an ordinary share in the capital of the Company;
"Subsisting Option" means an Option which has neither lapsed nor been
exercised.
1.2 Where the context so admits the singular shall include the plural and
vice versa and the masculine shall include the feminine.
1.3 Any reference in the Scheme to any enactment includes a reference to
that enactment as from time to time modified, extended or re-enacted.
2. Invitation to apply for Options
2.1 The Committee may in its absolute discretion invite any number of
Eligible Executives to apply for an Option. An invitation may not be
made earlier than the date on which the Scheme is adopted nor later
than the tenth anniversary thereof. An invitation may be made at any
time or times within a period of six weeks after either:
(a) the date these Rules are adopted or amended by the Company in
general meeting; or
(b) the date on which the annual or half-yearly results of the
Company are announced.
2.2 Each invitation shall specify:
(i) the date (being not later than 14 days after the issue of the
invitation) by which an application must be made;
(ii) the maximum number of Shares over which that individual may on
that occasion apply for an Option, being determined at the
absolute discretion of the Committee (subject to Rule 5.2);
and
(iii) the Acquisition Price at which Shares may be acquired on the
exercise of any Option granted in response to the application.
2.3 Each invitation shall be accompanied by an application in such form,
not inconsistent with these Rules, as the Committee may determine.
2.4 The Acquisition Price shall not be less than either:
<PAGE>
(i) the nominal value of a Share; or
(ii) the Market Value of a Share on the day the invitation to apply
for an Option was issued (subject to Rule 9).
3. Applications for Options
3.1 Not later than the date specified in the invitation each Eligible
Executive to whom an invitation has been issued in accordance with Rule
2 above may apply to the Committee, using the application form
supplied, for an Option over a number of Shares not exceeding the
number specified in the invitation.
4. Grant of Options
4.1 Not later than the twenty-first day following the issue of invitations
the Committee may grant to each applicant who is still an Eligible
Executive an Option over the number of Shares specified in his
application.
4.2 As soon as possible after Options have been granted the Committee shall
issue a certificate of option in respect of each Option in such form,
not inconsistent with these Rules, as the Committee may determine.
4.3 No Option may be transferred, assigned or charged and any purported
transfer, assignment or charge shall cause the Option to lapse
forthwith (subject to Rule 6). Each option certificate shall carry a
statement to this effect.
4.4 Options may be granted so that their exercise shall be subject to such
objective conditions (additional to the conditions expressed in these
Rules and not inconsistent with the provisions of the Scheme) as the
Committee may think fit. Any such additional conditions may be waived
or amended if an event happens which causes the Committee to consider
that such additional conditions could not fairly or reasonably be met,
provided that any amended conditions shall be no easier and no more
difficult to satisfy than the original condition.
5. Limitations on Grants
5.1 No Options shall be granted if such grant would result in the aggregate
of:
(i) the number of Shares over which Subsisting Options have been
granted under this Scheme;
(ii) the number of Shares which have been issued on the exercise of
Options granted under this Scheme;
<PAGE>
(iii) the number of Shares over which subsisting options have been
granted under any other share option scheme of the Company
during the period of 10 years ending on the relevant Date of
Grant; and
(iv) the number of Shares which have been issued pursuant to any
other employee share scheme (including a share option scheme)
of the Company;
during the period of 10 years ending on the relevant Date of Grant
exceeding 10% of the number of shares then in issue and during the
period of 3 years ending on the relevant Date of Grant exceeding 3% of
the number of shares then in issue.
5.2 Any Option granted to an Eligible Executive shall be limited and take
effect so that the aggregate number of Shares subject to that Option
and Subsisting Options held by that Eligible Executive shall not exceed
300,000.
5.3 No Options shall be granted to Peter Levin.
6. Exercise of Options
6.1 Any Option which has not lapsed may be exercised in whole or in part at
any time (subject to Rule 10) following the earliest of the following
events:
(i) the third anniversary of the Date of Grant;
(ii) the death of the Option Holder;
(iii) the Option Holder ceases to be a director or employee of any
Participating Company by reason of injury, disability,
redundancy or retirement.
6.2 An Option shall lapse on the earliest of the following events:
(i) the fifth anniversary of the Date of Grant;
(ii) the first anniversary of the Option Holder's death;
(iii) six months after the Option Holder ceases to be a director or
employee of any Participating Company, other than by reason of
his death;
(iv) six months after the Option has become exercisable in
accordance with Rule 8;
(v) the Option Holder being adjudicated bankrupt;
(vi) the Option Holder having committed a serious breach of one or
more of the terms and conditions of his service agreement with
the Company resulting in the termination of that agreement.
<PAGE>
7. Death of the Option Holder
7.1 If the Option Holder dies, his legal personal representatives may
exercise any Option held by the Option Holder immediately before his
death, which has not lapsed under Rule 6.2.
8. Takeovers and liquidations
8.1 If any person obtains Control of the Company as a result of making:
(i) a general offer to acquire the whole of the issued share
capital of the Company which is made on condition such that if
it is satisfied the person making the offer will have Control
of the Company; or
(ii) a general offer to acquire all the shares in the Company which
are of the same class as the Shares:
then any Subsisting Option may be exercised within six months of the
time when the person making the offer has obtained Control of the
Company and any condition subject to which the offer is made has been
satisfied.
8.2 If under Section 425 of the Companies Act 1985 the Court sanctions a
compromise or arrangement proposed for the purposes of or in connection
with a scheme for the reconstruction of the Company or its amalgamation
with any other company or companies, any Subsisting Option may be
exercised within six months of the Court sanctioning the compromise or
arrangement.
8.3 If any person becomes bound or entitled to acquire shares in the
company under Section 428 to 430 of the said Act any Subsisting Option
may be exercised at any time when that person remains so bound or
entitled.
8.4 If the Company passes a resolution for voluntary winding up, any
Subsisting Option may be exercised within six months of the passing of
the resolution.
8.5 For the purposes of this Rule 8, a person shall be deemed to have
obtained Control of a Company if he and others acting in concert with
him have together obtained Control of it.
8.6 The exercise of an Option pursuant to the preceding provisions of this
Rule 8 shall be subject to the provisions of Rule 10 below.
<PAGE>
9. Variation of Share Capital
9.1 In the event of any variation of the share capital of the Company by
way of capitalisation or rights issue, consolidation, subdivision or
reduction of capital or otherwise, the number of Shares subject to any
Option and the Acquisition Price for each of those Shares shall be
adjusted in such manner as the auditors for the time being of the
Company (acting as experts and not as arbitrators) confirm in writing
to be fair and reasonable provided that:
(i) the aggregate amount payable on the exercise of an Option in
full is not increased; and
(ii) the Acquisition Price for a Share is not reduced below its
nominal value.
10. Manner of Exercise of Option
10.1 An Option shall be exercised by the Option Holder (or his legal
personal representative) giving notice to the Company in writing of the
number of Shares in respect of which he wishes to exercise the Option
accompanied by the appropriate payment and the relevant option
certificate and shall be effective on the date of its receipt by the
Company.
10.2 Shares shall be either allotted and issued, or at the discretion of the
Company, transferred by trustees from time to time of any employee
benefit trust, pursuant to a notice of exercise within 30 days of the
date of exercise. In the case of shares allotted, save for any rights
determined by reference to a date preceding the date of allotment, such
shares shall rank pari passu with the other shares of the same class in
issue at that date of allotment.
10.3 When an Option is exercised only in part, a new option certificate
shall be issued by the Company as soon as possible after the partial
exercise.
11. Administration and amendment
11.1 The Scheme shall be administered by the Committee whose decision on all
disputes shall be final.
11.2 The Committee may from time to time amend these Rules provided that:
(i) no amendment may materially affect an Option Holder as regards
an Option granted prior to the amendment being made;
(ii) no amendment may be made which would make the terms on which
Options may be granted materially more generous or would
increase the
<PAGE>
limits specified in Rule 5 without the prior approval of the
Company in general meeting.
11.3 The cost of establishing and operating the Scheme shall be borne by the
Participating Companies in such proportions as the Committee shall
determine.
11.4 Any notice or other communication under or in connection with the
Scheme may be given by the Company either personally or by post to the
registered office to the chairman of the committee; items sent by post
shall be prepaid and shall be deemed to have been received 72 hours
after posting.
11.5 The Company shall at all times ensure that there are available
sufficient authorised and unissued Shares, together with shares held
from time to time by trustees of any trust established for the benefit
of Eligible Executives of all or any Participating Company, to satisfy
the exercise to the full extent still possible of all Options which
have neither lapsed nor been fully exercised, taking account of any
other obligations of the Company to issue unissued Shares.
12. General
12.1 This Option shall not afford to the Holder any additional right to
compensation on the termination of his employment which would not have
existed had this Option not been granted.
12.2 No Participating Company shall be liable for any tax to which an Option
Holder may become subject as a result of his participation in the
Scheme.
<PAGE>
SPECIMEN LETTER OF INVITATION
Date
Dear
Display.IT Holdings plc ("the Company")
- ---------------------------------------
Share Option Scheme (the "Scheme")
- ---------------------------------------
You are invited to apply for an option to acquire [ ] ordinary shares of 5p each
in the capital of the Company under the rules of the Scheme. A copy of the rules
of the Scheme is enclosed.
The Acquisition Price per share payable upon the exercise of the option will be
[insert Acquisition Price].
If you wish to accept this invitation, as to all or part of the shares
specified, please complete the attached application form and send it, to the
Company so as to arrive by NOT LATER THAN [insert date required](1)
Yours sincerely
- -------------------------
Chairman of the Committee
- --------
(1) Nb Any options applied must be granted no later that 21 days after the
issue of the invitations.
<PAGE>
SPECIMEN APPLICATION FORM
Date 19
Home address of
Eligible Executive
To: The Directors,
Display.IT Holdings plc
Dear Sirs
Display.IT Holdings plc ("the Company")
- ---------------------------------------
Share Option Scheme (the "Scheme")
- ---------------------------------------
With reference to your letter of [ ] I apply for the grant of an option under
the Scheme to acquire [*] Ordinary Shares of (bullet)p each in the capital of
the Company at the Acquisition Price of [insert Acquisition Price].
If my application is accepted I agree to comply with and be bound by the Rules
of the Scheme and by any amendments or variations thereto.
Yours faithfully
Signed
[Eligible Executive]
Full name of executive ________________________
* Applications must be for no more than the number of shares specified in
the Letter of Invitation.
<PAGE>
SPECIMEN OPTION CERTIFICATE
DISPLAY.IT HOLDINGS plc
EXECUTIVE SHARE OPTION SCHEME
This is to certify that
------------------------------
is the holder of an option to acquire up to maximum of ..... ordinary shares of
(bullet)p each in Display.IT Holdings plc at a price of ................ per
ordinary share.
This option was granted on ........................ under the rules of the
Display.IT Holdings plc Share Option Scheme and is exercisable in accordance
with those rules.
The options may not be transferred, assigned or charged and any purported
transfer, assignment or charge shall cause the option to lapse forthwith.
EXECUTED as a deed by )
DISPLAY.IT HOLDINGS plc )
acting by the Chairman of the Committee )
THIS CERTIFICATE IS IMPORTANT AND SHOULD BE KEPT
IN A SAFE PLACE
<PAGE>
SPECIMEN NOTICE OF EXERCISE OF OPTION
To: The Chairman of the Committee
Display.IT Holdings plc
From: .................................... (name in BLOCK
CAPITALS)
.................................... (ADDRESS)
....................................
....................................
(1) I give notice to Display.IT Holdings plc that
immediately upon your receipt of this certificate and
the enclosed remittance I exercise the option,
granted in the attached Option Certificate, to
acquire ................. ordinary shares of
(bullet)p each in Display.IT Holdings plc at the
subscription price of ................. for each
share.
(2) I enclose a cheque drawn in favour of Display.IT
Holdings plc for (pound sterling)............. being
the amount payable in full for those shares.
- ------------------ ------------------------------------
Date Signed
