SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant |X|
Filed by a party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary proxy statement |_| Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
|_| Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
TYCO INTERNATIONAL LTD.
-----------------------
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the form or schedule and the
date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
LOGO
o o, 1998
Dear Shareholder,
I am pleased to invite you to attend our 1998 Annual General Meeting of
Shareholders, which will be held at 9:30 a.m., Bermuda time, on March 26, 1998,
at Marriott's Castle Harbor Resort, 2 South Road, St. George, SN 02, Bermuda.
As discussed in the accompanying proxy statement, you will be asked at the
Annual General Meeting to re-elect the Board of Directors, re-appoint the
Company's auditors, approve the conversion of 3,750,000 of the Company's
preference shares into common shares and approve an increase of the Company's
authorized share capital by the creation of an additional 750,000,000 common
shares. You will also be asked at the meeting to consider and approve the
adoption of new Bye-Laws for the Company. The new Bye-Laws are designed to
conform the Company's Bye-Laws to current corporate practice and to reflect
changes in Bermudian law since the adoption of the existing Bye-Laws.
As I wrote to you on December 15, 1997, we will actually be holding two annual
general meetings on March 26. In order to comply with the requirements of
Bermudian law, at 9:00 a.m., we will first be holding the 1997 annual general
meeting that was adjourned from December 30, 1997. Immediately following, we
will be holding the 1998 annual general meeting, at which we will consider the
matters that I mentioned above. The accompanying notices of meeting enumerate
the matters to be brought before each of the two meetings and the accompanying
proxy statement discusses these matters in detail.
Whether or not you are able to attend, it is important that your shares be
represented at the meeting. Accordingly, please sign, date and return the
enclosed proxy card at your earliest convenience.
Thank you for your cooperation.
Yours sincerely,
/s/L. Dennis Kozlowski
------------------------------------
L. Dennis Kozlowski
Chairman and Chief Executive Officer
the gibbons building, 10 queen street, hamilton, hm 11, bermuda
incorporated in bermuda with limited liability
<PAGE>
NOTICE OF ADJOURNED 1997 ANNUAL GENERAL MEETING OF SHAREHOLDERS
TYCO INTERNATIONAL LTD.
(Incorporated in Bermuda with limited liability)
Notice is hereby given that the adjourned 1997 Annual General Meeting of Tyco
International Ltd. (the "Company") will be held on March 26, 1998 at 9.00 a.m.,
local time, at Marriott's Castle Harbor Resort, 2 South Road, St. George, SN 02,
Bermuda for the following purposes:
1. to re-elect the Board of Directors of the Company;
2. to re-appoint Coopers & Lybrand as the independent auditors of the
Company and to authorize the directors to fix the auditors'
remuneration; and
3. to receive the Company's audited consolidated financial statements for
the year ended December 31, 1996.
The 1997 Annual General Meeting was originally convened for December 30, 1997
but was adjourned without consideration of any of the above business. All
holders of record of the Company's common shares at the close of business on
January 28, 1998, which has been fixed as the record date for notice of the
adjourned meeting, are entitled to notice of the meeting. All holders of record
of the Company's common shares on the date of the meeting will be entitled to
attend, and to vote at, the meeting.
The audited consolidated financial statements of the Company (then called ADT
Limited) for the year ended December 31, 1996 have been provided or made
available to shareholders.
Shareholders are cordially invited to attend the meeting in person. Whether or
not you plan to attend the meeting, please sign, date and return the enclosed
proxy to ensure that your shares are represented at the meeting. Shareholders
who attend the meeting may vote their shares personally, even though they have
sent in proxies.
By Order of the Board of Directors,
John D. Campbell, Secretary
The Gibbons Building
10 Queen Street
Hamilton, HM 11
Bermuda
o o, 1998
IMPORTANT: Please sign, date and return the enclosed proxy as soon as possible.
The proxy is revocable and it will not be used if you give written notice of
revocation to the Secretary of the Company prior to the vote to be taken at the
Meeting, if you lodge a later-dated proxy or if you attend and vote at the
Meeting.
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<PAGE>
NOTICE OF 1998 ANNUAL GENERAL MEETING OF SHAREHOLDERS
TYCO INTERNATIONAL LTD.
(Incorporated in Bermuda with limited liability)
Notice is hereby given that the Annual General Meeting (the "Meeting") of Tyco
International Ltd. (the "Company") for 1998 will be held on March 26, 1998 at
9.30 a.m., local time (or so soon thereafter as the adjourned Annual General
Meeting for 1997 is concluded) at Marriott's Castle Harbor Resort, 2 South Road,
St. George, SN 02, Bermuda, for the following purposes:
1. to re-elect the Board of Directors of the Company;
2. to re-appoint Coopers & Lybrand as the independent auditors of the
Company and to authorize the directors to fix the auditors'
remuneration;
3. to convert and sub-divide all of the Third Preference Shares, Fourth
Preference Shares and Fifth Preference Shares (as defined in the
Company's Bye-Laws) into 3,750,000 common shares of US$0.20 each;
4. to increase the authorized capital of the Company by the creation of an
additional 750,000,000 common shares of US$0.20 each;
5. subject to the resolution relating to item 4 above being duly passed,
to approve the adoption of new Bye-Laws of the Company; and
6. to receive the Company's audited consolidated financial statements for
the period of nine months ended September 30, 1997.
All holders of record of the Company's common shares at the close of business on
January 28, 1998, which has been fixed as the record date for notice of the
Meeting, are entitled to notice of the Meeting. All holders of record of the
Company's common shares on the date of the Meeting will be entitled to attend,
and to vote at, the Meeting.
The Company's 1997 Annual Report, which includes the audited consolidated
financial statements of the Company for the period of nine months ended
September 30, 1997, is being mailed to shareholders along with the attached
proxy statement.
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<PAGE>
Shareholders are cordially invited to attend the Meeting in person. Whether or
not you plan to attend the Meeting, please sign, date and return the enclosed
proxy to ensure that your shares are represented at the Meeting. Shareholders
who attend the Meeting may vote their shares personally, even though they have
sent in proxies.
By Order of the Board of Directors,
John D. Campbell, Secretary
The Gibbons Building
10 Queen Street
Hamilton, HM 11
Bermuda
o o, 1998
IMPORTANT: Please sign, date and return the enclosed proxy as soon as possible.
The proxy is revocable and it will not be used if you give written notice of
revocation to the Secretary of the Company prior to the vote to be taken at the
Meeting, if you lodge a later-dated proxy or if you attend and vote at the
Meeting.
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<PAGE>
ADJOURNED 1997 ANNUAL GENERAL MEETING AND
1998 ANNUAL GENERAL MEETING
MARCH 26, 1998
GENERAL
Solicitation of Proxies
This proxy statement and accompanying form of proxy are furnished in connection
with the solicitation of proxies by and on behalf of the Board of Directors of
Tyco International Ltd. (the "Company") in connection with the Adjourned 1997
Annual General Meeting of the Company and the 1998 Annual General Meeting of the
Company, both to be held on March 26, 1998, and any adjournment thereof.
(References to the "Meeting" are to either or both the Adjourned 1997 Annual
General Meeting and the 1998 Annual General Meeting, as the context requires.)
This proxy statement and the accompanying form of proxy are being mailed to
shareholders of the Company on or about o o, 1998.
Costs of Solicitation
The cost of solicitation of proxies will be paid by the Company. In addition to
the use of the mails, certain directors, officers or employees of the Company
may solicit proxies by telephone or personal contact. Upon request, the Company
will reimburse brokers, dealers, banks and trustees, or their nominees, for
reasonable expenses incurred by them in forwarding proxy materials to beneficial
owners of common shares.
Registered and Principal Executive Offices
The registered and principal executive offices of the Company are located at The
Gibbons Building, 10 Queen Street, Hamilton, HM 11, Bermuda. The telephone
number there is 441- 292-8674. The executive offices of the Company's principal
United States subsidiary, Tyco International (US) Inc., are located at One Tyco
Park, Exeter, New Hampshire 03833. The telephone number there is 603-778-9700.
Outstanding Voting Shares
Notice of the Meeting has been sent to all holders of record of common shares at
the close of business on January 28, 1998, which has been fixed as the record
date for notice of the Meeting. Except as provided in the Company's Bye-Laws,
all holders of record of common shares on the date of the Meeting will be
entitled to attend and vote at the Meeting. As of the record date for notice of
the Meeting, there were outstanding and entitled to vote o common shares,
including _______ common shares owned by a subsidiary of the Company. All
holders of record of the Company's common shares on the date of the Meeting are
entitled to vote at the Meeting and, on a poll, each common share is entitled to
one vote on each proposal. Not less than two holders of common shares present in
person or by proxy shall form a quorum for the transaction of business.
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<PAGE>
Common shares will vote together as a single class with respect to the
re-election of directors, the re-appointment of independent auditors of the
Company and authorization for the Board of Directors to fix the auditors'
remuneration, the conversion of preference shares into common shares, the
increase in authorized common share capital and the adoption of new Bye-Laws.
The affirmative vote of a majority of common shares represented and voting at
the Meeting is required for the re-election of directors and the approval of the
other proposals. Pursuant to Bermudian law, shares represented at the Meeting
whose votes are withheld on any matter, which are represented by "broker
non-votes" (as discussed below) or which abstain from voting on any matter are
not included in the determination of the shares voting on such matter but are
counted for quorum purposes.
Shares represented by "broker non-votes" (shares held by brokers or nominees
which are represented at the Meeting but with respect to which the broker or
nominee is not empowered to vote on a particular proposal) will be counted for
the purposes of determining whether there is a quorum but will be considered to
be voted only as to those matters actually voted on. In accordance with New York
Stock Exchange rules, brokers and nominees are precluded from exercising their
voting discretion with respect to the approval and adoption of non-routine
matters.
Voting Your Proxy
Shares represented by properly executed proxies will be voted as directed
therein on any poll that may be called for. In the event of a poll being called
for and in the absence of direction from a shareholder, proxies held by the
chairman of the Meeting will be voted FOR the re-election of eleven (11)
directors, FOR the re-appointment of the independent auditors of the Company and
authorization for the Board of Directors to fix the auditors' remuneration, FOR
the conversion of preference shares into common shares, FOR the increase in
authorized common share capital and FOR the adoption of new Bye-Laws.
You may revoke your proxy by giving written notice of revocation to the
Secretary of the Company at the registered office at any time before it is
voted, by submitting a later-dated proxy or by attending the Meeting and voting
your shares in person.
A proxy card has been enclosed with this document.
Shareholders should complete and return the proxy as soon as possible. In order
to be valid, the proxy must be completed in accordance with the instructions on
it and received at any of the offices set forth below by the times and dates
specified:
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<PAGE>
In the United States:
by [5:00 p.m.] (Eastern Daylight Time) on [March 25], 1998 by hand or mail at:
[ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road
Ridgehead Park, New Jersey 07660]
For shareholder questions, please call 1-800-685-4509.
In the United Kingdom:
by [5:00 p.m.] (Greenwich Mean Time) on [March 25], 1998 by hand or mail at:
[ChaseMellon Shareholders Services, L.L.C.
c/o Independent Registrars Group Limited
Balfour House
High Road, Ilford
Essex IG1 1NQ]
In Bermuda:
to the Registrar by 8:30 a.m. (Bermuda Time) on March 26, 1998 by hand or mail
at:
A.S. & K. Services Ltd.
Cedar House
41 Cedar Avenue
P.O. Box, HM 1179
Hamilton, HM 12
Bermuda
THE ADJOURNED 1997 ANNUAL GENERAL MEETING
Reason for the Adjourned 1997 Annual General Meeting
The Adjourned 1997 Annual General Meeting will be held at 9:00 a.m. on March 26,
1998.
Under the Company's Bye-Laws and Bermudian law, the Company is required to hold
an annual general meeting each year at which certain business must be conducted.
This business includes the election of directors, appointment of the Company's
auditors and presentation of audited financial statements for the preceding
fiscal year. The Company did not hold an annual general meeting in 1997 at which
any such actions were taken, although the Company did hold a special general
meeting on July 2, 1997 at which, following the removal of all but three of the
Company's then current directors, an additional eight directors were elected.
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<PAGE>
In order to formally comply with the requirements of the Bye-Laws and Bermudian
law with respect to an annual general meeting for 1997, the Company noticed such
a meeting for December 30, 1997. As indicated in the letter to shareholders that
accompanied the notice, no action was proposed to be taken or was taken on
December 30, 1997, other than to adjourn the 1997 Annual General Meeting to a
time immediately preceding the 1998 Annual General Meeting.
Matters to be Considered by Shareholders at the Adjourned 1997 Annual General
Meeting
At the Adjourned 1997 Annual General Meeting, shareholders will be asked to
elect directors to serve for the nominal period of time until the election of
directors at the 1998 Annual General Meeting to immediately follow. The nominees
for election are the same as the nominees for election at the 1998 Annual
General Meeting, who, technically will retire and stand for re-election at the
later meeting. Unless a shareholder indicates otherwise on the proxy card, a
vote FOR the election of directors will constitute a vote for the election of
such directors at both the Adjourned 1997 Annual General Meeting and at the 1998
Annual General Meeting.
Shareholders at the Adjourned 1997 Annual General Meeting will also be asked to
re-appoint the independent auditors of the Company and to authorize the
directors to fix their remuneration for the nominal period of time until
appointment of the independent auditors of the Company at the 1998 Annual
General Meeting to immediately follow. Unless a shareholder indicates otherwise
on the proxy, a vote FOR the appointment of the Company's independent auditors
will constitute a vote for the appointment of such auditors at both the
Adjourned 1997 Annual General Meeting and at the 1998 Annual General Meeting.
Presentation of Financial Statements
Under the Company's Bye-Laws and Bermudian law, audited financial statements
must be presented to shareholders at an annual general meeting. In fulfillment
of this requirement, historic audited financial statements in respect of the
year ended December 31, 1996 will be presented at the Adjourned 1997 Annual
General Meeting. Copies of these financial statements were sent to shareholders
of the Company in April 1997. Copies are also available on request from the
Secretary, Tyco International Ltd., The Gibbons Building, 10 Queen Street, Suite
301, Hamilton, HM 11, Bermuda (telephone: 441-292-8674).
The historic 1996 audited financial statements present information with respect
to ADT Limited ("ADT"; renamed "Tyco International Ltd.") only and do not
reflect the business combination between ADT and Tyco International Ltd. (the
Massachusetts company; "Former Tyco") on July 2, 1997, or certain stock splits
and other transactions that occurred in connection with or since the
consummation of such business combination. The Company's 1997 Annual Report,
which accompanies this proxy statement, includes the Company's audited financial
information for the year ended December 31, 1996 on a pooled basis, as if ADT
and Former Tyco were combined for that period. [These pooled financial
statements will also be presented at the Adjourned 1997 Annual General Meeting.]
The Company's audited financial statements for the nine month transition period
ended September 30, 1997, which are contained in the 1997 Annual Report and
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<PAGE>
which also reflect the combination of ADT and Former Tyco, will be presented at
the 1998 Annual General Meeting.
The remainder of this proxy statement discusses the matters to be presented at
the 1998 Annual General Meeting.
PROPOSAL NUMBER ONE - ELECTION OF DIRECTORS
Nominees for Directors
The election of directors will take place at the Meeting. Each of the directors
elected will serve for the ensuing year or for such other term as may be
determined in accordance with the Company's Bye-Laws. All nominees are presently
members of the Board of Directors. The management of the Company is not aware of
any reason why any of the nominees for director will not be able to serve.
Approval of the nominees for election to the Board of Directors will require the
affirmative vote of a majority of the votes cast by holders of common shares
represented at the Meeting in person or by proxy.
Information regarding the nominees, including their principal occupations during
the past five years, is set forth below.
<TABLE>
<CAPTION>
% OF
OUTSTANDING
NAME, PRINCIPAL NUMBER OF COMMON
OCCUPATION AND COMMON SHARES
POSITION WITH DIRECTOR SHARES OWNED OWNED
THE COMPANY AGE SINCE BENEFICIALLY(1) BENEFICIALLY
----------- --- ----- --------------- ------------
<S> <C> <C> <C> <C>
L. Dennis Kozlowski................................................ 51 1997 1,364,916(2) (5)
Chairman of the Board, President and Chief Executive Officer of the Company
(July 1997-present), Chairman of the Board, Former Tyco (January 1993-
present); Chief Executive Officer, Former Tyco (July 1992-present); President,
Former Tyco (December 1989-present); President, Grinnell Corporation (January
1984-present); Director, Applied Power Inc. (control products) (July 1994-
present); Director, Raytheon Company (electronic systems and equipment) (June
1995-present); Director, RJR Nabisco Holdings Corp. (consumer products) (June
1996-present)
Michael A. Ashcroft................................................ 51 1984 8,739,114(3) 1.6%
Chairman of the Board and Chief Executive Officer of the Company
(1984-July 1997); Chairman of the Board and Chief Executive Officer, Hawley
Group PLC (predecessor to the Company) (1977-1984); Chairman, BHI Corporation
(services company) (1987-present)
Joshua M. Berman(4)................................................ 59 1997 72,000 (5)
Counsel to Kramer, Levin, Naftalis, & Frankel (counselors at law)
(1985-present); Director, Former Tyco (1967-November 1997);
Vice President of the Company (July 1997-present)
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Richard S. Bodman*+................................................ 59 1997 26,925 (5)
Managing General Partner, AT&T Ventures LLC (venture capital) (May
1996-present); Senior Vice President, Corporate Strategy and Development, AT&T
Corporation (communications) (August 1990-May 1996); Director, Reed Elsevier,
plc (publishing) (June 1996-present); Director, Lin Television (broadcasting)
(May 1996-present); Director, National Housing Partnerships Inc. (real estate)
(August 1995-present); Director, Former Tyco (1992-November 1997)
John F. Fort, III*+................................................ 56 1997 159,795 (5)
Chairman of the Board, Former Tyco (1982-December 1992); Chief
Executive Officer, Former Tyco (1982-June 1992); Director, Dover
Corporation (diversified manufacturer) (November 1989-present);
Director, Roper Industries (diversified products) (December 1995-present);
Director, Former Tyco (1982-November 1997)
Stephen W. Foss**.................................................. 55 1997 59,160 (5)
Chairman, President and Chief Executive Officer, Foss Manufacturing
Company, Inc. (manufacturer of synthetic fibers and non-woven fabrics)
(1969-present); Director, Ameron International (diversified manufacturer) (1994-
present); Director, Former Tyco (1983-November 1997)
Richard A. Gilleland*.............................................. 53 1997 6,701 (5)
Chairman, President and Chief Executive Officer, Physician's Resource
Group, Inc. (physician practice management services) (December 1997-present);
President and Chief Executive Officer, AMSCO International, Inc. (infection
control products) (July 1995-July 1996); Senior Vice President, Former Tyco
(October 1994-July 1995); Chairman, President and Chief Executive Officer, The
Kendall Company (July 1990-July 1995); Director, DePuy International (medical
products) (July 1996-present); Director, Remington Arms Company, Inc.
(firearms and ammunition) (March 1994-present); Director, Former Tyco
(1994-November 1997)
Philip M. Hampton**+++.............................................. 65 1997 50,000 (5)
Co-Managing Director, R. H. Arnold & Co. (investment bank)
(April 1997-present); Chairman of the Board, Metzler Corporation (investment
bank) (October 1989-March 1997); Director & Vice Chairman, Bankers Trust New
York Corporation (banking) (1986- 1989); Director, Former Tyco (1985-November
1997)
James S. Pasman, Jr.*.............................................. 67 1992 1,924 (5)
President and Chief Operating Officer, National Intergroup, Inc.
(industrial holding company) (1989-1991); Chairman and Chief Executive Officer
Kaiser Aluminum and Chemical Corp. (aluminum and chemicals) (1987- 1989);
Director, BEA Income Fund, Inc., BEA Strategic Income Fund, Inc., BT Insurance
Funds Trust and Education Management Corp.
W. Peter Slusser**................................................. 68 1992 3,368 (5)
President, Slusser Associates, Inc. (private investment firm) (1988-present);
Managing Director and Head of Mergers and Acquisitions, Paine Webber
Incorporated (1976-1988); Director, Ampex Corporation (high performance
television and data storage recording systems) (1992-present); Director,
Sparton Corporation (anti-submarine warfare products and electronics)
(1997-present)
Frank E. Walsh, Jr.**.............................................. 56 1997 105,127 (5)
Chairman, Sandyhill Foundation (charitable organization) (August
1996-present); Director, Former Tyco (1992-November 1997)
Chairman Wesray Capital Corporation (private investment firm)
(1989-1996)
</TABLE>
- ----------
o Member of Audit Committee
- 8 -
<PAGE>
** Member of Compensation Committee
+ Member of Corporate Governance and Nominating Committee
++ Lead director
(1) The amounts shown are the number of common shares owned beneficially as of
January 16, 1998, based on information furnished by the persons named. For
purposes hereof, a person is deemed to be the beneficial owner of shares if
such person, either alone or with others, has the power to vote or to
dispose of such shares. There were 550,182,802 common shares of the Company
outstanding as of January 16, 1998.
(2) The amount shown includes 300,000 shares that Mr. Kozlowski has the right
to acquire within 60 days of January 16, 1998, through the exercise of
stock options. The amount shown excludes 3,000,000 options awarded to Mr.
Kozlowski under the Tyco International Ltd. Long Term Incentive Plan, which
will become exercisable in three equal annual installments beginning in
July 1998, and 655,200 shares held in a charitable remainder trust, as to
which Mr. Kozlowski disclaims beneficial ownership.
(3) The amount shown consists of 3,128,626 shares that Mr. Ashcroft has the
right to acquire within 60 days of January 16, 1998 through the exercise of
stock options and 5,610,488 common shares held by or on behalf of the
trustees of an irrevocable trust in which Mr. Ashcroft is beneficially
interested.
(4) The amount shown is held in two charitable remainder trusts of which Mr.
Berman is co-trustee and Mr. Berman and members of his immediate family are
life beneficiaries. The law firm of Kramer, Levin, Naftalis & Frankel has
performed and will perform legal services for the Company during the
current fiscal year.
(5) Less than 1%.
The Board of Directors held nine meetings during the nine month period ended
September 30, 1997 ("Fiscal 1997"). Messrs. Ashcroft, Pasman and Slusser, who
served as directors of the Company for all of Fiscal 1997, received during this
period compensation of $16,250, $36,250 and $36,250, respectively, for their
services as directors and for other services to the Company. (All references in
this proxy statement to "$" are to US dollars.) Each of the other current
directors, who served for only the last three months of Fiscal 1997, received
during this period compensation of $16,250. The existing Bye-Laws provide that a
director who does not hold an executive office or employment may be paid for his
services in such an amount not to exceed $25,000 per year or such larger amount
as may be approved at a general meeting of shareholders. (The existing Bye-Laws
also provide for additional, special remuneration to directors who perform any
extra or special services for the Company.) Shareholders are being asked to
approve proposed new Bye-Laws providing that directors may be paid such fees as
the Board from time to time determines. See "Proposal Number Five--Adoption of
New Bye-Laws." Subject to approval of the proposed new Bye-Laws, directors are
receiving in the 1998 fiscal year a compensation package consisting of $65,000
in cash and, for all directors other than Mr. Kozlowski, stock options valued at
$35,000 (utilizing the Black-Scholes option pricing model). Such compensation
has already been paid. (See below with respect to the grant of options.) If the
proposed new Bye-Laws are not approved, the Company will take such action as is
appropriate to comply with the provisions of the existing Bye-Laws on
remuneration of directors, including, if necessary, the recovery of any excess
compensation. Directors may make an irrevocable election each year to defer all
or a portion of their annual cash fees into an account containing phantom shares
of the Company. The account is credited with an amount equal to the
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<PAGE>
dividends which would have been earned on the shares if owned. Participants will
receive payments from their account in cash, in either a lump sum or annual
installments, beginning five years after the original deferral or at the
termination of serving on the Board of Directors of the Company, if earlier. In
July 1997, all directors other than Mr. Kozlowski were granted options to
purchase 3,500 common shares at an exercise price of $38.3125 per share. One
quarter of such options was attributable to director compensation in Fiscal
1997, and the balance is attributable to director compensation in the 1998
fiscal year. In October 1997, all directors other than Mr. Kozlowski were
granted options to purchase 876 common shares at an exercise price of $41.625,
all of which options were granted in respect of director compensation for the
1998 fiscal year. All such director options were granted under the Tyco
International Ltd. Long Term Incentive Plan, have a term of ten years from date
of grant and become exercisable one year from the date of grant. The exercise
price of all such options equals the market price of the common shares on the
date of grant.
The Board has an Audit Committee which reviews the internal controls of the
Company. It meets with appropriate Company financial personnel as well as the
Company's independent auditors. The Audit Committee reviews the scope and
results of the professional services provided by the Company's independent
auditors and the fees charged for such services and makes such recommendations
to the Board as it deems appropriate, including recommendations as to the
appointment of independent auditors. The Audit Committee met two times in Fiscal
1997.
The Board has a Compensation Committee which sets the compensation and benefits
of executive officers and key managers of the Company. The Compensation
Committee met three times in Fiscal 1997.
The position of Lead Director, held by an outside director, is responsible for
coordinating with the Chairman to establish the Board's agenda and the
nomination of new directors and their committee assignments, coordinating the
evaluation of the Chairman and all directors, and acting as the lead
non-employee director.
The Board has a Corporate Governance and Nominating Committee which is
responsible for evaluating the Board's structure, personnel and processes and
makes recommendations to the full Board regarding nominations of individuals for
election to the Board of Directors. The Committee will consider nominations
submitted by shareholders. To recommend a nominee, a shareholder should write to
the Secretary of the Company at the Company's corporate headquarters in
Hamilton, Bermuda. Any such recommendation must include the name and address of
the candidate, a brief biographical description or statement of the
qualifications of the candidate and the candidate's signed consent to being
named as a nominee in the Company's proxy statement, if nominated, and to serve
as a director if elected. Under the Company's existing Bye-Laws, generally no
person shall be eligible for election to the office of director at any general
meeting unless, not less than six and not more than twenty-eight calendar days
before the day appointed for the meeting, there has been given to the Secretary
notice in writing by a shareholder (not being the person to be proposed)
entitled to attend and vote at the meeting and the signed consent of the nominee
to serve as a director. The proposed new Bye-Laws would change these
requirements. See "Proposal Number Five--Adopting of New Bye-Laws";
- 10 -
<PAGE>
"Shareholder Proposals for 1999 Annual General Meeting"; Appendix II, New
Bye-Law 77.) Corporate Governance and Nominating Committee members communicated
with one another informally, but did not hold a formal meeting in Fiscal 1997.
Each director who served during Fiscal 1997 attended at least 75% of the
meetings of the Board and all of the meetings of each committee on which he
served.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE ELECTION OF THE NOMINEES LISTED ABOVE.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF THE COMPANY
The following table sets forth the beneficial ownership of common shares by (i)
those persons known by the Company to own beneficially more than 5% of the
Company's outstanding common shares; (ii) each of the executive officers named
under "Executive Compensation" below (other than Messrs. Kozlowski and
Ashcroft); and (iii) all directors and executive officers of the Company as a
group. See "Directors" above for the beneficial ownership of common shares by
Mr. Kozlowski, Mr. Ashcroft and other directors of the Company.
<TABLE>
<CAPTION>
NUMBER OF % OF OUTSTANDING
COMMON SHARES COMMON SHARES
BENEFICIAL OWNER OWNED BENEFICIALLY(1) OWNED BENEFICIALLY
---------------- --------------------- ------------------
<S> <C> <C> <C>
FMR Corp.(2).............................................................. 78,190,334 14.2%
82 Devonshire Street
Boston, Massachusetts 02109
Equitable Companies, Inc.(3).............................................. 40,311,672 7.3%
1345 Avenues of the Americas
New York, New York 10105
Massachusetts Financial Services Co.(4)................................... 35,015,576 6.4%
500 Boylston Street
Boston, Massachusetts 02116
Raymond A. Gross.......................................................... 3,400 *
Michael J. Richardson (5)................................................. 532,192 *
Stephen J. Ruzika......................................................... 13,958 *
Mark H. Swartz(6)......................................................... 288,452 *
All directors and executive officers as a group (20 persons).............. 12,153,511 2.2%
</TABLE>
- ----------
* Less than 1%
(1) The amounts shown are amounts owned beneficially as of January 16, 1998
(except for FMR, Equitable Companies and Massachusetts Financial Services,
where the amount is as of September 30, 1997), based on information
furnished by the persons named. For purposes hereof, a person is deemed to
be the beneficial owner of shares if such person, either alone or with
others, had the power to vote or to dispose of such shares. There were
550,182,802 common shares of the Company outstanding as of January 16,
1998.
(2) In a Form 13F, with information as of September 30, 1997, FMR Corp., the
parent company of the Fidelity Investments organization, reported that it
has sole dispositive power over 78,190,334 shares, and sole voting power
over 2,241,372 shares.
- 11 -
<PAGE>
(3) In a Form 13F, with information as of September 30, 1997, Equitable
Companies, Inc. reported that it has sole dispositive power over 39,846,576
shares, sole voting power over 29,393,152 shares, and shared voting power
over 465,096 shares, all of which shares are held for the benefit of its
separate accounts.
(4) In a Form 13F, with information as of September 30, 1997, Massachusetts
Financial Services Co. reported that it has sole dispositive power over
35,015,576 shares and sole voting power over 34,887,318 shares.
(5) Includes 216,598 shares that Mr. Richardson has the right to acquire within
60 days of January 16, 1998 through the exercise of stock options. The
amount shown excludes 86,638 options awarded to Mr. Richardson under the
ADT 1993 Long-Term Incentive Plan, which become exercisable over periods
from May 1998 through 2001.
(6) Includes 100,000 shares that Mr. Swartz has the right to acquire within 60
days of January 16, 1998 through the exercise of stock options. The amount
shown excludes 1,000,000 options awarded to Mr. Swartz under the Tyco
International Ltd. Long Term Incentive Plan, which will become exercisable
in three equal annual installments beginning in July 1998, and 91,000
shares held in a charitable remainder trust, as to which Mr. Swartz
disclaims beneficial ownership.
EXECUTIVE COMPENSATION
Summary Compensation Table
The table below presents the annual and long-term compensation for services in
all capacities to the Company and its subsidiaries for those persons who served
as the Chief Executive Officer during Fiscal 1997 and the other four most highly
compensated executive officers of the Company (the "Named Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE(1)
LONG-TERM INCENTIVE
----------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------- --------- ------------
SHARES LONG-TERM
FISCAL UNDERLYING STOCK INCENTIVE ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS PLAN PAYOUTS COMPENSATION
--------------------------- ------ ------ ----- --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael A. Ashcroft(2)............... 1997 $ 578,812 $ 0 $ 0 $ $19,750,000 (2)
Prior Chairman of the Board 1996 1,143,844 2,344,880 4,813,300 1,330,380 (3)
and Chief Executive Officer 1995 1,089,378 2,233,219 1,443,990 1,921,939 (3)
Raymond A. Gross(4).................. 1997 204,275 75,992 0 728,984 (4)
Senior Vice President of 1996 183,353 82,500 96,266 0
ADT Security Services, Inc. 1995 0 0 0 0
Michael J. Richardson(5)............. 1997 253,053 242,219 0 5,403 (6)
Chief Executive Officer 1996 335,000 222,705 38,506 6,461 (6)
of ADT Automotive, Inc. 1995 314,000 145,245 48,132 6,461 (6)
Stephen J. Ruzika(7)................. 1997 579,217 3,225,000(8) 0 5,166,516 (9)
Prior Vice President and Chief Financial 1996 686,306 1,100,000(8) 200,552 40,323 (9)
Officer; President ADT Security 1995 653,625 250,000(8) 481,330 37,432 (9)
Services, Inc......................
L. Dennis Kozlowski(10).............. 1997 312,500 2,544,260 3,300,000 6,508,125 108,125 (11)
Chairman of the Board and
Chief Executive Officer
Mark H. Swartz(12)................... 1997 139,875 1,272,130 1,100,000 2,169,375 31,994 (13)
Executive Vice President
and Chief Financial Officer
</TABLE>
- 12 -
<PAGE>
- ---------
(1) On July 2, 1997, a wholly-owned subsidiary of ADT merged with Former Tyco.
Upon consummation of the merger, ADT (the surviving corporation) changed
its name to Tyco International Ltd. Former Tyco became a wholly-owned
subsidiary of the Company and changed its name to Tyco International (US)
Inc. In conjunction with the merger on July 2, 1997, L. Dennis Kozlowski
and Mark H. Swartz were named Chairman of the Board/Chief Executive
Officer and Executive Vice President/Chief Financial Officer of the
Company, respectively. The compensation data presented herein for Messrs.
Kozlowski and Swartz reflect their earnings for the period from July 2,
1997 through the end of the fiscal year. Mr. Kozlowski and Mr. Swartz are
also Chairman of the Board/Chief Executive Officer and Vice
President/Chief Financial Officer of Former Tyco, respectively.
In September 1997 the Company changed its fiscal year end from December 31
to September 30. The change in year end resulted in a short fiscal year
covering the nine month transition period from January 1 to September 30,
1997. References to Fiscal 1997, 1996 and 1995 refer to the nine months
ended September 30, 1997 and the calendar years ended December 31, 1996
and 1995, respectively.
(2) Concurrent with the merger of ADT and Former Tyco, Mr. Ashcroft's services
as Chairman of the ADT Board and Chief Executive Officer were terminated.
At the time of his termination, Mr. Ashcroft was paid in full and final
settlement of severance payments to which he was entitled under his
employment agreement in respect of salary, bonus payment and pension
payments and also in lieu of compensation to the end of 1997 as well as in
satisfaction of certain other future commitments and benefits due him.
The salary, bonus and all other compensation shown in 1995 represents Mr.
Ashcroft's entitlement to those amounts. Mr. Ashcroft utilized $2,500,000
of the compensation due to him for 1995, being the whole of his bonus
entitlement of $2,233,219 and $266,781 of his other compensation to
subscribe for options, at a rate of $2.50 per option, for ADT common
shares.
(3) The other compensation due to Mr. Ashcroft in respect of 1996 and 1995 (a
portion of which for 1995 is referred to in note (2)) represents the US
dollar equivalent of (pound)851,344 and (pound)1,217,341, respectively,
being an amount in lieu of providing Mr. Ashcroft with retirement and
death benefits under a defined pension plan.
(4) Mr. Gross joined ADT Security Services, Inc. in March 1996 and left the
Company in October 1997. Other compensation of $728,984 represents amounts
paid under a severance agreement with the Company in accordance with a
"Severance Change in Control" event, as defined.
(5) The salary amount shown for 1996 represents Mr. Richardson's entitlement
to salary in the year. Prior to becoming entitled to receive certain
salary, however, Mr. Richardson elected to receive options, at the rate of
$2.50 per option, to subscribe for ADT common shares at an exercise price
of $8.956 per share, in lieu of receiving $69,444 and $83,333 in salary in
1996 and 1995, respectively.
(6) Includes $3,600, $4,500 and $4,500 contributed for 1997, 1996 and 1995,
respectively, to a defined contribution 401(k) pension benefit plan and
$1,803, $1,961 and $1,961 for 1997, 1996 and 1995, respectively, which is
the aggregate incremental cost to the Company of providing Mr. Richardson
with enhanced group term life insurance benefits.
(7) Concurrent with the merger of ADT and Former Tyco, Mr. Ruzika's services
as Vice President and Chief Financial Officer of the Company were
terminated, but he retained his position of President, ADT Security
Services, Inc. At the time of his termination as Chief Financial Officer,
Mr. Ruzika was paid $2,000,000 in severance to which he was entitled under
his employment agreement in respect of salary and bonus plan payments. In
October 1997, Mr. Ruzika resigned from his position as President, ADT
Security Services, Inc. and received a severance payment of $710,520. Such
severance amounts are included in the All Other Compensation column. He is
no longer employed by the Company.
- 13 -
<PAGE>
The salary amount shown for 1996 represents Mr. Ruzika's entitlement to
salary in the year. Prior to becoming entitled to receive certain salary,
however, Mr. Ruzika elected to receive options, at the rate of $2.50 per
option, to subscribe for ADT common shares at an exercise price of $8.956
per share, in lieu of receiving $80,1316 and $104,167 in 1996 and 1995,
respectively.
(8) Mr. Ruzika earned these amounts under a bonus arrangement by which
payments were related directly to the performance of the ADT common share
price.
(9) Includes $19,056, $37,639 and $35,777 contributed to Mr. Ruzika's
retirement income plan in 1997, 1996 and 1995, respectively, and $2,013,
$2,684 and $1,655 for 1997, 1996 and 1995, respectively, which is the
estimated aggregate incremental cost to the Company of providing Mr.
Ruzika with supplemental term life insurance. Also, in conjunction with
his termination as Chief Financial Officer and resignation as President,
ADT Security Services, Inc. (referred to in note 7 above), Mr. Ruzika was
paid $698,246 under his retirement income plan, $643,318 under a pension
plan and $1,112,419 under a supplemental pension plan.
(10) Included in the Bonus and Long-Term Incentive Plan Payouts for Mr.
Kozlowski is $4,526,193 of compensation that has been deferred under the
Tyco International Ltd. Deferred Compensation Plan. At September 30, 1997,
Mr. Kozlowski had $11,866,675 outstanding under the Key Employee Loan
Program of Former Tyco, the proceeds of which were used for payment of
taxes due on the vesting of restricted shares of common stock of Former
Tyco. The loans to Mr. Kozlowski are unsecured and bear interest at the
Company's incremental short term borrowing rate. The loans are repayable
upon the earliest to occur of (i) the expiration of ten years from the
date of borrowing, (ii) the termination of Mr. Kozlowski's employment with
the Company or (iii) the sale or other disposition (other than gifts to
certain family members) of the shares with respect to which the loans were
granted.
(11) Includes contributions to a Supplemental Executive Retirement Plan of
$91,875, interest credited on deferred compensation in excess of 120% of
the applicable federal long-term rate of $13,025, and director's fees of
$16,250.
(12) Included in the Salary, Bonus and Long-Term Incentive Plan Payouts for Mr.
Swartz is $3,466,505 of compensation that has been deferred under the Tyco
International Ltd. Deferred Compensation Plan.
(13) Includes contributions to a Supplemental Executive Retirement Plan of
$31,994, and interest credited on deferred compensation in excess of 120%
of the applicable federal long-term rate of $8,747.
Option Grants in Last Fiscal Year
The following table shows all grants of stock options to the Named Officers
during Fiscal 1997. All options expire ten years after the date of grant. The
grant date present values were determined using the Black-Scholes option pricing
model applied as of the grant date using the following assumptions: an interest
rate of 6.07 percent that represents the interest rate on a long-term U.S.
Treasury security; an assumed annual volatility of underlying stock of 22.0
percent; quarterly dividend payments of $.025 per share; and the vesting of all
options.
- 14 -
<PAGE>
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------
% OF TOTAL
OPTIONS EXERCISE
GRANTED TO OR BASE GRANT DATE
OPTIONS EMPLOYEES PRICE EXPIRATION PRESENT
NAME GRANTED(1) IN FISCAL YEAR ($/SHARE) DATE VALUE
---- ---------- -------------- --------- ------ ------
<S> <C> <C> <C> <C> <C>
L. Dennis Kozlowski....................... 3,000,000 35.2% $ 38.31250 July 17, 2007 $69,783.845
L. Dennis Kozlowski....................... 300,000 3.5 40.96875 July 23, 2007 6,653,793
Mark H. Swartz............................ 1,000,000 11.7 38.31250 July 17, 2007 23,261,281
Mark H. Swartz............................ 100,000 1.2 40.96875 July 23, 2007 2,217,931
</TABLE>
- ----------
(1) The 3,000,000 and 1,000,0000 options granted to Mr. Kozlowski and Mr.
Swartz, respectively, become exercisable in three equal annual installments
beginning in July 1998. The 300,000 and 100,000 options granted to Mr.
Kozlowski and Mr. Swartz, respectively, become exercisable on January 23,
1998, six months from date of grant. These latter options were granted
under a re-load feature of the Tyco International Ltd. Long Term Incentive
Plan that provides for issuance of stock options to replace restricted
shares returned to the Company to satisfy income tax withholding
obligations on stock vestings.
Aggregate Option Exercises in Last Fiscal Year and Year-End Option Values
Shown below is information with respect to aggregate option exercises by the
Named Officers in the fiscal year ended September 30, 1997 and with respect to
unexercised stock options held by them at September 30, 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS
ACQUIRED FISCAL YEAR END AT FISCAL YEAR END(1)(2)
ON VALUE ----------------------------- ----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael A. Ashcroft(3)...... 0 $ 0 10,829,906 0 $290,450,144 $ 0
Raymond A. Gross(4)......... 0 0 0 96,266 0 2,299,914
Michael J. Richardson....... 0 0 303,232 86,638 9,357,488 2,313,615
Stephen J. Ruzika(5)........ 160,442 5,131,240 1,371,722 64,176 39,650,744 1,795,602
L. Dennis Kozlowski......... 0 0 0 3,300,000 0 8,175,000
Mark H. Swartz.............. 0 0 0 1,100,000 0 2,725,000
</TABLE>
- ----------
(1) Based on the closing price of $41.03125 on September 30, 1997 (after giving
effect to the two-for-one stock split effective on October 22, 1997).
(2) Messrs. Ashcroft, Richardson and Ruzika were granted certain options for
which they have paid a subscription price of $2.50 per option which has
been taken into account for the purpose of valuing these options.
(3) On November 10, 1997, Mr. Ashcroft exercised 7,701,280 options with a value
of $210,475,982 based on a Black-Scholes valuation. In connection with this
exercise, a subsidiary of the Company provided a guarantee through December
3, 1997 of Mr. Ashcroft's short-term margin loan of approximately $120
million to an investment broker in return for managing an orderly
disposition of the shares on behalf of Mr. Ashcroft.
(4) Upon Mr. Gross' resignation as Senior Vice President of ADT Security
Services, Inc. subsequent to year end, his unexercisable options became
vested. On October 2, 1997, Mr. Gross exercised all his remaining options
(96,266) for a value of $2,320,973.
- 15 -
<PAGE>
(5) Upon Mr. Ruzika's resignation as President of ADT Security Services, Inc.
subsequent to year end, his unexercisable options became vested. On October
22, 1997, Mr. Ruzika exercised all his remaining options (1,435,898) for a
value of $41,969,748.
Certain Defined Benefit Plans
Except for Mr. Richardson, the Company and its subsidiaries do not maintain any
defined benefit or actuarial retirement plans ("pension plans") in which the
Named Officers participate. Mr. Richardson participates in a pension plan
maintained by ADT Group PLC (the "ADT Group Plan"). Mr. Richardson is the only
Named Officer who participates in the ADT Group Plan. The ADT Group Plan
provides Mr. Richardson an annual benefit payable for life beginning at age 60.
The annual benefit is equal to 66.7 percent of base salary for the three years
of the most recent ten years prior to retirement that produce the highest
average. Mr. Richardson's annual benefit payable at age 60 for life is
(pound)146,095. Since Mr. Richardson has already attained age 60, the benefit
payable to him upon his actual retirement will be adjusted based upon his actual
retirement date. Benefits payable under the ADT Group Plan are not offset by
United States social security benefits.
Employment Contracts and Termination of Employment Arrangements
Mr. Richardson entered into an employment agreement with ADT Automotive
Holdings, the corporate parent of ADT Automotive, as of November 30, 1993. The
agreement provided for Mr. Richardson's services as Chief Executive Officer of
ADT Automotive Holdings and its subsidiaries from December 1, 1993 until July
31, 1996, subject to renewal for additional one-year terms thereafter. The
agreement was renewed on a year-to-year basis through July 31, 1998.
Mr. Richardson's initial annual base salary was $300,000 and is subject to
annual review for possible increases. Mr. Richardson is also eligible for annual
bonus payments at the discretion of the Company. The termination provisions of
this agreement include a term to the effect that, in the event that the
agreement is terminated by ADT Automotive Holdings without cause or by Mr.
Richardson with cause, Mr. Richardson will be entitled to receive his base
salary and certain fringe benefits for two years or the remaining term of the
agreement, whichever is longer.
Board Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors of the Company sets the
level of compensation and benefits for the Company's executive officers and key
managers and oversees the administration of executive compensation programs. The
Compensation Committee is composed solely of independent directors, none of whom
have any interlocking relationships with the Company that are subject to
disclosure under the Securities and Exchange Commission rules relating to proxy
statements.
During Fiscal 1997, compensation was earned by the Named Officers based on
arrangements approved at the beginning of the year by the respective
Remuneration Committee of ADT and/or
- 16 -
<PAGE>
by the Compensation Committee of Former Tyco. Consistent with the Former Tyco
philosophy, going forward, the Compensation Committee's executive compensation
policies are designed to:
o attract and retain senior executives who will contribute to the
long term success and growth of the Company;
o reward executives for increased profitability and resulting
increased shareholder value by closely aligning the financial
interest of senior executives with those of shareholders;
o provide equitable compensation within a competitive framework of
comparable industrial companies; and
o emphasize the importance of stockholder interest through heavily
weighing the top executives' compensation with grants of
restricted stock and options.
The Compensation Committee seeks to achieve these goals through a compensation
program applicable to all corporate officers and to the operating unit officers
reporting directly to the Chief Executive Officer. The program consists
primarily of the following:
o Base Pay: Based upon levels that reflect the degree of
responsibility associated with the executive's position and the
executive's past achievements;
o Annual Incentive Bonuses: Paid in cash based upon achievement of
annual earnings and working capital targets established for the
relevant business unit and/or the overall performance of the
Company; and
o Long-term, Equity-based Incentive Compensation: Tied to
shareholder return in that the value of the executive's
shareholding fluctuates with the movement in the share price. The
restricted stock program consists of grants in which the lapse of
restrictions generally occurs as a result of obtaining certain
performance based criteria. The stock option program consists of
grants which exercise pro rata over three years and are
exercisable in periods up to ten years. The number of shares and
options awarded is based upon certain financial and management
performance targets as well as the individual's potential for
future contribution to the Company. The principal purpose of the
equity program is to encourage executives to enhance the value of
the Company and therefore, the price of the Company's shares and
the return to shareholders. Additionally, this component of the
compensation program creates an incentive for the individual to
remain with the Company until restrictions on all shares or
option exercise periods have lapsed.
Any person who is a named executive officer for proxy reporting purposes will be
a participant in the Tyco Incentive Compensation Plan (the "Incentive Plan").
Through the Incentive Plan, the named executives can each earn a cash bonus,
vest in shares subject to restricted stock grants, and earn stock option grants
based on the attainment of certain performance goals.
- 17 -
<PAGE>
These performance goals are based on three business criteria for the chief
executive officer and named corporate officers: (i) the Company's growth in
earnings per share; (ii) increases in earnings before tax; and (iii) improvement
in operating cash flow, each as defined. For those named executives who have
divisional operating responsibilities, the performance targets are measured
through improvement in divisional earnings before interest and tax, as defined,
as well as achieving certain working capital goals. Specific annual targets for
the performance measures under the Incentive Plan are established in writing by
the Compensation Committee within 90 days of the beginning of the fiscal year to
which the performance goals relate.
The Compensation Committee believes that the overall performance of its most
senior executives cannot in all cases be reduced to a fixed formula and that the
prudent use of discretion in determining pay levels is in the best interests of
the Company and its shareholders. While achieving certain predetermined goals is
fundamental to earning incentive payments, neither the Compensation Committee
nor management can anticipate unusual events entirely beyond the control of
management which may have a material effect on the ability to achieve desired
results. Under certain circumstances, the Compensation Committee's use of
discretion in determining amounts of compensation may be appropriate.
Annually, the Compensation Committee reviews with the Chief Executive Officer
the individual performance of each of the other executive officers and receives
his recommendations with regard to the appropriate compensation awards. The
Compensation Committee also reviews with the Chief Executive Officer the
financial and other objectives for each of the executive officers for the
following year.
The Compensation Committee meets shortly after the end of each fiscal year to
consider and make its determination regarding the total compensation of the
Chief Executive Officer for the ensuing year. The Compensation Committee
determines such compensation based on its assessment of the individual
performance of the Chief Executive Officer, a review of the Company's operating
performance (including such factors as revenues, operating income, earning per
share and cash flow generation), an analysis of total returns to shareholders
relative to total returns generated by comparable quoted companies and a review
of compensation of the chief executive officers of companies with similar
businesses of comparable size.
Submitted by the Compensation Committee,
Stephen W. Foss
Philip M. Hampton
W. Peter Slusser
Frank E. Walsh, Jr.
- 18 -
<PAGE>
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a graph comparing the cumulative total shareholder return on
the Company's common shares against the cumulative total return of the S&P
Services (Commercial and Consumer) Index, the Dow Jones Industrial-Diversified
Index and the S&P 500 Index. In September 1997, the Company changed its fiscal
year end from December 31 to September 30. Therefore, the graph below sets forth
the cumulative total return for each of the four years in the period ended
December 31, 1996 and for the nine-month transition period ended September 30,
1997. Also shown is the cumulative total return as of July 2, 1997, the
consummation date of the merger between ADT and Former Tyco.
[The Performance Graph is being filed in tabular form pursuant to
Item 304(d) of Regulation S-T.]
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
------------------------------------------------------------------------------
12/92 12/93 12/94 12/95 12/96 7/2/97 9/97
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Tyco International Ltd. (formerly ADT
Limited)(1)....................... ADT, TYC 100.00 114.52 138.71 193.55 295.16 467.74 529.76
S&P Services (Commercial &
Consumer)......................... ISSV 100.00 96.90 88.71 119.82 123.74 134.13 154.28
Dow Jones Industrial-Diversified.... IIDD 100.00 122.19 112.07 146.76 190.60 238.00 247.97
S&P 500............................. I500 100.00 110.08 111.53 153.45 188.68 227.57 244.61
</TABLE>
- ----------
(1) On July 2, 1997, a wholly-owned subsidiary of ADT merged with Former Tyco.
Upon consummation of the merger, ADT (the surviving corporation) changed
its name to Tyco International Ltd. Former Tyco became a wholly-owned
subsidiary of the Company and changed its name to Tyco International (US)
Inc. This performance presentation shows the cumulative total return for
ADT from December 31, 1992 through July 2, 1997 and for the Company for
the periods thereafter.
PROPOSAL NUMBER TWO - APPOINTMENT OF INDEPENDENT AUDITORS
In accordance with Section 89 of the Companies Act, 1981 of Bermuda, the
Company's shareholders have the authority to appoint the independent auditors of
the Company and to authorize the Board of Directors to fix the auditors'
remuneration. Shareholders will be asked to make a re-appointment at the Meeting
of Coopers & Lybrand, who has been approved by the Board to be the independent
auditors of the Company for the fiscal year ending September 30, 1998. A
predecessor of Coopers & Lybrand was first appointed to be the independent
auditors of the Company in 1984. Audit services performed by Coopers & Lybrand
for the Company in Fiscal 1997 included the examination of the consolidated
financial statements of the Company and its subsidiaries. Appointment of the
independent auditors requires the affirmative vote of a majority of the votes
cast by the holders of outstanding common shares represented at the Meeting in
person or by proxy. If shareholders do not approve such appointment, it will be
reconsidered by the Board.
- 19 -
<PAGE>
[It is expected that representatives of Coopers & Lybrand will attend the
Meeting and be available to respond to questions.]
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE RE-APPOINTMENT
OF COOPERS & LYBRAND AS THE COMPANY'S INDEPENDENT AUDITORS AND TO AUTHORIZE THE
BOARD OF DIRECTORS TO FIX THE AUDITORS' REMUNERATION.
PROPOSAL NUMBER THREE - CONVERSION OF PREFERENCE SHARES INTO COMMON SHARES
A resolution will be proposed at the Meeting to simplify the Company's
authorized share capital through the conversion of certain of the authorized
preference shares into common shares (the "Capital Conversion Proposal").
Although the Company's issued and outstanding share capital consists of a single
class of common shares, the authorized share capital of the Company also
includes four classes of preference shares, representing various capital issues
previously made by the Company and now redeemed in full. One of these classes
consists of 125 million convertible cumulative redeemable preference shares
("First Preference Shares") which, subject to certain limitations, the Board is
empowered to issue in one or more series. The Board is also empowered to
determine the designation of, and the number of shares constituting each series
and the rights and restrictions attaching to each series, including the dividend
rate, the terms and conditions of any voting and conversion rights, the amounts
payable on redemption or return of capital, and the preference and relative
rights among each series of First Preference Shares. At present, none of these
shares is in issue, but 7,500,000 First Preference Shares have been designated
as Series A First Preference Shares and are reserved for issue upon exercise of
rights under the Company's Shareholder Rights Plan.
It is proposed to retain the First Preference Shares but to convert and
sub-divide all the other authorized preference shares into common shares. This
will result in the creation of an additional 3,750,000 common shares and the
share capital will be comprised of the common shares and a single class of
preference shares (being the First Preference Shares, which will simply be
designated as "Preference Shares").
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE CAPITAL CONVERSION PROPOSAL.
PROPOSAL NUMBER FOUR - INCREASE IN AUTHORIZED COMMON SHARE CAPITAL
A resolution will be proposed at the Meeting to increase the Company's
authorized share capital by the creation of an additional 750,000,000 common
shares (the "Capital Increase Proposal").
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<PAGE>
The Company's authorized share capital is currently US$275,750,000, divided into
certain preference shares, as described above, and 750,000,000 common shares of
US$0.20 each (which will be increased to 753,750,000 if the Capital Conversion
Proposal is approved). As of January 16, 1998, there were 550,182,802 common
shares in issue and approximately 55,000,000 common shares were reserved for
issue under stock options, warrants and other existing entitlements. The number
of common shares in issue was significantly increased by the 2 for 1 stock split
effected as a stock dividend in October 1997.
The Board believes that it is desirable to have available additional authorized
common shares for future stock splits and dividends, employee benefit plans,
financings, acquisitions and other corporate purposes. The passing of the
resolution to approve the Capital Increase Proposal would confer on the Board
the power to issue these additional shares in its discretion without further
approval by shareholders, except as may be required by any applicable stock
exchange rules. The Company has filed a registration statement with the United
States Securities and Exchange Commission (the "SEC") pursuant to which it may
publicly offer common shares and other securities of the Company from time to
time. [The SEC has not yet declared the effectiveness of this registration
statement.]
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE CAPITAL INCREASE PROPOSAL.
PROPOSAL NUMBER FIVE - ADOPTION OF NEW BYE-LAWS
The Board of Directors has approved the adoption of a new set of bye-laws,
subject to the approval of shareholders at the Meeting, to replace the Company's
existing Bye-Laws. These proposed new Bye-Laws contain numerous changes to the
existing Bye-Laws. The changes are detailed in Appendix I to this proxy
statement, "Summary of Principal Differences Between the Existing Bye-Laws and
the Proposed New Bye-Laws." The full text of the proposed new Bye-Laws is set
forth in Appendix II to this proxy statement. The existing Bye-Laws may be
inspected at the corporate offices of the Company, The Gibbons Building, 10
Queen Street, Suite 301, Hamilton, HM 11, Bermuda, and copies may be obtained by
writing to the Secretary of the Company at the aforementioned address prior to
the Meeting. The existing Bye-Laws are also on file with the SEC and publicly
available as an exhibit to the Company's Current Report on Form 8-K, dated July
2, 1997, which was filed on July 10, 1997. The discussion of the existing
Bye-Laws and the proposed new Bye-Laws in this proxy statement, including
Appendix I, is qualified in its entirety by reference to the full text of each
of those documents. The proposed new Bye-Laws have been prepared on the basis
that the Capital Conversion Proposal is adopted, and the approval of the
proposed new Bye-Laws is therefore conditional on the approval of the Capital
Conversion Proposal.
The existing Bye-Laws were adopted in 1984, with various amendments having been
made on a piecemeal basis over the years since that time. Following the business
combination between ADT and Former Tyco, the Company initiated a review of the
existing Bye-Laws to analyze the differences between the corporate governance
profiles of ADT and Former Tyco and determine the extent to which the Company's
existing Bye-Laws reflect current corporate practice of large
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<PAGE>
international public companies and conform to changes in Bermudian law and
practice that have occurred since the adoption of the existing Bye-Laws. As a
result of this review, the Board has approved extensive changes to the existing
Bye-Laws. Rather than making numerous amendments to the existing Bye-Laws, the
Board has adopted an entirely new set of by-laws, subject to the approval of
shareholders at the Meeting.
Governance Profiles of ADT and Former Tyco
The Company is incorporated under and subject to Bermudian law, and its existing
Bye-Laws are those that were adopted by ADT. Former Tyco was incorporated under
and subject to Massachusetts law. In its consideration of the proposed new
Bye-Laws, the Board focused upon certain significant differences between the
governance regimes of the two companies, particularly as they relate to
anti-takeover protections. These differences are summarized in the following
table:
<TABLE>
<CAPTION>
Provision ADT Former Tyco
(the Company)
<S> <C> <C>
Shareholder Rights Plan ("poison Yes, including a No.
pill") so-called "dead hand"
provision pursuant to
which only so-called
"continuing directors"
are able to redeem the
rights or amend the plan.
Staggered Board of Directors No. No.
Massachusetts law
staggers the terms of
office of directors of
publicly-held
Massachusetts companies
unless the corporation,
by vote of its board or
by vote of shareholders,
opts out of this law. The
board of Former Tyco
opted out. However, under
Massachusetts law, a
board that had opted out
could at any time opt in
and stagger the terms of
its directors.
Limitation on the Power of No. No.
Shareholders to Remove Directors
Under the Company's Bye- Under Massachusetts law,
Laws, shareholders may shareholders may remove a
call a special general director with or without
meeting to remove a cause by the vote of
director, and a director holders of a majority of
may be removed from votes entitled to vote
office by the vote of a generally in the election
majority of directors.
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<PAGE>
of the shares voting at such If a board is staggered,
meeting. however, directors may be
removed only for
specified acts of
misconduct.
Ability of Shareholders to Call a Yes. Yes.
Special Meeting
Under Bermudian law, the Under Massachusetts law,
Board is required to a corporation is required
convene a special general to call a meeting of
meeting of shareholders shareholders on the
on the requisition of application of the owners
holders of at least 10% of at least 40% of the
of the paid-up voting corporation's stock
capital. entitled to vote.
Provisions Applicable to Significant The Company's Bye-Laws The Massachusetts
Shareholders make applicable to the business combination
Company various statute provides that a
provisions of the UK City person that holds 5% or
Code on Takeovers and more of the voting stock
Mergers. Under these of a Massachusetts
provisions, a person corporation (an
acquiring 30% or more of "interested shareholder")
the voting rights of a may not engage in certain
company may be required business combination
to make an all-cash offer transactions with the
for all shares at a corporation for a period
specified minimum price. of three years, unless
Under related rules, (i) the board of
there are restrictions on directors approved such
a person acquiring shares business combination
representing 10% or more transaction or the
of a company's voting transaction that resulted
rights in a seven day in the interested
period if, as a result, shareholder becoming such
such person would hold prior to the date such
more than 15% but less person became an
than 30% of the interested shareholder;
outstanding voting (ii) the shareholder
rights. acquires at least 90% of
the corporation's voting
The Company's Bye-Laws stock (excluding shares
also provide that a held by officers and
person acquiring 3% or directors and certain
more of any class of employee plans) in the
shares must notify the transaction that causes
Company of that him to become an
acquisition and any interested shareholder;
change of 1% or more in or (iii) the business
the shares held by such combination transaction
person. A person who is approved by the board
fails to comply with of directors of the
these provisions could be corporation and holders
deprived of his voting of two-thirds of the
rights. corporation's voting
stock not held by the
interested shareholder.
The Bye-Laws of Former
Tyco (adopted before the
Massachusetts business
combination statue was
enacted) provided that
business combinations
with 5% shareholders that
are not approved by
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<PAGE>
"continuing directors"
and that do not satisfy
certain "fair price"
provisions require
approval by holders of
80% of the corporation's
voting stock.
</TABLE>
In adopting the proposed new Bye-Laws, the Board of Directors of the Company
intended to move the Company closer to the corporate governance profile of
Former Tyco by eliminating most of the anti-takeover provisions of the existing
Bye-Laws and adopting certain provisions from the corporate governance profile
of Former Tyco. The Board believes that the proposed new Bye-Laws will protect
the Company and its shareholders against coercive takeover tactics that threaten
corporate policy or might deprive shareholders of the opportunity to obtain the
best price for their shares. The Board also believes that the new Bye-Laws
strike a proper balance between giving directors the authority to act, in the
exercise of their fiduciary duties, to protect corporate and shareholder
interests and the principle that the ultimate governance authority of a company
resides with its shareholders.
The proposed new Bye-Laws:
o provide for the annual election of directors, but include a
provision similar to the Massachusetts statute allowing the Board
of Directors to stagger the terms of office of directors;
o continue to allow removal of directors by shareholders for any
reason, except that, while the terms of directors are staggered,
directors may be removed by shareholders only by vote of the
holders of 80% of the total number of shares outstanding and
entitled to vote;
o continue to enable shareholders holding at least 10% of the
Company's paid-up voting capital to request a special general
meeting of shareholders, and provide that such meeting must be
convened within six months after the date of the requisition;
o eliminate those provisions of the existing Bye-Laws making
applicable to the Company provisions of the UK City Code on
Takeovers and Mergers and related rules;
o eliminate the informational requirements currently imposed upon
3% shareholders; and
o include a provision on business combinations with interested
shareholders, but one that is modeled after Section 203 of the
General Corporation Law of Delaware rather than the Massachusetts
statute or the "fair price" provision contained in Former Tyco's
Bye-Laws. Under the new provision, a person owning 15% or more of
the Company's voting shares (referred to as an "interested
shareholder") may not engage in certain business combination
transactions with the Company for a period of three years, unless
(x) prior to the time the person became an interested
shareholder, the
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<PAGE>
Board of Directors approved either the business combination or the
transaction in which the person became an interested shareholder,
(y) the interested shareholder acquires at least 85% of the
Company's voting shares in the transaction that results in its
becoming an interested shareholder; or (z) the transaction is
approved by the Board of Directors of the Company and two-thirds
of the voting shares not owned by the interested shareholder.
Although the proposed new Bye-Laws would allow the Board to stagger the terms of
directors, the Board of the Company intends to continue to hold an annual
election of all directors and has no present intention to introduce a staggered
board. The Board intends to exercise its authority to stagger the terms of
directors only if and so long as it determines, in the exercise of its fiduciary
duties, that the staggering of the terms of directors is an appropriate and
necessary response to a threat to corporate policy or to a takeover attempt that
would deprive shareholders of the opportunity to maximize the value of their
shares. If the Board staggers the terms of directors, at least two annual
general meetings would generally be required to effect a change of a majority of
the directors. This could give the Board the time and leverage necessary to
review any takeover proposal, to negotiate a more favorable result, to consider
alternative strategies and to assure that shareholder value is maximized.
The Board of the Company has resolved that, if the proposed new Bye-Laws are
approved by shareholders, the Board will redeem or otherwise terminate the
Company's poison pill. Under Bermudian law, the Board will continue to have the
authority to adopt a new shareholder rights plan at any time without the
approval of shareholders. However, the Board would not exercise such authority
unless it determined, in the exercise of its fiduciary duties, that adoption of
such a plan was appropriate and necessary to achieve the protection of corporate
or shareholder interests, as described above.
The proposed new bye-law provisions relating to a staggered board and to
business combination transactions with interested shareholders may be
disadvantageous to shareholders in that they may discourage a future takeover
transaction that is not approved by the Board but which may be favored by a
majority of shareholders. For example, a transaction such as a hostile tender
offer could provide shareholders with a substantial premium for their shares
over the then current market price, but the new bye-law provisions could prevent
or discourage consummation of such a transaction. Staggering the terms of
directors and increasing the vote required for removal of directors on a
staggered board could also make it more difficult to change the existing Board
and management of the Company, even if a majority of the shareholders desired to
do so. Nonetheless, the Board believes that the proposed new Bye-Laws are in the
best interests of shareholders, and strike an appropriate balance between the
respective governance authority of the Board and the shareholders.
Other Corporate Governance Provisions
The proposed new Bye-Laws contain other provisions designed to conform to
current corporate practice of large publicly held international companies. In
this regard, the new Bye-Laws would:
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<PAGE>
o increase the quorum requirements for meetings of shareholders
from two or more shareholders regardless of the number of shares
they hold to holders of a majority of the number of shares
outstanding and entitled to vote;
o permit the Board to establish a record date for shareholders
entitled to vote at general meetings;
o change the vote required to approve an amalgamation to which the
Company is a party from three-quarters of the votes cast to a
simple majority of each outstanding class of shares;
o eliminate the current $25,000 limit on annual remuneration for
services as a non- executive director and allow directors to
receive such fees as the Board determines appropriate; (In the
past, ADT had paid additional remuneration to directors for their
services on committees of the Board and for other services.)
o change the voting requirement for alteration of the Bye-Laws from
a majority of votes cast to a majority of the issued shares
carrying the general right to vote;
o provide that a director may be removed by the written resolution
of 80% of the other directors, in contrast to the existing
Bye-Laws that provide for such removal only upon the resolution
of all the other directors;
o establish new procedural requirements for shareholder nomination
of directors that include notice of such nomination to the
Company at its registered office not less than 60 days nor more
than 180 days prior to the scheduled date of an annual general
meeting or, if at the time the notice of nomination is given the
meeting date is not known, the anniversary of the previous year's
annual general meeting and provision of appropriate supporting
information;
o eliminate the requirement that at least one vice president of the
Company be a director;
o eliminate the requirement that the Board manage the affairs of
the Company outside the United Kingdom; and
o conform to changes in Bermudian law on exculpation and
indemnification of directors and officers.
The proposed new Bye-Laws contain numerous other changes to the existing
Bye-Laws, many of which are of a technical nature designed to conform to changes
in Bermudian companies legislation or corporate practice transpiring since the
adoption or most recent amendment of the Bye-Laws. All the bye-law changes are
summarized in greater detail in Appendix I, and the full text of the proposed
new Bye-Laws is set forth in Appendix II, to which reference is made hereby.
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<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE ADOPTION OF THE PROPOSED NEW BYE-LAWS.
RECEIPT OF FINANCIAL STATEMENTS
In accordance with Section 84 of the Companies Act, 1981 of Bermuda, the audited
financial statements of the Company for the year ended December 31, 1996 and for
the nine month period ended September 30, 1997 will be presented at the Meeting.
These statements have been approved by the directors of the Company. There is no
requirement under Bermudian law that such statements be approved by
shareholders, and no such approval will be sought at the Meeting.
SHAREHOLDER PROPOSALS FOR THE 1999 ANNUAL GENERAL MEETING
In accordance with the rules established by the SEC, any shareholder proposal
intended for inclusion in the proxy statement for next year's annual general
meeting of shareholders must be received by the Company no later than [October
29, 1998]. Such proposal should be sent to the Secretary of the Company at The
Gibbons Building, 10 Queen Street, Suite 301, Hamilton, HM 11, Bermuda. To be
included in the proxy statement, the proposal must comply with the requirements
as to form and substance established by the SEC and must be a proper subject for
shareholder action under the Company's Bye-Laws and Bermudian law.
Under the Companies Act, 1981 of Bermuda, any shareholders who represent not
less than 5 per cent of the total voting rights of shareholders having the right
to vote at the meeting, or who are 100 or more in number, may requisition a
resolution at an annual general meeting. A shareholder wishing to move a
resolution at an annual general meeting must give notice to the Company of the
resolution at the aforementioned address at least six weeks before the meeting.
If the proposed new Bye-Laws are approved, any shareholder wishing to nominate a
director at an annual general meeting will be required to provide written notice
of such nomination and appropriate supporting information, as set forth in
Bye-Law 77 of the new Bye-Laws, to the Company at its registered office not less
than 60 calendar days nor more than 180 days prior to the scheduled date of the
annual general meeting or, if at the time the notice of nomination is given the
meeting date is not known, the anniversary of the previous year's annual general
meeting.
REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
Copies of the Company's Transition Report on Form 10-K for Fiscal 1997, as filed
with the SEC (without exhibits), are available to shareholders free of charge by
writing to Investor Relations: Tyco International Ltd., The Gibbons Building, 10
Queen Street, Suite 301, Hamilton, HM 11, Bermuda.
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<PAGE>
GENERAL
The enclosed proxy is solicited on behalf of the Company's Board of Directors.
Unless otherwise directed, proxies held by the chairman will be voted to elect
the directors named therein and FOR the other proposed resolutions. If any
matter other than those described herein properly comes before the Meeting, the
chairman will vote the shares represented by such proxies in accordance with his
best judgment.
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<PAGE>
APPENDIX I
SUMMARY OF PRINCIPAL DIFFERENCES BETWEEN
THE EXISTING BYE-LAWS AND THE PROPOSED NEW BYE-LAWS
In this summary, references to the "Companies Act" are to the Companies Act,
1981 of Bermuda, as amended, references to the "1991 Act" are to the ADT Limited
Company Act 1991, which modifies certain provisions of the Companies Act in
their application to the Company, and references to the "US" and the "UK" are to
the United States of America and the United Kingdom, respectively.
1. INTERPRETATION (NEW BYE-LAW 1)
Both the existing Bye-Laws and the new Bye-Laws make reference to an "officer"
of the Company in a number of provisions, including those relating to the
exemption and indemnification of officers (see paragraph 32 below). This term,
under Bermudian law, includes a director, secretary and (at least for certain
purposes) an auditor. The new Bye-Laws define an "officer" so as to exclude any
person holding the office of auditor of the Company. The existing Bye-Laws do
not contain a corresponding provision.
2. SHARE RIGHTS (NEW BYE-LAW 4)
The existing Bye-Laws set out, in addition to the amount of the common share
capital, particulars of the rights attaching to the various classes of
authorized but unissued preference share capital of the Company. It is proposed
that all the existing preference share capital, except that presently described
as First Preference Shares, will be converted into common shares. Accordingly,
the new Bye-Laws make provision only for the rights attaching to that remaining
class of preference shares; these rights may generally be determined by the
Board in the same manner as under the existing Bye-Laws.
3. VARIATION OF RIGHTS (NEW BYE-LAWS 5 & 6)
Both the existing Bye-Laws and the new Bye-Laws provide that the special rights
attached to any class of shares may be altered with the written consent of 75
per cent of the issued shares of that class, or with the sanction of a
resolution passed by a majority of 75 per cent of the votes cast. Under the
existing Bye-Laws, the quorum at any such general meeting is three or more
persons holding or representing not less than one-third of the issued shares of
the relevant class; under the new Bye-Laws, the number of members required to
form a quorum is two holding or representing not less than one-third of the
issued shares of that class. Under the existing Bye- Laws, at any adjourned
class meeting, two shareholders of the relevant class may constitute a quorum
(whatever the number of shares held by them); the new Bye-Laws do not provide
for any such reduced quorum at an adjourned meeting.
Both the existing and the new Bye-Laws provide that the rights conferred upon a
class of shareholders are not (unless otherwise expressly provided by their
terms) deemed to be varied
I-1
<PAGE>
by the creation or issue of further shares ranking pari passu with them. The new
Bye-Laws further provide that (i) the creation or issue for full value (as
determined by the Board) of further shares ranking in priority to such shares,
and (ii) the purchase or redemption by the Company of any of its own shares,
will not be deemed to be a variation of their rights.
4. SHARES (NEW BYE-LAWS 7, 8 & 9)
Under the existing Bye-Laws, the Board may issue and deal with the authorized
but unissued shares in the capital of the Company, and exercise the powers of
the Company to purchase its own shares, to the extent authorized by shareholders
in general meeting (which the Board is currently authorized so to do). Under the
new Bye-Laws, the Board may exercise these powers without specific authorization
of shareholders.
The new Bye-Laws enable shares to be issued in fractional denominations, as
permitted by the Companies Act. The existing Bye-Laws do not contain any
corresponding provision.
The Companies Act permits the payment of reasonable commission to any person in
consideration of his subscribing or processing subscriptions for shares. The new
Bye-Laws provide that the Board may, in connection with the issue of any shares,
exercise all powers of paying commission and brokerage conferred or permitted by
law. The existing Bye-Laws do not contain any corresponding authorization.
5. ALTERATION OF CAPITAL (NEW BYE-LAWS 14 & 15)
The existing Bye-Laws permit the Company to increase and alter its share capital
in a number of ways. The new Bye-Laws also expressly permit the Company to make
provision for the issue of shares which do not carry voting rights, to change
the currency denomination of its share capital and to convert preference shares
into redeemable preference shares, as permitted by the Companies Act. The
existing Bye-Laws do not contain any corresponding provision.
6. LIEN (NEW BYE-LAW 22)
Both the existing and the new Bye-Laws provide that the Company shall have a
lien on every share which is not a fully paid share for all moneys payable in
respect of that share. The existing Bye-Laws also provide that the Company shall
have a lien upon all dividends and other monies payable in respect of shares in
respect of certain tax liabilities. The new Bye-Laws do not contain a
corresponding provision.
7. REGISTER OF SHAREHOLDERS (NEW BYE-LAW 37)
The Companies Act permits the register of shareholders to be closed for a period
not exceeding 30 days in any year. The new Bye-Laws expressly authorize this;
the existing Bye-Laws do not contain any corresponding provision.
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<PAGE>
8. REGISTER OF DIRECTORS AND OFFICERS (NEW BYE-LAW 38)
The Companies Act requires the Company to maintain a register of directors and
officers. The new Bye-Laws make express reference to this; the existing Bye-Laws
do not contain any corresponding reference.
9. TRANSFER OF SHARES (NEW BYE-LAWS 40 & 42)
The new Bye-Laws entitle the Board to refuse to register a transfer of shares
which is not duly stamped, if required (which is relevant to the transfer of
shares on the UK branch register subject to UK stamp duty). The existing
Bye-Laws do not contain a corresponding provision.
The existing Bye-Laws permit the Board to refuse to register a transfer of
shares by or to a person on whom a notice has been served under existing bye-law
46 (which requires certain information about interests in shares to be provided
to the Company) or bye-law 104 (which relates to certain takeover and other
transactions affecting the Company). See 14 below. The new Bye-Laws do not
contain any corresponding provision.
The new Bye-Laws provide that no fee shall be charged by the Company for
registering any transfer or making any entry in the register of shareholders
affecting the title to any share. The existing Bye-Laws do not contain any
corresponding provision.
10. TRANSMISSION OF SHARES (NEW BYE-LAWS 44 & 45)
Under the existing Bye-Laws, a person becoming entitled to a share in
consequence of the death of a shareholder may obtain registration of the shares
in his name or transfer the shares to some other person. Under the new Bye-Laws,
this will also apply in the case of a person who becomes entitled to a share in
consequence of the bankruptcy of a shareholder or any other event giving rise to
its transmission by operation of law. Any person becoming so entitled may also
exercise all rights in respect of the share as if he were the registered
shareholder. In all cases, the rights of the person so entitled are dependent
upon production of sufficient evidence of his entitlement.
The new Bye-Laws further provide that the Board may require a person entitled by
transmission to a share to elect to be registered as the holder or to transfer
the share and, if this is not done within 60 days of written notice to that
effect, the Board may withhold payment of dividends and other monies. The
existing Bye-Laws do not contain a corresponding provision.
11. GENERAL MEETINGS (NEW BYE-LAW 47)
Under the Companies Act and the existing Bye-Laws, the Board is required to
convene a special general meeting upon the written requisition of shareholders
holding at least 10 per cent of the paid up share capital of the Company
entitled to vote at a general meeting. Under the new Bye- Laws, a meeting
requisitioned by shareholders must be convened for a date which is not more than
6 months after the delivery of the requisition. The existing Bye-Laws do not
impose any such requirement.
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<PAGE>
12. NOTICE OF GENERAL MEETINGS (NEW BYE-LAW 48)
The existing Bye-Laws enable shareholders' meetings to be convened on not less
than 5 days' notice. Under the new Bye-Laws, at least 20 clear days' notice is
required to be given of any shareholders' meeting (other than an adjourned
meeting).
13. PROCEEDINGS AT GENERAL MEETINGS (NEW BYE-LAWS 50 TO 57)
Under the existing Bye-Laws, the chairman of the Board or, in his absence, the
president acts as chairman at all meetings of shareholders; in the absence of
the chairman and the president, a vice-president is elected as chairman by those
shareholders present or, failing all of them, another person is so elected.
Under the new Bye-Laws, in the absence of the chairman and the president, a
director present may act as chairman or, if no director is present and willing
to act, any director(s) present may appoint another officer as chairman. In
default, the shareholders present may elect any officer or, if no officer is
present and willing to act, one of their number as chairman.
Under the existing Bye-Laws, the quorum at any shareholders meeting is two
shareholders present in person or by proxy. Under the new Bye-Laws, two or more
shareholders present in person or by proxy together holding or representing more
than 50 per cent of the issued shares carrying the right to vote at the meeting
constitute a quorum.
The existing Bye-Laws provide that a meeting may be validly called by shorter
notice if it is so agreed, in the case of an annual general meeting, by all the
shareholders entitled to vote thereat and, in the case of any other meeting, by
a majority in number of shareholders entitled to vote thereat together holding
not less than 95 per cent of the shares giving that right. The new Bye- Laws do
not contain any corresponding provision, but the Companies Act (which contains
provisions to the same effect) will nevertheless continue to apply to the
Company.
The new Bye-Laws contain provisions (i) which permit a meeting of shareholders
or any class of shareholders to be held by means of such communications
equipment as the Board approves and (ii) which enable the Board to arrange
satellite meetings, so that presence at a satellite meeting will constitute
attendance at the principal meeting and enable shareholders to vote at it. The
existing Bye-Laws do not contain any similar provision, although the Companies
Act generally permits meetings of shareholders to be held by such communication
facilities as permit all persons participating in the meeting to communicate
with one another.
Under the Companies Act, a director is, upon written request, entitled to
receive notice of, and to attend and be heard at, all general meetings. The new
Bye-Laws expressly provide that each director is entitled to attend and speak at
meetings of shareholders or any class of shareholders. The existing Bye-Laws do
not contain a corresponding provision.
The new Bye-Laws provide that the Board may make security arrangements which it
considers appropriate relating to the holding of meetings of shareholders or any
class of shareholders, which may include the requirement for persons attending
to be searched, and admission to a
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<PAGE>
meeting may be refused if such arrangements are not complied with. The existing
Bye-Laws do not contain a similar provision.
Under the Companies Act, a shareholder wishing to move a resolution at an annual
general meeting must give notice to the Company of the resolution at least 6
weeks before the meeting. Any shareholders who represent not less than 5 per
cent of the total voting rights of shareholders having the right to vote at the
meeting, or who are 100 or more in number, may requisition a resolution at an
annual general meeting. Under the new Bye-Laws, a resolution may only be put to
a vote at a meeting if (i) it is proposed by or at the direction of the Board,
(ii) it is proposed at the direction of the Supreme Court of Bermuda, (iii) it
is proposed on the requisition of shareholders in the manner described above or
(iv) the chairman of the meeting in his absolute discretion decides that the
resolution may properly be regarded as within the scope of the meeting. The
chairman of the meeting also has discretion to determine whether any amendment
to a resolution may properly be put to a vote. The existing Bye-Laws do not
contain any corresponding provisions.
Under Bermudian law, the chairman of the meeting has an inherent power to
adjourn it if the adjournment is necessary in order to facilitate the proper
conduct of the business of the meeting. The new Bye-Laws contain express power
for the chairman of a meeting to adjourn a meeting if, in his opinion, it would
facilitate the conduct of the business of the meeting. This is in addition to
the other circumstances in which a meeting may be adjourned, under both the
existing and the new Bye-Laws.
The existing Bye-Laws provide that, when a meeting is adjourned for more than 5
days, notice of the adjourned meeting is to be given in such manner as the Board
considers expedient. Under the new Bye-Laws, not less than 10 clear days' notice
of an adjourned meeting must be given when a meeting is adjourned for 3 months
or more or sine die, but otherwise it is not necessary to give notice of an
adjourned meeting.
14. VOTING (NEW BYE-LAWS 60, 61, 64, 66 & 68)
Under the existing Bye-Laws, a proxy for a shareholder may vote on a poll, but
not on a show of hands, although the Companies Act contemplates that a proxy
should also vote on a show of hands. Under the new Bye-Laws, a proxy is
expressly authorized to vote on a show of hands, as well as on a poll. The
existing Bye-Laws provide that a poll may be demanded on any resolution by the
chairman of the meeting, or by at least three shareholders present in person or
by proxy, or by a shareholder or shareholders present in person or by proxy
holding shares conferring the right to vote at such meeting on which an
aggregate sum has been paid equal to at least one-tenth of the total sum paid on
all such shares. The new Bye-Laws provide that a poll may also be demanded by
shareholders present in person or by proxy holding not less than one- tenth of
the total voting rights of all shareholders having the right to vote at the
meeting.
The existing Bye-Laws provide that a poll is to be taken in the manner provided
by the Companies Act, which authorizes the chairman to direct the manner of
taking the poll. The new Bye-Laws provide that a poll demanded on any question
(other than on the election of the
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chairman or the question of adjournment of the meeting) shall be taken at such
time, either at the meeting or within 60 days after the meeting, as the chairman
of the meeting may direct.
In the case of an equality of votes, whether on a show of hands or a poll, the
Companies Act provides that the chairman of the meeting shall be entitled to a
second or casting vote, unless the bye-laws otherwise provide. The existing
Bye-Laws do not contain any contrary provision; the new Bye-Laws provide that
the chairman of the meeting shall not be entitled to a second or casting vote.
The new Bye-Laws provide that a shareholder who is a patient for the purposes of
any applicable law relating to mental health or is subject to an order of any
competent court protecting a person incapable of managing his own affairs may
vote by his receiver or other applicable person appointed by such court, subject
to evidence of authorization being produced to the Company. The existing
Bye-Laws do not contain any corresponding provision.
The new Bye-Laws provide that any objection to the qualification of a voter or
to the counting of votes must be raised at the time of the vote and shall be
referred to the chairman of the meeting for decision. The existing Bye-Laws do
not contain any corresponding provision.
The existing Bye-Laws provide that a shareholder is not entitled (except as
proxy for another shareholder) to attend or vote at any meeting if he has been
served, and has failed to comply, with a notice under the bye-laws requiring him
to make an offer in accordance with the UK City Code on Takeovers and Mergers
(the "City Code"), as applied by the existing Bye-Laws, or in accordance with
the existing Bye-Laws. A shareholder also loses the right to vote for a period
of 180 days if he acquires 3 per cent or more of the issued share capital of any
class of the Company, either alone or with others, and fails to notify the
Company of such acquisition within 2 days or, if he already possesses 3 per cent
or more, he fails to notify the Company of any change in his interests amounting
to 1 per cent or more of the share capital of any class, and such shareholder is
notified by the Board of such loss of right. In addition, the existing Bye- Laws
provide that any person who is known or believed by the Company to be interested
in common shares and has failed to comply with the notice from the Company
requesting specified information regarding his interests in shares loses the
right to vote for the period during which he fails to comply with the notice,
plus an additional 90 days. The new Bye-Laws do not contain any corresponding
provisions.
15. PROXIES AND CORPORATE REPRESENTATIVES (NEW BYE-LAWS 69 TO 73)
Under the existing Bye-Laws, no person who is not a shareholder may be appointed
as a proxy. Under the new Bye-Laws, a proxy need not be a shareholder.
The new Bye-Laws enable a shareholder to appoint a proxy, with or without the
power of substitution. The existing Bye-Laws do not contain any express
reference to the appointment of a proxy with a power of substitution.
Under the Companies Act, a shareholder which is a corporation may appoint a
person to act as a representative at any meeting of shareholders or any class of
shareholders. The existing Bye-
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Laws require an instrument appointing a proxy or evidencing the appointment of a
corporate representative to be deposited not less than 24 hours (or such shorter
time as may be stated in the form of proxy circulated with the notice of the
meeting) before the holding of the meeting in question. The new Bye-Laws require
an instrument appointing a proxy or a corporate representative to be deposited
by such time as is specified by the Board for the purpose or, if no such time is
specified, at any time prior to the holding of the relevant meeting.
The new Bye-Laws also permit a shareholder to appoint a standing proxy or, in
the case of a shareholder which is a corporation, a standing representative,
which appointment becomes effective 24 hours after it is lodged and remains
valid for voting at all meetings until it is revoked, subject to the production
of such evidence as the Board may require as to the execution and continuing
validity of the proxy or authorization. The existing Bye-Laws do not contain any
corresponding provision.
The new Bye-Laws provide that a vote given by proxy shall be valid
notwithstanding the death or insanity of the principal or revocation of the
proxy, unless notice of the relevant event was received by the Company at least
one hour before the vote in question. The new Bye-Laws also contain a general
power for the Board to waive the requirements for the appointment of proxies or
representatives and to permit the deposit of instruments by telecopier or
similar means. The existing Bye-Laws do not contain any similar provisions.
16. AMALGAMATIONS (NEW BYE-LAW 74)
Under the Companies Acts, any amalgamation between the Company and another
company requires approval by shareholders by a 75 per cent majority of the votes
cast, unless the bye- laws otherwise provide. The new Bye-Laws require any such
amalgamation to be approved by a majority of the directors and by a resolution
approved by the holders of a simple majority of each class of shares. The
existing Bye-Laws do not contain any similar provision.
17. BUSINESS COMBINATIONS WITH INTERESTED SHAREHOLDERS (NEW BYE-LAW 75)
The new Bye-Laws provide that the Board shall not effect a "business
combination" involving the Company and an "interested shareholder" for three
years following the date that such person becomes an interested shareholder.
With certain exceptions, an interested shareholder is a person who owns,
individually or with or though certain other persons, 15 per cent or more of the
Company's outstanding voting shares (including any rights to acquire shares
pursuant to an option, warrant, agreement, arrangement or understanding, or upon
the exercise of conversion or exchange rights, and shares with respect to which
the person has voting rights only). The three-year moratorium imposed on
business combinations does not apply if (i) prior to the date on which such
shareholder becomes an interested shareholder the Board approves either the
business combination or the transaction that resulted in the person becoming an
interested shareholder; (ii) upon consummation of the transaction that made it
an interested shareholder, the interested shareholder owns at least 85 per cent
of the Company's voting shares outstanding at the time the transaction commenced
(excluding from the 85 per cent calculation shares owned by directors who are
also executives or employees of the Company and shares held by employee share
plans that do not give employee participants the right to decide confidentially
whether to
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accept a tender or exchange offer); or (iii) on or after the date such person or
entity becomes an interested shareholder, the Board approves the business
combination and it is also approved at a general meeting of shareholders by
two-thirds of the outstanding voting shares not owned by the interested
shareholder.
The existing Bye-Laws do not contain any provision regulating transactions with
interested shareholders, but they do provide that the Board may require a person
to make an offer to shareholders if, whether as a result of one transaction or a
series of transactions, he would be obliged to make an offer under the rules of
the City Code, if it applied to the Company. The City Code provides that where
any person (and persons acting in concert with him) acquires shares which carry
30 per cent or more of the voting rights of a company, that person must make an
offer for all shares of any class of equity share capital (whether voting or non
voting) and also any voting non-equity share capital in which any such person or
persons hold shares. The offer must be for cash or offer a cash alternative, in
each case of not less than the highest price paid (in cash or otherwise) for
shares of the same class by the offeror, or anyone acting in concert with the
offeror, during the offer period and within the 12 months prior to its
commencement. The existing Bye-Laws also contain a similar provision which
expressly permits the Board to require an offer to be made in an analogous
situation and, where a person has acquired, or is in the process of acquiring
shares in circumstances where that person would be subject to the UK Rules
governing Substantial Acquisitions of Shares ("SARs"), to give notice in writing
requiring that person to comply with the SARs and, if he fails to do so, to
require the disposal by that person of any interest in shares acquired. The SARs
provide that a person may not, in any period of 7 days, acquire shares
representing 10 per cent or more of the voting rights in a company if those
shares, when aggregated with shares already held by the purchaser, would carry
15 per cent or more (but less than 30 per cent) of the voting rights of the
Company. The SARs do not apply to an acquisition from a single shareholder if
such acquisition is the only acquisition within a 7 day period, or to a person
who acquires 30 per cent or more of the voting rights in a company. The new
Bye-Laws do not contain any corresponding requirements or provisions.
18. APPOINTMENT AND REMOVAL OF DIRECTORS (NEW BYE-LAWS 76 TO 80)
The existing Bye-Laws provide that the number of directors shall be such number,
not less than two, as the shareholders in general meeting from time to time
determine. The new Bye-Laws provide that the number of directors shall be not
less than three nor more than 21.
Under Bermudian law, the election of directors may be regulated by the bye-laws
or otherwise determined by the shareholders in general meeting. The existing
Bye-Laws do not prescribe any particular term of office for a director (except
one appointed to fill a casual vacancy) or require directors to retire at each
annual general meeting, although the Company's practice has been for all the
directors to retire and seek re-election at each annual general meeting. The
1991 Act provides that the directors shall be subject to retirement by rotation
in such manner as the bye- laws may provide.
Under the new Bye-Laws, unless the Board is classified for retirement by
rotation, directors are appointed at each annual general meeting or at a special
general meeting called for the purpose.
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The Board may also, if authorized by shareholders, by resolution passed with the
approval of a majority of the directors, appoint additional directors up to a
number specified in the shareholders' resolution and, so long as a quorum
remains in office, fill any vacancy occurring in the Board. Unless the Board is
classified, all directors retire from office at each annual general meeting, but
are then eligible for re-election. The new Bye-Laws provide that the Board may,
by resolution passed with the approval of a majority of the directors, at any
time determine that the Board shall be classified into three classes and be
subject to retirement by rotation, so that each class retires at the annual
general meeting in the third year after its election. In such event, the new
Bye-Laws provide that the only directors that may be appointed shall be those of
the class subject to retirement by rotation at any particular annual general
meeting, that a director may only be removed from office by a resolution passed
at a special general meeting called for the purpose by a majority of not less
than 80 per cent of all the votes capable of being cast by all shareholders
having the general right to vote at general meetings of the Company or by
written notice signed by not less than 80 per cent in number of the directors
then in office and that vacancies in the Board may generally be filled solely by
a majority of the directors then in office.
Under the existing Bye-Laws, no person other than a director retiring at a
meeting or recommended for election by the Board is eligible for election as a
director unless not less than six nor more than 28 clear days before the meeting
notice in writing has been given by a shareholder entitled to attend and vote at
the meeting of his intention to propose such person for election, together with
notice in writing signed by the nominee of his willingness to be elected. Also,
a director must be a shareholder of the Company.
Under the new Bye-Laws, no person is eligible for election as a director unless
he has been recommended for election by the Board or, in the case of an annual
general meeting, he is a retiring director or he has been nominated for election
by shareholders. A director need not be a shareholder. To be timely, a
shareholder's notice of nomination must be given in writing to the secretary at
the registered office (in relation to an annual general meeting) not less than
60 days nor more than 180 days prior to the scheduled date of the general
meeting or, if at the time of the notice of nomination is given the date of that
meeting is not known, the anniversary of the previous year's annual general
meeting or, in relation to a special general meeting, within 10 days after the
meeting is announced. Such a notice must contain particulars of the nomination
and certain information required by section 14 of, and schedule 14A under, the
US Securities Exchange Act of 1934, as amended, and be accompanied by the
written consent of the nominee to his serving as a director if elected.
Under the existing Bye-Laws, a director may be removed from office at any time
by a resolution of shareholders to that effect or by a written resolution signed
by all the other directors. Under the new Bye-Laws, a director may be removed
from office by a resolution of shareholders passed at a special general meeting
called for the purpose (or, if the Board is classified, by a resolution passed
by an 80 per cent majority of all the votes capable of being cast, as described
above) or by written notice signed by not less than 80 per cent of the number of
directors then in office.
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19. RESIGNATION AND DISQUALIFICATION OF DIRECTORS (NEW BYE-LAW 81)
Under the existing Bye-Laws, the office of a director is vacated if he ceases to
be a shareholder or if he resigns by notice in writing. Under the new Bye-Laws,
the office of a director will be vacated if he resigns, if he becomes of unsound
mind (and the Board resolves that his office is vacated), if he becomes bankrupt
or compounds with his creditors, if he is prohibited by law from being a
director, or if he ceases to be a director by virtue of the Companies Act.
20. ALTERNATE DIRECTORS (NEW BYE-LAW 82)
Under the existing Bye-Laws, any general meeting of shareholders may elect
persons to act as alternate directors to designated directors and authorize the
directors to appoint such alternate directors. Under the new Bye-Laws, a
director may appoint an alternate director without any specific authorization on
the part of shareholders. The appointment of an alternate director who is not a
director in his own right is subject to the approval of a majority of the
directors or a resolution of the Board, which may also remove any alternate
director from office.
21. DIRECTORS' REMUNERATION AND EXPENSES (NEW BYE-LAW 85)
Under the existing Bye-Laws, each director (other than any director holding an
executive office or employment with the Company or a subsidiary) may be paid a
fee not exceeding $25,000 per annum as the Board from time to time determines,
or such larger sum as the shareholders in general meeting from time to time
determine. Under the new Bye-Laws, a director is entitled to receive such fees,
if any, as the Board from time to time determines. Both the existing Bye- Laws
and the new Bye-Laws provide that a director who performs special services may
be paid extra remuneration, as determined by the Board, and also provide for
directors to be reimbursed all expenses properly incurred in discharging their
duties. The new Bye-Laws provide that the Board may decide to satisfy all or
part of any director's or other officer's remuneration in the form of shares or
other securities of the Company or a subsidiary, or options or rights to acquire
such shares or other securities, on such terms as the Board may decide. The
existing Bye-Laws do not contain any similar provision.
22. POWERS OF THE BOARD (NEW BYE-LAWS 87, 90 & 91)
The existing Bye-Laws require the Board to manage the Company's business outside
the UK. The new Bye-Laws do not contain any territorial restriction on the
Board's management powers.
The new Bye-Laws contain an express power for the Board to exercise the
Company's powers to provide benefits, such as pensions, for any person
(including any director or former director) who has held any executive office or
employment with, or whose services have been of benefit to, the Company or any
affiliate of the Company or their predecessors in business. There is no
corresponding provision in the existing Bye-Laws, although the memorandum of
association of the Company contains a similar power.
The existing Bye-Laws empower the Board to appoint a director as chief executive
officer, to fix his remuneration and to confer upon him such powers as the Board
considers expedient. The
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existing Bye-Laws also require the Board to exercise a general supervision over
the financial affairs of the Company and enable the Board to appoint a
supervisor to perform this role, subject to the directions of the Board. The new
Bye-Laws contain a general power for the Board to appoint any director to any
executive office with the Company on such terms as the Board may determine. They
also enable the Board to delegate to any officer any of the Board's powers,
authorities and discretions.
23. PROCEEDINGS OF THE BOARD (NEW BYE-LAWS 95 TO 99)
The existing Bye-Laws preclude any board meeting being held in the UK. The new
Bye-Laws do not contain any corresponding restriction.
Under the existing Bye-Laws, any director may summon a meeting of the Board, and
the quorum at any board meeting is two directors unless otherwise fixed by the
Board. Under the new Bye-Laws, a board meeting may be summoned by the Chairman
(or, if there is no Chairman, by the President), by one-third or more in number
of the directors for the time being in office or, if more than 90 days has
elapsed since the last board meeting, by any one director. A quorum at any board
meeting is two directors or a majority of the directors then in office and
eligible to vote at the meeting, whichever is the higher number.
Both the existing Bye-Laws and the new Bye-Laws provide that a director may not
vote or be counted in the quorum in relation to any proposal in which he has a
material interest, subject to certain exceptions. Under the new Bye-Laws, this
restriction will also apply in relation to any proposal in which a connected
person of a director has an interest, and connected persons include certain
members of a directors' family, certain trusts for the benefit of the director
or his family, and certain companies in which the director or his family have an
interest.
The new Bye-Laws provide that, so long as two directors remain in office, the
remaining directors may act notwithstanding any vacancy in the Board but, if
less than two directors remain in office, the sole remaining director may act
only for the purposes of calling a shareholders' meeting and of nominating a
person or persons for election to the Board. The existing Bye- Laws do not
contain a corresponding provision.
24. OFFICERS (NEW BYE-LAW 104)
The existing Bye-Laws provide that the officers of the Company shall consist of
a president (who must be a director), one or more vice presidents (one of whom
must be a director), the secretary and such other officers as the directors may
from time to time determine, and that such officers shall be appointed or
elected by the Board. The existing Bye-Laws also permit the appointment of other
officers, including a treasurer. Under the 1991 Act, the Company is only
required to have a chairman but may have such other officers as the bye-laws may
provide. Under the new Bye-Laws, the Company is required to have a chairman, who
is elected by the Board from among its members, and may also have such other
officers (who need not be directors) as the Board may from time to time
determine.
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25. DIVIDENDS (NEW BYE-LAW 109 TO 114)
Under the existing Bye-Laws, cash dividends are generally declared in US
dollars, but shareholders with registered addresses in the UK may elect to
receive dividends in pounds sterling and the Board may arrange for payments to
persons outside the US or the UK to be made in the currency of the country in
which the shareholder concerned has his registered address. Under the new
Bye-Laws, dividends are generally declared in US dollars, but the Board may from
time to time decide that dividends payable to those shareholders with a
registered address in a particular territory shall be declared or paid in a
currency other than US dollars. The new Bye-Laws also provide that no dividend
or other monies payable in respect of a share shall bear interest against the
Company unless the terms of issue of the share otherwise provide. The existing
Bye-Laws do not contain a corresponding provision.
The new Bye-Laws authorize the payment of dividends and other sums to
shareholders by cheque, warrant or other means approved by the Board, or by bank
or other funds transfer system, and provide that the payment of dividends to any
shareholder may be suspended if dividend payments are uncashed or returned to
the Company on two consecutive occasions, or on a single occasion if after
reasonable enquiries the Company is unable to establish an address or account
for payment to that shareholder. The existing Bye-Laws do not contain any
corresponding provisions.
26. CAPITALIZATION OF RESERVES (NEW BYE-LAWS 118 & 119)
Both the existing Bye-Laws and the new Bye-Laws enable (i) a capitalization
issue to be made on terms that a shareholder may elect to receive cash in lieu
of all or part of his entitlement to bonus shares and (ii) a dividend to be
declared with a stock dividend alternative. The existing Bye-Laws provide that
payments under any such arrangements made to shareholders with registered
addresses in the UK shall be made in pounds sterling and, in the case of (ii)
above, prescribe a formula for calculating the basis of entitlement to the stock
dividend alternative. The new Bye-Laws contain general power for the Board to
decide that payment under (i) above should be made to shareholders with
registered addresses in a particular territory in a currency other than US
dollars and to determine the basis of allotment under (ii) above so that it is,
as nearly as may be considered convenient, equal to the value of the cash
dividend foregone. The new Bye-Laws also enable the Board to establish a
procedure for election mandates under which future dividends may be satisfied by
the issue of fully paid shares in the Company. The existing Bye-Laws do not
contain a corresponding provision.
27. RECORD DATES (NEW BYE-LAW 120)
The new Bye-Laws contain an express power to fix record dates for distributions
and issues and for the entitlement to receive notice of general meetings or
other documents and for the purposes of determining which persons are entitled
to attend and vote at any general meeting, but a record date for voting
entitlements may not be more than 60 days before the date of the relevant
meeting. The existing Bye-Laws do not contain any corresponding provision.
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28. ACCOUNTING RECORDS (NEW BYE-LAWS 122 & 123)
The Companies Act requires the Board to lay the Company's audited financial
statements before shareholders in general meeting. The existing Bye-Laws require
this to be done at the annual general meeting in each year and also require the
auditors' report to be read to the meeting, neither of which is required by the
Companies Act. The new Bye-Laws simply require audited financial statements to
be prepared and presented to shareholders in accordance with the requirements of
the Companies Act.
29. AUDITORS (NEW BYE-LAW 124)
The Companies Act requires auditors to be appointed at each annual general
meeting to hold office until the close of the next annual general meeting. The
existing Bye-Laws provide that at the annual general meeting or at a subsequent
special general meeting in each year auditors shall be appointed to hold office
until the shareholders appoint other auditors. The existing Bye- Laws also
expressly require the auditors to examine certain books and records of the
Company and to report to the shareholders and that the report of the auditors be
read at the general meeting at which the audited balance sheet is presented. The
new Bye-Laws simply provide for the appointment of auditors and the regulation
of their duties in accordance with the Companies Acts, any other applicable law
and such requirements not inconsistent with the Companies Act as the Board may
from time to time determine.
30. UNTRACED SHAREHOLDERS (NEW BYE-LAW 125)
The existing Bye-Laws permit the Company to sell the shares of a shareholder in
certain circumstances, which include the expiry of a period of six years during
which no dividends or other documents despatched to the shareholder have been
claimed and no indication has been received of the whereabouts or existence of
the shareholder in question. The new Bye-Laws contain a similar provision, but
provide that the relevant period (during which no communication has been
received from the relevant shareholder) shall be 12 years, during which at least
three cash dividends must have been paid and not claimed. The new Bye-Laws also
extend the power of sale to any shares which have been issued in right of a
share held by such a shareholder.
31. SERVICE OF NOTICES AND OTHER DOCUMENTS (NEW BYE-LAWS 126 TO 130)
The existing Bye-Laws provide that a notice sent through the post to a
shareholder is deemed to have been served at the expiration of 24 hours after it
was posted. The new Bye-Laws provide that service of such a document will be
deemed to have occurred on the second day after the notice was posted.
The new Bye-Laws also make provision for the service of notices by telecopier or
similar means, for the advertisement in an appropriate newspaper of notices
during a period when postal services are disrupted and for the suspension of a
shareholder's right to receive communications if two consecutive communications
have been returned to the Company undelivered. The existing Bye-Laws do not
contain any corresponding provisions.
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32. EXEMPTION AND INDEMNIFICATION OF OFFICERS (NEW BYE-LAWS 133 & 134)
The Companies Act permits a company to exempt an officer from, and to indemnify
him in respect of, any loss arising or liability attaching to him by virtue of
any rule of law in respect of any negligence, default, breach of duty or breach
of trust of which the officer may be guilty in relation to the Company or any
subsidiary, except as regards any liability resulting from fraud or dishonesty.
The new Bye-Laws provide that, so long as he has acted honestly and in good
faith with a view to the best interests of the Company, no officer shall be
liable in respect of any negligence, default or breach of duty in relation to
the Company or any subsidiary, or for any loss, misfortune or damage which may
happen in or arising out of the actual or purported execution or discharge of
his duties, to the fullest extent permitted by the Companies Act. The existing
Bye-Laws contain a similar provision for exemption from liability, except in so
far as it arises through the director's own wilful negligence, wilful default,
fraud or dishonesty.
The existing Bye-Laws provide that every director, secretary and other officer
of the Company shall be indemnified by the Company against all costs, losses and
expenses for which any such director or officer may be liable by reason of any
contract entered into, or any act or thing done by such director or officer in
the discharge of his duties, to the fullest extent permitted by the Companies
Act. The new Bye-Laws provide for the indemnification of every director and
every officer (including an alternate director, a member of a board committee
and any person acting in such capacity in the reasonable belief that he has been
so appointed or elected, notwithstanding any defect in his appointment or
election) and the estate and personal representatives of any such person against
all liabilities, losses, damages or expenses arising out of the actual 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 liabilities and losses arising by virtue of any rule of law
in respect of any negligence, default, breach of duty or breach of trust of
which he may be guilty in relation to the Company or any subsidiary, to the
fullest extent permitted by the Companies Act.
33. ALTERATION OF BYE-LAWS (NEW BYE-LAW 135)
Any alteration of the existing Bye-Laws requires that it be confirmed by
shareholders at a subsequent general meeting, by a simple majority of the votes
cast. Any alteration of the new Bye-Laws will require confirmation by resolution
approved by shareholders holding not less than a majority of the issued shares
carrying the general right to vote. In addition, any alteration of new bye-law
75 regarding business combinations with interested shareholders (see 17 above)
will require the confirmation of a resolution passed by a majority of not less
than 80 per cent of all the votes capable of being cast by all shareholders
having the general right to vote, except for an amendment approved by a majority
of the continuing directors (as defined in that bye-law).
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APPENDIX II
NEW
BYE-LAWS
OF
TYCO INTERNATIONAL LTD.
(Effective from o o , 1998)
INTERPRETATION
1. In these Bye-Laws, unless the context otherwise requires:
(i) "Bermuda" means the Islands of Bermuda;
(ii) "Board" means the Board of Directors for the time being of
the Company;
(iii) "Bye-Laws" means these Bye-Laws in their present form or as
from time to time amended;
(iv) "clear days" means, in relation to the period of a notice,
that period excluding the day on which the notice is given or served,
or deemed to be given or served, and the day for which it is given or
on which it is to take effect;
(v) "Common Shares" means the Common Shares of par value US$0.20
per share (or such other par value as may result from any
reorganisation of capital) in the capital of the Company;
(vi) "Companies Acts" means every Bermuda statute, regulation and
order from time to time in force concerning companies insofar as the
same applies to the Company including (and as modified by) the ADT
Limited Company Act, 1991 (ADT Limited being the former name of the
Company);
(vii) "Company" means Tyco International Ltd., a company
incorporated in Bermuda;
(viii) "Director" means a director for the time being of the
Company;
(ix) "Officer" means a Director, Secretary, or other officer of
the Company appointed pursuant to Bye-Law 104, but does not include
any person holding the office of auditor in relation to the Company;
(x) "paid up" means paid up or credited as paid up;
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(xi) "person entitled by transmission" means a person whose
entitlement to a share in consequence of the death or bankruptcy of a
Shareholder or of any other event giving rise to its transmission by
operation of law has been noted in the Register;
(xii) "Preference Shares" means the 125,000,000 Preference Shares
of par value US$1 per share (or such other par value as may result
from any reorganisation of capital) in the capital of the Company;
(xiii) "Register" means the Register of Shareholders of the
Company and includes any branch register;
(xiv) "Registered Office" means the registered office for the
time being of the Company;
(xv) "Resolution" means a resolution of the Shareholders or,
where required, of a separate class or separate classes of
Shareholders, adopted in general meeting in accordance with the
provisions of these Bye-Laws;
(xvi) "Seal" means the common seal of the Company and includes
any duplicate seal;
(xvii) "Secretary" means the Secretary of the Company or, if
there are joint Secretaries, any of the joint Secretaries and includes
a deputy or assistant Secretary and any person appointed by the Board
to perform any of the duties of the Secretary;
(xviii) "Shareholder" means a member of the Company;
(xix) "share" means any share in the capital of the Company;
(xx) "subsidiary" has the same meaning as in Section 86 of the
Companies Act 1981, except that references in that Section to a
company shall include any body corporate or other legal entity,
whether incorporated or established in Bermuda or elsewhere; and
(xxi) "US dollars" or US$" means United States dollars.
2. For the purposes of these Bye-Laws, unless the context otherwise requires:
(i) a corporation shall be deemed to be present in person at a
meeting if its representative, duly authorised pursuant to these
Bye-Laws, is present;
(ii) words importing only the singular number include the plural
number and vice versa;
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(iii) words importing only one gender include the other genders;
(iv) references to a company include any body corporate or other
legal entity, whether incorporated or established in Bermuda or
elsewhere:
(v) references to a person include any company, partnership or
other body of persons, whether corporate or not, any trust and any
government, governmental body or agency or public authority, whether
of Bermuda or elsewhere;
(vi) references to writing include typewriting, printing,
lithography, photography and other modes of representing or
reproducing words in a legible and non-transitory form;
(vii) references to a dividend include a distribution out of
contributed surplus or any other distributable reserve;
(viii) any words or expressions defined in the Companies Acts, if
not otherwise defined in or given a particular meaning by these
Bye-Laws, have the same meaning in these Bye-Laws, except that the
definition of "attorney" shall not apply;
(ix) any reference to any statute or statutory provision (whether
of Bermuda or elsewhere) includes a reference to any modification or
re-enactment of it for the time being in force and to every rule,
regulation or order made under it (or under any such modification or
re-enactment) and for the time being in force and any reference to any
rule, regulation or order made under any such statute or statutory
provision includes a reference to any modification or replacement of
such rule, regulation or order for the time being in force; and
(x) references to shares carrying the general right to vote at
general meetings of the Company are to those shares (of any class or
series) carrying the right to vote, other than shares which entitle
the holders to vote only in limited circumstances or upon the
occurrence of a specified event or condition (whether or not those
circumstances have arisen or that event or condition has occurred).
REGISTERED OFFICE
3. The Registered Office shall be at such place in Bermuda as the Board from
time to time decides.
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SHARE RIGHTS
4. (a) Subject to the Companies Acts and to the rights conferred on the holders
of any other class of shares, any share in the Company may be issued with such
preferential, deferred, qualified or special rights, privileges or conditions as
the Company may by Resolution decide or, if no such Resolution is in effect or
insofar as the Resolution does not make specific provision, as the Board may
from time to time determine.
(b) Without limiting the foregoing and subject to the Companies Acts,
the Company may issue preference shares (including the Preference Shares) which
(i) are liable to be redeemed on the happening of a specified event or events or
on a given date or dates and/or (ii) are liable to be redeemed at the option of
the Company and/or the holder. The terms and manner of redemption of any
Preference Shares shall be as the Board may by resolution determine before the
allotment of such shares and the terms and manner of redemption of any other
redeemable preference shares shall be either (i) as the Company may by
Resolution determine or (ii) insofar as the Board is so authorised by any
Resolution, as the Board may by resolution determine before the allotment of
such shares. Any such Resolution or resolution of the Board for the time being
in force shall be attached as an appendix to (but shall not form part of) these
Bye-Laws.
(c) The rights attaching to the Preference Shares shall be as follows:
(i) Each Preference Share shall have attached to it such
preferred, qualified or other special rights, privileges and
conditions and be subject to such restrictions, whether in regard to
dividend, return of capital, redemption, conversion into Common Shares
or voting or otherwise, as the Board may determine on or before its
allotment.
(ii) The Board may allot the Preference Shares in more than one
series and, if it does so, may designate each series in such manner as
it deems appropriate to reflect the particular rights and restrictions
attached to that series, which may differ in all or any respects from
any other series of Preference Shares.
(iii) The particular rights and restrictions attached to any
Preference Share shall be recorded in a resolution of the Board. The
Board may at any time before the allotment of any Preference Share by
further resolution in any way amend such rights and restrictions or
vary or revoke its designation. A copy of any such resolution or
amending resolution for the time being in force shall be annexed as an
appendix to (but shall not form part of) these Bye-Laws.
(iv) The Board shall not attach to any Preference Share any right
or restriction which would alter or abrogate any of the special rights
attached to any other class of preference shares for the time being in
issue without such sanction as is required for any alteration or
abrogation of such rights, unless expressly authorised to do so by the
terms of issue of such preference shares.
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VARIATION OF RIGHTS
5. (a) Subject to the Companies Acts, all or any of the special rights for the
time being attached to any class of shares for the time being in issue may,
unless otherwise expressly provided in the rights attaching to or by the terms
of issue of the shares of that class, from time to time (whether or not the
Company is being wound up), be altered or abrogated with the consent in writing
of the holders of not less than 75 per cent. in nominal value of the issued
shares of that class or with the sanction of a Resolution passed at a separate
general meeting of the holders of shares of that class by a majority of not less
than 75 per cent. of the votes cast.
(b) All the provisions of these Bye-Laws relating to general meetings
of the Company shall apply mutatis mutandis to any separate general meeting of
any class of Shareholders, except that:
(i) the necessary quorum shall be two or more Shareholders
present in person or by proxy together holding or representing not
less than one-third in nominal amount of the issued shares of the
relevant class; provided that, if the relevant class of Shareholders
has only one Shareholder, one Shareholder present in person or by
proxy shall constitute the necessary quorum;
(ii) each holder of shares of the class shall, on a poll, have
one vote in respect of each share of the class held by him; and
(iii) a poll may be demanded by any one holder of shares of the
class, whether present in person or by proxy.
6. The special rights conferred upon the holders of any shares or class of
shares shall not, unless otherwise expressly provided in the rights attaching to
or the terms of issue of such shares, be deemed to be altered or abrogated by
(i) the creation or issue of further shares ranking pari passu with them, (ii)
the creation or issue for full value (as determined by the Board) of further
shares ranking as regards participation in the profits or assets of the Company
or otherwise in priority to them or (iii) the purchase or redemption by the
Company of any of its own shares.
SHARES
7. (a) Subject to the provisions of these Bye-Laws, the unissued shares of the
Company (whether forming part of the original capital or any increased capital)
shall be at the disposal of the Board, which may offer, allot, grant options or
other rights over or otherwise deal with or dispose of them to such persons, at
such times and for such consideration and generally on such terms and conditions
as the Board may from time to time determine.
(b) Shares may be issued in fractional denominations and in such event
the Company shall deal with such fractions to the same extent as its whole
shares, so that a share in a fractional denomination shall have, in proportion
to the fraction of a whole share which it represents, all
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<PAGE>
the rights of a whole share, including (but without limiting the generality of
the foregoing) the right to vote, to receive dividends and distributions and to
participate in a winding up.
8. The Board may, in connection with the issue of any shares, exercise all
powers of paying commission and brokerage conferred or permitted by law.
9. Subject to the Companies Acts and to any confirmation or consent required by
law or these Bye-Laws, the Board may exercise the power of the Company to
purchase its own shares, whether in the market, by tender or by private treaty,
at such prices and otherwise on such terms and conditions as the Board may from
time to time determine.
10. Except only as otherwise provided in these Bye-Laws, as ordered by a court
of competent jurisdiction or as otherwise required by law, the Company shall be
entitled to treat the registered holder of any share or any fractional part of a
share as the absolute owner of it and accordingly no person shall be recognised
by the Company as holding any share or any fractional part of a share upon
trust, and the Company shall not be bound by or required in any way to recognise
(even when having notice of it) any interest or other right in any share or in
any fractional part of a share except an absolute right to the entirety of the
share or to the fractional part of a share in the registered holder of it.
INCREASE OF CAPITAL
11. The Company may from time to time increase its capital by such sum, to be
divided into shares of such par value, as the Company by Resolution shall
prescribe.
12. The Company may, by the Resolution increasing the capital, direct that the
new shares or any of them shall be offered in the first instance either at par
or at a premium or (subject to the provisions of the Companies Acts) at a
discount to all the holders for the time being of shares of any class or classes
in proportion to the number of such shares held by them respectively or make any
other provision as to the issue of the new shares.
13. The new shares shall be subject to all the provisions of these Bye-Laws with
reference to lien, the payment of calls, forfeiture, transfer, transmission and
otherwise.
ALTERATION OF CAPITAL
14. (a) The Company may from time to time by Resolution:
(i) divide its shares into several classes and attach to them
respectively any preferential, deferred, qualified or special rights,
privileges or conditions;
(ii) consolidate and divide all or any of its share capital into
shares of larger par value than any of its existing shares;
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<PAGE>
(iii) sub-divide its shares or any of them into shares of smaller
par value than is fixed by its memorandum, so, however, that in the
sub-division the proportion between the amount paid and the amount, if
any, unpaid on each reduced share shall be the same as it was in the
case of the share from which the reduced share is derived;
(iv) make provision for the issue and allotment of shares which
do not carry any voting rights;
(v) cancel shares which, at the date of the passing of the
Resolution in that behalf, have not been taken or agreed to be taken
by any person, and diminish the amount of its share capital by the
amount of the shares so cancelled; and
(vi) change the currency denomination of its share capital.
(b) Where any difficulty arises in regard to any division,
consolidation or sub-division under this Bye-Law, the Board may settle the same
as it thinks expedient and, in particular, may arrange for the sale of the
shares representing fractions and the distribution of the net proceeds of sale
in due proportion among the Shareholders who would have been entitled to the
fractions, except that any proceeds in respect of any holding which are less
than a sum fixed by the Board may be retained for the benefit of the Company.
For the purpose of any such sale the Board may authorise some person to transfer
the shares representing fractions to the purchaser, who 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 or invalidity in the proceedings relating to the
sale.
15. Subject to the Companies Acts and to any confirmation or consent required by
law or these Bye-Laws, the Company may from time to time by Resolution convert
any preference shares into redeemable preference shares.
REDUCTION OF CAPITAL
16. Subject to the Companies Acts and to any confirmation or consent required by
law or these Bye-Laws, the Company may from time to time by Resolution authorise
the reduction in any manner of its issued share capital (but not to a sum less
than the minimum share capital prescribed by its memorandum) or any share
premium account.
17. In relation to any such reduction, the Company may by Resolution determine
the terms upon which the reduction is to be effected, including, in the case of
a reduction of part only of a class of shares, those shares to be affected.
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<PAGE>
CERTIFICATES
18. (a) Shares shall be issued in registered form. Unless otherwise provided by
the terms of issue of any particular shares, each Shareholder shall, upon
becoming the holder of any share, be entitled to a share certificate for all the
shares of each class held by him (and, on transferring a part of his holding, to
a certificate for the balance), but the Board may decide not to issue
certificates for any shares held by, or by the nominee of, any securities
exchange or operator of any clearance or settlement system except at the request
of any such person. In the case of a share held jointly by several persons,
delivery of a certificate in their joint names to one of several joint holders
shall be sufficient delivery to all.
(b) Share certificates shall be in such form as the Board may from time
to time prescribe, subject to the requirements of the Companies Acts. No fee
shall be charged by the Company for issuing a share certificate.
19. If a share certificate is worn-out or defaced, or alleged to have been lost
or destroyed, it may be replaced without fee but on such terms (if any) as to
evidence and indemnity and to payment of any exceptional costs and out of pocket
expenses of the Company in investigating such evidence and preparing such
indemnity as the Board may think fit and, in case of wearing- out or defacement,
on delivery of the certificate to the Company.
20. (a) All certificates for shares (other than letters of allotment, scrip
certificates and other like documents) shall, except to the extent that the
terms of issue of any shares otherwise provide, be issued under the Seal or a
facsimile of it. Each certificate shall be signed by such person or persons
(whether or not Officers) as the Board may from time to time decide, but the
Board may determine that certificates for shares or for particular shares need
not be signed by any person.
(b) The Board may also determine, either generally or in any particular
case, that any signatures on certificates for shares need not be autographic but
may be affixed to such certificates by some mechanical means or may be
facsimiles printed on such certificates. If any Officer who has signed, or whose
facsimile signature has been used on, any such certificate ceases for any reason
to hold his office, such certificate may nevertheless be issued as though that
Officer had not ceased to hold such office.
21. Nothing in these Bye-Laws shall preclude (i) title to a share being
evidenced or transferred otherwise than in writing to the extent permitted by
the Companies Acts and as may be determined by the Board from time to time or
(ii) the Board from recognising the renunciation of the allotment of any share
by the allottee in favour of some other person on such terms and subject to such
conditions as the Board may from time to time decide.
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LIEN
22. The Company shall have a first and paramount lien on every share (not being
a fully paid share) for all moneys, whether presently due or not, called or
payable in respect of such share. The Company's lien on a share shall extend to
all dividends payable on it. The Board may at any time, either generally or in
any particular case, waive any lien that has arisen or declare any share to be
wholly or in part exempt from the provisions of this Bye-Law. Unless otherwise
agreed, the registration of a transfer of a share shall operate as a waiver of
the Company's lien on that share.
23. (a) The Company may sell, in such manner as the Board may think 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 due nor until the expiration of
14 clear days after a notice in writing, stating and demanding payment of the
sum presently due and giving notice of the intention to sell in default of such
payment, has been served on the holder for the time being of the share or the
person entitled by transmission to it.
(b) The net proceeds of sale by the Company of any shares on which it
has a lien shall be applied in or towards payment or discharge of the debt or
liability in respect of which the lien exists so far as the same is due, and any
residue shall (subject to a like lien for debts or liabilities not presently due
as existed upon the share prior to the sale) be paid to the holder of, or the
person entitled by transmission to, the share immediately before such sale. For
giving effect to any such sale the Board may authorise some person to transfer
the share to the purchaser. The purchaser shall be registered as the holder of
the share and he shall not be bound to see to the application of the purchase
money, nor shall his title to the share be affected by any irregularity or
invalidity in the proceedings relating to the sale.
CALLS ON SHARES
24. (a) The Board may from time to time make calls upon the Shareholders in
respect of any moneys unpaid on their shares (whether on account of the par
value of the shares or by way of premium) and not by the terms of issue of the
shares made payable at a date fixed by or in accordance with their terms of
issue and each Shareholder shall (subject to the Company serving on him at least
14 clear days' notice in writing specifying the time or times and place of
payment) pay to the Company at the time or times and place so specified the
amount called on his shares. A call may be revoked or postponed as the Board may
determine.
(b) A call may be made payable by instalments and shall be deemed to be
made at the time when the resolution of the Board authorising the call is
passed.
(c) A person on whom a call is made shall remain liable for it
notwithstanding the subsequent transfer of the share in respect of which the
call is made.
25. The joint holders of a share shall be jointly and severally liable to pay
all calls in respect of it.
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26. If a sum called in respect of a share is not paid before or on the day
appointed for its payment, the person from whom the sum is due shall pay
interest on the sum from the day appointed for payment to the time of actual
payment at such rate not exceeding 15 per cent. per annum as the Board may
determine, but the Board may waive payment of such interest, wholly or in part.
27. Any sum which, by the terms of issue of a share, becomes payable on
allotment or at any date fixed by or in accordance with such terms of issue,
whether on account of the nominal value of the share or by way of premium, shall
for all purposes of these Bye-Laws be deemed to be a call duly made, notified
and payable on the date on which by the terms of issue the same becomes payable,
and, in case of non-payment, all the relevant provisions of these Bye-Laws as to
payment of interest, forfeiture or otherwise shall apply as if such sum had
become payable by virtue of a call duly made and notified.
28. The Board may, on the issue of any shares, differentiate between the
allottees or holders as to the amount of calls to be paid and the times of
payment.
29. The Board may, if it thinks fit, receive all or any part of the moneys
payable on a share beyond the sum actually called up on it if the holder is
willing to make payment in advance and, on any moneys so paid in advance, may
(until they would otherwise be due) pay interest at such rate as may be agreed
between the Board and the Shareholder paying the sum in advance.
FORFEITURE OF SHARES
30. If a Shareholder fails to pay any call or instalment of a call on the day
appointed for its payment, the Board may at any time while any part of such call
or instalment remains unpaid serve on him a notice in writing requiring payment
of so much of the call or instalment as is unpaid, together with any interest
which may have accrued. The notice shall state a further day (not being less
than 14 clear days from the date 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 on or before the day and at the place
appointed, the shares in respect of which such call is made or instalment is
payable will be liable to be forfeited.
31. The Board may accept the surrender of any share liable to be forfeited, and,
in any such case, references in these Bye-Laws to forfeiture include surrender.
32. If the requirements of any notice given under Bye-Law 30 are not complied
with, any share in respect of which the notice was given may, at any time before
payment of all calls or instalments and interest due in respect of it is made,
be forfeited by a resolution of the Board to that effect. Such forfeiture shall
include all dividends declared and other moneys payable in respect of the
forfeited shares and not actually paid before the forfeiture.
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33. When any share has been forfeited, notice of the forfeiture shall be served
on the person who was before forfeiture the holder of the share or the person
entitled by transmission to it, but no forfeiture shall be invalidated by any
omission to give such notice.
34. A forfeited share shall become the property of the Company and may be sold,
re-offered or otherwise disposed of either to the person who was, before
forfeiture, the holder of, or entitled to, the share or to any other person, on
such terms and in such manner as the Board thinks fit. At any time before a
sale, re-allotment or disposition the forfeiture may be cancelled on such terms
as the Board may think fit.
35. A person whose shares have been forfeited shall cease to be a Shareholder in
respect of the forfeited shares but shall, notwithstanding the forfeiture,
remain liable to pay to the Company all moneys which at the date of forfeiture
were payable by him to the Company in respect of the shares, together with
interest at such rate not exceeding 15 per cent. per annum as the Board may
determine from the date of forfeiture until payment and the Company may enforce
payment without being under any obligation to make any allowance for the value
of the shares forfeited.
36. An affidavit in writing to the effect that the deponent is a Director or the
Secretary and that a share has been duly forfeited on the date stated in the
affidavit shall be conclusive evidence of the facts stated in it as against all
persons claiming to be entitled to the share. The Company may receive the
consideration (if any) given for the share on its sale, re-allotment or
disposition, and the Board may authorise some person to transfer the share to
the person to whom it is sold, re-allotted or disposed of. That person shall be
registered as the holder of the share and shall not be bound to see to the
application of the purchase money (if any), nor shall his title to the share be
affected by any irregularity or invalidity in the proceedings relating to the
forfeiture, sale, re- allotment or disposal of the share.
REGISTER OF SHAREHOLDERS
37. (a) The Register shall be kept in the manner prescribed by the Companies
Acts at the Registered Office or at such other location in Bermuda as may be
authorised by the Board from time to time. The Company may also keep one or more
branch registers at such place or places outside Bermuda to the extent and in
the manner permitted by the Companies Acts and the Board may transfer any share
on the Register to a branch register, or any share on a branch register to the
Register or another branch register.
(b) The Register may be closed at such times and for such periods as
the Board may from time to time decide, subject to the Companies Acts. Except
during such time as it is closed, the Register shall be open to inspection in
the manner prescribed by the Companies Acts between 10:00 a.m. and 12:00 noon
(or between such other times as the Board from time to time determines) on every
working day.
(c) Unless the Board so determines, no Shareholder or intending
Shareholder shall be entitled to have entered in the Register any indication of
any trust or any equitable, contingent,
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future or partial interest in any share or any fractional part of a share, and
if any such entry exists or is permitted by the Board it shall not be deemed to
abrogate any provisions of Bye-Law 10.
REGISTER OF DIRECTORS AND OFFICERS
38. The Secretary shall maintain a register of the Directors and Officers of the
Company as required by the Companies Acts. The register of Directors and
Officers shall be open to inspection in the manner prescribed by the Companies
Acts between 10:00 a.m. and 12:00 noon (or between such other times as the Board
from time to time determines) on every working day.
TRANSFER OF SHARES
39. Subject to the Companies Acts and to such of the restrictions contained in
these Bye-Laws as may be applicable, any Shareholder may transfer all or any of
his shares by an instrument of transfer in the usual common form or in any other
form which the Board may from time to time approve. The instrument of transfer
may be endorsed on the certificate.
40. (a) The instrument of transfer of a share shall be signed by or on behalf of
the transferor and, if the share is not fully paid, by or on behalf of the
transferee and the transferor shall be deemed to remain the holder of the share
until the name of the transferee is entered in the Register in respect of it.
All instruments of transfer may be retained by the Company.
(b) The Board may, in its absolute discretion and without assigning any
reason for its decision, decline to register any transfer of any share which is
not a fully-paid share but, in the case of a class of shares which is listed on
any stock exchange, not so as to prevent dealings in those shares from taking
place on an open and proper basis. The Board may also decline to register any
transfer if:
(i) the instrument of transfer is not duly stamped, if required,
and lodged at the Registered Office or any other place as the Board
may from time to time specify for the purpose, accompanied by the
certificate (if any) for the shares to which it relates and such other
evidence as the Board may reasonably require to show the right of the
transferor to make the transfer; or
(ii) the instrument of transfer is in respect of more than one
class of share; or
(iii) the instrument of transfer is in favour of more than four
persons jointly.
(c) Subject to any directions of the Board from time to time in force,
the Secretary may exercise the powers and discretions of the Board under this
Bye-Law and Bye-Laws 39 and 41.
41. If the Board declines to register a transfer it shall, within two months
after the date on which the instrument of transfer was lodged, send to the
transferee notice in writing of such refusal.
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42. No fee shall be charged by the Company for registering any transfer or for
making any entry in the Register concerning any other document relating to or
affecting the title to any share.
TRANSMISSION OF SHARES
43. In the case of the death of a Shareholder, the survivor or survivors, where
the deceased was a joint holder, or the estate representative, where he was sole
holder, shall be the only person or persons recognised by the Company as having
any title to his shares; but nothing in these Bye- Laws shall release the estate
of a deceased holder from any liability in respect of any share held by him
either solely or jointly with other persons. In this Bye-Law, estate
representative means the person to whom probate or letters of administration or
confirmation as executor has or have been granted under the laws of Bermuda, any
country in the Commonwealth or any part of the United States of America or,
failing such person, such other person as the Board may in its absolute
discretion determine to be the person recognised by the Company for the purpose
of this Bye-Law.
44. (a) In the case of a person becoming entitled to a share in consequence of
the death of a Shareholder or otherwise by operation of applicable law, the
Board may require the production to the Company of such evidence of his
entitlement as is prescribed by the Companies Acts or, to the extent that no
such evidence is prescribed, as may from time to time be required by the Board.
Upon production of such evidence the name and address of the person so entitled
shall be noted in the Register.
(b) Subject to paragraph (b) of Bye-Law 45, any person entitled by
transmission to a share shall be entitled to receive (and may give a discharge
for) any dividends or other moneys payable in respect of the share, to attend
and vote in respect of the share at general meetings of the Company and of the
relevant class of Shareholders and generally to exercise in respect of the share
all of the rights or privileges of a Shareholder as if he were registered as the
holder of the share.
45. (a) Any person entitled by transmission to a share may elect either to be
registered himself as the holder of the share or to have some person nominated
by him registered as the transferee of the share. If he elects to be registered
himself, he shall deliver or send to the Company a notice in writing signed by
him stating that he so elects. If he elects 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 provisions of these Bye-Laws relating to the
right to transfer and the registration of transfer of shares shall apply to any
such notice or instrument of transfer as if the death of the Shareholder or
other event giving rise to the transmission had not occurred and the notice or
instrument of transfer was an instrument of transfer signed by such Shareholder.
(b) The Board may at any time give notice in writing requiring a person
entitled by transmission to a share to elect either to be registered himself or
to transfer the share and if the notice is not complied with within 60 days the
Board may withhold payment of all dividends and
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other moneys payable in respect of the share until the requirements of the
notice have been complied with.
46. Subject to any directions of the Board from time to time in force, the
Secretary may exercise the powers and discretions of the Board under Bye-Laws
43, 44 and 45.
GENERAL MEETINGS
47. (a) The Board shall convene and the Company shall hold Annual General
Meetings in accordance with the requirements of the Companies Acts.
(b) The Board may, whenever it thinks fit, and shall, on the
requisition in writing of Shareholders holding such number of shares as is
prescribed by, and made in accordance with, the Companies Acts, convene a
general meeting. All general meetings other than Annual General Meetings shall
be called Special General Meetings. Within 21 days from the date of delivery of
any such requisition by Shareholders, the Board shall proceed duly to convene a
Special General Meeting for a date which is not more than six months after the
date of delivery of the requisition.
(c) Each general meeting shall be held at such time and place as the
Board decides.
NOTICE OF GENERAL MEETINGS
48. Any general meeting of the Company (other than an adjourned meeting) shall
be called by at least 20 clear days' notice. The notice of a general meeting
shall specify the place, day and time of the meeting (including any satellite
meeting place arranged for the purposes of paragraph (b) of Bye-Law 52) and, in
the case of a Special General Meeting, the general nature of the business to be
considered. Notice of every general meeting shall be given in any manner
permitted by these Bye-Laws to all Shareholders (other than those who, under the
provisions of these Bye-Laws or the terms of issue of the shares which they
hold, are not entitled to receive such notice from the Company) and to each
Director.
49. The accidental omission to give notice of a meeting or (in cases where
instruments of proxy are sent out with the notice) the accidental omission to
send such instrument of proxy to, or the non-receipt of notice of a meeting or
such instrument of proxy by, any person entitled to receive such notice shall
not invalidate the proceedings at that meeting.
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PROCEEDINGS AT GENERAL MEETINGS
50. The Chairman or, in his absence, the President shall preside as chairman at
every general meeting of the Company or of any class of Shareholders. If there
is no such Chairman or President, or if at any meeting neither the Chairman nor
the President is present within 15 minutes after the time appointed for holding
the meeting, or if neither of them is willing to act as chairman, the Directors
present shall appoint one of those Directors who is willing to act as chairman
or, if only one Director is present, he shall preside as chairman, if willing to
act. If none of the Directors present is willing to act as chairman, the
Director or Directors present may appoint any other Officer who is present and
willing to act as chairman. In default of any such appointment, the persons
present and entitled to vote shall elect any Officer who is present and willing
to act as chairman or, if no Officer is present or if none of the Officers
present is willing to act as chairman, one of their number to be chairman.
51. (a) No business shall be transacted at any general meeting or adjourned
meeting unless a quorum is present when the meeting proceeds to business, but
the absence of a quorum shall not preclude the appointment or election of a
chairman, which shall not be treated as part of the business of the meeting.
Except as otherwise provided by the Companies Acts or these Bye- Laws, two or
more Shareholders present in person or by proxy together holding or representing
more than 50 per cent. in nominal amount of the issued shares carrying the right
to attend and vote at the meeting shall be a quorum.
(b) If within 30 minutes (or such longer time as the chairman of the
meeting may determine to wait) after the time appointed for a meeting (other
than an adjourned meeting) a quorum is not present, the meeting, if convened on
the requisition of Shareholders, shall be dissolved. In any other case, it shall
stand adjourned to such other day and such other time and place as the chairman
of the meeting may determine. If within 30 minutes (or such longer time as the
chairman of the meeting may determine to wait) after the time appointed for any
adjourned meeting a quorum is not present, the meeting may be further adjourned
to such other day and such other time and place as the chairman of the meeting
may determine, but otherwise the meeting shall be dissolved. A meeting may not
be adjourned under this Bye-Law to a day which is more than 90 days after the
day originally appointed for the meeting.
(c) If it appears to the chairman of a general meeting that the place
of the meeting specified in the notice convening the meeting is inadequate to
accommodate all persons entitled and wishing to attend, the meeting is duly
constituted and its proceedings are valid if the chairman is satisfied that
adequate facilities are available, whether at the place of the meeting or
elsewhere, to ensure that each such person who is unable to be accommodated at
the place of the meeting is able to communicate simultaneously and
instantaneously with the persons present at the place of the meeting, whether by
the use of microphones, loud-speakers, audio-visual or other communications
equipment or facilities.
52. (a) A meeting of the Shareholders or of any class of Shareholders may be
held by means of such telephone, electronic or other communications equipment or
facilities as the Board may from time to time approve and which permit all
persons participating in the meeting to
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communicate with each other simultaneously and instantaneously, and
participation in such a meeting shall constitute presence in person at such
meeting.
(b) The Board may resolve to enable persons entitled to attend a
general meeting of the Company or of any class of Shareholders to do so by
simultaneous attendance and participation at a satellite meeting place anywhere
in the world. The Shareholders present at any such satellite meeting place in
person or by proxy and entitled to vote shall be counted in the quorum for, and
shall be entitled to vote at, the general meeting in question if the chairman of
the general meeting is satisfied that adequate facilities are available
throughout the general meeting to ensure that Shareholders attending at all the
meeting places are able to:
(i) communicate simultaneously and instantaneously with the
persons present at the other meeting place or places, whether by the
use of microphones, loud-speakers, audio-visual or other
communications equipment or facilities; and
(ii) have access to all documents which are required by the
Companies Acts and these Bye-Laws to be made available at the meeting.
The chairman of the general meeting shall be present at, and the meeting shall
be deemed to take place at, the principal meeting place. If it appears to the
chairman of the general meeting that the facilities at the principal meeting
place or any satellite meeting place are or become inadequate for the purposes
referred to above, then the chairman may, without the consent of the meeting,
interrupt or adjourn the general meeting. All business conducted at that general
meeting up to the time of such adjournment shall be valid.
53. Each Director shall be entitled to attend and speak at any general meeting
of the Company or of any class of Shareholders.
54. The Board may make any security arrangements which it considers appropriate
relating to the holding of a general meeting of the Company or of any class of
Shareholders including, without limitation, arranging for any person attending a
meeting to be searched and for items of personal property which may be taken
into a meeting to be restricted, and any person who fails to comply with any
such arrangements may be refused entry to the meeting.
55. (a) Subject to the Companies Acts, a resolution may only be put to a vote at
a general meeting of the Company or of any class of Shareholders if:
(i) it is proposed by or at the direction of the Board; or
(ii) it is proposed at the direction of the Court; or
(iii) it is proposed on the requisition in writing of such number
of Shareholders as is prescribed by, and is made in accordance with,
the relevant provisions of the Companies Acts; or
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(iv) the chairman of the meeting in his absolute discretion
decides that the resolution may properly be regarded as within the
scope of the meeting.
(b) No amendment may be made to a resolution, at or before the time
when it is put to a vote, unless the chairman of the meeting in his absolute
discretion decides that the amendment or the amended resolution may properly be
put to a vote at that meeting.
(c) If the chairman of the meeting rules a resolution or an amendment
to a resolution admissible or out of order (as the case may be), the proceedings
of the meeting or on the resolution in question shall not be invalidated by any
error in his ruling. Any ruling by the chairman of the meeting in relation to a
resolution or an amendment to a resolution shall be final and conclusive.
56. The chairman of the meeting may, with the consent of any meeting at which a
quorum is present (and shall if so directed by the meeting), adjourn the meeting
from time to time (or sine die) and from place to place. In addition to any
other power of adjournment conferred by law, the chairman of the meeting may at
any time without the consent of the meeting adjourn the meeting (whether or not
it has commenced or a quorum is present) to another time and/or place (or sine
die) if, in his opinion, it would facilitate the conduct of the business of the
meeting to do so or if he is so directed (prior to or at the meeting) by the
Board. When a meeting is adjourned sine die the time and place for the adjourned
meeting shall be fixed by the Board.
57. When a meeting is adjourned for three months or more or sine die, not less
than 10 clear days' notice of the adjourned meeting shall be given in the same
manner as in the case of the original meeting. Except as expressly provided by
these Bye-Laws, it shall not be necessary to give any notice of an adjourned
meeting or of the business to be transacted at an adjourned meeting. No business
shall be transacted at any adjourned meeting except business which might
properly have been transacted at the meeting from which the adjournment took
place.
VOTING
58. Except where a greater majority is required by the Companies Acts or these
Bye-Laws, any question proposed for consideration at any general meeting of the
Company or of any class of Shareholders shall be decided by a simple majority of
the votes cast by Shareholders entitled to vote at such meeting.
59. Subject to any rights or restrictions for the time being attached to any
class of shares, on a show of hands each Shareholder present in person or by
proxy shall have one vote and, on a poll, each Shareholder present in person or
by proxy shall have one vote for each share held by him.
60. (a) At any general meeting, a resolution put to the vote of the meeting
shall be decided on a show of hands, unless (before, or immediately after the
declaration of the result of,
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the show of hands or on the withdrawal of any other demand for a poll) a poll is
demanded by:
(i) the chairman of the meeting; or
(ii) at least three Shareholders present in person or by proxy;
or
(iii) a Shareholder or Shareholders present in person or by proxy
holding between them not less than one-tenth of the total voting
rights of all the Shareholders having the right to vote at such
meeting; or
(iv) a Shareholder or Shareholders present in person or by proxy
holding shares conferring the right to vote at such 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;
and a demand for a poll by a person present as proxy for a Shareholder shall be
as valid as if the Shareholder himself were present in person and made the
demand.
(b) A demand for a poll may, before the poll is taken, be withdrawn but
only with the consent of the chairman of the meeting, and the demand so
withdrawn shall not be taken to have invalidated the result of a show of hands
declared before the demand was made. If a poll is demanded before the
declaration of the result of a show of hands and the demand is duly withdrawn,
the meeting shall continue as if the demand had not been made.
(c) Unless a poll is demanded (and the demand is not withdrawn), a
declaration by the chairman of the meeting that a resolution has been carried,
or carried unanimously, or has been carried by a particular majority, or lost,
or not carried by a particular majority, shall be conclusive, and an entry to
that effect in the minutes of the meeting shall be conclusive evidence of that
fact, without proof of the number or proportion of the votes recorded in favour
of or against the resolution.
(d) The demand for a poll shall not prevent the continuance of a
meeting for the transaction of any business other than the question on which the
poll has been demanded.
61. (a) A poll demanded on the election of a chairman of a meeting or on a
question of adjournment of the meeting shall be taken at the meeting without
adjournment. A poll demanded on any other question shall be taken at such time
(either at the meeting or within 60 days after the meeting) as the chairman of
the meeting may direct.
(b) A poll shall be taken at such place and in such manner as the
chairman of the meeting may direct, and he may appoint scrutineers (who need not
be Shareholders). It shall not be necessary (unless the chairman of the meeting
otherwise directs) for notice to be given of a poll, whether taken at or after
the meeting at which it is demanded.
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62. On a poll votes may be cast either personally or by proxy. 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.
63. The result of the poll shall be deemed to be the resolution of the meeting
at which the poll was demanded.
64. In the case of an equality of votes at a general meeting, the motion shall
be deemed to be lost and the chairman of the meeting shall not be entitled to a
second or casting vote.
65. 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 joint holding.
66. (a) Subject to paragraph (b) below, a Shareholder who is a patient for any
purpose of any statute or applicable law relating to mental health or in respect
of whom an order has been made by any court in Bermuda or elsewhere having
jurisdiction for the protection or management of the affairs of persons
incapable of managing their own affairs may vote, whether on a show of hands or
on a poll, by his receiver, committee, curator bonis or other person in the
nature of a receiver, committee or curator bonis appointed by such court, and
such receiver, committee, curator bonis or other person may vote by proxy and
may otherwise act and be treated as such Shareholder for the purpose of general
meetings.
(b) Evidence to the satisfaction of the Board of the authority of any
person claiming the right to vote under paragraph (a) above shall be produced at
the Registered Office (or at such other place as may be specified for the
deposit of instruments of proxy) not later than the last time by which an
instrument appointing a proxy must be deposited in order to be valid for use at
the meeting or adjourned meeting or on the holding of the poll at or on which
that person proposes to vote and, in default, the right to vote shall not be
exercisable
67. No Shareholder shall, unless the Board otherwise determines, be entitled to
vote at any general meeting of the Company or of any class of Shareholders in
respect of any share held by him unless all calls or other sums presently
payable by him in respect of that share have been paid.
68. No objection may be raised to the qualification of any voter or to the
counting of, or failure to count, any vote except at the meeting at which the
vote objected to is tendered. Any objection so raised shall be referred to the
chairman of the meeting and shall only vitiate the decision of the meeting on
any resolution if the chairman decides that it may have affected the decision of
the meeting. The decision of the chairman on any such matter shall be final and
conclusive. Except as otherwise decided by the chairman, every vote counted and
not disallowed at the meeting shall be valid and every vote disallowed or not
counted shall be invalid.
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PROXIES AND CORPORATE REPRESENTATIVES
69. (a) A Shareholder may appoint one or more persons as his proxy, with or
without the power of substitution, to represent him and vote on his behalf in
respect of all or some only of his shares at any general meeting (including an
adjourned meeting) or at any poll taken subsequently to the date of a meeting or
adjourned meeting. A proxy need not be a Shareholder.
(b) A Shareholder which is a corporation may appoint any person (or two
or more persons in the alternative) as its representative at any general meeting
(including an adjourned meeting) or at any poll taken subsequently to the date
of a meeting or adjourned meeting and such a corporate representative may
exercise the same powers on behalf of the corporation which he represents as
that corporation could exercise if it were an individual Shareholder.
(c) An instrument appointing a proxy or a corporate representative in
relation to a particular meeting shall, unless the contrary is stated in it, be
valid for any adjournment of the meeting and an instrument appointing a proxy or
a corporate representative in relation to a particular meeting or adjourned
meeting shall, unless the contrary is stated in it, be valid for any poll
demanded at, but taken subsequently to the date of, the meeting or adjourned
meeting, as well as for a poll taken on the date of such meeting.
70. A Shareholder may appoint a standing proxy, with or without the power of
substitution, or (if a corporation) a standing representative by depositing at
the Registered Office (or at such other place as the Board may from time to time
specify for such purpose) a proxy or (if a corporation) an authorisation, and
such standing proxy or authorisation shall be valid for every general meeting,
adjourned meeting and poll taken subsequently to any meeting until such time as
it is revoked by notice in writing to the Company, but:
(i) the operation of a standing proxy or authorisation shall be
deemed to be suspended at any meeting or poll taken subsequently to
any meeting at which the Shareholder is present or in respect of which
the Shareholder has specifically appointed a proxy or representative;
and
(ii) the Board may from time to time require such evidence as it
deems necessary as to the due execution and continuing validity of any
standing proxy or authorisation and, if it so requires, the operation
of the standing proxy or authorisation shall be deemed to be suspended
until such time as the Board determines that it has received the
required evidence or other evidence satisfactory to it.
71. (a) The instrument appointing a proxy shall be in writing in any common form
or in such other form as the Board may approve and shall be under the hand of
the appointor or of his attorney or agent authorised by him in writing or, if
the appointor is a corporation, either under its seal or under the hand of an
officer, attorney or other person authorised to sign the same.
(b) Any instrument appointing a proxy or a corporate representative
(other than a standing proxy or representative), together with such evidence as
to its due execution as the
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Board may from time to time require, shall be delivered at the Registered Office
(or at such other place as may be specified in the notice convening the meeting
or in any notice of an adjourned meeting or, in either case, in any other
document sent to Shareholders by or on behalf of the Board in relation to the
meeting or adjourned meeting) by such time as may be specified in the notice of
meeting or adjourned meeting or in any such other document or, if no such time
is specified, at any time prior to the holding of the relevant meeting or
adjourned meeting at which the person named in the instrument proposes to vote
or, in the case of a poll taken subsequently to the date of a meeting or
adjourned meeting, before the time appointed for the taking of the poll, and in
default (but subject to Bye-Law 73) the instrument shall not be treated as
valid.
(c) Subject to Bye-Law 73, an instrument appointing a standing proxy or
representative shall not be treated as valid until 24 hours after the time at
which the instrument, together with such evidence as to its due execution as the
Board may from time to time require, is delivered at the Registered Office (or
at such other place as the Board may from time to time specify for the purpose).
(d) A proxy appointed by substitution under an instrument of proxy
containing a power of substitution shall be deemed to be the proxy of the
Shareholder who conferred such power. All the provisions of these Bye-Laws
relating to the execution and delivery of an instrument of proxy shall apply,
mutatis mutandis, to the instrument effecting or evidencing the appointment by
substitution of a person as proxy under such a power.
(e) An instrument of proxy, whether a standing proxy or a proxy
relating to a particular meeting or poll taken subsequent to a meeting, shall be
deemed, unless the contrary is stated in it, to confer authority to demand or
join in demanding a poll and to vote on any amendment of a resolution and on any
other resolution put to a meeting for which it is valid in such manner as the
proxy thinks fit.
72. A vote given in accordance with the terms of an instrument of proxy, whether
a standing proxy or a proxy relating to a particular meeting or poll taken
subsequent to a meeting, shall be valid notwithstanding the previous death or
insanity of the principal, or revocation of the instrument of proxy or of the
authority under which it was executed, unless notice in writing of such death,
insanity or revocation was received by the Company at the Registered Office (or
such other place as may be specified for the delivery of instruments of proxy in
the notice convening the meeting or in any other document sent to Shareholders
by or on behalf of the Board in relation to the meeting) at least one hour
before the commencement of the meeting or adjourned meeting or the taking of the
poll at which the vote is given or by such later time as the Board may decide,
either generally or in any particular case.
73. The Board may decide, either generally or in any particular case, to treat
an instrument appointing a proxy or a corporate representative as properly
delivered for the purposes of these Bye-Laws if a copy of the instrument is sent
by telecopier or similar means to the Registered Office (or to such place as may
be specified in the notice convening the meeting or in any notice of any
adjournment or, in either case, in any other document sent by or on behalf of
the Board
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in relation to the meeting or adjourned meeting). Subject to the Companies Acts,
the Board may also at its discretion waive any of the provisions of these
Bye-Laws relating to the execution and deposit of an instrument appointing a
proxy or a corporate representative or any ancillary matter (including, but
without limitation, any requirement for the production or delivery of any
instrument or other document by any particular time or in any particular way)
and, in any case in which it considers it appropriate, may accept such verbal or
other assurances as it thinks fit as to the right of any person to attend and
vote on behalf of any Shareholder at any general meeting.
AMALGAMATIONS
74. Without prejudice to the requirements of Bye-Law 75, any amalgamation of the
Company and another company shall require the approval of (i) the Board by a
resolution passed with the approval of a majority of those Directors then in
office and eligible to vote on that resolution and (ii) a Resolution approved by
Shareholders of each class of shares holding not less than a majority in nominal
amount of the issued shares of that class, in addition to any other sanction
required by the Companies Acts in respect of any variation of the rights of any
class of Shareholders.
BUSINESS COMBINATIONS WITH INTERESTED SHAREHOLDERS
75. (a) In addition to the definitions and other provisions as to interpretation
set out elsewhere in these Bye-Laws, terms used in this Bye-Law have the
meanings given to them respectively in paragraph (d) below.
(b) During the period of three years following the time at which any
person becomes an Interested Shareholder the Board shall not effect any Business
Combination of the Company with that Interested Shareholder and shall exercise
all voting and other rights or powers of control exercisable by the Company in
relation to any of its subsidiaries so as to secure that no subsidiary shall
effect any Business Combination with that Interested Shareholder, unless in any
such case:
(i) prior to the time at which that person became an Interested
Shareholder, the Board approved either the Business Combination or the
transaction which resulted in that person becoming an Interested
Shareholder; or
(ii) upon consummation of the transaction which resulted in that
person becoming an Interested Shareholder, the Interested Shareholder
owned at least 85 per cent. of the shares carrying the general right
to vote at general meetings of the Company in issue at the time the
transaction commenced, excluding for the purpose of determining the
number of shares so in issue those shares owned (A) by any Director
who holds any executive office or employment with the Company or any
of its subsidiaries and (B) by any employees' share scheme in which
the participants do not have the right to determine confidentially
whether shares held subject to the scheme will be tendered in a tender
or exchange offer; or
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(iii) at or subsequent to the time at which that person became an
Interested Shareholder, the Business Combination is approved by the
Board and at a general meeting of the Company by a Resolution approved
by Shareholders holding not less than two-thirds of those shares
carrying the general right to vote at general meetings of the Company
which are not owned by the Interested Shareholder.
(c) The restrictions contained in paragraph (b) above shall not apply
if:
(i) a person becomes an Interested Shareholder inadvertently and
(A) as soon as practicable divests himself of ownership of sufficient
shares so that he ceases to be an Interested Shareholder and (B) he
would not, at any time within the three-year period immediately prior
to a Business Combination between the Company and such person, have
been an Interested Shareholder but for the inadvertent acquisition of
ownership; or
(ii) the Business Combination is proposed prior to the
consummation or abandonment of and subsequent to the earlier of the
public announcement or the notice required under this paragraph (c) of
a proposed transaction which (A) constitutes one of the transactions
described in sub-paragraphs (aa) to (cc) below, (B) is with or by a
person who either was not an Interested Shareholder during the
previous three years or who became an Interested Shareholder with the
approval of the Board and (C) is approved or not opposed by a majority
of the Directors then in office (but not less than one) who were
Directors prior to any person becoming an Interested Shareholder
during the previous three years or were recommended for election, or
were appointed to succeed such Directors, by a majority of such
Directors.
The proposed transactions referred to in (ii) above are
limited to:
(aa) an amalgamation, scheme of arrangement, merger or
consolidation of the Company (except for one in respect of
which pursuant to the Companies Acts and these Bye-Laws no
vote of the shareholders of the Company is required); or
(bb) a sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a
series of transactions), whether as part of a winding up or
otherwise, of assets of the Company or of any wholly-owned
subsidiary of the Company (other than to any wholly-owned
subsidiary or to the Company) having an aggregate market
value equal to 50 per cent. or more of either the aggregate
market value of all of the assets of the Company determined
on a consolidated basis or the aggregate market value of all
the issued shares of the Company; or
(cc) a proposed tender or exchange offer for 50 per
cent. or more of the issued shares carrying the general
right to vote at general meetings of the Company.
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The Company shall give not less than 20 days' notice to all
Interested Shareholders prior to the consummation of any of the
transactions described in sub-paragraphs (aa) or (bb) above.
(d) As used in this Bye-Law only:
(i) "Affiliate" means a person that directly, or indirectly
through one or more intermediaries, controls, or is controlled
by, or is under common control with, another person;
(ii) "Associate," when used to indicate a relationship with
any person, means:
(A) any company or other person of which he is a
director, officer or partner or is, directly or indirectly,
the owner of 20 per cent. or more of any class of voting
shares;
(B) any person in which he has at least a 20 per cent.
beneficial interest or as to which he serves as trustee or
in a similar fiduciary capacity; and
(C) any relation or spouse of his, or any relative of
his spouse, who has the same residence as him.
(iii) "Business Combination" means:
(A) any amalgamation, scheme of arrangement, merger or
consolidation of the Company or any subsidiary of the
Company (aa) with the Interested Shareholder of any of its
affiliates, or (bb) with any other person if the
amalgamation, scheme of arrangement, merger or consolidation
is caused by the Interested Shareholder;
(B) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a
series of transactions), except proportionately as a
Shareholder, to or with the Interested Shareholder, whether
as part of a winding up or otherwise, of assets of the
Company or of any subsidiary of the Company which assets
have an aggregate market value equal to 10 per cent. or more
of either the aggregate market value of all the assets of
the Company determined on a consolidated basis or the
aggregate market value of all the issued shares of the
Company;
(C) any transaction which results in the issue or
transfer by the Company or by any subsidiary of the Company
of any shares, or any share of such subsidiary, to the
Interested Shareholder, except: (aa) pursuant to the
exercise, exchange or conversion of securities exercisable
for, exchangeable for or
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convertible into shares, or shares of any such subsidiary,
which securities were in issue prior to the time that the
Interested Shareholder became such, (bb) pursuant to an
amalgamation, scheme of arrangement or merger with a
wholly-owned subsidiary of the Company solely for purposes
of forming a holding company, (cc) pursuant to a dividend or
distribution paid or made, or the exercise, exchange or
conversion of securities exercisable for, exchangeable for
or convertible into shares, or shares of any such
subsidiary, which security is distributed pro rata to all
holders of a class or series of shares subsequent to the
time the Interested Shareholder became such, (dd) pursuant
to an exchange offer by the Company to purchase shares made
on the same terms to all holders of said shares or (ee) any
issue or transfer of shares by the Company; provided that in
no case under items (cc)-(ee) of this sub-paragraph is there
an increase in the Interested Shareholder's proportionate
share of any class or series of shares;
(D) any transaction involving the Company or any
subsidiary of the Company which has the effect, directly or
indirectly, of increasing the proportionate share of any
class or series of shares, or securities convertible into
any class or series of shares, or shares of any such
subsidiary, or securities convertible into such shares,
which is owned by the Interested Shareholder, except as a
result of immaterial changes due to fractional share
adjustments or as a result of any purchase or redemption of
any shares not caused, directly or indirectly, by the
Interested Shareholder; or
(E) any receipt by the Interested Shareholder of the
benefit, directly or indirectly (except proportionately as a
Shareholder), of any loans, advances, guarantees, pledges or
other financial benefits (other than those expressly
permitted in subparagraphs (A) to (D) of this paragraph)
provided by or through the Company or any subsidiary;
(iv) "control", including the terms "controlling",
"controlled by" and "under common control with," means the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a person,
whether through the ownership of voting shares, by contract or
otherwise, and a person who is the owner of 20 per cent. or more
of the issued voting shares of any company shall be presumed to
have control of such company, in the absence of proof by a
preponderance of the evidence to the contrary, except that,
notwithstanding the foregoing, a presumption of control shall not
apply where such person holds voting shares, in good faith and
not for the purpose of circumventing this Bye-Law, as an agent,
bank, broker, nominee, custodian or trustee for one or more
owners who do not individually or as a group have control of such
company;
(v) "Interested Shareholder" means any person (other than
the Company and any subsidiary of the Company) who (A) is the
owner of 15 per cent. or more of the issued shares carrying the
general right to vote at general meetings of the Company, or
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(B) is an affiliate or associate of the Company and was the owner
of 15 per cent. or more of the such shares at any time within the
three-year period immediately prior to the date on which it is
sought to be determined whether such person is an Interested
Shareholder; and the affiliates and associates of such person,
provided that the term "Interested Shareholder" shall not include
any person whose ownership of shares in excess of such 15 per
cent. level is the result of action taken solely by the Company;
but such person shall be an Interested Shareholder if thereafter
such person acquires additional shares carrying the general right
to vote at general meetings of the Company, except as a result of
further Company action not caused, directly or indirectly, by
such person; for the purpose of determining whether a person is
an Interested Shareholder, the shares carrying the general right
to vote at general meetings of the Company deemed to be in issue
shall include such shares deemed to be owned by the person
through the application of paragraph (vii) below, but shall not
include any other unissued shares which may be issuable pursuant
to any agreement, arrangement or understanding, or upon exercise
of conversion rights, warrants or options, or otherwise;
(vi) "voting shares" means, with respect to any company,
shares of any class or series carrying the right to vote
generally in the election of directors and, with respect to any
person that is not a company, any equity interest entitled to
vote generally in the election of the governing body of such
person; and
(vii) "owner", including the terms "own" and "owned", when
used with respect to any shares, means a person who individually
or with or through any of his affiliates or associates:
(A) beneficially owns such shares, directly or
indirectly; or
(B) has (aa) the right to acquire such shares (whether
such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or
understanding, or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise;
provided, however, that a person shall not be deemed the
owner of shares tendered pursuant to a tender or exchange
offer made by such person or any of such person's affiliates
or associates until such tendered shares are accepted for
purchase or exchange; or (bb) the right to vote such shares
pursuant to any agreement, arrangement, or understanding,
provided that a person shall not be deemed the owner of any
shares because of such person's right to vote such shares if
the agreement, arrangement or understanding to vote such
shares arises solely from a revocable proxy or consent given
in response to a proxy or consent solicitation made to 10 or
more persons; or
(C) has any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting (except voting
pursuant to a revocable proxy or consent as described in
item (bb) of subparagraph (B) of this paragraph), or
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disposing of such shares with any other person that
beneficially owns, or whose affiliates or associates
beneficially own, directly or indirectly, such shares.
APPOINTMENT AND REMOVAL OF DIRECTORS
76. (a) The number of Directors shall not exceed 21 and shall be not less
than three.
(b) Except as otherwise provided in these Bye-Laws, the Directors shall
be individuals appointed as follows:
(i) the Company by Resolution at the Annual General Meeting
in each year or at any Special General Meeting called for the
purpose may appoint any eligible person as a Director (but not so
as to exceed the maximum number of Directors permitted by these
Bye-Laws);
(ii) if so authorised by the Company by Resolution at any
general meeting, the Board may, by a resolution passed with the
approval of a majority of the Directors then in office, appoint
any persons as additional Directors, up to a number specified in
the Resolution (but not so as to exceed the maximum number of
Directors permitted by these Bye-Laws); and
(iii) so long as there remains in office a sufficient number
of Directors to constitute a quorum of the Board in accordance
with paragraph (a) of Bye-Law 98, the Board may, by a resolution
passed with the approval of a majority of the Directors then in
office, appoint any person as a Director to fill any vacancy
occurring in the Board;
and a Director so appointed shall (unless he is removed from office or his
office is vacated in accordance with these Bye-Laws) hold office until the next
Annual General Meeting after his appointment, when he shall retire.
(c) A Director retiring at an Annual General Meeting shall be eligible
for reappointment and shall retain office until the close of the meeting at
which he retires or (if earlier) until a resolution is passed at that meeting
not to fill the vacancy, or to appoint another person in his place, or the
resolution to re-appoint him is put to a vote at the meeting and lost.
(d) If at any Annual General Meeting at which a Director retires the
Company does not fill the office vacated by such Director, the retiring
Director, if willing to act, shall be deemed to be re-appointed, unless at the
meeting a Resolution is passed not to fill the vacancy, or to appoint another
person in his place, or unless the Resolution to re-appoint him is put to a vote
at the meeting and lost.
77. (a) No person shall be eligible for appointment as a Director at any general
meeting unless (i) he has been recommended for appointment by the Board in the
notice of the meeting or in any other document sent to Shareholders by or on
behalf of the Board in relation to the meeting or (ii) in the case of an Annual
General Meeting, he is a Director whose term of office
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is expiring at that meeting or (iii) he has been nominated for election as a
Director in accordance with paragraph (b) of this Bye-Law. A Director need not
be a Shareholder.
(b) Any Shareholder may nominate a person for election as a Director at
an Annual General Meeting or at a Special General Meeting called for the purpose
by giving to the Secretary at the Registered Office a written notice of
nomination containing the information required by paragraph (c) of this Bye-Law.
To be valid, such a notice of nomination must be received (i) in the case of a
person nominated for election at an Annual General Meeting, not less than 60
days nor more than 180 days prior the scheduled date of that meeting or, if at
the time the notice of nomination is given the date of that meeting is not
known, the anniversary of the previous year's Annual General Meeting, or (ii) in
the case of a person nominated for election at a Special General Meeting, within
10 days after the date on which the Company first publicly announces that such
Special General Meeting is to be called for the purpose of electing Directors.
(c) A notice of nomination shall:
(i) specify the meeting at which the person nominated is proposed
for election as a Director;
(ii) contain all such information relating to the nominee as is
required in solicitations of proxies for the election of Directors or
as may be otherwise required pursuant to Section 14 of, and Schedule
14A under, the United States Securities Exchange Act of 1934;
(iii) state the names and addresses, as they appear in the
Register, of the Shareholder(s) giving the notice and the class and
number of shares which are held by such Shareholder(s) at the date of
the notice and be signed by such Shareholder(s); and
(iv) be accompanied by the written consent of the nominee to his
being named in a proxy statement as a nominee and to serving as a
Director, if elected.
78. (a) Except as otherwise provided in Bye-Law 80, a Director may be removed
from office by Resolution passed at a Special General Meeting called for the
purpose and any vacancy created by such removal may be filled at the meeting by
the election of another eligible person as a Director in his place or, in the
absence of any such election, by the Board.
(b) Notice of any Special General Meeting called for the purpose of
removing a Director shall be served upon the Director concerned not less than 14
clear days before the meeting.
(c) A Director may also be removed from office by service on him of a
notice in writing to that effect signed by not less than 80 per cent. in number
of the Directors then in office. Such a notice may be contained in one document
or in several documents in like form
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each signed by one or more of the Directors, but no such notice may be signed by
an Alternate Director on behalf of his appointor.
(d) Any removal from office of a Director shall be without prejudice to
any claim for damages that such Director may have against the Company or the
Company may have against such Director for any breach of any contract of service
between him and the Company which may be involved in such removal.
79. (a) The Board, by a resolution passed with the approval of a majority of the
Directors then in office, may at any time determine that the Directors need not
all retire at each Annual General Meeting but shall be subject to retirement by
rotation in accordance with the provisions of this Bye-Law, and that for that
purpose the Directors be divided into three classes, each as nearly equal in
number as possible, each Director being designated as a member of one of the
three classes. In that event (and notwithstanding that the appointment of any
Director was expressed to be for a shorter term of office) the first class of
Directors shall retire at the first Annual General Meeting, the second class
shall retire at the second Annual General Meeting and the third class shall
retire at the third Annual General Meeting, in each case following the date of
such classification. The class of Directors to retire by rotation at each
subsequent Annual General Meeting shall be that class of Directors who, at the
date of the meeting, have been longest in office since their last appointment or
re-appointment.
(b) At each Annual General Meeting during such time as the Directors
are subject to retirement by rotation the Company may elect such number of
eligible persons as Directors as does not exceed the number of Directors who
retire at that meeting.
(c) The Board, by a resolution passed with the approval of a majority
of the Directors then in office, may at any time revoke any resolution that the
Directors be subject to retirement by rotation and declassify the Directors
accordingly and, if it does so, all the Directors shall retire at the next
Annual General Meeting, but without prejudice to the Board's power to make any
further determination pursuant to this Bye-Law.
80. During such time as the Directors are subject to retirement by rotation
pursuant to Bye- Law 79:
(i) no person may be appointed as a Director except in
accordance with paragraph (b) of Bye-Law 79 or sub-paragraphs
(iii) or (iv) below;
(ii) a Director may be removed from office only (A) by a
Resolution passed at a Special General Meeting called for the
purpose by or with the sanction of a majority of not less than 80
per cent. of all the votes capable of being cast by holders of
shares (whether or not of the same class) carrying the general
right to vote at general meetings of the Company or (B) in
accordance with paragraph (c) of Bye-Law 78;
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(iii) any vacancy in the Board occurring by reason of the
removal of a Director under sub-paragraph (ii) above may be
filled at the meeting by the election of another eligible person
as a Director in his place or, in the absence of any such
election, by the Board by a resolution passed with the approval
of a majority of the Directors then in office;
(iv) any vacancy in the Board occurring in any other manner
may be filled by the Board by a resolution passed with the
approval of a majority of the Directors then in office or, if
there are insufficient Directors to constitute a quorum of the
Board in accordance with paragraph (a) of Bye-Law 98, by the
election by Resolution passed at a Special General Meeting called
for the purpose of an eligible person as a Director; and
(v) any Director appointed to fill a vacancy shall retire by
rotation at the same meeting as the Directors of the class in
which the vacancy occurred.
Paragraphs (b) and (d) of Bye-Law 78 apply to the removal of any Director under
this Bye-Law.
RESIGNATION AND DISQUALIFICATION OF DIRECTORS
81. In addition to those circumstances in which a Director may be removed from
office pursuant to these Bye-Laws, the office of a Director shall be vacated:
(i) if he resigns his office, on the date on which notice in
writing of his resignation is delivered to the Registered Office
or tendered at a meeting of the Board or on such later date as
may be specified in such notice; or
(ii) if he becomes of unsound mind or a patient for any
purpose of any statute or applicable law relating to mental
health, on the date on which the Board resolves that his office
is vacated; or
(iii) on his becoming bankrupt; or
(iv) on his being prohibited by law from being a Director;
or
(v) on his ceasing to be a Director by virtue of any
provision of the Companies Acts.
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ALTERNATE DIRECTORS
82. (a) In addition to the power conferred on a Director by the Companies Acts
to appoint another Director to represent him and vote on his behalf at any
meeting of the Board, a Director may appoint any other person who is willing to
act as his Alternate Director and may remove him from that office. An Alternate
Director may also be a Director in his own right and may act as alternate to
more than one Director. The appointment of an Alternate Director who is not a
Director in his own right shall be subject to the approval of a majority of the
Directors or a resolution of the Board. An Alternate Director need not be a
Shareholder.
(b) Any appointment or removal of an Alternate Director shall be made
by notice in writing, signed by his appointor, and (subject to any approval
required under paragraph (a) above) such appointment or removal shall be
effective on delivery at the Registered Office or at a meeting of the Board or
on such later date as may be specified in such notice. Any person appointed as
an Alternate Director shall vacate his office as Alternate Director if the
Director by whom he has been appointed vacates his office as a Director
(otherwise than by retirement at a general meeting of the Company at which he is
re-appointed) or removes him by notice to the Company or, in the case of an
Alternate Director who is not a Director in his own right, if the Board so
resolves.
83. An Alternate Director shall be entitled to receive notice of all meetings of
the Board and of all meetings of any committee of the Board of which the
Director appointing him is a member, to attend, be counted in the quorum and
vote at any such meeting at which any Director to whom he is alternate is not
personally present and, except as expressly provided to the contrary in these
Bye-Laws, generally to perform all the functions of any Director to whom he is
alternate in his absence. Every person acting as an Alternate Director shall
have one vote for each Director for whom he acts as alternate (in addition to
his own vote if he is also a Director). The signature or approval of an
Alternate Director to or of any resolution in writing of the Board or a
committee of the Board shall, unless the terms of his appointment provide to the
contrary, be as effective as the signature or approval of the Director or
Directors to whom he is alternate.
84. A person acting as an Alternate Director shall not by virtue of that
position be deemed to be a director of the Company for the purposes of the
Companies Acts but shall, when performing the functions of his appointor, be
subject in all respects to the provisions of the Companies Acts and these
Bye-Laws relating to Directors (except as regards powers to appoint an alternate
and remuneration) and shall alone be responsible to the Company for his acts and
defaults and shall not be deemed to be the agent of or for any Director for whom
he is alternate. An Alternate Director may be paid expenses to the same extent
as if he were a Director.
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DIRECTORS' REMUNERATION AND EXPENSES
85. (a) Each Director shall be entitled to receive such fees, if any, as the
Board may from time to time determine. Each Director shall be paid all expenses
properly and reasonably incurred by him in the conduct of the Company's business
or in the discharge of his duties as a Director, including (but without
limitation) his reasonable travelling, hotel and incidental expenses in
attending and returning from meetings of the Board or any committee of the Board
or general meetings.
(b) Any Director who serves on any committee of the Board or who
performs services which in the opinion of the Board go beyond the ordinary
duties of a Director may be paid such extra remuneration (whether by way of
salary, commission, participation in profits or otherwise) as the Board may
determine, and such extra remuneration shall be in addition to any remuneration
or other amounts payable to a Director pursuant to any other Bye-Law.
(c) The Board may from time to time determine that all or part of any
fees or other remuneration payable to any Director or other Officer of the
Company shall be provided in the form of shares or other securities of the
Company or any subsidiary of the Company, or options or rights to acquire such
shares or other securities, on such terms as the Board may decide.
DIRECTORS' INTERESTS
86. (a) A Director may hold any other office or place of profit with the Company
(except that of auditor) in addition to his office of Director for such period
and upon such terms as the Board may determine and may be paid such extra
remuneration for so doing (whether by way of salary, commission, participation
in profits or otherwise) as the Board may determine, in addition to any
remuneration or other amounts payable to a Director pursuant to any other Bye-
Law.
(b) A Director may act by himself or his firm in a professional
capacity for the Company (otherwise than as auditor) and he or his firm shall be
entitled to remuneration for professional services as if he were not a Director.
(c) Subject to the Companies Acts, a Director notwithstanding his
office (i) may be a party to, or otherwise interested in, any transaction or
arrangement with the Company or in which the Company is otherwise interested and
(ii) may be a director or other officer of, or employed by, or a party to any
transaction or arrangement with, or otherwise interested in, any company or
other person promoted by the Company or in which the Company is interested. The
Board may also cause the voting power conferred by the shares in any other
company or other person held or owned by the Company to be exercised in such
manner in all respects as it thinks fit, including the exercise in favour of any
resolution appointing the Directors or any of them to be directors or officers
of such other company or person or voting or providing for the payment of
remuneration to the directors or officers of such other company or person.
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(d) A Director who to his knowledge is in any way, whether directly or
indirectly, interested in a contract with the Company or any of its subsidiaries
shall declare the nature of his interest at the first opportunity at a meeting
of the Board at which the question of entering into the contract is first taken
into consideration, if he knows his interest then exists, or in any other case
at the first meeting of the Board after he knows that he is or has become so
interested.
(e) Subject to the Companies Acts and any further disclosure required
thereby, a general notice to the Directors by a Director or other Officer
declaring that he is a director or officer or has an interest in a person and is
to be regarded as interested in any transaction or arrangement made with that
person shall be a sufficient declaration of interest in relation to any
transaction or arrangement so made.
(f) So long as, where it is necessary, he declares the nature of his
interest, a Director shall not by reason of his office be accountable to the
Company for any benefit which he derives from any office or employment to which
these Bye-Laws allow him to be appointed or from any transaction or arrangement
in which these Bye-Laws allow him to be interested, and no such transaction or
arrangement shall be liable to be avoided on the ground of any such interest or
benefit.
POWERS OF THE BOARD
87. Subject to the provisions of the Companies Acts and these Bye-Laws, the
Board shall manage the business and affairs of the Company and may exercise all
the powers of the Company. No alteration of these Bye-Laws shall invalidate any
prior act of the Board which would have been valid if that alteration had not
been made. The powers given by this Bye-Law shall not be limited by any special
power given to the Board by these Bye-Laws and, except as otherwise expressly
provided in these Bye-Laws, a meeting of the Board at which a quorum is present
shall be competent to exercise all the powers, authorities and discretions for
the time being vested in or exercisable by the Board.
88. The Board may exercise all the powers of the Company to borrow money and to
mortgage or charge all or any part of the undertaking, property and assets
(present and future) and uncalled capital of the Company 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 other person.
89. All cheques, promissory notes, drafts, bills of exchange and other
instruments, whether negotiable or transferable or not, and all receipts for
money 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 determine.
90. The Board may exercise all the powers of the Company to grant or procure the
grant or provision of benefits, including pensions, annuities or other
allowances, to or for any person, including any Director or former Director, who
has held any executive office or employment with, or whose services have
directly or indirectly been of benefit to, the Company or any company which is
or has been a subsidiary or affiliate of the Company or otherwise associated
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with any of them or a predecessor in business of the Company or of any such
other company, and to or for any relation or dependant of any such person, and
to contribute to any fund and pay premiums for the purchase or provision of any
such benefit, or for the insurance of any such person.
91. The Board may from time to time appoint one or more of its body to hold any
executive office with the Company for such period and on such terms as the Board
may determine and may revoke or terminate any such appointment. Any such
revocation or termination shall be without prejudice to any claim for damages
that such Director may have against the Company or the Company may have against
such Director for any breach of any contract of service between him and the
Company which may be involved in such revocation or termination. Any person so
appointed shall receive such remuneration, if any (whether by way of salary,
commission, participation in profits or otherwise), as the Board may determine
either in addition to or in lieu of his remuneration as a Director.
DELEGATION OF THE BOARD'S POWERS
92. The Board may by power of attorney or otherwise appoint any person, whether
nominated directly or indirectly by the Board, to be the attorney or agent of
the Company and may delegate to such person any of the Board's powers,
authorities and discretions (with power to sub-delegate) for such period and
subject to such conditions as it may think fit. The Board may revoke or vary any
such appointment or delegation, but no person dealing in good faith and without
notice of such revocation or variation shall be affected by any revocation or
variation. Any such power of attorney or other document may contain such
provisions for the protection and convenience of persons dealing with any such
attorney or agent as the Board may think fit.
93. The Board may entrust to and confer upon any Officer any of its powers,
authorities and discretions (with power to sub-delegate) on such terms and
conditions with such restrictions as it thinks fit and either collaterally with,
or to the exclusion of, its own powers and may from time to time revoke or vary
all or any of such powers, but no person dealing in good faith and without
notice of such revocation or variation shall be affected by any revocation or
variation.
94. (a) The Board may delegate any of its powers, authorities and discretions
(with power to sub-delegate) to any committee, consisting of such person or
persons (whether Directors or not) as it thinks fit, provided that the majority
of the members of the committee are Directors. The Board may make any such
delegation on such terms and conditions with such restrictions as it thinks fit
and either collaterally with, or to the exclusion of, its own powers and may
from time to time revoke or vary such delegation, but no person dealing in good
faith and without notice of such revocation or variation shall be affected by
any revocation or variation. Any committee so formed shall, in the exercise of
the powers, authorities and discretions so delegated, conform to any regulations
which may be imposed on it by the Board. The power to delegate to a committee
extends to all the powers, authorities and discretions of the Board generally
(including, but without limitation, those conferred by Bye-Law 85) and shall not
be limited by the fact that in certain provisions of these Bye-Laws, but not in
others, express reference is made
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to a committee or to particular powers, authorities or discretions being
exercised by the Board or by a committee of the Board.
(b) The meetings and proceedings of any committee of the Board
consisting of two or more members shall be governed by the provisions contained
in these Bye-Laws for regulating the meetings and proceedings of the Board so
far as they are capable of applying and are not superseded by any regulations
imposed by the Board except that (i) unless otherwise determined by the Board,
the quorum necessary for the transaction of business at any committee meeting
shall be two members and (ii) no meeting of any committee consisting of two or
more members shall be quorate for the purposes of exercising any of its powers,
authorities and discretions unless a majority of those present are Directors.
PROCEEDINGS OF THE BOARD
95. The Board may meet for the despatch of business, adjourn and otherwise
regulate its meetings as it thinks fit. Except where a greater majority is
required by these Bye-Laws, questions arising at any meeting shall be determined
by a majority of the votes cast. In the case of an equality of votes the motion
shall be deemed to be lost and the chairman of the meeting shall not be entitled
to a second or casting vote.
96. A meeting of the Board may at any time be summoned by the Chairman or, if
there is no Chairman, by the President, if he is a Director. The Secretary shall
also summon a meeting of the Board on the requisition of one-third or more in
number of the Directors for the time being in office or, if more than 90 days
has elapsed since the last meeting of the Board, on the requisition of any one
Director.
97. Notice of a meeting of the Board shall be deemed to be duly given to a
Director if it is given to him personally or by word of mouth or sent to him by
post, telecopier or other mode of representing or reproducing works in a legible
and non-transitory form at his last known address or any other address given by
him to the Company for this purpose. A Director may waive notice of any meeting
either prospectively or retroactively or at the meeting in question.
98. (a) The quorum necessary for the transaction of business at any meeting of
the Board shall be two Directors or a majority of the Directors then in office,
whichever is the higher number, but in determining the majority of the Directors
then in office for the purpose of ascertaining a quorum for the transaction of
any particular business at a meeting there shall be disregarded any Director who
is not permitted to vote on that business.
(b) A Director shall not vote (or be counted in the quorum at a
meeting) in respect of any resolution concerning his own appointment (including
fixing or varying its terms), or the termination of his own appointment, as the
holder of any office or place of profit with the Company or any other company in
which the Company is interested but, where proposals are under consideration
concerning the appointment (including fixing or varying its terms), or the
termination of the appointment, of two or more Directors to offices or places of
profit with the Company or any other company in which the Company is interested,
those proposals may be
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divided and a separate resolution may be put in relation to each Director and in
that case each of the Directors concerned (if not otherwise debarred from voting
under this Bye-law) shall be entitled to vote (and be counted in the quorum) in
respect of each resolution unless it concerns his own appointment or the
termination of his own appointment.
(c) A Director shall also not vote (or be counted in the quorum at a
meeting) in relation to any resolution relating to any contract or arrangement
or other proposal in which he has an interest which (together with any interest
of any connected person) is to his knowledge a material interest and, if he
purports to do so, his vote shall not be counted, but this prohibition shall not
apply, and a Director may vote (and be counted in the quorum), in respect of any
resolution concerning any one or more of the following matters:
(i) any contract in which he is interested by virtue of an
interest in shares, debentures or other securities of the Company
or otherwise in or through the Company;
(ii) the giving of any guarantee, security or indemnity in
respect of:
(A) 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 subsidiaries; or
(B) a debt or obligation of the Company or any of its
subsidiaries for which he himself has assumed responsibility
in whole or in part (either alone or jointly with others)
under a guarantee or indemnity or by the giving of security;
(iii) any issue or offer of shares, debentures or other
securities of the Company or any of its subsidiaries in respect
of which he is or may be entitled to participate in his capacity
as a holder of any securities or as an underwriter or
sub-underwriter;
(iv) any contract concerning any other company in which he
and any connected persons do not to his knowledge hold an
interest of any kind, directly or indirectly, in shares
representing one per cent. or more of any class of the equity
share capital of that company or of the voting rights available
to members of that company;
(v) any arrangement for the benefit of employees of the
Company or any of its subsidiaries which does not accord to him
any privilege or benefit not generally accorded to the employees
to whom the arrangement relates; and
(vi) the purchase or maintenance of insurance for the
benefit of Directors or for the benefit of persons including
Directors.
(d) In the case of an Alternate Director, an interest of his appointor
shall be treated as an interest of the alternate in addition to any interest
which the alternate otherwise has.
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(e) If any question arises at any meeting as to the materiality of an
interest of a Director (other than the chairman of the meeting) or as to the
entitlement of any Director (other than the chairman of the meeting) to vote and
the question is not resolved by his voluntarily agreeing to abstain from voting,
the question shall be referred to the chairman of the meeting and his ruling in
relation to the Director concerned shall be final and conclusive except in a
case where the nature or extent of the interest of the Director concerned, so
far as known to him, has not been fairly disclosed. If any question shall arise
in respect of the chairman of the meeting and is not resolved by his voluntarily
agreeing to abstain from voting, the question shall be decided by a resolution
of the Board (for which purpose the chairman shall be counted in the quorum but
shall not vote on the matter) and the resolution shall be final and conclusive
except in a case where the nature or extent of the interest of the chairman, so
far as known to him, has not been fairly disclosed.
(f) For the purposes of this Bye-Law:
(i) references to a contract include references to any
proposed contract and to any transaction or arrangement, whether
or not constituting a contract;
(ii) a person is a "connected person" in relation to a
Director if that person is (A) that Director's spouse or minor
child, (B) a person acting in his capacity as a trustee of a
trust (other than an employees' share scheme or a pension scheme)
the beneficiaries of which include that Director, his spouse, his
minor children or a company such as described in sub-part (D),
(C) a person acting in his capacity as a partner of that Director
or of that Director's spouse or minor child or (D) a company in
which the Director, his spouse and minor children and any such
trustee or partner together own or control, directly or
indirectly, not less than 20 per cent. of the equity share
capital or the voting rights available to members of that
company; and
(iii) in ascertaining a person's interest in any shares in
any other company there shall be disregarded (A) any shares held
by that person as trustee, personal representative or in any
similar capacity and in respect of which neither he nor, if he is
a Director, any connected person has any beneficial interest, (B)
any shares comprised in a trust in which that person's interest
is not material, having regard to the interests of other
beneficiaries, or is incapable of being ascertained, (C) any
shares comprised in an employees' share scheme or a pension
scheme in which a person is interested only as a participant or
member and (D) any shares comprised in a mutual fund or other
collective investment scheme open to members of the public and in
the assets of which that person and, if he is a Director, any
connected person does not have or do not together have an
interest representing five per cent.or more of the interests
attributable to all investors in that fund or scheme.
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(g) The Company may by Resolution suspend or relax the provisions of
this Bye-Law to any extent or ratify any transaction not duly authorised by
reason of a contravention of this Bye-Law.
99. So long as at least two Directors remain in office, the remaining Directors
may act notwithstanding any vacancy in the Board, but, if less than two
Directors remain in office, the sole remaining Director may act only for the
purposes of calling a general meeting for such purposes as he thinks fit and of
nominating a person or persons for appointment to the Board.
100. The Chairman or, in his absence, any Director holding the office of
President shall preside as chairman at every meeting of the Board. If there is
no such Chairman or President, or if at any meeting the Chairman or the
President is not present within 15 minutes after the time appointed for holding
the meeting or is not willing to act as chairman, the Directors present may
choose one of their number to be chairman of the meeting.
101. A resolution in writing signed or approved by all the Directors shall be as
valid and effectual as a resolution passed at a meeting of the Board duly called
and constituted. Such a resolution may be contained in one document or in
several documents in like form each signed or approved by one or more of the
Directors.
102. A meeting of the Board may be held by means of such telephone, electronic
or other communications equipment or facilities as permit all persons
participating in the meeting to communicate with each other simultaneously and
instantaneously, and participation in such a meeting shall constitute presence
in person at such meeting.
103. All acts done in good faith by the Board or by any committee or by any
person acting as a Director or member of a committee or any person authorised by
the Board or any committee shall, notwithstanding that it is afterwards
discovered that there was some defect in the appointment of any member of the
Board or such committee or person acting as aforesaid or that they or any of
them were disqualified or had vacated their office, be as valid as if every such
person had been duly appointed and was qualified and had continued to be a
Director, member of such committee or person so authorised.
OFFICERS
104. (a) The Company shall have a Chairman, who shall be elected by the Board
from its members. A person appointed to the office of Chairman shall vacate that
office if he vacates his office as a Director (otherwise than by retirement at a
general meeting of the Company at which he is re-appointed).
(b) The Company may have such other Officers (including a President,
one or more Vice-Presidents, a Deputy Chairman and a Treasurer), in addition to
the Directors and the Secretary, as the Board may from time to time determine. A
person appointed to any such other office need not be a Director and the same
person may hold more than one office.
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(c) Any person elected or appointed pursuant to this Bye-Law shall hold
office for such period and on such terms as the Board may determine and the
Board may revoke or vary any such election or appointment at any time by the
affirmative vote of a majority of the Directors then in office. Any such
revocation or variation shall be without prejudice to any claim for damages that
such Officer may have against the Company or the Company may have against such
Officer for any breach of any contract of service between him and the Company
which may be involved in such revocation or variation. If any such office
becomes vacant for any reason, the vacancy may be filled by the Board.
(d) Except as provided in the Companies Acts or these Bye-Laws, the
powers and duties of any Officer elected or appointed pursuant to this Bye-Law
shall be such as are determined from time to time by the Board.
MINUTES
105. (a) The Directors shall cause minutes to be made and books kept for the
purpose of recording:
(i) all appointments of Officers made by the Board;
(ii) the names of the Directors and other persons (if any)
present at each meeting of the Board and of any committee; and
(iii) all proceedings at meetings of the Board and of any
committee of the Board and at general meetings of the Company and of
any class of Shareholders of the Company .
(b) The minutes of general meetings of the Company and of any class of
Shareholders of the Company shall be open to inspection in the manner prescribed
by the Companies Acts between 10:00 a.m. and 12:00 noon (or between such other
times as the Board from time to time determines) on every working day.
SECRETARY
106. The Secretary shall be appointed by the Board at such remuneration (if any)
and on such terms as it may think fit and any Secretary so appointed may be
removed by the Board. The duties of the Secretary shall be those prescribed by
the Companies Acts, together with such other duties as shall from time to time
be prescribed by the Board.
107. A provision of the Companies Acts or these Bye-Laws requiring or
authorising a thing to be done by or to a Director and the Secretary shall not
be satisfied by its being done by or to the same person acting both as Director
and as, or in the place of, the Secretary.
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THE SEAL
108. (a) The Seal shall consist of a circular metal device with the name of the
Company around its outer margin and the country and year of incorporation across
its centre. The Company may also have for use in any territory outside Bermuda
one or more additional Seals, each of which shall be a duplicate of the Seal
except, in the case of a Seal for use in sealing documents creating or
evidencing securities issued by the Company, for the addition on its face of the
word "Securities".
(b) The Board shall provide for the custody of every Seal. A Seal shall
only be used by authority of the Board or of a committee of the Board. Subject
to the Companies Acts and except as provided in Bye-Law 20, any instrument to
which a Seal is affixed shall be signed by an Officer or by any person who has
been authorised by the Board either generally or specifically to attest to the
use of a Seal.
DIVIDENDS AND OTHER PAYMENTS
109. Subject to the Companies Acts, the Board may from time to time declare cash
dividends to be paid to the Shareholders, according to their respective rights
and interests, and may fix the time for the payment of such dividends.
110. Except insofar as the rights attaching to, or the terms of issue of, any
shares otherwise provide:
(i) all dividends shall be declared and paid according to the
amounts paid up on the shares in respect of which the dividend is
paid, but no amount paid up on a share in advance of a call may be
treated for the purpose of this Bye-Law as paid up on the share;
(ii) dividends shall be apportioned and paid pro rata according
to the amounts paid up on the shares during any portion or portions of
the period in respect of which the dividend is paid; and
(iii) dividends shall be declared and paid in US dollars, but the
Board may from time to time determine that dividends which may be
declared or become due on shares held by all or some of those
Shareholders whose registered addresses are in a particular territory
shall be declared or paid in a currency other than US dollars and, if
it does so, the Board may fix or otherwise determine the basis of
conversion into that other currency, and payment of that converted
amount in that currency shall be in full satisfaction of the
entitlement to such dividend.
111. The Board may deduct from any dividend or other moneys payable to a
Shareholder (either alone or jointly with another) by the Company on or in
respect of any shares all sums of money (if any) due from him (either alone or
jointly with another) to the Company on account of calls or otherwise in respect
of shares of the Company.
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112. No dividend or other moneys payable by the Company on or in respect of any
share shall bear interest against the Company, unless the terms of issue of that
share otherwise expressly provide.
113. (a) Any dividend or other sum payable in cash to the holder of a share may
be paid by cheque, warrant or other means approved by the Board and, in the case
of a cheque or warrant, may be sent through the post addressed to the holder at
his address in the Register (or, in the case of joint holders, addressed to the
holder whose name stands first in the Register in respect of the share at his
registered address as appearing in the Register) or addressed to such person at
such address as the holder or joint holders may in writing direct.
(b) Every such cheque or warrant shall, unless the holder or joint
holders otherwise direct, be made payable to the order of the holder or, in the
case of joint holders, to the order of one or more of the holders and shall be
sent at his or their risk and payment of the cheque or warrant by the bank on
which it is drawn shall constitute a good discharge to the Company.
(c) In addition, any dividend or other sum payable to the holder of a
share may be paid by a bank or other funds transfer system or by such other
means as may be approved by the Board and to or through such person as the
holder or joint holders may direct in writing, and the Company shall have no
responsibility for any sums lost or delayed in the course of any such transfer
or when it has acted on any such direction.
(d) Any one of two or more joint holders may give an effectual receipt
for any dividend or other moneys payable or property distributable in respect of
the shares held by such joint holders.
114. (a) If (i) a payment for a dividend or other sum payable in respect of a
share sent by the Company to the person entitled to it in accordance with these
Bye-Laws is left uncashed or is returned to the Company and, after reasonable
enquiries, the Company is unable to establish any new address or, with respect
to a payment to be made by a funds transfer system, a new account, for that
person or (ii) such a payment is left uncashed or returned to the Company on two
consecutive occasions, the Company shall not be obliged to send any dividends or
other sums payable in respect of that share to that person until he notifies the
Company of an address or, where the payment is to be made by a funds transfer
system, details of the account, to be used for the purpose.
(b) Any dividend or other distribution in respect of a share which is
unclaimed for a period of 12 years from the date on which it became payable
shall be forfeited and shall revert to the Company. The payment by the Company
of any unclaimed dividend or other distribution payable on or in respect of a
share into a separate account shall not constitute the Company a trustee in
respect of it.
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115. The Board may direct payment or satisfaction of any dividend or other
distribution wholly or in part by the distribution of specific assets and, in
particular, of paid up shares or debentures of any other company; and, where any
difficulty arises in regard to such dividend or distribution, the Board may
settle it as it thinks expedient, and in particular may authorise any person to
sell and transfer any fractions, or may ignore fractions altogether, and may fix
the value for distribution or dividend purposes of any such specific assets, and
may determine that cash payments shall be made to any Shareholders upon the
footing of the values so fixed in order to secure equality of distribution, and
may vest any such specific assets in trustees as may seem expedient to the
Board.
RESERVES
116. The Board may, before declaring any dividend or other distribution, set
aside such sums as it thinks proper as reserves which shall, at the discretion
of the Board, be applicable for any purpose of the Company and pending such
application may, also at such discretion, either be employed in the business of
the Company or be invested in such manner as the Board may from time to time
think fit. The Board may also without placing the same to reserve carry forward
any sums which it may think it prudent not to distribute.
CAPITALISATION OF RESERVES
117. (a) The Board may, at any time and from time to time, resolve that it is
desirable to capitalise all or any part of any amount for the time being
standing to the credit of any reserve or fund which is available for
distribution or to the credit of any share premium account and accordingly that
such amount be set free for distribution amongst the Shareholders or any class
of Shareholders who would be entitled to it if distributed by way of dividend
and in the same proportions, on the footing that the same is not paid in cash
but is applied either in or towards paying up amounts for the time being unpaid
on any shares in the Company held by such Shareholders respectively or in
payment up in full of unissued shares, debentures or other obligations of the
Company, to be allotted, distributed and credited as fully paid amongst such
Shareholders, or partly in one way and partly in the other; provided that, for
the purpose of this Bye-Law, a share premium account may be applied only in
paying up of unissued shares to be issued to such Shareholders credited as fully
paid.
(b) Where any difficulty arises in regard to any distribution under
this Bye-Law, the Board may settle the same as it thinks expedient and, in
particular, may make such provision as it thinks fit in the case of securities
becoming distributable in fractions (including provision for the whole or part
of the benefit of fractional entitlements to accrue to the Company) and may
authorise any person to sell and transfer any fractions or may resolve that the
distribution should be as nearly as may be practicable in the correct proportion
but not exactly so or may ignore fractions altogether, and may determine that
cash payments should be made to any Shareholders in lieu of any fractional
entitlements, as may seem expedient to the Board. The Board may appoint any
person to sign on behalf of the persons entitled to participate in the
distribution any contract necessary or desirable for giving effect to it, and
such appointment shall be effective and binding upon the Shareholders.
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118. (a) Whenever the Board decides to make a capitalisation issue of shares
under Bye-Law 117 it may, subject to the rights attached to any particular class
of shares, also decide to offer any Shareholder the right to elect to forego his
entitlement to receive additional shares under such capitalisation issue (or
such part of his entitlement as the Board may determine) and to receive instead
a payment in cash (a "cash option") in accordance with the following provisions
of this Bye-Law.
(b) The amount payable under and all other terms of the cash option
shall be decided by the Board, which may fix a limit on the extent to which an
election for the cash option shall be effective (whether by reference to a part
of any Shareholder's total entitlement to additional shares or to the total
number of additional shares in respect of which all such elections may be made
on any occasion).
(c) The Board shall give notice to the Shareholders of their rights of
election in respect of the cash option and shall specify the procedure to be
followed in order to make an election.
(d) Payments to those Shareholders who elect to receive cash instead of
their entitlement to further shares under such a capitalisation issue ("cash
electors") may be made either (i) out of profits or reserves of the Company
available for the payment of dividends or (ii) out of the net proceeds of sale
of the shares to which the cash electors would have been entitled under such
capitalisation issue but for their election to receive cash, or partly in one
way and partly in the other, as the Board determines. To the extent that the
Board determines that payment is to be made as in (ii) above, the Board shall be
entitled to sell the additional shares to which the cash electors would have
been entitled, to appoint some person to transfer those shares to the purchaser
who 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 or invalidity in the
proceedings relating to the sale. The net proceeds of sale shall be applied in
or towards payment of the amounts due to cash electors in respect of their cash
entitlement and, to the extent that they exceed that entitlement, may be
retained by the Company for its benefit.
(e) The Board may decide that Shareholders resident in territories
where, in the opinion of the Board, compliance with local laws or regulations
would be unduly onerous if those Shareholders were to receive additional shares,
shall be deemed to have exercised rights of election to receive cash.
(f) The Board may determine that any sums due in respect of a cash
option to all or some of those Shareholders whose registered addresses are in a
particular territory shall be paid in a currency other than US dollars and, if
it does so, the Board may fix or otherwise determine the basis of conversion
into the other currency and payment of that converted amount in that currency
shall be in full satisfaction of the entitlement to such sum.
119. (a) The Board may, subject to the rights attached to any particular class
of shares, offer any Shareholder the right to elect to receive further shares,
credited as fully paid, instead
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of cash in respect of all (or some part) of any dividend (a "scrip dividend") in
accordance with the following provisions of this Bye-Law.
(b) The basis of allotment of the further shares shall be decided by
the Board so that, as nearly as may be considered convenient, the value of the
further shares, including any fractional entitlement, is equal to the amount of
the cash dividend which would otherwise have been paid. For these purposes the
value of the further shares shall be calculated in such manner as may be
determined by the Board.
(c) The Board shall give notice to the Shareholders of their rights of
election in respect of the scrip dividend and shall specify the procedure to be
followed in order to make an election.
(d) The dividend or that part of it in respect of which an election for
the scrip dividend is made shall not be paid and instead further shares shall be
allotted in accordance with elections duly made and the Board shall capitalise a
sum equal to the aggregate nominal amount of the shares to be allotted out of
such sums available for the purpose as the Board may consider appropriate.
(e) The Board may decide that the right to elect for any scrip dividend
shall not be made available to Shareholders resident in any territory where, in
the opinion of the Board, compliance with local laws or regulations would be
unduly onerous.
(f) The Board may do all acts and things considered necessary or
expedient to give effect to the provisions of a scrip dividend election and the
issue of any shares in accordance with the provisions of this Bye-Law, and may
make such provisions as it thinks fit for the case of shares becoming
distributable in fractions (including provisions under which, in whole or in
part, the benefit of fractional entitlements accrues to the Company rather than
to the Shareholders concerned).
(g) The Board may from time to time establish or vary a procedure for
election mandates, under which a holder of shares may, in respect of any future
dividends for which a right of election pursuant to this Bye-Law is offered,
elect to receive further shares in lieu of such dividend on the terms of such
mandate.
RECORD DATES
120. (a) Notwithstanding any other provision of these Bye-Laws, the Company by
Resolution or the Board may fix any date as the record date for any dividend,
distribution, allotment or issue and for the purpose of identifying the persons
entitled to receive notices of general meetings of the Company or of any class
of Shareholders or other documents. Any such record date may be on or at any
time before or after any date on which such dividend, distribution, allotment or
issue is declared, paid or made or such notice or other document is dispatched.
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(b) In relation to any general meeting of the Company or of any class
of Shareholders or to any adjourned meeting or any poll taken subsequently to
the date of a meeting or adjourned meeting of which notice is given, the Board
may specify in the notice of meeting or adjourned meeting or in any document
sent to Shareholders by or on behalf of the Board in relation to the meeting, a
time and date (a "record date") which is not more than 60 days before the date
fixed for the meeting (the "meeting date") and, notwithstanding any provisions
in these Bye-Laws to the contrary, in any such case:
(i) each person entered in the Register at the record date
as a Shareholder, or a Shareholder of the relevant class, (a
"record date holder") shall be entitled to attend and to vote at
the relevant meeting and to exercise all of the rights or
privileges of a Shareholder, or a Shareholder of the relevant
class, in relation to that meeting in respect of the shares, or
the shares of the relevant class, registered in his name at the
record date;
(ii) as regards any shares, or shares of the relevant class,
which are registered in the name of a record date holder at the
record date but are not so registered at the meeting date
("relevant shares"), each holder of any relevant shares at the
meeting date shall be deemed to have irrevocably appointed that
record date holder as his proxy for the purpose of attending and
voting in respect of those relevant shares at the relevant
meeting (with power to appoint, or to authorise the appointment
of, some other person as proxy), in such manner as the record
date holder in his absolute discretion may determine; and
(iii) accordingly, except through his proxy pursuant to
sub-paragraph (ii) above, a holder of relevant shares at the
meeting date shall not be entitled to attend or to vote at the
relevant meeting, or to exercise any of the rights or privileges
of a Shareholder, or a Shareholder of the relevant class, in
respect of the relevant shares at that meeting.
The entry of the name of a person in the Register as a record date holder shall
be sufficient evidence of his appointment as proxy in respect of any relevant
shares for the purposes of this paragraph, but all the provisions of these
Bye-Laws relating to the execution and deposit of an instrument appointing a
proxy or any ancillary matter (including the Board's powers and discretions
relevant to such matters) shall apply to any instrument appointing any person
other than the record date holder as proxy in respect of any relevant shares.
ACCOUNTING RECORDS
121. The Board shall cause accounting records of the Company to be kept in
accordance with the requirements of the Companies Acts.
122. The records of account shall be kept at the Registered Office or at such
other place or places as the Board thinks fit and shall at all times be open to
inspection by the Directors; provided that, if the records of account are kept
at some place outside Bermuda, there shall be kept at an office of the Company
in Bermuda such records as are required by the Companies Acts to be so kept. No
Shareholder (other than an Officer) shall have any right to inspect any
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accounting record or book or document of the Company except as conferred by law
or authorised by the Board or by Resolution.
123. The Board shall procure that financial statements of the Company are
prepared and audited in respect of each year or other period from time to time
fixed by the Board and that those financial statements are made available to
Shareholders and laid before the Company in general meeting in accordance with
the requirements of the Companies Acts.
AUDITORS
124. (a) Auditors shall be appointed and their duties regulated in accordance
with the Companies Acts, any other applicable law and such requirements not
inconsistent with the Companies Acts as the Board may from time to time
determine.
(b) The auditors shall be entitled to receive notice of, and to attend
and speak at, any general meeting at which financial statements on which the
auditors have reported are laid before the Company or at which a resolution is
to be proposed to remove them from office.
UNTRACED SHAREHOLDERS
125. (a) The Company shall be entitled to sell at the best price reasonably
obtainable at the time of sale the shares of a Shareholder or the shares to
which a person is entitled by transmission if and provided that:
(i) during a period of 12 years no dividend in respect of
those shares has been claimed and at least three cash dividends
have become payable on the shares in question;
(ii) on or after expiry of that period of 12 years the
Company has inserted an advertisement in a newspaper circulating
in the area of the address at which service of notices upon the
Shareholder or person entitled by transmission may be effected in
accordance with these Bye-Laws and in a national newspaper
published in the relevant country, giving notice of its intention
to sell the said shares;
(iii) during the said period of 12 years and the period of
three months following the publication of such advertisement the
Company has not received any communication from such Shareholder
or person entitled by transmission; and
(iv) if so required by the rules of any securities exchange
upon which the shares in question are listed for the time being,
notice has been given to that exchange of the Company's intention
to make such sale.
(b) The Company's power of sale shall extend to any share which, on or
before the date or first date on which any such advertisement appears, is issued
in right of a share to which paragraph (a) applies.
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(c) To give effect to any such sale the Board may authorise some person
to transfer the said shares to the purchaser who 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 or invalidity in the proceedings relating to the
sale. The net proceeds of sale shall belong to the Company which shall be
obliged to account to the former Shareholder or person entitled by transmission
for an amount equal to such proceeds and shall enter the name of such former
Shareholder or person entitled by transmission in the books of the Company as a
creditor for such amount. 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 as the
Board may from time to time think fit.
SERVICE OF NOTICES AND OTHER DOCUMENTS
126. (a) Any notice or other document (including a share certificate) may be
served on or delivered to any Shareholder by the Company either personally or by
sending it through the post (by air mail where applicable) in a pre-paid letter
addressed to such Shareholder at his address as appearing in the Register or by
delivering it to or leaving it at such registered address. Any notice may also
be served on any Shareholder by the Company by sending it to him by telecopier
or similar means to a telecopier or other address given by him to the Company
for this purpose.
(b) Any notice or other document which is sent by post shall be deemed
to have been served or delivered on the second day after it was put in the post
and, in proving such service or delivery, it shall be sufficient to prove that
the notice or document was properly addressed, stamped and put in the post. Any
notice or other document not sent by post but left at a registered address shall
be deemed to have been served or delivered on the day it was so left. Any notice
sent by telecopier or similar means during normal business hours on any business
day shall be deemed to have been served on the day on which it is sent and any
notice so sent at any other time shall be deemed to have been served on the next
day which is such a business day (normal business hours and business days being
ascertained for this purpose by reference to such hours and days in the place or
territory to which the notice is so sent).
127. If at any time by reason of the suspension or curtailment of postal
services within Bermuda or any other territory the Company is unable effectively
to convene a general meeting by notices sent through the post, a general meeting
may be convened by a notice advertised in at least one national newspaper
published in the territory concerned and such notice shall be deemed to have
been duly served on each person entitled to receive it in that territory on the
day, or on the first day, on which the advertisement appears. In any such case
the Company shall send confirmatory copies of the notice by post if at least
five clear days before the meeting the posting of notices to addresses
throughout that territory again becomes practicable.
128. In the case of joint holders of a share, service or delivery of any notice
or other document on or to one of the joint holders shall for all purposes be
deemed as sufficient service on or delivery to all the joint holders.
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129. In the case of a person entitled by transmission to a share, any notice or
other document shall be served on or delivered to him as if he were the holder
of that share and his address noted in the Register were his registered address.
In any other case, any notice or other document delivered, sent or given to a
Shareholder in any manner permitted by these Bye-Laws shall, notwithstanding
that the Shareholder is then dead or bankrupt or that any other event has
occurred, and whether or not the Company has notice of the death or bankruptcy
or other event, be deemed to have been duly served or delivered in respect of
any share registered in the name of such Shareholder as sole or joint holder.
130. A Shareholder shall not be entitled to receive any communication from the
Company if two consecutive communications addressed to him, and properly served
under these Bye-laws, have been returned to the Company undelivered but he shall
again become entitled to receive communications following written notice from
him to the Company of a new or corrected registered address. For the purposes of
this Bye-law, references to a communication include (without limitation) notices
of general meetings and any cheque or other instrument of payment or attempted
payment by a funds transfer system; but nothing in this Bye-Law shall entitle
the Company to cease sending any cheques, warrants or orders or otherwise to
cease making any payments for dividends or other monies payable in respect of
shares, unless it is so entitled under paragraph (a) of Bye-Law 114.
DESTRUCTION OF DOCUMENTS
131. (a) The Board may authorise or arrange the destruction of documents held by
the Company as follows:
(i) at any time after the expiration of six years from the
date of registration, all instruments of transfer of shares and
all other documents transferring or purporting to transfer shares
or representing or purporting to represent the right to be
registered as the holder of shares on the faith of which entries
have been made in the Register;
(ii) at any time after the expiration of one year from the
date of cancellation, all registered share certificates which
have been cancelled;
(iii) at any time after the expiration of two years from the
date of recording them, all dividend mandates and notifications
of change of address; and
(iv) at any time after the expiration of one year from the
date of actual payment, all paid dividend warrants and cheques.
(b) It shall conclusively be presumed in favour of the Company that:
(i) every entry in the register purporting to have been made
on the basis of an instrument of transfer or other document so
destroyed was duly and properly made;
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(ii) every instrument of transfer so destroyed was a valid
and effective instrument duly and properly registered;
(iii) every share certificate so destroyed was a valid
certificate duly and properly cancelled;
(iv) every other document mentioned in paragraph (a) above
so destroyed was a valid and effective document in accordance
with the particulars of it recorded in the books and records of
the Company; and
(v) every paid dividend warrant and cheque so destroyed was
duly paid.
(c) The provisions of paragraph (b) above shall apply only to the
destruction of a document in good faith and without notice of any claim
(regardless of the parties to it) to which the document might be relevant.
(d) Nothing in this Bye-Law shall be construed as imposing on the
Company or the Board any liability in respect of the destruction of any document
earlier than as stated in paragraph (a) above or in any other circumstances in
which liability would not attach to the Company or the Board in the absence of
this Bye-Law.
(e) References in this Bye-Law to the destruction of any document
include references to its disposal in any manner.
WINDING UP
132. If the Company is wound up, the liquidator may, with the sanction of a
Resolution and any other sanction required by the Companies Acts:
(i) divide among the Shareholders in specie the whole or any
part of the assets of the Company (whether they consist of
property of the same kind or not) and for such purposes set such
value as he deems fair on any property to be so divided and
determine how such division shall be carried out as between the
Shareholders or different classes of Shareholders;
(ii) vest the whole or any part of such assets in trustees
upon such trusts for the benefit of the contributories as the
liquidator, with the like sanction, thinks fit, but so that no
Shareholder shall be compelled to accept any shares or other
assets upon which there is any liability.
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EXEMPTION AND INDEMNIFICATION OF OFFICERS
133. (a) Subject always to paragraph (d) below, no Officer shall be liable for
the acts, receipts, neglects or defaults of any other Officer nor, so long as he
has acted honestly and in good faith with a view to the best interests of the
Company, shall any Officer be liable in respect of any negligence, default or
breach of duty on his own part in relation to the Company or any subsidiary of
the Company, or for any loss, misfortune or damage which may happen, in or
arising out of 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.
(b) Subject always to paragraph (d) below, every Officer shall be
indemnified out of the funds of the Company against all liabilities, losses,
damages or expenses (including but not limited to liabilities under contract,
tort and statute or any applicable foreign law or regulation and all reasonable
legal and other costs and expenses properly payable) arising out of 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 but not limited to liabilities attaching to
him and losses arising by virtue of any rule of law in respect of any
negligence, default, breach of duty or breach of trust of which he may be guilty
in relation to the Company or any subsidiary of the Company).
(c) In this Bye-Law (i) the term "Officer" includes, in addition to the
persons specified in the definition of that term in Bye-Law 1, an Alternate
Director, a member of a committee constituted under Bye-Law 94 and any person
acting as an Officer or committee member in the reasonable belief that he has
been so appointed or elected, notwithstanding any defect in such appointment or
election; and (ii) where the context so admits, references to an Officer include
the estate and personal representatives of a deceased Officer or any such other
person.
(d) The provisions for exemption from liability and indemnity contained
in this Bye- Law shall have effect to the fullest extent permitted by law, but
shall not extend to any matter which would render any of them void pursuant to
the Companies Acts.
134. (a) To the extent that any person is entitled to claim an indemnity
pursuant to these Bye-Laws in respect of an amount paid or discharged by him,
the relevant indemnity shall take effect as an obligation of the Company to
reimburse the person making such payment or effecting such discharge.
(b) The rights to indemnification and reimbursement of expenses
provided by these Bye-Laws are in addition to any other rights to which a person
may be entitled.
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ALTERATION OF BYE-LAWS
135. These Bye-Laws may be revoked or amended only by the Board, which may from
time to time revoke or amend them in any way by a resolution of the Board passed
by a majority of the Directors then in office and eligible to vote on that
resolution, but no such revocation or amendment shall be operative unless and
until it is approved at a subsequent general meeting of the Company:
(i) with respect to any revocation or amendment of Bye-Law
75 which has not been approved by a majority of the Continuing
Directors, by a Resolution passed by or with the sanction of a
majority of not less than 80 per cent. of all the votes capable
of being cast by holders of shares (whether or not of the same
class) carrying the general right to vote at general meetings of
the Company; and
(ii) with respect to any other revocation or amendment, by a
Resolution approved by Shareholders holding not less than a
majority in nominal amount of the issued shares of the Company
carrying the general right to vote at general meetings.
For the purpose of paragraph (i) above "Continuing Director" means any person,
while he continues to hold office as a Director, (A) who was a Director at the
time at which the adoption of these Bye-Laws became effective, (B) who
subsequently became a Director, if at the time he became a Director he was
appointed or recommended for election by a majority of the Directors referred to
in (A) who were then in office, or (C) who subsequently became a Director, if at
the time he became a Director he was appointed or recommended for election by a
majority of the Directors referred to in (A) and (B) who were then in office.
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