<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
[AMENDMENT NO................]
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
[ ] Confidential, For Use of the Commission Only (as Permitted
by Rule 14a-6(e)(2))
Danka Business Systems PLC
-------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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> 2
[DANKA LOGO]
DANKA BUSINESS SYSTEMS PLC
33 Cavendish Square
London W1M 0DE England
June 24, 1998
TO HOLDERS OF ORDINARY SHARES AND AMERICAN DEPOSITARY SHARES OF DANKA
BUSINESS SYSTEMS PLC (THE "COMPANY") AND, FOR INFORMATIONAL PURPOSES ONLY,
HOLDERS OF OPTIONS TO ACQUIRE ORDINARY SHARES AND HOLDERS OF OPTIONS TO ACQUIRE
AMERICAN DEPOSITARY SHARES.
Holders of Ordinary Shares are cordially invited to attend the
Company's 1998 Annual General Meeting (the "Meeting"). The Meeting will be
held on Friday, July 24, 1998 at 11:00 a.m. (local time) at the Langham Hilton
Hotel, 1 Portland Place, Regent Street, London W1N 4JA.
The Notice of the Annual General Meeting and the Proxy Statement on
the following pages cover the formal business of the Meeting, which includes
resolutions proposing (1) approval of a final dividend; (2, and 3) re-election
and retirement of Directors; (4) re-appointment of the Company's Auditors; (5)
authorizations for the Directors to allot Ordinary Shares; (6) authorizations
to disapply pre-emption rights; (7) authorization for purchase by the Company
of its own shares; (8) approval of the 1998 Executive Performance Plan; (9)
approval of amendments to the Danka 1996 Share Option Plan; and (10) approval
of the Danka Business Systems PLC Savings Related Share Option Scheme. We will
also report on the progress of the Company and comment on matters of current
interest. Your Directors believe that the above proposals are in the best
interests of the Company and its shareholders and unanimously recommend that
holders vote in favor of all of the resolutions. You will notice that the
proxy materials are very comprehensive due to the necessity of the Company
complying with securities law requirements in both the United Kingdom and
United States.
It is important that Ordinary Shares be represented at the Meeting.
We ask that Ordinary Shareholders promptly sign, date and return the enclosed
proxy card (not later than 48 hours before the time fixed for the holding of
the Meeting) to the Company's registrars, Computershare Services plc, even if
you plan to attend the Meeting. Returning your proxy card will not prevent a
holder of Ordinary Shares from voting in person at the Meeting if they are
present and choose to do so. Holders of American Depositary Shares should
follow the special voting instructions provided by The Bank of New York as
Depositary.
Your Board of Directors and management look forward to greeting you
at the Meeting.
Sincerely,
/s/ Mark A. Vaughan-Lee
-------------------------
MARK A. VAUGHAN-LEE
Chairman
<PAGE> 3
DANKA BUSINESS SYSTEMS PLC
_____________________________________________
NOTICE OF THE ANNUAL GENERAL MEETING
FRIDAY, JULY 24, 1998
_____________________________________________
Notice is hereby given that the 1998 Annual General Meeting (the
"Meeting") of Danka Business Systems PLC (the "Company") will be held at the
Langham Hilton Hotel, 1 Portland Place, Regent Street, London W1N 4JA, on
Friday, July 24, 1998 at 11:00 a.m. (local time) for the following purposes:
AGENDA
To consider and, if thought fit, approve the following ordinary resolutions:
1. THAT the Directors of the Company be and hereby are authorized to pay
a final dividend for fiscal 1998 in the amount of 1.56 pence per
Ordinary Share (net) directly to all Holders of Ordinary Shares and
the equivalent thereof to all Holders of American Depositary
Shares through the Depositary, The Bank of New York.
2. THAT James F. White, Jr., whose term as Director expires at the 1998
Annual General Meeting, be and hereby is re-elected to serve as
Director of the Company in accordance with the Company's Articles of
Association.
3. THAT J. Ernest Riddle, who was appointed as Director by the Board of
Directors in fiscal 1998 and whose appointment expires at the 1998
Annual General Meeting, be and hereby is re-elected to serve as
Director of the Company in accordance with the Company's Articles of
Association.
4. THAT KPMG Audit Plc, Chartered Accountants and Registered Auditors, be
and hereby are re-appointed to serve as the Company's Auditors until
the conclusion of the 1999 Annual General Meeting, and that the Board
of Directors of the Company or a duly appointed Committee thereof,
be and hereby is authorized to fix the Auditors' remuneration.
5. SPECIAL BUSINESS: To consider and, if thought fit, approve the
following ordinary resolution:
THAT the Directors be and hereby are generally and unconditionally
authorized for purposes desired at their discretion, in place of all
existing authorities under Section 80 of the Companies Act 1985, as
amended by the Companies Act 1989 (the "Companies Act"), to exercise
all powers of the Company to allot relevant securities (within the
meaning of Section 80 of the Companies Act) up to an aggregate nominal
amount of L.947,898 (representing approximately thirty-three and one
third percent (33 1/3%) of the issued share capital of the Company),
provided that this authority shall expire on the earlier of the date
of the 1999 Annual General Meeting of the Company or October 23, 1999,
save that the Company may before such expiry make an offer or
agreement which would or might require relevant securities to be
allotted after such expiry, and the Board of Directors may allot
relevant securities in pursuance of such an offer or agreement as if
the authority conferred hereby had not expired.
6. SPECIAL BUSINESS: To consider and, if thought fit, approve the
following special resolution:
THAT, subject to the passing of Resolution 5, the Directors be and
hereby are generally and unconditionally authorized to exercise all
powers of the Company to allot equity securities (within the
meaning of Section 94(2) of the Companies Act 1985, as amended by the
Companies Act 1989 (the "Companies Act")), as if Section 89(1) of the
Companies Act did not apply to such allotment, provided that this
authority shall:
i
<PAGE> 4
i) expire on the earlier of the date of the 1999 Annual General
Meeting of the Company or October 23, 1999, save that the
Directors may allot equity securities under this authority
after the expiry thereof pursuant to any offer or
agreement made by the Company on or before such expiry date
pursuant to this authority as if such authority had not
expired; and
ii) be limited to the allotment of equity securities:
(a) in connection with a rights issue or any other pre-emptive
offer concerning equity securities in the Company where it is,
in the opinion of the Directors, necessary or expedient to
allot equity securities otherwise than in accordance with
Section 89 of the Companies Act by reason of the rights
attached to any shares or securities of the Company or in
relation to fractional entitlements or legal or practical
problems under the laws of or the requirements of any
recognized regulatory body or stock exchange in any territory;
(b) pursuant to the terms of any stock option plan or share option
scheme or other plan for employees and/or executive or
non-executive Directors approved by the Company in a general
meeting, up to an aggregate nominal value of L.284,370; or
(c) otherwise than pursuant to sub-paragraphs (a) and (b) above,
up to an aggregate nominal value not exceeding L.568,740.
7. SPECIAL BUSINESS: To consider, and, if thought fit, approve the
following special resolution:
THAT the Company is hereby generally and unconditionally authorized to
make market purchases (within the meaning of Section 163 of the
Companies Act 1985) of Ordinary Shares of 1.25 pence each in the
capital of the Company with effect from the conclusion of this meeting
provided that:
(a) the maximum aggregate number of Ordinary Shares authorized to
be purchased is 34,124,000 representing approximately 15% of
the issued share capital of the Company as of March 31, 1998;
(b) the minimum price which may be paid for each such Ordinary
Share is 1.25 pence;
(c) the maximum price (inclusive of expenses) which may be paid
for each such Ordinary Share is an amount equal to 105 percent
of the average of the middle market quotations as derived from
The London Stock Exchange Daily Official List for the five
business days immediately preceding the day on which such
Ordinary Share is purchased;
(d) the Company may make a contract to purchase its Ordinary
Shares under this authority prior to the expiry thereof, which
will or may be executed wholly or partly after the
expiry of such authority, and may make a purchase of its
Ordinary Shares pursuant to any such contract; and
(e) the purchase is made in compliance with all applicable
governmental laws, rules and regulations.
The authority herein will expire at the conclusion of the 1999 Annual
General Meeting of the Company, or, if earlier, October 23, 1999.
8. SPECIAL BUSINESS: To consider and, if thought fit, approve the
following ordinary resolution:
THAT the 1998 Executive Performance Plan, as described in the
Company's Proxy Statement for the 1998 Annual General Meeting and as
recommended and approved by the Human Resources Committee, be and
hereby is approved.
ii
<PAGE> 5
9. SPECIAL BUSINESS: To consider and, if thought fit, approve the
following ordinary resolution:
THAT the proposed amendments to the Danka 1996 Share Option Plan (the
"Plan"), which are summarized in Appendix A to the Company's Proxy
Statement for the 1998 Annual General Meeting, be and hereby are
approved and the Directors be and hereby are authorized to amend the
Plan in accordance therewith or consequent thereon (and to make any
changes or further changes required by the Inland Revenue).
10. SPECIAL BUSINESS: To consider and, if thought fit, approve the
following ordinary resolutions:
THAT
(i) The Danka Business Systems PLC Savings Related Share Option
Scheme, the principal terms of which are contained in Appendix
B to the Proxy Statement relating to the 1998 Annual General
Meeting, be and it is hereby adopted and the Rules be and
hereby are approved in such draft form subject to such
amendments thereto as are approved by, or by a committee of,
the Directors as are necessary to carry the same into effect
and/or are necessary or desirable to obtain regulatory or
Inland Revenue approval thereto and the Directors be
authorized to do all acts and things which they may consider
necessary or expedient for implementing and giving effect to
the said scheme;
(ii) The Directors be authorized to establish one or more further
schemes based on the Danka Business Systems PLC Savings
Related Share Option Scheme but modified to take account of
local tax, exchange control or securities laws in territories
outside the U.K., provided that any shares made available
under such further schemes are treated as counting against any
limits on individual or overall participation in the Danka
Business Systems PLC Savings Related Share Option Scheme;
(iii) The Directors be authorized to adopt an employee share trust
or trusts, or to amend the Danka Employees' Share Trust
established by a Trust Deed dated March 3, 1998, so that it
may operate in conjunction with the Danka Business Systems PLC
Savings Related Share Option Scheme and such further schemes
as may be established based on that scheme and the Directors
be and hereby are authorized to do all such things as may be
necessary to carry the same into effect (including providing
funds to the said trust and issuing Ordinary Shares to the
trust in connection with the said schemes) and the Directors
be and hereby are authorized to permit the trustees of the
said trust)s to hold more than five percent of the issued
Ordinary share capital of the Company at any time; and
(iv) The Directors be authorized to vote and to be counted in a
quorum at any meeting of the Directors at which any matter
connected with the said scheme is under consideration
notwithstanding that they may be interested in the same
in any present or proposed capacity whatsoever and that this
resolution shall operate so far as is necessary by way of
suspension and relaxation of the prohibition on interested
Directors voting contained in the Articles of Association of
the Company, provided that no Director may vote or be counted
in a quorum when the Directors are considering any matter
concerning his individual rights of participation in the said
scheme.
Copies of contracts of service of the Directors and a register of
Directors' interests kept by the Company are available for inspection at the
registered office of the Company during normal working hours and will be
available for inspection at the place of the Meeting during the Meeting and for
at least fifteen (15) minutes prior to the Meeting.
Holders of Ordinary Shares entitled to attend and vote at the Meeting
may appoint a proxy to attend and, on a poll of such holders, to vote in their
place. A proxy need not be a holder of Ordinary Shares of the Company. Every
holder of Ordinary Shares who is entitled to vote and who is present or is
represented by a
iii
<PAGE> 6
proxy will have one (1) vote. If voting is by a poll, each holder of Ordinary
Shares who is entitled to vote and who is present or is represented by a proxy
will have one (1) vote for each Ordinary Share owned.
To be entitled to attend and vote at the Meeting (and for the purpose
of the determination by the Company of the number of votes they may cast),
Holders of Ordinary Shares must be entered on the Company's register of members
by 11:00 a.m. on Wednesday, July 22, 1998.
By order of the Board of Directors
/s/ Paul G. Dumond
----------------------------------
London, England Paul G. Dumond
June 24, 1998 Secretary
iv
<PAGE> 7
THIS PROXY STATEMENT IS FOR HOLDERS OF ORDINARY SHARES, HOLDERS OF
AMERICAN DEPOSITARY SHARES ("ADSs") REPRESENTED BY AMERICAN DEPOSITARY
RECEIPTS, AND, FOR INFORMATIONAL PURPOSES ONLY, HOLDERS OF OPTIONS TO ACQUIRE
ORDINARY SHARES OR AMERICAN DEPOSITARY SHARES OF DANKA BUSINESS SYSTEMS PLC.
THE PROXY STATEMENT CONTAINS INFORMATION REQUIRED UNDER REGULATION 14A UNDER
THE SECURITIES EXCHANGE ACT OF 1934 OF THE UNITED STATES.
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. IF
YOU HAVE ANY DOUBT AS TO THE ACTION YOU SHOULD TAKE, YOU SHOULD IMMEDIATELY
CONSULT YOUR STOCKBROKER, BANK MANAGER, SOLICITOR/ATTORNEY, ACCOUNTANT OR OTHER
PROFESSIONAL ADVISER AUTHORIZED UNDER THE FINANCIAL SERVICES ACT 1986 OF THE
UNITED KINGDOM.
IF YOU HAVE SOLD ANY OF YOUR ORDINARY SHARES IN DANKA BUSINESS SYSTEMS
PLC, PLEASE SEND A COPY OF THIS DOCUMENT TO THE STOCKBROKER OR OTHER AGENT
THROUGH WHOM THE SALE WAS EFFECTED FOR TRANSMISSION TO THE PURCHASER.
DANKA BUSINESS SYSTEMS PLC
33 CAVENDISH SQUARE
LONDON W1M 0DE ENGLAND
(REGISTERED IN ENGLAND NO. 1101386)
PRELIMINARY PROXY STATEMENT PRELIMINARY
INTRODUCTION
GENERAL
This Proxy Statement is furnished by the Board of Directors of Danka
Business Systems PLC (the "Company") in connection with the solicitation of
specific voting instructions ("voting instructions") from holders of ADSs
("Holders of ADSs") and proxies ("proxies") from holders of Ordinary Shares
("Holders of Ordinary Shares") for voting at the Company's 1998 Annual General
Meeting (the "Meeting"), which will be held at 11:00 a.m. (local time) on July
24, 1998 at the Langham Hilton Hotel, 1 Portland Place, Regent Street, London
W1N 4JA. For purposes of this Proxy Statement and related materials, the term
"Shareholders" shall mean Holders of Ordinary Shares and Holders of ADSs. The
approximate date on which this Proxy Statement and related materials has been
first mailed to Shareholders is June 24, 1998.
As of March 31, 1998, 227,495,865 Ordinary Shares of 1.25 pence each
were issued and outstanding ("Ordinary Shares"), of which approximately
seventy-three percent (73%) were held in the form of ADSs. Each ADS represents
four Ordinary Shares.
The cost of soliciting proxies and voting instructions will be borne
by the Company. In addition to the use of the mails, proxies and voting
instructions may be solicited personally or by telephone by employees of the
Company. The Company does not expect to pay any compensation for the
solicitation of proxies or voting instructions, but may reimburse brokers, The
Bank of New York (the "Depositary") and other persons holding stock in their
names, or in the names of nominees, for their expenses in sending proxy
materials to their principals and obtaining their proxies and/or voting
instructions.
Prior to 1994, Holders of Ordinary Shares had adopted a resolution at
each Annual General Meeting to receive and approve the Directors' Report and
Accounts (financial information of the Company) prepared according to Generally
Accepted Accounting Principles of the United Kingdom ("U.K. GAAP"), for that
year
1
<PAGE> 8
and the report of the auditors thereon ("Report and Accounts"). Pursuant to
the Companies Act 1985, as amended by the Companies Act 1989 (the "Companies
Act"), it is no longer necessary for Holders of Ordinary Shares to approve the
Report and Accounts. Because of the unnecessary cost and inconvenience to the
Company that would be associated with such a vote due to the need for the
Company to comply with various disclosure requirements pursuant to United
States securities laws, the Company determined in 1994 not to propose such a
resolution in conjunction with its annual general meeting. However, as
required by the Companies Act, the 1998 Annual Report and Accounts prepared in
accordance with U.K. GAAP will be presented at the Meeting. Additionally, the
U.K. Shareholders have received a copy of the 1998 Annual Report and Accounts.
U.S. Shareholders have received the Company's financial information prepared in
accordance with United States Generally Accepted Accounting Principles ("U.S.
GAAP") in their copy of the Company's 1998 Annual Report. U.S. Shareholders
who would like a copy of the 1998 Annual Report and Accounts may contact the
Company's registered office. Additionally, copies of relevant contracts of
service of the Directors and a register of Directors' interests kept by the
Company are available for inspection at the registered office of the Company
during normal working hours and will be available for inspection at the place
of the Meeting during the Meeting and for at least fifteen (15) minutes prior
to the Meeting.
In this Proxy Statement, references to "Company" are to Danka Business
Systems PLC or to Danka Business Systems PLC and its directly and indirectly
owned subsidiaries, as the context requires. In this Proxy Statement,
references to "pounds," "pence" or "L." are to United Kingdom currency, and
references to "U.S. dollars" or "$" are to United States currency. Amounts that
have been paid in currency of the United States are generally denominated herein
in United States currency, and amounts that have been paid in currency of the
United Kingdom are generally denominated herein in United Kingdom currency.
Merely for convenience of the reader, the pound equivalent of the dollar at the
Noon Buying Rate (as defined below) on March 31, 1998 was L.1.00 = $1.6765. The
noon buying rate is the exchange rate in New York City for cable transfers in
pounds sterling as certified for customs purposes by the Federal Reserve Bank of
New York (the "Noon Buying Rate").
VOTING INSTRUCTIONS/HOLDERS OF ORDINARY SHARES
Holders of Ordinary Shares entitled to attend and vote at the Meeting
may appoint a proxy to attend and, on a poll of such holders, to vote in their
place. A proxy need not be a Holder of Ordinary Shares of the Company. Every
Holder of Ordinary Shares who is entitled to vote and who is present in person
or by a proxy will have one (1) vote. If voting is by a poll, each Holder of
Ordinary Shares who is entitled to vote and who is present in person or by a
proxy will have one (1) vote for each Ordinary Share owned. An ordinary
resolution requires the affirmative vote of a majority of the votes cast at the
Meeting. A special resolution requires an affirmative vote of at least
seventy-five percent (75%) of the votes cast at the Meeting. A form of proxy
is enclosed which, to be effective, must be deposited with the Company's
registrars, Computershare Services PLC, P.O. Box 82, Caxton House, Redcliffe
Way, Bristol BS99 7YA England, not later than forty-eight (48) hours before the
time appointed for the holding of the Meeting.
Any proxy delivered pursuant to this solicitation may be revoked, at
the option of the person executing the proxy, at any time before it is
exercised by submitting a later-dated proxy or by delivering a signed
revocation in no specifically required form to the Company at least 48 hours
before the Meeting, or by attending the Meeting in person and casting a ballot.
If proxies are signed and returned without voting instructions, the Ordinary
Shares represented by the proxies will be voted as the proxy deems fit.
Ordinary Shares that are not voted by the Holders of Ordinary Shares or brokers
entitled to vote them, due to abstention or failure to cast a ballot in person
or by returning a signed proxy, will not be considered in the final tabulation.
2
<PAGE> 9
VOTING INSTRUCTIONS/HOLDERS OF AMERICAN DEPOSITARY SHARES
Holders of ADSs should complete and return the voting instructional
form provided to them in their proxy materials by the Depositary in accordance
with the terms provided thereon not later than July 21, 1998. The close of
business on June 17, 1998 has been fixed as the record date for the
determination of the Holders of ADSs entitled to provide voting instructions to
the Depositary. The proxy committee, which consists of Paul G. Dumond and
David C. Snell, has the right to instruct the Depositary on how to vote all
Ordinary Shares represented by Holders of ADSs that have failed to timely file
their voting instructional form with the Depositary.
For purposes of the remainder of this document, the term "vote" shall
mean either a vote by a Holder of Ordinary Shares or instructions to the
Depositary by a Holder of ADSs, unless the context requires otherwise.
3
<PAGE> 10
RESOLUTIONS
RESOLUTION 1 (ORDINARY): DIVIDEND FOR ORDINARY SHARES
The Company's net earnings for fiscal 1998 were L.46,200,000 under
U.K. GAAP and $52,200,000 under U.S. GAAP. The Board of Directors recommends
that a final dividend for fiscal 1998 in the amount of 1.56 pence per Ordinary
Share (net) be paid directly to all Holders of Ordinary Shares and, through the
Depositary, the equivalent thereof to all Holders of ADSs. To accomplish the
foregoing, the Board of Directors proposes adoption of the following
resolution:
THAT the Directors of the Company be and hereby are authorized to pay
a final dividend for fiscal 1998 in the amount of 1.56 pence per
Ordinary Share (net) directly to all Holders of Ordinary Shares and
the equivalent thereof to all Holders of American Depositary Shares
through the Depositary, The Bank of New York.
The Board of Directors has unanimously approved proposed Resolution 1
and recommends that you vote "FOR" its adoption. An affirmative vote of a
majority of the votes cast at the Meeting will be required for adoption of the
proposed resolution.
RESOLUTIONS 2 (ORDINARY) AND 3 (ORDINARY): RE-ELECTION AND RETIREMENT OF
DIRECTORS
The Articles of Association of the Company set the size of the Board
of Directors at not less than two members. The Board of Directors currently
consists of eight members who serve pursuant to the Company's Articles of
Association. One third (1/3) of the Directors are to retire at each Annual
General Meeting.
Pursuant to the Company's Articles of Association, two of the Company's
current Directors, James F. White, Jr. and Pierson M. Grieve, will retire at the
Meeting.
The Board of Directors recommends in Resolution 2 that Mr. White be
re-elected at the Meeting to serve as a Director. To accomplish the foregoing,
the Board of Directors proposes adoption of the following resolution:
Resolution 2:
THAT James F. White, Jr., whose term as Director expires at the 1998
Annual General Meeting, be and hereby is re-elected to serve as
Director of the Company in accordance with the Company's Articles of
Association.
The Board of Directors has unanimously approved proposed Resolution 2
and recommends that you vote "FOR" its adoption. An affirmative vote of a
majority of the votes cast at the Meeting will be required for adoption of the
proposed resolution.
Pierson M. Grieve, who reached the age of 70 during fiscal 1998, will
be retiring at the Meeting and has indicated that he does not wish to offer
himself for re-election. During fiscal 1998, J. Ernest Riddle was appointed by
the Board of Directors. His term expires at the Meeting in accordance with the
Company's Articles of Association. The Board of Directors recommends in
Resolution 3 that Mr. Riddle be re-elected at the Meeting to serve as a
Director. To accomplish the foregoing, the Board of Directors proposes adoption
of the following resolution:
Resolution 3:
THAT J. Ernest Riddle, who was appointed as Director by the Board of
Directors in fiscal 1998 and whose appointment expires at the 1998
Annual General Meeting, be and hereby is re-elected to serve as
Director of the Company in accordance with the Company's Articles of
Association.
4
<PAGE> 11
The Board of Directors has unanimously approved proposed Resolution 3
and recommends that you vote "FOR" its adoption. An affirmative vote of a
majority of the votes cast at the Meeting will be required for adoption of the
proposed resolution.
RESOLUTION 4 (ORDINARY): RE-APPOINTMENT OF AUDITORS
At the Meeting, the Company is required, pursuant to Sections 384 and
385 of the Companies Act, to appoint auditors to serve until the conclusion of
the Company's next Annual General Meeting and to set their remuneration. KPMG
Audit Plc, Chartered Accountants and Registered Auditors ("KPMG") have served
as the Company's Auditors for more than twenty (20) years. The Board of
Directors recommends in Resolution 4 that KPMG be re-appointed to serve as the
Company's Auditors until the conclusion of the next Annual General Meeting and
that the Board of Directors be authorized to fix the Auditors' remuneration.
To accomplish the foregoing, the Board of Directors proposes adoption of the
following resolution:
THAT KPMG Audit Plc, Chartered Accountants and Registered Auditors, be
and hereby are re-appointed to serve as the Company's Auditors until
the conclusion of the 1999 Annual General Meeting, and that the
Board of Directors of the Company, or a duly appointed Committee
thereof, be and hereby is authorized to fix the Auditors'
remuneration.
The Board of Directors has unanimously approved proposed Resolution 4
and recommends that you vote "FOR" its adoption. An affirmative vote of a
majority of the votes cast at the Meeting will be required for adoption of the
proposed resolution. The Company expects representatives of KPMG to be present
at the Meeting, have an opportunity to make a statement if they desire to do so
and to be available to respond to appropriate questions at the Meeting.
RESOLUTIONS 5 (ORDINARY) AND 6 (SPECIAL): AUTHORITY TO ALLOT SHARES/PRE-EMPTIVE
RIGHTS WAIVER
The Board of Directors recognizes that there may be instances where it
is desirable for the Company to be able to issue (allot) securities in
connection with various matters without the prior specific consent of Holders
of Ordinary Shares. Before the Board of Directors may exercise any such power
to allot relevant securities, however, Section 80 of the Companies Act requires
(with certain exceptions) that the Company authorize a general power at a
general meeting. The Board of Directors, therefore, is seeking authority in
Resolution 5 to allot securities up to an aggregate nominal amount of L.947,898
(representing approximately thirty-three and one third percent (33 1/3%) of the
Company's present issued share capital) before the earlier of the date of its
next Annual General Meeting or October 23, 1999 (subject to extensions upon the
occurrence of the events set forth below) for such purposes as desired in the
discretion of the Directors. To accomplish the foregoing, the Board of
Directors proposes adoption of the following resolution:
Resolution 5:
THAT the Directors be and hereby are generally and unconditionally
authorized for purposes desired at their discretion, in place of all
existing authorities under Section 80 of the Companies Act 1985, as
amended by the Companies Act 1989 (the "Companies Act"), to exercise
all powers of the Company to allot relevant securities (within
the meaning of Section 80 of the Companies Act) up to an aggregate
nominal amount of L.947,898 (representing approximately thirty-three
and one third percent (33 1/3%) of the issued share capital of the
Company), provided that this authority shall expire on the earlier of
the date of the 1999 Annual General Meeting of the Company or October
23, 1999, save that the Company may before such expiry make an offer
or agreement which would or might require relevant securities to be
allotted after such expiry, and the Board of Directors may allot
relevant securities in pursuance of such an offer or agreement as if
the authority conferred hereby had not expired.
The Board of Directors has unanimously approved proposed Resolution 5
and recommends that you vote "FOR" its adoption. An affirmative vote of a
majority of the votes cast at the Meeting will be required for adoption of the
proposed resolution.
5
<PAGE> 12
Subject to the passing of proposed Resolution 5, the Board of
Directors is seeking authority in Resolution 6 to issue Ordinary Shares for
cash, other than effecting such issuance only after first offering the Ordinary
Shares to existing Holders of Ordinary Shares pro-rata to their holdings
("pre-emptive rights"). Pursuant to Section 95 of the Companies Act, a special
resolution of the Company is generally necessary (with some exceptions) to
permit an allotment by Directors without providing the pre-emptive rights
provided by Section 89 of the Companies Act. Apart from other authority to the
Directors permitting allotments, the power would be limited to the issuance of
Ordinary Shares up to a maximum aggregate nominal amount of L.568,740
(representing approximately twenty percent (20%) of the Company's present
issued share capital). This level of authority is consistent with the
limitations placed on NASDAQ Stock Market's National Market companies to issue
shares without further approval. The power that is sought by Resolution 6
would expire on the earlier of the date of the 1999 Annual General Meeting or
October 23, 1999, (subject to extensions upon the occurrence of the events set
forth below). To accomplish the foregoing, the Board of Directors proposes
adoption of the following resolution:
Resolution 6:
THAT, subject to the passing of Resolution 5, the Directors be and
hereby are generally and unconditionally authorized to exercise all
powers of the Company to allot equity securities (within the
meaning of Section 94(2) of the Companies Act 1985, as amended by the
Companies Act 1989 (the "Companies Act")), as if Section 89(1) of the
Companies Act did not apply to such allotment, provided that this
authority shall:
i) expire on the earlier of the date of the 1999 Annual General
Meeting of the Company or October 23, 1999, save that the
Directors may allot equity securities under this authority
after the expiry thereof pursuant to any offer or
agreement made by the Company on or before such expiry date
pursuant to this authority as if such authority had not
expired; and
ii) be limited to the allotment of equity securities:
(a) in connection with a rights issue or any other
pre-emptive offer concerning equity securities in the
Company where it is, in the opinion of the Directors,
necessary or expedient to allot equity securities
otherwise than in accordance with Section 89 of
the Companies Act by reason of the rights attached to
any shares or securities of the Company or in
relation to fractional entitlements or legal or
practical problems under the laws of or the
requirements of any recognized regulatory body or
stock exchange in any territory;
(b) pursuant to the terms of any stock option plan or
share option scheme or other plan for employees
and/or executive or non-executive Directors
approved by the Company in a general meeting, up to
an aggregate nominal value of L.284,370; or
(c) otherwise than pursuant to sub-paragraphs (a) and (b)
above, up to an aggregate nominal value not exceeding
L.568,740.
The Board of Directors has unanimously approved proposed Resolution 6
and recommends that you vote "FOR" its adoption. An affirmative vote of at
least seventy-five percent (75%) of the votes cast at the Meeting will be
required for adoption of the proposed resolution.
RESOLUTION 7 (SPECIAL): PURCHASE OF OWN SHARES
Under Section 166 of the Companies Act, a company is required to
obtain shareholder approval before it is able to buy back its own shares. The
resolution must be subject to certain restrictions. The resolution as set out
will enable the Company to buy back up to 34,124,000 Ordinary Shares
representing approximately 15% of its issued share capital at the higher of the
nominal value or the market value of the shares, as calculated from The London
Stock Exchange Daily Official List of mid-market prices for the five
days prior to the purchase. If this resolution is passed, the authority shall
continue until the earlier of the date
6
<PAGE> 13
of the 1999 Annual General Meeting or October 23, 1999 (subject to extensions
upon the occurrence of the events set forth below).
While there is no current plan to repurchase any shares, the Board of
Directors believes maintaining such flexibility is beneficial to the Company.
To accomplish the foregoing, the Board of Directors proposes adoption of the
following resolution:
THAT the Company is hereby generally and unconditionally authorized to
make market purchases (within the meaning of Section 163 of the
Companies Act 1985) of Ordinary Shares of 1.25 pence each in the
capital of the Company with effect from the conclusion of this meeting
provided that:
(a) the maximum aggregate number of Ordinary Shares authorized to
be purchased is 34,124,000 representing approximately 15% of
the issued share capital of the Company as of March 31, 1998;
(b) the minimum price which may be paid for each such Ordinary
Share is 1.25 pence;
(c) the maximum price (inclusive of expenses) which may be paid
for each such Ordinary Share is an amount equal to 105
percent of the average of the middle market quotations as
derived from The London Stock Exchange Daily Official List
for the five business days immediately preceding the day on
which such Ordinary Share is purchased;
(d) the Company may make a contract to purchase its Ordinary
Shares under this authority prior to the expiry thereof, which
will or may be executed wholly or partly after the
expiry of such authority, and may make a purchase of its
Ordinary Shares pursuant to any such contract; and
(e) the purchase is made in compliance with all applicable
governmental laws, rules and regulations.
The authority herein will expire at the conclusion of the 1999 Annual
General Meeting of the Company, or, if earlier, October 23, 1999.
The Board of Directors has unanimously approved proposed Resolution 7
and recommends that you vote "FOR" its adoption. An affirmative vote of at
least seventy-five percent (75%) of the votes cast at the Meeting will be
required for adoption of the proposed resolution.
RESOLUTION 8 (ORDINARY): 1998 EXECUTIVE PERFORMANCE PLAN
The Company seeks to build a performance-led culture and accordingly,
its remuneration and benefits policies are constructed to support the principle
of rewards related to achievement. The Company believes that it must also
structure the compensation of key executive officers in a combination of ways
in order to attract and retain qualified management. In furtherance of such
compensation strategy, the Company has historically and continues to provide
performance-based incentive bonuses for certain of its key executive officers.
At the Annual General Meeting in June 1994, the shareholders approved
the 1994 Executive Performance Plan which provided annual performance-based
awards to the Company's Chief Executive and Finance Director beginning in
fiscal year 1995. That performance plan authorized the Human Resources
Committee (the "Committee") to grant cash and deferred cash awards to the Chief
Executive and the Finance Director based upon a formula related to increases in
the Company's annual pre-tax earnings per share.
It is now the recommendation of the Committee to replace the 1994
Executive Performance Plan with the 1998 Executive Performance Plan (the "1998
Plan"). If the meeting approves the implementation of the 1998 Plan, the 1994
Executive Performance Plan will automatically terminate and be replaced by the
1998 Plan.
7
<PAGE> 14
The 1998 Plan is more broad-based in that it is available for selected
Executive Officers as well as the Chief Executive and the Finance Director.
Additionally, under the 1998 Plan, the performance goals which may be set by
the Committee have been widened to include net income, operating cash flow or
such other objective measures of financial performance as the Committee may
determine to be appropriate, and the maximum amount of the annual award payable
to any Executive Officer has been clarified.
Summary of the 1998 Plan
The 1998 Plan provides benefits to the Company's Chief Executive and
selected other Executive Officers (the "Plan Participants") and will be
administered by the Committee. The Committee will make all of the
determinations regarding the amount of the awards available to Plan
Participants each year and the terms and conditions of the awards, subject to
the limitations imposed by the 1998 Plan.
As soon as practicable after the start of the first quarter (but not
later than 90 days) of the Company's fiscal year, the Committee will meet to
determine the terms and conditions of the performance awards to be available
for the fiscal year, including the relevant performance goal or goals, the
threshold level for each performance goal below which no performance award will
be earned, and the ceiling performance level at or above which the maximum
performance award will be payable to each Plan Participant. The amount of the
performance award payable to each Plan Participant for any fiscal year shall be
directly proportional to the extent to which the Company has achieved the
specified performance goal or goals for the fiscal year. In no event shall the
performance award under the 1998 Plan be payable to any Plan Participant for
any fiscal year in which the Company's achievement of the relevant performance
goal is less than the threshold level determined in advance by the Committee.
The Committee will meet again at the end of the fiscal year to review whether
the performance goals have been satisfied, and, if the Committee certifies that
the goals have been satisfied, to calculate the amount of the awards payable to
Plan Participants.
In determining the performance goal or goals for a fiscal year, the
Committee may determine that any extraordinary, unusual or non-recurring items
which the Committee anticipates may be recognized in the Company's audited
financial statements under U.S. GAAP shall be excluded. If such exclusion has
not been approved by the Committee at the time the performance goals are set,
then any extraordinary, unusual or non-recurring items may not be excluded in
determining the extent to which the Company's performance goals for the fiscal
year have been met or the amount payable to any Plan Participant as a
performance award for the year.
The 1998 Plan also permits any Plan Participant who is eligible to
receive an award to elect to have all or part of such award credited to his or
her account under an executive deferred compensation plan of the Company, by
filing an election to such effect prior to April 1 of the fiscal year in which
the award is to be earned.
Upon the death, retirement or termination of employment (except where
the Plan Participant has materially breached his employment contract) of the
Plan Participant prior to the end of a fiscal year (as defined in the 1998
Plan), the 1998 Plan provides for payment of a pro-rata share of the award
earned for the fiscal year through the date of retirement, death or termination
of employment. Once an award is granted and paid or credited to a deferred
compensation plan, it would be non-forfeitable.
The maximum amount of any performance award payable to a Plan
Participant under the 1998 Plan for a single fiscal year will be limited to the
lesser of $2,000,000 or 150 percent of the Plan Participant's annual base
salary in effect on the last day of the year.
Copies of the draft 1998 Plan will be available for inspection at the
registered office of the Company and at the offices of Clifford Chance, 200
Aldersgate Street, London EC1A 4JJ during normal business hours on any weekday
(Saturdays and public holidays excepted) up to the date of the Annual General
Meeting and at the Meeting itself.
8
<PAGE> 15
With approval of Holders of Ordinary Shares, payments made under the
1998 Plan are intended to qualify as tax-deductible performance-based
compensation under Section 162(m) of the U.S. Internal Revenue Code. In order
to preserve the U.S. tax deductions available for payment of such bonuses
pursuant to Section 162(m) of the Internal Revenue Code, the Board of Directors
proposes that the Holders of Ordinary Shares approve the 1998 Plan. To
accomplish the foregoing, the Board of Directors proposes adoption of the
following resolution:
THAT the 1998 Executive Performance Plan, as described in the
Company's Proxy Statement for the 1998 Annual General Meeting and as
recommended and approved by the Human Resources Committee, be and hereby is
approved.
The Board of Directors has unanimously approved the proposed
resolution and recommends that you vote "FOR" its adoption. An affirmative
vote of a majority of the votes cast at the Meeting will be required for
adoption of the proposed resolution.
RESOLUTION 9 (ORDINARY): AMENDMENTS TO THE DANKA 1996 SHARE OPTION PLAN
At the Annual General Meeting of shareholders held in 1996, a new
share option plan (the "Plan") was approved. However, approximately 60% of the
Company's employees are based in the United States and the terms of the
existing share option plan differ in a number of respects from those which are
normally found in a scheme for U.S. employees. It is therefore proposed,
subject to approval of the shareholders, to amend the Danka 1996 Share Option
Plan. The amendments are considered to be in shareholders' best interests,
since they will enable the company to grant options in line with the practice
adopted by U.S. companies with which the Company is competing. There are
currently approximately 500 employees eligible to participate in the Plan.
Details of the proposed amendments are set out in Appendix A to the Proxy
Statement.
The proposal concerning the adoption of the Plan has been considered
and approved by the Human Resources Committee.
In order to effect the proposed changes to the Danka 1996 Share Option
Plan the Directors are proposing the following resolution:
THAT the proposed amendments to the Danka 1996 Share Option Plan (the
"Plan"), which are summarized in Appendix A to the Company's Proxy Statement
for the 1998 Annual General Meeting. be and hereby are approved and the
Directors be and hereby are authorized to amend the Plan in accordance
therewith or consequent thereon (and to make any changes or further changes
required by the Inland Revenue).
The Board of Directors has unanimously approved the proposed
resolution and recommends that you vote "FOR" its adoption. An affirmative
vote of a majority of the votes cast at the Meeting will be required for
adoption of the proposed resolution.
RESOLUTION 10 (ORDINARY): DANKA BUSINESS SYSTEMS PLC SAVINGS RELATED SHARE
OPTION SCHEME
The Company is proposing that a Savings Related Share Option Scheme
(the "Scheme") should be introduced in order to encourage loyalty and share
ownership among the Company's employees.
The Scheme involves the grant of an option to any eligible employee
who applies in response to invitations circulated by the Board. The employee
must save a fixed monthly amount between L.5 and L.250 (equivalent to $8 and
$420 per month) for a period of either three or five years. The amount saved
will be invested with a bank or savings institution chosen by the Board and the
savings, with the interest or bonus earned, may be used to exercise the option
on the maturity of the savings contract.
The Scheme incorporates limits on the ordinary shares which may be
issued pursuant to options granted under the Scheme (and rights granted under
other employee share schemes of the Company). The
9
<PAGE> 16
Scheme may be operated in connection with an employee share trust which may
either subscribe for shares in the Company or purchase them in the market in
order to satisfy options granted under the Scheme.
The Scheme will be submitted to the U.K. Inland Revenue for approval,
and subject to that approval will only be available to U.K. resident employees.
There are currently approximately 1,700 U.K. employees of the Company, who will
be eligible to participate in the Scheme. The Company believes that this type
of scheme should be extended to employees of the Company in countries outside
the U.K., subject to local taxation and other considerations. So the Company
is asking shareholders to authorize it to adopt equivalent schemes outside the
U.K. which are based on the U.K. scheme but modified to take account of local
tax, exchange control and securities law considerations.
A summary of the principal features of the Scheme are contained in
Appendix B to the Proxy Statement.
The proposal concerning the adoption of the Scheme has been considered
and approved by the Human Resources Committee.
The Company considers that this proposal is in the best interests of
the Company and its shareholders. To accomplish the foregoing, the Board of
Directors proposes adoption of the following resolution:
THAT
(i) The Danka Business Systems PLC Savings Related Share Option
Scheme, the principal terms of which are contained in Appendix
B to the Proxy Statement relating to the 1998 Annual General
Meeting be and it is hereby adopted and the Rules be and
hereby are approved subject to such amendments thereto as are
approved by, or by a committee of, the Directors as are
necessary to carry the same into effect and/or are necessary
or desirable to obtain regulatory or Inland Revenue approval
thereto and the Directors be authorized to do all acts and
things which they may consider necessary or expedient for
implementing and giving effect to the said scheme;
(ii) The Directors be authorized to establish one or more further
schemes based on the Danka Business Systems PLC Savings
Related Share Option Scheme but modified to take account of
local tax, exchange control or securities laws in territories
outside the U.K., provided that any shares made available
under such further schemes are treated as counting against any
limits on individual or overall participation in the Danka
Business Systems PLC Savings Related Share Option Scheme;
(iii) The Directors be authorized to adopt an employee share trust
or trusts or to amend the Danka Employees' Share Trust
established by a Trust Deed dated March 3, 1998, so that it
may operate in conjunction with the Danka Business Systems PLC
Savings Related Share Option Scheme and such further schemes
as may be established based on that scheme and the Directors
be and hereby are authorized to do all such things as may be
necessary to carry the same into effect (including providing
funds to the said trust and issuing Ordinary Shares to the
trust in connection with the said schemes) and the Directors
be and hereby are authorized to permit the trustees of the
said trust(s) to hold more than five percent of the issued
Ordinary share capital of the Company at any time; and
(iv) The Directors be authorized to vote and to be counted in a
quorum at any meeting of the Directors at which any matter
connected with the said scheme is under consideration
notwithstanding that they may be interested in the same
in any present or proposed capacity whatsoever and that this
resolution shall operate so far as is necessary by way of
suspension and relaxation of the prohibition on interested
Directors voting contained in the Articles of Association of
the Company, provided that no Director may vote or be counted
in a quorum
10
<PAGE> 17
when the Directors are considering any matter concerning his
individual rights of participation in the said scheme.
The Board of Directors has unanimously approved proposed Resolution 10
and recommends that you vote "FOR" its adoption. An affirmative vote of a
majority of the votes cast at the Meeting will be required for adoption of the
proposed resolution.
The following table sets forth the benefits that will be received or
allocated to the named individuals or groups as a result of the Company's
proposed amendment to the Plan and the addition of the Scheme.
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
AMENDED SHARE OPTION PLAN (1) SAVINGS RELATED SHARE OPTION SCHEME (1)
------------------------------------------------ ---------------------------------------
NAME AND POSITION DOLLAR VALUE ($) (2) NUMBER OF UNITS DOLLAR VALUE (2) NUMBER OF UNITS (2)
- ----------------- -------------------- ------------------------ ---------------- -------------------
<S> <C> <C> <C> <C>
Daniel M. Doyle, Chief Executive -- 1,000,000 ADSs (3) -- --
Executive Group -- 1,000,000 ADSs (1), (3) -- --
</TABLE>
- -----------
(1) The benefits or amounts that will be received by or allocated, or that
would have been received by or allocated in the last fiscal
year, to the Company's Name Executive Officers (other than the Chief
Executive), and the current non-executive officer group employees as a
group under the Plan and the Scheme are undeterminable. The
non-executive directors as a group will receive no benefits under
either the Plan or the Scheme.
(2) Benefits or amounts under the Plan or the Scheme that may be received
or allocated are undeterminable.
(3) Represents the number of options to be awarded to Mr. Doyle under
his new employment agreement.
11
<PAGE> 18
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding the
Directors and executive officers of the Company and its primary operating
subsidiaries. The executive officers serve at the pleasure of the respective
Boards of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION(S) DIRECTOR'S ROTATION
- ---- --- ----------- -------------------
<S> <C> <C> <C>
Mark A. Vaughan-Lee............. 52 Chairman 1999
Daniel M. Doyle................. 57 Chief Executive Officer 1999
David C. Snell.................. 50 Finance Director ---
David W. Kendall................ 63 Director (1)(2)(3) 2000
James F. White, Jr. ............ 58 Director (2)(3) 1998
Pierson M. Grieve............... 70 Director (1)(3) 1998
Keith J. Merrifield............. 56 Director (1)(2)(3) 2000
J. Ernest Riddle................ 56 Director (1) 2001
Paul G. Dumond.................. 43 Company Secretary ---
Peter G. Meier.................. 55 Corporate Vice President, Americas ---
Martin G. St. Quinton........... 40 Corporate Vice President, International ---
R. Paul Umberg.................. 58 Corporate Vice President, U.S. Divisions ---
</TABLE>
(1) Member of the Human Resources Committee.
(2) Member of the Audit Committee.
(3) Member of the Nominations Committee.
MARK A. VAUGHAN-LEE. Mr. Vaughan-Lee has served the Company as
Chairman since July 1986. In addition to his duties as Chairman, he is a
member of the executive management group and is involved in the Company's
strategy and development as well as a number of operational areas. Mr.
Vaughan-Lee was previously a director of Samuel Montagu & Co. Limited, an
investment banking firm.
DANIEL M. DOYLE. Mr. Doyle is a co-founder of Danka Industries, Inc.
now known as Danka Holding Company. He has served the Company as Chief
Executive and as a Director since Danka Holding Company was acquired by the
Company in December 1986. Prior to founding Danka Holding Company, Mr. Doyle
was employed by Litton Industries, Inc.'s Royal Business Machines division in
various capacities, including Vice President and National Sales Manager. Since
June 1994, Mr. Doyle has served as a Director of Tech Data Corporation, a
publicly owned distributor of personal computer products. Mr. Doyle has also
served as a Director of AccuStaff, Inc., a publicly owned employment services
firm, since October 1997.
DAVID C. SNELL. Mr. Snell serves as Finance Director and Chief
Financial Officer. Mr. Snell became a certified public accountant in 1969 and
has been with the Company since August 1978. Prior to joining the Company, Mr.
Snell was with the accounting firm of Peat Marwick. On May 7, 1998 the Company
announced that Mr. Snell would be leaving the Company to pursue personal
business interests with effect from July 24, 1998, the date of the Company's
Annual General Meeting.
DAVID W. KENDALL. Mr. Kendall has served the Company as a Director
since July 1993. He is Chairman of Whitecroft plc, a conglomerate, Ruberoid
PLC, a manufacturer and supplier of building products, Celtic Energy Limited, a
Welsh coal mining company, Blagden Industries plc, a packaging company, Wagon
Industrial Holdings plc, an engineering company, and a non-executive director
of Gowrings plc, a motor distributor, all of which are publicly owned U.K.
companies. Previously, Mr. Kendall has served as executive deputy chairman of
British Coal, a coal mining company, chairman of Bunzl plc, a U.K.
conglomerate, and chief executive of BP Oil Limited, an oil refining and
marketing company.
12
<PAGE> 19
JAMES F. WHITE, JR. Mr. White has served the Company as a Director
since July 1993. Since January 1996, he has served of counsel to the law firm
of Shumaker, Loop & Kendrick, LLP, Toledo, Ohio. Mr. White served as an
executive officer and director of Checkers Drive-In Restaurants, Inc. from
January 1993 through December 1995, most recently as Vice Chairman of the Board
and as a non-executive director of Arbor Health Care Company prior to its sale
in November 1997. For more than 20 years prior to January 1993, Mr. White was a
partner in the law firm of Shumaker, Loop & Kendrick. Mr. White is a director
of numerous private companies.
PIERSON M. GRIEVE. Mr. Grieve was elected as a Director in July 1996.
From January 1983 through December 1995, Mr. Grieve served as chairman and
chief executive officer of Ecolab, Inc. Ecolab, Inc. is the leading worldwide
developer and marketer of premium cleaning and sanitizing products, systems and
services, for the hospitality, foodservice, healthcare, dairy and food and
beverage processing markets. Mr. Grieve is also a director of the following
publicly held companies: Norwest Corporation, a Minnesota based bank; U S
WEST, Inc., a telecommunications and information services company based in
Colorado; and St. Paul Companies, Inc., a Minnesota based insurance company.
Mr. Grieve attained the age of 70 during fiscal 1998 and has indicated that he
does not wish to seek re-election to the Board.
KEITH J. MERRIFIELD. Mr. Merrifield was elected as a Director in
January 1997. From 1975 through 1990, Mr. Merrifield was the Managing
Director of Wellcome International, a division of the United Kingdom
pharmaceutical company Wellcome plc. During this time Mr. Merrifield
significantly developed Wellcome's pharmaceutical business in Asia, Africa and
Eastern Europe. In 1990 Mr. Merrifield was appointed as Director of
International Operations and in addition Director of Group Marketing worldwide
in 1994. Mr. Merrifield also played a key role in the integration process
following Glaxo's acquisition of Wellcome plc. Since resigning from Wellcome
plc in June 1995, Mr. Merrifield has served as a director of British Biotech
PLC, an innovative pharmaceutical company based in Oxford, England, and also
Coats Viyella PLC, the largest textile company in the U.K.
J. ERNEST RIDDLE. Mr. Riddle was appointed as a Director in January
1998 and, although required by the Articles to retire at the Meeting, is a
candidate for re-election to the Board of Directors for the first time. Since
March 1997, Mr. Riddle has been President and Chief Operating Officer of
Norrell Services, Inc., an outsourcing information technology and staffing
services company based in Atlanta, Georgia. Prior to joining Norrell, Mr.
Riddle spent four years with Ryder System, Inc., a logistics and transportation
group, primarily in marketing and sales, and was President of Ryder
International from October 1995 to December 1996. Mr. Riddle also has
considerable experience in the photocopier industry, having worked for Xerox
Corporation from 1966 to 1992 where he held several executive positions
including Vice President Marketing and Vice President Operations for the U.S.
group, and Vice President Worldwide Marketing Operations. Mr. Riddle serves as
a director of the University of North Carolina and Brevard College.
PAUL G. DUMOND. Mr. Dumond, who is a Chartered Accountant, has been
the Company Secretary of the Company since March 1986. Mr. Dumond is also the
owner and director of Nautilus Management Limited, a management services
company, and a non-executive director of two publicly owned U.K. companies;
Horace Small Apparel PLC, which manufactures and distributes uniforms and
Mid-States PLC, which distributes auto parts. He was previously with Thomson
McLintock, Chartered Accountants, now part of KPMG, following which he held the
positions of finance manager and later finance director in the oil and gas
industry.
PETER G. MEIER. Mr. Meier joined the Company in January 1997 upon the
acquisition of Eastman Kodak's Office Imaging division. Mr. Meier was named
Corporate Vice President of Danka Americas in September 1997 and oversees the
Company's sales, service, finance, marketing, wholesale, and outsourcing
operations in the United States, Canada and Latin America. Before that, Mr.
Meier served as the President of Danka Office Imaging and managed the acquired
Kodak sales and services business worldwide. Prior to joining the Company, Mr.
Meier was the Regional Business General Manager and Vice President of Office
Imaging for Kodak's Europe, Africa and Middle East Region since 1994. Mr.
Meier began his career with Kodak in 1973.
13
<PAGE> 20
MARTIN G. ST. QUINTON. Mr. St. Quinton joined the Company in June
1993 upon the acquisition of Saint Group plc, the Company's first acquisition
in Europe. Mr. St. Quinton was named Corporate Vice President of Danka
International in September 1997 and oversees the Company's sales, service,
finance, marketing, wholesale and outsourcing operations throughout Europe,
Asia/Pacific and Australia. Prior to this appointment, Mr. St. Quinton
supervised the development of the Company's European network. Mr. St. Quinton
was Chief Executive and majority owner of Saint Group plc prior to its
acquisition.
R. PAUL UMBERG. Mr. Umberg was recently named Corporate Vice
President, U.S. Divisions, and manages the field sales and service operations
within the U.S. Mr. Umberg joined the Company in 1994 as President of Omnidex,
responsible for Danka's fax division, and was promoted to his current position
in fiscal 1997. Prior to joining the Company, Mr. Umberg served as President,
Chief Executive Officer and Board Chairman of Bay Bankshares, a multi-bank
holding company headquartered in Florida.
The Articles of Association of the Company set the size of the Board
of Directors at not less than two persons. The Board of Directors currently
consists of eight members who serve pursuant to the Company's Articles of
Association. As a result of the resignation of Mr. Snell, the Company will
have seven Directors upon the conclusion of the Meeting. One third (1/3) of
the Directors are to retire and shall be eligible for re-election at each
Annual General Meeting. In addition, Directors may be appointed by the Board
of Directors, but Directors so appointed hold office only until the next Annual
General Meeting of the Company, when they are eligible for re-election. Other
than the employment agreements that the Company has entered into with Daniel M.
Doyle and David C. Snell, and a consulting agreement between the Company and
Mark A. Vaughan-Lee Limited, as described in the "Report of the Human Resources
Committee" section of this Proxy Statement, there is no understanding regarding
any executive officer or Director and the Company or any other person pursuant
to which any executive officer or Director was, or is, to be elected or
appointed to such position. No executive officer is related to any other
executive officer or Director. The Board of Directors held thirteen meetings
during fiscal 1998.
The Nominations Committee, as it deems appropriate, makes
recommendations to the full Board of Directors with respect to the size and
composition of the Board and its committees and with respect to nominees for
election as directors. The current members of the Nominations Committee are
Messrs. White, Grieve, Kendall and Merrifield. The Nominations Committee met
once in fiscal 1998. The Nominations Committee will consider suggestions
regarding candidates for election to the Board submitted by Shareholders in
writing to the Secretary of the Company. With regard to the 1999 Annual
General Meeting, any such suggestion must be received by the Secretary no later
than the date by which Shareholder proposals for such annual general meeting
must be received as described below under the heading "Shareholders Proposals
for Presentation at the 1999 Annual General Meeting".
The Company has an audit committee (the "Audit Committee") which is
composed of Messrs. White, Kendall and Merrifield. The functions of the
Audit Committee are to recommend annually to the Board of Directors the
appointment of the independent public accountants (Chartered Accountants and
Registered Auditors) of the Company, discuss and review the scope and the fees
of the prospective annual audit, review the results thereof with the
independent public accountants, review and approve nonaudit services of the
independent public accountants, review compliance with existing major
accounting and financial policies of the Company, review the adequacy of the
financial organization of the Company, review management's procedures and
policies relative to the adequacy of the Company's internal accounting control,
monitor compliance with relevant laws relating to accounting practices and
review and approve transactions, if any, with affiliated parties. The Audit
Committee met four times in fiscal 1998.
The function of the Human Resources Committee, which is composed of
Messrs. Grieve, Kendall, Merrifield and Riddle, independent outside Directors,
is to review and approve annual salaries and bonuses for executive Directors
and certain officers and to review, approve and/or generally recommend to the
Board of Directors the terms and conditions of employee benefit plans or
changes thereto. The Human Resources Committee met six times in fiscal 1998.
In fiscal 1998, each incumbent Director attended in excess of
seventy-five percent (75%), collectively, of the meetings of the Board of
Directors and of each committee of which he was a member.
14
<PAGE> 21
SECURITY OWNERSHIP OF MANAGEMENT AND OTHERS
The following table sets forth, as of March 31, 1998, information as
to the beneficial ownership of the Company's Ordinary Shares or Ordinary Share
equivalents (whether held in Ordinary Shares or ADSs, each ADS being equivalent
to four Ordinary Shares), by (i) each person known to the Company as having
beneficial ownership of more than five percent (5%) of the Company's equity
securities, (ii) each Director, (iii) each "named executive officer" (as
defined in Item 402(a) (3) of Regulation S-K under the Securities Exchange Act
of 1934 (the "1934 Act") ("Named Executive Officer")), and (iv) all Directors
and Executive Officers of the Company as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
NAME OF BENEFICIAL OWNER (1) AS OF MARCH 31, 1998 (2)
- -------------------------------------------- ---------------------------------------------------
NUMBER OF ADS
HOLDINGS OF GREATER THAN 5 PERCENT ORDINARY SHARES (11) EQUIVALENT PERCENT (11)
- -------------------------------------------- -------------------- ---------- ------------
<S> <C> <C> <C>
Massachusetts Financial Services (3) 24,455,200 6,113,800 10.7%
Prudential Corporation plc (4) 13,833,084 3,458,271 6.1%
Merrill Lynch Asset Management (5) 12,722,048 3,180,512 5.6%
HOLDINGS BY DIRECTORS AND EXECUTIVE OFFICERS
- --------------------------------------------
Daniel M. Doyle (6) 7,455,200 1,863,800 3.3%
Mark A. Vaughan-Lee (7) 1,160,000 290,000 *
David C. Snell (8) 1,128,000 282,000 *
David W. Kendall 15,000 3,750 *
James F. White, Jr. 4,000 1,000 *
Pierson M. Grieve 20,000 5,000 *
Keith J. Merrifield 15,000 3,750 *
J. Ernest Riddle 0 0 *
Peter G. Meier 0 0 *
Martin G. St. Quinton (9) 2,309,600 577,400 1.0%
R. Paul Umberg (10) 17,356 4,339 *
All Directors and executive Officers as a group (15 persons) 12,253,604 3,063,401 5.4%
</TABLE>
- -------------
(*) Represents less than one percent (1%) of the share capital.
(1) Except for Messrs. Meier, St. Quinton and Umberg, all of the listed
individuals are currently Directors of the Company. Messrs. Doyle,
Vaughan-Lee and Snell are executive officers of the Company.
(2) Except as otherwise indicated, all Ordinary Shares are held of record
with sole voting and investment power.
(3) Massachusetts Financial Services is a mutual fund organization. The
address of Massachusetts Financial Services is 500 Boylston Street,
Boston, Massachusetts 02116.
(4) Prudential Corporation plc is affiliated with Prudential Client (MSS)
Nominees Ltd. The address of Prudential Corporation plc is 142
Holborn Bars, London EC1N 2NH England.
(5) Merrill Lynch Asset Management is a mutual fund organization. The
address of Merrill Lynch Asset Management is 800 Scudders Hill Road,
Plainsboro, NJ 08536.
(6) Includes 229,850 Ordinary Shares (equivalent of approximately
57,463 ADSs) held of record by Mr. Doyle's wife. Includes options held
by Mr. Doyle to purchase 2,924,000 Ordinary Shares (equivalent of
731,000 ADSs), all of which are currently exercisable.
(7) Includes 540,000 Ordinary Shares (equivalent of 135,000 ADSs) which are
held in a pension fund. Also includes options held by Mr. Vaughan-Lee
to purchase 620,000 Ordinary Shares (equivalent of 155,000 ADSs), all
of which are currently exercisable, and held in a pension fund.
15
<PAGE> 22
(8) Includes options held by Mr. Snell to purchase 88,000 Ordinary Shares
(equivalent of 22,000 ADSs), all of which are currently exercisable.
(9) Includes options held by Mr. St. Quinton to purchase 310,000 Ordinary
Shares (equivalent of 77,500 ADSs), all of which are currently
exercisable.
(10) Includes options held by Mr. Umberg to purchase 10,000 Ordinary Shares
(equivalent of 2,500 ADSs), all of which are currently exercisable.
(11) Based on 227,495,865 Ordinary shares outstanding. Pursuant to the
rules of the Securities and Exchange Commission, certain of the
Ordinary Shares which a person has a right to acquire within 60 days of
the date of the hereof pursuant to the exercise of stock options are
deemed to be outstanding for the purpose of computing the percentage
ownership of such person but are not deemed to be outstanding for the
purpose of computing the percentage ownership of any other person.
On March 31, 1998, The Bank of New York, as depositary for the
Company's ADS program, held 166,129,791 Ordinary Shares representing 73.0% of
the issued share capital.
16
<PAGE> 23
The information contained in the following sections "Report of the
Human Resources Committee" and "Performance Graph" is not deemed to be
"Soliciting Material" or to be "Filed" with the SEC or subject to Regulation
"A" under the 1934 Act, or to the liabilities of Section 18 of the 1934 Act.
REPORT OF THE HUMAN RESOURCES COMMITTEE
EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY
The guiding philosophy of Danka's executive compensation program is
to:
a) provide an industry-competitive program with emphasis on incentive pay
which links pay to performance, both long and short term, and
provides the opportunity to earn compensation above the competitive
market when the Company's performance exceeds that of its peers;
b) ensure that executive compensation over time closely reflects long
term shareholder return.
Compensation of the Company's top executives is reviewed and approved
by the Human Resources Committee which is comprised entirely of non-employee,
independent directors. The Human Resources Committee has access, at its
discretion, to compensation consultants and survey information on executive
compensation in comparable companies. In determining the compensation of top
executives, the generally accepted practices on executive compensation in the
geographic markets in which they are principally based are taken into account.
COMPENSATION ELEMENTS
There are three elements to the Company's executive compensation
program:
o base salary, other benefits and relevant perquisites
o annual incentives
o long term incentives - currently executive share options
Base Salary
Base salaries for senior executives, including those listed in the
Summary Compensation Table, are targeted to be at the 50th percentile of
companies in similar industries. Such companies include Xerox, Ikon Office
Solutions, Pitney Bowes, Lexmark, Boise Cascade Office Products, Harris,
OfficeMax, Polaroid and Staples. Actual base salary levels vary from this
target level based upon the potential impact of the individual executive on the
Company, the skills and experience that the executive brings to the job and the
individual's performance.
Further details of other benefits and perquisites provided are given
below.
Annual and long term incentives
Under the Company's annual and long term incentive plans total
compensation is geared to the Company's financial performance, so that at the
upper end of pre-determined performance bands, compensation will be at the 75th
percentile for executives in similar companies in similar geographic regions.
Annual incentive compensation for executives is based on
pre-established performance goals, primarily corporate earnings per share and
cash generation by the Company. Certain executives are eligible for
incentive compensation based on business unit operating performance. In
addition, performance
17
<PAGE> 24
compensation may be earned for achievement of personal goals as approved by the
Human Resources Committee. The maximum annual incentives for executives range
from 20% to 150% of base salary.
Long term incentive compensation consists of the award of stock
options. The number of stock options awarded to an executive is based on the
executive's target option level, the targets being set as a range depending on
staff grade and the individual's performance. Currently, neither the number of
options previously granted to, nor the options currently held by, a potential
recipient are considered when grants are awarded. Stock options to individuals
are currently limited to annual awards of options with respect to 600,000
Ordinary Shares (or the equivalent thereof in ADSs), but, as described on pages
30 and 31 of the Proxy Statement, the Company has proposed to modify this
limit. The new limit, which is subject to shareholder approval, is 4,000,000
Ordinary Shares (equivalent to 1,000,000 ADSs) per individual in any five year
period. Stock options are granted at the fair market value on the date of the
grant, have a 10-year maximum term and generally vest three years after the
date of grant.
One million limit on deductibility
Section 162(m) of the Internal Revenue Code limits the U.S. tax
deduction the Company may claim for non-deferred compensation paid to its
Chief Executive Officer or to any one of the other four executive officers
named in the Summary Compensation Table in a single fiscal year to $1,000,000,
unless the portion exceeding $1,000,000 qualifies as performance-based
compensation under the U.S. tax laws. The Human Resources Committee has
determined that it will make every reasonable effort, consistent with sound
executive compensation principles and the needs of the Company, to ensure that
all amounts paid to the Company's Chief Executive Officer or to any of the
other Named Executive Officers in excess of $1,000,000 will qualify as
performance-based pay and be deductible by the Company.
In this regard the Board is proposing to shareholders at the
forthcoming Annual General Meeting that a new executive bonus program, the
"1998 Executive Performance Plan", be approved. A summary of the provisions of
the plan is set out on pages 7, 8 and 9 of the Proxy Statement. If approved,
the new executive performance plan would replace the 1994 Executive Performance
Plan, currently in force. During fiscal 1998 no awards were made under the
1994 Executive Performance Plan.
Other Benefits
The Company may provide other benefits (including perquisites) to its
senior executives in line with accepted practice in the geographic territories
in which they are based. These include the use of an automobile or the
provision of an automobile allowance, health insurance, life insurance, 401(k)
plans and, in the case of executives based in Europe, Company pension schemes.
In addition, in fiscal 1997 the Company established a Supplemental
Executive Retirement Plan (the "SERP") for its U.S. based executives. The
SERP, which is not tax-qualified, provides an annual retirement benefit,
payable over 15 years, to participants who attain a retirement age of 60. The
SERP benefit phases in until 100% accrual is attained after four years of
participation for each contribution. At March 31, 1998 all fiscal 1997
contributions were 40% vested. Contributions to the SERP are at the discretion
of the Company. There were no contributions to the SERP for fiscal 1998 for
the Named Executive Officers. (See the table captioned "Summary Compensation
Table".)
The Company also established a Deferred Compensation Plan in fiscal
1997 for its U.S. based executives, which allows participants to defer all or a
portion of their annual salary and/or bonus until the retirement age of 60.
Upon retirement, each participant will receive their deferred balances in
either a lump sum, or in annual installments over five, 10 or 15 years. (See
the table captioned "Summary Compensation Table".)
The Company has purchased and holds whole life insurance policies on
the lives of those executive officers participating in the SERP and the Deferred
Compensation Plan, to provide a source of funds available to satisfy its
obligations under these plans.
18
<PAGE> 25
CEO COMPENSATION
The Human Resources Committee determined that it was in the best
interests of shareholders that the services of Mr. Doyle should be secured for
a further four year period and that a new employment contract should be
executed as soon as practicable.
The framework for determining Mr. Doyle's base salary and
opportunities under the Company's annual and long term incentive compensation
plans is described in the compensation elements section of this report set out
above. In fiscal 1998 Mr. Doyle received a base salary of $795,000 (see the
table captioned "Summary Compensation Table"), which was increased from
$630,000 with effect from April 1, 1997 to bring his base compensation more in
line with normal market practice for CEOs of peer group companies. In
addition, in accordance with established practice in the U.K., he received
$12,310 (equivalent to L.7,500) in directors fees.
No annual incentive award was made to Mr. Doyle during or in respect
of fiscal 1998 as the pre-determined performance goals for increasing diluted
earnings per share were not met in this period. In fiscal 1998 the Human
Resources Committee granted him options to acquire 100,000 ADSs (equivalent to
400,000 Ordinary Shares) at a price of $47.97 per ADS (equivalent to 730 pence
per Ordinary Share). (See the table captioned "Summary Compensation Table".)
The exercise of these options is subject to stringent performance criteria
geared to growth in the Company's earnings per share. The level of grant was
determined having considered a number of factors, including the Company's
expansion in recent years, total shareholder return, individual performance,
individual responsibilities and individual potential.
In fiscal 1998, the Human Resources Committee conducted a review of
Mr. Doyle's total compensation. In performing their work, they commissioned a
report from, and were advised by, Frederic W. Cook & Co., Inc., an independent
consulting firm specializing in executive compensation. The guiding principles
for the new employment arrangements entered into with Mr. Doyle were as
referred to above. Particular weight was attached to normal practice in
relation to U.S.-based executives of similar public companies.
On May 15, 1998 the Company entered into a new employment contract
with Mr. Doyle, which expires on March 31, 2002. In addition to his base
salary of $800,000 per annum (which is to be reviewed annually), Mr. Doyle is
entitled to an annual bonus under the proposed 1998 Executive Performance Plan
of 100% of salary on achievement of annually determined performance goals. He
is eligible for a further bonus of a maximum of 50% of salary on achievement of
stretch goals, also determined annually.
Under the contract Mr. Doyle is due to be awarded options to acquire a
total of 1,000,000 ADSs (equivalent to 4,000,000 Ordinary Shares). Of these,
options to acquire 625,000 ADSs (equivalent to 2,500,000 Ordinary Shares) will
be awarded during the current fiscal year (with options to acquire 500,000 ADSs
due to be granted as soon as possible after signing the contract). Options to
acquire 125,000 ADSs (equivalent to 500,000 Ordinary Shares) will be awarded in
each of the remaining three fiscal years of the contract.
The full implementation of the arrangements in relation to options is
contingent upon the approval of shareholders to amendments to the Company's
1996 Share Option Plan to be effected on the passing of resolution 9 to be
proposed at the Company's forthcoming Annual General Meeting. In particular,
the level of award of options set out in the contract is above the annual limit
of 150,000 ADSs per employee that is currently available under the Company's
1996 Share Option Plan. Consequently, options to acquire 350,000 ADSs as
called for under the contract cannot be awarded prior to shareholder approval.
On May 15, 1998 Mr. Doyle was granted options to acquire 150,000 ADSs at a
price of $18.69 per ADS (equivalent to 600,000 Ordinary Shares at 287 pence per
share).
<PAGE> 26
To take account of the possibility that the pricing of the grant of
options to acquire the 350,000 ADSs following the amendments to the plan, if
approved by shareholders, may be higher than the grant made on May 15, 1998 at
a price of $18.69 per ADS, the new employment contract provides that a
supplemental cash payment would be made. This would be paid at the time of
vesting of that option and would be
19
<PAGE> 27
equivalent to any increase in the average price of the Company's ADSs as traded
on NASDAQ in the five days following the announcement of the Company's results
for the quarter to June 30, 1998 compared to $18.69 (subject to a maximum of
$5.00 per ADS), multiplied by the number of options vesting but subject to a
maximum of $1,750,000 in total.
In general the employment contract is terminable on one year's notice
by the Company or Mr. Doyle. In the event of termination by the Company other
than for cause (as defined in the contract), or in the event of termination by
Mr. Doyle for good reason (as similarly defined) he is eligible to receive a
payment equivalent to two years' salary and target bonuses to be paid in 24
monthly installments always provided that no such installment may be paid after
the normal expiration date of the contract. Thus the total compensation due
declines to zero on a straight line basis over the final two years of the
contract.
Other benefits (including perquisites) due to him under the new
contract are essentially similar to those under his previous employment
agreement. Mr. Doyle participates in the Company's heath insurance and 401(k)
plans.
OTHER EXECUTIVE DIRECTORS
The chairman, Mr. Vaughan-Lee, receives a director's fee of L.7,500
per annum. In addition, the Company has an ongoing agreement, terminable on
one year's notice, with Mark A. Vaughan-Lee Limited, a company which is
majority owned by Mr. Vaughan-Lee, with respect to consulting services. This
agreement was effective April 1, 1994 and was for an initial three year term
with automatic renewals for three year periods thereafter, unless terminated by
either party on one year's written notice in accordance with the terms of the
contract. The amount payable by the Company on termination of the contract
comprises one year's consulting fees.
During the year Mr. Vaughan-Lee was issued an option to acquire up to
40,000 Ordinary Shares (equivalent to 10,000 ADSs) at a price of 730 pence per
Ordinary Share (equivalent to $47.97 per ADS). The grant of options was not
subject to any performance vesting conditions. Further details of amounts paid
to Mark A. Vaughan-Lee Limited in respect of the services of Mr. Vaughan-Lee
are set out in the "Summary Compensation Table".
Mr. David Snell, the Company's Finance Director, is employed under a
contract effective April 1, 1994 which had an initial term of three years with
automatic renewal for three year periods thereafter. His compensation package
consists of base salary (subject to annual review) as well as other benefits
(including health insurance and cash bonus).
Mr. Snell's salary was last adjusted during fiscal 1997. He did not
receive any bonus during fiscal 1998 as the Company failed to achieve the
pre-determined performance targets for increasing diluted earnings per share
set by the Human Resources Committee. During the year he received an option to
acquire up to 75,000 ADSs (equivalent to 300,000 Ordinary Shares) at a price of
$47.97 per ADS (equivalent to 730 pence per Ordinary Share). These options did
not contain any performance vesting conditions. In addition to the above
compensation, Mr. Snell received directors fees totaling $12,310 (equivalent to
L.7,500).
The members of the Human Resources Committee are Pierson M Grieve,
David W Kendall, Keith J Merrifield and J Ernest Riddle. Mr. Riddle was
appointed to the Human Resources Committee during the year and Mr. David Hooker
resigned from the Committee on his retirement from the board at the Company's
1997 Annual General Meeting. Mr. Riddle and Mr. Grieve retire at the
forthcoming Annual General Meeting in accordance with the Company's Articles of
Association. Mr. Riddle is seeking re-election to the board.
By the Human Resources Committee
Pierson M. Grieve
David W. Kendall
Keith J. Merrifield
J. Ernest Riddle
20
<PAGE> 28
COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS
The following table provides information concerning the annual
compensation and long-term compensation for services rendered in all capacities
to the Company for the last three (3) fiscal years for each of the following
Named Executive Officers. The Company did not grant any restricted stock
awards or stock appreciation rights during the last three (3) fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------------------------------- ------------
NAME AND FISCAL OTHER ANNUAL NUMBER OF ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (2) OPTIONS (3) COMPENSATION
- ------------------ ---- ------ ----- ---------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mark A. Vaughan-Lee,
Chairman 1998 L.181,500(4) -- L.7,500 40,000 L.8,270(4)
1997 L.181,500(4) -- L.7,500 37,243 L.15,570(4)
1996 L.170,000(4) L.65,000(4) L.7,500 48,000 --
Daniel M. Doyle,
Chief Executive 1998 $795,000 -- $12,310 400,000 $63,716(5)
1997 $630,000 -- $11,900 180,000 $121,846(5)
1996 $600,000 $540,000 $11,740 124,000 $53,817(5)
David C. Snell, 1998 $600,000 -- $12,310 300,000 $9,076(6)
Finance Director 1997 $460,000 $200,000(1) $11,900 126,000 $48,982(6)
1996 $420,000 $378,000 $11,740 88,000 $3,440(6)
Peter G. Meier,
Corporate Vice President, 1998 $446,000 $101,250 -- 70,000 $5,608(8)
Americas (7)
Martin G. St. Quinton
Corporate Vice President, 1998 L.200,000 L. 90,000 -- 110,000 L.34,817(9)
International 1997 L.210,500 L.325,000 -- 80,000 L.41,422(9)
1996 L.150,000 L.100,000 -- 66,666 L.14,480(9)
</TABLE>
- ------------
(1) Includes deferred compensation under the Company's Deferred
Compensation Plan of $200,000 for Mr. Snell in 1997.
(2) The amounts listed represent sums received as Director fees.
(3) Options are granted to acquire either Ordinary Shares or American
Depositary Shares ("ADS") depending on where the individual is
resident. Each ADS represents four Ordinary Shares. All numbers
shown represent Ordinary Shares or the equivalent number of Ordinary
Shares based on the 4:1 ratio. All options were granted at the fair
market value of the underlying Ordinary Shares or ADSs on the date of
the grant.
(4) These sums paid were pursuant to a consulting arrangement between the
Company and Mark A. Vaughan-Lee Ltd.
(5) Includes net premiums of $41,855 in each year paid by the Company as
advances under a $3,000,000 split-dollar term life insurance
agreement on behalf of Daniel M. Doyle for the benefit of
beneficiaries designated by Mr. Doyle. The advances are secured by
an interest in the policy which has been assigned to the Company and
are repayable upon (i) the death of Mr. Doyle, (ii) the surrender of
the policy, or (iii) termination of the split-dollar life insurance
agreement prior to the death of Mr. Doyle. Also includes Company
matching contribution to 401(k) plan of $9,228, $6,296 and $5,082 in
fiscal 1998, 1997 and 1996, respectively. Fiscal 1998, 1997 and 1996
also include
21
<PAGE> 29
$12,633, $13,695 and $6,880, respectively of above-market interest
earned on deferred compensation arrangement. Fiscal 1997 also includes
Company contribution of $60,000 to the Supplemental Executive
Retirement Plan.
(6) Represents above-market interest earned on deferred compensation
arrangement in fiscal 1998, 1997 and 1996 of $9,076, $6,982 and $3,440,
respectively. Fiscal 1997 includes Company contribution of $42,000 to
the Supplemental Executive Retirement Plan.
(7) Mr. Meier became a Named Executive Officers in fiscal 1998.
(8) For Mr. Meier, other compensation consists of Company matching
contribution to 401(k) plan of $5,608.
(9) Consists of Company pension contributions.
SHARE OPTION PLANS
The Company has options outstanding under its Share Option Plans.
Options granted are for the right to acquire Ordinary Shares or ADSs. The
following table provides information concerning options granted, under the
Company's Share Option Plans, to the Named Executive Officers during fiscal
1998. The Company did not grant any stock appreciation rights during fiscal
1998.
OPTIONS GRANTED IN FISCAL 1998
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
% OF TOTAL POTENTIAL REALIZABLE VALUE
OPTIONS AT ASSUMED ANNUAL RATES
GRANTED TO OF SHARE PRICE APPRECIATION
NUMBER OF EMPLOYEES EXERCISE FOR OPTION TERM(3)
OPTIONS IN PRICE EXPIRATION ---------------------------
NAME GRANTED(1) FISCAL 1998 ($/SHARE)(2) DATE 5% 10%
- ---- ----------- ----------- ------------ ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Mark A. Vaughan-Lee 40,000 0.5% $12.24 08/01/2007 $ 307,868 $ 780,197
Daniel M. Doyle 400,000 4.6% $12.24 08/01/2007 $3,016,808 $7,645,183
David C. Snell 300,000 3.4% $12.24 08/01/2007 $2,262,606 $5,733,887
Peter G. Meier 70,000 0.8% $ 4.12 03/09/2008 $ 181,558 $ 460,103
Martin G. St. Quinton 40,000 0.5% $12.24 08/01/2007 $ 307,868 $ 780,197
70,000 0.8% $ 4.12 03/09/2008 $ 181,558 $ 460,103
</TABLE>
- ----------------------------
(1) The options granted are for Ordinary Shares, or the Ordinary Share
equivalent number in the case of ADSs.
(2) The exercise price is reflected in U.S. dollars using the Noon Buying
Rate conversion rate of L.1.00=$1.6765 on March 31, 1998.
(3) The U.S. dollar amounts under these columns are the result of
calculations at 5% and 10% which reflect rates of potential
appreciation set by the Securities and Exchange Commission and
therefore are not intended to forecast possible future appreciation,
if any, of the Company's Ordinary Share or ADS price. The Company's
stock options are granted with a pence per Ordinary Share or $ per
ADS exercise price. The U.S. dollar appreciation is calculated using
the March 31, 1998 Noon Buying Rate of L.1.00=$1.6765.
22
<PAGE> 30
The following table provides detailed information concerning aggregate
share option exercises in fiscal 1998 and share option values at the end of
fiscal 1998 for unexercised share options held by each of the Named Executive
Officers.
AGGREGATED OPTIONS EXERCISED IN FISCAL 1998
AND FISCAL YEAR-END OPTION VALUES
--------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
ORDINARY SHARES NUMBER OF EXERCISED IN-THE-MONEY
ACQUIRED ON VALUE OPTIONS AT FISCAL YEAR-END OPTIONS AT FISCAL YEAR-END
NAME EXERCISE(1) REALIZED(2) EXERCISABLE/UNEXERCISABLE(1) EXERCISABLE/UNEXERCISABLE(3)
- ---- ----------- ----------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C>
Mark A. Vaughan-Lee --- --- 572,000/125,243 $2,376,969/--
Daniel M. Doyle --- --- 2,800,000/704,000 $9,376,665/--
David C. Snell --- --- --/514,000 --/--
Peter G. Meier --- --- --/171,408 --/--
Martin G. St. Quinton 44,000 $354,326 248,250/358,416 $11,112/--
</TABLE>
- ------------
(1) The options granted are for Ordinary Shares or the Ordinary Share
equivalent of ADSs and were granted at the fair market value
underlying the Ordinary Shares or ADSs on the date of the grant.
(2) Fair market value of the Company's Ordinary Shares on the date of
exercise, minus the exercise price, multiplied by the Noon Buying
Rate on the date of exercise.
(3) Based upon the March 31, 1998 closing price of 274 pence per Ordinary
Share on the London Stock Exchange, multiplied by the Noon Buying
Rate on March 31, 1998 of L.1.00=$1.6765.
COMPENSATION OF DIRECTORS
Each non-employee Director of the Company was paid the equivalent of
an annual sum of L.7,500 for fiscal 1998. In addition, with effect from
October 1, 1997, non-employee Directors are eligible to receive a further
L.22,500 remuneration if they are members of sub-committees of the Board of
Directors. Each non-employee Director of the Company will be paid the same
equivalent of an annual sum for fiscal 1999. Each Director also serving as an
executive officer received the equivalent of L.7,500 in Directors' fees for
fiscal 1998 and will receive the equivalent of L.7,500 for fiscal 1999.
Additionally, each non-employee Director receives the equivalent of L.750 for
each day in which a Board of Directors or committee meeting is attended and is
reimbursed for expenses in connection with such attendance. However, in the
case of the chairman of a committee, a daily allowance of L.1,000 is given. In
addition, each non-employee Director receives an allowance of L.250 in respect
of his participation in a telephone conference call constituting a meeting of
the board or any of its sub-committees.
NON-EMPLOYEE, INDEPENDENT ("NON EXECUTIVE") DIRECTORS
Compensation payable to the non-employee Directors is determined by
the executive members of the board and is reviewed annually. Emoluments
comprise a fee together with an additional allowance for acting as members of
sub- committees of the board. In addition, non-employee Directors are paid a
per diem allowance for attendance at meetings and can claim reimbursement of
reasonable travel expenses.
At the Company's 1996 Annual General Meeting shareholders approved the
implementation of a share option scheme for non-employee Directors. This
provided for the award of 2,500 ADSs (equivalent to 10,000 Ordinary Shares) to
a non- employee Director on joining the board and an annual award of options to
subscribe for 500 ADSs (equivalent to 2,000 Ordinary Shares) thereafter. An
annual award of options was made to Mr. Grieve, Mr. Merrifield, Mr. Kendall and
Mr. White immediately following the Company's announcement of its results for
the quarter ended June 30, 1997. Mr. Merrifield had previously been granted
23
<PAGE> 31
options on joining the board in January 1997. In order to bring the Company
into line with present U.K. corporate governance guidelines in relation to
option grants to non-employee Directors, all of the non- employee Directors
waived their entitlements to acquire shares pursuant to the existing outstanding
options and the scheme generally.
HUMAN RESOURCES COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Human Resources Committee in fiscal 1998
were Messrs. Grieve, Kendall, Merrifield and Riddle. Mr. Hooker was also a
member of the Human Resources Committee until the date of his retirement in
July 1997. Neither Mr. Grieve, Mr. Kendall, Mr. Merrifield nor Mr. Riddle has
at any time been an Executive Officer of the Company. There were no Human
Resources Committee interlocks or insider participation in compensation
decisions in fiscal 1998.
24
<PAGE> 32
PERFORMANCE GRAPH
COMPARISON OF FIVE (5) YEAR CUMULATIVE TOTAL RETURN* AMONG DANKA
BUSINESS SYSTEMS PLC,** S&P 500 INDEX AND S&P OFFICE EQUIPMENT AND SUPPLIES
INDEX
[GRAPH]
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Danka Business Systems PLC $100 $196 $261 $430 $322 $190
S&P 500 $100 $101 $110 $155 $186 $336
S&P Office Equipment & Supplies $100 $106 $114 $157 $211 $275
</TABLE>
- -----------
Assumes $100 invested on April 1, 1993 in Danka Business Systems PLC,
S&P 500 Index and S&P Office Equipment and Supplies Index. Comparison is made
for the five (5) year period from March 31, 1993 to March 31, 1998, with the
base measurement point fixed at the close of trading on March 31, 1993. The
Company's fiscal year ends on March 31.
* Total return assumes reinvestment of any dividends for all companies
considered within the comparison and is based on the current
four-to-one ratio of Ordinary Shares to each ADS.
** Assumes investment in the Company's ADSs traded on the NASDAQ National
Market.
Note: The performance shown on the graph above is not necessarily indicative
of future Ordinary Share or ADS price performance.
25
<PAGE> 33
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth herein briefly describes certain
relationships and transactions between the Company and affiliated parties.
Management of the Company believes that such relationships and transactions
have been established on terms no less favorable to the Company than those that
could have been obtained from unaffiliated parties. These relationships and
transactions have been approved by a majority of the Company's independent
outside Directors (and the Audit Committee since its creation). Future
relationships and transactions, if any, with affiliated parties will be
approved by a majority of the Company's independent outside Directors and the
Audit Committee and will be on terms no less favorable to the Company than
those that could be obtained from unaffiliated parties.
The Company occupies its principal business headquarters in St.
Petersburg, Florida under a lease dated December 22, 1986 between Danka
Industries, Inc., now known as Danka Holding Company and Daniel M. Doyle, a
Director and Chief Executive of the Company, and Frances J. McPeak, Jr., a
previous shareholder of Danka Holding Company. The lease was assigned from the
individuals on March 1, 1987, to Mid-County Investments, Inc., a Florida
corporation of which Mr. Doyle is a fifty percent (50%) shareholder. An
Addendum to the Lease Agreement was entered into on September 1, 1992, extending
the lease term until December 31, 2003 and providing for a rental of $580,000
per annum. Danka Holding Company's payments made under the lease for fiscal
1998 amounted to $580,000. The aggregate sum owed for the remainder of the
lease was approximately $3,332,000 as of March 31, 1998. An amount of $36,000
has been deposited with the landlord as security for the performance by Danka
Holding Company of its obligations under the lease. Additionally, since 1987,
the Company has had contingent liability for a guarantee by Danka Holding
Company for the financing of the building by Mr. Doyle and Mr. McPeak. Danka
Holding Company's contingent liability for repayment in the event of a default
of the obligation totaled $792,000 as of March 31, 1998. Further, Danka Holding
Company leases three other offices from Mr. Doyle and Mr. McPeak. The aggregate
rent (including tax) paid by Danka Holding Company on all three leases during
fiscal 1998 was $177,000. In addition, Mr. Daniel M. Doyle, Jr., the son of the
Chief Executive, is the President of MIDA Group Inc., a real estate services
Company, engaged in ordinary course of business real estate service transactions
with the Company and its subsidiaries for which the Company paid approximately
$1,263,000 for the fiscal year ended March 31, 1998.
On January 1, 1996, Director James F. White, Jr. became of counsel to
the law firm of Shumaker, Loop & Kendrick, LLP, which rendered legal services
to the Company and its subsidiaries in fiscal 1998 and is expected to render
services to the Company and its subsidiaries in fiscal 1999.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the 1934 Act requires the Company's Directors,
officers and holders of more than ten percent (10%) of the Company's Ordinary
Shares to file with the SEC initial reports of ownership and reports of changes
in ownership of Ordinary Shares and any other equity securities of the Company.
Except as set forth below, to the Company's knowledge, based solely upon a
review of the forms, reports and certificates filed with the Company by such
persons, all such Section 16(a) filing requirements were complied with by such
persons in fiscal 1998.
Martin G. St. Quinton, a U.K. citizen, did not file a Form 4 reporting
a sale of Ordinary Shares in June 1997, a Form 4 reporting the exercise and
purchase of share options in August 1997, and a Form 4 reporting a purchase of
Ordinary Shares in December 1997. Mr. St. Quinton reported these transactions,
which were outside the U.S., on a Form 4 filed in April 1998.
26
<PAGE> 34
SHAREHOLDERS PROPOSALS FOR
PRESENTATION AT THE 1999 ANNUAL GENERAL MEETING
If a Holder of Ordinary Shares desires to present a proposal for
action at the Annual General Meeting to be held in 1999, and such proposal
conforms to the laws of the United Kingdom, such proposal must be received by
the Company by May 1, 1999 to be included in the Company's Proxy Statement and
proxy for such 1999 meeting.
If a Holder of American Depositary Shares desires to present a
proposal for action at the Annual General Meeting to be held in 1999, and such
proposal conforms to the rules and regulations of the SEC and is in accordance
with other U.S. federal laws, such proposal must be received by the Company by
February 26, 1999 to be included in the Company's Proxy Statement and proxy for
such 1999 meeting.
By Order of the Board of Directors
/s/ Paul G. Dumond
------------------------------
Paul G. Dumond,
Company Secretary
Dated: June 24, 1998
27
<PAGE> 35
APPENDIX A
PROPOSED AMENDMENTS TO THE DANKA 1996 SHARE OPTION PLAN
The Danka 1996 Share Option Plan (the "Plan") consists of two parts, Part A,
which is unapproved by the U.K. Inland Revenue, and Part B, which is approved
by the U.K. Inland Revenue. It is proposed to amend both parts (subject in the
case of Part B to the approval of the U.K. Inland Revenue) as follows:
1. The proposed amendments summarized below will apply to options granted
from May 1998, but not to any options granted before that date.
2. The Plan provides that options which may be granted under the Plan
during any one financial year of the Company to any person shall not
exceed the equivalent of 600,000 Ordinary Shares (equivalent to 150,000
ADSs) and no person may be issued more than a total of 5,000,000
Ordinary Shares (equivalent to 1,250,000 ADSs) under the Plan. It
is proposed to replace these limits for options granted on or after
1 May 1998 by a limit of 4,000,000 Ordinary Shares (equivalent to
1,000,000 ADSs) which may be placed under option to any person during
any period of five consecutive financial years, subject to no options
being granted after July 19, 2006. The total limit of 22,000,000
Ordinary Shares (equivalent to 5,500,000 ADSs) which may be issued
under the Plan will remain in place.
3. The Plan currently provides that no options may be exercised within
three years of the date of grant. It is proposed to amend this so
that, provided any performance or other conditions imposed on the grant
of the option are satisfied, the option may be exercised as to
one-third of the number of shares one year after the date of grant, the
next one-third two years after the date of grant, and the final
one-third three years after the date of grant.
4. The Plan currently provides that if an option holder ceases to be
employed by the Company by reason of ill-health, injury, disability,
retirement, the employing company or business leaving the Company, or
death, he can exercise within a period of twelve months after
ceasing employment. It is proposed to amend these periods to three
years or such shorter period as the Committee may decide. Exercise in
such circumstances will be at the discretion of the Committee which may
impose additional conditions on the exercise.
If the option holder ceases to be employed for any other reason except
for cause, he can exercise within 30 days after his employment ceased
or such later period as the Committee in its absolute discretion
may decide, not exceeding one year. It is proposed to extend the
period of the Committee's discretion to three years.
5. The Rules currently permit the Committee to impose additional
conditions on exercise, such as performance conditions. It is proposed
to amend the Rules to clarify that these conditions do not have to be
satisfied in certain circumstances, for instance in the event of a
change of control or the employee ceasing employment (at the discretion
of the Committee).
6. In the case of a grant to a US-resident person, the first $100,000 of
options granted to such person in each year will currently qualify
under the Plan as Incentive Stock Options. It is proposed to
amend this, so that the Committee, in its discretion, may make such
awards as Non-Qualifying Stock Options to US-resident persons.
A copy of the detailed amendments will be available for inspection at the
registered office of the Company and at the office of the Company's solicitors,
Clifford Chance, 200 Aldersgate Street, London EC1A 4JJ during normal business
hours on weekdays (Saturdays and public holidays excepted) up to the date of
the Annual General Meeting and at the meeting itself. The Directors reserve the
right up to the time of the meeting to make such amendments as they may
consider necessary or appropriate, provided that such alterations do not
conflict in any material respect with the summary set out above.
28
<PAGE> 36
APPENDIX B
The principal features of the Danka Business Systems PLC Savings Related Share
Option Scheme (the "Scheme") are:-
1. Eligibility
All U.K. based employees who have worked for a company in the Company
for at least six months are eligible to participate in the Scheme. The
Board has a discretion to invite employees who do not satisfy these
conditions to participate in any grant of options.
2. Exercise Price
The exercise price of an option is determined by the Board prior to
invitations being sent to all eligible employees. The exercise price
must not be less than the nominal value of an Ordinary Share (if it is
an option to subscribe for Ordinary Shares) or 80 per cent of the
middle market quotation of the Company's Ordinary Shares on the London
Stock Exchange on the last dealing day preceding the issue of
invitations under the Scheme. The percentage varies in line with
changes in the applicable legislation.
3. Issue of invitations and grant of options
The Board may issue invitations during the period of 42 days following
the obtaining of Inland Revenue approval of the Scheme. Thereafter
invitations may be issued within 42 days of the announcement of the
Company's results for any period. In exceptional circumstances the
Board may issue invitations outside these periods.
On receipt of an invitation participants may apply for the grant of an
option by entering into a savings contract to save a monthly amount
which may not be less than the minimum specified in the savings
contract (currently L.5/equivalent to $8) and may not exceed L.250
(equivalent to $420). The limit of L.250 per month may increase in
line with changes in the applicable legislation. Applications must
be received within a specified period and if the Board receives
applications for options over more shares than are available,
applications may be scaled down. On receipt of the applications (after
scaling down, if applicable) options are granted to participants by the
Board.
4. Exercise of options
Options may be exercised in the six month period following the maturity
date of the related savings contract which may be the third, fifth or
seventh anniversary of the commencement of the contract.
If the option holder ceases employment by reason or injury, disability,
redundancy or retirement at age 63 or his contractual retirement
age or because the employing company ceases to be a member of the Group
or because the business by which he is employed is transferred out of
the Group, his or her options may be exercised within six months of
cessation. His options will then lapse. If he ceases employment or
any other reason (except death) and his option is more than three years
old at the time, then he may exercise within six months of cessation
unless he was dismissed for fraud or dishonesty. At the end of the
six month period his option lapses.
If an option holder dies before the option becomes exercisable, his
option may be exercised within twelve months of his death by his
personal representatives. If he dies after the option becomes
29
<PAGE> 37
exercisable the option may be exercised within twelve months after the
bonus date under his savings contract by his personal representatives.
His options will then lapse.
An option holder may (but need not) exercise his option on reaching
age 63 even if he does not retire then.
If the option holder ceases employment in other circumstances
then the option will lapse.
Options are also exercisable within limited periods if the
Company is taken over or is wound up or if there is a scheme of
reconstruction.
5. Substitution of Shares
Where there is a general offer to acquire the Company, options may by
agreement between the offeror and the option holder be rolled over into
options over the shares of the offeror.
6. Limitations on the Scheme
The aggregate number of ordinary shares which may be issued pursuant
to options to subscribe granted in a ten year period under the Scheme
and pursuant to rights granted in the same period under any other
employee share scheme adopted by the Company in general meeting may not
exceed 34,000,000 ordinary shares (equivalent to 8,500,000 ADSs)
(equivalent to approximately 15% of the Company's issued share capital;
These limits do not affect options which may be satisfied by the
transfer of issued ordinary shares to the option holder by a third
party (such as an employee share trust, being a trust formed to acquire
shares of the Company for the benefit of the employees). The Company
intends to establish such a trust to operate in conjunction with the
Scheme.
7. Variation of share capital
On a variation of the Company's share capital by way of capitalization
or rights issue, sub-division, consolidation or a reduction, the
exercise price and the number of shares comprised in an option can be
varied at the discretion of the Board subject to:-
i) certification from the Company's auditors that in their
opinion the variation is fair and reasonable; and
ii) prior Inland Revenue approval.
8. General
Ordinary shares allotted on the exercise of options rank pari passu
with ordinary shares in issue at the date of allotment but shall not
rank for dividends whose record date precedes the date of exercise of
the option.
9. Amending the Scheme
The Board will have power to administer, interpret and amend the
Scheme. No amendment may be made to the provisions relating to:-
9.1 the eligibility conditions;
9.2 the limit rules;
9.3 the variation of share capital rule;
9.4 the rules governing the terms of the options to be received by option
holders
30
<PAGE> 38
to the advantage of options holders without the prior approval of
shareholders in general meeting (except for minor amendments to
benefit the administration of the Scheme or to take account of a
change in legislation or to obtain or maintain favorable tax, exchange
control or regulatory treatment for option holders or the Company) nor
will any amendment be effective unless it has received the approval of
the Inland Revenue.
10. U.S. federal income taxes consequences
Since only U.K. resident employees are eligible to participate in the
Scheme, there are no United States federal tax consequences related to the
issuance and exercise of such options to the recipient or the Company.
Copies of the draft Rules of the Scheme will be available for
inspection at the registered office of the Company and at the offices of
Macfarlanes, 10 Norwich Street, London EC4A 1BD during normal business hours on
any weekday (Saturdays and public holidays excepted) up to the date of the
Annual General Meeting and at the meeting itself.
31
<PAGE> 39
APPENDIX C
DANKA BUSINESS SYSTEMS PLC
1998 EXECUTIVE PERFORMANCE PLAN
1. ESTABLISHMENT AND PURPOSE OF THE PLAN. The DANKA BUSINESS
SYSTEMS PLC 1998 EXECUTIVE PERFORMANCE PLAN is hereby established upon the
following terms and conditions. The purpose of the Plan is to recognize and
reward on an annual basis the contributions of the Chief Executive and selected
other executive officers of Danka Business Systems PLC toward the overall
profitability of the Company.
2. DEFINITIONS.
2.01 Awardee: An Executive Officer to whom a Performance
Award is made.
2.02 Board of Directors: The Board of Directors of Danka
Business Systems PLC.
2.03 Cash: Funds in U.S. Dollars, U.K. Pounds or such
other currency used as a medium of payment for an annual Executive Performance
Award.
2.04 Committee: The Human Resources Committee of the
Board of Directors, or such other committee designated by the Board of
Directors, designated to administer the Plan under Section 4, which committee
shall have at least TWO (2) members, each of which shall be an Outside
Director.
2.05 Company: Danka Business Systems PLC, a corporation
organized in the United Kingdom, or any successor to substantially all its
business, and its direct and indirect subsidiaries.
2.06 Danka Office Imaging. Danka Office Imaging Company,
a Delaware corporation and the principal U.S. operating subsidiary of the
Company, or any successor to substantially all its business.
2.07 Diluted EPS: For purposes of this Plan, Diluted EPS
shall mean the Company's earnings per American Depositary Share for the fiscal
year of the Company, as reflected in the audited consolidated statements of
earnings for Danka Business Systems PLC and subsidiaries for the relevant
fiscal year, prepared in accordance with U.S. GAAP, but excluding any
extraordinary, unusual or nonrecurring items, in the Committee's discretion,
stated on a diluted basis and expressed in U.S. dollars.
2.08 Executive Officer: The Chief Executive of the
Company, and any other executive officer designated by the Committee as
eligible to participate in this Plan.
2.09 Internal Revenue Code: The Internal Revenue Code of
1986, as amended.
-1-
<PAGE> 40
2.10 Outside Director: A member of the Board of Directors
who is an "outside director" as that term is defined in Treasury Regulation
1.162-27(e)(3) promulgated under the Internal Revenue Code, or any successor
definition adopted under Internal Revenue Code Section 162(m), and a
"non-employee" director as that term is defined in SEC Rule 16b-3(b)(3) or any
successor definition promulgated by the SEC.
2.11 Performance Award: An annual performance bonus earned
by an Executive Officer pursuant to the terms of this Plan, whether payable in
Cash or voluntarily deferred under the terms of the Danka Office Imaging
Executive Deferred Compensation Plan.
2.12 Performance Goal: The required levels of performance
by the Company of such financial performance measures as may be designated by
the Committee, upon which payment of a Performance Award is contingent, as
described in Section 6 of the Plan. Any Performance Goal shall be stated in
terms of the Company's operating income, pre-tax income, net income, earnings
per share, cash flow from operations, growth in revenues, market share, or such
other objective measures of performance as the Committee may determine to be
appropriate. The accomplishment of a Performance Goal must be objectively
determinable by a third party with knowledge of the relevant facts.
2.13 Plan: Danka Business Systems PLC 1998 Executive
Performance Plan herein set forth, as the same may from time to time be
amended.
2.14 U.S. GAAP: United States Generally Accepted
Accounting Principles.
3. ELIGIBILITY. The Chief Executive of the Company and any other
Executive Officer of the Company, as defined herein, shall be eligible for
Performance Awards under the Plan.
4. PLAN ADMINISTRATOR.
4.01 Administrator: The Plan shall be administered by the
Committee.
4.02 Administrative Powers: The Committee shall have the
full power to interpret and administer the Plan and full authority to act in
selecting the Executive Officers to whom Performance Awards will be granted, as
well as full authority to set the Performance Goal or Goals, measure
performance in relation thereto, and determine the type and amount of the
Performance Awards to be granted to each such Executive Officer, the terms and
conditions of Performance Awards granted under the Plan and the terms of
agreements which will be entered into with Awardees. The Committee shall have
the power to make regulations for carrying out the Plan and to make changes in
such regulations as they from time to time deem proper. Any interpretation by
the Committee of the terms and provisions of the Plan and the administration
thereof, and all action taken by the Committee, shall be final, binding and
conclusive on the Company, its stockholders, employees, Executive Officers,
their respective legal representatives, successors and assigns and upon all
other persons claiming under or through any of them.
-2-
<PAGE> 41
4.03 Limitation on Liability: Members of the Board of
Directors and members of the Committee acting under the Plan shall be fully
protected in relying in good faith upon the advice of counsel and shall incur
no liability except for gross negligence or willful misconduct in the
performance of their duties.
5. FORM OF PAYMENT OF AWARD. Any Performance Award payable to an
Executive Officer under this Plan with respect to a fiscal year will be paid to
the Executive Officer in Cash unless the Executive Officer has elected, with
the Committee's approval, by filing a written election with the Committee prior
to April 1 of the fiscal year (or for the fiscal year ending March 31, 1999,
within thirty (30) days after this Plan has been approved by the Company's
shareholders), to have all or any designated portion of such Performance Award
deferred as an elective deferral pursuant to the terms of Danka Office
Imaging's Executive Deferred Compensation Plan (or, for Executive Officers not
residing in the U.S., any equivalent deferred compensation plan maintained by
the Company in their country of residence), in lieu of a Cash payment.
6. PERFORMANCE GOALS AND DETERMINATION OF PERFORMANCE AWARD.
6.01 Determination of Performance Goal: In order for any
Executive Officer to earn a Performance Award under the Plan for any given
fiscal year, the Company must have achieved the Performance Goal or Goals which
were established by the Committee during the first quarter (i.e., 90 days) of
the fiscal year. During the first quarter of each fiscal year, the Committee
shall meet to establish the Performance Goal for the fiscal year, as well as
the target performance level for each such Performance Goal to be achieved for
payment of the target Performance Award, the threshold level for each
Performance Goal below which no Performance Award will be earned, and the
ceiling performance level at or above which the maximum available Performance
Award will be payable to the Executive Officer. The amount of the Performance
Award payable for each Executive Officer shall be directly proportionate to the
extent to which the Company has achieved the specified Performance Goal for the
subject fiscal year, increasing only in proportion to increases in the level of
achievement. In no event shall a Performance Award under the Plan be payable
to any Executive Officer for any fiscal year in which the Company's achievement
of the relevant Performance Goal is less than the threshold level designated by
the Committee.
6.02 Determination of Performance Award: Each year, once
the Company's audited financial statements for the prior fiscal year are
available, the Committee shall: (1) determine whether the Performance Goal for
the prior fiscal year has been met and so certify in writing in the Committee
minutes or elsewhere, (2) calculate the amount of each Performance Award to be
awarded that year under the Plan and (3) grant any such Performance Awards.
The Committee may, in its discretion, reduce (but not increase) the amounts of
the Performance Award from the amount so calculated.
In determining whether the Performance Goal for a fiscal year
has been met, extraordinary, unusual or nonrecurring items may not be excluded
unless the Committee has agreed to their exclusion in writing at the time the
Performance Goal was established; provided, however, that if the Committee
determines that a Performance Goal would not have been met at the same level,
in the absence of such an extraordinary or nonrecurring item, the Committee
shall have the reserved authority
-3-
<PAGE> 42
to, in its discretion, reduce the Performance Award which would otherwise have
been earned by each Executive Officer in such manner as the Committee may
determine to be necessary to properly recognize the impact of such
extraordinary item on the Performance Goal and target Performance Award.
Executive Officers who leave the employment of the Company and
its subsidiaries during the subject fiscal year may be paid a pro rata share of
the Performance Award earned through the date of termination pursuant to the
terms of this Section 6.02 during the time they were Executive Officers,
provided they are not in material breach of their Employment Agreement existing
on the date of such termination or payment.
6.03 Maximum Amount of Performance Award. Notwithstanding
any other provision of this Plan, the amount of the Performance Award to be
awarded to an Executive Officer for any year under this Plan shall not exceed
the lesser of (1) $2,000,000 in U.S. Dollars or the equivalent in U.K. Pounds,
or (2) 150 percent of the Executive Officer's annual base salary as in effect
on the last day of the year.
7. EFFECTIVE DATE AND TERMINATION OF THE PLAN. The Plan shall be
effective as of April 1, 1998, subject to approval by the Company's
stockholders at the 1998 Annual General Meeting. The Plan shall remain in full
force and effect until April 1, 2004, unless terminated by the Board of
Directors at an earlier date.
8. AMENDMENT OF THE PLAN. The Board of Directors shall have the
power to amend, suspend or terminate the Plan at any time except for any
amendment requiring stockholder approval pursuant to the provisions of the
Exchange Act or the Internal Revenue Code.
9. NON-ASSIGNABILITY. Performance Awards may not be pledged,
assigned or transferred for any reason during the Awardee's lifetime, and any
attempt to pledge, assign or transfer shall be void and the relevant
Performance Award shall be forfeited, other than by will or the laws of descent
and distribution or pursuant to a qualified domestic relations order as defined
by the U.S. Internal Revenue Code or Title I of the Employee Retirement Income
Security Act, or the rules thereunder. The naming of a beneficiary does not
constitute a transfer.
10. BENEFICIARY UPON AWARDEE'S DEATH. Any Performance Award
earned but unpaid at the time of an Executive Officer's death shall be paid to
the Executive Officer's surviving spouse or such other beneficiary as may be
designated by the Awardee on forms prescribed by and filed with the Committee.
Upon the death of an Awardee, such beneficiary shall succeed to the rights of
the Awardee. If no such designation of a beneficiary has been made, the
Performance Awards shall succeed to his or her surviving spouse, or, if none,
to his or her legal representatives and shall be transferable by will or
pursuant to the laws of descent and distribution. No provision of this Section
10 shall reduce the Performance Goal requirements of Section 6 hereof. Death
of an Awardee prior to the end of the performance period may result in a
reduced Performance Award, based upon a pro rata evaluation by the Committee of
the portion of the goal achieved prior to the Awardee's death.
-4-
<PAGE> 43
11. GENERAL PROVISIONS.
11.01 Nothing contained in the Plan, or in any Performance
Award granted pursuant to the Plan, shall confer upon any Executive Officer any
right with respect to continuance of employment by the Company or with any
subsidiary or affiliated company, nor interfere in any way with any right the
Company, a subsidiary or affiliated company may have to terminate the
employment of an Executive Officer at any time, with or without assigning any
reason therefor, nor confer any right with respect to continuance as an
Executive Officer, member of the Executive Committee or member of the Board of
Directors.
11.02 For any Executive Officer residing in the United
States, any Performance Award to be paid in Cash shall be paid by Danka Office
Imaging through its U.S. payroll system, but if Danka Office Imaging should
fail to make any such payment to an Executive Officer when due, the Company and
Danka Office Imaging shall be jointly and severally liable for such payment.
11.03 Appropriate provisions may be made for all income or
payroll-based taxes required to be withheld in connection with any Performance
Award pursuant to any federal, state or local tax withholding applicable under
the laws of the United Kingdom, the United States of America, or other local or
foreign jurisdictions.
11.04 If any day on or before which action under the Plan
must be taken falls on a Saturday, Sunday or legal holiday, such action may be
taken on the next succeeding day not a Saturday, Sunday or legal holiday.
11.05 Without amending the Plan, Performance Awards may be
granted to Executive Officers who are foreign nationals or employed outside the
United States or both, on such terms and conditions different from those
specified in the Plan as may, in the judgment of the Committee, be necessary or
desirable to further the purpose of the Plan or to accommodate differences in
local law, tax policy or custom. Moreover, the Committee may approve such
supplements to, or amendments, restatements or alternative versions of, this
Plan as it may consider necessary or appropriate for such purposes without
thereby affecting the terms of this Plan as in effect for any other purpose;
and the Secretary or any Assistant Secretary of the Company is authorized to
certify the approval of any such supplements, amendments, restatements or
alternative versions as though they were approved by the shareholders of the
Company provided, however, that no such supplements, amendments, restatements
or alternative versions shall cause this Plan to cease to satisfy any
conditions of SEC Rule 16b-3 under the U.S. Securities Exchange Act of 1934, or
Section 162(m) of the Internal Revenue Code.
11.06 To the extent the U.S. federal laws (such as the
Internal Revenue Code of 1986, as amended or Treasury regulations promulgated
thereunder) do not otherwise control, the Plan and all determinations made and
actions taken pursuant hereto shall be governed by the laws of Florida and
construed accordingly.
-5-
<PAGE> 44
11.07 The Committee may amend any outstanding Performance
Awards to the extent it deems appropriate consistent with the requirements of
the Internal Revenue Code. Such amendment may be unilateral by the Company,
except in the case of amendments adverse to the Awardee, in which case the
Awardee's consent is required to any such amendment.
11.08 Upon approval of this Plan by the Company's
shareholders, the 1998 Executive Performance Plan shall supercede the Company's
1994 Executive Performance Plan, and the 1994 Executive Performance Plan shall
be considered terminated and no further force and effect.
12. AWARDEES' RIGHTS UNSECURED. The right of any U.S. Awardee or
his or her designated beneficiary to receive a distribution of any deferred
Performance Award shall be an unsecured claim against the general assets of
Danka Office Imaging, and neither the Awardee nor his or her designated
beneficiary shall have any rights in or against any amount credited to his or
her account or any other specific assets of Danka Office Imaging or the
Company. All amounts credited to an account shall constitute general assets of
Danka Office Imaging and may be disposed of by Danka Office Imaging at such
time and for such purposes as it may deem appropriate. An account may not be
encumbered or assigned by an Awardee or any beneficiary. In the event the
Company or Danka Office Imaging establishes an irrevocable trust that conforms
to the requirements of the model trust document set forth in Revenue Procedure
92-64, the Committee may at any time in its sole discretion, fund cash equal to
the then deferred amount.
--- END OF PLAN ---
-6-
<PAGE> 45
DANKA BUSINESS SYSTEMS PLC
1998 EXECUTIVE PERFORMANCE PLAN
DESIGNATION OF BENEFICIARY
BY DANIEL M. DOYLE
Pursuant to Section 10 of the 1998 Executive Performance Plan, I
hereby designate the following as the beneficiary or beneficiaries entitled to
receive any Performance Awards payable after my death:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
In the event no beneficiary named herein survives me, then any such
distribution shall be paid to my estate. This Designation shall apply to any
Performance Award I may earn for FYE March 31, 1999, and to any additional
Performance Awards for future fiscal years until and unless modified by the
undersigned.
________________________________________
DANIEL M. DOYLE
###-##-####
_______________________________________
Social Security Number
(NOTE: This form should be delivered to the Human Resources Committee)
-7-
<PAGE> 46
APPENDIX D
THE DANKA 1996 SHARE OPTION PLAN
SCHEDULE OF AMENDMENTS TO PART A
1. Rule 2.10 is amended by replacing the existing definition of "Exercise
Period" with the following definition:
"in relation to an option means the period beginning when the
option first becomes exercisable under the provisions of Rule
7.2(c) and ending on the tenth anniversary of the Date of
Grant of the option (or such shorter period as the Committee
may have determined before the grant thereof)."
2. Rule 6.1 is amended by replacing the words "during any one financial
year of the Company" with the words ", in the case of options granted
on or after 1 April 1998, during any period of five consecutive
financial years". By replacing the figure "600,000" with the figure
"4,000,000" and by replacing the words "and no person may be issued
more than a total of 5,000,000 Ordinary Shares under the Plan" with
the words "subject to the provisions of Rule 5.4".
3. Rule 7.1 is amended by replacing the wording following the wording in
sub-rule (iii) ending "to a person which is not a member of the Group"
with the following wording:
"in the case of all options, shall notwithstanding Rule 7.2(c)
be entitled to exercise an option for the period which shall
expire twelve months after the date of cessation and in the
case of options granted on or after 1 May 1998, may
notwithstanding Rule 7.2(c) be entitled to such extent and on
such conditions as the Committee shall in its absolute
discretion determine to exercise the option at such later date
as the Committee, in its absolute discretion, may decide, not
exceeding three years. In the case of all options granted
before 1 May 1998, for the purposes of this Rule 7.1(a) and
(b) only (and for no other purposes), Exercise Period means a
period of one year from the date of cessation of employment of
the Option-holder with the Group. In the case of options
granted on or after
1
<PAGE> 47
1 May 1998, for the purposes of this Rule 7.1(a) and (b) only
(and for no other purposes), Exercise Period means the period of one
year from the date of cessation of employment of the Option-holder
with the Group or such longer period, not to exceed three years, as
the Committee shall in its absolute discretion determine."
4. Rule 7.1 is further amended by amending sub-rule (c) by replacing the
words "not exceeding one year" with the words "being in the case of
options granted before 1 May 1998 not exceeding one year, and in the
case of options granted on or after 1 May 1998, not exceeding
three years".
5. Rule 7.2 is amended by inserting the words "Subject to Rule 7.2(b)" at
the beginning of sub-rule (a).
6. Rule 7.2 is further amended by deleting the word "fully" in the
sub-rule (b) and adding the words "in accordance with Rule 7.2(c)"
to the end of that sub-rule.
7. Rule 7.2 is further amended by inserting a new sub-rule (c) as
follows:
"An option granted before 1 May 1998 shall, except where
exercised pursuant to Rule 7.1(a) or (b) or Rule 9 or as
specifically provided otherwise pursuant to Rule 5.5, only be
exercised during the period of seven years from the third
anniversary of the Date of Grant of the option. An option
granted on or after 1 May 1998 shall, except where exercised
pursuant to Rule 7.1(a) or (b) or Rule 9 or as specifically
provided otherwise pursuant to Rule 5.5, not be exercisable
before the first anniversary of the Date of Grant and shall,
when added to the number of Ordinary Shares (or ADSs) in
respect of which the option has previously been exercised, not
be exercisable over more than one-third of the Ordinary
Shares (or ADSs) originally subject to the option on or after
the first anniversary of the Date of Grant and before the
second anniversary of the Date of Grant, more than two-thirds
of the Ordinary Shares (or ADSs) originally subject to the
option before the third anniversary of the Date of Grant and
only exerciseable in full on or after the third
2
<PAGE> 48
anniversary of the Date of Grant. Where any adjustment has
been made under rule 7.5 to any unexercised option rights, a
corresponding adjustment shall be assumed for this purpose to
have been made to the number of Ordinary Shares (or ADSs)
subject to the option and to the number of Ordinary Shares (or
ADSs) in respect of which the option has been previously
exercised."
and the subsequent sub-rules are re-numbered and any cross-references
to those sub-rules are amended accordingly.
8. Rule 12.1 is amended by adding the following wording to the end of
sub-rule (a):
"unless the Committee shall in its absolute discretion
determine otherwise in which case Rule 5 shall (for the
avoidance of doubt) be construed to refer to and to permit a
grant of a Non-Qualifying Option only".
9. Rule 12.1 is further amended by inserting the following wording in the
second line of sub-rule (c) between the words "which can first be
exercised in a given year," and "the first $100,000 of such options":
"unless the Committee shall in its absolute discretion
determine otherwise,".
3
<PAGE> 49
APPENDIX E
DANKA BUSINESS SYSTEMS PLC
DANKA BUSINESS SYSTEMS PLC SAVINGS RELATED
SHARE OPTION SCHEME APPROVED BY THE INLAND
REVENUE ON [ ] 1998
(REFERENCE: SRS/ )
ADOPTED BY THE COMPANY IN GENERAL MEETING
ON JULY 1998
Macfarlanes
10 Norwich Street
London EC4A 1BD
LMC/549068-706340.01
17 May 1998
DRAFT 2
<PAGE> 50
CONTENTS
<TABLE>
<CAPTION>
CLAUSE PAGE
<S> <C> <C>
1 Definitions 1
2 Applications for Options 5
3 Grant of Options 7
4 Limitations 9
5 Exercise Price 10
6 Exercise of Options 10
7 Substitution of Shares 14
8 Variation of Share Capital 16
9 Rights of Ordinary Shares Allotted 16
10 Availability of Shares 17
11 Listing 17
12 Transfers of Options 17
13 Loss of Office 17
14 Powers of Directors 18
</TABLE>
<PAGE> 51
DANKA BUSINESS SYSTEMS PLC
1 DEFINITIONS
1.1 In this Scheme the following words and expressions bear
the following meanings, namely:-
THE ACT: the Income and Corporation Taxes Act 1988;
ADOPTION DATE: the later of the date on which the Scheme
is adopted by ordinary resolution of the Company in
general meeting and the Approval Date;
ANNOUNCEMENT DATE: a date on which the Company announces
its results for any period;
APPLICATION: an application for an Option in an Approved
Form;
APPROVAL DATE: the date on which the Scheme receives
formal Inland Revenue approval;
APPROVED FORM: a form approved by the Board and the
Inland Revenue;
ASSOCIATED COMPANY: an associated company as defined in
Section 187 of the Act;
AUDITORS: the Auditors for the time being of the Company;
BOARD: the Board of Directors of the Company or a duly
constituted committee of it authorised and empowered to
operate the Scheme consisting wholly of directors of the
Company who are outside directors within the meaning of
Internal Revenue Service Regulations 1.162-27(e) (3) and
"disinterested persons" within the meaning of US Securities
and Exchange Commission Rule 16b-3 (c) (i);
BONUS DATE: the date on which Repayments under a Savings
Contract are due being the date on which a bonus is payable
under the Savings Contract as
<PAGE> 52
specified by the Qualified Person in his Application
pursuant to Rules 2.3.3 and 2.3.4 subject to the
provisions of Rule 3.3;
COMPANY: Danka Business Systems PLC;
CONTROL: control as defined in Section 840 of the Act;
DATE OF GRANT: the date on which an Option is granted as
specified in the relevant Option Certificate;
EMPLOYEE: an employee of any company in the Group
(including a director required by the terms of his
employment or office to work for the Group or any part of
it for 25 hours or more per week (exclusive of meal
breaks)) who is not an Excluded Person;
EXCLUDED PERSON: a person who has a Material Interest;
EXERCISE PRICE: the amount payable for each Ordinary Share
on the exercise of an Option determined in accordance with
Rule 5 below;
GROUP: the Company and its subsidiaries (as defined in
Section 736 of the Companies Act 1985) over which the
Company has control;
INVITATION: the letter of invitation in the Approved Form;
LONDON STOCK EXCHANGE: The London Stock Exchange Limited;
MARKET VALUE: the middle market quotation of an Ordinary
Share on the London Stock Exchange, on the last dealing day
preceding the date an Invitation is made under Rule 2.1 on
which dealings in the Ordinary Shares took place as
derived from the Daily Official List of the London Stock
Exchange;
MATERIAL INTEREST: an interest in 25 per cent. or more in
the Company's share capital contrary to paragraph 8 of
Schedule 9 to the Act;
MODEL CODE: the Company's code on dealing in its securities
by directors and employees (as amended from time to time)
based on the Model Code for
2
<PAGE> 53
Securities Transactions by Directors of Listed Companies
contained in the Listing Rules issued by authority of the
Council of the London Stock Exchange;
OPTION: a right to acquire Ordinary Shares granted
pursuant to the Scheme;
OPTION CERTIFICATE: the Option Certificate in the
Approved Form;
OPTION HOLDER: a Qualified Person or a former Qualified
Person who holds an Option in accordance with the terms of
the Scheme, or where the context permits, a person becoming
entitled to any such Option in consequence of the death of
the original Option Holder;
OPTION PERIOD: a period of six months commencing on the
Bonus Date and being the period within which (subject to
the provisions of the Scheme) the Options must be
exercised, if at all;
ORDINARY SHARES: Ordinary Shares in the Company whether
issued or unissued which satisfy the conditions specified
in paragraphs 10 to 14 inclusive of Schedule 9 to the Act;
QUALIFIED PERSON: any Employee who
(i) is chargeable to tax in respect of his
employment under Case 1 of Schedule E; and
(ii) will have been so employed by a company
in the Group for a continuous period of at least 6
months on the date on which the Board makes its
Invitation for Applications under Rule 2.1. For
the avoidance of doubt periods of service with any
such company prior to its joining the Group shall
be disregarded and a Qualified Person who takes
maternity leave under the provisions of Part VIII
of the Employment Rights Act 1996 and exercises her
right to return to work under that Act shall not be
deemed to cease to be in the employment of the
Company by virtue of taking that maternity leave
and the period of maternity leave shall count
towards the period of continuous employment;
The Board may, at its discretion, resolve to waive or vary
all or any of the above
3
<PAGE> 54
conditions in respect of any Employee (but not so that they
breach the requirements of paragraph 26 of Schedule 9 to
the Act). Any Employee to whom the Board sends an
Invitation in exercise of the discretion shall be allowed
to participate in the Scheme on similar terms to all other
Qualified Persons;
REPAYMENTS: repayments made to a Qualified Person under a
Savings Contract and either including or not including
the bonus payable under the Savings Contract as specified
by the Qualified Person in his Application, subject to the
provisions of Rule 3;
SAVINGS AUTHORITY: Nationwide Building Society or such
other building society within the meaning of the
Building Societies Act 1986 or bank within the meaning of
the Banking Act 1987 nominated by the Board for the purpose
of the Scheme;
SAVINGS CONTRACT: a certified contractual savings scheme
within the meaning of Section 326 of the Act entered
into by the Qualified Person which has been approved for
the purposes of Schedule 9 to the Act by the Board of
Inland Revenue;
SCHEME: the Danka Business Systems PLC Savings Related
Share Option Scheme;
SPECIFIED AGE: 63.
1.2 In this Scheme (unless the context requires otherwise):-
1.2.1 any reference to any statute or statutory provisions
shall be construed as including a reference to any
modification, re-enactment or extension of such statute or
statutory provision for the time being in force, to any
subordinate legislation made under the same and to any
former statutes or statutory provisions which is
consolidated or re-enacted;
1.2.2 the singular includes a reference to the plu and vice
versa;
4
<PAGE> 55
1.2.3 the masculine gender shall include the feminine gender;
1.2.4 references to the exercise of an Option shall
where the context so allows include the exercise of an
Option in part.
1.3 The Scheme shall be governed by and construed in
accordance with the law of England and Wales.
2 APPLICATIONS FOR OPTIONS
2.1 The Board may at any time after the Adoption Date and
thereafter during the period beginning on and ending
forty-two days after an Announcement Date invite
Applications under the Scheme from Qualified Persons by
sending them Invitations. Provided that:-
2.1.1 if the Company is prevented by statute, order, regulation
or government directive or the Model Code from inviting
Applications from a Qualified Person within any such
period then the Board may invite such Applications within
the period of twenty-one days after the lifting of such
restriction; and
2.1.2 the Board may invite Applications outside these periods in
circumstances which it considers in its absolute
discretion to be exceptional.
2.2 Each Invitation shall be in writing and shall specify:-
2.2.1 the Exercise Price (or the time and manner in which the
Exercise Price will be communicated to Qualified
Persons);
2.2.2 the last date by which Applications must be received
(which shall be neither earlier than 14 days nor later
than 21 days after the date of the Invitation);
2.2.3 whether the Board has decided to allow Qualified Persons
to choose, for the purpose of determining the number of
Ordinary Shares over which an Option is to be granted,
whether the payment under the Savings Contract is to
be taken as including a bonus available under such Savings
Contract (and, if so, which bonus) or no bonus at all; and
5
<PAGE> 56
2.2.4 whether it is open to the Qualified Person to choose
between Savings Contracts of different durations and Bonus
Dates falling on different anniversaries of the
commencement of the Savings Contract and, if so,
which Bonus Dates;
and the Board may, at its discretion, determine and
include in the Invitations details of the maximum number
of Ordinary Shares over which Options may be granted at
that time or any maximum monthly saving contribution.
2.3 Each Invitation shall be accompanied by such documents
relating to the Savings Contract as the Savings Authority
may prescribe and an Application which shall provide
for the Qualified Person to state:-
2.3.1 the monthly savings contribution (being a multiple of
L.1 and not less than the minimum amount specified in the
Savings Contract) which he wishes to make under the
related Savings Contract;
2.3.2 that his proposed monthly savings contribution under the
Savings Contract, when added to any monthly savings
contributions then being made under any other savings
contract linked to an option granted under the Scheme or
any other scheme approved under Schedule 9 to the Act will
not exceed the maximum permitted under Rule 4.3; and
2.3.3 if he may choose whether the Repayment under the Savings
Contract be taken to include a bonus or no bonus for the
purpose described in Rule 2.2.3, his choice in that
respect; and
2.3.4 if he may choose between Savings Contracts of different
durations or Bonus Dates falling on different anniversaries
of the commencement of the Savings Contract, his choice in
that respect;
and to authorise the Board to enter on the form of Savings
Contract such monthly savings contribution (not exceeding
the maximum stated on the Application) as shall be
determined pursuant to Rule 3 below.
2.4 Each Application shall be deemed to be for an Option over
the largest whole number of Ordinary Shares which can be
bought at the Exercise Price with the
6
<PAGE> 57
expected Repayments under the related Savings Contract at
the appropriate Bonus Date taking into account
the Qualified Person's choice under Rule 2.3.3.
2.5 Not later than the date specified in the Invitation as
the last date for receipt of an Application, each person
who was a Qualified Person on the date of the Invitation
may, by the return of a duly completed Application
complying with the requirements of this Rule 2 as
specified on the Application, apply for an Option. A
person may only submit one Application for an Option of any
particular duration in response to each Invitation which he
receives, but he may apply for Options of different
durations, if the Invitation so permits. If he receives
more than one Invitation relating to Options proposed to be
granted on the same Date of Grant, he may submit only one
Application for an Option of any particular duration in
response to both or all of them, but he may apply for
Options of different durations, if the Invitation(s) so
permit(s).
2.6 An Application for an Option shall be in writing and
shall be accompanied by such documents relating to the
Savings Contract as the Savings Authority may
prescribe, and the valid completion and return of such
documents shall be a precondition of the grant of an
Option.
3 GRANT OF OPTIONS
3.1 No Option shall be granted to any director or employee
who has ceased to be a Qualified Person at the Date
of Grant.
3.2 Subject to Rules 3.1 and 3.3, the Board shall grant an
Option to each Qualified Person who has submitted a valid
Application in respect of the number of Ordinary Shares for
which he has applied within 30 days of the date by
reference to which the relevant Exercise Price was fixed.
If, in applying the scaling down provisions contained in
Rule 3.3, Options cannot be granted within the 30 day
period referred to in this Rule 3.2, the Options may be
granted within 40 days of the date by reference to which
the relevant Exercise Price was fixed.
3.3 If valid Applications are received for a total number of
Ordinary Shares in excess of any maximum number of Ordinary
Shares determined by the Board pursuant to Rule 2.1 or any
limitation under Rule 4, the Board shall scale down
7
<PAGE> 58
Applications by taking the following steps (or by such
other procedure agreed by the Board in advance with the
Inland Revenue) until the number of Ordinary Shares applied
for equals or is less than the number of Ordinary Shares
available:-
3.3.1 by deeming each choice under Rule 2.3.3 to include a
bonus to be a choice to include no bonus in the Repayment;
3.3.2 by reducing the monthly savings contributions pro rata (and
consequently the number of Ordinary Shares applied for)
provided that the monthly savings contributions of a
Qualified Person shall not be reduced below the minimum
amount specified in the Savings Contract;
3.3.3 by selecting Applications by lot, each based on a monthly
savings contribution of the minimum specified in the
Savings Contract and the inclusion of no bonus in the
Repayment.
If after applying the above steps the number of Ordinary
Shares available is still insufficient to enable an Option
based on the minimum monthly contributions specified in the
Savings Contract to be granted to each Qualified Person
whose Application so remains, no Options shall be granted.
3.4 Each Application shall be deemed to have been modified or
withdrawn in accordance with the provisions of Rule
3.3 and the Board shall complete each Savings Contract
proposal form to reflect any reduction in monthly savings
contributions resulting therefrom.
3.5 As soon as possible after Options have been granted the
Company shall issue to each Option Holder an Option
Certificate executed by the Company in such manner
as the Board may from time to time prescribe. Each Option
Certificate shall specify the Date of Grant of the Option,
the number of Ordinary Shares over which the Option is
granted and the Exercise Price. If any Option Certificate
shall be worn out, defaced, destroyed or lost, it may be
renewed on such evidence being provided as the Board may
reasonably require.
3.6 No amount shall be paid in respect of the grant of an
Option but the maintenance of the Savings Contract by
the Option Holder shall be a condition of the
8
<PAGE> 59
continuance of the Option provided that the discontinuance
of a Savings Contract with a view to the exercise of
an Option will not preclude the Option Holder from
exercising that Option.
4 LIMITATIONS
4.1 No Options shall be granted hereunder later than 10 years
after the Adoption Date.
4.2 The grant of Options to subscribe for Ordinary Shares
under this Scheme shall be restricted so that the aggregate
of all Ordinary Shares issued or remaining issuable under
Options granted in the ten years preceding the Date
of Grant (excluding those which have lapsed or been
surrendered) or options granted in that ten year period
under any other employee share scheme established by the
Company in General Meeting (excluding those which have
lapsed or been surrendered) shall not exceed ten per cent.
of the issued ordinary share capital of the Company from
time to time.
For the avoidance of doubt, any option or other right
which is to be satisfied by the transfer from a third
party to the Option Holder of issued Ordinary Shares does
not count towards the limits set out in this Rule and
shall be disregarded for the purposes of this Rule.
4.3 Contributions made by an Option Holder under his Savings
Contract shall not be less than the minimum amount per
month specified in the Savings Contract and shall be
made in multiples of L.1 per month. The maximum payments
an Option Holder may make under his Savings Contract (when
aggregated with the monthly payments being made under any
other Savings Contracts entered into by the Option Holder
and at that date still outstanding) shall be L.250 per
month or such other amount as may be specified in paragraph
24 of Schedule 9 of the Act from time to time.
9
<PAGE> 60
5 EXERCISE PRICE
Each Option is to be an Option to subscribe for or acquire
Ordinary Shares in the Company at a price per Ordinary
Share determined by the Board but in any event not less
than the higher of:-
(i) the nominal value of such Ordinary Share; and
(ii) 80 per cent. (or such other percentage as may be
specified in paragraph 25 of Schedule 9 to the
Act from time to time) of the Market Value of
an Ordinary Share.
6 EXERCISE OF OPTIONS
6.1 Subject to Rules 6.2 and 6.5 below, the Option Holder may
only exercise the Option if:-
6.1.1 at the date of exercise the Option Holder is employed by
or holds office with a company in the Group and is not
an Excluded Person; and
6.1.2 the Option Period has commenced and not expired.
6.2 The Option shall, in the following circumstances, be
exercisable earlier and otherwise than as aforesaid:-
6.2.1 if the Option Holder ceases to hold office or employment
with a company in the Group by reason of injury, disability
evidenced to the satisfaction of the Board or redundancy
(within the meaning of the Employment Rights Act 1996)
or by reason of retirement on reaching the Specified Age or
any other age at which he is bound to retire in accordance
with the terms of his contract of employment or by reason
of the Option Holder ceasing to be a director or employee
of a company in the Group because his employing company
ceases to be a member of the Group or the business or part
of the business in which he is employed is transferred
outside the Group then he shall exercise the Option within
six months of so ceasing provided that the Option may not
be exercised more than six
10
<PAGE> 61
months after the relevant Bonus Date. To the extent that
an Option so exercisable is not exercised within that
period it shall then lapse;
6.2.2 if the Option Holder dies before the commencement of the
Option Period while still holding office or being employed
by a company in the Group the Option must be exercised (if
at all) within twelve months of his death by his legal
personal representatives. If the Option Holder dies during
the Option Period while still holding office or being
employed by a company in the Group then the Option may be
exercised within twelve months after the relevant Bonus
Date by his legal personal representatives. To the extent
that an Option so exercisable is not exercised within that
period it shall then lapse;
6.2.3 if an Option Holder ceases to hold office or employment
with a company in the Group more than three years after the
Date of Grant for any reason except dismissal by his
employer for dishonesty or fraud then he or she may
exercise the Option within six months of so ceasing
provided that the Option may not be exercised more than six
months after the relevant Bonus Date. To the extent that
an Option so exercisable is not exercised within that
period it shall then lapse;
6.2.4 if an Option Holder reaches the Specified Age, then he may
exercise his Option within six months after attaining that
age, whether or not he retires at that age provided that
the Option may not be exercised more than six months after
the relevant Bonus Date;
6.2.5 if any person obtains Control of the Company while the
Option Holder holds office or is employed by a company in
the Group as a result of making:-
6.2.5.1 a general offer to acquire the whole of the
issued ordinary share capital of the Company
which is made on a condition such that if it
is satisfied the person making the offer will
have Control of the Company, or
6.2.5.2 a general offer to acquire all the shares
in the Company which are of the same class as
the Ordinary Shares
the Option may be exercised within six months of the time
when the person making the offer has obtained Control of
the Company and any condition subject to which the offer is
11
<PAGE> 62
made has been satisfied provided that the Option may not be
exercised more than six months after the relevant Bonus
Date. To the extent that an Option so exercisable is not
exercised within such period, it shall then lapse unless
Rule 6.2.7 applies;
6.2.6 if under Section 425 of the Companies Act 1985 the court
sanctions a compromise or arrangement proposed for the
purposes of or in connection with a scheme for the
reconstruction of the Company or its amalgamation with any
other company or companies the Option may be exercised
within six months of the court sanctioning the compromise
or arrangement provided that the Option may not be
exercised more than six months after the relevant Bonus
Date. To the extent that an Option so exercisable is not
exercised within that period it shall then lapse;
6.2.7 if any person becomes bound or entitled to acquire shares
in the Company under Sections 428-430F of the Companies
Act 1985 the Option may be exercised at any time when that
person remains so bound or entitled provided that the
Option may not be exercised more than six months after the
relevant Bonus Date. To the extent that an Option so
exercisable is not exercised within that period it shall
then lapse;
6.2.8 if the Company passes a resolution for voluntary winding
up, the Option may be exercised within six months of the
passing of the resolution provided that the Option may not
be exercised more than six months after the relevant Bonus
Date. To the extent that an Option so exercisable is not
exercised within that period it shall then lapse;
6.2.9 for the purposes of Rule 6.2.5 a person shall be deemed
to have obtained Control of the Company if he and others
acting in concert with him have together obtained
Control of it.
6.3 If an Option Holder ceases to hold office or employment
with a company in the Group less than three years after
the Date of Grant for any reason other than those set out
in Rules 6.2.1 or 6.2.2 or more than three years after the
date of grant for any reason other than those set out in
Rules 6.2.1 to 6.2.3 the Option shall lapse;
12
<PAGE> 63
6.4 For the purposes of the Scheme, a woman who leaves
employment due to pregnancy will be regarded as having left
the employment of a company in the Group on the earliest of
the date she notifies her employing company of her
intention not to return and the last day of the 29 week
period commencing on the date of confinement.
6.5 No person shall be treated for the purposes of Rules 6.1,
6.2.1, 6.2.3 and 6.3 as ceasing to hold an office or
employment with a company in the Group until he
ceases to hold any office or employment in the Company or
any company in the Group or an Associated Company. If, at
the Bonus Date, the Option Holder holds an office or
employment with a company which is a company over which the
Company has Control or an Associated Company but which is
not a member of the Group (or is a member of the
Group which does not participate in the Scheme), then the
Option Holder may exercise the Option during the Option
Period.
6.6 Each Option is to be exercisable by an Option Holder once
only in respect of all or any proportion of the Ordinary
Shares comprised in the Option granted to him as adjusted
in accordance with the provisions of the Scheme.
6.7 If, before the earliest time when, in accordance with the
provisions of this Scheme, an Option Holder may exercise an
Option he gives (or under the regulations governing
the Savings Contract is deemed to have given) notice that
he intends to stop paying contributions thereunder, such
Option shall thereupon lapse.
6.8 Exercise of an Option is to be by application in writing
addressed to the Company or to such other person as the
Company shall direct and specifying the number of
Ordinary Shares in respect of which the Option is being
exercised and accompanied by the Option Certificate, such
application to be delivered or sent by prepaid post to the
registered office for the time being of the Company or to
such office as may from time to time be specified by the
Company. Exercise of the Option is conditional on receipt
of the Exercise Price (which shall not exceed the sum
obtained by way of Repayments). For this purpose any
Repayment shall exclude the repayment of any contribution
the due date for payment of which falls:-
13
<PAGE> 64
6.8.1 more than one month after the date on which the Repayment
is made, or
6.8.2 after the end of the period within which the Option may be
exercised.
If the Company is procuring the transfer of Ordinary Shares
from a third party under Rule 6.9 then it shall receive
the Exercise Price as agent for the third party.
6.9 Subject to such consents of the Bank of England, H.M.
Treasury or other competent authority under the regulations
or enactments for the time being in force as may be
necessary and subject to compliance by the Option Holder
with the terms of the Option the Company will not
later than twenty-eight days after receipt of the
application make an allotment to or procure the transfer to
the Option Holder of the number of Ordinary Shares
specified in the application at the Exercise Price (as may
be adjusted in accordance with the provisions of the
Scheme) and will deliver evidence of title to the Ordinary
Shares to the Option Holder.
7 SUBSTITUTION OF SHARES
7.1 Notwithstanding the provisions of Rules 6.2.5 to 6.2.8 if
any company ("the Acquiring Company") shall:-
7.1.1 obtain Control of the Company as a result of making:-
7.1.1.1 a general offer to acquire the whole of
the issued ordinary share capital of the
Company which offer is made on a condition
that if the condition is satisfied the
Acquiring Company will have Control of the
Company; or
7.1.1.2 a general offer to acquire all shares of
the Company which are of the same class as the
Ordinary Shares; or
7.1.2 obtain Control of the Company in pursuance of a
compromise or arrangement sanctioned by the Court under
Section 425 of the Companies Act 1985; or
14
<PAGE> 65
7.1.3 become bound or entitled to acquire shares in the Company
under Sections 428 to 430F of the Companies Act 1985
any Option Holder may at any time within the appropriate
period (as defined in Rule 7.2 below) by agreement with the
Acquiring Company release his Option under the Scheme ("the
Old Option") in consideration of the grant to him of an
option ("the New Option") which is equivalent (as defined
in Rule 7.3 below) to the Old Option but relates to shares
in a company other than the Company (being either the
Acquiring Company or some other company within the
provisions of paragraph 10(b) or (c) of Schedule 9 to the
Act). The New Option shall, for all the purposes of the
Scheme, be treated as having been acquired at the same time
as the Old Option.
7.2 For the purposes of Rule 7.1 above the appropriate period
means:-
7.2.1 in a case falling within Rule 7.1.1 a period of six months
beginning with the time when the Acquiring Company has
obtained Control of the Company and (if applicable) any
condition subject to which the offer is made is satisfied;
7.2.2 in a case falling within Rule 7.1.2 the period of six
months beginning with the time when the court sanctions
the compromise or arrangement; and
7.2.3 in a case falling within Rule 7.1.3 the period during
which the Acquiring Company remains bound or entitled as
mentioned in that Rule.
7.3 For the purposes of Rule 7.1 above the New Option shall
be equivalent to the Old Option if the requirements of
paragraph 15(3)(a) to (d) inclusive of Schedule 9 to
the Act are met.
7.4 For the avoidance of doubt if the Option Holder does not
release his rights pursuant to the provisions of this Rule
or exercise his Option pursuant to the provisions of Rules
6.2.5 to 6.2.8 hereof within the periods permitted by
those rules then all such Options held by him shall lapse.
7.5 If, in accordance with this Rule 7, an Old Option is
released and a New Option granted, the New Option shall not
be exercisable under Rules 6.2.5 to 6.2.8 by virtue
of the event by reason of which the New Option was granted.
15
<PAGE> 66
7.6 Notwithstanding the definitions contained in Rule 1, if a
New Option is granted pursuant to the provisions of Rule
7.1, then for the purposes of that New Option references
(directly or indirectly) in Rules 6.2.5 to 6.2.8 and 7 and
13 to the Company and Ordinary Share shall respectively
mean the Acquiring Company and a share in the capital of
the Acquiring Company or of some other company which
satisfies the provisions of paragraphs 10 to 14 of Schedule
9 to the Act (except that reference to the Company in the
definition of the Group shall continue to refer to Danka
Business Sytems PLC).
8 VARIATION OF SHARE CAPITAL
On any variation of the share capital of the Company
(whether by way of capitalisation or rights issue or
sub-division or consolidation of the Ordinary Shares) the
Exercise Price and the number of Ordinary Shares comprised
in an Option shall be varied in such manner as the Board
shall determine and such decision of the Board shall be
final and binding on the Option Holder and the Company
provided that:-
8.1 no adjustment to the Exercise Price shall be made
pursuant to the provisions of this Rule which would result
in any Ordinary Shares being issued unlawfully at a
discount and if in the case of any such Ordinary Shares
such an adjustment would but for this proviso have so
resulted the Exercise Price payable for such Ordinary
Shares shall be the nominal amount thereof;
8.2 no variation to the number of Ordinary Shares comprised
in an Option or the Exercise Price thereof shall be
made pursuant to any of the provisions contained in this
Rule until the Auditors shall (acting as experts and not as
arbitrators) have certified in writing that such variation
is in their opinion fair and reasonable;
8.3 no such variation shall be made until the Board of Inland
Revenue have approved such variation.
9 RIGHTS OF ORDINARY SHARES ALLOTTED
Ordinary Shares to be allotted pursuant to the exercise of
any Option shall rank pari passu in all respects and as one
class with the Ordinary Shares in issue at the date of
16
<PAGE> 67
allotment but shall not rank for any dividend the record
date of which precedes the date of exercise of the Option.
10 AVAILABILITY OF SHARES
The Company shall at all times have available sufficient
unissued ordinary share capital to meet any exercise of any
Option taking into account any arrangements made by the
Company to procure the transfer by a third party to the
relevant Option Holder of Ordinary Shares to satisfy
(whether in full or in part) the exercise of any Option.
11 LISTING
The Company will at its expense make application for and
use its best endeavours to obtain a listing on The
London Stock Exchange for all Ordinary Shares of the
Company allotted pursuant to the exercise of any Option.
12 TRANSFERS OF OPTIONS
12.1 No Option granted pursuant to this Scheme nor the benefit
thereof may be transferred assigned charged or otherwise
alienated save that nothing herein contained shall
prohibit the transmission of an Option by operation of law.
12.2 If an Option Holder does or suffers an act or thing
whereby he would or might be deprived of the legal or
beneficial ownership of an Option that Option shall
forthwith lapse and the Board shall not knowingly permit
its exercise.
13 LOSS OF OFFICE
If any Option Holder shall cease to hold office or
employment with a company in the Group for any reason he
shall not be entitled by way of compensation for loss of
office or (save as otherwise provided herein) on any
other basis to any sum or other benefit to compensate him
for the loss of any right under the Scheme.
17
<PAGE> 68
14 POWERS OF DIRECTORS
14.1 The decisions of the Board shall be final and binding in
all matters relating to the Scheme.
14.2 The Board may at any time discontinue the grant of
further Options or decide in any year not to grant any
Options. If the Scheme is discontinued the provisions of
the Scheme shall nevertheless continue in full force and
effect in relation to Options then subsisting.
14.3 The Board may amend any of the provisions of the Scheme
in any way it thinks fit save that:-
14.3.1 no amendment which is to the advantage of Option Holders
may be made to the provisions relating to:-
(i) the persons to whom Options may be granted
under the Scheme;
(ii) the limitations in Rules [4.2] or 4.3;
(iii) the maximum entitlement for any one Option
Holder;
(iv) the basis for determining an Option Holder's
entitlement to, and the terms of, Options;
(v) the basis for the adjustment of Options under
Rule 8;
without the prior approval of the Company in General
Meeting provided that amendments may be made to the Scheme
without such approval if they are minor amendments to
benefit the administration of the Scheme or to take account
of any change in legislation or amendments to obtain or
maintain favourable tax, exchange control or regulatory
treatment for Option Holders, the Company or the Group;
14.3.2 (subject as herein provided) it may not modify the terms
of an Option already granted except with the consent of
the Option Holder;
14.3.3 no amendment shall have effect until approved by the
Board of Inland Revenue.
18
<PAGE> 69
APPENDIX F
DANKA BUSINESS SYSTEMS PLC
33 CAVENDISH SQUARE
LONDON W1M ODE ENGLAND
PROXY FOR THE ANNUAL GENERAL MEETING TO BE HELD
JULY 24, 1998. THIS PROXY IS SOLICITED BY
THE BOARD OF DIRECTORS.
The undersigned, having received notice of the Annual General Meeting
of Danka Business Systems PLC (the "Company") to be held at 11:00 a.m. (local
time) on Friday, July 24, 1998 (the "Meeting"), hereby designates and appoints
Paul G. Dumond and David C. Snell, and each of them with authority to act
without the others, or ________________________________, as attorneys and
proxies for the undersigned (the "proxies"), with full power of substitution, to
vote all Ordinary Shares of 1.25 pence each (net) of Danka Business Systems PLC
that the undersigned is entitled to vote at such Meeting or at any adjournment
thereof, such proxies being directed to vote as specified on the reverse side.
THIS PROXY WILL BE VOTED: (1) AS DIRECTED ON THE MATTERS LISTED ON THE REVERSE
SIDE; AND (2) WHERE A CHOICE IS NOT SPECIFIED, AS THE PROXIES DEEM FIT.
(Continued on the reverse side)
<PAGE> 70
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING MATTERS.
PLEASE MAKE AN "X" IN ONE SPACE FOR EACH ITEM. TO BE EFFECTIVE, THIS PROXY MUST
BE DEPOSITED AT THE COMPANY'S REGISTRARS NOT LATER THAN 48 HOURS BEFORE THE TIME
APPOINTED FOR THE MEETING. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE.
<TABLE>
<S> <C> <C> <C>
1. To approve the final dividend 2. To re-elect Mr. James F. White 3. To elect Mr. J. Ernest Riddle 4. To appoint the auditors
of 1.56p per share (net). as a Director as a Director, to serve in and authorize the Board
place of Pierson M. Grieve who of Directors to fix
retires. their remuneration.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
5. To empower the Board of 6. SPECIAL RESOLUTION. 7. SPECIAL RESOLUTION. 8. To approve the 1998
Directors to allot securities To empower the Board of To authorize the Company Executive
up to an aggregate nominal Directors to allot to buy back up to 10% Performance Plan.
amount of L.947,898. securities subject to of its issued share
certain limitations capital.
without Providing certain
pre-emptive rights.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
9. To approve the amendments 10. To approve the Danka
to the Danka 1996 Share Business Systems Savings
Option Plan. Related Share Option
Scheme.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ] [ ]
</TABLE>
The undersigned reserves the right to revoke this Proxy at any time prior to the
Proxy being voted at the Meeting. The Proxy may be revoked by delivering a
signed revocation to the Company at any time prior to the Meeting, by submitting
a later-dated Proxy, or by attending the Meeting in person and casting a ballot.
The undersigned hereby revokes any proxy previously given to vote such Ordinary
Shares at the Meeting.
Signature(s) Date
- --------------------------------------- ----------------------
(Please sign exactly as your name appears
on your share certificate(s). In the case
of joint owners, the signature of any one
of them will suffice. When signing as
attorney, executor, administrator, trustee,
guardian or corporate officer, please give
your full title as such).
<PAGE> 71
DANKA BUSINESS SYSTEMS PLC
NOTICE TO OWNERS OF AMERICAN DEPOSITARY RECEIPTS
Owners of Record on June 17, 1998, of American Depositary Receipts (each
representing four Ordinary Shares of Danka Business Systems PLC of 1.25 pence
each) issued under any existing Deposit Agreements among Danka Business Systems
PLC (the "Company" or the "Issuer"), The Bank of New York, as Depositary, and
the Owners from time to time of the American Depositary Receipts issued
thereunder, are hereby notified that The Bank of New York, as Depositary, has
received Notice of an Annual General Meeting of the members of Danka Business
Systems PLC, to be held on July 24, 1998.
By provision of Section 4.7 of the aforementioned Deposit Agreement, Owners of
American Depositary Shares are entitled, subject to applicable law and the
provisions of the Articles of Association of the Issuer and the provisions of
or governing Deposited Securities, to instruct The Bank of New York, as
Depositary, as to the exercise of the voting rights, if any, pertaining to the
Deposited Securities represented by the American Depositary Shares evidenced by
such Owner's Receipts. Upon the written request of an Owner on such record
date, received on or before July 21, 1998, The Bank of New York, as Depositary,
shall endeavor in so far as practicable and permitted under applicable law and
the provision of the Articles of Association of the Issuer and the provisions
of or governing the Deposited Securities to vote or cause to be voted the
Deposited Securities represented by such Owner's Receipts in accordance with
the instructions set forth in such request. If after complying with the
procedures set forth in this Section, the Depositary does not receive
instructions from the Owner of a Receipt, the Depositary shall give a
discretionary proxy for the Shares evidenced by such Receipt to a person
designated by the Issuer. The Bank of New York, as Depositary, shall not vote
or attempt to exercise the right to vote that attaches to the Deposited
Securities, other than in accordance with such instructions.
In view of the fact that requests from Owners must be received prior to the
close of business on July 21, 1998, there is a pre-addressed envelope enclosed
for your use.
The Bank of New York, as Depositary
Dated: June 24, 1998
