<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:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Danka Business Systems PLC
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
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(5) Total fee paid:
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[ ] 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:
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(4) Date Filed:
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<PAGE> 2
(DANKA LOGO)
DANKA BUSINESS SYSTEMS PLC
MASTERS HOUSE
107 HAMMERSMITH ROAD
LONDON W14 0QH
November , 1999
Dear Fellow Shareholders:
You are cordially invited to attend Danka's Extraordinary General Meeting.
The meeting will be held on December , 1999 at a.m., London
time, at .
The Notice of Extraordinary General Meeting and the Proxy Statement on the
following pages describe the formal business to be considered at the meeting.
Specifically, you will be asked to approve two special resolutions and two
ordinary resolutions to adopt new articles of association to, among other
things, increase Danka's authorized share capital and create a new class of
participating shares. In addition, the resolutions provide that the preemptive
rights that would otherwise apply upon the allotment of the participating shares
will be eliminated.
Your Board of Directors announced on November 3, 1999 that Danka had
entered into a Subscription Agreement with Cypress Merchant Banking Partners II,
L.P., Cypress Merchant Banking II C.V. and 55th Street Partners II L.P. for the
issuance to those investors of a new class of senior convertible participating
shares of Danka. The new participating shares will carry voting rights and will
be convertible into ordinary shares of Danka. In addition, the participating
shares will have a preference as to dividends and upon liquidation over the
ordinary shares of Danka. Under the terms of the Subscription Agreement, the
investors will pay $200 million to purchase 200,000 participating shares, at a
price of $1,000 per share. The net proceeds to Danka from the sale of the
participating shares to the investors are estimated to be approximately $190
million after deducting estimated transaction commissions, fees and expenses of
$10 million. Under the terms of the Subscription Agreement, we will expand the
Board of Directors from nine to eleven members. Upon the closing of the
transactions contemplated by the Subscription Agreement, the investors will be
invited to appoint two representatives to fill the vacancies created by the
expansion of the Board of Directors. The investor funds are managed by
affiliates of The Cypress Group LLC.
The closing of the transactions contemplated by the Subscription Agreement
is subject to various conditions, including your approval of the resolutions as
presented in the attached Notice of Extraordinary General Meeting and Proxy
Statement.
YOUR BOARD OF DIRECTORS BELIEVES THAT THE INVESTMENT BY THE INVESTORS, AND
THE OTHER PROPOSALS DESCRIBED IN THE PROXY STATEMENT, ARE IN THE BEST INTERESTS
OF DANKA AND ITS SHAREHOLDERS AS A WHOLE. ACCORDINGLY, YOUR BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE RESOLUTIONS. [THE
DIRECTORS HAVE RECEIVED IRREVOCABLE COMMITMENTS TO VOTE "FOR" THE RESOLUTIONS
FROM SHAREHOLDERS WITH RESPECT TO ORDINARY SHARES, REPRESENTING
PERCENT OF THE ISSUED ORDINARY SHARES OF DANKA AS OF OCTOBER 29,
1999.] PLEASE GIVE CAREFUL CONSIDERATION TO ALL OF THE INFORMATION CONTAINED IN
THE PROXY STATEMENT AND ITS EXHIBIT BEFORE CASTING YOUR VOTE.
It is important that ordinary shares be represented at the meeting. If you
hold ordinary shares, we ask that you promptly sign, date and return the
enclosed proxy. The proxy must be returned not later than a.m. on
, 1999. The proxy should be returned to Danka's registrars,
Computershare Services PLC, even if you plan to attend the meeting. Returning
the proxy will not prevent you from voting your ordinary shares in person at the
meeting if you are present and choose to do so.
Ordinary shares represented by American Depositary Shares (ADSs) will be
voted by The Bank of New York as Depositary (the Depositary) for Danka's ADSs
pursuant to instructions received from holders of ADSs. If you hold ADSs, we ask
that you promptly sign, date and return instructions to the Depositary in the
enclosed envelope provided by the Depositary, and otherwise follow the special
voting instructions provided by the Depositary.
Your Board of Directors and management look forward to meeting with you at
the meeting.
Sincerely,
DAVID W. KENDALL
Chairman
<PAGE> 3
PRELIMINARY COPY -- SUBJECT TO COMPLETION
DANKA BUSINESS SYSTEMS PLC
MASTERS HOUSE
107 HAMMERSMITH ROAD
LONDON W14 0QH
----------------------------------------
NOTICE OF EXTRAORDINARY GENERAL MEETING
NOVEMBER , 1999
----------------------------------------
NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of Danka
Business Systems PLC (the "Company") will be held at [insert venue] on
, December 1999 at a.m. (London
time) to consider and, if thought fit, to pass the following resolutions, of
which the first and fourth resolutions will be proposed as special resolutions
and the second and third resolutions will be proposed as ordinary resolutions.
SPECIAL RESOLUTION
(1) THAT, subject to the passing of the resolutions numbered (2), (3) and (4)
in the notice of extraordinary general meeting, the regulations in the form
of the print produced to the meeting marked "A" and initialled for
identification purposes by the chairman of the meeting be adopted with
immediate effect as the new articles of association of the Company to
replace the existing articles of association of the Company in their
entirety.
ORDINARY RESOLUTIONS
(2) THAT, subject to the passing of the resolutions numbered (1), (3) and (4)
in the notice of extraordinary general meeting, the authorised share
capital of the Company be and is hereby increased to L6,250,000 and
US$500,000 by the creation of 500,000 6.50 per cent. senior convertible
participating shares of US$1.00 each (the "Participating Shares") having
the rights and obligations set out in the new articles of association of
the Company proposed to be adopted pursuant to the resolution numbered (1)
above.
(3) THAT, subject to the passing of the resolutions numbered (1), (2) and (4)
in the notice of extraordinary general meeting, the board of directors of
the Company (the "Board") be generally and unconditionally authorised, in
addition to all the subsisting authorities, pursuant to section 80 of the
Companies Act 1985 (the "Act"), to exercise all the powers of the Company
to allot relevant securities (within the meaning of section 80 of the Act)
up to an aggregate nominal amount of L1,400,000 and US$350,000 for a period
expiring (unless previously renewed, varied or revoked by the Company in
general meeting) five (5) years after the date on which this resolution is
passed, save that the Company may before such expiry make an offer or
agreement which would or might require relevant securities to be allotted
after expiry of this authority, and the Board may allot relevant securities
in pursuance of such an offer or agreement as if the authority conferred
hereby had not expired.
SPECIAL RESOLUTION
(4) THAT, subject to the passing of the resolutions numbered (1), (2) and (3)
in the notice of extraordinary general meeting, the Board be and is hereby
generally empowered, in addition to all subsisting powers, pursuant to
section 95 of the Act to allot equity securities (within the meaning of
section 94(2) of the Act) for cash, pursuant to the general authority
conferred by the resolution
<PAGE> 4
numbered (3) above as if section 89(1) of the Act did not apply to the
allotment, provided that this power:
(a) shall expire when the authority conferred by resolution numbered (3)
above expires, save that the Company may before expiry of this power
make an offer or agreement which would or might require equity
securities to be allotted after expiry of this power, and the Board may
allot equity securities in pursuance of such an offer or agreement as if
the power conferred hereby had not expired; and
(b) shall be limited to:
(i) the allotment of Participating Shares up to an aggregate nominal
value of US$350,000; and
(ii) the allotment of equity securities of the Company to effect
conversion of the Participating Shares up to an aggregate nominal
value of L1,400,000.
Your Board of Directors and management look forward to meeting with you at
the meeting.
Sincerely,
DAVID W. KENDALL
Chairman
<PAGE> 5
PRELIMINARY COPY -- SUBJECT TO COMPLETION
(DANKA LOGO)
DANKA BUSINESS SYSTEMS PLC
MASTERS HOUSE
107 HAMMERSMITH ROAD
LONDON W14 0QH
PROXY STATEMENT
EXTRAORDINARY GENERAL MEETING
November , 1999
This proxy statement is furnished to you by the Board of Directors of Danka
Business Systems PLC in connection with the solicitation by your Board of
Directors of specific voting instructions from United States holders of American
Depositary Shares (ADSs) and proxies from United States holders of ordinary
shares for voting at Danka's Extraordinary General Meeting. The meeting will be
held at a.m., London time, on December , 1999 at .
For purposes of this proxy statement and related materials, the term
"shareholders" will mean, collectively, holders of ordinary shares and holders
of ADSs. At the meeting, shareholders will be asked to approve two special
resolutions and two ordinary resolutions which will be proposed to adopt new
articles of association to, among other things, increase Danka's authorized
share capital and create a new class of participating shares. In addition, the
resolutions provide that the preemptive rights that would otherwise apply upon
the allotment of the participating shares will be eliminated.
IF YOU HOLD ORDINARY SHARES, PLEASE COMPLETE, DATE, SIGN AND RETURN THE
PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING.
IF YOU HOLD ADSS, PLEASE COMPLETE, DATE, SIGN AND RETURN THE INSTRUCTIONS
TO THE DEPOSITARY IN THE ENCLOSED POSTAGE-PAID ENVELOPE, WHETHER OR NOT YOU PLAN
TO ATTEND THE MEETING.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE
PROPOSED RESOLUTIONS. THE APPROXIMATE DATE ON WHICH THIS PROXY STATEMENT AND
RELATED MATERIALS HAVE BEEN FIRST MAILED TO YOU IS NOVEMBER , 1999. IT IS
IMPORTANT THAT YOU PROMPTLY RETURN YOUR PROXY OR VOTING INSTRUCTIONS, AS THE
CASE MAY BE.
<PAGE> 6
TABLE OF CONTENTS
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THE COMPANY................................................. ii
WHERE YOU CAN FIND MORE INFORMATION......................... ii
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS........... iii
SUMMARY..................................................... 1
General Comments.......................................... 1
The Extraordinary General Meeting......................... 1
Voting and Record Dates................................... 1
Quorum.................................................... 2
Vote Required............................................. 2
Purpose of the Extraordinary General Meeting.............. 2
Sale of Participating Shares.............................. 2
Background and Reasons for Sale of Participating Shares... 3
Recommendation of Danka's Board of Directors.............. 3
THE EXTRAORDINARY GENERAL MEETING........................... 4
Time, Place and Purpose of the Extraordinary General
Meeting................................................ 4
Voting Instructions -- Holders of Ordinary Shares......... 4
Voting Instructions -- Holders of American Depositary
Shares................................................. 4
Quorum.................................................... 4
Vote Required............................................. 4
No Dissenters' Rights..................................... 5
Solicitation of Proxies and Voting Instructions........... 5
Recommendation of Danka's Board of Directors.............. 5
PROPOSALS TO APPROVE SPECIAL RESOLUTION NO. 1 AND ORDINARY
RESOLUTION NOS. 1 AND 2................................... 6
Background and Reasons for Adopting New Articles of
Association............................................ 6
Purchasers of the Participating Shares.................... 7
Use of Proceeds........................................... 7
Capitalization............................................ 8
Adoption of New Articles of Association................... 8
Description of Participating Shares....................... 9
Effect of Issuance of Participating Shares on Holders of
Ordinary Shares........................................ 15
Subscription Agreement.................................... 16
Registration Rights Agreement............................. 20
Interests of Certain Persons in the Resolutions........... 21
Regulatory Approval....................................... 21
Nasdaq Listing Obligations................................ 21
Resolutions Numbered (1), (2) and (3)..................... 22
Recommendation of Danka's Board of Directors.............. 22
PROPOSAL TO APPROVE RESOLUTION NUMBERED (4)................. 23
Disapplication of Preemptive Rights....................... 23
Resolution Numbered (4)................................... 24
Recommendation of Danka's Board of Directors.............. 24
SECURITY OWNERSHIP OF MANAGEMENT AND OTHERS................. 25
INDEPENDENT AUDITORS........................................ 26
SHAREHOLDERS' PROPOSALS FOR 2000 ANNUAL GENERAL MEETING..... 26
OTHER BUSINESS.............................................. 26
EXHIBIT A -- NEW ARTICLES OF ASSOCIATION.................... A-1
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i
<PAGE> 7
THE COMPANY
Danka is one of the world's largest independent suppliers of office imaging
equipment and related services, parts and supplies. With operations throughout
30 countries, Danka provides a complete range of products and services, from
small copiers to high-volume equipment, fax machines, state-of-the-art digital
and color copiers, facilities management and other related document management
services. Danka's operations are segmented into three divisions: Danka Americas,
Danka International and Danka Services International.
Danka is a corporation organized under the laws of England and Wales.
Danka's principal operating subsidiaries are located in North America, Europe,
Australia and Latin America. The registered office of Danka is located at
Masters House, 107 Hammersmith Road, London W14 0QH England, and its telephone
number is 011-44- 171-603-1515. Danka's operational and executive headquarters
are located at 11201 Danka Circle North, St. Petersburg, Florida 33716, and its
telephone number is 727-576-6003.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the SEC. You
may inspect and copy such reports, proxy statements and other information at the
public reference facilities maintained by the SEC at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549 and at the following Regional
Offices of the SEC: Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; and 7 World Trade Center, Suite 1300, New York, New
York 10048. Copies may be obtained by mail at prescribed rates from the Public
Reference Section of the SEC at its principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such materials also may be accessed electronically by
means of the SEC's web site at http://www.sec.gov. Please call the SEC at
1-800-SEC-0330 for further information.
The SEC allows us to "incorporate by reference" information into this proxy
statement, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is deemed to be part of this proxy statement, except
for any information superseded by information in this proxy statement. This
proxy statement incorporates by reference the documents set forth below that
have been previously filed with the SEC. These documents contain important
information about our business and finances.
The following documents are incorporated by reference herein:
1. Danka's annual report on Form 10-K for the year ended March 31,
1999;
2. Danka's amendment to its annual report on Form 10-K dated July 28,
1999;
3. Danka's quarterly reports on Form 10-Q for the quarters ended June
30 and September 30, 1999; and
4. Danka's current reports on Form 8-K dated May 25, June 30, July 15,
August 3 and November 2, 1999.
This proxy statement also incorporates by reference additional documents
that we may file with the SEC between the date of this proxy statement and the
date the transactions contemplated by the Subscription Agreement are completed.
YOU MAY OBTAIN COPIES OF SUCH DOCUMENTS WHICH ARE INCORPORATED BY REFERENCE
IN THIS PROXY STATEMENT (OTHER THAN EXHIBITS THERETO WHICH ARE NOT SPECIFICALLY
INCORPORATED BY REFERENCE HEREIN), WITHOUT CHARGE, UPON WRITTEN OR ORAL REQUEST
TO DANKA, 11201 DANKA CIRCLE NORTH, ST. PETERSBURG, FLORIDA 33716, TELEPHONE
NUMBER (727) 579-2880.
ii
<PAGE> 8
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this proxy statement under the caption
"PROPOSAL TO APPROVE RESOLUTIONS NUMBERED (1), (2) AND (3) -- Background and
Reasons for Adopting New the Articles of Association," and elsewhere, or
incorporated into the proxy statement by reference, such as statements
concerning the reasons for and the effect of the Subscription Agreement, future
intentions and prospects arising from the Subscription Agreement, and other
statements contained herein regarding matters that are not historical facts are
"forward-looking statements" (as such term is defined in the Private Securities
Litigation Reform Act of 1995). Because such statements involve risks and
uncertainties, actual results may differ materially from those expressed or
implied by such forward-looking statements. These risks and uncertainties
include, among others, the following:
1. failure to close the contemplated $200 million investment by the
investors in Danka's participating shares;
2. failure to obtain necessary consents, approvals or agreements with
certain third parties;
3. failure to obtain shareholder and regulatory approval;
4. material adverse change in financial markets or Danka;
5. failure to meet any of the conditions of closing of the
transactions contemplated by the Subscription Agreement;
6. failure of the average closing price of the ADSs for the 10-day
period ending 3 business days before the scheduled closing date to equal or
exceed $9.00 per ADS;
7. failure to obtain a reasonably satisfactory financing commitment
from a major financial institution;
8. failure to refinance Danka's bank indebtedness on satisfactory
terms prior to the July 31, 2000 expiration of waivers with respect to such
financing;
9. general economic and business conditions; and
10. other risks including those risks identified in any of Danka's
other filings with the SEC.
You are cautioned not to place undue reliance on these forward-looking
statements, which reflect management's analysis only as of the date of this
proxy statement. Danka will not update these forward-looking statements to
reflect events or circumstances that arise after the date such statements are
made.
iii
<PAGE> 9
SUMMARY
GENERAL COMMENTS
The following is a summary of certain pertinent information from this proxy
statement. This summary is not intended to be a complete description. This
summary is qualified in its entirety by reference to the more detailed
information contained in this proxy statement, incorporated by reference into
this proxy statement, or in the exhibit attached to this proxy statement. Unless
the context requires otherwise:
- references to "Danka" or the "Company" include Danka Business Systems PLC
together with all of its direct and indirect subsidiaries;
- references to "$" or "Dollars" are to United States currency; and
- references to "L," "pounds," "p" or "pence" are to United Kingdom
currency.
On , 1999 the $ to L exchange rate based on the noon buying rate
in New York City for cable transfers as certified for customs purposes by the
Federal Reserve Bank of New York was $ per L1.00. You are urged to give
careful consideration to all of the information contained in this proxy
statement and its exhibit, as well as information incorporated by reference
before voting or providing a proxy or voting instructions.
THE EXTRAORDINARY GENERAL MEETING
- Date and Time. The Extraordinary General Meeting will be held on
December , 1999 at a.m., London time, at .
- Purpose. At the meeting, you will consider and vote upon two special
resolutions and two ordinary resolutions. These resolutions will adopt
new articles of association of Danka to, among other things, increase
Danka's authorized share capital and create a new class of participating
shares. In addition, the resolutions provide that the preemptive rights
that would otherwise apply upon the allotment of the participating shares
will be eliminated.
- Outstanding Capital Stock. As of October 29, 1999, there were
233,026,993 ordinary shares of 1.25 pence each issued and fully paid, of
which approximately 80.4% were held in the form of ADSs represented by
American Depositary Receipts (ADRs). Each ADS currently represents four
ordinary shares.
- Voting. If you hold ordinary shares, you are entitled to one vote per
each share that you hold. If you hold ADSs, the Depositary will vote the
ADSs pursuant to instructions received from you. See "THE EXTRAORDINARY
GENERAL MEETING."
VOTING AND RECORD DATES
In accordance with Regulation 34 of the United Kingdom Uncertificated
Securities Regulations 1995, only those shareholders entered on the register of
shareholders of Danka as at a.m., London time, on December , 1999 shall
be entitled to attend or vote at the meeting in respect of the number of shares
registered in their name at that time. Changes to entries on the register of
members after a.m., London time, on December , 1999 shall be
disregarded in determining the rights of any person to attend or vote at the
meeting.
The close of business on December , 1999 has been fixed as the record
date for the determination of the holders of ADSs entitled to provide voting
instructions to the Depositary. If you hold ADSs, you cannot vote the ordinary
shares represented by your ADSs at the meeting or grant proxies to vote your
shares other than through instructions to the Depositary. Ordinary shares
represented by ADSs will be voted at the meeting by the Depositary pursuant to
instructions received from holders of ADSs.
<PAGE> 10
QUORUM
Three holders of record of ordinary shares present in person or represented
by proxy at the meeting or two holders holding or representing by proxy at least
one-third in nominal value of the ordinary shares will constitute a quorum.
VOTE REQUIRED
All of the resolutions must be passed for any of them to be effective. The
resolutions to adopt new articles of association and to eliminate the statutory
preemptive rights set out in section 89(1) of the Companies Act 1985 will be
proposed as special resolutions. The special resolutions must receive the
affirmative vote of at least 75% of the votes cast at the meeting in order for
them to be passed. The remaining two resolutions will be proposed as ordinary
resolutions. The ordinary resolutions must receive the affirmative vote of at
least a majority of the votes cast at the meeting in order for them to be
passed.
PURPOSE OF THE EXTRAORDINARY GENERAL MEETING
The meeting is convened to consider and vote on the two special resolutions
and two ordinary resolutions to adopt new articles of association of Danka to,
among other things, increase Danka's authorized share capital and create a new
class of participating shares. In addition, the resolutions provide that the
preemptive rights that would otherwise apply upon the allotment of the
participating shares will be eliminated.
SALE OF PARTICIPATING SHARES
Your Board of Directors announced on November 3, 1999 that Danka had
entered into a Subscription Agreement with Cypress Merchant Banking Partners II,
L.P., Cypress Merchant Banking II C.V. and 55th Street Partners II L.P. for the
issuance to those investors of a new class of senior convertible participating
shares of Danka. The new participating shares will carry voting rights and will
be convertible into ordinary shares of Danka. In addition, the participating
shares will have a preference as to dividends which equal the greater of (a) an
amount per annum equal to 6.50% of the liquidation preference payable on that
participating share and (b) the deemed per annum rate of dividends, if any,
declared on Danka's ordinary shares in that quarter. The participating shares
also have a preference upon liquidation over the ordinary shares of Danka equal
to the $1,000 per share initial issue price plus accumulated and unpaid
dividends. Under the terms of the Subscription Agreement, the investors will pay
$200 million to purchase 200,000 participating shares, at a price of $1,000 per
share. The net proceeds to Danka from the sale of the participating shares are
estimated to be approximately $190 million after deducting estimated transaction
commissions, fees and expenses of $10 million. Under the terms of the
Subscription Agreement, we will expand the Board of Directors from nine to
eleven members. Upon the closing of the transactions contemplated by the
Subscription Agreement, the investors will have the right to appoint two
representatives to fill the vacancies created by the expansion of the Board of
Directors. The investor funds are managed by affiliates of The Cypress Group
LLC.
The closing of the sale of the participating shares pursuant to the
Subscription Agreement is conditioned upon, among other things, obtaining
shareholder approval of the resolutions at the Extraordinary General Meeting for
the following purposes:
- to adopt the new articles of association;
- to increase the authorized share capital of Danka by $500,000 by the
creation of 500,000 participating shares of $1.00 each;
- to authorize the Board of Directors pursuant to section 80 of the
Companies Act 1985 to allot relevant securities up to an aggregate
nominal amount of L1,400,000 and $350,000 for a period expiring five
years after the date of the resolution;
- to disapply the statutory pre-emption rights set out in section 89(1) of
the Companies Act 1985 in relation to the allotment of equity securities
for a period expiring five years after the date of the resolution (i) to
enable the sale of the participating shares and the further possible
issue of
2
<PAGE> 11
participating shares described below to proceed and to enable the issue
of further participating shares as dividends and (ii) if required, to
enable conversion of the participating shares into ordinary shares.
BACKGROUND AND REASONS FOR SALE OF PARTICIPATING SHARES
Your Board of Directors has authorized the execution and delivery of the
Subscription Agreement in the belief that the sale of participating shares on
the terms of that agreement is advisable to, fair to and in the best interests
of Danka and you. Danka is required to make a payment of $4.7 million to its
bank lenders to the extent there is any indebtedness outstanding under its
principal bank credit agreement at December 31, 1999. The Board of Directors,
therefore, desires to refinance the bank indebtedness before that date, if
possible.
The sale of the participating shares to the investors will increase Danka's
equity base, which should assist Danka in refinancing its existing bank
indebtedness. The Board of Directors chose the sale of the participating shares
as the preferred means of raising equity financing because the Board of
Directors believes that the sale can be completed quickly. In addition,
financial advisors to Danka have advised that there is a significant risk that
an attempt to complete an underwritten public equity financing prior to December
31, 1999 would be unsuccessful due to the expectation that concerns about Y2K
problems will result in greatly constrained public market activity at the end of
the current year. The investors moved quickly to conclude the Subscription
Agreement and have agreed to close the sale promptly. The investors are prepared
to invest the entire $200 million that the Company's financial advisors have
advised was needed to obtain refinancing of the bank indebtedness on favorable
terms.
RECOMMENDATION OF DANKA'S BOARD OF DIRECTORS
YOUR BOARD OF DIRECTORS BELIEVES THAT THE SALE OF PARTICIPATING SHARES TO
THE INVESTORS, THE POSSIBLE SALE OF ADDITIONAL PARTICIPATING SHARES TO A SMALL
NUMBER OF UNITED KINGDOM INSTITUTIONAL INVESTORS (AS DISCUSSED IN THIS PROXY
STATEMENT), AND THE OTHER PROPOSALS DESCRIBED IN THE ATTACHED PROXY STATEMENT
ARE IN THE BEST INTERESTS OF DANKA AND THE SHAREHOLDERS AS A WHOLE. ACCORDINGLY,
YOUR BOARD OF DIRECTORS RECOMMENDS THAT IF YOU HOLD ORDINARY SHARES, YOU VOTE
"FOR" APPROVAL AND ADOPTION OF THE RESOLUTIONS. YOUR BOARD OF DIRECTORS ALSO
RECOMMENDS THAT IF YOU HOLD ADSS, YOU INSTRUCT THE DEPOSITARY TO VOTE "FOR"
APPROVAL AND ADOPTION OF THE RESOLUTIONS.
3
<PAGE> 12
THE EXTRAORDINARY GENERAL MEETING
TIME, PLACE AND PURPOSE OF THE EXTRAORDINARY GENERAL MEETING
The Extraordinary General Meeting is scheduled to be held at
a.m., London time, on December , 1999 at . At
the meeting, you will consider and vote upon the proposals to adopt new articles
of association of Danka to, among other things, increase the authorized capital
stock and create a new class of participating shares. In addition, the
resolutions provide that the preemptive rights that would otherwise apply upon
the allotment of the participating shares will be eliminated.
VOTING INSTRUCTIONS -- HOLDERS OF ORDINARY SHARES
If you hold ordinary shares, you are entitled to attend and vote at the
meeting or you may appoint a proxy to attend and vote at the meeting in your
place. The person you select to be your proxy does not have to be a shareholder
of Danka. Voting will be by a poll. Every holder of ordinary shares who is
entitled to vote and who is present in person or by proxy will have one vote for
every ordinary share owned.
A form of proxy is enclosed which, to be effective, must be deposited with
Danka's registrars, The Computershare Services PLC, P.O. Box 82, Caxton House,
Redcliffe Way, Bristol BS99 7YA England, not later than a.m.
on , 1999.
If you deliver a proxy pursuant to this solicitation you may revoke your
proxy, at any time before it is exercised, by delivering a written revocation to
Danka at least 48 hours before the meeting, by submitting a later-dated proxy,
or by attending the meeting in person and casting a ballot. There is no specific
form required to revoke a proxy. If proxies are signed and returned without a
vote indicated, it is anticipated that the proxy will vote the ordinary shares
represented by such proxies in favor of the resolutions. Ordinary shares that
are not voted by the holders of ordinary shares or brokers entitled to vote
them, either by casting a ballot in person, by returning a signed proxy or
through abstention, will not be considered in the final tabulation.
VOTING INSTRUCTIONS -- HOLDERS OF AMERICAN DEPOSITARY SHARES
If you hold ADSs, you should complete and return the voting instructions
provided to you by the Depositary, in accordance with the terms provided
therein, not later than a.m. on , 1999. The voting
instructions, to be effective, must be sent to the Depositary, The Bank of New
York, ADR Division, 101 Barclay Street, New York, NY 10286.
The close of business on December , 1999 has been fixed as the record
date for the determination of the holders of ADSs entitled to provide voting
instructions to the Depositary. If you hold ADSs, you cannot vote the ordinary
shares represented by your ADSs at the meeting or grant proxies to vote your
shares other than through instructions to the Depositary. Ordinary shares
represented by ADSs will be voted at the meeting by the Depositary pursuant to
instructions received from holders of ADSs. Ordinary shares represented by ADSs
as to which the Depositary does not receive timely voting instructions will not
be considered in the final tabulation.
QUORUM
Three holders of record of ordinary shares present in person or represented
by proxy at the meeting or two holders holding or representing by proxy at least
one-third in nominal value of the ordinary shares will constitute a quorum.
VOTE REQUIRED
All of the resolutions must be passed for any of them to be effective. The
resolutions to adopt new articles of association and to eliminate the statutory
preemptive rights set out in section 89(1) of the Companies Act 1985 will be
proposed as special resolutions. The special resolutions must receive the
affirmative vote of at least 75% of the votes cast at the meeting in order for
them to be passed. The remaining two resolutions will be
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<PAGE> 13
proposed as ordinary resolutions. The ordinary resolutions must receive the
affirmative vote of at least a majority of the votes cast at the meeting in
order for them to be passed.
NO DISSENTERS' RIGHTS
You do not have any rights of appraisal or similar rights of dissenters,
whether you vote for or against the resolutions.
SOLICITATION OF PROXIES AND VOTING INSTRUCTIONS
The accompanying proxy and the accompanying voting instructions to the
Depositary are solicited by and on behalf of the Board of Directors of Danka for
use at the Extraordinary General Meeting. The cost of soliciting proxies and
voting instructions will be borne by Danka. In addition to the use of the mails,
proxies and voting instructions may be solicited personally or by telephone by
officers of Danka. Danka will reimburse brokers, the Depositary and other
persons holding stock in their names, or in the names of nominees, for their
expenses in sending proxy materials and/or voting instructions to their
principals and obtaining their proxies and/or voting instructions. In addition,
Danka has retained for solicitation and advisory services in
connection with the solicitation. will receive a fee of
$ plus reimbursement of reasonable out-of-pocket expenses.
RECOMMENDATION OF DANKA'S BOARD OF DIRECTORS
YOUR BOARD OF DIRECTORS BELIEVES THAT THE SALE OF PARTICIPATING SHARES TO
THE INVESTORS, THE POSSIBLE SALE OF ADDITIONAL PARTICIPATING SHARES TO A SMALL
NUMBER OF UNITED KINGDOM INSTITUTIONAL INVESTORS (AS DISCUSSED IN THIS PROXY
STATEMENT), AND THE OTHER PROPOSALS DESCRIBED IN THE ATTACHED PROXY STATEMENT
ARE IN THE BEST INTERESTS OF DANKA AND THE SHAREHOLDERS AS A WHOLE. ACCORDINGLY,
YOUR BOARD OF DIRECTORS RECOMMENDS THAT IF YOU HOLD ORDINARY SHARES, YOU VOTE
"FOR" APPROVAL AND ADOPTION OF THE RESOLUTIONS. YOUR BOARD OF DIRECTORS ALSO
RECOMMENDS THAT IF YOU HOLD ADSS, YOU INSTRUCT THE DEPOSITARY TO VOTE "FOR"
APPROVAL AND ADOPTION OF THE RESOLUTIONS.
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<PAGE> 14
PROPOSALS TO APPROVE SPECIAL RESOLUTION NO. 1 AND
ORDINARY RESOLUTION NOS. 1 AND 2
BACKGROUND AND REASONS FOR ADOPTING NEW ARTICLES OF ASSOCIATION
The following "Background and Reasons for Adopting New Articles of
Association" section should be read in conjunction with "SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS."
For more than a year, the Board of Directors has been working to improve
the financial position of Danka and its subsidiaries. In particular, the Board
of Directors has been focusing on methods to improve the terms of Danka's
financing arrangements. It has been necessary for Danka to obtain a series of
waivers from its bank lenders of certain terms and covenants contained in its
financing arrangements and the current waiver expires on July 31, 2000. Under
the terms of this waiver, Danka is required to make payments of $4.7 million and
$9.3 million, respectively, to its bank lenders to the extent there is any
indebtedness outstanding under its bank credit agreement at December 31, 1999
and March 31, 2000, respectively. Therefore, Danka desires to refinance its bank
indebtedness before December 31, if possible.
The sale of the participating shares to the investors will increase Danka's
equity base, which should assist Danka in refinancing its existing bank
indebtedness. The Board of Directors chose the sale of the participating shares
as the preferred means of raising equity financing because the Board of
Directors believes that such sale can be completed quickly. In addition,
financial advisors to Danka have advised that there is a significant risk that
an attempt to complete an underwritten public equity financing prior to December
31, 1999 would be unsuccessful due to the expectation that concerns about Y2K
problems will result in greatly constrained public market activity at the end of
the current year. The investors who entered into the Subscription Agreement have
agreed to close the sale promptly. The investors are prepared to invest the
entire $200 million that Danka's financial advisors have advised was needed to
obtain refinancing of the bank indebtedness on favorable terms.
The Board of Directors announced on November 3, 1999 that Danka had entered
into an agreement with the investors for the issuance to the investors of a new
class of senior convertible participating shares of Danka which carry voting
rights, are convertible into ordinary shares of Danka and have a preference as
to dividends and upon liquidation to the ordinary shares of Danka. Under the
terms of the Subscription Agreement, the investors will pay $200 million to
purchase 200,000 participating shares, at a price of $1,000 per share. The net
proceeds to Danka from the sale of the participating shares to the investors are
estimated to be approximately $190 million after deducting estimated transaction
commissions, fees and expenses of $10 million.
The closing of the sale of participating shares pursuant to the
Subscription Agreement is conditioned upon, among other things, obtaining
approval by shareholders of the resolutions at the meeting for the following
purposes:
- to adopt the new articles of association;
- to increase the authorized share capital of Danka by $500,000 by the
creation of 500,000 participating shares of $1.00 each;
- to authorize the Board of Directors pursuant to section 80 of the
Companies Act 1985 to allot relevant securities up to an aggregate
nominal amount of L1,400,000 and $350,000 for a period expiring five
years after the date of the resolution;
- to disapply the statutory pre-emption rights set out in section 89(1) of
the Companies Act 1985 in relation to the allotment of equity securities
for a period expiring five years after the date of the resolution (i) to
enable the sale of the participating shares to the investors, and the
possible sale of additional participating shares to United Kingdom
institutional investors, as described elsewhere herein, proceed and to
enable the issue of further participating shares as dividends and (ii) if
required, to enable conversion of the participating shares into ordinary
shares.
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<PAGE> 15
PURCHASERS OF THE PARTICIPATING SHARES
The Cypress Group LLC is a New York based private equity firm. Cypress
Merchant Banking Partners II L.P., a Delaware limited partnership, Cypress
Merchant Banking II C.V., a limited partnership organized and existing under the
laws of The Netherlands, and 55th Street Partners II L.P., a Delaware limited
partnership, are equity investment funds managed by affiliates of The Cypress
Group LLC. These investors will be the purchasers of the participating shares.
The Cypress Group LLC, together with its affiliates, currently manages more
than $3.5 billion of equity capital on behalf of major public and private
pension funds, university endowments, trusts and other leading financial
institutions. The Cypress Group LLC seeks to invest alongside experienced
executives in growth businesses to achieve long term capital appreciation. The
Cypress Group LLC professionals have employed this strategy in numerous other
investments such as Infinity Broadcasting Corporation, Lear Corporation, R.P.
Scherer Corporation, Cinemark USA, Inc., Williams Scotsman, Inc., Frank's
Nursery & Crafts, Inc. and WESCO International, Inc. The foregoing information
concerning The Cypress Group LLC and its affiliates, was supplied to Danka by
The Cypress Group LLC.
The Company has discussed the sale of the participating shares with four
institutional holders of its ordinary shares in the United Kingdom. Certain of
those institutional shareholders may be willing to subscribe for participating
shares on substantially the same terms as the investors. Danka and the investors
have agreed that up to 40,000 participating shares may be issued to the United
Kingdom institutional investors on those terms for $1,000 per participating
share in which case a total of $240 million of participating shares would
initially be issued, before payment of any in-kind dividends. However,
discussions remain at a preliminary stage and any additional issuance of
participating shares would be subject to agreement on definitive documentation
between Danka and the institutional holders that would invest in participating
shares, and the consent of the investors. The Board of Directors proposes to
obtain authority to allot the additional 40,000 of participating shares on a
non-preemptive basis pursuant to the resolutions so that Danka is in a position
to allot those shares if agreement is reached.
USE OF PROCEEDS
The net proceeds to Danka from the sale of the initial 200,000
participating shares are estimated to be approximately $190 million after
deducting estimated transaction commissions, fees and expenses of $10 million,
consisting of $4 million payable to Lehman Brothers Inc., Danka's financial
advisor, $4 million in commissions payable to the investors and $2 million of
other expenses, including professional fees.
Danka and its bank lenders currently are negotiating an amendment to
Danka's principal bank credit agreement pursuant to which it is anticipated that
Danka will be required to use a minimum of $163.2 million of the net proceeds of
the sale of the participating shares to repay indebtedness outstanding under
that credit agreement. It is anticipated that the amendment will eliminate the
obligation of Danka to use its best efforts to sell its Danka Services
International division and that the $10 million that would have been due upon
completion of such sale will become due upon completion of the sale of the
participating shares. A portion of the net proceeds may be used to pay
obligations other than long-term indebtedness. It is anticipated that the
balance of net proceeds will also be used to repay indebtedness outstanding
under Danka's principal credit agreement.
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<PAGE> 16
CAPITALIZATION
The following table sets forth the debt and capitalization (i) of Danka as
of September 30, 1999, (ii) on an as adjusted basis as of that date giving
effect to the sale of the initial 200,000 participating shares assuming $163.2
million of the net proceeds are used to repay indebtedness outstanding under
Danka's principal credit agreement.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
-----------------------------------------
ACTUAL ADJUSTMENTS(1) AS ADJUSTED
---------- -------------- -----------
IN THOUSANDS, EXCEPT SHARE AMOUNTS
<S> <C> <C> <C>
Long-term debt:
6.75% convertible subordinated notes due 2002.......... $ 200,000 $ -- $ 200,000
Long-term debt and notes payable, less current
maturities.......................................... 779,937 (163,200) 616,737
---------- --------- ----------
Total long-term debt........................... $ 979,937 $(163,200) $ 816,737
---------- --------- ----------
6.50% senior convertible participating
shares -- redeemable,
$1.00 stated value:
500,000 authorized; 200,000 issued and outstanding..... $ -- $ 190,000 $ 190,000
Shareholders' equity:
Ordinary shares, 1.25 pence stated value:
500,000,000 authorized; 228,067,865 issued and
outstanding(2)...................................... $ 4,758 $ -- $ 4,758
Additional paid-in capital............................. 304,436 -- 304,436
Retained earnings (deficit)............................ (53,813) -- (53,813)
Other.................................................. (66,993) -- (66,993)
---------- --------- ----------
Total shareholders' equity..................... 188,388 -- 188,388
---------- --------- ----------
Total capitalization........................... $1,168,325 $ 26,800 $1,195,125
========== ========= ==========
</TABLE>
- ---------------
(1) A portion of the net proceeds in excess of $163.2 million may be used to pay
obligations other than long-term indebtedness. It is anticipated that the
balance of the net proceeds will be used to repay indebtedness outstanding
under Danka's principal credit agreement.
(2) Excludes ordinary shares issued after September 30, 1999 pursuant to Danka's
401(k) plan representing the employer stock match.
ADOPTION OF NEW ARTICLES OF ASSOCIATION
Danka's articles of association were last revised in 1991. The articles of
association must be amended to increase the authorized share capital of Danka
and to reflect the terms of the new participating shares. In addition, Danka
will update the articles of association so that they comply with the
requirements of the London Stock Exchange's Listing Rules and current best
practice as set out in the United Kingdom Combined Code on corporate governance.
The full text of the new articles of association, which have been revised to
reflect the matters considered in this proxy statement, is attached hereto as
Exhibit A.
The principal changes in the new articles of association to Danka's
existing articles of association are as follows:
- the inclusion of the terms of the participating shares and the removal of
inconsistencies in Danka's existing articles of association with those
terms, see "PROPOSALS TO APPROVE SPECIAL RESOLUTIONS NUMBERED (1), (2)
AND (3) -- Description of the Participating Shares";
- an amendment to the existing article 9(B)(iv)(d) to provide that the
"Section 89 prescribed period" can continue for up to 5 years in place of
15 months as currently provided. This amendment allows Danka to disapply
the statutory preemptive rights that would otherwise apply on new issues
of shares for cash for periods of up to five years at a time;
- an amendment to the existing article 14 to remove the ability of the
Board of Directors to demand security for an indemnity for a lost share
certificate;
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<PAGE> 17
- the amendment of the existing article 39, which sets out the
circumstances in which the Board of Directors may refuse to register a
transfer of shares of Danka, (a) to allow the directors to refuse to
register the transfer of a share on which Danka has a lien and (b) to
prevent the Board of Directors from refusing to register a transfer of
any shares admitted to the Official List of the London Stock Exchange if
that refusal would prevent dealings in the shares from taking place on an
open and proper basis;
- the amendment of the existing article 76(A) to provide that the power of
Danka to impose sanctions on a shareholder for reason of non-compliance
with a notice served by Danka pursuant to section 212 of the United
Kingdom Companies Act 1985 is subject to the requirements of the London
Stock Exchange and that a shareholder who is in default in respect of
such a notice may not be present at any meetings of the shareholders, or
any class of shareholders, of Danka;
- an amendment to the existing article 76(D) to clarify that sanctions
imposed on a shareholder by reason of non-compliance with a notice served
by Danka pursuant to section 212 of the United Kingdom Companies Act 1985
will cease to apply seven days following compliance with the notice or a
transfer satisfactory to Danka of the shares in question;
- to clarify that the requirements of the existing article 110, which
relate to the notice requirements to propose a person who is not
recommended by the Board of Directors as a director of Danka, apply on
the re-election (as well as the election) of that person;
- the existing article 134(B) provides that, if on two consecutive
occasions, cheque warrants or orders in payment of dividends or other
monies payable in respect of any share have been sent through the post in
accordance with the articles to a shareholder but are returned
undelivered or left uncashed during the periods for which they are valid,
Danka need not despatch further payments to the person entitled to the
payment until that person has provided another address for payment.
Article 134(B) will be amended to provide that Danka need not despatch a
payment to the person entitled to that payment following one occasion on
which a payment sent to that person is returned, provided that reasonable
enquires to establish an alternative address or account for that person
have failed;
- the amendment of the existing article 155(A) to provide that, in the
event of the suspension or curtailment of postal services in the United
Kingdom, a notice convening a general meeting which is advertised in
newspapers must be inserted in two daily newspapers with national
circulation, rather than two daily newspapers with appropriate
circulation, as currently provided;
- the amendment of the existing article 155(A) to provide that notices to
untraced shareholders must be inserted in a leading national daily
newspaper, and not a leading London daily newspaper, as currently
provided; and
- certain other consequential amendments to update references to statutes
appearing in the articles of association.
This summary of the new articles of association is qualified in its
entirety by reference to the full text of such new articles of association
attached as Exhibit A. YOU ARE URGED TO READ THE NEW ARTICLES OF ASSOCIATION
CAREFULLY AND IN THEIR ENTIRETY.
DESCRIPTION OF PARTICIPATING SHARES
The following is a summary of the terms of the participating shares. The
terms of the participating shares are set out in full in Article 10A of the new
articles of association.
Authorized Participating Shares. If approved, the New Articles of
Association will authorize 500,000 6.50% senior convertible participating
shares, stated value $1.00 per share, and set forth the terms and conditions of
the participating shares as summarized below. The investors have agreed to
purchase 200,000 participating shares at a price of $1,000 per share, or a total
consideration of $200 million. The net proceeds to Danka of the sale of the
participating shares to the investors are estimated to be approximately $190
million after deducting estimated transaction commissions, fees and expenses of
$10 million, consisting of $4 million
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<PAGE> 18
payable to Lehman Brothers Inc., Danka's financial advisor, $4 million payable
to the investors and $2 million of other expenses, including professional fees.
See "PROPOSAL TO APPROVE RESOLUTION NUMBERED (4) -- Use of Proceeds."
Entitlement to Dividends and Other Distributions. The participating shares
will have a preference over ordinary shares as to dividends and other
distributions.
Subject to certain exceptions, Danka may not pay dividends or make any
other distributions on ordinary shares (other than in the form of additional
ordinary shares) unless all accumulated dividends on the participating shares
have been paid in full and Danka is not in default of its obligations to redeem
any participating shares. In addition, Danka may not repurchase any of its
ordinary shares while the participating shares are outstanding and may not pass
any resolution to reduce its issued share capital except to the extent approved
by extraordinary resolution of a separate class meeting of the holders of the
participating shares.
The participating share dividend payable on each participating share will
be payable quarterly on February 15th, May 15th, August 15th and November 15th
(or the next following business day) in each year. The participating share
dividend will be equal to the greater of (a) an amount per annum equal to 6.50%
of the liquidation preference payable on that participating share and (b) the
deemed per annum rate of dividends, if any, declared on Danka's ordinary shares
in that quarter. Until the fifth anniversary of the issue of the initial
participating shares, the participating share dividend shall be paid in the form
of additional participating shares. From the fifth anniversary of the initial
issue of the participating shares, the participating share dividend will be
payable in cash, unless Danka is prohibited by law or under the terms of its
then existing indebtedness under principal bank credit facilities or debt
facilities from paying cash dividends, in which case the participating share
dividend shall be paid in the form of additional participating shares. In the
event that Danka does not have sufficient distributable profits to pay any
participating share dividend which is payable in participating shares, it will
instead (to the extent it has reserves legally available for the purpose) make a
bonus issue of additional participating shares to the holders of the
participating shares in an amount equal to, and in place of, the participating
share dividend. The cumulative effect of the payment in kind of the
participating dividend is discussed further below.
The preferential return of capital on winding up of Danka payable on each
participating share will be equal to the then effective liquidation preference
per share, plus any accumulated and unpaid dividends accumulating from the most
recent dividend date or, if greater, the amount that would have been payable on
each participating share if it had been converted into ordinary shares
immediately prior to such winding up. The liquidation preference per
participating share is the sum of $1,000 plus accumulated and unpaid dividends
added to the liquidation preference in accordance with the new articles of
association. The preferential return may be increased following a "change of
control" event, as described below.
Voting. Each holder of a participating share will be entitled to receive
notice and attend meetings of Danka as if such person were a holder of ordinary
shares and will be entitled to vote on all matters at such meetings on which the
holders of ordinary shares are entitled to vote. On each such vote that is taken
as a poll, each holder of a participating share shall be entitled to exercise so
many votes as attach to the ordinary shares that would be issued on conversion
of the participating share, except that the aggregate voting rights attached to
the participating shares held by The Cypress Group LLC and its affiliates in the
aggregate may never exceed 29.99% of the voting rights exercisable from time to
time in general meetings of Danka's shareholders. The participating shares
purchased by the investors will have voting rights initially corresponding to
approximately 21% of the total voting rights exercisable in general meetings of
Danka's shareholders.
Appointment of Directors. The holders of the participating shares will be
entitled to appoint two non-executive directors to the Board of Directors, as
long as such holders own voting shares (including participating shares) of Danka
that represent at least 10% of the voting rights of Danka. The Board of
Directors will be expanded upon the appointment of those two non-executive
directors from nine to eleven members. In the event that such holders own voting
shares representing less than 10%, but more than 5%, of the voting rights of
Danka, such holders will be entitled to appoint one director to the Board of
Directors. In the event that The Cypress Group LLC or its affiliates transfer
some or all of the participating shares to a person who is unaffiliated with the
investors without the consent of the Board of Directors, and as a result of
10
<PAGE> 19
the transfer, The Cypress Group LLC and its affiliates hold in the aggregate
less than 50.01% of the total number of participating shares, the holders of the
participating shares will be entitled in aggregate to appoint only one director
to the Board of Directors. Each committee of the Board of Directors will include
at least one of the directors appointed by the holders of participating shares,
subject to certain limitations to comply with applicable laws and regulations.
If Danka fails to redeem any participating shares when obligated to do so
or, following the fifth anniversary of the initial date of issuance of the
participating shares, Danka fails to pay a cash dividend on the participating
shares for six consecutive quarters (regardless of whether Danka has paid such
dividends in the form of additional participating shares) the holders of the
participating shares will be entitled to appoint an additional two directors to
the Board of Directors for so long as Danka is in default of its redemption
obligations or until Danka will have paid dividends in full in cash for four
additional consecutive quarters. Accordingly, the Board of Directors would be
expanded from eleven to thirteen members to accommodate these additional
directors.
Redemption. Danka is required to redeem the participating shares after 11
years at the greater of 100% of the liquidation preference and the market value
of the ordinary shares into which the participating shares would then be
convertible, in each case plus accumulated and unpaid dividends from the most
recent dividend payment date. As an alternative to redemption of the
participating shares at the "as converted" ordinary shares market value, Danka
may decide instead to convert the participating shares, instead of redemption in
cash, into the number of ordinary shares into which they are convertible.
Danka may redeem the participating shares, in whole but not in part, at any
time after the fourth anniversary of the initial issue date, at a price equal to
the greater of (a) a percentage of the then effective liquidation return, being
103.25% in the fifth year of issue, 102.167%, in the sixth year of issue,
101.083% in the seventh year of issue and 100% in the eighth year of issue and
beyond, and (b) the then market value of the ordinary shares into which the
participating shares are convertible, in each case plus accumulated and unpaid
dividends from the most recent dividend payment date. In the case of any
redemption for cash at the "as converted" ordinary share market valuation, Danka
may decide instead to convert the participating shares, instead of redemption in
cash, into the number of ordinary shares into which they are convertible.
Tax Gross Up and Redemption at the Option of Danka. Danka is obliged to
make payments on the participating shares without withholding or deduction of
any United Kingdom taxes or other charges. In the event that Danka is obliged by
law to make any such withholding or deduction, subject to certain exceptions, it
must pay such additional amounts as may be necessary to ensure that the amounts
received by holders of the participating shares after such withholding or
deduction equal the amount that would have been received in the absence of such
withholding or deduction. Danka may redeem the participating shares in whole but
not in part before the fourth anniversary of the initial issue if it is obliged
to pay additional amounts on the participating shares in excess of 7.5% of the
amounts that would have been payable in the absence of such withholding or
deduction, at a price equal to the greater of (a) 103.25% of the then effective
liquidation preference and (b) the then market value of the ordinary shares into
which the participating shares are convertible, in each case plus accumulated
and unpaid dividends from the most recent dividend payment date. As an
alternative to redemption of the participating shares at the "as converted"
ordinary share market value, Danka may decide instead to convert the
participating shares, instead of redemption in cash, into the number of ordinary
shares into which they are convertible. Danka is not entitled to redeem the
participating shares before the fourth anniversary of the initial issue date if
the holders of the participating shares elect to forego their right to have
additional amounts paid to them by Danka as a result of any such withholding or
deduction.
Effect of a "Change of Control." The holders of the participating shares
are entitled to demand that Danka redeems all or part of their holdings of
Participating Shares following the occurrence of certain "change of control"
events affecting Danka, at a price equal to the greater of (a) 101% of the then
effective liquidation preference and (b) the then market value of the ordinary
shares into which the participating shares are convertible, in each case plus
accumulated and unpaid dividends accruing from the most recent dividend payment
date. In the event of a change of control event which takes place within three
and a half years from the initial issue date of the participating shares, the
holders of the participating shares are also be entitled to
11
<PAGE> 20
receive any other dividend payments that would otherwise have been payable on
the participating shares up to and including the date which is three and a half
years following the initial issue date had they not been redeemed. As an
alternative to redemption of the participating shares at the "as converted"
ordinary share value, Danka may decide instead to convert the participating
shares, instead of redemption in cash, into the number of ordinary shares into
which they are convertible.
Alternatively, the holders of participating shares may elect to convert all
or part of their participating shares into ordinary shares and, if the change of
control event takes place within three and a half years from the initial issue
date of the participating shares, on conversion, the holders of the
participating shares will also receive a cash payment equal to the amount of any
dividend payments that would otherwise have been payable on the participating
shares up to and including the date which is three and a half years following
the initial issue date.
The following constitute change of control events:
(i) any person or group of persons (other than The Cypress Group or
the investors) becomes the beneficial owner of more than 29.99%
of Danka's voting shares;
(ii) subject to certain exceptions, Danka merges or consolidates with
another entity, petitions the court pursuant to a scheme of
arrangement within the meaning of section 425 of the United
Kingdom Companies Act 1985 or transfers all or substantially all
of its assets to another person, in any such event pursuant to a
transaction in which the issued voting shares of Danka are
changed into or exchanged for cash, securities or other
property, subject to specified exceptions;
(iii) during a period of 24 consecutive months, individuals who at the
beginning of the period constituted the Board of Directors
(together with any new members of the Board of Directors whose
election is approved by a vote of at least 66 2/3% of the Board
of Directors then still in office who were either directors of
the Board of Directors at the beginning of the period or whose
election was so approved) cease to constitute a majority of the
Board of Directors; and
(iv) subject to certain exceptions, Danka is voluntarily or
involuntarily wound up or adopts a plan of liquidation.
In the event that Danka is unable to redeem participating shares on the due
date for redemption following a change of control event, the liquidation
preference of each participating share, and therefore, the amount of the
dividends payable on each participating share and their liquidation preference
will be increased in accordance with the formula set forth in the new articles
of association. The formula increases the liquidation preference per
participating share by an amount (if a positive number only) equal to (i) the
difference between (a) 101% of the effective liquidation preference per share on
the due date for redemption and (b) the aggregate market value of the ordinary
shares into which each participating share is convertible on the date
immediately preceding the first public announcement of the transaction giving
rise to the change of control event, multiplied by (ii) a fraction the numerator
of which is the deficiency in monies lawfully available for redemption of the
participating shares due to be redeemed following the change of control event
and the denominator of which is the total amount of monies necessary to pay the
total redemption price that would be payable on the change of control event if
all of the participating shares then in issue were to be redeemed.
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<PAGE> 21
Conversion. At a conversion price of $3.125 per ordinary share, the
200,000 participating shares to be issued initially to the investors will be
convertible initially into 64,000,000 ordinary shares and the 40,000
participating shares that may be issued initially to United Kingdom
institutional investors will be convertible initially into 12,800,000 ordinary
shares. As payment in kind ("PIK") dividend payments of additional participating
shares will be made until at least the fifth year from the original issue date
of participating shares, the eventual conversion of the participating shares may
result in the issue of significantly more ordinary shares, as illustrated by the
following table:
<TABLE>
<CAPTION>
EQUIVALENT NUMBER CUMULATIVE NUMBER PERCENTAGE OF ORDINARY
OF ORDINARY SHARES OF ORDINARY SHARES SHARES OUTSTANDING ON
ISSUABLE UPON ISSUABLE UPON A FULLY-CONVERTED
PARTICIPATING SHARES CONVERSION CONVERSION BASIS
-------------------- ------------------ ------------------ ----------------------
<S> <C> <C> <C> <C>
Initial Issuance........... 240,000.00 76,800,000.00 76,800,000.00 24.79%
PIK Dividends for Year 1... 15,984.39 5,115,003.56 81,915,003.56 26.01%
PIK Dividends for Year 2... 17,048.97 5,455,671.02 87,370,674.58 27.27%
PIK Dividends for Year 3... 18,184.46 5,819,027.49 93,189,702.06 28.57%
PIK Dividends for Year 4... 19,395.58 6,206,584.08 99,396,286.14 29.90%
PIK Dividends for Year 5... 20,687.35 6,619,952.57 106,016,238.71 31.27%
PIK Dividends for Years
6-11..................... 156,492.54 50,077,613.41 156,093,852.18 40.11%
---------- -------------- -------------- -----
Total............ 487,793.29 156,093,852.18 156,093,852.18 40.11%
========== ============== ============== =====
</TABLE>
- ---------------
NOTES: This table should be read on the basis of the following assumptions and
factors:
(1) 240,000 participating shares are initially issued.
(2) A PIK dividend of participating shares equivalent to 6.50% per annum is paid
on a compounded basis on each outstanding participating share in issue on
each quarterly dividend payment date during the period covered by the table
(including after the fifth anniversary of the initial issue of the
participating shares, following which Danka may no longer be obliged to pay
PIK dividends).
(3) Danka is obligated pay the participating share dividend in cash after the
fifth anniversary of the initial issuance of the participating shares,
unless Danka is prohibited by law or its then existing indebtedness under
the principal bank credit facilities or debt facilities from paying cash
dividends.
(4) No participating shares are redeemed or converted during the period covered
by the table.
(5) The participating shares are convertible into ordinary shares at a
conversion rate of $3.125 per ordinary share.
(6) The table includes references to fractions of participating shares and
ordinary shares. Fractions of shares will not be issued and cash payments
will be made in their place, meaning that the number of shares that will
actually be issued will be slightly fewer than shown in the table.
(7) The column entitled "Percentage of Ordinary Shares Outstanding on a
Fully-Converted Basis" is the approximate percentage of all ordinary shares
outstanding constituted by the ordinary shares issued on conversion of
participating shares in full, assuming that, other than the ordinary shares
issuable upon conversion of the participating shares, there are 233,026,993
ordinary shares outstanding, being the number of ordinary shares outstanding
on October 29, 1999. Such number excludes ordinary shares issued after that
date pursuant to Danka's 401(k) plan representing the employer stock match.
(8) This table is for illustrative purposes only and the figures are not exact
due to rounding.
In the event that Danka has insufficient distributable profits to pay the
PIK dividend when dividend obligations are to be satisfied by the additional
issue of participating shares, Danka will (to the extent it has reserves or sums
in its share premium legally available for the purpose) make a bonus issue of
additional participating shares to the holders of the participating shares in an
amount equal to, and in place of, the PIK dividend.
The participating shares will be convertible at any time into ordinary
shares at the option of the holder. The holder may require that the ordinary
shares issued on conversion of the participating shares be deposited in Danka's
ADS program and that such holder receives ADRs evidencing ADSs instead of
ordinary shares. However, the ordinary shares representing restricted
securities, as that term is used in Rule 144 promulgated
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<PAGE> 22
by the SEC under the United States Securities Act of 1933, as amended (the "U.S.
Securities Act"), may not be deposited by Danka into Danka's ADS program unless
the Deposit Agreement, dated as of June 25, 1992 among Danka, the Depositary and
the owners and holders of ADSs is amended or a restricted deposit agreement is
entered into between Danka and the Depositary. Danka has agreed to use its best
efforts to amend the Deposit Agreement to permit such deposit or obtain a
restricted stock deposit agreement pursuant to which restricted shares may be
transferred. It is anticipated that the initial purchasers will receive upon
conversion of their participating shares restricted ordinary shares unless their
direct and indirect ownership of ordinary shares is substantially reduced and
they cease to have the right to designate directors of Danka.
The ordinary shares to be issued on conversion of the participating shares
shall rank equally with the other ordinary shares of Danka. The participating
shares shall be convertible into ordinary shares at a conversion price of $3.125
per ordinary share (equal to $12.50 per ADS), subject to adjustment in certain
circumstances. The conversion price represents a premium of 25% over the average
closing price of approximately $10.00 for Danka's ADS (each of which represent
four of Danka's issued ordinary shares) on The Nasdaq National Market System for
the 20 consecutive trading days ending on and including November 2, 1999, the
date of execution of the Subscription Agreement. The conversion rate is subject
to adjustment by the mutual agreement of Danka and the investors in the event of
a significant decrease in the market value of the ADSs prior to the closing of
the sale of the participating shares. Alternatively, if an adjustment is not
agreed, such closing will not be completed. The conversion rate is also subject
to adjustment to avoid dilution of the interests of the holders of the
participating shares in the event of any reorganization of Danka's share capital
or issuances of securities by Danka at prices below their market value.
The new articles of association authorize the Board of Directors to effect
the conversion of the participating shares into ordinary shares in such manner
as the Directors may determine, including by means of redemption of the
participating shares and a new issue of ordinary shares (including by means of
bonus issue) or by consolidation and sub-division of the participating shares
into ordinary shares. The new articles of association authorize the Board of
Directors to issue, or convert all or some of the participating shares which are
the subject of the conversion into, deferred shares of 0.001 pence or 0.001
cents each in connection with the conversion of the participating shares where
necessary to avoid an unlawful reduction of capital. These deferred shares will
carry no right to vote or to dividends. On a winding up, the holders of the
deferred shares will be entitled to the capital paid up on such deferred shares
after a repayment of the capital paid up on the ordinary shares together with an
additional amount of L50,000 per ordinary share. Danka may, at its option,
repurchase or redeem any or all deferred shares in issue for an aggregate price
of one penny.
Other. It is not currently anticipated that the participating shares will
be listed or publicly traded on any stock exchange. Application will be made to
list the ordinary shares to be issued on conversion of the participating shares
on the London Stock Exchange and the National Market Tier of The Nasdaq Stock
Market and, at the election of the holders of the participating shares, to
register ADSs representing such ordinary shares, and ADRs evidencing such ADSs,
under the U.S. Securities Act, and the U.S. Securities Exchange Act of 1934. See
"PROPOSAL TO APPROVE SPECIAL RESOLUTIONS NUMBERED (1), (2) AND (3) -- Nasdaq
Listing Obligations."
Conditions. The sale of the participating shares is subject to various
conditions, including, among others (i) approval by Danka's shareholders at an
extraordinary general meeting, (ii) obtaining a commitment from a major
financial institution to refinance Danka's senior indebtedness on terms
reasonably satisfactory to the parties; (iii) the absence of a significant
decline in Danka's share trading price, (iv) receipt of required regulatory
approvals and (v) other customary conditions. See "PROPOSALS TO APPROVE SPECIAL
RESOLUTIONS NUMBERED (1), (2) AND (3) -- Subscription Agreement."
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<PAGE> 23
EFFECT OF ISSUANCE OF PARTICIPATING SHARES ON HOLDERS OF ORDINARY SHARES
The issuance of the participating shares will have several substantial
effects upon the holders of ordinary shares, whether those shares are held
directly or through beneficial ownership of ADSs, including the following:
- Dividends will not be payable on ordinary shares unless and until
dividends payable on the participating shares are paid in full and Danka
is not in default of its obligation to redeem participating shares. In
addition, the participating shares will be entitled to participate in any
ordinary share dividend to the extent that the deemed per annum amount of
ordinary share dividend declared in any quarter exceeds the amount of the
dividend that would otherwise be payable on the participating shares in
that quarter.
- The participating shares will be entitled to a preferential return of
assets on a winding up of Danka, which may reduce the amount of assets
otherwise available for distribution to the holders of ordinary shares.
- Holders of participating shares will be entitled to vote at general
meetings of Danka's shareholders. Each participating share shall carry so
many votes as the number of ordinary shares into which it may convert,
except that the total voting rights for the participating shares held by
The Cypress Group LLC and its affiliates may not exceed 29.99% of the
total voting rights of shareholders.
- Subject to certain limitations, holders of participating shares will be
entitled to appoint two directors to the Board of Directors of Danka
(and, in certain default situations will be entitled to appoint an
additional two directors). One or other of these directors will also be
entitled to sit on committees of the Board of Directors, subject to some
limitations. Holders of ordinary shares will not be entitled to vote on
the appointment of these directors. Holders of participating shares will,
however, be entitled to vote on the appointment and removal of other
members of the Board of Directors.
- Dividends on the participating shares will be paid in the form of
additional participating shares for the first five years following the
initial issue date and in certain circumstances will continue to be paid
in the form of additional participating shares thereafter. These
additional issues of participating shares will further increase the
amount of the aggregate dividend payable on the participating shares, the
aggregate amount payable on the participating shares on a winding up of
Danka, the percentage of the voting rights exercisable in general
meetings of Danka's shareholders controlled by the holders of the
participating shares and the number of ordinary shares into which the
participating shares will convert in aggregate. Basic and diluted
earnings per ADS and per ordinary share, while participating shares
remain outstanding, will be equal to the lower of (a) the amount which
would result from treating as outstanding the ordinary shares and ADSs
into which the participating shares would be convertible at the date of
calculation and not reducing the amount of earnings applicable to ADSs
and ordinary shares by the amount of dividends, whether in cash or in
kind, paid or accumulated with respect to the participating shares during
the period of the calculation and (b) the amount which would result from
not treating those ordinary shares or ADSs as outstanding at the date of
calculation and reducing the amount of earnings applicable to ADSs and
ordinary shares by the amount of dividends, whether in cash or in kind,
paid or accumulated with respect to the participating shares during the
period of the calculation.
- The participating shares will be redeemable at the option of Danka,
including in certain circumstances for a price greater than their initial
issue price. The redemption monies payable by Danka must be paid out of
Danka's distributable profits or, subject to certain limitations, the
proceeds of a new issue of shares. Payment of the redemption monies out
of Danka's distributable profits may reduce the amount of funds available
to Danka from which to pay a dividend on the ordinary shares.
- The participating shares will be redeemable at the option of the holders
of the participating shares following certain "change of control" events
for a price in excess of the initial issue price of the participating
shares. These "change of control" events include events relating to the
change in ownership of Danka's issued share capital and events relating
to changes in the composition of Danka's
15
<PAGE> 24
Board of Directors. These events may be beyond the control of Danka.
These arrangements may discourage a third party from attempting to obtain
control of Danka.
- Danka will not be permitted to take actions which constitute a variation
of the class rights of the participating shares.
- Danka will not be permitted to repurchase any of its ordinary shares, nor
reduce its ordinary share capital, without the approval of an
extraordinary resolution of a separate meeting of the holders of the
participating shares.
- Danka is not permitted to purchase any of its ordinary shares while any
of the participating shares are outstanding and is not permitted to adopt
any resolution to reduce its issued share capital, except to the extent
approved by extraordinary resolution of a separate class meeting of the
holders of the participating shares.
- Bonus issues of participating shares or ordinary shares issued on
conversion of participating shares may reduce the reserves of Danka which
would otherwise be available for the making of bonus issues to holders or
ordinary shares or which would otherwise be available for distribution to
the holders of ordinary shares upon the winding up of Danka.
- The Subscription Agreement includes various representations, warranties,
covenants and other commitments and indemnities by Danka in favor of the
investors. Any payment that Danka may be liable to make to the investors
with respect to a breach of any of these representations, warranties,
covenants and other commitments may reduce the net worth of Danka to the
detriment of its shareholders.
Please read carefully the discussion under the heading "PROPOSALS TO
APPROVE SPECIAL RESOLUTIONS NUMBERED (1), (2) AND (3) -- Description of
Participating Shares" for a more detailed description of the terms of the
participating shares.
SUBSCRIPTION AGREEMENT
The Subscription Agreement is made between Danka and the investors and is
dated as of November 2, 1999. The Subscription Agreement is governed by the laws
of the State of New York.
Subscription and Payment. Under the Subscription Agreement, the investors
agree to subscribe for 200,000 participating shares at a cash price of $1,000
per share, for an aggregate subscription price of $200 million. Subject to
satisfaction of the conditions set forth below, the participating shares will be
allotted and issued to the investors against payment in cash.
Conditions to Completion of the Transactions Contemplated by the
Subscription Agreement. The completion of the transactions contemplated by the
Subscription Agreement is subject to the following conditions:
- The passing of the proposed resolutions.
- Each of the representations and warranties of Danka and the investors
contained in the Subscription Agreement remaining true and correct.
- The amendment of certain terms and covenants in each of (i) the credit
agreement between Danka, Nationsbank, N.A., and certain other financial
institutions; (ii) the financing arrangements between Danka and General
Electric Capital Corporation as evidenced by a series of documents,
including a global operating agreement dated December 22, 1997 and an
operating agreement dated January 29, 1999; and (iii) the TROL financing
agreements between certain members of the Group and First Security Bank
of Utah, N.A., Nationsbank of Florida, N.A. and Sun Trust Bank, Tampa
Bay, including a participation agreement dated November 15, 1999, in each
case as set forth in the Subscription Agreement;
- To cause its independent auditors to determine, pursuant to Section
1204(b)(3) of the Convertible Subordinated Notes Indenture with respect
to Danka's convertible subordinated notes that no anti-
16
<PAGE> 25
dilution adjustment is required in respect of the conversion price of the
Convertible Subordinated Notes as a result of the issue and allotment of
the participating shares in accordance with the Subscription Agreement
or, alternatively, to obtain on commercially reasonable terms an
amendment to, or waiver of, the provisions of the notes to permit the
issue and allotment of the participating shares in accordance with the
Subscription Agreement.
- Danka having obtained a debt refinancing commitment in terms satisfactory
to the investors and Danka.
- The size of the Board of Directors having been increased by the
appointment of the two directors who are representatives of the
investors.
- No material adverse change having occurred in the financial, banking or
capital markets in the United States or the United Kingdom which would
materially and adversely affect the investors' investment in the
participating shares.
- Danka and the investors agreeing to an adjustment to the participating
share conversion price in the event of a significant decrease in the
market value of Danka's ordinary shares. For purposes of the Subscription
Agreement, a significant decrease in the market value for the ordinary
shares will occur if the average market value of the ADSs, calculated
over a 10 day trading period ending at the close of business three
business days (New York time) before the scheduled completion of the
transactions contemplated by the Subscription Agreement, has decreased
below $9.00 per ADS (being equivalent to $2.25 per ordinary share).
- No action, suit, investigation or proceeding being commenced by any
governmental authority seeking to restrain or delay the transactions
contemplated by the Subscription Agreement.
- There being in effect no law or governmental order directing that the
transactions contemplated by the Subscription Agreement not be
consummated or which has the effect of rendering unlawful the
consummation of such transactions.
- Any applicable waiting periods under applicable anti-trust and
competition laws with respect to the transactions contemplated by the
Subscription Agreement having expired or been terminated and any other
governmental approvals and non-governmental approvals (including under
any material contract) necessary to permit the consummation of the
transactions contemplated by the Subscription Agreement having been
obtained.
Completion of the transactions contemplated by the Subscription Agreement
is also conditioned upon the execution of the Registration Rights Agreement by
Danka and the investors and the fulfillment of certain other customary
conditions, including the delivery of legal opinions and officers' certificates.
Regulatory and Other Authorizations; Notices and Consents. Danka and the
investors each agreed to promptly make any filings required under the HSR Act or
any other applicable law in order to effect the transactions contemplated by the
Subscription Agreement.
Representations, Warranties and Indemnities. The Subscription Agreement
contains representations and warranties given by Danka to the investors and
representations and warranties given by the investors to Danka. The
representations and warranties of Danka include representations and warranties
relating to validity of the participating shares to be issued to the investors,
the business of Danka, its financial status, employee benefit plans,
environmental matters and tax affairs. The representations and warranties of the
investors include a representation and warranty that they have sufficient funds
to satisfy the subscription price for the participating shares in full.
The Subscription Agreement includes indemnities from Danka to the investors
and from the investors to Danka which will apply on the breach by any of them of
their respective representations and warranties contained in the Subscription
Agreement or on the breach by any of them of any of their other obligations and
covenants under the Subscription Agreement. The indemnities are subject to
certain limitations, including in the case of the indemnities for breach of
representations and warranties, as to timing and amounts of claims.
17
<PAGE> 26
Adjustment to Conversion Price for Participating Shares. Each
participating share is initially convertible into 320 ordinary shares, based
upon a conversion price of $3.125 per ordinary share (or $12.50 per ADS). The
conversion price is subject to adjustment prior to issue of the participating
shares in the following circumstance:
- in the event of a significant decrease in the market value of Danka's
ordinary shares. For the purposes of the Subscription Agreement, a
significant decrease in the market value for the ordinary shares will
occur if the average market value of the ADSs, calculated over a 10 day
trading period ending at the close of business (New York time) three days
prior to the scheduled completion of the sale of the participating
shares, has decreased to below $9.00 per ADS (being the equivalent of
$2.25 per ordinary share); and
- Danka and the investors agree to a downward adjustment of the conversion
price, in which event each participating share will be initially
convertible into a higher number of ordinary shares based upon a
conversion price per ordinary share equal to the market value of the ADSs
(calculated as described above) multiplied by a factor of 1.25 and
divided by four.
Conduct of Business Prior to Closing. Under the Subscription Agreement,
Danka agrees that, during the period prior to the completion of the transactions
contemplated by the Subscription Agreement, it will, and will cause its
subsidiaries to, conduct its business in all material respects only in the
ordinary course and consistent with past practice, and subject to certain
limitations, it will not, and will cause its subsidiaries not to, not take any
of the following actions without the prior written consent of the investors:
- the proposing of any amendments to its memorandum and articles of
association other than the adoption of the New Articles of Association;
- the sale, lease, transfer, mortgage, encumbrance or other disposition of
any of its properties, rights or assets except in the ordinary course of
business consistent with past practice;
- the merger or consolidation of Danka or its significant subsidiaries or
the sale, directly or indirectly, of all or substantially all of their
assets;
- the acquisition by merging or consolidating with, or by purchasing all or
a substantial portion of the stock or assets of, any business,
properties, assets or person;
- the incurrence of any new indebtedness in excess of $25 million in the
aggregate;
- the making, declaration, setting aside or payment of any dividend or any
other distribution (whether in cash, share capital or other property) on,
or directly or indirectly, the redeeming, purchasing or otherwise
acquiring of, any shares of its share capital or any securities or
obligations convertible into or exchangeable for any shares of its share
capital;
- the entering into of any transaction with affiliates by Danka or its
subsidiaries, subject to certain exceptions;
- to the extent reasonably within Danka's control, (i) the removal of, or
election of the chief executive officer of Danka or (ii) the approval of
any new, or modification of any existing, director or executive officer
compensation plans or agreements offered by Danka;
- the commencement of any proceeding or the filing of any petition in any
court relating to bankruptcy, reorganization, insolvency, winding up,
liquidation or relief from debtors;
- the initiation, settlement or compromise of any litigation, other than
settlements or compromises of litigation where the amount paid does not
exceed $10 million for any single litigation matter;
- the allotment or issue of any ordinary shares or other share capital
(except, in each case, ordinary shares issued or reserved for issue by
Danka, or ADSs representing such ordinary shares, (i) upon exercise of
outstanding share options or (ii) upon conversion of the outstanding $200
million aggregate principal amount of Danka's 6.75% Convertible
Subordinated Notes due 2002);
18
<PAGE> 27
- the making of any material change in any method of accounting or
accounting practice or policy except as required by U.S. GAAP or U.K.
GAAP, and with the concurrence of its independent accountants or
auditors; or
- the taking of any action which would reasonably be expected to cause any
representation or warranty of Danka contained in the Subscription
Agreement to be or become untrue at the closing in any material respect.
Non-solicitation. Prior to completion of the transactions contemplated by
the Subscription Agreement, and subject to certain exceptions, except with the
prior written consent of the investors, Danka will not:
- solicit any proposals with respect to, negotiate or consummate, or have
any other substantive discussions concerning:
(a) any direct or indirect sale, disposition or redemption of any
substantial portion of the securities of Danka or its significant
subsidiaries;
(b) the direct or indirect sale or disposition of any substantial assets
of Danka or its significant subsidiaries; or
(c) any merger, reorganization, consolidation or recapitalization or other
similar transaction involving Danka or its significant subsidiaries;
or
- discuss or disclose any non-public information pertaining to Danka with
or to any person in connection with the foregoing.
Commission and Expenses. Danka will pay the investors a commission of
$4,000,000 upon completion of the sale of the participating shares.
Danka Holding Company and Danka Office Imaging Company (which are U.S.
subsidiaries of Danka) have agreed to pay the out-of-pocket expenses of the
investors incurred in connection with the sale of the participating shares
(including, without limitation, the fees of the investors' legal advisors,
financial advisors and accountants). Danka Holding Company and Danka Office
Imaging Company are not obliged to pay these expenses if the sale of the
participating shares is not completed solely as a result of the default of the
investors in the performance of their obligations under the Subscription
Agreement.
Termination. The Subscription Agreement may be terminated, and the
transactions contemplated therein abandoned, at any time prior to the completion
of the transactions contemplated by the Subscription Agreement by Danka or the
investors:
- in the event of a breach or default by the other party of or in any
representation, warranty, covenant or agreement of such other party
contained in the Subscription Agreement;
- if completion of the transactions contemplated by the Subscription
Agreement have not occurred on or prior to 120 days after the date of the
Subscription Agreement;
- in the event that any governmental authority whose consent is necessary
for the consummation of the transactions contemplated by the Subscription
Agreement will have issued a final, non-appealable government order or
taken any other final, non-appealable action restraining, enjoining,
denying approval of or otherwise prohibiting the transactions
contemplated by the Subscription Agreement and the Registration Rights
Agreement; or
- by mutual written consent of Danka and the investors.
Termination Fee. Danka will pay the investors a termination fee of $2
million, subject to certain limited exceptions, in the event that the
transactions contemplated by the Subscription Agreement are not completed by
reason of the failure of Danka to satisfy or procure the satisfaction of the
conditions to completion of the transactions contemplated by the Subscription
Agreement, including if the resolutions are not passed and the terms of Danka's
existing indebtedness is not amended to the satisfaction of the investors. The
termination fee will also be payable by Danka if, following a significant
decrease in the market value of the ordinary shares
19
<PAGE> 28
prior to completion, the transactions contemplated by the Subscription Agreement
are not completed by reason of Danka and the investors failing to agree a
revision to the rate at which participating shares are to convert into ordinary
shares.
REGISTRATION RIGHTS AGREEMENT
Danka and the investors will enter into a Registration Rights Agreement
immediately prior to the closing of the transactions contemplated by the
Subscription Agreement. The Registration Rights Agreement will be governed by
the laws of the State of New York. Pursuant to the terms of the Registration
Rights Agreement, the investors will be given the following rights with respect
to Danka's participating shares, ordinary shares and ADSs:
Demand Registrations. At any time after the first anniversary of the
closing date of the initial sale of the participating shares, each investor (or
persons to whom an investor specifically assigns the right) will have the right
to require Danka to file a registration statement under the U.S. Securities Act
covering all or part of its securities. Danka shall then give the other holders
of participating shares (or holders of ordinary shares into which participating
shares are converted or ADSs) the opportunity to participate in the
registration. Based on the advice of the underwriter, if any, the number of
shares registered may be less than all those the holders desire to sell. In
certain circumstances, the holders may request that the registration statement
be abandoned or withdrawn. The holders are permitted a maximum of four demand
registrations. Danka is not required to effect a demand registration within six
months of the effective date of any prior demand registration. In addition,
Danka is not obligated to effect more than one demand registration under which
the aggregate number of securities would represent less than 10% of the
purchasers' initial interest in Danka's stock and may delay registrations that
would require premature disclosure of material confidential information or which
would have an adverse effect on Danka's financing plans or any planned material
transaction involving Danka.
Piggyback Registrations. At any time after the first anniversary of the
closing date of the Registration Rights Agreement, if Danka proposes or is
required by law to register shares of its capital stock under the U.S.
Securities Act, as amended, or to list any shares on the London Stock Exchange,
with certain exceptions, Danka shall give reasonable notice of its intention to
do so to each of the holders of participating shares (or holders of ordinary
shares into which participating shares are converted or ADSs) and provide them
with an opportunity to participate in the registration statement or the listing,
as applicable. There is no limitation on the number of piggyback registrations
or piggyback listings.
Costs of Registration. To the extent permitted by law, Danka will pay all
expenses incurred in connection with each registration statement filed pursuant
to the Registration Rights Agreement, except that all underwriting discounts and
selling commissions shall be borne by the shareholders who sold shares under a
registration statement.
Indemnification and Contribution. With respect to the registration of
securities pursuant to the Registration Rights Agreement, Danka will indemnify
each investor selling securities covered by the registration statement, and
persons who participate as underwriters in such sales, against all claims and
expenses to which such person may become liable based on untrue statements of
material fact, or failure to state a material fact, contained in the
registration statement or the prospectus and any amendments or supplements to
such documents, except to the extent such claims or expenses arise from reliance
upon information furnished to Danka by the indemnified party. In addition, each
investor selling securities that are included in the registration statement
shall severally, and not jointly, indemnify Danka with respect to any untrue
statement of material fact in, or omission of any material fact from, such
registration statement or any accompanying prospectus and any amendments or
supplements to such documents, if such claims or expenses arise from reliance
upon information furnished by such investors to Danka. However, in no event will
the investors indemnify Danka in an amount greater than the net proceeds
received by such investors upon the sale of securities pursuant to the
registration statement giving rise to the claim.
Contribution. If for any reason the indemnity provided in the Registration
Rights Agreement is unavailable or is insufficient to hold harmless an
indemnified person, then Danka, the shareholders and the
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<PAGE> 29
underwriters of the registration statement giving rise to a claim, may seek
contribution from one another in proportion to the relative benefits and
relative fault of each such person to the others.
INTERESTS OF CERTAIN PERSONS IN THE RESOLUTIONS
To Danka's knowledge, prior to consummation of the transactions
contemplated in the Subscription Agreement, none of the directors, executive
officers or 5% shareholders of the investors or The Cypress Group LLC was a
director, executive officer or 5% shareholder of Danka or an affiliate of any
such person or entity. See "SECURITY OWNERSHIP OF MANAGEMENT AND OTHERS."
REGULATORY APPROVAL
Under the Subscription Agreement, Danka agreed promptly to make any filings
required to be made under the United States Hart-Scott-Rodino Antitrust
Improvements Act of 1976 or any other applicable law regarding the new Articles
of Association, the allotment and issue of the participating shares, the
conversion of the participating shares on the receipt of any additional
participating shares as dividends or by way of bonus issue. The investors agreed
promptly to make all necessary filings which they are required to make under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 or any other applicable law
regarding the subscription for the participating shares, the conversion of the
participating shares and the receipt of any additional participating shares as
dividends or by way of bonus issue. Danka and the investors agree to furnish the
other with such necessary information and reasonable assistance as the other
party may reasonably request in connection with the preparation of any necessary
filings or submissions to the United States Federal Trade Commission or to the
Antitrust Division of the United States Department of Justice, including,
without limitation, any filings or notices necessary under the Hart-Scott-Rodino
Act, or to any governmental authority pursuant to any European Union or European
national antitrust, competition or merger laws and regulations.
Each of the parties agreed to use its reasonable best efforts to give such
notices and obtain all other authorizations, consents, orders and approvals of
all governmental authorities and other persons that may be or become necessary
for its execution and delivery of, and the performance of its obligations
pursuant to, the Subscription Agreement and the Registration Rights Agreement
and will cooperate with the other parties in promptly seeking to obtain all such
authorizations, consents, orders and approvals.
The parties have filed notification and report forms under the
Hart-Scott-Rodino Act and have requested early termination of the waiting period
under that Act. In addition, the parties may make filings under the competition
laws of other jurisdictions, none of which are expected to delay the closing of
the transactions contemplated by the Subscription Agreement.
Each of the parties agreed to use its reasonable best efforts to give such
notices and obtain all other authorizations, consents, orders and approvals of
all governmental authorities and other persons that may be or become necessary
for its execution and delivery of, and the performance of its obligations
pursuant to, the Subscription Agreement and the Registration Rights Agreement
and will cooperate with the other parties in promptly seeking to obtain all such
authorizations, consents, orders and approvals.
The parties have filed notification and report forms under the
Hart-Scott-Rodino Act and have requested early termination of the waiting period
under that Act. In addition, the parties may make filings under the competition
laws of other jurisdictions, none of which are expected to delay the closing of
the transactions contemplated by the Subscription Agreement.
NASDAQ LISTING OBLIGATIONS
The ADSs are quoted and trade on the Nasdaq National Market tier of The
Nasdaq Stock Market. Under the applicable rules governing the Nasdaq National
Market, Danka, as a listed company, is required to obtain shareholder approval
of the issuance at a price less than the greater of book value or market value
of ordinary shares or shares convertible into ordinary shares equal to 20% or
more of the number of ordinary shares or voting power issued and outstanding.
Shareholder approval is also required for transactions deemed to constitute a
"change in control." Danka does not believe that the issuance of the
participating shares is at a
21
<PAGE> 30
price less than the greater of book value or market value or that it will
constitute a "change in control" under the those rules. However, if the
transactions were to be so construed, the approval sought in this proxy
statement is effective to constitute shareholder approval required to satisfy
both of the Nasdaq National Market requirements, to the extent they are
applicable.
RESOLUTIONS NUMBERED (1), (2) AND (3)
SPECIAL RESOLUTION
(1) THAT, subject to the passing of the resolutions numbered (2), (3) and (4)
in the notice of extraordinary general meeting, the regulations in the form
of the print produced to the meeting marked "A" and initialed for
identification purposes by the chairman of the meeting be adopted with
immediate effect as the new articles of association of the Company to
replace the existing articles of association of the Company in their
entirety.
ORDINARY RESOLUTIONS
(2) THAT, subject to the passing of the resolutions numbered (1), (3) and (4)
in the notice of extraordinary general meeting, the authorised share
capital of the Company be and is hereby increased to L6,250,000 and
US$500,000 by the creation of 500,000 6.50 per cent. senior convertible
participating shares of US$1.00 each (the "Participating Shares") having
the rights and obligations set out in the new articles of association of
the Company proposed to be adopted pursuant to the resolution numbered (1)
above.
(3) THAT, subject to the passing of the resolutions numbered (1), (2) and (4)
in the notice of extraordinary general meeting, the board of directors of
the Company (the "Board") be generally and unconditionally authorised, in
addition to all subsisting authorities, pursuant to section 80 of the
Companies Act 1985 (the "Act"), to exercise all the powers of the Company
to allot relevant securities (within the meaning of section 80 of the Act)
up to an aggregate nominal amount of L1,400,000 and US$350,000 for a period
expiring (unless previously renewed, varied or revoked by the Company in
general meeting) five (5) years after the date on which this resolution is
passed, 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 may allot relevant securities in pursuance
of such an offer or agreement as if the authority conferred hereby had not
expired.
RECOMMENDATION OF DANKA'S BOARD OF DIRECTORS
Your Board of Directors considers that resolutions numbered (1), (2) and
(3) are in the best interests of Danka and the shareholders as a whole.
Accordingly, your Board of Directors recommends that if you hold ordinary
shares, you vote "FOR", and if you hold ADSs, you provide voting instructions
"FOR", each of resolutions numbered (1), (2) and (3).
All of the resolutions must be passed for any of them to be effective.
Resolution numbered (1) must receive the affirmative vote of at least 75% of the
votes cast at the meeting in order for them to be passed. Resolutions numbered
(2) and (3) must receive the affirmative vote of at least a majority of the
votes cast at the meeting in order for them to be passed.
22
<PAGE> 31
PROPOSAL TO APPROVE RESOLUTION NUMBERED (4)
DISAPPLICATION OF PREEMPTIVE RIGHTS
Danka, as a company incorporated under the laws of England and Wales, is
subject to the requirements of the United Kingdom Companies Acts.
The United Kingdom Companies Act of 1985 provides pre-emptive rights to
holders of the ordinary shares of Danka. Subject to the exceptions described
below, section 89 of the United Kingdom Companies Act of 1985 provides that
companies subject to that Act, such as Danka, must if they wish to issue shares
of their equity securities for cash, or to offer rights to subscribe for or to
convert any securities into new equity securities, offer to their existing
shareholders the new equity securities, or the relevant rights. Therefore, if
Danka offers to issue for cash ordinary shares or securities, such as the
participating shares, which are convertible into ordinary shares the ordinary
shares or other securities must be offered to you if you hold ordinary shares
and to the Depositary to the extent it is the record holder of your shares if
you hold ADSs. The new equity securities or the rights relating to new equity
securities may only be sold for cash to third parties, or otherwise than pro
rata to Danka's shareholders' existing shareholdings, to the extent that the
shareholders do not exercise their pre-emptive rights to subscribe for those
securities.
Pre-emptive rights do not apply on the sale of new equity securities or
rights relating to new equity securities to the extent that the pre-emptive
rights are disapplied by the shareholders. Resolution 4 is a resolution to
disapply your pre-emptive rights to the issuance of the participating shares.
Absent such disapplication, if you hold ordinary shares, you would be entitled
to purchase the percentage of the participating shares equal to your percentage
ownership of the ordinary shares. The Depositary would be entitled to purchase
the pro rata portion of the participating shares represented by all of the
ordinary shares held of record by it in the form of ADSs. Subject to the
requirements of the US Securities Act, the Depositary could offer holders of
ADSs the opportunity to have the pre-emptive rights attaching to ordinary shares
they beneficially own through ADSs exercised by the Depositary on their behalf.
Under the Depositary Agreement between Danka and the Depositary, Danka is
required to file a registration statement under the U.S. Securities Act, if, as
would be the case, a distribution of rights to purchase participating shares to
holders of ADSs in that manner would require registration under the U.S.
Securities Act, unless such registration would result in unreasonable expense to
Danka in relation to the proceeds Danka would expect to receive as a result of
such registration or such registration would interfere with a material pending
transaction. A registered distribution of rights to subscribe for participating
shares would require substantial additional expense and there is a very
substantial risk that such a distribution could not be completed before December
31, 1999. Furthermore, the investors who have agreed to purchase participating
shares have required as a condition of such purchase that applicable pre-emptive
rights be disapplied, Therefore, the Board of Directors does not believe that
such a registered distribution would be in Danka's interest or your interest,
whether you hold ordinary shares or ADSs, and has proposed resolution numbered
(4).
If this resolution is not passed, closing of the issuance of the
participating shares to the investors would not be feasible as Danka would have
to offer the participating shares to its existing shareholders on a pro rata
basis before it could sell those shares to any other person or in any other
manner, and the investors would no longer be obligated to purchase any
participating shares. If resolution numbered (4) is approved, it will empower
the Board of Directors to allot equity securities for cash without regard to the
statutory preemptive rights of shareholders. The empowerment will apply in
relation to:
(i) the issue of up to 350,000 participating shares. Assuming the
issuance of such participating shares and their conversion into ordinary
shares in full at a conversion rate of $3.125 per ordinary share,
represents approximately 48% of Danka's total ordinary shares outstanding
as of October 29, 1999 and approximately 36% of Danka's ordinary shares
outstanding following completion of the transactions contemplated by the
Subscription Agreement and the issuance of an additional 40,000
participating shares, assuming conversion in full at the conversion rate of
$3.125 per ordinary share of the 200,000 participating shares to be issued
to the investors and the 40,000 participating shares that may be issued to
other investors. This empowerment is required to enable the issuance of the
participating shares and the
23
<PAGE> 32
issuance of up to 40,000 participating shares to persons other than the
investors and permit Danka to make dividend payments in the form of
additional participating shares; and
(ii) if required, the issuance of equity securities to effect
conversion of the participating shares into ordinary shares up to an
aggregate nominal amount of L1,400,000.
RESOLUTION NUMBERED (4)
SPECIAL RESOLUTION
(4) THAT, subject to the passing of the resolutions numbered (1), (2) and (3)
in the notice of extraordinary general meeting, the Board be and is hereby
generally empowered, in addition to all subsisting powers, pursuant to
section 95 of the Act to allot equity securities (within the meaning of
section 94(2) of the Act) for cash, pursuant to the general authority
conferred by the resolution numbered (3) above as if section 89(1) of the
Act did not apply to the allotment, provided that this power:
(a) shall expire when the authority conferred by resolution numbered (3)
above expires, save that the Company may before such expiry make an
offer or agreement which would or might require equity securities to be
allotted after expiry of this power, and the Board may allot equity
securities in pursuance of such an offer or agreement as if the power
conferred hereby had not expired; and
(b) shall be limited to:
(i) the allotment of Participating Shares up to an aggregate nominal
value of US$350,000; and
(ii) the allotment of equity securities of the Company to effect
conversion of the Participating Shares up to an aggregate nominal
value of L1,400,000.
RECOMMENDATION OF DANKA'S BOARD OF DIRECTORS
Your Board of Directors considers that resolution numbered (4) is in the
best interests of Danka and the shareholders as a whole. Accordingly, your Board
of Directors recommends that if you hold ordinary shares, you vote "FOR", and if
you hold ADSs, you provide voting instructions "FOR", resolution numbered (4).
All of the resolutions must be passed for any of them to be effective.
Resolution numbered (4) must receive the affirmative vote of at least 75% of the
votes cast at the meeting in order for it to be passed.
24
<PAGE> 33
SECURITY OWNERSHIP OF MANAGEMENT AND OTHERS
The following table sets forth, as of October 29, 1999, information as to
the beneficial ownership of Danka's ordinary shares or ordinary share
equivalents (whether held in ordinary shares or ADSs, each ADS being equal to
four ordinary shares), by (i) each person known to Danka as having beneficial
ownership or more than five percent (5%) of Danka's equity securities, (ii) each
director, (iii) each "named executive officer" (as defined in Item 402(a)(3) of
Regulation S-K under the U.S. Securities Exchange Act), and (iv) all directors
and executive officers of the company as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED AS
OF OCTOBER 29, 1999(2)
----------------------------
HOLDINGS OF
NUMBER OF GREATER THAN
ORDINARY ADS 5 PERCENT
NAME OF BENEFICIAL OWNER(1) SHARES EQUIVALENT (11)
- --------------------------- ---------- ----------- -------------
<S> <C> <C> <C>
Wellington Management Company, LLP(3)................... 19,480,000 4,870,000 8.4%
Massachusetts Financial Services(4)..................... 17,956,000 4,489,000 7.7
Prudential Corporation plc(5)........................... 14,513,984 3,628,496 6.4
HOLDINGS BY DIRECTORS AND EXECUTIVE OFFICERS
- --------------------------------------------------------
David W. Kendall........................................ 15,000 3,750 *
Larry K. Switzer(6)..................................... 1,373,333 343,333 *
Brian L. Merriman(7).................................... 1,046,666 261,666 *
Michael B. Gifford...................................... 8,000 2,000 *
Richard C. Lappin....................................... 10,000 2,500 *
Keith J. Merrifield..................................... 15,000 3,750 *
J. Ernest Riddle........................................ 20,000 5,000 *
C. Anthony Wainwright................................... -- -- *
James F. White, Jr...................................... 16,000 4,000 *
F. Mark Wolfinger(8).................................... 760,000 190,000 *
Martin G. St. Quinton(9)................................ 3,362,933 840,733 1.4
David P. Berg(10)....................................... 333,332 83,333 *
All Directors and Executive Officers as a group (17
persons).............................................. 7,243,352 1,810,838 3.1
</TABLE>
- ---------------
(*) Represents less than one percent (1%) of the share capital.
(1) Except for Messrs. Wolfinger, St. Quinton and Berg, all of the listed
individuals are currently directors of Danka. Messrs. Switzer and Merriman
are executive officers of Danka.
(2) Except as otherwise indicated, all ordinary shares are held of record with
sole voting and investment power.
(3) Wellington Management Company, LLP is a mutual fund organization. The
address of Wellington Management Company, LLP is 75 State Street, 19th
Floor, Boston, Massachusetts 02109.
(4) Massachusetts Financial Services is a mutual fund organization. The address
of Massachusetts Financial Services is 500 Boylston Street, Boston,
Massachusetts 02116.
(5) 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.
(6) Includes options held by Mr. Switzer to purchase 333,333 ADSs (equivalent
of 1,333,333 ordinary shares), all of which are currently exercisable.
(7) Includes options held by Mr. Merriman to purchase 261,666 ADSs (equivalent
of 1,046,666 ordinary shares), all of which are currently exercisable.
(8) Includes options held by Mr. Wolfinger to purchase 190,000 ADSs (equivalent
of 760,000 ordinary shares), all of which are currently exercisable.
(9) Includes options held by Mr. St. Quinton to purchase 563,333 ordinary
shares (equivalent of 140,833 ADSs), all of which are currently
exercisable.
(10) Includes options held by Mr. Berg to purchase 83,333 ADSs (equivalent of
333,332 ordinary shares), all of which are currently exercisable.
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<PAGE> 34
(11) Based on 233,026,993 ordinary shares outstanding. Pursuant to the rules of
the SEC, certain of the ordinary shares or ADSs, which a person has a right
to acquire within 60 days of the date hereof pursuant to the exercise of
stock options or the conversion of Danka's convertible subordinated notes,
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 October 29, 1999, The Bank of New York, as depositary for Danka's ADS
program, held 187,456,851 ordinary shares representing 80.4% of the issued share
capital.
INDEPENDENT AUDITORS
The consolidated financial statements of Danka at and for the three years
ended March 31, 1999, incorporated in this proxy statement by reference to
Danka's Annual Report on Form 10-K for such period, have been incorporated by
reliance on the report of KPMG Chartered Accountants and Registered Auditors,
which is also incorporated by reference herein. Danka's present auditors have
served in such capacity for Danka for more than 20 years. Representatives of the
firm are expected to be present at the meeting, will be afforded an opportunity
to make a statement if they desire to do so and will be available to respond to
appropriate questions.
SHAREHOLDERS' PROPOSALS FOR 2000 ANNUAL GENERAL MEETING
If a holder of ordinary shares desires to present a proposal for action at
Danka's next Annual General Meeting to be held in 2000, and such proposal
conforms to the laws of the United Kingdom, such proposal must be received by
Danka by May 1, 2000 to be included in Danka's proxy statement and proxy for
such 2000 Annual General Meeting.
If a holder of ADSs desires to present a proposal for action at Danka's
next Annual General Meeting to be held in 2000, and such proposal conforms to
the rules and regulations of the SEC and is in accordance with other United
States federal laws, such proposal must be received by Danka by April 20, 2000
to be included in Danka's proxy statement and proxy for such 2000 Annual General
Meeting.
OTHER BUSINESS
It is not anticipated that any action will be asked of the shareholders
other than that set forth above, but if other matters are properly brought
before the Extraordinary Special Meeting, the persons named in the proxy will
vote in accordance with their best judgment.
By order of the Board of Directors
Paul G. Dumond
Secretary
26
<PAGE> 35
NO. 1101386 EXHIBIT A
THE COMPANIES ACTS 1948 TO 1989
---------------------
COMPANY LIMITED BY SHARES
---------------------
NEW ARTICLES OF ASSOCIATION
OF
DANKA BUSINESS SYSTEMS PLC
<PAGE> 36
THE COMPANIES ACTS 1948 TO 1989
---------------------
COMPANY LIMITED BY SHARES
---------------------
ARTICLES OF ASSOCIATION
OF
DANKA BUSINESS SYSTEMS PLC
(ADOPTED PURSUANT TO A SPECIAL RESOLUTION
PASSED ON ____________)
PRELIMINARY
1. The regulations contained in Table A in the First Schedule to the
Companies Act 1948, in Table A in the Schedule to the Companies (Tables A to F)
Regulations 1985 and in any Table A applicable to the Company under any former
enactment relating to companies shall not apply to the Company except insofar as
they are repeated or contained in these Articles.
2. In these Articles, unless the context otherwise requires:
"these Articles" means these Articles of Association or other the
articles of association of the Company from time to time in force;
"the Auditors" means the Auditors for the time being of the Company;
"clear days" in relation to the period of a notice means that period
excluding the day when notice is given or deemed to be given and the day
for which it is given or on which it is to take effect;
"the Directors" means the Directors for the time being of the Company
or, as the case may be, the Board of Directors for the time being of the
Company or the Directors present at a duly convened meeting of the
Directors or any duly authorised committee at which a quorum is present;
"dividend" includes bonus;
"holder" in relation to shares means the Member whose name is entered
in the Register as the holder of the shares;
"month" means calendar month;
"the Office" means the registered office for the time being of the
Company;
"paid up" includes credited as paid up;
"the Register" means the Register of Members required to be kept by
the Statutes;
"the Seal" means the common seal of the Company;
"Secretary" includes a deputy of assistant secretary, and any person
appointed by the Directors to perform the duties of the Secretary;
"the Statutes" means the Companies Act 1985 (as amended by the
Companies Act 1989), the Companies Act 1989 and every statutory
modification or re-enactment thereof for the time being in force;
A-2
<PAGE> 37
"the United Kingdom" means Great Britain and Northern Ireland:
"in writing" and "written" includes printing, lithography,
typewriting, photography, telex, facsimile transmission and other modes of
representing or reproducing words in visible form or partly one and partly
another;
"year" means calendar year;
Words importing the singular number only shall include the plural, and
vice versa;
Words importing the masculine gender only shall include the feminine
gender;
Words importing individuals and words importing persons shall include
bodies corporate and unincorporated associations;
The expressions "debenture" and "debenture holder" shall respectively
include "debenture stock" and "debenture stockholder";
The expressions "recognised clearing house" and "recognised investment
exchange" shall mean any clearing house or investment exchange (as the case
may be) granted recognition under the Financial Services Act 1986.
A Special or Extraordinary Resolution shall be effective for any purpose
for which an Ordinary Resolution is expressed to be required under any provision
of these Articles.
Any reference herein to the provisions of any Act shall extend to and
include any amendment or re-enactment of or substitution for the same effected
by any subsequent statute.
Subject as aforesaid, and unless the context otherwise requires, words and
expressions defined in the Statutes shall bear the same meanings in these
Articles.
Headings are inserted for convenience only and shall not affect the
construction of these Articles.
SHARES
3. The authorised capital of the Company as at the date of the adoption of
these Articles as the Articles of Association of the Company is L6,250,000 and
US$500,000 divided into:
3.1 500,000,000 ordinary shares of 1.25 pence each (the"Ordinary Shares");
and
3.2 500,000 6.50% senior convertible participating shares of US$1.00 each
(the "Participating Shares").
4. Without prejudice to any special rights previously conferred on the
holders of any existing shares or class of shares, any share in the Company may
be issued with such preferred, deferred or other special rights or such
restrictions, whether in regard to dividend, voting, return of capital or
otherwise as the Company may from time to time by Ordinary Resolution determine
(or, in the absence of any such determination, as the Directors may determine).
If requisite, the Company shall in accordance with the Statutes within one month
from allotting shares deliver a statement in the prescribed form containing
particulars of special rights.
5. Subject to the provisions of the Statutes:
(1) any shares may be issued on the terms that they are to be redeemed
or are liable to be redeemed at the option of the Company or the
shareholder on such terms and in such manner as may be provided by these
Articles; and
(2) subject to Article 10A(C)(xiii) the Company may purchase its own
shares (including any redeemable shares) provided that the Company shall
not purchase its own shares if at the time of such purchase there are
outstanding any convertible shares of the Company which remain capable of
being converted, unless such purchase has been sanctioned by an
Extraordinary Resolution passed at a separate Meeting of the holders of
each class of such convertible shares in accordance with Articles 16 and
17.
6. The Company shall not give any financial assistance for the acquisition
of shares in the Company except and in so far as permitted by the Statutes.
A-3
<PAGE> 38
7. The shares of the Company shall not be allotted at a discount and save
as permitted by the Statutes shall not be allotted except as paid up at least as
to one-quarter of their nominal value and the whole of any premium thereon.
8. The Company may exercise the powers of paying commissions conferred by
the Statutes to the full extent thereby permitted. The Company may also on any
issue of shares pay such brokerage as may be lawful.
9.(A) Save as otherwise provided in the Statutes or in these Articles, all
unissued shares (whether forming part of the original or any increased capital)
shall be at the disposal of the Directors who may (subject to the provisions of
the Statutes) allot (with or without conferring a right of renunciation), grant
options over, offer or otherwise deal with or dispose of them to such persons at
such times and generally on such terms and conditions as they may determine. The
Directors may at any time after the allotment of any share but before any person
has been entered in the Register as the holder recognise a renunciation thereof
by the allottee in favour of some other person and may accord to any allottee of
a share a right to effect such renunciation upon and subject to such terms and
conditions as the Directors may think fit to impose.
(B)(i) Pursuant to and in accordance with Section 80 of the Companies
Act 1985 (as amended) the Directors shall be generally and unconditionally
authorised to exercise for each Section 80 prescribed period all the powers
of the Company to allot relevant securities up to an aggregate nominal
amount equal to the Section 80 Amount; and
(ii) Pursuant to and within the terms of the said authority the
Directors shall be empowered during each Section 89 prescribed period to
allot equity securities wholly for cash (a) pursuant to a Scrip Dividend
Offer; (b) in connection with a rights issue; and (c) otherwise than in
connection with a Scrip Dividend Offer or a rights issue up to an
aggregate nominal amount equal to the Section 89 Amount as if Section
89(1) of the Companies Act 1985 did not apply to such allotment; and
(iii) During each Section 80 prescribed period and each Section 89
prescribed period the Company and its Directors by such authority and
power may make offers or agreements which would or might require equity
securities or other relevant securities to be allotted after the expiry
of such period; and
(iv) For the purposes of this Article 9(B):
(a) "rights issue" means an offer of equity securities open for
acceptance for a period fixed by the Directors to holders of equity
securities on the register on a fixed record date in proportion to
their respective holdings of such securities or in accordance with
the rights attached thereto (but subject to such exclusions or other
arrangements as the Directors may deem necessary or expedient in
relation to fractional entitlements, record dates or legal or
practical problems under the laws of, or the requirements of any
recognised regulatory body or any stock exchange in any territory or
as regards shares held by any approved depositary or otherwise
howsoever);
(b) "Scrip Dividend Offer" has the meaning as ascribed in
Article 137 below;
(c) "Section 80 prescribed period" means any period not
exceeding 5 years for which the authority conferred under
sub-paragraph (1) is renewed by Ordinary or Special Resolution
stating the Section 80 Amount;
(d) "Section 89 prescribed period" means any period (not
exceeding 5 years on any occasion) for which the power conferred
under sub-paragraph (ii) is renewed by Special Resolution stating the
Section 89 Amount;
(e) "the Section 80 Amount" shall for any Section 80 prescribed
period be that stated in the relevant Ordinary or Special Resolution;
(f) "the Section 89 Amount" shall for any Section 89 prescribed
period be that stated in the relevant Special Resolution;
A-4
<PAGE> 39
(g) the nominal amount of any securities shall be taken to be,
in the case of rights to subscribe for or to convert any securities
into shares of the Company, the nominal amount of such shares which
may be allotted pursuant to such rights; and
(h) words and expressions defined in or for the purposes of Part
IV of the Companies Act 1985 (as amended) shall bear the same
meanings herein.
10A 6.50% SENIOR CONVERTIBLE PARTICIPATING SHARES
(A) Encumbrances
All Participating Shares (including any Participating Shares issued as a
dividend or by way of bonus issue pursuant to Article 10A(C)) shall, when
issued, be free from any option, charge, lien, equity, encumbrance, right of
pre-emption or any other third party rights and free from any taxes and charges
with respect to the issue thereof.
(B) Ranking
The Participating Shares shall, with respect to dividend rights and rights
on a return of capital (whether on a liquidation, winding-up, dissolution or
otherwise), on the terms set out in the following provisions of this Article
10A, rank in priority to the Ordinary Shares and each other class of Share
Capital of the Company created after the date of adoption of these Articles
which does not expressly provide that it ranks in priority to or on a par with
the Participating Shares as to dividend rights and rights on a return of capital
(collectively, the "Junior Securities"). The Participating Shares shall, with
respect to dividend rights and rights on a return of capital, rank on a par with
each other class of shares of the Company hereafter created which expressly
provides that it ranks on a par with the Participating Shares as to dividend
rights and rights on a return of capital (collectively, the "Parity
Securities"); provided, that any such securities not issued in accordance with
Article 10A(D)(iv) hereof shall be deemed to be Junior Securities. The
Participating Shares shall, with respect to dividend rights and rights on a
return of capital, rank junior to each class of shares of the Company hereafter
created which expressly provides that it ranks in priority to the Participating
Shares as to dividend rights and rights on a return of capital (collectively,
the "Senior Securities"); provided, that any such securities not issued in
accordance with Article 10A(D)(iv) hereof shall be deemed to be Junior
Securities.
(C) Dividends
(i) For each Dividend Period (as defined below), the holders of
Participating Shares shall be entitled to receive with respect to their
holdings of Participating Shares, in priority to the transfer of any sum to
reserves or any rights of holders of Junior Securities, out of the
distributable profits of the Company legally available therefor, cumulative
preferential dividends calculated based on the then effective Liquidation
Return per Participating Share at a rate per annum equal to the greater of
(i) the Stated Dividend Rate and (ii) the Ordinary Share Equivalent Rate
with respect to such Dividend Period.
(ii) In the period prior to the fifth anniversary of the Issue Date
(as defined below) the Company's obligations to pay dividends on the
Participating Shares pursuant to Article 10A(C)(i) above (including in
respect of all accumulated and unpaid dividends) shall be satisfied solely
by the issue to the holders of the Participating Shares of additional
Participating Shares, credited as fully paid up for cash, as provided
below. In the period commencing on the fifth anniversary of the Issue Date,
dividends in respect of the Participating Shares (including all accumulated
and unpaid dividends in respect of prior Dividend Periods which are payable
in such period) shall be payable in cash; provided, that the Company's
obligations to pay dividends on the Participating Shares pursuant to
Article 10A(C)(i) above in such period shall be satisfied by the issue to
the holders of the Participating Shares of additional Participating Shares,
credited as fully paid up for cash, to the extent that the terms of the
Company's then existing principal indebtedness (whether under its principal
bank credit facilities or pursuant to debt securities issued in an
aggregate principal amount in excess of U.S.$50 million in a bona fide
underwritten public or bona fide private offering) prohibits the payments
of such dividends in cash. The number of Participating Shares to be issued
to the holders of Participating Shares when dividends are to be satisfied
by the issue of Participating Shares shall equal the amount of the dividend
expressed in cash divided by the then
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<PAGE> 40
effective Liquidation Return per Participating Share, rounded down to the
nearest full share after taking into account all Participating Shares owned
by the holder thereof. If dividends are to be satisfied by the issue of
Participating Shares in accordance with this Article 10A(C)(ii), the
holders of the Participating Shares shall be deemed to have irrevocably
authorised and instructed the Directors to apply the dividend payable to
such holders in subscribing in cash for such Participating Shares and the
Company irrevocably undertakes to apply the same in accordance with such
instructions.
(iii) Dividends shall be payable in arrears on each February 15, May
15, August 15 and November 15, unless such day is not a Business Day, in
which event dividends shall be payable on the next succeeding Business Day
(each such date being hereinafter referred to as a "Dividend Payment
Date"), commencing on the first Dividend Payment Date in respect of
Participating Shares which is at least seven days after the issuance
thereof. For Participating Shares issued on the original issue date of the
Participating Shares in accordance with these Articles (the "Issue Date"),
the first dividend payment shall be for the period from and including the
Issue Date up to but excluding the date of the first Dividend Payment Date,
and each dividend payment thereafter shall be for the period from and
including the most recent Dividend Payment Date to but excluding the first
Dividend Payment Date thereafter. For Participating Shares issued
subsequent to the Issue Date, the first dividend payment shall be for the
period from and including the date of issuance thereof to but excluding the
date of the first Dividend Payment Date thereafter, and each dividend
payment thereafter shall be for the period from and including the most
recent Dividend Payment Date to but excluding the first Dividend Payment
Date thereafter. Each quarterly period beginning on February 16, May 16,
August 16 and November 16 in each year and ending on and including the day
next preceding the first day of the next such quarterly period shall be a
"Dividend Period". The amount of dividends payable for each full Dividend
Period shall be computed by dividing the applicable dividend rate per annum
by four. Dividends (or amounts equal to accumulated and unpaid dividends)
payable on Participating Shares for any period less than a full quarterly
Dividend Period will be computed on the basis of a 360-day year of twelve
30-day months and the actual number of days elapsed in any period less than
one month. The record date for determination of holders of Participating
Shares entitled to receive payment of a dividend or distribution thereon
shall be, with respect to the dividend payable on February 15, May 15,
August 15 and November 15 of each year, the preceding January 15, April 15,
July 15 and October 15, respectively, or such other record date as may be
fixed by the Directors from time to time, which other record date shall be
no less than 30 and no more than 60 calendar days prior to the relevant
Dividend Payment Date. Dividends and distributions shall be payable to
holders of record as they shall appear on the records of the Company on the
applicable record date.
(iv) When the Company's dividend obligations are to be satisfied by
the issue of Participating Shares in accordance with Article 10A(C)(ii)
above (whether prior to the fifth anniversary of the Issue Date or
thereafter), then to the extent that the Company has insufficient
distributable profits legally available in accordance with the Statutes for
the payment of such dividends on any Dividend Payment Date, the Company
shall (to the extent that it has reserves or sums in its share premium
account legally available therefor in accordance with the Statutes) issue
to the holders of the Participating Shares, by way of bonus issue,
additional Participating Shares, except to the extent prohibited by the
Company's then existing indebtedness (whether under its principal bank
credit facilities or pursuant to debt securities issued in an aggregate
principal amount in excess of US$50 million in a bona fide underwritten
public or bona fide private offering). The number of additional
Participating Shares to be so issued and the rights and obligations
attaching thereto shall be the same as if the Company had issued such
Participating Shares as a dividend in accordance with Article 10A(C)(ii).
Any Participating Shares issued by way of a bonus issue under this Article
10A(C)(iv) shall be in lieu of dividends and the provisions of this Article
10A shall apply as if such Participating Shares had been issued as
dividends. The rights to receive Participating Shares by way of bonus issue
pursuant to this Article 10A(C)(iv) shall accrue to the holders of the
Participating Shares and not to any other holder of Share Capital.
(v) The cash equivalent of dividends on account of arrears in respect
of each Participating Share for any particular Dividend Period in which
dividends were not paid or a bonus issue was not made on the
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<PAGE> 41
applicable Dividend Payment Date (including, without limitation, as a
result of the Company not having available sufficient distributable
profits, reserves or sums in its share premium account available for a
bonus issue, or as a result of the rounding down of the number of
Participating Shares issuable in the payment of dividends as provided above
in Article 10A(C)(ii)) shall be automatically added to the then effective
Liquidation Return on the relevant Dividend Payment Date. Any amounts so
added to the then effective Liquidation Return in respect of such
Participating Share shall be subject to reduction as provided below in
Article 10A(C)(vi).
(vi) To the extent the Company has profits or reserves legally
available for distribution, an amount equal to accumulated and unpaid
dividends for any past Dividend Period may be declared by the Directors and
paid as a dividend (in Participating Shares or cash, as the case may be, as
provided above in Article 10A(C)(ii)) or by way of a bonus issue in lieu of
such dividend in accordance with Article 10A(C)(iv) on any subsequent
Dividend Payment Date to all holders of Participating Shares of record on
the record date for such subsequent Dividend Payment Date (including,
without limitation, holders of Participating Shares issued after the record
date for the Dividend Payment Date for such past Dividend Period). Each
such payment shall automatically reduce the then effective Liquidation
Return by an amount equal to the aggregate amount of such payment divided
by the total number of Participating Shares outstanding on such record date
for such subsequent Dividend Payment Date; provided, however, that the
Liquidation Return shall not be reduced below U.S.$1,000 per share.
(vii) Dividends on the Participating Shares shall accumulate on a
daily basis. Dividends shall cease to accumulate in respect of
Participating Shares on the date of actual conversion or redemption
thereof. The amount of the dividend due on each Dividend Payment Date
shall, subject to Article 10A(C)(iv), be paid out of the profits of the
Company available for distribution in accordance with the Statutes, without
the need for any resolution of the Directors or of the Members in General
Meeting.
(viii) To the extent that the Company is legally permitted to do so
but save where a majority of the Directors decides bona fide that to do so
would be materially prejudicial to the business of any subsidiary
undertaking, the Company shall use its best efforts to procure the
distribution to the Company by its subsidiary undertakings in respect of
each financial year by way of dividend or otherwise (except by the
reduction of capital or own-share purchase) of sufficient of the profits,
if any, of its subsidiary undertakings to enable the company to pay the
dividends on the Participating Shares.
(ix) Dividends paid on the Participating Shares in an amount less than
the total amount of such dividends at the time accumulated and payable on
such shares shall be allocated pro rata on a share-by-share basis among all
such shares at the time outstanding, and any remainder not paid as provided
above in respect of each Participating Share shall be added to the
Liquidation Return as provided above in Article 10A(C)(v) hereof.
(x) As long as any Participating Shares are outstanding, no dividends
or other distributions (other than dividends or other distributions payable
in shares of, or warrants, rights or options exercisable for or convertible
into shares of, Junior Securities and cash in lieu of fractional shares of
such Junior Securities in connection with any such dividends) will be paid
on any Junior Securities unless:
(a) full cumulative dividends on all outstanding Participating
Shares and any outstanding Parity Securities have been paid, or declared
and set aside for payment, for all Dividend Periods terminating on or
prior to the payment date of such dividend or distribution and for the
current Dividend Period;
(b) the Company has paid or set aside all amounts, if any, then or
theretofore required to be paid or set aside for all redemption
reserves, if any, for any outstanding Participating Shares or Parity
Securities; and
(c) the Company is not in default of any of its obligations to
redeem any outstanding Participating Shares or Parity Securities.
(xi) As long as any Participating Shares are outstanding, no Junior
Securities may be purchased, redeemed or otherwise acquired by the Company
or any of its subsidiaries (except in connection with a reclassification or
exchange of any Junior Securities through the issuance of shares of, or
warrants, rights
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<PAGE> 42
or options exercisable for or convertible into shares of, other Junior
Securities (and cash in lieu of fractional shares of such Junior Securities
in connection therewith) or the purchase, redemption or other acquisition
of any Junior Securities with any shares of, or warrants, rights or options
exercisable for or convertible into shares of, other Junior Securities (and
cash in lieu of fractional shares of such Junior Securities in connection
therewith)), nor may any funds be set aside or made available for any
redemption reserve for the purchase or redemption of any Junior Securities.
(xii) As long as any Participating Shares are outstanding, no
dividends or other distributions (other than dividends or other
distributions payable in shares of, or warrants, rights or options
exercisable for or convertible into shares of, Junior Securities and cash
in lieu of fractional shares of such Junior Securities in connection with
any such dividends) will be paid on any Parity Securities unless such
dividends or other distributions are declared and paid pro rata so that the
amounts of any such dividends or other distributions declared and paid per
share on outstanding Participating Shares and each other share of such
Parity Securities will in all cases bear to each other the same ratio that
the then effective Liquidation Return per share of outstanding
Participating Shares and the amount payable per share of such other
outstanding shares of Parity Securities on a solvent winding up of the
Company bear to each other.
(xiii) As long as any Participating Shares are outstanding, no Parity
Securities may be purchased, redeemed or otherwise acquired by the Company
or any of its subsidiaries (except with shares of, or warrants, rights or
options exercisable for or convertible into shares of, Junior Securities
and cash in lieu of fractional shares of such Junior Securities in
connection therewith) unless the Participating Shares and such Parity
Securities are purchased, redeemed or otherwise acquired pro rata so that
the Fair Market Value of the consideration applied to the purchase,
redemption or other acquisition of each Participating Share and each share
of such Parity Securities will in all cases bear to each other the same
ratio that the then effective Liquidation Return per outstanding
Participating Share and the amount payable per share of such other
outstanding Parity Securities on a solvent winding up of the Company bear
to each other.
(xiv) As long as any Participating Shares are outstanding, no
resolution to reduce the Company's issued share capital or any uncalled
liability thereon shall be effective unless such resolution is sanctioned
by an extraordinary resolution of the holders of the Participating Shares
held at a separate meeting of such holders.
(xv) Subject to the provisions described above in this Article 10A(C),
such dividends or other distributions (payable in cash, property or Junior
Securities) as may be determined from time to time by the Directors may be
declared and paid on the shares of any Junior Securities and/or Parity
Securities and from time to time Junior Securities and/or Parity Securities
may be purchased, redeemed or otherwise acquired by the Company or any of
its subsidiaries. In the event of the declaration and payment of any such
dividends or other distributions, the holders of such Junior Securities
and/or Parity Securities, as the case may be, will be entitled, to the
exclusion of holders of any outstanding Participating Shares, to share
therein according to their respective interests.
(D) Voting Rights
(i) The holders of the Participating Shares (in addition to their
rights set forth in this Article 10A(D) and otherwise provided by
applicable law) shall be entitled from time to time to such number of votes
for each Participating Share held as equals the number of Ordinary Shares
into which such Participating Share is convertible on the record date set
for determining the persons entitled to vote on any matter and shall, if
they shall exercise such entitlement, vote together with the holders of the
Ordinary Shares (and any other class or series of Share Capital, if any,
similarly entitled to vote), as a single class, on all matters to be voted
on by holders of the Ordinary Shares. Notwithstanding the preceding
sentence, the aggregate voting rights attaching to the Participating Shares
held by Cypress and Affiliates of Cypress shall in no circumstances exceed
29.99% of all voting rights from time to time exercisable by the Members of
the Company in General Meeting. If the voting rights attaching to the
Participating Shares held by Cypress and Affiliates of Cypress when
calculated in accordance with this Article 10A(D)(i) exceed 29.99%, then
the aggregate voting rights of the Participating Shares held by Cypress and
Affiliates of Cypress shall be deemed to be 29.99%, and such voting rights
shall be
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<PAGE> 43
exercisable by Cypress (if it is a holder of Participating Shares) and
Affiliates of Cypress that are holders of Participating Shares on a pro
rata basis according to the number of issued Participating Shares held by
each such holder.
(ii) In addition to the voting rights set forth in Article 10A(D)(i),
holders of the Participating Shares shall be entitled to vote as a separate
class on matters which require (under these Articles or applicable law) a
separate class vote of the Participating Shares and shall have such other
voting rights as are set forth in this Article 10A(D).
(iii) If at any time:
(a) the Company shall have failed to redeem any outstanding
Participating Shares in accordance with these Articles; or
(b) dividends payable in cash on Participating Shares as provided
in Article 10A(C)(ii) hereof (i.e., dividends payable in the period
commencing on the fifth anniversary of the Issue Date) have not been
paid in full in cash for six consecutive Dividend Periods regardless of
whether or not the Company shall have paid dividends in additional
Participating Shares pursuant to the proviso in the second sentence of
Article 10A(C)(ii) hereof, or by way of bonus issue pursuant to Article
10A(C)(iv) hereof,
thereafter and until, in the case of Article 10A(D)(iii)(a) above, the
date that the Company shall have fulfilled its redemption obligations
or, in the case of Article 10A(D)(iii)(b) above, until the date that all
accumulated and unpaid dividends payable as provided in Article
10A(C)(ii) hereof (i.e., dividends payable on and after the fifth
anniversary of the Issue Date), whether or not declared, on the
outstanding Participating Shares shall have been paid in full and the
Company shall have paid dividends in full in cash for four additional
consecutive fiscal quarters thereafter, the number of Directors then
constituting the Board of Directors of the Company shall be increased by
two and the holders of Participating Shares, acting as a class, shall be
entitled to elect the two additional Directors to serve on the Board of
Directors by majority vote at a class meeting of the holders of the
Participating Shares to be held immediately prior to any annual meeting
of shareholders or extraordinary meeting held in place thereof, or by
majority vote at an extraordinary meeting of the holders of the
Participating Shares called as hereinafter provided, or by majority vote
of the holders of the Participating Shares as set forth in a written
document signed by all such holders. The remaining Directors of the
Company shall be elected by the classes of Share Capital, including the
Participating Shares, entitled to vote therefor, voting together, at
each meeting of shareholders held for the purpose of electing Directors,
all in accordance with the terms and procedures set forth in these
Articles. As soon as, in the case of Article 10A(D)(iii)(a) above, the
Company shall have fulfilled its redemption obligation and, in the case
of Article 10A(D)(iii)(b) above, all accumulated and unpaid dividends
payable as provided in Article 10A(C)(ii) hereof, whether or not
declared, on the outstanding Participating 4 Shares shall have been paid
in full and the Company shall have paid dividends in full in cash for
four additional consecutive fiscal quarters thereafter, then the right
of the holders of the Participating Shares to elect such additional
Directors pursuant to this Article 10A(D)(iii) shall immediately cease,
the term of office of any person elected as Director by the holders of
the Participating Shares shall forthwith terminate (and the holders of
the Participating Shareholders shall take all steps necessary to procure
the resignation of such Directors) and the number of Directors
comprising the board of Directors shall be reduced accordingly. At any
time after voting power to elect a Director shall have become vested and
be continuing in the holders of Participating Shares pursuant to this
Article 10A(D)(iii) or if a vacancy shall exist in the office of a
Director elected by the holders of Participating Shares, the Directors
may, and upon the written request of the holders of record of at least
25% of the Participating Shares then outstanding addressed to the
Secretary of the Company shall, call an extraordinary meeting of the
holders of Participating Shares, for the purpose of electing the
Directors which such holders are entitled to elect. If such meeting
shall not be called by the Directors within 20 days after personal
service of written request upon the Secretary of the Company, or within
20 days after mailing the
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<PAGE> 44
same by a reputable overnight air courier service, addressed to the
Secretary of the Company at its principal executive offices, then the
holders of at least 25% of the outstanding Participating Shares may
designate in writing one of their number to call such meeting at the
expense of the Company. Such meeting may be called by the person so
designated, or the Directors (as the case may be) upon the notice
required for the annual meeting of shareholders of the Company and shall
be held at the place for holding the Annual General Meeting of
shareholders. Any holder of Participating Shares so designated shall
have, and the Company shall provide, access to the lists of shareholders
to be called pursuant to the provisions hereof. The rights of the
holders of the Participating Shares to elect two additional Directors
pursuant to this Article 10A(D)(iii) shall be in addition to the right
to appoint Directors set forth in Article 10A(H) hereof.
(iv) As long as any Participating Shares are outstanding, subject to
applicable law, the Company shall not, without consent of the holders of at
least a majority of the number of Participating Shares at the time
outstanding, voting as a single class, given in person or by proxy, either
in writing or by vote at an extraordinary meeting of that class called for
the purpose:
(a) increase the number of authorized Participating Shares or issue
any additional Participating Shares, other than as contemplated by the
terms of the Participating Shares;
(b) amend or modify the relative rights, powers, preferences or
limitations of the Participating Shares or amend, alter or repeal any of
the provisions of the Company's Memorandum of Association or these
Articles so as to eliminate the Participating Shares or otherwise affect
adversely the relative rights, powers, preferences or limitations of the
holders of Participating Shares; or
(c) other than Participating Shares, create, authorize, issue or
permit to exist any class of Share Capital or series of preferred shares
that ranks as Senior Securities or Parity Securities with respect to the
Participating Shares, or reclassify any class or series of any Junior
Securities into Senior Securities or Parity Securities or reclassify any
class or series of any Parity Securities into Senior Securities, or
authorize any securities exchangeable for, convertible into or
evidencing the right to purchase any such class or series of Senior
Securities or Parity Securities.
(v) The holders of the Participating Shares shall be entitled to
relinquish their rights to the tax gross- up provided for in Article 10A(I)
at an extraordinary meeting of the holders of the Participating Shares duly
convened on 14 days notice. If the holders of the Participating Shares
present in person or by proxy at such meeting resolve by majority vote to
relinquish such tax gross-up rights, the Participating Shares shall
thereafter have no such rights and the Company shall not have the right to
redeem the Participating Shares in accordance with Article 10A(E)(iv).
(E) Redemption
(i) Subject to the provisions of the Statutes and these Articles, the
Company may redeem the Participating Shares and make payment in respect of
the Participating Shares in accordance with the Statutes whether out of its
distributable profits or out of the proceeds of a fresh issue of shares
made for the purposes of such redemption or otherwise. For the purposes of
any redemption under Articles 10A(E)(v) or 10A(E)(vii), the Company shall
use its best efforts to complete a fresh issue of shares (taking into
account then prevailing market conditions and other factors deemed
reasonable by a majority of the Directors) if and to the extent that the
Company does not have sufficient distributable profits to make such
redemption without such a fresh share issue, but save to the extent that
such fresh issue is prohibited by the Company's then existing indebtedness
(whether under its principal bank credit facilities or pursuant to debt
securities issued in an aggregate principal amount in excess of U.S.$50
million in a bona fide underwritten public offering or bona fide private
offering).
(ii) The Company shall not have the right to redeem the Participating
Shares prior to the fourth anniversary of the Issue Date, except in the
limited circumstances set forth in Articles 10A(E)(iv).
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<PAGE> 45
(iii) On and after the fourth anniversary of the Issue Date and prior
to the eleventh anniversary of the Issue Date, the Company shall have the
right to redeem the Participating Shares, in whole but not in part, at a
redemption price per share in cash equal to the greater of:
(a) the amount set forth below (expressed as a percentage of the
then effective Liquidation Return), if redeemed during the twelve-month
period beginning on the anniversary of the Issue Date in the years
indicated below:
<TABLE>
<CAPTION>
PERCENTAGE OF
THEN EFFECTIVE
YEAR LIQUIDATION RETURN
---- ------------------
<S> <C>
2003..................................................... 103.250%
2004..................................................... 102.167
2005..................................................... 101.083
2006 and thereafter...................................... 100.000; and
</TABLE>
(b) the aggregate Market Value of the Ordinary Shares into which
such Participating Shares are convertible (in accordance with Article
10A(F)) on the date of redemption,
in each case plus accumulated and unpaid dividends for the period from
and including the most recent Dividend Payment Date through and
including the date of redemption. Notwithstanding the preceding
sentence, the Company may, at its option (exercisable by resolution of
the Directors), elect to cause the Participating Shares to be converted
(in lieu of redemption in cash at the price referred to in Article
10A(E)(iii)(b)) into such number of Ordinary Shares as are issuable upon
conversion of the relevant Participating Shares on the date fixed for
redemption (the number of Ordinary Shares issuable on conversion being
calculated in accordance with Article 10A(F)(ii)).
(iv) Prior to the fourth anniversary of the Issue Date, the Company
shall have the right to redeem the Participating Shares, in whole but not
in part, at the same redemption price applicable for redemptions during the
twelve-month period beginning on the anniversary of the Issue Date in 2003
(as set forth in Article 10A(E)(iii)), but only in the event that the
Company has or will become obliged to pay Additional Amounts in respect of
the Participating Shares under the provisions of Article 10A(I) at a rate
of withholding or deduction in excess of 7.5% of the amounts otherwise
payable but for such Article 10A(I) as a result of any change in, or
amendment to, the laws (or any rules, regulations or ruling promulgated
thereunder) of the United Kingdom, which change or amendment becomes
effective after the Issue Date. Prior to the giving of any notice of
redemption of the Participating Shares under this Article 10A(E)(iv), the
Company will deliver to the holders of the Participating Shares (a) a
certificate, executed by the Company's chief financial officer, stating
that the Company is entitled to effect such redemption pursuant to this
Article 10A(E)(iv) and setting forth in reasonable detail a statement of
facts showing that the conditions precedent to the right of the Company so
to redeem have occurred; and (b) a written opinion of independent English
legal advisors, of recognised standing, to the effect that the Company has
or will become obliged to pay such Additional Amounts as a result of such
change or amendment. Notwithstanding the preceding sentences of this
Article 10A(E)(iv), the Company shall not have any rights to redeem the
Participating Shares pursuant to this Article 10A(E)(iv) in the event that
the holders of the Participating Shares vote pursuant to Article 10A(D)(v)
to relinquish their rights to the tax gross-up provided for in Article
10A(I).
(v) Subject to the Statutes, on the eleventh anniversary of the Issue
Date (or as soon thereafter as the Company is permitted by the Statutes),
the Company shall redeem all outstanding Participating Shares or, failing
which, the maximum number of outstanding Participating Shares that can
lawfully be so redeemed in accordance with the Statutes on such date, if
any, at a redemption price per share in cash equal to the greater of (a)
the then effective per share Liquidation Return and (b) the aggregate
Market Value of the Ordinary Shares into which such Participating Shares
are convertible (in accordance with Article 10A(F)) on the date of
redemption, in each case plus accumulated and unpaid dividends for the
period from and including the most recent Dividend Payment Date through and
including the date of redemption. Notwithstanding the previous sentence,
the Company may, at its option (exercisable by
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<PAGE> 46
resolution of the Directors), elect to cause the Participating Shares to be
converted (in lieu of redemption in cash at the price referred to in
Article 10A(E)(v)(b)) into such number of Ordinary Shares as are issuable
upon conversion of the relevant Participating Shares on the date fixed for
redemption (the number of Ordinary Shares issuable on conversion being
calculated in accordance with Article 10A(F)(ii)). In case the Company is
unable to so redeem all outstanding Participating Shares on the eleventh
anniversary of the Issue Date, it shall do so pro rata on a share-by-share
basis among the holders of all such Participating Shares.
(vi) A notice to redeem the Participating Shares pursuant to Article
10A(E)(iii), 10A(E)(iv) or 10A(E)(v) hereof (the "Redemption Notice") shall
be sent by or on behalf of the Company, by a reputable overnight air
courier service, to holders of record of Participating Shares at their
respective addresses as they shall appear on the records of the Company,
not less than 30 days nor more than 60 days prior to the date fixed for
redemption:
(a) notifying such holders of the election of the Company to redeem
such shares, the number of shares to be redeemed, and of the date fixed
for redemption;
(b) stating that the Participating Shares may be converted in
accordance with Article 10A(F) hereof, until the close of business
(London time) on the Business Day prior to the date of redemption by
surrendering to the Company or the registrar (who shall act as transfer
agent for the Participating Shares) the certificate or certificates for
the shares to be converted, accompanied by written notice specifying the
number of shares to be converted, and stating the name and address of
the registrar;
(c) stating the place or places at which the shares called for
redemption shall, upon presentation and surrender of the certificates
evidencing such shares, be redeemed, and the redemption price to be paid
therefor; and
(d) stating that dividends shall cease to accumulate on the date of
redemption unless the Company defaults in the payment of the redemption
price.
(vii)(a) Subject to the provisions of the Statutes, in the event of
any Change of Control, each holder of the Participating Shares shall have
the right, at such holder's option, subject to the terms and conditions
hereof, to require the Company to redeem its Participating Shares, in whole
or in part, on a Business Day that is no earlier than 30 days nor later
than 60 days after the occurrence of such Change of Control (the "Change of
Control Repurchase Date") at a redemption price per Participating Share in
cash equal to the greater of (1) 101% of the then effective per share
Liquidation Return and (2) the aggregate Market Value of the Ordinary
Shares into which such Participating Shares are convertible (in accordance
with Article 10A(F)) on the date of redemption, in each case plus
accumulated and unpaid dividends in respect of each Participating Share
being redeemed for the period from the most recent Dividend Payment Date
through and including the date of redemption, plus the sum of any remaining
dividend payments that would have otherwise been payable on such
Participating Shares (assuming that the Stated Dividend Rate would have
been the applicable rate throughout such period) up to and including the
date which is three and one-half years after the Issue Date (the "Change of
Control Repurchase Price"). Notwithstanding the preceding sentence, the
Company may, at its option (exercisable by resolution of the Directors),
elect to cause the Participating Shares to be converted (in lieu of
redemption in cash at the price referred to in Article 10A(E)(vii)(a)(2))
into such number of Ordinary Shares as are issuable upon conversion of the
relevant Participating Shares on the date fixed for redemption (the number
of Ordinary Shares issuable on conversion being calculated in accordance
with Article 10A(F)(ii)), except that the Company shall pay in cash such
sum of any remaining dividend payments referred to in the preceding
sentence.
(b) In the event of any Change of Control, each holder of
Participating Shares may, alternatively, convert its Participating
Shares, in whole or in part, into Ordinary Shares in accordance with
Article 10A(F) and, if converted after such Change of Control but prior
to or at the close of business on the 60th day after the Change of
Control Notice, subject to the provisions of the
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<PAGE> 47
Statutes, such holder shall receive on the date of conversion an
additional cash payment equal to the sum of any remaining dividend
payments that would have otherwise been payable on such converted
Participating Shares (assuming that the Stated Dividend Rate would have
been the applicable rate throughout such period) through and including
the date which is three and one-half years after the Issue Date (the
"Additional Change of Control Payment").
(c) If the Company is unable lawfully to redeem in accordance with
the Statutes all Participating Shares as to which holders have, at their
option, required the Company to redeem in accordance with Article
10A(E)(vii)(a), then it shall do so pro rata on a share-by-share basis
among all such shares of the relevant holders. Similarly, if the Company
is unable lawfully to pay any Additional Change of Control Payment set
forth in Article 10A(E)(vii)(b), then it shall do so pro rata on a
share-by-share basis among all such shares of the relevant holders. For
purposes of the preceding two sentences, the redemption of Participating
Shares pursuant to Article 10(E)(vii)(a) shall have priority over the
payment of any Additional Change of Control Payment pursuant to Article
10A(E)(vii)(b).
(d) Notwithstanding Articles 10A(E)(vii)(a) or 10A(E)(vii)(b), to
the extent that the Company is prohibited by the Statutes from paying
the Change of Control Repurchase Price set forth in Article
10A(E)(vii)(a) and/or any Additional Change of Control Payment set forth
in Article 10A(E)(vii)(b) to the relevant holder of any Participating
Share, respectively, then the Change of Control Adjustment Amount, if
applicable, shall be added to the Liquidation Return of each such
Participating Share that will not be redeemed or converted in accordance
with such Articles and each such Participating Share not so redeemed or
converted shall remaining outstanding after any corresponding Change of
Control Repurchase Date and/or the 60th day after the corresponding
Change of Control Notice, as the case may be.
(e) The Company shall comply with the requirements of Rule 14e-1
under the U.S. Securities Exchange Act of 1934 and any other securities
laws and regulations to the extent such Rule and such laws and
regulations are applicable in connection with the redemption of
Participating Shares as a result of a Change of Control in accordance
with Article 10A(E)(vii)(a).
(f) The Company shall not be required to redeem Participating
Shares in the event of the occurrence of a Change of Control in
accordance with Article 10A(E)(vii)(a) if any other Person acquires all
Participating Shares in respect of which a Change of Control Repurchase
Notice has been validly tendered and not withdrawn in the manner and at
the times required by, and otherwise in compliance with, Article
10A(E)(ix) and Article 10A(E)(x).
(viii) A notice of a Change of Control (the "Change of Control
Notice") shall be sent by or on behalf of the Company, by a reputable
overnight air courier service, to each holder of Participating Shares of
record at its respective address as it appears on the records of the
Company not more than 10 days after the Change of Control:
(a) describing the transaction that constitutes the Change of
Control;
(b) stating the date by which any Change of Control Repurchase
Notice (as defined below) must be received by the Company or the
registrar from such holder and any Change of Control Repurchase Date;
(c) stating the procedures for withdrawing any Change of Control
Repurchase Notice;
(d) stating that the Participating Shares may be converted in
accordance with Article 10A(F) until the close of business on the
Business Day prior to any Change of Control Repurchase Date by
surrendering to the Company or its registrar the certificate or
certificates for the Participating Shares to be converted, accompanied
by written notice specifying the number of shares to be converted, and
stating the name and address of the transfer agent for the Participating
Shares, if any;
(e) stating any Additional Change of Control Payment;
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(f) stating the place or places at which the shares called for
redemption shall, upon presentation and surrender of the certificates
evidencing such shares, be redeemed, and any Change of Control
Repurchase Price to be paid therefor; and
(g) stating that dividends shall cease to accumulate on any Change
of Control Repurchase Date unless the Company defaults in payment of any
Change of Control Repurchase Price.
(ix) To exercise its rights, if any, pursuant to Article
10A(E)(vii)(a), a holder of Participating Shares must deliver written
notice (a "Change of Control Repurchase Notice") to the Company, of the
exercise of such right prior to the close of business on the Business Day
immediately prior to the Change of Control Repurchase Date. The Change of
Control Repurchase Notice must state (a) the number of Participating Shares
to be redeemed and (b) that such Participating Shares will be submitted for
redemption by the Company on the Change of Control Repurchase Date.
(x) Any Change of Control Repurchase Notice may be withdrawn by a
holder of Participating Shares by a written notice of withdrawal delivered
to the Company prior to or at the close of business (London time) on the
Business Day immediately prior to the Change of Control Repurchase Date.
The notice of withdrawal must state the number of Participating Shares as
to which the withdrawal notice relates and the number of Participating
Shares, if any, which remains subject to the original Change of Control
Repurchase Notice.
(xi) Neither failure to mail any Redemption Notice or Change of
Control Notice, as the case may be, nor any defect in any Redemption Notice
or Change of Control Notice, as the case may be, to one or more holders of
Participating Shares shall affect the sufficiency of the proceedings for
redemption as to other holders. Subject to compliance with the provisions
of this Article 10A(E), the Company shall forthwith upon the date fixed for
redemption pay the redemption monies to the appropriate holders of the
Participating Shares.
(xii) On redemption the Company shall cancel the share certificate of
the applicable holder of Participating Shares and, in the case of a
redemption of part of the Participating Shares included in such
certificate, without charge issue a new certificate to such holder for the
balance of Participating Shares not redeemed.
(xiii) To the extent the Company is legally permitted to do so and
save where a majority of the Directors decides bona fide that to do so
would be materially prejudicial to the business of any subsidiary
undertaking, the Company shall use its best efforts to procure the
distribution to the Company by its subsidiary undertaking in respect of
each financial year by way of dividend or otherwise (except by the
reduction of capital or own-share purchases) of sufficient of the profits,
if any, of its subsidiary undertakings to enable the company to redeem the
Participating Shares in accordance with this Article 10A(E).
(xiv) If a Redemption Notice or a Change of Control Notice shall have
been given as hereinbefore provided, then each holder of Participating
Shares shall be entitled to all relative rights, powers, preferences and
limitations accorded to holders of the Participating Shares until and
including the date of redemption. Provided that the Company shall have
complied with its obligations pursuant to this Article 10A(E), from and
after the date of redemption, the Participating Shares the subject of such
redemption shall no longer be deemed to be outstanding, and all rights of
the holders of such shares shall cease and terminate, except the right of
the holders of such shares, upon surrender of certificates therefor, to
receive the monies to be paid under this Article 10A(E).
(xv) Any redemption monies unclaimed by the holders of the
Participating Shares entitled thereto for a period of 30 days following the
requisite payment date shall promptly be deposited by the Company in a
third party bank account to be held in trust for such holders.
(xvi) If a holder whose Participating Shares are to be redeemed under
this Article 10A(E) fails to deliver the certificate (or certificates) for
those shares to the Company, the Company may retain the redemption monies
payable to such holder pending delivery of such certificate(s). No person
shall, prior
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to delivery of such certificate(s), have any claim against the Company for
redemption monies retained under this Article 10A(E)(xvi), and the Company
shall not be liable for interest in respect thereof.
(xvii) The Directors may, pursuant to the authority given by the
adoption of this Article 10A(E), consolidate and sub-divide the share
capital available for issue as a consequence of a redemption of
Participating Shares into Ordinary Shares or any other class of shares into
which the authorised share capital of the Company is then divided, each of
a like nominal amount as the shares of that class then in issue, or into
unclassified shares of the same nominal amount as the Participating Shares.
The Directors may issue shares in anticipation of redemption to the extent
permitted by the Statutes and these Articles.
(F) Conversion Rights
(i) Subject to and upon compliance with the provisions of this Article
10A(F), the holder of any Participating Shares shall have the right, at any
time and from time to time, at such holder's option, to convert all or part
(having an aggregate Liquidation Return of at least U.S.$1 million) of such
holder's Participating Shares into Ordinary Shares, and the Company shall
have the limited ability in accordance with Article 10A(E)(iii), Article
10A(E)(v) and Article 10A(E)(vii) to elect to cause the Participating
Shares to be converted into Ordinary Shares. If a Redemption Notice or a
Change of Control Repurchase Notice has been given as hereinbefore
provided, such right of conversion shall terminate at the close of business
on the Business Day prior to the date fixed for redemption.
(ii) Each Participating Share as a whole (and not a fraction thereof)
shall be converted into the number of Ordinary Shares as is equal to the
number determined by dividing (i) the sum of the Liquidation Return on the
date of conversion plus accumulated and unpaid dividends for the period
from and including the most recent Dividend Payment Date up to and
including the date of conversion (in respect of such Participating Share)
by (ii) the Conversion Price in effect on the date of conversion.
(iii) Conversion of such Participating Shares as are due to be
converted ("Relevant Shares") shall be effected in such manner as may be
authorised by applicable law and, without prejudice to the rights of the
holders of the Participating Shares under this Article 10A(F), as the
Directors may in their absolute discretion from time to time determine for
effecting the exercise of the conversion rights attaching to the relevant
Participating Shares (unless the holders of the Participating Shares pass
an extraordinary resolution at a class meeting of the holders of the
Participating Shares electing a particular manner of conversion (which
extraordinary resolution is in effect prior to or at the time of delivery
of the Conversion Notice relating to the Shares to be converted)) in which
case conversion shall be effected in such manner, provided that such manner
complies with these Articles and the Statutes). Without limiting the
foregoing, the conversion of the Participating Shares may be effected by
any of the methods set out below (and the Directors shall be authorised for
all relevant purposes pursuant to the authority given by the resolution
adopting these Articles to so convert the Participating Shares):
(a) Conversion may be effected by the redemption of the Relevant
Shares (or any of them) on the relevant conversion date for a sum equal
to the Liquidation Return on the date of conversion plus accumulated and
unpaid dividends for the period from and including the most recent
Dividend Payment Date up to and including the conversion date, out of
distributable profits of the Company. In that event, the Relevant Shares
confer upon the holders thereof the right and obligation to subscribe
for the appropriate number of Ordinary Shares to which such holder is
entitled in accordance with Article 10A(F)(ii), at such aggregate
premium, if any, as represents the amount by which the redemption monies
payable in respect of the Relevant Shares exceeds the nominal amount of
such number of Ordinary Shares. If redemption is to be made in
accordance with this Article 10A(F)(iii)(a), the Conversion Notice given
by or relating to a holder of Relevant Shares shall be deemed
irrevocably to authorise and instruct the Directors to apply the
redemption monies payable to such holder in subscribing in such holder's
name for such Ordinary Shares at such premium.
(b) Conversion may be effected by the redemption of the Relevant
Shares (or any of them) on the relevant conversion date, for a sum equal
to the Liquidation Return on the conversion date plus
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<PAGE> 50
accumulated and unpaid dividends for the period from and including the
most recent Dividend Payment Date up to and including the conversion
date, out of the proceeds of a fresh issue of shares made for the
purposes of redemption or in any other manner allowed by the Statutes
and these Articles. In that event, the Relevant Shares confer on the
holders thereof the right and obligation to subscribe for the
appropriate number of Ordinary Shares to which that holder is entitled
in accordance with Article 10A(F)(ii), at such aggregate premium, if
any, as represents the amount by which the redemption monies payable in
respect of the Relevant Shares exceeds the nominal amount of such number
of Ordinary Shares. If redemption is to be made out of the proceeds of a
fresh issue of shares made for the purposes of the redemption the
Conversion Notice given by or relating to a holder of Relevant Shares
shall be deemed irrevocably:
(1) to have appointed any Person selected by the Directors as
such holder's agent with authority to apply an amount equal to the
redemption monies in respect of that holder's Relevant Shares in
subscribing and paying on that holder's behalf for the number of
Ordinary Shares to which such holder is entitled in accordance with
Article 10A(F)(ii); and
(2) to have authorised and instructed the Directors to pay
following the allotment of such Ordinary Shares such redemption
monies to such agent who shall be entitled to retain the same for the
agent's own benefit without being accountable therefor to such
holder.
(c) Conversion may be effected by means of consolidation and
sub-division to the extent that such consolidation and sub-division can
lawfully be effected in accordance with the provisions of the Statutes
(or other applicable laws) and these Articles. In such case, the
requisite consolidation and sub-division shall be effected pursuant to
the authority given by the resolution adopting these Articles as
follows. All the Relevant Shares held by any holder or joint holders in
respect of which a Conversion Notice shall have been delivered shall be
consolidated into one share having a nominal value equal to the
aggregate nominal value of the Relevant Shares. Such consolidated share
shall be sub-divided and redesignated into such number of Ordinary
Shares of 1.25p each (or such other nominal value as may be appropriate
as a result of any consolidation or sub-division of the Ordinary
Shares), as is equal to the number of Ordinary Shares to which such
holder is entitled pursuant to such Conversion Notice (fractional
entitlements to an Ordinary Share being disregarded) and such number of
special deferred shares of 0.001p each, if any, as have an aggregate
nominal value equal to the amount, if any, by which the aggregate
nominal value of such Ordinary Shares issued on conversion is less than
the aggregate nominal value of such consolidated share. Any such special
deferred shares will have the rights set out in Article 10A(F)(iv). The
Directors shall be authorised for all relevant purposes pursuant to the
authority given by the resolution adopting these Articles to make such
arrangements for the attribution of value to reflect the redesignation
of a U.S. dollar denominated share as a sterling denominated share.
(d) Provided it is lawful to do so in accordance with the Statutes
(or other applicable laws) and the Articles, conversion may be effected
by means of the issue of shares to the holders of the Relevant Shares
credited as paid up in full out of distributable profits or reserves,
sums in the Company's share premium account or otherwise legally
available therefor. In such case, the number of Ordinary Shares to be
issued shall be the number of Ordinary Shares to which such holder is
entitled in accordance with Article 10A(F)(ii). In such event, upon the
issue of such Ordinary Shares the Relevant Shares shall be subdivided
and redesignated by the Directors pursuant to the authority given by the
resolution adopting these Articles into special deferred shares of U.S.
0.001 cents each having the rights set out in Article 10A(F)(iv) below.
(e) If and to the extent that conversion in accordance with the
above means (or any other means) would result in an illegal reduction of
capital or the issue of shares at a discount then the Company shall take
such action as may be lawful to issue such number of Ordinary Shares to
the holders of the Relevant Shares as may be required by the foregoing
provisions of this Article 10A(F)(iii) including by way of the issue of
bonus shares to the holders of the Relevant Shares
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or otherwise (but in no event shall the holders of the Relevant Shares
receive a number of Ordinary Shares exceeding their entitlement under
Article 10A(F)(ii)).
(iv) In the case of a conversion effected pursuant to either Article
10A(F)(iii)(c) or (d) the special deferred shares arising as a result
thereof shall on a return of capital in a winding-up or otherwise entitle
the holder only to the repayment of the amounts paid up on such shares
after repayment of the capital paid up on the Ordinary Shares plus the
payment of an additional L50,000 on each Ordinary Share and shall not
entitle the holder to the payment of any dividend nor to receive notice of
or to attend or vote at any General Meeting of the Company and such
conversion shall be deemed to confer irrevocable authority on the Company
at any time thereafter to appoint any person to execute on behalf of the
holders of such shares an instrument of transfer thereof and/or an
agreement to transfer the same, without making any payment to the holders
thereof, to such person as the Directors may determine as custodian thereof
and to agree to the cancellation and/or purchase by the Company of the same
(in accordance with the provisions of the Statutes) for a price of 1p for
all the special deferred shares without obtaining the sanction of the
holder thereof and pending such transfer and/or agreement to transfer
and/or cancel and/or purchase to retain the certificate for such shares (if
any certificate has been issued in respect thereof).
The Company may at its option (exercisable by resolution of the Directors)
at any time after the creation of any special deferred shares redeem all or
any of the special deferred shares then in issue for 1p for all the special
deferred shares redeemed, at any time upon giving the registered holders of
such share or shares not less than 28 days' previous notice in writing of
its intention so to do, such notice fixing a time and place for redemption
of such shares.
(v) The holder of any Participating Shares may exercise the conversion
right specified in Article 10A(F)(i) by surrendering to the Company at its
registered office or its registrar the certificate or certificates for the
Participating Shares to be converted, accompanied by written notice
specifying the number of shares to be converted with any evidence the
Directors may reasonably require to prove title of the person exercising
the right to convert (the "Conversion Notice"). If the Company has
exercised its limited ability in accordance with Article 10A(E)(iii),
Article 10A(E)(v) or Article 10A(E)(vii) to elect to cause the
Participating Shares to be converted into Ordinary Shares then a Conversion
Notice shall be deemed to have been given upon such exercise.
(vi) Allotments of Ordinary Shares arising from conversion shall be
made within 10 Business Days of the delivery of the Conversion Notice to
the Company. Subject to the provisions of Article 10A(F)(ix)(h) hereof, as
promptly as practicable thereafter, the Company shall issue and deliver to
or upon the written order of each holder of Relevant Shares a new
certificate or certificates for the number of Ordinary Shares to which such
holder is entitled, a new certificate for any unconverted Participating
Shares comprised in any certificate(s) surrendered by such holder, and a
cheque or cash with respect to any fractional interest in an Ordinary
Share, as provided in Article 10A(F)(viii) hereof. In the meantime,
transfers of new Ordinary Shares shall be certified against the register.
(vii) Subject to the provisions of Article 10A(F)(ix)(h) hereof, the
person in whose name the certificate or certificates for Ordinary Shares
are to be issued shall be entered into the Company's register of Members as
a holder of record of such Ordinary Shares immediately prior to the close
of business on the date of conversion. A Conversion Notice may only be
withdrawn by notice by the holder(s) of the Relevant Shares delivered to
the Company not less than two Business Days prior to the date of
conversion.
(viii) No fractions of Ordinary Shares shall be issued upon conversion
of Participating Shares. If more than one Participating Share shall be
surrendered for conversion at any one time by the same holder, the number
of full Ordinary Shares issuable upon conversion thereof shall be computed
on the basis of the aggregate number of Participating Shares so
surrendered. If as a result of conversion holders become entitled to
fractions of an Ordinary Share, the Directors may on behalf of the holders
deal with the fractions as they reasonably deem to be appropriate. Without
limiting the generality of the preceding sentence, the Directors may
aggregate and sell the fractions to a person (including, subject to the
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provisions of the Statutes, the Company) for the best price reasonably
obtainable and distribute the net proceeds of sale in due proportions
amongst the holders.
(ix) The Conversion Price shall be subject to adjustment from time to
time as follows, provided that in the event that the holders of
Participating Shares carrying more than 50% of the voting rights of that
class exercise their preemptive rights in a transaction to which Section 89
of the Companies Act 1985 applies, then the adjustment in the Conversion
Price provided for in Article 10A(F)(ix)(a) only shall not be given effect.
(a) Ordinary Shares Issued at Less Than Market Value. If the
Company shall issue any Ordinary Shares, other than Excluded Shares or
Ordinary Shares issued in an Excluded Transaction, without consideration
or for a consideration per share less than the Market Value immediately
prior to such issuance, the Conversion Price in effect immediately prior
to each such issuance shall immediately (except as provided below) be
reduced to the price determined by multiplying the Conversion Price in
effect immediately prior to such issuance by a fraction (A) the
numerator of which is the sum of (1) the number of Ordinary Shares
outstanding immediately prior to such issuance and (2) the number of
Ordinary Shares that the aggregate consideration, if any, received by
the Company upon such issuance, would purchase at such Market Value and
(B) the denominator of which is the total number of Ordinary Shares
outstanding immediately after such issuance.
For the purposes of any adjustment of the Conversion Price pursuant to
this Article 10A(F)(ix)(a), the following provisions shall be
applicable.
(1) Cash. In the case of the issuance of Ordinary Shares for
cash, the amount of the consideration received by the Company shall
be deemed to be the amount of the cash proceeds received by the
Company for such Ordinary Shares before deducting therefrom any
discounts, commissions, taxes or other expenses allowed, paid or
incurred by the Company for any underwriting or otherwise in
connection with the issuance and sale thereof.
(2) Consideration Other Than Cash. In the case of the issuance
of Ordinary Shares (otherwise than upon the conversion of shares of
Share Capital or other securities of the Company) for a consideration
in whole or in part other than cash, including securities acquired in
exchange therefor (other than securities by their terms so
exchangeable), the consideration other than cash shall be deemed to
be either:
(A) the amount determined by an independent valuation
undertaken in accordance with Section 108 of the Companies Act
1985; and
(B) in the absence of such valuation, the Fair Market Value
thereof, irrespective of any accounting treatment.
(3) Options and Convertible Securities. In the case of the
issuance of (x) options, warrants or other rights to purchase or
acquire Ordinary Shares (whether or not at the time exercisable) (but
any adjustment pursuant to this provision shall be made only to the
extent any adjustment shall have not been made pursuant to Article
10A(F)(ix)(d)(4) hereof), (y) securities by their terms convertible
into or exchangeable for Ordinary Shares (whether or not at the time
so convertible or exchangeable) or (z) options, warrants or rights to
purchase such convertible or exchangeable securities (whether or not
at the time exercisable),
(A) the aggregate maximum number of Ordinary Shares
deliverable upon exercise of such options, warrants or other
rights to purchase or acquire Ordinary Shares shall be deemed to
have been issued at the time such options, warrants or rights
were issued and for a consideration equal to the consideration
(determined in the manner provided in subclauses (1) and (2)
above), if any, received by the Company upon the issuance of such
options, warrants or rights plus the minimum purchase price
provided in such options, warrants or rights for the Ordinary
Shares covered thereby;
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(B) the aggregate maximum number of Ordinary Shares
deliverable upon conversion of or in exchange for any such
convertible or exchangeable securities, or upon the exercise of
options, warrants or other rights to purchase or acquire such
convertible or exchangeable securities and the subsequent
conversion or exchange thereof, shall be deemed to have been
issued at the time such convertible or exchangeable securities
were issued or such options, warrants or rights were issued and
for a consideration equal to the consideration, if any, received
by the Company for any such convertible or exchangeable
securities or options, warrants or rights (excluding any cash
received on account of accumulated interest or accumulated
dividends), plus the additional consideration (determined in the
manner provided in subclauses (1) and (2) above), if any, to be
received by the Company upon the conversion or exchange of such
securities, or upon the exercise of any related options, warrants
or rights to purchase or acquire such convertible or exchangeable
securities and the subsequent conversion or exchange thereof;
(C) on any change in the number of Ordinary Shares
deliverable upon exercise of any such options, warrants or rights
or conversion or exchange of such convertible or exchangeable
securities or any change in the consideration to be received by
the Company upon such exercise, conversion or exchange (but
excluding any change resulting solely from the operation of the
anti-dilution provisions thereof if, and only if, such
anti-dilution provisions would not require an adjustment to the
exercise price or conversion price thereof in the event of any
change to the Conversion Price pursuant to the provisions of this
Article 10A(F)), the Conversion Price as then in effect shall
forthwith be readjusted to such Conversion Price as would have
been obtained had an adjustment been made upon the issuance of
such options, warrants or rights not exercised prior to such
change, or of such convertible or exchangeable securities not
converted or exchanged prior to such change, upon the basis of
such change;
(D) on the expiration or cancellation of any such options,
warrants or rights that are unexercised, or the cancellation or
redemption of, or the termination of the right to convert or
exchange such convertible or exchangeable securities, if the
Conversion Price shall have been adjusted upon the issuance
thereof, the Conversion Price shall forthwith be readjusted to
such Conversion Price as would have been obtained had an
adjustment been made upon the issuance of such options, warrants,
rights or such convertible or exchangeable securities on the
basis of the issuance of only the number of Ordinary Shares
actually issued upon the exercise of such options, warrants or
rights, or upon the conversion or exchange of such convertible or
exchangeable securities; and
(E) if the Conversion Price shall have been adjusted upon
the issuance of any such options, warrants, rights or convertible
or exchangeable securities no further adjustment of the
Conversion Price shall be made for the actual issuance of
Ordinary Shares upon the exercise, conversion or exchange
thereof.
(b) Excluded Shares. All Excluded Shares shall be deemed to be
issued and outstanding for all purposes of computations under Article
10A(F)(ix)(a).
(c) Share Dividends, Subdivisions, Reclassifications or
Combinations. If the Company shall (1) declare a dividend or make a
distribution on its Ordinary Shares in additional Ordinary Shares which
is not paid or made on an equal and ratable basis to all holders of
Participating Shares, (2) subdivide, split or reclassify (by merger,
consolidation or otherwise) the outstanding Ordinary Shares into a
greater number of shares, (3) combine or reclassify (by merger,
consolidation or otherwise) the outstanding Ordinary Shares into a
smaller number of shares or (4) issue any Ordinary Shares in a
reclassification (by merger, consolidation or otherwise), the Conversion
Price in effect at the time of the record date for such dividend or
distribution or the effective date of such subdivision, combination,
reclassification or issuance shall be proportionately adjusted so that
the holder of any Participating Shares surrendered for conversion after
such date shall be entitled to
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receive the number of Ordinary Shares which such holder would have owned
or been entitled to receive had such Participating Shares been converted
immediately prior to such date. Successive adjustments in the Conversion
Price shall be made whenever any event specified above shall occur.
(d) Other Distributions. In case the Company shall fix a record
date for the making of a distribution to all holders of Ordinary Shares
which is not paid or made on an equal and ratable basis to all holders
of Participating Shares, (1) of shares of any class other than its
Ordinary Shares or (2) of evidence of indebtedness of the Company or any
subsidiary or (3) of assets or other property, including, without
limitation, securities issued by subsidiaries or others (excluding
regular cash dividends, and dividends or distributions referred to in
Article 10A(F)(ix)(c) above), or (4) of options, warrants or other
rights, in each such case the Conversion Price in effect immediately
prior thereto shall be reduced immediately thereafter to the price
determined by dividing (A) an amount equal to the difference resulting
from (1) the number of Ordinary Shares outstanding on such record date
multiplied by the Conversion Price per Ordinary Share on such record
date less (2) the Fair Market Value of such shares or evidences of
indebtedness or assets or rights or warrants to be so distributed, by
(B) the number of Ordinary Shares outstanding on such record date. Such
adjustment shall be made successively whenever such a record date is
fixed. In the event that such distribution is not so made, the
Conversion Price then in effect shall be readjusted, effective as of the
date when the Directors determine not to distribute such shares,
evidences of indebtedness, assets, property, options, rights or
warrants, as the case may be, to the Conversion Price which would then
be in effect if such record date had not been fixed.
(e) Consolidation, Merger, Sale, Lease or Conveyance. In case of
any consolidation, amalgamation, or merger of the Company with or into
another corporation or entity, or in case of any sale, lease or
conveyance to another corporation or entity of the assets of the Company
as an entirety or substantially as an entirety, each Participating Share
shall after the date of such consolidation, amalgamation, merger, sale,
lease or conveyance be convertible into the number of shares of stock or
other securities or property (including cash) to which the Ordinary
Shares issuable (immediately prior to the time of such consolidation,
merger, sale, lease or conveyance) upon conversion of each such
Participating Shares would have been entitled upon such consolidation,
amalgamation, merger, sale, lease or conveyance, and in any such case,
if necessary, the provisions set forth herein with respect to the rights
and interests thereafter of the holders of the Participating Shares
shall be appropriately adjusted so as to be applicable, as nearly as may
reasonably be possible, to any shares of stock or other securities or
property thereafter deliverable on the conversion of the Participating
Shares.
(f) Rounding of Calculations. All calculations under this Article
10A(F)(ix) shall be made to the nearest U.S. cent or to the nearest one
ten thousandth of a share, as the case may be.
(g) Adjustments for American depositary shares. All computations
and calculations under this Article 10A(F)(ix) shall, at the time of
determination, give effect to the then applicable ratio of Ordinary
Shares to American depositary shares representing such Ordinary Shares
at the time of determination and shall be adjusted accordingly (it being
recognized that such ratio is four Ordinary Shares per American
depositary share on the Issue Date). Without limiting the generality of
the preceding sentence, the computations and calculations relating to
Market Value in Article 10A(F)(ix)(a) shall be based on the Market Value
for American depositary shares representing Ordinary Shares of the
Company as adjusted by then applicable ratio of Ordinary Shares to
American depositary shares (it being recognized that Market Value
initially is to be divided by 4 to reflect the ratio of four Ordinary
Shares per American depositary share on the Issue Date).
(h) Timing of Issuance of Additional Ordinary Shares Upon Certain
Adjustments. In any case in which the provisions of this Article
10A(F)(ix) shall require that an adjustment shall become effective
immediately after a record date for an event, the Company may defer
until the occurrence of such event (1) issuing to the holder of any
Participating Shares converted after such record date and before the
occurrence of such event the additional Ordinary Shares issuable upon
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such conversion by reason of the adjustment required by such event over
and above the Ordinary Shares issuable upon such conversion before
giving effect to such adjustment and (2) paying to such holder any
amount of cash in lieu of any fractional Ordinary Shares, provided, that
the Company, upon request, shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive
such additional Ordinary Shares, and such cash, upon the occurrence of
the event requiring such adjustment.
(x) Whenever the Conversion Price shall be adjusted, the Company shall
forthwith file, at the office of the registrar, at the registered office of
the Company, and at the principal office of the Company in the United
States, a statement showing in detail the facts requiring such adjustment
and the Conversion Price that shall be in effect after such adjustment, and
the Company shall also cause a copy of such statement to be sent by
reputable overnight air courier service, to each holder of Participating
Shares at its address appearing on the Company's records.
(xi) In the event the Directors have, or the Company has, agreed or
otherwise formally determined to take any action of the type described in
clause (a) (but only if the action of the type described in clause (a)
would result in an adjustment in the Conversion Price), (c), (d) or (e) of
Article 10A(F)(ix) hereof, the Company shall give notice to each holder of
Participating Shares, in the manner set forth in Article 10A(F)(ix) hereof,
which notice shall specify the record date, if any, with respect to any
such action and the approximate date on which such action is to take place.
Such notice shall also set forth such facts with respect thereto as shall
be reasonably necessary to indicate the effect of such action (to the
extent such effect may be known at the date of such notice) on the
Conversion Price and the number, kind or class of shares or other
securities or property which shall be deliverable upon conversion of
Participating Shares. In the case of any action which would require the
fixing of a record date, such notice shall be given at least ten days prior
to the date so fixed, and in case of all other action, such notice shall be
given at least ten days prior to the taking of such proposed action.
Failure to give such notice, or any defect therein, shall not affect the
legality or validity of any such action.
(xii) The Company shall pay all U.K. documentary, stamp, transfer or
similar taxes, plus any fees of the depositary for American depositary
shares, attributable to the issuance or delivery of Ordinary Shares or
American depositary shares representing Ordinary Shares upon conversion of
any Participating Shares, provided that the Company shall not be required
to pay any taxes which may be payable in respect of any transfer involved
in the issuance or delivery of any certificate for such shares in a name
other than that of the holder of the Participating Shares in respect of
which such shares are being issued.
(xiii) The Company shall at all times so long as any Participating
Shares remain outstanding, have sufficient authorised Share Capital
available for allotment and issue (i) to permit the issuance of additional
Participating Shares as dividends or by way of bonus issue on the
Participating Shares and (ii) to permit the conversion of all Participating
Shares in issue from time to time into Ordinary Shares in accordance with
these Articles.
(xiv) If any Ordinary Shares to be issued for the purpose of
conversion of Participating Shares require registration with or approval of
any governmental authority under any U.S. federal or state, English or
other non-U.S. law before such shares may be validly issued or delivered
upon conversion, then the Company will in good faith and as expeditiously
as possible endeavour to secure such registration or approval, as the case
may be. If, and so long as, any Ordinary Shares into which the
Participating Shares are then convertible are listed or quoted on any U.S.,
U.K. or other securities exchange or market, the Company will, if permitted
by the rules of such securities exchange or market, list and keep listed or
quoted on such securities exchange or market, upon official notice of
issuance, all such shares issuable upon conversion.
(xv) All Ordinary Shares that may be issued upon conversion of the
Participating Shares will upon issuance by the Company be duly and validly
issued, fully paid and non-assessable, not issued in violation of any
preemptive rights arising under law or contract, and free from all taxes,
liens and charges with respect to the issuance thereof, and the Company
shall take no action which will cause a contrary result
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(including without limitation, any action which would cause the Conversion
Price to be less than the nominal value, if any, of the Ordinary Shares).
(xvi) Notwithstanding the foregoing provisions of this Article 10A(F)
(and subject to the terms of the relevant American depositary receipt
agreement), if the holder of any Participating Shares so specifies in the
Conversion Notice, the Company shall cause to be delivered to the holder of
the said Participating Shares, upon conversion of the specified
Participating Shares, American depositary receipts evidencing the number of
American depositary shares representing the Ordinary Shares into which such
Participating Shares have been converted. Any American depositary shares
that may be issued upon such conversion shall upon issuance be duly and
validly issued and entitled to the benefits specified therein and in the
deposit agreement relating to such American depositary shares, and the
Company shall take no action which will cause a contrary result. For the
purposes of this Article 10A(F) (including without limitation, Articles
10A(F)(vii), 10A(F)(ix) and 10A(F)(xv)) all references to Ordinary Shares
shall be deemed, to the fullest extent possible, to apply to the American
depositary shares representing such Ordinary Shares and all references to
share certificates to the American depositary receipts representing such
American depositary shares.
(G) Liquidation Return
(i) In the event of the liquidation, winding-up or dissolution of the
Company, whether voluntary or involuntary, the holders of Participating
Shares then outstanding, after payment or provision for payment of the
debts and other liabilities of the Company, and before any distribution to
holders of any Junior Securities of the Company, shall be entitled to be
paid out of the assets of the Company available for distribution to its
shareholders an amount per Participating Share in cash equal to the greater
of (a) the then effective Liquidation Return per share plus accumulated and
unpaid dividends from and including the most recent Dividend Payment Date
through and including the date of liquidation, winding-up or dissolution
and (b) the amount that would be payable to the holders of the
Participating Shares if the Participating Shares had been converted into
Ordinary Shares immediately prior to such liquidation, winding-up or
dissolution. In the event the assets of the Company available for
distribution to the holders of the Participating Shares upon any
dissolution, winding-up or liquidation of the Company shall be insufficient
to pay in full the liquidation payments payable to the holders of
outstanding Participating Shares and of all other Parity Securities, the
holders of Participating Shares and all other Parity Securities shall share
in such distribution of assets on a pro rata basis in proportion to the
amount which would be payable on such distribution if the amounts to which
the holders of outstanding Participating Shares and the holders of
outstanding shares of such Parity Securities were paid in full.
(ii) For the purposes of this Article 10A(G), none of the following
transactions shall be deemed to be a voluntary or involuntary liquidation,
dissolution or winding-up of the Company (provided that the same shall be
effected by way of a bona fide transaction on arm's length terms):
(a) the sale, lease, transfer or exchange of all or substantially
all of the assets of the Company; or
(b) the consolidation, amalgamation, or merger of the Company with
or into one or more other corporations or other Persons (whether or not
the Company is the corporation surviving such consolidation or merger).
(H) Special Right to Appoint Directors
(i) Beginning on the Issue Date and continuing as long as the holders
of the Participating Shares own Voting Shares of the Company and debt
securities or Share Capital convertible into or exercisable for Voting
Shares of the Company where all such Voting Shares represent at least 10%
of the Company's total voting power, such holders shall be entitled
pursuant to this Article 10A(H) to appoint two Directors to serve on the
board of Directors of the Company. In the event that such holders own, on
such a basis, Voting Shares representing less than 10%, but more than 5%,
of the Company's total voting power, such holders shall be entitled
pursuant to this Article 10A(H) to designate one Director.
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(ii) In the event that Cypress and/or Affiliates of Cypress shall
transfer some or all of their Participating Shares to another Person (other
than an Affiliate of Cypress or its Affiliates) without the written consent
of the Directors of the Company (which consent shall not be unreasonably
withheld), and as a result of such transfer Cypress and Affiliates of
Cypress hold in the aggregate less than 50.01% of the total number of
Participating Shares outstanding at that time, then the holders of the
Participating Shares shall, notwithstanding Article 10A(H)(i), be entitled
thereafter to appoint only a maximum of one Director (it being recognised
that Cypress and its Affiliates and any other holders of the Participating
Shares shall not be subject to any restriction hereunder on their ability
to transfer all or part of their Participating Shares to any other Person
and that this Article 10A(H)(ii) relates solely to the power to appoint
Directors).
(iii) Each committee of the Directors shall include at least one
Director designated by such holders as provided above; provided, that this
requirement shall not apply with respect to the appointment of any
particular designee to a committee in the event that the rules or
regulations of any securities exchange or market on which the Ordinary
Shares or American depositary shares representing such Ordinary Shares are
then listed, quoted or traded (including, in the case of the London Stock
Exchange, the Combined Code or any successor thereto), or applicable law,
prohibits the appointment of such Director to such committee.
(iv) The Company and the Directors shall take all actions necessary to
effect such designation to the board of Directors (including, without
limitation, increasing the size of the board of Directors and/or removing
Directors) and to each committee thereof.
(v) The Directors to be designated by the holders of the Participating
Shares shall be elected by such holders by majority vote at a class meeting
of the holders of the Participating Shares to be held immediately prior to
any annual meeting of shareholders or extraordinary meeting held in place
thereof, or by majority vote at a duly convened extraordinary meeting of
the holders of the Participating Shares.
(vi) The special right to appoint Directors set forth in this Article
10A(H) shall be in addition to the rights of the holders of the
Participating Shares to exercise voting rights pursuant to Article 10A(D)
hereof (including, without limitation, with respect to the election of
Directors of the Company generally).
(vii) If any Director appointed by the holders of the Participating
Shares pursuant to this Article 10A(H) resigns, retires or is removed by
the Company while the holders of the Participating Shares continue to have
the right to appoint such Director, then, notwithstanding anything
contained in these Articles, such holders shall be entitled to appoint a
replacement Director in the same manner as appointment of the predecessor
Director.
(I) Tax Gross-Up.
Subject as provided in Article 10A(D)(v), all payments by the Company in
respect of the Participating Shares shall be made without withholding or
deduction for or on account of any present or future taxes, duties, assessments
or other governmental charges of whatsoever nature imposed or levied by or on
behalf of the United Kingdom or any political subdivision or authority thereof
or therein having power to tax, unless the Company is required by law to
withhold such taxes, duties, assessments or other governmental charges. In such
event, the Company shall make the required withholding or deduction, make
payment of the amount so withheld or deducted to the appropriate government
authority and pay such additional amounts ("Additional Amounts") as may be
necessary to ensure that the net amounts received by the holders of the
Participating Shares (taking into account any tax credits received by such
holders from the United Kingdom) after such withholding or deduction shall equal
the respective amounts of dividends and other amounts which would have been
received in respect of the Participating Shares in the absence of such
withholding or deduction; provided, however, that no such Additional Amounts
shall be payable:
(i) to any holder who is subject to such taxes, duties, assessments or
other governmental charges in respect of the Participating Shares by reason
of such holder being a resident of the United Kingdom and otherwise than
solely by the holding of such Participating Shares or by the receipt of
dividends and other amounts in respect thereof; or
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(ii) to the extent that the taxes, duties, assessments or other
governmental charges would not have been imposed but for the failure of
such holder to comply with any certification, identification or other
reporting requirements concerning the nationality, residence, identity or
connection with the United Kingdom of such holder if (a) such compliance is
required or imposed by law as a precondition to exemption from all or a
part of such tax, duty, assessment or other governmental charge and (b) at
least 30 days prior to the first Dividend Payment Date with respect to
which the Company will apply this clause (ii), the Company shall have
notified all holders of the Participating Shares that such holders will be
required to comply with such requirement.
(J) Definitions.
For the purposes of this Article 10A only, the following definitions shall
apply:
"Affiliate" means, with respect to any Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with, such specified Person, for
so long as such Person remains so associated to the specified Person. The
term "control" shall have the meaning for such term as used in Rule 12b-2
under the U.S. Securities Exchange Act of 1934.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in New York City or London are authorized or
required by law to close.
"Change of Control" means the occurrence at any time of any of the
following:
(i) any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the U.S. Securities Exchange Act of 1934) (excluding
for purposes of this clause (i), Cypress and any of its Affiliates,
individually and in the aggregate), in a single transaction or through a
series of related transactions, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the U.S. Securities Exchange Act of 1934,
except that a person shall be deemed to have "beneficial ownership" of
all securities that such person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 29.9% of the total Voting Shares of
the Company;
(ii) the Company consolidates or merges with or into another
corporation or petitions the court for any scheme of compromise or
arrangement within the meaning of section 425 of the Companies Act 1985
or conveys, transfers or leases all or substantially all of its assets
to any Person, or any corporation consolidates or mergers with or into
the Company, in any such event pursuant to a transaction in which the
issued Voting Shares of the Company are changed into or exchanged for
cash, securities not issued in violation of Article 10A(D)(iv) or other
property, other than (a) any such transaction in which (1) the issued
Voting Shares of the Company are changed into or exchanged for Voting
Shares of the surviving corporation or its parent corporation and (2)
the holders of the Voting Shares of the Company immediately prior to
such transaction own, directly or indirectly, not less than 50.01% of
the Voting Shares of the surviving corporation or its parent corporation
immediately after such transaction or (b) any such transaction with,
into or to any Affiliate of Cypress;
(iii) during any period of 24 consecutive months, individuals who
at the beginning of such period constituted the board of Directors of
the Company (together with any new Directors whose election by such
board of Directors or whose nomination for election by the shareholders
of the Company was approved by a vote of at least 66 2/3% (sixty-six and
two thirds percent) of the Directors then still in office who were
either Directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason
to constitute a majority of the Directors of the Company then in office
(but any additional Directors elected by the holders of the
Participating Shares pursuant to Article 10A(D)(iii) shall be excluded
from the calculations for the purposes of this definition); or
(iv) the Company is voluntarily or involuntarily wound up or
dissolved or adopts a plan of liquidation, other than a voluntary
winding up pursuant to which the whole of the Company's
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business is proposed to be transferred or sold to another company and
the issued Voting Shares of the Company are changed into or exchanged
for Voting Shares of that other company or its parent company, such
Voting Shares having rights equal to or greater than the rights attached
to the Voting Shares in the Company.
"Change of Control Adjustment Amount" means an amount (if a positive
number only) equal to (i) the difference between (a) 101% of the then
effective Liquidation Return per share and (b) the aggregate Market Value
of the Ordinary Shares into which each Participating Share was convertible
on the date immediately preceding first public announcement of the
transaction giving rise to the Change of Control, multiplied by (ii) a
fraction the numerator of which is the deficiency in monies lawfully
available for redemption and the denominator of which is the total amount
of monies necessary to pay the redemption price in full upon a Change of
Control as set forth in Article 10A(E)(vii)(a), in the case of this
paragraph (ii) assuming that all holders of Participating Shares determined
to require the Company to redeem their Participating Shares in accordance
with Article 10A(E)(vii)(a).
"Conversion Price" means an amount in U.S. dollars per Ordinary Share,
determined by the Directors on the Issue Date, being not more than US$3.125
per Ordinary Share, subject to adjustment in accordance with the provisions
of Article 10A(F) hereof.
"Cypress" means The Cypress Group LLC or any successor entity.
"Excluded Shares" means Ordinary Shares issued or issuable by the
Company or American depositary shares representing such Ordinary Shares (i)
upon conversion of the Participating Shares, (ii) upon conversion of the
outstanding U.S.$200 million aggregate principal amount of the Company's
6.25% Convertible Subordinated Notes due 2002, or (iii) pursuant to bona
fide stock option or other employee or officer benefit plans, provided,
that such shares are issued at an exercise price or for consideration equal
to or greater than the Fair Market Value thereof on the date of grant or
award (and, in each case, including any American depositary shares
representing such Ordinary Shares).
"Excluded Transaction" means (i) an underwritten public offering of
Ordinary Shares or American depositary shares representing Ordinary Shares
or (ii) the issuance of Ordinary Shares or American depositary shares
representing Ordinary Shares solely in exchange for assets or all of the
shares of another Person (whether by merger, exchange or otherwise) in a
transaction in which an independent internationally recognized investment
banking firm has advised the Company that the transaction is fair and
reasonable to the Company from a financial point of view.
"Fair Market Value" means, with respect to any securities, the Market
Value thereof and of any consideration other than cash or securities shall
mean the amount which a willing buyer would pay to a willing seller in an
arm's length transaction as determined by an independent internationally
recognized investment banking or appraisal firm experienced in the
valuation of such securities or property selected in good faith by the
Directors.
"in cash" shall mean in U.S. dollars, unless otherwise specified.
"Liquidation Return" means, on any date, the sum of U.S.$1,000 per
Participating Share, plus (i) accumulated and unpaid dividends added to the
Liquidation Return in respect of such Participating Share in accordance
with Article 10A(C)(v) hereof and (ii) the amount, if any, added to the
Liquidation Return in respect of such Participating Share in accordance
with Article 10A(E)(vii)(d) hereof.
"Market Value," with respect to any security, means the average of the
daily closing prices of such security for the 20 trading day period ending
on the relevant date of determination. The closing price for each day shall
be the last reported sales price regular way or, in case no such reported
sale takes place on such day, the average of the reported closing bid and
asked prices regular way, in either case on the New York Stock Exchange,
or, if such security is not listed or admitted to trading on the New York
Stock Exchange, on the American Stock Exchange, or, if such security is not
listed or admitted to trading on the American Stock Exchange, the average
of the closing bid and asked prices of such security in the
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over-the-counter market as reported on the NASDAQ National Market System of
the National Association of Securities Dealers, Inc. or if such security is
not so quoted, the average of the closing bid and asked price of such
security in the over-the-counter market as furnished by any U.S. nationally
recognized New York Stock Exchange member firm selected by the Company for
such purpose (it being recognized that on the Issue Date American
depositary shares representing Ordinary Shares of the Company are quoted on
the NASDAQ National Market System). If such security is not so listed,
quoted or traded, the closing price shall be the last reported closing
price for such security on the London Stock Exchange or, if not so listed,
any other non-U.S. securities exchange or market on which such security is
listed, quoted or traded (translated to U.S. dollars using the then
prevailing exchange rate on such date of determination). If such security
is not so listed, quoted or traded on any non-U.S. securities exchange or
market, the closing price shall mean the amount which a willing buyer would
pay to a willing seller in an arm's length transaction as determined by an
independent internationally recognized investment banking or appraisal firm
experienced in the valuation of such securities or property selected in
good faith by the board of directors of the issuer of such security.
Notwithstanding the foregoing (and subject to Article 10A(F)(g)), the
Market Value of the Ordinary Shares shall be determined by reference to
closing prices for the American depositary shares representing such
Ordinary Shares so long as such American depositary shares are listed,
quoted or traded on the New York Stock Exchange, the American Stock
Exchange or the NASDAQ National Market System (adjusted to take into
account the then prevailing ratio of Ordinary Shares per one American
depositary share).
"Ordinary Share Equivalent Rate" means, with respect to any Dividend
Period, the quotient of (a) the product of (i) all dividends declared
during such Dividend Period with respect to one Ordinary Share, (ii) the
Applicable Period Adjustment Factor and (iii) the number of Ordinary Shares
issuable upon conversion of one Participating Share on the last day of such
Dividend Period, divided by (b) the Liquidation Return of one Participating
Share on the first day of such Dividend Period. For purposes of the
preceding sentence, "Applicable Period Adjustment Factor" means two (if
such dividends are declared and paid on a semi-annual basis), four (if such
dividends are declared and paid on a quarterly basis) or such other number
as reflects the fiscal periods as to which such dividends are declared and
paid, as the case may be.
"Ordinary Shares" means the Ordinary Shares referred to in Article 3,
and shall also include (i) Share Capital of the Company of any other class
(regardless of how denominated) issued to the holders of Ordinary Shares
upon any reclassification thereof in which the Ordinary Shares are
converted into a new class of Share Capital and (ii) shares of common stock
of any successor or acquiring corporation received by or distributed to the
holders of Ordinary Shares.
"Person" shall mean any individual, firm, corporation or other entity,
and shall include any successor (by merger or otherwise) of such entity.
"Share Capital" means any and all shares, interests, participations,
rights in or other equivalents (however designated and whether voting or
non-voting), and any and all rights (other than any evidence of
indebtedness), warrants or options exchangeable for or convertible into
such shares, interests, participations, rights in or other equivalents,
including, to the fullest extent applicable, American Depository Receipts
or similar instruments representing any such share capital.
"Stated Dividend Rate" means 6.50% per annum; provided, that if at any
time the Company shall be in default of its obligation to redeem any shares
of the Participating Shares, the then effective Stated Dividend Rate shall
increase by 2.00% per annum.
"Voting Shares" means shares of the class or classes of Share Capital
(including, in the case of the Company, the Ordinary Shares and the
Participating Shares) pursuant to which the holders thereof have the
general voting power to vote at meetings of shareholders (irrespective of
whether or not at the time shares of any other class or classes shall have
or might have voting power by reason of the happening of any contingency).
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(K) In the event of any conflict between the provisions of this Article 10A and
any other provision of these Articles, this Article 10A shall prevail except
where such construction would result in manifest error.
10B
(A) The Directors may refuse to register an allotment of shares (whether
fully paid or not) in favour of more than four persons jointly. If the Directors
refuse to register an allotment they shall within two months after the date on
which the letter of allotment was lodged with the Company send to the allottee
notice of the refusal.
(B) Except as required by law or pursuant to the provisions of these
Articles, no person shall be recognised by the Company as holding any share upon
any trust, and (except only as by these Articles or by law otherwise provided or
under an order of a court of competent jurisdiction) the Company shall not be
bound by or be compelled in any way to recognise (even when having notice
thereof) any equitable, contingent, future or partial interest in any shares or
any interest in any fractional part of a share or any other rights in respect of
any share except an absolute right to the entirety thereof in the registered
holder.
SHARE CERTIFICATES
11. Every share certificate shall be issued in accordance with Article 126
and shall specify the number and class and the distinguishing number (if any) of
the shares to which it relates and the amount paid up thereon. No certificate
shall be issued relating to shares of more than one class.
12. Every person (other than a recognised clearing house or a nominee of a
recognised clearing house or of a recognised investment exchange in respect of
whom the Company is not by law required to complete and have ready for delivery
a certificate) whose name is entered as a Member on the Register shall be
entitled without payment to receive within one month after allotment or
lodgement of transfer (or within such other period as the conditions of issue
shall provide) one certificate for all the shares registered in his name or, in
the case of shares of more than one class being registered in his name, a
separate certificate for each class of shares so registered, and where a Member
transfers part of the shares of any class registered in his name he shall be
entitled without payment to one certificate for the balance of shares of that
class retained by him. If a Member shall require additional certificates he
shall pay for each additional certificate such reasonable sum (if any) as the
Directors may determine.
13. In respect of shares of one class held jointly by more than one person
the Company shall not be bound to issue more than one certificate, and delivery
of a certificate for such shares to the person first named on the Register in
respect of such shares shall be sufficient delivery to all such holders.
14. If any certificate be worn out or defaced then upon delivery thereof to
the Directors they may order the same to be cancelled, and may issue a new
certificate in lieu thereof; and if any certificate be lost or destroyed, then
upon proof thereof to the satisfaction of the Directors and on such indemnity as
the Directors deem adequate being given, a new certificate in lieu thereof shall
be given to the party entitled to such lost or destroyed certificate.
15. Every certificate issued under the last preceding Article shall be
issued without payment, but there shall be paid to the Company any exceptional
out-of-pocket expenses of the Company in connection with the request as the
Directors think fit and a sum equal to the costs incurred by the Company of any
such indemnity and security as is referred to in that Article.
VARIATION OF RIGHTS
16. If at any time the share capital is divided into different classes of
shares, the rights attached to any class or any of such rights may, subject to
the provisions of the Statutes, whether or not the Company is being or is to be
wound up, be modified, abrogated or varied (i) in such manner (if any) as may be
provided by such rights or (ii) in the absence of any such provision either with
the consent in writing of the holders of three-
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fourths of the issued shares of that class, or with the sanction of an
Extraordinary Resolution passed at a separate General Meeting of the holders of
the shares of the class.
17. To every such separate General Meeting the provisions of Sections 369,
370, 376 and 377 of the Companies Act 1985 and the provisions of these Articles
relating to General Meetings shall, mutatis mutandis, so far as applicable
apply, subject to the following provisions, namely:
(a) the necessary quorum at any such meeting other then an adjourned
meeting shall be two persons holding or representing by proxy at least
one-third in nominal value the issued shares of the class in question and
at an adjourned meeting two persons holding shares of the class in question
or his proxy; and
(b) any holder of shares of the class in question present in person or
by proxy may demand a poll.
18. The rights attached to any class of shares shall, unless otherwise
expressly provided by the terms of issue of the shares of that class or by the
terms upon which such shares are for the time being held, be deemed to be varied
or abrogated by the reduction of the capital paid up on such shares or by the
allotment of further shares ranking in priority thereto for payment of a
dividend or repayment of capital but be deemed not to be modified, abrogated or
varied by the creation or issue of further shares ranking pari passu in all
respects (save as to the date from which such new shares shall rank for
dividend) with or subsequent to those already issued.
CALLS ON SHARES
19. The Directors may, subject to the terms of allotment thereof, from time
to time make such calls upon the Members as they think fit in respect of any
moneys unpaid on their shares (whether on account of the nominal value of the
shares or by way of premium) and each Member shall (subject to receiving at
least 21 days' notice specifying the time or times and place of payment) pay to
the Company at the time or times and place so specified the amount called on his
shares. A call may be revoked or postponed, in whole or in part, as the
Directors may determine.
20. A call shall be deemed to have been made at the time when the
resolution of the Directors authorising the call was passed and may be required
to be paid by instalments.
21. The joint holders of a share shall be jointly and severally liable to
pay all calls in respect thereof.
22. If a sum payable in respect of any call or instrument is not paid on or
before the day appointed for payment thereof, the holder for the time being of
the share in respect of which the call shall have been made, or the instrument
be due, shall pay interest on the sum at such reasonable rate as the Directors'
shall determine, or failing such determination at the rate of 14% per annum from
the day appointed for the payment thereof until the actual payment thereof, and
all expenses that may have been incurred by the Company by reason of such
non-payment; but the Directors may, if they shall think fit, waive the payment
of such interest and expenses or any part thereof.
23. Any sum which by the terms of issue of a share becomes payable on
allotment or at any fixed date, whether on account of the nominal value of the
share or by way of premium, shall for the purposes of these Articles be deemed
to be a call duly made and payable on the date on which by the terms of issue
the same becomes payable, and in case of non-payment all the relevant provisions
of these Articles as to payment of interest and expenses forfeiture or otherwise
shall apply as if such sum had become payable by virtue of a call duly made and
notified.
24. The Directors may, on the issue of shares, make arrangements for a
difference between the holders of such shares in the amounts of calls to be paid
and in the times of payment of such calls.
25. The Directors may, if they think fit, receive from any Member willing
to advance the same all or any part of the moneys, whether on account of the
nominal value of the shares or by way of premium, uncalled and unpaid upon any
shares held by him; and upon all or any of the moneys so paid in advance the
Directors may (until the same would, but for such advance, become presently
payable) pay interest at such rate not
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exceeding (unless the Company in General Meeting shall otherwise direct) 10 per
cent, per annum, as may be agreed upon between the Directors and the Member
paying such moneys in advance.
FORFEITURE AND LIEN
26. If any Member fails to pay any call or instalment in full on or before
the day appointed for payment thereof, the Directors may, at any time thereafter
during such time as any part of the call or instalment remains unpaid, serve a
notice on him requiring him to pay so much of the call or instalment as is
unpaid together with any interest which may have accrued and any expenses
incurred by the Company by reason of such non-payment.
27. The notice shall name a further day (not earlier than the expiration of
seven days from the date of service of the notice) on or before which and the
place where such call or instalment and such interest and expenses as aforesaid
are to be paid. The notice shall also state that in the event of non-payment at
or before the time and at the place appointed, the shares in respect of which
such call or instalment is payable will be liable to be forfeited.
28. If the requirements of any such notice as aforesaid are not complied
with, any share in respect of which such notice has been given may at any time
thereafter, before the payment required by the notice has been made, be
forfeited by a resolution of the Directors to that effect. Such forfeiture shall
extend to all dividends declared in respect of the shares so forfeited and not
actually paid before such forfeiture. Forfeiture shall be deemed to occur at the
time of the passing of the said resolution of the Directors. The Directors may
accept a surrender of any share liable to be forfeited hereunder upon such terms
and conditions as may be agreed.
29. When any share has been forfeited notice of the forfeiture shall be
served upon the person who was before forfeiture the holder of the share, or the
person entitled to the share by transmission, and an entry of the forfeiture or
surrender, with the date thereof, shall forthwith be made in the Register, but
no forfeiture shall be invalidated by any failure to give such notice or make
such entry as aforesaid.
30. A share so forfeited or surrendered shall be deemed to be the property
of the Company, and may be sold, re-allotted or otherwise disposed of in such
manner, either subject to or discharged from all calls made or instalments due
prior to the forfeiture or surrender, as the Directors think fit: Provided that
the Company shall not exercise any voting rights in respect of such share and
any such share not disposed of in accordance with the foregoing within a period
of three years from the date of its forfeiture or surrender shall thereupon be
cancelled in accordance with the provisions of the Statutes. For the purpose of
giving effect to any such sale or other disposition the Directors may authorise
some person to transfer the share so sold or otherwise disposed of to the
purchaser thereof or other person becoming entitled thereto,
31. The Directors may, at any time before any share so forfeited or
surrendered shall have been cancelled or sold, re-allotted or otherwise disposed
of, annul the forfeiture or surrender upon such terms as they think fit.
32. Any person whose shares have been forfeited or surrendered shall cease
to be a Member in respect of those shares, but shall, notwithstanding, remain
liable to pay to the Company all moneys which, at the date of the forfeiture or
surrender, were presently payable by him to the Company in respect of the
shares, together with interest thereon at such rate, not exceeding 15 per cent,
per annum, as the Directors may determine from the time of forfeiture or
surrender until the time of payment, but his liability shall cease if and when
the Company shall have received payment in full of all such moneys in respect of
the shares, together with interest as aforesaid. The Directors may enforce
payment without any allowance for the value of the shares at the time of
forfeiture or surrender or for any consideration received on their disposal or
waive payment in whole or in part.
33. The Company shall have a first and paramount lien on every share (not
being a fully paid share) for all moneys (whether presently payable or not)
called or payable at a fixed time in respect of such share; but the Directors
may at any time waive any lien which has arisen and may declare any share to be
wholly or in
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part exempt from the provisions of this Article. The Company's lien, if any, on
a share shall extend to all dividends payable thereon.
34. The Company may sell, in such manner as the Directors think fit, any
share on which the Company has a lien, but no sale shall be made unless a sum in
respect of which the lien exists is presently payable, nor until the expiration
of seven days after a notice in writing, (i) stating, and demanding payment of,
the sum presently payable, and (ii) giving notice of intention to sell in
default of such payment, has been given to the registered holder for the time
being of the share, or the person entitled thereto by reason of his death or
bankruptcy.
35. The net proceeds of such sale, after payment of the costs thereof,
shall be received by the Company and applied in or towards satisfaction of such
part of the amount in respect of which the lien exists as is presently payable.
The residue, if any, shall (subject to a like lien for sums not presently
payable as existed upon the shares before the sale) be paid to the person
entitled to the shares at the date of sale. For giving effect to any such sale
the Directors may authorise some person to transfer the shares sold to the
purchaser.
36. A statutory declaration in writing that the declarant is a Director or
the Secretary of the Company and that a share has been duly forfeited or
surrendered or sold to satisfy a lien of the Company on a date stated in the
declaration shall be conclusive evidence of the facts stated therein against all
persons claiming to be entitled to the share. Such declaration and the receipt
of the Company for the consideration (if any) given for the share on the sale,
re-allotment or disposal thereof together with the share certificate delivered
to a purchaser or allottee thereof shall (subject to the execution of a transfer
if the same be required) constitute a good title to the share and the person to
whom the share is sold, re-allotted or disposed of shall be registered as the
holder of the share and shall not be bound to see to the application of the
purchase money (if any) nor shall his title to the share be affected by any
irregularity or invalidity in the proceedings in reference to the forfeiture,
surrender, sale, re-allotment or disposal of the share.
TRANSFER OF SHARES
37. The instrument of transfer of any share in the Company shall be signed
by or on behalf of the transferor (and, in the case of a share which is not
fully paid, shall be signed by or on behalf of the transferee) and the
transferor shall be deemed to remain the holder of the share until the name of
the transferee is entered in the Register in respect thereof.
38. All transfers of shares shall be effected by instrument in writing in
any usual or common form or any other form which the Directors may approve.
39. Subject to Article 76 and the requirements of the London Stock
Exchange, the Directors may, in their absolute discretion and without assigning
any reason therefor, refuse to register any transfer of any share which is not a
fully paid share or the transfer of a share on which the Company has a lien. If
that share has been admitted to the Official List of the London Stock Exchange,
the Directors may not refuse to register the transfer if this would prevent
dealings in the share from taking place on an open and proper basis. The
Directors may likewise refuse to register any transfer of a share, whether fully
paid or not, in favour of more than four persons jointly.
40. The Directors may decline to recognise any instrument of transfer
unless:
(a) the instrument of transfer is left duly stamped at the Office, or
at such other place as the Directors may from time to time determine, to be
registered, accompanied by the certificate(s) of the shares to which it
relates, and such other evidence as the Directors may reasonably require to
show the right of the transferor to make the transfer (and, if the
instrument of transfer is executed by some other person on his behalf, the
authority of that person so to do); and
(b) The instrument of transfer is in respect of only one class of
share provided that, in the case of a transfer by a recognised clearing
house or a nominee of a recognised clearing house or of a recognised
investment exchange, the lodgement of share certificates will only be
necessary if and to the extent that certificates have been issued in
respect of the shares in question.
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41. If the Directors refuse to register a transfer they shall within two
months after the date on which the transfer was lodged with the Company send to
the transferee notice of the refusal and (except in the case of fraud) return to
him the instrument of transfer. All instruments of transfer which are registered
may be retained by the Company.
42. No fee shall be charged by the Company on the registration of any
instrument of transfer, probate, letters of administration, certificate of death
or marriage, power of attorney, stop notice or other document relating to or
affecting the title to any shares or otherwise for making any entry in the
Register affecting the title to any shares.
43. The registration of transfers may be suspended at such times and for
such periods as the Directors may from time to time determine and either
generally or in respect of any class of shares: Provided always that such
registration shall not be suspended, either generally or otherwise, for more
than thirty days in any year.
44. The Company shall be entitled to destroy:
(i) any instrument of transfer which has been registered, at any time
after the expiration of six years from the date of registration thereof;
(ii) any dividend mandate or any variation or cancellation thereof or
may any notification of change of address, at any time after the expiration
of two years from the date of recording thereof;
(iii) any share certificate which has been cancelled, at any time
after the expiration of one year from the date of such cancellation; and
(iv) any other document on the basis of which entry in the Register is
made, at any time after the expiration of six years from the date an entry
in the Register is first made in respect thereof;
and it shall conclusively be presumed in favour of the Company that every
entry in the Register purporting to have been made on the basis of an
instrument of transfer or other document so destroyed was duly and properly
made, that every instrument of transfer so destroyed was a valid and
effective instrument duly and properly registered, that every share
certificate so destroyed was a valid certificate duly and properly
cancelled and that every other document destroyed hereunder was a valid and
effective document in accordance with the recorded particulars thereof in
the books or records of the Company: Provided always that:
(a) the provisions aforesaid shall apply only to the destruction of a
document in good faith and without express notice to the Company that the
preservation of such document was relevant to any claim (regardless of the
parties thereto);
(b) nothing contained in this Article shall be construed as imposing
upon the Company any liability in respect of the destruction of any such
document earlier than as aforesaid or in any case where the conditions of
proviso (a) above are not fulfilled; and
(c) references in this Article to the destruction of any document
include references to its disposal in any manner.
TRANSMISSION OF SHARES
45. In case of the death of a Member, the survivor or survivors where the
deceased was a joint holder, and the legal personal representatives of the
deceased where he was a sole or only surviving holder, shall be the only persons
recognised by the Company as having any title to his interest in the shares; but
nothing herein contained shall release the estate of a deceased Member from any
liability in respect of any share which had been held by him (whether solely or
jointly with other persons).
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46. Any person becoming entitled to a share in consequence of the death or
bankruptcy of a Member may, upon such evidence being produced as may from time
to time properly be required by the Directors and subject as hereinafter
provided, elect either to be registered himself as holder of the share or to
have some person nominated by him registered as the transferee thereof, but the
Directors shall, in either case, have the same right to decline or suspend
registration as they would have had in the case of a transfer of the share by
that Member before his death or bankruptcy, as the case may be.
47. If the person so becoming entitled shall elect to be registered
himself, he shall deliver or send to the Company a notice in writing signed by
him stating that he so elects. If he shall elect to have another person
registered he shall testify his election by executing to that person a transfer
of the share. All the limitations, restrictions and provisions of these Articles
relating to the right to transfer and the registration of transfers of shares
shall be applicable to any such notice or transfer as aforesaid as if the death
or bankruptcy of the Member had not occurred and the notice or transfer were a
transfer signed by that Member.
48. Save as otherwise provided by or in accordance with these Articles, a
person becoming entitled to a share by reason of the death or bankruptcy of the
holder shall, upon supplying to the Company such evidence as the Directors may
reasonably require to show his title to the share, be entitled to the same
dividends and other advantages to which he would be entitled if he were the
registered holder of the share, except that he shall not, before being
registered as a Member in respect of the share, be entitled in respect of it to
exercise any right conferred by membership in relation to meetings of the
Company: Provided always that the Directors may at any time give notice
requiring any such person to elect either to be registered himself or to
transfer the share, and if the notice is not complied with within 90 days the
Directors may thereafter withhold payment of all dividends, bonuses or other
moneys payable in respect of the share until the requirements of the notice have
been complied with.
CONVERSION OF SHARES INTO STOCK
49. The Company may by Ordinary Resolution convert any of its fully paid up
shares into stock of the same class as the shares so converted, and reconvert
such stock into fully paid up shares of the same class and of any denomination.
50. The several holders of stock may transfer the same, or any part
thereof, in the same manner, and subject to the same regulations, as and subject
to which the shares from which the stock arose might previously to conversion
have been transferred, or as near thereto as circumstances admit; and the
Directors may from time to time fix the minimum amount of stock transferable but
so that such minimum shall not exceed the nominal amount of the shares from
which the stock arose.
51. The several holders of such stock shall, according to the amount of
stock held by them and the class thereof, have the same rights, privileges and
advantages as regards dividends, voting at meetings of the Company and other
matters as if they held the shares from which the stock arose, but no such
privilege or advantage (except participation in the dividend and profits of the
Company and in the assets on winding up) shall be conferred by an amount of
stock which would not, if existing in shares, have conferred that privilege or
advantage.
52. Such of the provisions of these Articles as are applicable to fully
paid up shares shall apply to stock and the words "share" and "shareholder"
therein shall include "stock" and "stockholder".
ALTERATION OF CAPITAL
53. The Company may from time to time by Ordinary Resolution increase its
share capital by such sum, to be divided into shares of such amount, as the
resolution shall prescribe. All new shares shall be subject to the provisions of
these Articles with reference to allotment, payment of calls, forfeiture, lien,
transfer and transmission and otherwise.
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54. The Company may by Ordinary Resolution:
(a) consolidate and divide all or any of its share capital into shares
of larger amount than its existing shares:
(b) sub-divide its existing shares, or any of them, into shares of
smaller amount than is fixed by the Memorandum of Association,
provided that:
(i) in the sub-division the proportion between the amount paid and
the amount, if any, unpaid on each reduced share shall be the same as it
was in the case of the share from which the reduced share is derived;
and
(ii) the resolution whereby any share is sub-divided may determine
that as between the resulting shares one or more of such shares may be
given any preference or advantage as regards dividend, capital, voting
or otherwise over the others or any other of such shares;
(c) cancel any shares which, at the date of the passing of the
resolution, have not been taken or agreed to be taken by any person, and
diminish the amount of its share capital by the amount of the shares so
cancelled.
55. Subject to any direction by the Company in General Meeting, whenever as
the result of any consolidation and division or sub-division of shares Members
of the Company are entitled to any issued shares of the Company in fractions,
the Directors may deal with such fractions as they shall determine and in
particular may sell the shares to which Members are so entitled in fractions to
any person for the best price reasonably obtainable and pay and distribute to
and amongst the Members entitled to such shares in due proportions the net
proceeds of the sale thereof. For the purpose of giving effect to any such sale
the Directors may nominate some person to execute a transfer of the shares sold
on behalf of the Members so entitled to the purchaser thereof and may cause the
name of the purchaser to be entered in the Register as the holder of the shares
comprised in any such transfer and he shall not be bound to see to the
application of the purchase money nor shall his title to the shares be affected
by any irregularity or invalidity in the proceedings in reference to the sale.
56. Subject to any consent required by law, the Company may by Special
Resolution reduce its share capital, any capital redemption reserve and any
share premium account in any manner and with, and subject to, any incident
authorized, and consent required, by law.
GENERAL MEETINGS
57. The Company shall in each year hold a General Meeting as its Annual
General Meeting in addition to any other meetings in that year, and not more
than fifteen months shall elapse between the date of one Annual General Meeting
of the Company and that of the next. The Annual General Meeting shall be held at
such time and place as the Directors shall appoint.
58. All General Meetings other than Annual General Meetings shall be called
Extraordinary General Meetings.
59. The Directors may, whenever they think fit, convene an Extraordinary
General Meeting, and Extraordinary General Meetings shall also be convened on
such requisition, or, in default, may be convened by such requisitionists, as
provided by the Statutes. If at any time there are not within the United Kingdom
sufficient Directors capable of acting to form a quorum the Directors in the
United Kingdom capable of acting, or if there are no Directors capable and
willing so to act, any two Members of the Company, may convene an Extraordinary
General Meeting in the same manner as nearly as possible as that in which
meetings may be convened by the Directors.
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NOTICE OF GENERAL MEETING
60. An Annual General Meeting and a meeting called for the passing of a
Special Resolution shall be called by not less than twenty-one days' notice in
writing, and a meeting of the Company other than an Annual General Meeting or a
meeting for the passing of a Special Resolution shall be called by not less than
fourteen days' notice in writing. The notice shall be exclusive of the day on
which it is served or deemed to be served and of the day for which it is given,
and shall specify the place, the day and the hour of meeting and, in case of
special business, the general nature of that business. It shall be given, in
manner hereinafter mentioned or in such other manner, if any, as may be
prescribed by the Company in General Meeting, to such persons as are, under
these Articles, entitled to receive such notices from the Company and shall
comply with the provisions of the Statutes as to informing Members of their
right to appoint proxies. A notice calling an Annual General Meeting shall
specify the meeting as such and a notice convening a meeting to pass an
Extraordinary Resolution or a Special Resolution as the case may be shall
specify the intention to propose the resolution as such.
61. A meeting of the Company shall, notwithstanding that it is called by
shorter notice than that specified in the last preceding Article, be deemed to
have been duly called if it is so agreed:
(a) in the case of a meeting called as the Annual General Meeting, by
all the Members entitled to attend and vote thereat; and
(b) in the case of any other meeting, by a majority in number of the
Members having a right to attend and vote at the meeting, being a majority
together holding not less than ninety-five per cent, in nominal value of
the shares giving that right.
62. The accidental omission to give notice of a meeting to, or the
non-receipt of notice of a meeting by, any person entitled to receive notice
shall not invalidate the proceedings at that meeting. In cases where instruments
of proxy are sent out with notices, the accidental omission to send such
instrument of proxy to or non-receipt of such instrument of proxy by any person
entitled to receive notice shall not invalidate the proceedings at the meeting.
PROCEEDINGS AT GENERAL MEETINGS
63. All business shall be deemed special that is transacted at an
Extraordinary General Meeting, and also all that is transacted at an Annual
General Meeting, with the exception of:
(a) declaring dividends:
(b) receiving and/or adopting the accounts, balance sheets, reports
of the Directors and Auditors and any other documents required by law to
be attached or annexed to the balance sheets;
(c) appointing or re-appointing Directors to fill vacancies arising
at the meeting on retirement whether by rotation or otherwise;
(d) re-appointing the retiring Auditors (unless they were last
appointed otherwise than by the Company in General Meeting);
(e) fixing of the remuneration of the Auditors or determining the
manner in which such remuneration is to be fixed.
64. No business shall be transacted at any General Meeting unless a quorum
of Members is present at the time when the meeting proceeds to business; save as
herein otherwise provided, three Members present in person or by proxy shall be
a quorum. The appointment of a Chairman in accordance with the provisions of
these Articles shall not be treated as part of the business of the meeting. If
within thirty minutes from the time appointed for the meeting a quorum be not
present, the meeting, if convened by or upon the requisition of Members, shall
be dissolved. In any other case it shall stand adjourned to such other day and
such time and place as may have been specified for the purpose in the notice
convening the meeting or (if not so specified) as the Chairman of the meeting
may determine and in the latter case not less than seven days' notice of the
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adjourned meeting shall be given in like manner as in the case of the original
meeting. If at such adjourned meeting a quorum be not present within fifteen
minutes from the time appointed therefor, the Member or Members present in
person or by proxy and entitled to vote shall be a quorum and shall have power
to decide upon all matters which could properly have been disposed of at the
meeting from which the adjournment took place.
65. The Chairman of the Board of Directors, failing whom the Deputy
Chairman, shall preside as Chairman at every General Meeting of the Company. If
there be no such Chairman or Deputy Chairman, or if at any General Meeting
neither shall be present within ten minutes after the time appointed for holding
the meeting and willing to act as Chairman, the Directors present shall select
one of their number to be Chairman; or if no Director be present and willing to
take the chair the Members present and entitled to vote shall choose one of
their number to be Chairman of the meeting.
66. The Chairman of the meeting may, with the consent of any meeting at
which a quorum is present (and shall if so directed by the meeting), adjourn the
meeting from time to time and from place to place; but no business shall be
transacted at any adjourned meeting other than the business left unfinished at
the meeting from which the adjournment took place. When a meeting is adjourned
for fourteen days or more, not less than seven clear days' notice in writing of
the adjourned meeting shall be given specifying the day, the place and the time
of the meeting as in the case of an original meeting, but it shall not be
necessary to specify in such notice the nature of the business to be transacted
at the adjourned meeting. Save as aforesaid it shall not be necessary to give
any notice of an adjournment.
67. If at any General Meeting an amendment shall be proposed to any
resolution under consideration but shall in good faith be ruled out of order by
the Chairman of the meeting, the proceedings on the substantive resolution shall
not be invalidated by any error in such ruling. In the case of a resolution duly
proposed as a Special or Extraordinary Resolution no amendment thereto (other
than an amendment to correct a patent error) may in any event be considered or
voted upon and in the case of a resolution proposed as an Ordinary Resolution no
amendment thereto (other than an amendment to correct a patent error) may be
considered or voted upon unless at least forty-eight hours prior to the time
appointed for holding the meeting or adjourned meeting at which such resolution
is to be proposed notice in writing of the terms of the amendment and intention
to move the same has been lodged at the Office.
68. At any General Meeting a resolution put to the vote of the meeting
shall be decided on a show of hands unless a poll is (before or on the
declaration of the result of the show of hands) demanded:
(a) by the Chairman of the meeting; or
(b) by at least three Members present in person or by proxy and
entitled to vote; or
(c) by any Member or Members present in person or by proxy and
representing not less than one-tenth of the total voting rights of all the
Members having the right to vote at the meeting; or
(d) by a Member or Members holding shares in the Company conferring a
right to vote at the meeting being shares on which an aggregate sum has
been paid up equal to not less than one-tenth of the total sum paid up on
all shares conferring that right.
Unless a poll be so demanded a declaration by the Chairman of the meeting
that a resolution has on a show of hands been carried or carried
unanimously, or by a particular majority, or lost and an entry to that
effect in the book containing the minutes of the proceedings of the Company
shall be conclusive evidence of the fact without proof of the number or
proportion of the votes recorded in favour of or against such resolution.
69. Except as provided in Article 71, if a poll is duly demanded it shall
be taken in such manner (including the use of ballot or voting papers or
tickets) as the Chairman of the meeting directs, and the result of the poll
shall be deemed to be the resolution of the meeting at which the poll was
demanded. The Chairman of the meeting may (and if so directed by the meeting
shall) appoint scrutineers and may adjourn the meeting to some place and time
fixed by him for the purpose of declaring the result of a poll.
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70. In the case of an equality of votes, whether on a show of hands or on a
poll, the Chairman of the meeting at which the show of hands takes place or at
which the poll is demanded, shall be entitled to a second or casting vote.
71. A poll demanded on the election of a Chairman of the meeting or on the
question of an adjournment shall be taken forthwith. A poll demanded on any
other question shall be taken either immediately or at such subsequent time (not
being more than thirty days after the date of the meeting or adjourned meeting
at which the poll is demanded) and place as the Chairman of the meeting may
direct. No notice need be given of a poll not taken immediately. Any business
other than that upon which a poll has been demanded may be proceeded with
pending the taking of the poll. The demand for a poll may be withdrawn at any
time before the conclusion of the meeting; but, if a demand is withdrawn, the
Chairman of the meeting or other Members entitled may himself or themselves
demand a poll.
VOTES OF MEMBERS
72. Subject to any rights or restrictions for the time being attached to
any class or classes of shares, on a show of hands every Member present in
person shall have one vote, and on a poll every Member shall have one vote for
each share of which he is the holder.
73. In the case of joint holders of a share the vote of the senior who
tenders a vote, whether in person or by proxy, shall be accepted to the
exclusion of the votes of the other joint holders; and for this purpose
seniority shall be determined by the order in which the names stand in the
Register in respect of the share.
74. A Member in respect of whom an order has been made by any court having
Jurisdiction (in the United Kingdom or elsewhere) in matters concerning mental
disorder may vote, whether on a show of hands or on a poll, by his receiver
curator bonis or other person authorised in that behalf appointed by that court,
and such receiver curator bonis or other person may, on a poll, vote by proxy:
Provided that such evidence as the Directors may require of the authority of the
person claiming to vote shall have been deposited at the Office not less than
forty-eight hours before the time appointed for holding the meeting or adjourned
meeting or for taking the poll at which it is desired to vote.
75. No Member shall, unless the Directors otherwise determine, be entitled,
in respect of any share in the capital of the Company held by him, to be present
or to vote on any question, either in person or by proxy, at any General Meeting
or meeting of the holders of any class of shares of the Company, or upon any
poll, or to be reckoned in a quorum, or to exercise any other right or privilege
conferred by membership in relation to General Meetings of the Company or
meetings of the holders of any class of shares of the Company if any call or
other sum presently payable by him to the Company in respect of such share
remains unpaid.
76. (A) If any Member, or any other person appearing to be interested in
shares held by such Member, has been duly served with a notice under Section 212
of the Companies Act 1985 (as amended by the Companies Act 1989) and is in
default for the prescribed period in supplying to the Company the information
thereby required, then, subject to the requirements of the London Stock
Exchange, the Directors may in their absolute discretion at any time thereafter
by a notice (a "direction notice") to such Member direct that, in respect of the
shares in relation to which the default occurred (the "default shares" which
expression shall include any further shares which are issued in respect of such
shares), the Member shall not be entitled to be present or to vote either
personally or by proxy at a General Meeting of the Company or a meeting of the
holders of any class of shares of the Company or to exercise any other right
conferred by membership in relation to General Meetings of the Company or
meetings of the holders of any class of shares of the Company.
(B) Where the default shares represent at least 0.25 per cent. of the
issued shares of that class, then the direction notice may additionally
direct:
(i) that any dividend or part thereof or other money which would
otherwise be payable in respect of the default shares shall be retained
by the Company without any liability to pay interest thereon when such
money is finally paid to the Member; and/or
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(ii) that no transfer of any of the shares held by such Member
shall be registered unless:
(a) the Member is not himself in default as regards suppling the
information required and the transfer is of part only of the Member's
holding which, when presented for registration, is accompanied by a
certificate by the Member in a form satisfactory to the Directors to the
effect that after due and careful inquiry the Member is satisfied that
none of the shares the subject of the transfer are default shares; or
(b) the transfer is an approved transfer.
(C) The Company shall send to each other person appearing to be
interested in the shares the subject of any direction notice a copy of the
notice, but the failure or omission by the Company to do so shall not
invalidate such notice.
(D) The sanctions under this Article 76 shall cease to apply seven
days after the earlier of:
(i) receipt by the Company of notice of an approved transfer, but
only in relation to the shares transferred; and
(ii) receipt by the Company, in a form satisfactory to the
Directors, of all the information required by the direction notice.
(E) For the purposes of this Article:
(i) a person shall be treated as appearing to be interested in any
shares if the Member holding such shares has given to the Company a
notification under the said Section 212 which either (a) names such
person as being so interested or (b) fails to establish the identities
of those interested in the shares and (after taking into account the
said notification and any other relevant Section 212 notification) the
Company knows or has reasonable cause to believe that the person in
question is or may be interested in the shares;
(ii) the prescribed period is 28 days from the date of service of
the notice under the said Section 212 except where the default shares
represent at least 0.25 per cent. of the issued shares of that class in
which case the prescribed period is 14 days from such date; and
(iii) a transfer of shares is an approved transfer if:
(a) it is a transfer of shares to an offeror by way or in
pursuance of acceptance of a takeover offer for a company (as defined
in Section 428(1) of the Companies Act 1985); or
(b) the Directors are satisfied that the transfer is made
pursuant to a sale of the whole of the beneficial ownership of the
shares to a party unconnected with the transferring Member and/or
with any other person appearing to be interested in such shares; or
(c) the transfer results from a sale made through a recognized
investment exchange or any stock exchange outside the United Kingdom
on which the Company's shares are normally traded.
77. No objection shall be raised to the qualification of any voter or as to
whether any votes have been counted which ought not to have been counted or
which might have been rejected, or as to whether any votes have not been counted
which ought to have been counted, except at the meeting or adjourned meeting at
which the vote objected to is given or tendered or at which the vote which might
have been counted is not counted, or (in the case of a poll) on or within 24
hours of the declaration of the result of the poll, and every vote not
disallowed at such meeting shall be valid for all purposes. Any such objection
made in due time shall be referred to the Chairman of the meeting, whose
decision shall be final and conclusive.
78. On a poll votes may be given personally or by proxy and a Member
entitled to more than one vote need not, if he votes, use all his votes or cast
all the votes he uses in the same way.
79. The instrument appointing a proxy shall be in writing in any usual or
common form, or any other form which the Directors may approve, under the hand
of the appointor or of his attorney duly authorized in
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writing, or if the appointor is a corporation, either under seal, or under the
hand of an officer or attorney duly authorized. The Directors may, but shall not
be bound to, require evidence of the authority of any such attorney or officer.
The signature on such instrument need not be witnessed. A proxy need not be a
Member of the Company. A Member may appoint more than one proxy to attend on the
same occasion. Deposit of an instrument of proxy shall not preclude a Member
from attending and voting in person at the meeting or any adjournment thereof.
80. An instrument appointing a proxy and the power of attorney or other
authority, if any, under which it is signed, or a notarially certified copy or a
copy certified in accordance with the Powers of Attorney Act 1971 of that power
or authority shall be deposited at the Office or at such other place (if any)
within the United Kingdom as is specified for that purpose in or by way of note
to the notice convening the meeting, not less than forty-eight hours before the
time for holding the meeting or adjourned meeting, at which the person named in
the instrument proposes to vote, or, in the case of a poll taken otherwise than
at or on the same day as the meeting or adjourned meeting, not less than
twenty-four hours before the time appointed for the taking of the poll at which
it is to be used, and in default the instrument of proxy shall not be treated as
valid.
81. An instrument appointing a proxy shall, unless the contrary is stated
thereon, be valid as well for any adjournment of the meeting to which it
relates. An instrument of proxy may relate to more than one meeting (including
any adjournment thereof) and having once been so delivered for the purpose of
any meeting shall not require to be delivered in relation to any subsequent
meeting to which it relates. No instrument of proxy shall be valid after the
expiration of twelve months from the date of its execution except at an
adjourned meeting or on a poll demanded at a meeting or adjourned meeting in
cases where the meeting was originally held within twelve months from that date.
82. The instrument appointing a proxy shall be deemed to confer authority
to demand or join in demanding a poll.
83. A vote given in accordance with the terms of an instrument of proxy
shall be valid notwithstanding the previous death or insanity of the principal
or revocation of the proxy or of the authority under which the proxy was
executed, or the transfer of the share in respect of which the proxy is given,
provided that no intimation in writing of such death, insanity, revocation or
transfer shall have been received by the Company at the Office or such other
place (if any) as is specified for depositing the instrument of proxy before the
commencement of the meeting or adjourned meeting or the holding of a poll
subsequently thereto at which such vote is given.
84. Subject to the provisions of the Statutes, a resolution in writing
signed by all the Members for the time being entitled to receive notice of and
to attend and vote at General Meetings (or being corporations by their duly
authorised representatives) shall be as valid and effective as if the same had
been passed at a General Meeting of the Company duly convened and held, and may
consist of two or more documents in like form each signed by one or more of the
Members.
85. Any corporation which is a Member of the Company may by resolution of
its directors or other governing body authorise such person as it thinks fit to
act as its representative at any meeting of the Company or of any class of
Members of the Company, and the person so authorised shall be entitled to
exercise the same powers on behalf of the corporation which he represents as
that corporation could exercise if it were an individual member of the Company.
DIRECTORS
86. Unless and until the Company in General Meeting shall otherwise
determine, the number of Directors shall be not fewer than two.
87. A Director shall not be required to hold any shares in the capital of
the Company. A Director who is not a Member shall nevertheless be entitled to
receive notice of and attend and speak at all General Meetings of the Company
and all separate General Meetings of the holders of any class of shares in the
capital of the Company.
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88. Any provisions of the Statutes which, subject to the provisions of
these Articles, would have the effect of rendering any person ineligible for
appointment as a Director or liable to vacate office as Director on account of
his having reached any specified age or of requiring special notice or any other
special formality in connection with the appointment of any Director over a
specified age, shall not apply to the Company.
89. A Director of the Company may be or continue as or become a director or
other officer servant or member of, or otherwise interested in, any company
promoted by the Company or in which the Company may be interested as shareholder
or otherwise, and no such Director shall be accountable to the Company for any
remuneration or other benefits received or receivable by him as a director or
other officer servant or member of, or from his interest in, such other company.
90. (1) The Directors (other than any Director who shall for the time being
hold an executive office or employment under the Company or a subsidiary of the
Company) shall be paid out of the funds of the Company by way of fees for their
services as Directors such sums (if any) as the Directors may from time to time
determine (not exceeding in the aggregate an annual sum of L150,000 or such
larger amount as the Company may by Ordinary Resolution determine). Such
remuneration shall be deemed to accrue from day to day.
(2) The Directors may also be paid all reasonable travelling, hotel
and other expenses properly incurred by them in attending and returning
from meetings of the Directors or any committee of the Directors or General
Meetings or otherwise in connection with the business of the Company.
91. Any Director who is appointed to any executive office or who serves on
any committee or who devotes special attention to the business of the Company,
or who otherwise performs services which in the opinion of the Directors are
outside the scope of the ordinary duties of a Director, may be paid such
remuneration or extra remuneration by way of salary, percentage of profits or
otherwise as the Directors may determine.
92. The Company shall in accordance with the provisions of the Statutes
duly keep a register showing, as respects each Director, interests of his in
shares in, or debentures of, the Company or associated companies.
ALTERNATE DIRECTORS
93. (A) Each Director shall have the power at any time to appoint as an
alternate Director either (i) another Director or (ii) any other person approved
for that purpose by a resolution of the Directors, and, at any time, to
terminate such appointment. Every appointment and removal of an alternate
Director shall be in writing signed by the appointor and (subject to any
approval required) shall (unless the Directors agree otherwise) only take effect
upon receipt of such written appointment or removal at the Office or at a
meeting of the Directors. An alternate Director shall not be required to hold
any shares in the capital of the Company and shall not be counted in reckoning
the maximum and minimum number of Directors allowed or required by Article 86.
(B) An alternate Director so appointed shall not be entitled as such
to receive any remuneration from the Company except only such part (if any)
of the remuneration otherwise payable to his appointor as such appointor
may by notice in writing to the Company from time to time direct, but shall
otherwise be subject to the provisions of these Articles with respect to
Directors. An alternate Director shall during his appointment be an officer
of the Company and shall not be deemed to be an agent of his appointor.
(C) An alternate Director shall (subject to his giving to the Company
an address within the United Kingdom at which notices may be served upon
him) be entitled to receive notices of all meetings of the Directors and of
any committee of the Directors of which his appointor is a member and to
attend and vote as a Director at any such meeting at which his appointor is
not personally present and generally in the absence of his appointor to
perform and exercise all functions, rights, powers and duties as Director
of his appointor, and to receive notice of all General Meetings.
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(D) The appointment of an alternate Director shall automatically
determine on the happening of any event which if he were a Director would
cause him to vacate such office or if his appointor shall cease for any
reason to be a Director otherwise than by retiring and being re-appointed
at the same meeting.
(E) A Director or any other person may act as alternate Director to
represent more than one Director and an alternate Director shall be
entitled at meetings of the Directors or any committee of the Directors to
one vote for every Director whom he represents in addition to his own vote
(if any) as a Director, but shall count as only one for the purpose of
determining whether a quorum be present.
BORROWING POWERS
94.(A) Subject as hereinafter provided, the Directors may exercise all the
powers of the Company to borrow money, and to mortgage or charge its
undertaking, property and uncalled capital, and to issue debentures, debenture
stock and other securities whether outright or as collateral security for any
debt, liability or obligation of the Company or of any third party.
(B) The Directors shall restrict the borrowings of the Company and
exercise all voting and other rights or powers of control exercisable by
the Company in relation to its subsidiary companies (if any) so as to
ensure (so far, as regards subsidiary companies as by such exercise they
can secure), that the aggregate amount for the time being remaining
undischarged of all moneys borrowed by the Company and any of its
subsidiary companies (exclusive of moneys for the time being owing by any
subsidiary to the Company or to another subsidiary or by the Company to any
subsidiary) shall not without the previous sanction of an Ordinary
Resolution of the Company exceed an amount equal to four times the Adjusted
Total of Capital and Reserves. For the purpose of the said limit, the issue
of debentures shall be deemed to constitute a borrowing notwithstanding
that the same may be issued in whole or in part for a consideration other
than cash.
(C) The expression "Adjusted Total of Capital and Reserves" means the
aggregate of:
(i) the amount paid up or credited as paid up on the issued share
capital of the Company; and
(ii) the amounts standing to the credit of the capital, special and
revenue reserves (including any share premium account, capital
redemption reserve fund and profit and loss account) of the Company;
all as shown in the latest audited Balance Sheet of the Company after:
(i) deducting an amount equivalent to any distribution by the
Company, or by any of its subsidiaries otherwise than in favour of the
Company out of profits down to the date of such Balance Sheet of the
Company which may have been declared, recommended or made since that
date except in so far as such distribution is provided for in such
Balance Sheet of the Company;
(ii) making such adjustments as may be appropriate to reflect any
variation in the paid up share capital of the Company or in the said
capital reserves which has taken place since the date of such Balance
Sheet of the Company or which would result from any transaction
contemplated at the time when the Adjusted Total of Capital and Reserves
is being calculated or from any transaction connected therewith.
(D) A certificate in writing by the Auditors for the time being of the
Company as to the amount of the Adjusted Total of Capital and Reserves or
as to the amount deemed to be outstanding as borrowed moneys at any date
shall be conclusive for all purposes as to the matters thereby certified.
(E) No lender or other person dealing with the Company or any of its
subsidiary companies shall be concerned to see or inquire whether the limit
imposed by this Article is observed, and no debt incurred or security given
in excess of such limit shall be invalid or ineffectual unless the lender
or the recipient of the security had at the time when the debt was incurred
or security given express notice that the said limit had been or would
thereby be exceeded.
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POWERS AND DUTIES OF DIRECTORS
95. The business of the Company shall be managed by the Directors, who may
exercise all such powers of the Company as are not, by the Statutes or by these
Articles, required to be exercised by the Company in General Meeting, subject,
nevertheless, to the provisions of these Articles and of the Statutes, and to
such directions, being not inconsistent with any provisions of these Articles
and of the Statutes, as may be given by the Company in General Meeting: Provided
that no direction given by the Company in General Meeting shall invalidate any
prior act of the Directors which would have been valid if such direction had not
been given. The general powers conferred upon the Directors by this Article
shall not be deemed to be abridged or restricted by any specific authority or
power conferred upon the Directors by any other Article.
96.(A) The Directors may procure the establishment and maintenance of or
participate in, or contribute to any non-contributory or contributory pension or
superannuation fund, scheme or arrangement or life assurance scheme or
arrangement for the benefit of, and pay, provide for or procure the grant of
donations, gratuities, pensions, allowances, benefits or emoluments to, any
persons who are or shall have been at any time Directors of the Company or in
the employment or service of the Company or of any company which is or was a
subsidiary of or allied to or associated with the Company or of the predecessors
in business of the Company or any such subsidiary or associated company or the
wives, widows, families, relatives or dependants of any such persons and so that
any Director shall be entitled to receive and retain for his own benefit any
such pension, annuity, gratuity, allowance or other benefit (whether under any
such fund or scheme or otherwise).
(B) The Directors may also procure the establishment and subsidy of or
subscription to and support of any institutions, associations, clubs, funds
or trusts calculated to be for the benefit of any such persons as aforesaid
or otherwise to advance the interests and well-being of the Company or of
any such other company as aforesaid, or its members, and may take or
procure payments for or towards the insurance of any such persons as
aforesaid and subscriptions or guarantees for charitable or benevolent
objects or for any exhibition or for any public, general or useful object.
(C) Without prejudice to the provisions of Article 154 the Directors
shall have power to purchase and maintain insurance for or for the benefit
of any persons who are or were at any time Directors, officers or employees
or auditors of the Company, or of any other company which is its holding
company or in which the Company or such holding company or any of the
predecessors of the Company or of such holding company has any interest
whether direct or indirect or which is in any way allied to or associated
with the Company, or of any subsidiary undertaking of the Company or of any
such other company, or who are or were at any time trustees of any pension
fund in which any employees of the Company or of any such other company or
subsidiary undertaking are interested, including (without prejudice to the
generality of the foregoing) insurance against any liability incurred by
such persons in respect of any act or omission in the actual or purported
execution and/or discharge of their duties and/or in the exercise or
purported exercise of their powers and/or otherwise in relation to their
duties, powers or offices in relation to the Company or any such other
company, subsidiary undertaking or pension fund. For the purposes of this
Regulation "holding company" and "subsidiary undertaking" shall have the
same meanings as in the Companies Act 1989.
(D) Without prejudice to the generality of the foregoing paragraphs of
this Article, the Directors may exercise any of the powers conferred by the
Statutes to make provision for the benefit of any such persons as aforesaid
in connection with the cessation or the transfer to any person of the whole
or part of the undertaking of the Company or any of its subsidiaries.
(E) The Directors may procure any of the matters aforesaid to be done
by the Company either alone or in conjunction with any other company.
97. The Directors may make such arrangements as they think fit for the
management and transaction of the Company's affairs in the United Kingdom and
elsewhere and may from time to time and at any time establish any local boards
or agencies for managing any of the affairs of the Company in any specified
locality, and may appoint any persons to be members of such local board, or any
managers or agents, and may fix their remuneration. And the Directors from time
to time, and at any time, may delegate to any person so appointed
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any of the powers, authorities, and discretions for the time being vested in the
Directors (other than the powers of borrowing and of making calls), with power
to sub-delegate, and may authorise the members for the time being of any such
local board, or any of them, to fill up any vacancies therein, and to act
notwithstanding vacancies; and any such appointment or delegation may be made on
such terms and subject to such conditions as the Directors may think fit, and
the Directors may at any time remove any person so appointed, and may annul or
vary any such delegation.
98. The Directors may from time to time and at any time by power of
attorney appoint any company, firm or person or body of persons, whether
nominated directly or indirectly by the Directors, to be the attorney or
attorneys of the Company for such purposes and with such powers, authorities and
discretions (not exceeding those vested in or exercisable by the Directors under
these Articles) and for such period and subject to such conditions as they may
think fit, and any such powers of attorney may contain such provisions for the
protection and convenience of persons dealing with any such attorney as the
Directors may think fit and may also authorise any such attorney to sub-delegate
all or any of the powers, authorities and discretions vested in him.
99. The Company may exercise the powers conferred by the Statutes with
regard to having an official seal for use abroad and the powers conferred by
Section 40 of the Companies Act 1985 with regard to having an official seal for
sealing and evidencing securities, and such powers shall be vested in the
Directors.
100. The Company may exercise the powers conferred upon the Company by the
Statutes with regard to the keeping of an overseas branch register, and the
Directors may (subject to the provisions of the Statutes) make and vary such
regulations as they may think fit respecting the keeping of any such register.
101.(A) Subject to the provisions of the Statutes, a Director may hold any
other office or place of profit under the Company, except that of Auditor, in
conjunction with the office of Director and may act by himself or through his
firm in a professional capacity for the Company, and in any such case on such
terms as to remuneration and otherwise as the Directors may arrange. Any such
remuneration shall be in addition to any remuneration provided for by any other
Article. No Director or intending Director shall be disqualified by his office
from entering into any contract, arrangement, transaction or proposal with the
Company either with regard to his tenure of any such other office or place of
profit or any such acting in a professional capacity or as a vendor, purchaser
or otherwise. Subject to the provisions of the Statutes and save as therein
provided no such contract, arrangement, transaction or proposal entered into by
or on behalf of the Company in which any Director or person connected with him
is in any way interested, whether directly or indirectly, shall be liable to be
avoided, nor shall any Director who enters into any such contract, arrangement,
transaction or proposal or who is so interested be liable to account to the
Company for any profit realised by any such contract, arrangement, transaction
or proposal by reason of such Director holding that office or of the fiduciary
relation thereby established, but he shall declare the nature of his interest in
accordance with the Statutes.
(B) Save as herein provided, a Director shall not vote in respect of
any contract, arrangement, transaction or any other proposal whatsoever in
which he has any material interest otherwise than by virtue of his
interests in shares or debentures or other securities of or otherwise in or
through the Company. A Director shall not be counted in the quorum at a
meeting in relation to any resolution on which he is debarred from voting.
(C) A Director shall (in the absence of some other material interest
than is indicated below) be entitled to vote (and be counted in the quorum)
in respect of any resolution concerning any of the following matters,
namely:
(i) the giving of any security or indemnity to him in respect of
money lent or obligations incurred by him at the request of or for the
benefit of the Company or any of its subsidiaries;
(ii) the giving of any security or indemnity to a third party in
respect of a debt or obligation of the Company or any of its
subsidiaries for which he himself has assumed responsibility in whole or
in part under a guarantee or indemnity or by the giving of security;
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any proposal concerning an offer of shares or debentures or other
securities of or by the Company or any of its subsidiaries for
subscription or purchase in which offer he is or is to be interested as
a participant in the underwriting or sub-underwriting thereof;
(iv)any contract, arrangement, transaction or other proposal
concerning any other body corporate in which he is interested, directly
or indirectly and whether as an officer or shareholder or otherwise
howsoever, provided that he is not the holder of or beneficially
interested in one per cent. or more of any class of the equity share
capital of such body corporate (or of a third body corporate through
which his interest is derived) or of the voting rights available to
members of the relevant body corporate (any such interest being deemed
for the purposes of this Article to be a material interest in all
circumstances);
(v) any contract, arrangement, transaction or other proposal
concerning the adoption, modification or operation of a superannuation
fund or retirements death or disability benefits scheme under which he
may benefit and which relates to both employees and Directors of the
Company and which does not accord to any Director as such any privilege
or advantage not generally accorded to the employees to whom such scheme
or fund relates;
(vi) any contract, arrangement, transaction or other proposal
concerning the adoption, modification or operation of any scheme for
enabling employees including full-time Executive Directors of the
Company and/or any subsidiary to acquire shares of the Company or any
arrangement for the benefit of employees of the Company or any of its
subsidiaries under which the Director benefits in a similar manner to
employees and which does not accord to any Director as such any
privilege or advantage not generally accorded to the employees to whom
the scheme relates; and
(vii) any proposal concerning any insurance which the Company is
empowered to purchase and/or maintain for or for the benefit of any
Directors of the Company or for persons who include Directors of the
Company.
(D) A Director shall not vote or be counted in the quorum on any
resolution concerning his own appointment as the holder of any office or
place of profit with the Company or any company in which the Company is
interested including fixing or varying the terms of his appointment or the
termination thereof.
(E) Where proposals are under consideration concerning the appointment
(including fixing or varying the terms of appointment) of two or more
Directors to offices or employments with the Company or any company in
which the Company is interested, such proposals may be divided and
considered in relation to each Director separately and in such cases each
of the Directors concerned (if not debarred from voting under paragraph
(C)(iv) of this Article) shall be entitled to vote (and be counted in the
quorum) in respect of each resolution except that concerning his own
appointment.
(F) If any question shall arise at any meeting as to the materiality
of a Director's interest or as to the entitlement of any Director to vote
and such question is not resolved by his voluntarily agreeing to abstain
from voting, such question shall be referred to the Chairman of the meeting
and his ruling in relation to any other Director shall be final and
conclusive except in a case where the nature or extent of the interests of
the Director concerned have not been fairly disclosed.
(G) Subject to the provisions of the Statutes the Company may by
Ordinary Resolution suspend or relax the provisions of this Article to any
extent or ratify any transaction not duly authorised by reason of a
contravention of this Article.
102. The Directors may exercise or procure the exercise of the voting
rights conferred by the shares in any other company held or owned by the
Company, and may exercise any voting rights to which they are entitled as
Directors of such other company, in such manner as they shall in their absolute
discretion think fit, including the exercise thereof in favour of any resolution
appointing themselves or any of them as directors, officers or servants of such
other company, and fixing their remuneration as such, and may vote as Directors
of this Company in connection with any of the matters aforesaid.
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103. All cheques, promissory notes, drafts, bills of exchange and other
negotiable instruments, and all receipts for moneys paid to the Company, shall
be signed, drawn, accepted, endorsed, or otherwise executed, as the case may be,
in such manner as the Directors shall from time to time determine.
104.(A) The Directors shall cause minutes to be made in books provided for
the purpose:
(a) of all appointments of officers made by the Directors;
(b) of the names of the Directors present at each meeting of the
Directors and of any committee of the Directors;
(c) of all resolutions and proceedings at all meetings of the Company,
and of the Directors, and of committees of Directors.
It shall not be necessary for Directors present at any meeting of Directors
or committee of Directors to sign their names in the Minute Book or other
book kept for recording attendance. Any such minute as aforesaid, if
purporting to be signed by the Chairman of the meeting at which the
proceedings were had, or by the Chairman of the next succeeding meeting,
shall be receivable as prima facie evidence of the matters stated in such
minutes without any further proof.
(B) Any Director or the Secretary or any person appointed by the
Directors for the purpose shall have power to authenticate any documents
affecting the constitution of the Company and any resolutions passed by the
Company or the Directors or any committee, and any books, records,
documents and accounts relating to the business of the Company, and to
certify copies thereof or extracts therefrom as true copies or extracts;
and where any books, records, documents or accounts are elsewhere than at
the Office the local manager or other officer of the Company having the
custody thereof shall be deemed to be a person appointed by the Directors
as aforesaid. A document purporting to be a copy of a resolution, or an
extract from the minutes of a meeting, of the Company or of the Directors
or any committee which is certified as aforesaid shall be conclusive
evidence in favour of all persons dealing with the Company upon the faith
thereof that such resolution has been duly passed or, as the case may be,
that any minute so extracted is a true and accurate record of proceedings
at a duly constituted meeting.
DISQUALIFICATION OF DIRECTORS
105. The office of a Director shall be vacated in any of the following
events, namely:
(a) if he becomes bankrupt or a receiving order is made against him or
he makes any arrangement or composition with his creditors generally;
(b) if he becomes prohibited by law from acting as a Director;
(c) if in England or elsewhere an Order is made by any Court claiming
jurisdiction in that behalf on the ground (however formulated) of mental
disorder for his detention or for the appointment of a guardian or receiver
or other person to exercise powers with respect to his property or affairs;
(d) if he resigns his office by notice in writing under his hand to
the Company or offers in writing under his hand to resign and the Directors
resolve to accept such offer;
(e) if not having leave of absence from the Directors, he and his
alternate (if any) fail to attend the meetings of the Directors for six
successive months, unless prevented by illness, unavoidable accident or
other cause which may seem to the Directors to be sufficient, and the
Directors resolve that his office be vacated;
(f) if all the other Directors unanimously resolve that he be removed
as a Director.
ROTATION OF DIRECTORS
106. At each Annual General Meeting of the Company one-third of the
Directors for the time being, or, if their number is not three or a multiple of
three, then the number nearest to but (except when less than three
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directors are subject to retirement) not exceeding one-third, shall retire from
office. A Director retiring at a meeting shall retain office until the
dissolution of such meeting.
107. The Directors to retire by rotation shall include (so far as necessary
to obtain the number required) any Director who wishes to retire and not to
offer himself for re-election. Any further Directors so to retire, shall be
those who have been longest in office since their last election, but as between
persons who became Directors on the same day those to retire shall (unless they
otherwise agree among themselves) be determined by lot. A retiring Director
shall be eligible for re-election.
108. The Company at the meeting at which a Director retires under any
provision of these Articles may by Ordinary Resolution fill up the vacated
office by electing thereto the retiring Director or some other person eligible
for appointment. In default the retiring Director shall be deemed to have been
re-elected except in any of the following cases, namely if:
(a) at such meeting it is expressly resolved not to fill up such
vacated office or a resolution for the re-election of such Director is put
to the meeting and lost; or
(b) such Director has given notice in writing to the Company that he
is unwilling to be re-elected; or
(c) the default is due to the moving of a resolution in contravention
of the next following Article.
109. A single resolution for the appointment of two or more persons as
Directors shall not be put at any General Meeting, unless a resolution that it
shall be so put has first been agreed to by the meeting without any vote being
given against it.
110. No person other than a Director retiring at the meeting shall, unless
recommended by the Directors, be eligible for election or re-election to the
office of Director at any General Meeting unless not less than seven nor more
than twenty-one days before the date appointed for the meeting there shall have
been left at the Office notice in writing, signed by a Member (other than the
person proposed) duly qualified to attend and vote at such meeting, of his
intention to propose such person for election, and also notice in writing signed
by that person of his willingness to be elected or re-elected.
111. The Company may from time to time by Ordinary Resolution increase or
reduce the number of Directors then in office, and may also determine in what
rotation the increased or reduced number is to go out of office.
112. The Directors shall have power at any time, and from time to time, to
appoint any person to be a Director of the Company, either to fill a casual
vacancy or as an addition to the existing Directors, but so that the total
number of Directors shall not at any time exceed the maximum number, if any,
fixed by or pursuant to these Articles. Any Director so appointed shall hold
office only until the next following Annual General Meeting, and shall then be
eligible for re-election but shall not be taken into account in determining the
Directors who are to retire by rotation at such meeting.
113. The Company may by Ordinary Resolution, of which special notice has
been given in accordance with the provisions of the Statutes, remove any
Director before the expiration of his period of office notwithstanding anything
in these Articles or in any agreement between the Company and such Director.
Such removal shall be without prejudice to any claim such Director may have for
damages for breach of any contract of service between him and the Company.
114. The Company may by Ordinary Resolution appoint another person in place
of a Director removed from office under the immediately preceding Article, and
without prejudice to the powers of the Directors under Article 112 the Company
in General Meeting may appoint any person to be a Director either to fill a
casual vacancy or as an additional Director. A person appointed in place of a
Director so removed or to fill such a vacancy shall be subject to retirement at
the same time as if he had become a Director on the day on which the Director in
whose place he is appointed was last elected a Director.
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PROCEEDINGS OF DIRECTORS
115.(A) The Directors may meet together for the despatch of business,
adjourn and otherwise regulate their meetings, as they think fit, and determine
the quorum necessary for the transaction of business. Until otherwise determined
two Directors shall constitute a quorum. Questions arising at any meeting shall
be decided by a majority of votes. In case of an equality of votes, the Chairman
shall have a second or casting vote. A Director may, and the Secretary on the
requisition of a Director shall, at any time summon a meeting of the Directors.
Any Director may waive notice of any meeting and any such waiver may be
retroactive.
(B) All or any of the Directors or any committee thereof may participate in
a meeting of the Directors or that committee by means of a conference telephone
or any communication equipment which allows all persons participating in the
meeting to hear each other. Any person so participating shall be deemed to be
present in person at the meeting and shall be entitled to vote or be counted in
a quorum accordingly. Such a meeting shall be deemed to take place where the
largest group of those participating is assembled, or, if there is no such
group, where the Chairman of the meeting is then present.
116. Notice of a meeting of the Directors shall be deemed to be duly given
to a Director if it is given to him personally or by word of mouth or sent in
writing to him at his last known address or any other address given by him to
the Company for this purpose. It shall not be necessary to give notice of a
meeting of the Directors to (a) any Director for the time being absent or
intending to be absent from the United Kingdom unless such Director has
requested the Company that notice of meetings of the Directors shall during his
absence be sent in writing to him at his last known address or any other address
given by him to the Company for this purpose, whether or not out of the United
Kingdom or (b) to any alternate Director who has not given to the Company an
address within the United Kingdom at which notice may be served upon him.
117. The continuing Directors or sole continuing Director may act
notwithstanding any vacancy in their body, but, if and so long as their number
is reduced below the number fixed by or pursuant to these Articles as the
necessary quorum of Directors, the continuing Directors or Director may act for
the purpose of increasing the number of Directors to that number, or of
summoning a General Meeting of the Company, but for no other purpose. If there
be no Directors or Director able or willing to act, then any two Members may
summon a General Meeting for the purpose of appointing Directors.
118. The Directors may elect from their number a Chairman and a Deputy
Chairman of their meetings and determine the period for which each is to hold
office; but if no such Chairman or Deputy Chairman be elected, or if at any
meeting no Chairman or Deputy Chairman shall be present within five minutes
after the time appointed for holding the same, the Directors present shall
choose one of their number to be Chairman of such meeting.
119. The Directors may from time to time and always in compliance with
Article 10A(H)(iii) appoint committees consisting of one or more members of
their body as they think fit and may co-opt one or more other persons as
hereinafter provided. The Directors may delegate any of their powers or
discretions to any such committee and from time to time revoke any such
delegation and discharge any such committee wholly or in part. Insofar as any
such power or discretion is so delegated any reference in these Articles to the
exercise of discretion by the Directors of such power or discretion shall be
read and construed as if it were a reference to such committee. Any committee so
formed shall in the exercise of the powers so delegated conform to any
regulations that may be imposed by the Directors in default of which proceedings
of a committee consisting of more than one member shall be regulated mutatis
mutandis like the proceedings of the Directors. Any such regulations may provide
for or authorise the co-option to the committee of persons other than Directors
and for such co-opted members to have voting rights as members of the committee
but so that (a) the number of co-opted members shall be less than one-half of
the total number of members of the committee and (b) no resolution of the
committee shall be effective unless a majority of the members of the committee
present throughout the meeting are Directors.
120. All acts done by any meeting of the Directors or of a committee of the
Directors or by any person acting as a Director shall, notwithstanding that it
be afterwards discovered that there was some defect in the appointment or
continuance in office of any of the persons acting as aforesaid, or that any of
such persons were
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or was disqualified from holding office or not entitled to vote, or had in any
way vacated office, be as valid as if every such person had been duly appointed
or had duly continued in office and was qualified and had continued to be a
Director or member of the committee and was entitled to vote.
121. A resolution in writing, signed by all the Directors for the time
being entitled to receive notice of a meeting of the Directors, shall be as
valid and effective for all purposes as a resolution of the Directors passed at
a meeting duly convened and held, and may consist of two or more documents in
like form each signed by one or more of the Directors: Provided that such a
resolution need not be signed by an alternate Director if it is signed by the
Director who appointed him.
MANAGING AND EXECUTIVE DIRECTORS
122. Subject to the provisions of the Statutes the Directors may from time
to time appoint one or more of their body to be the holder of any executive
office (including, where considered appropriate, the office of Chairman or
Deputy Chairman), for such period and on such terms as they think fit, and,
subject to the terms of any service contract entered into in any particular case
and without prejudice to any claim for damages such Director may have for breach
of any such service contract, may revoke or vary the terms of such appointment.
The appointment of a Director to such office shall, without prejudice, to any
claim for damages such Director may have for breach of any service contract
between him and the Company, be automatically determined if he ceases from any
cause to be a Director.
123. The salary or remuneration of any Director holding any executive
office shall, subject as provided in any contract, be such as the Directors may
from time to time determine, and may either be a fixed sum of money, or may
altogether or in part be governed by the business done or profits made, and may
include the making of provisions for the payment to him, his widow or other
dependants, of a pension on retirement from the office or employment to which he
is appointed and for the participation in pension and life assurance benefits,
or may be upon such other terms as the Directors determine.
124. The Directors may entrust to and confer upon any Director holding any
executive office any of the powers exercisable by them upon such terms and
conditions and with such restrictions as they may think fit, and either
collaterally with or to the exclusion of their own powers and may from time to
time revoke, withdraw, alter or vary all or any of such powers.
SECRETARY
125.(A) Subject to the provisions of the Statutes the Secretary shall be
appointed by the Directors for such term, at such remuneration and upon such
conditions as they think fit; and any Secretary so appointed may (without
prejudice to any claim for breach of damages for breach of any contract between
him and the Company) be removed by them.
(B) A provision of the Statutes or these Articles requiring or
authorising a thing to be done by or to a Director and the Secretary shall
not be satisfied by its being done by or to the same person acting both as
Director and as, or in place of, the Secretary.
(C) The Directors may, at any time and from time to time, appoint any
person to be Assistant or Deputy Secretary and anything required or
authorised to be done by or to the Secretary may be done by or to any
Assistant or Deputy Secretary so appointed; and any Assistant or Deputy
Secretary may (without prejudice to any claim for damages for breach of any
contract between him and the Company) be removed by the Directors.
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THE SEAL
126.(A) The Directors shall provide for the safe custody of the Seal and
any official seal under Section 40 of the Companies Act 1985, and the Company
may exercise the powers conferred by the Statutes with regard to having an
official seal for use in any territory outside the United Kingdom, and such
powers shall be vested in the Directors. Whenever in these Articles reference is
made to the Seal, the reference shall, when and so far as may be applicable, be
deemed to include any such official seal as aforesaid.
(B) Where the Statutes so permit, any instrument signed by one
Director and the Secretary or by two Directors and expressed to be executed
by the Company shall have the same effect as if executed under the Seal.
(C) The Seal shall not be affixed to any instrument and no instrument
shall be executed having the same effect as if executed under the Seal
except by the general or special authority of a resolution of the
Directors, or of a committee of the Directors authorised in that behalf.
The Directors may from time to time make such regulations as they think fit
(subject to the provisions of these Articles) determining the persons and
the number of such persons who shall sign every instrument to which the
Seal is affixed. Until otherwise so determined, every such instrument shall
be signed by a Director and countersigned by the Secretary or another
Director, and in favour of any purchaser or person bona fide dealing with
the Company, the signatures of such persons shall be conclusive evidence of
the fact that the Seal has been properly affixed.
(D) Every certificate of shares, debentures, debenture stock or
representing any other form of security of the Company (other than letters
of allotment, receipts for securities or certificates of deposit) shall be
issued under the Seal or under any official seal kept by the Company
pursuant to Section 40 of the Act or in such other manner having the same
effect as if issued under the Seal.
(E) Each certificate to which the Seal shall be affixed shall bear the
autographic signatures of at least one Director and the Secretary or other
person acting in the place of the Secretary, provided that the Directors
may by resolution determine (either generally or in any particular case or
cases) that such signatures shall be dispensed with, or shall be affixed by
means of some method of system of mechanical signature.
(F) Each certificate to which such official seal as is referred to in
paragraph (D) of this Article shall be affixed need not bear any
signatures.
RESERVE
127. Subject to Article 10A(C)(i), the Directors may, before recommending
any dividend, set aside out of the profits of the Company such sums as they
think proper as a reserve or reserves which shall, at the discretion of the
Directors, be applicable for any purpose to which the profits of the Company may
be properly applied, and pending such application may, at the like discretion,
either be employed in the business of the Company or be invested in such
investments as the Directors think fit. The Directors may divide the reserve
into such special funds as they think fit, and may consolidate into one fund any
special funds or any parts of any special funds into which the reserve may have
been divided as they think fit. The Directors may also without placing the same
to reserve carry forward any profits which they may think prudent not to divide.
DIVIDENDS
128. The profits of the Company available for dividend and resolved to be
distributed shall be applied in the payment of dividends to the Members in
accordance with their respective rights and priorities. The Company in General
Meeting may declare dividends, but no dividend shall exceed the amount
recommended by the Directors. Dividends regarding the Participating Shares shall
be paid only in accordance with Article 10A(C).
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129. The Directors may if they think fit from time to time pay to the
Members such interim dividends as appear to the Directors to be justified by the
profits of the Company. If at any time the share capital of the Company is
divided into different classes the Directors may pay such interim dividends in
respect of those shares in the capital of the Company which confer on the
holders thereof deferred or non-preferred rights as well as in respect of those
shares which confer on the holders thereof preferential rights with regard to
dividend and provided that the Directors act bona fide they shall not incur any
responsibility to the holders of shares conferring a preference for any damage
that they may suffer by reason of the payment of an interim dividend on any
shares having deferred or non-preferred rights. The Directors may also pay the
fixed dividend payable on any shares of the Company half-yearly or otherwise on
fixed dates, whenever such profits, in the opinion of the Directors, justify
that course.
130. No dividend or interim dividend shall be paid otherwise than in
accordance with the provisions of the Statutes which apply to the Company.
131. Subject to the rights of persons, if any, entitled to shares with any
priority, preference or special rights as to dividend, all dividends shall be
declared and paid according to the amounts paid up on the shares in respect
whereof the dividend is paid, but no amount paid up on a share in advance of
calls shall be treated for the purpose of this Article as paid up on the share.
All dividends shall be apportioned and paid proportionately to the amounts paid
up on the shares during any portion or portions of the period in respect of
which the dividend is paid; but if any share is issued on terms providing that
it shall rank for dividend as if paid up in full or in part from a particular
date, whether past or future, such share shall rank for dividend accordingly.
132.(1) The Directors may deduct from any dividend or other moneys payable
to any Member on or in respect of a share all sums of money (if any) presently
payable by him to the Company on account of calls or otherwise in relation to
shares of the Company.
(2) The waiver in whole or in part of any dividend on any share by any
document (whether or not under seal) shall be effective only if such
document is signed by the shareholder (or the person entitled to the share
in consequence of death or bankruptcy of the holder or otherwise by
operation of law) and delivered to the Company and if or to the extent that
the same is accepted as such or acted upon by the Company.
133. Any General Meeting declaring a dividend may, upon the recommendation
of the Directors, by Ordinary Resolution direct payment of such dividend wholly
or in part by the distribution of specific assets and in particular of paid up
shares or debentures of any other company, and the Directors shall give effect
to such direction. Where any difficulty arises in regard to such distribution,
the Directors may settle the same as they think expedient, and in particular may
issue fractional certificates and fix the value for distribution of such
specific assets or any part thereof and may determine that cash payments shall
be made to any Members upon the footing of the value so fixed in order to adjust
the rights of all parties, and may vest any such specific assets in trustees as
may seam expedient to the Directors.
134.(A) All dividends and interest shall belong and be paid (subject to any
lien of the Company) to those Members whose names shall be on the Register at
the date at which such dividend shall be declared or at the date on which such
interest shall be payable respectively, or at such other date as the Company by
Ordinary Resolution or the Directors may determine notwithstanding any
subsequent transfer or transmission of shares. The Company may pay any dividend,
interest or other moneys payable in cash in respect of shares, by direct debit,
bank transfer, cheque, dividend warrant or money order and may remit the same by
post directed to the registered address of the holder or, in the case of joint
holders, to the registered address of the joint holder whose name stands first
in the Register, or to such person and to such address as the holder or joint
holders may in writing direct, and the Company shall not be responsible for any
loss of any such cheque, warrant or order. Every such cheque, warrant or order
shall be made payable to the order of the person to whom it is sent, or to such
person as the holder or joint holders may in writing direct, and the payment of
such cheque, warrant or order shall be a good discharge to the Company. If any
such cheque, warrant or order has or shall be alleged to have been lost, stolen
or destroyed, the Directors may, on request of the person entitled thereto,
issue a replacement cheque, warrant or order subject to compliance with such
conditions as to
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evidence and indemnity and the payment of out of pocket expenses of the Company
in connection with the request as the Directors may think fit. Any one of two or
more joint holders may give effectual receipts for any dividends or other moneys
payable in respect of the share held by him as joint holder.
(B) If on two consecutive (or following one such occasion, where
reasonable enquiries have failed to establish another address or account of
the person entitled to the payment) occasions cheques warrants or orders in
payment of dividends or other moneys payable in respect of any share have
been sent through the post in accordance with the provisions of this
Article but have been returned undelivered or left un-cashed during the
periods for which the same are valid, the Company need not thereafter
despatch further cheques or warrants in payment of dividends or other
moneys payable in respect of the share in question until the Member or
other person entitled thereto shall have communicated with the Company and
supplied in writing to the Office an address for the purpose. The Company
shall not be responsible for any cheque or warrant lost in transmission.
135. No dividend or other moneys payable on or in respect of a share shall
bear interest against the Company.
136. All dividends, interest or other sums payable unclaimed may be
invested or otherwise made use of by the Directors for the benefit of the
Company until claimed and so that the Company shall not thereby be constituted a
trustee in respect thereof. All dividends, interest or other sums unclaimed for
a period of twelve years (or such shorter period as may be approved under any
regulations from time to time made by The Stock Exchange and to which the
Company is subject) after their date of payment shall be forfeited and shall
revert to the Company. The payment of any unclaimed dividend, interest or other
sum payable by the Company on or in respect of any share into a separate account
shall not constitute the Company a trustee thereof.
CAPITALISATION OF PROFITS AND SCRIP DIVIDENDS
137. Subject to the provisions of Article 138, the Directors may capitalise
any part of the amount for the time being standing to the credit of any of the
Company's reserve accounts (including any share premium account and capital
redemption reserve) or to the credit of the profit and loss account (in each
case, whether or not such amounts are available for distribution), and
appropriate the sum resolved to be capitalised either:
(i) to the holders of Ordinary Shares who would have been entitled
thereto if distributed by way of dividend and in the same proportions; and
the Directors shall apply such sum on their behalf either in or towards
paying up the amounts, if any, for the time being unpaid on any shares held
by such holders of Ordinary Shares respectively or in paying up in full at
par unissued shares or debentures of the Company to be allotted credited as
fully paid up to such holders of Ordinary Shares in the proportion
aforesaid, or partly in the one way and partly in the other;
(ii) to such holders of Ordinary Shares who may, in relation to any
dividend or dividends, validly accept an offer or offers on such terms and
conditions as the Directors may determine (and subject to such exclusions
or other arrangements as the Directors may consider necessary or expedient
to deal with legal or practical problems in respect of overseas
shareholders) to receive new Ordinary Shares, credited as fully paid up, in
lieu of the whole or any part of any such dividend or dividends (any such
offer being called a "Scrip Dividend Offer"); and the Directors shall apply
such sum on their behalf in paying up in full at par unissued shares (in
accordance with the terms, conditions and exclusions or other arrangements
of the Scrip Dividend Offer) to be allotted credited as fully paid up to
such holders respectively;
(iii) to the holders of the Participating Shares for the issue of
bonus shares in accordance with Article 10A(C)(iv), 10A(F)(iii)(d) or
10A(F)(iii)(e).
138.(1) The authority of the Company in General Meeting shall be required
before the Directors implement any Scrip Dividend Offer (which authority may
extend to one or more offers), but for the
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avoidance of doubt shall not be required in relation to the issue of bonus
shares to the holders of the Participating Shares in accordance with Article
10A(C)(iv).
(2) The authority of the Company in General Meeting shall be required
for any capitalisation pursuant to paragraph (i) of Article 137 above.
(3) A share premium account and a capital redemption reserve and any
other amounts which are not available for distribution may only be applied
in the paying up of unissued shares to be allotted to holders of Ordinary
Shares of the Company credited as fully paid up, or for the issue of bonus
shares to the holders of the Participating Shares in accordance with
Article 10A(C)(iv), 10A(F)(iii)(d) or 10A(F)(iii)(e).
(4) The Directors may in their discretion suspend or terminate any
Scrip Dividend Offer which is in operation, but for the avoidance of doubt
may not suspend or terminate the issue of bonus shares to the holders of
the Participating Shares in accordance with Article 10A(C)(iv),
10A(F)(iii)(d) or 10A(F)(iii)(e).
139. Whenever a capitalisation requires to be effected, the Directors may
do all acts and things which they may consider necessary or expedient to give
effect thereto, with full power to the Directors to make such provision as they
think fit for the case of shares or debentures becoming distributable in
fractions (including provisions whereby fractional entitlements are disregarded
or the benefit thereof accrues to the Company rather than to the Members
concerned) and also to authorise any person to enter on behalf of all Members
concerned into an agreement with the Company providing for any such
capitalisation and matters incidental thereto and any agreement made under such
authority shall be effective and binding on all concerned.
ACCOUNTS
140. The Directors shall cause accounting records to be kept in accordance
with the provisions of the Statutes.
141. The accounting records shall be kept at the Office or, subject to the
provisions of the Statutes, at such other place or places as the Directors think
fit, and shall always be open to the inspection of the officers of the Company.
142. The Directors shall from time to time determine whether and to what
extent and at what times and places and under what conditions or regulations the
accounting records of the Company or any of them shall be open to the inspection
of Members not being Directors, and no Member (not being a Director) shall have
any right of inspecting any account or book or document of the Company except as
conferred by statute or authorised by the Directors or by the Company in General
Meeting.
143. The Directors shall from time to time in accordance with the
provisions of the Statutes, cause to be prepared and to be laid before the
Company in General Meeting such profit and loss accounts, balance sheets, group
accounts (if any) and reports as are referred to in the Statutes.
144. A printed copy of every balance sheet (including every document
required by law to be annexed thereto) which is to be laid before the Company in
General Meeting, together with a copy of the Auditors' report and Directors'
report, shall not less than twenty-one days before the date of the meeting be
sent to every Member (whether or not he is entitled to receive notices of
General Meetings of the Company) and every holder of debentures of the Company
(whether or not he is so entitled) and to every other person who is entitled to
receive notices of meetings from the Company under the provisions of the
Statutes or these Articles, provided that this Article shall not require a copy
of those documents to be sent to any person of whose address the Company is not
aware or to more than one of the joint holders of any shares or debentures and
provided further that if the Statutes so permit the company need not send copies
of such documents to members who do not wish to receive them but may send them
such summary financial statement or other documents as may be authorised by the
Statutes.
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AUDIT
145. Auditors shall be appointed and their duties regulated in accordance
with the provisions of the Statutes.
NOTICES
146. Any notice or document (including a stock or share certificate) may be
given by the Company to any Member either personally or by sending it by post to
him or to his registered address, or (if he has no registered address within the
United Kingdom) to the address, if any, within the United Kingdom supplied by
him to the Company for the giving of notice to him. A Member who has no
registered address within the United Kingdom, and has not supplied an address
within the United Kingdom as aforesaid, shall not be entitled to receive any
notice from the Company.
147.(A) If at any time by reason of the suspension or any curtailment of
postal services in the United Kingdom the Company is unable effectively to
convene a General Meeting by notices sent through the post, a General Meeting
may be convened by a notice advertised on the same date in at least two daily
newspapers with national circulation and such notice shall be deemed to have
been duly served on all members entitled thereto on the day when the
advertisement appears. In any such case the Company shall send confirmatory
copies of the notice by post if at least seven days prior to the date of the
Meeting the posting of notices to addresses throughout the United Kingdom again
becomes practicable.
(B) Any notice to the bearer of a warrant or to any other person who
holds or is interested in shares in the Company in bearer form or any
related coupons or talons shall be sufficiently given if advertised in at
least two daily newspapers with a national circulation in the United
Kingdom and any such notice shall be deemed given on the day when the
advertisement appears.
(C) Any notice required to be given by the Company to the Members or
any of them, and not provided for by or pursuant to these Articles shall be
sufficiently given if given by advertisement which shall be inserted once
in at least one daily newspaper with a national circulation in the United
Kingdom. Such a notice given by advertisement shall be deemed to have been
served on the day on which the advertisement appears.
148. Where a notice or other document is sent by post, service of the
notice shall be deemed to be effected by properly addressing, prepaying, and
posting a letter containing the notice, and to have been effected at the latest
on the day following that on which the letter containing the same is posted (by
whatever class); and in proving such service it shall be sufficient to prove
that the letter containing the same was properly addressed, stamped and posted.
149. A notice may be given by the Company to the joint holders of a share
by giving the notice to the Joint holder first named in the Register in respect
of the share.
150. A notice may be given by the Company to the persons entitled to a
share in consequence of the death or bankruptcy of a Member by sending it
through the post in a prepaid letter addressed to them by name, or by the title
of representatives of the deceased, or trustee of the bankrupt, or by any like
description, at the address, if any, within the United Kingdom supplied for the
purpose by the persons claiming to be so entitled, or (until such an address has
been so supplied) by giving the notice in any manner in which the same might
have been given if the death or bankruptcy had not occurred.
151. Subject to such restrictions affecting the right to receive notice as
are for the time being applicable to the holders of any class of shares, notice
of every General Meeting shall be given in any manner hereinbefore authorised
to:
(a) every Member except those Members who (having no registered
address within the United Kingdom) have not supplied to the Company an
address within the United Kingdom for the giving of notices to them;
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(b) the Auditor for the time being of the Company;
(c) the Directors and (if any) alternate Directors.
No other person shall be entitled to receive notices of General Meetings.
152. Every person who becomes entitled to a share shall be bound by a
notice in respect of that share which, before his name is entered in the
Register, has been duly given to a person from whom he derives his title
provided that no person who becomes entitled to a share shall be subject to the
provisions of Article 76 by reason of any notice served under Section 212 of the
Companies Act 1985 on the person from whom he derives his title before his name
is entered in the Register.
WINDING UP
153. If the Company shall be wound up the Liquidator may, with the sanction
of an Extraordinary Resolution of the Company and any other sanction required by
the Statutes, divide amongst the Members in specie or kind the whole or any part
of the assets of the Company (whether they shall consist of property of the same
kind or not) and may, for such purpose, set such value as he deems fair upon any
property to be divided as aforesaid and may determine how such division shall be
carried out as between the Members or different classes of Members. The
Liquidator may, with the like sanction, vest the whole or any part of such
assets in trustees upon such trusts for the benefit of the contributories as the
Liquidator, with the like sanction, shall think fit, but so that no Member shall
be compelled to accept any shares or other securities whereon there is any
liability.
INDEMNITY
154. Subject to the provisions of the Statutes, every Director or other
officer or Auditor for the time being of the Company shall be indemnified out of
the assets of the Company against all costs, charges, expenses, losses or
liabilities which he may sustain or incur in or about the actual or purported
execution of the duties of his office or otherwise in relation thereto,
including (without prejudice to the generality of the foregoing) any liability
incurred by him in defending any proceedings, whether civil or criminal, in
which judgment is given in his favour or in which he is acquitted or in
connection with any application in which relief is granted to him by the Court
from liability for negligence, default, breach of duty or breach of trust in
relation to the affairs of the Company.
UNTRACED SHAREHOLDERS
155.(A) The Company shall be entitled to sell at the best price reasonably
obtainable at the time of sale shares of a Member or spares to which a person is
entitled by transmission if and provided that:
(i) during the period of twelve years prior to the date of the
publication of the advertisements referred to in paragraph (ii) below
(or, if published on different dates, the first thereof) no cheque or
warrant sent by the Company through the post in a prepaid letter
addressed to the Member or to the person entitled by transmission to the
shares at his address on the Register or other the last known address
given by the Member or the person entitled by transmission to which
cheques and warrants are to be sent has been cashed and no communication
has been received by the Company from the Member or the person entitled
by transmission and at least three dividends whether interim or final on
or in respect of the shares in question have become payable and no such
dividend has been claimed; and
(ii) the Company shall on expiry of the said period of twelve years
have inserted advertisements in both a leading national daily newspaper
and in a newspaper circulating in the area in which the address referred
to in paragraph (i) above is located giving notice of its intention to
sell the said shares; and
A-53
<PAGE> 88
(iii) during the said period of twelve years and the period of
three months following publication of the advertisements the Company
shall have received no communication from such Member or person; and
(iv) notice shall have been given to the Quotations Department of
The Stock Exchange in London of its intention to make such sale.
(B) To give effect to any such sale the Company may appoint any person
to execute as transferor an instrument of transfer of the said shares and
such instrument of transfer shall be as effective as if it had been
executed by the registered holder of or person entitled by transmission to
such shares and the title of the transferee shall not be affected by any
irregularity or invalidity in the proceedings relating thereto. The net
proceeds of sale shall belong to the Company which shall be obliged to
account to the former member or other person previously entitled as
aforesaid for an amount equal to such proceeds and shall enter the name of
such former member or other person in the books of the Company as a
creditor for such amount which shall be a permanent debt of the Company. No
trust shall be created in respect of the debt, no interest shall be payable
in respect of the same and the Company shall not be required to account for
any money earned on the net proceeds, which may be employed in the business
of the Company or invested in such investments (other than shares of the
Company or its holding company if any) as the Directors may from time to
time think fit.
A-54
<PAGE> 89
DANKA BUSINESS SYSTEMS PLC
MASTERS HOUSE
107 HAMMERSMITH ROAD
LONDON W14 OQH
PROXY CARD FOR EXTRAORDINARY GENERAL MEETING
_________________, 1999
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
I/We (full names in block capitals please)
------------------------------------
of (address)
------------------------------------------------------------------
- ------------------------------------------------------------------------------
hereby appoint the Chairman of the Meeting or ________________________________
as my/our proxy to vote for me/us on my/our behalf at the Extraordinary
General Meeting of the Company to be held at ______ pm on ___________________,
1999 and at every adjournment thereof. I/we request such proxy to vote on the
following resolutions as indicated below;-
Please indicate with an "X" in the appropriate column how you wish the proxy to
vote. In the absence of any instructions, the proxy will vote or abstain as he
thinks fit.
ORDINARY BUSINESS FOR AGAINST
- ----------------- --- -------
1. Resolution Numbered (1) to adopt the New Articles of
Association.
2. Resolution Numbered (2) to approve the increase in the
authorized capital stock of Danka and the issuance of
the participating shares.
3. Resolution Numbered (3) to approve the grant of
authority to the Board of Directors to allocate the
capital stock of Danka.
4. Resolution Numbered (4) to approve the disapplication
of the preemptive rights upon the allotment and issue
of participating shares.
Dated this ______________________________ day of __________________________ 1999
Signature_______________________________________________________________________
NOTES:
1. To be effective this form must be deposited with the Company's Registrars,
Computershare Services PLC, PO Box 82, Caxton House, Redcliffe Way, Bristol
8599 7YA not later than _____ pm on ________________________________, 1999.
2. Shareholders who are not resident in the United Kingdom will need to attach
appropriate postage to the reverse of this card in order to ensure that
their votes are received in time.
3. Where the Member is a corporation, this Form must be executed as a deed or
signed by an officer, attorney or other person duly authorised by the
corporation.
4. In the case of joint holders, the signature of any of them will suffice.
5. A Member may appoint a proxy of his own choice in which case the words "the
Chairman of the Meeting/or" should be deleted, and the name of the person
appointed as proxy should be inserted in the space provided. A proxy need
not be a Member of the Company.
<PAGE> 90
DANKA BUSINESS SYSTEMS PLC
MASTERS HOUSE
107 HAMMERSMITH ROAD
LONDON W14 OQH
INSTRUCTIONS TO THE BANK OF NEW YORK, AS DEPOSITARY
(MUST BE RECEIVED PRIOR TO _____ P.M. NEW YORK TIME ON ________________, 1999)
The undersigned Owner of American Depositary Receipts hereby requests
and instructs The Bank of New York, as Depositary, to endeavor, insofar as
practicable, to vote or cause to be voted the Deposited Securities represented
by such Receipts registered in the name of the undersigned on the books of the
Depositary as of the close of business on ____________, 1999 at the
Extraordinary General Meeting of Danka Business Systems PLC to be held in
London, England, on ________________, 1999 in respect of the resolutions
specified in the Notice of the Meeting.
NOTE:
Instructions as to voting on the specified resolutions should be indicated
by an "X" in the appropriate box. The Depositary shall not vote or
attempt to exercise the right to vote that attaches to the Shares or
other Deposited Securities other than in accordance with such
instructions. If the Depositary does not receive instructions from the
Owner of American Depositary Receipts, the Depositary shall give
discretionary proxy for the shares evidenced by such Receipt to a person
designated by the Issuer.
DANKA BUSINESS SYSTEMS PLC
P.O. BOX 11124
NEW YORK, N.Y. 18283-5424
(Continued and to be dated and signed on the reverse side.)
<PAGE> 91
1. Resolution Numbered (1) to adopt the New Articles of Association:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. Resolution Numbered (2) to approve the increase in the authorized capital
stock of Danka and the issuance of the participating shares:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Resolution Numbered (3) to approve the grant of authority to the Board of
Directors to allocate the capital stock of Danka:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Resolution Numbered (4) to approve the disapplication of the preemptive
rights upon the allotment and issue of participating shares:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(This Voting Instruction should
be dated, signed by the
shareholder(s) exactly as his or
her name(s) appears hereon, and
returned promptly in the enclosed
envelope. Persons signing in a
fiduciary capacity should so
indicate. If shares are held by
joint tenants or as community
property, both should sign.)
Signature
-------------------------
Date
------------------------------
Signature
-------------------------
Date
------------------------------
VOTES MUST BE INDICATED [X]
IN BLACK OR BLUE INK. [ ]
